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91–040 PDF 2004

S. Hrg. 108–326

DOD’S IMPROPER USE OF FIRST AND BUSINESS

CLASS AIRLINE TRAVEL

HEARING

BEFORE THE

PERMANENT SUBCOMMITTEE ON INVESTIGATIONS

OF THE

COMMITTEE ON 

GOVERNMENTAL AFFAIRS 

UNITED STATES SENATE

ONE HUNDRED EIGHTH CONGRESS

FIRST SESSION

NOVEMBER 6, 2003

Printed for the use of the Committee on Governmental Affairs

(

(II)

COMMITTEE ON GOVERNMENTAL AFFAIRS 

SUSAN M. COLLINS, Maine, Chairman 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

NORM COLEMAN, Minnesota 

ARLEN SPECTER, Pennsylvania 

ROBERT F. BENNETT, Utah 

PETER G. FITZGERALD, Illinois 

JOHN E. SUNUNU, New Hampshire 

RICHARD C. SHELBY, Alabama 

JOSEPH I. LIEBERMAN, Connecticut 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

RICHARD J. DURBIN, Illinois 

THOMAS R. CARPER, Delaware 

MARK DAYTON, Minnesota 

FRANK LAUTENBERG, New Jersey 

MARK PRYOR, Arkansas

MICHAEL D. BOPP, Staff Director and Chief Counsel 

JOYCE RECHTSCHAFFEN, Minority Staff Director and Counsel 

AMY B. NEWHOUSE, Chief Clerk

PERMANENT COMMITTEE ON INVESTIGATIONS 

NORM COLEMAN, Minnesota, Chairman 

TED STEVENS, Alaska 

GEORGE V. VOINOVICH, Ohio 

ARLEN SPECTER, Pennsylvania 

ROBERT F. BENNETT, Utah 

PETER G. FITZGERALD, Illinois 

JOHN E. SUNUNU, New Hampshire 

RICHARD C. SHELBY, Alabama 

CARL LEVIN, Michigan 

DANIEL K. AKAKA, Hawaii 

RICHARD J. DURBIN, Illinois 

THOMAS R. CARPER, Delaware 

MARK DAYTON, Minnesota 

FRANK LAUTENBERG, New Jersey 

MARK PRYOR, Arkansas

RAYMOND V. SHEPHERD, III, Staff Director and Chief Counsel 

ELISE J. BEAN, Minority Staff Director and Chief Counsel 

MARY D. ROBERTSON, Chief Clerk 

(III)

C O N T E N T S 

Opening statements: Page 

Senator Coleman .............................................................................................. 1

Senator Levin .................................................................................................... 13

WITNESSES 

THURSDAY, NOVEMBER 6, 2003

Hon. Charles E. Grassley, a U.S. Senator from the State of Iowa ...................... 5

Hon. Janice D. Schakowsky, a Representative in Congress from the State 

of Illinois ............................................................................................................... 10

Gregory D. Kutz, Director, Financial Management and Assurance, accompanied by John V. Kelly, Assistant Director, Financial Management and 

Assurance, and John J. Ryan, Assistant Director, Office of Special Investigations, U.S. General Accounting Office .......................................................... 15

Hon. Charles S. Abell, Assistant Secretary of Defense (Force Management 

Policy), accompanied by Lawrence J. Lanzillotta, Principal Deputy Under 

Secretary (Comptroller), U.S. Department of Defense ...................................... 26

ALPHABETICAL LIST OF WITNESSES

Abell, Hon. Charles S.: 

Testimony .......................................................................................................... 26

Prepared statement .......................................................................................... 70

Grassley, Hon. Charles E.: 

Testimony .......................................................................................................... 5

Prepared statement .......................................................................................... 39

Kutz, Gregory D.: 

Testimony .......................................................................................................... 15

Prepared statement .......................................................................................... 48

Schakowsky, Hon. Janice D.: 

Testimony .......................................................................................................... 10

Prepared statement .......................................................................................... 44

EXHIBITS 

1. GAO Report to Congressional Requesters [The Honorable Charles E. 

Grassley, Chairman, Senate Committee on Finance; The Honorable Norm 

Coleman, Chairman, Senate Permanent Subcommittee on Investigations, 

Committee on Governmental Affairs; and The Honorable Janice 

Schakowsky, House of Representatives], TRAVEL CARDS: Internal Control Weaknesses at DOD Led to Improper Use of First and Business Class 

Travel, October 2003, GAO–04–88 .................................................................... 72

2. GAO Chart: Defense Premium Class Travel vs. Total Travel at Selected 

Departments/Agencies ........................................................................................ 122

3. GAO Chart: Examples of Price Differences Between Premium and Coach 

Class Trips .......................................................................................................... 123

4. Responses to supplemental questions for the record submitted to Charles 

S. Abell, Principal Deputy Under Secretary of Defense for Personnel and 

Readiness, U.S. Department of Defense and Lawrence J. Lanzillotta, Principal Deputy Under Secretary (Comptroller), U.S. Department of Defense .. 124

5. Materials provided for the record by Lawrence J. Lanzillotta, Principal 

Deputy Under Secretary (Comptroller), U.S. Department of Defense, regarding the Business Management Modernization Program ........................... 129

(1)

DOD’S IMPROPER USE OF FIRST AND 

BUSINESS CLASS AIRLINE TRAVEL 

THURSDAY, NOVEMBER 6, 2003

U.S. SENATE, PERMANENT SUBCOMMITTEE ON INVESTIGATIONS, OF THE COMMITTEE ON GOVERNMENTAL AFFAIRS, Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:02 p.m., in Room 

SD–342, Dirksen Senate Office Building, Hon. Norm Coleman, 

Chairman of the Subcommittee, presiding. 

Present: Senators Coleman, Levin, and Pryor. 

Staff Present: Raymond V. Shepherd, III, Staff Director and 

Chief Counsel; Mary D. Robertson, Chief Clerk; Kristin Meyer, 

Staff Assistant; Jay Jennings, Detailee, General Accounting Office; 

Laura Stuber, Counsel to the Minority; Gita Uppal (Senator Pryor); 

Patrick Hart (Senator Lieberman), and Brian McLaughlin (Senator 

Durbin). 

OPENING STATEMENT OF SENATOR COLEMAN 

Senator COLEMAN. This hearing of the Permanent Subcommittee 

on Investigations is called to order. Good afternoon and welcome to 

today’s hearing. 

This afternoon, we are holding this hearing to address a serious 

challenge to the credibility of the travel system and controls at the 

Department of Defense. In particular, we will focus on a system 

where the controls have failed, and this has led to the loss of millions of taxpayer dollars. The current system allows for abuse. It 

must be fixed. To paraphrase an old adage, watch the millions and 

the billions take care of themselves. 

Our goal today is to ground the so-called high flyers, those who 

abuse the system, and to ensure that DOD is committed to implementing long-term solutions to this costly problem. 

The fact is, many government employees are required by virtue 

of their job to travel great distances, and oftentimes, many employees are required to travel with great frequency. Our policy should 

not be to require those who must travel as part of their government job to do so in discomfort or extreme inconvenience. However, 

our policy must certainly ought not to be one that provides government employees with the type of travel conditions that the public 

reasonably feels are excessive in cost to the taxpayers. 

I am pleased today to be joined by my colleague, the esteemed 

Senator from Iowa, Senator Chuck Grassley, and also by Congresswoman Janice Schakowsky. Welcome. We are very pleased to have 

you at this hearing. Their work on travel and purchase card abuses 

2

in the Federal Government has highlighted continued abuses government-wide and has focused our attention on the need to conduct 

continuing Congressional oversight on these issues to ensure that 

they are corrected. 

An investigation recently completed by the General Accounting 

Office found that almost three-quarters of DOD’s first and business 

class airline travel was improper. This accounts for tens of millions 

of taxpayer dollars inappropriately spent by DOD. In fiscal years 

2001 and 2002, DOD spent almost $124 million on over 68,000 premium airline tickets. Among DOD’s 28 most frequent first and 

business class flyers, GAO found problems with almost all of the 

justifications for premium class travel. This lack of accountability 

cannot be tolerated. Under government travel regulations, government employees are also allowed to upgrade their accommodations 

by using their frequent flyer miles or paying the difference themselves. 

Let me outline some of the most egregious and outrageous 

abuses of the system. A DOD employee flew first class on a roundtrip ticket from Los Angeles to Washington, DC, for $3,253, compliments of the Federal Government. A coach fare for the same trip 

would have cost $238, a difference of $3,015. 

Another employee flew business class on a round-trip ticket from Washington, DC, to Taiwan for $4,319 when a coach fare ticket for 

the same trip would have cost $1,450, a difference of $2,869. 

A family of four relocated from London and Honolulu and flew 

first and business class nonstop at a cost to the taxpayers of 

$20,943. Had they simply made the effort to reduce costs and follow travel procedures, they would have saved the taxpayers 

$18,443. 

Other cases involved a traveler who took 14 trips at a cost of $88,000 to taxpayers because he inappropriately claimed that he 

needed to be upgraded to first class and business class because of 

a medical condition. 

In each of these and dozens of other cases, it appears that travel 

orders were either not authorized or not justified and premiumclass tickets should not have been issued. 

The passage of the Travel and Transportation Reform Act of 

1998 brought with it the promise of millions of dollars in Federal 

travel savings. These savings were to be realized through Federal 

employees’ use of Federal travel cards that would reduce the government’s administrative costs and provide rebates to Federal 

agencies. 

However, these anticipated savings will not simply materialize 

because we have provided Federal employees with credit cards. Realizing the full potential of these savings requires that Federal 

agencies and departments provide clear guidance and effective 

management oversight of their travel programs. 

The focus of today’s hearing is DOD’s use of premium class travel 

accommodations that include first and business class travel that 

was paid with a travel card from a centrally billed account. Over 

the last 2 years, Congressional hearings and reports by the General 

Accounting Office and the Inspector General have highlighted continuing abuses, including individuals’ late or nonpayment of travel 

card debt and using the card to purchase personal goods and servVerDate 0ct 09 2002 15:00 Feb 25, 2004 Jkt 091040 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 C:\DOCS\91040.TXT SAFFAIRS PsN: PHOGAN
3

ices or obtain improper cash advances. But today, we will focus the 

hearing on the use of premium class travel accommodations. 

The Department of Defense’s Joint Federal Travel Regulations 

for military personnel and Joint Travel Regulations for civilian personnel do not prohibit the use of first and business class airline accommodations, but they do require authorization by an appropriate 

official and justification by the traveler. Otherwise, DOD’s regulations require the use of coach class accommodations for domestic 

and international travel. 

Given the increased costs of premium class travel, DOD has very 

specific restrictions on the use of first and business class airline accommodations. DOD’s travel regulations provide three circumstances when an employee can be authorized to travel first class 

and eight circumstances where an employee can be authorized to 

travel business class. I will have my full statement entered into the 

record where I walk through that. 

Let me just make an observation. The DOD, I understand, has 

clarified its regulations with regard to the use of premium travel, 

and I want to commend them for their prompt attention to these 

issues. But I want to reiterate our deep concern for the abuses that 

we have noted. 

As we begin this hearing, I want to reiterate my commitment to 

use this Subcommittee to find solutions to problems in government 

as well as use it as an opportunity to provide positive, constructive 

oversight. Where we find fraud and abuse, we must not only root 

it out, but we must fix it and stop it from occurring again. 

This afternoon, we will hear from representatives of the General 

Accounting Office on their recently completed investigation of 

DOD’s use of premium travel that was paid from a centrally billed 

account. We will also hear from DOD concerning the actions it has 

taken or plans to take to ensure full compliance with their travel 

regulations. 

[The prepared statement of Senator Coleman follows:]

PREPARED OPENING STATEMENT OF SENATOR COLEMAN 

Good afternoon and welcome to today’s hearing. 

This afternoon we are holding this hearing to address a serious challenge to the 

credibility of the travel systems and controls at the Department of Defense. In particular, we will focus on a system where the controls have failed—and this has led 

to the loss of millions of taxpayer dollars. 

The current system allows for abuse. It must be fixed. To paraphrase an old 

adage—‘‘watch the millions and the billions take care of themselves.’’

Our goal today is to ground the high flyers who abuse the system and to ensure 

DOD is committed to implementing long-term solutions to this costly problem. 

The fact is, many government employees are required, by virtue of their job, to 

travel great distances—and often times, many employees are required to travel with 

great frequency. 

Our policy should not be to require those who must travel as a part of their government job to do so in discomfort or extreme inconvenience. However, our policy 

most certainly ought not to be one that provides government employees with the 

type of travel conditions that the public reasonably feels are excessive in cost to the 

taxpayer. 

I am pleased to be joined today by my colleague, the esteemed Senator from Iowa, 

Senator Chuck Grassley and also by Congresswoman Janice Schakowsky. 

Their work on travel and purchase card abuses in the Federal Government has 

highlighted continuing abuses government-wide and has focused our attention on 

the need to conduct continuing Congressional oversight on these issues to ensure 

that they are corrected. 

4

An investigation recently completed by the General Accounting Office found that 

almost three-quarter of DOD’s first and business class airline travel was improper. 

This accounts for tens of millions of taxpayer dollars inappropriately spent by DOD. 

In fiscal years 2001 and 2002, DOD spent almost $124 million on over 68,000 premium airline tickets. Among DOD’s 28 most frequent first and business class fliers, 

GAO found problems with almost all of the justifications for premium class travel. 

This lack of accountability cannot be tolerated. 

Under government travel regulations, government employees are also allowed to 

upgrade their accommodations by using their frequent flier miles or paying the difference themselves. 

Let me outline some of the most egregious and outrageous abuses of the system:

• A DOD employee flew first class on a round trip ticket from Los Angeles to 

Washington, DC, for $3,253 compliments of the Federal Government. A coach 

fare for the same trip would have cost $238, a difference of $3,015.

• Another employee flew business class on a round trip ticket from Washington, 

DC to Taiwan for $4,319 when a coach fare for the same trip would have cost 

$1,450, a difference of $2,869.

• A family of four relocated from London to Honolulu and flew first and business class non-stop at a cost to taxpayers of $20,943—had they simply made 

the effort to reduce costs and follow travel procedures, they would have saved 

taxpayers $18,443.

• Other cases involved a traveler who took 14 trips at a cost of $88,000 to taxpayers because he inappropriately claimed that he needed to be upgraded to 

first-class and business class because of a medical condition.

In each of these and dozens of other cases it appears the travel orders were either 

not authorized or not justified and premium class tickets should not have been 

issued. 

The passage of the Travel and Transportation Reform Act of 1998 brought with 

it the promise of millions of dollars in Federal travel savings. These savings were 

to be realized through Federal employees mandatory use of Federal travel cards 

that would reduce the government’s administrative costs and provide rebates to 

Federal agencies. 

However, these anticipated savings will not simply materialize because we have 

provided Federal employees with credit cards. Realizing the full potential of these 

savings requires that Federal agencies and departments provide clear guidance and 

effective management oversight of their travel programs. 

Over the last 2 years, Congressional hearings and reports by the General Accounting Office and the Inspectors General have highlighted continuing abuses including 

individuals’ late or nonpayment of travel card debt, and using the card to purchase 

personal goods and services or obtain improper cash advances. 

The focus of today’s hearing is DOD’s use of premium class travel accommodations 

that include first and business class travel that was paid with a travel card from 

a centrally billed account. 

The Department of Defense’s Joint Federal Travel Regulations, for military personnel, and Joint Travel Regulations, for civilian personnel, do not prohibit the use 

of first and business class airline accommodations, but they do require authorization 

by an appropriate official and justification by the traveler. 

Otherwise, DOD’s regulations require the use of coach class accommodations for 

domestic and international travel. Given the increased cost of premium class travel, 

DOD has very specific restrictions on the use of first and business class airline accommodations. DOD’s travel regulations provide three circumstances where an employee can be authorized to travel first class and eight circumstances where an employee can be authorized to travel business class. 

For example, first class accommodations are permitted if no other class is available, or if the traveler has a handicap or physical impairment that requires the use 

of first class accommodations and the condition is substantiated by a competent 

medical authority, or if there are exceptional security circumstances. 

These abuses occurred because effective management oversight was nonexistent 

and DOD’s travel guidance was inadequate or contradictory. 

Many of the abuses we will hear about today can be traced to the lack of management oversight and a lack of familiarity with DOD’s travel policies and regulations. 

For example, DOD’s first class travel records were incomplete and there were no 

records at all for business class travel. Without complete records, DOD can hardly 

be expected to conduct effective oversight. 

5

1The prepared statement of Senator Grassley appears in the Appendix on page 39. 

Further, DOD has two sets of travel regulations that are augmented by DOD directives and individual service policies. The layering and multiplicity of policies and 

regulations have confused both travelers and officials who approve their travel. I 

understand that DOD has clarified its regulations with regard to the use of premium class travel and I want to commend DOD for their prompt attention to these 

issues. 

As we begin this hearing, I want to reiterate my commitment to use this Subcommittee to find solutions to problems in government—as well as use it as an opportunity to provide positive, constructive oversight. 

Where we find fraud and abuse, we must not only root it out, but we must fix 

it and stop it from occurring again. 

This afternoon we will hear from representatives of the General Accounting Office 

on their recently completed investigation of DOD’s use of premium travel that was 

paid from a centrally billed account. We will also hear from DOD, concerning the 

actions it has taken or plans to take to ensure full compliance with their travel regulations. 

Our first witnesses will be Senator Charles Grassley and Congresswoman Janice 

Schakowsky to whom we are indebted for their tireless efforts to expose and correct 

travel and purchase card abuses.

Senator COLEMAN. Our first witnesses will be Senator Charles 

Grassley and Congresswoman Janice Schakowsky, to whom we are 

indebted for their tireless efforts to expose and correct travel and 

purchase card abuses. 

With that, I will turn to my colleague, Senator Grassley. 

TESTIMONY OF HON. CHARLES E. GRASSLEY,1 A U.S. SENATOR 

FROM THE STATE OF IOWA 

Senator GRASSLEY. Thank you, Mr. Chairman, and I am glad to 

be here with Representative Schakowsky, as well. First of all, 

thank you for that commitment you just made for the use of this 

Subcommittee to follow through on some of these extravagant and 

wasteful uses of taxpayers’ money. 

I think that follows on with the work that Chairman Horn did 

in the House over the last few years through the Government Reform Subcommittee, and now that he has retired, I am thankful 

that you are picking up the ball and running with it. By agreeing 

to hold this hearing, you are helping shine the light, the public 

spotlight, on the problem, and usually I find that the glare of spotlight helps bureaucrats to see the need for reform. 

I think it is impossible to fully appreciate the dangers of credit 

card explosion until you understand that internal controls in the 

Pentagon are broken. Over the last 15 years, I have worked hard 

to understand what broken controls really mean. My concerns are 

reinforced by the continued stream of audits issued by the GAO 

and the Inspector General. These reports consistently show that 

sloppy bookkeeping and poor internal controls leave the Department’s financial resources vulnerable to theft. 

In 1997 and 1998, as Chairman of the Judiciary Subcommittee 

on Administrative Oversight, I conducted my own review of internal controls at Defense. I conducted an in-depth examination of 

several hundred transactions and I issued a report. I came away 

from that experience convinced that stealing money at the Department of Defense was a piece of cake. Fraudulent activity, if discovered, was detected by chance and not as a result of internal controls that are very necessary. 

6

This whole experience taught me one very important lesson: 

Good bookkeeping is the key to controlling money. If, on the one 

hand, your books of account are in shambles, as the Pentagon situation is, then it is easy to steal money. Money needs to be controlled at the transaction level. Unfortunately, that is exactly 

where the Department of Defense lost it. The Department of Defense transactions are not recorded in the books of account as they 

occur. Sometimes it takes days to make an entry, sometimes 

months, sometimes years, and sometimes a transaction never 

makes it into the books. That is why the Department of Defense 

books don’t balance and that is why the Department of Defense 

cannot provide a satisfactory financial statement as required by the 

Chief Financial Officers Act. 

So, Mr. Chairman, these vulnerabilities are the reasons for my 

concern about the credit card explosion. By providing direct access 

to the cash, credit card transactions bypass standard controls. They 

make it easier to steal money. That makes the independent checkers the last and only line of defense. All the evidence that we have 

seen so far tells me they are asleep at the switch. A credit card explosion of this magnitude in a zero-controlled environment is a recipe for disaster. It is like leaving the doors to the bank vault wide 

open with no guards on duty. 

In the face of what I feared was an impending disaster 3 years 

ago, I asked the General Accounting Office to begin an in-depth examination of Defense credit card transactions. The GAO has issued 

at least six separate reports. The audit and investigative work done 

by the General Accounting Office I think is very first rate. The reports provide an unending litany of horror stories. The abuse documented by the GAO was disgraceful. 

Since our first hearing on July 30, 2001, however, I feel like 

there has been a modest improvement. I don’t know if it is accurate 

to say that the Department of Defense has turned the corner, but 

things are better I am told. For starters, the bank and the Department of Defense agreed in October 2001 to initiate a salary offset 

program. 

Another important development involves the new Department of 

Defense Inspector General, Joe Schmitz. When we began our review, the Department of Defense IG was AWOL on credit card use. 

Under Joe Schmitz, that is changing. He has placed an Army Colonel by the name of Bill Kelly in charge of an aggressive data mining operation to help search transaction records and identify suspicious purchases. Colonel Kelly’s data mining operation is helping 

apprehend criminals and sending them to jail. 

So this is a good beginning. Once the cardholders know and understand that their transactions could be under surveillance, the 

abuse will come to a halt. 

Last year, Senator Byrd and I teamed up on a credit card 

amendment on the Defense appropriations bill. Our amendment 

did several things. It put a lid on the total number of cards at 1.5 

million. It made credit checks mandatory. It required disciplinary 

action for abuse and prohibited the use of credit cards in places 

like Bottoms Up Lounge and gambling casinos. 

Drawing on my experience and the experience of the GAO and 

agency IGs, I recently introduced legislation that requires all FedVerDate 0ct 09 2002 15:00 Feb 25, 2004 Jkt 091040 PO 00000 Frm 00010 Fmt 6633 Sfmt 6601 C:\DOCS\91040.TXT SAFFAIRS PsN: PHOGAN
7

eral agencies to put in place specific safeguards and internal controls. Mr. Chairman, I believe that mandatory credit reporting is 

critical to curbing abuse. The checkers and overseers must also be 

minding the store to make sure that all charges are legitimate. 

That brings us to the subject of today’s hearing, the General Accounting Office’s latest report on defense travel card abuse. In the 

last 2 years, the General Accounting Office reports that DOD employees charged $124 million on centrally-billed travel card accounts to buy 68,000 premium class airline tickets. The General 

Accounting Office estimates that 72 percent of the Department of 

Defense personnel who flew premium class on the taxpayer’s dime 

didn’t even have proper authorization to do it, much less a valid 

justification for why they needed to fly premium class. 

Premium class travel is considered permissible for those personnel only in certain limited circumstances, for instance, if it is 

necessary because of a traveler’s disability, coach class accommodations are not available, or the travel is to an overseas destination 

and at least 14 hours long. 

According to the government-wide and DOD regulations, a traveler must get specific authorization to use premium class travel, 

and a premium class ticket should not be issued unless it is properly authorized. Unfortunately, the large majority of the time, the 

tickets are issued and billed to the Department of Defense travel 

card account with no questions asked. 

So how was this allowed to happen? The General Accounting Office found that DOD performed no monitoring or oversight activities to make sure that premium class travel was authorized according to regulation. In fact, the Department of Defense does not even 

maintain a central accounting of premium class travel so it did not 

even have the basic data necessary for monitoring and oversight. 

In order to conduct this oversight investigation, the General Accounting Office collected data directly from the Bank of America 

and started from scratch. 

The General Accounting Office also found that higher-ranking civilian and military officials accounted for a large part of the premium class travel. In fact, the General Accounting Office considers 

travel by high-ranking officials to be a sensitive payment area because of its susceptibility for abuse and non-compliance with the 

law. Apparently, some high-ranking bureaucrats feel they are entitled to luxury air travel. We have got people who are supposed to 

be public servants stretching their legs with hot towels and a cocktail, even if it costs the taxpayers thousands of dollars more. 

The General Accounting Office discovered through data mining 

that a GS–14 relocated his family of four from London to Honolulu, 

flying first and business class at a cost of $20,943, despite the fact 

that the travel order did not authorize premium class travel. The 

General Accounting Office estimated that a coach fare for the same 

trip would have cost $2,500, so a waste of $18,000. 

Using statistical sampling and data mining, GAO found other examples—a GS–15 who flew first class without authorization, costing $3,200, while a coach ticket was $238; an officer who flew business class without authorization for $1,300 when it could have cost 

$672; another GS–15 whose $4,500 business class ticket was auVerDate 0ct 09 2002 15:00 Feb 25, 2004 Jkt 091040 PO 00000 Frm 00011 Fmt 6633 Sfmt 6601 C:\DOCS\91040.TXT SAFFAIRS PsN: PHOGAN
8

thorized but not properly justified, costing the taxpayers $3,955 

over a coach ticket. 

The General Accounting Office also identified a number of highranking officials who repeatedly used premium class travel without 

proper authorization, including Presidential appointees requiring 

Senate confirmation. One example that I find particularly telling 

has to do with 15 trips made by Assistant Secretary of Defense for 

International Security Policy J.D. Crouch at a cost of $70,000. 

While some of these flights were authorized, the justification given 

was that premium class travel was mission essential so that he 

could be ready for meetings upon arrival. However, Department of 

Defense regulations do not list this as a proper basis for that type 

of travel. 

According to a summary on page 19 of the report, Mr. Crouch’s 

assistant told the General Accounting Office that he flies premium 

class travel to minimize time away from the office. Yet, his assistant could not demonstrate overall cost savings by lost productivity. 

Mr. Crouch’s assistant also apparently told the General Accounting 

Office that even though the flights did not exceed the 14 hours necessary to justify that type of travel, Mr. Crouch should be able to 

fly premium class because of the importance of his work. 

Although these are the words of Mr. Crouch’s assistant and not 

Mr. Crouch himself, this attitude is disturbing and helps to shed 

some light on the reason why improper premium class travel is especially prevalent among high-ranking officials. 

I don’t mean to pick on him. He is not the only Presidential appointee involved in this type of problem. Mr. Stenbit, the Assistant 

Secretary of Defense for Command, Control, Communications, and 

Intelligence is also described on pages 20 and 21 of the report as 

having taken 17 premium class flights at the cost of $68,000, as 

compared with the estimated $17,000 had he flied coach. Mr. 

Stenbit’s justification was based on an unspecified medical condition but no documentation. While the General Accounting Office review of the records indicate that no effort was made to accommodate Mr. Stenbit’s needs in a coach seat for these 17 flights, he apparently flew coach at other times. Also, his travel was approved 

by a subordinate, which is essentially the same as not being approved. 

In this case, the aide who made the reservations stated that she 

will seek approval of the Deputy Secretary in the future for first 

class travel and only schedule Mr. Stenbit for premium class travel 

when less-expensive alternatives are not available. 

These are just examples. Of 44,000 premium class travelers, the 

General Accounting Office reviewed transactions by only 177 individuals, nine of whom were political appointees. 

So, Mr. Chairman, leaders must lead by example. If the highestranking officials don’t feel they need to comply with regulations, 

what kind of message does that send? No wonder no one in the Department of Defense seemed to notice or care that 74 percent of the 

premium class travel was not authorized. There is no leadership at 

the top. 

Mr. Chairman, the General Accounting Office has made a number of excellent recommendations to the Department of Defense 

about how to get its house in order, but unless the Department of 

9

Defense gets serious about internal controls and enforcement of its 

own regulations, we will continue to find this sort of waste. Every 

time we peel back another layer of abuse, we find another just 

below it. 

While the Department of Defense has started to fix some of the 

problems revealed to date with purchase cards and travel cards, I 

see no sign that the Department of Defense has made a concerted 

effort to implement a positive control environment throughout the 

Department. The Department of Defense shouldn’t wait for Chuck 

Grassley or Representative Schakowsky or Chairman Coleman or 

the General Accounting Office to undercover instances of waste, 

fraud, and abuse and tell them what needs to be fixed. 

Make no mistake about it, I intend to keep digging, but I look 

forward to the day when I find nothing to report. Thank you. 

Senator COLEMAN. Thank you, Senator Grassley. 

Senator Grassley, I know that you are involved in some Conference Committees and some delicate negotiation. I am not sure 

what your timing is. What I would like to do, if I can, is just ask 

you one question and then turn to Congresswoman Schakowsky. I 

understand that you may have to leave. 

First, I do want to thank both of you for your dogged determination in looking after taxpayer dollars and dealing with these issues. 

You noted, Senator Grassley, that the GAO has made a number of 

excellent recommendations to address this. I believe that the bill 

that you have authored, S. 1744, the Credit Card Abuse Prevention 

Act, covers many of these recommendations. But in the review that 

we have done in preparation for this hearing, we have noted that 

centrally billed accounts are not presently included in the definition of travel cards as it appears in the bill. Many of the abuses 

today focus on centrally billed accounts, so I would simply ask if 

you would be willing to work with this Subcommittee and work 

with this Chairman and others on the Subcommittee to have a 

more expansive definition so that we eventually cover some of the 

abuses that we are talking about today. 

Senator GRASSLEY. The answer is absolutely yes with only this 

explanation of why it wasn’t included, and that is because we are 

looking for another General Accounting Office report before we 

went that far. But if you know what to do and exactly what to do, 

or maybe by the time we get to that point it will be out. The obvious answer is, yes. I want to do whatever it takes, first, to get the 

bill out of committee, and second, to solve this problem, and I find 

it very comfortable working with the two of you and probably most 

everybody on this Subcommittee. 

Senator COLEMAN. Thank you very much, Senator Grassley. Senator Levin, do you have any questions before Senator Grassley 

leaves? 

Senator LEVIN. Yes. I understand that Senator Grassley has to 

leave. Let me just first of all commend him. I don’t know of any 

tougher, stronger watchdog in the Senate than Senator Grassley. 

It has been a pleasure to work with him on a number of issues. 

Its always a great pleasure to hear from him and his persistence 

in going after waste, fraud, and abuse, wherever it is, whatever the 

Administration is, whatever year it takes place. He has been consistent and I admire him. 

10

1The prepared statement of Ms. Schakowsky appears in the Appendix on page 44. 

Senator GRASSLEY. Thank you. Those are kind words. I appreciate it. 

Senator COLEMAN. Thank you, Senator Levin. Thank you, Senator Grassley. 

Congresswoman Schakowsky. 

TESTIMONY OF HON. JANICE D. SCHAKOWSKY,1 A REPRESENTATIVE IN CONGRESS FROM THE STATE OF ILLINOIS 

Ms. SCHAKOWSKY. Thank you, Chairman Coleman and Senator 

Levin. Before you leave, Senator, I want to thank you for your leadership and I want to associate myself with all of your remarks. We 

have worked together on a number of investigations. I appreciate 

that and hope that we can continue to do so. So thank you very 

much for your work. 

Senator GRASSLEY. Thank you. 

Ms. SCHAKOWSKY. I really appreciate the opportunity to testify 

before you today. I want to also acknowledge my former colleague, 

Representative Steve Horn, with whom I worked on issues of waste 

and abuse during the 107th Congress. Congressman Horn was a 

strong advocate of rooting out waste wherever it was found and it 

was a pleasure to work with him as the Ranking Democrat on his 

Subcommittee. 

I also want to thank the General Accounting Office and its investigators who diligently perform an essential service for U.S. taxpayers by bringing to light abuses like those we are talking about 

today. 

Before I talk about the specifics of today’s report or the history 

of how we got here, I want to put the issue of DOD’s financial mismanagement in a broader context. Of about $7 trillion in accounting entries at the Pentagon, at least 1.2 trillion—that is trillion 

with a ‘‘T’’—were not supported by sufficient evidence to determine 

their validity. That is about 20 percent of all dollars at DOD and 

transactions. 

DOD cannot locate hundreds of billions of dollars worth of military equipment, including weapons systems. It lacks a complete 

and reliable inventory of its environmental liabilities. In the case 

of some equipment, Kevlar body armor for our troops in Iraq, for 

example, DOD does not have enough supplies, while inventory for 

other items exceed the Pentagon’s need by about $30 billion. DOD 

overpays contractors at the rate of about $1 billion a year, and that 

only counts what is eventually returned to the government. There 

may well be another $1 billion in overpayments each year that 

aren’t caught. 

If DOD were a private corporation, it would already be bankrupt 

or the management of the Department would be fired or under investigation. 

To stop the culture of waste, fraud, and abuse at the Defense Department, we need a fundamental change. Today’s report on premium class travel is just one part of a much larger problem. 

For years, the Federal Government has been unable to balance 

its books and the single largest cause for this is financial mismanagement at the Department of Defense. DOD has an enormous 

11

budget. It accounts for about half of all the discretionary spending, 

and despite its horrific record of waste, fraud, and abuse, DOD’s 

budget grows every year. Until the Department of Defense can pass 

a financial audit and balance its books, and all signs suggest that 

won’t happen for years, we won’t be able to balance the books for 

the entire Federal Government. 

This is the sixth hearing I have attended on government credit 

cards alone. Every time we ask the GAO to shed light on any aspect of DOD’s financial management, scandalous abuses are uncovered. A couple of examples. 

At the Naval Space Wars Research Laboratory, we found serious 

abuse of government purchase cards. Employees were buying Palm 

Pilots, Coach briefcases, Luis Vuitton bags for themselves, all at 

government expense. There was little accountability and the government paid all the bills. The commander of the laboratory tried 

to defend these purchases. Much of what had been purchased 

couldn’t be found when GAO went looking for it. It was the Navy’s 

policy, we were told, not to inventory items that were easily stolen. 

At another installation, the cardholder was also the approving official and paid the bills. At another installation, the cardholder 

bought gift certificates for family members using a government 

purchase card but was never held accountable. Senator Grassley 

highlighted this case in one of his many testimonies before the 

Government Efficiency Subcommittee. 

Working with Chairman Shays on the Government Reform National Security Subcommittee, we found that the Defense Department was selling chemical and biological protection suits on the 

Internet for just $2 or $3. At the same time, the Department was 

purchasing these suits for $300 apiece. Recently, GAO testified that 

over the Internet, one could buy all of the equipment needed to set 

up a lab to produce biological weapons from the Defense Department. This equipment was purchased in new or virtually new condition for pennies on the dollar. 

We looked at the travel card program and discovered that agencies were losing hundreds of thousands of dollars in rebates because military employees were defaulting on payments owed to 

credit card companies. We saw no accountability. One officer was 

promoted, despite the fact that he had defaulted on thousands of 

dollars for which he was reimbursed by the government. 

Today, the GAO will testify to the abuse of yet another system 

by DOD employees. Senior officials, some of them Presidential appointees, are taking advantage of their position and wasting taxpayer dollars, flying premium class in violation of the rules. At the 

same time, enlisted military personnel returning from Iraq during 

their brief 2-week break from the war have had to pay their own 

transportation within the United States. Were it not for the fact 

that Congress intervened, those patriot soldiers would still have to 

pay their own way to see loved ones before returning to combat in 

Iraq. 

GAO found widespread abuses of premium class travel. Of the almost $124 million the DOD spends on about 68,000 premium class 

flights during fiscal years 2001 and 2002, 72 percent was not properly authorized and 73 percent was not properly justified. That is 

close to $90 million in misused taxpayer dollars for close to 50,000 

12

flights, and while $124 million is not even a rounding error at 

DOD, that number is still greater than the total travel and transportation expenses spent by 12 other major agencies combined, including Social Security Administration, DOE, Education, NASA, 

HUD, and others. 

As we have seen on other investigations, there was little or no 

management oversight. DOD could not even count the number of 

premium class flights, had no idea of the cost to the government 

for these flights. As you listen to GAO’s testimony, you will hear 

again and again that DOD did not have adequate internal controls. 

I expect we will also hear today from the Defense Department 

that they have put procedures in place to end the abuse of premium class travel. We have heard that same thing about the purchase cards and about other travel cards. When DOD heard about 

our investigation into the chem bio suits, they sent out a notice to 

stop those sales. When they learned of the laboratory equipment 

problems, senior DOD officials tried to get the GAO report classified. Then they told the remainder of the companies to stop selling 

the laboratory instruments. 

The problem at DOD is indeed much larger than today’s discussion. The problem is that the leadership of the Department of Defense has acted to stop abuses only when it becomes public, and 

then only addresses the specific case at hand. The purchase card 

abuses were widespread when we did our first investigation at the 

Space Warfare Laboratory. However, the Department did nothing 

to address this widespread abuse until our investigation began to 

uncover problems everywhere. And there is no real reason to believe that any action announced by DOD today is anything more 

than a band-aid. 

To address this issue in a more fundamental way, I plan to introduce legislation that will prevent the Defense Department from receiving budget increases unless and until it can balance its books. 

Congress will, of course, always give our troops what they need. 

But if we want to force DOD to clean up its act, Congress has to 

take serious and comprehensive action. If not, we are going to 

spend years offering piecemeal solutions and reading countless 

GAO reports with similar conclusions while the entire Federal Government and taxpayers continue to pay the price. 

The irony is that these problems are occurring at the Department of Defense, an institution that places a premium on discipline, the chain of command, and accountability. That makes the 

culture of waste, fraud, and abuse that seems to permeate all aspects of DOD’s fiscal operations all the more intolerable. This has 

to stop. It is unfair to our soldiers and certainly to our U.S. taxpayers. 

It is not enough to punish only those who abuse the system. 

Until we force DOD’s managers to make the system-wide reforms 

that will end this culture of waste, fraud, and abuse, I believe that 

it will persist. I thank you both. 

Senator COLEMAN. Thank you, Congresswoman Schakowsky. 

Again, thank you for your efforts in this area. 

I want to thank you for putting today’s hearings in the context 

of a larger set of issues. We can’t look at this as if, OK, here is 

13

what we have today and forget that there was a yesterday and we 

would like to make sure there is not a tomorrow. 

And then this last observation. I had the pleasure of being the 

Senate author of the provision to provide payment for our military 

personnel coming home from Iraq so they could get from Baltimore 

to St. Paul, or get from Baltimore to Omaha. 

Ms. SCHAKOWSKY. Thank you very much. 

Senator COLEMAN. As we were working on that provision, I was 

struck with the irony and I was angered that on the one hand we 

have situations of folks living the high life, flying first class, and 

then we have got grunts trying to figure out a way to see their 

wives or moms and dads or sons and daughters. So I again want 

to thank you for fighting the fight here and for your work. 

Senator Levin. 

Senator LEVIN. I thank the Congresswoman. Say hi to my brother. [Laughter.] 

Senator COLEMAN. Thank you very much, Congresswoman. 

Before we introduce the next panel, I would turn to the distinguished Ranking Member, Senator Levin, for any opening remarks 

that he may have. 

OPENING STATEMENT OF SENATOR LEVIN 

Senator LEVIN. Mr. Chairman, thank you and thank you for your 

determined leadership in this area and so many other areas that 

come within the oversight responsibility of this Subcommittee. You 

have taken on this Chairmanship with gusto and I commend you 

for it. 

As you pointed out, and I think both our witnesses so far have 

pointed out, Mr. Chairman, the weaknesses that we will see today 

in the DOD systems for authorizing travel are symptomatic of 

broader management shortcomings that we have seen to be pervasive in the Department of Defense financial management system 

for so long. 

Just in the last couple months, we have received two reports 

from the DOD Inspector General, one documenting the failure of 

management controls for the purchase card program by Washington headquarters services, and the other Inspector General’s report documenting the failure of management controls over DOD 

transit subsidies in the National Capital Region. 

And because of these ongoing shortcomings in the Department of 

Defense’s financial management systems, it can take more than 

100 paper transactions in the contracting and disbursing systems 

for the Department of Defense to make a single contract payment. 

Because of these shortcomings, the Department of Defense’s working capital funds operate on the basis of arbitrary prices that lead 

to perpetual problems in making the books balance. Because of 

these shortcomings, the Department cannot reliably account for the 

cost of performing work in-house for the purposes of OMB Circular 

A–76. Because of these shortcomings, DOD managers often have to 

set up separate tracking systems of their own with varying degrees 

of success to manage funds, to ensure that they have adequate financial reserves, and to avoid Anti-Deficiency Act violations. 

What today’s hearing shows is that even in those cases where the 

Department’s financial management systems are capable of proVerDate 0ct 09 2002 15:00 Feb 25, 2004 Jkt 091040 PO 00000 Frm 00017 Fmt 6633 Sfmt 6601 C:\DOCS\91040.TXT SAFFAIRS PsN: PHOGAN
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ducing useful data, it doesn’t do any good if nobody is paying attention. According to the GAO report, the Department of Defense and 

the military services did not, one, obtain or maintain centralized 

management data on the extent to which military and civilian personnel used premium class accommodations for their travel; two, 

issue adequate policies relating to the approval of premium class; 

and three, require consistent justification to justify premium class. 

So at a time when top Department of Defense officials are insisting that they need unprecedented new flexibility to manage the resources allocated to the Department, it is disturbing to see the continual shortcomings in the exercise of the management responsibility that they already have. 

Again, Mr. Chairman, thank you for your leadership and for your 

convening this hearing on a very significant subject, which again, 

as you point out, is really symbolic and symptomatic of a deeper 

problem. 

Senator COLEMAN. Thank you, Senator Levin. It is always a 

pleasure to work with you in a nonpartisan way and a bipartisan 

way on issues such as this. 

I would now like to welcome our next panel to today’s important 

hearing: Gregory Kutz, a Director with the Financial Management 

and Assurance Team at the General Accounting Office; John Kelly, 

an Assistant Director with the Financial Management and Assurance Team at GAO; and finally, John Ryan, an Assistant Director 

in the Office of Special Investigations at GAO. 

As I mentioned in my opening statement this morning, GAO is 

here to release the results of the GAO’s investigation of the Department of Defense’s use and monitoring of premium airline travel 

during the fiscal years 2001 and 2002. The purpose of this hearing 

is to identify the types of abuse that you uncovered, discuss the 

causes, determine the magnitude of the problem and identify what 

corrective action is taken. I believe it is essential for us to monitor 

the utilization of both government-issued travel cards and centrally 

billed accounts to ensure that expected cost savings are realized. 

I thank you again for your attendance at today’s important hearing. I understand that Mr. Kutz will testify but that the other gentlemen will be here in a supporting capacity and may have something to say. 

As such, before we begin, pursuant to Rule 6, all witnesses who 

testify before the Subcommittee are required to be sworn. At this 

time, I would ask you to please stand and raise your right hand. 

Do you swear that the testimony you are about to give before the 

Subcommittee will be the truth, the whole truth, and nothing but 

the truth, so help you, God? 

Mr. KUTZ. I do. 

Mr. KELLY. I do. 

Mr. RYAN. I do. 

Senator COLEMAN. We will use a monitoring system today and I 

would ask that you limit your oral testimony to no more than 10 

minutes. If your testimony goes beyond that, the written testimony 

will be entered as part of the record. 

Mr. Kutz, I believe you will be presenting the GAO’s statement 

this afternoon. You may proceed. 

15

1The prepared statement of Mr. Kutz appears in the Appendix on page 48. 

2See Exhibit No. 1 which appears in the Appendix on page 72. 

3See Exhibit No. 2 which appears in the Appendix on page 122. 

4See Exhibit No. 3 which appears in the Appendix on page 123. 

TESTIMONY OF GREGORY D. KUTZ,1 DIRECTOR, FINANCIAL 

MANAGEMENT AND ASSURANCE TEAM, ACCOMPANIED BY 

JOHN V. KELLY, ASSISTANT DIRECTOR, FINANCIAL MANAGEMENT AND ASSURANCE TEAM, AND JOHN J. RYAN, ASSISTANT DIRECTOR, OFFICE OF SPECIAL INVESTIGATIONS, U.S. 

GENERAL ACCOUNTING OFFICE 

Mr. KUTZ. Thank you, Mr. Chairman. I have testified after Senator Grassley several times and that is a hard act to follow, so bear 

with me. 

But thank you for the opportunity to be here to discuss our audit 

of premium class travel at the Department of Defense.2 This is a 

continuation of our series of audits of DOD’s $10 billion credit card 

programs. Today, we will discuss the use of the centrally billed 

travel accounts to purchase premium class airline tickets. As you 

mentioned before, first and business class tickets are referred to as 

premium class. 

The bottom line of my testimony is that control breakdowns resulted in significant improper premium class travel and increased 

cost to taxpayers. These results provide another example of why 

DOD financial management is on our list of high-risk areas, highly 

vulnerable to fraud, waste, and abuse. 

My testimony has three parts: First, the extent of premium class 

travel; second, examples of improper travel; and third, the key 

causes of the control breakdowns. 

First, based on extensive analysis of Bank of America data, we 

found the following for fiscal year 2001 and 2002. One-hundredand-twenty-four million dollars was spent on 68,000 premium class 

airline tickets by 44,000 individuals. Premium travel represents a 

very small percentage of DOD’s annual travel budget of $5 billion. 

However, premium travel at DOD is more than the entire travel 

budget of 12 Federal agencies. Specifically, as shown on the 

posterboard and the monitor, the $124 million DOD spent on premium travel was more than Labor, NASA, SSA, Energy, and EPA 

spent on all travel for 2001 and 2002.3

Based on our statistical sample, we estimate that about 50 percent of premium travel related to senior military and civilian personnel. In addition, 27 of the 28 most frequent premium class travelers were senior personnel. As Senator Grassley noted, we consider travel by high-ranking officials to be a sensitive payment area 

that is vulnerable to abuse. 

The price difference between a premium ticket and coach ticket 

is generally substantial. The poster board and monitor show some 

examples of these price differences.4 For these examples, premium 

tickets cost as much as 13 times more than a comparable coach 

ticket. And as you mentioned, Mr. Chairman, the cost of this trip 

from Los Angeles to Washington, DC, cost $3,000 more than a 

coach ticket. 

We also identified numerous cases of improper and questionable 

travel, including the following. Six individuals flew premium class 

to a 2-day conference in Moscow, with stops in London, Brussels, 

16

and Paris. The travel order used ‘‘mission essential’’ as justification, but we found no evidence that this conference was mission essential. 

We also found a number of trips with questionable medical condition justification. For example, one individual took 14 premium 

class trips using a medical condition as justification. During the 

same time frame and for trips of similar duration, this individual 

also took 31 coach class trips. 

One General took 16 premium class trips that were approved by 

a subordinate. Allowing subordinates in the military chain of command to approve travel is not a valid control. 

We also found cases where individuals approved their own travel, 

including a GS–15 with 11 premium class trips. Self-approval of 

any travel is not a valid control. 

GSA and DOD regulations state that government travelers must 

exercise the same standard of care when spending taxpayer dollars 

that they would when spending their own money. We found that 

many of the premium tickets that we audited and investigated did 

not meet that standard. 

Third, based on our statistical sample, we estimate that 72 percent of DOD premium class travel was not properly authorized and 

justified. Part of the problem was that the commercial travel offices 

did not properly scrutinize the requests for premium class tickets. 

We found that 64 percent of the tickets in our sample did not have 

specific premium authorization and thus should not have been 

issued. 

Further, DOD did not have accurate data on the extent of premium travel and did little or no monitoring of this travel. As a result, DOD was not aware of the extent of improper premium travel 

until they saw the results of our audit. In addition, DOD’s required 

reports to GSA on the extent of first class travel were inaccurate. 

We also found that DOD’s policies were inconsistent with government-wide travel regulations and did not specify how to properly 

document authorization and justification of transactions. In addition, the proliferation of internal DOD policies caused confusion 

over the appropriate circumstances for premium travel. As a result 

of our audit, DOD has begun updating its travel regulations to 

more clearly articulate the circumstances under which premium 

travel is authorized. The updated regulations emphasize that premium travel must only be used when exceptional circumstances 

warrant the additional cost. 

DOD should build on these improvements and establish strong 

controls over this sensitive area to ensure that its travel dollars are 

spent efficiently. To that end, we have issued a report with 16 recommendations to the Secretary of Defense aimed at reducing improper travel. DOD has concurred with all of our recommendations. 

In conclusion, DOD does not have the management controls in 

place to identify issues, such as improper premium travel. Secretary Rumsfeld has stated that successful business process reform 

could save DOD up to 5 percent of its budget, or over $20 billion 

annually. The millions of dollars of wasteful spending described 

today are a small example of those potential savings. 

Oversight hearings, like the one today, are a critical component 

to successful reform at DOD. In addition, high-level management 

17

focus will be needed to end the improper use of premium travel at 

DOD. 

Mr. Chairman, this ends my statement. Special Agent Ryan, Mr. 

Kelly, and I will be happy to answer questions. 

Senator COLEMAN. Thank you very much, Mr. Kutz. 

First, just a couple of background questions. When we are talking about premium travel here, does that at all relate to—what 

about folks who have frequent flyer miles and use them to upgrade? Is that part of this process at all? 

Mr. KUTZ. No, that would not. Premium travel as part of our report would have been only when the government paid for premium 

travel. It is appropriate for people to use frequent flyer miles now. 

Senator COLEMAN. And premium travel includes both first class 

and business class, is that correct? 

Mr. KUTZ. Correct. 

Senator COLEMAN. There is very little difference between first 

and business class? 

Mr. KUTZ. Sometimes they are the same. 

Senator COLEMAN. I believe in going through my notes on this 

that there has not been the same level of documentation within the 

DOD for business class. Was that a definitional issue? Can you 

shed some insight onto the difference in terms of tracking between 

first class and business class? 

Mr. KUTZ. They were required by GSA policy to report annually 

on first class travel and GSA rolls that up for all the agencies in 

the Federal Government and reports that to the Congress. As I 

mentioned in my opening statement, that report understated the 

extent of first class travel. 

Senator COLEMAN. First class. 

Mr. KUTZ. They had no information on business class travel, and 

what we had to do to get that information, as I believe Senator 

Grassley noted in his opening statement, was use data mining to 

go in, and when you go into the database and you look at a ticket 

number, there are certain characteristics in a ticket number that 

tell you whether it is first or business class. And so we were able 

to go in and get what is called Level 3 data from Bank of America 

and extract that information. 

Senator COLEMAN. And what percentage of premium travel was 

first class versus what was business class? 

Mr. KUTZ. It was virtually all business class. There were about 

1,240, I believe, first class trips, and the other 66,000-plus were 

business class trips. 

Senator COLEMAN. So I take it you would be very supportive of 

OMB and GSA requiring annual reporting of all premium travel, 

first class and business class, from here on in? 

Mr. KUTZ. Yes, that would be a good idea. 

Senator COLEMAN. Thank you. You indicated in your testimony 

that DOD wasn’t aware. I am trying to understand what that 

means. Who wasn’t aware? If the practice is widespread, if it has 

gone on, help me understand what it means not to be aware. Was 

it not to be aware because it wasn’t reported? Was it not to be 

aware because folks just didn’t have the data? Is there a sense that 

there is kind of a problem in the culture here that simply has alVerDate 0ct 09 2002 15:00 Feb 25, 2004 Jkt 091040 PO 00000 Frm 00021 Fmt 6633 Sfmt 6601 C:\DOCS\91040.TXT SAFFAIRS PsN: PHOGAN
18

lowed this and hasn’t addressed it? Can you give me your insight 

into that? 

Mr. KUTZ. Yes. There are cultural issues, because I think there 

were some—there are some folks that probably did this not knowing the rules. Others probably felt they had or deserved to have the 

travel. But this is an issue we see across the board with DOD. 

There are issues of overall monitoring and the control environment, 

and here, it was a matter of not having the data and having three 

separate organizations. I think you can ask the next panel about 

who is going to be in charge going forward. But no one was in 

charge, but three groups were in charge. So at the end of the day, 

there was really no oversight. Again, the three groups have some 

culpability in that. 

Senator COLEMAN. I want to get back to the difference in handling first class, which was really a very small percentage of the 

travel, which had the reporting requirements, which had the rules, 

which I believe, as I understand it, had an approval process requiring it being approved by——

Mr. KUTZ. The Secretary or the designee of the Secretary. 

Senator COLEMAN. So we are talking about a very high-level person approving first class. 

Mr. KUTZ. That is the government-wide requirement, yes. 

Senator COLEMAN. But in terms of business class, I believe in 

your testimony you talked about instances where subordinates 

were approving travel for superiors. Would I take it then to understand that in business class, there is not a clear, uniform directive 

that says it has to be done by somebody at a higher level? 

Mr. KUTZ. That was correct. 

Senator COLEMAN. And is there——

Mr. KUTZ. Now, whether they have revised that or not, I don’t 

know, but there was varying practices for business class travel. 

Senator COLEMAN. My next question would be, do you know 

whether that has been corrected? 

Mr. KELLY. To the best of our knowledge, we don’t know if that 

has been corrected yet. 

Senator COLEMAN. And would you be willing to offer a recommendation as to some uniform standard? 

Mr. KUTZ. Right. 

Senator COLEMAN. Can we do that, or is it the nature of the military that you may have somebody on site somewhere and not have 

somebody at that rank? Can you help me understand——

Mr. KUTZ. Yes. 

Senator COLEMAN [continuing]. How we ensure the common 

sense thing, which is if you are going to get approval for this, it 

should be done by somebody at a higher level. 

Mr. KUTZ. Our recommendation was that the approval should be 

done by someone at the same level or, preferably, a higher level, 

and they have concurred with that recommendation. So my belief 

would be that they have gone in and changed the policy. 

There are two things, though. There is writing a policy and there 

is actually enforcing the policy, and that second part here—in some 

cases, what we found, that there were policies in place and people 

weren’t following them. So they have to have two things. They have 

to have the valid policies and they are going to have to have an 

19

accountability mechanism in place to make sure that even if they 

put a good policy in there for approval, that it is being consistently 

followed. 

Senator COLEMAN. I just want to clear up something statistically. 

At one point in your testimony, you talked about 72 percent not 

properly authorized, and then you used a 64 percent figure. 

Mr. KUTZ. The 64 percent represent—out of the 72, 64 percent 

had no specific documentation in the packages that went to the 

commercial travel office that said that they were for premium class 

travel, which means that someone had to have called the travel office and said, please get me a business or first class ticket, and the 

travel office issued it without following the appropriate policies and 

having the documentation. 

Senator COLEMAN. Much of this report is based on sampling. 

Critics may come back and say, well, you took a very small sample 

and they may then, therefore, challenge the results. Can you talk 

to me a little bit about your statistical method, your confidence in 

the validity of what we found? 

Mr. KUTZ. Right. Yes, we used statistical sampling when we test 

internal controls and our confidence level, we are 95 percent confident that the failure rate is 72 percent, plus or minus 5 or 10 percent. I don’t know the specific details. So we are 95 percent confident that the failure rate or the breakdown in controls is between 

probably 65 and 75 percent. 

Senator COLEMAN. I am trying to put myself in the position of 

some folks in DOD and kind of looking and trying to give them the 

benefit of the doubt. In your opinion, are the travel regulations 

themselves simple enough for people to understand, or is there a 

claim here that somehow there was confusion and there was a lack 

of clarity in terms of what is required? Can you help me out with 

your assessment of the nature of the regulations here? 

Mr. KUTZ. There was a proliferation of policies out there that—

a lot of times in DOD, you have got policies at the Office of the Secretary of Defense level and then each of the services will develop 

their own and even units within the military services will have 

their own policies. And here, we found that there are lots of policies 

out there, some inconsistent with each other, and some inconsistent 

with GSA’s government-wide regulations. 

Senator COLEMAN. But I want to get back to the culture question. Both in listening to the statements by Senator Grassley and 

Congresswoman Schakowsky, I get a sense that there is a cultural 

problem here, that common sense would dictate you save taxpayers’ 

money. That is what we are supposed to do. You want people to 

fly in comfort, you don’t want them to be abused, but common 

sense says if you can fly somewhere for coach class, you do that 

rather than presume, because you are a high-ranking official, you 

are going to automatically fly first class. 

I guess I want to come back to that. Can we clean the system 

up? Can we take an agency as diverse, as large as the DOD—in 

your experience in the GAO, can we put into place some clear 

standards here and have the confidence level, as representatives of 

the taxpayers, that they can be enforced? 

Mr. KUTZ. I would say yes. With respect to the prior work we did 

on credit cards, there has been significant progress in improving 

20

the controls over the purchase and the individually billed travel 

card. For example, the delinquency rates were well over 10 percent 

when we first started doing our work on the individually billed 

travel card, and my understanding is now that they are well below 

10 percent. 

So DOD can make progress. These are issues that don’t require 

new business systems, which is a whole other matter we will probably get into here. But this is pretty much people and policies and 

procedures and implementing them. And the interesting thing 

about the culture is that 50 percent of the people who took this 

travel were senior, but the other 50 percent were very junior, and 

that is almost as surprising to me as the senior people actually taking that travel. 

Senator COLEMAN. But to me, it says you are building a culture——

Mr. KUTZ. Yes, you build a culture, and unless you intervene——

Senator COLEMAN [continuing]. Some people would change. 

Mr. KUTZ [continuing]. They are setting a bad example for other 

people, probably, and they were following it. 

Senator COLEMAN. Well, I do hope they can change. We will expect change. We will monitor to see that change is taking place and 

this is just not an exercise in you doing a report and us having a 

hearing. We do expect things to change. 

My distinguished Ranking Member, Senator Levin. 

Senator LEVIN. Thank you, Mr. Chairman. Just to clarify a couple of the points on this business class-first class, you said there 

were 66,000 business class purchases, I think that was the figure——

Mr. KUTZ. A little over 66,000 and then about 1,200 first class, 

yes. 

Senator LEVIN. Do we assume that where there were 66,000 

business class that most of those were the top class that was available, or do we know what percentage where business class was 

purchased that there was even a higher-cost ticket, the first class 

ticket? 

Mr. KELLY. We do not have that information. It is not collected. 

Senator LEVIN. You, at one point, said that the regulations are 

not clear in some instances between the services, within the services. Do we know in what percentage of the cases that you looked 

at there was a violation of the regulation? 

Mr. KUTZ. Of the current DOD or government-wide regulations? 

Senator LEVIN. Or of the unit regulations or service regulations. 

Mr. KUTZ. Well, certainly the 64 percent I mentioned that had 

no specific documentation justifying the premium would have been 

a violation of policy. The policy was that premium travel required 

specific authorization and documentation. 

Senator LEVIN. And that is true across the board——

Mr. KUTZ. Across the board. 

Senator LEVIN [continuing]. Every unit, every service, period? 

Mr. KELLY. Yes. That is a requirement. 

Senator LEVIN. On the justification side, on giving the reasons, 

the justifications, what percentage was there of that lacking? 

Mr. KUTZ. That would have been virtually all of them, also. 

Senator LEVIN. The same——

21

Mr. KUTZ. Yes, I would say the same, because nothing is justified 

unless it is authorized, first of all. The way the rules work is that 

even if you meet the criteria for business or first class, a lot of 

agencies don’t allow their people to do it because they have travel 

constraints and they try to save the money for their budget. So it 

isn’t an entitlement. You still have to have someone make the justification to say, we are willing to pay four or five times more for 

a ticket for you because you meet these criteria. So it is not really 

an entitlement. It is something that still needs authorization. 

Senator LEVIN. So you can say with certainty what that percentage is from your sample, even though you are saying that there is 

a discord in the regulations between units, between services. In 

that regard, there is a clarity as to what is required and a clear 

percentage of what was not done according to regulation. 

Mr. KUTZ. I would say over half of the problem here was people 

not following valid policies, and then the rest of it was where the 

policies need to be tightened up. So I think it is a combination of 

both. I am not sure we can precisely identify which is which, but 

over half of it was where there were policies in place and people 

were not following them, and there is no accountability system to 

ensure that people were doing what they were supposed to. 

Senator LEVIN. Can you compare the Department of Defense in 

this regard with other agencies in terms of the percentage of times 

in which the policies or regulations were not followed? 

Mr. KUTZ. No, but Mr. Ryan has some information he could 

share on the practices of several other agencies. 

Senator LEVIN. Is this typical of agencies? Does it exceed the percentage of other agencies in terms of failure to document? Where 

are we on a relative basis? 

Mr. KUTZ. Well, when we looked at the purchase card program, 

we found that DOD in some cases was the worst in the government. In other cases, they were similar to others, like the delinquency rates. But with respect to premium, we have not gone out 

and done other studies of this at other agencies, except Mr. Ryan 

has talked to some agencies. I will let him answer. 

Mr. RYAN. Basically, what we tried to do is to contact the security details that were for the head of the agencies to try to find out 

what the secretaries were doing or the agencies. It was kind of like 

they told us that they try to follow all the GSA rules and regulations and the secretaries, according to the protective details, will 

travel coach. If they want to move up, they use their own miles. 

And they are saying that—the details say that is the practice that 

they have. 

Mr. KUTZ. So we didn’t go below that. 

Mr. RYAN. Right. 

Mr. KUTZ. We thought if we were at the Secretary level, that 

would have trickled down within the agencies. 

Senator LEVIN. Congresswoman Schakowsky was interested in 

this area and I think the rest of us would be, too. The report does 

not give a dollar amount as to the savings that could have been 

achieved had the waste not occurred. However, according to Congresswoman Schakowsky’s office, I understand there is some evidence that could produce a number in that regard. Are you able to 

give us a range of dollars that could have been saved? 

22

Mr. KUTZ. Yes. We believe it is tens of millions of dollars a year, and I would say between $10 and $30 million would be a good estimate, because we are talking about 70 percent of $124 million, and 

if you kind of trickle that down to an annual savings, and you assume some of it might have been valid had someone gone through 

and done the right documentation, I would say $10 to $20 to $30 

million a year. 

Senator LEVIN. Now, on the broader financial management 

issues which we indicated are a backdrop for this problem and you 

thought you might be asked about, so here goes. Section 1004 of 

last year’s Defense Authorization Act required the Department to 

establish by no later than May 1 of this year a financial management enterprise architecture for the Department of Defense and a 

transition plan for implementing that enterprise architecture. That 

requirement was consistent with commitments that had previously 

been made by senior Department of Defense officials. The GAO was 

required to follow up and determine whether or not the Department complied with the requirement. 

Your report, which was issued in September, concludes that, 

‘‘DOD’s initial architecture does not yet adequately address the 

Act’s requirements and other relevant architectural requirements,’’ 

and I would like to ask you some very specific questions about that. 

Section 1004 required that the new architecture comply with all 

Federal accounting, financial management, and reporting requirements. Does DOD’s proposed architecture do that? 

Mr. KUTZ. The May version did not. We found a significant number of requirements were not in there, hundreds of them, although 

there were thousands that were in there, so it was a mixed result. 

Senator LEVIN. Is that something you have put in writing, what 

were and what weren’t? 

Mr. KUTZ. Yes, we did, and I would believe by now, and Mr. 

Lanzillotta can probably answer this, they have got those in there. 

Senator LEVIN. All right. We will ask——

Mr. KUTZ. Because they are updating the architecture all the 

time. 

Senator LEVIN. We will ask him that question, then. 

Section 1004 required that the new architecture include policies, 

procedures, data standards, and system interface requirements 

that apply uniformly throughout the Department of Defense. Does 

the Department’s proposal do that? 

Mr. KUTZ. Partially, but not fully, is what our report noted. 

Senator LEVIN. And do you know if they have made progress 

since your report? 

Mr. KUTZ. I believe they have. Again, they have agreed with our 

recommendations and we were very specific in the kinds of things 

that needed to be done. So I suspect they are further along, because that was back in May. 

Senator LEVIN. Do you track that? 

Mr. KUTZ. No, but we are required under Section 1004 to report 

on this periodically and we are starting our next review of this. So 

we will be reporting back to you on that in May 2004. 

Senator LEVIN. Section 1004 required that the transition plan 

include an acquisition strategy for the enterprise architecture, including specific time-phased milestones, performance metrics, and 

23

financial and non-financial resource needs. Did their proposal do 

that? 

Mr. KUTZ. No. That was one of the areas where we felt it fell far 

short of the requirement. The transition plan was actually a plan 

to develop a transition plan. It really did not chart what I think 

that the Act was looking for, which is, for all of you that are not 

familiar with this, there are over 2,000 business systems out there 

right now and the plan was intended to show how DOD is going 

to go from their 2,000-some systems that cost $19 billion a year to 

operate and maintain to the environment they see in the future, 

which should be several hundred systems that cost billions and billions of dollars less to operate. So they did not have that, and 

again, Mr. Lanzillotta can probably tell you where they are with 

that today. 

Senator LEVIN. Section 1004 required the transition plan to include a specific schedule for phasing out legacy systems that are 

not consistent with the new architecture. Did the proposal do that? 

Mr. KUTZ. No. 

Senator LEVIN. And Section 1004 required the Department to institute an investment management process to ensure that investments in new business systems are consistent with the requirements of the new architecture. Did the Department establish an effective investment control process? 

Mr. KUTZ. I would say no, but they had made a start at that, and the specifics of the Act, as I recall, are anything over $1 million 

that is going to be obligated is supposed to have comptroller review 

and approval before they enter into those transactions. They have 

just begun and I think they have maybe done 10 or 11 of the several hundred that might meet that criteria. So they are beginning, 

but they have not met that one. 

Senator LEVIN. Thank you. Thank you so much. 

Senator COLEMAN. Senator Pryor. 

Senator PRYOR. Thank you, Mr. Chairman, and I appreciate your 

leadership on this because this is important. 

I would like to ask, if I may, some questions about perspective 

to try to get this in perspective. First, as I understand your previous testimony, you have not done this type of survey with other 

Federal agencies or other Federal departments, but is it fair to say 

that your impression, and probably your clear impression, is that 

this problem is far worse in DOD than it is in other agencies? Is 

that fair? 

Mr. KUTZ. That would be fair. If the Secretaries of the other 

agencies are going coach, then I would say that is a fair statement. 

Senator PRYOR. Another question I have, and it is probably in 

your report and I have been reading through it, it is very interesting. I have not come across the part yet that tells me what percentage—and you may have covered this in your opening statement, but what percentage of the travel is not following government guidelines that have been established? What overall percentage of the travel is the so-called problem travel? 

Mr. KUTZ. Well, the premium travel is 1 percent of all travel 

tickets but it is 5 percent of the dollars. That gives you an idea of 

how many—I am not sure if that completely answers your question, but it is a small percentage of the transactions, but because 

24

they cost four or five times more than a coach ticket, it becomes 

about 5 percent of all DOD travel dollars. 

Senator PRYOR. Do you know, and you may not know this off the 

top of your head, but what the overall Defense Department travel 

budget is? I am sure it is complicated because——

Mr. KUTZ. It is over $5 billion. 

Senator PRYOR. Five billion? 

Mr. KUTZ. Yes, and the centrally billed accounts are about $1.45 

billion a year. 

Senator PRYOR. OK. I assume they are not having problems stay- ing within their $5 billion travel budget? 

Mr. KUTZ. I couldn’t address that necessarily. 

Senator PRYOR. OK. I do have another question that is raised in 

the report and it is just an unanswered question. Maybe I haven’t 

gotten to the answer in the report yet. Is all of this travel for DOD 

employees? It seems like there may be some family travel in there. 

Is there any contractor travel in there? I mean, what are we talking about here? 

Mr. KUTZ. I will let the gentlemen here that were involved in 

some of the interviews elaborate, but we found travel that was by 

family members as part of what is called a PCS move, Permanent 

Change of Station move, and again, that was a situation where I 

believe several of the opening statements related to a trip from 

London to Honolulu of a family of four——

Senator PRYOR. Right, I saw that. 

Mr. KUTZ [continuing]. And it was $21,000 versus $2,500, and so 

that is in the population in all likelihood, a bunch of that. And one 

of the reasons that they were able to do that is because the travel 

office told the traveler that we have done that for others. 

We also found that there was a commission of private sector individuals, that the government paid for them to take the trip to Moscow, I mentioned in the opening statement——

Senator PRYOR. Right. 

Mr. KUTZ [continuing]. So that was not government employees. 

Senator PRYOR. What about any sort of contractors or non-DOD 

people that are being paid for out of DOD funds? 

Mr. KUTZ. In our testing, did we come up with anything? 

Mr. KELLY. I don’t remember seeing any contractors. We do know 

that sometimes wives of senior-level officials are asked to go represent the United States overseas and there are some of those situations. 

Senator PRYOR. Did you find any unauthorized travel, where people should not have had the government pay for the trip, but they 

did? 

Mr. KELLY. We did not find any examples of people taking trips 

when there was no travel order authorizing them to fly. 

Mr. KUTZ. If it appeared to be official government business. We 

didn’t see anything that was outside of this realm. 

Senator PRYOR. Mr. Chairman, I think that is all I have right 

now. 

Senator COLEMAN. Thank you, Senator Pryor. 

Just two quick follow-up questions. I am interested in the range of dollar loss and I think, Mr. Kutz, you talked about $10 to $30 

million in savings. Is that just for the years 2001 and 2002? 

25

Mr. KUTZ. That would be for those 2 years, but I would assume 

that that would continue. If they are able to put these controls in 

place, I believe that is what would be saved going forward per year. 

Senator COLEMAN. So if one were to kind of reverse at estimated 

dollar loss, what do you estimate the total dollar loss then to be 

in fiscal years 2001 and 2002? 

Mr. KUTZ. Twenty to $60 million. 

Senator COLEMAN. And——

Mr. KUTZ. I think what we can do, I mean, if you look forward, 

and in your opening statement you want to kind of track these 

things, we could work with you to kind of monitor this and see. If 

they implement the controls we are talking about here, you should 

see this dramatically decrease going forward. 

Senator COLEMAN. And I would like to be able to see that to say 

there is a reason that we do what we do. 

Is there anything in this process that would provide some avenues of recoupment of loss, or would that be difficult in these situations? 

Mr. RYAN. I think what we decided to do is, working with your 

staff, we decided to refer the 44,000 people to DOD. DOD can make 

their mind up as to whether or not they want to recoup the money. 

What we are interested in doing is continue to do investigations to 

identify what causes these problems so that we can pass the information on, and hopefully we can get the savings that way. 

Senator COLEMAN. I think that, depending on the intent of the 

person involved, assuming that some folks went through the system, the problem is the system didn’t do the check-up. 

Mr. KUTZ. Right. 

Senator COLEMAN. There were travel orders here, so I am not 

pointing a finger on the folks. Apparently there is a system. They 

travel all the time. But what I am hearing today is that there 

wasn’t the kind of follow-up, there wasn’t the authorization, there 

wasn’t the review, there wasn’t the justification, there wasn’t then 

the documenting and all the things down the line that the system 

should do simply weren’t happening here on a consistent, regular 

basis, would that be correct? 

Mr. KUTZ. Yes. 

Senator COLEMAN. Thank you. Gentlemen, thank you very much. 

Senator Pryor. 

Senator PRYOR. No. Thank you. 

Senator COLEMAN. This panel is excused. I would now like to 

welcome our final panel of witnesses for this afternoon’s important 

hearing on the Department of Defense. We have Lawrence J. 

Lanzillotta, the Principal Deputy Under Secretary of Defense, the 

Comptroller’s Office, and Charles S. Abell, the Principal Deputy 

Under Secretary of Defense for Personnel and Readiness. 

I want to thank both of you for your attendance at this afternoon’s hearing and I look forward to hearing your testimony concerning the actions DOD has taken or plans to take to ensure full 

compliance with its travel regulations. 

Before we begin, pursuant to Rule 6, all witnesses who testify before this Subcommittee are required to be sworn. At this time, I 

would ask you both to please stand and raise your right hand. 

26

1The prepared statement of Mr. Abell appears in the Appendix on page 70. 

Do you swear that the testimony you are about to give will be 

the truth, the whole truth, and nothing but the truth, so help you, 

God? 

Mr. LANZILLOTTA. I do. 

Mr. ABELL. I do. 

Senator COLEMAN. Thank you. Mr. Abell, I understand that you 

will be givingn the Department’s testimony today——

Mr. ABELL. Yes, sir. 

Senator COLEMAN [continuing]. And Mr. Lanzillotta will be there 

to assist or answer any questions. As indicated before, if you have 

a full statement and you wish to enter that into the record and just 

summarize, let us know and that will become part of the record. 

With that, please proceed. 

TESTIMONY OF HON. CHARLES S. ABELL,1 ASSISTANT SECRETARY OF DEFENSE (FORCE MANAGEMENT POLICY), ACCOMPANIED BY LAWRENCE J. LANZILLOTTA, PRINCIPAL 

DEPUTY UNDER SECRETARY (COMPTROLLER), U.S. DEPARTMENT OF DEFENSE 

Mr. ABELL. Thank you, sir. Mr. Chairman, Members of the Subcommittee, my colleague and I are here today to provide the initial 

views of the Department of Defense in response to the draft General Accounting Office report on DOD use of premium class travel. 

The GAO report questions the Department’s policies, procedures, 

and monitoring related to our premium class travel and we are already working on some needed changes, as have been noted earlier. 

The Department of Defense takes very seriously any questionable 

spending, such as that noted in the GAO report. Any unjustified 

expenditure diverts funding vitally needed to sustain U.S. military 

operations and other pressing priorities. 

For travel and every other functional area, the Department must 

have policies that clearly detail what is proper. We must have 

strong internal controls to monitor and enforce those policies. Our 

policies must leave no room for misunderstanding or abuse. 

In addition to actions the Department is already taking in response to the GAO report’s findings, I am announcing here today 

the formation of a task force to more fully diagnose and propose 

remedies for our premium class travel shortcomings. The work of 

this task force will benefit from the methodologies and findings of 

the GAO report. 

Our goal will be for this new task force to be as thorough and 

as successful as our earlier task force on government charge cards. 

As with that earlier effort, we will marshal expertise and realworld experience from across the Department of Defense, to include 

the Office of the Inspector General, and we will invite our colleagues from the General Accounting Office. Our work will range 

from overarching policies to specific internal controls. 

Since we are just beginning this comprehensive analysis of premium class travel today, I cannot tell you exactly how we will address all the issues raised in the GAO report. However, the Department’s creation of this new task force underscores how seriously we 

27

take the type of problems identified by the General Accounting Office. 

An especially important mission of the task force will be to analyze the roles played by each DOD organization involved in premium class travel, roles ranging from policy development, to authorization and travel orders, to paying the final travel bills. The 

Department will determine whether any changes in organizational 

roles are needed to strengthen internal controls and accountability 

for premium class travel. 

We are not waiting on the task force recommendations and have 

already made some changes to our policies. As indicated in the 

GAO report, the Department has begun updating its travel regulations. Our goal again is to promulgate clear, strong policies that 

will enable us to manage premium class travel most effectively. 

The Department expects its new regulations to state clearly that 

premium class travel should be used only when authorized and 

only when exceptional circumstances warrant the additional cost; 

that authorization documents must state the general condition that 

justifies premium class travel, for example, a substantiated medical 

condition; that justification of premium class travel must be consistent with criteria in government-wide General Services Administration regulations; and that travel regulations issued by DOD 

component organizations must be consistent with the new overarching policy. 

The new regulations will include details on how to properly document authorization and justification of premium class travel. Part 

of this guidance will be clear direction as to who should retain documentation of each justification and for how long. 

We will realize further enhancement of our ability to oversee and 

manage travel with the deployment of the Defense Travel System. 

This system was recently approved for fielding. It is operational in 

24 sites already and will be totally fielded by fiscal year 2006. 

When this system is fielded, it will replace 43 legacy systems and 

give the Department a view of these types of situations in real time 

versus discovering problems after the fact. 

In closing, over the past 2 years, the Department has undertaken 

a massive overhaul of its management and support activities. What 

we especially aim to achieve is a cohesive, comprehensive management information system that will make it much easier for us to 

track transactions, ensure strong internal controls, and prevent 

abuses and eliminate inadequately documented spending. 

Finally, I want to assure you and this Subcommittee that the Department of Defense takes very seriously any indication of questionable spending. We will not tolerate any situation that wastes 

money needed to support our military and that undermines our 

strong stewardship of the public’s trust and resources. Thank you, 

Mr. Chairman. 

Senator COLEMAN. Thank you very much, Mr. Abell. 

I would note that the Comptroller is not here today. The Principal Deputy Under Secretary is here. I do want to make it clear 

and ask, do you speak for the Department of Defense and will you 

assure this Subcommittee that the DOD is committed to preventing 

this abuse of taxpayer money? 

Mr. LANZILLOTTA. Yes, I do. 

28

Senator COLEMAN. I have to say, gentlemen, maybe it is because 

I am the new guy here, but I am not as cynical as some of my more 

seasoned colleagues. As I listened to the comments of the Congresswoman and Chairman Grassley, there is a great deal of cynicism 

about the Department’s commitment to getting ahead of the problem, that the reaction is a response to the problem, and I do want 

to applaud the fact that you are putting together a task force that 

will diagnose and propose remedies for these premium class travel 

shortcomings. 

But can you respond to that charge that what we get is a problem and we respond but we don’t look ahead. Talk to me a little 

bit about how you do that. 

Mr. ABELL. Mr. Chairman, I appreciate your perspective on this. 

The Department of Defense has its eye on many balls, and unfortunately, we don’t catch all of them before they bounce off the floor. 

This may be one that we didn’t have our eye on as much as we 

should. 

As you have heard in previous testimony, it is a small piece of 

our operation. That doesn’t excuse any abuse or the lack of clear, 

cogent direction. But I think it might explain, while we were 

watching bigger things, this one might have escaped our constant 

attention. 

We also don’t—haven’t in the past provided our folks with clear 

guidance. We have handed them books of this size, sometimes out 

at the installation level fairly low-level folks, and said, these are 

the regulations. Try not to screw it up. That may be asking too 

much of them. We will look at some sort of decision support tool. 

Some have suggested a form. That strikes me as 1940’s technology, 

but I think we can provide them some sort of decision support tool 

that will allow them to go through a checklist if you will, that helps 

them decide whether or not they have followed all the regulations, 

and it would also benefit all of us by providing something that 

could help us in the audits. 

It is my strong belief that many of the unauthorized or unjustified trips were probably authorized and justified but that our recordkeeping hasn’t been sufficient to be able to demonstrate that to 

an auditor. 

Senator COLEMAN. There seemed to be a clear difference, though, 

in terms of recordkeeping between first class and business class 

and I would take it that that division will be removed and they will 

focus on both. 

Mr. ABELL. Yes, sir. As was previously testified, there is a requirement that we report first class travel to the General Services 

Administration. I think our colleagues from GAO were very kind. 

My understanding is that the quality of our report to the GSA is 

probably less than we would hope, as well, and we will fix that as 

part of this. 

Senator COLEMAN. I appreciate your candor. 

How many people are employed by the Department of Defense? 

Mr. ABELL. The military is about 1.4 million. We have about 

800,000 reservists and another 600,000 civilian employees. 

Senator COLEMAN. And how many different locations? How many 

worksites? 

29

Mr. ABELL. Oh, jiminees. I do not know that number. I will tell 

you that it is lunchtime somewhere in the Department of Defense 

every hour of the day. So we are around the world a number of 

times. 

Senator COLEMAN. I asked that because one of the things we 

have kind of talked about here is can you centralize travel order 

authority or post-travel voucher review at single locations. Will you 

talk to me about what centralizing this type of travel order approval would mean? How would you go about centralizing something like that, based on the diverse system that you have? 

Mr. LANZILLOTTA. Mr. Abell mentioned in his testimony that the 

Department is in the process of fielding the Defense Travel System. 

When we field the Defense Travel System, it will be the unifying 

system across the Department of Defense for all travel orders. I believe that this system, when fielded—it is fielded at 24 locations 

now in pilot sites—will take care of many of the problems that we 

have. 

One of the main things that this system will do for us, is that 

when a traveler comes up on the system, it will only display coach 

reservations. So he won’t be able to make a premium travel, any 

type of premium travel, either business or first class. For him to 

do that, he will have to go through another procedure outside to 

get it specifically authorized and that order will be flagged and 

tagged so we will know at the Department level what we can do. 

So we will be able to do that data mining. 

We are building that functionality into the system now. In the 

24 pilot sites, we recognize this as a shortcoming that we needed 

to fix and we are in the process of fixing it. 

So initially, we do have a problem. We will have to use a shortterm solution of Bank of America as our credit card vendor right 

now to pull some data together for us so we can do the data mining 

techniques. In the future, we will have our own system that we will 

be able to go through and do it and manage it, and the purpose 

of our whole modernization program is to provide that type of data. 

Senator COLEMAN. The task force that you announced today to 

diagnose and propose remedies, would they be looking at simplifying the Joint Federal Travel Regulations? Are you going to be 

looking at that piece of things? 

And I have a second part of that. Are those regulations, are they 

online? Are they available worldwide? How do you folks know what 

the regulations are? 

Mr. ABELL. They are available on paper and they are visible online, yes, sir. 

Senator COLEMAN. When you say visible, does that mean somebody can——

Mr. ABELL. Yes, they can read it. 

Senator COLEMAN. They are available? 

Mr. ABELL. Yes, sir. 

Senator COLEMAN. OK. 

Mr. ABELL. The task force will look at all of those things. I don’t 

expect that the task force will do much to simplify the Joint Travel 

Regulations or the Joint Federal Travel Regulations since they mirror, and we hope precisely mirror, the General Services Administration Federal Travel Regulations. What we will do to help our 

30

folks in the field go from something like this to something that is 

more manageable is try to give them a decision support tool that 

walks them through the processes so that they don’t have to rely 

on their memory or do extensive research every time they do this. 

Senator COLEMAN. I would commend or recommend that you look 

at the online capacities and capabilities to allow folks to walk 

through that. You perhaps could simplify your system online without necessarily changing the regulations, but just make it easier for 

folks to process that stuff. 

Mr. Lanzillotta, are you going to add something there? 

Mr. LANZILLOTTA. Mr. Chairman, I would also like to maybe let 

the Subcommittee know, on this task force, I would like to give the 

results of the task force we did on the travel card and the purchase 

card to show the Subcommittee the type of things that the task 

force looked at and the type of things that we implemented to give 

you an idea of what we hope to do with this program. 

The task force, we were able to establish a metrics program so 

we could monitor performance of the travel card. We were able to 

publish a CD that laid out the training responsibilities of card 

holders. We were able to begin data mining, start the data mining 

on the data that we could get on the purchase and now the travel 

card that was mentioned by, I believe, Greg on his testimony from 

the IG. We were able to issue better guidance or more clear guidance to our security managers. We issued disciplinary guidance applicable to the individual and centrally billed accounts. 

We looked at the codes and the use of blocking merchant codes. 

That way, credit cards cannot be used in certain merchant areas. 

We looked at the credit limits and established more realistic credit 

limits on these cards. 

We simplified the guidance. It has led to a reduced delinquency 

rate on our travel cards. It is now on the individual accounts about 

6.3 percent and on the centrally billed accounts below 2 percent. 

We are getting very close to industry standards. 

We implemented mandatory split disbursement for military 

members and we asked for mandatory split disbursement for civilian employees. Right now, it is the default solution if they don’t 

elect it. That allows us to pay directly to the credit card. We implemented and collected approximately $42 million in delinquent dollars through that salary offset for military members. We have 

asked for that authority also on civilian members to help the government recoup the losses from improper charges. 

[Information supplied by DOD follows:]

NOTE: DOD has inplemented salary offset for civilian employees. We are working with GSA and OPM to implement the authority to include civilian 

retirees in the program.

We took out and eliminated 600,000 travel cards. We looked at 

the established procedures, the cards that were not active or people 

who left DOD, to go back and make sure that we could go and close 

their accounts. We have been working with the bank to develop 

even more internal controls. 

I have a similar list for the purchase card things that we have 

done to try to bring the Department more in line and establish 

these controls on these programs. I just want to assure the Committee that the Department takes this seriously and these are the 

31

type of things that we were able to do in the travel and purchase 

card to show success and we plan to do the same thing in this program. 

Senator COLEMAN. And I appreciate that, and I do want to reit- erate that $10 to $30 million in savings may not be a lot in the 

perspective of a percentage of your budget, but it is sure a lot to 

folks that live in St. Paul or live in Crookston or live in Michigan 

or Arkansas. So I just want to reiterate that. We are very serious 

about the need to deal with the abuse and to make sure that the 

dollars are being saved. 

Can I ask just one further question and get back to this issue 

between business class and first class. It was the testimony here 

that first class approval required, I think, first class airline accommodations at the three-star equivalent level. Business class rests 

with transportation officers. Can you first tell me, what is the level 

of a transportation officer in DOD and wouldn’t it be appropriate 

to have all premium travel approved at the same level? 

Mr. ABELL. Mr. Chairman, the first class travel is by the Secretary of Defense, the Deputy Secretary, or their designee. The premium class travel is, in the current environment, approval authority is widely decentralized. It is one of the things we will take a 

look at in this task force, is what level should we have premium 

class travel, and as Mr. Lanzillotta has testified, when the Defense 

Travel System comes in, it will be done offline in a—not offline, but 

it will be kicked over to a special authority and that would allow 

us to implement in an automated way, as you have suggested, this 

special approval authority, as well. I don’t know what the right 

level is. We will have to figure that out. 

Senator COLEMAN. I would hope, though, that we take certainly 

a close look at those situations where you have folks at subordinate 

levels making approvals of folks to expend dollars who are at a 

higher level. It seems to me something that is a little illogical and 

that, at a minimum, should be stopped. 

Mr. ABELL. We have no argument with that in concept. Back to 

the size and scope of the Department, there will be cases where 

somebody somewhere has to go around the world to find their superior, but I am sure we can work out a way to make sure that there 

are enough internal controls in place to take care of those singular 

cases. 

Senator COLEMAN. Thank you, gentlemen. Senator Levin. 

Senator LEVIN. Thank you, Mr. Chairman, and I welcome you 

both. I think you were both here when I asked the GAO five questions as to the implementation of Section 1004 just a few moments 

ago. Did you disagree with any of the answers you heard about 

that, as to the level or the degree of implementation of the requirements in last year’s authorization bill? 

Mr. LANZILLOTTA. Generally, we agree with GAO. The only thing 

I would mention, Senator, is that I guess some of this is in the eyes 

of the beholder on how far down the architecture should go and on 

the transition plan. I would like to clarify, especially on the transition plan, the comments made. 

When we started the architecture and the architecture that we 

delivered, it was an activities-based architecture throughout the 

Department, and to do that, we met and mapped all the activities 

32

that are business activities down to the financial transaction area 

to go through with the entire Department. So it really was a massive effort. 

To do that, we found out that we had 2,274 business systems 

that it touched. Originally, we started out—when we started the effort, we thought it was only 475 and it continued to grow as we 

went through and mapped it. 

The transition plan that the bill called for, we have a transition 

plan. It may not be the same transition plan or the definitional 

transaction plan that the Subcommittee was expecting. What we 

were trying to do is we want to go through, and we have started 

by looking at the material weaknesses in the Department in an incremental approach to reengineer those processes. After we reengineer those processes, we want to develop a system that will take 

care of that reengineered process. 

We couldn’t, in the course of a year, develop and map out the activities and know the final solution to the architecture. So what we 

want to do, which I think is the most efficient way, and I think 

that GAO will probably agree with the approach, is we look at the 

material weaknesses, we engineer those processes that we need to, 

in order to eliminate that material weakness, and then develop a 

system that will take care of that. 

Senator LEVIN. And when will that be developed? 

Mr. LANZILLOTTA. We hope to have the first increment done and 

have the clean financial statements for fiscal year 2007. 

Senator LEVIN. The first financial statement reflecting the new, 

that new architecture——

Mr. LANZILLOTTA. It would be the fiscal year 2007 statement. 

Senator LEVIN. So it is going to take you 2 more years before you 

get that in place, a system in place? You reengineered your system——

Mr. LANZILLOTTA. To eliminate all the material weaknesses that 

have currently been identified. 

Senator LEVIN. Does GAO know that? Have you told them it is 

going to be 2007 before we are going to get those kind of statements, or are they hearing that for the first time today? 

Mr. LANZILLOTTA. I guess I——

Senator LEVIN. Have you heard that before? Maybe I can go back 

and ask the GAO. Is that an acceptable period of time? If you don’t 

mind——

Mr. KUTZ. Well, there are two things. I mean, he is talking about 

getting an opinion on financial statements, I believe, versus developing a transition plan as part of the architecture. So the 2007 goal 

to get an opinion on financial statements is to me a little bit different than the goal to completely reengineer and modify the systems. I think that is going to take a lot longer, actually, than 2007, 

so I don’t know if that would be——

Mr. LANZILLOTTA. For all of our systems. 

Mr. KUTZ. Right, for all the systems. 

Senator LEVIN. Are those timelines acceptable to you in terms of 

the speed with which they are being done? Can they be speeded 

up? Is that the first time we are going to have some decent accounting systems at the DOD and the ability to audit? 

33

Mr. KUTZ. A lot will have to go right for 2007 to be achieved, in 

my view. 

Senator LEVIN. Is it on target now? 

Mr. KUTZ. I have not looked in detail at the plan, but we know 

that 2007 is the goal that the Comptroller has for an opinion on 

the balance sheet. 

Senator LEVIN. Well, if you do look at the plan, Mr. Chairman, 

to tell us if it is a realistic plan. It seems like a long time off, but 

I guess from your perspective it is not a long time off. Given the 

decades that this has been brewing, maybe that is not such a long 

time. But if it is appropriate, Mr. Chairman——

Senator COLEMAN. Senator Levin, we will follow up and I will 

take that as a request from this Subcommittee. We will follow it 

up in writing with a very specific request to accomplish that. 

Senator LEVIN. When the Comptroller was before the Armed 

Services Committee, he made a certain commitment that the Department, ‘‘would not fund any programs for new business management systems until we were convinced that they would all fit in 

with one another,’’ so you would not have the kind of mess that the 

Department has with existing systems. That requirement was included in the Authorization Act last year. 

But the GAO has reported that the DOD has not yet implemented an effective investment management process for selecting 

and controlling ongoing and planned business system investments. 

Until it does, DOD remains at risk of spending billions of dollars 

on duplicative, stovepiped, non-integrated systems that do not optimize mission performance and accountability and, therefore, do not 

support the Department’s business transformation goals. 

So my question, Mr. Lanzillotta, is are you aware of any business 

management systems that have been canceled or modified because 

of their failure to meet financial management requirements? 

Mr. LANZILLOTTA. Yes, Senator, we have canceled or terminated 

programs that we didn’t feel that were going to yield compliant systems. If I could take a minute, I could explain the Department and 

how we are trying to implement this guidance. 

Senator LEVIN. Sure. 

Mr. LANZILLOTTA. What we have done is we have taken the 2,274 

systems and we divided them into seven business areas for the Department of Defense. We have created domain holders. Those are 

the people who own the process or own that area of the business. 

Mr. Abell happens to be one of our domain owners for the human 

resource systems. We divided those 2,274 systems into these seven 

areas. These domains now are responsible for reviewing these systems, not only these old systems, but also for approving new systems to make sure that they are compliant with the architecture. 

So our acquisition process for IT systems is now two-phased. Not 

only when we get a system approved, but also it is what systems 

go out of the inventory. Like with Defense Travel System, when we 

plan to bring that on board, it will be one system and it is planning 

to replace 43 other systems, and those systems will be phased out. 

We take those systems, the domain owner reviews their systems, 

and it is a huge task. It is a challenging task. They will come back 

and make a recommendation as to what systems should be funded 

34

1See Exhibit No. 5 which appears in the Appendix on page 129. 

or what systems shouldn’t be funded, and then we will use that as 

an enforcement mechanism. 

Senator LEVIN. You say some systems have been canceled? 

Mr. LANZILLOTTA. Yes, Senator. 

Senator LEVIN. It would be useful if you just, for the record, give 

us some examples of that. Give us a half-a-dozen examples, not 

right now, just for the record, if you would, systems that have been 

canceled for non-compliance with that requirement.1

Mr. LANZILLOTTA. Sure. 

Senator LEVIN. That would be great. Thank you. Thank you, Mr. 

Chairman. 

Senator COLEMAN. Thank you, Senator Levin. Senator Pryor. 

Senator PRYOR. Thank you, Mr. Chairman. 

Let me give you all my perspective on this, and that is admittedly, the dollars involved here in relative terms to DOD budget 

and the travel budget are small, and I think, Mr. Abell, you mentioned that in your opening statement or in one of your answers 

to questions. But the way I look at it is if we can’t trust you on 

the small things, how can we trust you on the large things? 

What I sense is that, if I could put this in NCAA terms, there 

is a lack of institutional control when it comes to these nuts and 

bolts, dollar issues within the DOD. I am new on this Subcommittee, but what I have heard today is the GAO looked into 

credit cards and found a lot of wrongdoing. You all formed a task 

force. Now we are looking into premium travel. You all are going 

to form a task force. As I understand the testimony, and I hope I 

am wrong, it is going to be 2007 before it is fixed. That is totally 

unacceptable. 

I guess the question I have for you is we talked about credit 

cards. We talked about travel. What is next? What is next in the 

DOD that GAO hasn’t discovered yet? How many millions are we 

just wasting there because of the lack of managerial control of the 

dollars in DOD? So my question is, what next is out there on the 

horizon where you think we have problems? 

Mr. LANZILLOTTA. Senator, that is the whole purpose of our business modernization program. The reengineering of the systems and 

our processes, that is what we are trying to avoid as to what is 

next. 

Now, referring back to Senator Levin’s comment that the Department has developed this problem over a long period of time, we 

have put together this program and we are trying to go through, 

look at each of our business processes, and reengineer it using our 

domain process. 

We have started our first increment on our material weaknesses, 

which are the most serious financial areas that need to be corrected. We are going through and we are not waiting on GAO to 

tell us what is next. We know what is wrong. It is just that we are 

trying to fix it by the reengineering. 

It is just going to be a process that is going to take us time, 2007 

seems a long way away, but I think from Mr. Kutz’s testimony that 

he thinks that it might be a little ambitious that we get it done 

by 2007. But that is what we are doing to take care of the whole 

35

process. It is the magnitude of the problem and the scalability that 

we have to get our systems to handle these type of reengineering 

processes. 

Senator PRYOR. Today we heard testimony that the DOD is wast- ing maybe $20 million a year, it may be $50 million a year. There 

is not a real firm number on how much we are wasting just in travel. What is your sense of the overall waste in the Department of 

Defense today? How much money are we going to save the 

taxpaywers when you put these new systems in and this new architecture that you are talking about and you address problems that 

you say you know are there. 

Mr. LANZILLOTTA. Senator, at this point, I don’t even know how 

to hazard a guess. 

Senator PRYOR. Do you understand my concern? You can’t even 

guess how much waste there is. I mean, you have no idea, and yet 

you come in and you ask us, hey, appropriate this money, appropriate these dollars. We look at your travel account and I don’t 

know how much we have budgeted to the Department of Defense’s 

travel account, but you haven’t run out of money. It seems to me 

that if you budget right, you should have run out of money, or you 

should have caught this problem, because you would be looking at 

your budget and you know you don’t have the dollars there. 

It raises very serious concerns on my part about how you manage 

your internal affairs over there at the Department of Defense. So 

could you give me some sense of the scale of the problem at the 

Department of Defense? 

Mr. LANZILLOTTA. Senator, I don’t even know how to address 

that. The scale is we are looking at the 2,274 systems that we currently have in our business architecture and we are trying to reengineer those processes. When we find out or notice or somebody 

tells us or we find it that there is an area for waste, fraud, and 

abuse, we do take action. 

Now, people say, well, you noticed a problem and you develop a 

task force. Well, that is right. We did. We took action. We got the 

problem under control. 

I don’t know, or if I knew that there was a problem in a particular area, I would immediately try to take action to correct that 

problem. When you sit down there and ask me about how much 

money will it save by—with one architecture—if I know there is 

waste, I go after it. I don’t know what I don’t know, and so I can’t 

hazard a guess as to what there is. I know what has been reported. 

I know what we find. I don’t know how much is out there. I don’t 

know if there is anything out there. GAO may have done an excellent job and has identified it all. But we work at it. 

Senator PRYOR. I understand that DOD is a very large agency, 

it has a very diverse mission and it’s budget is complicated. I appreciate that. I really do. And I know that, like you said, you are 

in every time zone in the world. You have got important tasks 

going on all over the world and it is very dangerous at times in certain places. I am very sympathetic and understanding of that. 

But at the same time, your answers today just aren’t satisfactory 

to me. Like I said, I am just kind of waiting to see what we are 

going to find out next about the Department of Defense. I am glad 

you are being proactive and at some point, hopefully by 2007, you 

36

will have some new systems in place. But it is very troubling to me 

that you can’t even begin to tell us how much waste, fraud, and 

abuse is within your Department. It is just—I understand you don’t 

know what you don’t know, but it seems to me that you don’t even 

have a way to measure it right now. It is such a large department 

that you can’t even get your hands around it. Is that fair? 

Mr. LANZILLOTTA. Well, Senator, that would have the assumption 

that there is a defined number out there of waste, fraud, and 

abuse, that somebody has gone out there and knows that number. 

It can’t be measured because nobody knows. 

Senator PRYOR. Well, it can be measured because if it is there, 

it is there. It is just you don’t know how to measure it. You are 

not measuring it because you don’t know how, is that right? You 

don’t have the capability today to look at your internal systems and 

tell us how much money you are wasting at the Department of Defense, is that true? 

Mr. LANZILLOTTA. We don’t have the capability at the Department of Defense to go across all of our systems, and that is true 

that our systems are not integrated. I don’t take the assumption, 

though, that automatically means that there is waste, fraud, and 

abuse. 

Senator PRYOR. I am not starting with that assumption, either, 

but I am starting with the fact that you can’t tell us what is or 

what isn’t waste, fraud, and abuse within your own Department. 

That is very troubling to me as a Member of Congress who has 

oversight over the Department of Defense. 

I mean, I think the Congress gives you all a lot of leeway. We 

put a lot of confidence in you as an agency and as a Department 

to do your mission. I don’t want to say there are no questions asked 

on this end because we ask a lot of hard questions. But in the end, 

we defer a lot to the Department of Defense. It is your area of expertise and we want to be supportive and make sure that we have 

the best trained, best equipped military in the world to go out and 

do whatever the challenges are. 

But then again, when you get back to look internally at the nuts 

and bolts type of spending at the Department of Defense, it just 

seems like there is not the control that is necessary. It is a very 

large Department, but when you have such a large and diverse Department, you need the controls and it seems to me that there are 

just not the controls present. Is that fair or not fair? 

Mr. LANZILLOTTA. That is the purpose of the business modernization program, is to make sure that there are adequate controls on 

our business processes. 

Senator PRYOR. But is it fair to say that you don’t have the controls in place today? 

Mr. LANZILLOTTA. It is fair to say that we don’t have satisfactory 

controls on all of our processes. 

Senator PRYOR. Mr. Abell, you have been awfully quiet over 

there. Do you have any comment on this? 

Mr. ABELL. Senator, I can assure you that the issue of premium 

travel will be resolved long before 2007. My assurance to you is we 

will have it before St. Patrick’s Day. But I defer—you have been 

asking about business management and financial controls and that 

is my colleague’s area of expertise. I make a deal with him that I 

37

1See Exhibit No. 4 which appears in the Appendix on page 124. 

don’t do financial management and he doesn’t do management of 

human resources. 

Senator PRYOR. I do a lot of that around here myself, so I am 

sympathetic to that. [Laughter.] 

Mr. Chairman, I would like to reserve the right to insert a few 

more questions for the record, but that is all I have right now. 

Senator COLEMAN. Thank you. Thank you, Senator Pryor. 

The record, by the way, will be held open for 21 days for any further questions and we will forward to the witnesses any questions 

that you, Senator Pryor, or any of the Members of the Subcommittee may have.1

Gentlemen, I want to thank you for appearing today. I want to 

say that I appreciate your candor. I would also note that we want 

to work with you. I do not view this as an adversarial process. This 

is a shining light, identifying the problem and solving it process. 

I think we and the Comptroller share a common bond. We want to 

make sure that government resources are used efficiently and that 

we are going to give it our best efforts to make sure that happens. 

We understand the challenge facing an agency as large as the 

Department of Defense, but I share the concerns of my friend and 

colleague from Arkansas. If you take care of the little things, the 

big things oftentimes take care of themselves. It may not always 

be that way, but you have got to take care of those little things. 

Again, for the average citizen out there, $10, $20, or $30 million 

is not a little thing, but it is a big thing. 

So let us commit to work together on this. We anticipate a series 

of other hearings relating to the Department and other issues concerning—a number of other things. I will leave it at that. We will 

be in touch. We will work with you on that. But again, I want to 

thank you for appearing here today. 

With that, this hearing is adjourned. 

[Whereupon, at 3:50 p.m., the Subcommittee was adjourned.] 

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