US Federal Government Awards Ride-hailing Contracts to Uber and Lyft

The US federal government has awarded Uber and Lyft contracts worth up to $810 million to offer ride services to public agencies and transport more than four million of their employees and contractors.

Uber said the development is a dream come true as partnering with the federal government has always been the plan for its Uber for Business that serves companies and organizations.

“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, global head of Uber for Business, said in a statement.

The new contract allows the ride-hailing companies to formally launch their services within agencies and directly work with government officials to promote their services.

Reuters reported a statement from Veronica Juarez, Lyfts’s vice president of social enterprise and government, saying that General Services Administration (GSA), which manages services for federal agencies, issued its final five-year award on Monday.

Juarez said the award capped a nearly four year negotiation process. She did not say how much revenue Lyft expected from the contract, but said the US government spends around $200 million on ground transportation each year.

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

Neither the GSA nor Uber and Lyft gave details of the contract. But when it was announced back in April, the agency said that it had negotiated discounts with the companies of 2%-4% compared with large commercial customers and that Uber and Lyft had agreed to waive some additional fees.

However, it is a big reprieve for the duo struggling to break through the strains of the pandemic that have narrowed their business to food delivery.

Uber and Lyft have been trying to stay afloat as the pandemic-induced lockdowns confined riders at home amidst multiple lawsuits, and they thus recorded significant losses.

Uber reported gross bookings of $14.7 billion in the Q3, recording a decline of 10% compared to the same quarter last year. The bookings generated $3.1 billion revenue for the company, 18% decline compared to the same period a year ago. The company lost $1.1 billion in its Q3 report.

After the companies won the prop.22 early in November, that ensured that gig business in California could keep their employees as independent contractors, Uber introduced new features to woo more customers.

The feature enables riders to reserve rides up to 30 days in advance and pick their favorite driver for the trip. It is under a new option, called Uber Reserve. Uber said it is designed for riders who want to book rides from two hours in advance.

Part of the Reserve feature is showing the fare upfront and being matched to a driver ahead of the trip. There is also a “favorite driver” option designed to allow riders select drivers they prefer.

Also, they can now add favorite drivers to their app, and once they select the Reserve features, riders will have the choice to select one of their “favorite drivers.” Uber said the favorite drivers will be presented to riders first when they request a ride, and the drivers will not be penalized if they declined the request.

Uber also introduced an additional 15-minute grace period if the rider is running late and an on-time guarantee that will give users $50 in Uber Cash if their driver is even a minute late to the ride they have scheduled.

The GSA approval of the government partnership means guaranteed business for Uber and Lyft, unlike when their business would depend on the commuting choices of customers.