B-103315, MAY 31, 1972

B-103315, MAY 31, 1972

TRANSPORTATION - GOVERNMENT TRANSPORTATION REQUESTS - USE OF TRAVEL AGENCIES - STATUTORY PROHIBITION WITH REGARD TO A LETTER FROM C. I. HOGAN TRAVEL SERVICE, INC., CONCERNING THE PROHIBITION IN 5 GAO 2013.10 AGAINST THE USE OF TRAVEL AGENCIES FOR CERTAIN TRAVEL BEING PROCURED THROUGH GOVERNMENT TRANSPORTATION REQUESTS. THE REFERENCED STATUTORY REQUIREMENT WAS PROMULGATED FOR THE PROTECTION AND IN THE INTERESTS OF THE UNITED STATES, AND APPLIES EQUALLY TO THE USE OF FOREIGN TRAVEL AGENCIES UNLESS DIRECT CARRIER TICKETING ARRANGEMENTS ARE UNAVAILABLE. FURTHER, IT IS NOTED THAT THE USE OF HOGAN'S SERVICES HAS BEEN PERMITTED IN SITUATIONS WHERE SUBSTANTIAL COST SAVINGS TO THE GOVERNMENT COULD BE ACHIEVED. 46 COMP. GEN. 398 (1966). IN ADDITION, THE CORPORATION'S PRACTICE OF ACCEPTING GTRS AND ISSUING TICKETS AS AN AGENT OF THE CARRIER, WHILE NOT IN STRICT CONFORMITY WITH TITLE 5, IS NOT GENERALLY VIOLATIVE OF ANY SPECIFIC REGULATION.

TO C. I. HOGAN TRAVEL SERVICE, INC.:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MARCH 28, 1972, RELATIVE TO THE USE OF TRAVEL AGENCIES IN THE PROCUREMENT OF OFFICIAL GOVERNMENT PASSENGER TRANSPORTATION SERVICES PURSUANT TO GOVERNMENT TRANSPORTATION REQUESTS.

YOU ARE SPECIFICALLY CONCERNED WITH THE PROHIBITION IN TITLE 5 OF THE GAO MANUAL (5 GAO 2013.10 PUBLISHED IN TITLE 4, CODE OF FEDERAL REGULATIONS) ON THE USE OF TRAVEL AGENCIES TO PROCURE PASSENGER TRANSPORTATION SERVICES FOR THE ACCOUNT OF THE UNITED STATES. YOU CONTEND THAT UNITED STATES TRAVEL AGENTS SHOULD BE ALLOWED TO ACCEPT GOVERNMENT TRANSPORTATION REQUESTS (GTRS) IN EXCHANGE FOR PASSENGER TRANSPORTATION TICKETS SINCE FOREIGN TRAVEL AGENTS CAN ACCEPT THEM (5 GAO 2013.20) AND RECEIVE THE COMMISSION ALLOWED BY THE AIRLINES.

YOU MAY HAVE OVERLOOKED THE FACT THAT THE USE OF TRAVEL AGENTS FOR TRAVEL WITHIN AND BETWEEN FOREIGN COUNTRIES OR FROM FOREIGN COUNTRIES TO THE UNITED STATES WHEN AUTHORIZED UNDER ADMINISTRATIVE REGULATIONS IS RESTRICTED GENERALLY TO SITUATIONS WHERE THROUGH TICKETING ARRANGEMENTS CANNOT BE SECURED FROM AN AMERICAN-FLAG CARRIER OR WHERE NO BRANCH OFFICE OR GENERAL AGENT OF AN AMERICAN-FLAG CARRIER IS LOCATED IN THE AREA IN WHICH THE OFFICIAL TRAVEL IS TO ORIGINATE. (5 GAO 2013.20; 4 CFR 51.4) THIS MEANS, IN EFFECT, THAT TRAVEL AGENTS IN FOREIGN COUNTRIES MAY BE USED ONLY WHEN PROCUREMENT OF DESIRED TRANSPORTATION DIRECT FROM THE AMERICAN CARRIER IS PHYSICALLY IMPOSSIBLE. MOREOVER, WE BELIEVE THAT THE FAR-FLUNG OPERATIONS OF AMERICAN-FLAG CARRIERS KEEP THE USE OF FOREIGN TRAVEL AGENTS TO A MINIMUM.

THE HOGAN TRAVEL SERVICE WAS ADVISED OF OUR REGULATIONS ON THE USE OF TRAVEL AGENCIES BY LETTER OF AUGUST 8, 1966, B-103315, AND HAS BEEN FURNISHED A COPY OF GAO'S REPORT OF OCTOBER 17, 1966 (COPY ENCLOSED FOR YOUR CONVENIENCE), TO THE HOUSE SELECT COMMITTEE ON SMALL BUSINESS, IN WHICH WE CONCLUDED THAT THE TITLE 5 RESTRICTIONS ON THE USE OF TRAVEL AGENCIES WERE SOUND FOR LEGAL, ADMINISTRATIVE, AND ECONOMIC REASONS. ALSO, IN RECENT YEARS TRAVEL AGENTS HAVE BEEN ALLOWED, IN A NUMBER OF CASES, TO PROCURE CHARTER OR GROUP FLIGHTS BETWEEN THE UNITED STATES AND ITS POSSESSIONS OR FOREIGN COUNTRIES FOR GOVERNMENT TRAVELERS WHERE SUBSTANTIAL COST SAVINGS TO THE UNITED STATES COULD BE ACHIEVED. SUCH APPROVALS WERE GRANTED ON THE BASIS OF THE TRAVEL BEING PROCURED BY THE USE OF CASH RATHER THAN A GTR. YOUR CORPORATION ARRANGED SUCH TRAVEL INVOLVING AIR TRANSPORTATION AT GROUP TRAVEL FARES FOR A STAFF MEMBER OF THE SMITHSONIAN INSTITUTION WHICH WAS THE SUBJECT OF DECISION OF NOVEMBER 14, 1966, B-103315, PUBLISHED IN 46 COMP. GEN. 398 (COPY ENCLOSED FOR YOUR INFORMATION).

APPARENTLY YOUR CORPORATION HAS IN SOME CASES ACCEPTED GTRS AND ISSUED THE REQUIRED TICKET AS AN AGENT OF THE CARRIER WHICH SUBSEQUENTLY BILLED THE GOVERNMENT FOR THE CHARGE, ALTHOUGH YOU CLAIM NO COMMISSION FROM THE CARRIER. THIS PRACTICE, WHILE NOT IN STRICT CONFORMITY WITH TITLE 5, WOULD NOT BE GENERALLY VIOLATIVE OF ANY SPECIFIC REGULATION. ALL CONTROL OF ISSUE AND DISTRIBUTION OF THE GTR WOULD REMAIN WITH THE GOVERNMENT AGENCY AND ENSURE EQUITABLE DISTRIBUTION OF GOVERNMENT TRAVEL AMONG PASSENGER CARRIERS. ALSO, SUBSEQUENT AUDIT BY OUR OFFICE ENSURES APPLICATION OF THE LOWEST FARE, THE GTR BEING PRIMA FACIE EVIDENCE THAT THE SERVICE WAS FOR THE ACCOUNT OF THE UNITED STATES.

THE REQUIREMENT THAT PASSENGER TRANSPORTATION SERVICES FOR OFFICIAL GOVERNMENT TRAVEL BE PROCURED DIRECT FROM CARRIERS POSSIBLY MAY RESULT IN DEPRIVING TRAVEL AGENTS OF A MEANS OF SECURING COMMISSIONS; HOWEVER, WE HAVE BEEN ADVISED BY THE ASSOCIATION OF AMERICAN RAILROADS AND THE AIR TRANSPORT ASSOCIATION THAT THEIR ARRANGEMENTS DO NOT PROVIDE FOR THE PAYMENT OF COMMISSIONS ON GOVERNMENT TRAVEL BUSINESS SINCE THE FUNDAMENTAL PURPOSE OF THE TRAVEL AGENT, IN THE CARRIERS' VIEW, IS TO PROMOTE AND SELL TRAVEL THAT OTHERWISE WOULD NOT BE MADE, AND THIS IS NOT FULFILLED IN THE CASE OF GOVERNMENT TRAVEL. THE LATTER ASSOCIATION ADDED THAT THE AIRLINES HAVE NO INTENTION OF AGREEING TO PAY COMMISSIONS FOR OFFICIAL GOVERNMENT TRAVEL. IF TRAVEL AGENCIES AND THE PASSENGER CARRIERS ARE UNABLE TO AGREE ON COMMISSION ARRANGEMENTS FOR GOVERNMENT TRAVEL, THIS FACTOR ALONE WOULD FRUSTRATE THE GOVERNMENT'S USE OF TRAVEL AGENTS ON A WIDER SCALE THAN NOW PERMITTED. BUT OUR REGULATIONS RESTRICTING THE USE OF TRAVEL AGENTS WERE NOT ISSUED TO DEPRIVE TRAVEL AGENTS OF THEIR COMMISSIONS. OUR REGULATIONS IN THIS REGARD ARE SOLELY FOR THE PROTECTION OF THE GOVERNMENT AND ARE BELIEVED TO BE IN ITS BEST INTERESTS.