Lawmakers Question DOA Role After Lottery RFP Delay, Cite Senate Bill 51 Exemption

At a legislative committee hearing, Department of Administration (DOA) Director Giles told legislators the agency advised Montana Lottery Director Brown to —give the incumbent proposal a look— before pursuing a full request-for-proposals process, citing technical procurement issues and a statutory exemption created by Senate Bill 51.

Giles said DOA administers statewide procurement and provides technical review and legal support for agencies. "I have 20 plus years in government contracting, and I'm a lawyer as well," Giles said, and noted DOA handled about 300 contracting actions in 2024. He told the committee a modern, large RFP for lottery systems typically costs about $250,000 to produce and can lead to litigation that adds substantially to expense.

The exchange grew tense after several legislators and lottery commissioners said the Lottery Commission had already voted in September to pursue an RFP. Lottery Commissioner Metropolis told the committee the commission made a unanimous decision in September to pursue the RFP option and stressed "the commission is the boss at the lottery," citing the commission's supervisory role under the Constitution. Metropolis and other commissioners said they were surprised in December to learn an alternative contracting track had been under consideration.

DOA described a different timeline: Giles said DOA had asked Lottery staff to present both options to the commission and that, based on DOA's procurement review, the department found technical issues with the draft RFP that needed to be addressed. "We do not dictate that at D of A," Giles told the committee. "I dictate the how, not the what. The what rests with the lottery. If they wanna do that, that is solely their bill."

Giles also said an amendment in Senate Bill 51 created an unintended procurement exemption that could apply to the Lottery and the Montana university system. He walked the committee through portions of the Montana Code Annotated that DOA staff reviewed and described how the statutory language changes expanded the definition of "person" and unintentionally created an exemption from competitive procurement for some private contractors contracted by those entities. "We were trying to clarify the underlying matter... which was causing confusion for our vendors and our contracts. It did not come to our attention quite honestly until this matter arose that there was an exemption," Giles said.

Members repeatedly pressed Giles on whether DOA or the Lottery had authority to decide whether to go to an RFP. Giles said legal questions about whether a commission can compel an executive-branch agency to initiate a multimillion-dollar RFP are "colorable" and could divide lawyers; he said DOA believed it was appropriate to take both tracks back to the Lottery Commission so the commission could weigh the business decision with all facts.

Several witnesses and commissioners urged the committee to consider the contractor's performance record. Scott Aspenlighter, who identified himself as chair of the Department of Justice's Gaming Advisory Council, urged scrutiny of the incumbent vendor Interlot and said Interlot had not met commitments to fund problem-gambling services. Aspenlighter told the committee Interlot had not made payments since 2022 and that $88,000 in arrears remained owed to a problem-gambling fund. "Interlot has been a terrible partner to the state of Montana," he said.

Commissioner Metropolis and others emphasized the commission's September vote, warned that months of delay make it difficult to meet the commission's target schedule, and said the commission expects its directive to be followed. Giles and other DOA witnesses said DOA's intent was to ensure the Lottery Commission had complete procurement analysis before finalizing a business decision.

Committee members asked about litigation risk, timelines and costs. Giles reiterated that a large RFP can cost about $250,000 to draft and run, and said litigation can add significantly to cost; he also noted that some rebids in other jurisdictions produced large savings while others increased costs. He said DOA had asked Lottery to examine whether the incumbent's proposed extension was reasonable and to bring analysis back to the commission.

The committee did not take formal votes. Director Brown was described as planning to present both options to the Lottery Commission in March so the commission could decide whether to pursue an RFP or negotiate an extension with the incumbent vendor.

Why it matters: The committee hearing focused on where procurement authority resides, the fiscal risks of an RFP versus extending an incumbent contract, and an apparent statutory exemption inserted during passage of Senate Bill 51 that may affect transparency and competition for high-dollar contracts. The dispute touches state procurement policy, potential costs to taxpayers and oversight responsibilities of the Lottery Commission versus executive-branch officials.

What's next: Giles said he expected Director Brown to return the matter to the Lottery Commission with both procurement analysis and the incumbent proposal to allow a commission decision; legislators and commissioners urged expedited resolution so the commission can meet its March target.