Lottery's Low Bid

February 16, 1991

On the surface, the stunningly low bid on the Maryland Lottery Agency's lucrative computer contract represents a good deal for the state. But surface appearances can be deceiving. State officials should keep in mind the age-old principle of commerce: Caveat emptor ("Let the buyer beware").

The yawning gap of more than $20 million between the low bidder, GTECH of Providence, R.I., and Control Data Corp of Minneapolis raises the immediate concern that this may have been a "low-ball" bid by the winner, which will inevitably lead to add-ons, change orders and "unanticipated overruns." That has been a frequent occurrence in government procurement contracts.

An equally troubling aspect is the way the state plans to pay GTECH for this new equipment. The new vendor will receive a percentage of lottery revenue. It will have a financial interest in expanding lottery games -- and other gambling that can be linked to lottery terminals, perhaps even including off-track betting. This could have unanticipated -- and unwelcome -- results.

The two special panels set up by the governor to evaluate the lottery bids did an admirable job analyzing the technical and financial proposals. Unfortunately, by the time Gov. William Donald Schaefer created these panels, the lottery bidding process had already been badly tainted. Heavy-handed political lobbying played too large a role in determining the eventual outcome.

GTECH waged an intense battle in the General Assembly to force the Lottery Agency to seek new computer terminals, hiring million-dollar lobbyist Bruce Bereano and former Gov. Marvin Mandel to push their case. They then pressed the governor to bypass the normal state procurement process and establish special rules more favorable to their client. It proved a successful strategy.

Now that GTECH has won the bidding war, will its lobbyists seek to expand lottery-related gambling to increase their clients' profits? Will they exert new-found influence in the operations of the Lottery Agency? Will they use their clout with legislators and the governor to enhance the contract?

We hope not. In negotiating a definitive contract with the low bidder, lottery officials should seek guarantees that GTECH will live up to its $60.06 million proposal without any costly changes down the road. We also hope we've seen the last of the lobbyists in lottery decision-making. They have done enough damage to the integrity of Maryland's procurement process.

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