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Current Federal Frequent Traveler Policy
Under current federal laws and regulations, the frequent
traveler benefits1 received by a federal employee in conjunction
with official travel are generally considered government property,
and the employee may not retain the benefits for personal use. As a
result, the employee should accept the benefits on behalf of the
government and turn them over to the employee's agency. The agency
should then integrate the benefits into its travel plans to
maximize their value to the government.
Initially, this policy was enunciated and followed in a number
of prior Comptroller General decisions. These decisions were based
on the fundamental rule of law that a federal employee is obligated
to account for any gift, gratuity, or benefit received from private
sources incident to the performance of official duty. Any such
gifts, gratuities, or benefits tendered to the employee are viewed
as having been received on behalf of the government.2
In 1994, Congress enacted a statute designed to help realize to
the maximum extent practicable cost savings for official travel
from frequent traveler benefits. The statute directed the
Administrator of GSA to issue guidelines to ensure that agencies
promote, encourage, and facilitate the use of frequent traveler
programs offered by airlines, hotels, and car rental vendors by
federal employees who engage in official travel.3 This act
specifically provides that any awards granted under such a frequent
traveler program accrued through official travel shall be used only
for official travel.4
GSA has incorporated these policies into the Federal Property
Management Regulations5 and the Federal Travel Regulation,6
applicable to most federal civilian employees. Similarly, the Joint
Federal Travel Regulations,7 applicable to members of
1
These include the benefits offered by airlines, hotels, and car
rental vendors.
2
See 67 Comp. Gen. 79 (1987) (quoting B-199656, July 15, 1981);
and 63 Comp. Gen. 229 (1984). See also, 63 Comp. Gen. 233 (1984);
B-215826, Jan. 23, 1986; and B-257525, Nov. 30, 1994.
3
Federal Acquisition Streamlining Act of 1994, P.L. 103-355, §
6008, 102 Stat. 3367 (1994), 5 U.S.C. § 5702, note.
4
P.L. 103-355, § 6008(b). GSA issued Bulletin FTR 17, Oct. 24,
1995, advising agencies of the provisions of P.L. No. 103-355, §
6008 and reminding them of the existing provisions of the Federal
Travel Regulation concerning cost-saving opportunities provided by
the use of frequent traveler benefits. In Bulletin FTR 17, GSA also
encouraged agencies to establish programs under the Government
Employees Incentive Awards Act, 5 U.S.C. §§ 4501-4507, to reward
employees who take the initiative to accrue travel savings, and GSA
offered its program as a guide in establishing such reward
programs.
541 C.F.R. § 101-25.103-2.
6
41 C.F.R. part 301-53.
7
Paragraph U2010B.
the uniformed services, recognize that promotional material
received by a uniformed service member traveling on official
business at government expense belongs to the government and must
be relinquished in accordance with service regulations.8
Legislation would be required to change the government's general
policy to allow civilian employees and uniformed service members to
retain for personal use frequent traveler benefits accrued on
official travel. Such legislation would be necessary to repeal the
current requirement that such benefits be used only for official
travel9 and to affirmatively authorize employees and members to
retain for personal use these benefits that are now considered the
property of the government.


Use of Frequent Flyer Miles for Official Travel Is Difficult
and Appears Limited
Comprehensive governmentwide data are not readily available on
the extent to which federal agencies capture and use frequent flyer
miles for official travel. GSA officials told us that they do not
collect such data. However, our task team did obtain information on
GAO's practices, as well as those of several other federal
organizations. This information follows.
GAO's Experience
GAO has never had a centralized, formal program to reduce its
travel costs by capturing and using its employees' official travel
miles. Several years ago, we pilottested a program in one of our
headquarters units but soon discontinued it for a variety of
reasons. These reasons, which have also discouraged other
headquarters units, include the airlines' refusal to establish
separate official and personal travel accounts for employees,
employees' reluctance to participate, administrative burdens and
costs, and limited savings. Furthermore, few frequent flyer seats
were available at desired travel times, transfers of free tickets
to other employees took time and effort, and employees who flew on
different airlines often took a long time to accumulate enough
miles for free trips.
Although we never set up a GAO-wide program to capture and use
frequent flyer miles, several of our field offices tried to
establish such programs. Of these, the majority discontinued their
efforts for the same reasons that discouraged our headquarters
units. Two field offices did, however, establish programs and
continue to operate them, yet their dollar savings have been very
limited. One office saved $6,600 over about 33 months. This office
has many employees with enough miles on single carriers for free
trips, but these miles have been difficult to use because few seats
have been available when employees have needed to travel.
Furthermore, in past years, the unit's savings were reduced by the
$50 fee that the contract carrier charged for reservations made
less than 3 weeks in advance. Accumulating sufficient
8
There are some federal organizations that are not covered by §
6008 of P.L. 103-355 and also have their own property disposal
authority. One such organization we are aware of that does not
prohibit its employees from retaining frequent flyer benefits for
their personal use is the U.S. Postal Service.
9
§ 6008 of P.L. 103-355.
frequent flyer miles for this unit's employees has become more
problematic since the government contracted with a different
carrier for one of the unit's most heavily traveled routes. The
other field office, which reported saving about $32,000 over 6
years, also noted that multiple changes in contract carriers have
made it more difficult to accumulate and effectively use frequent
flyer miles.
Experiences of Other Federal Organizations
The other federal organizations we contacted had varied
approaches to capturing and using frequent flyer benefits for
official travel. A representative from one--the U.S. Postal
Service, which is not subject to the travel rules that apply to
most federal agencies--said that the Service does not prohibit its
employees from making personal use of the frequent flyer miles
received on official travel.
In 1998, the Department of the Interior considered establishing
a frequent traveler program that would have been managed by a
contractor. However, the Department rejected the contractor's
proposal as too expensive and difficult to implement. Interior
believed that the fees the contractor would have charged were
excessive and the savings were uncertain. In addition, under the
contractor's proposal, Interior would have had to provide the
contractor with data on the frequent flyer miles received by its
employees. It would have had to obtain the data from the employees
because the airlines would not provide the information to the
agency.
An Interior Department representative told us that some of its
bureaus use frequent flyer benefits to enable their employees to
take training and attend conferences because their budgets do not
cover non-program-related travel. Therefore, if frequent flyer
miles received on program-related travel were not captured and used
for this type of travel, the bureaus might not be able to send
their employees to these types of events. At the same time, if
employees were allowed to retain the frequent flyer benefits, they
might be willing to use some of their miles for such travel on a
voluntary basis.
GSA, IRS, and the Department of Justice have established
gain-sharing programs that enable frequent travelers to share in
the savings they achieve in airfares, lodging costs, or both. Under
these programs, employees can obtain cash awards based on savings
they can document by using free tickets from airline frequent flyer
programs or by securing lodging rates below the maximum amounts
allowed.
According to GSA officials, GSA considered establishing a
frequent traveler program in the early 1990s but abandoned the idea
because the airlines would neither pool the miles received by GSA
employees for the agency's use nor provide data to GSA on the miles
its employees received. In 1995, however, GSA established a
voluntary gainsharing program under which employees who use free
tickets awarded for official travel miles or secure lodging at less
than the established lodging rates can receive cash awards of up to
half the amount saved for the government. GSA reported that from
January 1995 through September 2000, almost $823,000 was saved
under the program, and employees received about half that amount in
cash awards. These savings do not take into account the costs of
administering the gain-sharing program, which GSA officials believe
were minimal. However, GSA officials view the program as a limited
success because the savings are low relative to GSA's overall
travel costs, which totaled about $190 million for the last 6
years. In addition, GSA officials believe that most of the savings
are from the lodging portion of the program rather than from the
use of frequent flyer miles.
IRS established a program similar to GSA's in 2000 at the
request of the National Treasury Employees Union. Employees can
accrue savings by such means as using frequent flyer miles to
obtain free airline tickets, sharing hotel rooms with coworkers, or
staying with friends or relatives. IRS travel officials did not
have data on the savings achieved through their program because the
program is less than a year old. However, they view the program as
a success. They said employees like the program and most of the
savings are in lodging costs.
The Justice Department established its gain-sharing program at
the beginning of fiscal year 1996. Like GSA and IRS, Justice shares
savings its employees achieve by using frequent flyer miles and
obtaining lodging at reduced costs. The program is discretionary,
and Justice components can choose whether they want to include
frequent flyer savings, lodging savings, or both. Administrative
support staff who assist travelers who achieve savings can also
share in the savings awards. According to Justice, it saved about
$70,000 in fiscal year 1996 and $202,000 in fiscal year 1997 and
paid cash awards equaling about half of the savings. Again, these
financial benefits do not factor in the gain-sharing program's
administrative costs. Justice did not provide savings data beyond
fiscal year 1997.
According to a representative from DOD, the Department does not
have a departmentwide frequent traveler program and has no data on
the extent to which its components have such programs. He said that
in the mid-1990s, his command attempted to, but could not, find an
effective program for capturing and using employees' official
frequent flyer miles anywhere in DOD. He believes the use of free
tickets awarded for frequent flyer miles in DOD is spotty at best.
He cited many of the same practical difficulties with implementing
the current federal policy that we and other agencies identified,
including the reluctance of both the airlines and employees to
provide frequent flyer data to the government and the problems with
tracking and using miles for official travel. He also identified
another difficulty--the time and expense associated with taking
disciplinary action against employees who violate the current
policy by making personal use of miles received on official travel.
He said his agency completed a demotion action against an employee
for personal use of miles, but assistance from the airlines was
difficult to obtain. Such action, he maintained, was not
cost-effective. These difficulties, combined with a departmental
emphasis on adopting private-sector practices, have led DOD to
prepare draft legislation that would abolish the current
restriction and allow military and civilian employees
governmentwide to retain for personal use frequent flyer benefits
received on official travel. He said that DOD has discussed its
proposal with other federal agencies, which have been supportive.
DOD is currently considering submitting its proposal to the Office
of Management and Budget.
An SEC representative informed us that SEC began using a
contractor's software 2 to 3 years ago to facilitate the use of
frequent flyer mileage. She said that employees' participation in
SEC's frequent flyer program is voluntary and that SEC's savings
have been minimal, in part because frequent flyer tickets do not
give travelers flexibility in arranging their travel. Specifically,
she said that it is difficult for SEC employees to obtain seating
using frequent flyer tickets because many trips are scheduled,
canceled, or changed at the last minute. Finally, she said that SEC
is likely to discontinue its contract because the savings, minus
the contractor's 30-percent commission, are not sufficient to
offset SEC's "hidden" management and oversight costs and employees
have not been enthusiastic about participating in the program.


The Private Sector's Practices
According to the results of three recent surveys, the private
sector commonly allows its employees to retain for personal use
frequent flyer miles received on business travel. This practice may
give the private sector, including government contractors, an
advantage over the federal government in recruiting and retaining
employees. While small compared with the higher salaries companies
often pay, this advantage may nonetheless influence the job choices
of some employees, especially if they are frequent travelers.
In April 2001, the National Business Travel Association surveyed
its members via the Internet on frequent traveler programs.
According to the Association, 200 companies responded. Of these, 98
percent said they do not recover frequent traveler benefits
received by employees on business travel for their companies, and
95 percent said they have no plans to do so. According to the
Association, most companies do not want to become involved in
capturing these benefits because it is too difficult to track miles
or points received.
In May 2000, the Bureau of National Affairs reported the results
of a 1999 survey of about 1,800 companies on their business travel
policies. These companies, about 450 of which responded to the
survey, represented a cross section of U.S. employers: 34 percent
were manufacturing companies, 36 percent were nonmanufacturing
(e.g., service) businesses, and about 30 percent were other
establishments, such as health care facilities, educational
institutions, and government agencies. Seventy percent of the
companies had fewer than 1,000 employees, and the remainder had
more. According to the survey, most employers with business
travelers allowed their workers to keep frequent flyer miles
received on business travel for their own use. About two-thirds of
the responding companies reported specifically allowing their
employees to retain the miles for their personal use, about 20
percent reported having no policy at all, and under 10 percent
reported requiring their employees to relinquish mileage received
to the company. A few companies reported having gain-sharing
programs similar to GSA's, IRS', and Justice's.
The findings from these two surveys appear consistent with the
results of an American Express survey of business travel
management, reported in July 1999 by Business Travel News, a
business travel industry publication. According to the article
discussing this survey, the trend in the private sector was away
from collecting frequent flyer awards, and the number of
corporations doing so was declining. Specifically, the survey
showed that the proportion of companies managing and using frequent
flyer miles received by their travelers fell from 9 percent in 1994
to 4 percent in 1996. According to the article, "most companies
neither want the headache of tracking miles nor the disincentive
that taking them away might present to employees." In addition, the
article discussed the views of the travel services manager of a
company that was using a contractor to aggressively track and use
frequent flyer miles for company business. Although this approach
was saving the company 10 percent of its overall air travel costs,
the manager said he would rather receive discounts from the
airlines than deal with frequent flyer miles.
These survey results are also consistent with the experience of
one large corporation that we contacted in 1994 after learning that
it had established a program to capture and use for company travel
frequent flyer miles received by employees on company business. The
company later told us that it had discontinued the program because
of its adverse effect on employee morale. In April 2001, we
contacted the company again, and a representative told us that the
company continues to allow its employees to make personal use of
frequent flyer miles received on company travel.


Views on Frequent Flyer Issue
You asked for our views on this issue as well as those of the
Foreign Service Officers Association. I will discuss the
Association's views first.
In April 2001, the Director of Congressional Affairs for the
Foreign Service Officers Association told us that the Association
would support legislation that would allow federal employees to
keep for personal use frequent flyer miles earned on official
travel. He said the Association recognizes that many foreign
service officers frequently travel long distances and would
therefore receive considerable benefits from such legislation.
However, he noted that these officers are often assigned to
hardship locations that require difficult travel. He also said that
if this type of legislation is not feasible, the Association's
members would like to be able to use their frequent flyer miles to
upgrade to business class on long flights.
In our view, the current federal policy on frequent flyer miles
was well intentioned as a potential means for reducing federal
travel costs and promoting economy in government. We recognize that
federal agencies, including GAO, might be able to achieve some
additional savings by taking more advantage of frequent flyer miles
for government travel. However, the practical obstacles to
achieving significantly greater savings are such that few agencies
have overcome them without creating incentives, such as
gain-sharing plans, that have generally reduced the government's
savings by half. Additionally, more aggressive efforts to use
frequent flyer miles to reduce the government's travel costs could,
according to GSA, jeopardize its ability to negotiate significant
savings under its contract air carrier program. This negotiated
travel program saves the government over $2 billion annually. GSA
officials responsible for the program told us they believe the
savings achieved through this program far outweigh the benefits the
government would gain through more aggressive efforts to capture
and use frequent flyer miles for official travel. We do not know
how a change in the current federal policy to permit individual use
would affect GSA's ability to negotiate savings in contract
airfares. However, a change would not seem likely to have a
negative impact, since, in contrast to the current policy, it would
be consistent with the airlines' position that frequent flyer miles
belong to the individual traveler.
Changing the federal policy on frequent flyer miles would have
some disadvantages for the government. First, it would eliminate
any savings that certain agencies currently achieve by implementing
the policy. In addition, some employees who now travel on free
tickets obtained with frequent flyer miles might no longer be able
to travel when funds for air travel were not available or were in
short supply. However, these disadvantages would, we believe, be
far outweighed by the advantages of a change, both to federal
employees and to the government. A change would eliminate the
current disparity in practice between the private sector and the
government and would put federal employees on a par with their
private-sector counterparts, including federal contractor
personnel, in this area. Like private-sector employees, federal
employees who put up with flight delays and cancellations and
travel on their own time to meet work schedules would then feel
that they were being compensated, in part, for these frustrations
and sacrifices. Establishing parity between the federal government
and the private sector in this area would also aid the government
in recruiting and retaining top-quality employees.
If the current policy is changed to allow federal civilian and
military employees to retain their official travel miles for
personal use, controls over the need for travel and the selection
of routes and carriers would have to be effectively implemented.
These controls are designed to prevent employees from selecting
certain carriers to earn miles or otherwise undercutting the
government's negotiated fare agreements with major carriers.
Today, millions of frequent flyer miles earned on official
travel are going unused, benefiting neither the government nor its
employees. Changing the federal frequent flyer policy-and changing
it retroactively so that employees can take advantage of these
unused miles--would boost federal employees' morale and strengthen
the federal government's ability to compete with the private
sector. We therefore believe Congress should consider allowing
federal employees to keep and make personal use of the frequent
flyer miles they have already received and will receive for
official travel. In order to assist the Committee, we have enclosed
draft legislation that would accomplish this objective (see enc.
I).
If you have any questions on the information we are providing or
if we can be of further assistance, please call me on (202)
512-5500 or John H. Anderson, Jr., Managing Director, Physical
Infrastructure Issues, on [phone].
Sincerely yours,

David M. Walker Comptroller General Of the United States
Enclosure I


Draft Legislation
Be it enacted by the Senate and House of Representatives of the
United States in Congress assembled,
SEC. 1. Section 5702 of title 5, United States Code, is amended
-


(1)
by redesignating subsection (c) as subsection (d);
and


(2)
by inserting after subsection (b) the following new
subsection (c): "(c) Notwithstanding the provisions of subsection
(d), promotional items an employee (including a justice or judge)
receives as a consequence of using travel or transportation
services procured by the United States or accepted pursuant to
31


U.S.C. § 1353 may be retained by the employee for personal use.
Promotional items include only those obtained under the same terms
as those offered to the general public and at no additional cost to
the government. Promotional items include but are not limited to
frequent flyer miles, upgrades, and access to carrier clubs or
facilities."
SEC. 2. Section 404 of title 37, United States Code, is amended
-


(1)
by redesignating subsection (j) as subsection (k);
and


(2)
by inserting after subsection (i) the following new
subsection:


"(j) Promotional items a member receives as a consequence of
using travel or transportation services procured by the United
States or accepted pursuant to 31
U.S.C. § 1353 may be retained by the member for personal use.
Promotional items include only those obtained under the same terms
as those offered to the general public and at no additional cost to
the government. Promotional items include but are not limited to
frequent flyer miles, upgrades, and access to carrier clubs or
facilities."
SEC. 3. Section 6008 of the Federal Acquisition Streamlining Act
of 1994, Public Law 103-355 (5 U.S.C. § 5702, note), is
repealed.
SEC. 4. Sections 1 and 2 of this act shall apply to promotional
items received prior to the effective date of this act.


Sectional Analysis
Section 1 of this legislation would amend section 5702 of title
5, United States Code (Per diem, employees traveling on official
business). This amendment would authorize federal civilian
employees, including justices and judges, who receive promotional
items incident to using government procured travel or
transportation services, or such services accepted from non-Federal
sources pursuant to 31 U.S.C. § 1353, to retain such promotional
items for personal use. The travel or transportation services from
which the promotional benefits accrue are intended to include
services provided by airlines, hotels, and rental car vendors. The
Administrator of the General Services Administration would be
expected to prescribe regulations under existing authority in 5
U.S.C. § 5707 to protect the government from incurring excess costs
or
improper selection of travel or transportation providers for the
benefit of the employee. Enclosure I
Section 2 of this legislation would amend section 404 of title
37, United States Code (Travel and Transportation Allowances). This
amendment would provide the same treatment for members of the
uniformed services. The Secretaries of the services concerned under
existing authority in 37 U.S.C. § 404 would be expected to
prescribe regulations similar to those prescribed by the
Administrator of General Services.
Section 3 of the legislation would repeal section 6008 of the
Federal Acquisition Streamlining Act of 1994, Pub. L. 103-355, 108.
Stat. 3367 (1994) (5 U.S.C. § 5702 note). Section 6008 requires the
Administrator of the General Services Administration to issue
guidelines to ensure that agencies promote, encourage, and
facilitate the use of frequent traveler programs offered by
airlines, hotels, and car rental vendors by Federal employees who
engage in official travel, for the purpose of realizing cost
savings for official travel. Section 6008 also provides that any
awards granted under such a frequent traveler program accrued
through official travel shall be used only for official travel. It
would be necessary to repeal section 6008 since its provisions
conflict with the purposes of sections 1 and 2 of the proposed
legislation.
Section 4 would make it clear that the legislation is applicable
to any unused promotional benefits received by an employee or
service member prior to the effective date of the legislation as
well as to such benefits received on and after the effective date
of the legislation.