NJ CONSORTIUM:Able/MFS Staggers On

ATS people paint a picture of MFS as being “totally dysfunctional” – a bunch of people constantly having meetings or conference calls but with few decisions ever made, rarely a clear plan of action, or assignment of responsibility. ATS was also upset that it did not get paid a cent for what it says was $5m worth of work.

Able/MFS (3/2/99) blamed ATS for its difficulties in getting the New Jersey violations processing operational saying:

“The Agreement... required ATS to deliver the software required to operate the Violations Processing Center (“VPC”) for the New Jersey Consortium no later than 11/11/98. ATS failed to meet that deadline. ATS subsequently failed to meet extended deadlines of 12/5/98, 12/23/98 and 1/15/99.

“MFS concluded, after reviewing the matter internally and after engaging

the services of a third party to carry out a further review, that the ATS software was of poor quality and far from complete. MFS also concluded that ATS was unlikely to meet the scheduled delivery date of

3/31/99. Accordingly, MFS terminated the Agreement for cause.”

ATS’s pres James Tuton responded saying that these statements were false, misleading and actionable: “The record clearly shows that MFSNT failed to deliver necessary documentation, technical specifications and stable violation images required to configure the software system.”

Tuton says that repeated efforts by ATS to get Able/MFS to make decisions about the toll system interfaces, and details of how violations should be handled forced them to design a system based on assumptions and default values. Moreover he says the MFS toll system was producing huge numbers of anomalies, which threw up thousands of spurious violations. Able/MFS’ shortage of cash apparently was a problem too and on 1/5/99 ATS told Able/MFS it was ceasing work due to the “failure to pay past-due invoices.” Then on 3/1/99 ATS formally pulled out of its sub-contracting job. ATS has filed injunctions to prevent MFS using violations processing software ATS had written for the consortium project. It is also claiming on the unpaid invoices and damages.

There’s also apparently a continuing lack of progress in other troubled MFS contracts in CO and CA.

Denver Comes to NJ Rescue

In the absense of the ATS violations processing system MFS says it is adapting violations processing systems designed for E-470 CO for use in NJ. The E-470 system is rather simple compared to NJ but has not yet been accepted by the Denver operators as working adequately.

Speculation is that Able/MFS difficulties in implementing electronic toll systems in the Bay area, NJ and Denver may force it to some dramatic rejigging of its work at these troubled sites.

One scenario being discussed would have a large group such as TransCore, Amtech or Lockheed Martin, or even a smaller group like InTrans (sub of CS Route) or eTrans (composed of former Hughes TMS people) take over the system integration from MFS staff. Chase Manhattan is handling customer service well in NJ and their part of the contract would stay in place. Violation processing would go back to ATS, working to the new system integration crew, or be made part of the new system integration task itself. MFS would confine its own work to the communications including the fiber-optic network.

But what actually transpires depends on whether MFS can even at this late stage, and contrary to expectation, get its act together. If it does and gets some progress payments it might survive. On the other hand, according to Wall St analyst Manuel Asensio the people connected with Able current owner have a long history of stock manipulation, and fraud. He says the company is already insolvent. Asensio has been recommending selling the stock short for more than 6 months.

At some point one of the major clients for electronic toll collection systems will lose patience. They could demand that MFS bring in a competent and credible system integrator as part of their team, or terminate the contract with MFS citing repeated failure to deliver.

Ed Gross of the NJ Consortium says NJ has $200 million worth of guaranteed performance bonds in place, that give it some protection: “When a problem ensued, I took action against the contractor and continue to do that.” He refers to the $25k/day penalties being imposed on Able/MFS.

“But the bottom line is, I do have a fully functional and high performance customer service center, a partially built fiber network, a third party lease of that, design work up to a certain percent of integrating lane equipment with electronic tolls. What I don’t have is a functioning violations processing center. And if I don’t get that, I’ll have to take further action.”

Gross is under serious pressure in a state where the governor dispatched her top transport commissioner not many months ago after a protracted outcry and a policy U-turn over HOV lanes. Caltrans and E-470 management are also paying a price for the problems with MFS. (Contacts Vance Cartee MFS 609 235 5252, James Tuton ATS 602 922 2100x230, Asensio & Co 212 702 8800, Ed Gross NJ Consortium 732 247 0900,1x5000)