BankAmerica Corp. wants to distribute California's food stamp payments electronically.
The San Francisco-based bank said it will team with an experienced vendor, Deluxe Data Systems Inc., to improve its chances of winning a hotly contested electronic benefits transfer contract.
The project, in San Bernardino and San Diego counties, will be a model for the state. A five-year contract will be awarded by January, with rollout expected by September.
Expansion beyond the two counties will be covered by subsequent procurements.
California is the last big frontier for electronic benefits transfer; 40 states already have awarded contracts. Competition is expected to be "fairly intense," said Gary Glickman, president of Rockville, Md.-based consulting firm Phoenix Planning and Evaluation Ltd.
Bank of America believes it has an edge, said spokesman Cary Walker, with its "premier electronic distribution network, 85 years of dealing with public sector market, and relationships with many retailers across California."
As the state converts its food stamp program from a paper-based system, plastic cards will be issued to recipients, who will use point of sale terminals at supermarkets to access their benefits and pay for purchases.
BankAmerica, with $243 billion in assets, has the largest ATM network in the state, with 3,900 machines and more than 115,000 point of sale terminals. It also performs cash management services for 55 of California's 58 counties.
Deluxe, headquartered in Milwaukee, is involved in benefit transfer projects in 27 states. It processes four million to five million such transactions per month. Deluxe will bid as the prime contractor.
There will be others.
Austin-based Transactive Corp., which runs a program for the state of Texas, will partner with Union Bank of California, a unit of Bank of Tokyo- Mitsubishi Ltd. Citicorp, with 27 state contracts under its belt, will bid with Lockheed Martin, and Transfirst Inc., a subsidiary of Affiliated Computer Services, is expected to respond. Electronic Data Systems Inc. and Wells Fargo & Co. were among attendees at the pre-bidders conference, which makes them eligible to compete.
San Diego and San Bernardino counties account for 30% of the state's food stamp volume, with 150,000 cases, said Roberta York, staff analyst, San Bernardino Department of Social Services. Bids are due by Nov. 15. Los Angeles County, the largest in the state, distributes more than 40% of California's food stamps.
Mr. Glickman noted that California is a "natural market" for Bank of America, the state's dominant financial institution.