- The Washington Times - Monday, January 23, 2012

The local half of a joint venture that runs the D.C. Lottery misrepresented its business activities during its bid for a stake in the $38 million contract, according to a report by the D.C. inspector general.

The findings mirror conclusions in a report by The Washington Times that showed Veterans Services Corp. boasted on its website of general contracting experience from federal jobs it did not perform for government clients who had never heard of the company.

“OIG investigators reviewed The Washington Times articles alleging that VSC had misrepresented its previous work experience on its website,” the report by Inspector General Charles J. Willoughby says in reference to the contracting jobs. “The [chief operations officer] acknowledged that VSC, which did not exist during the time periods of these construction projects, did not work on them.”

The official said VSC included the projects in its capability statement to showcase the experience of VSC personnel, “who had worked on these projects in connection with previous employment.”

VSC President and Chief Operating Officer Emmanuel S. Bailey declined to comment on the inspector general’s report.

The report says it was unclear whether the claims were made while Chief Financial Officer Natwar M. Gandhi evaluated the company and were, therefore, immaterial to the city’s decisions.

The inspector general’s report largely clears D.C. officials of any illicit activity in awarding the lottery contract in December 2009, although a lawsuit by a former procurement officer says undue influence by certain council members led the city to scuttle an earlier contract award for political reasons.

While the inspector general was not too critical of city leaders, his report may shake up controversial plans for online gambling, or iGaming, in the District because it sheds new light on how the first-in-the-nation program became law.

The report says Mr. Gandhi inserted options in the contract between its approval in December 2009 and its execution in March 2010 that provided for online gambling, “which materially changed the contract requirements.”

The contract was executed “without adhering to procurement regulations and, as a result, may not have received the best price for the District,” the report says.

Mr. Gandhi “strongly disagrees” with the findings, noting “a form of ‘gaming over the Internet’ was presented by each vendor” who responded to the city’s request for proposals, spokeswoman Natalie Wilson said.

“The IG incorrectly asserts that the [Office of the Chief Financial Officer] improperly added the online gambling provision after the bidding had closed,” she said. “The OCFO’s procurement process was completely transparent and adhered to all District procurement laws and regulations.”

Council member Michael A. Brown, at-large independent, inserted the iGaming provision in a supplemental budget bill in December 2010, allowing it to become law.

The inspector general said Mr. Brown should have alerted the council that he worked for a law firm with a gambling-industry interest, but it did not find that Mr. Brown benefited from the connection or did anything wrong.

Council member Jack Evans, Ward 2 Democrat, has called on Mr. Willoughby to testify on his finding Thursday before the Committee on Finance and Revenue.

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