Reengineering the Personal Property ProgramSynopsis of Comments Received

DEPARTMENT OF DEFENSE

Department of the Army

Reengineering the Personal Property Program--Synopsis of Comments

Received

AGENCY: Military Traffic Management Command (MTMC), DOD.

ACTION: Notice.

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SUMMARY: As part of the reengineering of the Department of Defense

(DOD) personal property program on June 30, 1995, MTMC released the

draft requirements document over MTMC's EasyLink Bulletin Board. The

initial draft of the requirements document outlined the anticipated

requirements to participate in the movement of personal property under

MTMC's reengineered concept. More importantly, the initial draft of the

requirements document was provided with the intent to give industry the

opportunity to comment on the feasibility of the proposal. A request

for comments from industry concerning the draft requirements document

was published in the Federal Register, Thursday, July 13, 1995, Vol 60,

No. 134. In conjunction with the draft requirements document, MTMC

released on August 1, 1995, the proposed acquisition strategy over the

EasyLink Bulletin Board. In the proposed acquisition strategy, MTMC

informed industry that we were considering the use of the Federal

Acquisition Regulation (FAR) to procure services for the movement of

personal property.

An additional request for industry's comments, this time concerning

the proposed acquisition strategy, was published in the Federal

Register, Thursday, August 10, 1995, Vol 60, No. 154. In this Federal

Register notice, we requested industry consider the draft requirement

document and proposed acquisition strategy as one package, and that

comments be provided to MTMC by September 20, 1995.

ADDRESSES: Headquarters, Military Traffic Management Command, ATTN:

MTOP-Q, 5611 Columbia Pike, Falls Church, Virginia 22041-5050.

FOR FURTHER INFORMATION CONTACT:

Mr. Lee Strong or Shelly Johnson, MTOP-Q, (703) 681-6393.

SUPPLEMENTARY INFORMATION: As a result of the Federal Register requests

for comments, MTMC received 297 letters from industry. The 297 letters

included 102 individual letters, 152 National Moving and Storage

Association endorsement letters, and 43 Washington Movers Conference

endorsement letters. The following provides a summary of many of the

questions posed by industry concerning the draft requirements document

and proposed acquisition strategy, as well as, MTMC's current position

regarding these industry questions.

Summary of Industry Comments Concerning the Draft Requirements

Document and Proposed Acquisition Strategy

In response to a request for comments concerning MTMC's

reengineering draft requirements document and proposed acquisition

strategy, we received 297 letters, including 102 individual letters,

152 National Moving and Storage Association endorsement letters, and 43

Washington Movers Conference endorsement letters. The following

summarizes and consolidates the questions posed in those letters and

provides a MTMC response.

Comments Regarding the Acquisition Strategy

(1) Industry: The use of proposed FAR to award contracts for

personal property movements is unacceptable and will adversely impact

the DOD Personal Property Program by imposing detailed, complex, and

burdensome regulations, including the provisions of the Service

Contract Act and Small Business Act. The use of the FAR is more onerous

and complex than the current system and fails to achieve the stated

goal of simplification.

Response: The Federal Acquisition Regulation (FAR) is an instrument

the Federal Government routinely utilizes to acquire and administer the

vast majority of its contracts for goods and services. It may be as

simple or as complex as the requirement being procured. It may require

minimal to detailed documentation depending upon the requirement and

the dollar threshold involved. Currently the FAR is geared toward

streamlining the acquisition process as much as possible while

maintaining the proper expenditure of public funds. The language in the

FAR is to the mutual benefit of private industry and the Federal

Government. The Service Contract Act (SCA) requirements are

administered and implemented by the Department of Labor (DOL). The FAR

simply implements the procedures and regulations published by DOL.

While compliance with the SCA provisions may require changes in carrier

business practices, these changes are not insurmountable. Likewise, the

FAR implementation of the Small Business Act, where applicable, will

not necessarily make the acquisition process unduly burdensome. While

many members of the industry may not be familiar with these provisions,

we are confident that this industry has the capability to learn, adjust

and master new procedures just as it has done in the past when we made

changes to the current program. MTMC is available to assist industry in

understanding these provisons.

(2) Industry: The ongoing regulatory requirements of the Service

Contract Act (SCA) would impose a significant burden and subject

industry to varying interpretations, continuous review of the contract

award procedures, and significantly increase costs due to mandatory

wage levels. The burden of imposing wage determinations and benefit

guidelines on full-service worldwide moves will fall directly upon the

small businesses, the agents and owner operators who actually perform

the services for the member. The detailed accounting infrastructure

does not exist to handle such a complex process.

Response: The Service Contract Act (SCA) does not require a

detailed accounting system, nor does it require continuous review of

the contract award procedures. MTMC intends to work with the Department

of Labor to attempt to lessen the impact on the industry, as

[[Page 14748]]

much as possible. Again, while compliance with the SCA provisions may

require changes in carrier business practices, carriers will be able to

factor into their rates any increased costs in the operations caused by

their compliance with the SCA. Once established, the specific burdens/

interpretations imposed by the SCA will have to be addressed between

the industry and the Department of Labor.

(3) Industry: The provisions of the Small Business Act mandate

maximum business opportunity for small and small disadvantaged

businesses. In addition, large businesses with annual gross receipts of

$18.5 million, or more, must submit a subcontracting plan outlining the

minimum goals for subcontracting and specifying how the plan will be

executed. These requirements are an administrative burden, and are

difficult to understand and enforce. Small businesses have an equal

opportunity to compete in the current program and the requirements of

the FAR will prevent them from competing in the new program.

Response: The FAR does not prevent small and small disadvantaged

business from bidding/proposing on any requirement that has full and

open competition. Small businesses will be given an equal opportunity

to compete among small businesses and among their larger competitors.

The provisions of the Act apply to both the current program and the

proposed reengineered program. The broad policies of the Act are to

ensure that a fair proportion of acquisitions are placed with small

business concerns and small disadvantaged business concerns. The FAR

regulations implement this policy. The regulations will not prevent

competition by these concerns. Rather, the regulations promote

competition by mandating that such concerns have the maximum

practicable opportunity to compete. For information on how to submit a

subcontracting plan, which is only applicable to large businesses for

awards over a certain threshold, it is recommended that companies

review the guidance in FAR Subpart 19.7. It is apparent that many of

the large firms currently have an operating procedure with many small

businesses; therefore, they should review actions that they currently

have in place to determine whether they would satisfy the requirement.

The FAR approach may be more or less labor intensive depending upon the

type of solicitation and the type of contract awarded. Part of its

advantage, however, is that it is a competitive process for the award

of contracts which allows technical and price factors to be considered;

it is not simply a system for filing rates.

(4) Industry: The FAR is a very complex bidding process and

requires a very large amount of work for potential contractors who wish

to bid on the program. The decision to file rates from each area of

responsibility to each rate area will result in 17,425 contract awards.

If 50 carriers should file rates for all channels, MTMC would be

required to evaluate 871,250 offers. Under the current program, all

rates are submitted electronically and require only a few number of

personnel to manage the process. The FAR evaluation process is labor

intensive and will not reduce the manpower required to administer and

manage the program.

Response: MTMC agrees that awarding a best value FAR contract under

the Area of Responsibility (AOR) to rate area/channel concept would be

labor intensive and difficult to administer because of the large number

of potential offers and awards to be evaluated and administered.

Although a low cost FAR-exempt concept would provide simplicity in

administration, we believe FAR contracts, which are awarded based on

price and non price factors and which would allow the contracting

officer to exercise business judgment in selecting an awardee, would

result in an overall better value to the Government than the present

distribution scheme which awards to the carrier with the low rate.

Since quality of service is a major goal in the reengineering effort,

MTMC has been considering alternatives which allow us to achieve

greater value while being administratively manageable.

Consequently, MTMC is considering an approach which encompasses six

origin regions which include four CONUS and two OCONUS regions. We

anticipate the four CONUS regions being divided into the states within

the four Regional Storage Management Offices (RSMO) areas currently in

existence. The two OCONUS regions would be divided into countries under

the current responsibility of the Military Traffic Management Command,

Europe and the Military Traffic Management Command, Pacific. We

envision three categories of service out of each origin region and

contractors may choose to bid as follows:

CONUS Origin Regions

a. Intra-Region Destination. Contractor must provide service from

all areas of responsibility (AOR) of personal property shipping offices

(PPSOs) located within a region to all AORs located within states in

that same region. (Example: The Atlanta Region encompasses North

Carolina, South Carolina, Kentucky, Tennessee, Mississippi, Alabama,

Georgia, and Florida. The contractor must provide service from North

Carolina to any other state within the Atlanta Region.) Locals and

intra-state moves will not be included for the pilot acquisition.

b. Inter-CONUS Destination. Contractor must provide service from

all AORs of PPSOs located within a region to all AORs located within

states outside that region. (Example: From Atlanta Region to

California, Kansas, New Jersey, etc.)

c. OCONUS Destination. Contractor must provide service from all

AORs or PPSOs located within a CONUS region to all OCONUS AORs.

(Example: From Atlanta Region to Germany, Japan, Italy, etc.)

OCONUS Origin Regions

(Moves originating from these regions will not be included in the

pilot acquisition.)

a. Intra-Region Destination. Contractor must provide service from

all AORs of PPSOs located within a region to AORs located within

countries in that same region. (Example: From MTMCEUR Region (Germany)

to United Kingdom, Italy, Turkey, etc.)

b. Inter-OCONUS Destination. Contractor must provide service from

all AORs of PPSOs located within a region to all AORs located within

countries outside that region. (Example: From MTMCEUR Region (Germany)

to Japan, Korea, Hawaii, etc.)

CONUS Destination. Contractor must provide service from all AORs

of PPSOs located within a OCONUS region to all CONUS AORs. (Example:

From MTMCEUR Region (Germany) to South Carolina, California, New

Jersey, etc.)

We anticipate making multiple awards on DOD's needs and the

contractor's capacity set out in responsive proposals. In addition, we

envision awarding an indefinite delivery/indefinite quantity (IDIQ)

fixed price contract for one (1) year, with four (4) priced one (1)

year option periods. The contract will specify the minimum tonnage the

contractor is guaranteed for the base period and the maximum tonnage

the contractor is obligated to move during each year of performance and

for the life of the contract. Further, the contractor will specify his

maximum daily tonnage capacity for each installation within the region.

Contractors may be authorized to submit a separate daily maximum

for peak season. The maximum daily tonnage capacities will be a

negotiable element in determining contract awards.

[[Page 14749]]

A contractor may choose to submit a proposal for any or all of the

categories of service. Each awardee is obligated to provide service

from all areas of responsibility of PPSOs located within a region to

all destination AORs encompassed within each category of service.

(5) Industry: MTMC's repeated statements indicate the technical

area elements of an offeror's proposal will have priority over cost. It

is very difficult for those who have been in business with the military

for any length of time to believe cost will not be the primary factor.

This element of the reengineering proposal is critical to providing

premium services for the military customer.

Response: One of the main differences between the current personal

property program and the reengineered concept, is that the current

program awards traffic to the low rate carrier. The reengineered

concept, on the other hand, will emphasize the selection of carriers

that provide quality service, even if this results in the payment of

commensurably higher rates. Thus, the reengineered source selection

process will place weight on the carriers' capability to provide

quality service and not just focus on low rates. The relative

importance of the technical factors the Government will evaluate during

the source selection process will be specifically stated in the

solicitation.

(6) Industry: Technical issues can only be evaluated subjectively.

Awards based on subjective evaluation factors and the offerors writing

ability rather than the carriers ability to competitively meet MTMC's

established service requirements will result in litigation.

Response: We are aware that changing the present system may result

in litigation. However, if we adopt a FAR-based system, we plan to

develop a streamlined acquisition process that will help us achieve two

main objectives: facilitate the source selection process for both the

carriers and MTMC, and minimize the potential for litigation. We plan

to develop a source selection process which de-emphasizes proposal

writing skills and emphasizes the contractors' capability and past

performance. Again, if we adopt the FAR-based approach, we will seek

industry assistance with the draft solicitation and the streamlined

acquisition method.

(7) Industry: Industry is not familiar with the terms, conditions,

and requirements of the FAR. This will lead to inconsistent

interpretations, appeals and protests.

Response: Industry has indicted repeatedly that it understands the

terms and conditions of the services we want to procure. Additionally,

industry has indicated that it can provide most of the required

services under the current program. The main difference lies on the

source selection methods and standardized clauses which the FAR

provides. Thus, whether we procure those services using the FAR, or

using FAR-exempt procedures, does not appear to increase the potential

for inconsistent service. The statement of work will be essentially the

same under either method. With regard to appeals and protests, please

note that the right to appeal or protest procurement decisions is based

on statute, not the FAR. If the FAR is chosen, MTMC is dedicated to

work with industry in facilitating the transition to a FAR-based system

and, together, avoid any conditions which may lead to unnecessary

appeals or protests.

(8) Industry: A FAR based contract has indefinite and various terms

and conditions which are subject to legislative change and new

interpretations by parties with no knowledge of the moving industry.

This will adversely impact the ability of the contractor to comply and

provide the services required.

Response: No government contract, be it FAR or FAR-exempt, has

``indefinite and variable terms and conditions.'' The FAR contains

rules, terms, and conditions which generally govern the formation and

administration of government contracts. The work requirements are

established by the requiring activity and are set forth in the

contract. While the FAR is often revised to implement new ideas, court

decisions and legislative changes, those changes are always

prospectively applied. In those unusual cases where a contract needs to

be modified to implement a new court decision or statute, the

contractor is compensated for any increased cost of performance.

(9) Industry: Subcontracting requires discussions prior to bid

submission between the parties involved. These discussions will involve

the exchange of price information, as well as consideration of whether

a potential bidder will agree not to submit its own independent bid.

This raises serious anti-trust implications. The moving industry has in

the past been subject to Justice Department grand jury investigations

and threatened indictments on the basis of alleged joint actions by

bidders and agents in connection with the submission of bids on

military traffic.

Response: Carriers concerned about whether their discussions

regarding potential subcontracting arrangements with other carriers or

contractors might have antitrust implications should consult their

legal counsel. Hundreds of contractors in other industries routinely

enter into subcontracting arrangements without violating antitrust

laws. We are unaware of any statutory provision which would prevent the

household goods industry from entering into similar subcontracting or

other types of teaming arrangements. Please refer to FAR Subpart 9.6

for the Federal Government's policy on teaming arrangements and joint

ventures.

(10) Industry: Subcontracting is developed based on business

relationships and established on the basis of mutual integrity and

reputation for performance and prompt payment. In addition,

subcontractors will have no protection against slow payment or

nonpayment by the Government selected contractor.

Response: Any acquisition concept we adopt will place significant

emphasis on past performance. This will include the contractor's

financial performance. Since a carrier's failure to comply with its

financial obligations to its subcontractors is likely to negatively

impact its performance, we anticipate that the carrier receiving awards

under such a reengineered proposal will be motivated to maintain

excellent working relationships with its subcontractors. As far as

protection against slow payment, or nonpayment by a Government selected

contractor, we believe that this responsibility rests with industry. As

a general rule, the Government's obligation is to the prime contractor.

It is the responsibility of subcontractors to assure that they are

involved in a business relationship with a reliable and responsible

prime contractor. The same holds true for the prime contractor.

(11) Industry: MTMC's concept of contractors and subcontractors

will put the agent/van line relationship seriously at risk. No large

van line, with appointed and dependent and financially supported

agents, will make its resources available to those agents working as

subcontractors for a competing van line, on a contract that the carrier

itself bid on and lost.

Response: The objectives of the reengineering process include the

design of a procurement process that maximizes competition, selects

quality carriers, and is administratively manageable for MTMC and the

PPSOs. We recognize that any acquisition method we adopt which

satisfies these objectives may require some modification of industry's

current business practices. We do not wish to dictate what specific

changes the carrier industry should make to its business

[[Page 14750]]

practices. We trust that the household goods industry has the

capability to make those business decisions independently. Hundreds of

other government contractors have been able to adjust to changing

market conditions. The freight industry, for example, is successfully

adjusting to deregulation. We are confident that those household goods

carriers that are committed to providing quality transportation

services to DOD at competitive rates will find ways to successfully

compete for these contracts.

(12) Industry: Large van lines have the resources to provide the

services required and can satisfy the subcontracting requirements

within their own system of agents and owner operators without utilizing

the services of other carriers and agents. Capacity will only be an

issue during peak period of times. Many smaller carriers or agents will

not be able to survive on peak business alone. As a result, the agent

infrastructure will be severely damaged. Warehouse and van capacity

will be reduced resulting in serious deterioration of service and

competition on subsequent bids will be significantly reduced since many

unsuccessful bidders, who have been deprived military shipments will go

out of business. Service quality will ultimately deteriorate.

Response: If we adopt a FAR-based approach we anticipate making

multiple awards. The decision on how many awards we need to make will

depend on the minimum transportation needs of DOD shippers and the

capacity of the competing carriers. The solicitation will provide data

showing DOD's minimum transportation needs for each performance period,

including peak periods. It is possible that some carriers will base

their capacity on the agent infrastructure they already have in place.

Others may choose to expand their capacity by entering into additional

subcontracting arrangements. Carriers will retain absolute discretion

on how they wish to structure their proposals for these requirements.

At this point, it would be speculative to assert with a high degree of

certainty the potential impact the reengineered acquisition will have

on the agents infrastructure, as well as warehouse and van capacity. We

anticipate that the pilot acquisition we plan to conduct will provide

factual information about the potential impact of the reengineered

concept on the industry's infrastructure.

(13) Industry: The FAR contains many stringent reporting

requirements. These reports may be required simply because the contract

is subject to the terms and conditions of the FAR.

Response: The only known reporting requirement required by the FAR

relates to subcontracting and is only required of large businesses. The

report reflects the contractor's progress on meeting his/her

subcontracting goals as proposed and incorporated into any resultant

contracts. Any other required reports will not result from the FAR, but

will be generated as a requirement under the particular contract for

purposes of providing specific management information to the

Government.

(14) Industry: The FAR contains strict penalty provisions for

contractors that are not able to meet all of the terms of the contract.

Given the lack of familiarity with the detailed requirements of the

FAR, the number of violations can be expected to be very high and the

amount of potential penalties could be crippling to the entire

industry. There is no need for these penalties because they only serve

to enforce meaningless and unnecessary rules. This requirement is

another reason to exempt this contract from the FAR.

Response: The FAR provides guidance to Federal agencies on how to

conduct its acquisition. It provides standardized clauses which Federal

agencies must use for certain types of acquisition. It does not contain

penalties; rather, it outlines remedies available to both contractors

and government agencies in place of contract changes or disputes. These

remedies are incorporated into the contract through standardized

contract clauses. See FAR Subpart 33.2, for guidance on disputes and

appeals, and FAR Part 43, for guidance on contract modifications.

Contractors are only required to comply with the terms and conditions

of the contract. These terms and conditions initially are stated in the

request for proposals. Thus, carriers will know, even before they

submit a bid in response to the request for proposals (RFP), the terms

and conditions of the proposed acquisition. Those carriers that believe

they cannot comply with the terms of the RFP has essentially two

options. First, they can inform the procuring agency of the fact which

in their opinion prevent them from complying with the requirements, and

request the agency to amend the RFP. Second, carriers can enter into

teaming or joint venture agreements with other companies in order to

enhance their capability to perform the requirements. Of course, while

we understand this is not a desirable option, a carrier can always

choose not to bid. Finally, it should be noted that, like any other

private citizen, contractors also have to comply with Federal statutes.

Most of these statutes would apply regardless of whether we are dealing

with FAR or FAR-exempt contracts.

(15) Industry: The FAR contains provisions regarding default terms

and conditions. It also stipulates procedures regarding contractor

liability for procurement costs. The clauses pertaining to default are

not mandatory and the reasonableness of these terms should be dependent

upon the type of contract awarded. Specific information is required

regarding default provisions and punitive actions.

Response: The use of contract termination clauses for convenience

and default are mandated as specified in FAR Subpart 49.5. The

standardized clauses to be used are listed in that subpart. General

guidance regarding the policies and procedures for the complete or

partial termination of contracts is provided in FAR Part 49. We will be

glad to answer any specific questions industry may have about these

clauses. The specific clauses applicable to any contract will be

included in its appropriate RFP.

(16) Industry: All of MTMC's service requirements, with a single

exception (full replacement liability), can be achieved by modifying

the current program and without incurring the problems resulting from

the proposed ``winner take all'' FAR contract concept. The draft

Requirements Package and Acquisition Strategy reveals a program that is

far more bureaucratic and complex than the existing program and it

contradicts standard commercial business practices in most aspects.

Response: One of the primary reengineering goals it to move away

from the current rate driven system, to one that encompasses a quality/

greater value approach. MTMC has discovered several factors that argue

decisively against merely modifying the current program. First, 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 brought it to

its present form. Additionally, 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. Also, achieving a system

that awards traffic on other than cow cost cannot be attained by

modifying the existing program. The FAR provides an established and

proven procurement method to achieve the desired approach. In addition,

MTMC is considering a multiple award regional approach in place of the

``winner take all'' concept.

[[Page 14751]]

Thus, there will be adequate opportunities for several contractors to

receive contract distribution system and ``me-too'' bidding, on the

other hand, effectively emasculates the benefits that competition can

provide.

Comments Regarding the Draft Requirements Document; Industry

Comments and MTMC Responses are Keyed to the Paragraph Number of

the Requirement Document

1. Requirements

1.1 Channel Concept

(17) Industry: Commercial accounts are national, not regional or

point-to-point in scope. The moving industry, even at its inception,

was concerned about return loads. Trucks must be kept filled and this

cannot be done in a point-to-point environment, especially if it is not

known who will be awarded the contract from the other end. Not knowing

which routes will be awarded to an offeror further complicates the

bidding strategy. A traffic lane concept will minimize the opportunity

to fully utilize equipment and will increase costs.

Response: MTMC agrees the majority of commercial accounts are

national in scope; however, due to significant concerns from industry

regarding a national/worldwide approach and the effect it might have on

small and medium carriers, local moving and storage companies, and

freight forwarders, the approach was changed. MTMC considered awarding

traffic on a ``winner take all'' basis out of an area of responsibility

(AOR) to a rate area. It became clear through industry comments and

MTMC's analysis that the channel approach created many administrative

complexities. Consequently, MTMC is considering use of a regional

approach with multiple awards. The proposed regional concept provides

an opportunity for all carriers, local agents, and freight forwarders

to submit offers. Subcontracting provides an opportunity for carriers

to participate in those channels in which they were not awarded

contracts.

(18) Industry: The proposed traffic channel concept is no different

than those in use today. This concept offers no program simplification

for MTMC or industry.

Response: MTMC agrees. Analysis of the AOR/channel concept

confirmed this approach would not simplify the program for the

Government or industry. We feel the regional approach will simplify

evaluation, execution and administration.

1.1 Winner Take All

(19) Industry: The ``winner take all'' approach will have a

devastating impact on small corporations within the industry. It would

create a monopoly of large van lines, thus forcing small carriers,

agents, and forwarders out of business.

Response: The regional/multiple award concept should eliminate

concerns regarding ``winner take all.''

(20) Industry: No one carrier or any one agent in a military market

is able or willing to provide for 100 percent of all traffic in any

given channel. Every year during peak season there are problems

somewhere in the country acquiring the necessary capacity. It should be

abundantly clear from this that no one contractor is capable of

handling all of the shipments, whether worldwide, at an installation,

or in a single traffic channel. The volume is too large.

Response: Concerns over available capacity during peak season was

an important factor for MTMC in deciding upon multiple award options.

Multiple awards, in conjunction with contractor stated maximum daily

capacity and PPSO discretion in awarding traffic, will ensure

sufficient capability for movement requirements.

2.1 Expansion Capability

2.1.1

(21) Industry: A carrier and its agent cannot be expected to

maintain additional capacity and personnel to cover seasonal surges

which may or may not materialize. Steps should be taken to minimize

such surges by encouraging movements during the winter months.

Additionally, no prudent bidder can provide a viable rate without

knowing the parameters of the daily workload requirement. The

Government's estimated daily requirements and minimum acceptable daily

requirements must be provided for each channel.

Response: One of the ways that a contractor can expand capacity

during seasonal surges is through an effective subcontracting plan. The

revised concept allows for the contractor to specify their maximum

daily capacity. In addition, we are considering separate daily maximums

for peak season movement requirements. Multiple awards and

subcontracting will ensure the capability is available to support

seasonal surges. Contractor established daily maximums and the right of

refusal once daily maximums have been met, afford the contractor an

opportunity to effectively manage his/her company's operations.

Although MTMC and the services would like to see the volume of moves

evened out over the entire year, realistically there is not much that

can be done to accomplish this. Often, even when military members with

families are ordered to a new duty station during the winter months,

the spouse and children will stay behind until the school year is

completed. Although the DOD can control when a service member must

report for a new duty assignment, we can not mandate when he/she

chooses to move household goods and family. Just like the commercial

world, a move is a quality of life issue and most people with families

prefer to move in the summer to minimize the adverse impact on their

children's education.

(22) Industry: The Contractor should be compensated overtime labor

charges when services are requested and performed during other than

normal working hours. It is not realistic to require the contractor to

extend work hours without any additional compensation. The provisions

of the Service Contract Act would require the contractor to pay its

employees overtime wages and the Government should like be willing to

pay the contractor.

Response: Since confirmed pack, pickup, and delivery dates are

established between the contractor and customer, MTMC does not envision

the payment of overtime charges as a separate charge item. We would

expect contractors to factor anticipated costs into their rates.

(23) Industry: The expansion capability requirement is restrictive

on small business. The alternative to the unlimited expansion

capability requirements is to use the FAR-exempt tender system of

procurement. It has agent and carrier expansion capability built in by

using the Me-Too rate filing system. The available capability provided

by the Me-Too carriers will not be available under the FAR contract

concept.

Response: MTMC wants to move from the current rate driven system,

to one that considers the value of services provided. Although price

will continue to be one of the factors evaluated, it will not be the

driving factor in determining which proposal is awarded the traffic.

The Government will make cost-technical tradeoffs, and determine which

proposal offers greatest value based on sound business judgment and the

evaluation criteria stated in the solicitation. The current Me-Too rate

filing system does not lend itself to an approach that evaluates

factors other than cost. Although it allows for a carrier to match or

Me-Too the rate of the low cost carrier, it does not provide a vehicle

for the carrier to match the other factors encompassed in an

[[Page 14752]]

evaluated procurement. Therefore, under Me-Toos, the rate becomes the

driving factor once again. The alternative for expansion capability, is

for the contractor to assemble an effective and efficient

subcontracting plan.

2.1.2

(24) Industry: The Contractor may be asked to support unforecasted

contingencies, but should not be required to do so. The Contractor

should be compensated for all additional cost incurred in supporting

such an effort.

Response: Because of the potential severity of unforecasted

emergencies such as military contingencies, natural disasters, etc.,

MTMC believes it is imperative that the contractor be required to

support these unforeseen events. A provision does exist for HQMTMC and

the contractor to negotiate, when applicable, rate adjustments

necessitated by such unforecasted conditions that exceed contract

requirements. However, if such requirements are within the daily

maximum capacity established in the initial contract, they should not

entitle the contractor to additional compensation.

2.2 Movement Via Air Mobility Command (AMC)/Military Sealift Command

(MSC)

(25) Industry: Movement via AMC/MSC is not a commercial business

practice. MTMC is taking away the Contractors traffic management

responsibility for through movement. The PPSO's right to direct

movement via AMC/MSC will deny the Contractor the ability to negotiate

the most cost effective rates based on volume.

Response: DOD policy mandates use, under certain circumstances, of

AMC and MSC lift capability. This policy serves to maintain DOD's

transportation assets in operation during peacetime so they are

available during contingencies. In addition, there always is not ample

American flag service to accommodate the volume of DOD Unaccompanied

Baggage moving between CONUS and certain OCONUS destination (i.e.,

Korea), and there are some OCONUS areas where AMC/MSC assets provide

the only service available. Any directed use will be separately

addressed in any ensuing solicitation.

2.3 Compliance With DOD Policies

(26) Industry: Compliance with regulations, publications,

directives, MTMC advisories, and changes thereto are not commercial

business practices. The contract should be all inclusive and the

contract should not be revised without consultation and agreement from

the Contractor.

Response: The contract will specify which conditions the contractor

must comply with. Once the contract is signed and awarded, any change

must be discussed with the contractor. There is no way it can be

revised without the knowledge of the contractor.

2.5 Automation Interface

(27) Industry: Automation interface systems must be readily

available in the commercial marketplace and not out of the technical or

financial reach of contractors. Interface capability of the local

agents may be cost prohibitive and the requirement may preclude small

businesses from participating. MTMC should consider assisting small

businesses in acquiring this capability by providing sufficient notice

of the details of the electronic capability being requested.

Response: Definitive automation requirements will be included in

the Request for Proposal. MTMC envisions many benefits associated with

electronic capability such as intransit visibility of shipments,

electronic billing, and payments, etc. However, MTMC is also sensitive

to demands upon small and medium size businesses that provide quality

service. Consequently, MTMC will look to implement electronic

capability requirements that are efficient, cost effective and

reasonably avilable to the industry. We will also consider capabilities

of DFAS, the PPSOs, the military services, the customers, and MTMC.

3. Key Personnel

3.1/3.2 Contract Manager/Operations Manager

(28) Industry: It is not commercial practice to dictate the

experience levels of the contractor or subcontractor personnel. Key

personnel requirements should not be micromanaged by MTMC. The 10 years

experience requirement for the Contract Manager, and the 5 year

requirement for the alternate and Site Manager is unreasonable.

Recommend reducing or eliminating this requirement since the quality

feedback of the market place will drive the parties providing service

to employ the best personnel available to ensure high quality rankings.

Response: MTMC partially agrees and has eliminated the requirement

for years of experience for all key personnel except the Contract

Manager. MTMC believes that a minimum number of years of experience is

a necessary requirement to assure that the Contract Manager has the

knowledge and background to be responsible for the performance and

operation of the contract. However, as recommended by industry, MTMC

will relook the minimum experience requirement for the Contract

Manager. The specific requirement will be stated in the RFP.

3.3

(29) Industry: The prohibition against a contractor removing key

personnel constitutes interference with the internal management of the

contractor's company. This requirement should be deleted.

Response: MTMC has eliminated the requirement that the contractor

must notify and receive concurrence by HQMTMC of the replacement of key

personnel, with the exception of the Contract Manager whose replacement

must be with the concurrence of HQMTMC. HQMTMC is only concerned with

the replacement's qualifications. It is necessary that the contractor

verify to HQMTMC the qualifications of the potential replacement of the

Contract Manager to assure that the quality of contract performance is

not placed at risk by the employment of an inexperienced contract

manager.

4. Personnel

4.3

(30) Industry: Imposing requirements for uniforms with company name

or logo and Contractor issued identification cards are an excessive

regulatory requirement which provides no service quality benefit. These

requirements disrupt commercial industry practices and impact

subcontractors, small businesses, and carriers employing casual labor.

An alternative would be to require employees performing services at the

customers residence to dress in appropriate attire and be in

presentable clean condition. If identification is sought by the

customer, require the driver or lead foreman to present commercial

drivers license or possibly a Contractor issued identification card.

Response: MTMC has modified the requirement. All employees

performing moving services at the customer's residence shall be in

uniform shirt with company name or logo and maintain a professional

demeanor. The team leader shall have some type of contractor issued

identification. The uniform shirt and team leader's identification card

provide a method for the customer to verify who the individuals are

before allowing entry to their home. The identification card provides a

quick and accurate way for the customer to identify the team leader who

is in

[[Page 14753]]

charge of the work group and who the customer can go to if a problem

arises. MTMC feels that these requirements are simple as well as

inexpensive methods to reassure the service members that the

individuals handling their personal belongings are professionals.

Although these requirements may not have a direct impact on the quality

of service being provided, we believe that they are reasonable methods

to relieve some of the anxiety associated with moving.

5. Quality Control

5.2 Intransit Visibility Service

(31) Industry: MTMC requiring tracing within 2 hours is not

realistic and not the prevailing commercial practice.

Response: MTMC realizes that at the time of a tracing request, the

shipment may be in route and it may be difficult for a contractor to

provide an exact status on that particular shipment. Upon a request of

a shipment trace by the customer or the government, an initial response

from the contractor that provides the most current status available

within 2 hours from the time of the request will be required. Once the

initial response is made, a more updated and exact status can then be

provided at a later time. Technology available and currently in use by

many carriers today allows for the capability to trace, monitor, and

report movement progress of any shipment instantaneously. As our

members may also be traveling at the time of the request, we feel that

a 2 hour response time reasonably meets their needs while placing a

reasonable demand on the contractor.

(32) Industry: The requirement for the contractor to provide a

weekly report to the destination PPSO listing all anticipated late

shipments is excessive.

Response: MTMC understands industry's concerns with the volume and

frequency of reports currently proposed. Consequently, MTMC is

currently reviewing all the report requirements to determine which ones

can be streamlined or eliminated.

5.3 Access to Contractor Facilities

(33) Industry: Access to contractor's facilities should be limited

to normal working hours, by appointment only, and should not include

access to personnel files.

Response: Access to contractor records is often required to

substantiate compliance with statutory or contractual requirements.

When such efforts are necessary, the Government will coordinate with

the affected contractor to minimize disruptions as much as feasible.

5.4 Contractor Meeting With PPSO

(34) Industry: Contractor meetings with the PPSO should follow the

commercial practice that a meeting occur on an as needed basis based

upon common sense, problem resolution and the judgment of the manager

involved. It is not necessary to hold these meeting on a weekly,

biweekly, or monthly basis.

Response: MTMC agrees. The intent of this requirement is to let the

PPSO schedule the meetings at his discretion.

5.5 Contractor Operational Problems

(35) Industry: Agree that the contractor should keep MTMC/PPSO

informed about serious problems that arise, but disagree with being

required to advise the PPSO of the loss of a subcontractor. If a

subcontractor goes out of business or the relationship to the

contractor is terminated for any reason, neither MTMC nor the PPSO

should be involved as long as the contractor is still able to fulfill

its duties.

Response: MTMC agrees and will modify the requirement accordingly.

MTMC has no privity of contract with subcontractors; however, prime

contractors will be expected to fulfill their contractual obligations.

However, should a subcontracting plan become part of any ensuing

contract, any substantial variance from its terms must be reported.

5.6 Customery Survey

(36) Industry: Agrees with replacing TQAP with a customer survey

form.

Response: MTMC agrees and TQAP will be replaced with the customer

survey form.

(37) Industry: MTMC should not prescribe the questions on the

customer survey to be asked.

Response: MTMC believes that there are some core questions that

must be mandatory on the customer survey form to evaluate contractor

performance. However, MTMC does not intend to otherwise limit the

questions that the carrier believes it needs to retain quality service.

(38) Industry: There should be a mandatory return policy on the

customer survey form for the military service member, and if after a

predetermined time no reply is received then the move should be

considered satisfactory with the contractor receiving credit

accordingly.

Response: MTMC cannot mandate that the military member return the

customer survey form. We would expect carriers to institute reasonable

efforts to obtain representational answers. PPSOs will conduct a

sufficient number of random surveys to assure the sample size for each

contractor per region/contract provides a minimum 95 percent confidence

level. However, PPSO efforts will not remove carrier responsibility to

take all reasonable efforts to obtain survey results.

6. Quality Assurance

6.2 Contractor Performance

(39) Industry: The required standards of 99% for on-time pickups,

95% for on-time delivery, and 95% for using the contractor again are

higher than most corporate accounts and should be lowered.

Response: MTMC does not concur and has retained the requirement for

these standards. MTMC has benchmarked this requirement with corporate

customers and found numerous examples of standards equal to or higher

than these, and believes that the DOD, as this industry's largest

single customer, deserves equal service. Consequently, MTMC believes

that these standards are appropriate and reasonable.

(40) Industry: In addition to measuring loss/damage, claims

frequency and loss/damage claims exceeding a certain dollar amount, the

contractor's performance should be measured on the basis of claims cost

per hundredweight. Furthermore, loss/damage should not count against a

carrier as long as the member was made whole and is satisfied with the

move.

Response: MTMC disagrees that loss/damage should not count against

a carrier as long as the member was made whole and is satisfied with

the move. We believe that loss/damage is a critical element of a

contractor's overall performance and should be compiled and evaluated.

MTMC is considering claims' cost per hundredweight, as well as other

alternatives.

7. Specific Tasks

7.1 Customer Service

7.1.1 Toll Free Telephone Numbers

(41) Industry: It is simple to provide for toll free numbers in the

United States, but toll free numbers are not available all over the

world internationally. Also, the toll free number should only be

required to be manned during normal business hours which is 5 days a

week and 8 hours a day. Recommend that after hours be covered by a

mechanical message collection device with follow up during the next

official business day.

Response: MTMC recognizes that in some instances toll free numbers

may not be available internationally. MTMC

[[Page 14754]]

has modified the requirements document to read that if toll free

capability is not available, the contractor shall accept collect calls.

MTMC has also modified the requirement of the toll free number being

manned 24 hours a day, 7 days a week, to it being operational 24 hours

a day, 7 days a week. Thus, a type of recorder, beeper, or other

electronic device may be used provided someone knowledgeable will

promptly respond to the customer's concern. The goal is to allow

customer's located in different time zones, to contact the contractor

without being restricted by the contractors routine office hours.

(42) Industry: It is redundant and unnecessary for the contractor's

origin and destination agents to have toll free numbers. The service

member should be dealing with the contractor; thus, only one toll free

number is necessary.

Response: MTMC agrees and has eliminated the requirement for origin

and destination agent toll free numbers. However, the requirement for

the contractor to establish and maintain a toll free number for their

service areas has been retained in the requirements document. We

believe it is necessary that the customer have at least one toll free

number where his/hers inquiries/problems can be dealt with in a timely

manner.

7.1.2 Movement Counseling

7.1.2.1

(43) Industry: Imposing a minimum transit time schedule for the RDD

is micro management, and instead MTMC should allow the contractor to

work with the customer to reach a mutually agreed upon RDD. MTMC should

also allow the use of spread dates for pickup and delivery because it

is a commercial practice, allows for the greatest flexibility, and the

maximum use of a carrier's capability.

Response: MTMC agrees that the transit time guide should not be a

mandatory regulation for determining the RDD, and the contractor and

the customer should be allowed to come to a mutually agreed upon

delivery date. However, a transit time guide will be made available to

be used as a tool to assist in determining the RDD. In those instances

when a mutually agreed RDD cannot be reached between the Contractor and

the customer, the transit time guide will be used to establish the RDD.

MTMC will not require the customer to agree to the use spread dates.

However, if the contractor and the customer mutually agree to the use

of spread dates for pack, pickup, or delivery, then spread dates may be

used. However, if the customer does not agree to spread dates, then the

contractor must agree to a specified date for these services.

(44) Industry: MTMC needs to clarify the requirement that the

contractor must notify the customer within 2 work days after

notification by the PPSO that the contractor has been awarded the

traffic.

Response: MTMC has eliminated the 2 work day minimum for

notification, and modified the requirement so that upon notification of

shipment award, the contractor shall contact the customer to confirm

the pack, pickup, and tentative required delivery dates established

during the PPSO entitlement counseling or establish mutually agreed

upon dates. The contractor shall provide each customer and the PPSO a

schedule of all confirmed dates prior to the pickup date. The PPSO will

then issue a service order based on these confirmed dates.

(45) Industry: Agrees with move counseling being done by the

carrier. However, MTMC/PPSO must continue to provide entitlement

counseling because of the variation in policy among each of the

military services.

Response: MTMC agrees and the PPSOs will continue to provide

entitlement counseling to the service members while the contractor will

now be responsible for movement counseling.

7.2 Pre-move Survey

(46) Industry: It is unnecessary to require an on site pre-move

survey on all shipments regardless of weight or type. Telephone surveys

should suffice for small shipments and shipments more than a specified

number of miles away.

Response: MTMC wants the contractor to perform a pre-move survey on

all shipments. However, MTMC agrees that in many instances a pre-move

survey conducted by telephone would be effective and appropriate.

Consequently, the requirement has been modified so that a residence

pre-move survey shall be conducted on all shipments estimated at 3000

pounds or more, at origin points within a 50 mile radius of

contractor's nearest agent facility, unless specifically waived by the

customer and annotated on the service order. A telephone contact pre-

move survey shall be made, as a minimum, for all other shipments.

7.3 Customer Inconvenience Payment

7.3.1

(47) Industry: There should exist a minimum weight and miles

standard in determining inconvenience claims, as is the prevailing

commercial practice. The contractor should not be responsible to pay

100% of the costs of meals, clothing, or other purchased items that

retain a residual value. Inconvenience payments should not be tied to

the government per diem rate.

Response: MTMC does not concur and has retained the requirement

that the contractor shall pay the customer an inconvenience claim when

a missed pickup, missed RDD, or missed confirmed delivery date from SIT

causes inconvenience to the customer and the expenditure of personal

funds for the reasonable costs for lodging meals, and rental/purchase

of household necessities. MTMC has also retained the requirement that

the contractor's maximum liability, excluding costs for rental/purchase

of reasonable household necessities, shall not exceed the local DOD per

diem rate. MTMC believes that the customer should be reimbursed for

reasonable out of pocket expenses incurred as a result of these type of

situations. MTMC further believes that the DOD per diem rate provides

an established and effective tool to determine the cost for lodging and

food expenses associated with the various cost of living rates in

different areas of the world.

7.3.2

(48) Response: The contractor being required to acknowledge receipt

of the inconvenience claim is unnecessary. Also, the contractor will

require more than 15 work days from the time of the customer's request

for reimbursement to make payment of the inconvenience claim.

Response: MTMC partially agrees, and has eliminated the requirement

for the contractor to acknowledge receipt of the claim to the customer

within 5 days of the date of the customer's request. However, MTMC

believes that 15 work days from the time of the customer's request is a

reasonable period of time for the contractor to make payment on an

inconvenience claim, and has retained this requirement. This

requirement is designed to reimburse the customer for unexpected

expenses that he/she may not be reasonably able to personally

underwrite.

8. Transportation Services at Origin

8.3 Advance Notice of Pack/Pickup Dates

(49) Industry: Do not agree with short notice shipments being done

at no additional cost to the government. Additional services of this

type should be compensated because it goes beyond the level of normal

service.

[[Page 14755]]

Response: MTMC has retained the requirement that short notice

shipments, such as disciplinary actions, compassionate reassignments,

movements pertaining to deceased members and their families and short

notice assignments, shall be moved at no additional cost to the

Government. The contractor should account for these possible type

situations up front in the contractor's single factor rate, and

exercise sound business practices that permit the him/her to be

responsive to the government's needs. On the other hand, unforeseen

emergencies such as natural disasters, are subject to negotiation under

the expansion capability paragraphs of the draft requirements document.

8.4 Acceptance of Shipments

8.4.1

(50) Industry: It makes no sense to force the contractor to take

shipments with dates that cannot be met. There must be a minimum daily

work load established.

Response: MTMC is considering allowing contractors to establish

their maximum daily capacity at each AOR within a region. Each

contractor would be required to accept all shipments offered until they

reach their established maximum daily capacity. Contractors may refuse

shipments once they reach their maximum daily capacity. We will provide

specific details in the draft solicitation.

8.4.3

(51) Industry: Forcing the contractor to provide the PPSO a daily

report of all shipments scheduled for pack and pickup for the next work

day is an administrative burden with no clear value added.

Response: MTMC agrees and has eliminated the requirements that the

contractor provide this daily report.

8.6 Expedited Service

(52) Industry: Currently, the draft requirements document provides

that expedited service charges apply only if the RDD is less than 25%

of the published transit line. This language must be changed to require

an expedited service charge whenever the PPSO requires the RDD to be

less than the transit time. The requirement that expedited service be

provided without additional cost is unreasonable.

Response: MTMC has modified the requirements document to state that

if the required delivery date is less than 50% of the transit time then

expedited service charges will apply. MTMC believes that with the

contractor and the customer working together to set up a mutually

agreed upon delivery date, this will allow the flexibility and the

opportunity for the contractor to meet most expedited deliveries

necessitated by member needs. In those cases when the PPSO deems it

necessary for the required delivery date to be less than 50% of the

published transit time when the expedited service charge will apply.

Otherwise, we expect potential contractors to include this requirement

in their single factor rate.

11. Shipment Diversion

(53) Industry: Diversions of shipments up to 100 miles at no

additional cost is an excessive requirement.

Response: MTMC agrees that requiring the contractor to be

responsible for shipments diverted to a new destination up to 100 miles

at no additional cost is excessive. Consequently, the requirements has

been modified to 50 miles. However, when necessary to meet the needs of

the Government, the PPSO may order the contractor to divert a shipment

to a new destination that is more than 50 miles from the original

destination. In such case, a new single factor rate that includes all

charges from original origin to new destination will be negotiated

between the PPSO, in coordination with MTMC, and the contractor.

14. Transportation Services at Destination

14.8 Destination Shipment Report

14.8.1

(54) Industry: Destination shipment reports are excessive and

unnecessary micro management by MTMC.

Response: MTMC understands industry's concerns with the volume and

frequency of reports currently proposed. Consequently, MTMC is

currently reviewing all the reporting requirements to determine which

ones can be streamlined and/or eliminated.

14.9 Conversion of Storage in Transit (SIT) to Commercial Storage

(55) Industry: There must be a defined end point to government paid

SIT, not just an undefined specified date by the PPSO.

Response: SIT is authorized in increments of 90 days with

extensions up to 360 days. Consequently, SIT does have a defined end

point. In addition, a storage extension forms reflecting the expiration

date will be provided to the Contractor.

15. Liability

15.1

(56) Industry: The contractor should have the prerogative of

repairing a damaged item or replacing the item whichever they deem more

cost effective.

Response: MTMC agrees and has added the option of allowing the

contractor to negotiate with the member to repair damaged item(s) are

repaired to the same condition as received by the contractor from the

member at the time of pickup. If however, the contractor chooses to

replace the lost or damaged item(s), then replacement will be

determined by current market value without depreciation.

15.2

(57) Industry: Need to add statement that any item replaced becomes

the property of the contractor.

Response: MTMC agrees and has modified the requirements document to

read that all items which are replaced or for which the full current

market value has been paid become the property of the contractor. The

contractor shall pick up the salvage within 30 calendar days after

settling the claim with the customer unless provisions for a later pick

up date are made with the customer. Failure to pick up salvaged

property within the prescribed time results in forfeiture of the

property, loss of any deduction of funds for salvage value, and the

customer may then dispose of the property.

15.3

(58) Industry: Full value protection of $100,000 per shipment is

excessive and should be modified to apply a released value on a per

pound basis. Coverage should be depreciated; however, the member could

choose to purchase additional coverage at an additional cost if

desired. The contractor should be allowed to use a high-value inventory

in which the member must identify articles with a value of greater than

$100.00 per pound.

Response: MTMC partially agrees and has reduced the maximum

liability from $100,000 per shipment to $75,000 unless the customer

purchases additional insurance. MTMC is aware that additional up front

costs may be associated with full value protection; however, it is a

service that is desirable for our military members. We believe that in

the long run, these up front costs will be offset by better service and

a reduced claims ratio per move. This notwithstanding use of a high-

value inventory being considered.

16. Loss and Damage Claims

16.1

(59) Industry: Agrees with service members filing their claims

directly with the contractor.

[[Page 14756]]

Response: MTMC also agrees with direct claim settlement between the

contractor and the customer, and has provided for this option in the

draft requirements document.

16.3

(60) Industry: Commercial practice requires that exceptions (damage

to property) be noted at the time of delivery. At a minimum, the

customer should be required to notify the contractor of loss or damage

within a minimum number of specified days following delivery.

Response: The contractor will provide the customer a notice

document at time of delivery, and the customer will provide the

contractor at time of delivery with written notice of discovered lost

and damage. MTMC agrees that the service member should notify the

contractor in a timely manner of later discovered loss or damage.

Consequently, the requirement has been modified to read that the

customer will have 90 days to notify the contractor in writing of later

discovered lost or damaged items. For lost and damaged items identified

by the customer within the 90 day notice period, the notice document

overcomes the presumption of the correctness of the delivery receipt.

16.4

(61) Industry: The service member should only have up to nine

months to file a claim as is the current commercial practice.

Response: MTMC disagrees. Current commercial practice is no less

than 9 months. We feel that a 1 year limit for the service member to

file their claim directly with the contractor is fair, due to the

uniqueness of military constraints.

16.7

(62) Industry: Need to add a clause allowing the contractor to

inspect the damaged item(s).

Response: MTMC agrees, and has added the statement that the

contractor shall have the right to inspect the damaged property within

45 calendar days of delivery or dispatch of the customer's written

notice document, whichever is later. The contractor shall notify the

customer prior to any inspection to arrange a mutually agreeable time.

16.8

(63) Industry: The contractor will need more than 30 days to gather

documentation, determine the validity of a claim, make investigation,

conduct inspections, arrange for repairs and make cash settlement to

the service member.

Response: MTMC agrees that in certain cases the contractor may

require more than 30 days to settle the claims as was required in the

original draft requirements document. It has been changed to read that

the contractor shall pay, decline, or make a firm compromise settlement

offer in writing to the customer within 60 calendar days after receipt

of the claim by the contractor. However, if the contractor fails to

respond within 60 calendar days of receipt of the claim, or the

contractor declines to pay the claim, the customer may file a claim

with the appropriate military claim service. Such claim to the military

claim service may address all items which are not covered by an

agreeable resolution between the contractor and the customer.

16.11

(64) Industry: The service member should be precluded from filing a

claim directly with the government. Also, the government should not

have the power to offset on disputed claims between the contractor and

the customer.

Response: We cannot change the member's statutory right to file a

claim directly with the government. However, we prefer that the member

file directly with the contractor, and we plan to encourage it by not

making full replacement coverage available if the member decides to

settle directly with the military, without first seeking reimbursement

from the carrier. As for the government not having the right to offset

on disputed claims, we disagree and believe that the government should

have the right to enforce contract requirements and be the service

members' advocate. In any event, it is a remedy available under the

terms of government contracts. Consequently, as a minimum, the

contractor will be subject to set aside by the government on those

items that the military pays for and which the contractor improperly

denied.

16.13

(65) Industry: A monthly claims activity report provided by the

contractor to the PPSO is unnecessary and should be reduced to a

quarterly basis.

Response: MTMC disagrees. This monthly report is necessary to

assist in evaluating carriers' overall performance.

17. Billing and Payment Procedures

17.1

(66) Industry: The requirement to have all invoices certified by

the PPSO, that show that all services have been performed, is

unnecessary, encourages lost billing, and is counter productive to the

prompt payment act. Instead the contractor should bill the finance

center directly.

Response: The invoice certification requirement is being

reevaluated as part of the effort to implement EDI procedures.

Attachment 3--Single Factor Rate/Accessorial Information

1. Single Factor Rate (SFR)

(67) Industry: Single factor rates reduce the direct compensation

to service providers for extra services rendered, which are time and

labor intensive. The SFR is too inclusive. Prevailing commercial

practice is that accessorial services are separately identified and

payable when requested and performed.

Response: MTMC disagrees and will retain the SFR pricing structure.

Carriers currently participating in the international through

Government bill of lading program submit SFRs for household goods and

unaccompanied baggage shipments. Additionally, MTMC feels the SFR

should encompass the majority of the accessorial services which may

affect a shipment. Service providers should ensure costs for

accessorial services are negotiated and agreed upon prior to contract

award. MTMC has identified those accessorial services which will be

outside the SFR pricing structure. These services are not routinely

ordered, are labor intensive, and costly to perform. Separate rates

will be submitted by the Contractor for these services. This should

ensure the Contractor's service providers are equitably compensated for

services rendered.

2. SFR Solicitation/Submission

(68) Industry: Single factor rates are not prevailing commercial

practice for domestic shipments and are used on a very small percentage

of commercial corporate accounts. SFR pricing does not provide the

means or the structure needed for fair pricing and payment of moving

services. Domestic movements and the majority of commercial accounts

use a discount from a common industry baseline tariff and a segmented

rate. Corporate accounts which do use single factor pricing predicate

rates on a weight and mileage matrix.

Response: MTMC recognizes that SFRs are not the prevailing

commercial practice for domestic shipments. However use of SFRs will

standardize, simplify, and reduce administrative workload associated

with rate

[[Page 14757]]

submissions/evaluation, accessorial services, billing and payment, and

program management. Major goals for the reengineering effort are

program simplification and reduction of administrative processing. The

volume associated with the personal property program warrants attaining

such goals.

2.1, 2.3.1 Domestic Service

(69) Industry: The underlying services and transportation methods

for unaccompanied baggage (UB) differ significantly from those for

household goods (HHG) shipments. Bundling of HHGs and UB together to

move on the same SFR is not supportable. Factors for fixed costs also

have a larger impact on smaller shipments and domestic baggage cannot

be moved at the same rate as a large HHG shipment. It would be

unrealistic for the same rate to apply for UB as it does for HHG

shipments regardless of size. UB shipments are more expensive due to

initial acquisition costs, inventory control measures, and labor costs

for containerization. Pricing shipments at the same rate per

hundredweight regardless of size and distance will result in

significant over-payment for some shipments and under-payment for

others. An alternative procedure for domestic service would be to

establish domestic baggage service and have separate baggage rates.

Response: MTMC is reevaluating movement of unaccompanied baggage/

personal effects within CONUS to determine if a different pricing

structure is appropriate.

(70) Industry: By combining domestic UB with HHG rates, the small

business set-aside used for the Direct Procurement Method (DPM) pack &

crate service is eliminated. This will adversely impact many small

businesses who specialize in the service for DOD.

Response: MTMC believes that the multiple contract aspects of its

proposed system, along with inherent opportunities to form consortiums

and use subcontracts will provide meaningful small business

opportunities.

(71) Industry: Carriers and forwarders do not typically perform

local move services. Local moves are provided by local agents within

the AOR and contracts for these services are awarded by the

installation contracting offices. Prevailing commercial practice is to

bill local moves at an hourly rate. Local moves should be solicited and

awarded separately.

Response: Local moves will be excluded from the pilot program. MTMC

is currently evaluating how local moves will be incorporated into the

regional concept.

(72) Industry: UB needs to be better defined. The types of items

which will be included in a typical baggage shipment and whether it

must be shipped via air or surface must be known. If UB can be more

accurately defined, an SFR could possibly be used since fewer

accessorials apply. In addition, some type of mileage factors need to

be included.

Response: UB is defined as that portion of the customer's

prescribed weight allowance of personal property, including

professional books, papers, and equipment, normally shipped separately

from the bulk of the personal property. UB is usually shipped via an

expedited mode because it is needed immediately, or soon after, the

customer's arrival at destination for interim housekeeping pending the

arrival of the major portion of the customer's property. The

entitlement for a UB shipment normally only exists when a member has a

permanent change of station to/from an OCONUS location. The term ``UB''

will not be used for shipments moving within CONUS under the

reengineered program. Small shipments moving with CONUS will be

classified as a personal property shipment and normally are not shipped

via an expedited method. However, if the PPSO determines the need to

expedite a personal property shipment, the expedited service paragraph

of the draft requirements document will control carrier compensation.

2.2 International Service

2.3.2

(73) Industry: Requiring the contractor to file rates for all four

international types of service restricts competition and constitutes

bundling. Bundling of HHG and UB in the international program restricts

competition and ``administrative convenience'' is not sufficient

justification for bundling. The contractor should be allowed to bid on

HHG and UB separately. This alternative would provide all required HHG

and UB services for each AOR and will increase competition by

permitting more carriers to independently file rates for each channel.

Response: MTMC does not agree. Under the regional concept all

potential contractors will be required to submit both HHG and UB rates

for every rate area within an origin region to all destination rate

areas for a category of service (e.g., a CONUS origin region to all

OCONUS destinations, and OCONUS origin region to all CONUS

destinations, or an OCONUS origin region to all OCONUS destinations).

MTMC recognizes certain carriers participating in the present program

have specialized in UB service; however, we believe that requiring the

same contractor to provide HHG and UB services simplifies the

acquisition process for DOD, enhances competition, and simplifies

accountability by allowing DOD and the customer to deal with one

contractor per move. Bench marking surveys with corporate accounts and

commercial business practices disclose that commercial customers are

not usually required to consult with different carriers to acquire

movement services for HHG and UB. This requirement does not constitute

improper bundling or restrict competition because the regional/multiple

award concept increases business opportunities for industry. In

addition, potential contractors may subcontract with any carrier for

specialized services.

(74) Industry: American carriers who file inter- and intra-theater

rates would not normally have operating authority and expertise to

transport local and in-country overseas moves. Historically, in-country

and local moves have been separated and performed by the local small

business movers located with the AOR. Rates for these shipments are

procured by overseas Contracting Officers who have the experience with

the local conditions and requirements. Combining these types of moves

in one channel is not cost efficient and does not simplify the process.

The procurement for these moves should remain with the overseas

contracting offices.

Response: MTMC is evaluating the unique requirements and factors

which may affect these movements to determine how they can be

incorporated into the regional concept. OCONUS local and in-country

moves will be excluded from the pilot program.

2.4

(75) Industry: Separate accessorial service charges are needed for

each origin AOR.

Response: MTMC agrees and recognizes costs vary significantly by

geographic area. Therefore, Schedule A of the requirements document has

been modified to allow contractors to submit separate accessorial

charges for SIT services, Flat Service, and special crating for each

origin rate area within a region.

2.5

(76) Industry: It is unreasonable to have 100 net pounds as the

minimum weight for all SFRs. The prevailing commercial practice is

generally a

[[Page 14758]]

minimum weight of 1,000 pounds for HHG and 100 pounds gross for UB. The

use of the net weight in lieu of gross weight for UB will create

additional work. Gross weight is used for UB because obtaining the tare

weight of small cartons and boxes is costly and labor intensive.

Further the ITGBL program has always moved UB on a gross weight basis.

Recommend using prevailing commercial practice or a 500 pound minimum,

Response: MTMC agrees and has modified the Requirements Document to

state the SFR and all accessorial service charges, computed on weight,

are subject to a 500 pound net minimum.

3. Accessorial Service

3.1

(77) Industry: An accessorial statement being sent to the PPSO for

signature is redundant and unnecessary. The contractor's billing,

supported by the member signed accessorial should suffice. Allowing 10

days to return the certified accessorial statement to the contractor

will unreasonably delay carrier billings.

Response: MTMC disagrees. The contractor will be required to

prepare and submit to the PPSO for certification an accessorial

statement authorizing accessorial services. The service member is often

unable to verify all accessorial services that are performed. For

example, the service member may be unaware of possible charges such as

an attempted pickup, waiting time, number of days in SIT, etc.

Consequently, it is a necessary requirement for the PPSO to certify the

accessorial services.

(78) Industry: Auxiliary services are costly, labor intensive, and

time consuming. The frequency of this service cannot be determined and

therefore should not be part of the SFR.

Response: MTMC agrees and Attachment 3 has been modified to include

auxiliary service. The Flat Service charge will be used for computing

the cost for auxiliary service. Auxiliary service must be authorized by

the PPSO prior to commencement of service.

3.4.1 Storage-in-Transit (SIT) Services

(79) Industry: The criteria established for commencement of SIT

charges is not acceptable or prevailing commercial practice. This

requirement will either force an increase in SIT charges to cover days

that are no longer billable or it will have a negative impact on local

agent's revenue. MTMC would like to reduce the amount paid for SIT, so

it is attempting to limit its application by not paying for SIT prior

to the required delivery date. This application may apply if commercial

shipments were involved and commercial practices and commercial rate

levels were used. Prevailing commercial practice is to use spread of

dates for delivery. If the shipment arrives within the spread, SIT

begins on date of arrival. If the shipment arrives ahead of the spread,

SIT commences on the first day of the spread.

Position. MTMC does not agree and will retain the requirement that

SIT charges at destination will not commence prior to the first work

day following the agreed upon RDD or the offered delivery date when

later than the RDD. The RDD will be established and mutually agreed to

between the contractor and customer during the movement counseling.

This direct personal interface between the contractor and customer will

encourage open communication and realistic RDDs can be established.

This will also allow the contractor to more efficiently utilize his

resources. MTMC realizes spread dates are a commercial business

practice; however, we believe the use of spread dates should be at the

discretion of the customer. MTMC does not object to use of spread dates

if agreed to by the customer. If the shipment arrives within the spread

and delivery cannot be coordinated, SIT begins from expiration of the

time provided for transportation services at destination. If the

shipment arrives ahead of the spread, then SIT will start on the first

day of the spread. Our desire to limit SIT is not based on

considerations associated with the cost of SIT. Rather, we hope to

limit unnecessary handling of the HHGs and thereby reduce the incidence

of damage.

(80) Industry: A single daily SIT charge, based on a 100 pound

minimum, which includes warehouse handling, storage, and drayage to/

from the SIT facility is not appropriate and not prevailing commercial

practice. When a shipment is placed into storage, a large percentage of

the charges are incurred from unloading the truck and handling the

shipment. That is why the tariff contains a warehouse handling charge

and a higher first-day SIT charge. The charges for additional days are

lower because the costs involved with actual storage are much lower

than the first day. The Government would save money by continuing this

practice. Other alternatives include minimum 30-day storage period with

separate warehouse handling and delivery charges or separating the SIT

charge from the warehouse handling/drayage charge. These alternatives

would ensure sufficient revenue is generated to pay for administrative

and operational costs.

Response: MTMC partially agrees and has modified Attachment 3 to

read ``Charges for this service will be based on the net weight of

property stored in transit, subject to a 500# minimum.'' MTMC

recognizes charges associated with warehouse handling and drayage

differ from those associated with the actual storage of the property.

Accordingly, a modification also has been made which allows the

Contractor to submit a SIT charge which applies for each 15-day period

of storage or fraction thereof and a warehouse handling/drayage charge.

These two charges will be submitted separately and considered in the

price area during the source selection evaluation process.

(81) Industry: A 100 mile radius for delivery out of SIT at no

additional charge is not a commercial practice as well as an excessive

requirement.

Response: MTMC agrees and has reduced the requirement. The

requirement has been reduced to the contractor being responsible for

direct deliveries and deliveries from SIT within a 50 mile radius of

the original destination at no additional charge. The contractor will

be compensated for direct deliveries and deliveries from SIT within the

AOR that are more than 50 miles from the original destination.

Attachment 3, of the draft solicitation, will specify these provisions.

3.4.2 Flat Service Charge

(82) Industry: The Flat Service Charge is not a commercial business

practice. The charge is stated on a per hour basis and the per hour

amount includes all labor, mileage, and vehicle use. Accessorial

services involving labor are billed in the commercial marketplace on a

per man, per hour basis. The number of personnel required to perform a

service varies depending on the size of a shipment. Therefore, it is

difficult to construct a rate which would compensate the service

provider equitably. Recommend changing this service to include billing

on a per hour, per man, basis. In addition, a separate flat service

charge should be solicited for HHG and UB because the equipment and

manpower for each is vastly different.

Response: MTMC does not agree. The per man approach complicates the

verification and billing process. MTMC believes industry can construct

a rate based on the average number of personnel required to perform the

services specified.

[[Page 14759]]

3.4.2.3 Extra Pickup and/or Delivery

(83) Industry: Extra pickup and/or delivery requirements are not

commercial business practices. The contractor should be compensated for

any extra pickup or delivery, not just more than one. The 75-mile

radius is excessive and should be changed to 50 miles.

Response: MTMC recognizes requiring the contractor to perform the

first extra pickup or delivery outside a 75-mile radius from the first

pickup point may be excessive. Accordingly, the 75-mile radius has been

changed to 50 miles. MTMC believes those accessorials services which

are routinely ordered should be included in the SFR. This will ease the

program administration and execution.

3.4.2.6 Partial Withdrawal From Sit

(84) Industry: Application of the flat service charge is not

realistic. The definition of this charge includes the use of trucks and

mileage. Removal of a shipment from storage in a warehouse and sorting

items is completely different in nature. A charge based on labor per

hour, per man should apply to ensure service providers are equitably

compensated.

Response: The Flat service charge is a labor charge which includes

the sorting of items.

(85) Industry: Customer presence in the warehouse during sorting

may pose insurance problems.

Response: Should such presence require additional cost to the

carrier, MTMC would expect that to be addressed in the carrier's SFR.

The option which allows the customer or PPSO to be present at the

contractor's facility during sorting and removal of the partial

withdrawal from SIT has been retained. The customer or PPSO presence

will minimize claims disputes because of the actual observation and

should therefore protect the contractor and the customer by eliminating

speculation over mishandling.

3.4.2.7 Waiting Time

(86) Industry: Free waiting time should be limited to 2 hours for

both domestic and international.

Response: MTMC agrees that 4 hours free waiting on domestic

shipment is excessive, and has reduced the requirement to 2 hours.

However, do not agree on reducing free waiting time on international

shipments from the 24 hours initially established in the draft

requirements document. The majority of international shipments go into

agent facilities first. Consequently, driver time will typically not be

lost as a result of the 24 hours of free waiting time on international

shipments because the shipment will most likely already be stationed in

an agent's facilities.

3.4.5 Third Party Service

(87) Industry: Commercial practice allows the contractor to add a

percentage to the cost incurred for the process of handling and funding

the transaction. Normal add-ons are in the 10 percent range and this

provision should be incorporated into this item.

Response: MTMC disagrees and retains the requirement that the

contractor will be reimbursed actual charges. Historically, a third

party invoice which sets both the services rendered, charges and basis

thereof must accompany the contractor billing. We do not intend to

change that practice from the commercial practice in effect throughout

the U.S.

Schedule A--Rate Sample

(88) Industry: The sample needs to be expanded to include the

charges at both origin and destination for all services. Because of the

requirement that prevailing wage scales be utilized in all areas, there

will be vast differences in the charges.

Response: MTMC agrees and recognizes costs vary significantly by

geographic area. Therefore, Schedule A has been modified to allow

contractors to submit separate accessorial charges for SIT services,

Flat Service, and special crating for each origin rate area within a

region.

(89) Industry: The proposed rate sample contemplates only one rate

for commercial/military air for HHG and UB. The same SFR cannot apply

to those shipments moving either commercial or military air.

Response: MTMC did not contemplate the same SFR applying for HHG

and UB movement via commercial and military air. The contractor will be

asked to submit a separate rate for commercial air--HHG and UB; and

military air--HHG and UB. However, the contractor will be required to

accept all commodities for movement upon contract award.

Attachment 9--Weight Additives

1.

(90) Industry: The only item that the draft requirements document

provides additional compensation for are boats. A weight additives

charges should apply for other commonly shipped bulky articles such as

satellite dishes, hot tubs, etc., as spelled out in the current tariff

item.

Response: MTMC does not agree. The costs associated with bulky

articles should be included in the SFR. In the current ITGBL program,

costs for this service are included in the SFR.

1.3 Boats and Sailboats

(91) Industry: It is unreasonable to expect contractors to

transport boats and/or similar items 14 feet and less at no additional

cost. Boat charges should follow the commercial tariff. Also, the

proposed provisions for boats over 14 feet but less than 25 feet

presents serious problems for international shipments. Boats of this

size will not fit in lift vans and must go inside the ocean container.

The proposed weight additive factor for boats will not provide adequate

revenues to cover significant expenses incurred in accommodating boats

of this size. If boats are too wide to fit inside a ocean container

they must be accommodated on racks. Ocean charges increase

significantly if the boat extends beyond the sides of the rack since

the boat occupies three ocean container spaces. Recommend boats 14 feet

and over in length remain in the OTO program for international

shipments.

Response: MTMC has modified the requirements document by adding a

weight additive of 700 pounds for boats and sailboats less than 14 feet

in length. Boat trailers less than 14 feet will have a weight additive

of 1000 pounds. Boats, sailboats, and boat trailers 14 feet and over

will be moved under the one time only (OTO) program. Canoes, skiffs,

rowboats, dinghies, sculls, and kayaks 14 feet and over in length will

have a weight additive of 700 pounds, while those less than 14 feet

will be moved under a single factor rate with no weight additive. Other

specifics of the requirements concerning boats will be released in the

upcoming draft solicitation.

Attachment 10--Weigh/reweigh Procedures

(92) Industry: Current commercial practice is that there is no

specific charge for a reweigh but the second weight is the billing

weight, regardless of whether it is above or below the first weight.

Since DOD shipments have a very high reweigh request rate, then the

contractor should be compensated for reweighs.

Response: MTMC will require the contractor to incorporate reweighs

in their single factor rate. Also, MTMC feels that the DOD as the

single largest shipper should benefit from the best commercial

practices available. Since the commercial practice is that no specific

charge is associated with reweighs, then reweighs ordered by the

government should also be conducted at

[[Page 14760]]

no additional cost to the Government. Further, MTMC, by requiring the

lower of the two weights to be used as the transportation charge, is

not modifying the program as it currently operates today. Finally,

changing reweigh procedures so that the second weight is also the

billing weight may adversely effect the members' entitlement to request

reweighs.

7. Observation of Weighing

(93) Industry: Unless specifically requested by the PPSO or the

customer, the contractor should not have to advise the PPSO or the

customer of the time and specific location of every shipment weighing.

This is an unnecessary administrative burden on the PPSO, the customer,

and the contractor.

Response: MTMC agrees and has changed the language to read that

``upon request'' the contractor will, prior to weighing, advise the

PPSO or the customer of the time and specific location of every

shipment weighing. Also the PPSO or the customer will have the right to

observe all weighing upon request and will be entitled to notice of the

time and location of the weighing with sufficient time to exercise that

right.

Gregory D. Showalter,

Army Federal Register, Liaison Officer.

[FR Doc. 96-8093 Filed 4-2-96; 8:45 am]

BILLING CODE 3710-08-M