By Adam Pagnucco.
In prior articles, I reported on the admission by MCPS officials of skyrocketing poor performance fees associated with its electric bus contract and the fact that two admitted criminals participated in its original award. That provoked a deluge of further information into my inbox. This column summarizes what I have learned since Friday in two issue sets: legal and operational.
Legal Issues
Soon after the electric bus contract was awarded to Highland Electric Trucking (HET), one of the losing bidders – AutoFlex Fleet, Inc. – protested its award. The protest moved up to the state school board and the courts. Revelations that two of MCPS’s contract evaluators pleaded guilty to criminal offenses involving an affiliate of HET (MCPS’s existing diesel operator) caused the Appellate Court of Maryland to order MCPS’s school board to reconsider AutoFlex’s challenge. Instead, MCPS officials told the county council last week that they intended to renegotiate the existing contract.
That creates a significant legal problem for MCPS. AutoFlex’s challenge has not disappeared. In fact, the appellate court has instructed the school board to reconsider the contract challenge. That’s not optional; it’s a mandate.
If the school board approves a renegotiated contract with HET before or instead of taking action on the still-pending challenge, the challenger will have several legal options up to and including an injunction or perhaps even court sanctions. Why on Earth would MCPS take such a risk? MCPS could continue to fight or perhaps even settle with the challenger, but both of those options could consume significant amounts of taxpayer money. (The just-resolved Beidleman scandal cost taxpayers more than $2 million.) If MCPS goes down the road of using more tax money to ward off the consequences of mismanagement, that will cause the council – and the public – to question how it handles money the next time it asks for a budget increase.
Incidentally, this legal issue did not come up at the county council meeting. I was told by numerous sources in the council building that they had no knowledge of the court order. MCPS staff should have told the council about this, either privately or at the meeting itself. This exacerbates the trust issues between the school system and the council that rose to a fever pitch under former Superintendent Monifa McKnight. The new superintendent, Thomas Taylor, would like to patch up those issues but the kind of performance delivered by his subordinates last week will make that task harder.
Operational Issues
Between September 2023 and January 2024, the Center for Effective School Operations (CESO) conducted a five part study on MCPS’s transportation program. Much of that study addressed MCPS’s shift to electric vehicles (EV). Some of it also addressed claims made by McKnight that the contract would result in cost cuts of 50% “immediately.”
Among its findings were these quotes (italics appeared in original documents):
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The fleet shops used primarily for bus maintenance and repair are not adequate to successfully support the future fleet. The average age of the five bus shops is approximately 48 years. The standard for useful life is 30 years without any major improvements or renovations. The shops are not sized or configured appropriately to successfully support effective working conditions. Poor layout, space allocations, and adjacencies impact technician productivity and overall shop performance, as well as providing potentially unsafe working conditions…
The actual cost of owning and operating an EV remains unclear. The claim of budget neutrality in the EV transition was constructed on a foundation of false assumptions and estimates…
It is CESO’s opinion that the claim of budget neutrality is incorrect. The argument that the contract with HET would be budget neutral was based on overly optimistic future cost modeling. The claim overstated current mileage and fuel usage. Claims of maintenance and leasing cost reductions were also overstated. Based on our review of prior and current costs we believe budget neutrality is not feasible without changes in the plan for, and the contracting approach followed in pursuit of electrification…
The EV contract includes dozens of performance-restrictive assumptions. There is no contract management structure in place for this complicated agreement. Regardless of future EV purchases, management of this contract will be an ongoing challenge.
Regardless of cost, the HET contract contains numerous operationally-restrictive clauses and requirements that will impact the management of the fleet and DoT operations for years to come, regardless of whether the contract is extended or terminated. Examples include:
- Usage (mileage) caps with significant surcharge for overages.
- Time of use restrictions with surcharges for use outside established daily timeframes.
- Financial burdens for MCPS when non-delivery of contracted EV occurs.
- All incentives, related grants and rebates that pass through to HET with no reduction in contract price.
- Charging stations that will have to be rented from HET or removed on termination and will require new investments to support continued EV conversion.
- The provision of smaller special needs EV’s, due to begin this year, is not at a separate cost structure from the full size EV’s already delivered.
These restrictions are well outside of established standards for the legacy approach to lease-financing of the MCPS diesel-powered bus fleet. Future success with this, or any other EV contract requires a more structured and formalized approach to contract development and management to better understand implications, mitigate shortcomings, and ensure vendor and MCPS contract compliance…
Critical data resides only in the heads of key operations staff.
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There is so much more in these studies, but I am not going to run a 12-part series on them. Let’s just say that the Soviet Army never had as many red flags as these studies contain. We will finish with this statement: “Fleet electrification is unlikely to be reversed.” If that’s true, then that means that decisions made by McKnight and two admitted criminals have created consequences that will be hard for MCPS to escape.
I renew my request that Superintendent Thomas Taylor freeze the electric bus contract while he engages in a review.