Thursday, July 27, 2017

Contested Multi Billion Dollar US Military Freight Contract Awarded to Crowley Logistics

Original Tender for Defense Department Supply Chain Works Upheld
Shipping News Feature
US – Following a series of protests from freight trade competitors and subsequent legal challenges, the US Transportation Command (TRANSCOM), a part of the US Department of Defense (DOD), this week confirmed a large, multi-year supply chain contract award to Crowley Logistics Inc. to provide transportation and related services supporting the department's activities throughout the United States and Canada. 

The contract had been originally awarded in November 2016 but was contested by XPO Logistics who were at that time engaged to provide some of the services covered in the contract. XPO’s appeal was based upon the argument that Crowley engaged in unbalanced pricing in their bid and that the customer’s evaluation of past performance for Crowley was flawed, because Crowley’s previous efforts were considerably smaller in magnitude than the amount of work being sought after under the solicitation at issue.

As the Department of Defense Freight Transportation Services (DFTS) contract is one of the largest logistics contracts awarded by the US government, and therefore it is hardly surprising that XPO decided to make a legal challenge. The contract is for two base years followed by five optional years for a total value of approximately $2.3 billion, a huge contract even for operators of the magnitude of the two contestants.

The court’s finding in favour of Crowley means that the company will be responsible for moving various types of cargo from thousands of material suppliers through 41 major depots around the continental US. The programme encompasses all forms of truck transportation, including less than truckload, full truckload, expedited and refrigerated services. Delivery locations include vendor facilities, Defense Department warehouses or depots, and US military installations.

Under the contract, Crowley would initially provide services to select Defense Department agencies, with the expectation that other DOD customers and agencies outside DOD would soon join. Tom Crowley, company chairman and CEO of Crowley Logistics, said:

“We appreciate TRANSCOM’s continued confidence in our company to meet their transportation needs going forward. We look forward to providing solutions that enhance the efficiency and reduce the cost of critically important services required by our military.”

Frank Larkin, Crowley senior vice president and general manager, logistics and commercial services, was also both relieved the court had sided with his company and delighted to be starting the new contract, saying:

“This confirmation of the contract award hopefully ends the legal contest. We are eager to get started, and will be bringing best commercial practices to our government customers, providing transportation solutions that increase the velocity of the DOD’s supply chain, reduce their overall landed costs and help our military fulfil their missions.”