All Bets Off on the City's Lottery Contract Who will control D.C.'s numbers games?

Take a Number: Gray has summoned a long list of witnesses for lottery contract hearing.
Darrow Montgomery

There are lots of savvy observers of D.C. politics. There’s Jonetta Rose Barras, who brings moral outrage to procurement issues like few others. Then there’s longtime radio voice Mark Plotkin, who can go as deep and wide on the District as anyone. And, of course, LL is no slouch himself.

Yet a nod must go in the direction of GTECH. G-who, you say?

GTECH is a Rhode Island-based firm that bills itself as “architects of gaming.” True to its corporate identity, GTECH has for decades provided the technology behind the District’s lottery. A gig that runs for 10 years, the contract has been known to yield upward of $13 million per year in profits—profits that GTECH has long split with local partner Leonard Manning and his Lottery Technology Enterprises.

But when Manning became a political liability, GTECH’s expertise on D.C. affairs shone through on the team that it put together to replace him. From the mayoral camp, it recruited Darryl Wiggins, owner of an office-technology business and a longtime political confidant of Mayor Adrian M. Fenty. From the council camp it snagged Lorraine Green, a close friend and ally of Council Chairman Vincent C. Gray, who also happened to have run the city lottery for years. Lending an air of disinterested respectability to the whole enterprise is Rod Woodson, the Holland & Knight partner. And advising the bunch is Tom Lindenfeld, the political hand who has done work most famously for Fenty—but also for Kwame Brown and other key councilmembers.

Let’s see—established gaming company with a dream team of locals in supporting roles. How could they lose?

Somehow. In September, the Office of the Chief Financial Officer announced that the winner of the contract would be Intralot, a Greek multinational corporation that opted not to bid with a local partner.

Of course, the process wasn’t quite that simple. The contract to run the D.C. lottery has been a municipal telenovela dating back to the spring of 2008. That’s when the first round of bidding concluded. The winner of that contest, too, was Intralot, though it was then partnered with local firm W2Tech, owned by mayoral ally Warren C. Williams Jr. and wife Alaka Williams. In this most recent round, it had dumped the Fenty-connected Williamses (by outward appearances, at least), yet still emerged with the W—beating out not only GTECH, but a third team involving Georgia-based Scientific Games.

What did the GTECH team lack? As it turns out, their Dream Team failed to get certified as a local/small/disadvantaged business by city contracting authorities in time for the bidding. Such a certification would have potentially given the GTECH crew 12 preference points, Intralot won the bid by 11 points.

But why didn’t the Dream Team get certified? The official line is that the players didn’t have sufficient experience with lottery technology. But the process again has raised such questions that the D.C. Council is now again sticking its legislative nose in the matter.

Next Tuesday, Gray will chair a hearing on the lottery rebid, and all the bidders and government players are invited. “We want to have a clearer undertstanding of all the dynamics getting to the selection that was made,” Gray says. “We’ve heard various things, some of that may be unfounded rumor, some of it may be true....I think we’re just trying to satisfy ourselves of the soundness of the process and preparation and the adequacy of those who are going to run our lottery.”

If the council doesn’t vote to approve the contract at its Dec. 1 meeting, the competition will go on. Gray says he is expecting a quick resolution, but one player in the contracting saga isn’t: “I would bet they have to get it out a third time.”

Meanwhile, the winner in this story is Manning, whose Lottery Technology Enterprises continues to hold the lottery franchise while all the politicking works itself out. Indeed, the rigmarole has let LTE off the hook. In 2008, the company was found liable for security breaches that cost the city millions of dollars and was ordered to pay nearly $2 million in damages.

According to sources consulted by LL, Manning reached a settlement with the CFO’s office last month on the payout. Under the settlement terms, LTE doesn’t lay out any cash. Instead, the company contract has simply been extended for another year, and rather than take its usual 4.2 percent off the top of lottery sales, LTE agreed to take a mere 3.1 percent.

Had the contract been awarded to Intralot following the original bid, Manning would have been forced to pay any damages out of his own pocket.

 

 

Who’s a Law-Breaker?

 

When Ximena Hartsock’s nomination to be parks-and-rec director was disapproved by the D.C. Council in September, councilmembers jawed incessantly about how the Chilean native had broken the law. To wit: that she had fired dozens of child care workers without following city privatization laws, or obeying a council request to provide more information on the firings.

In response, the city argued that due to underenrollment, the money simply was not there to keep the child care programs in place—necessitating a reduction in force. And every time the “law-breaker” talk popped up, Attorney General Peter Nickles has shot it down as a canard.

So did Hartsock break the law? The jury’s still out.

At least eight former Department of Parks and Recreation (DPR) employees filed affidavits as part of a lawsuit claiming that they were told to stop accepting applications from parents. The result of the orders, which came from DPR functionaries, had the result of keeping the city child care programs underenrolled—and thus forcing layoffs that weren’t strictly necessary.

Lawyer Donald Temple, who’s pressing the lawsuit against the city, calls it a “cold, calculated, and manipulated scheme of numbers.” By the time the program was effectively privatized, with the city handing it over to the United Planning Organization, some 268 kids were waiting to be placed in the DPR child care programs.

Temple’s willing to go sound bite to sound bite with Nickles: “It’s an egregious violation of the law,” he says, referring not only to general city privatization regulations, but council measures demanding an end to the layoffs.

Now, should the District government be in the business of providing child care? Perhaps not, but the Fenty administration never made the case to the council or to the public that the programs ought to be privatized. They simply fired everyone, using budget cuts as the rationale.

The lawsuit was tossed out of federal court last month by U.S. District Judge Thomas Hogan on jurisdictional grounds. Temple has refiled the case in Superior Court.

 

 

Political Potpourri

 

• In recent months, the D.C. Democratic State Committee has come under the disapproving glare of city campaign finance officials. That glare remains trained on the local Democratic umbrella organization.

According to an interim audit report released Nov. 9, the city campaign finance office did not accept explanations offered by DCDSC officials for fundraising irregularities. Audit officials maintain that the committee needs to return some $37,000 to donors, and it may be subject to fines.

At issue was lax reporting of receipts and expenditures by the DCDSC but, more important, questionable practices in fundraising for last year’s Democratic National Convention.

Top DCDSC honchos, including chair Anita Bonds, set up a separate organization to raise funds for the District’s DNC delegation. But they did so in some instances by invoking the name and authority of the DCDSC itself, raising issues as to whether the fundraising was subject to city contribution limits and disclosure regulations.

David Meadows, the DCDSC’s executive director, declined to comment on the report’s contents. “This is an ongoing investigation, and we look forward to a resolution,” he says.

Last Thursday, DCDSC members gathered for the group’s regular monthly meeting. The finance inquiry has deeply split the membership already, and members discussed the report for more than an hour without coming to a resolution on how to proceed. The $37,000 that OCF holds should be returned exceeds what’s currently in the DCDSC coffers. Action has been delayed until the next meeting, on Dec. 3.

The DCDSC has until Dec. 9 to respond to the interim findings, before a final report—and possible sanctions—are issued.

• A Fenty “running buddy” has decided not to enter public service after all.

Omar Nour, an extremely fast member of Fenty’s AOAT (“All Out All the Time”) running team, had been nominated by Hizzoner to a seat on the Board of Elections and Ethics no less than three times this year.

Back in June, the council held a hearing on his nomination, but it didn’t go well for Nour. Ward 3 Councilmember Mary M. Cheh pointedly questioned him on his professional qualifications for overseeing city elections, which are thin by any standard. She’s declined to move his nomination to the full council.

According to a letter posted to the council last week, Nour wrote that he’d be withdrawing his name due to new obligations that would require a bunch of overseas travel.

LL did a little investigating—of Nour’s Facebook account—to see what the new obligations might be. How’s this for an excuse: Nour’s engaged in a bid to make the 2012 London Olympics as part of the Egyptian triathlon team.

But for those lamenting the loss of cardiovascular fitness on the city elections panel, fear not: In a surprise replacement of Errol Arthur, Fenty has nominated Mark Sommers to chair the elections board.

Sommers, a trademark lawyer, is a member of D.C. Velo, Fenty’s bike team.

• Ward 5 Councilmember Harry Thomas Jr. came under fire earlier this fall when a hearing he chaired on Hartsock’s confirmation as parks director degenerated into racist and sexist ramblings—both on and off the council dais.

On Monday afternoon, Thomas and Hartsock met again in a council hearing room, this time to discuss the story behind the tens of millions in parks contracts shipped out to the D.C. Housing Authority before being managed by a mayorally connected firm.

There were a few heated moments in Room 412, but nothing approaching racism or sexism from Thomas, who was again chairing the hearing.

Perhaps he’d gotten it out of his system. Just prior to Hartsock’s testimony, Thomas excused Deputy Mayor for Planning and Economic Development Valerie Santos from the witness table after a contentious round of questioning.

Said Thomas to his colleagues, “We’ve tried to ride this pony to the end of this race.”

Cheh replied to Thomas: “Mr. Chairman, I think we can quit with that analogy.”

 

Get Loose Lips Daily every weekday morning in your inbox—sign up at washingtoncitypaper.com/blogs/citydesk. Got a tip for LL? Send suggestions to lips@washingtoncitypaper.com. Or call (202) 332-2100, x 244, 24 hours a day.

Correction: Due to an error by reporter Mike DeBonis, this column misreported that Intralot won the city lottery contract by a single point. In fact, Intralot won by 11 points; had the competing GTECH group received full small-business certification from the city, worth 12 points, it would have won by one point.

Our Readers Say

A reverent obituary for a fallen leader.
N o v e m b e r 2 0 0 9

The fall of freshman college year,
I stepped about the dining hall
not feeling that I fitted well
within the ivy covered wall,

I was unsure of where I'd fit
and in an isolation lived
but there, on top in stacks of press
I saw the BLADE, an outward hand

was gesturing to me to be
a welcomed soul among the more
and many that as yet unseen
we're there already all around.

From freedom of the printed word
and access to its mirth and taunts
and introspection, guidance printed,
strident editorial,

I found my way, when I was lost
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and ink, art, liberty displayed,
those decades back upon the BLADE.

John-Paul Boisvert
North Potomac
Yarn!!!!!
Dear LL:
1. The lottery issue is sooooo booooorriiiiiiiinnng! Your coverage is good, but the issue itself is a snoozer.
2. Fascinating how Fenty is always appointing running teammates, but how exactly do these people get to join his workout circle in the first place?
Thanks.
I hope that the dc media get some backbone and cover the real stories of mismanagement of rhee and fenty
I have been playing dc lottery since its inception and found it to be a fair affair u
until leonard manning gained exclusive control,now the numbers game has been
tampered with so that it can be controlled by programing a computer.
they seem to think the citizens are stupid and cant tell the diffirence of a
real time drawing vs a manuplated sham.they are so bold that very few
people ever win on the scratch games,you win three or four dollars your
money back or you lose.the few winners,1500 or so are xroxed and placed
in outlets to encourage the lie that we can actually win.
When is somebody gonna call bullshit on the Council with this lottery stuff?? The 1st time it was awarded, they were all up in arms because they said the local partner was not qualified. Now that the contract was awarded a 2nd time without a local partner, they are all up in arms because a local partner who specializes in office supplies and copiers was not approved as part of a LOTTERY contract. They don't even try to hide the politics. Give me a break!!!
Benjamin Barnes,

LTE has held the lottery contract for 26 years.

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