Baltimore is suing Transdev Services Inc., the company that runs the Charm City Circulator, alleging it overbilled the city $20 million for the free bus service.
The city’s complaint, filed Wednesday in Baltimore Circuit Court, alleges the company billed the city for thousands of hours during which the free bus service was not operating since 2010. The city is seeking compensation for the alleged overbilling.
“They overbilled us, and we overpaid,” City Solicitor Andre Davis said. “We want some money back from them.”
Scott Hagen, the communications manager for Transdev North America, responded Wednesday night, saying in a statement: “We are extremely disappointed that the City of Baltimore elected to pursue this meritless litigation.
“This issue began when Transdev won the bid to operate the Charm City Circulator in 2010. The City was required to provide the full fleet of buses but was unable to do so because it selected non-functioning vehicles with unproven technology from a company that ultimately went bankrupt. Because the City was unable to meet the terms of the contract, Transdev agreed to the City’s request for a new contractual and invoicing structure. For months, Transdev has actively engaged city officials to address their concerns and provide them with the relevant facts and documents, which makes this baseless lawsuit a complete and utterly non-productive surprise.”
The dispute began when a consultant for the city noticed Transdev had billed the city more than $2 million for more than 29,000 hours during which the free bus was not operating from July 2015 to July 2017.
The lawsuit claims the company responded to an inquiry from Transportation Director Michelle Pourciau in an April 11 letter, admitting it had invoiced the city “for scheduled hours for the Charm City Circulator and not the Revenue Service Hours when vehicles were actually operated.”
“In its April 11th letter, Transdev claimed that it had reached an unwritten mutual agreement with unnamed city ‘representatives,’ pursuant to which Transdev would simply bill and receive payments for scheduled hours, regardless of actual Revenue Service Hours,” according to the complaint.
The city rejected that reasoning, due in part to policy that prohibits city contracts from being amended orally.
City officials met with Transdev in June to resolve the dispute “but did not resolve the matter,” the complaint said. The city threatened to sue Transdev for the outstanding $2 million if the company did not repay it, it said.
In an Aug. 17 letter, the company said it had invoiced the city for scheduled hours, not actual hours of operation, for nearly eight years, beginning in 2010 — and argued that the city routinely paid the invoices, according to the complaint.
The city claims the overbilling resulted in $16 million in excess payments to the company. It withheld an additional $4 million in payments amid the dispute.
The city is claiming Transdev breached its contract, and wants the case decided by a jury. The company is expected to be served with the lawsuit this week.
Transdev’s contract with the city expires Oct. 11, according to the Department of Transportation. The department is seeking another vendor for a three-year contract to operate the free bus service, which has been in operation since February 2009.
“If the subsequent negotiations are concluded successfully, it is anticipated that the new contract will be awarded by October 10,” city spokesman James Bentley said in a statement.
The agenda for the Board of Estimates, the city's spending panel, said the city had received two bids from companies to run the service and recommended a Bethesda-based company, RMA Worldwide Chauffeured Transportation.
"The Board is further requested to reject the technical proposal of Transdev Services Inc. and return their price proposal," the agenda said, "as they were not determined to be a responsible bidder."
If a replacement contract is not awarded by that time, the department plans to hire local contractors to provide buses in place of the Circulator “until a permanent vendor is ready to begin full operations.”
The free bus has been targeted for cuts in the past, but its routes, schedules and hours of operation are not expected to change.
Buses in operation after Oct. 11 “may differ slightly in size and/or design from the original Charm City Circulator fleet,” Bentley said.
“The Charm City Circulator strives to provide the residents, businesses and visitors of Baltimore with fast, friendly and free services,” Pourciau said in a statement. “DOT is committed to providing seamless, uninterrupted service as we transition to a new vendor.”