U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001

27–853 PDF 2006

FINANCIAL FRIENDLY FIRE: A REVIEW OF

PERSISTENT MILITARY PAY PROBLEMS

HEARING

BEFORE THE

COMMITTEE ON

GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED NINTH CONGRESS

SECOND SESSION

APRIL 27, 2006

Serial No. 109–145

Printed for the use of the Committee on Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.house.gov/reform

(II)

COMMITTEE ON GOVERNMENT REFORM

TOM DAVIS, Virginia, Chairman

CHRISTOPHER SHAYS, Connecticut

DAN BURTON, Indiana

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

GIL GUTKNECHT, Minnesota

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

CANDICE S. MILLER, Michigan

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

JON C. PORTER, Nevada

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

CHARLES W. DENT, Pennsylvania

VIRGINIA FOXX, North Carolina

JEAN SCHMIDT, Ohio

——— ———

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. DUTCH RUPPERSBERGER, Maryland

BRIAN HIGGINS, New York

ELEANOR HOLMES NORTON, District of

Columbia

———

BERNARD SANDERS, Vermont

(Independent)

DAVID MARIN, Staff Director

LAWRENCE HALLORAN, Deputy Staff Director

TERESA AUSTIN, Chief Clerk

PHIL BARNETT, Minority Chief of Staff/Chief Counsel

(III)

C O N T E N T S

Page

Hearing held on April 27, 2006 .............................................................................. 1

Statement of:

Kutz, Gregory D., Managing Director, Forensic Audits and Special Investments, U.S. Government Accountability Office; Lieutenant Colonel

John M. Lovejoy, U.S. Army Reserve, 364th Civil Affairs Brigade, Portland, OR; Specialist Frank Mangum, former Alabama Army National

Guard, 279th Signal Battalion; and Specialist Brandy Taylor, former

U.S. Army Reserve, 296th Transportation Company, Brookhaven, MS .. 19

Kutz, Gregory D. 19

Lovejoy, John M. 41

Mangum, Frank 48

Taylor, Brandy 62

Patterson, J. David, Principal Deputy Under Secretary of Defense, Office

of the Comptroller, U.S. Department of Defense; Nelson Ford, Principal

Deputy Assistant Secretary of the Army for Financial Management

and Comptroller, U.S. Department of Defense; Zack E. Gaddy, Director,

Defense Finance Accounting Service, U.S. Department of Defense;

Mark R. Lewis, Assistant Deputy Chief of Staff, G–1, Department

of the Army, U.S. Department of Defense; and Colonel Mark A.

McAlister, Finance Officer, 18th Airborne Corps, Fort Bragg, NC, U.S.

Army .............................................................................................................. 87

Ford, Nelson 92

Gaddy, Zack E. 102

Lewis, Mark R. 114

McAlister, Mark A. 119

Patterson, J. David 87

Letters, statements, etc., submitted for the record by:

Cummings, Hon. Elijah E., a Representative in Congress from the State

of Maryland, prepared statement of ............................................................ 7

Davis, Chairman Tom, a Representative in Congress from the State of

Virginia, prepared statement of ................................................................... 4

Ford, Nelson, Principal Deputy Assistant Secretary of the Army for Financial Management and Comptroller, U.S. Department of Defense,

prepared statement of ................................................................................... 94

Gaddy, Zack E., Director, Defense Finance Accounting Service, U.S. Department of Defense, prepared statement of .............................................. 104

Hayes, Hon. Robin, a Representative in Congress from the State of North

Carolina, prepared statement of .................................................................. 12

Kutz, Gregory D., Managing Director, Forensic Audits and Special Investments, U.S. Government Accountability Office:

Example of a credit report ........................................................................ 21

Prepared statement of ............................................................................... 23

Lewis, Mark R., Assistant Deputy Chief of Staff, G–1, Department of

the Army, U.S. Department of Defense, prepared statement of ............... 116

Lovejoy, John M.,U.S. Army Reserve, 364th Civil Affairs Brigade, Portland, OR:

Leave and earnings statement ................................................................. 42

Prepared statement of ............................................................................... 44

Mangum, Specialist Frank, former Alabama Army National Guard, 279th

Signal Battalion, prepared statement of ..................................................... 50

McAlister, Colonel Mark A., Finance Officer, 18th Airborne Corps, Fort

Bragg, NC, U.S. Army , prepared statement of ......................................... 120

Page

IV

Letters, statements, etc., submitted for the record by—Continued

Patterson, J. David, Principal Deputy Under Secretary of Defense, Office

of the Comptroller, U.S. Department of Defense, prepared statement

of ..................................................................................................................... 89

Platts, Hon. Todd Russell, a Representative in Congress from the State

of Pennsylvania, prepared statement of ...................................................... 78

Taylor, Specialist Brandy, former U.S. Army Reserve, 296th Transportation Company, Brookhaven, MS, prepared statement of ....................... 64

Waxman, Hon. Henry A., a Representative in Congress from the State

of California, prepared statement of ........................................................... 16

(1)

FINANCIAL FRIENDLY FIRE: A REVIEW OF

PERSISTENT MILITARY PAY PROBLEMS

THURSDAY, APRIL 27, 2006

HOUSE OF REPRESENTATIVES, COMMITTEE ON GOVERNMENT REFORM, Washington, DC.

The committee met, pursuant to notice, at 10:03 a.m., in room

2154, Rayburn House Office Building, Hon. Tom Davis (chairman

of the committee) presiding.

Present: Representatives Tom Davis, Shays, Platts, Foxx, Waxman, Cummings, Kucinich, Clay, Ruppersberger, Higgins, and Norton.

Also present: Representative Hayes.

Staff present: David Marin, staff director; Larry Halloran, deputy

staff director; Keith Ausbrook, chief counsel; Rob White, communications director; Andrea LeBlanc, deputy director of communications; Grace Washbourne, professional staff member; Teresa Austin, chief clerk; Sarah D’Orsie, deputy clerk; Leneal Scott, computer

systems manager; Phil Barnett, minority staff director/chief counsel; Kristin Amerling, minority general counsel; Karen Lightfoot,

minority communications director/senior policy advisor; Andrew Su,

minority professional staff member; Earley Green, minority chief

clerk; and Jean Gosa, minority assistant clerk.

Chairman TOM DAVIS. Good morning. A quorum being present,

the Committee on Government Reform will come to order.

Today we are joined by my friend from North Carolina, Congressman Robin Hayes, who has worked with us on behalf of the soldiers at Fort Bragg and has contributed to the improvements in the

situation there. I would ask unanimous consent that he be allowed

to join us today, and hearing no objection, so ordered.

Today we are going to continue the committee’s oversight of Department of Defense payroll, personnel, and medical systems intended to serve deployed service members, particularly those

wounded in battle. Four previous hearings, here and before our

subcommittees, have examined specific aspects of a military finance process that is badly broken. This morning we will discuss

the impact of overpayments and subsequent debt collection actions

on the lives of soldiers and their families.

Between public sessions, the committee receives frequent briefings from the Defense Finance and Accounting Service [DFAS], the

Army, and the Government Accountability Office [GAO], on the

status of short-term work-arounds, mid-term initiatives, and longterm plans to modernize and integrate vital functions that sustain

the financial lives of those injured on behalf of our Nation’s deVerDate 11-MAY-2000 14:02 Sep 05, 2006 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 D:\DOCS\27853.TXT HGOVREF1 PsN: HGOVREF1
2

fense. What we have learned continues to raise serious questions

about the pace and the adequacy of efforts to address longstanding

systemic problems.

After hearing from many who had encountered pay and debt

problems, we asked GAO to determine how many returning soldiers, from both active and reserve components, had been overpaid,

how much was owed, and what steps DOD took to collect. We also

asked GAO to focus specifically on overpayments to the injured National Guard and Reserve soldiers who transition through the facilities at Fort Bragg, NC, one of 23 Army Medical Retention Processing Units.

Keep this fact in clear focus: Almost without exception, the debts

we are talking about are caused by a sluggish, misfiring pay system, not the soldier. Hazardous duty bonuses and other deployment-specific payments are not always shut off when the service

member comes home. And once the error is discovered, it is the soldier or the family who gets the bill, not the Army. In some cases,

a lump-sum deduction wipes out an entire paycheck. Other debts

are reported to credit bureaus and sent to collection agencies, marring credit histories and impairing a family’s ability to complete

the healing process and to get on with life. Literally adding insult

to injury, the systems that are supposed to nurture and support returning warriors too often inflict additional wounds to their financial health.

The GAO reports released today point to this conclusion: Convoluted, disjoined, and error-prone personnel and pay systems continue to impose needless hardships on military members and their

families. Despite earnest efforts by DFAS and the Army to train

personnel, craft new procedures, and address individual problems,

it is still far too likely the system will get it wrong. The sad sagas

we will hear today from wounded soldiers about pay errors and

debt collections are not anomalous or isolated cases. They bring

tragic proof that a Byzantine and stovepiped system grinds on, all

but impervious to fundamental change.

In previous testimonies, DOD promised interim steps to merge

pay, personnel, and medical data on returning soldiers so managers

would not financially ‘‘shoot the wounded’’ by starting collection actions while the patient was still healing. In fact, the Wounded in

Action Pay Management Program has cobbled together a tracking

system. Many erroneous payments are being caught, and debts are

being deferred or canceled. But a more comprehensive interim fix,

the Forward Compatible Payroll system, was over budget, behind

schedule, and has been abandoned. That does not bode well for successful development of the planned long-term fix, which is a fully

integrated finance and personnel platform, the Defense Integrated

Military Human Resources System. For the foreseeable future,

wounded soldiers trying to avoid drowning in debts not of their

making have to hope DFAS and the Army can keep plugging holes

in aging, leaky legacy systems.

Last year Congress gave the military Service Secretaries additional authority to forgive some debts, but the provision is set to

expire next year, creating potential inequities for those discharged

before or after the eligibility period. So we asked GAO and our

other witnesses to recommend ways to make this process more solVerDate 11-MAY-2000 14:02 Sep 05, 2006 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 D:\DOCS\27853.TXT HGOVREF1 PsN: HGOVREF1
3

dier-friendly. The most complex battlefield system fielded by this

Nation, the human soldier, deserves to be supported by fully modern, sophisticated human resource systems that account for the entire life cycle of those precious assets. Soldiers already injured

should never face the risk of having their credit standing crippled

as well due to error-prone military pay systems.

We want to thank all of you for your testimony today. All the

witnesses today bring important information and perspectives to

this important work, and we look forward to a constructive discussion.

[The prepared statement of Chairman Tom Davis follows:]

4

5

6

Chairman TOM DAVIS. I would now yield to the gentleman from

Maryland for any opening statement he would wish to make.

Mr. CUMMINGS. Thank you very much, Mr. Chairman, I do thank

you very much for holding this vitally important hearing on the perennial pay problems experienced by military personnel.

In no uncertain terms, no military personnel who risk their life

and limbs in the service of this great Nation should have to experience pay problems and their attendant economic hardship because

the Government failed to operate effectively and efficiently.

Soldiers fighting in the global war on terrorism have inappropriately incurred debts for which they bear no direct responsibility.

Central factors contributing to this troubling state of affairs include

the Department of Defense’s attempt to recover overpayments,

computation mistakes, and unearned credit related to enlistment

bonuses and leave payments.

As a result, succeeding paychecks may lag or be subject to substantial deductions in pursuit of debt collection. Moreover, DOD’s

inability to appropriately reimburse soldiers for expenses ranging

from travel to insurance premiums has driven some soldiers into

the unforgiving arms of debt.

The scope of this problem is jaw-dropping. The GAO reports that

by September 2005, 1,300 injured or killed soldiers serving in the

global war on terrorism acquired more than $1.5 million in debt because of DOD failures. Make no mistake, such debt has real consequences. The GAO found that 16 of 19 soldiers it studied experienced significant problems covering the cost of the basic necessities

as a result of payment issues and debt collection activities.

For instance, one soldier and his family could not afford to pay

their utility bill and were compelled to have distant relatives assume the care of their daughter. I am also no less troubled by the

reports out of Fort Bragg that overpayments and the military’s attempt to recoup those funds left soldiers without the resources

needed to pay their mortgage, insurance, and other critical expenses.

It has been said that the true measure of a great Nation is how

it treats those brave souls who willingly shed blood, sweat, and

tears in defense of our fellow countrymen. In the past, our Nation

has done well by this standard, and there is no reason why we cannot do the same today. After all, we are one of the greatest countries in the world. We best honor the sacrifice of the men and

women who serve in our military by eliminating impediments that

hinder our ability to dispense military pay in a timely and accurate

manner.

And with that, Mr. Chairman, I yield back.

[The prepared statement of Hon. Elijah E. Cummings follows:]

7

8

9

10

Chairman TOM DAVIS. Thank you very much.

Mr. Hayes.

Mr. HAYES. Thank you very much, Mr. Chairman, and thank

you, Congressman Cummings, for your kind remarks.

I showed Colonel Lovejoy and, of course, Colonel McAlister this

coin that is always in my pocket for the 82nd Airborne, and it just

reminds me of the incredible service not only at Fort Bragg and our

wonderful soldiers, but Specialist Taylor and others around the

globe and around the country. Thank you so much for what you do.

Our concern here, Chairman Davis, always is to bring to light

what the issues are but, more importantly, solve the problems and

make sure that these circumstances do not reoccur, but also that

anything else that might be lurking out there in the unintended

consequences category hopefully we can scoop that in our net as

well.

Again, thank you for inviting me here to be with you today,

Chairman Davis, for this critical hearing and for the opportunity

to participate in the oversight of this important issue. I am very

proud to have Fort Bragg, home of the 18th Airborne Corps, 82nd

Airborne Division, the epicenter of the universe, here today. The

service members and their families are our top priority.

I care about our soldiers at Fort Bragg and appreciate the sacrifices that they have made to ensure freedom for all of us. Whether our soldiers are stationed there permanently or are on temporary medical hold, it is vital that they are given the best care

and services. That is why I have been happy to work with this committee on the investigation into the effects of the military pay process and to make sure that our Army Guard and Reserve who are

injured or wounded in combat have the best treatment possible.

When I learned of the allegations that Guard and Reservists at

the Medical Retention Processing Unit at Bragg were being overpaid and that this was sometimes resulting in their referral to debt

collection agencies, I was, needless to say, outraged. Unfortunately,

I was to learn that this Army problem is not specific to the base

in my district, but was also occurring at 21 other sites for medical

in-processing. That is why the Government Accountability Office

investigation and this hearing are so very important.

Thank you to all of our witnesses. We appreciate you bringing

your experiences, your wisdom, and things that can only come from

the field, thank you for bringing that today. I want to welcome

Colonel McAlister of the Fort Bragg Finance Battalion and share

my appreciation for him for facing the challenges under extremely

heavy uptempo—he is doing a great job—challenges they have

faced due to lack of resources and personnel to give our wounded

soldiers the attention they deserve. We want to help.

Many strides have been made in terms of addressing the pay and

personnel system integration at the Department of Defense. I am

committed to doing whatever is necessary to ensure that our Nation’s soldiers do not fall victim to this continuing bureaucratic

nightmare. It is our duty to take care of those who serve our country in the Nation’s armed forces, and I look forward to working

with the Department of Defense to address these issues.

11

Thank you for your presence and, more importantly, thank you

to the men and women in uniform for your incredible service.

Thank you, Mr. Chairman. I yield back.

[The prepared statement of Hon. Robin Hayes follows:]

12

13

14

15

Chairman TOM DAVIS. Thank you very much.

Mr. Waxman.

Mr. WAXMAN. Mr. Chairman, thank you for holding this oversight hearing today. I am pleased that the committee continues to

focus on exposing and addressing numerous deficiencies in our

military pay system. These problems have become painfully apparent during the recent unprecedented call-up of National Guard soldiers and Reservists.

I would like to welcome the soldiers and their families who are

with us today and praise your heroism in serving our country. I

also want to commend you for your bravery in speaking out on behalf of your fellow soldiers on the indignities that you have suffered. I hope that the Pentagon takes the necessary actions following today’s hearing to help you and your families.

Today we will be hearing yet again about pay problems in the

Army’s financial and accounting systems. In 2003, the committee

held its first hearing on pay irregularities that had arisen regarding compensation of soldiers contributing to the military efforts in

Afghanistan, Iraq, and elsewhere. At that time, the Army said the

problems were anomalies.

Yet, here we are 3 years later, and the Army still has not fixed

the problems. At the committee’s request, the Government Accountability Office has been conducting an ongoing review of DOD

pay administration systems. GAO tells us that internal control

weaknesses, poor training and other human capital problems, and

the lack of integrated financial systems continue to exist.

Now we are learning that the newly discovered accounting errors

have incorrectly assigned millions of dollars in debt to hundreds of

Guard and Reserve soldiers. We will hear from GAO today that

DOD delays in reimbursing soldiers, pay errors, and other DOD accounting and administrative problems have resulted in about $1.5

million in debts for soldiers who have served in Iraq and Afghanistan.

These incorrectly assigned debts have a very real human cost.

The hardships to soldiers caused by these errors can be both burdensome and stigmatizing. Whether it is struggling to pay household bills, car payments, mortgages, or being hounded by debt collectors for bad credit, our veterans continue to suffer after they return from the battlefield. And these debt problems may take

months or years to resolve.

Mr. Chairman, I hope this hearing will be the last the committee

needs to hold on military pay problems. Our Nation will continue

to rely upon Guardsmen and Reserve soldiers into the foreseeable

future. Fixing the multiple pay problems affecting these individuals

is integral to demonstrating them the respect and care that they

so rightly deserve.

Thank you again, and thanks to the soldiers and their families

for being here today.

[The prepared statement of Hon. Henry A. Waxman follows:]

16

17

18

19

Chairman TOM DAVIS. Mr. Waxman, thank you. You know, we

have held hearings on pay problems, then health, now debt collection. There always seems to be a new wrinkle. They solve one, and

other things seem to spring up. But I hope this is the last one we

have to hold.

I am going to move to our first panel. We are very honored and

grateful to our first panel of witnesses for coming forward today to

share their personal experiences and expertise with the committee.

Mr. Gregory Kutz is back. He is the financial management and assurance from the U.S. Government Accountability Office.

Lieutenant Colonel John M. Lovejoy, U.S. Army Reserve, 364th

Civil Affairs Brigade, Portland, OR. Thank you for being with us.

We have Specialist Frank Mangum, former Alabama Army National Guardsman with the 279th Signal Battalion, accompanied by

his wife, Paulette, and thank you very much for being with us.

And Specialist Brandy Taylor, former U.S. Army Reservist with

the 296th Transportation company, Brookhaven, MS.

Along with Mr. Kutz, I want to recognize Gary Bianchi, Gayle

Fischer, and Mary Ellen Chervenic of the GAO who have gone beyond the call of duty to assist this committee with its investigation,

just quality work. We appreciate it. The committee thanks you very

much for your outstanding work.

I also want to welcome and thank Mrs. Paulette Mangum for

coming here today. We consider your husband’s service and sacrifices and your service and sacrifices, and we salute you.

We also welcome Ms. Jamesa Taylor, who is here supporting her

cousin, Specialist Brandy Taylor.

I just want to thank all of you very much for being here and taking part in this important hearing.

It is our policy on the committee that we swear witnesses before

you testify, so if you will just rise with me and raise your right

hands.

[Witnesses sworn.]

Chairman TOM DAVIS. We are going to start, Mr. Kutz, with you

and move straight on down. We have a light in front of you. If you

have a written statement, that entire statement is already in the

record and questions will be based on that. And thank you once

again for being with us. Greg, you are on.

STATEMENTS OF GREGORY D. KUTZ, MANAGING DIRECTOR,

FORENSIC AUDITS AND SPECIAL INVESTMENTS, U.S. GOVERNMENT ACCOUNTABILITY OFFICE; LIEUTENANT COLONEL JOHN M. LOVEJOY, U.S. ARMY RESERVE, 364TH CIVIL

AFFAIRS BRIGADE, PORTLAND, OR; SPECIALIST FRANK

MANGUM, FORMER ALABAMA ARMY NATIONAL GUARD,

279TH SIGNAL BATTALION; AND SPECIALIST BRANDY TAYLOR, FORMER U.S. ARMY RESERVE, 296TH TRANSPORTATION

COMPANY, BROOKHAVEN, MS

STATEMENT OF GREGORY D. KUTZ

Mr. KUTZ. Mr. Chairman and Congressman Hayes, thank you for

the opportunity to discuss pay problems for Army soldiers. As you

mentioned, Mr. Chairman, this is the fifth in our series of pay-related testimony before this committee. I want to commend you, Mr.

20

Chairman, and Representatives Shays, Platts, Ruppersberger, and

Hayes for your consistent and aggressive oversight of military pay.

The bottom line of my testimony today is that sick and injured

soldiers continue to experience frustration and financial problems

with an outdated, error-prone military pay system.

My testimony has two parts: first, actions taken by DOD; and,

second, the results of our two reports that are being released today.

First, I want to make clear to you that this committee’s oversight

has made a difference. Based on your requests, our past work has

resulted in 84 recommendations for improvement to soldier pay

and travel reimbursements. According to DOD, they have taken action on 70 of these recommendations. Improvements include specific actions to help wounded soldiers, enhances training of soldiers

and finance personnel, and improved customer service.

However, although these actions result in an improved system,

the fundamental problems remain. In essence, DOD is using substantial human effort and work-arounds to compensate for the current outdated, error-prone military pay system.

Second, our two reports being released today are further evidence

that soldiers remain vulnerable to pay problems. Our first report

shows battle-injured soldiers struggling to deal with debts primarily caused by pay problems.

This work started in February 2005, after I read an e-mail from

Staff Sergeant Ryan Kelly from the Army Reserve. Mr. Kelly was

wounded by a roadside bomb in Iraq in 2003, resulting in the loss

of his right leg below the knee. What struck me about this e-mail

was that Sergeant Kelly was representing that his pay-related

debts had been reported to a credit bureau.

The posterboard, which is on the monitor, shows excerpts from

Staff Sergeant’s Kelly’s credit report.

[The information referred to follows:]

21

22

Mr. KUTZ. As you can see, the summary section shows $2,249 of

past due debt. Below that, you can see that the source of the only

negative credit on the entire report is the Defense Finance Accounting Service [DFAS]. Although it is hard to believe, wounded

warriors such as Staff Sergeant Kelly were being reported as bad

credit by the Department of Defense.

Subsequently, DOD established the Wounded-in-Action data base

and is attempting to better handle these soldiers’ debts. Our report

provides suggestions for legislation to expand debt relief authority

and exempt soldiers from credit bureau reporting and private collection agency actions.

Our Fort Bragg report provides another example of pay problems, this time for sick or injured soldiers receiving medical treatment. Although initial allegations were that 37 Army National

Guard and Reserve soldiers had pay problems, our investigation

showed that 232 were overpaid. These overpayments ultimately

can result in debt and garnishment of wages.

Examples of the impact of problems from our two reports include:

battle-injured soldiers’ debts reported to credit bureaus; injured soldiers being pursued by private collection agencies; and soldiers and

their families struggling to pay their bills.

I am honored to be at the table today with the other witnesses,

who will share their stories with the committee.

In conclusion, DOD is trying very hard to compensate for the

current outdated, error-prone military pay system. However, until

this system is reengineered, soldiers will continue to experience

frustration and financial problems. Mr. Chairman, I encourage you

to continue your oversight for as long as it takes to ensure that our

soldiers have the world-class military pay system that they deserve.

Mr. Chairman, this ends my statement. I look forward to your

questions.

[NOTE.—The GAO report entitled, ‘‘Military Pay, Hundreds of

Battle-Injured GWOT Soldierts Have Struggled to Resolve Military

Debts, GAO–06–494, April 2006’’ may be found in committee files.]

[The prepared statement of Mr. Kutz follows:]

23

24

25

26

27

28

29

30

31

32

33

34

35

36

37

38

39

40

41

Chairman TOM DAVIS. Thank you very much.

Colonel Lovejoy, thanks for being with us.

STATEMENT OF JOHN M. LOVEJOY

Lt. Colonel LOVEJOY. My name is Lieutenant Colonel John

Lovejoy, and I am an officer in the U.S. Army Reserve. Although

I am appearing in uniform today, I am speaking only for myself.

I do not represent any position of my unit, the Army, the Army Reserve, or the Department of Defense. I am a graduate of the U.S.

Military Academy and have a Master of Science degree in engineering management from the University of Missouri-Rolla. My current

duty station is the 364th Civil Affairs Brigade out of Portland, OR.

I would like to thank the members of the committee and the

Honorable Tom Davis for inviting me to testify today. I hope that

my testimony will illustrate the type of pay problems a Reservist

or National Guardsman can face when called to active duty. Generally, my experience with the Army pay system has been positive.

However, the ‘‘system’’ did make mistakes with my pay during my

last deployment. The more serious problems usually occur when a

soldier does not get paid. However, I am here to talk about the impact of being overpaid.

I was mobilized in December 2003 for Operation Iraqi Freedom.

Nine months later, I was having chest pains, but not serious

enough to be medically evacuated out of theater since I only had

about a month left on my tour of duty. I left Iraq in October 2004

and was retained on medical hold at Fort Bragg, NC. I remained

on medical hold for 7 months until July 3, 2005, when I was released from active duty to return to my Reserve unit.

My first pay issue occurred when my hardship duty and hostile

fire pays were not stopped after I left the Iraqi theater. I made

three separate visits to the Fort Bragg Finance Office trying to stop

these pays. I was overpaid a total of $553, with the last overpayment received on December 15, 2004. To prepare for this hearing,

I reviewed all of my leave and earnings statements [LES], and

found that the Army had over-collected $150 in hardship duty pay

and under-collected $225 in hostile fire pay. I counted 17 LESs that

contained remarks only, adjustments to pay, or debt collections

from the period November 2004 to February 2006.

The collections made by the Army in my case were somewhat

confusing, but I was confident that the Army would correct my pay.

I have an example of a confusing collection action from my November 15, 2005, LES. Please refer to the monitor.

[The information referred to follows:]

42

43

Lt. Colonel LOVEJOY. Note in the remark block in the center,

‘‘Original Debt $50.00,’’ with the dates 01 December to 15 December 2004. Above that in the deductions columns is a debt payment

of $11—$11 from $50 should leave a balance of $39, but the LES

indicates an unpaid balance total of 448.32. Nowhere on this LES

is this discrepancy explained. It appears the $50 collection was for

hardship duty pay, but I am not sure.

My second pay issue occurred when my active duty pay was not

stopped after I was released from active duty. I was overpaid for

two pay periods totaling about $7,600. I owed this amount back to

the Army. Luckily, I had earned subsequent pay for a 4-week military exercise, and that pay plus 33 days of accrued leave repaid my

debt, or I would still be paying the debt back over several months

from my weekend drill—now known as battle assembly pay.

Civilian employers have the flexibility to resolve their mistakes

by working closely with the affected employee. In fact, mistakes

found over a year old are more likely to be written off by a company rather than attempting to collect from an employee, especially

if the company was responsible for the mistake. The Army does not

operate that way. The Army usually takes action without consulting with the affected soldier. As a result, the soldier usually bears

the burden when the soldier’s pay is suddenly corrected. The Army

can do a better job of fixing pay errors to minimize the impact on

the soldier.

I have the following recommendations for the committee’s consideration which, if implemented, will truly take care of soldiers.

First, routinely provide a point of contact for any collection action

in the remarks block of the soldier’s LES. Many Reservists and National Guardsmen are separated from their home units and need

a point of contact.

Second, write a letter to the soldier explaining any errors and the

action that will be taken to correct the error.

Third, for collections greater than $300, provide the soldier with

options for repayment.

Fourth, provide the soldier with detailed information on how to

apply for relief from the debt if that debt creates a hardship.

Fifth, give brigade commanders the authority to relieve debt on

any mistakes made by the Army.

And, finally, complete all collection actions in a timely manner.

I also concur with Mr. Kutz’s recommendations that bad debts

caused by the Army’s errors should not be reported to collection

agencies or credit bureaus. The two panel members to my left

agree with all of these recommendations. These actions will minimize the impact on a soldier’s pay due to overpayment or error.

Again, thank you for the opportunity to share my experience

with you. I would be happy to answer any questions that you might

have.

[The prepared statement of Lt. Colonel Lovejoy follows:]

44

45

46

47

48

Chairman TOM DAVIS. Thank you very much, Specialist

Mangum. Thank you for being with us.

STATEMENT OF FRANK MANGUM

Mr. MANGUM. Thank you for inviting me here today to testify before this committee. I am here in the hope that my story may benefit other Guard and Reserve soldiers returning from the global war

on terrorism. I wish to preface this statement by simply stating

that in my case, if something could go wrong, it did. I feel that I

am not the average case to come before you, but the exception to

you. The average soldier does not have as many problems as seem

to have plagued me. I sincerely hope this testimony will help improve the financial and medical care given to returning soldiers.

My name is Frank Mangum, Jr., and I’m a 36-year-old former

National Guard soldier from Decatur, AL. I was a member of the

279th Signal Battalion attached to Bravo Company for deployment

to Iraq in support of Operation Iraqi Freedom. I volunteered for

this deployment in October 2003, and deployed to Iraq in February

2004. My unit was stationed at Camp Caldwell, which is near

Kurkush. During my deployment, I served as a 35 Echo, or a

Radio/COMSEC Repairer, for my unit.

On April 2nd, I injured my right knee during physical training.

Medical personnel onsite treated the injury, which they determined

to be minor. Even though I was in a considerable amount of pain,

I continued to perform my duties while following up with the doctor

at Camp Caldwell about my knee.

I was eventually sent to the hospital at Camp Anaconda in Baghdad for physical therapy. I was seen by a doctor there who recommended my medical evacuation from the theater, because he

suspected more serious problems than originally thought. This

evacuation from Iraq was on June 28th.

I arrived at Fort Bragg on July 5th, and inprocessed into the

Fort Bragg Medical Retention Unit [MRPU], on July 9th. After

inprocessing into the MRPU, it took 6 weeks before I was seen by

an orthopedist. The orthopedist ordered x-rays and a series of physical therapy sessions for me. Six weeks later, I was again seen, and

he recommended me for a medical discharge because I could no

longer perform my duties as a soldier, because I had a condition

known as ‘‘runner’s knee.’’ I was discharged from the military on

June 19, 2005.

After being medically discharged, all returning Guard and Reserve soldiers are given 6 months of continued health coverage,

which I used to seek another opinion on my knee in July 2005.

This time the doctor I saw ordered an MRI and a set of x-rays.

After reading the results, the doctor asked me when I had broken

my leg in the past. I had never had my leg diagnosed as being broken in the past. The doctor determined that I had most likely broken it in my accident in Iraq, 15 months earlier. He also found a

tear in the meniscus in my knee, plus severe damage to the cartilage in the kneecap. Surgery was performed to remove the cartilage and the torn portion of the meniscus. The break was not repairable.

My pay issues started upon my arrival at Fort Bragg. As part of

my inprocessing to the Fort Bragg MRPU, I visited the Fort Bragg

49

Finance Battalion on July 15th to have my pay account reviewed

for accuracy by a financial clerk. Yet I still continued to receive the

hostile fire and hazardous duty pay through October 31st. My overpayments grew to $1,075 in spite of my complaints to the MRPU

and the Finance Office.

I had $299 deducted from my pay on November 15th, which a

Fort Bragg finance official told me was for overpayment of hardship duty pay. This prevented me from coming home to visit my

family in Alabama over the Thanksgiving holiday. I still had bills

to pay, and I couldn’t afford to do both. My paycheck was reduced

by another $23 on December 15th. My LES did not describe what

the deduction was for. And this is similar to the problem that is

faced by Colonel Lovejoy.

Since there were no further deductions from my paychecks, I assumed that my debt was paid. I was wrong. As shown on the poster

board, I received a letter from DFAS, dated March 21, 2006, regarding a $775 debt for overpayment of military pay. I contacted

DFAS to dispute the amount, and I was told that I still had to pay

this entire $775, file my dispute, and after DFAS investigated the

matter, they would refund the difference if any difference was

found. If I did not make full payment, I would be subject to interest

charges, administrative fees and possibly face collections and credit

issues. I question why this took 15 months to be sorted out. I had an award of severance pay in the amount of $11,266 that

I had been awarded at the time of my discharge on June 19, 2005.

I was told this would take 2 weeks to put in my bank account. It

took 8 months.

The final chapter to the financial side of my story ends with the

aftermath of my injury. Before I was deployed to Iraq with my

Guard unit, I was a sheet metal mechanic in the construction industry. I was required to climb ladders all day long. My wage was

between $15 and $17 an hour. I can no longer do this job. I now

make $8 as a manager for the local Burger King franchise.

My service in Iraq cost me my health, my money and my job.

Now I’m being asked for more. Do I regret serving in the Army?

Not for 1 minute. I would go back in if they would let me, and

straight back to Iraq to boot. This is the greatest Nation in the

world, and I would gladly give my life to defend her. I ask nothing

of this Nation in return except to care for me as I have cared for

her.

I thank you again for the opportunity to share my experiences.

I would be happy to answer any questions you may have.

[The prepared statement of Mr. Mangum follows:]

50

51

52

53

54

55

56

57

58

59

60

61

62

Chairman TOM DAVIS. Thank you very much.

Specialist Taylor, thank you for being with us.

STATEMENT OF BRANDY TAYLOR

Ms. TAYLOR. Mr. Chairman and members of the committee, my

name is Brandy Taylor. I’m a former Army Reserve Specialist with

the 296th Transportation Company. Thank you for this opportunity

to take part in this hearing, to share my experience with the Army

debt problem.

I entered on duty with the Army Reserve in July 2001 as a Food

Service Specialist. My unit deployed to Iraq in February 2003, and

I was assigned to drive a 5-ton supply truck. In March 2003, my

unit was attacked on the way to Baghdad, and I was wounded by

mortar fire, which left shrapnel in my right knee.

I had a series of six surgeries, none of which were successful.

After I returned to the United States, I was sent to a military hospital at Keesler Air Force Base in Biloxi, MS.

Upon my arrival at Keesler, I made several attempts to contact

my unit to let them know my status and location. The Air Force

doctor arranged for me to receive physical rehab near my home in

Leakesville, MS. My rehab continued until July 2003, and I was

medically discharged November 2003.

I became aware that I had a military debt when a collection

agent contacted me 2 months after I separated. The collection

agent told me that I owed the Government money because my unit

had listed me AWOL. I was told that I had to repay $975 of my

enlistment bonus, and $600 related to overpayment of my hardship

duty, a total of $1,575. I told the collection agent that I was never

AWOL, and he told me to contact my unit to resolve this problem.

I contacted my unit Admin Officer, who said she would correct

these problems. However, I received another call from the collection

agent in late 2004. I told the collection agent that the Admin Officer was correcting my paperwork. However, when I contacted my

Admin Officer to check on the status, she was not in, and she never

returned my call. As it turned out, she was away at school.

The collection agent hounded me for months until I faxed him orders and related documents. The collection agent then told me that

I should hear from DFAS in a few months. However, DFAS never

contacted me.

In April 2004, the Government withheld my tax refund of $576

to cover the military debt. At this point I assumed that my debt

issues had been corrected.

I experienced significant frustration and financial difficulties

during my 21⁄2 year struggle with the military debt. I planned to

use my tax return to pay off bills. When I couldn’t pay my bills,

then this caused other problems. I had to quit attending college to

work more hours to pay bills.

As shown on the poster board, although DFAS supposedly recalled my debt from the credit bureau, in November 2005, when I

attempted to obtain a $500 loan, my application was denied because my credit report showed unpaid DFAS debt. When Christmas

came, I had no money. Previously I always paid my bills on time.

Now I had bills that I couldn’t pay. In January 2006, I again applied for a loan. It was also denied for the same reason, DFAS debt.

63

Although DFAS recalled my debt of $1,575 from the credit bureau two times, as shown on the poster board, the military debt appeared on my credit report again, the end of March 2006, just 4

weeks ago. I understand that this was a result of error made by

both DFAS and the credit bureau. The bottom line is that even

though my debt should have been corrected, I still couldn’t get a

loan to pay off my bills.

Mr. Chairman and members of the committee, I want to thank

you again for this opportunity to share my experience. I want to

note that the Army awarded me a Purple Heart for my combat injury, and the Mayor of Leakesville gave me a key to my hometown.

And yet, there was this terrible man from the collection agency

hounding me and making me feel like a criminal.

The military was quick to pursue me for debts that were their

mistake, and they were extremely slow in correcting their error, resulting in significant stress and additional cost and effort to me. I

was a 24-year-old war hero, and shouldn’t have had to deal with

this. It was my faith, and is my faith in God that keeps me going.

I would be happy to answer any question that you might have.

[The prepared statement of Ms. Taylor follows:]

64

65

66

67

68

69

70

Chairman TOM DAVIS. Well, Thank you very much.

I will start the questions. Let me just ask each of you—your experiences under the DOD Army pay systems I think are appalling.

Was there anyone in the Army, DOD, the staff at the medical finance centers or anyone at all who has apologized to you for making these mistakes? Ms. Taylor.

Ms. TAYLOR. No, sir.

Chairman TOM DAVIS. Mr. Mangum.

Mr. MANGUM. No, sir.

Chairman TOM DAVIS. Colonel Lovejoy.

Lt. Colonel LOVEJOY. No, sir.

Chairman TOM DAVIS. Who has been the most help to you? Is

there anybody you could single out that has really helped you as

you moved up the line? And then I am going to ask is there any

people that really just sloughed this thing off?

Ms. TAYLOR. GAO.

Chairman TOM DAVIS. GAO was very helpful?

Ms. TAYLOR. Yes.

Mr. MANGUM. GAO was very helpful to me, as well as Mr.

Cawthorn in my Alabama Pay and Finance Office.

Chairman TOM DAVIS. Thank you.

Lt. Colonel LOVEJOY. Mr. Chairman, in my case, the Fort Bragg

Finance Office was the most help to me when I tried to stop the

active duty pay. And I was really frantically trying to stop that because while I was still in the active duty pay system, I couldn’t do

anything in the reserve system. I couldn’t be paid in the reserve

system, and I also believe to include going on military missions, so

I was really working hard to get that stopped, and the Finance Office did help me get that accomplished in short order.

Chairman TOM DAVIS. We often hear about the one Army in

which active duty and Reserve component soldiers in an integrated

seamless organization. With respect to your pay, your travel, medical treatment, do you think that you all received comparable treatment to your active duty counterparts?

Mr. MANGUM. Mr. Chairman, I feel that we got no equal treatment at all.

Chairman TOM DAVIS. Do you agree with that, Specialist Taylor?

Ms. TAYLOR. Yes, I agree with him.

Chairman TOM DAVIS. Colonel Lovejoy.

Lt. Colonel LOVEJOY. I don’t know if I really detect any difference.

Chairman TOM DAVIS. It is just that the difference being, when

you move from system to system, it is not seamless and you get

lost. It is not that you are discriminated against when you are on

the field, right? But it is just the fact that the systems, they are

not integrated, that once you move from one system to another, you

seem to move into anotherworld, whereas somehow things fall

through the cracks. We have held hearing after hearing here where

people have stayed and not received medical attention for months

because they are lost in the system between the States and the

Federal system, where the pay systems moved over and didn’t get

adjusted. I guess that is where I am at, Colonel Lovejoy, if that

gives you a sense of it.

71

Lt. Colonel LOVEJOY. Yes, sir. And I was going to say, it did affect me, now that I think about it—something I didn’t bring up in

my testimony—but I had another pay issue before I deployed. We

were allowed to make up our drill assemblies, and I had made up

those, but I submitted those when I was already on active duty,

and was told I couldn’t be paid because I was now in the active

duty system, and I was told I had to wait until I got off of active

duty before I could get paid in the reserve system. And then after

I got off the active duty system and tried to get paid in the reserve

system, they said, ‘‘Well, it’s too old, so we can’t do it. That was

too long ago.’’ And then it took a while before I got to the right person, who then told me, ‘‘Yes, we could have paid you while you

were on the active duty system. All we had to do was get that to

Fort McCoy.’’

So a lot of people didn’t have the right answer for me, and even

though I pursued it and asked several people, and I got the same

answer, the same wrong answer, and then it wasn’t till almost 2

years later or 18 months later I got the right answer, but then it

was quite a bit later.

Chairman TOM DAVIS. Specialist Taylor, I look at your poster regarding your credit report and your attempts to get loans to cover

debt, to cover living expenses and pay off interest fees on credit

cards. You were discharged from the Army in November 2003?

Ms. TAYLOR. Yes, sir.

Chairman TOM DAVIS. And this is 2006.

Ms. TAYLOR. Yes, sir.

Chairman TOM DAVIS. And it looks to me that DFAS is still having problems with notifying the credit agencies that your debt was

removed?

Ms. TAYLOR. Yes, sir. I went to the bank, and he pulled up my

credit report, and it was still there.

Chairman TOM DAVIS. Now, roughly a month ago, after telling

you that they had recalled your debt from collection agencies on

March 28th, the DFAS debt reappeared on the credit report, is that

right?

Ms. TAYLOR. Yes, sir.

Chairman TOM DAVIS. Has anyone from DFAS contacted you recently to resolve this?

Ms. TAYLOR. No, sir not even a letter.

Chairman TOM DAVIS. Wow. Thank you very much.

Mr. Kutz, let me just ask, as we discussed at prior meetings,

DOD has been trying to re-engineer its military pay systems for a

long, long time. This is the fifth hearing we have done. It seems

that some of the representations made at our prior hearings that

a new re-engineered system would be in place by 2005, and be in

place by 2006, are not going to come to pass. How long has DOD

been trying to develop new, more automated and integrated pay

systems?

Mr. KUTZ. Actually, Comptroller General Bowsher had testified

on this back in the mid and early 1990’s, so this goes back, Mr.

Chairman, at least 10 years, possibly, at least to the first Gulf war,

and so they’ve been attempting—it was called something other

than DIMHRS in the 1990’s. I think they’ve changed the name. But

72

the concept of integrating personnel pay systems has been around

for well over a decade.

Chairman TOM DAVIS. How much have they spent on this?

Mr. KUTZ. Hundreds of millions. I don’t have the exact numbers.

Hundreds of millions on DIMHRS and at least 50 million on what’s

called the Forward Compatible Pay System, which was terminated

recently.

Chairman TOM DAVIS. I don’t want to be flip, but it looks like they are spending more effort getting $50 bucks back from Colonel

Lovejoy, than they are in getting this thing resolved properly. Is

there any end in sight?

Mr. KUTZ. Well, certainly, I think that the folks like Colonel

McAlister on the next panel, who have to deal with this, need to

plan as if DIMHRS will never come to pass. In other words, they

have to continue the human efforts and work-arounds to make sure

that the soldiers are taken care of, because if they had planned for

DIMHRS and Forward Compatible Pay, which were promised in

2002, 2004, 2005, 2006, they would have been in bigger trouble

than they are today, so I think they indefinitely need to keep the

human effort and work-arounds in place to take care of soldiers as

best they can.

Chairman TOM DAVIS. Is it fair to say that hundreds of millions

of dollars have been wasted?

Mr. KUTZ. I would say yes. And, again, this is a broader issue

than just the military pay. We have testified before your committee

and Chairman Platts’ subcommittee before on business system

modernization, which is on our high-risk list for the Department of

Defense. And so they have had difficult fielding business systems

through all of their business lines, and we’re talking about billions

and tens of billions there.

Chairman TOM DAVIS. What do you think are the root causes of

their failure to implement the new technology in the area of military pay?

Mr. KUTZ. Well, I think, Congress, has been more than generous

giving DOD money to modernize its system, so it’s not a lack of

money. I think it’s a lack of sustained leadership, accountability

and basic project management and oversight. It isn’t as if this is

new technology. This is off-the-shelf——

Chairman TOM DAVIS. The private sector is doing this stuff every

day, aren’t they?

Mr. KUTZ. It is off-the-shelf packages. I will say though, Mr.

Chairman, that the military pay system is significantly more complicated than any other system I have seen, because you know as

soldiers move in and out of theater, they have different—there’s

dozens of different special pays that they——

Chairman TOM DAVIS. Just look at the LES. I mean it is pretty

complicated.

Mr. KUTZ. It’s complicated, yes.

Chairman TOM DAVIS. What happened to the Forward Compatible pay system?

Mr. KUTZ. I don’t know, but it’s been terminated, and that was

promised at one of your prior hearings in 2005 to be delivered, and

again, I would expect it was ineffective management and oversight

of the project.

73

Chairman TOM DAVIS. My last question is, would the plan, Defense Integrated Military Human Resource System, the DIMHRS,

solve all the problems that you have identified over the course of

this work?

Mr. KUTZ. No. I think that no software alone is going to solve

the problem. I think that unless DIMHRS is considered to be people processes and automated systems, but I think you still have to

re-engineer the processes and make sure that the right human capital is in place at the right places.

Chairman TOM DAVIS. When a returning soldier comes back and

has a problem with pay, with their health care, with all this, is

there an ombudsman that they can call? Has DOD set up where

they can call somebody that will get on that problem and solve it?

Mr. KUTZ. Yes. As I mentioned in my opening statement, as a result, in many respects, of your past hearings, there’s more 800

numbers, there’s better customer service, there’s more customer

service, there are more case people, case workers for injured soldiers. So I think in the last several years we’ve seen increased

human efforts again to compensate for the broken system.

Chairman TOM DAVIS. But still, as we can, it has fallen through

the cracks in some cases.

Mr. KUTZ. People can fall through the cracks, yes.

Chairman TOM DAVIS. And we have some examples. Thank you

very much.

Mr. Hayes.

Mr. HAYES. Thank you, Mr. Chairman. Specialist Mangum and

Taylor, you have a great career ahead of you in public speaking.

Thanks for very eloquent and accurate presentations.

As the chairman alluded to, we talk about an army of one, I

want to assure—and I am sure I speak for the chairman, Mr.

Platts and other members of this committee—that we want to treat

you as though it is an army of one. Every single one of you is vitally important. It is appalling and embarrassing what has happened, but stuff happens, the point being, anything that we can do

to make sure this never happens again is what we want to do.

Brandy, who is your Congressman? Do you know? Don’t mean to

embarrass you.

Ms. TAYLOR. No, sir. [Laughter.]

Mr. HAYES. Unfortunately, I travel around a lot with the military, and typically they don’t know you can always call your Congressman if, for whatever reason, you are not receiving the help

that you need. It is either Bennie Thompson, Chip Pickering, Roger

Wicker or Gene Taylor. And we will jump at the chance.

And, Frank, do you know who yours is?

Mr. MANGUM. Yes, Mr. Hayes, I do. My Congressman is Bud

Cramer.

Mr. HAYES. I am sure Bud would—and again, it is not our point

as Congressman to give a hard time to any of the agencies, but this

is a complex problem. It seems to me—and I had a good conversation with Colonel McAlister before we began the hearing—when

you are in your unit, you are the team. The army of one is a team

and you got your sergeant major or whatever the leadership is, and

you have ways to go. But once you are separated from that team,

then the potential and chances of problems increases dramatically.

74

So, again, let me encourage you through this process to help us

think through, as you have seen your own circumstance, so that we

have a system, a safety net in place, where you have always got

some place to go.

Again, looking forward, prevention of the problem, what has happened at Bragg and many of our other installations, because of op

tempo, a tremendous number of deployments, they had the personnel who would normally have handled what your case called for,

deployed. The other personnel who would be sort of the backup

were in training. So, Mr. Chairman, again, an unexpected gap.

That is not an excuse, but we know that happened now. Again,

what is the backstop that we can provide?

Mr. Kutz, having heard what you have heard—it has been very

instructional—have you got any thoughts of what we might ought

to definitely have on our action list leaving here today?

Mr. KUTZ. Again, I think that this committee’s oversight and actions by the Department in the areas of human capital and customer service and process improvements have been positive. And so

I would expect that since we started looking at this 3 years ago,

that there are fewer problems.

However, fundamental problems have not been fixed, and so

there is still a high probability of soldiers having pay problems. So

the real solution is to re-engineer and have an integrated pay personnel system that links to the medical records system, and quite

frankly, also the Defense travel system. So this is a fairly complicated systems issue that needs to be resolved, but I think there’s

no solution within the next several years from what I can tell.

Mr. HAYES. Well, surely to goodness, we can do better than that.

We are from the Government. We are here to help you. Let’s find

something we can do. Any thoughts, either Frank or Brandy, in

those situations, if you are wounded, leave your unit, come to

Womack at Bragg—let’s say your family is stationed at

Landstuhl—all of a sudden you are not getting combat pay, but you

should be getting overseas duty pay. So be sure we put our finger

on each one of those kinds of situations. Everybody tells me how

wonderful computers are. Well, once computers start putting out

bad information, that is a force multiplier I don’t know how you

bring back into control. Any thoughts at this point, either of you?

Mr. MANGUM. Yes, sir, I do have thoughts. Communication between the Reserve and Guard components and the regular Army

seems to be breaking down. I know that in the case of my unit, we

were given a lot of misinformation when we got to Bragg. We had

housing problems. We had initial pay problems, just simply because our command and control group did not have the correct information. Where they got their information from were several

sources, and often these sources conflicted each other.

When we first arrived at Bragg we had housing issues, as I’ve

previously stated, and we were without barracks our first night.

We just kind of piled in with other units that had empty beds, just

simply to sleep that evening. We didn’t have a chow hall that

evening. When we get into Iraq we ran into similar problems. We

slept outside for 3 or 4 days simply because there were no tents

made available to us.

75

Then we had problems—there was a KBR dining facility on post,

on the camp, and we were underneath a regular Army unit, we

were eating in that dining facility because we assumed, hey, a soldier’s got to eat, that’s where we eat. There was a command sergeant major from that regular Army unit that came through, and

tossed out all the Guard and Reserve soldiers. We were put into

a formation after we got tossed out of the dining facility, and told

there was no contract for the Guard and Reserve element to eat in

that dining facility, so we had to leave. We were told to eat out of

our mobile kitchens or eat MREs for the duration of our stay or

until we got a contract to eat in his dining facility.

After that problem—eventually resolved that, but it took about

4 or 5 months. We could sit, for that 4 or 5 months, from where

I worked, and watch the food just being thrown away, and we were

sitting, eating rations out in the field, and Specialist Taylor can attest to the quality of those rations because she is a cook.

Thank you.

Mr. HAYES. I see my time has expired, Mr. Chairman. Any of

those thoughts that you would write down—I was in Iraq, first

group in, I know what it is like then, so I know exactly what they

put you in, but I’ve also been back since and seen a KBR facility,

and that just makes it even more—please keep a close record, and

let’s make sure that this is, after-action, never to happen again.

Thank you, Mr. Chairman.

Chairman TOM DAVIS. Mr. Shays, followed by Mr. Platts.

Mr. SHAYS. Thank you, Mr. Chairman.

As has been pointed out, we have had a number of hearings. Mr.

Kutz, why is it that we end up with a hearing and feel like we have

solved the problem or are close to solving the problem, and then

we have another hearing and we learned we had—what accounts

for that?

Mr. KUTZ. Well, I think, again, it has to do with there’s been a

lot of progress in the short-term fixes. The real fundamental problem is the long-term fixes. And I recall several years ago we had

the business systems modernization hearings with your subcommittee, and we discussed even at those that the GAO high-risk area

business systems modernization, that this isn’t just a military pay

problem, it’s a logistics issue and other lines of business where

they’ve been unable to deliver these longer term fundamental fixes.

So I would commend them for the short-term actions, but the long

term, as you said, never seems to get resolved.

Mr. SHAYS. I think nothing outrages my constituents more than

thinking we would send men and women into battle and that they

would have to worry that back home bills aren’t being paid and

their spouses are dealing with not only the agony of their being in

Iraq or Afghanistan or somewhere else, but then, you know, someone is calling to ask them to pay their bills. But what I have not

been introduced to, and this is new to me, is that we have a problem with people AWOL when they have been injured in battle. I

just want to apologize to all of you that you have had to go through

this. What I wrestle with is once we know someone has gone

through this, and it becomes public can I make an assumption that

the three soldiers before us, you know, tomorrow the problem is

solved, or are they going to still be having to deal with this issue?

76

I mean that is an immediate issue and it is a micro issue not a

macro, because all of you are here to tell your story, to solve it for

everyone. But can I go home tomorrow and know that Specialist

Taylor will have no more problems, Mr. Kutz?

Mr. KUTZ. Again, I think—I’ll let them answer it on their own,

but I think that it depends. It depends on what you’re talking

about. Some things can be fixed short term, but as we’ve talked

about before, once a pay problem happens, oftentimes—I think

Chairman Davis said that in his opening—can take months or

years to resolve, so the real solution is preventing the pay problems

in the first place because once they happen, it can be a nightmare

scenario.

Mr. SHAYS. That suggests to me that we don’t have ombudsmen

and folks that we can turn to, who will every day be available

when someone encounters that problem. And I thought we were

seeing ombudsmen available.

Newt Gingrich says this, you know, that sometimes just having

a hearing, the problem gets solved because we focus attention and

resources go. But the one thing I have always found to be true, almost always, is at least the people came and testified to their problem, and if their problem isn’t going to be dealt with, then we are

in a more serious problem than anyone can imagine.

I would like each of you to tell me what you think you will still

encounter after this hearing.

Lt. Colonel LOVEJOY. Mr. Shays, I’m thinking probably the worst.

I’m thinking that the Army is going to collect back the $225 hostile

fire pay, but I’ll be retired by that time, because I will be retired

within the next 21⁄2 months. So I will get a debt letter, and I might

be working on a house in Alabama, may not get my mail, and then

this is turned over to a collection agency because I didn’t pay for

the $225. And then, of course, they over collected $150 from me,

so then I’d have to work to try to get that back. And then the—

we haven’t talked about the tax consequences——

Mr. SHAYS. We are not talking about $150,000, we are talking

about $150?

Lt. Colonel LOVEJOY. Right, we’re only talking about $150.

Mr. SHAYS. We are not talking about $1,500, we are talking

about $150?

Lt. Colonel LOVEJOY. Well, we’re talking about what this could

do as a negative remark on my credit report, which I do not want

that blemish, and I would love to just be able to cut a check for

$75——

Mr. SHAYS. You know, I had a Mayor that people would go to and

say, ‘‘Mayor, could you fix this ticket?’’ And it was illegal to fix tickets. But he would take the ticket—and everybody thought this guy

was a genius—and then we found out all he did was paid himself.

I mean it would almost be better for us to just come to one of us,

and we can—next?

Mr. MANGUM. So I fully expect after I go back home to be in Specialist Taylor’s shoes. I expect at one point to be hounded by collection agencies. I’ve been told that I can obtain a waiver and possibly

I have obtained this waiver, but Specialist Taylor thought her problem was solved, and she was still getting negative reports.

77

Mr. SHAYS. Anyone in the audience from the liaison of the National Guard, the Reserve, the Army? Anyone, just raise your hand.

You do not have to identify yourself, just raise your hand. Would

you guys meet me after, please? Thank you.

Ms. Taylor, could I just ask Ms. Taylor to respond? Is that all

right?

Chairman TOM DAVIS. Sure.

Mr. SHAYS. Ms. Taylor.

Ms. TAYLOR. I expect that everything will be OK, but I have to

go through the point where I had to go to my bank and constantly

get him to run a credit report, and still say, no, I was denied. So

for me to go to my bank and say, ‘‘Now, can I get a loan because

this is taken off of my credit report,’’ still, back in his mind, well,

what if something else comes up on her credit report?

Mr. SHAYS. You served again where?

Ms. TAYLOR. I served in Iraq.

Mr. SHAYS. And you were there and you were injured, correct?

Ms. TAYLOR. Yes, sir.

Mr. SHAYS. How long were you there before you were injured?

Ms. TAYLOR. I was there—I went in February 18, 2003, and I

was injured March 23, 2003.

Mr. SHAYS. Let me just say this to you. Are you her representative, Mr. Hayes?

Mr. HAYES. I don’t represent Mississippi, but I will be glad to

annex it and take care of her.

Mr. SHAYS. OK. [Laughter.]

You looked like you were about to tell me that you were already

helping her. I just want to say——

Mr. HAYES. Would the gentleman yield just a moment?

Mr. SHAYS. Absolutely.

Mr. HAYES. What I will assure you is, because of the nature of

the investigation that is here before this committee—as it well

should be—but I can promise you that Chairman Hunter and the

full Armed Services Committee will be totally aware, and all of

their posts will be involved in whatever clean-up, fix-up and repair

needs to be done.

Mr. SHAYS. Just in closing—thank you for your promise, Mr.

Chairman. In closing, obviously, we have a systemic issue to deal

with. We appreciate GAO’s work on it. We know the military is trying to wrestle with it, but we are not seeing the kind of success

that we want to see.

I hope that each one of you is in personal contact with your individual Congressperson. If you were one of my constituents, I would

assign a case worker that you could call every day until this problem was resolved, and I believe that if you are not getting satisfaction from your Congressperson, I want you to call my office. I am

going to give you my card, and I am going to give you my personal

phone number, if somehow it falls through the cracks.

Thank you.

Chairman TOM DAVIS. Thank you.

Mr. Platts, followed by Mr. Clay.

Mr. PLATTS. Thank you, Mr. Chairman. I have a statement I

would like to have entered into the record.

Chairman TOM DAVIS. Without objection.

78

[The prepared statement of Hon. Todd Russell Platts follows:]

79

80

Mr. PLATTS. Thank you, and I want to thank you and your staff

for holding this hearing and staying very engaged on this issue,

and especially thank our witnesses for being here today and sharing your specific involvement in this issue.

Mr. Kutz, we know you have been very engaged with this full

committee as well as my subcommittee, and appreciate your efforts

on behalf of these soldiers and all of our men and women in uniform.

And to our three military personnel, first, my heartfelt thanks

for your service to our Nation. We are the most blessed Nation in

the world with the most blessed freedoms in the world because of

you who have one uniform, are wearing the uniform, and all of

your fellow men and women in uniform, past and present. So my

sincere thanks. And certainly my regrets for the way our Nation,

through the bureaucracy, has treated you in trying to get your pay

and compensation straight.

I think that a point that was made was the dollar amounts is one

thing, but the impact long term, especially on your credit reports,

is what is problematic, as creditors are looking not at maybe necessarily the amount, but any blemish. And to no fault of your own

you have had blemishes. And as Chairman Shays so well stated,

you know, whatever problems remain certainly need to be addressed for you as well as for all, and with DFAS and other personnel engaged in this issue here in the room, I would certainly fully

believe that we take one case at a time, and eventually we get

them all, and here are three cases we need to make sure we get

right, and then we move on to the fourth and fifth and down the

line till we get them all right.

In the second panel, those who will be testifying certainly are in

a position to help make sure we get them right, and if not, all of

us here today stand ready to assist you and your individuals cases.

On specific—and I want to make sure I understood—Specialist

Taylor, your testimony is that even as late as this past month, your

credit report was still showing errors?

Ms. TAYLOR. Yes, sir.

Mr. PLATTS. And has action been taken to correct that

specific——

Ms. TAYLOR. Yes, sir, it’s been taken off. I went to my bank, and

he also told me there was a credit bureau made this on my credit

report. So he knows where it came from.

Mr. PLATTS. So you believe that right now it has been corrected?

Ms. TAYLOR. I hope so. It was taken off twice, so we don’t know.

Mr. PLATTS. Again, if not, and with the other witnesses being

back with this committee, and us as Members and staff, if you continue to have problems, you will have a lot of advocates here, helping to correct.

I want to touch base, Mr. Kutz, on your knowledge of the issues.

You referenced kind of what I will call the heroic efforts, the workarounds that are occurring. Am I accurate in saying that egregious

errors were made over the last 10 years, and specific to Iraq, probably in 2003, 2004, and what we are still dealing with is a lot of

problem solving relating to errors that happened in 2003 and 2004,

and that because of the focus of Chairman Davis and this committee and GAO, that DFAS and all involved in these issues have

81

tried to make sure we are not repeating those errors in 2005 and

now in 2006? Is that a fair statement?

Mr. KUTZ. Not completely. I mean we still found problems in

2005, and they’re being still resolved. I think that given what has

happened as a result of your hearings, is there are probably fewer

problems to deal with, and there’s more customer service people in

place to deal with them quicker. But the fundamental problems remain, and the soldiers are still vulnerable. They are always one

step away from disaster basically. If you don’t have trained people

or—I think you’ll hear at the second panel, the trained people got

deployed. Then you have a real problem, and a lot of people, in the

case of Fort Bragg, over 200 people fell through the cracks and had

significant problems as late as 2005.

Mr. PLATTS. And where it is not happening and we are catching

them is not because of yet permanent fixes, but because of heightened awareness, a heightened effort within a flawed system, that

they are trying to make sure that they catch those flaws before

there is a problem. Is that fair?

Mr. KUTZ. Yes, that’s accurate. I mean I think they’re trying to

put as many safety nets, band-aids, whatever you want to call

them in place to the fundamentally flawed system in place today.

Mr. PLATTS. I think that is something that we do want to recognize the personnel, that in response to the errors that have come

forward through Chairman Davis and his committee and subcommittee and GAO, that the message is being heard, and there

is an effort to correct the error so that the terrible situation that

the three of you have suffered through is not repeated, ideally, at

all, and certainly it is the exception, not the norm, and that we acknowledge that ongoing effort is, but we still got to get to what,

Mr. Kutz, you have well highlighted, the importance of a permanent solution, which we hope DIMHRS in the end will lead to be.

That remains to be seen.

Mr. KUTZ. That’s where the real failure is at this point, as you

know. I mean, there’s been hundreds of millions or more spent,

possibly more, because they’ve been trying to do this for over a decade, to do the integrated pay personnel, and here we sit today,

they’re re-baselining and replanning, and I don’t really know how

much has actually been accomplished to solve the problem systematically and permanently.

Mr. PLATTS. And that is clearly what we need, is the permanent

systemic changes. The end of the Forward Compatible Pay System

in January, $52 million roughly spent, it seems like there is some

good and bad news in that announcement. Bad is that some of that

$52 million was spent without a benefit, but good in that some of

it was spent, is now going to be transferred to the DIMHRS effort,

because the way I understand that is that FCP was intended to be

a kind of interim fix while they get to DIMHRS. Deputy Secretary

England, he and his staff, they are really trying to focus on this,

and made a determination it is just not good management to keep

spending money on this interim that has been delayed, as opposed

to use what already is gained there, and really focus on a permanent solution. Is that your understanding?

Mr. KUTZ. Yes. Hopefully, they have learned something from the

$52 million that they have spent, and I think one of the other good

82

things is they may have recognized the failure and stopped additional money from being wasted on something that wasn’t going to

provide benefit to taxpayers and to the people sitting at the table

here.

Mr. PLATTS. What is somewhat outrageous, I think, is we are

talking about going after soldiers who have gone into harm’s way

for us over $150, $200, and we talk millions that is spent without

a result for the taxpayers to prevent the problems from occurring

in the first place.

In the Defense Reauthorization Act, we gave additional authority

for the waiver of debt such as we are discussing here. Is there—

are you aware of any cases that authority is not being used you believe it should be, or is it more just getting people through the

process that their case is heard for the waiver to be considered?

Mr. KUTZ. I think that was a step in the right direction some of

the authority granted, but there’s additional things that we proposed in our report, such as expanding that beyond 2007, providing

the ability to refund solider—some soldiers now have already paid

their debts, where others have been waived, and from a fairness

perspective, we believe that refunds is something that Congress

should consider allowing for soldiers.

Also, the current policy and the way it is set up is that they can

only go back 1 year to provide relief. So soldiers, if you’re released

from active duty and a year has passed, you are no longer eligible.

You know, we have offered any possibility for the Congress to consider taking that back all the way to 2001, the beginning of the

global war on terrorism efforts, so that other soldiers can be fairly

treated there also.

Mr. PLATTS. I am sure I am over my time, Mr. Chairman. On

that final point, if we can work with GAO and Chairman Hunter

at Armed Services, as we look to Defense reauthorization later this

year, to incorporate those recommendations, which are important

about fairness, that those who pay the debt should have that same

opportunity to have that forgiveness and that we look prospectively

as well.

Finally, just again, my sincere thanks to our courageous men and

woman here today for your service. I know that my family and I

are free and safe because of you and all who wear the uniform, and

may God watch over you in your lives ahead.

Again, Mr. Chairman, thanks for your efforts on these issues.

Thank you.

Chairman TOM DAVIS. Thank you very much, Mr. Platts.

We now go to Mr. Clay, accompanied by his chief aide here.

Mr. CLAY. Thank you very much. Will is here with us today. I

guess this is take your——

Chairman TOM DAVIS. You need to understand, before we start,

Mr. Clay succeeded his father, and then this is young Will who is

in training here. He is not old enough to run yet, but he is getting

some firsthand experience.

Mr. CLAY. Thank you very much, Mr. Chairman. Also, thank you

for conducting this hearing, and thank you all for being here today.

Specialist Mangum, you not only encountered pay problems, but

you experienced a host of other problems while in service, from the

lack of available bathroom facilities when you arrived in Iraq, probVerDate 11-MAY-2000 14:02 Sep 05, 2006 Jkt 000000 PO 00000 Frm 00086 Fmt 6633 Sfmt 6633 D:\DOCS\27853.TXT HGOVREF1 PsN: HGOVREF1
83

lems with obtaining medical treatment, theft of personal items, and

hassles in medical processing. We could hold an entire hearing just

on your experiences. [Laughter.]

Instead of helping you get back on your feet, the solution given

to you by the Army was to suck it up. Could you please describe

the attitude and treatment given to you when you dared to raise

questions about your medical condition? And by the way, how is

your family doing? I see your wife has joined you. How are they

doing? Go ahead.

Mr. MANGUM. My family is doing fine. You know, of course, we’ve

had some financial problems because of the re-collections. I’ve already stated that it was a problem to get back home for the holidays and cover bills. So I chose to cover the bills to try to save my

credit rating. And now I’m probably facing more credit issues because of this re-collection.

In regards to how soldiers were treated, in Medical Retention at

Fort Bragg, any soldier that raised a congressional inquiry was put

on the back burner. They were actually moved to the back of the

list, if you would, on medical treatment. We sort of started back at

square one. As my position that I was given during my time at the

medical holding, as Assistant NCO IC of Clinical Operations for

Womack Army Hospital, even though it wasn’t an NCO, I got a lot

of information on how things were moving through the hospital. It

was part of my job to help other medical hold soldiers get through

the system, and I saw firsthand congressionals come through, and

flat out, there were lies told.

There are people that are in control of the medical hold program

there that I have directly heard stated in the office that I worked

in, state that they were there just to move the soldier home. If they

could be treated at home, they had 6 months worth of tri-care, they

could get it handled there.

Mr. CLAY. Thank you for that response. It is apparent that we

need to make it clear to those at Fort Bragg and elsewhere that

our soldiers deserve the best medical treatment that we pay for as

taxpayers, and that this is not a political game. It is about life and

death for you all.

Let me go on to Specialist Taylor. Your testimony showed the numerous attempts you made to notify your unit of your whereabouts

and status. Yet, despite your repeated attempts over a 21⁄2 year period, you were continually listed as AWOL, and as a result, suffered pay discrepancies and were hounded by credit collection agencies for the mistaken debt which appeared on your credit report.

What do you believe should be an appropriate review period or

grace period for DFAS to take before it reports debt to major credit

bureaus for collection? I understand that since 2005, DFAS has

suspended all reporting of military debt to private debt collection.

So what do you think would be an appropriate review period or

grace period for DFAS to take?

Ms. TAYLOR. First of all, I would like for them to first go and review the person, look at the person’s stuff. Don’t just say this person owes a debt. Go and check it out, investigate first beforehand,

before saying a debt is old, and then holding a person, getting them

put on a collection agency. Don’t do that. Talk to the person. Get

to know the person, find out what—because I told them that my

84

unit did this. They didn’t want to get in contact with my unit. They

told me to get in contact with my unit. Well, they could have went

and got in contact with my unit themselves and found out their paperwork was wrong. I was never AWOL.

Mr. CLAY. So, Specialist, DFAS should be more thorough in their

investigation, more careful in their investigation, and actually do

a thorough investigation of the circumstances, without this willynilly make determinations that have an impact on someone’s credit

report.

It looks like my time is up, but I appreciate both of you all for

being here today, as well as your service to this Nation. Thank you.

Mr. KUTZ. Congressman, could I just add a point? I mean, I think

one of the issues we’ve seen that has been a problem that causes

pay problems is the loss of track of soldiers, and that’s what I think

happened to Brandy. I mean they thought she was AWOL when

she was actually being treated as an outpatient at an Air Force

hospital. Which what happens then is she got paid. Subsequently,

they go back and say she shouldn’t have been paid because she was

AWOL, and then that turns into debt.

You also had a situation at Fort Bragg, where soldiers that never

deployed, the system said that they actually were in Iraq, so those

soldiers that were still at Bragg that never deployed, received hardship duty and hostile fire pay, although they never went. So you

have lots of problems that we’ve seen over the last 3 years, tracking soldiers, which drives pay issues.

Mr. CLAY. And this is the advantage we have for this new technology that we have purchased, that the military has purchased.

Mr. KUTZ. They need new technology to better do that, I would

say.

Mr. CLAY. Don’t they have the technology now? I mean aren’t

they using a computer system now to track these soldiers?

Mr. KUTZ. They are, but they do not have effective integrated

pay and personnel systems, and that is driving many of the problems.

Mr. CLAY. Thank you for your response.

Chairman TOM DAVIS. Thank you.

Mr. Ruppersberger.

Mr. RUPPERSBERGER. Probably the second panel is who I should

be asking this question to, but, Mr. Kutz, I want to ask you. First

thing, let me say this. If you look at the different wars that we

have had in this country, probably World War II more than any,

when the whole country came together, but the only sacrifices that

you see now, I think, are the men and women going to Iraq and

Afghanistan and their families, and whatever we have to do to resolve this issue.

And the amount, I think the report you showed, about 1,300 that

really were in a bad situation. It seems to me that we need to create a system—and I don’t want to repeat what has been said before—but that we need a recommendation of a system, and not why

it happened. I mean, learn from that, and find out right now, to

make sure this doesn’t happen again and we take care of the backlog that is there. That might mean—and maybe we have this—but

I don’t know—were you aware, when you did your analysis, did

they have a help desk? You know, we have, in certain situations

85

like this, where you have a help desk, I mean, a very simple position that could make a big difference for a lot of these people, who

could then follow through and deal with the collection agencies and

all the things that occur when you get on a list of having bad debt.

Mr. KUTZ. There are Army, Guard and Reserve ombudsmen, and

there are 800 numbers and there are various functions to put in

place in many parts because of the prior hearings we have had

here, I believe, and so that has been an improvement, but again,

you still have the fundamental problems, and soldiers can still slip

through the cracks, and I think today would be an example.

Let me just also say on the 1,300, the 1,300 is battle-injured soldiers that are separated, so the actual number of soldiers that had

debt problems is going to be far more significant than that. That

was just battle-injured, separated, so you still have soldiers that

are in service, and so if you have non-battle-injured, sick and—

you’re going to have others.

Mr. RUPPERSBERGER. I am going to stop a bit because I want to

stay focused, but I mean, the wounded veteran issue is an entirely

different issue. Once the men and women leave the military hospitals and go throughout the country, are not getting the rehab or

what they need to take them to the next level, and it’s not any

physical rehab, mental rehab, and also job issues that are out

there, which is something that hasn’t been dealt with and should.

But I want to get back to, you know, your analysis. Because of

hearings, we have help desks, but are they functioning? Just because we put in a position, what is the mission or the plan to make

sure that every single individual who served our country in Iraq

and Afghanistan has been injured, where are we as far as fixing

that problem? And you need to put together a system, and there

needs to be somebody who is overseeing that system to hold the

people working there accountable. Does that exist? Does your research show that it is working now, or what kind of backlog that

we have? I mean this should be a high-priority issue that should

be resolved from the highest level within a month.

Mr. KUTZ. I think the second panel can better answer that, but

my analysis——

Mr. RUPPERSBERGER. I am not going to be here for the second

panel. I have to go to another hearing.

Mr. KUTZ [continuing]. My analysis of it, I mean, with respect to

short-term fixes of customer service and other process improvements, band-aids to the current system, there has been a lot of action and a lot of focus. It has been a very high priority focus based

on our assessment of DOD’s actions.

With respect to the fundamental fixes that would prevent the

problems from happening in the first case, they have not made

much progress on that, and they’ve spent hundreds of millions of

dollars trying to implement the integrated pay personnel system,

and re-engineered system, and I think at this point they haven’t

gotten very far, so that’s where the real issue is.

Mr. RUPPERSBERGER. Why do you think they haven’t gotten far

in that regard?

Mr. KUTZ. Again, we have a high-risk area, DOD business system modernization. You’ve got basic project management. It isn’t as

if the technology doesn’t exist for this, it’s a matter of actually efVerDate 11-MAY-2000 14:02 Sep 05, 2006 Jkt 000000 PO 00000 Frm 00089 Fmt 6633 Sfmt 6633 D:\DOCS\27853.TXT HGOVREF1 PsN: HGOVREF1
86

fectively planning, implementing, testing and executing implementation of that.

Mr. RUPPERSBERGER. So then we need a system, say, call it a

manual system to back it up until this works when you are dealing

with men and women serving our country.

Mr. KUTZ. And they do have that in place, but again, the problem

is so—the system is so fundamentally flawed that I don’t think you

can have 100 percent fail-safe system until you re-engineer and

provide the new system.

I think that there are fewer problems than when we started looking at this 3 years ago, but I just don’t think human effort alone

is going to fix this.

Mr. RUPPERSBERGER. All you have to do is use common sense,

and you can identify everyone who has been injured, and you just

follow them through. I mean, you have their names. You know who

they are. You have somebody assigned to them like a caseworker,

and take them through—they don’t know. They have been called

up to duty. They come from all different walks of life, and I am not

sure what their education, and whether they really understand

debt, some do, some might not. Would you recommend—I am just

looking for a solution here, and a system that has been set up, not

to talk about—if we use technology that can’t work, then we have

to back it up with manual in certain areas of priorities.

All it is, this could be fixed tomorrow if the Secretary of Defense

would make this a very high priority, to take care of injured men

and women and to put the resources there. If it is from a manual

point of view, to assign every person who is injured or comes up

until this is fixed. Do you feel that——

Mr. KUTZ. I agree with you.

Mr. RUPPERSBERGER. Do you feel that can be done?

Mr. KUTZ. I agree they can do better, and I think that this needs

to be a priority because there should be a zero tolerance for pay

problems for sick, injured soldiers.

Mr. RUPPERSBERGER. My light is on and I have to stop. The

chairman seems to be in a good mood today, so maybe he will let

me ask one more question.

Chairman TOM DAVIS. This is very important, so I appreciate it.

Mr. RUPPERSBERGER. What would you recommend—you are outside looking in—that this could be fixed? How would we do it?

Start at the top. I mean we have some leverage, not a lot.

Mr. KUTZ. Well, as a result of your request, as I mentioned in

my opening statement—you were not here for that—but we have

issued 84 recommendations and they have taken action on 70 of

those, and so not all of the 70 are implemented, many of them are,

and so if they implement all 84 of our recommendations, I think

they’ll be closer, but again, it appears that there are still people

falling through the cracks, so to the extent that the customer service function has not served appropriately for the people at the

table, then they need to take a re-look at what they’ve done.

Mr. RUPPERSBERGER. Mr. Chairman, from an accountability point

of view, I would really request that we have another analysis and

come back in the next month or so, and let us know where we are.

And the second panel, I am sure, might address these issues. Unfortunately, I can’t be here for that.

87

Chairman TOM DAVIS. Well, our staff is going to continue to birddog this, and we are just hearing things today, just like the mess

hall, things that shouldn’t happen, additional problems that we will

get to with our next panel. So thank you very much.

Mr. Hayes.

Mr. HAYES. Quick comment. I assured Mr. Clay—if you all wonder what the conversations were—we are across-the-hall neighbors.

We check each other. Womack will get a call about your situation,

Frank. Jennifer Shirley is my MLA. She will give you the numbers

and we will make sure that all that gets followed up on. Didn’t like

the sound of that.

Thank you, Mr. Chairman.

Chairman TOM DAVIS. Let me just say to each of you, we really

appreciate your being here. We didn’t get you up here just to hear

you talk. We think this will make a difference. And if you can stay

and hear the second panel, we are going to ask them some questions, and I am sure they are as eager to solve these issues. They

don’t like coming up here before the committee having to explain

how things go wrong with systems, but this is important. We appreciate your willingness to speak out, and we think a lot of the

other soldiers will benefit, because you have come forward today.

So thank you very much.

I will dismiss this panel. And we will take a quick recess, but

we are going to move to our second panel then, which is the Hon.

J. David Patterson, who is the Principal Deputy Under Secretary

of Defense in the Office of the Comptroller; Hon. Nelson Ford, who

is the Principal Deputy Assistant Secretary of the Army for Financial Management and Comptroller; Zack Gaddy, who is the Director

of Defense Finance Accounting Service, Defense; Mark Lewis, Assistant Deputy Chief of Staff, G–1, U.S. Department of the Army;

and Colonel Mark McAlister, who is the Finance Officer of the 18th

Airborne Corps at Fort Bragg, NC.

So we will just take a 2-minute recess and come back.

[Recess.]

[Witnesses sworn.]

Chairman TOM DAVIS. I think you know the rules on testifying.

You have heard the first panel, and I would like to hear your response. I mean, this should not happen in 2001 in the U.S. military. And a lot of these decisions that led to where we are were

before many of you were in your places, and so we are not trying

to point fingers. We are trying to solve a problem here. But, Mr.

Patterson, we will start with you and move straight on down, and

welcome and thanks for being here. I am glad you were here to

hear the first panel. I think that is helpful to all of us.

88

STATEMENTS OF J. DAVID PATTERSON, PRINCIPAL DEPUTY

UNDER SECRETARY OF DEFENSE, OFFICE OF THE COMPTROLLER, U.S. DEPARTMENT OF DEFENSE; NELSON FORD,

PRINCIPAL DEPUTY ASSISTANT SECRETARY OF THE ARMY

FOR FINANCIAL MANAGEMENT AND COMPTROLLER, U.S. DEPARTMENT OF DEFENSE; ZACK E. GADDY, DIRECTOR, DEFENSE FINANCE ACCOUNTING SERVICE, U.S. DEPARTMENT

OF DEFENSE; MARK R. LEWIS, ASSISTANT DEPUTY CHIEF OF

STAFF, G–1, DEPARTMENT OF THE ARMY, U.S. DEPARTMENT

OF DEFENSE; AND COLONEL MARK A. McALISTER, FINANCE

OFFICER, 18TH AIRBORNE CORPS, FORT BRAGG, NC, U.S.

ARMY

STATEMENT OF J. DAVID PATTERSON

Mr. PATTERSON. OK. Thank you, Mr. Chairman, Mr. Hayes.

I am very pleased to be here with my colleagues, Mr. Nelson

Ford, Mr. Zack Gaddy, Mr. Mark Lewis, and Colonel Mark

McAlister. And I think it is an important topic that we are discussing: the accuracy of the pay support to our wounded soldiers and,

in fact, all of our military members.

But before I begin with my prepared remarks, let me be on the

record as offering the Department’s sincerest apology for the pain,

anxiety, and inconvenience that we have caused these fine soldiers

that you heard this morning.

The statements of my colleagues will outline what the Department of Defense is doing to address these pay problems experienced by a number of our military members and their families.

Some of the problems we have discovered while others have been

identified by the Government Accountability Office. So I will restrict my statements to some broader elements of the Defense Department policy and commitment.

First, be assured that keeping military pay straight is one of the

most important priorities of the Department of Defense. None of

our missions or goals will ever get very far if we do not take good

care of our military people and their family, and that care starts

with their compensation. And certainly what group could be more

deserving of keeping pay straight than the troops who have been

wounded in action? So our Department leaders are committed to

moving as quickly as possible whenever we find problems affecting

our military people and their families.

Second, the Department of Defense continues to make progress

on solving the basic cause of these pay problems: the lack of an integrated personnel, pay, and medical system. Secretary Rumsfeld

and other DOD leaders recognize that we need to overhaul our information and management systems to preclude problems, not simply put Band-aid fixes on the problems du jour. The Secretary has

made clear that transforming how the Department of Defense does

business is just as important as transforming our weapons or how

our military fights. More to the point, all of these elements of Defense Transformation are interwoven. The Department has established a Personnel Pay Council made up of senior Defense Department executives whose responsibility it is to identify potential pay

problems and put in place process remedies. I co-chair that Council.

89

Furthermore, and perhaps more important, the Department recently established the Business Transformation Agency [BTA],

which is responsible for the development and the implementation

of Defense business systems. As one of its top priorities, the BTA

is taking the lead on the implementation phase of the Defense Integrated Military Human Resource System [DIMHRS], which will

help us provide excellence in pay service to our military members.

Additionally, the Deputy Secretary of Defense, Secretary England,

is personally involved in ensuring that DIMHRS is implemented on

schedule and on cost. Our plan is to have this system fielded by

December of calendar year 2008.

Now, in previous hearings, the Department offered the Forward

Compatible Payroll [FCP], system as an interim solution to our

payroll tracking and distribution challenge. In a review of the

DIMHRS implementation profile, we found that the Forward Compatible Payroll system was, as you mentioned, Mr. Chairman, over

cost, behind schedule, and, truthfully, with little chance of reaching

the desired level of performance. The expected fielding date of that

system was such that it would be functional just about the time

that DIMHRS was coming on board. Consequently, FCP was not an

interim solution at all, but a duplicate system solution, and, therefore, the FCP program was canceled.

With that as an overview, I will defer to my Army and DFAS colleagues for a detailed discussion of our diagnosis of the pay problems we have discovered and the solutions that we are implementing to address those problems. But, again, I would offer to you that

having been a forward air controller in Vietnam, I wanted my pay

correct. Having been a deputy commander or airlift forces during

Desert Storm and Desert Shield, I wanted my pay correct. I have

a son-in-law flying KC–135s. I want his pay to be correct. And I

have a son who is in the Air Force Special Forces who frequently

deploys, and I want his pay to be correct.

So I have a personal stake in the fact that the Department of Defense provides pay support that is accurate, timely, and sensitive

to our military members’ needs. And I thank you for the opportunity to discuss this important subject that directly, clearly, affects the welfare of our troops and their families. And I look forward to your questions and comments, sir.

[The prepared statement of Mr. Patterson follows:]

90

91

92

93

Chairman TOM DAVIS. Thank you very much.

Mr. Ford, thanks for being here.

STATEMENT OF NELSON FORD

Mr. FORD. Thank you. Good morning. Chairman Davis, Mr.

Hayes, my name is Nelson Ford, and I am the Principal Deputy Assistant Secretary of the Army for Financial Management and

Comptroller, and I want to thank you for this opportunity to address debt-related problems for some of our injured soldiers who

have separated from the Army.

I want to stress at the outset that the Army expects that every

soldier will be paid accurately and on time, and it is our fault when

that does not occur. This is even more important for deployed soldiers and those wounded while selflessly serving their country.

During this period of tremendous upheaval in their lives, soldiers

should not have to worry about being paid correctly.

I want to thank the committee for the emphasis you have placed

on this issue. Mr. Chairman, for the past 2 years we have worked

closely with the members of your staff resolving individual pay-related issues and implementing new policies and procedures to improve our ability to pay soldiers correctly and on time.

We have made significant improvements in the way we train our

payroll personnel, we have improved our payroll systems, and,

most importantly, we have changed the process for granting debt

relief to soldiers who have been overpaid through no fault of their

own.

Between DFAS and the Army, about 400 additional staff, military and civilian, have been augmenting existing staff to catch and

correct pay problems before they turn into soldier debts. We are

committed to maintaining these efforts until better systems are in

place and proven to work. Let me provide some examples of what

we are doing.

First, in the area of improved business practices for wounded soldiers, we have implemented three new policies: one, we no longer

refer outstanding debts to collection agencies; two, all pay-related

debts are suspended until a thorough review of the soldier’s pay account is completed; and, three, if appropriate, we initiate debt relief

on the soldier’s behalf through the waiver and remission process.

Second, working with DFAS, we implemented the Wounded in

Action Pay Management Program. This system captures medical

information on soldiers from five different systems, both medical

and personnel, and makes that information available to our finance

and human resources personnel from a single data base that can

be accessed through the Internet.

Since mid-October 2005, we have successfully stopped all applicable theater entitlements for 100 percent of the soldiers evacuated

through Landstuhl. This alone has significantly reduced the possibility of payroll overpayments for wounded and injured soldiers.

Third, our efforts to make sure soldiers are paid correctly has reinforced the importance of making timely changes to soldier duty

status in the payroll system. Our problems are a manifestation of

the Department’s struggles in developing and deploying an integrated personnel and pay system. As you have heard from Mr. PatVerDate 11-MAY-2000 14:02 Sep 05, 2006 Jkt 000000 PO 00000 Frm 00097 Fmt 6633 Sfmt 6633 D:\DOCS\27853.TXT HGOVREF1 PsN: HGOVREF1
94

terson, we are strongly committed to resolving these problems

through the fielding of DIMHRS.

We are also here to discuss the problems associated with the

Medical Retention Processing Units [MRPUs], at Fort Bragg. We

have investigated these problems carefully and confirmed that the

issues are primarily local, not Army-wide. Colonel McAlister will

address these issues in more detail. However, we continue to evaluate the support required for all the MRPUs.

In summary, I want to reiterate that every soldier deserves to be

paid correctly and on time. Although we have made significant improvements in soldier pay, the process remains imperfect. The

Wounded in Action Pay Management Program provides visibility

for a large group of at-risk soldiers, but it is not a perfect solution.

We need DIMHRS in order to gain further improvements.

In the meantime, we will continue to work with the committee,

DFAS, and the GAO, to prevent and, if necessary, resolve the debts

and other pay-related problems for all wounded soldiers.

Thank you very much for the opportunity to testify this morning,

and I look forward to your questions.

[The prepared statement of Mr. Ford follows:]

95

96

97

98

99

100

101

102

103

Chairman TOM DAVIS. Thank you very much.

Mr. Gaddy, thanks for being with us.

STATEMENT OF ZACK E. GADDY

Mr. GADDY. Thank you, Mr. Chairman.

Chairman Davis and distinguished members of the committee,

my name is Zack Gaddy, Director of the Defense Finance and Accounting Service, and I am here today to discuss pay-related problems for soldiers injured while serving in a combat zone.

I would like to give you an overview of the progress the Army

and DFAS have made to improve the accuracy of military pay to

soldiers and actions we have taken to assist soldiers with relief

from indebtedness. I am providing detailed information on this

issue and a statement for the record.

One of my top priorities is to make sure our men and women in

uniform are paid the right amount on time. For the past year,

DFAS has worked closely with the Army to mitigate conditions

causing soldier indebtedness. I had the privilege to visit soldiers

who have been medically evacuated to both the Landstuhl and

Walter Reed Medical Army Centers to see firsthand how the solutions we are developing are working.

Mr. Chairman, I was moved by their courage and spirit. Their efforts in fighting the global war on terrorism are exemplary, their

contributions and personal sacrifices matchless. These young men

and women are what make this the greatest Nation in the world,

and they deserve timely, accurate pay. So let me explain how we

in the Army have improved our accuracy.

In May 2005, DFAS developed and deployed a Wounded in Action Pay Management Program that links casualty and medical information with finance records. Using Army data, we identify and

monitor all battle-injured and non-battle-injured soldiers who have

served in a combat zone from October 7, 2001, to the present.

Over 60,000 pay accounts have been added to the program’s data

base. Since May 2005, we have reviewed over 35,000 of those accounts and should complete the remaining reviews by September

2006. As we find discrepancies, we take corrective action, including

adjudication of any identified indebtedness.

Since September 2005, all identified pay and allowance indebtedness for ill and injured active-duty soldiers has been suspended,

pending review of their pay account for possible adjudication. To

date, we have assisted just under 1,700 soldiers with debt relief totaling approximately $1.5 million.

Also, in October 2005, DFAS and the Army deployed a team to

Landstuhl, the point of medical evacuation from the combat zone,

to stop Hardship Duty Pay-Location. This was one of the combat

entitlements being overpaid and causing much of the soldier indebtedness. To date, over 2,800 entitlements have been stopped

correctly by our team at Landstuhl.

Please put the chart up for how we handle this.

This chart shows you the pay support soldiers now receive when

medically evacuated from Southwest Asia through Landstuhl and

onward to U.S. medical centers and hospitals. Face-to-face meetings with patients and their families are an integral part of the

process. Every step of the way, Army finance specialists discuss

104

current pay and entitlements, usually within 48 to 72 hours, and

assist soldiers and family members with travel claim processing.

They also track pay accounts until soldiers return to duty or separate from service. If indebtedness is discovered, the finance specialist initiates the relief request on behalf of the soldier.

We have also taken positive steps to alleviate the reporting of

soldiers to credit bureaus over repayment issues. In June 2005, we

suspended collection of debt for those wounded-in-action soldiers

identified as no longer in the service. We also stopped reporting

wounded-in-action soldier indebtedness to collection agencies and

credit bureaus, and we stopped sending collection letters to the soldiers. These actions remain in effect until we can review and adjudicate each and every case of soldier indebtedness.

The Department appreciates congressional assistance provided

on these issues in the fiscal year 2006 National Defense Authorization Act. Thanks to your actions, Service Secretaries now have

broader debt relief authority to take care of injured and ill activeduty and Reserve component soldiers. They now have a wider

range of debt collection for relief consideration, more time for due

process, and processing time is shortened by several weeks.

Finally, I want to assure this committee that DFAS does not pursue debt collection for those who have given their lives in defense

of our country. No known debts have been passed to the estates of

those paying the ultimate price.

Mr. Chairman, soldiers wounded in action should not have to

worry about whether they are getting the right pay. They need to

focus on their medical care, the healing process, and their families.

The Army and DFAS need to provide the proper fiscal care. Since

this issue came to light, the Army and DFAS have focused their efforts on providing soldiers the pay they are due when they are due

to receive it. When we find pay discrepancies, we work aggressively

with the Army to fix them. I assure you this is one of my top priorities, and DFAS will continue to work with the Army and the other

services to do our very best each and every day to pay our brave

men and women in uniform correctly.

And, finally, I would like to offer my sincere thanks to those who

have served, who are currently serving in Iraq and Afghanistan,

and apologize for any problems we have caused them.

Thank you.

[The prepared statement of Mr. Gaddy follows:]

105

106

107

108

109

110

111

112

113

114

115

Chairman TOM DAVIS. Thank you very much.

Mr. Lewis, thanks for being with us.

STATEMENT OF MARK R. LEWIS

Mr. LEWIS. Mr. Chairman, distinguished members of the committee, thank you for the opportunity to speak with you today to discuss wounded soldier pay issues. Our wounded soldiers deserve the

very best compassion and care that the Army has to offer. That

care includes the assurance and commitment to the soldier and

their families that their pay is correct, sufficient, and timely.

Within the Army, the U.S. Army Wounded Warrior Program,

coined AW2 now, assists our most severely wounded soldiers in a

myriad of areas. One of these areas is finance. AW2 receives debt

management pay inquiries from several sources such as members,

family members, unit members, and our own Army Family Management Pay Specialists, and through various data bases. Examples of wounded soldier issues include identifying theater entitlement overpayment and working with finance offices for debt relief

or reducing incorrect payments.

To date, the AW2 has reviewed 1,170 cases of their soldiers.

They have audited them with 623 of those cases seeking an overpayment in the amount of $592,442. Over half of those cases submitted were approved for a complete write-off. Of the remaining

cases, 61 are currently under reserve for write-off in the remaining

then have exceeded the 3-year statute of limitation for submitting

a waiver.

In the past, wounded service members have received deployment

entitlements above those authorized. Months later, they have a

large lump sum deducted from their paycheck, thus leaving the soldier and their family with very little pay for a particular period.

Several severely injured service members have incurred this kind

of debt, and there is no excuse for that. The AW2 Finance Support

Specialist is dedicated to working very closely with those soldiers

and the finance officers to obtain and submit remittance or waiver

packets for those soldiers. AW2, Army Medicine, and DFAS are in

constant close coordination now to implement and develop

proactive processes and procedures to ensure soldier’s financial

issues are identified and corrected before the issues become financial burdens to the soldier and their family.

One of those key initiatives that we are working on is the

Wounded Warrior Accountability System, which consolidates information regarding severely injured service members from a variety

of personnel, finance, and medical systems. This system, this data

base, is to be the platform for both the Wounded in Action and

AW2 programs as we work with our soldiers, enabling greater visibility, collaboration, and resolution of the financial issues.

Our efforts to fix these issues immediately when they occur are

ongoing and continue to employ a mix of solutions to correct overpayments for the Active, Guard, and Reserve soldiers. The 2006

NDAA provided the Army needed assistance to grant debt relief for

our wounded soldiers. However, we would like Congress to specify

that payment of previously collected debts would be allowed as a

remissible collection. We also would like to see the debt remission

law added as permanent legislation and seek a 1-year retroactive

116

one-time provision for debts of separated soldiers wounded in action implemented in the future.

Recent enactments by Congress, such as the Traumatic Injury

Protection under the Servicemember’s Group Life insurance program, not charging soldiers for meals received at military treatment facilities, debt remission authority, and combat-related Rehabilitation Injury Pay, have all helped tremendously in caring for

our soldiers and safeguarding the financial futures of their families. I am confident that current systems in place coupled with recent legislation will reduce financial disruptions to our wounded

soldiers’ lives.

Our soldiers’ duty performance provides this Nation the very best

Army in the world, and each soldier deserves accurate and timely

pay, particularly for those who are wounded and sick and unable

to provide for themselves and their families. The Army leadership

has been deeply involved and concerned in providing the requisite

services in support of all soldiers’ and their families’ well-being.

The Army is committed to developing and fielding an integrated

personnel and pay system which provides accurate and timely personnel services and pay to our soldiers.

Mr. Chairman, thank you for this opportunity. I look forward to

your questions.

[The prepared statement of Mr. Lewis follows:]

117

118

119

120

Chairman TOM DAVIS. Thank you very much.

Colonel McAlister, thanks for being with us.

STATEMENT OF MARK A. McALISTER

Colonel MCALISTER. Good afternoon, Chairman Davis and distinguished members of the committee. I am Colonel Mark McAlister,

Commander of the 18th Soldier Support Group (Airborne), responsible for Personnel, Finance, and Postal support to the 18th Airborne Corps at Fort Bragg. It is a privilege for me to speak to you

today about current procedures and useful solutions for pay processing of Army Guard and Reserve soldiers.

Since the start of the global war on terror, the 18th Airborne

Corps and the 18th Soldier Support Group have been at the center

of activity. Being both continuously deployed in a combat theater

of operations and sharing the responsibility for the processing of

tens of thousands of mobilizing and demobilizing Reserve soldiers

through Fort Bragg, the operational tempo for my units and soldiers have been very challenging. I thank you for your interest in

these soldiers, and I thank the Government Accountability Office

report that has proven very helpful to us in identifying shortfalls

and establishing better procedures to ensure soldiers are paid correctly.

Again, it is an honor and privilege for me to appear before this

committee, and I look forward to your questions.

[The prepared statement of Colonel McAlister follows:]

121

122

123

124

125

126

127

Chairman TOM DAVIS. Thank you very much.

Mrs. Foxx, do you want me to start with you?

Mrs. FOXX. No. That is fine.

Chairman TOM DAVIS. I have a lot of questions.

First of all, thank you all for being here. For Secretary Patterson

and Mr. Gaddy, DOD has been promising a new integrated pay and

personnel system along with a complete overhaul of the entire process for paying mobilized and active-duty soldiers. These go back to

the mid-1990’s, as we heard, before any of you were there, before

I was here, when GAO and others reported significant soldier pay

problems.

During the last decade or more, Congress has provided DOD

with hundreds of millions of dollars to address the problem. I do

not think it is a money problem. Why have we not been able to deliver on these promises, which have had real consequences for hundreds of thousands of soldiers? And we talk about, you know, the

wounded. If this were one or two people that we were bringing up

here, you can always have that slipping through. But in the

wounded soldiers category, we know a minimum of 1,300 that we

had this issue with.

What is the problem? Can you explain to me why, with all this

money—is it the contractor? Is it the fact that DOD has just not

had the coordination and the expertise to do it? Can somebody help

me?

Mr. PATTERSON. It is an obvious question, and it requires a really

good answer, and I wish I had one. But let me say that we are all

culpable. No one gets off scot-free on this.

I just came off of a project for a Defense Acquisition Performance

Assessment where Secretary England asked us to look at every aspect of the acquisition process. And once we did, we found out that

nobody gets a pass. We have all been culpable in one way or another—the industry that was willing to do whatever we asked, and

Government, who asked whatever was thought possible. We have

an ever-increasing number of requirements that drive the cost of

contracts up, and DIMHRS does not escape.

But I can tell you that the future is much brighter. We have

Major General Pair, who is in charge of this program. He is an excellent program manager. We have milestones that are achievable.

We have requirements that we hope will not creep. And we have

senior management interests at the very highest levels that will

ensure that the program DIMHRS is on track, on cost, and on

schedule.

Chairman TOM DAVIS. Now, this is the fifth hearing this committee has held on these issues, and every time it is a new wrinkle

on an old problem. And they persist. You heard one of our witnesses today, that these issues still aren’t resolved 3 years after

she has left active service. I hope at a minimum we can take care

of that problem as we leave here today.

Some call DIMHRS little more than vapoware, an ambitious concept but not yet a functional system. The history of major IT system development in the Pentagon is very mixed. It is not always

a pretty story. What is different about the promises you are making this time that should give us any confidence that you can finally deliver on a solution? Do you have different people overseeing

128

this? You mentioned one general. I don’t know what their tenure

is, but these things tend to take years into buildout. Is it a question of just getting good procurement officials? Is it a contractor

issue to some extent? Is it communications between the contractor

and the Government? I mean, can we get a little more precise?

What has caused the problems today? You heard the GAO witness

talk about hundreds of millions of dollars being wasted, and yet we

are going after $50 that somebody owes and that is ruining their

credit. I mean, all of us know we will look ridiculous when that

happens.

What has happened that this money has gone down the drain?

Mr. PATTERSON. That now gives us more encouragement that we

can go forward.

Chairman TOM DAVIS. And why did they go bad? Why did we

lose hundreds of millions of dollars in this? I mean, somebody made

a mistake somewhere. This did not just come out of thin air.

Mr. PATTERSON. Well, of course, I think that you are exactly

right, and as I said before, we are culpable. We are victims of the

conspiracy——

Chairman TOM DAVIS. Mistakes were made, as——

Mr. PATTERSON. Well, you know, that is a very—I do not want

to be quite that glib, but the fact is that, you know, we live in a

world of a conspiracy of hope. We hope that the contractors will do

what they say, and the contractors hope they can as well. And I

will tell you that what has changed—and then I will leave the details of the answer to your question to Mr. Gaddy. But the fact is

that we now have benefit of Secretary England being intimately involved. And we also have benefit of a committee that is made up

of the senior executives of the Department of Defense who are interested in seeing success. And we have a program manager who

is interested in meeting milestones and having this program implemented calendar year 2008 in December.

To your specific question about communications, I think, too,

what gives us a certain amount of hope that this will come to pass

is the fact that we have deployed some pilot programs into the

services, both the Air Force and the Army, who have taken a quick

look at this. And the people who actually have to put the data into

the system are delighted with it. They pick up on it right away.

So there is reason for encouragement here, and I would ask you

to invite us back to give you an update so that you can be encouraged as well.

Chairman TOM DAVIS. Well, we continue to invite you back, but

it is usually not for that kind of update. What happened along the

way? Where did we go wrong?

Mr. PATTERSON. Well, I think that Mr. Gaddy, who has been

with this longer than I have—I came on board in November—is

probably in a better position to talk about that.

Chairman TOM DAVIS. Mr. Gaddy, this is the advantage of seniority. You get to answer this question. [Laughter.]

Mr. GADDY. Yes, sir, Mr. Chairman. I appreciate the advantage

of seniority since next month will be 2 years for me, so I can go

back about that far. Actually, I have been in the Defense Finance

and Accounting Service since it was created in 1991, so I have been

around this for a long time in different capacities.

129

I would like to comment a little bit on DIMHRS and then maybe

a little bit more on Forward Compatible Pay, which I know has had

some conversation today.

First, in terms of DIMHRS, I would just submit to you it is the

largest, most complex ERP, Enterprise Resource Planning, system

ever envisioned by anyone. The pay complexity that we deal with—

there are over 2,000 pay entitlements that military members—

Guard, Reserve, active duty—can have, and that adds to complexity. And I know there is an undertaking right now within Personnel and Readiness to look at how to do some pay simplification

kind of things.

I think initially over the last 10 years or so that this program

has been under way, money has been spent in a variety of ways.

I don’t know that I would categorize it as wasted. I believe that the

money that was spent to date has brought us to a point where,

when they went out last year looking at the system—because there

was some question about where was it and could it actually be

fielded. I think the assessment going out was we did not think so,

but the assessment coming back in, quite candidly, was it is much

better than they thought. It is——

Chairman TOM DAVIS. But maybe not DIMHRS, but some of the

previous systems that they had been working on were completely

scrapped.

Mr. GADDY. Yes, sir.

Chairman TOM DAVIS. And you would agree with me that money

was wasted, wouldn’t you?

Mr. GADDY. Yes, sir, I do.

Chairman TOM DAVIS. OK.

Mr. GADDY. I believe DIMHRS itself will be fielded in spite of

what some may say right now. And I understand why people may

say that, because it has taken a long time, it is complex. My agency

alone has devoted over 50 people to just supporting the pay requirements. We know those pay requirements exist. We are testing

them today. There is a data base with those requirements. We are

working on interfaces. We are doing the things that we believe will

help push the program along.

Chairman TOM DAVIS. Do you have the resources from us that

you need to make this work?

Mr. GADDY. Yes, sir, we do. From my perspective, we have identified the requirements. One of the lessons learned coming out of

Forward Compatible Payroll was have your pay requirements established early on. We believe we have those. When we were working FCP, one of the pitfalls that we did not anticipate, going back

to 2003 when that started, was we were only replacing the pay portion of this problem, not the integration of pay, personnel, and

medical. What we were trying to do is just replace the payroll system itself. That meant we had to go interface to every personnel

system that exists. We added a level of complexity that we could

not handle. With hindsight, that looks pretty clear to us, but going

into it, it looked like we could do it.

As the program slowed down and the progress was not what we

anticipated, DIMHRS looked like it had more legs, it is going to

make it. So then it looked like we were going to have a schedule

convergence. So we had to make a decision: Do we continue pouring

130

money and resources into FCP or do we basically put our money

and resources on DIMHRS? And we believe DIMHRS is a much

more pervasive system, solves many more problems, and will do a

lot more for the soldier than FCP ever dreamed of doing.

So when it came down to a resource contention, we decided

DIMHRS was the right way to go, and that is why I made the decision back in February to terminate the FCP program.

Chairman TOM DAVIS. OK. Thank you very much.

Ms. Norton.

Ms. NORTON. Mr. Chairman, I just want to indicate a particular

concern I had, and I think that you are to be congratulated for

staying with this issue. I have never been able to understand it because we had more soldiers deployed in the Kuwait war. Perhaps

I was not around when these issues might have been raised then.

Maybe it is me that this is the first war I have heard of this kind

of problem. It is not as if we had a draft and all of a sudden there

was this huge influx of people and the payroll system just fell apart

because we had to put so many people on it.

The problem that concerns me most has been the overpayment

problem. It does seem to me that the volunteers leave the Army

and are then told you now owe money because you should have

caught the error when you received more money. I keep thinking

everybody should put themselves in the place of these soldiers. I

do not know about them. Perhaps this is not the case with them.

I know that any sizable amount of money I get is direct deposited,

so I do not even know how much money there is.

There is an analogy—not a complete and total one, but I cannot

help but think of it—when there is overreaching in the criminal

justice system. There are times when the charges have to be

thrown out, where the courts say that the fault is so significantly

with the Government that the only way the Government will learn

not to engage in that violation again is not to be able to press this

matter forward.

Now, this, of course, is not in the justice system at all, and I understand that some adjustments have been made more recently. I

would remain very—I just want to say for the record I would remain very, very concerned that soldiers who have stepped up—you

do not hear any of them complain—to participate in a very unpopular war at home, do not complain now even when they hear that

the tide at home has turned very decidedly against continued participation, to come home and find that the answer to the overpayment is you got to do your own accounting, soldier, the Government

is not in the business of overpaying.

If the fault is the Government’s, it is very hard for me to be able

to justify the notion that there is a single soldier who should have

to pay back—and I particularly say this—for our Guard soldiers

and our Reserve soldiers. And you are aware that they are—I suppose now almost half of those—they certainly were that at one

point—in Iraq. Here are people for the most part who never expected to have to serve in combat in the first place, have gone without complaint, some at huge sacrifice at home—loss of businesses,

only person working, marriages breaking up, debts unpaid, reduction in pay, Federal Government does not even do what private industry does for Reserve and National Guard, and that is to try to

131

make up for the differential in pay. And on top of that, at the end,

at some point in your service you are told the Government made

a mistake and we want your check to be in the mail, I just want

to say I think that cannot possibly be justified under any circumstances.

And I thank you very much, Mr. Chairman.

Chairman TOM DAVIS. Thank you very much.

Ms. Foxx, do you have any questions?

Ms. FOXX. Thank you, Mr. Chairman.

I have a series of questions to ask here, but I guess I have really—I am just a very plainspoken, basic person, and the question

that I would like to ask you is: Why when the Government needs

to do something—well, let me back up. How many employees are

affected by this new payroll system? How many people were affected by it, how many people came under it?

Mr. GADDY. The one that—DIMHRS is what you are talking

about?

Ms. FOXX. Right.

Mr. GADDY. It will be about 2.1 million.

Ms. FOXX. 2.1 million, OK. Well, there may not be any analogy

to it in the private sector, but my thought was there surely are

payroll systems out in the private sector, they may not be quite as

complicated, but similar to it. Why do we always have to reinvent

something instead of taking something that works somewhere else

and adapting it? Why is it that we can do so many great things

in the military and we cannot do administrative things in a way

like this? Why is that such a problem? Just a real basic issue.

Mr. GADDY. Yes, ma’am, I would like to address that. As I mentioned earlier, there are over 2,000 pay entitlements for military.

There is nothing like that anywhere in the private sector. We are,

in fact, with DIMHRS, using a COTS—commercial, off-the-shelf

software product to handle the pay computation. The thing that

makes it complex in addition to the pay entitlements is now you

go to the personnel side of the business, and nowhere else do you

see people being deployed in the many ways that we may call upon

service members to serve.

So, from that perspective, you have the complexity of the personnel business, the payroll side of things, and then add to that the

third condition, which is unique to us, and that is the medical status of people. So when you look at the overall complexity of that,

it is a scope issue. There are so many, and then there are also all

the various pay entitlements that just make this a very terribly

complicated area.

It has taken many, many years to reach agreement within the

Department on how to approach these things. I believe that has

happened. It has taken many years to get the right focus behind

things. I think that exists today. And as Mr. Patterson indicated,

there is a refocus on the part of the Secretary, the Deputy Secretary, and all the military departments to bring DIMHRS to fruition.

I as a payroll provider am very, very interested in it being successfully deployed because it will make my life so much easier in

terms of being able to provide good service to men and women

every day.

132

Ms. FOXX. OK. When—and you may have said this earlier, and

if you did, I apologize. When do you expect that this very antiquated statement that soldiers and their families get will be put in

a way that they can understand it? When do you think——

Mr. GADDY. That is an excellent question, and, again, I will have

to go back and look at that and take that for the record to give you

a more definitive answer. Our payroll system that we currently use

that produces that leave and earnings statement is quite old so I

am not quite sure how much programming it might take to turn

that into a more user-friendly pay statement. We have been doing

that on the civilian side, trying to make the leave and earnings

statement more intelligible to civilians, and we will certainly look

at that for military as well.

Chairman TOM DAVIS. Mr. Hayes.

Mr. HAYES. Thank you again, Mr. Chairman, and my neighbor,

Ms. Foxx, thank you for great questions.

Colonel McAlister and I and a number of others of you had a

lengthy discussion before the hearing began. It was very, very helpful, and I believe it was you, Secretary Patterson, who apologized

for the circumstances of having it, which is appreciated and appropriate. I come away today with a sense that everybody is committed to doing whatever it takes to get the problem solved.

I want to take exception with Ms. Norton’s characterization. It

is not an unpopular war except for the terrorists in Iraq and Afghanistan. Around the world there are some people who have questions about it, and this is America, you can question that. It is not

an unpopular war.

Having said that—and, again, for Congresswoman Foxx, at Fort

Bragg, we have an awful lot of great people, never claim that they

are perfect, but, Colonel McAlister, you and I and your friends and

associates in Fort Bragg will work this extremely hard from the

soldier’s perspective up, because, Mr. Chairman, as you well know,

we have found out things among ourselves today that we did not

know happened, that wasn’t stovepiped, and it was just lack of information.

So, Colonel, let’s make sure that every one of our folks who has

input provides it so that Secretary Patterson, Mr. Gaddy, and others can use that to craft the appropriate response. There is not

going to be, you know, a perfect solution immediately, but this committee, for which I am very appreciative they let me come today,

the Armed Services, and all of Congress pledge their support to you

to solve a problem. We don’t know where they all are yet. We have

a good look, but, again, you want to make sure that we are doing

the things that we need to do to equip and enable you to do what

we know you want to do, and that is, take care of that wonderful

man and woman who is wearing the uniform.

Do any of you all have any questions that have not been asked

by us to you that you would like for us to ask so that you could

answer them? Or would you like to say anything to add to the process to assure the folks back home and the people in the room that

we are absolutely committed to fix the problem.

One more thing and I will be quiet. As we have transformed the

Army—and that is wonderful. We have brigade combat teams. We

have striker brigades. We have all kinds of neat things going on.

133

But the basic premises, the problems, and the challenges of paying,

feeding, and caring for the soldier have not gone away as we have

transformed. So some of what has come out today is, as we have

worked on future combat systems and all those kinds of important

things, we got to make sure that the basics don’t get short shrift.

So any questions that we should have asked or any comments,

on my time.

Mr. GADDY. I would like to make the following comment. It is not

so much a question. As I visited Landstuhl and Walter Reed, what

I came away with—I think others have alluded to it here today,

and that is, a system like DIMHRS will certainly help us, but it

will not replace the human dimension of what we need to do. At

both locations the medical staff commented to me that one of the

best things we have done since this issue came to light was to

embed finance professionals with the medical professionals to help

deal with the issues that the patients were facing. And I believe

as we move forward, looking at how we will field DIMHRS and the

way we support troops in the future, we need to look into how we

provide that total person support to people ongoing.

Mr. HAYES. Colonel McAlister?

Colonel MCALISTER. Thank you, sir. One, I would like to say, sir,

we really appreciate the support that we have gotten from the committee and that the GAO report really has been truly helpful in

helping us identify those problems.

We will continue to work with DFAS and the Army to ensure

that the particular circumstances that caused some of the issues at

Fort Bragg continue to be addressed. I think to date, we have already made very significant progress in addressing those issues.

We have gotten the support from the Army to fix some of those

issues.

We will continue to have some challenges as the optempo and

our constant deployments take experienced people away from the

garrison support responsibility and they deploy to Iraq. The 18th

Airborne Corps and Fort Bragg has also been extremely helpful to

us in allowing us to do some over-hires and contract support to

help fill some of those gaps. But as long as the pay system is as

complicated and requires the kind of expertise that it currently requires, we will consistently be met with challenges deploying people and maintaining that level of support that every soldier deserves when they return back home.

Thank you, sir.

Mr. HAYES. Thank you all again for appearing. Thank you for

your comments. And please rest assured all of us are here to help

provide what you need to get done what we know you want to do,

and that is, take care of the folks in uniform.

Mr. Chairman, I yield back and thank you once again.

Chairman TOM DAVIS. Well, thank you very much. I just have a

few questions I need to get answered here.

Colonel McAlister, thanks again for being here. Your poster on

deciphering just one line of code for a hostile fire pay transaction

is just beyond comprehension. Pretend I am a new finance officer.

Tell me what my responsibility is with this code. And how do I tell

if it is in error?

134

Colonel MCALISTER. OK, sir. The line of code that you received

is a single line that really talks to—I think the one you received

is a hazardous duty pay. It is broken out on the chart over there.

The first portion of the code identifies the soldier as a portion of

their last name.

Chairman TOM DAVIS. Right.

Colonel MCALISTER. It then breaks down into what the entitlement is, the location, the entitlement is derived from. All of these

are in code, not plain English.

Chairman TOM DAVIS. Right.

Colonel MCALISTER. It breaks down the——

Chairman TOM DAVIS. That is why it is tough for the average

person.

Colonel MCALISTER. Yes, sir. Today’s soldiers and our civilians

are used to the current computer environment. We work through

drop-down menus, plain English screens. The experience that is required in order to read the documentation in the current pay system is difficult, and it does require quite a bit of experience, which

makes it more complicated as we deploy soldiers and we bring in

fillers to perform some of those garrison functions as soldiers go off

to war.

Chairman TOM DAVIS. Mr. Gaddy, is that really the Julian calendar system on the DJMS-RC system?

Mr. GADDY. Yes, sir.

Chairman TOM DAVIS. Are many of the pay systems at DOD on

this ancient calendar system?

Mr. GADDY. No, sir. The civilian payroll system is not; the military payroll system is.

Chairman TOM DAVIS. So what type of errors do you foresee in

data transferred to the DIMHRS because of this?

Mr. GADDY. Well, actually, as we go through the conversion to

DIMHRS, there will be a data conversion effort. We are actually

doing that today as a result of our efforts with the Forward Compatible Payroll system where we have been building a modern data

base with pay information in it, for the Army primarily because we

were going to field FCP to them first. That has been quite a learning experience for us to help bring information together in a modern data base. The current payroll system is not a data base system. It is what we call a flat file system. I don’t know if you are

familiar with that or not.

Basically what that means is it was written—the code was written back in the 1960’s. It has been added over the years. So when

we do queries against it, we are going against a flat file system and

the data structure that is quite complicated. We have introduced

something called DMO or debt management—or defense military

pay simplification to try to put a more modern screen on the front

end of it to make it easier for users to actually go in and do queries. That is, again, more of a Band-aid than an ultimate solution

because, quite frankly, we need a new payroll system. But we are

certainly depending on DIMHRS to be that payroll system to make

things simpler for people.

Chairman TOM DAVIS. Let me ask, how does an injured soldier

like Specialist Taylor, who is in the personnel pay and medical systems, how do they get declared AWOL?

135

Mr. FORD. We have looked at that, and we do not have any

record in our personnel systems that she was ever declared AWOL.

And so we are still looking into why the credit reporting process

identified her that way. But we haven’t found it——

Chairman TOM DAVIS. Just somebody punched something in erroneously? Does that happen sometimes?

Mr. FORD. It could be. It could be the fact that she had an outof-service debt that a credit reporting entity decided she must have

been AWOL. It is unclear. We are looking into it, and we will get

back to the committee with a more complete report.

Chairman TOM DAVIS. OK. Mr. Gaddy, your written testimony

indicated that Fort Bragg was an anomaly and that the other 22

Medical Processing Units do not have similar problems. As you

know, this committee has been hearing from individual Reserve

component soldiers affiliated with the Fort Bragg Medical Unit for

about 21⁄2 years. Why did it take our committee investigation for

you to notice that there were issues at Fort Bragg? And why was

it only then the Army decided to look to see that other MRPUs

were having problems? That pre-dates you to some extent, so I am

not making this personal. But I am just trying to get the flavor for

it.

Mr. GADDY. Yes, sir, Mr. Chairman. I appreciate that. Quite

frankly, I think, as we were looking at how to resolve many of the

issues associated with taking care of soldiers and wounded, the

MRPUs were not, you know, a high visible priority. I believe that

when GAO did their review and identified the kind of problems

they had, it forced us to relook at our procedures to ensure that

we knew factually whether these kind of problems existed other

places.

We did find, in fact, 83 other individuals with similar pay issues

at 11 of the remaining 22 MRPUs, and so we are working those

cases individually. But it does point out, if you look at the kind of

issues GAO found, we have other ways that members can end up

in MRPUs besides coming out of a combat zone. So we needed to

be a little broader in how we were evaluating whether those individuals’ pays were correct.

Chairman TOM DAVIS. What is the root cause of Army soldiers

being overpaid?

Mr. GADDY. As GAO pointed out, about 73 percent of it is overpayment of pay and allowances. If you do not start or stop a member’s entitlements correctly when they go into a war zone or when

they come out of a war zone, a certain entitlement should stop. If

they are not stopped, then, of course, they will continue being paid.

If they leave the service, as Lieutenant Colonel Lovejoy indicated,

and he was still paid for another month after he left, then the payroll system today is dependent on the accuracy and timeliness of

personnel input.

Chairman TOM DAVIS. What do you think the overpayments total

in a given year in the Army? Any idea?

Mr. GADDY. Sir, I would not hazard a guess on that. I know what

we have seen looking at the records of the ones we have looked at;

2 to 3 percent of the time we see pay issues with the 60,000 people

in the payroll data base that we have now for wounded in action

or non-battle injury. So I——

136

Chairman TOM DAVIS. You see that in corporations, though. You

see that in other branches of Government. You are just going to

have issues with so many—I mean, the problem here, of course, is

recouping those payments with wounded veterans, and obviously

not just the embarrassment but the hardship it causes.

Mr. GADDY. Yes, sir.

Chairman TOM DAVIS. And I think the appropriate sensitivity

now, hopefully, has filtered on down the ranks at this point where

we don’t just process it and we start thinking about this. Do you

think that is fair to say?

Mr. GADDY. Yes, sir.

Chairman TOM DAVIS. Secretary Patterson, what OSD policy office is conducting oversight of the debt forgiveness process to assure fair results now for wounded soldiers?

Mr. PATTERSON. Well, there are two, actually. There is my office,

the Comptroller’s office, and we have under us DFAS, but also Personnel and Readiness as well. And as I mentioned, we have the

Personnel Pay Council that also has brought to it a number of

problems or issues, and the Council deals with it in order to solve

these issues. And, again, our purpose is not to put Band-aid fixes

on things, but to find process remedies that are lasting, and we

share that goal with you, Mr. Chairman.

Chairman TOM DAVIS. OK. Thank you all very much. We appreciate your coming here. I think you understand. Nobody likes being

hauled up before our committee and explaining mistakes that get

made. Some of them had their germination before any of you were

part of this. But, you know, we are all responsible for this. We all

bear responsibility now for the outcomes, and so we will continue

to monitor this and keep in close contact with you as we move

ahead.

I will keep the record open for 7 days, and the hearing is adjourned.

[Whereupon, at 12:38 p.m., the committee was adjourned.]

[Additional information submitted for the hearing record follows:]

137

138

139

140

141

142

143

144

145

146

147

148

149

150

151

152

153

154

155

156

157

158

159

160

Æ