Our analysis of limited airline data found that DOD had purchased millions of dollars in airline tickets that it did not use and did not process for refund. Because DOD did not maintain data on unused tickets, DOD was not aware of this problem prior to our audit. Further assessment of the data indicated that it is possible that since 1997, DOD purchased more than $100 million in airline tickets with its centrally billed accounts that it did not use and did not process for refunds. As shown in table 1, data provided by five of DOD’s most frequently used airlines showed that about 58,000 tickets with a value of $21.1 million were purchased with DOD’s centrally billed accounts but were unused and not refunded. DOD was not aware of these unused tickets and did not know their number or dollar value. The $21.1 million we identified included more than 48,000 tickets valued at $19.2 million that were fully unused, and $1.9 million in the unused (residual) value of about 10,000 partially used tickets, that is, at least one leg had not been used. These tickets were primarily acquired during fiscal years 2001 and 2002, although some were also purchased during fiscal years 1999, 2000, and 2003. In addition to the known, unused value of $21.1 million, DOD also failed to claim refunds on an additional 81,000 partially unused tickets purchased at more than $62 million, of which the residual value is unknown. This is because Delta, Northwest, and United airlines, which provided us with these data, informed us that their ticket data are not maintained in a format that would allow them to easily quantify the remaining unused value. The data the five airlines provided in response to our request for fiscal years 2001 and 2002 unused ticket data were not uniform, complete, or consistent. For example, while American, Delta, Northwest, and United provided some data on partially unused tickets, US Airways did not provide any. Further, while Delta, Northwest, and United provided data on the total purchase price of tickets that were partially unused, American Airlines was the only airline that provided data on the purchase price and unused value of its partially unused tickets. The airlines cited difficulties with accessing their historical files as the reason for not being able to fully respond to our request. The airlines pointed out that to provide additional information, they would have had to access information that had been stored in archived computer files, and in some instances, the computer files had been eliminated and the only documentation that remained were paper records of the flights. Also as we reported previously, DOD’s failure to monitor premium class travel had resulted in more than 70 percent of premium class travel being unauthorized and unjustified, and thus increased cost to taxpayers. Although we found that the vast majority of the wasted airline tickets were for coach class travel, the most egregious examples of waste related to premium class tickets costing thousands of dollars that DOD—and thus the taxpayers—paid for that were not used and therefore provided no benefit to the government or the taxpayers. For example, United Airlines reported that a Navy traveler used the centrally billed account to purchase a round- trip business-class ticket costing $9,800 from Washington D.C., to Canberra, Australia. Table 2 shows examples of first and business class tickets purchased for travel through December 2002 that were identified as unused—and were not refunded—as of October 2003. Based on further assessment of the limited airline data, we determined that it is possible that DOD purchased at least $100 million in airline tickets that were unused and not refunded since 1997, the oldest year for which centrally billed account data were available. This amount is derived by using data provided by the airlines for fiscal year 2002 to calculate the total value of unused tickets as a percentage of total tickets purchased using the centrally billed accounts, and applying the resulting percentage to the almost $8 billion in total value of tickets purchased with a centrally billed account since 1997. Federal agencies are authorized to recover payments made to airlines for tickets that agencies acquired but did not use. Consequently, DOD might be entitled to recover the value of the unused and unrefunded tickets from the airlines. Because DOD did not maintain data on unused tickets, DOD would have to rely on the airlines to provide the relevant data needed to claim refunds. While the airlines provided us with at least 1 year of the data we requested, some airline representatives expressed concerns about the feasibility and costs of providing additional unused ticket data. However, unused tickets from these 5 airlines and the more than 85 other airlines that DOD uses represent a potentially substantial government claim. To assist DOD in claiming refunds or converting the unused tickets to future use, we provided DOD with a list of the unused ticket information we received from the airlines in December 2003. As will be discussed in further detail below, DOD has taken actions to request repayment of the over $21 million in known unused tickets from the airlines. We found that breakdown in internal controls resulted in numerous instances during fiscal years 2001 and 2002 where DOD travelers submitted improper claims and subsequently received improper reimbursements for airline tickets they did not purchase. Requesting reimbursement for items that the traveler did not pay for may violate the False Claims Act and be punishable by imprisonment or a monetary fine, or both. Although limitations in DOD data prevented us from accurately estimating the magnitude of these improper reimbursements, our data mining of limited DOD data indicated that the potential improper claims could total more than $8 million dollars. During fiscal years 2001 and 2002, DOD spent over $10.8 billion on travel and transportation expenses for DOD military and civilian personnel, of which about $2.8 billion were charged to the centrally billed accounts, and the remaining $8 billion through voucher settlement. However, significant limitations related to DOD travel and transportation data prevented us from accurately estimating the magnitude of improper payments DOD made to travelers for improper and potentially fraudulent claims travelers filed for airline tickets that DOD—and not the traveler—purchased. Specifically, travel voucher data received from the Army, Navy, and Marine Corps covered only about $4.5 billion of the $8 billion in total travel voucher expenses. Despite these limitations, our data mining of about 50 percent of voucher data identified about 27,000 travel claims totaling over $8 million for which DOD made potentially improper reimbursements to travelers for airline tickets that had actually been paid for using DOD centrally billed accounts. Although we were unable to obtain Air Force data in a format that would help us identify instances of improper payments, the Air Force Audit Agency reported that the Air Force also improperly paid travelers for the cost of airline tickets purchased with centrally billed accounts and estimated that the improper payments cost the Air Force $6.5 million over 6 years. To determine whether DOD improperly paid travelers for the airline tickets purchased with centrally billed accounts, we tested 204 travel claims selected from the 27,000 potentially improper travel claims we identified through data mining. We selected the 204 travel claims containing about $154,000 in potentially improper payments using a nonrepresentative methodology. Our tests—which consisted of reviewing what the travelers claimed as reimbursable expenses, what DOD paid, and what was purchased using the centrally billed accounts—confirmed that DOD made 123 improper payments totaling more than $97,000 to 91 travelers. Fifteen of the 123 improper payments had been identified prior to our audit because the travelers voluntarily notified DOD of the improper payments, or because DOD found that the payments were improper through its own voucher audits. Further, in response to our audit, DOD collected more than $42,500 from 46 travelers for 63 improper airfare payments, and is in the process of recovering the remaining improper payments We found that improper payments fell into two categories. The first category, which is linked to DOD’s unused ticket problem, comprises 15 instances totaling almost $16,000. In these instances, DOD and the traveler each purchased one airline ticket for the same travel, and DOD properly reimbursed the traveler for the airline ticket used and charged to the traveler’s individually billed account. However, lack of reconciliation procedures, which I will discuss in further detail below, resulted in DOD not being able to detect that a payment for an airline ticket purchased and paid for by the traveler corresponded to an unused airline ticket purchased with a centrally billed account. The second, and more typical, category of improper payments were made to 76 travelers for airline tickets they simply did not purchase. Only 4 travelers notified the Defense Finance and Accounting Service—and made restitution—on the improper payments prior to our audit. The remaining improper payments would also be fraudulent if the travelers intentionally filed false claims. Travelers who had not purchased airline tickets should not have requested reimbursements, nor should DOD have paid the travelers for the cost of the airline tickets. Knowingly requesting reimbursement for items that the traveler did not pay for may violate the False Claims Act and be punishable by imprisonment or a monetary fine, or both. Although most of the 76 travelers we identified submitted improper claims once, several travelers we identified repeatedly submitted claims for airline tickets they did not purchase, which could indicate an intent to defraud the government. For example: A GS-15 submitted claims—and received payments—for 13 airline tickets totaling almost $10,000 that he did not purchase. One of these claims was for an international ticket costing more than $3,500. Despite receiving almost $10,000 over a 9-month period, the traveler informed us that he did not notice that he had received payments for expenses he did not incur. Despite six notifications by DFAS from March 2001 to July 2002 that his vouchers contained improper airfare claims, a GS-13 acquisition specialist continued to submit false airfare claims from August 2002 to June 2003.