Federal News Service
HEADLINE: HEARING OF THE PERMANENT SUBCOMMITTEE ON INVESTIGATIONS OF THE SENATE GOVERNMENTAL AFFAIRS COMMITTEE
SUBJECT: DOD'S IMPROPER USE OF FIRST AND BUSINESS CLASS AIRLINE TRAVEL
CHAIRED BY: SENATOR NORM COLEMAN (R-MN)
WITNESSES PANEL I:
SENATOR CHARLES E. GRASSLEY (R-IA);
REPRESENTATIVE JANICE D. SCHAKOWSKY (D-IL);
PANEL II:
GREGORY D. KUTZ, DIRECTOR, FINANCIAL MANAGEMENT AND ASSURANCE TEAM, UNITED STATES GENERAL ACCOUNTING OFFICE;
JOHN V. KELLY, ASSISTANT DIRECTOR, FINANCIAL MANAGEMENT AND ASSURANCE TEAM, UNITED STATES GENERAL ACCOUNTING OFFICE;
JOHN J. RYAN, ASSISTANT DIRECTOR, OFFICE OF SPECIAL INVESTIGATIONS, UNITED STATES GENERAL ACCOUNTING OFFICE;
LAWRENCE J. LANZILLOTTA, PRINCIPAL DEPUTY UNDER SECRETARY (COMPTROLLER), UNITED STATES DEPARTMENT OF DEFENSE;
CHARLES S. ABELL, ASSISTANT SECRETARY OF DEFENSE (FORCE MANAGEMENT POLICY), UNITED STATES DEPARTMENT OF DEFENSE
BODY:
SEN. NORM COLEMAN (R-MN): This hearing of the Permanent Subcommittee on Investigations is called to order. Good afternoon and welcome to today's hearing. This afternoon we are holding this hearing to address a serious challenge to the credibility of the travel system and controls at the Department of Defense. In particular, we will focus on a system where the controls have failed, and this has led to the loss of millions of taxpayer dollars. The current system allows for abuse, it must be fixed. To paraphrase an old adage, watch the millions and the billions take care of themselves.
Our goal today is to ground the so-called highfliers, those who abuse who the system, and to ensure that DOD is committed to implementing long-term solutions to this costly problem. The fact is, many government employees are required by virtue of their job to travel great distances and oftentimes many employees are required to travel with great frequency. Our policy should not be to require those who must travel as part of their government job to do so in discomfort or extreme inconvenience. However, our policy most certainly ought not to be one that provides government employees with the type of travel conditions that the public reasonably feels are excessive in cost to the taxpayers.
I'm pleased today to be joined by my colleague, the esteemed senator from Iowa, Senator Chuck Grassley, and also by Congressman Janice Schakowsky. Welcome. Very pleased to have you at this hearing. Their work on travel and purchase card abuses in the federal government has highlighted continued abuses government-wide and has focused our attention on the need to conduct continuing congressional oversight on these issues to ensure that they are corrected.
An investigation recently completed by the General Accounting Office found that almost three-quarters of DOD's first and business class airline travel was improper. This accounts for tens of millions of taxpayer dollars inappropriately spent by DOD. In Fiscal Years 2001-2002, DOD spent almost $124 million on over 68,000 premium airline tickets. Among DOD's 28 most frequent first- and business- class flyers, GAO found problems with almost all of the justifications for premium class travel. This lack of accountability cannot be tolerated. Under government travel regulations, government employees are also allowed to upgrade their accommodations by using their frequent flyer miles or paying the difference themselves.
Let me outline some of the most egregious and outrageous abuses of the system. A DOD employee flew first class in a roundtrip ticket from Los Angeles to Washington, D.C. for $3,253, compliments of the federal government. A coach fare for the same trip would have cost $238, a difference of $3,015. Another employee flew business class on a roundtrip ticket from Washington, D.C. to Taiwan for $4,319 when a coach fare ticket for the same trip would have cost $1,450, a difference of $2,869.
A family of four relocated from London to Honolulu and flew first and business class non-stop at a cost to the taxpayers of $20,943. Had they simply made the effort to reduce costs and follow travel procedures, they would have saved the taxpayers $18,443. Other cases involved a traveler who took 14 trips at a cost of $88,000 to taxpayers because he inappropriately claimed that he needed to be upgraded to first class and business class because of a medical condition. In each of these and dozens of other cases, it appears the travel orders were either not authorized or not justified and premium class tickets should not have been issued.
The passage of the Travel and Transportation Reform Act of 1998 brought with it the promise of millions of dollars in federal travel savings. These savings were to be realized through federal employees' mandatory use of federal travel cards that would reduce the government's administrative costs and provide rebates to federal agencies. However, these anticipated savings will not simply materialize because we have provided federal employees with credit cards. Realizing the full potential of these savings requires that federal agencies and departments provide clear guidance and effective management oversight of their travel programs.
The focus of today's hearing is DOD's use of premium class travel accommodations that include first and business class travel that was paid with a travel card from a centrally billed account. Over the last two years, congressional hearings and reports by the General Accounting Office and the inspector general have highlighted continuing abuses, including individuals' late or non-payment of travel card debt and using the card to purchase personal goods and services or obtain improper cash advances. But today we will focus the hearing on the use of premium class travel accommodations.
The Department of Defense joint federal travel regulations for military personnel and joint travel regulations for civilian personnel do not prohibit the use of first and business class airline accommodations but they do require authorization by an appropriate official and justification by the traveler. Otherwise, DOD's regulations require the use of coach class accommodations for domestic and international travel.
Given the increased costs of premium class travel, DOD has very specific restrictions on the use of first and business class airline accommodations. DOD's travel regulations provide three circumstances where an employee can be authorized to travel first class and eight circumstances where an employee can be authorized to travel business class. I will have my full statement entered into the record where I walk through that.
Let me just say this, two observations. One, the DOD I understand has clarified its regulations with regard to the use of premium travel. And I do want to commend them for their prompt attention to these issues. What I want to reiterate are deep, deep concern for the abuses that we have noted.
As I begin this hearing, I want to reiterate my commitment to use this subcommittee to find solutions to problems in government, as well as use it as an opportunity to provide positive, constructive oversight. Where we find fraud and abuse we must not only root it out but we must fix it and stop it from recurring again. This afternoon we will hear from representatives of the General Accounting Office on their recently completed investigation of DOD's use of premium travel that was paid from a centrally billed account. We will also hear from DOD, concerning the actions it has taken or plans to take to ensure full compliance with their travel regulations.
Our first witnesses will be Senator Charles Grassley and Congresswoman Janice Schakowsky, to whom we are indebted for their tireless efforts to expose and correct travel and purchase card abuses. And with that, I would turn to my colleague, Senator Grassley.
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SEN. COLEMAN: Thank you, Senator Grassley. Senator Grassley, I know that you're involved in some conference committees and some delicate negotiations. I'm not sure what your timing is. What I'd like to do if I can, just ask you one question and then turn to Congressman Schakowsky, I understand that you may have to leave.
First, I do want to thank both of you for your dogged determination in looking after taxpayer dollars and dealing with these issues. You noted, Senator Grassley, that the GAO has made a number of excellent recommendations to address this. I believe that the bill that you've authored, Senate File 1744, Credit Card Abuse Prevention Act, covers many of these recommendations.
But in the review that we've done in preparation for this hearing, we have noted that centrally billed accounts are not presently included in the definition of travel cards as it appears in the bill. And many of the abuses today focus on centrally billed accounts. So I would simply ask if you'd be willing to work with this committee and work with this chairman and others on the committee to have a more expansive definition, so that we eventually cover some of the abuses that we're talking about today.
SEN. GRASSLEY: The answer is absolutely yes, with only this explanation of why it wasn't included, and that's because we're looking for another General Accounting Office report before we went that far. But if you know what to do and exactly what to do, or maybe by the time we get to that point it'll be out, the obvious answer is yes. I want to do whatever it takes, number one to get the bill out of the committee, and number two to solve this problem. And I find it very comfortable working with the two of you and probably most everybody on this committee.
SEN. COLEMAN: Thank you very much, Senator Grassley.
Senator Levin, any questions before Senator Grassley goes?
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SEN. COLEMAN: Thank you, Congresswoman. Again, I want to thank you for your efforts in this area. I want to thank you for putting today's hearings in the context of a larger set of issues. We can look at this as if, okay, here's what we have today, and forget there was a yesterday. And we'd like to make sure there's not a tomorrow. And then this last observation. I had the pleasure of being the Senate author of the provision to provide payment for our military personnel coming home from Iraq so they could get from Baltimore to St. Paul, or get from Baltimore to Omaha.
REP. SCHAKOWSKY: Thank you very much.
SEN. COLEMAN: But I found that also I was struck with the irony, as we were working on that I also knew that this review was underway and I was struck by that. And I was angered by that, that on the one hand we have situations of folks living the high life, flying first class, and then we've got grunts trying to figure out a way to see their wives or moms and dads or sons and daughters.
So I again want to thank you for fighting the fight here and for your work.
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SEN. COLEMAN: Thank you, Senator Levin, and it's always a pleasure to work with you a non-partisan way, a bi-partisan way on issues such as this. I would now like to welcome our next panel to today's important hearing. Gregory Kutz, a director of the financial management and assurance team at the General Accounting Office. Mr. John Kelly, an assistant director of the financial management and assurance team at GAO, and finally Mr. John Ryan, an assistant director in the Office of Special Investigations at GAO.
As I mentioned in my opening statement this morning, GAO is here to release the results of the GAO's investigation of the Department of Defense's use in monitoring the premium airline travel during the fiscal years 2001 and 2002. The purpose of this hearing is to identify the types of abuse that you uncovered, discuss the causes, determine the magnitude of the problem, identify what corrective action is taken. I believe it is essential for us to monitor the utilization of both government issued travel cards and centrally billed accounts to ensure that expected cost savings are realized. I thank you again for your attendance at today's important hearing.
I understand that Mr. Kutz will testify but that the other gentlemen will be there in a supporting capacity and may also have something to say. Such before we begin, pursuant to rule 6, all witnesses who testify before the subcommittee are required to be sworn. At this time I would ask you to please stand and raise your right hand. Do you swear that the testimony you're about to give before this subcommittee will be the truth, the whole truth and nothing but the truth, so help you God?
WITNESSES: I do.
(Witnesses sworn.)
SEN. COLEMAN: We'll use a monitoring system today and I would ask that you limit your oral testimony to no more than 10 minutes. If your testimony goes beyond that, the written testimony will be entered as part of the record. Mr. Kutz, I believe you will be presenting the GAO statement this afternoon. You may proceed.
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SEN. COLEMAN: Thank you very, very much, Mr. Kutz. First, just a couple of background questions. When we're talking about premium travel here, does that at all relate to-what about if folks who have frequent flyer miles on the upgrade? Is that part of the process at all?
MR. KUTZ: No. That would not, no. Premium travel as part of our report would have been when the government paid for premium travel. It's appropriate for people to use frequent flyer miles now.
SEN. COLEMAN: And premium travel includes both first class and business class. Is that correct?
MR. KUTZ: Correct.
SEN. COLEMAN: Very little difference between first and business class.
MR. KUTZ: Sometimes they're the same.
SEN. COLEMAN: Is it correct, though, as-I believe, in going through my notes in this, that there has not been the same level of documentation within the DOD system for business class. Was that a definitional issue? Can you shed some insight into the difference in terms of tracking between first class and business class?
MR. KUTZ: They were required by GSA policy to report annually on first class travel and GSA rolls that up for all the agencies in the federal government and reports that to the Congress. And as I mentioned in my opening statement, that report understated the extent of first class travel. They had no information on business class travel and what we had to do to get that information, as I believe Senator Grassley noted in his opening statement, was to use data mining to go in and when you go into the database and you look at a ticket number, there are certain characteristics in the ticket number that tells you whether it's first or business class. So we were able to go in and get what's called level 3 data from Bank of America and extract that information.
SEN. COLEMAN: And what percentage of premium travel was first class versus what was business class?
MR. KUTZ: It was virtually all business class. There were about 1,240, I believe, first class trips and the other 66,000 plus were business class trips.
SEN. COLEMAN: So I take it you would be very supportive of OMB and GSA requiring annual reporting of all premium travel, first class and business class from here on end.
MR. KUTZ: Yes, that would be a good idea.
SEN. COLEMAN: Thank you. You indicated in your testimony that DOD wasn't aware-I'm trying to understand what that means. Who wasn't aware? If the practice is widespread, if it's going on-help me understand what it means not to be aware? Is it not to be aware because it was not reported? Is it not to be aware because folks just didn't have the data? Is there a sense that this is a kind of a problem in the culture here, that simply has allowed this and hasn't been addressed-can you give me your insight into that?
MR. KUTZ: Yeah. There are cultural issues. I think there are some folks that probably did this not knowing the rules. Others probably felt they had or deserved to have the travel. But this is an issue we see across the board with DOD. There are issues of overall monitoring in the control environment and here, it was a matter of not having the data and having three separate organizations.
I think you can ask the next panel about who's going to be in charge going forward. But no one was in charge but three groups were in charge. So, at the end of the day, there was really no oversight and again, the three groups have some culpability in that.
SEN. COLEMAN: I want to get back to the difference in handling first class, which was really a very small percentage of the travel, which had the reporting requirements, which had the rules which, I believe, as I understand it, had an approval process requiring it being approved by ==
MR. KUTZ: The secretary or the designee of the secretary.
SEN. COLEMAN: So we're talking about a very high level person approving first class?
MR. KUTZ: That is a government-wide requirement, yes.
SEN. COLEMAN: But in terms of business class, I believe, in your testimony, you talked about instances where subordinates were approving travel for superiors. Would I take it then to understand that business class, there is not a clear uniform directive that says it has to be done by somebody at a higher level?
MR. KUTZ: That was correct. Now, whether they have revised that or not, I don't know but there was varying practices for business class travel.
SEN. COLEMAN: My next question would be, do you know whether that has been corrected?
MR. JOHN V. KELLY: To the best of our knowledge, we don't know if that's been corrected yet.
SEN. COLEMAN: And would you be willing to then offer recommendations as to some uniform standard-can we do that or is it the nature of the military that you may have somebody on site somewhere and not have somebody of rank-help me understand it. How do we ensure the common sense thing which is, if you're going to get approval for this, it should be done by somebody at a higher level?
MR. KUTZ: Our recommendation was that the approval should be done by someone at the same level or preferably a higher level and they have concurred with that recommendation. So my belief would be that they have gone in and changed the policy. There's two things. There's writing the policy and there's actually enforcing the policy.
In that second part here, in some cases, what we found was that there were policies in place and people weren't following them. So they have to have two things. They have to have the valid policies and they're going to have an accountability mechanism in place to make sure that, even if they put a good policy in there for approval, that it's being consistently followed.
SEN. COLEMAN: I just want to clarify something statistically. At one point in your testimony, you talked about 72 percent not properly authorized and then you used the 64 percent figure. Can you clear that up for me?
MR. KUTZ: The 64 percent represent-out of the 72, 64 percent had no specific documentation in the packages that went to the commercial travel office that said that they were for premium class travel. Which means, that someone had to have called the travel office and said, please get me a business or a first class ticket. And the travel office issued it without following the appropriate policies and having the documentation.
SEN. COLEMAN: Much of this report is based on sampling. Critics may come back and say, Well, you took a very small sample. And they may then therefore challenge the results. Can you talk to me a little bit about your statistical method, your confidence in the validity of what you found?
MR. KUTZ: Yeah. We use statistical sampling when we test internal controls and our confidence level, we're 95 percent confident that the failure rate is 72 percent plus or minus five or 10 percent. I don't know the specific details. So we're 95 percent confident that the failure rate or the breakdown in controls is between probably 65 and 75 percent.
SEN. COLEMAN: I'm trying to put myself in the position of some folks in DOD and trying to give them the benefit of the doubt. In your opinion, are the travel regulations themselves simple enough for people to understand or is there a claim here that somehow there was confusion or there was lack of clarity in terms of what's required? Can you help me out with your assessment of the nature of the regulations here?
MR. KUTZ: There was a proliferation of policies out there. A lot of times in DOD, you've got policies at the office of the secretary of Defense level and then each of the services will develop their own and even units within the military services will have their own policies. And here, we found that there are lots of policies out there, some inconsistent with each other and some inconsistent with GSA's government-wide regulations.
SEN. COLEMAN: But I want to get back to the culture question. Both in listening to the statements by Senator Grassley and Congresswoman Schakowsky, I get a sense that there's a cultural problem here, that common sense would dictate you save taxpayers' money. That's what we're supposed to do. We want people to fly in comfort, you don't want to be abused, but common sense says if you can fly somewhere for coach class you do that, rather than presume because you're a high ranking official you're going to automatically fly first class.
I guess I want to come back to that, is there-can we clean the system up? Can we take an agency as diverse, as large as the DOD, in your experience in the GAO, can we put into place some clear standards here and have the confidence level as representatives of the taxpayers, that they can be enforced?
MR. KUTZ: I would say yes. With respect to the prior work we did on credit cards, there has been significant progress in improving the controls over the purchase and the individually billed travel card. For example, the delinquency rates were well over 10 percent when we first started doing our work on the individually billed travel card, and my understanding is now that they're well below 10 percent. So DOD can make progress, these are issues that don't require new business systems, which is a whole other matter will probably get into here.
But this is pretty much people and policies and procedures and implementing them. And the culture, the interesting thing about the culture is that 50 percent of the people who took this travel were senior, but the other 50 percent were very junior. And that is almost as surprising to me as the senior people actually taking that travel.
SEN. COLEMAN: But to me it says you're building a culture --
MR. KUTZ: Yes, you build a culture and --
SEN. COLEMAN: -- that will continue unless you intervene, unless you change.
MR. KUTZ: -- some people were setting a-they're setting a bad example for other people, probably, and they're following it.
SEN. COLEMAN: Well, I do hope they can change, we will expect change. We will monitor to see that change is taking place, and this is just not an exercise in you doing a report and us having a hearing. We do expect things to change.
My distinguished ranking member, Senator Levin.
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SEN. COLEMAN: Thank you, Senator Pryor.
Just two quick follow up questions. Interested in the range of dollar loss, and I think, Mr. Kutz, you talked about $10 million to $30 million in savings. Is that just for the years 2001 and 2002?
MR. KUTZ: That would be for those two years but I would assume that would continue if they're able to put these controls in place. I believe that's what would be saved going forward per year.
SEN. COLEMAN: So if one were to kind of reverse that estimated dollar loss, what do you estimate the total dollar loss then to be in Fiscal Years 2001 and 2002?
MR. KUTZ: Twenty to $60 million. I think what we can do-I mean, if you look forward in your opening statement, you want to kind of track these things. We could work with you to kind of monitor this and see. If they implement the controls we're talking about here, you should see this dramatically decrease going forward.
SEN. COLEMAN: And I mean and I would like to be able to see that, to say there's a reason that we do what we do. Is there anything in this process that would provide some avenues of recoupment of loss or would that be difficult in these situations?
MR. RYAN: I think what we decided to do is, working with your staff, we decided to refer the 44,000 people to DOD. DOD can make their mind up as to whether or not they want to recoup the money. What we're interested in doing is continue to do investigations to identify what causes these problems so that we can pass the information on and hopefully we can get the savings that way.
SEN. COLEMAN: And I would-I think that, depending on the intent of the person involved, I'm assuming that some folks went through the system. The problem is the system didn't do the check up, so we've got to fly. There were travel orders here. So I'm not pointing a finger on the folks. Apparently there's a system, the travel order got filed. But what I'm hearing here today is that there wasn't the kind of follow-up, there wasn't the authorization, there wasn't the review, there wasn't the justification, there wasn't then the documenting, and all the things down the line that the system should do, simply weren't happening here on a consistent, regular basis.
Would that be correct?
MR. KUTZ: Yes.
SEN. COLEMAN: Thank you. Gentlemen, thank you very much.
Senator Pryor?
SEN. PRYOR: No.
SEN. COLEMAN: This panel is excused.
I would now like to welcome our final panel of witnesses to this afternoon's important hearing. From the Department of Defense we have Lawrence J. Lanzillotta, the principal deputy undersecretary of Defense, Comptroller's Office. Charles S. Abell, the assistant secretary of Defense for force management policy. I want to thank both of you for your attendance at this afternoon's hearing and I look forward to hearing your testimony concerning the actions DOD has taken or plans to take to ensure full compliance with its travel regulations.
Before we begin, pursuant to rule 6, all witnesses who testify before this subcommittee are required to be sworn. At this time I'd ask you both to please stand and raise your right hand. Do you swear that the testimony your about to give will be the truth, the whole truth and nothing but the truth, so help you God?
WITNESSES: I do.
(Witnesses sworn.)
SEN. COLEMAN: Thank you. Mr. Abell, I understand that you will be giving the department's testimony today --
MR. CHARLES S. ABELL: Yes, sir.
SEN. COLEMAN: -- and Mr. Lanzillotta will be there to assist or answer any questions. As indicated before, if you have a full statement and you wish to enter that into the record and just summarize, let us know and that will become part of the record. With that, please proceed.
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SEN. COLEMAN: Thank you very, very much, Mr. Abell.
I would note that the comptroller is not here today, the principal deputy undersecretary is here. I do want to make it clear and ask, do you speak for the Department of Defense, and will you assure this subcommittee that the DOD is committed to preventing this abuse of taxpayers' money?
MR. LANZILLOTTA: Yes, I do.
SEN. COLEMAN: And I do want to-I have to gentlemen, maybe because I'm the newer guy here, I'm not as cynical as some of my more seasoned colleagues, but as I listened to even the comments of the Congresswoman and Chairman Grassley, there is a great deal of cynicism about the department's commitment to getting ahead of the problem, that the reaction is we respond to the problem, and I do want to applaud the fact that you're putting together a taskforce that will diagnose and propose remedies for these premium class traveler shortcomings.
But can you respond to-help me-respond to that charge, that what we get is a problem and we respond but we don't look ahead. Talk to me a little bit about how you do that.
MR. ABELL: Mr. Chairman, I appreciate your perspective on this. The Department of Defense has its eye on many balls, and unfortunately we don't catch all of them before they bounce off the floor. This may be one that we didn't have our eye on as much as we should. As you have heard in previous testimony, it is a small piece of our operation. That doesn't excuse the abuse or the lack of clear cogent direction, but I think it might explain while we were watching bigger things this one might have escaped our constant attention.
We also haven't in the past provided our folks with clear guidance. We have handed them books of this size, sometimes out at the installation level, fairly low level folks, and said, these are the regulations, try not to screw it up. And that may be asking too much of them. We will look at some sort of decision support tool, some have suggested a forum. That strikes me as 1940s technology, but I think we can provide them some sort of decision support tool that will allow them to go through a checklist, if you will, that helps them decide whether or not they have followed all the regulations.
And it would also benefit all of us by providing something that could help us in the audits. It's my strong belief that many of the unauthorized or unjustified trips were probably authorized and justified, but that our record-keeping hasn't been sufficient to be able to demonstrate that to an auditor.
SEN. COLEMAN: There seems to be a clear difference, though, in terms of record keeping between first class and business class, and I would take it that that division will be removed and we'll focus on both.
MR. ABELL: Yes, sir. As was previously testified, there's a requirement that we report first class travel to the General Service Administration. I think our colleagues from GAO were very kind. My understanding is that the quality of our report to the GSA is probably less than we would hope as well, and we will fix that as part of this.
SEN. COLEMAN: And I appreciate your candor. How many people are employed by the Department of Defense?
MR. ABELL: Well, the military's about 1.4 million, we have about 800,000 reservists and another 600,000 civilian employees.
SEN. COLEMAN: And how many different locations? How many work sites?
MR. ABELL: Oh Jiminy, I do not know that number. I will tell you that it is lunchtime somewhere in the Department of Defense every hour of the day. So we are around the world a number of times.
SEN. COLEMAN: I asked that because one of the things that has been talked about here is, you know, can you centralize travel order authority? A post-travel voucher review at single locations. Can you talk to me about what centralizing this type of travel order approval would mean? How would you go about centralizing something like that, based on the diverse system that you have?
MR. LANZILLOTTA: Mr. Abell mentioned in his testimony that the department is in the process of fielding the Defense Travel System. When we field the Defense Travel System, it will be the unifying system across the Department of Defense for all travel orders. I believe that this system, when fielded, it's fielded at 24 locations now in pilot sites, will take care of many of the problems that we have. One of the main things that this system will do for us, that when a traveler comes up on the system it will only display coach reservations.
So he won't be able to make a premium travel, any type of premium travel, either business or first class. For him to do that he will have to go through another procedure outside to get it specifically authorized, and that order will be flagged and tagged, so we'll know at the department level what we can do. So we'll be able to do that data mining. We're building that functionality into the system now. In the 24 pilot sites we recognize this as a shortcoming that we needed to fix and we are in the process of fixing it.
So initially we do have a problem. We will have to use a short- term solution of Bank of America, as our credit card vendor, right now to pull some data together for us so we can do the data mining techniques. In the future we will have our own system that we'll be able to go through and do it and manage it, and the purpose of our whole modernization program is to provide that type of data.
SEN. COLEMAN: With the task force that you announced today to diagnose and propose remedies, would they be looking at simplifying the joint travel regulations, the joint federal travel regulations. Are you going to be look at that piece of things? And I have a second part of that. Are those regulations, are they online? Are they available worldwide? How do you folks know what the regulations are?
MR. ABELL: They're available on paper and they are visible online, yes, sir.
SEN. COLEMAN: When you say visible, does that mean somebody can-they're available?
MR. ABELL: Yes.
SEN. COLEMAN: Okay.
MR. ABELL: The task force will look at all of those things. I don't expect that the task force will do much to simplify the joint travel regulations or the joint federal travel regulations since they mirror and we hope precisely mirror the General Services Administration federal travel regulations. What we will do to help our folks in the field go from something like this to something that's more manageable is try to give them a decision support tool that walks them through the processes so that they don't have to rely on their memory or do extensive research every time they do this.
SEN. COLEMAN: And I just-I would commend or recommend that you look at the online capacities and capabilities that allow folks to walk through that, and you perhaps could simplify your system online without necessarily changing the regulations, but just make it easier for folks to process that stuff.
Mr. Lanzillotta, you were going to say something there?
MR. LANZILLOTTA: Mr. Chairman, I would also like to maybe let the committee know that on this task force, I would like to give the results of the task force we did on the travel card, on the purchase card, to show the committee the type of things that the task force looked at and the type of things that we implemented to give you an idea of what we hope to do with this program. The task force-we were able to establish a metrics program so we could monitor performance of the travel card. We were able to publish a CD that laid out the training responsibilities of card holders. We were able to begin data mining-start the data mining on the data that we could get on the purchase and now travel card that was mentioned by, I believe, Greg on his testimony from the I.G.
We were able to issue better guidance or more clear guidance to our security managers. We issued disciplinary guidance applicable to the individual and centrally billed accounts. We looked at the codes and did merchant blocking codes. That way, credit cards cannot be used in certain merchant areas.
We looked at the credit limits, and established more realistic credit limits on these cards. We simplified the guidance. It's led to a reduced delinquency rate on our travel cards, it's now on the individual, about 6.3, and on the centrally billed accounts, below 2 percent.
We're getting very close to industry standards. We implemented mandatory split disbursement from military members and we asked for mandatory split disbursement for civilian employees. Right now it is the default solution if they don't elect it. That allows us to pay directly to the credit card. We implemented and collected approximately $42 million in delinquent dollars, salary offset for military members. We've asked for that authority also on civilian members to help the government recoup the losses from improper charges.
We took out and eliminated 600,000 travel cards. We looked at the established-for procedures. The cards that were not active or people who left the DOD go back and make sure that we could go and close their accounts. We've been working with the bank to develop even more internal controls. I have a similar list for the purchase card things that we've done to try to bring the department more in line and establish these controls on these programs. I just wanted to assure the committee that the department takes this seriously and these are the type of things that we were able to do in the travel and purchase card to show success and we plan to do the same thing in this program.
SEN. COLEMAN: And I appreciate that, and I do want to reiterate that $10 million to $30 million in savings may not be a lot in the perspective of a percentage of your budget, but sure a lot of folks that live in St. Paul or live in Crookston or live in Michigan or Arkansas, so I just-I want to reiterate that. We are very serious about the need to deal with the abuse and to make sure that dollars are being saved. Can I ask just one further question and get back to this issue between business class and first class?
It was really the testimony here that first class approval required, I think, first class airline accommodations at the three star equivalent level. Business class rests with transportation officers. Can you first tell me, what's the level of transportation officer in DOD and wouldn't it be appropriate to have all premium travel approved at the same level?
MR. ABELL: Mr. Chairman, the first class travel is by the secretary of Defense, the deputy secretary or their designee. The premium class travel is, in the current environment, is-approval authority is widely decentralized. It is-one of the things we'll take a look at in this task force is what level should we have premium class travel, and as Mr. Lanzillotta has testified, when the Defense Travel System comes in, it will be done offline and-not offline, but it will be kicked over to a special authority and that would allow to implement in an automated way, as you suggested, this special approval authority as well. I don't know what the right level is. We'll have to figure that out.
SEN. COLEMAN: And I would hope that we take certainly a close look at those situations where you have folks at subordinate levels making approvals of folks who expend dollars who are at a higher level. It seems to me it's something that's a little illogical and that at a minimum should be stopped.
MR. ABELL: We have no argument with that in concept. Back to the size and scope of the department, there will be cases where somebody somewhere has to go around the world to find their superior but I'm sure we can work out a way to make sure that there's enough internal controls there to take care of those singular cases.
SEN. COLEMAN: Thank you, gentlemen.
Senator Levin.
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SEN. COLEMAN: Thank you. Thank you, Senator Pryor. The record, by the way, will be held open for 21 days for any further questions. And I will forward to the witnesses any questions that you, Senator Pryor, or any other members of the committee may have.
Gentlemen, I want to thank you for appearing today. I want to say that I appreciate your candor. I would also note that we want to work with you. I do not view this as an adversarial process. This is a shining light identifying the problem and solving it process. I think we and the comptroller share a common bond, we want to make sure that government resources are used efficiently and that we're going to make it our best efforts and give it our best efforts to make sure that happens.
We understand the challenge facing an agency as large as the Department of Defense but I share the concerns of my friend and colleague from Arkansas. If you take care of the little things then the big things oftentimes take care of themselves. It may not always be that way but you got to take care of those little things. And again, for, you know, the average citizen out there, $10 million and $20 million and $30 million is not a little thing, it's a big thing. So let us commit to work together on this.
We anticipate a series of other hearings relating to the department and other issues concerning a number of other things. I'll leave that, we'll be in touch, we'll work with you on that. But again, I want to thank you for appearing here today.
With that, this hearing is adjourned.