Vol. 536 No. 4
6 Mr. Stagg asked the Minister for Finance the position regarding the process for seeking applications for the licence to run the national lottery following the withdrawal of two companies which had been bidding; and if he will make a statement on the matter. [14250/01]
The two phase process leading to the issuing of a licence to operate the national lottery was approached with the intention of ensuring that the most fair and reasonable circumstances and opportunities for competitive tendering were created.
Phase 1 began on 29 July 1999 when my Department advertised for suitable applicants to participate in a later separate competitive process for the award of the licence. Three applications were received from the current operator, Autotote Worldwide Services and Rockdean Ltd., a subsidiary of Sisal, a Milan based lottery operator. A selection board from within my Depart ment decided that all three were qualified to be considered for the second phase.
An evaluation group chaired by my Department at second secretary level and comprising four other senior officials was established for phase 2, the actual selection process itself. Mr. Sean Cromien, former Secretary General of my Department, was appointed as process auditor to ensure that the process is implemented in an open and transparent manner. The evaluation group recruited a firm of consultants to advise and assist with the design of the invitation to apply, evaluation of proposals received and the final selection of the successful applicant. The three applicants were issued with a draft invitation to apply and a draft licence on 26 September last. They were subsequently asked to an applicants' conference on 27 October which afforded them the opportunity to query the documents and to raise various issues concerning the future operation of the lottery.
My Department issued a final invitation to apply to the three applicants on 15 December last, setting the date for final responses at 28 February 2001. Two of the three applicants have since withdrawn from the process leaving An Post National Lottery Company as the sole bidder whose application was received on 28 February and is currently being evaluated. The consultants are conducting a detailed evaluation of the application and supporting documentation. I am advised by the evaluation group that they hope to be in a position to report to me by the end of May or beginning of June, by which time I shall be able to make a decision on the matter. In the meantime, the existing licence has been extended to 1 October 2001 to allow the process to be completed.
Does the Minister agree that notwithstanding the process and the fairness and transparency of it heretofore, the current situation is not satisfactory where effectively there is no competition for the operation of the licence? Can he state in so far as he is aware what led the two companies which were interested before New Year to withdraw from the process?
I do not know what led them to withdraw, but in the light of events in recent years in a wide variety of areas the appropriate procedure was to have an open tender competition. That is why I pursued that route. It is not unusual to go to tender – lottery bids are very common abroad. We felt we needed to see what was on offer. The initial process resulted in three potential bidders who wanted to apply for the licence. I have explained what happened subsequently and that two have withdrawn leaving An Post National Lottery Company as the only bidder in the race. Since we began the process advice was taken that we should complete it and that is being done. It is hoped the process will have been completed within the next month when I will make my final decision.
I do not disagree with what the Minister has said, but he did not answer my question. I asked if he agreed that it is unsatisfactory that effectively we now only have one applicant, and if he can account for why that is so given the process which has been gone through.
The other invitees decided for their own commercial reasons not to proceed further with their applications. Having put a considerable amount of effort and time into the lead up, they decided to withdraw. That was their commercial decision.
The Minister suggested the evaluation was continuing on the basis of criteria. What are those criteria?
That was set out in the draft invitation to apply and the draft licence dated 26 September 2000 which was issued to all these companies and was a monstrous tome. To complete the process is currently costing a considerable amount of money for the one invitee still in the race, namely, An Post. It was a very large tome prepared by consultants.
On what basis will the decision be made?
The criteria were laid down in the draft invitation to apply. When the process is completed, I am sure one could spend many nights and months going through the draft invitation.
The legislation setting up the national lottery provided that the operating company could spend up to 20% of the total costs on administration and so on. Is the Minister concerned that the company managed to expand its expenditure to up to 20% each time? The expenditure for the initial year was not that heavy but the company seemed to expand the amount it would spend when it realised it could spend up to 20%. Is he concerned about that aspect and has he carried out a thorough investigation of the actual expenditure by the company?
The invitation to apply set out very stringent rules on how the company should operate in the future. I was satisfied with the process. I would like to have seen everyone compete to the end game but the two other applicants decided to withdraw at a very late stage having, I suspect, committed a lot of money up to that point. Each invitee had to obtain a lot of legal, accountancy and other professional advice, which would have cost a large fee. However, they decided to withdraw from the process.
