Deluxe Data Systems Inc. and Unisys Corp, have formed an alliance to go after a state electronic benefits transfer contract in Pennsylvania.
Deluxe, a leading provider of processing services to electronicbanking networks, is involved in several EBT efforts, and computer manufacturer Unisys sees these activities as a growth opportunity for both its hardware and system integration areas.
"This is one of our first efforts to go after EBT," said Myles Tillotson, health and human services manager in Unisys' U.S. division. "We decided to go with someone who had a footing in the market to make our bid operational and functional."
Tom McLaughlin, vice president of government service for Deluxe, said the alliance was a unique opportunity to work with a company with "a good presence" in the state. Unisys' headquarters are in Blue Bell, a Philadelphia suburb.
"It is in our best interest to form a team whenever we go after these types of projects," Mr. McLaughlin said. "Anytime we can find a partner to help fund the up-front cost of the projects, it is positive."
Pennsylvania is the only place so far where the two companies are joining forces in the EBT area, but it "may lay the foundation for future projects," Mr. McLaughlin said.
"We have teamed up for other projects," he added. "Unisys came to us and offered us the ideal opportunity to be exposed to a new market."
The Pennsylvania Department of Public Welfare plans to award a five-year contract with two optional one-year extensions in the summer of 1995. It is valued at $100 million to $150 million over the seven-year period, and covers the delivery of both welfare and food stamp benefits through electronic payment terminals.
Mr. McLaughlin said he expected at least two competing bids - one from a Citibank-Lockheed alliance, the other from Transactive Corp., the EBT subsidiary of Tech Corp., a lottery-systems supplier.
Edward Furash, chairman of Furash & Co. in Washington, says the alliance approach is indicative of how competition between banks and nonbank system providers will shape up.
"The alliance is very consistent with the trends in the industry," he said. "Banks are making a stronger effort to go out after the business, and in order to do that partnerships need to be formed."
The Pennsylvania welfare agency intends to have a pilot system on-line by the spring of 1996 and the statewide system up and running by the summer of 1997.
The program will serve about 500,000 food stamp households and 700,000 welfare recipients through point of sale terminals and automated teller machines. The system is expected to reduce fraud and be less costly than the current manual and paper-intensive methods.
Under the Deluxe-Unisys alliance, Unisys will be the lead contractor and system integrator. Deluxe Data, best known in EBT circles as the contractor for Maryland's statewide system, will provide transaction processing and related services.
Both organizations said they expected to include additional third-party suppliers and service providers as part of the joint proposal,