The Department of Defense recently released their DP3 business rules for the 2022 season. These rules will govern the regulations and tariffs for military and government moves next year. The new rules go into effect on May 15, 2022. TSPs, agents, and the moving industry are attentive to this annual release, as any changes can have a significant impact on their businesses in the coming year.
The Daycos team reviews every detail of the new DOD business rules to analyze their impact on DP3 relocation charges, processes, and billing. We’re sharing our expertise so you can expect which changes to the business rules will most impact your company.
2022 DP3 Business Rules
To review the updated rules yourself, they are shared on the “Defense Personal Property Program” page of the USTRANSCOM website, including:
- Defense Personal Property Program Domestic 400NG Tariff – 2022
- Defense Personal Property Program (DP3) Household Goods (HHG) Tender of Service (TOS)
- Defense Personal Property Program International Tender – 2022
New Failure to Reweigh Consequences
The most significant change to this year’s DOD business rules is in the 400 NG tariff item 4, “Reweigh, Weighing, and Weights,” paragraph 6-A, which states:
“If a reweigh was not performed, and the weight exceeds the customer’s entitlement, TSP can only seek payment up to 110% of the customer’s weight entitlement (this includes the 10% for packing).”
The previous consequence for a failure to comply with an automatic or requested reweigh was a $400 fine. The new rule removes the fine for a failure to reweigh. However, the new repercussion is a payment limit of 110% of the shipper’s weight entitlement.
At first glance, the removal of the $400 fine appears to be a positive. However, the new rule could be significantly more expensive overall.
Analysis: What the New Reweigh Rule Could Mean in $
To better understand the possible impact of the rule change, Daycos did an analysis of approximately 30,000 recent shipments for which we had entitlement data. We found that approximately 4% of the shipments were billed at a weight that was higher than 110% of the entitlement weight. That means that for 96% of the shipments in the sample, failure to perform a reweigh would not cost the TSP anything. However, for the 4% of shipments that weighed more than 110% of the entitlement weight the penalty could be severe.
To understand how severe the penalty could be, we took a closer look at those 4% of shipments. Using the average weights and entitlements of those shipments, we rated a hypothetical 13,500 lbs. direct delivery shipment from San Diego to the DC area to determine the cost of failing to perform a request reweigh.
Under the previous rule, the fine would have been $400. However, under the 2022 rules, the difference between what could be billed at full billing weight compared to 110% of the entitlement weight would result in a loss of $3909.67 in revenue. When you multiply this scenario across potentially thousands of shipments, the financial loss could be significant.
The criteria for an automatic reweigh is also being updated in 2022, as per item 4, paragraph 7-AB, which states that TSPs are automatically required to weigh shipments that meet the following criteria:
- All shipments for grades E-6 thru O-10, and DoD Civilians, weighing 7,000 pounds or more.
- All shipments for grades E-1 thru E-5, weighing 4,000 pounds or more.
To avoid revenue loss, TSPs and agents should check their internal processes ahead of the 2022 season and emphasize the importance of completing a reweigh in their internal training.
2022 Changes to DP3 Business Rules
The failure to reweigh penalty isn’t the only change the Department of Defense is rolling out in their business rules. Stay tuned for Daycos’ list of other significant changes and clarifications.
400 NG and International Tender Rating in 2022
Daycos MoversPay will be updated in accordance with 2022 rate changes. You can use this absolutely free rating tool at https://daycos.moverspay.com/
Maximize Your Revenue in 2022
The Daycos team will continue to analyze the DOD rules, information, and rates to ensure our TSP and agent clients’ revenue is streamlined and maximized. If you need help managing your revenue, contact us.