Pentagon loses two bid protests that challenged $7 billion moving contract

This story was updated on Oct. 22 at 12:57 p.m. EDT to incorporate new comments from U.S. Transportation Command.

The Pentagon will likely need to redo its award of a $7.2 billion contract intended to transform the military’s household goods moving system after two losing bidders won their cases before an independent arbiter on Wednesday.

The Government Accountability Office agreed with numerous challenges two losing bidders brought after U.S. Transportation Command (TRANSCOM) awarded the contract to American Roll-On-Roll-Off Carrier Group (ARC), pulled the contract back for corrective action, changed its mind on the need for corrective action and then re-awarded the contract to the same firm.

GAO hasn’t yet released the full text of its decisions in the bid protests, saying they need to be scrubbed of procurement-sensitive information before they’re made public. But a statement the office issued Wednesday indicated the protest arbiter agreed with nearly all of the legal issues the protesters raised — a highly unusual circumstance in a government bid protest.

Both protestors — HomeSafe Alliance, LLC and Connected Global Solutions, LLC (CGSL) — had argued that ARC should have been ineligible for the award because of prior misconduct by its parent company. GAO appeared to agree with that position, or at least concluded that TRANSCOM didn’t do enough to verify that ARC was a responsible bidder, according to its statement.

“In our decision addressing CGSL’s protest, we sustained the challenge to the agency’s responsibility findings, the conduct of discussions, and the evaluation of oral presentations,” said Ralph White, GAO’s managing associate general counsel for procurement law. “We also sustained portions of CGSL’s challenges to the evaluation of the proposals. Since the agency’s best-value tradeoff analysis was based on flawed evaluation conclusions, we also sustained the challenge to the best-value decision.”

White said GAO also agreed with most of the allegations in HomeSafe’s challenge.

Like CGSL, that firm had contested TRANSCOM’s finding that ARC was a responsible contractor and challenged Command’s methodology for deciding ARC would deliver the best value to the government. GAO also found mistakes in TRANSCOM’s evaluation of HomeSafe’s technical proposals, but rejected a contention about similar mistakes in evaluating HomeSafe’s pricing.

GAO recommended several steps to fix the procurement, White said. Among other things, TRANSCOM needs to reopen discussions with all three bidders, let them submit revised proposals and start the evaluation process over again. The office said the government should reimburse both protestors for their legal costs.

“We also recommended that the agency make a new decision about which of the proposals offers the best value to the government,” he said. “We noted that if the agency again decides that the proposal submitted by ARC offers the best value, it should perform a new responsibility review, consistent with the findings in our decision.”

Although GAO’s bid protest recommendations are technically non-binding, it’s extremely rare for agencies not to follow them. In a statement Thursday, TRANSCOM said it was still evaluating its next steps.

“While we understand that implementing the GHC will be delayed, USTRANSCOM is encouraged by the [household goods] industry’s willingness to participate in the GHC concept and their interest in being DoD’s partner to improve the relocation process,” the command said in a statement. “We are reviewing the GAO comments to determine the way ahead, which will lead to the implementation of the GHC. We will continue to work to improve service members’, DoD employees’, and their families’ access to an enhanced overall move experience through better management, more responsive customer service, and higher capacity to meet peak demand, as well as enable the department to affix the accountability and responsibility lacking in today’s program.”

In its own statement, ARC said the GAO decisions were disappointing.

“Team ARC remains committed to consistently delivering a superior relocation experience for Service Members and their families,” ARC CEO Eric Ebeling said in a statement. “We will evaluate our options in light of the GAO’s decisions and determine the appropriate next steps.”

Wednesday’s decisions were the latest upset in a contracting process that the Defense Department believes will ultimately bring major improvements to its troubled household goods moving system, but has taken several strange turns along the way.

TRANSCOM first announced the award to ARC in April. As the new managed service provider for all military moves, the company’s main task was to consolidate the current ad-hoc system, in which 42 separate regional DoD offices hire local firms on a move-by-move basis, into one that manages longer-term arrangements with moving companies and oversees the entire process worldwide.

But the same two firms who eventually won this week’s decision protested in short order. The specific allegations from those first protests remain unclear, because DoD responded to them by promising to take corrective action. In light of that promise, GAO dismissed the first round of protests as moot.

But by June, DoD had decided no corrective action was needed after all. In that same announcement, the department disclosed that the concerns that caused it to pull the contract back had to do with allegations that ARC was owned by a foreign company with a criminal history that it had failed to disclose.

TRANSCOM explained at the time that that the dustup about ARC’s ownership was due to a clerical error in which the company inadvertently associated itself with the wrong parent company in the federal government’s System for Award Management: Wallenius Wilhelmsen Logistics AS, rather than Wallenius Wilhemsen ASA.

But as Federal News Network reported in detail in July, the two companies have much more in common than a similar name.

For instance, an executive who plead guilty to a bid rigging conspiracy and agreed to pay a nearly $100 million fine on behalf of one of those companies is now the chairman of the board of the almost identically-named other firm. Also, the parent company TRANSCOM apparently concluded had nothing to do with the fraud scheme disclosed in public documents that it had set aside $200 million to deal with that case and others, including a similar allegation of anti-competitive behavior in the European Union.

 

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