‘Serious concerns’: Losing myki bidder raises questions about tender process

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One of the losing bidders for the contract to overhaul Victoria’s myki ticket system has claimed the state government ran an unfair tender process and questioned whether the winning company can deliver the technology improvements it has promised.

Cubic Transportation Systems – the world’s largest operator of public transport ticketing systems – sent a letter to Premier Daniel Andrews on Friday, saying it had “serious concerns about possible errors in the tender process” which “could impact Victorians for many years to come”.

The Andrews government announced three weeks ago that it had selected US-based outfit Conduent to run myki for the next 15 years under a $1.7 billion contract, which will include an upgrade of the system to allow passengers to travel using a bank card or smartphone rather than a standalone smartcard.

The premier told media on Tuesday he had been briefed on the letter’s contents, but had not personally read it.

“There’s been a process run. There’s a probity auditor that’s been deeply involved in that process,” he said.

“Advice was provided as to who won that process. And the tender has been awarded. Beyond that, I’m not really in a position to have anything more to say.”

Cubic – which already operates this type of “contactless” system in Sydney, London and New York – said Conduent had not yet delivered the technologies promised in its tender. Cubic said it may have been a cheaper option for Victoria.

“Cubic has successfully delivered projects around the world and has consistently been selected in procurements for those cities based on our proven products/services and ability to deliver these technologies on time and on budget,” the letter to the premier said.

“We urge you to personally evaluate if the right decision was made, particularly since the selected provider has not yet successfully delivered the technologies and services that the state is seeking.”

The Age has seen the letter from Cubic, which was first reported on by ABC News.

Public Transport Minister Ben Carroll spruiked Conduent’s experience running almost 400 ticketing systems globally, including in Paris, Dubai, Montreal and its native New Jersey, when announcing the contract.

But Cubic points out in its letter that none of those systems accept bank card or phone payments, saying that Conduent “overstated its experience” while the government procurement team failed to verify claims about its technology by visiting other cities or contacting other transit agencies.

An Andrews government spokesperson said Conduent had delivered a contactless payment system in the district of Flanders in Belgium, across multiple transport modes.

Cubic said that its bid was $100,000 lower than Conduent’s over the 15-year contract, and also claimed the state had “significant discussions and interactions” with Conduent after it submitted its own final bid on April 21, which gave it “a significant opportunity to explain and improve its offer”.

The premier was asked on Tuesday about the allegation that Conduent was still in talks with the government after Cubic had submitted its bid.

“I’m not certain they were,” was his response, adding it was up to the relevant department to determine whether the tender process needed to be reviewed.

“I have no advice that would lead me to be concerned at this point.”

A government spokesman said the procurement process was “a rigorous process undertaken by experts that concluded Conduent to be the best option for Victoria’s public transport network”.

“Conduent has a reputation for delivering successful projects in Australia and across major global cities. We have every confidence in this new ticketing contract and the track record of the technology,” they said.

Cubic’s letter is not the first time it has cried foul after losing a contract. It wrote to Victoria’s ombudsman and auditor-general in 2016 alleging it was treated unfairly in a tender process won by the incumbent myki operator, NTT Data.

It also launched unsuccessful legal action against the NSW government in 1999 after it was passed over to introduce a new smartcard system in Sydney.

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