[Federal Register Volume 60, Number 202 (Thursday, October 19, 1995)]
[Notices]
[Pages 54061-54065]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-25882]



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DEPARTMENT OF DEFENSE
Department of the Army


Report of Comments Received to a Request for Comments on MTMC's 
Consideration to Employ Full-Service Contracts to Improve the 
Department of Defense (DOD) Personal Property Program, Published in the 
Federal Register, Monday, March 13, 1995, Vol. 60, No. 48, Notices, and 
Again on Wednesday, May 10, 1995, Vol. 60, No. 90, Notices To Extend 
the Comment Period

AGENCY: Military Traffic Management Command.

ACTION: Notice.

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SUMMARY: Fifty-six responses were received from members of the carrier 
industry, carrier industry association, and related industries. 
Headquarters, Military Traffic Management Command wishes to thank all 
those who took the time to provide thoughtful and beneficial 
suggestions and comments.

ADDRESSES: Headquarters, Military Traffic Management Command, Attn: 
MTOP-QE, 5611 Columbia Pike, Falls Church, VA 22041-5050.

FOR FURTHER INFORMATION CONTACT:
Mr. Joe DeLucia, MTOP-QE, (703) 681-6753 or Ms. Ann Gibson, MTOP-QS, 
(703) 681-6590.

SUPPLEMENTARY INFORMATION: The following is MTMC's response to the 
questions received from the 56 respondents to the Federal Register 
Notice that solicited comments from industry concerning the 
reengineering of the DOD personal property program:

Questions and Answers Concerning Re-engineering

    1. Why start over from scratch by re-engineering the entire program 
when many of the objectives could be achieved by making changes to the 
current system that would be less disruptive?
    A. Military Traffic Management Command (MTMC) has discovered 
several factors that argue decisively against small changes. First, 
there is widespread opinion among the military services, personal 
property shipping offices, and the individual service members that the 
entire system is broken rather than a few elements within that system. 
Second, the existing system itself is a product of the process of 
making many isolated changes without considering the total impact. It 
seems inappropriate to fix a program by the same process that caused it 
to break down. Third, there is value in boldness. It is often difficult 
to adjust single elements of the program because of vested interests 
and the interconnected nature of various provisions. Frequently, good 
ideas are lost in the negotiation or compromise process. As an 
alternative, the re-engineering approach offers a process in which the 
best commercial practices can be combined with Government needs to 
create a better system for all concerned. Also with the down sizing, 
the military does not have the infrastructure it once had to support 
the current program. Although MTMC is committed to re-engineering, that 
is not to say that the new program won't have some features that are 
similar to the current system.
    2. Are the services sold on the re-engineering program at this 
point?
    A. There is an agreement that a re-engineering of the program is 
necessary and that we must move toward a simpler, customer satisfaction 
driven program incorporating commercial business practices.
    3. What are the specific goals that MTMC wants to achieve under the 
re-engineering effort?
    A. MTMC has three basic goals. One of the goals is to simplify the 
personal property program. The second is to maximize the use of 
commercial practices. The third is to improve customer satisfaction 
(quality of life for the military member).
    4. What specific commercial practices does MTMC want to obtain?

[[Page 54062]]

    A. MTMC would like to see as close as possible a commercial 
contract with a Department of Defense (DOD) cover on it. This would 
include commercial practices such as long term contracts, direct claim 
settlements; full value replacement; movement counseling by industry; 
tracing and intransit visibility; 1-800 customer numbers; carrier 
customer surveys; electronic data interchange; management information; 
commercial quality inventory, packing, storage, and shipping; and full 
service movement arranging/managing.
    5. Can you provide a brief description on how the process will work 
under the Federal Acquisition Regulation (FAR)?
    A. The proposed acquisition will be advertised in the Commerce 
Business Daily (CBD). Contractors interested in competing for the award 
of the contracts will request a copy of the request for proposals (RFP) 
or solicitation. Following the CBD announcement MTMC will issue the RFP 
to all interested parties. The RFP will provide a minimum of 30 days to 
prepare and submit proposals in accordance with the instructions set 
forth in the RFP. The solicitation will also set forth all significant 
factors and subfactors we will consider in evaluating proposals, 
including price and non-price (technical and operations) related 
factors and subfactors. A team or panel will evaluate each proposal 
individually. The evaluator will identify any deficiencies, weaknesses 
and strengths in the proposals and will rate them in accordance with 
the criteria set forth in the solicitation. Based on the results of the 
evaluation, the contracting officer will determine whether discussions 
are necessary. If it is determined that discussions are unnecessary, 
award will be made based on initial proposals. If discussions are 
conducted, the contracting officer will request best and final offers 
which will be evaluated just like the initial proposals. In any case 
award will be made to those offerors whose proposals provide the best 
overall value to the government.
    6. Would the competitive range be determined in terms of dollars?
    A. No, the competitive range is established by the contracting 
officer after consideration of all factors, including price or cost. 
All proposals that have a reasonable chance of receiving the award will 
be included in the competitive range.
    7. Is MTMC going from a total cost operation to a quality 
operation?
    A. No, price will continue to be a factor but it will not be the 
only factor. However, greater emphasis certainly will be placed on 
quality than is currently required under today's system.
    8. Under the best value evaluation process, would you rank each 
proposal then choose a cut off point or would there exist some type of 
formula to determine best value?
    A. When price or cost is the basis for award, proposals are 
evaluated for technical acceptability and then award is made to the 
lowest priced, technically acceptable offeror. Under our proposed 
concept, we would lay out specific evaluation factors and the 
importance of each in the solicitation. The Government will make cost-
technical tradeoffs, and determine which proposal offers the best value 
based on sound business judgment and the evaluation criteria stated in 
the solicitation.
    9. would the best value method increase the price?
    A. Best value may be associated with paying a price premium. 
However, it is consistent with the philosophy that the slight increase 
in price is more than compensated for by the associated increase in 
quality, performance, decrease in claims, etc.
    10. Will the same team evaluate everybody?
    A. All proposals will be equally evaluated as to each factor. We 
may have established teams reviewing specified aspects of all 
proposals.
    11. What does MTMC anticipate the length of the FAR contract to be 
under the proposed reengineering initiative?
    A. MTMC envisions a base period of two years with possible one year 
options not to exceed a total of five years.
    12. Currently, who uses FAR contracts?
    A. The overall preponderance of Government acquisitions currently 
utilize FAR. However, transportation services acquired under rates 
negotiated under the authority 49 U.S.C. 10721 have been exempted from 
certain rules and regulations established in the FAR. Nonetheless, 
transportation related services are routinely acquired using FAR 
contracts (for example, non-temp storage, direct procurement HHG 
movements, etc.)
    13. Do there currently exist FAR contracts with multiple award 
winners?
    A. Yes.
    14. How will the labor wage rate be determined under a FAR 
contract?
    A. MTMC is aware of industry's concerns. At the present time MTMC 
has not determined how the labor wage rate will impact the program, but 
we are working with the Department of Labor to determine how the 
Service Contract Act and associated labor wage rates should apply to 
MTMC's HHG contracts.
    15. How could small and medium size carriers possibly service every 
destination out of an AOR? This worldwide, service concept may exclude 
some small and medium size carriers that provide excellent specialized 
service in specific areas. These carriers will be forced to align 
themselves as subcontractors with one of the major van lines or be 
forced out of business. Why prevent these carriers from being prime 
contractors?
    A. It is not MTMC's intent to force any carrier out of business or 
to prevent small and medium size carriers from being a prime 
contractor. MTMC wants to do business with those carriers that provide 
quality service. MTMC has reevaluated its position of requiring a prime 
carrier to provide worldwide service out of an AOR. Presently, MTMC is 
considering awarding personal property traffic in channels from a 
single AOR to single rate areas throughout the world. An offeror may 
choose to bid on one, several, or all traffic channels offered. It will 
allow any carrier the opportunity to choose those outbound channels 
from an AOR that they would like to make a proposal to service. Size 
will not be a discriminatory factor in determining the ability of a 
carrier to be awarded a contract as long as the contractor can 
reasonably establish a capability to meet our minimum requirements. 
Instead it will be based, among other things, upon management, 
operations, quality control plan, and past performance of the carrier. 
One of the reasons we narrowed our focus from a regional concept down 
to the AOR/worldwide service concept and further down to an AOR/rate 
area service concept is to allow the small and medium size carriers, 
that provide quality service, the opportunity to participate. We 
recognize and need the capacity of the small and medium carriers, and 
we believe they will fit into the re-engineered program.
    16. Why does MTMC intend to combine domestic and international into 
one program when they are distinctly different and would be more 
manageable if kept separate?
    A. Under the single AOR to single rate area concept, a proposal may 
be placed for one or any number of traffic channels. In effect, this 
separates the domestic and international programs by permitting bidding 
for only international origin/destinations, only domestic origins/
destinations, or a combination of both, if desired.
    17. Under the Area of Responsibility (AOR) to rate area concept, 
how many awards do you envision for each channel?

[[Page 54063]]

    A. The best overall offer will be awarded all the traffic moving 
between the AOR and the rate area. Additionally, the process will allow 
us to consider selecting one or more alternates to move into the prime 
position in the event the prime contractor fails.
    18. Because carriers will not know which channel they will be 
awarded, it seems under the re-engineering concept carriers would be 
placed in a situation where they would have to place proposals on more 
channels than they have the capacity to service if they were awarded 
them all. What will protect the carrier from over bidding or under 
bidding their capacity?
    A. MTMC will provide potential offerors with distribution data 
(weight, shipments, costs) for each channel at the time of the 
solicitation. Also, we are working on a procedure to consider capacity 
and risk assessment in awarding channels.
    19. Could an agent for a carrier make a proposal on a contract?
    A. MTMC fully expects agents of carriers to make proposals on 
contracts under their own authority.
    20. Under the FAR contract will there be a restriction that only 
allows movers to be eligible to make a proposal? What would preclude 
someone from outside the moving industry from trying to become a prime 
contractor?
     A. Nothing would prevent someone from outside the moving industry 
from making a proposal. We encourage full and open competition.
    21. How will someone new to the business of transportation be 
evaluated on past performance under the FAR proposal?
    A. A new company would be required to display to us their ability 
to satisfy the expected requirements. When no relevant past performance 
information exists, we will treat it as an unknown performance risk 
that is neutral, having no positive or negative evaluative 
significance. However, the proposal can offer other considerations such 
as the past experience of individual employees.
    22. Can a foreign corporation be a prime overseas?
    A. Foreign corporations are not precluded from competing for these 
requirements. Their offers, however, will be evaluated in accordance 
with the guidance at FAR Part 25 and DFARS Part 225 on Foreign 
Acquisitions.
    23. Would operating authority be one of the criteria in determining 
a carriers ability under a FAR contract?
    A. Contractors will be required to comply with all applicable 
federal, state, and local laws. Whether an offeror has proper operating 
authority is a determination to be made by the appropriate regulatory 
body, not MTMC. The operating authority of a carrier could possibly be 
one of the criteria that is evaluated. However, typically all 
responsible offerors that will be transporting HHG are required by law 
to have such authority. As such, the authority may simply be required 
as a condition for award.
    24. Will the Government require a performance bond?
    A. At the present time, our intention is to require a performance 
bond.
    25. Does MTMC intend to enforce regulations covering Common 
Financial and Administrative Control (CFAC)?
    A. We do not anticipate CFAC being an issue under a FAR contract.
    26. Will there exist a subcontracting requirement for a carrier 
awarded a channel of traffic under the AOR to rate area concept?
    A. The contractor will have the option of subcontracting any 
movement services deemed necessary to meet the shipping requirements of 
each customer. However, the contractor shall be responsible for all 
actions of any subcontractor used in the shipment and/or storage of 
personal property. Pursuant to FAR 19.702, acquisitions expected to 
exceed $500,000 will require a subcontracting plan with expressed goals 
for small, small and disadvantaged, and women-owned companies. We are 
in the process of determining what these requirements will be.
    27. Can you define what a subcontract is?
    A. In general terms, a subcontractor is any supplier, distributor, 
vendor, or firm that furnishes supplies or services to or for a prime 
contractor or another subcontractor. See FAR 19.701.
    28. Could a large carrier as a prime contractor only subcontract to 
its own agents and still satisfy the subcontracting requirement? If 
this is the case then won't a large carrier be inclined to only use its 
own agents as subcontractors?
    A. Offers must demonstrate in the subcontracting plan how they will 
ensure that small businesses and small disadvantaged businesses will 
have an equitable opportunity to compete for contracts. See FAR 19.704.
    29. Could the owner/operator of a truck be a subcontractor?
    A. An owner/operator of a truck probably could qualify as a 
subcontractor.
    30. How will you monitor the subcontracting requirement of a prime?
    A. The FAR requires the contracting officer to monitor the 
subcontracting plan for individual contracts. Additionally, the plan 
may be evaluated during the selection process. The contractor is 
required to submit to the contracting officer a subcontracting report 
semiannually for an individual contract and an annual summary report to 
each summarizing cumulative subcontracting activity for all contracts 
being performed for the respective agency. Note, this reporting is only 
required on contracts involving performance within the United States, 
its possessions, Puerto Rico, and the Trust Territory of the Pacific 
Islands which exceed $500,000 and for which a subcontracting plan was 
negotiated. Failure of the contractor to meet the plan requirements and 
goals could result in the assessment of liquidated damages. If goals 
are not met, the contracting officer must determine whether the 
contractor failed to make a good faith effort to comply with the 
subcontracting plan and if so will make a final decision and assess 
liquidated damages. The contractor has the right to appeal the 
contracting officer's final decision under the disputes clause of the 
contract.
    31. What happens if the subcontractor fails, would the prime 
contractor still be expected to provide moves?
    A. Yes, the prime contractor would still be expected to perform.
    32. Will the government ensure that subcontractors are paid by the 
prime contractor?
    A. As a general rule the Government's obligation will be only to 
the prime contractor. It will be the responsibility of the 
subcontractors to assure that they are involved in a business 
relationship with a reliable and responsible prime contractor that they 
can trust. The opposite also holds true for the prime contractor. MTMC 
is allowing the carriers the ability to choose whom they do business 
with.
    33. Could a subcontractor support several prime contractors per 
AOR?
    A. Within the capabilities of the individual subcontractors, we 
envision a subcontractor being able to support as many prime 
contractors in an AOR as they might desire.
    34. What will happen in small areas where all offerors may have the 
same subcontractors?
    A. Unique capabilities will also help determine who will receive 
the award. This would include past performance, financial stability, 
and how the carrier plans to manage the expected requirements.
    35. Can a prime carrier also be a subcontractor in the same AOR?
    A. Subject to capacity/capability, a carrier could be a prime 
contractor for one channel of traffic out of an AOR, 

[[Page 54064]]
and at the same time be a subcontractor to a carrier for a different 
channel of traffic out of that same AOR.
    36. Will there be different requirements for small and 
disadvantaged carriers to qualify as a prime contractor?
    A. The requirements for small and small disadvantaged carriers will 
not be different. All offerors will be evaluated in accordance with the 
criteria stated in the solicitation, regardless of business size.
    37. What will be the function of the Installation Transportation 
Office (ITO) under the re-engineering concept?
    A. The ITO will continue to play an important role. Under the re-
engineering concept, the ITO will continue to perform many of the roles 
they do today. The difference is that the simpler process will give 
them more opportunity to focus on customer advocacy and quality 
management. We envision the final determination of the role performed 
by the ITO as a military service determination.
    38. Is any consideration being given to contracting out the 
functions performed by the Personal Property Shipping Offices (PPSOs) 
and Personal Property Processing Offices (PPSOs)?
    A. The PPSOs and PPPOs are operated by their respective services. 
The decision to staff PPSOs and PPPOs with Government employees or 
contracted personnel remains the decision of the services.
    39. Who will manage the list and distribute the traffic under the 
AOR concept?
    A. Most of the lanes out of the AORs to the rate areas will have 
one contractor that is awarded all of the traffic.
    40. If there is excess tonnage that the prime contractor and his 
subcontractors cannot handle then will the prime contractor have to 
acquire additional subcontractors to handle the tonnage?
    A. Yes. In single contractor channels, if the prime does not want 
to fail, arrangements will have to be made to accommodate all 
requirements within the channel, unless we specify a maximum 
requirement in the solicitation.
    41. Who will provide entitlement counseling to the service member?
    A. Collectively, the services desire to maintain the function of 
entitlement counseling of the members. This function will probably be 
retained by the personal property offices. However, we envision 
movement planning being a service provided by the contractor.
    42. Will there be a change in the service members' entitlements as 
a result of the re-engineering?
    A. Presently there are no plans to change entitlements as a result 
of the re-engineering. MTMC does not determine entitlements. It is 
decided by the services and the Congress.
    43. There was mention of permitting the carrier industry to do self 
reporting. If this would happen then will the temptation exist for some 
carriers to over rate how well they are doing?
    A. Although the temptation may exist to over rate performance, we 
expect to counter it by means such as monitoring and doing random 
checks to assure the accuracy of the carrier reports.
    44. In a commercial move, the carrier normally has a spread on the 
required pick-up and delivery dates. Does MTMC plan on incorporating 
this practice within the re-engineering program?
    A. MTMC does envision some flexibility being incorporated within 
the re-engineering program. However, there does need to exist some 
structured framework to which the variance in pick-up and delivery 
dates must adhere.
    45. Have service members been surveyed on whether they would like 
pick up and delivery spreads?
    A. We have not conducted a formal survey on whether the service 
members would prefer load spreads. However, selected members have 
indicated that they would like more involvement in the personal 
property process.
    46. Will direct claim settlements with the carrier definitely be 
part of the program?
    A. At this point, our intentions are to incorporate direct claims 
settlements with the carriers as part of the program. We cannot take 
away from the members the option of settling with the Government, but 
we can make it mandatory that the member attempts settlement first with 
the carrier. Also, we can make it more attractive to the member to 
settle the claim with the contractor with full value replacement as an 
incentive.
    47. Under the re-engineering concept will the service members still 
have two years to file a claim?
    A. Currently, our approach is that the customer have one year from 
the date of delivery of the personal property shipment to file a claim 
with the contractor. The contractor has thirty days from receipt of a 
claim to respond to the claim by making payment for lost or damaged 
items, beginning repairs, or presenting an explanation for denial of an 
item or items. However, after the one year limit has expired then the 
member would still have the statutory entitlement to settle the claim 
with the Government until the two year limit.
    48. In the commercial world, corporate customers pay for full value 
replacement. Does the military expect to get full value replacement 
free?
    A. As the full value replacement requirement will be included in 
our solicitation, we expect all offerors to include costs associated 
with requirements in their rates.
    49. Will the service members fill out value inventories?
    A. Yes, we believe that the service members will fill out value 
inventories if they know that they will be protected. We realize that 
the re-engineering of personal property will also necessitate that the 
service members be educated on their responsibilities under the new 
program.
    50. If quality is to be measured in part on the basis of customer 
surveys then what guarantees are there that a customer knows how to 
determine whether they have received a good, quality move?
    A. We must assume they know how to determine if they are satisfied. 
Every day the service members take consumer judgments and choices, and 
this is no different. Customer satisfaction is a key to a quality move.
    51. If the use of the Government Bill of Lading is eliminated then 
would MTMC leave it to the discretion of industry to determine what to 
include in the commercial bill?
    A. MTMC has not yet determined what bill of lading requirements 
will apply.
    52. Will the carriers have the ability to determine how to move 
shipments under the re-engineering concept?
    A. MTMC's concern is not how you move the shipment but that it is 
picked up and delivered on time with minimal or no damage. We 
ultimately want the member to be happy with the move. However, once a 
proposal is accepted for award, we would expect performance to be 
consistent with the accepted proposal.
    53. What transportation services will be included and excluded from 
the contract?
    A. The transportation services required at origin include packing, 
crating, disassembly, accessorial services, linehaul, SIT, and other 
services required for the preparation and movement of the property. At 
destination the contractor will be responsible for unpacking, 
reassembly, one time placement of articles as designated by the 
customer, one time removal of debris at the time property is delivered 
or at a date agreed upon by the customer and contractor. Transportation 
services not included in the contract include nontemporary storage 
(NTS), mobile homes, one-time-only (OTO), volume moves, boats/

[[Page 54065]]
trailers 25 feet and over, and Do-it Yourself (DITY) moves.
    54. What is the drive behind combining many of the transportation 
services into one contract?
    A. The principal drive behind combining the transportation services 
is a quality of life issue. We want to allow a member to go to just one 
carrier for a move as opposed to multiple carriers as often happens 
under the present system. We would like one stop shopping and 
simplicity. We believe, it would also relieve some of the 
administrative burden.
    55. Will MTMC go down to the agent level to get their input on the 
re-engineering program?
    A. MTMC is accepting input from all sources. MTMC already has gone 
down to the agent level and will continue to do so to receive input. 
MTMC encourages and wants input from all parties involved in the 
personal property process throughout the re-engineering. This is the 
only way we can build an effective program.
    56. Do you intend on having a pilot program? If so, then when and 
where?
    A. It is MTMC's intent to award a pilot program contract late in 
calendar year 1996. We have not decided on a geographic location at 
this time.
    57. Will there exist a provision to adjust the rate for economic 
changes that may occur?
    A. We are considering incorporating an economic price adjustment 
clause within the contract that would allow for rate adjustments after 
the first year, based on increased carrier costs. This would involve 
upward or downward revisions of the contract price based on the cost of 
labor or material.
    58. Has there been consideration given to having the services work 
with the transportation industry to attempt to eliminate some of the 
peak season and even out the volume throughout the entire year?
    A. MTMC has talked to the services but realistically we are not 
overly optimistic that anything can be done to even out the volume 
throughout the entire year. Just like the commercial world, a move is a 
quality of life issue and most people with families prefer to move in 
the summer.
    59. If there exists a mistake in the entire process what is the 
Government's ability to back out of the contract?
    A. The Government would have the right to terminate for convenience 
or default.
Gregory D. Showalter,
Army Federal Register Liaison Officer.
[FR Doc. 95-25882 Filed 10-18-95; 8:45 am]
BILLING CODE 3710-08-M