SEPTA’s Key Card has been plagued with issues. A new version could cost $211 million.

It took a little over eight years to build, run, and maintain SEPTA’s Key Card electronic fare-payment system and has cost at least $285 million, twice the budgeted amount.

Now the transit authority is close to spending an additional $211 million for a different company to update the system, at a time when its finances are precarious and officials are negotiating in Harrisburg for a new source of state transit funding to avoid deep service cuts later this year.

The contract would go to Cubic Transportation Systems, a San Diego-based competitor of incumbent Conduent Inc., a spin-off of Xerox, headquartered in Florham Park, N.J.

The project requires approval from SEPTA’s board. Already, SEPTA’s board postponed a scheduled December vote on the project because several members raised serious concerns that spending so much could complicate budget talks with Harrisburg, as well as potential complications in transitioning to the Key 2.0 system.

The delay allowed board members to discuss the concerns with SEPTA staff. A vote on the contract is scheduled for board consideration Jan. 23.

“The system overall has become outdated,” SEPTA spokesperson Andrew Busch said. “We’re seeing some signs that it’s getting close to wearing out.”

Conduent said in a statement that it has already installed some upgrades SEPTA wanted and is capable of finishing other proposed work in a “cost-effective manner” because it designed and installed the existing hardware and software of the current Key Card system.

“Our view is that SEPTA does not need to spend hundreds of millions of dollars on a new system when SEPTA’s objectives could be achieved through feature enhancements,” a spokesperson for Conduent said in the statement. “We believe making a significant change at this time will likely lead to increased risk of delays, disruptions and costs that have not been accounted for.”

SEPTA officials considered putting off the project but concluded they would have to solicit bids on the work again and a delay of two to three years would push the cost of the base contract with Cubic from $211 million to about $300 million, Busch said.

Over the last six months, SEPTA has experienced outages of the Key Card system, and customers have had problems with fare kiosks and loading their cards, Busch said. Conduent reimbursed SEPTA about $610,000 in December for revenue lost in the 2024 outages.

Key Card’s rollout in 2016 was two years late, and the system had issues that annoyed SEPTA riders, including cards that expired, difficulty loading money on them at station kiosks, and other malfunctions. Conduent struggled to adapt to contactless payments with credit cards and smartphone apps, which were not widely accepted on SEPTA until 2023.

Cubic’s final bid was $63.6 million lower than that of Accenture Inc., the runner-up, according to SEPTA documents. And Cubic’s final offer was also about $35 million below Conduent’s bid, the documents show. SEPTA did not negotiate on price with Conduent because officials rated its technical capabilities “marginal,” officials said.

In November, Gov. Josh Shapiro, a Democrat, moved $153 million in federal highway funds to transit accounts in the Pennsylvania Department of Transportation to help SEPTA postpone the service cuts and fare increases. A deal on the governor’s proposal to increase state transit funding did not pass the legislature.

The transit agency says it faces a $240 million recurring shortfall in its operating budget.

Republican leaders were infuriated by Shapiro’s flex of operating money to SEPTA. They wanted to negotiate a transportation package that would also pump money into highway infrastructure, airports, and other transportation needs.

“Flexing these dollars, No. 1, sends a message that the governor cares more about transit than he does [highway] infrastructure, and, No. 2, doesn’t seem interested in sitting down and figuring out how we collaborate on real solutions to these issues,” Senate Majority Leader Joe Pittman (R., Indiana) told The Inquirer when the move was announced.

State Senate Republicans have blocked Shapiro’s proposal to raise $1.5 billion over five years for transit operations by allocating more sales tax revenue to the Public Transportation Trust Fund. SEPTA, as the largest system, would have received about $161 million annually under that plan.

Shapiro said SEPTA ran out of time amid legislative inaction and he had to act. The governor said he still wants to negotiate a comprehensive transportation spending measure.