The U.S. military's plan to improve logistics efficiency and cut costs has been put on hold by a protest over the awarding of an outsourcing contract to one of the nation's largest third-party logistics companies.

In August, the Defense Department had awarded what's known as the Defense Transportation Coordination Initiative (DTCI) contract to Menlo Worldwide Government Services LLC of San Mateo, Calif. Under the contract, which is potentially worth $1.6 billion, Menlo would manage Department of Defense (DOD) freight movements within the continental United States. The DTCI program is aimed at improving the speed, predictability, and reliability of transportation service while reducing costs by as much as 20 percent.

Soon after the contract was announced, however, Ryder Integrated Logistics filed a formal protest against the contract award, claiming that one of Menlo's partners in the deal had yet to deploy its solution to customers and that therefore, DTCI had embraced an unproven business concept. Officials from Ryder were unavailable to comment at press time.

The U.S. Government Accounting Office (GAO) is now investigating Ryder's contention that the award was invalid. Its decision is expected as early as next month.

Ryder's protest isn't the first roadblock encountered by the DTCI initiative—government-speak for a third-party logistics solution. In 2006, the program sparked a pre-award protest by the Transportation Intermediaries Association, which GAO ultimately ruled was without merit. That cleared the way for the U.S. Transportation Command (USTRANSCOM) to review applicants' proposals and make the final selection.

Though USTRANSCOM declined to comment on the protest while the GAO's investigation is under way, a TRANSCOM spokesman told DC VELOCITY that it stands by its contract award process. "We have confidence in our source-selection process and that it was conducted properly and in accordance with the solicitation," he said.

If it retains the contract, Menlo will be responsible for deploying and operating an integrated logistics solution for shipment planning, optimization, and execution as well as for transportation resource management for all materiel shipments moving into and among DOD facilities in the Lower 48. Menlo is the prime contractor in the DTCI partnership; subcontractors include Computer Sciences Corp., which will provide IT infrastructure hosting, network management, and integration services; ONE Networks Enterprises, which will provide transportation management software; and Olgoonik Logistics, which will provide professional services supporting the participation of minorityowned and small businesses in the contract.