Defense Travel System: Implementation Challenges Remain
Released: 2009-06-30T00:00:00

Letter

Background

In September 1993, the National Performance Review recommended an overhaul of DOD’s temporary duty (TDY) travel system. In response, the department created the DOD Task Force to Reengineer Travel to examine the travel process. It found that existing processes were expensive to administer and neither customer nor mission oriented, resulting in a travel process that was costly, inefficient, fragmented, and did not support DOD’s needs. In December 1995, the Under Secretary of Defense for Acquisition and Technology and the Under Secretary of Defense (Comptroller)/Chief Financial Officer issued a memorandum, “Reengineering Travel Initiative,” which established the PMO-DTS and tasked it with the responsibility to acquire travel services to be used departmentwide. Currently, the BTA is responsible for the management oversight of the PMO-DTS. DTMO is the departmentwide entity responsible for commercial travel policy, management, and oversight within the department and reports to the Under Secretary of Defense (Personnel and Readiness). DTMO’s responsibilities include establishing strategic direction, setting travel policy, managing the commercial travel program, and defining and providing the functional requirements to the PMO-DTS.

DOD Has Implemented 6 of 14 GAO Recommendations

Our January 2006 and September 2006 reports contained 14 recommendations for improving DOD’s management oversight and implementation of DTS and related travel policies. On the basis of our analysis of the documentation provided and discussions with DTMO and PMO-DTS representatives, the department has taken sufficient action to implement 6 of the 14 recommendations. While the department has initiated actions to address the remaining 8, additional efforts are needed. The 6 closed recommendations pertain to unused airline tickets, use of restricted airfare, proper testing of system interfaces, and streamlining of certain travel processes, such as approving travel vouchers.

The 8 open recommendations relate to requirements management and system testing, DTS utilization, premium-class travel, and developing an approach that will permit the use of automated methods to reduce the need for hard-copy receipts to substantiate travel expenses. Appendix III offers additional details on DOD’s efforts to implement the 14 recommendations.

Highlighted below are two examples—testing of system interfaces and use of restricted airfare—where DOD has taken sufficient action to close our recommendations.

Testing of system interfaces. In our January 2006 report, we noted that while the department had developed and implemented interfaces with 36 systems, going forward, the testing of system interfaces would continue to be a challenge. We recommended that the PMO-DTS test new or modified system interfaces to ensure that the intended functionality is operating properly. To address our recommendation, the PMO-DTS engaged the DFAS Enterprise Level Test Group as an independent verification and validation group in 2006 to provide an objective perspective of the reliability of the system interface testing being performed by the contractor. We reviewed the testing documentation, such as the test plan, test scripts, and test cases, related to the DTS system interface with the Navy Enterprise Resource Planning system, and found that the documentation was sufficient for ensuring that interfaces between systems operated as intended. DOD’s use of an independent verification and validation group meets the intent of our recommendation.

Use of restricted airfares. In our January 2006 report, we recommended that the PMO-DTS determine the feasibility of using restricted airfares where cost effective. We reported that the system requirement stipulated that DTS is to display only unrestricted airfares. As noted in that report, other airfares generally referred to as restricted airfares may, in some cases, be less expensive than a given General Services Administration (GSA) city-pair fare and other unrestricted airfares. However, as the name implies, restricted airfares contain certain limitations. We recommended that the PMO-DTS determine the feasibility of using restricted airfares where cost effective. To address our recommendation, DTMO contracted with the Logistics Management Institute to conduct a study on the use of restricted airfares. The study, completed in September 2008, determined that the use of restricted airfares was feasible and presented DOD management with two options for implementing this functionality into DTS. The department’s actions are fully responsive to our recommendation for the determination of feasibility. Highlighted below are examples where further actions are needed to fully address our recommendations.

Requirements management processes. Our January 2006 and September 2006 reports noted that DTS did not display flight information in a manner that facilitated a traveler’s compliance with DOD travel regulations. For example, we found that not all GSA city-pair flights were included in the display of flights provided to the traveler. As a result, travelers may not consistently select flights that are most cost advantageous to the government. We recommended that DOD consider simplifying the display of flight information in DTS. The intent of this recommendation was to improve usability by reducing the amount of user effort required to identify flights that matched the traveler’s schedule in order to meet mission needs. Our current analysis found that DTS’s flight displays have not been simplified. More specifically, the DOD traveler may have to review at least four of the five separate flight display screens to identify the flight that is best suited to his or her needs. DTS’s flight displays could be simplified by grouping the flights into two categories— GSA and commercial. Displaying all of the GSA flights on one display screen would facilitate selection of the lowest fare. If a GSA city-pair fare was not available, the traveler could view a single display screen of commercial flights to identify and select a commercial flight with the lowest available airfare that meets mission needs.

DTS testing. In January 2006 and September 2006, we reported that the system testing performed did not provide reasonable assurance that DTS was displaying the proper flights and airfares. We also reported that DOD did not adequately document the testing performed to ensure DTS was functioning properly. We recommended that the PMO-DTS effectively implement the disciplined processes necessary to provide reasonable assurance that (1) requirements are properly documented and (2) requirements are adequately tested. Throughout our review, we have found that while DOD has stated that it has established processes, consistent with industry practices, to ensure that (1) DTS requirements are valid, clearly stated, and properly documented and tested; and (2) testing is properly documented, those processes have not been effectively implemented. For example, our January 2009 analysis of selected DTS requirements related to flight displays and airfares found that the testing process did not fully address our previously reported problems. The problems we found generally related to missing documentation to support tests performed or the test performed focused on limited aspects of the requirement and did not provide sufficient evidence that the requirement was adequately tested.

Our analysis found that DOD did not adequately test the DTS requirement that travelers provide a justification for any deviation from DOD travel policies. For example, DOD policy requires the traveler to select the lowest cost compact rental car. However, if the traveler later changes this selection to the lowest cost car within another model category (mid-size), the justification box will not appear for the approving official to review. The underlying control weakness is that the appearance of the justification box is not predicated on whether the last selected choice meets the department’s travel policy requirements. PMO-DTS officials were not aware of this problem until we brought it to their attention.

We also found that DOD did not adequately test the DTS requirement to only display flights that comply with the requirements of the Fly America Act, which stipulates that travel must be on U.S. carriers when available. This testing failure places the traveler who purchases a ticket or the individual authorizing, certifying, or disbursing DOD ticket payments directly through a centrally billed account, at unnecessary risk of being personally liable for the cost of the ticket. Specifically, our analysis of November 2008 flight display data identified the following instances in which DTS displayed flights that did not meet the requirements of the Fly America Act: 9 out of 25 flights DTS displayed for travel from Washington Dulles Airport to Harare, Zimbabwe; 4 out of 10 flights from Washington Dulles Airport to Islamabad, Pakistan; 3 out of 15 flights from Washington Dulles Airport to Sana’a, Yemen.

Our analysis of the same flight origins and destinations in March 2009 found that the problem continues. On April 9, 2009, DTMO’s Commercial Travel Division Chief concurred with our assessment that DTS’s display of flights could result in the traveler selecting a flight that was not in compliance with the requirements of the Fly America Act. As a result, the traveler is at unnecessary risk of being held personally liable for the cost of the airfare.

In addition, one requirement indicated that DTS should not allow a traveler to select flight departure or arrival dates that were outside the established itinerary trip dates. Our review of DOD’s testing of this requirement showed that only three of the six boundary conditions needed to fully test this requirement had been tested. Neither DOD nor its contractor could provide documentation supporting testing for the day after the traveler’s departure date, the day before the arrival date, and the day after the arrival date. Based on our analysis, DOD does not have assurance that this requirement was adequately tested because of a lack of documentation.

DTS utilization. Our September 2006 report pointed out that the department did not have the quantitative metrics to measure the extent to which employees used DTS at locations where the system was deployed. We recommended that the department establish a process by which the military services develop and use quantitative data from DTS and their individual legacy systems to clearly identify the total universe of DTS- eligible transactions on a monthly basis. The department has yet to establish a process to identify the universe of DTS-eligible transactions, which is needed to effectively measure DTS usage. Until the department has reasonable quantitative metrics to measure and reliably report on the extent to which DTS is being used, the department’s ability to ensure compliance with its mandate to use DTS and to provide consistent and accurate DTS utilization data to the Congress is diminished.

Premium-class travel. We reported in January 2006 that the commercial travel offices (CTO) were not adhering to the department’s policy restricting the use of premium-class travel and not issuing premium-class tickets without proper authorization. Because a premium-class ticket can cost the government thousands of dollars more than a coach-class ticket, unauthorized premium-class travel can result in millions of dollars in unnecessary travel costs annually. We recommended that the department take action to ensure that CTOs adhere to the department’s policy on the use of premium-class travel. To address our recommendation, in October 2007, DTMO started using a Web-based management tool that generates monthly reports to assess compliance with DOD’s premium-class travel policy. DTMO also receives and reviews monthly reports from CTOs on premium-class travel. The CTO reports include a list of the premium-class travel tickets issued and the information necessary to identify the traveler and the trip taken.

While DTMO has taken steps to identify premium-class travel, its actions do not address our concerns that such travel be properly authorized. We requested and reviewed one CTO’s December 2008 monthly premium-class report and determined that 12 premium-class tickets were issued for the month. Based upon our review of documentation provided by DTMO to determine whether these tickets complied with DOD’s travel policy on premium-class travel, we found two tickets were properly justified and authorized; two tickets were for DOD contractors and therefore should not have been on the report; four tickets were issued without the proper justification and authorization; the CTO has initiated actions to reimburse DOD for the cost of the difference between any premium-class airfare and the lowest applicable airfare; and four tickets were issued without justification and authorization, on the basis of our review of DOD travel regulations. However, based on our interpretation of federal travel regulations, they do not meet the definition of premium-class as defined by federal travel regulations because they were the lowest available fare and, therefore, would not require justification and authorization.

Automating hard copy receipts. In January 2006, we reported that DOD might be able to change its travel policy, and reduce the number of receipts required, and the associated administrative burden without adversely affecting its ability to ensure a claim is proper. The Internal Revenue Service (IRS) has established criteria for determining whether travel reimbursements are taxable to an employee and the documentation required to substantiate travel expenses. As a result, any changes to DOD’s travel policies regarding travel reimbursement—including evaluating methods that meet IRS’s receipt requirements—should be done in consultation with IRS. We recommended that the department work with IRS in developing an approach that would permit the use of automated methods to reduce the need for hard-copy receipts while satisfying the department’s and IRS’s requirements to substantiate travel expenses. To its credit, the department has had one meeting with the IRS to obtain an understanding of IRS revenue rulings regarding travel receipts and to discuss the possible use of travel card statements in lieu of travel receipts. However, the department has not developed or presented to the IRS a conceptual approach for how travel card data and other information could be used to address IRS concerns regarding the use of electronic data to substantiate travel expenses. Since GSA is the lead agency for promulgating travel policy for the federal government, DOD will need to work with both GSA and IRS to implement the needed changes.

DOD Has Implemented the 22 Recommendations Made in the 1995 Travel Reengineering Report

The 1995 DOD Travel Reengineering Report included 22 recommendations for reengineering DOD’s TDY travel rules and processes and automating these processes by implementing an integrated DOD travel system. On the basis of our analysis of documentation provided and discussions with DTMO and PMO-DTS representatives, the department has taken sufficient action to address all of these recommendations.

Appendix IV offers additional details on DOD’s efforts to implement the 22 recommendations.

Highlighted below are two examples—mandated use of CTOs in providing travel services and the availability of 24-hour CTO support to DOD travelers—where DOD has taken sufficient action to close the recommendations.

Mandated use of CTOs. The 1995 report noted that DOD’s cumbersome, complex, and fragmented travel operations were not customer or mission oriented and the report recommended that DOD mandate the use of CTOs for DOD travel services. To address this recommendation, the department updated its travel regulations to mandate the use of CTOs for making DOD travel arrangements and identified DTMO as the department’s single travel procurement and contract manager. In addition, DTMO is modifying CTO contract language, as CTO contracts become subject to renegotiation and renewal, to standardize the level of services CTOs provide DOD travelers.

Twenty-four hour CTO support. The 1995 report noted that if travelers need to change accommodations during nonbusiness hours, they are often required to make the changes themselves. To provide DOD travelers with travel support consistent with services provided in the private sector, and to ensure compliance with DOD policy, the report recommended that all changes in accommodations be made through CTO 24-hour 800 service phone numbers. To address this recommendation, the department requires all CTO contracts to include a provision to support DOD travelers via toll- free numbers or collect call.

DOD Entities Use DTS and Legacy Systems to Process Travel Vouchers

According to DOD officials, except for locations where DTS has not yet been deployed, such as the Army Corps of Engineers and some locations within the military services, DTS is used by the military services and all 44 defense agencies and joint commands to process TDY travel vouchers. (Appendix V offers a list of the 44 defense agencies and joint commands.) The department uses two legacy systems to process (1) TDY travel vouchers at locations where DTS is not yet deployed and (2) civilian and military permanent duty travel vouchers since DTS currently lacks the functionality to process these vouchers (see table 1). According to DOD officials, the department should complete its efforts to add military permanent duty travel functionality to DTS in fiscal year 2010. A decision on whether civilian permanent duty travel will be added to DTS has not yet been made. In response to our request for operating costs associated with these systems, DOD officials provided us with fiscal year 2008 expenditure data for one system and budget data for the other system. The expenditure/budget data provided by DOD are comparable with the fiscal year 2008 amounts identified in the department’s fiscal year 2008 Information Technology Budget request for these two systems.

According to DOD officials, these legacy systems will not be eliminated because they provide the capability to process civilian permanent duty travel vouchers. DOD officials stated that this capability is not currently within DTS and it is uncertain whether it will be added.

Electronic Processing of Travel Vouchers Is Significantly Less Expensive Than Manual Processing

For fiscal year 2009, DFAS estimates it will charge DOD components an average of $2.47 for travel vouchers processed electronically and $36.52 for travel vouchers processed manually. It is about 15 times less expensive to process a travel voucher electronically versus manually. In our review of DOD’s calculation of costs for travel voucher processing, we found an error in the DFAS rate determination that resulted in an over allocation of DFAS general and administrative cost to DFAS’s travel voucher processing activities. DFAS personnel, unaware of the error until our review, confirmed that the computation of the fiscal year 2009 rates was inaccurate and indicated that the miscalculation occurred as a result of a misinterpretation of DFAS guidance. The DFAS official further stated to that changes would be made to the fiscal year 2010 rate computation accurately allocate the general and administrative costs among DFAS’s various accounting and finance operations. The cost figures for fiscal year 2010 reflect the corrected rates.

DOD officials acknowledged that the department continues to lack the data needed to ascertain the complete universe of travel vouchers that should be processed through DTS. This lack of data adversely affects the reliability of DTS utilization reports and the department’s ability to identify locations where DTS is deployed but not fully utilized. Given that the Army is DFAS’s largest customer of manually processed travel vouchers, DFAS officials told us that the Army would benefit most from increased electronic voucher processing. The department reported that in fiscal year 2008, the Army had processed more than 1.5 million vouchers, about 1.1 million through DTS. However, DOD cannot determine how many of the remaining 400,000 vouchers were from locations where DTS was already available but the offices continued processing the vouchers manually. As a result, the department cannot ascertain the total universe of travel vouchers that are eligible to be processed through DTS and the savings that could be realized through electronic processing of those vouchers. Continued use of manual processing of TDY travel vouchers through legacy systems is inefficient because the department is paying for a service that can be provided at much lower cost. DFAS provides only limited manual travel voucher processing for the Navy and the Air Force.

Conclusions

DOD has made progress in addressing our prior recommendations regarding the implementation of DTS as well as those in the 1995 DOD Travel Reengineering Report that were intended to streamline DOD’s travel operations. Additional management attention is needed to ensure that DTS delivers its intended functionality and meets customers’ needs. Accordingly, we reaffirm our prior recommendations related to the improvements needed to effectively implement DTS so that it can become the department’s standard travel system. Electronic processing of travel vouchers through DTS is far less expensive than manual processing through legacy systems. Thus, it is important for the department to continue its efforts to make DTS its standardized system for processing travel vouchers.

Agency Comments and Our Evaluation

We received written comments on a draft of this report from the Deputy Under Secretary (Military Personnel Policy), which are reprinted in appendix II. In commenting on the report, the Deputy Under Secretary stated that the DTS program overall is a success story and that system usage and customer satisfaction have increased since 2006. The department acknowledges that there is still room for improvement and stated that DOD is committed to continued progress. The department commented that reiteration of the 14 previous recommendations creates an inaccurate impression because it believes it has taken sufficient action to address all but 2 of our recommendations. However, we clearly state in the report that the department satisfactorily addressed 6 of our 14 recommendations; therefore, we were reiterating only the remaining 8 recommendations that require additional action to address.

For the two recommendations the department acknowledged that it had not yet addressed, DOD identified specific actions it has under way or planned to take to address our concerns regarding DTS requirements management and testing. For example, the department noted that PMO-DTS is currently reviewing software test processes with the prime contractor to ensure that proper documentation and test artifacts are maintained. The department also noted that it intended to correct the System Problem Reports to address any deficiencies that preclude DOD from meeting the requirements of the Fly America Act.

Regarding the remaining six open recommendations relating to premium- class travel, DTS utilization, simplification of flight displays, and developing an approach that will permit the use of automated methods to reduce the need for hard-copy receipts to substantiate travel expenses, DOD stated that it believed it had taken sufficient action to address these recommendations. Specifically, the department is of the opinion that the recommendation related to premium-class travel should be considered closed. DOD noted that it has enacted several measures to strengthen the control over premium-class travel, such as including a requirement in CTO contracts that premium-class tickets not be issued unless there is a properly signed or otherwise properly authenticated travel authorization. Additionally, DOD noted the use of a Web-based management tool by the military services and defense agencies to document and report premium- class approvals. We do not agree that the department’s actions fully addressed our concerns. As noted in the report, despite the implementation of these measures, we identified four premium-class tickets, at one location for 1 month, that were improperly issued by the CTO. The DTMO was not aware of this improper issuance until we brought it to DTMO’s attention. The fact remains that CTOs continue to issue premium-class tickets that have not been properly justified and authorized, thereby raising concerns about the effectiveness of the controls the department has put in place.

Three of the eight open recommendations relate to the department’s actions taken to develop and report metrics on its utilization of DTS. In its comments, DOD noted that the military services and defense agencies report actual non-DTS travel voucher counts and that DTMO’s calculations of DTS utilization take into account travel vouchers that are and are not processed by DTS. DOD acknowledged that these computations are not completely accurate and stated that the modifications to legacy systems that would be needed to achieve greater accuracy would require a significant investment of time and money. The department stated that given the 70 percent DTS usage rate it has calculated for DTS through the second quarter of fiscal year 2009, this additional cost is not justified. We disagree with the department’s assessment that these recommendations should be closed. Our recommendations in this area were intended to improve the department’s metrics for measuring and reporting DTS usage and to facilitate the identification of locations that were not fully utilizing DTS. The department could not ascertain the complete universe of travel vouchers that should be processed through DTS. Without a process to identify TDY vouchers by location that are processed outside DTS, DOD is hindered in its ability to (1) identify the locations responsible for those travel vouchers and identify and address issues that undermine DTS usage, (2) reliably measure and report DTS usage, and (3) ensure that DTS is the departmentwide standard travel system.

With respect to our prior recommendation on requirements management as it relates to the simplification of the display of flights, the department believes that sufficient action has been taken to address this recommendation. DOD noted in its comments that the requirements were specifically written to display airfare in the five-tab format to provide flight information in accordance with the order of precedence contained in the current policy. The department also noted that travelers do not have access to each of the five tabs, but rather DTS presents the traveler with only the available flights based on policy. We do not consider this recommendation closed. We found, on the basis of our testing of this requirement, the traveler does have access to at least four of the five tabs and must review each to identify the flight that is best suited to his or her needs. In addition, the use of multiple flight display screens can result in the display of flights occurring within the same travel schedule time period that are significantly more expensive than the available GSA flights. Simplifying the flight displays to two tabs or categories—GSA and commercial—would facilitate the traveler’s identification and selection of flights with the lowest cost airfare by eliminating the display of higher cost flights within the same travel schedule time period. The department recognized the merit of our recommendation by stating in its comments that it intended to review the feasibility of grouping the flights into two categories or tabs as part of its overall effort to improve the usability of DTS.

DOD did not assert that sufficient action had been taken in its entirety to address our recommendation that the department develop an approach that uses automated methods to reduce the need for hard copy receipts. Rather, DOD noted that, because this recommendation has governmentwide impact, GSA—the agency responsible for promulgating travel policy for the entire federal government—is the more appropriate agency to lead this effort. We recognize that GSA is the lead agency for promulgating travel policy for the federal government. However, the intent of our recommendation was that given the size of DOD’s travel operations and the department’s goal to improve the efficiency and effectiveness of its business operations, we believe DOD should work with GSA and the IRS to identify and implement acceptable changes. To date, DOD has not developed or presented to the IRS or GSA a conceptual approach that identifies the information that would be needed and the extent to which this information is available to address this recommendation while adhering to the IRS’s requirements. DOD needs to conduct research to understand what data is available, either from industry providers or its systems (including the travel card data), that could be used to meet IRS’s requirements. This recommendation was not intended to assess simply the extent to which credit card data could be used to substantiate travel expenses, but also for DOD to understand the data and the internal control requirements that should be included in the functionality of relevant systems, such as DTS, to ensure compliance with IRS requirements regarding documentation of actual travel expenses.

DOD also provided technical comments on a draft of this report that we have incorporated throughout the report, as appropriate.

We are sending copies of this report to the Secretary of Defense; the Under Secretary of Defense for Personnel and Readiness; the Director, Defense Business Transformation Agency; the Director, the Defense Travel Management Office; the Director, Program Management Office-Defense Travel System; the Assistant Secretary of the Army (Financial Management and Comptroller); the Assistant Secretary of the Navy (Financial Management and Comptroller); the Acting Assistant Secretary of the Air Force for Financial Management; and the Director, Defense Finance and Accounting Service. The report also is available at no charge on the GAO Web site at http://www.gao.gov.

Please contact Asif A. Khan at (202) 512-9095 or khana@gao.gov, or Nabajyoti Barkakati at (202) 512-4499 or barkakatin@gao.gov, if you or your staffs have questions on matters discussed in this report. Contact points for our Offices of Congressional Relations and Public Affairs may be found on the last page of this report. Key contributors to this report are listed in appendix VI.

Appendix I: Scope and Methodology

To determine the status of the Department of Defense’s (DOD) efforts to address our 14 recommendations and those made in the 1995 Task Force Report to streamline the department’s travel rules and processes, we obtained and analyzed relevant documentation, such as travel policies and procedures, documents related to the Defense Travel System (DTS) requirements management and system testing, and monthly premium-class travel reports to assess the actions taken, under way, or planned by the department to address these recommendations. To determine the specific actions taken related to our previous recommendations on requirements management and system testing, we nonstatistically selected and analyzed 209 requirements by reviewing relevant documentation to determine whether the requirements had been adequately tested. The requirements selected for review related primarily to the display of flight information for travelers—since that was an area of concern in our prior work.

Regarding premium-class travel, we requested and reviewed one Commercial Travel Office’s December 2008 monthly premium-class report and determined that 12 premium-class tickets were issued for the month. We requested and reviewed documentation from the Defense Travel Management Office (DTMO) regarding the justification of these premium- class tickets to determine whether these tickets complied with DOD’s travel policy regarding premium-class travel. We met with representatives of DTMO, the Program Management Office-Defense Travel System, and the prime contractor and travel management representatives of the military services to obtain clarification and explanations of actions taken, under way, or planned by the department in response to our recommendations.

To determine if DOD has identified its legacy systems, their operating costs, and which legacy travel systems will be eliminated as well as the time frame for elimination, we reviewed and compared information provided by DTMO and the military services’ regarding the legacy systems used to manage their travel operations, associated costs, and the rationale for continued use of these systems. We met with representatives of DTMO and the military services to (1) discuss discrepancies or omissions in the information provided identifying the legacy systems and their operating costs, and (2) obtain the rationale for why these systems would not be eliminated.

To analyze DOD’s costs to process travel vouchers manually and electronically, we reviewed the methodology used by the Defense Finance and Accounting Service (DFAS) to calculate the rates it charged other DOD activities and assessed the reasonableness of DOD’s cost estimates. During the course of the audit, we interviewed DFAS officials to obtain an understanding of the methodology and an explanation for the error we identified in the rate calculation.

We conducted this performance audit from July 2008 through June 2009, in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.

We conducted our work at the offices of the Defense Travel Management Office, the Business Transformation Agency, the Program Management Office - Defense Travel System, the Defense Travel System prime contractor, the military services, and the Defense Finance and Accounting Service–Indianapolis. We requested comments on a draft of this report from the Secretary of Defense or his designee. We received written comments from the Deputy Under Secretary (Military Personnel Policy), which are reprinted in appendix II.

Appendix II: Comments from the Department of Defense

Appendix III: Status of DOD’s Actions on Previous GAO Recommendations on the Defense Travel System

Appendix III: Status of DOD’s Actions on Previous GAO Recommendations on the Defense Travel System DOD action taken to address the recommendation 1. Secretary of Defense should direct the Project Management Office-Defense Travel System (PMO-DTS) to effectively implement the disciplined processes necessary to provide reasonable assurance that (1) requirements are properly documented and (2) requirements are adequately tested.

DOD stated that it has established processes, consistent with best practices, to ensure that (1) DTS requirements are valid, clearly stated, and properly documented and tested; and (2) testing is properly documented; however, we found that those processes have not been effectively implemented. For example, our January 2009 analysis of selected DTS requirements related to flight display and airfares found that the DTS testing process still did not fully address our previously reported problems. The problems we found generally related to missing documentation or the test performed focused on limited aspects of the requirement and did not provide sufficient evidence that the requirement was adequately tested using best practices. Because of these continuing problems, we found that DTS was not in compliance with the requirements of the Fly America Act and as a result, the traveler is at unnecessary risk of being held personally liable for the cost of the airfare.

2. Secretary of Defense should direct the PMO-DTS to properly test new or modified system interfaces so that the intended functionality is properly operating prior to a software update being provided to DTS users.

To address our recommendation, the PMO-DTS engaged the Defense Finance and Accounting Service (DFAS) Enterprise Level Test Group as an independent verification and validation group in 2006 to provide an objective perspective of the reliability of the contractor-performed system interface testing. We reviewed the testing documentation, such as the test plan, test scripts, and test cases, related to the DTS system interface for the Navy Enterprise Resource Planning system. We found that the documentation was consistent with best practices and adequate for ensuring that interfaces between systems operated as intended.

3. Secretary of Defense should direct the PMO-DTS to require that all Commercial Travel Offices (CTO) adhere to the department’s policy on the use of premium- class travel, even in those instances where it is listed as the only available airfare.

In October 2007, the Defense Travel Management Office (DTMO) started utilizing a Web-based management tool that generates monthly reports to assess compliance with DOD’s premium-class travel policy. DTMO also receives and reviews monthly reports from CTOs on premium-class travel. The CTO reports include the total number of premium-class tickets issued each month for each military service and defense agency, the identification of the traveler, authorization numbers, airline and ticket numbers, fare basis, date of travel, and cost of the original ticket. While DTMO has taken steps to identify premium-class travel, its actions do not address our concerns that such travel be properly authorized. Our analysis of one CTO’s December 2008 monthly premium-class report identified premium-class travel that was not authorized. Specifically, we identified four premium-class tickets that were issued without the proper justification and authorization. The CTO has initiated actions to reimburse DOD for the cost of the difference between the premium- class airfare and the lowest applicable airfare (total of about $4,218).

DOD action taken to address the recommendation 4. Secretary of Defense should direct the Secretaries of the Army, Navy, and Air Force, as well as the heads of all DOD agencies, to reemphasize that travelers are to justify exceptions from department policy and the importance of the authorizing officials not approving any travel authorization in which exceptions are not properly justified.

The department has updated Appendix O—Temporary Duty (TDY) Travel Allowances of the Joint Travel Regulations that provide specific guidance on the various types of travel expenses that are authorized and those expenses that are not authorized. Appendix O identifies the types of exceptions from department policy for which travelers must provide justification and obtain approval from the authorizing official (AO). For example, Appendix O guidance states that the traveler must use coach-class for all official travel, unless premium-class accommodations are justified and approved prior to travel by the appropriate AO. There are separate sections of the appendix that are applicable to the traveler and the AO. Additionally, DTMO has put on the DTS Web site a document, entitled “Authorizing Official Checklist and Helpful Tips,” which can be used when reviewing the justification before authorizing an expense or approving a voucher.

5. Secretary of Defense should direct the Secretaries of the Army, Navy, and Air Force, as well as the heads of all DOD agencies, to routinely monitor, such as on a quarterly basis, information on the number and cost of processing travel vouchers outside of DTS and initiate action to eliminate funding for legacy systems, where applicable.

DOD officials acknowledged that the department does not know the total number of manual travel vouchers that are processed by DFAS that should be processed through DTS. As a result, the department cannot ascertain the total universe of travel vouchers that are eligible to be processed through DTS or the savings that could be realized through electronic travel voucher processing.

6. Secretary of Defense should direct the PMO-DTS to develop and implement the means to automate the approval of changes to authorized travel expenses where possible.

Functionality has been added to DTS to facilitate the automatic approval of changes to authorized estimated expenses where such changes are consistent with sound internal controls and DOD policy.

7. Secretary of Defense should direct the PMO-DTS to consider the viability of using commercial databases to identify unused airline tickets, for which reimbursement should be obtained and help improve the assurance that the actual travel taken was consistent with the information shown on the travel voucher.

The intent of this recommendation was to establish a process to identify and obtain reimbursement for unused airline tickets. Beginning in 2007, as CTO contracts came up for renewal, DTMO included a requirement in new CTO contracts that the CTO identify and cancel unused tickets 30 days after the planned trip date and initiate a refund request for the cancelled unused tickets. DTMO’s effort to include this requirement in all CTO contracts is scheduled to be completed by June 2009.

8. Secretary of Defense should direct the PMO-DTS to consider simplifying the display of airfares in DTS.

The intent of this recommendation was to improve usability by reducing the amount of user effort required to identify flights that matched the traveler’s schedule in order to meet mission needs. However, we found that a traveler must access at least four of the five flight display screens. DTS’s flight displays could be simplified by grouping the flights into two categories—GSA and commercial. Displaying all of the GSA flights on one display screen would facilitate selection of the lowest fare. If a GSA city-pair fare was not available, the traveler could view a single display screen of commercial flights to identify and select a commercial flight with the lowest available airfare that meets mission needs.

DOD action taken to address the recommendation 9. Secretary of Defense should direct the PMO-DTS to determine the feasibility of utilizing restricted airfares, where cost effective.

In 2007, DTMO contracted with the Logistics Management Institute to conduct a study on the use of restricted airfares. The study, completed in September 2008, determined that the use of restricted airfares was feasible and presented DOD management with two options for implementing this functionality into DTS. The two options recommended by the study were to either add (1) a restricted airfare screen to DTS’s flight display screen, which would include embedded controls requiring approval of restricted airfare flights prior to booking the reservation; or (2) a preapproval option for restricted airfares, and allow instant booking of restricted airfares in DTS. As of May 2009, DOD had not selected an option.

10. Secretary of Defense should direct the PMO-DTS to work with the Internal Revenue Service (IRS) to develop an approach that will permit the use of automated methods to reduce the need for hard copy receipts to satisfy requirements to substantiate travel expenses.

DOD has had one meeting with the IRS to obtain an understanding of IRS revenue rulings regarding travel receipts and to discuss the possible use of travel card statements in lieu of travel receipts. However, the department has not developed or presented to the IRS a conceptual approach for how travel card data and other information could be used to address IRS concerns regarding the use of electronic data to substantiate travel expenses. Since GSA is the lead agency for promulgating travel policy for the federal government DOD will need to work with both GSA and IRS to implement the needed changes.

DOD Business Transformation: Defense Travel System Continues to Face Implementation Challenges, GAO-06-18 (Washington, D.C.: Jan. 18, 2006).

DOD action taken to address the recommendation 1. The Secretary of Defense should direct the Under Secretary of Defense (Personnel and Readiness) (P&R) and the Director, Business Transformation Agency (BTA), to jointly evaluate the cost effectiveness of the Navy continuing with the CTO management fee structure versus adopting the revised CTO fee structure, once the new contracts have been awarded.

As DTMO renegotiates CTO contracts for Navy travel services, DTMO is requiring bid proposals to include (1) a management fee structure, which is a flat rate regardless of CTO involvement, and (2) a CTO fee structure, which is transaction based. According to DTMO officials, the bid proposals will be evaluated to identify the most cost-effective fee structure. This meets the intent of our recommendation.

2. The Secretary of Defense should direct the Under Secretary of Defense (P&R) and the Director, BTA, to jointly develop a process by which the military services develop and use quantitative data from DTS and their individual legacy systems to clearly identify the total universe of DTS-eligible transactions on a monthly basis. At a minimum, these data should be used to update the DTS Voucher Analysis Model to report DTS actual utilization rates.

DOD officials acknowledged that the department does not know the total number of manual travel vouchers that are processed by DFAS that should be processed through DTS. As a result, the department cannot ascertain the total universe of travel vouchers that are eligible for DTS processing or the savings that could be realized through electronic travel voucher processing.

3. The Secretary of Defense should direct the Under Secretary of Defense (P&R) and the Director, BTA, to jointly require the PMO-DTS to provide a periodic report on the utilization of DTS to the Under Secretary of Defense (P&R) and the Director, BTA, once accurate data are available. The report should continue until the department has reasonable assurance that DTS is operating properly at all intended locations. The report should identify at a minimum (1) the number of defense locations at which DTS has been deployed, (2) the extent of DTS utilization at these sites, (3) steps taken or to be taken by the department to improve DTS utilization, and (4) any continuing problems in the implementation and utilization of DTS.

The fiscal year 2007 John Warner National Defense Authorization Act directed DOD to provide semiannual reports to the Congress for two years starting in 2007. The requirements of the act are consistent with our recommendations. The department submitted its first semiannual report to the Congress in September 2007 and its final semiannual report in December 2008. However, DOD continues to lack the data needed to ascertain the complete universe of travel vouchers that should be processed through DTS. This lack of data adversely affects the reliability of DTS utilization reports and the department’s ability to identify locations where DTS is deployed but not fully utilized.

DOD action taken to address the recommendation 4. The Secretary of Defense should direct the Under Secretary of Defense (P&R) and the Director, BTA, to jointly resolve inconsistencies in DTS requirements, such as the 25 flight display, by properly defining the (1) functionality needed and (2) business rules necessary to properly implement the needed functionality.

The intent of this recommendation was to ensure that the basis of a requirement was valid and the resulting functionality would be consistent with DOD travel regulations. DOD stated that it has established processes, consistent with best practices, to ensure that (1) DTS requirements are valid, clearly stated, and properly documented and tested; and (2) testing is properly documented; however, we found that those processes have not been effectively implemented. For example, we found that DOD did not implement the disciplined requirements management processes to achieve the intent of this recommendation. For example, we found that DOD travelers had to access at least four of the five flight display screens to identify the flight that best suited his or her needs. As a result, the traveler may not have selected the flight that was the most cost advantageous to the government.

Defense Travel System: Reported Savings Questionable and Implementation Challenges Remain, GAO-06-980 (Washington, D.C.: Sept. 26, 2006).

Appendix IV: Status of DOD’s Actions to Address Recommendations of the January 1995 Travel Reengineering Report

Appendix IV: Status of DOD’s Actions to Address Recommendations of the January 1995 Travel Reengineering Report DOD action taken to address the recommendation 1. The Task Force recommended creating three broad categories of mission travel: deployment, training, and “business.”

The department has updated the Appendix O— Temporary Duty (TDY) Travel Allowances of the Joint Travel Regulation—to include these three broad categories of travel.

2. The Task Force recommended that entitlements for subsistence be structured on a lodging-plus per diem method.

The intent of this recommendation was to adopt a “Lodging-Plus” per diem method of reimbursing travelers for subsistence expenses incurred. Appendix O of the Joint Federal Travel Regulations and the Joint Travel Regulations requires that the “Lodgings- Plus” computation method be used to reimburse TDY living expenses. A traveler is paid the actual lodging cost up to a limit, plus a set amount for meals and incidental expenses—commonly referred to as per diem.

3. The Task Force recommended eliminating the various types of TDY travel orders and order formats used for TDY travel, and using a modified version of the itinerary prepared by the commercial travel office in its place.

The intent of this recommendation was to permit single entry of data, so that information required for both the orders and voucher would not have to be entered repeatedly on different forms only to satisfy the internal operations of existing process owners. DTS has been designed to create a single electronic trip record for all official travel authorizations, modifications, and payment decisions. The trip record is the single document that includes the travel authorization and fund cite, cost estimate, itinerary, and updates to the itinerary made during the trip, and also serves as the expense report when the traveler returns.

4. The Task Force recommended that funds control responsibility must be delegated to the lowest practical level, with authority to obligate funds given to the commander or supervisor approving travel consistent with Operation and Maintenance (or other funding) controls.

The intent of this recommendation was to delegate the approval of travel vouchers to the lowest practical level, (i.e., the traveler’s supervisor or authorizing officer) and reduce the number of approving officials. Appendix O of the Joint Federal Travel Regulations and the Financial Management Regulation delegates approval authority to the lowest practical level. The approval authority is implemented via DTS’s “routing list” functionality. Through DTS, the military service or defense agency can centrally control the approval authority levels and minimize the number of approving officials involved.

5. The Task Force recommended that the accounting for travel be simplified and made more accurate by funding all or as much travel as possible at the organizational level and using one element of expense—TDY.

The intent of this recommendation was to reduce the accounting information needed—commonly referred to as the line of accounting. DOD has had a policy in place since 1997 requiring the use of a single line of accounting, but recognizes that in all cases this may not be practical, especially when travel crosses fiscal years.

DOD action taken to address the recommendation 6. The Task Force recommended that use of government quarters and dining facilities not be mandated.

The intent of this recommendation was to allow a DOD civilian the option of using quarters and dining facilities other than those of the military/government while on TDY. According to Appendix O of the Joint Federal Travel Regulations, military personnel are still required to check the availability of government quarters before using commercial quarters and dining facilities when assigned to a military installation. If government quarters and dining facilities are available, or if the military member chooses to use other lodgings or dining as a personal choice, reimbursement is limited to the cost of government quarters or dining on that installation.

7. The Task Force recommended three major changes in current arrangement practices: mandate the use of commercial travel offices, develop a DOD standardized full travel services contract, and establish a single entity within DOD to perform the commercial travel offices contracting function.

The department updated its travel regulations to mandate the use of CTOs for making DOD travel arrangements and identified DTMO as the department’s single travel procurement and contract manager. In addition, DTMO is standardizing travel service requirements as individual CTO contracts become subject to renegotiation and renewal.

8. The Task Force recommended that DOD provide incentives for the use of the charge card by both organizations and individuals. Four aspects of the card program must be improved to create such incentives: management information, rapid reconciliation (claims settlement), partial payment, and flexible policies.

The intent of the recommendation was to realize substantial benefits through the use of the government charge card. Travel card usage has improved DOD’s cash management by reducing the amount of advances. DOD receives electronic information from the credit card company that can be used to detect the use of the credit card for inappropriate purposes. It also reduces to less than five days the time it takes for a travel voucher to be reimbursed/reconciled after a voucher is electronically approved. The split disbursement process, which is mandatory for the military and civilian DOD employees, allows the traveler to have part or all of the travel reimbursement paid directly to the charge card account with the balance paid (through Electronic Funds Transfer) to the traveler’s bank account. A “partial payment option” is available for travelers every 30 days if their TDY is over 45 days long.

9. The Task Force recommended that supervisors determine the appropriate status of the mission and direct the travel arrangements accordingly.

The intent of this recommendation was to have the traveler’s supervisor ensure that travel arrangements were based on the needs/status of a mission rather than the individual traveler. DTS routes a traveler’s authorization request to the appropriate official with the authority to approve, change, or deny the electronically submitted travel itinerary.

DOD action taken to address the recommendation 10. The Task Force recommended that the use of government facilities should be directed only if it supports the mission.

The intent of this recommendation was to allow a DOD civilian the option of using quarters and dining facilities other than those of the military/government while on TDY. According to Appendix O of the Joint Federal Travel Regulations, military personnel are still required to check the availability of government quarters before using commercial quarters and dining facilities when assigned to a military installation. If government quarters and dining facilities are available, or if the military member chooses to use other lodgings or dining as a personal choice, reimbursement is limited to the cost of government quarters or dining on that installation.

11. The Task Force recommended that all changes in accommodations be made through the commercial travel offices 24-hour 800 service.

To address this recommendation, the department requires all CTO contracts to provide support to DOD travelers via toll-free numbers and collect call.

12. The Task Force recommended that DOD take measures to reduce no-shows, perhaps through improvements in contractual arrangements to address options to guarantee reservations with a charge card with penalties for no-shows, and provide information to DOD travelers on no-shows.

The intent of this recommendation was to mandate that all reservations be made through the CTO. The department updated its travel regulations to mandate the use of CTOs for making DOD travel arrangements. Furthermore, DTS notifies the traveler if an authorization is not approved by the authorizing officer. After a specified period of time, all reservations and associated travel reservations are automatically canceled within DTS, if approval has not been recorded in DTS.

13. The Task Force recommended that rental car authorization should remain the decision of travel authorizing or approving officials.

The intent of this recommendation was to ensure that the authorizing official had the authority to decide on whether or not a traveler should be approved to use a rental car on a travel mission. Appendix O clearly specifies that the authorizing official decides whether or not a rental car is necessary to complete the mission.

14. The Task Force recommended that the reimbursement for phone calls to the traveler’s family/home should remain the decision of the travel authorizing or approving official.

The authorizing officer may determine whether communications to a traveler’s family/home are official. These communications must be only to advise a family of a traveler’s safe arrival, to inquire/inform about a medical condition, and/or to inform of a trip itinerary change. The authorizing officer may approve the charges after the TDY when appropriate.

15. The Task Force recommended that travelers should be able to receive telephone approval from their supervisor for changes or, in the absence of a supervisor, to make common-sense decisions about changes to a traveler’s trip itinerary.

The intent of this recommendation was to provide the traveler with greater flexibility and authority to change his or her itinerary to accommodate mission needs. If a traveler’s plans change from the original approved itinerary, the traveler should call the CTO and the authorizing officer may approve the changes after the trip is complete.

DOD action taken to address the recommendation 16. The Task Force recommended that arrangements/itinerary should be established upfront for the obligation of funds the supervisor approves.

DTS obligates the funds once the travel authorization has been approved by the authorizing officer.

17. The Task Force recommended the use of single-source data entry starting with the authority to travel as the basis for reimbursement and automate the process.

The intent of this recommendation was to automate the travel authorization and reimbursement process from the beginning to the end. DTS has been designed to create a single electronic trip record for all official travel authorizations, modifications, and payment decisions. The trip record is the single docu- ment that includes the travel authorization and fund cite, cost estimate, itinerary and updates to the itinerary made during the trip, and also serves as the expense report when the traveler returns.

18. The Task Force recommended that to achieve a paperless system, the receipt review and retention process should stop with the supervisor’s approval of the voucher.

The intent of this recommendation was to minimize and simplify the receipt requirements. As allowed by IRS, DOD has adopted the recommended receipt threshold of $75 and provides the ability for the traveler to store required receipts electronically.

19. The Task Force recommended that travel accounting must be simplified and made more accurate by funding all or as much travel as possible at the organization level and using one element of expense—TDY.

The intent of this recommendation was to reduce the accounting information needed—commonly referred to as the line of accounting. DOD has had a policy in place since 1997 requiring the use of a single line of accounting, but recognizes that in all cases this may not be practical, especially when travel crosses fiscal years.

20. The Task Force recommended that the approved voucher should be transmitted via electronic information to disbursing offices, as that capability becomes available, and that audit and review be based on random samples selected by disbursing office.

The intent of this recommendation was for the approved travel voucher to be electronically transmitted to DFAS. DTS electronically transmits all approved travel vouchers to DFAS. Subsequently, DFAS uses DTS information to select travel vouchers for postaudit reviews.

21. The Task Force recommended that the traveler should have the option to elect on the voucher to have the government pay the card company directly for authorized charges with residual expenses remitted to the individual.

The split disbursement process, which is mandatory for military and civilian DOD employees, directs the traveler to have part or all of their travel reimbursement paid directly to the charge card account with the balance paid (through Electronic Funds Transfer) to their personal bank account. A “partial payment option” is available for travelers every 30 days if their TDY is over 45 days long.

22. The Task Force recommended that an alternative approach for ensuring appropriate controls is to build as many considerations into the authorizing and approval processes as possible and have it done once with the same data flowing through the steps in the process.

The intent of this recommendation was to implement a system that would automate the authorization and approval processes to the extent possible. DTS functionality enables authorization and approval consistent with DOD travel policy. For example, DOD policy requires the use of GSA city-pair flights, unless the traveler provides justification for another type of flight. This justification must be approved by the authorizing official.

Appendix V: List of Defense Agencies and Joint Commands

Appendix VI: GAO Contacts and Staff Acknowledgments

Staff Acknowledgments

In addition to the above contacts, the following individuals made key contributions to this report: Darby Smith, Assistant Director; Evelyn Logue, Assistant Director; J. Christopher Martin, Senior-Level Technologist; F. Abe Dymond, Assistant General Counsel; Jehan Abdel- Gawad, Senior Attorney; Beatrice Alff; Maxine Hattery; Jason Kelly; and John Vicari.