Oklahoma officials waived competitive bidding to give EV startup Canoo a potentially lucrative statewide contract
On the promise of new jobs, Oklahoma officials waived competitive bidding requirements to award electric vehicle startup Canoo a statewide contract to buy up to 1,000 electric vehicles over five years.
The Frontier obtained a copy of the contract through an Open Records Act request.
Carly Atchison, a spokeswoman for Gov. Kevin Stitt, said the contract for vehicles could be considered a kind of job-creation incentive, part of the governor’s strategy to make Oklahoma more attractive to businesses. Oklahoma is competing against neighboring states like Arkansas and Texas for jobs, she said.
“We’re doing it with the intent and the vision of we want high-paying quality jobs to come to this state,” Atchison said. “And we are making sure that we’re doing it in a way that’s fiscally responsible.”
Oklahoma would pay Canoo $35 million to $50 million if the full value of the contract is realized over the life of the five-year deal, but it’s unclear how many vehicles the state will ultimately buy. The state has agreed to pay Canoo $35,000 to $50,000 each for up to 1,000 of the company’s boxy electric vehicles with rectangular steering wheels, according to the contract. Canoo’s vehicles are still in development, but those prices are in line with the estimated retail prices the company has previously announced for an electric van.
Caden Cleveland, a spokesman for the Oklahoma Office of Management and Enterprise, which oversees purchasing for the state, said he was unaware of any pricing agreements with Canoo.
“… But I would expect there would likely be a quantity price break to the state,” he said in an email.
Canoo did not respond on Monday to emailed questions about its contract with the state or pricing.
Oklahoma Chief Operating Officer Steven Harpe used his authority as executive director of the Office of Management and Enterprise Services to award Canoo the contract, waiving state requirements to seek competitive bids for most large purchases. A vaguely worded Oklahoma statute gives the executive director of the agency broad latitude to waive bidding requirements when it “furthers the best interest of the state.” Harpe waived the competitive bidding in the interest of diversifying Oklahoma’s economy, according to the contract.
“The Contract provides for the creation of new jobs, is attracting investments to the State of Oklahoma and is diversifying the state economy,” the agreement states.
Canoo landed the deal as part of Oklahoma’s efforts to become part of a new regional hub for electric vehicle manufacturing, but the first vehicles the state purchases from the company could be made in Arkansas.
Canoo announced in December that it plans to begin producing vehicles at a plant in Northwest Arkansas this year before opening a factory in Oklahoma in 2023.
The contract states that Canoo will provide electric vehicles for state agencies once the company establishes a factory and research and development offices in Oklahoma. But the made-in-Oklahoma requirement “may” be waived for the first 250 vehicles the state could purchase if the company is making “suitable progress” on the construction of the factory.
Atchison acknowledged that some of the vehicles Oklahoma has agreed to buy may end up being manufactured in Arkansas, but said performance measures in the contract will protect the state’s investment in the company.
“There isn’t any commerce deal for any state that doesn’t come along with potential risks, but that’s why these contracts have such detailed metrics and measures,” she said.
Canoo is still a startup that has yet to generate a profit. The company is burning through cash, has seen an exodus of top talent, and isn’t on track to reach production goals this year, Business Insider reported in January.
The company is already clearing ground for its Oklahoma factory at MidAmerica Industrial Park in Pryor. But a final development agreement between the industrial park and Canoo is still being drafted, MidAmerica Administrator David Stewart told The Frontier on Friday.
Stewart said he is confident the company will move forward with building the Oklahoma factory, despite plans to first begin production in Arkansas.
As first reported by The Frontier, the state has agreed to give Canoo $15 million in cash incentives over the next four years, including $10 million to help it build the Pryor factory if the company meets hiring targets and other goals.
Canoo will be able to collect $3 million of that money after it spends at least $48 million and completes 10% of construction on the Pryor plant. The company says Oklahoma has pledged a total package of incentives valued at $300 million to bring new jobs to the state, but many details have been subject to a confidentiality agreement.
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