Vic govt defends $1.7bn myki deal, denies tender was ‘flawed’

The Victorian government is “confident“ in its decision to award Conduent a $1.7 billion contract to run and upgrade the myki public transport ticketing system despite complaints from another bidder that the procurement process was “flawed”.

Last month, the government handed the business services provider a 15-year contract to replace the card-based ticketing system with an account-based system, giving Victorians the future ability pay for public transport using debit and credit cards, as well as connected smart devices.

The decision followed a two-year procurement process in which the Department of Transport also considered incumbent provider NTT Data and Cubic, which runs similar ticketing systems in Sydney and Brisbane.

But on Tuesday, a letter surfaced from two senior US-based Cubic executives accusing the government of giving Conduent “significant opportunity to explain and improve its offer” by holding discussions with the company after Cubic had made its final submission.

It came just hours before Cubic was announced as the successful bidder for Tasmania’s single statewide public transport ticketing system — a procurement process also reportedly the subject of controversy.

Image: Vrieselaar

In the letter to Premier Daniel Andrews last week, obtained by the ABC, Cubic chief executive Stevan Slijepcevic and corporate senior vice-president Jeffrey Lowinger asked the government to re-evaluate the myki bids.

“Cubic asks you review the flawed procurement process for the PTT (Public Transport Ticketing) and suggest the result be re-evaluated to ensure that Victoria receives the innovative technology solution its residents desire and deserve,” the letter reads.

The letter represents the second time in seven years that the company has cried fowl about a myki tender process.

At Budget Estimates on Tuesday morning, Public Transport minister Ben Carroll defended the contract with Conduent and said the Department had “run a very thorough procurement process at arm’s length”.

“Different companies when they aren’t selected and they haven’t been awarded the contract may be upset, and that’s just part and parcel of doing business, but we have awarded a system to a company that has a proven track record in 24 countries around the world,” he said.

“I’ve seen it, I’ve used it, I’ve experienced what they are going to bring to Melbourne, just like their eight open loop systems in other places around the world, and I’m very confident about the diligence and the procurement process.”

Liberal MP’s Nick McGowan and Bev McArthur raised issue with the department’s choice of the most expensive bidder, telling the committee that both NTT Data’s and Cubic’s bids were lower at $900 million and $1.66 billion, respectively.

Transport department investment and technology deputy secretary Dean Tighe said that while price was one of the factors, other technical and commercial considerations were taken into account during the assessment of the Conduent bid.

But Mr Tighe acknowledged that the team assessing the bid had not visited an overseas jurisdiction where the Conduent was operating a similar system in its “complete entirety”, referring to the ability to use credit and debit cards or payments by phones, as Cubic had suggested.

“You’ve given the tender to a [company] that actually doesn’t operate anywhere in the world today, despite… the minister referring to it as being off-the-shelf,” Mr McGowan told the Budget Estimates hearing.

Mr Tighe also told the committee that staff employed by NTT Data and responsible for myki would be “largely expected” to transition to Conduent when the contract begins in December. Both Conduent and NTT are part of the special purpose vehicle set up for the transition.

“We’ve gone for a 15-year operator to operate the myki system, upgrade 23,000 devices across the network, introduce progressively functionality for account-based ticketing… integrate [the] concession validation platform and also provide and lead the back-office operations,” he added.

Do you know more? Contact James Riley via Email.

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