The District’s current lottery manager was assessed more than $350,000 in penalties this week for a series of system failures that left retailers temporarily unable to issue tickets and account for the tickets sold.

Lottery Technology Enterprises was ordered Thursday by a D.C. contracting officer to pay $351,482 in liquidated damages for performance breakdowns in 2007 and 2008.

The penalties come as LTE is locked in a heated political battle with W2I, a firm that was given a contract to manage the lottery by Mayor Adrian Fenty, only to see that contract tabled by the city council.

“Once again you have a contractor who has shown it cannot perform and service a lottery contract the way it should be serviced,” said Crystal Wright, spokeswoman for W2I. “The vendor’s broken.”

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LTE spokeswoman Ann Walker Marchant did not respond to requests for comment.

The damages assessed by contracting officer Eric Payne break down like this: $86,582 for a 34-minute, 38-second system failure March 2, 2007; $147,499 for a system failure and “degraded performance” July 4, 2007; and $117,400 for two days of degraded performance between April 30 and May 1, when retailers were unable to access weekly settlement reports.

Payne, director of contracts for the city’s Chief Financial Officer Natwar Gandhi, has described the proposed $120 million deal with W2I as a “win-win for the District of Columbia in terms of technical superiority and cost savings.” A joint venture of Greek firm Intralot and fledgling D.C.-based W2Tech, W2I is expected to save the District upward of $8 million a year while modernizing the lottery operation.

LTE President Leonard Manning and his partner company, G Tech, have steadily fallen out of favor with the city’s lottery board after a series of foul-ups, including a 2006 incident in which hackers were able to print nearly $80,000 in phony tickets.

But lottery problems haven’t swayed city lawmakers. Citing questions about W2I’s inexperience in lottery management and its close ties to the Fenty administration, the council tabled the W2I contract in May.

“If they want to replace the current contractor, they’re going to have to come up with somebody better,” at-large Councilman Phil Mendelson said Friday.

Fenty later withdrew the contract, but he might reintroduce it in September.

mneibauer@dcexaminer.com