Travel Agencies First Government Contracts

» Posted by on Jan 1, 2013 in History and Overview, Industry Postings, Travel Management Centers | 0 comments

Once the GSA and Department of Defense received the authority to contract with travel agencies to test travel agencies’ capabilities in 1980, a new customer was born for travel agencies in the United States.  In 1984, when the GAO removed the prohibition against using travel agencies for the federal government’s travel, travel agencies realized that government travel management could be a new business venture.

Although there were a few flaws in the initial program, namely the that the TMC program caused travel agencies to be paid only after a trip was taken, while the travel agencies had to pay the Airline Reporting Corporation weekly, this was ameliorated by the introduction of a charge card to be used by government travelers.  However, it was not until 1986 Congress agreed in principle that the Secretary of each military department should provide for the free and open competition among commercial travel agencies, SATOs and other entities which provide travel services, to compete for the establishment of travel offices or the acquisition of travel services.  Accordingly, “the Chairman of the House Armed Services Committee, Les Aspin, wrote a letter to the Secretary of the Department of Defense affirming that travel service procurement was subject to CICA and committed the Services to initiate the competitive travel procurements.”  Society of Government Travel Professionals, Certified Government Travel Professional Training Course, 9 (2007-2010).

Travel agencies were dealt a large blow when airlines began decreasing and then eliminating commissions to the TMCs, which in turn required contract and policy changes.  Additionally, hotel and rental car company commissions continue to decline and many times are not available on discounted government rates.  Nonetheless, the travel industry and government have worked to better understand each others complexities, giving way to a more symbiotic relationship.

By Ian Petrulli

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