United States General Accounting Office 

GAO Testimony 

Before the Permanent Subcommittee on Investigations, 

Committee on Governmental Affairs, U.S. Senate 

For Release on Delivery 

Expected at 2:00 p.m. EST 

Thursday, November 6, 2003 

TRAVEL CARDS 

Internal Control 

Weaknesses at DOD Led to 

Improper Use of First and 

Business Class Travel 

Statement of Gregory D. Kutz


Director, Financial Management and Assurance


John J. Ryan


Assistant Director, Office of Special Investigations


John V. Kelly


Assistant Director, Financial Management and Assurance


GAO-04-229T


A
Highlights of GAO-04-229T, a testimony 

before the Permanent Subcommittee on 

Investigations, Committee on 

Governmental Affairs, United States 

Senate 

Long-standing financial 

management problems, coupled 

with ineffective oversight and 

management of the Department of 

Defense’s (DOD) travel card 

program, which GAO has 

previously reported on, have led to 

concerns about DOD’s use of first 

and business class airfares. At the 

request of this Subcommittee, 

Senator Grassley, and 

Representative Schakowsky, GAO 

performed work to identify 

problems in DOD’s controls over 

premium class travel. This 

testimony focuses on (1) the extent 

of DOD premium class travel, 

(2) the effectiveness of key internal 

control activities and examples of 

improper premium class travel 

resulting from internal control 

breakdowns, and (3) DOD ‘s 

November 6, 2003 

TRAVEL CARDS 

Internal Control Weaknesses at DOD Led 

to Improper Use of First and Business 

Class Travel 

Breakdowns in internal controls and a weak control environment resulted in 

a significant level of improper premium class travel and millions of dollars of 

unnecessary costs being incurred annually. Based on extensive analysis of 

records obtained from DOD’s credit card issuer—Bank of America, GAO 

found that for fiscal years 2001 and 2002, DOD spent almost $124 million on 

about 68,000 premium class tickets that included at least one leg of premium 

class service, primarily business class. To put the $124 million into 

perspective it exceeded the total travel expenses—including airfare, lodging, 

and meals—spent by each of 12 major CFO agencies. The price difference 

between a premium class ticket and a coach class ticket ranged from a few 

dollars to thousands of dollars. 

Based on statistical sample testing, GAO estimated that 72 percent of DOD’s 

fiscal year 2001 and 2002 premium class travel was not properly authorized, 

and that 73 percent was not properly justified. GAO estimated that senior 

civilian and military employees accounted for almost 50 percent of premium 

class travel. Further, our data mining showed that 27 of the 28 most frequent 

premium class travelers were senior DOD officials. The table below 

provides examples of unauthorized and/or unjustified premium class travel 

compared to what the travel would have cost using coach class tickets. 

Examples of Improper Premium Class Travel 

control environment over premium Cost of Estimated 

class travel. Rank/grade premium cost of coach 

of traveler class trips class trips Reason travel was improper 

In a companion report being issued 

today, GAO made numerous 

recommendations—that DOD 

concurred with—to strengthen key 

internal control activities and 

improve the overall control 

environment. 

GS-15 $35,000 $7,000 Traveler approved own first class travel based on 

medical condition that was later determined to not 

meet stringent first class criteria. 

Presidential 68,000 17,000 First and business class travel was authorized by a 

appointee subordinate using a blanket order. 

GS-14 and 

family 

21,000 2,500	 The travel order authorizing relocation costs for the 

traveler and his family did not authorize premium 

class travel. 

GS-15 3,300 250 First class ticket not authorized by the Secretary of 

Defense or designee as required. 

GS-15 4,500 600 18 months after the trip, traveler’s supervisor (not a 

medical authority) provided a note regarding a 

medical need as the justification for business class. 

Source: GAO. 

Lack of oversight and a weak overall control environment characterized 

DOD’s management of premium class travel. DOD and the military services 

(1) did not have accurate and complete data on the extent of premium class 

travel, (2) issued inadequate policies on premium class travel that were 

inconsistent with government travel regulations and with each other, (3) did 

not issue guidance on how to document the authorization and justification of 

www.gao.gov/cgi-bin/getrpt?GAO-04-229T. premium class travel, and (4) performed little or no monitoring of this travel. 

During the course of our audit, DOD began updating its travel regulations to 

To view the full product, including the scope more clearly articulate and to make more stringent the circumstances under 


and methodology, click on the link above. 


For more information, contact Gregory Kutz at which premium class travel can be authorized.


(202) 512-9095 or kutzg@gao.gov. 
Mr. Chairman, Members of the Subcommittee, Senator Grassley, and 

Representative Schakowsky: 

Thank you for the opportunity to discuss the Department of Defense’s 

(DOD) management of premium class travel acquired using centrally billed 

accounts. Our related report,1

 released today and developed at the request 

of this Subcommittee, Senator Grassley, and Representative Schakowsky, 

describes the problems we identified in DOD’s controls over premium class 

travel. These problems are illustrative of DOD’s long-standing financial 

management problems, which are pervasive, complex, and deeply rooted in 

virtually all business operations throughout the department. Such 

problems led us in 1995 to put DOD financial management on our list of 

high-risk areas—those that are highly vulnerable to fraud, waste, and 

abuse—a designation that continues today.

2 Due to these vulnerabilities, 

and our identification of fraud, waste, and abuse in a series of testimonies3 

and reports4 we issued in fiscal years 2002 and 2003 on DOD’s individually 

billed travel cards, you asked us to audit controls over the other major form 

of payment used by DOD for travel expenses—centrally billed accounts. 

The centrally billed accounts are used by most DOD services and units to 

purchase transportation services such as airline and train tickets, facilitate 

group travel, and procure other travel-related expenses,5

 while the 

individually billed accounts are used by individual travelers for lodging, 

1

U.S. General Accounting Office, Travel Cards: Internal Control Weaknesses at the DOD 

Led to Improper Use of First and Business Class Travel, GAO-04-88 (Washington, D.C., Oct. 

24, 2003). 

2

U.S. General Accounting Office, High-Risk Series: An Overview, GAO/HR-95-1 

(Washington, D.C.: February 1995), and High-Risk Series: An Update, GAO-03-119 

(Washington, D.C.: January 2003). 

3

U.S. General Accounting Office, Travel Cards: Control Weaknesses Leave Army 

Vulnerable to Potential Fraud and Abuse, GAO-02-863T (Washington, D.C.: July 17, 2002), 

and Travel Cards: Control Weaknesses Leave Navy Vulnerable to Fraud and Abuse, GAO03-148T (Washington, D.C.: Oct. 8, 2002). 

4

U.S. General Accounting Office, Travel Cards: Control Weaknesses Leave Army 

Vulnerable to Potential Fraud and Abuse, GAO-03-169 (Washington, D.C.: Oct. 11, 2002), 

Travel Cards: Control Weaknesses Leave Navy Vulnerable to Fraud and Abuse, GAO-03-

147 (Washington, D.C.: Dec. 23, 2002), and Travel Cards: Air Force Management Focus Has 

Reduced Delinquencies, but Improvements in Controls Are Needed, GAO-03-298 

(Washington, D.C.: Dec. 20, 2002). 

5

The Air Force is an exception to this general rule. The Air Force equally uses both centrally 

billed and individual billed accounts for purchasing airline transportation. 

Page 1 GAO-04-229T 
rental cars, and other travel expenses. For fiscal years 2001 and 2002, DOD 

travelers incurred $7.1 billion in expenses on the centrally billed and 

individually billed travel card accounts, with about $2.8 billion related to 

the use of centrally billed accounts. 

Today, I will summarize our work on DOD’s use of premium class travel 

charged to its centrally billed accounts. Federal travel regulations define 

premium class travel as any class of accommodation above coach class, 

that is, first or business class. General Services Administration (GSA) and 

DOD regulations state that travelers must use coach class accommodations 

for official business air travel—both domestic and international—except 

when a traveler is specifically authorized to use premium class. These 

regulations restrict premium class travel to limited circumstances. The 

regulations state that travelers on official government business must 

exercise the same standard of care in incurring expenses that a prudent 

person would exercise if traveling on personal business. Premium class 

flights are not something travelers are entitled to simply because certain 

conditions exist. Rather, when possible, travelers are to plan their travel in 

advance to avoid the necessity for premium class travel. 

My testimony will focus on (1) the extent of premium class travel during 

fiscal years 2001 and 2002—the most recently available data at the time of 

our work, (2) the effectiveness of key internal control activities and 

examples of improper premium class travel resulting from internal control 

breakdowns, and (3) DOD’s control environment over premium class 

travel. 

Summary	 During fiscal years 2001 and 2002, DOD spent almost $124 million on over 

68,000 premium class tickets that included at least one leg in premium 

class—primarily business class. The price difference between a premium 

class ticket and a coach class ticket ranged from a few dollars to thousands 

of dollars. Based on our statistical sample, we estimated that senior 

civilian and military employees—including senior-level executives and 

presidential appointees with Senate confirmation—accounted for almost 

50 percent of premium class travel. 

During those fiscal years, breakdowns in key internal controls activities at 

DOD resulted in a significant level of improper premium class travel. The 

two basic internal control activities we tested—proper authorization and 

proper justification—were ineffective. Based on our statistical sample, we 

estimated that 72 percent of all premium class tickets were not authorized 

Page 2 GAO-04-229T 
and 73 percent were not justified—and therefore improper. Because of the 

weaknesses we identified in the control environment and the breakdown in 

specific internal control activities, DOD did not detect these improper 

transactions. As each premium class ticket cost the government up to 

thousands of dollars more than a coach class ticket, unauthorized premium 

class travel resulted in millions of dollars of unnecessary costs being 

incurred annually. 

A contributing factor to those excess costs was that DOD did not track 

premium class travel usage, design a strong control environment, or adhere 

to important internal control activities that provide reasonable assurance 

that DOD premium class travel regulations are consistent with federal 

travel regulations and are for authorized purposes only. DOD did not 

maintain adequate and accurate premium class travel data. For example, 

DOD’s first class travel data, which DOD is required to report to GSA 

annually, were incomplete, and DOD did not obtain or maintain data on 

business class travel. Thus, DOD was not aware of the extent of premium 

class travel and did not have data available to identify trends and determine 

whether alternate, less expensive means of transportation could have been 

used. Other weaknesses in the area of policies and procedures 

exacerbated weak internal control procedures and contributed to 

ineffective oversight of premium class travel. In particular, DOD and the 

services did not issue (1) adequate and consistent policies on premium 

class travel, and (2) guidance on how to document the authorization and 

justification of premium class travel. Further, DOD had not performed 

audits or evaluations of premium class travel, and did not monitor training 

provided to travelers, authorizing officials, and commercial travel offices 

employees on governmentwide and DOD premium class travel regulations. 

During our audit, DOD officials began to address some of the deficiencies 

we identified by updating the Joint Travel Regulations and the Joint 

Federal Travel Regulations–DOD’s internal travel regulations—in April 

2003 to articulate more clearly and to make more stringent the 

circumstances under which premium class travel can be authorized. As 

discussed in the report released today, DOD concurred with our 

recommendations to improve the overall control environment and 

strengthen key internal control activities. 

Page 3 GAO-04-229T 
Extent of Premium 

Class Travel Is 

Significant 

As shown in table 1, DOD spent nearly $124 million on airline tickets that 

included at least one leg of premium class service during fiscal years 2001 

and 2002. However, because DOD did not maintain centralized data on 

premium class travel, we had to extract these data from Bank of America’s 

databases of DOD centrally billed account travel, which included over 5.3 

million transactions for airline tickets valued at over $2.4 billion. Due to 

limitations in the information collected on individual transactions, we were 

unable to determine the amount of premium class travel by military service 

or the amount of premium class travel used for domestic versus overseas 

flights. 

Table 1: DOD Premium Class Travel for Fiscal Years 2001 and 2002 

Number of Dollar amounts 

transactions (in thousands) 

First class 1,240 $2,898 

Business class 66,850 $120,947 

Total premium travel 68,090 $123,845 

Source: GAO analysis of Bank of America data. 

Note: Transactions include at least one leg of premium class travel. 

DOD’s premium class air travel accounted for a very small percentage of 

DOD travel overall

6

—about 1 percent of total DOD airline transactions and 

5 percent of total DOD dollars spent on airline travel. However, to put the 

$124 million that DOD spent on premium class travel in perspective, the 

amount DOD spent on premium class-related travel during these 2 fiscal 

years exceeded the total travel and transportation expenses—including 

airfare, lodging, and meals—spent by each of 12 major agencies covered by 

the Chief Financial Officers Act of 1990, including the Social Security 

Administration; the Departments of Energy, Education, Housing and Urban 

Development, and Labor; and the National Aeronautics and Space 

Administration. 

The difference between the price of a premium class ticket and a 

comparable coach class ticket can range from negligible—particularly if 

6

DOD reported almost $10.8 billion in travel-related expenses for fiscal years 2001 and 2002 

combined. 

Page 4 GAO-04-229T 
the traveler traveled within Europe—to thousands of dollars. In one 

instance, a traveler’s first class flight between Washington, D.C., and Los 

Angeles was 14 times, or about $3,000 more than, the price of a comparable 

coach class flight at the government fare. 

Higher-ranking civilian personnel and military officials accounted for a 

large part of premium class travel. Based on our statistical sample, we 

estimated that DOD civilian employees under the General Schedule (GS) 

grade GS-13 to GS-15 (supervisors and managers), Senior Executive 

Service (SES) (career senior executives), presidential appointees with 

Senate confirmation, and DOD senior military officers O-4 and above 

accounted for almost 50 percent of premium class travel. GAO’s Guide for 

Evaluating and Testing Controls Over Sensitive Payments7

 considers 

travel by high-ranking officials, in particular senior-level executives, to be a 

sensitive payment area because of its susceptibility to abuse or 

noncompliance with laws and regulations. 

Internal Control 

Activities Not 

Effectively 

Implemented 

Control activities occur at all levels and functions of an agency. They 

include a wide range of diverse activities such as authorizations, reviews, 

approvals, and the production of records and documentation. For first and 

business class travel, we tested control activities designed to provide 

assurance that premium class travel transactions are (1) authorized and 

(2) justified in accordance to the Federal Travel Regulation (FTR), issued 

by GSA to implement travel policies for federal civilian employees and 

others authorized to travel at government expense, and DOD’s travel 

regulations, including the Joint Federal Travel Regulations (JFTR), which 

applies to uniformed service members, and the Joint Travel Regulations 

(JTR), which applies to DOD civilian personnel who are subject to GSA’s 

travel regulation. These regulations generally require that premium class 

travel be specifically authorized in advance of travel and only under 

specific circumstances. (See app. I for further details of GSA and DOD 

premium class travel regulations.) For example, although FTR and DOD 

travel regulations allow premium class travel when the scheduled flight 

time is in excess of 14 hours, these regulations prohibit use of premium 

class accommodation if the traveler has scheduled rest stops. 

7

GAO/AFMD-8.1.2. 

Page 5 GAO-04-229T 
In addition to the FTR and DOD regulations, we also applied the criteria set 

forth in our internal control standards8

 and sensitive payments guidelines9 

in evaluating the proper authorization of premium class travel. For 

example, while DOD travel regulations and policies do not address the 

issue of subordinates authorizing their supervisors’ premium class travel, 

our internal control standards consider such a policy to be flawed from an 

independence viewpoint. Therefore, a premium class transaction that was 

approved by a subordinate would fail the controls over authorization test. 

Using these guidelines, we estimated, based on our statistical sample, that 

an estimated 72 percent of the DOD centrally billed travel transactions 

containing premium class travel for fiscal years 2001 and 2002 were not 

properly authorized and that an estimated 73 percent were not properly 

justified. 

Table 2: Estimate of Fiscal Year 2001 and 2002 DOD Premium Class Travel 

Transactions That Failed Control Tests 

Estimated 

percentage failure 

rate in key internal 

Control test controls 

Not properly authorized by a designated official at equal or 

higher rank/grade to the traveler 

• Premium class travel was not specifically authorized on the 64 

travel order or other supporting documentation 

• Travel order authorizing premium class travel was not signed 6 

• Premium class travel was authorized by a subordinate 2 

Not properly justified 

Source: GAO analysis of DOD premium class travel transactions and supporting documentation. 

Note: Our testing excluded all business class transactions costing less than $750. We determined that 

many of these lower dollar transactions were covered by a blanket authorization for certain intraEuropean flights. Although, as discussed in this section, we did not believe the blanket authorization 

was valid, we eliminated these transactions from our sample to avoid possible skewing of the results. 

As shown in table 2, an estimated 64 percent of premium class transactions 

did not contain travel orders that specifically authorized the traveler to fly 

premium class, and thus the commercial travel office—a travel agency— 

8

GAO/AIMD-00-21.3.1. 

9

GAO/AFMD-8.1.2. 

Page 6 GAO-04-229T 

72 

73 
should not have issued the premium class ticket. Another 6 percent of 

premium class transactions were related to instances where the travel 

order authorizing business class was not signed (left blank) or the travel 

order authorizing first class was not signed by the service secretary or his 

or her designee, as required by DOD regulations. If the travel order is not 

signed, or not signed by the individual designated to do so, DOD has no 

assurance that the substantially higher cost of the premium class tickets 

was properly reviewed and represented an efficient use of government 

resources. We also estimated that 2 percent of the premium class 

transactions involved situations where a subordinate approved a superior’s 

travel. Although these limited instances do not necessarily indicate the 

existence of a significant systemic problem, allowing subordinates to 

approve their supervisors’ premium class travel is synonymous with selfapproval and reduces scrutiny of premium class requests. 

Another internal control weakness identified in the statistical sample was 

that the justification used for premium class travel was not always 

provided, not accurate, and/or not complete enough to warrant the 

additional cost to the government. As previously stated, premium class 

travel is not an entitlement and recent changes to DOD regulations state 

that in the context of lengthy flights premium class travel should only be 

used when exceptional circumstances warrant and alternatives should be 

explored to avoid the additional cost of premium class travel. As shown in 

table 2, an estimated 72 percent of premium class transactions were not 

authorized and therefore because they were not properly authorized they 

could not have been justified. An additional two transactions in our sample 

which were authorized but not justified in accordance with DOD’s criteria 

increased our estimate of premium class transactions that were not 

justified to 73 percent. 

Considering the significant breakdown in key internal controls, it was not 

surprising that our audit identified numerous examples of improper 

premium class travel that cost DOD significantly more than what would 

have been spent on a coach class ticket. Table 3 illustrates a few of the 

types of unauthorized and/or unjustified transactions from both our 

statistical samples and data mining work, along with a comparison 

between amounts actually paid and the comparable coach fares at that 

time. Without authorization or adequate justification, these cases illustrate 

the improper use of premium class travel and the resulting increase in 

Page 7 GAO-04-229T 
travel costs. For further details on the cases shown in table 3, as well as 

additional examples of unauthorized and/or unjustified transactions, please 

refer to the report that we released today on this subject.10 

Table 3: Examples of Improper Use of Premium Class Travel 

Cost of Estimated 

premium cost of 

Grade/ Class of ticket coach fare 

Traveler Source rank Itinerary ticket paid ticketa Reason for exception 

Data GS-14b One-way from First and $20,943 $2,500c Travel order did not authorize use of 

mining London to business premium class travel. Traveler obtained 

Honolulu for a premium class tickets on the basis that these 

family of four tickets were issued to other permanent 

for relocation change of station (PCS) moves exceeding 

purposes 14 hours in total travel time. Navy policy 

excludes PCS move over 14 hours as a 

condition under which premium class travel 

can be authorized. Transaction failed 

authorization and justification. 

Statistical GS-13 San Diego to Business 3,695 2,161 Travel order did not authorize business class 

sample Busan, Korea, travel. Transaction failed authorization and 

and back justification. 

Statistical GS-13 San Francisco Business 3,168 610c Travel order authorizing the traveler to fly 

sample to Tokyo, and business class on the basis that the flight 

back exceeded 14 hours was not signed. 

Transaction failed authorization and 

justification. 

Statistical GS-13 Tucson to Business 8,308 4,966 Travel order contained authorization for 

sample Bahrain and traveler to fly business class on the basis 

Bahrain to Los that the flight lasted more than 14 hours. 

Angeles However, the traveler had a layover in 

London on both the outbound and return 

portions of the trip, which, per the FTR and 

JTR, would have precluded the traveler from 

traveling in premium class. Transaction 

passed authorization but failed justification. 

5 Statistical GS-15 Los Angles to First 3,253 238 First Class Ticket not authorized by the 

sample Washington, Secretary of Defense or designee as 

D.C., and back required. 

10GAO-04-88. 

Page 8 GAO-04-229T 

1 

2 

3 

4 
(Continued From Previous Page) 

Cost of Estimated 

premium cost of 

Grade/ Class of ticket coach fare 

Traveler Source rank Itinerary ticket paid ticketa Reason for exception 

Data GS-15 Washington, 

mining D.C. to 

Amsterdam, 

and back 

Business 4,525 570c	 Business class travel authorized but no 

justification provided on the order. Over 18 

months after the trip occurred, the traveler’s 

supervisor—not a physician—wrote a note 

stating that he authorized premium class 

based on a medical need. The traveler also 

flew coach on a number of trips that lasted 

longer than his flight from Washington D.C. 

to Amsterdam. The traveler admitted that he 

should not have traveled business class. 

Transaction passed authorization but failed 

justification. 

Statistical Political Washington, Business 7,450 3,060c Business class travel authorized on basis 

sample appointee D.C. to that travel is mission essential, which is not a 

and data London, then DOD criterion for authorizing business class 

mining Paris to travel. Traveler was part of a group of 13 

Moscow attending a conference in Moscow. 

Transaction passed authorization but failed 

justification. 

Source: GAO analysis of premium class travel transactions and supporting documentation. 

a

Source of estimated coach fares is GSA city pair or expedia.com.


b

GS designates General Schedule pay schedule.


c

Fares do not include all applicable taxes and airport fees.


Our work also included data mining to identify the individuals who traveled 

premium class most frequently. We identified 28 of the most frequent 

premium class travelers from the 68,090 premium class transactions during 

fiscal years 2001 and 2002. All but 1 of the 28 frequent travelers were at 

least GS-13 civilians or O-4 military, that is, senior DOD personnel. We 

found that the most frequent travelers were, in most instances, authorized 

to obtain premium class travel by people at the same or higher levels, with 

3 of the 28 failing the authorization test because they or their subordinates 

authorized their travel orders. However, we determined that many of the 

transactions were improper because their justification was not supported 

by the documentation provided or did not adhere to FTR and DOD travel 

regulations. 

Some cases involving frequent travelers were questionable because the 

justification documentation was not adequate to determine whether the 

transaction met DOD’s criteria. We found that 12 of the 28 frequent 

premium class travelers justified their more expensive flights with a 

medical condition. However, we identified several anomalies in the 

Page 9 GAO-04-229T 

6 

7 
application of medical condition justification, as evidenced by travelers 

who used both coach and premium class accommodations during flights of 

similar duration and during the same time period. For example, frequent 

traveler 1 in table 4 took 14 premium and 31 coach class trips during fiscal 

years 2001 and 2002. Many of the coach class trips, for example, from 

Washington, D.C., to Honolulu or cities in California were similar in 

duration to premium class trips from Washington, D.C., to Frankfurt or 

Amsterdam. This may indicate that additional steps should be taken to 

verify the validity of the medical certification. During testing, an Army 

official at the Traffic Management Office informed us that his office 

forwards all medical certifications to the Surgeon General for an opinion 

before recommending to the Secretary of the Army that approval be 

granted for first class travel. For further details on the cases shown in table 

4, as well as additional examples of travelers who frequently used premium 

travel, please refer to the report that we released today.

11 

Table 4: Examples of Travelers Who Frequently Used Premium Travel 

Number/ 

cost of Justification 

Grade/ premium provided for GAO’s concern with premium class Response by traveler or 

Traveler rank class trips premium travel travel traveler’s staff 

GM-14 14/$88,000	 Doctor’s note claiming Traveler took 45 flights—14 premium and Traveler admitted to inconsistent 

medical necessity did 31 coach class trips during fiscal years application of medical necessity. 

not indicate whether 2001 and 2002. Many coach class trips Traveler considered extra room 

premium class travel were similar in duration to premium class in business class to be more 

was needed on all trips. comfortable for long flights. 

flights or flights of 

certain duration 

PASa 17/$68,000	 First and business 

class travel justified 

through a blanket 

order based on a 

medical condition 

1. Blanket authorization was used to 

justify first and business class travel. 

2.	 Premium travel was authorized by a 

subordinate. 

3. Traveler flew in coach class on some 

flights. 

4. Medical certification not attached to 

travel orders or vouchers, but a 

doctor’s note dated 9/11/2001 was 

provided a month after we 

requested additional documentation. 

The traveler's aide said that she 

will get the Deputy Secretary's 

approval for first class travel and 

only schedule the traveler for 

first or business class when 

alternative seating is not 

available. 

11GAO-04-88. 

Page 10 GAO-04-229T 

1 

2 
(Continued From Previous Page) 

Number/ 

cost of Justification 

Grade/ premium provided for GAO’s concern with premium class Response by traveler or 

Traveler rank class trips premium travel travel traveler’s staff 

GS-15 11/$35,000 First class travel on Travel orders were not signed, but the Traveler told us he was not 

domestic flights official authorizing first class travel was aware that first class travel had 

justified through a the traveler himself. Further, first class to be approved by the Under 

certification from travel was not authorized by the Under Secretary of the Navy. Traveler 

medical authority Secretary of the Navy, as required by is no longer authorized to fly first 

Navy regulations. class based on medical 

condition. 

SESb 10/$48,000	 Claimed mission 

essential, so that the 

traveler would be 

ready for meetings 

upon arrival at 

destination 

1. DOD travel regulations do not list 

mission essential as a basis to 

justify premium class travel. 

2. 	 Some premium class flights were 

less than 14 hours. 

3. 	 Business class was taken on return 

flights. 

4.	 Specific justification was not always 

accurate, for example, justification 

for first class travel from 

Washington, D.C., to Tampa used to 

support first class travel from 

Washington, D.C., to Atlanta. 

The traveler said that he did not 

make his flight arrangements. 

The traveler’s assistant had no 

explanation for why some 

premium class trips were not 

authorized, or why the specific 

justification was not accurate. 

The traveler’s assistant said that 

the traveler did not want to leave 

the day before to avoid the 

additional cost of a business 

class flight. 

Source: GAO analysis of premium class travel transactions and supporting documentation. 

a

Presidential appointment with Senate confirmation. 

b

Senior Executive Service appointment. 

Weaknesses in Internal 

Control Environment 

GAO’s Standards for Internal Control12 states that a positive control 

environment is the foundation for all other standards. The importance of 

the “tone at the top” or the role of management in establishing a strong 

control environment cannot be overstated. However, we found that prior 

to us initiating this audit, DOD had not taken actions to encourage a strong 

internal control environment over premium class travel. Specifically, DOD 

and the military services did not (1) maintain adequate and accurate 

premium class travel data, (2) issue adequate policies related to the 

approval of premium travel, (3) require consistent documentation to justify 

premium class travel, and (4) perform audits or evaluations of premium 

class travel and did not monitor training provided to travelers, authorizing 

officials, and commercial travel offices employees on governmentwide and 

DOD premium class travel regulations. During the course of our work, 

12GAO/AIMD-00-21.3.1. 

Page 11 GAO-04-229T 

3 

4 
DOD updated the JTR and JFTR in April 2003 to articulate more clearly and 

to make more stringent the circumstances under which premium class 

travel can be authorized. 

DOD Did Not Maintain 

Centralized Management 

Data on Premium Class 

Travel 

The FTR requires DOD, along with all other executive and legislative 

branch agencies, to provide GSA annual reports listing all instances in 

which the organization approved the use of first class transportation 

accommodations. We found that the Military Traffic Management 

Command (MTMC), responsible for tracking DOD’s first class travel, 

understated DOD’s cost and frequency of first class travel reported to GSA. 

According to DOD’s first class travel reports submitted to GSA for fiscal 

years 2001 and 2002, DOD civilian and military personnel took less than 

1,000 first class flight segments13 totaling less than $600,000. In contrast, 

our analysis of the Bank of America airline transaction data indicates that 

DOD purchased more than 1,240 tickets containing over 2,000 separate 

segments with first class accommodations. Our analysis also found that 

these first class tickets costs of about $2.9 million were almost 5 times the 

amount DOD reported to GSA. We found that a number of cities were 

omitted from DOD’s first class report. For example, while DOD data 

indicated that no first class flights were taken into Washington, D.C., during 

fiscal year 2001, Bank of America data identified 88 first class flights into 

Washington D.C., during the same time period. 

We also found that DOD did not obtain or maintain centralized data on 

premium class travel other than first class, i.e., business class. 

Consequently, DOD did not know, and was unable to provide us with data 

related to, the extent of its premium class travel. As mentioned previously, 

we were able to obtain such data through extensive analysis and 

extractions of DOD travel card transactions from databases provided by 

the Bank of America. 

Control Environment Is DOD travelers must follow a complicated array of premium class travel 

Flawed by Inconsistencies guidance. The applicability of specific regulations depends on whether the 

in Premium Class Travel traveler is civilian or military. For DOD civilians, GSA’s FTR governs travel 

and transportation allowances. DOD’s JTR and individual DOD and Guidance military service directives, orders, and instructions supplement the FTR. 

13A flight segment is any portion of a ticket with a separate flight number. 

Page 12 GAO-04-229T 
For military personnel, DOD’s JFTR governs travel and transportation 

allowances. Individual DOD and military service directives, orders, and 

instructions supplement the JFTR. The executive branch policy on the use 

of first class travel applicable to the FTR, JTR, and JFTR is found in OMB 

Bulletin 93-11. When a subordinate organization issues an implementing 

regulation or guidance, the subordinate organization may make the 

regulations more stringent, but generally may not relax the rules 

established by higher-level guidance. 

Inconsistencies have accumulated within the various premium class travel 

regulations because DOD did not revise its directives, or require the 

military services to revise their travel policies or implementing guidance, 

when DOD modified the JTR or JFTR. For example, DOD first issued the 

JTR in 1965 and since then has modified it 450 times through April 2003, 

including 30 modifications since October 2000. While the JFTR has had 

fewer modifications—196 through April 2003—the JFTR has also been 

modified 30 times since October 2000. In contrast, DOD Directive 4500.9, 

Transportation and Traffic Management, was last revised in 1993 while 

DOD Directive 4500.56, Use of Government Aircraft and Air Travel, was 

last updated in 1999. Similarly, the Navy Passenger Transportation 

Manual was last updated in 1998, the Marine Corps Order P4600.7C 

Marine Corps Transportation Manual was last changed in 1992, and while 

the Air Force Instruction 24-101 Passenger Movement was last updated in 

2002, it contains some provisions that are contrary to GAO’s internal 

control standards and sensitive payments guidelines. 

Inconsistencies also exist because DOD and its components have elected 

to authorize the use of premium class travel in different circumstances or 

have described the authorization to use premium class using different 

language. For example, 

•	 DOD Directive 4500.9 grants blanket authority for high-ranking officials 

to use premium class when traveling overseas on official government 

business. This policy contradicts and is less stringent than the FTR, 

which does not cite rank as a condition for obtaining premium class 

travel. 

•	 GSA’s FTR authorizes agencies to approve the use of first class or 

business class accommodations when required by an agency’s mission, 

but neither the JTR nor the JFTR adopt this authorization. In contrast, 

DOD’s policies on transportation and traffic management—DOD 

Page 13 GAO-04-229T 
Directive 4500.9—states that the use of business class on domestic 

travel14 may be authorized when necessitated by mission requirements.15 

•	 GSA’s FTR prohibits premium class travel if the traveler is authorized a 

rest stop en route or a rest period upon arrival at the duty site, even if 

the scheduled flight time is in excess of 14 hours. While DOD’s JTR and 

JFTR that were in effect at the time of our audit should have contained 

the same restriction, they were silent as to whether a rest period upon 

arrival would exclude a traveler from traveling in premium class. 

Further, the services’ implementing guidance is inconsistent in their 

application of the 14-hour rule.16 

DOD Does Not Have a 

Standard Format for 

Documenting Premium 

Class Travel 

Because premium travel is to be used only on an exception basis after all 

other alternatives have been exhausted, the documentation for 

authorization and justification should be held to the highest standards to 

provide reasonable assurance that in every case, the substantially higher 

premium travel cost is warranted. The JTR and JFTR state that approval 

for premium class travel should be obtained in advance of travel, except in 

extenuating/emergency circumstances that make authorization impossible, 

and specify the circumstances under which premium travel is to be 

permitted. However, we found substantial inconsistencies in the 

documentation trail indicating that appropriate officials approved premium 

class travel based on inadequate documentation. 

In contrast, other federal agencies have issued clear and consistent 

guidelines related to the documentation of premium class travel. For 

example, the Department of Agriculture approves the use of premium class 

accommodations on a case-by-case basis and specifies that premium travel 

14DOD Directive 4500.56, DOD Policy on Use of Government Aircraft and Air Travel, last 

updated April 19, 1999, states that all DOD travel outside the continental United States is 

subject to the JTR and the JFTR. 

15DOD Directive 4500.9, Transportation and Traffic Management, ¶ 3.4.3.1.3, Dec. 29, 1993. 

16The Secretary of the Army policy, last updated in March 2003, adopts the FTR “rest period 

upon arrival.” limitations, but did not define what is considered a “rest period.” The Navy’s 

OPNAVINST 4650.15, issued in July 1998, prohibits a “rest period en route.” Air Force 

Instruction 24-101 (March 2002) states that Air Force travelers might be authorized business 

class accommodations if they are required to perform a full day (8 hours) of work 

immediately upon arrival. Finally, the Marine Corps Order 4600.25C does not address this 

matter. 

Page 14 GAO-04-229T 
be approved by the under secretary except when frequent travel benefits 

are used. The justification must include the specific circumstances relating 

to the criteria, such as a medical justification from a competent medical 

authority, which must include a description of the employee’s disability, 

medical condition, or special need; approximate duration of the medical 

condition or special need; and a recommendation of a suitable means of 

transportation based on medical condition or special need. The National 

Institutes of Health (NIH) requires that the traveler, when requesting 

premium class travel based on a medical condition, detail the nature of the 

disability or special need on an authorization form for employees with 

disabilities or other special needs. The authorization form must be signed 

by both the employee and a competent medical authority. NIH’s policies 

state that the medical statement should specifically address why it is 

necessary to use upgraded accommodations. The form also limits the 

authority to a period of 6 or 12 months from the initial date of approval 

depending on the nature of the disability or special need. In the instance of 

a permanent disability, NIH policy is that authorized use of premium class 

accommodations is valid for up to 3 years, but that resubmission is 

necessary to ensure that there continues to be a need for the premium class 

travel. 

Oversight and Monitoring 

Needs Improvement 

In general, effective oversight activities would include management review 

and evaluation of the process for issuing premium class travel and 

independent evaluations aimed directly at the effectiveness of internal 

control activities. Our internal control standards state that separate 

evaluations of control should depend on the assessment of risks and the 

effectiveness of ongoing monitoring procedures. As mentioned above, we 

consider executive travel as a high-risk area susceptible to abuse or 

noncompliance with laws and regulations. However, we found no evidence 

of any audits or evaluations of premium class travel. The lack of effective 

oversight and monitoring was another contributing factor to DOD and the 

services’ lacking knowledge of the extent of improper premium class 

transactions. 

The lack of oversight was further demonstrated by the fact that travelers, 

supervisors/managers, and employees at the commercial travel offices 

(CTO) responsible for issuing airline tickets to the travelers were not 

adequately informed on governmentwide and DOD travel regulations 

concerning when premium class travel is or is not to be authorized. Thus, it 

was not surprising that some DOD travelers and authorizing officials were 

under the mistaken impression that travel regulations entitled travelers to 

Page 15 GAO-04-229T 
travel in business class when their flights exceed 14 hours. These 

individuals were not aware that the FTR provides that, in order to qualify 

for business class travel, travelers have to proceed directly to work upon 

arriving at the duty location. DOD also did not verify whether CTO 

employees receive training in DOD premium travel regulations. A 

representative from one commercial travel office informed us that they 

issue premium class travel if premium class was requested on the travel 

order, even if justification for obtaining premium class travel was flawed— 

for example, the flight was not at least 14 hours. 

DOD Issued New 

Regulations to Better Define 

When Premium Class Travel 

is Authorized 

During the course of our work, in April 2003, DOD updated the JTR17 and 

JFTR18 to articulate more clearly and make more stringent the 

circumstances under which premium class other than first class travel, that 

is, business class, is authorized for DOD travelers on flights to and/or from 

points outside the continental United States when the scheduled flight time 

exceeds 14 hours. The revised regulations prohibit the use of business 

class travel when travelers are authorized a “rest period” or an overnight 

stay upon arrival at their duty station, and state that business class 

accommodations are not authorized on the return leg of travel. 

Finally, in its revised regulations, DOD states that, in the context of 

authorizing business class accommodations for flights scheduled to exceed 

14 hours, “business class accommodations must not be common practice” 

and that such service should be used only in exceptional circumstances. 

Further, DOD directs order-issuing officials to “consider each request for 

business class service individually.” We agree with DOD that decisions 

regarding the use of premium class travel should be made on a case-by-case 

basis and based on a preference for coach class. 

Conclusions	 The ineffective management and oversight of premium class travel 

provides another example of why DOD financial management is one of our 

“high-risk” areas, with the department highly vulnerable to fraud, waste, 

and abuse. DOD does not have the management controls in place to 

identify issues such as improper use of premium class travel. As a result, 

17JTR Change 450, April 1, 2003. 

18JFTR Change 196, April 1, 2003. 

Page 16 GAO-04-229T 
millions of dollars of unnecessary costs are incurred annually. Because 

premium class travel is substantially more costly than coach travel, it 

should only be used when absolutely necessary, and the standards for 

approval and justification must be appropriately high. During our audit, 

DOD began taking steps to improve its policies and procedures for 

premium class travel. DOD must build on these improvements and 

establish strong controls over this sensitive area to ensure that its travel 

dollars are spent in an economical and efficient manner. 

Our related report on these issues released today includes 

recommendations to DOD. Our recommendations address the need to 

improve internal controls to provide reasonable assurance that 

authorization and justification for premium class travel are appropriate, 

monitor the extent of premium class travel, modify policies and procedures 

to make them consistent with GSA regulations, and issue policies 

prohibiting subordinates or the travelers themselves from authorizing 

premium class travel. In oral comments on a draft of this report, DOD 

officials concurred with our recommendations to resolve the control 

weaknesses. 

Mr. Chairman, Members of the Subcommittee, Senator Grassley, and Ms. 

Schakowsky, this concludes my prepared statement. I would be pleased to 

answer any questions that you may have. 

Contacts and 	 For future contacts regarding this testimony, please contact Gregory D. 

Kutz at (202) 512-9095, John J. Ryan at (202) 512-9587, or John V. Kelly at Acknowledgments	 (202) 512-6926. Individuals making key contributions to this testimony 

included Kris Braaten, Beverly Burke, Francine DelVecchio, Aaron Holling, 

Jeffrey Jacobson, Julie Matta, Sidney H. Schwartz, and Tuyet-Quan Thai. 

Page 17 GAO-04-229T 
Appendix I 

GSA and DOD Premium Class Travel 

Regulations 

DOD travelers must follow a complicated array of premium class travel 

guidance. The applicability of specific regulations depends on whether the 

traveler is civilian or military. For DOD civilians, GSA’s FTR governs travel 

and transportation allowances. DOD’s JTR and individual DOD and 

military service directives, orders, and instructions supplement the FTR. 

For military personnel, DOD’s JFTR governs travel and transportation 

allowances. Individual DOD and military service directives, orders, and 

instructions supplement the JFTR. The executive branch policy on the use 

of first class travel applicable to the FTR, JTR, and JFTR is found in OMB 

Bulletin 93-11. When a subordinate organization issues an implementing 

regulation or guidance, the subordinate organization may make the 

regulations more stringent, but generally may not relax the rules 

established by higher-level guidance. 

GSA and DOD regulations authorize the use of premium class travel under 

specific circumstances. The JTR and the JFTR limit the authority to 

authorize first class travel to the Secretary of Defense, his or her deputy, or 

other officials as designated by the Secretary of Defense. However, while 

both the JTR and JFTR provide that the authority to authorize first class 

travel may be delegated and re-delegated, the regulations specify that the 

authority must be delegated to “as high an administrative level as 

practicable to ensure adequate consideration and review of the 

circumstances necessitating the first class accommodations.” DOD travel 

regulations also require that authorization for premium class 

accommodations be made in advance of the actual travel unless 

extenuating circumstances or emergency situations make advance 

authorization impossible. DOD regulations also provide that first class 

accommodations may be used without authorization only when regularly 

scheduled flights between the authorized origin and destination (including 

connecting points) provide only first class accommodations. Specifically, 

the JTR and JFTR state that first class accommodation is authorized only 

when at least one of the following conditions exists: 

•	 coach class airline accommodations or premium class other than first 

class airline accommodations are not reasonably available; 

•	 the traveler is so handicapped or otherwise physically impaired that 

other accommodations cannot be used, and such condition is 

substantiated by competent medical authority; or 

• exceptional security circumstances require such travel. 

Page 18 GAO-04-229T 
Appendix I


GSA and DOD Premium Class Travel 


Regulations


The JTR and JFTR allow the transportation officer,

1

 in conjunction with the 

official who issued the travel order, to approve premium class travel other 

than first class. In accordance with the FTR, DOD restricts premium class 

travel to the following eight circumstances: 

•	 regularly scheduled flights between origin and destination provide only 

premium class accommodations, and this is certified on the travel 

voucher; 

•	 coach class is not available in time to accomplish the purpose of the 

official travel, which is so urgent it cannot be postponed; 

•	 premium class travel is necessary to accommodate the traveler’s 

disability or other physical impairment, and the condition is 

substantiated in writing by competent medical authority; 

•	 premium class travel is needed for security purposes or because 

exceptional circumstances make its use essential to the successful 

performance of the mission; 

•	 coach class accommodations on authorized/approved foreign carriers 

do not provide adequate sanitation or meet health standards; 

•	 premium class accommodations would result in overall savings to the 

government because of subsistence costs, overtime, or lost productive 

time that would be incurred while awaiting coach class 

accommodations; 

• transportation is paid in full by a nonfederal source; or 

1

The JFTR delegates to the services the authority to determine who may approve premium 

other than first class travel. The service regulations call for the same authorizing official as 

the JTR. 

Page 19 GAO-04-229T 
Appendix I


GSA and DOD Premium Class Travel 


Regulations


•	 travel is to or from a destination outside the continental United States, 

and the scheduled flight time (including stopovers) is in excess of 14 

hours. However, if premium class accommodations are authorized, a 

rest stop is prohibited.2 

Both GSA and DOD regulations allow a traveler to upgrade to premium 

class other than first class travel at personal expense, through redemption 

of frequent traveler benefits. GSA also identified agency mission as one of 

the criteria for premium class travel. However, agency mission is not a 

DOD criterion for obtaining premium class travel. 

2

The April 2003 change to the JTR and JFTR states that premium class travel is authorized 

for DOD travelers on flights to and/or from points outside the continental United States 

when the scheduled flight time exceeds 14 hours. The revised regulations prohibit the use 

of business class travel when travelers are authorized a “rest period” or an overnight stay 

upon arrival at their duty station, and state that business class accommodations are not 

authorized on the return leg of travel. 

(192112) Page 20 GAO-04-229T 
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