DoD Travel System Takes Off
he Defense Department awarded a $263.7 million contract for an automated travel services system that promises to make the lives of its travelers much easier.
Once the winner of the May 7 contract, BDM International, and its subcontractors get the system up and running, DoD travelers will be able to use it to book travel arrangements, get approval for expenses, look up travel regulations and file for reimbursements. It's a start-to-stop, paperless travel administration system.
The contract covers DoD Travel Region 6, which includes 11 states (Iowa, Illinois, Indiana, Kentucky, Michigan, Minnesota, Missouri, North Dakota, Nebraska, South Dakota and Wisconsin) and about 200,000 travelers.
More to Come
The Military Traffic Management Command will implement and manage the system. Testing began in June, and the system setup was scheduled in stages starting in September.
The contract will be a model for 18 additional contracts that will take effect over the next three years and cover DoD employees, service members and reservists worldwide. Air travel volume for the individual contracts is valued at $25 million to $88 million each for official travel and $2 million to $30 million each for leisure - a total of $1.17 billion. By 2001, Defense employees worldwide will use the system. (Also to come is the leisure travel contract for Region 6, expected sometime this summer.)
The first region's contract carries more weight than the 18 others, according to project manager Col. Albert Arnold. It involves "development of a worldwide common user interface, provision of training services, and integration with follow-on contracts," says Arnold. The $263.7 million covers the system and its administration. For direct travel expenses, travel services provider American Express estimates an additional $120 million a year in air travel volume alone.
DoD also plans to let other federal agencies use the system. The Defense Department and BDM have yet to negotiate the timelines and costs for that move.
Out of a Hole
DoD concedes that its traditional way of doing travel is annoying, laborious and slow. Accounting clerks have to navigate as many as 25 steps to approve, authorize and pay travel expenses, requiring the traveler to keep stacks of invoices, vouchers, authorizations and other supporting documents. The Pentagon says administrative overhead for its $3 billion a year in travel expenses is about 30 percent of costs, compared to 8 percent or less in the private sector.
During pilot tests of the new system at 27 DoD locations, reimbursement time fell by half, costs went down 65 percent, traveler satisfaction went up, and travelers got through administrative steps in one-third the time, DoD says.
With the new paperless system, DoD expects to save $300 million annually, primarily by reducing processing time demanded of travelers and authorizing officials on its 5.9 million travel vouchers a year. Costs for finance and accounting, records management, and financial systems maintenance also should drop. The change will involve use of desktop automated travel approvals (including digital signatures), arrangements and vouchering (see "DoD Goes Paperless," November 1997).
How it Works
Travelers will make arrangements through AmEx, though they won't always be dealing with an AmEx employee. The company plans to open satellite offices and to subcontract with existing Amex offices and independent travel agents.
The Region 6 contract runs for five years, with three option years for renewal. BDM, a subsidiary of TRW, heads up the contracting team. Subcontractors include American Express, Gelco Information Network, Oracle Corp. and Sun Microsystems. AmEx will provide travel services, including reservations, ticketing and record-keeping.
Gelco's contribution is a commercial, off-the-shelf software package called Travel Manager that walks travelers through their trips from booking through expense reporting. More than 80 federal agencies already use the software. Sun Microsystems will provide computer hardware, and Oracle will provide database management software.
DoD has publicly announced it is willing to consider a fee-based pricing structure for the contracts, but the request for proposals for Region 6 was based on commissions and rebates. Historically, travel agents have made their money from the commissions they receive from vendors, mostly airlines. As airlines have cut and restructured commissions, travel agents have started charging clients for the services they deliver. Some in the industry speculate that contracts for the other 18 regions may be fee-based.
Protest Delay
On May 26, EDS, the only other vendor that competed for the contract, filed a bid protest. According to spokesman Randolph Dove, the company believes the government did not evaluate its bid fairly. He insists the protest is not merely routine. "We're very serious. We don't file protests lightly, and we don't do it very often," Dove says. "The question is, when the government procures services, is it really looking for low cost or for best value overall?"
The protest means that BDM and its subcontractors must stop all work on the contract, but DoD can continue working on the system. The fact that the vendor must stop work (probably for three to four months while GAO processes the protest) will undoubtedly affect the implementation schedule.
- Brian Friel contributed to this report
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