DOD Awards Team End-To-End Automation Contract

<B> DOD Awards Team End-To-End Automation Contract</B>

By Mary Ann McNulty

<I>Alexandria, Va.</I> - Four years after the Department of Defense began reengineering travel services, it has awarded the first contract to deliver its vision of an automated booking-through-expense-reporting system to a team headed by BDM International, a unit of TRW Inc., Gelco Information Network and American Express.

American Express will provide travel services--including reservationists, ticketing and reporting--for the 200,000 travelers in the 11-state Midwest region. SatoTravel now handles about $60 million of the region's $121 million total air volume, with the remainder shared by Carlson Wagonlit Travel and Omega World Travel.

The new partners, along with five more companies, will design, integrate, implement and run the end-to-end technology that will be deployed to DOD travelers worldwide by 2001. The linchpin of the system is Gelco's Travel Manager, an off-the-shelf booking through expense reporting software already in use at more than 80 federal agencies. However, to make it work within DOD, contractors have to integrate such gee-whiz features as digital signatures, online links to DOD's accounting systems and real-time policy exception reporting.

The contract with BDM also gives DOD the right to market its solution to other units of the federal government. However, each unit will have to negotiate its own pricing and specifications with BDM.

"This contract puts in place an automated approach to travel that mirrors the best practices of industry," said Deputy Secretary of Defense John Hamre, who sponsored the travel reengineering initiative. "When tested in a pilot program, this new approach to travel resulted in traveler reimbursement in half the time, processing in half the steps and overall administration in one-third the time. Costs fell 65 percent and customer service improved dramatically."

Administrative overhead on DOD travel is currently about 30 percent, compared to 8 percent or less in the private sector.

That fact is what prompted DOD to reengineer the travel process and run 27 separate pilots of various commercial software packages. During these pilots, begun in late 1995 and continuing until today, DOD identified several critical success factors to any system it might deploy, said Col. Al Arnold, project manager for the Defense Travel System (<I>BTN</I>, Nov. 10, 1997). Among these were the need for a single integrator, need to streamline rules to automate them, use of a common user interface and senior leadership support to overcome cultural barriers.

The contract is worth an estimated $263.7 million over a five-year period, with three option years. When it is adopted nationwide, DOD estimates the new travel process will save about $300 million a year. During budget proceedings last year, Congress was told that the new system would save approximately $88 per voucher--or almost $520 million on the 5.9 million travel vouchers processed each year. The savings will accrue from the streamlined and paperless environment that will replace the cumbersome and paper-intensive process of today.

"I have to compliment the government on the excellent process they went through and the diligence they put into this," said Gelco executive vice president Bill Shively. "We are, as a company, a lot better off, a lot more prepared with how to do this. But it was a long, hard and expensive experience. As a team, we're talking an investment in excess of $1 million, and I'm sure the competition would equal that."

The other bidder on the contract was Electronic Data Systems, which partnered with SatoTravel and others.

"We've obviously very disappointed, but will be participating in the debriefing process with EDS and the DOD," to learn of the shortcomings of its bid, said Michael Premo, president and CEO of SatoTravel.

For American Express, the DOD business will be relatively new. Although Amex handles travel for several federal agencies, including the State Department, NASA and the White House, it currently holds only a couple of military contracts.

Amex intends to service the business using a combination of central reservation centers, perhaps in Omaha, and some onsites. When fully deployed, Amex expects to have between 150 and 200 reservationists working on the account, with a minimum of 50 percent of bookings going through the electronic system, said Carole Fletcher-Fitchko, vice president of business development for government services, Arlington, Va. Under the terms of the contract, Amex must take each reservation request forwarded by travelers, perform a quality control check and then make the actual booking in Sabre, Fletcher-Fitchko said.

Although DOD has said it is open to discussing fee-based pricing, the request for proposals for Region 6 travel did not include that option. Instead, the government continued to ask vendors for rebates.

While an additional request for proposals for the travel accounts of the Defense Department's 18 other regions will be issued in coming months, the technology deployed by Gelco-BDM will be installed in all areas.