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Jul12
A $5 Billion Earmark?

In late March of this year, just three weeks after filing legislation that would largely kill a government program established just 10 years ago to help the Department of Defense reduce waste in its mammoth travel expenditures, U.S. Sen. Norm Coleman, R-Minnesota, received $8,200 in campaign contributions from the Minnesota power couple that includes the CEO of Carson Wagonlit Travel, one of America's largest travel corporations.

If passed, Coleman's legislation would make an additional $5 billion worth of government travel spending potentially available to Carson Wagonlit, which is part of The Carlson Cos., based in Minneapolis, Minn. Coleman's home state...

Carlson is one of America's largest private corporations with reported sales of $37.1 billion in 2006. Carlson brands include Radisson Hotels, casual dining chain TGI Friday's, Regent Seven Seas Cruises, Carlson Leisure Group (travel agencies) and Carlson Wagonlit Travel, a business travel management firm. Carlson also owns CW Government Travel, which provides travel management for some departments of the federal government.

In June, Carlson announced that CW Government Travel had won a U.S. Department of Justice contract to provide 'E-Gov Travel Services' and would manage all of DOJ's travel needs, 'including planning and authorization, approvals, reservations, vouchers, and reporting.'

Carlson already provides similar services to the U.S. Department of Education, the State Department, the General Services Administration headquarters, the Department of Labor, the National Business Center, and a number of other federal agencies. Carlson estimated the DOJ contract to be worth $43 million. That's a nice little contract for Carson Wagonlit, which did $20.5 billion in sales in 2006, but that DOJ contract is not the big fish that Carson is trying to catch.

Carlson has its eye on the U.S. Department of Defense - which spends more on travel than the rest of the federal government combined. And that's where Sen. Coleman comes in.

The Defense Department is the biggest single purchaser of travel services in the federal government, accounting for more than half of the nearly $11 billion that Uncle Sam spends on official government travel. As you can imagine, Carlson - America's largest travel agency - would love to get some of that more than $5 billion in potential business.

But they can't.

In 1997, during the Clinton Administration, investigative reports found large-scale waste in the Defense Department's system of administering travel, and the Defense Department launched a program to create an automated on-line Defense Travel System to drastically reduce the overhead costs of administering the 'back-office' functions associated with manually processing and paying travel vendors and travelers' vouchers, as well as to properly account for travel expenses through various auditing and control functions. Up to that point, Defense employees traveling on official business could book their own travel through a travel agency, then turn in the receipts for reimbursement.

In addition, the DTS would consolidate into one system the nearly three dozen different - and incompatible - travel systems then operated by different branches and agencies within the military.

(A more recent study estimated that the Defense Department wasted $100 million in 2004 on unused airline tickets purchased by or for Defense travelers that were never nor submitted for refunds because the department lacks a system to identify unused tickets in the process of reconciling travel reimbursement claims.)

In 1998, DOD contracted BDM Corporation to build the Defense Travel System, which was to be an online, automated system that handled both the 'front end' of making travel arrangements and reservations and the back end of payments and the accounting and auditing. BDM was later acquired by TRW, which itself was acquired by Northrop Grumman, which now is overseeing completion of the DTS.

Today, the Defense Travel System is in use at all of the 281 major military installations that account for the vast bulk of Defense travel, and has been deployed to more than 8,100 of the approximately 11,000 remaining U.S. military facilities and sites. And usage of the system is rising - the DTS has processed 3 million travel vouchers since its launch, including 2 million vouchers and 2.4 million travel authorizations in the last year.

While Defense has been developing the unique DTS system for handling its travel booking, voucher processing, accounting and auditing needs, the General Services Administration pursued a different approach to providing automated travel booking to the civilian Federal agencies.

Federal civilian agencies are authorized to use one of three vendors certified by the General Services Administration to provide automated travel booking services. Those vendors are Carlson Travel, American Express, and Northrop Grumman, the builder of the DTS.

The Defense Travel System is not without its critics. Over the years, the Government Accountability Office has issued two reports on the DTS; the DOD Inspector General has reviewed the program, and the Senate Homeland Security and Government Affairs Committee's Permanent Subcommittee on Investigations (chaired by Sen. Coleman until the Democrats took control of the Senate in January) has also issued a report.

Each of those reports has identified different flaws and short-comings in the DTS, which remains a work-in-progress.

In March, Sen. Coleman filed legislation, which would eliminate the travel booking functions of the DTS and encourage the Department of Defense to instead use travel agents - such as those who work at various Carlson Travel franchises, for example - to identify flights, hotels and rental car options. Defense travelers would gather their own travel reservations information, then input that info into the back-end portion of the DTS.

But instead of letting Northrop Grumman complete work on the DTS - on which more than $400 million has already been spent - Coleman proposes to scrap it, and go back to the old, wasteful, system of letting Defense employees book their own official travel through whatever travel agency they happen to find in the Yellow Pages. More often than not they're likely to be dialing the number of a Carlson travel agency.

Coleman titled his legislation, S. 754, the 'Defense Travel Simplification Act of 2007' - but allowing Defense employees to book their own travel was one of the reasons why the Defense Department's official travel budget was riddled with waste. (More recently, Sen. Coleman filed an amendment to the pending Department of Defense spending authorization bill that would do much the same thing as S. 754.)

Northrop Grumman, answering critics of the DTS program last year, said that the DTS is projected to save $178 million in productivity costs and $56 million in real dollars each year when fully deployed by the end of this year.

Scrapping it and switching to one of the 'eTravel' services used by the civilian agencies 'would forego about $25 million of the conservatively estimated $56 million in annual savings that DTS would produce,' Northrop Grumman contends.

Before you dismiss that as spin from a company that doesn't want to lose access to a government gravy train, remember this: Northrop Grumman is one of three GSA-certified eTravel vendors.

It could potentially make more money if Defense switched to eTravel and selected Northrop Grumman's GovTrip system as its eTravel vendor. Says Northrop Grumman:

Halting DTS development would be the wasteful discard of a $400 million investment by taxpayers in an existing, operational, effective system before its benefits have been fully realized while spending an additional $40 million to $65 million per year using eTravel, which does not meet the Defense Department's security and interface requirements.
So, if scrapping the DTS wouldn't actually save taxpayers money, why is Sen. Coleman so determined to do it?

 

Is it because he's facing a tough re-election fight next year and wants to grandstand as a friend of taxpayers and a foe of government waste? Perhaps. It's a pretty standard political pose in an election year.

But there are plenty of better examples of real government waste, so why is Coleman so fixated on the DTS, a program that, when fully implemented, is designed to save taxpayers money?

Consider this: Northrop Grumman's DTS gives it a monopoly over more than half of Uncle Sam's total spending on travel, while its GovTrip system competes with Carlson (and American Express) for the less than half of total federal government spending on travel that remains.

Carlson is America's largest travel agency, but more than $5 billion in annual travel bookings by the federal government is slipping beyond its reach as more and more Defense employees are switched on to the DTS. (Carlson hates the DTS so much that a few years ago it filed a lawsuit - later dismissed - alleging Northrop Grumman got the contract unfairly.)

Since 2001, more than $65,000 in Carlson-connected money has flowed into Sen. Coleman's campaign coffers.

Helping Carlson by striving to earmark $5 billion in business for them to compete for is a pretty nice payback.

Or perhaps there is no connection between those campaign contributions and Coleman's crusade to cancel the DTS. Perhaps he really is just out to battle government waste and thinks there are better alternatives to the DTS.

Still, filing legislation to kill the program - and soon thereafter getting big campaign contributions from major campaign benefactors who stand to benefit from that legislation - looks a lot more like a senator using his legislative power to benefit big campaign contributors and a big home-state employer at the expense of the U.S. taxpayer.

That's the kind of behavior that cost Republicans their majority in the last election.

Update: Minnesota Campaign Report says comedian and failed liberal talk show host Al Franken is raising serious cash for his campaign to unseat Coleman.

The Politico says Franken out-raised Coleman - by a wide margin in the second quarter.

<i>Cross-posted from BillHobbs.com</i>

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4 Comments/Trackbacks




Bill,

Fishy? Yes. Malfaesance? Not necessarily. I do applaud you pointing this out, this is but a tiny float in a Murtha-style defense porkbarrel parade, but it's important to keep an eye on everyone.

One little issue is that Carlson Wagonlit doesn't stand to make (and keep) $5 billion. This is similar to people getting peeved over HAL or KBR getting a contract 'worth billions' -- it's not, at least not to KBR.

In the case of HAL (or now, KBR), the profit is a low single-digit percentage of the total cost of the contract. Carlson Wagonlit may see a few percent of that contract if they got the whole thing, maybe $150-300 million. That's nothing to sniff at but it's not the pot o'gold that $5 billion sounds like. The money may go through CW but not as much sticks as it would seem. They stand to make a profit on some hotel stays, but unless they're planning on buying a fleet of 787s they will fork over the majority of that money to airlines or contract air services.

DTS seems like a good idea, but it often seems that the armed forces succeed despite things like DTS, not because of them.

Considering the cost of a Senate campaign versus the donation received, if this is naked porkbarrelling and service of special interests this is a Senator selling his soul for a remarkably small sum, and in public no less.

» A Military Guy Rebuts Charges That Coleman Is Selling Out from Ace of Spades HQ
Over in the sidebar was linked a Bill Hobbs piece suggesting that Norm Coleman's pushing to scrap the current DoD travel-arrangement system, DTS, in favor of going back to the system of using travel agents, was a political/pecuniary sop to... [Read More]

You may be right that Coleman has pork roasting on his mind. However, DTS is terrible, it's cost an incredible amount of money in ways counted and not counted (for instance, now the colonels are spending many hours doing their own travel planning by fighting through this terrible computer system, which sounds egalitarian until you realize how much money you're paying a colonel instead of a GS-3). It's inefficient, and very irritating to the people here that use it.

It sounds a bit like the DTS blurbs you're using are from the company--it might be worthwhile to google around and see how expensive DTS is.

Personally, I'd prefer going to something more like what business does--but there are so many city pair contracts and rules that it would take a lot more changes to become effective.

» http://www.elephantbiz.com/2007/07/when_i_reported_two_weeks.html from ElephantBiz
When I reported two weeks ago on an effort by U.S. Sen. Norm Coleman, R-Minnesota, to pass legislation to kill the Defense Travel System, opening up a potential $5 billion in government business to Carlson Cos., a home-state company whose... [Read More]

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