MTMC expands scope of major ocean contract. (Estimated $17 million savings).

For the second straight year, the Military Traffic Management Command has improved its contract providing liner services worldwide.

MTMC awarded its Universal Services Contract 03 on July 14. The $325 million best value contract begins Sept. 1 and includes shipments to more than 130 countries worldwide.

The bulk of the contract benefits eight U.S. Flag carriers.

The contract reflects a six-percent reduction in last year's contract rates, said Joe Crandell, the contract's pricing team leader. In addition, freight rates have been simplified. While last year's contract has 25,000 different rates, the new contract has about 10,000.

"We are delighted with this contract," said Len Priber, Chief, International Customer Service Division, of MTMC's Joint Traffic Management Office.

"This is smaller, simpler and easier to use. This contract also represents a tremendous savings for the taxpayer. It will cost about $17 million less than last year's contract, and yet has comparable shipments."

"We are receiving the benefit of a very favorable shippers' ocean carrier market," said Crandell. "This is a best value contract. In several instances, carriers were awarded cargo based on their superior service--not lowest cost."

The one-year contract provides for the movement of a forecasted 100,000 containers and 300,000 measurement tons of break bulk cargo on a worldwide basis.

The contract awards volume movements to 14 carriers. It is the largest single contract for commercial liner service for Department of Defense cargoes.

Carriers are guaranteed cargo in the contract for major routes and customer service contracts.

The contract is used by several hundred Department of Defense shippers to meet their transportation requirements. It requires carriers to provide best quality service on a consistent basis in order to deliver products on time and without loss and damage.

Award of the contract 45 days prior to its effective date is a major accomplishment, said Priber.

"This allows users to better prepare for the transition to the new contract, and contractors to pre-position equipment and train their staffs on the new requirements in the contract," said Priber.

The extra time will allow MTMC to ensure that the automated systems used for the booking operation are loaded with new rates and fully tested for the changes required by USC 03, he said. Work began on the project in March 2000.

The USCO 03 contract evaluation team included representatives of five major shippers.

"For most of the people, it was their first time being part of the evaluation process," said Priber. "This was a daunting challenge in the short time it was available, but it was tackled by all our people in the same way they volunteered to be part of the process.

"They quickly mastered the skills necessary to do their part in the evaluations, and continued to expand their expertise as the process continued."

In-depth research by the team was very helpful in the negotiations, said Priber.

"This led to very productive negotiations with carriers at a detailed level, which resulted in 27 percent of the initial rates offered being reduced by carriers for their final proposals."

Ultimately, MTMC accepted an unprecedented 78 percent of the total rates offered as being fair and reasonable.

"This rate of acceptance ensures more coverage in the contract to meet Department of Defense shipper requirements, and provides more options and competition among carriers for this cargo," said Priber.

"In my opinion, this contract will also provide Department of Defense shippers with significantly more and better service to ensure cargo is delivered," said Priber.

Many destinations were formerly served with time-consuming, one-time-only negotiated awards. This expansion adds to the contract a number of low-volume and remote U.S. military locations and embassies worldwide.

U.S. Flag carriers who will participate in the contract include: APL, Maersk Line, Lykes Lines, Farrell Lines (P&O NedLloyd), Central Gulf Lines, and American Roll-on Roll-off Carders. Two other U.S. Flag carriers are listed on the contract, but without minimum volumes: Waterman Steamship Corp. and Matson Navigation Co.