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June 16, 2020 1:00 PM, EDT

DOD Pulls Back $20 Billion Contract for Military Family Moves

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Military officials have pulled back a sweeping multibillion-dollar contract intended to address military families’ long-standing problems with delays and damaged goods during their roughly 400,000 annual moves to assignments around the globe.

The contract, which could have netted American Roll On Roll Off Carrier Group, or ARC, of Parsippany, N.J., up to $20 billion over nine years, is being “reexamined” by the U.S. Transportation Command, known as Transcom, after two competitors protested the award to the Government Accountability Office.

The contract was awarded to ARC on April 30.

Sources said that among the protesters’ complaints was an allegation that the contract award somehow failed to take into account the past criminal history of ARC’s parent corporation, Wallenius Wilhelmsen Logistics of Oslo, Norway.

In July 2017, the U.S. Department of Justice announced that three Wallenius executives were part of a conspiracy dating back to 2000 to allocate certain customers and routes, rig bids and fix prices for the sale of international ocean shipments of cargo to and from the United States and elsewhere, including the Port of Baltimore. In a September 2016 plea agreement, the three executives admitted to the conspiracy and agreed to pay a criminal penalty of $98.9 million. Three other companies involved in the criminal conspiracy also pleaded guilty, paying criminal fines of more than $230 million.

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In a statement, the Department of Defense said it planned to take a fresh look at the contract to “consider this new information, gather facts, and conduct a review of the award.”

Transcom oversees moves for members of all military services and DOD civilians.

In a statement, ARC downplayed that the contract award had been pulled back.

“Corrective action occurs in a substantial number of Government Accountability Office protests where an agency determines that it would like to address potential issues in the record or raised by the protests,” said Charles Diorio, an ARC spokesman.

A spokeswoman for one of the protesters, HomeSafe Alliance, said “we expect our original proposal will be given favorable consideration as part of this process.”

“We don’t know why the contract is being reexamined,” said John Becker, interim president of the American Moving and Storage Association. “But I’ve never seen this in my 30 years of government work.” But Becker agrees that there have been problems with military moves, for both the soldiers and commercial motor carriers. “Normally, I get problems every day, May to August. Every summer you have a different problem,” Becker said.

He noted, however, that last summer was the first where complaints quieted down and service seemed to be improving.

Transcom’s Global Household Goods contract is one aspect of a broader DOD reform plan to improve the relocation process for DOD families, and integrates functions currently performed by hundreds of commercial entities.

“It will improve access to, and management of, quality capacity to meet peak demand and enable the department to affix the accountability and responsibility lacking in today’s program,” DOD said.

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“DOD families are our North Star and the reason we are making this change to the Defense Personal Property Program,” U.S. Army Gen. Stephen Lyons, commander of Transcom, said in a statement. “The contract was written by and for the military services, and addresses long-standing pain points DOD families have highlighted for years.”

But the fix for military families could be delayed until 2022 if the ARC contract review drags on too long, Becker said.

Summer is by far the time when military soldiers and their families make the most moves, and plans were to get the new contract requirements well underway in time for summer 2021.

The long-standing military move challenges were highlighted in January when a DOD Inspector General audit showed that more than 40% of the nearly 10,000 military personal property shipments audited in fiscal year 2018 were not delivered in a timely manner, causing soldiers to incur lodging and other living expenses.

“Many DOD military families have complained about unexpected delays in pickups or delivery of their household goods,” the audit said. “There also have been complaints about the moves themselves, which have resulted in loss and damage for some families.”

“Throughout my career, I’ve been disappointed with what the Defense Personal Property Program does to families,” said Chief Master Sgt. Jason France, the senior enlisted leader for Transcom. “Today, I’m confident that the Defense Personal Property Program will deliver the care and service they deserve in the coming years.”

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