[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] ----------------------------------------------------------------------- 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. ----------------------------------------------------------------------- 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