Travel Cards:

Internal Control Weaknesses at DOD Led to Improper Use of First and Business Class Travel

GAO-04-88: Published: Oct 24, 2003. Publicly Released: Nov 6, 2003.

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Ineffective oversight and management of the Department of Defense's (DOD) travel card program, which GAO has previously reported on, have led to concerns about DOD's use of first and business class airfares. GAO was asked to (1) identify the magnitude of premium class travel, (2) determine if DOD's key internal control activities operated effectively and provide examples of control breakdowns, and (3) assess DOD's monitoring and key elements of the control environment.

Breakdowns in internal controls and a weak control environment resulted in improper first and business class travel and increased costs to taxpayers. Based on extensive analysis of records obtained from Bank of America, GAO found that DOD spent almost $124 million on about 68,000 premium class related tickets--primarily business class--during fiscal years 2001 and 2002. Each premium class ticket costs the government up to thousands of dollars more than a comparable coach class ticket. GAO's work also indicated that civilian supervisors, managers, and executives and senior military officers accounted for almost 50 percent of the premium class transactions, and for 27 of the 28 most frequent premium class travelers. GAO considers travel by high-ranking officials to be a sensitive payment area because of its susceptibility to abuse. Breakdowns in key internal controls resulted in a significant level of improper premium class travel. GAO estimated that 72 percent of DOD's fiscal year 2001 and 2002 premium class travel was not properly authorized, and 73 percent was not properly justified. Further, DOD did not have accurate and complete data on the extent of premium class travel and performed little or no monitoring of this travel. In regard to the control environment, GAO found that DOD (1) issued policies that were inconsistent with General Service Administration governmentwide travel regulations, (2) did not require military services to issue and update premium class policies to implement DOD's travel regulations consistently, and (3) did not issue guidance on how to document the authorization and justification of premium class travel. As a result of GAO's audit, DOD has begun updating its travel regulations to more clearly state when premium class travel can be authorized and to emphasize that it must only be used when exceptional circumstances warrant the additional cost.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: The Department of Defense issued revised Joint Travel Regulations (JTR), which promulgated travel regulations for DOD civilian personnel, and Joint Federal Travel Regulations (JFTR) for military personnel, to be effective March 1, 2004. The revised JTR and JFTR explicitly emphasize the exception basis for use of premium class travel. For example, the new regulations state that travelers must use economy class transportation accommodations for all official business travel unless proper documentation/justification is provided and substantiated to justify premium-class accommodations. Per the new regulations, authorizing officials must consider each request for business class airline service individually and carefully balance good stewardship of scarce resources with the immediacy of mission requirements. The new regulations also further define that, when an airline has only two classes of service, the travelers must travel in the back cabin of the two-cabin aircraft unless the traveler qualifies for first-class travel.

    Recommendation: Because of the substantial cost and sensitive nature of premium class travel, the Secretary of Defense should direct the appropriate under secretary of defense, assistant secretary of defense, or military service officials to direct the implementation of specific internal control activities over the use of premium travel. While a wide range of activities can contribute to a system that provides reasonable assurance that premium class travel is authorized and justified, at a minimum, the internal control activities should include reiterating to DOD's personnel the policy that premium class travel be authorized and justified only on a case-by-case basis.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: The Department of Defense issued revised Joint Travel Regulations (JTR), which promulgated travel regulations for DOD civilian personnel, and Joint Federal Travel Regulations (JFTR) for military personnel, to be effective March 1, 2004. The revised JTR and JFTR specify that commands must not permit CTOs to issue travelers premium-class tickets without prior proper authorization. Further, the premium class task force has developed standard contract language that will be provided to DOD components to be used in modifying contracts.

    Recommendation: Because of the substantial cost and sensitive nature of premium class travel, the Secretary of Defense should direct the appropriate under secretary of defense, assistant secretary of defense, or military service officials to direct the implementation of specific internal control activities over the use of premium travel. While a wide range of activities can contribute to a system that provides reasonable assurance that premium class travel is authorized and justified, at a minimum, the internal control activities should include requiring the travel offices to issue premium class tickets only if properly authorized and justified and documented accordingly.

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: DOD issued revised Joint Travel Regulations (JTR), which promulgated travel regulations for DOD civilian personnel, and Joint Federal Travel Regulations (JFTR) for military personnel effective March 1, 2004, implementing the GAO recommendation. The revised JTR and JFTR direct that blanket travel authorization is restricted to economy-class travel authorization, and that if, premium class transportation becomes necessary for a specific trip, an amendment to the order must be issued.

    Recommendation: Because of the substantial cost and sensitive nature of premium class travel, the Secretary of Defense should direct the appropriate under secretary of defense, assistant secretary of defense, or military service officials to direct the implementation of specific internal control activities over the use of premium travel. While a wide range of activities can contribute to a system that provides reasonable assurance that premium class travel is authorized and justified, at a minimum, the internal control activities should include prohibiting the use of blanket authorization for premium class travel.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: On March 19, 2004, as part of his overall directives to heads of military departments related to premium class travel, the Deputy Secretary of Defense required all DOD components to track the use of premium class travel and maintain applicable documentation for 6 years and 3 months. The Deputy Secretary also specified the minimum amount of information that needed to be captured, including the total number of premium class trips, total cost to the government of these trips, and the name of the traveler and approving official, among others. The Deputy Secretary also asked all DOD components to be prepared to institute internal management controls to address DOD's misuse of premium class travel.

    Recommendation: The Secretary of Defense should direct the appropriate under secretary of defense, assistant secretary of defense, or military service officials to establish policies and procedures to incorporate the regulations specified in GSA's FTR as well as guidance specified in our Standards for Internal Control and our Guide for Evaluating and Testing Controls Over Sensitive Payments, including developing procedures to identify the extent of premium class travel, including all business class travel, and monitor for trends and potential misuse.

    Agency Affected: Department of Defense

  5. Status: Closed - Implemented

    Comments: Although DOD determined that this was not feasible due to the lack of a airline industry standard coding method, On October 1, 2007, DOD implemented a web-based application which requires those who authorize other travelers to use premium class travel accommodations to report those approvals within 5 business days of the approval action.

    Recommendation: The Secretary of Defense should direct the appropriate under secretary of defense, assistant secretary of defense, or military service officials to establish policies and procedures to incorporate the regulations specified in GSA's FTR as well as guidance specified in our Standards for Internal Control and our Guide for Evaluating and Testing Controls Over Sensitive Payments, including developing procedures to identify all first class fare codes so that DOD can prepare complete and accurate first class travel reports.

    Agency Affected: Department of Defense

  6. Status: Closed - Implemented

    Comments: In March 2004, the Deputy Secretary of Defense issued a memo on premium class travel guidance and reporting requirements. The memo requires DOD components to track the use of premium class travel, submit semi-annual report on premium class travel, and to maintain documentation related to premium class travel for 6 years and 3 months. The guidelines for reporting included specific fields and data to be provided. Further, DOD's updates to the JTR and JFTR specifically prohibiting commercial travel offices from issuing premium class tickets without proper approval. DOD issued guidance directing Defense components to modify contracts with commercial travel offices so that performance standards direct them not to issue airline tickets for premium class travel unless the traveler's orders identify that premium class travel is authorized.

    Recommendation: The Secretary of Defense should direct the appropriate under secretary of defense, assistant secretary of defense, or military service officials to establish policies and procedures to incorporate the regulations specified in GSA's FTR as well as guidance specified in our Standards for Internal Control and our Guide for Evaluating and Testing Controls Over Sensitive Payments, including developing a management plan requiring that audits of DOD's issuance of premium class travel are conducted regularly and the results of these audits reported to senior management. Audits of premium class travel should include reviews of whether commercial travel offices adhere to all governmentwide and DOD regulations for issuing premium class travel.

    Agency Affected: Department of Defense

  7. Status: Closed - Implemented

    Comments: DOD issued 2004 guidance directing Defense components to modify contracts with commercial travel offices so that performance standards direct them not to issue airline tickets for premium class travel unless the traveler's orders identify that premium class travel is authorized. DOD's updates to the Joint Travel Regulations (JTR) and the Joint Federal Travel Regulations (JFTR) to reflect this guidance and, in 2006 posted to their travel page, an alert specifying instances where travelers are not entitled to premium class, e.g., permanent change of travel. The alert also directs the traveler to specific section in the regulations related to premium class travel.

    Recommendation: The Secretary of Defense should direct the appropriate under secretary of defense, assistant secretary of defense, or military service officials to establish policies and procedures to incorporate the regulations specified in GSA's FTR as well as guidance specified in our Standards for Internal Control and our Guide for Evaluating and Testing Controls Over Sensitive Payments, including periodically providing notices to travelers and supervisors/managers that specifically identify the limitations on premium class travel.

    Agency Affected: Department of Defense

  8. Status: Closed - Implemented

    Comments: DOD issued guidance in 2004 directing Defense components to modify contracts with commercial travel offices so that performance standards direct them not to issue airline tickets for premium class travel unless the traveler's orders identify that premium class travel is authorized. DOD also updated the Joint Travel Regulations (JTR) and the Joint Federal Travel Regulations (JFTR) to reflect this guidance. Further, in July 2006, DOD posted an alert on its travel page that specifies the circumstances under which travelers are not entitled to premium class, e.g., permanent change of travel. The alert also directs the traveler to specific section in the regulations providing guidance on when premium class travel may be authorized.

    Recommendation: The Secretary of Defense should direct the appropriate under secretary of defense, assistant secretary of defense, or military service officials to establish policies and procedures to incorporate the regulations specified in GSA's FTR as well as guidance specified in our Standards for Internal Control and our Guide for Evaluating and Testing Controls Over Sensitive Payments, including periodically providing notices to travelers and supervisors/managers that specifically identify the limited situations in which premium class travel may be authorized.

    Agency Affected: Department of Defense

  9. Status: Closed - Implemented

    Comments: In a memorandum dated 3/19/04 to all DoD components, the Deputy Secretary of Defense reiterated the guidance for use of premium class travel and highlighted the major changes to the JFTR and JTR effective 3/01/04. However, DOD's guidance has not yet provided guidance to DOD travelers on how to avoid unnecessary premium class air transportation costs.

    Recommendation: The Secretary of Defense should direct the appropriate under secretary of defense, assistant secretary of defense, or military service officials to establish policies and procedures to incorporate the regulations specified in GSA's FTR as well as guidance specified in our Standards for Internal Control and our Guide for Evaluating and Testing Controls Over Sensitive Payments, including periodically providing notices to travelers and supervisors/managers that specifically identify how the additional cost of premium class travel can be avoided.

    Agency Affected: Department of Defense

  10. Status: Closed - Implemented

    Comments: DOD Components have developing training programs for their personnel highlighting policies for use of premium class travel and the new approval levels. However, DOD has not yet provided GAO documentation of its training materials demonstrating that the training identifies DOD's premium class travel requirements. DOD provided GAO documentataion on 10/09/2009 including training guidance and other materials that identifies DOD's premium class travel requirements.

    Recommendation: The Secretary of Defense should direct the appropriate under secretary of defense, assistant secretary of defense, or military service officials to establish policies and procedures to incorporate the regulations specified in GSA's FTR as well as guidance specified in our Standards for Internal Control and our Guide for Evaluating and Testing Controls Over Sensitive Payments, including providing training to travelers and supervisors/managers that identifies DOD's premium class policies and procedures.

    Agency Affected: Department of Defense

  11. Status: Closed - Implemented

    Comments: DOD has reported developing a model decision support tool for CTOs highlighting DOD's policies for use of premium class travel and the new approval levels. However, DOD has not yet provided documentation of this tool, including evidence that the decision support tool is sufficient to effectively address the intent of this recommendation. On 10/09/2009, DOD provided GAO documentation of this tool and it is sufficient to effectively address this recommendation.

    Recommendation: The Secretary of Defense should direct the appropriate under secretary of defense, assistant secretary of defense, or military service officials to establish policies and procedures to incorporate the regulations specified in GSA's FTR as well as guidance specified in our Standards for Internal Control and our Guide for Evaluating and Testing Controls Over Sensitive Payments, including training or make training materials available to the commercial travel offices so that they may train their employees on premium class policies and procedures.

    Agency Affected: Department of Defense

  12. Status: Closed - Implemented

    Comments: DOD revised its travel regulations, to be effective March 1, 2004, specifying that only a person senior to, or independent of the traveler, may authorize/approve premium-class accommodations for the traveler. This change in policy effectively responds to GAO recommendations.

    Recommendation: The Secretary of Defense should direct the appropriate under secretary of defense, assistant secretary of defense, or military service officials to establish policies and procedures to incorporate the regulations specified in GSA's FTR as well as guidance specified in our Standards for Internal Control and our Guide for Evaluating and Testing Controls Over Sensitive Payments, including requiring that premium class travel be approved by individuals who are at least of the same rank/grade as the travelers.

    Agency Affected: Department of Defense

  13. Status: Closed - Implemented

    Comments: DOD revised its travel regulations, to be effective March 1, 2004, specifying that only a person senior to, or independent of the traveler, may authorize/approve premium-class accommodations for the traveler. The new policies further specify that a staff member may not authorize/approve premium class accommodations for the traveler. Further, the new travel regulations specifically state that individuals who have authority to approve premium class travel must obtain approval for their own business-class travel from the next higher approval authority.

    Recommendation: The Secretary of Defense should direct the appropriate under secretary of defense, assistant secretary of defense, or military service officials to establish policies and procedures to incorporate the regulations specified in GSA's FTR as well as guidance specified in our Standards for Internal Control and our Guide for Evaluating and Testing Controls Over Sensitive Payments, including specifically prohibiting the travelers themselves or their subordinates from approving requests for premium class travel.

    Agency Affected: Department of Defense

  14. Status: Closed - Implemented

    Comments: The Deputy Secretary of Defense issued a memo in March 19, 2004, reiterating the need to implement procedures related to DOD premium class travel requirements. The memo requires that approval for premium class travel be documented by placing a statement on the travel authorization/order that provides, at a minimum, standardized information related to the name and rank of the approving official, the reason for approving premium class travel with specific reference to the JTR/JFTR, and the coach and premium class fares, among others. This action substantially addresses our recommendation.

    Recommendation: The Secretary of Defense should direct the appropriate under secretary of defense, assistant secretary of defense, or military service officials to establish policies and procedures to incorporate the regulations specified in GSA's FTR as well as guidance specified in our Standards for Internal Control and our Guide for Evaluating and Testing Controls Over Sensitive Payments, including using a standardized format or modify the format of the existing travel order to document the request and authorization of premium class travel. The standardized form or modified travel order should contain sufficient information to provide a clear audit trail that documents why the additional cost of premium class travel was a necessary expense that could not have been avoided.

    Agency Affected: Department of Defense

  15. Status: Closed - Implemented

    Comments: In response to this recommendation, DOD revised the Joint Federal Travel Regulations (for uniformed service members) and the Joint Travel Regulations (for DOD civilian employees). The new policy, effective August 2004, specifies that a competent medical authority must certify that a disability or other special need exist that requires premium class travel. The new policy also specifies that the certification should be for a specific time period.

    Recommendation: The Secretary of Defense should direct the appropriate under secretary of defense, assistant secretary of defense, or military service officials to establish policies and procedures to incorporate the regulations specified in GSA's FTR as well as guidance specified in our Standards for Internal Control and our Guide for Evaluating and Testing Controls Over Sensitive Payments, including developing a policy that articulates what constitutes adequate support to substantiate medical, disability, or special needs. Such a policy should address the length of time a medical certification is valid.

    Agency Affected: Department of Defense

  16. Status: Closed - Implemented

    Comments: DOD revised travel regulations in October 2004 and December 2007 to specify that premium-class accommodations for medical reasons are to be authorized only based on a certification from a competent medical authority.

    Recommendation: The Secretary of Defense should direct the appropriate under secretary of defense, assistant secretary of defense, or military service officials to establish policies and procedures to incorporate the regulations specified in GSA's FTR as well as guidance specified in our Standards for Internal Control and our Guide for Evaluating and Testing Controls Over Sensitive Payments, including determining the feasibility of requiring that the medical certification for premium class travel be reviewed by an independent medical professional to verify that the medical condition justifies the additional cost of premium class travel.

    Agency Affected: Department of Defense

  17. Status: Closed - Implemented

    Comments: DOD revised DODD 4500.9 on November 17, 2003. The revised DODD 4500.9 eliminated the blanket authorization for high ranking officials' travel by requiring that travel other than coach-class must comply with the JFTR or JTR, i.e., DOD travel regulations for military and civilian employees as appropriate.

    Recommendation: The Secretary of Defense should direct the appropriate under secretary of defense, assistant secretary of defense, or military service officials to establish policies and procedures to incorporate the regulations specified in GSA's FTR as well as guidance specified in our Standards for Internal Control and our Guide for Evaluating and Testing Controls Over Sensitive Payments, including revising DOD's directives on travel, when necessary, to ensure that they are at least consistent with, or more stringent than, GSA's travel regulations. For example, the Secretary of Defense should issue the update to DOD Directive 4500.9 that removes the provision authorizing certain presidential appointees and three-star and four-star generals/admirals to fly premium class on flights when flying to or from overseas destinations.

    Agency Affected: Department of Defense

  18. Status: Closed - Implemented

    Comments: In September 2007 DOD published an update to the Defense Transportation Regulation. This update clarified that new policies are consistent with the JTR and JFTR and made specific reference to the premium class travel policies related to allowable uses of and authorization of first and business class travel in those regulations.

    Recommendation: The Secretary of Defense should direct the appropriate under secretary of defense, assistant secretary of defense, or military service officials to establish policies and procedures to incorporate the regulations specified in GSA's FTR as well as guidance specified in our Standards for Internal Control and our Guide for Evaluating and Testing Controls Over Sensitive Payments, including revising the military service directives, orders, and policies to make them consistent with the JTR and JFTR.

    Agency Affected: Department of Defense

 

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