Long Beach, California, has long been known as the Queen City because of the Queen Mary ocean liner that's docked there. A much less elegant situation is happening to Chinese vehicle maker BYD, which had a $12.1-million contract nullified over what BYD says is a technicality.

BYD said last week that it and the city of Long Beach mutually agreed to terminate an electric-bus contract for 10 electric buses. The US federal government has said that BYD didn't comply with a mandate to pass on a certain percentage of their business to minority-owned entities. And because the feds were funding almost $10 million of that contract, according to the Long Beach Press-Telegram, both BYD and the city agreed to call the year-old deal off.

BYD was pretty miffed that the government took so long to get to its findings and said its own actions were a "good faith error." The company also took the opportunity to cite its buses' "superior technology" as a reason why the company expects to win future municipal contracts and slyly noted that it has a 25-bus order from the nearby city of Los Angeles. No federal funds were part of that contract. The company also said last month that the Chinese city of Dalian put in an order for as many as 1,200 electric buses, so that should sooth things a bit. Check out BYD's somewhat defiant press release below.
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BYD Announces Agreement with Long Beach Transit to Mutually Terminate Electric Bus Contract

Expresses "Confidence in Winning New Competition For Same Reasons as in 2013: Technological Superiority"

LONG BEACH, Calif.--(BUSINESS WIRE)--BYD Motors, Inc. announced today that it had agreed to mutually terminate its contract with Long Beach Transportation Company ("LBT") for the delivery of 10 electric buses. BYD said that the Federal Transit Administration ("FTA") withdrew funding of the contract as a result of a good faith error in BYD's pre-bid disadvantaged business program certification in February 2013. LBT announced that BYD won the competition for the contract on March 24, 2013. Based on the contract award, BYD then submitted a percentage goal for purchases from disadvantaged businesses in June 2013. The FTA concluded, however, that BYD should not have certified to compliance prior to submitting a goal, even though submitting a goal in the absence of a contract award would have been meaningless.

"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."

Regardless, both the FTA and the LBT attorneys agree that BYD is now eligible to participate in any future contract funded by the FTA as a result of its June 2013 program goal submission.

Ms. Stella Li, CEO of BYD Motors, Inc., stated: "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."

"In an effort to demonstrate our good will to both the people of Long Beach and the FTA, we have agreed to mutually terminate the Long Beach Transit contract so it can be re-bid without delay."

"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."

"We have the longest range of any electric bus manufactured in the world, with up to 24-hour service on a single electric charge, and thus, no need to construct conspicuous charging stations throughout the bus routes. Our buses can be used without interruption during operating hours, and can be recharged overnight at the time of lowest electrical rates. We have no engine, no clutches and no transmission-we have simply in-wheel-hub motor drives and batteries. It is for these reasons that the Los Angeles County Metropolitan Transportation Authority decided last year to purchase up to 25 BYD buses."

"We remain committed to a robust program of purchasing from disadvantaged businesses. We also look forward to creating many new jobs at our two new manufacturing facilities in Lancaster, California and administrative offices in Los Angeles. In less than two years, we already have created 60 new jobs in both places. We expect to increase to 100 new jobs by the end of this year, and to 200 by the end of next year."

"The people of Lancaster are excited that we have located two manufacturing facilities in their city. We are proud of our job-creating record in Southern California-American jobs with technology that is operating and praised throughout the world."

"We are optimistic, enthusiastic, and dedicated to being a successful American company, with clean, silent, and economical electric energy buses produced by well-paid and supportive workers. Make no mistake: We are here in Southern California and in America for the long-term."

The FTA-funded stress testing in its Altoona, Pennsylvania, facility, of the BYD electric bus-the same model to be delivered to Long Beach Transit-has resumed and should finish soon.

About BYD

BYD presently has sold and deployed over 1,000 operating electric buses in China and throughout Europe and Latin America. It has received an order for up to 25 buses from the Los Angeles County Metropolitan Transportation Authority and is in the process of converting the Antelope Valley Transit Authority (AVTA) fleet to all-electric buses as it has done in other places around the world (see https://www.youtube.com/watch?v=wz_96VQIrpo). BYD will deliver the first two buses to the AVTA in April 2014.

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