The Department of General Services (DGS) has undertaken a major overhaul of how state workers will book travel.
Over the short term, DGS will move the state from relying on 22 different travel agencies to a single provider. Over the long term, DGS will become the travel agency for the state workforce, and change they say will deliver big savings to the state. The state currently spends $1.3 million a year in fees for booking about $200 million worth of state worker travel, according to DGS figures.
The move has small travel agencies crying foul. Jim Platzer, owner of Sacramento Travel Service Inc., said the move is a power grab by DGS that won’t save the state any money. He called for more due diligence and transparency before the state makes such a large change.
“I’m gonna be out of business the moment the contract is signed,” Platzer said.
DGS spokesman Eric Lamoureux said the move towards consolidated travel services is long overdue.
“We’re trying to get to a place where we have our hands around where the state workforce is traveling and what it’s costing us, so that in the future well be able to much more effect manage the state spend on travel and get the best bang for the state buck that we can,” Lamoureux said. “Right now you’ve basically got most agencies arranging travel on their own.”
DGS put out a 61-page request for proposal (RFP) on Jan 25. It seeks bids from travel agencies to sign a two-year contract to become the state’s sole outside travel services provider beginning on April 5. This could be a extended an addition three years at the “sole option” of DGS.
After that “transition period,” DGS would become the sole source booking travel for state workers. Lamoureux said the goal would be to eventually role the new system out to the University of California and California State University systems, cities, counties and other governmental systems in California.
But Platzer and Sundancer Travel owner Brian Ritter said DGS has been on a multiyear campaign to take the fees paid to agencies and add them to their own bottom line. As an unfunded agency, DGS entire budget comes from outside fees, mainly from other state agencies.
Ritter said DGS currently collects commission fees from Southwest Airlines, Enterprise Rental Car, American Express and Marriot Hotels—and plans to start collecting all commission fees into a single account controlled by DGS.
Ritter said he started Sundancer in 1994 and started doing state business the next year. At the time, he said, there were hundreds of travel agencies doing state business. In 2002, DGS put in new automation requirements that reduced this number to 156. In 2005, further requirements dropped the number of travel agencies working for the state to 22, a group that still includes both Sundancer and Sacramento Travel.
But neither agency was big enough to apply to be the state’s new sole, temporary provider. The RFP requires that the agency be able to handle $30 million in air travel and $75 million in total travel bookings annually. Only a few large, national agencies would be able to handle this type of volume on a quick turnaround, Platzer said. This makes the small business preference laid out on page 17 of the RFP essentially moot, he added.
“They got rid of 22 travel agencies in one swoop,” Platzer said. “They worded the RFP in such a way that it made it impossible for small agencies to participate.”
DGS put out an earlier RFP in October calling for a provider who could do $200 million a year in business, but withdrew it. Platzer complained to DGS about the requirements on Jan. 11.
On Jan. 26, DGS chief deputy director Scott Harvey wrote Platzer back saying the original RFP was pulled because DGS received “no qualified bids.” He also denied Platzer’s allegation that the process was “rigged.”
Platzer said that he did not apply for the contract because he did not think that his agency qualified—and then was later told by DGS that he could not file a complaint about the RFP because he didn’t apply.
The irony, Platzer said, was the at one time he nearly had the kind of status that DGS is trying to award now. In 1995, he said, Sacramento Travel had 35 employees and handled about three quarters of state flight bookings—up to 15,000 tickets a month. These days, his firm is down to four employees.
Under the current system, Platzer said, his firm charges only about $10 to book an entire trip. DGS’s plan, he said, is to put more of the burden of booking travel onto the state employee doing the travelling. These employees, he said, are likely to be making for more than one of his travel agents, but be far less efficient at booking travel. Ritter noted that the average state worker makes the equivalent of $33 an hour — well more than the average travel agent. He also said that DGS already has detailed reports on state travel costs, delivered regularly by the travel agencies already doing state work.
DGS’s Lamoureux said the goal is to relieve particular state agencies from the burden of managing their own travel. The impetus for the move came from leadership at DGS, not from the administration or anywhere else. Right now, there are only six employees allocated to the program, but this is likely to grow over time.
“This is something that you’re going to see a cumulative savings over a number of years,” Lamoureux said. “It’s not going to be immediate.”