Cubic Sues to Prevent Rebidding on New York Subway System Job


Cubic Corp. on Friday asked a U.S. District Court Judge in Manhattan to prohibit the New York City Metropolitan Transit Authority from seeking new bids for a lucrative contract to replace aging turnstiles and fare-collection machines in New York’s 469 subway stations.

Cubic’s Automatic Revenue Collection Group, which filed the lawsuit, earlier had submitted the low bid for the initial phase of a hotly contested contract that could grow in value to an estimated $480 million. Cubic said it could complete the first phase of the contract for $181 million, while an international consortium that includes New York-based Nynex bid $218.5 million.

U.S. District Judge Michael B. Mukasey has scheduled a 3 p.m. hearing on Monday to rule on Cubic’s request for a temporary restraining order that would prohibit the MTA from reopening bidding. Cubic also is seeking a permanent injunction that would prohibit the transit authority from seeking new bids.


Cubic officials on Friday declined to comment on the lawsuit. MTA spokesman Tito Davila described the lawsuit as premature because the authority board hasn’t cast a final vote on the contract award.

Cubic in March became the front-runner in the increasingly bitter competition for the transit authority contract when an MTA committee determined that Cubic’s offer was technically equal to the Nynex team’s bid--but $25 million cheaper. Despite that finding, the MTA board reopened bidding in June after Nynex officials indicated that they could lower their initial bid by as much as $40 million.

On Wednesday, Cubic spokesman Jerry Ringer said the San Diego-based company would not submit a new bid before the MTA’s July 9 deadline because Cubic’s initial bid was the company’s “best and final offer.” Ringer on Wednesday said that Cubic would go to court if the MTA didn’t back away from its plan to reopen bidding.

Cubic’s lawsuit alleges that the transit authority violated federal rules of civil procedure by agreeing to review the Nynex team’s bid after an MTA committee recommended that Cubic be awarded the contract. Although the MTA is financed by the state of New York, Cubic officials believe that federal regulations prohibit the it from reopening bidding.

Although Cubic officials declined to comment on the suit, Raymond L. deKozan, president of Cubic’s Automatic Revenue Collection Group, recently described the MTA’s planned bid reopening as “a travesty and a farce.”

In a June 13 letter to MTA Chairman Peter Stangl that Cubic made available Friday, deKozan complained that he had “never encountered in federal, state or local procurements where a rebid has been initiated because the losing competitor, having seen the winner’s price, says with reflection (that) ‘I can now meet or beat that price.’ ”

In the letter, deKozan described Nynex’s request for a new round of bidding as “cry-baby letters of the disgruntled, losing contractor. . . . They contain verbiage that range from outright lies to distortions to science fiction.”

MTA spokesman John Cunningham has defended the decision to reopen bids.

“Our aim is the best product for the best price,” Cunningham said last month. “We certainly think that, by having further discussions, we will be ensuring that we achieve that goal.”

The Friday lawsuit was the latest chapter in the MTA’s 13-year-old plan to modernize a fare-collection system that has been described as a museum piece.

The current system, which dates from the 1930s, is losing an estimated $70 million each year to “fare-beaters” who avoid paying by crawling under or climbing over turnstiles.