Panel backs $34.5M Arkansas lottery ad pact

Lawmakers recommend CJRW after conflict claims aired

Arkansas Scholarship Lottery Director Bishop Woosley (left) listens Tuesday as Edward Armstrong, director of the Office of State Procurement, answers questions from legislators about the lottery’s proposed advertising contract.
Arkansas Scholarship Lottery Director Bishop Woosley (left) listens Tuesday as Edward Armstrong, director of the Office of State Procurement, answers questions from legislators about the lottery’s proposed advertising contract.

The Legislature's Joint Budget Committee should sign off on the Arkansas Scholarship Lottery's proposed five-year, $34.5 million advertising contract with the firm CJRW, its subcommittee recommended on Tuesday afternoon.

The Performance Evaluation and Expenditure Review Subcommittee voted 14-4 to approve a motion by Senate President Pro Tempore Jonathan Dismang, R-Searcy, for the subcommittee to complete its review of the proposed contract. Eleven Republican and three Democratic lawmakers voted for the motion, while two Republican and two Democratic lawmakers voted against the motion.

"The lottery has got to do some advertising and I think there is some things they can clean up on their scoring and procurement," a Joint Budget Committee co-chairman, Rep. Lane Jean, R-Magnolia, said after voting for Dismang's motion.

"I didn't see the evidence that it shouldn't be reviewed. But I think they can do a better job going forward," he said.

The committee's action came after several lawmakers grilled lottery and state procurement directors about how they selected CJRW for the contract that previously was held by Mangan Holcomb Partners. Last week, the subcommittee decided not to review the contract in a voice vote with only Dismang heard dissenting, and shortly thereafter the Joint Budget Committee decided to refer the proposal back to the subcommittee.

After the lottery signaled its intent to award the contract to CJRW, Mangan Holcomb Partners of Little Rock and the partnership of the Little Rock firms of Ghidotti Communications and Vines Media filed protests with the Office of State Procurement. Edward Armstrong, director of the Office of State Procurement, subsequently rejected the protests.

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CJRW also works for Oaklawn Racing & Gaming in Hot Springs, and some lawmakers have questioned whether awarding the lottery's contract to the firm would represent a conflict of interest. Oaklawn and CJRW officials said last year that they don't believe there is a conflict of interest.

"I believe my obligation ... and the obligation of this membership is to ensure that the procurement process was properly followed," Dismang told the subcommittee Tuesday.

"Now, we aren't all attorneys and we are all not in the advertising business, and we are all not aware of who knows who inside that industry," he said. "However, those individuals that bid on this process and were involved in that process had attorneys. They were well aware of the market and what was inside the market and who were the players in the market and who worked for who at some other period of time.

"I think it is very critical ... that at no point, with the attorneys and the expertise, did anyone object to these provisions [of the lottery's request for qualifications of advertising firms] and I have a hard time believing that the attorneys that work for each of these ad firms didn't thoroughly review this RFQ to thoroughly understand what [is in] all of this language, including the successful bidder having to notify if there was a conflict of interest," Dismang said.


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"It wasn't until after this [proposed contract] was awarded these objections were raised," he said.

But Sen. Jimmy Hickey, R-Texarkana, who voted against reviewing the proposed contract, said the lottery's request for qualifications for advertising companies states that any resulting contract is "subject to the state approval process, which may include legislative review and approval.

"So from that standpoint, there has been some that have alluded to the fact that we are overstepping our bounds here. I don't believe we are," he said.

Sen. Bryan King, R-Green Forest, questioned whether Arkansas Economic Development Commission project consultant Esperanza Massana, who is one of the three state officials who evaluated the qualifications of the advertising firms for the lottery, formerly worked for CJRW. The two others are lottery marketing director Donna Bragg and Parks and Tourism Department Tourism Director Joe David Rice.

Lottery Director Bishop Woosley said Massana worked for CJRW probably about 3½ years to four years ago.

That led King to reply: "To me, that's enough to say, 'Wow.'"

Woosley said he knew Massana previously worked for CJRW when he selected Massana for the evaluation committee and "she had sat on previous contracts in the last year or two" involving Mangan Holcomb and CJRW.

But Armstrong said, "Even if you remove her scores, it wouldn't change the results." Mangan Holcomb and the Ghidotti-Vines partnership could have raised the issue of Esperanza's involvement on the evaluation committee and "none of them did," he said.

Yet King said that "it certainly casts it in a light that has major issues."

Armstrong said CJRW is required to disclose any conflicts of interest after its contract with the lottery becomes final -- not beforehand -- under the lottery's request for qualification.

In an apparent reference to CJRW's work for Oaklawn to which lawmakers referred, he said, "It's not as if something that was not common knowledge was withheld, so it's not like the Office of Lottery is going to be operating in the dark because somebody maliciously failed to disclose something."

But Sen. Joyce Elliott, D-Little Rock, who voted later against reviewing the proposed contract, asked of Armstrong, "Don't you need to know before [about conflicts of interest before the contract is awarded] or I am just thinking about that wrong?"

Armstrong said he would guarantee that the lottery's next request for proposals or next request for qualifications would " require disclosure as part of the process."

Elliott said she "couldn't care less who gets this contract. But to try explain to somebody that this is the way we do conflict of interest is a thing that I can't explain to people."

Armstrong said, "It's not a general operating rule. It is not a general operating practice for the state. You can rest assured that that's not how we typically approach things."

Metro on 01/25/2017

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