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B-153105, APR. 16, 1964

B-153105 Apr 16, 1964
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INC.: REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 25. YOUR CURRENT LETTER STATES "ANY TRAVEL DISCOUNTS TO THE GOVERNMENT NOW ALLOWED WILL BE HONORED IN THE FUGAZY AGREEMENT OR CONTRACT.'. YOUR PROPOSAL CONTEMPLATES DISCONTINUANCE OF THE USE OF GOVERNMENT TRANSPORTATION REQUESTS AND MANY OF THE CONCESSIONS AND REDUCTIONS NOW OBTAINED ARE CONTINGENT UPON AND ALLOWED ONLY WHERE THE TRANSPORTATION IS PROCURED PURSUANT TO SUCH TRANSPORTATION REQUESTS. IT WOULD BE NECESSARY TO DETERMINE WHETHER CARRIERS WOULD AGREE TO THE CONTINUANCE OF SUCH CONCESSIONS WHERE GOVERNMENT TRANSPORTATION REQUESTS WERE NOT USED. NO SHOWING WAS MADE IN YOUR SEVERAL LETTERS IN THAT REGARD AND IN VIEW OF THE INDICATIONS HERE THAT CARRIERS GENERALLY HAVE OBJECTED TO PROCUREMENT OF GOVERNMENT PASSENGER TRANSPORTATION THROUGH THE USE OF TRAVEL AGENTS RATHER THAN DIRECTLY FROM THE CARRIERS.

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B-153105, APR. 16, 1964

TO FUGAZY TRAVEL BUREAU, INC.:

REFERENCE IS MADE TO YOUR LETTER OF FEBRUARY 25, 1964, IN WHICH YOU FURNISH INFORMATION WHICH YOU STATE SHOULD BE MADE AN APPENDIX TO YOUR LETTER OF DECEMBER 10, 1963, AND WHICH YOU INDICATE CLARIFIES YOUR PROPOSED PLAN TO PROVIDE SERVICES IN THE PROCUREMENT OF OFFICIAL GOVERNMENT TRAVEL. BY OUR LETTER OF JANUARY 21, 1964, WE ADVISED YOU OF THE REASONS FOR THE PROMULGATION OF OUR REGULATIONS GENERALLY RESTRICTING THE USE OF TRAVEL AGENTS IN THE PROCUREMENT OF OFFICIAL GOVERNMENT PASSENGER TRANSPORTATION AND WHY WE COULD NOT SANCTION THE ADOPTION OF YOUR PROPOSAL.

WE INDICATED IN OUR LETTER OF JANUARY 21, 1964, THAT WHILE WE UNDERSTOOD UNDER YOUR PROPOSAL YOU WOULD MAKE NO DIRECT CHARGE, AS SUCH, TO THE GOVERNMENT FOR YOUR SERVICE, YOU WOULD BILL AT THE FULL COMMERCIAL FARES WHICH WOULD RESULT IN INCREASED TRANSPORTATION COSTS TO THE GOVERNMENT SINCE THE REDUCTIONS AND CONCESSIONS PRESENTLY RECEIVED UNDER SECTION 22 QUOTATIONS AND SPECIAL TARIFFS AND ARRANGEMENTS WORKED OUT WITH VARIOUS CARRIERS WOULD BE ELIMINATED. YOUR CURRENT LETTER STATES "ANY TRAVEL DISCOUNTS TO THE GOVERNMENT NOW ALLOWED WILL BE HONORED IN THE FUGAZY AGREEMENT OR CONTRACT.' HOWEVER, YOUR PROPOSAL CONTEMPLATES DISCONTINUANCE OF THE USE OF GOVERNMENT TRANSPORTATION REQUESTS AND MANY OF THE CONCESSIONS AND REDUCTIONS NOW OBTAINED ARE CONTINGENT UPON AND ALLOWED ONLY WHERE THE TRANSPORTATION IS PROCURED PURSUANT TO SUCH TRANSPORTATION REQUESTS. THUS, THE CONCESSIONS AND REDUCTIONS UNDER SUCH CURRENT ARRANGEMENTS WOULD NOT BE FORTHCOMING AND WOULD BE LOST. BEFORE ANY RELIANCE COULD BE PLACED ON YOUR CONTENTION THAT THE SAME DISCOUNTS NOW ALLOWED WOULD BE HONORED, IT WOULD BE NECESSARY TO DETERMINE WHETHER CARRIERS WOULD AGREE TO THE CONTINUANCE OF SUCH CONCESSIONS WHERE GOVERNMENT TRANSPORTATION REQUESTS WERE NOT USED. NO SHOWING WAS MADE IN YOUR SEVERAL LETTERS IN THAT REGARD AND IN VIEW OF THE INDICATIONS HERE THAT CARRIERS GENERALLY HAVE OBJECTED TO PROCUREMENT OF GOVERNMENT PASSENGER TRANSPORTATION THROUGH THE USE OF TRAVEL AGENTS RATHER THAN DIRECTLY FROM THE CARRIERS, WE HAVE NO REASON TO BELIEVE THEY WOULD BE WILLING TO CONTINUE THE CURRENT CONCESSIONS IF THE USE OF GOVERNMENT TRANSPORTATION REQUESTS WERE DISCONTINUED AND THE TRANSPORTATION SECURED THROUGH AN INTERMEDIARY SUCH AS YOUR COMPANY.

WE ALSO POINTED OUT IN OUR LETTER OF JANUARY 21, 1964, THAT OUR AUDIT EXPERIENCE SHOWED THAT WHERE TRAVEL AGENCIES WERE USED, DIFFICULTIES WERE ENCOUNTERED IN COLLECTION OF OVERCHARGES. THESE DIFFICULTIES AROSE, IN SOME CASES, BECAUSE PART OF THE FARE PAID WAS RETAINED BY THE AGENT AS HIS COMMISSION AND THE BALANCE WAS PAID TO THE CARRIER. WHEN AN OVERCHARGE OCCURRED, CONTROVERSIES AROSE AS TO WHETHER THE OVERCHARGE SHOULD BE REFUNDED BY THE CARRIER OR THE AGENT AND THE EXTENT TO WHICH EACH SHOULD CONTRIBUTE. YOU INDICATE, UNDER YOUR PLAN, FUGAZY WOULD MAKE ANY ADJUSTMENT AND REFUND IMMEDIATELY AND ELIMINATE ANY DELAY WHICH MIGHT BE ENCOUNTERED IN OBTAINING REFUND FROM THE CARRIER. HOWEVER, IT IS NOTED THAT THE AIR TRAFFIC CONFERENCE, SALES AGENCY AGREEMENT, UNDER WHICH MANY TRAVEL AGENTS SUCH AS YOUR COMPANY OPERATE, PROVIDES:

"NO COMMISSION WILL BE PAID TO THE AGENT FOR THE SALE OF ANY AIR PASSENGER TRANSPORTATION PAID FOR BY GOVERNMENT TRAVEL VOUCHER, WARRANT, OR SIMILAR GOVERNMENT PURCHASE CONTRACT.'

IF YOU WERE TO RECEIVE NO COMMISSION FROM THE CARRIERS IN CONNECTION WITH THE TRANSPORTATION FURNISHED THE GOVERNMENT UNDER THE PLAN, AND WERE TO RECEIVE FROM THE GOVERNMENT ONLY THE NET FARES GIVING THE GOVERNMENT THE BENEFIT OF THE REDUCED RATES UNDER SECTION 22 QUOTATIONS AND OTHER AGREEMENTS AND TARIFFS UNDER WHICH THE GOVERNMENT SECURES RATES LOWER THAN THOSE CHARGED THE PUBLIC, IT DOES NOT APPEAR YOUR COMPANY WOULD ACCRUE SUFFICIENT REVENUES FROM SUCH BUSINESS THAT IT COULD MAKE IMMEDIATE REFUNDS OF OVERCHARGES NOR BEAR THE COSTS OF ESTABLISHING AND MAINTAINING A WORLD-WIDE SERVICE SUCH AS YOU PROPOSE.

MOREOVER, UNDER PRESENT PROCEDURES, CARRIERS' BILLS ARE GENERALLY PAID UPON PRESENTMENT PRIOR TO AUDIT AND SETTLEMENT BY THE GENERAL ACCOUNTING OFFICE WITH A RIGHT RESERVED TO THE UNITED STATES TO DEDUCT OVERCHARGES FROM AMOUNTS SUBSEQUENTLY FOUND DUE THE CARRIER. SEE 49 U.S.C. 66. THIS SECTION WAS ENACTED AS PART OF THE TRANSPORTATION ACT OF 1940 IN DIRECT RESPONSE TO A DEMAND OF THE RAILROADS FOR LEGISLATION RELIEVING THEM OF THE DELAYS ATTRIBUTABLE TO PREAUDIT OF THEIR BILLS UNDER PRIOR PROCEDURES. SEE UNITED STATES V. NEW YORK, N.H. AND H.R. CO., 355 U.S. 253, 257-264 (1957), AS TO THE LEGISLATIVE HISTORY OF SUCH PROVISION. ALSO, IN ORDER THAT SUCH PROMPT PAYMENT COULD BE EFFECTED, THE ACT OF JUNE 1, 1942, 56 STAT. 306, 31 U.S.C. 82G, PROVIDED THAT NO DISBURSING OR CERTIFYING OFFICER SHOULD BE HELD LIABLE FOR OVERPAYMENTS MADE FOR TRANSPORTATION FURNISHED ON GOVERNMENT TRANSPORTATION REQUESTS WHERE THE OVERPAYMENTS ARE DUE TO THE USE OF IMPROPER TRANSPORTATION RATES, CLASSIFICATIONS OR FAILURE TO DEDUCT THE AMOUNTS UNDER EQUALIZATION OR OTHER AGREEMENTS. SHOULD THE USE OF TRANSPORTATION REQUESTS BE ABANDONED, AS CONTEMPLATED BY YOUR PROPOSAL, DISBURSING AND CERTIFYING OFFICERS WHO ARE GENERALLY ACCOUNTABLE FOR AND LIABLE TO MAKE GOOD TO THE UNITED STATES ANY IMPROPER, ILLEGAL OR INCORRECT PAYMENT RESULTING FROM PAYMENTS MADE OR CERTIFIED BY THEM, LIKELY WOULD, FOR THEIR OWN PROTECTION, FEEL REQUIRED TO PREAUDIT ANY PROPOSED PAYMENT FOR OFFICIAL PASSENGER TRANSPORTATION. THIS WOULD NECESSITATE PROCUREMENT BY EACH SUCH OFFICER OF PERTINENT TARIFFS AND QUOTATIONS, AND OF A STAFF TO DO SUCH PREAUDIT WORK WITH CONSIDERABLE RESULTANT EXPENSE NOT NOW INCURRED. SUCH EXPENSE ALONE MIGHT WELL EXCEED ANY SAVINGS YOUR PLAN ENVISIONS. ALSO, THE DELAYS INCIDENT TO SUCH PREAUDIT WOULD LIKELY GIVE RISE TO MUCH THE SAME COMPLAINTS OF CARRIERS WHICH RESULTED IN PASSAGE OF THE TRANSPORTATION ACT OF 1940 AND CAUSE ABANDONMENT OF THE PLAN.

FURTHERMORE, CERTAIN OF THE STATEMENTS IN THE MATERIAL FURNISHED WITH YOUR LETTER OF FEBRUARY 25, 1964, ARE APPARENTLY MADE WITHOUT FULL KNOWLEDGE OF THE FACTS. THUS, YOUR STATEMENT THAT THE PLAN WOULD SAVE THOUSANDS OF DOLLARS BY ELIMINATING EMPLOYEES SUCH AS A TRANSPORTATION OFFICER WHO OCCUPIES "OFFICE SPACE AND IS RESPONSIBLE FOR KEEPING RECORDS" AND AUDIT CLERKS WHO OPERATE ,FULL TIME AUDITING TRAVEL VOUCHERS" FAILS TO CONSIDER THAT THE NORMAL DUTIES OF A GOVERNMENT TRANSPORTATION OFFICER EXTEND FAR BEYOND THAT OF KEEPING RECORDS. SUCH OFFICERS WITH FEW EXCEPTIONS, PREPARE, ISSUE, AND CONTROL TRANSPORTATION DOCUMENTS, PREPARE EXPENSE VOUCHERS FOR TRAVELERS, INTERPRET AND ADVISE CONCERNING GOVERNMENT TRAVEL REGULATIONS, AND PERFORM OTHER DUTIES CONNECTED WITH THE USE OF COMMERCIAL TRANSPORTATION SERVICES. THE DIRECT PROCUREMENT OF TICKETS IS ONLY ONE PHASE OF THE TRANSPORTATION OFFICER'S WORK AND ONE THAT IS AN INTEGRAL AND MINOR PART OF THEIR FUNCTION. ALSO, AN AUDIT CLERK WHO OPERATES FULL TIME AUDITING TRAVEL VOUCHERS WOULD CONTINUE TO BE REQUIRED FOR THE PROPER CONTROL OF GOVERNMENT FUNDS CLAIMED IN PAYMENT OR REIMBURSEMENT OF TRAVELER'S SUBSISTENCE AND OTHER TRAVEL EXPENSES REGARDLESS OF THE MANNER IN WHICH OFFICIAL PASSENGER TRANSPORTATION SERVICE IS PROCURED.

IN THE PENULTIMATE PARAGRAPH OF YOUR LETTER YOU INDICATE THAT SEVERAL YEARS AGO OUR OFFICE ESTIMATED THAT IT COST ABOUT $20 TO PROCESS ONE GOVERNMENT VOUCHER, AND THAT SUCH COST NOW COULD BE HIGHER. TO OUR KNOWLEDGE, THIS OFFICE DID NOT MAKE SUCH AN ESTIMATE; HOWEVER, IT MAY BE THAT THE $20 COST FIGURE CITED WAS OBTAINED FROM AN ASSOCIATED PRESS ARTICLE APPEARING (AMONG OTHER NEWSPAPERS) IN THE EVENING STAR, WASHINGTON, D.C., SEPTEMBER 20, 1953, WHICH, ESPECIALLY IF TAKEN OUT OF TEXT AND NOT EVALUATED, IS MISLEADING TO SHOW COST FIGURES EITHER AT THAT TIME, OR NOW, FOR PROCESSING ONE GOVERNMENT TRANSPORTATION VOUCHER. THE ARTICLE ATTRIBUTED THIS COST FIGURE TO THE THEN SECRETARY OF COMMERCE. LETTER OF NOVEMBER 10, 1953, WE ADVISED THE SECRETARY OF COMMERCE AS FOLLOWS:

"DATA HAS BEEN COMPILED TO SHOW THE COST OF PROCURING TRANSPORTATION BY USE OF TRANSPORTATION REQUEST, INCLUDING COSTS OF ADMINISTRATIVE AUDIT OF THE TRAVELERS' EXPENSE VOUCHERS, EXAMINATION OF CARRIERS' BILLS, AND SCHEDULING PAYMENTS. THE COSTS RANGE FROM A LOW OF $0.48 FOR A TRANSPORTATION REQUEST ISSUED BY THE VETERANS ADMINISTRATION TO A HIGH OF $0.95 FOR A TRANSPORTATION REQUEST ISSUED BY THE GENERAL SERVICES ADMINISTRATION. IN ADDITION, IT IS ESTIMATED THAT THE COST TO THE GENERAL ACCOUNTING OFFICE FOR AUDITING THE PAYMENT TO THE CARRIER AVERAGES ABOUT $0.23 PER TRANSPORTATION REQUEST. THESE COSTS DO NOT INCLUDE AGENCY COSTS OF ISSUING THE TRAVEL ORDERS, WHICH WOULD BE INCURRED REGARDLESS OF THE METHOD USED IN PROCURING TRANSPORTATION.' AT THAT TIME INDEPENDENT CONTINUOUS STUDIES OF THE WORKLOAD ATTENDANT ON VOUCHER EXAMINATION MADE BY THE BUREAU OF THE BUDGET FOR ITS GOVERNMENT-WIDE STAFFING STANDARDS INDICATED THE COST FOR EXAMINING THE AVERAGE GOVERNMENT VOUCHER WAS ONE DOLLAR (ON THE BASIS OF FOUR OR FIVE TRANSPORTATION REQUESTS ON A VOUCHER). SUBSEQUENT TO THAT TIME, CENTRALIZED AUDIT PROCEDURES AND TELETICKETING ARRANGEMENT WITH VARIOUS AIR CARRIERS--- WHERE INDIVIDUAL AGENCY REQUIREMENTS SO WARRANTED--- HAVE BEEN ADOPTED IN THE INTEREST OF INCREASED ECONOMY AND EVEN CONSIDERING GENERALLY INCREASED PRICES IT WOULD NOT APPEAR THAT THE COST OF VOUCHER AUDIT WOULD APPROACH THE $20 FIGURE YOU MENTION.

WITH REGARD TO THE STATEMENT THAT TRANSPORTATION CARRIERS AND GOVERNMENT AGENCIES FORMULATED REGULATIONS MANY YEARS AGO THAT ARE OUTDATED, YOU ARE ADVISED THAT REGULATIONS COVERING PROCUREMENT, PAYMENT AND CONTROL OF TRANSPORTATION SERVICES PROMULGATED BY THIS OFFICE AND THE BUREAU OF THE BUDGET DESIGNED TO PROMOTE ECONOMY AND UNIFORMITY IN THE PROCUREMENT AND CONTROL OF GOVERNMENT TRANSPORTATION ARE CONTINUALLY BEING UPDATED AND REVISED TO CONFORM TO CHANGING CONDITIONS.

IT IS ACCORDINGLY OUR VIEW, FOR THE REASONS OUTLINED HEREIN AND IN OUR LETTER OF JANUARY 21, 1964, THAT YOUR PROPOSED PLAN IS NEITHER FEASIBLE NOR PRACTICABLE. NEITHER CAN IT BE ADOPTED UNDER PRESENT PROVISIONS OF LAW AND, ACCORDINGLY, WE CANNOT SANCTION ITS ADOPTION.

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