As state officials take steps to use sophisticated computer-based background checks to detect welfare fraud, they acknowledged Monday that food stamps won’t be included in the process.

The federal government, which foots the entire bill for food stamps, was not interested in participating the state effort, which should get under way sometime next year, a state official said.

Pushed by House Republicans, the program is designed to run the identities of participants in state-run welfare programs through national databases to detect cases of fraud.

The databases would include state unemployment agencies, Social Security, state licenses, wage reporting, immigration status and FBI felons.

“They (the federal government) came back and said ‘no, we can’t do that,’” said Terry Smith, director of the Division of Family Assistance. “I think at the federal level they don’t have a policy for this; it’s too new.”

Last week, the New Hampshire Department of Health and Human Services took an early step to implement the system. It requested bid proposals from companies that would run the operation.

The proposal calls for a performance-based system. The vendor who finds the fraud gets to keep a percentage of the savings. The percentage is not set; it is part of the bid that state officials are soliciting. The company would end up paying for any investigation into false hits.

Republican House Speaker William O’Brien, an early advocate of the system, said on Monday that he wants state welfare officials to work with the federal government to reward vendors who uncover fraud in the food stamp program.

“While food stamps are federally funded, our citizens are both state and federal taxpayers, so we want to make sure that vendors don’t ignore food stamp fraud because the state will not recognize the benefit in stopping it,” O’Brien said.

Last year, food stamp recipients in New Hampshire totaled 56,464, the second highest welfare program after Medicaid, which amounted to 118,553, according to state figures.

Smith said the problem is that the federal government won’t allow payments to the vendor who finds the fraud. If New Hampshire were to reward the vendor when the vendor finds fraud, the state would have to use state dollars.

“There is an opportunity here for food stamps, but it’s a federal opportunity, not a state one,” he said.

But he added that many food stamp recipients also participate in other welfare programs such as Temporary Aid to Needy Families, Medicaid, and Aid to the Permanently and Totally Disabled. Those programs are either partially or entirely funded with state dollars and will be part of the new data analysis service.

If fraud is detected in one of those programs, the perpetrator would likely be on food stamps and lose those benefits, Smith said.

The deadline for responses is Sept. 28, and officials hope for final contract approvals in mid-December.

mhayward@unionleader.com