PENALTIES:MFS hit by NJ Consortium

He told us in an interview that the Consortium estimates $25k/day is being lost on the Atlantic City Exwy each day because the system is not working and MFS is being hit with that expense plus a $5k/day penalty up to the time of the new agreement.

Violation processing fees are the heart of the financing the Consortium system, and Gross said: “We need a VPC operational. We depend on that revenue.”

He said the problem was lack of adequate programming personnel committed to the project by MFS.

MFS and the Consortium had two days of meetings Jan 20 and 21 with Vance Cartee, the latest president of MFS/Transp Systems and senior staff. A 3 page letter from Cartee afterward admits MFS past failures and promises to devote more staff to the work as part of a plan to get the project back on track. The letter also promises to deliver into escrow programming source code written for the Customer Service Center, electronic toll collection and the fiber optic networking. Gross said this is being done to ensure that the Consortium gets the benefit of work done should MFS default further and the contract need to be cancelled.

“If we find ourselves in the position of having to engage another contractor to take over the work we don’t want to find we cannot get our hands on the work that we have paid for and be in the position where we have to pay someone to do it all over again,” Gross said.

The Consortium has also grown alarmed at the high turnover of MFS personnel. Andre Schmid project manager for the NJ/DE contract, Michael Breslin, president and most recently John Berry, VP Operations as well as many others have left MFS in the last few months, some fired, others resigning.

On Nov 11 last year MFS successfully started electronic tolls on the Atlantic City Exwy and the I-95 Delaware Turnpike. Chase Manhattan MFS’s partner opened the customer service center which sets up customer accounts and supplies transponders to patrons.

MFS’s owner Able Telecom, a small Miami company continues to be the subject of scathing criticism by Wall Street analysts Asensio & Co. In a recent report they accuse its management of “gross exaggeration” of the value of fiber duct capacity it claims to control on the New York State Thruway. Asensio accuses Able of continuing to misrepresent its situation to shareholders and says there is a “high probability that the company will lose its New Jersey contract and declare bankruptcy in the first quarter.”

Unless there are breakthroughs in resolving MFS problems on troubled contracts in California and Colorado it does seem likely to run out of money before long. (Contact Vance Cartee MFS 609 489 6872, Edward Gross NJ Consortium 732 247 0900, Asensio 212 702 8800 www.asensio.com)