fob complaints

7/28/2019 FOB Complaints

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State of New York

Franchise Oversight Board

State Capitol

Albany, New York 12224

MEMORANDUM

TO: David Skorton/Robert Megna

FROM: Robert Williams

DATE: 7 June 2013

SUBJECT: NYRA/GBE Concerns

Summary. Review of the documents and materials provided by The New York

Racing Association, Inc. (NYRA), in support of the single source award to GlobalBetting Exchange (GBE) to develop an Advanced Wagering Services and Technology

Platform (Platform), finds that the award to GBE was unjustified.

In making a determination for this award, NYRA failed to follow its Purchasing

Policy and Procedures Manual (Purchasing Policy), which was approved by the

Franchise Oversight Board in 2009. Purchasing Policy Section III.F outlines the

process for conducting a competitive procurement using a Request for Quotations

(RFQ), which includes development of specifications; preparation of the solicitation

document; review of the bids for responsiveness; evaluation of bid responses; as well

as other factors.

It is clear that in developing the RFQ and the Evaluation Instrument, NYRA failed

to adhere to its own processes:


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a. The RFQ failed to set forth the minimum qualifications relative to the

company or staffing; however, the Evaluation Instrument addressed such

factors.

b. The RFQ indicated that any final agreement resulting from the award may

contain terms and conditions other than those defined in the RFQ.

c. The RFQ failed to define the method of the award, such as the criteria to be

considered, the weights to be applied to the technical criteria, or the relative

weight of technical to cost. The method of scoring, however, as defined in the

Evaluation Instrument and accompanying scoring chart, applied three factors

against the criteria.

d. The Award Summary provided by NYRA (New Technology Overview, dated

April 2013) provided a summary of the review of each bidders proposal and

the reasons why they were disqualified from consideration after evaluation.

Since there were no minimum qualifying thresholds set forth in the RFQ, no

bidder should have been disqualified. Had NYRA followed its Purchasing

Policy in developing an RFQ document and making an award, bidders would

have been ranked, based on their final scores, and NYRA, in accordance with

its Purchasing Policy, could have decided not to make an award if it was not

in its best interest to do so.

e. NYRA did not sufficiently define the method for bidders to quote a cost for

the service. The RFQ provided three options for bidding cost, one of which

was an open ended option, which if chosen by any of the bidders, would likely

not have been subject to comparison to other cost proposals, thereby making

it impossible to score this factor.

f. In relation to GBEs cost, NYRA stated in its Award Summary that, based on

its Purchasing Policy, it had limited flexibility to negotiate pricing with a

bidder. There does not appear to be such a limiting provision in the

Purchasing Policy.

g. Once NYRA began looking at other strategies for an advanced technology

platform, which included conversations with other track operators about the

possibility of forming an industry cooperative approach, it had an obligation

to undertake another competitive bidding process and to set out new

requirements in a newly developed RFQ.


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In conclusion, since the bidder pool may now have changed completely due to the

new approach, it is not feasible to rationally state that GBE is the best (single

source) company for this platform development. Therefore, NYRA has not

sufficiently demonstrated that no other company in the industry is capable of

providing this service.

Review of NYRA Award to Global Betting Exchange of

Advanced Wagering Services and Technology Platform

I. RFQ Process. The NYRA Purchasing Policy and Procedures Manual (the

Purchasing Policy) outlines the process for conducting a competitive

procurement (RFQ) (Section III-F). The process includes, but is not limited

to: Development of specifications for services needed; Preparation of the

solicitation document; Advertisement of the procurement opportunity;

Distribution of the RFQ to potential bidders; Review of bids for

responsiveness; Evaluation of bid responses; and Responsibility/integrity

review of apparent winning bidder.

II. Development of specifications and preparation of solicitation

document. According to the Purchasing Policy (Section III.F.a),

specifications must ensure that bidders know exactly what is required. The

specifications should be as clear, inclusive and informative as possible and

establish the minimum level of acceptable requirements. The level of detail

required in the specifications depends on the complexity of the service

required. The solicitation should not be written so specifically as to target a

particular bidder, but may contain information obtained from an Request for

Information (RFI) or other means of gathering information prior to a bid

solicitation (i.e. Request for Comment, release of a draft RFQ). The

specifications must define the Scope of Service and the minimum

qualifications of the bidder, including years of experience and experience

performing similar services; required license or certifications; and financialviability.

According to the Purchasing Policy (Section III.F.b), the document should

inform the potential bidders of the nature of the procurement, any statutory

requirements, deadline for submission of bids, basis for award and method of

award, among other factors.


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III. NYRA did not follow its Purchasing Policy in developing

specifications. Review of the RFQ finds numerous concerns.

A. RFQ General Terms and Conditions.

Provision. Proposers should be engaged in the business of providing

the services contemplated herein (Section V.1).

Concern. The RFQ should have set forth minimum qualifications,

required years of experience, etc. based on the nature of this service. It

did not.

Provision. The final agreement, if any, awarded hereunder will

contain the terms, covenants and conditions to be negotiated by the

parties which may contain terms that differ from those in the RFQ

(Section V.4).

Concern. Any agreement resulting from the award of a formal

solicitation should reflect the terms set forth in that solicitation. If

vendors are not aware of the terms of the resulting agreement, they

cannot adequately provide a responsive proposal or financial quote.

Allowing for negotiation of terms subsequent to the award does not

meet the requirement of a Best Value award. A vendor cannot be

deemed responsive or non-responsive if terms are not defined.

Provision. Most Favored In the event that any other vendor

develops, acquires, or has the ability to acquire relevant technology or

services more favorable than those provided to NYRA under any

contract that may arise hereunder, Contractor or NYRA (as applicable)

shall promptly advise the other party hereto of such development, and

NYRA shall, at its option, have the right to terminate this Agreement

upon 30 days written notice or promptly receive from Contractor suchimproved technology or services upon terms and conditions comparable

to those set forth in any contract that may arise hereunder.

Concern. It is impossible for a vendor to price its Proposal and be held

to this standard.


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B. RFQ Scope of Service.

Provision. A formal Service Level Agreement will be drafted as part

of the contractual process with the winning bidder.

Concern. As noted above, to receive a responsive proposal and to make

an award that is the Best Value, the bidder must be aware of all terms

and conditions that they will be bound to upon award.

C. Miscellaneous. Relative to preparation of the solicitation document,

NYRA did not inform the vendors of the basis for the award. Since the

RFQ outlined requirements for a technical Proposal and Cost Proposal

and Evaluation criteria was developed and applied, the RFQ should

have clearly noted that the award would be based on Best Value, and

in addition, should have addressed that criteria would be defined and

applied by a team of evaluators.

IV. Evaluation of Bid Responses (Development & Application of the

Evaluation Instrument). According to the Purchasing Policy, Evaluation

of Bid Responses (Section III.F.i), where price will not be the determining

factor a combination of technical criteria may be made by using an evaluation

instrument. The evaluation instrument will be the tool used by evaluators to

apply scoring criteria as defined and agreed to by the evaluation team and

include the breakdown of relative weights into detailed categories (i.e.

experience 20%, staffing 15%, etc.). This tool would consist of a series of

documents used in the evaluation process and include: instruction to

evaluators; pre-defined rating sheet defining the allocation of points

consistent with the RFQ; Evaluator worksheets and summary forms; and

scripted interview questions.

The NYRA New Technology Overview, dated April 2013 (the Award

Summary) Comparative Summaries of RFQ Respondents includes threetables: Table 1 - Net pricing of Respondents; Table II Evaluation Criteria

and Definition; Table III Key Vendor Strengths and Weaknesses.

There are numerous issues:


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A. Technical Criteria. NYRA did not follow its Purchasing Policy in

determining relative weights for the technical evaluation criteria.

Table III Key Vendor Strengths and Weaknesses merely assigns a

symbol (strength, weakness, or neutral assessment) for each vendor in

relation to each of the criteria defined in Table II. Using this means of

scoring does not adequately score evaluation criteria and cannot result

in a Best Value award in which the award optimizes quality, cost, and

efficiency (Purchasing Policy Section II).

Further, the criteria defined in Table II for evaluation purposes

includes definitions such as whether a bidders organization is

sufficiently staffed to support the program; whether the vendor has

extensive history interacting with various regulatory agencies, etc.;

however, the RFQ does not set forth any specific requirements of

company size, staffing requirements, or years or type of experience.

B. Evaluation of Proposals. Following the evaluation of Proposals,

NYRA disqualified all seven bids for reasons that are not clearly

defended based on vague or non-existent specifications.

Disqualifications should only apply when a minimum standard, as set

forth in the RFQ, is not met (i.e. minimum score to shortlist) and does

not apply in a situation where technical (scored criteria) and cost are

being considered.

1. RFQ requirements. The RFQ states, Vendor will be expected to

provide an integrated CRM/ADW Platform Database with the

capability of customizing the user experience based on pre-

defined criteria (segmentation). Ultimately it is NYRAs

objective to collect and analyze the largest possible scope of

customer data. This would include standard ADW metrics

(majority of which are current totalizer based) such as wagering

and funding activity; integration throughout on-track POS

systems; and a full understanding of how the customers areinteracting with both websites and mobile applications. It is

understood that each vendor may have a different approach to

the collection of data, CRM capabilities (in-house or third party

arrangement) and ability to customize the user experience. The

section below is meant to provide guidelines for the bidders to

list and define their capabilities in these areas. Any additional


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information and in-depth explanation of potential capacities is

encouraged as it is NYRAs view that the aforementioned

integration is an evolving process.

The RFQ specifications were vague and fairly permissive in

submissions; therefore, calling into question any

disqualifications following evaluation.

a. Totalizator reliance. AmTote and Sportech were

disqualified mainly due to their reliance on the core

totalizator platform to support their CRM Systems and

due to one companys platform still being in initial stages

of development.

The RFQ did not set forth restrictions on such an

approach.

b. Lack of customization. TVG, TwinSpires, and eBet were

disqualified because they offered to white-label their

current generation platforms with the NYRA brand and

any level of customization offered was cosmetic rather

than functional.


approach.

c. Competition. NYRA also noted that three bidders were

direct competitors to the NYRA Rewards Program making

it undesirable to award the contract to these bidders.


approach. Additionally, if this concern was of paramount

importance, why were the companies specifically includedas part of the solicitation list and/or why didnt the RFQ

detail not being a competitor as a condition of submitting

a Proposal?

d. Size. One bidder, BAM Software, was disqualified due to

the small size of the company.


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The RFQ did not set forth restrictions on such a condition.

e. Cost. GBE was disqualified due to its high price.

The RFQ did not set forth specific criteria on acceptable

pricing; nor did the Evaluation Criteria define such. In

addition, in a Best Value (technical and cost evaluation)

the vendors cost is not a deciding factor.

2. Inability to negotiate. NYRA indicates in its Evaluation

Summary that it could not accept GBEs Proposal due to the

high quote because NYRAs Purchasing Policy affords limited

price negotiation flexibility.

The Purchasing Policy does not specify any threshold for

negotiation or inability to negotiate. Further, as noted above,

disqualification is not appropriate under the method of award of

evaluating technical and cost.

C. Cost Evaluation. The RFQ (Section IV Pricing) provides for three

pricing options as follows:

Option one implementation fee and % of handle based on various

tiers;

Option two - % of handle based on various tiers; [and]

Option three open pricing scenario Bidders are encouraged to

think outside of the box to develop a pricing/business scenario that

provides a win/win for both bidder and NYRA.

It is unclear how NYRA determined a final cost for each bidder basedon this cost quote structure. In order to determine a total cost for each

bidder, the RFQ must define how cost is to be provided by each bidder.

Option three does not meet this requirement.


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V. Abandonment of the RFQ process and award GBE. According to

NYRAs Award Summary, since all respondents to the RFQ were seemingly

disqualified it abandoned the award process and began looking at other

strategies for a Platform, which included conversations with other track

operators about the possibility of forming an industry cooperative approach to

an Platform. Since NYRA believed that GBE had the capacity to meet this

approach, the GBE platform was chosen.

Since the cooperative approach was a new concept, NYRA had an obligation to

undertake another competitive bidding process and to set out the new requirements

in a freshly developed RFQ. Since the bidder pool may now have changed

completely due to the new approach, it is not feasible to award the contract to GBE.

NYRA has failed to demonstrate that no other company in the industry is capable of

providing this service.

.

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