Two members of the D.C. Council are asking city agencies to examine a local firm that is supposed to do most of the work on a $215 million no-bid gambling contract despite the fact that it has no employees and listed executives on its website who didn’t work there.
The inquiries from council members Robert C. White Jr. (D-At Large) and Elissa Silverman (I-At Large) came after a Washington Post investigation into Veterans Services Corp., a business with the largest chunk of the city’s lottery and sports betting contract.
The Greek gaming company Intralot selected the firm to comply with a D.C. law that requires companies with large public contracts to share a portion of the work with small local businesses. The law is intended to create jobs, expand the local tax base and grow the District’s economy. In a document this summer, Intralot said Veterans Services would “perform the ENTIRE subcontract with its own organization and resources.”
Intralot and the leader of Veterans Services, Emmanuel Bailey, already held the city contract to operate the D.C. Lottery.
But The Post found Veterans Services appears to have no employees, based on interviews and records, and, until recently, touted executives who didn’t work there on the company website.
What’s more, Intralot officials said the work on the new sports gambling and lottery contract will be performed by DC09, a joint venture between Intralot and Veterans Services. Veterans Services owns 51 percent of DC09, but Intralot funded the creation of DC09 and controls the company, The Post found.
The story prompted Silverman and White, who provided a crucial swing vote to approve the contract, to request D.C. government officials review whether Veterans Services is complying with local laws.
“It is clear they are just a shell company,” said Silverman, who has consistently opposed the sole-source sports gambling contract.
She asked Attorney General Karl A. Racine to examine the validity of the city’s contract with Intralot.
“I’d like to know if the Intralot contract can be nullified or revisited given what has been reported about its compliance with the CBE requirement,” Silverman wrote in her request, referring to certified business enterprises.
White is asking Chief Financial Officer Jeffrey DeWitt, who oversees the D.C. Lottery, to conduct a similar review.
“I am asking the CFO, who negotiated and lobbied the Council to approve the sports betting contract with Intralot, to report to us on whether the ownership structure of VSC complies with all D.C. laws, how VSC has operated the D.C. Lottery contract and how they plan to operate the sports betting contract with no employees, and whether VSC meets all Certified Business Enterprise program requirements,” White said in a statement.
White helped the contract pass on a 7-to-5 vote in July despite his earlier misgivings about suspending the normal procurement process that would have required the city to seek competitive bids.
At the time, White said he was satisfied the contract was the best deal for the District after speaking with several of the parties involved, including Bailey.
Bailey, 56, has donated more than $30,000 to D.C. political candidates since 2006, campaign finance reports show.
On Friday, White declined to answer questions, including what Bailey told him about his company.
Spokesmen for Racine and DeWitt did not return requests for comments.
In the past, lottery officials said questions about subcontractor performance are a matter between Intralot and its partners, although they have praised Intralot for subcontracting much of the work to local businesses.
In his statement, White also said he would examine the issues raised by The Post as he writes legislation to tighten the rules for certified business enterprises.
Other lawmakers who voted to approve the contract did not return requests for comments on The Post’s findings, including council Chairman Phil Mendelson (D), and members Jack Evans (D-Ward 2), Kenyan R. McDuffie (D-Ward 5) and Vincent C. Gray (D-Ward 7).
Council member Anita Bonds (D-At Large) said in a text message Bailey “obviously was/is the principal consultant.”
A week after council member Brandon T. Todd (D-Ward 4) voted for the contract, Bailey was among those who hosted and attended a fundraiser for his reelection campaign.
Janeese Lewis George, a candidate challenging Todd in the next year’s Democratic primary, used Todd’s vote for the no-bid contract and the subsequent fundraiser with Bailey to portray her opponent as a proponent of “pay-to-play politics in the city.”
In a brief interview, Todd said her contention was “not factual” but declined to say more, adding that he didn’t want to get into “a back-and-forth in the paper.”
A campaign flier shows that Bailey was among the hosts for a July 25 fundraiser, and Bailey was photographed at the event. Shown the flier, Todd said Bailey hosted the event “with 30 other people” and declined to answer further questions. Bailey also gave $1,000 to Todd’s constituent services fund in 2017 and 2018, campaign records show.
Lawmakers who voted against the lottery and sports gambling contract said the latest revelations reaffirmed their opposition.
“The slow trickle of new information regarding the vendor and subcontractors — and the lobbyists and champions of the contract — clearly demonstrates that the contract should have been competitively bid and the final contract more closely scrutinized,” council member David Grosso (I-At Large) said in a statement. “Instead, the Council, under the leadership of Chairman Mendelson, rushed to approve a dubious agreement that is unlikely to realize the benefits it promised.”