Md. agency imposes gag on bidding Lottery officials cite political interference

October 25, 1990|By C. Fraser Smith

The Maryland State Lottery Agency has put a gag order on companies planning to bid for a computer contract worth as much as $75 million, telling prospective bidders not to discuss their proposals with legislators, government officials or the news media.

Michael W. Law, the lottery agency's procurement officer, said he put the "disclosure prohibition" language in the state's formal request for bids to shield the procurement from political interference.

"We had a lot of trouble last year with the legislature getting involved with various vendors," he said. "There was a lot of dialogue going on. We wanted a smooth procurement operation."

His anti-disclosure provision had landed like a verbal hand grenade in a volatile and highly politicized competition among some of the most powerful Annapolis lobbyists, and it may achieve the opposite of a "smooth operation." The language is designed to prevent lobbyists from invading the procurement process or transferring it into the political environment of Annapolis where the lobbyists operate best.

Vendors are competing to replace the lottery's current computer system, increasing the number of terminals from 1,850 to 2,400 and adding capability for more games -- thereby increasing lottery revenue.

Mr. Law insists that the disclosure language is only advisory. "I can't punish anyone if they don't abide by it," he said.

But three vendors say the language appears to be legally binding and they assume they will be disqualified as bidders if they ignore it.

Two potential bidders say the disclosure prohibition paragraph is unconstitutional and a substantial interference in their ability to compete for the contract. One of the bidders said the language throws into question whether his company will spend the considerable sums required to prepare and enter a bid.

"The way I read it," says Joseph A. Schwartz III, who represents a computer company called Scientific Games, "if you're going to protest before the Board of Public Works without the lottery's permission, you've violated the rule. That's nuts."

Mr. Schwartz said his company is concerned that some requirements established by the proposal virtually disqualify his company from bidding. Though he declined to be specific, he said the requirements put his client at a distinct disadvantage -- and thereby enhance the competitiveness of another vendor.

Bruce C. Bereano, who represents G-Tech of Providence, R.I., another potential vendor, went further. The gag rule and various other aspects of the proposal, he said, suggest that the agency has already made up its mind about who should get the contract. Since vendors are permitted to raise their grievances only with the lottery agency, Mr. Bereano says, there are no "checks and balances" -- there is nowhere outside the Lottery to lodge an appeal.

Mr. Bereano alleges that various provisions of the contract favor Control Data, which currently supplies and maintains the lottery computers, by giving Control Data credit for equipment already in the lottery's possession.

Alan M. Rifkin, who represents Control Data, said he would not risk violating the gag order by discussing the contract.

"It's inappropriate in the midst of the bid process for me or anyone at Control Data to comment publicly," Mr. Rifkin said. "It's our job at this point to respond fully and faithfully to the language of the bid proposal, and we fully intend to do so."

Deputy Attorney General Dennis M. Sweeney said the gag language "certainly is not a routine provision" in Maryland state government contracts.

Delegate Timothy F. Maloney, D-Prince George's, whose subcommittee oversees the lottery agency budget, said he plans to hold hearings to examine the bid process and to explore the reasons for the disclosure prohibition.

Paragraph I of the official "Request for Proposals" says: "Until a contract resulting from this RFP is executed, no employee, agent, or representative of any vendor will make available or discuss its proposal with the press, any elected or appointed official or officer of the state of Maryland, any commission member, or any employee, agent or representative of the Lottery, unless specifically authorized to do so in this RFP or in writing by the issuing officer for the purpose of clarification, evaluation, and or negotiation."

Though it appears to bar discussion of bid proposals with legislators, Mr. Maloney said, "We expect to hear from all parties."

He said he has asked Gov. William Donald Schaefer to review the RFP to see if it should be rewritten. Mr. Schaefer's press secretary, Paul Schurick, said, "The governor is not involved in the RFP, but he's aware of the sensitivity of the project."

The project is sensitive for several reasons. It involves an agency whose operation has always been cautiously handled because it deals with so much of the public's money, hopes and dreams.

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