The high stakes in costly and complex upgrade of Opal ticketing system

The collection of up to $220 million in public transport fares in NSW could be at risk if the private operator of the Opal ticketing system fails to co-operate with the state government during a complex upgrade of the technology.

Transport for NSW believes its dependence on existing operator Cubic supporting the shift from old Opal technology to a new system is a high risk, confidential documents reveal.

The complex and costly upgrade of the Opal ticketing system is already running a year late.Credit: Rhett Wyman

In a sign of the level of concern, the agency has been assessing the risk of Cubic seeking a court injunction to halt a tender process if it is unsuccessful in bidding for the NSW government’s $568-million upgrade of the Opal system.

“This would impact the schedule in finalising the contract award and increase cost and delivery of the program,” the documents state.

The complex upgrade of the ageing Opal system is already running at least a year late due largely to procurement delays. It will be one of the largest contracts worldwide this year for an electronic ticketing system.

Cubic’s future as the operator of the Opal system, which it has run for the past 14 years, hinges on the outcome of the tender to deliver, operate and maintain the next-generation ticketing system.

The US corporation is vying with other large players for the contract to modernise the system, which has been dubbed Opal Next Gen. The new operator of Victoria’s long-troubled myki system, Conduent, is also in the race for the NSW contract.

The internal government documents seen by the Herald warn of the reliance placed on Cubic playing ball in the transition to an upgraded system.

If Cubic does not provide support, the documents – dated last year and marked “sensitive” – warn that Transport for NSW will be forced into a strategy that will have a “high level of impact on customers, operational staff and introduce a high risk of impacting revenue collection”.

They estimate it could impact fare collection to the tune of $220 million if Cubic fails to support the shift in technology.

A confidential business case completed in late 2022 for the project also cites the risk of “potential for legal risk” over the ownership of intellectual property relating to the design of Opal readers.

The ageing Opal ticketing system is “reaching end of life”.Credit: Rhett Wyman

It warns that a legal tussle “may delay timelines or require sourcing an alternative reader system”.

The government has paid Cubic $1.345 billion to operate the Opal system since 2010 and recently extended its contract for two years until September 2026.

Transport for NSW said in a statement that the procurement process was subject to “regular, very high standards” of probity and assessment.

“The prospect of providers launching legal action is highly speculative and unfounded,” it said.

The agency said it was working hard through the “extensive and complex delivery process” to ensure that the best possible ticketing solution was achieved for commuters and NSW taxpayers.

“The procurement process for the Opal Next Gen program remains under way. As a result, Transport cannot comment on the scenarios contained in a 2022 business case,” it said.

“Transport has conducted a competitive tender and closed submissions, which are currently under evaluation. The entire process has been peer-reviewed to ensure a fair and equitable process.”

Transport for NSW has declined to name the bidders or the exact number of them other than to say it had received “multiple tender submissions”.

Cubic and Conduent would not comment. The tender process prevents companies from disclosing whether they have put in bids.

Tenders for the Opal upgrade closed in December, more than two years after plans to modernise the system were announced.

Internal documents show Transport for NSW has been targeting September 2027 as a “go-live” date for the next-generation ticketing system, which is later than the original plans to complete the upgrade by mid-2026.

The business case has put the cost of a one-year delay at $86 million, two years at $163 million and three years at $237 million.

Transport for NSW has previously declined to reveal the total cost of Cubic’s two-year contract extension, saying it would be determined after the services have been delivered.

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