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Testimony:

Before the Committee on Governmental Affairs, U.S. Senate:

For Release on Delivery Expected at 10 a.m. EDT Wednesday, June 9, 
2004:

DOD Travel Cards:

Control Weaknesses Led to Millions in Fraud, Waste, and Improper 
Payments:

Statement of Gregory D. Kutz, 
Director, Financial Management and Assurance:

John J. Ryan, 
Assistant Director, Office of Special Investigations:

GAO-04-825T:

GAO Highlights:

Highlights of GAO-04-825T, a testimony before the Committee on 
Governmental Affairs, United States Senate 

Why GAO Did This Study:

In November 2003, GAO testified on the significant level of improper 
premium class travel purchased with centrally billed accounts. These 
findings led to concerns over the Department of Defense’s (DOD) overall 
management of the centrally billed account program. At the request of 
this Committee, Senator Grassley, and Representative Schakowsky, GAO 
performed work to determine whether DOD controls were adequate to 
protect the centrally billed accounts from fraud, waste, and abuse. 
This testimony focuses on whether DOD (1) paid for airline tickets 
that it did not use and did not process for refund, (2) improperly 
reimbursed travelers for the cost of airline tickets paid for with 
centrally billed accounts, and (3) adequately secured access to 
centrally billed accounts against improper and fraudulent use. This 
testimony also addresses the internal control breakdowns that led to 
instances of fraud, waste, and abuse and DOD’s corrective actions.

In two companion reports issued today, DOD concurred with the 31 
recommendations GAO made—including moving to a well-managed 
individually billed account program—to improve the management of unused 
tickets, recover the value of outstanding unused tickets, prevent and 
detect improper payments, reduce the risk that airline tickets are 
issued on invalid travel orders, and improve security over the 
centrally billed accounts. 

What GAO Found:

A weak control environment and breakdowns of key controls over the 
centrally billed accounts led to millions of dollars wasted on unused 
airline tickets, reimbursements to travelers for improper and 
potentially fraudulent airline ticket claims, and issuance of airline 
tickets based on invalid travel orders. 

Problem identified: Unused airline tickets: 
* 58,000 airline tickets—primarily fiscal years 2001 and 2002 tickets—
with a residual value of more than $21.1 million were unused and not 
refunded as of October 2003; 
* Many more tickets are partially unused with unknown residual value; 
* $100 million in potential unused tickets from fiscal years 1997 to 
2003; 

Illustrative example(s): 
Some unused tickets are first or business class tickets that cost 
thousands of dollars: 
* $9,800 round trip from Washington, D.C. to Canberra, Australia; 
* $3,400 round trip from Washington, D.C. to San Diego, Calif.

Problem identified: Reimbursements to travelers for improper and 
potentially fraudulent airline ticket claims: 
* About 27,000 potential improper reimbursements totaling more than $8 
million identified at the Army, Marine Corps, and Navy during fiscal 
year 2001 and 2002; 
* 123 of 204 transactions selected for testing were improper and 
potentially fraudulent; 
* Air Force Audit Agency estimated that losses for the Air Force due 
to improper payments to be $6.5 million over 6 years. 

Illustrative example(s): 
Some travelers submitted multiple claims for tickets they did not 
purchase, which could be indicative of intent to defraud the 
government: 
* A GS-15 received 13 improper payments totaling almost $10,000 but 
claimed he did not notice the overpayments; 
* A GS-13 repeatedly submitted false claims for airline ticket 
reimbursements after being told they were improper; 

Problem identified: Centrally billed accounts not adequately secured 
against improper and fraudulent use: 
* No verification that travel order is valid before airline tickets 
are charged to the centrally billed accounts and obligations recorded 
to pay for the airline tickets; 
* Centrally billed account numbers were compromised and used for 
personal gain; 

Illustrative example(s): 
* Using a basic scheme to defraud, GAO obtained a round-trip airline 
ticket from Washington, D.C. to Atlanta, Ga. that was paid for by DOD; 
* A DOD traveler used a centrally billed account number to purchase 
over 70 airline tickets costing over $60,000, which he resold at a 
discount. 

Source: GAO analysis of DOD data.

[End of table]

In some instances where the centrally billed accounts were compromised, 
DOD did not pay for the airline tickets because DOD disputed those 
charges. However, not all DOD units disputed unauthorized charges. As a 
result, DOD is vulnerable to paying for fraudulent charges. A major 
contributing factor to these problems is that DOD’s travel order, 
ticket issuance, and travel voucher systems are not integrated, and 
DOD had not designed compensating procedures to reconcile data in these 
systems. Thus, DOD was unable to detect instances where (1) the absence 
of a travel voucher might indicate that an airline ticket was unused, 
(2) travelers improperly claimed reimbursement for tickets they did not 
purchase, and (3) an authorized individual did not approve the travel 
order submitted to obtain an airline ticket. Other causes are excessive 
reliance on DOD travelers to report unused tickets, inadequate voucher 
review, and weak centrally billed account safeguards. 

www.gao.gov/cgi-bin/getrpt?GAO-04-825T.

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Gregory Kutz at (202) 
512-9505 or kutzg@gao.gov.

[End of section]

Madame Chairman and Members of the Committee:

Thank you for the opportunity to discuss the Department of Defense's 
(DOD) management of its centrally billed accounts. This testimony is a 
continuation of previous work we performed on weaknesses in controls 
over DOD's premium class travel acquired using the centrally billed 
travel accounts.[Footnote 1] Our two related reports,[Footnote 2] 
released today and developed at the request of this Committee, Senator 
Grassley, and Representative Schakowsky, describe additional problems 
we identified in DOD's controls over the centrally billed accounts. 
These weaknesses, and other weaknesses we had previously reported upon 
related to DOD's management of the individually billed 
accounts,[Footnote 3] are illustrative of DOD's long-standing financial 
management problems, which are pervasive, complex, and deeply rooted in 
virtually all business operations. Such problems led us in 1995 to put 
DOD financial management on our list of high-risk areas--those that are 
highly vulnerable to fraud, waste, and abuse--a designation that 
continues today.[Footnote 4]

The centrally billed accounts are used by most DOD services and units 
to purchase transportation services such as airline and train tickets, 
facilitate group travel, and procure other travel-related 
expenses.[Footnote 5] In contrast, the individually billed travel 
accounts are used by individual travelers primarily for lodging, rental 
cars, and other travel expenses. Further, unlike the individually 
billed travel accounts, where travelers are responsible for all charges 
and for remitting payments for the monthly bill, charges for centrally 
billed accounts are billed directly to the government for payment. For 
fiscal years 2001 and 2002, DOD travelers incurred $7.1 billion in 
expenses on the centrally billed and individually billed travel card 
accounts, with about $2.8 billion related to the use of centrally 
billed accounts.

Today, we will share our perspective on whether DOD (1) paid for 
airline tickets that it did not use and did not process for refund, (2) 
improperly reimbursed travelers for the cost of airline tickets paid 
for using centrally billed accounts, and (3) adequately secured access 
to the centrally billed accounts against improper and fraudulent use. 
We will also address the internal control breakdowns that led to these 
instances of fraud, waste, and abuse and DOD's corrective actions.

Summary:

Weaknesses in the design and implementation of key internal controls 
over the centrally billed accounts led to millions of dollars wasted on 
airline tickets that were unused and not refunded, and millions more 
where DOD made payments to travelers for improper and potentially 
fraudulent claims the travelers filed for airline tickets that DOD--and 
not the traveler--purchased. The weaknesses were also highlighted when 
DOD issued us an airline ticket and recorded an obligation to pay for 
that ticket based on a fictitious travel order we prepared. We also 
found that some DOD centrally billed accounts had been compromised and 
used for personal gain.

Limited data provided by DOD's five most frequently used airlines 
indicated that DOD had purchased--primarily in fiscal years 2001 and 
2002--about 58,000 tickets with a residual (unused) value of $21.1 
million that were unused and not refunded as of October 2003. In 
addition, three airlines reported that DOD had purchased more than 
81,000 airline tickets costing more than $62 million that it used only 
partially, that is, at least one leg had not been used. We also found 
that DOD was not aware of the magnitude of these unused tickets, and 
therefore did not know their number or dollar value. Based on further 
assessment of the limited airline data, we determined that it is 
possible that DOD had purchased, since 1997, more than $100 million in 
airline tickets with its centrally billed accounts that it did not use 
and did not process for refunds. The millions of dollars in airline 
tickets were wasted because DOD did not have a systematic process to 
identify and process unused airline tickets.

We also found that DOD made millions of dollars of improper 
reimbursements to travelers who filed potentially fraudulent claims for 
airline tickets that DOD, and not the travelers, paid for using the 
centrally billed accounts. Some DOD travelers submitted multiple claims 
for airline tickets they did not purchase, which could indicate an 
intent to defraud the government. During fiscal years 2001 and 2002, 
these improper reimbursements were made on about 27,000 transactions 
totaling more than $8 million. We identified the $8 million through 
data mining of limited fiscal year 2001 and 2002 travel voucher data 
provided by the Army, Navy, and Marine Corps. Further testing of a 
nonrepresentative selection of 204 potentially improper claims for 
airline tickets confirmed that 123 payments totaling about $97,000 were 
improper. For example, one traveler received 13 improper payments 
totaling almost $10,000 for airline tickets he did not purchase, yet 
claimed that he did not realize he was overpaid. In another case, one 
traveler continued to file false claims and eventually received 
improper payments of $3,600 despite repeated notification that his 
claims were improper.

The lack of adequate security over the centrally billed accounts also 
exposed these accounts to improper and fraudulent use. We found that 
DOD allowed the centrally billed accounts to be used for payment of 
airline tickets without verifying the validity of the travel order. Our 
investigation demonstrated the ease with which an unauthorized 
individual could obtain an airline ticket using a fictitious travel 
order. Specifically, we found that DOD readily issued an airline 
ticket--for which we were able to obtain a boarding pass--on the 
receipt of a fictitious travel order, and automatically recorded an 
obligation to pay for the airline ticket issued on the basis of the 
fictitious travel order. The lack of adequate security also resulted in 
some DOD centrally billed accounts being compromised and used for 
personal gain. For instance, a military service member used the 
centrally billed accounts to buy airline tickets costing more than 
$60,000 and sold them at a discounted rate to coworkers and family 
members. Because DOD disputed these unauthorized transactions once they 
were identified as unauthorized, DOD received credits from Bank of 
America and did not incur losses. However, some DOD locations did not 
file disputes for unauthorized items or track their resolution. As a 
result, DOD could have paid for fraudulent transactions from 
compromised accounts.

Weaknesses in the design of internal controls, specifically the lack of 
interface between DOD's travel order, ticket issuance, and travel 
voucher systems, and the lack of compensating procedures to reconcile 
data from these systems, were major contributing factors to the fraud, 
waste, and improper payments we identified. For example, without 
reconciling data from the ticket issuance to the travel voucher system, 
DOD could not identify instances where the absence of a travel voucher 
indicates that travel was canceled and the airline ticket was unused, 
or that an airline ticket claimed on a travel reimbursement was 
improper. Without an interface between the travel order and ticket 
issuance systems, DOD could not determine that a travel order was valid 
before ticket issuance. Again, DOD did not implement compensating 
procedures to verify that the travel order was valid before it paid 
Bank of America for the airline tickets. Other internal control 
weaknesses included excessive reliance on DOD travelers to report 
unused tickets, inadequate supervisory review of vouchers, and lack of 
physical safeguards over centrally billed accounts.

As discussed in the two reports released today, DOD agreed with all 31 
of our recommendations to improve internal controls over the centrally 
billed accounts. In particular, DOD agreed that using a well-controlled 
individually billed account program to pay for airline tickets would 
transfer responsibility for all charges to the individual cardholder 
and reduce the financial exposure resulting from the weaknesses in the 
controls over DOD's centrally billed accounts. DOD has also begun to 
take corrective actions in a number of areas. DOD has convened task 
forces and working groups to address the deficiencies we have 
identified, taken actions to attempt to recover the $21.1 million in 
tickets identified as unused and not refunded, and recovered more than 
$50,000 of the $100,000 in improper payments we identified.

Millions of Dollars Wasted on Airline Tickets that Were Unused and Not 
Refunded:

Our analysis of limited airline data found that DOD had purchased 
millions of dollars in airline tickets that it did not use and did not 
process for refund. Because DOD did not maintain data on unused 
tickets, DOD was not aware of this problem prior to our audit. Further 
assessment of the data indicated that it is possible that since 1997, 
DOD purchased more than $100 million in airline tickets with its 
centrally billed accounts that it did not use and did not process for 
refunds.

As shown in table 1, data provided by five of DOD's most frequently 
used airlines[Footnote 6] showed that about 58,000 tickets with a value 
of $21.1 million were purchased with DOD's centrally billed accounts 
but were unused and not refunded. DOD was not aware of these unused 
tickets and did not know their number or dollar value. The $21.1 
million we identified included more than 48,000 tickets valued at $19.2 
million that were fully unused, and $1.9 million in the unused 
(residual) value of about 10,000 partially used tickets,[Footnote 7] 
that is, at least one leg had not been used. These tickets were 
primarily acquired during fiscal years 2001 and 2002, although some 
were also purchased during fiscal years 1999, 2000, and 2003.

Table 1: Known Value of Unused and Unclaimed Airline Tickets, November 
1998 through December 2002:

Airline: American; 
Number of tickets: 15,877[A]; 
Known unused value of fully and partially unused airline tickets 
(dollars in millions): $4.1[A].

Airline: Delta; 
Number of tickets: 15,588; 
Known unused value of fully and partially unused airline tickets 
(dollars in millions): $6.4.

Airline: Northwest; 
Number of tickets: 3,479; 
Known unused value of fully and partially unused airline tickets 
(dollars in millions): $2.3[B].

Airline: United; 
Number of tickets: 16,283; 
Known unused value of fully and partially unused airline tickets 
(dollars in millions): $6.0.

Airline: US Airways; 
Number of tickets: 6,719; 
Known unused value of fully and partially unused airline tickets 
(dollars in millions): $2.3.

Airline: Total; 
Number of tickets: 57,946; 
Known unused value of fully and partially unused airline tickets 
(dollars in millions): $21.1. 

Source: GAO analysis of Bank of America and airline data.

[A] In total, American Airlines reported 24,013 tickets with residual 
value of more than $6.2 million that were fully or partially unused. We 
excluded 8,136 American Airlines unused tickets totaling more than $2.1 
million from our analysis because either (1) less than 6 months had 
passed since the tickets were purchased and when American Airlines 
provided the file or (2) Bank of America data did not confirm whether 
the tickets were fully or partially unused.

[B] Values represent the amount Bank of America reported for tickets 
Northwest identified as being unused.

[End of table]

In addition to the known, unused value of $21.1 million, DOD also 
failed to claim refunds on an additional 81,000 partially unused 
tickets purchased at more than $62 million, of which the residual value 
is unknown. This is because Delta, Northwest, and United airlines, 
which provided us with these data, informed us that their ticket data 
are not maintained in a format that would allow them to easily quantify 
the remaining unused value.

The data the five airlines provided in response to our request for 
fiscal years 2001 and 2002 unused ticket data were not uniform, 
complete, or consistent. For example, while American, Delta, Northwest, 
and United provided some data on partially unused tickets, US Airways 
did not provide any. Further, while Delta, Northwest, and United 
provided data on the total purchase price of tickets that were 
partially unused, American Airlines was the only airline that provided 
data on the purchase price and unused value of its partially unused 
tickets. The airlines cited difficulties with accessing their 
historical files as the reason for not being able to fully respond to 
our request. The airlines pointed out that to provide additional 
information, they would have had to access information that had been 
stored in archived computer files, and in some instances, the computer 
files had been eliminated and the only documentation that remained were 
paper records of the flights.

Also as we reported previously, DOD's failure to monitor premium class 
travel had resulted in more than 70 percent of premium class travel 
being unauthorized and unjustified, and thus increased cost to 
taxpayers.[Footnote 8] Although we found that the vast majority of the 
wasted airline tickets were for coach class travel, the most egregious 
examples of waste related to premium class tickets costing thousands of 
dollars that DOD--and thus the taxpayers--paid for that were not used 
and therefore provided no benefit to the government or the taxpayers. 
For example, United Airlines reported that a Navy traveler used the 
centrally billed account to purchase a round-trip business-class ticket 
costing $9,800 from Washington D.C., to Canberra, Australia. Table 2 
shows examples of first and business class tickets purchased for travel 
through December 2002 that were identified as unused--and were not 
refunded--as of October 2003.

Table 2: Examples of Unused and Unclaimed Premium Class Tickets:

Ticket itinerary: 1; 
Ticket itinerary: Round trip -Washington, D.C. to Canberra, Australia; 
Ticket price: $9,800.

Ticket itinerary: 2; 
Ticket itinerary: Round trip -Atlanta, Georgia to Muscat, Oman; 
Ticket price: $8,100.

Ticket itinerary: 3; 
Ticket itinerary: Round trip -Washington, D.C. to Canberra and 
Honolulu; 
Ticket price: $8,000.

Ticket itinerary: 4; 
Ticket itinerary: Round trip -Washington, D.C. to Tokyo, Japan; 
Ticket price: $7,300.

Ticket itinerary: 5; 
Ticket itinerary: One way -Stuttgart, Germany to Honolulu; 
Ticket price: $4,800.

Ticket itinerary: 6; 
Ticket itinerary: One way -Washington, D.C. to Brussels, The 
Netherlands; 
Ticket price: $2,800.

Ticket itinerary: 7; 
Ticket itinerary: One way -Washington, D.C. to Chicago, Illinois; 
Ticket price: $900. 

Source: GAO.

[End of table]

Based on further assessment of the limited airline data, we determined 
that it is possible that DOD purchased at least $100 million in airline 
tickets that were unused and not refunded since 1997, the oldest year 
for which centrally billed account data were available. This amount is 
derived by using data provided by the airlines for fiscal year 2002 to 
calculate the total value of unused tickets as a percentage of total 
tickets purchased using the centrally billed accounts, and applying the 
resulting percentage to the almost $8 billion in total value of tickets 
purchased with a centrally billed account since 1997. Federal agencies 
are authorized to recover payments made to airlines for tickets that 
agencies acquired but did not use.[Footnote 9] Consequently, DOD might 
be entitled to recover the value of the unused and unrefunded tickets 
from the airlines.

Because DOD did not maintain data on unused tickets, DOD would have to 
rely on the airlines to provide the relevant data needed to claim 
refunds. While the airlines provided us with at least 1 year of the 
data we requested, some airline representatives expressed concerns 
about the feasibility and costs of providing additional unused ticket 
data. However, unused tickets from these 5 airlines and the more than 
85 other airlines that DOD uses represent a potentially substantial 
government claim. To assist DOD in claiming refunds or converting the 
unused tickets to future use, we provided DOD with a list of the unused 
ticket information we received from the airlines in December 2003. As 
will be discussed in further detail below, DOD has taken actions to 
request repayment of the over $21 million in known unused tickets from 
the airlines.

Reimbursements for Improper and Potentially Fraudulent Airline Ticket 
Claims Could Total Millions of Dollars:

We found that breakdown in internal controls resulted in numerous 
instances during fiscal years 2001 and 2002 where DOD travelers 
submitted improper claims and subsequently received improper 
reimbursements for airline tickets they did not purchase. Requesting 
reimbursement for items that the traveler did not pay for may violate 
the False Claims Act and be punishable by imprisonment or a monetary 
fine, or both. Although limitations in DOD data prevented us from 
accurately estimating the magnitude of these improper reimbursements, 
our data mining of limited DOD data indicated that the potential 
improper claims could total more than $8 million dollars.

Magnitude of Potentially Improper Payments:

During fiscal years 2001 and 2002, DOD spent over $10.8 billion on 
travel and transportation expenses for DOD military and civilian 
personnel, of which about $2.8 billion were charged to the centrally 
billed accounts, and the remaining $8 billion through voucher 
settlement.[Footnote 10] However, significant limitations related to 
DOD travel and transportation data prevented us from accurately 
estimating the magnitude of improper payments DOD made to travelers for 
improper and potentially fraudulent claims travelers filed for airline 
tickets that DOD--and not the traveler--purchased. Specifically, travel 
voucher data received from the Army, Navy, and Marine Corps covered 
only about $4.5 billion of the $8 billion in total travel voucher 
expenses.[Footnote 11] Despite these limitations, our data mining of 
about 50 percent of voucher data identified about 27,000 travel claims 
totaling over $8 million for which DOD made potentially improper 
reimbursements to travelers for airline tickets that had actually been 
paid for using DOD centrally billed accounts. Although we were unable 
to obtain Air Force data in a format that would help us identify 
instances of improper payments, the Air Force Audit Agency[Footnote 12] 
reported that the Air Force also improperly paid travelers for the cost 
of airline tickets purchased with centrally billed accounts and 
estimated that the improper payments cost the Air Force $6.5 million 
over 6 years.

Results of Improper Payment Testing:

To determine whether DOD improperly paid travelers for the airline 
tickets purchased with centrally billed accounts, we tested 204 travel 
claims selected from the 27,000 potentially improper travel claims we 
identified through data mining. We selected the 204 travel claims 
containing about $154,000 in potentially improper payments using a 
nonrepresentative methodology. Our tests--which consisted of reviewing 
what the travelers claimed as reimbursable expenses, what DOD paid, and 
what was purchased using the centrally billed accounts--confirmed that 
DOD made 123 improper payments totaling more than $97,000 to 91 
travelers.[Footnote 13] Fifteen of the 123 improper payments had been 
identified prior to our audit because the travelers voluntarily 
notified DOD of the improper payments, or because DOD found that the 
payments were improper through its own voucher audits. Further, in 
response to our audit, DOD collected more than $42,500 from 46 
travelers for 63 improper airfare payments, and is in the process of 
recovering the remaining improper payments:

We found that improper payments fell into two categories. The first 
category, which is linked to DOD's unused ticket problem, comprises 15 
instances totaling almost $16,000. In these instances, DOD and the 
traveler each purchased one airline ticket for the same 
travel,[Footnote 14] and DOD properly reimbursed the traveler for the 
airline ticket used and charged to the traveler's individually billed 
account. However, lack of reconciliation procedures, which I will 
discuss in further detail below, resulted in DOD not being able to 
detect that a payment for an airline ticket purchased and paid for by 
the traveler corresponded to an unused airline ticket purchased with a 
centrally billed account.

The second, and more typical, category of improper payments were made 
to 76 travelers for airline tickets they simply did not purchase. Only 
4 travelers notified the Defense Finance and Accounting Service--and 
made restitution--on the improper payments prior to our audit. The 
remaining improper payments would also be fraudulent if the travelers 
intentionally filed false claims.

Examples of Improper Payments:

Travelers who had not purchased airline tickets should not have 
requested reimbursements, nor should DOD have paid the travelers for 
the cost of the airline tickets. Knowingly requesting reimbursement for 
items that the traveler did not pay for may violate the False Claims 
Act and be punishable by imprisonment or a monetary fine, or both. 
Although most of the 76 travelers we identified submitted improper 
claims once, several travelers we identified repeatedly submitted 
claims for airline tickets they did not purchase, which could indicate 
an intent to defraud the government. For example:[Footnote 15]

* A GS-15 submitted claims--and received payments--for 13 airline 
tickets totaling almost $10,000 that he did not purchase. One of these 
claims was for an international ticket costing more than $3,500. 
Despite receiving almost $10,000 over a 9-month period, the traveler 
informed us that he did not notice that he had received payments for 
expenses he did not incur.

* Despite six notifications by DFAS from March 2001 to July 2002 that 
his vouchers contained improper airfare claims, a GS-13 acquisition 
specialist continued to submit false airfare claims from August 2002 to 
June 2003. This employee ultimately received $3,600 in payments for six 
improper claims. To circumvent proper review of his vouchers, the 
traveler scribbled his own name as the approving official and approved 
his own voucher. The traveler also took other questionable actions 
related to travel. For example, the traveler used the individually 
billed travel card to obtain two unrestricted coach class tickets for 
family members to fly to Germany. These unrestricted coach class 
tickets were normally priced at $2,800 each compared to the reduced 
government rate of $546 per person, which the traveler was able to 
obtain by using the individually billed card. The traveler also rented 
luxury vehicles--Mercedes Benz and Lincoln Navigator--while on 
government travel, typically at a rental rate of more than $100 a day.

* Another traveler, an E-9, represented to us that he knew that he 
received $1,400 in payments for two airline tickets he did not 
purchase. The traveler did not take actions to notify DFAS of the 
overpayment. The traveler kept the payment until our audit.

Because of potential fraud, we have referred these cases to the DOD 
Office of Inspector General for further inquiry, and potential referral 
to the appropriate U.S. Attorney for further consideration.

Inadequate Security over the Centrally Billed Accounts Increased Risk 
of Fraud and Abuse:

We also found that inadequate security resulted in improper and 
fraudulent use of the centrally billed accounts. Specifically, DOD did 
not adequately protect the centrally billed accounts from being used to 
purchase airline tickets based on fictitious travel orders and from 
being compromised and used for personal gain. These weaknesses exposed 
the centrally billed accounts to increased risk of fraud and abuse.

Airline Ticket Purchased Based on Fictitious Travel Order:

We found that DOD allowed the centrally billed accounts to be used for 
payment of airline tickets without verifying the validity of the travel 
order. Consequently, we performed additional work during fiscal year 
2004 to determine whether our concerns were warranted, or whether DOD 
could detect instances where invalid travel orders are used to obtain 
airline tickets. Our tests were also designed to determine whether 
current DOD controls could detect a ticket that is partially unused, 
and process that ticket for refund.

Our work involved creating, in February 2004, a fictitious travel order 
using fictitious names for the traveler and approving official. We had 
a GAO employee sign the travel order as the approving official using 
the fictitious name. We called a commercial travel office (CTO) 
assigned to one of the locations where we performed our testing and 
requested that they purchase a round trip airline ticket from 
Washington, D.C., to Atlanta, Ga. Upon receiving a faxed copy of our 
fictitious order, the CTO issued the airline ticket and charged it to a 
centrally billed account. The CTO then notified us that the ticket was 
issued and on the day of the scheduled flight, we went to the airline's 
ticket counter at the airport and picked up a boarding pass for the 
outbound flight from Washington, D.C., to Atlanta (see fig. 1).

Figure 1: Boarding Pass for Airline Ticket Charged to a Centrally 
Billed Account for Fictitious Traveler:

[See PDF for image] 

[End of figure] 

Two months later, we obtained and reviewed the Bank of America invoice 
for the centrally billed account the CTO used to purchase the 
unauthorized ticket. The documentation indicated that DOD made payment 
to Bank of America without being aware that the travel order was 
fictitious, or that it had issued an airline ticket based on a 
fictitious travel order. Because it did not verify that the travel 
order was valid, DOD allowed its system to create an obligation to pay 
for the ticket. Further, DOD had not by that time detected that the 
return portion of the airline ticket was unused. Consequently, DOD had 
not processed a refund for the unused portion. After we informed DOD 
about the airline ticket that we obtained using the fictitious travel 
order, DOD requested and received a refund from the airline for the 
ticket we obtained.

Centrally Billed Accounts Were Compromised and Used Fraudulently:

During fiscal years 2001 and 2002, some DOD centrally billed accounts 
were compromised and fraudulently used for personal gain. We detected 
these fraudulent activities by reviewing Bank of America data and 
making inquiries of DOD officials. In many instances, DOD had detected 
the fraudulent transactions, and did not incur losses, because it 
disputed these transactions with the Bank of America. For example:

* Between August 2001 and March 2002, a Navy seaman used the centrally 
billed accounts to purchase over 70 tickets totaling more than $60,000. 
The 70 unauthorized tickets were identified by the CTO as unauthorized, 
that is, tickets they did not issue while reconciling tickets they had 
issued to the Bank of America invoices. According to the Naval Criminal 
Investigative Service (NCIS), to which this case was referred, the 
seaman called the airlines and purchased the tickets by giving them the 
centrally billed account numbers, which he found printed on his travel 
itineraries. Some of the 70 airline tickets were obtained for the 
seaman's own travel, but in many instances the tickets were sold at a 
discounted rate to other Navy personnel and their family members.

* Similarly, a Marine Corps corporal used the centrally billed account 
number printed on his itinerary to fraudulently purchase, through the 
internet, 11 airline tickets and a hotel accommodation totaling $3,360 
between July and October 2000. The charges were identified as 
unauthorized by the CTO during the reconciliation process, and disputed 
with Bank of America.

In the above cases, DOD identified and disciplined the military 
personnel and did not incur financial losses. This is because, in both 
cases, DOD officials filed disputes with Bank of America upon receiving 
notification from the CTO that they had no record of having issued the 
airline ticket or making the hotel accommodation, and thus the 
transactions appeared to be unauthorized. Monitoring of the disputes 
also helped DOD officials conclude that the transactions were 
fraudulent, and resulted in Bank of America reimbursing DOD for the 
fraudulent transactions.

The examples above indicated the importance of identifying unauthorized 
transactions and filing disputes. However, our audit also found that 
not all DOD offices filed disputes. During fiscal years 2001 and 2002, 
5 of the 11 units we visited did not file disputes. Other DOD units 
that did file disputes did not do so consistently. Although some 
transactions that appeared to be unauthorized could ultimately be 
traced to tickets actually purchased by DOD, other unauthorized 
transactions occurred because the centrally billed accounts were 
compromised and used fraudulently. Without disputing or researching 
centrally billed account transactions that appear to be unauthorized, 
DOD is exposed to significant risks that centrally billed accounts 
would be compromised, similar to the two cases discussed above, but 
without detection.

Weaknesses in Design and Implementation of Key Internal Controls 
Contributed to Fraud, Waste, and Abuse:

We found that the lack of interface among DOD's primary travel systems-
-travel order, ticket issuance, and travel voucher--was the common 
underlying cause and major contributing factor that allowed the fraud, 
waste, and abuse we identified to occur without detection. DOD had 
intended that the Defense Travel System (DTS) would address this 
fundamental weakness; however, DTS had experienced cost and schedule 
delays. In the interim, DOD had either not designed adequate 
compensating procedures, such as reconciliation of data from these 
systems, or had not effectively implemented procedures it had in place, 
such as verifying the validity of all travel orders before paying Bank 
of America for airline ticket charges. Other weaknesses that 
contributed to the fraud, waste, and abuse we identified above included 
excessive reliance on travelers to report unused tickets, lack of 
adequate supervisory review of travel claims, and inadequate safeguards 
of centrally billed account numbers.

Lack of Integrated Travel Systems and Effective Compensating Procedures 
Contributed to Fraud, Waste, and Abuse:

DOD's travel systems--specifically the travel order, obligations, 
ticket issuance, and travel voucher processing--are not integrated. 
DOD's current travel systems do not have the ability to route only 
valid travel orders to the CTO for ticket issuance, or routinely match 
travel vouchers to tickets issued through the centrally billed accounts 
before making voucher or centrally billed account payments. We also 
found that DOD had not designed controls, or implemented effective 
controls, to compensate for these system weaknesses.

We found that DOD had not designed other procedures to link or 
reconcile tickets issued using the centrally billed accounts to the 
voucher system. A link or reconciliation between these two types of 
data would assist DOD in preventing or detecting both unused tickets 
and improper payments. For example, if DOD compared ticket issuance and 
voucher data, DOD could detect instances where a lack of a travel 
voucher might indicate that the ticket was unused. Further follow-up 
would confirm that a number of these tickets are unused and therefore, 
could result in actions to claim a refund on those tickets. Without 
reconciling these two types of records, DOD cannot obtain reasonable 
assurance that centrally billed account charges represent airline 
tickets that are eventually used. Reconciliation would also enable DOD 
to detect instances where a traveler submitted a claim for airfare for 
which a corresponding ticket was issued using the centrally billed 
accounts. In these instances, if the traveler submitted evidence that 
he bought another airline ticket, DOD would detect that the airline 
ticket purchased with the centrally billed account was unused, or, if 
such evidence was not submitted, that the airfare claim should be 
rejected.

We also found that, in instances where DOD designed compensating 
procedures to address lack of system integration, DOD did not 
effectively implement these procedures. As mentioned previously, DOD 
travel systems did not have the ability to route only valid travel 
orders to the CTO for ticket issuance.[Footnote 16] Without this 
capacity, DOD was unable to detect from its systems instances where a 
travel order was not approved by an authorized individual and should 
not be used as the basis for airline ticket issuance and payment. One 
compensating procedure would involve DOD providing the CTOs with a list 
of approving officials, or these officials' signature cards, to aid in 
determining the validity of the travel orders the CTO received before 
tickets are issued. DOD had chosen not to implement this front-end 
procedure, electing instead to focus on back-end procedures. However, 
our work found flaws in DOD implementation of these back-end 
procedures.

The back-end procedure requires that DOD verify that an obligation 
exists for each airline ticket charged on the centrally billed 
accounts--a process called prevalidation--before payment is made to the 
Bank of America. This procedure is intended to provide DOD with 
assurance that, prior to payment of the Bank of America invoice, 
airline ticket charges on the centrally billed accounts are supported 
by valid travel orders. By verifying that an obligation exists for the 
travel order that authorizes each airline ticket charged on the Bank of 
America's invoice, the prevalidation process could identify instances 
where obligations have not been established, which could indicate that 
the travel order might not be valid, such as the fictitious order we 
faxed to DFAS to obtain the airline ticket we described previously.

However, the Financial Management Regulations (FMR) allows DFAS--DOD's 
disbursing organization--to record a new obligation, or increase an 
existing obligation, up to $2,500 for transactions that fail 
prevalidation if DFAS is in possession of a valid obligating document. 
The FMR also defines a valid obligating document to include a travel 
order.[Footnote 17] Thus, if DFAS receives a travel order from the CTO, 
DFAS is not required to determine the validity of the travel order if 
the airline ticket charge is less than $2,500.[Footnote 18] However, as 
discussed previously, the CTOs forwarded the travel orders to DFAS 
without verifying that these orders were valid. Therefore, DFAS does 
not have reasonable assurance that the obligations it creates based on 
the travel orders the CTO provided were approved by individuals who 
have the authority to authorize the travel. As our investigative work 
demonstrated, failure to determine the validity of all travel orders 
for which a corresponding obligation had not been created resulted in 
DOD creating an obligation to pay for the airline ticket we obtained 
based on the fictitious travel order.

DOD officials informed us that DTS, currently being developed to 
replace the more than 30 travel systems now operating within the 
department, will provide an integrated process of preparing travel 
orders and making travel arrangements, including airline reservations, 
and filing and paying travel vouchers. According to these officials, it 
will also include a capability to routinely match travel vouchers to 
tickets issued through the centrally billed accounts. DTS was 
originally scheduled to be fully operational in 2002, but has 
experienced cost and schedule delays. According to the program 
management office, DTS will be operational for about 80 percent of DOD 
personnel in 2006.

Excessive Reliance on Travelers to Report Unused Tickets:

Another contributing factor to unused and unrefunded tickets is DOD's 
excessive reliance on travelers to report unused tickets to the CTOs. 
Appropriate reporting of unused tickets is needed to help DOD request 
refunds in a timely manner so that scarce resources are returned to the 
government. DOD travel and financial management regulations require 
that travelers notify the appropriate CTO when a ticket is unused and 
to return the unused ticket to the CTO for refund. According to bank 
data, DOD received credits amounting to about 9 percent of the airline 
tickets purchased through the CTOs during fiscal years 2001 and 2002, 
indicating that some DOD travelers followed the unused ticket 
requirements. However, DOD did not implement control procedures to 
systematically determine the extent to which DOD travelers adhered to 
the unused ticket requirements, and to identify instances in which they 
did not.

We identified a number of control breakdowns due to excessive reliance 
on travelers to notify DOD of unused tickets. Figure 2 illustrates the 
many ways in which a ticket can be unused and not refunded. Internal 
control breakdown 1 could occur if the traveler does not notify the CTO 
of an unused paper ticket. Control breakdown 2 occurs if the ticket is 
electronic, but the CTO had not implemented a system to monitor the 
ticket databases maintained by the airlines to determine whether the 
ticket is unused. Control breakdown 3 occurs if the CTO does not 
consistently monitor unused tickets, and therefore could not identify 
all unused tickets. Control breakdown 4 occurs if the CTO identifies or 
is notified of an unused ticket, but fails to process a refund. 
Finally, breakdown 5 occurs in the event that the CTO or the government 
travel office (GTO) does not track the status of refunds from the 
airlines, and therefore was not aware that a refund was not given.

Figure 2: Possible Control Breakdowns in the Unused Ticket Process:

[See PDF for image] 

[End of figure] 

Inadequate Voucher Review Contributed to Improper Payments:

We found that some improper and potentially fraudulent payments for 
airline tickets could be prevented if DOD approving officials conducted 
adequate review of the travel vouchers and the supporting documentation 
before authorizing the vouchers for payment. DOD's financial management 
regulations require that approving officials review travel vouchers for 
accuracy before authorizing them for payment. Many of the airline 
receipts submitted as supporting documentation for the improper claim 
clearly showed that the airline ticket was purchased using the 
centrally billed accounts. In these instances, if the approving 
officials had conducted careful review of the travel vouchers and 
supporting documentation, the official would have noted that the 
traveler was not entitled to the travel reimbursement. Further, the 
reviewing officials should have been knowledgeable that local and 
component policy called for centrally billed accounts to be used to 
purchase the airline tickets that were claimed as a reimbursable 
expense on the vouchers.

Lack of Physical Safeguards Exposed Centrally Billed Accounts to 
Fraudulent Activities:

DOD was exposed to fraudulent activities because DOD did not adequately 
safeguard the centrally billed account numbers. These accounts require 
safeguarding because stolen account numbers can be used fraudulently 
for personal gain. We determined that a major contributing factor to 
DOD's accounts being compromised was that many DOD units did not 
adequately protect centrally billed account numbers. Of the 11 CTOs we 
visited to observe control procedures and conduct statistical sampling, 
8 printed the centrally billed account credit card number used to 
purchase the airline ticket on the trip itinerary that was given to 
each traveler along with the airline ticket. In these instances, the 
CTOs could have safeguarded these accounts by limiting the accounts' 
identity to the last four digits or simply not printing the account 
number on the traveler's copy of the itinerary. In fiscal year 2003, 
some CTOs improved their safeguards of the centrally billed account 
numbers by printing only the last four digits of the credit account 
number. However, not all CTOs have implemented this safeguard. We also 
found that copies of these itineraries were maintained at CTO offices 
that were accessible to any traveler who required assistance with 
travel reservations. Further, at the Pentagon, the GTO stored the 
reconciliation packages in boxes with the centrally billed account 
numbers prominently written on the outside of the boxes in an office 
that was not secured. Failure to safeguard centrally billed account 
numbers creates unnecessary risks that expose the government to 
fraudulent activities.

Corrective Actions Related to DOD's Management of the Travel Card 
Programs:

During fiscal years 2002 and 2003, we issued a series of 
testimonies[Footnote 19] and reports[Footnote 20] that focused on 
problems that the Army, Navy, and Air Force had in managing the 
individually billed travel card accounts. These testimonies and reports 
showed high delinquency rates and significant potential fraud and abuse 
related to DOD's individually billed travel card program. However, in a 
recent report[Footnote 21] concerning control weaknesses with DOD 
travel we recognized improvements that DOD has made in the management 
of the individually billed accounts. These improvements point to the 
possibility of using this program as the principal means of acquiring 
tickets, thereby reducing the government's risk of losses arising from 
the use of centrally billed accounts.

In response to our testimonies and reports on the individually billed 
accounts, the Congress took actions in the fiscal year 2003 
appropriations and authorization acts[Footnote 22] and the fiscal year 
2004 authorization act[Footnote 23] requiring (1) the establishment of 
guidelines and procedures for disciplinary actions to be taken against 
cardholders for improper, fraudulent, or abusive use of government 
travel cards; (2) the denial of government travel cards to individuals 
who are not creditworthy; (3) split disbursements[Footnote 24] for 
paying a portion of the expenses claimed on a travel voucher directly 
to the credit card bank and the remainder to the cardholder; and (4) 
offset of delinquent travel card debt against the pay or retirement 
benefits of DOD civilian and military employees and retirees.

DOD has implemented many of the legislatively mandated improvements--
most notably the implementation of split disbursements and salary 
offsets and the reduction in the numbers of individuals with access to 
the travel cards. According to Bank of America, the delinquency rates 
we noted in our prior reports at the Army, Navy, and Air Force have 
decreased. For example, the monthly delinquency rate at the Navy had 
decreased from an average of about 11 percent during fiscal year 2002 
to an average of less than 7 percent in fiscal year 2003. Similarly, 
during that same period, the Army's average monthly delinquency rate 
decreased from about 14 percent to an average of about 9 percent. 
Although these rates are still substantially above the agency goal of 
4.5 percent, the proper implementation of split disbursements should 
continue to reduce these delinquency rates.

The use of a well-controlled individually billed account travel program 
as the principal mechanism for acquiring airline tickets will help 
limit the government's financial exposure by reducing the magnitude of 
unused tickets and improper payments, and preventing improper and 
fraudulent use from inadequate security over centrally billed accounts. 
However, the use of the individually billed accounts to acquire airline 
tickets would only minimize, not eliminate, the necessity of 
implementing internal controls over the centrally billed account 
program. DOD would still need to maintain a centrally billed account 
structure to purchase airline tickets for travelers who have been 
denied individually billed accounts, infrequent travelers whose 
individually billed credit cards have been canceled, and new employees 
who have not yet acquired individually billed accounts.

In addition, DOD has taken actions to improve management of its 
centrally billed account travel program based on the results of our 
premium class travel and unused airline ticket reports. Specifically, 
DOD commissioned a task force to establish policies and procedures 
intended to help prevent unauthorized use of premium class travel. The 
March 16, 2004, report by the premium class task force contained 
corrective actions in the areas of policy and controls of travel 
authorization, ticket issuance, and internal control oversight to 
address our recommendations. Many of the task force's recommendations 
have been implemented.

In the area of unused tickets, DOD issued claim letters in late 
February to five airlines requesting repayment of the over $21 million 
in known unused tickets and programmed letters for claims against other 
airlines. The responses from the airlines have been varied. One airline 
indicated that they needed further information to process refunds, 
while another airline informed DOD that it may not be able to 
accommodate DOD's refund claims due to its weak financial position. To 
date, DOD has not exerted its rights afforded by federal law[Footnote 
25] to offset payments due to the airlines for the amount of unused 
tickets. As a result, to date none of the potentially over $21 million 
of unused ticket money has been returned to DOD by the airlines.

Conclusion:

The millions of dollars wasted on unused airline tickets, improper 
payments, and fraudulent activities provide another example of why DOD 
financial management is one of our "high-risk" areas, with DOD highly 
vulnerable to fraud, waste, and abuse. While DOD has acknowledged the 
control weaknesses we identified and has taken actions to address some 
of these weaknesses, DOD needs to take a more active role in 
identifying and resolving control weaknesses. In each case identified 
in our two most recently issued reports, DOD officials acknowledged 
that they were not aware of these significant and long-standing control 
breakdowns prior to our audit. DOD must proactively identify control 
weaknesses and implement a system of internal controls that provide 
reasonable assurance to both DOD senior management and the taxpayers 
that the billions of dollars in travel expenses paid for with centrally 
billed accounts are spent prudently. As our nation continues to be 
challenged with growing budget deficits and increasing pressure to 
reduce spending levels, it is important that DOD improve its management 
of the travel program, which will save millions of dollars annually.

Madam Chairman and Members of the Committee, this concludes my prepared 
statement. I would be pleased to respond to any questions that you may 
have.

For further information regarding this testimony, please contact 
Gregory D. Kutz at (202) 512-9505 or [Hyperlink, kutzg@gao.gov], John 
J. Ryan at (202) 512-9587 or [Hyperlink, ryanj@gao.gov], John V. Kelly 
at (202) 512-6926 or [Hyperlink, kellyj@gao.gov], or Tuyet-Quan Thai at 
(206) 287-4889 or [Hyperlink, thait@gao.gov].

Individuals making key contributions to this testimony included Beverly 
Burke, Matthew Brown, Francine DelVecchio, Aaron Holling, Jeffrey 
Jacobson, Barbara Lewis, Julie Matta, Kristen Plungas, and Sidney H. 
Schwartz.

(192131):

FOOTNOTES

[1] U.S. General Accounting Office, Travel Cards: Internal Control 
Weaknesses at the DOD Led to Improper Use of First and Business Class 
Travel, GAO-04-88 (Washington, D.C., Oct. 24, 2003), and Travel Cards: 
Internal Control Weaknesses at the DOD Led to Improper Use of First and 
Business Class Travel, GAO-04-229T (Washington, D.C.: Nov. 6, 2003).

[2] U.S. General Accounting Office, DOD Travel Cards: Control 
Weaknesses Led to Millions of Dollars Wasted on Unused Airline Tickets, 
GAO-04-398 (Washington, D.C.: Mar. 31, 2004), and DOD Travel Cards: 
Control Weaknesses Resulted in Millions of Dollars of Improper 
Payments, GAO-04-576 (Washington, D.C.: June 9, 2004).

[3] U.S. General Accounting Office, Travel Cards: Control Weaknesses 
Leave Army Vulnerable to Potential Fraud and Abuse, GAO-03-169 
(Washington, D.C.: Oct. 11, 2002), Travel Cards: Control Weaknesses 
Leave Army Vulnerable to Potential Fraud and Abuse, GAO-02-863T 
(Washington, D.C.: July 17, 2002), Travel Cards: Control Weaknesses 
Leave Navy Vulnerable to Fraud and Abuse, GAO-03-147 (Washington, D.C.: 
Dec. 23, 2002), Travel Cards: Control Weaknesses Leave Navy Vulnerable 
to Fraud and Abuse, GAO-03-148T (Washington, D.C.: Oct. 8, 2002), and 
Travel Cards: Air Force Management Focus Has Reduced Delinquencies, but 
Improvements in Controls Are Needed, GAO-03-298 (Washington, D.C.: Dec. 
20, 2002).

[4] U.S. General Accounting Office, High-Risk Series: An Overview, GAO/
HR-95-1 (Washington, D.C.: February 1995), and High-Risk Series: An 
Update, GAO-03-119 (Washington, D.C.: January 2003). 

[5] The Air Force is an exception to this general rule. The Air Force 
equally uses both centrally billed and individually billed accounts for 
purchasing airline tickets.

[6] The five most frequently used airlines accounted for more than 80 
percent of airline tickets DOD purchased in fiscal years 2001 and 2002.

[7] These 10,000 tickets were from American Airlines, the only airline 
that provided us the residual value of partially unused tickets.

[8] GAO-04-88. 

[9] 31 U.S.C. § 3726(h).

[10] Voucher settlements are made in payments of travel expenses 
travelers incur through the individually billed accounts or other 
means. 

[11] Even though the Army, Navy, and Marine Corps provided us with 
travel voucher data, we were unable to obtain assurance concerning the 
completeness and reliability of these data. In addition, the Air Force 
did not provide data in the format we requested to enable analysis.

[12] Air Force Audit Agency, Centrally Billed Accounts for Travel, 
F2003-003-FB1000 (Washington, D.C., Apr. 24, 2003).

[13] The remaining 32 travelers did not submit improper or fraudulent 
claims.

[14] For example, if the airline has no record that a ticket was 
purchased using the centrally billed account, the traveler would have 
to purchase another ticket. In other instances, emergency circumstances 
such as weather problems might require that the traveler purchase 
another ticket at the airport. 

[15] See our related report, GAO-04-576, for further examples of 
improper payments.

[16] Requiring airline tickets purchased with centrally billed accounts 
to be issued based on valid travel orders is the first step in 
preventing DOD from purchasing airline tickets that are not for 
official government business. 

[17] Some DOD units, such as a number of Navy units, require that DFAS 
return all airline ticket transactions that failed the prevalidation 
test to the units that created the travel order so that the units can 
record the obligations. This is not a DOD-wide practice. Instead, DFAS 
records the obligation to pay for the airline ticket and then notifies 
the unit that an obligation was created. It is expected that each 
unit's resource manager would conduct timely review of the obligations 
DFAS created for validity, as DOD has only 60 days to dispute invalid 
charges. Based on previous work we performed on the Navy's review of 
unliquidated obligations, which found that Navy fund managers failed to 
review unliquidated obligations over $50,000, and the work we performed 
on unused tickets, which found Air Force's monitoring of open travel 
orders to be ineffective, we again raise questions as to whether each 
unit's resource manager would review obligations in a timely manner to 
detect inaccurate obligations created by DFAS. 

[18] If an obligation needs to be created or increased by more than 
$2,500, DFAS is to notify the unit that created the travel order, and 
give the unit 10 days to record that obligation before DFAS could 
record the obligation.

[19] GAO-02-863T and GAO-03-148T.

[20] GAO-03-169, GAO-03-147, and GAO-03-298.

[21] U.S. General Accounting Office, DOD Travel Cards: Control 
Weaknesses Led to Millions of Dollars Wasted on Unused Airline Tickets, 
GAO-04-398 (Washington, D.C.: Mar. 31, 2004).

[22] Department of Defense Appropriations Act, 2003, Pub. L. No. 107-
248, 116 Stat. 1519 (2002), and the Bob Stump National Defense 
Authorization Act for Fiscal Year 2003, Pub. L. No. 107-314, 116 Stat. 
2458 (2002).

[23] National Defense Authorization Act for Fiscal Year 2004, Pub. L. 
No. 108-136, 117 Stat. 1392 (2003).

[24] Split disbursement is a process in which DOD pays the travel-card-
issuing bank directly for charges incurred on the travel card and 
claimed on the travel voucher. Additional money owed to the traveler is 
deposited directly into the traveler's bank account. Split 
disbursements are mandatory for all military and DOD civilian 
personnel. See the National Defense Authorization Act for Fiscal Year 
2004, Pub. L. No. 108-136, § 1009, 117 Stat. 1392, 1587 (2003), 10 
U.S.C. § 2784a.

[25] 31 U.S.C. § 3716(e).