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99–986PDF 2005

FOLLOW-UP HEARING ON EFFORTS TO IDENTIFY

AND ELIMINATE FRAUD, WASTE, ABUSE, AND

MISMANAGEMENT IN PROGRAMS ADMINISTERED BY THE DEPARTMENT OF VETERANS

AFFAIRS

HEARING

BEFORE THE

COMMITTEE ON VETERANS’ AFFAIRS

HOUSE OF REPRESENTATIVES 

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

JUNE 17, 2004

Printed for the use of the Committee on Veterans’ Affairs

Serial No. 108–45

(
COMMITTEE ON VETERANS’ AFFAIRS 

CHRISTOPHER H. SMITH, New Jersey, Chairman 

MICHAEL BILIRAKIS, Florida 

TERRY EVERETT, Alabama 

STEVE BUYER, Indiana 

JACK QUINN, New York 

CLIFF STEARNS, Florida 

JERRY MORAN, Kansas 

RICHARD H. BAKER, Louisiana 

ROB SIMMONS, Connecticut 

HENRY E. BROWN, JR., South Carolina 

JEFF MILLER, Florida 

JOHN BOOZMAN, Arkansas 

JEB BRADLEY, New Hampshire 

BOB BEAUPREZ, Colorado 

GINNY BROWN-WAITE, Florida 

RICK RENZI, Arizona 

TIM MURPHY, Pennsylvania 

LANE EVANS, Illinois 

BOB FILNER, California 

LUIS V. GUTIERREZ, Illinois 

CORRINE BROWN, Florida 

VIC SNYDER, Arkansas 

CIRO D. RODRIGUEZ, Texas 

MICHAEL H. MICHAUD, Maine 

DARLENE HOOLEY, Oregon 

TED STRICKLAND, Ohio 

SHELLEY BERKLEY, Nevada 

TOM UDALL, New Mexico 

SUSAN A. DAVIS, California 

TIM RYAN, Ohio 

STEPHANIE HERSETH, South Dakota

PATRICK E. RYAN, Chief Counsel and Staff Director

(II) 
(III)

C O N T E N T S 

June 17, 2004

Page

Follow-up Hearing on Efforts to Identify and Eliminate Fraud, Waste, Abuse, 

and Mismanagement in Programs Administered by the Department of Veterans Affairs ......................................................................................................... 1

OPENING STATEMENTS 

Chairman Smith ...................................................................................................... 1

Hon. Lane Evans, ranking democratic member, full committee on Veterans’

Affairs .................................................................................................................... 3

Prepared statement of Congressman Evans .................................................. 33

Hon. Michael Bilirakis ............................................................................................ 3

Prepared statement of Congressman Bilirakis .............................................. 34

Hon. Steve Buyer, Chairman, Subcommittee on Oversight and Investigations . 4

Prepared statement of Congressman Buyer ................................................... 37

Hon. Rob Simmons, Chairman, Subcommittee on Health ................................... 5

Hon. Tom Udall, prepared statement of ................................................................ 81

WITNESSES 

Griffin, Richard J., Inspector General, Department of Veterans Affairs, accompanied by John D. Daigh, Jr., Assistant Inspector General for Health Care 

Inspections ............................................................................................................ 11

Prepared statement of Mr. Griffin .................................................................. 112

Mansfield, Gordon, Deputy Secretary, Department of Veterans Affairs, accompanied by Laura J. Miller, Deputy Under Secretary for Health ...................... 6

Prepared statement of Mr. Mansfield ............................................................. 84

Williams, McCoy, Director, Financial Management and Assurance Team, General Accounting Office, accompanied by Carla J. Lewis, Senior Auditor ........ 8

Prepared statement of Mr. Williams .............................................................. 90

MATERIAL SUBMITTED FOR THE RECORD 

Letters: 

From Congressman Buyer to Veterans’ Services Organizations .................. 39–63

To Congressman Buyer from Military Officers Association of America ...... 64

To Congressman Buyer from AMVETS .......................................................... 69

To Congressman Buyer from The American Legion ...................................... 72

Written committee questions and their responses: 

Chairman Smith to Department of Veterans Affairs .................................... 144

Congressman Evans to Department of Veterans Affairs .............................. 163

Chairman Smith to General Accounting Office ............................................. 177

Congresswoman Brown-Waite to General Accounting Office ....................... 181

Chairman Smith to Office of the Inspector General ...................................... 184

Chairman Smith to Office of the Inspector General ...................................... 192

(1)

FOLLOW-UP HEARING ON EFFORTS TO IDENTIFY AND ELIMINATE FRAUD, WASTE, 

ABUSE, AND MISMANAGEMENT IN PROGRAMS ADMINISTERED BY THE DEPARTMENT OF VETERANS AFFAIRS 

THURSDAY, JUNE 17, 2004

U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON VETERANS’ AFFAIRS, Washington, DC 

The committee met, pursuant to notice, at 10 a.m., in room 334, 

Cannon House Office Building, Hon. Christopher H. Smith (chairman of the committee) presiding. 

Present: Representatives Smith, Evans, Bilirakis, Buyer, Snyder, 

Moran, Baker, Hooley, Simmons, Miller, Boozman, Udall, Davis, 

Beauprez, Brown-Waite, Renzi, Murphy, and Herseth. 

OPENING STATEMENT OF CHAIRMAN SMITH 

The CHAIRMAN. Let me begin this hearing by referring to a statement that I made when I became Chairman of this Committee. In 

February of 2001, I said that holding VA officials accountable for 

carrying out the laws would be a constant in all of our Committee 

work. Although the vast majority of the Department’s more than 

200,000 employees are doing an excellent job, our Committee’s 

oversight has found that many management improvements are 

needed, and some funds are being misspent. Despite the fact that 

Congress provided more than $62 billion in funds for the Department in this fiscal year, VA is unable to provide services to all the 

veterans who seek it. Caring for and assisting veterans is an essential function of the Federal Government, and we must constantly 

ask whether there are ways to use available funds more effectively. 

I commend all of my fellow Committee members who have spent 

substantial time reviewing testimony and reports about how well 

the laws providing benefits to veterans are being executed. Even 

though the work of questioning witnesses and gathering accurate 

information about the effectiveness of programs serving veterans is 

a daunting task, it is an essential part of Congress’ role as the 

maker of laws. Veterans deserve our best efforts. 

Our witnesses today will address recent efforts to correct a variety of problems affecting programs providing important benefits to 

veterans. Not all of the changes needed have been made, but there 

is clearly some progress on important issues. We want to learn 

about what is preventing VA managers from achieving the success 
2

they are striving for. This hearing also presents an opportunity to 

review VA’s progress on implementation of the Government Performance and Results Act of 1993. This Act is potentially one of the 

most important oversight tools we have available. One of the purposes of the Act is to ‘‘improve congressional decision-making by 

providing more objective information on achieving statutory objectives and on the relative effectiveness and efficiency of the federal 

programs in spending.’’ There is much that remains to be done, as 

my colleagues know, not only at the VA, but throughout the Federal Government, to achieve this goal, and we continue that work 

today. 

Some fear that taking a hard look at the results of a program 

is a precursor of cutting funding or abolishing the program. I believe that we need to take a hard look so that we can know whether managers understand the law and have made wise choices to 

implement it. A hard look also helps us to learn whether funds are 

being well-spent, and what we might do to improve the results 

being achieved. 

Recently, the Deputy Director of OMB for Management sent the 

Committee a letter on the performance assessments completed by 

the VA and five of its major programs. These five programs authorize disability compensation, medical care, educational assistance, 

burial benefits and research into diseases affecting veterans. 

Frankly, these are the programs that absorb the vast majority of 

funds that are appropriated for veterans benefits each year. The 

program assessments depict a wide range of performance and accountability, from programs that are achieving clear measurable 

objectives to programs that don’t have any measurable results. 

Although I disagree with one or two of the conclusions reached 

in these assessments, it is nevertheless important that an effort is 

being made to report objective findings so that Congress can better 

understand whether managers and programs are succeeding or failing. I hope that when we have the next hearing on this subject, the 

VA will be able to report that substantial steps have been taken 

to address some of these shortcomings. 

In a report that was published in September of last year, this 

Committee documented a number of recent oversight findings. 

Among other matters, the Committee reported that health insurers 

are refusing to pay for care of insured veterans as required by law, 

leading to shortfalls in fundings for veterans care. The VA is losing 

millions of dollars each year because it has not adopted rigorous 

methods to insure that its bills for care are accurate and timely. 

VA and DOD have missed numerous opportunities to share health 

care resources, and have failed to emphasize sharing in the Department’s planning for future medical facilities. VA has not taken sufficient corrective action to ensure that its capacity for providing 

long-term care meet legal requirements. VA was too lax in supervising physicians, particularly those who are employed part-time, 

leading to millions in questionable salary costs. Finally, VA overstated its success rate for its vocational rehabilitation program, revealing a program that is not serving disabled veterans in the manner that top VA leaders and Congress expect. 

Although we may not cover all of these subjects in the hearing 

today, we will do so in the weeks and months ahead through public 
3

oversight hearings such as this and through other meetings. It is 

the least we can do to honor those who have served our nation. 

I would now like to recognize my good friend and colleague, the 

Ranking Democratic Member, Lane Evans, who will also, when she 

arrives, introduce our newest Member of the Committee. I recognize Lane for any time that he would like to consider. 

OPENING STATEMENT OF HON. LANE EVANS, RANKING DEMOCRATIC MEMBER, FULL COMMITTEE ON VETERANS’ AFFAIRS 

Mr. EVANS. Well, thank you, Mr. Chairman. We await Stephanie’s arrival here; I appreciate your indulgence in interrupting our 

schedule. 

Our efforts to greatly reduce or eliminate fraud, waste, and 

abuse in the VA will help the VA become more effective. In doing 

this, we serve our two most important stakeholders: veterans and 

taxpayers. This will become a recurring theme for future hearings. 

It is our duty to ask hard questions about uncomfortable topics, but 

we must toe the line for accountability. 

Before we go on, I would like to thank you, Mr. Chairman, for 

your tireless work for veterans everywhere. Again, this is a very 

important hearing that you have arranged for and I look forward 

to working with you in the future. 

[The prepared statement of Congressman Evans appears on p. 

33.] 

The CHAIRMAN. Mr. Evans, thank you very much, and it’s a 

privilege to work with you, as well. We do have, I think, a very 

good partnership. Thank you for your kind comments. 

Mr. EVANS. You’re welcome. 

The CHAIRMAN. The Vice-Chairman of the Committee, Mr. Bilirakis. 

OPENING STATEMENT OF HON. MICHAEL BILIRAKIS 

Mr. BILIRAKIS. Thank you, Mr. Chairman, and I echo Mr. Evans’

statements regarding your work for the veterans, you know that I 

do. And I commend you for scheduling today’s follow-up hearing 

and you’re awfully good at follow-ups, which is a big problem with 

us up here, quite often. 

I, along with so many others, have participated in previous 

waste, fraud, and abuse hearings, so we’re all anxious to hear what 

progress has been made to correct some of the problems that we 

have examined in the past. As members of this Committee, we all 

have a vested interest in making sure our nation’s veterans receive 

the best possible services, and every dollar that is wasted is obviously a dollar that could be used to provide quality services, so we 

should be greatly concerned. 

We also have an obligation to the taxpayer to ensure that the VA 

spends our tax dollars wisely to maximize the bang for the buck, 

so to speak. And this is especially true at a time when the VA is 

struggling to meet the high demand for health care services. 

Mr. Chairman, I am particularly interested, and I know that you 

are, in receiving an update of the CoreFLS situation at Bay Pines 

in St. Petersburg. In May, the Department awarded a new contract, which I hate to pre-judge but it doesn’t seem right. The De-
4

1 Correction for the record—Disabled American Veterans and Military Officers Association of 

America responded to Mr. Buyer’s letter of January 31, 2003. 

partment awarded a new contract to the same company under investigation for its work in the computer system project at Bay 

Pines. The company also received, as we now know, an incentive 

bonus on more than $200,000 for finishing CoreFLS project on 

time, even though there were warnings, as I understand it, that 

the system was not ready. And there are other bonuses given to 

veterans employed, to VA, VA employees for their work, et cetera, 

et cetera. 

Given the amount of money that has been spent on that troubled 

system, I would think that we would question the wisdom of these 

decisions and I will probably explore these issues further during 

the hearing. So I am anxious to hear today’s testimony from the 

GAO and Inspector General’s offices on how the VA can reduce 

waste, increase efficiency and eliminate fraud, and I know we all 

look forward to our witnesses’ suggestions. Thank you, Mr. Chairman. 

[The prepared statement of Congressman Bilirakis appears on p. 

34.] 

The CHAIRMAN. Thank you very much. Would any other Members like to be heard? Mr. Buyer. 

OPENING STATEMENT OF HON. STEVE BUYER, CHAIRMAN, 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS 

Mr. BUYER. I have an opening statement I would like to submit 

for the record, and also, Mr. Chairman, I want to thank you for 

holding this hearing along with Mr. Evans, and I want to thank 

the VA IG, Mr. Griffin. Please extend the compliments to your 

team. You’re doing excellent work, and I’m sure it also pleases Secretary Principi, given his level of sincerity in wanting to do that 

which is right. I also want to compliment the GAO. Their outside 

eye on things is very important, and works in partnership with 

you, Mr. Griffin, and we appreciate that. 

I have not had the opportunity to see the VA’s rebuttal to the 

IG testimony. I have it in my hand, Mr. Mansfield, but when you 

get this stuff to us late, the night before the hearing, I wasn’t 

aware of it, so I haven’t been able to see it. I want you to know 

that I am pleased, because when I saw how thick and to go through 

the report from the IG, for their testimony, and then I looked at 

the VA’s 6- or 7-page testimony, I gasped. And so I’m really 

pleased, though, that we’ve got this document, we can pour over it, 

and it will go far beyond today. So it sort of changes my opinion 

coming in to the hearing. I just wanted you to know honestly. 

To give you another prime example, we can always talk about 

our sincerity, go after this waste, fraud and abuse. I sent a letter 

out to the VSOs 2 years ago, asking for their input in the area of 

waste, fraud, and abuse. Do you know only two of them responded? 

The American Legion and AMVETS were the only two that responded to me with recommendations on areas for which they want 

to help bring efficiencies to the system. 1 I thought that was very 

insightful. 

So, Mr. Chairman, again, we thank you for the hearing. 
5

[The prepared statement of Congressman Buyer appears on p. 

37.] 

The CHAIRMAN. Thank you. Any other Member? Chairman Simmons. 

OPENING STATEMENT OF HON. ROB SIMMONS, CHAIRMAN, 

SUBCOMMITTEE ON HEALTH 

Mr. SIMMONS. Yes, thank you, Mr. Chairman. When I joined the 

Committee 2 years ago, I was surprised to find how large the budget was for the IG, and I think I raised that question on the record. 

Of course, I was a freshman. Since then, I’ve become somewhat 

more educated to the nature of the beast. It’s my understanding 

that the VA IG is one of the smallest relative to the size of the 

agency, and that for every dollar invested in the IG, we recover almost $30 in savings for cost avoidance, which results in about $180 

million agency-wide. So that’s very substantial, and I appreciate 

that. 

I guess my own view with regard to waste is, let’s eliminate it 

with abuse, let’s correct it, but it comes to fraud, I stick by my 

original comments, Mr. Griffin, if we find that people within the 

system are engaging in fraudulent activities, I want to throw the 

book at them. I don’t want to transfer them, I want to put them 

in jail, because people who are defrauding the system are defrauding veterans, and, quite frankly, that just irritates me. Thank you, 

Mr. Chairman. 

The CHAIRMAN. Thank you very much, Chairman Simmons. Are 

there any other Members that would like to be heard? 

If not, I would like to introduce our distinguished witnesses, beginning with the Honorable Gordon H. Mansfield, who was nominated to serve as Deputy Secretary by President Bush on November 3, 2003, and confirmed by the Senate on January 22, 2004. He 

previously served as VA Assistant Secretary for Congressional and 

Legislative Affairs since August of 2001. Prior to his appointment, 

Mr. Mansfield served as the Legislative Advisor to the Secretary of 

Veterans Affairs, and was responsible for VA’s Congressional relations and for representing VA programs, policies, investigations, 

and legislative agenda to the Congress. Secretary Mansfield previously served as the Executive Director of the Paralyzed Veterans 

of America, and in the Department of Housing and Urban Development during the previous Bush administration. 

A graduate of Villanova University with a law degree from the 

University of Miami, Gordon enlisted in the Army in 1964, where 

he served two tours of duty in Vietnam. While serving as Company 

Commander with the 101st Airborne Division during his second 

tour, he was wounded during the Tet Offensive of 1968, sustaining 

a spinal cord injury. For his actions while his unit was under fire, 

he was decorated with the Distinguished Service Cross. He was 

medically retired by the U.S. Army at the grade of captain. 

His other combat decorations include the Bronze Star, two Purple Hearts, the Combat Infantryman’s Badge, and the Presidential 

Unit Citation. Secretary Mansfield, is also a recipient of the Presidential Distinguished Service Award. 

Mr. McCoy Williams is the Director in the Financial Management and Assurance Team of the General Accounting Office. He 
6

has worked in the Financial Management and Audit Issue area 

since 1980. He has broad responsibility at GAO on these issues. 

His work on numerous assignments over the past 23 years including GAO’s first agency-wide audits of the General Services Administration and the Department of the Army. In addition, during 

1990, he was detailed to the then-House Government Operations 

Committee and played a major role in the drafting of the Chief Financial Officers’ Act of 1990. 

Mr. Williams has a B.S. degree in business management from 

Virginia State College and an M.S. degree in accounting from Virginia Commonwealth University. In addition, he is a graduate of 

Harvard’s John F. Kennedy School of Government, Senior Executive Fellows Program. He is a certified government financial manager and a certified public accountant, Maryland, of 1982. 

We will then hear from the Honorable Richard J. Griffin, who is 

the Inspector General of the Department of Veterans Affairs. As 

the Inspector General, Mr. Griffin directs a nationwide staff of 

auditors, investigators, inspectors, and support personnel. His office conducts reviews to improve the economy, effectiveness and efficiency of VA programs, and to prevent and detect waste, fraud 

and abuse. 

Mr. Griffin came to the VA from the U.S. Secret Service, where 

he was Deputy Director, responsible for planning and directing all 

investigative, protective, and administrative programs. He began 

his career with the Secret Service in 1971, as an agent in the Chicago office. Mr. Griffin received a number of special achievement 

awards during his career in the Secret Service. He also received in 

1994, the Senior Executive Service Presidential Rank Award of 

Meritorious Executive. 

In 1971, Mr. Griffin earned a bachelor’s degree from Xavier University in Cincinnati, Ohio, and, in 1984, a master’s degree in business administration from Marymount University in Arlington, Virginia. He is a 1983 graduate of the National War College. 

Mr. Secretary, if you could begin your testimony. 

STATEMENTS OF GORDON MANSFIELD, DEPUTY SECRETARY, 

DEPARTMENT OF VETERANS AFFAIRS, ACCOMPANIED BY 

LAURA J. MILLER, DEPUTY UNDER SECRETARY FOR 

HEALTH; McCOY WILLIAMS, DIRECTOR, FINANCIAL MANAGEMENT AND ASSURANCE TEAM, GENERAL ACCOUNTING OFFICE, ACCOMPANIED BY CARLA J. LEWIS, SENIOR AUDITOR; 

AND RICHARD J. GRIFFIN, INSPECTOR GENERAL, DEPARTMENT OF VETERANS AFFAIRS, ACCOMPANIED BY JOHN D. 

DAIGH, JR., ASSISTANT INSPECTOR GENERAL FOR HEALTH 

CARE INSPECTIONS 

STATEMENT OF GORDON MANSFIELD 

Mr. MANSFIELD. Thank you, Mr. Chairman. Good morning, Mr. 

Chairman and Mr. Evans and members of the Committee. I want 

to start out by stating that I and Secretary Principi fully appreciate 

and understand the purpose of this meeting and understand the 

Constitutional responsibilities involved here. You are the folks who 

authorize the laws that we carry out, you are the folks who appro-
7

priate the dollars that we spend, and you are the folks who are 

now exercising your oversight responsibility. 

Today I will provide you with an update of VA’s responses to 

findings included in reports issued last year by the Office of Inspector General and the General Accounting Office. I would ask that 

my full written statement be entered into the record as well as the 

paper we prepared that describes our efforts in detail with respect 

to each of the IG and GAO findings. And Mr. Chairman and Mr. 

Buyer, I would apologize for the lateness in delivery of that document, it’s my fault, I was on travel status and did not communicate 

to the staff that they should get it down here in the time that they 

should have. So I apologize and will pay a little bit more attention 

to that in the future. 

We take seriously our stewardship of America’s programs of veterans’ benefits and services. It remains incumbent on us to manage 

the considerable resources entrusted to us in the most effective 

manner so that we can best serve our nation’s veterans as well as 

safeguard America’s investment in these important programs. 

I would like to comment first about an issue of concern to both 

the VA and the Congress that was brought to our attention in recent months. Mr. Bilirakis alluded to, discussed it, and that’s the 

implementation of the CoreFLS system that is currently operational at Bay Pines. The Secretary will decide whether to continue 

CoreFLS after he reviews three reports, two of which are due this 

month, and the third in September. In the interim, the CoreFLS 

staff continues to work closely in support of Bay Pines. 

Last year, the VA responded to a finding by the IG that some 

part-time physicians had not worked their scheduled hours and 

that others performed no work for the VA during the periods examined. Our response included placing physicians whose services are 

not needed on a regular basis on a more appropriate scheduling arrangement, requiring that every part-time physician be personally 

counseled about responsibilities, and that all VA network directors’

performance reviews include compliance measures. 

These measures have paid off. In unannounced follow-up visits, 

the IG found that a much lower number of the part-time physicians 

reviewed were not in compliance. Our goal is full system-wide compliance, which we will continue to pursue. That means that our 

goal is zero percent non-compliance. 

In the area of purchase cards, we are pro-actively responding to 

vulnerabilities identified during the IG’s reviews related to the purchase card. Specifically, the VA established new policies and procedures for employee responsibilities for proper use of purchase 

cards. The policy also provides for disciplinary action when an employee uses the card improperly. We recognize that our purchase 

card program is still vulnerable and we will continue to improve 

the program. 

VA’s federal supply schedule programs have enjoyed substantial 

growth in the last 4 years. Last year, sales topped $6 billion. GAO 

found that VA’s aggressive efforts to ensure most favorable pricing 

in awarding contracts for medical products and services have saved 

taxpayers hundreds of millions of dollars per year. We still have 

improvements to make. 
8

A GAO report noted that many of the VA’s buildings remain 

under-utilized and its large and aged infrastructure is not well 

aligned to efficiently meet veterans’ needs. To address this, the Secretary recently submitted the CARES package to Congress. Implementation of the CARES plan will reduce vacant space by 42.5 percent, resulting in a savings of $2.65 billion over the period from 

2006 to 2022. Major construction requirements needed to implement CARES have been identified. VA will use currently-available 

funds and funds from the FY 2005 President’s budget request to 

carry out the VA’s highest priority projects in FY 2004 and FY 

2005. VA’s five-year asset plan will be submitted to Congress in the 

near future. 

In response to the IG’s report on VA purchasing practice, the 

Secretary chartered the VA Procurement Task Force. The task 

force has examined all aspects of VA procurement and contracting. 

One example of the task force’s accomplishments is the post-award 

audit program. Audits are performed after they award a contract 

to ensure that they were made properly. If they were not, the VA 

can demand price reductions and refunds from the contractors and, 

through April 2004, refunds have totaled approximately $200 million. 

That leads us to have two questions asked. Number one is, why $200 million to recover, and why weren’t we doing it correctly the 

first time, but we also need to continue this program. 

I am encouraged by the progress we have made in correcting 

shortcomings identified by the IG and GAO. I know that we have 

a long way to go. VA leadership, from the Secretary on down, is 

committed and prepared to address all of these issues. I thank you 

for this opportunity to provide the update, and I will be glad to respond to questions that you or any of member of the Committee 

may have. 

[The prepared statement of Mr. Mansfield appears on p. 84.] 

The CHAIRMAN. Mr. Secretary, thank you very much for your testimony. 

I’d like to now ask Mr. Williams if he would present his testimony. 

STATEMENT OF McCOY WILLIAMS 

Mr. WILLIAMS. Mr. Chairman and members of the Committee, 

thank you for the opportunity to discuss our work on internal controls over the use of purchase cards at the Veterans Health Administration. As you know, the Department of Veterans Affairs, Office 

of Inspector General, has identified significant vulnerabilities in 

the Department’s use of government purchase cards, including internal control weaknesses that resulted in instances of fraud, and 

numerous improper and questionable uses of purchase cards. 

Given that VA is the second-largest user of the government-wide 

purchase card program, with reported purchases totaling about 

$1.5 billion for fiscal year 2002, and because of the program weaknesses reported by the OIG, we were asked to review the VA’s purchase card program for fiscal year 2002, to determine if control 

problems still existed. 

We were also asked to perform two separate reviews of VHA’s operations. The first will address internal control activities over 
9

third-party billings and collections at selected VHA medical centers. The second review will assess control activities at selected 

VHA medical centers over personal property, drugs returned for 

credit, and part-time physician time and attendance. We will issue 

two reports covering these issues in July. 

In my testimony today, I will focus on the inadequacy of internal 

controls over VHA’s purchase card program. Today, we are releasing a report that details the internal control weaknesses we found. 

I ask that the report and my entire written statement be included 

in the record. 

The CHAIRMAN. Without objection, it will be included. 

Mr. WILLIAMS. Mr. Chairman, before I continue, I want to make 

clear that GAO supports the concept of the purchase card program. 

The use of purchase cards lowers costs and lessens paperwork for 

both the government and the vendor community. At the same time, 

given the nature, scale and increase in use of purchase cards, it is 

important that agencies have adequate internal controls in place to 

help ensure proper use of purchase cards and thus to protect the 

government from waste, fraud and abuse. 

We found that VHA locked adequate segregation of duties between those purchasing and receiving goods, payments for purchase card and convenience check transactions often did not have 

key supporting documents, timeliness standards for recording, reconciling and reviewing transactions were not met, and card holders 

did not consistently take advantage of vendor-offered purchase discounts. 

Generally, we found that internal controls were not operating as 

intended, because cardholders and approving officials were not following operating guidance governing the program and, in the case 

of documentation and vendor-offered discounts, they lacked guidance. 

We also noted that monitoring activities could be strengthened. 

For instance, we found accounts that remained active long after 

cardholders had left service at VA, credit limits on many accounts 

were significantly higher than actual usage, and human capital resources were insufficient to enable adequate monitoring of the purchase card program. 

This lack of adequate internal controls resulted in numerous violations of applicable laws and regulations and VHA’s purchase card 

policies. We found violations of applicable laws and regulations 

that included purchases for personal use such as food or clothing, 

purchases that were split into two or more transactions to circumvent single-purchase limits, purchases over the $2,500 micropurchase threshold that were either beyond the scope of the cardholder’s authority or lacked evidence of competition, and purchases 

made from an improper source. 

We also noted 250 questionable purchases totaling about 

$210,000 that lacked key purchase documentation from vendors 

that would more likely be selling unauthorized personal use items. 

Examples of these types of purchases included a purchase from 

Radio Shack totaling approximately $3,300, a purchaser from Gap 

Kids totaling approximately $800, and a purchase from Daddy’s 

Junky Music for approximately $1,000. 
10

Missing documentation prevented us from determining the reasonableness and validity of these purchases. While the total 

amount of improper purchases we identified is relatively small 

compared to the more than $1.4 billion in VHA’s annual purchase 

card and convenience check transactions, we believe these results 

demonstrate vulnerabilities from weak controls that may have been 

exploited to a much greater extent. 

In closing, Mr. Chairman, I want to emphasize that, without improvements in its internal controls to strengthen segregation of duties, documentation of purchase transactions, timely recording, review and reconciliation of transactions and program monitoring, 

VHA will continue to be at risk for non-compliance with applicable 

laws and regulations and its own policies, as well as vulnerable to 

improper, wasteful and questionable purchases. 

Mr. Chairman, this concludes my statement. I would be happy 

to answer any questions you or other members of the Committee 

may have. 

[The prepared statement of Mr. Williams appears on p. 90.] 

The CHAIRMAN. Mr. Williams, thank you very much for your testimony. We do have a number of questions, but I would like to 

yield to my friend, Mr. Evans, for the purposes of an introduction. 

Mr. EVANS. Thank you, Mr. Chairman. I’d like to extend a welcome to South Dakota Congresswoman Stephanie Herseth, who 

joins us today as the newest member of our Subcommittee. Her 

record is quite impressive, including graduating summa cum laude 

from Georgetown University and graduating with honors from 

Georgetown University Law Center. And I’ll say I’m a graduate of 

it, too, and didn’t quite hear of the suffix on my degree as you’ve 

no doubt heard. 

She has been very interested in continuing South Dakota’s efforts as far as veterans are concerned, to Senator Johnson, Senator 

Daschle being the best representatives of that recently, but she is 

a supporter of veterans and has shown her commitment for caring 

for their needs. 

I have no doubt that her addition to this Committee is a positive 

one and I look forward to working with her for some time to come. 

Mr. Chairman, I’d like to yield my remaining time to Stephanie, 

and she would like to say a few words. 

Ms. HERSETH. Thank you, Congressman Evans, thank you, Mr. 

Chairman, and my colleagues on the Veterans’ Affairs Committee, 

to those in attendance today, those testifying before the Committee 

today, it’s certainly an honor for me to represent South Dakota as 

our lone member in the House of Representatives. As many of you 

know, we’ve had a vacancy for a number of months, and to be able 

to serve on this Committee, as well as the Resources and Agriculture Committee, serving important constituencies in South Dakota, where a very high number per capita, as many of you know, 

of veterans in South Dakota, including those currently serving in 

active duty as well as our National Guard and Reserve units. I look 

forward to working with them, as well as the veterans across South 

Dakota and across the country from past military conflicts. Thank 

you very much. 

The CHAIRMAN. Thank you. And I’d like to welcome you, too, to 

the Committee, Congresswoman Herseth, and say that this is a 
11

committee that, as you will quickly discover, if you don’t already 

know, is a very bipartisan committee. We work very hard on behalf 

of veterans, and hopefully that will continue, and I have no doubt 

that it will continue. Welcome to the Committee. 

[Applause.] 

The CHAIRMAN. I’d like to now ask that our distinguished Inspector General, make his presentation. 

STATEMENT OF RICHARD J. GRIFFIN 

Mr. GRIFFIN. I am accompanied today by Dr. John David Daigh, 

who is my Assistant Inspector General for Health Care Inspections. 

Mr. Chairman and members of the Committee, thank you for the 

opportunity to testify today. Since last year’s hearing, we have 

issued 250 reports with actual or potential monetary benefits of 

over $2 billion. While much progress has been made, much work 

remains to be done. I will highlight some of the more significant 

management areas where continued improvement is needed. 

The lack of staffing standards for physicians and nurses as required by Public Law 107–135, which was enacted in January of 

2002, continues to impair VHA’s ability to adequately manage personnel resources. Our current review of nurse staffing disclosed 

that the nursing shortage is affecting patient care, employee morale and costs at VHA facilities. Facility leaders might have been 

able to mitigate these consequences had VHA developed and implemented staffing standards. 

Our follow-up to the 2003 physician time and attendance audit 

found that VHA’s implementation of management controls continues to need improvement. We found that 8 percent who were 

scheduled for duty were not on duty, approved leave or authorized 

absence, and were potentially not meeting their VA employment 

obligations. Since I last addressed the Committee, my staff has conducted 42 CAP (Combined Assessment Program) reviews at veterans health care facilities. We continue to find systemic weaknesses relating to accountability for time and attendance for parttime physicians, and a need to align physicians’ hours of work consistent with actual workload requirements. 

In the past year, we completed 28 pre-award reviews of proposals 

for sole-source contracts to be awarded to VA-affiliated institutions, 

with recommended cost savings $9,496,000. For just four contracts 

awarded this year, negotiators sustained 98 percent of our recommended better use of funds for those proposals, or $1.2 million. 

Our reviews provide recommendations to ensure that the contract meets the needs of the VA, is in the best interest of the government, and ensures that our veterans receive quality medical 

care in a timely manner. 

Maintaining strong inventory controls in VA pharmacies continues to be extremely important. During this past year, we have 

opened more than 80 investigations into the theft of drugs. Of the 

42 VHA CAP reviews completed during this past year, 31 disclosed 

controlled substance accountability issues. 

One of our investigations disclosed that, between March 2001 

and January 2003, two VA employees, a pharmacy technician and 

a purchasing agent, conspired to divert over 600,000 tablets of 

hydrocodone and alprazolam from the outpatient clinic in Oakland 
12

Park, FL. The VA employees who stole these drugs sold them to 

a drug operation involving between 30 and 40 mid-level dealers. 

Both employees were indicted on multiple counts and pled guilty. 

Our special agent who worked this case recently received the National Commanders Law Enforcement Award from the Military 

Order of Purple Heart in recognition of his efforts in this investigation. 

As I mentioned last year, the Fugitive Felon Project was established within the VA to comply with provisions of a new law. This 

program is a collaborative effort between my office, VBA, VHA and 

VA Police Services. To date, 8,299 fugitive felons identified have 

been referred to the department for benefit suspension, creating 

$54.5 million in overpayments and an estimated cost avoidance of 

over $100 million. The apprehension of felons creates a safer environment for VA facilities and for the rest of our communities. 

We recently issued a follow-up draft report on VA’s workers’ compensation program. VA continues to be at risk for significant abuse, 

fraud and unnecessary costs because of inadequate case management and fraud detection. VA also continues to face major challenges in implementing a more efficient, effective and coordinated 

acquisition program. The Department spends about $6 billion annually for goods and services. 

Our audit of procurement of medical, prosthetic and miscellaneous supplies found that purchases were not made from the best 

available sources, and more national-scope contracts are needed to 

take advantage of VA’s buying power. 

I’d like to thank the Chairman and the members of the Committee for the opportunity to testify today and I would be pleased 

to answer any questions that you might have. 

[The prepared statement of Mr. Griffin appears on p. 112.] 

The CHAIRMAN. Thank you very much for your tremendous work 

on behalf of the VA, and all taxpayers and our veterans. I do have 

a few opening questions, and then I will yield to my colleagues for 

any questions they might have. 

First, Secretary Mansfield. I, too, got this report late last night, 

and have only been able to page through it and have not read it 

with the kind of focus I would like. On page 41, talking about longterm health care, an issue that we have raised repeatedly in terms 

of planning, the fact is that the emphasis has shifted to the state 

rather than the federal commitment to nursing home care. And I 

note that in the report, the statement is made that the Secretary 

is currently considering various policy options designed to adhere 

to the core principles. It also points out that, at this time, we are 

unable to say with certainty when the model will be finalized and 

released to the networks for their use. 

We raised this issue by way of letter and in serious discussions 

and hearings, including a CARES hearing focused almost exclusively on it, that it was not part of the CARES process, and we 

thought it was a glaring omission to be doing long-term planning 

and re-alignment, and enhanced services, without looking at longterm care. Could you react to that? Are we looking to get out of 

long-term care, or are we looking to meet our obligations the way 

we ought to? And, when will you provide us the milestones to indi-
13

cate when the model will be completed, and when might we to expect those milestones. And then, secondly, let me ask you, Mr. Griffin. Your $62 million 

budget and 442 FTE, is that enough? Have you made recommendations and requests for additional resources? Chairman Simmons, I 

think, made a very good point. For every person we put on the job, 

there is a return that is very significant, and, if you would, elaborate, on the physician and nursing standards. Are we talking about 

a loss of tens of millions, hundreds of millions? If you could try to 

quantify that. 

And then, let me just ask Mr. Williams, you indicate, if I heard 

this correctly, that you’re estimating maybe up to a third of VA 

purchase card transactions violated one rule or another, which is, 

I think, indicative of a very widespread problem. Has anyone been 

fired? What happens when people commit these, what someone 

might construe, to be crimes? Maybe Secretary Mansfield wants to 

comment on that as well. Secretary Mansfield. 

Mr. MANSFIELD. First of all, sir, on the first question, about longterm care. As you indicated, it is under consideration by the Secretary right now. He’s had a report from the group that he put together to work on it. Part of it is a follow-up to the CARES process. 

Whatever is decided on it will be rolled into the CARES process 

and become a part of that for the future. I can’t tell you what the 

answer is, except I can tell you that we will comply with the law. 

And the Secretary has made that point very vividly to the folks, so 

that’s the starting point, and I think right now we’re moving towards that compliance. I think it’s 13,361 or 91 is the target number for an average daily census. I think right now we’re probably 

somewhere in the 12,600 or 300 range, but that is being worked 

on, and we will obviously communicate with you as soon as the 

Secretary makes the decision on which of the options he has accepted. 

The second question then was the deal with the purchase card. 

Obviously, this is an area of concern. When I looked at the report 

from last year and the draft from the follow-up, I think I noted 

that, in comparison with other agencies, we’re doing an all right 

job. But again, obviously, the goal is 100 percent in compliance 

with the law. You mentioned a point about anybody being fired. I 

do know that, as I mentioned in my statement, that the new handbook dealing with this provides for sanctions on employees as we 

go forward, but you have to keep in mind too that this, as in many 

other issues, deals with the federal employment rules and laws 

that we have to follow, and you have a process that you have to 

go through that’s very lengthy and involved. Unless it’s outright 

theft and you’ve got something like that, then I think we could 

probably say that we could move forward and would move forward 

as soon as we could, or at least that would be my intent and my 

direction. 

The CHAIRMAN. Mr. Griffin. 

Mr. GRIFFIN. On your first regarding budget. If there’s no one in 

the room who would answer that, that they couldn’t use more resources, I can answer it with a strong yes. I appreciate the support 

the Committee has given to our budget in the six and a half years 

that I’ve been the Inspector General. In three of those years there 
14

been a supplement to the budget that came up here. I must say the 

Secretary has been supportive of my budget, but there have been 

initiatives that I have felt strongly about that didn’t make it 

through the process. 

One of those initiatives was the Fugitive Felon Initiative. We felt 

very strongly that that was a collaborative, good government initiative. At a time when the government is spending billions and billions on homeland security, that we would have fugitive felons coming and going in government facilities, and having their ability to 

come and go financed by taxpayers’ dollars, was just not a good 

government. To support that initiative, I had requested 37 FTE a 

couple of years ago. I requested them again last year. To date we’ve 

been trying to make that program work from the piece that we own 

of it, with no staffing provided whatsoever. 

Now, you can shift resources around, but we have a number of 

areas where we’ve got cases in the cue that we can’t get to. We 

have several hundred cases in the death match area with potential 

recoveries of millions of dollars. Our workers’ comp report which 

will soon be issued, once again, there’s tremendous amount of dollars available, 42 million a year, that we identify in workers’ comp 

work, that could stand further attention, but we don’t have the resources to apply to it. 

So, yes, we could very well utilize additional resources. This is 

a huge department. It’s going to get bigger, perhaps, under the 

Capital Asset Realignment for Enhanced Service, or the CARES 

initiative. We’re going to have more locations, it’s going to be more 

spread out, we’re going to have more veterans receiving care, and 

you need to invest some money in oversight in order to make sure 

you’re getting what you pay for. 

Regarding how much we are missing in the area of part-time 

physicians, T&A (time and attendance), in the unannounced work 

that we did, we looked at, we tried to track down 729 physicians 

that should have been working at the fifteen facilities that we went 

to. Of that number, 58 were not where they were supposed to be. 

Twenty-five claimed, ‘‘oh, I was on leave, I was supposed to be on 

leave. ’’ Well, it wasn’t recorded in any time and attendance record, 

the supervisor of that employee had no knowledge that he was 

going to be on leave. It’s not like we’re talking about painters, and 

if they don’t paint the room today, they can paint it tomorrow. 

These physicians have veterans on a waiting list who are waiting 

to get care, and you don’t just decide, unannounced, I’m not going 

in today. 

So I think there has to be a zero tolerance for no-shows, and 

we’re not there yet. Progress has been made, no question. But to 

have 8 percent not there on the day we did the unannounced audit, 

I think is not acceptable. 

Mr. WILLIAMS. Mr. Chairman, to the best of my knowledge, I am 

not aware of anyone being fired as a result of the items that I discussed. During our review, we were informed that staff had been 

counseled on the proper policy, procedures or use of the credit 

cards. In addition, we were told that there had been some additional training to make staff aware of what they could and could 

not purchase under the Credit Card, Purchase Card Program. 

The CHAIRMAN. Mr. Evans. 
15

Mr. EVANS. Mr. Chairman, I think at this time, I would like to 

use my time for the members on the subcommittees. 

Dr. SNYDER. Thank you all for being here, and we welcomed Congresswoman Herseth today, and she’s been in the press a lot lately, 

but, Mr. Chairman, it’s a pleasure to see you here, too, after reading about, some of the articles about you, Chairman Smith. 

[Laughter.] 

Dr. SNYDER. So thank you for being here, and all your work here. 

And, in fact, I thought of you when I, in the—Mr. Inspector General, you paged through the report, you specifically made mention 

of the fact that, since the increase in the number of veterans using 

the veterans’ health care, by your numbers are 2.9 million use it 

in some way in 1995, then that went up to 4.5 million in 2003, and 

that’s— in terms that Mr. Buyer has expressed in the past about 

it’s easy for us in Congress to expand the numbers that can use 

the VA health care system, but then it’s up to the VA folks to get 

the work done. And that’s been a fairly dramatic increase that can, 

as you point out, and I think your exact words, this increase has 

significantly challenged the Department’s capacity to treat veterans. 

And I know Chairman Smith has been very zealous in his advocacy of being sure we have the right amount of resources to do the 

job. But then, once we have, what resources we have, that it be 

done efficiently. 

I really just have one question, and it’s with regard to this parttime physician issue. And that, this issue is a very prominent part 

of the discussion we had the last time we had met, and I know it’s 

something that you all had focused on, but I’m confused then by 

why we seem to have, be working from different numbers about 

what kind of progress has been made. The, in Secretary Mansfield’s 

report, you all did a spot check in August of 2003, follow-up visits 

to fifteen VA facilities, and, by your documentation of the 729 parttime physicians, only 2 percent were identified as not being in compliance, and that 98 percent of these had comprehensive written 

agreements. 

But then, those numbers seem to be not consistent with what the 

Inspector General reports when you say that you had 8 percent 

that were supposed to be on duty that just weren’t there, and you 

went through a list of other facilities. You’ve got seven of fifteen 

medical facilities did not make sure each part-time physician was 

provided a written agreement, and so, seven of fifteen, that seems 

to be a different percentage than 98 percent, talking about having 

comprehensive written agreements documented. So, why do we 

have this discrepancy? 

Mr. MANSFIELD. Sir, part of that is my fault. The 2 percent and 

the 8 percent number is a discrepancy. When my folks took a look 

at the report, they failed to include, I think, 25—the number of 25 

that were included that were not identified as being where they 

should have been. So the fault, the difference between the 2 percent number and the 8 percent number is my folks taking raw data 

and making a report on it. 

Dr. SNYDER. So the 2 percent number is wrong? 

Mr. MANSFIELD. Yes, sir. And in my oral testimony, I changed 

that to a different number. I didn’t, Mr. Griffin indicated earlier, 
16

just before we started, that they were using the 8 percent number 

and I would agree with him. 

Dr. SNYDER. All right, thank you. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very much, Doctor. The Chair recognizes the Vice-Chairman of the Committee, Mr. Bilirakis. 

Mr. BILIRAKIS. Thank you very much, Mr. Chairman. I, too, want 

to welcome all of the panelists, Secretary Mansfield, and all the 

others. And it’s great to see Mr. Griffin again. We were together 

at the Military Order of Purple Hearts meeting when your agent 

received that very much deserved award. It’s good to see you here, 

sir. 

Mr. Mansfield, I understand, getting to Bay Pines now, that 

CoreFLS project, I understand that there’s about $18 million of 

CoreFLS funds unaccounted for, at Bay Pines? Is that true? And 

can anyone talk about this? 

Mr. MANSFIELD. Mr. Bilirakis, I think the best thing I can do is 

ask Mr. McFarland, our assistant secretary for IT, to answer your 

question. 

Mr. BILIRAKIS. Okay. 

Mr. MANSFIELD. I think he can get you to the details quicker 

than I can. 

Mr. MCFARLAND. Let me tell you what we’ve done in the last 

week and a half. The responsibility for the CoreFLS project has 

been transferred from the Office of Management to the CIO office, 

my office. We have put on the ground an experienced project director to take over the project. We are in what I would call stabilization mode. Right now, we are concentrating on trying to make sure 

that three installations—Bay Pines, St. Louis, and the cemetery in 

Florida—are able to get stabilized from a data input and a reporting process, so that, as we get near the end of the year, we are hoping to be able to close the books properly at those installations. 

And that is the complete and 100 percent focus of what we are 

doing right now. That is at the direction of the Secretary. After receiving some input on stabilization and recommendations from the 

Carnegie Mellon University team that were put in place to look at 

the CoreFLS issue. 

So, right now——

Mr. BILIRAKIS. Well, but, sir, is it true that there are $18 million 

of funds that are not accounted for? 

Mr. MCFARLAND. Sir, I do not know of any instance where there 

are $18 million unaccounted for. We have had, my team has had 

about a week and a half on the ground. One of the things we are 

going to do is to look into the funds that we are using on that 

project, and I would have to defer to our finance department for 

any other comments on that issue. 

Mr. MANSFIELD. Mr. Vice-Chairman, let me make the point. I am 

not aware of any $18 million, but let me make the point that we 

will go back, we’ll check with you after this hearing, and we’ll go 

back and double-check and then make a report to you and to the 

Committee as to that question. 

Mr. BILIRAKIS. Yes, that’s an awful lot of, obviously, it’s a lot of 

money, but I can’t, I can’t imagine that there’s an adequate accountability to——
17

Mr. MANSFIELD. Sir, there has been an awful lot of senior-level 

attention paid to this program since the problems were identified, 

and I think we would know if there were $18 million unaccounted 

for, but I will commit to you that we will go back. We’ll check with 

you as to any details that you may have, and we will go back and 

we will—— Mr. BILIRAKIS. In any case, your response will be in terms of a 

complete accountability, right? I mean, it may eighteen, it may be 

zero, but still there will be complete accountability. 

Mr. MANSFIELD. Yes, yes, sir. 

Mr. BILIRAKIS. Well, let me ask this question then, it may be in 

the same vein. I mentioned this in my opening statements. The 

company under investigation for its work on that project at Bay 

Pines received an incentive bonus of more than $200,000 for finishing it on time, even though the rewarding system wasn’t ready. 

And then, this company was awarded another contract. Subsequent 

to that, this same company was awarded another contract, probably at another location. Any explanation about that? 

Mr. MCFARLAND. Sir, I am aware that this company was awarded a separate and different contract for another purpose——

Mr. BILIRAKIS. Subsequent to all this having taken place? 

Mr. MCFARLAND. Yes, sir, it’s been in the last, I believe, 60 to 

90 days. I would have to defer to VHA, I believe that contract was 

awarded for the decision support system within VHA for some 

analysis. I did personally take a look at and ask the Office of Materials Management and Procurement to look at the contract. The 

contract itself was awarded under what appears to be very proper 

procedures, and I can’t tell you that it has anything to do with the 

CoreFLS environment. It’s a totally different—— Mr. BILIRAKIS. Yes, apparently that company was a low bidder. 

There are a couple of others—IBM was one, I think—and there was 

another company or whatever, there may have been more, but 

those are what, ones in the statements here. But I guess what I’m 

saying is, if you do it strictly on the lowest bid or whatever the case 

may be, proper procedures have been followed. But those procedures don’t take into consideration the problem at Bay Pines, the 

CoreFLS problem at Bay Pines. I can’t imagine. 

Mr. MANSFIELD. Sir, I do know, and we may need to get the General Counsel in the discussion, but I do know that we have to be 

careful in these areas, because we do not, at this point in time, as 

I understand it, have the right to exclude anybody from contracting 

with the government, based on the—— Mr. BILIRAKIS. You don’t have the legal right to do that? 

Mr. MCCLAIN. Congressman, I’m Tim McClain, I’m the general 

counsel of the VA. 

Mr. BILIRAKIS. Yes, thank you for being here, sir. 

Mr. MCCLAIN. Thank you, sir. In answer to the question, the 

deputy secretary is correct in that, at this point, we don’t have a 

debarment of any company under Bay Pines, and the contract that 

was let, once again, it was my understanding, it was done under 

the proper procedures. And so we don’t have the right to exclude 

any one company at this point. But we are looking into it. 

Mr. BILIRAKIS. Well, I should think in the process of looking into 

it, you should also be maybe coordinating with the Congress, if you 
18

don’t have the rights to at least take into consideration—and I’m 

not trying to be accusatory here of the particular company, all 

right, those are all details and what not. 

But I know that they’re under investigation. And I know that 

bad things happen. And I should think you’d be coordinating with 

the Congress here. If you don’t have some sort of right, Gordon, 

that you feel you should have, you ought to be letting us know so 

that we can help you out in that regard. But I—it’s just—well, my 

time is up, Mr. Chairman, but I just can’t imagine, we’re 

compounding the problem here, potentially, compounding the problem here. 

Mr. MANSFIELD. Sir, if I may, I’d just make the point that the 

additional contract you refer to, has been reviewed in depth, and 

it is a firm, fixed-price contract with a specific deliverable and a 

specific time frame, areas we had problems with before and we will 

be paying strict attention to it. 

Mr. BILIRAKIS. Yes, well, the problem previously was lack of 

quality, of course. It was not only a time—it wasn’t a time frame, 

they received a $200,000 incentive bonus for coming in within that 

time. 

Thanks, Mr. Chairman. 

The CHAIRMAN. The Chair recognizes Ms. Hooley. 

Ms. HOOLEY. Thank you, Mr. Chair. I have a couple of questions, 

and I’m going to start with Mr. Mansfield. We’ve spent a lot of time 

on the Committee talking about some of the very good innovations 

and inventions that have occurred in the VA, and the Subcommittee hearings have tracked VA efforts to receive its financial 

due through patents or other intellectual property rights for its research efforts. Can you tell me what patents or intellectual property rights the VA has secured in the last year for its inventions? 

Do we know that? 

Mr. MANSFIELD. I don’t have that information currently at hand, 

but I would respond for the record, ma’am. 

Ms. HOOLEY. Thank you, that would be great. I would appreciate 

it. 

Mr. Griffith, thank you for all the good work you’ve done. I know 

year in and year out, the IG makes recommendations to the VA on 

ways to improve efficiency and effectiveness throughout the organization. This year, I know you forecast that you thought you would 

find $2 billion in savings. In the areas of laboratory security and 

information management, you had a total of thirty-two recommendations, and a formal set of sixty recommendations that 

date back to March of 2003. 

Now I understand you’ve only been able to close on one of those 

recommendations, is that correct? 

Mr. GRIFFIN. That’s correct. 

Ms. HOOLEY. So help me understand what the problem is and 

are we asking for unrealistic performance of the VA? What’s going 

on? 

Mr. GRIFFIN. I would not say that we are asking for unrealistic 

performance. I would say that, on each of those recommendations, 

progress has been made, but I can’t close a recommendation out or 

close a report until we are totally satisfied that the recommended 

fixes have been put in place. Not 80 percent, not 90 percent there, 
19

it has to be done, because, unfortunately, if we move on to something else, we may not get to the 100 percent mark. 

And progress has been made on those recommendations. They 

have been around for a couple of years. 

Ms. HOOLEY. Right. 

Mr. GRIFFIN. Some of them have joint ownership. Some are 

issues for VHA and security and law enforcement with a little help 

from the general counsel’s office. So when you have multiple entities needing to get together on the response, that will put a delay 

in. 

My concern is that, too often, an excellent policy is promulgated, 

and it’s sent out to the facilities, but then the implementation 

doesn’t quite happen to the extent that it needs to happen. 

As you recall, that particular report was done shortly after 9/11, 

and shortly after the anthrax attacks on the Hill and in other 

places in the country. It was something that needed to be reviewed 

timely, it was reviewed, and we need to get to closure on all sixteen 

of those recommendations. 

Ms. HOOLEY. Because, I mean, with the $2 billion that you 

thought you would find in savings if you’re off by 50 percent you’re 

still talking about $1 billion. Do you think you’re being ignored? 

That’s probably an unfit question to ask you. 

Mr. GRIFFIN. Well, I wouldn’t say that. This is a huge department, it’s decentralized, they’ve had a tremendous spike in demand 

for health care, which you would expect at a time——

Ms. HOOLEY. Right, we know that. 

Mr. GRIFFIN (continuing). When the requirements were changed 

and private sector health care is going through the ceiling. So, naturally, there is tremendous demand there. But you need to have 

the right business processes in place to address the management 

side of the business in order to make it a system and not a hundred and fifty different individual hospitals. 

And when you talk about CoreFLS and issues like that, you have 

to make sure that all of those medical centers out there are utilizing all of the legacy systems that have been prescribed by VA, 

so that when try and lay a CoreFLS over the top, that you’ve got 

accurate data in those systems, number one, and, secondly that 

every facility is using those systems in the same manner, so that 

when you go to the next facility to try and do CoreFLS there, that 

they are all using GIP (Generic Inventory Package) for their inventory package. If you’re not using that and if CoreFLS assumes you 

are, the old saying of garbage in, garbage out would apply. And 

that was part of problem. 

Ms. HOOLEY. Well, you just need to know that I personally think 

you’re doing a terrific job, and this Committee is not ignoring you, 

and I’m anxious to hear a progress report as we go along. Thank 

you. 

[The prepared statement of Congresswoman Hooley appears on 

p. 78.] 

Mr. GRIFFIN. I’m pleased to say that I have most of my senior 

staff here because they are the ones who are really doing a fabulous job. And thank you for the compliment. 

The CHAIRMAN. Chairman Simmons. 
20

Mr. SIMMONS. Well, thank you, Mr. Chairman. Very briefly, Daddy’s Junky Music, a thousand dollars, what were they buying at 

Daddy’s Junky Music for a thousand dollars? 

Mr. WILLIAMS. We’re not for sure. That’s one of those purchases 

that we couldn’t find the supporting documentation, so that’s why 

we classified it in that particular category. That’s one of the problems, when you look at those items, it’s difficult for us to explain 

or to be able to report what that particular purpose was for, that 

purchase was for, because the documentation was missing. 

Mr. SIMMONS. Thank you. I would think they would have had 

enough common sense not to buy something at Daddy’s Junky 

Music in the first place, but then—anyway, if you don’t have 

enough common sense not to buy that kind of stuff, I guess you’re 

going to use your card as well. 

On a little more serious subject, Mr. Griffin, page 30 of your testimony. Two items—one is the pharmaceutical off-label drug promotion, which I assume is an initiative that did not just involve the 

VA, but it did involve a major pharmaceutical corporation, which 

pleaded guilty and paid more than $430 million to resolve its criminal and civil liabilities involving their activities that did involve the 

VA. 

And the second is the New Orleans bribery scheme, where a VA 

employee and two other individuals apparently overcharged VA 

more than $75,000. 

On the first case, is the VA continuing to do business with that 

major pharmaceutical corporation? If yes, why? And, on the second 

case, which involved a VA employee and two VA contractors, what 

is the status of the VA employee currently with the VA? Has that 

individual been fired? Two questions. 

Mr. GRIFFIN. Right. As I sit here, I’m not sure what the employee’s status is, I’ll certainly check on that for you. Typically, when 

we bring criminal charges against an employee, the government 

personnel regs are pretty straightforward, that if a person has been 

charged with a felony for which they could they could be sentenced 

to prison time, they can be terminated in fairly short order, with 

limited notice. And that is the government reg, and the Department has been following that reg on criminal cases. 

The question about the settlement on the off-label uses. The company that was involved in that activity was bought out by another 

company, so they are no longer a stand-alone company. And to 

what extent there may be contracts with the new parent, I’m hardpressed to give you a number of contracts or what have you. But 

the original company is no longer in existence. 

Mr. SIMMONS. Just briefly, Mr. Chairman. For the record, I’d like 

to know what the status of that VA employee is. According to your 

records, they’ve, he or she has been convicted with the contractors. 

They are awaiting sentencing. But, you know, this goes to my earlier point, that people within the VA who rip off the VA are lowlife, and for us not to know the status of this individual, for us to 

say that, well, the rules and regulations are such that we can’t be 

certain whether they’re not still on the payroll subject to sentencing or incarceration, conveys a message that we don’t really 

have a lot of concern about that or——
21

Mr. GRIFFIN. Mr. Simmons, if I may. We have over a thousand 

criminal investigations. I’m not saying that this person hasn’t been 

fired. I’m saying that I can’t testify here today as to the precise 

outcome of his case. My criminal squad has had 100 percent increase in their arrests and convictions in the last 2 years. No one 

in the Department has accused me of being a shrinking violet when 

it comes to going after these people, believe me. And I think maybe 

one of my people could leave the room now, and come back with 

that answer, before the hearing concludes. 

Mr. SIMMONS. That would be terrific. And, with regard to the 

pharmaceutical company, I’m glad to hear they’re not in business 

anymore. Thank you. 

The CHAIRMAN. Thank you. I think the next time somebody accuses someone from the Secret Service of being a shrinking violet, 

it will be the first. Ms. Herseth? 

Mr. SIMMONS. I used to work for the CIA, so I’m not a shrinking 

violet, either. 

Mr. GRIFFIN. I can see that, sir. 

Ms. HERSETH. Thank you, Mr. Chairman. Mr. Griffin, I want to 

acknowledge the efforts of you and your office and others to establish important measures like the Fugitive Felon Initiative to ensure 

the safety of our facilities, VA’s facilities, across the country, and 

so we take your review of the VA’s control of biological, chemical 

and radiological inventories very seriously. 

On page 11 of your written statement, I note that your office is 

not going to close the recommendations until a number of actions 

are taken, including that the medical center directors certify implementation of directives and security requirements. Does any one of 

your sixteen open recommendations involve accountability statements by the directors, and what is the status of this and any reasons for delays? 

Mr. GRIFFIN. Well, the accountability is that I have gone on 

record that we will not close that report until each director has certified that all of the security requirements in the report have been 

put in place at their facility. Not that a plan was sent to the facility that said, this is what needs to be done. When they certify that 

it has been done, then we will close the report. 

Ms. HERSETH. Okay. And then, on page 31 of your written testimony, you state that the Department hasn’t been able to effectively 

address its significant information security vulnerabilities and reverse the impact of its historical decentralized management approach. The VA’s security remediation efforts continue to be ineffective with inadequate facility compliance with established security policies, procedures and guidelines. 

It’s my understanding that the Committees often express concerns about the lack of centralized authority in the CIO office. And, 

given that Mr. McFarland is here, perhaps he can respond to this 

as well. But is this a symptom suggesting that the problem hasn’t 

been fixed, and how about the problems with the CoreFLS and patient financial services system? Did a lack of centralized control by 

the CIO office impact these programs? 

Mr. GRIFFIN. Well, I think as the Deputy Secretary testified a 

short time ago, the control of the CoreFLS activity has apparently 

been moved to the CIO’s office. 
22

In our annual financial statement audit work for the last few 

years, we have identified IT security as a material weakness in the 

Department. Now, you can talk about accountability, you can talk 

about whether the CIO’s office in Washington, DC has the clout to 

make somebody in a medical center 2,000 miles away accountable 

for doing certain things. 

But my main concern would be that somebody accepts responsibility. Now, when those things are sent out to be implemented 

don’t happen, the medical center director may not be fully aware 

when his information security officer receives traffic from the CIO’s 

office or a patch is sent to be placed on the computers at a facility 

and it doesn’t happen, as was the case in the Blaster report. But, 

if it’s my facility, I’m responsible for what goes on there. And if it 

involves CIO activity or CFO activity or quality of health care, 

whatever it is, I’m in charge. The question of where the buck stops 

has to be with the person who is tasked with being the senior official at that facility, and they make it happen. 

So, you know, it’s more a question of, you can’t just send stuff 

out there and have people decide whether or not they feel like implementing it. When someone doesn’t, when it’s an administrative 

thing, then administrative action needs to be taken. 

If it’s a criminal thing, then we will take action, and the appropriate disposition will happen from that also. 

Ms. HERSETH. Okay, thank you. 

The CHAIRMAN. Thank you. The Chair recognizes Chairman 

Buyer. 

Mr. BUYER. Thank you. I’d like to do a little clean-up work from 

my opening statement. I went ahead and pulled all of the letters 

that the Subcommittee had sent to the veterans’ service organizations. Now, the veterans’ service organizations play an important 

role, and they request a lot of things from this Committee. They 

ask for a lot of money in support of veterans’ causes. 

So when the Subcommittee asked them for some help and assistance on how to streamline and improve the service to the nation’s 

veterans, it doesn’t feel very good when they ignore the Subcommittee. So what I’d like to do, Mr. Chairman, is place in the 

record all these letters that were sent. 

[The letters appear on pp. 39 to 63.] 

Mr. BUYER. Now, the American Legion was very responsive. But 

we sent a letter to the, not only the American Legion, these are 

dated January 31st of 2003. So if anybody would still like to respond to these, we’re still waiting—to the Military Officers Association of America, we sent one to the NCOA, we sent one to the Military Officers Association of America, to the Military Order of World 

Wars, to the Paralyzed Veterans of America, to the VFW Washington Office, we sent one to the Vietnam Veterans of America, and 

we sent one to AMVETS, we sent one to TREA, and we sent one 

to Disabled American Veterans. 

Then, when the only response we got was from the American Legion, we sent out a second, follow-up letter. So, from the second, 

follow-up letter, we received a response from AMVETS. So we’re 

still awaiting response. So I’d like to submit those letters for the 

record. 
23

Mr. Griffin, I want to compliment you, and, again, I actually did 

in my opening statements, but please extend it to your staff. I’d 

also like to compliment you on the Fugitive Felon Program. You’ve 

taken this on, and, to my understanding, it’s just, you and—the VA 

and SAA, are you the only two in the Federal Government that 

have taken this on? 

Mr. GRIFFIN. HUD is presently trying to put a copycat program 

together. 

Mr. BUYER. That’s great. 

Mr. GRIFFIN. Yes. 

Mr. BUYER. How many individuals have you had to take from 

other tasks to perfect the program? 

Mr. GRIFFIN. Well, when we receive our hit list, if you will, we 

cannot possibly go after all those people ourselves. But as a member of the law enforcement community, we will try and assist any 

federal, state or local agency who is the owner of the warrant to 

the extent that we can. To date, there have been 400 fugitive felons 

arrested, and my people have participated directly in 240 of those 

arrests. 

Mr. BUYER. I’m just trying to lay a base here. I believe that this 

Committee wants to help you, and do to so as quickly as we possibly can, so please lay a basis for me, on how many employees you 

have shifting away from other responsible tasks to perfect this program. 

Mr. GRIFFIN. My people have a pool of potential work that is unquenchable. And, depending on the priority of the day, that’s what 

they do. As I mentioned, we’ve got a number of cases in our death 

match queue, several hundred, which, when we have some time, we 

go do them. 

When we came forward with this initiative, Social Security Administration was doing it with 46 FTE. We said, we can do better. 

We asked for 37. And there’s a basis for each of those 37 positions. 

So what we’ve been able to do to date is, when we can find the time 

to do it, we go and do it. 

But as you see in our testimony, these are not good people that 

we are arresting. These are murderers and rapists and kidnappers 

and drug dealers and so on, and we don’t need them coming into 

VA facilities. I would stand by the 37 number to have a fully-implemented and well-managed program. 

Mr. BUYER. How long does it take, after a felon warrant is put 

into the National Crime Information Center, until a fugitive felon’s 

VA benefits are stopped? 

Mr. GRIFFIN. Well, there are protocols for notification, even for 

fugitives, there’s a 60-day delay, which is not a problem for us, because, when they create an overpayment—the overpayment goes 

back to the day the President signed the law, which was December 

27, 2001. So if somebody gets a couple of payments along the way 

while we’re trying to locate them, that’s okay, because, after that 

60 days, if that person was a fugitive on January 1 of 2002, the 

overpayment goes back to the entire time that they were a fugitive. 

Mr. BUYER. Well, Mr. Chairman, this is a really good program. 

And I know it’s one that you also like, and I wish to join you, any 

action you want to take to help make this a reality and give Mr. 
24

Griffin the resources and authorizations he needs to perfect this 

program. So, I’ll join you, Mr. Chairman. 

Mr. GRIFFIN. Thank you, Mr. Buyer. 

The CHAIRMAN. Thank you. Mr. Miller. 

Mr. MILLER. Thank you very much, Mr. Chairman. I have a written statement that I’d like to add into the record, as well. 

[The prepared statement of Congressman Miller appears on p. ] 

The CHAIRMAN. Without objection. 

Mr. MILLER. Mr. Griffin, you talked about the death matches and 

the difficulty that you have in being able to fulfill the obligation 

necessary to recover the funds that are out there and, in addition 

to that, some other areas as well. Is there—and you talk about the 

additional FTEs that are necessary in order to do that work. Is 

there any way that in the short haul, that it can be contracted for 

by somebody that can go in and take a piece of what is out there? 

If we’re losing the money anyway, whereby they can contract and 

receive a portion of what they bring back into VA? Is there any 

mechanism that allows you to do that? 

Mr. GRIFFIN. There is not a mechanism to contract for federal 

law enforcement agents, because that is strictly, you know, a governmental function. We do contract for some of our audit work. 

Perhaps a contract could be arranged by the Department to help 

them address the workers’ comp backlog that exists, because, in 

workers’ comp cases, it has to be worked from day one. And somebody has to manage that case, and somebody has to make sure 

that, if that employee can come back to work, that they’re invited 

back to work, even if it’s a different job than they had when they 

left. 

And, due to the crush of all the other administrative and management issues that are out there, our recent audit report on workers’ comp found that, for some workers’ comp cases, there isn’t even 

a case file created. Now, it’s real easy to lose track of those cases, 

and then, over time, people forget about them, and you just continue making those payments, month after month, year after year, 

in some instances. 

So there are business practices which could be contracted for, 

some of which are contracted for, in certain areas in the Department, where, once some of the initial legwork and the initial review 

is done, if there are fraud indicators, at that point, that case can 

be referred to my people, who have the training and the expertise 

to take it the last ten yards, and to make that criminal case. 

But, right now, as you’ll see, in our workers’ comp report, case 

management there is an issue. Maybe it’s an issue that could be 

addressed with contracting. 

My people right now are the ones that do those post-award audits that the Deputy Secretary referred to with a couple hundred 

million dollars of recoveries. That’s a contract job, where the Department pays us to have those 25 auditors do pre- and post-award 

audits. That’s one of the most successful programs in the Federal 

Government. We’re one of the few departments that even does it. 

GSA has a huge number of FFS contracts. They haven’t been doing 

pre- and post-award audits. We do them, and I think the results 

speak for themselves. And that is a contractual situation, where we 

are reimbursed by the Department to do those. 
25

Mr. MILLER. Well, let me ask you this, then. If in fact you are 

being contracted to do a portion of those audits, does the fact that 

you’re doing those audits take away from the time that you could 

do, be doing something else? 

Mr. GRIFFIN. I think those audits are worth every—— Mr. MILLER. I’m saying could the contracting for the audits be 

done outside instead of internally? Because if we’re contracting 

agency to agency or internally and we’re losing time because we’re 

auditing for VA, could it be done by somebody outside the system? 

Mr. GRIFFIN. They were previously done by an outside entity. It 

is a requirement that the Department has them done. But when 

the outside entity did them, they came through us on a passthrough, because we are where all the auditors are located. And we 

were finding that the previous group wasn’t doing a very good job, 

frankly. 

These staff salaries are being paid by this contract, rather than 

by appropriated funds. So if there were no contract, we would not 

have these employees to assign other work to. 

And I think if you look at the return on investment, which I will 

provide for you for the record, over the last several years for that 

group, I think that group is paying for itself many, many times 

over. If anything, you might consider whether the thresholds which 

create those contracts that we look at are too high, and whether 

it might not be a wise investment to increase the size of that group 

and dig a little deeper in the review of certain contracts, scarce 

medical specialists, et cetera, to make sure that we’re getting what 

we pay for. 

The CHAIRMAN. Ms. Brown-Waite. 

Ms. BROWN-WAITE. Thank you very much, Mr. Chairman. You 

know, people warned me when I got elected that this, it would be 

very frustrating dealing with how slow the Federal Government operates, and Mr. Griffin and Mr. Williams, you all have a very 

tough, probably thankless, job. And I think, you know, this is but 

one tip of the iceberg that you all look at, because your focus— these reports focus on the VA. 

How do we, as members of Congress, see that your recommendations are enforced in a more timely manner, and actually be able 

to have some teeth to what you do? Is the problem the bureaucracy? Is it the head of the agency? Help me to understand what the 

problem is. 

Mr. Griffin, do you want to go first? 

Mr. GRIFFIN. Okay. The easy issues are quickly dealt with. If it’s 

easy, it wouldn’t be on the table. It’s a combination of things, in 

my estimation. I think part of the problem, throughout the government, is turnover. I think the recent publication by the Volcker 

Commission talked about perhaps there are too many PAS positions, perhaps that’s why it takes so long for someone to get confirmed for positions, perhaps that’s why we see the turnover that 

we see in a lot of departments in very important jobs, like the CIO 

job. 

When you’ve got the computer world changing at the pace that 

it’s changing, it would seem that the more continuity you had in 

your top position, to stay the course, and have a vision, and see it 

through to the end, would serve the government well. Too often, 
26

though, that’s not the case. And look at Bay Pines. If you look at 

the turnover in the top three or four positions there, over the last 

6 or 7 years, there’s no continuity. 

You need continuity. You need to have a vision, and then you 

need to take the time to take it from A to Z. 

Ms. BROWN-WAITE. You know, we did away with indentured servitude, so, I, you know, we cannot restore that. So people are moving from job to job. Did you ever see the movie ‘‘The Enforcer’’? 

How do we get an enforcer in this agency and every single other 

agency? Because, you know, you can’t tell people back home that 

it’s because of the fact that there is no continuity. People back 

home, every single taxpayer in America, wants their money spent 

wisely. And I’m not picking on you all, you just happen to be before 

this Committee. Believe me, I’d be saying the same thing before 

any other committee that came with us with results of fraud, waste 

and abuse. How do we get enforcement that translates into significant tax dollars? And then, Mr. Mansfield, I have a question for 

you. 

Mr. GRIFFIN. Let me say that this Committee and this Department and my organization and the veterans’ service organizations 

all have the same goal. Everyone wants to make sure that veterans 

get the care, support and recognition that they deserve. 

Now, from our position, as you know, we have dual reporting requirements. Every report that I issue to the Department comes up 

here, to everybody on the Committee. Every report that I issue to 

the Department, my group does follow up on. And after 90 days, 

if we haven’t heard from back from the Department, we send them 

a written letter asking what the status is of these recommendations. 

Ms. BROWN-WAITE. And, excuse me. Do you also send a copy to 

the Committee so that we know that you’re following up? 

Mr. GRIFFIN. I’ll be happy to send you a copy if you would like 

to have them. You’ll need a fairly large file cabinet. 

Ms. BROWN-WAITE. I’ll personally buy the staff that file cabinet, 

sir. 

Mr. GRIFFIN. But we do follow up on these, and some of them, 

as I said, are difficult and they take time. But, believe me, I’m with 

you. I’m making sure that the fixes happen. It does my people no 

good to do a lot of quality work and not have anything done in the 

way of making the right fixes to the system. 

Ms. BROWN-WAITE. You all are kind of like the police officer who 

keeps arresting the criminal and the judge doesn’t follow up or 

turns them loose. I mean, it’s got to be the same frustration level. 

Mr. Mansfield, I don’t know if you’re going to have time to answer this, but, of the recommendations that regularly come before 

us stating ‘‘management efficiencies,’’ how do we quantify whether 

or not those management efficiencies really happened, and how 

much of a savings there is as a result of it? 

Mr. MANSFIELD. I think the quick answer could be, for example, 

in the area of the productivity task force and the recommendations 

that were made there in my testimony, the testimony submitted for 

the record, and my statement, you’ll see that there are some dollars 

associated, for example, with contracts for medical supplies, that 

we know we’re saving more money this year, because we’re doing 
27

a better job on the contract. So that’s one way that you can do it, 

and that, of course, follows out year after year. 

Ms. BROWN-WAITE. Mr. Chairman, with your indulgence, I would 

ask Mr. Williams if—and I know you can’t do it now because my 

time is up, but if you would also respond to the same questions 

that I asked Mr. Griffin. If you would just get back to me on that, 

please. 

(See p. 181.) 

Mr. WILLIAMS. Okay. 

The CHAIRMAN. Dr. Murphy. 

Dr. MURPHY. Thank you, Mr. Chairman, and good morning, everyone. I’d like to focus on some of the issues that I know we covered last year and that we’re covering this follow-up and with physicians who are not putting in the time they’re supposed to be 

doing, particularly part-time physicians, I believe. 

Now, your testimony alludes to, I believe, that some of the VA 

facilities which are affiliated with the medical school, need to support the medical school at all costs. I’m wondering, first of all, if 

my conclusion is correct on that, and, secondly, if that is something 

that contributes to some of these breakdowns or that there might 

be some of the abuses coming through with regard to the part-time 

physicians and how much time they actually provide. Can anyone 

respond to that? 

Mr. GRIFFIN. I think that, in some of the dealings with the affiliates, over the years, in the evolution of the system, that VA has 

become a source of cash for them, that they have, in some instances, gotten a little bit too careless about it, and—for example, 

in the question of sole-source contracts, which each medical center 

has the authority—it’s actually written that they may grant a solesource contract to the affiliate. They don’t have to. And some of our 

experiences, when an initial proposal has been on the table, and 

the numbers from the affiliates seem to be excessively high, when 

challenged, there wasn’t a whole lot of push-back on the amount. 

It was more of a, well, we’ll do it for this amount. And I think it 

goes, as in anything else, if you have a little more competition, you 

get a better price. 

Dr. MURPHY. Tell me a little bit more about that. What do you 

mean, when you get competition, you get better prices? As opposed 

to the monopoly? 

Mr. GRIFFIN. I mean if the, if a medical center needs to contract 

for ear, nose and throat specialists. And if they simply go to the 

affiliate and say, this is what we think our workload is going to be, 

because that’s been a difficult challenge also, to quantify that, and 

then to have a staffing standard that says, this amount of workload 

requires this number of doctors. But they may determine, using 

whatever tools they use locally, that we think we need four fulltime ear, nose and throat doctors to take care of our veterans at 

the medical center this year. 

If you’re in a city that has a large number of ear, nose and throat 

doctors or practice groups, and if a contract was put out for a bid, 

as opposed to a sole-source contract to the affiliate, you would be 

able to get a more competitive cost for that service. 

Dr. MURPHY. So does this contribute to having staffing standards 

because we have just this sole source? It’s hard to get staffing 
28

standards in when you don’t have competition bidding on things 

and looking at other ways of reviewing and monitoring? Is that a 

contributory factor? 

Mr. GRIFFIN. I think that, without staffing standards, I don’t 

know how you would determine how many MD’s and nurses you 

need. 

Dr. MURPHY. So do we have adequate staffing standards now? 

know moves have been made to educate physicians or retrain them, 

as it were, in terms of their responsibilities whether they’re parttime or full-time. Do we have adequate staffing standards now? 

Have we reached that point? What else do we need to do? Mr. 

Mansfield, you’re responding. 

Mr. MANSFIELD. We’re still in the process of finalizing that. 

We’ve done it for primary care, but we still have do it for specialty 

care. I think the first group of three specialties is on target to be 

done sometime later on this summer, then we move on to the next 

group. But we’re behind where we should be in that area. 

And then the whole area of nursing standards is still out there, 

also. 

Dr. MURPHY. Well, it will be extremely helpful, as I know you’re 

moving towards having those standards to be able to review this 

some months from now and see how things have changed. I’m sure 

the situation will be that there are no more excuses for people to 

be abusing these issues, because the standards are clear. 

So I thank you for doing that, I really appreciate your work, it’s 

been a tremendous help. It’s not only a cost savings, but it raises 

the bar of responsibility that we expect the VA to have, and I appreciate the work all of you are doing. 

Mr. MANSFIELD. Just to make the point, sir, that we are following up on the IG’s findings and attempting to make things right 

in the area of contracting for sole sourcing. There is now a directive 

that requires a review of the pricing in competition, if possible. 

Dr. MURPHY. Thank you. And thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Dr. Murphy. 

Mr. GRIFFIN. Mr. Chairman, I’d like to give Mr. Simmons the answer to his question that he asked earlier. The employee is currently on administrative leave without pay. He’s to be fired when 

sentenced on July 7th of 2004. 

Mr. SIMMONS. Thank you. 

Mr. GRIFFIN. You’re welcome. 

The CHAIRMAN. Mr. Griffin, let me ask you a question, and I 

hope there is some press here. Very often when you hold an oversight hearing, you read the report the next day, and the only information that seems to be conveyed is negative. And, of course, you 

know, almost by definition, the IG is going to find some things that 

need to be rectified and remedied, and you did. 

But what I think needs to be pointed out, and to the GAO as 

well, is that Deputy Secretary Mansfield and Secretary Principi 

and the VA itself move very quickly, and I think effectively, on the 

issue of the waiting lists, and I would hope that this could be amplified a bit. You point out, and properly so, Mr. Griffin, that waiting list data, to be accurate, is important for planning, budget priorities, measuring performance, and determining whether strategic 

goals are met. Inaccurate waiting lists compromise the ability to 
29

assess and manage demand and the credibility of VA responses to 

internal and external stakeholder concerns. 

You point out, so rightly and we thank you for this, that the 

number pursuant to your audit, was overstated as to that waiting 

list, by about 91,000 veterans, for a total of 309,186. It should have 

been reported at 218,000. And a whole series of reforms were indeed put into place by the VA. Perhaps Mr. Mansfield might want 

to speak to this. And the recommendations that you had made, Mr. 

Griffin, were followed. And those four recommendations were 

closed on June 3, 2004. 

This is a good news story that comes out of this hearing. I hope, 

as well, that the waiting list has been driven down dramatically 

from even the number that was accurate when your audit was 

done. And, that’s something that we care deeply about. If someone 

is waiting, and they get sicker, they are not being well-served, and 

it also is indicative of a poorly-constructed model for dealing with 

patients walking in the door or making appointments. 

So if you, Secretary Mansfield, and perhaps Mr. Griffin, might 

want to comment on that, because, again, I hope that, in the interest of balance, because I am critical too of the VA, I’m critical of 

us, that we don’t always do what we ought to do, given the opportunities we have. If perhaps you might want to touch on this. 

Mr. MANSFIELD. Mr. Chairman, I thank you for making that 

point that we do try. We do try and do the right thing, and we are 

here to take care of veterans and that is the one issue that, I think, 

everybody agrees on. 

In the waiting list area, we knew when we were getting these reports in originally, that there were probably overcounts, in many 

cases, because people were dually-registered, and you know, I know 

some people were registered at a hospital as well as one or more 

clinics. 

But part of this also goes back to the issue—a pervading issue 

that Mr. Griffin mentioned earlier, and that is the point that we 

need to be able to say, from a centralized position, there are certain 

things that you will do and you don’t have the option of deciding 

whether you’ll do it or not. And in putting this waiting list, the new 

system in place, that’s one of the points that was made. We do 

have a responsibility, at Central Office, that goes all the way down 

to the facility and we now have a system in place where we are 

getting a count on a periodic, regular basis, and we know what 

they are, and we’re able to filter out the dual registrations and go 

forward. 

So that is, in effect, a positive result of the findings that the IG, 

in one area that the IG brought forward. 

Mr. GRIFFIN. If I may add, just briefly, I share your concern for 

the perception that all the reporting is negative. I purposely opened 

my written statement with several examples that occurred just in 

the last few months, of doctors, in the VA, who were out there, 

doing the right thing, providing superb care, some of whom have 

gotten international recognition, some of whom have been recognized with Presidential awards here in the United States. We’ve 

got a couple hundred thousand dedicated civil servants out there 

that are trying to make a difference. 
30

When it comes to our reporting to try and make things better, 

too often it may appear that the sky is falling. Well, there are thousands of tremendous incidents of care that occur every day. And we 

shouldn’t lose sight of that. 

The CHAIRMAN. Mr. Bilirakis. 

Mr. BILIRAKIS. Thanks, Mr. Chairman. I had the same concern 

as Ms. Ginny Brown-Waite did. You had mentioned continuity, Mr. 

Griffin, lack of continuity, turnover. Also, let me ask you—also, in 

response to Mr. Simmons, you indicated when the person is adjudicated, this particular individual is adjudicated on July the 7th, 

or whatever that date is, that then he will be fired. Does that mean 

he can’t be fired now? And I realize he’s off-duty without pay, but 

can he not be fired now? I mean, is that one of our problems? That, 

I know civil servants and the protections of employees and that’s 

important and all that, but is that one of our problems here, 

that——

Mr. GRIFFIN. You know, for criminal cases, the rules are different 

than when we’re talking about an administrative action involving 

an administrative offense in the government. Obviously, in the 

criminal process, the person is presumed innocent until proven 

guilty. Having said that, once they’re charged, as was the circumstance here, this person was suspended without pay. When I 

hear that, I’m, you know, I’m pleased. Maybe I’d like to see him 

fired immediately, but, suspended without pay, at least the person 

is no longer drawing a salary from the Department. What never 

happens is timely, as I would like to see. 

Mr. BILIRAKIS. It does happen, it’s timely. But is that—you’re 

talking about criminal, I think there’s an awful lot of cases of 

waste, fraud and abuse, and, I mean, these are pretty criminal 

things that we’re talking about, purchasing, I realize that. But, in 

general, is the fact that you can’t get rid of an employee—and I 

know there are employee rights and I’m just as supportive of them 

as anybody else is—but the fact that you can’t, maybe, you know, 

get rid of an employee who is completely inefficient, not caring, you 

know, that sort of thing, is that some of the problem? 

Mr. GRIFFIN. You can do it, but it takes work. 

Mr. BILIRAKIS. Yes. 

Mr. GRIFFIN. And as you know, if you wind up in a merit systems 

protection board hearing, there are Douglas factors, there are ten 

of them, and you have to justify the level of penalty that is being 

imposed based on these factors, which include things like previous 

offenses, and, you know, previous behavior and so on, how heinous 

was the offense committed, and so on. So there is a pretty elaborate due process system out there, and it can take time, but managers have to document the performance and create a record and 

then do what has to be done. 

Mr. BILIRAKIS. Yes. Okay, thanks. I guess I got the response I 

expected. 

The CHAIRMAN. Mr. Simmons. 

Mr. SIMMONS. Briefly, Mr. Chairman, I have a question that Mr. 

Baker asked me if I would request. With regard to the New Orleans bribery scheme, which involves kickbacks of $75,000 and two 

plumbing contractors, what was the scope of that contract? What 

was the amount of the total contract? What was the source of dis-
31

covery? What he’s getting at was, was this part of a larger contract, 

or was it simply plumbers? And who was the person that was involved in uncovering this scheme? 

Mr. GRIFFIN. I would like to give you a full answer to that question for the record, unless my investigation’s AIG has those answers with him. 

Mr. SIMMONS. Mr. Baker shared with me that he is concerned 

that there may be a broader range of problems in that particular 

facility, and that is the thrust of his question. Thank you, Mr. 

Chairman. I guess I would request that for the record on behalf of 

Mr. Baker. 

Mr. GRIFFIN. We will, you will have that within 24 hours. 

The CHAIRMAN. Thank you very much. Chairman Buyer. 

Mr. BUYER. Mr. Chairman, I have two issues very quickly. Number one, I would ask unanimous consent to have placed in the 

record the responses to the Subcommittee on O&I letters from the 

American Legion and AMVETS, to place that on the record. 

The CHAIRMAN. Without objection, so ordered. 

(See pp. 60 and 72.) 

Mr. BUYER. I’d also ask the Committee, and I know under the 

rules, we keep the record open five days, but if we could even extend it to ten days, by unanimous consent, so that the other veterans’ service organizations could respond to the Subcommittee’s 

letter, or place extraneous material with regard to the comments 

at today’s hearing, that is my request. 

The CHAIRMAN. Sure. And, without objection, that request. 

Mr. BUYER. Thank you. My other question deals with IT systems. 

Mr. Mansfield, there is a very large level of frustration here concerning the amount of money we have been spending annually on 

IT. And when the Secretary took his leadership position, I was 

pleased when he consolidated the IT—he made this huge effort 

about consolidations behind then-Admiral Gauss. At the time, I 

was more than willing to submit legislation, not only to make this 

consolidation a reality, but also to put funding power behind them. 

There are many IT systems that are out there—strike that. 

There are many IT projects that are out there. It seems like every 

time the VA touches one, they never meet their timelines. With the 

PFSS right now in the Cleveland VISN, six months behind their 

timelines, it’s hard for anybody to follow a contractor with this. I 

look more at leadership. And it’s difficult for them to do their jobs, 

to get the information that’s necessary to consolidate the clinical 

data so they can hit their milestones. 

When I asked Mr. McFarland, who’s in charge of PFSS, he immediately looked around, everybody looked around, he said, okay, I 

am. Then he finds out he really isn’t, that it’s the Business office. 

Mr. Mansfield, I just want you to know that I am right on the edge, 

and I think, I’d like for your response on whether we should take 

IT and put funding power behind him, and let’s just cut the bureaucracies and let’s stop wasting the money. What are your 

thoughts on that? 

Mr. MANSFIELD. Sir, I share your concerns, and I think the Secretary does, too. We’re right on the edge together. I would ask you 

that you let us go through the studies that we’re doing and the reports that are coming in on CoreFLS as well as a few others that 
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we’re doing based on the information developed, the CoreFLS leading us otherwise. 

The one you referred to, the UNISYS contract, we have decided 

that there will be one person responsible, one person in charge. I 

agree with you that it’s awful hard, when I asked the question, 

who’s in charge and responsible for this, and don’t get the answer 

that it’s this or that person, it raises an issue. 

So I think it’s one that the Secretary intends to address in detail 

when we get all these reports in and have the back-up and further 

justification. I would ask you to bear with us and we would be 

more than happy to work with you. 

Mr. BUYER. I look forward to engaging with you on it. 

Mr. MANSFIELD. But I understand and agree with your concerns. 

Mr. BUYER. All right. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very much. I want to thank our very 

distinguished panel for their insights, for their recommendations, 

their implementation of those recommendations, and say that we 

want to work with you and be partners. We will follow up, Mr. 

Griffin, as we did last year, on that request for the FTE for the 

project dealing with fugitive felons. 

We tried very hard last year. I plan on initiating a letter. I hope 

I get multiple signers, and I’m sure I will. That money would be 

very well spent and would capture so much more money that can 

then be used wisely for the VA. 

So again, I want to thank all of you. You’re doing a tremendous 

job. 

Mr. BUYER. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you, Mr. Chairman. 

[Whereupon, at 11:55 a.m., the committee was adjourned.] 
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A P P E N D I X 
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PREPARED STATEMENT OF THE HONORABLE STEVE BUYER

Thank you, Mr. Chairman, for holding this timely hearing on efforts to curtail 

waste, fraud, abuse, and mismanagement within the Department of Veterans 

Affairs. 

During last year’s hearings we learned about several programs that were sorely 

in need of corrective action. What we hope to learn today is how the VA has addressed these issues and what has actually been done to correct these identified 

problems. As we all know, fraud, waste, abuse, and mismanagement ultimately ends 

up costing the American taxpayers and negatively impacts our veterans’ access to 

care and benefits. 

Several important programs were evaluated in our previous hearings. One of the 

programs discussed happens to be one of my top priorities. I am referring to the 

VA’s Medical Care Collection Fund (MCCF) and its third party collections and the 

progress being made by the VA in improving all of its collections. In fact, on May 

23, 2003, we asked the GAO to provide us with a report outlining its findings on 

the progress being made by the VA since the Oversight Subcommittee’s May 7, 2003 

hearing. Specifically, we asked the General Accounting Office to evaluate how the 

VA calculates its costs to collect third-party payments and compare and contrast 

VA’s cost reporting practices with those of private sector health organizations. 

As I have already indicated, several important issues will be examined today. 

Poor project management is clearly one such area. For example, it appears to be 

a dominant factor in the serious disruption in health care delivery that occurred 

when the Core Financial and Logistics System (CoreFLS) was undergoing operational testing at the Bay Pines medical center in St. Petersburg, Florida. This 

project has experienced numerous delays resulting in cost overruns in the millions. 

I hope the IG report and the Carnegie Mellon analysis, which was commissioned 

by the VA, will shed some light on why this happened. The Carnegie Mellon report 

has a $500,000 price tag. This is in addition to over $8 million already lost in delays 

experienced with the project. 

Much terrain was covered at last year’s hearings. What I hope to learn today is 

whether the VA and DOD have implemented any new sharing agreements and what 

net savings have resulted. With regard to physician time and attendance, today, 

both the IG and the VA will provide us with updates on efforts to make sure all 

VA health care providers are held more accountable. In reading the February 18, 

2004, IG report (Follow-up of the Veterans Health Administration’s Part-Time Physicians Time and Attendance Audit) it would appear that directives were sent from 

central office but were not, for the most part, implemented by individual facilities. 

Is the VA addressing this now? 

I would like to compliment Mr. Griffin on the success of the Fugitive Felon program, which was established after passage of legislation initiated by the VA Committee, Public Law 107–103. To date, this program has resulted in $154.5 million 

in savings. 

At last year’s hearing the IG made the following comments about the Workers’ Compensation Program (WCP), Inspector General Griffin said: ‘‘Our preliminary results indicate VA continues to be at risk for program abuse, fraud, and unnecessary 

costs because prior IG program recommendations have not been fully implemented.’’ In its November 14, 2003, audit report the findings were almost identical in nature 

and it was reiterated that past recommendations made by the IG to correct the 

problems had not been fully implemented. The basic reasons for abuse, fraud, and 

unnecessary costs in the program are due to inadequate case management and 

fraud detection. The IG estimates that ineffective WCP case management and program fraud results in potential unnecessary costs to the Department totaling $42.7 

million annually. Furthermore, an estimated $112.6 million in avoidable past compensation payments were made that are not recoverable because VA did not offer 

jobs to employees that were able to come back to work. How do we recover these 

lost funds? Hopefully, VA will address these problems to avoid future unnecessary 

costs. 

In its Semiannual Report to Congress, dated March 31, 2004, the IG audit found 

that VA information security controls and security management have made insufficient progress in improving its information security position. More troubling is the 

fact that the disruptions caused by the Microsoft Blaster Worm virus security patch 

showed that VA computers were not patched in a timely and effective manner. The 

VA was virtually shutdown for three days. Again, how could this happen? 

The last area I will address deals with the Veterans Health Administration’s 

(VHA) Purchase Card Program. The General Accounting Office along with the VA 

Office of Inspector General have performed extensive reviews of the VHA’s Purchase 

Card Program and found many vulnerabilities with its internal controls and compli-
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ance. This issue is about good government and the need to ensure that VA employees’ purchases made on these cards are legitimate. For instance, the GAO estimates 

that $312.8 million of the fiscal year 2002 purchase card transactions lacked vital 

supporting documentation. Were the $5,799 worth of purchases made by a cardholder for two restaurants, a movie theater, a country club and an airport cafe ́ official business for the VA? There is no way of knowing because the cardholder did 

not provide documentation for these transactions. This is really more about the perception being perpetuated if this type of activity is allowed to continue, rather than 

the actual dollar amounts involved. Weak internal controls and lack of compliance 

set the stage for further abuse and fraudulent behavior. The VA must implement 

recommendations recommendations made by the GAO and the IG to rectify such 

wasteful practices. Thank you, Mr. Chairman, this concludes my statement.
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