Soiled Dealings Schaefer Steps into Lottery Mess With a cast of superstar lobbyists in action, it is no wonder procurement law got twisted into a pretzel.

Barry Rascovar

November 18, 1990|By Barry Rascovar

AS GEORGE BUSH might say, Don Schaefer has put himself in ''deep doo-doo.'' No matter which way he moves, he could end up with soiled shoes.

For the best of motives, Mr. Schaefer intervened in the award of a $75-million state contract for new lottery computers. He thus placed himself squarely in the midst of an unsavory controversy reminiscent of scandals associated with Spiro Agnew and Marvin Mandel.

High-powered lobbyists have succeeded in subverting the state law designed to insulate contract awards from political favoritism. Instead of choosing a lottery-computer vendor on the basis of technology and price, the decision now could hinge on which firm has the best-connected lobbyists.

Million-dollar lobbyist Bruce Bereano and former Governor Mandel seem to be leading in that race.

They fomented legislative discontent over the Lottery Agency's handling of this contract, got the award postponed and then persuaded the governor to intervene not once but twice to champion their position.

That's political clout. Their actions have a rival high-powered lobbyist, Alan Rifkin, wringing his hands, and a third major lobbyist, Jay Schwartz, upset over the emergence of politics rather than technology as the deciding factor.

Messrs. Bereano and Mandel teamed up on behalf of GTECH, a Rhode Island firm which has played political hardball on other states' lottery contracts. Mr. Rifkin represents the incumbent vendor, Control Data. Mr. Schwartz works for Scientific Games (Bally). Another superstar lobbyist, James J. Doyle Jr., represents General Instrument.

With a cast like this, no wonder the procurement law has been twisted into a pretzel.

Each company has its own version of what's gone wrong.

Control Data is alarmed because the state's normal procurement process has been junked. The challengers say the ground rules were designed to favor the incumbent vendor and that an impartial consultant's recommendations were ignored. Legislators, meanwhile, complain that lottery officials aren't competent to handle this high-stakes competition.

This isn't the first time a Maryland governor has been embroiled in a contract award controversy. In 1973, Spiro Agnew resigned as vice president after having demanded and received -- while governor -- kickbacks from companies in exchange for state contracts.

Four years later, Harry Hughes resigned as transportation secretary to protest alleged political tampering by then-Governor Mandel in awarding a $26-million mass-transit contract. (Mr. Hughes was elected governor the next year, running on an anti-corruption platform.)

These incidents led to passage of reform legislation to stop politicians from interfering in the selection of state contractors.

But now, Mr. Schaefer has reintroduced this political element. Three political animals -- the governor, the state comptroller and the state treasurer -- have the power to decide the winner of the $75-million lottery contract. It is a situation tailor-made for pressure lobbying.

Ordinarily, these three officials, who make up the Board of Public Works, would never get involved in the lottery contract.

The Lottery Agency would draw up a request for proposal; a selection panel would judge the entries based on technical merit and price, and the best combined bid would win. If a losing company wanted to protest, it would go before the State Board of Contract Appeals.

Mr. Schaefer changed all that. He apparently agreed with protesters that the Lottery Agency had botched the job and favored Control Data. He set up two evaluation panels to judge applications and report to his budget secretary, who would give his own verdict to the Board of Public Works.

That made Mr. Schaefer, Comptroller Louis L. Goldstein and Treasurer Lucille Maurer the arbiters.

This was what Messrs. Bereano and Mandel had sought. There was one problem: ground rules still seemed to favor Control Data. They began a campaign to persuade the governor to intervene once more.

On election day, all vendors but Control Data said they were dropping out of the bidding because of the unfairness of the ground rules. Mr. Bereano had these announcements, all similar in tone, faxed to the governor's chief of staff. He made other efforts to contact the governor. As an exuberant Schaefer supporter and a major Schaefer fund-raiser, Mr. Bereano has plenty of contacts. So does Marvin Mandel.

One day later, Mr. Schaefer made Mr. Bereano a happy lobbyist: the governor postponed the submission deadline and altered the ground rules just as GTECH and the other protesters had requested.

Instead of untangling this mess, Mr. Schaefer made the knots worse. Instead of setting up a new procedure removed from politicians and lobbyists -- as the governor hoped to do -- he has given the award process a distinctly political flavor.

This creates a major-league headache for Mr. Schaefer and the Board of Public Works. State procurement laws have been punctured, setting a dangerous precedent. Lobbyists are enjoying a lucrative field day. The entire matter seems certain to wind up in court, regardless of who wins the lottery contract.

What a mess. Mr. Schaefer now has a most difficult task. He's got to extricate himself from this quagmire -- without stepping in any more ''deep doo-doo.''

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