HBA-EVB H.C.R. 153 76(R)    BILL ANALYSIS


Office of House Bill AnalysisH.C.R. 153
By: Corte
Civil Practices
4/19/1999
Introduced



BACKGROUND AND PURPOSE 


Lawrence Littwin alleges that the Texas Lottery Commission (commission)
hired him in June 1997 to fill the position of executive director, with an
annual salary of $100,000.  Mr. Littwin alleges that he served as executive
director until October 1997 when he was wrongfully terminated. 

Mr. Littwin contends that the Texas Legislature enacted the State Lottery
Act in 1992, which established the state lottery system in Texas.  Mr.
Littwin alleges that the operation of the lottery was privatized and the
commission was created to oversee the private vendors that operate the
state's lottery, and various safeguards were  provided to ensure that
privatization would not lead to corruption.  Mr. Littwin contends that the
commission contracted with GTech Corporation (GTech) and that GTech  has
operated the state's lottery since 1992.   

Mr. Littwin alleges that Lora Linares, the first executive director of the
commission, was responsible for the oversight of the operation of the
lottery.  Mr. Littwin contends that under Ms. Linares's administration,
GTech engaged in questionable business practices that included putting Ms.
Linares's boyfriend on GTech's payroll, making gifts and other
contributions to Ms. Linares, hiring former state officials as lobbyists
with excessive control, repeatedly violating the contract with the state,
and failing to provide the state with sufficient data to oversee GTech's
operations.  Mr. Littwin alleges that the commission fired Ms. Linares and
voted to put the lottery operator contract up for rebid in March 1997. 

Mr. Littwin alleges that GTech's contract allowed the commission to
terminate the contract with 30 days' notice for any reason and if GTech was
not awarded the contract under the new request for proposal, GTech's
contract could be terminated.  Mr. Littwin alleges that the request for
proposal was designed so that it would be considered "above reproach" and
the bid would be given objectively to the lowest qualified bidder.  Mr.
Littwin contends that GTech was not the successful bidder under the request
for proposal. 

Mr. Littwin alleges that in June 1997, he was hired from approximately 700
applicants to replace Ms. Linares as executive director.  Mr. Littwin
alleges that Harriet Miers, chair of the commission, said of him, "his
extensive business, technical and lottery experience, his knowledge of
lottery products offered by vendors, and his knowledge of the procurement
process will be of great benefit . . . .  He is a man of integrity who will
further develop and maintain strict controls at the commission and insure
operations that are above reproach."  Mr. Littwin alleges that his duties
included oversight of the rebidding of the multimillion dollar lottery
operator contract, oversight of the issuance of the request for proposal in
an effort to solicit bids for the lottery operator contract, and the
exercise of strict control  and close supervision over GTech to ensure
integrity, security, honesty, and fairness in the operation and
administration of the lottery. 
  
Mr. Littwin alleges that when he first began his new position, the state
auditor (auditor) provided him with a highly critical review of the
commission, GTech, and the  relationship between the two. Mr. Littwin
contends that the auditor warned him that GTech had not provided complete
and timely responses to the auditor's request for information and denied
the auditor access to information concerning its contracting practices.
Mr. Littwin purports that based upon the auditor's report and his review of
the current state of affairs, he realized that the commission had not
conducted necessary audits of GTech as required by law and he entered into
a contract with Deloitte and Touche to  perform the necessary audits.  Mr.
Littwin alleges that he also instructed staff members to review the GTech
contract to determine whether GTech had complied with all of the contract
obligations. Mr. Littwin contends that from the staff members' preliminary
investigation, it appeared that GTech had seriously violated the contract
and that the violations gave rise to millions of dollars in liquidated
damages.  Mr. Littwin alleges that he made the commission aware of these
issues. 

Mr. Littwin alleges that he continued a previously initiated investigation
into, among other things, alleged unlawful campaign contributions made by
GTech, through various subterfuges, in violation of the contract.  Mr.
Littwin alleges that ultimately, he was instructed by Harriet Miers, John
Hill, and Anthony Sadberry, members of the commission, to stop the
investigation.  Mr. Littwin contends that the investigation was never
completed.  Mr. Littwin alleges that the commission did not take any action
and to the best of his information and belief, GTech has never been forced
to cure these breaches or pay these penalties.  Mr. Littwin alleges that he
was terminated on October 29, 1997, only five months after he had been
hired.  Mr. Littwin alleges that the commission members did not provide a
reason for his dismissal other than to say they had "lost confidence" in
him.  Mr. Littwin alleges that his personnel files list the reason for his
termination as "reasons unknown" and none of the commission members would
explain what that actually meant. 

Mr. Littwin contends that following his dismissal, Linda Cloud was named
executive director of the commission. Mr. Littwin alleges that Ms. Cloud
quietly canceled the request for proposal, leaving the contract with GTech
despite the fact that GTech was not the successful bidder.  Mr. Littwin
alleges that the audit of GTech that he contracted for was never
performed.  Mr. Littwin alleges that the commission never forced GTech to
pay the liquidated damages under the contract.  Mr. Littwin purports that
the investigation of illegal contributions to state officials has never
been completed. Mr. Littwin alleges that a report prepared and completed by
himself discussing material problems with the commission was never
disclosed to the public.  Mr. Littwin alleges that his termination did not
come as a result of poor job performance, but rather, his attempts to
uphold the laws of the state and eradicate inappropriate activities by the
commission and GTech.  H.C.R. 153 grants permission to Lawrence Littwin to
sue the State of Texas and the Texas Lottery Commission. 
 
RULEMAKING AUTHORITY

It is the opinion of the Office of House Bill Analysis that this bill does
not expressly delegate any additional rulemaking authority to a state
officer, department, agency, or institution. 

SECTION BY SECTION ANALYSIS

H.C.R. 153 grants permission to Lawrence Littwin to sue the State of Texas
and the Texas Lottery Commission (commission) subject to Chapter 107
(Permission to Sue the State), Civil Practice and Remedies Code. 

Provides that the executive director of the commission be served process as
provided by Section 107.002(a)(3) (Effect of Grant of Permission), Civil
Practice and Remedies Code.