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[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]

 
                        OVERSIGHT EFFORTS OF THE 
                U.S. DEPARTMENT OF VETERANS AFFAIRS (VA) 
                       INSPECTOR GENERAL: ISSUES, 
                 PROBLEMS AND BEST PRACTICES AT THE VA 
=======================================================================
                                HEARING

                               before the

                     SUBCOMMITTEE ON OVERSIGHT AND
                             INVESTIGATIONS

                                 of the

                     COMMITTEE ON VETERANS' AFFAIRS
                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                           FEBRUARY 15, 2007

                               __________

                            Serial No. 110-4

                               __________

       Printed for the use of the Committee on Veterans' Affairs

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34-306 PDF                 WASHINGTON DC:  2007
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                     COMMITTEE ON VETERANS' AFFAIRS

                    BOB FILNER, California, Chairman

CORRINE BROWN, Florida               STEVE BUYER, Indiana, Ranking
VIC SNYDER, Arkansas                 CLIFF STEARNS, Florida
MICHAEL H. MICHAUD, Maine            DAN BURTON, Indiana
STEPHANIE HERSETH, South Dakota      JERRY MORAN, Kansas
HARRY E. MITCHELL, Arizona           RICHARD H. BAKER, Louisiana
JOHN J. HALL, New York               HENRY E. BROWN, Jr., South 
PHIL HARE, Illinois                  Carolina
MICHAEL F. DOYLE, Pennsylvania       JEFF MILLER, Florida
SHELLEY BERKLEY, Nevada              JOHN BOOZMAN, Arkansas
JOHN T. SALAZAR, Colorado            GINNY BROWN-WAITE, Florida
CIRO D. RODRIGUEZ, Texas             MICHAEL R. TURNER, Ohio
JOE DONNELLY, Indiana                BRIAN P. BILBRAY, California
JERRY McNERNEY, California           DOUG LAMBORN, Colorado
ZACHARY T. SPACE, Ohio               GUS M. BILIRAKIS, Florida
TIMOTHY J. WALZ, Minnesota

                   Malcom A. Shorter, Staff Director

                                 ______

              Subcommittee on Oversight and Investigations

                  HARRY E. MITCHELL, Arizona, Chairman

ZACHARY T. SPACE, Ohio               GINNY BROWN-WAITE, Florida, 
TIMOTHY J. WALZ, Minnesota           Ranking
CIRO D. RODRIGUEZ, Texas             CLIFF STEARNS, Florida
                                     BRIAN P. BILBRAY, California

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Veterans' Affairs are also 
published in electronic form. The printed hearing record remains the 
official version. Because electronic submissions are used to prepare 
both printed and electronic versions of the hearing record, the process 
of converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.

                            C O N T E N T S

                               __________

                           February 15, 2007

                                                                   Page
Oversight Efforts of the U.S. Department of Veterans Affairs (VA) 
  Inspector General: Issues, Problems and Best Practices at the 
  VA.............................................................     1

                           OPENING STATEMENTS

Chairman Harry E. Mitchell.......................................     1
    Prepared statement of Chairman Mitchell......................    22
Hon. Ginny Brown-Waite, Ranking Republican Member................     2
    Prepared statement of Congresswoman Brown-Waite..............    22
Hon. Timothy J. Walz.............................................     3

                                WITNESS

U.S. Department of Veterans Affairs, Hon. George J. Opfer, 
  Inspector General..............................................     3
    Prepared statement of Mr. Opfer..............................    23

                   MATERIAL SUBMITTED FOR THE RECORD

Post-Hearing Questions and Responses for the Record:
    Hon. Harry E. Mitchell, Chairman, and Hon. Ginny Brown-Waite, 
      Ranking Republican Member, Subcommittee on Oversight and 
      Investigations, to Hon. George J. Opfer, Inspector General, 
      U.S. Department of Veterans Affairs, letter dated March 21, 
      2007.......................................................    27

   OVERSIGHT EFFORTS OF THE U.S. DEPARTMENT OF VETERANS AFFAIRS (VA) 
    INSPECTOR GENERAL: ISSUES, PROBLEMS AND BEST PRACTICES AT THE VA

                              ----------                              

                      THURSDAY, FEBRUARY 15, 2007

             U.S. House of Representatives,
                    Committee on Veterans' Affairs,
              Subcommittee on Oversight and Investigations,
                                                    Washington, DC.

    The Subcommittee met, pursuant to notice, at 3 p.m., in 
Room 334, Cannon House Office Building, Hon. Harry E. Mitchell 
[Chairman of the Subcommittee] presiding.

    Present: Representatives Mitchell, Walz, Rodriguez, Brown-
Waite.

             OPENING STATEMENT OF CHAIRMAN MITCHELL

    Mr. Mitchell. Good afternoon and welcome to the Oversight 
and Investigations Subcommittee for the Veterans' Affairs 
Committee. This is the meeting of February 15, 2007.
    And I would like to begin by welcoming our new Members. 
And, actually, you are probably not a new Member, are you? I am 
the new Member, so I guess I welcome--and, Tim, welcome.
    First, let me just give a little--and I also want to 
welcome--forgive me if I make some mistakes here. I was talking 
earlier about how I needed to know what the protocol here was. 
And this looks like a very friendly group, so please bear with 
me.
    This is our very first Oversight Subcommittee hearing of 
the 110th Congress. And today, the VA Inspector General will 
provide an assessment of issues, problems, and best practices 
at the VA.
    We will also look for avenues in which the Subcommittee can 
help the Inspector General do a better job. Thus far, it looks 
like his team is doing a great job with the resources that are 
allocated.
    This Subcommittee has a long history of working with the VA 
Inspector General. They are the first stop, the first call, so 
to speak, where our Subcommittee needs a firsthand assessment 
from a field location regarding operations at the VA's central 
office.
    I have asked the Inspector General to be accompanied by his 
staff of experts in audit, contracting, healthcare, and 
investigations. I am interested in their views and as honest 
brokers as to how the VA as a very large Federal organization 
is doing.
    This topic and this hearing are our place to start our 
oversight assessment of the VA. The IG has significant 
knowledge and recent hands-on experience in matters that impact 
the VA.
    I would stress that we do not only want to hear about the 
VA and what it is doing wrong. We want to hear about what the 
VA is doing right. We want to hear about the best practices of 
the VA, and we want to do what we can to see that those 
practices grow and multiply.
    The best situation is when the VA is proactive and 
identifies and solves problems before they become real 
problems. We all strive to be proactive, but all too often we 
end up just being reactive. Out of necessity, we may do both on 
this Subcommittee, but we will strive to be proactive as often 
as practicable.
    I will now ask my colleague and Ranking Republican Member, 
Ms. Ginny Brown-Waite, if she has opening comments. I look 
forward to working with her during the next 2 years, and I 
recognize Ms. Brown-Waite for opening remarks.
    [The prepared statement of Mr. Mitchell appears on pg. 22.]

          OPENING STATEMENT OF HON. GINNY BROWN-WAITE

    Ms. Brown-Waite. Thank you very much, Mr. Chairman, and 
welcome to the Committee.
    This is a Committee that, historically has worked in a very 
bipartisan manner, because veterans are not Republicans or 
Democrats. They are veterans needing our assistance.
    I appreciate the Chairman yielding me time. This is the 
first Subcommittee hearing for the Subcommittee on Oversight 
and Investigations. And, I certainly appreciate the Inspector 
General coming in and testifying before us regarding the 
President's proposed budget for fiscal year 2008 as it relates 
to your office.
    The VA's Office of Inspector General is responsible for the 
audit, investigations, and inspection of all VA programs and 
operations. Given the recent demand for greater accountability 
within the business lines at the VA, I am very sure that the 
workload within your office has increased significantly in the 
past year.
    Therefore, I find the budget before us very disconcerting 
in that the amount the Administration has requested for the 
office is 72.6 million, which provides for 445 full-time 
equivalent employees to support the activities of your office.
    During fiscal year 2006, OIG identified over 900 million in 
monetary benefits for a return of $12 for every dollar expended 
by your office. The OIG closed 652 investigations; made 712 
arrests, just in 1 year; 344 indictments; 214 criminal 
complaints; and 833 administrative sanctions.
    My understanding is that, if the President's numbers 
prevail, it actually would amount in a reduction of 40 
employees from your current staffing level.
    I am very concerned that the funding levels the 
Administration is requesting are not going to be sufficient to 
continue the very excellent work that has been done by your 
office. And I look forward to hearing testimony on this matter.
    Again, Mr. Chairman, I thank you very much for yielding.
    Mr. Mitchell. Thank you.
    [The prepared statement of Ms. Brown-Waite appears on pg. 
22.]
    Mr. Mitchell. Mr. Walz.

           OPENING STATEMENT OF HON. TIMOTHY J. WALZ

    Mr. Walz. Thank you, Mr. Chairman, and also congratulations 
to you. I am proud to work with you on this Committee. I know 
your reputation far precedes you for your fairness and your 
work ethic. So thank you.
    And I would also like to thank our Ranking Member for such 
an eloquent statement and a belief that what your office is 
doing is something we absolutely believe in. You should be 
commended for the work that you have done on the scarce amount 
of resources that you have. Protecting those resources for our 
veterans is a sacred responsibility, and you have taken that 
obviously to heart and done a very good job with that.
    I would concur with our Ranking Member that I am deeply 
concerned that an area that has proven to be able to return 
resources to us, an area that has been a good steward of the 
public trust is an area that we are trying to cut a few corners 
on. And I want to make sure that this Committee, this 
Subcommittee, has a clear understanding of what we need to do 
and how we need to articulate the needs that your office has so 
that we can get those resources to you to continue with this 
work.
    And I fully believe that it may be one of the most 
important positions that a lot of people do not know about that 
is happening in an organization or in our VA system that I 
think is absolutely critical, especially at this time.
    So I thank you. I thank you for taking the time, all of 
you, for coming today, sharing your expertise with us and 
hopefully letting us know where we can make your job easier.
    So thank you, Mr. Chairman.
    Mr. Mitchell. Thank you.
    At this time, we will begin with Mr. Opfer and make your 
statement.

  STATEMENT OF HON. GEORGE J. OPFER, INSPECTOR GENERAL, U.S. 
 DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY JOHN D. DAIGH, 
 ASSISTANT INSPECTOR GENERAL, HEALTH; JAMES O'NEILL, ASSISTANT 
 INSPECTOR GENERAL, INVESTIGATIONS; BELINDA J. FINN, ASSISTANT 
   INSPECTOR GENERAL, AUDIT; MAUREEN REGAN, COUNSELOR TO THE 
                       INSPECTOR GENERAL

    Mr. Opfer. Thank you, Mr. Chairman and Members of the 
Subcommittee. Thank you for the opportunity to appear before 
you today.
    I am accompanied by the senior members of my staff, Maureen 
Regan, Counselor to the Inspector General; Dr. David Daigh, the 
Assistant Inspector General for Healthcare Inspections; Belinda 
Finn, our Assistant Inspector General for Auditing; and Jim 
O'Neill, the Assistant Inspector General for Investigations.
    I would like to recognize that we have had a long history 
of working with this Committee, and I appreciate the oversight 
by this Committee and interest in the work that we do. A lot of 
it, as both of you said, Mr. Chairman and the Ranking Member, 
is unfortunately we like to do more proactive work, but a lot 
of times, we are in reactive mode.
    Last year, we had to react to issues such as the cranial 
implant situation, and there was the data loss, with a 
significant impact on twenty-six and a half million veterans.
    I am going to list some of our accomplishments. There is a 
commercial that says things are priceless. How do I put a value 
on maintaining the integrity of the quality and safety of care 
in the VA hospitals? It is invaluable. How do I put a value on 
maintaining the integrity of the data which is in the hands of 
VA? It has a significant impact on the twenty-six and a half 
million veterans and their families and would have an economic 
impact.
    That work was done collectively with the resources that we 
had within the OIG. We did not just use the investigative 
staff. We used everyone we had, and I am fortunate to have the 
staff to do that.
    I am in the twilight of my career, starting government 
service in 1969, and I have only been the Inspector General 
here for a year. But I have been fortunate my entire career 
working with and for outstanding people. And nowhere is it more 
paramount. I have been blessed to be working as the Inspector 
General in the Department of Veterans Affairs and have these 
outstanding people and to visit the field offices and to know 
what they can do and to know what could be done if we had more 
resources.
    But I am not here to ask for resources. I am here to 
explain what we have done and put some initiatives on the table 
for consideration of the policymakers to see if this is a role 
for the IG, if this is something that would be useful for you 
in making the decisions that affect the veterans of this 
country.
    During the past 6 years, the OIG had a return on investment 
of $31 for every dollar invested in the OIG operations. We have 
produced $11.6 billion in monetary benefits and issued 1,200 
reports, over 6,600 recommendations. We also completed nearly 
15,000 criminal investigations. We have processed over 93,000 
hotline contacts and completed over 7,300 reviews of 
allegations of fraud, waste, abuse, and mismanagement.
    OIG oversight is not only a sound fiscal investment. It is 
investment in good government. To highlight some of the best 
practices resulting from our work, the VHA has developed a 
seamless transfer of medical records for returning war 
veterans. Thousands of unscrupulous individuals who preyed on 
our veterans by stealing their benefits and abusing fiduciary 
responsibilities have been prosecuted as a result of our 
investigations.
    We have produced unqualified opinions in VA's financial 
statements and identified material weaknesses that need 
correcting. We have also recovered more than $104 million from 
contractors who overcharged VA.
    We have identified systemic problems in major procurements 
and serious deficiencies in VA's IT security, such as the work 
I outlined in the theft of the records concerning the twenty-
six and a half million veterans.
    Despite our accomplishments, I believe that there is much 
more we could and should be doing if this is the role for the 
IG in the future.
    While we do the most we can with the resources provided, 
there are many issues that we are not able to review. For 
example, we refer over 70 percent of all the hotline cases that 
we receive back to the Department for review.
    As indicated in my written statement, there are several key 
challenges facing VA that we are not able to review with 
existing resources. For example, in healthcare, the VA is 
challenged in its delivery of care to the returning war 
veterans. Compliance by VA researchers with policies that 
protect patients and ensure not only sound scientific results 
is also an area of concern.
    VA's research is budgeted for 1.8 billion in fiscal year 
2008, which makes the research program commensurate with the IT 
budget for VA for 2008. A significant amount of funds are being 
appropriated for VA or are in the process of being reviewed by 
Congress.
    The increasing geriatric veteran population also presents 
VA with a growing challenge. Veterans 85 years and older 
enrolled in VA health systems is expected to exceed 675,000 by 
year 2012. As VA searches for organizational efficiencies, the 
question of whether the VISN model that they have now in VHA is 
the best infrastructure to manage the medical care and 
resources needs to be addressed.
    Also drug diversion steals valuable medicine from patients, 
and makes patients vulnerable to harm from providers impaired 
by drug use.
    I think the timeliness and accuracy of processing claims is 
a top priority.
    Veterans would benefit from OIG work aimed at reviewing 
VBA's quality assurance program for rating decisions, and 
assessing the factors contributing to the serious backlog of 
claims.
    The VA's internal controls and accountability of VA funds 
remain an area of high concern. The OIG, I believe, has an 
important role to play in overseeing the development of the new 
integrated financial and logistics system to ensure that VA 
corrects these material weaknesses.
    Systemic deficiencies in VA procurement include lack of 
communication, insufficient planning, poorly written contracts, 
inadequate competition, and inadequate contract administration. 
Independent oversight efforts would benefit VA in determining 
how best to address these deficiencies.
    VA's budget request for fiscal year 2008 estimates a need 
of 1.9 billion for IT. I believe independent oversight is 
needed to ensure that system development controls are 
effective, the requirements are accurately identified and 
planned, contracts are used to support the projects in the best 
interest of the government and to achieve the desired results.
    As I outlined before, protecting VA data is and will remain 
a primary focus of ours. It is the society that we live in, the 
technological age, whether at work or at home.
    I would like to emphasize that my office will continue, I 
believe, to provide a positive return on investment. While I 
believe the VA OIG has accomplished a great deal in improving 
VA, we are faced with the challenges I have just discussed, and 
I need to greatly expand on the oversight to meet these 
challenges.
    In closing, I would like to add that my current resource 
level is sufficient to meet the mandatory statutory obligations 
that have been placed on the IG by Congress, such as reviewing 
the consolidated financial statement, the FISMA, and other 
congressional mandates.
    However, I believe like most agencies VA is faced with 
evolving challenges and changing demands. If the OIG is really 
going to be an agent for positive change, future resource 
levels need to be commensurate with this challenge.
    Thank you for the opportunity to appear here before you 
today. My staff and I will be glad to answer any questions that 
the Committee would have for us.
    [The prepared statement of Mr. Opfer appears on pg. 23.]
    Mr. Mitchell. Thank you very much, Mr. Opfer.
    Let me just ask a couple of quick questions. One, you 
mentioned how you uncovered some of the contractors who had 
overcharged and overbilled and so on.
    When you find those kind of people, what happens to them? 
Do they get put back on a list because there is a lack of 
competition? Are they blackballed? Are they no longer allowed 
to bid? What happens to them?
    Mr. Opfer. Let me have Maureen Regan explain that part of 
the contractors. There were areas of debarment and other things 
like that. If it was a criminal nature that we could prove, 
then that would go to our investigations office. But let 
Maureen explain.
    Ms. Regan. The agency has the authority to debar them from 
future contracts. Whether or not it goes through the debarment 
process depends on a number of factors.
    One of them may be how old the conduct was. They also have 
the opportunity to enter into similar to a corporate integrity 
agreement. There has been a number of cases we have worked on 
that affect other agencies and they may have the responsibility 
to do a debarment or a corporate integrity agreement.
    In criminal cases, they do get referred for debarment to 
our agency if it is against us.
    Mr. Mitchell. One last question, if you do not mind. In 
response to what Ms. Brown-Waite spoke of, I think we are all 
concerned with your staffing level, and you mentioned that. And 
the great job that you and your staff are doing is just 
terrific.
    And as you know, the ratio of the Inspector Generals to the 
number of people who work in a particular department--for 
example, my understanding is that the Department of Veteran 
Affairs is the second largest department in the Federal 
Government and, yet, you have the lowest number of employees in 
relation to the parent agency.
    And seeing the great success you have had with the people 
that you have working for you, don't you think it would be 
great for all of us and certainly good business practices if we 
raised that ratio?
    Thinking of HUD, for example, and the Department of 
Education, both of them have full-time equivalents of Inspector 
Generals of 33 times greater than the VA has.
    And I think the ratio was something like .2 percent. So it 
is very, very low. So we are really getting a bang for our 
buck. But maybe we can get better if you had more staff.
    Mr. Opfer. Mr. Chairman, you are correct. If you look at 
the IG's Office in relationship to the 26 statutory IGs at the 
Cabinet agencies, if you go by the ratio of FTEs in comparison 
to the IG's Office with the parent agency, we would be 26. We 
would be last.
    If we look at the ratio of budget authority in comparison 
to the OIG's budget with the parent agency, we would rank 20th 
out of 26. So we are last in the ratio of FTE to FTE with the 
parent agency and third from the bottom of the budget 
authority.
    From my own experience prior to coming to VA as the 
Inspector General, I served as the Deputy Inspector General in 
the Department of Labor, and it was a great organization and I 
enjoyed working there.
    The comparison I am trying to make is that agency was of 
17,000 employees, and the IG's Office in DoL is about the same 
size as mine, and, actually, in fiscal year 2008, they would be 
larger than the VA OIG and that is for an agency of 17,000 
employees.
    Mr. Mitchell. Thank you.
    Ms. Brown-Waite.
    Ms. Brown-Waite. I thank the Chairman.
    I think I threw the Chairman off a little bit when I told 
him we may be related because I have a granddaughter by the 
name of Mitchell. My daughter is a Mitchell. And so we are 
going to check those family trees.
    You all do such a great job in the Inspector General's 
Office, and I mean that sincerely. And, you know, I can be a 
very, very harsh critic. But the work that you do, we need to 
be, if anything, plussing up those numbers because of the fact 
of the dollars saved.
    But would you help us to understand the real impact if you 
lose 40 FTEs? What current services or audits would be 
affected, and tell me the effect that it would have on the 
Fugitive Felon program?
    Mr. Opfer. Yes, Congresswoman. Let me give a bit of an 
answer and then I will rely on the program managers to respond 
specifically, the Office of Investigations to respond to your 
Fugitive Felon question. And David Daigh will respond to the 
healthcare initiatives that would be affected, and Belinda Finn 
will talk about the audit program.
    But overall, in a quick summary, in Healthcare, the OIG 
inspectors would not review the quality of care and patient 
safety issues at the outpatient clinics. The inspectors would 
have to cancel most of the planned work on VA research and the 
identification of best practices and PTSD treatment.
    Probably an inspection of the VA pharmacy and medical 
device programs would have to be delayed or put off completely. 
We would have to cancel an initiative to expand audit oversight 
in the VA information systems that would address the material 
weaknesses that we find in our financial statements and 
vulnerabilities.
    We would have to cancel three national audits. One would be 
in looking at the accountability controls over some sensitive 
IT equipment, an audit of VA DoD electronic data, and an audit 
of VHA's internal controls of financial activities.
    I would rather have Jim explain the Fugitive Felon program 
and if we have time, I would have the program officers 
elaborate more into the healthcare initiative and the audit 
initiative.
    Jim.
    Mr. O'Neill. Yes. This would be one program that probably 
would not be impacted directly. We have automated a lot of this 
program. It has been very successful and I would love to tell 
you about it if you are interested in the number of veterans 
and beneficiaries who have been identified in the program, and 
the number of arrests.
    In terms of the process, the data is retrieved from a 
variety of sources, NCIC, 13 different states, the U.S. 
Marshals, and it is matched electronically against VA records. 
We have automated the notification as much as possible to the 
warrant holders in terms of addresses that we may or may not 
have for them.
    Typically we get involved personally in these 
investigations in a couple ways. One is when we learn that a 
veteran who has a warrant is going to appear at a medical 
center for an appointment and if we are proximate to that 
location, we may get involved because the burden of that is 
only a couple of hours, because we always involve local police 
to represent the warrant holder, and the arrest is actually 
made by them, and our agents are instructed to provide cover 
for the arrest, but not to necessarily effect it.
    Then we do it on occasion when the warrant is for a heinous 
crime and there is serious violence and particularly when the 
local department asks for assistance, we do our best to assist 
them. We believe that this helps us when we need their help.
    Ms. Brown-Waite. Could you just give us an idea of the 
number of felons that have been identified through this 
process?
    Mr. O'Neill. Yes. Actually, I looked it up. As of September 
30th, we had identified 26,763 VA beneficiaries who were 
identified as having an active felony warrant. Once we identify 
them, of course, the information is passed on to the warrant 
holders.
    We also pass on the information to comply with the law to 
VBA who would cease monetary benefits after due process and to 
VHA to let them know they do not have to provide anything but 
emergency medical care.
    Then both VHA and VBA identify the amount that has been 
spent, and we provide them the data to do this, from the time 
the individual was a fugitive felon. There is a start date on 
that statute. I forget it now. But if it falls within that 
statute, we identify that date so that they can initiate 
recovery because the law allows VA to recover the money.
    Ms. Brown-Waite. I know my time has expired, but one quick 
question----
    Mr. Mitchell. Sure.
    Ms. Brown-Waite [continuing]. Mr. Chairman, if you will 
indulge me. How many felons have you found actually as 
employees of the VA? And I hate to ask that question, but while 
we are talking about felons, we might as well get it all out 
here.
    Mr. O'Neill. Well, I cannot answer how many felons are in 
VA, but we have identified 154 fugitive felons. We are not 
doing background checks. We are doing wanted person checks in 
NCIC and in all the databases we have access to.
    So we did identify 154 employees. Ninety-six have been 
arrested. The remainder were not arrested for a variety of 
reasons. The warrant holder does not want to pay for 
extradition, so the employee is encouraged to go satisfy the 
warrant, clear up the problem, or occasionally we will find out 
that actually it was a misdemeanor. It was reported improperly 
to NCIC or whatever. So that would account for the remainder.
    Ms. Brown-Waite. Thank you.
    Thank you, sir, for indulging me.
    Mr. Mitchell. Thank you.
    Mr. Rodriguez.
    Mr. Rodriguez. Thank you very much, Mr. Chairman.
    And let me just continue to follow up. I am curious. You 
said you had 26,000 felons. And how do I say this? What 
percentage of that has to do with drug related?
    Mr. O'Neill. Well, sir, I would----
    Mr. Rodriguez. You do not know?
    Mr. O'Neill. I would not hazard a guess because we have not 
quantified that. However, I can tell you that a lot of the 
warrants are for probation and parole violations which, in 
essence, is a felony, but we do not necessarily always know the 
predicate offense.
    Mr. Rodriguez. You do not know the reason. Okay. Because I 
know that in prison, we have about 80 percent are due to drug 
related, and a large number of our veterans, especially Vietnam 
veterans--I do not want to stereotype--but a lot of them, you 
know, were, I know, engaged in drugs. And I kind of have a----
    Mr. O'Neill. Well, I can tell you this, sir, that we have 
arrested, I recall, someone on the Tennessee ten most wanted 
list. We have had murderers, sexual predators, child sexual 
rapists. We have a lot of violent predators that we caused to 
be arrested.
    I probably did not say this, but we have confirmed with the 
law enforcement agencies who are the warrant holders that 1,294 
fugitive felons have been arrested based upon the information 
we provided them. Now, we expect that number is much higher 
because it is a self-reporting mechanism where they tell us 
that our data helped them arrest. So we actually think it is 
higher.
    Mr. Rodriguez. Twelve hundred over what, a year or----
    Mr. O'Neill. Oh, no. This would be from the beginning of 
the program, 1,294.
    Mr. Rodriguez. Okay. Which is how long?
    Mr. O'Neill. I would say it was about--I did not bring the 
beginning date, but it was about 2002 or 2003.
    Mr. Rodriguez. Okay. So it has been 4 years, about 1,200 
people. So the other 26,000 were others? It was not any of your 
doing?
    Mr. O'Neill. Pardon me, sir?
    Mr. Rodriguez. You said 1,200 were as a result of your 
work. And so I gather the other 20 something thousand was not?
    Mr. O'Neill. Well, we do not know what happened to the 
remainder, whether they were arrested, whether they were 
arrested before we even forwarded the information that we had, 
or whether they were arrested based upon our information. But 
the departments have not told us.
    Mr. Rodriguez. Thank you.
    I was going to ask regarding the audit if that is okay. On 
the audit, and I have not seen it and I apologize, you know, 
and I do not even know if we have it before us, but on the 
audit report that you have, I know I get a lot of complaints 
about vacancies that have not been filled. Is that reflective 
on the audit in terms of----
    Mr. Opfer. I am not sure, Congressman, I understand which 
particular audit you are referring to.
    Mr. Rodriguez. I gather you do an audit of the VA?
    Mr. Opfer. We do a series of audits, some of them in the 
program offices and various things.
    Mr. Rodriguez. Staffing, you know.
    Mr. Opfer. Dr. Daigh did one on staffing.
    Mr. Rodriguez. Okay. Because I keep getting reports of the 
number of vacancies that are carried, I guess for the purposes 
of the budget, but a live person is not there.
    Dr. Daigh. Sir, I am not aware that we publish vacancies 
not filled. But if you are talking about management of human 
capital, we are very interested in that. For instance, we have 
aggressively advocated that VHA develop standards so that they 
know how many doctors and nurses they should employ, and I 
believe that one of the initiatives that audit has under 
proposal here would be to look at human capital and see how 
VISNs are staffed and see what the staffing relationships are 
throughout VA.
    So I cannot directly answer your question in terms of human 
capital management, we are very interested in that.
    Mr. Rodriguez. Okay. How do you assess whether what is 
being said is actually occurring?
    Dr. Daigh. With respect to?
    Mr. Rodriguez. Staffing.
    Dr. Daigh. Yes, sir.
    Mr. Rodriguez. I was a school board member, and one of the 
ways they packed the budget was on staffing. They said we are 
going to have 150 teachers when in reality, they only had 125 
or whatever. And they used that other money for something else. 
I am sorry. I do not know how bluntly I could put it.
    Dr. Daigh. Yes, sir. We believe that manpower costs are a 
significant driver for the cost of delivering healthcare, among 
other things, and we believe that VHA needs to develop 
standards for how many specialists and nurses they would like 
to hire.
    VA has made tremendous progress in determining how many 
primary care providers they should have by determining a panel 
size so that they would have one family practice or internal 
medicine physician per 1,200 patients or a number that is 
reasonable. But they have made much less progress in 
determining subspecialty provider standards.
    In our reports, we have pushed VHA to produce those 
standards. And we believe that with respect to radiologists, 
they are nearing production of a standard for radiologists and 
that they have done a great amount of work to develop standards 
for other specialties.
    Mr. Rodriguez. So I gather we have some of that data 
already available, and how much work is being done with the 
number of staff that they have now?
    Dr. Daigh. We are currently not doing a great deal of work 
on seeing whether the numbers are appropriate because we are 
trying to get VHA to agree on what the appropriate ratio 
between patients and staffing should be so that we could agree 
on how many people they should employ.
    Mr. Rodriguez. Okay. But I gather you do not see that as an 
area of difficulty or a problem?
    Dr. Daigh. We do see that as an area of difficulty and both 
with respect to administration of VISNs and with respect to the 
number of nurses and physicians that they need to employ. We 
think it is imperative that these staffing standards be 
developed and adhered to.
    Mr. Rodriguez. So who checks on them if you are not doing 
it? Is the GAO the ones who check on that for hospital 
standards or stuff like that, for existing standards now that 
exist out there for accreditation of hospitals and clinics?
    Dr. Daigh. My group goes to each of the 150, thereabout, 
major medical facilities on a 3-year schedule. And we devote 
most of our energies to assuring that processes are in place to 
ensure that veterans get quality healthcare, that peer review 
is ongoing, that other fundamental administrative processes 
occur so that if an error occurs in the hospital, the hospital 
will react appropriately to that.
    Mr. Rodriguez. But are there not some set standards already 
for hospitals that exist out there, and are we close to any of 
those standards? There has got to be some degree of 
accreditation in cer- 
tain hospitals already, national standards? Do we go by those at
 all?
    Dr. Daigh. JCAHO accredits hospitals, and that would be an 
organization different than ours. And we apply some JCAHO 
standards to the work we do. The standards that we normally try 
to apply are VA's policies that they have agreed to and then 
there are standards for healthcare outcomes that have been 
promulgated by entities outside of the VA.
    Mr. Rodriguez. How do we compare, I guess if we are going 
to look at our hospitals for the VA, how do we compare our 
hospitals in comparison to other hospitals that exist in the 
country?
    Dr. Daigh. Well, one example that we have published that is 
important is our efforts to look at specific outcomes. The VA 
has held as a standard that they would screen for colon cancer 
72 percent 
of the patients enrolled to their facilities. We checked that st
andard.
    What we did was we looked at how many patients were 
actually diagnosed with colon cancer, looked at the medical 
records, and went backward and determined that, yes, they did 
screen 72 percent of the patients or actually better than that. 
In our review, they screened 90 percent of the patients.
    The problem was the time to make a diagnosis of colon 
cancer was way too long, in the order of months. We reported 
that data both by facility during our CAP reports and we rolled 
that data up and reported to VHA and the stakeholders in the 
summary report.
    And VHA is now making significant strides to decrease the 
time between screening for colon cancer and then making a 
diagnosis of colon cancer. So we have tried to take existing 
standards and explore VHA's compliance with those standards.
    Mr. Rodriguez. Okay.
    Mr. Mitchell. Thank you, Mr. Rodriguez.
    Ms. Brown-Waite.
    Ms. Brown-Waite. Thank you, Mr. Chairman.
    I have a report, the semiannual report to Congress that was 
done September 2006. And in it, it lists reports that have been 
unimplemented for over a year.
    Some of these, having been on this Committee, this is my 
fifth year on the Committee, and, Mr. Rodriguez, you have been 
on the Committee, too, I am sure some of these will sound 
familiar to you, things such as the audit of the part-time 
physician time and attendance, only this shows nine out of 
seventeen recommendations have been implemented.
    An issue real close to me is the issue at the VA Medical 
Center in Bay Pines. Not all of the recommendations have been 
implemented. This relates to the CoreFLS System. When you make 
these recommendations, and they are not implemented, can we 
cost that out? In other words, when they do not implement 
these, I know Congress stays on them, which is one of the 
reasons why we ask for this report. But have you ever been able 
to quantify when they do not implement them?
    Mr. Opfer. Congresswoman, you are right. The ``IG Act'' 
requires us to list the recommendations not implemented within 
a year in our semiannual reports and the last report, I think 
we listed 22 reports with, I believe, 77 recommendations that 
were more than a year old. I think one recommendation was over 
4 years old and eleven were over three.
    The consequence, I believe, of not implementing these OIG 
recommendations in a timely manner can be significant. I think 
you have a problem then in your projected cost savings, what 
could have been achieved during that period when they are not 
implementing the recommendations. Inefficiencies still continue 
to go unresolved. Poor services to the veterans can be 
perpetuated.
    To address this a little bit more robustly in our office, 
because, as you know, we only can issue the recommendations, I 
am looking at our own followup procedure. My goal is not to 
accept any response from the Department as far as our 
recommendations if the implementation plan is over a year. When 
they respond to our recommendations, if the implementation plan 
will be taking over a year, we are going to be pushing back 
very strongly to make sure there is justification why it would 
take over a year.
    Also, I think we want to start doing a quarterly followup 
within the IG Office of looking at the recommendations, where 
the agency is in achieving the recommendations. I think we need 
to be a little more aggressive too.
    If we feel one of the program offices, no matter what level 
that it is, if we really have a sincere belief that they are 
deliberately not implementing our recommendation or stalling, 
then I believe I need to elevate that to the Deputy Secretary 
and the Secretary.
    Also, we just met, my staff met with one of our program 
offices. For example, if it is an audit recommendation or a 
healthcare recommendation, that would be the two primary ones, 
that they will become more involved in reviewing what the 
Department says they are implementing to make sure we are doing 
some verification that it has truly been implemented.
    But we have to do this with the existing resources, both 
ratcheting up to the Deputy Secretary level and possibly the 
Secretary level, and also having the program officers that know 
the issues being more engaged with the Department in looking at 
what they are doing to implement those recommendations.
    Ms. Brown-Waite. And certainly, if you have your staff cut 
you will never be able to do it, absolutely never be able to 
follow up on these.
    But I think it is incumbent on the Committee Members here 
also to take a look at these reports and let the Secretary and 
Under Secretary know that these are serious--I do not want to 
call them flaws--but they are serious problems that need to be 
remedied.
    Mr. Opfer. I agree. My experience in the IG community has 
been since 1994, serving as an Inspector General to different 
agencies. And I have always found that when Congress weighs in, 
the Committees with the agencies, the IG reports are taken much 
more seriously.
    Mr. Mitchell. Thank you. I have one question.
    The IG has been very critical of VA's compliance with the 
``Federal Information Security Management Act.'' And it has 
reported on FISMA's weakness and vulnerability since 2001.
    In May of 2006, the VA eventually reported a loss of 
information of our veterans that had the potential to 
compromise millions of veterans' identities. And in 2007, at 
Birmingham there was another incident involving lost data.
    Two questions on this. First, how does the VA react to your 
recommendations and what other areas of concerns besides FISMA 
and information security has the IG made recommendations that 
are not being followed?
    Mr. Opfer. Certainly. And I will give part of this answer 
on the FISMA to my AIG for audit.
    But in the area of IT security, I think that they are 
trying to address the issues, but you had a culture established 
for years. And we have some leadership problems, not at the 
main VA, but leadership and accountability and responsibility 
has to be put down at the hospital level, all the facilities. 
They have to take ownership. There has to be responsibility.
    If you have sensitive data, you need to be responsible for 
how you control that data. They are implementing policies and 
procedures. But, again, for instance, you would need 
independent oversight.
    But issuing policies and procedures does not necessarily 
get to the root of the problem. You have to go out and verify 
whether they are being fully implemented, are they being 
complied, and if not, are you taking appropriate action against 
the people. It is a cultural change that we need to do in VA.
    As far as the FISMA, I would like Belinda to expand on that 
answer a little bit.
    Ms. Finn. We are currently finalizing our 2006 report on 
FISMA. In that report, we did a followup on earlier issues and 
also reported some new problems that the Department needed to 
address.
    They have been responding very positively to our findings 
in that they have issued, as Mr. Opfer said, policies and 
procedures. The problem is ensuring compliance of the policies 
and procedures. It is not automatic as we have seen from recent 
events. A policy on encrypting a hard drive does not 
necessarily mean that all the hard drives are encrypted.
    We have a number of recommendations to the Department 
dealing with access controls and system controls. Most of that 
report is not published in the public domain, so we probably 
need to talk separately.
    Other areas that we are looking at, actually right now, we 
are focusing most of our IT efforts on our work related to the 
financial statement audit and the FISMA. So we really do not 
have a lot of other results that we can talk about.
    We would certainly like to do more audit work looking at 
actual compliance. We would like to look at controls over 
removable media. We would like to evaluate all the implementing 
instructions and how they have been complied with.
    Mr. Mitchell. Thank you.
    It sounds to me, in both the questions that Ms. Brown-Waite 
asked and I asked, it is one thing to offer some suggestions 
and procedures, but it is another thing to be able to follow 
up. And that seems to be the crux of all of this.
    Let me just ask hypothetically. Would you be able to absorb 
200 FTEs in 2008 and if you could, how long would it take for 
them to be productive?
    Mr. Opfer. If we received an increase of that size, I think 
we could absorb 200 FTEs. What we would try to do is an 
aggressive recruitment at the journey-level both from the 
auditors and investigators and healthcare inspectors so you can 
bring them in with very little training in our programs and 
start being productive.
    Conceptually, we have the initiatives, as I outlined in my 
statement, where we would use those people. Recruiting should 
not be a hard issue.
    About two years ago in our Office of Investigation, just 
for two 1811 positions in our Washington office, we had over 50 
experienced agents from the FBI, Secret Service, and other OIGs 
apply for those positions. These are highly-qualified 
individuals. When we put out an announcement for entry-level 
positions, they had over a thousand responses.
    The mission of VA is something that people like, paying 
back, helping the veterans who deserve the help. And it is not 
me. I am the new guy in town. The Office of Inspector General 
in VA has an outstanding reputation in the IG community and has 
received a number of awards from the President's Council on 
Integrity and Efficiency for investigations, healthcare 
inspections, and audits. This is prior to my watch, so I am not 
tooting my horn.
    In healthcare, Dr. Daigh has a unique responsibility. I am 
the only IG's Office that has a healthcare inspection unit that 
has an actual medical professional staff. We have done a great 
job at being proactive, looking at things. Dr. Daigh has 
brought in extremely talented people.
    I do not think that we would have a hard time recruiting 
the people. I think almost as they walk in the door, we will 
get increased monetary returns. Certainly they would at least 
pay for themselves and certainly in the out years, the second 
year, I think you would see tremendous increases that they 
would be able to produce for us.
    Mr. Mitchell. Thank you.
    I am going to ask Mr. Rodriguez if he has a question, but 
at the same time, I hope you will excuse me. I have got to go.
    And I turn it over to you, and thank you very much.
    Mr. Rodriguez [presiding]. Thank you.
    Let me ask you. I think in your report, you had talked 
about some of the areas where you felt you were lacking or you 
could do a little bit better. And one of them was looking at 
mental health; is that correct?
    Dr. Daigh. Yes, sir. If I could comment a minute. I think 
the returning war veterans, that mental health issues are among 
the highest priority issues that they face. My primary mission, 
as I stated, is to ensure the veterans get quality healthcare. 
And most of my resources are consumed in trying to do that for 
the 150 something hospitals that VA has.
    Veteran mental health issues, in order to address it in a 
way that I think will bring satisfactory results, I think, 
requires us to take a more in-depth look at the care actually 
provided at the sites where healthcare should be provided.
    So what I propose that we should do is to look at outcomes 
of patients who were treated at individual facilities, sit down 
and talk about the outcomes for those patients with the 
physicians at those facilities, report our findings as to 
whether the care was appropriate or not in our cap reports, and 
then roll up additional data that we uncover as we look at 
systematic issues in the mental health spectrum across the 
system and national reports to give data that would be helpful 
in addressing national policies.
    I would also point out that there are 800 CBOCs roughly and 
200 vet centers, each of which has a mission in providing 
mental health activities and care for veterans away from 
veterans' medical centers.
    Mr. Rodriguez. I have been getting reports of the needs of 
some of the family members. And I do not know. Do we have to do 
something for the family members to get service now or are they 
entitled to services?
    I am not aware. That is why I am asking, because I was 
hearing about the young people that are--in fact, there were, I 
think, possible suicides on the part of family members of 
veterans.
    Dr. Daigh. Yes, sir. That is a complex issue. We recently 
published a report on traumatic brain-injured veterans who 
fought in Iraq or Afghanistan. And in that report, we 
highlighted the fact that medical care after discharge from the 
VA and more importantly supportive care after veterans are 
discharged from the VA, if you live distant from a major 
medical center can be problematic. We are continuing to follow 
up on that issue.
    The specific issue that you address, I think, relates to 
the different status of different folks who leave DoD. For 
instance, a Reservist might be in a different status than a 
National Guard Member who might be in a different status from 
an active duty who all might leave under different 
circumstances.
    We are currently exploring this issue in a current study 
looking at the benefits that are available to individuals 
depending on their status when they leave DoD. So I think that 
is a very complex question to answer in terms of what an 
individual is entitled to.
    A simple example might be with respect to healthcare is 
that some individuals might leave with TRICARE healthcare 
benefits. Some individuals might leave with VA healthcare 
benefits. Some individuals might leave with neither. Some might 
leave with both. So that complexity exists all across the 
benefit spectrum for individuals who are veterans.
    Mr. Rodriguez. In your report, you also talk about the 
material weaknesses that need correcting in the area of 
procurement. And you mention also since 2001, they have 
recommended more than two billion in potential cost savings by 
contracting officers negotiating fair or reasonable prices.
    Let me ask you, especially because I know we highlighted 
the negotiations with the pharmaceutical companies on 
prescription drug coverage, but there was also a report that 
came out by the organization ``Families USA'' where--and I am 
curious to know if the pharmaceutical companies, because I know 
that that report indicated that they upped the prices prior to 
us moving on the Medicare piece of legislation 2 years ago, and 
whether there has been any major changes in that area or 
whether the negotiations on the part of the VA have been, you 
know, somewhat positive or, you know, how those costs have 
changed. Have you looked at that at all?
    Ms. Regan. We have a group called the Office of Contract 
Review and they do the pre-award audits for all the 
pharmaceutical contracts and the Med-Surge contracts awarded by 
the National Acquisition Center. So these are going to be your 
Federal supply schedule contracts.
    Part of that, in answer to your question, is going to be it 
depends on when they had their contract awarded. If it is a 
covered drug, which is, I think, more of what you are talking 
about, the ``Veterans Healthcare Act'' had a ceiling price for 
drugs that are on the Federal supply schedule that VA, 
Department of Defense, Coast Guard, and Public Health Service 
can buy from.
    If their contract has been awarded, they can only go up a 
certain percentage every year depending on the CPIU. If it is a 
new contract, they can renegotiate the price.
    I do not think I have seen what I would call a significant 
increase across the board in pricing. A lot of the pricing 
depends on competition. And so you may see it go down, but we 
have not seen where the prices have gone up significantly in 
order to verify the statement that you heard.
    Mr. Rodriguez. Thank you.
    Make sure we get some additional questions right in. Okay? 
Does the VA have adequate legal contracting oversight for its 
portfolio of contracts? Excuse me. Ms. Regan.
    Ms. Regan. I think at the field facilities, they could 
probably use more support in contracting. A lot of times, they 
do a lot of scarce medical specialist contracts, contracts for 
specialists, for physicians. And they get into negotiations 
where the university is represented by counsel, but there is no 
counsel--there is not a sufficient number of attorneys to help 
the VA in the same negotiations to work day to day with them. 
So with the number of contracts that are out in the field, they 
could use more contract attorneys working directly with them.
    Mr. Rodriguez. So we do not have them at the present time 
then?
    Ms. Regan. No. There is not a sufficient amount of 
attorneys to do that work. It is very specialized.
    Mr. Rodriguez. Okay. Thank you.
    And let me just as we are talking about--I was in the San 
Antonio community, and we had moved on a clinic there. And I 
was told that our staff there was pretty good at that aspect of 
it in terms of looking at that--but that that was not 
necessarily the case in the main office.
    So I was wondering from a perspective of the agency, does 
it rely mainly on the local hospitals out there or the local 
states to follow through or, you know, is there some lack of 
expertise in the agency that needs to be beefed up in certain 
areas?
    I know we just mentioned legal, but are there other areas 
that, you know, in terms of either, housing and other types of 
contracts that need to be looked at or----
    Ms. Regan. Are you talking about just on the contracting 
side?
    Mr. Rodriguez. Yes, the contracting side and also--because 
I know that on clinics now, we are not purchasing facilities. 
We are basically contracting out and moving in. That is my 
understanding, or am I wrong?
    Ms. Regan. I am not sure if I can answer that question. I 
have not seen enough of that.
    Mr. Rodriguez. Okay. So I gather, because I was told that 
the agency still did not have the expertise in some of those 
specific areas.
    Are there areas where we really need to beef up on the 
expertise of the agency for procurement and those kind of 
things and contracting?
    Mr. Opfer. I think we have issued a number of reports on 
procurement and have been very critical of the whole 
procurement process. And that is one of the initiatives that we 
have. I think if we had additional resources, we certainly 
would want to go into that. That is a big ticket item for the 
agency.
    And I think within the last couple of months, we have 
issued at least three or four reports that are very critical of 
the procurement processes within the agency, and it is not in 
one area.
    Mr. Rodriguez. Have you found them to follow through on 
that or what is lacking there from your perspective?
    Ms. Regan. I think at this point, we have issued a number 
of reports on major contracts that were issued, particularly 
for IT services in which there were a number of problems.
    What we are in the process of doing now is to take the work 
over the last couple years and kind of look for the trends that 
were in there, and we plan on issuing a report that looks at 
the overall problems and where we found problems consistently 
throughout these contracts. And those would be large contracts 
awarded at the central office level.
    We have put out reports in the past about buying practices 
at facilities in 2001, resulted in a Procurement Reform Task 
Force, and they have a buying hierarchy now to leverage our 
buying power at the facility level.
    We have not been able to go out and--we have not had the 
resources to go out and look at how compliant, whether or not 
it is being complied with and how it has affected spending.
    With the healthcare resource for physicians, we wrapped all 
that work up last year. I guess it was in 2005. They put out a 
new directive and made people more accountable to do better 
contracting. They actually have steps in there they are 
supposed to use, including looking at their resources and what 
resources do I actually need.
    And, again, that is another issue that audit would like to 
go out and look at, to look at the implementation of that 
policy and how it has affected healthcare and contracting.
    Mr. Rodriguez. Let me yield to my colleague.
    Ms. Brown-Waite. I was just going to ask if you would be 
kind enough to yield, Mr. Chairman.
    I have a constituent waiting for me up in my office, and I 
am going to have to leave. But one question along the lines 
that the Chairman was asking.
    Tell me about the Unisys contract, that they were paid $20 
million so that you could get out of the contract with no 
deliverables. Is that accurate?
    Ms. Regan. We looked at the Unisys contract at the time 
where it had been determined, I think by both parties, that it 
was not working and they needed to end the relationship. And 
the issue we were asked to look at was what was the best way 
for the VA to get out of it or what was in the best interest.
    Did they have a right to terminate for cause because Unisys 
did not deliver the product during the deadlines that were set 
in the contract or was it in the government's best interest to 
buy the product that had been developed thus far and that had 
not been accepted by the VA for payment?
    We determined at that time there was grounds to terminate 
for cause under the commercial item provisions in the Federal 
acquisition regs. But VA felt very strongly that the project 
was moving along, that they had several of the deliverables, or 
I think they called them iterations, but they were deliverables 
that were almost complete that they wanted to buy and not have 
to start over again.
    The settlement that was recommended was to pay 
approximately $8.5 million, which was the percentage of work 
done, and then the rest of the money was supposed to be for 
travel if Unisys submitted appropriate documentation to support 
the travel.
    They settled for $9.5 and bought the product. And then I 
understand some of the travel has been paid, but I have not 
seen any documentation on it.
    We did check the product. We had one of our experts, and he 
said it was a good product and was moving along. We looked at 
all the program records. At the time, we thought that we were 
going to complete the product. I think there have been $16.7 
million that was paid before this point in time and we accepted 
deliverables. So it was only another $12 million to settle it.
    Ms. Brown-Waite. So $16.7 million. That does not include 
the $12 million?
    Ms. Regan. Right. It is about $30 million all together. 
Sixteen point seven million dollars had been paid over time for 
deliverables that had been accepted during various parts of the 
development of the program.
    Ms. Brown-Waite. And the project, I am told, does not work. 
Is this another CoreFLS System?
    Ms. Regan. We understood that the project is not complete 
and that at the time we made our recommendation, which was in 
September, that the agency was going to hire a contractor to 
complete it with the work that had been turned over or 
purchased from Unisys. At the time we issued our report, a 
decision had been made that it was not going to be completed 
because of funding issues.
    Ms. Brown-Waite. I would like to have some followup on that 
issue, not here. My time has expired. I do have a constituent 
waiting. But I would like to followup with you on that. And Mr. 
Wu will be in touch with you.
    Ms. Regan. Okay. Thank you.
    Ms. Brown-Waite. Thank you.
    Mr. Rodriguez. You talked in your presentation about 
needing some additional resources commensurate on the changes 
and the challenges in your packet. Also information management 
mentioned the need for additional oversight that was needed and 
especially on information technology and information security 
and that you still had not done some of the audits. That is 
because they are being done now or because you need additional 
resources in order to pull that off?
    Ms. Finn. We actually had to cancel two planned audits in 
the information technology area, so we are not going to be able 
to do those.
    Mr. Rodriguez. And the reasons why?
    Ms. Finn. Because we did not have enough resources.
    Mr. Rodriguez. Okay. And what kind of resources do you need 
in order to pull off, you know--for example, those audits were 
for what? Was it comprehensive in nature or just some site 
assessments?
    Ms. Finn. No. They were specific topics and how VA was 
handling specific--one of them was information exchange with 
the Department of Defense.
    Mr. Rodriguez. That is critical.
    Ms. Finn. Yes. These are critical areas.
    Mr. Rodriguez. Do we have a system now because I know I 
have had people come to me, and one of them was--I guess I'll 
mention him--Dr. Weiss, who keeps talking to me for the last 2 
years that he has got this data where we can follow through on 
people because we had talked about a technology that we could 
follow through as they left the military and we could grasp 
that data and have that information and so that that would not 
be duplication.
    Have we kind of come together with that or are we still 
working on that?
    Dr. Daigh. Sir, I cannot give you a comprehensive answer, 
but I will say that in a report we did at Tampa on the death of 
a Marine a couple of years ago, maybe a year and a half ago, we 
found the transfer of medical records between DoD and VA at 
that facility was a significant problem.
    We followed up that inspection by revisiting in an 
unannounced fashion about a year later, and we found that they 
had made significant progress in providing records from DoD to 
the VA.
    We also found that the larger problem was probably in 
getting records from civilian sites where the transfer between 
the DoD site, which has an electronic record, and the VA had 
improved, but from the civilian side, it was not so good.
    On the computerized patient record that we have on our 
desk, we can see, when we click on patients, we can see that 
one can get access to DoD data. It is not always there and it 
does not right now cover everyone. But we have seen progress in 
this area over time.
    Mr. Rodriguez. But what do we need to do legislatively that 
might--because I thought we had already worked on that for a 
few years to try to streamline that process so when a soldier 
left into the veteran status that instead of redoing 
everything, that we could just follow through and maybe get 
some of that data. Is that occurring or is there something that 
we can still do legislatively to make that happen?
    Dr. Daigh. Sir, I am not an expert really in electronic 
medical records. I have seen where there is--it has been an 
ongoing effort, and I am as frustrated as from your question I 
take you are that there is not a seamless movement of records 
between the systems.
    Mr. Rodriguez. But it is apparent that you do not have 
enough resources to do those audits anyway. Is that correct?
    Dr. Daigh. That would be correct, sir.
    Ms. Finn. That is correct right now.
    Mr. Rodriguez. Okay. And so you are asking for what, 
additional----
    Mr. Opfer. We really were not asking for specific numbers. 
We put out initiatives that we thought should be considered.
    Mr. Rodriguez. Considered as you do the assessments?
    Mr. Opfer. Right. And I think on the medical records, that 
probably would be a good question that VHA could probably give 
you a status of where they are in dealing with DoD. I think Dr. 
Kussman would be the right one to give you a response for the 
agency. I know that they have had discussions with DoD. I, 
quite frankly, do not know what level or where they are on that 
project.
    Mr. Rodriguez. You also mentioned a need to--well, I think 
was it the procurement aspect of it and then the IT aspect of 
it? Any other areas that you feel that there might be some gaps 
upon looking and reviewing?
    Dr. Daigh. Yes, sir. I think there is one area that would 
benefit from improved oversight and that would be VHA's 
research program, which is currently about $1.6 billion between 
appropriated moneys from the VA, NIH, and then non-appropriated 
moneys.
    There are about 2,500 FTE involved in the VHA research 
community. There are about 85 nonprofits. There are about 150 
some odd medical centers, about 85 nonprofits who exist to hold 
moneys for research efforts by VA physicians, many of whom hold 
appointments at affiliated medical centers.
    Mr. Rodriguez. How many nonprofits?
    Dr. Daigh. There are about 92, I believe, authorized, about 
85 active. And that data is--I can update it exactly, but it is 
in the current budget.
    Mr. Rodriguez. And who looks at those nonprofits?
    Dr. Daigh. Sir, the Board of Directors for the nonprofits 
is in large measure comprised of individuals who work at the 
VA. So the Director and the ACOS for research and others are, 
by large measure.
    Mr. Rodriguez. Do you have the authority to oversee those 
nonprofits, I guess?
    Dr. Daigh. We do.
    Mr. Rodriguez. Okay. Have you looked at any of those?
    Dr. Daigh. Yes, sir. Well, the healthcare inspections have 
published two reports recently. We have other ongoing work that 
will be published soon. And I believe that there are issues 
with respect to human protections, conflict of interest, 
management of moneys, animal protections, and radiation safety.
    Many of the research efforts require the use of radioactive 
materials, some of which is at very low level, but nevertheless 
requires compliance with rules and regulations. And I believe 
from the work, we have done that, whereas in the healthcare 
side of VHA, I think that physicians and providers are used to 
making the right decision about providing healthcare and they 
understand what the risks are, and they are careful in a way 
that we all have come to expect.
    And from what I have seen from the body of the work this 
year on the research side, I think the researchers are too 
aggressively trying to get their research accomplished and too 
quick to sidestep some of the policies that are in place. At 
the senior level management, one would much prefer that they 
took the time to do things exactly correctly and delay the work 
if that is required and not sidestep appropriate policy.
    Mr. Rodriguez. And I agree with you. I think that there is 
a lot, and I think we are seeing that now, a lot more research 
coming out that is basically funded by the same people that 
might be impacted by the results.
    I would hope that we would have an opportunity to look at 
that a little closer, especially within our system, and 
hopefully we will not have it, because I know we have that in 
the private sector a lot. And that is an area of serious 
concern. I know because that impacts directly in terms of 
certain types of approaches or medications or, diagnoses or, 
other things that are utilized.
    If there are no other questions, then do any of you have 
any comments? You have the last word.
    Mr. Opfer. No, Congressman. Thank you very much. I 
appreciate the opportunity to appear here. And I have had the 
opportunity for about 15 months here of working very closely 
with the staff and this Committee, and it has been a very 
productive and open and very candid relationship.
    And I do appreciate the interest that the Committee Members 
and the Committee staff have expressed in the work of the 
Office of the Inspector General. So on behalf of our staff, I 
would like to say thank you for your interest in our work.
    Mr. Rodriguez. Well, thank you very much.
    You did not want to give me a last figure for how much you 
need? I am an appropriator.
    Mr. Opfer. I will take anything you give me.
    Mr. Rodriguez. Okay. Thank you, sir. Thank you very much.
    Mr. Opfer. All right. Thank you.
    [Whereupon, at 4:15 p.m., the Subcommittee was adjourned.]

                           A P P E N D I X

                              ----------                              

              Prepared Statement of Hon. Harry E. Mitchell
         Chairman, Subcommittee on Oversight and Investigations
    I would like to begin today by welcoming our new Members from both 
sides of the aisle, welcoming our witnesses, and our guests.
    This is our first Oversight Subcommittee hearing of the 110th 
Congress. Today, the VA Inspector General will provide an assessment of 
issues, problems, and best practices at VA. We may also look for 
avenues in which this Subcommittee can help the Inspector General to 
better do his job. Thus far, it looks like his team is doing a great 
job with the resources allotted.
    This Subcommittee has a long history of working with the VA 
Inspector General. They are the first stop, the first call so-to-speak, 
when our Subcommittee needs a first-hand assessment from a field 
location or regarding operations at VA's Central Office.
    I have asked the Inspector General to be accompanied by staff 
experts in audit, contracting, healthcare and investigations. I am 
interested in their views--as honest brokers--as to how the VA, as a 
very large Federal organization, is doing.
    This topic and this hearing are our place to start our oversight 
assessment of VA. The IG has significant knowledge and recent hands-on 
experience in matters that impact VA. I would stress that we do not 
only want to hear about what VA is doing wrong--we want to hear about 
what it is doing right--we want to hear about best practices at VA and 
we want to do what we can to see those best practices grow and 
multiply.
    The best situation is when VA is proactive and identifies and 
solves potential problems before they become real problems. We all 
strive to be proactive, but all too often we end up just being 
reactive.
    Of necessity, we may do both on this Subcommittee, but we will 
strive to be proactive as often as practicable.
    I will now ask my colleague and Ranking Republican Member, Ms. 
Ginny Brown-Waite if she has opening comments. I look forward to 
working with her during these next 2 years.
    I recognize Ms. Brown-Waite for opening remarks.

                                 
   Prepared Statement of Hon. Ginny Brown-Waite, Ranking Republican 
          Member, Subcommittee on Oversight and Investigations
    Thank you, Mr. Chairman, for yielding.
    This is the first Subcommittee hearing for the Subcommittee on 
Oversight and Investigations, and I appreciate the Inspector General 
coming in to testify before this Subcommittee regarding the President's 
proposed budget for FY 2008, as it relates to the Office of the 
Inspector General.
    The VA's Office of Inspector General (OIG) is responsible for the 
audit, investigation, and inspection of all VA programs and operations. 
Given the recent demand for greater accountability within all the 
business lines at the VA, I am sure that the workload within the Office 
of Inspector General has increased significantly in the past year.
    Therefore, I find the budget before us very disconcerting, in that 
the amount the Administration has requested for the Office of the 
Inspector General is $72.6 million, and allows for 445 Full Time 
Equivalent Employees (FTEE) to support the activities of the OIG. 
During FY 2006, OIG identified over $900 million in monetary benefits, 
for a return of $12 for every dollar expended on OIG oversight.
    The OIG closed 652 investigations, made 712 arrests, 344 
indictments, 214 criminal complaints, 316 convictions, and 833 
administrative sanctions. My understanding is that the requested 
funding level would result in a reduction of 40 FTEE from current 
staffing levels.
    I am concerned that the funding levels the Administration is 
requesting may not be sufficient to continue the work that is currently 
being performed by the OIG, and I look forward to hearing Mr. Opfer 
testify on this matter, as well as others.
    Again, thank you, Mr. Chairman, for yielding.

                                 
              Prepared Statement of Hon. George J. Opfer,
         Inspector General, U.S. Department of Veterans Affairs

INTRODUCTION
    Mr. Chairman and Members of the Subcommittee, I am pleased to be 
here today to address the Office of Inspector General's (OIG's) 
oversight efforts in terms of issues, problems, and best practices at 
the Department of Veterans Affairs (VA). We provide independent 
oversight that addresses mission-critical activities and programs in 
healthcare delivery, benefits processing, financial management, 
procurement practices, and information management. We plan our work in 
each of these strategic areas, which are aligned with the Department's 
strategic goals.
    Today, I will present to you my observations of OIG's overall 
impact since 2001, and the challenges we face in providing effective 
oversight of the second largest Cabinet level Department to ensure it 
effectively carries out its mission of serving America's veterans. We 
have accomplished much, but there is much more we can do.
    With me today are the Assistant Inspectors General (AIGs) for 
Investigations, Audit, and Healthcare Inspections; and the Counselor to 
the Inspector General, who will answer questions about their specific 
programs. The AIGs conduct criminal and administrative investigations, 
national audits, healthcare inspections, and other reviews in the five 
strategic areas. For fiscal year (FY) 2007, the proposed joint 
resolution provides the OIG funding to support 445 full-time 
equivalents (FTE) from appropriations. This is a reduction of 40 FTE 
from the previous year. Our Office of Contract Review performs preaward 
and postaward reviews under a reimbursable agreement with VA, which 
funds an additional 25 FTE. These reviews of VA contracts produce 
significant recoveries to the VA Supply Fund, as well as many 
improvements in processes and practices in the procurement arena.
RETURN ON INVESTMENT
    In the 6-year period FY 2001-2006, OIG delivered a return on 
investment of $31 for every dollar invested in OIG operations. We 
produced $11.6 billion in monetary benefits from recommended better use 
of funds, savings, costs avoidances, recoveries, questioned costs, 
restitutions, and civil judgments. We issued 1,169 audit and inspection 
reports with 6,601 recommendations to improve services to veterans and 
to improve the economy and efficiency of VA programs, operations, and 
facilities. Almost 90 percent of these recommendations have been 
implemented by VA to date. OIG also completed almost 15,000 
investigative actions resulting in arrests, indictments, convictions, 
administrative sanctions, and apprehension of fugitives, and processed 
over 93,000 Hotline contacts, which resulted in completion of over 
7,300 reviews of allegations of fraud, waste, abuse, and mismanagement. 
OIG oversight is not only a sound fiscal investment, it is an 
investment in good government and public assurance. For example, you 
cannot put a monetary value on a patient's life saved through better 
healthcare standards or removing an abusive provider from patient care.
    To highlight some best-practice accomplishments resulting from our 
healthcare inspection work, the Veterans Health Administration (VHA) 
developed new national policies for colon cancer diagnosis and 
treatment, management of pressure ulcers, management of surgical items 
that can be left in the body, and seamless transfer of medical records 
for returning war veterans transitioning from active duty to VA medical 
care. Our investigative work has led to the successful prosecution of 
medical providers who have harmed, and in some cases murdered, 
patients. We have performed oversight work aimed at developing mandated 
physician and nursing staffing standards. In the benefits area, our 
work has led to the successful prosecution of thousands of unscrupulous 
individuals who preyed on veterans by stealing benefits checks, abusing 
fiduciary responsibilities, and making false claims.
    Audits have identified billions of dollars in better use of funds 
through improved practices. In financial management, we have produced 
unqualified opinions of VA financial statements for many years while 
identifying material weaknesses that need correcting. In procurement, 
preaward reviews since 2001 have recommended more than $2 billion in 
potential cost savings by contracting officers negotiating fair and 
reasonable prices. Postaward reviews of Federal Supply Schedule 
contracts resulted in more than $104 million in hard-dollar recoveries 
that went back to the VA Supply Fund. Audit reviews have identified 
systemic information technology (IT) system development deficiencies in 
major procurements, such as CoreFLS. Our mandated Federal Information 
Security Management Act audits have identified serious deficiencies in 
VA's IT security. We have also successfully completed investigative 
work on major IT data loss cases, such as the loss and recovery of the 
data on 26.5 million veterans and active duty personnel.
    Despite our significant accomplishments, I believe we have only 
scratched the surface on what we can contribute to helping improve VA 
programs and activities. For example, while we do the most we can with 
the resources provided, there are many issues we are unable to review 
within existing resource levels. For example, we cannot investigate or 
review all Hotline complaints. In fact, we must refer 70 percent of all 
Hotline cases to the Department for review. I believe VA would benefit 
from an independent and objective review of these cases by the OIG 
because the OIG-performed substantiation rate is 20 percent higher than 
the Department. Furthermore, business is growing--our Hotline contacts 
are up 16 percent over this point last year. We also decline more 
criminal investigation cases than we prefer due to our high per capita 
agent caseload of 16 to 1, which is one of the highest in the OIG 
community.
    We focus our resources on the most important and urgent issues 
facing VA at the time and will always do so, but this often results in 
delaying review of other important high priority planned oversight 
work. I would now like to take this opportunity to discuss some of 
these high priority issues by strategic area.
HEALTHCARE DELIVERY
    OIG work has helped VHA improve the quality of medical care through 
our focused reviews, healthcare inspections, audits, and 
investigations. During the past 6 years, the OIG has invested about 40 
percent of its resources in overseeing healthcare issues.
    Issues that have received little attention in past years but offer 
significant opportunity for systemic improvement involve services 
provided to returning war veterans, medical research activities, care 
of elder veterans, VHA's Veterans Integrated Service Network (VISN) 
structure, and drug diversion at VA medical centers and mail-out 
pharmacies.
    Operations Enduring Freedom and Iraqi Freedom (OEF/OIF) veterans 
are receiving care, as are other veterans, in a nationwide system of 
over 150 medical centers, 800 Community Based Outpatient Clinics, and 
over 200 Vet Centers. While we believe the quality of medical care in 
VHA facilities is generally excellent, VA is challenged to deliver 
mental health services and provide seamless transition of care from 
active duty to veterans who live in areas distant from VA facilities. 
Compliance by VA researchers with policies that protect patients and 
ensure sound scientific results is another area of concern. VA research 
is budgeted at $1.8 billion in FY 2008, which makes the research 
program commensurate with the entire VA IT budget. The increasing 
geriatric veteran population presents VA with constantly changing 
challenges to care for elders at VA facilities, contract nursing homes, 
and at home. Veterans 85 years and older enrolled in VA healthcare are 
expected to exceed 675,000 by 2012.
    As VA searches for organizational efficiencies, the question of 
whether the VISN model offers VHA the best infrastructure to manage its 
healthcare resources and provide access to quality care needs to be 
addressed. The size of operations and the highly decentralized nature 
of these activities add to the complexity of this issue.
    Drug diversion steals valuable medicines from patients who need 
them and makes patients vulnerable to harm from providers impaired by 
drug use. VA has over 1,300 sites nationwide where drugs are provided 
or stored with unique circumstances that can be exploited by those 
seeking to steal drugs. VA would benefit from independent OIG 
systematic facility reviews--immediately focusing on information 
contained in automated dispensing systems--to identify and investigate 
instances of drug diversion.
BENEFITS PROCESSING
    The Veterans Benefits Administration (VBA) faces rising workload 
levels, in terms of both absolute numbers and complexity, and is 
anticipating receiving 800,000 claims in both FYs 2007 and 2008 from 
returning war veterans and veterans of earlier periods. The pending 
inventory of disability claims alone rose to almost 400,000 by the end 
of FY 2006.
    The timeliness and accuracy of processing these claims remain a top 
priority for VBA. For example, VBA reports progress in reducing its 
error rate for compensation core rating work to 12 percent, but this 
rate remains unacceptably high in a program of over $40 billion. I 
believe VBA and veterans would benefit from OIG oversight work aimed at 
reviewing VBA's quality assurance program for rating decisions and an 
assessment of other contributing causes of timeliness problems to 
address the serious backlog of claims in VBA.
FINANCIAL MANAGEMENT
    Although VA has received a series of unqualified audit opinions, it 
has three material weaknesses that impact its ability to safeguard and 
account for VA financial operations. The lack of an integrated 
financial management system increases the risk of materially misstating 
financial information and requires significant labor-intensive manual 
processes to prepare auditable reports for the Department. Other 
material weaknesses are deficiencies in financial operations oversight 
and continuing problems with IT security controls.
    The annual audit of VA's Consolidated Financial Statement does not 
address other important financial activities or provide a detailed 
review of individual accounts. We do not know, for example, if other 
high risk areas, such as VA financial, statistical, budget, and 
performance measures and reports, including the validity of automated 
VA data, are accurate and reliable. Additionally, VA's internal 
controls over, and accountability for, the use of VA funds remain an 
area of high concern.
    I believe the OIG has an important role to play in overseeing the 
development process of new integrated financial and logistics systems 
to ensure that they systematically address the needs of VA and correct 
material weaknesses.
PROCUREMENT PRACTICES
    VA spends over $6 billion annually in supplies, services, 
construction, and equipment. In the past 6 years, we have issued a 
number of reports involving individual failed procurements that 
resulted in large dollar losses to VA and serious delays in significant 
projects needed to improve VA infrastructure. Systemic deficiencies 
include the lack of effective communication, little or no acquisition 
planning, poorly written contracts, inadequate competition, poor 
contract administration, and inadequate legal support.
    We believe the organizational structure of VA's procurement 
activities and the lack of oversight and accountability are factors 
that have significantly contributed to these problems. Because 
procurement activities are decentralized, it is difficult to conduct an 
in-depth oversight program on a nationwide basis. There is no central 
database identifying contracts that have been awarded, individual 
purchase orders, or the amount of money spent on goods and services.
    Effective oversight can improve contracting practices and help 
avoid losses due to fraud, waste, abuse, and mismanagement. To this 
end, I believe VA would benefit from national audits conducted by staff 
who possess the specialized skills, knowledge, and experience in the 
rapidly changing environment of Federal acquisitions. Efforts are also 
needed to determine whether VA procurement activities could benefit 
from the same centralization that VA is implementing in IT.
INFORMATION MANAGEMENT
    VA's budget request for FY 2008 estimates a need to spend $1.86 
billion for the IT appropriation. At a time when VA is realigning its 
IT governance and resources, OMB identified dozens of VA systems on its 
high risk watch lists. VA's automated information systems have not 
provided management with sufficient information for effective 
decisionmaking, are not fully integrated, and are difficult to use. The 
current IT consolidation within VA is a critical first step to 
establishing an effective IT governance structure, but does not 
guarantee success. It remains to be seen whether VA's realignment will 
enhance operational effectiveness, provide standardization, and 
eliminate duplication in the delivery of information management 
services.
    Independent oversight is needed to ensure system development 
controls are effective, requirements are accurately identified and 
planned, and contracts used to support projects protect the 
Department's interests and achieve optimum results. VA will continue to 
face challenges in implementing its enterprise architecture, and 
ensuring that it addresses the entire range of managerial, operational, 
and technical controls necessary to oversee the IT architecture.
    We have not been able to provide comprehensive audit oversight of 
information security controls over VA systems. VA has identified almost 
600 IT systems. To date, we have only been able to review a very small 
percentage of these systems. I believe VA would benefit from more 
national audits of information management and governance, IT 
investments, and information and system security. This will help VA 
improve its management practices and security controls over its 
sensitive information, thereby helping VA institute changes that could 
prevent further exposure of sensitive data.
    The loss of VA data on millions of veterans and active duty 
military personnel last year highlights the challenges facing the VA in 
the area of information security. As we briefed your staff, we 
currently are reviewing the circumstances involving a missing external 
hard drive containing sensitive data from a VA facility in Birmingham, 
Alabama. These reviews are complex and labor intensive.
    Concern with protecting VA data is and will remain a primary focus 
for years to come. This is not just a VA concern, but a national issue 
that reflects the technological age we live and work in. This is an 
area that will continue to require significant OIG resources and 
oversight in the future. To this end, I believe VA would benefit from 
an OIG rapid response capability, using teams consisting of criminal, 
administrative, and computer forensic investigators who would 
immediately assess the magnitude of the breach and implement an 
investigative protocol built upon successful methods used in prior 
incidents.
CONCLUSION
    My office will continue to provide oversight of VA programs through 
a combination of proactive and reactive audits, healthcare inspections, 
and criminal and administrative investigations. We will continue to 
provide positive return on investment not only in terms of monetary 
impact, but also in management collaboration, good government, and 
public trust. While I believe the OIG has accomplished a great deal in 
improving VA, we are faced with the evolving challenges I have set 
forth above and the need to greatly expand oversight to meet these 
challenges.
    In closing, I would like to add that my current resource level is 
sufficient to meet my mandatory obligations and respond to high 
priority issues raised by the Congress and VA. However, I believe VA, 
like most agencies, is faced with evolving challenges and changing 
demands. If the OIG is going to be an agent of positive change, future 
resource levels need to be commensurate with this challenge.
    Thank you again for the opportunity to discuss these issues with 
you today. My staff and I would be pleased to answer any questions.
          POST-HEARING QUESTIONS AND RESPONSES FOR THE RECORD

          Questions from Hon. Harry E. Mitchell, Chairman, and
           Hon. Ginny Brown-Waite, Ranking Republican Member,
            Subcommittee on Oversight and Investigations, to
                Hon. George J. Opfer, Inspector General,
                  U.S. Department of Veterans Affairs

                                U.S. Department of Veterans Affairs
                                                  Inspector General
                                                     Washington, DC
                                                     March 21, 2007

The Honorable Harry Mitchell, Chairman
The Honorable Ginny Brown-Waite
Subcommittee on Oversight and Investigations
Committee on Veterans' Affairs
U.S. House of Representatives
Washington, DC 20515

Dear Mr. Chairman and Congresswoman Brown-Waite:

    Thank you for the opportunity to appear before the Subcommittee on 
February 15, 2007, to discuss the Oversight Efforts of the VA Office of 
Inspector General: Issues, Problems and Best Practices at the U.S. 
Department of Veterans Affairs.
    Enclosed are our responses to the followup questions from you and 
Congresswoman Ginny Brown-Waite. If you need further information on the 
work of the Office of Inspector General, please do not hesitate to 
contact me.

            Sincerely,

                                                    George J. Opfer
                                                  Inspector General

                               __________

For the Inspector General

    1. State your view of the Department's management of its Workman's 
Compensation Program. What do you estimate the cost savings would be 
with more aggressive case management?

    Response: In August 2004, the OIG issued a report on the costs of 
VA's Workers' Compensation Program (WCP) that found that WCP case 
management was ineffective and that program fraud existed (Audit of 
Department of Veterans Affairs Workers' Compensation Program Costs, 
Report No. 02-03056-182). In our FY 2004 report, we estimated $588 
million in WCP costs could potentially be avoided for lifetime claimant 
benefits through improved case management. We also estimated $108 
million in WCP compensation costs could potentially be avoided for 
projected lifetime claimants through improved fraud detection. The 
Department concurred with the potential cost savings in our report and 
the need for enhanced WCP management throughout VA.
    VA has implemented significant initiatives to address the findings 
and recommendations presented in our 2004 report. For example, VA 
formed a Workers' Compensation (WC) Strategic Planning Committee, 
comprised of representatives from throughout the Department in October 
2004, and VA's Strategic Management Council approved the WC strategic 
plan in February 2005. Programs were developed to promote professional 
development, case file review, WC education, and quality assurance 
programs. Action was also taken to develop performance criteria to 
measure WCP case management effectiveness. While a number of 
improvement actions involve complex organizational issues, improved 
program oversight is being achieved in a collaborative manner through 
the WCP Steering Committee. VA has implemented actions to evaluate the 
adequacy of compliance with WCP performance criteria and is working 
with the Department of Labor to contain and reduce program costs.

    2. In your estimation, where do you think there are excessive 
employees in the Department or offices with redundant or duplicative 
missions?

    Response: VA has recently taken steps to consolidate Information 
Technology (IT) personnel who were decentralized throughout all VA 
offices. This consolidation presents VA with the opportunity to 
identify and eliminate redundant positions. Similar opportunities exist 
with the current decentralization of procurement throughout VA, which 
needs to be addressed as part of a larger effort to fix VA's 
acquisition problems. These problems are outlined in response to 
Question One addressed to the Counselor to the Inspector General.

    3. Have you reviewed patient waiting times--specifically mental 
health appointments? PTSD?

    Response: We have not specifically reviewed mental health 
appointment waiting times but we have reviewed the broader issue of 
waiting times (Audit of VHA's Outpatient Scheduling Procedures, Report 
No. 04-02887-169, July 2005). This review addressed the Veterans Health 
Administration's (VHA) compliance with outpatient scheduling procedures 
to determine the accuracy of the reported patient waiting times and 
facility waiting lists.
    VHA measures patient waiting times by comparing the desired 
appointment dates to the actual appointment dates and strives to 
schedule at least 90 percent of all next available appointments for 
veterans within 30 days. Only 65 percent of these appointments were 
scheduled within 30 days of the desired dates based on our analysis. We 
reported outpatient scheduling procedures need improvement nationwide. 
As part of this audit, 116 of the 1,104 outpatient appointments 
examined were mental health appointments. We determined that 11 of the 
116 appointments were incorrect--they were either the wrong desired 
date or the wrong appointment type.
    We are conducting a current review of VHA's outpatient waiting 
times. The scope includes eight specialties, audiology, cardiac, eye 
care, gastroenterology, mental health, orthopedics, primary care, and 
urology. We expect to issue a final report in June 2007.

    4. You stated that from 2001-2006 the OIG delivered a 31 to 1 
return on investment. We understand that last year, the OIG's return on 
investment was somewhat lower--at a figure closer to 12 to 1. At the 
same time, you report that you faced a dramatic resource loss in the 
OIG of some 40 FTE. What impact did the loss of personnel have on the 
reduced return on investment?

    Response: The return on investment of OIG oversight fluctuates from 
year to year depending on the magnitude of individual audit, 
investigative, contract review, and healthcare inspection results; 
however, it has always been a positive ratio over the past 6 years. At 
the time we reported FY 2006's 12 to 1 return on investment, the 40 
Full-Time Equivalents (FTE) reduction had not occurred, so it did not 
contribute in any way to that figure. We anticipate seeing the FY 2007 
reduction in OIG FTE impacting next year's return on investment. Using 
the average return on investment over the past 6 years of 31 to 1 in 
terms of a return per planned FTE, we estimate a reduction of 40 FTE 
would result in a drop of approximately $174 million in monetary impact 
of OIG operations annually.

    5. What would happen to both the net revenues returned to the 
Department as a result of fines, penalties, cost avoidance and the 
like, and to the basic return on investment per dollar invested in the 
OIG, if the number of FTE in the OIG were to grow back to FY 2006 
levels? What if the number of FTE at the VA OIG were to increase to the 
next smallest statutory IG's ratio of FTE to parent organization FTE, 
and you had a staff of about 750? Would this reap more benefits than it 
would cost?

    Response: Our long-term experience demonstrates a positive return 
on investment year after year, so we estimate that any increase of the 
OIG FTE resource level would reap more benefits than the increased FTE 
would cost. Using the 31 to 1 return on investment that OIG has 
achieved over the past 6 years, the restoration of 40 FTE would be 
expected to result in $174 million in return on investment annually.
    We estimate a staffing increase of 280 FTE to reach 750 FTE would 
be expected to result in about $1.2 billion in additional monetary 
benefits annually for VA.

    6. The IG conducts Combined Assessment Program, or ``CAP,'' reviews 
of VA facilities nationwide. How often does a facility face a review, 
and are you able to reassess each facility to assure that followup 
actions are complete whenever findings indicate the need for further 
action?

    Response: On average, we review VA medical centers on a 3 year 
cycle. Facilities that are deemed to be at the most risk are reviewed 
in consecutive years. OIG has a followup process for all 
recommendations including those in CAP reports. This process involves 
the facility certifying they have taken corrective action and the OIG 
agreeing with the certification. On selected critical issues, in 
addition to the written certification, an onsite inspection may occur.

    7. We note in your testimony that IG audits have identified 
billions of dollars in better use of funds through improved practices, 
cost avoidances, and other methods. How does the IG establish a 
baseline and measure the results of its actions to account for this 
claim?

    Response: In our semiannual report to Congress, we include the 
monetary benefits of recommendations contained in OIG reports issued 
during the reporting period. The monetary benefits are determined using 
Government Auditing Standards (GAS) set by the Comptroller General of 
the United States. By following GAS, the OIG ensures that the monetary 
benefits reported are reasonable, prudent, and quantified. OIG audit 
work uses comparative and statistical sampling techniques to ensure the 
validity of data serving as the basis for identifying and reporting 
monetary benefits. Statistical techniques allow us to project the 
results to larger populations. Through the report drafting and comment 
process, we solicit and consider our audit clients' concerns, assess 
the viability and appropriateness of using alternative estimates, and 
work to reach agreement with audit clients to ensure the reliability 
and reasonableness of the monetary benefits reported.

    8. Why has the VA had so much difficulty fielding information 
technology systems and programs? I refer to HR LINK$, CoreFLS, PFSS, 
and VETSNET--especially the BDN replacement component of VETSNET. Each 
of these has either failed or had large cost overruns. What is VA doing 
wrong?

    Response: We found that program offices in these and other 
procurements for services failed to adequately plan for the 
procurement, which ultimately led to their demise. In particular, the 
program offices failed to adequately define their requirements. The 
second deficiency was poor contract administration by both the program 
and contracting offices. This includes the failure to monitor 
performance and take corrective action in a timely manner. We also have 
identified the use of open-ended contracting vehicles, such as blanket 
purchase agreements and other indefinite delivery indefinite quantity 
type contracts, and option year contracts, as contributing to the 
failures of contracts for services needed to develop IT systems and 
programs.

    9. The VA OIG invested significant time and effort into the May 
2006 data loss. You interviewed numerous witnesses and specialists, and 
produced a report that was refreshing in its candor. Did the IG 
validate the explanation the VA employee gave for having numerous 
databases such as mustard gas and project SHAD? Were the VA 
researcher's activities confined to the research he described? If so, 
why did he have the SHAD and mustard gas databases?

    Response: The OIG validated the explanation the VA employee gave 
for having each of the numerous databases on his hard drive, most of 
which were discovered on the recovered external hard drive. He was 
assisting the Veterans Benefits Administration (VBA) outreach efforts 
by identifying former military personnel whose names and service 
numbers, but not Social Security numbers, were contained in what has 
become known as the ``mustard gas'' spreadsheet by comparing them with 
data stored in other database files he possessed. The Project 112/SHAD 
database was part of the ``mustard gas'' spreadsheet that was included 
in the VBA outreach project. Finally, it should be noted that this 
spreadsheet was not found on the recovered external hard drive.

For the Assistant Inspector General for Healthcare Inspections

    1. Last year the IG investigated a situation where nonsterile 
prosthetic implants were implanted in patients at a VA hospital. This 
Committee is aware of another situation at VHA where part of an 
invasive medical device was not correctly sterilized at several medical 
centers. In each situation, both the instance of an unsafe medical 
practice and apparent delays of sometimes circuitous routes that the 
bad information traveled before it came to our full attention are of 
concern. What is the IG doing to promote safe practices during invasive 
medical procedures, and do you believe that the notification process is 
working properly?

    Response: Following last year's hearing in patient safety issues 
before the House Subcommittee on Oversight and Investigations, 
Committee on Veterans' Affairs, we met with senior VHA officials to 
discuss supply processing and distribution policy and practice. VHA 
subsequently initiated a series of actions to address these issues, 
including the publication in January 2007 of VHA Directive 2007-001, 
Ensuring Sterility of Non-biological Implantable Devices. We also 
recently completed a national review on operating room safety, Review 
of Patient Safety in the Operating Room in Veterans Health 
Administration Facilities (Report No. 05-00379-91, February 28, 2007). 
The OIG will continue to examine patient safety through the environment 
of care and quality management portions of CAP reviews and through 
inspections related to complaints received by the VA OIG Hotline. OIG 
work underway includes an Office of Audit project on the acquisition 
and management of surgical implants to assess the effectiveness of VHA 
oversight and we expect to issue a final report in August 2007. The OIG 
has not specifically evaluated the patient notification process as it 
relates to invasive medical procedures.

    2. What are the pressing quality-of-care issues that affect 
returning war veterans, and how could the OIG contribute to 
improvements in their care?

    Response: Two important issues are the management of mental health 
issues to include Post Traumatic Stress Disorder (PTSD) and related 
conditions, and the availability of quality medical care at sites that 
are distant from the medical center.
    Outcome based reviews of PTSD, affective disorders, and substance 
abuse disorders, in a sample of veterans recently evaluated at the 
medical center, would permit OIG to make specific recommendations to 
improve local care and include information on how individual medical 
centers respond through our CAP reports.
    A review of the policies and outcomes for care provided to 
returning war veterans at the more than 800 outpatient clinics and 200 
Vet Centers would similarly improve veterans' medical care. As 
highlighted in the OIG report, Healthcare Inspection Health Status of 
and Services for Operation Enduring Freedom/Operation Iraqi Freedom 
Veterans after Traumatic Brain Injury Rehabilitation (No. 05-01818-165, 
July 12, 2006), veterans have significant supportive care requirements 
upon discharge from inpatient care. OIG inspections would report on 
VHA's efforts to provide these veterans with required services and 
medical care with the effect of improving the full scope of care 
provided to veterans.
    Other issues that we are concerned with are the effective use and 
maintenance of high-technology prosthetic devices, the full lifetime of 
the veteran's management of orthopedic injuries of returning war 
veterans with amputations, and VA's ability to provide specialized care 
to war veterans with serious blast injuries to the head, eyes, and 
extremities.

    3. How would you approach assessment of VHA researchers' compliance 
with appropriate policies and regulations, and what would you expect to 
find?

    Response: In addition to national reviews of VHA research, the OIG 
would perform a compliance-based review of the research activities at 
each facility visited during a CAP inspection. This review would 
address topics that include compliance with policies that address human 
research protection, animal welfare, security of research data, and 
radiation safety. Based on prior work, the OIG would expect to find 
that the research community may be taking unacceptable risk by 
sidestepping the strict interpretation of applicable current policy. As 
a result, some research protocols may not include appropriate human 
protection measures, that research data may not be properly 
compartmentalized and secured, and that policies may not be updated to 
reflect the current national standard.

    4. What are the key issues facing VA in providing care for the 
elderly?

    Response: The quality of medical care provided at VHA facilities is 
generally excellent. However, the provision of supportive care for 
elders varies across the nation. Included in the issues that the OIG 
could evaluate are local demands for supportive care such as nursing 
home and in-home assistance programs; specialty care such as 
cardiology, neurology, and orthopedic surgery; and VHA's current local 
progress at meeting these demands through the multiple programs that 
are currently available. This could be accomplished as national 
programmatic reviews that are targeted to address issues of concern to 
the elderly, as well as part of the CAP hospital inspection process.

For the Counselor to the Inspector General

    1. What do you see as the major problems impacting VA in the area 
of procurement?

    Response: Our work has identified significant problems at most 
stages in the procurement process. This includes planning, soliciting 
and evaluating proposals, and contract administration. The most 
significant problem influencing all these deficiencies is VA's 
organizational structure for acquisitions. Procurement activities are 
so decentralized that VA does not know what was purchased, who it was 
purchased from, who made or approved the purchase, whether it was a 
contract or open market purchase, what was paid, or whether it was a 
fair and reasonable price. A majority of the acquisition workforce does 
not work for the Office of Acquisition and Materiel Management, but for 
various entities within VA such as VHA and VBA.
    Although the Office of Acquisition and Materiel Management has 
authority to issue warrants to contracting officers and issue policy, 
it does not have authority to conduct oversight to ensure that the 
contracting officers are complying with laws and regulations or acting 
in the best interest of the Government. As a result, there is little to 
no VA oversight of procurement activities and no accountability. 
Oversight is an important internal control. Lack of oversight not only 
results in acquisitions that are not in the best interest of the 
Government, it allows for criminal activity to go undetected. This 
includes bribery, kickbacks, and theft.
    With respect to individual procurements, we have found that most 
failed procurements are the result of poor acquisition planning, poor 
contract administration, or both. For example, we often find that 
program offices do not adequately define their needs or the timeframe 
needed to complete the procurement, identify the type of contract that 
is best suited to meet the need, how performance will be monitored, or 
perform the required independent cost estimates needed to budget 
appropriately. Lack of effective communication between the program and 
contracting offices during the planning process also contributes to 
these problems.
    We also find deficiencies on the part of the program and 
contracting offices resulting in poor contract administration. The most 
significant are the failure to monitor contract performance, take 
action in a timely manner when the contractor fails to comply with the 
contract's terms and conditions, and ensure that invoices are supported 
by the proper documentation before authorizing payment.

    2. Are adequate legal counsel staff and contract supervision 
resources used by VA to oversee its portfolio of contracts? What impact 
does VA's emphasis on competitive sourcing-type activities have on 
legal and contracting resources?

    Response: Based on our reviews of contracting actions, we have 
identified a problem with the lack of legal support. There are an 
insufficient number of attorneys in the Office of General Counsel to 
provide adequate legal support on a daily basis to the contracting 
entities located at VA facilities nationwide. In our view, both 
contracting and program offices would benefit from onsite legal support 
during all phases of the acquisition process.
    We have not performed sufficient work to determine whether the 
ratio of experienced contracting officers to the number of contracts 
being managed is an issue either locally or nationwide. However, the 
results of our audits and reviews of VA contracts have shown a need for 
better oversight of VA's contracting practices.
    We also have not performed sufficient work to determine the impact, 
if any, that an emphasis on competitive sourcing-type activities has on 
legal and contracting resources. However, based on our pre- and post-
award reviews of contracts awarded by VA medical facilities pursuant to 
38 U.S.C. Sec. 8153 to obtain healthcare resources, we have identified 
a need for greater legal support to ensure that the contracts are 
legally sound, to provide assistance in negotiations, and to assist 
contracting officers in making decisions relating to contract 
administration.

For the Assistant Inspector General for Investigations

    1. You mentioned the need for a proactive approach to drug 
diversion. What additional steps can the OIG take to detect and deter 
drug diversion at VA facilities?

    Response: With additional staff, each field investigator would be 
assigned ownership of one, but not more than two, VA Medical Centers 
and Consolidated Mail Outpatient Pharmacies for the purpose of 
proactively identifying and eliminating drug diversion. This would be 
accomplished by frequent examination of paper and electronic audit 
trails associated with the receipt, storage, dispensing, and 
destruction of pharmaceuticals; onsite assessment of controls and 
vulnerabilities at each site; close interaction with staff in order to 
increase awareness of signs of drug diversion and to cultivate sources 
of information about such activity; and increasing our partnership with 
VHA management in Headquarters and the field to address this problem. 
We would specifically concentrate our efforts first on facilities that 
have implemented Pandora, an automated tool designed to detect drug 
diversion.
    A comprehensive diversion mitigation strategy cannot be limited to 
just our internal concerns. Diversion schemes may occur at any point 
along a continuum from receipt of the drugs into the VA system, up to 
the actual delivery of pharmaceuticals to the veteran. While the 
individuals who divert drugs may use the drugs themselves, these 
diverted drugs also have the potential of being illegally sold on the 
streets of our communities. Therefore, we also proactively seek 
beneficial partnerships with Federal, state, and local law enforcement 
whose jurisdictional responsibilities complement our own. With 
additional criminal investigators we would be better positioned to 
participate on task forces, thereby enhancing our ability to identify 
and disrupt potential diversion schemes, and maximize our ability to 
investigate and arrest offenders.

    2. What impact have the major data breaches been on OIG resources? 
What would you estimate is needed to address future data loss cases?

    Response: The major data breaches have consumed significant OIG 
resources. For example, approximately 3,600 staff hours were devoted in 
May and June 2006 to the criminal and administrative investigations of 
the Montgomery County, MD, data theft. The current criminal and 
administrative investigations on the data loss in Birmingham, Alabama, 
presently involve 20 employees working full-time and performing 
significant amounts of travel.
    Due to the complex nature of data loss cases, we estimate that we 
would need additional staff to address future data loss cases. We 
estimate that we need an additional 30 FTE to address future data loss 
cases and to assist the Department in addressing network security. This 
staff would include computer forensics specialists, database analysts, 
network security specialists, forensic auditors, as well as criminal 
and administrative investigators. This group would assess network 
security and critical information assets protection, conduct 
penetration testing, and investigate network intrusion.

For the Assistant Inspector General for Auditing

    1. How can the OIG improve its oversight of VA's procurement and 
acquisition programs and activities?

    Response: While past audit efforts have addressed individual or 
localized problems such as contract award and administration and supply 
chain management issues, we would like to expand OIG oversight to 
address more nationwide issues. With additional resources, we would 
establish an audit division dedicated to procurement and acquisition 
programs and activities. This division would be comprised of staff with 
the specialized skills, knowledge, and experience needed to address the 
rapidly changing and complex environment of Federal acquisitions. The 
division would provide for a more systematic, disciplined, strategic, 
and proactive approach to reviewing VA's procurement and acquisition 
processes.
    For example, more audit work is needed to examine staffing, 
organization, processes, and procurement actions of VA's current 
decentralized approach to acquisition. We would expand our oversight of 
historically problematic areas such as Government Purchase Card Program 
activities, acquisitions supporting major IT systems and development, 
and the award and administration of clinical services contracts, along 
with other major business line acquisitions. We would also increase our 
oversight at VA's local facilities and major acquisition support 
centers such as the National Acquisition Center.

    2. How can the OIG help VBA address problems with the accuracy and 
timeliness of claims?

    Response: Currently, we are conducting several audits of VBA claims 
processing activities. These audits include:

      Examining whether VA regional offices process Operation 
Enduring Freedom/Operation Iraqi Freedom veterans' claims accurately 
and promptly (final report expected in September 2007).
      Determining if VA's compensation system messages are an 
effective control for ensuring the accuracy of compensation claim 
payments (final report expected in September 2007).
      Determining if VA regional offices promptly process 
nonrating claims such as death pension claims and disability and death 
dependency claims (final report expected in July 2007).

    With additional staff, we could perform national audits to evaluate 
the impact of various resource and procedural shortcomings and 
recommend specific actions to fix those issues. These audits would be 
based on a comprehensive strategy to provide information on all claims 
processing activities instead of evaluating individual activities.

                                 
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