Concluding a hard-fought bidding process, the state today selected a Rhode Island firm to supply a new computer system for the state lottery at a projected cost of about $61 million over five years.
In a price discrepancy that surprised state officials, GTECH Corp.'s winning bid was more than $20 million below the only other bidder, Control Data Corp., a New Jersey company that currently runs the state lottery's computer system.
"If they can do it at that price and make money, maybe we have to reconsider our place in this business," said Marcel Helou, vice president for sales at Control Data, who was present in Annapolis today when the winning bid was announced. "A $20 million difference over five years in this business is virtually unprecedented."
Two special committees appointed by Gov. William Donald Schaefer separately weighed the proposals on technical and financial merit and both recommended GTECH. State budget Secretary Charles L. Benton Jr. said he would recommend GTECH to the state Board of Public Works for final approval within the next few weeks.
Concerned about negative publicity surrounding the bidding, Benton today stressed that the process had been fair. The bidding has come under intense scrutiny because of the large amount of money and the involvement of highly paid lobbyists representing both companies -- Bruce Bereano for GTECH and Alan M. Rifkin for CDC.
Owen Cole, chairman of First Maryland Bancorp, Schaefer's appointee to chair the committee that reviewed the financial portion of the bids, said, "It was one of the most impartial, careful, thorough processes I have ever been involved in."
Schaefer took what Benton called an "extraordinary" step in November, when he changed the procurement process to include review by Benton as well as the two committees. CDC has filed a bid protest over those changes.
Continuing their battle over lottery contracts that has ranged across dozens of states, GTECH scored slightly higher than CDC on technical merit -- with a rating of 91.65 to 90.15, on a scale of 100.
On price, however, the discrepancy was vastly larger.
GTECH's lowest proposal was for $61.06 million over five years, compared to CDC's best bid of $81.45 million. Each firm submitted three different price proposals. The final price will be negotiated between the state and GTECH, Benton said.
State officials say a new lottery computer will handle more games and boost state revenues.