The $390 Million MetroCard

Inside New York’s Megabuck Lovefest With Automation

Looking back, inspector Pritchard says he wishes the rules governing the switch from the public sector to a private company were stricter. "I always felt the law needed to be tighter in that area," says Pritchard, now retired and living upstate. "Whether it makes a case for malfeasance is doubtful. But to me, [those moves] just raised all sorts of ethical questions as to whether it should be allowed, or whether a person should do it. I have a pretty strong conviction that in public service you're not supposed to profit from it.

"I feel uncomfortable with it," he says. "I think a lot of people do. It's a reality. I always felt that the more exposure things like this received, the better."

But perhaps Trenery himself had the best response in 1989 when, faced with tales of Cubic Defense Systems' bribery of public officials, he said simply, "It would be far better if there were no insinuation of scandal."

The Open-Source Solution

These are the kinds of vexed relationships being studied by consumer advocates, who want technology to be employed responsibly, and by the burgeoning open-source movement, which wants computer code to be free.

Particularly now, when advanced proprietary technology can keep public agencies in thrall to a single corporation—with add-ons locking up a public bidding process for decades—the structure of public deals like that between Cubic and New York should be an oversized, frantically waving red flag for public watchdogs.

United in the belief that the best software is created only when the programs are available to everyone for testing and tweaking, open sourcers have fought for access to operating systems like Windows and encryption tools like the one that protects DVDs from piracy. They say public agencies would benefit from the same sort of process.

"We are pointedly aware that the situation has limited alternatives for us. We spend a great deal of time trying to get other companies to come into these markets for us. No one wants to be beholden to a single organization. It's not good business."

"You need to be able to get reliable, maintainable, affordable software," says Lawrence Rosen, executive director and general counsel for the Open Source Initiative, a licensing and activist group. "When the source of the software is published, you can look at it; you have the ability to see what it does, make your own improvements. The peer review process of open-source software gives a look at what's in the box."

In an open-source utopia, designing software would be a free, communal project, so businesses could shift to manufacturing hardware and maintaining, installing, and servicing systems. Where to drum up money for such a project in transit? Just take a look at Cubic's business over the years. Collectively New York, Washington, D.C., Chicago, San Francisco, London, Singapore, Kuala Lumpur, Hong Kong, Seoul, Sydney, and Guangzhou, China, have paid Cubic more than $1.3 billion for automated fare collection. The waste and inefficiency of this constellation of individual private deals, often financed with a blend of federal and state subsidies, city taxes, and fare revenues, should be obvious. What if those cities banded together and subsidized the development of an open-architecture program that all cities could use?

"That's an interesting idea," says Jamie Love, director of the Consumer Project on Technology, based in D.C. "Local governments only have a small amount of bargaining power. As a group, they would have a common interest. From a procurement point of view and a strategic point of view, it's a good idea to acquire more intellectual property rights, to create more sharing, pooling their interests, or to go open source all together."

A consortium of smart buyers could develop open products that would be easily serviceable because the code is public and learnable. Anyone could compete for vending jobs, a change that would extend the ostensible promises of capitalism—competition, the exchange of ideas, innovation—to all comers. This kind of network could exist among major U.S. cities alone, or on a global scale. Cubic is a self-consciously global operation. Why shouldn't its buyers be the same?

Transit says the varying sizes of different cities prohibit a universal design, but the charm of open architecture is that different companies, or transit agencies themselves, could tweak the software to solve their own specific problems. A more credible argument is Transit's fear that an open-source MetroCard would further compromise the security of a system already prone to fraud, by handing geeks the virtual key to coding cash onto cards themselves. But a consortium of public buyers could decide how open the automated fare collection could be, and how much of its code should be locked down.

Anyone who laments the publicly funded sound of such a project need only ask where Cubic makes most of its money now: delivering massive contracts to U.S. and worldwide governments. We're already subsidizing automated fare collection software up to our necks—via Cubic profits.

"We are pointedly aware that the situation has limited alternatives for us," says O'Leary. "We spend a great deal of time trying to get other companies to come into these markets for us. No one wants to be beholden to a single organization. It's not good business. But because of the specialized functions and the fact that we require huge quantities, we have to go that way. There's no alternative."

But there might be. And especially now that the next billion-dollar private tech deal, in the form of the sleek Kawasaki and Bombardier trains, courses through the veins of the city, any alternative should be a matter of vigorous debate.

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