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District to Take New Bids on Lottery
Council Rejects Proposal to Award Contract to Start-Up Business

By Nikita Stewart and Hamil R. Harris
Washington Post Staff Writers
Wednesday, December 17, 2008

The District will take new bids for a $120 million deal to operate the city's lucrative lottery system and is bracing for a possible lawsuit after the D.C. Council rejected a proposal to give the controversial contract to a start-up firm.

The council voted 8 to 5 against the contract to W2I -- a partnership between international gaming services provider Intralot and W2Tech, a year-old company with ties to Mayor Adrian M. Fenty (D) through fraternity and friendship. The council tabled the contract in May, but the mayor revived it repeatedly.

D.C. Council Chairman Vincent C. Gray (D) had declined to place it on the agenda after that. But council member Jack Evans (D-Ward 2), chairman of the Committee on Finance and Revenue, brought it back yesterday. "The point is we need to move forward," said Evans, who voted for the contract.

But the majority questioned W2I's experience and whether the company was a true partner with Intralot.

The vote came during the last meeting of the legislative session. This year, Fenty and the council scuffled over everything from the budget to a downtown homeless shelter to Washington Nationals tickets.

Yesterday's lottery vote promises to prompt more legal wrangling among the city, W2I and current vendor Lottery Technology Enterprises, a venture between international lottery firm GTech and New Tech Games, headed by P. Leonard Manning, who has longtime ties to city officials.

"The council has spoken, and we now will have to rebid," said Attorney General Peter Nickles.

A. Scott Bolden, attorney for W2Tech, said he was baffled by the vote. "It's not clear to me why a legislature or a council is involved in the procurement process," he said. "We're going to look at every legal option."

Another council vote has invited a fight in court.

The council approved the Firearms Registration Amendment Act, another measure that tries to put the District in compliance with the Supreme Court decision that struck down the city's longtime gun ban in June.

The legislation requires the re-registration of guns every three years, and an amendment, approved in a separate 10 to 3 vote, makes gun owners take at least four hours of classroom instruction and one hour of training at a firing range.

"We will be saving lives by requiring training," said council member Mary M. Cheh (D-Ward 3), who proposed the amendment.

Council member Phil Mendelson (D-At Large), who has shepherded all gun legislation as chairman of the Committee on Public Safety and the Judiciary, said there is no evidence that five hours of training is effective.

Gun and Second Amendment advocates plan to challenge the vote.

The requirements are "phony barriers" for law-abiding gun owners, said Wayne LaPierre, executive vice president and chief executive of the National Rifle Association. "It's kind of saying, 'Hey, you're the Supreme Court, but we're the D.C. Council and we'll show you,' " he said.

Nickles said that the training amendment was not his recommendation but that "it's not going to lead to litigation that we can't defend."

The Supreme Court ruling and the city's reaction highlighted another rocky year in local politics. Gray and Fenty have tugged for control of the council since they took office in January 2007.

Fenty, who was elected in 2006 with unprecedented wins in every precinct, showed vulnerability this year when lax oversight and a poor records system led to a $30 million budget overrun for the city's summer jobs program.

Recently, Gray made a political move by backing lobbyist Michael A. Brown against council member Carol Schwartz (R-At Large), who was seeking a fifth term. Fenty did not endorse anyone in the race. But despite help from members of his mayoral campaign team, Schwartz lost.

She was forced to wage a write-in campaign in the general election after losing her party's nomination in the September primary. The business community, upset that she shepherded a bill that requires employers to give most workers paid sick leave, poured money into a foe's campaign.

Schwartz teared up a few times yesterday.

"I am sad. I can't say that I am not sad. People come up to me and say how are you, and I say, 'I have been better,' " she said in an interview. "I was here to 10 o'clock last night packing up my office, so it is a tough time for me. I am really proud of my years here."

She remained spirited on the dais, however. Before the lottery vote, she said that she could have taken a lame duck approach but that "this stalemate is not helpful."

"This is my parting gift. Thank you very much," Schwartz said as she voted for the W2I contract.

Evans said he was going with the recommendation of Chief Financial Officer Natwar M. Gandhi, who has repeatedly told council members that W2I won a competitive bid for the contract against LTE. The Contract Appeals Board upheld that process in a November ruling.

Gandhi has also pointed to a possible annual savings of $5 million with W2I. LTE has been fined more than $1 million for security breaches and systems breakdowns that have occurred since 2005.

In addition to Schwartz, Evans was joined in approval by members Muriel Bowser (D-Ward 4), David A. Catania (I-At Large) and Cheh.

They said the council must uphold the city's contracting and procurement process.

But the majority of the council members expressed concerns privately and publicly about W2Tech, owned by real estate developer Warren C. Williams Jr. and his wife, Alaka Williams. Yesterday, they focused on whether the partnership met the parameters of the contract requiring minority participation. W2Tech and New Tech Games are black-owned businesses.

Manning said he is also looking at legal options, hoping to get the appeals board ruling overturned and to lower the city's fines against LTE. For now, he said, he is satisfied with the council's vote. "I feel that the council did the right thing," he said.

At the end of the 13-hour marathon meeting, Gray presented Schwartz with a crystal bowl in council tradition. She bid goodbye to the council, saying again that she was sad to go. "But c'est la vie. Such is life. I've gotten over worse things. I'll get over this," she said.

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