Parent Company of Contractor Picked to Manage PCS Moves Has Troubled Past

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Movers uncrate household goods during delivery. (
Movers uncrate household goods during delivery. (US Navy/Russell Stewart)

Editor's note: This story has been updated to correct and clarify the relationship between ARC, its parent company and sibling corporations charged with price fixing and cartel behavior.

The parent company of the firm awarded a $7.2 billion contract for managing service members' household goods shipments -- a decision now being reconsidered by the Defense Department -- has a murky past that includes several of its subsidiaries pleading guilty to price-fixing in the U.S. and being charged with "criminal cartel conduct" last August in Australia.

American Roll-On Roll Off Carrier Group (ARC), the firm awarded the Pentagon's Global Household Goods contract on April 30, is the American subsidiary of Wallenius Wilhelmsen Logistics ASA, also known as Wallenius Wilhelmsen Group, a Norwegian shipping company that also owns the former Wallenius Wilhelmsen Logistics, a company that paid at least $98.9 million in fines in 2016 for conspiring to fix prices and rig international cargo bids in Baltimore and elsewhere in the U.S., as well as Eukor, a South Korean car carrier company charged in 2015 with price-fixing.

ARC, based in Parsippany, New Jersey, has been a contractor with the Department of Defense and Department of Transportation for 30 years, providing American-owned ships for carrying cargo, including military gear and service members' household goods.

Prior to 2017, ARC's investors included Wallenius Lines of Sweden and Wilh. Wilhelmsen ASA of Norway, another holding company with several subsidiaries that were under antitrust investigation.

ARC and its partner companies were awarded the DoD Global Household Goods Contract contract April 30, an agreement worth up to $20 billion over the next decade to manage the moves of more than 400,000 military personnel and families each year.

The company, which owns a fleet of cargo vessels, teamed with Deloitte and several van lines and moving companies, including the parent companies of United Van Lines, Mayflower Transit and Atlas Van Lines; Suddath; and the Pasha Group, to win the contract

On June 9, however, U.S. Transportation Command asked the Government Accountability Office for permission to take "corrective action" on the contract. The GAO oversees government contract protests and disputes.

TRANSCOM officials would not say why they decided to withdraw the contract award pending review, and declined to comment on ARC's ownership or say whether it factored into the decision.

TRANSCOM spokesman Dave Dunn said that if the GAO grants the review request, the command will go over the "entire evaluation record to include reviewing the reported allegations along with gathering additional facts."

"An interested party presented TRANSCOM with information that they believe should have been considered in the Global Household Goods Contract award decision. USTRANSCOM intends to take corrective action to consider this new information, gather facts and conduct a review of the award," Dunn said in a statement.

The Defense Department first considered outsourcing its household goods management system in 2018, following a disastrous year in which 10% of all service members who moved reported breakage, loss of items, damage and delivery delays of their household goods.

A DoD Inspector General report earlier this year found that 41% of shipments were not delivered on time.

Nearly 105,000 military families signed a petition on Change.org calling for system improvements.

The contract is designed to address these long-standing problems with scheduling, overseeing and monitoring household goods shipments.

After the award to ARC was announced, however, two of the three other companies vying for the contract filed bid protests: HomeSafe Alliance LLC and Connected Global Solutions LLC.

Neither company would comment on their protests or TRANSCOM's decision to review the award.

Under the original contract, ARC was to begin a nine-month IT and system turnover and prepare to manage worldwide household goods shipments by 2022.

The bid protests automatically delayed the handoff by 100 days, but with the ongoing review, the transition will remain on hold until a decision is made. Dunn said he expects the review to be "completed in the next several weeks."

The company, which transports millions of tons of cargo each year, has had a few notable incidents while shipping U.S. military gear and service members' household goods and cars.

In 2000, 166 vehicles, some belonging to the U.S. government, others privately owned by service members, were damaged aboard the motor vessel Faust when a tow truck broke loose of its tethers in heavy seas and rolled into nearby cars and a diesel fuel tank. A third party was later found liable for the damages, having been responsible for securing the lines.

In 2001, 21 vehicles were destroyed and another 150 were damaged in a fire on another of the company's ships. And in June 2015, a fire broke out on ARC's motor vessel Courage, carrying 461 service members' cars and 204 household goods shipments. An undisclosed number of automobiles sustained damage.

Industry officials and representatives for small moving companies said they found TRANSCOM's decision to select ARC puzzling, since its parent company is a foreign corporation and it partnered mainly with large van lines. Under the contract, a significant portion of the moves are to be handled by small businesses.

"It is no surprise that corrective measures are being taken," said a source familiar with the contracting process. "The protests associated with this contract all make note of ARC's foreign ownership, that ownership's criminal history and the company's inability to deliver on the needs of the military community or support small business subcontractors."

ARC responded to Military.com following the initial publication of this article to clarify its ownership. A previous version of the story stated that Wallenius Wilhelmsen Logistics -- the company charged across the globe with conspiring to rig bids and fix prices and, in August 2019, with criminal conduct for allegedly conspiring with two other shipping companies to control the pricing of vehicle shipments to Australia between 2011 and 2012 -- was its parent company.

Wallenius Wilhelmsen Logistics ASA is the parent company; Wallenius Wilhelmsen Logistics AS is a subsidiary, a Norwegian sibling of ARC. It was renamed in WWL ASA's corporate restructuring in 2017.

ARC spokesman Charles Diorio told Military.com that it was "unfortunate that well-documented facts relating to a 2016 agreement between WWL and the U.S. Department of Justice to settle allegations of anti-competitive behavior are being misinterpreted by parties with a vested interest to promulgate a false and misleading narrative about ARC."

"As an entirely separate U.S. company with separate U. S. citizen management, ARC was not a party to the 2016 U.S. Department of Justice case involving Wallenius Wilhelmsen Logistics AS (WWL), a Norwegian company, and has never been accused of any anti-competitive or criminal activities. ARC was never owned or otherwise controlled by WWL," Diorio said.

-- Patricia Kime can be reached at Patricia.Kime@Monster.com. Follow her on Twitter @patriciakime.

Related: Military Families Making Summer PCS Moves Will Have to Follow

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