District lottery contract merits a closer look

Friday, August 13, 2010

IT IS INEVITABLE: As the District gets closer to the hotly contested primary for mayor, any word and every action is seen through a political prism. So it is with Attorney General Peter Nickles and criticism about his request for an independent investigation into the awarding of a lottery contract. We don't discount the possible influence of politics, but there are so many questions surrounding the District's tortured effort to get a new lottery operator that it is prudent that an outside review be conducted.

In a July 20 letter to the city's inspector general, Mr. Nickles, joined by D.C. Chief Procurement Officer David P. Gragan, requested a probe into the handling of the $38 million contract, approved by the D.C. Council in December to the Greek company Intralot. Of particular interest, as The Post's Mike DeBonis reported, is Intralot's partnership with a local business that did not undergo a full vetting. Intralot first bid on the contract without having a local, minority partner, but on the eve of the council's vote it entered into an agreement with Veterans Services Corp., giving it 51 percent of the equity in the joint venture running day-to-day operations of the lottery. None of this was known to the contracting officer who evaluated the proposals or to Mayor Adrian M. Fenty. Recent articles in the Washington Times have raised questions, disputed by the firm's president, about the company's qualifications.

The need for an outside review extends beyond the events of last year to the entire three-year history of the lottery contract. Why did D.C. Council Chairman Vincent C. Gray and the council repeatedly refuse to act on the 2008 recommendation to award the contract to Intralot, which had submitted the winning bid? Why was that award ultimately rejected? Was there misuse of the process to certify local, minority businesses? And is there any truth to the allegations by the city's former contracting officer that he was subjected to undue political pressure? That officer, Eric Payne, has filed a federal lawsuit, contested by the District, that contends he was wrongly terminated for what he characterized as his efforts to resist and report political pressure.

Some unsubstantiated charges have been made. Mr. Nickles, for example, suggested (unwisely to our minds) a connection between Mr. Gray, now challenging Mr. Fenty's bid for reelection, and the mother of the president of Veterans Services Corp. In fact, Mr. Gray abstained from voting on the contract award, partly because he was friendly with people involved in a rival partnership. He also thought there were flaws in the contract process. Mr. Gray told us he, too, thinks it's a good idea for the inspector general to undertake a dispassionate review of events. We hope the inspector general agrees.

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