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December 2024 Chairman’s Column
Guest Chairman's Corner
By: Former CMSA Chairman John Chipman, Jr.(2020 - 2022) |
Will the Global Household Contract (“GHC”) put local Movers out of business? Recent events have raised this serious concern.
For decades, moving companies have been helping service members and their families relocate. From 29 Palms, CA to Norfolk, VA, Movers - many generationally rooted in their local communities - have played an indispensable role in helping TransCom get military personnel moved in a professional, timely manner. With the advent of the GHC in November 2021, the method for moving service members is changing. The military is transitioning from the DP3 program, which is made up of hundreds of local moving servicing providers, to a single contractor, KBR’s HomeSafe Alliance (“HSA”). TransCom expects the new program to improve quality, efficiency, and accountability.
The transition from DP3 is not progressing in the way that many in the moving industry expected. This year HSA has confronted several local Movers with a non-negotiable vendor service agreement and a blunt message: “Join us” or we’ll take your military business away and give it to our vendors.
AAction Movers (“AAction”) has been moving airmen and officers at Minot AFB, ND for the last 40 years – “at least since 1976”, according to AAction’s president, Scott Herman. At a face-to-face meeting with HSA on July 20, 2024, Herman tried to negotiate with HSA about the terms and conditions of HSA’s agreement. According to Herman, HSA’s representative said the agreement was “non-negotiable” and that HSA was “fully prepared to send trucks into our market, buy or build warehouses, and out-source the crews necessary to service the [military] work.” Scott thought HSA’s threat was “crazy” and “unreasonable” until he learned that HSA representatives were “reaching out to our contractor as well as positioning JB Hunt trailers in the region.” Reports indicate HSA created a new vendor and is doing moves at Minot AFB.
Why would HSA want to strong-arm a local Mover into working directly for them? HSA has failed to sign up enough local Movers and van lines to provide the packers, drivers, vans, trailers, and warehouses needed to relocate service members. By the end of 2023, HSA had promised to provide TransCom with thousands of interstate moves. As of its 3rd anniversary in November 2024, HSA’s progress has been limited to providing 440 (primarily local) moves; a small fraction of the 300,000 service members TransCom moves annually.
National Van Lines’ President & CEO, Tim Helenthal, sees it this way "A cornerstone of the Global Household Goods Contract (GHC) was to get more dollars to curbside providers – the local moving companies, packers, loaders, and drivers. It’s clear that goal isn’t being met. Rather than buying services from the moving and storage industry, through its contract the DoD is instead beginning to interfere in the competitive market and is undermining the very providers that the GHC was trying to get more dollars to."
HSA also has other challenges. The implementation of its proprietary IT platform has suffered delays. Additionally, HSA can’t explain to potential vendors how the use of independent contractors, which is the moving industry’s primary service model, can comply with the mandated Service Contract Act (which is geared to an employment model). Moreover, at a time when government efficiency is being scrutinized, the GHC has proven to be absurdly expensive. Even after $100M in funding from DoD, HSA, by its own account, has only moved 440 service members. How does any government vendor pretend to rationalize charging the US taxpayer an average of $440,000 for each of the moves it has performed?
John Campbell’s moving company, Studdard Moving Group, has serviced moves at Ft. Leavenworth since World War II. “We do about 300 moves a year, mostly for officers participating in the Command and General Staff College,” according to Campbell.
On October 4, 2024, HSA met in person at Campbell’s office in Leavenworth, KS. HSA explained to Campbell that HSA’s parent, KBR, was a $30 Billion company before being awarded the GHC, and the GHC business would add another $20 Billion. Additionally, HSA indicated it was prepared to protect this new revenue by investing in warehouses and moving equipment, including into the Leavenworth market. In a matter-of-fact tone, Campbell was told that HSA is also prepared to perform military moves at Ft. Leavenworth with or without Studdard’s help.
Growing up in a military family, Campbell moved multiple times; he even attended high school in South Korea. He’s also a veteran of the Army National Guard, including 4 deployments. These experiences make Campbell and Studdard uniquely qualified to understand the importance of providing high-quality service to our service members and their families.
Campbell is seriously considering HSA’s offer. However, after comparing comparable DPS orders on HSA’s current rating app, Campbell quickly realized the proposed economics were unfavorable. “There’s no way Studdard could provide service members and their families with the high-quality moves they expect and deserve,” according to Campbell.
Campbell hasn’t signed HSA’s agreement. Campbell confirms that HSA started performing local military moves in Studdard’s market in late October 2024.
What does HSA’s incursion into local markets mean to the employees and families of local Movers? Campbell says, “Trying to perform moves on HSA terms would severely damage the financial position of my company. Losing the military business will damage us in irreparable ways.”
Herman, from AAction, sums it up similarly: “The impact this will have on us if HSA was to take all of our business from us in the Dakotas would be detrimental for several of our markets to the extent of potentially putting us out of business.”
The Government Accounting Office is currently speaking with industry stakeholders about HSA’s progress, including whether it can attract enough service capacity from local Movers and van lines to make the new GHC program a reality. The GAO’s analysis goes to Congress on April 1, 2025. |
