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The Massachusetts Bay Transportation Authority, or MBTA, in Boston recently approved another contract with Scheidt & Bachmann, as it seeks to extend the life of its existing fare-collection system until a delayed new fare system from Cubic Transportation Systems arrives.
This “reset” the Cubic project, with the parties agreeing to increase the contract cost by nearly 30% to just over $935 million and to add two more years to the rollout schedule–all in the hopes of getting the project back on track.
The Massachusetts Bay Transportation Authority, or MBTA, in Boston recently approved another contract with Scheidt & Bachmann, as it seeks to extend the life of its existing fare-collection system until a delayed new fare system from Cubic Transportation Systems arrives.
The MBTA board unanimously approved a $51 million contract with Scheidt & Bachmann, longtime vendor of the agency’s closed-loop CharlieCard program. The contract will mainly upgrade MBTA’s current payments channels to comply with a new version of the Payment Card Industry Data Security Standard, PCI DSS 4.0, by March 2025.
The contract also “addresses ‘state of good repair’ back office critical issues,” and extends the life of the current system, which an MBTA official described as “old and creaky.” Scheidt & Bachmann originally implemented the CharlieCard system for the card’s launch in late 2006.
The delay in Cubic’s delivery of the “next-generation” fare system made the new contract with Scheidt & Bachmann necessary, said the official, David Panagore, MBTA’s chief administrative officer. He added that the Scheidt & Bachmann contract would include $7.4 million for three years of maintenance, “allowing us time, if we need it, if there are any further delays in the Cubic engagement.”
The Scheidt & Bachmann contract includes a sizable contingency fee of 20%, or $10.2 million, to cover “unknown unknowns,” he said, speaking at a May 25 MBTA board meeting.
“When you open up an old system as this, you pull up the hardware, you may discover something needs to be replaced,” Panagore said.
That brings the total budget authorized by the board to $61.2 million, the $51 million contract, plus a $10.2 million contingency. (See MBTA staff presentation on new contract.)
No Detailed Update Yet on Cubic Project
Panagore made it clear during the section of the May 25th board meeting covering the Scheidt & Bachmann contract that he would not be providing an update on the Cubic rollout, but would offer an update later.
At one point, however, in response to comments by MBTA board members, Panagore did say that Cubic, at present, was on track to meet the extended deadlines in the revamped agreement of the project.
That likely refers to the agreement MBTA reached with Cubic and financing partner John Laing Group in late 2019 and finalized in June 2020. This “reset” the Cubic project, with the parties agreeing to increase the contract cost by nearly 30% to just over $935 million and to add two more years to the rollout schedule–all in the hopes of getting the project back on track, as Mobility Payments reported earlier.
Cubic’s implementation is the main focus of the revamped agreement but it included what appears to be an earlier $49 million contract for Scheidt & Bachmann to extend the life of the aging CharlieCard system. That contract reportedly included new fare vending machines and upgraded software and hardware.
A public-private partnership finances the next-generation fare project, sometimes called “AFC 2.0.” It includes expenses for operation and maintenance by Cubic for at least 10 years. MBTA largely pays for the system after it is built. The John Laing Group leads the financing of the project, which came from at least six banks and financial institutions.
Instead of the earlier “big bang” approach to launching the new fare system in Boston all at once–a model that had failed for Cubic in Chicago in 2013–the revamped agreement put a phased rollout schedule in place. Cubic had success taking a phased approach with its OMNY system implementation in New York.
The agreement for the new rollout schedule between MBTA, Cubic and the John Laing Group had earlier appeared to call for four phases and a final deadline in 2024. That would be to roll out the new fare system throughout MBTA’s subway, buse, commuter rail and ferry networks. It would include open-loop contactless payments, an expanded closed-loop CharlieCard program, and new mobile app. MBTA was the fourth largest transit agency in the U.S. in 2019, with ridership of 352 million.
When asked by Mobility Payments if the final deadline for the AFC 2.0 project was still 2024, an MBTA spokeswoman pointed to a “Fare Transformation” summary page on the agency website. It seems to say that the last year of the project timeline will be 2025, not 2024. And there is fifth phase, which will enable users to tap the same fare media on all four of MBTA transport modes, from wherever they are in the agency’s service area.
Board Member: ‘Milestones That They Never Reached
The parties agreed to add at least two years to the rollout schedule and more than $200 million to the previous $723 million cost of the contract around four years ago. Despite the time that has passed, two MBTA board members were still complaining about the delays during the recent board meeting, May 25. And they worried that Cubic would not hit the new deadlines. The comments indicate there would be much resistance if Cubic sought another extension.
“So I know we talked about this in the past, but Cubic, they had all kinds of incentives to get this done, right? Milestones that they never reached,” said board member Bob Butler, a local organized-labor official, who fills the seat on the board reserved for the AFL-CIO union. “It’s very important that you come back with this contract, because if they’re not going to follow through, there’s only probably five different companies that do this type of work in the country. So (we’re) kind of handcuffed a little bit, right?”
“In some sense, yes,” responded Panagore. “I would also say that with the Scheidt and Bachmann contract, the way we’ve laid it out with the O&M (operations and maintenance), it provides us more runway and more ability to have conversations with Cubic in terms of addressing their needs, while at the same time not (being) entirely beholden to only one contractor.”
“So why didn’t S&B (Scheidt & Bachmann) bid on this contract against Cubic?” continued Butler.
“I was not here at the time; that was back in 2017. But I believe that at the time, we selected Cubic as the best available out there,” said Panagore, adding that both MBTA and Cubic were “frustrated” by the contract.
Eric Goodwine, a commercial banker, recently appointed to fill the MBTA board’s public/private finance seat, noted that the project was originally due to be finished in 2022 after Cubic and the John Laing Group finalized the financing and contract with MBTA in 2018.
“So we’re beyond 2022; (it’s) heavily delayed,” said Goodwine. “How are we holding them accountable since 2018?”
“I’d like to come back to the board with a full detail on that,” responded Panagore, adding that the “restated project agreement” has a “very stringent set of performance guidelines to ensure that the product that we get is delivered.”
He added that because the project is a public-private partnership, the agency is “paying for the outcome and performance based upon timeframes in the project, so you don’t have that same degree of control.
“They’re in the driver’s seat on the development, and they’re currently within their timeframes of the agreement to perform. But (that’s) their extended timeframe for this fallback.”
A Cubic spokesperson did not immediately respond with a comment when asked if the vendor could offer an update on progress for the MBTA rollout.
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