The Department of Transportation says a private contractor has made concessions worth $6.4 million as payback for delays and errors that accompanied last year’s move to a new statewide tolling system, including problems that led to the loss of hundreds of thousands of dollars in toll revenue on the Tacoma Narrows bridge.
That’s on top of $1.5 million that Electronic Transaction Consultants Corp. has already given up.
But the full amount of the settlement will only be recouped if the state follows through with plans to extend its contract with the company another four years.
“We do have confidence in ETC. We want to put this behind us and move forward (with) lessons learned,” Toll Division Director Craig Stone said Wednesday, noting that the system’s performance has improved.
The company took over toll processing and customer service in February 2011. Delays and problems plagued the transition. After computer glitches caused some Narrows drivers to be improperly fined, the contractor and the courts threw out many of the infractions, losing revenue for the bridge.
The same period saw repeated delays in the start of tolling on the state Route 520 bridge over Lake Washington, which will raise the money to replace the bridge. Drivers finally started paying to cross in December, nine months later than planned.
The state had a contractual right to penalize ETC $300,000 for every week of delay on the Route 520 bridge, and Stone said the contractor is effectively paying 21 weeks’ worth of that penalty. The state gave up the right to collect the weekly damages for the early weeks of delay, in exchange for recouping the actual costs of the problems. Stone said all but $600,000 of the actual costs had been recovered prior to the settlement.
State officials had been wary of charging too large of a fine for fear of putting the company out of business.
Rather than handing over a check, ETC will meet most of its obligations under the settlement by sharing a secret: its software code.
The state will receive a license to ETC’s software without paying royalties, something a state consultant has valued at $4 million.
With the license in hand, the agency knows it can switch contractors in the future without having to move to a new system, Stone said.
Apart from the software license, the settlement will be paid in the form of $2.4 million in future discounts.
As long as several upcoming benchmarks are met, ETC said the five-year, $23 million contract will be extended an extra four years through 2018 at a discounted price tag of $26.6 million.
State Rep. Jan Angel, whose constituents include many who pay the $4 electronic Good to Go bridge toll, said the settlement leaves unanswered questions, especially because it hinges on extending the contract.
“I thought we had a company we were dealing with that had sustainability and solvency issues,” the Port Orchard Republican said.
Angel also questioned how errors on the Narrows bridge are built into the settlement total.
WSDOT spokeswoman Patty Michaud said the Route 520 delays were tied closely to other problems, including the delay in charging tolls automatically based on license plates on the Narrows. The bridge between Tacoma and Gig Harbor lost about $600,000 in revenue overall, she said, including infractions that weren’t billed or were dropped.
Michaud said that’s why $600,000 of the discount will go directly to the Narrows bridge account. And that account will also share in the rest of the discount, which goes to costs across the statewide system.
“Tacoma Narrows bridge costs are being recovered and the toll payers are being held harmless from this,” Stone said. “They will bear no cost associated with the delay, and in fact in the long term there will be savings in the operations costs” from moving to a statewide system.
Texas-based ETC said in a statement that the settlement “avoids what could have been significant costs associated with a dispute review process and potential litigation costs.”
In May, Italy-based Autostrade took over the majority ownership of the company.