The Office of the Inspector General (OIG) recently concluded an investigation into Montgomery County Public Schools’ (MCPS) management of a contract valued at over $160 million to acquire and operate 326 electric school buses. The investigation substantiated that all of the buses received during fiscal years (FYs) 2022-2024 were delivered beyond the contractually required delivery date.
The investigation states that “On February 23, 2021, as part of its commitment to sustainability, MCPS announced it was replacing 326 diesel school buses with electric school buses. The Montgomery County Board of Education (BOE) approved the acquisition including all associated charging infrastructure, charge management, electric, and related maintenance expenses totaling $168,684,990.
On March 1, 2021, MCPS entered into a transportation services agreement (Agreement) with a contractor to deploy the 326 electric school buses, 108 of which were to be electric special education buses, over a four-year period and continue to provide maintenance support over a twelve-year period. The contract required buses to be delivered by August 1st of each contracted fiscal year.
The agreement includes provisions allowing MCPS to seek billing credits for expenses related to the repair of buses and assess fees for “downtime damages” for buses or charging systems being unavailable due to extended maintenance, repair, and charging system readiness issues. The agreement also includes a termination clause that permits MCPS to terminate the agreement if the contractor fails to fulfill its obligations.
At a ribbon cutting ceremony in October of 2022, the then superintendent of schools claimed that when all 326 electric buses were procured, “we are going to be saving upwards of 6,500 gallons of diesel fuel per day, and immediately, this is going to cut costs by 50%.” MCPS’s webpage further states that the “school district is on track to have 326 electric school buses by 2025 and an entirely electric school bus fleet in 10 years. Replacing the diesel bus fleet with electric buses brings MCPS one step closer to our pledge of cutting greenhouse gas emissions by 80% by 2027 and 100% by 2035.”
Due to the contractor not delivering the required electric school buses per the contracted timeframe, MCPS submitted a request to the BOE to purchase 90 diesel school buses at a cost of $14,749,919. The BOE approved the request on October 12, 2023, in light of the anticipated electric bus shortfall. During the associated BOE hearing, MCPS’ then chief operating officer stated that MCPS remains committed to the electrification of school buses but acknowledged a need to maintain a blended fleet of both diesel and electric vehicles going forward.”
Per the conclusion of Memorandum of Investigation, “We estimate that, in addition to other possible actions, MCPS should have assessed the contractor approximately $372,000 for failing to provide serviceable buses between FYs 2022 and 2024. Furthermore, MCPS is spending over $14 million to acquire diesel buses to compensate for not receiving the anticipated electric school buses.
We substantiated that MCPS did not receive 206 electric buses for which they contracted within the timeframe specified by the agreement. MCPS is actively negotiating with the contractor to determine the number and expected delivery of the remainder of the contracted buses; they have received only 16 buses thus far for FY2025. We also substantiated that MCPS did not assess more than $372,000 in fees, as required by the agreement, related to buses not being available for five days or more from February 10, 2022 through March 31, 2024.
Finally, we substantiated that MCPS’ reluctance to enforce the terms of the agreement and failure to include penalties to offset incurred expenses has led to millions of dollars in wasteful spending and drastically hindered MCPS’s ability to meet its environmental goals.”
The full memorandum of investigation can be seen here.