AMSA’s Position on DOD’s Global Household Goods Contract
Scott Michael, AMSA President & CEO
This summer, we released AMSA’s Position on Military Outsourcing, which provided background on the evolution of our position on this issue. AMSA’s lobbying efforts were instrumental in securing language in both the House and Senate Defense Authorization bills (NDAA). While the language was not exactly what we requested, the House bill:
- Requested that US TRANSCOM delay releasing the RFP by two months (already happened)
- Requested that US TRANSCOM allow a second round of comments on the draft RFP (happened)
- Required a five-year advisory council including industry representatives
- Required a business case analysis justifying outsourcing
- Stops the contract award until the completion and briefing of congressional committees on the business case analysis and structure of the advisory council
The companion Senate bill requires US TRANSCOM to wait 60 days after completion of a GAO report that is due Feb. 15, 2020 to award the contract. It does not include the other House provisions. During the Senate NDAA passage, AMSA successfully defeated an amendment that would have required tracking on all military packages. This would have been a significant burden on our industry. A conference committee is currently meeting to resolve the differences between these bills, but is reportedly stalled on the use of military funds for border wall construction. As a result, the Senate is now considering a “skinny” bill that would not include any policy changes, but it is unclear if such a clean bill would pass the House. The passage of a “skinny” bill would allow US TRANSCOM to proceed.
Since Congress is caught up in partisan battles, another government shutdown is possible. The government is currently funded through Nov. 21. Agreement may be reached for either short- or long-term extension. If the government closes, the GAO would be forced to stop working on its study, likely delaying the planned Feb. 15, 2020 release. US TRANSCOM has a separate funding mechanism, but it would only be able to continue work for a few weeks.
Since the summer, the final solicitation for the GHC has been released, and bids are due Nov. 12. US TRANSCOM hosted a conference to answer questions about the GHC, and has also received and responded to numerous written questions. Several companies are forming teams to bid on the contract – both within the industry and outside of it. Unless all bids are deemed unacceptable or other obstacles appear, DOD plans discussions with the top bidders starting Jan. 3, 2020, with revised proposals due Feb. 24, 2020. The contract award is scheduled for April 15, 2020, with domestic shipments starting on Feb. 1, 2021, phased in over several months.
AMSA Leadership Action
AMSA’s Executive Committee wrote to US TRANSCOM Commander Gen. Lyons on Sept. 13, identifying the following items as critical for a successful DOD household goods program. Our letter concluded with the recommendation that these elements must have specific contract language to ensure success. Here is the current status:
- Improve the service member experience while moving. The contract mandates improved customer satisfaction, but there is a concern that DOD will have limited recourse if the contractor fails to meet the criteria. To protect military families, DOD needs to develop a robust fallback plan for managing shipments if the contractor is not successful.
- Increase compensation to the drivers and crews directly providing that service. The domestic pricing methodology for the GHC is vastly different from anything our industry is used to, causing concern that some bidders will submit pricing that is insufficient to cover the costs of some moves, leveraging their control of all military shipments to impose non-compensatory pricing on subcontractors. The current RFP lacks clarity on how the prime contractor will manage capacity and subcontractors. Specific requirements regarding how transportation revenue will flow to the companies providing the service at the curb would benefit industry providers moving into a new system, but is not included.
- Protect small businesses’ ability to service military shipments. The Pre-Proposal conference reinforced guidance that using small business subcontractors for 40 percent of the moves is not a goal but a requirement that must be outlined in the bid process. There remains uncertainty about how the GHC will work based on the prime’s model for distribution, but the 40 percent requirement removes some small business concerns.
- Ensure timely payment to service providers. DOD added a requirement that the prime contractor is required to abide by FAR 52.242-5, Payments to Small Business Subcontractors (JAN 2017) (15 U.S.C. 637(d)(12)). This has been and will continue to be a major concern of all the subcontractors with no definitive timeline for payment within the GHC. We continue to believe that having the Prompt Payment Act compliance protecting subcontractors would be a better approach to ensuring timely payment, but this clause does provide some protection.
- Reduce the administrative burden on DOD. While DOD has not released its staffing plans for GHC, it appears that this plan will alleviate the workload on US TRANSCOM to manage the program.
In addition, the proposed Non-Temporary Storage (NTS) process is generating concern.It is unclear whether current NTS contractors will want to continue to participate in a program that only includes storage and not its related services (packing, handling in/out). For those who do, the biggest issue will be liability, because they are assuming Full Replacement valuation for shipments packed by someone else. NTS warehouses are going to insist on inspecting those shipments when they arrive at their locations, which means unloading the sealed crate, going through all items and the contents of packed boxes to establish condition, then creating a rider to the original inventory. This extra work generates another opportunity for loss or damage to occur through the additional handling.
Questions about the application of the Service Contract Act (SCA) also remain a significant concern, as this is a new requirement for household goods moving.DOD has indicated that the origin location of the shipment is used for determining the labor rates, but has not addressed how multiple shipments on the same truck with different origins would be handled.
Many other questions remain, but the answers will depend upon who is selected as the winning bidder, and how they have structured their plan.
AMSA has consistently stated that it is critical for industry to have a seat at the table both for the current program and the GHC. The moving and storage industry will be the ones performing the moves, and we want to ensure that the rules will permit us to do so successfully. Communication with DOD has improved since the Sept. 13 letter was sent, and AMSA will continue representing the interests of the moving and storage industry to the best of our abilities.