Outsourced Military Moves Are on Hold Again Thanks to a $20 Billion Contract Cancellation

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Movers pack a military members property into boxes.
Movers pack a military members property into boxes and load it into crates to be transferred to a temporary storage facility, July 1, 2019. (U.S. Air Force/Stephenie Wade)

Under a decision issued Wednesday by the Government Accountability Office, the company selected to manage military moves and shipments of household goods belonging to U.S. service members has lost the contract but still may be able to bid for the job, worth up to $19.9 billion over a decade.

In its review of protests filed over a U.S. Transportation Command decision to award the Defense Department's global household goods contract to American Roll On Roll Off Carrier Group, or ARC, of Parsippany, New Jersey, the GAO ruled that portions of the protests were valid, negating the contract award and sending the process back to TRANSCOM.

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The decision adds another chapter to the short, tumultuous history of the Defense Department's effort to outsource military moves.

Following a difficult year in 2018 that resulted in 10% of military families reporting loss, breakage or other issues with their moves, TRANSCOM instituted a number of initiatives to improve the military moving process. But ultimately the DoD decided to contract out the process.

TRANSCOM awarded the historic contract to ARC on April 30. But competing bidders filed protests over the award, and the contract was pulled back for review June 9 over allegations that the company had not been transparent about its ownership or the executives who run its parent company, Wallenius Wilhelmsen Group.

ARC is the U.S. subsidiary of Norwegian company Wallenius Wilhelmsen, which also owns two other shipping firms -- one in Norway and one in South Korea -- that have been fined for price-fixing and rigging international cargo bids.

The parent company and sibling company have similar names and shared the same one until 2017, when parent Wallenius Wilhelmsen Group became publicly traded.

TRANSCOM officials said June 29 that the allegations over ownership were not substantiated, explaining that ARC selected the wrong name from a drop-down menu in its application, and reissued the contract to it.

But in announcing the decision, TRANSCOM did not declare it as final, allowing the losing bidders to protest. Two weeks later, Connected Global Solutions and HomeSafe Alliance filed protests, prompting the GAO review.

In its announcement Wednesday, the GAO said it sustained several allegations by the protesters, including charges that they were treated unfairly during negotiations and that TRANSCOM used flawed measurements to determine which firm promised the best value. One company also challenged TRANSCOM's decision that ARC is a "responsible contractor."

GAO contract analysts recommended that TRANSCOM "take steps to remedy the flaws in the procurement."

"These recommendations include conducting a new round of oral presentations and discussions, permitting the submission of revised proposals, and reevaluating those proposals," GAO officials said in a release. "We also recommended that the agency make a new decision about which of the proposals offers the best value to the government."

The process now goes back to TRANSCOM, which must revise its procedures before reissuing a new request for proposal. A new RFP will allow all parties -- including ARC, the two protesting companies and others -- to rebid.

Service members and their families have been moving this year under an existing construct that has TRANSCOM managing the scheduling, oversight, administration and coordination of hundreds of moving companies.

The contract award to ARC was set to kick off a nine-month transition period to shift information technology and all systems from TRANSCOM to the company, allowing the ARC team to handle all military moves by 2021.

But with the sustainment of bid protests, however, that timeline is now defunct. TRANSCOM will likely be responsible for handling military moves next year and perhaps into 2022.

A spokesman for the ARC consortium said Wednesday that the group is "disappointed in the GAO's decision to sustain the protests of unsuccessful bidders."

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

The ARC group consists of the parent company of United Van Lines and Mayflower Transit, called UniGroup; Atlas World Group and Atlas World Group International; the moving companies Suddath and The Pasha Group; and Deloitte.

Connected Global Solutions is a Jacksonville, Florida-based partnership between Crowley, Total Military Management and several van lines and logistics companies, including Interstate, National, Smarter Movers, Conser Moving and Storage and Agility.

HomeSafe Alliance, a relocation team coordinated by KBR of Houston, has not publicly disclosed its partnerships.

Moves this year have been hampered by stop-move orders and COVID-19 travel restrictions, with military orders backlogged and TRANSCOM and the military services scrambling to address the issues.

In a normal year, the command handles 600,000 personal property shipments associated with permanent change-of-station orders each year.

As a result of the pandemic, however, fewer than 16,000 household goods shipments had been picked up at the start of the peak season in May and June. Service officials have adapted their calendars to prioritize essential personnel and give families more leeway in delaying travel.

As of Wednesday, travel restrictions had been lifted for 148 of 231 DoD installations.

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

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