Contractor disputes watchdog group's criticism of Defense Travel System

By Daniel Pulliam

A Defense Department contractor on Friday disputed a recent report from the government watchdog group Citizens Against Government Waste, which concluded that the Defense Travel System is too costly and badly managed.

The 12-page report stated that because DTS is rarely used, the per-transaction cost is about $33,000. According to CAGW, the system has failed numerous tests, is six years behind schedule, and its cost has almost doubled. The original contract totaled $263.7 million and now the project is slated to cost about $474 million.

"Basically once something gets started [at the Pentagon], unless it is something that is an absolute disaster, it is difficult to get these things to slow down," said Tom Schatz, president of CAGW. According to Schatz, DTS does not give the best price for airline tickets.

"If you're talking about $56 million in savings and you're talking about 5 million trips, it doesn't take long to lose that savings," he said.

In a Friday interview with Government Executive, Northrop Grumman officials called the numbers put forth by CAGW "gross mistakes" and insisted that DTS has been well managed by the Pentagon.

Spokeswoman Janis Lamar criticized the CAGW report as "fraught with flaws," adding that DTS is within budget and will operate within Pentagon-approved performance, schedule and cost parameters. The Pentagon is firmly behind the program, according to Lamar, and has designated it as a "Major Automated Information System Acquisition Category 1," which means it receives close oversight from Defense officials.

DTS is supposed to generate $56 million annually in travel management savings and is used by 425,000 uniformed and civilian personnel, according to the Los Angeles-based military contractor. The travel management system has approved 210,000 travel authorizations and 200,000 vouchers to date. By September 2006, according to the Pentagon's rollout schedule, Northrop Grumman expects to process 5 million of the Pentagon's 5.9 million travel plans annually.

The original contract, signed in May 1998, was a fee-for-service pact, but in 2002, Pentagon officials renegotiated it because they wanted to have more control over the system's development. A July 2004 federal court ruling instigated by one of Northrop Grumman's competitors, CW Government Travel Inc., found that inserting a travel services portion into the renegotiated contract made it illegal. The court did not require that development of DTS cease.

Calling for the Defense Department to replace the Web-based system with a private sector system, such as Travelocity or Expedia, the CAGW report urged other federal agencies considering eTravel systems to avoid Northrop Grumman's GovTrip system, which is similar to DTS.

Comparing the project's original price tag of $263.7 million with the current $474 million estimate is like comparing apples to oranges, according to Rich Fabbre, DTS' program manager. The $474 million price tag is the Pentagon's overall cost for the project, while the $263.7 million total is the amount Northrop Grumman will receive for developing the DTS system, and that amount is included in the overall cost estimate.

"I think the DoD has done a fine job of managing this program," said Fabbre, who added that the original estimate for the entire DTS program was $491 million. According to Fabbre, DTS uses the same commercial global distribution systems that Travelocity and Expedia use, and airline fares will vary depending on the requirements of a trip.

He also challenged CAGW's transaction cost estimate, saying that would be similar to charging the full development cost of a new car model to the first car off the assembly line. According to Northrop Grumman's analysis, the eventual cost will be $5 per transaction.

Fabbre said the Pentagon is preparing a point-by-point response to the CAGW report.