correction: Due to an editing error, an earlier version of this column misstated the size of the proposed contract to oversee sports gambling under consideration by the D.C. Council. This version has been corrected.
The proposed $215 million contract to oversee sports gambling pending before the D.C. Council will channel up to $116 million over five years to a small circle of politically connected D.C. companies billed as subcontractors. Should it occur, the council’s approval of that contract negotiated between the city’s chief financial officer and the D.C. Lottery operator, Intralot, might well be regarded as an act of legislative malpractice. Lawmakers, however, may be headed in that direction if they follow the lead of Chairman Phil Mendelson (D) and adhere to the strategy devised by Jack Evans (D-Ward 2), the scandal-scarred (but still) chairman of the council’s finance committee.
Informed this week that the bulk of the lucrative contract would go to companies with city hall ties but without extensive records in the sports betting industry, Mendelson shrugged. City law, he told The Post, requires large contractors to give a certain amount of work to D.C.-based certified business enterprises, or CBEs.
When such opportunities materialize, Mendelson observed vapidly, CBEs show up saying to contractors, “Pick me, because I know the mayor, because I know council member so-and-so. Pick me. It’s how business is done everywhere. I don’t want to say it’s a great thing, but I don’t know how you avoid it.”
In other words, prime contractors choosing subcontractors based on their political connections is accepted behavior in this city because the council’s leadership doesn’t know what to do about it.
Lawmakers are obliged to ensure that the government is getting the best value for the D.C. taxpayer. Favoritism and cronyism undercut the contracting process. Those unsavory practices also disadvantage qualified D.C. companies — the very small businesses the CBE program is designed to help.
Unfortunately, the council, as an oversight body, has come up short before.
This year, Evans, joined by Chief Financial Officer Jeffrey S. DeWitt — who oversees the D.C. Lottery — sought to persuade council members to forgo competitive bidding and negotiate a single-source contract for legalized sports gambling with Intralot. They estimated that sports wagers would generate almost $34 million for the District within 15 months. And if the District didn’t move fast, they warned, Maryland and Virginia would siphon off the sports gambling business.
A 7-to-6 council majority fell for the pitch and gave a green light to the single-source, no-bid contract.
But bills to advance sports betting didn’t get through Maryland and Virginia legislatures this year. And, last week, council members were told that D.C. officials have lowered that 15-year revenue estimate by nearly $16 million . Oops.
Nonetheless, DeWitt — undeterred, unembarrassed and with Evans’s concurrence — is still asking the council to approve the contract that they negotiated, worth up to $215 million over five years. Could city lawmakers — already snookered on sole-source contracting and the puffed-up revenue estimates — really be about to do that?
If they do, these companies would be among the subcontractors, according to The Post:
●Vital Services Corp., headed by Emmanuel Bailey, would be awarded a subcontract worth up to $109.65 million over five years to serve as “operations manager.” Another company of Bailey’s, DC09, holds a major stake in Intralot, and Bailey was on the Intralot team that negotiated the contract. Bailey, personally and through his companies, has given thousands in campaign contributions to Mayor Muriel E. Bowser (D) and an array of council members.
●Octane LLC, a public relations company run by Everett Hamilton, would receive up to $3.5 million to provide “digital marketing and advertising services.” Hamilton was communications manager for both Bowser’s 2014 mayoral campaign and council member Brandon T. Todd’s (D-Ward 4) 2016 campaign. He’s also a contributor to the campaign committees of Bowser and Todd.
●Goldblatt Martin Pozen LLP would receive up to $300,000 for “legal services.” Partner Thorn Pozen is Bailey’s lobbyist; DC09 paid Pozen’s firm $20,000 to lobby council members for the sports betting legislation. Pozen also was general counsel for Bowser’s political action committee, FreshPAC, before it was disbanded in 2015.
●District Services Management would be awarded a subcontract of up to $1.2 million to host a data center and provide “cloud services.” DSM, headed by Allieu Kamara, has a business address at a single-family home that Kamara owns in Southeast D.C. Kamara also ran Life Deeds, which in February lost a $3 million city contract to manage a homeless shelter; he has said he will appeal the decision.
●M. Jones Companies , owned by Mark Jones, a former D.C. Lottery deputy director, would receive up to $1.25 million for “lottery agent support” — installing equipment and recruiting retailers and warehouse staff.
●SBC LLC, a subcontractor and shuttle bus company, would be awarded up to $600,000 for “vehicle fleet management services.”
●Potomac Supply Company LLC, another subcontractor, is supposed to produce “paper products” for sports betting operations. PSC’s principal is Okera Stewart. Stewart is also a registered agent for three companies with matching Northeast D.C. addresses, including Haute Hair LLC. Stewart is a Trichology Hair Practioner who assists clients challenged with hair loss.
That’s called getting down to business.
Were the subcontracts awarded fairly? Were other D.C.-based CBEs given a chance to compete?
Incredibly, Beth Bresnahan, director of the D.C. Lottery, testified at a council hearing that she did not know how Intralot had picked its subcontractors.
Will lawmakers gloss over such important questions?
If so, the case for dereliction of duty and legislative malpractice will, to the council’s shame, have been made.
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