Revenue Roulette

Why is the D.C. Council still refusing to consider a better bet for running the city's lottery?

EVEN IF THE District of Columbia were flush with money, one would think its elected officials would want to get the best value for taxpayers' dollars. Yet in the face of a looming budget deficit, the D.C. Council is ignoring the advice of fiscal and legal experts that the city is poorly served by the company running its valuable lottery business. The council's troubling refusal to even consider a new contractor who promises to provide a better product for less money is simply incomprehensible.

It's been nine months since contracting officers working for Chief Financial Officer Natwar M. Gandhi recommended that a $120 million, multiyear contract be awarded to W2I, a joint venture between a local startup and Intralot, a leading world provider of gambling services. The selection followed a rigorous progress in which W2I was judged to offer the best technical competency and price, with an annual estimated savings to the city of $5 million.

That's not inconsiderable, given that the District needs all the money it can find to close a projected $130 million budget gap. Moreover, it's not as if the District were pleased with the performance of long-term vendor Lottery Technology Enterprises, having recently fined the firm $1.4 million for an egregious security breach.

The council's refusal to act on the proposed contract -- or to say why -- is unprecedented, according to those knowledgeable about city procurement practices. When Acting Attorney General Peter J. Nickles raised the issue at a recent breakfast with council members, he was met with stony silence, even as he outlined a trend of declining lottery revenue to the city. There have been other troubling developments: Eric W. Payne, the contracting officer who has been relentless with his oversight of the lottery contract, has been "reassigned," although officials say he is not being removed from the case. A number of council members are backing a bill that in effect would limit the mayor's ability to resubmit the contract for a vote.

These events call into question the integrity of the procurement process and give credence to suspicions that it is the political connections of vendors, not the interests of the public, that determine who gets the city's business. Indeed, as lottery chief operating officer Jay Young wrote in a Oct. 6 memo warning against rebidding the contract, "If the Council rejects the Contract as currently submitted, I suspect that it will do so on grounds not related to the substance of the offers, the soundness of the proposed solution, or the administration of the procurement process, but rather on the discretionary latitude provided to Council by legislative fiat." He went on to say that the harm of such a rejection to lottery operations -- which provide some $70 million in revenue to the city each year -- would be "both extensive and lengthy."

It's time for Mr. Gandhi, who prides himself on the independence of his office, to stand up to Council Chairman Vincent C. Gray (D) and demand action. Mr. Gray, who prides himself on the transparency of his governance, needs to have a full vetting and vote on this issue.