For some companies, winning a contract to do a job or provide a service for the United States military is the equivalent of finding the pot of gold at the end of the rainbow. One good strike and you’re home free. That makes for a contracting process that is highly regulated, closely supervised, and open both to review and repeal — because heaven forbid someone should make an error that leaves the U.S. taxpayers on the hook or worse.
Unfortunately that’s just what may have happened in the highly specialized and quite profitable business of shipping cars for transferred military personnel and their families.
Up to now it’s been a service provided by a company called American Auto Logistics, which has performed the job with distinction. However, when it came time for the contract to be renewed, the firm lost the bid to a new company called International Auto Logistics that had been formed specifically for the purpose of competing for the contract and has no experience managing the complicated process of moving vehicles to and from locations overseas. As such it’s little surprise that the government asked AAL to continue doing the work past the changeover date until the new company, IAL, can get all its ducks in a row.
If that were the only issue involved in the changeover it might not be such a big deal. IAL got the work despite its inexperience because it put in a lower bid, a factor most people accept as a legitimate tipping point when decisions about awarding government contracts are being made. The government, however, is closing vehicle processing and shipping centers as a way to save money. This shifts the costs from this contract to other Defense Department transportation accounts as individual service members and their families are forced to drive their vehicles farther in order to drop them off. It’s not a real savings, just one realized on paper.
The closing of the processing centers is not insignificant and has attracted the attention of members of Congress like Louisiana Republican Sen. David Vitter, who has asked USTRANSCOM to explain why the New Orleans Vehicle Processing Center is being closed under the terms of the new deal.
In the end the sought-after cost savings realized through moving the contract from AAL to IAL may prove to be illusory. Rather than come out $38 million ahead on a contract worth more than $300 million over just one year, USTRANSCOM may ultimately, according to one analysis, end up paying just as much if not more for the same business while, at the same time, making it more costly and less family friendly to U.S. soldiers, sailors, and Marines.
Taking all that into consideration makes the decision by USTRANSCOM to award the contract to the new company seem like it might actually be a bad deal. What’s not clear, and would be even worse if true as some have alleged, is whether or not the new deal also jeopardizes U.S. national security and the personal financial security of service members needing to use IAL’s services.
IAL’s corporate ownership, a company called International Auto Processing has, through its officers and directors, ties to North Korea. Park Sang-Kwon, IAP’s chairman and a director of IAP Group Limited, is an American who, according to Fox News, was granted honorary North Korean citizenship in 2013, and has been photographed with Kim Jong-Un
“This means that North Korea has acknowledged the trust they put in me,” Park said. “They were also encouraging me to start new projects in the North, more freely and aggressively.”
When queried about the unusual relationship and its potential impact on the IAL contract, the Defense Department has repeatedly said it has examined the matter and is unconcerned it presents any risk. A reasonable person can conclude, just based on published reports, that the Pentagon is not thinking clearly.