Lottery Commission
A Report on Procurement Practices at the Texas Lottery Commission
August 1999
Report Number 99-050
Overall Conclusion
The Texas Lottery Commission (Commission) generally follows good business practices to select contractors to run lottery operations and provide other goods and services. However, we noted one instance in which the prior executive director limited the selection factors for the lottery operator contract. This action could have resulted in the State not getting the best value for its money if the contract had been awarded. The authority to limit the selection factors is granted by state law, which allows the executive director to exercise sole discretion over how contractors are selected. The lottery operator contract, which is the single most important contract entered into by the Commission, comprised approximately 64 percent ($274 million out of $428 million) of the Commission's procurement expenditures in fiscal years 1997 and 1998 combined.
Additionally, agency management requested our assistance to determine if the Commission received the services it paid for from its advertising vendor subcontractors. We identified $343,000 in fiscal year 1999 payments to subcontractors for which the Commission may not have received the advertising services it purchased. Approximately 67 percent of the 249 print media subcontractors had not obtained independent verification that the advertisements were printed and reached the targeted audience. Based on the results of our review, the Commission has identified changes it plans to make in its current negotiations for advertising services contracts.
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