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Workhorse challenges USPS decision to award vehicle contract to Oshkosh

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A U.S. Postal Service (USPS) logo is pictured on a mail box in the Manhattan borough of New York City, New York, U.S., August 21, 2020. REUTERS/Carlo Allegri/File Photo

WASHINGTON, June 16 (Reuters) - Electric vehicle company Workhorse Group (WKHS.O) filed a legal challenge on Wednesday to the U.S. Postal Service (USPS) decision in February to award a multibillion-dollar, 10-year contract to Oshkosh Defense (OSK.N) to manufacture a new generation of postal delivery vehicles.

The contract could be worth more than $6 billion in total. It allows for delivery over 10 years of between 50,000 and 165,000 of a mix of internal combustion-powered and battery-electric vehicles.

Workhorse had proposed building an all-electric vehicle fleet for USPS and has support of many U.S. lawmakers. USPS did not immediately comment. The bid protest was filed in the U.S. Court of Federal Claims under seal.

USPS declined to comment on the challenge but said "preproduction design, tooling and facility preparation are proceeding on schedule with the first (next generation delivery vehicles) estimated to appear on carrier routes in 2023."

Workhorse said in a statement it could not disclose further details "but will provide updates when appropriate and as permitted under its non-disclosure agreement." A judge will likely unseal a version of the complaint in the coming weeks.

Reuters reported the planned bid challenge earlier Wednesday sending its shares up more than 10%. Shares closed up 5.3% in heavier than normal trading.

Oshkosh Defense declined to comment on Workhorse's protest but said it looks "forward to getting these highly capable vehicles into the hands of mail carriers."

Last month, the U.S. House Oversight and Reform Committee voted to authorize $8 billion for USPS.

Postmaster General Louis DeJoy has committed to at least 10% of the fleet being electric vehicles but he said in a letter in March to lawmakers that with government assistance the USPS could commit to making a majority of the fleet electric within 10 years. He added that the USPS needs about $8 billion to electrify the new fleet to the "maximum extent" feasible.

In January, President Joe Biden vowed to replace the U.S. government’s fleet of roughly 650,000 vehicles with electric models and has called for funding to electrify the fleet.

New USPS vehicles will include air conditioning and heating, improved ergonomics, and advanced vehicle safety technology including air bags and 360-degree cameras. Most current delivery vehicles do not have air conditioning or modern safety features.

A 2020 report said USPS spent $706.2 million in maintenance costs for 141,057 delivery vehicles.

Reporting by Jarett Renshaw; writing by David Shepardson Editing by Chizu Nomiyama

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