Madam Chairwoman, members of the committee, I am here to discuss with you the actions the Department of Defense has taken and will take to correct weaknesses identified by the General Accounting Office (GAO) in the DoD centrally-billed travel card program. 

At the outset, I want to underscore the resolve of the Department’s leadership to continue progress toward improving DoD financial management.  We are determined to complete our overhaul of our financial processes and systems – which will dramatically improve our ability to ensure strong internal controls and prevent the kinds of problems identified by the GAO. 

The GAO reports on unused tickets and improper payments demonstrate the value of having automated data to analyze and review for anomalies.  It also demonstrates the weaknesses inherent in manual systems and the many legacy systems still being used by the Department.  As the Department transforms its financial management systems we will do a better job of detecting and addressing the kinds of problems identified in these reports.  In the meantime we will work hard to correct the policies and procedures that contributed to the problems identified by GAO -- while we work on the automated solutions. 

Centrally-Billed Travel Cards - Why DoD Uses Them

Before I address the actions that the Department has taken to address GAO’s concerns, I would like to tell you why the Department uses centrally-billed account (CBA) travel cards. 

Travel cards are cost-effective tools that enable the Department to save money while meeting our travel requirements.  Consequently, travel card products are valued tools to the Department - tools we intend to ensure are properly and effectively administered.  We appreciate the role the GAO has played in focusing on issues that warrant greater attention. 

The CBA travel card is used to facilitate travel for DoD personnel who are not provided individually billed travel cards because they do not travel frequently.  These travel cards also facilitate travel for personnel who can not obtain a credit card due to credit worthiness issues and support unique mission requirements that are no longer supported by local paying offices.  Without the CBAs, the Department would have to provide costly travel advances to travelers.  Those travelers without a personal credit card would then have difficulty making reservations. 

Centrally billed travel cards have also facilitated the lowering of limits on individually billed travel cards by having the airline ticket, which may be the most costly single item for an individual’s travel, charged to the CBA.  Lastly, the CBAs, unlike the individual cards, are more flexible in responding to emergency conditions or contingency operations due to their government liability and higher credit limits.
 

Actions to Strengthen DoD’s Travel Card Program

Madam Chairwoman, I would like to briefly address the Department’s initiatives aimed at correcting control weaknesses identified in each of the GAO reports on centrally billed travel cards.

            The Defense Travel System.  The Department has long recognized the need to revamp its travel systems and to tighten controls over this program.  We are currently fielding the Defense Travel System (DTS), which offers substantial improvements by consolidating outdated order writing systems and numerous computation systems into a consolidated fully electronic process which will offer online access, approvals, computation, quality assurance, accounting and record keepings.  The deployment objective is to field DTS to approximately 268 high-volume sites, which account for 80 percent of the business travel for DoD.  Of these 268 high-volume sites, DTS is operational at 79.    

            Data-mining.  The GAO’s findings are based on reviews of bank transaction data and comparisons to other databases within the Department.  We will continue this methodology and will seek affordable interfaces to facilitate the synthesis needed to identify potentially unused tickets and improper payments.  The DoD Inspector General has been reviewing FY 2003 and 2004 transaction data for the travel card program, both to identify weaknesses and to develop a method for reviewing transactions according to the risk they present.  We have been in discussion with Bank of America, as well as other vendors, regarding data-mining capabilities that can be applied to identify transactions that may pose a risk of being improper or identify instances of potential misuse.  While that important tool is yet not available, we are considering alternatives to provide at least a pilot for that capability.

New Policies to Reduce Losses Associated with Unused Tickets.  The GAO findings on unused tickets are based on information provided by certain airlines that unused DoD ticket costs are reflected on their accounting records.  The airlines are now refuting the completeness and accuracy of the data they provided to GAO.  We are attempting to recover those funds but the probability of success is low:  To prevent a future accumulation of unused airline tickets not being turned in for refunds, we are implementing policies and procedures to detect unused tickets and to recover the funds. 

Recovering Erroneous Payments.  We have taken action to recover payments disbursed erroneously and to establish preventive measures.  One example of the latter, the Department has directed DoD components to instruct all military and civilian personnel to not claim airline tickets purchased with the CBA as reimbursable expenses and to turn in unused airline tickets.  It also directs approving officials to closely review travel claims for unauthorized reimbursable expenses and performs follow-up to ensure unused tickets are returned.

Closing

In closing, I want to emphasize that the Department has made significant progress in improving the performance of the individually billed travel cards through implementation of policy changes such as split disbursement and salary offset; through actions to reduce risk such as closing unused accounts and reviews to identify where individuals have separated without properly clearing out and having their account closed.   

The types of problems highlighted in these GAO reports underscore the importance of transforming how DoD does business.  Over the past two years, the Department has undertaken a massive overhaul of its management and support activities.  Ultimately we want to implement a cohesive, comprehensive management information system that will enable DoD to track transactions, strengthen internal controls, and prevent abuses. 

I assure this committee that we will continue our close working relationship with the GAO as we correct the problems identified and monitor the corrective actions to ensure their effectiveness.  I would be happy to answer any questions that you have.  Thank you.