Panel to re-examine Arkansas Scholarship Lottery ad contract

Legislature, governor seen at odds

An Arkansas legislative subcommittee will contemplate Tuesday what to do with the Arkansas Scholarship Lottery's proposed five-year, $34.5 million advertising, marketing and public relations contract -- six days after the panel declined to sign off on the proposal.

Sen. Gary Stubblefield, R-Branch, and Sen. Jimmy Hickey, R-Texarkana, said they plan to meet Monday afternoon with Gov. Asa Hutchinson to discuss the proposed contract with public relations firm CJRW.

Stubblefield is the co-chairman and Hickey is a member of the Joint Budget Committee's Performance Evaluation and Expenditure Review Subcommittee, the panel that will consider the contract Tuesday.

Hickey made the motion Wednesday, which the subcommittee approved, not to complete its review of the proposed contract. Lawmakers questioned its cost; whether CJRW had a conflict of interest in working for the lottery when it also works for Oaklawn Racing & Gaming in Hot Springs; and whether the lottery should have issued a request for advertising companies to submit bids rather than request firms to submit their qualifications.

Stubblefield subsequently made the motion, approved by the Joint Budget Committee, to refer the proposal back to the subcommittee.

Asked whether he believes that CJRW would have a conflict of interest in representing both the lottery and Oaklawn, Hutchinson said, "The questions on conflicts and merits are determined by procurement rules and professionals.

"They determined there was no disqualifying factor and awarded the contract. I support the decision," the Republican governor said Friday in a written statement.

Edward Armstrong, director of the Office of State Procurement, has ruled that CJRW is required to disclose any conflicts of interest after it signs the proposed contract -- not before -- under the requirements of the request for qualifications.

[EMAIL UPDATES: Get free breaking news alerts, daily newsletters with top headlines delivered to your inbox]

When the lottery contract was previously available, CJRW didn't seek the work because it viewed the contract as a conflict of interest with its work for Oaklawn. But officials with Oaklawn and CJRW said last year that they no longer consider there to be a conflict.

Hickey, who has served as co-chairman of the legislative Lottery Oversight Subcommittee, said he's considering making a motion Tuesday to recommend that the lottery rebid the contract.

"I am going to sit and listen to the thing, but that would be my suggestion at this point," he said.

Stubblefield said that "the other entities that CJRW represents like [the Department of Parks and Tourism] and [the Arkansas] Economic Development [Commission], those are not gambling entities. But Oaklawn is."

Stubblefield called CJRW's Oaklawn contract a "direct competition" and a "threat," and said he had a problem with awarding the contract to CJRW "when it's not in the best interest of the Arkansas lottery."

Lottery Director Bishop Woosley told lawmakers last week that the lottery also competes with Southland Gaming and Racing in West Memphis and any business that seeks discretionary consumer dollars.

The skirmish over the contract comes about a month after senators on the Legislative Council voted 14-5 not to review a proposed seven-year, $160 million Department of Human Services contract with Youth Opportunity Investments LLC of Carmel, Ind., to run seven youth lockups. Hickey was one of the 14 senators who voted against reviewing the Department of Human Services' contract.

After the senators balked at signing off on the youth lockup contract, Hutchinson said the state would take control of operations at the seven lockups at the start of this year. He also said the lawmakers' decision amounted to a dereliction of the General Assembly's role as a reviewer of state contracts.

Asked whether the dispute over the lottery contract is part of a larger power struggle between the Republican-controlled Legislature and Republican governor over state contracts, Senate President Pro Tempore Jonathan Dismang, R-Searcy, said, "That's probably a fair characterization to some degree."

Dismang said some lawmakers and some members of the news media "mischaracterize our authority and say that we do have the authority for veto power over state contracts." He said a constitutional amendment that he proposed and that voters approved in 2014 to allow the Legislature to require legislative approval of proposed state rules and regulations "is limited to new rules and [regulations] and we do not have any authority over contracts other than to take a look at them and make sure that the procurement process is properly followed."

Asked the same question about a power struggle, Hutchinson said, "There is always a healthy tension between the executive and legislative branches of government. This is the design of our constitution.

"In terms of the legislative review of the lottery marketing contract, I look forward to meeting with those legislators who have raised questions about the contract. This procurement has been reviewed, and I expect the contract award to proceed in a timely way."

Hutchinson said lawmakers approve the state budget, so they have an important oversight role.

"The contract awards must be done without political influence and based upon normal procurement rules," he said. "Once a contract is reviewed, then it's submitted to the Legislature for review. That is the only requirement of current law."

Stubblefield said he is not sure whether lawmakers have veto authority over proposed state contracts.

Hickey said he doesn't view the dispute as part of a power struggle between the Legislature and Hutchinson over state contracting.

"From my viewpoint, it's just that the Legislature is here to make sure that we have a fair process, and the way that they are currently doing our procurement process, I don't believe it is fair," he said.

Hickey said state agencies could implement proposed contracts after lawmakers declined to review them.

But he said, "I don't think that would be wise. I think that would be bad business and bad politics, and I don't think that would sit well with the public."

Regarding the power struggle question, Stubblefield said: "I think it's just a lot of legislators that have become aware of all these contract procurements that they weren't aware of. I have been here six years. I didn't have any idea of the process they go through to get these [contracts], and the way the RFQ [request for qualifications] and RFP [request for proposals] is done and especially the price element of it.

"I think the Legislature just wants more time to be able to make sure that these contracts are done right and they are fair and they are transparent, because there is an element of, if you get to looking at them, it almost looks like some of these contracts could be steered in certain directions."

Metro on 01/22/2017

Upcoming Events