PROVIDENCE — To go out to bid or not to go out to bid.
That was the question that emerged Thursday during the first legislative hearing on a proposed 20-year, $1-billion extension of IGT’s contract to run traditional lottery games and provide slot machines in Rhode Island.
Members of Governor Gina M. Raimondo’s administration made the case that passing legislation to extend IGT’s state lottery contract for 20 years would be a more transparent process than going out to bid.
But members of the Senate Finance Committee pushed back, questioning whether a competitive bidding process for an extension worth $1 billion would provide more efficiencies and a better value for Rhode Island taxpayers.
Marilyn Shannon McConaghy, chief legal counsel for the state Department of Revenue, said that if the state put this contract out to bid, there would be no public hearings and none of the input that the General Assembly is about to provide on a bill introduced on Raimondo’s behalf.
Vetting and voting on the bill in the House and Senate will be “much more open and transparent,” McConaghy said. “The reason for that is the seriousness of the level of contracts that you consider. You are not talking about furniture or paper or pens or billboards. You are talking about things that have a significant impact on the taxpayers of this state.”
McGonaghy maintained it would be expensive and time consuming to go out to bid.
“A bid process could result in less favorable contract terms to the state,” she said. “IGT could move its North American headquarters outside the state of Rhode Island, and we could lose 1,100 FTEs [full-time equivalents] that IGT is currently required to maintain under that contract.”
But Senator Louis P. DiPalma, a Middletown Democrat, said the federal government contracts for billions of dollars on a daily basis. “Typically competitive bidding provides the best value to the taxpayer,” he said.
DiPalma said he would like to know if other states have done competitive bidding in this area and how long it has taken those states. He also questioned the administration’s suggestion that it would take three-and-a-half years to go through a bid process. “We know what we need and what we want,” he said.
Senator James A. Seveney, a Portsmouth Democrat, said the defense business contracts for complex systems all the time, and one of the strategies is to bid different parts of a contract rather than bundling them in a way that allows bidding by just a few companies.
“I would suggest to you that the efficiencies or inefficiencies would come out in the analysis of the solicitation responses,” Seveney said.
Senator Walter Felag, a Warren Democrat, and Senator Frank Cicccone, a Providence Democrat, raised questions about how many jobs IGT would keep in Rhode Island, whether the proposal would water down job commitments to include contractors or full-time employees, and how much those jobs would pay on average.
Also, Felag pointed out that while IGT does have a “principle operating facility” in Providence, its corporate headquarters are in London.
Senate Finance Committee Chairman William J. Conley, an East Providence Democrat, vowed to delve into the details of the proposal in the weeks ahead.
“It is the intention of the committee to conduct the most deliberative hearing process possible,” he said. “The goal is to be transparent, comprehensive, and participatory.”
The committee has set hearings for Oct. 1, 15, 22, and 24, and Raimondo plans to testify on Oct. 1, Conley said. The public can submit testimony via a website that includes documents about the proposal: www.SenateLotteryContractHearings.com.
Also, the House of Representatives has scheduled hearings on the IGT proposal for Sept. 24 and Oct. 3.
Meanwhile, the Twin River casino company has announced it is partnering with Camelot Lottery Solutions, an international lottery vendor, to try to challenge IGT’s proposal.
Twin River Executive Vice President Marc A. Crisafulli and Camelot CEO Wayne Pickup wrote to Raimondo and legislative leaders on Wednesday, saying they would create 1,100 new jobs in Rhode Island and provide a $100 million guarantee. Camelot recently began operating the Illinois lottery system, succeeding a group led by IGT.
“You will note that the terms contained are significantly more favorable for the lottery and thus the taxpayers than are currently being discussed,” Crisafulli and Pickup wrote. “As a result, it is in the best interest of Rhode Island to proceed with an open, competitive bidding process.”
At the State House on Thursday, IGT Senior Vice President Robert Vincent called the Twin River/Camelot proposal “an incomplete PR stunt designed to distract.” He said Twin River is not a technology provider and Camelot buys its technology from IGT in the United Kingdom.