VA IT Infrastructure 

Reorganization and the role

of the CIO

Hearing

before the

Committee on 

Veterans’ Affairs

House of Representatives

one hundred ninth congress

first session

September 14, 2005

Printed for the use of the Committee on Veterans’ Affairs

Serial No. 109-22

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Committee on Veterans’ Affairs

Steve Buyer, Indiana, Chairman

Michael Bilirakis, Florida Lane Evans, Illinois, Ranking

Terry Everett, Alabama Bob Filner, California

Cliff Stearns, Florida Luis V. Gutierrez, Illinois

dan burton, Indiana Corrine Brown, Florida

Jerry Moran, Kansas Vic Snyder, Arkansas

richard H. baker, Louisiana Michael H. Michaud, Maine

Henry E. Brown, Jr., South Carolina Stephanie Herseth, South 

Jeff Miller, Florida Dakota

John Boozman, Arkansas Ted Strickland, Ohio

Jeb Bradley, New Hampshire Darlene Hooley, Oregon

Ginny Brown-Waite, Florida Silvestre Reyes, Texas

Michael R. Turner, Ohio Shelley Berkley, Nevada

 Tom Udall, New Mexico

JAMES M. LARIVIERE, Staff Director

(II)
CONTENTS

September 14, 2005

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VA IT Infrastructure Reorganization and the Role of the CIO 

OPENING STATEMENTS

Chairman Buyer ......................................................................... 

Hon. Lane Evans, Ranking Democratic Member ......................

Prepared statement of Mr. Evans ..............................................

Witnesses

Seifert, Jeffrey W. Analyst in Information Science and Technology Policy, Congressional Research Service .................... 

Prepared statement of Mr. Seifert .............................................

Koontz, Linda D., Director, Information Management Issues, 

U.S. Government Accountability Office .....................................

Prepared statement of Ms. Koontz ............................................

Pedersen, Michael L., Managing Vice President, Gartner 

Consulting ...............................................................................

Prepared statement of Mr. Pedersen .........................................

Mansfield, Gordon, Deputy Secretary, Department of Veterans Affairs ...............................................................................

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

POST-HEARING QUESTIONS FOR THE RECORD

Hon. Steve Buyer ........................................................................

Hon. Lane Evans ........................................................................

 

ADDITIONAL INFORMATION FOR THE RECORD

Carnegie Mellon Action Dashboard ..........................................

Descriptive chart of the HealtheVet-VistA Components FY06 

Carnegie Mellon SEI Independent Technical Assessment, 

 Phase I Outbrief, VA HealtheVet-VistA, 03 December 2004 .

Carnegie Mellon SEI Independent Technical Assessment, 

 Phase II Outbrief , VA HealtheVet-VistA, 04 February 2005 

(III)
(1)

VA IT Infrastructure reorganization and the 

role of the cio

Wednesday, September 14, 2005

U.S. House of Representatives, 

Committee on Veterans’ Affairs,

Washington, D.C.

 The Committee met, pursuant to notice, at 10:08 a.m., in Room 

334, Cannon House Office Building, Hon. Steve Buyer [Chairman of 

the Committee] presiding.

 Present: Representatives Buyer, Bilirakis, Evans & Michaud.

 The Chairman. The VA’s Information Technology (IT) infrastructure reorganization hearing before the House Veterans’ Affairs Full 

Committee will come to order September 14, 2005.

 This hearing will provide the Committee with an update on the Department of Veterans’ Affairs information technology infrastructure 

reorganization to learn more about the role of the chief information 

officer within that department.

VA’s IT modernization efforts go back at least 29 years to 1985, 

when it was the policy of the Veterans Administration to “better 

serve the veteran through modern technology.” Despite 20 years of 

“modernizing,” this Committee has authorized, and Congress has appropriated roughly $10 billion over the last decade alone for VA IT

spending.

This is probably a very conservative figure, as historically the VA 

has included funding for IT in general administration accounts of the 

Veterans Health Administration, the VA’s Benefits Administration, 

and the National Cemetery Administration.

 Since coming to Congress in 1993, I have witnessed this Committee 

struggle with VA’s inability to adequately manage its IT funding and 

IT modernization efforts.

 The Subcommittee on Oversight and Investigations has conducted 

six separate hearings on VA IT and related issues since 2000, when I

chaired the Subcommittee.

 Ms. Koontz, I see you so often, I feel like you’re part of my family.
2

While there have been significant improvements in VA’s IT modernization efforts, the improvements have come at a significant cost 

to our veterans and the system:

$600 million plus for a decade of VETSNET, the automated compensation and pension claims processing system that still has not 

been implemented in 10 years;

$342 million for CoreFLS -- the failed financial management system;

$300 million for HR Links, the failed automated personnel system;

$485 million annually to maintain VISTA, VA’s 25-year-old medical information system.

In fiscal year 2004 and fiscal year 2005, VA received $1.4 and $1.6 

billion respectively for IT funding. For the fiscal year 2006, VA’s projected spending for IT will be approximately $2.2 billion.

 This lack of accountability in VA IT spending, I believe must stop, 

and that’s the reason why there was such a reduction in your budget 

requests for IT. Not only did I recommend it, it was supported then 

by the Budget Committee, by the Appropriations Committee, and 

also by the Senate.

 So somewhere in here, we need to come to a meeting of the minds 

and to figure out how we’re going to do this.

 Last year, VA was able to testify before the Committee, that they 

were “well under way with an enterprise architecture that aims to 

align the business with the information technology plans, goals, and 

efforts.” However, I am concerned that the structure in place lacks 

the authority to provide a better service to the veteran.

 Today, we will hear testimony from Gartner Consulting, VA’s own 

private IT consultant, on what the VA needs to do more effectively to 

reorganize itself, and at what cost would be of letting the bureaucracy 

maintain the status quo.

 That’s why myself, along with Ranking Member Lane Evans and 

other distinguished members of this Committee, we will soon be introducing legislation that will mandate the Department of Veterans’ 

Affairs to empower the chief information officer with authority over 

resources, budget, and personnel related to the information technology of the Department.

 I’m holding this hearing, Lane and I are, because our legislation is 

in draft form, we’ve not shared it with anyone.

 We’ve come into a comfort zone where we are with the legislation, 

but we’re going to ask a series of questions today, because we want 

to make sure that what we’re about to do, we do correctly, because 

we also then want it to be leveraged into other departments of the 

federal government; so we want to walk cautiously and carefully as 

we do this correctly.

 So I am really pleased that the GAO is here to testify. We have you 
3

as the first panel for a reason, because you’re experts in your field. 

Also, CRS, with all your vast knowledge and expertise. Ms. Koontz, 

the survey that you have done and also with an outside consultant 

of all the Chief Information Officers (CIOs) and how things are looking out there, you’ve spoken to so many, and so they’ve shared with 

you their successes and they’ve shared with you their challenges, and 

from that we want to create the model that can be leveraged.

 With that, I’ll yield to the Ranking Member for any comments that 

he may have.

 Mr. Evans. Thank you. Thank you, Mr. Chairman.

 I also want to praise the VA workers and the crisis response team 

for safely and swiftly evacuating so many veterans, staff, and their 

families out of the Gulf Coast.

 I also commend VA workers for their current efforts to keep veterans out of the path of Ophelia.

 I’m proud of the VA staff.

 I have introduced three bills to help veterans and their families get 

their medical needs and their shelter after the storm. I hope we can 

mark up these three bills sometime in the near future.

 As for information technology management, I think we see this issue in the same way. It is nice to be on the same sheet of music on 

this.

 For years major IT projects at the VA have failed or suffered costly 

delays. This Committee and its Subcommittees have held a significant number of hearings on VA’s mismanagement of IT. We’ve got to 

change that need.

 Mr. Chairman, we both have consistently pushed for accountability 

and change. We now have an environment where any successes in 

the IT area are overshadowed by some well-publicized failure in IT

someplace else.

 Let us hear testimony about the current status of IT management 

and then facilitate any needed change.

 Thank you, Mr. Chairman.

[The statement of Hon. Lane Evans appears on p. 44]

 The Chairman. Thank you, Mr. Evans.

 I join you in your spirit and compliments to the VA in their rapid 

response. America doesn’t get to hear about it, but Lane and I and 

members of this Committee are very proud of the VA employees and 

your direction, and how you responded to the crisis on the Gulf Coast, 

continue to respond, and help as part of our national response.

 Here on Capitol Hill also there are different Committees that are 

examining Katrina, and so Secretary Mansfield, if you know of things 

that you need to do within your agencies, that you cannot do right 

presently within your executive authorities, let us know.

 I’m not interested in doing theater or do something, that “do some-
4

thing” stuff that we get here in Washington, that really is duplicative 

or multiplicious.

 So if it’s outside that, please be in touch with Mr. Evans and I.

 Mr. Bilirakis.

 Mr. Bilirakis. Mr. Chairman, thank you.

 I really appreciate both you and Mr. Evans giving accolades where 

they’re deserved.

 The VA, certainly on this particular issue,is far from perfect. 

There’s an awful lot of work that needs to be done and there are a lot 

of frustrations in the sense that we haven’t been able to get IT to the 

point that it should be after all these many years.

 But at the same time, they’re probably heads over heels above most 

of the departments in the government in terms of IT, and they’ve 

proven that time and time again. They certainly proved it in New 

York City in 9/11. They proved it certainly in Katrina. And so they’ve 

done really good work.

 And what we want to do is to help you to improve upon that, so the 

potential legislative solutions that the Chairman mentioned are very 

important.

 So we want to be here to help you, but we’re not going to be able 

to help you to really get this thing going the way it should be unless 

you’re cooperative and unless you’re being frankly very frank and 

blunt with us in terms of what needs to be done, in addition to money. 

It’s always money, of course, and that’s the unfortunate thing.

 Thanks, Mr. Chairman.

 The Chairman. Mr. Bilirakis, we appreciate your leadership in the 

continued work on IT from your Subcommittee.

 Mr. Michaud, opening statement?

 Mr. Michaud. Thank you very much, Mr. Chairman.

 I too want to thank you, Mr. Chairman, and Ranking Member Evans for having this hearing today.

Since this is our first hearing after Katrina, I, too, want to take this 

opportunity to praise the VA employees who kept our veterans, staff, 

and others safe during the storm.

 I understand the staff did an amazing job in evacuating the very 

sick veterans after the storm and flooding. I applaud the VA frontline workers for reaching out to the veterans to make sure that the 

storm will not disrupt the delivery of needed medication and benefits.

 Those employees and the others who have not yet been found, our 

thoughts and prayers are definitely with them, and I hope that they 

are safe.

 I understand that the crisis response team is making sure that the 

VA IT system is working and the benefit files and medical data is secure, so I look forward to hearing your testimony here today.

 So thank you very much, Mr. Chairman.
5

 The Chairman. Thank you, Mr. Michaud.

The first panel, I will now recognize Mr. Jeff Seifert, who is the Analyst in Information, Science, and Technology Policy Resources, Science, and Industry Division of the Congressional Research Service.

 Next we’ll hear from Ms. Linda Koontz. She is the Director, Information Management Issues, U.S. Government Accountability Office.

 Then we’ll hear from Mr. Michael Pedersen, Managing Vice President of Gartner Consulting.

 Do each of you have a written statement?

All three have nodded their heads in the affirmative.

Your complete written statements will be made part of the official 

hearing record.

 I will ask members to hold all their questions until the panel has 

testified. We will move under the five-minute rule.

 And Mr. Seifert, you are now recognized.

STATEMENT OF MR. JEFFREY W. SEIFERT, ANALYST IN

 INFORMATION SCIENCE AND TECHNOLOGY POLICY, 

CONGRESSIONAL RESEARCH SERVICE

 Mr. Seifert. Thank you, Mr. Chairman and members of the Committee for the invitation to appear before you today to offer testimony 

on the background and role of chief information officers in the federal 

government.

While the specific topic of today’s hearing is on the responsibilities 

and authority entrusted to the Office of the Chief Information Officer 

at the Department of Veterans’ Affairs, my comments today will focus 

on the performance and challenges of federal CIOs more generally.

 As you are aware, the Congressional Research Service does not 

take a position on issues or legislation.

 The federal government spends more than $60 billion annually on 

information technology goods and services, reflecting how technology 

has become integrated into nearly all government processes.

 Federal CIOs are on the front lines in implementing a wide range 

of e-government and homeland security initiatives. These include 

initiatives to develop a federal enterprise architecture, improve information security, and identify opportunities to facilitate information 

sharing.

 While CIOs were once commonly thought of as “technocrats,” they 

are now being called upon not only for their technological expertise, 

but also to provide strategic leadership in the areas of policy, budget, 

and contract oversight.

 Federal CIOs serve as change agents for business modernization 

and transformation. They must possess strong management, leadership, and communication skills. The CIO’s relationship with toplevel department decisionmakers can also be critical to successfully 
6

implementing IT and e-government initiatives.

 Inherent to the nature of their responsibilities, CIOs need to look 

at the departments horizontally, across a department, rather than 

vertically, such as at a single program or function.

 Likewise, there is a need to be able to exercise control over resources horizontally, in part to break down the so-called “stovepipes” 

and “islands of automation” that are created when resources and programs are developed individually.

 However, this difference in perspectives can frequently put the 

CIO at odds with his/her counterparts, such as program managers, 

whose responsibilities may foster a more vertical view of the department and its assets.

 For example, whereas CIOs may recommend adopting a standardized software platform for desktop computers, in order to facilitate 

interoperability and lower costs, program managers may oppose this 

approach on the basis that it reduces their decisionmaking authority 

to procure and develop assets used in the delivery of services.

This clash of perspectives exemplifies why the biggest challenges 

facing federal CIOs are not technical, but instead, organizational.

 Decentralized organizations can be especially challenging for CIOs, 

whose primary role includes coordinating resources and personnel in 

an effort to effect transformation of the organization.

 While having access to or direct participation in decisions regarding funding issues and allocation of resources is important, simply 

having a seat at the management table may not be sufficient if other 

parts of the department can act autonomously in areas that either 

undermine or mitigate attempts by the CIO to develop enterprisewide standards.

Consolidating authority over IT resources and clarifying who is accountable for specific functions is one approach that some departments have begun using to address these challenges.

 For example, earlier this year, the Federal Bureau of Investigation 

announced it was implementing a new strategic approach to information technology.

Specifically, the strategy includes centralizing management of FBI 

IT resources under the FBI’s Office of the Chief Information Officer; 

creating several IT governance bonds; implementing an IT investment strategy and an enterprise architecture; and granting the CIO

“budgetary authority over all FBI IT funds.”

 However, efforts to consolidate IT investment management decisions can be hindered at the outset by a lack of comprehensive accounting of a department’s IT resources and responsibilities.

 For example, in a March 2005 report, the inspector general at the 

Department of Transportation found that the consolidation of department-wide IT responsibilities, begun in fiscal year 2003, was not accompanied by a comparable level of budgetary and contract services 
7

oversight.

Among the problems specifically identified in consolidating CIO 

control over systems originally maintained by the DOT’s 11 individual operating administrations was an incommensurate transfer 

of project management and budget authority, as well as duplicative 

funding requests made by the CIO’s office and the operating administrations.

 In closing, information technology management has been a longstanding challenge for the federal government. The general problems facing the Department of Veterans’ Affairs are not unlike those 

facing CIOs in other executive branch departments and agencies.

 However, the challenges of harmonizing the acquisition, development, and maintenance of information resources across the department, including its three major subcomponents -- the Veterans Benefits Administration, the Veterans Health Administration, and the 

National Cemetery Administration -- are considerable.

 By enhancing the authority of the department CIO, the Department of Veterans’ Affairs may be able to better address some of its 

information technology management challenges in the future.

 Thank you for your attention.

 I welcome any questions.

[The statement of Jeffrey W. Seifert appears on p. 46]

 The Chairman. Thank you, Mr. Seifert.

 Ms. Koontz.

STATEMENT OF MS. LINDA D. KOONTZ, DIRECTOR, INFORM-

 ATION MANAGEMENT ISSUES, U.S. GOVERNMENT

 ACCOUNTABILITY OFFICE

Ms. Koontz. Mr. Chairman and members of the Committee, I am 

pleased to be here at today’s hearing on reorganization of VA’s CIO

office.

 At your request, I will be discussing our previous work on the role 

of the CIOs in the federal government generally, and at VA in particular, to provide background and perspective for your consideration.

 As you know, the CIO position was established by the Clinger-Cohen Act in 1996. Through this law and others, the Congress has 

expressed the view that the federal CIOs should play a central role in 

managing information and technology within federal agencies.

 In this way, the CIO can help ensure that agencies manage their 

information functions in a coordinated and integrated fashion and 

thus improve the efficiency and effectiveness of government programs 

and operations.

CIOs have a wide range of responsibilities. For a review of federal 

CIOs that we reported on in 2004, we identified 13 major areas of CIO 
8

responsibility that were either statutory requirements or critical to 

effective information and technology management.

 Our review showed that CIOs were generally responsible for these 

key areas, although not all CIOs were completely responsible for all 

areas.

 To give a few examples, all the CIOs were responsible for enterprise architecture and information security, and more than half were 

responsible for systems acquisition and major e-government initiatives.

 In certain areas such as system acquisition and statistical policy, it 

was common for CIOs to share responsibilities with others.

 We have also developed guidance on the effective use of CIOs in 

which we describe characteristics of organizations that contribute to 

CIO success.

 First, successful CIOs work with supportive senior executives who 

embrace the central role of technology in accomplishing mission objectives and include the CIO as a full participant in senior executive 

decisionmaking.

Second, successful CIOs have legitimate and influential roles in 

leading top managers to apply IT to business problems and needs. 

Placement of the position at an executive management level in the 

organization is important, but in addition, CIOs earn credibility and 

produce results by establishing effective working relationships with 

business unit heads.

 Third, successful CIOs structure their organizations in ways that 

reflect a clear understanding of business and mission needs. Along 

with knowledge of business processes, market trends, internal legacy 

structures, and available IT skills, this understanding is necessary 

that the CIO’s office is aligned to best serve agency needs.

 To achieve this kind of success, CIOs face a number of challenges. 

In our 2004 review, CIOs most frequently cited two in particular:

 First, implementing effective IT management practices.

 A little over 80 percent of the CIOs reported that they face one or 

more challenges related to this area. This is not surprising, given the 

government’s recognized difficulties in IT management.

 We have issued numerous reports describing challenges in the specific management areas that the CIOs cited most frequently: information security, enterprise architecture, investment management, 

and e-government.

Second, obtaining sufficient and relevant resources.

Virtually all agency CIOs cited resources both in dollars and staff 

as major challenges.

 Two other commonly cited challenges were communication and collaboration, both internal and external, and managing change.

CIOs cited the challenge of establishing effective communications 

with the business part of their organizations as well as sharing infor-
9

mation with partners and influencing OMB and the Congress.

 And of course implementing major IT changes can involve not only 

technical risks but also risks associated with people and organizational culture.

 At VA, the CIO position and IT management have received increasing attention in recent years.

 The department went for two-and-a-half years after the passage of 

the Clinger-Cohen Act without a CIO.

 For two years after that, the CIO role was held by an executive who 

also had other major responsibilities.

 The department then had an acting CIO for a year, and in August 

2001, it appointed a full-time permanent CIO.

 Since then, the department proposed further strengthening the 

CIO position and centralizing IT management, recognizing that aspects of the VA computing environment were particularly challenging and required substantial management attention.

 In particular, the department information systems and services 

were highly decentralized and a huge proportion of the department 

IT budget was controlled by the VA’s administrations and staff office.

 To address these challenges, the Secretary issued a memo in 2002 

announcing that IT functions, programs, and funding would be centralized under the department-level CIO.

 In our view, this alignment held promise for improving IT accountability and enabling the department to accomplish its mission. The 

additional oversight afforded by the CIO could have a significant impact on the department’s ability to more effectively account for and 

manage the approximately $2.1 billion in planned IT spending.

 Mr. Chairman, that completes my statement, and I would be happy 

to answer questions at the appropriate time.

[The statement of Linda Koontz appears on p. 54]

 The Chairman. Thank you, Ms. Koontz.

 Mr. Pedersen.

STATEMENT OF MR. MICHAEL L. PEDERSEN, MANAGING

VICE PRESIDENT, GARTNER CONSULTING

 Mr. Pedersen. Thank you, Mr. Chairman, and members of the 

Committee.

I appreciate the opportunity to participate in today’s hearing regarding the Department of Veterans’ Affairs IT reorganization.

 My name is Michael Pedersen. I’m the managing vice president 

within the consulting division at Gartner, a provider of research and 

analysis on the global IT industry.

 Unlike our competitors, we do not offer implementation services 
10

that would compromise our independence and objectivity.

 It is this objectivity that was the basis for us being selected to assess whether the VA’s IT personnel assets are appropriately aligned 

to efficiently deliver world-class IT program management, operational support, and systems design and development services.

 I was the lead consultant and subject matter expert on this assessment and directed activities.

 When looking at the VA today, we documented several issues that 

must be addressed for the VA to achieve its objective of efficiently 

delivering world-class IT services in a veteran-centric model.

Our principal finding is there is excessive duplication of IT assets 

-- defined as people, process, and technologies -- across the VA It organizations. This approach leads to inefficiencies in IT delivery and 

creates significant barriers to improve performance at a VA-wide 

level.

 Each IT group, and there are many, has its own unique, at times 

competing, at times complementary approach to delivering IT services.

 Different approaches to work means working together on common 

objectives that much more difficult. It also costs more to operate such 

a fragmented IT organization and has the potential to leave unmanaged risk within its major programs.

 There are few incentives or mechanisms in place for these multiple 

IT groups to work together.

 In fact, the culture fosters a go-it-alone approach which forces the 

IT staff to engage their informal personal network when required to 

work across organizational boundaries.

 To resolve these issues, we recommended changes at the VA. We 

recommended significant change in the underlying processes that 

make organizations work, as noted in my written testimony.

 As organizational structure is the most visible aspect of organizations, it is worthy of additional discussion.

 Several organizational structures were analyzed to resolve the issues uncovered within the VA. Two organizational structures had 

the greatest potential for application at the VA.

The first is an organizational structure where technology operations, such as data centers and networks, are controlled by a single 

group with all business applications developed and supported by each 

business line, whether medical care, pension, housing, or finance. We 

call this the federated model.

 The second is an organizational structure where all VA IT is organized into a single entity reporting to a chief information officer. We 

call this the centralized model.

Each has its own risks and benefits.

The primary benefit of the federated model is it allows business 

leaders to develop the applications unique to their missions while 
11

achieving economies of scale by managing the VA infrastructure 

through the centralized function.

 While we did not undertake a cost analysis, our organization does 

extensive IT cost modeling regarding savings potential.

 We estimate implementing the federated model will reduce the annual run rate by approximately $207 million within five years. However, this comes with risk to the VA.

 The VA will struggle to obtain in a timely manner its One VA mission objectives, because of its culture, unaligned investment priorities 

between and within administrations, and differences in technology 

and process, which hinders efforts to create veteran-centric systems.

 In contrast to this approach, the centralized organizational model 

provides the greatest opportunity to successfully execute One VA

mission objectives in a timely manner.

 Like the federated model, it achieves economies of scale, but will 

also allow for rapidly maturing the IT investment management process to better deliver its major IT programs.

 We estimate potential savings from the centralized option to be 

approximately $345 million in annual run rate reduction within five 

years.

 The potential risk from implementing the centralized option is significant. It is the big bang.

 But both the centralized and federated potions are viable organizational structures to achieve One VA mission objectives.

 However, it is our recommendation that the VA pursue the centralization option and aggressively manage the risk to maximize cost 

saving opportunity and reduce program risk.

 Let me clearly state the organizational change is hard work. If not 

done properly, it places the entire organization at risk.

 Many examples exist where change efforts were not conducted 

properly.

 Whether a computerized position order entry system at Cedars Sinai or a financial management system at the VA itself, organizational 

change requires extensive planning, executive commitment, and a relentless focus on the details.

 The whole organization must see the need for change, understand 

how change will occur, and participate in the change efforts.

 If it embarks on any change effort, the VA must have:

 One, its entire leadership team dedicated to the effort, visible in its 

executive, and held accountable for its results;

 Two, fast-track budgeting and personnel change authority for its 

leaders to act quickly; and

 Three, use outside experts to guide, track, and report on its performance against plan.

 While it has risk, the payoff can be substantial improvement in IT

performance at the VA.
12

 Mr. Chairman, this concludes my statement.

 Thank you again for the opportunity to discuss an important matter for our veterans.

 I’ll answer any questions at the appropriate time.

[The statement of Michael L. Pedersen appears on p. 77]

 The Chairman. Thank you very much, the three of you, for your 

testimony, your work, and that of your staffs, so please extend that 

to them.

 Let me ask, Mr. Pedersen, the credibility that you bring to this, 

being one of the top companies in the world in what you do, are you 

aware of any organization in the private sector that’s like how the VA

is presently operating its IT? Is there anyone out there?

 Mr. Pedersen. There is no one out there, sir.

The profit motive of the commercial sector drives a natural cost reduction orientation and an investment oversight mentality, so I know 

of no other organizations like that.

 The Chairman. So as Congress has been asking the VA to act more 

like a business, this effort to bring -- streamline or bring a centralization to the CIO would place us in greater stead with modern business 

practices?

 Mr. Pedersen. Yes, sir.

 If I could add, there are -- the organization as a whole, the agencies 

are well operating. I want to make that clear. And there is a tremendous desire for the staff to serve the veteran.

 And is it our belief that there are efforts underway that have had 

small pockets of success.

 The Austin Automation Center was a good example that we found, 

where they had defined how they work in a very detailed way. They 

talked about the costs of their services back through the franchise 

fund.

 And we found that a very effective model. We applaud their efforts. 

It’s the cost that they would -- the recovery or the price, if you will, 

that they charged the administration are comparable to the outside 

services.

 So there are efforts underway throughout the organization to drive 

towards that more business, more commercial-oriented practice. It’s 

just not on it as an organization as a whole.

 The Chairman. All right.

 Ms. Koontz, in your written statement, you indicated that the 

Clinger-Cohen Act of 1996 mandated federal departments to establish the position of CIO. However, the VA did not appoint a permanent CIO position until August of 2001.

 What other federal departments, if any, requested and received 

OMB waivers for appointing a permanent CIO?

 Ms. Koontz. I know of no department that has a waiver for estab-
13

lishing a CIO.

 I don’t know of any mechanism, either, that would allow an agency 

to go without a CIO.

 The law requires that they have a CIO, and that the CIO report to 

the agency head.

 The Chairman. Also, in your written statement, you indicated that 

GAO conducted reviews of the relationships of CIOs and agency heads 

in 23 different agencies.

 You further indicated the vast majority of these CIOs reported directly to the agency head.

Of the five largest federal agencies in terms of budget outlays, what 

is the reporting relationship for the CIO?

 Ms. Koontz. Of the five largest agencies that we looked at, based 

on discretionary spending -- and that would be Defense, Health and 

Human Services, Education, State, and VA -- four of the five, including VA, at the time we did our review in early 2004, the CIO reported 

directly to the agency head. Only HHS did not at that time.

 The Chairman. Also, in your written statement you indicated that 

virtually all agency CIOs cite resources, both in dollars and in staff, 

as a major challenge in effective IT management.

What specific challenges do you believe the VA’s CIO must overcome in order for this position to effectively manage VA IT?

 Ms. Koontz. I think that the primary thing that the CIO needs -- 

there’s two things that I think that are most important for the CIO to 

have in order to be successful.

And the first of that is, obviously, that the CIO has to have the support of the Secretary. Without management support, the CIO cannot 

be effective.

 Secondly, I think that it’s critical that the CIO have -- be a participant in an investment management process that’s established and 

mature at the agency, that allows the senior management to come together and make decisions on proposed investments and then oversee 

those investments over time.

 And as part of that process, it’s absolutely critical that the CIO be 

able to veto any proposed investment that is not consistent, for example, with enterprise architecture, that’s not consistent with standards, including network standards, or with other security requirements.

 The Chairman. Mr. Seifert and Mr. Pedersen, do you have an opinion based on Ms. Koontz’ statement that she just made?

 Do you concur or non-concur?

 Mr. Pedersen. I’d agree that investment management and that 

control is critical for future investment planning and success.

 Mr. Seifert. Well, as you know, CRS does not take a position on it 

or express an opinion.

 The Chairman. Do you have a personal opinion of what you just 
14

heard Ms. Koontz say?

 Mr. Seifert. Well, I’m not allowed to express a personal opinion, 

but I would say that -- 

 The Chairman. Hypothetical?

 Mr. Seifert. -- evidence suggests that this is very important to the 

successful functioning of the department.

 The Chairman. That counts. That counts.

 Mr. Evans and I and others on this Committee believe in line and 

budget authority for the CIO position.

 So I’m going to go right to the heart of the question.

 If we’re to deliver line and budget authority to the CIO, give us 

your positives and negatives that you would foresee in that action 

being taken.

 And then I’ll yield to Mr. Evans.

 All three of you can respond.

 Mr. Seifert. Well, some potential positives are that the CIO would 

gain control over all the IT resources within the department and be 

able to coordinate this in a better fashion, perhaps being able to execute an enterprise architecture plan.

 A potential drawback is that, a department of the VA’s size is fairly 

complex and it would be hard to imagine any one person being able to 

honestly understand every nuance that’s required for every department or every function.

 So it is possible that he or she may not be able to capture every 

little piece of that and may inadvertently overlook something.

 The Chairman. Ms. Koontz.

 Ms. Koontz. Similarly, I think that if you centralize the funding 

under the CIO, certainly the CIO gains control over the expenditure 

of those funds, and in that way can ensure that investments that are 

made are consistent with the enterprise architecture and standards 

and security requirements, et cetera, and that’s an important thing.

 My concern, in addition to the scope issue that I think that Mr. 

Seifert just mentioned, is that it removes the funds from the business 

areas, and its’ very important, if not critical, that information systems arise from identified business needs, and that’s critical to any 

successful systems development effort.

 So removing that money from the business does run its own set of 

risks. It also puts the business in a position where they have -- they 

don’t have the investment in the systems development effort anymore, because it’s not their money.

 Mr. Pedersen. I’d agree with that.

 The idea of bringing accountability is critical. What you want to 

guard against -- and you’ll have that if you bring that to the single 

point in the CIO.

What you need to guard against is that budget flows for other purposes manifest themselves back into IT. You need to guard against 
15

that. And you need those executives, those business leaders, back at 

the table to guide investment decisions.

 It should not be the CIO deciding where investments go. All right. 

They should manage it, get the business to decide where the money 

should go, what the requirements are, and acceptance of those systems they build. That’s where accountability lies on the business.

 On the CIO side, it’s build towards that spec, and that’s where that 

-- the investment management process can be very effective.

 The Chairman. Mr. Pedersen, that’s where we’d like to go.

 Mr. Evans, you are recognized.

 Mr. Evans. Mr. Pedersen, could you describe the safeguards necessary to prevent a so-called federated adoption from just becoming 

what you described as the status quo option, if there were a bureaucratic show of resistance? Can you tell us what those safeguards 

would have to be?

 Mr. Pedersen. There would be several that I could identify.

Clearly the idea of where money, people, and assets find themselves 

is going to be one element.

 Policy alone won’t protect that, because the complexity of the organization is so broad, the way money flows through the organization is 

so complex, IT spend is very difficult right now to control.

 So for the federated model to be successful, there must be all three 

of those aspects, so the technology, the people, and the budget authority for those assets must move, and that will prevent itself from at 

least the broad, the very significant change back to the status quo.

 But also, though, just good change management requires all members of the organization to be bought into it and lead that effort.

 This is not a strike-of-a-pen activity. This is -- we’ve laid out that 

this is a long-term plan, it’s hard work, it’s hard work for the executive team. This is not something that’s delegated. The executive 

team must be critically involved with this and be held accountable for 

what progress is being made.

 Sir, does that help?

 Mr. Evans. Yes, sir.

 Thank you, Mr. Chairman.

 The Chairman. Mr. Bilirakis.

 Mr. Bilirakis. Thank you, Mr. Chairman.

 Mr. Chairman, I recently returned from a two-day visit to Estonia.

 Now, here is a country which just a few years ago was behind the 

Iron Curtain. Their IT is unbelievable.

 Everybody in the country, I think, or virtually everybody in the 

country -- certainly there must be some exceptions, although I understand there probably aren’t -- pay all their bills electronically. Everything is done electronically there.

 Their cabinets, if I can call them that -- they took us into a room 
16

where the cabinet sits, and they all have a computer right at their 

particular location. Everything is done electronically.

 A smaller country, to be sure, but in no time at all, they’re well past 

us when it comes to something like this.

 You know, it seems to me what Ms. Koontz said in her testimony here, that certainly the VA did not take Clinger-Cohen seriously 

when they handled the CIO position the way they did, given the time 

that VA took to even put the position into place, and then it was a 

part-time job, and functions were divided. Then VA went one year 

with an acting CIO, and finally in August of 2001, VA appointed a 

full-time permanent CIO.

 So we pass these laws up here, and maybe it’s our fault that we 

don’t follow through adequately and have the proper oversight.

 In my time remaining, Ms. Koontz, you mentioned the challenges 

and you mentioned the lack, the implementing and practices -- I’m 

just paraphrasing. You mentioned obtaining relevant resources. I

guess there’s always that. And then the word “collaboration,” et cetera, everything related to collaboration.

 Why are these still challenges after so many years? When you research something like this, the GAO does such a great job, you must 

have details, specific instances which lead you to these conclusions.

Can you sort of expand upon that, go into these three challenges, 

particular the top two that you’ve mentioned, the implementing and 

the relevant resources, and sort of go into some details for us?

 You know, we want to be able to picture this, I guess, is what I’m 

saying.

 Ms. Koontz. I understand.

 I will confess, we have lots of details, because we’re GAO, but I’m 

not sure that I have all of them at my fingertips.

 Mr. Bilirakis. Well, I don’t want all of them.

 Ms. Koontz. But I will -- I will provide what I can.

 We have done an awful lot of work over the years about IT management practices, and in fact, that’s one of the main -- you know, our 

main lines of work, and that’s to look at things like, IT management 

practices, I mean having enterprise architectures in place, I mean 

having a robust investment management process in place that will 

again, like I said before, bring together the right people to make decisions about IT investments, and to not only make the right decisions 

but then continue to follow them over time.

 And also, we’ve done a huge body of work on security. As you know 

from the annual reporting of agencies, there are many, many, continue to be many, many difficulties in these areas.

 Many of our reports over the years point to the need to strengthen 

all these management areas and we, you know, continue to work on 

that.

VA specifically I think, one of the things that has been a threat in 
17

the work that we have done, and I think you would find it’s at those 

other agencies as well, it is not really the technology that is the big, 

insurmountable problem, it’s putting the right management practices 

in place to make things successful.

Mr. Bilirakis. It’s not the resources, the mechanical resources, if 

you will, it’s the -- 

 Ms. Koontz. Exactly. It’s a matter of having the right institutional 

processes in place. It’s a matter of having accountability. It’s a matter of following disciplined processes in terms of building your systems.

 And that does sound very simple, but yes, those are challenges. 

They have been challenges for a long time. This is very difficult. 

Much of what they’re doing -- much of what’s being done at the VA is 

very difficult. I think we can’t -- 

 Mr. Bilirakis. So it’s people.

 Ms. Koontz. -- we can’t ignore that.

 Mr. Bilirakis. It comes down to people and personalities, and yeah, 

the thing -- the big problem in government, maybe in life in general, I

guess, is what turf, jurisdiction, power, that sort of thing.

 Is that what we’re really talking about?

 Ms. Koontz. I think that may be an issue. I can’t say as I’ve studied 

it for sure, but the reason that we support the idea of having these 

institutional processes in place is that if you have these strong institutional processes, they sort of transcend all those kinds of issues.

 They transcend changes in personnel which happen all the time. 

They transcend personalities. They transcend turf. And that’s why 

we continue to try to underscore the importance of having them.

 Mr. Bilirakis. Well, and it’s critical, obviously, that we not do anything here in this legislation that’s being talked about, and really 

heavily thought out, to hurt things.

 Ms. Koontz. Mm-hmm.

 Mr. Bilirakis. We don’t want to make things worse.

 And I’m not really sure, and I haven’t even talked to the staff about 

it, what kind of cooperation they’re getting from the VA, how much 

they’ve even gone to the VA for their inputs on it, and that sort of 

thing, and that’s something, of course, that we should be concerned 

with here.

 It’s frustrating. We had a round robin in this room here a while 

back where we’re trying to get the VA to cooperate with the DoD in 

terms of exchange of medical information, interoperability. And it’s 

just frustrating.

 The VA has gone, I think, a lot further, obviously, and they have 

already been commended by us, and well they should be, but if we 

can’t get it done in the VA, which is just one department, I don’t know 

where we’re going to be thinking about transferring it over and working with DoD, which is so very, very -- well, particularly in a war such 
18

as we’re going through right now, where these people, you know, will 

-- you know, the transition, if you will, from DoD into the VA and the 

transfer of records that should take place adequately, and things of 

that nature.

 It’s frustrating. The bill was passed back in 1997, I believe, something like that, and here we are in 2005 and we’re still not there.

 I don’t know. I know we change. You know, there’s changes up 

here all the time, and so you have a lack of stability maybe, and 

then obviously in the departments and in the agencies they have big 

changes and whatnot, so you have a lack of stability, so it’s a little 

more difficult, Mr. Pedersen, than it would be, I guess, in the private 

sector, mainly for those reasons.

 But when it comes to the things like turf and whatnot, which stick 

their ugly, ugly head in the way, that upsets the hell out of me.

 Thanks, Mr. Chairman.

 The Chairman. Thank you.

 Mr. Michaud.

 Mr. Michaud. Thank you very much, Mr. Chairman.

 Many of the problems, when you look at the IT system at VHA, can 

be linked, I think, to the failure to involve front-line workers.

 In some cases, I’ve been told about, for example, the CoreFLS system failed to adequately understand the needs to supply staff and 

others in ordering basic hospital resources, and as a result, you know, 

surgeries had to be postponed due to lack of surgical kits; and there 

are other situations, such as this.

 My question is, under the different IT reorganization options, how 

can the VA best ensure that the end user, the front-line nurse, doctor, 

medical technician, and others, will have a meaningful involvement 

in identifying and selecting the IT system that will help them deliver 

the high quality care that they have to deliver.

It’s one thing to sit in an office and see what might be good for a 

system, but it’s another thing to actually be out there having to use 

that system and knowing what they need.

 So what involvement is being done to ensure that end users have 

a say in this?

 Mr. Pedersen. Clearly, sir, defining the requirement, defining that 

need is the critical element for that whole investment process.

 This is not a central -- you know, there’s no effort or desire to say, 

“We will build it and they will come.” It is clearly the role for the 

practitioners themselves, the consumer of those services to define 

what they need with the sufficient clarity that people can build it, but 

also be have to accept what comes back, and if it’s not accepted, they 

have to say why it’s not accepted, and that’s how the business and the 

technology work well together to define that.

Where those problems emerge, they typically hadn’t defined requirements sufficiently in detail. They hadn’t set up the change pro-
19

cess of when it is a change, how will the new organization absorb that 

new system. The work, will they be doing things differently? How 

differently? And has the business leader helped lead that effort? If it 

comes from the technology group, these typically fail.

 Mr. Michaud. In what process do you envision that happening? 

Clearly, you know, you might go to one area and just ask one or two, 

or it might be different in different regions, you know, around the 

country.

 I mean, how are you going to ensure that the end users will have, 

you know, adequate input into the process?

 Mr. Pedersen. As large organizations have defined it -- I go back to 

earlier when I said a principal challenge for the organization is defining how they work. They haven’t sat down to say how those interactions should occur so that you can capture and manage that risk.

 If there are differences for the health care system within each 

VISN, or within each hospital, we need to define that, or we need to 

understand it. That would be a cost to the system implementation 

and how the system will be built.

 But if that isn’t well established up front, how it gets delivered in 

the back, that will create a huge problem.

 Mr. Michaud. Thank you.

 Thank you, Mr. Chairman.

 The Chairman. Mr. Pedersen, who are some of Gartner Consulting’s 

private clients, if you’re willing to tell me?

 Mr. Pedersen. We predominantly -- we have seven to ten thousand 

clients worldwide. Predominantly, it is the largest commercial organizations in the world, so names -- household names.

Bank of America, Abbott Laboratories, Office Depot, these are our 

clients, in addition to most states and large federal governments.

 The Chairman. So is it fair to say that you are the leader of your 

field?

 Mr. Pedersen. We are the leading provider of research services, 

yes, sir.

 The Chairman. Mr. Seifert, in your testimony when you mentioned 

Clinger-Cohen, and although the act is specifically -- strike the word 

“specifically” -- does not explicitly identify federal CIOs as having any 

form of budgetary control or authority over IT resources, do you know 

if any federal CIOs that have explicit control over that budget authority?

 Mr. Seifert. As I mentioned in the testimony, the FBI recently 

granted that authority, and also in the budget proposal for fiscal year 

2006, it was proposed, although I don’t believe it has been formally 

approved, that the Department of Justice CIO have budgetary authority over IT related just to information sharing, as compared to 

the whole department.

 Otherwise, I would have to look at the different departments o see, 
20

but so far, most do not appear to.

 The Chairman. Are you familiar with HHS and in particular NIH?

 Mr. Seifert. To some degree, yes.

 The Chairman. They’re making strides, are they not, in the same 

fashion where we’re going, they just haven’t gotten there yet? Is that 

fair?

 Mr. Seifert. That would be a fair assessment.

 The Chairman. Ms. Koontz, I couldn’t help but think that I could get 

this wrong, but it’s probably pretty close.

I almost feel like I’m having a flashback here.

 Five years ago, we sat just like this and at the time I believe it was 

Secretary Goss who had just testified. He testified after you, but I 

remember -- it was before you -- and I was asking him, “What kind of 

authority and powers do you need, you know, now that you’ve finally 

got this?”

 And he said, “You know, I really don’t -- I don’t need any, because 

the Secretary is going to give me what I need to get this done” -- five 

years ago.

 And then when I look at these systems that we have here, this 

Committee, has funded, that have failed, and that were even outside 

of his ability to control, it pains me. It -- I just want to say personally 

-- it pains me.

Because five years ago is where I came up with this, to give this line 

of budget authority, and I’ve been really patient, and you’ve been, 

too.

But we are -- I think the Committee is finally about there, we really 

are, to actually do this. But I want to make sure we do it smartly and 

correctly.

 So I hate to be redundant, but I have to come back to this.

 If we’re to give the CIO budget and line authority and say, then, 

to the CIO that these are your CIOs that serve for the three under 

secretaries -- they don’t work for the under secretary. They work for 

the CIO.

 And then those regional CIOs report to each CIO, right? So we’ve 

got them in a control function?

 At the same time, we want business practices to continue, okay?

 So whatever system is being created, whether it’s -- you know, we 

have in the works this competition going on with regard to our claims 

recovery. So we’re going to find out which two pilots we’ll do for a 

national rollout. But those are business practices.

 But help me here, give me your counsel, give the Committee counsel on how we deliver line and budget authority to the CIO and how 

then we’re going to have proper interface with the business office.

 Tell me what your thoughts are.

 Ms. Koontz. I think that’s precisely the question.

 And one thing that I would like to emphasize developing about in-
21

vesting in and developing systems, the importance of collaboration 

between the CIO and the business units.

 It’s not necessarily that it’s one or the other. It’s really that it has 

to be a collaborative type of relationship.

The business is -- the business units are definitely the ones who 

have to identify the needs. They know what they want. And then the 

CIO has to be involved to make sure that this fits with the rest of the 

enterprise, make sure that -- advises them on different technological 

solutions, and sort of guides the implementation from an IT perspective.

 I think that what is more important than who precisely controls 

the funds is that you have that investment process, that you have a 

strong institutionalized investment process that brings together the 

right people to the table to make these decisions, and of course that 

has to be supported by the head of the agency. The head of the agency has to be committed to making this process work.

 The Chairman. All right.

 Mr. Pedersen, in your counsel, now to me, take the private sector, 

how they control the enterprise architecture, interfaced with business, and your counsel is to say, this is how we can do it in the VA.

 Mr. Pedersen. I agree heartily with the comments you just heard.

 The idea of transparency of the budget, of the money, of how it’s 

being spent, where it’s being spent is critical for this. That’s the first 

item that would come to mind.

 The second is again, it is not -- well, the chain of command needs to 

clearly understand the change. They have to be very active in this. 

This is a very large, complex organization. I don’t need to tell you all 

that.

 But how IT currently is structured is very complex today. There 

isn’t a well-defined chain of command. It reports to different people.

 So bringing that together is itself an effort, so that all of those individuals need to be involved and have that ability to change.

 So that quick change needs to be managed. That is a risk you’ll 

have to manage as you go to that new operating model.

 The Chairman. All right.

 Mr. Michaud, do you have anything?

Mr. Michaud. No, sir.

 The Chairman. All right.

 I’d like to thank all of you for your written testimony, and we may 

have follow-on, not today, but as we proceed, and if we can call on 

you, I’d appreciate that.

 As I said earlier, we’re trying to build a model that we want to 

leverage into the rest of the departments in the federal government, 

and more importantly, how do we do it first in the VA, and then others can examine what we do right and what we do wrong.

 And I appreciate your counsel.
22

 Thank you.

The first panel is now dismissed.

 The second panel I would like to introduce is The Honorable Gordon H. Mansfield, Deputy Secretary of the Department of Veterans 

Affairs.

 He is accompanied by the Honorable Daniel Cooper, the Under Secretary for Benefits, Veterans Benefits Administration; the Honorable 

Jonathan B. Perlin, Under Secretary for Health, Veterans Health Administration; and Richard A. Wannemacher, Jr., Acting Secretary for 

Memorial Affairs, National Cemetery Administration.

 Also at the table is the Honorable Robert N. McFarland, the Assistant Secretary for Information Technology and Chief Information 

Officer, Department of Veterans Affairs.

 We also have Pedro Cadenas, the Associate Deputy Assistant Secretary for Cyber and Information Security, Department of Veterans 

Affairs.

 I have a name that a lot of people butcher, and I think I just butchered somebody else’s name.

 Mr. Cadenas. Yes, sir. Cadenas.

 The Chairman. Cadenas? I apologize. You can call me Buyer.

 Mr. Secretary, your complete written statement will be made part 

of the official record, and you are now recognized for an opening statement.

STATEMENT OF HON. GORDON H. MANSFIELD, DEPUTY

 SECRETARY, DEPARTMENT OF VETERANS AFFAIRS

 ACCOMPANIED BY HON. DANIEL L. COOPER, UNDER

 SECRETARY FOR BENEFITS, VETERANS BENEFITS ADMIN-

 ISTRATION; HON. JONATHAN B. PERLIN, UNDER SECRE-

 TARY FOR HEALTH, VETERANS HEALTH ADMINISTRA-

 TION; HON. RICHARD A. WANNEMACHER, JR., ACTING

 UNDER SECRETARY FOR MEMORIAL AFFAIRS, NATIONAL

CEMETERY ADMINISTRATION; HON. ROBERT N. 

 MCFARLAND, ASSISTANT SECRETARY FOR INFORMATION

 TECHNOLOGY AND CHIEF INFORMATION OFFICER, 

 DEPARTMENT OF VETERANS AFFAIRS; AND HON. PEDRO

CADENAS, ASSOCIATE DEPUTY ASSISTANT SECRETARY

 FOR CYBER AND INFORMATION SECURITY, DEPARTMENT

 OF VETERANS AFFAIRS

 Mr. Mansfield. Mr. Chairman and members of the Committee, I’m 

pleased to be here this morning to discuss the Department of Veterans’ Affairs’ ongoing activities in the reorganization of our information technology programs.

 I would request also, sir, that the articles noted in the full statement also be included in the record.
23

 Mr. Chairman, I wish to acknowledge your continued interest in 

this area and thank you for your efforts -- 

 The Chairman. Hold just a second.

 Which articles are you referring to? Which articles are you referring to that you’re asking be incorporated in the record?

 Mr. Mansfield. The ones that are mentioned in my full statement, 

sir, that are summarized, I would ask that the full articles be included.

 These are the ones that deal with our medical records, and they’ve 

been presented to the recorder, sir.

 The Chairman. All right. Hold on just a second right here.

 Mr. Mansfield. If that creates a problem, we will withdraw the 

request, sir.

 The Chairman. Well, let me just share this with you, Mr. Secretary.

 What I’m going to try to get a control on here is the incorporation of 

so many outside journals and articles.

 I just learned that one of our members on this Committee asked 

that the Independent Budget be made part of an official record, and 

we exploded the cost of the production of a record because of how 

large it is, and it really wasn’t something that really was necessary.

 So let me just -- 

 Mr. Mansfield. Sir, as a compromise, I would propose that I would 

withdraw that request and that, with your permission, copies of those 

articles will be sent to the members of the Committee.

 The Chairman. That sounds like a wonderful -- thank you -- request.

 You may proceed.

 Mr. Mansfield. Yes, sir, and my apologies for the problem.

 As I’ve said, sir, I wish to acknowledge your continued interest in 

this area and thank you for your efforts to aid our evolution in this 

important arena.

 In fact, I would say that this truly has been a bipartisan effort by 

this Committee, and an effort to move us forward in the area of IT

technology for the VA.

 The size and scope of VA’s mission demands a judicious use of all 

means at our disposal. Information technology has proven to be a 

valuable tool in a number of important aspects of our business and it 

holds great promise for increasing our capacity to perform for America’s veterans.

 I want to emphasize that IT is a tool to be utilized as an important 

aid to allow us to carry out the department’s reason for existence, to 

deliver services and benefits to our nation’s veterans.

Today, we are nearing the end of a fiscal year in which we will 

provide health care to 5.2 million veterans out of 7.1 million who are 

enrolled in our system.
24

We will provide monthly compensation and pension benefits to over 

3.5 million veterans and beneficiaries.

 Also, we will work with over 500,000 veterans or family members 

to provide education benefits and 95,000 service disabled veterans 

through our voc rehab programs.

 We are also approaching 100,000 burials in our National Cemetery 

Administration facilities.

 These large numbers are made up of individuals who have earned 

the benefits we are charged with delivering.

One of the first considerations I believe we have to these millions of 

veterans is to do no harm.

 By that, I mean we must recognize that our current IT system is 

working and we are performing and providing those benefits.

 One of the reasons we are performing is because over the past decades plus we have decentralized our system, as I explained in my 

submitted testimony.

 One result of that decision was that we did gain an effectiveness. 

However, I recognize that that effectiveness has come with a loss of 

many efficiencies, and I agree that they must be regained.

As a part of the need to regain some efficiency, the VA must also 

recognize that we have reached the point in time where we must 

move, we must move towards standardization in these activities.

Dr. John Gauss, the first IT Assistant Secretary and CIO, started 

to move towards reorganization.

 His efforts resulted in some progress towards a One-VA enterprise 

architecture, effective project review and approval process, modernization of the telecommunications infrastructure, implementation of 

an effective cyber-security program for the VA, and a move towards 

consolidating control over IT budgets, expenditures, and personnel.

 When Mr. McFarland came to the VA in 2004, he recommended, 

and I approved, that we needed an outside consultant to review the 

VA IT organization and activities with a goal of giving us an “as is,” 

that is an existing view of the organization, and some proposals on 

recommendations for change.

 That activity was performed by Gartner Consulting, whose testimony has been presented by Mr. Michael Pedersen, the managing 

vice president.

 This assessment was to help us enhance the effectiveness of VA’s 

IT by first baselining how it operates today, then developing organizational models that increase VA’s IT value in terms of greater efficiencies, economies of scale, and added business value, and finally, 

charting the path VA IT can follow to deploy its new organizational 

model to truly deliver value.

 This assessment, as you noted, was completed in May of 2005. We 

are currently assessing alternative management structures and a recent organizational assessment has provided important input.
25

 We understand that any changes must serve to increase our performance on behalf of veterans, in a way ensuring no interruption of 

services to them.

 We are committed to organizing and managing our IT resources 

wisely and prudently, and look forward to this Committee’s continued support.

Basically, Secretary Nicholson, after the briefing from Mr. Pedersen, asked me to review recommendations with the CIO and the under 

secretaries of the administrations, and come up with a recommended 

model for him to make the final decision.

 I believe that the federated model is the best answer for VA at this 

point, in that it will produce the quickest return on investment.

VA’s size and the scale of its mission make it unique. While centralization of IT application and system development should be the 

long-term goal, it is not a prudent near-term solution based on the 

current culture and the ability to manage significant change.

 The federated approach includes high-level management, budget 

control, and comprehensive oversight of application and systems development within the CIOs’s office. This will significantly strengthen 

the VA’s ability to deliver high-risk, high-value application development projects.

This is the first step, and will start breaking down the stovepipes, 

moving us closer towards One-VA.

And finally, I have directed each administration to realign and reorganize the methods by which they do application and systems development and reorient those activities based on industry standard 

best practices.

 This will ensure proper planning, design, integration and standardization requirements are followed throughout the department as 

we build our next generation systems and applications as One-VA

systems to better serve our veterans.

 I might note in closing that the CIO will have management oversight and budget decision authority.

 Two issues I would like to address include, number one, resources. 

That issue has been brought up.

 But I would say that this Congress and the administration have 

been generous with the VA for funding IT projects, and I believe that 

it’s not an issue of dollar resources as much as it is qualified personnel that we need to be able to get into this organization and help us 

design, manage, and run these programs.

 We also recognize that right now we cannot do it from inside, and 

as we move forward towards a change, we’re going to need outside 

help, and we’re planning on that. And the last point I would make is 

one that’s mentioned in the Gartner report. And that is that we do 

have a highly motivated workforce in the administrations that want 

to deliver services to veterans and will get in line with a proper plan 
26

that’s properly explained and that they have a part in designing and 

moving forward.

 Thank you very much for this opportunity, Mr. Chairman, and I

look forward to answering your questions.

[The statement of Hon. Gordon H. Mansfield appears on p. 90]

 The Chairman. Thank you, Mr. Secretary.

 I can choose one word to describe the mission when I took over this 

job as Chairman of the Committee: accountability -- accountability, 

accountability, accountability.

 People will demand it on this Committee, will demand it equally of 

the administration or any of the advocates on behalf of veterans.

 Why did you hire Gartner Consulting?

 Mr. Mansfield. At the point in time we made the decision to hire 

them, we decided that, with Mr. McFarland as a brand new assistant 

secretary for information technology, and I as a brand new deputy 

secretary, looking at the situation we had in hand and in discussions 

with the then Secretary, acknowledged that we needed to look at this 

total IT structure, what it was doing, what it was not doing, and make 

decisions to make changes in its operations.

 We wanted to bring in somebody from the outside that could take 

an outside view of it, and give us some information on where they saw 

the “as is” picture, and also make some recommendations where they 

thought we might want to go.

 And Mr. McFarland is the person that was put in charge of that, 

and followed up on that mission.

 The Chairman. And why that specific consulting firm?

 Mr. Mansfield. I’ll turn that over to Mr. McFarland, since he’s the 

expert in this area.

 Mr. McFarland. Well, sir, Gartner and the firm which they acquired, which was META, is known throughout the industry as having a unique set of qualifications.

 Primarily, I was interested in someone that didn’t have a vested 

interest in what we did and how we organized ourselves and what 

the outcome was.

 Gartner nor META had any businesses that are related to integration of products or selection of products and tools, so I was interested 

in an independent attitude.

 I also wanted a fresh set of eyes. Everybody in the VA has an opinion about IT. I wanted a fresh set of eyes, and that was the best fresh 

set of eyes I could find at the time, and I -- 

 The Chairman. What was the cost of the contract?

 Mr. McFarland. The contract was, I believe, sir, somewhere between $4.5 and $5 million, I believe, to the best of my recollection.

 The Chairman. Secretary Mansfield, what makes an effective CIO?

Mr. Mansfield. Someone that, number one, is knowledgeable and 
27

understands information technology, understands what it can do as 

a tool, somebody who is able to look to the future, and in this fastchanging arena, be able to anticipate some of the changes or be able 

to move with the changes, and then somebody who is dedicated to 

ensuring that these activities go forward in the best way possible.

The Chairman. You would concur with this statement, that this is 

the 101, that IT is an enabler for you to accomplish your mission in 

an effective manner, correct?

 Mr. Mansfield. Yes.

 The Chairman. In order to have a good enabler, you have to have 

one architecture; would you concur with that?

 Mr. Mansfield. Yes.

 The Chairman. So it is extremely important, whether you choose a 

centralized approach or a federated approach, that we maintain one 

architecture, correct?

 Mr. Mansfield. Yes, sir.

The Chairman. Okay.

 Let me -- Mr. Secretary, may I turn to your three under secretaries 

for a moment?

 Mr. Mansfield. Pardon me, sir?

 The Chairman. May I turn to your three under secretaries for a moment for questions?

 Mr. Mansfield. Yes, sir. That’s what they’re here for.

 The Chairman. What would be the concern of the three of you of a 

centralized approach, whereby we give a line of budget authority to 

the CIO?

 What are the positives of that approach, and what are the negatives of that approach with regard to centralized, let me just say this, 

recognizing that testimony we just had before you took to this table, 

the testimony was what you presently do is not mirrored anywhere, 

not anywhere.

So give me your counsel. Whoever wants to go first.

 Mr. Mansfield. Dr. Perlin, do you want to go first?

 Dr. Perlin. Thank you, Mr. Chairman for the opportunity to comment on that.

 First, let me acknowledge the positives of either centralization or 

a federated approach.

 We are One-VA. We should have seamless interoperability between benefits and health and commemoration of veterans, period. 

We should have an architecture that supports and facilitates that.

 Some might actually agree that the control of funds within the Office of Information Technology will allow us to coordinate our projects 

and realize an enterprise architecture that delivers that.

 My concern about centralization really relates to our history, as 

well as the experience of health information technology in the United 

States.
28

 Health information technology is not pervasive. Less than 20 percent of health care providers, certainly hospitals, have health information systems, and certainly VA has been hailed for its exceptional 

performance in delivery of high-quality health care facilitated by 

health information technologies.

 In fact, this month’s issue of Healthcare Papers in Canada, (an entire issue) was dedicated to understanding the improvement and the 

transformation of VA. It recognized the health information technology as a supporting technology, and it recognized further the performance measurement and the accountability.

 Sir, you asked about accountability. Our performance is our accountability. Our performance is the fulfillment of our mission of 

high-quality health care services.

 We’ve had a history of a centralized health information before. In 

fact, before this very Committee, the Inspector General testified he 

did a “flyoff” between one centralized and one decentralized program. 

Ultimately it was the centralized one that had failed.

 It failed because it had characteristics that were similar to some of 

the shortcomings of CoreFLS. It didn’t engage the end user.

 So with all due respect to what I’ve just heard in terms of testimony and with absolute cognizance of health information in the 

United States and the experience of health care executives and chief 

information officers in health care, I support the consolidation of the 

infrastructure, the generic architecture, the enterprise architecture, 

but the attachment of development to the clinicians, to the end users 

is the defining characteristic and has been reported in Healthcare 

Papers, among other journals, as the key feature of the success of the 

health information system in VA.

So in the federated model, I think we gain the efficiencies but preserve that unique aspect of the information system that allows and 

has demonstrated VA’s ability to deliver high-quality care to veterans.

 The Chairman. Admiral Cooper.

 Admiral Cooper. Essentially, I would say that the devil is in the 

details.

 In my organization, VBA, we essentially have a centralized process. In my opinion, I could acclimate to whatever decision is made.

 The whole execution of the IT reorganization is dependent upon 

the agreements that we have and how we execute them. My concern 

is that because such a large portion of VBA’s budget goes to paying 

people, if at times I have to use money, I do not having full control of 

the budget. However, that is something that can be worked out.

 The Chairman. Mr. Wannemacher.

 Mr. Wannemacher. The National Cemetery Administration supports the VA CIO by working within federated model. This insures 

we adapt and adhere to Department goals which promote synergy 
29

and efficiency of business processes.

 With the smallest of the three VA administrations IT budget, NCA

has operated with an internalized centralized system for the past 10 

years in order to enhance memorial benefits and service delivery to 

our Nation’s veterans and their families.

 Mr. Mansfield. Mr. Chairman, Dr. Perlin would like to add another 

point, if he may.

 Dr. Perlin. I think you asked for the pros and cons of the two models, so I was very taken by the testimony where it supported the thesis that I just offered.

 It was said that one of the risks is a lack of intellectual investment 

in the activity.

 That singularly has been the disconnect in the clinical community 

in terms of getting health information technologies to work. Maintaining that connectivity with clinicians, is one of the key features. 

That is why I recommend the federated model.

 The Chairman. Secretary McFarland, if we were to give you line 

and budget authority, how do you place at ease the three under secretaries that you’re not going to stymie innovation, and their ideas?

 There’s a budget. There’s only so many dollars. But you’re part 

of a team, and when we’re now going to heed counsel that you paid 

a lot of money for, and he talked about the importance of collaboration between the business and the CIO, how do we achieve a central 

model?

 Mr. McFarland. Well, I believe in no matter which model you 

choose, a key factor has to take place, and that is a customer orientation.

 I’ve spent 33 years in the information technology sector, and I am 

a full believer and have seen this environment be successful, where 

you have a customer mentality.

 IT is a tool. It’s a business enabler. It serves its customers. It 

should first serve the veteran in this organization and it should second serve the employees, and the employees of the administrations.

 If the users are not served, then IT fails.

 So any IT organization that I’ve ever headed up or will ever head 

up will have a customer mentality that says that the people we serve 

every day and supply power to, supply technology to, are the customers. They are the people that we have to deliver services and technology that make their business applications work.

 We have to take input from them on what’s required. They are the 

experts.

 IT itself is not a business application. IT is a tool. And it can only 

be enabled if you’re able to serve the customer.

Candidly, I haven’t always seen a customer mentality in VA in the 

18 months I’ve been here, and I believe we have to first and foremost take 6,000 IT people out there, no matter what they’re doing or 
30

where they’re serving, and get them to understand that IT and their 

participation is about serving the customers -- the veterans and the 

employees.

 The Chairman. All right. That was pretty hard.

 We’re well aware of, as we roll out in more areas the patient medical records issues, that those words are all meant to be customer 

friendly and help deliver and improve quality care.

 So as Dr. Perlin would come up with an idea, all right, or roll out 

into another VISN, your job would be to make sure that it fits the 

architecture, right, and hardware and software, right?

 So you got to put a check in the box for that, under a centralized 

approach?

 Mr. McFarland. Yes, sir.

 The Chairman. All right? Not that you’re the guy that’s to tell him, 

“No, it cannot be done,” or if you say it can’t be done, then it’s a real 

issue that’s got to be resolved then between Secretary Mansfield and 

the Secretary, right?

 Mr. McFarland. Well, under either model you have to be able to 

do this.

 Under either model, you have to be able to agree that anything the 

user wants you to build or wants you to run has to be able to meet 

the enterprise architecture. It has to be able to fit within the One-VA 

approach to delivering services.

 Our job, in either model, is to advise the administrations and their 

constituents exactly what will fit and what won’t fit -- 

 The Chairman. Okay.

 Mr. McFarland. -- and then sit down and negotiate how we change 

a specification, how do we move a design to make it fit. That’s a collaborative effort. It has to be done that way.

 The Chairman. All right.

 Mr. Michaud,.

 Mr. Michaud. Thank you, Mr. Chairman.

I have one question for Mr. Mansfield.

 I realize that the VA is still in the process of securing IT assets and 

restoring information systems and communication in the Katrina-affected area, and this may be too early for the question.

 But do you have any preliminary lessons learned on improving the 

IT system at VA, and how would IT reorganization have improved or 

hindered efforts during this disaster?

 Mr. Mansfield. Thank you for that question, sir.

 I would make a couple of introductory comments, and then turn it 

over to the experts here.

 But I do know the one lesson -- and we do have a lessons learned 

group out of our readiness operations center that is currently in the 

process of coming up with a total lessons learned for everything in 

this operation, as we do every time we go through one of these exer-
31

cises.

 One lesson learned is that our backup communications systems 

were not able to do the job, and we need to go forward and find something better than we had and get that on site and be able to use that 

so we can maintain communications.

 One of the aspects of our system, though, is fortunately, because 

of our planning, because of our training, we have folks out there that 

have been through this, and were able to operate on their own even if 

communications was interrupted from a certain point.

 The other part of it is dealing with records, and I’ll turn that over 

to Dr. Perlin, is that in general, we were able to make the move in 

time to be sure that any of the veterans in that affected area, no matter where they moved to, the practitioners were able to get access to 

those records.

 However, it does raise one issue that is a problem in our system, 

and that is that it oftentimes, again in these, as I say, decentralized 

operations, each one doesn’t fit across the whole system, and that’s 

where we need to go, where instead of having to work a special fix 

each time, we can ensure that across the total system, those records 

are interoperable.

 And I would ask Dr. Perlin to comment on that, and then Mr. McFarland.

 Dr. Perlin. Thank you, Secretary Mansfield.

Congressman Michaud, thank you for the question.

 I actually have in front of me two articles from today.

 One: “Katrina Shows Need to Computerize Records,” Orlando Sentinel, talking about how effective having electronic health records 

were.

 And a similar article from Government Computer notes, “Agency 

IT Provides Relief After Katrina.”

 Both comment on VA’s effectiveness in meeting the mission: That’s 

serving veterans - ultimately our mission, not an IT mission - a mission of patient care, because those records could be made available 

to the entire system, being hosted at another facility, even after New 

Orleans came off-line.

 The deputy had mentioned one important improvement, that backup communications henceforth will have satellite uplinks, and we appreciate the collaboration with the Office of Information Technology 

in establishing those at Biloxi and Jackson in the middle of the crisis 

to provide broadband communications.

 The second is that -- 

 The Chairman. Can I interrupt a second?

 I want you to correct me if I’m wrong.

 There’s no single data repository for all of these records. Would 

that not be correct? That’s correct, is it not?

Dr. Perlin. That is correct.
32

 The Chairman. Okay. So when a patient was transferred directly from, whether it’s New Orleans to Houston, or Biloxi to Jackson, 

somebody had to back up a tape.

 So when that patient was taken directly to Houston, Houston 

couldn’t come on line, show a doctor, “Here’s what the medical record 

is,” that it had to be backed up and inserted?

 Dr. Perlin. No, that record would have been, Sir, available had 

there been connectivity between New Orleans and Houston.

 Under the circumstance, the latest footprint, the most recent data 

was acquired in fact, during the storm. In fact, that’s one of the takehome lessons: that the facility could continue to operate independently!

 Let me turn to Mr. McFarland in terms of our corporate repository.

 Mr. McFarland. It is true that, in order to get the records from New 

Orleans to Houston, we did have to take a tape from New Orleans 

bring it to Houston, install a configuration that was equal to the New 

Orleans configuration, and then bring it up.

 One of the initiatives that Dr. Perlin’s people and myself have been 

working on some two months now, two-and-a-half, three months now, 

is the concept of regional data processing centers, so that we can get 

to a point where these records will not have to be moved by tape, that 

they would be accessible anywhere within a region that a veteran 

would be able to go.

 But, yes, currently today, they are different instances, different 

configurations based on medical centers, but there is a process in 

place to change that.

 The Chairman. All right.

 Mr. Michaud, I want to thank you for yielding to me, because that’s 

a fine example of why I’m hesitant on a federated approach, because 

we think that this is all out there, but it’s really not if you don’t have 

the word, “connectivity.”

 I yield back to the gentleman.

 Mr. Michaud. That’s a good point, Mr. Chairman.

 Actually, that was going to be my follow-up question. Is there a 

central place where there is a backup, and if so, where is that, or do 

you envision that being so?

 Dr. Perlin. Sir, there is backup of corporate data nationally. It 

doesn’t integrate as one seamless record at this moment.

 The project Mr. McFarland described, the health data repository, 

will allow it to operate as one seamless health record.

 The reason it does not is not because we willfully wanted to have 

different instances of VISTA. The reason it is as it is now is entirely 

an artifact of history.

 Even ten years ago, let alone 20 years ago, one didn’t think in terabytes of data or national data files. It was really quite miraculous to 
33

stand up one hospital on one system.

 In fact, as they evolved over time, there was differentiation.

 The task before us, and Mr. McFarland and I are absolutely in lockstep agreement on this, is that there be one consistent instance of the 

system of the electronic health record, and it’s that which allows in 

this really imminent next generation of the health data repository 

one seamless record across the United States.

Mr. Mansfield. Sir, if I may add a follow-up to that, to the Chairman’s point, it’s my belief in the federated model that we’re talking about and recommending to go forward with, that the issue you 

brought up would be solved because there would be one operational 

system that would be under the control of the CIO, across the whole 

VA, and that would take care of not only the problem with VHA, but 

it would, when we get to the final point, also give us One-VA where 

the veterans’ records would be accessible across the system.

 So in the model that I’m looking at and proposing, we would have 

that solution, sir.

Mr. Michaud. I want to follow up on that question.

 So what would happen if we had a terrorist attack and it took out 

that system? What would happen as far as the records?

 The Chairman. The national system or the local system?

 Mr. Michaud. Yes, the national system.

 Mr. McFarland. Well, first off, sir, we would never have a single 

instance of any system.

 I believe we will be able to put those records, that national system 

in multiple locations, and have a mirror image of those at all times, 

so that no matter whether we lose any specific site, we will be able to 

recover immediately from the backup site, and that’s a mirroring effect. You don’t want it to be anything except a mirrored image.

 Mr. Michaud. Thank you very much.

 And Mr. Chairman, Dr. Perlin had mentioned a couple of articles. 

We do not need them for the record, but if he could provide the Committee with those articles, I’d appreciate it.

 The material was provided to the Committee, and is maintained in 

the Committee files.]

 The Chairman. Thank you, Mr. Michaud.

 Mr. Michaud. Thank you.

 The Chairman. Mr. Bilirakis.

 Mr. Bilirakis. This is not, I guess, considered a very sexy subject, 

high-profile, et cetera, and yet we’ve got a room full of people here.

 I mean, to me that’s very meaningful. There’s concern in this area. 

There’s a lot of interest in this area. And I’d like to say there’s a lot of 

frustration in this area.

 Mr. McFarland, Mr. Secretary McFarland -- I guess you’re Secretary, right?
34

 Mr. McFarland. Assistant Secretary.

 Mr. Bilirakis. Under the federated model that Mr. Mansfield and 

others have talked about putting that into effect, you would be in 

charge, I guess.

 Would you have the adequate authority to be able to do what is 

necessary to be done, referring now again -- I don’t know whether Ms. 

Koontz is still in the room -- referring again to the challenges that 

she mentioned, the implementation practices, the obtaining relevant 

resources, the collaboration.

 Would you have the adequate authority?

 Now, I know you guys work next to each other and you probably go 

to lunch together and you’re friends, as well you should be.

 But can you be honest with us?

 Mr. McFarland. As long as I have what I would consider, and this 

may not be the right government word, but I’ll use it anyway, as long 

as I have veto power over the way money is spent on IT infrastructure 

and IT projects -- 

 Mr. Bilirakis. How about if money is spent for -- money which may 

be allocated to IT, but is not being proposed to be spent for IT, is being 

used for any other purposes?

 Mr. McFarland. Well, then, would that be the case, then I would 

not have the control, no.

 But I don’t believe that is the intent of either model, If I understand 

what we’re working -- 

 Mr. Bilirakis. I’m sure it’s not the intent, officially the intent.

 What happens now? You have money allocated to IT, and is all of 

it being spent on IT?

 Mr. McFarland. I daresay, according to what staff tells me, it is 

not.

 I do not have visibility into all of the money being spent today, and 

as to whether it is completely spent on IT -- 

 Mr. Bilirakis. Should you not have that authority?

 Mr. McFarland. I definitely should have.

 Mr. Bilirakis. You should have that authority, and you would not 

have under the model that is proposed by the VA, would you?

 Mr. McFarland. No, I believe I could have it under either model. I

don’t have it today, but I could have it under either of the models that 

are proposed here.

 Mr. Bilirakis. Well, I should think that it’s not a matter of could 

have. I think it should be a matter of should have or will have based 

on the way legislation is crafted.

 The VA has spent, what is it, half a billion dollars, whatever, what 

the figure was for the consultant that we talked about earlier.

 They disagree, the VA disagrees with the consultant’s recommendations. As I understand it the piece of legislation which the Committee 

is crafting is consistent with the consultant’s recommendations.
35

 How do you feel about that?

 Mr. Mansfield. Sir, I would say that -- 

 Mr. Bilirakis. I was asking Mr. McFarland, but I would like to hear 

from you, too, Gordon.

 Mr. Mansfield. Sir, I would say that we have agreed with one of the 

options, and the consultant, as requested, came up with a number of 

options, and we believe that, based on his input plus other input, that 

the one that we’ve chosen is the best one for the organization.

 Mr. Bilirakis. Are you saying the consultant -- 

 Mr. Mansfield. We didn’t say that “You have complete control and 

you’ll run this.” We said, “We want you to make recommendations.”

 We’ve taken those recommendations inside the Department, and 

as I mentioned, at the Secretary’s direction, we’ve had numerous discussions with the CIO and the administrations and come up with 

what we have -- 

 Mr. Bilirakis. So the consultant suggested a number of options 

and the centralized model which is going into the legislation is one of 

them, but the federalist -- the federated model -- 

 Mr. Mansfield. Yes, sir. And I believe his testimony that he presented here indicates that those two are the preferred -- those two are 

the preferred models.

 Mr. Bilirakis. Mr. McFarland, what say you?

 Mr. McFarland. I believe that I can support a federated model 

based on the concept that the very first thing we need to do is get our 

arms around the infrastructure.

 The reason we have stovepipes today is because the infrastructure 

is divided among the administrations. There is no collaboration. 

There is no joint use. There is none of that today. And that is the 

primary reason for the stovepipes. And I also -- 

 Mr. Bilirakis. Would the federated model be consistent with that 

particular status quo?

 Mr. McFarland. The federated model would solve that. Both the 

centralized and the federated model would solve that issue.

 The other thing, candidly, that I have to look at as a political appointee is, I have a limited amount of time to pour what I call concrete with good rebar, and that is that what can I do quickly in my 

three years left here that I can do to make sure that we make change 

that stays here; and certainly, the infrastructure is the quickest return on investment.

 Mr. Bilirakis. Which model would you prefer, sir? You, our political 

appointee?

 The Chairman. In your personal opinion.

 Mr. McFarland. In my professional opinion -- 

 Mr. Bilirakis. Personal, professional, any kind of opinion.

 Mr. McFarland. -- I support what the consultant said.

 That being said, it is the big bang, and the big bang has a great 
36

amount of risk to it.

 And at the direction of the Secretary and the deputy -- 

 Mr. Bilirakis. Are you a lawyer, Mr. McFarland?

 Mr. McFarland. Pardon me, sir?

 Mr. Bilirakis. Are you a lawyer?

 Mr. McFarland. No, sir, I am not a lawyer.

 Mr. Bilirakis. Well, you know how to dance around these questions.

 Mr. McFarland. I’m not trying to dance, sir.

 I’ll be honest and tell you, in my professional opinion and my personal opinion, the centralized option is the best thing in the long run 

for the VA.

 Mr. Bilirakis. Okay.

 Mr. McFarland. I’m also a realist and know that we have to take 

this thing a step at a time. There are no -- 

 Mr. Bilirakis. Okay, and that’s good. I really appreciate your adding those additional words. We have to take it a step at a time and 

what not.

 And I think it’s important that the Committee understand, I know 

that the Chairman understands, that we don’t want to do any harm 

here. We don’t want to cause more problems.

 And we understand also, or we should understand, hopefully we 

understand correctly that you’re on the line and you know this stuff 

better than we do.

 But, you know, we have concerns. The major VA IT investments 

that have failed in the past, who was -- you know, the questions, 

who was in charge of the following programs: VETSNET, CoreFLS, 

VISTA, two billion dollars down the drain, that could have gone to 

health care, Mr. Secretary.

 I understand the CIO was not in charge. Who was in charge? Who 

is currently in charge of management of these programs?

 We can get answers from you, but these things have happened.

 Now, there’s a level. We’ve already said great things about the VA. 

We’ve commended you. Frankly, I felt like standing up and applauding you on the work that you have done on Katrina and your help 

with 9/11 back in 2001, et cetera.

 But there are a lot of failures here, and so there’s a lack of credibility, I would say.

 And Dr. Perlin -- you know, you want to put up your hand -- you’re 

a doctor, and you care about health care, and you don’t mind my concern. I’ve chaired the Health Subcommittee on the Energy and Commerce Committee for 10 years on health care, and I’m very much 

concerned with it all.

 By God, the question that Mr. Michaud asked, about why the Houston computers had to be reconfigured in order to be able to use that 

tape? What’s wrong? Something is wrong with that scenario. 
37

 And I’m going to ask, on behalf of -- I’m vice Chairman of the Committee. I’ve already cosponsored the legislation.

 But I’m going to ask that we sit down with you all and that you’ll be 

yielding, that you’ll be yielding, that you’re not going to be stubborn 

and say, “Hey, our model is the model that we want to go to and we 

don’t want to cooperate as far as a centralized model is concerned.”

 But Mr. McFarland, who I think can see the forest for the trees 

hopefully, has said that the centralized model is clearly the preferred 

one. He said he can work with both of them, I think, as I understand 

his paraphrasing his statements, but that’s the better model.

 Now, should that model be twisted a little bit and whatnot to make 

sure that no harm is done? I suppose so. But we’ve all got to be open 

minded.

 I’ve taken a lot of time, Mr. Chairman. I apologize for it. But I’ve 

sat in these meetings all through the years. We had our roundtable 

the other day. I just can’t get over how little Estonia can do what 

they’ve done and how we can’t even do it within one of our departments.

 Thanks, Mr. Chairman.

 The Chairman. Mr. Michaud.

 Mr. Michaud. Thank you, Mr. Chairman.

 I’m reading the GAO Report, and I have one question, Mr. Chairman.

 According to a memorandum dated back in August of 2002 from 

Secretary Principi, in that memorandum, he talked about realigning 

to a central IT system. That was back in 2002.

 The GAO reported in September of 2002 that it would build credibility, it would achieve a One-VA, it was bold, it was innovative, and 

that memorandum was signed in 2002.

 My question is, why hasn’t it happened? That was for a centralized 

system.

 Mr. McFarland. I’ve only been here 18 months, so I didn’t have the 

benefit of being here at that time, but I’ve done my best to look into 

the history.

 I believe the intent was there. With all due respect to my predecessor, I do not believe it was executed on. It’s as simple as that.

 Mr. Michaud. I guess from the VA side this was signed by the former Secretary.

 What has been done to move it to a centralized system?

And I realize, Mr. Mansfield, you’ve only been there for a short 

time, as well. I don’t know if Dr. Perlin or -- 

 Mr. Mansfield. Sir, the effect of that memo was carried out with a 

change, I believe, of 97 personnel being in effect dual-lined, reporting both to the CIO and to the administration head, and then further 

down the line.

 And as I mentioned in my oral statement, there was work done on 
38

a One-VA enterprise architecture. There was a move towards project review that got the Office of the CIO the ability to sign off before 

money could be authorized.

 There was a modernization of the telecommunications infrastructure that Mr. McFarland finished, which is saving us millions of dollars, the implementation of an effective cyber security program -- for 

the first time in history, VA has completed that and is certified -- and 

a move towards, only a move towards, consolidating control over IT

budgets, expenditures, and personnel.

 And as I indicated, what Mr. McFarland and I were looking for 

when we asked for the outside consultant to come in was to look at, 

based on that change, where we were and what did we need to do to 

go forward so that we would have a plan, and then we could, inside 

the Department, make a decision or make a recommendation to the 

Secretary, based on his final decision then, as you said, sir, assume 

the responsibility and move forward.

 Mr. Michaud. If I might, Mr. Chairman, just follow up.

 Mr. McFarland, you said you’ve only been there 18 months. That’s 

a year-and-a-half.

 Did you make any attempt to try to move forward on this memorandum?

 Mr. McFarland. Well, as soon as I got my hands on the memorandums and the history is when I sat down with the new deputy and 

said, “We are not where this says we were supposed to go. I think 

we need to get an understanding of where we are and then figure out 

how we get to go where we’re supposed to go.” And that’s what generated the Gartner study.

 And, you know, it took me some time to get that contract awarded. 

We have our share of issues in the area of getting contracts, so it took 

some matter of months before I could actually get a contract out.

 So I apologize for having been here 18 months and not getting it 

done sooner, but I moved about as fast as I was able to, sir, candidly.

 Mr. Michaud. Okay. Thank you very much.

 Thank you, Mr. Chairman.

 The Chairman. You know, Mr. Michaud, when you talked about 

what’s been done in moving toward that direction of centralization, I

couldn’t help but think there’s also been a trip, a stumble, and a fall.

 And I recall the trip, the stumble, and the fall: CoreFLS, VETSNET, 

and VISTA, and some of that was outside of control and responsibility.

 And so what I’m hopeful, I think, as we move toward this centralization, that there’s not going to be a lot of fingerpointing. We’re going to know how we’re going to make the system accountable.

 At this moment, I want to pause, and I think we need to get some 

input here from the chief information security officer.

 We’ve heard from the other three under secretaries, and you work 
39

directly for McFarland. Now, we know that the Federal Information 

Systems Management Act gave an F on the report with regard to cyber security, and so we’ve got some pretty strong concerns here.

 And so if Congress were to move toward a centralized approach 

and follow the counsel of Gartner Consulting, as opposed to a federated approach -- so take federated approach and flush it out of your 

mind at the moment -- how do we improve the cyber security under a 

centralized approach?

 Mr. Cadenas. Thank you for the opportunity to be here, sir.

 Tremendous opportunities in regards to a centralized approach, as 

you’ve been talking about, sir.

 With me working for Mr. McFarland, it allows me to go out there 

with my teams, established a more formalized process, applying 

hardening systems to ensure configuration baseline, change control 

boards, everything, and bringing in what I would call good systems 

engineering from a security point of view, to out there and do that 

to the systems out there, to ensure hardening -- perimeter in depth, 

defense in depth approach.

 The Chairman. So if we’re under the centralized approach, the CIO, 

your boss, now owns the people for the three under secretaries, and 

then owns those CIOs that go down regionally, right, and it continues 

to go down.

 Do you believe that the centralized approach will regain control, or 

could take this control away from these autonomous networks?

 Mr. Cadenas. Well, sir, I’ve been there -- I’m a newbie, as well. I

will have my third anniversary here in November.

 Yes, it will help in those areas, but what we have been doing is, we 

have developed a tremendous collaboration effort with the community in working with us. The result of worms that we’ve experienced 

in the past have only applied or reinforced the need for that strong 

collaboration.

 The control that you’re talking about, sir, that it will allow us to 

have, will allow us to act much quicker. A great deal of our success 

has been on KOOMBAYA’s, shared accountability working groups 

with the various communities out there. Versus having that control, 

I can immediately engage and move out.

 The Chairman. Well, if the Federal Information Systems Management Act Report gave you an F -- 

 Mr. Cadenas. Yes, sir.

 The Chairman. -- I mean, come on. We need to move out swiftly 

here.

 Mr. Mansfield. Sir, if I may, I believe that the federated model that 

I’m proposing would give him exactly the same capability. He would 

be able to do it.

The Chairman. Well, I asked my particular question because I think 

we’re about to follow the centralized approach that you paid $5 mil-
40

lion to a consultant that’s giving us counsel here.

 And I know, Mr. Secretary, you’re under tremendous pressures. 

You have three under secretaries that you also have to work with, 

and you’ve developed relationships with.

 And to be very frank with you, I don’t have much patience, because 

I’ve been doing this for six years -- six years -- and I’ve watched the 

system, and all along, it’s been, “Steve, let this mature, let it massage, 

we’ll move in that direction, incremental approaches.” I’m pretty exhausted, Mr. Secretary.

 Mr. Bilirakis. Well, Mr. Chairman, sorry to hitchhiked upon your 

comments.

 This trying to set up an IT system that will be able to accomplish 

all of these things the way it should in today’s high-powered electronic and mechanical world is significant, but it’s even more so now 

because of the threat of terrorism, because of natural disasters, and 

everything of that nature.

 So, boy, we should all have lost our patience, not knowing what 

may happen tomorrow.

 But you seem to be intent on the federated model. The Committee 

seems to be intent on the centralized model. Hopefully, there will be 

something in between or at least some of your ideas certainly should 

be used to be part of any legislation that comes up.

 But what I’m wondering, Mr. Chairman, is if they’re working towards a federated model with their full speed ahead on the federated model, and we in the meantime are thinking another way, and 

the time that it takes, of course, to get through the process, through 

this very unwieldy republic system of ours, it becomes legislation, are 

they going to be expending dollars on a system that will not -- that 

will be moot, basically, once we finally have -- 

 The Chairman. That’s a good question, and I think that’s one that 

we can also entertain off line, but just playing this out, my counsel to 

the Secretary would be to be cautious, in how you proceed.

 Because there is such strong bipartisan support on this Committee for a centralized approach, we will immediately go to conference 

with the Senate, where we also know that House Appropriations staff 

along the Senate Appropriations staff is also embracing, I believe, a 

centralized approach.

 So there is time between now and when we leave, potentially, on 

November 18th, that we could actually send this to the President.

 So, Mr. Bilirakis, your point is well made, and I think Mr. Mansfield has heard the response.

 I yield back to Mr. Bilirakis.

 Mr. Bilirakis. Well, thank you, sir.

I would just hope, Mr. Mansfield, that you would -- you know, let’s 

be logical and reasonable and all this, knowing that this may be coming down the pike, with hopefully suggestions from you all, which 
41

might sort of squirm it a little bit, you know and change it a little bit 

and that sort of thing.

 I don’t know where it might be needed and acceptable that in the 

process of what you’re doing with your federated model, you take all 

that into consideration.

 As I understand the federated model, it probably would be right on 

the same path as the centralized model, anyhow, so hopefully, we’re 

not talking about any waste of dollars or waste of effort that would 

then have to be undone later on.

 Mr. Mansfield. Yes, sir. In fact, the Gartner report makes the point 

for the centralized model that it cannot be done in one step, that it 

will require multiple steps, and the federated model is a part of that 

process, I would believe, or can be made so.

 Mr. Bilirakis. Okay. That’s good. Thank you, sir.

 The Chairman. Thank you.

 Mr. Michaud.

 Mr. Michaud. Just a comment, Mr. Chairman.

My question to Mr. McFarland wasn’t to point fingers. It was more 

or less to find out why they have not moved in that direction, because 

having been involved for a number of years at the state level, if sometimes individuals who are running programs, if they do not like the 

particular program, they’ll do everything they can to make sure that 

it doesn’t happen, so that was my questioning.

 And I agree with you 100 percent on the accountability, and we 

definitely have to have accountability and make sure that the end 

users are involved in doing it, because they’re the ones that are going 

to have to use the system.

 And I know that you will hold them accountable, and actually, in 

Maine, Mr. Chairman, we have a saying, and hopefully you don’t take 

it disrespectfully, but knowing you just the short time I have known 

you, you’re like a pit bull. When you get something, you hold onto it, 

and you hold that accountability.

And I think we definitely will get that accountability. Looking forward to working with you, making sure that we have a system that 

everyone can live with and will be accountable not only to the taxpayers but also to members of Congress.

 Thank you, Mr. Chairman.

 The Chairman. Thank you, Mr. Michaud.

 I appreciated the candor of the gentleman from Gartner Consulting 

in that it’s almost like, well, of course, this isn’t going to be out in the 

private sector, because there it is for profit. Right? And if you’re a 

government enterprise, you don’t have to worry about it. You do budget submissions. Who wants to be against spending in the veterans’ 

arena? Right?

And so trying to bring efficiencies to these processes, I mean, it is 

our responsibility.
42

 You know, there are a couple of really large procurement contracts 

with regard to IT that are sitting out there -- PAIRS and PCHS. 

PCHS and PAIRS.

 So if we’re about to move into this, tell me where we are on these 

two larger procurement contracts that could involve billions of dollars. What are we doing?

Mr. McFarland. Well, sir, we are currently operating under what’s 

called PCHS II, which is a common hardware and software procurement vehicle that we use to buy all of our hardware and software 

throughout the VA. It’s based on a set of standards.

 It has served us reasonably well, but it’s due to be redone, because 

it’s about to hit its cap, and we’ll have to implement anew what I call 

PCHS III next year.

 I’ve been intimately involved with procurement and have made it 

clear what I want out of PCHS III, which is different than what we’ve 

had in PCHS II.

 I want to get a lot more standardization, because it appeared as 

PCHS II evolved, just about anyone could select something and get it 

on PCHS, and that allowed them to buy it, and that did not serve us 

as well as I would have hoped in our standardization efforts.

 So PCHS III will produce a much stronger standardized environment.

 Under any move that we make from an IT reorg, I will control that 

hardware and software buy, and I will see that we get standardization and that we get common configurations out there through this 

contract.

 The Chairman. I don’t know where you are in the letting of these 

contracts.

 Mr. McFarland, should we not let these contracts until this legislation is in place, so that you’ve got this line of budget authority?

 Mr. McFarland. We are still working under PCHS II, and will 

through a part of next year.

 I believe PCHS III isn’t due to come online or be let, if you will, the 

contract be let until about the middle of next year.

 So we’re at a point where nothing that you would do between now 

and then would get in the way of any aspect of trying to modernize 

that procurement vehicle.

 The Chairman. All right.

 Admiral Cooper, the Navy uses a process where the Fleet expresses 

a need for a new system, provides requirements, and the systems 

commands work with the Pentagon and the Fleet users to build a 

system that meets the Fleet’s needs.

 The process is very structured and has rigorous reviews at many 

levels in the acquisition chain of command, does it not?

 Admiral Cooper. That’s correct. Yes, sir.

 The Chairman. Do you similarly see a structure and would you like 
43

to see a system very similar to that within the systems that you presently control?

 Admiral Cooper. Yes, sir.

 The Chairman. I’m going to give it to you.

 This hearing is now concluded.

[Whereupon, at 12:08 p.m., the Committee was adjourned.]

 
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