A KEY component of the troubled smartcard public transport ticketing system has been outsourced to India. Financial services software for the $500 million project is being developed in Bangalore.
A private company with major operations in India took over the major smartcard contractor in June.
That company, Caritor, was based in northern California, but most of its employees were based in India.
Caritor took over Keane, the leading member of the Kamco consortium that won the State Government contract to develop the smartcard system, known as myki.
The State Government has been aware of the ownership change all year.
But Premier John Brumby this week publicly rebuked Kamco as the extent of its failure to meet the contractual requirements became public.
"They've not done that (met their contractual obligations) properly to date and we've put them on notice that they've got to deliver," Mr Brumby said.
The Transport Ticketing Authority has withheld millions of dollars in payments owed to Kamco because of the delays.
TTA solution architect Duncan Bryce yesterday confirmed work had been outsourced to India.
"The Indian proportion of the project is relatively small . . . and is almost complete," Mr Bryce said in a statement.
About 5 per cent of the total capital being spent on the project was being spent in India, he said.
All smartcard equipment was being manufactured in Europe following a tender, Mr Bryce said.
"The vast majority of the expenditure for the project is being spent and delivered in Victoria," he said.
The TTA was first informed of a proposed change in ownership of Keane in February.
The State Government was told before the takeover occurred on June 4, but no public announcements were made locally.
Mr Bryce said the TTA had investigated Caritor before consenting to the change in ownership.
"The acquisition of Keane by Caritor has not altered the way in which the project is being delivered," Mr Bryce said.
Kamco spokeswoman Margo Nison most of the work done in India had occurred before the ownership change.
Ms Nison said all private information collected through myki use would be retained in Australia.
The Herald Sun this week revealed millions of dollars in payments had been withheld from Kamco after it failed to meet a number of key project milestones.
Mr Bryce said it would not make further payments until Kamco satisfied its contractual obligations.
"The amounts that have been withheld are commercial in confidence but are substantial," he said.
Industry sources said the relationship between the government authority and Kamco was at breaking point.
"There is almost open warfare," one source said.
"TTA has lost confidence with the contractor and . . . within TTA there is also conflict. The minister is not being told the truth about what's going on."
Kamco and TTA have played down suggestions of growing conflict.
"In a large and multi-faceted project of this nature there are always going to be tensions at certain points," Mr Bryce said.
"Both Kamco and TTA share the common goal of building a world-class ticketing system."
Ms Nison said Kamco was working with the TTA and other stakeholders to develop a "realistic" timeline.
"Parts of the project such as the manufacture and delivery of hardware, development of core back-office technology, and the building the operating company are on track.
"Elements of the device software are running late."
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