MCPS Electric Bus Contractor Sues Competitor

Note : I have updated this post to include a response from Montgomery County's Office of Inspector General (OIG) at the end.

Three companies affiliated with Highland Electric Fleets , one of which has a contract with MCPS to provide electric buses, have filed a federal lawsuit against a competing electric bus company, AutoFlex, and its owner, Luis MacDonald. The suit alleges that AutoFlex and MacDonald have engaged in a "pattern of unfair competition, including their repeated and unlawful interference with Highland's contracts and customer relationships" and seeks to "vindicate Highland's contractual rights to electrify school-bus fleets."

That brings us to Highland's federal lawsuit, filed in the U.S. District Court for Maryland, Northern Division on 11 / 21 / 24. After recounting the history of bidding for MCPS's electric bus contract, Highland noted that AutoFlex finished last of four bidders and alleged that it "has pursued a baseless legal challenge to the procurement process. Relying on little more than innuendo and unfounded aspersions, AutoFlex has sought to take advantage of two MCPS employees' misconduct (unrelated to HET) to imply that the 2020 bidding process was tainted, hoping somehow to secure a do-over of AutoFlex's last place bid."

That's not all. Here is Highland's version of what came next.

But AutoFlex and MacDonald have not limited themselves to this legal challenge. They also have sought to reopen and amend the 2020 RFP by unfairly competing with Highland and unlawfully interfering with Highland's customer relationships. AutoFlex and MacDonald have done so in many different ways. For instance, AutoFlex and MacDonald have urged MCPS to violate competition laws and breach HET's contract by converting it from a single-award RFP and contract to a multi-award RFP and multi-award contract—i.e., a contract that would enable AutoFlex to participate in it—even though the RFP's bidding process has been closed for years, the contract prohibits unilateral material changes, and there is no legal basis for reopening the 2020 bidding process or amending the RFP.

AutoFlex and MacDonald have not merely spread negative publicity about Highland and MCPS; they have manufactured it. For instance, AutoFlex and MacDonald circulated a letter, purportedly from a nonprofit coalition group, to MCPS that urges MCPS to breach its contract with HET to allow for an AutoFlex sole-source, non-competitive second contract under HET's award so it can participate in the provision of electric buses to the school system. This letter was purportedly signed by the coalition's executive director. When Highland Electric Fleets, a member of the coalition, discussed the letter with the purported signatory, however, he disclaimed any knowledge of it. AutoFlex's MacDonald is the treasurer and a board member of the coalition. On information and belief, MacDonald prepared the letter without proper authorization and forged the signature of the coalition's executive director.

On more than one occasion, MacDonald abused his position of trust within the coalition by attempting to use the nonprofit coalition as a cloak of legitimacy in his campaign to disparage Highland, to promote the AutoFlex protest, and to amend the contract. Trading on the goodwill of the coalition in conflict with his duties as its treasurer and board member, AutoFlex's MacDonald circulated the forged letter to other Highland customers and copied the coalition's executive director in misinformation-spreading messages to advocates and consultants within the clean-school-bus space to promote AutoFlex to the detriment of other coalition members and the public mission advanced by the coalition.

Then Highland went on to criticize Montgomery County's Office of Inspector General (OIG). (Neither the county government nor the OIG are parties to the suit.) Here is what Highland wrote about the OIG.

In 2024, the Office of Inspector General ("OIG") for Montgomery County released a four-page memorandum that criticized MCPS and HET, including MCPS's management of this first-of-its-kind initiative. The OIG memorandum addressed supposed delivery delays and operational deficiencies (without acknowledging that the electrification efforts contended with a disrupted global economy or identifying whether other school districts faced similar delays and operational challenges) and falsely concluded that MCPS should have exercised certain rights under its contract with HET. Contrary to best practices for inspector general investigations, the OIG did not contact HET before releasing its memorandum. After its issuance, the OIG refused HET's repeated requests to discuss the memorandum. Unsurprisingly, given the OIG's failure to speak to one of the two parties to the contract, the memorandum contained many inaccuracies, including misinterpretations of contract terms. Equally predictable, the memorandum was incomplete and decontextualized. For instance, it did not acknowledge the multiple changes to school-system leadership that impacted effective management of the Agreement or HET's many good-faith efforts to address economic headwinds and performance challenges, such as implementing its own parts-inventory-management system (not required by the Agreement) and absorbing millions of dollars of cost overruns (even when the overruns were caused by factors outside of HET's control, such as manufacturer delays, inflation, and supply-chain disruptions) instead of passing them on to MCPS.

The OIG memorandum was prompted by anonymous reports that, on information and belief, AutoFlex and MacDonald were involved in submitting. And, in all events, consistent with their other contract-interfering actions, AutoFlex and MacDonald have weaponized the OIG memorandum, shopping it around to potential AutoFlex customers and attempting to leverage the negative publicity from the OIG memorandum to undermine Highland.

That's just the summary of Highland's criticism of the OIG. Later in the complaint, Highland identified nine individual statements by the OIG that it characterized as "incorrect / misleading." Highland described the negative press resulting from the OIG report, naming the Washington Post, WJLA ABC 7, WTOP and Montgomery Perspective, recounted its efforts to communicate its version of events to the OIG and discussed AutoFlex's challenge of the contract award. Highland alleged that AutoFlex circulated negative news coverage about the MCPS contract to other Highland clients including school districts in Baltimore County, Baltimore City and Manassas, VA.

Highland wrote this about MCPS's efforts to recover fees under the contract.

Under pressure from the OIG's flawed findings that MCPS ought to have enforced rights under the Agreement that MCPS did not have, MCPS wrote to HET in a letter dated August 14, 2024, requesting more than $350,000 in fees for buses that allegedly remained out of service for more than five days and citing the same inapplicable provision—which provided for a fee of $100 per day—that the OIG referenced in the Memorandum. MCPS also requested that the base-service-fee be reduced, on a pro rata basis, to account for any operational delays, seeking more than $1.5 million.

HET and MCPS negotiated issues relating to MCPS's request.

HET has negotiated making certain pro rata payments to MCPS and a good-faith payment related to delayed buses, even if not required under the Agreement.

Highland alleged three counts of tortious interference with contractual relations, one count of tortious interference with prospective economic advantage, one count of unfair competition, one count of injurious falsehood and one count of declaratory relief against AutoFlex and its owner. Highland is asking the court for a jury trial, damages of an unspecified amount, reasonable costs, attorney's fees and declaratory relief.

It's important to note that MCPS is not a party to this case. I have requested comment from the OIG and Luis MacDonald, AutoFlex's owner.

Update : Shortly after this post was published, I received this comment from Inspector General Megan Davey Limarzi.

Thank you for contacting our office. The Montgomery County Office of the Inspector General (OIG) is tasked with improving the effectiveness and efficiency of publicly funded programs and operations. The OIG stands by the integrity of its work and fully supports the analysis and conclusions contained in every publication. In conducting our work we diligently adhere to professional standards to ensure it is fully supported, objective, and fair. Notably, the Office of the Inspector General is not a party to this law suit.

The case number is 1 : 24-cv-03366-RDB. The case can be found on the U.S. court system's PACER website . The complaint can be downloaded at the link below.

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