Mr. Chairman, members of the committee: It is a pleasure to be here to address you on our temporary duty travel re-engineering project within the Department of Defense.
Last June the undersecretaries of defense for acquisition and technology, personnel and readiness, and comptroller, and the director for administration and management chartered the DoD Task Force to Re-engineer Travel. The task force's report, published in January 1995, recommends we shift our ways of thinking about traveling for the government and provides numerous specific changes in our administration of travel. It recommends reliance on the private sector to accomplish many of its goals.
Our vision is a seamless, paperless system that meets the needs of travelers, commanders and process owners. It must reduce costs, support mission requirements and provide superior customer service.
On Jan. 23 the deputy secretary of defense directed the department to implement the recommendations of the task force and tasked me to manage the transition effort, giving me the authority to change any practice, policy or procedure within the department to accomplish this end.
I have created a transition task force of functional experts and service and agency representatives. This task force is up and running -- running very fast, in fact... . The task force process includes a steering group of major general/rear admiral or equivalent representatives from all the services, and it has a working group level to tackle the specifics of the implementation. We have also included the DoD inspector general's staff in our process to ensure we build in appropriate oversight processes up front.
This transition team has an extremely ambitious timeline and has begun to meet many of the targets set forth in the original task force report. The first task was to create a simplified structure of entitlements, one that provides equity among officers, enlisted members and civilian travelers in the department. I am happy to report that a simpler regulation is virtually complete.
We have prepared an entitlements package that will replace Chapter 4 of both the Joint Federal Travel Regulations and Joint Travel Regulations, which cover both military and civilian travelers, respectively. These simplified entitlements reduce the existing regulations by over 90 percent. I must compliment my colleagues in the Office of the Undersecretary of Defense for Personnel and Readiness for radically altering the structure, language and direction of the entitlements regulation so quickly. They have done a truly remarkable job, fixing in two months a document that has taken over 40 years to create.
Some of the changes in this simple document include payment of 75 percent of the meals and incidental allowance on the day of departure and day of return; using a "whole day" concept for meals, whereby meals in a government mess are regarded as available only if all three meals are in fact available and suitable for mission requirements; and retention of the lodgings-plus system of determining per diem, but with the ability of the authorizing official to permit exceptions up to 150 percent of the per diem rate when the CTO [commercial travel office] cannot book arrangements with the normal rate. I have furnished a copy of the entitlements report to your staff.
This package requires some waivers from other government agencies, including the Internal Revenue Service and General Services Administration, which we have requested. We are also giving our unions the opportunity for input through the Defense Partnership Council. I have included a summary of our waiver requests with the entitlements report. We expect a favorable response in the very near future.
Additionally, the department has established both use of the travel card (currently furnished by American Express through a GSA contract) and payment of travel claims and advances by electronic funds transfer as our standard business practice. We are developing procedures that offer the option to split disbursement of travel payment to both the travel card vendor and to the traveler as well. Implementation instruction[s] are in final stages of development even as we speak.
Another major initiative is the development of a standard statement of work for the commercial travel office contracts with DoD. This effort has been under way for quite some time and will be complete by the middle of April. This statement of work will clearly identify the services sought by the government from industry, requiring, for example, that CTOs book government billeting as well as commercial lodging. It will also require CTOs to prepare "should-cost" estimates for travel based on booked arrangements. We seek one-stop shopping for all travel arrangements, just as is provided to many corporate customers of our CTOs.
Also by the middle of April several pilot sites will have been nominated by the services and defense agencies, and pilot programs are scheduled to begin in July of this year. We anticipate the pilot programs are scheduled to begin in July of this year. We anticipate the pilot and selection process will last about a year in toto, and we will begin DoD-wide application of the process within the next fiscal year.
We will hold an industry symposium April 26 to seek what products within the commercial sector can meet our needs. We intend to present industry with three major pieces: simplified entitlements, a standard statement of work for a contract and new administrative and financial procedures (such as split disbursement and EFT [electronic funds transfer]). We expect them to offer us systems that will seamlessly tie these pieces together into a paperless process. The transition team has been receiving queries from industry since the day this symposium was announced in the Commerce Business Daily on March 1.
Some limited pilots have already begun to provide proof-of-concept testing of many elements of the new system. At Air Combat Command headquarters at Langley Air Force Base, Va., we will test maximized use of the travel card, payment by EFT and use of a commercial software program to prepare orders and compute vouchers. Within the Washington area the 11th Support Wing, an Air Force unit, is testing similar processes.
The National Security Agency has had a long-term re-engineering effort under way, which was, by the way, very helpful in completing our own study. They, too, will be testing similar processes within their own specialized community.
Lastly, the Army's Forces Command headquarters in Atlanta will be testing similar arrangements, but integrated with the Army's financial management systems.
Initial feedback from these limited tests are encouraging: error rates, cycle times and customer "time in line" is reduced, which assists us in both managing government cost and serving travelers faster. Manpower can then be redirected to more productive tasks.
While we are enthusiastic about this program in principle, the devil is, of course, in the details, and we have found four major barriers to our fully implementing this project:
- Barriers within government.
First, we must seek waivers from other government agencies, as I have mentioned, such as GSA and IRS [Internal Revenue Service]. We must also seek General Accounting Office approval of the use of electronic signatures and other measures to streamline the management of information. These waiver request[s] have already been submitted, as I have said, and we are awaiting a response.
Second, we have not been able to fully develop a good baseline for current process costs, since each installation uses somewhat different processes and has radically different levels of technology. Compounded with service variations in accounting and financial management systems, this will make for some complex interface questions. Our proof-of-concept pilots within Army and Air Force address some of these issues, however, and we will be able to get answers to many of these questions as we continue to test.
- Barriers within the private sector.
Third, the commercial world, on which we intend to rely for many tasks, is rapidly changing its practices as well. As you know, most airlines have imposed a cap on commissions paid to commercial travel offices, which significantly reduces their income. Since our contracts with these CTOs are concession contracts in which we pay nothing directly to them, we will likely have to alter our practices in this regard.
No standard CTO contract exists within DoD -- or indeed throughout the government -- but we are developing one now. Additionally, there are no true "turnkey" commercial systems that integrate all the parts of the process. While many vendors provide portions of such a system, no firm has integrated all the elements into a seamless system.
Our project will provide the impetus to create such a system. Our travelers also do not all accept the use of the travel card, due either to miseducation (which is our fault) or perceived poor service, and we have a challenge ahead of us to train our travelers in the advantages of the using the travel card.
- Barriers within our culture.
Fourth, and perhaps most important, are barriers to our thinking with[in] the department. We must first change the perception that loosening controls will cause someone to get an undeserved dollar. Rather than focus on potential chiselers, who comprise less than 2 percent of our total population (and of the commercial world as well), we should be focusing on the over 98 percent of our people who are honest and do the right thing -- no matter how much we get in their way. We need to change the "Washington Post test" to focus on the cost of administration of trying to catch that 1 or 2 percent, which we impose on 100 percent of the travelers and their superiors.
We have other internal perceptions to overcome as well, such as a somewhat paternalistic view of junior enlisted members who, we assume, when given new tools could abuse them; a distrust of new technology and of the re-egineering process in general; and the impression that this effort is but another "one size fits all" solution to all our problems. It is not, of course: We do provide flexibility to meet mission requirements.
I am happy to report we are correcting these perceptions, but it will take some time. We have a substantial internal marketing effort under way within the department and are continually seeking buy-in. I am confident that once we have data from successful tests and pilots the program will begin to sell itself.
We don't know the full scope of investment costs for [the] project until tests are complete. We intend to make maximum use of existing information architecture at our installations, but not allow ourselves to be limited by that architecture alone. We will have to buy software from commercial vendors, create bridging programs to get accounting systems to accept data, purchase some hardware and additional connectivity for installations and organizations that lack such infrastructure and pay for vendors to train current process owners, travelers and commanders in their new systems.
I think these costs will be relatively small compared to the potential savings and can be managed within the existing and projected DoD budget. Again, our pilot projects will tell us much more about such costs. At Langley Air Force Base, for example, costs have been limited to purchasing some software, some minor hardware upgrades and paying for system maintenance and bridging program development. Since this process is not yet complete, I cannot give you a full cost breakdown, but we will furnish it in due course.
We are developing performance measures to use throughout the testing and implementation phases of this effort. They include total cycle time, indirect and direct costs of travel, and customer satisfaction. We also want to examine aspects of policy compliance, some of which we do already, such as the percentage of total travel reimbursements made via EFT, percent of total travel paid for through the travel card and percent of airline reservations made on city-pair contract routes.
We are preparing a draft set of performance measures now and will refine them throughout the testing process. Of note is the participation of members of the DoD IG [inspector general] staff and the budget and costing communities in helping us identify cost baselines and to shape these performance measures.
Just as we don't know the full extent of investment costs, we don't know the full extent of potential savings. We estimate we currently spend between 15 percent and 30 percent of the direct cost of travel on administration, which equates to between $500 [million] and $1 billion each year.
Within those numbers about $100 million are salaries of voucher examiners and computation specialists in service and agency finance centers. We also estimate that about $60 million is spent on reconciling and paying travel costs billed to central accounts (such as government travel accounts and transportation requests). Following our re-engineering strategy would reduce these two costs substantially.
We also would be able to capture the full range of travel card rebates and shared commissions with travel service providers, such as hotels and rental cars, that we currently lose. We currently retain about $55 million of a potential $110 million in shared commission and rebates. The changing industry commission structure and the expanded scope of services we expect will affect this amount, but we don't know by how much yet. I hesitate to mention specific cost reduction goals because we simply do not have a full handle on current costs.
Other portions of the cost are in the salaries of administrative personnel, who now spend an inordinate amount of their time working within today's highly bureaucratic system -- though this is not their primary responsibility. We would be letting these people perform more productive tasks once our reforms are fully implemented.
One of the greatest improvements will be reducing "time in line." We do know that our travelers spend an extraordinary amount of time complying with the current rules. Our study shows an estimated six hours of time for travelers simply to prepare a reimbursement voucher for submission; one base got this down to an hour.
If we can make that much of an improvement DoD-wide, we could save as much as 21,000 man-years -- a division's worth of troop labor -- that would be devoted to much more productive tasks directly related to the readiness of our armed forces. That's the kind of payoff we're seeking through this process.
I have prepared 10 key features for this new system, which I would like to share with you now:
- The traveler and commander or supervisor are honest professionals, who are accountable for their actions. Simple rules and automated tools will help them carry out their responsibilities.
- Supervisors will have travel budgets and will approve vouchers and variations in "should-cost" arrangements. Simplified accounting and management information systems will let supervisors track their funds.
- Entitlements are simple, easy to understand and provide maximum flexibility for mission support. Arrangements are based on mission rather than status of traveler.
- Travelers and supervisors will have one-stop shopping for all arrangements through mandatory use of a commercial travel office.
- One document will support travel by being the order, itinerary, voucher and record of any changes in arrangement. Data will be entered once, regardless of source, and all levels will rely on electronic records rather than paper documents.
- Travelers will be paid fairly and quickly through a process they can easily understand and use.
- No more paper statements of nonavailability -- if government facilities can't be confirmed through the CTO, they don't have to be used.
- The traveler would hold all receipts, not the government, just as we do for taxes.
- Travelers will use commercial travel cards to pay for all travel expenses, consistent with mission requirements, with split disbursement both to the traveler and to the card company via electronic funds transfer. No cash advances, except in the most unusual circumstances -- use the travel card for advances or pay most charges on the travel card.
- Continuously assess performance for improvement.
These features form the specific tenets of our vision and will assist in shaping our transition to the future. More importantly, they represent the best-in-class practices found both inside the government and in the private sector. However, they do not now exist together as a seamless process.
DoD intends to become the example for others to follow. The travel re-engineering represents one of many; we are committed to fundamentally improving our unduly management processes. I look forward to working with you and my colleagues in helping to reshape the travel process to attain our vision.
Published for internal information use by the American Forces Information Service, a field activity of the Office of the Assistant to the 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