Management Letter: Recommendations for Improvements to MCC's
Internal Controls and Policies on Premium Class Air Travel
(29-FEB-08, GAO-08-468R).
On September 28, 2007, GAO issued a report detailing our findings
of improper and abusive premium class travel governmentwide. The
audit was performed at the request of the Permanent Subcommittee
on Investigations, Committee on Homeland Security and
Governmental Affairs, U.S. Senate, and Senator Grassley,
Committee on Finance, U.S. Senate. As part of the audit, we
tested premium class transactions at the Millennium Challenge
Corporation (MCC). While our report provided recommendations to
the General Services Administration (GSA) and the Office of
Management and Budget (OMB), the purpose of this letter is to
report on specific matters identified during our audit that
relate to weaknesses in internal controls at MCC. This letter
contains three recommendations that warrant management's
consideration.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-08-468R
ACCNO: A81190
TITLE: Management Letter: Recommendations for Improvements to
MCC's Internal Controls and Policies on Premium Class Air Travel
DATE: 02/29/2008
SUBJECT: Accountability
Air travel allowances
Federal agencies
Federal employees
Financial analysis
Financial management
Government employees
Internal controls
Transportation expense claims
Travel allowances
Travel costs
Policies and procedures
Waste, fraud, and abuse
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GAO-08-468R
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February 29, 2008:
Ambassador John J. Danilovich:
Chief Executive Officer, Millennium Challenge Corporation:
Subject: Management Letter: Recommendations for Improvements to MCC's
Internal Controls and Policies on Premium Class Air Travel:
Dear Ambassador Danilovich:
On September 28, 2007, GAO issued a report detailing our findings of
improper and abusive premium class travel governmentwide.[Footnote 1]
The audit was performed at the request of the Permanent Subcommittee on
Investigations, Committee on Homeland Security and Governmental
Affairs, U.S. Senate, and Senator Grassley, Committee on Finance, U.S.
Senate. As part of the audit, we tested premium class transactions at
the Millennium Challenge Corporation (MCC). While our report provided
recommendations to the General Services Administration (GSA) and the
Office of Management and Budget (OMB), the purpose of this letter is to
report on specific matters identified during our audit that relate to
weaknesses in internal controls at MCC. This letter contains three
recommendations that warrant management's consideration.
Results in Brief:
We found that MCC spent about $6.2 million in air travel from July 1,
2005, through September 30, 2006, of which about $4.8 million included
at least one leg of a premium class flight. We also found internal
control breakdowns and control environment weaknesses over MCC's
premium class travel. Our findings are summarized as follows:
* MCC was the most frequent user of premium class travel
governmentwide. Overall, MCC spent about 77 percent of its air travel
on premium class travel, compared to the overall governmentwide average
of about 7 percent. On a comparative basis, we found that 83 percent of
MCC's over-14-hour flights between airports in the United States and
selected locations in Africa, the Middle East, and parts of Europe were
in premium class. In contrast, only 3 percent of the Department of
Defense's (DOD) and the Department of Homeland Security's (DHS) travel
to the same locations was in premium class.
* Our statistical sampling of and data-mining work on premium class
travel at MCC found that none of the 36 MCC premium class transactions
we tested were properly authorized or justified.[Footnote 2]
Specifically, in premium class flights occurring prior to February
2006, MCC officials informed us that premium class authorization was
provided through blanket authorizations. Flights during this period
failed our control tests based on a lack of specific authorization.
Further, of an additional 15 transactions occurring after February 2006
when premium class travel at MCC was supposed to be authorized on a
trip-by-trip basis, we found that all 15 still failed our control tests
due to lack of specific authorization and justification. According to
MCC officials, specific authorization was not necessary for these trips
because they were over 14 hours in length. However, the Federal Travel
Regulation (FTR) still requires specific authorization for premium
class use, even in situations where flight time exceeds 14 hours.
* We found that MCC employees improperly used the 14 hour rule to
qualify for premium class travel. The FTR specified that employees
qualify to use premium class travel for flights exceeding 14 hours if
they had no rest stop en route or rest period at their destination.
However, on 20 of the 36 flights we examined, travelers arrived at
their destination on a weekend without providing documentation that
they reported to work before incurring a rest period. This is in
violation of the FTR. We found additional flights where the traveler
arrived at a time during the day to allow for a rest period prior to
reporting to work the next day.[Footnote 3]
At the end of our discussion on each of these issues, we offer
recommendations for strengthening MCC's internal controls and travel
policies. We also referred to you on October 18, 2007, individuals who
violated federal premium class policy for further review and
appropriate action. Actions could include, if warranted, repayment of
the difference between the price of coach and premium class and
administrative actions.
In written comments on a draft of this management letter, MCC concurred
with many of our conclusions and recommendations. However, MCC made
several objections to factual findings. MCC's objections and our
response are addressed below.
Scope and Methodology:
This letter is based on the work performed during our audit of the
federal government's use of premium class air travel. To determine the
magnitude of premium class travel at MCC, we extracted premium class
transactions from July 1, 2005, through June 30, 2006, from the
databases provided by Bank of America. Premium class transactions were
defined as debit air travel transactions that included at least one leg
of first or business class travel. Our review included charges made to
both the individually billed accounts, which are travel cards assigned
to individual travelers for transportation expenses, lodging, and
miscellaneous expenses, and charges made to centrally billed accounts,
which are travel cards assigned to the agencies and used primarily to
procure transportation for travelers. During the period from July 1,
2005, through September 30, 2006, MCC had a total of nearly 2,000 air
tickets totaling about $6.2 million, of which about 750 were premium
class air tickets totaling about $4.8 million. We selected and tested a
statistical sample of governmentwide premium class travel transactions,
which included trips taken by MCC employees, and conducted other audit
work to determine the extent to which this travel was
improper.[Footnote 4] Because first class travel at MCC was immaterial-
-accounting for only 5 percent of total premium class travel--we did
not review the completeness of MCC's reporting of first class travel to
GSA. To identify specific cases of improper or abusive use of premium
class travel, we used data mining to identify instances in which
individuals flew many premium class flights during the period or groups
of individuals flew together in premium class. Because we included
additional data provided by the bank subsequent to our selection of the
statistical sample, our data-mining work was performed on data from
July 1, 2005, through September 30, 2006. We audited 4 MCC transactions
selected as part of our statistical sample and an additional 32
transactions selected through data mining. This represents
approximately 5 percent of premium class air tickets purchased by MCC.
However, because of the use of a nonrepresentative sample, it is not
possible to project the extent to which MCC's premium class travel was
improper. To identify underlying causes contributing to improper
premium class travel, we reviewed federal laws and regulations and
MCC's implementing guidance for premium class travel, and interviewed
MCC officials on the processes and procedures in place to authorize and
justify premium class travel. Enclosure I contains a summary of when
federal regulations allow premium class travel to be authorized. We
also interviewed GSA and OMB officials on their oversight of premium
class travel.
We conducted our audit from July 2006 through August 2007 in accordance
with U.S. generally accepted government auditing standards, and we
performed our investigative work during the same period in accordance
with standards prescribed by the President's Council on Integrity and
Efficiency.
Frequency of Premium Class Use Highest of All Federal Agencies:
We found that MCC had the highest frequency of premium class use in all
of the federal government. Specifically, about $4.8 million of the $6.2
million MCC spent on airline tickets was spent on tickets with at least
one leg of premium class travel. In other words, despite the fact that
MCC is a very small agency that is limited to 300 or fewer employees,
the amount MCC spent on premium class travel represented the sixth
largest premium class program in the government by total
dollars.[Footnote 5] In addition, MCC spent about 77 percent of its air
travel dollars on premium class flights, far higher than the average of
7 percent governmentwide.
Our comparison of long international flights exceeding 14 hours further
support our analysis that MCC used premium class on these flights more
frequently compared to other agencies. Specifically, we analyzed over-
14-hour flights between airports in the United States and selected
locations in Africa, the Middle East, and far eastern Europe. Our
analysis indicates that 83 percent of MCC's travel between these
locations was in premium class. In contrast, 3 percent of DHS's and
DOD's travel to the same locations were in premium class.
MCC is also the highest user of premium class travel when compared to
other federal agencies that have been vested with international
missions. For flights to the same locations exceeding 14 hours, 25
percent of the United States Agency for International Development's and
72 percent of the State Department's travel to the same locations were
in premium class.
MCC Allowed Premium Class Tickets to Be Issued Without Specific
Authorization:
We found that none of the 36 MCC trips that we tested in our
statistical sample or through data mining had specific authorization
for premium class travel. According to the Federal Travel Regulation
(FTR), agencies must specifically authorize each premium class trip to
ensure that premium class travel fits criteria defined in the FTR, that
is, the use of blanket authorization for premium class travel was not
acceptable. Furthermore, the FTR states that travelers on official
government travel must exercise the same standard of care in incurring
expenses that a prudent person would exercise if traveling on personal
business. Premium class flights are not something travelers are
entitled to simply because certain conditions exist, and judicious
approvals of premium class can reduce unnecessary expenses. However,
MCC's use of premium class travel was not specifically authorized as
follows:
* Prior to February 2006, MCC allowed employees to fly business class
on blanket travel authorizations. Of the 36 trips whose supporting
documentation we requested during our audit, 21 were taken during the
period that a blanket authorization policy, which allowed premium class
travel on all trips exceeding 14 hours, was in effect. All of the 21
trips had legs exceeding 14 hours and were issued business class
tickets on blanket travel authorizations allowing premium class travel
for trips exceeding 14 hours. However, some of the trips included legs
of travel of less than 14 hours that were also taken in business class.
These trips cost the government more than $180,000 and failed
authorization and justification requirements.
* MCC officials told us that in February 2006, MCC established a policy
requiring specific authorization for travel on a trip-by trip basis.
However, our review of an additional 15 premium class trips taken after
February 2006 showed that the travel authorizations for all 15 trips
did not specifically authorize premium class travel. MCC officials we
spoke to believed the trips were proper because they exceeded 14 hours.
However, the FTR requires specific authorization, even for trips that
meet criteria for justification. Consequently, none of these 15 trips
were properly authorized, and therefore none were justified.[Footnote
6] These 15 improper trips cost the government more than $110,000.
MCC's Policy and Procedures for Trips Exceeding 14 Hours Does Not
Follow Federal Regulations:
We also determined that MCC did not properly apply the 14-hour rule
when authorizing travel or issuing premium class tickets. According to
MCC representatives we interviewed, the MCC agent automatically issued
business class tickets for all employees on trips exceeding 14 hours
unless the traveler requested otherwise. However, these trips violated
the FTR and therefore were improper.
The FTR specifically states that in order to qualify for premium class
travel for flights lasting 14 hours or more, the traveler could not
have a rest period en route or a rest period upon arrival.[Footnote 7]
On the basis of our analysis of the FTR and interviews of GSA
officials, we determined that if a flight arrived at its destination by
evening, at such a time that the traveler was provided a reasonable
opportunity to get a night of rest before working, this constituted a
rest period and therefore made the traveler ineligible for premium
class. Similarly, if a traveler returned home in the evening or on a
weekend, and did not provide evidence that he or she reported directly
to work, we concluded that the premium class trip was not justified.
However, as discussed previously, because these trips were not
specifically authorized, there was no assurance that the travel
authorizing officials knew whether the traveler had a rest period upon
arrival. As a result, we found multiple instances where MCC employees
flew business class, but also had a rest period upon arrival at their
destination or once they arrived home. Specifically, we found that for
20 of the 36 trips we examined, the traveler arrived home on a weekend
without evidence of going to work.[Footnote 8] We also found other
trips where travelers arrived at their destinations on weekday
afternoons and likely received rest periods before going to work. For
example:
* One MCC traveler flew first and business class from Washington, D.C.,
to Port Villa, Vanuatu--a trip exceeding 14 hours and costing $12,000.
On the trip to Port Villa, the traveler arrived on a Saturday night
without evidence of working before taking a rest period. On the return
trip, the traveler arrived back in Washington, D.C., on a Saturday
night, and therefore the traveler had a reasonable opportunity for rest
before work. In addition, no documents were provided to show that
business class was specifically authorized in advance of the trip. The
trip included a reasonable opportunity for rest upon arrival at both
the destination and back home, making the trip ineligible for business
class according to the FTR.
In our governmentwide audit, we found that internal policy can
contribute to an overall control environment that substantially
restricts premium class travel. For example, DOD's travel policy states
that premium class flights over 14 hours would be approved only if the
travel is so urgent that it can not be postponed, nor can alternatives
be found to reduce the cost. As a result, only 3 percent of DOD's trips
exceeding 14 hours were taken in premium class during our audit period.
MCC could save money by adopting a similar policy toward 14-hour
travel. DHS provides another example of restraint on approving 14-hour
trips for premium class; like DOD's, only 3 percent of DHS's trips
exceeding 14 hours were in premium class during our audit period.
Additionally, when possible, travelers plan their travel in advance to
avoid having to use premium class travel out of necessity. Attention to
these details would likely identify some 14-hour trips that, by
allowing extra time for a rest period or rest stop, alternatively could
be taken in coach.
In response to our audit, MCC officials noted on the travel documents
that, "additional supporting documentation was not required because
itinerary shows that flight time was in excess of 14 hours." MCC's
policy and procedures and subsequent inadequate documentation to
support the travel transactions shows poor internal controls.[Footnote
9] Thus, there are no mechanisms for management to assure that business
class travelers are not taking a rest stop or rest period, therefore
making these trips with insufficient oversight. This lack of scrutiny
facilitates improper use of premium class travel, and creates
unnecessary travel costs at taxpayer expense.
Recommendations for Executive Action:
To reduce improper premium class travel, we recommend that the Chief
Executive Officer of the Millennium Challenge Corporation implement
improved internal controls over the use of premium class travel. While
a wide range of activities can contribute to a system that provides
reasonable assurance that premium class travel is properly authorized
and justified, at a minimum the internal control activities should
include the following:
* require specific authorization for the use of premium class, to be
documented and retained with travel orders;
* enforce FTR regulations prohibiting premium class travel if the trip
was over 14 hours and the traveler had a rest stop at destination or a
rest stop en route; and:
* prohibit the use of premium class air travel on weekend arrivals,
except in cases where a traveler documents that he or she will report
immediately to work upon arrival before incurring a rest period.
Agency Comments and Our Evaluation:
In written comments on a draft of this management letter, which are
reprinted in enclosure II, MCC said it concurred with many of our
conclusions, including that MCC needed to specifically justify, as well
as authorize, each premium class trip, and needed to clarify its policy
to ensure that premium class travel is used only in those cases where a
rest stop is not feasible for business or medical reasons. However, MCC
made several objections to our methodology and factual findings, which
we have addressed below.
MCC objected that we did not mention policy changes designed to limit
premium class travel. However, the reason we did not address changes
made to MCC's premium class policies and procedures is because we
consider the changes made by MCC ineffective in addressing the MCC
internal control weaknesses we found. Specifically, MCC says that it
eliminated the use of blanket orders authorizing premium class travel
in February 2006, and that all trips taken after February 2006 were
specifically authorized for business class travel in its e-travel
system by appropriate supervisors. However, while we found signed
authorizations for all trips taken after February 2006, none of the
trips contained specific authorization for the use of premium class on
the authorization itself or in the notes section of the authorization.
MCC objected that it had provided us a corrected spreadsheet that was
not reflected in our management letter. However, we disagreed with the
corrections they suggested, thus their suggestions were not
incorporated into our management letter. Among the corrections MCC
suggested were that some travelers arriving on weekends were justified
for premium class travel use, that premium class trips taken on blanket
authorizations were specifically authorized, and that one premium class
return trip was justified because it was the only flight available.
However, our control tests define blanket premium class travel as not
specifically authorized, and MCC provided no documentation supporting
the rest of their assertions. Therefore, we did not incorporate their
suggested changes.
MCC also disagreed with our statement that all 15 of the transactions
we examined that occurred after February 2006 failed our control tests
for specific authorization and justification. However, this assertion
is incorrect. While all 15 of the transactions had travel orders signed
off on by supervising officials, which was an improvement from the past
use of blanket travel orders authorizing the use of premium class
travel, none of the 15 travel orders specifically authorized premium
class travel. Further, MCC provided no additional evidence that a
supervisor approved the use of premium class travel subsequent to the
travel order.
MCC asserted that the FTR does not require an agency to seek or provide
documentation that travelers arriving home on a weekend did not incur
rest periods before reporting to work. However, agencies need to
provide assurance that all travelers using premium class travel are in
compliance with FTR requirements, including the requirement that a rest
stop does not exceed 24 hours. We considered that the transaction
failed the control test if there was not some evidence that travelers
arriving on weekends did not report to work before incurring a rest
period. We repeatedly found that MCC travelers, arriving on weekends
after traveling in premium class, who would be reasonably expected to
have rest stops before reporting to work. Agencies need to document
that travelers have certified that they did not incur rest periods in
situations where they would be reasonably expected to do so. For
example, the authorization form could be amended, without undue burden,
to include a box where a traveler and his/her supervisor could certify
that a rest period was not being incurred by a traveler traveling in
business class.
We disagree with MCC's assertion that a lack of per-segment costs, and
the inclusion of some coach class legs in ticket prices, significantly
affected our premium class estimates. Our calculation of premium class
travel was conducted on a governmentwide scale. As we expressed in
previous meetings with MCC officials, since the government credit cards
banks and most agencies do not collect information on the cost of
airline flights by individual segments of travel, it was not reasonable
for us to calculate this amount for certain agencies but not others.
However, our analysis of MCC's premium class flights by segment shows
that 85 percent of the legs on MCC's premium class flights had premium
class service codes, while just 9 percent had coach class service
codes[Footnote 10]. Further, the inclusion of coach class legs among
premium class tickets should not have significantly affected premium
class estimates, for MCC or the government. For example, we examined
the itinerary of an MCC traveler who flew coach class from Washington
to New York, then business class from New York to Johannesburg. The
cost for the coach portion of the trip was slightly over $100,
according to GSA's city-pair contracts, as opposed to over $5,000 for
the business class portion. For that itinerary, the coach class portion
was about 2 percent of the total ticket.
This report contains recommendations to you. The head of a federal
agency is required by 31 U.S.C. 720 to submit a written statement on
actions taken on these recommendations. You should submit your
statement to the Senate Committee on Homeland Security and Governmental
Affairs and the House Committee on Oversight and Government Reform
within 60 days of the date of this report. A written statement must
also be sent to the House and Senate Committees on Appropriations with
the agency's first request for appropriations made more than 60 days
after the date of the report.
This report is intended for use by the management of MCC. We are
sending copies to the Honorable Carl Levin and the Honorable Norm
Coleman, Chairman and Ranking Member, Permanent Subcommittee on
Investigations, Senate Committee on Homeland Security and Governmental
Affairs, and the Honorable Charles Grassley, Ranking Member, Senate
Committee on Finance. Copies will be made available to others upon
request. The report is also available at no charge on GAO's homepage at
[hyperlink, http://www.gao.gov]. If you or your staff have any
questions concerning this letter, lease contact me at (202) 512-6722 or
[email protected].
Sincerely yours,
Signed by:
Gregory D. Kutz:
Managing Director, Forensic Audits and Special Investigations:
Enclosures--2:
GSA Regulations Governing Premium Class Travel Use:
The Federal Travel Regulation (FTR), issued by the General Services
Administration (GSA), implements statutory and Office of Management and
Budget (OMB) requirements and policies for most federal civilian
employees and others authorized to travel at government expense. The
purpose of the FTR is to ensure that official travel is conducted
responsibly and at minimal administrative expense. Unless exempt by
specific legislation,[Footnote 11] executive agencies, fully owned
government corporations, and independent establishments are expected to
follow the FTR, including its promulgation related to premium class
travel. The Department of Defense's uniformed servicemembers and
Department of State employees exempt from the FTR are covered by their
agencies' travel regulations.
OMB's general policy related to travel is that the taxpayers should pay
no more than necessary to transport government officials. Consistent
with this principle, the FTR states that with limited exceptions,
travelers must use coach class accommodations for both domestic and
international travel. Premium class travel can occur only when the
traveler's agency specifically authorizes the use of such
accommodations (authorization) and only under specific circumstances
(justification). Specifically, the FTR states that first class
accommodation is authorized only when at least one of the following
conditions exists:[Footnote 12]
* coach class airline accommodations or premium class other than first
class airline accommodations are not reasonably available,
* when use of first class is necessary to accommodate a disability or
other special need that is substantiated in writing by a competent
medical authority,
* exceptional security circumstances require first class travel, or:
* when required because of agency mission.[Footnote 13]
The FTR authorizes premium class accommodations other than first class
(e.g., business class) when at least one of the following conditions
exists:
* regularly scheduled flights between origin/destination points provide
only premium class accommodations, and this is certified on the travel
voucher;
* coach class is not available in time to accomplish the mission, which
is urgent and 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;
* 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 (however, a rest stop en route or a rest period upon
arrival is prohibited when premium class accommodations are
authorized); or:
* when required because of agency mission.[Footnote 14]
As specified above, employees traveling in premium class have to meet
both authorization and justification to qualify, meaning that employees
who, for example, traveled premium class on a trip exceeding 14 hours
would violate the FTR if they traveled premium class without receiving
specific authorization to do so. Agencies subject to the FTR have
generally issued internal policies and procedures to clarify and
implement the premium class travel provisions of the FTR. When issuing
implementing policy, agencies have to follow executive branch policy,
which specifies that a subordinate organization seeking to establish
implementing regulations or guidance may make the regulations more
stringent but not relax the rules established by higher-level guidance.
For example, an agency's implementing policy related to premium class
travel because of disability can require that the traveler provides
medical certification that is updated annually, but cannot waive the
requirement that a certification by a competent medical authority be
provided.
Enclosure II:
Comments from the Millennium Challenge Corporation:
Millennium Challenge Corporation:
February 22, 2008:
Mr. Gregory Kutz:
Managing Director, Forensic Audits and Special Investigations:
U.S. Government Accountability Office:
Dear Mr. Kutz:
This letter responds to your draft Management Letter: Recommendation
for Improvements to MCC's Internal Controls and Polices on Premium
Class Air Travel sent to MCC on February 8, 2008. I was surprised and
concerned to see that this draft Management Letter makes no mention of
the policy changes we brought to GAO's attention in our August 20, 2007
meeting with Scott Wrightson, and subsequently forwarded to GAO in our
December 5, 2007, letter to you.
At the August 2007 meeting and in our December 2007 letter, MCC
provided GAO with documented changes in our travel policy, including
changes to limit the use of premium class travel to those instances
where there is a mission critical justification for such travel, or
where a legitimate medical condition or disability requires it. In
implementing these changes to our travel policies and procedures, we
have in many cases gone beyond the requirements of the Federal Travel
Regulations (FTR) in order to conserve our travel resources for those
cases where the use of premium class travel has a significant impact on
the ability of our hard-working staff to accomplish their mission.
Also, in your initial draft, GAO made a number of factual errors, which
are repeated in the February 8, 2008, draft. The new draft states
correctly that before February 2006, MCC used a blanket travel
authorization, and therefore did not properly authorize or justify
premium class travel. However, the statement that "of an additional 15
transactions occurring after February 2006 when premium class travel at
MCC was supposed to be authorized on a trip-by-trip basis, we found
that all 15 still failed our control tests due to lack of specific
authorization and justification" is simply incorrect. While MCC agrees
that these 15 trips did not have separate and specific justifications,
all 15 were specifically authorized in MCC's e-travel system by
appropriate supervisors for business class travel. We explained this at
the August 2007 meeting with GAO, yet the assertion that these tips
were not properly authorized is repeated in the most recent draft
Management Letter without any additional factual basis.
Furthermore, when reviewing the spreadsheet provided by GAO on the
trips in question, MCC uncovered a number of factual errors, and in our
December 2007 letter we provided you with a corrected version of your
spreadsheet. However, in this draft Management Letter, GAO again has
failed to correct these facts with the documentation MCC provided,
which included MCC's revised Travel Policy and the corrected
spreadsheet.
We also continue to question the assertion from GAO that a number of
trips "violated the FTR and therefore were improper" because MCC did
not document that a rest stop did not occur over a weekend. The FTR
does not require an agency to seek or provide such proof, and it is
neither administratively feasible nor reasonable for GAO to ask an
agency to document for every premium class trip that a rest stop did
not occur. In effect, GAO is asserting with no evidence that MCC is
"guilty" of combining rest stops with premium class travel and asking
MCC to prove its "innocence."
Finally, in our August 2007 meeting, GAO acknowledged that it counts
entire round-trip flights as "premium class" even if only one segment
in one direction of the trip was actually flown in a premium class. MCC
made clear at that point that we can provide segment by segment data
showing the actual travel flown in a premium class, but there appeared
to be no interest on the detailed part of GAO on using this data
because certain other agencies cannot provide their data on as a
detailed a basis. As a result, MCC believes that GAO has significantly
overstates the actual amount of MCC travel that has taken place in
premium classes, and is ready to provide our data to GAO so that it can
develop a more accurate estimate.
Despite these inaccuracies in the GAO draft Management Letter, MCC
agreed with many of the report's conclusions, including that MCC needed
to specifically justify, as well as authorize, each premium class trip,
and needed to clarify our policy to ensure that premium class travel is
used only in those cases where a rest stop is not feasible for business
or medical reasons. We have shared our revised policy with you and do
so again with this letter. We have also attached a document describing
in more detail the steps that MCC has taken to ensure full compliance
with the FTR. I hope that the final Management Letter will reflect the
corrections we are again urging you to make in your characterizations
of MCC's past premium class travel, as well as the policy changes we
have made in response to GAO's recommendations. Please do not hesitate
to contact me at (202) 521-3723 with any specific questions you may
have regarding our approach to premium class travel.
Sincerely,
Signed by:
Michael Casella:
Acting Vice President:
Administration and Finance:
Enclosures:
(1) Travel Policies and Procedures (Revised 11-29-07):
(2) GAO Audit Referral Letter- MCC Corrections (Rev 11-19-07):
(3) MCC FTR Compliance Fact Sheet:
[End of section]
Footnotes:
[1] GAO, Premium Class Travel: Internal Control Weaknesses
Governmentwide Led to Improper and Abusive Use of Premium Class Travel,
GAO-07-1268 (Washington, D.C.: Sept. 28, 2007).
[2] Four transactions from MCC were selected as part of our statistical
sample of government premium class transactions. The remaining 32 MCC
transactions we tested were selected through data mining.
[3] We defined a weekend arrival as a flight arriving between Friday at
2 p.m. and Sunday at 8 p.m.
[4] Our statistical sample included 4 transactions from MCC travelers.
An additional 32 transactions were selected through data mining.
[5] As specified by the MCC staffing model.
[6] We considered an unauthorized trip to automatically be unjustified;
authorized trips were then tested to see if they were justified.
[7] The FTR defines a rest period as not in excess of 24 hours, but
does not define a minimum period that defines a rest period.
[8] We defined a weekend arrival as a flight arriving between Friday at
2 p.m. and Sunday at 8 p.m.
[9] GAO, Standards for Internal Control in the Federal Government, GAO/
AIMD-00-21.3.1 (November 1999).
[10] The remaining 6 percent of flight legs had codes that could have
been either premium or coach, depending on the airline.
[11] A number of federal agencies are exempt from the FTR. For example,
the United States Postal Service (USPS) is exempt through 5 U.S.C. 104
and 5 U.S.C. 5701. The Federal Reserve Bank also claimed exemption from
the FTR under section 10 of the Federal Reserve Act, which provides
that "employment, compensation, leave, and expenses" of board employees
are "governed solely by the provisions of the Federal Reserve Act."
Both USPS and the Federal Reserve Bank use their respective exemptions
to promulgate their own travel policies.
[12] The FTR also allows for the traveler to upgrade to premium class
accommodations, at the traveler's expense or by using frequent traveler
benefits.
[13] 41 C.F.R. 301-10.123.
[14] 41 C.F.R. 301-10.124.
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