Lottery Chief Urges No-Bid Contract : Gaming: GTECH would be paid $23 million to automate state’s Scratcher ticket payoffs. The proposal comes six months after the same firm was awarded a $400-million non-competitive contract.


Six months after the lottery was criticized for awarding a lucrative contract to the GTECH Corp. without rival bids, Director Sharon Sharp is proposing that the agency enter into a new non-competitive contract with the same company.

The contract calls for paying the Rhode Island-based computer company an estimated $23 million over 4 1/2 years to install and run automated devices for cashing in winning Scratcher tickets.

The devices will be installed next spring if the California Lottery Commission approves the new contract today. They would permit lottery players to cash in winning tickets for prizes of less than $600 at any of the 22,000 outlets in the state that sell Scratcher tickets. Most prizes now have to be collected at the store where the Scratcher ticket was purchased.

In a memorandum to the commission, Sharp and her staff said they were proposing that the contract be awarded without competitive bid because they were “very impressed with the GTECH offer, which is a comprehensive Scratcher automation solution for what appears to be a very competitive price.”


Lottery spokeswoman Joanne McNabb said the staff had considered seeking outside bids but after making inquiries to eight firms, only two--GTECH and Anderson Consulting--expressed interest in the contract. The memo to the commission said it was determined that the Anderson firm did not have enough experience in managing a Scratcher automation system.

After reviewing similar systems in other states--about 12 have them--she said the staff decided GTECH was offering a “very good price.”

Sen. Tom Hayden (D-Santa Monica), who has been critical of the lottery’s contracting practices, said he thought it was bad policy for an agency that operates a gambling enterprise not to seek competitive bids on large contracts.

“I think the concept of competitive bidding makes a lot of sense from the point of view of the public interest,” Hayden said. “I further think in this very controversial area it’s incumbent on the state to go the extra mile to do everything in a clean and proper manner.”


Earlier this year, Hayden asked the Senate to reject the confirmation of Lottery Commission member Daniel Apodaca, contending that he had not been diligent enough in overseeing the agency’s contracting process. The Senate rejected his request, although several senators, including President Pro Tem David A. Roberti (D-Van Nuys), said they were concerned that the lottery had awarded GTECH a $400-million contract without competitive bids.

GTECH was the only bidder on that contract after two rivals refused to bid, contending the specifications for the project favored the Rhode Island company. They complained that only GTECH, which held the current contract, would be able to meet the performance deadlines. Sharp argued that the deadlines were standard for the industry.

Both the governor’s office and a legislative committee investigated the contracting process but ultimately decided not to interfere with the lottery’s decision to award it to GTECH.

McNabb said lottery officials expect the new automated system to increase Scratcher sales and return about $27 million more a year to California schools, which receive at least 34% of lottery earnings.