```

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

 
         FOLLOW-UP OVERSIGHT HEARING ON GI BILL IMPLEMENTATION

=======================================================================

                                HEARING

                               before the

                  SUBCOMMITTEE ON ECONOMIC OPPORTUNITY

                                 of the

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

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 24, 2008

                               __________

                           Serial No. 110-107

                               __________

       Printed for the use of the Committee on Veterans' Affairs

                   U.S. GOVERNMENT PRINTING OFFICE
44-934 PDF                  WASHINGTON : 2009
----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free(866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, 
Washington, DC 20402-0001

                     COMMITTEE ON VETERANS' AFFAIRS

                    BOB FILNER, California, Chairman

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

                   Malcom A. Shorter, Staff Director

                                 ______

                  SUBCOMMITTEE ON ECONOMIC OPPORTUNITY

          Stephanie Herseth Sandlin, South Dakota, Chairwoman

JOE DONNELLY, Indiana                JOHN BOOZMAN, Arkansas, Ranking
JERRY McNERNEY, California           JERRY MORAN, Kansas
JOHN J. HALL, New York               STEVE SCALISE, Louisiana

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

                            C O N T E N T S

                               __________

                           September 24, 2008

                                                                   Page
Follow-up Oversight Hearing on GI Bill Implementation............     1

                           OPENING STATEMENTS

Chairwoman Stephanie Herseth Sandlin.............................     1
    Prepared statement of Chairwoman Herseth Sandlin.............    50
Hon. John Boozman, Ranking Republican Member.....................     2
    Prepared statement of Congressman Boozman....................    50
Hon. Bob Filner..................................................     3

                               WITNESSES

U.S. Department of Defense, Curtis L. Gilroy, Ph.D., Director, 
  Accession Policy, Office of the Under Secretary of Defense for 
  Personnel and Readiness........................................    28
    Prepared statement of Dr. Gilroy.............................    62
U.S. Department of Veterans Affairs, Keith Pedigo, Associate 
  Deputy Under Secretary for Policy and Program Management, 
  Veterans Benefits Administration...............................    29
    Prepared statement Mr. Pedigo................................    64

                                 ______

American Federation of Government Employees, AFL-CIO, Leonard 
  Smith, Veterans Claims Examiner, Education Division, Veterans 
  Benefits Administration Atlanta Regional Office, U.S. 
  Department of Veterans Affairs.................................    17
    Prepared statement of Mr. Smith..............................    58
American Legion, Joseph Sharpe, Jr., Deputy Director, National 
  Economic Commission............................................     7
    Prepared statement of Mr. Sharpe.............................    53
American Veterans (AMVETS), Raymond C. Kelley, National 
  Legislative Director...........................................     8
    Prepared statement of Mr. Kelley.............................    54
Carnegie Mellon University, College of Engineering, Pittsburgh, 
  PA, Pradeep K. Khosla, Ph.D., Dean.............................    18
    Prepared statement of Dr. Khosla.............................    60
Iraq and Afghanistan Veterans of America, Patrick Campbell, Chief 
  Legislative Counsel............................................     5
    Prepared statement of Mr. Campbell...........................    51
Military Officers Association of America, Colonel Robert F. 
  Norton, USA (Ret.), Deputy Director, Government Relations......    10
    Prepared statement of Colonel Norton.........................    56
Veterans of Foreign Wars of the United States, Dennis Cullinan, 
  Director, National Legislative Service.........................     9
    Prepared statement of Mr. Cullinan...........................    55

                   MATERIAL SUBMITTED FOR THE RECORD

Post-Hearing Questions and Responses for the Record:
    Hon. Stephanie Herseth Sandlin, Chairwoman, Subcommittee on 
      Economic Opportunity, Committee on Veterans' Affairs, to 
      Hon. James B. Peake, Secretary, U.S. Department of Veterans 
      Affairs, letter dated October 2, 2008, and VA responses....    67

         FOLLOW-UP OVERSIGHT HEARING ON GI BILL IMPLEMENTATION

                              ----------                              

                     WEDNESDAY, SEPTEMBER 24, 2008

             U.S. House of Representatives,
                    Committee on Veterans' Affairs,
                      Subcommittee on Economic Opportunity,
                                                    Washington, DC.

    The Committee met, pursuant to notice, at 1:00 p.m., in 
Room 340, Cannon House Office Building, Hon. Stephanie Herseth 
Sandlin [Chairwoman of the Subcommittee] presiding.

    Present: Representatives Herseth Sandlin, Donnelly, 
McNerney, Hall, Boozman, Moran, and Scalise.
    Also present: Representative Filner.

        OPENING STATEMENT OF CHAIRWOMAN HERSETH SANDLIN

    Ms. Herseth Sandlin. Good afternoon, ladies and gentlemen. 
The Committee on Veterans' Affairs, Subcommittee on Economic 
Opportunity, follow up oversight hearing on the implementation 
of the GI Bill will come to order.
    The hearing we had on September 11th gave the Subcommittee 
a brief insight into the U.S. Department of Veterans Affairs 
(VA) current status on the outsourcing for the GI Bill 
implementation. Unfortunately, it left us with more questions 
than answers and the primary purpose of last week's hearing was 
to give the VA an opportunity to brief Congress on how they 
intend to implement Public Law 110-252. We wanted to know the 
primary plan, VA's contingency plan, and how the contractor fit 
into VA's vision. In that hearing we received testimony from 
the VA that the original timeframe to develop and implement a 
new information technology (IT) system was 2013. Implementation 
of this IT system 4 years ahead of schedule, as mandated by 
Public Law 110-252 increases my apprehension about VA's 
capabilities to successfully implement the new GI Bill on time. 
This is a major concern and we will continue to observe the 
VA's progress every step of the way.
    My main concern is over the VA's lack of information on the 
implementation plan as required by Public Law 110-252 and a 
contingency plan should the contractor fail to perform on 
schedule. Rather than providing us with peace of mind over the 
implementation process the VA was unable to discuss the 
implementation plan or the contingency plan in much detail. 
According to the VA, they should have a complete contingency 
plan 30 to 45 days after awarding the contract. My colleagues 
and I have serious doubts that VA is yet planning for the worst 
case scenario. The Subcommittee and all stakeholders seek 
assurance from the VA that no matter what is done VA will be 
able to process veterans' education benefits on August 1, 2009.
    Today we hope to learn more about the VA's plan to 
implement Public Law 110-252. The Subcommittee needs to have a 
clear understanding of the VA's primary plan and the private 
contractor's vision for meeting the VA's goal.
    Finally, I am glad to know that we have a witness from the 
U.S. Department of Defense (DoD) today. Having a DoD witness 
will also allow us to address any concerns or issues that might 
arise from this important partnership. We all know that VA and 
DoD will be working together to execute Chapter 33 benefits and 
the Department of Defense plays an important role in this 
partnership by sharing important data elements and confidential 
information.
    We all want to ensure that this is done successfully, not 
just for the VA but obviously for the veterans that they serve 
and who earned this benefit. I look forward to working with 
Ranking Member Boozman, Members of this Subcommittee, the 
Chairman of the full Committee as we continue to provide 
oversight on the implementation of the new Montgomery GI Bill 
requirements. I now recognize Mr. Boozman for opening remarks 
he may have.
    [The prepared statement of Chairwoman Herseth Sandlin 
appears on p. 50.]

             OPENING STATEMENT OF HON. JOHN BOOZMAN

    Mr. Boozman. Thank you, Madam Chair. When we met 2 weeks 
ago to begin our oversight of how VA intends to implement the 
new GI Bill, there was considerable discussion about whether VA 
should develop the new information technology system in-house 
or hire a contractor for development and possibly some clerical 
support. I believe that that is probably not the right 
question. Rather, I think we should be discussing the 
following.
    First, does VA have sufficient numbers of the right people 
on staff that are required to manage the development program? 
And with the technical qualifications needed to develop the 
necessary computer codes? VA says they do not. Second, what are 
the critical milestones and what are the critical functions and 
requirements that must be met to proceed to the next 
development milestone. In other words, how will VA define 
success along the way?
    Third, what are the key functions or performance parameters 
of the new IT system, and what are the limitations of the 
current system that make it unable to implement Chapter 33?
    Fourth, if neither the contractor or in-house staff are 
able to complete development to meet the August 2009 
implementation date, what are VA's fall back plans to 
compensate for incomplete or failure?
    And fifth, what happens when VA ultimately pushes the on 
button and digital Armageddon causes all the lights to go out 
at 810 Vermont and the White House?
    Any IT systems engineer or program manager will tell you 
that basic program management principles apply to any project 
regardless of who is doing the development. So I would note 
that these questions apply whether VA develops the system in-
house or through a contractor. I would also note that even if 
VA developed the system in-house it is highly likely support 
contractors would be used. As I said last week, there is ample 
history of IT development failure by both in-house staff and 
contractors. I would also remind our witnesses that the only 
agenda here today is how to meet the needs of the veterans. And 
I think that goes without speaking. As former VA Administrator 
General Omar Bradley said, ``We are dealing with veterans, not 
procedures--with their problems, not ours.''
    Finally, the question remains regarding VA's plans for the 
existing workforce. They have stated before that no one will 
lose their VA job and I hope to hear more details about that 
today. And I yield back my time. Thank you, Madam Treasurer.
    [The prepared statement of Congressman Boozman appears on
p. 50.]
    Ms. Herseth Sandlin. Thank you, Mr. Boozman. I would now 
like to recognize the distinguished Chairman of the full 
Committee, Mr. Filner, for opening remarks.

              OPENING STATEMENT OF HON. BOB FILNER

    Mr. Filner. Thank you, Madam Chair. And I want to thank you 
and Mr. Boozman both for the incredible work on the original 
bill that brought us here, everybody around the country is 
excited about these new benefits and I think you have done a 
great job. You realized right away that the implementation is 
just as important as the original bill and you have held timely 
hearings on the issue. This follow-up hearing is just another 
example of your commitment. So thank you, both of you, for your 
leadership.
    When I first heard of the contracting decision, my 
immediate response was, ``why can't we do it in-house?'' Those 
were my initial thoughts. Even though it was part of the 
computer system, and eligibility, it was not the entire GI Bill 
program that we were contracting out. When I saw the Request 
for Proposal (RFP), which is about 150 pages, I said, ``If you 
have the expertise to do the RFP,'' which I think is harder 
than the actual implementation, ``why do we not have the 
expertise to do the actual program?''
    As I listened to the testimony in the first hearing my 
concerns deepened and went beyond the contracting out. I think 
you spoke very appropriately, Madam Chair, of the questions 
that were left with us after that testimony. I think we ended 
the hearing with less confidence than when we started the 
hearing that this was going to be handled correctly.
    The two issues that concerned me after I left here was 
number one, we are calling it a contingency plan. But what we 
are really talking about is continuing the same procedures that 
we had before. We have had a GI Bill program for 64 years. We 
have been implementing the program through VA. We have received 
letters about employees who have the expertise, knowledge, and 
relationships with the Department of Defense. You have the 
employees and could do it along the same lines as we were 
doing. Now, it is not as high-tech or as quick, and I 
appreciate the intent to do the computer program which will 
give us a 2-minute eligibility type of response. We should 
continue that, but it is more important to have the benefits in 
place. You might think of having a longer range contract to 
bring that program online while at the same time keeping the 
system that you have in place to deal with these issues. I 
think that would be a smart thing to do, as Dr. Boozman said, 
considering a history of failures in both the private and 
public sector of this type of contracting. We ought to have 
what you are calling the ``contingency plan.'' I am looking at 
the system that has served us for six decades or more.
    A third issue, which I hope we will address, is the issue 
of the limited number of bids. I recently wrote a letter to the 
Secretary asking for a briefing on this issue but we have not 
had an official response. We had some staff response yesterday, 
I believe. The original pool of contractors for the bid was 
limited to a certain list of 32 companies. I do not understand 
that at all, frankly, if someone will answer why there was a 
certain ``approved list.'' When you are getting in the IT field 
I do not believe the old lists matter. There are new companies, 
new technology, there is more expertise available. Maybe 
somebody in Arkansas or in South Dakota would have the answer 
to this. But we are not giving them the chance which is why the 
list of 32 concerns me.
    We have had all kinds of rumors, although there was no 
official word, that there are four finalists. We heard that 
there were conflicts of interest in those finalists and we 
heard all kinds of nefarious things. Yet we do not know the 
reality of the list of contractors or the four finalists. I 
asked the Secretary to come and brief us if necessary in 
private or executive session so we could have that process 
transparent at least to the Members of Congress before a 
contract was awarded, not after the contract was awarded.
    These are the issues that concern me, Madam Chair. The in-
house/out-house, we will call it the out-house kind of 
approach. I am still concerned about that. But most 
importantly, is that we get the benefits, as you stated, ready 
to be delivered on time in the coming school year. I want to 
make sure that this contracting process did not eliminate firms 
that might help, and too, of course, that there was no conflict 
of interest in the bidding process.
    I thank you again for the procedure that you have set up 
here.
    Ms. Herseth Sandlin. Thank you, Mr. Chairman. We do have a 
pending series of votes, three votes. I am going to invite our 
first panel of witnesses up and introduce them. Then we will 
probably recess for those three votes so no one feels rushed in 
their opening statements. We will come back and hear from all 
five of the individuals on our first panel.
    As you come up let me remind you that your complete written 
statement has been made part of the hearing record. Please 
limit your remarks so that we have sufficient time to follow up 
with questions once everyone has had the opportunity to provide 
their testimony.
    Joining us in our first panel is Mr. Patrick Campbell, 
Chief Legislative Counsel for the Iraq and Afghanistan Veterans 
of America (IAVA); Mr. Joseph Sharpe, Jr., Deputy Director of 
Economic Commission for the American Legion; Mr. Raymond C. 
Kelley, National Legislative Director for American Veterans 
(AMVETS); Mr. Dennis Cullinan, Director of National Legislative 
Service for the Veterans of Foreign Wars (VFW) of the United 
States; and Colonel Robert F. Norton, Deputy Director of 
Government Relations for the Military Officers Association of 
America (MOAA).
    I think we have 10 minutes remaining in the vote. We will 
go ahead and get started, Mr. Campbell you are recognized for 
the first 5 minutes in your opening statement.

STATEMENTS OF PATRICK CAMPBELL, CHIEF LEGISLATIVE COUNSEL, IRAQ 
AND AFGHANISTAN VETERANS OF AMERICA; JOSEPH SHARPE, JR., DEPUTY 
   DIRECTOR, NATIONAL ECONOMIC COMMISSION, AMERICAN LEGION; 
  RAYMOND C. KELLEY, NATIONAL LEGISLATIVE DIRECTOR, AMERICAN 
    VETERANS (AMVETS); DENNIS CULLINAN, DIRECTOR, NATIONAL 
  LEGISLATIVE SERVICE, VETERANS OF FOREIGN WARS OF THE UNITED 
   STATES; AND COLONEL ROBERT F. NORTON, USA (RET.), DEPUTY 
 DIRECTOR, GOVERNMENT RELATIONS, MILITARY OFFICERS ASSOCIATION 
                           OF AMERICA

                 STATEMENT OF PATRICK CAMPBELL

    Mr. Campbell. I guess I get to go first, awesome. Madam 
Chair, Ranking Member, Mr. Chairman, thank you on behalf of the 
Iraq and Afghanistan Veterans of America for this opportunity. 
It is good to be back. I have been gone for about six weeks.
    As you know, after we passed the Post-9/11 GI Bill 
servicemembers all around the world are dreaming bigger dreams 
because of this new opportunity. And I am very happy that this 
Committee is focusing on making sure that those dreams will be 
delivered on time. And just a personal experience, when I was 
demobing out of Iraq in 2005, I remember getting a slide 
briefing where they said, ``All right, you served 14 months 
overseas. You will be entitled to $660 a month for education 
under the Reserve Education Assistance Program (REAP) Program, 
Chapter 1607. When I came home I re-enrolled in school 2 months 
later. I took out financial aid based on the fact that I would 
be getting that $660 only to find out after a month into school 
that I was not actually going to get the $660. The REAP 
Program, which had been passed a year before, could not be 
implemented in time by the VA. So even though hundreds of 
thousands of veterans and servicemembers overseas were being 
told that they were getting one benefit, they came home to 
another one.
    Now, as you can imagine, this put us in a really big bind, 
because I could not even make my rent anymore. And they said, 
``Eventually, you will get a check.'' And that check came about 
a year later. So that experience, to me, has colored, when we 
were debating this original GI Bill, the need to have a year 
period of time to process, to get the things in place, so that 
when veterans are promised, ``You will get a benefit,'' that 
that benefit will be delivered on time.
    Now, you asked us for our specific opinions about three 
different issues. The first is that IAVA believes first and 
foremost, with the implementation of the new GI Bill, is that 
veterans must get their benefits on time. I do not care how you 
do it. The veteran getting their benefit is the customer and is 
the reason why this bill was passed. And anyway we get to that, 
we just need to make sure that is delivered.
    We do believe that whatever process we do choose, the VA 
must retain the ability to make final determinations about 
benefits. I know that you have been getting plenty of letters 
from constituents. I know that we have all been getting emails 
from our members. And I know the VA has been getting thousands 
of very specific questions. I know from my personal experience 
in the military, no one ever fits the exact mold. Individual 
cases that fall out of the system, that do not quite make 
sense, should be determined, the final determinations must be 
made by VA employees. Also, direct interaction with veterans 
should also be made by VA employees.
    Now, I believe that Keith Wilson, throughout the discussion 
of the GI Bill, was very clear in saying, ``If you want this GI 
Bill to be done internally I need two years to do it.'' Now, I 
think all of us, when we were debating on what we wanted to 
happen with the new GI Bill said, ``Two years is too long. That 
is 400,000 veterans going to school without a GI Bill for 
another year.'' We said, ``We are going to give you a year and 
that is all you are going to get.'' So pretty much we knew at 
that point that we were going to have to go outside the system 
to make sure these benefits are delivered.
    Now, I spent the first 2 months after the GI Bill was 
passed in kind of going into a hole, and spent those 2 months 
developing our Web site, http://gibill2008.org, developing a 
calculator which is very much similar to the benefits system 
that the VA is going to develop. It was an extremely trying 
process. Who knew there were 47,000 zip codes out there? Who 
knew that the postal service did not know that 5,000 of them do 
not have States associated with them? That was just in 
developing this calculator. But what I learned in that process 
is once you are able to develop the rules-based system, it is 
actually remarkably easy to input very little information about 
the veteran and output whether or not you are qualified for the 
claim, or how much benefits you should be entitled to.
    Mr. Filner. So you did that alone in about 2 months?
    Mr. Campbell. Me and two web designers. But the thing----
    Mr. Filner. That is worth about $100 million according to 
the VA.
    Mr. Campbell. I mean, mine only tells you----
    Mr. Filner. I will give you $50 million and I will take the 
system.
    Mr. Campbell. We can talk afterward. I mean, in that 
experience I believe that, I realized that because this GI 
Bill, although it seems complicated, it is essentially a rules-
based system. You can answer certain questions, and if you ask 
the right questions and make sure that it is intuitive for the 
person using it, that you can streamline responses. Now people 
not only understand what they are entitled to, but also makes 
the whole process more understandable for them.
    The last things I just want to say is that whatever system 
that we do develop we need to make sure that it is field 
tested, both by this Committee, the veterans service 
organizations (VSOs), and the customers. Which means that it is 
not ready in July. It needs to be ready months ahead of time 
and we need to basically break it down over and over again. 
Like we did with our calculator. I was done after a month. But 
we spent a month playing with it to make sure we caught as many 
of the bugs we could get out.
    Thank you for this opportunity to testify. I look forward 
to any of your questions.
    [The prepared statement of Mr. Campbell appears on p. 51.]
    Ms. Herseth Sandlin. Thank you. We will take a short recess 
and be back following votes. Then we will resume with Mr. 
Sharpe. Thank you.
    [Recess]
    Ms. Herseth Sandlin. Okay, thank you for your patience 
during that series of votes. We will now resume with our next 
witness. 
Mr. Sharpe, you are now recognized for 5 minutes.

                STATEMENT OF JOSEPH SHARPE, JR.

    Mr. Sharpe. Thank you. Madam Chairman and distinguished 
Members of the Subcommittee, thank you for the opportunity to 
present the views of the American Legion regarding the GI Bill 
implementation.
    Historically, the American Legion has encouraged the 
development of essential benefits to help attract and maintain 
servicemembers in the armed services, as well as to assist them 
in making the best possible transition back to the civilian 
community. The Servicemembers Readjustment Act of 1944, the GI 
Bill of Rights, is a historic piece of legislation authored by 
the American Legion that enabled millions of veterans to 
purchase their first homes, attend college, obtain vocational 
training, receive quality healthcare, and start private 
businesses.
    The successful and timely transformation from one education 
benefit to the next, starting with the Servicemembers 
Readjustment Act of 1944, leading to the Montgomery GI Bill, 
has been administered and implemented by existing VA employees 
within the Veterans Benefits Administration (VBA). Currently 
the VBA Education Service employs more than 700 full-time 
employees. These employees have intimate knowledge of 
veterans'' often unique needs and how best to serve them. The 
American Legion is extremely disappointed that the VA feels it 
does not have the capabilities in Education Service in 
information technology to implement this critical service.
    While the American Legion supports improving the delivery 
of education benefits it should not lead to the VA removing 
itself from the process. Any changes to the administration of 
the GI Bill benefits should aim toward reaching the performance 
goals, as outlined in the recent RFP, while allowing VA to 
retain ownership.
    The American Legion also recommends that once the software 
and automated process is developed, VA should train its 
Education Service personnel so the IT component can be placed 
under its responsibilities. It is important that VA retain 
ownership of one of its more significant and successful 
programs.
    The new GI Bill has been hard earned and is currently well 
deserved for the men and women who have protected, sacrificed, 
and served our country honorably. An automatic, efficient 
delivery of education benefits must ultimately remain with VBA 
Education Service.
    In conclusion, the American Legion strongly supported the 
enhancement to the Montgomery GI Bill and is grateful that the 
House and Senate have passed this bill, and that the President 
signed this vital piece of legislation on June 30, 2008. On 
behalf of the American Legion I would like to thank the 
Chairman and this Subcommittee for presenting us with the 
opportunity to make our thoughts and considerations known. 
Thank you.
    [The prepared statement of Mr. Sharpe appears on p. 53.]
    Ms. Herseth Sandlin. Thank you, Mr. Sharpe. Mr. Kelley, you 
are now recognized.

                 STATEMENT OF RAYMOND C. KELLEY

    Mr. Kelley. Madam Chair, Ranking Member, Members of the 
Committee, thank you for this opportunity to appear before you 
today to provide AMVETS views and discuss the VA's strategy for 
implementing the Post-9/11 GI Bill.
    The Montgomery GI Bill was enacted in late 1984 for 
servicemembers who completed 24 months of active-duty service 
if that service began after June 30, 1985. This provided VA 
with more than 30 months to develop a system to deliver the 
benefit. With only 13 months to meet the statutory requirements 
of the new Educational Assistance Program it is necessary for 
VA to rely on contractor support to develop an IT solution that 
will accurately determine benefits eligibility so our 
servicemembers and veterans will be able to receive their 
Chapter 33 benefits in a timely manner.
    By VA's own admission, they do not have the proper IT 
manpower to develop an acceptable solution by August 2009. 
Development of software demands a narrow scope of work over a 
relatively short period of time, and the most efficient way to 
solve an IT problem when current staff, for whatever reason, 
cannot produce the solution is to hire a software development 
firm to take on the task. Furthermore, for VA to process the 
new claims through manual processing while they develop an in-
house IT solution, VA would be required to hire hundreds of new 
claim processors for a temporary period of time. This would be 
at an increased cost to VA and only provide temporary 
employment for any veteran who might benefit from the hiring 
increase.
    Because of the scope of the IT solution and the limited 
time in which VA has to implement this program, AMVETS does not 
fault VA for their management of the proposal process. Although 
AMVETS prefers to see a more open bidding process, which would 
include disabled veteran-owned companies, under the 
circumstances VA was required to select a contractor in a 
timely manner. Streamlining the acquisition process was a 
response to the limited time.
    When VA took over the acquisition process, only four 
contractors had agreed to enter into the bidding competition. 
Therefore, VA requested proposals from only those four 
companies.
    AMVETS is completely confident that no VBA employees will 
lose Federal employment because of the software development by 
an outside source. VA will continue to process Montgomery GI 
Bill claims as well as take on processing claims that are 
denied by the IT solution. There will also be positions within 
the new system that will move claims processors into oversight 
roles and any other employees will be properly trained to work 
in similar positions within VBA.
    Madam Chair, this concludes my testimony and I will be 
happy to answer any questions.
    [The prepared statement of Mr. Kelley appears on p. 54.]
    Ms. Herseth Sandlin. Thank you, Mr. Kelley. Mr. Cullinan, 
welcome.You are now recognized for 5 minutes.

                  STATEMENT OF DENNIS CULLINAN

    Mr. Cullinan. Thank you very much, Madam Chairwoman, 
Ranking Member, distinguished Members of the Committee, 
Chairman Filner, of course, on behalf of the men and women of 
the Veterans of Foreign Wars, I want to express our deep 
appreciation for inviting us to testify here today. This is an 
essential and vital issue for us, and its effective and 
efficient implementation is a key goal of all of us.
    The VFW commends this Subcommittee for working to ensure 
that the new GI Bill is implemented and managed properly. This 
Committee has demonstrated unified bipartisan dedication to 
improving the GI Bill. The VFW urges this Subcommittee to 
continue to exercise careful oversight throughout the 
implementation of the new GI Bill. We thank you for holding 
hearings on this issue and shedding light on the GI Bill 
implementation process.
    As one of the leading advocates for this GI Bill, the VFW 
supports using outside contracting in order to get this program 
fully operational. We are deeply concerned, however, that under 
this standard government Request for Proposal, contracting 
proposal may jeopardize the future efficient running of the 
program. It is our reading that under this particular proposal, 
may result in allowing the contractor to own the software and 
the source code of the benefits delivery system. Essentially, 
this contract allows the contractor to sell the license to VA 
and when the contract for that license expires the contractor 
can set the pricing items on their terms. In this case, the 
company may bid low to obtain the contract and then once the 
initial period of service expires the company may increase its 
price because there is no other cost effective option for the 
VA.
    I would just add to this, I have had a number of my staff 
take a look at this contract proposal. It was their estimation 
that indeed that both the software and, I believe, the source 
code would at some point revert to VA. In our National Veterans 
Service we have an attorney on staff who reviewed it. I guess 
that is a good thing. And it was his opinion that, no, indeed 
the contractor would hang onto the software. And at the very 
least the source code. This is indeed problematic. We urge that 
the VA own the software and the source code so it may 
eventually operate and further develop this program using its 
own resources. Without the source code, even if the software 
reverts to VA, they would have to further develop it on their 
own. Similar to what happens if you own Microsoft Windows. You 
may own the software on the licensing agreement and of course 
not share it with others. But if you want to change something 
with respect to what Windows can do for you, you cannot do it 
without the source code. That is a key issue here for us.
    While we believe VA is capable of administering this 
program, we are gravely disappointed that leadership has not 
been more open about its decisionmaking process, or more 
consistent in its messaging. VA leadership only started 
engaging the VSO community in discussing the contracting 
situation when the press started to report on the issue. This 
was only after rumors had been circulating that VA Educational 
employees would be terminated and replaced by computers and the 
administration of all veterans' education programs was to be 
outsourced. VA's response was clearly too little and too late.
    We also share the Subcommittee's concern that VA has not 
articulated its fail safe plan. The American public, and our 
veterans, need to know what VA will do if the software or 
contractor fails to deliver services so that the GI Bill 
benefits will be paid by August 1, 2009.
    And with that, I will conclude, Madam Chairwoman, and thank 
you very much.
    [The prepared statement of Mr. Cullinan appears on p. 55.]
    Ms. Herseth Sandlin. Thank you. Colonel Norton, you are now 
recognized for 5 minutes.

             STATEMENT OF COLONEL ROBERT F. NORTON

    Colonel Norton. Thank you, Madam Chair, and thank you 
Ranking Member Boozman, Chairman Filner, and Members of the 
Subcommittee. On behalf of the Military Officers Association of 
America, I am deeply honored to appear before you today on this 
very important subject. But first I want to say on behalf of 
all of our members, that MOAA is deeply grateful to all Members 
of Congress for enacting the Post-9/11 GI Bill. Our Nation's 
warriors have stood in the breach for more than 7 years and 
they have dearly earned these new benefits.
    As indicated in my prepared statement, MOAA does not have a 
position on whether the information management system that will 
support Chapter 33 benefits administration should be built 
inside the VA Education Service or contracted out. In either 
case, the VA may well need contractor support due to the 
inherent challenges in capturing and managing data of all the 
stakeholders. Those stakeholders include the Department of 
Defense and the Services.
    DoD will be on the hook to validate the qualifying post-9/
11 service, including the qualifying service of National Guard 
and Reserve servicemen and women, and to furnish locality based 
basic allowance for housing rates for servicemembers in grades 
E5 with dependents.
    The VA will be responsible for maintaining information on 
veterans with Chapter 33 service, interacting with 
postsecondary institutions, and the U.S. Department of 
Education, and administering payments.
    Veterans themselves will apply for and provide information 
documenting their Chapter 33 service and school enrollment 
information.
    There is no doubt that this will be a complex, challenging 
undertaking. We are, however, confident that applications 
similar to commercial tax preparation software, like ``Turbo 
Tax,'' can be used for this purpose. Millions of American 
citizens use these kinds of applications. Maybe not as good as 
the one Patrick Campbell has developed. And we believe that 
they can be developed to serve as the interface for 
administering Chapter 33 payments. The features of any system 
developed to support Chapter 33 administration should, in our 
view, be simple, efficient, fast, accurate, secure, and cost 
effective.
    This concludes my statement. I look forward to your 
questions, Madam Chair.
    [The prepared statement of Colonel Norton appears on p. 
56.]
    Ms. Herseth Sandlin. Thank you all for your testimony. 
Looking back on other changes that we made to the GI Bill, the 
Montgomery GI Bill, let us start there. I believe that it took 
32 months, am I right on that? Thirty-two months for the VA to 
implement the Montgomery GI Bill. When we were debating the 
Post-9/11 GI Bill, were each of your organizations aware of the 
past implementation issues of new education benefits? Did each 
of your organizations, support the 1-year timetable that was 
included in the Post-9/11 bill? Mr. Campbell.
    Mr. Campbell. I remember there was actually pretty intense 
negotiations about that. The VA had asked for a longer period 
of time. We wanted it to be shorter. With Keith Wilson and 
Senator Webb and our organization we did agree to the, I think 
I was the one who said, ``Why do we not start it next school 
year?'' And there was kind of a general nod after that. The 
next school year is about the proper time politically and 
administratively.
    Ms. Herseth Sandlin. And that put it at the 13 months?
    Mr. Campbell. Well, it was August, I just said the 
beginning of next school year, whenever it passed that would 
give them that period of time until August 1, 2009.
    Ms. Herseth Sandlin. Okay. Mr. Sharpe.
    Mr. Sharpe. It was not an issue that we really debated. But 
we agreed with the 1-year timeframe.
    Mr. Kelley. Yes and yes to your answers. Yes, we understood 
the length of time last time and yes we agreed to the 1-year 
time.
    Mr. Cullinan. With respect to the VFW, we questioned 
whether VA would be able to get it up and running within the 
year or 
13 month period. Of course, we wanted it functioning as soon as 
possible. But also understand that this is a difficult task. 
The only way to add to that is, I mean VA was provided a number 
of months ago a $100 million in appropriation to initiate this. 
And that is not just software development. That is bringing the 
requisite personnel. Whether they went ahead in a timely 
fashion with that I guess I should leave that to VA to respond 
to. But that is the extent of our involvement.
    Colonel Norton. I was on active duty at the time of the 
implementation of the Montgomery GI Bill working on the task 
force in the Office of the Secretary of Defense. So I was aware 
of that, the long start up period to get the Montgomery GI Bill 
up and running. We did not take a position on the time to 
implement the new GI Bill but we knew it would take some period 
of time.
    Ms. Herseth Sandlin. Mr. Campbell, I think you had 
mentioned that there should be extensive field testing by the 
Committee, VSOs, and the customers, the veterans themselves who 
would be eligible. So the program needs to be ready to be field 
tested months earlier than August 1, 2009. How many months 
earlier?
    Mr. Campbell. I would say the, any type of public interface 
at least a month, if not two. I know that with our calculator 
that we developed, it does not output or send checks, we had 
done a month ahead of time before we even gave it out to 
anyone. Had people run through it.
    Now, I did forget one group of people. Not only do the 
veterans also have to use it, but the schools. Those are the 
people who will be receiving checks. So they would be another 
person who would need to field test this.
    Ms. Herseth Sandlin. Are you familiar with whether or not 
the RFP specifies any dates for field testing, I will pursue 
this with our witnesses and with the VA as well. But have you 
had a chance to review the RFP?
    Mr. Campbell. I have, but I do not remember that specific 
part.
    Ms. Herseth Sandlin. Mr. Cullinan, your concern with the 
RFP is the issue of whether or not the software reverts in 
terms of ownership to the VA. Since the RFP has already gone 
out, as this process unfolds, if that issue cannot be 
rectified, in light of the fact that the RFP has already gone 
out, and we may be looking at a delay. Do you feel that the 
issue that you have raised with us rises to the level of 
concern and importance, perhaps if a delay is necessary, that 
it warrants a delay to get this right and make sure that the VA 
is able to retain the software and the source codes?
    Mr. Cullinan. Madam Chairwoman, it would be very 
unfortunate if it were to come to that. And we would trust that 
something would be worked out. Although it is a very important 
issue, because down the road if VA cannot, you know, administer 
this software, develop it, and make the changes, because 
undoubtedly there could be a number of changes. Even its 
initial implementation, even during the field testing period, 
we can foresee, you know, big changes will be in order. If they 
cannot do it themselves they will be locked into a situation 
which could cost VA and indirectly veterans money and make the 
system less effective. So, yeah, that is something that would 
really have to be pursued.
    Ms. Herseth Sandlin. Okay. Hopefully, I agree with you, it 
will not come to that and it can be worked out. There are a lot 
of questions that the Committee has and will continue to have 
about the RFP and the process and how the contractor fulfills 
the requirements.
    Mr. Boozman.
    Mr. Boozman. Thank you, Madam Chair. I appreciate your 
testimony. It was really very helpful. But, the good thing is 
that we are debating a subject and it is great that we are 
having the debate. I mean this is by all accounts a massive 
expansion of the GI Bill and that is great news for everybody. 
What we do not want is the situation that you went through, Mr. 
Campbell, of it being something that we want to get online, it 
is not there, everybody is all excited. And then, for many 
individuals, the money is just not there. You know, if it is 
not provided in a timely way. So that is the purpose of the 
hearing, that is why we had the last one. And we are going to, 
I am sure under the Chairman's leadership, we will have as many 
as we need to, you know, again to be helpful in trying to get 
this thing done.
    Mr. Kelley, let me ask you, you made some comments in your 
testimony about the bidding process?
    Mr. Kelley. Yes.
    Mr. Boozman. Can you expand on that? And then also, Mike 
was telling me that you were in Iraq and in a very dangerous 
part of Iraq. We appreciate your service very, very much.
    Mr. Kelley. It is my understanding from looking back to the 
bidding process that, and from my recollection I thought it was 
ten, that had been sent to bid and four had responded. And at 
that point there had been some amendments to that bidding 
process. And VA, at that point, took over the bidding process. 
Since they had only had four responses they sent back out to 
only those four. That is from my recollection.
    Mr. Boozman. Mr. Norton, in your testimony you had noted 
that Chapter 33 payments can vary infinitely and that MOAA 
believes a Turbo Tax-like approach automation would service as 
a model, perhaps. Is it fair to say that you support a rules-
based processing system as a necessary tool to meet the new GI 
Bill's payment requirements?
    Colonel Norton. Yes, absolutely. And I think I would add to 
that, too, that as you know there is a technical amendments 
draft legislation that is in the works in the Senate. So any 
rules-based system will also have to be flexible and scalable 
in order to accommodate needed changes as amendments to the 
basic program are made.
    Mr. Boozman. Thank you, Madam Chair. I yield back.
    Ms. Herseth Sandlin. Thank you, Mr. Boozman. Mr. Filner.
    Mr. Filner. Thank you, Madam Chair. Let me just make one 
contextual statement. While I think we all agreed what a great 
step forward the educational benefits were, when we look back 
at the GI Bill of 1944 it had two major parts: education and 
homeownership or, the home loan program. I have said many times 
that I am here because of the GI Bill because my father was 
able to buy a house for about $2,000. And we became part of the 
middle class. I am disappointed that part was left out of the 
new GI Bill that was passed. My bill had a section covering the 
home loan program. I want you to know that we have two omnibus 
bills that are coming from the Senate today on health and 
benefits issues. Most of the housing provisions that were in my 
GI Bill are also in the Senate benefits bill to raise the value 
of home loans, take off the cap for refinancing, and reduce the 
equity required. These are some very important things that not 
only will help, any first-time homeowner but will also help 
veterans that are caught in this incredible crunch right now. 
The VA had become irrelevant to their situation because of 
these restrictions. I think we are going to pass the bill today 
which will alleviate most of these restrictions and make the VA 
Home Loan Program relevant to today's veterans and helpful 
given the current mortgage crisis. I see the staff shaking 
their heads, so I hope I characterized that properly.
    Mr. Cullinan. Again from the VFW, we just want to thank you 
for those changes. Because not only does it make the program 
relevant during this current mortgage crisis, but you did it 
within what the VA Home Loan Program is. You did not try and 
make it into a lender or something different. With respect to 
lowering refinance rates, raising the caps on some of these 
things, you are helping veterans but you did not undermine the 
program. So we really salute you for doing that.
    Mr. Filner. Thank you. Of course, VA will probably come 
back and say they need to contract that out. I share the 
concerns of the Chair about the repercussions of a delay if we 
do not import the program on time. I do not think, Madam Chair, 
that if they set up the contingency plan properly that a delay 
in the software development does not necessarily mean a delay 
in the provisions of benefits. Because if they are doing it 
right they have to have a back up if anything goes wrong. If 
the program fails, if we do not negotiate these source codes, 
they have to have a back-up system that provides the benefit. 
So I do not believe we should be thinking of playing off a 
delay in the software development as meaning a delay in the 
benefits. They are separate issues. If they have to take more 
time to develop the software, they must have a proper 
contingency plan. I think we ought to just keep those ideas 
separate and we will be talking to the VA folks about that.
    Mr. Kelley, I was interested in your statements about the 
fact that there were four finalists. I had asked the VA, in the 
last hearing, how many finalists were there and the VA said 
they could not tell us. It was a secret. How do you know this 
stuff?
    Mr. Kelley. Evidently, it is not secret anymore.
    Mr. Filner. I know it too, but they would not answer me in 
public.
    Mr. Kelley. I had asked through sources through the VA 
earlier this week.
    Mr. Filner. Interesting. Do you know the names of them, by 
the way? Can you tell me?
    Mr. Kelley. No, I do not.
    Mr. Filner. I appreciate the information because the VA 
would not give it to us. Yet we have had, as I said in my 
opening statement, sources tell us the information and it seems 
everybody knows it, but yet it is a secret.
    Mr. Kelley. And that may be the case for me, also.
    Mr. Filner. So you are under arrest for giving the 
information out, or whoever told you is, but I will not ask for 
your source. Madam Chair, again, I think this panel has raised, 
as Mr. Boozman said, some very important issues and I think we 
need to separate the software development from the benefits 
implementation because of these questions. If we do not like 
the fact that we will not get ownership of the program, should 
we say, ``Well, let us negotiate that more?''
    Ms. Herseth Sandlin. Would the gentleman yield?
    Mr. Filner. Sure.
    Ms. Herseth Sandlin. For purposes of clarifying my 
question, from the testimony I heard from these witnesses is 
that at least three, if not four, out of the five anticipated 
that there would be some contractor support necessary to 
implement this new benefit. So my concern is that even with a 
contingency plan, and this is what we will explore with the VA, 
are we going to insist on a contingency plan separate from any 
IT component? Separate from any contractor component? Because 
if that is what we are going to mandate that is what we have to 
discuss here. Four out of the five witnesses on this first 
panel are indicating that their organizations anticipated some 
level of contractor support and if it is primarily the IT 
function then if we have some concerns about how the RFP went 
out to perform that IT function. I want to make sure there is 
not a delay either, but I do not know that we can completely 
separate them in light of some of the testimony that we have 
heard.
    Mr. Filner. I think we can. If it is a catastrophic failure 
of the whole system we had better have a back up. But, if it is 
a failure of policy recommendations we still have the same back 
up. That is all I am saying. Thank you, Madam Chair.
    Ms. Herseth Sandlin. Mr. Hall, do you have questions for 
the witnesses?
    Mr. Hall. Yes, thank you Madam Chair. And I am very much 
interested in Mr. Cullinan's comments about ownership of source 
code. And I think the discussion about that is extremely 
important. To prevent the VA from being in the position down 
the road, it could be during the trial period or the test 
period, it could be 10 years or 20 years from now, of being 
tied to a particular corporation that has a monopoly. If the VA 
goes down the road that they appear to be going down they are 
going to contract out for the writing and the creation of a 
particular program that has one application. It is not like 
Microsoft Word that will be sold to millions of people around 
the country or around the world. This is something that would 
be sold to the VA and used by the VA. It is created, we can 
dictate the terms because we are the only customer. And so I 
would say that this should absolutely be one of the terms, that 
the source code is open to us and that we are able to make 
changes internally. Or if we wish, VA can hire a different 
contractor to make changes, knowing the source code. That is 
something I would say that the VA should not yield on in 
negotiations.
    And I am curious, just a couple of comments here. Maybe Mr. 
Campbell you could tell me if you have heard whether the VA, at 
any point, gave their own employees a chance to compete for 
these jobs before deciding that they could not do it in-house? 
Or if any of the panelists have information about that?
    Mr. Campbell. I have not heard anything like that. But I 
know that even before the GI Bill passed the VA did say, ``This 
is how much time we would need to do it internally,'' and we 
did not give, we being the veterans groups and people 
associated with the Post-9/11 GI Bill, did not give them that 
amount of time.
    Mr. Hall. Would IAVA have an objection, I know that 
initially at least my impression is that you would prefer for 
VA to do this in-house, as was my first reaction. But would you 
have a problem with a contract being done for the initial 
development, testing, and implementation of this and then 
having the VA's own employees who have been handling these 
benefits and similar benefits for years trained to run the 
software, and take that job over? So in other words, the 
contractor would be phased out on an as needed basis.
    Mr. Campbell. That is my impression on what should be 
happening, is that the contractor, once the software, the 
rules-based system is developed, the contractor would only be 
held on to do minor adjustments and data entry.Which, you know 
basically means keeping the data. That is what I heard from the 
VA a couple of weeks ago when they had their conference call 
with the VSOs.
    Mr. Hall. I just maybe would ask each member of the panel 
if they would answer the same question, and maybe comment in 
that framework on the opportunities for veterans to, as one of 
the objects that the Secretary has initiated and we all have 
been asking for, to hire more disabled vets to work for the VA. 
And so this is, you know, the more the jobs are retained in the 
VA, the more possibility there is for that to happen. So if an 
outside contractor designs the software, tests it, gets it 
underway and implemented, and then we have VA employees trained 
an actually carrying it out, going out to the future, is that 
acceptable to you, Mr. Sharpe?
    Mr. Sharpe. We prefer that it is done in-house. And that if 
additional expertise is needed that they hire those additional 
experts. However, if some portion of it has to be contracted 
out, we want to make sure that VA is definitely involved, that 
they have oversight, and that it eventually comes back to the 
VA employees, who are the ones trained in the implementation of 
the program.
    Mr. Hall. Thank you. Mr. Kelley.
    Mr. Kelley. AMVETS also agrees that contracting out is 
probably the only solution and that at some point I think the 
contract now looks like mandatory 3 years with an optional 2 
more years for the ownership. And then I do not know, I did not 
get the inside information on the ownership. But the ownership 
should come back to the VA and VA employees should maintain, do 
the administrative work and management of that at that point.
    Mr. Hall. Okay.
    Mr. Cullinan. Mr. Hall, again, thank you for the question. 
I would certainly agree with what my predecessor just said 
here. You know, additionally VA is not only going to need 
people to operate the program. They are going to need 
programmers to actually be able to keep it up, make the 
requisite changes. It seems to us that would be an excellent 
opportunity to bring in veterans with the requisite skills to 
carry out those jobs. You have two areas. You have those who 
run the programs, operate them, for like typing on Word, to 
extend that analogy. And those who are actually going to 
rewrite the things to make them work better and appropriate to 
the circumstances.
    Mr. Hall. Thank you. Colonel Norton.
    Colonel Norton. It is certainly one approach and we would 
not object to it if that is what is worked out.
    Mr. Hall. Okay. A concise answer and my time is up, thank 
you, Madam Chair.
    Ms. Herseth Sandlin. Thank you, Mr. Hall. Mr. Boozman, did 
you have any follow up questions? Mr. Filner. Okay. I thank you 
all for your testimony today and taking our questions. Thank 
you for your service to the country and all the work that you 
are doing on behalf of our veterans. Thank you.
    Now I would like to invite our second panel. Joining us on 
the second panel is Mr. Leonard Smith, a member of the American 
Federation of Government Employees (AFGE); and Dr. Pradeep 
Khosla, Dean of the College of Engineering at Carnegie Mellon 
University. Gentlemen, welcome to the Subcommittee. Thank you 
for being here. We look forward to your testimony. Mr. Smith, 
we will begin with you and you are recognized for 5 minutes.

    STATEMENTS OF LEONARD SMITH, VETERANS CLAIMS EXAMINER, 
 EDUCATION DIVISION, VETERANS BENEFITS ADMINISTRATION, ATLANTA 
REGIONAL OFFICE, U.S. DEPARTMENT OF VETERANS AFFAIRS, ON BEHALF 
 OF THE AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO; 
  AND PRADEEP K. KHOSLA, PH.D., DEAN, COLLEGE OF ENGINEERING, 
           CARNEGIE MELLON UNIVERSITY, PITTSBURGH, PA

                   STATEMENT OF LEONARD SMITH

    Mr. Smith. Thank you, Madam Chairwoman and distinguished 
Members of the Subcommittee. My name is Leonard Smith. I am a 
20-year service-connected disabled veteran myself. And I work 
in the Education Division at Atlanta as a Veterans Claims 
Examiner.
    Every day employees like myself help veterans obtain 
education benefits through our offices out of Buffalo, St. 
Louis, Muskogee, and like I mentioned, Atlanta. It is my honor 
to share our perspective with you. In addition, AFGE would like 
to submit a supplemental statement to respond to the 
Subcommittee's questions about IT and possible restructuring on 
more detail.
    It is my belief that VA's own employees would do a far 
better job than any contractor. The VA wants the contractor to 
achieve an objective of an accuracy rate of 98 percent. My 
office already has an accuracy rate of 95 percent in Atlanta, 
and 98.8 percent in Buffalo. The VA also wants the vendor to 
process original claims in 10 days and supplemental claims in 7 
days. Our office right now for original claims is at 20.2 days 
and supplemental claims at 9.8. The vendor, who does not know 
the work at all, can only promise to reach their goals. We say 
at much more assurance at additional hiring and our long 
experience and great track record we can bring those numbers to 
even a better rate.
    So why does VA let vendors compete for this work but, you 
know, but not us? They say we, the work is new and that we do 
not have the right to compete. But, I mean, I get quarterly 
training briefs on, at a minimum, on new laws and regulations 
and benefits. And quite honestly, Chapter 33 will not be that 
different than the current law. We already process dependant 
claims for 100-percent service-connected disabled veterans who 
are killed in action, or service connected disabilities. And if 
we have to go to making payments to schools directly, that is 
just a matter of inputting a bank number or account number.
    VA says we have no right to compete for these jobs because 
we will not be harmed by the outsourcing. But if I have to be 
retrained for something unfamiliar and leave the job that I 
love and know so well, and face the possibility of reassignment 
and relocation, and I know for me personally with two young 
kids, a wife that has just started a new job, that would be, I 
would be worse off. I would run the risk of being downgraded. 
In other words, and even if my pay is saved, that would not be 
good for my career.
    I am not an IT expert and I am someone, I am just someone 
who knows through my experience as an aircraft electrician and 
also teaching electronics at the United States Army Aviation 
Logistics School, and also through my studies, that is also as 
a result of VA benefits, that is what I know about IT. And I 
know a lot more about what I do process as far as, the process 
that I do use each day for my veterans.
    I do not believe any software can replace the role of a 
claims examiner, especially doing the original claims. I am 
constantly having to do different overrides because of the 
different, dealing with the different documents that I have and 
the discrepancies within those documents. The software that we 
already have, it handles six Veterans Education Programs. I do 
not know why VA will not have its own IT employees and why we 
cannot at least be given the opportunity to compete with 
developing the software for Chapter 33, when we already know so 
much about the Education Division, or they already know so much 
about the Education Division.
    I also know when it comes to IT support, it would be much 
more difficult for me to get in touch with the outside 
contractor as opposed to the ones that are already there on 
site with me in the event of a glitch in the system.
    Again, I do not understand why, you know, we want to have a 
contractor replace experienced, dedicated employees like myself 
who are in the best position to train new employees and 
implement the new laws. Also, hiring more disabled veterans 
coming home from combat, which is exactly what Secretary Peake 
recently said he wanted the VA to do. At least give us the 
opportunity to compete for the work.
    Thank you for the opportunity and I would be happy to 
address any questions.
    [The prepared statement of Mr. Smith appears on p. 58.]
    Ms. Herseth Sandlin. Thank you, Mr. Smith. Dr. Khosla, 
thank you for being here. You are now recognized for 5 minutes.

               STATEMENT OF PRADEEP KHOSLA, PH.D.

    Mr. Khosla. Chairwoman Herseth Sandlin, Chairman Filner, 
Ranking Member Boozman and Members of the Subcommittee, thank 
you for this opportunity for being here today. I have the 
distinct honor of being the Dean of the College of Engineering 
at Carnegie Mellon. The College is ranked top ten in the 
country and is housed in what I consider to be a spectacular 
School of Engineering and Technology. As a steward of higher 
education, it is an honor to be here today as we examine the 
best ways to support the delivery of enhanced educational 
benefits to the military.
    It has been well documented that the end of World War II, 
the original GI Bill had a profound impact on the United 
States. As Edward Hume states in his book, Over Here, that GI 
Bill allowed us to create 14 Nobel Prize winners, 3 Supreme 
Court Justices, 3 U.S. Presidents, 12 Senators, in addition to 
67,000 doctors and 91,000 scientists who contributed in a very 
tremendous way to the economy of this country and to the 
quality of life as we see it today.
    So I am particularly interested in the technological 
advancements that came to the fore from these individuals. It 
is also my hope that your efforts today will similarly help 
others achieve their academic dreams and support additional 
economic and technological sea changes.
    I have been asked to comment from a technical perspective 
on four different areas of concern related to the Chapter 33 
benefits implementation RFP language. These are overall 
feasibility of the proposal; August 1, 2009, implementation 
deadline; possible problems that may be encountered in creating 
the program; recommendations on industries' best practices in 
creating a similar program. So let me start addressing these 
issues now.
    Regarding feasibility, the RFP specifies in reasonable 
detail the objectives of the project. It clearly identifies 
that the VA is responsible for specifying the ``what'' and the 
contractor for delivering the ``how.'' I believe this allows 
for adequate flexibility on the offeror's part to propose a 
state-of-the-art and scalable solution based on industry best 
practices.
    The ability to support more than half a million students 
requesting benefits annually, including about 1.4 million 
claims, is certainly feasible provided the contractor is 
skilled in the implementation of large scale IT projects and 
handling personally identifiable information, PII, and 
processing financial benefits. Areas that could undermine the 
feasibility and success of this project include selecting the 
right technology, I mean hardware and software both, and 
ensuring that the interoperability and system interconnection 
issues are addressed up front and factored into the technology 
selection process. This should include personal identity 
authentication and authorization.
    Ensuring that the contractor has the skills and experience 
to properly handle, store, process, and transit large amounts 
of PII and financial data and meet the security requirements 
set forth in the RFP, including compliance with the Privacy Act 
1974, FISMA, which is the Federal Information Security 
Management Act, privacy requirements of the E-Government Act of 
2002, National Institute of Standards and Technology (NIST) 
guidance and standards, and other regulatory guidance or 
requirements, as set forth in the RFP. Security of PII, both 
during transmission and storage, is of paramount importance. 
PII is usually disclosed through one of many means that 
include, for example, a dishonest insider, lost or stolen 
computer, hacking, and lost or stolen backup tape.
    But while I do not see any technical barriers it is 
important to recognize that the requested secure solution can 
be technically complicated to implement. Project management 
capabilities, especially with respect to managing the 
implementation of goals to ensure that a secure solution is 
implemented by the target deadline; stakeholders stay involved 
throughout the project; testing of the system, including pilot 
trials, are carefully orchestrated and planned to meet the 
requirement of a seamless transfer of data with uninterrupted 
service.
    The RFP requirement that VA IT resources will not be 
provided to support the development of a solution is too 
stringent. VA needs to have liaison personnel working closely 
with the contractor to ensure that the solution meets the 
benefit needs of the veterans and has a successful 
implementation without IT or public relations problems. This 
does not mean that the VA IT resources need to be used; but to 
clarify, VA personnel need to be available and assigned to 
interface with the contractor from the beginning through 
implementation.
    Best practices in outsourcing call for careful management 
from the company outsourcing the work. This is discussed 
further in my section on best practices.
    Implementation deadline. As I mentioned earlier, the 
implementation of this project can be expected to be 
complicated and complex. Therefore, I believe that the 
timeframe of implementation by August 1, 2009, may be too 
aggressive.
    Successful implementation within the requested timeframe 
would require that the evaluation of responses to the RFP be 
thoroughly evaluated, including, if possible, a site visit to 
the offeror for an in-depth analysis of their capabilities. A 
more reasonable implementation deadline would be 12 months 
after the award of contract.
    The evaluation process will involve multiple 
considerations, as noted above, that will require various areas 
of expertise and review by VA personnel. A reasonable timeframe 
for review of complex proposals and assessment of the offerors' 
capabilities is about 3 months. Even with an aggressive 
schedule and the RFP going out next week, it is unlikely that 
proposals could be received, evaluated, and a contract awarded 
prior to February 2009. This would leave the contractor only 
six months to bring the team together, develop the solution, 
have the system undergo certification and accreditation, 
prepare and receive approval of a privacy impact assessment, 
and implement the solution. The deadline may well undermine the 
objectives of the project.
    In addition, the project plan should contain--I think I am 
going to skip some of this in the interest of time. The RFP 
mandates a response time of 10 days for original claims and 7 
days for supplemental claims. In addition, it requires that 
there exist a capability for the claims to be handled both 
electronically and in paper form, and also a capability for 
electronic and check payments. Given the number of claims that 
are expected to be filed, it is likely that the deadline 
imposed for processing paper claims may require a significant 
amount of staff resources. This would especially be true if 
most of the claims were submitted around the same time. For 
example, most university tuition payments are required within a 
few weeks of classes starting and, therefore, fall within a 
common timeframe. Surge periods must be anticipated and planned 
for in the system requirements. The 10- and 7-day processing 
requirements may be too stringent for surge periods, especially 
for paper claims.
    Let me comment on the best practices. The RFP adequately 
addresses the standards and best practices as related to 
security and financial administration. FISMA has strong 
security standards and NIST guidance is world class and 
consistent with internationally accepted best practices and 
standards.
    Outsourcing best practices also call for contract clauses 
that will protect operational data, business processes, and 
compliance requirements. The offeror selected for this work 
should be required to meet best practices for financial 
outsource providers. The Financial Roundtable and Federal 
Financial Regulators have compiled excellent guidance on 
managing outsource providers and security risks. The VA would 
benefit significantly and provide important leadership to this 
project if it examined these materials and included relevant 
portions in the RFP.
    It is my hope that my testimony has helped to clarify some 
of the major technical matters and logistics associated with 
the RFP for Members of the Subcommittee. I fully realize how 
important it is for Members of the Subcommittee to have trust 
and confidence in the IT solutions sought for in the RFP to 
deliver education benefits to our Nation's veterans. As leaders 
in the realm of technology and innovation, please know that 
myself and the College of Engineering at Carnegie Mellon stand 
ready to assist you in dealing with technical matters as they 
relate to your efforts to craft a sound public policy and 
implement VA projects. We applaud you for your diligence in 
reviewing this specific matter. Thank you.
    [The prepared statement of Dr. Khosla appears on p. 60.]
    Ms. Herseth Sandlin. Thank you, Dr. Khosla. I have a couple 
questions at the outset for points of clarification before 
recognizing Mr. Boozman. Now recognizing that we are going to 
be pursuing with the VA separately a contingency plan, let us 
just focus on the IT solution, the 6-year solution that they 
are seeking. In your opinion, can a secure solution be 
developed and implemented by the target deadline?
    Mr. Khosla. I believe it is possible but highly unlikely. 
It would depend on the contractor and how much experience the 
contractor already has in this area of business, which to the 
best of my knowledge, I would doubt anybody has significant 
experience and has developed significant software already that 
could be used in the context of this project.
    Ms. Herseth Sandlin. Okay. How long should the testing 
period be before it is launched? Do you think that there is 
sufficient time to do that? Is that one of the reasons you 
think it is highly unlikely, because you do need a longer 
testing period before it would be launched and fully 
operational, by August 1, 2009?
    Mr. Khosla. Testing periods I think have to be split into 
two categories. One is testing the technology and making sure 
it is working right. And as a previous speaker mentioned, 
testing the usability of the technology from a user's 
perspective and making sure that the usability considerations 
are being met. So I would think between 30 and 90 days would be 
a reasonable testing period to convince ourselves that the 
security requirements are being met, the privacy requirements 
are being met, the financial requirements are being met. And 
that reasonable users are able to use the system without being 
overwhelmed by it.
    Ms. Herseth Sandlin. Okay. I will come back to some other 
questions. I will recognize Mr. Boozman.
    Mr. Boozman. Thank you, Madam Chair. Dr. Khosla, several 
years ago someone in the IT sector developed a set of rankings 
to describe an organization's ability to develop IT systems. 
Are you familiar with what I am talking about in that regard?
    Mr. Khosla. You are talking about Software Engineering 
Institute's CMM----
    Mr. Boozman. Ranking system?
    Mr. Khosla. Sir, it is a capability maturity model. It does 
not necessarily rank companies. But it gives you an idea of 
your ability to develop, follow best practices, and reasonable 
solutions.
    Mr. Boozman. How would, if you looked at the VA ability 
now, how would you rank VA's ability to develop the new IT 
system using only in-house staff?
    Mr. Khosla. I could offer an opinion, uninformed, because--
--
    Mr. Boozman. That is fine.
    Mr. Khosla [continuing]. I have not looked at the VA's 
abilities.
    Mr. Boozman. We have lots of uninformed opinions that are 
on this side of the table and that side.
    Mr. Khosla. I am sorry, I do not remember the name of that 
project. But a few years ago there was a project that the VA 
was implementing. There was an IT project, which did not have a 
very good outcome at the end. Given that and some other random 
opinions I might have heard, I would say in general it would be 
mediocre to low.
    Mr. Boozman. Let me ask you too, one of the things that I 
know businesses get into with this is that you, if you did have 
the ability to go in-house, and then the technology changes, 
two or three, which it is going to do. I guess at some point it 
will not, but the chances are great that it will continue to 
change. Is it easier to continue to have that, a continual 
upgrade when you have the system outside versus inside?
    Mr. Khosla. So that depends on the type of systems. But for 
example, if you look at universities and if you look at their 
financial and administration systems and Human Resource 
management systems, most universities outsource them because it 
is always good to have a specialist who does it for a living 
day in and day out to develop a system for you and deployed at 
your place. Having said that, the systems are then deployed 
within the university, run by university personnel. And then 
you go out for consulting help when you need an upgrade.
    Mr. Boozman. Thank you. Thank you, Madam Chair.
    Ms. Herseth Sandlin. Chairman Filner.
    Mr. Filner. Thank you. Just briefly, Mr. Smith thank you 
for being here and I hope you will convey to your coworkers how 
much we appreciate them. You did not refer to your written 
text, the section which I found very upsetting, that this was 
all a surprise. The management of your own units did not know 
what was going on. It was unclear which people were going to 
keep jobs in the same area, where they were going to be 
relocated, or be retrained, and your own confusion in this 
process. This is not a way to run the VA, in my opinion. You 
deal with employees in an up-front way, talk it through, and 
also give them a chance to see if they can compete. So, I 
appreciate your giving us a sense of what was going on 
internally. I think it strengthens my view that they probably 
should have stayed in-house.
    Dr. Khosla, thank you for your, I almost went to what was 
then called Carnegie Tech. It used to be called that, right?
    Mr. Khosla. It still is.
    Mr. Filner. Okay.
    Mr. Khosla. The College of Engineering is Carnegie Tech.
    Mr. Filner. You heard the discussion earlier about these 
source codes and ownership. After the initial set-up is phasing 
out and then letting in-house people take over, is that an 
important part of this whole process as far as you are 
concerned? I mean----
    Mr. Khosla. Actually, I was thinking about it as the 
conversation was happening. And I think it could be important. 
But one has to be careful in how one interprets what source 
code it needs. For example, look at the implementation of most 
rules-based systems, which is what this is going to be. It 
would be based on some rules-based processing engine database 
sold by some database manufacturer. And I cannot imagine that a 
person who, a company that is selling a rules-based processing 
engine is going to give you the source code for their engine. 
They would give you the ability to add new rules, modify the 
rules. But the source code that decides how these rules are, 
how the infrastructure, I doubt very much that somebody would 
sell that to you. Like, no database manufacturer will tell you 
the source code for the database. They will sell you the 
ability to add to the database, to query the database, to 
process the data from the database.
    Mr. Filner. Well, could you require that in an RFP? I mean, 
you said you doubt that they would do it. But could you require 
it?
    Mr. Khosla. This is the U.S. Government. You can require 
whatever you want.
    Mr. Filner. I mean, we can give them $700 billion if they 
agree to give us the bad source code or something.
    Mr. Khosla. But actually I think one has to ask oneself, 
owning, or having the ability to process rules, if that is the 
case then why would you want to own software that you will not 
be able to change anyway because that is a commercial product? 
But what I am trying to say is that there are two systems out 
here. One is the infrastructure, just like Microsoft's 
operating system. And the other is an application layer built 
on top of it, which is what the VA is paying for. VA is not 
going to pay for the basic infrastructure. So I think owning 
the application layer is going to be important. But trying to 
go too far and own the basic infrastructure would actually be 
expensive if at all you can do it.
    Mr. Filner. But the ownership, then, of the applications is 
important?
    Mr. Khosla. Ownership of applications, ownership of data. 
In fact, what is really important is VA's ability to migrate 
the system to the next generation, to upgrade the system, to 
modify the system, is of paramount importance. Whether it 
happens through ownership of everything or only parts of the 
system is something that the program management should decide.
    Mr. Filner. Did you read the whole RFP that was----
    Mr. Khosla. Actually, believe it or not, that is what I was 
doing over the weekend. One-hundred fifty-two pages.
    Mr. Filner. You need to get a life. But, thank you.
    Mr. Khosla. If it was not for this Committee and how 
important I think the veterans are, I would not be spending my 
weekend reading the RFP.
    Mr. Filner. We do appreciate it very much that you have 
done this. I hope you will sell us your source code, no--did 
they require that in the RFP? Do you recall?
    Mr. Khosla. I was just scanning it. And it turns out they 
do not require it. In fact, they clearly state that the 
software would be owned by the contractor but all the data 
would be owned by the VA.
    Mr. Filner. But the applications, then, are not owned by 
the VA?
    Mr. Khosla. They do not quite go to that level of data. 
They just say the software would be owned by the contractor. 
And I read this right, I was just reading it while you were 
asking the question.
    Mr. Filner. That may be a problem as far as what we would 
like to see as a policy. But we thank you again. I know you 
took this on as a----
    Mr. Khosla. Because I believe in it.
    Mr. Filner [continuing]. Helpful citizen. Thank you so much 
for doing that and we really do appreciate it. Thanks so much. 
Thank you, Madam Chair.
    Ms. Herseth Sandlin. Thank you, Mr. Chairman. Mr. Smith, I 
appreciate the concern of the employees at the VA who feel that 
you should be given the opportunity to compete based on the 
expertise that is developed over time in house to process the 
claims under the current Montgomery GI Bill. If you were to be 
given the opportunity to compete, do you think you could do so 
within the remaining amount of time?
    Mr. Smith. It would be only speculation if I answered a 
question like that, because I am not sure of all of the 
variables. But I mean I do not see why we would not be able to 
within our, you know, IT be able to perform at a quicker rate 
than an outside contractor was simply because we already know 
what we need within house as far as there are particulars about 
the claims.
    Ms. Herseth Sandlin. Does your membership feel that you 
have all of the expertise necessary already in house to develop 
the system for implementing and administering the benefits? 
There is nothing that you have seen in the RFP that requires a 
certain amount of expertise, including software development, 
that already is not available within and among the employees at 
the VA in the Education Service?
    Mr. Smith. Well that question, Madam Chairwoman, I would 
have to make sure that they address in a supplemental because I 
really do not, I cannot give you a, it would only be 
speculation what I gave you.
    Ms. Herseth Sandlin. I appreciate, if you can get back to, 
just because we understand those concerns.
    Mr. Smith. I do.
    Ms. Herseth Sandlin. If we are looking at developing 
something, and this may become part of a contingency plan that 
we see, we would just like more information in terms of the 
ability and the expertise that is currently available in 
meeting the demands. Including again the IT demands, necessary 
for implementing the new benefit.
    Dr. Khosla, again, let me also add my thanks to the time 
that you have spent preparing for today's hearing and for 
providing the testimony that you have today. Mr. Chairman, did 
you have a follow up for Mr. Smith?
    Mr. Filner. No, when you are finished.
    Ms. Herseth Sandlin. Oh, okay. The 7- to 10-day processing 
requirement, you stated in your testimony that you thought was 
too stringent. What would you recommend based on your 
experience?
    Mr. Khosla. I would not be able to answer that quite 
accurately because it depends. The reason I said it was too 
stringent, you can certainly do it in 7 to 10 days. But you 
have to employ 500 people to do that in 7 to 10 days only for 1 
month every 6 months.
    Ms. Herseth Sandlin. Based on the timing of when the claims 
come in?
    Mr. Khosla. That is right. Then you have to wonder what 
these people are doing for the other 5 months and it causes a 
big glitch. So I think one has to think in terms of what is the 
right level of resource you want to deploy and based on that 
what is the right level of response time that you can, to 
respond to it without creating an imbalance in the system.
    Ms. Herseth Sandlin. Mr. Smith, did you want to comment on 
that?
    Mr. Smith. No, ma'am.
    Ms. Herseth Sandlin. Do you agree with the statement of 
Mr. Kelly in the first panel, that if it were to be done 
internally without any outsourcing that it would require the 
hiring of hundreds of additional new employees?
    Mr. Smith. My opinion, it would. They would have to hire 
more employees, yes.
    Ms. Herseth Sandlin. Okay. A final question, Dr. Khosla, 
you state in your written testimony that the project plan 
should contain subplans for various aspects critical to 
implementation. Could you elaborate on what you mean by that?
    Mr. Khosla. Because----
    Ms. Herseth Sandlin. Because this may be important as we 
pursue with the VA contingency plans within the contractor 
process versus a separate contingency plan based on my 
understanding of what you meant by that.
    Mr. Khosla. I am trying to look at where it was where I 
said that. Because I think the project management, I think we 
talked about subplans in terms of areas that are critical to 
implementation. So if you look at a project like this, 
selection and testing of hardware. So you can create a project 
plan, which says in the first 20 days I am going to select 
hardware. But then a subplan would then go on to say, what are 
the criteria that you are going to use to select the hardware, 
the software solution. The same thing for privacy impact 
assessment. How are you going to go about doing that? How long 
will it take? What parameters would you use? That is what I 
meant. I meant they have to offer a little bit more detail than 
they did.
    Ms. Herseth Sandlin. Okay.
    Mr. Khosla. Now if I may, Madam Chairwoman, I just want to 
come back to Chairman Filner's comment. It states out here 
clearly, page 22 of the RFP, ``the contractor shall retain 
ownership of the secure solution (except for any items that may 
be furnished by the Education Service) including hardware and 
software.'' So----
    Ms. Herseth Sandlin. So the answer is it does not require 
ownership of the application?
    Mr. Khosla. Quite the opposite.
    Ms. Herseth Sandlin. Right.
    Mr. Khosla. Because the contractor, they own everything. It 
is page 22 of 152.
    Ms. Herseth Sandlin. Except for the data?
    Mr. Khosla. Right.
    Ms. Herseth Sandlin. Provided by the Education Service?
    Mr. Khosla. That is right.
    Ms. Herseth Sandlin. No mention of the Department of 
Defense.
    Mr. Khosla. Not that I can tell.
    Ms. Herseth Sandlin. One final question, then. Is one of 
the reasons you are concerned about the likelihood of being 
able to implement the secure solution on time is the difficulty 
for which a private contractor is going to have to interface 
with the Department of Defense, the Department of Veterans 
Affairs, universities, and the U.S. Treasury perhaps?
    Mr. Khosla. Absolutely. But in addition, implementing a 
secure solution is a nontrivial task. And there are a lot of 
technology components that have to come into play. They have to 
interoperate with each other. Communications between all of 
these various systems, and I am not on top of what these 
various systems are and what standards they follow, has to 
happen and that will be part of the testing and the 
certification process. So it is a very complicated project.
    Ms. Herseth Sandlin. I appreciate that concern. That has 
been one of the concerns of the Subcommittee and the full 
Committee, is the interoperability issues between the 
Department of Defense and the VA. To a degree some of what we 
have encountered, and of course our witness here from the 
Department of Defense can certainly respond to this statement, 
we have had issues of interoperability even within a certain 
agency. I do think that this task is a rather overwhelming one 
for any private contractor undertaking the task.
    Chairman Filner, did you have any follow up questions?
    Mr. Filner. Just quickly, if I may. A couple of weeks ago 
when we had our first hearing on this, we had a little 
discussion on penalties for failure to produce on time. And I 
was shocked by the answer, that the RFP says, ``Oh, the 
contractor will propose the penalties.'' Do you have any 
comment on that in general? Should the maker of the RFPs not 
talk about the penalties?
    Mr. Khosla. I think if I was writing the RFP and I was 
buying a system, I would have penalties. But now having said 
that, a project of this type which is so important, I think 
going in, we need to have enough qualified personnel in the VA 
who are on top of this. Failure is not an option. And it is an 
extremely remote possibility. So we should not be dealing with 
veterans' benefits, especially education benefits, assuming 
that, ``Oh, if it does not work I am going to penalize you $10 
million.' But the veterans are the ones who are paying the 
price. And there is not enough penalty for that.
    Mr. Filner. No, I agree. Each one of us serves on other 
committees, and have been in Congress several years or more. 
These contracts, in many cases, have not performed, whether it 
is a weapons system, or an IT system, and they have just 
collapsed. Boeing got a $2 billion contract on the border, to 
do border security near my district and nothing worked after 
they got a couple billion dollars. So we have some 
illustrations of the potential and we may be setting a 
precedent in the bills we are talking about now if you fail, 
you get bailed out by the government anyway. So----
    Mr. Khosla. I believe, especially for, this is, in my mind, 
is an acquisition contract. It is not a research and 
development contract like Defense Advanced Research Projects 
Agency (DARPA) would give out when I used to be at DARPA. I 
think in the context of an acquisition there has to be a clear 
understanding of what quality of service, what quality of 
product is expected, and what is the penalty, or the liability, 
or the warranty for not delivering.
    Mr. Filner. You would think. I agree with you.
    Mr. Khosla. I would hope so. It is my money, too. I am a 
taxpayer.
    Mr. Filner. Stay and listen to the testimony and see if you 
have confidence when you are finished. Thank you, sir.
    Mr. Khosla. Thank you.
    Ms. Herseth Sandlin. Mr. Boozman.
    Mr. Boozman. Dr. Khosla, you mentioned, you read from the 
contract, the statement, that it would be owned by the company 
that develops or whatever. But earlier in your testimony, was I 
correct in understanding that, you said no one would bid on the 
contract if that was not. I guess what I am trying to 
understand is, when you go outside, when you contract outside, 
is that standard procedure that it is done that way?
    Mr. Khosla. That is what I was trying to, and I am trying 
to find a way, so for example, when I go out and buy, let us 
say, an Oracle database nobody ever in their right mind would 
give me access to the source code which implements that 
database. But on the other hand, if I buy the license to the 
Oracle database and I hire a contractor to write a rules-based 
engine that is going to implement my rules on this Oracle 
database, then that was a job done specifically for me that I 
would have access to and that I have the right to own. So what 
I am trying to say is, and both are pieces of software. So one 
has to be able to differentiate between software, which is an 
application that was written just for you, versus software that 
is infrastructure that is being sold on a daily basis that 
costs hundreds and hundreds of millions of dollars to develop.
    Mr. Boozman. So in your opinion, which is this?
    Mr. Khosla. This system would have both components. And 
this is why the VA has to have really top notch technically 
trained people who can figure out the difference between the 
infrastructure versus the application layer that is written 
just for the VA. And that they should own.
    Mr. Boozman. Okay, very good.
    Mr. Filner. But you did say also that the Federal 
Government can do anything?
    Mr. Khosla. That is true.
    Mr. Boozman. The other thing is, Mr. Smith, be sure and 
convey to your colleagues how much we appreciate them. I have 
been to the Muskogee Center and I know that there is lots of 
hard work being done there. And hopefully 1 day we can get out 
to the Atlanta Center and you can show us around there. But we 
really do appreciate your efforts. And I know that you want, we 
want, what is best for the veterans and what is best for the 
taxpayers. Thank you very much.
    Mr. Khosla. Can I add one more thing I just remembered? I 
think a work of this type would most likely be performed by a 
systems integrator. A systems integrator is one that typically 
has no ownership of any software. So software that the house 
buys, or the systems integrator company buys from outside would 
be one thing. But then they would have to write pieces of code 
to integrate all of these systems together to build this 
complete system. That is the type of code which is custom 
written just for this contract, just for the VA. It is probably 
not much use for anyone else. It should be owned, controlled, 
by the VA over time.
    Ms. Herseth Sandlin. Thank you both very much for your 
testimony and for offering your insights and your expertise 
today. Thank you again for being here.
    I would now like to invite up our third and final panel for 
today. Joining us on this third panel is Dr. Curtis Gilroy, 
Director for Accession Policy, Office of the Under Secretary of 
Defense for Personnel and Readiness, U.S. Department of 
Defense; and Mr. Keith Pedigo, Associate Deputy Under Secretary 
for Policy and Program Management, Department of Veterans 
Affairs. Mr. Pedigo is accompanied by Mr. Keith Wilson, 
Director of the Office of Education Service, Veterans Benefits 
Administration, Department of Veterans Affairs; and Mr. Stephen 
Warren, Principal Deputy Assistant Secretary of the Office of 
Information and Technology, Department of Veterans Affairs. 
Thank you gentlemen for being here, and for hearing the 
testimony of the prior panels. Mr. Gilroy, welcome back. We 
appreciate your being here. You are recognized first for 5 
minutes.

  STATEMENTS OF CURTIS L. GILROY, PH.D., DIRECTOR, ACCESSION 
POLICY, OFFICE OF THE UNDER SECRETARY OF DEFENSE FOR PERSONNEL 
 AND READINESS, U.S. DEPARTMENT OF DEFENSE; AND KEITH PEDIGO, 
    ASSOCIATE DEPUTY UNDER SECRETARY FOR POLICY AND PROGRAM 
 MANAGEMENT, VETERANS BENEFITS ADMINISTRATION, U.S. DEPARTMENT 
  OF VETERANS AFFAIRS; ACCOMPANIED BY KEITH WILSON, DIRECTOR, 
OFFICE OF EDUCATION SERVICE, VETERANS BENEFITS ADMINISTRATION; 
 AND STEPHEN W. WARREN, PRINCIPAL DEPUTY ASSISTANT SECRETARY, 
   OFFICE OF INFORMATION AND TECHNOLOGY, U.S. DEPARTMENT OF 
                        VETERANS AFFAIRS

              STATEMENT OF CURTIS L. GILROY, PH.D.

    Dr. Gilroy. Thank you, Chairwoman Herseth Sandlin, Ranking 
Member Boozman, Chairman Filner, Subcommittee, and staff; is a 
pleasure, Madam Chair, to return to the Committee to testify, 
this time to discuss the Department of Defense's role in 
implementing the Post-9/11 GI Bill. And also to discuss the 
extent to which we are working with our colleagues at the 
Department of Veterans Affairs to implement the new GI Bill.
    The implementation and the administration of this new piece 
of legislation, of course, is the responsibility of the 
Department of Veterans Affairs. But we have a fundamental 
interest as well as a very important role to play in the 
program's success. And we take that role very seriously.
    As soon as the bill was enacted, I asked a senior member of 
my staff to guide our efforts in concert with staff at Veterans 
Affairs. Mr. Robert Clark immediately established liaison with 
staff at the Veterans Affairs' Office of Education Service to 
coordinate the effort. Mr. Clark has formed four working 
groups, and senior members of the VA Education Service are 
integral parts of each of those groups.
    The first group is what we call the Data Working Group, 
critical and extremely important to the implementation of the 
new GI Bill. This involves extremely close cooperation between 
the Department of Defense, the Department of Veterans Affairs, 
and the Defense Manpower Data Center. Many of you may know that 
the Defense Manpower Data Center is the official repository of 
all DoD personnel records and information on Active duty and 
Reserve component members. And we have a file manager at the 
Defense Manpower Data Center whose primary responsibility and 
function is to manage the GI Bill education benefits data. She 
is already playing a primary role in this effort and is working 
directly with my office and Keith Wilson in the Office of 
Education Service. We are confident, and this is an extremely 
important point that I make, that we will have the data 
Veterans Affairs needs by March 2009, a critical date because 
that is the first important milestone for the VA contractor.
    The second group is an Implementation Working Group which 
is examining the impact on the force of the new legislation. I 
have testified before our concerns we have about the retention 
effects of this new legislation. This working group will be 
looking at that as well.
    In addition, there is a Transferability Working Group which 
is developing policies and procedures to implement this unique 
feature of the bill for which the Defense Department is most 
grateful for your support.
    The fourth is a Strategic Message and Outreach Working 
Group, which is focused on how to best market the program both 
internal and external to the Department.
    DoD is most committed to the success of the Post-9/11 GI 
Bill and has been working very closely with the Department of 
Veterans Affairs since its enactment. We will continue to work 
with our colleagues there providing the requisite data within 5 
to 6 months to successfully implement this legislation. I thank 
the Committee again for its continued and dedicated support for 
our men and women both serving now and having served, and I 
stand ready to answer any questions. Thank you.
    [The prepared statement of Dr. Gilroy appears on p. 62.]
    Ms. Herseth Sandlin. Thank you very much, Dr. Gilroy. Mr. 
Pedigo, welcome back. We appreciated your testimony from a 
couple of weeks ago and look forward to your testimony today. 
We do have three votes. But it is 15 minutes and it gives you 
time for your opening statement and perhaps some questions. You 
are now recognized.

                   STATEMENT OF KEITH PEDIGO

    Mr. Pedigo. Good afternoon, Madam Chairwoman and Members of 
the Subcommittee. I appreciate the opportunity to appear before 
you today to discuss the Department of Veterans Affairs 
strategy for implementation of the Post-9/11 GI Bill. 
Accompanying me today are Mr. Stephen Warren, Principal Deputy 
Assistant Secretary for Information and Technology at VA, and 
Mr. Keith Wilson, Director of the Office of Education Service.
    Madam Chairwoman, in your September 16 letter of invitation 
you raised eight issues about VA's implementation plan. We have 
addressed all of these in my written testimony, but due to time 
constraints I will only address a few of those in my oral 
testimony.
    Upon arrival at the Cannon Building today, I just wanted to 
mention to you we dropped off two binders that contain a large 
number of documents that are being used in the planning process 
for the GI Bill. We provided one to the majority staff and one 
to the minority staff. And I think that you will find that some 
of the information in there is very enlightening as to the 
approach that we will be talking about this afternoon.
    You raised the issue of why VA is using a contractor to 
support the development of a solution to implement the new 
program. This approach is being used because we do not believe 
that we could deliver the systems necessary to administer the 
program within the timeframe required utilizing our existing 
technology resources. VA has experienced difficulty in being 
able to deliver advanced technology solutions, especially ones 
that have a very short timeframe for development; in this case 
13 months.
    The resources and technical expertise necessary to deliver 
an IT solution before August 1, 2009, do not presently exist 
within the VA. Consequently it was determined that the most 
prudent course of action was to seek a contractor to assist in 
developing a solution. If VA were to develop an in-house IT 
solution that addresses the unique provisions of this program, 
24 to 36 months would be required. During this development 
period, it would be necessary to use the legacy system that was 
used to deliver benefits for the Vietnam-era GI Bill and would 
result in a highly labor intensive and largely manual process. 
VA estimates that processing benefits in this manner would 
require hiring up to 805 additional Education Service 
employees, additional employees whose services would not be 
required once the new payment system was in place.
    I would now like to talk about VA's management of the 
proposal process. On July 17, 2008, at VA's request, the Office 
of Personnel Management (OPM) provided an invitation to vendors 
approved for OPM's Training and Management Assistance (TMA) 
contracting vehicle, also known as TMA, to submit their 
capabilities and qualifications based on VA's statement of 
objectives. This vehicle provides a streamlined process for 
contracting for services. Ten vendors responded to OPM's 
request for proposals. OPM then issued a solicitation for a 
task order competition to the ten vendors on August 11, 2008. 
Only four vendors elected to participate.
    At this point, VA's counsel became aware that OPM's counsel 
had serious concerns regarding OPM's authority to conduct this 
specific type of acquisition. Therefore, VA took control of the 
acquisition process. Because of the compressed timeframe 
created by the legislation, VA determined that urgent and 
compelling reasons existed to seek proposals from limited 
sources. Thus, VA solicited proposals from the same four 
vendors that had previously agreed to participate in the task 
order competition. On August 29, VA issued the request for 
proposal solicitation. VA is currently in the process of 
reviewing documents submitted in response to the solicitation 
and we expect to make an award by the end of this month.
    Another issue you requested comment on was any plan to 
restructure the Education Service. Because the contractor will 
only be responsible for development of the IT solution and 
general administrative and data entry functions, VA will 
continue to need claims processing personnel to support the 
existing education programs that were in existence prior to the 
implementation of the Post-9/11 GI Bill. Additionally, VA 
personnel will handle claims that cannot be processed 
automatically, conduct oversight, operate a nationwide customer 
call center, and respond to all online inquiries.
    Extensive planning to include establishment of critical 
milestones could be effected in the event of vendor failure are 
key elements of VA's approach to successfully implementing the 
program. Our primary contingency plan is a largely manual 
process, essentially the same as what we would have implemented 
if we had opted to build the system with the existing VA IT 
resources.
    Madam Chairwoman, you also asked about actions required by 
DoD. Because VA does not currently receive all the necessary 
service data from DoD to determine the appropriate payment 
levels in the new program, we have been working very closely 
with DoD to arrange to receive that information. Both agencies 
anticipate signing a memorandum of understanding (MOU), and 
data sharing, and a computer matching agreement. The details of 
these agreements, however, cannot be fully implemented until 
some of the elements of the IT solution are available.
    Madam Chairwoman, this concludes my statement. I would be 
pleased to answer any questions that you or any Members of the 
Subcommittee may have.
    [The prepared statement of Mr. Pedigo appears on p. 64.]
    Ms. Herseth Sandlin. Thank you, Mr. Pedigo. Mr. Boozman.
    Mr. Boozman. Thank you, Madam Chair. In the interest of 
time what we would like to do is submit some questions in 
writing. Dr. Gilroy, when we were in South Dakota at a field 
hearing, we learned there that the DD-214 was taking up to 90 
days. And that is creating problems, not only with the GI Bill 
but with several other things. Could you look into that, and 
give us a report as to what is going on in that regard? And 
those are things that we have got to get worked out for these 
other systems to work. But it did seem like that really is a 
problem.
    Mr. Gilroy. Absolutely, I would be happy to do that. But I 
can report to you now that you will be happy to know that we 
will not be using the DD-214 form for the purposes of our 
transfer of data to VA. We will be transferring those data 
practically in real time using the activation files through our 
DEERS system at the Defense Manpower Data Center. So we have 
made great strides in that regard. But I will get back to you 
with a formal response.
    [The following was subsequently received from DoD:]

          The Department could not find specific examples of members 
        failing to receive their DD Form 214s in a timely manner in 
        South Dakota, but asked the Military Departments to inform the 
        Department of Defense (DoD) if they are experiencing inordinate 
        delays. A delay is not consistent with the Department's policy.
          DoD policy, as well as that of each Service, specifies that 
        upon release or discharge from active service, the original 
        copy of the DD Form 214 will be physically delivered to the 
        member prior to departure from the separation activity. This 
        occurs on the effective date of separation, or the date on 
        which authorized travel time commences. Copies of the DD Form 
        214 are then distributed within 24 hours of the effective date 
        of separation. When emergency conditions preclude physical 
        delivery of the DD Form 214, or when the recipient departs in 
        advance of normal departure time (e.g., on leave in conjunction 
        with retirement, or at home awaiting separation for 
        disability), the original DD Form 214 is mailed to the 
        recipient on the effective date of separation.
          There may be instances in which the separation activity is 
        unable to complete all items on the DD Form 214. At those 
        times, the form is prepared as completely as possible and 
        delivered to the member. The member is advised that a DD Form 
        214 will be issued when the missing information becomes 
        available.
          The Department will contact Representative Boozman's office 
        upon completion of our queries into this issue.

    Ms. Herseth Sandlin. I believe we are going to recess and 
come back for sufficient time for questions. We will be coming 
back shortly before 4:00, but let me pose a couple of questions 
now. 
Mr. Pedigo, you heard the testimony from some on the first 
panel, and I believe Dr. Khosla as well, the importance of 
sufficient time for field testing. You know, testing within the 
VA, that the Committee is aware, the VSOs are aware, the 
customers are aware, the universities, a lot of field testing 
that will be necessary. How confident do you feel in the 
timetable that we are looking at in using the outside 
contractor for the rules-based IT solution that you have 
sufficient time for the field testing that many testified 
earlier is so important prior to the August 1, 2009, deadline?
    Mr. Pedigo. Madam Chairwoman, that certainly is a concern 
that we have given the short time frame. We know that getting 
this solution awarded to a contractor and completing 
development by August 1, 2009, is going to be extremely 
challenging. We have laid out what we think is a very 
aggressive set of milestones to make sure that we accomplish 
everything that is required to develop this solution. It 
includes two to 3 months to do testing. On March 1, we intend 
to make a decision on whether or not the solution that the 
contractor is developing for us is going to work. That is what 
is commonly known as a go/no go decision. If it is a go 
decision, we will begin testing that system and over the course 
of the next 2 to 3 months we will complete that testing. And 
while that is an aggressive timeframe, at this point we believe 
that we can accomplish full testing.
    Ms. Herseth Sandlin. Thank you for that response. 
Obviously, it will be very important to meet your March 1 self-
imposed deadline in that regard, about the relationship with 
the Department of Defense and the data sharing agreement. Has 
the data sharing agreement as well as the computer matching 
agreement, and the MOU already been done? If not, when do you 
anticipate that it will be done?
    Mr. Pedigo. I am going to ask Mr. Wilson to comment on 
that, Madam Chairwoman.
    Ms. Herseth Sandlin. Okay.
    Mr. Wilson. I know those issues are in negotiation right 
now. I am not aware that they actually have been signed. And I 
will have to find out the specific timetable for those. I do 
not have that with me.
    Ms. Herseth Sandlin. Okay. Has a specific timetable to get 
the MOUs signed, and the other agreements, a specific deadline 
been set?
    Mr. Wilson. I believe so.
    Ms. Herseth Sandlin. Okay. Well, if you could follow up 
with us, I would appreciate that.
    [The information was provided in the Post-Hearing Questions 
and Responses for the Record, which appears on p. 67.]
    Mr. Wilson. Yes, I will. Mr. Gilroy, Dr. Gilroy, you state 
that you are confident that the Department of Defense can begin 
to pass to the VA the data necessary to implement the program 
on time. Is it also going to be necessary, based on your 
understanding of how this is unfolding with the RFP being out, 
that you are also going to be passing that data to the 
contractor directly? Or is this all going to be flowed through 
the VA?
    Mr. Gilroy. The plan right now is to provide those data 
directly to the Veterans Affairs.
    Ms. Herseth Sandlin. To the Education Service, which will 
then pass it on?
    Mr. Gilroy. Education Service, Veterans Affairs, that is 
exactly right. We will have nothing to do with the contractor, 
per se.
    Ms. Herseth Sandlin. Which highlights the issue of the 
compatibility, then, of getting this information over and 
shared?
    Mr. Gilroy. Absolutely. Now, and in that regard, that is a 
very important point. We will have to provide the data to 
Veterans Affairs for the contractor with the specifications 
stipulated by both the contractor and Veterans Affairs. We will 
just not send a file over there.
    Ms. Herseth Sandlin. Okay.
    Mr. Gilroy. It needs to be in the correct form, the usable 
form. And we are prepared to provide those data in that form.
    Ms. Herseth Sandlin. Okay. Well, since my colleagues move a 
little faster than I do these days, I had better get going over 
to the vote. We will see you just shortly. We will take a short 
recess.
    [Recess]
    Ms. Herseth Sandlin. Mr. Boozman has to manage a few bills 
on the Floor. He is hoping to make it back but may not make it 
back for the balance of the hearing. He indicated that we 
should go ahead, and so let me just ask one question before 
turning it over to Mr. Filner. Dr. Gilroy, the Reserve forces, 
was there a working group that has been set up to deal with 
this? You said with transferability and some other issues, how 
about in terms of Reserve forces? Since their benefits are 
going to improve incrementally, is there a separate working 
group to deal with that? And if not, how easy or difficult is 
it going to be for DoD to capture the Reserve mobilizations and 
update the VA in a timely basis with that information?
    Mr. Gilroy. That is a good question. Yes, there are 
additional challenges for the Reserve component. But there is 
no special working group for the Reserve component. We are 
dealing with those Reserve data issues in all of the working 
groups that Mr. Clark is chairing. With respect to the Reserve 
component data, I can report to you now, if my numbers are 
right, that we have captured probably 80 to 90 percent of what 
we need, what we think we need to capture in terms of accuracy 
of those personnel records. The active-duty data, we are nearly 
100 percent there. So across the board, in terms of periods of 
service, our measuring of the data which will provide the 
eligibility determination, we are at about 90 percent good in 
terms of the data that we need to provide to Veterans Affairs 
at this point. By March, we will be 100 percent, no question. 
But we are making wonderful progress through the Defense 
Manpower Data Center at this point. But the Reserve component 
numbers are a bit of a challenge.
    Ms. Herseth Sandlin. Thank you. Mr. Filner.
    Mr. Filner. Thank you, Madam Chair. We apologize that a 
series of votes keeps us from moving along. Thank you for 
staying here. I have expressed frustration to Secretary Peake 
many times, but let me share with you, too, that we put the VA 
on the last panel so you can hear the testimony of all the 
witnesses. Issues were raised, questions were asked and I would 
think that you would want to answer them. However, you stuck to 
your prepared statements. It is as if we have got to ask the 
exact, right question in the exact, right language, otherwise 
we are not going to get an answer. We are in this together. We 
are trying to make this program work. We have an oversight role 
in this. You have a role as implementer. We have to work 
together. I do not understand why you do not just get into the 
issues, for example, that came up during the previous 
testimony. If I do not ask the questions, I guess you are never 
going to answer them.
    Let me just follow up on the last question, Mr. Gilroy, you 
said something slightly different than what you wrote. ``We are 
confident we begin to pass the VA the data necessary to 
implement the program by March.'' I mean, you must have the 
data now. It is a question of what, the format? Or, perhaps I 
do not understand what the problem is.
    Mr. Gilroy. Oh yes, it is. It is a question of the format. 
We really do not know right now the degree of specificity and 
in what form the contractor and/or VA would like the data. And 
that is one of the reasons why we do not have an agreement just 
yet in terms of the data passthrough. So once that is 
determined, I think that it will be not nontrivial to get the 
data to VA, but it will not be difficult. But that is 
consistent, though, Mr. Chairman with what I said just a moment 
ago. That we are in good shape in terms of capturing the 
active-duty data at about that 100 percent level right now.
    Mr. Filner. Okay, but you have the data? It is a question 
of----
    Mr. Gilroy. We do have the data, oh, absolutely yes. Yes, 
we do. So we are in very good shape. And I think the Committee 
needs to know that and to feel assured that in fact we are 
working closely with Veterans Affairs, and that we will have 
the data to them clearly by March.
    Mr. Filner. Do you think they ought to have a contingency 
plan for a whole lot of things, not just the fact that your 
data has to be given to them?
    Mr. Gilroy. Well----
    Mr. Filner. I mean, there are other constraints on them.
    Mr. Gilroy. Well, sure, I mean everyone I think needs a 
contingency plan. There is no question about that. In my office 
we do too.
    Mr. Filner. Well, that is what we asked last time and we 
did not seem to have one. Mr. Pedigo, you started with saying 
that there was a binder delivered to the staffs? I did not 
understand that. What is in the binder that you delivered to 
us?
    Mr. Gilroy. In that----
    Mr. Filner. Is there any secret information in there, that 
I should rush to review? Is it about the process and the 
bidders, or not?
    Mr. Pedigo. My list of what is in that binder? There is 
nothing secret in that binder. In that binder is a copy of the 
request for proposal, a copy of the draft of the regulations to 
implement Chapter 33 which we needed in the Education----
    Mr. Filner. And why did we need this binder that we did not 
have before? Did you think we did not have this information or 
what?
    Mr. Pedigo. At the last hearing, Mr. Chairman, you appeared 
to be concerned that we were not being very forthcoming----
    Mr. Filner. Yes, and I sent a letter to the Secretary 
specifying what I wanted and it does not sound like the binder 
has anything in there that I asked for.
    Mr. Pedigo. The purpose of the binder was to provide more 
information to you.
    Mr. Filner. Yes, but I asked specifically, did you see the 
letter I wrote to the Secretary?
    Mr. Pedigo. I did see that letter.
    Mr. Filner. So, is any of that information in the binder?
    Mr. Pedigo. I do not know if any of the information you 
requested in that letter----
    Mr. Filner. So what good is the binder if you are not 
giving me anything I requested? Giving me more data so I have 
to read a whole big binder of papers? I mean, come on. I asked 
for the names of the 32 bidders. I asked for the names of the 
finalists. I asked for the process that you went through and I 
do not have any of that. Why not?
    Mr. Pedigo. However, the Secretary is in the process of 
responding to the letter that you sent, and----
    Mr. Filner. I asked for all this information before----
    Mr. Pedigo. [continuing]. As opposed to the information 
that we are able to provide.
    Mr. Filner. I asked for this information before a contract 
was awarded so we do not have to say, ``I wish you had done 
this and that and that.'' Well, we will see if the Secretary 
responds. You just give me another binder of information that 
does not answer any questions? I guess that is the kind of 
response we get, sir. It is not very helpful. You are not 
helping us. You are putting stuff in the way of us trying to 
understand what is going on.
    Let me go back to the process that you went through. Is 
there any legal requirement for you to let your employees know 
that there is a bid going out, and whether they should be open, 
or they should be eligible for bidding on this if they feel 
like they are capable? It seems like this was sprung on 
everybody. Nobody understood what was going on. There were a 
lot of rumors going on which we then had to respond to. People, 
as you heard from Mister, I forgot his name, I am sorry, 
Leonard?
    Mr. Smith. Leonard Smith.
    Mr. Filner. Mr. Smith, that nobody knew what was happening. 
Their own supervisors and managers did not know what was 
happening. Why was this sprung on them in this way? Is there no 
requirement that a full and open competition include those 
employees?
    Mr. Pedigo. Mr. Chairman, we discussed this issue with our 
General Counsel. One of the concerns was whether or not VA 
would be required to do an A-76 study, which would in effect 
provide the VA and VA staff with an opportunity to make a 
proposal as to how they could implement Chapter 33. And the 
decision that we got from our General Counsel was that because 
Chapter 33 represents a totally new program, that it is not 
required that an A-76 process be conducted.
    Mr. Filner. I do not know if that is true or not. But maybe 
there would be a suit on that, which would hold up everything 
anyway, right? But wouldn't the spirit of an A-76, say you 
should do this? You have employees. This is a service 
operation. This is not a cutthroat, profit-oriented system. You 
have employees who are committed to serving veterans. Involve 
them in the process. What is the difference if you were 
required to or not?
    Mr. Pedigo. Well, one of the concerns was that if we had 
gone through an A-76 process, it is quite protracted. I have 
personally directed an A-76 process in the VA Home Loan 
program. It took over 2 years to go through that whole process. 
By the time----
    Mr. Filner. Why don't you explain that to us, or to the 
employees? Communication is a part of running an operation, 
right?
    Mr. Pedigo. We did communicate with the employees that we 
would be seeking contractor support to provide a solution. 
There was a conference call with the field station staff, the 
four regional processing offices for the Education Program, and 
the information----
    Mr. Filner. Is there anything in writing on that?
    Mr. Pedigo. I believe we can get----
    Mr. Filner. Put that in the binder that you leave me next 
time.
    Mr. Pedigo. I would be glad to do that.
    Mr. Filner. Okay, why did you only send out the original 
request to 32 contractors?
    Mr. Pedigo. Because of the time constraints of getting a 
solution in place by August of 2009, we were looking for a 
streamlined procurement vehicle that would eliminate the long 
process that is usually involved with the typical full and open 
competition. And we identified the Training and Management 
Assistance vehicle that the Office of Personnel Management 
administers. And under that vehicle, there were 32 contractors.
    Mr. Filner. Is that a public list?
    Mr. Pedigo. That is available.
    Mr. Filner. So, I asked for the list. Did I get that in the 
binder?
    Mr. Pedigo. Those 32 are not listed in the binder.
    Mr. Filner. Can you give me some samples of who was on the 
list?
    Mr. Pedigo. We can get the full list of 32 from----
    Mr. Filner. Well tell me a few who are on there now. You 
must remember some of them.
    Mr. Pedigo. I was not privy to the list. It was protected.
    Mr. Filner. Okay. First of all, not only did you not 
adequately notify or communicate with employees, now you have a 
restricted list of 32 contractors. You are in a field that is 
changing by the minute and people have solutions to things that 
we would not have even have considered.
    Mr. Pedigo. Well----
    Mr. Filner. It seems to me that you restricted yourself. 
The fact that only ten or something responded, and you got down 
to four who really responded, seems to me that your list was 
pretty bad to begin with. You told me last time this is a 
possible $100 million contract. Only four people in the Nation 
want to respond to this?
    Mr. Pedigo. I can only tell you that the process for the 
OPM vehicle resulted in 10 of the 32 vendors being interested 
in making preliminary proposals. And those proposals were 
reviewed and it was decided that four of those contractors----
    Mr. Filner. Okay, I asked for the names of those four and 
if you have to tell me in an executive session, tell the 
Secretary that I want to know the four finalists. I cannot 
believe that in this kind of contract in IT, which is moving so 
rapidly and people are so involved in development of new 
companies, that only four people are interested in a $100 
million contract. It is just inconceivable to me.
    Mr. Pedigo. Mr. Chairman, can I ask Mr. Warren, who is our 
Principal Deputy Assistant Secretary for Information and 
Technology to address----
    Mr. Filner. Sure, and you could send the binder, too, if 
you think that would help.
    Mr. Warren. Sir, to your point about why a certain number 
competed and why that number started to narrow down, I think in 
large part it is the time that is available for an organization 
to provide the service to build the system----
    Mr. Filner. Did you hear the testimony of Patrick Campbell?
    Mr. Warren. Yes, sir, I did.
    Mr. Filner. I could find a tech guy to do this project and 
I could offer him $1 million to do it. I am going to save you 
99 percent of your contract. We have these kids all over the 
country who can do this stuff. I do not know why you think this 
is so special, or, this is a standard kind of request. There 
may be more people, it may be a little more complicated, but in 
general this is a trivial request. It is for managing data in a 
secure way.
    Mr. Warren. Actually, it is a little bit more complex than 
managing data. I believe this is----
    Mr. Filner. Did you look at his calculator?
    Mr. Warren. I have looked at his calculator.
    Mr. Filner. And how is that, by the way?
    Mr. Warren. It is a nice calculator, but it is only a piece 
of the work that needs to happen here.
    Mr. Filner. So, give him another month and he will do the 
other piece.
    Mr. Warren. I would gladly give him 10 percent, if you 
will, of that amount to deliver the full system, which is not 
just that front end, which is a calculator. It is taking into 
consideration the yellow ribbon components, it is taking into 
consideration the payment components, it is taking into 
consideration all the things necessary to ensure that payments 
happen----
    Mr. Filner. I understand but it is manipulation of data. It 
is not conceptually very difficult. If you gave me $1 million, 
I would take off from this great job and do it, actually. Or, I 
would get a few kids and pay them $1,000 dollars each and they 
would do it for me. I cannot tell if people are shaking their 
heads, thinking that I am stupid or what but I can tell you, 
conceptually this is not a difficult issue.
    Mr. Warren. The difference between conceptually is not a 
difficult issue and putting all the pieces in place to ensure 
the payments take place on time and it happens on time----
    Mr. Filner. I understand.
    Mr. Warren [continuing]. Is huge.
    Mr. Filner. I cannot believe that only four people in the 
country can do it. I think you have narrowed it down. You 
started off in secret. You continued in secret. It continues 
now in secret. Nobody knows.
    Let me ask you about the conversations we had earlier. 
Ownership of the system in some way, whether it is, source 
codes, or applications, why was that not in the RFP? It was 
specifically written according to the testimony that ownership 
would stay with the contractor.
    Mr. Warren. If I can give you an analogous situation. I had 
the pleasure of working on the National Do Not Call Registry, 
the Telemarketing Bill. Everybody was very satisfied with----
    Mr. Filner. I am sorry. The which? I did not hear you.
    Mr. Warren. The Telemarketing Bill. Telemarketers no longer 
call you. That system was built using this same model. At the 
Commission, the Federal Trade Commission where I was Chief 
Information Officer, we brought that system online in 100 days 
and we got no code out of it. In fact, we changed contractors 
before I left the Commission from one vendor to another, no 
transfer of code, functionality took place.
    Mr. Filner. What am I supposed to learn from that? What is 
the moral?
    Mr. Warren. What you can learn from that, sir, is this 
model of buying a service, not a product, is something that 
works in the marketplace and it is used----
    Mr. Filner. And they did it in 100 days?
    Mr. Warren. We did it in 100 days, sir. A 9-month 
preparation period to put all the pieces in place to do that. 
And we have said all along, for this system it is going to be 
hard to get there, which is why we have contingencies in place. 
But it is the only way we could see getting there. Using our 
staff and our existing system and existing tools and skill sets 
would not get us there. And it is difficult for a leader of an 
organization to say, ``My people cannot do it.'' I would love 
to have done that in a period of time. But the question was, do 
we deliver the benefit on time----
    Mr. Filner. And you are saying the ownership is standard, 
but that is not an answer.
    Mr. Warren. It----
    Mr. Filner. It does not mean we should not own it just 
because that is standard operating procedure.
    Mr. Warren. And my question for you, sir, is what is the 
value of owning the system?
    Mr. Filner. Well, I am just going by the testimony of the 
experts we had who said that there is value.
    Mr. Warren. I believe we had one individual who spoke to 
the value of some components, the interface components.
    Mr. Filner. The applications, he said.
    Mr. Warren. And if you sit down and lay out how we are 
providing this solution, there are actually three components. 
The piece that the vendor is putting together is a service. The 
interface, how the data moves in and out, that is actually 
being built by the VA using SPAWARS, Navy Engineering Command, 
to build that piece.
    Mr. Filner. They are in my district. I am very aware of 
them.
    Mr. Warren. A pretty critical component. We will own that. 
It is for us. We will learn from how they do it. The data flows 
internal to the Department, in terms of making sure all the 
stuff coming from DoD as well as all the other veteran 
information that fits in the multitude of systems that are 
pulled together, we will be doing that. So we are not 
outsourcing the full task. What we have done is, we have taken 
the component we believed we could not do, gave it out, bring 
that in, so we could meet the dates so the veteran got the 
benefit.
    Mr. Filner. Well, I hope you are right. How about the 
phasing out of the contract, and in-house people doing the work 
over time?
    Mr. Warren. The way this is structured, sir, is it is a 3-
year contract. The intent is in that 3-year period we will be 
building the capability within VA with our staff to understand 
what is this technology and have the capability to build it. So 
there is a business decision that can be made at the end of 3 
years, about do we bring it back in? Do we keep it out? Or do 
we do something else? That truly is a business decision. It 
should not be and will not be an IT decision.
    Mr. Filner. Were you here at the last hearing?
    Mr. Warren. No sir, I was not. I did not have the fortune 
to be here.
    Mr. Filner. I wish you were. I appreciate your responses. 
They give me a little more confidence. What is the issue on 
penalties? Why do we not state the penalties? Because it is not 
standard practice?
    Mr. Warren. I think we actually have not done a good job of 
communicating how this vehicle with the vendor actually has 
penalties built into it. There are two types of payment that 
will be taking place on this contract. There will be several 
payments as critical stages are met. The vendor will not get 
paid unless they successfully process registration or payment. 
So if it does not work, they do not get paid. That is a pretty 
high penalty.
    Mr. Filner. It says that in the RFP?
    Mr. Warren. Sir?
    Mr. Filner. It says that in the RFP?
    Mr. Warren. The payment schedule in terms of how we ask the 
vendor to pay----
    Mr. Filner. Do you work for them, or do they work for you?
    Mr. Warren. We are in parallel organizations. I am the----
    Mr. Filner. Because I asked that same question last hearing 
and I got a different answer.
    Mr. Warren. I cannot explain that, sir.
    Mr. Filner. You said the contractor provides the penalties. 
You are saying you have a payment schedule and there are 
penalties built in?
    Mr. Pedigo. Can I, I think I can clarify that. If we said 
that what we really meant to say was the contractor would 
propose penalties and incentives.
    Mr. Filner. Right.
    Mr. Pedigo. It does not mean we accept what they propose. 
That forms the basis to begin a negotiation.
    Mr. Filner. Mr. Warren is saying that there are penalties 
built in because of the payment schedules. That is not what you 
said last time.
    Mr. Pedigo. What I am telling you is that we are asking the 
vendor to give us what they think would be a good starting 
point for negotiating what the penalties and incentives would 
be.
    Mr. Filner. I think we should have done that.
    Mr. Pedigo. And then VA would make the final decision.
    Mr. Filner. I still think we should have suggested the 
penalties to begin with. Let me just ask, as I stated in my 
opening statement, that I am most concerned about, getting to a 
point where we have this computerized in the way you described. 
That would be great. We all want that to happen. We are all 
deathly afraid that it will not happen on time. Take as much 
time as you need as long as we have a contingency plan in 
place. The last time we asked about that, I got an answer that 
there was none. Your written statement did not go into much 
more detail. What is the contingency plan if this fails at any 
given point along the way?
    Mr. Pedigo. Mr. Wilson, would you like to discuss in some 
detail what we have developed so far as to a contingency plan?
    Mr. Wilson. Yes. When we talk about contingency plan I 
think it is important that we draw distinctions between two 
things, I believe as Madam Chair did earlier. The contingency 
for ultimate failure if a contractor cannot deliver versus 
contingencies based on fall back positions for decision points 
within the contract or proposal.
    The contingencies based on the contract or proposal were 
the points that we were making at the last hearing and perhaps 
we did not do a good job of articulating that. Irregardless of 
that, obviously we have a baseline contingency that we are 
implementing. And that contingency is based on our original 
understanding of the legislation in terms of what we could do 
and manually process awards. We know we have the capability of 
manually processing awards, award payments if that is what is 
needed. That is our base contingency if a contractor is 
absolutely unable to deliver.
    Mr. Filner. All right. Are you training, people on the new 
law now?
    Mr. Wilson. Yes. People are already being trained on the 
new law. They have been for some time now. There will be 
decision points as we go forward concerning how much more of 
the contingency we will roll out. One of the key periods during 
this will be the March 1 timeframe. And that will be at the 
point where the contractor is expected to demonstrate the 
viability of their system. If that does not happen, that is a 
key go/no go decision point. At that point we will----
    Mr. Filner. Then you will be able to train people or bring 
up their training in a sufficient fashion where we will be able 
to start processing these on August 1st?
    Mr. Wilson. Correct.
    Mr. Filner. That is what your plan is?
    Mr. Wilson. Yes.
    Mr. Filner. Okay, well that sounds a little different than 
what we heard before. I appreciate that. That is not what you 
said last time. You said, ``Well, we have not started any 
contingency plan.'' Remember that?
    Mr. Wilson. Yes, I do. And again, I think perhaps the 
discussion was focused too much on the contingencies for the 
contractors and less focused on the base contingency for 
contractor failure. I am hoping to emphasize that we have a 
base contingency for contractor failure. And that is----
    Mr. Filner. We have the people in place who are able to do 
this manually, correct?
    Mr. Wilson. Right now, no. The March 1st timeframe will be 
a key decision point that if we have to go forward with the 
contingency plan we will be doing hiring in some manner at that 
point. In addition to our existing staff, of course.
    Ms. Herseth Sandlin. Would the gentleman yield?
    Mr. Filner. Yes, please.
    Ms. Herseth Sandlin. Are your current employees who are 
manually processing being trained? You also recognize based on 
the testimony from others that it will require hiring probably 
hundreds of additional people which there is $100 million minus 
whatever the contracting cost is to do that. Are you confident, 
and I think that is the Chairman's question, that while you are 
training people currently in the VA that the March 1st to 
August 1st gives you enough time in the new hiring and 
training? Do you feel confident that gives you enough time?
    Mr. Wilson. I am confident that gives us enough time. We 
will have several groups, perhaps, of employees that we will be 
hiring. Some of those will be decision makers. But a large 
segment of the work that we will have to do to manually process 
payments will be administrative type work, and that simply will 
not take the level of training that a full claims adjudicator 
or authorizer would be required to do.
    Ms. Herseth Sandlin. Okay.
    Mr. Filner. Thank you for giving me leeway, Madam Chair. I 
am still not confident that we are not going to have to go 
through this and still not have to end up using the manual 
system. In terms of this whole process, I have concerns about 
whether you did this whole process correctly. The only way I 
can determine it is by repeating, and I hope you will tell the 
Secretary, and the General Counsel, that before the end of the 
week, I need to have the list of 32 contractors, the list of 
the 10 who submitted, and the list of the 4 who responded. If 
there is any legal problem, they should tell me so we can try 
to settle it. Remind the Secretary that we have subpoena power. 
I would like to have the information we need to see if this 
whole process was carried out in a way that we have confidence 
in the process.
    I still have problems in the way that the employees were 
treated and the restricted list that you started off with given 
the constellation of people who have IT knowledge. You are in 
an area where you have all kinds of people with knowledge that 
will blow your mind. They may have the solution already, but we 
did not have the chance to ask them. I bet you they are the 
same companies and the same people that everybody knows and you 
feel very comfortable with them. I do not think that is the way 
to go on this kind of contract which is why I need that 
information. Please let the Secretary and your General Counsel 
know. If there are any problems, rather than just saying that I 
cannot have them, I want to find out why I cannot have them. 
Thank you, Madam Chair.
    Ms. Herseth Sandlin. Thank you, Mr. Chairman. One of the 
questions I posed earlier was with regard to the timetable for 
the MOUs being signed, and you are going to get back to me on 
that. Mr. Wilson, how soon will the VA finish the MOUs with all 
the universities that is also required by the Public Law 110-
252?
    Mr. Wilson. We are working with our General Counsel right 
now to develop the formula that we are looking for in terms of 
the information that will need to be reported to VA by each 
school. And I will have to go back and look at my notes for the 
exact timetable, but in the spring sometime is the latest at 
which we would expect information to be going out to the 
schools concerning what they would need to report to 
participate in that program.
    Ms. Herseth Sandlin. Do you need that information prior to 
the March 1 deadline? Is that something that will not be 
necessary to test the viability of the contractor IT solution?
    Mr. Wilson. We have the specifics of how the program would 
be administered. That is largely in statute----
    Ms. Herseth Sandlin. Okay.
    Mr. Wilson [continuing]. Concerning the variables that we 
would have to account for.
    [The information was provided in the Post-Hearing Questions 
and Responses for the Record, which appears on p. 69.]
    Ms. Herseth Sandlin. All right. Mr. Warren, can you comment 
on VA's technological capabilities. As Dr. Khosla testified, it 
is going to take a lot of moving parts. It is going to take 
some pretty sophisticated folks within the VA to stay on top of 
what is going to be required of the contractor. I assume that 
will be your office that has to have that technology capability 
to stay on top of this?
    Mr. Warren. In conjunction with the Education Service, 
because----
    Ms. Herseth Sandlin. They will bring, right.
    Mr. Warren [continuing]. They will bring the program view. 
We will bring the technical view.
    Ms. Herseth Sandlin. Can you respond specifically to a 
couple of points that Dr. Khosla made? One, the issue of 
ownership of the applications. There seemed to be a difference 
of opinion of the source codes versus maintaining the data, 
which it is clear that the RFP does. But then the applications, 
versus getting into the source codes and the actual system. 
Then on what your thoughts were on what I think Dr. Khosla was 
talking about in terms of the importance of a systems 
integrator.
    Mr. Warren. Certainly. The question about what is this 
thing that we are getting and who should own it if you change 
how you are going to do it? So this question of do you own the 
source code or not? One of the dramatic changes that has taken 
place in the IT community is, most organizations actually no 
longer own the source code of the thing that allows them to do 
their business. Oracle was a great example. If you use a 
database and you happen to use the Oracle product in your 
business, you do not own that source code. Most of America that 
runs on Oracle, all of America that runs on Oracle, does not 
own that source code. What they own is the data structure they 
put into it. Their intellectual knowledge, their business rules 
about how they do their business. So in the past, when you 
custom built things, because the state of technology was that 
you had to build it, piece by piece by piece, you owned the 
source code because it actually was your intellectual knowledge 
built into the tool. And it was one of the reasons why IT has 
been so expensive in the past, why it is so hard to quickly 
deliver things in the past, because things were so tightly 
coupled.
    As an example, you have the interface on the Web where you 
do something, there is an engine or something that says what 
you do with the information that comes in, then you have a 
place where the data goes. Most of the Code that exists, not 
the new generation, most of the Code at the VA, those three 
layers are like this. So if I change the data field on the 
outside I have to change everything in and everything back out 
again. It is one of our liabilities, if you will, in terms of 
our existing infrastructure. It is why it is so difficult for 
us to do things quickly, is we have this legacy, which is 
tightly bound.
    The Chairman is correct in terms of the new technology that 
is out there. Those things are broken into layers, and when 
folks are able to do things quickly, it is not because they are 
building the layers. They are building the rules that connect 
the layers together. Those rules in this case are the 
eligibility that we are specifying. We own that intellectual 
knowledge and we are giving it to the vendor to say, ``In the 
tool, lay the rules in.'' Those are our rules. We validate 
them, we come up with them, it is the inherently governmental 
portion. Our rules, how you do it.
    The connection to the Treasury in terms of who you pay and 
how you pay. It is a rule based on a database, the data that we 
are asking them to give back to us. So the things that are 
fundamental to this work, using the latest technology, not the 
VA way, the latest technology that we are looking for these 
vendors to bring to the table, we are asking for the critical 
components that would allow any vendor to bring those, the 
technology available today to deliver what we need.
    So if we were asking them to build what we have, which is 
standard practice, and Boeing is a great example, though absent 
any knowledge on my part, that contract was giving me 
something. Bring me a rock. The contract was bring me a rock. 
Give me the source code, give me the machines, I will tell you 
what I need. They probably gave them what they asked for, what 
they knew to ask for. What we are trying to do is, this is the 
outcome we need. We do not care how you do it. Here are the 
rules you need to follow. Bring your creativity, bring your 
knowledge, bring your experience to the table to meet the date 
we need to make. That is one of the key differences on this. If 
that helps answer that question.
    System integrator? Yes, there is a system integrator. For 
any of this stuff to happen they will be reaching out to the 
knowledge, the experience, those young kids, if you will. The 
ones that are out there that are breaking ground, to bring them 
in to do this.
    Ms. Herseth Sandlin. I appreciate that. From my perspective 
and for purposes of the record, Mr. Campbell's testimony in the 
first panel was very interesting. We would like to get more 
information on how you are going to have different VSOs that 
are going to want to help their members to be able to make 
accessing the benefit easier. It simply stood in contrast, at 
least from my perspective, and the testimony of Dr. Khosla, who 
clearly believes this is a really complex strategy that has to 
be undertaken to get this done in this timeframe. I think it 
requires the Subcommittee to get more information from Mr. 
Campbell on what he has been working on as well as the 
information that we are getting from you and 
Dr. Khosla.
    Mr. Warren. I hope my remarks did not minimize the 
complexity and the challenge of what needs to happen.
    Ms. Herseth Sandlin. No, quite the opposite from what I am 
hearing. Mr. Pedigo and Mr. Wilson, I appreciate the 
clarification on the baseline contingency plan. If you could 
provide us in writing a more descriptive summary and 
description of what you are undertaking in the event of a 
contractor failure to perform, so that we can see the timelines 
and what you are already doing to train individuals.
    [The information was provided to the Subcommittee in a 
subsequent hearing held on November 18, 2008, entitled ``U.S. 
Department of Veterans Affairs Short- and Long-Term Strategies 
for Implementing New GI Bill Requirements.'']
    I share the Chairman's concern about the miscommunication 
with employees in the regional offices. I think this has caused 
some confusion, about their ability to bid and to compete with 
what is being outsourced. Mr. Pedigo, your explanation to the 
Chairman's question about how you had directed something like 
this under the A-76 study and it had taken 2 years to do so 
helps us understand a little bit better some of the decisions 
that you have made. But I think it is important that you are 
communicating not just to us proactively, but to the employees 
in the regional service as well and in the regional offices.
    My concern is, what do you anticipate then over the course 
of the 3 years contract and then the options to renew? What is 
going to happen, if we assume that the contractor can perform 
on time, what happens to the existing employees over that 
period of 
5 years? Are they still going to be necessary and have jobs? 
Based on your testimony from our hearing 2 weeks ago, that they 
are the ones that are going to be doing the direct interaction. 
We are going to have transferability issues that I think are 
going to be hard to do in a rules-based system right away. You 
are going to have the Reserve forces component. Colonel 
Norton's testimony mentioned the varied types of calculations 
that are going to go into these different benefits is 
substantial. So just tell me, have you made any kind of 
analysis? Has that been done, or will it be done? How will that 
be communicated to your current employees in the regional 
offices about what to expect if indeed this goes forward in 
developing the IT rules-based solution with the latest 
technology? What happens to the existing workforce during that 
time?
    Mr. Pedigo. Let me make a couple of comments on that and 
then Mr. Wilson can add something to it. But I think it is safe 
to say that at this point we do not know with much certainty 
how many staff we are going to need once this solution is 
implemented, or how many we are going to need after that, 
because we have not seen the solution yet. By the end of this 
month, we expect to award, and then we will be able to sit down 
and closely analyze what the proposal is, and then start 
developing a very detailed plan with regard to how existing 
staff will be utilized when we implement the proposal.
    But I can tell you that our expectation at this point is 
that a significant number of staff will initially be needed to 
handle what is likely to be a significant number of what we 
will call exceptions. These would be cases that the automated 
system could not handle. And because making a decision on those 
exceptions is an inherently governmental function, we could not 
allow a contractor to perform that function. So we would 
utilize existing Education Service staff to do that. We also 
intend to use some component of the existing staff to do the 
outreach and to man the call center in Muskogee, Oklahoma. 
Oversight will be a responsibility of VA staff, and some other 
functions. So at this point, we expect that a significant 
number of present staff will be needed at least initially when 
we implement this program.
    But we also have told the employees that no one will lose a 
job. Our intention is to make sure that everyone continues 
their employment.
    Mr. Filner. Yes, but you heard, what we heard, that 
employees say that leads to an incredible amount of 
uncertainty, fear, etcetera. That yes, they will have a job, 
but what job? Are they going to be transferred? If they do not 
agree to a transfer will they lose their job? Are they going to 
be retrained? The questions go on and on and on. That kind of 
statement, which you have given to us as some sort of certainty 
that it protects everybody, has created fear--nobody knows what 
that means.
    Mr. Pedigo. We will assure all the employees that they will 
not lose their employment. They will be able----
    Mr. Filner. That is what I just said. That is not enough.
    Mr. Pedigo. Well, sir, if you would let me finish maybe I 
can provide enough.
    Mr. Filner. Does that mean they are going to be 
transferred? Does that mean they have to be retrained? Does 
that mean they have a lesser job but with the same pay? What 
does that mean?
    Mr. Pedigo. Our plan is to continue using whatever level of 
employees we need for the new program. For those that we no 
longer need in the education program, we have other positions 
in the regional offices that house the four regional processing 
offices for the education program that we plan to transfer 
these employees to. We will not reduce the salary of any of 
these employees for the first 2-year period. Any training that 
is required for them to do on the new job will be provided. And 
I would add that we have a long history in the Veterans 
Benefits Administration of making sure that our employees have 
a soft landing when we make significant consolidations in 
operations.
    Mr. Filner. Again, 2 weeks ago all you said was, ``Nobody 
is going to lose a job.'' Now you are saying, ``Well, they 
will, at least for 2 years keep the salary.'' Now you are 
saying they are going to be in the same division. I do not even 
know if that means the same city, or that they may have to go 
to Oklahoma, or wherever. As I said, think of the kind of 
uncertainty and fear that that gives an individual employee. 
You are not giving them enough information.
    Mr. PEDIGO. We intend to continue providing information as 
it becomes available. And a lot revolves around seeing that 
proposal from the vendor. Once we see it and we have had a 
chance to analyze it, then we will be able to provide more 
detailed information to our employees, as well as to this 
Committee.
    Mr. Filner. Well, you should have given them a chance to 
put in a proposal since you do not even know what you are 
getting. Ask your employees to give you one, too. I am sorry, 
Madam Chair.
    Ms. Herseth Sandlin. If I have any further questions I will 
submit them in writing to you. But just for point of 
clarification Mr. Warren, or Mr. Pedigo, the VA could have 
built new IT system internally if it had been given enough 
time. Is that correct?
    Mr. Warren. Yes. We could have built a new system. The 
reason I hesitated a moment is, a new system, and this is the--
--
    Ms. Herseth Sandlin. But it would have been using the 
technology, existing technology.
    Mr. Warren. Existing systems and existing limitations. One 
of the things that we are trying to do and it is one of the 
benefits of the consolidation, the IT consolidation, of 
starting to bring in professional project and program managers, 
is starting to train and build a skill set to use the new 
technology. Not just use it, but know how to build with it. 
They are very focused on delivering systems that are obsolete 
when they arrive because it is dependent on what we know from 
the past. So a new system, yes, we could have built one using 
internal stuff, internal systems, internal connections, 
internal tools. And that was the 24 to 36 months in terms of 
how long would it take us to have built something using the 
skills and the tools that are out there today. I could not come 
up with a clean answer of what that would take because we do 
not have the skill set internal from the VA top to do that.
    Chairman Filner, you had asked a question earlier on about, 
``Oh, you build all this stuff yourself anyway.'' In fact, the 
VA, over 
50 percent of the development work in the VA is using 
contractors. So already a large amount of work that we do is 
contract workforce.
    Mr. Filner. Yes, they may be, but if I asked you a question 
about something and you did not know the answer, you would ask 
somebody in the field. You can call somebody.
    Mr. Warren. I do, sir.
    Mr. Filner. Yes, and everybody else does that within the 
system too. So to say we would rely on the existing system, 
with enough time and if they had the intelligence, anybody 
could build a system. They asked Patrick Campbell and he 
developed a system. I do not think this is as complicated in 
theory, in concept, as you keep saying. You lay out this 
incredible, bureaucratic plan and I can tell you that if you 
promised the prospect of $100 million, I would solve your 
problem in 90 days. I would just call the right people and get 
them to work, and I would have it delivered, and I would test 
it out. It just boggles my mind what you have decided to go 
through when, if you called in Mr. Gates and said, ``Hey, for 
your country do this,'' he would call in the right people and 
get it done.
    Mr. Warren. Could I posit a choice for you, sir?
    Mr. Filner. A what?
    Mr. Warren. Could I posit a choice for you?
    Mr. Filner. Yes, but only if it would not hurt your career, 
I would nominate you for Secretary. But, you could get fired 
because of that.
    Mr. Warren. If, as a steward, and I do look at myself as a 
steward of the tax dollar, if the choice was $100 million for a 
system in ninety days or $20 million for a system in 13 months, 
which one should I take?
    Mr. Filner. I agree, it would be tough if that was the 
choice.
    Mr. Warren. And all of our choices----
    Mr. Filner. I do not know if that is the choice. I do not 
know that.
    Mr. Warren. And remember the----
    Mr. Filner. That is what you said it was. I do not know 
that it is fact.
    Mr. Warren. As the risk or the----
    Mr. Filner. I would ask eight different people the same 
question and see what they told me.
    Mr. Warren. In the pricing, in terms of when you ask 
somebody for something, the higher the risk the higher the 
cost. Because it is 90 days, I am going to ask for a lot of 
money because I have to deliver it in 90 days and so I am going 
to run multiple things. Balancing always is the risk, the 
higher the risk the higher the dollar. The higher the surety, 
the higher the dollar. And what we were trying to do----
    Mr. Filner. I think we understand that.
    Mr. Warren [continuing]. Was deliver it with a reasonable 
amount, with what we had, always trying to find that balance. 
And sir, not everybody is going to be happy with those choices. 
Our goal is to----
    Mr. Filner. Who actually wrote the RFP?
    Mr. Warren. The RFP was made up of a team of 25, 30 folks. 
We actually had some, there were representatives----
    Mr. Filner. So you brought together the necessary people to 
come up with a product that you had to do within X amount of 
time.
    Mr. Warren. Yes, sir.
    Mr. Filner. You had the expertise and as I said, I think 
the RFP is harder than answering the contract because you have 
to think in a vacuum rather than answering a question. So you 
brought together what you needed. I think you could do the same 
thing with the system, frankly.
    Mr. Warren. And we, sir, you could be right. We were not 
willing to risk the delivery of the benefit on the date it 
needed to happen. That is truly what it came down to. Whether 
to say, you know, hope and wishful thinking are on my team and 
we hope we can get there using wishful thinking----
    Mr. Filner. Well, you are still hoping because you have not 
seen the product. I understand that and I appreciate your 
outlining that dilemma. And you may be right that after 
balancing the risk that this is the best way to do it. I am not 
convinced yet, but that is the way we are going. I just want to 
make sure that since we are going in this direction that it 
will not lead us to a Halliburton kind of contract. If that is 
what this leads us to, we are going to have some problems. 
Thank you.
    Ms. Herseth Sandlin. Just to wrap up the hearing, if I 
could summarize my understanding of what we have heard today as 
well as a couple of weeks ago. The VA had intended to move in 
this direction over the course of the next 4 to 5 years with a 
timetable of 2013. Is that correct?
    Mr. Pedigo. That is correct.
    Ms. Herseth Sandlin. Were you planning to do that both with 
internal changes to bring in newer technology and do the type 
of training in-house the way Mr. Warren described as well as 
using outside contractors to help assist in developing that 
expertise to bring in the latest technology to move to the 
rules-based system. Is that correct?
    Mr. Pedigo. That is correct.
    Ms. Herseth Sandlin. You made a determination based on the 
law that we just passed to implement a new law within a year's 
time that while you wanted to speed up that process, you could 
not do it all internally, or you could not do some of the 
aspects of it internally that you thought you would when you 
were working on a 2013 timetable, which led to the development 
of the RFP. Is that correct?
    Mr. Pedigo. I would say that is correct. Would you agree?
    Mr. Warren. Yes, ma'am.
    Ms. Herseth Sandlin. In the last Congress this Committee, 
the full Committee, undertook a series of oversight hearings 
based primarily on the available information technology and 
secure systems following the stolen laptop at the VA. That is 
correct?
    Mr. Warren. Hearings took place, yes, ma'am.
    Ms. Herseth Sandlin. Okay. We were concerned about the 
state of the information technology system at the VA. Based on 
the testimony that we heard in the first panel, some of the 
VSOs that were in support of the new law also recognized as 
they negotiated and pushed for a 12- to 13-month timeline, that 
there was an anticipation that there would be some contracting 
that would have to happen. Is that how you heard the testimony? 
Is that how the three of you heard the testimony this morning, 
or earlier this afternoon?
    Mr. Warren. I believe what they said was, it would be a 
challenge for the VA to do it whether they used in-house 
resources or contracted resources.
    Ms. Herseth Sandlin. You anticipate awarding the contract 
by the end of the month, correct?
    Mr. Pedigo. Correct.
    Ms. Herseth Sandlin. Within 30 to 45 days you can develop a 
contingency plan that is specific to the performance of the 
contract or the baseline contingency plan in the event of a 
contract failure?
    Mr. Wilson. Baseline contingency is already underway.
    Ms. Herseth Sandlin. Which you are going to provide the 
Subcommittee.
    Mr. Wilson. Correct.
    Ms. Herseth Sandlin. You will provide it in greater detail 
in writing. The 30 to 45 days that you need is the contingency 
plan associated with the award under the RFP?
    Mr. Wilson. Correct.
    Ms. Herseth Sandlin. Okay. I am just trying to get a little 
bit of what I think the Chairman has been getting at, with 
Mr. Boozman and others. The timeline imposed has created a 
challenge for the VA. And you were working from a timetable in 
which to move in this direction anyway and made modifications 
to that to try to get the latest technology integrated within 
that year time frame. Mr. Warren, you had to make a difficult 
decision based on that time frame to say, ``We cannot do it all 
internally in that timeframe.'' And that is what led to the 
RFP?
    Mr. Warren. Yes.
    Ms. Herseth Sandlin. Okay. Well then we would really 
appreciate if you could follow up as quickly as possible, even 
though Congress may or may not be in session next week and the 
following weeks. As you know, we are going to stay on top of 
this regardless. We would appreciate it if you can follow up 
with what we requested with the timetables for the MOUs, the 
description of the baseline contingency plan, the information 
that the Chairman has requested, and if that cannot be 
provided, the legal basis for not providing it. We really hope 
that you will be quick and responsive to us. Because I think it 
is clear that you can tell the interest in all of us to want to 
work with you to make sure that this is done on time, whether 
it is through the contract or whether it is through a 
contingency plan while simultaneously communicating effectively 
not only with each other but with the folks in your regional 
offices. Okay?
    Mr. Pedigo. We concur with what you said. We will.
    Ms. Herseth Sandlin. All right. Well, thank you for your 
testimony and for answering all of our questions, and your 
patience this afternoon in light of the series of votes that we 
had to leave to take. Again, thank you for your service. Thank 
you to the Department of Defense for gathering this data. It 
sounds like the percentages are reassuring in terms of where 
you are with gathering that data but obviously we may want to 
hear more from you and your working groups with regard to 
transferability and some other issues that are more complicated 
in administering the new benefit.
    The hearing stands adjourned.
    [Whereupon, at 4:57 p.m., the Subcommittee was adjourned.]

                            A P P E N D I X

                              ----------                              

   Prepared Statement of Hon. Stephanie Herseth Sandlin, Chairwoman,
                  Subcommittee on Economic Opportunity
    The hearing we had on September 11, gave the Subcommittee a brief 
insight into the Department of Veterans Affairs (VA) current status on 
the outsourcing for the G.I. Bill implementation. Unfortunately, it 
left us with more unanswered questions than answers. The primary 
purpose of last week's hearing was to give VA an opportunity to brief 
Congress about how they intend to implement Public Law 110-252. We 
wanted to know the primary plan, VA's contingency plan and how the 
contractor fit into VA's vision.
    In that hearing we received testimony from the VA that the original 
time frame to develop and implement a new IT system was 2013. 
Implementation of this IT system 4 years ahead of schedule as mandated 
by Public Law 110-252, increases my apprehension toward VA's 
capabilities to successfully implement the new G.I. Bill. This is a 
major concern and we will continue to observe VA's progress every step 
of the way.
    My main concern is over the VA's lack of information on the 
implementation plan as required by Public Law 110-252 and a contingency 
plan should the contractor fail. Rather than providing us with peace of 
mind over the implementation process, the VA was unable to discuss 
their implementation plan and their own fail safe plan. According to 
the VA, they should have a complete contingency plan 30 to 45 days 
after awarding a contract. My colleagues and I have serious doubts that 
VA is planning for the worst case scenario. The Subcommittee and all 
stakeholders seek assurance from the VA that no matter what is done, VA 
will be able to process veterans educational benefits on August 1, 
2009.
    Today we hope to learn more about the VA's plan to implement Public 
Law 110-252, the Subcommittee needs to have a clear understanding of 
the VA's primary plan, and the private contractor's vision for meeting 
the VA goal.
    Finally, I am glad to know that we have a witness the Department of 
Defense (DoD) today. Having a DoD witness will also allow us to address 
any concerns or issues that might arise from this important 
partnership. We all now that VA and DoD will be working together to 
execute Chapter 33 benefits, DoD plays an important role in this 
partnership by sharing important data elements and confidential 
information. We all want to ensure that this is done successfully, not 
just for the VA but for those veterans who have earned this benefit.

                                 
  Prepared Statement of Hon. John Boozman, Ranking Republican Member,
                  Subcommittee on Economic Opportunity
    Good afternoon everyone. When we met 2 weeks ago to begin our 
oversight of how VA intends to implement the new GI Bill, there was 
considerable discussion about whether VA should develop the new 
information technology system in-house or hire a contractor for 
development and possibly some clerical support.
    I believe that is not the right question. Rather, we should be 
discussing the following:
    First, does VA have sufficient numbers of the right people on staff 
who are qualified to manage the development program and with the 
technical qualifications needed to develop the necessary computer code. 
VA says they do not.
    Second, what are the critical milestones and what are the critical 
functions and requirements that must be met to proceed to the next 
development milestone? In other words, how will VA define success along 
the way?
    Third, what are the key functions or performance parameters of the 
new IT system and what are the limitations of the current system that 
make it unable to implement chapter 33?
    Fourth, if neither the contractor or in-house staff are able to 
complete development to meet the August 09 implementation date, what 
are VA's fallback plans to compensate for incomplete or failure?
    And fifth, what happens when VA pushes the ON-button and digital 
Armageddon causes all the lights to go out at 810 Vermont and the White 
House?
    Any IT systems engineer or program manager will tell you that basic 
program management principles apply to any project regardless of who is 
doing the development so I would note that these questions apply 
whether VA develops the system in-house or through a contractor. I 
would also note that even if VA developed the system in-house, it is 
highly likely support contractors would be used.
    As I said last week, there is ample history of IT development 
failure by both in-house staff and contractors. I would also remind our 
witnesses that the only agenda here today is how to meet the needs of 
veterans. As former VA Administrator General Omar Bradley said, ``We 
are dealing with veterans, not procedures--with their problems, not 
ours.''
    Finally, the question remains regarding VA's plans for the existing 
workforce. They have stated before that no one will lose their VA job. 
I hope to hear more details about that today.
    I yield back.

                                 
   Prepared Statement of Patrick Campbell, Chief Legislative Counsel,
                Iraq and Afghanistan Veterans of America
    Madam Chairwoman, Ranking Member, and Members of the Subcommittee, 
on behalf of Iraq and Afghanistan Veterans of America (IAVA), thank you 
for the opportunity to testify today regarding the VA's plan to 
implement the Post-9/11 GI Bill. Servicemembers and veterans alike have 
been dreaming bigger dreams since the passage of this new GI Bill and I 
am pleased to see that this Committee is working to ensure that those 
dreams are going to be realized on time.
    When I was demobilizing from Iraq in 2005, I remember being told 
that I would qualify for a new GI Bill program called the Reserve 
Education Assistance Program (Chapter 1607--REAP). I was promised $660/
month in education benefits, an increase of almost $400/month. When I 
reenrolled in school I was depending on that money to pay for school/
expenses. Unfortunately, what I did not know was that although I 
qualified for this new benefit at this point in time the VA did not 
have the capacity to start processing applications for, nor 
distributing the new REAP benefits. I was counting on that money when I 
planned my budget for things like an apartment and not having those 
promised benefits put me in a tough bind financially. It took over a 
year for me to finally get my REAP benefits, which was almost 2 years 
after REAP was signed into law.
    With that experience still fresh in my memory it is incumbent on 
all of us to ensure that veterans applying for their new GI Bill 
benefits actually receive an accurate and timely benefit. This 
Subcommittee has requested our views on the following specific 
implementation issues:

    1.  Should the new information technology system be developed by an 
outside contractor or VA employees? If not, what are the advantages and 
disadvantages, if any, of developing the new information system by 
using VA employees, including whether current VA staffing is sufficient 
to complete development by August 1, 2009?

         IAVA's first and foremost concern with the implementation of 
the new GI Bill is that veterans depending on this new education 
benefit are able to apply for and receive Chapter 33 benefits no later 
then August 1st, 2009. IAVA is not opposed to VA contracting out its IT 
services for Chapter 33 implementation so long as final benefit 
determinations and direct interaction with veterans will continue to be 
done by VA employees.
         Throughout the debate leading up to the passage of the Post-9/
11 GI Bill there were a number of discussions with the VA about their 
capacity to implement the education benefit program. Keith Wilson, the 
head of education services at the VA, was very clear during those 
discussions that given the VA's current outdated IT infrastructure that 
they needed at least 18-24 months to successfully implement the new 
program. A shorter deadline meant that the VA would need additional 
monetary resources and broad implementation authority in order to 
comply. Senator Webb and many of the supporting veterans groups, such 
as IAVA, felt that waiting up to 2 years to implement the new GI Bill 
would let too many veterans fall through the cracks and an August 2009 
compromise deadline was set. These deliberations are important because 
IAVA feels that the VA has been very candid and frank about their 
incapacity to meet an August 2009 deadline without outside contracting.
         Given my personal experience with the implementation of the 
REAP benefits and discussions with employees within the education 
services department, I concur with the VA's assessment that they would 
not be able to internally develop a new IT system capable of dealing 
with the new benefit system by the August 2009.

    2.  How VA managed the proposal process that resulted in two 
requests to industry, including the industry response to the two 
requests.

         IAVA has no relevant or useful comments on this issue.

    3.  The VA's plan for restructuring the education service if there 
is outsourcing.

         The need to outsource IT development, however, does not 
immunize the VA from some tough questions about the future 
restructuring of education service department. IAVA shares some of the 
concerns raised in the September 11th hearing, such as the potential 
lack of accountability, the challenge of coordinating VA and DoD 
technology, and the need for a back-up plan, should the private company 
selected by the VA fail to live up to their contract.
         In the past, a number of efforts to privatize benefits 
delivery and eligibility determination have been disastrous for the 
benefits recipients. One recent report on efforts to automate benefits 
delivery in Texas and Indiana concluded,

             ``the use of private entities in determining eligibility 
        raises very troubling questions about the appropriateness of 
        private entities having a key role in benefits delivery and 
        whether such privatization can be cost-effective and 
        accountable.'' \[i]\
---------------------------------------------------------------------------
    \[i]\ Mannix et al, National Center for Law and Economic Justice, 
``Public Benefits Privatization and Modernization: Recent Developments 
and Advocacy,'' Clearing House Review: Journal of Poverty Law and 
Policy, May-June 2008.

         IAVA strongly believes that any final determination of 
eligibility for benefits must made by VA employees to ensure both 
accountability and accuracy. VA employees have years of experience 
dealing with these types of issues, especially the minute intricacies 
in dealing with individual cases. However, this does not preclude the 
VA from outsourcing the creation of computer system that will follow a 
rules based model in making initial determinations of education 
benefits. Admittedly, while the Post 9/11 GI Bill is not the simplest 
benefit to understand by reading the statute, my personal experience 
developing an education benefits calculator for www.gibill2008.org has 
shown me that a well thought out benefits system technology can 
simplify the process for both the veteran and the approving employee at 
the VA. The benefits calculator on this website is actually a rough 
version of what the VA will be outsourcing and I recommend anyone 
---------------------------------------------------------------------------
interested in this subject to see why it is so helpful.

    Historically, the VA has also had its share of serious contractor 
mishaps. Among the common causes of failed IT privatization initiatives 
are the lack of a pilot program, and an inadequate opportunity for 
public input and oversight. While a pilot program in this instance may 
not be possible, it is critical that the VA have its program up and 
running in enough time for beta testing and public comment. The 
Veterans Affairs Committees, the Veteran Service Organizations (VSO's) 
and the VA Council on Education (VACOE) should be intimately involved 
in the development of this new system. Lastly, future beneficiaries 
should be able to take the program for a test run in order to make sure 
most of the technical issues are worked out. IAVA is willing to help 
whomever develops this system to ensure that it functions properly and 
is ready to go online by August 1, 2009.
    Above all, there must be clear and continued oversight from the 
Congress and the VA throughout the development of the benefits-delivery 
system, so that every Iraq and Afghanistan veteran gets the education 
benefits they have earned. Thank you again for this opportunity to 
testify.
    Respectfully submitted.

                                 
       Prepared Statement of Joseph Sharpe, Jr., Deputy Director,
             National Economic Commission, American Legion
                           EXECUTIVE SUMMARY
    Historically, The American Legion has encouraged the development of 
essential benefits to help attract and retain servicemembers into the 
Armed Services, as well as to assist them in making the best possible 
transition back to the civilian community. The Servicemen's 
Readjustment Act of 1944, the GI Bill of Rights is a historic piece of 
legislation, authored by The American Legion, that enabled millions of 
veterans to purchase their first homes, attend college, obtain 
vocational training, receive quality healthcare and start private 
businesses.
    The successful and timely transformation from one educational 
benefit program to the next, starting with the Serviceman's 
Readjustment Act of 1944, the Korean Veterans, Vietnam Veterans, 
Veterans Educational Assistance Program, and the Montgomery GI Bill, 
has been competently administered and implemented by existing VA 
employees within the Veterans Benefits Administration (VBA) Education 
Service. Currently, VBA Education Service employs more than 700 full-
time employees. Those employees have intimate knowledge of veterans 
often unique needs and how best to serve them. The American Legion is 
extremely disappointed that the VA feels it does not have the 
capabilities in Education Service and Information Technology (IT) to 
implement this critical service.
    While The American Legion supports improving the delivery of the 
educational benefits it should not lead to VA removing itself from the 
process. Any changes to the administration of GI Bill benefits should 
aim toward reaching the performance goals as outlined in the recent RFP 
while allowing VA to retain ownership:

      Ten (10) days or fewer to complete original claims;
      Seven (7) days or fewer to complete supplemental claims; 
and
      A 98 percent administrative and payment accuracy rate.

    The American Legion also recommends that once the software and 
automated process is developed, VA would train its educational services 
personnel, so the IT component can be placed under its 
responsibilities. It is important that VA retain ownership of one of 
its most significant and successful programs. This New GI Bill has been 
hard earned and is certainly well deserved for the men and women who 
have protected, sacrificed, and served our country honorably. An 
automated, efficient delivery of educational benefits must ultimately 
remain with VBA Education Service.
                               __________
    Madam Chairwoman and distinguished Members of the Subcommittee, 
thank you for the opportunity to present the views of The American 
Legion regarding the GI Bill implementation.
MONTGOMERY GI BILL
    Historically, The American Legion has encouraged the development of 
essential benefits to help attract and retain service members into the 
Armed Services, as well as to assist them in making the best possible 
transition back to the civilian community. The Servicemen's 
Readjustment Act of 1944, the ``GI Bill of Rights'' is a historic piece 
of legislation, authored by The American Legion, that enabled millions 
of veterans to purchase their first homes, attend college, obtain 
vocational training, receive quality healthcare and start private 
businesses.
    The American Legion strongly supported the Montgomery GI Bill 
evolving with this new generation of wartime veterans because of 
significant changes in the country's existing social and economic 
cultures. The Post-9/11 Veterans Educational Assistance Act of 2008 
became Public Law 110-252 when the President signed H.R. 2642, the 
Emergency War Supplemental Appropriations Bill, on June 30, 2008. The 
American Legion vigorously advocated for years for this new benefit 
that provides major enhancements to the package of educational 
assistance available to those individuals who have served on active 
duty on or after September 11, 2001 in this country's greatest hour of 
need.
    The inclusion of benefits such as a full 4 years of tuition up to 
the cost of the most expensive public universities in the states, a 
full $1,000 per academic term for books and supplies, monthly housing 
stipends and more are precisely the sort of improvements to this system 
which have been so richly deserved by these courageous individuals who 
have sacrificed so much for their country. We have long advocated that 
the country must pay back those who have been willing to selflessly 
answer the call to duty.
GI BILL IMPLEMENTATION
    The successful and timely transformation from one educational 
benefit program to the next, including the Serviceman's Readjustment 
Act of 1944, the Korean veterans, Cold war, Vietnam veterans, Veterans 
Educational Assistance Program, and the Montgomery GI Bill, have been 
competently administered and implemented by existing VA employees 
within the Veterans Benefits Administration (VBA) Education Service. 
Currently, VBA Education Service employs more than 700 full-time 
employees. Those employees have intimate knowledge of veterans' often 
unique educational needs and how best to serve them. The American 
Legion is extremely disappointed that VA feels that it does not have 
the capabilities in Education Service and Information Technology (IT) 
to implement this critical program.
    The American Legion supports improving the delivery of educational 
benefits. However, that should not lead to VA removing itself from the 
process. Any changes to the administration of GI Bill benefits should 
aim toward reaching the performance goals as outlined in the recent RFP 
while allowing VA to retain ownership:

      Ten (10) days or fewer to complete original claims;
      Seven (7) days or fewer to complete supplemental claims; 
and
      A 98 percent administrative and payment accuracy rate.

    The American Legion also recommends that once the software and 
automated process are developed, VA would train its educational 
services personnel, so the IT component can be placed under its 
responsibilities. It is important that VA retain ownership of one of 
its most significant and successful programs.
CONCLUSION
    The American Legion strongly supported the enhancements to the 
Montgomery GI Bill and is grateful that the House and Senate have 
passed this bill, and that the President signed this vital piece of 
legislation on June 30, 2008. This New GI Bill has been hard earned and 
is certainly well deserved for the men and women who have protected, 
sacrificed, and served our country honorably. An automated, efficient 
delivery of educational benefits must ultimately remain within VBA 
Education Service.
    On behalf of The American Legion, I would like to thank the 
Chairwoman and this Subcommittee for presenting us with the opportunity 
to make our thoughts and considerations known on this matter and to 
thank you for taking the time to thoughtfully deliberate on the points 
we have made clear today. Thank you as well for your service and good 
judgment on behalf of this Nation's veterans.

                                 
Prepared Statement of Raymond C. Kelley, National Legislative Director, 
                       American Veterans (AMVETS)
    Chairwoman Herseth-Sandlin, Ranking Member Boozman, Members of the 
Subcommittee, thank you for the opportunity to appear before you today 
to provide AMVETS' views and discuss the VA strategy for implementing 
the Post-9/11 GI Bill.
    The Montgomery GI Bill was enacted in late 1984 for servicemembers 
who completed 24 months of active duty service if that service began 
after June 30, 1985. This provided VA with more than 30 months to 
develop a system to deliver the benefit. With only 13 months to meet 
the statutory requirements of the new educational assistance program, 
it is necessary for VA to rely on contractor support to develop an IT 
solution that will accurately determine benefits eligibility so our 
servicemembers and veterans will be able to receive their Chapter 33 
benefits in a timely manner.
    By VA's own admission, they do not have the proper IT manpower to 
develop an acceptable solution by August 2009. Development of software 
demands a narrow scope of work over a relatively short period of time 
and the most efficient way to solve an IT problem when current staff, 
for whatever reason, cannot produce the solution is to hire a software 
development firm to take on the task. Furthermore, for VA to process 
these new claims through manual processing while they develop an in-
house IT solution, VA would be required to hire hundreds of new claims 
processors for a temporary period of time. This would be an increased 
cost to VA, and only provide temporary employment for any veterans who 
might benefit from the hiring increase.
    Because of the scope of the IT solution and the limited time in 
which VA has to implement this program, AMVETS does not fault VA for 
their management of the proposal process. Although AMVETS prefers to 
see a more open bidding process, which would include disabled veteran-
owned companies, under the circumstances, VA was required to select a 
contractor in a timely manner. Streamlining the acquisition process was 
a response to the limited time. When VA took over the acquisition 
process only four contractors had agreed to enter into the bid 
competition. Therefore, VA requested proposals from only those four 
companies.
    AMVETS is completely confident that no VBA employees will lose 
Federal employment because of the software development by an outside 
source. VA will continue to process Montgomery GI Bill claims as well 
as take on processing claims that are denied by the IT solution. There 
will also be positions within the new system that will move claims 
processors into oversight roles and any other employees will be 
properly trained to work in similar positions within VBA.
    Ms. Chairwoman, this concludes my testimony. I will be happy to 
answer any questions regarding our opinion on these matters.

                                 
 Prepared Statement of Dennis Cullinan, Director, National Legislative 
         Service, Veterans of Foreign Wars of the United States
    Mr. Chairman and Members of the Subcommittee:
    On behalf of the 2.4 million men and women of the Veterans of 
Foreign Wars of the U.S. (VFW) and our Auxiliaries, we appreciate the 
opportunity to present our views on the implementation of the GI Bill.
    The VFW commends this Subcommittee for working to ensure that the 
new GI Bill is implemented and managed properly. This Committee has 
demonstrated unified bipartisan dedication to improving the GI Bill. 
The VFW urges this Subcommittee to continue to exercise careful 
oversight throughout the implementation of the new GI Bill. We thank 
you for holding hearings on this issue and shedding light on the GI 
Bill implementation process.
    The VFW, as a leading advocate for the new GI Bill (Chapter 33), 
supports the outside contracting and development of a computer program 
that will administer the GI Bill to student veterans. We are concerned 
that the VA, while using a standard government Request for Proposal 
(RFP) contract language, is putting the future of this benefit in 
jeopardy. The leading advocates for the new GI Bill recognized, prior 
to its enactment, that it would be both prudent and necessary to 
administer the new program electronically. While we believe VA is able 
to administer this program, we are gravely disappointed that VA 
leadership has not been more open about its decisionmaking process or 
more consistent in its messaging. We also share this Subcommittee's 
concerns that VA has not articulated its ``fail safe'' plan. The VFW is 
not fundamentally opposed to contracting to provide the best solutions 
at a fair market price, if the government is unable or unequipped to 
provide the industry standard.
    We have come to understand that VA lacks an Information 
Technologies (IT) department sufficient to design and develop a rules-
based software system to administer the GI Bill benefit. Any software 
program developed to administer the new GI Bill benefit will be web-
based allowing veterans and VA employees to access the program online. 
The software will require input from DoD, VA, Veterans, and possibly 
colleges. It will then communicate with the VA, Veterans, colleges, and 
the Department of the Treasury. The RFP demands a highly accurate and 
timely computer system. The goals defined by the VA in the RFP are 
goals that the VA is not currently capable of meeting with the much 
simpler Chapter 30, Montgomery GI Bill (MGIB), claims powered by a 
personal centric system.
    The new GI Bill is more intricate than all previous programs. The 
1944 GI Bill distributed two payments: tuition paid to the universities 
or trade schools capped at $500 a year and a living stipend based on 
dependents. The new GI Bill makes three very precise payments: the 
highest in-state tuition paid to colleges and universities, a variable 
housing allowance (Basic Housing Allowance [BHA]) determined by the zip 
code of the school based on an E-5 with dependents, and $1000 annually 
paid to the student veteran for books. Any software designed to track 
this information and administer these payments must be continually 
updated. We would like to see the VA take primary responsibility in 
managing the software, but we do not believe the VA can develop 
software or deal with the ever-occurring programming fixes and system 
maintenance, at this time.
    The VFW has serious reservations with allowing the contractor to 
own the software and sourse code of the benefits delivery system. 
Essentially, the RFP allows the contractor to ``sell a license'' to the 
VA and when the contract for that license expires; the contractor can 
set the pricing terms of the contract. The type of system developed by 
a contractor will likely have no other potential user. The only 
customer of this product will be the VA Education Service. In this 
case, the company may bid low to obtain the contract and then once the 
initial period of service expires the company may increase its price 
because there is no other cost effective option for the VA.
    We want the VA to own the software and source code. We expect every 
security measure and industry standard for IT to be applied in the 
implementation and administration of the GI Bill. When a customer buys 
Windows they only get a license. If the customer is unhappy with the 
purchase, they must seek a different company and product to fill the 
void left by terminating the contract with Windows. We DO NOT want to 
see VA and veterans held hostage by the only GI Bill software company 
available.
    During the crafting of the Post-9/11 Veterans Education Assistance 
Act of 2008, now section 5001 of Public Law 110-252, Veterans Service 
Organizations (VSO) were aware that in order to implement this program, 
contracting is necessary to meet the August 1, 2009 deadline. The VSO 
community realized that with placing $100 million dollars in the 
appropriation for this program we would contract for IT as a component. 
We also realized that the IT build would draw on DoD's BHA table 
already in use and the cost of tuition at all accredited institutions 
across the Nation maintained by the Department of Education. These two 
components alone are very detailed and maintained by other government 
organizations outside of VA, thus making it harder for VA to import 
mechanisms that duplicate other government functions. A contractor can 
deal with these other systems, possibly gain access to them or reverse 
engineer these systems into a software that saves VA the annual pain of 
tracking all of this data that is far beyond their immediate concerns.
    VA leadership has contributed to the confusion surrounding the GI 
Bill contracting issue. For months, rumors have circulated that VA 
education employees would be terminated and replaced by computers and 
contractors that administered and adjudicated the GI Bill benefit. VA 
leadership only started engaging the VSO community and discussing the 
contracting situation when the press started to report on the issue. 
Instead of enlisting our support to tell the story of this policy's 
success and educate the public, they closed the doors and ignored the 
VSOs. We find this counterintuitive, the VSO community could be a close 
ally of VA in trying to manage expectations and deliver sound 
information. Once again, the VA leadership has squandered any trust the 
community was willing to place in the VA. Our confidence is shaken in 
VA's ability to make sound decisions.
    Without confidence in VA's leadership and decisionmaking, we are 
extremely concerned that the VA has yet to discuss a ``fail safe'' 
plan. The American public needs to know what the VA will do if the 
software or contractor fails to deliver services, so that GI Bill 
benefits will be paid by August 1, 2009. The VFW recognizes that all VA 
Education Service employees should still be employed in their current 
positions on August 1, 2009. Considering that Chapter 30 and 31 
benefits must continue to operate in tandem with Chapter 33, the RFP 
does not call for an outsourcing for the current MGIB, Vocational, 
Rehabilitation, and Employment (VR & E) programs we expect they will 
continue to process all education claims. We have a number of questions 
about how VA will manage this transition.
    We thank this Subcommittee for the opportunity to share our views. 
We welcome any questions.

                                 
  Prepared Statement of Colonel Robert F. Norton, USA (Ret.), Deputy 
   Director, Government Relations, Military Officers Association of 
                                America
    Madam Chairwoman and Distinguished Members of the Subcommittee, on 
behalf of the nearly 370,000 members of the Military Officers 
Association of America (MOAA), I am honored to have this opportunity to 
present the Association's views on implementation of the Post-9/11 GI 
Bill legislation (P.L. 110-252).
    MOAA does not receive any grants or contracts from the federal 
government.
                               STATEMENT
    The Subcommittee requested MOAA's views on issues concerning the 
implementation of P.L. 110-252 GI Bill benefits as codified in Chapter 
33, 38 U.S. Code.
    Specifically, the Subcommittee is examining three issues at this 
hearing:

    1.  Should the new information technology system be developed by an 
outside contractor or VA employees? If not, what are the advantages and 
disadvantages, if any, of developing the new information technology 
system by using only VA employees, including whether current VA 
staffing is sufficient to complete development by August 1, 2009.
    2.  How VA managed the proposal process that resulted in two 
requests to industry, including the industry's response to the two 
requests.
    3.  The VA's plan for the restructuring the education service if 
there is outsourcing.

    Should the new information technology system be developed by an 
outside contractor or VA employees? If not, what are the advantages and 
disadvantages, if any, of developing the new information technology 
system by using only VA employees, including whether current VA 
staffing is sufficient to complete development by August 1, 2009.
    MOAA has no position on these questions. However, we offer for the 
Subcommittee's consideration a perspective on implementing the Post-9/
11 GI Bill that may help to answer them.
    The Post-9/11 GI Bill program is a radical departure from GI Bill 
programs of the past 50 years. Major differences include the 
calculation of benefits, direct payments to institutions, a new housing 
stipend and an annual book stipend.
    Unlike the Montgomery GI Bill, Chapter 33 benefits are calculated 
up to the cost of the highest in-state public college or university 
tuition rate. MGIB rates, on the other hand, are based on a table of 
set monthly rates that are based on only two variables: the length of 
the contract that established entitlement and the number of credits or 
training taken--not the tuition charged at the institution where the 
veteran is enrolled. In short, the calculation of benefits paid under 
Chapter 33 can vary ``infinitely'' by the number of enrolled veterans.
    In addition, Chapter 33 benefits will be paid directly to 
institutions rather than to the veteran.
    The housing stipend is based on the Dept. of Defense's basic 
allowance for housing (BAH) of servicemembers in grade E-5 with 
dependents. The BAH stipend is further tied to the veteran's zip code 
of residence.
    The third payment stream in Chapter 33 is an annual book stipend of 
$1000.
    These calculations in themselves should be considered ``business 
process'' transactions that can and should be supported by modern data 
processing technologies. In other words, the calculations are not in 
themselves a ``veteran's benefit''. In this sense, it is not critical 
that the new claims processing system should be established either 
inside the VA or contracted out.
Outcome Measures of Merit
    MOAA believes that a claims processing system for Chapter 33 can be 
set up along the lines of commercial tax return products like ``Turbo 
Tax''. Millions of private citizens use such commercial products to 
submit their annual tax returns to the Federal Government's Internal 
Revenue Service (IRS). A similar approach may be desirable for 
administering Chapter 33 benefits.
    Commercial taxpayer software tools have certain features in common:

    Simplicity. Users follow a set of simple questions and data entry 
prompts. Backup information, government forms and instructional videos 
are available to understand more complex tax-related issues.
    Efficiency. Millions of taxpayers pay taxes owed and receive 
refunds on their taxes through online transactions between their 
financial institutions and the IRS. Studies have indicated that the 
government and taxpayers benefit by using such tools.
    Speed. Submissions of tax returns online has increased 
exponentially in recent years and greatly accelerated the turnaround 
time for receipt of tax refunds directly into bank accounts.
    Accuracy. Studies would suggest that commercial tax software 
products are at least as accurate as cumbersome calculations using 
multiple, confusing paper forms.
    Reduced cost. Commercial tax software products have greatly reduced 
government and taxpayer paper transactions and handling costs.
    Security. An overriding concern of the VA must be protection of a 
veteran's personal information. Commercial tax preparation software 
appears to have met government requirements for privacy and data 
protection.

    MOAA believes that technologies can be developed for administering 
Chapter 33 benefits that could link government entities (The Dept. of 
Veterans Affairs and the Dept. of Education, primarily), educational 
and training institutions and veterans in a collaborative partnership.

    How VA managed the proposal process that resulted in two requests 
to industry, including the industry's response to the two requests. 
MOAA has no information upon which to offer comment on this issue.

    The VA's plan for the restructuring the education service if there 
is outsourcing. MOAA has no information upon which to offer comment on 
this issue.

    MOAA is grateful to the Subcommittee's continuing interest in and 
leadership on the implementation of the Post-9/11 GI Bill program. We 
recommend that appropriate oversight hearings be conducted as needed to 
ensure that the policies, procedures and technologies supporting the 
new program are in place by 1 August 2009.

                                 
    Prepared Statement of Leonard Smith, Veterans Claims Examiner, 
Education Division, Veterans Benefits Administration, Atlanta Regional 
  Office, U.S. Department of Veterans Affairs, on behalf of American 
              Federation of Government Employees, AFL-CIO
    As the exclusive representative of the employees who process claims 
at the VBA Education Division, AFGE is very concerned about the impact 
of proposed outsourcing on the hundreds of employees who are currently 
processing claims for education benefits, and at a very competent 
level. More than half of the workforce are veterans themselves. The 
VA's plans to outsource this work and transfer most of these trained 
and high performing employees elsewhere, to be replaced by contractors 
with no experience, are a disservice to taxpayers and veterans as 
students and as federal employees.
    AFGE's witness, Mr. Leonard Smith, is a frontline employee and 
service-connected disabled veteran who brings a unique dedication and 
compassion to his work processing these claims. He and his colleagues 
have been told regularly by management that their performance is 
excellent. Yet, without warning, they have been told that a contractor 
will replace them to better serve veterans when the new GI bill takes 
effect. Mr. Smith and his co-workers have implemented many changes in 
the law in the past effectively and do not understand why outsourcing 
is necessary for this next change in the law.
    They are also anxious about the possibility of having to be 
retrained, reassigned and downgraded, as per statements made by Mr. 
Walcoff in pleadings provided to AFGE in connection with AFGE's pending 
protest with GAO.
    AFGE requests the opportunity to address questions presented by the 
Subcommittee regarding information technology, the bidding process and 
restructuring of the education service in a supplemental statement 
following the hearing. To reiterate, there is substantial evidence that 
the VA plans to outsource claims processing work, not solely IT work. 
AFGE is also troubled by VA's insistence on a closed bidding process 
and its refusal to provide any legal justification for ignoring legal 
requirements for competitive bidding and for public-private 
competitions that cover all federal agencies.

    Thank you for allowing me to testify today on behalf of my union, 
the American Federation of Government Employees, AFL-CIO.
    My name is Leonard Smith. I have worked in the Education Division 
of the VBA Regional Office in Atlanta as a Veterans Claims Examiner 
since February 2007. I work on the Original Claims Processing Team. My 
duties are to determine eligibility of veterans based on their period 
of service and then process those claims appropriately. I was recently 
recognized for outstanding performance for the third quarter of 2007 
for performing above the standard production rate, at 113 percent.
    I myself am a veteran of twenty years and served in two combat 
zones: Operation Just Cause in Panama and Operation Desert Storm. I am 
60 percent service-connected disabled due to injuries to my knees and 
back. I currently attend school using a VA administered program myself, 
so I know what it takes to service a veteran properly.
    I used my veteran's preference to get my job at the VA. Before this 
job, I worked at the Postal Service for 2 years but it was a more 
manual job with lots of lifting and it was not good for my health and 
hurt my knees and back. This is the same reason I was not able to stay 
at my earlier job at the Atlanta airport working for the contractor 
Airmark where I had to constantly go up and down stairs to inspect 
planes and in and out of vehicles. I also left Airmark because it was 
the contractor for Delta which was having problems and I felt the 
federal government would be more secure. In my current job, I sit at a 
computer. My job also involves phone contact with the veterans I am 
helping.
    At the end of July, my coworkers and I heard about the contracting 
out during a full staff meeting. There were no handouts. What 
management told us was that they had no information but they had 
directions from the Secretary that the work would be going to a 
contractor. They said a few people would be left in the section. The 
rest would be more likely to go up to the Veterans Service Center where 
disability claims are processed. Management did not mention IT work at 
all. But they specifically said the processing work was going to be 
contracted out.
    People asked if they should look for other jobs and whether they 
would be able to do these other VBA jobs. They were told they would be 
trained to learn the new work. I am a little nervous about having to 
retrain all over again. I have a real comfort level at Education 
because I know how to do the job so well.
    Management kept saying that they themselves did not know anything 
else and they were not given any specific date for when this would all 
happen or when they would be given more information. Management 
admitted at this meeting that they were just as surprised as we were to 
hear about plans to contract out.
    I just found out that now there's a hiring freeze in Education. But 
our managers keep telling us to do the work just like before so we can 
show that we are still doing a good job, and if by chance the work is 
not contracted out, we would still be in line to do the work.
    I am proud to say that we are still providing the same excellent 
service in the face of losing our jobs. In fact, even after we were 
told about the contracting out, management has continued to encourage 
us to reach our Tier 2 goal. That's a rewards program where the 
employees get a monetary award based on the performance of the entire 
office. The award is based on a combination of accuracy and timeliness 
of claims processing. Management has been telling us for a while that 
we were close to our goal and could be the first ones in the Atlanta 
office to win this award.
    I also just learned that last year, Central Office put out a press 
release praising the excellent work we do in Education. Although no one 
ever showed it to us, I am not surprised because I know how good our 
work is.
    The contracting out announcement was a big surprise but not the new 
GI bill. We had been expecting it for a while and we were expecting the 
work to be done by us, just like in the past. There are always changes 
in the law and benefits programs that we get briefed on. It's a regular 
part of the job. When management talked to us about getting trained to 
implement Chapter 33, it was described just like what we had done to 
implement past changes, nothing different or any bigger. Since I 
started at Education, I have had to learn to implement changes after my 
initial training, such as how to ask for different types of information 
from the veterans and a different way to develop the claim. When they 
announced new reserve guard benefits, we learned about it at our 
quarterly training on new benefits.
    As someone getting these benefits, I have also been through several 
changes. In fact, I started receiving benefits under Chapter 32 which 
is a contributory program. Now I work with Chapter 32 in my job. I know 
my knowledge of Chapter 30 will still be needed for veterans who 
convert to Chapter 33.
    The initial training I got at the Education Division was one of the 
better training programs I have experienced. After I got the job at 
VBA, I was sent for classroom training to learn how to read 
regulations, process claims and determine eligibility. The classroom 
training lasted 9 months and it was mixed in with floor experience. 
When we were finally released on the floor, we were still heavily 
supervised for three more months.
    I like many things about being a Veterans Claims Examiner. Most of 
all, I like helping people like myself. I know where they are, I've 
been there. It is gratifying because the person I am helping is not 
just a number but someone who was in my position. When I was told I 
would be transferred, I felt bad, because who was going to take care of 
these guys who need their education? The contractor won't give them the 
same service, without a doubt. They're in it for a profit. I have heard 
a lot about contractors wasting taxpayer dollars and giving poor 
service.
    I know my coworkers would agree with me that we would have wanted 
the chance to compete with the contractor to keep this work inside the 
VA if given the chance. In fact, I am sure that we would have blown 
them away in the competition. That's because we as veterans are the 
ones who really know how to take care of other veterans. I don't 
believe a contractor could be as passionate about caring for my 
veterans as me and my colleagues. I take my job very seriously because 
I know how deserving of quality service our Nation's defenders are. We 
can not pay these men and women their worth with money. The very least 
we can do is show them we care by taking care of them while they take 
care of us. If the Education Division needs more help implementing the 
new law, why don't they just hire more veterans like me who will really 
understand what these veterans are going through?

                                 
   Prepared Statement of Pradeep K. Khosla, Ph.D., Dean, College of 
        Engineering, Carnegie Mellon University, Pittsburgh, PA
    Chairwoman Herseth Sandlin, Ranking Member Boozman, and Members of 
the Subcommittee, thank you for the opportunity to testify today on the 
implementation of the Post-9/11 G.I. Bill Support Services Project, 
Chapter 33 benefits.
    I have the distinct honor of being Dean of the College of 
Engineering at Carnegie Mellon University. The College of Engineering 
is ranked as a top 10 school for both undergraduate and graduate 
education and is housed at one of the most respected research 
universities in the country. Our commitment to providing an 
unparalleled educational experience to our students extends outside of 
the country as well. Today, we offer 12 different degree programs in 10 
countries, and have institution building, joint degree programs, and 
formal collaborative research activities in Singapore, Taiwan, India, 
China and Portugal. Additionally, we have an official presence in 
Greece, Qatar, Japan, and Australia. As a steward of higher education, 
it is an honor to be here today as you examine the best ways to support 
the delivery of enhanced education benefits to members of the military.
    It has been well documented that at the end of World War II, the 
original G.I. Bill, the Serviceman's Readjustment Act of 1944, had a 
profound impact of the United States. This impact was, and is still 
felt, at the individual, economic, and larger societal level. From my 
perspective as an academic, I can think of no other stand alone piece 
of federal legislation that has also had an equally profound effect on 
institutions of higher education. It has been estimated that at the 
time of its enactment, less than 2/5 of those serving in World War II 
had even a high school education. This makes the fact that 10 million 
soldiers went on to college a even more astounding outcome.
    I think we would all agree that the ``middle class'' in America of 
the time would not have been created if not for this landmark 
legislation. The human factor is also worth stressing. In Over Here: 
How the G.I. Bill Transformed the American Dream, Edward Humes sites 
that it helped to produce 14 Nobel Prize winners, 3 Supreme Court 
Justices, 3 U.S. presidents, and 12 U.S. senators. It also, however, 
helped to train an estimated 67,000 doctors and 91,000 scientists. No 
small feat. As you might assume, I am particularly interested in the 
technological advancements that came to the fore from these 
individuals. It is my hope that your efforts today will similarly help 
others achieve their academic dreams and support additional economic 
and technological sea changes.
    I have been asked to comment from a technical perspective on four 
different areas of concern related to the Chapter 33 benefits 
implementation RFP language. These areas are: 1) overall feasibility of 
the proposal; 2) August 1, 2009 implementation deadline; 3) possible 
problems that may be encountered in creating the program; and 4) 
recommendations on industries' best practices in creating a similar 
program.
    Before I begin my comments about these areas of concern, I do want 
to acknowledge my awareness of the tension surrounding the 
implementation of the program as it relates to outsourcing and the 
possible displacement of current employees. In the Department of 
Veterans' Affairs testimony from the Subcommittee's initial September 
11, 2008 hearing, it was emphatically stated that ``no VA staff will 
lose federal employment as a result of the Post 9-11 G.I. Bill''. It is 
my sincere hope that this matter is sufficiently addressed to the 
satisfaction of the Committee and Members of the full House such that 
efforts can move forward with providing enhanced educational benefits 
to today's veterans.
Feasibility
    The RFP specifies in reasonable detail the objectives of the 
project. It clearly identifies that the VA is responsible for 
specifying the ``What'' and the contractor is responsible for 
delivering the ``How''. This allows for adequate flexibility on the 
offeror's part to propose a state of the art, and scalable solution 
based on industry best practices.
    The ability to support more than a half million students requesting 
benefits annually, including approximately 1.4 million claims is 
certainly feasible provided the contractor is skilled in the 
implementation of large scale IT projects and handling personally 
identifiable information (``PII'') and processing financial benefits. 
Areas that could undermine the feasibility--and success--of this 
important initiative include:

      Selecting the right technology (hardware and software) 
and ensuring that interoperability and system interconnection issues 
are addressed up front and factored into the technology selection 
process. This should include personal identity authentication and 
authorization.
      Ensuring that the contractor has the skills and 
experience to properly handle, store, process, and transmit large 
amounts of PII and financial data and meet the security requirements 
set forth in the RFP, including compliance with the Privacy Act 1974, 
the Federal Information Security Management Act (``FISMA''), privacy 
requirements of the E-Government Act of 2002, NIST guidance and 
standards, and other regulatory guidance or requirements, as set forth 
in the RFP. Security of PII both during transmission and storage is of 
paramount importance. PII is usually disclosed through one of many 
means that include, for example, a dishonest insider, lost or stolen 
computer, hacking, and lost or stolen backup tape.

    While I do not see any technical barriers, it is important to 
recognize that the requested secure solution can be technically 
complicated.

      Project management capabilities, especially with respect 
to managing the implementation goals of to ensure that:

       A secure solution is implemented by the target deadline;
       Stakeholders stay involved throughout the project and 
have a reasonable means of providing input without creating unnecessary 
changes or disruptions that could jeopardize project implementation;
       Testing of the system, including pilot trials, are 
carefully orchestrated and planned to meet the requirement of a 
seamless transfer of data with uninterrupted service (stakeholder input 
could be particularly valuable at this stage);
       The VA provides the contractor with necessary system 
data and access to VA personnel to enable the contractor to develop the 
solution without using VA IT resources.

    The RFP requirement that VA IT resources will not be provided to 
support development of the solution (including unit, integration, and 
performance testing) is too stringent. The VA needs to have liaison 
personnel working closely with the contractor to ensure that the 
solution meets the benefit needs of veterans and has a successful 
implementation without IT or public relations problems. This does not 
mean that VA IT resources need to be used, but to clarify that VA 
personnel need to be available and assigned to interface with the 
contractor from beginning through implementation.
    Best practices in outsourcing call for careful management from the 
company outsourcing the work; this is discussed further in the section 
on best practices.
Implementation Deadline
    As I mentioned earlier, the implementation of this project can be 
expected to be complicated and complex to implement. Therefore, I 
believe that the timeframe of implementation by August 1, 2009 (as 
requested in the RFP) may be too aggressive.
    Successful implementation within the requested timeframe would 
require that the evaluation of the responses to the RFP be thoroughly 
evaluated including, if possible, a site visit to the offeror for an 
in-depth analysis of their capabilities. A more reasonable 
implementation deadline would be twelve (12) months after the award of 
the contract.
    The evaluation process will involve multiple considerations, as 
noted above, that will require various areas of expertise and review by 
internal VA personnel. A reasonable timeframe for review of complex 
proposals and assessment of the offerors' capabilities is about 3 
months. Even with an aggressive schedule and the RFP going out next 
week, it is unlikely that proposals could be received, evaluated, and a 
contract awarded prior to February 2009. This would leave the 
contractor only 6 months to bring the team together, develop the 
solution, have the system undergo certification and accreditation 
(C&A), prepare and receive approval of a privacy impact assessment 
(PIA), and implement the solution. The deadline may well undermine the 
objectives of the project.
    In order to minimize this risk, the RFP correctly requests weekly 
meetings to discuss various aspects of the project including risk 
reduction (Section C, item 4), and the offeror's approach to risk 
management as part of the project management plan (Deliverable for Task 
1).
    In addition, the project plan should contain sub-plans for various 
aspects critical to implementation, such as the selection and testing 
of hardware, the preparation of the required PIA, the system C&A, 
testing, and pilot implementation. This will help ensure that 
stakeholder involvement is included at critical points in these areas 
and will help avoid implementation bottlenecks and delays.
Possible Problems
    The RFP mandates a response time of 10 days for original claims and 
7 days for supplemental claims. In addition it requires that there 
exist a capability for the claims to be handled both electronically and 
in paper form, and also a capability for electronic and check payments. 
Given the number of claims that are expected to be filed, it is likely 
that the deadline imposed for processing paper claims may require 
significant amount of staff resources. This would be especially true if 
most of the claims were submitted around the same time. For example, 
most university tuition payments are required within a few weeks of the 
start of classes and, therefore, fall within a common timeframe. Surge 
periods must be anticipated and planned for in the system requirements. 
The 10- and 7-day processing requirements may be too stringent for 
surge periods, especially for paper claims.
Best Practices
    The RFP adequately addresses the standards and best practices as 
related to security and financial administration. FISMA has strong 
security standards and NIST guidance is world-class and consistent with 
internationally accepted best practices and standards.
    Outsourcing best practices also call for contract clauses that will 
protect operational data, business processes, and compliance 
requirements. The offeror selected for this work should be required to 
meet best practices for financial outsource providers. The Financial 
Roundtable and Federal financial regulators have compiled excellent 
guidance on managing outsource providers and security risks. The VA 
would benefit significantly and provide important leadership to this 
project if it examined these materials and included relevant portions 
in the RFP.
    It is my hope that my testimony has helped to clarify some of the 
major technical matters and logistics associated with the RFP for 
Members of the Subcommittee. For non-technical practitioners, I 
recognize that digesting the details and evaluating the merits of the 
concepts put forth in the 152 page document is no easy feat. Without 
question, the task posed by the Subcommittee required me to call upon 
all of my professional experiences: educator, engineer, DARPA program 
manager, security researcher and technical advisory board member.
    I fully realize how important it is for Members of the Subcommittee 
to have trust and confidence in the IT solutions sought for in the RFP 
to deliver education benefits to our Nation's veterans. As leaders in 
the realm of technology and innovation, please know that the College of 
Engineering at Carnegie Mellon University stands ready to assist you in 
dealing with technical matters as they relate to your efforts to craft 
sound public policy and implement VA projects. We applaud your 
diligence in reviewing this specific matter.
    Again, thank you for the opportunity to testify. I would be happy 
to answer any questions the Subcommittee might have.

                                 
  Prepared Statement of Curtis L. Gilroy, Ph.D., Director, Accession 
  Policy, Office of the Under Secretary of Defense for Personnel and 
                 Readiness, U.S. Department of Defense
    Good afternoon Madam Chairwoman and Members of the Subcommittee. I 
am pleased to appear before you today to discuss the Department of 
Defense's role in the implementation of the Post 9/11 GI Bill, as 
enacted in Public Law 110-252, and codified in Chapter 33, title 38, 
United States Code. There is little doubt that this new educational 
assistance program represents the most sweeping change in post-service 
education benefits since World War II.
    The original ``GI Bill of Rights,'' created at the end of World War 
II, gave returning Servicemembers a comprehensive package of benefits 
to compensate for opportunities lost while in the military, and to ease 
their transition back into civilian life. The noted economist, Peter 
Drucker, described that GI Bill by saying, ``Future historians may 
consider it the most important event of the 20th century.'' Perhaps the 
most far-reaching provision of the GI Bill was the financial assistance 
it made available for veterans to attend college. The GI Bill offered 
returning Soldiers, Sailors, Marines, and Airmen payment for tuition, 
fees, books, and supplies, along with a living stipend, at the 
educational institution of the veteran's choice. With over 7.8 million 
veterans receiving education or training, this landmark program changed 
the face of higher education, and many have said directly led to the 
creation of the American middle class.
    Although there have been several GI Bills since the original, the 
Post 9/11 GI Bill is the first to directly mirror this original 
milestone program, again offering the returning Soldiers, Sailors, 
Marines, and Airmen payment for tuition, fees, books, and supplies, 
along with a living stipend, at the educational institution of the 
veteran's choice. However, the original GI Bill was designed to ease 
the transition to civilian life from a conscripted military force 
during a massive drawdown. Today's military is much different--since 
1973 we have defended this Nation with a volunteer force, and our 
military forces are growing, not drawing down. In recognition of this 
difference, the Post 9/11 GI Bill offers career Service members the 
opportunity to share or transfer their earned, but unused, education 
assistance benefits with their immediate family members. GI Bill 
transferability has been at the top of military family issues for 
several years and was mentioned by President Bush in his 2008 State of 
the Union address. We greatly appreciate this provision and believe it 
will have a significant impact on the retention of our career force.
    For today's hearing, you asked me to comment on the role that the 
Department of Defense (DoD) will play in the implementation of the Post 
9/11 GI Bill and how DoD and the Department of Veterans Affairs (VA) 
will work together to ensure success in the roll-out of this new 
program.
    Implementation and administration of the Post 9/11 GI Bill is the 
responsibility of VA; however, we recognize that DoD has an important 
role in its success, and we take this role very seriously. Immediately 
after enactment of Public Law 110-252, I charged a senior member of my 
staff with the responsibility to guide the DoD efforts in support of 
this new program. He is in constant contact with senior staff in the VA 
Education Service. DoD and VA formed four working groups comprised of 
representatives from the Services, the Joint Staff, other parts of the 
OSD staff, data management staff from the Defense Manpower Data Center 
(DMDC)--the official repository of all DoD personnel data--and senior 
representatives from the VA Education Service.
    The Post 9/11 GI Bill Data Working Group is the one that epitomizes 
the cooperation between DoD and VA. The road to becoming a veteran 
always entails passage through service in the military. Accurate 
reporting of that service is vital to the determination of eligibility 
for post-service education benefits. We recognize our role in that 
reporting. To meet this end, our greatest emphasis is being placed on 
this working group. The GI Bill file manager from DMDC is in constant 
contact with VA staff and has made two visits to VA Education Service 
to establish the data requirements and rules. We are confident that we 
can begin to pass to VA the data necessary to implement the program by 
March 2009.
    The overall Post 9/11 GI Bill Implementation Working Group is 
focusing on the impact to the force of the introduction of this new 
program, with particular emphasis on developing the policies necessary 
to establish the provisions of Sec 3316, Supplemental education 
assistance: members with critical skills or specialty; members serving 
additional service, which allows the Services to continue the use of 
``kickers'' to assist in steering high quality youth into critical and 
hard-to-fill military specialties. Senior members of VA Education 
Service are integral to this working group. The policies and procedures 
developed by this group will result in an internal DoD Instruction 
(DoDI) this coming spring.
    The Post 9/11 GI Bill Transferability Working Group is developing 
the policies and procedures to implement this vital new program in 
support of the Services' retention programs. Senior members of VA 
Education Service are also integral to this working group. The policies 
and procedures developed by the Transferability Working Group also will 
be included in the DoDI this coming spring.
    The Post 9/11 GI Bill Strategic Message and Outreach Working Group 
is focusing on how DoD and the Services will market this new program 
both internally and externally with a clear and consistent message. 
Senior members of VA Education Service in this group are helping us 
develop our marketing strategy.
    As you can see, DoD is committed to the success of the Post 9/11 GI 
Bill, and has been working very closely with VA Education Service since 
enactment, and plans to continue working side-by-side with them. The 
Post 9/11 GI Bill will have major impacts on DoD recruiting and 
retention and, as you know, few areas, if any, are more important to us 
than those in implementing this program. We recognize our duty to staff 
the All-Volunteer Force with high-quality, motivated, and well-trained 
men and women. As we move through the 21st Century, we must continue to 
build upon the remarkable legacy of the visionaries who crafted 
preceding versions of and improvements to the GI Bill. I thank this 
Committee for its dedicated support to the men and women who currently 
serve, and those who have served, our great Nation.

                                 
                  Prepared Statement of Keith Pedigo,
  Associate Deputy Under Secretary for Policy and Program Management,
 Veterans Benefits Administration, U.S. Department of Veterans Affairs
    Good afternoon Chairwoman Herseth Sandlin, Ranking Member Boozman, 
and Members of the Subcommittee. I appreciate the opportunity to appear 
before you today to discuss the Department of Veterans Affairs (VA) 
strategy for implementation of the Post-9/11 GI Bill (chapter 33 of 
title 38, United States Code). Accompanying me today is Mr. Keith 
Wilson, Director, Education Service and Mr. Stephen Warren, Principal 
Deputy Assistant Secretary for Office of Information and Technology. My 
testimony will address the specific issues regarding implementation of 
the Post-9/11 GI Bill as requested by the Subcommittee.
    The Post-9/11 GI Bill will provide veterans, servicemembers, and 
members of the National Guard and Selected Reserve with educational 
assistance, generally in the form of tuition and fees, a monthly 
housing allowance, and a books and supplies stipend, to assist them in 
reaching their educational or vocational goals. This program will also 
assist in the readjustment to civilian life, support the armed services 
recruitment and retention efforts, and enhance the Nation's 
competitiveness through the development of a more highly educated and 
productive workforce.
Reason for Contractor Support
    Our strategy to implement the Post-9/11 GI Bill relies on 
contractor support to build upon and accelerate what we had developed 
as our longer term strategy to employ rules-based, industry-standard, 
technologies in the delivery of education benefits. The chapter 33 
program contains eligibility rules and benefit determinations that 
would work well with rules-based technology that requires minimal human 
intervention.
    We plan to award a contract for this support before the end of this 
month. Pursuant to the contract, which includes potential penalties for 
failure to perform, the contractor will be accountable for providing 
timely and accurate education claims processing by completing original 
claims within 10 days, supplemental claims within 7 days, and achieving 
a 98 percent accuracy rate. The technological solution and services 
provided will be under the close direction and oversight of Veterans 
Benefits Administration (VBA) employees.
    VA is seeking contractor support to implement the Post-9/11 GI Bill 
because we do not believe that we could deliver the systems necessary 
to administer the program within the time required utilizing our 
existing information technology (IT) resources. Our focus is to pursue 
a path that we believe will provide the highest level of assurance that 
we can deliver this benefit by August 1, 2009. VA's existing IT 
systems, which do not include a capacity for rules-based claims 
processing, would require major modifications to accommodate the unique 
eligibility criteria and complex payment structure. Modifying our 
existing system to the extent required for the new benefit is not a 
viable option, given its age and technical limitations. Consequently, 
VA will need to develop a new payment system that includes the 
capability to exchange data with the Department of Defense (DoD), 
determine eligibility, automatically generate letters, streamline or 
automate payment calculations, generate payment transactions, and 
perform accounting functions. VA has experienced difficulty in being 
able to deliver advanced technological solutions, especially ones that 
have a very short timeframe for development; in this case, 13 months. 
The resources and technical experience necessary to deliver an IT 
solution before August 1, 2009, do not presently exist within VA. 
Consequently, it was determined that the most prudent course of action 
was to use a contractor to harness the creativity, knowledge, and 
experience of business enterprises to assist in developing a solution.
    When the Montgomery GI Bill (MGIB) was enacted in October 1984, 
individuals could begin using benefits after completing 24 months of 
active duty service that began after June 30, 1985. Thus, VA had 
approximately 32 months to prepare to deliver benefits. VA received 
5,760 claims for MGIB benefits through 1988. In contrast, the Post-9/11 
GI Bill, with its far more complex payment requirements, allows VA 13 
months to develop a payment system for what likely will be hundreds of 
thousands of claimants who will be immediately eligible for benefits 
August 1, 2009.
Impact of VA System Development
    An in-house IT solution that addresses the unique provisions of the 
new program would require VA 24-36 months to develop. Such a lengthy 
development phase would require VA to process claims largely through 
manual processing in the interim. As part of the manual process, VA 
would need to utilize the legacy system that was used to deliver 
benefits for the Vietnam Era GI Bill (chapter 34), since the current 
benefits delivery system does not have functionality to make payments 
to schools as well as trainees. The chapter 34 system has limited 
functionality, but does allow for entry of one-time payments. VA would 
have to enter individual entries for each student for each monthly 
housing allowance, each tuition payment, and each book stipend. 
Security controls exist for one-time manual payments so as to ensure 
program integrity. Each one-time payment requires two distinct actions. 
First, an employee manually enters the necessary fiscal information 
into the legacy system. Second, another employee, an ``Authorizer'' 
reviews the prepared fiscal information to ensure correctness and then 
authorizes the action, which releases the payment. This separation of 
duties is intended to limit the possibility of fraud and abuse, but 
also significantly increases the time and resources required to deliver 
benefits.
    Currently VA releases approximately 400,000 payments each month. VA 
anticipates a similar volume of monthly payments under the new program 
for the housing allowance. Monthly payments, such as the housing 
allowance payable under this program, are paid at the end of the month 
after a student verifies his or her attendance. This verification is to 
limit overpayment of benefits. These student verifications normally 
occur the last week of the month. Therefore, VA would have to manually 
process 400,000 housing allowance payments over a 7-day period at the 
end of each month.
    VA estimates that processing benefits in this manner would require 
hiring up to 800 additional Education employees whose services would 
not be required once the new payment system was in place.
Program Executive Office
    To manage the development of the overall process for administering 
the
Post-9/11 Gill Bill, VA has established a Program Executive Office 
within Education Service comprised of senior business-line managers, 
management analysts, individuals with program and project management 
experience, and administrative support. This office will be responsible 
for coordination of all the projects within the VA comprehensive 
management plan to successfully implement the Post-9/11 GI Bill.
Management of Proposal Process
    On July 17, 2008, on behalf of VA, the Office of Personnel 
Management (OPM) submitted an invitation to vendors under OPM's 
Training and Management Assistance (TMA) contract to submit their 
capabilities/corporate qualifications based on VA's statement of 
objectives. The TMA contract allowed a streamlined acquisition process 
for VA to contract for services. Ten vendors responded to OPM's request 
for proposals. After an amendment to VA's requirements, OPM issued a 
solicitation for a task order competition to the 10 vendors on August 
11, 2008. Only four vendors elected to participate.
    At this point, VA's General Counsel became aware that OPM's General 
Counsel had serious concerns regarding OPM's authority to conduct the 
acquisition. Therefore, VA took control of the acquisition process. 
Because of the compressed timeframe created by the legislation, VA 
determined that urgent and compelling reasons existed to seek proposals 
from limited sources. Thus, VA solicited proposals from the same four 
vendors that had previously agreed to participate in a task order 
competition. On August 29, 2008, VA issued the request for proposal 
solicitation. VA is currently in the process of reviewing documents 
submitted in response to the solicitation. VA anticipates awarding a 
contract this month.
Restructuring Education Service
    Based on the implementation strategies being pursued, VA does not 
anticipate the loss of federal employment for any present employees 
associated with VA's Education programs. It is important to understand 
that the contractor will not have full responsibility over the 
administration of the Post-9/11 GI Bill. Instead, the contractor will 
be responsible for development of the IT solution, and general 
administrative and data-entry functions. The technological solution and 
services provided by the contractor will be accomplished under the 
close direction and oversight of Veterans Benefits Administration (VBA) 
employees.
    VA will continue to require claims processing personnel to support 
the existing education benefit programs we administer and to process 
Post-9/11 GI Bill claims that cannot be processed automatically through 
the vendor's solution. We also anticipate increasing our compliance 
survey activities and oversight visits due to direct payment of tuition 
and fees to schools. VA will utilize existing claims processing 
resources to address the increased compliance staffing needs. VA 
employees will continue to staff and operate our Nationwide customer 
call center in Muskogee, Oklahoma. VA employees will also continue to 
respond to all online inquiries received through the VA website, 
including Post-9/11 GI Bill inquiries.
    We anticipate reassigning any remaining affected employees to 
similar positions in the Compensation & Pension Program. Such transfers 
may involve positions with similar duties. Employees may also be 
reassigned to support other benefit programs within VA. In any case, VA 
will provide affected employees with the training necessary to perform 
their new duties successfully.
Critical Milestones and Contingency Planning
    To meet the effective date of August 1, 2009, VA will require 
delivery of critical services (milestones) by the vendor. In addition, 
VA will require weekly progress meetings throughout development. As 
soon as the contract is awarded, VA subject matter experts will work in 
collaboration with the vendor to document business requirements and 
process flows. VBA Education Service is currently preparing detailed 
requirements which will be given to the selected contractor after 
contract award.
    The first critical milestone will occur March 1, 2009, when the 
contractor will be required to demonstrate its IT solution 
capabilities. At this time VA will begin testing the contractor's 
program. On May 1, 2009, after 2 months of testing and debugging, the 
system must be able to demonstrate to VA subject matter experts the 
ability to make correct eligibility and entitlement decisions based on 
service data and data pertaining to prior VA benefit usage. VA has 
established June 1, 2009, as the critical date on which the contractor 
must be able to demonstrate the ability of the system to issue award 
letters, make full benefit payments, properly document accounting, and 
all other required functionality. At this point, we anticipate the 
contractor will begin receiving applications and processing claims. 
However, payments will not be generated. Finally, on August 1, 2009 the 
system must be certified and fully operational.
    Due to the short timeframe to implement this program, VA is 
concurrently working on contingency plans. Our main contingency plan is 
the same largely manual process discussed earlier in this testimony 
that we would have pursued had we chosen to build the system with 
existing VA IT resources. The contingency plan requires modifications 
to the existing chapter 34 payment system and temporary additional 
staffing to assist in the manual data entry, eligibility 
determinations, and recordkeeping required until the automated system 
is up and running. We are going forward with this plan so that in the 
event of vendor failure, we are ready to implement manual processing 
and deliver benefits August 1, 2009.
    At the first critical milestone date of March 1, 2009, VA will 
determine if it is necessary to implement manual processing. We intend 
to work very closely with the vendor in order to meet the statutory 
deadline for delivery of benefits to our Nation's veterans.
Contractor Approach
    Since VA is presently in the process of evaluating the documents 
submitted in response to the request for proposals, we are not yet able 
to discuss the vendor's approach due to acquisition rules.
Actions Required by DoD
    Since eligibility for the Post-9/11 GI Bill is based on cumulative 
service, whereas the MGIB is based on service commitment, the data VA 
currently receives from DoD will have to be modified. The Department of 
Defense, including the Defense Manpower Data Center, is working closely 
with VA to determine the data requirements and to establish an 
interface to exchange data for the Post-9/11 GI Bill program. DoD will 
be required to provide VA with the data elements, such as active duty 
service periods, needed to make eligibility determinations. Further, 
DoD will be required to provide those data elements in a format which 
is compatible with the IT solution being developed for optimum 
functionality of the rules-based system.
VA-DoD Agreements Required
    Under the existing benefit programs, VA has a long history of 
successful cooperation and partnership with DoD, and we fully expect 
that relationship to continue under the Post-9/11 GI Bill.
    To exchange Post-9/11 GI Bill data between VA and DoD, both 
agencies anticipate signing a memorandum of understanding, data-sharing 
agreement, and computer matching agreement. These agreements cannot be 
implemented until some of the elements of the IT solution are 
available.
    Madam Chairwoman, this concludes my statement. I would be pleased 
to answer any questions you or any of the other Members of the 
Subcommittee may have.
                   MATERIAL SUBMITTED FOR THE RECORD

                                     Committee on Veterans' Affairs
                               Subcommittee on Economic Opportunity
                                                    Washington, DC.
                                                    October 2, 2008
Hon. James B. Peake, M.D.
Secretary
U.S. Department of Veterans Affairs
810 Vermont Ave., NW
Washington, DC 20420

Dear Secretary Peake:

    I am sending you a deliverable in reference to a hearing from our 
House Committee on Veterans' Affairs Subcommittee on Economic 
Opportunity Follow Up Oversight Hearing on G.I. Bill Implementation on 
September 24, 2008. Please answer the enclosed hearing questions by no 
later then Wednesday, November 7, 2008.
    In an effort to reduce printing costs, the Committee on Veterans' 
Affairs, in cooperation with the Joint Committee on Printing, is 
implementing some formatting changes for material for all full 
committee and subcommittee hearings. Therefore, it would be appreciated 
if you could provide your answers consecutively on letter size paper, 
single-spaced. In addition, please restate the question in its entirety 
before the answer.
    Due to the delay in receiving mail, please provide your response to 
Ms. Orfa Torres by fax at (202) 225-2034. If you have any questions, 
please call (202) 226-4150.
            Sincerely,
                                  Stephanie Herseth Sandlin
                                                 Chairwoman
                               __________
                        QUESTIONS FOR THE RECORD
                           September 24, 2008
    Question 1: Is the data sharing agreement, computer matching 
agreement, and MOU already done? If not, when will they be done?
    Response: The Department of Veterans Affairs (VA) has developed 
both short and long-term strategies to support the new claims 
processing and benefit payment methods required under the Post-9/11 GI 
Bill. To process and pay claims by the legally mandated date of August 
1, 2009, manual processing procedures will be used and existing 
information technology (IT) systems will be modified. At the same time, 
development of an automated system that will become the longer term 
strategy for Post-9/11 GI Bill claims processing will be pursued.
    A data sharing agreement is required for both the short and long-
term strategies. VA and the Department of Defense (DoD) are working 
together to solidify the data element requirements necessary to 
implement the short-term strategy. A data sharing agreement will be 
completed once all data element requirements are finalized. The data 
sharing agreement should also fulfill the requirements for the long-
term strategy.
    A computer matching agreement is not required for VA's short-term 
strategy. VA's long-term strategy may require a computer matching 
agreement; however, not enough information is available to determine if 
one will be required.
    A memorandum of understanding (MOU) between VA and DoD is required 
for both the short and long-term strategies. VA and DoD are working 
together to draft a MOU that would fulfill the requirements for both 
strategies. We anticipate the MOU will be finalized by December 2008. 
If modifications to the MOU are needed for the long-term strategy, they 
will be made when more detailed information becomes available.
    Question 2: How soon will the VA finish the memorandum of 
understanding with all the universities in the country as mandated by 
Public Law 110-252?
    Response: VA's Office of General Counsel is working to finalize an 
agreement template that schools can submit to allow them to participate 
in the Yellow Ribbon Program. The template will be sent to all 
Institutions of higher learning by Education Service. The schools will 
need to return this agreement to VA by February 15, 2009, to 
participate in the program.

                                 

```