The D.C. Lottery Board yesterday bypassed two politically potent bidders to operate the city's first legalized daily numbers game and instead awarded the lucrative contract to a Rhode Island computer firm and four relatively unknown minority-owned Washington companies.
After considering the voluminous bids for nearly two months, the board voted 4 to 0 to award the contract to Lottery Technology Enterprises. That newly created firm is 40 percent owned by Gaming Systems Corp., a Providence, R.I., firm that runs eight other lotteries worldwide, and 60 percent owned by the four D.C. firms, which will perform a variety of functions in the joint venture.
Robert Stern, Gaming Systems' chairman, declared: "We're going to make a lot of money for the District." The city's financially pressed government expects to collect at least 30 cents of each dollar bet in what some predict will be a $100-million-a-year game.
Stern said the new firm expects to sell its first lottery tickets by July 18 in a pick-your-own three-digit game similar to the one now operating in Maryland.
Stern said he was "pleasantly surprised" to win the contract "in light of what happened at the end," a reference to last-minute questions raised by D.C. Mayor Marion Barry and several of his top aides.
The board postponed final selection a week ago after Ivanhoe Donaldson, deputy mayor for economic development, met with the members and raised questions about the extent of minority participation in the bids. Three board members said Donaldson did not voice a preference for one of the three firms.
One source familiar with the deliberations said Donaldson strongly suggested that the contract be given to Columbia Gaming Services Inc., a partnership involving Control Data Corp. and Sterling Systems Inc., a McLean-based minority-owned computer firm. Columbia Gaming is represented by D.C. lawyer Robert B. Washington Jr., a former city Democratic Party chairman.
The source said Donaldson argued that Columbia Gaming had the best minority participation and should get the contract even though its proposed cost to operate the game was more than twice that of Lottery Technology or the third bidder, D.C. Data Co., a joint venture of a division of General Instrument Corp. and IBS Digit Inc., a local minority-owned computer systems firm.
One of the prime investors in D.C. Data was William B. Fitzgerald, president of Independence Federal Savings and Loan Association and a confidant of Barry's.
After Donaldson voiced his concerns about the contract, the board asked another deputy mayor, Alphonse G. Hill, and William Jameson, executive director of the city's Minority Business Opportunity Commission, to assess the percentage of minority participation of the three bidders.
The board had earlier said that it would give equal weight to the bidders' proposed cost and to their level of minority ownership. Another source familiar with the board's operations said that the Hill-Jameson report concluded that the Columbia Gaming proposal had the best minority participation and should win the contract. The board declined to immediately release the report.
In the end, board Chairman Brant Coopersmith said that Columbia Gaming was judged to have the best minority participation package but could not win the contract because of its proposed high cost.
"The company that got the bid had the least community clout," said Coopersmith, who did not cast a vote approving a contract when the four other board members unanimously voted for the Lottery Technology entry.
"The board made the decision," Barry said. "It's not for me to be pleased or displeased. I raised questions about all three."
Lottery Technology's four minority-owned partners are:
* New Tech Games Inc., a newly created firm that owns 24 percent of Lottery Technology and is solely owned by P. Leonard Manning, a D.C. businessman who will be the joint venture's board chairman.
* Network Technical Services Inc., an electronics firm that will perform the maintenance on the 300 to 700 computer terminals that will be placed in stores throughout most of the District and be used to print lottery tickets. NTS owns 15 percent of Lottery Technology, a source said.
* Opportunity Systems Inc., a computer firm that also owns 15 percent and will operate the computer system for the firm.
* Prism Corp., an advertising and public relations firm that owns 6 percent. It will train the sales agents and do some of Lottery Technology's advertising production work.
Under a complex formula, Lottery Technology will be paid 3.9235 percent of the first $2 million in revenues each week and 2.95 percent of the next $2 million a week. D.C. Data had a basic bid of 2.5 percent and had 60 percent minority participation, while Columbia Gaming bid 5.9 percent and had 85 percent minority participation.