Date: 1988-05-10
Speaker: CHARLES MURPHY (democrat)
Chamber: S

Senate Rayburn Office Building. Washington. DC. DEAR MR. MURPHY: This is in reply to your January 28. 1988 note regarding potential cost savings from contractors use of Government discount alrfares. In July 1980. the General Services Administration established the Federal Contract Airline Program to reduce the cost of Federal Government employee travel in the United States. The airlines signed contracts with the General Services Administration to piovide discount airfares to Government employees between designated city pairs. Also. the airline contracts provided the discount airfares to contractors. at the airlines discretion. when their travel was charged as direct costs on Government costreimbursable contracts. In October 1984. the General Services Administration signed agreements with six airlines that permitted contractors working on Government costreimbursable contracts unconditional use of Government discount airfares. By December 1985. 14 of the 25 airlines that had contracts to provide Federal employees discount airfares had also signed agreements to permit Government costreimbursable contractors to travel on the discount air fares. In October 1985. an audit was Initiated in response to a travel agency allegation that DoD was losing $500 million annually by not requiring Government contractors to use the General Services Administration negotiated discount airfares. In May 1987. Audit Report No. 87145. "Final Report on the Audit of Contractors Use of Government Transportation Requests" was issued (Enclosure 1). The report describes how DoD could save $135 million of the estimated $362 million in annual air travel costs that 90 major Defense contractors incur in support of DoD contracts. Also. the Presidents Council on Integrity and Efficiency (PCIE) initiated a Governmentwide audit of contractor use of Government Travel Requests. As part of the PCIE audit. the Inspector General. Department of Energy. issued a report in April 1987. "Contractor Use of Government Contractor Carriers Western Region." stating that $3 million could be saved if the Departments contractors in the Western Region used the discount airfares. In late 1987. before the recommendations in the referenced audit reports were fully implemented. the major airlines withdrew their agreements that permitted contractors access to Government discount air fares. The airlines withdrew their agreements because of concerns that Government contractors traveling on discount airfares would significantly reduce revenues. and the belief that contractors had abused the discount airfares. We believe the airlines concerns can be resolved. Accordingly. in December 1987. tle Inspector General wrote to the Assistant Secretary of Defense (Production and Lgoistics) (Enclosure 2) providing suggestions for resolving the concerns and asking his office to work with the General Services Administration to restore Government discount airfares for contractors. Until the airlines agree to allow contractors to use Government discount airfares. there Is no possiblity that saving can be achieved through that procedure. I would appreciate any efforts by your office to encourage Mr. Terry Angelo (5571261). Director of Travel and Transportation Management. General Services Administration. to seek agreements with the airlines that would allow contractor use of Government discount airfares. If you have any questions or If my staff can assist you with these issues. please call Mr. Jackie Crawford (6948508) or Mr. David Steensma (6930186). � Sincerely.