Lottery Puts Off Action on GTECH Bid

The California Lottery Commission on Wednesday postponed awarding a non-competitive, $23-million contract to GTECH Corp. after it was alleged that the agency’s staff had discouraged a rival company from submitting a proposal for the contract.

The three-week postponement came at the suggestion of Commission member Edward L. Lammerding, who urged the panel to delay action until the matter could be more closely examined.

Lottery Director Sharon Sharp insisted that her staff had done nothing wrong and that its conversations with the rival company--Scientific Games of Georgia--had been misrepresented. “The lottery acted properly in this matter,” she said.

Sharp had recommended awarding Rhode Island-based GTECH the contract for the automation of Scratcher prize payoffs, arguing that there was no need for competitive bids because only one other company had shown interest in the business.

Lottery Finance Director Gordon Jones said the other company, Anderson Consulting, did not have enough experience in managing all the elements of the system. He said he believed that GTECH was offering an excellent price and would be the logical company to operate the new system because it already held a multimillion dollar contract to operate the lottery’s computerized games.

The commission was preparing to vote on the recommendation when an attorney representing another GTECH competitor stepped forward and alleged that Scientific Games had also been interested in the contract but had been told by lottery officials that its proposal would “not be welcome.”

“I think the anti-competitive nature of what I’m telling you would be shocking to the people of the state of California and should be shocking to you,” said Joseph S. Genshlea, a Sacramento attorney representing High Integrity Systems. “You need to investigate it.

He said he was told by the Scientific Games attorney that the message of the lottery’s lack of interest in a Scientific Games bid had been conveyed by the lottery’s general counsel, Roland Bowns, and its assistant director, Jim Barnett.

Sharp and Bowns immediately denied Genshlea’s allegations. Representatives from Scientific Games were unavailable.

Bowns accused Genshlea of trying to discredit lottery officials to improve his position in an unrelated court suit that the agency has filed against High Integrity Systems. Bowns said Scientific Games was a partner with High Integrity Systems of Sacramento in providing low-volume computer terminals to the lottery and an automated Scratcher system. The contract was terminated for what lottery officials determined was non-performance, Bowns said.

The agency, Bowns said, has since sued High Integrity Systems for damages and the company has countersued.

“I’m very angry about this situation in which a disgruntled vendor makes allegations that they think will help them in court and that may end up costing needless time and money,” Sharp said.

Bowns said that, while he never suggested Scientific Games not submit a proposal, he did advise the company that it would be unacceptable for Scientific Games to offer the lottery the same computer software under the new proposed contract that it had used with the old High Integrity Systems contract.

Later, Bowns told the commission that he spoke with an attorney for Scientific Games during a commission recess who confirmed his version of events.