Cubic Cries Foul as Bids Reopen on $480-Million Deal

Cubic Corp. assailed New York City transit officials Wednesday for reopening the bidding for a $480-million contract to replace aging turnstiles and fare-collection machines at New York’s 469 subway stations.

San Diego-based Cubic became the front-runner for the hotly contested contract in March when a transit system staff report determined that Cubic’s bid was $25 million less than a similar bid from a team that includes Nynex, a giant New York-based computer and telephone company.

Raymond L. de Kozan, chairman of Cubic’s Automatic Revenue Collection Group, described the reopening of bidding as a “corrupt (act) . . . that undermines the integrity of the selection process.”

New York transit officials, however, defended the new round of bid negotiations as being in the public interest.

“Our aim is the best product for the best price,” said John Cunningham, spokesman for the New York Metropolitan Transit Authority board, which oversees public transit systems in the city. “We certainly think by having further discussions we will be ensuring that we achieve that goal.”

Cunningham said that the MTA never considered the bidding to be closed because the MTA board has not yet accepted the staff report. “We are within our rights to have further discussions,” Cunningham said. “Both companies have been invited to come back and basically resubmit new bids.”

De Kozan, however, countered that the the initial bid called for “best and final offers. . . . They’re now asking for new best and final offers. That’s not kosher, not fair, it’s not right, and it’s not legal. It’s not a competition, it’s an auction.”

Cubic’s attorneys have “told (the MTA) that we’re having no part” of the second bidding process, de Kozan said. “We will protest it,” de Kozan said. Cubic “is tooling up to do whatever we need to do,” he said.

De Kozan said federal law clearly prohibits “multiple best and final offers . . . because they lead to waste, fraud and abuse. . . . Under federal law it’s very clear that you can’t do this.” Cubic attorneys are studying New York law to determine whether the MTA, which is funded by New York state, has the authority to reopen bidding.

De Kozan linked the decision to reopen bidding to political pressure by Nynex, a powerful, New York-based company. “What losing contractor in the world wouldn’t like this arrangement,” de Kozan said. “They’ve transformed a competitive procurement into a public auction.”

Cunningham said the new round of negotiations was ordered “after we had received indications from Nynex . . . that they could do substantially better on price than their original bid . . . . We decided it was in our interest and the interest of public to entertain further negotiations.”