Moving Madness

hat's the worst that could happen when you pack up and move all your worldly belongings? Well, the movers could cut your couch in half. Or pack your cat in a box. Or you unpack your heirloom chair and find it in splinters. Or the driver has welding done to the van and the whole thing goes up in flames--with your stuff in it. Or everything is delivered covered in mold and mildew and surrounded by 2 feet of standing water.

If you are a service member relocating for the Defense Department, such horrors aren't rare--in fact, they're routine. Being badly treated is "more common than not, and everybody knows it," says Karen Alderman, co-chair of a department task force studying relocation. With everything you own and need to function in the hands of a moving company, "our families are at the mercy of the [moving van] driver," adds Sydney Hickey, associate director of the National Military Family Association.

The Size of the Beast

The near-universal dissatisfaction with the current system is well-documented. "Despite the fact that [DoD] moves more household effects than any U.S. corporation, its system provides some of the worst service in the nation," the General Accounting Office reported in June 1998 (GAO/NSIAD-98-149). Each year, DoD moves 775,000 service members and 25,000 civilians (or 35 percent of its non-Reserve personnel), plus their families, at a cost of $3 billion.

And nearly 80 percent of customers are dissatisfied with the service they receive, according to GAO and DoD reports. One in four moves results in a claim for lost or damaged goods. Actual losses are much greater, say Defense officials, the GAO and service-member advocates, but many service members don't file claims because of the time and hassle involved and because they can only be reimbursed the depreciated value of goods, not the replacement value.

Those loss and damage claims totaled about $100 million in fiscal 1996, the most recent year for which figures are available. DoD pays out about $79 million of the total and then goes after the moving industry, recouping about $42 million of what was paid to service members.

However, the real costs of the fragmented and bureaucratic relocation system are impossible to calculate. Beyond the direct costs of $3 billion a year, DoD spends "hundreds of millions of dollars annually in administrative costs and lost productivity," the DoD relocation task force reported in "Reengineering Permanent Duty Travel," dated June 1998.

The ultimate costs to the services--in member dissatisfaction and retention problems--"are very hard to quantify," says Alderman.

Low-Cost Driver

Household goods forwarding is exempt from federal acquisition regulations, and as a result, the program at DoD, run by the Military Traffic Management Command, is driven by low cost, not best value.

Every six months, DoD reopens bidding for spots on its list of approved movers. Firms that don't make the cut generally lower their rates to get on the list. Defense transportation officers are required to distribute the jobs evenly among companies on the list.

The result is a list of more than 1,200 carriers and 1 million rates--though it's widely known that only 300 to 400 carriers exist and the rest are just paper companies set up by those carriers to get more work. One Defense official, who asked not to be identified, likened the system to everyone trying to get their hands in a cookie jar.

Army Col. Kevin Keady, assistant for surface transportation in the Office of the Assistant Undersecretary of Defense for Transportation Policy, sums up the current system: "Low bid, low cost is not high value, not high quality."

Blueprint for a Renovation

DoD pays carriers more than $1.2 billion a year, accounting for 15 percent of all payments to the industry. "We are the elephant in this industry," says Keady, "and we want to be treated like the elephant."

The desire to be treated like the large customer it is spurred DoD to set up the task force to look at developing a better process for permanent change of station (PCS) moves. The group's recently released report is "a blueprint for massive change," says Alderman.

The task force found that managing service member and civilian moves is not a core Defense Department function and thus is not a good use of resources. The group proposes applying to PCS moves the same approach DoD used in developing the Defense Travel System to overhaul temporary duty travel.

The report lays out a soup-to-nuts management approach to running DoD's PCSs. It recommends that, following private-sector practice, relocation be outsourced. "Industry is making the move to outsourcing because they realize that to keep people productive, the best thing is to leave this job to professionals," says Alderman.

Test Case

Several installations are testing innovative approaches to relocation. Hunter Army Airfield in Savannah, Ga., outsourced relocation management in 1997 under a pilot program directed by the Office of the Secretary of Defense.

Contractor Cendant Mobility provides a full range of relocation services, including counseling employees, making move arrangements, tracking shipments, and helping employees with vouchers and other paperwork. (For more on the Hunter pilot, see "First-Class Travel Teams Earn Awards," 1998 Federal Travel Guide, November 1998). Preliminary results show customer satisfaction ratings have increased from 23 percent to 95 percent or more.

Lisa Roberts, a traffic management specialist for the Army, says the Hunter pilot resulted in a lower transit and storage rate, more services, a streamlined claims process, a lower claims rate and, overall, better quality.

"Our goal was to prove the concept--applying best commercial practices--and we think we did that successfully," says Roberts. "Quality of life continues to be our full objective." A GAO report on the Hunter initiative was due out by early March.

In January, MTMC, DoD's personal property program manager, kicked off a pilot project for shipments of household goods from all bases and installations in North Carolina, South Carolina and Florida. The program, which involves all branches of the military, uses a competitive, Federal Acquisition Regulation-based contract.

The Navy is running a test at Bremerton, Wash., that started in January 1998. Under certain conditions, the Service Member Arranged Move (SAM) program allows Navy personnel to select their own movers from a list.

The U.S. Transportation Command will evaluate the Hunter, MTMC and Navy programs, consider whether aspects of the pilots could be used throughout DoD and make a recommendation to the Defense Secretary about what elements to implement throughout the department.

Industry Opposition

DoD's relocation reengineering effort faces massive opposition from the carrier and forwarder industry and its supporters on Capitol Hill.

The American Moving and Storage Association (made up primarily of businesses that handle military moves in the continental United States) and the Household Goods Forwarders Association of America (made up of those who handle overseas military moves) contend that relocation reform would strike a blow to their members, many of them small business owners. It "would guarantee the elimination of the forwarder and many small- and medium-size moving and storage companies and agents from the DoD marketplace," the Household Goods Forwarders Association said in a Jan. 5 release.

"What they should be reengineering is their program, not the industry. Let's take it one phase at a time," the group's executive director, Terry Head, told Government Executive.

The groups are lobbying Congress to block expansion of the Hunter pilot and launch of the MTMC program. "Industry convinced DoD many years ago that they needed to do [relocation the old way] in order 'to maintain capacity and protect small business,' " says Carol Lucas of relocation management firm Cendant Mobility, who works with a coalition of businesses that favor reengineering.

The fight has even gotten dirty, with forged memos and angry letters flying back and forth. At one point, the heads of the services wrote to Congress saying, "don't get in the way here," according to several sources.

"That this piece of industry will go down the tubes [with reengineering]--there's no question about that," says the military family association's Hickey. "But the fact that nobody else [except DoD] is using [these listed companies] means somebody isn't getting their money's worth--either the service member or Uncle Sam."

The Full Service Move Project, now in draft stage, is DoD's attempt to work up a compromise that answers industry concerns and yet reaches the department's goals of revamping the PCS process.

Contention among the factions involved make DoD's relocation changes slow going. Best business practices "can't be quickly adopted by government," says Alderman. "Not because it's not the right thing to do, but because of the political process."