National City Sues Citicorp and Ohio in Dispute Over Benefits Contract

and Citicorp Services Inc. over a recently awarded electronic benefits transfer contract. The subsidiary of National City Corp., Cleveland, claims in its suit that the Ohio Department of Human Services improperly awarded an electronic food stamp delivery contract to Citicorp. "Citi bid $78 million and National City bid $88 million," said Ron Rhodes, a spokesman for the Ohio Department of Administrative Services. "We feel very comfortable with the process and feel we chose the best bid." National City Processing claims that it was the lowest qualified bidder. It claims that its cost per recipient is lower than Citicorp's. "The term 'lowest qualified bidder' has a dual implication," said Delroy A. Hayunga, chairman and chief executive officer of National City's Stored Value Systems unit. "We offered the best deal in terms of both cost and service capabilities," he added. A Citicorp spokeswoman echoed the Ohio official's remarks. The lawsuit, which was filed in Ohio's Franklin County Court of Common Pleas, seeks a permanent injunction preventing the state of Ohio and Citicorp from performing under the contract. The court has not yet acted on National City Processing's request. A preliminary hearing is scheduled for Nov. 9. The contract awarded to Citicorp calls for the New York-based bank to develop, implement, and operate a system to distribute food stamp benefits to more than one million Ohio residents. The system will use a plastic smart card, embedded with a computer chip that contains the information needed to authorize food stamp benefits. The benefits would be delivered through point of sale terminals at more than 7,000 merchants throughout the state. Ohio's statewide rollout of electronic benefits transfer follows a successful pilot project by National City Processing in Montgomery County. In that test program, National City Processing served 11,000 food stamp clients and 90 merchant locations.