Lawmakers Want Probe into $7.2 Billion Military Household Goods Shipping Contract

Movers unload household goods after a delivery.
Movers unload household goods after a delivery. (US Navy/Russell Stewart)

Two congressional Republicans are calling for investigations into U.S. Transportation Command's selection of American Roll-On Roll-Off Carrier Group, or ARC, to run the Defense Department's household goods moving contract.

Sen. Thom Tillis, R-N.C., wrote Under Secretary of Defense for Acquisition and Sustainment Ellen Lord, while Rep. David McKinley, R-W.Va., sent a letter to the House Armed Services Committee, asking for thorough examinations of the $7.2 billion contract award.

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The two questioned the command's decision to re-award the contract to ARC just two weeks after deciding to rescind it while military officials looked into allegations made by rival companies over the company's bid proposal and its ownership.

The companies with losing bids, Home Safe Alliance LLC and Connected Global Solutions LLC, filed protests against the decision, saying ARC's bid was $2 billion higher than other proposals and the company failed to disclose that it is owned by a Norwegian company with a history of criminal conduct.

"Considering the significance of this contract to our national security, an independent investigation is imperative," McKinley wrote Reps. Adam Smith, D-Wash., and Mac Thornberry, R-Texas, the Armed Services Committee chairman and ranking member, respectively.

"As corrective actions normally take four months or longer, I remain concerned that TRANSCOM's two-week corrective action was incomplete and superficial at best," Tillis wrote.

ARC, based in Parsippany, New Jersey, is owned by Wallenius Wilhelmsen ASA, or WWASA, a publicly traded Norwegian-Swedish shipping company formed in 2017 that also owns Wallenius Wilhelmsen Logistics, or WWLAS, a shipping company that paid nearly $100 million in fines in 2016 for conspiring to fix prices and rig international cargo bids in the port of Baltimore and elsewhere in the U.S.

But at the time WWLAS pleaded guilty to charges, the parent company was known as Wallenius Wilhelmsen Logistics ASA, or WWLASA, and Hakan Larson, who now serves as chairman of the board of WWASA, represented WWLAS in the 2016 court proceedings in the U.S.

In June 2017, three WWLAS executives were also indicted for conspiring to rig bids and fix prices of international shipments of cargo to and from the U.S.

ARC officials have maintained that it is a wholly owned American subsidiary of WWASA with no ties to its sibling, WWLAS. ARC spokesman Charles Diorio told in June that the company "has never been accused of any anti-competitive or criminal activities."

In its review of the allegations against the company, TRANSCOM concluded that ARC had selected the wrong company -- sibling WWLAS -- as its parent company from a drop-down menu in its application.

TRANSCOM officials called it a "clerical error" and decided to re-award the contract to ARC.

"Over the course of the following week, the contracting officer and legal counsel reviewed the response and other relevant information. After a thorough review of all relevant information, the contracting officer made an independent determination that the allegations were unsubstantiated," said U.S. Transportation Command officials in a statement.

In his letter to Lord, Tillis also expressed concerns that ARC and its partners, including UniGroup -- the parent company of United Van Lines and Mayflower Transit; Atlas World Group and its international arm; the moving companies Suddath and The Pasha Group; and Deloitte, will not be able to accommodate all military household goods shipments because the partners make up just 35% of the military moving market, according to the senator.

Moreover, he added, Suddath has been "plagued with complaints and is oft referred to within the military as 'Sudden Death,'" Tillis wrote.

"The protests outlined several serious questions related to ARC's ability to meet the needs of our military families," he added.

The consortia that filed the protests in the contract award, worth up to $20 billion over the next decade, are HomeSafe Alliance -- a relocation team that has not publicly disclosed its partners and is spearheaded by Houston-based KBR -- and Connected Global Solutions of Jacksonville, Florida, a partnership between Crowley, Total Military Management and several van lines and logistics companies, including Interstate, National, Smarter Movers, Conser Moving and Storage and Agility.

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 calling for systemic improvements.

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

The decision to re-award the contract triggered a 30-day deadline for TRANSCOM to explain its decision to the Government Accountability Office.

"We expect TRANSCOM to conduct a thorough review of all concerns as our service members and the American taxpayer deserve our due diligence," Tillis wrote.

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

Related: DoD's $7 Billion Military Household Goods Moving Contract Hit With Another Protest

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