Board of Contract Appeals General Services Administration Washington, D.C. 20405 _______________________________________________ July 23, 1999 _______________________________________________ GSBCA 15012-TRAV In the Matter of DESIREE FRAY Desiree Fray, Cape Town, South Africa, Claimant. Edith Moore, Embassy Pretoria Budget & Fiscal Office, United States Embassy, Pretoria, South Africa, appearing for Department of State. BORWICK, Board Judge. Ms. Desiree Fray, claimant, is a foreign service national employed by the United States Consulate General, United States Department of State (agency) in Cape Town, Republic of South Africa. She took a business trip to Washington, D.C., and, on her return leg admittedly violated the Fly America Act by unnecessarily using a foreign flag carrier--South African Airways--between London and Cape Town. Upon her return, the agency settled her travel voucher by assessing a Fly America Act penalty of $1357.88; it determined that she owed a balance due on her travel voucher of $1286.40. Claimant seeks relief on the grounds that she relied on the misleading booking of the agency's travel agent and that the amount of the penalty is disproportionate. We sustain the agency's assessment of a Fly America Act penalty since claimant has not demonstrated that the circumstances of her travel fall within the statutory or regulatory exception to that Act s requirements. Nevertheless, we grant the claim in part. The agency misapplied the standard regulatory formula for assessing the penalty and arrived at a penalty that was disproportionate to the offense. Correct application of the formula results in a penalty of $729.51 and a balance due of $658.03. The facts are as follows. On October 26, 1998, the agency authorized claimant's travel from Cape Town to Washington, D.C. and return. For her trip to Washington on October 31, the agency's travel agent booked claimant on American Airlines from Cape Town to Miami, Florida and from Miami to Washington, D.C. For her return leg to Cape Town commencing on November 14, the travel agent booked claimant through Europe since flights to Cape Town through Miami were not available on that day. The agency booked claimant on United Airlines from Washington, D.C. to London on November 14 and on South African Airways from London to Cape Town on November 21, allowing for claimant's week of leave in London. The untaxed price shown on the ticket was 12,610 South African Rands. Because the fares for a direct return to Cape Town through Miami on American Airlines and for a return to Cape Town through London on United Airlines and South African Airways were the same, the travel agent assumed that the booking of South African Airways through London was acceptable. American Airlines and United Airlines are United States flag carriers, holding Federal Aviation Administration (FAA) certificates pursuant to 49 U.S.C. 41102 (Supp. II 1996). South African Airways is not a United States flag carrier. Claimant could have returned to Cape Town from London using United Airlines through Frankfort, Germany, or using United States flag carrier code-share service through Amsterdam, The Netherlands. Upon claimant's return to Cape Town, claimant submitted a travel voucher for her expenses totaling $2318.48. Upon examination of her voucher, the agency concluded that claimant had violated the Fly America Act by using South African Airways on her return leg from London to Cape Town instead of available United States flag carriers or code-sharing arrangements with United States flag carriers on that segment. The agency calculated a Fly America Act penalty of $1357.88. The agency then subtracted $1357.88 plus her travel advance of $2247 from the total requested. That calculation resulted in a balance due the United States Government of $1286.40. Claimant appealed to this Board. The Fly America Act provides in pertinent part: (a) Transportation by air carriers holding certificates.--A department . . . of the United States Government shall take necessary steps in ensure that the transportation of passengers and property by air is provided by an air carrier holding a certificate under section 41102 of this title if (1) the department (A) obtains the transportation for itself. . . . . . . . (2) the transportation is authorized by the certificate or regulation or exemption of the Secretary of Transportation; and (3) the air carrier is (A) available, if the transportation is between a place in the United States and a place outside the United States. . . . . (c) Proof.-- The Administrator of General Services shall prescribe regulations under which agencies may allow the expenditure of an appropriation for transportation in violation of this section only when satisfactory proof is presented showing the necessity for the transportation. 49 U.S.C. 40118(a), (c), 41102. While clumsily worded, the statute in effect requires the Government to obtain its employees' air transportation involving destinations within the United States from United States flag carriers unless the Government can show that transportation by foreign air carrier is necessary. The Administrator of General Services implements the Fly America Act in the Federal Travel Regulation (FTR). The latest version of the FTR provides that for all federally funded air travel, federal employees must use United States flag carrier service unless: (a) Use of a foreign flag carrier is deemed a matter of necessity in accordance with Sec. 301- 10.138;[foot #] 1 or ----------- FOOTNOTE BEGINS --------- [foot #] 1 Foreign air transportation is deemed a necessity when service by United States flag carrier is available, but the carrier cannot provide the transportation needed or will not accomplish the agency mission. Necessity includes but is not limited to the following: the agency has determined that use of a foreign carrier is necessary for medical reasons or when use of a foreign air carrier is required to avoid unreasonable risk to the traveler's safety as determined by the prior written approval of the agency and supported by a Federal Aviation Administration and Department of State travel advisory notice, or when the traveler cannot purchase his or her authorized class of service in a United States flag carrier and a seat is available in the authorized class of service on a foreign air carrier. 41 CFR 301-10.138. ----------- FOOTNOTE ENDS ----------- (b) The transportation is provided under a bilateral or multilateral air transportation agreement to which the United States Government and the government of a foreign country are parties, and which the Department of Transportation has determined meets the requirements of the Fly America Act; or (c) [The employee is] an officer or employee of the Department of State, United States Information Agency, United States International Development Cooperation Agency or the Arms Control Disarmament Agency, and [the employee's] travel is paid with funds appropriated to one of these agencies, and [the employee's] travel is between two places outside the United States; or (d) No [United States] flag carrier provides service on a particular leg of the route, in which case foreign air carrier service may be used but only to or from the nearest interchange point on a usually traveled route to connect with United States flag carrier service; or (e) A [United States] flag carrier involuntary reroutes [the employee's] travel on a foreign air carrier; or (f) Service on a foreign carrier would be three hours or less, and use of the United States flag carrier would at least double [the employee's] en-route travel time; or (g) When the costs of transportation are reimbursed in full by a third party such as a foreign government or international agency. 41 CFR 301-10.135 (1998). Claimant has not demonstrated that any of these exceptions applies here. Foreign air carrier service may not be used solely based on the cost of an employee's ticket. 41 CFR 301-10.139. Thus neither the travel agent nor claimant can justify use of South African Airways from London to Cape Town on the ground that the fare is the same as using United States flag carriers for all segments. The FTR warns employees in its question and answer format that a federal employee "will not be reimbursed for any transportation cost for which you improperly use foreign air carrier service." 41 CFR 301-10.143. The FTR provides that agencies must establish internal procedures for denying reimbursement to travelers when use of a foreign air carrier was neither authorized nor otherwise permitted. Id. The agency has promulgated in its Foreign Affairs Manual (FAM) regulations and the formula for recapturing appropriated funds used for improper travel on a foreign air carrier. The formula is: "(Sum of certified carrier segment mileage authorized DIVIDED BY Sum of all segment mileage authorized MULTIPLIED BY Fare payable by Government) MINUS (Sum of certified carrier segment mileage traveled DIVIDED BY Sum of all segment mileage traveled MULTIPLIED BY through fare paid)." 6 FAM 135.14. That formula meets the intent of the Fly America Act in recapturing from the employee the agency expenditure of appropriated funds for improper foreign air travel. The first half of the formula establishes the fare payable by the Government based on the ratio of certified carrier segment miles authorized to all segment miles authorized. Here, since the return trip to Cape Town from Washington, D.C. through London was authorized, instead of a return trip to Cape Town from Washington, D.C. through Miami, the agency concedes that if claimant had used certified carrier segment miles for all segments of her trip the full fare would have been payable. The second half of the formula establishes the ratio of certified carrier segment miles traveled to the total segment miles traveled and multiplies the through fare paid by that ratio. The product is then subtracted from the fare payable by the Government. Here the agency derived a ratio of certified carrier mileage to total miles traveled of .379. The agency concedes this ratio was based on its mistake of counting only the Washington, D.C. to London segment of the trip on United Airlines as certified segment miles traveled. The agency neglected to count the segment claimant traveled on American Airlines between Cape Town and Washington, D.C. If we count those miles, then the ratio of certified segment miles traveled to all segment miles traveled is .670823. Completion of the formula with the correct ratio, using the fare of 12,610 South African Rands as stated on the airline ticket, derives a Fly America Act penalty of $729.51 and a balance due of $658.03.[foot #] 2 Claimant maintains that she should not be liable for the penalty because she only followed the advice of her travel agent, and that improper use of the foreign flag carrier was not her fault. Agency regulations, however, provide that: "the traveler is responsible for the correct performance of official travel, for the payment of any charges incurred through failure to comply with the governing regulations, regardless of who may have assisted the traveler in making travel arrangements." 6 FAM 115. In the context of the Fly America Act, it has long been the rule that, because the requirement for use of United States flag carriers is imposed directly by statute, all persons are charged with notice of it. For this reason and because Government funds may not be used to pay for unnecessary travel by foreign air carrier, the traveler is personally liable for any cost incurred ----------- FOOTNOTE BEGINS --------- [foot #] 2 The agency uses an exchange rate of 5.69 South African Rands to the Dollar. Claimant does not challenge that rate and we use it as well. ----------- FOOTNOTE ENDS ----------- because of his or her failure to comply with the requirement, regardless of who gave the traveler the erroneous advice. Jasinder S. Jaspal, 60 Comp. Gen. 718 (1981). Here, claimant is responsible for the costs of the London to Cape Town segment of her trip which was flown on South African Airways. Claimant's Fly America Act penalty is $729.51. The balance claimant owes the Government for her trip is $658.03. __________________________ ANTHONY S. BORWICK Board Judge