Millions of Dollars of Airline Tickets Were Unused and Not Refunded

As shown in table 1, data provided by five airlines and verified against Bank  of America’s data showed that about 58,000 tickets with a value of   $21.1 million were purchased with DOD’s centrally billed accounts but  were unused and not refunded. Based on our  assessment of the limited data provided by the airlines, it is possible that  since fiscal year 1997, DOD purchased more than $100 million in airline  tickets that were not used and not processed for refunds and for which  DOD may be entitled to refunds or offsets against other payments to those  airlines. As in the case of fully unused  tickets, DOD was not aware of, and therefore did not maintain data on,  partially unused tickets. However, we found that  DOD’s flawed process relied extensively on DOD personnel to report  unused tickets to the travel offices. Although some units had instituted a process by fiscal year  2002 to more systematically identify instances of unused tickets, the  process was not implemented DOD-wide and could only be used to identify  unused electronic—not paper—tickets. Although many DOD travelers informed the CTOs of unused tickets  as required, the lack of specific internal control procedures to identify  instances in which the travelers did not do so resulted in DOD paying for  thousands of airline tickets that were not used and not processed for  refunds. To enable DOD to systematically identify future unused airline tickets  purchased through the centrally billed accounts, and improve internal  controls over the processing of unused airline tickets for refunds, we  recommend that the Secretaries of the Army, Air Force, and Navy and the  heads of DOD agencies direct the appropriate personnel within services  and agencies to take the following nine actions:  evaluate the feasibility of implementing procedures to reconcile airline  tickets acquired using the centrally billed accounts to travel vouchers in  the current travel system;  modify existing CTO contracts to include a requirement that the CTOs   establish a capability to systematically identify unused e-tickets in  their computer reservation systems,  identify all unused tickets based on specified criteria before the  unused ticket data are removed from the computer reservation  systems,  maintain daily schedules that identify unused tickets and how long  they have been unused,   routinely provide the GTOs with unused ticket reports,   routinely process refunds for tickets identified as unused, and  submit to the GTOs all requests for refunds that have been   require the GTOs to routinely compare unused tickets processed by the  CTOs to the credits on the Bank of America invoice; and   require either the GTOs or the units responsible for monitoring the  CTOs’ activities to determine whether the CTOs are consistently  implementing the procedures to identify unused tickets and process  these tickets for refunds. Our assessment covered the following:  the extent of tickets charged to the centrally billed accounts that are  unused and not refunded and  whether DOD’s internal controls provided reasonable assurance that all  unused tickets were identified and submitted for refunds. We also  requested that the five airlines that DOD used most frequently provide us  with data relating to tickets DOD purchased during fiscal years 2001 and  2002 that were unused and not refunded. Only one airline provided us the unused  value (residual value) of partially unused tickets. As shown in table 4, while all  the airlines generally provided complete data on fiscal year 2002 fully  unused tickets, the airlines did not provide uniform, complete, or  consistent responses to our request for fiscal year 2002 partially unused  tickets, or for fully or partially unused ticket data for fiscal year 2001. As a result, we  determined that it was possible that DOD had purchased at least   $115 million in tickets that were unused and not refunded.
Why GAO Did This Study

Ineffective oversight and management of the Department of Defense's (DOD) travel card program, which GAO previously reported on, have led to concerns about airline tickets DOD purchased but did not use and for which it did not claim refunds. GAO was asked to (1) determine whether, and to what extent, airline tickets purchased through the centrally billed accounts were unused and not refunded and (2) determine whether DOD's internal controls provided reasonable assurance that all unused tickets were identified and submitted for refunds.

What GAO Found

Control breakdowns over the centrally billed accounts resulted in DOD paying for airline tickets that were not used and not processed for refund. DOD was not aware of this problem before our audit and did not maintain data on unused tickets. We determined, based on airline data, that DOD had purchased--primarily in fiscal years 2001 and 2002--about 58,000 tickets with a residual (unused) value of more than $21 million that remained unused and not refunded as of October 2003. We also identified more than 81,000 partially unused airline tickets with a purchase price of about $62 million that will require additional analysis to determine the residual value. Based on further analysis of the limited data, it is possible that DOD purchased at least $100 million in airline tickets that it did not use and for which it did not claim refunds from fiscal years 1997 through 2003. Although GAO asked DOD's five most frequently used airlines for fiscal year 2001 and 2002 unused ticket data, the airlines did not provide uniform, complete, or consistent responses. For example, one airline did not provide partially unused ticket data, another airline's fiscal year 2001 data covered only September 2001, while yet another airline provided data on electronic tickets dating back to November 1998. Although additional data on unused tickets may be available from the airlines' archives, our attempts to obtain additional information were unsuccessful. DOD's unused ticket problems were caused by a flawed process that relied extensively on DOD personnel to report unused tickets to the travel offices. Although it appears that many unused tickets were processed for a refund, the internal controls DOD had in place did not detect millions of dollars of unused airline tickets. Specifically, DOD did not systematically implement compensating procedures to identify instances in which DOD personnel did not report unused tickets, or reconcile the centrally billed accounts to travel claims to determine whether airline tickets were used. Although some units had instituted a process by fiscal year 2002 to more systematically identify instances of unused tickets, the process was not implemented DOD-wide, DOD did not verify that units were consistently implementing the process, and the process could only identify unused electronic--not paper--tickets.