The government is partnering with an American transport and military contractor that promotes its weapons-training systems by showing the targeting of men dressed in robes.
Cubic Corporation of San Diego has won a Waka Kotahi contract to roll out a $1.388 billion system to let people use one card on buses, trains and ferries.
As well as supplying public transport ticket systems in many cities, Cubic does training for US military Predator and Reaper drones.
Ethical finance adviser Barry Coates said the Cubic deal was surprising.
"Over 80 percent of people want to avoid investing in companies that make weapons," Coates said.
"So it's of concern to us that now there's a major public service contract going to a US company that's deeply involved in weapons manufacturing."
In a separate deal, Waka Kotahi has signed up to get more speed cameras from a company, Redflex, caught up in a major bribery case in Chicago several years ago.
Both the speed camera and the ticketing deals are in areas that official documents say need a lot of public trust and buy-in.
It has deals with Lockheed Martin and Northrop Grumman, both on the NZ Super Funds' list of banned companies due to nuclear weapons and civilian firearms manufacture.
Cubic was the major subcontractor in a seven-year, $6b Lockheed Martin combat training deal in 2018.
Its training includes gaming elements "on a platform inherently understood by today's warriors", its website says.
A promotional video includes clips of virtual missiles hitting vehicles, aerial targeting of tanks and trucks, and figures in robes carrying guns.
Cubic has a subsidiary, Abraxas-Cubic, that calls itself "a trusted partner to the US national security community".
Abraxas-Cubic says it is engaged in "its worldwide mission with both service and technical related programs across a vast array of intelligence community organisations".
Cubic has subsidiaries in New Zealand and Australia "to support warfighters at the tactical edge".
Coates said it was the first such public deal with a military contractor he was aware of.
"Cubic is a company that provides some of the crucial elements of weapons supply," said Coates, a former Green MP who founded the not-for-profit Mindful Money.
The group had been asking the government to give higher priority to ethical choices.
The deal "would be presumably hard to get out of now", he said.
Cubic was on his group's banned list, before the firm was taken private by Veritas in a $5b deal last year.
Cubic declined to comment.
NZTA said it chose Cubic based on its track record of delivering ticket systems in multiple countries.
The process was independently reviewed throughout "with specific advice being sought from relevant bodies at decision points".
The contract runs for 15 years and covers new hardware, software and operating costs.
As for data security for travellers, Waka Kotahi said it was "strongly committed to protecting individual privacy and ensuring the security of data" by it and its contractors.
Highway camera deal
On the speed camera front, Redflex has supplied cameras to New Zealand for several years.
It is poised to provide another 100 smart fixed, mobile, redlight and average-speed cameras in the "first phase" of an expansion nationwide by Waka Kotahi.
The company was caught up in a bribery scandal in Chicago around the time it was doing deals with New Zealand police.
The US scandal ran from 2012 to 2016, when the firm and its Australian parent company, Redflex Holdings, agreed to pay $35m to the city to settle a lawsuit.
Three executives were sentenced to federal prison. One admitted her role in orchestrating a $3m scheme to bribe a top city transportation official.
New Zealand police began looking for cameras in 2013-14.
"NZ Police undertook an extensive global procurement process for safety cameras and associated systems and services which resulted in Redflex being confirmed and contracted as their supplier," a report released under the OIA said.
The contract came into effect in 2018.
Now, Waka Kotahi is taking over the police camera network - rechristening the speed cameras "safety cameras" - and has done a deal to lease new cameras from Redflex.
Its safety camera project did "due diligence", the agency told RNZ.
"Waka Kotahi was aware of the previously reported issue and this was taken into account, regarding engaging this vendor.
"Redflex is a well-established and trusted supplier of safety cameras in the global market."
Redflex was bought by US firm Verra in 2021.
Redflex/Verra did not respond to requests for comment.