Household Goods Full Replacement Value
The 2007 Defense Authorization required the Department of Defense to provide Full Replacement Value (FRV) reimbursement for household goods lost or damaged in government-ordered moves for military members starting in 2008. This new standard replaced the old method of depreciation reimbursements from carriers based on the weight of the damaged item, a formula that used to provide members only a fraction of actual replacement costs. As of 2008, Members whose household goods are ruined, damaged, or lost, in a government-required move (PCS) will be reimbursed by the moving company for the actual cost of replacement.
Under the new FRV standard, if a mover lost an item or destroyed an item, the service member would get a new one in return. For furniture, appliances, electronics, and more, the carrier will have to replace old items with new ones, complete a full repair of the item if possible, or pay the replacement value in dollars.
This is a welcome change to the depreciation formula used to cheat military members out of reimbursements in the past. However, not all changes brought about by this new PCS system are good ones. Read on to find out what is not good about this new system…
New System Saves the DoD Money
We’ve spoken extensively with professionals in the moving industry – from company managers, to dispatchers, to long-time truck drivers, and even the government contract representatives at these companies — they have all agreed that the sole purpose of this new PCS / Household Goods Shipmen system is to save the Defense Department money. Unfortunately, in an attempt to streamline processes and introduce mandatory full replacement coverage (in line with industry standards), the service member and their families suffer.
Moving companies are now paid significantly less for each military service member’s move. In an attempt to satisfy moving companies who are now making less revenue per military move, the Department of Defense has also loosened delivery windows (time it takes for your moving truck to transport and deliver your household goods at your final destination — more about this later in this article). Now, the moving companies pass on the low payment they receive from the government to the truck drivers. So, we end up with a system where many truck drivers refuse to take on a military shipment because they are barely covering their time, labor, and fuel costs. Low costs = low quality.
Household Goods are Slow to Delivery
As mentioned above, the Defense Department has loosened its moving company standards on delivery timeframe in the new “DP3″ System. In the past, when the service member had his household goods appointment with TMO to arrange for his upcoming PCS, they would decide on a pack date (when the packers start packing your home), a load date (when your boxes and furniture would be loaded onto the moving truck), and a delivery date at your final destination.
The new system does not hold the moving companies accountable to specific delivery dates – not even for a door-to-door move. Instead, moving companies are given a sliding “window” of delivery that can be as much as 8 days long. This means your goods could be delivered anywhere in this large window of time. And, the window is not determined or influenced by the truck driver, it is set by the moving company and the dispatcher. You no longer have the ability to arrange for a specific delivery date in order to meet a lease date or home closing date, etc. You now have lost control of your move. Door-to-door moves are now extremely painful because you could be moving into a home more than a week before your goods are delivered.
There are additional changes to PCS reimbursement. Newly implemented are: a new electronic billing and payment system, customer satisfactions surveys, new contracts with moving companies emphasizing best performance rather than the lowest bidder — although, with the DoD paying moving companies dramatically below industry standards, you end up receiving sub-par services. Now, service members will settle claims directly with the moving company rather than rely on the overburdened military claims offices. Service members will be urged to report on moving companies performance through satisfaction surveys and this feedback will rank the companies and determine which companies will receive the most business.
We Can Do Better
We applaud the change mandating additional FRV coverage that a service member used to have to purchase out-of-pocket. This saves the service member a few hundred dollars on an average military shipment.
These are all welcome changes to a current system that treats military service members as second-class citizens. Hopefully, over time, this new system will result in better quality of packing and delivery. Historically, over one-fifth of military moves result in claims being filed – a number absurdly high.
However, the low-balled payments from DoD to moving companies is simply passed on to the truck drivers and the result is fewer truck companies signing up for DoD moves. Lastly, the incorrigible window of delivery (even for door-to-door moves) hurts military families and adds to the already high level of anxiety experienced during a military PCS. We can only hope our elected officials and DoD leadership fixes the “new” system. For more lessons learned, tips and advice, check out our comprehensive Military PCS Information section.