Schaefer's lottery changes defended But contractor calls bid process tainted

November 30, 1990|By Thomas W. Waldron and Joe Nawrozki | Thomas W. Waldron and Joe Nawrozki,Evening Sun Staff

Gov. William Donald Schaefer's personal involvement in the Maryland Lottery Agency's effort to purchase a new $75 million computer system out of the normal bidding process is legally appropriate, a spokesman for the governor said today.

Paul Schurick, press secretary for Schaefer, said the state attorney general has assured the governor and the other two members of the state Board of Public Works that procurement policies have not been violated and that Schaefer's actions "pass legal muster."

Yesterday, the lottery agency's effort to buy the new multimillion-dollar computer system hit another snag as one of the potential bidders filed an official protest charging that the bidding process has been tainted.

The protest by Control Data Corp., filed with the state yesterday, threatens to disrupt the bids that are due Dec. 10.

The protest is the latest problem in a year-long bid process that has turned political because of the involvement of former Gov. Marvin Mandel, some legislators, four of the highest-paid lobbyists in Annapolis and Schaefer.

In his comments today, Schurick said the complaint filed yesterday will proceed "through a well-established process and will take its normal course."

He said that Schaefer, state Comptroller Louis L. Goldstein and Treasurer Lucille Maurer -- the members of the Board of Public Works -- "all have been assured by the attorney general's office that the changes made to date pass legal muster."

Carroll Hynson, spokesman for the lottery agency, today refused to respond to any questions relating to the case and referred queries to the governor's press office.

Spurred by complaints from potential bidders and legislators, Schaefer earlier this month took the extraordinary step of jumping into the bid process. He appointed two panels to review the computer bids. And Schaefer took the ultimate selection away from the lottery agency and gave it to one of his closest advisers, budget Secretary Charles L. Benton Jr., and the Board of Public Works, which Schaefer chairs.

In its protest, Control Data asks that those changes be undone to protect the integrity of the original process.

"While CDC has only the highest respect for the governor, the Board of Public Works and the other officials now empowered to select the lottery vendor, we are quite concerned about the new process and procedures," the bid protest states.

The company, besides filing the protest, alerted Attorney General J. Joseph Curran Jr. to the possibility that the changes were sparked by collusion among other potential bidders. Curran says his staff will be watching the process for possible anti-trust violations.

Before the protest was filed, Schaefer bristled at charges that he has politicized the process.

"We've tried in every way possible to have competition," Schaefer said. "No one should have an advantage over the others. When you have high-priced lobbyists, you have to be doubly careful."

At stake is the contract to provide a new lottery computer system, which could cost as much as $75 million. With a new system, the lottery can feature more complicated games, add machines around the state and generate more revenue, officials said.

Control Data supplied the computers now used by the lottery and has operated them for the last decade. At least three other companies have shown interest in supplying the new computers, although most analysts believe the stiffest competition will come from GTECH, a Rhode Island company that has done battle with Control Data over lucrative state lotteries across the country for years.

"A lot of odd things go on in these kind of procurements," said Cato Carpenter, an analyst who keeps tabs on GTECH and its competitors for Alex. Brown and Sons Inc., a Baltimore investment firm. "There's a lot of mudslinging by the vendors."

The lottery agency, worried about declining revenue, decided last year it needed a new computer system. Even before the agency made a final decision, major computer companies hired influential lobbyists to get involved in the selection process. Control Data hired Alan M. Rifkin, Schaefer's former legislative officer who is now a lobbyist. GTECH hired both Mandel and Bruce C. Bereano, the highest earning lobbyist in the state capital. Other companies hired long-time Annapolis lobbyists James Doyle and Joseph A. Schwartz 3rd.

Normally, procurements are handled quietly by state bureaucrats. The lottery contract has been different, mainly because so much money is at stake and because of the high-profile lobbyists on the various sides.

Wary of possible political jockeying, the lottery agency last spring spent $150,000 to hire an outside consultant to help it develop a set of specifications for a new lottery system. In September, the lottery agency issued an official Request for Proposals for a new computer.

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