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Scientific Games International, Inc. v. Governor's Office of Administration

Commonwealth Court of Pennsylvania

October 9, 2013

Scientific Games International, Inc., Petitioner
v.
Governor's Office of Administration, Respondent

Argued: September 12, 2013

BEFORE: HONORABLE DAN PELLEGRINI, President Judge HONORABLE ANNE E. COVEY, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge

OPINION

PELLEGRINI PRESIDENT JUDGE

Scientific Games International, Inc. (SGI) petitions for review of the order of the Governor's Office of Administration (GOA) dismissing SGI's protest of the selection of GTECH Corporation (GTECH) for contract negotiations as a result of RFP# 6100020492 (2012 RFP). We affirm.

I.

The Pennsylvania Race Horse Development and Gaming Act (Gaming Act), 4 Pa. C.S. §§1101-1904, permits slot machine gaming in Pennsylvania and delegates the monitoring of such gaming to the Department of Revenue (Department). Section 1323(a) of the Gaming Act, 4 Pa. C.S. §1323(a), authorizes the Department to acquire a Central Computer Control System (CCCS) that links slot machines and reports their operations to a central location. Section 1323(c), 4 Pa. C.S. §1323(c), authorizes the Department to initially acquire the CCCS without adhering to the requirements of the Commonwealth Procurement Code (Procurement Code), 62 Pa. C.S. §§101-2311. On October 31, 2005, the Department selected GTECH as the vendor for this initial contract.

In 2010, the Department of General Services (DGS) posted a Request for Proposal (2010 RFP) for the acquisition of a replacement CCCS. On November 23, 2010, DGS selected SGI for negotiations with the Department. In May 2011, SGI sent signed contract pages to DGS and asked if the contract execution process could be expedited. DGS responded that execution could take longer than 60 days and that it could not guarantee that the process could be expedited.

GTECH then filed a protest to the award and requested a debriefing. In connection with the protest and debriefing and pursuant to Section 708(b)(26) of the Right-to-Know Law (RTKL), [1] GTECH received a copy of the contract executed by SGI, the IT Contract Terms, the 2010 RFP and related documents, and a redacted copy of SGI's proposal for the 2010 RFP. Likewise, pursuant to its RTKL request, SGI received from DGS a redacted copy of GTECH's proposal for the 2010 RFP including GTECH's price.

On July 11, 2011, a DGS Protest Officer granted the protest in part and denied it in part. The Protest Officer found that the 2010 RFP made having a manufacturer's license a condition precedent to contract execution and that the stay in execution must remain in place at least until SGI received its manufacturer's license thereby fulfilling the condition precedent so that contract execution could proceed. GTECH appealed and sought a preliminary injunction from this Court to prevent any further negotiation or performance of the contract between the Department and SGI. In August 2011, DGS cancelled the 2010 RFP and the associated award pursuant to Section 521 of the Procurement Code, 62 Pa. C.S. §521, [2] on the basis that the cancellation was in the best interests of the Commonwealth. GTECH discontinued its suit against DGS. Scientific Games International, Inc. v. Commonwealth, __Pa. __, __ & n.9, 66 A.3d 740, 745-46 & n.9 (2013).

On August 16, 2011, SGI filed a complaint and a petition for a preliminary injunction in this Court seeking to prevent the Department and DGS from canceling the contract and soliciting new bids.[3] This Court denied the petition for preliminary injunction and DGS and GTECH filed preliminary objections to the complaint alleging that the Board has exclusive jurisdiction over SGI's claims. This Court overruled the preliminary objections, but the Supreme Court reversed on interlocutory appeal, holding that we did not have jurisdiction. On May 6, 2013, the Board lifted the stay of the proceedings before it. Scientific Games International, Inc., ___Pa. at __, 66 A.3d at 746-48; Scientific Games International, Inc. v. Department of Revenue, 34 A.3d 307, 313 (Pa. Cmwlth. 2011), rev'd, __ Pa. at __, 66 A.3d at 760.[4]

II.

While all of that was going on, on December 14, 2012, GOA posted the 2012 RFP seeking proposals for a replacement CCCS which is the subject of this appeal. When that RFP was issued, SGI submitted a written request asking the Department's and GOA's positions regarding whether by submitting a proposal an "offeror" waives any rights or causes of actions relating to claims that are then pending before the courts arising from the 2010 RFP process. The response was that it was GOA's and the Department's position that an offeror did not waive any of its rights in that regard.[5] GTECH and SGI were the only two offerors to submit proposals in response to the 2012 RFP. On April 19, 2013, DGS selected GTECH for contract negotiations under the 2012 RFP.

On April 26, 2013, SGI filed a protest with GOA seeking to void the selection of GTECH for or, in the alternative, the cancellation of the 2012 RFP because:

• GTECH's selection would make an award to SGI under the 2012 RFP less likely and it was not in the Commonwealth's best interests because SGI's existing challenge to the 2010 RFP was still pending and the Commonwealth would be subject to inconsistent contractual ...

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