Lowest Price Vendor Wins Despite Poor Quality in EBT Procurements
Definition
States intend to balance price and quality in EBT vendor selection, but evaluation processes allow the lowest-priced bid to prevail regardless of responsiveness or capability. This leads to contracts with under-responsive vendors, complicating performance management and increasing long-term costs. Systemic flaws in proposal scoring favor price over comprehensive quality assessment.
Key Findings
- Financial Impact: Higher total cost of ownership via poor performance (recurring over contract term)
- Frequency: Every procurement cycle (every 8-10 years)
- Root Cause: Vendor proposals are under- or over-responsive, with inconsistent scoring making fair price-quality comparisons impossible
Why This Matters
This pain point represents a significant opportunity for B2B solutions targeting Public Assistance Programs.
Affected Stakeholders
Procurement Evaluators, EBT Directors, Evaluation Committees
Deep Analysis (Premium)
Financial Impact
$100K-$200K in emergency overtime + potential civil penalties from retailers for late settlements + customer service complaints • $100K-$400K+ per contract annually in change order costs, state staff overtime, and unrecovered liquidated damages • $100K-$600K in federal audit findings, disallowance risk, remediation costs, and state coverage of failed vendor services
Current Workarounds
Ad-hoc change orders to fund workarounds; manual issue tracking spreadsheets; informal vendor negotiation via phone/email; state staff performing vendor functions manually • Benefits Issuance staff manually process benefit issuance using paper forms or legacy systems; overtime required; case-by-case authorization needed • Benefits Issuance staff work extended hours to manually reconcile and reprocess transactions; use legacy batch system as backup; manage retailer complaint calls manually
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Methodology & Sources
Data collected via OSINT from regulatory filings, industry audits, and verified case studies.
Related Business Risks
Excessive Change Orders Due to Inadequate RFPs in EBT Contracts
Unenforceable Contract Penalties in EBT Vendor Agreements
Payment by Attendance Instead of Enrollment
Delayed Subsidy Reimbursements Paid in Arrears
Subsidy Application Processing Delays and Error Corrections
Administrative Burdens and Paperwork Discouraging Subsidy Participation
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