Calif. County to Hear Benefits Transfer Appeal

BankAmerica Corp., a new entrant to the competitive field of electronic benefits transfer, has won a contract in its own backyard. But a protest from a losing bidder, to be addressed today, may derail the victory.

The San Francisco-based bank, as a subcontractor to processor Deluxe Data Corp., was chosen to provide food stamp benefits electronically in two Southern California counties.

With most of the South and Northeast and the other western states taken, California is considered the last big frontier for EBT providers.

The contract to outfit San Diego and San Bernardino counties was hotly pursued by many prominent EBT candidates, including Citicorp and the bidder that protested the award, Austin, Tex.-based Transactive Corp.

Bank of America, with 4,400 point of sale terminals at 3,700 locations in San Bernardino county alone, offers a ready-made infrastructure for the system-which will provide recipients with access to food stamp accounts through government-issued debit cards.

Relationships with a large portion of retailers, consumers, and government agencies give the bank even more clout in the state.

"We were courted by every major vendor with a desire to play in California," said Frank Abraham, executive vice president of government services at the bank. "We bank 90% of the counties in California."

Mr. Abraham said he considered the contract a "critical" extension of business dealings with the "large and important accounts."

Certainly competitors like Citicorp, which has won contracts to provide benefits in 27 states, were unwelcome in BankAmerica territory.

Mr. Abraham said Deluxe Data had the most compelling technical skills, a key ingredient the newcomer needed to clinch the award.

The two counties invited bids last October. By Jan. 17, the counties had selected the winners. The protest from Transactive, which runs Texas' EBT program, the nation's largest, followed shortly. Although the protest was rejected by the San Bernardino selection panel, Transactive has pursued its protest to the county board of supervisors, which will hear arguments at its meeting today.

The G-Tech Corp. subsidiary claims it should have won because its bid was 30% lower than Deluxe Data's, which will cost $1.39 per cardholder, or $11.3 million over the life of the five-year contract.

Still, the Deluxe Data system is about 50 cents cheaper per case than the current paper-based system, according to Tom McLaughlin, the Milwaukee- based company's head of government services. Though price is an issue, said Mr. McLaughlin, Transactive scored lower on technical ability.

Mr. McLaughlin pointed out that Deluxe has been in the business longer than Transactive-it developed the first EBT system in 1993 for Maryland-and has more experience, with projects in seven states. With the strengths of Bank of America behind it, the company said it can provide the best service.

In addition to the program for three million recipients in Texas, Transactive runs a small pilot in Illinois. The company recently won contracts for Mississippi and Indiana, and is competing for those in Virginia and Michigan.

Transactive has pursued protests and lawsuits on several EBT projects. It succeeded in overturning an award in Louisiana, thus driving winning bidder First Security Corp. out of the business. The contract ultimately went to Deluxe Data.

Protests aside, Joe Gee, California's EBT coordinator, expects the contract to be ratified. Rollout is to begin in San Bernardino in October; San Diego County is to follow in January. The program is then expected to incorporate cash assistance benefits.

Though the ultimate statewide rollout will involve a new procurement process, Mr. Abraham said, "If we do the job we expect, we should receive strong consideration."

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER