U.S. Government Awards Huge Transportation Contract to Uber, Lyft

Matt Posky
by Matt Posky
u s government awards huge transportation contract to uber lyft

The General Services Administration (GSA), responsible for managing services for federal agencies, issued a five-year federal contract to Uber and Lyft. Confirmed by Veronica Juarez, Lyft’s vice president of social enterprise and government, on Monday, the deal estimated to be worth somewhere in the neighborhood of $810 million and allows the ride-hailing firms to offer public agencies a direct line to their transportation services.

While federal employees have always been able to utilize the services, the new arrangement makes them semi-compulsory for some of the millions of government employees involved. Meanwhile, Uber and Lyft can now work directly with officials to promote their services. With the recent passing of California’s Prop 22, which issued special legal protections to ride-hailing companies, the duo seemed to be experiencing a run of good fortune late in the year. That doesn’t guarantee that they’ll suddenly become profitable entities. But they could be with sufficient government support — which seems increasingly likely for reasons we’re about to dive into.

As things currently stand, neither Uber or Lyft have ever turned a profit from their services. While we cannot say whether the new government contract will change that, it certainly likely won’t hurt. Then again, ridership is down on account of the pandemic and a subset of the populace has started shunning Lyft/Uber due to their increasingly overt political messaging and questionable business practices.

Speaking of politics, the contract decision came hot on the heels of the GSA’s decision to name Joe Biden is the apparent winner of the 2020 presidential election. Interestingly, Lyft hired a lobbyist to help it push through Prop 22 who previously worked as the director of legislative affairs for Biden when he was still vice president. Matt Olsen, the former general counsel of the National Security Agency (NSA) who went on to serve as Uber’s chief security officer, also has a spot on Biden’s transition team.

Lyft’s Juarez said the awarded contract concluded almost four years of negotiations that weren’t being endorsed by the Trump administration. According to Reuters, she declined to state how much revenue her company expects to generate from the deal but noted that the U.S. government spends around $200 million on ground transport per year.

From Reuters:

Lyft also hopes the government contract will open doors to further collaboration on public health and equity projects that require transportation.

The GSA did not immediately respond to a request for comment, but the agency in April announced the award to Uber and Lyft tentatively.

At the time, the agency said in a blog post that it had negotiated discounts with the companies of 2-4 percent compared with large commercial customers and that Uber and Lyft had agreed to waive some additional fees.

“The expansion of our customer base to include government is a natural next step for us, and we’re proud to help federal agencies tackle some of the biggest administrative challenges they face,” Ronnie Gurion, head of Uber for Business, said in a prepared statement.

[Image: Jonathan Weiss/Shutterstock]

Join the conversation
  • Art Vandelay Art Vandelay on Nov 24, 2020

    When our contract was rebid recently there was a bunch of language in it with respect to labor categories and how exactly the contractors are to be paid. Typically the government only allows the big contract firms to exploit third country nationals. This is new ground.

  • Tobiasfunkemd Tobiasfunkemd on Nov 25, 2020

    The politics of gig economy workers being exploited by Silicon Valley tech bros using VC funding to stay afloat aside, this has always been a weird grey area for feds (full disclosure: I am a career federal employee). There was a pretty clear admonishment NOT to use rideshare apps when Uber and Lyft first came on the scene, but they were so clearly superior to using taxis (especially in DC, which had the zone system for cab fare rates that was both inscrutable and designed to rip off riders) that travel reviewers started turning a blind eye to vouchers with rideshare receipts in them. Later, it seemed like an unwritten rule was established that they were cool with rideshares, although it took years for them to finally put that into writing. As a Californian, Prop 22 was a tough vote for me. The apps are super convenient, but there are legitimate questions about the responsibility of these companies for their workforce and their actions in the marketplace. Although it looks like they have dealt with their regulatory risk, they have yet to deal with their inability to profitably operate. When that ride to the airport that used to cost $25 now becomes $50 when VC money isn’t subsidizing their growth, I might just go back to using a black car livery service that charges $60 and doesn’t require me worrying about enabling the Travis Kalanicks of the world.

    • Tonycd Tonycd on Nov 30, 2020

      Tobias, I encourage your skepticism. These companies have no viable business model except to break the law, snooker investors mesmerized by "tech" stocks, and pull political influence plays like this one to exterminate their legit competitors so they can raise prices later in a monopolistic world. The net effect of Uber and Lyft is what Prop 22 has already officially made it in California: ultimately a bad deal for travelers and an even worse deal for drivers.

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