The GHC promises that 40% of work will be awarded to small businesses. But are the GHC terms even viable for small businesses? Without basic transparency from TRANSCOM, there are a host of unknowns that make it hard for small businesses to plan for the future.
For instance, can small businesses handle the increase in required umbrella insurance coverage, from $1 million to $3 million? Can they navigate the complexities of the Service Contract Act and then comply with the cascade of requirements? When so many moving companies depend on independent contractors to keep their labor and fleet costs down, what happens when those contractors suddenly have to operate as employees? Can small businesses absorb the cost of adding them as employees and acquiring the necessary trucks and equipment? And will contractors even want to play by those rules?
The Government Accountability Office should look into these questions and provide the answers that TRANSCOM can’t or won’t provide. With a 40% set aside for small business, clearly the government intends for small businesses to play a major role in military moves. But right now, there’s just too much up in the air to conclude with any confidence that the GHC will work for small businesses and independent contractors.
It’s time to dig into the details: Has TRANSCOM considered the costs (see below) that could shift from independent contractors to small businesses when they become the de facto “employers?” Have they considered whether small businesses will be able to absorb these costs and stay afloat?
In fact, the GHC could drive up costs for all moving businesses — large and small.
BUSINESS COSTS CURRENTLY COVERED BY INDEPENDENT CONTRACTORS:
| Claims |
Truck Licenses |
| Capacity |
Local Labor Wage |
| Fuel |
Local Workers Compensation Insurance |
| Tolls |
Local Labor Overtime |
| Inside Equipment |
Local Labor Benefits |
| Tires |
Local Labor Training |
| Truck Maintenance and Repairs |
Local Labor Non-Revenue Costs:
- Travel time,
- Obtaining weight scales
- Truck breakdown
- Weather delays
- Customer Delays
|
| Truck Inspections |
Local Labor Per Diem |
| Truck Insurance |
Background Checks, Drug Tests |
| Truck Rentals |
Increased Admin Costs to track, report, and audit SCA compliance |
| Recruiting and replacing labor |
Increased insurance exposure and risk |
If small businesses are driven out of the military move sector by increased costs and bureaucratic requirements, how will the GHC live up to its commitment to be small business-friendly? And more to the point, who will deliver the services that military families need?
