Judge Vows Quick Decision on Letting Nonbank Bid for Benefits-Transfer

WASHINGTON - banks in the bidding for an eight-state electronic benefits transfer system, got a judge's promise Monday that he would decide the case before the contract is awarded. U.S. District Judge Emmet G. Sullivan put off until Thursday a ruling on the company's request for a preliminary injunction. An injunction would halt the Treasury Department's banks-only bidding for the new benefits transfer system. But the judge said repeatedly during a morning hearing that since he planned to decide the issues of the case quickly he saw little reason for an injunction. Judge Sullivan also indicated that when the case is argued on its merits he won't go easy on banks. "The record of the American banking industry, I'll be focusing on that," said Judge Sullivan. "I have to determine if it's in the interest of the public to have . . . banks distributing benefits." Transactive of Austin, Tex., sued the Treasury in March after the department issued an "invitation for expressions of interest" to replace welfare checks and food stamps with debit cards for a regional network in eight Southern states. The "invitation" was open only to financial institutions. Transactive, a subsidiary of lottery-services giant GTech Corp., argued that the Treasury instead should have issued a "request for proposals" - a competitive bidding process open also to nonbank companies that specialize in electronic benefits transfer. As it is, any bank awarded the project would have to subcontract with Transactive, Electronic Data Systems Corp., or another EBT specialist. But that wouldn't be as profitable for Transactive, argued the company's attorney, Kathleen Beggs. "The primes get to set the tune that the subs have to hum," she said. Judge Sullivan didn't dispute this, and he dropped hints that he agreed with many of Transactive's arguments. But the Treasury will not be awarding the EBT contract until Oct. 17, and the judge said he can decide the case by then - averting the need for a preliminary injunction. "What better possible position can you be in?" Judge Sullivan asked Ms. Beggs. "You have a judge telling you he will decide the case on its merits by Oct. 17." Ms. Beggs argued that even if the judge were ultimately to throw out the "invitation for expressions of interest" and order the Treasury to allow Transactive to bid, the company would still have missed out on several months of give and take between banks and the officials who will award the contract. "Citicorp and NationsBank and other financial institutions that have expressed an interest are all going to have a huge leg up on us," she said. For the moment, Transactive has the leg up. In 1994, it won the state of Texas' electronic benefits transfer contract, the biggest awarded so far. And as yet no bank has landed a big EBT deal.