VATS = Vehicle Anti Theft System. It is a box under your dash that measures the resistance of the chip in your key. The chip in your key is a resistor and there were I think 6 different resistances that were used by GM. To bypass the resistor in the key you need to measure your keys resistance and buy a resistor from Radioshack that matches the resistance. Install it inline with the wire that goes to the box from the ignition switch, and then pop the chip out of the key. The car will then start without the chip. I had problems with my 95 and had it disabled. Is your alarm aftermarket? I may be wrong but I thought when the install aftermarket alarms they do the bypass. Anyway if you need it bypassed you can usually have an alarm shop do it for about $50.
If you decide to do the bypass just do a search on VATS and you will find a link to the diagram for installing the bypass. Good luck.
1993 Bonneville SC SSE With Supercharged Badges, Black and Gold, CAI, 180T, TR-55'*, 2.2 Pulley, Jet Stage 2 Chip, Ceramic coated PEM'*, Magnaflow, Flowmaster 80, Megs Tips.
1995 SLE (Wifes), White and Gold, CAI, APN, Magnaflow, otherwise stock.
1966 Ford Ranchero, 312ci 60 over block decked, GT40P heads Milled, RPM Air Gap intake, Holley 600, MSD Billet Dist., 6A Box, FlowTech Shorties, C-4 W/Shiftkit, 8" 4.11