Response to a Posthearing Question Related to GAO's November 16, 2006 Testimony on the Defense Travel System
Gao ID: GAO-07-287R December 19, 2006On November 16, 2006, GAO testified before the Permanent Subcommittee on Investigations, Committee on Homeland Security and Governmental Affairs, on the results of our audit on the Defense Travel System (DTS). This letter responds to a question from Senator Coburn that we were asked to answer for the record. The question and our response follow.
We fully recognize the challenge the Department of Defense (the department) faces in attempting to improve the efficiency and effectiveness of its business operations. The fact remains, however, that the results of an economic analysis are intended to help management decide if future investments in a given endeavor are worthwhile. In order to provide management the most realistic information possible to support decision-making in this area, it is imperative that an economic analysis be supported by valid assumptions. However, we found that the underlying assumptions were not valid, particularly in regard to the estimated amounts for the Navy and Air Force. Moreover, the department did not provide any new data or related documentation in its comments that were counter to our finding. As a result of these factors, we continue to believe that the estimated annual personnel savings of $54.1 million are unrealistic.
GAO-07-287R, Response to a Posthearing Question Related to GAO's November 16, 2006 Testimony on the Defense Travel System
This is the accessible text file for GAO report number GAO-07-287R
entitled 'Response to a Posthearing Question Related to GAO's November
16, 2006 Testimony on the Defense Travel System' which was released on
December 19, 2006.
This text file was formatted by the U.S. Government Accountability
Office (GAO) to be accessible to users with visual impairments, as part
of a longer term project to improve GAO products' accessibility. Every
attempt has been made to maintain the structural and data integrity of
the original printed product. Accessibility features, such as text
descriptions of tables, consecutively numbered footnotes placed at the
end of the file, and the text of agency comment letters, are provided
but may not exactly duplicate the presentation or format of the printed
version. The portable document format (PDF) file is an exact electronic
replica of the printed version. We welcome your feedback. Please E-mail
your comments regarding the contents or accessibility features of this
document to Webmaster@gao.gov.
This is a work of the U.S. government and is not subject to copyright
protection in the United States. It may be reproduced and distributed
in its entirety without further permission from GAO. Because this work
may contain copyrighted images or other material, permission from the
copyright holder may be necessary if you wish to reproduce this
material separately.
December 19, 2006:
The Honorable Norm Coleman:
Chairman, Permanent Subcommittee on Investigations:
Committee on Homeland Security and Governmental Affairs:
United States Senate:
Subject: Response to a Posthearing Question Related to GAO's November
16, 2006 Testimony on the Defense Travel System:
Dear Mr. Chairman:
On November 16, 2006, I testified before your Subcommittee on the
results of our audit on the Defense Travel System (DTS).[Footnote 1]
This letter responds to a question from Senator Coburn that you asked
us to answer for the record. The question and our response follow.
Q. Mr. Williams, GAO's September 2006 study looked at DOD's Program
Management Office-DTS (PMO-DTS) projected DTS annual savings estimates.
GAO found that PMO-DTS' $56.4 million of anticipated personnel savings
are unrealistic. PMO-DTS projected that the Army and Navy would have
$24.2 million of personnel savings as a result of using DTS. However,
GAO found that the Army and Navy have not had and are not anticipating
any savings through decreased personnel from the implementation of DTS.
DOD has refuted GAO's findings by claiming that the savings created by
DTS are not necessarily achieved through decreased personnel, but
through increasing personnel productivity and reducing inefficiencies.
Were PMO-DTS' projected personnel savings based solely on personnel
reduction, and if not, is it possible to quantitatively measure cost
savings through increased personnel productivity and reducing
inefficiencies?
As discussed in our September 2006 report[Footnote 2] and reiterated in
our November 2006 testimony[Footnote 3] before your Subcommittee, the
$24.2 million of personnel savings estimated by the Department of
Defense (DOD) relates to the Air Force and the Navy.
More specifically, the September 2003 economic analysis noted that
personnel savings of $12.9 million and $11.3 million would be realized
by the Navy and Air Force, respectively. The assumption behind the
personnel savings computation was that there would be less manual
intervention in the processing of travel vouchers for payment, and
therefore fewer staff would be needed. However, based on our
discussions with Air Force and Navy DTS program officials, it is
questionable as to how the estimated savings will be achieved. Air
Force and Navy DTS program officials stated that they did not
anticipate a reduction in the number of personnel with the full
implementation of DTS, but rather the shifting of staff to other
functions. Furthermore, according to DOD officials responsible for
reviewing economic analyses, while shifting personnel to other
functions is considered a benefit, it should be considered an
intangible benefit rather than tangible dollar savings since the
shifting of personnel does not result in a reduction of DOD
expenditures. Also, as part of the Navy's overall evaluation of the
economic analysis, program officials stated that "the Navy has not
identified, and conceivably will not recommend, any personnel billets
for reduction." Finally, the Naval Cost Analysis Division (NCAD)
October 2003 report on the economic analysis noted that it could not
validate approximately 40 percent of the Navy's total costs, including
personnel costs, in the DTS life-cycle cost estimates because credible
supporting documentation was lacking. The report also noted that the
PMO-DTS used unsound methodologies in preparing the DTS economic
analysis.
The extent of personnel savings for the Army and defense agencies,
which DOD estimated to be $16 million and $6.3 million respectively, is
also unclear. The Army and many defense agencies use the Defense
Finance and Accounting Service (DFAS) to process their travel vouchers,
so the personnel savings for the Army and the defense agencies were
primarily related to reductions in DFAS's costs. In discussions with
DFAS officials, they were unable to estimate the actual personnel
savings that would result since they did not know (1) the number of
personnel, like those at the Air Force and Navy, that would simply be
transferred to other DFAS functions or (2) the number of personnel that
could be used to avoid additional hiring. For example, DFAS expects
that some of the individuals assigned to support the travel function
could be moved to support its ePayroll program. Since these positions
would need to be filled regardless of whether the travel function is
reduced, transferring personnel from travel to ePayroll would reduce
DOD's overall costs since DFAS would not have to hire additional
individuals.
As pointed out in your question and as discussed in our report and
testimony, DOD strongly objected to our finding that the personnel
savings are unrealistic. In its written comments, the department stated
that it is facing an enormous challenge and continues to identify
efficiencies and eliminate redundancies to help leverage available
funds. We fully recognize the challenge the department faces in
attempting to improve the efficiency and effectiveness of its business
operations. The fact remains, however, that the results of an economic
analysis are intended to help management decide if future investments
in a given endeavor are worthwhile. In order to provide management the
most realistic information possible to support decision-making in this
area, it is imperative that an economic analysis be supported by valid
assumptions. However, we found that the underlying assumptions were not
valid, particularly in regard to the estimated amounts for the Navy and
Air Force. Moreover, the department did not provide any new data or
related documentation in its comments that were counter to our finding.
As a result of these factors, we continue to believe that the estimated
annual personnel savings of $54.1 million are unrealistic.
If you or your staff have questions about our response to this
question, please contact me at (202) 512-9095, or williamsm1@gao.gov.
Sincerely yours,
Signed by:
McCoy Williams:
Director, Financial Management and Assurance:
(195107):
FOOTNOTES
[1] GAO, Defense Travel System: Estimated Savings Are Questionable and
Improvements Are Needed to Ensure Functionality and Increase
Utilization, GAO-07-208T (Washington, D.C.: Nov. 16, 2006).
[2] GAO, Defense Travel System: Reported Savings Questionable and
Implementation Challenges Remain, GAO-06-980 (Washington, D.C.: Sept.
26, 2006).
[3] GAO-07-208T.
GAO's Mission:
The Government Accountability Office, the audit, evaluation and
investigative arm of Congress, exists to support Congress in meeting
its constitutional responsibilities and to help improve the performance
and accountability of the federal government for the American people.
GAO examines the use of public funds; evaluates federal programs and
policies; and provides analyses, recommendations, and other assistance
to help Congress make informed oversight, policy, and funding
decisions. GAO's commitment to good government is reflected in its core
values of accountability, integrity, and reliability.
Obtaining Copies of GAO Reports and Testimony:
The fastest and easiest way to obtain copies of GAO documents at no
cost is through GAO's Web site (www.gao.gov). Each weekday, GAO posts
newly released reports, testimony, and correspondence on its Web site.
To have GAO e-mail you a list of newly posted products every afternoon,
go to www.gao.gov and select "Subscribe to Updates."
Order by Mail or Phone:
The first copy of each printed report is free. Additional copies are $2
each. A check or money order should be made out to the Superintendent
of Documents. GAO also accepts VISA and Mastercard. Orders for 100 or
more copies mailed to a single address are discounted 25 percent.
Orders should be sent to:
U.S. Government Accountability Office 441 G Street NW, Room LM
Washington, D.C. 20548:
To order by Phone: Voice: (202) 512-6000 TDD: (202) 512-2537 Fax: (202)
512-6061:
To Report Fraud, Waste, and Abuse in Federal Programs:
Contact:
Web site: www.gao.gov/fraudnet/fraudnet.htm E-mail: fraudnet@gao.gov
Automated answering system: (800) 424-5454 or (202) 512-7470:
Congressional Relations:
Gloria Jarmon, Managing Director, JarmonG@gao.gov (202) 512-4400 U.S.
Government Accountability Office, 441 G Street NW, Room 7125
Washington, D.C. 20548:
Public Affairs:
Paul Anderson, Managing Director, AndersonP1@gao.gov (202) 512-4800
U.S. Government Accountability Office, 441 G Street NW, Room 7149
Washington, D.C. 20548:
