[Federal Register Volume 60, Number 202 (Thursday, October 19, 1995)]
[Notices]
[Pages 54061-54065]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-25882]
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DEPARTMENT OF DEFENSE
Department of the Army
Report of Comments Received to a Request for Comments on MTMC's
Consideration to Employ Full-Service Contracts to Improve the
Department of Defense (DOD) Personal Property Program, Published in the
Federal Register, Monday, March 13, 1995, Vol. 60, No. 48, Notices, and
Again on Wednesday, May 10, 1995, Vol. 60, No. 90, Notices To Extend
the Comment Period
AGENCY: Military Traffic Management Command.
ACTION: Notice.
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SUMMARY: Fifty-six responses were received from members of the carrier
industry, carrier industry association, and related industries.
Headquarters, Military Traffic Management Command wishes to thank all
those who took the time to provide thoughtful and beneficial
suggestions and comments.
ADDRESSES: Headquarters, Military Traffic Management Command, Attn:
MTOP-QE, 5611 Columbia Pike, Falls Church, VA 22041-5050.
FOR FURTHER INFORMATION CONTACT:
Mr. Joe DeLucia, MTOP-QE, (703) 681-6753 or Ms. Ann Gibson, MTOP-QS,
(703) 681-6590.
SUPPLEMENTARY INFORMATION: The following is MTMC's response to the
questions received from the 56 respondents to the Federal Register
Notice that solicited comments from industry concerning the
reengineering of the DOD personal property program:
Questions and Answers Concerning Re-engineering
1. Why start over from scratch by re-engineering the entire program
when many of the objectives could be achieved by making changes to the
current system that would be less disruptive?
A. Military Traffic Management Command (MTMC) has discovered
several factors that argue decisively against small changes. First,
there is widespread opinion among the military services, personal
property shipping offices, and the individual service members that the
entire system is broken rather than a few elements within that system.
Second, the existing system itself is a product of the process of
making many isolated changes without considering the total impact. It
seems inappropriate to fix a program by the same process that caused it
to break down. Third, there is value in boldness. It is often difficult
to adjust single elements of the program because of vested interests
and the interconnected nature of various provisions. Frequently, good
ideas are lost in the negotiation or compromise process. As an
alternative, the re-engineering approach offers a process in which the
best commercial practices can be combined with Government needs to
create a better system for all concerned. Also with the down sizing,
the military does not have the infrastructure it once had to support
the current program. Although MTMC is committed to re-engineering, that
is not to say that the new program won't have some features that are
similar to the current system.
2. Are the services sold on the re-engineering program at this
point?
A. There is an agreement that a re-engineering of the program is
necessary and that we must move toward a simpler, customer satisfaction
driven program incorporating commercial business practices.
3. What are the specific goals that MTMC wants to achieve under the
re-engineering effort?
A. MTMC has three basic goals. One of the goals is to simplify the
personal property program. The second is to maximize the use of
commercial practices. The third is to improve customer satisfaction
(quality of life for the military member).
4. What specific commercial practices does MTMC want to obtain?
[[Page 54062]]
A. MTMC would like to see as close as possible a commercial
contract with a Department of Defense (DOD) cover on it. This would
include commercial practices such as long term contracts, direct claim
settlements; full value replacement; movement counseling by industry;
tracing and intransit visibility; 1-800 customer numbers; carrier
customer surveys; electronic data interchange; management information;
commercial quality inventory, packing, storage, and shipping; and full
service movement arranging/managing.
5. Can you provide a brief description on how the process will work
under the Federal Acquisition Regulation (FAR)?
A. The proposed acquisition will be advertised in the Commerce
Business Daily (CBD). Contractors interested in competing for the award
of the contracts will request a copy of the request for proposals (RFP)
or solicitation. Following the CBD announcement MTMC will issue the RFP
to all interested parties. The RFP will provide a minimum of 30 days to
prepare and submit proposals in accordance with the instructions set
forth in the RFP. The solicitation will also set forth all significant
factors and subfactors we will consider in evaluating proposals,
including price and non-price (technical and operations) related
factors and subfactors. A team or panel will evaluate each proposal
individually. The evaluator will identify any deficiencies, weaknesses
and strengths in the proposals and will rate them in accordance with
the criteria set forth in the solicitation. Based on the results of the
evaluation, the contracting officer will determine whether discussions
are necessary. If it is determined that discussions are unnecessary,
award will be made based on initial proposals. If discussions are
conducted, the contracting officer will request best and final offers
which will be evaluated just like the initial proposals. In any case
award will be made to those offerors whose proposals provide the best
overall value to the government.
6. Would the competitive range be determined in terms of dollars?
A. No, the competitive range is established by the contracting
officer after consideration of all factors, including price or cost.
All proposals that have a reasonable chance of receiving the award will
be included in the competitive range.
7. Is MTMC going from a total cost operation to a quality
operation?
A. No, price will continue to be a factor but it will not be the
only factor. However, greater emphasis certainly will be placed on
quality than is currently required under today's system.
8. Under the best value evaluation process, would you rank each
proposal then choose a cut off point or would there exist some type of
formula to determine best value?
A. When price or cost is the basis for award, proposals are
evaluated for technical acceptability and then award is made to the
lowest priced, technically acceptable offeror. Under our proposed
concept, we would lay out specific evaluation factors and the
importance of each in the solicitation. The Government will make cost-
technical tradeoffs, and determine which proposal offers the best value
based on sound business judgment and the evaluation criteria stated in
the solicitation.
9. would the best value method increase the price?
A. Best value may be associated with paying a price premium.
However, it is consistent with the philosophy that the slight increase
in price is more than compensated for by the associated increase in
quality, performance, decrease in claims, etc.
10. Will the same team evaluate everybody?
A. All proposals will be equally evaluated as to each factor. We
may have established teams reviewing specified aspects of all
proposals.
11. What does MTMC anticipate the length of the FAR contract to be
under the proposed reengineering initiative?
A. MTMC envisions a base period of two years with possible one year
options not to exceed a total of five years.
12. Currently, who uses FAR contracts?
A. The overall preponderance of Government acquisitions currently
utilize FAR. However, transportation services acquired under rates
negotiated under the authority 49 U.S.C. 10721 have been exempted from
certain rules and regulations established in the FAR. Nonetheless,
transportation related services are routinely acquired using FAR
contracts (for example, non-temp storage, direct procurement HHG
movements, etc.)
13. Do there currently exist FAR contracts with multiple award
winners?
A. Yes.
14. How will the labor wage rate be determined under a FAR
contract?
A. MTMC is aware of industry's concerns. At the present time MTMC
has not determined how the labor wage rate will impact the program, but
we are working with the Department of Labor to determine how the
Service Contract Act and associated labor wage rates should apply to
MTMC's HHG contracts.
15. How could small and medium size carriers possibly service every
destination out of an AOR? This worldwide, service concept may exclude
some small and medium size carriers that provide excellent specialized
service in specific areas. These carriers will be forced to align
themselves as subcontractors with one of the major van lines or be
forced out of business. Why prevent these carriers from being prime
contractors?
A. It is not MTMC's intent to force any carrier out of business or
to prevent small and medium size carriers from being a prime
contractor. MTMC wants to do business with those carriers that provide
quality service. MTMC has reevaluated its position of requiring a prime
carrier to provide worldwide service out of an AOR. Presently, MTMC is
considering awarding personal property traffic in channels from a
single AOR to single rate areas throughout the world. An offeror may
choose to bid on one, several, or all traffic channels offered. It will
allow any carrier the opportunity to choose those outbound channels
from an AOR that they would like to make a proposal to service. Size
will not be a discriminatory factor in determining the ability of a
carrier to be awarded a contract as long as the contractor can
reasonably establish a capability to meet our minimum requirements.
Instead it will be based, among other things, upon management,
operations, quality control plan, and past performance of the carrier.
One of the reasons we narrowed our focus from a regional concept down
to the AOR/worldwide service concept and further down to an AOR/rate
area service concept is to allow the small and medium size carriers,
that provide quality service, the opportunity to participate. We
recognize and need the capacity of the small and medium carriers, and
we believe they will fit into the re-engineered program.
16. Why does MTMC intend to combine domestic and international into
one program when they are distinctly different and would be more
manageable if kept separate?
A. Under the single AOR to single rate area concept, a proposal may
be placed for one or any number of traffic channels. In effect, this
separates the domestic and international programs by permitting bidding
for only international origin/destinations, only domestic origins/
destinations, or a combination of both, if desired.
17. Under the Area of Responsibility (AOR) to rate area concept,
how many awards do you envision for each channel?
[[Page 54063]]
A. The best overall offer will be awarded all the traffic moving
between the AOR and the rate area. Additionally, the process will allow
us to consider selecting one or more alternates to move into the prime
position in the event the prime contractor fails.
18. Because carriers will not know which channel they will be
awarded, it seems under the re-engineering concept carriers would be
placed in a situation where they would have to place proposals on more
channels than they have the capacity to service if they were awarded
them all. What will protect the carrier from over bidding or under
bidding their capacity?
A. MTMC will provide potential offerors with distribution data
(weight, shipments, costs) for each channel at the time of the
solicitation. Also, we are working on a procedure to consider capacity
and risk assessment in awarding channels.
19. Could an agent for a carrier make a proposal on a contract?
A. MTMC fully expects agents of carriers to make proposals on
contracts under their own authority.
20. Under the FAR contract will there be a restriction that only
allows movers to be eligible to make a proposal? What would preclude
someone from outside the moving industry from trying to become a prime
contractor?
A. Nothing would prevent someone from outside the moving industry
from making a proposal. We encourage full and open competition.
21. How will someone new to the business of transportation be
evaluated on past performance under the FAR proposal?
A. A new company would be required to display to us their ability
to satisfy the expected requirements. When no relevant past performance
information exists, we will treat it as an unknown performance risk
that is neutral, having no positive or negative evaluative
significance. However, the proposal can offer other considerations such
as the past experience of individual employees.
22. Can a foreign corporation be a prime overseas?
A. Foreign corporations are not precluded from competing for these
requirements. Their offers, however, will be evaluated in accordance
with the guidance at FAR Part 25 and DFARS Part 225 on Foreign
Acquisitions.
23. Would operating authority be one of the criteria in determining
a carriers ability under a FAR contract?
A. Contractors will be required to comply with all applicable
federal, state, and local laws. Whether an offeror has proper operating
authority is a determination to be made by the appropriate regulatory
body, not MTMC. The operating authority of a carrier could possibly be
one of the criteria that is evaluated. However, typically all
responsible offerors that will be transporting HHG are required by law
to have such authority. As such, the authority may simply be required
as a condition for award.
24. Will the Government require a performance bond?
A. At the present time, our intention is to require a performance
bond.
25. Does MTMC intend to enforce regulations covering Common
Financial and Administrative Control (CFAC)?
A. We do not anticipate CFAC being an issue under a FAR contract.
26. Will there exist a subcontracting requirement for a carrier
awarded a channel of traffic under the AOR to rate area concept?
A. The contractor will have the option of subcontracting any
movement services deemed necessary to meet the shipping requirements of
each customer. However, the contractor shall be responsible for all
actions of any subcontractor used in the shipment and/or storage of
personal property. Pursuant to FAR 19.702, acquisitions expected to
exceed $500,000 will require a subcontracting plan with expressed goals
for small, small and disadvantaged, and women-owned companies. We are
in the process of determining what these requirements will be.
27. Can you define what a subcontract is?
A. In general terms, a subcontractor is any supplier, distributor,
vendor, or firm that furnishes supplies or services to or for a prime
contractor or another subcontractor. See FAR 19.701.
28. Could a large carrier as a prime contractor only subcontract to
its own agents and still satisfy the subcontracting requirement? If
this is the case then won't a large carrier be inclined to only use its
own agents as subcontractors?
A. Offers must demonstrate in the subcontracting plan how they will
ensure that small businesses and small disadvantaged businesses will
have an equitable opportunity to compete for contracts. See FAR 19.704.
29. Could the owner/operator of a truck be a subcontractor?
A. An owner/operator of a truck probably could qualify as a
subcontractor.
30. How will you monitor the subcontracting requirement of a prime?
A. The FAR requires the contracting officer to monitor the
subcontracting plan for individual contracts. Additionally, the plan
may be evaluated during the selection process. The contractor is
required to submit to the contracting officer a subcontracting report
semiannually for an individual contract and an annual summary report to
each summarizing cumulative subcontracting activity for all contracts
being performed for the respective agency. Note, this reporting is only
required on contracts involving performance within the United States,
its possessions, Puerto Rico, and the Trust Territory of the Pacific
Islands which exceed $500,000 and for which a subcontracting plan was
negotiated. Failure of the contractor to meet the plan requirements and
goals could result in the assessment of liquidated damages. If goals
are not met, the contracting officer must determine whether the
contractor failed to make a good faith effort to comply with the
subcontracting plan and if so will make a final decision and assess
liquidated damages. The contractor has the right to appeal the
contracting officer's final decision under the disputes clause of the
contract.
31. What happens if the subcontractor fails, would the prime
contractor still be expected to provide moves?
A. Yes, the prime contractor would still be expected to perform.
32. Will the government ensure that subcontractors are paid by the
prime contractor?
A. As a general rule the Government's obligation will be only to
the prime contractor. It will be the responsibility of the
subcontractors to assure that they are involved in a business
relationship with a reliable and responsible prime contractor that they
can trust. The opposite also holds true for the prime contractor. MTMC
is allowing the carriers the ability to choose whom they do business
with.
33. Could a subcontractor support several prime contractors per
AOR?
A. Within the capabilities of the individual subcontractors, we
envision a subcontractor being able to support as many prime
contractors in an AOR as they might desire.
34. What will happen in small areas where all offerors may have the
same subcontractors?
A. Unique capabilities will also help determine who will receive
the award. This would include past performance, financial stability,
and how the carrier plans to manage the expected requirements.
35. Can a prime carrier also be a subcontractor in the same AOR?
A. Subject to capacity/capability, a carrier could be a prime
contractor for one channel of traffic out of an AOR,
[[Page 54064]]
and at the same time be a subcontractor to a carrier for a different
channel of traffic out of that same AOR.
36. Will there be different requirements for small and
disadvantaged carriers to qualify as a prime contractor?
A. The requirements for small and small disadvantaged carriers will
not be different. All offerors will be evaluated in accordance with the
criteria stated in the solicitation, regardless of business size.
37. What will be the function of the Installation Transportation
Office (ITO) under the re-engineering concept?
A. The ITO will continue to play an important role. Under the re-
engineering concept, the ITO will continue to perform many of the roles
they do today. The difference is that the simpler process will give
them more opportunity to focus on customer advocacy and quality
management. We envision the final determination of the role performed
by the ITO as a military service determination.
38. Is any consideration being given to contracting out the
functions performed by the Personal Property Shipping Offices (PPSOs)
and Personal Property Processing Offices (PPSOs)?
A. The PPSOs and PPPOs are operated by their respective services.
The decision to staff PPSOs and PPPOs with Government employees or
contracted personnel remains the decision of the services.
39. Who will manage the list and distribute the traffic under the
AOR concept?
A. Most of the lanes out of the AORs to the rate areas will have
one contractor that is awarded all of the traffic.
40. If there is excess tonnage that the prime contractor and his
subcontractors cannot handle then will the prime contractor have to
acquire additional subcontractors to handle the tonnage?
A. Yes. In single contractor channels, if the prime does not want
to fail, arrangements will have to be made to accommodate all
requirements within the channel, unless we specify a maximum
requirement in the solicitation.
41. Who will provide entitlement counseling to the service member?
A. Collectively, the services desire to maintain the function of
entitlement counseling of the members. This function will probably be
retained by the personal property offices. However, we envision
movement planning being a service provided by the contractor.
42. Will there be a change in the service members' entitlements as
a result of the re-engineering?
A. Presently there are no plans to change entitlements as a result
of the re-engineering. MTMC does not determine entitlements. It is
decided by the services and the Congress.
43. There was mention of permitting the carrier industry to do self
reporting. If this would happen then will the temptation exist for some
carriers to over rate how well they are doing?
A. Although the temptation may exist to over rate performance, we
expect to counter it by means such as monitoring and doing random
checks to assure the accuracy of the carrier reports.
44. In a commercial move, the carrier normally has a spread on the
required pick-up and delivery dates. Does MTMC plan on incorporating
this practice within the re-engineering program?
A. MTMC does envision some flexibility being incorporated within
the re-engineering program. However, there does need to exist some
structured framework to which the variance in pick-up and delivery
dates must adhere.
45. Have service members been surveyed on whether they would like
pick up and delivery spreads?
A. We have not conducted a formal survey on whether the service
members would prefer load spreads. However, selected members have
indicated that they would like more involvement in the personal
property process.
46. Will direct claim settlements with the carrier definitely be
part of the program?
A. At this point, our intentions are to incorporate direct claims
settlements with the carriers as part of the program. We cannot take
away from the members the option of settling with the Government, but
we can make it mandatory that the member attempts settlement first with
the carrier. Also, we can make it more attractive to the member to
settle the claim with the contractor with full value replacement as an
incentive.
47. Under the re-engineering concept will the service members still
have two years to file a claim?
A. Currently, our approach is that the customer have one year from
the date of delivery of the personal property shipment to file a claim
with the contractor. The contractor has thirty days from receipt of a
claim to respond to the claim by making payment for lost or damaged
items, beginning repairs, or presenting an explanation for denial of an
item or items. However, after the one year limit has expired then the
member would still have the statutory entitlement to settle the claim
with the Government until the two year limit.
48. In the commercial world, corporate customers pay for full value
replacement. Does the military expect to get full value replacement
free?
A. As the full value replacement requirement will be included in
our solicitation, we expect all offerors to include costs associated
with requirements in their rates.
49. Will the service members fill out value inventories?
A. Yes, we believe that the service members will fill out value
inventories if they know that they will be protected. We realize that
the re-engineering of personal property will also necessitate that the
service members be educated on their responsibilities under the new
program.
50. If quality is to be measured in part on the basis of customer
surveys then what guarantees are there that a customer knows how to
determine whether they have received a good, quality move?
A. We must assume they know how to determine if they are satisfied.
Every day the service members take consumer judgments and choices, and
this is no different. Customer satisfaction is a key to a quality move.
51. If the use of the Government Bill of Lading is eliminated then
would MTMC leave it to the discretion of industry to determine what to
include in the commercial bill?
A. MTMC has not yet determined what bill of lading requirements
will apply.
52. Will the carriers have the ability to determine how to move
shipments under the re-engineering concept?
A. MTMC's concern is not how you move the shipment but that it is
picked up and delivered on time with minimal or no damage. We
ultimately want the member to be happy with the move. However, once a
proposal is accepted for award, we would expect performance to be
consistent with the accepted proposal.
53. What transportation services will be included and excluded from
the contract?
A. The transportation services required at origin include packing,
crating, disassembly, accessorial services, linehaul, SIT, and other
services required for the preparation and movement of the property. At
destination the contractor will be responsible for unpacking,
reassembly, one time placement of articles as designated by the
customer, one time removal of debris at the time property is delivered
or at a date agreed upon by the customer and contractor. Transportation
services not included in the contract include nontemporary storage
(NTS), mobile homes, one-time-only (OTO), volume moves, boats/
[[Page 54065]]
trailers 25 feet and over, and Do-it Yourself (DITY) moves.
54. What is the drive behind combining many of the transportation
services into one contract?
A. The principal drive behind combining the transportation services
is a quality of life issue. We want to allow a member to go to just one
carrier for a move as opposed to multiple carriers as often happens
under the present system. We would like one stop shopping and
simplicity. We believe, it would also relieve some of the
administrative burden.
55. Will MTMC go down to the agent level to get their input on the
re-engineering program?
A. MTMC is accepting input from all sources. MTMC already has gone
down to the agent level and will continue to do so to receive input.
MTMC encourages and wants input from all parties involved in the
personal property process throughout the re-engineering. This is the
only way we can build an effective program.
56. Do you intend on having a pilot program? If so, then when and
where?
A. It is MTMC's intent to award a pilot program contract late in
calendar year 1996. We have not decided on a geographic location at
this time.
57. Will there exist a provision to adjust the rate for economic
changes that may occur?
A. We are considering incorporating an economic price adjustment
clause within the contract that would allow for rate adjustments after
the first year, based on increased carrier costs. This would involve
upward or downward revisions of the contract price based on the cost of
labor or material.
58. Has there been consideration given to having the services work
with the transportation industry to attempt to eliminate some of the
peak season and even out the volume throughout the entire year?
A. MTMC has talked to the services but realistically we are not
overly optimistic that anything can be done to even out the volume
throughout the entire year. Just like the commercial world, a move is a
quality of life issue and most people with families prefer to move in
the summer.
59. If there exists a mistake in the entire process what is the
Government's ability to back out of the contract?
A. The Government would have the right to terminate for convenience
or default.
Gregory D. Showalter,
Army Federal Register Liaison Officer.
[FR Doc. 95-25882 Filed 10-18-95; 8:45 am]
BILLING CODE 3710-08-M
