Premium Class Travel
Internal Control Weaknesses Governmentwide Led to Improper and Abusive Use of Premium Class Travel Gao ID: GAO-07-1268 September 28, 2007Previous GAO work on widespread improper premium class travel at the Department of Defense (DOD) and the Department of State (State) have led to concerns as to whether similar improper travel exists in the rest of the federal government. Consequently, GAO was asked to (1) determine the magnitude of premium class travel governmentwide and the extent such travel was improper, (2) identify internal control weaknesses that contributed to improper and abusive premium class travel, and (3) report on specific cases of improper and abusive premium class travel. GAO analyzed bank data and performed statistical sampling to quantify the extent premium class travel was improper. GAO also performed data mining, reviewed travel regulations, and interviewed agency officials.
Breakdowns in internal controls and a weak control environment resulted in at least $146 million in improper first and business class travel governmentwide. The federal government spent over $230 million on about 53,000 premium class tickets from July 1, 2005, through June 30, 2006. Premium class tickets are costly--for example, a Department of Agriculture (USDA) executive flew business class from Washington, D.C., to Zurich, Switzerland, at a cost of $7,500 compared to $900 for a coach class ticket. Based on statistical sampling, GAO estimated that 67 percent of premium class travel was not properly authorized, justified, or both. While business class travel accounted for 96 percent of all premium class travel, many agencies informed us that they did not track, and thus did not know the extent of, business class travel. OMB and GSA also did not require reporting of business class travel. GAO found large differences in premium class guidance governmentwide, with some agencies issuing less restrictive guidance that were tailored for executive travel. For example, the FTR allows premium class travel for flights over 14 hours if properly authorized. However, executives at the Foreign Agricultural Service frequently used "mission critical" to justify flights to Western Europe that typically lasted less than 10 hours. Other agencies, such as State and the Millennium Challenge Corporation (MCC), automatically approved premium class travel for all flights over 14 hours. GAO's analysis of flights involving destinations in the United States and Africa, the Middle East, and parts of Europe lasting 14 hours or more showed that 72 and 83 percent, respectively, of State's and MCC's flights involving these locations were in premium class. In contrast, 3 percent of all DOD's and the Department of Homeland Security's flights to the same locations were in premium class. There are examples representing specific cases of improper and abusive use of premium class, including employees of entities not subject to the Federal Travel Regulations that have issued policies that resulted in the purchase of costly premium class travel.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-07-1268, Premium Class Travel: Internal Control Weaknesses Governmentwide Led to Improper and Abusive Use of Premium Class Travel
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Report to Congressional Requesters:
United States Government Accountability Office: GAO:
September 2007:
Premium Class Travel:
Internal Control Weaknesses Governmentwide Led to Improper and Abusive
Use of Premium Class Travel:
Premium Class Travel:
GAO-07-1268:
GAO Highlights:
Highlights of GAO-07-1268, a report to congressional requesters
Why GAO Did This Study:
Previous GAO work on widespread improper premium class travel at the
Department of Defense (DOD) and the Department of State (State) have
led to concerns as to whether similar improper travel exists in the
rest of the federal government. Consequently, GAO was asked to (1)
determine the magnitude of premium class travel governmentwide and the
extent such travel was improper, (2) identify internal control
weaknesses that contributed to improper and abusive premium class
travel, and (3) report on specific cases of improper and abusive
premium class travel. GAO analyzed bank data and performed statistical
sampling to quantify the extent premium class travel was improper. GAO
also performed data mining, reviewed travel regulations, and
interviewed agency officials.
What GAO Found:
Breakdowns in internal controls and a weak control environment resulted
in at least $146 million in improper first and business class travel
governmentwide. The federal government spent over $230 million on about
53,000 premium class tickets from July 1, 2005, through June 30, 2006.
Premium class tickets are costly”for example, a Department of
Agriculture (USDA) executive flew business class from Washington, D.C.,
to Zurich, Switzerland, at a cost of $7,500 compared to $900 for a
coach class ticket. Based on statistical sampling, GAO estimated that
67 percent of premium class travel was not properly authorized,
justified, or both.
While business class travel accounted for 96 percent of all premium
class travel, many agencies informed us that they did not track, and
thus did not know the extent of, business class travel. OMB and GSA
also did not require reporting of business class travel. GAO found
large differences in premium class guidance governmentwide, with some
agencies issuing less restrictive guidance that were tailored for
executive travel. For example, the FTR allows premium class travel for
flights over 14 hours if properly authorized. However, executives at
the Foreign Agricultural Service frequently used ’mission critical“ to
justify flights to Western Europe that typically lasted less than 10
hours. Other agencies, such as State and the Millennium Challenge
Corporation (MCC), automatically approved premium class travel for all
flights over 14 hours. GAO‘s analysis of flights involving destinations
in the United States and Africa, the Middle East, and parts of Europe
lasting 14 hours or more showed that 72 and 83 percent, respectively,
of State‘s and MCC‘s flights involving these locations were in premium
class. In contrast, 3 percent of all DOD‘s and the Department of
Homeland Security‘s flights to the same locations were in premium
class.
The examples below represent specific cases of improper and abusive use
of premium class, including employees of entities not subject to the
FTR that have issued policies that resulted in the purchase of costly
premium class travel. For example, the U.S. Postal Service (USPS)
allows all members of the board to fly first class whenever they are on
business.
Examples of Improper, Abusive, and Wasteful Premium Class Travel:
Agency: USDA;
Cost of premium ticket(s): $163,000;
Reason travel was improper or abusive:
* Executive had subordinate authorize 25 premium class flights;
* Executive used ’mission critical“ to justify 10 of the 25 flights
lasting less than 14 hours to Western Europe.
Agency: DOD;
Cost of premium ticket(s): $105,000;
Reason travel was improper or abusive:
* Executive flew premium class 15 times claiming a medical condition;
* Medical condition was documentation with a note signed by a DOD
employee, not a physician as required by DOD regulations.
Agency: State;
Cost of premium ticket(s): 46,000;
Reason travel was improper or abusive:
* Family of 8 flew premium class to relocate from Washington, D.C., to
Eastern Europe. Coach tickets would have cost $12,000.
Agency: USPS;
Cost of premium ticket(s): 2,200;
Reason travel was improper or abusive:
* A member of the board flew first class round trip from Washington,
D.C., to Los Angeles. Comparable coach price was $400.
Source: GAO analysis of bank data and supporting documentation.
What GAO Recommends:
To improve management and oversight of premium class travel, GAO is
making three recommendations to the Office of Management and Budget
(OMB), and five recommendations to the General Services Administration
(GSA). They include requiring agency reporting on premium class travel
including business class, clarifying specific provisions of the Federal
Travel Regulations (FTR), and creating an office for central oversight
of agency travel policies to help ensure adherence to federal
regulations. In written comments, OMB and GSA generally agreed with
GAO‘s findings and recommendations.
To view the full product, including the scope and methodology, click on
[hyperlink, http://GAO-07-1268]. For more information, contact Gregory
Kutz at (202) 512-6722 or kutzg@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Extent of Governmentwide Improper Premium Class Travel Is Significant:
Key Transaction-Based Controls Are Ineffective:
Ineffective Oversight and Internal Control Weaknesses Contributed to
Improper and Abusive Premium Class Travel:
Case Studies of Improper and Abusive Premium Class Travel Highlight
Extent and Nature of Control Breakdowns:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: Background:
Appendix III: Comments from the Office of Management and Budget:
Appendix IV: Comments from the General Services Administration:
Appendix V: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Selected Agencies' Use of Premium Class for 14-Hour Flights to
Africa, the Middle East, and Europe:
Table 2: Results of Statistical Sampling of Premium Round-trip Airline
Ticket Transactions:
Table 3: Examples of Improper and Abusive Premium Class Travel:
Table 4: Examples of Abusive Activity by Frequent Premium Class
Travelers:
Table 5: Examples of Abusive Activity by Group Travelers:
Table 6: Premium Class Flights Governmentwide and at Selected Agencies
from July 1, 2005, through June 30, 2006:
Abbreviations:
DOD: Department of Defense:
FAM: Foreign Affairs Manual:
FAS: Foreign Agricultural Service:
FDIC: Federal Deposit Insurance Corporation: FRB: Federal Reserve
Board:
FTR: Federal Travel Regulations:
GSA: General Services Administration: JFTR: Joint Federal Travel
Regulations: JTR: Joint Travel Regulations:
MCC: Millennium Challenge Corporation: OMB: Office of Management and
Budget: PCS: permanent change of station:
SES: Senior Executive Service:
TDY: Temporary Duty Travel:
USAID: United States Agency for International Development: USDA:
Department of Agriculture:
USPS: United States Postal Service:
[End of section]
United States Government Accountability Office: Washington, DC 20548:
September 28, 2007:
The Honorable Carl Levin:
Chairman:
The Honorable Norm Coleman:
Ranking Member:
Permanent Subcommittee on Investigations: Committee on Homeland
Security and Governmental Affairs:
United States Senate:
The Honorable Charles E. Grassley:
Ranking Member:
Committee on Finance:
United States Senate:
The serious fiscal challenges facing the federal government dictate
that agencies do everything they can to operate as efficiently as
possible. With respect to government travel, employees on official
government travel are expected to follow published guidelines related
to when and how premium (first and business) class travel should be
undertaken. Due to the high cost of premium class travel, the General
Services Administration's (GSA) Federal Travel Regulations
(FTR)[Footnote 1] includes specific guidelines meant to restrict
premium class use. For example, agencies can provide business class
travel for agency mission; when an individual has a physical disability
that is certified by a medical professional; or a flight is to or from
a destination outside the continental United State, exceeds 14 hours,
and is taken without a rest stop en route or at destination (i.e., the
14-hour rule). While travelers who meet these or a number of other
criteria stated in the FTR may qualify for premium class, GSA directs
agencies to evaluate each application, decide whether the circumstances
warrant it, and issue specific authorization before the traveler can
travel premium class. To safeguard taxpayer's money, the regulations
state that agencies are to conduct all travel as responsibly as
possible. For their part, travelers are told to exercise the same
standard of care in incurring expenses that a prudent person would
exercise if traveling on personal business. However, in 2003 and again
in 2006, we reported that weaknesses in internal controls at the
Department of Defense (DOD)[Footnote 2] and the Department of State
(State)[Footnote 3] led to improper use of premium class travel, that
is, travel that was unauthorized or unjustified. Premium class flights
are of special concern because they often cost thousands of dollars
more than the coach class alternatives. Subsequently, questions have
arisen as to whether improper and abusive[Footnote 4] premium class
travel was also occurring in other federal government agencies. This
report responds to your request that we provide the results of our
audit and investigative work on the use of premium class travel
governmentwide.
Specifically, we (1) determined the magnitude of premium class travel
governmentwide and the extent such travel was improper, (2) identified
internal control weaknesses that contributed to improper and abusive
premium class travel, and (3) reported on specific cases of improper
and abusive premium class travel.
To determine the magnitude of premium class travel, we extracted
premium round-trip airline ticket transactions from July 1, 2005,
through June 30, 2006, from the databases provided by the four banks
that supplied travel cards to federal government employees--Bank of
America, Citibank, JPMorgan Chase, and US Bank. We drew and tested a
statistical sample of premium class travel transactions and conducted
other audit work to determine the extent to which this travel was
improper. We included in our statistical sample premium class
transactions from all executive agencies, wholly owned federal
government corporations, and independent establishments as defined by
the United States Code.[Footnote 5] We excluded transactions by
employees or individuals approved to travel for the legislative and
judicial branches, executive entities with statutory authority over
their own travel that are not subject to the FTR, and entities under
treaty with the United States, and premium class travel obtained as a
result of mileage upgrades because they did not result in a cost to the
federal government.
To identify underlying causes contributing to improper premium class
travel, we reviewed federal laws and regulations and selected agencies'
implementing guidance, and interviewed agency officials on their
agencies' approval processes for premium class travel. We also
interviewed GSA and Office of Management and Budget (OMB) officials on
their oversight of premium class travel. To identify whether variances
existed in how agencies used premium class travel, we calculated the
extent to which federal agencies flew premium class for flights over 14
hours to selected locations. We used data mining to identify the most
egregious examples of premium class travel, including instances of high-
priced or frequent premium class travel by the same individual from
July 1, 2005, through September 30, 2006. This period includes an
additional 3 months of data subsequent to the period included in our
statistical sample. Our case studies included premium class travel by
individuals from executive entities with statutory authority over their
own travel that are not subject to the FTR, and also included
information obtained through investigations of specific allegations
regarding possible premium class travel abuse received through GAO's
FraudNET hotline. Appendix I provides further detail on our scope and
methodology.
We conducted our audit work from July 2006 through August 2007 in
accordance with U.S. generally accepted government auditing standards,
and we performed our investigative work during the same period in
accordance with standards prescribed by the President's Council on
Integrity and Efficiency. A detailed discussion of our scope and
methodology is presented in appendix I.
Results in Brief:
A weak control environment and breakdowns in specific internal control
procedures resulted in at least $146 million in improper first and
business class travel by executive branch agencies over the 12-month
period ending June 30, 2006.[Footnote 6] Specifically, of the $230
million the federal government[Footnote 7] spent on over 53,000 premium
class airline tickets (including at least one leg of premium class
travel) from July 1, 2005, through June 30, 2006, 67 percent were
either not properly authorized, not properly justified, or both.
According to GSA data, the government fare for business class
travel[Footnote 8] is typically more than 5 times the price of coach
class travel for comparable routes, with some tickets costing more than
10 times as much. First class travel can be even more costly. For
example, we found that a round-trip first-class ticket from Washington,
D.C., to London cost over $12,000 compared to a business class ticket
that would have about $6,000, or a coach class ticket that would have
cost less than $800. Further, our testing indicated that senior
executives (senior-level executives and presidential appointees with
Senate confirmation) accounted for 15 percent of premium class travel
while constituting about one-half of 1 percent of the federal
workforce.
The breakdowns in specific internal controls demonstrated by the
instances of improper premium class travel identified through our
statistical sample were exacerbated by a weak control environment.
While agencies collected and reported on first class travel, agency
officials informed us that they did not collect information on--and
thus were not aware of the extent of--business class travel. OMB and
GSA do not require reporting of premium class travel other than first
class, despite the fact that we estimate that business class travel
accounted for 96 percent of governmentwide premium class travel. We
further found that no central oversight existed over agencies'
implementing guidance, and thus it was not surprising that inconsistent
policies and procedures existed for premium class travel across the
federal government. For example, some agencies had policies and
procedures that permitted approving premium class travel without
properly considering the final costs to the taxpayers. Specifically,
State's policies and procedures allowed foreign affairs travelers to
continue to be automatically approved for premium class for all trips
over 14 hours, a practice that we have previously questioned because of
the increased costs to the taxpayers.[Footnote 9] Similarly, Millennium
Challenge Corporation's (MCC) policies and procedures violated the
requirements of the FTR by allowing employees to fly business class
without specific authorization whenever the flight exceeded 14 hours.
We found that more than 70 percent of State's and 85 percent of MCC's
over 14-hour flights to Africa, the Middle East, and selected locations
in Europe were in premium class. In contrast, only 3 percent of DOD and
Department of Homeland Security travel to these same locations was
carried out using premium class, which resulted in millions of dollars
of savings for these agencies.
Contrary to the FTR, we also found that some agencies that were
required to adhere to the FTR issued premium class policies in such a
way as to allow individuals to travel in first or business class
because of their positions in the organization. In addition, we also
found that federal entities exempt from the FTR also followed similar
practices. Listed below are examples of agencies subject to the FTR and
exempt from the FTR that permitted senior executives to travel premium
class:
* At the Department of Agriculture's (USDA) Foreign Agricultural
Service (FAS), policies and procedures permitted senior executives to
use mission critical, the 14-hour rule, or both to travel premium class
while non-executive employees taking the same flight flew coach class.
For example, in December 2005, a FAS executive traveled from
Washington, D.C., to Hong Kong and back in business class, a ticket
that cost the government over $6,900. In contrast, 11 other FAS
employees did not travel in premium class, even though they were
qualified to do so under the 14-hour rule. Instead, the 11 employees
traveled on the same plane in coach at the cost of less than $1,400 per
ticket.
* The United States Postal Service's (USPS) premium class policy allows
members of the Board of Governors to travel first class to any
destination. Using this policy, a member of the board flew first class
from Washington, D.C., to Los Angeles at a cost of $2,200 compared to
$400 in coach.
Our case studies provide further illustrations of the extent and nature
of improper premium class travel. In each case study below, premium
class tickets cost the taxpayers tens of thousands of dollars more than
their equivalents in coach class--the required class of travel with a
few exceptions. Our case studies included multiple premium class trips
by senior executives and costly group travel that were improper and
abusive.
* A senior executive at FAS took 10 premium class trips from
Washington, D.C., to Geneva, Paris, and other destinations in Western
Europe from:
* July 1, 2005, through September 30, 2006. In violation of USDA's
policies and procedures, these trips were authorized by the executive's
subordinate--tantamount to self-authorization. These tickets were not
only improper, but because these tickets totaled more than $62,000
compared to less than $9,000 in coach, the $53,000 difference between
business and coach class travel was abusive.
* A group of 21 employees from the Office of the United States Trade
Representative traveled from Washington, D.C., to Hong Kong to attend
an international trade meeting. These tickets, which were purchased in
business class, cost about $100,000 compared to just $32,000 if these
individuals had flown coach. No document existed that authorized these
employees for premium class travel, and therefore the trips were
unauthorized and unjustified.
* One DOD traveler flew 15 times in premium class costing the
government over $100,000 from July 1, 2005, through September 30, 2006.
According to the travel orders for these trips, the official had a
medical condition that justified the majority of the trips. However,
the medical justification provided by DOD was a letter signed by a DOD
employee citing a non-life-changing surgery that occurred in 2001. DOD
could not produce a physician's statement documenting the traveler's
need to fly premium class. According to DOD regulations, flying premium
class based on a medical condition requires a physician's
certification.
This report contains recommendations to OMB and GSA aimed at minimizing
improper and abusive premium class travel and related governmentwide
travel costs. Our recommendations address the need to (1) improve
internal controls to properly authorize and justify premium class
travel, including prohibiting subordinates or the travelers themselves
from authorizing premium class travel, and (2) establish procedures to
require compiling governmentwide data and monitoring of the extent of
premium class travel, including business class. In cases where
recommendations apply only to certain agencies, we are issuing separate
letters to the heads of these agencies discussing specific control
weaknesses we observed and the related corrective actions required.
Further, we are referring all cases of improper and abusive travel we
identified to the respective agency management and inspector general's
office for further actions, including, if warranted, repayment of the
difference between premium class and coach class travel and
disciplinary actions against those who have abused premium class
travel.
In written comments on a draft of this report, OMB and GSA generally
agreed with our findings and recommendations. GSA stated they did not
have the statutory authority to address one of our recommendations, and
we modified the language of the recommendation to allow GSA to address
the intent of the recommendation under its statutory authority. OMB and
GSA stated that they had taken actions or will take actions to address
all our recommendations.
Background:
The FTR, issued by GSA, implements statutory and OMB requirements and
policies for most federal civilian employees and others authorized to
travel at government expense. The purpose of the FTR is to ensure that
official travel is conducted responsibly and at minimal administrative
expense. Unless exempt by specific legislation,[Footnote 10] executive
agencies, wholly owned government corporations, and independent
establishments are expected to follow the FTR, including its
promulgation related to premium class travel. DOD's uniformed
servicemembers and State employees exempt from the FTR are covered by
their agencies' travel regulations.
OMB's general policy related to travel is that the taxpayers should pay
no more than necessary to transport government officials. Consistent
with this principle, the FTR states that with limited exceptions,
travelers must use coach class accommodations for both domestic and
international travel. Premium class travel can occur only when the
traveler's agency specifically authorizes the use of such
accommodations (authorization) and only under specific circumstances
(justification). Specifically, the FTR states that first class
accommodation is authorized only when at least one of the following
conditions exists[Footnote 11]:
* coach class airline accommodations or premium class other than first
class airline accommodations are not reasonably available,
* when use of first class is necessary to accommodate a disability or
other special need that is substantiated in writing by a competent
medical authority,
* when exceptional security circumstances require first class travel,
or:
* when required because of agency mission.[Footnote 12]
The FTR authorizes premium class accommodations other than first class
(business class) when at least one of the following conditions exists:
* regularly scheduled flights between origin/destination points provide
only premium class, and this is certified on the travel voucher;
* coach class is not available in time to accomplish the mission, which
is urgent and cannot be postponed;
* premium class travel is necessary to accommodate the traveler's
disability or other physical impairment, and the condition is
substantiated in writing by competent medical authority;
* premium class travel is needed for security purposes or because
exceptional circumstances make its use essential to the successful
performance of the mission;
* coach class accommodations on authorized/approved foreign carriers do
not provide adequate sanitation or meet health standards;
* premium class accommodations would result in overall savings to the
government because of subsistence costs, overtime, or lost productive
time that would be incurred while awaiting coach class accommodations;
* transportation is paid in full by a nonfederal source;
* travel is to or from a destination outside the continental United
States, and the scheduled flight time (including stopovers) is in
excess of 14 hours (however, a rest stop en route or a rest period upon
arrival is prohibited when travel is authorized by premium class
accommodations); or:
* when required because of agency mission.[Footnote 13]
As specified above, employees traveling in premium class have to meet
both authorization and justification requirements to qualify, meaning
that employees who, for example, traveled premium class on a trip
exceeding 14 hours would violate the FTR if they traveled premium class
without receiving specific authorization to do so. Agencies subject to
the FTR have generally issued internal policies and procedures to
clarify the premium class travel provisions of the FTR, implement these
provision, or both. When issuing implementing policy, agencies have to
follow executive branch policy, which specifies that a subordinate
organization seeking to establish implementing regulation or guidance
may make the regulations more stringent but not relax the rules
established by higher-level guidance. For example, an agency's
implementing policy related to premium class travel because of
disability can require that the traveler provides medical certification
that is updated annually, but cannot waive the requirement that a
certification by a competent medical authority be provided.
DOD and State have also issued their own detailed implementing policies
and procedures that cover all aspects of travel, from authorization to
reimbursement to regulations for premium class. DOD issues the Joint
Federal Travel Regulations (JFTR) for uniformed service members not
covered by the FTR, and also updates the Joint Travel Regulations
(JTR), which implements the FTR for DOD civilian employees. Similarly,
State's Foreign Affairs Handbook and Foreign Affairs Manual (FAM)
represent major sets of policies and procedures related to travel
reimbursements to Foreign Service employees pursuant to the Foreign
Service Act of 1980. With respect to premium class travel, the
regulations contained in the JTR, the JFTR, and the FAM are generally
consistent with the FTR.
Extent of Governmentwide Improper Premium Class Travel Is Significant:
For 12 months of travel from July 1, 2005, through June 30, 2006, the
government spent more than $230 million on over 53,000 airline tickets
that contained at least one leg of premium class travel.[Footnote 14]
Using statistical sampling, we estimated that at least $146 million of
this premium class travel was unauthorized or unjustified. In addition,
our statistical sample population contained a number of flights taken
by government executives. Specifically, we found that senior executives
(senior-level executives and presidential appointees with Senate
confirmation), who constituted about one-half of 1 percent of the
federal workforce, accounted for 15 percent of premium class travel.
Governmentwide Premium Class Travel Use:
The government bought more than 53,000 premium class tickets totaling
over $230 million during a 12-month period from July 1, 2005, to June
30, 2006. We identified premium class tickets as any ticket that
contained at least one leg of travel in first or business class. Since
the government did not maintain centralized data on premium class
travel, we extracted ticket information from the government credit card
banks' databases of government individually and centrally billed
account travel, which included over 6.1 million transactions for
airline tickets valued at almost $3.4 billion.
Although premium class travel represented less than 1 percent of the
total flights taken governmentwide, the high cost of premium class
tickets meant that premium class travel accounted for nearly 7 percent
of total dollars spent on government airline travel. In some instances,
the price difference between a business class and comparable coach
class ticket may be negligible--particularly if the traveler traveled
within Europe. However, on routes where GSA had awarded a government
fare for economy and business classes, an average business class ticket
in fiscal year 2006 cost more than 5 times the cost of a coach class
ticket. For example, a traveler's one-way business class ticket from
Madrid to Washington, D.C., was over 7 times the price of a coach class
ticket. First class tickets can be even more costly. For example,
another traveler from the Federal Reserve Board (FRB) flew first class
between Washington, D.C., and London for more than $12,000, or more
than 16 times the price of a coach class flight. To put the total
amount spent on premium class travel into perspective, the over $230
million the government spent on premium class travel during these 12
months exceeded the travel expenses on the government travel cards of
most individual government agencies, including major executive agencies
such as the Departments of Agriculture, Energy, Health and Human
Services, Labor, Transportation, and the Treasury.
Premium class travel usage also varied significantly across federal
agencies, both in the total amount and frequency with which premium
class travel was used. Some agencies spent only a fraction of total
airline expenditures on premium class, while premium class travel at
other agencies was substantial. Data provided by the travel card banks
showed that while DOD was the second largest user of premium class
travel based on total dollars, it had substantially reduced its use of
premium class travel charged to the government credit cards since 2004,
following our DOD premium class audit.[Footnote 15]Specifically, DOD's
premium class charges decreased from more than $124 million over fiscal
years 2001 and 2002, or more than $60 million annually, to slightly
over $23 million in the 12-month period ending June 30, 2006--about 1
percent of its air travel expenditures. In contrast, tickets bought by
State for foreign affairs agency travelers continued to account for the
largest portion of governmentwide premium class travel. Our data showed
that the over $140 million that State spent on nearly 30,000 premium
class tickets for foreign affairs agency travelers represented over 60
percent of its total air expenditures during this period.[Footnote 16]
This amount, which is comparable to our previous finding at State,
could decrease in the future based on actions taken by State based on
our previous audit findings and subsequent to the data period we
audited. For detailed breakdown of agencies' overall use of premium
class travel, see appendix II.
Table 1 shows the results of our analysis of the frequency at which
selected agencies purchased premium class tickets for flights involving
airports in the United States and locations in Africa, the Middle East,
and parts of Europe that likely lasted more than 14 hours. As shown,
large differences existed in agencies' use of premium class flights to
these locations. For example, 3 percent of DOD and Department of
Homeland Security travelers flying to these locations flew premium
class. In contrast, 72 percent of State's foreign affairs agency
travelers and 83 percent of MCC's travelers flying to these same
locations flew premium class.
Table 1: Selected Agencies' Use of Premium Class for 14-Hour Flights to
Africa, the Middle East, and Europe:
Agency: Department of Homeland Security;
Number of premium class tickets to 14-hour locations: 170;
Total number of tickets to 14-hour locations: 6,600;
Percentage of tickets in premium class: 3.
Agency: Department of Defense;
Number of premium class tickets to 14-hour locations: 1,810;
Total number of tickets to 14-hour locations: 54,650;
Percentage of tickets in premium class: 3.
Agency: Department of Agriculture;
Number of premium class tickets to 14-hour locations: 230;
Total number of tickets to 14-hour locations: 1,060;
Percentage of tickets in premium class: 22.
Agency: United States Agency for International Development;
Number of premium class tickets to 14-hour locations: 330;
Total number of tickets to 14-hour locations: 1,340;
Percentage of tickets in premium class: 25.
Agency: Department of Commerce;
Number of premium class tickets to 14-hour locations: 230;
Total number of tickets to 14-hour locations: 800;
Percentage of tickets in premium class: 29.
Agency: Department of the Treasury;
Number of premium class tickets to 14-hour locations: 270;
Total number of tickets to 14-hour locations: 450;
Percentage of tickets in premium class: 61.
Agency: Department of State (for foreign affairs agency travelers);
Number of premium class tickets to 14-hour locations: 8,870;
Total number of tickets to 14-hour locations: 12,270;
Percentage of tickets in premium class: 72.
Agency: Millennium Challenge Corporation;
Number of premium class tickets to 14-hour locations: 450;
Total number of tickets to 14-hour locations: 540;
Percentage of tickets in premium class: 83.
Source: GAO analysis of bank data.
Notes: The percentage of tickets to 14-hour locations in Africa, the
Middle East, and Europe is most likely understated. Due to the lack of
complete data on travel dates, we had to use a conservative methodology
that likely overestimated the population of tickets that qualified as
14-hour tickets. For example, if a flight had an origin or destination
in the United States and the 14-hour location in Africa, the Middle
East, or Europe, we considered that flight to have been a 14-hour
flight, and thus included it in the total number of 14-hour tickets.
For example, if a traveler flew from Washington, D.C., to Frankfurt;
spent a few days to perform work; then flew to Kuwait, we would have
considered the trip to be a 14-hour trip. However, in reality, the trip
from Washington, D.C., to Frankfurt was less than 14 hours, and
similarly the trip from Frankfurt to Kuwait would have been less than
14 hours, and thus each trip would not have qualified as a 14-hour
trip. By overestimating the total number of tickets for 14-hour
locations, we are underestimating the percentage of trips to these
locations that were premium class.
[End of table]
Key Transaction-Based Controls Are Ineffective:
Of the over $230 million in governmentwide premium class travel, we
estimated that 67 percent of trips were improperly authorized,
justified, or both. In all, the government likely spent at least $146
million on premium class travel that was improper.[Footnote 17] As
shown in table 2, we selected two key transaction-level controls--
proper authorization and proper justification--for statistical
sampling. Using these attribute tests, we estimated that 28 percent of
governmentwide premium class travel was not properly authorized.
Because premium class travel must first be authorized before it can be
justified, transactions that failed authorization also failed
justification. We also estimated, based on statistical sampling, that
another 38 percent (a total of 67 percent) of premium class travel was
not properly justified.
Table 2: Results of Statistical Sampling of Premium Round-trip Airline
Ticket Transactions:
Control test: Not specifically authorized by a designated official at
equal or higher rank/grade to the traveler;
Estimated percentage failure rate in key controls[A]: 28.
Control test: Not properly justified, authorized, or both;
Estimated percentage failure rate in key controls[A]: 67[B].
* Failed because premium class travel was not properly authorized;
Estimated percentage failure rate in key controls[A]: 28;
* Failed because of improper use of the 14-hour rule or other
justification; Estimated percentage failure rate in key controls[A].
38.
Source: GAO analysis of premium class transactions governmentwide and
supporting documentation.
Note: Our testing excluded all business class transactions costing less
than $750 because they were immaterial and frequently involved intra-
European flights on airlines that offered only business class
accommodation.
[A] Because we followed a probability procedure based on random
selections, our sample is only one of a large number of samples that we
might have drawn. Since each sample could have provided different
estimates, we express our confidence in the precision of our particular
sample's results as 95 percent confidence intervals (i.e., plus or
minus 10 percentage points). These are the intervals that would contain
the actual population value for 95 percent of the samples we could have
drawn. As a result, we are 95 percent confident that each of the
confidence intervals in this report will include the true values in the
study population. All percentage estimates from the sample of premium
class air travel have sampling errors of plus or minus 10 percentage
points or less. In addition to percentage estimates, we also estimate
the lower bound for the cost of unauthorized/unjustified premium class
travel. This lower bound of $146 million is based on the one-sided 95
percent confidence interval for our sample estimate of $167 million
spent on unauthorized premium class travel, unjustified premium class
travel, or both. So, based on our sample, we are 95 percent confident
that the actual amount is at least $146 million.
[B] Detail does not sum to total due to rounding.
[End of table]
As shown in table 2, 28 percent of governmentwide premium class travel
was not properly authorized. Authorization failures fell into the
following categories:
* Blanket travel authorizations. According to the FTR, premium class
travel has to be specifically authorized. Consequently, blanket premium
class authorization did not pass the specific authorization test.
* Subordinate authorizations. The FTR does not forbid subordinates from
approving their superior's premium class travel. However, applying the
criteria set forth in our internal control standards[Footnote 18] and
sensitive payments guidelines,[Footnote 19] premium class transactions
that were approved by subordinates reduced scrutiny of premium class
travel and amounted to self-approval, and thus would fail the control
test.
* No travel authorization. In a number of instances, agencies were not
able to provide a travel authorization corresponding to a trip in our
sample.
Table 2 also shows that an estimated 67 percent of transactions failed
the justification test. As the FTR requires specific authorization for
all premium class travel, the 28 percent of transactions that failed
the authorization test automatically failed the justification test.
Thirty-six additional transactions (38 percent) failed justification,
mostly due to improper use of the 14 hour-rule. The failures are as
follows:
* In four instances, travelers used the 14-hour rule to justify premium
class travel, even though supporting documentation showed that flight
time was less than 14 hours.[Footnote 20]
* In 29 instances, the traveler had a rest stop en route or rest period
upon arrival at the destination city, upon returning home, or both.
Travelers with rest stops en route or at destination are not qualified
for premium class travel.[Footnote 21] Despite our request, agencies
did not provide supporting documentation in these instances to indicate
that the travelers reported to work and thus met the 14-hour criterion.
* In three instances, the premium class flights failed justification
because the agency did not provide us with supporting documentation
required by the agency's own premium class policy as justification for
premium class travel.
Executive Premium Class Use:
Our Sensitive Payments Guide[Footnote 22] states that senior government
executives are subject to intense scrutiny in the event of "any
impropriety or conflict of interest, real or perceived, regardless of
how much money, if any, is involved." According to the guide, travel by
high-ranking officials, for example members of the Senior Executive
Service (SES), generals, admirals, and political appointees, is a
sensitive payment area because it poses a high level of risk of
impropriety. However, our sample indicated that high-ranking officials,
including SES (career senior executives) and presidential appointees,
were using premium class travel at a higher rate than other federal
employees. These high-ranking officials made up about one-half of 1
percent of the federal workforce yet accounted for 15 percent of
premium class travel in our sample population.[Footnote 23]
As stated previously, we consider premium class authorizations that
were signed by subordinates to be tantamount to self-authorization.
This is particularly true when travel by government executives is
authorized by subordinates. Nevertheless, we found that some premium
class flights taken by executives we looked at were approved by
subordinates of the travelers. For example, a presidential appointee at
the Department of the Treasury (Treasury) took 12 trips during the
audit period that were authorized by a subordinate.
Our data mining also found instances in which senior executives used
mission critical as justification for trips that did not qualify for
premium class under the 14-hour rule. Frequently, those trips were
authorized by subordinates, and the frequency of abusive travel by
executives indicates that in these cases premium class was used as a
perquisite for certain senior executives. For example, a senior
executive at USDA took 25 premium class trips totaling $163,000 from
July 1, 2005, through September 30, 2006. Fifteen of the 25 trips,
taken to destinations in Asia and Africa, were justified using the 14-
hour rule. The remaining 10 trips to Western Europe were justified
using mission critical as the criterion. All of this executive's
premium class authorizations were not properly authorized because they
were signed by a subordinate.
Ineffective Oversight and Internal Control Weaknesses Contributed to
Improper and Abusive Premium Class Travel:
A weak control environment further exacerbated breakdowns in specific
controls that led to at least $146 million in estimated improper
premium class travel. Many agencies did not capture data related to
business class travel, and therefore did not know the extent of premium
class travel. Further, premium class policies and procedures existed
that allowed potential abuse of premium class travel. We also found
that several government entities, such as USPS, the Federal Deposit
Insurance Corporation (FDIC), and FRB, which have their own pay
structures and are exempt from the FTR, issued premium class travel
guidance that was less restrictive. Consequently, while premium class
travel at these agencies was properly authorized and justified
according to the agencies' own policies, many of the trips were taken
at increased costs to the taxpayers.
Lack of Monitoring and Oversight Exists over Premium Class Travel Use:
The FTR[Footnote 24] requires all executive branch agencies to provide
GSA annual reports listing all instances in which the organizations
approved the use of first class transportation accommodations, which
GSA then forwards to OMB. However, agencies are not required to report
on the use of premium class other than first class, despite the fact
that business class travel accounted for nearly 96 percent of premium
class travel governmentwide during the 12-month period under audit. We
also found that OMB, GSA, and many agencies did not collect data on,
and therefore were not aware of, the extent governmentwide use of
premium class travel prior to our audit.
We found that business class travel is not tracked at the agency level
even though it accounts for almost all premium class travel. Officials
at several agencies we interviewed generally informed us that they did
not track, and thus were not aware of, the extent of their business
class travel. Agency officials also cited the lack of a business class
reporting requirement as one of the reasons why they did not track
business class travel. For example, officials at USDA and Treasury were
not aware of the extent of business class travel at their respective
agencies. Without knowing how much they spent on premium class travel,
agencies cannot effectively manage their travel budgets so that they
can prudently safeguard taxpayers' dollars.
We also found that neither OMB nor GSA obtained the data needed to
track premium class travel other than first class governmentwide. As a
result, the government did not have adequate data with which to
identify the extent of any abusive travel in the federal government.
Further, without all premium class data, OMB and GSA did not have the
means to determine whether agencies are adhering to OMB's requirements
that the taxpayers pay no more than necessary to transport government
officials. As a result of similar GAO findings,[Footnote 25] in early
2006 State responded to GAO's recommendations by issuing a directive
requiring officials at the department to track business class
travel.[Footnote 26]
GSA officials informed us that they did not know of any legislative
impediment to requiring reporting on business class travel, though they
expect that the amount of data would be much more extensive than for
first class. GSA officials pointed to a decline in the use of first
class travel since OMB started requiring reporting for this class of
travel. They told us that the scrutiny associated with reporting
requirements may have caused some agencies to restrict first class
travel.
Weak Control Environment Exists with Respect to Premium Class Policies
and Procedures:
We found that no single agency, neither GSA nor OMB, has the central
responsibility for oversight of premium class policies across federal
agencies. Neither GSA nor OMB currently reviews agency policies
regarding premium class travel. GSA officials informed us that agencies
are expected to manage premium class travel and that they should be
provided flexibility to do so. GSA officials saw their role as
advisory, that is, they would generally advise when asked as to whether
a particular agency was required to follow the FTR, or whether premium
class travel could be authorized in specific situations. Officials at
GSA informed us that they did not make determinations as to whether an
agency implementing guidance adhered to the spirit of the FTR.
Similarly, OMB does not oversee agencies' implementing guidance on
premium class travel.
Without central oversight, it is therefore not surprising that we found
different interpretation and implementation of premium class policies
governmentwide. Some agencies, such as DOD, have made policy changes
designed to limit the use of premium class travel consistent with the
spirit of the FTR. Other agencies, however, have implemented the travel
regulations in ways that allow more frequent use of premium class
travel. For example, FAS's and Treasury's policies allowed employees to
use "mission critical" or "exceptional circumstances" as criteria for
premium class travel less than 14 hours. In December 2005, in one
instance, a FAS executive traveled from Washington, D.C., to Hong Kong
and back in business class, a ticket that cost the government over
$6,900. However, 11 other FAS employees traveled in coach class at a
cost of less than $1,400 per ticket, despite the flight lasting over 14
hours. Data mining we performed at these agencies found that the
mission critical criterion is typically used by senior executives to
justify less than 10-hour trips to Western Europe. Allowing senior
officials to define their travel as mission critical can have a
substantial effect on overall travel costs. A department travel policy
allowing officials to justify their travel as mission critical
contributed to FAS spending nearly $2 million (about 30 percent) of its
total air dollars on premium class tickets, with a large proportion
going to fund executive premium class travel. We also found that while
the FTR requires physician's certification for premium class travel
based on disability, it did not require annual recertification.
Consequently, we found an instance where the doctor's note for a non-
life-changing illness was dated 3 years prior to the authorization for
premium class travel.
The variance in implementing guidance we observed was an important
factor in explaining the variances in the use of premium class
governmentwide, as shown in table 1. Specifically, we found that
premium class travel was taken less frequently at agencies where
existing policies and procedures emphasized the importance of
minimizing excess travel costs. For example, DOD's travel policy states
that premium class flights over 14 hours would be approved only if the
travel is so urgent that it can not be postponed or if alternatives did
not exist. In contrast, MCC officials informed us that its procedures
permitted automatically providing travelers with premium class for
trips over 14 hours, without necessarily requiring specific
authorization. A comparison between these two agencies' use of premium
class travel to the same locations found that MCC travelers flew to
these locations in premium class 83 percent of the time, compared to
DOD's use of premium class travel to the same locations only 3 percent
of the time.
Agencies Exempt from the FTR Incurred Costly Premium Class Travel:
Our audit of premium class travel by selected agencies that are exempt
from the FTR found premium class policies that allowed more permissive
use of premium class travel, resulting in higher travel costs to the
government. For example, we found that some of these agencies' policies
allowed business or first class travel for flights less than 14 hours,
and other agencies' policies allowed premium class travel based on an
individual's position in the organization. For example:
* At USPS, members of the Board of Governors are allowed to travel
first class whenever they fly. For example, a member of the Board of
Governors flew first class from Baltimore to San Francisco and back at
a cost of $1,900 when a coach class ticket would have cost $500. USPS
also allows all other officers to travel in business class overseas,
regardless of the length of the flight.
* At FRB, all members of the board are allowed to travel business class
for all international flights and all domestic flights exceeding 5
hours. In addition, there are limited instances in which FRB permits
the use of first class. For example, a member of the Board of Governors
of the Federal Reserve System and another FRB employee flew first class
from Washington, D.C., to London and back at a cost of $25,000.
Comparable business class tickets would have cost $12,000 and coach
class tickets would have cost $1,500.
* At FDIC, employees are allowed to travel premium class for
international flights over 6 hours. For example a deputy director of
FDIC flew business class from Washington, D.C., to London and back at a
cost of $7,200 while a coach class ticket would have cost $800.
Case Studies of Improper and Abusive Premium Class Travel Highlight
Extent and Nature of Control Breakdowns:
To illustrate the effects of control breakdowns, we also data mined
premium class travel data provided by the banks. Based on these
techniques, and our statistical sampling, we found numerous examples of
premium class travel without authorization or adequate justification.
Further, we used data mining to identify the most frequent users of
premium class travel. Our analysis of these cases showed that almost
all were senior-level employees whose travel, even when properly
authorized, generally was not adequately justified. We also identified
cases where groups of individuals traveled in premium class together to
a single location. However, in the instances we examined, we found no
justification showing that all members of the group needed to travel in
premium class. Given the high cost of premium class tickets,
unnecessary premium class group trips can be very costly to the
government.
Examples of Improper and Abusive Use of Premium Class Travel:
Table 3 contains specific examples of abusive travel from both our
statistical sample and data mining, all of which were unauthorized,
unjustified, or both. These cases illustrate the improper and abusive
use of premium class travel. Following the table is more detailed
information on some of these cases.
Table 3: Examples of Improper and Abusive Premium Class Travel:
Traveler: 1;
Agency: State; Grade/rank/title[A]: Special agent;
Itinerary: Washington, D.C., to Sydney and back;
Cost of ticket: $12,200;
Estimated cost of coach ticket[B]: $2,200;
Reason for exception:
* Travel order did not provide specific authorization for business
class travel;
* Transaction failed authorization and justification.[C].
Traveler: 2;
Agency: USDA;
Grade/rank/title[A]: Presidential appointee;
Itinerary: Washington, D.C., to Geneva and back;
Cost of ticket: 7,500;
Estimated cost of coach ticket[B]: 1,000;
Reason for exception:
* Premium class travel authorization was signed by a subordinate;
* Travel was to Geneva, a flight lasting 10 hours;
* Flight was justified using the "exceptional circumstance" criterion;
* Agency policy specifically prohibits the use of this criterion to
justify flights to Western Europe;
* Transaction failed authorization and justification.
Traveler: 3;
Agency: USDA;
Grade/rank/title[A]: SES;
Itinerary: Washington, D.C., to Zurich and back;
Cost of ticket: 7,500;
Estimated cost of coach ticket[B]: 900;
Reason for exception:
* Premium class travel authorization was signed by a subordinate;
* Flight was justified using the "exceptional circumstance" criterion;
* Agency policy specifically prohibits the use of this criterion to
justify flights to Western Europe;
* Traveler flew to London in business class and had a one-night
stopover in London before returning home;
* Transaction failed authorization and justification.
Traveler: 4;
Agency: State;
Grade/rank/title[A]: GS-14;
Itinerary: Washington D.C., to Tel Aviv and back;
Cost of ticket: 6,300;
Estimated cost of coach ticket[B]: 1,500;
Reason for exception:
* Most direct route for this flight, as required by agency regulations,
is less than 14 hours;
* Flight, including a lengthy layover, was justified using the 14-hour
criterion;
* Transaction passed authorization but failed justification.
Traveler: 5; Agency:
Transportation[D];
Grade/rank/title[A]: Presidential appointee;
Itinerary: Washington, D.C., to Seoul and back;
Cost of ticket: 6,200;
Estimated cost of coach ticket[B]: 1,300;
Reason for exception:
* Blanket travel order authorizing premium class was used;
* Transaction failed authorization and justification.
Traveler: 6;
Agency: MCC;
Grade/rank/title[A]: Assistant general counsel;
Itinerary: Washington, D.C., to Tbilisi and back;
Cost of ticket: 7,000;
Estimated cost of coach ticket[B]: 1,200;
Reason for exception:
* No specific authorization exists for premium class travel;
* Transaction failed authorization and justification.
Traveler: 7;
Agency: Education[E];
Grade/rank/title[A]: GS-13;
Itinerary: Washington, D.C., to Athens and back;
Cost of ticket: 5,400;
Estimated cost of coach ticket[B]: 1,500;
Reason for exception:
* Business class travel authorized based on flight exceeding 14 hours;
* Portions of the flight were in first class and unauthorized;
* Using most direct route, trip would have lasted 12 hours;
* Transaction failed authorization and justification.
Traveler: 8;
Agency: DOD;
Grade/rank/title[A]: E-6;
Itinerary: Cairo to Washington, D.C.;
Cost of ticket: 5,400;
Estimated cost of coach ticket[B]: 800;
Reason for exception:
* Travel was in first class, which was not specifically authorized on
the travel order;
* DOD claimed that the first class price was the same as coach.
However, our work showed that the government rate from Cairo to
Washington, D.C., is less than one-sixth the cost of the first class
ticket purchased;
* Transaction failed authorization and justification.
Traveler: 9;
Agency: State;
Grade/rank/title[A]: FO-02;
Itinerary: Washington, D.C., to Tel Aviv;
Cost of ticket: 3,200;
Estimated cost of coach ticket[B]: 700;
Reason for exception:
* Premium class travel authorized because trip exceeded 14 hours;
* Travel took place as part of a permanent change of station move,
where the traveler did not have to report immediately to work;
* Transaction passed authorization but failed justification.
Traveler: 10;
Agency: DOD;
Grade/rank/title[A]: GS-13;
Itinerary: El Paso, Texas, to Washington, D.C., and back;
Cost of ticket: 2,200;
Estimated cost of coach ticket[B]: 800;
Reason for exception:
* Business class travel authorized because of traveler's medical
condition;
* Medical condition was documented by a doctor's note over 3 years old;
* Transaction passed authorization but failed justification.
Source: GAO analysis of premium class travel transactions and
supporting documentation.
Note: Amounts rounded to the nearest hundreds.
[A] Rank/grade/title includes rank/grade information from the General
Schedule, State, and DOD.
[B] Source of estimated coach fares is GSA city pair or expedia.com.
Fares do not include applicable taxes and airport fees.
[C] Subsequent to the date of this transaction, State changed its
policy to forbid the use of blanket travel authorizations for premium
class travel. This policy was designed to prevent transactions like the
one in this case study.
[D] Department of Transportation.
[E] Department of Education.
[End of table]
* Traveler #1 is a special agent with State who flew premium class from
Washington, D.C., to Sydney, Australia, and back at a cost of more than
$12,000, more than five times as much as a comparable coach class
ticket of $2,200. The authorization provided as part of the travel
order applied to a different trip. Despite repeated requests, State did
not provide us with the proper support for the premium class travel.
Consequently, the trip failed both authorization and justification.
* Traveler #3 is a member of the SES at USDA's FAS, who flew business
class from Washington, D.C., to Zurich and back. The total cost of the
business class ticket was $7,500, compared to $900 in coach. The travel
orders authorizing premium class travel were signed by the traveler's
subordinate and thus failed the authorization criteria. Further,
despite the flight taking less than 14 hours, including a layover, the
traveler used the exceptional circumstances criteria, permitted under
FAS policy to enable "a senior policy/program official to more
effectively carry out the agency mission involving critical trade
negotiations, market development, and sales efforts, or sensitive
meetings," to justify the premium class travel. However, FAS policy
specifically prohibits the use of business class for travel to
destinations in Western Europe. In addition, on the return trip, the
traveler took a one-night stopover in London on a Saturday after flying
in premium class and then proceeded to Washington the next day.
Frequent Travelers:
Our data mining of premium class travel from July 1, 2005, through
September 30, 2006, found additional examples of abusive premium class
travel taken by frequent premium class travelers, often executives. As
mentioned previously, some trips taken by executives were approved by
their subordinates and were therefore improperly authorized. In
addition, trips taken by frequent travelers that were unauthorized and
unjustified cost the government up to $100,000 or more per traveler
during the 15-month period we audited. More detailed information about
some of the cases follows table 4.
Table 4: Examples of Abusive Activity by Frequent Premium Class
Travelers:
Case study: 1;
Agency: USDA;
Rank/grade: SES;
Number of tickets: 25;
Total cost of tickets: $163,000;
Details:
* All premium class travel was authorized by a subordinate of the
traveler;
* In 10 of the 25 trips, traveler used "exceptional circumstances"
criterion to justify traveling premium class to locations in Western
Europe where flight time is less than 14 hours. However, agency policy
specifically forbids business class flights to Western Europe;
* The traveler's Western Europe trips cost more than $62,000 in premium
class compared to less than $9,000 in coach class;
* On the remaining trips lasting over 14 hours, traveler did not
provide documentation justifying the use of the exceptional
circumstances criterion, as required by agency policy, or that work was
conducted upon arrival, as required by the FTR.
Case study: 2;
Agency: Treasury;
Rank/grade: Presidential appointee;
Number of tickets: 21;
Total cost of tickets: 129,000;
Details:
* Traveler claimed that trips lasting less than 10 hours were mission
critical;
* Traveler's subordinate authorized 12 of the 21 trips. Another 7 trips
were not specifically authorized;
* Nineteen trips failed authorization and consequently justification.
Case study: 3;
Agency: DOD;
Rank/grade: Presidential appointee;
Number of tickets: 15;
Total cost of tickets: 105,000;
Details:
* Premium class generally justified through a medical condition;
* The only evidence of the medical condition is a note signed by a peer
of the traveler, not a physician;
* DOD's policy states that premium class travel can only be authorized
for medical reasons if a competent authority certifies that a medical
need exists and premium class is necessary.
Case study: 4;
Agency: African Development Foundation;
Rank/grade: SES;
Number of tickets: 10;
Total cost of tickets: 56,000;
Details:
* Tickets accounted for seven trips, some of which were authorized for
premium class travel, while others were not;
* Of the three properly authorized trips, two were justified with
"special need." However, the foundation was not able to provide
documentation of what constituted the traveler's special need.
Case study: 5;
Agency: Education;
Rank/grade: GS-15;
Number of tickets: 9;
Total cost of tickets: 42,000;
Details:
* The traveler took several premium class trips that were authorized
after the travel had already occurred;
* One trip was justified using the 14-hour criterion; however, the trip
was under 14 hours;
* Other premium class trips were taken without specific authorization.
Source: GAO analysis of premium class travel transactions and
supporting documentation.
[End of table]
* Traveler #2 was a presidential appointee from Treasury who bought 21
tickets in premium class at a total cost to the government of $129,000.
Seven premium class tickets were not specifically authorized, and 12
were authorized by a GS-12 subordinate and were therefore improper.
Further, the traveler took three trips in first class despite being
specifically authorized for business class travel. Treasury's
implementing guidance provides for premium class travel on trips that
are mission critical. We found that on trips of less than 10 hours, the
traveler claimed to be preparing briefing materials or reviewing
materials en route that justified the use of the mission-critical
criteria.
* Traveler #3 bought 15 premium class tickets costing the government
over $100,000 from July 1, 2005, through September 30, 2006. According
to the travel orders for these trips, the official had a medical
condition that justified the majority of the trips. However, the only
documentation of the traveler's medical condition was a note signed by
a peer of the traveler at DOD. According to DOD regulations, flying
premium class based on a medical condition requires a physician's
certification. However, DOD could not produce a physician's statement
documenting the traveler's need to fly premium class.
Abusive Premium Class Travel by Groups:
We also found that some agencies' policies and procedures allowed
abusive travel by groups of employees--sometimes as many as 20
employees or more. In particular, we found several instances where
groups of employees traveled to overseas destinations to attend
meetings, conferences, or trade negotiations. In one instance, a group
trip in premium class resulted in about $200,000 in increased costs to
the American taxpayers.
We also found instances where State and Department of Justice (Justice)
authorized employees and their families to travel premium class in
permanent change of station (PCS) moves. As reported
previously,[Footnote 27] while State believed such practice to be
necessary because it improves employee morale, we question the need to
provide premium class travel for PCS. In particular, we note that
although federal and State regulations allow premium class travel if
the flight is over 14 hours without a rest stop, DOD had issued
regulations prohibiting premium class travel for PCS, unless for
physical handicap or medical reasons. Specifically, DOD had determined
that premium class travel is permitted only for flights over 14 hours
if and only if the Temporary Duty Travel (TDY) purpose/mission is so
unexpected and urgent it cannot be delayed or postponed, and a rest
period cannot be scheduled en route or at the TDY site before starting
work. This decision is consistent with the prudent traveler's principle
and with DOD's new guidelines on the 14-hour rule, issued in early
2006. Table 5 contains specific examples of premium travel by group
travelers. More detailed information about some of the cases follows
the table.
Table 5: Examples of Abusive Activity by Group Travelers:
Case study: 1;
Agency: State;
Number of people: 32;
Total cost of tickets: $293,000;
Comparable coach class pricing: $124,000;
Details:
* From January 2006 through June 2006, 32 agents traveled from
Washington, D.C., to Liberia in premium class for the purpose of
providing security protection for a foreign head of state;
* Five travelers had no authorization for premium class use;
* Three trips had duplicate tickets without evidence of a refund;
* Seventeen travelers arrived home on Saturday after traveling in
premium class without evidence of reporting for duty before a rest
period.
Case study: 2;
Agency: United States Trade Representative;
Number of people: 21;
Total cost of tickets: 99,000;
Comparable coach class pricing: 31,000;
Details:
* A group of 21 employees of the United States Trade Representative
traveled premium class in December 2005 to Hong Kong for an
international trade meeting;
* None of the transactions were authorized for use of premium class
travel and were therefore not justified.
Case study: 3;
Agency: USDA;
Number of people: 8;
Total cost of tickets: 50,000;
Comparable coach class pricing: 8,000;
Details:
* A group of eight USDA employees traveled from Washington, D.C.,
Baltimore, or Atlanta to Geneva to attend a ministerial conference. The
longest flight lasted less than 11 hours;
* All traveled using FAS's budget;
* FAS policy prohibits the use of business class travel on Western
European flights.
Case study: 4;
Agency: State;
Number of people: 8;
Total cost of tickets: 46,000;
Comparable coach class pricing: 12,000;
Details:
* A family of eight was authorized to travel premium class from
Washington, D.C., to Eastern Europe as part of a PCS move;
* Federal and State travel regulations allow premium class travel if
the flight is over 14 hours without a rest stop. However, PCS moves
typically involve a rest stop en route or a rest stop at destination,
and thus should not necessitate premium class travel;
* Prior to 2002, State policy prohibited the use of premium class
accommodations for PCS travel even when the duration of the travel
exceeded 14 hours. However, in 2002, State eliminated that prohibition.
Case study: 5;
Agency: Justice;
Number of people: 9;
Total cost of tickets: 35,000;
Comparable coach class pricing: 4,000;
Details:
* Nine Justice travelers flew under 14 hours one-way from cities in the
United States to Frankfurt or back in premium class;
* Flights were justified as being over 14 hours based on the travelers'
transferring to military aircraft in Frankfurt and continuing travel;
* Justice provided no documentation for military air travel taken by
any travelers;
* Two flights were not authorized for premium class.
Case study: 6;
Agency: Justice;
Number of people: 5;
Total cost of tickets: 22,000;
Comparable coach class pricing: 6,000;
Details:
* A family of five was authorized to travel from St. Louis to Sydney as
part of a PCS move;
* All members of the family traveled premium class;
* PCS moves typically involve a rest stop en route or a rest stop at
destination, and thus should not necessitate premium class travel.
Source: GAO analysis of premium class travel transactions and
supporting documentation.
[End of table]
* Case study 1 relates to a group of 32 agents who took 40 premium
class trips from Washington, D.C., to Liberia to provide security
protection to a foreign head of state from January 1, 2006, through
June 15, 2006. We found five trips that had no authorization for the
travelers to fly in premium class, and three trips that had duplicate
tickets covering at least part of the traveler's itinerary. In
addition, we found that 17 travelers arrived back in the United States
on Saturday afternoon after flying in business class. There was no
evidence any of the travelers went to work before taking a weekend rest
period.
* Case study 2 involves a group of 21 travelers from the United States
Trade Representative Office within the Executive Office of the
President. The travelers each flew from Washington, D.C., to Hong Kong
in December 2005 in business class to attend a World Trade Organization
meeting at a total cost to the government of nearly $100,000. The
travelers ranged in grade from GS-9 to SES. None of the travelers were
authorized to fly premium class, and therefore the use of premium class
was improper. According to GSA's city pair contract for this itinerary,
the tickets would have cost about $31,000 in coach class.
As shown in table 5, the differences between premium and coach class
travel are made even more striking the larger the size of the group
that is approved to travel premium class. The high cost of premium
class travel by groups necessitates close scrutiny of whether it is
absolutely necessary for the whole group to travel in premium class.
Even a mix of premium class and coach class accommodations would
represent significant savings to the government as opposed to everyone
traveling premium class. As such, we are referring all cases of
improper and abusive travel we identified to the respective agency
management and inspector general's office for possible administrative
actions to be taken against employees who abuse premium class travel
use and repayment of the difference between premium class and coach
class travel.
Conclusions:
With the serious fiscal challenges facing the federal government,
agencies must maximize their ability to manage and safeguard valuable
taxpayers' dollars. Recognizing the high cost of premium class travel,
GSA and federal agencies have issued a series of policies providing
that such travel should be taken as a last resort. However, our audit
shows that some federal agencies and other federally related entities
did not adhere to this policy. In fact, some entities appeared to
provide premium class as a perquisite to senior-level executives.
Individuals that abusively use premium class travel at taxpayers'
expense should be held accountable for the taxpayer dollars they waste.
We are encouraged that DOD has taken steps to significantly curtail
unnecessary use of premium class travel, potentially saving millions of
dollars. Going forward, it will be important for other agencies to
follow DOD's lead and take steps to restrict the use of premium class
travel to only truly exceptional circumstances.
Recommendations for Executive Action:
We are making the following eight recommendations to improve internal
control over the authorization and justification of premium class
travel and to strengthen monitoring and oversight of premium class
travel as part of an overall effort to reduce improper and abusive
premium class travel and related government travel costs. We will also
issue separate letters to USDA, MCC, Treasury, and FRB on actions
needed to address specific control weaknesses we identified through our
audit.
We recommend that the Director of OMB:
* Instruct agencies that premium class travel requests for their senior-
level executives must be approved by someone at least at the same level
as the traveler or an office designated to approve premium class travel
for all senior-level executives.
* Establish policies and procedures to initially require all federal
agencies to collect data on the use of all premium class travel,
including business class, and submit the information to GSA annually
until a risk-based framework is developed.
* Using the premium class data collected by GSA, consider developing a
risk-based framework containing requirements as to:
* Reporting business class travel to GSA. For example, OMB might want
to consider only requiring entities to report business class travel
when business class travel exceeds a percentage of total travel.
* Performing audits of premium class travel programs, including a
review of executive travel.
We recommend that the Administrator of GSA take actions necessary to
help agencies comply with the FTR governing the use and reporting of
premium class travel, including the following:
* Require that agencies develop and issue internal guidance that
explains when mission criteria and the intent of that mission call for
premium class accommodations.
* Require agencies to define what constitutes a rest period upon
arrival.
* Require that the physician's certification related to medical
requirements for premium class travel be updated annually unless the
physical impairment is a lifelong impairment.
* Establish an office for travel management within GSA to review agency
policies and procedures, identify areas where agency policies and
procedures do not adhere to federal regulations, and issue
recommendations to agencies to bring their policies and procedures into
compliance.
* Based on the premium class data collected from agencies, determine if
the government should:
* clarify guidance concerning authorizing premium class travel only
when less costly means of transportation are not practical and:
* limit the use of premium class travel for PCS moves to those
necessary as a result of physical handicap, medical reasons, or
security reasons, or if the trip is taken at no additional cost to the
government.
Agency Comments and Our Evaluation:
In written comments on a draft of this report, OMB concurred with our
recommendations and stated that it is important to educate and remind
federal travelers of the policies and regulations that govern federal
travel to ensure that the most economic means of travel are used when
conducting the government's business. OMB stated that it is working
with GSA to require that premium class travel for senior-level
executives be approved by someone at the same level as the traveler, or
by an office specifically authorized to approve premium class travel.
OMB further stated that GSA is preparing agency guidance for collecting
and reporting premium class travel, and that OMB will begin working
with GSA and agencies to develop a risk-based reporting and review
framework consistent with Appendix A to OMB Circular A-123.
In written comments on a draft of this report, GSA concurred with many
of our findings and recommendations and said that it will use a number
of the report's findings to improve the FTR to ensure enhanced
accountability and control of the use of premium class travel
accommodations by federal employees. GSA said that these improvements
will include requiring agencies to designate premium class approving
officials, requiring agencies to develop internal definitions of
mission critical and rest periods, and requiring physician's notes to
be updated unless the physical impairment is a lifelong impairment. GSA
will also be collecting business class travel data from agencies
starting in fiscal year 2008.
GSA did suggest that one of our recommendations could be addressed in a
different way than contemplated in the draft report. GSA pointed out
that it does not have clear statutory authority to establish central
oversight offices for travel management. To address the intent of the
recommendation, GSA informed us that with OMB support, it created the
Center for Policy Evaluation and Compliance. GSA stated that the Center
for Policy Evaluation and Compliance will seek to identify areas within
agencies' policies and procedures that are not consistent with
governmentwide standards. The center will be responsible for suggesting
improvements to agencies. We have modified the language of this
recommendation to adhere to GSA's current statutory authority and keep
the intent of our original recommendation, which is that GSA takes a
proactive role in reviewing agency policies and procedures for possible
discrepancies with the FTR.
GSA's and OMB's comments are reprinted in appendixes III and IV.
As agreed with your offices, unless you announce the contents of this
report earlier, we will not distribute it until 30 days from its date.
At that time, we will send copies of this report to the Director of OMB
and the Administrator of GSA. We will make copies available to others
upon request. In addition, this report will be available at no charge
on GAO's Web site at [hyperlink, http://http://www.gao.gov].
If you or your staff have any questions concerning this report, please
contact me at (202) 512-6722 or kutzg@gao.gov. Contact points for our
Offices of Congressional Relations and Public Affairs may be found on
the last page of this report. GAO staff who made major contributions to
this report are listed in appendix V.
Signed by:
Gregory D. Kutz:
Managing Director:
Forensic Audits and Special Investigations:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
To assess controls over the authorization and issuance of
governmentwide premium class travel, we used premium class travel
transactions charged to the federal government's centrally billed and
individually billed accounts during the 12-month period ending June 30,
2006.
Magnitude of Premium Class Travel and the Extent Such Travel Was
Improper:
To assess the magnitude of use of premium class travel, we obtained
from Bank of America, Citibank, JP Morgan Chase, and U.S. Bank
government travel charge card databases that contained travel
transactions charged to the federal government for the 12 months ending
June 30, 2006. The databases contained airline transactions and
nonairline transactions charged to both the centrally and individually
billed travel card accounts. We queried the databases to identify
transactions specifically related to travel. The databases also
contained transaction-specific information, including the passenger
name, the ticket price, and the fare and service codes used to price
the tickets purchased. We identified the fare basis codes that
corresponded to the issuance of first, business, and coach class
travel. Using these codes, we selected all airline transactions that
contained at least one leg in which the federal government paid for
premium class travel accommodations. We excluded from our audit premium
class travel accommodations obtained as a result of upgrades, as these
tickets did not result in costs to the federal government.
As you requested, our audit covered premium class usage at executive
federal agencies and federally related entities. The population under
audit consists of transactions by travelers approved to use the
government travel card, except for employees and individuals whose
travel was approved by legislative or judicial entities and entities
covered by treaty with the U.S. government. Agencies included in the
audit include executive agencies as described in the Federal Travel
Regulations (FTR), including Chief Financial Officers Act agencies,
other major executive agencies, independent federally related
establishments, and wholly owned government corporations. As further
detailed below, we performed statistical sampling on these entities to
assess their internal controls and adherence to the FTR. However, to
determine whether incidences of costly premium class travel occurred at
other federally related entities, we expanded our data mining to
premium class transactions of mixed corporations, such as the Federal
Deposit Insurance Corporation, and other establishments specifically
exempt from the FTR, such as the United States Postal Service.
We tested a statistical sample of premium class transactions to assess
whether premium class travel was properly authorized and properly
justified, and to project the results of these tests to the population
of governmentwide premium class travel. The population from which we
selected our transactions for testing was the set of debit transactions
for both first and business class travel that were charged during the
12 months ending June 30, 2006. Because our objective was to test
controls over travel card expenses, we excluded transactions where half
or more of the ticket had been refunded. While these trips may not have
been properly authorized or justified, the amounts credited back to the
government may have been for the premium class portion of the ticket.
We also excluded refunded ticket transactions and miscellaneous debits
(such as fees) that would not have been for ticket purchases from the
population of transactions we reviewed.
We further limited the business class transactions to those costing
$750 or more because many intra-European flight business class tickets
cost less than $750 and are for flights for which there is only a
single premium class cabin. By eliminating from our sample business
class transactions less than $750, we avoided the possibility of
selecting a large number of transactions in which the difference in
cost was not significant enough to raise concerns about the
effectiveness of the internal controls. While we excluded business
class transactions costing less than $750, we (1) did not exclude all
intra-European single cabin flights and (2) potentially excluded
unauthorized business class flights costing less than $750. Limitations
of the database, specifically a lack of visibility between single-and
multicabin aircraft, prevented a more precise methodology of excluding
lower-cost business class tickets. For security reasons, we did not
include in our projection or data mining selections premium class
transactions related to agency-identified sensitive assignments and
secretive details.
To test the implementation of key control activities over the issuance
of premium class travel transactions, we selected a random probability
sample from the subset of centrally billed and individually billed
account transactions containing at least one premium class segment and
for which the business class ticket cost at least $750. We initially
selected 192 premium class travel transactions. Seventy-nine
transactions were excluded because they were out of the scope of the
sample.[Footnote 28] The final sample size of reviewed, in-scope
transactions was 96, totaling about $391,000. We overselected initially
because of the difficulty of perfectly extracting transactions from all
government corporations and establishments that should be excluded from
the sample population. For each sample transaction, we requested that
the entities provide the travel authorization, travel voucher, travel
itinerary, and other related supporting documentations demonstrating
justification for premium travel arrangements. We also requested
information on the rank or grade of the traveler. Based on the
information provided, we assessed whether premium class travel was
properly authorized and whether the premium class travel was justified
in accordance with the FTR or other applicable travel regulations. If,
after repeated requests, the entities did not provide us with the
supporting documentation, we concluded that the premium class travel
was improper. The results of the samples of these control attributes
can be projected to the population of transactions governmentwide, not
to any particular individual executive agency, federal corporation, or
independent federally related entity.
Based on the sampled transactions, we also estimated the percentage of
premium class travel taken by federal executives, that is, presidential
appointees or members of the Senior Executive Service. With this
statistically valid probability sample, each transaction in the
population had a probability of being included, and that probability
could be computed for any transaction. Each sample element was
subsequently weighted in the analysis to account statistically for all
the transactions in the population, including those that were not
selected. Because we followed a probability procedure based on random
selections, our sample is only one of a large number of samples that we
might have drawn. Since each sample could have provided different
estimates, we express our confidence in the precision of our particular
sample's results as 95 percent confidence intervals (i.e., plus or
minus 10 percentage points). These are the intervals that would contain
the actual population value for 95 percent of the samples we could have
drawn. As a result, we are 95 percent confident that each of the
confidence intervals in this report will include the true values in the
study population. All percentage estimates from the sample of premium
class air travel have sampling errors of plus or minus 10 percentage
points or less. In addition to percentage estimates, we also estimate
the lower bound for the cost of unauthorized/unjustified premium class
travel. This lower bound of $146 million is based on the one-sided 95
percent confidence interval for our sample estimate of $167 million
spent on unauthorized premium class travel, unjustified premium class
travel, or both. So, based on our sample, we are 95 percent confident
that the actual amount is at least $146 million.
Underlying Causes of Improper and Abusive Premium Class Usage:
We performed a limited assessment of the control environment over
premium class travel by obtaining an understanding of the premium class
travel authorization and ticketing process at selected agencies. We
interviewed officials from the General Services Administration (GSA),
Department of Defense (DOD), Department of State (State), Department of
Agriculture, and Millennium Challenge Corporation. We also reviewed
applicable policies and procedures and program guidance that they
provided. We used as our primary criteria applicable laws and
regulations that address governmentwide premium class travel, including
the Office of Management and Budget's (OMB) mandated controls as
implemented by GSA's FTR; DOD's Joint Federal Travel Regulations and
Joint Travel Regulations for uniformed members and civilian personnel,
respectively; as well as State's Foreign Affairs Manual and Foreign
Affairs Handbook, which govern travel of U.S. members of the Foreign
Service. We also used as criteria our Standards for Internal Control in
the Federal Government and our Guide to Evaluating and Testing Controls
over Sensitive Payments. Finally, we conducted "walk-throughs" of the
travel process at selected agencies and federally related entities. We
also interviewed GSA and OMB officials on their oversight of premium
class travel.
To determine the frequency with which agencies used premium class
travel for flights exceeding 14 hours, we identified airport codes in
Africa, the Middle East, and far eastern Europe that would necessitate
flights of 14 hours or more if traveling from the United
States.[Footnote 29] We analyzed the banks' databases to extract
flights involving locations in the United States with the selected
airports. We then compared the premium class flights to these locations
to all flights taken to these locations governmentwide and for selected
agencies.
Data Mining Improper and Abusive Premium Class Travel:
In addition to our audit of a governmentwide statistical sample of
transactions, we also selected other transactions identified by our
data-mining efforts for audit. Our data mining identified additional
examples of premium class travel by senior-level executives,
individuals who frequently travel using premium class accommodations,
and premium trips involving groups with four or more people. For this
nonrepresentative data-mining selection, we also requested that the
entities provide the travel authorization, travel voucher, travel
itinerary, and other related supporting documentations demonstrating
justification for premium travel arrangements. If the documentation was
not provided, or if it indicated further issues related to the
transactions, we obtained and reviewed additional documentation about
these transactions.
Data Reliability:
We assessed the reliability of the data provided by the four travel
card banks by (1) performing various electronic testing of required
data elements, such as transaction amounts and account numbers; (2)
reviewing financial statements of the four banks for information about
the data and systems that produced them; and (3) interviewing officials
knowledgeable about the data at the four banks. In addition, we
verified that totals from the databases agreed with the total travel
card activity provided to and published in GSA data on travel, in
totality and for selected agencies. We determined that data were
sufficiently reliable for the purposes of our report.
We conducted our audit work from July 2006 through August 2007 in
accordance with U.S. generally accepted government auditing standards,
and we performed our investigative work in accordance with standards
prescribed by the President's Council on Integrity and Efficiency.
[End of section]
Appendix II: Background:
Overall, government travel is managed as part of GSA's SmartPay
program. The SmartPay program began in 1998 as a way to streamline
purchasing, as well as providing an expeditious way to pay for travel
expenses. Under this program, banks provide travel cards to government
agencies and applicable employees for travel purposes. Travel cards
provided directly to the agencies are known as the centrally billed
accounts, and are typically used to purchase transportation services
such as airline and train tickets, facilitate group travel, and pay for
other travel-related expenses. The individually billed accounts,
provided directly to individual travelers, are used for lodging, rental
cars, and in many agencies for transportation services.
Four banks provide travel cards under the SmartPay program: Bank of
America, Citibank, JP Morgan Chase, and U.S. Bank. According to GSA
data, Bank of America and Citibank handle over 94 percent of SmartPay
travel card transactions. In the 12 months ending June 2006, total GSA
SmartPay travel card purchases totaled about $6.9 billion. Nearly $3.4
billion of the total travel card purchases were for airline travel.
Premium class flights accounted for over $230 million, or 7 percent, of
the total spent on airline travel.
Subsequent to our selection of the statistical sample, the banks
provided us with additional data related to premium class travel in the
3 months from July 1, 2006, through September 30, 2006. Our analysis of
the additional bank data indicates that premium class travel usage
stayed consistent among federal agencies. Table 6 provides information
on the premium class travel of selected agencies from July 1, 2005,
through June 30, 2006.
Table 6: Premium Class Flights Governmentwide and at Selected Agencies
from July 1, 2005, through June 30, 2006:
Agency/department: Governmentwide;
Total amount of premium class tickets (in millions): $232.9;
Percentage of expenditures in premium class: 7;
Total number of premium class tickets purchased: 53,100;
Percentage of air tickets that were premium class:
