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44–934 2009

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 

( 

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ii 

COMMITTEE ON VETERANS’ AFFAIRS 

BOB FILNER, California, Chairman 

CORRINE BROWN, Florida 

VIC SNYDER, Arkansas 

MICHAEL H. MICHAUD, Maine 

STEPHANIE HERSETH SANDLIN, South 

Dakota 

HARRY E. MITCHELL, Arizona 

JOHN J. HALL, New York 

PHIL HARE, Illinois 

SHELLEY BERKLEY, Nevada 

JOHN T. SALAZAR, Colorado 

CIRO D. RODRIGUEZ, Texas 

JOE DONNELLY, Indiana 

JERRY MCNERNEY, California 

ZACHARY T. SPACE, Ohio 

TIMOTHY J. WALZ, Minnesota 

DONALD J. CAZAYOUX, JR., Louisiana 

STEVE BUYER, Indiana, Ranking 

CLIFF STEARNS, Florida 

JERRY MORAN, Kansas 

HENRY E. BROWN, JR., South Carolina 

JEFF MILLER, Florida 

JOHN BOOZMAN, Arkansas 

GINNY BROWN-WAITE, Florida 

MICHAEL R. TURNER, Ohio 

BRIAN P. BILBRAY, California 

DOUG LAMBORN, Colorado 

GUS M. BILIRAKIS, Florida 

VERN BUCHANAN, Florida 

STEVE SCALISE, Louisiana 

MALCOM A. SHORTER, Staff Director 

SUBCOMMITTEE ON ECONOMIC OPPORTUNITY 

Stephanie Herseth Sandlin, South Dakota, Chairwoman 

JOE DONNELLY, Indiana 

JERRY MCNERNEY, California 

JOHN J. HALL, New York 

JOHN BOOZMAN, Arkansas, Ranking 

JERRY MORAN, Kansas 

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. 

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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 

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(1) 

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 Subjbell on PROD1PC69 with HEARING

2 

committee 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 

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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 

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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 inhouse/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). 

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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 

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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 rulesbased 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. 

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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 

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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. 

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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 

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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 

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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 

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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. 

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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. 

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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 

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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 Post9/11 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. 

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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. 

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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 

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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 

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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. 

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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 indepth 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 

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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. 

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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 rulesbased processing engine database sold by some database manufacjbell on PROD1PC69 with HEARING

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turer. 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. 

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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? 

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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. 

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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 

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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 

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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 memjbell on PROD1PC69 with HEARING

29 

bers 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. 

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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. 

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31 

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 separajbell on PROD1PC69 with HEARING

32 

tion 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. 

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33 

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 

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capture in terms of accuracy of those personnel records. The activeduty 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. 

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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? 

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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. 

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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 

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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. 

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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—— 

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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 

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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 

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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 

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43 

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 

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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 difjbell on PROD1PC69 with HEARING

45 

ferent 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 

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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. 

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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. 

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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. 

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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.] 

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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. 

f 

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? 

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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 inhouse 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. 

f 

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 comjbell on PROD1PC69 with HEARING

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[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. 

promise 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]

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. 

f 

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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. 

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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. 

f 

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, 

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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. 

f 

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 

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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. 

f 

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. 

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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. 

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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. 

f 

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 

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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? 

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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. 

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• 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. 

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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. 

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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 postservice 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 rejbell on PROD1PC69 with HEARING

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turning 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 welltrained 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. 

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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 

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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 

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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. 

jbell on PROD1PC69 with HEARING

67 

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. 

Æ 

jbell on PROD1PC69 with HEARING