B-153105, JAN. 21, 1964

B-153105, JAN. 21, 1964

TO FUGAZY TRAVEL BUREAU, INC.:

REFERENCE IS MADE TO YOUR LETTER OF DECEMBER 10, 1963, OUTLINING A PLAN WHEREBY YOUR COMPANY OFFERS TO FURNISH WITHOUT CHARGE CERTAIN SERVICES IN CONNECTION WITH THE PROCUREMENT OF OFFICIAL GOVERNMENT TRAVEL.

WE UNDERSTAND THAT TRAVEL AGENTS SUCH AS YOUR COMPANY, ORDINARILY RECEIVE THEIR COMPENSATION IN THE FORM OF A FEE OR COMMISSION FROM CARRIERS BY AIR, BUS OR RAILROAD. THE AIR TRAFFIC CONFERENCE OF AMERICA IN A LETTER DATED APRIL 14, 1955, TO US EXPLAINED THAT INSOFAR AS THIS TYPE OF TRAVEL AGENT IS CONCERNED,

"CARRIERS PAY COMMISSIONS TO TRAVEL AGENTS IN ORDER TO PROVIDE AN INCENTIVE, AND COMPENSATION, FOR THE PROMOTION OF NEW BUSINESS--- BUSINESS WHICH THE CARRIERS ARE NOT ORDINARILY ABLE TO DEVELOP THROUGH THEIR OWN SALES ORGANIZATIONS AND ACTIVITIES"

AND THAT CARRIERS DO NOT GENERALLY PAY COMMISSIONS FOR TICKETS ISSUED AGAINST GOVERNMENT TRANSPORTATION REQUESTS, SINCE GOVERNMENT TRAVEL DOES NOT REPRESENT NEW BUSINESS DEVELOPED BY THE AGENT BUT BUSINESS WHICH THE CARRIERS, IN ANY EVENT, WOULD OBTAIN.

IN CONSIDERATION OF SUCH REPRESENTATION, AND AFTER A CAREFUL REVIEW OF THE ADVANTAGES AND DISADVANTAGES OF THE USE OF TRAVEL AGENCIES FOR THE PROCUREMENT OF OFFICIAL PASSENGER TRANSPORTATION SERVICE AND AFTER CONSULTATION WITH CARRIERS AND THE ADMINISTRATIVE DEPARTMENTS AND AGENCIES CONCERNED, WE PROMULGATED REGULATIONS IN SUCH MATTER WHICH NOW APPEAR IN THE GENERAL ACCOUNTING OFFICE MANUAL FOR GUIDANCE OF FEDERAL AGENCIES, TITLE V, PARAGRAPH 2013.10 AND PUBLISHED IN TITLE 4, CODE OF FEDERAL REGULATIONS, SECTION 51.3. SUCH REGULATION PROVIDES IN PERTINENT PART AS FOLLOWS:

"PASSENGER TRANSPORTATION SERVICES BY AIR, BUS, RAIL, OR WATER SHOULD BE PROCURED DIRECTLY FROM CARRIERS. TRAVEL AGENCIES MAY BE UTILIZED ONLY AS PROVIDED IN SEC. 51.4. THEY MAY NOT BE UTILIZED TO SECURE AIR, RAIL, WATER, AND BUS PASSENGER TRANSPORTATION SERVICES, OR ANY COMBINATION THEREOF, (A) WITHIN THE UNITED STATES, CANADA, OR MEXICO; (B) BETWEEN THE UNITED STATES OR ITS POSSESSIONS TO FOREIGN COUNTRIES; AND (D) BETWEEN THE UNITED STATES AND ITS POSSESSIONS, AND BETWEEN AND WITHIN ITS POSSESSIONS.'

SECTION 51.4 OF THE REGULATIONS PERMITS A RESTRICTIVE USE OF TRAVEL AGENCIES WHERE AUTHORIZED BY ADMINISTRATIVE REGULATION FOR CERTAIN TRAVEL ABROAD EXCEPT IN CANADA AND MEXICO, PROVIDED NO PAYMENT IS TO BE MADE TO A TRAVEL AGENCY IN ADDITION TO THAT WHICH WOULD HAVE BEEN PROPERLY CHARGEABLE HAD THE SERVICES REQUESTED BEEN OBTAINED DIRECTLY FROM THE CARRIERS INVOLVED.

SOME OF THE FACTORS THAT CAUSED THE ISSUANCE OF SUCH REGULATIONS WHICH WITH SOME MODIFICATION NOW HAVE BEEN IN EFFECT FOR A NUMBER OF YEARS ARE AS FOLLOWS:

1. SECTION 22 OF THE INTERSTATE COMMERCE ACT, 49 U.S.C. 22, AND SIMILAR SECTIONS IN THE ACT DEALING WITH OTHER MODES OF TRANSPORTATION, AUTHORIZE CARRIERS TO FURNISH TRANSPORTATION OF PERSONS FOR THE UNITED STATES GOVERNMENT BY RAIL FREE OR AT REDUCED RATES. UNDER AGREEMENTS AND SPECIAL TARIFFS AND ARRANGEMENTS WORKED OUT BETWEEN THE ARMED SERVICES, WHICH SERVICES ACCOUNT FOR BY FAR THE GREATER PART OF ALL PASSENGER TRAVEL REQUIRED BY THE GOVERNMENT, THE VAST MAJORITY OF ALL OFFICIAL PASSENGER TRANSPORTATION IS OBTAINED AT A COST LESS THAN THE FULL PUBLISHED COMMERCIAL CHARGES THEREFOR. THUS THE DEPARTMENT OF DEFENSE GENERALLY PAYS ONLY 90 PERCENT OF THE FULL COMMERCIAL COSTS FOR PASSENGER TRAVEL BY RAILROAD, 90 PERCENT OF THE COMMERCIAL FARE AS TO FIRST-CLASS FLIGHTS BY COMMERCIAL AIRLINES AND 95 PERCENT OF THE FULL COMMERCIAL FARES FOR PASSENGER TRAVEL BY BUS LINES. ALSO MANY OTHER REDUCTIONS AND CONCESSIONS FROM FARES CHARGED THE GENERAL PUBLIC ARE ACCORDED THE GOVERNMENT AGENCIES AS TO PASSENGER TRAVEL. SHOULD TRAVEL AGENTS COME BETWEEN THE GOVERNMENT AND THE CARRIERS AND BE ALLOWED COMMISSIONS OR FEES OUT OF THE FARES PAID BY THE GOVERNMENT, SUCH REDUCTIONS AND CONCESSIONS WOULD NOT BE FEASIBLE OR PRACTICABLE AND WOULD NOT BE MADE.

2. SECTION 322 OF THE TRANSPORTATION ACT OF 1940, 49 U.S.C. 66, PROVIDES THAT PAYMENT FOR TRANSPORTATION OF THE UNITED STATES MAIL AND OF PERSONS AND OF PROPERTY "FOR OR ON BEHALF OF THE UNITED STATES BY ANY COMMON CARRIER SUBJECT TO THE INTERSTATE COMMERCE ACT, AS AMENDED, OR THE CIVIL AERONAUTICS ACT OF 1938 (NOW KNOWN AS THE FEDERAL AVIATION ACT OF 1958), SHALL BE MADE ON PRESENTATION OF BILLS THEREFOR, PRIOR TO AUDIT OR SETTLEMENT BY THE GENERAL ACCOUNTING OFFICE," BUT RESERVES TO THE UNITED STATES THE RIGHT TO DEDUCT THE AMOUNT OF ANY OVERCHARGES BY ANY SUCH CARRIER FROM ANY AMOUNT SUBSEQUENTLY FOUND TO BE DUE SUCH CARRIER. THESE PROVISIONS SEEM TO CONTEMPLATE THE GOVERNMENT DOING BUSINESS DIRECTLY WITH THE CARRIERS COVERED BY THE ACTS MENTIONED AND NOT THROUGH TRAVEL AGENTS WHICH MIGHT COMPLICATE AND MAKE MORE DIFFICULT ADJUSTMENT OF OVERCHARGES.

3. OUR OWN EXPERIENCES WITH AUDIT PROBLEMS GENERATED BY THE USE OF THE SERVICES OF TRAVEL AGENCIES WERE CAREFULLY REVIEWED. WE FOUND THAT QUITE OFTEN THE CARRIERS USED IN THE PERFORMANCE OF THE TRAVEL WERE NOT SUFFICIENTLY IDENTIFIED TO PERMIT A PROPER AUDIT OF THE PAYMENTS MADE ADMINISTRATIVELY TO THE TRAVEL AGENCIES. IN SOME INSTANCES, THE AUTHORITY FOR THE RATES OR FARES USED TO COMPUTE THE CHARGES DUE WAS NOT MADE A PART OF THE PAYMENT RECORD AND, IN OTHER INSTANCES, NO EVIDENCE THAT THE NEEDED TRANSPORTATION SERVICES HAD ACTUALLY BEEN PERFORMED WAS CONTAINED IN THE PAYMENT RECORD. ALL OF THESE MATTERS, AND OTHERS NOT MENTIONED SPECIFICALLY, REQUIRED EXTENSIVE INVESTIGATIONS AND CORRESPONDENCE BEFORE WE COULD CERTIFY TO THE CORRECTNESS OF AMOUNTS PAID TO THE TRAVEL AGENCIES FOR TRANSPORTATION SERVICES. IN MANY INSTANCES, WHERE OVERCHARGES WERE DETERMINED TO HAVE BEEN MADE, RECOVERY OF SUCH OVERCHARGES PRESENTED PROBLEMS IN ADDITION TO THOSE ORDINARILY ENCOUNTERED IN CONNECTION WITH THE RECOVERY OF OVERCHARGES MADE DIRECTLY TO THE CARRIERS.

THESE REGULATIONS HAVE RESULTED IN THE PROCUREMENT OF GOVERNMENT TRANSPORTATION SERVICES AT THE LOWEST OVERALL COST TO THE UNITED STATES AND NO PRACTICAL PROBLEMS HAVE ARISEN THEREUNDER AS TO THEIR MEANING OR EFFECT.

ALTHOUGH YOU INDICATE THAT YOUR COMPANY WILL FURNISH COMPLETE TRAVEL SERVICE FOR THE UNITED STATES GOVERNMENT WITHOUT CHARGE, AND WE UNDERSTAND YOU PROPOSE TO MAKE NO DIRECT CHARGE, AS SUCH, FOR YOUR SERVICE, IT IS ASSUMED THAT YOU WILL BILL THE GOVERNMENT AT THE FULL COMMERCIAL FARES, RATES AND CHARGES. THIS, OF COURSE, WOULD RESULT IN INCREASED TRANSPORTATION COSTS TO THE GOVERNMENT, SINCE THE AFOREMENTIONED REDUCTIONS AND CONCESSIONS PRESENTLY OBTAINED BY THE GOVERNMENT WHEN DEALING DIRECTLY WITH CARRIERS WOULD NOT BE FEASIBLE OR PRACTICABLE AND WOULD NOT BE MADE. FURTHERMORE, SUCH REDUCTIONS BY COMMON CARRIERS, AS TO TRANSPORTATION SECURED THROUGH YOUR COMPANY WOULD APPEAR TO BE PRECLUDED BY STATUTES FORBIDDING DISCRIMINATION AND PREFERENCE BY THE ASSESSMENT OF CHARGES OTHER THAN THOSE SET OUT IN PUBLISHED TARIFFS. SEE 49 U.S.C. 6/7), 317/B), AND 1373/B).

THERE ARE OTHER ADVANTAGES WHICH THE GOVERNMENT OBTAINS IN SECURING ITS OWN TRAVEL WHICH WOULD NOT BE AVAILABLE TO YOUR FIRM AS A PRIVATE CITIZEN. THE GOVERNMENT IS ACKNOWLEDGED AS THE LARGEST INDIVIDUAL USER OF COMMON CARRIER SERVICES. THE NEEDS OF GOVERNMENT TRAVEL ARE UNIQUE OWING TO THE LOCATION OF GOVERNMENTAL INSTALLATIONS AND FACILITIES, THE EXIGENCIES OF THE VARIOUS GOVERNMENTAL AGENCIES, ESPECIALLY THOSE RELATED TO THE DEFENSE OF THE UNITED STATES WHICH APPEAR TO CREATE NEEDS SO DIFFERENT FROM THOSE OF THE ORDINARY USERS OF CARRIER SERVICES AS TO JUSTIFY USE OF ITS OWN TRANSPORTATION PERSONNEL. GOVERNMENT TRAVEL OFTEN MOVES AGAINST OR CONTRARY TO THE NORMAL COMMERCIAL TRAVEL FLOW. THE GOVERNMENT'S TRAVEL PATTERNS ARE ALSO SUBJECT TO FREQUENT CHANGE BECAUSE MANY OF ITS NEEDS ARE GEARED TO CHANGING INTERNATIONAL SITUATIONS. ALSO HAS SPORADIC MOVEMENTS IN LARGE VOLUME, WHICH RUN COUNTER TO NORMAL TRAVEL CHANNELS. BY ITS VERY NATURE GOVERNMENT TRAVEL IS NOT AND CANNOT BE THAT OF AN ORDINARY TRAVELER; WE THINK ATTEMPTS TO EQUATE ITS TRAVEL WITH THE ORDINARY COMMERCIAL TRAVELER MIGHT END ONLY IN FRUSTRATING GOVERNMENTAL PURPOSES AND PREJUDICING THE NATIONAL INTEREST. IF YOUR PLAN WERE ADOPTED, CARRIERS COULD NO LONGER CONTINUE THEIR VOLUNTARY PREFERENTIAL TREATMENT TO GOVERNMENT TRAVELERS. LIKEWISE THE GOVERNMENT PROCURES ITS SERVICE FROM VARIOUS CARRIERS WHO ARE TREATED ON AN EQUITABLE BASIS. IT DOES NOT APPEAR THAT UNDER THE PROCEDURES YOU PROPOSE CARRIERS AT THE TIME OF FURNISHING THE SERVICE WOULD KNOW THAT GOVERNMENT TRAVEL RATHER THAN TRAVEL FOR A PRIVATE CUSTOMER OF YOUR FIRM WAS INVOLVED, NOR WOULD THE EQUITABLE DISTRIBUTION OF THE BUSINESS BE ASSURED.

APPARENTLY THE MONETARY SAVINGS ENVISIONED BY YOUR PLAN IS ALSO BASED UPON THE ELIMINATION OF THE USE OF UNITED STATES GOVERNMENT TRANSPORTATION REQUESTS IN PROCURING GOVERNMENT TRAVEL. YOU CONTEND THAT THIS WOULD ELIMINATE THE ORDERING, PRINTING, STOCKING AND RECORD KEEPING OF TRANSPORTATION REQUESTS. ALSO, IT IS CONTENDED THAT ADOPTION OF THE PLEA WOULD ELIMINATE ALL TRANSPORTATION OFFICERS AND PERSONNEL IN THE VARIOUS GOVERNMENT AGENCIES. ALTHOUGH YOU DO NOT FURNISH FACTS AND FIGURES TO SUPPORT THESE CONTENTIONS, IT IS NOT UNDERSTOOD HOW SUCH PERSONNEL WOULD BE ELIMINATED. WHERE GOVERNMENT EMPLOYEES PARTICIPATE IN THE ACTUAL PROCUREMENT OF TICKETS FROM CARRIERS, SUCH FUNCTION IS LIKELY SUBSIDIARY TO THEIR PROGRAMING AND PLANNING OF THE TRAVEL AND ELIMINATION OF THEIR PARTICIPATION IN THE TICKETING PROCESS WOULD NOT AFFECT ANY SAVINGS TO THE GOVERNMENT BECAUSE THEIR OTHER FUNCTIONS WOULD STILL BE REQUIRED. YOUR CONTENTION IN THIS REGARD APPEARS AT BEST SPECULATIVE.

SOME IDEA OF THE EXTENT OF THE GOVERNMENT'S USE OF PASSENGER CARRIER SERVICE MAY BE OBTAINED FROM OUR ANNUAL REPORT TO THE CONGRESS FOR THE FISCAL YEAR 1963 WHICH AT PAGE 348 SHOWS THAT WE COMPLETED AUDIT OF SOME 2,214,065 TRANSPORTATION REQUESTS ON WHICH THERE WAS PAID TO THE CARRIERS $373,468,048 FOR THE TRANSPORTATION OF PERSONS FOR OR ON BEHALF OF THE UNITED STATES. IN VIEW OF THIS CONSIDERABLE TRAVEL ALL OVER THE WORLD, IT DOES NOT APPEAR REASONABLE TO SUPPOSE THAT YOU WOULD HAVE THE FACILITIES OR PERSONNEL TO PERMIT THE ELIMINATION OF ALL GOVERNMENT PERSONNEL NOW PERFORMING THE SERVICE NOR ELIMINATE THE USE OF U.S. GOVERNMENT TRANSPORTATION REQUESTS. MANY GOVERNMENT INSTALLATIONS IN SOME INSTANCES ARE SMALL AND ISOLATED AND IT WOULD NOT APPEAR THAT YOUR AGENCY COULD SERVICE SUCH LOCATIONS AND THUS U.S. GOVERNMENT TRANSPORTATION REQUESTS WOULD STILL BE REQUIRED FOR TRAVEL FROM SUCH LOCATIONS.

IT WOULD APPEAR THAT YOUR PLAN MERELY PROPOSES TO SUBSTITUTE A DIFFERENT DOCUMENT IN THE PLACE OF THE PRESENT TRANSPORTATION REQUEST, THE FORM OF WHICH IS PROTECTED FROM COUNTERFEITING OR FRAUDULENT ALTERATION BY CRIMINAL SANCTIONS. SEE 18 U.S.C. 508 AND 509. IT APPEARS THAT SUCH OF THE SAME INFORMATION NOW REQUIRED TO BE SHOWN IN THE U.S. GOVERNMENT TRANSPORTATION REQUEST WOULD HAVE TO BE SHOWN ON YOUR PROPOSED SUBSTITUTE FORM. AS A MATTER OF FACT THE SAME CERTIFYING SIGNATURES ARE REQUIRED AND THE INFORMATION REQUIRED TO BE SHOWN ON YOUR PROPOSED DOCUMENT OBVIOUSLY WOULD HAVE TO BE PLACED THEREON BY THE SAME GOVERNMENT PERSONNEL WHICH PLACE THE INFORMATION AND SIGNATURES ON THE PRESENT GOVERNMENT TRANSPORTATION REQUESTS IN OBTAINING TRAVEL SERVICE DIRECT FROM THE CARRIERS. THUS IT APPEARS THE ONLY SAVING ACCRUING TO THE GOVERNMENT BY SUBSTITUTING YOUR FORM IN THE PLACE OF THE PRESENT TRANSPORTATION REQUEST WOULD BE IN THE COST OF PRINTING, WHICH WOULD BE NEGLIGIBLE AS COMPARED TO THE SAVINGS NOW REALIZED BY REASON OF THE CONCESSIONS AND REDUCTIONS UNDER SO CALLED SECTION 22 QUOTATIONS OR SPECIAL AIR TARIFFS OBTAINED WITH THEIR USE. THE USE OF YOUR DOCUMENT ALONG WITH THE GOVERNMENT TRANSPORTATION REQUESTS (IN SITUATIONS WHERE YOUR COMPANY IS UNABLE TO PROVIDE THE SERVICE) WOULD HAVE THE EFFECT OF DEFEATING THE PURPOSE OF OUR REGULATIONS WHICH ARE DESIGNED TO ESTABLISH UNIFORMITY IN THE PROCUREMENT OF, AND PAYMENT FOR, PASSENGER TRANSPORTATION SERVICE FOR THE ACCOUNT OF THE UNITED STATES, IN ADDITION TO FACILITATING THE AUDIT OF THE TRANSACTIONS IN OUR OFFICE.

GOVERNMENT TRANSPORTATION PROCUREMENT OFFICERS IN THE PERFORMANCE OF THEIR DUTIES ARE CONCERNED PRIMARILY WITH SECURING ESSENTIAL SERVICES OF THE KIND AND AT THE TIME NEEDED. WHILE PRESUMABLY THEY DO NOT OVERLOOK THE OBLIGATION TO EXPEND THE TAXPAYER'S MONEY WISELY, THEY ARE NOT SEEKING A PROFIT, AS ARE COMMERCIAL USERS OF TRANSPORTATION. THUS, WHERE SECTION 22 QUOTATIONS ARE NEGOTIATED, GOVERNMENT PROCUREMENT OFFICERS ARE INTERESTED IN REACHING A PRICE THAT IS JUST AND REASONABLE TO BOTH PARTIES, SINCE THEY ARE EQUALLY CONCERNED WITH THE MAINTENANCE OF A HEALTHY TRANSPORTATION SYSTEM ADEQUATE TO THE NEEDS OF BOTH THE GENERAL PUBLIC AND THE NATIONAL DEFENSE. IN TRANSPORTATION PROCUREMENT, THEY ARE BOUND TO THE SAME PRINCIPALS OF FAIR DEALING AS THOSE WHICH UNDERLIE THE FEDERAL PROCUREMENT REGULATIONS, 41 CRF 1-1.000 ET SEQ., AND THE ARMED SERVICE PROCUREMENT REGULATIONS, 32 CFR 1.100 ET SEQ., IT HAS BEEN OUR EXPERIENCE, IN CONSULTING WITH THE DEFENSE TRAFFIC MANAGEMENT SERVICE, FOR EXAMPLE, ON DIRECTIVES IMPLEMENTING PARTICULAR POLICIES, THAT EFFORT IS MADE TO ASSURE THE SELECTION OF RESPONSIBLE CARRIERS FAIRLY AND IMPARTIALLY AND TO DISTRIBUTE TRAVEL EQUITABLY AMONG THEM. IN ANY EVENT A CONTRACT SUCH AS YOU PROPOSE WOULD HAVE TO BE NEGOTIATED INDIVIDUALLY WITH THE VARIOUS AGENCIES INVOLVED SUBJECT TO THE LAWS AND REGULATIONS UNDER WHICH TRAVEL IS PROCURED. FURTHERMORE, WE KNOW OF NO AUTHORITY FOR PROCURING GOVERNMENT PASSENGER TRANSPORTATION EXCLUSIVELY THROUGH YOUR COMPANY WITHOUT ALLOWING OTHER SIMILAR AGENCIES TO COMPETE THEREFOR. SEE 41 U.S.C. 5 AND 10 U.S.C. 2304. COMPARE 5 U.S.C. 65/A). SUCH AN ARRANGEMENT WOULD NO DOUBT RESULT IN COMPLAINTS AND PROTESTS FROM NUMEROUS OTHER TRAVEL AGENCIES SIMILARLY SITUATED.

WE THEREFORE CONCLUDE THAT THE INTERESTS OF THE UNITED STATES WOULD BEST BE SERVED BY ADHERENCE TO OUR PRESENT REGULATIONS WHICH GENERALLY PRECLUDE AND RESTRICT TRAVEL AGENCIES IN PROCURING OFFICIAL GOVERNMENT TRANSPORTATION SERVICES. HOWEVER WE APPRECIATE YOUR INTEREST IN GOVERNMENT ECONOMY AND TRUST THAT WHAT IS SAID ABOVE WILL CLARIFY THE REASONS FOR THE PROMULGATION OF OUR REGULATIONS AND WHY WE CANNOT SANCTION THE ADOPTION OF YOUR PROPOSAL.