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Switch to new travel system could be costly for agencies

Aug. 10, 2012 - 12:22PM   |  

Civilian agencies may be forced to pay millions of dollars in extra costs and suffer delays as they transition to a new automated travel management system.

That is in part because of an industry challenge that has sidelined a $1.4 billion e-travel contract award by the General Services Administration.

In a June 15 protest filed with the Government Accountability Office, incumbent vendor CWT Sato Travel claimed that agencies will be forced to pay millions of dollars in transition and training costs for tens of thousands of employees under GSA’s contract award to Washington-based Concur Technologies.

The new contract differs markedly from GSA’s current e-travel contract, which offers three vendors from which agencies can choose.

Concur says it expects to save the government billions of dollars over the next 15 years through its new system, which is expected to provide feds with a better display of pricing options, similar to commercial travel websites like Orbitz and Travelocity, and easier navigation. The company also offers a mobile application for feds to create and approve expense reports, book flights and hotels and do other tasks while traveling.

Rajeev Singh, Concur president and chief operating officer, said in an interview that implementation costs will vary by agency and can be simple and inexpensive. However, complex transitions can range from six months to a year and cost more, Singh said.

At the Justice Department, for example, the challenge will be building multiple interfaces between the new e-travel system and the department’s financial systems and ensuring that the new commercial service meets federal security requirements, said Nanda Chitre, deputy director of public affairs.

Justice has not yet determined the costs and effort required to move to the new system, Chitre said.

Concur is hopeful that, after GAO’s Sept. 24 ruling on the protest, it can begin installing its travel system across the government. The contract does not cover the Defense Department, which has its own travel system and will be unaffected.

Transitioning each agency to the new Concur system will take about nine months to a year, said Jim Lucier, a senior vice president at Concur.

On an earnings call earlier this month, Steve Singh, chairman and CEO of Concur, said the company had planned on GSA awarding the contract to two vendors — not one — and it staffed accordingly. Concur said its current staff of 2,300 full-time employees is enough to support its customers, including the federal government. It expects to reach 2,500 employees by year’s end.

Under the Federal Travel Regulation, civilian agencies must use e-travel services through GSA.

Besides the possibility of significant additional expense in transitioning to a new travel system, agencies also must meet an Office of Management and Budget mandate to cut travel spending by 30 percent by next year in comparison with 2010 levels.

Also, in using the new travel system, agencies will be on the hook for a fee GSA charges each time agencies process a travel voucher using the automated system.

Between 2004 and 2011, GSA collected $30.8 million in fees from agencies. GSA raised its travel voucher fee from $3.50 to $5 in December 2010 to recoup costs for acquisition and transition to the new e-travel system. GSA said it does not plan to increase the fee under the new contract.

“The fee is set to recover GSA’s cost to provide such services as program management, security compliance, contract administration, vendor performance management, consulting services to customers and operational expenses,” Timothy Burke, director of GSA’s Office of Travel and Transportation Services, said in a statement.

GSA has acknowledged that agencies’ transactions using GSA’s e-travel service may decline.

In anticipation of some agencies not being able to fully migrate to the new system by November 2013, the end of the current contract, GSA negotiated options with the current vendors to extend the current contract to November 2015, if needed.

CWT Sato Travel is pushing for GSA to award a contract to a second vendor. It complained to GAO that GSA awarded a single-vendor contract in part because of “superficial reasons, such as a desire to eliminate the possibility of task order bid protests or because it would be more administratively convenient for GSA to manage only one IDIQ contractor.”

In a redacted version of GSA’s response to the protest, Ernesto Martinez, the contracting officer overseeing the procurement, said CWT Sato Travel had the lowest technical rating for its e-travel solution and the highest price for either a single or dual award. He added that it is not reasonable to pay more for a marginal proposal with significant weaknesses and security issues.

Among its deficiencies, the company didn’t meet contract requirements for providing a disaster recovery site, according to GSA.

Of the three current e-travel systems available to agencies, CWT Sato Travel accounted for 17 percent of federal civilian e-travel business in fiscal 2011, based on the number of vouchers processed through e-travel systems, Martinez wrote in response to the protest. CWT Sato Travel’s proposal did not show that it could perform the work, Martinez said.

Northrop Grumman’s GovTrip had 58 percent of the transactions and FedTraveler from HP Enterprise Services LLC had 25 percent of voucher transactions last fiscal year.

As a vendor, the biggest challenge is understanding that federal travelers’ needs are unique and they vary from agency to agency, said Dan Gildea, GovTrip program manager. “All of those customers have to be supported as efficiently as possible.”

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