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Making DoD's Temporary Duty Travel User Friendly
Statement as Prepared for Delivery by John J. Hamre, undersecretary of defense (comptroller), , Oversight of Government Management and the District of Columbia Subcommittee, Senate Government Affa, Friday, March 08, 1996

Defense Issues: Volume 11, Number 28-- Making DoD's Temporary Duty Travel User Friendly Revamping DoD's travel system requires new technology and changes in the law, but also the end of "cultural barriers," the foremost of which is the mentality that has DoD spend $100 to control a $10 problem.

 

Volume 11, Number 28

Making DoD's Temporary Duty Travel User Friendly

Prepared statement of John J. Hamre, undersecretary of defense (comptroller), to the Oversight of Government Management and the District of Columbia Subcommittee, Senate Government Affairs Committee, March 8, 1996.

Mr. Chairman, members of the committee, it is my pleasure to be here once more to address you concerning the status of the Defense Travel Re-engineering Initiative. Nearly one year ago, I came before you to describe how the Department of Defense would begin to take apart our old, outdated business travel system and build an entirely new one, employing the best business travel practices available.

Our vision was a seamless, paperless system that meets the mission needs of travelers, commanders and other travel resource managers; reduces the cost of travel; and provides superior customer service. Today, I am happy to report to you that we are much farther along the path to that new travel system. We have made great progress in many areas, ranging from fundamental cultural changes to cutting-edge technological improvements. Although we have made major improvements in the travel system, the journey, however, is not yet complete.

I then spoke to you about 10 guiding principles that we were to integrate throughout this change initiative. Briefly those principles that are embodied in our concept of operations are:

 

  • Travelers and supervisors are honest and responsible;
  • Allow the supervisor to control his or her travel budget and approve vouchers;
  • Implement simple clear rules to govern travel;
  • Rely on one-stop shopping at a commercial travel office;
  • Consolidate the process into a single piece of paper;
  • Eliminate bureaucratic burdens on travelers;
  • Ensure prompt payment by government;
  • Minimize bookkeeping requirements;
  • Use best industry financial practices; and
  • Continuously reassess for improvements.

These principles can be categorized into these three major areas: simplify the rules, delegate authority and use best industry practices. All of the improvements we have made are based upon the fundamental premise that our travelers and supervisors are honest customers of the system.

In order to test these principles in an operational environment, the department has embarked upon a pilot testing process at 28 different sites representing each of the services and several defense agencies. In June 1995, we had a conference with all of the pilot test organizations to begin the test process by providing them a general orientation to the new concept of operations as well as the specific guidance they would employ in their tests.

In September 1995, we invited representatives from industry to demonstrate vendor capabilities for personnel from the pilot test organizations. Personnel from the pilot organizations were able to examine the available software enablers and begin to finalize their test plans. It was very clear that even the private sector did not yet have all of the answers; we were clearly charting some unexplored territory. At the conference, vendors developed new partnerships among themselves, consolidating their areas of expertise, to be able to meet the needs of our new concept.

A third conference with pilot organizations was held in January 1996 to review their progress to date and begin to resolve barriers they had encountered. Most of the pilots were actively engaged in testing key travel system attributes such as the delegation of travel approval authority, reimbursement via electronic fund transfers and random audit of vouchers.

Most of the pilots had selected one of five major commercial computation software programs to test. Pilot organizations also reported that the seven commercial vendors currently providing travel arrangement services would also be supporting their tests of the new concept.

The barriers most commonly reported by the pilots were electronic signature capability, receipt retention by the traveler, the validation of software enablers and educating managers and travelers about their responsibilities under the new travel system.

The value of the pilot testing process is that it will provide us with an accurate baseline of the current travel process from which we will be able to assess the impact of the changes we want to implement across DoD. In other words, the pilots will serve as the means by which we establish proof of concept. Our performance measures are direct costs, indirect costs, accomplishment of mission needs and customer satisfaction.

The department is establishing baseline data for the current travel process at each of the 28 pilot test organizations. The measured process begins with the initiation of a travel order and travel arrangements, and it ends with reconciliation and payment of a travel voucher.

Preliminary data collected and reported by several organizations suggests that the number of steps for preparing and approving travel orders and for preparing, computing and reconciling vouchers varies across organizations. The number of people, amount of time and associated cost to prepare and to process travel orders and vouchers also vary.

Raw data reported by pilot organizations that are just beginning to implement travel reforms and software solutions indicate the current process takes -- excluding the traveler's time -- an aggregate of roughly two to five hours to complete with estimated labor costs of about $45 to $115. Reporting and verification of baseline data for the current travel process should be completed by May 1996.

The total expected monetary investments in technology and training to achieve a fully automated and integrated DoD-wide travel system have not been established. However, costs will be estimated as part of the acquisition planning process. Although total monetary investments for the new defense travel system have not been established, planned costs for the 28 pilot organizations to fully implement and test the re-engineered TDY [temporary duty] travel concept are estimated at $4.1 million. This estimate includes the costs to acquire hardware and software, and to train approximately 32,000 travelers and users served by the pilot test organizations.

We intend to collect the best data possible for our current and our new processes before implementing the new travel system.

Let me now discuss with you the progress we have made to date in each of the major areas described above, the remaining barriers and the steps we have planned toward implementation.

Last year, ... you noted that waste most often occurs due to rigid rules and archaic procedures, not due to ill motives. We have taken that advice to heart. I then provided you a copy of our simplified entitlements.

We have reduced a large, complex body of regulations down to those 17 pages of plain English that focuses on mission, provides discretion and places accountability with a person we call the authorizing official, who is the manager in the field responsible for the traveler's mission. The use of all of these entitlements is currently authorized only for the 28 pilot organizations until the new defense travel system becomes a reality. However, we have been able to implement some of these simplifications throughout DoD beginning fiscal year 1996. These include:

 

  • 75 percent M&IE [meals and incidental expenses] First and Last Day.

Rather than go through complex computations about time of departure and return on the first and last day of travel, we now authorize 75 percent of the M&IE as the standard reimbursement. The traveler now knows what to expect in terms of reimbursement, and we have simplified the computations.

 

  • $75 Receipt Threshold.

We no longer require the traveler to retain receipts for travel expenses less [than] $75 with the exception of lodging receipts, thanks to the IRS [Internal Revenue Service] change in policy. This reduces the burden of recordkeeping.

 

  • Paper Nonavailability Statement.

One of the most common frustrations of the DoD traveler has been the requirement to obtain a paper nonavailability statement from installation billeting offices when not staying on post. It is a time-consuming and bureaucratic process that is unnecessary in an age of electronic reservations. Last fall, I approved a policy change which eliminates this requirement if the traveler cannot establish a reservation with the billeting office prior to departure.

 

  • Per Diem Delivery System.

Closely related to the simplified entitlements that I have just discussed are the timely and accurate posting of travel per diem rates throughout the federal government. This is a joint responsibility of the Department of State, the General Services Administration and the Department of Defense.

Currently, the distribution of this important rate information is paper-based, time-consuming, error-prone, and it will not support electronic updates of the automated computation systems we envision. We are working with these federal agencies to be able to electronically process per diem rate information. This new system will minimize errors due to the rekeying of data and ensure travelers are provided accurate per diem entitlements in a much more timely manner governmentwide.

The current practice in many DoD organizations today is to control the funding authority for official TDY travel centrally. Commanders who direct and authorize travel do not always have accurate management information on funding availability and therefore cannot make informed choices on the use of those resources for travel in support of mission requirements. Furthermore, missions directed by the Joint Staff or other outside taskings resulted frequently in a two-step process with fund citations to support a mission coming at a later time than the tasking. This disconnected procedure introduces last minute administrative delays and paperwork foul-ups.

To overcome this problem, we issued a policy directive that henceforth the authority to obligate travel funds will be delegated to the level consistent with the authority to approve travel in the department. Authorizing officials will be given their own travel budgets to manage. For the first time, line managers will have both the responsibility and the resources to actually manage the travel function.

To make this work, we are planning ... to provide timely and accurate management information on funding availability status electronically to those supervisors who authorize and manage TDY travel. Secondly, in the case of taskings from external organizations, funding guidance or a fund citation must now be provided along with that direction. This will prevent a paperwork-intensive and time-consuming reconciliation process after the fact. We believe that these initiatives will effectively enhance the responsible use of travel resources and eliminate some of the burdens that infect the current travel process.

Effective fiscal year 1996, we have also simplified the accounting practices associated with our travel expenses. DoD replaced 30 different accounting codes with just one or two codes. This makes the budget process more user friendly for authorizing officials and eliminates the complexity of our current accounting procedures. This facilitates the delegation of budget authority to authorizing officials by not requiring them to act as budget clerks in determining which object class code is appropriate for every travel request approved.

In our survey of best industry practices it became clear that one-stop shopping for services with a commercial travel office was the preferred approach. These services include the one-time entry of data; the use of a single document used for both travel authorization and voucher approval; electronic or paperless processing; and the automatic computation of both a "should cost" pre-travel estimate and post-travel "did cost" voucher request.

We have two challenges here. The first is to produce an integrated travel system that provides for these services. There are commercial software products or enablers available that with some modifications will allow us to perform these functions.

The second challenge is to provide a single channel of information to travelers for all arrangements including government lodging/messing facilities, per diem rate information and other government-furnished information required to make travel arrangements. The pilots are helping us to determine the extent of industry capabilities to perform these functions.

The emphasis is on obtaining those services that the commercial travel industry currently provides to its best private sector customers, not on developing unique DoD system requirements. We want to remain sufficiently flexible to take advantage of the new products and services being offered commercially, rather than lock into requirements that do not evolve with industry innovations.

The best practices we studied in corporate America indicate the use of a corporate travel charge card is essential. This gets the employer out of the business of maintaining an overhead structure to provide travel advances to the traveler and ultimately a corporate card makes the travel process much easier for the traveler.

We have issued policy to maximize the use of the government-sponsored travel card, currently the American Express card, for all expenses associated with official business travel. DoD travelers will use the card to obtain cash advances from ATM [automatic teller] machines as well as to charge their hotels, rental cars, meals and other expenses.

This has been a significant cultural change for a population of travelers used to traveling with cash. We have also developed and implemented a training program for all travel card holders to ensure they understand the proper use of the card.

Best practices also demand we use to the greatest possible extent automated computation capabilities with built-in policy compliance checks that ensure reimbursement of travelers. Prompt payment of travelers will help ensure that the travel charge card vendor is paid on time. These initiatives are designed to exploit the fullest potential of electronic transactions.

 

  • Electronic Funds Transfer. The Department of Defense now requires that travel reimbursements be paid to the traveler by an electronic funds transfer to his or her financial institution; just like their paychecks. EFT allows us to both reduce the costs associated with reimbursements but also to speed up the reimbursement to the traveler. This policy was effective Oct. 1, 1995, for DoD personnel.
    Where systems are capable of paying by EFT, our percent to travel reimbursements have gone up from 25 percent to 47 percent over fiscal year 1995. We anticipate this figure to increase to 90 percent by the end of this calendar year as system changes are made to accommodate EFT transactions.
  • Split Disbursement. Much like EFT, split disbursement is where the traveler can elect to have the finance office electronically pay the government travel card vendor directly for the charges that are on his or her travel card, the balance of the reimbursement would be transferred electronically to their personal financial institution. This will greatly simplify a process that requires the traveler to wait for the reimbursement before sending a check to the travel card company.
    Our finance centers are developing implementation requirements for the testing of split disbursements at our pilot sites. We have been working with the current vendor, American Express, to ensure that financial data will be exchanged appropriately.
  • Third Party Pay.

A third and final electronic funds transfer initiative that we are testing concerns having a commercial vendor make payments directly to the travel card company. DoD would then reimburse a single invoice. This would cut yet another step from the payment process by relieving the government finance office of making those payments.

Our finance centers have prepared the necessary test procedures. If this proves to be a viable course of action, third party pay throughout DoD could result in privatized payment.

Another major improvement initiative was to establish procedures for the random examinations of travel vouchers in lieu of examining 100 percent of the vouchers. Effective Oct. 1, 1995, disbursing offices within the department began to move to random examinations. These quality assurance reviews, together with other audits as needed for oversight and control, should yield stronger controls at a reduced cost.

Achieving the accomplishments to date has been a collaborative effort across government. I must commend to you the GAO [General Accounting Office], GSA [General Services Administration] and IRS for their support and cooperation in overcoming regulatory barriers and adopting better business practices.

Many of these barriers were built for the best of intentions at the time they were constructed. The dismantling of them can run quickly into some plausible reasons for their continued existence. Reasoning our way through the changes needed to bring them up to date can be a tortuous process for both the regulators as well as those being regulated.

We still have some outstanding requests to IRS, GAO and the National Archives and Records Administration that will enable us to support a paperless process and reduce bureaucratic burden. However, the regulatory agencies on the whole have worked very hard with us to ensure the necessary controls yet allow us the necessary flexibility to ensure the travel mission is conducted more efficiently. I also commend the work of the Joint Financial Management Improvement Program in providing governmentwide leadership to simplify and modernize travel management in government.

Now for the future: I am very happy to report that in order to move out on this initiative, DoD has established a project management office headed by Col. Albert Arnold for the defense travel system. This office will take all recommendations from the DoD Re-engineering Task Force and coupled with lessons learned from the pilot sites, implement a DoD-wide solution that utilizes best industry practices.

A draft standard DoD solicitation was released on Dec. 7, 1995, that asked for industry comment to help us refine our requirements in accordance with these best industry practices. We feel that the best way for DoD to implement evolving travel management services is for us to take advantage of the wealth of nongovernment experience.

The travel industry is evolving, and it makes good sense for DoD to capitalize on this evolution and build a partnership with industry that will last well into the 21st century. In that light and because we have received such an extensive amount of positive comments in response to our draft solicitation, we are conducting a thorough review of our requirements and acquisition strategy.

It's too early for me to tell you the outcome, but I can assure you that we are listening to what industry has to say. They are the experts. They are the ones who will provide us solutions for our travel management challenges so DoD can put its streamlined resources to work in the appropriate areas.

It is clear that we have done much already. However, as I stated in the beginning, we are not there yet, and some significant challenges remain. They fall within three major areas: legislative, technological and cultural.

We have requested the amendment of the following statute that pertains to DoD civilian travelers: 10 United States Code, Section 1589.

We propose the repeal of statutory language that prohibits DoD from paying a lodging expense to a DoD civilian employee who does not use adequate available government lodgings while on TDY. The statutory language does not permit flexibility by the resource manager to determine on a case-by-case basis the most efficient and cost-effective utilization of total travel dollars.

For example, it does not allow consideration of car rental costs between government lodging and the TDY mission locations; it does not consider the total costs of providing government lodging, such as building construction, maintenance and utilities. These costs are paid by other DoD appropriations that are not visible either to the traveler or to the local resource manager.

I would also like to underscore that many of the reforms offered by the Joint Financial Management Improvement Program initiative to provide broader or governmentwide improvements require legislation.

Electronic Signature. A seamless, paperless system is our vision. An essential element to accomplish this vision is to ensure that the necessary data integrity is maintained since this system will result in disbursement of public funds. Electronic signature technology appears to provide a method that can be used to provide the necessary integrity and allow us to comply with requirements of the False Claims Act.

We are currently studying how we can achieve the necessary level of data integrity in a cost-effective manner. In order to reduce development risks and costs, we are working closely with the General Accounting Office, National Institute of Standards and Technology and the Department of Energy to develop the necessary specifications for a standardized electronic signature system.

Although this system will be utilized for travel, it can also be used for a variety of other applications and is based on the Digital Signature Standard. GAO has recognized that the issues surrounding data integrity in an effort such as ours is complex and specific features needed will continue to evolve as more experience is gained. In order to allow us to gain the information that we need to define the controls necessary to achieve a paperless system, GAO has approved our testing of some commercially available products.

Industry issues. Our pilot experience has underscored the need for a sophisticated understanding of the capabilities and limitations of our communications and data processing infrastructure. Our future system will have to provide service in a wide variety of operational environments.

Our tests have demonstrated that some of our communications and data processing infrastructure is not adequate to utilize these modern techniques. One of our initiatives is to identify industry standards for electronic commerce and apply them to our new DTS. As industry progresses towards greater reliance upon electronic commerce methods, the department must likewise remain flexible enough to move with it.

One of the unanticipated technical barriers encountered during the pilot phase has been the time required to update the software modules with new entitlement rules and to ensure that those changes are accepted for processing payments by our accounting systems. Since entitlement changes occur on a regular basis, this is an issue that needs to be worked.

Additionally, travel industry conditions are changing so rapidly that it is taxing our ability to predict the costs of future travel services. For example, the commission structure of the travel arrangements industry is changing, with potentially significant implications for our future costs.

Beyond the specific legislative proposals and technological challenges that I have outlined, there are some "cultural barriers" that hamper our ability to achieve our travel re-engineering goals. Perhaps foremost among these barriers is the oversight mentality that would have the department spend $100 in establishing rigorous internal controls to oversee a $10 problem. We need to emulate private sector practice of systems control, random audit and supervisory accountability. We need to ensure that requirements such as signatures add value to the process. Best practice in industry for filing vouchers does not require -- or pay for -- fail-safe or multiple signatures as a condition for reimbursement.

Here is where congressional leadership can help to set the tone by applying cost/benefit analysis principles and common sense to oversight and internal control requirements. By treating the DoD traveler and his/her supervisor as honest customers, we have deliberately designed a system that is not oriented around stopping the 2 percent "bottom feeders."

The costs and systems complexity required to target that population should not be allowed to drive the features of the defense travel system. Here again, the pilots will help us to assess the strength and viability of the internal control features of the new system. The lessons learned from their experience will provide an invaluable tool with which we can develop rational and cost-effective control alternatives.

I would like to conclude my testimony today on a very positive note. The Department of Defense remains highly committed to this important re-engineering effort. We have made significant progress in a very short period of time. Given the scope and complexity of the operations in this department and the changes underway in the travel industry itself, I would go even further to characterize the progress as extraordinary! I will admit to you, however, that this change effort has been much harder than we had anticipated. Change is always difficult, but the anticipated as well as those unanticipated barriers in the areas of policy, technology, and culture have been challenging indeed.

I would ask for the continued support of this committee, and I count on the support of the other federal agencies I have mentioned today as we come closer to the actual implementation of our new defense travel system. I would be happy to now take any questions that you may have.

 

Published for internal information use by the American Forces Information Service, a field activity of the Office of the Assistant Secretary of Defense (Public Affairs), Washington, D.C. Parenthetical entries are speaker/author notes; bracketed entries are editorial notes. This material is in the public domain and may be reprinted without permission. Defense Issues is available on the Internet via the World Wide Web at http://www.defenselink.mil/speeches/index.html. 11