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

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