Firm Assails Lottery Pact Bidding Process : Gambling: N.J. company withdraws from competition for $250-million deal, charging that the routine is biased to favor the current operator. State official calls the complaint ‘a bunch of hooey.’
One of the nation’s largest operators of computerized lottery games withdrew from the competition for a $250-million California contract Tuesday, saying the state’s bidding process was “biased” in favor of the present contract holder, the GTECH company.
Automated Wagering International Inc., a Hackensack, N.J., company that operates lottery games in eight states, charged in a letter to lottery officials that the California bid requirements not only favored GTECH but made it “virtually impossible for any other vendor to compete.”
The company’s actions prompted an angry retort from Lottery Director Sharon Sharp, who called the complaint “a bunch of hooey.” She said it was her hunch that AWI’s real problem was that it was not yet ready to bid and was attempting to win an extension. Final bids on the contract are due at 3 p.m. today.
“It is simply that they are not prepared (to bid) and they are trying to blame the lottery,” she said.
In a sharply worded letter, AWI insisted that the lottery had established a deadline for the winning bidder to complete installation of a central computer and a vast network of terminals that could only be met by a company that was already operating the California games. The lottery’s timetable calls for the final contract to be awarded April 21 and a new system with 13,000 terminals to be operating by Oct. 14.
“The lottery’s proposal is so biased toward the incumbent on-line contractor because of its unreasonable and prohibitive requirements that a bid is not only pointless, but makes a mockery of the lottery’s competitive bid process,” David H. Horowitz, AWI’s executive vice president, told The Times.
The company’s letter contended that although state lottery officials were ready to begin the bid process a year ago, they deliberately waited until last December to release the contract specifications. The delay, AWI said, allowed too little time for an outside bidder to meet the deadline for installing a new system and gave GTECH a “clear advantage.”
Although Sharp was plainly angered by AWI’s charges, she acknowledged that the company’s withdrawal from the bidding process was a major disappointment. If other companies follow suit today, it could embarrass the Wilson Administration, which has long encouraged competition for large government contracts.
The contract to operate the lottery’s computerized games--Super Lotto, Fantasy Five, Decco, Keno and Daily Three--is one of the largest awarded by the state. GTECH, which has held the contract since the state started computerized lottery games in 1986, will have earned $270 million from the state by the time the contract expires next October.
The new contract will be awarded for an initial five-year period with the state having the option to renew annually for five years after that. For the first five years, the contract is expected to earn its holder about $250 million. The contract requires the bidder to replace the lottery’s current equipment with a new mainframe computer and terminals.
Sharp, who called AWI’s actions “shocking,” said the time allowed winning bidders to complete contracted work was ample and standard for the lottery industry. As an example, she said AWI had been able to set up a computer system with 7,100 terminals for the Florida lottery within 84 days.
A company spokesman, however, disputed Sharp’s numbers from Florida. He said it had taken AWI 110 days to install 3,100 terminals--roughly a fourth of the number that it would have to install in California.
Sharp said the winning California bidder would be allowed nearly six months. She said because of earlier complaints from AWI, bidders were being allowed two options: they could promise to meet the Oct. 14 timetable or they could follow a second timetable that would give them an additional 109 days to install terminals.
