Workhorse Group Inc., an early equity investor in Lordstown Motors Corp., has voluntarily dropped its protest against the US Postal Service’s decision to award a lucrative contract to a competitor to develop the mail carrier’s next-generation delivery truck to a competitor.
In its June appeal, the Cincinnati-based technology firm claimed that the postal service behaved arbitrarily by awarding the contract to Oshkosh Defense, a branch of Wisconsin-based Oshkosh Corp. The 10-year contract, valued up to $6 billion, calls for the manufacture of up to 165,000 new delivery trucks for the postal jobs and service.
In February, Postmaster General Louis DeJoy announced the selection of Oshkosh, which suggested a mix of vehicles powered by a battery and fuel-efficient internal combustion engines. Workhorse Group envisioned an all-electric fleet.
Workhorse’s new CEO, Rick Dauch, stated that in his brief six-week time as CEO, he had conducted an exhaustive assessment of the company’s operations, including its postal service bid and protest.
“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,” 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.”
The withdrawal postponed oral arguments slated for last week in the case before the United States Court of Federal Claims. Government Lawyers and Oshkosh filed similar petitions in July, urging the court to dismiss Workhorse’s claim, noting that the firm had not exhausted its administrative options with the postal service.
Oshkosh’s motion states Workhorse initiated the first step of the appeal process. Still, when the award was determined was proper, Workhorse “sat idle for three months” before filing the complaint in court instead of further appealing the decision. “Workhorse’s failure to complete the administrative appeal process is fatal to its case,” the motion states.
Last month, the Wall Street Journal reported that Workhorse was being probed by the Securities and Exchange Commission’s enforcement section. The article quoted a letter dated June 30 that denied self-described short-request sellers for public records.
In August, Workhorse sold approximately three-quarters of its equity position in Lordstown Motors, selling 11.9 million shares of the Lordstown-based electric vehicle startup’s Class A common stock from July 1 to August 6.
Workhorse received around $78.8 million from the sale, but the business stated to the SEC that it suffered a $52.1 million loss due to the transaction. Early on, Workhorse and Lordstown Motors collaborated on a three-year license agreement that grants Lordstown Motors access to certain intellectual property in exchange for a 10% stake in the company, which plans to launch its all-electric pickup truck, the Endurance, in limited production this month.
Source: Youngstown Vindicator