Similarities and DifferencesSimilarities and Differencesbetween Managing Simple between Managing Simple and Complex Contractsand Complex Contracts

Presented by Angela Zgabay-Zgarba and Andy MarkerTexas Lottery Commission

Agency OverviewAgency OverviewOperate Lottery and Regulate

BingoUnaudited Sales FY 2012

$4,190,815,913Unaudited Transfers to State FY

2012 $1,153,560,513317 FTE’s

Contracts AdministrationContracts Administration2 Contract Administrators2 Attorneys who focus on

Contracts3 Purchasers1 HUB Coordinator1 Director & 2 Managers Contract Sponsors

TLC ContractsTLC Contracts75 -100 Active Contracts

◦Prime (15)◦High Risk (11)◦Other

Lease Interagency

60 Annual Promotional Event Contracts

Statutes & RulesStatutes & RulesTexas Gov’t Code

◦§466.014◦§466.101◦§466.102◦§466.103◦§466.105Texas Administrative Code◦§401.101 - 104

ProceduresProcedures36 for Purchasing/Contracts/HUB19 govern Contracts

Administration3 specific to Lottery Operator

Contract◦Vendor Background Risk Assessment◦Needs & Risk Assessment

Risk AssessmentRisk AssessmentSolicitation DocumentStatutes & RulesProceduresSecurity and Integrity of Lottery

GamesConflicts of InterestBackground Investigations

Contract ManagementContract ManagementMonthly Disclosure of LitigationBonds and InsuranceContract Sponsor reported issuesAnnual Contract Compliance

meetings with Contract SponsorsCommunication and

Correspondence with ContractorsContract AmendmentsSOW’s or Change Orders

Sanctions & Liquidated Sanctions & Liquidated DamagesDamagesLiquidated Damages in most of

our ContractsSanctions are in many of our

ContractsCompel Contractor PerformanceProvide RemediesSanction, LD & Warning Letters

Lottery Operator ContractLottery Operator Contract$1 Billion over life - $85M+ per

yearOver 1,000 deliverablesChange ordersContract compliance vendorApproximately 70 SanctionsApproximately 10 LD’s

Advertising ContractAdvertising Contract$32 M per yearAdvertising & Media PlanningReportingBilling and invoicingStaffing

Instant Ticket Instant Ticket ManufacturersManufacturers3 Contractors$19.5 M per year Approximately 75% of agency

sales are instant tickets85-90 instant games printed

each year

Simple vs. ComplexSimple vs. ComplexComplex

◦ Bonds and Insurance Required

◦ Long Contract Term◦ Significant Risk

Associated ◦ In-depth Background

Investigations◦ Many Sanctions or

Liquidated Damages◦ Extensive Terms &

Conditions

Simple◦ No Bonds or

Insurance◦ Short Contract Term◦ Limited Risk

Associated◦ Background

Certification◦ Few Sanctions or

Liquidated Damages◦ Minimal Terms &

Conditions

Questions?Questions?