Lottery Agrees to Seek Bids on Scratcher Contract

SACRAMENTO — Saying they were tired of being criticized for awarding non-competitive contracts, a California Lottery Commission majority agreed Wednesday to seek rival bids for a $23-million project to install an automated system for cashing Scratcher tickets.

Commission members acknowledged that they were taking the action reluctantly and only because they feared that recent criticism of their contracting process had damaged the public image of the state-run gambling enterprise.

“The lottery can only withstand so much criticism,” said Director Sharon Sharp, who made the proposal that the contract go out for bid.

Her suggestion was a reversal of her recommendation three weeks ago that a no-bid contract be awarded to the GTECH Corp. of Rhode Island, the company that won a $400-million computer contract earlier this year without competition. At the time, Sharp said she saw no need for competitive bids on the latest contract because there was only one other potential bidder and that company lacked experience in managing the kind of system California hoped to install.

But her assertions were challenged by a Sacramento lawyer who said that a third potential bidder for the contract--Georgia-based Scientific Games--had withdrawn any interest in the project after being told by lottery officials that its bid would “not be welcome.”

Sharp said she believes the accusations are baseless, but they had so damaged the image of her agency that the “only right thing” to do is seek competitive bids. “My job is to protect this organization,” she said.

Commission members said they still think lottery officials did nothing wrong and would prefer to award the contract to GTECH.

“We are a public agency. I would vote otherwise if this were a private corporation,” commission member John Diepenbrock said. Chairman John Price cast the only dissenting vote.

Robert J. Rendine, an official with GTECH, called the commission’s decision an act of bad faith, saying his company had laid all its financial cards on the table after being assured it would get the contract. He said it is now at a competitive disadvantage because its pricing proposal has been made public.

The contract in question will provide for the installation of devices to let Scratcher players cash in winning tickets for small amounts at any Scratcher outlet. Small prizes now must be collected at the store where the ticket was purchased.