Because of the potential for undue influence being exerted on government procurements, there are generally accepted standards to ensure that contract awards are beyond reproach. While the New York casino awards seemed to be on a course to instill public confidence, recent events suggest that political influence has worked its way into the process.
The New York casino law authorized awarding up to four licenses in three “upstate” regions of the state, with “upstate” beginning just north of New York City. The State’s Gaming Commission is responsible for making the contract awards, after it receives recommendations from the Facility Location Board that was appointed by the Commission.
The Facility Location Board evaluated 16 competing proposals and announced its recommendations on December 17, choosing one proposal from each of the three regions. They stated they would make a detailed report of its reasoning in about 30 days.
Even though no decision has actually been made, Governor Andrew Cuomo embarked on a victory tour celebrating the Board’s recommendations as if the Gaming Commission’s role in the process was a mere formality. Since Cuomo appointed most of the Commission’s members, one can assume they got the message from their boss.
I suspect that the Governor just cannot help inserting himself into every decision despite a rather obvious perception that he is interfering in a public procurement. So it should come as no surprise that on December 26, he again stepped into the process. This time he “requested” that a new procurement be held in the Southern Tier. He was rebuking a Board that essentially are his appointees, and ignoring the Board’s decision to award only one contract in the Southern Tier for what appeared to be sound reasons. And Cuomo was acting without seeing the detailed reasoning of the Board or awaiting an actual decision by the Gaming Commission. The Board is meeting tonight, and I think we all know what their decision will be.
As troubling as the Governor’s behavior is, it may not be the first instance of outside influence on the process. When the Facility Location Board announced its recommendations, it also revealed for the first time that it had added an evaluation criterion to the ones set forth in the law. While the law authorized the Board to develop additional criteria, the Board did so without any notice to the public, let alone a public discussion of whether it was appropriate.
The Board’s new criterion was to “consider which proposals best fulfill the intent of the Act in regard to providing economic assistance to disadvantaged areas of the State while enhancing Upstate New York’s tourism industry.” What makes the Board’s decision curious is that nowhere in the law is it stated that its intent is to provide economic assistance to disadvantaged localities. We’re talking about a law that is 111 pages long, and that specified 20 distinct criteria the Board had to use. If the Legislature and the Governor wrote such a detailed law, it is odd they would have neglected to mention the intent of the bill, if indeed that was the intent.
The notion that this was the intent of the law was put forth by various figures who had a vested interest in making it the intent even if the law was silent on the point, including competing bidders as well as political figures. When Genting, the behemoth Malaysian gambling company proposed a casino in Orange County, those hoping for ones located in the less-affluent Catskills started raising the illusory intent of the law. Of course, if the intent of the law was not to site a casino in Orange County, the Governor and Legislature could have excluded it from eligibility as they did with other downstate counties.
Governor Cuomo’s letter “requesting” a new procurement introduced yet another “intent” of the casino law that is not only not in the law, but contrary to it. The law created three upstate regions, one of which is called the “Southern Tier.” When the Facility Location Board recommended a proposal near the Finger Lakes, those near Tioga squawked that the Finger Lakes region was not in the “true” Southern Tier. The Governor who signed the law – and presumably was in large part responsible for writing it – now says the Finger Lakes site is “well north of the actual Southern Tier.” (Emphasis mine.)
The chair of the Assembly’s Racing and Wagering Committee, Gary Pretlow, concurred: “And that’s the Southern Tier that when we fashioned this bill we were thinking about, definitely not in the Rochester area,” as quoted by Gannett. It’s as though neither he nor the Governor had any responsibility for writing legislation that reflected their intent.
New York has had recent experience with a flawed procurement process involving gambling contracts. Prior to Genting being given the rights to operate a racino at Aqueduct, there was a decision to make the award to an entity known as AEG. That process was so defective that the only surprising aspect of it is that no one was indicted. I am not suggesting that this process is even remotely comparable to that one. But one of the reasons that government procurements are so tightly structured is to avoid even the appearance of impropriety or undue influence. The Gaming Commission and the Facility Location Board appeared to be on a track to a process that would be unimpeachable, but we now have the following developments:
- A secret evaluation criterion announced at the last minute;
- That criterion being thinly supported – if at all – by the law;
- The Governor visiting the communities of “winning” bidders even though no actual decisions have been made;
- The Governor “recommending” that a new procurement be conducted even though the actual decision with supporting documentation has not been made;
- The Governor’s rationale for the procurement being based not on the law, but contrary to it.
In what has to be one of the most foreseeable results of the Governor’s efforts to award a fourth contract, we now have people from Orange County arguing they they too should have the opportunity for a new procurement. What is also foreseeable is that we are about to embark on a prolonged period of second-guessing, innuendo and controversy in a process that started out as appearing to be beyond reproach. A cardinal rule of fair and open procurements is that the rules are known to all parties from the start. If you want to change them as you go along without any public notice or input, you should be prepared for the inevitable charges that the process was neither fair nor open.