TfL Oyster deal break reason smells odd

There was something that wasn't quite right about the reasoning TfL gave me for breaking its Oyster contract with Transys. I initially thought it could be something to do with the two outages in two weeks, or that security on the MiFare Classic chip used in the card has been repeatedly broken.

However, apparently this wasn't a factor in the break. TfL has been talking to Transys for a year about the how the system needs an update, it said, and the outages and security cracks were not a factor. Hmmm, not sure about that.

The main thing is, though, that TfL saying it could save money just didn't add up. For a start, TfL was very cagey about how it had decided that it could save money -- there's been a review, but a spokesperson didn't want to go into details of what criteria TfL had been looking at in the review, and how it had decided that the system could be run cheaper.

I spoke to a couple of people in the know about the situation who wished to remain anonymous. Transys and TfL had been negotiating for a year, and the people said they had heard that the negotiations had been tough, and had involved a lot of politics. Apparently, TfL didn't like not having immediate control over the system, and may be planning to insource Oyster.

One of the people I spoke to said they thought the reason given by TfL was "completely bonkers", as the cost of procurement would be high. Another said they thought that TfL didn't actually own the Oyster brand.

Aha, I thought -- I'll give TfL a ring to find that out. After a bit of a delay, TfL got back to me -- no, they don't own the brand -- Transys does. However, the TfL spokesperson insisted that TfL would "ensure continuity of the brand in future arrangements".

"How are you going to ensure continuity of the brand if you don't own it?" I asked the spokesperson.

"We're going to have to work that out. I'm not a contract lawyer, but Oyster will be rewritten into a future contract," said the spokesperson.

Transys will run the system until 2010. Ok, the system costs TfL £100m per year to run. However, when you look at it, TfL will have to licence Oyster from Transys, they'll have the cost of procurement for another system, and that system will have to get up and running in two years, and be completely stable, to cope with the massive incease in the number of passengers for the 2012 Olympics. All of these factors will incease the cost. Add it all up and the reasoning about breaking the contract on a costs basis begins to smell a bit fishy.