Troubled SunPass vendor could have to pay $1.7 million, but Florida isn't asking for it

Cars pass through the SunPass toll lanes at the Sunshine Skyway Bridge toll booth plaza in St. Petersburg last week. [EVE EDELHEIT | Times]
Cars pass through the SunPass toll lanes at the Sunshine Skyway Bridge toll booth plaza in St. Petersburg last week. [EVE EDELHEIT | Times]
Published Aug. 9, 2018

The vendor responsible for recent problems with the SunPass tolling system could be on the hook to pay the state at least $1.7 million based on a review of documents obtained by the Tampa Bay Times.

But the Florida Department of Transportation hasn't asked Conduent State and Local Solutions for the money nor is it pursuing litigation. The CEO of the contractor's New Jersey-based parent company, Conduent, Inc., is also downplaying the issue, which led to a pileup of millions of unprocessed toll charges.

"We have the capability to efficiently resolve this issue and are dedicating all necessary resources to meet our contractual commitments," Conduent CEO Ashok Vemuri said while sharing the company's earnings report with analysts Wednesday morning. "We are an industry leader in the automated tolling space across the United States with a strong performance track record, and are confident in our ability to address this issue and are making good progress towards our mutually agreed timeline."

What Vemuri didn't mention was that the timeline has shifted multiple times.

The original seven-year contract signed in November 2015 was designed to update Florida's tolling system, scheduled for August 2017. But since FDOT and Conduent signed the original contract worth $287 million, it's been amended 14 times, documents show. Those changes between December 2015 and June 2018 included increasing the state's contract payment to $343 million and providing more customer service staff to accommodate for the delay of the new system.

A pattern emerged with the state repeatedly pushing back the deadline and increasing its payment to Conduent. Typically, the state approved another contract amendment the same day Conduent was expected to launch its system update.

The original contract included a clause that if Conduent didn't provide the system within the timeline that was agreed upon, then the state had the right to collect "liquidated damages" from the company — in the form of $5,000 for each calendar day past the deadline that the system wasn't ready.

It's been a year since the contract's original August 2017 deadline, which means Conduent could be liable for at least $1.7 million in damages.

Last November, for the first time, the state created a timetable for Conduent to meet its obligation or pay up. But that contract amendment was never enforced, and four months later the state gave Conduent more time and more money.

FDOT still isn't ready to ask Conduent to comply with the terms of the agreement.

"At this time, the Department is calculating and expects to assess liquidated damages for the implementation phase of the contract," spokeswoman Kim Poulton said in an email.

Asked about potential litigation, Poulton said: "The FDOT legal office is reviewing the proper assessment of the contract options."

Adam Wolfe of Wolfe Law in Tampa, who has professional experience in contract litigation, said it doesn't make sense that the state wouldn't enforce its own clause.

"They had teeth, but they pulled their own teeth," Wolfe said. "They were never holding Conduent responsible because they kept saying, 'Oh, we'll waive (the deadline); we'll waive it.'"

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The executive director of Florida's Turnpike Enterprise, Paul Wai, signed the majority of the contract amendments but would not respond to requests for comment.

Florida has now entered its third month of what state politicians are calling "Tollgate," the SunPass tolling system chaos that has resulted in a backlog of at least 320 million toll charges for the state to process and unpredictable effects on drivers' accounts.

FDOT points to progress, however. Poulton on Wednesday said that Conduent has now worked through 84 percent of the backlogged transactions, with 48 million more to process.

"FDOT is fully committed to holding this vendor accountable and ensuring Conduent continues to diligently clear the backlog of toll transactions," she said in a release.

A professor at University of Florida's Levin College of Law who specializes in contract litigation, Bill Hamilton, said contract amendments aren't unusual if it's in the party's best interest to extend deadlines and add more services. But he said the question is how the postponements affected not only FDOT and Conduent, but the people the contract was set up to benefit.

"Who bears the risk if that technology is not going to be ready?" Hamilton said.

In order to update the system, Conduent had to back-up the user data and run multiple readiness tests before the "Go-Live" date to launch the new technology, which is why the system shut down in early June.

Poulton said that Conduent completed the necessary testing to make sure the new system was ready, and FDOT approved it.

Public records requests to FDOT for the readiness test documents by the Times have been pending for three weeks.

So what went wrong?

Two entities are responsible for oversight of the SunPass tolling system beyond FDOT: the Florida Transportation Commission (FTC) and outside consultant HNTB Corp.

FTC Chairman Jay Trumbull did not respond to a request for comment.

Florida has paid millions of dollars to consulting firm HNTB Corp. as a consultant to oversee transportation, including monitoring the SunPass system. HNTB and Conduent share a lobbyist, Brian Ballard of Ballard Partners.

PREVIOUS COVERAGE: Rick Scott's campaign record shows money trail to SunPass contractor, Conduent

An HNTB spokesperson declined comment, referring questions to FDOT.

Contact Hannah Denham at Follow @hannah_denham1.

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