565.25 Contracting authority and purchasing procedures.

(1) Definition. In this section, “department" means the department of administration.

(1m) Scope of authority. Subject to approval by the secretary of revenue, the administrator may determine whether lottery functions shall be performed by department of revenue employees or by one or more persons under contract with the department of administration, except that no contract may provide for the entire management of the lottery or for the entire operation of the lottery by any private person. The department of administration may contract for management consultation services to assist in the management or operation of the lottery. The department of administration may not contract for financial auditing or security monitoring services, except that, if the department of administration delegates under s. 16.71 (1) to the department of revenue the authority to make a major procurement, the department of revenue may contract with the department of administration for warehouse and building protection services relating to the state lottery. If the department of administration delegates under s. 16.71 (1) to the department of revenue the authority to make a major procurement, the department of revenue shall assume the powers and duties of the department of administration and the administrator shall assume the powers and duties of the secretary of administration under this section and ss. 16.70 to 16.77, except under ss. 16.72 (4) (a), 16.76 (1) and 16.77 (1).

(2) Purchasing procedures.

(a)

1. Except as provided under s. 16.71 (1), the department shall make major procurements.

2. Notwithstanding the provisions of s. 16.75 (1) (a) relating to the lowest responsible bidder and s. 16.75 (2m) (g) relating to the most advantageous proposal, all contracts or orders under s. 16.75 (1) and (2m) shall be awarded on the basis of a formula specified by the department that weighs all of the following factors, to the extent applicable:

a. The cost of the bid or proposal.

b. The technical capability and expertise of the proposed vendor.

c. The integrity, reliability and expertise of the proposed vendor in providing the items covered by the bid or proposal.

d. The security for lottery operations provided under the bid or proposal.

e. The financial stability of the proposed vendor.

3. In addition to the provisions of ss. 16.75 (3m) and 16.765 that apply to purchasing or contracting state agencies, in awarding orders or contracts, the department shall give preference to a bidder if at least 5 percent of the individuals employed by the bidder and any subcontractors to produce, distribute, supply or sell the materials, supplies, equipment or services under the order or contract are minority group members and are employed in the state.

4. The administrator shall develop specifications for major procurements. If security is a factor in the materials, supplies, equipment, property, or services to be purchased in any major procurement, then invitations for bids or competitive sealed proposals shall include specifications related to security. The administrator shall submit specifications for major procurement to the secretary of revenue for review and approval before the department of administration releases the specifications in invitations for bids or competitive sealed proposals. The department of administration shall require separate bids or separate competitive sealed proposals for management consultation services if the services are provided under contract as provided in sub. (1m).

5. The vendor shall disclose such information as is required by the department, by rule, with the vendor's submission of a bid or proposal for a major procurement.

6. If the department of administration delegates under s. 16.71 (1) to the department of revenue the authority to make a major procurement, the award of the major procurement contract is subject to the requirements in ss. 16.72 (4) (a) and 16.76 (1). Copies of requisitions and contracts for major procurements shall be maintained by the administrator and shall be subject to inspection and copying under subch. II of ch. 19.

7. No bill or statement for any purchase or engagement for the department of revenue relating to the state lottery may be paid until the bill or statement is approved by the administrator.

(c) A major procurement contract under this subsection may be for any term deemed to be in the best interests of the state lottery or the multijurisdictional lottery in which the state participates, but the term and any provisions for renewal or extension shall be incorporated in the bid specifications or proposal solicitation and the contract document.

(3) Vendor qualifications.

(a) No contract for a major procurement may be entered into with a person if, during the immediately preceding 10 years, the person has been convicted of, or entered a plea of guilty or no contest to, any of the following, unless the person has been pardoned:

1. A felony.

2. A gambling-related offense.

3. Fraud or misrepresentation in any connection.

4. A violation of this chapter or any rule promulgated under this chapter.

(b)

1. Except as provided in subd. 4., if the vendor is a partnership, par. (a) applies to the partnership and each partner of the partnership.

1L. Except as provided in subd. 4., if the vendor is a limited liability company, par. (a) applies to the limited liability company and to each of its members.

2. Except as provided in subd. 4., if the vendor is an association, par. (a) applies to the association and each officer and director of the association.

3. Except as provided in subd. 4., if the vendor is a corporation, par. (a) applies to the corporation, each officer or director of the corporation and each owner, directly or indirectly, of any equity security or other ownership interest in the corporation. In the case of owners of publicly held securities of a publicly traded corporation, par. (a) only applies to those persons who are beneficial owners of 5 percent or more of the publicly held securities.

4. The restrictions under par. (a) do not apply to the partnership, limited liability company, association or corporation if the department determines that the partnership, limited liability company, association or corporation has terminated its relationship with the partner, member, officer, director or owner who was convicted or entered the plea or with the partner, member, officer, director, owner or other individual whose actions directly contributed to the partnership's, limited liability company's, association's or corporation's conviction or entry of plea.

(c) No contract for a major procurement may be entered into unless the contract provides that the vendor has established or will, within a period of time specified in the contract, establish an office within the state from which the vendor will process, produce, distribute, supply or sell materials, supplies, equipment or services under the contract.

(d) The vendor shall meet any additional qualifications established by rule under s. 565.02 (4) (c).

(3m) False statement or material omission. No person proposing to contract for a major procurement may intentionally make a false statement or material omission in any disclosure statement required under sub. (2) (a) 5.

(4) Background investigations. The department of justice shall conduct a background investigation of any person proposing to contract or contracting for a major procurement and of all partners, members, officers, directors, owners and beneficial owners identified under sub. (3) (b). The department of justice may require the person and partners, members, officers, directors and shareholders identified under sub. (3) (b) to be photographed and fingerprinted. The department of justice may submit the fingerprints to the federal bureau of investigation for the purposes of verifying the identity of the persons fingerprinted and obtaining records of their criminal arrests and convictions. If the results of the background investigation disclose information specified in sub. (3) (a) with respect to the person, partner, member, officer, director, owner or beneficial owner, a contract with the vendor, if entered into prior to the disclosure, is void and the vendor shall forfeit any amount filed, deposited or established under sub. (5) (b). The department of justice shall repeat the background investigation of each vendor, and each vendor's partners, members, officers, directors, owners, and beneficial owners, under sub. (3) (b), every 5 years. The department of revenue shall reimburse the department of justice for the department of justice's services under this subsection and shall obtain payment from the person proposing to contract or the vendor in the amount of the reimbursement.

(5) Financial responsibility.

(a) In this subsection, “financial institution" has the meaning specified in s. 705.01 (3).

(b) For a major procurement, the department may require from a person proposing to contract on a bid, conditioned upon signing the contract if awarded to the person, or on a contract award, conditioned upon performance under the contract or payment of subcontractors, any of the following:

1. The deposit with the department of a bond payable to the department, in an amount required by the department.

2. The deposit and maintenance with the department of interest-bearing or interest-accruing securities approved by the department, which shall be held in trust by the department and shall have at all times a market value equal to at least the amount required by the department.

3. The filing with the department and maintenance of an irrevocable letter of credit payable to and for the benefit of the department, in an amount required by the department.

4. The establishment with a financial institution of an escrow account, the terms, conditions and amount of which are established for the benefit of the department, in an amount required by the department.

History: 1987 a. 119, 399; 1989 a. 31, 56, 99, 172, 345, 359; 1991 a. 39, 269, 315; 1993 a. 112; 1995 a. 27; 1997 a. 27; 2003 a. 33; 2005 a. 213; 2017 a. 17.