ESBD_360800_1718052537254_Lottery Operations RFP-Final.pdf

TEXAS LOTTERY COMMISSION

REQUEST FOR PROPOSALS

FOR

LOTTERY OPERATIONS AND SERVICES

ISSUED JUNE 10, 2024 4:00 P.M. CENTRAL TIME

Request for Proposal No. 362-2024-0003

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REQUEST FOR PROPOSALS FOR TABLE OF CONTENTS

TABLE OF CONTENTS

TABLE OF CONTENTS ...................................................................................................................... I

GLOSSARY OF TERMS

1.GENERAL INFORMATION

1.1. Purpose

1.2. Background

1.3. Our Vision and Mission

1.4. Our Core Values

1.5. Schedule of Events

1.6. Successful Proposer’s / Lottery Relationship

1.7. Procurement Authority

1.8. Proposals Subject to The Texas Public Information Act

1.9. Misunderstanding or Lack of Information

1.10. Rejection of Proposals and Cancellation of RFP

1.11. Ownership of Proposals

1.12. Incurred Expenses

1.13. Proposal Tenure

1.14. No Texas Lottery Obligations

1.15. Successful Proposer’s Obligations

1.16. Captions

1.17. Parts Incorporated

2.PROPOSAL PROCESS

2.1. Contact Person

2.2. Prohibition Against Unauthorized Contact

2.3. Pre-Proposal Conference

2.4. Letter of Intent to Propose

2.5. Non-Disclosure Statement

2.6. Mandatory HUB Subcontracting Plan (HSP) Workshop

2.7. Questions

2.8. Statement of Work Format

2.9. Submission of Technical Proposal

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2.10. Bid Bond / Proposal Surety

2.11. Protest / Litigation Bond

2.12. Response Format & Contents

2.13. Letter of Transmittal

2.14. Executive Summary

2.15. Proposer’s Contracting Authority

2.16. Submission of Cost Proposal, Proposer’s Commitment and Start-Up Costs

2.17. Multiple Proposals

2.18. Changes, Modifications and Cancellation

2.19. Updates to Information Supporting a Proposal

2.20. Additional Information

2.21. Proposal Evaluation and Contract Award

2.22. Site Visits and/or Oral Presentations

2.23. Protest Procedure

3.CONTRACTUAL TERMS AND CONDITIONS

3.1. Introduction

3.2. Governing Law and Venue

3.3. Contract Elements

3.4. Amendments

3.5. Non-Waiver

3.6. Clarification of Texas Lottery’s Intent

3.7. Relationship of the Parties

3.8. Payment

3.9. Assignments

3.10. Subcontracting

3.11. Lottery Approval of Staffing

3.12. Background Investigations

3.13. Compliance

3.14. Term of Contract

3.15. Termination at Will

3.16. Termination for Cause

3.17. Termination Related to Availability of Legislative Appropriations

3.18. Termination Without Penalty

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3.19. No Liability Upon Termination

3.20. Effect of Termination

3.21. Warranties

3.22. Licenses and Permits

3.23. Successful Proposer Site Visits

3.24. Intellectual Property Rights

3.25. Pre-Existing and Third-Party Rights

3.26. Remediation

3.27. Intellectual Property Search

3.28. Accounting Records

3.29. Right to Audit

3.30. Audit Requirements

3.31. Additional Right to Audit the Successful Proposer’s Texas Operations

3.32. Indemnification

3.33. Insurance

3.34. Self-Insurance

3.35. Commercial General Liability Insurance

3.36. Property Insurance

3.37. Workers’ Compensation & Employer’s Liability Insurance

3.38. Professional Liability (Errors and Omissions) Insurance

3.39. Crime Insurance

3.40. Umbrella/Excess Liability Insurance

3.41. Business Automobile Insurance

3.42. Cyber Liability Insurance

3.43. Performance Bond

3.44. Disclosure of Litigation

3.45. Disclosure of Sanctions and Liquidated Damages

3.46. Changes in Ownership

3.47. Force Majeure / Delay of Performance

3.48. Security Requirements

3.49. Taxes, Fees and Assessments

3.50. Media Releases

3.51. Advertising

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3.52. Hiring of Texas Lottery Personnel

3.53. Hiring of Lobbyist, Consultant and/or Advisor; Supplemental Information

3.54. Notices

3.55. Non-Disclosure

3.56. Usufruct

3.57. Ticket Purchase

3.58. End of Contract Transition

3.59. Equipment

3.60. Programs

3.61. Lottery Purchase Option

3.62. Sanctions and Remedies Schedule

3.63. Liquidated Damages

3.64. New or Innovative Technology, Goods or Services, and Most Favored Nations

3.65. Dispute Resolution

3.66. Certifications

3.67. Preferences

3.68. Deceptive Trade Practices; Unfair Business Practices

3.69. Immigration

3.70. Electronic and Information Resources Accessibility Standards, as Required by 1 TAC Chapters 206 and 213 (Applicable to State Agency and Institution of Higher Education Purchases Only)

3.71. Cybersecurity Training, Cloud Computing, Data Protection and Security

3.72. False Statements; Breach of Representations

3.73. Limitation on Authority; No Other Obligations

3.74. Proposer Assignment

3.75. Code of Conduct

3.76. Contact with Texas Lottery Commission

3.77. Incidents and Anomalies

3.78. Attachment of Third-Party Systems, Terminals or Products

3.79. Records Retention

3.80. U.S. Department of Homeland Security’s E-Verify System

3.81. Non-Exclusive Contract

3.82. Survival

4.REQUIRED INFORMATION

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4.1. Statement of Understanding

4.2. Experience of Responding Firm and Product

4.3. Experience of Key Personnel

4.4. Proposer References

4.5. Contact Person

4.6. Conflict of Interest

4.7. Financial Soundness

4.8. Background Investigations

4.9. Disclosure of Interested Parties

5.HISTORICALLY UNDERUTILIZED BUSINESS (HUB) PARTICIPATION

5.1. HUB Requirement

5.2. HSP Submission and Texas Lottery Review

5.3. Assistance for Preparation of HSP

5.4. Mandatory HSP Workshops

5.5. Requirements for Completing the HSP Forms

5.6. Subcontracting Opportunities

5.7. Post-Contract Award

6.ACCOUNT MANAGEMENT AND ADMINISTRATION

6.1. Overview

6.2. Account Management

6.3. Service Level Monitoring and Reporting

6.4. Service Management

6.5. Compliance Review

6.6. Facilities Support Services

6.7. Business Continuity and Disaster Recovery

6.8. Training

7.LOTTERY GAMING SYSTEM

7.1. Overview

7.2. Lottery Gaming System General Requirements

7.3. System Management

7.4. System Security

7.5. Draw Games

7.6. Scratch Ticket Game Management

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7.7. In-Lane Sales Solutions

7.8. Claims and Validation

7.9. Mobile Application

7.10. Internet Entry Promotional Second-Chance Drawings

7.11. Retailer Management

7.12. Reporting

7.13. Internal Control System and Vendor Requirements

7.14. System Supported Terminal Functions

7.15. Sales Terminals and Related System Equipment

7.16. Call Center Support

7.17. Interactive Voice Response System

7.18. Communications Network

8.SALES AND MARKETING

8.1. Overview

8.2. Sales Management and Business Development

8.3. Scratch Ticket and Draw Game Development

8.4. Lottery Sales Representatives

8.5. Retailer Contests, Incentives and Promotions

8.6. Promotional Events, Retailer Player Promotions and Other Promotions

8.7. Marketing Materials and Related Equipment

8.8. Permanent Out-of-Home Billboards

8.9. Marketing Materials and Point of Sale

8.10. Research and Lottery Product Development

9.WAREHOUSE AND DISTRIBUTION

9.1. Overview

9.2. New Scratch Ticket Delivery and Storage

9.3. Scratch Ticket Delivery

9.4. Scratch Ticket and Draw Game Ticket Stock Destruction

9.5. Promotional Items and POS Verification and Receiving

9.6. Promotional Items Inventory

9.7. Warehouse and Distribution General Requirements

10.CONVERSION

10.1. Conversion Plan

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10.2. Integration and Testing

10.3. Implementation and Migration

10.4. Conversion Plan General Requirements

10.5. Conversion Milestones

10.6. End of the Contract Transition Plan

11.OPTIONS

11.1. Specified Option

11.2. Invited Option

11.3. Offered Option

ATTACHMENT A PROPOSER’S COMMITMENT

ATTACHMENT B FINANCIAL COMMITMENT AND RESPONSIBILITY

ATTACHMENT C HUB SUBCONTRACTING PLAN

ATTACHMENT C-1 HSP QUICK CHECK LIST

ATTACHMENT C-2 HUB SUBCONTRACTING OPPORTUNITY NOTIFICATION FORM

ATTACHMENT D TEXAS GOVERNMENT CODE §466.155

ATTACHMENT D-1 BACKGROUND INFORMATION CERTIFICATION

ATTACHMENT E TEXAS LOTTERY COMMISSION VENDOR BACKGROUND INVESTIGATION

FORM

ATTACHMENT E-1 VENDOR BACKGROUND INVESTIGATION CERTIFIED LIST OF VENDOR

PRINCIPALS

ATTACHMENT E-2 VENDOR BACKGROUND INVESTIGATION CERTIFIED LIST OF

CONTRACTUALLY DEFINED VENDOR PRINCIPALS

ATTACHMENT E-3 VENDOR EMPLOYEE BACKGROUND INVESTIGATION LIST

ATTACHMENT E-4 CONSENT TO BACKGROUND INVESTIGATIONAND RELEASE OF PERSONAL

INFORMATION

ATTACHMENT F SAMPLE PERFORMANCE BOND

ATTACHMENT G SCORING MATRIX

ATTACHMENT H COST PROPOSAL

ATTACHMENT I TEXAS GOVERNMENT CODE CHAPTER 552 SUBCHAPTER J. ADDITIONAL

PROVISIONS RELATED TO CONTRACTING INFORMATION

ATTACHMENT J LETTER OF INTENT TO PROPOSE

ATTACHMENT K NON-DISCLOSURE STATEMENT

ATTACHMENT L START-UP COSTS

ATTACHMENT M TLC CURRENT STATE OPERATIONS

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ATTACHMENT N POTENTIAL SUBCONTRACTING OPPORTUNITES

REQUEST FOR PROPOSALS FOR GLOSSARY OF TERMS

GLOSSARY OF TERMS

This Glossary assigns definitions to the listed terms. The definition given to a term listed in this

Glossary applies whenever the capitalized term appears in this Request for Proposals (RFP) and in any response, including a Proposal, to this Request for Proposals.

Term Definition

Apparent Successful

Proposer

The Proposer recommended by the evaluation committee and approved by the Executive Director, subject to the execution of a completed contract.

Automated Scratch Ticket

Sales Solution

An automated system, deployed pursuant to the Texas Lottery’s

August 2022 Contracts for Scratch Ticket Manufacturing and

Services, that integrates with a Retailer’s point-of-sale system and the

Lottery Gaming System to enable the sale of Lottery Scratch Ticket games using a smart dispensing unit that accounts for, secures and reports on Scratch Ticket sales.

Backup Data Center The back-up computer facility established in a separate LATA from the

Primary Data Center that supports the Lottery Gaming System, located in the State of Texas, which is maintained and operated by the

Successful Proposer.

Business Hours The Texas Lottery’s Business Hours are 8:00 a.m. to 5:00 p.m. CT, Monday through Friday, except State holidays.

Contract The agreement entered into by the Texas Lottery and the Successful

Proposer, which will incorporate the contents of this RFP and the

Successful Proposer’s Proposal, except as specifically provided to the contrary in the Contract and any amendments to the Contract.

Contract Award The day of the Contract announcement after the signing of a Contract between the Texas Lottery and the Successful Proposer.

Contract Term The time period when the Contract is in effect, which unless otherwise indicated includes any extension period.

Corporate, Key, and Chain

Accounts

Corporate Accounts - Retailers operating with more than one selling location; achieving a $50,000 minimum weekly sales average; and utilizing a single bank account for the Electronic Funds Transfer process.

Key Accounts - Retailers operating with more than one selling location; achieving a $100,000 minimum weekly sales average; and utilizing a single bank account for the Electronic Funds Transfer process.

Chain Accounts - Retailers operating with more than one selling location and utilizing a single bank account for the Electronic Funds

Transfer process.

Cost Proposal The base system and services pricing for any and all requirements, goods and services described in this RFP, including items specified as an option, submitted by a Proposer, as set forth in Attachment H.

CPA Texas Comptroller of Public Accounts.

Day A calendar Day.

Draw Game Ticket

A computer-generated ticket issued to a player as a receipt for the combination of numbers a player has selected and generated on a

Lottery Terminal owned or operated by the Texas Lottery or Lottery

Operator, on official Texas Lottery paper stock, by either selecting his or her own numbers or selecting Quick Pick, which is a random number generator operated by the computer. That ticket shall be the only acceptable evidence of the combination of digits, numbers, or symbols selected. Draw Game Tickets may be purchased only from licensed

Retailers.

Executive Director The Executive Director of the Texas Lottery Commission or an employee of the Texas Lottery Commission authorized to act on behalf of the Executive Director.

Fiscal Year The Texas Lottery’s fiscal year, which begins on September 1 and ends on August 31 of the following year.

Historically Underutilized

Business (HUB)

A Historically Underutilized Business is a business that is certified by the State of Texas that (1) is at least 51% owned by an Asian Pacific

American, Black American, Hispanic American, Native American, American women, and/or Veteran (as defined by 38 U.S.C. Section

101(2)) who have suffered at least a 20 percent service-connected disability as defined by 38 U.S.C. Section 101(16); (2) is a for-profit entity that has not exceeded the size standards prescribed by 34 Texas

Administrative Code (TAC) §20.294, and has its principal place of business in Texas; and (3) has an owner residing in Texas with a proportionate interest who actively participates in the control, operations and management of the entity's affairs. For further explanation, see the Comptroller of Public Accounts (CPA) HUB rule definitions at 34 TAC §20.282.

HSP The Historically Underutilized Business Subcontracting Plan (HSP) required by Chapter 2161 of the Texas Government Code and by Texas

Lottery Commission Rule, 16 TAC §403.301 (See Attachment C.).

Incident An event or occurrence.

In-Lane Draw Game Ticket Any pre-printed or Retailer point of sale Draw Game Ticket not printed on official Texas Lottery paper stock or generated from a Lottery

Terminal owned or operated by the Texas Lottery or Lottery Operator.

For avoidance of doubt, for purposes of this RFP an In-Lane Draw

Game Ticket is not a Draw Game Ticket. As of the date this RFP was issued, the types of In-Lane Draw Game Tickets the Texas Lottery offers are QUICKTICKET (preprinted) and receipt ticket (printed on a

Retailer’s cash register receipt paper). In-Lane Draw Game Tickets are sold from a licensed Retailer’s Third-Party Point-of-Sale System.

In-Lane Sales Solution Any Texas Lottery-approved method for a Retailer to sell Lottery tickets via in-lane, without a Lottery Terminal owned or operated by the Texas Lottery or Lottery Operator, including any such method deployed as of the initial date of the Contract Term and any such method that is deployed during the Contract Term.

Intellectual Property Rights

The worldwide legal rights or interests evidenced by or embodied in:

(i) any idea, design, concept, personality right, method, process, technique, apparatus, invention, discovery, enhancement or improvement, including any patents, trade secrets, and know-how; (ii) any work of authorship, including any copyrights, moral rights, reversionary rights or neighboring rights; and any derivative work thereto (iii) any trademark, service mark, trade dress, trade name, or other indicia of source or origin; (iv) domain names (v) any other proprietary or similar rights, and (vi) any applications, provisionals, registrations, renewals, continuations, continuations-in-part, or divisionals relating thereto. The Intellectual Property Rights of a party include all worldwide legal rights or interests that the party may have acquired by assignment or license with the right to grant sublicenses.

Invited Option

An Invited Option is identified as being of specific interest to the Texas

Lottery; however, the Texas Lottery makes no commitment to quantity or timing for acquisition. The Proposer is not obligated to include an

Invited Option in the Proposal.

LATA

Local Access Transfer Area. A geographical area within which a divested Bell telephone company is permitted to offer local telecommunications and exchange services.

Lottery Gaming System or

System

The information system to be provided by the Successful Proposer that includes the infrastructure components to implement and/or support all Lottery functions, including, but not limited to:

• Retailer licensing and management

• Sales

• drawings processing (including Second-Chance drawings)

• validations

• claims and prize processing (including second-chance prize claims)

• marketing and promotions support

• inventory, warehousing, and distribution

• reporting and business intelligence

• customer-facing applications (such as an official Texas

Lottery mobile application (app), IVR Systems, Retailer and

Players web portals)

By extension, the System includes any third-party system interfaces which affect the security of the Successful Proposer’s System, such as with the Texas Lottery Commission or other partners. Collectively, the System will provide the ability to control, monitor and report all

Lottery activity.

Lottery Operator

The Successful Proposer that the Texas Lottery enters into the Contract to perform functions, activities, and/or services in connection with the operation of the Texas Lottery as required by this RFP.

Lottery Products All games presently offered by the Texas Lottery, together with new games introduced during the Contract Term.

Lottery Sales Representative

(LSR)

An employee of the Successful Proposer responsible for dealing with the Retailer sales and field services in regard to Lottery Products. The

Successful Proposer will have multiple LSRs.

Major And Prime Contracts

The following Texas Lottery contracts are considered major or prime contracts: lottery operations and services, scratch (instant) ticket manufacturing and services, advertising media services, lottery drawings certified public accounting services, drawings studio and production services, promotional products, TLC warehouse lease, internal audit services, internal control system and related services, security management system and monitoring services, risk review and compliance monitoring, website hosting services, Houston claim center lease, retailer bonus payment management services, trademark license and promotional agreements with the Dallas Cowboys and the Houston

Texans, promotional and sponsorship agreement with the National

Medal of Honor Museum Foundation. The Texas Lottery may add or delete major or prime contracts at its sole option.

Offered Option

Offered Options are not requested in the response to this RFP, but may be identified by the Proposer and included in its Proposal. A Proposer is not obligated to include an Offered Option in the Proposal. This is an opportunity for Proposers to offer options that the Texas Lottery may not have been aware of at the time the RFP was written. The Texas

Lottery makes no commitment to quantity or timing for acquisition of

Offered Options and offered options are not considered during evaluation of Proposals.

Offered Options shall not include video lottery, casino gaming, internet-based lottery sales, or other activities, goods or services not authorized by law.

Operating Hours

The period of time during a Day that the Texas Lottery designates, in its sole discretion, that Lottery Products sales, validations, reporting, and management functions are available. The Texas Lottery’s current operating hours are daily from 12:30 a.m. to midnight Central Time.

Primary Data Center

The computer facility that supports the Lottery Gaming System located in Austin, Texas, which is maintained and operated by the Successful

Proposer.

Proposal

All information and materials submitted by a Proposer in response to this RFP. This includes the sealed Cost Proposal, Technical Proposal, and other information and materials provided to the Texas Lottery by the Proposer prior to Contract Award.

Proposer

An individual or entity that submits a Proposal. The term includes anyone acting on behalf of the individual or entity that submits a

Proposal, such as agents, employees and representatives.

Retailer

A Texas Lottery ticket sales agent licensed by the Texas Lottery to sell lottery tickets, as contemplated by Texas Government Code, Chapter

466.

RFP This Request for Proposals.

Sales

Sales are defined as sold tickets processed by the Lottery Gaming

System, less any tickets that have been canceled or returned, less any promotional tickets or promotional coupons and less any Retailer adjustments.

Scratch Ticket As defined in Texas Lottery Commission Rule 16 TAC 401.301, a

Scratch Ticket lottery game, developed and offered for sale to the public in accordance with Texas Lottery Commission rules, that is played by revealing the ticket play symbols. Sometimes, Scratch Ticket games are called “instant games.”

Self-Check Terminal

A player-operated Terminal installed at a Retailer location that communicates with the Lottery Gaming System for the purpose of communicating winning, non-winning and actual prize amount data.

The functionality shall be included in stand-alone Terminals as well as

Self-Service Vending Machines.

Self-Service Vending

Machine

A player-operated Terminal installed at a Retailer location that communicates with the Lottery Gaming System for the purpose of printing Draw Game Tickets, selling Scratch Tickets, communicating winning, non-winning and actual prize amount data and performing other functions as identified in this RFP and the Contract.

Service Level or

Service Level Requirements

(SLR)

Minimum performance requirement(s) that shall be provided by the

Successful Proposer.

SPD

Statewide Procurement Division (SPD) is a division of the Texas

Comptroller of Public Accounts.

Specified Option

A Specified Option shall be proposed by the Proposer; however, the

Texas Lottery does not commit to any quantity or timing for accepting, declining, or acquisition of a Specified Option. A Proposal may be rejected if a Specified Option is not included.

State The State of Texas and its agencies, boards and commissions, officers and employees.

Subcontractor

A person who contracts with the Successful Proposer to work, to supply commodities, or contribute toward completing work for the Texas

Lottery.

Successful Proposer The Proposer with whom the Texas Lottery executes a contract to provide the goods and services that this RFP requires.

Technical Proposal All information and materials submitted by a Proposer in response to this RFP with the exception of the Cost Proposal.

Terminal

Any online device that communicates with the Lottery Gaming System for the purpose of selling Draw and/or Scratch Tickets, validating Draw and Scratch Tickets or communicating winning, non-winning and prize amount data.

Texas Lottery Commission, Texas Lottery, Lottery or

TLC

That agency created by Chapters 466 and 467, Texas Government

Code. The Texas Lottery Commission may be referred to as the Texas

Lottery, Lottery or TLC throughout this document.

Third-Party Point-of-Sale

System

Self-contained computerized equipment (not owned or operated by the

Texas Lottery or Lottery Operator) that performs sales-related tasks at a licensed lottery ticket retailer's checkout counter and that has the sole

Texas Lottery-related purpose of selling lottery tickets. Third-party

Point-of-Sale Systems will only perform the same lottery-related tasks as Terminals owned or operated by the Texas Lottery or Lottery

Operator and may not issue electronic tickets or display outcomes for draw games using casino-style graphics of any kind. Third-Party Point-of-Sale Systems do not include any gambling device.

Working Days

Business days occurring Monday through Friday except for the legal holidays observed by the State of Texas. The terms “working days” and “business days” may be used interchangeably.

Works

Any tangible or intangible items or things that have been or will be prepared, created, maintained, serviced or developed by a Successful

Proposer (or such third parties as the Successful Proposer may be permitted to engage) at any time following the effective date of the

Contract, for or on behalf of TLC under the Contract, including but not limited to any (i) works of authorship (such as literary works, musical works, dramatic works, choreographic works, pictorial, graphic and sculptural works, motion pictures and other audiovisual works, sound recordings and architectural works, which includes but is not limited to lottery games, game names, game designs, ticket format and layout, manuals, instructions, printed material, graphics, artwork, images, illustrations, photographs, computer software, scripts, object code, source code or other programming code, HTML code, data, information, multimedia files, text web pages or web sites, other written or machine readable expression of such works fixed in any tangible media, and all other copyrightable works and any derivative works thereto), (ii) trademarks, service marks, trade dress, trade names, logos, or other indicia of source or origin, (iii) ideas, designs, concepts, personality rights, methods, processes, techniques, apparatuses, inventions, formulas, discoveries, enhancements or improvements, including any patents, trade secrets and know-how, (iv) domain names,

(v) any copies, and similar or derivative works to any of the foregoing,

(vi) all documentation and materials related to any of the foregoing,

(vii) all other goods, services or deliverables to be provided to TLC under the Contract, and (viii) all Intellectual Property Rights in any of the foregoing.

REQUEST FOR PROPOSALS FOR PART 1

LOTTERY OPERATIONS AND SERVICES GENERAL INFORMATION

1. GENERAL INFORMATION

1.1. Purpose

The Texas Lottery Commission is issuing this Request for Proposals (RFP) to solicit proposals from interested vendors to provide lottery operations services and equipment, including, but not limited to, a Lottery Gaming System and sales, marketing, warehouse, distribution and related services to implement and operate Texas Lottery games as authorized by law. The scope of this RFP (including all options) does not include video lottery, casino gaming, internet-based lottery sales, or other activities, goods or services not authorized by law.

The Texas Lottery currently contracts with a single vendor (the Lottery Operator) for lottery operations and services. The Lottery Operator provides a wide range of goods and services essential to the delivery of lottery gaming services. This integrated approach for the provision of the Lottery Gaming System and the sales, marketing, warehouse, distribution and related services has been successful. The Texas Lottery believes that the current integrated operating model provides a cohesive approach to game development, systems support, sales, marketing and distribution and mitigates risk to the revenue stream that provides funding for education, veterans’ assistance, and other governmental purposes as required by the Texas Legislature. The Texas Lottery is not predisposed to any particular solution or service delivery methodology, nor does the Texas Lottery intend to limit the creativity of interested parties. Two or more entities may collaborate to file a Proposal, but they shall designate a single entity that will contract with the Texas

Lottery and be responsible for the delivery of all goods, services and requirements set forth in its Proposal (i.e., the Lottery Operator). All Proposals submitted shall completely define the responsibilities of the primary contractor (Lottery Operator) and each participating Subcontractor.

Proposers shall provide information in their Proposals that will permit awarding a contract in a manner that provides the best value to the Texas Lottery. A Proposer’s failure to respond in the manner required in this RFP may result in disqualification of its

Proposal.

1.2. Background

Through August 2023, total transfers by the Texas Lottery to the State of Texas equal more than $37 billion. The Texas Lottery continues to explore new and better ways to generate revenue for the State while operating within the parameters of its governing laws.

In Fiscal Year 2023, which ended August 31, 2023, Texas Lottery sales totaled $8.7 billion. Approximately 77% of the Sales were from the Scratch Ticket product and 23% of the Sales were from the Draw Game product.

The Lottery, in its sole discretion, shall make all final decisions regarding the development and implementation of lottery games for the State of Texas.

The Successful Proposer shall be required to provide goods and services as specified in this RFP and shall fully understand the Texas Lottery’s history and background, and support the Texas Lottery’s vision, mission, core values and goals. Proposers are encouraged to review the agency’s Comprehensive Business Plan and Annual Report and

Strategic Plan, both of which may be found on the Texas Lottery’s website at www.texaslottery.com (Click on About, Publications).

1.3. Our Vision and Mission

Vision – To be the preeminent Lottery and Charitable Bingo agency through innovative leadership.

Texas Lottery Mission – The Texas Lottery is committed to generating revenue for the

State of Texas through the responsible management and sale of entertaining lottery products. The Texas Lottery will incorporate the highest standard of security, integrity and responsible gaming principles, set and achieve challenging goals, provide quality customer service and utilize a TEAM approach.

Charitable Bingo Mission – Provide authorized organizations the opportunity to raise funds for their charitable purposes by conducting bingo. Determine that all charitable bingo funds are used for a lawful purpose. Promote and maintain the integrity of the charitable bingo industry throughout Texas.

1.4. Our Core Values

Integrity and Responsibility — The Texas Lottery Commission works hard to maintain the public trust by protecting and ensuring the security of our lottery games, systems, drawings and operational facilities. We value and require ethical behavior by our employees, licensees and vendors. We promote the integrity of charitable bingo in Texas for the benefit of charitable organizations.

Innovation — We strive to incorporate innovation into our products to provide the citizens of Texas with the best entertainment experience available through our products.

We pursue the use of technology that enhances the services that we provide to our customers and reduces our operating expenses. All proposed innovations must be authorized by Texas law, and do not include video lottery, casino gaming, internet-based lottery sales, fantasy sports, or any other activities not authorized by law.

http://www.texaslottery.com/

Fiscal Accountability — We emphasize fiscal accountability by ensuring that all expenditures directly or indirectly generate revenue, enhance security, fulfill regulatory requirements, improve customer service and/or boost productivity. We recognize our responsibility in generating revenue for the State of Texas without unduly influencing players to participate in our games. We maximize benefits to charities through the continual examination and review of charitable bingo operations.

Customer Responsiveness — The Texas Lottery Commission takes pride in providing exemplary service to the people of Texas through the courteous dissemination of clear and accurate information about our products, services and regulatory functions. We seek and respond to feedback expressed by our employees, retailers, licensees and the playing and non-playing public. We apply this feedback in the development of our products and in the services that we provide.

Teamwork — We are committed to creating an environment of mutual respect where open, honest communication is our cornerstone. We embrace the diversity of our team and individual perspectives in working together to achieve our common goals.

Excellence — We strive for excellence by taking a position of leadership on issues that impact the Texas Lottery Commission and achieve challenging goals by focusing on our core values.

1.5. Schedule of Events

The following time periods are set forth for informational and planning purposes only.

The Texas Lottery reserves the right to change any of the time periods and will post all changes on the Electronic State Business Daily, https://www.txsmartbuy.com/esbd and/or the Texas Lottery website, https://www.texaslottery.com (Click on About, Doing

Business with TLC, Procurement).

Date Event

June 10, 2024

(4:00 p.m., CENTRAL TIME)

Issuance of RFP

June 25, 2024

(9:00 a.m., CENTRAL TIME)

Pre-Proposal Conference (Virtual conference -see Section 2.3.)

July 9, 2024

(4:00 p.m., CENTRAL TIME)

(Late Letters of Intent and Executed Non-

Disclosure Agreements will not be considered)

Letter of Intent and Executed Non-Disclosure

Agreement Due

July 30, 2024

(4:00 p.m., CENTRAL TIME)

(Late Questions will not be answered)

First Round Written Questions Due

On or before Responses to Written Questions Issued https://www.txsmartbuy.com/esbd file://///FSRESOURCE/RESOURCE$/Legal/LCMS%20Assigned%20Case%20Files/00%20CONTRACTS/ACTIVE/Lottery%20Operator%202024/PROCUREMENT/RFP%20Drafts/www.texaslottery.com

1.6. Successful Proposer’s / Lottery Relationship

The Texas Lottery Commission is a part of the Executive Branch of Texas State

Government. The Texas Lottery will not relinquish control over lottery operations. The

Successful Proposer shall function under the supervision of the Texas Lottery. Its operations will be subject to the same scrutiny and oversight that would apply if all operations were performed by Texas Lottery employees. Accordingly, all operations shall be conducted in adherence to applicable statutes and the highest ethical standards.

1.7. Procurement Authority

This RFP and all activities leading toward the execution of a written contract under this

RFP are being conducted in accordance with the State Lottery Act (Tex. Gov't Code. §§

466.001, et seq.), as amended; the Texas Lottery's administrative regulations (16 TAC

§§ 401.101, et seq.); and other applicable laws of the State of Texas. All Proposers should read and be familiar with the State Lottery Act and 16 TAC §401.101-103.

August 13, 2024

August 1 – August 23, 2024

(as may be revised by the Texas Lottery)

Mandatory HSP Workshops (Zoom, TEAMS or telephone conference)

August 29, 2024

(4:00 p.m., CENTRAL TIME)

(Late Questions will not be answered)

Second Round Written Questions Due

On or before

September 17, 2024

Responses to Written Questions Issued

September 9 – September 25, 2024

(4:00 p.m., CENTRAL TIME)

Additional HSP Workshops (if necessary)

(Zoom, TEAMS or telephone conference)

October 15, 2024

(4:00 p.m., CENTRAL TIME)

(Late Proposals will not be considered)

Deadline for Cost Proposals, Set up Costs and

Proposer’s Commitment

October 16, 2024

(4:00 p.m., CENTRAL TIME)

(Late Proposals will not be considered)

Deadline for Technical Proposal, Bid

Bond/Proposal Surety, and Protest/Litigation

Bond

December 9 – December 20, 2024

(as may be revised by the Texas Lottery)

Oral Presentations (to be conducted at Texas

Lottery’s sole discretion)

January 6 – January 24, 2025

(as may be revised by the Texas Lottery)

Site Visits (to be conducted at Texas Lottery’s sole discretion)

On or before

March 3, 2025

(or as soon as possible thereafter)

Announcement of Apparent Successful

Proposer

1.8. Proposals Subject to The Texas Public Information Act

The Texas Lottery is subject to the Texas Public Information Act (Act) (Chapter 552, Government Code). Proposals submitted to the Texas Lottery in response to this RFP are subject (in their entirety) to release by the Texas Lottery as public information. A

Proposal, or specific parts thereof, may, however, be shown by the Proposer to fall within one or more of the exceptions to disclosure provided in the Act, the State Lottery Act or other applicable law. Marking an entire Proposal as “confidential” or “copyrighted” is unacceptable. If a Proposer believes that parts of its Proposal are confidential under the Act, it should specify the confidential information by marking “Confidential” on each page or by each paragraph containing such information prior to submitting the Proposal to the Texas Lottery. In response to this section, Proposers shall provide the Texas

Lottery with specific and detailed reasons for each item marked “Confidential”. Vague and general claims to confidentiality are not acceptable. This detail is necessary so that the Texas Lottery will have sufficient information to provide to the Attorney General of

Texas, if a ruling regarding the confidentiality of such information is requested. Failure of a Proposer to respond to such notification may result in the release of all or part of the

Proposal as public information. It is the Proposer’s obligation to submit briefing to the

Office of the Attorney General setting forth the basis upon which the requested information should remain confidential. The Attorney General may determine all or part of a Proposal to be public information even though parts of the Proposal were marked

“Confidential” by the Proposer. Additionally, see Sec. 552.0222 of the Act relating to contracting information that is considered public and shall be released.

The Texas Lottery assumes no responsibility for asserting legal arguments to the

Attorney General on behalf of Proposers.

Proposers are advised to consult with their legal counsel concerning disclosure issues resulting from this procurement process and to take precautions to safeguard trade secrets and other proprietary information.

The requirements of Subchapter J of the Act may apply to this Proposal and the

Successful Proposer, contractor, or vendor agrees that the Contract can be terminated if the Successful Proposer, contractor or vendor knowingly or intentionally fails to comply with a requirement of that subchapter. See Attachment I.

1.9. Misunderstanding or Lack of Information

By submitting a Proposal, a Proposer agrees that it fully understands and will abide by the terms and conditions of the RFP and it will not make any claims for, or have any rights to, cancellation or relief without penalty because of any misunderstanding or lack of information. The Executive Director reserves the right to accept Proposals by waiving minor technicalities if the Executive Director, within his or her sole discretion, determines it to be in the best interests of the Texas Lottery. The decision of the Executive

Director shall be conclusive, and subject to protest under Section 2.22 of this RFP.

1.10. Rejection of Proposals and Cancellation of RFP

Issuance of this RFP and/or retention of Proposals does not constitute a commitment on the part of the Texas Lottery to award a contract. The Texas Lottery maintains the right to reject any or all Proposals, and to cancel this RFP, if the Texas Lottery, in its sole discretion, considers it to be in its best interests to do so.

1.11. Ownership of Proposals

All materials submitted by a Proposer will become the property of the Texas Lottery and may be used as the Texas Lottery deems appropriate.

1.12. Incurred Expenses

The Texas Lottery accepts no obligations for costs incurred in preparing and submitting a Proposal. Proposals shall be submitted at the sole expense of the Proposer. All

Proposals shall be prepared simply and economically, providing a straightforward, concise delineation of the Proposer’s capabilities to satisfy the requirements of this RFP.

1.13. Proposal Tenure

All Proposals shall be valid for a period of three hundred and sixty-five (365) Days from the deadline for submitting Proposals.

1.14. No Texas Lottery Obligations

The Texas Lottery reserves the right to select qualified Proposals to this RFP without discussion of the Proposals with Proposers. It is understood that all Proposals will become a part of the Texas Lottery’s official procurement files after the Contract has been awarded or the procurement has been terminated, and will be available for public inspection except for portions that the Proposer has designated as proprietary and confidential (see Sections 552.110 and 552.305 of the Public Information Act and RFP

Section 1.8 above).

1.15. Successful Proposer’s Obligations

The Successful Proposer shall always be responsible for the performance of any contractual obligations that may result from the award of the Contract and shall be liable for the non-performance of any or all Subcontractors.

1.16. Captions

The captions to the sections of this RFP are for convenience only and are not part of the

RFP’s substantive terms.

1.17. Parts Incorporated

All attachments listed in the Table of Contents are incorporated into and expressly made a part of this RFP.

REQUEST FOR PROPOSALS FOR PART 2

LOTTERY OPERATIONS AND SERVICES PROPOSAL PROCESS

2. PROPOSAL PROCESS

2.1. Contact Person

The sole point of contact for communications concerning this RFP will be Juanita Rylee, whose mailing address and email address, are as follows:

Juanita Rylee CTCD, CTCM

Contracts and Procurement Manager

Texas Lottery Commission

P. O. Box 16630

Austin, TX 78761-6630

Phone (512) 344-5184 contracts@lottery.state.tx.us

The Texas Lottery headquarters’ physical address for deliveries is:

Juanita Rylee CTCD, CTCM

Contracts Management and Procurement

George H.W. Bush State Office Building

Texas Lottery Commission

1801 N. Congress Avenue

Austin, TX 78701

Cost Proposals, Start-up Costs and Proposers’ Commitments shall be delivered to:

Bob Biard

General Counsel

George H.W. Bush State Office Building

Texas Lottery Commission

1801 N. Congress Avenue

Austin, TX 78701

Hand or Overnight Delivery: The Texas Lottery headquarters is located at 1801 N.

Congress Ave., the George H. W. Bush State Office Building. This is a secure building, and all visitors shall check in at the front desk in the lobby of the main building off E.

18th Street. If you are hand delivering a Proposal, please provide 24-hour advance notice via email to contracts@lottery.state.tx.us of an eight hour delivery window and allow adequate time to check in and for TLC staff to receive your Proposal timely prior to the submission time listed in the Schedule of Events.

mailto:contracts@lottery.state.tx.us

2.2. Prohibition Against Unauthorized Contact

The Texas Lottery is committed to a procurement process that maintains the highest level of integrity. Accordingly, Proposers, as well as their agents, liaisons, advocates, lobbyists, legislative consultants, representatives or others promoting their position, are limited to those communications authorized by and described in this RFP. Any attempt to influence any of the participants, whether that attempt is oral or written, formal or informal, direct or indirect, outside of this RFP process is strictly prohibited.

Should allegations of improper contact be made prior to Contract Award, the Executive

Director may investigate those allegations and, in his sole discretion, disqualify a

Proposer.

2.3. Pre-Proposal Conference

Prospective Proposers are strongly encouraged to attend a virtual Pre-Proposal

Conference. See the Schedule of Events for the date and time. The Pre-Proposal

Conference will include an overview of the RFP and a presentation on the HUB

Subcontracting Plan (HSP) requirements. A question-and-answer session will also take place regarding general, technical and HSP questions. Attendance at the Pre-Proposal

Conference is recommended, but not mandatory. A link to the virtual Pre-Proposal

Conference will be posted on the Texas Lottery website at www.texaslottery.com and on the Electronic State Business Daily (ESBD), https://www.txsmartbuy.com/esbd in advance of the day and time listed in the Schedule of Events. The Texas Lottery intends to use Microsoft TEAMS for the conference. A video of the Pre-Proposal Conference will be posted on the Texas Lottery website.

2.4. Letter of Intent to Propose

All prospective Proposers are required to submit a non-binding Letter of Intent (LOI)

(Attachment J) to propose, which must be received no later than the day and time listed in the Schedule of Events. LOIs not timely received will not be considered. The LOI must identify the entity that may submit a Proposal in response to this RFP and be signed by an authorized representative of the prospective Proposer. Responses to questions and other information pertaining to this procurement will be sent only to those prospective

Proposers who submit a LOI. The LOI shall be emailed to contracts@lottery.state.tx.us.

It is the sole responsibility of prospective Proposers to verify timely receipt of LOIs.

FAILURE TO SIGN AND SUBMIT A LOI IN ACCORDANCE WITH THE

SCHEDULE OF EVENTS WILL RESULT IN REJECTION OF A PROPOSAL AND

DISQUALIFICATION OF THE PROPOSER. LATE LOI’S WILL NOT BE

CONSIDERED. NO EXCEPTIONS WILL BE MADE.

http://www.texaslottery.com/ mailto:contracts@lottery.state.tx.us

2.5. Non-Disclosure Statement

During the course of this procurement, Proposers may receive information relevant to

Lottery security or information that is confidential or claimed to be proprietary by third parties. Therefore, in order to receive any such information, Proposers are required to submit an executed Non-Disclosure Statement (NDS) (Attachment K) which shall be signed by an authorized representative of the prospective Proposer and shall be emailed to contracts@lottery.state.tx.us no later than the day and time listed in the Schedule of

Events. All directors, officers, employees and agents of a prospective Proposer will be required to maintain the confidentiality of all information provided either in writing or orally pursuant to the NDS that is confidential or claimed to be proprietary to third parties.

A PROPOSER’S FAILURE TO SUBMIT AN EXECUTED NDS IN ACCORDANCE

WITH THE SCHEDULE OF EVENTS AND TO COMPLY WITH THE NDS WILL

RESULT IN REJECTION OF ITS PROPOSAL AND DISQUALIFICATION OF THE

PROPOSER. LATE NDS SUBMISSIONS WILL NOT BE CONSIDERED. NO

EXCEPTIONS WILL BE MADE.

2.6. Mandatory HUB Subcontracting Plan (HSP) Workshop

The Texas Lottery will schedule mandatory one-on-one workshops with Proposers as discussed further in Part 5 of this RFP.

2.7. Questions

Written questions concerning this RFP will be accepted and responses posted on the

Electronic State Business Daily (ESBD), https://www.txsmartbuy.com/esbd, and the

Texas Lottery website, https://www.texaslottery.com/ according to the timetable established in the Schedule of Events. Questions received after the deadlines set in the

Schedule of Events may be reviewed by the Texas Lottery, but will not be answered. Any addenda or amendments, whether made as a result of a prospective Proposer’s written questions or otherwise, will be posted on the ESBD and the Texas Lottery website. It is the responsibility of the Proposer to check these websites for any additional information regarding this RFP.

Questions shall be submitted by email by the question submission deadline to:

contracts@lottery.state.tx.us

A Proposer shall submit questions in writing and is responsible for obtaining clarification as to any ambiguity, conflict, discrepancy, exclusionary specification, omission or error in this RFP (collectively, errors) prior to submitting a Proposal, but in no event shall be entitled to additional compensation, relief or time by reason of any error or its later correction. If a Proposer fails to obtain written clarification of any errors, the Proposer mailto:contracts@lottery.state.tx.us file://///FSRESOURCE/RESOURCE$/Legal/LCMS%20Assigned%20Case%20Files/00%20CONTRACTS/ACTIVE/Lottery%20Operator%202024/PROCUREMENT/RFP%20Drafts/www.texaslottery.com/ shall submit a Proposal at its own risk; and, if awarded the Contract, the Proposer shall be deemed to have waived any claim to contest the Texas Lottery’s interpretation thereof.

2.8. Statement of Work Format

Parts 6 through 10 of this RFP constitute the Statement of Work and are structured to provide Proposers with a thorough understanding of the goods and services required for the Texas Lottery’s operations. Some sections of the Statement of Work describe in detail the business process and/or functions that shall be provided. Other sections are written in more general terms to allow Proposers to offer a range of solutions. The structure of Parts

6 through 10 is as follows:

Introductory Paragraph – provides a brief overview of the service area and includes information on current state activities and metrics. Example:

6.2 Account Management

Account Management Services are those activities associated with the ongoing management of the service environment. The following table identifies the Account

Management requirements.

Roles and Responsibilities – provides a verbal definition of the labor to be performed.

Example:

Table 1. Account Management Requirements

Roles and Responsibilities Successful Proposer TLC

1. Develops, documents and maintains Account

Management procedures that meet Texas Lottery requirements.

X

Detail Requirements – provides detailed action requirements that include, but are not limited to, Service Level metrics, deliverables, and service requirements. Example:

Detail Requirements

2. The Successful Proposer shall provide verbal and/or written status reports to

Texas Lottery management in accordance with the requirements of this RFP and the Contract and on a frequency to be determined by the Texas Lottery.

Response Requirements – outlines the minimum response requirement for Proposers.

Proposers shall provide a detailed response for each numbered item. Responses should address how the Proposer will meet all of the roles and responsibilities and detail requirements for the section. Also, see Specified Options, Invited Options and Offered

Options in Part 11 for a response. Example:

Response Requirement

3. The Proposer shall acknowledge and accept the roles and responsibilities and detail requirements indicated in this section.

4. The Proposer shall provide a description of its proposed account management process.

Service Level Requirements – identifies the Service Level Requirements for the section.

The service levels are described in detail in Sections 3.62 and 3.63 of the Contractual

Terms and Conditions. Example:

Table 2. Account Management Service Level Requirements (SLRs)

SLR # SLR Name

3.60.6 Failure to Permit an Audit or Examination

2.9. Submission of Technical Proposal

Technical Proposals along with the Bid Bond/Proposal Surety and Protest/Litigation

Bond required by Sections 2.9, 2.10 and 2.11 shall be delivered to Juanita Rylee at the address provided in Section 2.1.

Technical Proposals, Bid Bonds/Proposal Surety and Protest/Litigation Bonds shall be received by Juanita Rylee no later than the deadline established in the Schedule of Events, in a sealed container addressed and designated conspicuously as “Technical Proposal for

RFP 362-2024-0003.” No exceptions will be made. Proposers may deliver Technical

Proposals and bonds prior to the due date and time. DO NOT INCLUDE A COST

PROPOSAL WITH THIS SUBMISSION. COST PROPOSALS SHALL BE

SUBMITTED SEPARATELY.

The Lottery assumes no responsibility for any delays caused by hand delivery, U.S.

Postal Service (USPS) mail or delivery service. It is the Proposer’s responsibility to allow sufficient time for delivery to ensure timely receipt by the contact person.