GAO-07-287R DTS Post Hearing Question 

United States Government Accountability Office

Washington, DC 20548 

December 19, 2006 

The Honorable Norm Coleman 

Chairman, Permanent Subcommittee on Investigations 

Committee on Homeland Security and Governmental Affairs 

United States Senate 

Subject: Response to a Posthearing Question Related to GAO’s November 16, 2006 

Testimony on the Defense Travel System

Dear Mr. Chairman: 

On November 16, 2006, I testified before your Subcommittee on the results of our 

audit on the Defense Travel System (DTS).1

 This letter responds to a question from 

Senator Coburn that you asked us to answer for the record. The question and our 

response follow. 

Q. Mr. Williams, GAO’s September 2006 study looked at DOD’s Program 

Management Office-DTS (PMO-DTS) projected DTS annual savings 

estimates. GAO found that PMO-DTS’ $56.4 million of anticipated personnel 

savings are unrealistic. PMO-DTS projected that the Army and Navy would 

have $24.2 million of personnel savings as a result of using DTS. However, 

GAO found that the Army and Navy have not had and are not anticipating 

any savings through decreased personnel from the implementation of DTS. 

DOD has refuted GAO’s findings by claiming that the savings created by DTS 

are not necessarily achieved through decreased personnel, but through 

increasing personnel productivity and reducing inefficiencies. Were PMODTS’ projected personnel savings based solely on personnel reduction, and if 

not, is it possible to quantitatively measure cost savings through increased 

personnel productivity and reducing inefficiencies? 

As discussed in our September 2006 report2

 and reiterated in our November 2006 

testimony3

 before your Subcommittee, the $24.2 million of personnel savings 

estimated by the Department of Defense (DOD) relates to the Air Force and the Navy. 

 

1

 GAO, Defense Travel System: Estimated Savings Are Questionable and Improvements Are Needed 

to Ensure Functionality and Increase Utilization, GAO-07-208T (Washington, D.C.: Nov. 16, 2006). 

2

 GAO, Defense Travel System: Reported Savings Questionable and Implementation Challenges 

Remain, GAO-06-980 (Washington, D.C.: Sept. 26, 2006). 

3

 GAO-07-208T. 
More specifically, the September 2003 economic analysis noted that personnel 

savings of $12.9 million and $11.3 million would be realized by the Navy and Air 

Force, respectively. The assumption behind the personnel savings computation was 

that there would be less manual intervention in the processing of travel vouchers for 

payment, and therefore fewer staff would be needed. However, based on our 

discussions with Air Force and Navy DTS program officials, it is questionable as to 

how the estimated savings will be achieved. Air Force and Navy DTS program 

officials stated that they did not anticipate a reduction in the number of personnel 

with the full implementation of DTS, but rather the shifting of staff to other functions. 

Furthermore, according to DOD officials responsible for reviewing economic 

analyses, while shifting personnel to other functions is considered a benefit, it should 

be considered an intangible benefit rather than tangible dollar savings since the 

shifting of personnel does not result in a reduction of DOD expenditures. Also, as 

part of the Navy’s overall evaluation of the economic analysis, program officials 

stated that “the Navy has not identified, and conceivably will not recommend, any 

personnel billets for reduction.” Finally, the Naval Cost Analysis Division (NCAD) 

October 2003 report on the economic analysis noted that it could not validate 

approximately 40 percent of the Navy’s total costs, including personnel costs, in the 

DTS life-cycle cost estimates because credible supporting documentation was 

lacking. The report also noted that the PMO-DTS used unsound methodologies in 

preparing the DTS economic analysis. 

The extent of personnel savings for the Army and defense agencies, which DOD 

estimated to be $16 million and $6.3 million respectively, is also unclear. The Army 

and many defense agencies use the Defense Finance and Accounting Service (DFAS) 

to process their travel vouchers, so the personnel savings for the Army and the 

defense agencies were primarily related to reductions in DFAS’s costs. In discussions 

with DFAS officials, they were unable to estimate the actual personnel savings that 

would result since they did not know (1) the number of personnel, like those at the 

Air Force and Navy, that would simply be transferred to other DFAS functions or 

(2) the number of personnel that could be used to avoid additional hiring. For 

example, DFAS expects that some of the individuals assigned to support the travel 

function could be moved to support its ePayroll program. Since these positions

would need to be filled regardless of whether the travel function is reduced, 

transferring personnel from travel to ePayroll would reduce DOD’s overall costs since 

DFAS would not have to hire additional individuals. 

As pointed out in your question and as discussed in our report and testimony, DOD 

strongly objected to our finding that the personnel savings are unrealistic. In its 

written comments, the department stated that it is facing an enormous challenge and 

continues to identify efficiencies and eliminate redundancies to help leverage 

available funds. We fully recognize the challenge the department faces in attempting 

to improve the efficiency and effectiveness of its business operations. The fact 

remains, however, that the results of an economic analysis are intended to help 

management decide if future investments in a given endeavor are worthwhile. In 

order to provide management the most realistic information possible to support 

decision-making in this area, it is imperative that an economic analysis be supported 

Page 2 GAO-07-287R DTS Post Hearing Question
by valid assumptions. However, we found that the underlying assumptions were not 

valid, particularly in regard to the estimated amounts for the Navy and Air Force. 

Moreover, the department did not provide any new data or related documentation in 

its comments that were counter to our finding. As a result of these factors, we 

continue to believe that the estimated annual personnel savings of $54.1 million are 

unrealistic.

If you or your staff have questions about our response to this question, please contact 

me at (202) 512-9095, or williamsm1@gao.gov. 

Sincerely yours, 

McCoy Williams 

Director, Financial Management and Assurance 

(195107) 

Page 3 GAO-07-287R DTS Post Hearing Question
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