The giant U.S. consulting firm hired to build the troubled Presto fare-card system had a history of problems delivering multimillion-dollar contracts for the Ontario government, a detail not included in last week’s Auditor-General’s report about delays and ballooning costs associated with the project.
Accenture, a $28-billion firm with 257,000 employees, won the 10-year, $250-million deal in 2006, just four years after a former Ontario auditor-general slammed the firm for a $60-million increase on a $180-million deal to automate the province’s welfare system. Erik Peters criticized that project as “seriously flawed” in 2002 and identified further unresolved problems in 2004.
Despite that track record, the company – which generates part of its revenue by operating outsourced government information systems – continued to receive public contracts, including a $38-million deal to operate the welfare system, as well as three sole-sourced consulting contracts worth $1.3-million with eHealth Ontario.
Accenture officials declined to comment. But in an interview, Auditor-General Jim McCarter said his recent review of the original Presto tendering process revealed nothing that would have excluded Accenture based on its previous work. “Up front, they had a pretty good requests-for-proposals process.”
Mr. McCarter’s report identified several deficiencies, including several untendered contract extensions negotiated between 2009 and 2012, totalling $496-million. Among these was a $344-million request from Accenture to build an “open fare” system that allows riders to pay by tapping credit or debit cards and smart phones on contactless readers as they board transit.
According to Metrolinx, that deal was vetted for fairness by Grant Thornton, an accounting firm, at the request of the board. “When the original procurement was done, it was always envisioned that the vendor would deliver a fare card that had the ability to expand service” to other communities and new technologies, CEO Bruce McCuaig said.
However, Mr. McCarter said that tendering the project would likely have pushed Accenture to bring back a more competitively priced bid.
Accenture also failed to roll out the basic Presto card by October, 2010, as stipulated in the contract. Mr. McCarter’s report found that Metrolinx and the provincial government failed to use its contractual authority to penalize the company for missing deadlines. They also allowed the project to be managed by external consultants, who were paid $4.2-million, despite instructions in the initial procurement policy that such tasks should be handled by provincial employees.
In the wake of the auditor’s report, Metrolinx officials said they will be imposing tighter performance controls on Accenture, which oversees several sub-contractors that are responsible for delivering different parts of the system.
The notion of integrating fares across the GTA and replacing tokens with smart cards has been part of the city’s transit debate for almost a decade. But the TTC, which accounts for 80 per cent of all rides taken in the region, resisted such efforts until 2010, which has slowed the implementation.
Under the Miller administration, the TTC launched an aggressive search for a private vendor to run an open-fare system just for its own vehicles. Only one bidder, a division of Xerox, responded. But after Mayor Rob Ford took office, the new commission shelved that plan and signed on instead with Presto/Accenture, using a financing formula that guarantees the TTC pays no more than $47-million in upfront capital costs, plus a fee to Metrolinx of 5.25 per cent of fare revenues . TTC officials said those costs are less than what the agency currently spends collecting fares.
According to TTC chair Karen Stintz, Metrolinx has pledged that Presto’s open-fare technology will be up and running in time for the 2015 Pan Am Games, although the full implementation won’t be complete until the TTC receives all its new streetcars. “I think it’s fair to say we’re behind.”
In Greater Toronto, where Presto has been up and running for two years, the auditor’s report points out that only 18 per cent of rail and bus riders overall use Presto, although that figure is 43 per cent for GO Transit commuter train riders. About 250,000 Presto rides were recorded at the handful of TTC subway stops.
At the time the province retained Accenture to build Presto, the company had just one major smart-card project to its name – a multi-city system in the Netherlands. Many other city regions moved much more rapidly, relying on proprietary technology or outsourcing smart-card services to tech giants such as ACS Xerox or Cubic, which has delivered systems in London, England, and Vancouver.
The GTA isn’t the only region to face difficulties setting up new fare media. In November, Calgary pulled the plug on a two-year partnership with a Spanish firm, Telvent, to implement a smart card for its LRT routes.
With open fare, the technology is still under development and several large vendors, including Accenture, are racing to market their systems. Chicago appears to be on track to launch the first large-scale open-fare system next spring, a $454-million system by Cubic, which is best known for London’s Oyster card.