Electric vehicle manufacturer Workhorse sued the U.S. Postal Service on Wednesday in an attempt to block the $6 billion procurement process for its next-generation mail truck, a contract offered to rival Oshkosh Defense in February, according to three people involved in the dispute.
The lawsuit, first reported by Reuters, comes as the Postal Service’s newly constituted governing board — under Democratic control for the first time since the Obama administration — met Wednesday in a closed session, ostensibly to take up two high-stakes issues: Revelations that Postmaster General Louis DeJoy is under FBI investigation in connection with past political fundraising activities, and the agency’s controversial 10-year plan, which pairs unprecedented service cuts with price increases. DeJoy has not been charged with any crimes.
The truck contract is a major pillar of that plan. The vehicles have more than twice the cargo capacity of the current fleet of “long life vehicles,” or LLVs, plus enhanced safety and ergonomic features such as air bags, air conditioning and backup cameras.
The LLVs, which date back to 1987, get only 10 mpg and have a reputation for component fires stemming from hundreds of thousands of miles of overuse.
The new trucks, called “next generation delivery vehicles,” or NGDVs, are built to accommodate more parcels. DeJoy is pivoting the agency to focus increasingly on its e-commerce package business.
The Postal Service in February announced plans to purchase as many as 165,000 mail trucks from Oshkosh for $6 billion in the next decade, and promised to pay an additional $482 million upfront for the Wisconsin-based firm’s finished designs.
It was, at the time, a dramatic conclusion to the purchasing program, a seven-year effort that had sparked bitter competition from vendors intent on boosting their electric vehicle manufacturing ambitions.
But DeJoy told a House panel shortly after the announcement that the agency planned for only 10 percent of the trucks to run on electric drivetrains, and for the rest to take gasoline. House Democratic leadership rallied behind an effort to grant the agency $8 billion to fund a fully electric fleet and charging infrastructure.
That funding program embittered Workhorse leadership, said the three people, who spoke on the condition of anonymity because both the Postal Service and its vendors are bound by nondisclosure agreements. The company’s bid sought to persuade agency leaders that it was the only vendor capable of expeditiously manufacturing electric vehicles, and leading observers of the procurement process have publicly questioned whether the Postal Service evaluated an electric Oshkosh prototype.
Workhorse leaders felt, two of the people said, that the Postal Service was about to receive — then pay out — a hefty sum of money without having seriously considered Workhorse’s bid, and after having overlooked deficiencies in competitors’ offerings.
Workhorse’s stock jumped 5.3 percent on the news to $14.90 a share. Oshkosh’s stock fell 1.8 percent to $125.15 per share.
“The allegations are that basically that [the Postal Service] never planned to seriously consider Workhorse and they put their thumb on the scale to select against Workhorse,” one of the people said Wednesday.
In a news release, Workhorse confirmed that it had filed the lawsuit but said it would not comment further because of its nondisclosure agreement with the Postal Service.
Postal Service spokeswoman Kimberly Frum wrote in an emailed statement that the agency was “looking forward to the start of vehicle production” for the NGDV program and that the trucks are scheduled to appear on the streets in 2023.
Linda Giordano, senior director of global branding and communications for Oshkosh, added in a separate statement that bid protests “are a normal part of the government contracting process,” and that the company would not comment on Workhorse’s suit.
“We are proud that the USPS selected Oshkosh Defense to fulfill the needs of the NGDV program and we look forward to getting these highly capable vehicles into the hands of mail carriers,” Giordano said.
The Postal Service awarded Oshkosh the contract based on a flexible truck model that could be converted from an internal combustion engine to a battery-electric powertrain. Neither the Postal Service nor Oshkosh representatives would say in previous interviews whether the company submitted an EV model for durability testing. Nor would they say whether Oshkosh has preformed a powertrain transition, swapping out an internal-combustion engine and transmission for electric parts, or how much that would cost.
As recently as November, Oshkosh wrote in a securities filing that it lacked the “expertise or resources” to develop electric vehicles.
“The prototype stage was a statement of objectives,” said Mark Guilfoil, the Postal Service’s vice president of supply management. “It was always built into the process where there would be changes and updates.”
Oshkosh’s president and chief executive, John Pfeifer, said that drivetrain flexibility was a key advantage of his company’s bid.
“We can take an internal-combustion vehicle and convert it in the future to battery-electric without having to replace the whole vehicle,” he said. “Now, that’s really important because there’s a lot of use cases for the Postal Service where either they don’t have the infrastructure for recharging yet — there will be in the future, but they don’t have it yet — or maybe it’s not conducive yet to battery-electric because it’s long rural routes where you don’t come back to base for a long time for recharging.”
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