DoD plans April contract award to fix ‘fundamentally flawed’ moving system

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Officials at U.S. Transportation Command say they’re getting close to awarding a multibillion dollar contract to overhaul the system for moving service members’ household goods across the country and around the world.

Gen. Steve Lyons, TRANSCOM’s commander, said this week that DoD now plans to award its new Global Household Goods Contract (GHC) by the end of April, once it’s resolved concerns Congress has raised in the last two National Defense Authorization bills.

If all goes according to plan, the new arrangement should be up and running in time for the harried summer moving season next year, Lyons said. The idea is to choose a single, large vendor to manage the entire process for the 400,000 military moves DoD funds each year, from subcontracting with hundreds of local moving and storage companies to tracking shipments and arranging for customs clearances.

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Right now, those duties fall to 42 separate government-managed shipping offices, each of which hires moving companies on a one-off basis each time a service member receives permanent change of station (PCS) orders. TRANSCOM said that decentralized system is “fundamentally flawed,” mainly because it doesn’t allow for long-term contracting relationships with movers, and gives the government few ways to hold them accountable for poor performance.

“We need to gain accountability of industry and we need to improve responsibility in the department, because it’s bifurcated today,” Lyons told an audience at the Atlantic Council. “At the end of the day, we want to create the right incentive structures so that during peak season, when most of the moves take place and capacity is depleted, we can increase the capacity to support peak-season moves. That’s our objective.”

But the moving industry has expressed numerous concerns about the changes, prompting Congress to insert itself into the procurement process. This year’s National Defense Authorization Act requires TRANSCOM to wait until the Government Accountability Office conducts an assessment of the program; that report is due in two weeks. And a previous bill told TRANSCOM to conduct a business case analysis of the proposed overhaul before it moves ahead.

Lyons said a draft business case was sent to Capitol Hill last week, and the command is now working on an updated version based on the actual proposals it received in response to its contract solicitation last year.

“It was pretty consistent with what our analysis and findings were,” he said. “The numbers were pending, but we now have several very legitimate proposals that came in against the RFP. And they are within the band of the cost of the program today, so we’re in good shape there.”

Whether or not the new contracting approach is the right solution, an DoD Inspector General report issued earlier this month highlighted some of the shortcomings in the way moves are handled as of now.

Based on a sample, auditors estimated 41% of military members who moved during fiscal 2018 received their household goods shipments late; another 21% had their property damaged during a move. The IG said DoD could improve the situation by issuing “letters of warning” to companies who aren’t delivering on time. In the audit, it found that only happened for 20% of the delayed deliveries.

TRANSCOM and Lyons don’t dispute the underlying findings.

“When I took command, this was probably the one area where I got more love letters from Congress than any other — I’ve got a whole desk drawer full of them,” he said. “The basic level of transparency, accountability, support for our military families, was not where it needed to be. And I think the complaints you’re seeing, frankly, are quite legitimate.”

But the command doesn’t believe trying to impose more accountability measures under the current system will work.

The U.S. military is, by far, the moving industry’s biggest customer: It’s responsible for 15% of all domestic and international moves. But even with that market power, TRANSCOM believes the current structure is simply incapable forcing the changes in quality and capacity DoD needs. Instead, officials say the problems point to the need for more comprehensive reforms they believe they’ll achieve under the GHC contract.

“The way it enhances capacity is it’s a longer term investment with our industry partners, so they’re willing to invest in capacity over time,” Lyons told the Seante Armed Services Committee last year. “And there’s no question it will improve accountability. Today, there are 950 various transportation service providers that compete for work on a transactional basis. It’s, very, very difficult across the services and TRANSCOM to maintain accountability. But the business folks know the business, and that’s the right relationship to have with a single move manager.”

But industry groups that represent moving companies have been highly skeptical.

One of the biggest challenges in the military moving market is that even though it’s very large, it’s also very seasonal: 40% of PCS moves happen during June, July and August.

Movers say that demand spike exacerbates an already-existing shortage of qualified drivers and crews, and outsourcing the management of the system can’t change that fact that on its own.

They also worry the new managed service provider will pick-and-choose which movers it contracts with in a way that forces some long-established local businesses out of the DoD market – or out of business entirely.

“In rural markets where many Army and Air Force installations are domiciled, agents rely 100% on DoD business; there is nothing else,” the International Association of Movers said in a statement last May. “The single source contractor may choose to work with a select few agents with whom they have a pre-existing relationship. Of course, all capacity is needed in the peak season, but the lopsided nature of the DoD volume will be felt even more strongly by a local agent who is not ‘in’ with the contract winner.”

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