General Services Administration's Actions To Collect and Improve Controls Over Refunds Owed by the Airline Industry

AFMD-82-33: Published: Dec 18, 1981. Publicly Released: Jan 6, 1982.

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GAO was asked to review the system used by the Nation's air carriers to reimburse the Government when higher priced tickets purchased with Government Transportation Requests were exchanged for tickets of lower values. Specifically, GAO was asked to establish why over $3 million due the Government was outstanding and what actions have been taken by the General Services Administration (GSA) to recover refunds since it has Government-wide responsibility for the travel program. Consistent with this request, GAO limited its review to those refunds owed the Government because Federal travelers changed their itinerary or changed from a higher to a lower class of service. GAO did not address the problem of entirely unused tickets.

In its review, GAO found that, since at least the 1970's, the Nation's airlines have failed to promptly remit millions of dollars in refunds due the Federal Government. This situation exists primarily because Federal agencies, Government travelers, and the airlines fail to follow a special procedure set up by the airlines to refund money owed the Federal Government. This procedure is basically the same as that available to the general public, except that the airlines do not give cash to Government travelers. Instead, the travelers are given data for their agencies to use in requesting the refunds. The procedure permits voluntary refunds by the airlines without a request from Federal agencies. However, most airlines were not making refunds without being billed, and there were discrepancies in record retention policies between the airlines and many Federal agencies. To correct these deficiencies, GSA has taken steps to recover the funds and to prevent future problems. For example, GSA clarified its regulation to require that carriers remit Government refunds without the Federal agency submitting a special request and asked Federal agencies to open their records to help determine the amount of refunds owed the Government. As a result of the improvements in the regulations, about $3.0 million in refunds have been collected by GSA.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Administrator of General Services should monitor agencies' refund policies, programs, and procedures to determine their adequacy and effectiveness to ensure that all refunds due the Government are paid promptly.

    Agency Affected: General Services Administration

  2. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Administrator of General Services should confer with individual airlines or airline associations about the need for carriers to obtain refund application documents associated with ticket downgrades and routing changes, bearing in mind the applicable statute of limitations.

    Agency Affected: General Services Administration

  3. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Administrator of General Services should make sure affected travelers know their responsibilities regarding refunds due the Government, and hold them accountable for complying with established refund procedures.

    Agency Affected: General Services Administration

  4. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Administrator of General Services should establish from records available to the Federal agencies and the airlines the refund amounts owed by each carrier and require carriers to make prompt payment.

    Agency Affected: General Services Administration

  5. Status: Closed - Implemented

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Administrator of General Services should work with Federal agencies to establish refund receivables in accordance with accrual accounting requirements and encourage them to aggressively pursue collection of all refunds not paid promptly.

    Agency Affected: General Services Administration

 

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