No time for competitive contracts, regulators say

Marc Levy

Friday, Aug. 5, 2005 | 9:57 a.m.

HARRISBURG, Pa. -- State gambling regulators moved Thursday to award emergency contracts to three background-investigation firms, saying there is no time for competitive bidding in the rush to jump-start the nascent slot-machine industry.

With property tax reductions for homeowners dependent on anticipated revenue from slots gambling, Pennsylvania Gaming Control Board officials say they have a broad mandate from Gov. Ed Rendell and the Legislature to license slots parlors as soon as possible.

"Read the (gambling) statute," board chairman Tad Decker told reporters after the board meeting in the state Capitol building. "The statute is perfectly clear. They want us to move."

Under board's regulations, many executives and employees of casino applicants and vendors, from slot-machine manufacturers to food services, and the companies themselves must undergo varying degrees of background investigation. That will require thousands of checks, including forensic accounting investigations into corporate applicants, within the next few months.

The board has known for months that a mountain of background checks will be required, but Decker said members did not begin the formal process of publicly requesting competitive contract bids because they were not sure how they would handle the task.

The board hired its first director of investigations and enforcement, David J. Kwait, only last month -- seven months after members first met.

State law limits use of emergency procurement to periods when a public health, welfare or safety threat exists, or when circumstances outside the control of the government agency create an "urgency of need" which does not permit a longer competitive-bidding process.

The top lawyer for the Senate Republicans questioned whether an emergency applied in this case, or whether the board was using the process "as a matter of convenience."

"It would seem to me much more appropriate to use a fuller and more accountable procurement procedure," said the lawyer, Stephen C. MacNett, who did not attend the meeting. "This is not something that they just discovered."

The state Department of General Services must approve the emergency procurements, although department officials said Thursday they had not been contacted by the gaming board.

Board members voted unanimously to allow Kwait to negotiate contracts with Manuel Daniels Burke International LLC of Alexandria, Va., Omnisec International Investigations Inc. of Chantilly, Va., and Corporate Investigations Inc. of Pittsburgh.

Kwait suggested the companies to board members, saying that he is familiar with the industry from his time working in the FBI and the state attorney general's office. The state police will handle some of the background investigations and Kwait eventually will hire staff investigators.

Thus far, the board has received just one application -- from a manufacturer, whose paperwork fit into a cardboard box the size of a filing-cabinet drawer -- and has yet to approve application regulations for any other class of business.