from smh

NSW had 'right' to terminate Tcard
Elizabeth Sexton
April 7, 2008

THE NSW Government had an "express right to terminate" the contract for Sydney's Tcard transport ticketing system if the company installing it failed to meet deadlines, says the Government's statement of claim against the Perth company ERG Limited.

The claim, filed in the Supreme Court on Friday, says ERG had not completed any of the specified 13 stages when the Public Transport Ticketing Corporation (PTTC) terminated the contract in January.

The original contract, signed in February 2003, contained a completion date for the first stage of January 2005. The Government agreed to a new timetable in June 2006, with stage 1 to be finished by April 2007.

After the corporation gave notice of termination in October 2007, ERG put forward a remedial plan with the completion of stage 1 for bus and rail by August 2008 and for ferries by May 2009. Stage 13 would be finished by January 2010, it said.

The corporation says it was entitled to terminate the contract if it was not satisfied with this plan.

ERG has promised to retaliate with a cross-claim, which Justice Robert McDougall said at the first directions hearing on Friday must be filed by May 9. The corporation's claim says ERG admitted in October that "a lack of diligent project management process, planning and program execution was evident".

It quotes from an October letter to the corporation from ERG's chairman, Colin Henson, which said there would be "a complete overhaul" of the company's approach to the Tcard and "there was a need for a change in culture and approach at ERG to turn the project around".

The statement of claim says the corporation wants to recover "large expenditure made in reliance on the contract which is now wasted, costs that it is continuing to incur in dismantling various equipment … and the loss of the use of the monies expended that would have been recouped had the contract been performed".

No sum is mentioned, but the Transport Minister, John Watkins, has previously said the Government would seek $95 million.

In January Mr Henson said ERG's losses from the "unlawful termination of the Tcard contract" were $250 million "so far".

In addition to not being paid for installing the system, ERG had suffered damage to its reputation and had forfeited a 10-year maintenance contract, he said.