Backroom deals and billion-dollar contracts: NJ Turnpike E-ZPass agreement with Singapore-owned firm shrouded in secrecy

In November 2023, the New Jersey Turnpike Authority set out to spend big money to fix its problem-plagued E-ZPass operation amid years of complaints from motorists about billing errors, excessive fees, and electronic tolling foul-ups.

Ten months later, the agency awarded a $1.73 billion, 11-year contract—one of the largest in the turnpike’s 75-year history—to a Tennessee company named TransCore LP, which officials said had all the right stuff to fix commuter headaches.

But motorists, or anyone else who might want to know how the NJ Turnpike Authority made its momentous bet on TransCore, are out of luck: There is virtually no public disclosure about how the Turnpike Authority weeded through competing proposals and struck a deal with a bidder as hundreds of millions of public dollars for E-ZPass services came on and off the table.

The few available documents reviewed by The Jersey Vindicator, as well as interviews with one of the losing bidders, show the lucrative TransCore deal was the product of a closed process that took place out of public view, with scant written records left behind. The losing bidder has contested the award and is poised to challenge the NJ Turnpike Authority in court.

For anyone attending the Sept. 24, 2024, Turnpike Authority morning meeting where the contract was approved, it would have been impossible to know that TransCore’s winning proposal was actually $250 million higher than any other bidder. Nor would they have known that TransCore’s initial bid was $500 million higher until the Turnpike Authority held private negotiations with the company to cut that amount in half.

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They also would not have known that TransCore is ultimately owned and controlled by the government of Singapore and that its parent company had long been directed by a member of the Chinese Communist Party who sat on the board. A three-page explanation in the meeting agenda, inserted into the meeting minutes, provided only a skeletal summary of the Turnpike Authority’s bid review process but offered no discussion about the security issue.

A flurry of public outrage over TransCore’s connection to potentially hostile foreign powers erupted after attorneys for Conduent State & Local Solutions Inc., the second-place bidder, filed an official protest highlighting the ownership issue.

New Jersey politicians from both parties now want the TransCore contract scrapped.

Conduent, a national firm that was once part of digital services giant Xerox, is currently managing the state’s E-ZPass customer service and toll collection system under a 10-year, $325 million contract that was signed in 2015.

The contract controversy comes as tolls on the New Jersey Turnpike have shot up almost 40% in the past half-decade, with increases driven by automatic annual hikes that have angered motorists. It now costs more than $21 for most passenger cars to drive the highway’s 117-mile length.

But the E-ZPass contract controversy has also revived broader concerns about the transparency of quasi-independent agencies like the Turnpike Authority as they spend billions in public money. The contract also underscores longstanding ethical issues for state agencies that have historically been criticized for cronyism and insider influence in the awarding of contracts.

“The China connection has gotten a lot of public attention, but what’s really in play here is the integrity of the system and what the public needs to know,” said Paul Josephson, a veteran government attorney who filed the protest on behalf of Conduent, the Florham Park company that has been running the state’s E-ZPass operations for 20 years.

“The record of how this contract was awarded is so opaque that we have no idea what deals may have been made behind closed doors,” Josephson told The Jersey Vindicator. “There are unusual aspects to this award that, frankly, I have never seen before.”

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Public agency, private hearing

On Jan. 17, the authority held a hearing to listen to Conduent’s complaints. A transcript of the hourlong protest hearing shows it was granted to Conduent on the condition that it not be open to the public. Conduent representatives were also compelled to agree that key discovery materials not be disclosed if they wanted the protest to be heard.

Presiding over the hearing was Turnpike Authority staffer Tom Holl, the authority’s director of law. That itself was a major departure from past procedure, Conduent claims, when an independent hearing officer, such as a retired judge or a former commissioner heard protests.

Holl set down clear guidelines at the outset.

“Nothing in the authority’s regulations provides for notice to the public or press, because this is not a public hearing,” Holl said. “The rules of evidence do not apply. Witnesses, if any are presented, will not be sworn in, and there will be no cross-examination.”

Josephson was given 60 minutes to present evidence and arguments on behalf of Conduent. He argued that the Turnpike Authority had essentially scuttled the official bid offers and negotiated the deal in private. TransCore, he claimed, benefited from a series of private, one-on-one meetings with Turnpike Authority officials, who made dramatic concessions to the firm. Other bidders were never given such an opportunity.

Initial competing offers for the new contract were scored by a formal evaluation committee appointed by Turnpike Authority Executive Director James Carone. The committee was composed of Turnpike Authority officials and representatives of other transportation agencies, such as the Delaware River Joint Toll Bridge Commission, which depend on the E-ZPass system.

Identities of the evaluation committee members are not available to the public or the competing bidders.

The committee gave TransCore’s proposal the highest overall score in several areas, including items such as staffing levels and the use of new technology to interface with customers.

There are no records available, however, explaining how factors such as price and experience were weighted when comparing the three qualified bidders. There is also no publicly available record of the committee’s meetings or written rationale detailing why TransCore’s offer, originally half a billion dollars higher than the lowest bidder, was more appealing.

These very issues were addressed in a 2010 report by the New Jersey State Comptroller’s Office that examined cronyism in government contracting.

The report recommended that government agencies publish a simple narrative explaining their choices and that members of bid evaluation committees be publicly named and submit publicly available disclosures about potential conflicts with bidders and their attorneys.

Neither happened with the current TransCore contract.

State authorities, which are nominally independent but must answer to the governor’s office, have historically been dogged by questions of insider influence in the awarding of lucrative public contracts. In 2006, former Gov. Jon Corzine issued a landmark executive order designed to quell criticism that well-connected contractors were monopolizing public business.

“It’s vital that all contracts be awarded based on price and quality factors, as opposed to favoritism or other impermissible considerations,” said Corzine in Executive Order 37. “Measures are needed to make authority operations more efficient, to bring greater transparency to the actions of the authorities … and to ensure consistent adherence to appropriate financial controls.”

Members of Corzine’s transition team made cleaning up state procurement a major goal upon entering office, according to a 2006 team report that called for state authorities to fully detail all reasons for choosing a vendor. The report also sought to ensure “easily available” bid protests and to create “contract managers” for the ethical oversight of awards.

The authors of the report included leading law enforcement officials such as former U.S. Attorney Edwin Stier and ex-Attorney General Robert J. Del Tufo.

The Turnpike Authority routinely states in its procurement resolutions that it is in compliance with Corzine’s executive order, as it did in the TransCore pact. That assertion, however, has not prevented losing bidders from successfully challenging Turnpike Authority awards that were made in favor of large and powerful contractors.

Just last year, a state appeals court ruled that the Turnpike Authority acted unfairly when it awarded an $80 million road construction contract to Sanzari Inc., a major firm with a long history of doing successful highway work and making political donations to influential officials.

Sanzari’s bid was $10 million higher than the lowest qualified bidder, El Sol Contracting and Construction Corp. of Maspeth, New York, records show. Only days after awarding the contract to El Sol, the turnpike withdrew the offer and gave it to Sanzari, citing technical issues with a surety bond offered by El Sol as part of the company’s application.

But El Sol, much like Conduent, claimed it was never told the specific reason for losing the award. The company also presented evidence that the bond was identical to more than a dozen others that had been accepted by the Turnpike Authority from successful bidders.

The court agreed. “NJTA acted arbitrarily, capriciously, and unreasonably,” it ruled in November 2024.

Conduent’s key argument is that the company was never informed about what transpired during a series of private negotiating sessions between Turnpike Authority officials and TransCore, records from the protest hearing obtained by The Jersey Vindicator show. During those private sessions, Josephson argued, TransCore was allowed to lower its original bid of more than $1.9 billion by $250 million, bringing it closer in line with other bidders. He said the two parties also discussed changing the basic parameters of the initial bid offering, including the key issue of staffing levels at E-ZPass customer service centers.

“It is unknown what deals were struck, what services were undoubtedly reduced, or how staffing was affected” with this “drastic lowering of price,” Josephson argued in the protest hearing. TransCore gained “immense concessions on price, outside of fair and open competition.”

Holl offered no questions or comments during the session. TransCore’s attorney, Ronald L. Israel, offered no rebuttal at the hearing. “TransCore believes that the Turnpike Authority’s decision was appropriate, and we have nothing else to add.”

Law firm ties

Israel didn’t even respond to Josephson’s ethical concerns about the role of his law firm, Chiesa Shahinian & Giantomasi, at the hearing. Josephson asserted a “clear” conflict of interest in the firm’s concurrent roles as a longstanding paid Turnpike Authority legal adviser. Since 2018, the firm, headed by former Gov. Chris Christie’s attorney general, Jeffrey S. Chiesa, has been retained to perform legal work for the authority, according to bid protest records reviewed by The Jersey Vindicator.

“An attorney simply cannot serve as counsel to the decision-maker while simultaneously representing a private party appearing before that same decision-maker,” Conduent wrote in an Oct. 22 protest letter to the authority.

But Israel, general counsel for the Chiesa firm, addressed the issue when questioned by The Jersey Vindicator. Israel told The Vindicator his firm did no legal work for TransCore during the bidding process and only got involved in early October 2024, after Conduent’s protest was lodged.

“Conduent’s allegations concerning a conflict of interest are simply wrong and belied by both the facts and the Rules of Professional Conduct,” Israel said in an emailed statement.

He did not address other issues Conduent raised at the hearing, saying only that the authority rejected Conduent’s allegations on Nov. 19 in “five pages of analysis,” which he declined to provide.

None of the five commissioners who voted to approve the contract responded to calls and messages asking for comment. One of the two board members absent from the meeting did respond. Former state Assemblyman John Wisniewski declined to comment on the issues raised by Conduent but said he was carefully watching the bid protest and expects a report on the matter from Turnpike Authority staff.

Tom Feeney, a spokesman for the Turnpike Authority, declined to answer questions about the TransCore contract, saying he couldn’t comment because an official bid protest is underway.

“It wouldn’t be appropriate for the agency to comment on Conduent’s allegations until the final agency decision is issued,” Feeney said.

Chinese Communist Party connections

New Jersey politicians from both parties, citing Communist Chinese links to the firm’s corporate parent in Singapore, have not backed down on their demands that the TransCore award be pulled and reviewed.

“China keeps trying to steal Americans’ data. NJ Turnpike toll booths are set to be owned by TransCore, with links to the Chinese Communist Party. We cannot allow our personal information and whereabouts to get into the hands of our number one adversary,” U.S. Rep. Josh Gottheimer, a Democratic member of the House Select Committee on Intelligence who is running to be New Jersey’s next governor, wrote on social media.

State Sen. Joseph Pennacchio, a Republican who represents voters in Morris and Passaic counties, called for Gov. Murphy to rescind the Turnpike Authority’s approval and re-bid the contract.

“It is unconscionable that we would willingly allow any business that has ties with a foreign adversary to manage our tolling systems,” Pennacchio wrote in a Feb. 11 letter to the governor.

Josephson drilled deeper into the ownership issue at the protest hearing. TransCore, he said, failed to disclose the identities of almost 30% of its parent firm, ST Engineering of Singapore, and its links to Chinese-controlled state entities. That, he argued, is required by state law and should result in mandatory rescission of the award.

“We don’t know who [the owners] are. We don’t know if that is a company. We don’t know if that is one individual. We don’t know if that is 20 individuals,” Josephson said at the hearing. “This was not disclosed to the Authority.”

In 2022, under questioning from Ohio Turnpike officials, TransCore’s former CEO acknowledged that he directly reported to the Singapore firm, according to a transcript submitted to New Jersey Turnpike officials by Conduent.

The former TransCore executive, Tracy Marks, told the Ohio officials he could not guarantee that his foreign bosses would not order changes that affect how the company operates in the U.S.

“I am sure that is within their prerogative,” Marks said. “I think anything is possible.”

TransCore, in a written statement to The Jersey Vindicator, accused Conduent of spreading “misinformation” to draw attention away from a poor service record with New Jersey E-ZPass. TransCore cited Conduent regulatory filings where the Florham Park firm acknowledged issues with “outdated” technology and being “susceptible” to security breaches that could expose customers’ data to “unauthorized” users.

“It is disappointing, though not surprising, that Conduent has focused on public fear-mongering rather than on improving the quality of its products and services,” CEO Whitt Hall wrote.

Hall also provided a letter noting that TransCore, which has 4,000 U.S. employees, including 340 in Union, New Jersey, passed a rigorous review by the U.S. Committee on Foreign Investment. TransCore has signed an agreement with the government to protect motorist data from any foreign affiliate, including parent entities owned and controlled by Singapore and other foreign investors, according to the letter.

Natalie Hamilton, a spokeswoman for Gov. Phil Murphy, said the administration would make no comment while the Turnpike Authority is still considering the formal bid protest.

Stephen G. Carrellas, who heads the New Jersey chapter of the National Motorists Association, has spent decades tracking the Turnpike Authority and other state transportation agencies. While he said he welcomes long-needed improvement in E-ZPass customer service, change shouldn’t come as the result of backroom deals.

The New Jersey Turnpike Authority, he said, all too often offers reflexive resistance to openness and transparency. Board meetings, he said, are not even tape-recorded for the public, and there is sparse documentary backup on spending decisions.

“It’s way past time for E-ZPass to get better,” he said. “But the Turnpike has to be transparent in how things are being done or we’re just headed for more problems.”