Jason Prechtel was troubled by Ventra.
As the CTA transitioned to the new fare-card system in 2013, some riders discovered that Ventra cards were deducting money from their bank accounts if stored in a wallet next to debit cards. In other instances, Ventra cards didn’t work until the second or third tap at the turnstile card-readers, though customers were charged for each try. And when riders called Ventra with questions and complaints, they waited and waited, sometimes for 30 minutes or more.
The messy rollout irked CTA riders around the city. But it got Prechtel wondering where the system had come from in the first place.
The CTA already had a functioning payment system: riders could purchase temporary magnetic-stripe cards or the more durable Chicago Card. Yet the agency had agreed to pay $454 million over 12 years to a company called Cubic for the new fare-card network—the one that didn’t actually work right.
Cubic was a familiar name. It was responsible for the Chicago Card too.
How did the Ventra deal come together? What other companies wanted the CTA contract, and how much did they offer? Prechtel thought the public should know.
He asked for the information under the state’s Freedom of Information Act. When the CTA wouldn’t provide the records, he sued.
Last December Prechtel and the CTA settled the suit after the agency finally agreed to hand over documents connected to the Ventra bidding process. Among 10,000 pages of records, Prechtel found that more than 50 companies initially expressed interest in the deal—but only two teams submitted final bids.
Along the way, Prechtel also discovered that the Ventra deal was put together with the help of some of the people behind the sell-off of Chicago’s parking meters. Last month, he posted some of the results on his Culture Bore blog and at Curbed Chicago.
I recently spoke with Prechtel about his battle to find out more about the privatization of the CTA’s fare collection system.
Mick Dumke: When did it dawn on you that you just had to get your hands on stacks of documents related to a privatization deal?
Jason Prechtel: Around 2012 I was writing for Gapers Block, doing theater and book reviews, and wasn’t that knowledgeable about recent Chicago political history. But I was inspired by what the Reader had done on the parking meter deal and what Whet Moser was writing on p3 [public-private partnership] deals at Chicago mag. I noticed that the CTA had outsourced its fare collection to a private company [in 2011], and it looked like there was a public-private partnership proposal to expand the Red Line south. I thought it was curious that those things were happening.
In a piece you wrote about privatization at the CTA, you mentioned that Cubic already had transit deals in San Francisco, Washington, D.C., and other places.
Yes. By the time the botched Ventra rollout happened a few months later, I remembered that paragraph. I noticed Cubic had also won a contract in Vancouver, and last I checked it had some implementation problems. Then I found it had problems in all these other cities–and that was just from searching Google.
It’s like, “Wait a second, Chicago media—why not connect the dots further? Why are we looking at Ventra as this Chicago-specific thing when this company has a very searchable track record?”
Then I did an internal search on the CTA website and found the request for proposals for the contract. And I saw that the primary contact on it was listed as Thomas Lanctot. Because I was a fan of your work on the parking meter deal, I knew who that was.
And for those who’ve tried to block out the parking meter mess, Lanctot is an executive at William Blair & Company, a financial services firm that was hired by the city to advise it on the meter deal.
Yeah—the guy most in charge of analyzing the parking meter deal was also involved with this. The timing meant that within a few days of the city inspector general’s condemnation of the meter deal [in 2009], William Blair was overseeing this procurement process for the CTA.
Then I found that in the same week the CTA board granted the contract in 2011, Philadelphia granted a [$129.5 million] contract to ACS, a Xerox subsidiary, for fare collection. All the final bids were disclosed to the public, and Cubic’s bid there lost to ACS/Xerox.
How come this was public knowledge for the citizens of Philadelphia, but we had no knowledge of who else bid for the CTA contract? Combined with the involvement of the people from the meter deal, I thought, “We need to find this information.”
And that’s what moved you to start submitting FOIA requests?
Yeah. Around that time I went to a [Better Government Association] workshop—FOIA 101. Afterward I decided to send a FOIA to the CTA, asking for documents including all participating bidders, dollar amounts of bids made, and communications between the CTA and outside advisors.
I got the “unduly burdensome” excuse from the CTA. So I reached out to Matt Topic, an attorney [at the firm Loevy and Loevy] who works with the BGA, and he thought the excuse was questionable, but he gave me some suggestions for how I could narrow it down.
I went back and forth with the CTA and made a few attempts to narrow my FOIA requests. Eventually the CTA gave me the actual Ventra contract, but not stuff like the other bids. I talked with Matt, and we decided there was the basis for a suit.
We filed it in July 2014, and about two weeks later the CTA reached out to Matt and said it was an innocent oversight, and they would produce the documents on a rolling basis.
But of course it wasn’t that simple.
What was interesting was that certain records we got no problem. But Samsung, Blaze Mobile, and Xerox wrote letters to the CTA and claimed the price proposals they submitted qualified as trade secrets, and that disclosing them could competitively hurt them. The fact that Samsung wanted to intervene in the suit is one thing, but the fact that Xerox and Blaze Mobile wanted to, when they didn’t even bid on the final project, is absurd.
We pushed back and said no. The idea that the price of a losing bid in Philadelphia is afternoon news but in Chicago it’s a protected trade secret is just ludicrous.
A few days later we did get the price proposals.
What did you find out?
There was a multi-step bidding process, and the only companies that submitted a final bid were Cubic and Samsung, and Samsung’s was more than $1 billion higher.
It seems that the CTA could have put that out in its first press release.
If Ventra works now, why should people care about any of this?
Ventra kind of works, though you can still go on Twitter and see people complaining about it.
But the technology was originally designed to be able to read the Chicago Card—which is the ultimate irony. Why did extra taxpayer dollars go to a new payment system with a debit card option? Why did we need that? Could we have gotten a cheaper system?
The number of large banks and large tech organizations that showed interest in this project shows that privatizing public services is a lucrative business. The CTA’s own documents refer to riders as a “captive clientele.” We’re talking about public transportation, but they’re effectively referring to people who rely on the system to get around their city as guinea pigs for their credit card payments.
So yes, Ventra works, but the philosophical justification for it is still worth questioning, and why we got it is still worth asking. v