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.