A D.C. contract review committee recommended last night that the D.C. Lottery Board reconsider its award of a lucrative contract to run the city's first legalized daily numbers game, saying that the board erred in not fully considering the minority participation proposed by each of the three bidders.
The three-member panel, headed by Assistant D.C. Corporation Counsel James E. Lemert, said the board did not request sufficient documentation from the three competing firms to ensure that they would meet the legal requirement that at least 25 percent of revenue from the daily numbers game go to minority-controlled firms.
It was unclear last night what effect the committee's recommendation would have on the lottery board.
Board member Carolyn Lewis said last night that the agency would have to consider the committee's report before deciding what exactly to do. She said that the board might be able to meet over the weekend, but that it was uncertain whether it would.
Board chairman Brant Coopersmith has divorced himself from lottery matters this week during a week-long period of mourning for the death of his mother. Lewis said the board would want to include Coopersmith it its deliberations.
The five-member board last month selected Lottery Technology Enterprises--a joint venture of a Rhode Island-based computer company, Gaming Systems Corp., and four minority-controlled D.C. firms--to run the game.
Both losing firms, D.C. Data Co. and Columbia Gaming Services Inc., promptly filed protests of the decision, claiming that the board made mistakes in picking Lottery Technology for a contract. The contract for the numbers game, which is expected to be identical to the one now operating in Maryland, may be worth at least $4 million a year based on the anticipated annual wagering of $100 million or more.
Michael B. Gross, a lawyer for D.C. Data, said that he would file a request in D.C. Superior Court this morning for a temporary restraining order to block the lottery board from signing its prospective contract with Lottery Technology. The board reluctantly agreed last week to not sign the contract until the review committee studied the board's selection process, but the board made no commitment to be bound by the committee's recommendation.
"We're in a situation where they seem to be making it clear they're going to ignore the committee and award the contract," Gross said. "We believe the board has no choice but to seriously consider and act on the committee's recommendation."
The review committee, which also included William Y. Kao, a city financial expert, and Horace G. Jones, a D.C. transportation department staff member, said the lottery board generally adhered to acceptable procurement procedures in picking Lottery Technology.
The board had said that it would give equal consideration on a 100-point scale to the financial bids of the competing companies and to their respective plans to include minority-controlled companies in the operation of the numbers game.
The review panel said that the board, in awarding points for each firm's minority participation plan, erroneously gave all three the same 20-point total.
"The board was apparently satisfied that each proposal, as submitted, met the requirement for 25 percent minority participation ," the committee said.
Both Lottery Technology and D.C. Data have promised their minority partners 60 percent of the equity, while Columbia Gaming has promised its minority partners 85 percent. The review panel questioned whether 25 percent of the gross revenue from the game, rather than an equity division of any net profits, would go to the minority firms, particularly those involved with Lottery Technology and D.C. Data.
"From the documents provided to the committee, it is obvious that the absence of definitive and quantifiable documentation on subcontractor compensation virtually preclude the board's ability to determine with any precision the quantitative percentage beyond 25 percent for at least two" of the bidders, the committee said.