The $390 Million MetroCard

Inside New York’s Megabuck Lovefest With Automation

In January, Richard Trenery, the transit official who oversaw MetroCard and automated fare collection in New York for eight years, got a new job: he is now vice president of business development for Cubic Transportation Systems, the company picked to deliver MetroCard to New York during his tenure. Since 1991, New York City Transit has paid Cubic more than $390 million for Metrocard.

Trenery's career move violates no laws. New York State Ethics Commission regulations stipulate only that he can't represent Cubic to New York in MetroCard matters he worked on. But his new gig is the latest tangle in a web of complications that have arisen since Transit officials decided to vend out their dreams of automation to a for-profit company with minimal public oversight.

Still on line: New York City shells out millions to the company that makes MetroCard.
photo: Tara Engberg
Still on line: New York City shells out millions to the company that makes MetroCard.

When Cubic won the MetroCard contract, the company effectively put New York City in its pocket. No part of this project has been competitively bid on for a decade.

When Cubic beat out one other finalist in 1991 for the MetroCard contract, the company effectively put New York City in its pocket. No part of this project has been competitively bid on for a decade.

Because Transit merely licenses the MetroCard software from Cubic, when the program breaks, the agency depends on Cubic engineers to fix it—which is often a lengthy, expensive, and convoluted process. Afraid that if the city brings in someone else Cubic will dissolve its warranty on the newly developed equipment, Transit won't bid out any of the work. And though Cubic has outfitted a dozen cities over the past 10 years, its strict nondisclosure agreements have left the firm's own specialists the only ones with the technical know-how to speedily mend the system.

"Every time they need a software change, they've got to petition Cubic and extend their contract," says Gary Hansjergen, director of stations for Local 100 of the Transport Workers Union. "Since the start, we've had 300 badass software problems that we've had to create walk-arounds for. . . . As time goes on, we find new things we never thought we'd find, then we address them, then we have to ask for new things.

"We have the talent in-house to do it ourselves, to write the program, but we don't write the program," Hansjergen adds. "We send a draft to Cubic. They putz around for a while, and then send us a coded disk."

Already committed to Cubic well into the next decade, Transit turned the volume even higher last year with a $17.8 million contract for the company to design 1000 new credit- and debit-card-only machines. The machines are supposed to be in place now, but they're still in the planning phase.

Two months ago, Transit asked for a new feature, and had to reduce its request by nearly 400 machines just to avoid a cost overrun. This means the city will either have to hand Cubic another mammoth contract to complete the order, or scale back its agenda.

Meanwhile, though the city has purchased some 1589 regular vending machines—the $50,000 metal behemoths with the speak-and-spell display screens—only about 1000 have been installed in stations. They're all equipped for what Cubic calls the "smart card," which customers merely wave in front of a turnstile to slide into a station. This capability suggests that New York might one day make the move from MetroCards; an agency spokesman says it has been discussed. Changing technology would, of course, mean yet more millions for Cubic, unless Transit actually bids the job out, which seems unlikely from past experience.

We didn't vote for this firm. Yet its principals vote in New York with their wallets. Cubic Corporation chairman Walter Zable gave Mayor Giuliani $1000 in February. Zable sent $2000 to Senate candidate Rick Lazio in June. Ron Kane, Cubic Transportation's local spokesman, gave $2000 to Lazio the same week as his boss. The Cubic Employees Political Action Committee also gave money to Lazio, and to Al D'Amato before him. Not to mention the $65,599 in soft money the company has funneled into Republican organizations since last October.

Now that we find ourselves stranded amid this archipelago of private interests, it seems reasonable to ask, who is Cubic? For an answer, it's helpful to return to the year Cubic won the New York contract, under what can fairly be called an odd set of circumstances.

The Closed-Loop Problem

When Cubic's not automating tollbooth clerks out of existence, its business is war.

Cubic Defense Systems sells high-tech war games, jam-proof data links, live-fire battle simulators, a "battlefield management system," and bull's-eye surveillance gadgetry to the U.S. Department of Defense. Its latest triumphs—the Multiple Integrated Laser Engagement System for the U.S. Army and the Area Weapons Effects Simulator for the British Ministry of Defense—deal in the fantasy of total control, replicating bureaucratically managed battlefield situations, noted by the company for their "fidelity and realism." The systems come complete with fake bullets derived from laser pulses, detection programs that register hits or kills without obliterating their targets, and gear that monitors individual soldiers and combat vehicles so superiors can pore over their every move after the firefight.

All well and good. But a decade ago, scandal riddled Cubic Defense.

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