United States Government Accountability Office

GAO Report to the Chairman, Committee on 

Veterans’ Affairs, House of 

Representatives 

VETERANS 

BENEFITS 

ADMINISTRATION 

Progress Made in 

Long-Term Effort to 

Replace Benefits 

Payment System, but 

Challenges Persist 

April 2007 

 

GAO-07-614 
What GAO Found

United States Government Accountability Office

Why GAO Did This Study

Highlights

Accountability Integrity Reliability

April 2007

VETERANS BENEFITS ADMINISTRATION

Progress Made in Long-Term Effort to 

Replace Benefits Payment System, but 

Challenges Persist 

Highlights of GAO-07-614, a report to the 

Chairman, Committee on Veterans’ 

Affairs, House of Representatives 

Since 1996, the Veterans Benefit 

Administration (VBA) has been 

working on an initiative to replace 

its aging system for paying 

compensation and pension

benefits. In 2005, concerned about

the slow pace of development, VBA 

contracted with the Software

Engineering Institute (SEI) for an

independent evaluation of the

project, known as the Veterans 

Service Network (VETSNET). SEI 

advised VBA to continue working

on the project at a reduced pace 

while addressing management and

organization weaknesses that it 

determined had hampered the 

project’s progress. 

GAO was requested to determine to 

what extent the VETSNET project 

has followed the course of action

recommended by SEI and describe

the project’s current status. 

To perform its review, GAO 

analyzed project documentation, 

conducted site visits, and

interviewed key program officials. 

What GAO Recommends

To sustain the improved

management and software 

development processes currently 

being used by VETSNET project 

management, GAO is making

recommendations to the Secretary 

of Veterans Affairs in several areas,

including cost tracking, capacity

planning and management, and 

performance measures. The 

Secretary agreed with GAO’s 

recommendations and described

actions planned in response. 

VBA is generally following the course of action recommended by SEI by 

continuing to work on the replacement initiative at a reduced pace, while 

taking action to address identified weaknesses in overall management and 

software development processes. For example, VBA established a new 

governance structure for the initiative that included senior management and 

involved all stakeholders, and it incorporated all critical areas of system 

development in an integrated master schedule. However, not all of SEI’s 

management concerns have been addressed. For example, SEI advised VBA 

to ensure that stakeholders take ownership responsibility for the project, 

including the total system and process operating costs; however, although 

VBA is tracking costs incurred by contractors, it is not yet tracking and 

reporting in-house costs incurred by the project. Further, although the 

project has improved its management processes, such as establishing a 

process to manage and stabilize system requirements, it has not yet 

developed processes for capacity planning and management. This will be 

important for ensuring that further VETSNET development does not lead to 

delays and slowdowns in processing of benefits. In addition, although the 

project has established certain performance measures, it has not yet 

established results-oriented measures for productivity and user satisfaction, 

both of which will be important for measuring progress. Finally, the process 

improvements that VBA has incorporated in the replacement initiative

remain in draft and have not been established through documented policies 

and procedures. If VBA does not institutionalize these improvements, it 

increases the risk that they may not be maintained through the life of the 

project or be available for application to other development initiatives. 

After more than 10 years of effort, including the recent management, 

organizational, and process improvements, VBA has developed critical 

functionalities needed to process and pay certain original compensation 

claims using the replacement system, but it remains far from completing the 

project. According to VBA officials, all five of the major software

applications that make up the new system are now being used to establish 

and process new compensation claims for veterans. In total, the replacement 

system is currently providing monthly compensation payments to almost 

50,000 veterans (out of about 3 million veterans who receive such

payments); the system was used to process about 83 percent of all new 

compensation claims completed in March 2007. Nonetheless, the system 

requires further development before it can be used to process claims for the 

full range of compensation and pension benefits available to veterans and 

their dependents. 

www.gao.gov/cgi-bin/getrpt?GAO-07-614.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Valerie Melvin 

at (202) 512-6304 or melvinv@gao.gov. 
Contents 

Letter 1

Results in Brief 3 

Background 4

VBA Is Following Course Recommended by SEI, but Weaknesses 

Remain to Be Addressed 10 

VETSNET Is Currently Processing a Portion of Compensation 

Claims, but Much Work Remains 22 

Conclusions 26

Recommendations for Executive Action 27 

Agency Comments and Our Evaluation 28 

Appendix I Objectives, Scope, and Methodology 30 

Appendix II Comments from the Department of Veterans 

Affairs 32 

Appendix III GAO Contact and Staff Acknowledgments 38 

Tables 

Table 1: Roles and Responsibilities of VETSNET Organizational 

Elements 12

Table 2: VETSNET Component Applications and Status of 

Development 24

Table 3: Software Releases Planned to Complete the VETSNET 

System 25

Table 4: Conversion Phases 26 

Figure 

Figure 1: VETSNET System Life Cycle and Review Concept 15 

Page i GAO-07-614 Progress on VETSNET
Abbreviations 

BDN Benefits Delivery Network 

CIO Chief Information Officer 

FAS Finance and Accounting System 

IT Information Technology 

MAP-D Modern Award Processing–Development 

RBA 2000 Rating Board Automation 2000 

SEI Carnegie Mellon Software Engineering Institute 

VA Department of Veterans Affairs 

VBA Veterans Benefits Administration 

VETSNET Veterans Service Network 

VRE Vocational Rehabilitation and Employment 

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Page ii GAO-07-614 Progress on VETSNET
United States Government Accountability Office

Washington, DC 20548 

April 27, 2007

The Honorable Bob Filner 

Chairman, Committee on Veterans’ Affairs 

House of Representatives 

Dear Mr. Chairman: 

Since 1996, the Veterans Benefits Administration (VBA), a major 

component of the Department of Veterans Affairs (VA), has been 

undertaking a project to replace its compensation and pension benefits 

payment system. VBA’s existing system, the Benefits Delivery Network 

(BDN), is essential to ensuring the accurate processing of compensation 

and pension benefits payments to over 3.5 million veterans and their 

dependents each month. However, this system, which has been in 

operation for more than 40 years, is based on antiquated software 

programs, which have become increasingly difficult and costly to 

maintain. VBA is in the process of replacing the aging BDN with a faster, 

more flexible, and higher capacity system. When it began this project in 

1996, which it generally refers to as the Veterans Service Network 

(VETSNET),1

 VBA had planned to complete the replacement system in 

May 1998 at an estimated cost of $8 million. 

Over the years, we have reported on numerous problems that VBA has 

encountered in completing the replacement system.2

 Our prior work 

found, for example, that the project was begun before VBA had fully 

developed its business requirements, resulting in confusion over the 

 1

It also refers to the initiative as the compensation and pension or C&P replacement 

system.

2

GAO, Software Capability Evaluation: VA’s Software Development Process Is Immature,

GAO/AIMD-96-90 (Washington, D.C.: June 19, 1996); Veterans Benefits Modernization: 

VBA Has Begun to Address Software Development Weaknesses but Work Remains, 

GAO/AIMD-97-154 (Washington, D.C.: Sept. 15, 1997); VA Information Technology: 

Progress Continues Although Vulnerabilities Remain, GAO/T-AIMD-00-321 (Washington,

D.C.: Sept. 21, 2000); VA Information Technology: Important Initiatives Begun, Yet 

Serious Vulnerabilities Persist, GAO-01-550T (Washington, D.C.: Apr. 4, 2001); VA 

Information Technology: Management Making Important Progress in Addressing Key

Challenges, GAO-02-1054T (Washington, D.C.: Sept. 26, 2002); and Information 

Technology: VA and DOD Face Challenges in Completing Key Efforts, GAO-06-905T 

(Washington, D.C.: June 22, 2006). 

Page 1 GAO-07-614 Progress on VETSNET
requirements to be addressed; in addition, VBA’s software development 

capability was too immature to ensure that the agency could reliably 

develop and maintain high-quality software on any major project within 

cost and schedule constraints. In 2002, we offered a number of 

recommendations to improve managerial and program weaknesses, 

including that VBA appoint a project manager; thoroughly analyze its 

initiative; and develop a number of plans, including a revised

compensation and pension replacement strategy and an integrated project 

plan. VA concurred with our recommendations, and as we last reported in

June 2006,3

 it took several actions to address them. For example, it 

appointed a full-time project manager, and the project team reported that

it had completed certifications of users’ requirements for the system’s 

applications. Nonetheless, these actions did not implement all our 

recommendations and were not sufficient to establish the program on a 

solid footing: certain basic requirements of sound project management, 

such as an integrated project plan for the replacement system, continued

to be lacking. 

In 2005, the VA Chief Information Officer (CIO) and Under Secretary for 

Benefits became concerned about continuing problems with the 

replacement project and contracted for an independent assessment of the 

department’s options for the project, including whether the project should 

be terminated. This assessment, conducted by the Carnegie Mellon 

Software Engineering Institute (SEI), concluded that the replacement 

project faced many risks arising from management and organizational 

issues, but no technical barriers that could not be overcome.4

 According to

SEI, a new system was still needed, and VBA would not be able to 

successfully deliver a full, workable solution unless it addressed its 

management and organizational weaknesses. SEI recommended that VBA 

continue to work on the project at a reduced pace, while taking an 

aggressive approach to addressing the identified weaknesses. 

Given the importance of ensuring the effective and efficient delivery of 

veterans’ benefits, we were requested to review the department’s 

continuing efforts to develop and implement the compensation and 

pension replacement system. Specifically, our objectives were to 

 3

GAO-06-905T. 

4

Kathryn Ambrose, William Novak, Steve Palmquist, Ray Williams, and Carol Woody, 

Report of the Independent Technical Assessment on the Department of Veterans Affairs 

VETSNET Program (Carnegie Mellon Software Engineering Institute, September 2005). 

Page 2 GAO-07-614 Progress on VETSNET
determine (1) to what extent VA has followed the course of action 

recommended by SEI and addressed the concerns that it raised and (2) the 

current status of the replacement project. 

In conducting this study, we visited VBA’s Nashville Regional Office to 

observe processing of new benefits claims in the compensation and 

pension replacement system, and we visited the St. Petersburg Regional

Office to observe processes and procedures used to test and validate key 

functionalities of the replacement system. We obtained and analyzed 

documents related to the replacement initiative and to SEI’s review of the

initiative. We supplemented our analysis with interviews of VBA and 

contractor personnel at headquarters and the two regional offices. 

Appendix I contains a more detailed discussion of our objectives, scope, 

and methodology. We conducted our study between April 2006 and April 

2007 in accordance with generally accepted government auditing 

standards. 

VBA is generally following the course of action recommended by SEI by 

continuing to work on the replacement initiative at a reduced pace, while 

taking action to address identified weaknesses in overall management and 

software development processes. For example, VBA established a new 

governance structure for the initiative that included senior management 

and involved all stakeholders, and it incorporated all critical areas of 

system development in an integrated master schedule. However, VBA did 

not address all of SEI’s management concerns. Specifically, SEI advised 

VBA to ensure that stakeholders take ownership responsibility for the 

project, including the total system and process operating costs; however, 

although VBA is tracking costs incurred by contractors, it is not yet 

tracking and reporting in-house costs incurred by the project. Further, 

VBA has not yet developed sufficient plans for performing the substantial 

task of moving records from the BDN to the replacement system 

(approximately 3.5 million beneficiaries are currently being served by the 

older system). VBA did take steps to improve its software development 

processes, such as establishing risk and requirements management 

processes, but some have not been addressed. For example, still to be 

addressed are processes for capacity planning and management, which 

will be important for ensuring that further development does not lead to 

slowdowns in processing of benefits. Finally, VBA has not yet documented

policies and procedures to institutionalize all the improvements that it has 

incorporated in the replacement initiative. According to the replacement 

project’s management team, it made a conscious decision first to establish 

the governance and build the organization, among other things, and it is

Results in Brief 

Page 3 GAO-07-614 Progress on VETSNET
still prioritizing remaining tasks. However, if VBA does not institutionalize 

the improvements made, it increases the risk that these process 

improvements may not be maintained through the life of the project or be

available for application to other development initiatives. 

After more than 10 years of effort, including the recent management, 

organizational, and process improvements, VBA has developed critical

functionalities needed to process and pay certain original compensation 

claims using the replacement system, but it remains far from completing 

the project. According to VBA officials, all five of the major software 

applications that make up the new system are now being used in VA’s 

regional offices to establish and process new compensation claims for 

veterans. In total, the replacement system is currently providing monthly 

compensation payments to almost 50,000 veterans (out of about 3 million 

veterans who receive such payments); the system was used to process 

about 83 percent of all new compensation claims completed in March 

2007. Nonetheless, the system requires further development before it can

be used to process claims for the full range of compensation and pension 

benefits available to veterans and their dependents. In addition, VBA still 

faces the substantial task of converting records for the approximately 

3.5 million beneficiaries currently being served by the BDN to the 

replacement system. 

To sustain the improved management and software development 

processes currently being used by VETSNET project management, we are 

making recommendations to the Secretary of Veterans Affairs in several 

areas, including cost tracking, capacity planning and management, and 

performance measures. 

In providing written comments on a draft of this report, the Secretary of 

Veterans Affairs agreed with our conclusions and concurred with the 

report’s recommendations. (The department’s comments are reproduced 

in app. II.) The comments described actions planned that respond to our 

recommendations, as well as providing further information on relevant

actions already taken. If the planned actions are properly implemented, 

they could help strengthen the department’s management of the 

replacement system project and improve the chances that the system will 

be successfully completed. 

VBA provides benefits for veterans and their families through five 

programs: (1) compensation and pension, (2) education, (3) vocational 

rehabilitation and employment (VRE) services, (4) loan guaranty, and 

Background 

Page 4 GAO-07-614 Progress on VETSNET
(5) life insurance. It relies on the BDN to administer benefit programs for 

three of VBA’s five programs: compensation and pension, education, and 

VRE services. 

Replacing the aging BDN has been a focus of systems development efforts 

at VBA since 1986.5

 Originally, the administration planned to modernize 

the entire system, but after experiencing numerous false starts and 

spending approximately $300 million on the overall modernization of the 

BDN, VBA revised its strategy in 1996. It narrowed its focus to replacing

only those functionalities that support the compensation and pension 

program, and began developing a replacement system, which it called 

VETSNET. 

As reported by the department in its fiscal year 2008 budget submission, 

the compensation and pension program is the largest of the three 

programs that the BDN supports: 

• The compensation and pension program paid about $35 billion in benefits

in fiscal year 2006 to about 3.6 million veterans or veterans’ family 

members. 

• Of this amount, compensation programs paid benefits of about $31 

billion to about 3.1 million recipients. 

• Pension programs paid benefits of about $3.5 billion to about 535,000 

recipients. 

• The education program paid about $2.8 billion to about 498,000 veterans or 

their dependents in fiscal year 2006.

6

 5

The BDN currently runs on aging software: COBOL programs and a nonrelational 

database. Analysts have indicated that moving from a nonrelational database of the BDN 

type to a more modern relational database is a challenging task. 

6

This program provides veterans, service members, reservists, and certain veterans’

dependents with educational resources. 

Page 5 GAO-07-614 Progress on VETSNET
• The VRE services program paid about $574 million for VRE services in 

2006 and provides rehabilitation services to approximately 65,700 disabled 

veteran participants per year.7

One of the challenges of developing the replacement system is that it must 

include processes to support the administration of a complex set of 

benefits. Different categories of veterans and their families are eligible for

a number of different types of benefits and payments, some of which are 

based on financial need. Compensation programs, which are based on 

service-connected disability or death, provide direct payments to veterans 

and/or veterans’ dependents and survivors. These programs are not based 

on income. Pension benefits programs, on the other hand, are income 

based; these are designed to provide income support to eligible veterans 

and their families who experience financial hardship. Eligible veterans are 

those who served in wartime and are permanently and totally disabled for

reasons that are not service-connected (or who are age 65 or older). 

Veterans are also eligible for burial benefits. 

Survivor benefits may be paid to eligible survivors of veterans, depending

on the circumstances. Some of these benefits are based on financial need, 

such as death pensions for some surviving spouses and children of 

deceased wartime veterans, and Dependency and Indemnity 

Compensation to some surviving parents. 

Finally, certain benefits may be paid to third parties, such as individuals to

whom a veteran has given power of attorney or medical service providers 

designated to receive payments on the veteran’s behalf. 

Generally, VBA administers benefit programs through 57 veterans benefits

regional offices8

 in a process that requires a number of steps, depending 

The Processes Supporting 

the Variety of 

Compensation and 

Pensions Benefits Are 

Complex 

 7

To help veterans with service-connected disabilities become employable and obtain and 

maintain suitable employment, the program provides a range of direct and supportive 

services. These services include comprehensive evaluation of rehabilitation needs 

(vocational or independent living); training and employment services to obtain or maintain 

suitable employment; and independent living services, such as training and specialized 

equipment to enable independence in the activities of daily living. 

8

Not all regional offices process all the different types of benefits. For example, 

adjustments to pension claims are processed at three pension maintenance centers in St.

Paul, Milwaukee, and Philadelphia, and education claims are processed only at the regional 

offices in Atlanta, Buffalo, Muskogee, and St. Louis. The Philadelphia Regional Office and 

Insurance Center has sole responsibility for insurance benefit processing, and nine

Regional Loan Centers administer the loan guaranty program.

Page 6 GAO-07-614 Progress on VETSNET
on the type of claim. When a veteran submits, for example, a 

compensation claim to any of the regional offices, a veterans service 

representative must obtain the relevant evidence to evaluate the claim 

(such as the veteran’s military service records, medical examinations, and

treatment records from VA medical facilities or private medical service 

providers). In the case of pension claims, income information would also 

be collected.

Once all the necessary evidence has been compiled, a rating specialist 

evaluates the claim and determines whether the claimant is eligible for 

benefits. If the veteran is determined to be eligible for disability 

compensation, the Rating Veterans Service Representative assigns a 

percentage rating based on the veteran’s degree of disability. This 

percentage is used in calculating the amount of payment. 

Benefits received by veterans are subject to change depending on 

changing circumstances. More than half of VBA’s workload consists of 

dealing with such changes. If a veteran believes that a service-connected 

condition has worsened, for example, the veteran may ask for additional 

benefits by submitting another claim.9

 The first claim submitted by a 

veteran is referred to as the original claim, and a subsequent change is 

referred to as a reopened claim. 

Since its inception, VETSNET has been plagued by problems. Over the 

years, we have reported on the project, highlighting concerns about VBA’s 

software development capabilities. 

In 1996, our assessment of the department’s software development 

capability determined that it was immature.10 In our assessment, we 

specifically examined VETSNET and concluded that VBA could not 

reliably develop and maintain high-quality software on any major project 

within existing cost and schedule constraints. The department showed 

significant weaknesses in requirements management, software project 

planning, and software subcontract management, with no identifiable 

strengths. We also testified that VBA did not follow sound systems 

Our Prior Products 

Identified Weaknesses in 

the Development and 

Implementation of the 

Replacement System 

 9

Claims may also be reopened if a veteran provides additional information on a claim that 

was denied.

10GAO/AIMD-96-90. 

Page 7 GAO-07-614 Progress on VETSNET
development practices on VETSNET, and we concluded that its 

modernization efforts had inherent risks. 

Between 1996 and 2002, we continued to identify the department’s weak 

software development capability as a significant factor contributing to 

persistent problems in developing and implementing the system. We also 

reported that VBA continued to work on VETSNET without an integrated 

project plan. As a result, the development of the system continued to 

suffer from problems in several areas, including project management, 

requirements development, and testing. 

Over the years, we made several recommendations aimed at improving 

VA’s software development capabilities. Among our recommendations was 

that the department take actions to achieve greater maturity in its 

software development processes11 and that it delay any major investment 

in software development (beyond that needed to sustain critical day-to-day 

operations) until it had done so. In addition, we made specific 

recommendations aimed at improving VETSNET development. For 

example, we recommended that VA appoint a project manager, thoroughly 

analyze its current initiative, and develop a number of plans, including a 

revised compensation and pension replacement strategy and an integrated

project plan.

VA concurred with our recommendations and took several actions to 

address them. For example, it appointed a full-time project manager and 

ensured that business needs were met by certification of user 

requirements for the system applications. The actions taken addressed 

some of our specific concerns; however, they were not sufficient to fully 

implement our recommendations or to establish the program on a sound 

footing. 

 11Specifically, at the repeatable level of process maturity, basic project management 

processes are established to track cost, schedule, and functionality, and the necessary 

process discipline is in place to repeat earlier successes on projects with similar 

applications. 

Page 8 GAO-07-614 Progress on VETSNET
As a result of continuing concerns about the replacement project, in 2005 

VA’s CIO and its Under Secretary for Benefits contracted for an 

independent assessment of the department’s options for the initiative.12

The chosen contractor, SEI, is a federally funded research and 

development center operated by Carnegie Mellon University. Its mission is 

to advance software engineering and related disciplines to ensure the 

development and operation of systems with predictable and improved 

cost, schedule, and quality. 

SEI recommended that the department reduce the pace of development 

while at the same time taking an aggressive approach to dealing with 

management and organizational weaknesses hampering VBA’s ability to 

complete the replacement system. According to SEI, these management 

and organizational concerns needed to be addressed before the 

replacement initiative or any similar project could deliver a full, workable 

solution. 

For example, the contractor stressed the importance of setting realistic 

deadlines and commented that there was no credible evidence that 

VETSNET would be complete by the target date, which at the time of the 

review had slipped to December 2006. According to the assessment, 

because this deadline was unrealistic, VBA needed to plan and budget for

supporting the BDN so that its ability to pay veterans’ benefits would not 

be disrupted. SEI also noted that different organizational components had 

independent schedules and priorities, which caused confusion and 

deprived the department of a program perspective. Further, the contractor 

concluded that VBA needed to give priority to establishing sound program 

management to ensure that the project could meet targeted dates. These 

and other observations were consistent with our long-standing concerns 

regarding fundamental deficiencies in VBA’s management of the project. 

To help VBA implement the overall recommendation, the contractor’s 

assessment included numerous discussions of activities needed to address 

these areas of concern, which can be generally categorized as falling into 

two major types: 

SEI Assessed System 

Replacement Initiative and 

Recommended a Changed 

Approach 

• Overall management concerns with regard to the initiative included 

 12Kathryn Ambrose, William Novak, Steve Palmquist, Ray Williams, and Carol Woody, 

Report of the Independent Technical Assessment on the Department of Veterans Affairs 

VETSNET Program (Carnegie Mellon Software Engineering Institute, September 2005). 

Page 9 GAO-07-614 Progress on VETSNET
• governance structure, including assigning ownership for the project 

and its costs; 

• project planning, including the development schedule and capacity 

planning; and 

• conversion of records currently on the BDN to the replacement system. 

• Software development process improvements were needed in the 

following areas: 

• risk management, 

• requirements management, 

• defect management, and

• program measures. 

As recommended by SEI, VBA is continuing to work on the replacement 

initiative at a reduced pace and taking action to address identified 

weaknesses in the project’s overall management and software 

development processes. For example, VBA has established a new 

governance structure and has developed an integrated master schedule 

that provides additional time and includes the full range of project 

activities. However, additional effort is needed to complete a number of 

the corrective actions, such as improving project accountability through 

monitoring and reporting all project costs. Further, VBA has not yet 

institutionalized many of the improvements that it has undertaken for the 

initiative. In particular, process improvements remain in draft and have 

not been established through documented policies and procedures. 

According to the VETSNET management team, it gave priority to other 

activities, such as establishing appropriate governance and organizational 

structures, and it is still gathering information to assist in prioritizing the 

activities that remain. Nonetheless, if VBA does not institutionalize these 

improvements, it increases the risk that these process improvements may 

not be maintained through the life of the project or be available for 

application to other development initiatives. 

VBA Is Following 

Course

Recommended by 

SEI, but Weaknesses 

Remain to Be 

Addressed 

Page 10 GAO-07-614 Progress on VETSNET
SEI concluded that VBA’s management issues would need to be addressed 

as part of the implementation of its overall recommendation. SEI’s overall

management concerns focused on the project governance, project 

planning, and conversion of records currently on the BDN to the 

replacement system. 

SEI guidance for software development stresses the need for 

organizational commitment and the involvement of senior management in

overall project governance.13 In its assessment, SEI noted that because 

management of the VETSNET project had been assigned to VBA’s 

information technology (IT) group, certain activities critical to the 

veterans’ benefits program, but not traditionally managed by the IT group, 

had not been visible to the project’s management. The contractor pointed

out that the IT group, business lines, and regional offices needed to share 

ownership and management of the replacement project through an 

established governance process and that the project management office 

should include business representatives. According to SEI, the project 

needed to establish ownership responsibility, including addressing total 

system and process operating costs. 

In response to the assessment, VBA developed a new governance structure 

for the initiative, which the Under Secretary for Benefits approved in 

March 2006. In the new structure, the VETSNET Executive Board that had 

been in place was expanded and reorganized to serve as a focal point and

major governance mechanism for the replacement initiative. A Special 

Assistant (reporting directly to the Under Secretary) was appointed to 

coordinate and oversee the initiative as the head of the VETSNET 

Executive Team, which was established to provide day-to-day operational 

control and oversight of the replacement initiative. Implementation Teams 

were also established to conduct the day-to-day activities associated with

implementing the initiative. This governance structure established a 

process for IT, business lines, and regional offices to share ownership and 

management, as SEI advised. 

The roles and membership of each of the organizational elements in the 

new governance structure are described in table 1. 

VBA Is Taking Action on 

Certain Overall 

Management Concerns 

Top Management Included in 

Revised Governance Structure 

 13CMMI Product Team, CMMI for Development, Version 1.2 (Carnegie Mellon Software 

Engineering Institute, August 2006). 

Page 11 GAO-07-614 Progress on VETSNET
Table 1: Roles and Responsibilities of VETSNET Organizational Elements

Organization Role Membership

VETSNET 

Executive Board 

Provides executive direction to the VETSNET

Executive Team. 

Deputy Under Secretary for Benefits 

Special Assistant to the Under Secretary for Benefits 

VETSNET Program Manager

VA Office of Information and Technology Principal Associate

Deputy Assistant Secretary 

Chief Financial Officer 

Director, Compensation and Pension Service

Director, Office of Performance Analysis and Integrity 

Associate Deputy Under Secretary for Policy and Programs

Associate Deputy Under Secretary for Field Operations 

VBA Chief Information Officer 

VETSNET 

Executive Team

Responsible for the delivery of the project and 

acts as the review and approval authority for the 

Implementation Teams. 

VETSNET Program Executive (Special Assistant to Under 

Secretary) 

VETSNET Program Manager

Contract support 

Business Architect 

Technical Architect 

MITRE support

VETSNET 

Implementation 

Teams 

Responsible for the day-to-day activities 

necessary to develop and implement the 

replacement system. 

Compensation and Pension 

Office of Resource Management 

Office of Performance Analysis and Integrity 

Office of Field Operation 

Office of Information Management, VA Central Office 

St. Petersburg Systems Development Center

Hines Information Technology Center 

Austin Automation Center 

Source: GAO analysis of VBA information.

When the new governance structure was approved in March 2006, the 

Under Secretary ensured that those involved in the project gave it high 

priority, directing certain key personnel (such as members of the 

executive and implementation teams) to make the initiative their primary 

responsibility, and other personnel (technical staff that provide support to 

other systems) with collateral (non-VETSNET) duties to make the project 

their first priority. He also placed limitations on the transfer of personnel 

away from the project, recognizing the importance of staff continuity in 

successfully completing the initiative. Staff members assigned project 

Page 12 GAO-07-614 Progress on VETSNET
responsibilities could be reassigned (i.e., given nonpromotion, lateral 

reassignments) only with approval from the Under Secretary or his deputy. 

By implementing the new governance and organizational structure and 

ensuring that the project has priority, VBA partially responded to SEI’s 

concerns in this area; however, VBA has not yet taken action with regard 

to ownership responsibility for total system and process operating costs, 

as SEI advised. According to administration officials, the replacement 

initiative is an in-house, contractor-assisted development effort, in which 

three different contractors provide support for program management, 

system development, and testing and validation of requirements. VA 

reported VETSNET system costs to the Congress totaling about 

$89 million for fiscal years 1996 through 2006, with additional estimated 

costs for completion of the initiative in 2009 of about $62.4 million. 

However, according to project management officials, these costs do not 

include expenditures for in-house development work. This in-house work 

involves many VA personnel, as well as travel to various locations for 

testing and other project related activities. Thus, considerable costs other 

than contract cost have been incurred, which have not been tracked and

reported as costs for the replacement initiative. Without comprehensive 

tracking and reporting of costs incurred by the replacement project, the 

ability of VBA and the Congress to effectively monitor progress could be 

impaired. 

A second major area of overall management concern was project planning. 

In particular, the lack of an integrated master schedule for the VETSNET 

project was a major concern articulated by SEI, as well as in our prior 

work. An integrated project plan and schedule should incorporate all the 

critical areas of system development and be used as a means of 

determining what needs to be done and when, as well as measuring 

progress. Such an integrated schedule should consider all dependencies 

and include subtasks so that deadlines are realistic, and it should 

incorporate review activities to allow oversight and approval by high-level 

managers. Among other things, the program plan should also include 

capacity requirements for resources and technical facilities to support 

development, testing, user validation, and production. 

VBA Took Action to Address 

Project Planning and 

Management 

SEI was specifically concerned that releases with overlapping

functionality were being developed at the same time, with insufficient time 

to document or test requirements; this approach constrained resources 

and added complexity because of the need to integrate completed 

applications and newly developed functionality. In addition, SEI observed 

Page 13 GAO-07-614 Progress on VETSNET
that the VETSNET program suffered from lack of sufficient test facilities 

because it did not have enough information to plan for adequate capacity.

In response to these project planning concerns, VETSNET management, 

with contractor support, developed an integrated master schedule to guide 

development and implementation of the remaining functionalities for the 

replacement system. The VETSNET Integrated Master Schedule, finalized

in September 2006, includes an end-to-end plan and a master schedule. 

According to VBA, the end-to-end plan documents the end state of the

project from a business perspective, which had not previously been done.

The master schedule identifies the necessary activities to manage and 

control the replacement project through completion. The schedule also 

describes a new software release process that provides more time to work 

on requirements definition and testing, and allows for more crossorganizational communications to lessen the possibility of not meeting 

requirements. 

In addition, the new release process includes a series of management 

reviews to help control the software development process and ensure that

top management has continuous visibility of project related activities. 

These reviews occur at major steps in the system development life cycle

(as described in fig. 1: initiation, preliminary design, and so on). Such 

reviews are intended to ensure that the VETSNET Executive Team and the

VETSNET Executive Board agree and accept that the major tasks of each

step have been properly performed. 

Page 14 GAO-07-614 Progress on VETSNET
Figure 1: VETSNET System Life Cycle and Review Concept 

Reqmts

Design Initial Cycle

Defect Repairs

Initial Cycle

Test Exec.

Build Build

PreProd Prod

Bug Fix

Defect

Repairs

Bug 

Fix Test

Exec.

Prep Prep Patch

AIT 

and

Build

Test Reqmts

Development

Test Development

Function

Specs Test Management and Planning

PIRA PDR CDR TRR PPR ORR PIR

Preliminary

Design

Review

Critical 

Design 

Review

Test

Readiness

Review

Pre-Prod

Readiness

Review

Project Initiation

Review

Authorization

Operational

Readiness

Review

Post

Implemenation

Review

Document business

requirements

·

Approve Functional

Specifications

Review Functional

Specifications

Draft Functional

Specifications

Approve business

requirements

·

·

·

·

· Design software

Map Specifications

Identify test

requirements

Approve software

design

Review software

design

·

·

·

·

· Create/update RTMs

· Develop software

Develop test cases

Build and install 

software

Unit test software

· Review software

·

· Resolve priority defects

Open CQ records to

document findings

· Execute test cases

·

·

·

Prepare Preliminary

test plan

·

Review Preliminary

test plan

·

Submit Final

test plan

·

Source: VBA.

Nonetheless, while the Integrated Master Schedule is an important 

accomplishment, it may not ensure that the project sufficiently addresses 

capacity planning, one of SEI’s areas of concern. According to its 

assessment, capacity requirements for the fully functional production 

system were unclear. Capacity planning is important because program 

progress depends on the availability of necessary system capacity to 

perform development and testing; adjustments to such capacity take time 

and must be planned. If systems do not have adequate capacity to 

accommodate workload, interruptions or slowdowns could occur. 

According to SEI, capacity adjustments cannot be made instantly, and 

program progress will suffer without sufficient attention to resource 

requirements. 

Page 15 GAO-07-614 Progress on VETSNET
However, the VETSNET Integrated Master Schedule does not identify 

activities or resources devoted to capacity planning. According to officials, 

the capacity of the corporate environment (that is, corporate information 

systems, applications, and networks) is being monitored by operational 

teams with responsibility for maintaining this environment. According to 

project officials, VETSNET representatives participate in daily conference

calls in which the performance of corporate applications is discussed, and 

changes in application performance are reported to the VETSNET 

developers for investigation and corrective action. Project officials 

reported that when a performance degradation occurred in some 

transactions during performance testing, it was determined that additional 

computing capacity was needed and would be acquired. One reason why 

the occurrence of degradation had not been anticipated by the VETSNET 

project was that capacity planning had not taken place. Unless it ensures 

that capacity planning and activities are included in the Integrated Master 

Schedule, the replacement project may face other unanticipated 

degradations that it must react to after the fact, thus jeopardizing the 

project’s cost, schedule, and performance. 

In its assessment, SEI questioned VBA’s approach to developing 

functionality while concurrently converting records from the BDN to the 

replacement system. It noted that VBA had chosen to complete software 

development according to location rather than according to the type of 

functionality. Specifically, in 2004, VBA began an effort to remove all 

claims activity (both new and existing claims) at one regional office 

(Lincoln, Nebraska) from the BDN to the replacement system, developing 

the software as necessary to accommodate processing the types of claims 

encountered at that site. The intention was to address each regional office 

in turn until all sites were converted. According to SEI, this approach had

resulted in the development being stalled by obstacles arising from the 

variety of existing claims.14 The contractor advised VBA to focus first on 

developing functionality to process original claims and discontinue efforts 

to convert existing claims until all the necessary functionality had been 

developed, and the replacement system’s ability to handle new cases of 

any complexity had been proven by actual experience. 

Conversion Efforts Were 

Suspended as Advised, but 

Issues Remain 

 14As previously noted, there are variations in types of compensation and pension benefits,

including death pensions for survivors of deceased wartime veterans, burial benefits, 

Dependency and Indemnity Compensation to some surviving parents, and benefits paid to

third parties, such as people to whom a veteran has given power of attorney, medical 

service providers, and so on. In addition, different forms of payment must be 

accommodated (check or electronic funds transfer). 

Page 16 GAO-07-614 Progress on VETSNET
In accordance with this advice, VBA stopped converting existing records 

from the BDN and changed its focus to developing the necessary 

functionality to process all new compensation claims. According to the 

integrated master schedule, conversion activities are now timed to follow 

the release of the needed functionality. That is, according to the schedule,

VBA plans to begin converting each type of record from the BDN only 

after the necessary functionality for the replacement system has been 

developed and deployed to process that type of record. 

In addition, the project is mitigating risk by resuming conversions 

beginning with a test phase. Its strategy is first to convert records for 

terminated claims—claims that are no longer being paid. Conversion of 

the terminated records will be followed by additional conversions of 

records for claims receiving payment at Lincoln and Nashville (these two 

sites are being used to test system functionality during development). The 

VETSNET leadership will consider testing complete with the successful 

conversion at these two sites. 

However, SEI raised three additional issues with regard to the conversion 

of records that VBA has not fully addressed: 

• First, SEI expressed concerns that conversion failures could lead to 

substantial numbers of records being returned to the BDN. Because of 

differences in the database technologies used for the old system and the 

replacement system, certain types of errors in BDN records cause 

conversion to fail (according to SEI, approximately 15 percent of all these

records are estimated to have such errors). If records fail to convert 

correctly, they may need to be returned to the BDN so that benefits can 

continue to be paid. However, this process is not simple and may involve 

manually reentering the records.15

• Second, SEI observed that VBA was also depending on manual processes 

for determining that records were converted successfully, including the 

use of statistically random samples, and that it was aiming to ensure 

correctness to a confidence level of 95 percent. However, in the absence of 

a straightforward method for automatically returning records to the BDN, 

SEI considered the 5 percent risk of error unacceptable for conversions of 

large numbers of records. 

 15SEI quoted program staff as calling the process “extraordinarily time consuming,” saying

that “It takes 5 minutes to get a veteran into VETSNET and then 5 days to get him back

out.”

Page 17 GAO-07-614 Progress on VETSNET
• Finally, SEI observed that the lack of automated methods and the 

complexity of the processes meant that conversions required careful 

planning and assurance that adequate staff would be available to validate

records when the conversions took place. 

However, the VETSNET leadership has not developed any strategy to

address the possibility that a large number of cases might need to be 

returned to the BDN during the testing phase. For example, it has not 

included this possibility as a risk in its risk management plan. The absence 

of a strategy to address this possibility could lead to delays in program 

execution. 

Further, VBA has not yet decided whether a possible 5 percent error rate 

is acceptable or developed a plan for addressing the resulting erroneous 

records. If VBA does not address these issues in its planning, it increases 

the risk that veterans may not receive accurate or timely payments. 

Finally, the VETSNET leadership has not yet developed detailed plans that 

include the scheduled conversions for each regional office and identified 

staff to perform the necessary validation. Having such plans would reduce 

the risk that the conversion process could be delayed or fail. 

In addition to actions addressing the overall management concerns 

identified by SEI, VBA has steps action to improve its software

development processes in risk management, requirements management, 

defect/change management, and performance measures. SEI described 

weaknesses in all of these areas. The steps taken have generally been

effective in addressing the identified weaknesses, but VBA has not yet 

institutionalized many of these improvements. According to the VETSNET 

management team, it made a conscious decision first to establish the 

governance, build the organization, implement processes to gain control,

and gather additional information about the project to assist in prioritizing 

the remaining activities. The team also stated that some of the processes 

are no longer VBA’s responsibility but are now that of the newly realigned 

Office of Information and Technology.16 Nonetheless, if VA does not 

develop and establish documented policies and procedures to 

institutionalize these improvements, they may not be maintained through 

VBA Is Improving Software 

Development Processes, 

but Improvements Are Not 

Yet Institutionalized 

 16This realignment was approved on February 27, 2007. 

Page 18 GAO-07-614 Progress on VETSNET
the life of the project or available to be applied to other development 

initiatives. 

Risk management is a process for identifying and assessing risks, their 

impact and status, the probability of their occurrence, and mitigation 

strategies. Effective risk management includes the development of a risk 

management plan and tracking and reporting progress against the plan.

According to SEI, to the extent that risk management existed at all in the 

replacement program, it was conducted on a pro forma basis without real 

effect on program decisions. SEI said that risks and risk mitigation 

activities needed to be incorporated into all aspects of program planning, 

budgeting, scheduling, execution, and review. 

In response to these concerns, VBA has instituted risk management 

activities that, if properly implemented, should mitigate the risks 

associated with the project. Specifically, the VETSNET team, with 

contractor support, developed a risk management plan that was adopted 

in January 2007. The plan includes procedures for identifying, validating, 

analyzing, assessing, developing mitigation strategies for, controlling and 

tracking, reporting, and closing risks. It also establishes criteria for 

assessing the severity of the risks and their impact. 

The VETSNET leadership also developed a Risk Registry database, and its 

contractor reviewed and prioritized the open risks. Each open risk was 

evaluated, and a proposed disposition of the risk was submitted to 

VETSNET management. Of the 39 open risks, all but 3 had been addressed 

as of January 2007. 

The development documentation for each planned software release also 

includes sections on risk. In accordance with these plans, the VETSNET 

leadership is currently capturing potential risks and tracking action items 

and issues. At weekly status meetings, VETSNET leadership reviews Risk 

Registry reports of open risks. According to the contractor, the reports 

identify each risk and provide information on its age, ownership, and 

severity. 

However, these risk management activities have not yet been 

institutionalized through the definition and establishment of associated 

policies and procedures. If it does not institutionalize these improvements, 

VBA increases the possibility that the VETSNET project’s improvements in 

risk management may not be maintained through the life of the project. 

Risk Management Plan Has 

Been Revised 

Page 19 GAO-07-614 Progress on VETSNET
Requirements management is a process for establishing and maintaining a 

common understanding between the business owners and the developers 

of the requirements to be addressed, as well as verifying that the system 

meets the agreed requirements. SEI’s report commented that the 

VETSNET project requirements were not stable, and that the business 

owners (including subject-matter experts) and developers were separated

by many organizational layers, resulting in confusion and delays in 

development of the system. SEI suggested that VA restructure project 

activities to focus on defining an effective requirements process. 

According to SEI, the project needed to ensure that subject-matter experts 

were included in developing requirements and that evaluation criteria 

were established for prioritizing requests for changes to requirements. 

Finally, business owners should confirm that the system is meeting 

organizational needs. 

VBA has instituted requirements management activities that, if properly 

implemented, should help avoid the instability and other requirements 

problems identified by SEI. Specifically, VBA took steps to establish a 

requirements management process and to stabilize the requirements. For 

example, the development release process in the Integrated Master 

Schedule includes a phase for requirements identification. In addition, the 

project has established and begun applying evaluation criteria to prioritize 

change requests for its development releases. Further, until all claims are 

completely migrated from the BDN to the replacement system, in July 

2006, the Under Secretary directed that any additional requirements would 

have to have his approval. 

Responding to SEI’s advice regarding the involvement of subject-matter 

experts and business owners, VBA designed the new release process to 

directly involve subject-matter experts in requirements workshops. 

Further, the business teams participate in user-acceptance testing. 

However, these requirements management activities have not yet been 

institutionalized through the definition and establishment of policies and 

procedures. Until they are established, VBA runs the risk that the 

improved processes will not be maintained through the life of the 

VETSNET project or used in other software development projects. 

SEI raised numerous concerns regarding the defect process for the 

replacement system. These concerns for defect management included 

(1) identification of defects, (2) determination of cause, and 

(3) disposition of defects—either by correction or workaround. According 

to SEI guidance, defect management prevents known defects from 

Requirements Management Has 

Improved 

Management Attention Is Being 

Focused on Major Software 

Defects 

Page 20 GAO-07-614 Progress on VETSNET
hampering the progress of the program. The management process should 

include clearly identifying and tracking defects, analyzing defects to 

establish their cause, tracking their disposition, clearly identifying the 

rationale for not addressing any defects (as well as proposing 

workarounds), and making information on defects and their resolution 

broadly available. SEI’s report stated that VBA needed to distinguish 

defects from changes to requirements and develop a process for defect 

management. 

To respond to these concerns and focus program management attention 

on major defects, the VETSNET Executive Team, with contractor support, 

conducted an audit of existing defects and revised the defect management 

process. The audit of the defect database determined that the VETSNET 

database used to capture software defects also included change requests; 

as a result, work required to address processes that did not work properly 

was not distinguished from requests for added or changed functionality,

which would require review and approval before being addressed. To 

address this issue, the team separated defects from change requests, and a 

new severity rating scale was developed. All open defects were

recategorized to ensure the major defects would receive appropriate 

program management attention. Also, all defect categorizations must meet 

the approval of the VETSNET Business Architect and are scheduled for 

action as dictated by the severity level. 

Although these steps address many of SEI’s concerns regarding VBA’s 

defect management process, more remains to be done before the process 

is institutionalized. The Program Management Office has reported that 

actions to revise the defect management process are complete, but the 

process description is still in draft, and policies and procedures have not 

been fully established. Without institutionalized policies and procedures 

for the defect management process, it may not be maintained consistently 

through the life of the project. 

According to SEI, performance measures are the only effective mechanism 

that can provide credible evidence of a program’s progress. The chosen 

measures must link directly to the expected accomplishments and goals of 

the system, and they must be applied across all activities of the program. 

In its report, SEI stated that although VBA was reporting certain types of 

performance measures, it was not relating these to progress in system 

development. For example, VBA reported the total number of veterans 

paid, but did not provide estimates of how many additional veterans would 

be paid when the system incorporated specific functionalities that were 

under development. SEI suggested several measures that would provide 

The Replacement Initiative Is 

Tracking Certain Performance 

Measures 

Page 21 GAO-07-614 Progress on VETSNET
more evidence of progress, such as increases in the percentage of original

claims being paid by the replacement system, as well as user satisfaction 

and productivity gains resulting from use of the replacement system 

applications at regional offices. 

In response to these concerns, the replacement project has begun tracking 

a number of the measures suggested by SEI, including 

• increases in the percentage of original claims being paid by the 

replacement system, 

• increases in the percentage of veterans’ service representatives using the 

new system,

• decreases in the percentage of original claims being entered in the BDN 

rather than the replacement system. 

Although these measures provide indications of VA’s progress, other 

measures that could demonstrate the effectiveness of the replacement 

system have not been developed. For example, VBA has not developed 

results-oriented measures to capture user satisfaction or productivity 

gains from the system. Without measuring user satisfaction, VBA has 

reduced assurance that the replacement system will be accepted by the 

users. In addition, measures of productivity would provide VBA with 

another indication of progress toward meeting business needs. 

After more than 10 years of effort, including the recent management, 

organizational, and process improvements, VBA has achieved critical 

functionalities needed to process and pay certain original compensation 

claims using the replacement system, but it remains far from completing 

the project. For example, the replacement system is currently being used 

to process a portion of the original claims that veterans file for 

compensation. Nonetheless, the system requires further development 

before it can be used to process claims for the full range of compensation 

and pension benefits available to veterans and their dependents. In 

addition, VBA still faces the substantial task of moving approximately 3.5 

million beneficiaries who are currently being served by the BDN to the 

replacement system. 

VETSNET Is 

Currently Processing 

a Portion of 

Compensation 

Claims, but Much 

Work Remains 

Page 22 GAO-07-614 Progress on VETSNET
As designed, VETSNET consists of five major system applications that are 

used in processing benefits: 

• Share—used to establish claims;17 it records and updates basic information 

about veterans and dependents both in the BDN and the replacement 

system. 

• Modern Award Processing–Development (MAP-D)—used to manage the

claims development process, including the collection of data to support 

the claims and the tracking of claims. 

• Rating Board Automation 2000 (RBA 2000)—provides laws and 

regulations pertaining to disabilities, which are used by rating specialists

in evaluating and rating disability claims. 

• Award Processing (Awards)—used to prepare and calculate the benefit

award based on the rating specialist’s determination of the claimant’s 

percentage of disability. It is also used to authorize the claim for payment. 

• Finance and Accounting System (FAS)—used to develop the actual 

payment record. FAS generates various accounting reports and supports 

generation and audit of benefit payments. 

According to VBA officials, all five of the software applications that make 

up the new system are now being used in VA’s 57 regional offices to 

establish and process new compensation claims for veterans. As of March 

2007, VBA leadership reported that the replacement system was providing

monthly compensation payments to almost 50,000 veterans (out of about 

3 million veterans who receive such payments). In addition, the 

replacement system has been processing a steadily increasing percentage 

of all new compensation claims completed: this measure was 47 percent in 

January 2007, increasing to 60 percent in February and 83 percent in 

March. 

Nonetheless, considerable work must be accomplished before VBA will be 

able to rely on the replacement system to make payments to all 

compensation and pension beneficiaries. Specifically, while all five 

software applications can now be used to process original compensation 

claims for veterans, two of the applications—Awards and FAS—require 

 17The functionalities for the Search and Participant Profile, formerly a separate application,

are now in Share. 

Page 23 GAO-07-614 Progress on VETSNET
further development before the system will be able to process claims for 

the full range of benefits available to veterans and their dependents. 

Table 2 shows the status of development of all five applications. 

Table 2: VETSNET Component Applications and Status of Development 

Application Development status Deployment status 

Share Completed Fully deployed at all 

regional offices. 

MAP-D Completed Fully deployed at all 

regional offices. 

RBA 2000 Completed Fully deployed at all 

regional offices. 

Awards Functionality to process thirdparty/nonveteran payee claims is in 

application testing. 

Requirements for processing survivor 

benefits are being developed.

Functionality to process pensions is not yet 

under development. 

In partial use in all regional 

offices. 

FAS Functionality to process thirdparty/nonveteran payee claims is in 

application testing. 

Functionality to generate management 

reports is partially in requirements 

development and partially in application 

testing. 

Requirements for processing survivor 

benefits are being developed.

Functionality to process pensions is not yet 

under development. 

In partial use in all regional 

offices. 

Source: GAO analysis of VBA data. 

According to VBA officials, Awards and FAS do not yet have the capability 

to process original claims for payment to recipients other than veterans: 

that is, the applications do not have the functionality to process claims for 

survivor benefits18 and third-party/nonveteran payee claims.19 In addition, 

further development of these applications is needed to process pension 

 18Survivor benefits may be paid to survivors of veterans who were eligible for either

compensation or pension benefits, depending on the circumstances. 

19Examples of third-party/nonveteran payees include people to whom a veteran has given 

power of attorney, medical service providers designated to receive payments, and so on. 

Page 24 GAO-07-614 Progress on VETSNET
benefits for qualified veterans and their survivors. Until enhancements are 

made to Awards and FAS, these claims must continue to be processed and 

paid through the BDN. Also, according to VBA, FAS does not yet have the 

capability to generate all the necessary accounting reports that support the 

development of benefits payments to claimants. 

As described earlier, VBA now has an Integrated Master Schedule that 

incorporates the activities that VBA needs to manage in order to complete 

the replacement project. According to the schedule, the remaining 

capabilities necessary to process compensation and pension claims are to 

be developed and deployed in three software releases, as shown in table 3. 

Table 3: Software Releases Planned to Complete the VETSNET System

Release number 

and title Functionality to be attained

Estimated 

completion date

1. Complete 

Compensation

Process all compensation claims and add 

significant FAS functionality (generate 

management reports). 

August 2007 

2. NonincomeBased Survivor

Benefits 

Process burial, accrued, and survivor claims. February 2008

3. Income-Based 

Pension 

Process nonservice-connected pension 

(veteran and survivor) and parents’ 

Dependent and Indemnity Compensation 

Benefit. 

August 2008 

Source: VBA. 

As table 3 shows, VBA does not expect to complete the development of the 

functionalities needed to process all new compensation and pension 

claims until August 2008. However, according to VBA, the estimated 

completion date is the planned date for completing all development and 

testing, but it is not necessarily the date when users will be able to begin 

using the new system. Before such use can begin, other activities need to 

occur. For example, users must receive training, and VETSNET program 

management must authorize the use of the system at each regional office.

In addition to its remaining software development activities, VBA also 

faces the challenge of converting records for claims currently paid by the 

BDN to the replacement system. Existing compensation and pension cases

on the BDN number about 3 million and about 535,000, respectively. 

Table 4 shows the phases in which VA is planning to perform conversions, 

according to its Integrated Master Schedule. 

Page 25 GAO-07-614 Progress on VETSNET
Table 4: Conversion Phases

Phases Conversions

Estimated start 

date

Estimated 

completion 

date

Phase 1 Conversion testing on terminated 

records and selected live records 

March 2007 August 2007 

Phase 2 Conversion of live compensation 

records 

January 2008 October 2008 

Phase 3 Conversion of pension records November 2008 June 2009 

Source: GAO analysis of VBA data. 

As the table shows, VBA conversion efforts began in March 2007. VBA first 

performed conversion testing on 310,000 terminated (that is, inactive) 

compensation cases so that it could develop and apply lessons learned to 

the conversion of live records. According to VETSNET officials, VBA 

planned to continue testing by converting live cases at two regional offices

(Lincoln and Nashville) that were used as testing sites during 

development. It then plans to perform the conversion of all live 

compensation cases. After the compensation conversion is complete, VBA 

plans to begin efforts to convert pension benefits cases. 

Based on VETSNET project documentation, activities supporting the 

releases have so far been performed on time, consistent with the 

milestones in the recently finalized Integrated Master Schedule. For 

example, VA completed the Project Initiation and Review Authorization 

for Release 1 on September 7, 2006, as scheduled (see fig. 1, shown earlier 

in the report, for the phases of system development and the required 

milestone reviews). It also completed the Preliminary Design Review and 

the Critical Design Review as scheduled (on November 20 and December 

22, respectively). Planning for Release 2 is also on schedule: a kickoff 

meeting was held on January 24, 2007, which established the scope of the

release, and the Project Initiation and Review Authorization was 

conducted on February 8. 

VA has responded to SEI’s assessment by making significant changes in its 

approach to the project and its overall management, including slowing the 

pace of development, establishing a new governance structure, and 

ensuring staff resources. However, VBA has not yet addressed all the 

issues raised by the SEI assessment. That is, it has not ensured ownership 

responsibility for total system and process operating costs, because it is 

not currently monitoring and reporting in-house expenditures for the 

Conclusions 

Page 26 GAO-07-614 Progress on VETSNET
project. It has not defined processes and resources for capacity planning

for the project. In addition, VBA has not yet addressed issues related to the 

conversion of records now on the BDN to the replacement system. 

Specifically, it has not addressed the risk that large numbers of records 

may need to be returned to the BDN, decided on the degree of confidence

it will require that records are converted accurately, or developed 

complete plans for converting and validating records. In addition, although 

VBA has improved key processes for managing the software development, 

these processes have not yet been institutionalized in defined policies and 

procedures, and performance measures of productivity and user 

satisfaction have not been developed. VETSNET management has stated 

that it gave priority to other activities, such as establishing appropriate 

governance and organizational structures, and that it is still gathering 

information to assist in prioritizing the activities that remain. 

Much work remains to be done to complete the VETSNET initiative. 

Although VBA has substantially increased the number of claims being paid

by the replacement system, it must not only finish the development and 

deployment of the software, it must also convert the over 3.5 million 

records now on the BDN to the replacement system. Addressing the 

remaining issues identified by SEI would improve VBA’s chances of 

successfully completing the replacement system and ending reliance on

the aged BDN to pay compensation and pension benefits. 

To enhance the likelihood that the replacement system will be successfully

completed and implemented, we are recommending that the Secretary of 

Veterans Affairs take the following five actions: 

Recommendations for 

Executive Action 

• Direct the CIO to institute measures to track in-house expenditures for the 

project. 

• Direct the VETSNET project to include activities for capacity planning in

the VETSNET Integrated Master Schedule and ensure that resources are 

available for these activities. 

• Direct VBA to (1) develop a strategy to address the risk that large numbers 

of records may need to be returned to the BDN; (2) determine whether a 

greater confidence level for accuracy should be required in the conversion 

process; and (3) develop a detailed validation plan that includes the 

scheduled conversions for each regional office and the validation team 

members needed for that specific conversion. 

Page 27 GAO-07-614 Progress on VETSNET
• Direct the CIO to document and incorporate the improved processes for 

managing risks, requirements, and defects into specific policy and 

guidance for the replacement initiative and for future use throughout VBA. 

• Direct the replacement project to develop effective results-oriented 

performance measures that show changes in efficiency, economy, or 

improvements in mission performance, as well as measures of user 

satisfaction, and to monitor and report on the progress of the initiative 

according to these measures. 

In providing written comments on a draft of this report, the Secretary of 

Veterans Affairs agreed with our conclusions and concurred with the 

report’s recommendations. (The department’s comments are reproduced 

in app. II.) The comments described actions planned that respond to our 

recommendations, such as incorporating processes developed for the 

VETSNET project in standard project management policies, processes, 

and procedures that would be used for all IT projects in the department. In 

addition, the comments provided further information on actions already 

taken, such as details of the records conversion process. If the planned 

actions are properly implemented, they could help strengthen the 

department’s management of the replacement system project and improve 

the chances that the system will be successfully completed. 

We are sending copies of this report to the Chairman and Ranking 

Minority Member of Committee on Veterans’ Affairs. We are also sending

copies to the Secretary of Veterans Affairs and appropriate congressional 

committees. We will make copies available to other interested parties 

upon request. Copies of this report will also be made available at no 

charge on GAO’s Web site at http://www.gao.gov. 

Agency Comments 

and Our Evaluation 

Page 28 GAO-07-614 Progress on VETSNET
Should you or your staff have any questions about this report, please 

contact me at (202) 512-6304 or by e-mail at melvinv@gao.gov. Contact 

points for our Offices of Congressional Relations and Public Affairs may 

be found on the last page of this report. Key contributors to this report are 

listed in appendix III. 

Sincerely yours, 

Valerie C. Melvin 

Acting Director 

Human Capital and Management Information Systems 

Page 29 GAO-07-614 Progress on VETSNET
Appendix I: Objectives, Scope, and Appendix I: Objectives, Scope, and Methodology 

Methodology 

Our objectives were to determine (1) to what extent the Department of 

Veterans Affairs (VA) has followed the course of action recommended by 

the Carnegie Mellon Software Engineering Institute (SEI) and addressed 

the concerns that it raised and (2) the current status of the replacement 

project, the Veterans Service Network (VETSNET). 

To determine the actions taken to implement SEI’s recommended 

approach and address the concerns it raised, we 

• determined the recommended actions by analyzing the report; 

• compared the concerns identified in the assessment to actions planned,

actions undertaken but not completed, and actions implemented by VA 

officials or contractors; 

• interviewed contractor, VA, and VETSNET program office officials to gain

an understanding about processes developed and procedures 

implemented; and 

• obtained and reviewed relevant VA and contractor documents that 

disclosed or validated VA responses to SEI’s concerns. 

To determine the status of system development efforts and the extent that

tasks planned for the initiative were completed, we analyzed VA and 

contractor documentation regarding system operations and development,

time frames, and activities planned. We analyzed VA documents that 

disclosed costs to date and costs planned for completion of the initiative. 

We did not assess the accuracy of the cost data provided to us. We 

supplemented our analyses with interviews of VA and contractor 

personnel involved in the replacement initiative.

We visited the Nashville and St. Petersburg regional offices to observe the 

replacement system in operation and the processes and procedures used 

to test and validate the replacement system as it was being developed and 

implemented. We analyzed VA documentation and relevant evidence from

contractors involved in the replacement effort to establish the work 

remaining to complete the project. Finally, we interviewed cognizant VA 

and contractor officials, responsible for developing, testing, and 

implementing the replacement system. 

Page 30 GAO-07-614 Progress on VETSNET
Appendix I: Objectives, Scope, and 

Methodology 

We performed our work at VA offices in Washington, D.C., and at VA 

regional offices in Nashville, Tennessee, and St. Petersburg, Florida, from 

April 2006 to April 2007 in accordance with generally accepted 

government auditing standards. 

Page 31 GAO-07-614 Progress on VETSNET
Appendix II: Comments from the Department Appendix II: Comments from the Department of Veterans Affairs 

of Veterans Affairs 

Page 32 GAO-07-614 Progress on VETSNET
Appendix II: Comments from the Department 

of Veterans Affairs 

Page 33 GAO-07-614 Progress on VETSNET
Appendix II: Comments from the Department 

of Veterans Affairs 

Page 34 GAO-07-614 Progress on VETSNET
Appendix II: Comments from the Department 

of Veterans Affairs 

Page 35 GAO-07-614 Progress on VETSNET
Appendix II: Comments from the Department 

of Veterans Affairs 

Page 36 GAO-07-614 Progress on VETSNET
Appendix II: Comments from the Department 

of Veterans Affairs 

Page 37 GAO-07-614 Progress on VETSNET
Appendix III: GAO

St

 Contact and 

aff Acknowledgments

Page 38 GAO-07-614 

Appendix III: GAO Contact and Staff 

Acknowledgments 

GAO Contact Valerie Melvin, (202) 512-6304 or melvinv@gao.gov

In addition to the individual named above, key contributions were made to 

this report by Barbara Oliver, Assistant Director; Nabajyoti Barkakati; 

Barbara Collier; Neil Doherty; Matt Grote; Robert Williams; and Charles 

Youman. 

Progress on VETSNET

Staff 

Acknowledgments 

(310758) 
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