Lottery pushes support for AWI Computer contract would save taxpayers millions, officials say

November 28, 1995|By Marina Sarris | Marina Sarris,SUN STAFF

The Maryland lottery urged yesterday that top state officials award the agency's computer contract to Automated Wagering International, a deal that could save taxpayers almost $53 million over the next five years.

Lottery Director Lloyd W. Jones said his agency has concluded that the Atlanta based firm has the technical and financial ability to run the state's $1.1 billion-a-year lottery operation. "AWI can do everything that it said it could," he said.

Lottery officials spent five weeks investigating AWI's operations in other states, its corporate finances and its proposal for Maryland.

The proposal will be on the Dec. 6 agenda of the state Board of Public Works, composed of the governor, comptroller and treasurer. If the contract is approved as expected, the state would pay AWI $43.4 million from July 1996 to July 2001 to supply and maintain lottery computers and games. AWI has lottery contracts in eight other states.

The only other bidder, GTECH Corp. of Rhode Island, which currently handles the lottery computer operations, offered to do the job for almost $53 million more, or $96.1 million. That price, recently deemed by the lottery agency to be "exorbitant and unreasonable" under market conditions, is only slightly higher than what the Maryland lottery has been paying GTECH since 1991.

GTECH's current five-year contract in Maryland is worth $93 million. Mr. Jones, however, declined to criticize that deal, which expires in July.

A GTECH spokesman could not be reached yesterday for comment.

The statement about the "unreasonable price" appears in a Nov. 22 letter from the lottery denying a protest filed by GTECH over its apparent loss.

GTECH, the world's leading lottery contractor, charged that the rival firm failed to meet various requirements set by the lottery. Among other things, it complained that AWI's tickets did not have the required four colors on them and that its proposed computer plant in Baltimore did not provide enough parking.

The firm also claimed that the state is wrong to presume that the most favorable price to taxpayers is the lowest one.

Mr. Jones said the protest was "without merit."

In a letter from lottery procurement officer Suzanne Meltzer, the lottery dismissed almost all of GTECH's complaints with little discussion. However, the letter acknowledged that the lottery's requirement for "up to four colors" on tickets was ambiguous.

Even if AWI did not have enough colors on its tickets, the letter said, the problem is not serious enough to overturn the agency's decision.

"We think it is self-evident that, if forced to reject AWI's bid, the lottery would not accept GTECH's bid. It is not in the public interest for the lottery to pay a price that the marketplace has demonstrated is exorbitant and unreasonable," the letter said.

Nonetheless, Mr. Jones said he does not believe the $93 million being paid to GTECH is "exorbitantly high" when compared with what other states have been paying.

Maryland is among those states benefiting from a price war between the GTECH and AWI that has led to lower bids on contracts negotiated in the past year. AWI also has said it offered Maryland a bargain-basement price in part for the chance to run the company's first keno game.

The state used an unusual method of awarding the lottery contract this year. In an effort to avoid charges of political manipulation, which dogged the lottery award in 1991, officials decided to pick a winner based almost solely on price. Typically, price makes up only part of a bid, with companies also receiving points for their technical abilities.

The award to GTECH in 1991 was so controversial that it led to a federal investigation and, ultimately, the conviction of the firm's former lobbyist, Bruce C. Bereano, on unrelated mail fraud charges.

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