Federal Fliers Win Freedom

In 1996 and early 1997, several innovations pushed government closer to the private sector model of travel management.

Congress made changes to relocation travel rules in seven parts of the Federal Travel Regulation, some of which were inspired by private-sector practices observed in research conducted by the Joint Financial Management Improvement Program, the interagency financial management group which drafted the legislation. Now agencies can pay a home-marketing incentive to employees who are transferring and cover the cost of moving a car to an employee's new duty station if such measures are cost-effective, among other new-found freedoms.

The General Services Administration pushed ahead with plans to rebid the government travel card, charge card and fuel card contracts, with the intent of making federal card contracts more responsive to individual agencies' needs. And GSA took a leap into uncharted waters by translating the Federal Travel Regulation into plain English.

These tangible changes reflect a new way of thinking in federal travel management circles. The new mind-set is supported by GSA's recent structural changes: In December 1995, the agency separated the policy and operations functions of the travel and transportation office of the Federal Supply Service. GSA executives say this has allowed them to give more attention to travel policy-making (and policy-breaking, in the case of outdated and inefficient practices.)

During fiscal 1996, most federal agencies spent less on travel than they anticipated they would. Of the 19 top traveling agencies, only five exceeded their estimated travel budgets.

More typical were agencies like the Social Security Administration, which spent 26 percent less than it planned to spend on travel in fiscal 1996, the Labor Department (which spent 27 percent less) and the Treasury Department (23 percent less). The Energy Department used only 60 percent of the money it allotted for travel in its fiscal 1996 travel budget. The General Services Administration spent a whopping 84 percent less than it anticipated, saving $16 million and consequently falling off The Top 200 Federal Contractors list of top-traveling agencies.

Gazing into the future, however, the Office of Management and Budget estimates that the travel budgets of only three top-traveling agencies-the Defense, Agriculture and State departments-will be smaller in fiscal 1998 than they were in fiscal 1996. OMB envisions most agencies' budgets rising by double-digit percentages over the same period.

For some agencies, like the Environmental Protection Agency, the increase over the two-year period is large because their travel budgets were artificially low in 1996, reflecting emergency cutbacks during the federal shutdown of 1996. Other increases reflect changes in the way agencies conduct their operations. The Department of Housing and Urban Development, for example, expects its travel budget to increase because it's sending employees out to do more hands-on work in communities across the country than it did in the past.

In spite of these growth patterns, OMB estimates that the federal government as a whole will spend 5 percent less on travel in fiscal 1998 than it did in 1996. That's because DoD, which spends $4 billion more on travel than any other federal agency, expects to cut 10 percent out of its travel budget by fiscal 1998.

Readers would be well-advised to take this prediction with a grain of salt. Each year since Government Executive first started tracking federal travel spending in 1992, OMB has been predicting travel budgets would be smaller the following year. Each year, travel budgets actually have been higher than the year before. (The one exception was between fiscal years 1994 and 1995, when OMB correctly estimated spending would rise from $7.5 billion to $7.7 billion.) In fiscal 1996, federal agencies spent $7.7 billion on travel, $300 million more than they spent five years ago.

Charge Card Changes

The biggest travel services procurement story of 1997 may be the re-bid of the federal travel charge card contract, currently held by American Express. This fall, charge card companies will submit their contract proposals to the General Services Administration. GSA will announce the contract awards in January 1998.

For the first time in history, GSA will award master contracts for both core and value-added services for the travel card to several vendors, and agencies will place task orders against the master contracts for specific needs. And that's not all: Vendors have the option of bidding for just the travel card contract, or one of the other card contracts administered by GSA-the purchase card and the fleet/fuel card-or they can offer government customers any combination of the three cards in one. The new contracts are scheduled to be in place by next November.

GSA is looking for card vendors that can provide new and innovative methods to streamline financial and administrative operations; support both front- and back-end processes; and, if a vendor offers several cards in one, provide an integrated solution across travel, purchase and fleet/fuel business lines.

The objectives of this new card procurement strategy include recognizing the diversity of federal agencies' needs, providing agencies with access to advances in technology and enhancing competition among vendors.

Even American Express is singing the praises of the new procurement process, in spite of the fact that it involves splitting the company's lucrative $3.3 billion contract into lots of tiny pieces. American Express officials say the new approach will allow them to introduce new technologies more quickly.

"When a new technology like electronic travel processing or smart card chips come along, "private sector companies just take it," says Dan Goren, vice president and general manager of the firm's government services division. "My government contract gives me no opportunity to offer it."

American Express is only allowed to offer the services it signed up to offer when its contract with the government was originally negotiated. Both parties lose in this arrangement, says Goren: The agency is denied access to services that could improve its travel management processes and the card vendor is denied the chance to increase the amount of business it does with the agency.

One concern about the new card procurement process is that it might set in motion a scramble among vendors to capture the business of the government's top traveling agencies while ignoring the needs of agencies with few or infrequent travelers. Goren doubts this will happen. Vendors will pursue small agencies, known in the credit card industry as "the mid-market," he says, because they are considered a growth business.

Also, "the smaller the agency, the more innovative they can be," Goren says. "Smaller agencies are ideal places to pilot the new technology products that the card re-compete asks for." Agencies with small travel budgets also will have the option to spend less money on a stripped-down contract. If small agencies want to increase their purchasing power, they can join forces and team up with each other under one task order.

In the past, the entire responsibility for selection of the government travel charge card vendor rested on GSA's shoulders. The new procurement process will shift responsibility for choosing cards to the agencies. "I don't see this as a downside, but as responding to a need," says Goren. From what he's seen, Goren says he is convinced, "federal managers are prepared, they want to be involved."

Bill Gormley, assistant commissioner of the Federal Supply Service's office of acquisition, agrees. "Agencies have said to us, 'give me a choice,' " he says. In return for a little extra work by management, each agencies' travelers will get a card or cards that best suit their needs.

The overhaul of the travel card system is occurring not a moment too soon. Earlier this year, the House passed a law that would require federal employees to use government charge cards for all travel expenses. If opting out of the travel charge card program is not an option, cards tailored to each agency's needs will be more important than ever.

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