The fallout from Transport for London’s (TfL’s) decision to end its contract with the IT consortium supporting the Oyster smartcard system has just begun.

While some believe the move may simplify the intended rollout of the government-imposed ITSO smartcard standard on the capital’s transport system, it could also bring uncertainties related to integration and service continuity.

The ending of the deal with the TranSys consortium ­ – which comprises EDS, Cubic, Fujitsu and WS Atkins ­ – took place last week when TfL exercised a break clause in the contract.

TfL said that savings generated through ending the contract will be channelled into improvement work on London’s transport network.

The system will need to accept ITSO-based smartcards by 2011, so the rationale behind dumping TranSys may also be motivated by the expense involved in rolling out the new technology, said a transport industry expert.

“The cost of making the proprietary Oyster scheme compatible with the new standard, which would cover readers, pads, systems and equipment on buses, would certainly exceed the £100m mark. So it would work out cheaper for TfL to roll out a new system as opposed to re-fitting the existing platform,” said the expert, who requested anonymity.

Shashi Verma, TfL’s director of fares and ticketing, told Computing in March that the transport body was working at full steam to replace 21,000 readers so they can accept both ITSO and Oyster cards by 2010, but it was facing integration challenges.

“There are a number of ITSO readers, ticketing structures and back-office systems in the market, so the integration challenges are much tougher,” he said at the time.

Under the new structure, TfL is expected to face issues related to the pressure for selecting suppliers in time for the Olympic Games in 2012, as well as issues about how the handover process is conducted, said Butler Group’s senior research analyst Sarah Burnett.

“The contractual break happened at a very interesting time because TfL still needs to analyse the bids and the new system will probably take about two years to deploy, so getting that done in time for the Olympics will surely be tough,” she said.

Burnett also expressed concerns over the handover process scheduled to happen within the next two years, which is the notice period given by the transport body.

“TfL must not let the expertise go and should concentrate on delivering a seamless handover by transferring knowledge and documenting the process carefully, as well as having a contingency plan,” she said.

“London cannot afford to have a malfunctioning system supporting the transport network, especially in 2012.”

TfL played down the fears by saying that it owns a licence to the intellectual property supporting Oyster and would continue even after TranSys’ replacement.

“As with any end of a contract, service continuity is fundamental. We have a two-year notice period and will put in place the necessary arrangements to ensure the continuity of the system,” said a TfL spokesman.

Industry speculation suggested the move follows years of failed discussions on future strategy plans based on any contract renewal and issues related to ownership of the rights to the Oyster brand and technology.

TfL’s contract with TranSys

• The Oyster card system was deployed in 2003, under an agreement between Transport for London and TranSys, a vendor consortium in which EDS and Cubic are the main shareholders and who deliver system development and maintenance.
  

• The £100m-a-year contract was originally for 17 years, but TfL decided to exercise a break clause in the agreement and terminate it in 2010, citing cost cutting and dramatic changes in the London transport system over the past decad e.
  

• While it is not known whether TfL has already started the selection of new vendors, recent developments signal that the two parties will be faced with managing a difficult relationship over the next two years.
  

• It is understood that TfL wants TranSys to take financial responsibility for the losses incurred when two major outages hit the system in July, causing card corruption or fare overcharging to more than 120,000 commuters.
  

• In a legal twist, EDS has filed a temporary restraining order against TfL to stop it transferring the Oyster contract to Cubic.
  

• TfL was apparently close to signing a deal with Cubic at the same time as the contractual break with TranSys was announced.