Board approves EBT contract despite protest

A pending challenge of a contract to provide electronic benefits services to more than 900,000 state residents drew a stinging rebuke from Maryland Department of Human Services Secretary Rafael J. Lopez during a Wednesday meeting of the Board of Public Works.

The three-member board led by Gov. Wes Moore (D) unanimously approved a contract with an initial five-year term despite ongoing appeals by a losing bidder, Fidelity Information Services. The Milwaukee, Wisconsin-based contractor urged the board to delay approval, claiming the contract was illegal and that Lopez and his agency were misrepresenting the consequences of a delay.

“We would not bring to you — the constitutional officers of Maryland — an unlawful contract to sign,” Lopez told the board, responding to the claims. “We just wouldn’t do it. Saying so doesn’t make it true. What they’ve done, sadly, is sow doubt, and at the end of the day, we lead with integrity. So, coming after my or our team’s integrity will not work.”

Lopez said his agency wanted to move forward with the contract with D.C.-based Conduent State and Local Solutions to improve security for people who receive public assistance through its electronic benefits transfer system.

Conduent and Fidelity are the only two companies in the country that provide EBT management systems, Lopez said.

The five-year contract with Conduent is valued at $11.1 million. Two optional renewals of two years each could extend the contract into 2033 and add nearly $9 million to the total cost.

More than 930,000 state residents use the state’s electronic benefits transfer system. That number includes more than 380,000 who receive Supplemental Nutritional Access Program benefits and another 32,000 households that receive direct cash benefits.S

Maryland ranked second in the number of claims of stolen food assistance benefits in 2023, according to the U.S. Department of Agriculture. That year, there were more than 33,500 stolen benefit claims made in Maryland, which trailed only New York and its nearly 55,700 claims.

“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,” said Lopez. “This will likely result in a nine- to 24-months delay.

“Conservatively, we will also continue to pay more in state funds to replace stolen benefits without the enhanced, enhanced system features,” he said. “It is Marylanders who will pay the ultimate price in stolen benefits through no fault of their own, and they deserve better.”

Mike Miller, an attorney for Fidelity, agreed with the importance of implementing new security features such as benefit cards with chip technology.

“Here’s the problem: The chip card technology they’re talking about has nothing to do with the request today,” Miller told the board. “It’s not in the approval that you’re being asked to sign off. The chip card technology is actually going to be part of a very large modification, multimillion-dollar modification, sometime in 2025 that sets forth an entire new process and timeline for integrating that technology.”

Miller said the state will be stuck with Conduent and an expensive modification if it approved the contract before the completion of the appeal process.

The unanimous vote is the second time in a month in which the panel opted to approve a contract award while it is under appeal .

State law allows for the Board of Public Works to approve a contract subject to an ongoing appeal if the requesting agency can show the state has a substantial interest in avoiding a delay.

Lopez said the incoming vendor will help the state implement improved security for electronic benefits cards, which are similar to traditional bank cards and credit cards.

“This is a serious and important contract,” said Comptroller Brooke Lierman (D). “There’s a huge risk in the state not proceeding.”

Last month, Lierman expressed concerns about agencies that bring contracts to the board that are subject to appeal. She also warned losing bidders to not file frivolous appeals.

“I continue to be hopeful, and we’ll push harder and harder for things to be resolved quickly at MSBCA (Maryland State Board of Contract Appeals), and so I want to work with MSBCA as well as the agencies to make sure that things can get there and get done quickly, so that we don’t have huge delays,” she said.

Panel settles wage theft claim

The three-member board also approved a $221,884.35 settlement with eight employees of the Maryland Department of Health for what union officials said was an effort to withhold wages from state employees.

Patrick Moran, president of American Federation of State, County and Municpal Employees Council 3, said the payments resolve a scheme that involved employees of the health department. More than 40 employees were found to hold two different jobs within the agency.

A spokesperson for the union said employees were offered extra hours at a second facility but required to sign “contracts” that paid them less than their regular hourly wage. The union raised the issue in 2022 during contract negotiations.

Including the payment approved today, the state has paid out more than $600,000 to state employees affected by the scheme, according to the union.

“Make no mistake, this was another wage-theft scheme orchestrated on Larry Hogan’s watch that took advantage of hard-working state employees and deprived them of what they had earned and were owed,” Moran said. “And again, he had accomplices who have yet to be held accountable and are still working for MDH.”

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