Transactive Corp., an electronic benefits transfer vendor, is protesting the recent decision by six western states to award a lucrative contract to Citibank.

The unit of Gtech, claiming it was the low bidder, filed the protest May 24 with the Colorado Department of Health and Human Services. Citibank's bid won the contract to distribute welfare and other public assistance benefits through automated teller machines and point of sale networks.

The seven-year contract could be worth more than $120 million.

"We feel the integrity of the procurement process was seriously compromised," said Marc Palazzo, Transactive spokesman.

He said an independent consultant, Phoenix Planning and Evaluation Ltd., prejudiced the evaluating committee by showing a slide presentation that highlighted the Citibank system but excluded Transactive's. The latter's system is used in Texas.

Mr. Palazzo said Phoenix Planning had also worked with the Southern Alliance of States and the Northeast Coalition - which between them comprise another 15 states that have awarded contracts to Citibank - and is partial to the Citibank system.

A Citibank spokeswoman said the procurement process "was fair and effective" and Phoenix Planning "has not worked for Citibank in any capacity."

Transactive sued the Treasury Department in April 1995, challenging a procurement rule requiring that banks be the prime contractors for benefits transfer systems.

It also successfully protested Louisiana's contract award to a First Security Corp. unit last March. Mr. Palazzo said First Security "was not compliant with the requirements of" the request for proposal. "The state of Louisiana determined our protest had merit, withdrew the award, and issued a new RFP."

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