This is the accessible text file for GAO report number GAO-07-287R 
entitled 'Response to a Posthearing Question Related to GAO's November 
16, 2006 Testimony on the Defense Travel System' which was released on 
December 19, 2006. 

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December 19, 2006: 

The Honorable Norm Coleman: 
Chairman, Permanent Subcommittee on Investigations: 
Committee on Homeland Security and Governmental Affairs: 
United States Senate: 

Subject: Response to a Posthearing Question Related to GAO's November 
16, 2006 Testimony on the Defense Travel System: 

Dear Mr. Chairman: 

On November 16, 2006, I testified before your Subcommittee on the 
results of our audit on the Defense Travel System (DTS).[Footnote 1] 
This letter responds to a question from Senator Coburn that you asked 
us to answer for the record. The question and our response follow. 

Q. Mr. Williams, GAO's September 2006 study looked at DOD's Program 
Management Office-DTS (PMO-DTS) projected DTS annual savings estimates. 
GAO found that PMO-DTS' $56.4 million of anticipated personnel savings 
are unrealistic. PMO-DTS projected that the Army and Navy would have 
$24.2 million of personnel savings as a result of using DTS. However, 
GAO found that the Army and Navy have not had and are not anticipating 
any savings through decreased personnel from the implementation of DTS. 
DOD has refuted GAO's findings by claiming that the savings created by 
DTS are not necessarily achieved through decreased personnel, but 
through increasing personnel productivity and reducing inefficiencies. 
Were PMO-DTS' projected personnel savings based solely on personnel 
reduction, and if not, is it possible to quantitatively measure cost 
savings through increased personnel productivity and reducing 
inefficiencies? 

As discussed in our September 2006 report[Footnote 2] and reiterated in 
our November 2006 testimony[Footnote 3] before your Subcommittee, the 
$24.2 million of personnel savings estimated by the Department of 
Defense (DOD) relates to the Air Force and the Navy. 

More specifically, the September 2003 economic analysis noted that 
personnel savings of $12.9 million and $11.3 million would be realized 
by the Navy and Air Force, respectively. The assumption behind the 
personnel savings computation was that there would be less manual 
intervention in the processing of travel vouchers for payment, and 
therefore fewer staff would be needed. However, based on our 
discussions with Air Force and Navy DTS program officials, it is 
questionable as to how the estimated savings will be achieved. Air 
Force and Navy DTS program officials stated that they did not 
anticipate a reduction in the number of personnel with the full 
implementation of DTS, but rather the shifting of staff to other 
functions. Furthermore, according to DOD officials responsible for 
reviewing economic analyses, while shifting personnel to other 
functions is considered a benefit, it should be considered an 
intangible benefit rather than tangible dollar savings since the 
shifting of personnel does not result in a reduction of DOD 
expenditures. Also, as part of the Navy's overall evaluation of the 
economic analysis, program officials stated that "the Navy has not 
identified, and conceivably will not recommend, any personnel billets 
for reduction." Finally, the Naval Cost Analysis Division (NCAD) 
October 2003 report on the economic analysis noted that it could not 
validate approximately 40 percent of the Navy's total costs, including 
personnel costs, in the DTS life-cycle cost estimates because credible 
supporting documentation was lacking. The report also noted that the 
PMO-DTS used unsound methodologies in preparing the DTS economic 
analysis. 

The extent of personnel savings for the Army and defense agencies, 
which DOD estimated to be $16 million and $6.3 million respectively, is 
also unclear. The Army and many defense agencies use the Defense 
Finance and Accounting Service (DFAS) to process their travel vouchers, 
so the personnel savings for the Army and the defense agencies were 
primarily related to reductions in DFAS's costs. In discussions with 
DFAS officials, they were unable to estimate the actual personnel 
savings that would result since they did not know (1) the number of 
personnel, like those at the Air Force and Navy, that would simply be 
transferred to other DFAS functions or (2) the number of personnel that 
could be used to avoid additional hiring. For example, DFAS expects 
that some of the individuals assigned to support the travel function 
could be moved to support its ePayroll program. Since these positions 
would need to be filled regardless of whether the travel function is 
reduced, transferring personnel from travel to ePayroll would reduce 
DOD's overall costs since DFAS would not have to hire additional 
individuals. 

As pointed out in your question and as discussed in our report and 
testimony, DOD strongly objected to our finding that the personnel 
savings are unrealistic. In its written comments, the department stated 
that it is facing an enormous challenge and continues to identify 
efficiencies and eliminate redundancies to help leverage available 
funds. We fully recognize the challenge the department faces in 
attempting to improve the efficiency and effectiveness of its business 
operations. The fact remains, however, that the results of an economic 
analysis are intended to help management decide if future investments 
in a given endeavor are worthwhile. In order to provide management the 
most realistic information possible to support decision-making in this 
area, it is imperative that an economic analysis be supported by valid 
assumptions. However, we found that the underlying assumptions were not 
valid, particularly in regard to the estimated amounts for the Navy and 
Air Force. Moreover, the department did not provide any new data or 
related documentation in its comments that were counter to our finding. 
As a result of these factors, we continue to believe that the estimated 
annual personnel savings of $54.1 million are unrealistic. 

If you or your staff have questions about our response to this 
question, please contact me at (202) 512-9095, or williamsm1@gao.gov. 

Sincerely yours, 

Signed by: 

McCoy Williams: 
Director, Financial Management and Assurance: 

(195107): 

FOOTNOTES 

[1] GAO, Defense Travel System: Estimated Savings Are Questionable and 
Improvements Are Needed to Ensure Functionality and Increase 
Utilization, GAO-07-208T (Washington, D.C.: Nov. 16, 2006). 

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

[3] GAO-07-208T. 

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