[Federal Register Volume 61, Number 65 (Wednesday, April 3, 1996)]
[Notices]
[Pages 14747-14760]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-8093]



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DEPARTMENT OF DEFENSE

Department of the Army


Reengineering the Personal Property Program--Synopsis of Comments 
Received

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

ACTION: Notice.

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SUMMARY: As part of the reengineering of the Department of Defense 
(DOD) personal property program on June 30, 1995, MTMC released the 
draft requirements document over MTMC's EasyLink Bulletin Board. The 
initial draft of the requirements document outlined the anticipated 
requirements to participate in the movement of personal property under 
MTMC's reengineered concept. More importantly, the initial draft of the 
requirements document was provided with the intent to give industry the 
opportunity to comment on the feasibility of the proposal. A request 
for comments from industry concerning the draft requirements document 
was published in the Federal Register, Thursday, July 13, 1995, Vol 60, 
No. 134. In conjunction with the draft requirements document, MTMC 
released on August 1, 1995, the proposed acquisition strategy over the 
EasyLink Bulletin Board. In the proposed acquisition strategy, MTMC 
informed industry that we were considering the use of the Federal 
Acquisition Regulation (FAR) to procure services for the movement of 
personal property.
    An additional request for industry's comments, this time concerning 
the proposed acquisition strategy, was published in the Federal 
Register, Thursday, August 10, 1995, Vol 60, No. 154. In this Federal 
Register notice, we requested industry consider the draft requirement 
document and proposed acquisition strategy as one package, and that 
comments be provided to MTMC by September 20, 1995.

ADDRESSES: Headquarters, Military Traffic Management Command, ATTN: 
MTOP-Q, 5611 Columbia Pike, Falls Church, Virginia 22041-5050.

FOR FURTHER INFORMATION CONTACT:
Mr. Lee Strong or Shelly Johnson, MTOP-Q, (703) 681-6393.

SUPPLEMENTARY INFORMATION: As a result of the Federal Register requests 
for comments, MTMC received 297 letters from industry. The 297 letters 
included 102 individual letters, 152 National Moving and Storage 
Association endorsement letters, and 43 Washington Movers Conference 
endorsement letters. The following provides a summary of many of the 
questions posed by industry concerning the draft requirements document 
and proposed acquisition strategy, as well as, MTMC's current position 
regarding these industry questions.

Summary of Industry Comments Concerning the Draft Requirements 
Document and Proposed Acquisition Strategy

    In response to a request for comments concerning MTMC's 
reengineering draft requirements document and proposed acquisition 
strategy, we received 297 letters, including 102 individual letters, 
152 National Moving and Storage Association endorsement letters, and 43 
Washington Movers Conference endorsement letters. The following 
summarizes and consolidates the questions posed in those letters and 
provides a MTMC response.

Comments Regarding the Acquisition Strategy

    (1) Industry: The use of proposed FAR to award contracts for 
personal property movements is unacceptable and will adversely impact 
the DOD Personal Property Program by imposing detailed, complex, and 
burdensome regulations, including the provisions of the Service 
Contract Act and Small Business Act. The use of the FAR is more onerous 
and complex than the current system and fails to achieve the stated 
goal of simplification.
    Response: The Federal Acquisition Regulation (FAR) is an instrument 
the Federal Government routinely utilizes to acquire and administer the 
vast majority of its contracts for goods and services. It may be as 
simple or as complex as the requirement being procured. It may require 
minimal to detailed documentation depending upon the requirement and 
the dollar threshold involved. Currently the FAR is geared toward 
streamlining the acquisition process as much as possible while 
maintaining the proper expenditure of public funds. The language in the 
FAR is to the mutual benefit of private industry and the Federal 
Government. The Service Contract Act (SCA) requirements are 
administered and implemented by the Department of Labor (DOL). The FAR 
simply implements the procedures and regulations published by DOL. 
While compliance with the SCA provisions may require changes in carrier 
business practices, these changes are not insurmountable. Likewise, the 
FAR implementation of the Small Business Act, where applicable, will 
not necessarily make the acquisition process unduly burdensome. While 
many members of the industry may not be familiar with these provisions, 
we are confident that this industry has the capability to learn, adjust 
and master new procedures just as it has done in the past when we made 
changes to the current program. MTMC is available to assist industry in 
understanding these provisons.
    (2) Industry: The ongoing regulatory requirements of the Service 
Contract Act (SCA) would impose a significant burden and subject 
industry to varying interpretations, continuous review of the contract 
award procedures, and significantly increase costs due to mandatory 
wage levels. The burden of imposing wage determinations and benefit 
guidelines on full-service worldwide moves will fall directly upon the 
small businesses, the agents and owner operators who actually perform 
the services for the member. The detailed accounting infrastructure 
does not exist to handle such a complex process.
    Response: The Service Contract Act (SCA) does not require a 
detailed accounting system, nor does it require continuous review of 
the contract award procedures. MTMC intends to work with the Department 
of Labor to attempt to lessen the impact on the industry, as

[[Page 14748]]

much as possible. Again, while compliance with the SCA provisions may 
require changes in carrier business practices, carriers will be able to 
factor into their rates any increased costs in the operations caused by 
their compliance with the SCA. Once established, the specific burdens/
interpretations imposed by the SCA will have to be addressed between 
the industry and the Department of Labor.
    (3) Industry: The provisions of the Small Business Act mandate 
maximum business opportunity for small and small disadvantaged 
businesses. In addition, large businesses with annual gross receipts of 
$18.5 million, or more, must submit a subcontracting plan outlining the 
minimum goals for subcontracting and specifying how the plan will be 
executed. These requirements are an administrative burden, and are 
difficult to understand and enforce. Small businesses have an equal 
opportunity to compete in the current program and the requirements of 
the FAR will prevent them from competing in the new program.
    Response: The FAR does not prevent small and small disadvantaged 
business from bidding/proposing on any requirement that has full and 
open competition. Small businesses will be given an equal opportunity 
to compete among small businesses and among their larger competitors. 
The provisions of the Act apply to both the current program and the 
proposed reengineered program. The broad policies of the Act are to 
ensure that a fair proportion of acquisitions are placed with small 
business concerns and small disadvantaged business concerns. The FAR 
regulations implement this policy. The regulations will not prevent 
competition by these concerns. Rather, the regulations promote 
competition by mandating that such concerns have the maximum 
practicable opportunity to compete. For information on how to submit a 
subcontracting plan, which is only applicable to large businesses for 
awards over a certain threshold, it is recommended that companies 
review the guidance in FAR Subpart 19.7. It is apparent that many of 
the large firms currently have an operating procedure with many small 
businesses; therefore, they should review actions that they currently 
have in place to determine whether they would satisfy the requirement. 
The FAR approach may be more or less labor intensive depending upon the 
type of solicitation and the type of contract awarded. Part of its 
advantage, however, is that it is a competitive process for the award 
of contracts which allows technical and price factors to be considered; 
it is not simply a system for filing rates.
    (4) Industry: The FAR is a very complex bidding process and 
requires a very large amount of work for potential contractors who wish 
to bid on the program. The decision to file rates from each area of 
responsibility to each rate area will result in 17,425 contract awards. 
If 50 carriers should file rates for all channels, MTMC would be 
required to evaluate 871,250 offers. Under the current program, all 
rates are submitted electronically and require only a few number of 
personnel to manage the process. The FAR evaluation process is labor 
intensive and will not reduce the manpower required to administer and 
manage the program.
    Response: MTMC agrees that awarding a best value FAR contract under 
the Area of Responsibility (AOR) to rate area/channel concept would be 
labor intensive and difficult to administer because of the large number 
of potential offers and awards to be evaluated and administered. 
Although a low cost FAR-exempt concept would provide simplicity in 
administration, we believe FAR contracts, which are awarded based on 
price and non price factors and which would allow the contracting 
officer to exercise business judgment in selecting an awardee, would 
result in an overall better value to the Government than the present 
distribution scheme which awards to the carrier with the low rate. 
Since quality of service is a major goal in the reengineering effort, 
MTMC has been considering alternatives which allow us to achieve 
greater value while being administratively manageable.
    Consequently, MTMC is considering an approach which encompasses six 
origin regions which include four CONUS and two OCONUS regions. We 
anticipate the four CONUS regions being divided into the states within 
the four Regional Storage Management Offices (RSMO) areas currently in 
existence. The two OCONUS regions would be divided into countries under 
the current responsibility of the Military Traffic Management Command, 
Europe and the Military Traffic Management Command, Pacific. We 
envision three categories of service out of each origin region and 
contractors may choose to bid as follows:

CONUS Origin Regions

    a. Intra-Region Destination. Contractor must provide service from 
all areas of responsibility (AOR) of personal property shipping offices 
(PPSOs) located within a region to all AORs located within states in 
that same region. (Example: The Atlanta Region encompasses North 
Carolina, South Carolina, Kentucky, Tennessee, Mississippi, Alabama, 
Georgia, and Florida. The contractor must provide service from North 
Carolina to any other state within the Atlanta Region.) Locals and 
intra-state moves will not be included for the pilot acquisition.
    b. Inter-CONUS Destination. Contractor must provide service from 
all AORs of PPSOs located within a region to all AORs located within 
states outside that region. (Example: From Atlanta Region to 
California, Kansas, New Jersey, etc.)
    c. OCONUS Destination. Contractor must provide service from all 
AORs or PPSOs located within a CONUS region to all OCONUS AORs. 
(Example: From Atlanta Region to Germany, Japan, Italy, etc.)

OCONUS Origin Regions

    (Moves originating from these regions will not be included in the 
pilot acquisition.)
    a. Intra-Region Destination. Contractor must provide service from 
all AORs of PPSOs located within a region to AORs located within 
countries in that same region. (Example: From MTMCEUR Region (Germany) 
to United Kingdom, Italy, Turkey, etc.)
    b. Inter-OCONUS Destination. Contractor must provide service from 
all AORs of PPSOs located within a region to all AORs located within 
countries outside that region. (Example: From MTMCEUR Region (Germany) 
to Japan, Korea, Hawaii, etc.)
     CONUS Destination. Contractor must provide service from all AORs 
of PPSOs located within a OCONUS region to all CONUS AORs. (Example: 
From MTMCEUR Region (Germany) to South Carolina, California, New 
Jersey, etc.)
    We anticipate making multiple awards on DOD's needs and the 
contractor's capacity set out in responsive proposals. In addition, we 
envision awarding an indefinite delivery/indefinite quantity (IDIQ) 
fixed price contract for one (1) year, with four (4) priced one (1) 
year option periods. The contract will specify the minimum tonnage the 
contractor is guaranteed for the base period and the maximum tonnage 
the contractor is obligated to move during each year of performance and 
for the life of the contract. Further, the contractor will specify his 
maximum daily tonnage capacity for each installation within the region.
    Contractors may be authorized to submit a separate daily maximum 
for peak season. The maximum daily tonnage capacities will be a 
negotiable element in determining contract awards.

[[Page 14749]]
A contractor may choose to submit a proposal for any or all of the 
categories of service. Each awardee is obligated to provide service 
from all areas of responsibility of PPSOs located within a region to 
all destination AORs encompassed within each category of service.
    (5) Industry: MTMC's repeated statements indicate the technical 
area elements of an offeror's proposal will have priority over cost. It 
is very difficult for those who have been in business with the military 
for any length of time to believe cost will not be the primary factor. 
This element of the reengineering proposal is critical to providing 
premium services for the military customer.
    Response: One of the main differences between the current personal 
property program and the reengineered concept, is that the current 
program awards traffic to the low rate carrier. The reengineered 
concept, on the other hand, will emphasize the selection of carriers 
that provide quality service, even if this results in the payment of 
commensurably higher rates. Thus, the reengineered source selection 
process will place weight on the carriers' capability to provide 
quality service and not just focus on low rates. The relative 
importance of the technical factors the Government will evaluate during 
the source selection process will be specifically stated in the 
solicitation.
    (6) Industry: Technical issues can only be evaluated subjectively. 
Awards based on subjective evaluation factors and the offerors writing 
ability rather than the carriers ability to competitively meet MTMC's 
established service requirements will result in litigation.
    Response: We are aware that changing the present system may result 
in litigation. However, if we adopt a FAR-based system, we plan to 
develop a streamlined acquisition process that will help us achieve two 
main objectives: facilitate the source selection process for both the 
carriers and MTMC, and minimize the potential for litigation. We plan 
to develop a source selection process which de-emphasizes proposal 
writing skills and emphasizes the contractors' capability and past 
performance. Again, if we adopt the FAR-based approach, we will seek 
industry assistance with the draft solicitation and the streamlined 
acquisition method.
    (7) Industry: Industry is not familiar with the terms, conditions, 
and requirements of the FAR. This will lead to inconsistent 
interpretations, appeals and protests.
    Response: Industry has indicted repeatedly that it understands the 
terms and conditions of the services we want to procure. Additionally, 
industry has indicated that it can provide most of the required 
services under the current program. The main difference lies on the 
source selection methods and standardized clauses which the FAR 
provides. Thus, whether we procure those services using the FAR, or 
using FAR-exempt procedures, does not appear to increase the potential 
for inconsistent service. The statement of work will be essentially the 
same under either method. With regard to appeals and protests, please 
note that the right to appeal or protest procurement decisions is based 
on statute, not the FAR. If the FAR is chosen, MTMC is dedicated to 
work with industry in facilitating the transition to a FAR-based system 
and, together, avoid any conditions which may lead to unnecessary 
appeals or protests.
    (8) Industry: A FAR based contract has indefinite and various terms 
and conditions which are subject to legislative change and new 
interpretations by parties with no knowledge of the moving industry. 
This will adversely impact the ability of the contractor to comply and 
provide the services required.
    Response: No government contract, be it FAR or FAR-exempt, has 
``indefinite and variable terms and conditions.'' The FAR contains 
rules, terms, and conditions which generally govern the formation and 
administration of government contracts. The work requirements are 
established by the requiring activity and are set forth in the 
contract. While the FAR is often revised to implement new ideas, court 
decisions and legislative changes, those changes are always 
prospectively applied. In those unusual cases where a contract needs to 
be modified to implement a new court decision or statute, the 
contractor is compensated for any increased cost of performance.
    (9) Industry: Subcontracting requires discussions prior to bid 
submission between the parties involved. These discussions will involve 
the exchange of price information, as well as consideration of whether 
a potential bidder will agree not to submit its own independent bid. 
This raises serious anti-trust implications. The moving industry has in 
the past been subject to Justice Department grand jury investigations 
and threatened indictments on the basis of alleged joint actions by 
bidders and agents in connection with the submission of bids on 
military traffic.
    Response: Carriers concerned about whether their discussions 
regarding potential subcontracting arrangements with other carriers or 
contractors might have antitrust implications should consult their 
legal counsel. Hundreds of contractors in other industries routinely 
enter into subcontracting arrangements without violating antitrust 
laws. We are unaware of any statutory provision which would prevent the 
household goods industry from entering into similar subcontracting or 
other types of teaming arrangements. Please refer to FAR Subpart 9.6 
for the Federal Government's policy on teaming arrangements and joint 
ventures.
    (10) Industry: Subcontracting is developed based on business 
relationships and established on the basis of mutual integrity and 
reputation for performance and prompt payment. In addition, 
subcontractors will have no protection against slow payment or 
nonpayment by the Government selected contractor.
    Response: Any acquisition concept we adopt will place significant 
emphasis on past performance. This will include the contractor's 
financial performance. Since a carrier's failure to comply with its 
financial obligations to its subcontractors is likely to negatively 
impact its performance, we anticipate that the carrier receiving awards 
under such a reengineered proposal will be motivated to maintain 
excellent working relationships with its subcontractors. As far as 
protection against slow payment, or nonpayment by a Government selected 
contractor, we believe that this responsibility rests with industry. As 
a general rule, the Government's obligation is to the prime contractor. 
It is the responsibility of subcontractors to assure that they are 
involved in a business relationship with a reliable and responsible 
prime contractor. The same holds true for the prime contractor.
    (11) Industry: MTMC's concept of contractors and subcontractors 
will put the agent/van line relationship seriously at risk. No large 
van line, with appointed and dependent and financially supported 
agents, will make its resources available to those agents working as 
subcontractors for a competing van line, on a contract that the carrier 
itself bid on and lost.
    Response: The objectives of the reengineering process include the 
design of a procurement process that maximizes competition, selects 
quality carriers, and is administratively manageable for MTMC and the 
PPSOs. We recognize that any acquisition method we adopt which 
satisfies these objectives may require some modification of industry's 
current business practices. We do not wish to dictate what specific 
changes the carrier industry should make to its business

[[Page 14750]]
practices. We trust that the household goods industry has the 
capability to make those business decisions independently. Hundreds of 
other government contractors have been able to adjust to changing 
market conditions. The freight industry, for example, is successfully 
adjusting to deregulation. We are confident that those household goods 
carriers that are committed to providing quality transportation 
services to DOD at competitive rates will find ways to successfully 
compete for these contracts.
    (12) Industry: Large van lines have the resources to provide the 
services required and can satisfy the subcontracting requirements 
within their own system of agents and owner operators without utilizing 
the services of other carriers and agents. Capacity will only be an 
issue during peak period of times. Many smaller carriers or agents will 
not be able to survive on peak business alone. As a result, the agent 
infrastructure will be severely damaged. Warehouse and van capacity 
will be reduced resulting in serious deterioration of service and 
competition on subsequent bids will be significantly reduced since many 
unsuccessful bidders, who have been deprived military shipments will go 
out of business. Service quality will ultimately deteriorate.
    Response: If we adopt a FAR-based approach we anticipate making 
multiple awards. The decision on how many awards we need to make will 
depend on the minimum transportation needs of DOD shippers and the 
capacity of the competing carriers. The solicitation will provide data 
showing DOD's minimum transportation needs for each performance period, 
including peak periods. It is possible that some carriers will base 
their capacity on the agent infrastructure they already have in place. 
Others may choose to expand their capacity by entering into additional 
subcontracting arrangements. Carriers will retain absolute discretion 
on how they wish to structure their proposals for these requirements. 
At this point, it would be speculative to assert with a high degree of 
certainty the potential impact the reengineered acquisition will have 
on the agents infrastructure, as well as warehouse and van capacity. We 
anticipate that the pilot acquisition we plan to conduct will provide 
factual information about the potential impact of the reengineered 
concept on the industry's infrastructure.
    (13) Industry: The FAR contains many stringent reporting 
requirements. These reports may be required simply because the contract 
is subject to the terms and conditions of the FAR.
    Response: The only known reporting requirement required by the FAR 
relates to subcontracting and is only required of large businesses. The 
report reflects the contractor's progress on meeting his/her 
subcontracting goals as proposed and incorporated into any resultant 
contracts. Any other required reports will not result from the FAR, but 
will be generated as a requirement under the particular contract for 
purposes of providing specific management information to the 
Government.
    (14) Industry: The FAR contains strict penalty provisions for 
contractors that are not able to meet all of the terms of the contract. 
Given the lack of familiarity with the detailed requirements of the 
FAR, the number of violations can be expected to be very high and the 
amount of potential penalties could be crippling to the entire 
industry. There is no need for these penalties because they only serve 
to enforce meaningless and unnecessary rules. This requirement is 
another reason to exempt this contract from the FAR.
    Response: The FAR provides guidance to Federal agencies on how to 
conduct its acquisition. It provides standardized clauses which Federal 
agencies must use for certain types of acquisition. It does not contain 
penalties; rather, it outlines remedies available to both contractors 
and government agencies in place of contract changes or disputes. These 
remedies are incorporated into the contract through standardized 
contract clauses. See FAR Subpart 33.2, for guidance on disputes and 
appeals, and FAR Part 43, for guidance on contract modifications. 
Contractors are only required to comply with the terms and conditions 
of the contract. These terms and conditions initially are stated in the 
request for proposals. Thus, carriers will know, even before they 
submit a bid in response to the request for proposals (RFP), the terms 
and conditions of the proposed acquisition. Those carriers that believe 
they cannot comply with the terms of the RFP has essentially two 
options. First, they can inform the procuring agency of the fact which 
in their opinion prevent them from complying with the requirements, and 
request the agency to amend the RFP. Second, carriers can enter into 
teaming or joint venture agreements with other companies in order to 
enhance their capability to perform the requirements. Of course, while 
we understand this is not a desirable option, a carrier can always 
choose not to bid. Finally, it should be noted that, like any other 
private citizen, contractors also have to comply with Federal statutes. 
Most of these statutes would apply regardless of whether we are dealing 
with FAR or FAR-exempt contracts.
    (15) Industry: The FAR contains provisions regarding default terms 
and conditions. It also stipulates procedures regarding contractor 
liability for procurement costs. The clauses pertaining to default are 
not mandatory and the reasonableness of these terms should be dependent 
upon the type of contract awarded. Specific information is required 
regarding default provisions and punitive actions.
    Response: The use of contract termination clauses for convenience 
and default are mandated as specified in FAR Subpart 49.5. The 
standardized clauses to be used are listed in that subpart. General 
guidance regarding the policies and procedures for the complete or 
partial termination of contracts is provided in FAR Part 49. We will be 
glad to answer any specific questions industry may have about these 
clauses. The specific clauses applicable to any contract will be 
included in its appropriate RFP.
    (16) Industry: All of MTMC's service requirements, with a single 
exception (full replacement liability), can be achieved by modifying 
the current program and without incurring the problems resulting from 
the proposed ``winner take all'' FAR contract concept. The draft 
Requirements Package and Acquisition Strategy reveals a program that is 
far more bureaucratic and complex than the existing program and it 
contradicts standard commercial business practices in most aspects.
    Response: One of the primary reengineering goals it to move away 
from the current rate driven system, to one that encompasses a quality/
greater value approach. MTMC has discovered several factors that argue 
decisively against merely modifying the current program. First, the 
existing system itself is a product of the process of making many 
isolated changes without considering the total impact. It seems 
inappropriate to fix a program by the same process that brought it to 
its present form. Additionally, it is often difficult to adjust single 
elements of the program because of vested interests and the 
interconnected nature of various provisions. Frequently, good ideas are 
lost in the negotiation or compromise process. Also, achieving a system 
that awards traffic on other than cow cost cannot be attained by 
modifying the existing program. The FAR provides an established and 
proven procurement method to achieve the desired approach. In addition, 
MTMC is considering a multiple award regional approach in place of the 
``winner take all'' concept.

[[Page 14751]]
Thus, there will be adequate opportunities for several contractors to 
receive contract distribution system and ``me-too'' bidding, on the 
other hand, effectively emasculates the benefits that competition can 
provide.

Comments Regarding the Draft Requirements Document; Industry 
Comments and MTMC Responses are Keyed to the Paragraph Number of 
the Requirement Document

1. Requirements

1.1  Channel Concept
    (17) Industry: Commercial accounts are national, not regional or 
point-to-point in scope. The moving industry, even at its inception, 
was concerned about return loads. Trucks must be kept filled and this 
cannot be done in a point-to-point environment, especially if it is not 
known who will be awarded the contract from the other end. Not knowing 
which routes will be awarded to an offeror further complicates the 
bidding strategy. A traffic lane concept will minimize the opportunity 
to fully utilize equipment and will increase costs.
    Response: MTMC agrees the majority of commercial accounts are 
national in scope; however, due to significant concerns from industry 
regarding a national/worldwide approach and the effect it might have on 
small and medium carriers, local moving and storage companies, and 
freight forwarders, the approach was changed. MTMC considered awarding 
traffic on a ``winner take all'' basis out of an area of responsibility 
(AOR) to a rate area. It became clear through industry comments and 
MTMC's analysis that the channel approach created many administrative 
complexities. Consequently, MTMC is considering use of a regional 
approach with multiple awards. The proposed regional concept provides 
an opportunity for all carriers, local agents, and freight forwarders 
to submit offers. Subcontracting provides an opportunity for carriers 
to participate in those channels in which they were not awarded 
contracts.
    (18) Industry: The proposed traffic channel concept is no different 
than those in use today. This concept offers no program simplification 
for MTMC or industry.
    Response: MTMC agrees. Analysis of the AOR/channel concept 
confirmed this approach would not simplify the program for the 
Government or industry. We feel the regional approach will simplify 
evaluation, execution and administration.
1.1  Winner Take All
    (19) Industry: The ``winner take all'' approach will have a 
devastating impact on small corporations within the industry. It would 
create a monopoly of large van lines, thus forcing small carriers, 
agents, and forwarders out of business.
    Response: The regional/multiple award concept should eliminate 
concerns regarding ``winner take all.''
    (20) Industry: No one carrier or any one agent in a military market 
is able or willing to provide for 100 percent of all traffic in any 
given channel. Every year during peak season there are problems 
somewhere in the country acquiring the necessary capacity. It should be 
abundantly clear from this that no one contractor is capable of 
handling all of the shipments, whether worldwide, at an installation, 
or in a single traffic channel. The volume is too large.
    Response: Concerns over available capacity during peak season was 
an important factor for MTMC in deciding upon multiple award options. 
Multiple awards, in conjunction with contractor stated maximum daily 
capacity and PPSO discretion in awarding traffic, will ensure 
sufficient capability for movement requirements.
2.1  Expansion Capability
2.1.1
    (21) Industry: A carrier and its agent cannot be expected to 
maintain additional capacity and personnel to cover seasonal surges 
which may or may not materialize. Steps should be taken to minimize 
such surges by encouraging movements during the winter months. 
Additionally, no prudent bidder can provide a viable rate without 
knowing the parameters of the daily workload requirement. The 
Government's estimated daily requirements and minimum acceptable daily 
requirements must be provided for each channel.
    Response: One of the ways that a contractor can expand capacity 
during seasonal surges is through an effective subcontracting plan. The 
revised concept allows for the contractor to specify their maximum 
daily capacity. In addition, we are considering separate daily maximums 
for peak season movement requirements. Multiple awards and 
subcontracting will ensure the capability is available to support 
seasonal surges. Contractor established daily maximums and the right of 
refusal once daily maximums have been met, afford the contractor an 
opportunity to effectively manage his/her company's operations. 
Although MTMC and the services would like to see the volume of moves 
evened out over the entire year, realistically there is not much that 
can be done to accomplish this. Often, even when military members with 
families are ordered to a new duty station during the winter months, 
the spouse and children will stay behind until the school year is 
completed. Although the DOD can control when a service member must 
report for a new duty assignment, we can not mandate when he/she 
chooses to move household goods and family. Just like the commercial 
world, a move is a quality of life issue and most people with families 
prefer to move in the summer to minimize the adverse impact on their 
children's education.
    (22) Industry: The Contractor should be compensated overtime labor 
charges when services are requested and performed during other than 
normal working hours. It is not realistic to require the contractor to 
extend work hours without any additional compensation. The provisions 
of the Service Contract Act would require the contractor to pay its 
employees overtime wages and the Government should like be willing to 
pay the contractor.
    Response: Since confirmed pack, pickup, and delivery dates are 
established between the contractor and customer, MTMC does not envision 
the payment of overtime charges as a separate charge item. We would 
expect contractors to factor anticipated costs into their rates.
    (23) Industry: The expansion capability requirement is restrictive 
on small business. The alternative to the unlimited expansion 
capability requirements is to use the FAR-exempt tender system of 
procurement. It has agent and carrier expansion capability built in by 
using the Me-Too rate filing system. The available capability provided 
by the Me-Too carriers will not be available under the FAR contract 
concept.
    Response: MTMC wants to move from the current rate driven system, 
to one that considers the value of services provided. Although price 
will continue to be one of the factors evaluated, it will not be the 
driving factor in determining which proposal is awarded the traffic. 
The Government will make cost-technical tradeoffs, and determine which 
proposal offers greatest value based on sound business judgment and the 
evaluation criteria stated in the solicitation. The current Me-Too rate 
filing system does not lend itself to an approach that evaluates 
factors other than cost. Although it allows for a carrier to match or 
Me-Too the rate of the low cost carrier, it does not provide a vehicle 
for the carrier to match the other factors encompassed in an

[[Page 14752]]
evaluated procurement. Therefore, under Me-Toos, the rate becomes the 
driving factor once again. The alternative for expansion capability, is 
for the contractor to assemble an effective and efficient 
subcontracting plan.
2.1.2
    (24) Industry: The Contractor may be asked to support unforecasted 
contingencies, but should not be required to do so. The Contractor 
should be compensated for all additional cost incurred in supporting 
such an effort.
    Response: Because of the potential severity of unforecasted 
emergencies such as military contingencies, natural disasters, etc., 
MTMC believes it is imperative that the contractor be required to 
support these unforeseen events. A provision does exist for HQMTMC and 
the contractor to negotiate, when applicable, rate adjustments 
necessitated by such unforecasted conditions that exceed contract 
requirements. However, if such requirements are within the daily 
maximum capacity established in the initial contract, they should not 
entitle the contractor to additional compensation.
2.2  Movement Via Air Mobility Command (AMC)/Military Sealift Command 
(MSC)
    (25) Industry: Movement via AMC/MSC is not a commercial business 
practice. MTMC is taking away the Contractors traffic management 
responsibility for through movement. The PPSO's right to direct 
movement via AMC/MSC will deny the Contractor the ability to negotiate 
the most cost effective rates based on volume.
    Response: DOD policy mandates use, under certain circumstances, of 
AMC and MSC lift capability. This policy serves to maintain DOD's 
transportation assets in operation during peacetime so they are 
available during contingencies. In addition, there always is not ample 
American flag service to accommodate the volume of DOD Unaccompanied 
Baggage moving between CONUS and certain OCONUS destination (i.e., 
Korea), and there are some OCONUS areas where AMC/MSC assets provide 
the only service available. Any directed use will be separately 
addressed in any ensuing solicitation.
2.3  Compliance With DOD Policies
    (26) Industry: Compliance with regulations, publications, 
directives, MTMC advisories, and changes thereto are not commercial 
business practices. The contract should be all inclusive and the 
contract should not be revised without consultation and agreement from 
the Contractor.
    Response: The contract will specify which conditions the contractor 
must comply with. Once the contract is signed and awarded, any change 
must be discussed with the contractor. There is no way it can be 
revised without the knowledge of the contractor.
2.5  Automation Interface
    (27) Industry: Automation interface systems must be readily 
available in the commercial marketplace and not out of the technical or 
financial reach of contractors. Interface capability of the local 
agents may be cost prohibitive and the requirement may preclude small 
businesses from participating. MTMC should consider assisting small 
businesses in acquiring this capability by providing sufficient notice 
of the details of the electronic capability being requested.
    Response: Definitive automation requirements will be included in 
the Request for Proposal. MTMC envisions many benefits associated with 
electronic capability such as intransit visibility of shipments, 
electronic billing, and payments, etc. However, MTMC is also sensitive 
to demands upon small and medium size businesses that provide quality 
service. Consequently, MTMC will look to implement electronic 
capability requirements that are efficient, cost effective and 
reasonably avilable to the industry. We will also consider capabilities 
of DFAS, the PPSOs, the military services, the customers, and MTMC.

3. Key Personnel

3.1/3.2  Contract Manager/Operations Manager
    (28) Industry: It is not commercial practice to dictate the 
experience levels of the contractor or subcontractor personnel. Key 
personnel requirements should not be micromanaged by MTMC. The 10 years 
experience requirement for the Contract Manager, and the 5 year 
requirement for the alternate and Site Manager is unreasonable. 
Recommend reducing or eliminating this requirement since the quality 
feedback of the market place will drive the parties providing service 
to employ the best personnel available to ensure high quality rankings.
    Response: MTMC partially agrees and has eliminated the requirement 
for years of experience for all key personnel except the Contract 
Manager. MTMC believes that a minimum number of years of experience is 
a necessary requirement to assure that the Contract Manager has the 
knowledge and background to be responsible for the performance and 
operation of the contract. However, as recommended by industry, MTMC 
will relook the minimum experience requirement for the Contract 
Manager. The specific requirement will be stated in the RFP.
3.3
    (29) Industry: The prohibition against a contractor removing key 
personnel constitutes interference with the internal management of the 
contractor's company. This requirement should be deleted.
    Response: MTMC has eliminated the requirement that the contractor 
must notify and receive concurrence by HQMTMC of the replacement of key 
personnel, with the exception of the Contract Manager whose replacement 
must be with the concurrence of HQMTMC. HQMTMC is only concerned with 
the replacement's qualifications. It is necessary that the contractor 
verify to HQMTMC the qualifications of the potential replacement of the 
Contract Manager to assure that the quality of contract performance is 
not placed at risk by the employment of an inexperienced contract 
manager.

4. Personnel

4.3
    (30) Industry: Imposing requirements for uniforms with company name 
or logo and Contractor issued identification cards are an excessive 
regulatory requirement which provides no service quality benefit. These 
requirements disrupt commercial industry practices and impact 
subcontractors, small businesses, and carriers employing casual labor. 
An alternative would be to require employees performing services at the 
customers residence to dress in appropriate attire and be in 
presentable clean condition. If identification is sought by the 
customer, require the driver or lead foreman to present commercial 
drivers license or possibly a Contractor issued identification card.
    Response: MTMC has modified the requirement. All employees 
performing moving services at the customer's residence shall be in 
uniform shirt with company name or logo and maintain a professional 
demeanor. The team leader shall have some type of contractor issued 
identification. The uniform shirt and team leader's identification card 
provide a method for the customer to verify who the individuals are 
before allowing entry to their home. The identification card provides a 
quick and accurate way for the customer to identify the team leader who 
is in

[[Page 14753]]
charge of the work group and who the customer can go to if a problem 
arises. MTMC feels that these requirements are simple as well as 
inexpensive methods to reassure the service members that the 
individuals handling their personal belongings are professionals. 
Although these requirements may not have a direct impact on the quality 
of service being provided, we believe that they are reasonable methods 
to relieve some of the anxiety associated with moving.

5. Quality Control

5.2  Intransit Visibility Service
    (31) Industry: MTMC requiring tracing within 2 hours is not 
realistic and not the prevailing commercial practice.
    Response: MTMC realizes that at the time of a tracing request, the 
shipment may be in route and it may be difficult for a contractor to 
provide an exact status on that particular shipment. Upon a request of 
a shipment trace by the customer or the government, an initial response 
from the contractor that provides the most current status available 
within 2 hours from the time of the request will be required. Once the 
initial response is made, a more updated and exact status can then be 
provided at a later time. Technology available and currently in use by 
many carriers today allows for the capability to trace, monitor, and 
report movement progress of any shipment instantaneously. As our 
members may also be traveling at the time of the request, we feel that 
a 2 hour response time reasonably meets their needs while placing a 
reasonable demand on the contractor.
    (32) Industry: The requirement for the contractor to provide a 
weekly report to the destination PPSO listing all anticipated late 
shipments is excessive.
    Response: MTMC understands industry's concerns with the volume and 
frequency of reports currently proposed. Consequently, MTMC is 
currently reviewing all the report requirements to determine which ones 
can be streamlined or eliminated.
5.3  Access to Contractor Facilities
    (33) Industry: Access to contractor's facilities should be limited 
to normal working hours, by appointment only, and should not include 
access to personnel files.
    Response: Access to contractor records is often required to 
substantiate compliance with statutory or contractual requirements. 
When such efforts are necessary, the Government will coordinate with 
the affected contractor to minimize disruptions as much as feasible.
5.4  Contractor Meeting With PPSO
    (34) Industry: Contractor meetings with the PPSO should follow the 
commercial practice that a meeting occur on an as needed basis based 
upon common sense, problem resolution and the judgment of the manager 
involved. It is not necessary to hold these meeting on a weekly, 
biweekly, or monthly basis.
    Response: MTMC agrees. The intent of this requirement is to let the 
PPSO schedule the meetings at his discretion.
5.5  Contractor Operational Problems
    (35) Industry: Agree that the contractor should keep MTMC/PPSO 
informed about serious problems that arise, but disagree with being 
required to advise the PPSO of the loss of a subcontractor. If a 
subcontractor goes out of business or the relationship to the 
contractor is terminated for any reason, neither MTMC nor the PPSO 
should be involved as long as the contractor is still able to fulfill 
its duties.
    Response: MTMC agrees and will modify the requirement accordingly. 
MTMC has no privity of contract with subcontractors; however, prime 
contractors will be expected to fulfill their contractual obligations. 
However, should a subcontracting plan become part of any ensuing 
contract, any substantial variance from its terms must be reported.
5.6  Customery Survey
    (36) Industry: Agrees with replacing TQAP with a customer survey 
form.
    Response: MTMC agrees and TQAP will be replaced with the customer 
survey form.
    (37) Industry: MTMC should not prescribe the questions on the 
customer survey to be asked.
    Response: MTMC believes that there are some core questions that 
must be mandatory on the customer survey form to evaluate contractor 
performance. However, MTMC does not intend to otherwise limit the 
questions that the carrier believes it needs to retain quality service.
    (38) Industry: There should be a mandatory return policy on the 
customer survey form for the military service member, and if after a 
predetermined time no reply is received then the move should be 
considered satisfactory with the contractor receiving credit 
accordingly.
    Response: MTMC cannot mandate that the military member return the 
customer survey form. We would expect carriers to institute reasonable 
efforts to obtain representational answers. PPSOs will conduct a 
sufficient number of random surveys to assure the sample size for each 
contractor per region/contract provides a minimum 95 percent confidence 
level. However, PPSO efforts will not remove carrier responsibility to 
take all reasonable efforts to obtain survey results.

6. Quality Assurance

6.2  Contractor Performance
    (39) Industry: The required standards of 99% for on-time pickups, 
95% for on-time delivery, and 95% for using the contractor again are 
higher than most corporate accounts and should be lowered.
    Response: MTMC does not concur and has retained the requirement for 
these standards. MTMC has benchmarked this requirement with corporate 
customers and found numerous examples of standards equal to or higher 
than these, and believes that the DOD, as this industry's largest 
single customer, deserves equal service. Consequently, MTMC believes 
that these standards are appropriate and reasonable.
    (40) Industry: In addition to measuring loss/damage, claims 
frequency and loss/damage claims exceeding a certain dollar amount, the 
contractor's performance should be measured on the basis of claims cost 
per hundredweight. Furthermore, loss/damage should not count against a 
carrier as long as the member was made whole and is satisfied with the 
move.
    Response: MTMC disagrees that loss/damage should not count against 
a carrier as long as the member was made whole and is satisfied with 
the move. We believe that loss/damage is a critical element of a 
contractor's overall performance and should be compiled and evaluated. 
MTMC is considering claims' cost per hundredweight, as well as other 
alternatives.

7. Specific Tasks

7.1  Customer Service
7.1.1  Toll Free Telephone Numbers
    (41) Industry: It is simple to provide for toll free numbers in the 
United States, but toll free numbers are not available all over the 
world internationally. Also, the toll free number should only be 
required to be manned during normal business hours which is 5 days a 
week and 8 hours a day. Recommend that after hours be covered by a 
mechanical message collection device with follow up during the next 
official business day.
    Response: MTMC recognizes that in some instances toll free numbers 
may not be available internationally. MTMC

[[Page 14754]]
has modified the requirements document to read that if toll free 
capability is not available, the contractor shall accept collect calls. 
MTMC has also modified the requirement of the toll free number being 
manned 24 hours a day, 7 days a week, to it being operational 24 hours 
a day, 7 days a week. Thus, a type of recorder, beeper, or other 
electronic device may be used provided someone knowledgeable will 
promptly respond to the customer's concern. The goal is to allow 
customer's located in different time zones, to contact the contractor 
without being restricted by the contractors routine office hours.
    (42) Industry: It is redundant and unnecessary for the contractor's 
origin and destination agents to have toll free numbers. The service 
member should be dealing with the contractor; thus, only one toll free 
number is necessary.
    Response: MTMC agrees and has eliminated the requirement for origin 
and destination agent toll free numbers. However, the requirement for 
the contractor to establish and maintain a toll free number for their 
service areas has been retained in the requirements document. We 
believe it is necessary that the customer have at least one toll free 
number where his/hers inquiries/problems can be dealt with in a timely 
manner.
7.1.2  Movement Counseling
7.1.2.1
    (43) Industry: Imposing a minimum transit time schedule for the RDD 
is micro management, and instead MTMC should allow the contractor to 
work with the customer to reach a mutually agreed upon RDD. MTMC should 
also allow the use of spread dates for pickup and delivery because it 
is a commercial practice, allows for the greatest flexibility, and the 
maximum use of a carrier's capability.
    Response: MTMC agrees that the transit time guide should not be a 
mandatory regulation for determining the RDD, and the contractor and 
the customer should be allowed to come to a mutually agreed upon 
delivery date. However, a transit time guide will be made available to 
be used as a tool to assist in determining the RDD. In those instances 
when a mutually agreed RDD cannot be reached between the Contractor and 
the customer, the transit time guide will be used to establish the RDD. 
MTMC will not require the customer to agree to the use spread dates. 
However, if the contractor and the customer mutually agree to the use 
of spread dates for pack, pickup, or delivery, then spread dates may be 
used. However, if the customer does not agree to spread dates, then the 
contractor must agree to a specified date for these services.
    (44) Industry: MTMC needs to clarify the requirement that the 
contractor must notify the customer within 2 work days after 
notification by the PPSO that the contractor has been awarded the 
traffic.
    Response: MTMC has eliminated the 2 work day minimum for 
notification, and modified the requirement so that upon notification of 
shipment award, the contractor shall contact the customer to confirm 
the pack, pickup, and tentative required delivery dates established 
during the PPSO entitlement counseling or establish mutually agreed 
upon dates. The contractor shall provide each customer and the PPSO a 
schedule of all confirmed dates prior to the pickup date. The PPSO will 
then issue a service order based on these confirmed dates.
    (45) Industry: Agrees with move counseling being done by the 
carrier. However, MTMC/PPSO must continue to provide entitlement 
counseling because of the variation in policy among each of the 
military services.
    Response: MTMC agrees and the PPSOs will continue to provide 
entitlement counseling to the service members while the contractor will 
now be responsible for movement counseling.
7.2  Pre-move Survey
    (46) Industry: It is unnecessary to require an on site pre-move 
survey on all shipments regardless of weight or type. Telephone surveys 
should suffice for small shipments and shipments more than a specified 
number of miles away.
    Response: MTMC wants the contractor to perform a pre-move survey on 
all shipments. However, MTMC agrees that in many instances a pre-move 
survey conducted by telephone would be effective and appropriate. 
Consequently, the requirement has been modified so that a residence 
pre-move survey shall be conducted on all shipments estimated at 3000 
pounds or more, at origin points within a 50 mile radius of 
contractor's nearest agent facility, unless specifically waived by the 
customer and annotated on the service order. A telephone contact pre-
move survey shall be made, as a minimum, for all other shipments.
7.3  Customer Inconvenience Payment
7.3.1
    (47) Industry: There should exist a minimum weight and miles 
standard in determining inconvenience claims, as is the prevailing 
commercial practice. The contractor should not be responsible to pay 
100% of the costs of meals, clothing, or other purchased items that 
retain a residual value. Inconvenience payments should not be tied to 
the government per diem rate.
    Response: MTMC does not concur and has retained the requirement 
that the contractor shall pay the customer an inconvenience claim when 
a missed pickup, missed RDD, or missed confirmed delivery date from SIT 
causes inconvenience to the customer and the expenditure of personal 
funds for the reasonable costs for lodging meals, and rental/purchase 
of household necessities. MTMC has also retained the requirement that 
the contractor's maximum liability, excluding costs for rental/purchase 
of reasonable household necessities, shall not exceed the local DOD per 
diem rate. MTMC believes that the customer should be reimbursed for 
reasonable out of pocket expenses incurred as a result of these type of 
situations. MTMC further believes that the DOD per diem rate provides 
an established and effective tool to determine the cost for lodging and 
food expenses associated with the various cost of living rates in 
different areas of the world.
7.3.2
    (48) Response: The contractor being required to acknowledge receipt 
of the inconvenience claim is unnecessary. Also, the contractor will 
require more than 15 work days from the time of the customer's request 
for reimbursement to make payment of the inconvenience claim.
    Response: MTMC partially agrees, and has eliminated the requirement 
for the contractor to acknowledge receipt of the claim to the customer 
within 5 days of the date of the customer's request. However, MTMC 
believes that 15 work days from the time of the customer's request is a 
reasonable period of time for the contractor to make payment on an 
inconvenience claim, and has retained this requirement. This 
requirement is designed to reimburse the customer for unexpected 
expenses that he/she may not be reasonably able to personally 
underwrite.

8. Transportation Services at Origin

8.3 Advance Notice of Pack/Pickup Dates
    (49) Industry: Do not agree with short notice shipments being done 
at no additional cost to the government. Additional services of this 
type should be compensated because it goes beyond the level of normal 
service.

[[Page 14755]]

    Response: MTMC has retained the requirement that short notice 
shipments, such as disciplinary actions, compassionate reassignments, 
movements pertaining to deceased members and their families and short 
notice assignments, shall be moved at no additional cost to the 
Government. The contractor should account for these possible type 
situations up front in the contractor's single factor rate, and 
exercise sound business practices that permit the him/her to be 
responsive to the government's needs. On the other hand, unforeseen 
emergencies such as natural disasters, are subject to negotiation under 
the expansion capability paragraphs of the draft requirements document.
8.4  Acceptance of Shipments
8.4.1
    (50) Industry: It makes no sense to force the contractor to take 
shipments with dates that cannot be met. There must be a minimum daily 
work load established.
    Response: MTMC is considering allowing contractors to establish 
their maximum daily capacity at each AOR within a region. Each 
contractor would be required to accept all shipments offered until they 
reach their established maximum daily capacity. Contractors may refuse 
shipments once they reach their maximum daily capacity. We will provide 
specific details in the draft solicitation.
8.4.3
    (51) Industry: Forcing the contractor to provide the PPSO a daily 
report of all shipments scheduled for pack and pickup for the next work 
day is an administrative burden with no clear value added.
    Response: MTMC agrees and has eliminated the requirements that the 
contractor provide this daily report.
8.6  Expedited Service
    (52) Industry: Currently, the draft requirements document provides 
that expedited service charges apply only if the RDD is less than 25% 
of the published transit line. This language must be changed to require 
an expedited service charge whenever the PPSO requires the RDD to be 
less than the transit time. The requirement that expedited service be 
provided without additional cost is unreasonable.
    Response: MTMC has modified the requirements document to state that 
if the required delivery date is less than 50% of the transit time then 
expedited service charges will apply. MTMC believes that with the 
contractor and the customer working together to set up a mutually 
agreed upon delivery date, this will allow the flexibility and the 
opportunity for the contractor to meet most expedited deliveries 
necessitated by member needs. In those cases when the PPSO deems it 
necessary for the required delivery date to be less than 50% of the 
published transit time when the expedited service charge will apply. 
Otherwise, we expect potential contractors to include this requirement 
in their single factor rate.

11. Shipment Diversion

    (53) Industry: Diversions of shipments up to 100 miles at no 
additional cost is an excessive requirement.
    Response: MTMC agrees that requiring the contractor to be 
responsible for shipments diverted to a new destination up to 100 miles 
at no additional cost is excessive. Consequently, the requirements has 
been modified to 50 miles. However, when necessary to meet the needs of 
the Government, the PPSO may order the contractor to divert a shipment 
to a new destination that is more than 50 miles from the original 
destination. In such case, a new single factor rate that includes all 
charges from original origin to new destination will be negotiated 
between the PPSO, in coordination with MTMC, and the contractor.

14. Transportation Services at Destination

14.8  Destination Shipment Report
14.8.1
    (54) Industry: Destination shipment reports are excessive and 
unnecessary micro management by MTMC.
    Response: MTMC understands industry's concerns with the volume and 
frequency of reports currently proposed. Consequently, MTMC is 
currently reviewing all the reporting requirements to determine which 
ones can be streamlined and/or eliminated.
14.9  Conversion of Storage in Transit (SIT) to Commercial Storage
    (55) Industry: There must be a defined end point to government paid 
SIT, not just an undefined specified date by the PPSO.
    Response: SIT is authorized in increments of 90 days with 
extensions up to 360 days. Consequently, SIT does have a defined end 
point. In addition, a storage extension forms reflecting the expiration 
date will be provided to the Contractor.

15.  Liability

15.1
    (56) Industry: The contractor should have the prerogative of 
repairing a damaged item or replacing the item whichever they deem more 
cost effective.
    Response: MTMC agrees and has added the option of allowing the 
contractor to negotiate with the member to repair damaged item(s) are 
repaired to the same condition as received by the contractor from the 
member at the time of pickup. If however, the contractor chooses to 
replace the lost or damaged item(s), then replacement will be 
determined by current market value without depreciation.
15.2
    (57) Industry: Need to add statement that any item replaced becomes 
the property of the contractor.
    Response: MTMC agrees and has modified the requirements document to 
read that all items which are replaced or for which the full current 
market value has been paid become the property of the contractor. The 
contractor shall pick up the salvage within 30 calendar days after 
settling the claim with the customer unless provisions for a later pick 
up date are made with the customer. Failure to pick up salvaged 
property within the prescribed time results in forfeiture of the 
property, loss of any deduction of funds for salvage value, and the 
customer may then dispose of the property.
15.3
    (58) Industry: Full value protection of $100,000 per shipment is 
excessive and should be modified to apply a released value on a per 
pound basis. Coverage should be depreciated; however, the member could 
choose to purchase additional coverage at an additional cost if 
desired. The contractor should be allowed to use a high-value inventory 
in which the member must identify articles with a value of greater than 
$100.00 per pound.
    Response: MTMC partially agrees and has reduced the maximum 
liability from $100,000 per shipment to $75,000 unless the customer 
purchases additional insurance. MTMC is aware that additional up front 
costs may be associated with full value protection; however, it is a 
service that is desirable for our military members. We believe that in 
the long run, these up front costs will be offset by better service and 
a reduced claims ratio per move. This notwithstanding use of a high-
value inventory being considered.

16. Loss and Damage Claims

16.1
    (59) Industry: Agrees with service members filing their claims 
directly with the contractor.

[[Page 14756]]

    Response: MTMC also agrees with direct claim settlement between the 
contractor and the customer, and has provided for this option in the 
draft requirements document.
16.3
    (60) Industry: Commercial practice requires that exceptions (damage 
to property) be noted at the time of delivery. At a minimum, the 
customer should be required to notify the contractor of loss or damage 
within a minimum number of specified days following delivery.
    Response: The contractor will provide the customer a notice 
document at time of delivery, and the customer will provide the 
contractor at time of delivery with written notice of discovered lost 
and damage. MTMC agrees that the service member should notify the 
contractor in a timely manner of later discovered loss or damage. 
Consequently, the requirement has been modified to read that the 
customer will have 90 days to notify the contractor in writing of later 
discovered lost or damaged items. For lost and damaged items identified 
by the customer within the 90 day notice period, the notice document 
overcomes the presumption of the correctness of the delivery receipt.
16.4
    (61) Industry: The service member should only have up to nine 
months to file a claim as is the current commercial practice.
    Response: MTMC disagrees. Current commercial practice is no less 
than 9 months. We feel that a 1 year limit for the service member to 
file their claim directly with the contractor is fair, due to the 
uniqueness of military constraints.
16.7
    (62) Industry: Need to add a clause allowing the contractor to 
inspect the damaged item(s).
    Response: MTMC agrees, and has added the statement that the 
contractor shall have the right to inspect the damaged property within 
45 calendar days of delivery or dispatch of the customer's written 
notice document, whichever is later. The contractor shall notify the 
customer prior to any inspection to arrange a mutually agreeable time.
16.8
    (63) Industry: The contractor will need more than 30 days to gather 
documentation, determine the validity of a claim, make investigation, 
conduct inspections, arrange for repairs and make cash settlement to 
the service member.
    Response: MTMC agrees that in certain cases the contractor may 
require more than 30 days to settle the claims as was required in the 
original draft requirements document. It has been changed to read that 
the contractor shall pay, decline, or make a firm compromise settlement 
offer in writing to the customer within 60 calendar days after receipt 
of the claim by the contractor. However, if the contractor fails to 
respond within 60 calendar days of receipt of the claim, or the 
contractor declines to pay the claim, the customer may file a claim 
with the appropriate military claim service. Such claim to the military 
claim service may address all items which are not covered by an 
agreeable resolution between the contractor and the customer.
16.11
    (64) Industry: The service member should be precluded from filing a 
claim directly with the government. Also, the government should not 
have the power to offset on disputed claims between the contractor and 
the customer.
    Response: We cannot change the member's statutory right to file a 
claim directly with the government. However, we prefer that the member 
file directly with the contractor, and we plan to encourage it by not 
making full replacement coverage available if the member decides to 
settle directly with the military, without first seeking reimbursement 
from the carrier. As for the government not having the right to offset 
on disputed claims, we disagree and believe that the government should 
have the right to enforce contract requirements and be the service 
members' advocate. In any event, it is a remedy available under the 
terms of government contracts. Consequently, as a minimum, the 
contractor will be subject to set aside by the government on those 
items that the military pays for and which the contractor improperly 
denied.
16.13
    (65) Industry: A monthly claims activity report provided by the 
contractor to the PPSO is unnecessary and should be reduced to a 
quarterly basis.
    Response: MTMC disagrees. This monthly report is necessary to 
assist in evaluating carriers' overall performance.

17. Billing and Payment Procedures

17.1
    (66) Industry: The requirement to have all invoices certified by 
the PPSO, that show that all services have been performed, is 
unnecessary, encourages lost billing, and is counter productive to the 
prompt payment act. Instead the contractor should bill the finance 
center directly.
    Response: The invoice certification requirement is being 
reevaluated as part of the effort to implement EDI procedures.

Attachment 3--Single Factor Rate/Accessorial Information

1. Single Factor Rate (SFR)

    (67) Industry: Single factor rates reduce the direct compensation 
to service providers for extra services rendered, which are time and 
labor intensive. The SFR is too inclusive. Prevailing commercial 
practice is that accessorial services are separately identified and 
payable when requested and performed.
    Response: MTMC disagrees and will retain the SFR pricing structure. 
Carriers currently participating in the international through 
Government bill of lading program submit SFRs for household goods and 
unaccompanied baggage shipments. Additionally, MTMC feels the SFR 
should encompass the majority of the accessorial services which may 
affect a shipment. Service providers should ensure costs for 
accessorial services are negotiated and agreed upon prior to contract 
award. MTMC has identified those accessorial services which will be 
outside the SFR pricing structure. These services are not routinely 
ordered, are labor intensive, and costly to perform. Separate rates 
will be submitted by the Contractor for these services. This should 
ensure the Contractor's service providers are equitably compensated for 
services rendered.

2. SFR Solicitation/Submission

    (68) Industry: Single factor rates are not prevailing commercial 
practice for domestic shipments and are used on a very small percentage 
of commercial corporate accounts. SFR pricing does not provide the 
means or the structure needed for fair pricing and payment of moving 
services. Domestic movements and the majority of commercial accounts 
use a discount from a common industry baseline tariff and a segmented 
rate. Corporate accounts which do use single factor pricing predicate 
rates on a weight and mileage matrix.
    Response: MTMC recognizes that SFRs are not the prevailing 
commercial practice for domestic shipments. However use of SFRs will 
standardize, simplify, and reduce administrative workload associated 
with rate

[[Page 14757]]
submissions/evaluation, accessorial services, billing and payment, and 
program management. Major goals for the reengineering effort are 
program simplification and reduction of administrative processing. The 
volume associated with the personal property program warrants attaining 
such goals.
2.1, 2.3.1  Domestic Service
    (69) Industry: The underlying services and transportation methods 
for unaccompanied baggage (UB) differ significantly from those for 
household goods (HHG) shipments. Bundling of HHGs and UB together to 
move on the same SFR is not supportable. Factors for fixed costs also 
have a larger impact on smaller shipments and domestic baggage cannot 
be moved at the same rate as a large HHG shipment. It would be 
unrealistic for the same rate to apply for UB as it does for HHG 
shipments regardless of size. UB shipments are more expensive due to 
initial acquisition costs, inventory control measures, and labor costs 
for containerization. Pricing shipments at the same rate per 
hundredweight regardless of size and distance will result in 
significant over-payment for some shipments and under-payment for 
others. An alternative procedure for domestic service would be to 
establish domestic baggage service and have separate baggage rates.
    Response: MTMC is reevaluating movement of unaccompanied baggage/
personal effects within CONUS to determine if a different pricing 
structure is appropriate.
    (70) Industry: By combining domestic UB with HHG rates, the small 
business set-aside used for the Direct Procurement Method (DPM) pack & 
crate service is eliminated. This will adversely impact many small 
businesses who specialize in the service for DOD.
    Response: MTMC believes that the multiple contract aspects of its 
proposed system, along with inherent opportunities to form consortiums 
and use subcontracts will provide meaningful small business 
opportunities.
    (71) Industry: Carriers and forwarders do not typically perform 
local move services. Local moves are provided by local agents within 
the AOR and contracts for these services are awarded by the 
installation contracting offices. Prevailing commercial practice is to 
bill local moves at an hourly rate. Local moves should be solicited and 
awarded separately.
    Response: Local moves will be excluded from the pilot program. MTMC 
is currently evaluating how local moves will be incorporated into the 
regional concept.
    (72) Industry: UB needs to be better defined. The types of items 
which will be included in a typical baggage shipment and whether it 
must be shipped via air or surface must be known. If UB can be more 
accurately defined, an SFR could possibly be used since fewer 
accessorials apply. In addition, some type of mileage factors need to 
be included.
    Response: UB is defined as that portion of the customer's 
prescribed weight allowance of personal property, including 
professional books, papers, and equipment, normally shipped separately 
from the bulk of the personal property. UB is usually shipped via an 
expedited mode because it is needed immediately, or soon after, the 
customer's arrival at destination for interim housekeeping pending the 
arrival of the major portion of the customer's property. The 
entitlement for a UB shipment normally only exists when a member has a 
permanent change of station to/from an OCONUS location. The term ``UB'' 
will not be used for shipments moving within CONUS under the 
reengineered program. Small shipments moving with CONUS will be 
classified as a personal property shipment and normally are not shipped 
via an expedited method. However, if the PPSO determines the need to 
expedite a personal property shipment, the expedited service paragraph 
of the draft requirements document will control carrier compensation.
2.2  International Service
2.3.2
    (73) Industry: Requiring the contractor to file rates for all four 
international types of service restricts competition and constitutes 
bundling. Bundling of HHG and UB in the international program restricts 
competition and ``administrative convenience'' is not sufficient 
justification for bundling. The contractor should be allowed to bid on 
HHG and UB separately. This alternative would provide all required HHG 
and UB services for each AOR and will increase competition by 
permitting more carriers to independently file rates for each channel.
    Response: MTMC does not agree. Under the regional concept all 
potential contractors will be required to submit both HHG and UB rates 
for every rate area within an origin region to all destination rate 
areas for a category of service (e.g., a CONUS origin region to all 
OCONUS destinations, and OCONUS origin region to all CONUS 
destinations, or an OCONUS origin region to all OCONUS destinations). 
MTMC recognizes certain carriers participating in the present program 
have specialized in UB service; however, we believe that requiring the 
same contractor to provide HHG and UB services simplifies the 
acquisition process for DOD, enhances competition, and simplifies 
accountability by allowing DOD and the customer to deal with one 
contractor per move. Bench marking surveys with corporate accounts and 
commercial business practices disclose that commercial customers are 
not usually required to consult with different carriers to acquire 
movement services for HHG and UB. This requirement does not constitute 
improper bundling or restrict competition because the regional/multiple 
award concept increases business opportunities for industry. In 
addition, potential contractors may subcontract with any carrier for 
specialized services.
    (74) Industry: American carriers who file inter- and intra-theater 
rates would not normally have operating authority and expertise to 
transport local and in-country overseas moves. Historically, in-country 
and local moves have been separated and performed by the local small 
business movers located with the AOR. Rates for these shipments are 
procured by overseas Contracting Officers who have the experience with 
the local conditions and requirements. Combining these types of moves 
in one channel is not cost efficient and does not simplify the process. 
The procurement for these moves should remain with the overseas 
contracting offices.
    Response: MTMC is evaluating the unique requirements and factors 
which may affect these movements to determine how they can be 
incorporated into the regional concept. OCONUS local and in-country 
moves will be excluded from the pilot program.
2.4
    (75) Industry: Separate accessorial service charges are needed for 
each origin AOR.
    Response: MTMC agrees and recognizes costs vary significantly by 
geographic area. Therefore, Schedule A of the requirements document has 
been modified to allow contractors to submit separate accessorial 
charges for SIT services, Flat Service, and special crating for each 
origin rate area within a region.
2.5
    (76) Industry: It is unreasonable to have 100 net pounds as the 
minimum weight for all SFRs. The prevailing commercial practice is 
generally a

[[Page 14758]]
minimum weight of 1,000 pounds for HHG and 100 pounds gross for UB. The 
use of the net weight in lieu of gross weight for UB will create 
additional work. Gross weight is used for UB because obtaining the tare 
weight of small cartons and boxes is costly and labor intensive. 
Further the ITGBL program has always moved UB on a gross weight basis. 
Recommend using prevailing commercial practice or a 500 pound minimum,
    Response: MTMC agrees and has modified the Requirements Document to 
state the SFR and all accessorial service charges, computed on weight, 
are subject to a 500 pound net minimum.

3. Accessorial Service

3.1
    (77) Industry: An accessorial statement being sent to the PPSO for 
signature is redundant and unnecessary. The contractor's billing, 
supported by the member signed accessorial should suffice. Allowing 10 
days to return the certified accessorial statement to the contractor 
will unreasonably delay carrier billings.
    Response: MTMC disagrees. The contractor will be required to 
prepare and submit to the PPSO for certification an accessorial 
statement authorizing accessorial services. The service member is often 
unable to verify all accessorial services that are performed. For 
example, the service member may be unaware of possible charges such as 
an attempted pickup, waiting time, number of days in SIT, etc. 
Consequently, it is a necessary requirement for the PPSO to certify the 
accessorial services.
    (78) Industry: Auxiliary services are costly, labor intensive, and 
time consuming. The frequency of this service cannot be determined and 
therefore should not be part of the SFR.
    Response: MTMC agrees and Attachment 3 has been modified to include 
auxiliary service. The Flat Service charge will be used for computing 
the cost for auxiliary service. Auxiliary service must be authorized by 
the PPSO prior to commencement of service.
3.4.1  Storage-in-Transit (SIT) Services
    (79) Industry: The criteria established for commencement of SIT 
charges is not acceptable or prevailing commercial practice. This 
requirement will either force an increase in SIT charges to cover days 
that are no longer billable or it will have a negative impact on local 
agent's revenue. MTMC would like to reduce the amount paid for SIT, so 
it is attempting to limit its application by not paying for SIT prior 
to the required delivery date. This application may apply if commercial 
shipments were involved and commercial practices and commercial rate 
levels were used. Prevailing commercial practice is to use spread of 
dates for delivery. If the shipment arrives within the spread, SIT 
begins on date of arrival. If the shipment arrives ahead of the spread, 
SIT commences on the first day of the spread.
    Position. MTMC does not agree and will retain the requirement that 
SIT charges at destination will not commence prior to the first work 
day following the agreed upon RDD or the offered delivery date when 
later than the RDD. The RDD will be established and mutually agreed to 
between the contractor and customer during the movement counseling. 
This direct personal interface between the contractor and customer will 
encourage open communication and realistic RDDs can be established. 
This will also allow the contractor to more efficiently utilize his 
resources. MTMC realizes spread dates are a commercial business 
practice; however, we believe the use of spread dates should be at the 
discretion of the customer. MTMC does not object to use of spread dates 
if agreed to by the customer. If the shipment arrives within the spread 
and delivery cannot be coordinated, SIT begins from expiration of the 
time provided for transportation services at destination. If the 
shipment arrives ahead of the spread, then SIT will start on the first 
day of the spread. Our desire to limit SIT is not based on 
considerations associated with the cost of SIT. Rather, we hope to 
limit unnecessary handling of the HHGs and thereby reduce the incidence 
of damage.
    (80) Industry: A single daily SIT charge, based on a 100 pound 
minimum, which includes warehouse handling, storage, and drayage to/
from the SIT facility is not appropriate and not prevailing commercial 
practice. When a shipment is placed into storage, a large percentage of 
the charges are incurred from unloading the truck and handling the 
shipment. That is why the tariff contains a warehouse handling charge 
and a higher first-day SIT charge. The charges for additional days are 
lower because the costs involved with actual storage are much lower 
than the first day. The Government would save money by continuing this 
practice. Other alternatives include minimum 30-day storage period with 
separate warehouse handling and delivery charges or separating the SIT 
charge from the warehouse handling/drayage charge. These alternatives 
would ensure sufficient revenue is generated to pay for administrative 
and operational costs.
    Response: MTMC partially agrees and has modified Attachment 3 to 
read ``Charges for this service will be based on the net weight of 
property stored in transit, subject to a 500# minimum.'' MTMC 
recognizes charges associated with warehouse handling and drayage 
differ from those associated with the actual storage of the property. 
Accordingly, a modification also has been made which allows the 
Contractor to submit a SIT charge which applies for each 15-day period 
of storage or fraction thereof and a warehouse handling/drayage charge. 
These two charges will be submitted separately and considered in the 
price area during the source selection evaluation process.
    (81) Industry: A 100 mile radius for delivery out of SIT at no 
additional charge is not a commercial practice as well as an excessive 
requirement.
    Response: MTMC agrees and has reduced the requirement. The 
requirement has been reduced to the contractor being responsible for 
direct deliveries and deliveries from SIT within a 50 mile radius of 
the original destination at no additional charge. The contractor will 
be compensated for direct deliveries and deliveries from SIT within the 
AOR that are more than 50 miles from the original destination. 
Attachment 3, of the draft solicitation, will specify these provisions.
3.4.2  Flat Service Charge
    (82) Industry: The Flat Service Charge is not a commercial business 
practice. The charge is stated on a per hour basis and the per hour 
amount includes all labor, mileage, and vehicle use. Accessorial 
services involving labor are billed in the commercial marketplace on a 
per man, per hour basis. The number of personnel required to perform a 
service varies depending on the size of a shipment. Therefore, it is 
difficult to construct a rate which would compensate the service 
provider equitably. Recommend changing this service to include billing 
on a per hour, per man, basis. In addition, a separate flat service 
charge should be solicited for HHG and UB because the equipment and 
manpower for each is vastly different.
    Response: MTMC does not agree. The per man approach complicates the 
verification and billing process. MTMC believes industry can construct 
a rate based on the average number of personnel required to perform the 
services specified.

[[Page 14759]]

3.4.2.3  Extra Pickup and/or Delivery
    (83) Industry: Extra pickup and/or delivery requirements are not 
commercial business practices. The contractor should be compensated for 
any extra pickup or delivery, not just more than one. The 75-mile 
radius is excessive and should be changed to 50 miles.
    Response: MTMC recognizes requiring the contractor to perform the 
first extra pickup or delivery outside a 75-mile radius from the first 
pickup point may be excessive. Accordingly, the 75-mile radius has been 
changed to 50 miles. MTMC believes those accessorials services which 
are routinely ordered should be included in the SFR. This will ease the 
program administration and execution.
3.4.2.6  Partial Withdrawal From Sit
    (84) Industry: Application of the flat service charge is not 
realistic. The definition of this charge includes the use of trucks and 
mileage. Removal of a shipment from storage in a warehouse and sorting 
items is completely different in nature. A charge based on labor per 
hour, per man should apply to ensure service providers are equitably 
compensated.
    Response: The Flat service charge is a labor charge which includes 
the sorting of items.
    (85) Industry: Customer presence in the warehouse during sorting 
may pose insurance problems.
    Response: Should such presence require additional cost to the 
carrier, MTMC would expect that to be addressed in the carrier's SFR. 
The option which allows the customer or PPSO to be present at the 
contractor's facility during sorting and removal of the partial 
withdrawal from SIT has been retained. The customer or PPSO presence 
will minimize claims disputes because of the actual observation and 
should therefore protect the contractor and the customer by eliminating 
speculation over mishandling.
3.4.2.7  Waiting Time
    (86) Industry: Free waiting time should be limited to 2 hours for 
both domestic and international.
    Response: MTMC agrees that 4 hours free waiting on domestic 
shipment is excessive, and has reduced the requirement to 2 hours. 
However, do not agree on reducing free waiting time on international 
shipments from the 24 hours initially established in the draft 
requirements document. The majority of international shipments go into 
agent facilities first. Consequently, driver time will typically not be 
lost as a result of the 24 hours of free waiting time on international 
shipments because the shipment will most likely already be stationed in 
an agent's facilities.
3.4.5  Third Party Service
    (87) Industry: Commercial practice allows the contractor to add a 
percentage to the cost incurred for the process of handling and funding 
the transaction. Normal add-ons are in the 10 percent range and this 
provision should be incorporated into this item.
    Response: MTMC disagrees and retains the requirement that the 
contractor will be reimbursed actual charges. Historically, a third 
party invoice which sets both the services rendered, charges and basis 
thereof must accompany the contractor billing. We do not intend to 
change that practice from the commercial practice in effect throughout 
the U.S.
Schedule A--Rate Sample
    (88) Industry: The sample needs to be expanded to include the 
charges at both origin and destination for all services. Because of the 
requirement that prevailing wage scales be utilized in all areas, there 
will be vast differences in the charges.
    Response: MTMC agrees and recognizes costs vary significantly by 
geographic area. Therefore, Schedule A has been modified to allow 
contractors to submit separate accessorial charges for SIT services, 
Flat Service, and special crating for each origin rate area within a 
region.
    (89) Industry: The proposed rate sample contemplates only one rate 
for commercial/military air for HHG and UB. The same SFR cannot apply 
to those shipments moving either commercial or military air.
    Response: MTMC did not contemplate the same SFR applying for HHG 
and UB movement via commercial and military air. The contractor will be 
asked to submit a separate rate for commercial air--HHG and UB; and 
military air--HHG and UB. However, the contractor will be required to 
accept all commodities for movement upon contract award.

Attachment 9--Weight Additives

1.

    (90) Industry: The only item that the draft requirements document 
provides additional compensation for are boats. A weight additives 
charges should apply for other commonly shipped bulky articles such as 
satellite dishes, hot tubs, etc., as spelled out in the current tariff 
item.
    Response: MTMC does not agree. The costs associated with bulky 
articles should be included in the SFR. In the current ITGBL program, 
costs for this service are included in the SFR.
1.3  Boats and Sailboats
    (91) Industry: It is unreasonable to expect contractors to 
transport boats and/or similar items 14 feet and less at no additional 
cost. Boat charges should follow the commercial tariff. Also, the 
proposed provisions for boats over 14 feet but less than 25 feet 
presents serious problems for international shipments. Boats of this 
size will not fit in lift vans and must go inside the ocean container. 
The proposed weight additive factor for boats will not provide adequate 
revenues to cover significant expenses incurred in accommodating boats 
of this size. If boats are too wide to fit inside a ocean container 
they must be accommodated on racks. Ocean charges increase 
significantly if the boat extends beyond the sides of the rack since 
the boat occupies three ocean container spaces. Recommend boats 14 feet 
and over in length remain in the OTO program for international 
shipments.
    Response: MTMC has modified the requirements document by adding a 
weight additive of 700 pounds for boats and sailboats less than 14 feet 
in length. Boat trailers less than 14 feet will have a weight additive 
of 1000 pounds. Boats, sailboats, and boat trailers 14 feet and over 
will be moved under the one time only (OTO) program. Canoes, skiffs, 
rowboats, dinghies, sculls, and kayaks 14 feet and over in length will 
have a weight additive of 700 pounds, while those less than 14 feet 
will be moved under a single factor rate with no weight additive. Other 
specifics of the requirements concerning boats will be released in the 
upcoming draft solicitation.

Attachment 10--Weigh/reweigh Procedures

    (92) Industry: Current commercial practice is that there is no 
specific charge for a reweigh but the second weight is the billing 
weight, regardless of whether it is above or below the first weight. 
Since DOD shipments have a very high reweigh request rate, then the 
contractor should be compensated for reweighs.
    Response: MTMC will require the contractor to incorporate reweighs 
in their single factor rate. Also, MTMC feels that the DOD as the 
single largest shipper should benefit from the best commercial 
practices available. Since the commercial practice is that no specific 
charge is associated with reweighs, then reweighs ordered by the 
government should also be conducted at

[[Page 14760]]
no additional cost to the Government. Further, MTMC, by requiring the 
lower of the two weights to be used as the transportation charge, is 
not modifying the program as it currently operates today. Finally, 
changing reweigh procedures so that the second weight is also the 
billing weight may adversely effect the members' entitlement to request 
reweighs.

7. Observation of Weighing

    (93) Industry: Unless specifically requested by the PPSO or the 
customer, the contractor should not have to advise the PPSO or the 
customer of the time and specific location of every shipment weighing. 
This is an unnecessary administrative burden on the PPSO, the customer, 
and the contractor.
    Response: MTMC agrees and has changed the language to read that 
``upon request'' the contractor will, prior to weighing, advise the 
PPSO or the customer of the time and specific location of every 
shipment weighing. Also the PPSO or the customer will have the right to 
observe all weighing upon request and will be entitled to notice of the 
time and location of the weighing with sufficient time to exercise that 
right.
Gregory D. Showalter,
Army Federal Register, Liaison Officer.
[FR Doc. 96-8093 Filed 4-2-96; 8:45 am]
BILLING CODE 3710-08-M