DOD Travel Cards:

Control Weaknesses Resulted in Millions of Dollars of Improper Payments

GAO-04-576: Published: Jun 9, 2004. Publicly Released: Jun 9, 2004.

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Ineffective management and oversight of the Department of Defense's (DOD) premium class travel and unused airline tickets led to concerns about DOD's overall management of the centrally billed accounts. GAO was asked to determine whether (1) DOD improperly reimbursed travelers for airline tickets DOD paid for using centrally billed accounts, (2) internal controls were effective in preventing issuance of unauthorized airline tickets, and (3) other control weaknesses led to compromised and fraudulently used centrally billed accounts.

A weak control environment and breakdowns in key controls over centrally billed accounts resulted in DOD paying travelers for airline tickets they did not purchase, issuing and paying for unauthorized airline tickets, and paying for goods and services obtained with compromised centrally billed accounts. Based on mining of limited fiscal year 2001 and 2002 data provided by the Army, Navy, and Marine Corps, GAO identified about 27,000 transactions totaling more than $8 million in which DOD potentially reimbursed travelers for airline tickets paid for by DOD--not the travelers. Requesting reimbursement for items that the traveler knowingly did not pay for may be a crime that could result in imprisonment or a monetary fine, or both. GAO's subsequent tests of a nonrepresentative selection of 124 individuals who submitted 204 of these 27,000 transactions confirmed that DOD improperly paid 91 individuals almost $98,000 for 123 airline tickets DOD purchased with centrally billed accounts. Only 4 travelers voluntarily reimbursed DOD prior to GAO initiating the audit, even though typically, more than a year had passed since the improper payments. Several travelers submitted multiple claims for airline tickets they did not purchase, which could indicate intent to defraud the government. In 2003, the Air Force Audit Agency reported that this same problem existed at the Air Force and estimated that, if not corrected, this problem will cost the Air Force more than $6 million over 6 years. Examples of Potentially Fraudulent Travel Claims Grade/rank Cost Number Nature of cases GS-15 $9,700 13 Traveler claimed he did not notice the additional $9,700 in his bank account. GS-13 3,600 6 Traveler continued to submit false claims after DOD told the traveler to stop requesting reimbursement for airline tickets purchased with centrally billed accounts. The traveler also rented luxury vehicles--such as a Mercedes Benz--while on government travel and approved his own travel vouchers. E-9 1,400 2 Traveler told us he knew of the improper payment, but he was waiting for DOD to request repayment. Source: GAO review of DOD travel data. GAO also determined that key internal controls did not provide DOD reasonable assurance that (1) airline tickets purchased and paid for with the centrally billed accounts were based on valid travel orders and (2) centrally billed account numbers were adequately protected against unauthorized use. To demonstrate weaknesses in DOD's system of internal controls, GAO submitted a fictitious travel order to a commercial travel office to obtain an airline ticket from Washington, D.C., to Atlanta, Ga. DOD issued GAO the airline ticket, established an obligation, and paid for the ticket without detecting the fictitious nature of the request. GAO also found instances where a lack of physical safeguards resulted in the centrally billed account numbers being stolen and used for personal gain. One DOD traveler stole a centrally billed account number to purchase over 70 airline tickets totaling more than $60,000, which he sold at a discounted rate to coworkers and their family members for personal travel. Because DOD disputed those fraudulent charges, DOD did not pay for those tickets. However, not all DOD units dispute unauthorized charges. As a result, DOD is vulnerable to paying for fraudulent charges on compromised centrally billed accounts.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In July 2004, DOD revised its travel voucher form to include instructions to travelers purchasing airline tickets using the CBA to identify CBA as the payment method and to provide a reminder that transportation tickets purchased with a CBA must not be claimed as a reimbursable expense. This action is consistent with the intent of our recommendation.

    Recommendation: To obtain reasonable assurance that DOD military and civilian personnel do not improperly request reimbursement for airline tickets purchased with centrally billed accounts and reinforce the seriousness of filing false claims against the government, the Secretary of Defense should direct the Secretaries of the Army, Navy, and Air Force, as well as the heads of all DOD agencies, to periodically issue guidance to military and civilian personnel reminding them that the cost of airfare expenses purchased with a centrally billed account should not be claimed as a reimbursable expense on travel vouchers, and of the potential penalties for doing so.

    Agency Affected: Department of Defense

  2. Status: Closed - Implemented

    Comments: On June 4, 2004, the Under Secretary of Defense directed DOD components to take immediate steps to review and then modify, as necessary, existing CTO contracts to meet specific standards. Included in these standards is the requirement that the CTOs mark all airline tickets purchased with a centrally billed accounts as "Ticket charged to a centrally billed accounts -- Non-reimbursable to the traveler."

    Recommendation: To obtain reasonable assurance that DOD military and civilian personnel do not improperly request reimbursement for airline tickets purchased with centrally billed accounts and reinforce the seriousness of filing false claims against the government, the Secretary of Defense should direct the Secretaries of the Army, Navy, and Air Force, as well as the heads of all DOD agencies, to direct the CTOs to mark all airline tickets purchased with a centrally billed account as "non-reimbursable."

    Agency Affected: Department of Defense

  3. Status: Closed - Implemented

    Comments: DOD responded partially to our recommendations by updating the Joint Federal Travel Regulations (for uniformed service members) and the Joint Travel Regulations (for civilian DOD employees) to require that a statement be included on the travel order/authorization indicating whether the tickets were purchased using a CBA or IBA. During FY 2006, DOD began implementation of the Defense Travel System (DTS), which automates the travel voucher approval system, as the primary method for processing travel. In conjunction with this new system, DOD has issued approving official training which includes guidance on the distinction between CBA and IBA reimbursements in DTS. As of January 1, 2007, DTS has been implemented in 280 major DOD sites and 8,760 total sites worldwide with estimated completion in FY 2009.

    Recommendation: To obtain reasonable assurance that DOD military and civilian personnel do not improperly request reimbursement for airline tickets purchased with centrally billed accounts and reinforce the seriousness of filing false claims against the government, the Secretary of Defense should direct the Secretaries of the Army, Navy, and Air Force, as well as the heads of all DOD agencies, to periodically issue guidance to officials responsible for processing travel vouchers instructing them on how to determine if an airline ticket was purchased with a centrally billed account or an individually billed account.

    Agency Affected: Department of Defense

  4. Status: Closed - Implemented

    Comments: DOD published disciplinary guidelines for both military and civilian personnel and modified systems to record and report instances of disciplinary action. DOD reports it implemented the new guidelines specifically to target card misuse and aggressively pursue prosecution of known fraud cases. DOD reported collecting approximately $48 million through salary offset. DOD's FY 2006 audits of travel claims helped validate compliance with new regulatory and policy guidelines to prevent improper travel payments. DOD has also continued monitoring of travel card performance through monthly metric reviews.

    Recommendation: To obtain reasonable assurance that DOD military and civilian personnel do not improperly request reimbursement for airline tickets purchased with centrally billed accounts and reinforce the seriousness of filing false claims against the government, the Secretary of Defense should direct the Secretaries of the Army, Navy, and Air Force, as well as the heads of all DOD agencies, to consider taking disciplinary action against employees who submit or allow the submission of falsely stated travel vouchers, and, if warranted, refer the matter to the U.S. Attorney for further consideration.

    Agency Affected: Department of Defense

  5. Status: Closed - Implemented

    Comments: As of October 2006, DOD collected 119 of the 123 identified improper payments. The four remaining payments were referred to out-of-service debt collection or were being evaluated as write-offs.

    Recommendation: To recover previous improper payments and identify further improper payments, Secretary of Defense should direct the Secretaries of the Army, Navy, and Air Force, as well as the heads of all DOD agencies, to send collection letters requesting reimbursements to all travelers identified as having been paid for airline tickets they did not purchase, and follow up to ensure that they reimburse the government for the improper payments.

    Agency Affected: Department of Defense

  6. Status: Closed - Implemented

    Comments: As of June 10, 2008, Defense Finance and Accounting Service (DFAS) and DOD components had reviewed the 27,000 transactions. They determined that less than 1,000 were improper. DOD has either collected, or has actions underway to recover, costs associated with the majority of the 1,000 payments to travelers who did not purchase their own airline tickets.

    Recommendation: To recover previous improper payments and identify further improper payments, Secretary of Defense should direct the Secretaries of the Army, Navy, and Air Force, as well as the heads of all DOD agencies, to review the 27,000 instances of potential improper payments that we referred to in this report and determine whether DOD improperly paid those travelers for airline tickets purchased with the centrally billed account. If DOD made improper payments, take actions necessary to recover the costs of the airline tickets.

    Agency Affected: Department of Defense

  7. Status: Closed - Implemented

    Comments: In June 2005, DOD completed its evaluation of existing procedures for the validation of travel orders. In early FY 2006, DOD determined that the new control procedures would be implemented through the Defense Travel System (DTS). The DTS utilizes Public Key Infrastructure (PKI) technology to validate the authenticity of electronic travel orders prior to issuing airline tickets with a centrally billed account. As of January 1, 2007, DTS has been implemented, including this automated travel order authorization technology, in 280 major DOD sites and 8,760 total sites worldwide.

    Recommendation: To provide DOD with reasonable assurance that airline tickets purchased with a DOD centrally billed account are for properly authorized official DOD business, the Secretary of Defense should direct the Secretaries of the Army, Navy, and Air Force, as well as the heads of all DOD agencies, to determine the feasibility of establishing control procedures to validate the authenticity of travel orders prior to issuing airline tickets purchased with a centrally billed account. Examples of how to validate the authenticity of travel orders include the following: (1) an electronic travel authorization process that limits approval of travel orders to designated officials (this could be accomplished by implementing the Defense Travel System across DOD, provided that DTS contains functionality to enable only designated authorizing officials to approve travel orders); and (2) a paper travel authorization process that is augmented by a system that provides the CTO with the capability to determine that the individual who approved a travel order can authorize the traveler to travel.

    Agency Affected: Department of Defense

  8. Status: Closed - Implemented

    Comments: The CTO contracts administered by the Services and DoD agencies were modified during June 2005 to instruct the CTOs that they can use a centrally billed account for purchase of airline tickets only if the CTO can obtain reasonable assurance that the travel order was properly authorized. However, DOD has not yet provided GAO with a copy of the CTO contracts to verify they were appropriately modified. On 10/09/2009, DOD provided GAO a copy of the modified CTO contracts.

    Recommendation: To provide DOD with reasonable assurance that airline tickets purchased with a DOD centrally billed account are for properly authorized official DOD business, the Secretary of Defense should direct the Secretaries of the Army, Navy, and Air Force, as well as the heads of all DOD agencies, to instruct the CTO that it can use a centrally billed account to purchase airline tickets only if the CTO can obtain reasonable assurance that the travel order was properly authorized. If the CTO cannot obtain such reasonable assurance, the CTO should direct the traveler to purchase the ticket with his or her DOD individually billed account travel card.

    Agency Affected: Department of Defense

  9. Status: Closed - Implemented

    Comments: During FY 2006, DOD created and deployed the Defense Travel System (DTS) at 8760 DOD sites worldwide. Before a travel transaction can be processed through DTS, its procedures require 100 percent verification that a valid obligation for official DOD travel has been established.

    Recommendation: To provide DOD with reasonable assurance that airline tickets purchased with a DOD centrally billed account are for properly authorized official DOD business, the Secretary of Defense should direct the Secretaries of the Army, Navy, and Air Force, as well as the heads of all DOD agencies, to consider the feasibility of prohibiting DFAS from establishing an obligation for airline tickets purchased with centrally billed accounts that failed DFAS' prevalidation process without obtaining positive confirmation that an obligation should be established from the unit that authorized the travel.

    Agency Affected: Department of Defense

  10. Status: Closed - Implemented

    Comments: On June 4, 2004, the Under Secretary of Defense directed DOD components to take immediate steps to review and then modify, as necessary, existing CTO contracts to meet specific standards. Included in these standards is the requirement that the CTO stop printing the complete centrally billed account number on travel itineraries and other documents.

    Recommendation: To prevent DOD's centrally billed account numbers from being compromised and help detect instances where they were, the Secretary of Defense should direct the Secretaries of the Army, Navy, and Air Force, as well as the heads of all DOD agencies, to direct CTOs to stop printing the centrally billed account number in its entirety on travel itineraries and any other documents that are accessible by individuals who do not need to know the account number.

    Agency Affected: Department of Defense

  11. Status: Open

    Comments: CTO contracts administered by the Services and DoD agencies were modified during June 2005 to include the requirement contained in the memorandum from the Acting Under Secretary of Defense (AT&L) that the CTO must notify the Government Transportation Office of any airline ticket transaction that has a potential discrepancy in authorization or billing. However DOD was unable to provide GAO with any evidence that appropriate followup is being conducted on items identified as discrepancies by CTOs. DOD still has not provided documentation or any other evidence that followup is being conducted on items identified as discrepancies by CTOs.

    Recommendation: To prevent DOD's centrally billed account numbers from being compromised and help detect instances where they were, the Secretary of Defense should direct the Secretaries of the Army, Navy, and Air Force, as well as the heads of all DOD agencies, to establish procedures to ensure that all airline ticket transactions identified as discrepancies by the CTOs are properly disputed, including performing any necessary follow-up actions to ensure that DOD receives appropriate credits.

    Agency Affected: Department of Defense

 

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