Lottery computer bidding changes are proposed

October 26, 1990|By C. Fraser Smith

C The Maryland State Lottery Agency's struggle to buy $75 million worth of computer equipment should be taken out of the agency's hands and turned over to the Department of Budget and Fiscal Planning -- a state agency of "independence, integrity and skill," according to Delegate Timothy F. Maloney, D-Prince George's.

In a clear vote of no confidence in the lottery management, the chairman of the subcommittee that oversees the lottery agency's budget said, "We want to make sure we have a truly competitive environment, and the best way to do that is to have greater scrutiny by Secretary [Charles L.] Benton and his computer experts."

The lottery agency is coping with charges that it has conducted its bid process in an atmosphere of secrecy and that its official bid specifications pose competitive disadvantages for all potential bidders except Control Data, which currently supplies and maintains the lottery's far-flung network of computer terminals and central controls.

"If the state ends up with only one bidder," Delegate Maloney said, "shame on us." The concern is that without competitive bidding the state will not get the best price or the best equipment.

A provision in the agency's formal request for bids prohibits any potential vendor from discussing his proposal with anyone, including a member of the state legislature.

The agency says the gag language is not legally binding, but two of the vendors have said they regard it as a serious threat because they have substantive objections to the way the proposal is written.

Michael W. Law, the lottery agency's procurement officer and the only lottery official permitted to speak on the computer issue, could not be reached last night for comment on Mr. Maloney's proposal.

Gov. William Donald Schaefer remained silent on the matter yesterday. His press secretary, Paul Schurick, has said Mr. Schaefer is aware of the issue's sensitivity. But Mr. Schurick said he knows of no action being contemplated by the governor at this time.

Also yesterday, one of the four potential vendors, the Maryland-based firm General Instruments, informed the agency that it would not bid unless changes are made in the specifications.

General Instruments, which employs 900 people at its Hunt Valley installation, told the lottery agency that bidding for the work under the current requirements now would not be "prudent or wise." The company has said it believes the deadline for delivery is too tight, that penalties for non-performance are too high, and that allowances for equipment already in the lottery's possession favors Control Data, the present vendor.

A source familiar with the company's thinking said meanwhile that Scientific Games, another potential bidder, is considering legal action unless provisions it regards as unfair are removed from the request for proposals.

Though he would not comment on the likelihood of a lawsuit, Scientific Games' Maryland representative, Joseph A. Schwartz III, said the agency's approach to providing a backup system puts his client at an immediate financial disadvantage of up to $2 million.

To guarantee continuous operation, the lottery agency has insisted on "a minimum [of] two computer systems," a requirement that is out of phase with most up-to-date computer technology, Mr. Schwartz contends. His system provides a primary and backup system in the same housing -- but the lottery agency is insisting on separate housings.

In a letter to the agency, Scientific Games points out that its hardware has been acceptable in three other states where the company recently submitted bids.

Scientific Games won the contract in Virginia.

"When there is a requirement to provide $1 million worth of redundant hardware, you have to question the expertise or the motives of the agency. I'm not going to question the agency's motives, but I do question its expertise," Mr. Schwartz said.

The other potential bidder is G-Tech, a Providence, R.I., firm. Its representative, Bruce C. Bereano, said he is preparing a "bill of particulars" protesting the bid specifications.

Mr. Schwartz, representing Scientific Games, proposed that the issue be turned over to a consultant hired last winter to take the procurement out of the lottery agency's hands -- and to remove it from the political arena of Annapolis.

The consultant, Batelle Memory Institute of Columbus, Ohio, was given a $150,000 contract to assist the lottery agency in developing its bid proposal.

Baltimore Sun Articles
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.