The Coast Guard meets "fixit culture"

Earlier today on NPR's morning edition, there was a story about a Netherlands-based e-bike manufacturer called VanMoof that went bankrupt.

Apparently, these e-bikes are a "hipster accessory both in Europe and in the United States" that have become "famous for their sleek design and ease of use through a smartphone app."[1] Now that VanMoof is bankrupt, though, people are concerned about how they're going to fix them:

Hartogs says VanMoof's creators fancied their company to be like Apple — creating unique products that would spawn its own ecosystem — but Hartogs says the company ran out of money because, unlike Apple's products, VanMoof's specialized bikes often broke down, and their maintenance shops and generous warranty policies couldn't keep up.***

With VanMoof no longer paying him to fix bikes under warranty, Tamor Hartogs is now left negotiating complicated repairs with individual customers.

Without access to VanMoof parts, he's only been able to restore e-shifters to two-speed gearshifts instead of their normal four-speed versions. He's also been reduced to taking out the company's patented cylindrical batteries from VanMoof bike frames by carefully breaking them apart and installing new internal components.

"I can cry in the corner, but I just thought, 'Let's work hard and let's make some new money,'" he says.

Oops! Having e-bikes break so often that repairing them makes you go bankrupt sounds like a problem. That said, working hard and making some new money definitely sounds better than crying in the corner. Maybe VanMoof should have tried that?

Anyway, the problem of repairing devices created by original equipment manufacturers (OEMs) is not unique to e-bikes. Many OEMs, like VanMoof and Apple, have engineering and brand interest in ensuring that their products are properly maintained and repaired. And often, they enter into contracts with other companies to be a "licensed" or "certified" or "authorized" repair shop to make those repairs.

There's a robust policy debate about whether this is a good state of affairs or not. To quote another recent NPR story, this time on Weekend Edition:

So-called "Right to Repair" legislation is focused on getting manufacturers to provide consumers and independent repair companies access to their parts, tools and service information.

"They are not in the business of fixing stuff," Gordon-Byrne said. "They would rather your stuff falls apart and dies and you have to go back to the store."

Gordon-Byrne said mounting pressure from groups like hers, as well as the growing interest in fixit culture, have started to force reluctant manufacturers to make repairs more accessible.

Which brings us to government contracting. Sometimes the government is a consumer of a product from an OEM that is in need of repair. And sometimes those OEMs rely on licensed repair shops to do those repairs.

Recently, the Court of Federal Claims ruled on a case that involved the United States Coast Guard (USGC) and a contract for the repair of a specific helicopter's propellor components, which are manufactured by a subsidiary of Collins Aerospace. That helicopter is used for "search and rescue and intelligence duties" and the helicopter flies frequently, it flies low, and it flies in salty conditions. Which all means that the propellors are frequently in need of repair.

For years, a small business called Piedmont provided repairs to those propellor components. Unfortunately for Piedmont, when the USGC put the contract up for recompete, USCG added a new qualification to do the work: "[s]ources must be the OEM or provide documentation they are an OEM licensee and be able to supply depot level overhaul services for the components listed in the attached Scheduled of Supplies/Service." I say unfortunately for Piedmont because Piedmont is not an OEM licensee.

Effectively, the USCG decided that it didn't want an independent repair operation; instead, it wanted a Collins-licensed repair operation.

But there's a problem: there is apparently only one Collins-licensed repair operation in the world! Which, as it turns out, is going to implicate the policy goal of the Competition in Contracting Act to avoid undue restrictions on competition. Unfortunately for the USCG, Piedmont protested. I say unfortunately for the USCG because Piedmont won.  

Without getting too far into the gory specifics of the case, the reason the USCG lost here is that their justification for requiring a Collins-licensed repair operator was not good enough. In theory, it could have been enough for the USCG if the justification were that only Collins-licensed repair shops could make repairs.

As it turned out, though, the record indicated that even a Collins-licensed repair operator couldn't actually do all of the repairs that the USCG needed. Instead, the record showed that only Collins could make certain repairs; being a licensee wasn't enough.[2] But Collins couldn't do supply depot level overhaul services, so even Collins couldn't perform the work.

Based on the emails between the government and Collins, the case boiled down to "whether the USCG understood what it was requiring when it limited competition to either the OEM or a licensee of the OEM." And the court concluded that the answer was no. No, the USCG did not understand what it was requiring when it limited competition to the OEM or its licensee.[3]

The court wrote:

At least based on the documentation in the administrative record, the more questions the USCG asked in advance of the Second Solicitation, the more it should have realized that simply having an OEM license may not actually provide all of the benefits that the USCG invoked to justify the restrictive OEM license requirement.


Which now sort of leaves the USCG at a fork in the road. On one hand, it can try and further narrow its requirements and sole source the proprietary repairs to Collins. Or, I guess, the USCG could embrace a bit more of that fixit culture vibe and allow unlicensed repair operators to compete.

Either way, a lesson here is that, if you're going to restrict competition by including a requirement that only one company can perform, it's probably a good idea to make sure the company can actually perform it.

Or, worst case, the government should stop crying in the corner and instead, go find a company that can get to work and make some new money!

[1] As a non-hipster myself, I had never heard of a VanMoof. But on an extremely unscientific poll of a few people who likely know a few hipsters, VanMoofs are indeed a Thing!

[2] Pity that exclusive licensee! Here they thought they had an exclusive worldwide license to repair Collins' propellor components. Only to later discover that, push come to shove, Collins would effectively throw them under the bus and reclaim the sole ability to make proprietary claims. Them's the breaks!

[3] To Collins's credit, I guess, they tried to do the government a solid when they suggested to the USCG that they "have no problem wordsmithing [a letter] to fit your needs." Unfortunately, though, that sort of email can — and does — show up in discovery.

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