August 12. 2018 10:23AM

NH withholding $1M from new vendor that maintains E-ZPass system, citing failure to deliver

New Hampshire Union Leader

The Bedford toll plaza on the F.E. Everett Turnpike in November 2017. (Allegra Boverman/Union Leader file photo)

CONCORD - New Hampshire is withholding about $1 million in payments to the new vendor that maintains the E-ZPass highway toll system, citing a failure to deliver on key contract features like an improved website, a mobile app, texting capabilities and enhanced options for cash payment on transponders.

"One of our biggest challenges has been sending out correspondence and invoices in a timely fashion. That's where we've had the most concern," says Department of Transportation Commissioner Victoria Sheehan.

"We were hoping to get a system that was better and providing more features for our customers, and they have been slow to develop that system. Our frustration is we didn't get all of the things we wanted on time."

The system now in place does a good job for customers whose accounts are linked to an active credit card with a sufficient balance to cover tolls. That group accounts for about 70 percent of the transactions on the state toll system, according to Sheehan.

Another 23 percent of toll-booth transactions involve people who pay in cash and forego the 30 percent E-ZPass discount. That group is unaffected by the E-ZPass system.

It's the remaining 7 percent of transactions that are creating problems. The system at this point is ill-equipped to deal with situations outside the ideal universe - like someone with no transponder who uses the open tolling lane and tries to pay on the website, a customer with a transponder whose credit card expired, or customers who changed credit cards and didn't update their account.

Anything out of the ordinary has the potential of becoming a communication and customer-service nightmare for the consumer, the vendor and the DOT.

Millions of transactions

Although 7 percent may seem like a low number, with 122 million transactions on the New Hampshire E-ZPass system in 2018, that translates into more than 8 million potential problems.

Sheehan urged consumers to be particularly vigilant about their accounts and any notifications as the transition to the new vendor continues. "Even if you think something doesn't make sense, please take the necessary action," she said. "Go to the website ( and review your account, or call the customer service center to make sure you understand what's going on with your account."

The state worked with Xerox as the management company for the E-ZPass system from 2004 until that contract expired in 2016.

After a bidding process involving Xerox and two other vendors, the DOT recommended a contract with California-based Cubic Transportation Systems, which was approved by the Executive Council in October 2015, although the switchover didn't take place until March 2017.

Xerox filed a lawsuit challenging the decision to switch vendors in a case that is still working its way through the courts.

Six-year contract

The original $52 million, six-year contract requires Cubic to run the E-ZPass billing, collection, enforcement and customer service operations, with the opportunity for three contract extensions at the discretion of the state.

That contract also allows the state to withhold any payments until the system is fully delivered as promised.

But Sheehan and her senior staff at the Department of Transportation felt that holding back all payments would not be in the best interests of the state, nor would it be fair to the vendor. So last Wednesday, the Executive Council unanimously agreed to a contract revision that allows the DOT to make some payments to Cubic, even though the contract requirements are not entirely fulfilled.

"The way the original contract was set up, they wouldn't receive any operations and maintenance payments until we accepted the system in its entirety," said Sheehan. "That wasn't fair to them. While they have struggled, they have put a system in place that is working. We are fortunate to have a robust call center in the state and walk-in centers open to the public, so the department felt it was unfair to hold them to the full contract provisions."

The financial impact on Cubic was also a concern, according to Sheehan, as the company has become a significant employer in the state, operating call centers and customer walk-in centers in Nashua, Portsmouth and Concord, which were not part of the Xerox contract.

Contract dates reset

Executive Councilor David Wheeler of Milford requested that the contract revision be tabled when it first came up on July 27, in order to get more explanation from the DOT. He says he's satisfied with the decision to allow some payments to be made.

"We approved a pay cut and reset the dates for deliverables," he said. "If they deliver 60 percent of what they're supposed to deliver, they'll get paid 60 percent."

While New Hampshire may be experiencing some challenges with its E-ZPass administration, the problems pale in comparison to what's going on in Florida, where the state picked a Xerox spin-off, Conduent, to operate the SunPass system in 2015.

According to the Tampa Bay Times, Conduent has a backlog of unprocessed charges now running into the millions.

"We have 70 percent of our transactions being handled correctly, with no issue," said Sheehan. "The situation in Florida is that those basic transactions are not even being handled properly."