Does Lockheed deserve media's, MTA's ire in NYC?

Lawsuit with subway agency drags on, leaving public perception in limbo
Thursday, June 10, 2010

NEW YORK—Following two fatal stabbings in the subways here and then the failed bombing attempt allegedly committed by Faisal Shahzad in Times Square, mainstream media scrutiny of the city’s surveillance system ramped up. In particular, MSNBC, WNYC and other outlets made waves with stories about how “half of NYC security cams don’t work” or “none of the roughly 2,000 cameras [in the subways] ... are fully hooked up to surveillance rooms where employees can monitor them.”

In the majority of these stories, just one systems integrator was ever mentioned: Lockheed Martin. Here is a typical paragraph, from the MSNBC story, dated March 30: “A division of Lockheed Martin hired to install the systems sued the MTA last year, blaming the agency for delays preventing them from meeting construction deadlines. The MTA countersued, saying that Lockheed Martin had provided faulty products.”

Of course, not every media outlet is so even handed. Here’s another way of putting it, from the online publication the Gothamist, dated May 16: “Almost 1,000 of the system's faulty cameras were installed by Lockheed Martin, though work has been stalled because the security company and the MTA are suing each other.”

The implicit understanding many stories and talking heads convey is that Lockheed has installed cameras that don’t work, or, worse, were installed in such a bungling fashion that they’re not even connected to anything.

So, what’s the real story? Much of it can be discerned by reading through legal filings from the summer of 2009 in connection with Lockheed’s suit against NYC’s MTA, in which the company alleges, alternately, that the MTA breached its contract with the company or wrongfully terminated it (which of those things actually happened is up to a judge to decide). Should the judge rule in its favor, Lockheed stands to get either $80 million or $138 million from the MTA.

The MTA counter-sued, alleging breach of contract on Lockheed’s part. Should Lockheed lose, it would have to pay out something in the realm of $92 million.

It’s possible a settlement winds up somewhere in between all of those figures. 

What everyone agrees upon is that the project was meant to be completed by August 2008 and that now, nearly two years later, the best-case scenario is completion (by a company or companies other than Lockheed) of a scaled-back electronic security system by some time in 2012.

In January, the New York State Controller’s office released its “Progress Report: The MTA Capital Security Program,” detailing where the project stands. Among its findings: “The insurance companies holding the performance bonds for the Lockheed contract have been ‘unable to conclude that Lockheed is, in fact, in material breach’ of its contract.” It also found the project to already be more than $200 million over budget.

While much of the legal wrangling involves “additional work orders” and what is and what is not in the scope of the contract, there appear to be three major issues that held up the project: a lack of a working IP network; lack of access to, or dangerous conditions at, specific work areas; and interference by agencies that were not party to the contract.

Specifically, says Lockheed in the filings, “None of the communication rooms have the necessary network access, the absence of which makes it impossible for Lockheed Martin to install a Security System that will actually transmit information.” Those cameras that aren’t connected? Essentially, Lockheed wasn’t contracted to build an IP network and one hasn’t been provided to them by the MTA.

Further, “In particular, Defendants MTA Capital and MTA demanded that Lockheed Martin obtain approval for the plans and specifications from non-parties to the Contract—even though the Contract does not require any such approval from non-parties. Those non-parties included at least five other agencies, including New York

City Transit Authority (“NYCT”), Long Island Railroad (“LIRR”), Metro North Railroad (“MNR”), Bridges & Tunnels (“B&T”), and MTA Police Department (“MTAPD”) (collectively “MTA Agencies”).”

As each phase of the project moved along, Lockheed was being asked to get approval from agencies that were not its master, and those agencies repeatedly requested changes to the designs.

It remains unclear when, and if, fault will be found in the whole NYC subway camera mess. The lawsuits between Lockheed and the MTA have been in the discovery phase for nearly a year now, and no one would speculate on a time frame for the case’s conclusion. Lockheed, itself, chose not to comment for this story, while pointing to its arguments in its court filings. For a statement, the company released the following to Security Systems News:

“We initiated legal action as a last resort. This is an action rarely taken by Lockheed Martin, and it is only being taken after having exhausted all efforts to resolve the issues with the MTA. As the parties proceed with the discovery phase of litigation, we continue to believe that the termination of Lockheed Martin was wrongful and that MTA’s claims are without merit.”