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Monday, March 29, 2010

Procurement controversies -- NSW, Australia

NSW govt defends Lotteries sale
The 40-year contract has been awarded to Tatts Group, which The Sydney Morning Herald newspaper reported on Tuesday lodged only the third highest bid, leaving rival bidders concerned.

On Tuesday, the Herald reported that original bids came from Tatts Group at $700 million, G-Tech at $730 million and Centrebet at $750 million.

It said Tatts Group then boosted its bid to $850 million in a package to include unclaimed prizes, estimated to be worth some $200 million over the life of the contract, the report said.

However, within hours of the paper's publication, Acting Treasurer John Hatzistergos shot down the report.

"Tatts was the largest bid," Mr Hatzistergos said in a statement.

Mr Hatzistergos denied on Tuesday that Tatts had been given preferential treatment.

"Every shortlisted proponent in the NSW Lotteries transaction process received identical information and bid instructions," his statement said.

"Bidders were also provided an opportunity to bid on any other basis they chose, and all bidders availed themselves of this opportunity."
Auditor to investigate allegations of impropriety in Tatts purchase
Auditor Peter Acherstraat's office has released a statement saying that the deal would be scrutinized, although investigations would "take time" to be completed.

The state appointed investment bank which oversaw the sale process, Goldman Sach's, has been accused of having previous business dealings with Tatts, especially with regards to a merger with Unitab four years ago.

The state opposition in particular has expressed concern over the deal, with shadow treasurer Mike Baird demanding that the state treasurer publicly prove the deal was above-board.

More on this story:

NSW Lotteries sale hits legal snag
A critical, eleventh-hour change to the deal between the State Government and the Tatts Group breaches the legislation that allows the sale.

The Government announced its intention to sell NSW Lotteries last year, but told prospective bidders it would not include unclaimed prizes.

The Acting Treasurer John Hatzistergos says the Tatts Group was the only one which put in what is called a non-conforming bid, offering $850 million if the Government threw in the unclaimed prizes.

That bid was accepted.

The problem is the legislation permitting the sell-off had already gone through Parliament and it says the Government will keep that unclaimed prize money.

But a spokesman for the Treasurer says he has legal advice saying there is discretion in the legislation that would allow it to ignore the breach.

But a rival bidder has legal advice saying that would be against the spirit of the law.

Under US procurement norms, it is improper (illegal) to alter the terms of the solicitation midstream. Any bid (tender) which fails to stick to the terms of the bid is non-responsive, and must be disregarded.

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