Posted:
April 4, 2014
By Tom Bethel
National President
As members of American Maritime Officers who read AMO Currents are aware, the United States Court of Federal Claims ruled March 26 in favor of Military Sealift Command, denying the legal challenge brought by Ocean Ships, Inc. regarding the contract award covering the Watson Class LMSRs.
For everyone at AMO, the court's ruling was a disturbing conclusion to a situation that began in September of 2013, when word circulated that MSC had selected Patriot Contract Services as the intended awardee of the contract for the eight ships.
Since that time, the AMO officers in the fleet have carried on with characteristic professionalism, continuing their exceptional work of sustaining the superior performance of the LMSRs beneath a cloud of uncertainty regarding the future manning of the Watson Class, each ship in which has been operated by an AMO-contracted company from day one.
As anyone who has been involved in the process of responding to requests for proposals on government contracts knows, the outcome is always unpredictable and there are no guarantees under any circumstances. Further, any decision to challenge a contract award is entirely in the hands of the operating companies involved in the bidding.
Although the role of a union is limited to providing a labor package to its contracted companies submitting proposals for an RFP, the labor package and the union that provides it can have a significant impact on a specific outcome, and in a broader sense, on the mariners working in a certain MSC fleet, and on the future working conditions faced by many more mariners employed in government program work.
As we do with each RFP involving a large number of vessels and extensive manning requirements, AMO approached both the Marine Engineers' Beneficial Association and Masters, Mates & Pilots to request their participation with us in the "tripartite agreement." For those not familiar with it, the tripartite agreement - proposed and promoted by AMO - is a three-party pact, under which each of the officers' unions provides identical total licensed labor costs, thereby shifting the competitive pressure to the bidding companies.
MM&P refused to participate in the tripartite agreement on the Watson Class RFP, as did MEBA.
Under the circumstances, I find it ironic that, in an edition of The Master, Mate & Pilot published earlier this year, MM&P President Don Marcus made the statement: "Rather than fighting to be 'the last man standing' in a crippled industry with few prospects, it is time that we worked together to salvage what is left."
Nevertheless, the AMO officers working aboard the LMSRs - many of whom brought these ships out of the yard and have sailed aboard them throughout a remarkable span of excellent service to the U.S. Armed Forces - provided AMO-contracted companies with what would seem an obvious edge in the process. The AMO officers have all of the required training and years of experience and expertise in operating these ships, which are expected to serve continuously in full operating status.
Accordingly, the labor package provided by AMO, while very competitive and considerate of the intent to maximize the efficiency and cost effectiveness of fleet operations, recognized and rewarded the amount of responsibility and expertise required of the officers on the Watson Class LMSRs.
Through the protests and legal challenge of the contract award, we have learned a few things. Equipped with the labor packages furnished by MM&P and MEBA, Patriot was able to underbid all other operating companies on the RFP. One element of the labor packages was the absence of a prescribed pension contribution in the fringe benefit allocation for the MEBA officers, who would then be required to give back more than 11 percent of their wages to provide a contribution to that union's defined benefit pension plan.
Another significant twist was the lack of accountability for the cost of training. Under the terms of the RFP, the cost of training is reimbursable by MSC. The MM&P and MEBA officers have needed and will continue to require training to man these specialized ships powered by gas turbines. MSC is paying for that training. Yet, in pursuing the lowest offer on the Watson Class RFP, the MSC contracting department eliminated the cost of training as a factor in the final calculations.
One unfortunate effect of the lowest-offer/technically-acceptable approach to contract awards is the 'race to the bottom' it promotes, and unfortunately, MM&P and MEBA jumped right into the race. Worse, having any competitor participating eventually forces everyone with a serious stake in securing jobs to join the scramble, which places damaging downward pressure on compensation and working conditions for merchant mariners. Rewarding operators simply for producing the lowest offer on an RFP also translates into a long-term loss of quality and qualification for active and indispensable sealift service.
It seems obvious the initial training expenses for the large number of engineering and deck officers new to the Watson Class LMSRs, the turnover costs and 'sea trials' for the new crews, and the onboard training that will be required from the company and MSC to begin from scratch in building a level of expertise with this equipment will probably consume any cost savings MSC might hope to achieve by employing the lowest-offer/technically-acceptable approach to this award, not to mention any unforeseen expenses that may arise going forward with the operation of these crucial sealift ships in full operating status.
While the turnover of these ships may have generated a momentary sense of victory and short-term gain for MM&P, MEBA and the MSC contracting personnel involved, there really are no winners in a race to the bottom for military and government contract awards.
Lost in the hustle is the simple expectation of being rewarded for dedicated service, earned expertise and impeccable performance with the opportunity to continue working in a job done so well for so many years. Ultimately, the losers in the race become the U.S. merchant mariners who are forced into a new labor paradigm of perpetual instability and stagnant or reduced compensation in a market that only values its own artificial perspective on dollars and cents.
As always, I welcome your comments and questions. Please feel free to call me on my cell phone at (202) 251-0349.
No winners in 'race to the bottom' for MSC contracts
By Tom Bethel
National President
As members of American Maritime Officers who read AMO Currents are aware, the United States Court of Federal Claims ruled March 26 in favor of Military Sealift Command, denying the legal challenge brought by Ocean Ships, Inc. regarding the contract award covering the Watson Class LMSRs.
For everyone at AMO, the court's ruling was a disturbing conclusion to a situation that began in September of 2013, when word circulated that MSC had selected Patriot Contract Services as the intended awardee of the contract for the eight ships.
Since that time, the AMO officers in the fleet have carried on with characteristic professionalism, continuing their exceptional work of sustaining the superior performance of the LMSRs beneath a cloud of uncertainty regarding the future manning of the Watson Class, each ship in which has been operated by an AMO-contracted company from day one.
As anyone who has been involved in the process of responding to requests for proposals on government contracts knows, the outcome is always unpredictable and there are no guarantees under any circumstances. Further, any decision to challenge a contract award is entirely in the hands of the operating companies involved in the bidding.
Although the role of a union is limited to providing a labor package to its contracted companies submitting proposals for an RFP, the labor package and the union that provides it can have a significant impact on a specific outcome, and in a broader sense, on the mariners working in a certain MSC fleet, and on the future working conditions faced by many more mariners employed in government program work.
As we do with each RFP involving a large number of vessels and extensive manning requirements, AMO approached both the Marine Engineers' Beneficial Association and Masters, Mates & Pilots to request their participation with us in the "tripartite agreement." For those not familiar with it, the tripartite agreement - proposed and promoted by AMO - is a three-party pact, under which each of the officers' unions provides identical total licensed labor costs, thereby shifting the competitive pressure to the bidding companies.
MM&P refused to participate in the tripartite agreement on the Watson Class RFP, as did MEBA.
Under the circumstances, I find it ironic that, in an edition of The Master, Mate & Pilot published earlier this year, MM&P President Don Marcus made the statement: "Rather than fighting to be 'the last man standing' in a crippled industry with few prospects, it is time that we worked together to salvage what is left."
Nevertheless, the AMO officers working aboard the LMSRs - many of whom brought these ships out of the yard and have sailed aboard them throughout a remarkable span of excellent service to the U.S. Armed Forces - provided AMO-contracted companies with what would seem an obvious edge in the process. The AMO officers have all of the required training and years of experience and expertise in operating these ships, which are expected to serve continuously in full operating status.
Accordingly, the labor package provided by AMO, while very competitive and considerate of the intent to maximize the efficiency and cost effectiveness of fleet operations, recognized and rewarded the amount of responsibility and expertise required of the officers on the Watson Class LMSRs.
Through the protests and legal challenge of the contract award, we have learned a few things. Equipped with the labor packages furnished by MM&P and MEBA, Patriot was able to underbid all other operating companies on the RFP. One element of the labor packages was the absence of a prescribed pension contribution in the fringe benefit allocation for the MEBA officers, who would then be required to give back more than 11 percent of their wages to provide a contribution to that union's defined benefit pension plan.
Another significant twist was the lack of accountability for the cost of training. Under the terms of the RFP, the cost of training is reimbursable by MSC. The MM&P and MEBA officers have needed and will continue to require training to man these specialized ships powered by gas turbines. MSC is paying for that training. Yet, in pursuing the lowest offer on the Watson Class RFP, the MSC contracting department eliminated the cost of training as a factor in the final calculations.
One unfortunate effect of the lowest-offer/technically-acceptable approach to contract awards is the 'race to the bottom' it promotes, and unfortunately, MM&P and MEBA jumped right into the race. Worse, having any competitor participating eventually forces everyone with a serious stake in securing jobs to join the scramble, which places damaging downward pressure on compensation and working conditions for merchant mariners. Rewarding operators simply for producing the lowest offer on an RFP also translates into a long-term loss of quality and qualification for active and indispensable sealift service.
It seems obvious the initial training expenses for the large number of engineering and deck officers new to the Watson Class LMSRs, the turnover costs and 'sea trials' for the new crews, and the onboard training that will be required from the company and MSC to begin from scratch in building a level of expertise with this equipment will probably consume any cost savings MSC might hope to achieve by employing the lowest-offer/technically-acceptable approach to this award, not to mention any unforeseen expenses that may arise going forward with the operation of these crucial sealift ships in full operating status.
While the turnover of these ships may have generated a momentary sense of victory and short-term gain for MM&P, MEBA and the MSC contracting personnel involved, there really are no winners in a race to the bottom for military and government contract awards.
Lost in the hustle is the simple expectation of being rewarded for dedicated service, earned expertise and impeccable performance with the opportunity to continue working in a job done so well for so many years. Ultimately, the losers in the race become the U.S. merchant mariners who are forced into a new labor paradigm of perpetual instability and stagnant or reduced compensation in a market that only values its own artificial perspective on dollars and cents.
As always, I welcome your comments and questions. Please feel free to call me on my cell phone at (202) 251-0349.