United States Travel Service Contractual Relationship with Discover America Travel Organizations, Inc.

An audit was conducted of the participation of the U.S. Travel Service in the Domestic Travel Mart. The question of whether there was an apparent or a real conflict of interest in the U.S. Travel Service award of two contracts to the Discover America Travel Organizations, Inc. (DATO) was investigated since the head of the Travel Service, the former Assistant Secretary of Commerce for Tourism, was a member of the board of directors of DATO. As part of its promotion of travel to and within the United States, the Travel Service participates in two major industry trade marts operated annually by DATO. The Travel Service has cosponsored nine International Pow Wow events and two Travel Marts through fees paid to the organization and personnel assigned to assist the organization.

In 1977, $25,000 was paid for the Domestic Travel Mart held in Phoenix in May, and in prior years $10,000 was paid for the International Pow Wow. No contract fee was paid this year for the International Pow Wow because of congressional concerns. In October 1976, the agency contracted for DATO to coordinate a government and industry travel and marketing program. The cost of the contract was estimated at $269,000, but the contract was terminated after $50,000 was spent following congressional inquiry. The agency pays an annual fee of $5,000 for membership with DATO. No real or apparent conflict of interest was found regarding the former agency head's serving as a member of the DATO board of directors. It was estimated that the agency spent $68,000 on this year's Domestic Travel Mart in Phoenix and $51,000 on the International Pow Wow in St. Louis. The agency did not request or obtain from DATO sufficient information on actual costs incurred to adequately evaluate the need to contribute to such private undertakings. DATO said it had incurred deficits on the two previous Travel Marts, but made $40,000 on the one held in Phoenix.