This article by Karen Jowers originally appeared on Military Times, the nation's largest independent newsroom dedicated to covering the military and veteran community.

Some industry representatives are warning that lower rates being offered to moving companies under a new $6.2 billion contract will affect the quality of service members’ personal property moves and will even force some companies out of business.

One mover who spoke to Military Times said his rates are being cut from 20% to 50%, compared to what he was being paid under the legacy system, even as he battles inflation in the cost of doing business. Conversations with other movers, information from moving industry forums and social media indicate the concerns are fairly widespread.

But a U.S. Transportation Command official contends that the idea companies will get just half of what they’re earning today isn’t based on an accurate understanding of the pricing structure and isn’t supported by cost comparisons. The 50% is a “dramatic number that has been tossed about to create unfounded angst,” he said.

The new system aims to fix military families’ long-standing problems with damaged and lost household goods, missed pickup and delivery times, and other frustrations they have had with movers. But the effectiveness of the entire enterprise depends on the ability of HomeSafe Alliance, the contractor, to bring quality moving companies on board.

Meanwhile, the start of the first phase of the new system has been delayed from Sept. 1 until later this year, according to TRANSCOM.

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According to Al Thompson, HomeSafe’s CEO, officials still expect to be handling all domestic moves by the start of peak season 2024, which generally runs May to September. International moves will be included later.

The phased-in approach will begin with a relatively small number of shipments — about 3,200 — by the end of this year in order to test the new process, Thompson said. This phase will include local moves at specific installations, not interstate moves. The Global Household Goods Contract (GHC) initially spans three years, but is worth a potential $17.9 billion if DoD exercises all contract options over nine years.

The delay stems from recent government testing of its information technology system, called MilMove, which service members will use to upload their permanent change of station orders, provide contact information and start a request to schedule their household goods shipment, according to TRANSCOM officials. MilMove must interface with HomeSafe’s technology, called HomeSafe Connect, which will be used by service members, the government and industry to manage and track the shipment after the request is received from MilMove.

“The heart of this effort has always been and continues to be the desire to improve the household goods moving experience for service members, civilians and their family members,” said Air Force Gen. Jacqueline Van Ovost, TRANSCOM commander, in announcing the delay. “Adjusting our timeline is the right thing to do to ensure moving services are not interrupted, and we successfully deliver the improvements GHC will bring.”

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This process consolidates all DoD household goods moves under a single contract, awarded to HomeSafe Alliance, a consortium of companies that will be the sole manager of household goods moves. One member of that consortium is Sirva, which includes North American Van Lines and Allied Van Lines.

HomeSafe will be fully responsible for these moves, bringing accountability to the program from the time a moving company is assigned, through the packing, hauling and unloading, and handling any claims for loss or damage. TRANSCOM is essentially outsourcing the management of the program through this contract, but will oversee the program.

Starting in January, HomeSafe expects to take on 25% of all domestic shipments, adding another 25% each month and ramping up until they’re moving all domestic shipments before peak season 2024, Thompson said. Generally there are about 300,000 shipments each year; service members may have more than one shipment during a move.

While HomeSafe is ramping up, other military moves will be handled by the legacy system.

“We believe we have the enabling technology and believe we have the needed industry capacity,” said Thompson. “We’ve got the critical mass of the industry, and we’re adding to it.”

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As of early September, well over 500 moving companies — both large and small providers — had signed on to work with HomeSafe, he said. The contract requires that at least 40% of the work be subcontracted to small, family-owned businesses, according to TRANSCOM.

Will Rate Cuts Hurt the Program?

The rates paid to movers are set by HomeSafe, based on their contract with TRANSCOM, unlike the current system where individual companies bid on particular lanes of business, such as Norfolk to San Diego. HomeSafe’s rates vary depending on time of year, the particular lane, and the weight of the household goods.

Some movers say they will get paid less than what they’ve received in the recent past, and that many companies won’t be able to survive under the new rate structure.

One mover, who asked to remain anonymous for fear of reprisal, showed Military Times documents for recent moves his company has handled and then compared them to HomeSafe compensation for identical moves, based on rates HomeSafe provided to companies that signed on for business. There was a 40% decrease in compensation for line haul services and the rate for packing services was 52% less under HomeSafe.

“I can confidently say that the costs of doing business have increased by 20% to 27% in the last year,” he said.

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With labor costs, the costs of trucks, packing materials, fuel and other elements, “this is putting moving companies in an unsustainable position. … With the rates we’re seeing, I don’t see how any organization can survive the cuts,” he said, especially companies that solely depend on military moves.

Fewer movers would affect the capacity to move service members, which has long been an issue.

While this owner has signed up with HomeSafe, he can turn down moves offered to him if it would result in losing money, he said.

Thompson, HomeSafe’s CEO, acknowledges the rates will be lower. He said there have been significant increases in compensation to moving companies in the DoD program over the past two years because of inflation and other factors. But the pricing HomeSafe proposed in its contract bid is pre-pandemic, based on 2019 rates.

“The rates industry has been paid for the last couple of years have been substantially higher than historic rates,” he said.

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HomeSafe did negotiate with TRANSCOM for an increase at the start of the contract, which was delayed by protests until late 2022. “Candidly, the increase wasn’t as large as we’d advocated for. There was a historic change in the economic environment. We’ve brought that to TRANSCOM’s attention and got some recognition, but there’s just flat out going to be a change.”

The 50% rate cut cited by some “does seem pretty high,” Thompson said. But he acknowledged “there’s definitely a noticeable change in the rates that will be paid.”

“The good news is, in our discussions, we believe we have the needed capacity. High quality movers aren’t saying they won’t do it at that price,” he said.

The HomeSafe system will assign a move to the highest quality bidder at the given rate. “If they don’t want to do it, they can reject it and we will assign it to the next high quality mover,” Thompson said. All the movers will start as “neutral,” and will be rated on their quality based on customer satisfaction surveys, timeliness and claims data.

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What if too many movers turn down shipments?

“We don’t have any data to suggest that will occur,” Thompson said. “We’re not extremely concerned that we’ll be in that situation. We’re trying to be very above board, transparent, honest and easy to deal with, with industry.

“We think it will be good for industry,” he said, noting that one benefit is that they’ll get paid “a whole lot faster” for their work.

“We’re not trying to be evil. We bid on a contract with certain rates, and we need to live with those rates.”

TRANSCOM officials also dispute the amount of the rate cuts.

“While the detailed rates offered to the government are proprietary to HomeSafe Alliance, cost comparison data we’ve reviewed makes it clear that 50% is an unsubstantiated rumor,” said Andy Dawson, director of the Defense Personal Property Management Office, in response to Military Times’ questions.

“TRANSCOM would have never accepted a proposal for the GHC that was not realistic or didn’t reflect actual market rate conditions,” he said. He noted that the pricing data made public in the Court of Federal Claims decision to uphold the contract in 2022 shows that HomeSafe was not the lowest bidder.

“We’re confident that HomeSafe is building a strong network of partners that will meet the demands of the shipment phase-in period and beyond,” Dawson said. “Based on the capacity reports they’ve shared, it’s clear they are securing participation from across the moving industry.”

The idea that compensation for moving companies will be 50% less under the new contract “is not based on an accurate understanding of the current program pricing structure, is not supported by cost comparison and rate information, and is not sustainable as a business model,” Dawson said.

“Instead, it is a dramatic number that has been tossed about to create unfounded angst in an unfortunate attempt to discredit or create doubt in HomeSafe Alliance and the transformational aspects of the GHC.”

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