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WKHS Vs United States (USPS Award Complaint) 1-21-Cv-0484-ZNS - Doc 44 (WKHS Reply To Oshkosh & USA Motion To Dismiss)
WKHS Vs United States (USPS Award Complaint) 1-21-Cv-0484-ZNS - Doc 44 (WKHS Reply To Oshkosh & USA Motion To Dismiss)
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)
WORKHORSE GROUP INC., )
)
Plaintiff, ) Case No. 21-1484C
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v. ) Judge Zachary N. Somers
)
THE UNITED STATES, )
)
Defendant )
)
and )
)
OSHKOSH DEFENSE, LLC, )
)
Defendant-Intervenor. )
)
TABLE OF CONTENTS
Page
INTRODUCTION ...........................................................................................................................1
ARGUMENT ...................................................................................................................................8
I. Legal Standard .........................................................................................................8
CONCLUSION ..............................................................................................................................24
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TABLE OF AUTHORITIES
Page(s)
Cases
Coit Independence Joint Venture v. Fed. Sav. & Loan Ins. Corp.,
489 U.S. 561 (1989) ...................................................................................................................9
Kontrick v. Ryan,
540 U.S. 443 (2004) ...................................................................................................................9
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Smith v. Orr,
855 F.2d 1544 (Fed. Cir. 1988)................................................................................................15
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Other Authorities
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INTRODUCTION
Defendant The United States and Defendant-Intervenor OshKosh Defense, LLC (the
“Movants”) argue that this Court may not exercise its jurisdiction under the Tucker Act to consider
Plaintiff Workhorse Group’s (“Workhorse”) challenge to a flawed bidding process and improperly
awarded contract for the U.S. Postal Service’s (“USPS”) Next Generation Delivery Vehicles
(“NGDV”). Movants rely on a USPS regulation stating that a supplier must present a bid protest
The first problem with Movants’ argument is that Congress did not authorize USPS to limit
the jurisdiction Congress gave this Court under the Tucker Act to decide bid protests. Because
only Congress can limit the Court’s Tucker Act jurisdiction, USPS cannot mandate that a supplier
like Workhorse exhaust two levels of administrative review before it can seek judicial relief.
Indeed, neither Movant cites to a decision holding that USPS’s regulation is a valid restriction on
this Court’s ability to entertain bid protests. The primary decision on which Movants rely,
Palladian Partners, Inc. v. United States, 783 F.3d 1243 (Fed. Cir. 2015), is readily distinguishable
from this case. It addressed a “size protest,” which the Federal Circuit has held is distinct from a
bid protest, such as Workhorse’s here. It involved an exhaustion regulation issued by the Small
Business Administration (“SBA”) pursuant to a statute to assign standard business size codes, a
supports the USPS regulation Movants invoke here. And USPS’s regulation does not involve the
resolution of any technical issue outside of this Court’s expertise, but rather purports to set up a
general bid protest process to address issues that Congress gave this Court jurisdiction to decide
Secondly, USPS’s attempt to unilaterally give itself its own mandatory bid protest process
is inconsistent with Congress’s well-established statutory scheme for bid protests. Congress has
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established multiple fora to decide bid protests, including this Court and the Government
Accountability Office (“GAO”). When Congress sees a need for a separate administrative bid
protest process for a particular agency, it establishes one by statute, as it did for the Federal Aviation
Administration (“FAA”). There is no statutory support whatsoever for USPS’s creation of its own
bid protest procedure, much less one that purports to restrict this Court’s Tucker Act jurisdiction.
Third, applying the exhaustion regulation would serve no purpose here, where Workhorse
presented its claims at the first level of administrative review and USPS made it clear that it would
not change its predetermined conclusion to award the contract to OshKosh Defense, LLC
(“Oshkosh”). The exhaustion doctrine does not require parties to take obviously useless steps in
order to preserve their rights. It would have served no purpose for Workhorse to bang its head
against the wall here, especially as the second level of the administrative process provides not an
independent and unbiased review, but simply another instance of USPS reviewing its own work
and rubber stamping its award decision. This is completely unlike the administrative remedial
scheme addressed in Palladian, where Congress had established a neutral body inside the SBA to
address challenges to technical decisions initially made by contracting officers outside the SBA.
Beyond these fatal flaws in the motions to dismiss, USPS’s two-level appeals process also
runs afoul of the Constitution’s Appointments Clause. Just last month, the Supreme Court held
that inferior officers cannot finally adjudicate claims on behalf of the Executive Branch where
their decisions are not reviewable by a principal officer who is appointed by the President with the
advice and consent of the Senate. United States v. Arthrex, Inc., 141 S. Ct. 1970 (2021). USPS’s
second-level appeal decision-maker is just such an inferior officer whose decisions are final and
binding yet not subject to review by USPS’s Board of Governors, the Postmaster General, or any
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Workhorse’s bid protest is properly before the Court, and the motions to dismiss should be
denied.
QUESTIONS PRESENTED
1. Whether USPS had authority to limit this Court’s Tucker Act jurisdiction to decide
administrative appeal where Workhorse presented its arguments at the first level and USPS’s
decision rejecting them and subsequent actions made clear that it would not change its
because it provides for an inferior officer’s adjudicative decision to bind the Executive Branch
without being subject to review by a principal officer who is appointed by the President with the
REGULATORY BACKGROUND
supplier bid protests: the supplier disagreement resolution (“SDR”) process. 70 Fed. Reg. 20291
(Apr. 19, 2005); 39 C.F.R. pt. 601. The process encompasses two levels of appeal: initial
§§ 601.107, 601.108. At the first level, the responsible contracting officer considers the supplier’s
claims in support of its bid protest and issues a written decision. Id. § 601.107(b). At the second
level, the SDRO (called an ombudsman in the original regulations) considers the supplier’s claims
and issues a written decision. Id. § 601.108(e). Second-level appeals must be lodged within 10
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days of the contracting officer’s decision. Id. § 601.108(d)(3). The SDRO is a contracting officer
appointed by the USPS Vice President for Supply Management. Id. § 601.107(a)(5); USPS,
As originally promulgated, the regulations stated that the second-level decision was not
reviewable by a federal court except on the grounds that the decision was “procured by fraud” or
“obtained in violation of the regulations…or an applicable public law[.]” 70 Fed. Reg. at 20298;
39 C.F.R. § 601.108(h)(5) (2006). In 2007, USPS amended the regulations to add criminal
misconduct as another basis for judicial review. 72 Fed. Reg. 58251, 58254 (Oct. 15, 2007); 39
C.F.R. § 601.108(g) (2008). In 2010, USPS again amended the regulations to state that a party
may seek judicial review of a USPS contract award “only after the mandatory administrative
remedies provided under § 601.107 and § 601.108 have been exhausted,” describing the
amendment in the preamble as intended “to clarify” certain of the SDR procedures. 75 Fed. Reg.
USPS operates a fleet of over 200,000 delivery vehicles in the United States and its
territories. Compl. ¶ 17, ECF No. 1. With the vast majority of those vehicles approaching the end
of their life cycles and USPS in need of a new, modern fleet, USPS developed the NGDV Program.
Id. USPS touted the NGDV program as forward-thinking, encouraging offerors to adopt
innovative and sustainable technologies such as alternative fuel systems and autonomous
capabilities. Id.
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USPS began the prototype phase of the procurement in October 2015, issuing a solicitation
for the design, development, and manufacture of NGDV prototypes. Id. ¶ 19. In September 2016,
Workhorse’s former partner, VT Hackney, Inc., was one of six prototype suppliers selected for
award of a prototype contract. Id. Workhorse purchased the VT Hackney prototype and assumed
VT Hackney’s responsibilities under the solicitation. Id. ¶ 19 n.2. Oshkosh was another of the six
prototype suppliers selected. Id. The selected suppliers designed and manufactured NGDV
prototypes for USPS, which conducted testing of emissions and fuel economy, ergonomics,
At great financial cost to it, Workhorse submitted a fully electric delivery vehicle, which it
designed and constructed entirely from scratch specifically to meet or exceed USPS’s requirements
and purposes. Id. ¶ 21. Consistent with the purpose of the Prototype Phase, Workhorse studied
USPS testing results and revised its design accordingly to resolve any shortcomings USPS
identified to Workhorse. Id. ¶ 22. In contrast, Oshkosh submitted a Ford Transit-based vehicle,
i.e., an already-existing commercial vehicle with a Ford Transit chassis and customized body. Id.
¶ 21.
On December 27, 2019, USPS issued a solicitation for award of an IDIQ Fixed Price with
Economic Price Adjustment contract for a minimum of 50,000 and maximum of 165,000 vehicles.
Id. ¶¶ 24–25. In the solicitation, USPS proposed to make awards to the offeror(s) whose proposal
offered USPS the best value, which it would determine by weighing factors such as total cost of
ownership, technical evaluation results, and risk. Id. ¶ 27. Workhorse timely submitted a proposal
on July 14, 2020. Id. ¶ 52. USPS on several occasions held discussions with Workhorse in which
it raised some deficiencies it had identified in Workhorse’s proposal. Id. ¶¶ 62–65. On each
occasion, USPS gave a brief description of the purported deficiency and did not identify to
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Workhorse any as major or critical; USPS also did not ask follow-up questions of Workhorse or
On February 23, 2021, Workhorse received a notice of award from the contracting officer
stating that USPS had made the contract award to Oshkosh with an initial $482 million payment
for Oshkosh to finalize its production design. Id. ¶ 66. That same day, Postmaster General Louis
DeJoy expressed satisfaction with the award in a video announcement on the USPS website,
stating, “I am happy I could move the ball across the goal line with this project and I am excited
to celebrate this win today.” USPS Newsroom, Next Generation Delivery Vehicle Production
The award to Oshkosh came shortly after President Biden’s Executive Order of January
27, 2021, directing the procurement of “clean and zero-emission vehicles for Federal, State, local,
and Tribal government fleets, including vehicles of the United States Postal Service.” Compl.
¶ 68. Yet, the selected Oshkosh vehicle is a conventional internal combustion engine vehicle, like
the rest of the aging USPS fleet. Id. ¶ 67. Remarkably, Oshkosh’s vehicle also is entirely different
from the Ford Transit-based vehicle that it submitted in the Prototype Phase. Id. While Oshkosh
claims its vehicle can be retrofitted to be electric, Oshkosh admitted to the Securities and Exchange
Commission in November 2020 that Oshkosh may not have the expertise or resources to
congressional testimony in February 2021, Postmaster General DeJoy stated that only 10 percent
of the new Oshkosh fleet eventually would be electric unless USPS receives an additional $3–4
billion in funding. Id. ¶ 71. During a March 2021 congressional hearing, DeJoy stated that if
USPS were to receive additional funding from Congress, the Oshkosh fleet could “maybe” become
50 percent electric. Oversight of the U.S. Postal Service: Hearing Before the H. Appropriations
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Subcomm. on Fin. Svcs. and Gen. Gov’t, 117th Cong. (Mar. 11, 2021) (testimony of Postmaster
Workhorse timely requested a debriefing on the award decision. Compl. ¶ 74. At the
debriefing, held on March 3, 2021, USPS described certain strengths and weaknesses it had
identified in Workhorse’s proposal but refused to provide any information regarding the
§ 601.107, triggering a 10-day resolution period in which USPS was required to attempt to resolve
the conflict “by mutual agreement.” Compl. ¶ 75. In its disagreement, Workhorse requested that
USPS withdraw the award to Oshkosh and make a new award decision based on a rational best-
value analysis in accordance with the express terms of the Solicitation. Id. USPS did not make
any contact with Workhorse, much less any effort to come to a mutually agreeable resolution,
At the end of the so-called resolution period, on March 22, 2021, the contracting officer
denied Workhorse’s disagreement in a 25-page letter (Exhibit 1 hereto). The letter made clear that
USPS had predetermined that Workhorse would not be granted any relief during the administrative
” Id. at 5. It
. Id. at 5.
In sharp contrast, USPS’s response letter uncritically touted Oshkosh’s claims about its
unbuilt hypothetical vehicle and rejected out of hand any criticisms of Oshkosh or its vehicle. For
example, Workhorse had referred in its disagreement letter to publicly available disclosures that
Oshkosh, in violation of the terms of the Solicitation, had lobbied USPS, the White House, the
House of Representatives, and the USPS Board of Governors during the Solicitation process in
support of its desire to be selected for the NGDV contract. Without any support, USPS’s response
letter declared these assertions “unequivocally false” and illustrative of Workhorse’s “lack of
credibility and candor with the Federal Government.” Id. at 1 n.1. Yet it is, in fact, true that
D. This Action
On June 16, 2021, Workhorse filed this action. On July 6, 2021, the government and
Defendant-Intervenor Oshkosh moved to dismiss. Gov. Mot. to Dismiss, ECF No. 29 (“Gov.
ARGUMENT
I. Legal Standard
Because Movants argue that under USPS regulations the Court lacks jurisdiction over
Workhorse’s bid protest, Federal Rule of Civil Procedure 12(b)(1) supplies the relevant legal
standard. Under Rule 12(b)(1), the Court “view[s] the alleged facts in the complaint as true, and
if the facts reveal any reasonable basis upon which the non-movant may prevail, dismissal is
1
See, e.g., https://lda.senate.gov/filings/public/filing/bc3bc7be-b5b7-48e5-81d6-
ebcb37ec5d15/print/.
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inappropriate.” Airport Rd. Assocs., Ltd. v. United States, 866 F.3d 1346, 1351 (Fed. Cir. 2017)
(quoting Pixton v. B & B Plastics, Inc., 291 F.3d 1324, 1326 (Fed. Cir. 2002)). The Court also
“may ‘inquire into jurisdictional facts’ to determine whether it has jurisdiction,” and consider
matters outside of the pleadings. Clark v. United States, 149 Fed. Cl. 409, 412 (2020) (quoting
Rocovich v. United States, 933 F.2d 991, 993 (Fed. Cir. 1991)).
A. Congress Did Not Authorize USPS to Limit the Court’s Jurisdiction under
the Tucker Act
Congress expressly granted the Court of Federal Claims jurisdiction to hear bid protests—
including bid protests involving USPS—through the Tucker Act. 28 U.S.C. § 1491(b)(1) (giving
United States, 264 F.3d 1071, 1083–84 (Fed Cir. 2001). The USPS regulation impermissibly
purports to limit that jurisdiction by barring bid protests of USPS-awarded contracts in this Court
if the protestor has not first participated in USPS’s own internal bid protest process. USPS lacks
Kontrick v. Ryan, 540 U.S. 443, 452 (2004) (citing U.S. Const., art. III, § 1). Accordingly, an
agency cannot preempt the Court’s jurisdiction through a regulation without congressional
authorization. Coit Independence Joint Venture v. Fed. Sav. & Loan Ins. Corp., 489 U.S. 561, 579
(1989) (Federal Savings and Loan Insurance Corporation exceeded its statutory authority in
passing a regulation restricting federal courts’ review of the Corporation’s decisions by making
them reviewable only under the Administrative Procedure Act); Pension Benefit Guar. Corp. v.
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Carter & Tillery Enters., 133 F.3d 1183, 1187 (9th Cir. 1998) (holding that exhaustion requirement
created by regulation did not create a jurisdictional bar); RAI Care Ctrs. of Md. I, LLC v. Office of
Pers. Mgmt., 459 F. Supp. 3d 124, 133 (D.D.C. 2020) (“exhaustion regulations are just that—
The USPS regulation on which the Movants rely, 39 C.F.R. § 601.108(h), asserts that a
party “may seek review of the Postal Service’s final contract award only after the mandatory
administrative remedies provided under § 601.107 and § 601.108 have been exhausted.” It also
purports to limit the protest grounds that this Court can consider: only those that allege a “violation
of the regulations contained in this part or an applicable public law enacted by Congress.” Id.
This regulation is invalid insofar as it purports to preempt the Court’s jurisdiction under the Tucker
Act by mandating exhaustion of two levels of agency review before a bid protest may be brought
before the Court. The government argues that the Postal Reform Act at 39 U.S.C. § 401(2)
authorizes the preemption, Gov. Mot. at 4, 11, but nothing in that general authorization of
rulemaking authority suggests that Congress intended for USPS to restrict the Court’s Tucker Act
jurisdiction. 39 U.S.C. § 401(2) (giving USPS “general powers” including “to adopt, amend, and
repeal such rules and regulations, not inconsistent with this title, as may be necessary in the
execution of its functions under this title and such other functions as may be assigned to the Postal
Service under any provisions of law outside of this title”). By contrast, where Congress intended
for USPS to implement a mandatory administrative remedies scheme, the Postal Reform Act
specifies it. Id. § 409(c) (incorporating Federal Tort Claims Act (“FTCA”) and its mandatory
administrative remedy scheme); Snow v. U.S. Postal Serv., 778 F. Supp. 2d 102, 108 (D. Me. 2011)
(FTCA’s mandatory exhaustion requirement, 28 U.S.C. § 2675, applies to claims against USPS).
Congress did not address administrative remedies for bid protests in the Postal Reform Act.
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Rather, it addressed these in the Tucker Act, and there assigned jurisdiction to this Court. 28 U.S.C
§ 1491(b). See also 31 U.S.C. §§ 3551–57 (assigning bid protest jurisdiction to GAO); 49 U.S.C.
§ 40110(d)(4) (assigning bid protest jurisdiction to the FAA Office of Dispute Resolution
(“ODRA”)).2
That the Postal Reform Act exempts USPS from much of the Administrative Procedure Act
and its notice-and-comment protections, 39 U.S.C. § 410(a), reinforces the conclusion that
Congress did not authorize USPS to restrict the Court’s exercise of Tucker Act jurisdiction.
Congress could not have intended for USPS to use that exemption—designed to facilitate
procurement, see id., Gov. Mot. at 8—to take action as extreme as restricting access to judicial
review without any opportunity for comment from those affected. Yet USPS has done just that by
amending 39 C.F.R. § 601.108 to mandate exhaustion without providing any notice or opportunity
for comment.
The government cites no authority to support its assertion that USPS can create an
exemption from this Court’s jurisdiction under the Tucker Act without any indication from
Congress of such authority; nor does the defendant-intervenor. And with good reason. As
discussed, only Congress has the power to restrict the Court’s jurisdiction.3
2
When 39 C.F.R. § 601.108 was first promulgated, at least one commentator opined that
the regulation’s provisions restricting judicial review were unenforceable. David P. Hendel,
Feature Comment: New USPS Procurement Rule-Are the Guidelines Really Non-Binding?, 47 No.
27 Gov't Contractor ¶ 313 (July 20, 2005). When the regulation was amended in 2010, the same
commentator, a former attorney in USPS’s Office of the General Counsel, called the updated
restrictions “utter nonsense” and “unenforceable” because this Court, not USPS, decides its
jurisdiction. David P. Hendel, Bid Protests: Postal Service Style (Feb. 2, 2011),
https://www.contractorsperspective.com/bid-protests/bid-protests-postal-service-style/.
3
As far as undersigned counsel has been able to determine, neither this Court nor the
Federal Circuit has addressed the validity of 39 C.F.R. § 601.108(h)’s purported limitation of
Tucker Act jurisdiction. In Am. K-9 Detection Servs., LLC v. United States, the government argued,
similarly to its argument here, that § 601.108(h) should create an exemption from Tucker Act
jurisdiction. No. 20-1614, 2021 WL 1086225, at *10 n.2 (Fed. Cl. Mar. 19, 2021) (Holte, J.). The
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B. Palladian Partners and the Other Cases on which the Government Relies Did
Not Involve Agency Attempts to Unilaterally Restrict this Court’s
Jurisdiction and are Otherwise Distinguishable
Palladian Partners v. United States, on which Movants principally rely, is unlike this case
in key respects. First, that case involved a small business size protest, not a bid protest. Second,
the regulatory exhaustion requirement at issue in Palladian Partners did not concern bid protests
or purport to limit Tucker Act jurisdiction, as USPS’s regulation does. Third, the exhaustion
regulation at issue in that case was consistent with Congress’s statutory scheme, whereas USPS’s
is not. Fourth, an exhaustion requirement made sense in that case because the administrative
process at issue involved the application of unique agency expertise, which is not the case here.
The exhaustion regulation at issue in Palladian Partners involves challenges to the SBA’s
selection of business size standard codes for small businesses (North American Industry
Classification System (“NAICS”) codes). It requires challenges to a code selection for a particular
solicitation to be appealed to the SBA’s Office of Hearing and Appeals (“OHA”) before judicial
review. Palladian Partners, 783 F.3d at 1247 (discussing 13 C.F.R. § 121.1102). The regulation
thus concerns judicial review of SBA’s business sizing code selections—determinations within the
SBA’s particular expertise—not bid protests such as the USPS regulation addresses. See 13 C.F.R.
§ 121.1102 (“A NAICS code designation made by a procuring activity contracting officer may be
appealed to OHA . . . The OHA appeal is an administrative remedy that must be exhausted before
The Federal Circuit has drawn a clear distinction between “size protests,” such as the one
involved in Palladian Partners, and “bid protests,” such as Workhorse’s here. Harmonia Holdings
Court did not decide the question, but it noted the government did not cite case law in support of
the exemption argument. Id.
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Grp., LLC v. United States, 999 F.3d 1397 (Fed. Cir. 2021). In Harmonia Holdings, the Federal
Circuit, citing Palladian Partners, “agree[d] that a disappointed bidder must generally exhaust its
administrative remedies at the SBA before seeking judicial review of a size protest.” Id. at 1402.
The court explained that “[a] ‘size protest’ refers to an administrative challenge to an offeror’s size
which is filed with the SBA.” Id. at 1403 (citing 13 C.F.R. §§ 121.1003, 121.1002). The court
noted that “[a] ‘bid protest,’ by contrast, generally challenges actions that an agency takes, or fails
to take, in connection with a procurement or proposed procurement.” Id. at 1403 (citing 28 U.S.C.
§ 1491(b)(1)). Because the protest in Harmonia Holdings was a bid protest and not a size protest,
the Federal Circuit rejected the Court of Federal Claims’ conclusion that it lacked jurisdiction
because the protestor had failed to exhaust its administrative remedies at the SBA. Id. at 1403–
404. This Court has recognized the same distinction. Hawpe Constr. Inc. v. United States, 46 Fed.
Cl. 571, 576–77 (2000), aff’d, 10 F. App’x 957 (Fed. Cir. 2001) (where protest has not challenged
a size determination, but rather the actions of the procuring agency, “Plaintiff's cause of action
arises under the contracts and bid protest jurisdiction of the Tucker Act [citation omitted], which
does not require exhaustion of administrative remedies for post-award bid protests.”)
Because Palladian Partners involved a size protest, its holding’s implications are limited
to size protests. Nothing in the decision indicates that the court analyzed the issue of exhaustion
within the distinct category of bid protests or that the court intended its holding to extend beyond
the realm of size protests. Even if it did, it would be dicta. In short, Palladian Partners does not
control here, as Workhorse’s protest is a bid protest, for which there is no exhaustion requirement.
Further, in Palladian Partners, the parties did not dispute SBA’s statutory authority to issue
the exhaustion regulation. Rather, the court recognized that Congress, through the Small Business
Act, specifically authorized the SBA to establish small business size standards. Palladian
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Partners, 783 F.3d at 1247 (citing 15 U.S.C. §§ 632(a), 637(b)(6)). That Act also establishes the
OHA and authorizes it “to impartially decide matters relating to program decisions of the
§ 634(i)(1)(A)(i)(II). SBA’s business sizing code determinations are such program decisions. 13
C.F.R. § 121.1102.
comparable, as it does not establish a particular program or authorize USPS to decide bid protests.
Nothing in the Postal Reform Act or any other statute indicates that Congress authorized USPS to
establish a bid protest procedure. Moreover, the administrative process USPS did attempt to create
is a general bid protest process that requires no special USPS expertise that this Court does not
have. To the contrary, the bid protest issues that would be resolved under USPS’s process are the
same that this Court routinely decides. The USPS bid protest process is simply a duplicative one
that places an unnecessary administrative hurdle between a protestor and its right under the Tucker
The other Federal Circuit cases the government characterizes as consistent with Palladian
Partners (Gov. Mot. at 12–13) also do not support its claim that USPS can limit this Court’s
jurisdiction simply by declaring so in a regulation. In Corus Staal BV v. United States, the Federal
antidumping must be exhausted before relief is sought in the Court of International Trade (“CIT”).
502 F.3d 1370 (Fed. Cir. 2007). The Federal Circuit found that the CIT was not bound by the
regulation even though the regulation purported to require exhaustion as a prerequisite to judicial
review, because no statute or statutory scheme governed. Id. at 1381 (“Where the issue of
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overall statutory scheme, the decision whether to require exhaustion in a particular case is a matter
committed to the discretion of the trial court; in particular, we have held that applying exhaustion
principles in trade cases is subject to the discretion of the judge of the Court of International
Trade.”) (citing cases). And in its opinion affirming the CIT’s dismissal on grounds of failure to
exhaust, the Federal Circuit recognized that Congress had instructed the CIT to require exhaustion
where appropriate. Id. at 1379 (citing 28 U.S.C. § 2637(d)); see also id. (“Although that statutory
injunction is not absolute, it indicates a congressional intent that, absent a strong contrary reason,
the court should insist that parties exhaust their remedies before the pertinent administrative
agencies.”). Likewise in Sandvik Steel Co. v. United States, exhaustion was deemed appropriate
in the exercise of the CIT’s discretion and consistent with Congress’s intent. 164 F.3d 596, 599–
600 (Fed. Cir. 1998). Here, there is no such statutory authority supporting USPS’s regulation
Whether a mandatory exhaustion requirement was established by a regulation also was not
at issue in Neely v. United States; the issue there was whether a third party’s appeal to the agency
on behalf of the plaintiff was sufficient to exhaust an administrative remedy. 285 F.2d 438, 443
(Ct. Cl. 1961) (finding administrative remedy exhausted through U.S. senator’s appeal to Secretary
of Interior on plaintiff’s behalf).4 Nor was the question of whether a regulatory exhaustion
requirement was mandatory presented in Fla. Home Med. Supply, Inc. v. United States; there, the
Court found that the subject administrative remedial scheme was “permissive, not mandatory.”
4
Accordingly, the sentence from Neely on which the government relies—“[u]nless made a
prerequisite to suit by statute, binding regulation or contract, the extent to which a plaintiff is
required to pursue his administrative remedy is a matter for the discretion of the court,” 285 F.2d
at 433—is obiter dictum and not binding authority. Smith v. Orr, 855 F.2d 1544, 1550 (Fed. Cir.
1988) (“[I]t is well established that a general expression in an opinion, which expression is not
essential to the disposition of the case, does not control a judgment in a subsequent proceeding.”).
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131 Fed. Cl. 170, 181 (2017). In so doing, the Court observed that Congress “made no express
mention of an administrative remedy” in the governing statute authorizing the regulation, id. at
180, and the “statute . . . provides ‘no expression of explicit intent from Congress,’” id. at 181
(citation omitted).
Likewise here, the Postal Reform Act does not mention administrative remedies for bid
protests or evidence any congressional intent for an administrative remedial scheme, let alone a
mandatory one that would supersede Congress’s grant of jurisdiction to this Court through the
Tucker Act.
There is zero evidence that Congress’s statutory scheme for bid protests includes a
mandatory administrative process for protests of USPS contracts. To the contrary, Congress has
established three separate fora for bid protests. The first is this Court, which has been the exclusive
judicial forum for all pre- and post-award bid protests since 2001. 28 U.S.C. § 1491(b); see
Impresa Construzioni Geom. Domenico Garufi v. United States, 238 F.3d 1324, 1332 (Fed. Cir.
2001). The second is the GAO, which entertains protests of government procurement decisions
pursuant to 31 U.S.C. §§ 3551–57. The third forum is the FAA ODRA, which Congress gave
exclusive jurisdiction to address bid protests in connection with FAA procurements. See Multimax,
Inc. v. F.A.A., 231 F.3d 882, 884 n.1 (D.C. Cir. 2000). Each of these fora has specific statutory
(COFC); 31 U.S.C. §§ 3551–57 (GAO); 49 U.S.C. § 40110(d)(4) (ODRA). In addition, since 1995
agencies have been required to establish an “agency protest” option, where the protest is directed
to the procuring agency itself, “as an alternative to protests in fora outside the procuring agencies.”
Exec. Order No. 12979, 60 Fed. Reg. 55171, 55171 (Oct. 25, 1995).
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The availability of the GAO and “agency protest” options has never been held to affect this
Court’s jurisdiction to entertain a bid protest. A protestor may bypass the GAO and file its protest
directly in this Court. S.K.J. & Assocs., Inc. v. United States, 67 Fed. Cl. 218, 223–24 (2005); see
also Weeks Marine, Inc. v. United States, 575 F.3d 1352, 1359 (Fed. Cir. 2009). If a protestor
unsuccessfully protests at the GAO, it may then protest to this Court. The Ravens Grp., Inc. v.
United States, 79 Fed. Cl. 100, 115 (2007). Likewise, a protestor need not pursue an agency protest
at all before filing its protest in this Court, and whether or not an agency protest was filed has no
bearing on this Court’s jurisdiction to entertain the matter. See Exec. Order No. 12979 (agency
protests are “an alternative” to protests in other fora). In the case of protests of FAA procurement
decisions, in contrast, Congress made ODRA the exclusive process for such protests and provided
that judicial review of ODRA decisions would be via an APA action in a federal circuit court. Sw.
Airlines Co. v. United States Dep’t of Transp., 832 F.3d 270, 275–76 (D.C. Cir. 2016); Pucciariello
Against this backdrop, USPS attempted unilaterally to create, by regulation, a new bid
protest process that prospective USPS contractors must follow in order to invoke this Court’s
Tucker Act bid protest jurisdiction. The USPS is not subject to the GAO bid protest process
because Congress exempted it from the Competition in Contracting Act, under which GAO
exercises its bid protest function. 39 U.S.C. § 410(a); Emery Worldwide Airlines, Inc., 264 F.3d at
1079 n.7. USPS is not subject to ODRA. Dynamic Sec. Concepts, Inc. v. F.A.A., 408 F. App’x
624, 628 n.3 (3d Cir. 2010) (citing 49 U.S.C. §§ 40110(d) and 46110) (ODRA has bid protest
jurisdiction over FAA procurements). But Congress has never exempted USPS from this Court’s
bid protest jurisdiction under the Tucker Act. See Emery Worldwide, 264 F.3d at 1083–84. Unlike
with ODRA, Congress did not direct USPS to establish its own bid protest forum. Indeed,
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Congress has never given any indication that USPS is authorized to create its own bid protest
procedure, much less one that restricts this Court’s ability to exercise its congressionally created
In short, not only is there a complete lack of evidence that Congress intended for USPS to
establish its own bid protest process that must be exhausted before this Court may exercise its
Tucker Act jurisdiction, USPS’s establishment of such a process runs counter to the statutory
scheme that Congress has established for the resolution of bid protests. Because 39 C.F.R.
§ 601.108, and particularly § 601.108(h), has no statutory authorization, it is ultra vires and invalid.
It is also inconsistent with the requirement in Executive Order No. 12979 that agencies
establish “alternative” (i.e., non-mandatory) agency protest procedures. While the term “agencies”
is not defined in Executive Order No. 12979, there is no indication that it was meant to exclude
USPS. In Emery Worldwide, the Federal Circuit determined that USPS is an “agency” for purposes
of this Court’s bid protest jurisdiction under the Tucker Act. 264 F.3d at 1083–84.
Accordingly, 39 C.F.R. § 601.108 provides no basis for dismissing Workhorse’s bid protest
for lack of jurisdiction under the Tucker Act, and the motions to dismiss should be denied.
A. The Facts Demonstrate That an Appeal to the SDRO Would Have Been
Futile
administrative review scheme has any legitimacy, its two levels of administrative review are, if
valid at all, permissive. “It is well-settled that ‘in Tucker Act suits, a plaintiff is not required to
exhaust a permissive administrative remedy before bringing suit.’” Fla. Home Med. Supply, Inc,
131 Fed. Cl. at 181 (quoting Martinez v. United States, 333 F.3d 1295, 1304 (Fed. Cir. 2003)). The
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Even if the Court were to conclude that the exhaustion requirement of 39 C.F.R.
§ 601.108(h) is valid (which it should not, for the reasons discussed), the Court should exercise its
discretion and not apply it to preclude Workhorse’s claims before this Court. While pursuit of
administrative remedies can protect administrative agency authority and promote judicial
efficiency, where no purpose would be served by requiring exhaustion and exhaustion would
instead amount to a futile exercise, a court properly exercises its discretion to excuse it. Itochu
Bldg. Prods. v. United States, 733 F.3d 1140, 1146 (Fed. Cir. 2013) (excusing exhaustion where
“no purpose was served” by requiring it); Corus Staal BV, 502 F.3d at 1379 (“The futility exception
to the exhaustion requirement has been applied in situations in which enforcing the exhaustion
requirement would mean that parties would be required to go through obviously useless motions
in order to preserve their rights.”) (internal quotation marks and citation omitted). Here, no
purpose would be served by requiring exhaustion, because in this case it would have plainly been
futile for Workhorse to pursue the second level of USPS administrative review.
The Federal Circuit recognized in Itochu Bldg. Prods. that where the plaintiff had presented
its arguments to the agency through one level of an agency review process and the agency rejected
them, and where “no purpose was served” by requiring the plaintiff to resubmit its arguments at a
second level of agency review, exhaustion of the second level of administrative remedies was not
required. 733 F.3d at 1146. The plaintiff had asked the Department of Commerce to revoke part
of an antidumping-duty order by a certain date and submitted comments and arguments in support
of its request. Id. at 1142. Commerce issued a preliminary ruling rejecting the request but giving
interested parties an opportunity to comment prior to the agency’s final ruling. Id. The plaintiff
did not submit additional comments and instead sought judicial review of the final ruling in the
CIT. Id. at 1144. The Federal Circuit reversed the CIT’s dismissal for failure to exhaust
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administrative remedies, finding that “no purpose was served by requiring [exhaustion]” because:
(1) the plaintiff had presented its arguments to the agency at the first level of agency review; (2)
nothing in the record suggested that additional materials from the plaintiff would have been
significant to the agency’s consideration or to judicial review; and (3) nothing in the agency’s
rejection of the plaintiff’s petition “adverted to any consideration that was material to Commerce’s
decision about the effective date and that [the plaintiff] had failed to address.” Id. at 1146. The
agency’s stated basis for its decision and its adherence to that position in court “strongly
suggest[ed] that a [second administrative petition] by [the plaintiff] would have been futile.” Id.
The Federal Circuit explained that “[i]n these circumstances, there was no reasonable prospect that
Commerce would have changed its position” at the second level of agency review, and “there was
no practical purpose served by requiring [the plaintiff] to file comments on the effective-date issue
Likewise here, there was no reasonable prospect that USPS would have changed its
position at the next level of administrative review and no practical purpose would be served by
requiring Workhorse to undertake that futile action. USPS’s decision rejecting Workhorse’s
disagreement clearly and emphatically stated USPS’s final position on Workhorse’s claims. Given
the size and importance of this procurement, it being high profile, the Postmaster General’s
involvement in announcing the contract award, and his defense of that decision in subsequent
sworn congressional testimony making it clear that USPS had decided Oshkosh would perform
the contract, the notion that the SDRO might have reached a different result and granted Workhorse
the relief it seeks is fanciful. USPS’s decision “strongly suggests” that the second step would have
been futile, as “there was no reasonable prospect that [USPS] would have changed its position” on
Workhorse’s bid protest. Itochu, 733 F.3d at 1146–47. Consequently, there would be “no practical
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purpose served” by requiring Workhorse to go through USPS’s second level of review after USPS
issued its March 22, 2021 decision. Id. at 1147. To the contrary, the expense of doing so would
have been a waste of Workhorse’s resources. Moreover, the comprehensive administrative record
and lengthy decision from USPS’s first level of review provide a full record for the Court’s review.
By contrast, in Palladian Partners, the plaintiff failed to submit any petition to the agency,
thereby “depriv[ing] the agency of an opportunity to correct its own errors.” Palladian Partners,
783 F.3d at 1261 (citation omitted). Indeed, the Federal Circuit recognized there that “courts have
waived exhaustion where the agency ‘has had an opportunity to consider the identical issues . . .
raised by other parties,’ or if the agency's decision indicates that it ‘had the opportunity to consider
the very argument pressed by the petitioner on judicial review.’” Id. at 1260 (quoting Natural Res.
Def. Council, Inc. v. EPA, 824 F.2d 1146, 1151 (D.C. Cir. 1987) (en banc) (cleaned up)).
Contrary to Movants’ contentions, review of a bid protest does not implicate USPS’s
unique expertise. USPS has discretion in procurement decisions, but the expertise in resolving
legal challenges to bid protests under the Tucker Act resides in this Court and the Federal Circuit.
Emery, 264 F.3d at 1083 (recognizing “the substantial experience and expertise the Court of
Federal Claims has developed in the government contracting area”) (citation omitted). By contrast,
Palladian Partners, where the Court declined to excuse exhaustion, implicated the SBA’s unique
expertise in NAICS code assignment. Palladian Partners, 783 F.3d at 1260 (explaining that
addition, there was “no evidence that Palladian’s now urged code designation was discussed during
[another party’s] OHA appeal.” Id. at 1261. Here, Workhorse presented its bid protest to USPS,
USPS issued a decision emphatically rejecting it, and the Postmaster General made it clear that
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Further, USPS’s second-level appeal official to whom Movants insist Workhorse should
have presented its claims—the SDRO—is not a neutral decision-maker. The GAO in 2005
criticized USPS for assigning binding decisionmaking authority over supplier disputes to an
ombudsman who was appointed by the USPS Vice President for Supply Management and held a
position and responsibilities in the USPS Supply Management organization and, therefore, was
“not independent of, or impartial from, the Supply Management organization.” GAO, U.S. Postal
Service: Purchasing Changes Seem Promising, but Ombudsman Revisions and Continued
190.pdf. In 2007, USPS changed the name from ombudsman to SDRO, 72 Fed. Reg. at 58251,
but did nothing to remedy the lack of independence and impartiality identified by the GAO. Just
like the ombudsman, the SDRO is appointed by the USPS Vice President for Supply Management.
https://about.usps.com/manuals/spp/html/spp7_021.htm.
To the extent the Court concludes that the current record is not sufficient to establish
futility, it should withhold its ruling on jurisdiction until it has been able to review the full
administrative record. See Clark, 149 Fed. Cl. at 412 (recognizing that on a Rule 12(b)(1) motion,
the Court “may ‘inquire into jurisdictional facts’ to determine whether it has jurisdiction” and
consider matters outside of the pleadings) (quoting Rocovich, 933 F.2d at 993). Review of the full
record will demonstrate that for Workhorse to pursue further administrative review would have
served no purpose, especially given the statements by USPS and the Postmaster General about
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administrative adjudications that are not reviewable by a principal officer who is appointed by the
President and confirmed by the Senate. Arthrex, 141 S. Ct. at 1986. Yet that is precisely what
USPS’s regulations purport to do. The regulations provide that the SDRO decision at the second
level of administrative review is final and binding, and do not provide for any review by a principal
officer.
administrative patent judges within the Patent Trial and Appeal Board (“PTAB”) to adjudicate
certain patentability claims and issue decisions where the decisions were not reviewable by the
Secretary of Commerce or any other principal officer. Under the Appointments Clause, only the
President, with the advice and consent of the Senate, can appoint principal officers who assist the
President in carrying out his responsibilities and are accountable to him. Arthrex, 141 S. Ct. at
1980. Inferior officers, who are not appointed by the President and confirmed by the Senate, must
be “directed and supervised at some level” by principal officers so that they are ultimately
accountable through a chain of command to the President. Id. (quoting Edmond v. United States,
520 U.S. 651, 663 (1997)). Adequate supervision entails ability to review inferior officers’ work.
Id. at 1983 (citing cases). Administrative patent judges’ patentability decisions—which could
implicate billions of dollars, id. at 1976—were final, but they were not reviewable by, and thus
were “insulat[ed]” from, the Secretary of Commerce, the Director of the PTAB (also a principal
officer), and any other principal officer. Id. at 1985. Consequently, the Supreme Court held,
administrative patent judges’ authority was “incompatible” with their appointment as inferior
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Similarly here, the SDRO is not a principal officer, yet under USPS regulations issues
“final and binding” decisions on which billions of dollars can turn.5 39 C.F.R. § 601.108(g). As
previously set forth, the SDRO is appointed by the USPS Vice President for Supply Management,
and USPS regulations do not provide that SDRO decisions are reviewable by the presidentially
appointed USPS Board of Governors or even the Postmaster General. Instead, SDRO decisions
are insulated from review by any principal officer. Consequently, as in Arthrex, the SDRO’s
authority under 39 C.F.R. § 601.108 is “incompatible” with their appointment as an inferior officer
Because the USPS administrative remedies scheme that incorporates unreviewable final
decisions by the SDRO is constitutionally infirm, the Court should give the scheme no effect. But
if the Court determines that Workhorse should present its claims to the SDRO for decision, it
should remand this matter to USPS for the SDRO to consider its bid protest and for the USPS
Board of Governors or Postmaster General to have the ability to review the SDRO’s decision.
CONCLUSION
For the foregoing reasons, the Court should deny the government’s and the intervenor’s
motions to dismiss.
5
The NGDV contract at issue here is valued at $3.1 billion. Intervenor. Mot. at 4.
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Of Counsel:
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EXHIBIT 1
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SUPPLY MANAGEMENT
Your correspondence of March 12, 2021, on behalf of your client Workhorse Group, Inc. (“Workhorse”),
presents a business disagreement (“Disagreement”), as defined in 39 C.F.R. Part 601, with respect to the
contract award issued under Solicitation No. 3D-20-A-0031 (the “Solicitation”). The Solicitation was for
the supply of Next Generation Delivery Vehicles (“NGDVs) to the United States Postal Service (“USPS” or
“Postal Service”). This letter constitutes the Contracting Officer’s resolution of Workhorse’s Disagreement
in accordance with 39 C.F.R. § 601.107(b).
On February 23, 2021, the Postal Service awarded Oshkosh Defense, LLC (“Oshkosh”) the NGDV
Production contract, No. 3DVPRT-21-B-0002 (the “Contract”). Oshkosh and its parent company have
decades of experience designing and manufacturing custom-built vehicles, both for commercial
customers and for the United States Government. Oshkosh offered the Postal Service two Production
proposals: one proposal for an internal combustion engine (“ICE”) vehicle and one proposal for a battery
electric vehicle (“BEV”). Oshkosh’s proposed ICE and BEV vehicles had the highest technical scores, and
its ICE vehicle was evaluated as having the lowest Total Cost of Ownership (“TCO”). By awarding
Oshkosh a contract to provide the Postal Service with both BEV and ICE powertrains, we ensured that
the USPS could expeditiously update its aging delivery fleet with a NGDV that could meet all of the Postal
Service’s efficiency, safety, and ergonomic requirements, while at the same time help achieve our
sustainability goals in the most cost-effective manner.
.
Workhorse’s Disagreement, however, asserts that the decision was plainly wrong and that the Postal
Service should have instead awarded the entire NGDV Production contract to Workhorse,
1
Workhorse’s Disagreement states: “Workhorse is also troubled by the publicly-available evidence that Oshkosh, through an
outside lobbying firm, lobbied USPS, the White House, the House of Representatives and the USPS Board of Governors regarding
the NGDV program during the competitive phase of the procurement, despite USPS’s requirement that offerors agree not to do so.
USPS’s irrational decision-making, as described herein, naturally suggests that the lobbying succeeded in improperly influencing
USPS’s award decision.” Disagreement, p. 4. These allegations are unequivocally false, and the fact that you cannot cite to any of
the purported “publicly-available evidence” provides another illustration of Workhorse’s lack of credibility and candor with the
Federal Government. In fact, publicly available information indicates that Workhorse has attempted, and continues to attempt, to
improperly influence the NGDV procurement through third-party contacts prohibited by its Nondisclosure Agreement with the USPS.
See Section III, infra; see also Farrar v. Workhorse Group, Inc., Case No. 2:21-cv-02072 (C.D. Cal. Mar. 8, 2021).
2
See Section II(A), infra.
I. BACKGROUND
The NGDV competitive procurement process began in January 2015, when the Postal Service published
a Request for Information (“RFI”) and Prequalification/Sources Sought notice. 3 In March 2015, 34
companies submitted prequalification information in response to the RFI. After evaluating the RFI
submissions, the Postal Service narrowed the prequalified list to 15 suppliers. 4 The list of prequalified
suppliers included both major manufacturers and small businesses, representing a broad range of
capabilities and technological solutions.
In October 2015, the Postal Service issued a Request for Proposals (“RFP”) for Prototype NGDVs. 5 The
RFP included a Statement of Objectives that communicated the Postal Service’s operational needs and
design objectives. Suppliers were encouraged to offer a wide range of drivetrain technologies – including
internal combustion engine vehicles and alternative fuel vehicles – as well as other innovative features.
Prototype proposals were due in February 2016. Most of the prequalified suppliers participated in the
Prototype RFP, either as a prime offeror or by teaming up with another prequalified supplier.
In September 2016, the Postal Service awarded contracts to six suppliers to produce prototype vehicles
for the NGDV program: AM General, LLC; Oshkosh HD, LLC; Spartan Motors (t/a Utilimaster); Mahindra
North American Technical Center; Karsan; and VT Hackney, Inc. 6 Prototype delivery began in
September 2017. Between September 2017 and May 2019, the Postal Service tested a total of 44
prototype vehicles, which included gasoline, hybrid electric, and electric (with range extender) drivetrains.
The Postal Service ran the NGDV Prototypes through a broad range of safety, efficiency, and durability
tests. The Prototypes were tested on a vehicle test-track, in simulated delivery conditions, as well as out
in the field on actual delivery routes. The testing took place in a variety of different climates, topography,
population centers, and delivery environments.
Following the completion of the testing, the Postal Service prepared the NGDV Production RFP,
incorporating into the Production vehicle requirements the lessons learned during the Prototype testing. 7
The Production RFP included specific requirements related to the Postal Service’s commitment to
domestic production and environmental quality. The Production RFP gave suppliers the option to provide
proposals for ICE vehicles and/or alternative fuel vehicles. 8 The RFP also contemplated that multiple
contracts could be awarded for an ICE vehicle and an alternative fuel vehicle in the event the Postal
Service could not obtain both from one supplier. 9 Prior to issuing, the Postal Service also provided
Prototype suppliers with the opportunity to review the RFP’s draft Statement of Work and provide
feedback.
3
See “Request for Information and Prequalification/Sources Sought - Next Generation Delivery Vehicle (NGDV) Acquisition
Program” (Jan. 20, 2015), at https://beta.sam.gov/opp/e4c65069740a6b4df5158fb0a9512b1c/view.
4
See “Next Generation Delivery Vehicle (NGDV) Acquisition Program – Prequalified Sources” (April 14, 2015).
5
See “Next Generation Delivery Vehicle (NGDV) Prototype Request for Proposal (RFP)” (Oct. 20, 2015), at https://beta.sam.gov/
opp/ed2c20e5021355df61636d68b2c5074f/view.
6
See “Next Generation Delivery Vehicles (NGDV) - Prototypes” (Sep. 16, 2016), at https://beta.sam.gov/opp/
07495c8ab09756e6ba25d36a86f0e48b/view. Utilimaster withdrew from the NGDV program in 2017 before producing any prototype
vehicles. AM General and Mahindra withdrew from the NGDV program prior to receipt of NGDV Production proposals.
7
See NGDV Production RFP Statement of Work, Section A, Part 2.2.
8
See id. at Section D. No Prototype supplier objected to the Postal Service’s consideration of both ICE and alternative fuel vehicles
at any point prior to the NGDV Production Contract Award.
9
See NGDV Production RFP, PS Form 8203, Schedule of Supplies/Services; Terms and Conditions, Provision 4-1(f): Type of
Contract.
On December 27, 2019, the Postal Service issued the NGDV Production RFP, with a submission
deadline of March 27, 2020. 10 Due to the COVID-19 pandemic, the Postal Service extended the
submission deadline to July 14, 2020. 11 Following submission of Production proposals, the USPS
Technical Evaluation Team (TET) began performing their technical review. The TET consisted of subject
matter experts from across the organization - Engineering, Delivery Operations, Fleet Management,
Safety, and Sustainability. In addition, the evaluation team included engineering consultants as non-
voting members. Following initial review, the Postal Service provided offerors with a list of certain
questions/deficiencies regarding their proposals, which required offerors to provide updated proposals by
September 25, 2020. The TET then reviewed the responses to questions/deficiencies and the updated
proposals. Offerors were provided the opportunity to conduct lengthy oral presentations for the USPS
evaluation team on October 7-8, 2020. The TET concluded its technical proposal review shortly
thereafter.
The Business Proposal evaluation team, which included members from Supply Management,
Engineering, and Fleet Management, and outside non-voting consultants, began its review of offeror
business proposals in October 2020. Offerors were provided the opportunity to respond to business
proposal clarification questions. After conclusion of the Business Proposal evaluation, the Contracting
Officer made a best value determination, with Oshkosh providing the best value to the Postal
Service for the NGDV Production contract. After obtaining final approval from the Postmaster General on
February 23, 2021, the Postal Service awarded the NGDV Production contract to Oshkosh. 12 Please
note that at no point prior to the Contracting Officer’s best value determination in favor of Oshkosh was
either the Postmaster General or the USPS Board of Governors aware of the results of the evaluations of
any of the proposals, in communication with the evaluation team, or otherwise involved in the best value
determination.
B. The NGDV Production Request for Proposals – Best Value & Evaluation Factors
In the Production RFP, the Postal Service advised offerors that it would award the NGDV contract to the
offeror(s) whose proposal presented the best value, using the following standard: 13
Best value offer(s) will be determined after the completion of the evaluation phase by
weighing total cost of ownership, technical evaluation results, and risk. The Postal
Service will determine total cost of ownership by considering the following factors:
Acquisition costs, Maintenance costs, Fuel costs and Charging Infrastructure costs .
Proposal and offeror-specific technical evaluation factors, when combined, are
considered to be more important than total cost of ownership in consideration of
best value selection(s). This may result in an award to a higher-rated, higher-priced
offeror where the decision is consistent with the evaluation factors, and it is reasonably
determined by the Contracting Officer that the technical superiority of the higher priced
proposal outweighs the price difference. However, the Postal Service will not make an
award at a significantly higher price to achieve slightly superior performance. The right to
award to other than the lowest proposed price or total cost of ownership is reserved. 14
(emphasis added). Technical proposals would be evaluated using three (3) factors in descending order of
importance:
10
See “Next Generation Delivery Vehicle (NGDV) Production Phase 3 Request for Proposal (RFP)” (Dec. 27, 2019), at
https://beta.sam.gov/opp/439efaf2ff57436da8403145d0d93069/view.
11
See https://beta.sam.gov/opp/439efaf2ff57436da8403145d0d93069/view.
12
See “Next Generation Delivery Vehicle (NGDV)” (Feb. 23, 2021), at https://beta.sam.gov/opp/
1e56c386808444d886124fc1927f4eb0/view.
13
See NGDV Production RFP, Provision 4-2(a); Attachment #7, NGDV Production Proposal Evaluation Criteria, p.1.
14
See NGDV Production RFP, Attachment #7, NGDV Production Proposal Evaluation Criteria, p.1.
Within Factor 1, the Postal Service evaluated the following: 1) Reliability, 2) Maintainability, 3) Fuel
Economy and Emissions, and 4) Safety and Ergonomics.16 Within Factor 2, the Postal Service evaluated
the following: 1) Engineering Capability, 2) Production and Delivery, 3) Service and Parts, and 4)
Quality.17 Within Factor 3, the Postal Service evaluated the following: 1) Prototype Performance and 2)
Prior Performance.18 Following the receipt of offerors’ proposals in July 2020, the evaluation team
proceeded to evaluate all proposals under these parameters.
As more fully set forth in Sections II(B) and II(E) of this response letter, the evaluation team
recommended, and the Contracting Officer determined, that the ICE and BEV vehicles proposed by
Oshkosh provided the best value to the Postal Service. The Oshkosh vehicles both received the highest
technical scores, and its ICE vehicle has the lowest TCO. It’s strategic partner, Ford, has been in the
business of manufacturing quality vehicles even longer than Oshkosh. In addition, as expected of all
offerors, Oshkosh incorporated much of what it learned from the Prototype phase into a better design for
the Production phase. Oshkosh detailed numerous tests of its proposed Production vehicle in its
proposal. Testing included body and component durability testing, prototype vehicle durability testing and
fuel economy and emissions testing on “test mule” vehicles at third party test facilities. The test reports
submitted with the proposal included details of the tests, test procedures and test data produced. The
TET determined that the Oshkosh tests followed the same procedures as the prototype test program.
Oshkosh furnished an abundance of testing data that demonstrated the quality and reliability of the
vehicle’s performance.19 As the offeror that presented the best value from both a technical and
cost perspective, as the Contracting Officer, I awarded Oshkosh one contract to furnish either ICE and/or
BEV vehicles, at whatever mix the Postal Service selected. 20
Workhorse did not participate in the Prototype phase as a prime contractor, but rather acted as a
subcontractor to VT Hackney, who had submitted a Prototype vehicle with
.
15
See id.
16
See id.
17
See id. at p.2.
18
See id.
19
While Workhorse argues that Oshkosh’s higher NRE of $482M - the dollar value of the first delivery order placed under the
Contract - necessarily means that Oshkosh’s vehicle is less developed, that is simply not the case. As discussed further in Section
II(A), supra, Oshkosh’s NRE reflects an agreed sum that takes into account several factors, including, most importantly, the NEPA
contingency.
20
The Oshkosh ICE and BEV vehicles have a 92% commonality of parts between them. Among other reasons, a single award to
Oshkosh for both vehicles is advantageous because it will result in a significant reduction in maintenance and training costs over the
20-year expected life of the vehicles. Those reductions would not be achieved if USPS awarded two separate contracts to two
different companies for two entirely different vehicles.
Following VT Hackney’s withdrawal, Workhorse attempted to obtain a strategic partner with the requisite
experience to compete in the NGDV Production Program as follows:
As discussed further in Section II(D), herein, the TET’s evaluation determined that Workhorse’s proposal
was .
The Postal Service may evaluate offers and award a contract without discussions with
offerors. Therefore, the offeror's initial offer should contain the offeror's best terms from a
price and technical standpoint. Discussions may be conducted if the Postal Service
determines they are necessary.21
As the foregoing demonstrates, the Postal Service went to extraordinary lengths to permit Workhorse’s
predecessor, VT Hackney, to finish Prototype testing, and then to help Workhorse submit a viable
proposal. In light of that course of dealing, Workhorse’s assertion that t
Despite our extensive efforts to support Workhorse, the Workhorse
technical proposal was determined to be
As discussed further in Section II(D),
and its proposal
scoring was properly assessed.
II. DISCUSSION
A. Workhorse’s Disagreement
Much of Workhorse’s Disagreement is premised on the faulty assumptions that (1) the Postal Service was
required to select an electric vehicle, and (2) Workhorse was the only electric option. However, because
the Postal Service disclosed throughout the Prototype and Production programs, including in the RFP,
21
NGDV Production RFP, Terms and Conditions, Provision 4-1(g): Contract Award.
that it was asking for and evaluating both ICE and alternative fuel vehicles, Workhorse knew all along that
the Postal Service could award a contract for only some - or no - BEV vehicles. Since Workhorse did not
raise its challenge by the time offers were due (i.e., by July 14, 2020), Workhorse waived its right to raise
this challenge now. Postal Service regulations make clear that, “[f]or disagreements that concern alleged
improprieties in a solicitation, the contracting officer must receive the disagreement before the time set for
the receipt of proposals . . . .”22 However, even assuming that Workhorse’s challenge had been timely
received, because Workhorse’s entire Disagreement is premised on an erroneous interpretation of the
Postal Service’s sustainability obligations and objectives, I will address these first in responding to
Workhorse’s Disagreement.
1. While Executive Order (“E.O.”) 14008 does not constrain the NGDV award decision,
the award is consistent with the E.O.’s stated goals.
Irrespective of the foregoing points, whether or not the E.O. has any effect on the NGDV procurement,
the Postal Service’s procurement strategy and objectives directly align with the goals expressed in the
order. The Postal Service supports the deployment of electric technology in our delivery fleet, which is
why it awarded a single, flexible contract to Oshkosh which allows for the purchase of both ICE and BEV
vehicles. The ultimate extent of our ability to purchase electric vehicles will depend on Congressional
financial support, which we are seeking and which the Executive Order contemplates.
2. Workhorse also
characterization of the Postal Service’s plan to electrify its fleet is both (1) plainly wrong; and (2) has been
waived. First, on March 11, prior to your Disagreement letter, the Postmaster General confirmed to
Congress that 10% NGDV electrification is a starting point, and that as many as 50% of the NGDVs could
22
See 39 CFR 601.107(b); see also Error! Main Document Only., 492 F.3d 1308, 1313 (Fed. Cir. 2007).
23 See Executive Order 14008, “Tackling the Climate Crisis at Home and Abroad” (Jan. 27, 2021).
24 See Disagreement, p. 1-2.
25 Furthermore, the Postal Service is not typically bound by such executive orders. With the passage of the Postal Reorganization
Act of 1970 (“PRA”), the United States Postal Service was established as an independent establishment of the executive branch.
The PRA’s central purpose was to end postal inefficiency by freeing postal services from direct control by the Legislative and
Executive Branches, and to allow the Postal Service to operate like a business, “with powers equivalent to a private business
enterprise.” Of most importance here, the PRA broadly exempts the Postal Service from federal laws “dealing with public or federal
contracts, property, works, officers, employees, budgets, or funds.” 39 U.S.C. § 410(a). Instead, the PRA authorizes the Postal
Service to determine its need for equipment and the character of and need for its expenditures, to enter into contracts, and to
acquire real and personal property as it deems necessary or convenient in the transaction of its business without direct control by
the Legislative and Executive Branches.
26
See Disagreement, p.2.
be electric.27 As the Postmaster General made clear, the percentage of ICE and BEV vehicles acquired
will be dependent upon funding from Congress (in line with President Biden’s Executive Order), which is
currently underway. Second, throughout this procurement, the Postal Service has always stated in the
RFP that it could award 100% ICE if it determined that such a vehicle presented the best value to the
Postal Service.28 Thus, any challenge to the planned mix of vehicles should have been raised as a pre-
award disagreement, and has thus been waived. 29
3. The National Environmental Policy Act (NEPA) was considered extensively in the
award decision.
a. Workhorse’s Disagreement .
There is also no “NEPA approval” which Workhorse can claim to receive in an expedited manner, nor is
the NEPA process for the above “detailed statement” one that must be “survived” by the Postal Service’s
proposed action.31 As the Supreme Court has repeatedly noted, “NEPA itself does not mandate particular
results . . . NEPA imposes only procedural requirements on federal agencies with a particular focus on
requiring agencies to undertake analyses of the environmental impact of their proposals and actions.” 32
Thus, even assuming that Workhorse’s bid is “technically and economically feasible” and has a less
significant impact on the environment than the Postal Service’s proposed action, there is no requirement
under NEPA that the Postal Service give Workhorse any sort of preference.
In accordance with the plain text of NEPA and federal case law, the Postal Service’s NEPA policy, at 39
C.F.R. § 775.2(e), “to avoid or minimize adverse effects on the environment” is not a mandate to choose
the alternative with the least adverse effect on the environment. Thus, even assuming arguendo that an
electric vehicle like Workhorse’s proposal was determined to be such an alternative at the conclusion of
the Environmental Impact Statement process, Workhorse’s argument that any other selection by the
Postal Service would be inconsistent with NEPA demonstrates its misunderstanding of this federal law. In
fact, Workhorse cannot guarantee that, were it selected, the NEPA process would not be subject to the
same risks of delay or legal challenges that it alleges exist for the proposed action.
27
See https://www.c-span.org/video/?509634-1/us-postal-service-oversight-hearing&live= (March 11., 2021).
28
See NGDV Production RFP Statement of Work, Section D.
29
See 39 CFR 601.107(b).
30
See Disagreement, p.3.
31
Id.
32
Dep’t of Transportation v. Public Citizen, 541 U.S. 752, 756-57 (2004).
Workhorse supports its erroneous interpretation of the NEPA process by also stating that
Since you provide no citation in support, the Postal Service can only assume that
c. The RFP included special provisions acknowledging the risks inherent in the
NEPA Process and its Commitment to Sustainability.
As NEPA is a pre-decisional statute, the RFP notified offerors that the NGDV award would be contingent
on the Postal Service’s satisfactory completion of the Environmental Impact Statement. Special Provision:
The National Environmental Policy Act (NEPA), subpart (e), in the RFP’s Terms & Conditions stated: “The
Postal Service’s obligation to order the minimum quantity identified in [the RFP] is expressly contingent
upon the satisfactory completion of the NEPA EIS process. Any resulting contract(s) awarded pursuant to
this solicitation shall reflect this contingency.” Thus, any NGDV award – whether the current awardee or
an alternative – retains the risk that costs expended to protect the interests of the Postal Service in
advance of the Record of Decision may be lost should the Postal Service modify, mitigate, change, or
terminate altogether its proposed action. Recognizing that the awardee would not be willing to enter into a
contract for production of NGDVs subject to the NEPA clause without some assurance of recovering its
start-up costs, the RFP allowed offerors to separately propose non-recurring engineering (“NRE”) costs.36
In addition to Clause 7-10: Sustainability (July 2014), the Postal Service included another special
provision that required that each offeror submit an emerging technologies roadmap along with its
proposal.37 As part of the roadmap, each offeror, whether incorporating an ICE powertrain or an
alternative fuel powertrain within their NGDV design, must also demonstrate and document its capability
to provide for and design a realistic path towards alternative fuel usage options for the NGDV vehicle. 38
This Roadmap would then become a binding contract document if the awardee’s vehicle did not already
have an alternative fuel vehicle solution ready for production. 39 Fortunately, Oshkosh’s provision of a
BEV proposal in addition to its ICE proposal, with both vehicles receiving the highest technical score for
their respective drivetrain categories, negated any concerns regarding the need for a roadmap to
alternative fuel vehicles at a later date.
33
Disagreement, p.3.
34
Update to the Regulations Implementing the Procedural Provisions of the National Environmental Policy Act,” 85 FR 43304,
43305 (July 16, 2020).
35
See id.
36
See NGDV Production RFP, Attachment #5 - Proposal Data Request Workbook, Section 2 – Milestones.
37
See NGDV Production RFP, Terms & Conditions, Special Provision: Emerging Technologies Roadmap.
38
See id. at (a)(1).
39
See id. at (b).
iii. The Postal Service placed significant weight on the environmental impact
of all proposed NGDVs during the technical evaluation.
In further demonstration of its commitment to environmental considerations, the Postal Service evaluated
all offerors’ Fuel Economy and Emissions in Factor 1: Design and Technical Approach. Specifically, the
Postal Service evaluated:
The completeness of description and projected value of offeror’s features that focus on
improving fuel economy and reducing emissions. Sufficiency of data and analysis from
simulation or lab results to support fuel economy and emission performance estimates
over the target service life of the vehicle. 40
In further demonstration of the importance of environmental impact in the technical evaluation process,
the TET included a representative from the Postal Service’s Sustainability office as a voting-member.
BEV NGDVs, such as those proposed by Workhorse, received higher scores than ICE proposals in
Subfactor 1.3, which as part of Factor 1 was weighted more than most other Subfactors, giving BEV
proposals a technical scoring advantage over ICE proposals. 41 However, as discussed further in Section
II(D), Workhorse was not able to capitalize on this technical scoring advantage.
Contrary to Workhorse’s misleading statements to investors and the media suggesting that Workhorse
was the only BEV offeror in contention for the NGDV Production contract, the Postal Service received two
other BEV offers.
vehicles proposed by other offerors, Workhorse’s Disagreement fails to acknowledge that, even if
Oshkosh were eliminated from the competition, and even if the RFP were re-written to exclude ICE
vehicles, 43 Therefore, even if Oshkosh was eliminated
from the competition, and if it was feasible for the Postal Service to acquire only BEVs (which it is not),
and if the Postal Service was required to only purchase BEV vehicles (which it is not),
B. The Postal Service’s Best Value Determination Was Rational and Correct.
Workhorse (BEV) 5
40
See NGDV Production RFP, Attachment #7 – Production Proposal Evaluation Criteria, p.1.
41
See id.
42
See Section II(B), infra.
43
See id.
The Oshkosh ICE vehicle was rated the highest, with the Oshkosh BEV vehicle only slightly below it
technically. as its score of
. As the TET concluded: “
The Postal Service then evaluated the offerors’ Total Cost of Ownership (TCO) in accordance with the
RFP.
Oshkosh (BEV) 4
Thereafter, the Postal Service performed a best value tradeoff analysis, with the following results:
Workhorse (BEV) 5 2 5
Due to the fact that the Oshkosh ICE vehicle was ranked 1 st in technical score and 1st in evaluated total
cost of ownership, The Oshkosh BEV was ranked 2 nd in
technical score and 4 in price, and thus was ranked 2 overall in best value. Because Oshkosh could
th nd
provide both its ICE and BEV under the same contract at whatever mix the Postal Service desired, the
Postal Service awarded Oshkosh a single contract to produce ICE and/or BEV vehicles.
For the foregoing reasons, I deny Workhorse’s Disagreement on the basis that the Postal Service did not
perform a proper best value tradeoff.
1. Workhorse received
. I will
therefore address this critical subfactor first before addressing Workhorse’s The RFP
stated that the TET would evaluate the Safety and Ergonomic subfactor based upon the following:
The completeness, feasibility, and potential safety value of offeror’s various design
features, systems, and components that focus on improving safety of operations and
minimizing carrier accidents. The degree to which the vehicle conforms to best
ergonomic practices. Completeness, availability and value of features that enhance
vehicle ergonomics–including features that increase the efficiency of loading, unloading,
curbside delivery, package delivery and delivery activities.
Because of the importance that the Postal Service places upon the safety of its vehicles and health of its
carriers, the NGDV TET included 2 safety experts to evaluate proposals. After the initial technical review, the
TET found that Workhorse had
• ; and
•
.
i)
ii)
In addition, to review and attempt to address the Postal Service’s concerns with the
raised in our deficiency list of September 3, 2020,47 Workhorse
44
.
45
See Workhorse Proposal, Page B-62.
46
See id. at Table B-33 (Tab B-62).
47
While Workhorse
For the first subfactor under Design and Technical Approach - Reliability - the RFP stated that offerors’
proposals would be evaluated on the following:
The clarity, completeness and merit of offeror’s description of how specific features,
materials, assembly techniques, sourcing, and quality control strategies will improve the
reliability and durability of the vehicle. Clarity, completeness, and merit of offeror’s
reliability improvement strategies needed to ensure that the design meets the service life
target.
During the March 3, 2021 debriefing, Workhorse was informed that its was
that its proposal failed to include
48
See Workhorse Proposal, B-65 to B-93.
49
See Disagreement, p.3.
50
See id.
51
See Workhorse Technical Proposal, Tab B-7.
52
See id.
53
See id. at Tab B-8.
54
See id. at Tab B-32; Disagreement, p.6.
ii. Workhorse .
.I
. To be clear, the Postal Service never approved these modifications for purposes of
the Production program.
.56
For these reasons, I find that the TET properly assigned Workhorse in Subfactor
1.1.
55
See id. at Tab D-7.
56
Id.
For the second subfactor under Design & Technical Approach - Maintainability - the RFP stated that
offerors’ proposals would be evaluated using the following:
The completeness and quality of the offeror’s description of how specific design features,
materials, assembly and/or operating characteristics will lead to reduced maintenance.
Practicality of special approaches taken that will result in more efficient servicing and
maintenance of the vehicles. Completeness of the description and capability of any on-
board self-diagnostic capability built into the vehicle –including provisions for monitoring
emissions, safety, and other wear components on the vehicle. Clarity and completeness
of any special and routine maintenance procedures, including an overview of
maintenance or replacement intervals for major components. Sufficiency of data and
analysis to validate claimed service intervals and expected lives of major components.
During the debriefing, the Postal Service identified the following in Workhorse’s
proposal regarding Subfactor 1.2 as follows:
57
i. Workhorse
Subfactor 1.2 required offerors to provide “data and analysis to validate claimed service intervals and
expected lives of major components.” Although Tab B-15 of Workhorse’s Technical Proposal provided
ii. Workhorse’s
For the first subfactor under Supplier Capability – Engineering Capability – the RFP stated that offeror’s
proposals must demonstrate the following:
57
See Workhorse Disagreement, p.7.
At the debriefing, the evaluation team identified the following in Workhorse’s proposal
with respect to Subfactor 2.1:
Workhorse’s Disagreement
58
i. Workhorse
.60
ii. Workhorse
63
For the second subfactor under Supplier Capability – Production and Delivery – the RFP stated that
offerors’ proposals must demonstrate the following:
58
See Workhorse Disagreement, p.8.
59
See id.
60
See id.
61
See id. at Tab C-17.
62
See id. at Tab C-14.
63
See id. at Tab C-9.
Workhorse’s proposal was assessed the following with regards to this subfactor, which
were discussed at debriefing:
i. Workhorse
ii. Workhorse
iii. Workhorse’s
64
See id. at Exhibit D-9, Tab D-29; Workhorse Disagreement, p.6.
65
See Workhorse Proposal, Tab E.05, p.1.
66
See Workhorse Disagreement, p.8.
For the third subfactor under Supplier Capability - Service and Parts – the RFP required offerors’
proposals to demonstrate the following:
Present and future capability to provide consistent service support and parts during the
NGDV lifecycle – with clearly defined processes to ensure part availability and support
resources as necessary.
Furthermore,
For the final subfactor under Production and Delivery - Quality – the RFP required offerors to
demonstrate:
Experience with and evidence of the offeror’s quality management system and the quality
management system of the offeror’s key partners/subcontractor(s). Capability of key
quality management personnel and documentation of qualifications (education and
For the first subfactor in Past Performance – Prototype Performance – the RFP stated that offerors’
proposals much demonstrate:
67
See Workhorse Proposal, Tab D, p.7.
After the Postal Service determined that testing would end in July 2018, the
. In the end,
Although Workhorse’s
proposal claims
Therefore, the
TET correctly assessed the Workhorse Prototype performance as a .
For the final subfactor – Past Performance, the RFP stated that it would be evaluated as follows:
Extent and quality of offeror and key partners/subcontractor(s) past performance in both
research/development and design/production of vehicles. Demonstration of offeror’s past
performance on prior Postal Service, government and/or commercial contracts of similar type
and magnitude and ability to provide high quality and timely delivery of vehicles, including:
delivery schedules, quantities, and contact information of contract managers that can verify
these production contracts over the last five (5) years.
During the debriefing, the Postal Service identified the of Workhorse’s Prior
Performance as follows:
68
See id. at Tab D, p.10.
69
See id. at Tab D, p.9.
i.
While Workhorse
identified a partnership with ,
Therefore, the
Postal Service properly concluded that
ii.
Therefore, this
was properly assessed.
iii. Workhorse
.
Workhorse’s only objection in its Disagreement is that it has
which does
D. The Postal Service performed the TCO evaluation of the offers correctly.
Contrary to Workhorse’s assertions, the Postal Service conducted the Total Cost of Ownership (TCO)
evaluation in accordance with the RFP and in a fair and impartial manner. But, to be clear, Workhorse’s
proposal From a TCO perspective, Workhorse’s proposed
vehicle offering ranked second.
However, since Workhorse has objected to the
TCO methodology in its Disagreement, I will discuss the Postal Service’s analysis in further detail below.
The RFP stated that TCO would be determined “by considering the following factors: Acquisition costs,
Maintenance costs, Fuel costs and Charging Infrastructure costs .” As discussed at the March 3rd
debriefing, the Postal Service conducted its TCO analysis in accordance with the express terms of the
70
Workhorse Disagreement, p.9.
RFP. Information provided by Workhorse, through submission of its NGDV Production Proposal
Workbook Data, was used by USPS to include in its TCO modeling. For uniformity purposes, USPS
determined the Charging Infrastructure costs used as part of the TCO calculation for each proposed BEV
offering, so Workhorse’s evaluated TCO was on equal footing with other electric vehicle offerings with
regards to Infrastructure costs. In addition, Acquisition costs included the NRE amount each offeror
identified in its proposal, so no offeror would receive an advantage by moving costs between vehicle price
and NRE.
2. The TCO did not include the costs of retrofitting Oshkosh’s ICE NGDVs.
Workhorse asserts
However, as discussed above and at the
feedback session, the cost to retrofit any ICE vehicles was not a component of the TCO analysis. Section
II(B) herein details how the Oshkosh proposal includes the option to procure vehicles with ICE or BEV
powertrains from the start of production in any quantity or proportions required by the Postal Service.
Retrofitting is not a necessity, but rather an added benefit if the circumstances are favorable in the future.
Workhorse complains
However, at no point
were any offerors asked to provide their own TCO calculations. Information provided by Workhorse,
through submission of its NGDV Production Proposal Workbook Data, was used by USPS to include in its
TCO modeling.
4. Workhorse
3. Oshkosh’s ability to retrofit its ICE vehicles was not part of its technical evaluation
or TCO.
Workhorse alleges,
However, as discussed previously, the
Postal Service does not currently have a plan to retrofit ICE vehicles in the future, because it is already
developing a plan to obtain a significant quantity of Oshkosh BEV NGDVs as soon as possible. USPS
has not determined the final procurement volume of ICE and BEV vehicles, and so, for informational
purposes only, inquired about the feasibility of retrofitting ICE vehicles to the BEV powertrain. Oshkosh
demonstrated this innovative approach for future consideration; retrofitting of vehicles wasn’t a proposal
requirement, wasn’t evaluated from a TCO perspective, and therefore was not factored into the overall
best value decision.
4. Workhorse
Workhorse also
However, in accordance with the terms of the
RFP, the Postal Service did not use these statements of to evaluate the capability
of any offeror, including both Oshkosh and Workhorse.
• “[W]e have in the past experienced a battery pack supply chain constraint as a result of our
existing supplier's inability to keep up with volume requirements.”
• “Our results of operations have not resulted in profitability and we may not be able to achieve
profitability going forward.”
• “Our business plan is focused on providing sustainable and cost-effective solutions to the
commercial transportation sector but is still unproven. There is no assurance that even if we
successfully implement our business plan, we will be able to curtail our losses or ever achieve
profitable operations.”
• “We have had negative cash flow from operating activities of $70.3 million and $36.9 million for
the years ended December 31, 2020 and 2019, respectively…. An inability to generate positive
cash flow for the near term may adversely affect our ability to raise needed capital for our
business on reasonable terms, diminish supplier or customer willingness to enter into
transactions with us, and have other adverse effects that may decrease our long-term viability.”
III. WORKHORSE’S
Even if Workhorse had submitted the Postal Service would still have to
consider
Due to the public interest in the NGDV program, the Postal Service required that all potential suppliers
and their strategic partners and subcontractors execute certain non-disclosure agreements during the
program. First, in November 2015, Workhorse executed the “Ground Rules for Supplier Operational Visits
& Protection of Postal Service Program Information” (the “Ground Rules”). In Paragraph 4(f) of the
Ground Rules, Workhorse agreed that it “shall not discuss the NGDV Prototype program proposal
process…with members of the media, or otherwise attempt to improperly influence, either directly or
indirectly, the Postal Service’s efforts to conduct the NGDV Prototype program in a fair and impartial
manner.” More recently, on December 4, 2019, Workhorse executed the NGDV Production Program Non-
Disclosure Agreement (“NDA”). Pursuant to Paragraph 2 of the NDA, Workhorse agreed “not to make any
oral or written statements, either public or private, to any third-parties regarding the NGDV Production
Program or [its] participation in the NGDV Production Program….”
are as follows:
A. Workhorse
had
furnished prototype vehicles to the Postal Service. As just one example, in its 2019 Annual Report,
Workhorse stated to investors and the SEC that:
Workhorse was one of the five participants that the United States Postal Service
(“USPS”) selected to build prototype vehicles for the USPS Next Generation Delivery
Vehicle (“NGDV”) project. … In September 2017, Workhorse delivered six vehicles for
prototype testing under the NGDV Acquisition Program in compliance with the terms set
forth in their USPS prototype contract.
B.
award while the TET was evaluating its technical proposal.
The Post Office, in the March time period, the Spring of 2019, had 6 companies go
through prototype and durability testing. We were one of those companies. We are the
only all-electric option, and we were 1 of the 3 American companies that went through
Prototype testing.”71
71
See “Workhorse CFO Talks USPS Contract, Says Company Has 2-Year Lead on Competitors,” at https://www.benzinga.com/
news/20/07/16712149/workhorse-cfo-talks-usps-contract-says-company-has-2-year-lead-on-competitors.
Following the award to Oshkosh, Workhorse continued to make additional public statements regarding
the NGDV Production program.72 This was capped off just this last week when, while Workhorse’s
business Disagreement was pending before the Contracting Officer, a member of Congress contacted the
Postal Service
with the
Postal Service was not evaluated as part of the best value determination, I find that, even if Workhorse
had submitted the Postal Service would
Workhorse’s disagreement
However, a stay of performance is not warranted in this
instance. As demonstrated herein, the Postal Service performed a thorough and well-reasoned analysis
of all proposals and correctly determined that an award of the NGDV Production Contract to Oshkosh
presented the best value to the Postal Service. In any event, the Contracting Officer does not have
authority to stay performance of a contract pending a Disagreement. See 39 C.F.R. Part 601. For these
reasons, Workhorse’s requests f is denied.
V. CONCLUSION
For the reasons set forth above, Workhorse’s business Disagreement is denied. The Postal Service
correctly concluded that Oshkosh’s ICE and BEV proposals provide the best value to the Postal Service
for its Next Generation Delivery Vehicle Production program.
If you elect to pursue this matter further, you may contest this resolution with the Supplier Disagreement
Resolution Official (SDRO) in accordance with 39 C.F.R. § 601.108. As indicated in the regulations, the
disagreement must be lodged, in writing, via facsimile, e-mail, hand delivery, or U.S. mail, with the SDRO
within ten (10) days of your receipt of this letter. The disagreement must state the factual circumstances
relating to it and the remedy sought. The contact information for the SDRO is:
Supply Management
Room 1141 (attn: SDR Official)
United States Postal Service Headquarters
475 L’Enfant Plaza SW
Washington, DC 20260-1141
SDROfficial@usps.gov
Fax: (202) 268-0075
72
See “Workhorse Met with USPS Reps After Missing Out on Delivery Truck Contract, Will Keep Pursuing Options”, at
https://www.marketwatch.com/story/workhorse-met-with-usps-reps-after-missing-out-on-delivery-truck-contract-will-keep-pursuing-
options-2021-03-04.
Sincerely,
Delores B. Waters
Contracting Officer