Menlo Wins $1.6 Billion DOD Contract
YRC Unit to Manage Transport Services
By Eric Miller, Staff Reporter
This story appears in the Aug. 27 print edition of Transport Topics.
The Department of Defense last week awarded its controversial $1.6 billion logistics contract to Menlo Worldwide Government Services, thereby outsourcing management of roughly one-third of all military freight moved within the continental United States.
The contract, which drew protests from small carriers and freight brokers and bids by several large logistics firms, will outsource to a single third-party logistics provider freight transportation that was managed by the military at each installation, said Army Lt. Col. G.P. Mirabella, a spokesman for the Defense Transportation Coordination Initiative.
“This contract is definitely a prize,” Bill Wanamaker, director of government traffic for American Trucking Associations, told Transport Topics. Wanamaker said ATA’s Government Traffic Policy Committee believes the DTCI contract is “the largest defense logistical outsourcing in history.”
The DTCI announced the award Aug. 17. It said that Menlo, a subsidiary of Con-way Inc., is the company it believes can best streamline DOD’s current distribution system, which the Government Accountability Office has labeled “vulnerable to fraud, waste, abuse and mismanagement.”
Historically, the freight covered by the DTCI contract has generated 570,000 shipments annually, totaling more than 1 million tons, DOD said.
“It’s a significant award,” Robert Bianco, president of Menlo Worldwide, told TT. “We’re very humbled and excited about it. We see this as something right in our sweet spot,” he said, characterizing the size of the project.
DOD originally intended to award the contract early this year. However, it was delayed by a protest filed with GAO by a group represented by the Transportation Intermediaries Association (12-4, p. 4).
The TIA filed the ultimately unsuccessful protest because it felt the contract would exclude small carriers and brokers from hauling freight for DOD.
“We still have concerns about the contract and the way it deals with small business, but we’re encouraged that Menlo will look at those concerns as it implements the contract,” said Robert Voltmann, president of TIA. “If DOD is going forward with it, we all want DOD to succeed.”
Voltmann said the selection of Menlo could mean smaller companies will have a better chance getting subcontracts for military freight.
“We’re encouraged that it was a company like Menlo that has some assets behind it,
but not enough assets that they could possibly move all of this freight themselves,” Voltmann said. “They’re going to be looking for other service providers,”
The contract will help the Pentagon consolidate the movement of freight, become more efficient and improve in-transit visibility, ATA’s Wanamaker said.
“In addition to the efficiencies and expected cost savings we’ll gain, this long-term partnership with Menlo . . . allows us to implement several commercial best practices into our transportation operations,” said Air Force Col. James Lovell, director of the DTCI program management office.
Lovell said the Menlo contract was not awarded on a low-bid basis, but instead went to the 3PL that could offer the “best value” to the government. While he would not discuss the specific reasons for selecting Menlo, Lovell said one of the company’s strengths was its past performance on large logistics management contracts in private industry.
Menlo and its DTCI partners — Computer Sciences Corp., One Network Enterprises and Olgoonik Logistics — were selected from a field of nine bidders, DOD said. The Pentagon would not officially identify the bidders, but those publicly named have included UPS Supply Chain Solutions, C.H. Robinson Worldwide, IBM Corp. and Ryder System.
Menlo said CSC will provide information technology infrastructure, ONE will provide transportation management software and Olg-oonik will provide professional services supporting participation by minority-owned and small businesses.
DOD estimated the initial three-year base contract is worth $525 million. Two additional one-year options are worth another $543 million, combined, and the final pair of one-year options would be worth about $567 million, DOD said.
A GAO report to Congress in May said the Pentagon has taken some positive steps in recent years to become more results oriented, customer focused and collaborative in nature, but DTCI’s long-term success “remains uncertain.”
Wanamaker said any contractor selected for DTCI will face challenges introducing commercial practices to the military.
Because of security measures, DOD facilities are harder to get into than most civilian loading docks, and it is more difficult to load and unload freight there, Wanamaker said. In addition, he said military sites do not always operate on a 24-hour-a-day schedule, as do many commercial operations, and trucks must pass through security at entrances to DOD installations.
Lovell, who said he is optimistic the contract will be a great help to DOD’s freight management, also said he doubts it will result in getting DOD off the GAO’s high-risk list quickly.
“I think what they’re [GAO] saying is, hey, [DOD has] done a good job preparing, but there’s still risk associated because it’s a new program and it’s a fundamental change to the way they’re doing business.”
This story appears in the Aug. 27 print edition of Transport Topics.
The Department of Defense last week awarded its controversial $1.6 billion logistics contract to Menlo Worldwide Government Services, thereby outsourcing management of roughly one-third of all military freight moved within the continental United States.
The contract, which drew protests from small carriers and freight brokers and bids by several large logistics firms, will outsource to a single third-party logistics provider freight transportation that was managed by the military at each installation, said Army Lt. Col. G.P. Mirabella, a spokesman for the Defense Transportation Coordination Initiative.
“This contract is definitely a prize,” Bill Wanamaker, director of government traffic for American Trucking Associations, told Transport Topics. Wanamaker said ATA’s Government Traffic Policy Committee believes the DTCI contract is “the largest defense logistical outsourcing in history.”
The DTCI announced the award Aug. 17. It said that Menlo, a subsidiary of Con-way Inc., is the company it believes can best streamline DOD’s current distribution system, which the Government Accountability Office has labeled “vulnerable to fraud, waste, abuse and mismanagement.”
Historically, the freight covered by the DTCI contract has generated 570,000 shipments annually, totaling more than 1 million tons, DOD said.
“It’s a significant award,” Robert Bianco, president of Menlo Worldwide, told TT. “We’re very humbled and excited about it. We see this as something right in our sweet spot,” he said, characterizing the size of the project.
DOD originally intended to award the contract early this year. However, it was delayed by a protest filed with GAO by a group represented by the Transportation Intermediaries Association (12-4, p. 4).
The TIA filed the ultimately unsuccessful protest because it felt the contract would exclude small carriers and brokers from hauling freight for DOD.
“We still have concerns about the contract and the way it deals with small business, but we’re encouraged that Menlo will look at those concerns as it implements the contract,” said Robert Voltmann, president of TIA. “If DOD is going forward with it, we all want DOD to succeed.”
Voltmann said the selection of Menlo could mean smaller companies will have a better chance getting subcontracts for military freight.
“We’re encouraged that it was a company like Menlo that has some assets behind it,
but not enough assets that they could possibly move all of this freight themselves,” Voltmann said. “They’re going to be looking for other service providers,”
The contract will help the Pentagon consolidate the movement of freight, become more efficient and improve in-transit visibility, ATA’s Wanamaker said.
“In addition to the efficiencies and expected cost savings we’ll gain, this long-term partnership with Menlo . . . allows us to implement several commercial best practices into our transportation operations,” said Air Force Col. James Lovell, director of the DTCI program management office.
Lovell said the Menlo contract was not awarded on a low-bid basis, but instead went to the 3PL that could offer the “best value” to the government. While he would not discuss the specific reasons for selecting Menlo, Lovell said one of the company’s strengths was its past performance on large logistics management contracts in private industry.
Menlo and its DTCI partners — Computer Sciences Corp., One Network Enterprises and Olgoonik Logistics — were selected from a field of nine bidders, DOD said. The Pentagon would not officially identify the bidders, but those publicly named have included UPS Supply Chain Solutions, C.H. Robinson Worldwide, IBM Corp. and Ryder System.
Menlo said CSC will provide information technology infrastructure, ONE will provide transportation management software and Olg-oonik will provide professional services supporting participation by minority-owned and small businesses.
DOD estimated the initial three-year base contract is worth $525 million. Two additional one-year options are worth another $543 million, combined, and the final pair of one-year options would be worth about $567 million, DOD said.
A GAO report to Congress in May said the Pentagon has taken some positive steps in recent years to become more results oriented, customer focused and collaborative in nature, but DTCI’s long-term success “remains uncertain.”
Wanamaker said any contractor selected for DTCI will face challenges introducing commercial practices to the military.
Because of security measures, DOD facilities are harder to get into than most civilian loading docks, and it is more difficult to load and unload freight there, Wanamaker said. In addition, he said military sites do not always operate on a 24-hour-a-day schedule, as do many commercial operations, and trucks must pass through security at entrances to DOD installations.
Lovell, who said he is optimistic the contract will be a great help to DOD’s freight management, also said he doubts it will result in getting DOD off the GAO’s high-risk list quickly.
“I think what they’re [GAO] saying is, hey, [DOD has] done a good job preparing, but there’s still risk associated because it’s a new program and it’s a fundamental change to the way they’re doing business.”
