Defense Travel System: Reported Savings Questionable and Implementation Challenges Remain

In September 2006, we found that DOD's economic analysis did not properly provide for considering the effects of components' use of management fees, rather than transaction fees, to compensate Commercial Travel Offices (CTO) for travel services provided. As a result, the estimated annual net savings related to CTO fees for the Navy would not be realized if the Navy continued to use the management fee concept. In addition, Navy Defense Travel System officials stated that they were considering continued use of management fees to compensate CTOs. We recommended that the Secretary of Defense direct the Under Secretary of Defense (Personnel and Readiness) and the Director, Business Transformation Agency, to jointly evaluate the cost effectiveness of the Navy continuing with the CTO management fee structure, instead of adopting the revised CTO fee structure, after new CTO contracts were awarded. We reported in June 2009, that the Defense Travel Management Office (DTMO) was requiring an examination of fee structure cost effectiveness as part of every Navy CTO contract renegotiation. Eight of the 11 CTO contract renegotiations, which included examination of fee structure proposals, were completed by the end of 2009. With these actions, DOD has taken action to substantively address our recommendation and therefore should better enable the Navy to establish a cost-effective fee structure for CTO services.

In December 2009, DOD reported to the Congress that DTS is operational at over 9,500 locations worldwide and future deployments are planned for the Army Corps of Engineers, the Air Force Reserve Command, and the Navy Ship Afloat. Additionally, starting in the third quarter of fiscal year 2007 DOD began to report quarterly on the extent to which DTS is utilized across the military services and defense agencies. For example, in the DTS quarterly metrics reported for the second quarter of fiscal year 2010, the department reported that 87 percent of all travel reservations were processed through DTS in March 2010. In October 2009, the quarterly report noted that approximately 84 percent of all travel reservations were processed through DTS. Furthermore, the quarterly metrics reports are submitted to the Defense Travel Steering Committee and the Defense Travel Improvement Board. Also, in DOD's December 2009 congressional report the department reported on the status of its efforts to include special circumstance travel, military permanent duty travel, and recruit travel capabilities within DTS. Including the capability to facilitate support for these travel types within DTS should help to increase DTS usage throughout the department. In its May 2010 congressional report, the department reported on the status of its efforts to consolidate the existing 76 travel types into no more than 10. Consistent with the intent of the recommendation, the department's December 2009 congressional report and May 2010 congressional report provides reasonable assurance that DOD is obtaining and reporting data related to DTS utilization.