Two key assumptions used by the Pentagon to estimate that it would reap $56 million in annual net savings from implementing its department wide electronic travel booking system were based on unreliable information, the Government Accountability Office reported Tuesday.

The department failed to adequately support a projected $24.2 million in annual personnel-related savings, the report (GAO-06-980) stated.

Defense Travel System program officials with the Air Force and Navy told GAO they did not anticipate a reduction in the number of personnel as a result of the new system. Rather, they said, employees would be shifted away from travel duties. The Naval Cost Analysis Division told GAO the Navy will not realize any tangible personnel cost savings from the implementation of DTS.

GAO also tracked an estimate -- claiming that the Defense Department would save $31 million in annual travel agent fees, based on an assumption that 70 percent of all DTS airline tickets would require little or no travel agent assistance -- back to a 2003 press release from American Express.

The press release was not based on information related to DTS, but rather on the experience of a single private sector company.

Despite guidance from the Office of Management and Budget and the Pentagon, DTS officials did not have the program's life-cycle cost estimates verified by an independent party, GAO said.

The Pentagon also still lacks the ability to monitor the use of the electronic travel system, the report states.

Ambiguous and conflicting requirements continue to trouble the program as well, though GAO has raised these issues, the report said.

GAO made four recommendations aimed at improving the oversight of DTS. These included suggestions to complete intermittent reports on the program's use and to resolve the inconsistent requirements.

While Defense Department officials generally agreed with the recommendations and outlined the ways that they are addressing them, they strongly objected to the finding that the personnel savings are unrealistic.

David Chu, undersecretary of Defense for personnel and readiness, said in a letter that the department is recognizing fiscal constraints by identifying efficiencies and eliminating redundancies to leverage available money. As an example, Chu said the department has increased its Special Forces capability without a net increase in manpower.

"The [personnel savings finding], if accepted, would disincentivize the very institutional behavior we should all actively promote," Chu wrote in his response to the report.

GAO said shifting personnel to other functions should be considered an intangible benefit rather than a tangible dollar saving since the movement of personnel does not result in a reduction of expenditures.

The Pentagon's $474 million Defense Travel System was originally scheduled to launch as early as 2000, but for a variety of reasons, it has yet to be fully deployed.

Troubled by the cost and schedule delays, Sen. Tom Coburn, R-Okla., secured an amendment to the fiscal 2007 Defense authorization bill (S. 2767) that would force the Defense Department to use a fixed fee-for-service method of paying for DTS. Under its existing contract with Northrop Grumman Mission Systems, the department pays an upfront price for owning the system.

In a statement, Coburn spokesman John Hart said the GAO report provides further proof that DTS "is a boondoggle that has not produced savings for taxpayers."

"Nearly 10 years after its inception, DTS doesn't work, doesn't save money and isn't being used," Hart said. "We are discouraged but not surprised that DTS cannot justify its alleged cost savings."

But Janis Lamar, a spokeswoman for DTS contractor Northrop Grumman, said in a statement that the company believes the system will result in significant cost savings for the Pentagon once deployment is complete. It is in place at all 270 major military installations and is being used by more than 50,000 personnel on a daily basis, she said.