Two lawmakers have weighed in with their concerns about the recently awarded $7.2 billion contract to outsource the management of service members’ household goods moves.
U.S. Transportation Command’s “decision to accept a higher priced bid, from a subsidiary of a foreign-owned company with a questionable track record, is deeply troubling,” wrote Rep. David B. McKinley, R-W.Va., in an Aug. 4 letter to the leaders of the House Armed Services Committee. He urged the committee to conduct an investigation into TRANSCOM’s decision.
Sen. Thom Tillis, R-N.C., member of the Senate Armed Services Committee, sent a similar letter dated Aug. 3, to Ellen Lord, under secretary of defense for acquisition and sustainment. Tillis said he expects U.S. Transportation Command “to conduct a thorough review of all concerns as our service members and the American taxpayer deserve our due diligence.”
The lawmakers stated that the successful bid from American Roll On Roll Off Carrier Group, of Parsippany, N.J., was $2 billion higher over a nine-year-period than other bidders who were evaluated as being highly technically qualified. The $7.2 billion award covers a nine-month transition period and base period of three years. But the contract could be worth $20 billion over nine years if all the options are exercised.
The contract is currently being protested for the second time by two unsuccessful bidders. The protests were filed July 13 with the Government Accountability Office by Connected Global Solutions, LLC and HomeSafe Alliance LLC, in the latest attempts to reverse TRANSCOM’s decision to award the contract to ARC.
The contract, aimed at fixing military families’ long-standing problems with damaged household goods and other frustrations with movers puts management of the moving process in the hands of a consortium of private companies. A commercial move manager will oversee everything related to the movement and temporary storage of household goods, essentially privatizing a function currently conducted by TRANSCOM. The physical aspects of the moves — packing, loading, trucking, unloading and unpacking, and storage if needed — have long been handled by private companies.
The contract doesn’t affect household goods moved this year; it isn’t supposed to take effect until February, 2021, although there will likely be delays in that start as GAO makes decisions on the protests.
The lawmakers’ letters echo the concerns of at least one of the unsuccessful bidders, HomeSafe Alliance LLC.
The bidders also filed protests in late May. TRANSCOM pulled back the contract, investigated, then re-awarded the contract to ARC on June 29.
“Two separate bidders submitted protests to the GAO outlining nine issues with TRANSCOM’s decision, including the fact that ARC failed to disclose its ownership by a foreign company with an international criminal history,” McKinley wrote. After two weeks of review of that allegation, TRANSCOM announced they had determined the allegation was not substantiated, and re-awarded the contract to ARC. “Just two weeks of review is not a serious reconsideration,” McKinley wrote.
In his reference to the case, Tillis wrote, “Instead of fully vetting each allegation, TRANSCOM deemed this a clerical error. Failure to accurately disclose ownership and a criminal history makes a bidder ineligible for the award.”
The allegations revolved around a Department of Justice case of bid rigging and price fixing. “Considering the significance of this contract to our national security, an independent investigation is imperative,” McKinley wrote.
According to TRANSCOM officials, Justice Department officials confirmed that the adverse information was not affiliated with ARC or its parent company.
ARC is the lead in the contract. The Team ARC consortium includes UniGroup, a $1.7 billion transportation company and the parent of United Van Lines, and Mayflower Transit; Suddath, a company that moves about 30,000 military members a year; Atlas World Group, the parent company of Atlas Van Lines, Inc. and Atlas World Group International; The Pasha Group, which has moved military members since 1947; and Deloitte.
Tillis also pointed to questions raised by the protests related to ARC’s ability to meet the needs of military families. With COVID-19 stop-movement orders, the 2020 military moving cycle has been severely disrupted, he stated, with many moves being pushed into 2021. “Yet ARC has zero past experience or revenue streams in the military moving space, and its subcontractors only make up 35 percent of the military moving market.”
GAO is required to make a decision on a protest within 100 calendar days — by Oct. 21 in these protests — although GAO officials push to make decisions sooner. But if GAO denies the protests, the option of the U.S. Court of Federal Claims is also available.