Oyster card contract moves to Cubic

TfL has started a new contract with Cubic to manage the London travel smartcard, which will see HP Enterprise Services handle the back-office work
Written by Tom Espiner, Contributor on

Transport for London has signed Cubic Transportation Systems as sole provider for London's Oyster travel smartcard, after exercising its right to break a contract that involved the company.

On Tuesday, Transport for London (TfL) said that a new contract with the transport company to manage the Oyster system has gone into effect. The previous contract was held by the Transactions Systems (TranSys) consortium, which consisted of Cubic and HP Enterprise Services.

The deal with TranSys was a Public Finance Initiative (PFI), an instrument to allow private sector investment in public sector companies. It ran from 1998 until 2010, after TfL exercised a break clause in 2008. The £190m contract was originally to have run for 17 years, but was fully paid off in February, according to TfL.

HP Enterprise Services will work on Oyster under the new deal, but not as a partner. "HP is still involved, but working as a contractor for Cubic," said a Cubic spokesman. The HP subsidiary will manage the back-office systems, while Cubic will handle ticketing, he added.

TfL declined to say how much the new contract, known as a Future Ticketing Agreement (FTA), will be worth to Cubic, but did say that it will save the transport agency £10m a year.

"The £10m per year in savings that the new contract with Cubic will deliver is a straight reduction in the contract cost," a spokeswoman for TfL told ZDNet UK on Tuesday. "The contract also delivers other benefits to TfL — a better performance regime, which supports a higher level of fare collection and improved customer service."

Interest payments have not been taken into account in TfL's savings calculations under the new contract, she added. At the beginning of 2010, TfL had a balance of £101m debt on the PFI contract. It was paying £8m per year in interest payments at that point. Previously, TfL had been paying more interest, said the spokeswoman, who added that TfL paid off the debt in February.

The PFI contract was negotiated by London Transport and was inherited by TfL in 2000. The FTA contract with Cubic is funded by TfL.

More than seven million Oyster cards are in regular use in London and 57 million journeys are made using the card each week, according to TranSys figures. Initially introduced for journeys on the London Underground, the travel smartcards can now be used on the London Overground, buses and trams, the Thames Clipper ferries and at all National Rail stations in London.

TranSys will retain advertising rights on ticket gates and ticketing media until March 2015. TfL bought the rights to the Oyster brand for £1m in 2008.

"TfL has already undertaken a trial of Oyster on bank cards and mobile phones, but now that we have complete control over the Oyster brand we can investigate options that make life easier and more convenient for Londoners to travel while also increasing the accessibility of Oyster," Shashi Verma, TfL's director of fares and ticketing, said in a statement.

New Oyster cards will use MiFare DesFire chips by NXP semiconductors. The previous chipset, MiFare Classic, is in the process of being phased out. The MiFare Classic chipset has suffered a number of cryptographic cracks by security researchers.

"TfL began the phased replacement of MiFare [Classic] Oyster cards last year and London Underground ticket offices continue to gradually swap existing cards as passengers top up, renew or replace lost cards," said the spokeswoman.

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