Lobbyists' duel over lottery contract tests state procurement

December 23, 1990|By C. Fraser Smith | C. Fraser Smith,Fraser Smith covers Maryland politics for The Sun.

ANNAPOLIS — "I seen my opportunities and I took 'em."

--Tammany Hall Boss George Washington Plunkitt, explaining what he called "honest graft."


Boss Plunkitt might have us believe he waited for opportunities to arise. The possibility exists, of course, that he created them and then took advantage. What's the point of being a boss otherwise?

Given the propensity of politics to assert itself in alarming ways, advocates of good government have passed laws and set policies over the years to give everyone the same opportunities and the same ability to take advantage of them -- to eliminate contradictions in terms such as "honest graft."

The idea was all-American: Rely on laws, not on men; establish good processes and apply them with good judgment.

Maryland's procurement law, passed in 1981 after ten years of embarrassing disclosures about how business was done in this state, is a good example of such a process. Spiro T. Agnew had resigned his vice presidency in disgrace amid charges of favoritism and kickbacks in the award of contracts in Maryland. Then-Transportation Secretary Harry R. Hughes alleged in 1977 that then-Gov. Marvin Mandel succumbed to political favoritism in the awarding of huge subway contracts.

A new process seemed imperative. And since the new procurement law was passed, hundreds of millions of dollars' worth of goods and services have been purchased quietly and efficiently by the state without a hint of scandal.

Recently, however, with a clutch of lobbyists seeking to create or retain opportunities for their clients, the state's attempt to buy $75 million worth of computers for the State Lottery Agency has been leveraged out of the procurement process and may now be caught in the toils of politics.

Gov. William Donald Schaefer, responding to complaints from lobbyists and legislators, appointed two blue-ribbon panels to review the bids, changed some of the bid specifications and made the Board of Public Works responsible for the final decision.

Some of the participants believe Mr. Schaefer over-reacted, changing the process materially by making himself and other members of the board responsible for substantive procurement decisions -- as opposed to approving the decisions of others or returning that decision for further consideration by the procuring agency. The distinction may seem abstract, but the reasons for the process are practical and pragmatic.

In a sense, the governor is always the final authority in such matters. Mr. Schaefer's spokesman, Paul E. Schurick, says the changes represent merely an extension of the current system. Mr. Schaefer says he wanted to de-politicize the process and insulate it from charges that favors were being done.

That, of course, was the objective of the 1981 law which sought to:

* Provide an orderly process for procurements, setting forth responsibilities of the state and the vendors.

* Establish appeal procedures;

* Keep substantive decisions in the procuring agencies;

* Set up a Board of Contract Appeals to settle disputes.

Intrinsically political entities such as the Board of Public Works -- run by the governor -- were deliberately kept out to prevent even the appearance of interference.

The objectives were clear: If vendors have confidence in the system they will compete for the state's business. And competitive bidding is relied upon to produce the lowest cost for the state and its taxpayers.

So what happened with the Lottery computer deal? Why was it removed from the comforting embrace of the law?

Bruce C. Bereano and Alan M. Rifkin happened.

Mr. Bereano, the highest paid lobbyist in Annapolis and its most active political fundraiser, represented a computer company called GTECH of Providence, R.I. GTECH wanted the lottery business -- owned then and now by Control Data Corp. represented by Mr. Rifkin.

Control Data has held the computer contract for nine years. Its position, Mr. Bereano said, gave it an unfair position as a competitor for a new generation of computers.

"It is absolutely naive to think that a user agency like the Lottery would act in an impartial way. If for nine years you're going to the same coffee machine and the same water fountain with a company's representative, you have a pretty close relationship. You risk an outcome that is not in the best interests of the state unless you take the procurement out of that agency's hands," he said.

Lobbyist Bereano set out to do precisely that. His efforts illustrate the degree to which lobbyists create opportunities for their clients. In this case -- since he had to dislodge a competitor -- he called it "cracking the egg."

"He should remember what happened to Humpty Dumpty," said Gerard Evans, Mr. Rifkin's law and lobbying partner.

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