In accordance with the FTR, DOD restricts premium class  travel to the following eight circumstances: regularly scheduled flights between origin and destination provide only  premium class accommodations, and this is certified on the travel  voucher; coach class is not available in time to accomplish the purpose of the  official travel, which is so urgent it cannot be postponed; premium class travel is necessary to accommodate the traveler’s  disability or other physical impairment, and the condition is  substantiated in writing by competent medical authority; premium class travel is needed for security purposes or because  exceptional circumstances make its use essential to the successful  performance of the mission; coach class accommodations on authorized/approved foreign carriers  do not provide adequate sanitation or meet health standards; premium class accommodations would result in overall savings to the  government because of subsistence costs, overtime, or lost productive  time that would be incurred while awaiting coach class  accommodations; transportation is paid in full by a nonfederal source; or travel is to or from a destination outside the continental United States,  and the scheduled flight time (including stopovers) is in excess of 14  hours. Extent of Premium Class Travel Is Significant

For fiscal years 2001 and 2002, DOD spent nearly $124 million on over  68,000 airline tickets containing at least one leg of premium class travel.Since DOD did not maintain centralized data on premium class travel, we  extracted this information from Bank of America’s fiscal years 2001 and  2002 databases of DOD centrally billed account travel, which included over  5.3 million transactions for airline tickets valued at over $2.4 billion. The difference between a premium class ticket and a  comparable coach class ticket can range from negligible—particularly if  the traveler traveled within Europe—to thousands of dollars. We  consider travel by high-ranking officials, in particular senior-level  executives, to be a sensitive payment area because of its susceptibility to  abuse or noncompliance with laws and regulations. GAO’s Standards for Internal Control in the  Federal Government (GAO/AIMD-00-21.3.1, November 1999)
Significant breakdowns in key internal control activities resulted in a  significant level of improper premium class travel and increased DOD  travel cost. Specifically, we estimated, based on our statistical sample, that  72 percent of the DOD centrally billed travel transactions containing  premium class travel for fiscal years 2001 and 2002 were not properly  authorized, and 73 percent were not properly justified. GAO’s Internal Control Standards: Internal Control Management and  Evaluation Tool (GAO-01-1008G, August 2001)
DOD and the services performed no monitoring and oversight activities to  obtain assurance that premium class travel was authorized in accordance  with regulations. Further, during fiscal years 2001 and 2002, control  environment weaknesses exacerbated already weak key internal controls  described in the previous section. We also found that DOD did not obtain or maintain centralized data on  premium class travel other than first class, that is, business class. They also provide  examples of when premium class travel should not be authorized. Provide training to travelers and supervisors/managers that identifies  DOD’s premium class policies and procedures. DOD’s oversight and monitoring of the use of premium travel and key  elements of the control environment, including the (1) consistency of  premium class travel procedures among the services and (2) adequacy  of documentation to justify the additional cost of premium class travel.
Why GAO Did This Study

Ineffective oversight and management of the Department of Defense's (DOD) travel card program, which GAO has previously reported on, have led to concerns about DOD's use of first and business class airfares. GAO was asked to (1) identify the magnitude of premium class travel, (2) determine if DOD's key internal control activities operated effectively and provide examples of control breakdowns, and (3) assess DOD's monitoring and key elements of the control environment.

What GAO Found

Breakdowns in internal controls and a weak control environment resulted in improper first and business class travel and increased costs to taxpayers. Based on extensive analysis of records obtained from Bank of America, GAO found that DOD spent almost $124 million on about 68,000 premium class related tickets--primarily business class--during fiscal years 2001 and 2002. Each premium class ticket costs the government up to thousands of dollars more than a comparable coach class ticket. GAO's work also indicated that civilian supervisors, managers, and executives and senior military officers accounted for almost 50 percent of the premium class transactions, and for 27 of the 28 most frequent premium class travelers. GAO considers travel by high-ranking officials to be a sensitive payment area because of its susceptibility to abuse. Breakdowns in key internal controls resulted in a significant level of improper premium class travel. GAO estimated that 72 percent of DOD's fiscal year 2001 and 2002 premium class travel was not properly authorized, and 73 percent was not properly justified. Further, DOD did not have accurate and complete data on the extent of premium class travel and performed little or no monitoring of this travel. In regard to the control environment, GAO found that DOD (1) issued policies that were inconsistent with General Service Administration governmentwide travel regulations, (2) did not require military services to issue and update premium class policies to implement DOD's travel regulations consistently, and (3) did not issue guidance on how to document the authorization and justification of premium class travel. As a result of GAO's audit, DOD has begun updating its travel regulations to more clearly state when premium class travel can be authorized and to emphasize that it must only be used when exceptional circumstances warrant the additional cost.