The City of Colorado Springs is facing a lawsuit from its fleet maintenance provider, after costs rose higher than anticipated. The city first outsourced its fleet maintenance in 2014, expecting to save $2 million over a three-year period. A five-year contract was awarded to U.K.-based Serco, with the option to renegotiate payment for years four and five based on inflation.
A financial audit conducted a year into the agreement found that costs were higher than anticipated due to a new utility service center, and the city paid $112,199 more than expected.
Now, Serco has said it lost money in the first three years of the contract, and would require a 22% price increase for 2017 to meet its operating needs, reports the Colorado Springs Independent. This would add $1.4 million to the city and utility's fleet maintenance budget, bringing the price up to $8.2 million.
This is significantly more than the 2.6% increase allowed in the outsourcing contract, and Serco has filed a lawsuit against the city to declare the agreement unenforceable for the last two years of the deal. The company cited the city's aging fleet for its rising maintenance costs.