Texas fires TxTag vendor after failed system upgrade overcharges drivers millions

Politics

AUSTIN (KXAN) — The Texas Department of Transportation has terminated the contract of its toll operations vendor because of a botched system upgrade.

IBM has been the state’s contractor since early 2019. For months, KXAN’s investigative team has been reporting on the rollout of the TxTag upgrade, which was intended to make life easier for drivers but became bogged down by technical problems.

Notably, many TxTag customers told KXAN their accounts were being overcharged. It came after the state told customers they would see multiple charges posted to their account that were incurred from late October 2020 to January 2021.

In May, TxDOT said it had refunded more than $11.7 million in overcharges back to drivers.

“We take the responsibility of providing a quality and trusted customer experience very seriously, and regret the impact and inconvenience these past many months of lackluster IBM service have had on our toll road users,” said TxDOT Executive Director Marc Williams in a statement last week. “We will continue to keep customers apprised on our progress to improve our customers’ interactions with TxTag. Our customers deserve better and we are committed to ensuring that they receive that going forward.”

As of May, the state had fined IBM more than $6 million for contractual obligations not met. For perspective, TxDOT’s old toll operator, Conduent, was charged more than $2 million for not meeting metrics between 2014 and 2018.

An IBM spokesperson said the company disagreed with TxDOT’s decision to cut ties, adding that the state was culpable for problems with the upgrade.

“The success of any information technology project depends on each of the participants fulfilling its obligations. IBM’s performance on this project has been hampered by the inability of TxDOT to do so,” said the spokesperson. “Despite TxDOT’s failure, IBM’s performance and the system IBM has implemented far exceed operational requirements anticipated when the contract was signed to the benefit of Texas motorists.”

The Texas Department of Transportation said it has signed an emergency contract with SAP Software Solutions and the Department of Information Resources Managed Security Services to help manage the “massive amount of customer data and toll transactions.” A spokesperson added the department has begun the process of selecting a permanent toll operations vendor.

TxDOT says TxTag customers do not need to take any action at this time, and that it will continue to not assess late fees.

Copyright 2021 Nexstar Media Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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