Pay & Benefits

TRANSCOM: allegations ‘unsubstantiated,‘ awards $7.2B contract to privatize household goods moves

Updated July 1 to include further information about TRANSCOM’s investigation

U.S. Transportation Command officials have confirmed their award to a New Jersey company of a $7.2 billion contract to outsource management of service members’ household goods, according to a statement from the command.

Allegations made against the company, American Roll On Roll Off Carrier Group, of Parsippany, N.J., were “unsubstantiated,” TRANSCOM officials said, resulting in the confirmation of the award Monday.

The $7.2 billion contract covers a nine-month transition period and three-year base period. But if all the options are exercised, the contract will be worth about $20 billion over nine years. The contract doesn’t affect service members’ moves currently under way; all household goods moves will continue under the current system, managed by TRANSCOM, until February, 2021.

“Team ARC remains committed to our proposal to provide exceptional customer service to TRANSCOM and the service members,” said ARC CEO Eric Ebeling, in a statement. “We look forward to getting started on the [Global Household Goods Contract.]”

TRANSCOM had previously pulled back the contract for the review, and notified the Government Accountability Office of its intent to review the allegations on June 9.

“An interested party” provided information to TRANSCOM that they believed should have been considered in the award decision. They alleged that ARC didn’t disclose adverse information of its parent company and the parent company’s executives, as is required.

ARC responded to TRANSCOM’s question about the allegations on June 18. TRANSCOM’s legal counsel and the contracting officer reviewed the response and other relevant information over the course of the following week, according to the statement.

Justice Department officials confirmed to TRANSCOM that the adverse information was not affiliated with ARC or its parent company, according to new information provided by TRANSCOM July 1.

“After a thorough review of all relevant information, the contracting officer made an independent determination that the allegations were unsubstantiated,” officials stated. During the same time, the source selection team reviewed the entire source selection record, and revised documentation was approved Monday.

The allegations centered around information about Wallenius Wilhelmsen Logistics AS, a Norwegian company. According to a Justice Department press release from July, 2016, Wallenius Wilhelmsen Logistics pleaded guilty to price fixing and paid a $98.9 million criminal fine for its involvement in a conspiracy to fix prices of international ocean shipments of roll-on, roll-off cargo to and from the Port of Baltimore and other locations in the United States.

Both WWL and ARC are owned by Wallenius Wilhelmsen ASA. But ARC is “an entirely separate U.S. company with separate U.S. citizen management” according to Charles Diorio, spokesman for ARC. “ARC was not a party to the 2016 U.S. Department of Justice case involving Wallenius Wilhelmsen Logistics AS (WWL), a Norwegian company, and has never been accused of any anti-competitive or criminal activities.”

Department of Justice officials confirmed to TRANSCOM that ARC and Wallenius Wilhelmsen ASA were not part of the 2016 conviction, according to information provided by TRANSCOM July 1. “After extensive review TRANSCOM determined that the corporate misconduct was not affiliated with ARC nor its parent company,” according to TRANSCOM.

According to the federal government’s System for Award Management website (SAM), the ARC filings don’t list any other immediate owner until August, 2018, when it lists Wallenius Wilhelmsen Logistics AS. That was listed until June 15, when ARC changed that immediate owner to Wallenius Wilhelmsen ASA.

ARC officials did not provide information about why WWL was listed as their immediate owner until June 15, as TRANSCOM was beginning to review the allegations.

However, TRANSCOM officials stated July 1 that this was based on a mistake.

ARC “erroneously listed [Wallenius Wilhelmsen Logistics] instead of [Wallenius Wilhelmsen ASA] as the corporate owner in the pulldown menu of the government’s System of Award Management. It appeared to the protester that ARC failed to meet [Federal Acquisition Regulations] disclosure requirements when, in actuality, the true parent company was misidentified.

“Minor errors in SAM are not grounds for disqualification.”

Two unsuccessful bidders filed protests of the award. “Protests are a common part of the acquisition process and serve as an important check and balance,” TRANSCOM officials stated.

“Since neither ARC, nor its parent company WWASA, have a record of misconduct, TRANSCOM substantiated its original award to ARC because its proposal provided the best service for the best value for service members, Department of Defense civilians and their families,” TRANSCOM stated July 1.

ARC is the lead in the contract. The Team ARC consortium includes UniGroup, a $1.7 billion transportation company and the parent of United Van Lines, and Mayflower Transit; Suddath, a company that moves about 30,000 military members a year; Atlas World Group, the parent company of Atlas Van Lines, Inc. and Atlas World Group International; The Pasha Group, which has moved military members since 1947; and Deloitte.

Recommended for you
Around The Web