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S.C. firms protest payday lending contract award to Florida company

The state’s initial attempt to award a multi-million contract to develop a centralized, web-based database collection system for payday lenders has been temporarily suspended, due to a protest. A Columbia-based company, The Prism Group, and its business partner, Tom Sawyer Company, filed the protest against the state’s Information Technology Management Office in a series of letters in August. The fee-based contract to develop the new database system was awarded to Florida-based Veritec Solutions, and could be worth $15 million over five years. The state chief procurement officer, Michael B. Spicer, is scheduled to hear arguments in the formal protests Wednesday morning. Under contentious legislation approved by the General Assembly in June, South Carolina must establish a real-time, database collection system by February 2010 that payday lenders must consult before each payday loan is established. The database, which is to be designed by the winning company after an advertised bid process, will store such information as a payday loan applicants’ name, address, and Social Security number, along with driver’s license number, and a history of previous loan transactions, in order for the payday lenders to keep track of loans. The General Assembly restricted payday loans to $550 per loan, with a two-day waiting period between loans after a consumer takes out seven consecutive loans. The Prism Group and the Tom Sawyer Company, represented by the McNair Law firm, contend in protest documents the state did not fairly consider its financial strengths, and failed to understand the company’s existing, superior reporting capabilities.