<DOC>
[109 Senate Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:32354.wais]
S. Hrg. 109-246
THE DEFENSE TRAVEL SYSTEM: BOON OR BOONDOGGLE? (PART 2)
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HEARING
before the
PERMANENT SUBCOMMITTEE ON INVESTIGATIONS
of the
COMMITTEE ON
HOMELAND SECURITY AND
GOVERNMENTAL AFFAIRS
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
NOVEMBER 16, 2006
__________
Printed for the use of the Committee on Homeland Security
and Governmental Affairs
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COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio CARL LEVIN, Michigan
NORM COLEMAN, Minnesota DANIEL K. AKAKA, Hawaii
TOM COBURN, Oklahoma THOMAS R. CARPER, Delaware
LINCOLN D. CHAFEE, Rhode Island MARK DAYTON, Minnesota
ROBERT F. BENNETT, Utah FRANK LAUTENBERG, New Jersey
PETE V. DOMENICI, New Mexico MARK PRYOR, Arkansas
JOHN W. WARNER, Virginia
Michael D. Bopp, Staff Director and Chief Counsel
Michael L. Alexander, Minority Staff Director
Trina Driessnack Tyrer, Chief Clerk
PERMANENT SUBCOMMITTEE ON INVESTIGATIONS
NORM COLEMAN, Minnesota, Chairman
TED STEVENS, Alaska CARL LEVIN, Michigan
TOM COBURN, Oklahoma DANIEL K. AKAKA, Hawaii
LINCOLN D. CHAFEE, Rhode Island THOMAS R. CARPER, Delaware
ROBERT F. BENNETT, Utah MARK DAYTON, Minnesota
PETE V. DOMENICI, New Mexico FRANK LAUTENBERG, New Jersey
JOHN W. WARNER, Virginia MARK PRYOR, Arkansas
Raymond V. Shepherd, III, Staff Director and Chief Counsel
C. Jay Jennings, Senior Investigator
Elise J. Bean, Staff Director and Chief Counsel to the Minority
Mary D. Robertson, Chief Clerk
C O N T E N T S
------
Opening statements:
Page
Senator Coleman.............................................. 1
Senator Coburn............................................... 4
Senator Levin................................................ 5
Senator Carper............................................... 6
WITNESSES
Thursday, November 16, 2006
Thomas F. Gimble, Acting Inspector General, U.S. Department of
Defense........................................................ 8
McCoy Williams, Director, Financial Management and Assurance
Team, Government Accountability Office......................... 9
Hon. David S.C. Chu, Ph.D., Under Secretary for Personnel and
Readiness, U.S. Department of Defense.......................... 16
Alphabetical List of Witnesses
Chu, Hon. David S.C., Ph.D.:
Testimony.................................................... 16
Prepared statement........................................... 61
Gimble, Thomas F.:
Testimony.................................................... 8
Prepared statement........................................... 29
Williams, McCoy:
Testimony.................................................... 9
Prepared statement........................................... 36
EXHIBITS
1. GLetter from the Permanent Subcommittee on Investigations to
Department of Defense Secretary Donald H. Rumsfled, dated
August 11, 2005, regarding the Defense Travel System........... 65
2. GLetter from the Permanent Subcommittee on Investigations to
U.S. Government Accountability Office Comptroller General David
M. Walker, dated August 11, 2005, regarding the Defense Travel
System......................................................... 69
3. GLetter from the Permanent Subcommittee on Investigations to
Department of Defense Inspector General Joseph E. Schmitz,
dated August 11, 2005, regarding the Defense Travel System..... 71
4. GU.S. Government Accountability Office (GAO) Report to
Congressional Addresses, DEFENSE TRAVEL SYSTEM--Reported
Savings Questionable and Implementation Challenges Remain,
September 2006, GAO-06-980..................................... 730
5. GLetters from Department of Defense Assistant Inspector
General John R. Crane, Communications and Congressional
Liaison, to the Permanent Subcommittee on Investigations, dated
May 11 and August 24, 2006, regarding analysis of the Defense
Travel System.................................................. 120
6. GReport of the Office of Inspector General, U.S. Department
of Defense, Information Technology Management--Management and
Use of the Defense Travel System, (D-2007-024), November 13,
2006........................................................... 122
7. GDTS Trip Usage At 42 DOD Locations (Jan-Sept 2006), chart
prepared by the Permanent Subcommittee on Investigations,
Majority Staff................................................. 178
8. GDTS Trip Usage At Selected DOD Locations (Jan-Sept 2006),
chart prepared by the Permanent Subcommittee on Investigations,
Majority Staff................................................. 179
9. GResponses to supplemental questions for the record submitted
to Thomas F. Gimble, Acting Inspector General, U.S. Department
of Defense..................................................... 182
10. GResponses to supplemental questions for the record submitted
to McCoy Williams, Director, Financial Management and
Assurance, U.S. Government Accountability Office............... 184
11. GResponses to supplemental questions for the record submitted
to David S.C. Chu, Ph.D., Under Secretary for Personnel and
Readiness, U.S. Department of Defense.......................... 187
THE DEFENSE TRAVEL SYSTEM: BOON OR BOONDOGGLE? (PART 2)
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THURSDAY, NOVEMBER 16, 2006
U.S. Senate,
Permanent Subcommittee on Investigations,
Committee on Homeland Security
and Governmental Affairs,
Washington, DC.
The Subcommittee met, pursuant to notice, at 10 a.m., in
room 342, Dirksen Senate Office Building, Hon. Norm Coleman,
Chairman of the Subcommittee, presiding.
Present: Senators Coleman, Coburn, Levin, and Carper.
Staff Present: Raymond V. Shepherd, III, Staff Director and
Chief Counsel; Mary D. Robertson, Chief Clerk; Mark L.
Greenblatt and Steven A. Groves, Senior Counsels; C. Jay
Jennings, Senior Investigator; Cindy Barnes, Detailee, GAO;
Joanna Ip Durie, Detailee, ICE; Emily Germain, Intern; Amy Hall
(Collins); Martin Updike (Coburn); Peter Levine (Levin); John
Kilvington (Carper); and Joel Rubin (Lautenberg).
OPENING STATEMENT OF SENATOR COLEMAN
Senator Coleman. This hearing of the Permanent Subcommittee
on Investigations is called to order. Good morning and thank
you for attending today's hearing.
This hearing is part of the Subcommittee's 2-year
investigation into various problems associated with the Defense
Trouble System, commonly called DTS. DTS is the Defense
Department's program designed to arrange and process travel for
all DOD employees.
Over the past 8 years, the Defense Department has spent
roughly half a billion dollars of taxpayers' money to develop
the system. For that huge investment, DTS was supposed to
generate cost savings of more than $65 million every year and
integrate the Department's travel planning system.
The Subcommittee's investigation has revealed that despite
these lofty goals and the massive investment of taxpayer money,
DTS does not perform its central purpose, booking travel in an
effective manner. I want the Department of Defense to have the
best travel system in the world, because travel is absolutely
essential for the effective performance of DOD's mission. For
half a billion dollars, DOD ought to have precisely that.
As a result, I expect to propose a major revision to the
Defense Department's travel procedures to make them more
effective and less wasteful and start down the path of getting
DOD a travel system that actually works.
But first let us explore some of the problems with DTS that
this Subcommittee has uncovered. More than a year ago I
directed the Subcommittee to investigate whether DTS is a boon
to the Defense Department or a boondoggle at the expense of the
American taxpayer. On August 11 of last year I wrote Secretary
Rumsfeld to request that he suspend further implementation of
DTS until certain serious problems were addressed.\1\
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\1\ See Exhibit 1 which appears in the Appendix on page 65.
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Those issues were the focus of a Subcommittee hearing in
September 2005. In that hearing, this Subcommittee established
several important problems associated with DTS. The development
of DTS was 4 years behind schedule. DTS was deployed in barely
half of the 11,000 DOD travel sites. DTS had grown in cost from
$273 million to almost $500 million. Despite that massive
investment, DTS did not list all available flights and did not
always identify the lowest possible airfares. To make matters
worse, DTS did not identify all available lodging facilities
that offer government rates.
All of these problems boil down to two fundamental
questions. One of those questions is whether DTS, which
purportedly saves $56 million each year, actually saves the
taxpayers any money. The next essential question is whether DTS
is the best, most cost-effective travel system for the
Department of Defense.
In order to get answers to these vital questions, I asked
the GAO to determine whether DTS's purported cost savings were
justified. I also asked the Inspector General of the Defense
Department to determine whether the cost and benefits of DTS
established that DTS was the best travel system for the
Department of Defense.
Today we hear from GAO and the Defense Department Inspector
General and we are getting answers to those questions. In
short, the evidence is in and it confirms the disappointing
truth: DTS does not work as advertised.
Here is a thumbnail sketch of the results of the
investigations by the GAO, the Inspector General and this
Subcommittee: GAO concluded that the projected cost savings for
DTS are questionable and cannot be justified. For instance, GAO
found that $31 million of the estimated $56.4 million in
estimated savings were based on a single article in a trade
industry magazine. According to the Inspector General, the
Defense Department does not know and cannot determine whether
DTS is the best travel system to serve its mission needs. This
Subcommittee has discovered that travel agents who work with
DTS on a daily basis uniformly agree that the system is
inefficient, incomplete and costly.
One additional fact reveals just how unpopular DTS is with
DOD personnel. The Subcommittee has discovered that more than
83 percent of DOD personnel who are supposed to use DTS are
actually using travel agents to arrange their travel. As
reflected in Exhibit 7,\2\ which is off to my left, the
Subcommittee found that of the roughly 755,000 trips undertaken
at 42 DOD locations from January through September of this
year, only 17 percent were arranged using DTS.
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\2\ See Exhibit 7 which appears in the Appendix on page 178.
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Let us turn to Exhibit 8,\3\ which lists some examples
where DOD personnel are primarily relying on travel agents. For
instance, DOD personnel at Fort Leavenworth booked more than
22,000 trips from January through September of this year and
99.9 percent used travel agents. Only one-tenth of 1 percent at
that location used DTS to plan their travel.
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\3\ See Exhibit 8 which appears in the Appendix on page 179.
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DOD personnel at another facility used DTS for a mere
eight-tenths of 1 percent of their trips. Likewise, DOD
personnel at Fort Shafter booked 26,425 trips and 98.3 percent
of those trips were arranged using travel agents rather than
DTS. My math, I think it is calculated up there for me, that
means 1.7 percent were arranged using this $500 million system.
Even the Pentagon, whose employees took more than 50,000
trips so far this year, have used DTS less than 20 percent of
the time.
These facts are disappointing. I am appalled that the
Defense Department has spent over half a billion dollars to
develop a system that does not work as required, that does not
save money as we were led to believe, that is not being used
uniformly by DOD personnel, and that DOD has not even kept
records to determine whether it is the best system for its
needs.
All this has led me to one simple conclusion: The travel
component to DTS is a failure and a waste of taxpayers' money.
Moreover, I have concluded that further efforts to resolve DTS
will only lead to a further waste of taxpayer dollars. The
answer is not to continue throwing money at the problem.
DOD now has the opportunity to pull the plug on DTS and I
recommend they take it. Because of DTS's widespread concerns,
Congress recently barred DOD from funding further
implementation of DTS. Instead, Congress has required DOD to
conduct an independent study of DTS to determine, among other
things, whether DTS travel and accounting functions can be
separated. I believe the study provides the Secretary of
Defense with the opportunity to graciously opt out of DTS's
travel functions, and I strongly suggest he take advantage of
that opportunity. Such a step will permit DOD to take advantage
of the aspects of DTS that work, and they do work, and that is
the accounting components, and scrap the elements that do not
work. And that is namely the travel functions.
It is important to understand the fallacy of the cost
savings that DOD proposed to generate by reducing travel agent
services. DTS's projected cost savings are, in fact, based on a
false premise: That you can generate savings by transferring
the responsibility to select flights, hotels, and rental cars
from professional travel agents to DOD travelers and pay the
travel agents a lower fee. This would be the same as directing
all DOD personnel to speak Arabic in order to save money on
translation services. DOD is claiming the savings from reduced
travel agent fees without considering the cost of having the
troops do the work.
According to numerous travel agents interviewed by the
Subcommittee, they can do the work faster and at less cost. In
fact, one travel agent said, ``DTS is not cost effective
because a travel agent can make all reservations in about 5
minutes where it takes DOD personnel 30 minutes or more to
perform the same function.'' The time DOD personnel spend
making travel reservations could be far better spent on their
mission-related responsibilities.
The commercial travel systems that travel agents use to
book reservations are far superior to DTS because they have
complete flight, hotel, and rental car information. DTS does
not. Travel agents can book rail reservations. DTS cannot.
Travel agents can make reservations in commercial travel
systems that actually book the flight and make the hotel
reservations. DTS cannot.
One travel agent summed up this problem as follows: ``The
system does not work. It is not a live system that actually
books flights or reserve hotel rooms or rental cars. That work
is performed by a travel agent.'' It is time to stop wasting
the taxpayers' money and find a solution that actually works.
To that end, I am preparing legislation and working with my
colleague, Senator Coburn, who has really been a champion in
rooting out inefficiency, incompetence, corruption, and fraud
in government and had really highlighted this issue long before
many others.
I hope to introduce that legislation in the near future in
order to end the part of DTS that does not work, the travel
planning component, and keep the part that does work, the
accounting component. At the very least, that will begin the
process of getting DOD the best travel service to meet its
needs.
As I said before, I look forward to working with my
colleague, Senator Coburn, and Ranking Member, Senator Levin,
on this proposal as they have very serious interest in this
issue.
Today we will hear testimony from representatives of the
General Accountability Office and the DOD Inspector General,
who will testify about their most recent findings as well as
the reports they wrote that questioned the costs and benefits
that DTS offers DOD.
Finally, we will hear from Undersecretary David Chu, who is
the official responsible for DTS.
With that, I recognize my colleague from Oklahoma.
OPENING STATEMENT OF SENATOR COBURN
Senator Coburn. Let me thank you, Mr. Chairman, a great
deal for having this hearing.
DTS is a symptom. This whole contract is a symptom of what
is wrong in our government today. It is not that the parties do
not intend and mean well. There is no sleight of hand. But what
there is is a lack of standards of both behavior and
expectation that is totally different than in private industry.
The problems I see is we have a never ending contract. In
the private sector, if we buy software, we buy software and get
a quote, we get a bid, and the vendor is expected to come in
and pay for it and do it.
We have seen totally the opposite of that with this
contracting process. This is not the supplier's fault, but
there are tremendous problems in procurement in the Pentagon
and in other areas across the government. And this is a symptom
of it.
I want to reflect no malice on anyone in this process other
than to say, with the significant problems that are in front of
us as a Nation, we cannot continue to do business this way.
My hope is that this can become the poster child of how not
to do something. There are certain components of this that work
very well, especially the financial. The one thing that nobody
considered in this whole program is because the Pentagon's
computers and the military and the whole Defense Department do
not talk to one another, that made this a very difficult
problem. There is no question about it.
But what nobody has answered is in the 6 or 8 years from
now, when they will talk to one another, we do not need this.
We are not going to need it because we have a program now that
takes care of all of those other problems from an accounting
standpoint but does not do what the private sector and other
areas can do in terms of travel.
So I am very thankful that we are here. I think we ought to
use this as an object lesson, how to change contracting, how to
increase accountability and tremendously increase transparency
in our government.
I look forward to working with both the Chairman and the
new Chairman and the future Congresses to change how we
contract.
As a physician, we look at symptoms of disease. This is a
symptom of a disease in contracting in the Federal Government
that has got to change. We cannot afford to do business this
way and I am very thankful that we are having this hearing.
Thank you.
Senator Coleman. Thank you, Senator Coburn. I will now turn
to my Ranking Member, Senator Levin.
OPENING STATEMENT OF SENATOR LEVIN
Senator Levin. Thank you very much, Mr. Chairman.
Thank you for convening this important hearing and for the
oversight that you have provided in the very critical area of
Department of Defense operations.
Every year the Department of Defense spends roughly $20
billion to develop new information systems and to operate and
maintain existing information systems. Like so many other
Department of Defense programs, the Department's information
technology programs are troubled by cost overruns, schedule
delays, and performance deficiencies.
The Defense Trouble System, DTS, is no exception. When DTS
was first conceived in the mid-1990s, the Department of Defense
travel system was a complete mess. Individual components of the
Department entered their own arrangements with different travel
companies, each of which had its own process systems and
procedures. The travel process was paper intensive with written
travel orders required before the trip and written requests for
reimbursement filed at the end of the trip.
The travel reservation and booking process was separate
from the voucher and payment process, which was itself separate
from the financial accounting process. Management controls were
lacking. Financial records were inaccurate and incomplete.
DTS was supposed to address all of these problems by
establishing a single end-to-end travel system based on
commercial technology. Unfortunately, as in so many other
cases, Department of Defense tried to do the job on the cheap
without conducting adequate planning as required by the
Clinger-Cohen Act and other applicable statutory requirements.
As a result, more than 7 years after the initial DTS
contract was awarded, the system still has not been
consistently implemented throughout the Department. And as a
result, the Department currently bears the burden for paying
for both DTS and on the legacy systems that it is designed to
replace.
This is all too typical of the Department of Defense
business system development programs. DTS appears to be
deficient in meeting user requirements by providing the
appropriate lowest-cost fares for government travelers.
The Department of Defense says that these problems can be
fixed, but we do not know how much those fixes will cost or how
effective they will be or when they will be accomplished.
For this reason, Section 943 of the John Warner National
Defense Authorization Act for fiscal year 2007 requires the
Secretary of Defense to conduct an independent study to
determine the most cost-effective method of meeting the
Department's future travel requirements. The Department is
prohibited from entering a new contract or expending funds for
DTS until after this report has been completed and submitted to
Congress.
The reason this language is there is because of the
initiative of Senator Coburn, who offered an amendment, which
was even somewhat stronger if I may say on the floor. We worked
out language in conference which I believe and hope was
satisfactory to Senator Coburn because it does now drive what
we are trying to accomplish here. I again commend him for his
tenacity in this regard.
I do not know whether the Department of Defense should
pursue DTS to completion at this point, or whether we would be
better off scrapping DTS and starting over from the beginning.
I do not know whether DTS would be more cost effective if its
use is mandated across the Department. I do not know whether
the successful elements of DTS, such as the vouchering and
financial systems, can be separated from the more problematic
travel reservation system.
It is my hope, however, that the independent review
mandated by Section 943 will provide the answers to these
questions.
Again, Mr. Chairman, I thank you for your initiative in
this area, as so many other areas, and I look forward to the
testimony of our witnesses.
Senator Coleman. Thank you, Senator Levin. Senator Carper.
OPENING STATEMENT OF SENATOR CARPER
Senator Carper. Just very briefly.
I want to preface my remarks by simply saying to the
Chairman, Senator Coleman, to Senator Levin, to Senator Coburn,
a real special thank you for participating as faculty members
in the orientation this week of our new senators and their
spouses, and to not only give them a good welcome but also to
try to help them learn from our mistakes that we have made in
our first years here, including our current experience here.
I shared with the new senators at our orientation breakfast
this morning that one of the core values in my own office to
focus on excellence in everything that we do because everything
that we can do we can do better. I also like to say to my
staff, if it is not perfect, make it better.
That is an understatement when it comes to this Defense
Travel System. What started off as a very good idea in 1994,
one that was going to cost about $250 million, is now sort of
morphed into a system that has been deployed in about half the
sites it was supposed to have been deployed to. The cost may
now be roughly twice what it was supposed to be. And not too
many people I have talked to are pleased with the product and
the service that it provides.
God knows, we can do better than this. We have a role in
the Legislative Branch, not a role we have always met well in
recent years, to provide good oversight not just to be critical
for the sake of being critical but to hold people's feet to the
fire to make sure that we actually do provide a better product,
better service for the taxpayers and for those that are, in
this case, going to be able to travel someplace and save money,
get where they need to go and do so at a reasonable cost to our
taxpayers.
Senator Coburn and I have looked at this issue in the
Subcommittee, that we have been privileged to lead in the last
few years. I am delighted that you are holding this oversight
hearing today to look for some further progress and to answer
some of the questions that Senator Levin just mentioned, that
we do not know, we do not know, we do not know. We need to
know. And frankly the President needs to know, and whoever is
going to lead the Department of Defense needs to know, as well,
so we can make some tough decisions.
Thank you, Mr. Chairman.
Senator Coleman. Thank you, Senator Carper.
I would now like to welcome our first panel of witnesses
for today's hearing. Thomas Gimble, the Acting Inspector
General at the Department of Defense; McCoy Williams, Director
of Government Accountability Office's Financial Management and
Assurance Team.
Both of you gentlemen were witnesses at our September 2005
hearing on this matter. I welcome you back and look forward to
your testimony here on your latest perspective on the Defense
Travel System.
As you know, DTS was largely justified on the cost savings
it would realize. And that is why I asked the Comptroller
General to determine if the cost savings were substantiated.
Further, as we pointed out in the Office of Program
Analysis and Evaluation study, a cost-benefit analysis is
required to determine if DTS meets DOD's travel needs. That is
why I asked the Department of Defense IG to perform such an
analysis and I look forward to hearing the results of your
reviews, in part, Senator Levin, to get answers to the
questions that you raise. I think one of the frustrations, at
least, is my review of the primary testimony is that we are not
in a position to answer those questions, even after spending
$500 million, which is obviously very frustrating.
Pursuant to Rule 6, all witnesses who testify before this
Subcommittee are required to be sworn. I would ask you please
to both stand and raise your right hand.
Do you swear the testimony you are about to give before the
Subcommittee is the truth, the whole truth, and nothing but the
truth, so help you, God?
Mr. Gimble. I do.
Mr. Williams. I do.
Senator Coleman. Gentleman, I think you are familiar with
the timing system. When the light turns to amber, you have
about a minute to sum up. Your entire testimony will be printed
into the record in its entirety.
We will start with Mr. Gimble first and he will be followed
by Mr. Williams.
Mr. Gimble, you may proceed.
TESTIMONY OF THOMAS F. GIMBLE,\1\ ACTING INSPECTOR GENERAL,
U.S. DEPARTMENT OF DEFENSE
Mr. Gimble. Mr. Chairman, Members of the Permanent
Subcommittee on Investigation, thank you for the opportunity to
appear before the Subcommittee today to discuss our most recent
audit report ``Management and Use of the Defense Travel
System,'' (DTS).
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\1\ The prepared statement of Mr. Gimble appears in the Appendix on
page 29.
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As you know, the Subcommittee asked my office to conduct an
independent cost-benefit evaluation of DTS. The Department,
however, was unable to provide supporting documentation to
substantiate all DTS and legacy system cost data. Therefore, it
is not possible for us to determine whether DTS is the most
cost-effective way to meet the Department's travel management
needs or even to fully quantify the cost savings that might be
realized by using DTS.
The Department envisioned DTS as a 21st Century model of
efficiency and service, featuring the best practices in
industry. The Program Management Office planned for DTS to
support all forms of business travel. In addition, the Program
Management Office designed DTS to interface with DOD accounting
and disbursing systems. The expected DTS program costs were
estimated at over $2 billion for the 20-year life cycle of the
program.
Problems with documentation supporting DOD travel costs
existed before DTS and continue to exist. The Task Force to
Reengineer Travel concluded in its January 1995 report that it
could not easily identify all costs involved in the temporary
duty travel process and that costs of administering travel were
also unquantifiable.
In response to our July 2002 audit report, the Director,
Program Analysis and Evaluation, conducted a cost-effectiveness
study and issued a report on December 17, 2002, concluding that
the Department did not capture travel costs necessary to
validate program savings or determine whether DTS was the most
cost-effective system to support DOD travel.
More recently, the Principal Deputy Director, Program
Analysis and Evaluation, wrote in a memorandum that the
Department needed more reliable data after reviewing the 2003
DTS economic analysis.
These undertakings, in addition to our inability to
validate current DTS and other travel-related cost data,
represent a fundamental flaw in the Department's reporting
process. However, the flaw is not specific to DTS. It is a
department-wide failure to collect and retain travel-related
cost data that are auditable.
Our report recommends that the Under Secretary of Defense
(Comptroller) and the Under Secretary of Defense for Personnel
and Readiness coordinate with the Department comptrollers to
develop a formal reporting process, maintain detailed records
of all DTS and legacy system travel costs, and establish a
viable process for measuring whether using DTS has enabled DOD
to achieve projected benefits cited during the Milestone C
decision.
The report also recommends that if DTS is to continue being
used after the study required by Section 943 of Public Law 109-
364 is completed, the Under Secretary of Defense for Personnel
and Readiness must develop, in coordination with the Director
of the Business Transformation Agency, the Services, and
Defense Agencies, a travel management strategy that includes a
plan for effectively implementing DTS at all remaining sites
and a single methodology for consistently monitoring compliance
with the Department policy.
The report also recommends that the Under Secretary of
Defense for Personnel and Readiness establish a plan addressing
short-term and long-term goals to achieve 100 percent use of
DTS for routine temporary travel.
Further recommendations include: That the Director, Defense
Finance and Accounting Service implement a process to ensure
voucher payments recorded in the disbursing systems can be
reconciled to the voucher payment data in the e-Biz accounting
system; and that upon completion of the DTS study, if it is
decided that DTS should continue, the Program Director, DTS
Program Management Office institute an effective and timely
process for addressing system change requests to improve the
Department's ability to use the system.
This concludes my oral statement. I would be happy to
answer any questions that the Subcommittee may have.
Senator Coleman. Thank you, Mr. Gimble. Mr. Williams.
TESTIMONY OF McCOY WILLIAMS,\1\ DIRECTOR, FINANCIAL MANAGEMENT
AND ASSURANCE TEAM, U.S. GOVERNMENT ACCOUNTABILITY OFFICE (GAO)
Mr. Williams. Thank you, Mr. Chairman. Mr. Chairman and
Members of the Subcommittee, I am pleased to be here today to
discuss our recent report related to problems encountered by
the Department of Defense in successfully implementing the
Defense Travel System.
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\1\ The prepared statement of Mr. Williams appears in the Appendix
on page 36.
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My testimony is based on our September 2006 report which
followed up on our September 2005 testimony and January 2006
report.
Today I will highlight our key findings related to the
September 2003 economic analysis, data needed to monitor DTS
utilization, and systems requirements and testing.
I will also discuss our recommendations to improve
Department's management and oversight of DTS.
First, Mr. Chairman, our analysis of the September 2003 DTS
economic analysis found that the two key assumptions used to
estimate cost savings were not based on reliable information.
Two primary areas, personnel savings and reduced CTO fees,
represented the majority of the over $56 million of estimated
annual net savings DTS was expected to realize.
With regard to personnel savings, Air Force and Navy DTS
program officials stated that they did not anticipate a
reduction in the number of personnel with the full
implementation of DTS, but rather the shifting of staff to
other functions. According to DOD officials responsible for
reviewing the economic analysis, while shifting personnel to
other functions is considered a benefit, it should not be
considered a real dollar savings since the shift in the
personnel does not result in a reduction of DOD expenditures.
DOD strongly objected to our finding that the personnel
savings are unrealistic, however, because none of the military
services could validate an actual reduction in the number of
personnel as a result of DTS implementation and DOD's comments
did not include any additional support or documentation for its
position, we continue to believe that the estimated annual
personnel savings of $54.1 million is unrealistic.
Mr. Chairman, in regards to the estimated annual savings of
$31 million attributed to the lower CTO fees, DOD assumed that
70 percent of all airline tickets would be considered no touch,
meaning that there would be no or minimal intervention by the
CTO, thereby resulting in lower CTO fees. However, DTS program
officials could not provide any data to support the assumption.
We found that the 70 percent assumption was based solely on an
American Express newsletter article that referred to the
experience of one private sector company completely unrelated
to DTS.
Second, Mr. Chairman, our analysis found that the
Department did not have quantitative metrics to measure the
extent to which DTS is actually being used. The reported DTS
utilization rates were based on estimated data and DTS program
officials acknowledged that the model had not been completely
updated with actual data as DTS continued to be implemented at
the planned 11,000 sites. As a result, DTS officials continue
to rely on outdated information in calculating DTS utilization
rates.
Third, Mr. Chairman, DOD still has not addressed problems
associated with weak requirements management and system
testing. Mr. Chairman, requirements represent the blueprint
that system developers and program managers used to design,
develop, test, and implement a system. We identified 246 unique
GSA city pair flights that should have been identified in one
or more DTS flight displays according to DOD requirements.
However, 87 of these flights did not appear on one or more of
the required listings.
Mr. Chairman, while DOD has taken actions to address our
concerns, these actions do not fully address the fundamental
problems we have found during this audit and on which we have
previously reported. For example, the DTS requirements we
reviewed were still ambiguous and conflicting.
Finally, Mr. Chairman, our recent report included several
recommendations to improve the Department's management and
oversight of DTS. For example, we recommended that DOD improve
its methodology for developing quantitative data on DTS usage
and resolve inconsistencies and DTS requirements. Effective
implementation of these recommendations, as well as those
included in our January 2006 report, will go a long way towards
improving DTS functionality and increasing utilization.
In closing, management oversight, as well as continued
Congressional scrutiny, such as this hearing, will be important
factors in achieving DTS's intended goals. Equally important,
however, will be the Department's ability to resolve the long-
standing difficulties that DTS has encountered with its
requirements management and system testing. Until these issues
are resolved, more complete utilization of DTS will be
problematic.
Mr. Chairman, this concludes my statement. I would be
pleased to respond to any questions.
Senator Coleman. Thank you, Mr. Williams.
Mr. Gimble, it would be fair to say both gentlemen
indicated that one of the problems we have here is we do not
have the data to justify the so-called cost savings? Is that a
fair statement?
Mr. Gimble. That is a fair statement.
Senator Coleman. Mr. Williams, you indicate that--we all
agree that we need a better system. There is no argument about
that. The question that I am struggling with is after spending
almost $500 million, we still do not have data. The cost
savings that have been laid out are clearly not justified by
whatever data is there. And so the question becomes do we keep
pouring money into this with the hope that once we get the data
that we can somehow figure out whether it is worthwhile?
It is the money pit. At what point do we stop throwing
money into this?
Just to go back as to where we have been, Mr. Williams, you
found--and I am a little stunned by this. I think your
testimony was that more than $30 million in projected cost
savings were based on an American Express magazine article. Is
that what is in your testimony?
Mr. Williams. That is correct. Basically the magazine
article referred to savings that could be achieved if a
particular package was procured. There was no relationship to
DTS and it basically stated, to be more specific, that savings
could be realized up to 70 percent. But 70 percent was used in
the assumption for calculating DTS's estimated annual savings.
Senator Coleman. Perhaps I am missing something here, but
is this standard practice for establishing cost savings?
Mr. Williams. As we stated in the report, the information
was not validated. There are requirements from OMB, as well as
from DOD, that when you are putting together information on
cost benefits that one of the things that you definitely need
to have is good information. That information also needs to be
validated and, in the case of this particular assumption, it
was not validated. We also stated in the report that if those
procedures or policies had been followed, that this would have
come to light, that this was not a valid assumptions that DOD
used to come up with this calculation.
Senator Coleman. One of the other instances of measuring
cost savings that the report highlights is that the DOD would
be achieving savings because personnel would be assigned to
other duties. Can you comment on that process for estimating
savings?
Mr. Williams. Basically, in the response to our report DOD
disagreed when we pointed out that the personnel savings were
unrealistic. The point comes down to when you move employees
from the travel operation to another operation, are you really
achieving tangible savings as far as what you are trying to
compare for that particular system.
We recognize that there are some savings when you are able
to move people to another operation within the Department. But,
when you get to the bottom line, as we stated in the report and
in our testimony, DOD's overall costs have not been reduced. So
while there were some tangible savings, there were no personnel
tangible amounts that we believe should be used in calculating
DTS's savings.
Senator Coleman. Mr. Gimble, going back with a little
history, did you do a report in 2002 on DTS?
Mr. Gimble. Yes.
Senator Coleman. Was there a 2002 report?
Mr. Gimble. There is a 2002 report, yes, sir.
Senator Coleman. I believe in that, the report recommended
that the Office of Program Analysis and Evaluation complete a
study as to whether DTS should continue or be terminated.
Mr. Gimble. It was to determine the cost-effectiveness of
the program.
Senator Coleman. Right. And I think it was the Office of
Program Analysis and Evaluation, and that there was an
understanding that a decision would be made to continue or
terminate the program based on the study findings.
As I understand it, the P&A study was supposed to look at
the costs and savings. I think we are still at the same point.
My understanding is that the Program Analysis and Evaluation
study found that it lacked the data needed to perform a cost-
effectiveness study. Did they recommend some other alternatives
travel solutions? What was the recommendation that came out of
that?
Mr. Gimble. The report was issued on December 17, 2002 and
it basically said that they did not have the data necessary to
make a determination that DTS was the most cost-effective
method for DOD to support its travel.
Senator Coleman. I thought there was a recommendation for
analysis, an alternative travel solution, a pilot program to
assess whether commercial travel systems can be used as partial
end-to-end solutions. Was that recommendation part of that
report?
Mr. Gimble. I think the recommendation was that because of
upgrades and advances in technology, they should go look at
other solutions. I do not believe that they did that.
Senator Coleman. I want to be clear that the recommendation
was there. But my question is did DOD comply with
recommendations?
Mr. Gimble. No.
Senator Coleman. So we are sitting here now almost 4 years
after 2002 and we still do not have the data necessary to do an
evaluation; is that correct?
Mr. Gimble. That is correct.
Senator Coleman. In August 2005, I sent a letter to your
predecessor, Inspector General Schmitz,\1\ to undertake a full
complete and independent performance and cost evaluation of DTS
to determine if it is the most cost-effective solution to DOD
travel needs. On May 11, 2006, you advised me in a letter that
DOD lacked the data needed to perform a cost benefit
evaluation. We will agree on that.
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\1\ See Exhibit 3 which appears in the Appendix on page 71.
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Without the data, how can we answer the question about
whether DTS is the most cost-effective way to meet the
Department's traveling?
Mr. Gimble. I think the situation is going to be that DOD
needs a travel system and whether there is a deficiency in the
one we have, depends on whether you look at the financial side
of it or the reservation side of it.
I think the study required by Section 943 will address the
reservation side of this to see if there is a better way of
doing it based on commercial technology. And then if you look
at the accounting side, our view of that is that it works
pretty well. It is not perfect, but it works pretty well. If we
can separate those out, I think that would be the way forward,
hopefully in the results that come out of the Section 943
study.
But I think personally the idea of going back and doing a
cost benefit analysis, we have tried that three times and the
data simply is not there to make a valid meaningful comparison
at this point.
Senator Coleman. In fact, not just the data is not there,
but you are also looking at a system that does not cover a lot
of things. National Guard and Reserve travel, not covered by
DTS. Is that fair to say?
Mr. Gimble. There is functionality that has not been
released that would cover that. But as it stands right now, the
National Guard and Reserve and prisoner travel, in addition to
permanent change of station travel are not covered as routine
business travel by DTS now.
So you are right, it is not a full range of routine
business travel.
Senator Coleman. Senator Coburn.
Senator Coburn. Thank you.
Basically you cannot manage what you cannot measure. In
your testimony, both of them, I think it is fair to say that
they cannot measure it. Can they measure what they have done
and whether or not it is efficient, whether or not it saves
money?
Mr. Gimble. No. The answer to that is no.
Senator Coburn. Mr. Williams, can they measure it?
Mr. Williams. No. To expand on that particular statement,
as you know, Senator, over the years there has been numerous
financial management legislation passed to improve financial
accountability.
The bottom line in most of that legislation is that what we
are trying to get to, you hear people talking about clean
opinions and improving systems. But the bottom line is the
overall goal is to have good cost information so that
decisionmakers can make informed and timely decisions.
DOD financial management is still on our high-risk list. So
until you get that, then you are not going to have the
information or the data that you need to make a good system as
to how much it costs to go this way or to go that way, or what
have you.
Senator Coburn. Who owns DTS system? Who owns the
technology?
Mr. Williams. Based on the previous hearing, it was divided
into various components, and to my knowledge, it has not
changed.
The Director of DFAS at the time basically stated that
there are several applications that DOD developed and DOD owned
those. There were numerous interfaces and DOD also owned the
interfaces that had been developed.
In addition, as far as the source code, etc., that was
developed by Northrop Grumman, DOD had the right to use that
data as well as the right if down the road another contractor
took over DTS, to provide that information to the new
contractor. So I guess if you summed it all up, it would be
DOD.
Senator Coburn. So DOD owns the technology and the software
associated with Defense Travel System?
Mr. Williams. That is my understanding.
Senator Coburn. So I can have a good understanding of where
we are today, we are still going to be paying $40 million to
$50 million a year for this; correct? Other than the abeyance
that was in the Defense Authorization Bill; is that correct?
Mr. Williams. There will be cost each year to maintain the
operations, such as the PMO Office, as well as paying the CTOs,
etc. There will also be ongoing costs if DTS continues to be
DOD's travel system.
Senator Coburn. I think everybody looking at this, that the
financial accounting function of this is pretty good,
considering the mess at the Department of Defense on
accounting.
Mr. Williams. I think everything that I have seen as far as
the processing of the accounting transactions for the travel,
that if you go through a process in which you do have the no
touch and there is an automated payment, that you are talking
about a transaction cost somewhere in the neighborhood of $2,
$2.22, versus a manual process that could increase that cost to
about $35.
Senator Coburn. So there is potential for savings on the
accounting side of this?
Mr. Williams. That is correct.
Senator Coburn. So the next question is if they do not get
the right fare, if they do not get the best fare, if people
book it but then by the time it is done they did not get the
fare because it is not a booking system, whatever savings we
have got we have got great potential to lose in terms of an
increased cost? Just looking at it in the whole of what we
have.
Mr. Williams. That is correct. If you end up saving $32 on
your processing fee, and you end up----
Senator Coburn. Paying $100 more for the flight.
Mr. Williams [continuing]. Paying $200 more for a flight,
then you really have not achieved savings in that scenario.
Senator Coburn. Let me tell you about a guy I travel with
every week. He works for the Defense Department. He flies out
of Tulsa, just like I do. And he says the accounting system of
this is good but the booking system stinks. So he does not use
it to book. He goes on Travelocity or Orbitz, books his flight,
then uses the DTS system to get it paid for because routinely
he did not get the fare or the flight by going through DTS.
If that is the case, why are we still paying for the
booking side of it, if it does not work? And he is not the only
one. Everybody that I talk to in the military says this is not
working. It is not working the way it should be working and it
is not working on a timely basis.
So the question is, my the ultimate question to that is are
the recommendations in your reports to create a way to measure
the effectiveness of this so that we say let us quit sending
money down the rathole, we paid for this system of accounting,
let us start using it and let us go to some other method of
booking travel, hotels, rental cars, etc.
Are there recommendations in your reports that you think
they will follow that will get us to that point?
Mr. Williams. Senator Coburn, that was outside of the scope
of what we were asked to do. We basically just laid out some of
the facts as far as the fundamentals of the assumptions and the
usage.
Senator Coburn. Let me ask you for your opinion then. What
is your opinion as far as the internal cost accounting function
of this versus the booking function? Should we continue to pay
money into this system, in your opinion, for the booking side
of it that does not seem to be efficient?
Mr. Williams. I would have to say that, based on what I
have heard today, I would concur with the statement that there
are savings on the accounting side, as far as the difference
between manual versus automated payments.
I would not like to form an opinion as to your question
because I have basically looked at this from a fact-based
standpoint. We have not analyzed how much savings you are
getting from DTS, not how much more it is going to cost DOD?
Mr. Gimble. Senator Coburn, I think, from our perspective,
is that when they do the Section 943 study, when they separate
that out, depending on what that shows, and whether there will
be a savings or not, they will make that decision as to whether
to go forward with the reservation part or not.
However, I think the bigger challenge for us is that we
think the accounting part is working and we have
recommendations that would request the Department to come up
with a strategy to have a 100 percent deployment of the
accounting part of it or, if the Section 943 study comes back
with a workable reservation side of the equation with it, that
would be deployed, too.
I think one of the things that we see is it is not being
deployed fully across the Department. And that is one of the
things that we see as a challenge.
Senator Coburn. Would you think there may be some
stimulation or incentive if the contractor was paid on a per
usage basis rather than a gross dollar contract?
Mr. Gimble. I have not thought enough on that to have a
valid opinion.
Senator Coburn. I have. If it was per item used, they would
be a whole lot more efficient, if that is where the revenues
were.
Mr. Chairman, I yield back.
Senator Coleman. Thank you. Thank you, Senator Coburn.
I have a whole series of other questions but we have
Undersecretary Chu here and I would like to hear his testimony.
I think the point has been made.
My frustration over this, again we are talking about lack
of data. So now we are going to spend 4 years and we still do
not have data. We have a system, the report notes 5 of 27 DOD
locations were not using it at all, 22 sites using it
occasionally. The anecdotal comment of your Tulsa individual,
from Oklahoma, who was not using it. The report demonstrates
that is not at all unusual.
And then if you ask the question why, it is obvious that it
does not list all hotels, it does not do the city pairs, it
does not cover train travel, a whole range of voids. I think at
a certain point in time, even if we are analyzing, we have this
dream, this hope. We have this great system out there. And at
some point somebody has to say what is the cost and how much do
we keep pouring into this, understanding the accounting side
makes sense.
I am not going to do another round unless, Senator Coburn,
you have some desire to do so.
Senator Coburn. No, I just would like the opportunity to
insert written questions of the witnesses so that we can get
the answers back.
Senator Coleman. That is fine.
Gentlemen, then this panel is excused and we will then call
the next panel, which will be Under Secretary Chu.
Mr. Secretary, I want to thank you for appearing before
this panel. I appreciate that you are understanding that we
will typically have the investigators issue the reports before
we hear even from senior administration personnel. So I want to
thank you.
As you know, all witnesses before this Subcommittee are
required to be sworn. I would ask you to please stand and raise
your right hand.
Do you swear the testimony you are about to give before
this Subcommittee is the truth, the whole truth, and nothing
but the truth, so help you, God?
Mr. Chu. I do.
Senator Coleman. Thank you, Mr. Secretary.
I think you are familiar with the timing system and your
complete testimony will be entered into the record. I would ask
you to begin.
TESTIMONY OF DAVID S.C. CHU, Ph.D.,\1\ UNDER SECRETARY FOR
PERSONNEL AND READINESS, U.S. DEPARTMENT OF DEFENSE
Mr. Chu. Thank you, Mr. Chairman. I appreciate the
opportunity to outline for your Subcommittee this morning where
the Department stands on the Defensive Travel System and on the
larger question of commercial travel policy of the Department.
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\1\ The prepared statement of Mr. Chu appears in the Appendix on
page 61.
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These are two important subjects. They overlap. They are
not, of course, exactly the same.
Commercial travel policy in the past in the Department of
Defense has been a fragmented responsibility. The Department
made the decision and began executing the decision in February
of this year to bring all travel policy oversight into one
place, into my office, and we have created a Defense Travel
Management Office in order to carry out that responsibility. I
anticipate we will complete the transfer of the various
functions relating to travel in the Department, in terms of
policy oversight, by the end of the current fiscal year.
We have two goals in our oversight responsibilities, our
new oversight responsibilities, for commercial travel policy in
the Department. The first is to ensure that we get the best
value, both for the government and for the user. The user
embraces both the organization an individual works for and that
individual himself or herself.
Second, we need to ensure that the systems that support the
user are responsive and can provide effective assistance. We
have, as you have outlined in the earlier panel, all sorts of
different travel situations in the Department of Defense and we
need to be able to be supportive of the needs of our travelers
in those highly varying circumstances.
We recognize that we are partners in this enterprise with
industry and with the users, both the organizations in which
they work and the travelers themselves. And I believe we are
making progress in establishing that climate of partnership.
If I may turn very briefly, then, to the Defense Travel
System itself. It has, as the earlier panel and your discussion
of its testimony underscores, two important functions. It is a
financial management system and it is a booking system. Indeed,
you might view it as a management information system.
It began in the middle of the last decade. It began in the
last Administration as part of the reengineering government
approach. They set out a very ambitious vision, to have a
single system that would end-to-end deal with all of the
transactions involved in travel, starting with the traveler's
inquiry as to what the options might be, through the booking of
the ticket and inclusive, importantly, of the back office
accounting functions for the funds involved, to be sure that
they were applied correctly.
Indeed, if you look at this history, in my judgment, and I
am a newcomer to this--I received responsibility just recently
for this system--the focus really was on the financial support
elements of this system. You could see that in the proponency
for this system, largely from the financial community. You can
see it in the way the workload was organized for the
development of the system. The first priority in this system
was the back office financial management element, not the
booking system, not the traveler's convenience.
I think as you look at some of the challenges this system
faces, that explains some of the issues that we have with us
today.
I would be honest, sir, in acknowledging the Department is
not satisfied with our track record on this system,
particularly as it applies to the travel functions, what the
traveler sees, the booking end, as you have phrased it.
I do believe an important element, a root cause if you
will, in some of that dissatisfaction does lie in our
previously fragmented oversight for commercial travel within
the Department. Therefore, I am hopeful that if we can bring a
more cohesive approach to the management of the commercial
travel department we will, in the end, solve these front-end
problems.
I do not want to get ahead of the independent study that
Congress directed we undertake. So I am trying very hard not to
form decided opinions about what works or what does not work.
I am struck that most observers of the Defense Travel
System agree that the back office financial functions work
reasonably well. At the same time, there are extensive
criticisms of the front end, the booking end, the kind of thing
that you see on an airline's travel site or a hotel systems
travel site or in Travelocity or various other commercial
systems that are out there. And I do acknowledge that is where
the work probably needs to focus as we go forward.
We will be using the independent study as our guide, sir.
We are almost ready to launch that study. It does need to meet
a tight set of deadlines so we can be successful.
We are taking as a principle, however, that the Defense
Travel System in the end is a means, not an objective in and of
itself. Our real goal here, as articulated earlier, is to
ensure that we get the best value for the government and for
the users of the system and that we provide responsive,
effective assistance to the many travel situations that
Department personnel confront.
Senator Coleman. Thank you, Mr. Secretary.
I appreciate your reflection that DTS is not an end in
itself. It is a means to an end. If the end is one that can be
accomplished without it, particularly on the travel side, I
think that is important to reflect.
Before I begin my questioning, I just want to raise one
other issue that has come up in regard to the investigation of
this. It has to do with a sensitivity on the part of
whistleblowers. I want to bring it to your attention because as
we go forward, I will tell you that we have talked to travel
agents who work with DTS every day. They have been very
critical. And there was some concern about coming forward, that
there would be some retribution.
Robert Langsfeld was a consultant who was retained to
conduct a study of the efficacy of DTS. He testified before
this Subcommittee last year. He was fired by GSA, and he
testified, when he said he refused to change adverse findings
about DTS.
So I just want to bring the issue and put the issue on the
table because we have had travel agents who chose not to come
forward because I did not want to put them in a position that
they felt was jeopardizing their financial livelihood. So I
think by bringing it to your attention, I would take it that
you will have great sensitivity to that and ensure that
whistleblower protection is out there for any who are involved
in this kind of review and investigation.
Mr. Chu. We certainly would, sir, and I want to go further
than that. We are eager to understand what the criticisms are.
I know one of the issues in the various reports, GAO and IG, is
the question of mandating use of the system. And in fact, the
Department did, in 2001, under the then leadership, mandate the
use of the system.
But in the end, as we all appreciate in these endeavors, if
the system is not user-friendly--let me put it positively. The
system needs to be user friendly, helpful to the traveler and
the using agency, or people will find ways around its use. I
think Senator Coburn pointed to his traveler as an example of
that.
So in the end, we need an effective system and we need to
hear from the critics as to what they do not like about the
system. We need to have an outlook of correcting problems, as
opposed to defending any particular set of software. We are not
trying to do that.
I would want to emphasize, however, and I do not want my
comments to be taken as unduly harsh vis-a-vis the Defense
Travel System as an enterprise--because if you look at the
lines of code in the system, it is my understanding that 85 to
90 percent of the lines of code in the system have to do with
the accounting back office functions. Again, I do not want to
reach conclusions prematurely, but my sense of the various
evaluations is that even the more critical agencies think that
portion of the system works reasonably well and is a success.
Senator Coleman. Again, I think the focus, clearly the
focus of the principal criticism has been on the travel piece.
Mr. Chu. As you phrased it in the earlier panel, the
booking function----
Senator Coleman. The booking rather than the travel
function.
Mr. Chu [continuing]. As opposed to the accounting for
travel, paying the travel voucher.
That has all been speeded up enormously. It is more
accurate, better managed, I think. The financial community
within the Department is very happy with the functionality in
that regard. They see criticisms of the Defense Travel System
as a threat to the improved performance they think they have
achieved in that domain.
I want to be careful not to cause commotion in that regard.
Senator Coleman. I would hope at the same time that we are
careful to recognize when there is great user concern reflected
in the data.
Mr. Chu. Absolutely, sir.
Senator Coleman. You talked about that we are looking
forward to the independent study. The DOD's Office of Program
and Analysis evaluation recommended an analysis of alternative
travel solutions, and a pilot program to assess whether
commercial travel solutions can be used as partial end-to-end
solutions. I think the testimony was that these recommendations
were never implemented.
Mr. Chu. That is all before my time, sir. I have taken, as
my instruction, your statutory direction that we constitute a
new independent study with a forward look. If we made mistakes
in the past, they unfortunately cannot be undone. What we need
to do now is put ourselves on the right course for the future.
Senator Coleman. One of the problems of even complying with
the current study, the Congressionally mandated study, is they
do not have the data.
Mr. Chu. We have acted on that front, sir, and we have
started to put in place the metric set that, at least from our
perspective, will be important to judging whether a system is
successful or not. So I think we are, and I believe the
previous witness acknowledge that we are, in the process of
putting those metrics into place.
Senator Coleman. My frustration is 4 years ago we had
recommendations to do evaluations. There was no data. We are
sitting here today, 4 years later, there is no data. We are now
hearing we are beginning to put metrics in place and at least
the money clock is----
Mr. Chu. There are data, sir. I think the issue is how
complete are they.
I would also emphasize, as I have looked at the prior and
most recent efforts to evaluate the cost-effectiveness of the
system, I think there are two big points that deserve emphasis.
First of all, some costs are a bygone. What we have already
spent on DTS, whether it was meritorious or not, is spent. We
cannot get it back. We cannot sell it. Maybe we can sell it,
but I will leave that for someone else to adjudicate.
Second, I think the real savings here are not where we have
been looking. We have been looking at could we reduce manpower.
We believe we have. The Air Force, for example, took several
hundred bullets out of the travel function. That is an issue of
methodological dispute with the General Accounting Office where
I have a different position than they do, I should emphasize.
But the real savings here come from two sources, in my
judgment. One, better enforcement of Defense Department
policies on travel. For example, use of premium class travel,
when is it applicable and when it is not applicable.
Second, encouraging the Department to pick cost-effective
solutions to its travel needs. I will give you an example of an
issue we are reviewing in the Department. The Department's
policy now heavily favors the use of refundable tickets. The
airline industry--I have flown for 56 years, yes, all tickets
used to be refundable. Few tickets these days are refundable.
That is a good policy if you are dealing with one traveler
because he or she may change his plans or her plans. But if I
have 10 people going, maybe I should be looking at
nonrefundable fares because they are typically much less
expensive. Even if I have to cancel one or two tickets, I could
be ahead of the game. One of the difficulties with the current
policy is we have a very myopic, soda-straw view. We do it
traveler by traveler. Sometimes, we do groups, I grant.
And so what I am hoping we can bring to this whole set of
issues is a broader view of how do you have a cost-effective
travel policy, not just a travel booking system?
Senator Coleman. And I appreciate your focus on that, and
certainly the focus on first-class travel has been a result of
the investigation of this Subcommittee that found massive abuse
of the first-class travel system. So in the process, we have
changed that.
Mr. Chu. We are painfully aware of that, sir.
Senator Coleman. So we appreciate that.
But a question in terms of savings. You are still using
legacy systems, are you not? So in spite of all this
investment--at least on the travel side. In spite of all this
investment in a system that is obviously not being used to the
extent it should, at the same time you have not gotten rid of
your legacy systems.
Mr. Chu. Not all, sir, and I think that is one of the
challenges in front of us is to be able to turn off the legacy
systems. But it comes back, I think, to the issue you have
raised, the confidence of the traveler in the new system.
We need to build that confidence. I think we are slowly
gaining their confidence. Part of it is a matter of education
and training for our people. Part of it is a matter of
demonstrating that the system will, in fact, do what it is
supposed to do for them. That is an ongoing issue.
Senator Coleman. According to the travel agents who I spoke
with, almost all of them said that the DTS does not--on the
travel booking side--does not compete, is not in the same
ballpark as current commercially available travel systems.
Again, experience shows you folks are not using DTS. They are
using the currently available systems.
When you evaluate DTS, what I would like to see is a
commitment that you are evaluating against commercially
available systems, what is out there.
Mr. Chu. I think that is part of the set of issues for the
independent study. I do think we have to be a little careful
when we observe that some of our travelers are not using DTS.
DTS does have built into it our current policy rules. They do
not permit you or make it more difficult for you to do things
that we have judged--whether wisely or not--to be courses of
action we prefer you not follow.
So one advantage people gain by going off to a commercial
system is they do not have to comply immediately with those
strictures. So I think we have to be a little careful about
this issue of how people have used some other system. Sometimes
it is in order to get outcomes that we have, as a matter of
policy, proscribed.
Now whether they should be proscribed or not, that is one
of the doors I wish to open and want to look at. Are we in the
right place with all of our travel policies? As I have started
to look through these travel policies the last few months, I
certainly find some of them earn that sort of an antique
quality. They were the right choices when the industry behaved
in a particular manner 5, 10, 15, or 20 years ago, and in some
cases more years ago than that. They may not be the right
choices today. That is part of the debate we are having inside
the Department. What travel policies do we want to have the
Department following? And how are we going to enforce them?
DTS, importantly, is an enforcement mechanism. That is one
of the reasons I think we should be careful about simply saying
we can use a commercial travel system.
I am not against the commercial travel systems. I use them
for my personal travel. Many of them are very fine.
Senator Coleman. I understand the concern. Again, we keep
getting back to the back end, the accountability. When the
travel is completed, you want to make sure it is processed in
the right way. We want to make sure we have information to
track that and to audit that. We want to make sure that
policies are followed, particularly first-class travel by way
of example.
But my problem is we have a system that right now does not
cover a range of functions in daily travel. In testimony, the
Reserve, the National Guard, that does not provide complete
information, that does not provide the cheapest or the lowest
available fares.
So I hear what you are saying about we want to keep people
tied into a good accounting system. But if in the end they are
paying significantly more than we should, if they are not
getting the service that they deserve--and in fact, they are
speaking with their fingers and their legs, they are walking or
dialing something else. It tells you that even with that goal
of having that good back end, if the travel end is not
operating, you have got a problem and the taxpayers are paying
for it.
Mr. Chu. We fully agree with you, sir. We fully agree on
the objectives. I do think I want to underscore why we face the
issues that you have just described.
First, in terms of functions not covered, that is because,
as I testified, the focus of the system at the start was on the
financial back end. That is why they started with the financial
systems.
Had the focus been on the traveler, I think we would have
started at the other end. Whether we should have done it that
way or not, we cannot change now. We are now trying to bring
that spirit to the system.
Second, this question of lowest possible fare. The
Department's policy is to emphasize the use of refundable
airfares. That is one of the things I want to emphasize. Many
of our travelers, in my judgment, and that is the policy issue
I am reopening, are questioning why do we have that policy?
They can buy a non-refundable ticket, often at a fraction of
the cost of the refundable fare. Their issue is why cannot I do
that and save more money?
Now why does the Department have that policy? Because many
travelers change their plans, the situation changes at the last
minute. Then from the individual traveler perspective, the
government has ``lost'' that money----
Senator Coleman. Mr. Secretary, I am going to turn to my
colleague. Just one comment here.
The issue is not competing policies. The issue is that we
do not even know what the lowest fare is. It would be one thing
to say well, we have a choice. We know this is low-fare but we
want a refundable ticket. We have half a billion dollars in a
system in which we cannot even tell you if it is the lowest
fare. We cannot tell you because it does not have all the
information.
Mr. Chu. I think, Senator, that criticism--I have started
looking into that criticism. I do not claim to have a complete
understanding. But from what I have developed so far, I think a
lot of that criticism has to do with the issue of in what
travel window have you asked for fares. This is an issue in the
commercial travel sites, as well. Many of them are much more
friendly in cuing you to understand. If you just enlarge the
window here you get a better price, or change the travel date.
So I think you want to be a little careful, on that
particular point, to be overly critical of DTS.
Senator Coleman. Senator Coburn.
Senator Coburn. I want to be plenty critical of it. Let us
go back.
Do you have any concern that we started out with $250
million in cost to get a Defense Travel System and we are at a
half a billion now? Does that bother you at all?
Mr. Chu. Absolutely, Senator, but that is not my doing, I
want to emphasize.
Senator Coburn. I understand that.
How do we keep from making this mistake again? How do we
change procurement to where we do not go down a money pit and
we do not get what we thought we bought, and yet we paid twice
for what we thought we bought and we still do not have it? And
it is not just DTS and the defense system that are doing that.
So my question to you is what do we change in the
Department of Defense so this does not happen again?
Mr. Chu. I think sir, let me offer a hypothesis here. This
started in the last Administration with a very visionary view
of how to deal with travel, end-to-end system, a lot of
management data, do exactly the kinds of things that have been
called for in this hearing this morning.
It was married up with a business strategy that had, in my
judgment, not been tested on the scale the Department of
Defense operates and with the complexities of the rule sets and
the varieties of travel in which our travelers engage.
Senator Coburn. I just do not buy that. Northrop Grumman
has been contracting with the Federal Government for a long
time.
Mr. Chu. No, sir, that is not the issue of the contractor--
actually it started out as BDM, it did not start out with
Northrop Grumman, which was, in turn, bought by TRW, that was
in turn bought by Northrop Grumman. So Northrop Grumman has
inherited this system, just as my office has inherited the
system.
But to your excellent question, what is the generic problem
that led to less success than was originally envisioned? My
personal view, and that is all it is, my personal hypothesis,
is that we tried on a full scale both an ambitious vision and a
new business strategy for how we might develop such software.
It was originally going to be a fee-for-service system. In
other words, the Department would pay a fee every time they
used it and the developer would therefore absorb all the costs.
My personal view is trying that many new things on that
scale at once was not the right procurement strategy.
Senator Coburn. I do not buy that. The fact is that we do
not have policies that say we buy something and we are going to
get what we paid for and there is a consequence if a vendor
does not supply it.
What we have said is there is no consequence. We are going
to keep giving you money, whether you deliver or not.
Let me go on to a couple of other things.
Mr. Chu. Sir, if I could just respond a moment, I think you
are speaking to the change in procurement strategy that
occurred early in this Administration in which the Department
switched from that original strategy to the present one, which
is more classic in its construction.
My understanding--I have asked the same question. Why did
we change? What were the causes of this change?
My understanding is that it was exactly because of the
issue that Senator Coleman raised. The military departments,
the Uniformed Services, came to the then-responsible agency and
complained that the system was not going to cover the breadth
of functionality, the types of travel that they needed. It was
too much oriented to ordinary domestic business travel, not the
variety of military situations that are actually confronted.
So in order to meet those new requirements, the Department
decided to switch procurement strategies. I am not sure it is
entirely fair to blame other parties for that.
Senator Coburn. If they were spending their own money, they
would have gotten one heck of a lot better value out of this.
And remember we are not spending our money. We are spending our
grandchildren's money.
Mr. Chu. Sir, I am equally upset at the expense that is
involved here, but I have also had the privilege of watching
the Department try fixed-price development contracts, which I
think is what you are arguing for. There is merit to that if it
is well-understood technology. If it is not, what the
Department has found, is that often you get into much worse
trouble.
Senator Coburn. I would tell you Expedia.com is well
understood technology. Travelocity.com is well understood
technology. You did not have to redevelop that. You could have
bought it. Nobody did that. What we did is----
Mr. Chu. Sir, as I----
Senator Coburn. I have a limited amount of time and I want
to get to another area.
Mr. Chu. Sir, but if I may--just to keep the record
straight, 85 to 90 percent of the code in this system is not
for what Expedia.com does or Travelocity.com does, 85 or 90
percent of the code is for back office accounting function.
Senator Coburn. That is fine, but you already said----
Mr. Chu. That is where the expense is.
Senator Coburn [continuing]. They did not concentrate on
that, and that is where the problems are with the system.
Mr. Chu. No, sir. As I have been best able to assemble the
record, that is what they did concentrate on. That is where
most of the expense really lies.
Senator Coburn. Is in the back office.
Mr. Chu. Is in the back office.
Senator Coburn. I do not have any complaints. I think they
have done a good job on that. But if that is the case in the
back office and we are still at twice the contract price and we
have not gotten the front part, which could have been
contracted out.
Let me go on to another area. I want to know, a Federal
judge said that you all did not own this, the DOD does not own
this, in 2004. In a September 23 letter to the DTS contractor,
Northrop Grumman said they would sign over the ownership rights
to the DOD if requested.
Have you done that? Do you own it?
Mr. Chu. The General Accounting Office witness, I think,
accurately summarized the situation, which is that there are
elements of the system that the Defense Department does not
``own''. We have the rights in perpetuity to that software and
we may use it with a different agent.
Senator Coburn. It was my understanding, Northrop Grumman
said they would sign over the ownership rights to that if
requested.
Mr. Chu. I am not a lawyer, sir, but my understanding of
the legal situation is that, as a technical matter, what we
have are the rights in perpetuity. In other words, we can use
it as if we owned it. We cannot sell it to somebody.
Senator Coburn. I am not asking you whether or not to sell
it.
Mr. Chu. We have the rights--my understanding is we have--
--
Senator Coburn. If we paid for it, is it going to be turned
around and sold to somebody else, as well?
Mr. Chu. We have the rights in perpetuity to the system and
we have the right to allow someone else to be our agent for it.
Senator Coburn. The other thing you said you are
developing, according to the Defense Authorization Bill, the
metrics on how you are going to make the decision. I have a
request for you. The request is that before you start making
that decision, I think it would be very wise to share those
metrics with this Subcommittee.
Mr. Chu. I would be delighted to.
Senator Coburn. If those metrics are the wrong metrics and
we get another year down the road and another set of
measurements that do not mean anything, all we are going to do
is spend a lot more money.
Mr. Chu. We have nothing to hide, sir. We would be glad to
share the metrics with you.
Senator Coburn. I would be very appreciative of that, so we
can look at it and say are we really making the good decision?
With that, I will yield back.
Senator Coleman. Thanks, Senator Coburn.
Secretary, if 85 percent of this relates to accounting,
would it be then difficult is to strip out the travel function?
Mr. Chu. I am not a software engineer. In principle you
would believe--but I do not know: It is true you could think
about a different front end. The business issue would be, are
you better off correcting the problems with this front end--and
I use front end very generically here, it is not physical--or
would you be better off acquiring another front end?
I have learned enough about the system and its
functionality to understand that a good deal of the expense in
terms of the code on the front end has to do with embedding DOD
travel policy.
So for example, we want a feature that triggers a review if
you try to book premium class travel. That is made complicated
by the fact that the airlines do not have standard codes. They
all vary as to what this is.
So it is not as if you could just take something without
also paying attention to what policy controls we want to impose
on the system.
So I am sorry to offer a less than clear answer, but my
belief is yes, you could contemplate a different front end.
Senator Coleman. Do you disagree with the statement of the
first panel that we still do not know if the DTS is the best
most cost-effective travel system for the Department of
Defense?
Mr. Chu. I was actually struck, Senator, in listening to
the prior witnesses, when you started on that question, you
asked what are the alternatives? And there was a full 60
seconds of silence. There really is not an off-the-shelf
alternative that does all of the things DTS does.
And therein lies the difficulty. This comes back, in some
ways, to some of Senator Coburn's excellent questions about
procurement strategy. If we decided to switch to ``something
else,'' either in part or in whole, what is that? Where is that
system? What would it cost to customize to the various needs
the Department has?
In fact, I have asked the most egregious question, suppose
we just turn the whole thing off? What would happen? What I
discovered would happen is we would revert to a series of
labor-intensive manual practices. Certainly on the back-end
accounting front, you do not want to do that.
We are exploring all options, sir.
Senator Coleman. One of the problems with why you cannot
answer that question is because in 2002, when there was a
report that was issued that said that--and this is the study by
the Department's Office of Program Analysis and Evaluation that
I think you headed yourself for 12 years.
Mr. Chu. In an earlier era, yes, sir.
Senator Coleman. By the way, 2002, that is this
Administration.
Mr. Chu. That is correct.
Senator Coleman. This Administration had a study that said
look at some alternatives. Are you troubled by the fact that,
in fact, those pilots or those recommendations were never
implemented?
Mr. Chu. I think what I would highlight is the Department's
decision to start correcting the fundamental problem here,
which is travel policy in the Department. It was in three
different offices until February of this year. It has been
brought together under my office's jurisdiction. We have the
same objective you do, which is very traveler oriented. How are
we going to make the traveler effective?
Because one of the costs here, and one of the savings in my
judgment, is if I have a traveler who arrives rested and ready
to go, I have a more productive employee than someone who is
worn out because they took a slightly cheaper connecting flight
through some city pair fare that someone happens to love.
So we have a different view of this. We have gotten
ourselves to a different place. Should we have gotten here
faster? Absolutely. I make no apology, make no attempt, rather,
to defend the fact that we should have gotten here faster. We
should have. Absolutely.
Senator Coleman. Again, are you troubled by the fact that a
2002 report of the Office of Program Analysis and Evaluations
recommendations, particularly recommendations for looking at
pilots and alternatives, were never implemented? Are you
troubled by that?
Mr. Chu. I think whether I am troubled or not, the real
issue is what are we going to do going forward? That is where
my focus is.
Senator Coleman. And our focus is what are we going to do
going forward.
Mr. Chu. Right.
Senator Coleman. I have no further questions. Senator
Coburn.
Senator Coburn. Commonsense tells you to step back from
this thing and say we ought to be able to learn we did not do
this one right. It does not mean people's efforts and their
desires were wrong. No reflection on that. As you can tell, I
am very frustrated.
From our other Subcommittee, we think there is $40 billion
a year in waste inside the Pentagon, in terms of procurement.
And this is just a little symptom of what is going on. So I
think we ought to look at that.
What I will assure you is that if this thing is not
straightened out by next year, the Senate will not move a thing
until it is. Because if we cannot fix the small things like a
travel system for the Pentagon, there is no way we are ever
going to solve the bigger ones.
The commonsense is this thing works on an accounting basis
but does not work on travel. Go contract with Travelocity or
one of the others and get the travel portion of it done. Tell
them what you want and they will do it. They are in it for
money. And they can do it cheaper, better, faster than we will
ever develop a system inside the government.
So we ought to be using the outside vendors who have
already experienced and already done it wrong several times,
rather than to try to relearn it ourselves.
What I would think is keep the accounting portion, tell the
people here how it is going to be. Some outside vendor is going
to come and say we will give you a great deal. We will cut you
a deal better than anybody in the country. And we will write it
the way you want it and we will just use our system. This is
Travelocity for the Defense Department. You will have it done
and the work will be done and you will save us and our kids a
ton of money.
We should not keep beating ourselves in the head trying to
do something that we are not qualified to do.
Mr. Chu. Senator, we are not trying to do that.
Senator Coleman. That is why the metrics are very
important.
Mr. Chu. That is why this independent study is important.
That is why we are going to use it as our guide to the future.
I do want to emphasize the Department is not writing the
code for this. This has been an outside vendor from the start.
I did not choose the vendors, I did not choose the procurement
strategy. But we are where we are.
Senator Coburn. I understand, but the point is you better
get it fixed. That is all I am saying.
Mr. Chu. We are committed to it.
Senator Coburn. And you better find the answer between this
time and next year or there is not going to be any money going
to the Pentagon, as long as I am a U.S. Senator, until this is
fixed.
Senator Coleman. Mr. Secretary, the question that is still
out there: Is this the best most effective system? And we
really do need an answer to that.
My last observation is----
Mr. Chu. Sir, if I may though, I would urge those who ask
the question to offer the alternatives. What is the specific
alternative? Not generic, ``let us try again.''
Because I have--you referred to my 12 years in Program
Analysis and Evaluation. I have watched the Department try
again and watched it better become the enemy of good enough.
That can be a very expensive procurement strategy.
Senator Coleman. And 4 years ago there was a directive to
at least look at alternatives, look at pilots, and those were
not followed. So we are in this place today. I do not want to
keep going back to yesterday. I am really not happy about
yesterday. I am concerned about tomorrow.
My last observation though is this, we talk a lot about the
back end system. But in the end, this is about people. Folks
are not using this for reasons. I understand the policy and the
process, and we want to make sure. But I think you have got--we
are in the customer service--your customers are your employees,
in this instance. And I think you have got to be listening to
your customer, listening to your employees who are telling you
loudly that this system on the travel end simply does not work.
Mr. Chu. Sir, we are and we are committed to doing so.
I should emphasize there are 600,000 users of the booking
function in DTS today, people in the Department. That is a very
significant customer base. So I think it is a little unfair to
say it is not being used.
But it is not where it needs to be. I agree with you. We
are eager to hear those criticisms. We are eager to respond to
those criticisms. Some of them have to do with underlying
policies in the Department and how the travel industry treats
those policies.
Senator Coleman. I would note, without engaging in debate,
that both the GAO and the DOD IG have reported and testified
that Department information on DTS usage is unreliable. But we
are back to the same problem. We do not have sufficient data.
We do not have sufficient analysis. We know the question out
there.
We share a goal. The goal is the best most cost-effective
system, good for the taxpayers, good for the employees, good
for all of us. Let us figure out how to reach that goal.
Thank you, Mr. Secretary.
Mr. Chu. Agreed. Thank you, sir.
Senator Coleman. With that, this hearing is now adjourned.
[Whereupon, at 11:29 a.m., the Subcommittee was adjourned.]
A P P E N D I X
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