DOD uses a combination of governmentwide and DOD guidance as the policy and procedural foundation for incurring premium class travel. The Federal Travel Regulation (FTR), issued by GSA, implements statutory and Office of Management and Budget (OMB) requirements and policies for travel by federal civilian employees and others authorized to travel at government expense, including guidelines governing the use of premium class travel. The purpose of the FTR is to ensure that official travel is conducted responsibly and at a minimal administrative expense. Pursuant to various statutes, DOD issued the Joint Federal Travel Regulations (JFTR), which applies to uniformed service members, and the Joint Travel Regulations (JTR), which applies to DOD civilian personnel. The DOD travel regulation for military personnel mirrors the GSA regulation, and DOD travel regulations for civilian personnel are subject to GSA’s travel regulation. In addition, each military service has issued implementing guidelines that, to varying degrees, provide additional guidance on when premium class travel is authorized. GSA and DOD regulations authorize the use of premium class travel under specific circumstances. The JTR and the JFTR limit the authority to authorize first class travel to the Secretary of Defense, his or her deputy, or other officials as designated by the Secretary of Defense. However, while both the JTR and JFTR provide that the authority to authorize first class travel may be delegated and re-delegated, the regulations specify that the authority must be delegated to “as high an administrative level as practicable to ensure adequate consideration and review of the circumstances necessitating the first class accommodations.” Further guidance is found in a DOD directive on transportation and traffic management, which specifically states that the secretaries within their military services and secretariats are the authorizing authorities for first class travel. The service secretaries may re-delegate authorizing authority for first class travel to under secretaries, service chiefs or their vice and/or deputy chiefs of staff, and four-star major commanders or their three-star vice and/or deputy commanders, but authorizing authority may not be delegated to anyone other than these officials. DOD regulations also require that authorization for premium class accommodations be made in advance of the actual travel unless extenuating circumstances or emergency situations make advance authorization impossible. Specifically, the JTR and JFTR state that first class accommodation is authorized only when at least one of the following conditions exists: coach class airline accommodations or premium class other than first class airline accommodations are not reasonably available; the traveler is so handicapped or otherwise physically impaired that other accommodations cannot be used, and such condition is substantiated by competent medical authority; or exceptional security circumstances require such travel. The JTR and JFTR allow the transportation officer, in conjunction with the official who issued the travel order, to approve premium class travel other than first class. In accordance with the FTR, DOD restricts premium class travel to the following eight circumstances: regularly scheduled flights between origin and destination provide only premium class accommodations, and this is certified on the travel voucher; coach class is not available in time to accomplish the purpose of the official travel, which is so urgent it cannot be postponed; premium class travel is necessary to accommodate the traveler’s disability or other physical impairment, and the condition is substantiated in writing by competent medical authority; premium class travel is needed for security purposes or because exceptional circumstances make its use essential to the successful performance of the mission; coach class accommodations on authorized/approved foreign carriers do not provide adequate sanitation or meet health standards; premium class accommodations would result in overall savings to the government because of subsistence costs, overtime, or lost productive time that would be incurred while awaiting coach class accommodations; transportation is paid in full by a nonfederal source; or travel is to or from a destination outside the continental United States, and the scheduled flight time (including stopovers) is in excess of 14 hours. However, a rest stop is prohibited when travel is authorized by premium class accommodations. Both GSA and DOD regulations allow a traveler to upgrade to premium class other than first class travel at personal expense, through redemption of frequent traveler benefits. GSA also identified agency mission as one of the criteria for premium class travel. Appendix II includes more detailed information concerning the process by which DOD military and civilian personnel would properly obtain premium class airline tickets. For fiscal years 2001 and 2002, DOD spent nearly $124 million on over 68,000 airline tickets containing at least one leg of premium class travel.Since DOD did not maintain centralized data on premium class travel, we extracted this information from Bank of America’s fiscal years 2001 and 2002 databases of DOD centrally billed account travel, which included over 5.3 million transactions for airline tickets valued at over $2.4 billion. Although we were able to report this aggregate information, we were unable to obtain any breakdowns of the data, such as the amount of premium class travel by military service or the amount of premium class travel used for domestic versus overseas flights. As discussed later in this report, because DOD does not obtain or maintain management information on premium class travel, it cannot monitor its proper use, identify trends, or determine alternate, less expensive means of transportation. As shown in table 1, the total dollar amount DOD spent on travel that included at least one leg of premium class airfare was about $57 million in fiscal year 2001 and about $67 million in fiscal year 2002. First class travel accounted for 2.4 percent of the total dollars spent for premium class travel for the 2 fiscal years, while business class accounted for the remaining 97.6 percent. DOD’s premium class air travel accounts for a very small percentage of DOD travel overall. It represents 1 percent of total DOD airline transactions and 5 percent of total DOD dollars spent on airline travel charged to the centrally billed accounts. However, to put the amount that DOD spends on premium class travel in perspective, we noted that the $124 million DOD spent on premium class related travel during these 2 fiscal years exceeded the total travel and transportation expenses—including airfare, lodging, and meals—spent by 12 major agencies covered by the Chief Financial Officers Act of 1990, including the Social Security Administration; the Departments of Energy, Education, Housing and Urban Development, and Labor; and the National Aeronautics and Space Administration. The difference between a premium class ticket and a comparable coach class ticket can range from negligible—particularly if the traveler traveled within Europe—to thousands of dollars. In one instance, a traveler’s first class flight between Washington and Los Angeles was 14 times, or about $3,000 more than, the price of a coach class flight. We also found that higher-ranking civilian personnel and military officials accounted for a large part of premium class travel. Based on our statistical sample, we estimated that DOD civilian employees under the General Schedule (GS) grade GS-13 to GS-15 (supervisors and managers), Senior Executive Service (SES) (career senior executives), presidential appointees with Senate confirmation, and DOD senior military officers O-4 and above accounted for almost 50 percent of premium class travel. The remaining 50 percent in our statistical sample comprised mostly other officers, senior enlisted personnel, and technical or professional staff. We consider travel by high-ranking officials, in particular senior-level executives, to be a sensitive payment area because of its susceptibility to abuse or noncompliance with laws and regulations. Internal control activities help ensure that management’s directives are carried out. The control activities should be effective and efficient in accomplishing the agency’s control objectives. GAO’s Standards for Internal Control in the Federal Government (GAO/AIMD-00-21.3.1, November 1999) Significant breakdowns in key internal control activities resulted in a significant level of improper premium class travel and increased DOD travel cost. Specifically, we estimated, based on our statistical sample, that 72 percent of the DOD centrally billed travel transactions containing premium class travel for fiscal years 2001 and 2002 were not properly authorized, and 73 percent were not properly justified. (See app. I for further details of our statistical sampling test results.) Using our statistical sample and data mining results, we found numerous examples of premium class travel without authorization or adequate justification, illustrating the improper use of premium class travel and the resulting increase in travel costs. Further, we used data mining techniques to identify the most frequent users of premium class travel. Our analysis of these cases showed that almost all were senior-level employees whose travel, although properly authorized, generally was not adequately justified. We selected two key transaction-level controls for statistical sampling testing. As shown in table 2, we estimated that 72 percent of premium class travel was unauthorized. Because the FTR and DOD regulations provide that premium class travel must be specifically authorized, transactions that failed this test also failed the justification test. In addition, we found two transactions in our statistical sample were properly authorized but failed the justification test as they were not supported by the documentation provided or did not adhere to the FTR and DOD travel regulations. Requiring premium class travel to be properly authorized is the first step in preventing improper premium class travel. The FTR requires premium class travel to be specifically authorized. DOD specifies that premium class travel must be authorized in advance of travel, unless extenuating or emergency circumstances make authorization impossible, in which case the traveler is required to request written approval from the appropriate authority as soon as possible after the travel. In addition to the FTR and DOD regulations, we also applied the criteria set forth in our internal control standards and sensitive payments guidelines in evaluating the proper authorization of premium class travel. For example, while DOD travel regulations and policies do not address subordinates authorizing their supervisors’ premium class travel, our internal control standards consider such policy to be flawed; therefore, a premium class transaction that was approved by a subordinate would fail the control test.