B-121143, FEB. 14, 1963

B-121143, FEB. 14, 1963

TO MR. GABRIEL REINER:

REFERENCE IS MADE TO YOUR LETTER OF JANUARY 31, 1963, IN WHICH YOU STATE THAT SOME GOVERNMENT AGENCIES WOULD LIKE TO HANDLE THEIR PASSENGER TRAVEL THROUGH YOUR OFFICE BUT ARE PRECLUDED FROM DOING SO DUE TO A REGULATION OF OUR OFFICE WHICH LIMITS THE USE OF TRAVEL AGENCIES FOR THE PROCUREMENT OF TRANSPORTATION SERVICES. YOU FURTHER STATE THAT YOU FEEL THAT THIS POLICY IS DISCRIMINATORY AND YOU WOULD LIKE TO ASCERTAIN HOW AN EXCEPTION TO THE REGULATION MAY BE OBTAINED DUE TO THE FACT THAT DEALINGS WITH YOUR COMPANY WOULD BE AT NO HIGHER PRICE TO THE GOVERNMENT.

THE REGULATION TO WHICH YOU REFER IS SET OUT IN THE GENERAL ACCOUNTING OFFICE POLICY AND PROCEDURES MANUAL FOR GUIDANCE OF FEDERAL AGENCIES, TITLE 5, PARAGRAPH 2013.10, AND PUBLISHED IN TITLE 4, CODE OF FEDERAL REGULATIONS, 1960 POCKET SUPPLEMENT, SECTION 51.3, AND READS IN PERTINENT PART AS FOLLOWS:

"PASSENGER TRANSPORTATION SERVICES BY AIR, BUS, RAIL OR WATER SHOULD BE PROCURED DIRECTLY FROM CARRIERS. TRAVEL AGENCIES MAY BE UTILIZED ONLY AS PROVIDED IN SEC. 51.4. THEY MAY NOT BE UTILIZED TO SECURE AIR, RAIL, WATER AND BUS PASSENGER TRANSPORTATION SERVICES, OR ANY COMBINATION THEREOF, (A) WITHIN THE UNITED STATES, CANADA, OR MEXICO; (B) BETWEEN THE UNITED STATES AND CANADA OR MEXICO; (C) FROM THE UNITED STATES OR ITS POSSESSIONS TO FOREIGN COUNTRIES; AND (D) BETWEEN THE UNITED STATES AND ITS POSSESSIONS, AND BETWEEN AND WITHIN ITS POSSESSIONS.'

SECTION 51.4 OF THE REGULATIONS PERMITS A RESTRICTED USE OF TRAVEL AGENCIES WHERE AUTHORIZED BY ADMINISTRATIVE REGULATIONS FOR CERTAIN TRAVEL ABROAD EXCEPT IN CANADA AND MEXICO, PROVIDED NO PAYMENT IS MADE TO A TRAVEL AGENCY IN ADDITION TO THAT WHICH WOULD HAVE BEEN PROPERLY CHARGEABLE HAD THE SERVICES REQUESTED BEEN OBTAINED DIRECTLY FROM THE CARRIERS INVOLVED. APPARENTLY YOU PREMISE YOUR VIEWS ON THE BELIEF THAT THE GOVERNMENT CURRENTLY PAYS THE FULL COMMERCIAL FARE FOR PASSENGER TRANSPORTATION SERVICES. SUCH PREMISE IS NOT CORRECT.

THE GOVERNMENT ENJOYS NUMEROUS ADVANTAGES OVER THE GENERAL PUBLIC IN THE PROCUREMENT OF PASSENGER TRANSPORTATION IN CARRYING OUT GOVERNMENTAL FUNCTIONS. MANY OF THESE RIGHTS AND PRIVILEGES ARE PREDICATED ON DIRECT PROCUREMENT FROM THE CARRIERS INVOLVED. THUS, JOINT MILITARY PASSENGER AGREEMENT NO. 30, ENTERED INTO BETWEEN THE VARIOUS DEPARTMENTS OF THE DEPARTMENT OF DEFENSE AND CERTAIN OTHER RELATED MILITARY AGENCIES, SUCH AS THE COAST GUARD, ON THE ONE HAND AND THE PRINCIPAL RAILROADS OF THE UNITED STATES ON THE OTHER HAND, COVERS "ALL PASSENGER TRANSPORTATION WHICH IS FURNISHED ON TRANSPORTATION REQUESTS ISSUED BY THE MILITARY AGENCIES, THE COST OF WHICH TRANSPORTATION IS PAYABLE FROM APPROPRIATIONS AVAILABLE TO THE MILITARY AGENCIES FOR EXPENDITURE, AND REGARDLESS OF THE FACT THAT THE COST OF TRANSPORTATION MAY BE CHARGED BACK TO THE TRAVELERS FOR ADMINISTRATIVE REASONS IN CERTAIN INSTANCES.' THIS AGREEMENT, APPLICABLE TO BOTH MILITARY AND CIVILIAN PERSONNEL (AND THEIR DEPENDENTS WHEN AUTHORIZED TO TRAVEL AT GOVERNMENT EXPENSE) OF THESE MILITARY AGENCIES, PROVIDES FOR A DEDUCTION FOR THE BENEFIT OF THE GOVERNMENT OF 10 PERCENT,"FROM COMMERCIAL FARES OF ALL CLASSES PUBLISHED IN TARIFFS ON FILE WITH THE INTERSTATE COMMERCE COMMISSION * * * WITH STATE COMMISSIONS * * * OR IN CIRCULARS FILED * * * WITH THE MILITARY AGENCIES * * *.'

REDUCED FARES FOR PASSENGER TRAVEL BY MOTOR VEHICLE (BUS TRAVEL), ARE ALSO PROVIDED MEMBERS OF THE VARIOUS DEPARTMENTS OF THE ARMED SERVICES, AND SELECTEES UNDER THE SELECTIVE SERVICE SYSTEM. THE USUAL REDUCTION ACCORDED THE GOVERNMENT ON MOTOR TRAVEL IS 5 PERCENT FROM THE REGULARLY PUBLISHED TARIFF FARES AVAILABLE TO THE GENERAL PUBLIC.

SUCH REDUCTIONS (COMMONLY CALLED "SECTION 22 QUOTATIONS"), ARE AUTHORIZED BY SECTION 22 OF THE INTERSTATE COMMERCE ACT, 49 U.S.C. 22, FOR AN ACCOUNT OF RAIL CARRIERS; SECTION 217 (B) OF THE ACT, 49 U.S.C. 317 (B), FOR ACCOUNT OF COMMON CARRIERS BY MOTOR VEHICLE; AND SECTION 306 (C) OF THE ACT, 49 U.S.C. 906 (C), FOR ACCOUNT OF COMMON CARRIERS BY WATER SUBJECT TO THE CONTROL OF THE INTERSTATE COMMERCE COMMISSION.

SIMILARLY AT THE PRESENT TIME, INSOFAR AS TRAVEL BY AIRPLANE IS CONCERNED,"JOINT MILITARY AIR TRANSPORTATION AGREEMENT NO. 9" BETWEEN THE VARIOUS DEPARTMENTS OF THE ARMED SERVICES AND THE "AIR TRAFFIC CONFERENCE OF AMERICA" AND OTHER CARRIERS LISTED THEREIN, PROVIDES FOR TRAVEL OF CIVILIAN AND MILITARY PERSONNEL OF THE DEPARTMENT OF DEFENSE AND RELATED MILITARY ESTABLISHMENTS VIA AIR CARRIERS AT A FARE GENERALLY EQUAL TO 90 PERCENT OF THE FIRST-CLASS ONE-WAY OR FIRST CLASS FARES ALSO APPLIES TO EXCESS BAGGAGE CHARGES. IN ADDITION, THE AGREEMENT PROVIDES FOR A HIGHER FREE BAGGAGE ALLOWANCE THAN ORDINARILY IS AVAILABLE TO THE GENERAL PUBLIC. OTHER FREE OR REDUCED CHARGES ARE COVERED BY THE AGREEMENT, SUCH AS WAIVING OF CERTAIN CHARGES FOR CHECK AGE OF BAGGAGE AND SPECIAL SERVICES.

WE UNDERSTAND THAT THE "TRAVEL AGENT" RECEIVES HIS REMUNERATION IN THE FORM OF A FEE OR COMMISSION FROM THE CARRIER. AT THE TIME OUR REGULATIONS WERE UNDER STUDY PRIOR TO ISSUANCE THE AIR TRAFFIC CONFERENCE OF AMERICA ADVISED US THAT THE "CARRIERS PAY COMMISSIONS TO TRAVEL AGENTS IN ORDER TO PROVIDE AN INCENTIVE, AND COMPENSATION, FOR THE PROMOTION OF NEW BUSINESS- -- BUSINESS WHICH THE CARRIERS ARE NOT ORDINARILY ABLE TO DEVELOP THROUGH THEIR OWN SALES ORGANIZATIONS AND ACTIVITIES.' THUS, IN AGREEING TO PAY COMMISSIONS, THE CARRIERS ACTUALLY ARE APPOINTING THE TRAVEL AGENTS AS THEIR AGENTS FOR THE DEVELOPMENT OF NEW BUSINESS THROUGH THE SALE OF TICKETS AND SOLICITING OF TRAFFIC. SINCE THE ONLY TICKETING THAT WOULD BE DONE FOR THE GOVERNMENT WOULD BE FOR OFFICIAL TRAVEL, WHICH THE CARRIERS WOULD GET IN ANY EVENT, IT WAS CONTENDED THAT THERE WOULD BE NO PROPER BASIS FOR THE GOVERNMENT DEALING THROUGH AN INTERMEDIARY WITH RESULTANT LOSS OF INCOME TO THE CARRIERS AND IMPEDING THE GOVERNMENT'S NEGOTIATION WITH CARRIERS FOR REDUCED RATES UNDER SECTION 22 AND OTHER PROPER AUTHORITY.

THE REGULATIONS PROMULGATED IN PART 51 OF TITLE 4 OF THE CODE OF FEDERAL REGULATIONS WERE PRESCRIBED AFTER A CAREFUL REVIEW OF THE EXPERIENCE OF THE ADMINISTRATIVE AGENCIES AND OUR OFFICE TO DETERMINE THE ADVANTAGES AND DISADVANTAGES ARISING FROM THE USE OF SERVICES OF TRAVEL AGENCIES FOR THE PROCUREMENT OF OFFICIAL PASSENGER TRANSPORTATION SERVICES. DURING THE PERIOD IN WHICH THESE REGULATIONS WERE UNDER STUDY BOTH OUR OFFICE AND THE ADMINISTRATIVE DEPARTMENTS AND AGENCIES WHO ARE CHARGED WITH THE DUTY OF PROCURING TRANSPORTATION SERVICES, GAVE FULL CONSIDERATION TO THE USE OF THE SERVICES OF THE TRAVEL AGENCIES. THE MATTER WAS DISCUSSED WITH REPRESENTATIVES OF THE CARRIERS INVOLVED ON SEVERAL OCCASIONS AND WE WERE REQUIRED TO ANALYZE AND REVIEW MANY RECOMMENDATIONS SUBMITTED CONCERNING THIS QUESTION. THE ADMINISTRATIVE DEPARTMENTS AND AGENCIES PRIMARILY CONCERNED INDICATED THAT NO BENEFITS WOULD BE OBTAINED BY THE USE OF THE SERVICES OF TRAVEL AGENCIES FOR DOMESTIC TRAVEL BETWEEN POINTS WITHIN THE UNITED STATES (INCLUDING CANADA AND MEXICO), AND ITS POSSESSIONS, OR BETWEEN POSSESSIONS OF THE UNITED STATES, SINCE THE CARRIERS BY RAIL, BUS, STEAMSHIP, OR AIR ORDINARILY ARE ABLE TO SUPPLY ALL THE INFORMATION AND ASSISTANCE NEEDED BY A GOVERNMENT TRAVELER WITH RESPECT TO THE AVAILABILITY OF SERVICES, INCLUDING THE RESERVATION OF ACCOMMODATIONS, SCHEDULES, ROUTES AND TICKETING ARRANGEMENTS.

OUR OWN EXPERIENCE WITH AUDIT PROBLEMS GENERATED BY THE USE OF THE SERVICES OF TRAVEL AGENCIES WAS CAREFULLY REVIEWED. WE FOUND THAT QUITE OFTEN THE CARRIERS USED IN THE PERFORMANCE OF THE TRAVEL WERE NOT SUFFICIENTLY IDENTIFIED TO PERMIT A PROPER AUDIT OF THE PAYMENTS MADE ADMINISTRATIVELY TO TRAVEL AGENCIES. IN SOME INSTANCES, THE AUTHORITY FOR THE RATES OR FARES USED TO COMPUTE THE CHARGES DUE WAS NOT MADE A PART OF THE PAYMENT RECORD. IN OTHER INSTANCES, NO EVIDENCE THAT THE NEEDED TRANSPORTATION SERVICES HAD ACTUALLY BEEN PERFORMED WAS CONTAINED IN THE PAYMENT RECORD. IT WAS NOT UNUSUAL TO FIND THAT THE SERVICES FURNISHED TO TRAVELERS WERE INCONSISTENT WITH OR IN EXCESS OF THOSE OFFICIALLY AUTHORIZED. ALL OF THESE MATTERS, AND OTHERS NOT MENTIONED SPECIFICALLY, REQUIRED EXTENSIVE INVESTIGATIONS AND CORRESPONDENCE BEFORE WE COULD CERTIFY TO THE CORRECTNESS OF AMOUNTS PAID TO THE TRAVEL AGENCIES FOR TRANSPORTATION SERVICES. IN MANY INSTANCES, WHERE OVERCHARGES WERE DETERMINED TO HAVE BEEN MADE, RECOVERY OF SUCH OVERCHARGES PRESENTED PROBLEMS IN ADDITION TO THOSE ORDINARILY ENCOUNTERED IN CONNECTION WITH THE RECOVERY OF OVERCHARGES MADE DIRECTLY TO THE CARRIERS. THERE WERE OTHER COMPLICATIONS IN ARRANGING FOR THE REFUND OF UNUSED TICKETS AND THE ADJUSTMENTS OF FARES WHERE DIFFERENCES IN SERVICE WERE INVOLVED.

AFTER FULL CONSIDERATION OF ALL OF THESE MATTERS, WE DETERMINED THAT IT WAS NECESSARY TO LIMIT THE USE OF THE SERVICES OF TRAVEL AGENCIES IN THE MANNER SPECIFIED IN SECTION 51.3 QUOTED ABOVE IN ORDER TO INSURE PROPER PROTECTION OF THE INTERESTS OF THE UNITED STATES. GENERALLY, THE EXCEPTIONS SPECIFIED IN SECTION 51.4 ARE GOVERNED BY LIMITATIONS AS TO THE AVAILABILITY OF CARRIER REPRESENTATIVES IN THE AREAS SERVED.

OUR REGULATIONS, WHILE REQUIRING THAT DOMESTIC PASSENGER TRANSPORTATION SERVICES SHOULD BE PROCURED DIRECTLY FROM CARRIERS, ARE DESIGNED PRIMARILY FOR THE PROTECTION OF THE INTERESTS OF THE UNITED STATES. SIMILAR REGULATIONS, AS SUPPLEMENTED, HAVE NOW BEEN IN EFFECT FOR A NUMBER OF YEARS AND WE HAVE HAD VERY FEW COMPLAINTS CONCERNING THEIR EFFECT UPON THE PRACTICAL PROBLEMS OF PROCUREMENT OF GOVERNMENT TRANSPORTATION SERVICES AT THE LOWEST OVERALL COST TO THE UNITED STATES.

AS A MATTER OF INFORMATION IN THE INSTANT SITUATION, MATERIAL ON FILE IN OUR OFFICE DISCLOSES THAT PRACTICALLY ALL CARRIERS MAINTAIN LOCAL OFFICES IN THE CITY OF NEW YORK FOR THE PURPOSE OF SERVICING TRAVELERS' RESERVATION AND TICKETING REQUIREMENTS. AS A CONSEQUENCE, WE FAIL TO SEE WHERE THERE WOULD BE ANY ADVANTAGE IN SERVICING THE NEEDS OF ANY GOVERNMENT AGENCIES IN THE WAY OF RESERVATIONS AND TICKETING REQUIREMENTS. WE DO NOT LOOK UPON THIS IN ANY SENSE AS A DISCRIMINATORY PRACTICE, BUT MERELY AS A PROCEDURE WHICH WILL SHORTEN THE LINES OF COMMUNICATION AND ELIMINATE TO A LARGE DEGREE THE PROBLEMS HEREINABOVE SET FORTH. THE MATTERS PRESENTED HAVE BEEN VERY THOROUGHLY REVIEWED BY OUR OFFICE ON SEVERAL OCCASIONS. WE PERCEIVE NO BASIS IN THE INSTANT PRESENTATION WHICH WOULD SUGGEST THAT THE GENERAL PROVISIONS OF OUR REGULATIONS SHOULD BE MODIFIED.