Los Angeles Business Journal

Long Beach Transit Cancels BYD Bus Contract

By Deborah Crowe Thursday, March 27, 2014

The board of Long Beach Transit voted Thursday to cancel the transit agency's contract for 10 of BYD Motors Inc.’s electric buses.

The Federal Transit Administration withdrew $9.6 million in funding for the $12.1-million project, saying China-based BYD, which has its North American headquarters in Los Angeles and assembly plants in Lancaster, had erred when making its initial bid.

BYD said it decided not fight the contract termination as a "good will" gesture and expects to win the contract again when it is rebid later this year.

“We are confident that we will prevail in any competitive re-bid in the future for the same reason we prevailed last year: Our superior technology.” Chief Executive Stella Li said in a statement.

FTA officials recently informed the transit agency that BYD should not have been awarded the contract because the company had not prequalified itself to participate in contracts that receive federal funds. The manufacturer should have submitted a percentage goal for the purchases it would make from disadvantaged businesses before making its bid, not after winning the contract.

Li said the omission was honest error on the Chinese company's part, but couldn't resist taking a dig at regulators for waiting so long to point out the problem.

“It is surprising that the FTA waited nine months to withdraw funding from this contract—after BYD spent millions of dollars—due to what can only fairly be described as a technical error that in no way casts doubt on our deep commitment to purchase from disadvantaged businesses," she said.

Long Beach Transit expects it will take up to three months to rebid the contract. BYD said any delays in resuming work on the buses, should it win, would not affect its hiring plans in the region. BYD's other U.S. deals include a contract with Los Angeles County Metropolitan Transportation Authority to provide up to 25 similar buses. It also is in the process of converting the Antelope Valley Transit Authority fleet to all-electric buses.

Between Los Angeles and Lancaster, the company has created 60 jobs in the past two years, Li said. It expects to increase that to 100 by the end of this year, and to 200 by the end of 2015.