United States General Accounting Office

GAO Report to Congressional Committees

November 1996 DEFENSE

TRANSPORTATION

Reengineering the

DOD Personal

Property Program

G O A

years

1921 - 1996

GAO/NSIAD-97-49

GAO United States

General Accounting Office

Washington, D.C. 20548

National Security and

International Affairs Division

B-275016 

November 27, 1996

Congressional Committees

The Military Traffic Management Command (MTMC) is reengineering the

Department of Defense (DOD) personal property program. The Congress,

while expressing support for DOD’s plan to reengineer the process, is

concerned that the reengineered program could adversely affect the

moving industry, particularly small business. Therefore, the Congress

directed DOD to report on small business concerns prior to implementing a

pilot test. Since this report did not satisfactorily address congressional

concerns about the impact this might have on small business, the Congress

directed DOD to convene a DOD/industry working group to develop a

mutually agreeable program to pilot test.

Although the working group came to a consensus on many issues,

including a set of program goals, it could not reach agreement on the

approach to take for the pilot test. Consequently, the two sides presented

separate proposals. We are directed to review the proposals by the House

and Senate reports accompanying the National Defense Authorization Act

for Fiscal Year 1997. This report provides the results of reviewing the two

proposals. Specifically, we provide an analysis of the extent to which each

proposal met the DOD/industry goals for a reengineered personal property

program.

Background DOD has long been concerned about the quality of its nearly billion and half

dollar annual program to transport, store, and manage the household

goods and unaccompanied baggage of its servicemembers and employees

with permanent change of station and other type orders. Some of the

concerns related to poor service from its movers, excessive incidence of

loss or damage to service members’ property, and high claims costs to the

government. All these problems contributed to a poor quality of service for

persons using the system.

Consequently, DOD proposed reengineering the personal property program

as a quality-of-life initiative. Its primary goals were to substantially

improve and put on par with corporate customer standards, the quality its

military personnel and their families received from DOD’s contracted

movers; simplify the total process—from arranging the moves to settling

the claims; and base the program on business processes characteristic of

world-class customers and suppliers.

Page 1 GAO/NSIAD-97-49 Reengineering Personal Property Program
B-275016 

Generally, DOD must acquire the goods and services it needs through the

competitive acquisition system consisting of the statutes in chapter 137 of

title 10 of the United States Code and the primary implementing

regulations contained in the Federal Acquisition Regulation (FAR).

However, pursuant to 49 U.S.C. 13712, the acquisition of transportation

services of a common carrier through the use of a government bill of

lading1

 is not subject to the acquisition laws.2 Instead, these services have

been acquired based upon published rates in accordance with procedures

contained in DOD transportation regulations.

A key feature of MTMC’s proposal to reengineer the personal property

program is to simplify the process of acquiring transportation services and

to bring it in line with the government’s acquisition of most other services

by using multiple award, fixed-price, indefinite delivery/indefinite

quantity-type contracts awarded under the competitive acquisition system.

MTMC’s proposed contracts would cover statewide services and provide for

a base and several option years. The solicitations for the contracts would

be open to all responsible offerors, including carriers, forwarders, and

relocation companies. Awardees would be selected in accordance with

solicitation evaluation factors, which will include such elements as

technical or operational requirements, past performance, subcontract

plan, and price.

To achieve these goals and to comply with congressional direction, MTMC is

proposing to begin a pilot test. The plan is to begin the test in early 1997

and run it for at least a year. Fifty percent of the DOD household goods and

unaccompanied baggage moving from the test area—North Carolina,

South Carolina, and Florida—to all other states, except Alaska and Hawaii,

and to Europe, would be included in the test. The other 50 percent would

continue moving in the existing program.

Industry objected to MTMC’s proposal, particularly because of what it

perceived as the negative impact that MTMC’s proposal would have on small

business moving companies. It offered for consideration an alternative

plan having two distinct programs, one for handling domestic shipments

and another for handling international shipments. The industry proposal

would not be based on the competitive acquisition system but would use a

1

A “government bill of lading” is the basic acquisition document used by the government for procuring

transportation services from common carriers pursuant to 49 U.S.C. 13712, which authorizes the

acquisition of transportation services at published rates from any carrier lawfully operating in the

territory where such services are to be performed.

2

See Sam Trucking, B-229890, March 3, 1988, 88-1 CPD 425.

Page 2 GAO/NSIAD-97-49 Reengineering Personal Property Program
B-275016 

government bill of lading to acquire the services in accordance with

procedures contained in DOD and the General Services Administration

transportation regulations.

Reengineering Goals and

Our Evaluation Approach

As a result of the initial joint DOD/industry working group session, DOD and

industry agreed to the following goals for the reengineered personal

property program. These were to

1. Provide quality service

2. Improve on-time pickup

3. Improve on-time delivery

4. Achieve high customer satisfaction in relationship to the entire move

process

5. Adopt corporate business processes that lead to world-class customer

service

6. Lower loss/damage and lower claims frequency and claims averages

7. Simplify the system, including reducing administrative workload

8. Ensure capacity to meet DOD’s needs for quality moves

9. Provide opportunity for small businesses offering quality service to

compete for DOD business as a prime contractor and

10. Provide best value moving services to the government.

Our assessment of the extent to which each proposal met the goals was

necessarily limited by the lack of precise definitions of each goal and the

way to achieve it. Moreover, the proposals were written in such a way that

did not specifically address how each would achieve the stated goals. We

necessarily had to interpret the goals based on our observations and

review of available material and assess each proposal’s ability to meet

those goals using our knowledge of the existing personal property

program, our understanding of the proposals, associated documents,

attendance at all of the working group meetings, a review of the

transcripts of the meetings, and our prior studies.

Results in Brief Our assessment shows that MTMC’s proposal meets the goals for

reengineering the personal property program to a greater extent than the

industry plan. Both proposals are likely to equally achieve several of the 

10 goals of the program. For example, for achieving high customer

satisfaction, both proposals provide for more communication between

servicemember and contractor, increased contractor liability, streamlined

claims settlement, and use of a customer survey for obtaining feedback.

Page 3 GAO/NSIAD-97-49 Reengineering Personal Property Program
B-275016 

However, overall, MTMC’s proposal appears more likely to achieve the

program goals to a greater extent.

• MTMC’s approach to providing quality service would give DOD the

opportunity to assess a prospective contractor’s plan to improve the

quality of the service prior to contract awards. This would enable MTMC to

determine best value to the government by assessing the trade-off between

price and technical factors. That is, award would be made only to

responsible offerors whose proposals represent the best overall value to

the government in terms of (1) the offeror’s proposed approach to

performing the work, (2) past performance, (3) subcontracting plan, and

(4) price. Price would be one evaluation criterion and would not provide

the primary basis for award. We believe determining best value is an

essential element of providing higher quality service to servicemembers.

The industry’s proposal provides for selecting contractors initially on

price, then quality after the carrier or forwarder has already handled DOD

traffic. This does not provide for assessment of quality up front using the

criteria MTMC has proposed to use under its proposal.

• MTMC’s approach to simplifying the system and adopting corporate

business practices would enable DOD to dramatically reduce the number of

contractors it must use. This would simplify contractor selection and

could lead to more stability and provide leverage leading to cost

efficiencies for both contractors and DOD. Industry’s proposal, though it

changes the existing program to some extent, still retains a process in

which DOD has to distribute traffic to many different carriers and

forwarders.

Overall, we believe that MTMC’s proposal provides a greater opportunity

than the industry proposal to achieve the program goals. Therefore, we

support moving forward with the pilot without further delay. The conduct

of a pilot test is essential to gathering the necessary data to ultimately

design the reengineered personal property program. In addition, it is

important that performance standards be developed and data gathered in

such a way to ensure measurable results of the pilot, particularly as it

relates to quality of service and small business participation. If the

Congress still has concerns about the impact on small business, piloting

both proposals is an option. However, doing this would likely place an

additional administrative and costly burden on MTMC and could delay

implementation of the program.

Page 4 GAO/NSIAD-97-49 Reengineering Personal Property Program
B-275016 

DOD’s Personal

Property Program

DOD’s nearly billion and a half dollar annual personal property

program—household goods and unaccompanied baggage—is run centrally

by the headquarters office of MTMC but administered locally by about 200

military and DOD transportation offices around the world. DOD relies almost

exclusively on commercial movers, both directly with more than 1,100

moving van companies (carriers) and forwarders and indirectly with

thousands more agents and owner-operator truckers working for the

carriers and forwarders.

The program consists of three major processes: carrier/forwarder

approval, rate solicitation, and traffic distribution. To participate in the

program, a carrier or forwarder must first be approved by MTMC. This

requires proof, or certification, that the carrier or forwarder has the

requisite state or federal transportation operating authority and agrees to

abide by the terms and conditions in MTMC’s tender of service. The carrier

or forwarder must also be approved by the local military and DOD

transportation office at which the company is planning to serve. This

requires proof, or certification, in the form of a letter of intent that the

company has local agents ready and able to meet the local installation’s

needs.

MTMC solicits rates every 6 months. Each carrier and forwarder must file

rates individually for the particular traffic channel it intends to serve. For

the domestic part of the household goods program, rates are submitted as

a percentage discount, or premium of a baseline schedule of rates by

origin installation and destination state channel.3

 For the international part

of the program, rates are filed as a fixed dollar and cents per

hundredweight basis by state and overseas area, or other subdivision

channel.4

 Carriers and forwarders have two chances to file rates before the

beginning of each rate cycle—an initial rate filing and a “me-too” rate filing

in which a carrier or forwarder can lower its initially filed rate to that of

any other carrier or forwarder. Rates cannot be changed during the

6-month rate cycle, except for special cause, but they can be canceled at

various times during the rate cycle.

Each local military installation must distribute its traffic using a traffic

distribution roster. Carriers and forwarders are placed on the rosters for

3

Separate rates must be filed for different types of domestic shipments—motor van (loose pack in a

moving van) and containerized (crated in plywood containers).

4

Separate rates have to be filed for three different types of international shipments (dependent on

whether the forwarder has to arrange the entire “through” movement or just parts of the “through”

move).

Page 5 GAO/NSIAD-97-49 Reengineering Personal Property Program
B-275016 

each channel by order of rate level and quality score. In the domestic

program, traffic is distributed on the basis of low-to-high rate, with highest

quality scored carriers given the first 20,000 pounds. In the international

program, the forwarder or forwarders initially offering the low rate for the

particular channel are given a pre-specified percentage of the traffic on

that channel.

The Proposals: MTMC

and Industry

MTMC’s Proposal Overall, MTMC’s proposal would result in a program that would operate in

much the same way other DOD programs operate for acquiring goods and

services. Emphasis is placed on assessing quality of service in the

contractor selection process and obtaining military member satisfaction

with the services received.

At the first meeting of the DOD/industry working group, MTMC provided a

briefing on its proposal.5

 Following that meeting, on June 24, 1996, MTMC

provided the working group with a draft request for proposals summary.

The summary described a standardized program for handling both

domestic and international shipments. It laid out MTMC’s proposed

acquisition strategy and the major events that MTMC expected to occur in

the proposed acquisition process. The MTMC proposal is the result of the

DOD/industry working group process and includes a number of features put

forward by industry.

Under its plan, MTMC would make major changes to the existing

carrier/forwarder approval, rate solicitation, and traffic distribution

processes. The existing approval process would be eliminated and

replaced by a contract award process. Prices would be fixed for 1 year,

with no provision for increases during the contract period. Rate

solicitation would be based on competitive acquisition procedures used by

government in procuring other types of goods and services and eliminate

the twice yearly re-solicitation of rates under the current system. Traffic

distribution would be limited to the number of contractors receiving

awards.

5

A description of the events leading up to the working group meetings and the meetings is contained in

appendix I.

Page 6 GAO/NSIAD-97-49 Reengineering Personal Property Program
B-275016 

Key points in MTMC’s acquisition strategy were that offerors would be

required to submit proposals addressing technical factors (i.e., how the

offeror proposed to perform specified technical or operational

requirements), past performance, subcontracting plan, and price. MTMC

said that it anticipated that price would be less important than the other

factors combined. Award would be made only to responsible offerors

whose offers conformed to the solicitation and represented the best

overall value to the government—price and other evaluation criteria

considered. There were no restrictions on the type of company that could

compete for the contracts. Therefore, companies other than licensed

carriers and forwarders—the only type of companies now allowed to

compete for DOD traffic—would be allowed to make an offer for the DOD

business.

MTMC’s proposal also detailed DOD’s movement and storage requirements,

shipment origins (all areas of North Carolina, South Carolina, and Florida)

and destinations (13 regions in the contiguous 48 states and 5 regions in

Europe), categories of shipments (household goods and unaccompanied

baggage) that would and would not be handled under the pilot test,

minimum contractor personnel requirements, specific tasks that were to

be performed, length of the contract (1 year plus an unspecified number of

option years), the way offerors should specify price for each traffic

channel (expressed as a discount percentage using the commercial rate

tariff for domestic shipments and a fixed dollar and cents per

hundredweight rate for international shipments), the accessorial services

DOD would be requiring, contractor’s liability and loss and damage claims

procedures (full value protection based on certain minimum declared

valuations subject to an overall cap), contractor’s required quality

assurance procedures (use of a customer survey), certain performance

standards for shipment pickup and delivery, and the invoicing and

payment process.

MTMC also indicated that it would establish and specify in the solicitation a

total contract minimum guaranteed tonnage amount from each origin pilot

state to each destination region included in the pilot program. It will

request that offerors furnish by traffic channel a maximum daily capacity

that they are willing to commit to the contract, stated in pounds, from

each installation in the pilot test to any or all destination pilot regions that

they may wish to serve.

MTMC’s proposal, as amended, was endorsed and supported by one of the

five industry associations attending the meetings—the Military Mobility

Page 7 GAO/NSIAD-97-49 Reengineering Personal Property Program
B-275016 

Coalition, an industry group with members from relocation companies;

move management companies; independent and van line-affiliated carriers

and forwarders; and industry specialty firms, such as cargo insurance

companies.

Industry Proposal The household goods carrier/forwarder industry associations prepared

and submitted for comment an alternative plan (referred to in this report

as the industry proposal) on June 24, 1996. Industry restated its proposal

on October 25, 1996, in a letter to us. The industry proposal also represents

the results of the DOD/industry working group process and includes certain

features favored by DOD.

The summary described a plan that consists of two distinct programs, one

for handling domestic shipments and another for handling international

shipments. Under its plan, industry would build on the existing DOD

program. It would not be based on the government competitive acquisition

system but would use a government bill of lading to acquire the services in

accordance with procedures contained in DOD and the General Services

Administration transportation regulations.6

 The industry proposal would

limit the type of company that could participate to only those

types—licensed carriers and forwarders—currently in the program.

Industry’s proposal for handling both domestic and international

shipments is like MTMC’s proposal to the extent that it would be based on

the same pricing system for each traffic channel (expressed as a discount

percentage using the commercial rate tariff for domestic shipments and a

fixed dollar and cents per hundredweight rate for international

shipments), provide for the same level of contractor liability (full value

protection based on certain minimum declared valuations subject to an

overall cap), provide for certain performance standards for shipment

pickup and delivery, and provide for the use of a customer survey.

Industry’s proposal differed in (1) who could participate in the DOD

program (only licensed carriers and forwarders), (2) lengthened the rate

cycle period from a current 6-month cycle to a yearly cycle, (3) indicated

that rates could be adjusted at stated times during the rate cycle to

account for underlying cost increases, and (4) explained how traffic would

be distributed among firms using a combination of price and customer

survey feedback data. Its proposal also indicated that carriers and

6

This would include the General Services Administration’s Federal Property Management Regulations 

(41 CFR 101-41).

Page 8 GAO/NSIAD-97-49 Reengineering Personal Property Program
B-275016 

forwarders in the domestic program could submit a “best and final” rate 

3 months into the rate cycle to improve their competitive position and that

forwarders in the international program could lower their originally filed

rates 60 days prior to the start of the rate cycle. Accompanying the

proposal was some discussion on how the industry would provide for

program simplification and eliminate “paper companies.” That is, paper

companies are companies in the domestic program that lack actual

operating assets but are affiliates of companies that have assets. These

paper companies do not increase DOD’s capacity.

The industry proposal was signed by the presidents of the four carrier

associations—American Movers Conference, the Household Goods

Forwarders Association of America, the National Moving and Storage

Association, and the Independent Movers Conference. The associations’

members represented virtually every facet of the moving industry,

including van lines with agent networks, independent carriers, agents, and

forwarders. As previously mentioned, the Military Mobility Coalition

supported the MTMC proposal.

Our Assessment of the

Proposals

The DOD/industry working group did not define the individual elements

that made up each of the agreed-to 10 goals for reengineering DOD’s

personal property program. The goals are qualitative and not easily

measured. Nor were the proposals written in such a way that specifically

addressed how DOD and industry would meet each goal. Consequently, our

assessment of the extent to which each proposal met the goals was

necessarily limited by the lack of precise definitions of each goal and the

way to achieve it.

Every goal was debated at length by DOD and industry officials without

complete agreement. For example, there were varying interpretations of

the goals to improve quality service and to achieve best value. We assessed

each proposal’s ability to meet those goals using our knowledge of the

existing personal property program, our understanding of the proposals,

associated documents, information gathered from our attendance at all of

the working group meetings, review of the transcripts of the meetings, and

our prior studies.

In table 1, we list the goals and provide a general comment about the

extent to which each proposal is likely to meet the goals. Following the

table, we then discuss the goals and the basis for our assessment of the

extent to which the proposals are likely to meet each goal. In discussing

Page 9 GAO/NSIAD-97-49 Reengineering Personal Property Program
B-275016 

the industry proposal, our comments are directed at both the domestic

and international programs, unless otherwise noted.

Table 1: Our Assessment of the Extent to Which DOD and Industry Proposals Met the Agreed Upon Goals for

Reengineering the Personal Property Program

Extent to which the proposals are likely to meet each

goal

Goal DOD proposal Industry proposal

1. Provide quality service Greater extent Lesser extent

2. Improve on-time pickup Equal extent Equal extent

3. Improve on-time delivery Equal extent Equal extent

4. Achieve high customer satisfaction in relationship to the entire move

process

Equal extent Equal extent

5. Adopt corporate business processes that lead to world-class customer

service

Greater extent Lesser extent

6. Lower loss/damage and lower claims frequency and claims averages Equal extent Equal extent

7. Simplify the system, including reducing administrative workload Greater extent Lesser extent

8. Ensure capacity to meet DOD’s needs for quality moves Greater extent Lesser extent

9. Provide opportunity for small businesses offering quality service to

compete for DOD business as a prime contractor

Unknown extent Unknown extent

10. Provide best value moving services to the government Greater extent Lesser extent

Assessment of Proposals:

Equal Extent

Both proposals are likely to equally achieve 4 of the 10 goals of the

program. These include the goals for improving on-time shipment pick-up

(goal 2), improving on-time shipment delivery (goal 3), achieving high

customer satisfaction (goal 4), and reducing claims and improving claims

handling (goal 6).

Both MTMC and industry agreed on the need for performance standards to

achieve the above goals. For example, to achieve high customer

satisfaction, each proposal provides for more direct communication

between servicemember and contractor (matters such as the pre-move

survey, movement counseling, phone numbers to check with the

contractors, and intransit visibility) and use of a customer survey as a tool

for obtaining feedback on contractor performance. Included would be

such questions as the timeliness of pickup, timeliness of delivery, loss and

damage occurrence, evaluation of origin and destination agent service, and

the customer’s decision on whether to use the particular contractor again.

Page 10 GAO/NSIAD-97-49 Reengineering Personal Property Program
B-275016 

To reduce claims and the problems associated with them, each proposal

provides for increased contractor liability (full value protection) and more

streamlined claims settlement, including direct settlement (servicemember

with contractor).

Assessment of Proposals:

Greater and Lesser Extent

MTMC’s proposal meets 5 of the 10 goals for reengineering the personal

property program to a greater extent than the industry plan. The goals are

providing quality service (goal 1), providing best value (goal 10),

simplifying the system (goal 7), adopting corporate business practices

(goal 5), and ensuring capacity to meet DOD’s needs (goal 8).

Quality Service 

(Goal 1) and Best Value

(Goal 10)

MTMC has said it wants its reengineering effort to produce a dramatic

improvement in the quality of personal property shipment and storage

services provided to military servicemembers or civilian employees and

their families when they are relocating on U.S. government orders. This

means providing a service to DOD personnel on par with corporate

customer standards.

MTMC’s proposal would fundamentally change the existing system by using

multiple award, fixed-price, indefinite delivery/indefinite quantity-type

contracts awarded under the competitive acquisition system. It would

require prospective contractors to address before contract award how

they would perform MTMC-specified technical or operational requirements.

This would provide DOD the opportunity to assess a prospective

contractor’s plan to improve the quality of the service DOD receives prior to

contract award. It would give MTMC an opportunity to assess “best value,”

that is, the ability to assess the trade-offs between price and technical

factors. Awards would not have to be made on price alone. Therefore, we

believe MTMC’s proposal would achieve the goal of quality service and best

value to a greater extent than the industry proposal.

MTMC had indicated that before any company is awarded DOD business, it

wants to ensure that company has submitted a proposal indicating its

“best value,” that is addressing the technical factors (e.g., how the offeror

proposed to perform specified technical or operational requirements),

identifying its past performance, subcontracting plan, and price. MTMC said

that it anticipated that price would be less important than the other factors

combined. Award would be made only to responsible offerors whose

offers conformed to the solicitation and represented the best overall value

to the government, price and other evaluation criteria considered.

Page 11 GAO/NSIAD-97-49 Reengineering Personal Property Program
B-275016 

Both MTMC and industry agreed that in order to obtain quality service, there

would be a need for longer term binding arrangements. In the current

system, rates are re-bid every 6 months, and there are periods within each

rate cycle when rates can be canceled. However, there was no agreement

on the exact length of the longer term, nor on the type of binding

arrangement. MTMC originally proposed establishing fixed prices for 1 year,

with option years. Industry proposed 1 year with no options, plus the

opportunity to cancel rates or meet other contractors’ rates at the 3-month

point of the year-long price cycle. MTMC wanted multiple award,

fixed-price, indefinite delivery/indefinite quantity-type contracts with a

base and several option years awarded under the FAR, whereas industry

wanted continuation of the current non-FAR arrangements with

modifications.

Industry’s proposal defines “best value” in terms of ranking carriers and

forwarders on the basis of price and performance. It would require MTMC

to develop a best value score for each carrier wanting to participate in the

program. The contractor’s “best value” score would be based 30 percent

on price and 70 percent on customer survey. Traffic would be distributed

to the top-rated 30 to 50 carriers and forwarders. The industry proposal

would not be based on the competitive acquisition system but would use a

government bill of lading to acquire the services in accordance with

procedures contained in DOD and the General Services Administration

transportation regulations. It would not require prospective contractors to

address how they would perform MTMC-specified technical or operational

requirements before contract award. Consequently, MTMC would not have

opportunity to assess a prospective contractor’s plan to improve the

quality prior to contract award and would limit MTMC’s ability to assess the

trade-offs between price and technical factors.

Simplification (Goal 7) MTMC has stated that it is looking for administrative simplification of the

program. This relates to simplifying the total process from arranging the

movement to settling the claim.

Elements of both proposals offer some simplification. For example, both

proposals price services on the basis of most corporate move contracts

(percentage discount off industry’s Domestic Commercial Tariff for

domestic household goods shipments and single factor rates for

international household goods and unaccompanied baggage shipments).

They agreed to simplify the pricing of certain accessorial services.

Page 12 GAO/NSIAD-97-49 Reengineering Personal Property Program
B-275016 

For reasons described below, MTMC’s proposal meets this goal to a greater

extent than the industry’s proposal. MTMC’s program is a standardized,

domestic and international program. Industry’s proposal is composed of

separate domestic and international programs. MTMC proposed to have

offerors submit prices and fix them for at least 1 year. Industry proposed

offering prices that could be changed or canceled. In industry’s domestic

program, prices would be established for 1 year, effective January 1 of

each year, with specific escalation provisions to account for significant

increases, such as fuel costs, insurance, containers, and labor costs. The

proposal also included allowing prices to be re-submitted as “best and

final” on April 1 of each year. In industry’s international program, industry

proposed to allow for increases 6 months into the contract period to

compensate for currency exchange adjustments.

We have previously urged DOD to take the actions it is proposing here, such

as eliminating the frequent rate re-solicitations. In a previous report, we

recommended that MTMC replace or modify the two-phase (me-too)

domestic household goods bidding system so that all carriers have

incentive to initially bid the lowest possible rates.7

 We also noted that as a

result of the current acquisition process, the domestic segment of the

industry had created many paper companies that significantly added to

DOD’s workload but did not increase industry operating asset capacity. The

MTMC proposal would implement our recommendation and limit the

participation of paper companies through the use of the competitive

acquisition system and provide for simplification. The carrier industry

acknowledges that nearly half of the currently approved interstate carriers

may be paper companies. Its proposal states that it will eliminate from the

domestic program the many paper companies that do not provide

“legitimate capacity,” but would still require MTMC to determine what is

“legitimate capacity.”

MTMC anticipates making awards to fewer contractors and basing the

system on fewer, more consolidated traffic channels. Currently, in the

domestic program, each of the roughly 170 U.S.-located shipping offices

has to maintain a traffic distribution roster for every traffic channel, or

destination state. Each channel can involve several hundred carriers or

forwarders. Industry suggests a distribution system that involves fewer

companies on each channel, but the numbers would still involve 30 to 50

companies.

7

Household Goods: Competition Among Commercial Movers Serving DOD Can Be Improved

(GAO/NSIAD-90-50, Feb. 12, 1990).

Page 13 GAO/NSIAD-97-49 Reengineering Personal Property Program
B-275016 

Neither proposal specifically addresses the numbers of staff and other

resources needed to implement them. There is no way to tell from the

proposal specifically how many people would be involved in reviewing the

proposal, how many people or resources are needed to handle the rate

solicitation process or any specific traffic distribution roster system.

Accordingly, our analysis is necessarily limited. However, we believe that

MTMC’s proposal offers the greater opportunity to provide for

administrative simplification because it (1) is a consolidated domestic and

international proposal; (2) changes the rate solicitation process by

eliminating re-solicitation; (3) provides for use of fewer companies to

handle the traffic, necessitating less administrative effort for military

installation traffic management personnel; and (4) relies on traffic

channels that cover entire states. The industry proposal, though it

improves on the current program somewhat, retains the rate re-solicitation

process in both the domestic and international programs; continues the

need to administer a large, complex traffic distribution roster process for

every channel; and continues to base traffic channels on each individual

military shipping office.

Adopting Corporate

Business Practices 

(Goal 5)

MTMC has said that it is attempting to capitalize on the best applicable

commercial business practices. This relates to adopting business practices

characteristic of world-class customers and suppliers, such as using

contractual arrangements to simplify contractor selection.

For the following reasons, MTMC’s proposal meets this goal to a greater

extent than industry. It would eliminate DOD-unique transportation

regulations for the acquisition of services. As we noted earlier, the

industry proposal, similar to the existing MTMC program, would not be

based on the competitive acquisition system but would use a government

bill of lading to acquire the services in accordance with procedures

contained in DOD and the General Services Administration transportation

regulations.

In addition, in the past, we have recommended that DOD adopt commercial

practices, such as using a smaller number of carriers to achieve quality

and cost benefits.8

 In the personal property program, we note that MTMC

has approved more than 1,100 motor van carriers and regulated

forwarders to handle its domestic moving needs. It has more than 150

forwarders at its disposal for its international traffic. All military shipping

8

See, for example, Defense Transportation: Commercial Practices Offer Improvement Opportunities

(GAO/NSIAD-94-26, Nov. 26, 1993).

Page 14 GAO/NSIAD-97-49 Reengineering Personal Property Program
B-275016 

offices have to spend considerable time and effort to allocate a relatively

small number of shipments to an enormous number of carriers. Fort

Bragg, North Carolina, a typical example of the roughly 170 shipping

offices in the contiguous 48 states, is serviced by more than 200 different

domestic movers, more than 160 international forwarders, and 50 local

carrier/forwarder agents. It has on average about 100 domestic and

40 international household goods shipments a week, moving in roughly

50 domestic and 30 international traffic channels, each requiring a

separate shipment distribution roster. Some carriers and forwarders get

but one shipment a week, if that. Many of the companies that get a

shipment are “paper companies” that provide DOD no new operating asset

capacity but were formed by their parent company to increase the parent

company’s market share of the DOD business. The administrative effort

does little to improve the quality of life for the servicemember and his or

her family.

In the same report, we recommended greater use of corporate practices

that promote use of contractual arrangements to simplify the carrier

selection. This could lead to more stability and provide leverage leading to

cost efficiencies for both the carriers and DOD.

Ensure Capacity (Goal 8) MTMC has long been concerned about having the necessary capacity to

meet DOD’s moving needs. There was no consensus, however, as to how to

achieve the goal. MTMC is looking for commitment from the contractors to

meet their needs, particularly during peak shipping periods. Over the

years, there have been many examples of carriers and forwarders not

being able to provide services when needed.

MTMC’s proposal, we believe, provides the greater opportunity to meet this

goal than does the industry proposal because it (1) would involve the

award of contracts that would obligate the contractors to provide specific

minimum capacity and (2) would not limit participation in the program to

only licensed carriers or forwarders. MTMC’s proposal would allow any

company, whether carrier, forwarder, relocation company, or anyone else,

to participate. Relocation companies stated that they are prepared to make

capacity available to DOD as needed. Industry’s proposal specifically

excludes relocation company participation unless such companies are

licensed carriers or forwarders.

Carrier/forwarder industry officials state that MTMC’s proposal with regard

to noncarrier/forwarder relocation company participation sets bad public

Page 15 GAO/NSIAD-97-49 Reengineering Personal Property Program
B-275016 

policy and raises serious legal questions. Under such a system, a

relocation company, with legal status as a broker, could be awarded a

prime contract to effect the moves from a given base or locality. It would

be the responsibility of that company to secure the services of carriers to

perform the actual packing and moving services under the contract.

Industry believes that a federal agency purchasing goods or services

should contract only with entities actually providing those goods or

services. Allowing relocation companies to compete for prime contracts,

industry argues, would create logistical problems and raise questions

concerning possible violations of the Anti-Kickback Act of 1986, 

41 U.S.C. 51-58 and antitrust laws.

As previously discussed, we believe MTMC’s proposal to meet its goals has

the potential for eliminating paper companies and opens the way for more

competition among companies having or bringing to DOD actual capacity. It

does not appear that MTMC wishes to restrict competition. The competitive

acquisition system that MTMC proposes to use requires, as a general rule,

that DOD obtain full and open competition in its acquisitions 

(10 U.S.C. 2304). Concerning the potential for legal problems, the propriety

of the relationship between firms participating in an acquisition as prime

contractor and/or subcontractor is governed by the particular facts and

circumstances in the context of the applicable laws.

Assessment of Proposals:

Unknown Extent

We are unable to determine the extent that either proposal provides or

does not provide opportunity for small business to participate in the

personal property program (goal 9). As was pointed out during the

DOD/industry working group meetings, opportunities for small business

and the impact on small business is difficult to assess or measure. The

moving industry is made up of both large and small businesses, with many

different types of organizational structures. The majority of moves are

handled by the large business, van lines, but the work itself—packing and

unpacking of the household goods, the loading and unloading of the

trucks, and the actual truck driving—is done by small businesses, some

independent and some part of the van line.

In addition, our data indicate that there are about 25 major, nationwide

van lines; a thousand independent van lines; several hundred freight

forwarder moving companies; about 4,500 agents; and thousands of

owner-operator truckers. In some instances, the agents actually own the

major van lines. In other instances, the agents are independent companies

working for the van lines. More recently, the industry has expanded to

Page 16 GAO/NSIAD-97-49 Reengineering Personal Property Program
B-275016 

include relocation companies that handle the moves as part of a total

package relocation service.

On April 17, 1996, as directed by the Fiscal Year 1996 Defense

Appropriations Bill Conference Report (House Conference Report 

Number 104-344), MTMC reported on the impact of the reengineering

program on small business. It said that it believed small businesses can

reasonably be expected to fare as well or better than they do in the

existing program. The reason, it said, was that MTMC’s program would

provide small businesses additional protection and opportunities, based

on the establishment of subcontracting goals. However, the extent that

small business is impacted remains a concern to the Congress and the

industry because of the many uncertainties involved in implementing a

new program.

The two sides agreed, however, to reduce the size of traffic channels for

the test, at least in part, to allow for greater participation of small business

as prime contractors. MTMC had originally wanted contractors to submit

offers by regions (4 in the contiguous 48 states). For the pilot test, MTMC

significantly decreased the size of the contract area, from regions to states.

The pilot test includes three states—North Carolina, South Carolina, and

Florida—and although contractors will be required to serve all points

within a state, they can offer on any or all of the other 13 regions into

which MTMC has divided the country. Furthermore, the test includes only

50 percent of the shipments from those states and only certain types of

shipments. Intrastate and local shipments, for example, are not in any test

plans. Industry preference is for traffic channels much as the current

system exists, where traffic channels are based on personal property

shipping offices (presently, more than 150 in the contiguous 48 states).

MTMC officials state that if a small business is intimidated by the size of the

contracts, it can participate as a subcontractor of a large company or of

another small business. MTMC indicated that for purposes of its proposal,

small business would be defined as any company with annual receipts less

than $18.5 million. The carrier association officials, however, do not

believe that subcontracting counts toward this goal. Accordingly, the

association officials believe that the MTMC proposal, by relegating small

business to a subcontractor role, would reduce the number of small

business prime contractors, resulting in the goal not being met. DOD’s

position is based on the opportunity to compete, not numbers. We based

our assessment on the opportunity to compete.

Page 17 GAO/NSIAD-97-49 Reengineering Personal Property Program
B-275016 

Under MTMC’s proposal, contracts for transportation services will be

awarded under the competitive acquisition system. The requirements of

the Small Business Act, 15 U.S.C. 631, et seq.; FAR part 19; and the

applicable part of the Defense Federal Acquisition Regulations

Supplement will apply to these acquisitions. These provisions include such

matters as subcontracting plans for the utilization of small, small

disadvantaged, and women-owned small business, and set-asides for small

business. Therefore, the protection for small business appear to reside in

the proposed MTMC plan as it would in any other contract awarded under

the government’s competitive acquisition system.

Matter for

Congressional

Consideration

We support moving forward with the pilot test of a reengineered personal

property program because it will provide the necessary data to ultimately

design an improved system. MTMC’s proposal represents a collaborative

effort to a large degree between DOD and industry and, as such, provides

the better opportunity to achieve the program goals. In addition, it is

important that performance standards be developed and data gathered in a

way that enables measurable results of the program, particularly as they

relate to quality of service and small business participation. We recognize

that our assessment of the extent to which the proposals met the program

goals required judgments about likely outcomes and that only actual data

can determine with greater certainty the impact of the proposals. If the

Congress still has concerns about the impact on small business, piloting

both proposals is an option. However, doing this would likely place an

additional administrative and costly burden on MTMC and could delay

implementation of the program.

Agency Comments

and Our Evaluation

We asked DOD, the four carrier associations—the American Movers

Conference, the Household Goods Forwarders Association of America, the

National Moving and Storage Association, and the Independent Movers

Conference—and the Military Mobility Coalition to comment on a draft of

this report. Our reporting time frames necessitated that we meet with each

group and obtain only their informal oral comments prior to the issuance

of the report. All expressed concern about the short time frame provided

for preparing their comments. We acknowledged that this was the case

and agreed to include their informal comments in this report and

encouraged them to provide any additional comments as appropriate.

Page 18 GAO/NSIAD-97-49 Reengineering Personal Property Program
B-275016 

DOD Comments DOD officials agreed with our analysis of the proposals and the facts in the

report. However, they strongly disagreed with our interpretation of what

MTMC’s proposal represents and the option we suggested to pilot both

proposals. According to DOD officials, the proposal submitted for review to

us from the DOD/industry working group represents the collaborative

product of the working group as indicated by a consensus list signed by

the industry representatives. Thus, they believe that MTMC’s proposal

represents a joint DOD/industry proposal. DOD officials stated that testing

the independent industry proposal would be a disservice to the

collaborative process and would obviate the instructions of the

congressional defense committees to reach agreement on a single plan.

Moreover, DOD officials stated that if directed to pilot test the industry

proposal in addition to the industry/DOD proposal, DOD would want to test

it against MTMC’s original proposal. Furthermore, they expressed concern

that testing of the industry proposal would further delay their effort to

improve the quality of service and reduce the $100 million annual claims

for loss and damage now being experienced by military members and their

families.

DOD officials also stated that they do not have enough detail on the

industry proposal to go forward without significant delay. They said that

the industry proposal was not debated during the working group meetings;

consequently, a number of areas are unclear, vague, and ambiguous from

their point of view. Further, they were concerned that the industry

proposal would be technically and operationally difficult to implement,

costly to administer, and cumbersome for installation transportation

officials to handle simultaneously with the other pilot. Moreover, DOD

officials stated the industry proposal would not provide the opportunity to

improve quality of service, which is one of the primary goals of the

reengineering effort.

We recognize DOD’s concerns about the administrative burden and the

delay that might be caused by dual testing the pilots. Consequently, we

modified the matter for congressional consideration, noting that the dual

pilot could be an administrative and costly burden for MTMC and could

delay implementation. Regarding DOD’s comments on what MTMC’s

proposal represents, we believe MTMC’s proposal represents the DOD

approach. Our view is based primarily on the letter we received on

October 1, 1996, from the Commander, MTMC, which stated

“The Working Group has agreed to disagree on one major area: our plan to use Part 12 of

the Federal Acquisition Regulation (FAR) as the basis for our projected contracts. . . . MTMC

Page 19 GAO/NSIAD-97-49 Reengineering Personal Property Program
B-275016 

respectfully disagrees with industry and proposes to use the FAR to obtain the benefits of

free and open competition for the government and our military service members. . . . The

House/Senate Conference Committee on National Defense included language in the 1996

Defense Appropriations Bill Conference Report (House Report 104-450) directing MTMC to

test its concept for improved service by conducting a Pilot Program. We are incorporating

ideas from the industry/DOD consensus, and propose to begin the test in the immediate

future.”

Industry Comments The four carrier associations and the Military Mobility Coalition had

differing opinions on our report. The American Movers Conference, the

Household Goods Forwarders Association of America, the Independent

Movers Conference, and the National Moving and Storage Association

disagreed with our analysis of the proposals in each area where we stated

that MTMC’s proposal would likely achieve the goals to an unknown extent

(goal 9) or to a greater extent (goals 1, 5, 7, 8, and 10) than the industry

proposal. The Military Mobility Coalition, however, agreed with our

analysis of the proposals.

In addition, the carrier associations strongly supported the option we

presented as a matter for congressional consideration to pilot both

proposals. They said that an advantage to piloting both proposals would

be to obtain with certainty the impact of the proposals on small business

participation. They added that to pilot their proposal should not be

difficult to implement and stated that they would be willing to work with

DOD to help implement a dual pilot. However, the Military Mobility

Coalition officials expressed concern about the time it would take to set

up and run two pilots, the significant administrative effort that would be

required, and the limited value such a test would yield. The Coalition

believes that the carrier association’s proposal is so similar to the

structure of the current program that it negates the need for a pilot

program.

The following are key points provided by the four carrier associations

where they disagreed with our analysis of the proposals. Most of the

concerns raised by the four carrier associations were regarding MTMC’s

proposal, our characterization of the industry proposal, and our

assessment of the proposals. We have revised the report to reflect their

concerns, provided additional information to support our position, or

clarified the position of DOD and industry, as appropriate.

Page 20 GAO/NSIAD-97-49 Reengineering Personal Property Program
B-275016 

Regarding our analysis of the goal to provide opportunity to small business

to participate as prime contractors (goal 9), the carrier associations stated

that they believed we had sufficient information to conclude that small

business would be negatively impacted under MTMC’s proposal. They took

issue with MTMC’s conclusion that the small business goal would be met

through small business competing as either subcontractors or prime

contractors. The carrier associations point out that the stated goal relates

to participation of small business concerns as prime contractors.

Accordingly, the associations state that MTMC’s proposal, by relegating

small business to a subcontractor role, would substantially reduce the

number of small business prime contractors and therefore, would not

meet the stated goal. As we stated, there was insufficient data for us to

assess this area. However, we revised the report to more fully discuss the

carrier associations’ concerns.

Regarding our analysis of the goal to ensure capacity to meet DOD’s needs

(goal 8), the carrier associations stated that the industry proposal would

not limit new capacity, it would only limit companies not properly licensed

as carriers or forwarders from participating in the program. They also

argue that MTMC’s proposal would be too complicated to successfully

guarantee adequate capacity and would reduce capacity by reducing the

number of service providers with assets. The Military Mobility Coalition

countered that many in the moving industry do not now participate

because of the current cumbersome methods, but would enter the

program under the MTMC proposal. Our overall basis for favoring MTMC’s

proposal in this area was based on the fact that contractors would be

required to commit minimum capacity and participation of contractors

would not be limited to licensed carriers and forwarders. The four carrier

associations provided us no new information to change our view in this

area.

Regarding our analysis of the goal to simplify the system (goal 7), the

carrier associations stated that we limited our analysis only to certain

aspects of simplification and did not consider, in their opinion, the

complicated systems and processes that would be added under MTMC’s

proposal. These included the complex method MTMC proposed to allocate

traffic, bid on channels, and use the FAR. The associations stated that the

MTMC-proposed program would become administratively cumbersome if

expanded worldwide. The Military Mobility Coalition, having operated

under competitive FAR procedures, believes the FAR is less cumbersome

than contracting with thousands of individual carriers, which occurs under

MTMC’s current operating system and the carrier associations’ proposal.

Page 21 GAO/NSIAD-97-49 Reengineering Personal Property Program
B-275016 

Regarding the carrier associations’ concerns, we added information on

why we believed MTMC’s proposal better met this goal, particularly as it

relates to simplifying the rate solicitation and traffic distribution

processes. In addition, we explained that the proposals do not specifically

address the numbers of staff and other resources needed to implement

them, limiting our analysis. Thus, we focused on the extent that the

proposed process changes would simplify traffic management processes.

Finally, we pointed out that industry’s proposal represents two separate

programs, as opposed to MTMC’s single program, for handling both

domestic and international traffic.

Regarding the goal to adopt corporate business processes (goal 5), the

carrier associations stated that using the government competitive

acquisition system, the FAR, and other practices proposed by MTMC does

not represent corporate business practices. We agree that the FAR is not

used in the corporate world. However, we believe MTMC’s proposal moves

closer toward adopting corporate business practices, such as using

contractual arrangements to simplify the carrier selection process.

Regarding the goals to provide quality service and best value (goals 1 and

10), the carrier associations noted that awarding contracts for these

services pursuant to the FAR would involve the evaluation of complex

proposals that must be prepared by the competing firms. According to the

association officials, such proposals are best prepared by large companies,

and there is not always a direct relationship between well-written

proposals and actual quality service. The Military Mobility Coalition

pointed out that small businesses in this carrier field can have annual

receipts up to $18.5 million and should be able to handle preparing

proposals. Given the conflicting views, we have no basis for judging the

extent to which proposal preparation would or would not be a problem.

This type of issue illustrates why we strongly support a pilot program.

The carrier associations pointed out that our report in many places

referred specifically to the domestic program and was silent about issues

surrounding the international program and the impact of the MTMC pilot

program on international service providers. We have revised the report to

more fully discuss the international aspect of the industry proposal.

Other comments were provided to us that clarified or corrected our

characterization of the industry proposal. We incorporated, as appropriate,

these comments into the report. For example, we added that the industry

proposal actually is composed of two programs—one for handling

Page 22 GAO/NSIAD-97-49 Reengineering Personal Property Program
B-275016 

domestic traffic and another for international traffic. In addition, we

clarified that the industry proposal modifies the current system, provides

for selecting carriers on quality as well as price, and has features that

address the problem of paper companies.

According to the four carrier associations, the specific reasons relied on

for their position is contained in the Industry Critique of MTMC’s Proposed

Pilot Program for Domestic and International, signed by American Movers

Conference and the Household Goods Forwarders Association of America

and agreed to by the Independent Movers Conference and the National

Moving and Storage Association. At their request, the document provided

by the carrier associations giving more detail on their position is included

as appendix II.

Overall Evaluation The diverse nature of the comments illustrates the difficulty of assessing

the two proposals and making the judgments when precise data is absent.

We believe that our assessment of the extent to which each proposal

meets the program’s reengineering goals is appropriate. We have revised

the report to better reflect the content of both proposals and specific

points made by the commenting officials. Overall, we continue to believe

that MTMC’s proposal provides a greater opportunity than the industry

proposal to achieve the program goals and that the pilot should not be

delayed any further.

Scope and

Methodology

The source proposals for our analysis were

1. MTMC’s “Draft Request for Proposal Summary, Reengineering the DOD

Personal Property Program,” dated June 24, 1996, as clarified in DOD

correspondence, position papers, and white papers distributed to the

working group members over the period of the working group meetings

held through September 16, 1996.

2. The “Joint Industry Proposed Alternative Plan to MTMC’s Re-Engineering

of the Domestic and International Personal Property Programs,” dated

June 24, 1996, and signed by the presidents of the four moving industry

carrier associations—American Movers Conference, the Household Goods

Forwarders Association of America, the National Moving and Storage

Association, and the Independent Movers Conference—as revised in an

American Movers Conference and Household Goods Forwarders

Association of America document entitled “Industry Alternative Pilot Plan

Page 23 GAO/NSIAD-97-49 Reengineering Personal Property Program
B-275016 

for MTMC’s Domestic and International Personal Property Program,” dated

October 25, 1996.

Since MTMC and industry could not agree on a single approach to the pilot

test, we analyzed the two approaches. As discussed with your office, we

agreed to use the source proposals described above as the basis for

analyzing the pilot test approach.

The program goals were those developed at the June 10, 1996, working

group meeting and agreed to by a September 16, 1996, DOD and

association-signed document entitled TRANSCOM/MTMC/Industry

Reengineering Personal Property Working Group Consensus List.

Our analysis was based on the review of the proposals; examination of the

transcribed record of the working group meetings; review of

correspondence of both sides relative to the two proposals, points of

clarification, and statements of disagreement; reference to our prior

reports and findings on the subject area; research and analysis of the

applicable procurement statutes and DOD and the General Services

Administration transportation procurement and traffic management

regulations; analysis of data related to the moving industry and small

business affairs, not necessarily discussed at the working group meetings;

and follow-up discussions with officials in DOD and the moving industry

who attended the working group sessions.

Our analysis of the reengineering initiative was conducted between June

and November 1996. Since agreement could not be reached on a mutually

acceptable proposal to pilot test, we began assessing in October 1996, the

separate DOD and industry proposals. Our assessment of the specific

proposals was conducted during a 30-day period as specified in the House

and Senate reports accompanying the National Defense Authorization Act

for Fiscal Year 1997. Our review was performed in accordance with

generally accepted government auditing standards.

We are sending copies of this report to the Secretary of Defense; the

Commander-in-Chief, U.S. Transportation Command; the Commander,

MTMC; the American Movers Conference; the Household Goods Forwarders

Association of America; the National Moving and Storage Association; the

Independent Movers Conference; and the Military Mobility Coalition. We

will also make copies available to others upon request.

Page 24 GAO/NSIAD-97-49 Reengineering Personal Property Program
B-275016 

Please contact me on (202) 512-8412 if you or your staff have any

questions concerning this report. Major contributors to this report are

listed in appendix III.

David R. Warren, Director

Defense Management Issues

Page 25 GAO/NSIAD-97-49 Reengineering Personal Property Program
B-275016 

List of Congressional Committees

The Honorable Strom Thurmond

Chairman

The Honorable Sam Nunn

Ranking Minority Member

Committee on Armed Services

United States Senate

The Honorable Ted Stevens

Chairman

The Honorable Daniel K. Inouye

Ranking Minority Member

Subcommittee on Defense

Committee on Appropriations

United States Senate

The Honorable Floyd D. Spence

Chairman

The Honorable Ronald V. Dellums

Ranking Minority Member

Committee on National Security

House of Representatives

The Honorable C. W. Bill Young

Chairman

The Honorable John P. Murtha

Ranking Minority Member

Subcommittee on National Security

Committee on Appropriations

House of Representatives

Page 26 GAO/NSIAD-97-49 Reengineering Personal Property Program
Page 27 GAO/NSIAD-97-49 Reengineering Personal Property Program
Contents

Letter 1

Appendix I 

Background on the

Military Traffic

Management

Command’s Pilot Test

Initiative to

Reengineer DOD’s

Personal Property

Program

30

Department of Defense’s Reengineering Initiative 30

Congressional Concern 30

MTMC/Industry Attempt to Reach Agreement on a Single Plan to

Pilot Test

31

Appendix II 

Document Provided

by the Carrier

Associations Giving

More Detail on Their

Position

34

Appendix III 

Major Contributors to

This Report

54

Table Table 1: Our Assessment of the Extent to Which DOD and

Industry Proposals Met the Agreed Upon Goals for Reengineering

the Personal Property Program

10

Abbreviations

DOD Department of Defense

FAR Federal Acquisition Regulation

MTMC Military Traffic Management Command

TRANSCOM Transportation Command

Page 28 GAO/NSIAD-97-49 Reengineering Personal Property Program
Page 29 GAO/NSIAD-97-49 Reengineering Personal Property Program
Appendix I 

Background on the Military Traffic

Management Command’s Pilot Test Initiative

to Reengineer DOD’s Personal Property

Program

Department of

Defense’s

Reengineering

Initiative

On June 21, 1994, the Deputy Commander-in-Chief, U.S. Transportation

Command, directed the Military Traffic Management Command (MTMC),

the Army component of the U.S. Transportation Command and program

manager for the Department of Defense (DOD) Personal Property Shipment

and Storage Program, to reengineer the personal property program. On

March 13, 1995, MTMC formally published a notice in the Federal Register of

its plans to consider employment of full-service contracts to improve DOD’s

personal property program. The notice highlighted the fact that the

evolving defense environment encompasses a smaller uniformed force,

less overseas basing, reduced funding, and diminished staffing of support

activities. It indicated that these changes will directly affect quality-of-life

issues. In light of these changes, the notice said MTMC is engaged in an

effort to simplify current processes, control program costs, and ensure

quality of service by reengineering the existing personal property program.

It further indicated that the reengineering effort will adopt, to the fullest

extent possible, commercial business processes characteristic of

world-class customers and suppliers and relieve carriers of DOD-unique

terms and conditions. It said it will also focus on the customer, reward

results, foster competition, and seek excellence of vendor performance.

The notice indicated that members of industry would be afforded an

opportunity to comment on the draft solicitation and to attend the

presolicitation and preproposal conferences.

On June 30, 1995, MTMC released a written proposal to reengineer the

personal property program. A notice of proposal was published in the

July 13, 1995, Federal Register. A further statement of acquisition strategy

was released to industry on July 31, 1995.

Congressional

Concern

On June 15, 1995, the House Committee on National Security reported that

it, too, was convinced that DOD must pursue a higher level of service that

moves toward greater reliance on commercial business practices,

including simplified procedures. It directed that DOD undertake a pilot

program to implement commercial business practices and standards of

service. It asked for a report from DOD on this by March 1, 1996.

On October 11, 1995, MTMC testified on the reengineering effort before the

House Committee on Small Business. MTMC discussed the impact on small

business and its rationale for planning to award contracts for the new

program under the Federal Acquisition Regulation (FAR). Carrier and

forwarder industry officials also testified at this hearing.

Page 30 GAO/NSIAD-97-49 Reengineering Personal Property Program
Appendix I 

Background on the Military Traffic

Management Command’s Pilot Test

Initiative to Reengineer DOD’s Personal

Property Program

In September 25, 1995, and November 15, 1995, reports accompanying the

conference report on the Fiscal Year 1996 Defense Appropriations Bill,

congressional managers directed that prior to implementing any pilot test,

DOD report on the program’s impact on small business resulting from the

application of the FAR and any requirements that were not standard

commercial business practices. DOD responded with reports dated

January 1996 and April 1996.

In a May 7, 1996, report accompanying the National Defense Authorization

Act for Fiscal Year 1997, the House Committee on National Security stated

that after reviewing the reports, it was still concerned that MTMC’s pilot

program did not satisfactorily address issues raised by the small moving

companies comprising a majority of the industry. The Committee,

therefore, directed the Secretary of Defense to establish a working group

of military and industry representatives from all facets of the industry to

develop an alternative pilot proposal.

The instructions were that the working group would be chaired by the

Commander, MTMC; include those DOD representatives the Chairman

deemed necessary (not to exceed six in number); and include an industry

delegation to be represented by no more than six people, including one

each from the American Movers Conference and the Household Goods

Forwarders Association of America. The Committee asked that the

working group submit the alternative proposal, along with the current

pilot proposed by MTMC, to us for review. The Committee further directed

that we report to the congressional defense committees the results of our

review. The report said that DOD may not proceed with the formal

solicitation for, or implementation of, any pilot program prior to August 1,

1996. Similar instructions were contained in the May 13, 1996, Senate

report accompanying the National Defense Authorization Act for Fiscal

Year 1997.

MTMC/Industry

Attempt to Reach

Agreement on a Single

Plan to Pilot Test

The congressionally directed working group of DOD and industry officials

met over a period of 3 months beginning in June 1996 and ending in

September 1996. In six sessions—9 days (June 10, July 1-2, July 18-19,

August 14, September 5-6, and September 16)—representatives of MTMC,

the U.S. Transportation Command, DOD, and various segments of the

moving industry, including the American Movers Conference, the

Household Goods Forwarders Association of America, the National

Moving and Storage Association, the Independent Movers Conference, the

Military Mobility Coalition, and a DOD-invited group of auxiliary members

Page 31 GAO/NSIAD-97-49 Reengineering Personal Property Program
Appendix I 

Background on the Military Traffic

Management Command’s Pilot Test

Initiative to Reengineer DOD’s Personal

Property Program

from the moving industry met in a formal group setting to forge a plan for

a pilot test. We and the Army Audit Agency attended as observers. The

meetings were chaired by the Commander, MTMC, and led by a

DOD-provided facilitator. All meetings were transcribed and made available

to anyone in the industry or the interested public through MTMC’s Internet

Web page. All written correspondence and position papers were also made

available on the MTMC Internet Web page.

At the first meeting, the Chairman reported that the objectives were to

meet the intent of the Congress for developing an alternative program that

could be reported to the Congress and to establish a forum for industry

and DOD to forge agreement on a single program for the pilot test. MTMC

explained its proposed pilot plan; laid out the program goals, which were

to dramatically improve the quality of personal property shipment and

storage services provided to military servicemembers or civilian

employees and their families when they are relocating on U.S. government

orders and to simplify the administration of the program, capitalizing on

the best applicable commercial business practices characteristic of

world-class customers and suppliers; and asked for industry comment.

After the first meeting, goals for the program were announced. These goals

and various issues were discussed and refined throughout the meetings.

Also, at the initial meeting, MTMC announced that it was not going to

release a formal request for proposals but instead have industry submit for

discussion any alternative plan they might wish to offer. MTMC also agreed

to provide for clarification its previously proposed plan.

Industry and MTMC offered proposals on June 24, 1996. Both, and others, as

desired, offered comments on the proposals on June 27. These two

proposals served as a framework, or center of discussion, for reaching or

attempting to reach, a single, mutually acceptable plan for testing.

In the end, on September 16, 1996, DOD and industry could not reach

agreement on any single plan. At the final meeting, representatives of DOD

and industry signed a document called a consensus list, on which the goals

and points of agreement reached by the working group were stipulated.

On October 1, 1996, the Commander of MTMC and the joint working group

chairman wrote us on the status of reengineering effort and work of the

group. The Chairman indicated that the group had come to a consensus of

many issues but had agreed to disagree on one major area: MTMC’s plan to

use part 12 of the FAR as the basis for its projected contracts. The

Page 32 GAO/NSIAD-97-49 Reengineering Personal Property Program
Appendix I 

Background on the Military Traffic

Management Command’s Pilot Test

Initiative to Reengineer DOD’s Personal

Property Program

Commander indicated that MTMC planned to move forward with a test by

releasing a request for proposals in November 1996 and making contract

awards in January 1997.

On October 10, 1996, the American Movers Conference wrote us

expressing its concerns about the adequacy of MTMC’s October 1 letter in

providing us information to use in evaluating MTMC’s proposed plan. The

Conference indicated that there were other areas of disagreement than the

FAR and that it believed that MTMC had tried to cover up these areas of

disagreement and emphasize instead the minor points of agreement. These

other areas included MTMC’s guaranteeing capacity (minimums and

maximums), distributing shipments to contractors, impact of MTMC’s

decision to permit relocation companies to participate in the program,

rules governing payment for storage-in-transit, and the number of

contracts that ultimately would be awarded. The Conference indicated

that it was planning to submit a more detailed industry plan for our

review.

On October 25, 1996, the American Movers Conference and the Household

Goods Forwarders Association, in a joint letter, submitted their views of

MTMC’s reengineering proposal to date. They provided an industry critique

of the MTMC proposal and the industry alternative plan. The proposal

provides for small business participation, program simplification, best

value, and the elimination of paper companies. The associations said that

while they are supportive of any effort to improve the existing program,

they believe that there are legitimate concerns that must be adequately

addressed before this program can proceed.

Page 33 GAO/NSIAD-97-49 Reengineering Personal Property Program
Appendix II 

Document Provided by the Carrier

Associations Giving More Detail on Their

Position

Page 34 GAO/NSIAD-97-49 Reengineering Personal Property Program
Appendix II 

Document Provided by the Carrier

Associations Giving More Detail on Their

Position

Page 35 GAO/NSIAD-97-49 Reengineering Personal Property Program
Appendix II 

Document Provided by the Carrier

Associations Giving More Detail on Their

Position

Page 36 GAO/NSIAD-97-49 Reengineering Personal Property Program
Appendix II 

Document Provided by the Carrier

Associations Giving More Detail on Their

Position

Page 37 GAO/NSIAD-97-49 Reengineering Personal Property Program
Appendix II 

Document Provided by the Carrier

Associations Giving More Detail on Their

Position

Page 38 GAO/NSIAD-97-49 Reengineering Personal Property Program
Appendix II 

Document Provided by the Carrier

Associations Giving More Detail on Their

Position

Page 39 GAO/NSIAD-97-49 Reengineering Personal Property Program
Appendix II 

Document Provided by the Carrier

Associations Giving More Detail on Their

Position

Page 40 GAO/NSIAD-97-49 Reengineering Personal Property Program
Appendix II 

Document Provided by the Carrier

Associations Giving More Detail on Their

Position

Page 41 GAO/NSIAD-97-49 Reengineering Personal Property Program
Appendix II 

Document Provided by the Carrier

Associations Giving More Detail on Their

Position

Page 42 GAO/NSIAD-97-49 Reengineering Personal Property Program
Appendix II 

Document Provided by the Carrier

Associations Giving More Detail on Their

Position

Page 43 GAO/NSIAD-97-49 Reengineering Personal Property Program
Appendix II 

Document Provided by the Carrier

Associations Giving More Detail on Their

Position

Page 44 GAO/NSIAD-97-49 Reengineering Personal Property Program
Appendix II 

Document Provided by the Carrier

Associations Giving More Detail on Their

Position

Page 45 GAO/NSIAD-97-49 Reengineering Personal Property Program
Appendix II 

Document Provided by the Carrier

Associations Giving More Detail on Their

Position

Page 46 GAO/NSIAD-97-49 Reengineering Personal Property Program
Appendix II 

Document Provided by the Carrier

Associations Giving More Detail on Their

Position

Page 47 GAO/NSIAD-97-49 Reengineering Personal Property Program
Appendix II 

Document Provided by the Carrier

Associations Giving More Detail on Their

Position

Page 48 GAO/NSIAD-97-49 Reengineering Personal Property Program
Appendix II 

Document Provided by the Carrier

Associations Giving More Detail on Their

Position

Page 49 GAO/NSIAD-97-49 Reengineering Personal Property Program
Appendix II 

Document Provided by the Carrier

Associations Giving More Detail on Their

Position

Page 50 GAO/NSIAD-97-49 Reengineering Personal Property Program
Appendix II 

Document Provided by the Carrier

Associations Giving More Detail on Their

Position

The agency misnumbered

their pages 14 and 15.

The text is in the correct

order, just the page

numbers are wrong.

Page 51 GAO/NSIAD-97-49 Reengineering Personal Property Program
Appendix II 

Document Provided by the Carrier

Associations Giving More Detail on Their

Position

The agency misnumbered

their pages 14 and 15.

The text is in the correct

order, just the page

numbers are wrong.

Page 52 GAO/NSIAD-97-49 Reengineering Personal Property Program
Appendix II 

Document Provided by the Carrier

Associations Giving More Detail on Their

Position

Page 53 GAO/NSIAD-97-49 Reengineering Personal Property Program
Appendix III 

Major Contributors to This Report

National Security and

International Affairs

Division, Washington,

D.C.

Charles I. Patton, Jr., Associate Director

Nomi R. Taslitt, Assistant Director

J. Kenneth Brubaker, Evaluator-in-Charge

Barbara L. Wooten, Evaluator

Leo G. Clarke, III, Evaluator

Office of the General

Counsel, Washington,

D.C.

John G. Brosnan, Assistant General Counsel

(709204) Page 54 GAO/NSIAD-97-49 Reengineering Personal Property Program
Ordering Information

The first copy of each GAO report and testimony is free.

Additional copies are $2 each. Orders should be sent to the

following address, accompanied by a check or money order

made out to the Superintendent of Documents, when

necessary. VISA and MasterCard credit cards are accepted, also.

Orders for 100 or more copies to be mailed to a single address

are discounted 25 percent.

Orders by mail:

U.S. General Accounting Office

P.O. Box 6015

Gaithersburg, MD 20884-6015

or visit:

Room 1100

700 4th St. NW (corner of 4th and G Sts. NW)

U.S. General Accounting Office

Washington, DC

Orders may also be placed by calling (202) 512-6000 

or by using fax number (301) 258-4066, or TDD (301) 413-0006.

Each day, GAO issues a list of newly available reports and

testimony. To receive facsimile copies of the daily list or any

list from the past 30 days, please call (202) 512-6000 using a

touchtone phone. A recorded menu will provide information on

how to obtain these lists.

For information on how to access GAO reports on the INTERNET,

send an e-mail message with "info" in the body to:

info@www.gao.gov

or visit GAO’s World Wide Web Home Page at:

http://www.gao.gov

PRINTED ON RECYCLED PAPER
United States

General Accounting Office

Washington, D.C. 20548-0001

Official Business

Penalty for Private Use $300

Address Correction Requested

Bulk Rate

Postage & Fees Paid

GAO

Permit No. G100