The Defense Department’s attempt to consolidate the shipping of service members’ goods during changes of station to one privatized manager is off to the races. And U.S. Transportation Command leader Gen. Stephen Lyons said the military is getting responses from legitimate companies that feel they are up to the task.
TRANSCOM asked for business proposals from companies for the potentially $2 billion contract about two weeks ago. It would pare down the 950 vendors DoD uses to ship service members’ household goods down to just one entity overseeing multiple subcontractors by 2021.
“There were some that thought that no company could take a contract like this and really make it work,” Lyons told reporters in Washington on Wednesday. “There have been a number of industry reps that have come to the table, and I’m not talking about tier one defense contractors. I’m talking about pretty creditable folks who have formed alliances that have come in and said, ‘We think we can do this.’”
DoD’s influence makes up 20% of the household goods moving market. Critics have concerns about placing so much faith in one company, especially after the recent reports of privatized military housing being substandard and not serviced.
Before TRANSCOM can award the contract it needs to finish a Government Accountability Office audit and provide Congress with a business case analysis.
Lyons said the effort will be cost neutral at best, but possibly less expensive than the current system. TRANSCOM’s goal with the contract is to have the management company spread 23% of the work to small businesses, another 20% to other groups like women-owned small businesses, and the rest to regular contractors.
“Moving season after moving season it’s the same predictable pattern, you go through a peak in the summer and the quality of service goes down,” Lyons said. “The current systems do not hold the industry accountable in a meaningful kind of way. It’s completely decentralized.”
Currently, service providers compete for work regionally or nationally, and they are managed separately by each service in regional offices. Businesses are given codes to work in the Defense Personal Property System.
“At the end of the day there is no particular mechanism to hold that code accountable,” Lyons said. “If I’m a regional property office and I say, ‘Your performance is substandard and I’m not awarding any more work to you in the northeast region.’ If you go to the southeast region they’ll never know the difference. If I’m a consumer, I find that problematic.”
DoD does not provide service members with any ratings or reviews on vendors.
With the new contract TRANSCOM wants clear metrics and grading to measure performance. The contract mandates increasing performance thresholds as the contract ages.
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“CEOs would be accountable for their level of performance,” Lyons said. “That does not exist today. Unfortunately, intermediate management — people who aren’t actually asset owners — started to sweep up 15% to 17% of the codes. The middle management piece is getting very, very wealthy. The folks at the curbside that are sweating are really sweating, and they are having a hard time making due.”
Service members are getting tired of moving issues after not receiving their goods or having their items delivered damaged.
In 2018, one military spouse created a petition online as a call for action to improve moving issues. It currently has more than 107,000 signatures.
Lyons said DoD hears them, but it does not have the market expertise to give service members what they need, which is why it’s outsourcing to industry to manage the moves.
“This is not an area of core competency for the Department of Defense,” Lyons said. “It’s an area where you stick to your knitting. It is an area of core competency for business. Business is driven by incentives, and when you put business in the driver’s seat to drive to the expectation that you want them to typically they are going to deliver. If they don’t there is a punishment and if they do there is a reward.”
However, the ghosts of privatization haunt DoD. The most recent poltergeist is the military’s privatization of on-base military housing. Since the move in the 1990s, lead paint contaminated children’s bloodstreams; mold, mice and insects infested houses; and work orders were unfinished.
The moving industry itself also has qualms with the plan. Current vendors say the satisfaction rate of service members continues to rise and they doubt a third-party manager will offer much more benefits.
Lyons said this year’s moving season had better results, but there were still underlying issues hurting the process.