For Immediate Release - August 31, 2011

Grossman Announces Dramatic Cost Savings of Banking Services Bid

Bid Process Results in $2.7 Million of Savings Over Three Years

Treasurer Steven Grossman today announced that his office's efforts to competitively bid four key banking services contracts has resulted in $2.7 million in anticipated savings to the Commonwealth over three years, a 33 percent reduction in the present cost of the state's banking business.

"When I first came into office, I promised to substantially change the way the Treasury does business, starting with putting all of our key contracts out to competitive bid," said Grossman. "The public is entitled to an open, transparent, and cost-effective bidding process, and these savings are the result of those guiding principles."

While the final terms of the contracts still have to be negotiated, the competitive bidding process identified Sovereign Bank and Bank of America as the institutions that will manage the business. As a result of the rigorous competitive bidding process, these two banks will deliver the same service to the Treasury, but at an anticipated cost of $1.86 million annually as opposed to the present cost of $2.77 million, a yearly savings of approximately $915,000. The four bid items were broken down as follows:

  • Core Banking Services - The central check-writing accounts of the Commonwealth, used to make payments for most of the state's business, including payroll, contracted services, tax refunds, and all direct deposits, will be managed by Sovereign Bank.
  • Lockbox and Electronic Credit and Debit Services - The accounts used to streamline the collection of tax payments and government fees, as well as electronic credit and debit services, will be managed by Bank of America.
  • Agency Advance Account - The checking accounts used to support various administrative expenditures at the agency level will be managed by Sovereign Bank.
  • Trial Court Account - The checking accounts used to support various expenditures at the Trial Court Clerk and Probation offices will be managed by Sovereign Bank.

Grossman said that the Treasury worked in close coordination with the Department of Revenue, the Comptroller's Office, and the Chief Administrative Justice of the Trial Court to select the most competitive offers. A total of six banks overall responded to the Request for Proposals for the various contracts.

In addition to these four banking contracts, Grossman said that his office identified dozens of significant contracts that could be put out for competitive bid when he first came into office. "Protecting the public's money is my top priority, and we'll continue to use an aggressive competitive bidding process to realize savings whenever and wherever we can," said Grossman.