Electric Vehicle Manufacturer Drops Lawsuit Protesting Postal Service Fleet Contract

A vehicle manufacturer has dropped a lawsuit that had sought to force the U.S. Postal Service to reconsider its award of a potentially multi-billion dollar fleet replacement contract to another company.

In February, USPS awarded its fleet replacement contract for the manufacturing of at least 50,000 and up to 165,000 vehicles to Oshkosh Defense. Workhorse Group, a much smaller company and also a finalist for the contract, sued USPS in June over the decision. On Tuesday evening, less than 24 hours before the U.S. Court of Federal Claims was set to hear oral arguments on the case, Workhorse dropped its suit. The company—which makes electric vehicles—said it is now pursuing other business opportunities, potentially to include future dealings with USPS as the agency seeks to ramp up its use of plug-in cars and trucks. 

“We have been conducting a deep and intensive overview of all aspects of our business, including an examination of the history of our USPS bid and subsequent protest filing,” said Workhorse CEO Rick Dauch, who joined the company after it filed its lawsuit. “The federal government has announced its intention to replace its fleet with electric vehicles, and we believe that the best way for us to work with any governmental agency is through cooperation, not through litigation.”

Workhorse originally said in its complaint it spent six years and more than $6 million on its bid. It accused Postal Service officials of predetermining the outcome of the agency's procurement without informing the bidders. The company said USPS "put its thumb on the scale" against its bid when it "falsely blamed" Workhorse for an incident that resulted in its prototype rolling into a ditch during a demonstration. Workhorse said the incident was clearly the result of driver error and not an indictment of its vehicle.

Workhouse also argued Oshkosh's selection was surprising given how few electric vehicles the company plans to produce, the costs USPS will incur just to allow Oshkosh to complete its design, and the significant differences between the selected model and the prototype Oshkosh actually put through testing.

Since awarding the contract, Postmaster General Louis DeJoy said he planned to make just 10% of the new vehicles electric. He added he was open to going much further, but would require funding assistance from Congress. A House committee recently passed a measure that would provide $2.4 billion to USPS for that purpose as part of a much larger $3.5 trillion package being pushed by congressional Democrats. 

The Postal Service and the Justice Department had asked the court to throw out the suit, saying Workhorse must first go through USPS' internal process to challenge procurement decisions before a court can weigh in.

The contract will be worth at least $482 million as Oshkosh is set to custom build an initial order of 50,000 right-hand-drive vehicles for USPS. The Postal Service’s “next generation delivery vehicle” search has lasted several years and gone through multiple delays, though its aging fleet and reports of trucks catching fire have given the process urgency. USPS owns more than 200,000 vehicles, most of which are categorized as “long-life” and have been on the road for an average of 25 years.

The Wall Street Journal reported earlier this month that Workhorse was under investigation by the Securities and Exchange Commission. Ultimately, the lawsuit was not worth Workhorse’s time, Dauch said. 

“By withdrawing our protest, we can also better focus our time and resources on initiatives that we expect will be more productive for our company,” he said.