Ryder Says Menlo Used Untested Technology in Winning Bid for $1.6 Bln. DOD 3PL Deal
By Eric Miller, Staff Reporter
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The Department of Defense should not have awarded its largest-ever third-party logistics contract to Menlo Worldwide Government Services because one of Menlo’s subcontractors plans to use a freight management technology that was untested “in a customer environment,” according to a formal protest filed by Ryder Integrated Logistics.
A redacted copy of the protest, filed Sept. 4 with the Government Accountability Office and obtained last week by Transport Topics, said that Ryder Integrated Logistics, a subsidiary of Ryder System, would have been awarded the contract if Menlo’s bid had been evaluated properly by the DOD’s contract selection team.
The contract, part of the DOD’s Defense Transportation Coordination Initiative, is valued at $1.6 billion over a period of up to seven years. It calls for outsourcing the 3PL management of roughly one-third of all military freight moved within the continental United States.
Ryder’s protest said the DOD U.S. Transportation Command’s evaluation failed to properly consider the risk involved in Menlo’s bid because the bid included a “newly developed optimization capability” developed by One Network Enterprises that neither Menlo nor One Network had “de-ployed” to customers.
Although the award was not selected on a low-bid basis, Ryder said in its protest that it actually underbid Menlo for the contract cost. Ryder blacked out the amount of its bid in the protest document, but said that Menlo’s bid totaled $628 million.
The contract was awarded to Menlo on Aug. 17, but work was halted immediately by the DTCI office after it was notified of Ryder’s protest. The GAO said it will rule on the issue by Dec. 7.
DOD originally was scheduled to award the contract earlier this year, but the award date was delayed after an unsuccessful GAO protest by a group of small carriers and freight brokers represented by the Transportation Intermediaries Association (12-4, p. 4).
The Ryder protest alleged that One Network Enterprises released the new optimization capability software six days after the contract was awarded. It should have been fully tested by customers before the decision to award the contract was made, Ryder said in its protest.
“One Network’s applications suite did not possess an optimization capability as required by the RFP [request for proposal],” Ryder said in its protest.
However, in its Aug. 23 news release, One Network said its new “Demand Driven Transportation network-based application suite” was an improvement of an earlier “proven solution” of one of the company’s applications being used by 2,200 customers.
Ryder said DOD should have identified “the likely possibility that problems may arise in the implementation of this newly developed capability.”
A Menlo spokeswoman declined comment. “We continue to await the conclusion of the formal protest process and are hopeful it will result in a favorable outcome for the program,” said Jayme Kunz, Menlo’s spokeswoman.
“We are unable to comment on any aspect of this protest during GAO’s consideration of the protest,” said Army Lt. Col. G.P. Mirabella, a spokesman for the DTCI office. “USTRANSCOM [Transportation Command] will provide any support requested by the GAO throughout this process. We have confidence in our source selection process and that it was conducted properly and in accordance with the solicitation.”
Spokesmen for Ryder and One Network did not return phone messages.
However, John Keenan, president of One Network, Dallas, earlier this month called Ryder’s protest “fairly frivolous” (9-10, p. 4).
