Full Text of SB1311 100th General Assembly
SB1311eng 100TH GENERAL ASSEMBLY |
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| 1 | | AN ACT concerning State government.
| 2 | | Be it enacted by the People of the State of Illinois,
| 3 | | represented in the General Assembly:
| 4 | | Section 5. The Illinois Lottery Law is amended by changing | 5 | | Section 9.1 as follows: | 6 | | (20 ILCS 1605/9.1) | 7 | | Sec. 9.1. Private manager and management agreement. | 8 | | (a) As used in this Section: | 9 | | "Offeror" means a person or group of persons that responds | 10 | | to a request for qualifications under this Section. | 11 | | "Request for qualifications" means all materials and | 12 | | documents prepared by the Department to solicit the following | 13 | | from offerors: | 14 | | (1) Statements of qualifications. | 15 | | (2) Proposals to enter into a management agreement, | 16 | | including the identity of any prospective vendor or vendors | 17 | | that the offeror intends to initially engage to assist the | 18 | | offeror in performing its obligations under the management | 19 | | agreement. | 20 | | "Final offer" means the last proposal submitted by an | 21 | | offeror in response to the request for qualifications, | 22 | | including the identity of any prospective vendor or vendors | 23 | | that the offeror intends to initially engage to assist the |
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| 1 | | offeror in performing its obligations under the management | 2 | | agreement. | 3 | | "Final offeror" means the offeror ultimately selected by | 4 | | the Governor to be the private manager for the Lottery under | 5 | | subsection (h) of this Section. | 6 | | (b) By September 15, 2010, the Governor shall select a | 7 | | private manager for the total management of the Lottery with | 8 | | integrated functions, such as lottery game design, supply of | 9 | | goods and services, and advertising and as specified in this | 10 | | Section. | 11 | | (c) Pursuant to the terms of this subsection, the | 12 | | Department shall endeavor to expeditiously terminate the | 13 | | existing contracts in support of the Lottery in effect on the | 14 | | effective date of this amendatory Act of the 96th General | 15 | | Assembly in connection with the selection of the private | 16 | | manager. As part of its obligation to terminate these contracts | 17 | | and select the private manager, the Department shall establish | 18 | | a mutually agreeable timetable to transfer the functions of | 19 | | existing contractors to the private manager so that existing | 20 | | Lottery operations are not materially diminished or impaired | 21 | | during the transition. To that end, the Department shall do the | 22 | | following: | 23 | | (1) where such contracts contain a provision | 24 | | authorizing termination upon notice, the Department shall | 25 | | provide notice of termination to occur upon the mutually | 26 | | agreed timetable for transfer of functions; |
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| 1 | | (2) upon the expiration of any initial term or renewal | 2 | | term of the current Lottery contracts, the Department shall | 3 | | not renew such contract for a term extending beyond the | 4 | | mutually agreed timetable for transfer of functions; or | 5 | | (3) in the event any current contract provides for | 6 | | termination of that contract upon the implementation of a | 7 | | contract with the private manager, the Department shall | 8 | | perform all necessary actions to terminate the contract on | 9 | | the date that coincides with the mutually agreed timetable | 10 | | for transfer of functions. | 11 | | If the contracts to support the current operation of the | 12 | | Lottery in effect on the effective date of this amendatory Act | 13 | | of the 96th General Assembly are not subject to termination as | 14 | | provided for in this subsection (c), then the Department may | 15 | | include a provision in the contract with the private manager | 16 | | specifying a mutually agreeable methodology for incorporation. | 17 | | (c-5) The Department shall include provisions in the | 18 | | management agreement whereby the private manager shall, for a | 19 | | fee, and pursuant to a contract negotiated with the Department | 20 | | (the "Employee Use Contract"), utilize the services of current | 21 | | Department employees to assist in the administration and | 22 | | operation of the Lottery. The Department shall be the employer | 23 | | of all such bargaining unit employees assigned to perform such | 24 | | work for the private manager, and such employees shall be State | 25 | | employees, as defined by the Personnel Code. Department | 26 | | employees shall operate under the same employment policies, |
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| 1 | | rules, regulations, and procedures, as other employees of the | 2 | | Department. In addition, neither historical representation | 3 | | rights under the Illinois Public Labor Relations Act, nor | 4 | | existing collective bargaining agreements, shall be disturbed | 5 | | by the management agreement with the private manager for the | 6 | | management of the Lottery. | 7 | | (d) The management agreement with the private manager shall | 8 | | include all of the following: | 9 | | (1) A term not to exceed 10 years, including any | 10 | | renewals. | 11 | | (2) A provision specifying that the Department: | 12 | | (A) shall exercise actual control over all | 13 | | significant business decisions; | 14 | | (A-5) has the authority to direct or countermand | 15 | | operating decisions by the private manager at any time; | 16 | | (B) has ready access at any time to information | 17 | | regarding Lottery operations; | 18 | | (C) has the right to demand and receive information | 19 | | from the private manager concerning any aspect of the | 20 | | Lottery operations at any time; and | 21 | | (D) retains ownership of all trade names, | 22 | | trademarks, and intellectual property associated with | 23 | | the Lottery. | 24 | | (3) A provision imposing an affirmative duty on the | 25 | | private manager to provide the Department with material | 26 | | information and with any information the private manager |
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| 1 | | reasonably believes the Department would want to know to | 2 | | enable the Department to conduct the Lottery. | 3 | | (4) A provision requiring the private manager to | 4 | | provide the Department with advance notice of any operating | 5 | | decision that bears significantly on the public interest, | 6 | | including, but not limited to, decisions on the kinds of | 7 | | games to be offered to the public and decisions affecting | 8 | | the relative risk and reward of the games being offered, so | 9 | | the Department has a reasonable opportunity to evaluate and | 10 | | countermand that decision. | 11 | | (5) A provision providing for compensation of the | 12 | | private manager that may consist of, among other things, a | 13 | | fee for services and a performance based bonus as | 14 | | consideration for managing the Lottery, including terms | 15 | | that may provide the private manager with an increase in | 16 | | compensation if Lottery revenues grow by a specified | 17 | | percentage in a given year. | 18 | | (6) (Blank). | 19 | | (7) A provision requiring the deposit of all Lottery | 20 | | proceeds to be deposited into the State Lottery Fund except | 21 | | as otherwise provided in Section 20 of this Act. | 22 | | (8) A provision requiring the private manager to locate | 23 | | its principal office within the State. | 24 | | (8-5) A provision encouraging that at least 20% of the | 25 | | cost of contracts entered into for goods and services by | 26 | | the private manager in connection with its management of |
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| 1 | | the Lottery, other than contracts with sales agents or | 2 | | technical advisors, be awarded to businesses that are a | 3 | | minority owned business, a female owned business, or a | 4 | | business owned by a person with disability, as those terms | 5 | | are defined in the Business Enterprise for Minorities, | 6 | | Females, and Persons with Disabilities Act. | 7 | | (9) A requirement that so long as the private manager | 8 | | complies with all the conditions of the agreement under the | 9 | | oversight of the Department, the private manager shall have | 10 | | the following duties and obligations with respect to the | 11 | | management of the Lottery: | 12 | | (A) The right to use equipment and other assets | 13 | | used in the operation of the Lottery. | 14 | | (B) The rights and obligations under contracts | 15 | | with retailers and vendors. | 16 | | (C) The implementation of a comprehensive security | 17 | | program by the private manager. | 18 | | (D) The implementation of a comprehensive system | 19 | | of internal audits. | 20 | | (E) The implementation of a program by the private | 21 | | manager to curb compulsive gambling by persons playing | 22 | | the Lottery. | 23 | | (F) A system for determining (i) the type of | 24 | | Lottery games, (ii) the method of selecting winning | 25 | | tickets, (iii) the manner of payment of prizes to | 26 | | holders of winning tickets, (iv) the frequency of |
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| 1 | | drawings of winning tickets, (v) the method to be used | 2 | | in selling tickets, (vi) a system for verifying the | 3 | | validity of tickets claimed to be winning tickets, | 4 | | (vii) the basis upon which retailer commissions are | 5 | | established by the manager, and (viii) minimum | 6 | | payouts. | 7 | | (10) A requirement that advertising and promotion must | 8 | | be consistent with Section 7.8a of this Act. | 9 | | (11) A requirement that the private manager market the | 10 | | Lottery to those residents who are new, infrequent, or | 11 | | lapsed players of the Lottery, especially those who are | 12 | | most likely to make regular purchases on the Internet as | 13 | | permitted by law. | 14 | | (12) A code of ethics for the private manager's | 15 | | officers and employees. | 16 | | (13) A requirement that the Department monitor and | 17 | | oversee the private manager's practices and take action | 18 | | that the Department considers appropriate to ensure that | 19 | | the private manager is in compliance with the terms of the | 20 | | management agreement, while allowing the manager, unless | 21 | | specifically prohibited by law or the management | 22 | | agreement, to negotiate and sign its own contracts with | 23 | | vendors. | 24 | | (14) A provision requiring the private manager to | 25 | | periodically file, at least on an annual basis, appropriate | 26 | | financial statements in a form and manner acceptable to the |
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| 1 | | Department. | 2 | | (15) Cash reserves requirements. | 3 | | (16) Procedural requirements for obtaining the prior | 4 | | approval of the Department when a management agreement or | 5 | | an interest in a management agreement is sold, assigned, | 6 | | transferred, or pledged as collateral to secure financing. | 7 | | (17) Grounds for the termination of the management | 8 | | agreement by the Department or the private manager. | 9 | | (18) Procedures for amendment of the agreement. | 10 | | (19) A provision requiring the private manager to | 11 | | engage in an open and competitive bidding process for any | 12 | | procurement having a cost in excess of $50,000 that is not | 13 | | a part of the private manager's final offer. The process | 14 | | shall favor the selection of a vendor deemed to have | 15 | | submitted a proposal that provides the Lottery with the | 16 | | best overall value. The process shall not be subject to the | 17 | | provisions of the Illinois Procurement Code, unless | 18 | | specifically required by the management agreement. | 19 | | (20) The transition of rights and obligations, | 20 | | including any associated equipment or other assets used in | 21 | | the operation of the Lottery, from the manager to any | 22 | | successor manager of the lottery, including the | 23 | | Department, following the termination of or foreclosure | 24 | | upon the management agreement. | 25 | | (21) Right of use of copyrights, trademarks, and | 26 | | service marks held by the Department in the name of the |
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| 1 | | State. The agreement must provide that any use of them by | 2 | | the manager shall only be for the purpose of fulfilling its | 3 | | obligations under the management agreement during the term | 4 | | of the agreement. | 5 | | (22) The disclosure of any information requested by the | 6 | | Department to enable it to comply with the reporting | 7 | | requirements and information requests provided for under | 8 | | subsection (p) of this Section. | 9 | | (e) Notwithstanding any other law to the contrary, the | 10 | | Department shall select a private manager through a competitive | 11 | | request for qualifications process consistent with Section | 12 | | 20-35 of the Illinois Procurement Code, which shall take into | 13 | | account: | 14 | | (1) the offeror's ability to market the Lottery to | 15 | | those residents who are new, infrequent, or lapsed players | 16 | | of the Lottery, especially those who are most likely to | 17 | | make regular purchases on the Internet; | 18 | | (2) the offeror's ability to address the State's | 19 | | concern with the social effects of gambling on those who | 20 | | can least afford to do so; | 21 | | (3) the offeror's ability to provide the most | 22 | | successful management of the Lottery for the benefit of the | 23 | | people of the State based on current and past business | 24 | | practices or plans of the offeror; and | 25 | | (4) the offeror's poor or inadequate past performance | 26 | | in servicing, equipping, operating or managing a lottery on |
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| 1 | | behalf of Illinois, another State or foreign government and | 2 | | attracting persons who are not currently regular players of | 3 | | a lottery. | 4 | | (f) The Department may retain the services of an advisor or | 5 | | advisors with significant experience in financial services or | 6 | | the management, operation, and procurement of goods, services, | 7 | | and equipment for a government-run lottery to assist in the | 8 | | preparation of the terms of the request for qualifications and | 9 | | selection of the private manager. Any prospective advisor | 10 | | seeking to provide services under this subsection (f) shall | 11 | | disclose any material business or financial relationship | 12 | | during the past 3 years with any potential offeror, or with a | 13 | | contractor or subcontractor presently providing goods, | 14 | | services, or equipment to the Department to support the | 15 | | Lottery. The Department shall evaluate the material business or | 16 | | financial relationship of each prospective advisor. The | 17 | | Department shall not select any prospective advisor with a | 18 | | substantial business or financial relationship that the | 19 | | Department deems to impair the objectivity of the services to | 20 | | be provided by the prospective advisor. During the course of | 21 | | the advisor's engagement by the Department, and for a period of | 22 | | one year thereafter, the advisor shall not enter into any | 23 | | business or financial relationship with any offeror or any | 24 | | vendor identified to assist an offeror in performing its | 25 | | obligations under the management agreement. Any advisor | 26 | | retained by the Department shall be disqualified from being an |
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| 1 | | offeror.
The Department shall not include terms in the request | 2 | | for qualifications that provide a material advantage whether | 3 | | directly or indirectly to any potential offeror, or any | 4 | | contractor or subcontractor presently providing goods, | 5 | | services, or equipment to the Department to support the | 6 | | Lottery, including terms contained in previous responses to | 7 | | requests for proposals or qualifications submitted to | 8 | | Illinois, another State or foreign government when those terms | 9 | | are uniquely associated with a particular potential offeror, | 10 | | contractor, or subcontractor. The request for proposals | 11 | | offered by the Department on December 22, 2008 as | 12 | | "LOT08GAMESYS" and reference number "22016176" is declared | 13 | | void. | 14 | | (g) The Department shall select at least 2 offerors as | 15 | | finalists to potentially serve as the private manager no later | 16 | | than August 9, 2010. Upon making preliminary selections, the | 17 | | Department shall schedule a public hearing on the finalists' | 18 | | proposals and provide public notice of the hearing at least 7 | 19 | | calendar days before the hearing. The notice must include all | 20 | | of the following: | 21 | | (1) The date, time, and place of the hearing. | 22 | | (2) The subject matter of the hearing. | 23 | | (3) A brief description of the management agreement to | 24 | | be awarded. | 25 | | (4) The identity of the offerors that have been | 26 | | selected as finalists to serve as the private manager. |
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| 1 | | (5) The address and telephone number of the Department. | 2 | | (h) At the public hearing, the Department shall (i) provide | 3 | | sufficient time for each finalist to present and explain its | 4 | | proposal to the Department and the Governor or the Governor's | 5 | | designee, including an opportunity to respond to questions | 6 | | posed by the Department, Governor, or designee and (ii) allow | 7 | | the public and non-selected offerors to comment on the | 8 | | presentations. The Governor or a designee shall attend the | 9 | | public hearing. After the public hearing, the Department shall | 10 | | have 14 calendar days to recommend to the Governor whether a | 11 | | management agreement should be entered into with a particular | 12 | | finalist. After reviewing the Department's recommendation, the | 13 | | Governor may accept or reject the Department's recommendation, | 14 | | and shall select a final offeror as the private manager by | 15 | | publication of a notice in the Illinois Procurement Bulletin on | 16 | | or before September 15, 2010. The Governor shall include in the | 17 | | notice a detailed explanation and the reasons why the final | 18 | | offeror is superior to other offerors and will provide | 19 | | management services in a manner that best achieves the | 20 | | objectives of this Section. The Governor shall also sign the | 21 | | management agreement with the private manager. | 22 | | (i) Any action to contest the private manager selected by | 23 | | the Governor under this Section must be brought within 7 | 24 | | calendar days after the publication of the notice of the | 25 | | designation of the private manager as provided in subsection | 26 | | (h) of this Section. |
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| 1 | | (j) The Lottery shall remain, for so long as a private | 2 | | manager manages the Lottery in accordance with provisions of | 3 | | this Act, a Lottery conducted by the State, and the State shall | 4 | | not be authorized to sell or transfer the Lottery to a third | 5 | | party. | 6 | | (k) Any tangible personal property used exclusively in | 7 | | connection with the lottery that is owned by the Department and | 8 | | leased to the private manager shall be owned by the Department | 9 | | in the name of the State and shall be considered to be public | 10 | | property devoted to an essential public and governmental | 11 | | function. | 12 | | (l) The Department may exercise any of its powers under | 13 | | this Section or any other law as necessary or desirable for the | 14 | | execution of the Department's powers under this Section. | 15 | | (m) Neither this Section nor any management agreement | 16 | | entered into under this Section prohibits the General Assembly | 17 | | from authorizing forms of gambling that are not in direct | 18 | | competition with the Lottery. | 19 | | (n) The private manager shall be subject to a complete | 20 | | investigation in the third, seventh, and tenth years of the | 21 | | agreement (if the agreement is for a 10-year term) by the | 22 | | Department in cooperation with the Auditor General to determine | 23 | | whether the private manager has complied with this Section and | 24 | | the management agreement. The private manager shall bear the | 25 | | cost of an investigation or reinvestigation of the private | 26 | | manager under this subsection. |
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| 1 | | (o) The powers conferred by this Section are in addition | 2 | | and supplemental to the powers conferred by any other law. If | 3 | | any other law or rule is inconsistent with this Section, | 4 | | including, but not limited to, provisions of the Illinois | 5 | | Procurement Code, then this Section controls as to any | 6 | | management agreement entered into under this Section. This | 7 | | Section and any rules adopted under this Section contain full | 8 | | and complete authority for a management agreement between the | 9 | | Department and a private manager. No law, procedure, | 10 | | proceeding, publication, notice, consent, approval, order, or | 11 | | act by the Department or any other officer, Department, agency, | 12 | | or instrumentality of the State or any political subdivision is | 13 | | required for the Department to enter into a management | 14 | | agreement under this Section. This Section contains full and | 15 | | complete authority for the Department to approve any contracts | 16 | | entered into by a private manager with a vendor providing | 17 | | goods, services, or both goods and services to the private | 18 | | manager under the terms of the management agreement, including | 19 | | subcontractors of such vendors. | 20 | | Upon receipt of a written request from the Chief | 21 | | Procurement Officer, the Department shall provide to the Chief | 22 | | Procurement Officer a complete and un-redacted copy of the | 23 | | management agreement or any contract that is subject to the | 24 | | Department's approval authority under this subsection (o). The | 25 | | Department shall provide a copy of the agreement or contract to | 26 | | the Chief Procurement Officer in the time specified by the |
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| 1 | | Chief Procurement Officer in his or her written request, but no | 2 | | later than 5 business days after the request is received by the | 3 | | Department. The Chief Procurement Officer must retain any | 4 | | portions of the management agreement or of any contract | 5 | | designated by the Department as confidential, proprietary, or | 6 | | trade secret information in complete confidence pursuant to | 7 | | subsection (g) of Section 7 of the Freedom of Information Act. | 8 | | The Department shall also provide the Chief Procurement Officer | 9 | | with reasonable advance written notice of any contract that is | 10 | | pending Department approval. | 11 | | Notwithstanding any other provision of this Section to the | 12 | | contrary, the Chief Procurement Officer shall adopt | 13 | | administrative rules, including emergency rules, to establish | 14 | | a procurement process to select a successor private manager if | 15 | | a private management agreement has been terminated. The | 16 | | selection process shall at a minimum take into account the | 17 | | criteria set forth in items (1) through (4) of subsection (e) | 18 | | of this Section and may include provisions consistent with | 19 | | subsections (f), (g), (h), and (i) of this Section. The Chief | 20 | | Procurement Officer shall also implement and administer the | 21 | | adopted selection process upon the termination of a private | 22 | | management agreement. The Department, after the Chief | 23 | | Procurement Officer certifies that the procurement process has | 24 | | been followed in accordance with the rules adopted under this | 25 | | subsection (o), shall select a final offeror as the private | 26 | | manager and sign the management agreement with the private |
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| 1 | | manager. | 2 | | Except as provided in Sections 21.2, 21.5, 21.6, 21.7, | 3 | | 21.8, and 21.9, the Department shall distribute all proceeds of | 4 | | lottery tickets and shares sold in the following priority and | 5 | | manner: | 6 | | (1) The payment of prizes and retailer bonuses. | 7 | | (2) The payment of costs incurred in the operation and | 8 | | administration of the Lottery, including the payment of | 9 | | sums due to the private manager under the management | 10 | | agreement with the Department. | 11 | | (3) On the last day of each month or as soon thereafter | 12 | | as possible, the State Comptroller shall direct and the | 13 | | State Treasurer shall transfer from the State Lottery Fund | 14 | | to the Common School Fund an amount that is equal to the | 15 | | proceeds transferred in the corresponding month of fiscal | 16 | | year 2009, as adjusted for inflation, to the Common School | 17 | | Fund. | 18 | | (4) On or before the last day of each fiscal year, | 19 | | deposit any estimated remaining proceeds, subject to | 20 | | payments under items (1), (2), and (3) into the Capital | 21 | | Projects Fund each fiscal year. Beginning in fiscal year | 22 | | 2017, the amount deposited shall be decreased or increased | 23 | | each year by the amount that the actual expenditures either | 24 | | fell short of or exceeded the estimate used by the | 25 | | Department in making the deposit for the previous fiscal | 26 | | year. |
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| 1 | | (p) The Department shall be subject to the following | 2 | | reporting and information request requirements: | 3 | | (1) the Department shall submit written quarterly | 4 | | reports to the Governor and the General Assembly on the | 5 | | activities and actions of the private manager selected | 6 | | under this Section; | 7 | | (2) upon request of the Chief Procurement Officer, the | 8 | | Department shall promptly produce information related to | 9 | | the procurement activities of the Department and the | 10 | | private manager requested by the Chief Procurement | 11 | | Officer; the Chief Procurement Officer must retain | 12 | | confidential, proprietary, or trade secret information | 13 | | designated by the Department in complete confidence | 14 | | pursuant to subsection (g) of Section 7 of the Freedom of | 15 | | Information Act; and | 16 | | (3) at least 30 days prior to the beginning of the | 17 | | Department's fiscal year, the Department shall prepare an | 18 | | annual written report on the activities of the private | 19 | | manager selected under this Section and deliver that report | 20 | | to the Governor and General Assembly. | 21 | | (Source: P.A. 97-464, eff. 8-19-11; 98-463, eff. 8-16-13; | 22 | | 98-649, eff. 6-16-14.)
| 23 | | Section 99. Effective date. This Act takes effect upon | 24 | | becoming law.
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