On April 2, SDDC held its semi-annual Personal Property Forum with industry near Scott AFB, Ill. AMSA's Linda Darr and Scott Michael attended this session with a couple hundred industry representatives and virtually all of SDDC's staff in attendance. As usual, it was a good opportunity for networking both within the industry and with the government officials.
See the PowerPoint presentations from the PPF here
Maj. Gen. Thomas Richardson kicked off the session with an explanation of how the drawdown in Afghanistan has led him to re-evaluate the importance of Personal Property to SDDC. Once all of the supplies are back from Afghanistan, his mission will dramatically change, and the command will have more focus on household goods issues, which account for about $2 billion each year. He indicated that the freight programs are beginning to transition from rate tenders to contracts, and this could eventually happen with household goods as well. We will need to closely monitor this possibility over the next few years, as there are some potential downsides to contracts.
CAPT Aaron Stanley led the rest of the session, and we continue to be impressed with his engagement on the issues and his willingness to listen to industry's concerns. We don't always get the answer we want, but he does at least consider our concerns. An example of this was the idea of using Survey Monkey to do customer surveys, as proposed at the AMSA Conference in San Diego. The feedback he heard there raising concerns about the security of this product led him to scrap that plan and seek a different approach.
Stanley announced that there will be an open season in 2014, but it will be very limited, focused on intrastate companies in selected states where the military needs additional capacity. He has recently heard that some companies have been withholding claims settlements until the customer submits a good survey, or in some cases, changes a survey score. They are investigating these reports, but the industry response at the meeting was strong that SDDC needs to take decisive action against any company which is found to have manipulated the system in this way.
The other significant issue SDDC is working on is an internal reorganization that is starting with a consolidation of the four Regional Storage Management Offices (RSMOs) into a single, smaller office at the Headquarters location at Scott AFB by the end of this year. About six individuals have agreed to relocate to the new office. This will dramatically change the workforce available to perform warehouse inspections, so they will have to focus mostly on new warehouses and expansions. These cuts are the beginning of a 25 percent reduction in staff, so we expect to see further re-organization efforts.
Lt. Col. Gina Prevett, the DPS program manager, gave a detailed update about upcoming software releases that unfortunately will extend into June. An issue with accountants being able to save financial information is scheduled to be corrected April 18, in time for the annual financial data, which is due by the end of May for most companies. The change to stop sending the survey links in the emails to the customers is scheduled for May 2. Once that happens, customers will need to log in to DPS to complete a survey until a solution can be found. We are very concerned about this change, as it will dramatically reduce the number of customer surveys that are completed.
Prevett also discussed the new programming contractor, CACI, which took over last fall and is now getting up to speed. CACI hopes to have document imaging available by late in 2015, along with the start of enhanced data transfer for industry. We will start to see new interfaces for different parts of DPS, and the company plans to continue to add features, including the DPM program in 2017.
George Thomas of GSA Audits gave a presentation, which included a detailed discussion about approval for shuttle service. To be paid for shuttle service, a mover will need to prove that a truck to truck transfer occurred on the shipment. Delivery out of storage is unlikely to qualify. To demonstrate that a larger vehicle was used, make sure to get the weight tickets on the linehaul vehicle, not on the shuttle vehicles. Detailed notes in DPS are important. Explain specifically why a shuttle is required.
SDDC's Rates, Quality, and Operations teams each gave presentations about their areas. The second round of rate filing is now complete, and shipments for the summer should start being booked this week. There were about six companies which failed to file their Certificate of Responsibility and/or Certificate of Independent Pricing (CIP/COR) this year, and they have been removed from the program. We expressed our concern that revocation seemed to be an excessive punishment for a paperwork mistake, and SDDC has agreed to take another look at this action.
The next PPF will likely be in late October.
Captain Aaron Stanley headlined this year’s annual military summit at the AMSA Conference in San Diego, with support from Jill Smith and Lt. Col. Gina Prevett, DPS Program Manager, along with a team of SDDC employees participating via conference call from Scott AFB.
CSS Security Issues: The military has advised the DPS office that they may no longer use an encrypted link in emails to customers to allow them to bypass the DPS login screen and go straight to their customer survey. Service members will now have to log into DPS with their password in order to complete their survey on the website. As a possible temporary work-around, DPS is considering using Survey Monkey, a commercial survey product, instead of DPS. Industry attendees expressed grave concerns about Survey Monkey, and also the potentially significant reduction in survey response rates from eliminating the encrypted link. DOD will continue to work on alternative approaches.
Open Season: Twelve carriers were approved in the Open Season last year (see article below). There will be a limited Open Season in 2014 for intrastate capability in certain states, but they are planning a full Open Season in the fall of 2015, with specific details still to be determined.
Requalification and “Right-sizing”: SDDC has decided to take additional time examining alternative approaches to potentially requiring all approved companies to re-qualify under new criteria. They do intend to enforce existing rules more carefully, including CFAC in the International Program. Previous approaches, including “right-sizing” remain options, but they are also considering other approaches.
Rate Filing: The rate filing process was changed for this year to eliminate the 10% peak season increase in linehaul rates and allow each carrier to file separate peak and non-peak rates. The old non-peak rates were increased by 1.56% to account for inflation.
Rankings: The 20% assigned to the claims score is being shifted to the customer satisfaction survey, which will now account for the entire 70% performance score, along with the 30% from the rates score to establish the TSP rankings. This makes those surveys even more important. SDDC is reserving the right to reinstate the 20 points for claims at some point in the future.
Pro Gear Rules: For customers who have their orders issued on or after May 1, professional gear will be limited to 2,000 pounds, with a more restrictive definition of what types of items qualify as pro equipment. Spouse pro gear will be limited to 500 pounds. If constructive weights are needed, they will be based upon 7 lbs. per cubic foot., so agents should make every effort to obtain an actual weight, using a bathroom scale if available (more details in article below).
SDDC Budget Cuts:
SDDC is reducing its budget by 25% through staff cuts, including a consolidation of the Regional Storage Management Offices (RSMOs) at headquarters by the end of the year. This will result in fewer inspections of warehouses.
Out of 271 applicants, only twelve movers have been approved by SDDC to become DOD-approved TSPs, as announced by the command. Hundreds of other companies were disqualified, mostly because SDDC declined applications from companies who have experience as agents or warehousemen on military moves. Here is the list of newly approved companies:
Ace Moving & Storage
American Van Lines
B & B Movers
DN Van Lines
Jordan River Moving
Neighbors Moving and Storage of Seattle
Two Men and a Truck, Ann Arbor, Mich.
Two Men and a Truck, Greenville, N.C.
Two Men and a Truck, Lansing, Mich.
Members of the military will soon have new limits on the amount and type of professional gear they may ship during a reassignment move. The allowance, which does not count toward the separate weight allowance for household goods, will be 2,000 pounds of professional books, papers and equipment — known as "PBP&E." The change takes effect for all permanent change-of-station orders issued as of May 1.
The regulation also will limit which items can be included in the professional shipments. If something doesn't qualify as a professional item, its weight will count against the member's regular household goods allowance.
Household goods weight limits are based on rank. The maximum allowance of 18,000 pounds applies only to four-star generals or admirals. From there, HHG allowance limits decrease with pay grade, with slightly lower "without dependents" limits for each grade.
According to SDDC, the average weight of professional gear shipped for flag and general officers was more than twice the overall average for all military personnel in 2013.
The new regulation will include a grandfather clause that will let anyone who shipped more than 2,000 pounds of professional items overseas before May 1 to return the same amount to the continental U.S. on their next PCS move.
Examples of items that will be excluded under the new policy are personal computers and peripheral devices, and memorabilia such as plaques and awards.
Brig. Gen. Susan A. Davidson, the commander, Defense Logistics Agency-Distribution, Defense Logistics Agency, New Cumberland, Pa has been nominated as the new commanding general, Military Surface Deployment and Distribution Command, Scott Air Force Base, IL. Gen. Davidson served a prior tour as Deputy Commander of SDDC.
Air Force Gen. Paul J. Selva has been nominated to replace Air Force Gen. William M. Fraser III as commander, U.S. Transportation Command. Gen. Selva currently commands the Air Mobility Command.
After a civilian truck driver shot and killed a sailor on base at Naval Station Norfolk, the Navy has tightened its rules for access to its bases. The shooter was a convicted felon who had a valid Transportation Worker Identification Credential (TWIC) card allowing him access to the base. He did not have a bill of lading or other supporting documents that would have given him a reason to be on the base. The sentry at the gate has been placed on administrative leave.
It is unclear how he was able to obtain the TWIC given his criminal background history, but this incident, coupled with other recent shootings on military bases, will make it much harder to obtain access to military bases for movers and others transportation workers. The Navy is now coupling the TWIC with a background check to allow access. We will have to see what other steps are taken as their investigation continues.
The Army is recommending another round of BRAC (base realignment and closure) for 2017, but the other military services are less supportive, and Congress has been opposed to another BRAC.
The U.S. Appeals Court for the Fourth Circuit reinstated a $24 million civil penalty against a Belgian mover accused of submitting thousands of false invoices under DOD contracts more than a decade ago. The ruling reversed a decision that had blocked the statutory penalty on the grounds the government hadn't proven damages.
In 2012, a Virginia district court declined to impose per-claim statutory penalties on Gosselin World Wide Moving (not an AMSA member) — which reached a minimum of $50 million based on more than 9,000 false invoices — saying such a judgment would violate the Eighth Amendment's ban on excessive fines.
The U.S. and Kurt Bunk, a German employee of one of the shipping companies involved in the scheme, had requested a compromise judgment of $24 million, but the lower court decided it had no discretion to reduce the penalties below the $5,500 to $11,000 per-violation penalty in the False Claims Act.
The Fourth Circuit last month not only reversed that decision, ordering the lower court to grant the requested $24 million in statutory penalties, but also reversed the court's decision to grant Gosselin immunity from additional damages under the Shipping Act, ordering the lower court to conduct additional proceedings for the alleged price-fixing.
The appeals court ruled that the Eight Amendment doesn't prevent large statutory penalties in False Claims Act cases involving widespread fraud, adding they would further the law's goal of deterring fraud against the government. The lower court's ruling essentially let the defendants off the hook because they generated too many false invoices, a ruling that "provides a perverse incentive for dishonest contractors to generate as many false claims as possible, siphoning ever more resources from the government," according to the Fourth Circuit.
The case involved false invoices in Gosselin's contract to transport DOD personal property within Europe in 2001. Federal prosecutors brought criminal charges against Gosselin in 2003, accusing it of participating in a conspiracy to fix rates in 2001 and 2002. Under a plea agreement, the company was sentenced to pay a fine of $6 million and restitution of $865,000.