One of the biggest moving jobs in the world is handling 350,000 U.S. military members and their families who are transferred every year. The contract is worth a staggering $20 billion over the next decade; it’s no surprise the competition for it is fierce.
But now the question being raised in the latest Pentagon contract round is: Has it been been fair?
There’s no question there was need for a change. For decades, military families have complained about damaged and lost belongings during moves, and about the quality of service that some moving companies have provided. When my father, a civilian engineer for the Air Force, moved our family to California in the 1960s, we experienced delayed pickups and deliveries as well as breakage.
These problems finally led the Pentagon to decide — starting in 2021 — to move away from move-by-move agreements between it and individual companies. Instead, the moving process will now be put in the hands of a single commercial move manager that can establish long-term relationships with those firms, and hold poor-performing ones accountable. Essentially, all of this would privatize a function currently conducted by U.S. Transportation Command (TRANSCOM).
The new process is designed to give the Pentagon — and service members — better-quality movers who will be more accountable to and better able to communicate with customers.
In April, the contract was awarded to American Roll On Roll Off Carrier Group of New Jersey. But two unsuccessful bidders on the contract filed protests. TRANSCOM withdrew the contract in early June, launched an investigation, and initially pledged to take corrective action on at least one of the issues raised in the complaints. But less than two weeks later, TRANSCOM declared it wouldn’t be taking any corrective action after all, and re-awarded the contract to ARC.
The two protesting companies — Connected Global Solutions and HomeSafe Alliance — weren’t satisfied. They filed new protests with the Government Accountability Office last week. GAO has to decide on the new protest by October 21, and then the dispute may head to the U.S. Court of Federal Claims.
The two firms complain that the winning ARC bid was more than $2 billion more than others submitted and that ARC didn’t disclose information about the criminal past of its Norwegian parent company, Wallenius Wilhelmsen Logistics AS. That firm paid a nearly $100 million fine and pleaded guilty to a price-fixing conspiracy in 2016. The Justice Department also indicted three of its current or former executives at the time.
TRANSCOM officials say that information did not need to be disclosed because ARC had inadvertently put the wrong parent company, Wallenius Wilhelmsen Logistics AS, on its paperwork when it put in the bid for the moving contract. ARC says its real legal parent company is Wallenius Wilhelmsen ASA, so there was no need for it to disclose any bad behavior. The latter Wallenius Wilhemsen is merely “a separate company with a similar name,” TRANSCOM said in statement this month.
But the Federal News Network says that is a distinction without a difference. The ultimate parent company’s chairman is Hakon Larson, the same person who entered the guilty plea on behalf of Wallenius Wilhelmsen Logistics AS in a federal courtroom. Today, Larson is the chairman of the board of WWASA, the parent company for both WWLAS and ARC. “TRANSCOM’s account is extremely difficult to reconcile against publicly-available documents,” Federal News Network concludes. Both TRANSCOM and ARC declined to answer questions from the Federal News Network in any detail. Since its initial stories, FNN has learned of other cases in which companies linked to WWASA have been fined for “cartel-like” behavior in Australia, Japan, and South Africa.
The awarding of government contracts is often controversial and often leads to grievance complaints — some justified and some not — from the losers.
But the TRANSCOM decision looks like it was particularly rushed and muddled. The 2021 military moving season may be the most complex and largest on record, because so much of it will be delayed moves from the time of COVID-19.
It’s important to get the details right given that any problems will be blamed on the new proposed “privatization” plans and could set back further Pentagon reform in that direction in other areas. This contract should be thoroughly reviewed before any final decision is made.