Despite contest, MD board approves $20M contract to combat SNAP benefits theft

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ANNAPOLIS — In approving a $20 million contract Wednesday, Maryland officials are hoping to hasten the rollout of protections against fraud and theft for people who rely on SNAP payments, formerly Food Stamps, and other government cash benefits.

Preventing benefits theft will also save taxpayers’ money. As of Wednesday morning, the state had paid more than $27 million to replace stolen benefits for over 41,000 low-income households, state Human Services Secretary Rafael Lopez said during a Board of Public Works meeting.

“If we fail to act now, Maryland will pay more for extension of the current system contract, which does not provide enhanced security features to protect Marylanders from benefit theft,” Lopez said during the meeting of the board, which comprises the governor, comptroller and treasurer.

The Electronic Benefit Transfer (EBT) debit-type cards that people use to access their monthly benefits — which averaged about $327 last fiscal year — have become frequent targets for fraud nationwide.

In Maryland, more than 414,000 households rely on the EBT system to access their SNAP or other cash benefits.

While benefits funding is split between the state and federal governments, a private contractor generally produces and mails the EBT Independence Card and ensures that state officials follow federal laws and regulations in distributing the benefits, Lopez said.

Lawmakers last year required that all EBT cards issued after September 2023 include an embedded microchip, the use of two-way fraud alerts and a platform allowing cardholders to lock and unlock their cards, among other security measures.

But thefts have continued and state officials sought a company to implement the next generation of chip technology commonly found in debit and credit cards, among other improvements.

The Board of Public Works awarded the contract to Conduent, which has administered the EBT system in Maryland since 2007 and is under contract through December, over appeals from the losing bidder, Fidelity Information Services (FIS). The company submitted a $31 million bid.

Maryland attorneys representing FIS contended that they’d been waiting since April for the State Board of Contract Appeals to decide on their appeal and that the agency had repeatedly delayed the process.

They pushed unsuccessfully for the Board of Public Works to delay its decision until the State Board of Contract Appeals issued a ruling, which was expected to follow a July 31 meeting.

Lopez said the state would’ve faced a delay of at least nine months if the agency denied FIS’s protest, accounting for a six-month period to implement the new system. The matter also would’ve come before the Board of Public Works again.

Lopez claimed that if the ruling went in FIS’s favor, the state could’ve faced a delay of up to two years, as the Department of Human Services would’ve had to solicit, award and transition to a new vendor’s system.

Board of Public Works officials agreed that a further delay would’ve hurt the state.

“There’s a huge risk to the state in not proceeding,” Comptroller Brooke Lierman said during Wednesday’s meeting.