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VOCATIONAL REHABILITATION EMPLOYMENT 

CONTRACTS FOR VETERAN COUNSELING 

HEARING 

BEFORE THE

SUBCOMMITTEE ON ECONOMIC OPPORTUNITY 

OF THE

COMMITTEE ON VETERANS’ AFFAIRS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

JULY 30, 2009 

Serial No. 111–40 

Printed for the use of the Committee on Veterans’ Affairs 

( 


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COMMITTEE ON VETERANS’ AFFAIRS 

BOB FILNER, California, Chairman 

CORRINE BROWN, Florida 

VIC SNYDER, Arkansas 

MICHAEL H. MICHAUD, Maine 

STEPHANIE HERSETH SANDLIN, South 

Dakota 

HARRY E. MITCHELL, Arizona 

JOHN J. HALL, New York 

DEBORAH L. HALVORSON, Illinois 

THOMAS S.P. PERRIELLO, Virginia 

HARRY TEAGUE, New Mexico 

CIRO D. RODRIGUEZ, Texas 

JOE DONNELLY, Indiana 

JERRY MCNERNEY, California 

ZACHARY T. SPACE, Ohio 

TIMOTHY J. WALZ, Minnesota 

JOHN H. ADLER, New Jersey 

ANN KIRKPATRICK, Arizona 

GLENN C. NYE, Virginia 

STEVE BUYER, Indiana, Ranking 

CLIFF STEARNS, Florida 

JERRY MORAN, Kansas 

HENRY E. BROWN, JR., South Carolina 

JEFF MILLER, Florida 

JOHN BOOZMAN, Arkansas 

BRIAN P. BILBRAY, California 

DOUG LAMBORN, Colorado 

GUS M. BILIRAKIS, Florida 

VERN BUCHANAN, Florida 

DAVID P. ROE, Tennessee 

MALCOM A. SHORTER, Staff Director 

SUBCOMMITTEE ON ECONOMIC OPPORTUNITY 

STEPHANIE HERSETH SANDLIN, South Dakota, Chairwoman 

THOMAS S.P. PERRIELLO, Virginia 

JOHN H. ADLER, New Jersey 

ANN KIRKPATRICK, Arizona 

HARRY TEAGUE, New Mexico 

JOHN BOOZMAN, Arkansas, Ranking 

JERRY MORAN, Kansas 

GUS M. BILIRAKIS, Florida 

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records 

of the Committee on Veterans’ Affairs are also published in electronic form. The printed 

hearing record remains the official version. Because electronic submissions are used to 

prepare both printed and electronic versions of the hearing record, the process of converting 

between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process 

is further refined. 


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C O N T E N T S 

July 30, 2009 

Page 

Vocational Rehabilitation Employment Contracts for Veteran Counseling ........ 1 

OPENING STATEMENTS 

Chairwoman Stephanie Herseth Sandlin .............................................................. 1 

Prepared statement of Chairwoman Herseth Sandlin .................................. 34 

Hon. John Boozman, Ranking Republican Member ............................................. 2 

Prepared statement of Congressman Boozman ............................................. 34 

WITNESSES 

U.S. Department of Veterans Affairs, Ruth A. Fanning, Director, Vocational 

Rehabilitation and Employment Service, Veterans Benefits Administration . 21 

Prepared statement of Ms. Fanning ............................................................... 64 

Heritage of America, LLC, Glendale, AZ, Patrick F. Chorpenning, President 

and Chief Executive Officer ................................................................................ 4 

Prepared statement of Mr. Chorpenning ........................................................ 35 

Paralyzed Veterans of America, Richard Daley, Associate Legislation Director 16 

Prepared statement of Mr. Daley .................................................................... 55 

Sygnetics, Inc., Rochester Hills, MI, Anthony Tarkowski, President/Chief Executive Officer ....................................................................................................... 5 

Prepared statement of Mr. Tarkowski ............................................................ 50 

Veterans Entrepreneurship Task Force (VET-Force), Joe Wynn, Treasurer, 

President, Veterans Enterprise Training and Services Group (VETS Group), 

and Legislative Liaison, National Association for Black Veterans .................. 17 

Prepared statement of Mr. Wynn .................................................................... 57 

SUBMISSION FOR THE RECORD 

Disabled American Veterans, John Wilson, Associate National Legislative 

Director, statement .............................................................................................. 66 

MATERIAL SUBMITTED FOR THE RECORD 

Post-Hearing Questions and Responses for the Record: 

Hon. Stephanie Herseth Sandlin, Chairwoman, Subcommittee on Economic Opportunities, Committee on Veterans’ Affairs, to Patrick F. 

Chorpenning, President and Chief Executive Officer, Heritage of America LLC, letter dated July 31, 2009, and response letter dated September 9, 2009 ............................................................................................... 69 

Hon. Stephanie Herseth Sandlin, Chairwoman, Subcommittee on Economic Opportunities, Committee on Veterans’ Affairs, to Anthony 

Tarkowski, President/Chief Executive Officer, Sygnetics, Inc., letter 

dated July 31, 2009, and response letter dated September 9, 2009 ......... 74 

Hon. Stephanie Herseth Sandlin, Chairwoman, Subcommittee on Economic Opportunities, Committee on Veterans’ Affairs, to Richard Daley, 

Associate Legislation Director, Paralyzed Veterans of America, letter 

dated July 31, 2009, and response letter dated September 10, 2009 ....... 77 

Hon. Stephanie Herseth Sandlin, Chairwoman, Subcommittee on Economic Opportunities, Committee on Veterans’ Affairs, to Joe Wynn, 

Treasurer, VET-Force, letter dated July 31, 2009, and Mr. Wynn’s 

responses ....................................................................................................... 81 


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iv 

Post-Hearing Questions and Responses for the Record—Continued 

Hon. Stephanie Herseth Sandlin, Chairwoman, Subcommittee on Economic Opportunities, Committee on Veterans’ Affairs, to Ruth Fanning, 

Director, Vocational Rehabilitation and Employment Service, U.S. Department of Veterans Affairs, letter dated July 31, 2009, and VA responses ........................................................................................................... 83 


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VOCATIONAL REHABILITATION EMPLOYMENT 

CONTRACTS FOR VETERAN COUNSELING 

THURSDAY, JULY 30, 2009 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON VETERANS’ AFFAIRS, 

SUBCOMMITTEE ON ECONOMIC OPPORTUNITY, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:43 p.m., in Room 

340, Cannon House Office Building, Hon. Stephanie Herseth 

Sandlin [Chairman of the Subcommittee] presiding. 

Present: Representatives Herseth Sandlin, Perriello, Adler, Kirkpatrick, Teague, Boozman, Moran, and Bilirakis. 

OPENING STATEMENT OF CHAIRWOMAN HERSETH SANDLIN 

Ms. HERSETH SANDLIN. Good afternoon, ladies and gentlemen. 

The Committee on Veterans’ Affairs, Subcommittee on Economic 

Opportunity, hearing on Vocational Rehabilitation and Employment Contracts for Veteran Counseling will come to order. 

In late June of this year, Committee Members were notified by 

Heritage of America (HOA) expressing concern over the U.S. Department of Veterans Affairs’ (VA’s) Vocational Rehabilitation and 

Employment (VR&E) National Acquisition Strategy (NAS) for counseling services. In their letters to Congressman Harry Mitchell and 

Committee Ranking Member Steve Buyer, Heritage of America 

raised concerns that include varied referral, evaluation, reporting, 

and invoicing from regional office (RO) to regional office that make 

it difficult for contractors to implement the VA’s National Acquisition Strategy; and need to improve timeliness of payment for services rendered and calculation of payments. 

We have been informed by Subcommittee staff that the Department of Veterans Affairs did not use its option to renew any of the 

eight contracts in its National Acquisition Strategy. Instead, the 

VA decided to use an interim strategy that will end later this year, 

at which point the VA plans to implement a new National Acquisition Strategy. 

This Subcommittee seeks to obtain feedback from prime contractors and stakeholders regarding areas of concern and their recommendations to improve VA’s National Acquisition Strategy for 

counseling services. Furthermore we seek to understand the reasons that led to the VA not using its 1-year contract renewal option 

and highlight lessons learned from the previous national strategy. 

We want to ensure that the Administration is aware of all concerns 


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to prevent the same pitfalls that have been experienced by recent 

contractors. 

I look forward to hearing from all of our witnesses here today as 

we seek to ensure our Nation’s injured veterans are provided timely services to achieve their employment goals. 

I now recognize the Ranking Member of this Subcommittee, Mr. 

Boozman, for his opening remarks. 

[The prepared statement of Chairwoman Herseth Sandlin appears on p. 34.] 

OPENING STATEMENT OF HON. JOHN BOOZMAN 

Mr. BOOZMAN. Thank you, Madam Chair. 

My agenda for this hearing is to determine that VA is properly 

administering the Vocational Rehabilitation and Employment Contract Counseling Program. The only measure I used to make that 

determination is whether the program is meeting the counseling 

needs of veterans. I want to make it clear that I have no stake in 

who VA selects to deliver services to veterans. Whether VA elects 

to award one contract or 50, VA must execute their side of the contract properly. They must hold their vendors accountable and we 

must do the same for VA. 

I am sure you are aware of the concerns expressed by some of 

the contractors regarding VA’s administration of the recently terminated National Acquisition Strategy contracts issued last July. I 

am also sure you have heard VA’s side of the story. For me, I believe that there have been ample mistakes by both sides. 

So where do we go from here? I understand that VA intends to 

award multiple short-term contracts via 19 subregions and will not 

extend the terminated contracts for a similar amount of time. 

It is reasonable to ask whether extending current contracts or 

issuing two sets of new contracts within 6 months is the better way 

to go. It is also reasonable to ask whether VA’s—the same contracting staff that had difficulty managing 8 contracts can manage 

50-plus contracts. 

Assuming for the moment that the contracts you assessed them 

on are reasonably accurate regarding things like inconsistent adherence to the terms of the contract by local VA officials, where 

does our duty lie? VA has not presented evidence other than anecdotal statements to staff that one or more contractors performed inadequately. 

Madam Chair, having reviewed the testimony, I cannot determine who is right. Maybe both sides are right. The contractors 

make the allegations and VA denies them and contends poor performance by some of the vendors. 

Therefore, I believe, there should be a complete review of the 

contract by U.S. Government Accountability Office (GAO) or the Inspector General (IG) since we are not staffed to conduct such an 

extensive investigation. 

In the meantime, I believe the eight prime contractors should 

continue under short contract extension until the new national contract is awarded. 

VA’s short-term strategy that spreads contract management back 

out to 57 regional offices for a 6-month period of performance with 

all the incumbent problems doesn’t seem to make a lot of sense. 


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Regardless, we have oversight of the bigger issues, whether VA 

has learned any lessons from the failure of the NAS contract and 

what they are doing to prevent a repetition. 

What are the lessons learned? Will there be sufficient training 

for both VA staff and vendors? If inconsistency and administration 

rises, how will they enforce standardized administration? Does 

VR&E have the right people in the right places? Does VA have a 

sound acquisition strategy? How will contractors be evaluated on 

their performance? And finally, how shall we evaluate VA on its 

performance in the execution of the next contract counseling program? 

Madam Chair, over the years, the Veterans’ Affairs Committee 

has not devoted a lot of time reviewing VA acquisition programs. 

Unlike the U.S. Department of Defense (DoD), VA does not develop 

big systems outside of information technology, but they do spend 

$15 billion of our citizens’ taxes and I believe it is incumbent on 

us to oversee that spending to ensure veterans get value for these 

dollars, whether it is a program administered by VR&E, Education 

or any other arm of VA. 

In the end, except through legislation, we cannot force VA to 

change its short-term strategy, but the Committee can learn from 

this unfortunate situation. And as I said earlier, I look forward to 

a detailed study of this particular process. Hopefully, VA will, too. 

In the meantime, I guess the lesson for the Business Committee 

is that when you do business with VA or any Government agency, 

make sure all of the contractual issues are resolved, including, in 

this case, how the Government views your assumptions, how administrative procedures will be handled and how to resolve conflicts before it is too late. 

And with that, I yield back. 

[The prepared statement of Congressman Boozman appears on 

p. 34.] 

Ms. HERSETH SANDLIN. Thank you, Mr. Boozman. 

I would like to welcome all of our panels testifying before the 

Subcommittee today, and I want to remind all of our panelists that 

your complete written statements have been made part of the hearing record, so I want you to limit your remarks to 5 minutes. 

We are going to have a series of votes and a classified briefing 

later on this afternoon. We are going do our best to keep everyone 

to their 5 minutes so that we have plenty time of questions. We 

will submit questions in writing if we run out of time today. 

Joining us on our first panel, if they could come up as I am introducing them, Mr. Patrick Chorpenning, President and Chief Executive Officer of Heritage of America, and Mr. Anthony Tarkowski, 

President of Sygnetics, Incorporated. 

Gentlemen, welcome to the Subcommittee. We appreciate, Mr. 

Chorpenning, that you have traveled here from Arizona to be with 

us today and, Mr. Tarkowski, I know that you flew in from Michigan for this important hearing. Thank you, both, for being here. 

Mr. Chorpenning, we will start with you. You are recognized for 

5 minutes. 


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STATEMENTS OF PATRICK F. CHORPENNING, PRESIDENT AND 

CHIEF EXECUTIVE OFFICER, HERITAGE OF AMERICA, LLC, 

GLENDALE, AZ; AND ANTHONY TARKOWSKI, PRESIDENT/ 

CHIEF EXECUTIVE OFFICER, SYGNETICS, INC., ROCHESTER 

HILLS, MI 

STATEMENT OF PATRICK F. CHORPENNING 

Mr. CHORPENNING. Madam Chairman, Ranking Member 

Boozman, and Members of the Subcommittee, on behalf of Heritage 

of America, initially, I would like to just express our appreciation 

for you holding this hearing today. 

I also want to recognize Chairman Filner, as well as Ranking 

Member Buyer and other Members who have written to the VA 

about the situation faced by the prime contractors under the National Acquisition Strategy contract for VR&E. 

Heritage of America is one of eight of the contractors under the 

National Acquisition Strategy. We are a service-disabled, veteranowned small business which was awarded a contract to provide 

services in 44 States, the remainder of the entire Western Hemisphere, along with the Pacific rim countries, including the countries of Australia and New Zealand. 

The problems you hear about today can be traced directly back 

to an absence of leadership and direction given to the regional officers and the VR&E officials from the VA Central Office. The NAS 

contract has worked relatively well in many parts of the country 

as listed in my written testimony. 

In those locations, regional managers have seemingly taken to 

heart the processes and the procedures laid out in the NAS agreement and sincerely worked with the prime contractors to resolve 

problems, provide quality service to our veterans, while managing 

through the typical learning curve involved with any new business 

relationship. 

In those parts of the country where the NAS approach has not 

worked well, it is because local officials clearly did not like the idea 

from the start, resented their loss of power over the contracting 

process and local vendors and believed they could ignore the processes and the procedures laid out in the NAS agreement with impunity. 

Timeliness obtainment for service is so inconsistent that some 

ROs we have no delay at all, while in others, delays exceeding 100 

days are standard with no explanation of why payments are not 

made or denied within the 30 days as required by the contract and 

in law. 

For payment tracking purposes, the contract requires the prime 

contractors to assign a number to each invoice. Unfortunately, the 

VA did not institute a corresponding information management system to track those invoice numbers within the VA. In fact, Central 

Office did not even require the ROs to use the same invoice forms. 

Heritage of America’s aging accounts receivable total has been 

running approximately $1.3 million a month over the past 3 to 4 

months. As of July the 27th, it has now crept over to $1.4 million 

in accounts receivable. 

A large and growing portion of these aging invoices are more 

than 90-days old. This ongoing situation has made it very difficult 


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for Heritage of America to meet its responsibilities to subcontractors and our counselors on a timely basis. 

Toward the end of the contract base year, we had many counselors refusing to accept new case referrals because they had not 

been paid for work performed months earlier. On multiple occasions, and I underscore ‘‘multiple occasions,’’ this has been brought 

to the attention of the contracting officer, the Director of VR&E 

and even to the level of the Under Secretary for Benefits, but still 

today remains a critical problem. 

Another ongoing problem pertains to the RO personnel undermining the relationships between Heritage of America and its subcontractors. The NAS agreement stipulates that VA officials are 

not to communicate with subcontractors regarding contract matters. However, this is a very large problem, especially in those 

States where implementation of the NAS agreement has not gone 

well. 

Regional officials have even gone so far as to tell the contractors 

that Heritage of America has been paid in full for cases when they 

have no way of knowing this to be true or not. It has been suggested to subcontractors that if they have, just have a little more 

patience, that the base year will conclude and that the ROs will be 

able to deal directly with the subcontractors as they have in the 

past. 

Madam Chairman, in conclusion, I would just ask that the Subcommittee and all Members of the full Committee strongly urge the 

VA to extend the NAS prime contracts by 6 months so that the veterans can continue to be served with the least amount of disruption 

and that contractors in the VA can work out remaining difficulties 

in a possible fashion if we can. 

I put myself at the Subcommittee’s disposal for any additional 

hearings you may decide to have and will provide any additional 

information you may need or responses for the record to any issues 

raised by the VA witnesses today. 

HOA also welcomes a thorough GAO investigation to begin as 

soon as possible for this particular contract year with the performance evaluations on both sides of the equation, both as far as the 

prime contractors are concerned, as well as the VA. 

I also hope the Subcommittee would accept statements for the 

record from any of the prime contractors that were not able to appear here today. 

Madam Chairwoman, on behalf of Heritage of America, I thank 

each and every one of you for your understanding, consideration 

and I would be happy to answer any questions from you. 

[The prepared statement of Mr. Chorpenning appears on p. 35.] 

Ms. HERSETH SANDLIN. Thank you. Thank you for your testimony. 

Mr. Tarkowski, you are now recognized for 5 minutes. 

STATEMENT OF ANTHONY TARKOWSKI 

Mr. TARKOWSKI. Thank you, Madam Chairwoman, Ranking 

Member, Mr. Boozman, and the other Representatives. 

I represent Sygnetics, Incorporated, which is a service-disabled, 

veteran-owned small business. My business enjoys assisting people 

and this contract is one I was extremely proud of. We were perVerDate Nov 24 2008 01:36 Jan 15, 2010 Jkt 051879 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 E:\HR\OC\51879.XXX GPO1 PsN: 51879

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forming services in 19 States under the Department of Veterans 

Affairs National Acquisition Strategy Vocational Rehabilitation and 

Employment contract. 

The Department of Veterans Affairs had litigation brought 

against it by Houck, Limited. After the outcome was decided in 

that case, VA simply made a decision to not provide the option 

years to the current eight contractors. The VA chose to not execute 

the option years, which penalizes all the businesses that have 

spent a great deal of time and effort winning and performing successfully under this current contract. 

While performing under the current contract, we have had to 

overcome many obstacles that the VA constructed that were not 

part of the original solicitation. This caused considerable financial 

outlays that without the continuance of this contract will cause severe financial harm. 

Sygnetics has worked through many of these hurdles during the 

first physical year of the contract while providing exceptional service to veterans. 

Now, that we are able to further increase our service to veterans 

and see a return on the investment, the VA seems satisfied to disrupt the entire process. The VA administration of this contract has 

been particularly unconscionable as applied to the companies that 

won this award, since most of them are small business and many 

are service-disabled, veteran-owned businesses, which the VA 

should be helping succeed on behalf of veterans, rather than subjecting them to bureaucratic roadblocks. 

Some of the small businesses would have liked to have testified 

to this contract today, but my understanding is that there was 

undue hardship and financial hardship. 

We have been informed on a number of occasions by our counselors that the VR&E officers’ intention was to make this contract 

fail. Here are some of the problems encountered. 

After award, we requested a debriefing and were told we would 

receive one. We have never been given that debrief. 

Although the background investigation process, vetting, was 

mentioned in the solicitation, no amount was provided for this 

process, nor was a time mentioned for how long this would take. 

Regional offices had little or no direction in the background investigation process, so we developed a seven-step process to get counselors approved. 

Startup costs were huge with equipment, scanning, printing, office spaces, et cetera, running well over $300,000 for us on top of 

labor issues. 

Timeliness of payments for services have been great in some 

areas and some areas are refusing to pay us at all. 

Calculations of payments on quoted pricing are not being honored and causing invoices to be returned due to misunderstanding 

by the VR&E officers. 

Travel, again, in our proposal we made very clear assumptions 

as to what would be required for travel reimbursement if VA were 

to accept our bid. Travel reimbursement has been resolutely denied 

by VA. 

There have been several areas causing slippage and timeliness 

on files being processed. Reports have been returned for correcVerDate Nov 24 2008 01:36 Jan 15, 2010 Jkt 051879 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 E:\HR\OC\51879.XXX GPO1 PsN: 51879

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tions, which have been quality assured by two former VR&E officers. Responses from many VR&E offices have been very limited. 

Several of the offices would not provide time for training to us or 

overcome challenges that arose. 

Qualifications necessary for our counseling staff were different 

from office to office. The vetting process slowed us significantly due 

to length of approval. 

Some of the VR&E officers did not provide contact information 

and they stated that the veteran did not sign release forms for information and, therefore, VA could not release information to us, 

so we were held accountable for those files not being timely. 

Reporting has been stipulated differently by the offices. There 

are over 40 formats of these reports in our company alone. 

The most important issue in all of this is the veteran. Sygnetics, 

Incorporated has been providing value-added services by supplying 

self assessment of Traumatic Brain Injury on files only to be instructed to remove the data from the report and re-date our invoices because the VR&E counselor did not want to see that information on a report. It is hard to believe that VA was not interested 

in Traumatic Brain Injury information. 

If communication lines were open between the Contracting Officer’s Technical Representative (COTR), the contracting officer and 

the suppliers, as well as the VR&E officers and reports were provided to Congress on a 6-month basis in the future, I believe it 

would serve the veteran community well. 

This contract could be modified to correct the difficulties, as 

many of them have already been corrected by Sygnetics, and allow 

these small businesses to retain what they have already fought to 

achieve. There simply is no reason to rebid at a great cost to small 

business as well as the Government when, in fact, this contract 

could serve veterans, VA and the small businesses with just a few 

modifications. 

Time is of the essence since these services have already been 

halted for veterans. We are requesting that this Committee, prior 

to departing for recess, suggest to VA that they extend this contract for 6 months to make certain that these Congressionally-mandated services are provided to veterans with only a 1-week break 

in service. 

Madam Chairwoman, we would be more than happy to provide 

answers to any questions the VA raises during its testimony. We 

will remain here to provide that information if asked. 

I would like to thank you, Madam Chairwoman and the Ranking 

Member, Mr. Boozman, and the other representatives for taking 

the time to have this hearing. 

[The prepared statement of Mr. Tarkowski appears on p. 50.] 

Ms. HERSETH SANDLIN. Thank you, Mr. Tarkowski. 

I would like to start with a question for both of you. How early 

did these problems begin? 

Mr. CHORPENNING. Madam Chairwoman, in regard to Heritage of 

America, the problems basically began almost immediately. We informed the Director of VR&E at the conference we had after the 

contract was issued in August of last year, before—I mean in—— 

Ms. HERSETH SANDLIN. Was that the 5-day workshop? 


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Mr. CHORPENNING. The 5-day workshop, as to how long it was 

going to take to get individual counselors through the security 

process that the VA had put into place in Little Rock, Arkansas, 

and we told them it would take anywhere from 2 months or more, 

based on the experience that we have had in the past. 

We were told that we didn’t know what we were talking about, 

and what it would take is basically 1 week, okay, was the comment 

that was made by the Director of VR&E. In reality on an average, 

it took over 2 months. 

As a result of that, even though the contract went into effect on 

July 21st of 2008, the VA did bridge contracts with the existing 

contractors that they had prior to the contract being issued, and 

those bridge contracts in many cases carried all the way through 

to the end of December because we had to get the counselors 

through that process. 

Even after—— 

Ms. HERSETH SANDLIN. If I may interrupt just 1 second. 

Mr. CHORPENNING. Yes, ma’am. 

Ms. HERSETH SANDLIN. At the 5-day—I was going to ask you if 

you had brought your concerns and the many problems you have 

articulated to the attention of leadership in the Washington, DC, 

office of the VA. But what you’re telling me is that at the 5-day 

workshop you informed the Director of VR&E of an anticipated 

problem? 

Mr. CHORPENNING. Yes, ma’am. And it started at that point. You 

know, Mr. Tarkowski, as well as Mr. Kiley with HOA, raised those 

issues at that conference and we were told that we didn’t know 

what we were talking about. 

As a result of that, we really, even though that contract initially 

started the 21st of July, we didn’t get our first case assigned to us 

from the VA until some time in mid-November. We didn’t start getting cases assigned to us in any numbers, in the sense of being able 

to really operate our business plan, until the middle to the latter 

part of December. 

So Heritage of America, for all practical purposes, has had probably 5, maybe 51⁄2 months of business with an initial investment 

of little over $2 million, and I think what the VA is doing is very, 

very disingenuous in the way that they are presenting what has 

happened because we have asked over and over and over again to 

have questions answered. Never heard a single word from them. 

We turned in weekly reports that would go unread, the e-mails 

that we were asked to provide, no questions, response, nothing. 

Ms. HERSETH SANDLIN. Mr. Chorpenning, do you have documentation? Did you submit anything in writing or by e-mail? Do 

you have anything that you can provide this Subcommittee as it relates to your communication? 

Mr. CHORPENNING. Yes, ma’am. I literally have boxes of e-mails 

that were sent to the contracting officer that had been sent to the 

Director. 

Ms. HERSETH SANDLIN. Director at the regional office or Director 

of VR&E? 

Mr. CHORPENNING. No, Director of VR&E. I’m sorry. 

Also, e-mails and communications that have been sent to the 

Under Secretary for Benefits as far as Patrick Dunn is concerned, 


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and asking, requesting for a period of months to have a meeting 

with the Under Secretary dealing with these issues in the sense 

that Heritage of America had about 80 percent of the contract. 

Months would go by and no response. Phone calls, no response. 

I have all of that documentation. I finally sent a letter in reference 

to the accounts receivable issue to see if somebody could start paying, you know, for the services that were provided. And I got the 

response back 21⁄2 months later, okay, on a letter that was sent on 

the 15th of May, back some time just within the past couple of 

weeks. And what they did is went through what I gave them in 

May and said, well, these have been paid. Well, you know, it’s 2 

months old at that point in time and our accounts receivable still 

continues to run to $1.3 million. 

The other thing that is frightening that we have raised with the 

VA over and over again is our finance, our information, okay, with 

our subcontractors. They have shared that information with our 

subcontractors and now they expect us to go out and put in bids 

and compete with them when everybody knows what our pricing 

structure is. 

I mean, it is absolutely—it is some of the most, some of the most 

disgusting business practices I think anybody could possibly witness. I mean, no leadership whatsoever, zero leadership. 

Ms. HERSETH SANDLIN. My time has ended. I am going to come 

back with further questions. But before I turn it over to the Ranking Member, do you have anything you would like to add, Mr. 

Tarkowksi? 

Mr. TARKOWSKI. Well, we have essentially the same problems 

with approval of counselors. We absolutely got our first billed file 

in November and, as a matter of fact, you know, we did get some 

files during the year, but our first file was in November. The 

VR&E counselors were told not to discuss anything with us until 

the meeting that they had in August, which was the beginning of 

the entire program, essentially, after they went through their review of what was supposed to be presented. 

And we certainly went to that meeting. My program managers 

all attended, et cetera. Everybody was there. And, you know, we 

were told that the VR&E counselors weren’t to talk with us, that 

the approval process would be very, very quick, which it was not. 

It took us at least 2 months to get people approved, and in some 

cases more time, a few cases as we progressed started to get better. 

And we shaped it up. We actually changed the program a little bit 

and set up six or seven steps depending on the region to allow the 

counselors to be approved much quicker and it started working 

much better for us after that point, but it did take time to resolve 

those issues in order to make that all work. 

So, you know, all in all, we had the same kind of invoicing 

issues. We have over $400,000 currently that’s over 30 days past 

due. I have sent AR sheets over and I had some discussion with 

Ms. Fanning today and, you know, she said they are going through 

those sheets and we are trying to resolve those issues. 

So there are a number of issues that have come up, though, and 

we have tried to resolve a lot of those, and I have told, you know, 

my people, you know, I am more than willing to sit down and resolve these issues, let us work through them, let us figure out a 


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way to make this work for everybody, for VA, for the veterans, and 

everybody. But, you know, instead, they just didn’t do the option 

year, which just doesn’t seem fair, with all the money we have 

spent. 

We have spent all of this—went out and got an office in San 

Diego because that was our biggest area that we were handling 

and we went out and tried to develop a lot of rapport with people 

and make sure that we were satisfying every need. Even when we 

weren’t paid travel, we gave all the money to counselors so that 

they could go up into the areas that were close to the Canadian 

border, from the Dakotas, et cetera, only to have those reports rejected after the VR&E officers reviewed them. Our VR&E officers 

that are retired reviewed those reports. 

Those reports were still rejected. Our invoices were rejected, and 

we were made to re-date our invoicing and made to redo the reports, which is just absolutely ridiculous. And so it pushed off our 

money and my banking relationships are strained. 

Ms. HERSETH SANDLIN. Thank you, Mr. Tarkowski. 

Mr. Boozman. 

Mr. BOOZMAN. Thank you very much, Madam Chair. 

In the interest of time, I want to ask you two or three things all 

at the same time and then you can think about it while I am asking them. And then I would really just like, again, if we can have 

a brief comment, then we cover a lot of ground. 

But, first of all, despite VA’s legal restrictions on executing the 

option year, in your opinion does VA have the legal authority to 

issue a short-term extension to some or all NAS contractors? Okay. 

So think about that. 

Now, I would like to learn a little bit about the training that you 

received. I would like for you to describe the training that you and 

your staff received as part of the National Acquisition Strategy contract. And then, also, did you receive copies of the Acquisition 

Strategy Contract Manual, and did you find it helpful? 

And then, lastly, and I think that you touched on it just a few 

minutes ago. I would really like to know at the time you bid on the 

Strategy Contract, how many counselors did you employ and in 

how many States were they located? In other words, as you geared 

up, how did this affect you in gearing up and how has it affected 

you going forward? 

Mr. TARKOWSKI. All I could tell you, as far as counselors, we are 

well over 100 individual independent counselors, small businesses 

if you will, that we have employed, that we have gotten verification 

back and they are actually doing files for us currently. I am trying 

to figure out, you know, the other question. 

Mr. BOOZMAN. And how about—so you added 100 or—— 

Mr. TARKOWSKI. We brought on over 100 independent businesses 

as counselors. The majority of them are out in California because 

of the workload out in California. But we do have independent 

small businesses working for us all over the United States in our 

19 States and we are satisfying the need that way. 

Mr. BOOZMAN. How about the short-term extension? 

Mr. TARKOWSKI. I’m sorry? 

Mr. BOOZMAN. The first question I asked about the short-term 

extension of the contract? 


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Mr. TARKOWSKI. Right. My legal counsel has informed me that 

as far as he is concerned, this contract certainly can be extended 

for 6 months. 

Mr. BOOZMAN. Do you agree? 

Mr. CHORPENNING. Yes, sir, I agree. Our legal counsel here in 

the Washington area, basically, has just recently dealt with that 

issue and concurs. 

Mr. BOOZMAN. And the training you received early on? 

Mr. CHORPENNING. I am sorry, sir? 

Mr. BOOZMAN. The training that you received early on? 

Mr. CHORPENNING. Training? The week that we had in—the 

thing is, the training we received in Baltimore was very good. The 

problem is, the VA, at the end of the 5 days decided they weren’t 

going to implement any of them. 

Mr. BOOZMAN. Okay. 

Mr. CHORPENNING. And just let—let me just—just for a second, 

sir, if I may. I mean, it was set up in such a way that all the VA 

officials, VR&E officials, were kept in one room and all the contractors were kept in the other room for the entire 5 days and we were 

not allowed to even get together and discuss anything until the 

morning of the last day. That is an absolute fact. 

The other thing is, we do have a copy of the book that was handed out. The workbook basically said that any form that you need, 

you in fact use it out of this book. We have gotten to a point that 

we were up to using, I think, somewhere around 11 different types 

of invoices just to bill the VA. We got it down to two. 

Tony mentioned the fact that they had 40-some different reports 

that they had to do, different forms. We have over 50. And then 

as far as employees are concerned, part of that contract basically 

says that if it is a set aside area, you have to put office space in 

those areas, and at the same time by the end of the first year, 51 

percent of your employees should be—or 51 percent of the counselors in those areas we need to tell them the process we are using 

to hire at least 51 percent. 

Right now we have in excess of full time employees and subcontractors in excess of 600 counselors. 

Mr. BOOZMAN. Six hundred additional? 

Mr. CHORPENNING. Yes, sir. 

Mr. BOOZMAN. Okay. Thank you, Madam Chair. 

Ms. HERSETH SANDLIN. Thank you, Mr. Boozman. 

Just a few additional questions, and then I am going to have a 

number of questions that I will submit in writing. Again, we have 

gotten your written testimony, your statements, your responses to 

my first question. I want to try to delve down here just a little further with you. 

Mr. Chorpenning, you state that regional office staff requested 

that cases be in batches of 20 or less, correct? 

Mr. CHORPENNING. Madam Chairwoman, it would depend. I 

mean, there was no consistency throughout the VA on anything. 

Ms. HERSETH SANDLIN. But at times were regional office staff requested that cases be batched in 20 or less? 

Mr. CHORPENNING. That is correct. Yes, ma’am. 


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Ms. HERSETH SANDLIN. Do you think that’s because the VA 

lacked proper, adequate staff at the regional office level? What do 

you think the reason for that was? 

Mr. CHORPENNING. Madam Chairwoman, I have no idea. I can 

tell you in all honestly, I cannot follow any of the rational reasoning over the past year of any business practice that any of the 

regional offices had where things would constantly change. There 

was no consistency throughout the entire area. 

Other than in those areas where virtually no VR&E services, and 

especially Chapter 36 services were ever located, in those States, 

as I pointed out in my written testimony, you know, we had great 

success. 

Where we had our biggest problems, and this is the reason I 

strongly, strongly encourage a GAO study, but the areas where we 

had our biggest problems are the exact same areas that the Inspector General and the GAO has pointed out to the VA in the last 

study that encouraged them to go to a national Acquisitions Strategy, they are still the exact same States and the VA has taken no 

steps whatsoever to stop it. 

And unfortunately, out of the 44 States that we have, we have 

most of those States. 

Ms. HERSETH SANDLIN. Okay. Mr. Chorpenning, do you have a 

copy of the letter from the Vocational Rehabilitation counselors in 

the Northwest which evidently predicted that Heritage of America 

was going to fail even before it began to provide contract services 

or counseling services? 

Mr. CHORPENNING. I am sorry, ma’am. I didn’t—— 

Ms. HERSETH SANDLIN. Is there a letter, is there some sort of 

documentation to the charge that there were VR&E counselors in 

the Northwest that predicted HOA’s failure before you even began 

to offer services? 

Mr. CHORPENNING. Madam Chairwoman, we do have that documentation and it was, in fact, a VA employee, that it was. And it 

is one of those original States, okay, and that letter was sent to 

their professional association as far as the American Counseling 

Association, and in the process it was shared with us and it is from 

that area of Washington and Oregon which was one of the very 

first, one of the very first States. 

In the letter where we were paying for initial assessments, anywhere from $55 to $75 an hour, she actually refers to it as 

Walmart wages. 

Ms. HERSETH SANDLIN. If you could provide us a copy of the letter—— 

Mr. CHORPENNING. Yes, ma’am. I certainly can. 

Ms. HERSETH SANDLIN. And if you could also provide us names 

of regional office staff who refused to provide instruction to contractor personnel on criteria for initial evaluations? 

Mr. CHORPENNING. Yes, ma’am. I certainly can do that as well. 

[Mr. Chorpenning subsequently provided the information, which 

is included at the end of the post-hearing questions and responses 

for the record, which appear on p. 73.] 

Ms. HERSETH SANDLIN. Mr. Tarkowski, I know in response to my 

earlier question, you did communicate the concerns that you were 


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having to either contracting officers or regional office personnel. 

Did you—— 

Mr. TARKOWSKI. Well, what happened, originally, my program 

managers went back to the VR&E officers and had quite a discussion, including my Chief Operating Officer, and tried to resolve 

most of the problems. And then what they did was they turned 

around and went back to the contracting officer and the COTR, et 

cetera, and left phone messages and tried sending a couple of emails and that with no return calls, so it was very difficult to communicate. It seemed like anytime after about January it made it 

very, very difficult. 

In the very beginning of the contract, we did receive a couple of 

e-mails, but you know, it was related to a couple of issues, but it 

wasn’t pertinent to this information now. 

But what happened was after about January is when, in fact, 

there was no contact any further. It was like they had already 

made up their mind that they weren’t going to do the option anyway and it would just go away. 

Ms. HERSETH SANDLIN. Okay. How often, Mr. Tarkowski? Do you 

have it documented where a Vocational Rehabilitation, a VR&E 

employee, gave a case to one of your counselors and did that violate 

the contract? 

Mr. TARKOWSKI. I’m not certain that that occurred. I would really 

have to check with my program manager to find out if that happened from my end. I believe it was Pat that had that happen 

where they actually gave files directly to a counselor. 

Ms. HERSETH SANDLIN. Okay. I will go back and review the written testimony we received today, but I think that may have been 

included. 

Mr. TARKOWSKI. Yeah. And I believe that in the beginning that 

there was what we will call an incident where that occurred. But 

I went back to my program manager and told them that I wanted 

it straightened out and that, and then after we went back and addressed the issue, then it did not seem to happen anymore. 

So you know, I think it was only one or two times right in the 

very beginning, and then after that, it was straightened out as I 

said. 

Ms. HERSETH SANDLIN. Okay. A final question for both of you, 

and again I will have others that I will submit to you in writing. 

As Mr. Boozman stated in his opening statement, and as you have 

reiterated in your verbal testimony, there are a lot of problems 

here that remain. So I am wondering, and I don’t mean to sound 

skeptical, how this is going to unfold over the next 6 months. Can 

you explain why you are seeking to extend this contract when there 

seems that there are so many problems associated with it? 

Mr. CHORPENNING. Madam Chairwoman, I was medically retired 

from the United States Marine Corps in 1970. I am a product of 

VR&E when it was Vocational Rehabilitation and Education. I had 

the privilege to serve on Secretary Principi’s task force when we 

redid VR&E as he referred to it as the crown jewel. And the only 

reason that the VA really exists is to take care of those veterans 

that have been severely wounded and hurt, all right. 

I have had the privilege to be the Director of the Arizona Department of Veterans’ Services for a period of 9 years, taking care of 


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over 450,000, almost 500,000 veterans as the advocate for them before the State of Arizona. 

These veterans need an advocate. 

Ms. HERSETH SANDLIN. No, I understand. I understand. 

Mr. CHORPENNING. And we are the advocate. We don’t have to 

protect what goes on in the bureaucracy. 

Ms. HERSETH SANDLIN. I understand. Look, I am not advocating 

one thing or the other. I haven’t predetermined anything. What I 

am trying to figure out in practice—— 

Mr. CHORPENNING. We can do it. We can do it, and if you look 

at—— 

Ms. HERSETH SANDLIN. You can do it even though you are having 

all these problems with the VA? You think those are going to be 

resolved in a way that doesn’t deny services to veterans? 

Mr. CHORPENNING. We have worked through most of them. Yes, 

ma’am. We have worked through most of them, and if you look at 

my written testimony and you look at the recommendations, there 

are 11 points that are made in there how we can streamline this 

if we can get the VA to work with us. That is the issue, to get the 

VA to work with us, and if that happens, Tony, myself, the other 

six primes, are more than happy to work together. 

We have had the opportunity to talk with them, and as Tony 

pointed out, they couldn’t be here today in many cases for various 

reasons. We are convinced we can make this program work because 

we are the disabled veterans. 

Stop and look at the leadership of VR&E and ask yourself how 

many of them are even veterans, let alone disabled veterans. You 

know, and so we are the group that is going to make it work if it 

is going to work. I mean that seriously. 

Ms. HERSETH SANDLIN. I understand what you are saying. I understand that we are going to get the testimony of the VA here in 

a couple of panels. I am not going to speak for Mr. Boozman, but 

you know, I have a lot of questions for them, too, in terms of an 

interim, their interim plan might work. 

Mr. CHORPENNING. Yes, ma’am. 

Ms. HERSETH SANDLIN. But I am a little wary and I know that 

there has been a lot information exchanged making a push for extending this contract and I am not going to prejudge that. I haven’t 

made a determination as to whether I think that is the right way 

to go yet. That is why we are having this hearing. 

I appreciate your response, but I think and what you are saying 

is, here are your recommendations and it is going to have to be up 

to someone to ensure that if this gets extended. Parties are really 

going to come together and work through these problems because 

the well has been poisoned here, it appears to me, versus a different strategy that I know that the VA is proposing in the interim, 

before adopting a new National Acquisition Strategy. 

Mr. Tarkowski, do you have anything to add? Then we have to 

move on to the second panel. Mr. Boozman’s ready. 

Mr. TARKOWSKI. Absolutely, Madam Chairwoman. 

I really believe that an extension of the contract would be appropriate for us for a number of reasons. Our biggest reason, of course, 

is that we have put so much cash outlay into equipment and everything and because the contract started late. 


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With that happening, it has really impacted us financially. If, in 

fact, that contract is extended, we have pretty much overcome 

many of the challenges. There still are a couple of areas where we 

need help, but we need communication and that is what, with the 

extension, what has to happen is a directive has to be given that 

there will be communication because if there is communication 

with Central Office and we can get somebody to sit down with 

these VR&E officers and say, look, you will train these people on 

what you want and you will work with them, then it will work. 

But it is only a couple of small pocket areas that are causing 

those difficulties for us. Most of our areas are very satisfied and, 

as a matter of fact, have increased our number of files every month 

because we are doing such a good job for them. 

So I very much feel that we can certainly excel at this contract 

and offer extra services to veterans that had not been offered in the 

past. You know, the self assessment of the Traumatic Brain Injury 

alone is phenomenal. Why wouldn’t they want that on their reports? Why were we forced to take it off the reports? 

Those kind of issues need to be discussed and it needs to be discussed in Central Office, and somebody needs to come up with formats for the reports that are going to be consistent across the 

whole Nation, not just here is one little format of a report from my 

office and want it this way or I won’t accept it. Even that would 

be better than not telling us what you want because that is what 

is happening in a couple of these offices. 

Travel should be picked up and things like that, but with these 

issues handled, with the communication opened up, that is the biggest difficulty. There is no communication. 

Ms. HERSETH SANDLIN. Okay. 

Mr. CHORPENNING. Madam Chairwoman, just to add to what 

Tony said—— 

Ms. HERSETH SANDLIN. Very briefly. 

Mr. CHORPENNING [continuing]. And I concur—very briefly. 

Okay. We have actually had cases returned because of punctuation 

mistakes, honest to God, and I can make those available. 

Ms. HERSETH SANDLIN. I know that was raised in the testimony, 

and that is something that we are going to pursue here in the 

other panel. 

I thank you both, again, for your trouble, for the important questions you have raised, and your very thoughtful responses to our 

questions here today. 

Thank you. I thank you for your commitment to our Nation’s veterans. 

Thank you. Thank very much. Thank you, Members of the Committee. 

Mr. TARKOWSKI. Thank you, Madam Chairwoman. Thank you, 

everyone. 

Ms. HERSETH SANDLIN. I would now like to invite our second 

panel. Joining us on the second panel today is Mr. Richard Daley, 

Associate Legislation Director of the Paralyzed Veterans of America (PVA), and Mr. Joe Wynn, Treasurer, Executive Committee for 

VET-Force. 

Welcome back to the Subcommittee, gentlemen. 


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Mr. Daley, we will go ahead and begin with your testimony. You 

are recognized for 5 minutes. 

STATEMENTS OF RICHARD DALEY, ASSOCIATE LEGISLATION 

DIRECTOR, PARALYZED VETERANS OF AMERICA; AND JOE 

WYNN, TREASURER, VETERANS ENTREPRENEURSHIP TASK 

FORCE (VET–FORCE), PRESIDENT, VETERANS ENTERPRISE 

TRAINING AND SERVICES GROUP (VETS GROUP), AND LEGISLATIVE LIAISON, NATIONAL ASSOCIATION FOR BLACK 

VETERANS 

STATEMENT OF RICHARD DALEY 

Mr. DALEY. Chairwoman Herseth Sandlin, Ranking Member 

Boozman, and Members of the Subcommittee, PVA would like to 

thank you for the opportunity to testify today concerning vocational 

rehabilitation and counseling services for veterans. Vocational Rehabilitation and Employment Program, VR&E, provides serviceconnected veterans with the necessary services to assist them to 

achieve maximum independence in daily living and, to the maximum extent feasible, to become employable and obtain and maintain suitable employment. 

This continued flow of new veterans into the VR&E program will 

certainly place a strain on this system that has already received 

some unfavorable criticism in recent years for its performance. 

Due to the fact that VR&E is limited in resources and staff, the 

VA has contracted out with private and State entities to provide 

VR&E services. This process of contracting to alleviate some of the 

burden from the VR&E regional offices did not produce the results 

that the VA anticipated. 

Without having all of the facts involved, or in this case any of 

the facts, pertaining to both parties’ performance with regard to 

fulfilling their obligations of the contract, it would be unrealistic for 

PVA to make credible recommendations pertaining to improving 

those contracts. 

Whether the veterans have received all of the counseling and 

services that they should receive or they have not received because 

of performance is really not our concern. Our concern is, does the 

veteran have a job when they get out of the process? 

When considering the future contracts, perhaps the VA could develop a pilot program in their VR&E program. The VA would reward the contractor for making changes in the veterans’ lives, not 

processing the veteran through another Government program. 

The Social Security Administration has had pretty good success 

with their Ticket to Work program. This program rewards an agency that performs vocational rehabilitation and finds the consumer 

employment if they stay employed. 

Placing a disabled veteran in a career is the goal behind PVA’s 

new Vocational Rehabilitation and Employment program. Two 

years ago we started the first one in Richmond, Virginia, at the VA 

hospital. We have expanded. We have one now in Minneapolis, 

Minnesota, and San Antonio, Texas. Soon we will be opening the 

fourth location in Long Beach, California. PVA’s goal is to have 22 

of these, one in all 22 spinal cord units that the VA has. 


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PVA’s VR&E program has recently applied for and qualified for 

employer network status. Being approved as an employer network 

allows PVA to participate in Social Security Administration’s Ticket to Work program. Social Security Administration will reimburse 

PVA up to $4,000 annually for each veteran that is employed and 

stays employed. The $4,000 will help defray some of the costs of 

our program. 

PVA is an organization of veterans who are catastrophically disabled by spinal cord injury or disease. Our members rely on the 

services provided by the VR&E program. 

We support the Subcommittee’s efforts to work with the VA and 

to improve the program. 

Chairwoman Herseth Sandlin, Ranking Member Boozman, that 

concludes my testimony. I will be happy to answer any questions. 

[The prepared statement of Mr. Daley appears on p. 55.] 

Ms. HERSETH SANDLIN. Thank you very much, Mr. Daley. 

Mr. Wynn, welcome. You are recognized for 5 minutes. 

STATEMENT OF JOE WYNN 

Mr. WYNN. Thank you, and good afternoon, Chairwoman and 

Ranking Member Boozman, other Members of the Subcommittee. 

Today, I come before you as a representative of the Veterans’ Entrepreneurship Task Force composed of over 200 organizations and 

affiliates representing thousands of veterans, a high percentage of 

which are small businesses. 

As a Vietnam air veteran myself, President of Veterans Enterprise Training and Services Group and working with the National 

Association for Black Veterans, I have come to appreciate this 

Committee’s steadfast support of veterans and the number of 

pieces of legislation that have passed in recent years. 

I have also come recently before this Committee, as you might 

very well remember, with regard to some of the issues he had with 

the Center for Veterans’ Enterprises’ policies that they have chosen 

to adopt that may hinder the number of small businesses who will 

be able to participate in VA contracting in the future. 

But now, here we are today talking about another example of 

what we believe is VA’s poor judgment in making management decisions that not only affects service-disabled veteran business owners, but also affects hundreds of our service-disabled veterans. 

I am sure you have received information detailing how the VR&E 

program works, so I won’t go into that. But I would like to mention 

that in 2006 and 2007, while serving as a Commissioner on the 

Congressional Veterans’ Disability Benefits Commission, I had the 

opportunity to review and discuss several GAO reports, VA reports, 

detailing recommendations and criticisms regarding the VR&E program. 

Some of those that came out in the report that we submitted was 

that GAO generally agreed that VR&E had not been a VA priority 

in returning disabled veterans to the workforce. VR&E also had a 

limited capacity to manage its growing workload and VR&E needed 

to be redesigned for the modern employment environment. 

Additionally, the Commission also agreed that VR&E needed to 

improve its process of defining, tracking and reporting on particiVerDate Nov 24 2008 01:36 Jan 15, 2010 Jkt 051879 PO 00000 Frm 00021 Fmt 6633 Sfmt 6633 E:\HR\OC\51879.XXX GPO1 PsN: 51879

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pants, while we found also that it was confusing and inconclusive 

in its current state. 

Our research also indicated that while the number of participants in VR&E program increased in recent years, the number of 

individuals rehabilitated remained constant. 

This now National Service contract, the NAS contract that VA 

has chosen to adopt, we still don’t understand why it would be canceled in such a short time frame. I do know a little bit more about 

it today than I knew before. We have received a number of complaints, though, from the contractors involved, much of which you 

have heard from the witnesses before me. 

But by virtue of the fact that the VA has chosen to cancel the 

entire contract or not extend it at this time leads many of us to 

believe that the VA implemented a national strategy that was 

flawed from the start. Since the VA has not reportedly requested 

corrective measures from the contractors involved and has reportedly stated that it intends to reissue the contract later, it simply 

appears that the strategy was not well thought out in the beginning. 

This action by the VA will have an adverse effect on the veterans 

it is intended to serve. Hundreds of service-connected disabled veterans in need of vocational rehabilitation and employment will experience additional delays in receiving the services that they so 

desperately need to successfully transition back into their communities, and those communities that they have fought so hard to protect. For some, this delay could also be life threatening. 

Madam Chairwoman and Members of this Committee, I strongly 

urge you to compel the VA to reconsider their action to terminate 

this national contract for at least 6 months or until such time as 

their procedures can be improved or other capable and qualified 

service-disabled veteran small businesses can be hired. Thank you, 

and I appreciate the opportunity to come before you. 

[The prepared statement of Mr. Wynn appears on p. 57.] 

Ms. HERSETH SANDLIN. Thank you, Mr. Wynn. 

I am going to recognize Mr. Boozman to start us off with questions. 

Mr. BOOZMAN. I am really going to yield my time to you, Madam 

Chair in the interest of time. We don’t have a lot—we have just 

had a series of votes that have been called. 

But as always, I want to thank Mr. Daley and Mr. Wynn for taking the time and coming over and, you know, adding to the information that we have been presented. I appreciate your testimony. 

Ms. HERSETH SANDLIN. Thank you, Mr. Boozman. 

Well, I think, Mr. Wynn, it is clear what you think should happen next from the end of your testimony there. 

Mr. WYNN. Yes, ma’am. 

Ms. HERSETH SANDLIN. Mr. Daley, what is your opinion of the 

VA’s National Acquisition Strategy and what do you think are the 

best next steps? 

Mr. DALEY. That is a very good question. As Mr. Wynn said, he’s 

fairly new to the issue, but he did have the privilege of sitting in 

for 2 years on the Veterans’ Disability Benefits Commission that 

discussed in depth many of these issues. He has more knowledge 

on this than I have, so let us just do what is best for the veteran. 


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I want to make sure that they don’t go through a Government program, but they get a job at the end. 

In my written testimony, I pointed out that in the 110th Congress, Ranking Member Boozman introduce H.R. 3889, which required a 20-year study. Wouldn’t it be great if we could look back 

10 years from now and see what happened to those veterans, especially the young veterans that went through a VR&E program? Are 

they still employed or are they not employed? Why aren’t they employed? Is it because of health reasons or because of a lack of other 

accommodations? But that bill didn’t go anywhere, so maybe some 

you could reintroduce that bill. 

Ms. HERSETH SANDLIN. Now, I did want to follow up with one 

other area. In your testimony, your written testimony, you state 

that the items contracted out are areas in which VR&E counselors 

have been trained to perform and have years of experience. In your 

opinion, or is it the position of PVA that the Department of Veterans Affairs should be performing these functions instead of contracting it out? 

Mr. DALEY. Yes, in my opinion, and I spoke with other veterans, 

and some disabled veterans that have been through the program. 

They said that some of that work that the VA professionals can do 

the best was contracted out and the VA professionals got stuck 

shuffling papers for 20 hours a week. That’s the problem, I think, 

too much paperwork. 

Ms. HERSETH SANDLIN. I think that goes to my next question and 

then we will have to leave for votes. We will probably resume the 

hearing with the third panel and we may have some other questions for you, Mr. Wynn, in writing. 

Again, in your testimony you write that, quote, ‘‘The process of 

contracting out to alleviate some of the burden from the VR&E regional office didn’t produce the results that the VA anticipated.’’ In 

your opinion, again, what were the results and why was VA unable 

to get the results they anticipated? 

Mr. DALEY. The results were a lot of problems; that is why we 

are sitting here today—did the veteran get the job back to that 

point—and I don’t think so. I also say in the testimony, in our program we have 356 severely injured veterans, and of that, we have 

placed 56 in career positions in 2 years. 

Ms. HERSETH SANDLIN. Let me delve down just one level more 

here. From the testimony of the first panel, and we will hear from 

the VA, does the PVA have a position in terms of what results we 

got out of this thing? If it was the lack of leadership out of Central 

Offices related to directing the regional offices and the contracting 

officers, or was it the ability of the prime contractors to deliver 

services at a national level or a combination of both? 

Mr. DALEY. At this time, I can’t take a position on that because 

I have heard 5 minutes or 10 minutes of testimony and I will hear 

another 5 minutes of testimony. I cannot decide who is right in this 

process, which affects veterans. 

Ms. HERSETH SANDLIN. Have you heard about this problem prior 

to us calling a hearing? 

Mr. DALEY. Not really. 

Ms. HERSETH SANDLIN. Although PVA did disagree with contracting officers? 


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Mr. DALEY. No. We recognized the need for contracting out in the 

past. In testimony within the last year, it said, we know that they 

have to contract out. 

Ms. HERSETH SANDLIN. Okay. It just didn’t alleviate the workload that—— 

Mr. DALEY. Yes. 

Mr. WYNN. Madam Chair, could I make just a quick comment 

and maybe—— 

Ms. HERSETH SANDLIN. Yeah, and then I think we have to—— 

Mr. WYNN [continuing]. Just quickly, I would just like to say, 

though, that to have eight contractors selected for a national contract and then all of the sudden to terminate or not extend their 

contract into the option years, if it was due to fault or non-performance by the contractors, it still shows that the VA has a very 

flawed process of selecting contractors because why would you select eight contractors in less than a few months if they are not performing. So—— 

Ms. HERSETH SANDLIN. Okay. Point well taken. 

One last question before we have to go. Mr. Wynn, is VET-Force 

advocating to give contracts to specific vendors or that VA make 

the best decision possible in the interest of the veterans that were 

served by the contract, regardless of who the vendor will be? 

Mr. WYNN. Right. We obviously support veteran small business, 

particularly, service-disabled veteran small business, so we support 

the use of them. We think that it is okay to contract its service out, 

but it does need to be managed more effectively. 

Ms. HERSETH SANDLIN. Okay. We will recess. It will be about a 

half an hour and we will resume with our third panel. 

[Recess.] 

Ms. HERSETH SANDLIN. Okay. Well, again, I want to thank our 

second panel for the insight that that they offered on the VR&E 

contracting issues and we look forward to following up on some of 

their suggestions from their testimony. I would now like to invite 

the third panel to the witness table. 

Joining us is Ms. Ruth Fanning, Director of Vocational Rehabilitation and Employment Service, Veterans Benefits Administration, 

U.S. Department of Veterans Affairs. Ms. Fanning is accompanied 

by Mr. C. Ford Heard, Executive Director, Center for Acquisition 

Innovation, Office of Acquisition and Logistics, U.S. Department of 

Veterans Affairs; and Mr. Philip Kauffman, Attorney, Office of Special Counsel, U.S. Department of Veterans Affairs. 

Thank you for being here. Ms. Fanning, you are now recognized. 


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STATEMENTS OF RUTH A. FANNING, DIRECTOR, VOCATIONAL 

REHABILITATION AND EMPLOYMENT SERVICE, VETERANS 

BENEFITS ADMINISTRATION, U.S. DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY C. FORD HEARD, EXECUTIVE DIRECTOR, CENTER FOR ACQUISITION INNOVATION, 

OFFICE OF ACQUISITION AND LOGISTICS, U.S. DEPARTMENT 

OF VETERANS AFFAIRS; AND PHILIP S. KAUFFMAN, DEPUTY 

ASSISTANT GENERAL COUNSEL, OFFICE OF GENERAL COUNSEL, U.S. DEPARTMENT OF VETERANS AFFAIRS 

STATEMENT OF RUTH A. FANNING 

Ms. FANNING. Madam Chairwoman, Ranking Member Boozman, 

Members of the Subcommittee, thank you for inviting me to appear 

before you today to discuss VA’s Voc Rehab and Employment program. 

With me today is Mr. Ford Heard, Executive Director, Center for 

Acquisition Innovation, Office of Acquisition, Logistics and Construction; and Mr. Phil Kauffman, Deputy Assistant General Counsel. 

My testimony will provide an overview of the VR&E program 

and the services we provide, a review of contract services used to 

support our mission, issues of concern pertaining to the VR&E National Acquisition Strategy contracts and prime contractor performance, and VA’s ongoing work to streamline and improve contracting 

requirements and oversight. 

The VR&E program has professional counseling and employment 

staff of over 1,100 throughout the country. They are located in 57 

regional offices and over 100 out-based offices. They are there to 

provide for the needs of veterans with disabilities to help them 

achieve their rehabilitation goals. 

While our VA staff are the primary providers of services to veterans in the VR&E program, VA has adopted a National Acquisitions Strategy. It was adopted to award and manage contracts at 

the national level. These contracts are in place to complement and 

supplement the services that we provide. 

The contracts are primarily used in areas where we have staffing 

shortages, geographic challenges or we need specialized services for 

veterans. We want to ensure that veterans don’t have to travel long 

distances, that they are able to access services in a timely and 

quality manner. 

All the contracts under the NAS were awarded to small businesses and service-disabled, veteran-owned small businesses that 

had or asserted that they could develop a local presence throughout 

the subareas for which they were awarded. 

Post-award, a week-long kick-off meeting was conducted which 

included extensive training for the new prime contractors, as well 

as for our own VA staff. This training included 2 days of combined 

sessions with VA staff and contractors and it also included breakout sessions designed to thoroughly review our in-depth, in-theweeds, processes with the contractors. In turn, the break-out sessions for VR&E staff were designed to go through the entire contract to ensure appropriate and consistent administration of the 

contract. 


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The last day of the session included a break out specifically to 

let prime contractors and the VA staff from around the country 

they would be supporting get together and talk about next steps. 

So it was an extensive and an unprecedented training that we provided in order to kick off this new contract appropriately. 

Post-award, local offices have continued to work with prime contractors to provide additional training. They invited them in, had 

training sessions and they have also worked with them ongoing to 

provide performance feedback. 

Also, throughout the post-award period, VR&E Service management and contracting staff continued routine calls with VR&E officers and field contract specialists. These were done weekly for the 

first several months of the contract, and then at least biweekly up 

until the current time. We had a call this week. 

We have also established a contract administration board. This 

includes Voc Rehab, the Office of Acquisitions and Logistics staff, 

including the contracting officer, and General Counsel staff. This 

meeting is used, and again it meets routinely at least once every 

2 weeks, to elevate contract concerns to the contracting officer to 

allow her to work proactively with the contractors. 

The current NAS contracts, unfortunately, have not met the 

needs of VR&E service in assisting us to provide timely and quality 

services to veterans. Half of the prime contractors have not met 

contract performance standards. In particular, prime contractors 

with contracts in multiple jurisdictions around the country have 

not consistently provided adequate staffing coverage, timely services, or the quality of services that are expected. 

VA has attempted, and continues to attempt, to resolve issues 

with vendors, but as the base contract year progressed, we became 

increasingly concerned about some contractors’ failure to meet 

timeliness and performance standards and the corresponding impact on services to veterans. 

We did not exercise options to extend the NAS contracts and we 

are in the process of developing new contracts. We expect those to 

be awarded by December of this year. 

Since the National Acquisition Strategy was developed, VA’s 

focus has been on continually leveraging lessons learned to find 

ways to simplify and strengthen oversight in administration and 

contracts. 

As we move forward into the temporary local contracts and the 

new national contracts, our primary concern will be in getting contractors on board who can meet timeliness and quality standards 

to ensure that veterans receive those services that they need. 

Obviously, as we go forward our main strategy will be to use our 

own professional staff to the maximum extent possible to provide 

those services, but as needed we will continue to use contracting 

as one of our primary strategies. 

Madam Chairwoman, that concludes my comments. I would be 

happy to take any questions from you or other Members of the 

Committee, as would other Members of the panel with me. 

[The prepared statement of Ms. Fanning appears on p. 64.] 

Ms. HERSETH SANDLIN. Thank you, Ms. Fanning. 

First, can you explain the varied forms that are used from regional office to regional office? One example that we are aware of 


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is Georgia’s Authorization for Services in the counseling services 

and that is different from any form used out of the regional office 

in Oklahoma. 

Ms. FANNING. I believe you are referring to referral forms for 

services under the contract, and our M28 Manual mandates that 

we use a 1985 form or its equivalent. I have recently reviewed a 

sample of referral forms used by regional offices, and our review 

showed that all of the required aspects from the 1985 were on the 

office’s local forms. 

The forms did vary. They looked different, but they were primarily designed to incorporate all the services under the contract 

onto one form, so that rather than writing each service on the form, 

it could be checked and I think it was actually done to improve 

clarity. 

Now, having said that, I can tell you that it is a complaint that 

I have heard in terms of using varied referral forms. And even 

though our manual allows that, as we go forward with new local 

contracts and new national contracts, we have already provided a 

standardized referral form that will be mandated for our regional 

offices. 

Ms. HERSETH SANDLIN. You say ‘‘the manual provides it.’’ What 

manual are you referring to, again? 

Ms. FANNING. The M28. It is our operating manual for Voc 

Rehab And Employment. 

Ms. HERSETH SANDLIN. When was the National Acquisition 

Strategy adopted? Not until last year, right? 

Ms. FANNING. The National Acquisition Strategy actually started 

several years ago. This is the second NAS contract that has been 

in place. 

Ms. HERSETH SANDLIN. Did you ever have complaints about varied forms previously? 

Ms. FANNING. Not that I am aware of, but I wasn’t in Central 

Office at that time, as you know. 

Ms. HERSETH SANDLIN. Do you know how long Georgia and Oklahoma have been using these respective forms? 

Ms. FANNING. Well, the 1985 form has been used throughout my 

career with VA. That is not a new form. It is a standardized form. 

The local referral forms that were developed to simulate the 1985 

would have been developed for this current NAS contract because 

the NAS contract had its own service packages, its own pricing. So 

the forms were developed in order to meet the need of the current 

contract. 

Ms. HERSETH SANDLIN. As you prepare to implement the new 

NAS? Has there been any evaluations as to whether or not there 

should be uniformity of the forms? 

Ms. FANNING. There already is. A standardized form has been developed. It is already in both of our contracts and it will be mandatory for all offices to use it. 

Ms. HERSETH SANDLIN. In your testimony you state that ‘‘as necessary,’’ VR&E officers and contract specialists were able to provide, or were available to provide guidance and resolve issues. According to one of the prime contractors, when they sought help 

from the contract specialists, they didn’t provide any assistance or 

guidance. Were you ever made aware of these concerns? 


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Ms. FANNING. No, I was not until just recently in preparing to 

come here. I had a conversation with Mr. Tarkowski early in the 

week. He referred to that. And he discussed that with me and I immediately went to my staff and asked them to provide me with any 

e-mails that they have received so that I could see what action they 

have taken, if they have forwarded those on to the contracting officer for action, what kind of feedback they have provided to his company. 

It concerns me anytime that communication breaks down. I was 

very grateful that he brought that issue to my attention. 

Ms. HERSETH SANDLIN. Do you acknowledge that there has been 

a breakdown in communication, or does that remain to be seen 

based on your request for information from your staff? 

Ms. FANNING. That remains to be seen. I haven’t received all of 

the information. Two individuals were pointed out and only one of 

them has provided information to me. From review of his e-mails, 

I didn’t see any problem, but I want to fully evaluate the situation. 

In addition, I would be happy to receive any e-mails or communication attempts that weren’t responded to so that I could research those further. 

Ms. HERSETH SANDLIN. This may be an area that Mr. Boozman 

is interested in pursuing. He and I have been visiting some of our 

questions to the prior panels and from concerns expressed in opening statements. 

What assurances can you give the Subcommittee that no veteran 

is going to go without services until the new National Strategy is 

implemented? 

Ms. FANNING. Well, as I mentioned earlier, we have almost 1,100 

staff around the country. They are fully equipped and trained to 

provide services. That is our primary strategy. Now, we have—— 

Ms. HERSETH SANDLIN. Let me interject. I thought the purpose 

of the National Acquisition Strategy was to relieve some of the 

workload of your 1,100 specialists? 

Ms. FANNING. The purpose of it is to supplement and complement our services where needed. 

Ms. HERSETH SANDLIN. So you have no concerns that the folks 

who you currently have on board, in addition to what they are 

doing today, will be able to provide those services to our veterans? 

Ms. FANNING. I am concerned and I had a little more to say, so 

I apologize that I wasn’t clear from the very moment I began. In 

addition to our staff, who are very competent and able to provide 

services, our caseload is lower now than it has been throughout my 

entire career. 

We will continue to use some contracting services. That’s necessary for a couple of reasons. First of all, if we do have a staffing 

shortage, an employee is promoted and moves on to a new job, we 

don’t want to have a gap, especially in a rural area. It is very important that we are able to contract for services. 

All of our offices have access to a contracting officer. We have 23 

of them around the country and that is a major enhancement that 

we made in our program over the last few years. 

Our VR&E officers, also, all have basic warrants, and they can 

also procure services on an as-needed basis. So today if there is a 

service need, even without a contract in place, we can go out and 


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meet that need. We don’t have to wait for a national contract to 

be awarded. 

The reason we have national contracts in place is not that that 

is the only vehicle that we have to procure services. National contracting is in place because we want to have a structured, consistent approach. We don’t want to have 57 offices doing business 

in 57 different ways. 

And back, you know, when I was rehabilitation counselor, back 

in the old days, we had local contracts in place. There was actually 

a task force put together on which I served that looked at how contracting could be strengthened. The National Acquisition Strategy 

came out of that task force. 

The purpose of that task force was to look at how could we come 

together nationally and not have 57 offices, first of all, taking time 

away from serving veterans to develop contracts, but second, not 

being experts in the field and perhaps having gaps in the way contracting is administered. For that reason, national contracts were 

developed. 

Now, because we are looking now at doing some local contracts 

as a bridge, that concern remains. To address that, we have developed a standardized acquisition package. The statement of work is 

mandatory. The technical evaluation criteria are outlined and are 

mandatory. The report forms have been standardized, and that is 

a change and a lesson learned from the last contract, that reports 

need to be clearly defined. 

Even though it is a performance-based contract, and in a performance-based contract typically you say to the person you are 

contracting with, this is what I need and they come back to you 

with a product and they have some flexibility. 

We did provide training based on the M28 and very structured 

training in terms of what we expected for each package. 

But some of the concerns that I have heard expressed about one 

office requiring a report format that is different from the State next 

door concerns me. So we have developed a template for each report 

that we will expect. 

So as we move into these local bridge contracts, there will be a 

great deal of structure in place, and in addition, we formed a governance board. The governance plan is in final concurrence now. As 

soon as my boss signs off on it, I will be happy to share it with 

you. 

That governance plan partners Voc Rehab with the Office of General Counsel, with the Office of Acquisition and Logistics and with 

VBA’s head of contracting activity. That board will oversea every 

aspect of these local contracts from solicitation to award, to implementation, until the new national contracts are in place. 

Ms. HERSETH SANDLIN. Mr. Boozman. 

Mr. BOOZMAN. I think, to follow up on that question, what happens to the local guy that doesn’t do what he is supposed to do, 

that doesn’t implement? That seems to have been the problem? 

Ms. FANNING. If a local officer, a VR&E officer or contracting officer doesn’t appropriately follow the guidance, then when we learn 

of it, we take corrective action. 

Mr. BOOZMAN. Have we ever taken corrective action? 

Ms. FANNING. I beg your pardon? 


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Mr. BOOZMAN. Like last year, did we ever take corrective action? 

Ms. FANNING. There was one incident mentioned earlier when an 

employee sent a letter that was inappropriate, and yes, we investigated that. In fact, that individual did that as a private citizen 

from their own home e-mail, but that was still addressed with that 

individual. 

Mr. BOOZMAN. Right. If you had problems with some of the contractors not performing, why would you terminate the contract for 

all eight? 

Ms. FANNING. Well, partly it is a legal issue, and if I could, I 

would like to defer to Phil Kauffman to talk about that issue of 

why we did not exercise options. 

Mr. BOOZMAN. Well, you might also comment, then, why when 

you are here in April, that VA didn’t, you know, and that you filed 

documents in the U.S. Court, Federal claims, stating that VA 

would not exercise the first option year, why didn’t you mention it 

in April when you were here? 

Ms. FANNING. Sir, I would need to go back and look at dates to 

know if those events, you know, how they fell before each other or 

after each other. I apologize that I can’t address that question at 

this time. 

[The VA subsequently provided the following information:] 

The Order of the United States Court of Federal Claims was entered 

April 24, 2009, in Veterans Vocational Service v. United States, No. 08–589– 

C, approximately 1 month after the April 2, 2009 HVAC hearing. 

Mr. BOOZMAN. Yes, sir. I am sorry. 

Mr. KAUFFMAN. The decision of the settlement in the Claims 

Court matter was based on the issues raised in the bid protest, so 

that was part of the—in the settlement of that case, the corrective 

action was the determination to agree not to exercise options on 

any of the contracts. So that was in conjunction with the Department and the Justice Department as to how we would resolve the 

matters in that Claims Court bid protest. 

Mr. BOOZMAN. Okay. Well, the Chairlady is the lawyer here, so 

maybe she understands, but again I don’t understand why, you 

know, if some of them are doing the job, why you get rid of all of 

them. 

But the other thing is is that the reason that we went to this system, or you guys went to this system was that GAO, had some real 

concerns about shoddy contract management, and I think at one 

time the counseling program contracted with over 240 vendors. 

It seems like with this short term, that we are going back in that 

direction, and yet if we are having trouble dealing with eight, I 

guess, how can we deal with all of those? 

The other thing is, is that if we look at the GAO report of April 

23rd, 2007, they list five things, keys challenges remaining to improving VA’s management of VR&E Service contract. Specifically 

found, regional offices are not fully applying VA’s contracting guidance, current training does not adequately prepare contracting officers to manage contracts. 

It seems like the thing that the contractors are complaining 

about are the things that are listed in the GAO report. So can you 

comment in that regard? 


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Ms. FANNING. Certainly. Your first question is, if we can’t manage eight, I think you said—— 

Mr. BOOZMAN. Yes, ma’am, how can we do it. 

Ms. FANNING [continuing]. How are we going to manage more. 

And I think part of the issue is not the number of contracts, but 

having the right contracts, including the right contract vehicle in 

place. 

Mr. BOOZMAN. But you are the ones that determined that in the 

first place, though. 

Ms. FANNING. Absolutely. You are right. We did. 

Mr. BOOZMAN. I mean, you did the contracts. 

Ms. FANNING. I didn’t personally, but VA did develop these contracts. 

Mr. BOOZMAN. I understand. 

Ms. FANNING. There was, in response to the GAO study and 

other studies, a move to attempt to lessen the number of total contracts that we had in order to—in an attempt to lessen the administrative burden. I think one thing that we learned from that venture is that eight may not be the right number. 

We need to ensure through our contract award process that any 

vendor who proposes to provide services to the VA is, in fact, able 

to deliver what they say that they can. 

Now, I fully believe that every vendor who proposed, thought 

they could do that but, in fact, we had vendors that were located 

in only one jurisdiction expand to cover multiple jurisdictions. We 

saw that they struggled to get staff on board and to develop subcontracting relationships. 

We had delays in being able to refer cases because in many jurisdictions they simply didn’t have adequate staff in place that we 

could refer to. 

So I think, really, the issue is making sure that during our 

award process, and this is something that I have ensured, that our 

current, our new solicitation very strongly outlines the requirements for VA, that not only are the staffing in place, but the professional locations are in place, that there is a presence in the communities where we need the services so that we can know that 

when the contracts are awarded, we can move forward and refer 

and get the services that we need. That’s the entire purpose of the 

contract. 

If I could address the second part of your question, GAO made 

three recommendations. The first was that we conduct a management review to assess how our regional offices are implementing 

contracting guidance and take actions to make improvements. We 

have done a number of things in response to, not only to that recommendation, but I can say that some of the actions have been implemented prior, requiring that any local contract that is entered 

into, field offices must come in and request a waiver. 

Use of the NAS contract has been mandatory. We do not allow 

local field offices to decide that they will go around that contract. 

They have to use the vehicle that has been nationally endorsed and 

developed. 

Quality assurance site visits have been strengthened in order to 

go out and look at the contracting activity in addition to other 

VR&E activities. 


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Our officers in the field have been required to go through 40 

hours of COTR training and an additional 40 hours of contracting 

officer training. They won’t usually be in a position of awarding 

any kind of contracts. The reason that they became contracting officers warranted to that basic level is to provide that basic training 

of the Federal Acquisition Regulations. They need to be cognizant 

of contracting regulations in order to provide appropriate services 

and oversight of these contracts. 

We have put 23 warranted contracting officers out in the field 

around the country. These are the same warranted officers that 

work for the Office of Acquisition and Logistics. They are warranted by Mr. Heard’s shop. In the 1102 series, they are very highly trained individuals, and they provide oversight. They provide assistance directly with the contractors out in the field, as well as 

oversight and assistance to our VR&E staff. They play a very important role and that is a very structured managerial approach to 

contracting. 

The GAO also recommended that we require regional offices to 

report on the efficacy of contracting training. We have done that 

throughout this process. And in our recent conference in Philadelphia we did an additional formal training review. The purpose of 

that is to ensure that the training we have targeted through the 

1-week training we did prior to kick-off and implementation, to the 

ongoing weekly and biweekly calls to the one-on-one consultation 

that is provided by the contract staff that we now have in VR&E 

service, that that is effective, that we are touching the correct 

points, and we will use the feedback that we got from our staff to 

further our training to address the issues where they felt uncomfortable or where they needed additional training. 

It is an evolving process. We want this to be very effective. It is 

something that we have been working on at the VR&E Service for 

years, and we will continue to work on even if we think we have 

it right. This go around, I think there is always room for improvement and that is what we will be looking for. 

In each aspect we will look for lessons learned and how can we 

do it better either next time and or how can we implement immediate improvement. 

Mr. BOOZMAN. Thank you, Madam Chair. 

Ms. HERSETH SANDLIN. Thank you, Mr. Boozman. 

Ms. Fanning, you said, in response to one of Mr. Boozman’s questions that you are convinced that the contractors in their mind believe they could provide these services, and maybe this is a question for Mr. Heard. I don’t know who—hopefully someone will be 

able to answer this question, but the issue isn’t whether or not 

they thought they could. The issue is whether or not, before giving 

them the contract, there was an assessment that they could fill the 

contract requirements. 

Prior to awarding these contracts under the NAS, did the VA assess whether or not these businesses had the capabilities and resources to provide the services required? 

Ms. FANNING. Yes. And it is a two-part process, and so I will ask 

Mr. Heard to also comment. There were formal technical reviews 

conducted of every proposal. This was done via a very structured 

process under the contracting officer’s oversight. 


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We brought in almost 20 field managers, not field staff but senior 

field folks to come in and review these contract proposals from a 

technical aspect. There were separate teams that looked at past 

performance information that was provided by the contractors. And 

remember, we are evaluating what the contractors have provided 

in their proposals, their outline of how they will meet the requirements, how they are structured as a company to do so, and looking 

at the past performance recommendations that they have provided, 

as well as utilizing any experience that we have with these companies. In addition, that process is also overseen by the contracting 

officer. 

The third evaluation is the price evaluation. That was the sole 

purview of the contracting officer. VR&E Service didn’t play a role 

in that evaluation and I will turn it over to you to comment on any 

of those issues. 

Mr. HEARD. Sure. The awards were best value awards, so we are 

looking at a combination of the technical expertise, experience and 

price. So as Ms. Fanning was talking about, we did look at, heavily 

at credentials that weighed into their capability. We were also looking at, from a strategic standpoint, that the NAS would really look 

at building upon partnerships. 

This is a national effort. A number of contractors that are out 

there, some who are bidding on this job, would not necessarily win 

contract awards. So the intent was for them to build partnerships 

with potential prime contractors as well. 

So when we were looking at this structure, the idea was to get 

individuals, contractors who had the skill sets that were going to 

provide the best services to VA and our veterans. 

Ms. HERSETH SANDLIN. Ms. Fanning, where in your opinion was 

the breakdown? I mean, how do you respond? I know you had mentioned that there were problems with prime contractors struggling 

to develop subcontract relationships, recruit appropriate staff. 

For one example, how do you respond to the testimony of the 

first panel that they raised at the workshop their concern about the 

process for getting counselors approved through, I think, the security assessment? So they claim they anticipated that it was going 

to be 2 months or so and were somewhat dismissed, it sounds like, 

in expressing that concern. 

Help us understand from your vantage point, if their capabilities 

were assessed, what happened with the breakdown? Are you satisfied that all of your staff out in the local and regional offices were 

committed to fully implementing the NAS? 

Ms. FANNING. First, regarding the training, we had a formal session at the training that was pre—before any referral was made, 

about the security requirements and the background checks. We 

brought experts in from those areas to review step by step what 

was required and provided step-by-step guidance. 

I have to say that I was surprised to hear the comments earlier 

because those conversations, in my recollection, did not happen. If 

there was a concern with the background checks being expedited, 

I wasn’t aware of it until some concerns were raised later when the 

background checks actually started being requested. 

At that time I personally called the Security Information Center 

in Little Rock and I learned that they put staff on overtime 


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throughout the weekend in order to avoid any backlog. And in fact, 

they never experienced a backlog. All those security checks that 

were submitted were timely processed. 

So I am surprised by that, but what it points out to me is that 

we need to, as we go further, ensure that that guidance is crystal 

clear. If there is any confusion about it, we need to make sure that 

it is crystal clear. It is to our benefit as well as to any contractor 

who works with us. We don’t want a delay. We wanted these contracts in place because we needed them. 

So for contractors having difficulty recruiting staff or getting subcontract relationships in place or getting a security clearance that 

is needed in order to start working with veterans, and I think you 

know that obviously is needed because of the importance of protecting private information, that is something that we wanted to 

make clear. That is why we brought experts in to provide that 

training. We will make doubly sure that, as we go forward, it is 

even more clear. 

Now, in terms of our field offices wanting the contractors to succeed, of course they did. This is a tool for them, and for our field 

offices to be able to use contracts as good tools, they want to be 

able to refer cases and have them correctly done in accordance with 

the contract and returned in a timely manner. 

Unfortunately, our field offices have been very frustrated 

throughout the last year. The contractors performance has affected 

service to veterans. It has created a huge administrative burden for 

the field offices. Their attention has been focused more on the contracting problems and resolving those, really, than it should have 

been. 

Their focus needs to be on veterans, ensuring that veterans are 

getting good services, not attempting to get contractors to return 

reports that are months and months overdue. 

Ms. HERSETH SANDLIN. So you have no concerns with regard to 

the contention in the testimony in the first panel that there were 

some in the local offices or regional offices that were concerned 

about the control they were losing with the implementation of 

NAS? 

Ms. FANNING. I am concerned any time that I hear that a field 

office is not appropriately working with anyone. We researched the, 

I believe it was two offices, that that was raised as an issue. We 

did not find that that was an issue. In one office I can say that 

they had been meeting with some of the contractors weekly for 5- 

hour meetings, 7-hour meetings, going over all of the past due work 

and trying to work proactively with them to get the work back in. 

I think our offices have extensive documentation on the outreach 

that they have done and the work that they have done to try to 

make these contracts a success. In fact, Madam Chair, these field 

offices didn’t have control before the current NAS. This current 

NAS contract was preceded by another national contract. That contract was mandatory as well. 

The current NAS, attempts were made to strengthen it, to make 

it a better vehicle, but it wasn’t the first National Acquisition 

Strategy, and the offices didn’t have the ability to freely procure as 

they wanted. 


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Now, when I came into VR&E Service almost 2 years ago now, 

one of the things that I have implemented is the requirement that 

a waiver be formally requested if the local office wants to do any 

kind of local procurement. I felt it was necessary to formalize that 

requirement to ensure that because we have this National Strategy, that it is being utilized, that there aren’t any gaps so that a 

local office could go out and contract on their own. 

Ms. HERSETH SANDLIN. Okay. 

Mr. Boozman, did you have any further questions? 

Mr. BOOZMAN. I guess I am a little confused. In your testimony 

you mentioned on page 6 about the improvements that were made 

or, I guess in the—the studies include the Secretary’s 2004 VR&E 

Task Force, 2005 VA Inspector General’s State of Contract, 2007 

GAO State of Contract, and you list a number of things that have 

been done or are in the process of being done. What time frame is 

that? When have all of these been—when did you find that things 

were kind of in a mess because in doing all of that, that indicates 

things are kind of in a mess? Do you understand what I am saying? 

Ms. FANNING. I understand what you are saying, yes, sir. I believe so. 

Mr. BOOZMAN. You are saying you instituted all of these things 

that you found needed to be instituted. When did you, when did 

that task force decide that this needed to be done? 

Ms. FANNING. Back when I actually was on the contracting task 

force, I know that there was just a concern that this was a burden 

on field offices to develop local expertise, to develop their own 

statement of work and award local contracts. 

The purpose of the task force was to relieve that burden from the 

field offices. 

Mr. BOOZMAN. Right. 

Ms. FANNING. And then as that task force’s work evolved, ultimately the Director of VR&E Service at that time determined that 

really what he wanted to put in place was a national Acquisition 

Strategy and not just have a national statement of work that could 

be used by local offices, but have a national contract that is awarded from a national perspective and implemented at the local level 

and monitored at the local level. 

Mr. BOOZMAN. So these twelve things that somebody decided 

needed to be done, were those done as a result of, like, last April 

or this April? 

Ms. FANNING. No, sir. These have been done as a result of the 

task force that was put in a place a few years ago, recommendations from that 2005 IG study, the 2007 GAO study, ongoing program evaluation that has been done, and frankly, evaluation of the 

current NAS contract and issues that have arisen from it and what 

we need to do as we go forward into our new contracts. 

So a lot of work has been done over the last 2 or 3 years to 

strengthen the contracting program. Adding the Contract Specialists, for example, that initiative was started by Ms. Caden. And 

when I came into VR&E Service, we added additional contract specialists throughout the country. 

So it has been an ongoing process. Our goal is always to continually look at what we are doing, how can we do it better, where 

are the gaps and how can we address them. 


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Mr. BOOZMAN. Okay. Thank you very much. 

Thank you, Madam Chair. 

Ms. HERSETH SANDLIN. Thank you, Mr. Boozman. 

Ms. Fanning, just two final questions. First, why was the Committee not immediately informed about the VA’s Settlement Agreement not to exercise any of its renewal options? 

Ms. FANNING. Well, I don’t have a response for that. I didn’t— 

I will take the blame for not knowing that I should have advised 

you and apologize to the Committee for that. 

Ms. HERSETH SANDLIN. Finally, in your opinion was the contract 

failure a VA problem or a vendor problem? 

Ms. FANNING. I think that if performance was acceptable, we 

could make this contract work. I do think that we have a stronger 

contract going forward. 

There were basic issues about the contract that I think were 

problematic. The per-case definition seemed to be something that 

some of the vendors, not all, struggled with—what does per-case 

mean, how long is that period. And even though that was clarified 

prior to proposals being submitted, it clearly continued to be an 

issue. 

I think making the solicitation very strong in terms of proposals 

demonstrating clearly that staff are in place, that the vendors have 

the capability to provide services throughout the jurisdiction they 

are bidding on is very important. I think that was a gap of the last 

contract. Had we had a way of really evaluating, based on the vendors being required to provide more robust information, I think we 

could have avoided some issues. 

So I would have to say that there are some issues with the contract that I think we are fixing as we go forward that created some 

of the problems that we are having. There were also just widespread problems with performance and timeliness and quality that 

in my role as the Director of VR&E, that is my biggest concern. 

We are here to serve veterans. It would be easier for us if we 

could have extended or picked up options, than going through an 

extensive process to award new contracts. But if veterans aren’t 

being well served, I have to take action to correct that, and that 

is what I am working to do. 

Ms. HERSETH SANDLIN. Well, I thank you for your testimony and 

your responses to our questions. I do think that there is a lot of 

work to be done here and gathering some more information from 

everyone that we heard from today. I want to thank the staff for 

the work that they have already done and will continue to do working with Mr. Boozman and myself and the rest of the Members of 

the Subcommittee. 

I do think that it is, I would hope that in light of some of the 

testimony you heard earlier or some of the concerns regardless of 

when they were first raised, that you will look into those. I mean, 

if there are issues of timeliness to delve into, you know, is that just 

because of performance issues by the vendors or are certain people 

in your offices making it more difficult for them to perform in a 

timely manner? 

As you work to get at the heart of that we will continue to be 

looking into this issue and looking forward to working with you 


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and the folks on your team and the other folks we heard from 

today. 

I thank all of our witnesses today on the panels for taking the 

time to be with us on pretty short notice. We value your insights 

and your expertise and your interest and perspective on the topic 

that we valuated today. 

The hearing now stands adjourned. 

[Whereupon, at 5:09 p.m. the Subcommittee was adjourned.] 


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(34) 

A P P E N D I X 

Prepared Statement of Hon. Stephanie Herseth Sandlin, Chairwoman, 

Subcommittee on Economic Opportunity 

In late June 2009, Committee Members were notified by Heritage of America expressing concern over the Department of Veterans Affairs’ Vocational Rehabilitation 

and Employment National Acquisition Strategy for counseling services. In their letters to Representative Harry Mitchell and Committee Ranking Member Steve 

Buyer, Heritage of America raised concerns that include: 

• varied referral, evaluation, reporting, and invoicing from regional office to regional office that make it difficult for contractors to implement the VA’s National Acquisition Strategy; and 

• need to improve timeliness of payment for services rendered and calculation of 

payments. 

We have been informed by Subcommittee staff that the Department of Veterans 

Affairs did not use its option to renew any of the eight contracts in its National Acquisition Strategy. Instead, the VA decided to use an interim strategy that will end 

later this year, at which point the VA plans to implement a new National Acquisition Strategy. 

This Subcommittee seeks to obtain feedback from prime contractors and stakeholders regarding areas of concern and their recommendations to improve VA’s National Acquisition Strategy for counseling services. Furthermore we seek to understand the reasons that led to the VA not using its 1-year contract renewal option 

and highlight lessons learned from the previous national strategy. We want to ensure that the Administration is aware of all concerns to prevent the same pitfalls 

that have been experienced by recent contractors. 

I look forward to hearing from all of our witnesses here today as we seek to ensure our Nation’s injured veterans are provided timely services to achieve their employment goals. 

f 

Prepared Statement of Hon. John Boozman, Ranking Republican Member, 

Subcommittee on Economic Opportunity 

Good afternoon everyone. 

Madam Chair, my agenda for this hearing is to determine that VA is properly administering the vocational rehabilitation and employment contract counseling program. The only measure I use to make that determination is whether the program 

is meeting the counseling needs of veterans. 

I want to make it clear that I have no stake in who VA selects to deliver services 

to veterans. Whether VA elects to award 1 contract or 50, VA must execute their 

side of the contract properly. They must hold their vendors accountable and we 

must do the same to VA. 

I’m sure you are aware of the concerns expressed by some contractors regarding 

VA’s administration of the recently terminated National Acquisition Strategy contracts issued last July. I am also sure you have heard VA’s side of the story. For 

me, I believe there have been ample mistakes by both sides. 

So where do we go from here? I understand VA intends to award multiple shortterm contracts via 19 sub-regions and will not extend the terminated contracts for 

a similar amount of time. It is reasonable to ask whether extending current contractors or issuing two sets of new contacts within 6 months is the better way to go. 

It is also reasonable to ask whether VA’s the same contracting staff that had difficulty managing eight contracts can manage 50 plus contracts. 

Assuming for the moment that the contractors’ testimony is reasonably accurate 

regarding things like inconsistent adherence to the terms of the contract by local 


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VA officials, where does our duty lie? VA has not presented evidence, other than 

anecdotal statements to staff, that one or more contractors performed inadequately. 

Madam Chair, having reviewed the testimony, I cannot determine who is right. 

Maybe both sides are right. The contractors make allegations and VA denies them 

and contends poor performance by some of the vendors. Therefore, I believe there 

should be a complete review of this contract by GAO or the Inspector General since 

we are not staffed to conduct such an extensive investigation. In the meantime, I 

believe the eight prime contractors should continue under a short contract extension 

until the new national contract is awarded. VA’s short term strategy that spreads 

contract management back out to 57 Regional Offices for a 6 month period of performance with all the incumbent problems makes no sense to me. 

Regardless, since we have oversight of the VA, the bigger issue is whether VA has 

learned any lessons from the failure of the NAS contract and what are they doing 

to prevent a repetition? What are the lessons learned? Will there be sufficient training for both VA staff and vendors? If inconsistency in administration arises, how 

will they enforce standardized administration? Does VR&E have the right people in 

the right places? Does VA have a sound acquisition strategy? How will contractors 

be evaluated on their performance? And finally, how should we evaluate VA on its 

performance in the execution of the next contract counseling program? 

Madam Chair, over the years, the Veterans’ Affairs Committee has not devoted 

a lot of its time reviewing VA acquisition programs. Unlike DoD, VA does not develop big systems outside of IT. But they do spend $15 billion of our citizens’ taxes 

and I believe it is incumbent on us to oversee that spending to ensure veterans get 

value for those dollars, whether it is a program administered by VR&E, Education, 

or any other arm of VA. 

In the end, except through legislation, we cannot force VA to change its short 

term strategy. But the Committee can learn from this unfortunate situation and as 

I said earlier, I look forward to a detailed study of this particular process. Hopefully, 

VA will too. In the meantime, I guess the lesson for the business community is that 

when you do business with VA or any Government agency, make sure all of the contractual issues are resolved including, in this case, how the Government views your 

assumptions, how administrative procedures will be handled, and how to resolve 

conflicts before it is too late. 

I yield back. 

f 

Prepared Statement of Patrick F. Chorpenning, President and Chief 

Executive Officer, Heritage of America, LLC, Glendale, AZ 

Executive Summary 

Heritage of America (HOA) is one of 8 prime contractors providing vocational rehabilitation and counseling services to disabled veterans under the VA’s National 

Acquisition Strategy (NAS) Vocational Rehabilitation and Employment (VR&E) Contract. HOA has the largest territory under this contract, serving veterans in 44 

States, the Western Hemisphere and Pacific Rim countries. HOA invested over $2 

million in this contract and has served over 16,000 veterans under this agreement. 

While this contract has operated well in many parts of the country there are a 

significant number of states where local VA practices running counter to the letter 

and spirit of the NAS agreement have resulted in it not working well at all. HOA 

considers this to be a function of varying degrees of commitment to the NAS among 

RO and VR&E officials that have been allowed to flourish due to the complete lack 

of leadership and management experience demonstrated at VA Central office. 

Start up problems—contract award was delayed multiple times in 2007 and 

2008 but contractors were not allowed to update pricing in their original bids. New 

security clearance procedures for counselors took inordinate amounts of time delaying case referrals for month, in some RO’s cases were not referred to counselors 

until December or even January, 5 months after contract award. 

Inconsistent business practices among regions have included: means of case 

referrals; initial evaluation information requirements; invoice forms, formats and 

submission procedures; lines of communication with ROs; and timeliness of payments for services. 

Delays in payments for services by the VA has resulted in severe cash flow 

shortages for HOA, which in turn is unable to pay its subcontractor counselors on 

a timely basis. Prime contractors were required to use a new invoicing system and 

HOA instituted a state-of-the-art information management system with which to 

track work flow and invoices. The VA did not establish any NAS tracking system 

matching the prime contractors’ ability to track invoice numbers. 


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It appears to HOA that services may have been delayed or denied to severely disabled veterans through VA mismanagement of this contract. Veterans 

were not served in a timely fashion during contract start up. As cash flow problems 

became more critical and counselors waited for payments for months at a time, 

cases had to be refused by HOA. Due to long delays in the ROs in approving HOA’s 

report, veterans’ services were delayed. 

VA inexplicably has declined to extend prime contracts by the 6 months 

held out in papers filed in Federal Court. However, no cohesive plan appears 

to be in place to continue services to veterans and HOA respectfully requests that 

Members of the Subcommittee urge VA in the strongest possible terms to extend 

the NAS prime contracts for 6 months to allow for more continuity in services to 

veterans and better contract administration. 

Madam Chairwoman, Ranking Member Boozman and Members of the Subcommittee, thank you for the opportunity to appear before you today, on behalf of 

Heritage of America, to testify on the Vocational Rehabilitation and Employment 

Contracts for Veteran Counseling. My submitted statement discusses where and 

why this contract has served veterans well in many parts of the country; where it 

has been extremely difficult to perform on this contract and why in other parts of 

the country; the lack of direction and leadership from VA Central Office regarding 

this contract; and recommendations for how to improve these important services for 

disabled veterans in the future. 

Heritage of America, LLC 

A service-disabled veteran owned small business (SDVOSB), Heritage of America, 

LLC, (HOA) was awarded, on July 21, 2008, one of the eight prime contracts under 

the National Acquisition Strategy (NAS) Vocational Rehabilitation and Employment 

(VR&E) Contract. HOA invested $2 million to create a state-of-the-art management 

information system, incorporating a number of technical innovations to enhance performance and delivery of VR&E services to veterans. While a small business, HOA 

is extremely fortunate to be owned and operated by individuals with extensive career experience in the VA and VR&E. Additionally, HOA has hired managers in the 

field with decades of experience working within VR&E. 

Despite VA actions truncating the beginning and termination of the base year of 

the contract, HOA is proud to have been tasked to provide counseling services to 

over 15,000 veterans, in 44 States and other countries including, Central and South 

America, Mexico, Canada, as well as the Pacific Rim including Australia and New 

Zealand. Playing a part in helping veterans achieve gainful employment has given 

HOA personnel a tremendous sense of accomplishment. Unfortunately, VA’s actions 

terminating the base year of this contract and summarily declining to exercise the 

first year option without any consultation or communication with prime contractors 

makes the past year’s efforts very disheartening. 

National Acquisition Strategy (NAS) Vocational Rehabilitation and Employment (VR&E) Contract 

This contract ostensibly is to standardize and streamline the acquisition process 

for the required VR&E services and to provide timely and high-quality service to 

servicemembers and veterans. Instead, the NAS has produced delays in the provision of services to veterans owing to the VA’s disjointed and incremental process of 

implementing the NAS. 

Where NAS worked well and why 

The areas of the country where HOA has had the most success include those in 

which Regional Office (RO) staff has been cooperative and reasonable in their dealings with veterans and the contractor. Implementation of the NAS agreement at the 

local level required contractor, RO and VR&E officials to adopt different practices 

and procedures than had been the norm in previous contract arrangements, entered 

into and administered by ROs. Where local VA officials professionally endeavored to 

abide by the new processes described in the NAS agreement and sincerely worked 

with contractor personnel to resolve problems and disagreements, services to veterans 

got off to a good start once referrals to counselors began to be made. 

The areas where such a cooperative atmosphere has existed include Hawaii, 

Samoa, Guam, California, Arizona, Colorado, Montana, Nevada, Oklahoma, Minnesota, Wisconsin, Illinois, Arkansas, Alabama, Georgia, Florida, Michigan, Indiana, 

Maryland, Delaware, Virginia and West Virginia, New York, and the New England 

states. For the most part, the Rules from the Baltimore Post-Award Conference and 

the contract itself were followed in detail in these states. There was not too much 


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divergence from the norm. The most significant procedural disparity among these 

States was in one where they have a unique demand for the prime contractor to 

deal directly with each of some 22 Vocational Rehabilitation Counselors (VRCs) in 

locations throughout the state, rather than dealing directly with the single VA Quality Assurance Manager, as stipulated in the agreement. 

Despite starting out on a good or even great footing in the above areas, severe 

cash flow problems owing to VA’s lack of timely payment for services rendered, have 

strained relationships across the board. Without timely payment from the VA, Heritage of America has had to delay payments to subcontractors and counselors for 

months at a time. (This overarching problem will be described in more detail below) 

While HOA has made every effort to pay its counselors as soon as HOA received 

payment from the VA, in too many cases payments from the VA have been so delinquent that counselors stopped accepting referrals from ROs, since the counselor had 

not been paid for work that had been performed months earlier. 

Where NAS implementation continues to be problematic 

Unfortunately, in many areas regional officials have disregarded the NAS agreement provisions, insisting that procedures revert back to previous local practices 

rather than working to implement the new strategy cooperatively. These areas include Washington, Oregon, Idaho, New Mexico, Wyoming, Texas, North and South 

Dakota, Nebraska, Iowa, Louisiana, Ohio, Mississippi, New Jersey, Pennsylvania, 

and Puerto Rico. All problems with regional officials have been exacerbated by the 

total absence of VACO leadership, virtual refusal to communicate with primes on any 

regular basis, and incompetence of the contracting officer. The National Acquisition 

Strategy is that in name only. Standardized business practices and procedures were 

not imposed on the ROs by VA Central Office (VACO) officials. There are still many 

VAs, represented by many ROs, that are being ‘‘managed’’ by regional directors, who 

have little interest in the ‘‘national’’ VR&E strategy. This reality became a confounding trap in time and money for prime contractors trying their best to abide 

by the NAS agreement and expecting ROs to do the same. 

Contract start up problems 

NAS contract award was delayed multiple times during 2007 and 2008 but prime 

contractors were not given a chance to update the prices bid from those entered in 

their original proposals. 

Heritage began contract performance with weekly status submissions, as requested 

by the contracting officer and national contracting officer technical representatives 

(COTRs). Each submission commented on progress and problems but receipt of 

these were acknowledged only once and never responded to substantively. Having 

noticed that some of these electronic submissions were even not opened by VA officials 

for weeks, HOA stopped sending them after about 4 months and never heard another 

comment about them from the officials who had requested them in the first place. 

New procedures for VA approval of counselors took months rather than a few days 

as touted by VA officials, notwithstanding being put on notice by prime contractors, 

experienced with the process, that a long time is required to complete the security 

initialization training and vetting demanded by contract add-ons. 

Therefore, individual veteran case referrals to counselors were thusly delayed for 

months but then dumped upon counselors in large batches by ROs. 

Counselors were then held to a 30 day timeliness criteria applied across the board 

for the first time. The RO staff in several locations, however, felt quite free to ask 

HOA not to return completed cases to them in batches as large as 20 or 30, even 

though they had been assigned to us in batches of 50 to 300 per week. 

Locally subjective criteria for approving initial evaluations made it very difficult 

to know what was required in the way of information and length or complexity of 

reports. While the NAS agreement stipulates that local ROs are to provide instruction to contractor personnel on such matter, many have refused to do so. 

Local attitudes in many areas were very predisposed against allowing the new national strategy contract to work and in some cases went so far as actively undermining or preventing performance by prime contractors. The NAS disrupted local RO 

regimes and the old ways of doing things, which had been criticized in prior IG, 

GAO and Secretary level Task Force Reports. Many RO officials simply resent losing 

power over VR&E contracting practices to the national strategy and prime contractors. 

Owing to 4 months delay in start up of this contract, the base year did not provide 

us with a full 12 months of work. Case work was first issued under this contract 

beginning in November 2008, following a ‘‘start date’’ of July 21, 2008. In one State 

it was even worse, as the VR&E Officer did not begin referring cases to us until 

January 2009, giving us less than a 5-month chance to show him how HOA could 


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improve on the first 300 cases he assigned in a 10-day period of January. In this 

State the ‘‘Base Year’’ was only 5 months long, and only 8 months long in the remainder of the 44 States in which HOA opened operations, spending about $2 million in startup costs. There was also an inordinate amount of delay in approving 

our counselors to accept case work. 

HOA had some start up problems of its own. Bringing to bear hundreds of new 

employees, subcontractors and counselors on complex tasks relatively quickly was 

not easy and not without some performance difficulties. In certain cases individuals 

performed so poorly that termination of employment under the contract was the appropriate action. Unfortunately, this is to be expected for a small number of cases 

but can be dealt with given proper management and leadership. HOA wonders how 

many of VA’s employees have been terminated for their poor performance under this 

contract? 

Specific problem examples 

Hundreds of cases were assigned to HOA virtually at once in Oregon, Washington 

and Ohio, months after the beginning of the contract, because VR&E officials in 

these and other states did not approve counselors in a timely manner. In Ohio no 

cases were assigned to HOA until nearly the end of January, almost 6 months after 

contract start up, even though HOA had approved counselors ready to provide services to veterans. Apparently the VR&E officer in Ohio simply did not wish to recognize those counselors as having been approved, and evidently VACO had instructed 

the VR&E officers not to provide the prime contractors with the names of their best 

contract counselors from prior arrangements until it was too late to any favorable 

impact on prime contractor operations. 

This manipulation by VACO was the result of what HOA believes to be the VR&E 

Service’s intention to see that the NAS contract fail. A letter from the VRC in the 

Northwest predicted HOA was going to fail even before it began to provide services 

and it was written before any of HOA’s counselors had been submitted for approval. 

Would that person ever have been inclined to approve any of HOA’s reports? Probably not, nor has that person done so. 

In another part of the Northwest it was even worse. The VR&E officers deliberately held up reports for months and then disapproved them with often flimsy critiques, such as declaring the report not to be approved when voc/ed exploration 

work appearing in attachments to the report were not referred to in the main body, 

and a typo appeared in one of them! And they have refused to accept 93 of HOA’s 

reports because these reports were sent to the Quality Assurance Manager, (QAM), 

per instructions received at the Baltimore Post-Award Conference to deal only with 

the QAMs regarding referrals and acceptances and other contract matters. 

In a Midwest State, where HOA has experienced the worst possible management 

of the NAS, no cases were assigned to HOA until nearly the end of January, almost 

6 months after contract start up. Counselors had been approved but the VR&E Officer simply did not wish to recognize them as such until January. Additionally, the 

VR&E Officer prevented the QAM from moving forward with 22 of HOA’s counselors 

who had been approved in November and, on that basis, refused to give HOA any 

cases until the end of January, at which time the VR&E Officer dumped over 300 

of them on HOA all at once. 

Inconsistent business practices and procedures among Regional Offices 

Inconsistent business practices between the regions prevented HOA from effectively serving veterans in the way they deserved and in some veterans being constructively denied congressionally mandated benefits when certain ROs refused to 

refer veterans for counseling by VA personnel because the services provided by HOA 

were declared to be inadequate. 

Lack of VACO leadership allowed these inconsistencies to flourish and probably 

emboldened the most problematic ROs to ignore provisions of the national strategy 

that prime contractors were trying to follow. 

Inconsistent Means of Case Referral 

The way cases are referred to contractors by each Regional Office (RO) varies 

greatly. Some ROs demand that HOA counselors attend the initial orientation the 

VA gives to veterans and pick up case files then (Chicago, Pittsburgh, Roanoke, several others to a lesser degree depending on location within the state). There are 

other ROs insisting that their Vocational Rehabilitation Counselors (VRC) assign 

HOA the cases and do the billing (Saint Petersburg). There are others that require 

us to deal only with the VR&E Officer in charge at each location (Cleveland and 

Seattle). There are a few others that follow the contract and have the Contract Specialist/Quality Assurance Manager (QAM) assign HOA the cases and submit invoices to financing for payment. 


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Some ROs want physical pickup of files, some FedEx files, others are willing to 

email them using secure Public Key Infrastructure and still others are willing to 

fax them via HOA’s secure Venali toll-free fax number. Faxing is preferred, as it 

saves the VA time, material costs, and labor costs in not having to put ‘‘dummy’’ 

files together, and it permits HOA to maintain the level of security required while 

permitting automation of file data entry. 

Inconsistent Initial Evaluation Information Requirements 

Inconsistency among the ROs in what they require in the way of initial evaluation 

information and length/complexity of reports is a major issue because in some areas 

VA officials use this as a means of not approving reports and therefore not paying 

HOA for months. This ‘‘procedure’’ constructively denies services to veterans during 

the months that RO staff takes to inform HOA as to the inadequacies they believe 

they have identified in reports. They usually state that ‘‘There is insufficient information on which to base a plan’’ when there often is sufficient information but the 

VRC or the VR&E officer or some other VA staffer does not like how the report was 

written and does not call the veteran in to provide services until after the report 

is redone. It often takes as long as three or 4 months for the ROs to inform HOA 

that reports are not adequate, thus delaying provision of services to veterans for 

that amount of time. 

In some cases the inadequacies are not even based on content but rather on punctuation within the report or the fact, as in Seattle, that the report did not state ‘‘See 

attachments for vocational and educational exploration results’’ when the results 

were very briefly summarized in the report body, but the details were presented in 

appendixes. This phenomenon is particularly evident in Washington, Oregon, Texas, 

Ohio, Florida, Pennsylvania, Colorado, and the Dakotas. To complicate matters, 

some ROs want short reports, some want longer ones. Some do not tell HOA what 

they want, but expect HOA to figure it out after reports are rejected. 

The divergence in what the contract requires and what the VR&E Officers demand is particularly notable in Ohio. The VR&E Officer in Cleveland insists that 

HOA provide what he calls a ‘‘Psycho-Social-Rehab-Employment Plan’’, as part of 

initial evaluation. This is not even remotely referred to in the contract and, to make 

things worse, he has refused to provide the mandated training required by the contract and VA regulations so HOA can determine what it is he truly wants as to content and forms to be used. 

Inconsistent Requirements for Reporting and Invoicing Forms 

The ROs do not all want the same VA forms. Some ROs want complete employment surveys and labor market research as part of the Initial Evaluation despite 

their not being required or desired in the contract. Some ROs have even gone to 

the extent of not approving reports on the basis that it does not include HOA’s own 

form entitled ‘‘Vocational Planner,’’ which is not a VA form. HOA had used it in the 

past and some ROs wanted it to be continued, though it was not part of HOA’s bid 

for the current procurement. 

As for invoicing, HOA has attempted to accommodate an enormous divergence of 

invoicing requirements from around the country, though the contract is very specific 

as to what is required. HOA even went to the extent of pre-printing invoices with 

stamps the ROs need to place on invoices so the VA disbursing unit in Austin, TX 

will have the funding obligation numbers and other information they need to pay. 

HOA has corrected this five times now and it is still not what some ROs want. 

Inconsistent Lines of Communication with the ROs 

This was discussed briefly in paragraph 1, above. The contract states that HOA 

counselors are to establish partnerships with the VA VRCs, but not involve themselves in contracting matters. Furthermore, the contract specifies that only the 

QAMs will make case referrals and approve invoices for payment. This is not the 

way it works in most ROs. In Seattle and Cleveland, for example, the VR&E Officers have reserved these rights and obligations to themselves. Other ROs, as explained above in the case of Florida, have the VRCs do all such work. In other 

areas, some of these duties are assumed by technicians who have no education or 

experience in such activities. 

Inconsistent Timeliness of Payment for Services 

Timeliness of payment for services is so inconsistent that in some ROs no delay 

occurs, while in others, delays exceeding 100 days are standard with no explanation 

of why payment is not being made or denied within 30 days, as required by the contract and in law. 

There are numerous possibilities for this inconsistency: In many ROs there is no 

single person responsible for tracking payments, or there is a single POC who is 


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not replaced when he or she goes on leave, or the report is not approved (and payment therefore is delayed) for any of the issues as explained above. Other possibilities include chances that reports and invoices are approved and forwarded by the 

local RO in a timely manner but ‘‘there is a problem in Finance,’’ or the VRC has 

given a case directly to one of HOA’s counselors (in violation of the contract) and 

HOA did not know that a case had been assigned and therefore could not bill it even 

though the work had been satisfactorily completed, or in some cases there has been 

deliberate withholding of payment to ensure that the NAS contract fails along with 

the prime contractors. 

Invoicing and aging accounts receivable 

Total current (as of July 27, 2009) accounts receivable for HOA is over $1.4 million, broken down as follows: 

0–30 days: $ 693,025.63 

31–60 days: 286,601.01 

61–90 days: 135,359.00 

Over 90 days: 298,079.31 

Total: $1,432,021.16 

On multiple occasions, this has been brought to the attention of the contracting 

officer, the Director of VR&E, as well as the Under Secretary for Benefits. Evidently, VACO is incapable of calculating accounts receivable using any national acquisition strategy invoice tracking system, as contemplated in the national contract 

and signed by the 8 prime contractors. In fact, VACO turned down HOA’s offer to 

provide it with the proprietary, state-of-the-art system HOA established, at considerable expense, specifically for this purpose. 

In February 2005, the VA Inspector General published a report concerning overpricing in Washington, DC and other areas, which had been tolerated for years. The 

recommendation to the VR&E Service then was to seek contractors who would be 

more reasonable in their pricing while still delivering acceptable services. HOA attempted to meet that requirement, but has been rebuffed at every turn. 

The critical nature of cash flow to small business is seemingly lost on VA officials 

both in Central Office and at the local level. This is particularly discouraging to 

HOA, which is a service-disabled veteran owned small business under the impression 

(apparently mistaken impression) that the VA considered it important, as provided 

in law, that it should help foster and support businesses owned and operated by service-disable veterans. 

As stated above, the inconsistency in timeliness of payment for services has placed 

extreme financial distress upon HOA and in many cases made it impossible for HOA 

to provide timely payment to its counselors. As a direct result of deficient payment 

to HOA by the VA, many of HOA’s counselors have declined to continue accepting 

case referrals from ROs or quit employment with HOA altogether. Such denial of 

services to veterans is regrettable but absolutely should have been avoidable, if only 

VA administered and implemented the NAS competently. 

The following paragraphs outline the inconsistent nature of VA direction on 

invoicing procedures. 

Contract language from solicitation page (un-numbered) section B.1.4.states: ‘‘Government Invoice Address: All invoices from the contractor shall be mailed to the following address: Department of Veterans Affairs, FMS–VA–2(101)/Certified Invoices, 

Financial Services Center, PO Box 149971, Austin, TX 78714–8971.’’ This has never 

been done because the prime contractors were given instruction at the Baltimore 

Post-Award Conference and subsequently by individual ROs to submit invoices entirely differently. 

Also, from un-numbered page section C.2 52.212–4(g) Invoice Contract Terms and 

Conditions-Commercial Items (FEB 2007): (1) ‘‘The Contractor shall submit an original and three copies (or electronic invoice, if authorized) to the address designated 

in the contract to receive invoices.’’ No address other than the one above is designated in the contract. 

However, more specific instructions are provided on pages 189–190 of the VR&E 

Post Award Workshop Book: ‘‘A proper invoice shall be submitted to the VR&E Officer at each division and include the following: Date; Invoice Number; Contractor 

Name; IDIQ Contract Number; Task Order Number; Purchase Order Number (the 

number from VA’s internal funding document); Case Number; Last four digits of the 

veterans SSN; Period of Performance; Service(s) provided to include Sub-Contract 

Line Item Number (SCLIN) number; Cost of services; Any travel and/or per diem 

costs and receipts (if appropriate) shall be included on a separate line item; Name, 

title and phone number of person to be notified in the event of a defective invoice. 


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The VR&E Office will approve the invoice and forward it for payment; or The VR&E 

Officer will disapprove any invoice and return it to the Industry Partner within 7 

calendar days.’’ Prime contractors were informed that the Post Award Workshop 

Book is their ‘‘bible’’ for guidance on issues surrounding the NAS and all the forms 

and procedures contractors would need were included in the Workshop Book. Nothing could have been further from the truth. 

Unfortunately, not all ROs follow these instructions. Many do not assign Purchase 

Order Numbers or Task Order Numbers, using instead the veteran’s name to track 

invoices. Others do not use the veteran’s name for tracking purposes, instead use 

the proper numbers but leave off the HOA invoice number, which does not permit 

HOA to track the invoice. Still other ROs do not use the proper obligation number 

which causes ALAC (Austin Disbursement) to return the invoice to the issuing RO 

Finance Office for revision. None of the ROs ever return a disapproved invoice within the 7-day period as required above and by FAR 32.904 (Prompt Payment). Some 

ROs have wanted HOA to pre-print funding obligation stamps on our invoices, others want them left off or modified in some way, thus providing more opportunity 

for misrouting, misfiling, lack of tracking consistency and rejection by the Austin 

disbursement center. 

One of the reasons for inconsistencies is the fact that the VA has changed its 

numbering system in mid-stream and the RO Finance Offices are not all plugged 

into the new Internet Payment Procedure (IPP) System. The IPP officials refuse to 

help HOA track invoices, saying that it is HOA’s problem and needs to be taken 

up with the Contracting Officer and the local ROs. 

Case Management Pricing Ambiguity 

Inexplicably, the VA has taken a position on interpretation of a pricing provision 

that assumes all eight prime contractors knowingly entered bids that would force 

them to lose money on case management services. VACO insists that billing for case 

management services should be for the ‘‘life of the case’’ which can be for as long 

as up to 63 months in one case, instead of the more reasonable 12 month period 

as bid by HOA. 

One of the prime contractors appealed VA’s interpretation for calculating these 

payments to the U.S. Civilian Board of Contract Appeals. The Board denied the 

VA’s motion for summary relief, stating in part that . . . ‘‘Given several requests 

to clarify its position through its solicitation, VA provided equivocal responses. When asked to describe the ways in which this solicitation differed from previous contractual instruments covering similar services, VA 

refused to provide any answer at all . . . It is not surprising, in light of 

the agency’s opaque approach to the matter at issue during the solicitation 

process, that the parties have entered into a contract with different understandings of an important term . . .’’ 

In many other respects, as itemized throughout this statement, Heritage of America believes VA’s administration and implementation of this so-called ‘‘national acquisition strategy’’ has been no better than its performance during the solicitation 

stages, as described above by the two judge panel of the Contract Appeals Board. 

Additionally, VACO officials seemingly have been less than forthcoming with the 

House Committee on Veterans’ Affairs about information regarding the nature and 

degree of the difficulties they perceived with the NAS contract. HOA notes that the 

Director of VR&E testified before this Subcommittee on April 2, of this year and 

mentioned nothing of the fact that VA officials had, just days earlier, filed documents in the U.S. Court of Federal Claims stating that VA was not going to exercise 

the first year option on the NAS contract. If the VA had decided implementation 

of the NAS was so flawed that it warranted such drastic action, why wouldn’t the 

VR&E Director even mention it during her appearance before the Subcommittee. 

Additional discrepancies in VA calculation of prices under the NAS agreement 

The calculation of payments disbursed to contractors does not comply with assumptions in contractor bids, as required by the RFP. There are three major areas 

of concern: 

1. On page 51 of the RFP (Sol. No. VA–101–07–RP-0306) it states very clearly 

that, ‘‘The Offeror shall document in its proposal any assumptions.’’ Even 

though we complied by proposing a comprehensive list of assumptions as the 

basis for our bid, and even though the Contracting Officer accepted our bid, 

our assumptions have been completely ignored. 

This is most evident in the divergence between what was the understanding 

of all eight prime contractors as to how services for Case Management would 

be billed and how the VR&E Service payments would be made. HOA’s position 


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was made very clear in a letter to the Contracting Officer (attached). HOA is 

not asking that VA modify the contract, only that they comply with it. 

2. Travel. Again, HOA’s proposal made very clear assumptions as to what would 

be required for travel reimbursement if the VA were to accept the bid. Travel 

reimbursement has been resolutely denied by the VA. HOA’s question to the 

VR&E Service has been ‘‘How do you expect us to get to Guam or Korea or 

Okinawa to perform case work there?’’ HOA has qualified counselors, willing 

to travel but the VA will not pay for travel from CONUS to OCONUS and 

HOA bid reasonable travel rates. 

They apparently expected HOA to have included these types of travel costs 

in the FFP bid, which HOA made very clear in its proposal assumptions were 

not included, and that if the VA wanted HOA counselors to go to remote areas, 

VA would have to pay for travel. None of the eight prime contractors is being 

reimbursed for travel, though the original QAM in Florida (who has since been 

replaced) indicated that office would be willing to pay for such in Florida if the 

travel was pre-approved. 

3. Add-Ons for Security. The VA has required a number of add-ons to the contract 

which were not clearly defined in the RFP. Security issues, computer replacements, and the like were ill-defined and certainly not considered as part of the 

HOA bid or in the bids of any of the other prime contractors. The VA has demanded HOA comply with all of the new rules and regulations they have promulgated owing to their own security lapses but has not provided HOA with 

any resources for meeting their demands. 

RO’s undermining HOA relationships and reputation with subcontractors 

Instructions at Baltimore Post-Award conference stipulated that VA officials are 

not to communicate with subcontractors regarding contract matters but deal only 

with prime contractors. However, VA contact with HOA subcontractors and counselors is on going and extensive. In some cases VA officials are inaccurately stating 

that HOA has been paid in full and holding back moneys from subcontractors and 

counselors. Even more damaging, are statements by VA officials telling subcontractors to just hang in there until HOA can be dumped and VA can contract with 

HOA’s subcontractors directly, thus cutting out the prime contractor, probably at 

higher price. Now HOA subcontractors are writing letters to Congressmen complaining about HOA and contemplating class action lawsuits. Again, HOA considers 

all this to be part of VACO incompetence and regional office malfeasance. 

Recommendations for improving contract next time 

There are a number of technical innovations that Heritage of America (HOA) has 

developed during our current VR&E NAS contract VA101(049A3)V–0329 to enhance 

performance and delivery of VR&E services to veterans. Unfortunately, owing to the 

VA’s decision to not exercise Option Year 1 of any of the current prime contractors 

and because the first 4 months of the contract were taken up with fulfillment of 

contract add-ons and security requirements, HOA has not been given enough time 

to implement its innovations sufficiently to allow the VA an adequate opportunity 

for review. These technical innovations include the following: I-Sight Management 

Information System, Venali Secure Fax System, Central Processing Center, Central 

Call Center, Paperless Communication, Wonderlic Protocol Correlation, OASYS and 

CareerScope, Discrete Services, Process Flow, Travel Considerations, and Case Management Fees. Each is discussed below, illustrating the considerable resources and 

capabilities HOA has brought to bear on NAS contract performance. 

1. I-Sight Management Information System 

HOA officials have been told by former VACO officers, who helped in developing 

‘‘CWINRS’’, the information management system for VR&E, that HOA’s management information system is better than CWINRS. It is certainly more secure and 

available, operating as it does in a 128-bit SSL environment that emulates banklevel security with servers in a vault in Phoenix, AZ where they are unlikely to succumb to weather and climate issues and unlikely to be subject to traffic overload 

and other issues that are experienced by the CWINRS servers on a regular basis. 

HOA has informally offered access to this system several times to the VR&E Service as well as to the Information Service Officer people in VACO and RO people in 

numerous states. VA’s accepting this HOA offer would enable VRCs to instantly 

view the status of the cases they have assigned to HOA. 

Accepting HOA’s offer would also enable uniform tracking of cases throughout all 

ROs nationwide instead of continuing with the current VA ‘‘system’’ wherein some 

ROs track cases by veteran name, some track by a number they assign to each case, 

some track by a redacted ‘‘half-sheet’’ that represents the VA Form 28–1985 authorization, and some track by no recognizable means at all from our perspective beVerDate Nov 24 2008 01:36 Jan 15, 2010 Jkt 051879 PO 00000 Frm 00046 Fmt 6604 Sfmt 6621 E:\HR\OC\51879.XXX GPO1 PsN: 51879

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cause the VRCs hand cases directly to sub-contract counselors and HOA has no way 

of knowing that a case has even been assigned. 

2. Venali Secure Fax System 

Assignment of cases via HOA’s toll-free Venali secure fax system has been working well. It needs to be implemented in all ROs, however, especially in those that 

demand HOA counselors appear at VA orientations to receive case assignments only 

to be told there are no veterans who showed up that day, and in those ROs that 

demand their VRCs assign cases directly to HOA sub-contract counselors. Such disregard on the part of some ROs for the welfare of their ‘‘Industry Partner’’ Prime 

Contractors creates dysfunction in case assigning to say the least. 

Using HOA’s Venali secure fax system to assign and authorize cases also saves 

the VA time and money. Staff at ROs that use HOA’s Venali fax system no longer 

need to spend time and money making up ‘‘Dummy Field Folders,’’ no longer need 

to spend time and money filling up FedEx boxes and paying for shipping hard copies 

to us, no longer need to spend time and money on keeping extra files around that 

take up space and resources. If ROs were permitted to accept faxed reports and invoices from HOA, additional time and money savings would be realized by the VA. 

Better yet, a completely paperless communication between HOA and the VA 

would realize other savings in addition to time and money—original documents and 

VA Form 28–1985 authorizations would remain in the custody of the VA at all 

times, RO staff dealing with paper documents could be freed up for other duties, 

and VRCs would be able to spend more valuable face-to-face time with veterans instead of attempting to perform administrative duties for which they are unlikely to 

be well-suited anyway. A process describing this paperless communication is described below. 

3. Central Processing Center (CPC) 

HOA’s CPC has been operating well now for about 2 months, but there are older 

cases that were not processed properly by former HOA staff and managers in our 

regional organization. These personnel have been terminated in order to restructure 

HOA operations, eliminating use of a regional concept and regional managers. It 

will take some time for these older cases, some of which were not referred to HOA 

in accordance with the NAS contract, to be resolved in the new system. HOA would 

need an extension of about 6 months on the NAS contract to make sure all old cases 

are resolved properly. 

All case referrals are now being directed solely to the CPC where they are 

scanned into iSight and assigned to counselors. In addition, the new Call Center will 

be contacting the veteran and making the first appointment within 7 days and also 

contacting the VRC who assigned the case within that same 7-day period. This will 

ensure that timelines are met in accordance with the NAS contract. There are 

benchmarks built into iSight and the CPC process to make sure that appointmentmaking, testing, counseling, report writing, invoicing, and other services are provided in a timely manner. 

Several ROs, particularly in Subareas 17 and 4 (Washington State and Ohio), are 

struggling with this situation. Many RO officials tell us that they have seen improvement during the past 2 months that the CPC has been operating. Those older 

cases are the ones giving HOA the greatest concern. 

The CPC, while attempting to resolve these issues, must also keep up with current operations. HOA has hired additional staff in the CPC to make this happen 

and anticipates that these additions, in conjunction with HOA’s new Call Center 

and Process Flow, will resolve many of the issues that have been identified during 

the current NAS contract. 

4. Central Call Center (CCC) 

The CCC has opened in an office next to HOA’s CPC and is currently being 

staffed. When completed the staff will be making all of the calls for all NAS contract 

activities. This will include, within the first 7 days following receipt of case authorization, speaking with the veteran and the VRC who assigned the case, and making 

an appointment with the veteran to begin work on the case. Then, Call Center personnel under guidance from the Quality Assurance Manager, will follow up at regular intervals with the HOA counselor assigned to the case as testing, further appointment-making, counseling, report writing, and invoicing benchmarks are 

reached. The CPC will be responsible for entering all communications in iSight 

where they will be available for use by all participants and stakeholders. 

The QA Manager will sit in the CCC making sure that iSight and other quality 

control mechanisms are functioning as they should. Please see the Process Flow discussion and chart below. 


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5. Paperless Communication 

The discussion above gives an indication of how paperless communication might 

work and a detailed description is made below under Process Flow. 

The 2004 report of the VR&E Task Force recommended that paperless communication be established by the VR&E Service and this was re-emphasized in the IG 

report of February 2005. To date, there has been little accomplished toward reaching this goal. 

It is hoped that the VR&E Service will take what HOA describes to heart and 

gives HOA the chance to prove that what has been designed into HOA’s capability 

is the best way to serve our veterans. 

6. Wonderlic Protocol Correlation 

The Wonderlic Corp. has agreed to design for HOA an automated composite of results from the four test protocols of theirs that we are currently using, correlating 

these results in a narrative report that presents interrelationships among the tested 

aptitudes, interests, and abilities as well as work values. This composite report will 

be available as an attachment to HOA’s Initial Assessment reports and results will 

be summarized in the main body of the report. The composite report was to have 

been ready from Wonderlic by the end of September, but has been put on hold owing 

to non-renewal of Option Year 1. Development could be re-instituted upon contract 

extension of 6 months. 

It can readily be seen that such a composite would be of enormous advantage in 

helping the VRCs use test results in plan development. Counselors would be instructed in HOA reporting as to what areas to emphasize, giving the VRCs an additional understanding of the veteran’s aptitudes, interests, abilities, and work values. 

HOA is currently employing secure fax-back test results from Wonderlic. Any of 

HOA’s counselors from anywhere can fax test results toll-free over a secure fax line 

to Wonderlic where the tests are scored and faxed back by secure Venali fax to the 

CPC. These test results are then entered in iSight by CPC staff and are available 

immediately for use by HOA counselors, and by the VRCs should the VA agree to 

let them have access to our Management Information System. 

This system also creates an additional layer of security because test results never 

leave a secure environment and are not available in paper form until inclusion in 

the final report should it be decided that final reports will continue to be required 

in hard copy. 

7. Occupational Aptitude System (OASYS) and CareerScope 

OASYS and CareerScope are not HOA innovations, but HOA designed a potential 

use for them that should be attractive to the VA and motivated both companies responsible for developing them to produce a combined usage for HOA. 

The Wounded Warrior Program, as well as Chapter 36 Educational Vocational 

Counseling, requires immediate response to needs of the military service as well as 

needs of the veteran. To do so, HOA needs to be able to get on military bases and 

have access to computers with Internet hookups. These are usually found in libraries, non-appropriated fund facilities, and family service centers among other potential locations. With such access, which HOA is currently negotiating with appropriate DoD agencies, HOA will be able to immediately respond to needs of wounded 

warriors and those transitioning out of military service. 

Results from OASYS and CareerScope are immediately available at completion 

online. They can be printed out by the military servicemember and be available for 

a counseling session by HOA counselor the same day. 

Outside of this potential use, which HOA has been recommending to specific ROs 

for months, HOA has begun using OASYS to develop its Transferable Skills Analysis and vocational and educational exploration on local, state, and national levels, 

all of which can be accomplished using the continually updated data bases now 

available within OASYS. HOA has found this usage to be successful, but again have 

not had sufficient time to prove to the various ROs what can be accomplished with 

it. 

A contract extension of 6 months on our current NAS contract would provide time 

to prove the value of OASYS in helping produce collaborative vocational and educational exploration results that can be used, in conjunction with testing results and 

the veteran’s experience and educational and medical history, to provide the VR&E 

counselor with sufficient information about the veteran to determine feasibility for 

achieving a vocational goal, entry into suitable employment, or achieving maximum 

independence in the community based on a written rehabilitation plan. 


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8. Discrete Services 

HOA has developed a nationwide system for delivering Discrete Services and has, 

in accordance with instructions received during the Baltimore Post-Award Conference, been proposing it for months to VACO and all of the QAMs and VR&E Officers in the 44 states in which HOA currently operates. HOA is capable of continuing 

to deliver Independent Living assessments, job coaching, life skills coaching, job site 

analysis, and assistive technology, as well as the other Discrete Services described 

in the attachment entitled Discrete Services under the guidance of HOA’s National 

Discrete Services Director. 

9. Process Flow 

An attached flowing chart shows HOA processing of case work from assignment 

through billing. 

To summarize, our process begins when the QAM or COTR at the local RO faxes 

a VA Form 28–1985 case authorization and referral documents as appropriate to a 

toll-free secure Venali fax number at our CPC. The fax is received and entered into 

iSight. That same day, or the business morning thereafter if the case is received 

late in the day or before a holiday, a CCC person will be assigned the case to establish initial contact with the veteran and the VRC assigning the case. 

A first appointment is made with the veteran and the case is assigned in iSight 

to a counselor as appropriate. Testing and an initial interview or other activities depending on the type of case authorized are completed by the counselor with the veteran. Forms are filled out, and the veteran is given an appointment for the second 

meeting as well as homework to complete goal-setting and vocational and educational exploration. The counselor faxes completed test protocols to Wonderlic, they 

are scored, and faxed back to the CPC the same day. The CPC Team enters the 

results in iSight and the counselor can have immediate access to the results. 

The counselor goes over the results as well as the vocational and educational exploration homework with the veteran at the second meeting. If there has not been 

sufficient progress made on the part of the veteran, a third meeting may be necessary. When all is at hand, including test results and school transcripts and exploration outcomes, the counselor and the veteran agree on a vocational and educational (if appropriate) goal. The counselor staffs the case with the assigning VRC 

and writes a report. 

The report is faxed to the CPC along with the counselor’s bill if he or she is an 

independent subcontractor, the CPC gathers everything together including the invoice to the VA, and transmits or FedEx’s the completed report and invoice to the 

appropriate QAM or COTR. Any iteration required is handled in the same expeditious manner. 

10. Travel Considerations 

Heritage of America has qualified, cleared counselors who are willing to travel to 

outlying locations, including OCONUS locations, but the VA simply cannot continue 

to take the attitude that, in effect, HOA personnel must swim to Korea or Guam 

or Samoa to get the job done. Because the VA has insisted that only U.S. citizens 

can be qualified as counselors in foreign locations, HOA must be permitted to use 

counselors who are willing to travel. 

In HOA’s NAS contract proposal dated September 6, 2007, HOA proposed the following for travel: 

‘‘Travel to outlying areas, beyond 100 miles from an established HOA service 

location, will incur a travel reimbursement fee as bid in Price Schedule Attachment D–1, below. No travel will be reserved or confirmed prior to approval of the 

COR at the respective VR&E office. Overseas pay at 20 percent differential as appropriate would be assumed as a reasonable incentive for counselors tasked with 

travel to NAS Foreign Area Designations. 

The firm-fixed-price bid for each Contract Line Identification Number and 

SubCLIN is an all-inclusive price based on fair and reasonable professional and 

non-professional wage scales throughout CONUS and OCONUS. The prices include wages, travel up to 100 miles, tests and supplies, office operations, insurance, G&A, contingency fees, overhead, and profit, but not travel beyond 100 

miles one way from the HOA office location nearest the veteran. 

The HOA formula for travel reimbursement was bid as follows: 

• For those veterans living beyond a 100-mile radius from an HOA office location, 

it is assumed that the VA will provide a travel voucher for the veteran unless 

he or she is homebound. In the case of homebound or IL assignments, HOA 

counselors will travel to the veteran on a pre-approved basis by privately owned 

vehicle where practical for up to 500 miles one way. 


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• Travel by commercial airline will be pre-approved by the local VR&E Officer as 

appropriate. Travel over 500 miles one way within Subareas 23, 24, 25, and 26 

is bid to include airfare, per diem, and hazardous duty and/or overseas differential as appropriate, at Government rates in effect at the time of travel and as 

approved by the VR&E Officer.’’ 

11. Case Management Fees 

No one is capable of providing Case Management services for the fees that VACO 

is insisting are permitted under the current NAS contract, that is for the ‘‘life of 

the case,’’ which apparently can be considered to be as long as 63 months by the 

VA since HOA has had at least one referral for that length of time. Dividing 63 

months by the Firm Fixed Price bid per case results in about $10 per month—less 

than minimum wage for the several hours to include travel expenses counselors put 

into a Level II or Level III Case Management assignment per month. HOA has written a letter (attached) to the current NAS contracting officer outlining the legal deficiencies in the current VACO interpretation of how Case Management fees should 

be paid, but to date, HOA has not received a reply. 

How to bill Case Management services was not adequately defined in the prior 

2002 NAS contract either and needs to be addressed in an equitable manner by the 

new contracting officer in the contemplated re-bid of the current NAS contract. 

HOA has the capability of providing Case Management services if the upcoming 

RFP will require that FFP bids per case are to be proposed on a monthly basis, that 

cases are to be assigned for a specified number of months within a 12-month base 

year or option year period, and that fees will be paid by the VA monthly. 

Recommendations for improving VR&E structure and bureaucracy: 

VA should create (alternatively Congress should legislate) a new Under Secretary 

position, titled Under Secretary for VR&E, who would have his or her own mandate 

for providing VR&E services separate from direction and funding and policy decisions dictated by the current Veterans Benefits Administration organizational structure. Veterans eligible for VR&E have already been adjudicated for compensation 

and pension purposes and should not have their separate VR&E benefits constrained by C&P criteria. 

Currently, Chapter 36 Educational/Vocational counseling is generally being disregarded by VA personnel in 90 percent of the ROs. The reason for this is that 

Chapter 36 is excluded from performance criteria and it is therefore not used in the 

VA’s work performance evaluation or in potential calculation of bonuses. This disregard of Chapter 36 counseling by most of the ROs in our Nation is constructive 

denial of a congressionally mandated benefit to more than 300,000 servicemembers 

separating from the armed forces annually. 

Because of the complexity of Independent Living (IL) evaluations, case management processes, and interaction between the veteran, the counselors, and the vendors providing supportive services, IL should be its own Service Group and not be 

relegated to inferior status under Discrete Services. In addition, IL is Track 5 of the 

VR&E process and is an important component of service to disabled veterans. 

Conclusion 

Apparently, the VA expected the NAS prime contractors—all small businesses, 

several of them service-disabled veteran owned small businesses (SDVOSB), to run 

their businesses as the VA runs its business, but without providing the resources 

to pay for massive inefficiency or intending to support success. 

Madam Chairwoman, thank you allowing Heritage of America to express its 

views. I hope you will seriously consider having additional hearings on these important matters. 

Given the Subcommittee’s awareness of the situation the VA has put it’s eight 

NAS prime contractors in, some of which are service-disabled veteran owned small 

businesses, I hope you will urge VA, in the strongest terms, to extend the NAS contracts by 6 months to allow for better continuity of service to veterans and improved 

treatment of the small businesses that believed this contract was an opportunity to 

serve veterans better than in the past. 

Additionally, I hope the Subcommittee will have the Government Accountability 

Office do a thorough investigation of the administration and implementation of the 

NAS contract to determine the successes and failures which have occurred over the 

past year, so that if VA goes forward with another national acquisition strategy it 

won’t again be fatally flawed from the start. 

VR&E should be the primary purpose for VA’s existence. Nothing should have priority over helping severely disabled veterans regain a place in the nation’s workforce 

or achieve the highest degree of independence possible. Sadly, VR&E has been broken for decades. Fixing it will take a sustained focus and strong desire to see real 


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changes made. I’m now, more than ever, totally convinced the VA cannot and will 

not accomplish the necessary reforms on its own. If the VA Committees of the House 

and Senate don’t take up the mission to fix VR&E once and for all, it will not happen and veterans desperately needing employment services will be stuck in the ongoing quagmire that is VR&E Services. 

Heritage of America will remain committed to the vision of a system that is not 

fragmented and dysfunctional, but cohesive from region to region, where veterans 

can receive valid evaluations and efficacious services, irrespective of their geographic location. Such a cohesive approach, however, is not possible with the old 

outdated model that features fiefdoms controlled by bureaucrats who have forgotten 

who we should be serving. 

Madam Chairwoman, this concludes my testimony. I would, of course, be pleased 

to answer questions from you or other Members of the Subcommittee. 


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f 

Prepared Statement of Anthony Tarkowski, President/Chief Executive 

Officer, Sygnetics, Inc., Rochester Hills, MI 

My company is one of the prime contractors for the Department of Veterans Affairs National Acquisition Strategy (NAS) Vocational Rehabilitation and Employment (VR&E) Contract. We were notified by the DVA that the option years on this 

contract would not be executed. This action was not due to deficiencies on our part 

in providing service to disabled veterans. There were awards made to Service Disabled Veteran Owned Small Businesses (SDVOSB), which we were one. The DVA 

erroneously made an award to a company that was not a SDVOSB. Therefore the 

DVA instead of removing that company from the contract they decided to punish 

all the other companies by not continuing the contract. 

While providing services under this contract we have had to overcome many obstacles that the DVA constructed that were not part of their original solicitation. 

This caused considerable financial outlays that without the continuance of the conVerDate Nov 24 2008 01:36 Jan 15, 2010 Jkt 051879 PO 00000 Frm 00054 Fmt 6604 Sfmt 6621 E:\HR\OC\51879.XXX GPO1 PsN: 51879

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tract will cause us severe financial harm. We have been able to work through these 

hurdles during the first year of the contract while providing exceptional service to 

veterans. Now that we are able to further increase our service to veterans and see 

a return on our investment the DVA seems satisfied to disrupt the entire process. 

The DVA administration of this contract has been particularly unconscionable as 

applied to the companies that won this award, since they are small businesses and 

many are service-disabled veteran owned small business, which the VA should be 

helping succeed on behalf of veterans rather than subjecting to bureaucratic roadblocks. 

We have been informed on a number of occasions by Regional Vocational Rehabilitation & Employment Officers that it was not their intention to make this contract 

successful. In fact they planned to do what ever they could to ensure failure. 

Some of the problems we encountered were: 

a. Reports returned for corrections. Our QA staff included two former VA VRE 

officers. We had to reiterate reports multiple times even after reviewed by 

former VA employees. 

b. Limited consistency between VA regional offices. 

c. Reporting content—what is acceptable at one office or counselor is not acceptable at another office and or by another counselor. 

d. Contact with VRE counselors was a challenge at best. In some offices the response was quick and informative. Other offices limited response. 

e. Regional offices had little if any direction on background security process. We 

developed a timeline—26 steps to have one counselor approved. 

f. Qualifications of staff—one regional office would accept the counselors’ background (resume) another office in close proximity would reject the counselor. 

g. Reporting—some offices accepted encrypted email others only wanted reports 

sent via a traceable mail delivery system. 

h. Attempts to communicate with the contracting officer and COR have been ignored. 

Time is of the essence, as VA has already not exercised the first option year of 

this contract and has no plan in place to furnish these services to veterans after 

the end of the base year. Please take appropriate action to force VA to exercise the 

option year or at least extend the current contract for 6 months and to pay the 

invoicing at the rates quoted in the awards to each company in a timely manner. 

Please make sure the VA is required to fix these problems, rather than allowing the 

VA to simply escape the situation it has created. 

My company is one of the prime contractors for the Department of Veterans Affairs National Acquisition Strategy (NAS) Vocational Rehabilitation and Employment (VR&E) Contract. We were notified by the DVA that the option years on this 

contract would not be executed. This action was not due to deficiencies on our part 

in providing service to disabled veterans. There were awards made to Service Disabled Veteran Owned Small Businesses (SDVOSB), which we were one. The DVA 

erroneously made an award to a company that was not a SDVOSB. Therefore the 

DVA instead of removing that company from the contract decided to punish all the 

other companies by not continuing the contract. 

While providing services under this contract we have had to overcome many obstacles that the DVA constructed that were not part of their original solicitation. 

This caused considerable financial outlays that without the continuance of the contract will cause us severe financial harm. We have been able to work through these 

hurdles during the first year of the contract while providing exceptional service to 

veterans. Now that we are able to further increase our service to veterans and see 

a return on our investment the DVA seems satisfied to disrupt the entire process. 

The DVA administration of this contract has been particularly unconscionable as 

applied to the companies that won this award, since they are small businesses and 

many are service-disabled veteran owned small business, which the VA should be 

helping succeed on behalf of veterans rather than subjecting to bureaucratic roadblocks. 

As one of the prime contractors providing vocational and education counseling to 

severely disabled veterans under the VA’s National Acquisition Strategy (NAS) Vocational Rehabilitation and Employment (VR&E) Contract, I’m respectfully requesting that you immediately investigate nationwide difficulties with administration of 

this contract. In many cases these problems are so severe that veterans are denied 

the services they deserve. As both the VA Inspector General and the Government 


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Accountability Office have previously reviewed VA practices in this area, I’d also request that you consider involving them in a new review. 

Specifically, the problems being experienced by contractors under this ‘‘so-called’’ 

National Acquisition Strategy include: 

• The way cases are referred to contractors by Regional Offices varies greatly. • The start up costs of this contract were huge and due to the fact that the contract was started late, the 6 month extension that can be provided within the 

constraints of the contract would help mitigate huge losses that will be experienced by small business. • By not extending this contract that VA has cut off the services to veterans they 

so richly deserve. • Timeliness of payment for services is so inconsistent that in some regions no 

delay occurs, while in others, delays exceeding 100 days are standard with no 

explanation of why payment is not being made or denied within 30 days, as required by the contract and in law. The interest being paid by small business 

on the loans necessary to continue service to VA far exceeds anything the VA 

will pay, and is forcing huge strains on the lines of credit for these small businesses. • Calculations of payments disbursed to contractors does not comply with assumptions in contractor bids, as required by the RFP. In many cases the VA 

is simply refusing to pay invoices causing large receivables to accumulate. 

One of the prime contractors appealed to the U.S. Civilian Board of Contract Appeals regarding the VA’s calculation for certain payments under the contract. The 

Board recently denied the VA’s motion for summary relief, stating in part that . . . 

‘‘Given several requests to clarify its position through its solicitation, VA 

provided equivocal responses. When asked to describe the ways in which 

this solicitation differed from previous contractual instruments covering 

similar services, VA refused to provide any answer at all . . . It is not surprising, in light of the agency’s opaque approach to the matter at issue during the solicitation process, that the parties have entered into a contract 

with different understandings of an important term . . .’’ 

In several other respects, as listed above, VA’s administration of this contract has 

not been any better than its performance during the solicitation phase. This is particularly unconscionable as applied to the companies that won this award, since they 

are small businesses and many are service-disabled veteran owned small businesses, which the VA should be helping succeed on behalf of veterans rather than 

subjecting to bureaucratic roadblocks. 

Many Department of Veterans Affairs offices, either by omission or commission, 

have undermined the efforts of the eight prime contractors awarded the Vocational 

Rehabilitation and Employment (VR&E) Service’s so-called ‘‘National Acquisition 

Strategy’’ contract, preventing these contractors from effectively serving our Nation’s veterans. The VA has, in this process, constructively denied congressionallymandated benefits to our veterans by actions taken and not taken. 

The most severely undermining actions include the following, which will be detailed in turn: 

• The way cases are referred to contractors by Regional Offices varies greatly. • What Regional Offices require in the way of initial evaluation information is not 

consistent and at least one Regional Office refuses to provide information or 

training on how to correct report submissions. • Requirements for forms to be used in reporting and invoicing are not standardized. • The process for contractor lines of communication with Regional Offices differs 

from one part of the country to another. • Timeliness of payment for services is so inconsistent that in some ROs no delay 

occurs, while in others, delays exceeding 100 days are standard with no explanation of why payment is not being made or denied within 30 days, as required 

by the contract and in law. • Calculation of payments disbursed to contractors does not comply with assumptions in contractor bids, as required by the RFP. • Delay in approving our counselors to work on the contract. • Pre-disposed attitude on the part of local Regional Office employees that the 

NAS contract was not going to work, that they were not going to let it work. 

1. Inconsistent Means of Case Referral 

The way cases are referred to contractors by each Regional Office (RO) varies 

greatly. Some VR&E Officers require we attend the initial orientation the VA gives 

to veterans and pick up case files. Others who insist that their Vocational RehabiliVerDate Nov 24 2008 01:36 Jan 15, 2010 Jkt 051879 PO 00000 Frm 00056 Fmt 6604 Sfmt 6621 E:\HR\OC\51879.XXX GPO1 PsN: 51879

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tation Counselors (VRC) assign us the cases. There are others who require us to 

deal only with the VR&E Officer in charge at each location. A few others who follow 

the contract and have the Contract Specialist/ Quality Assurance Manager (QAM) 

assign us the cases, approve the reports, and submit our invoices to financing for 

payment. 

Some VR&E Officers want physical pickup of files, some Fedex files to us, others 

are willing to email them using our secure PKI facility, and still others are willing 

to fax them to us via our secure toll-free fax number. 

2. Inconsistent Initial Evaluation Information Requirements 

Inconsistency among the VR&E Officers in what they require in the way of initial 

evaluation information and length/complexity of reports is a major issue because in 

some areas VA officials use this as a means of not approving our reports and therefore not paying us for months. This ‘‘procedure’’ constructively denies services to veterans during the months that VR&E staff takes to inform us as to the inadequacies 

they believe they have identified in our reports. They usually state that ‘‘There is 

insufficient information on which to base a plan’’ when there often is sufficient information but the VRC or the VR&E officer or some other VA staffer does not like how 

the report was written (or has some other agenda) and will not/does not call the 

veteran in to provide services until after the report is redone. It often takes as long 

as 3 or 4 months for the VR&E Officer to inform us that reports are not adequate, 

thus delaying provision of services to veterans for that amount of time. 

In some cases the inadequacies are not even based on content but rather on punctuation within the report or the fact, that the report did not state ‘‘See attachments 

for vocational and educational exploration results’’ when the results were very briefly summarized in the report body, but the details were presented in appendixes. 

This phenomenon is particularly evident in Colorado, and the Dakotas. To complicate matters, some VR&E Officers want short reports, some want longer ones. 

Some do not tell us what they want, but expect us to figure it out for ourselves after 

they reject our reports. 

3. Inconsistent Requirements for Reporting and Invoicing Forms 

The VR&E Officers do not all want the same VA forms. Some VR&E Officers 

want complete employment surveys and labor market research as part of the Initial 

Evaluation—not required or desired in the contract. Some have even gone to the extent of not approving our reports on the basis that we have not completed and included our own form entitled ‘‘Vocational Planner,’’ which is not a VA form. 

As for invoicing, we have attempted to accommodate an enormous divergence of 

invoicing requirements from around the country, though the contract is very specific 

as to what is required. We even went to the extent of pre-printing our invoices with 

stamps the VR&E Officers need to place on invoices so the VA disbursing unit in 

Austin, TX will have the funding obligation numbers and other information they 

need to pay. We have corrected this five times now and it is still not what some 

VR&E Officers want. 

4. Inconsistent Lines of Communication with the VR&E Officers 

This was discussed briefly in paragraph 1, above. The contract states that our 

counselors are to establish partnerships with the VA VRCs, but not involve themselves in contracting matters. Furthermore, the contract specifies that only the 

QAMs will make case referrals, accept reports and invoices for approval, and approve invoices for payment. This is not the way it works in some Regional Offices. 

5. Timeliness of Payment for Services 

Timeliness of payment for services is so inconsistent that in some Regional Offices 

no delay occurs, while in others, delays exceeding 100 days are standard with no 

explanation of why payment is not being made or denied within 30 days, as required 

by the contract and in law. 

There are numerous possibilities for this inconsistency: In many Regional Offices 

there is no single person responsible for tracking payments, or there is a single POC 

who is not replaced when he or she goes on leave, or the report is not approved (and 

payment therefore is delayed) for any of the issues as explained above, or reports 

and invoices are approved and forwarded by the local Regional Office in a timely 

manner but ‘‘there is a problem in Finance,’’ or the VRC has given a case directly 

to one of our counselors (in violation of the contract) and we did not know that a 

case had been assigned and therefore could not bill it even though the work had 

been satisfactorily completed, or there has been deliberate withholding of payment 

to ensure that the NAS contract (and our company) fails. 


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6. Calculation of Payment for Services 

Calculation of payments disbursed to contractors does not comply with assumptions in contractor bids, as required by the RFP. There are three major areas of concern: 

a. On page 51 of the RFP (Sol. No. VA–101–07–RP–0306) it states very clearly 

that 

‘‘The Offeror shall document in its proposal any assumptions.’’ Even 

though we complied by proposing a comprehensive list of assumptions as 

the basis for our bid, and even though the Contracting Officer accepted our 

bid, our assumptions have been completely ignored. 

This is most evident in the divergence between what was the understanding of all eight prime contractors as to how services for CM cases 

would be billed and how the VR&E Service payments would be made. Our 

position was made very clear in a letter from us to the Contracting Officer. 

We are not asking that they modify the contract, only that they comply 

with it. 

b. Travel. Again, in our proposal we made very clear assumptions as to what 

would be required for travel reimbursement if the VA were to accept our bid. 

Travel reimbursement has been resolutely denied by the VA. We have qualified 

counselors who are willing to travel to remote locations to accommodate veterans but the VA will not pay for it. They apparently expected us to have included these types of travel costs in our FFP bid, which we made very clear 

in our proposal assumptions we were not including, that if the VA wanted us 

to go to remote areas, they would have to pay for travel. None of the eight 

prime contractors is being reimbursed for travel. 

c. Add-Ons for Security. The VA has required a number of add-ons to the contract which were not clearly defined in the RFP. Security issues, computer replacements, and the like were ill-defined and certainly not considered as part 

of our bid or in the bids of any of the other prime contractors. The VA has 

demanded we comply with all of the new rules and regulations they have promulgated owing to their own security lapses but has not provided us with any 

resources for meeting their demands. 

7. Delay in Contract Start Up 

Owing to 3 months’ delay in start up of this contract, the base year did not provide us with a full 12 months of work. Case work was first issued under this contract beginning in November and December 2008, following a ‘‘start date’’ of July 

21, 2008. In fact the local VR&E Officers were ordered not to have any conversation 

with the contractors until August of 2008. We were hearing rumors that the VA decided in March 2009 not to execute the option year on this contract. This really gave 

us less than 6 months to show the DVA how we were continually improving our 

service to veterans. Our ‘‘Base Year’’ was only at the maximum 8 months long, in 

most of our 19 States in which we have opened operations, spending about $1 million in startup costs. There was also an inordinate amount of delay in approving 

our counselors to accept case work. 

8. Pre-Disposed Negative Attitude at Many of the ROs 

There has been a great deal of negative attitude by VRCs and local VR&E Officers 

toward the NAS contract. One VR&E Officer stated to one of our subcontractors 

that he would only refer cases to us to satisfy the contract minimum, regardless of 

the impact on Veterans. Several VRCs and VR&E officials have been telling our 

subcontractors for several months that the contract would be canceled and re-bid, 

so they should not hire on with us but wait until the new RFP came out. They seem 

to have made sure this would happen. 

Summary 

Apparently, the VA expected the prime contractors—all small businesses, several 

of them service-disabled veteran-owned small businesses (SDVOSB)—to run their 

businesses as the VA runs its business, but without providing the resources or the 

intent to ensure success. 

In February 2005, the VA Inspector General published a report concerning overpricing in Washington, Ohio, and DC., which had been paid for years. The recommendation to the VR&E Service then was to seek contractors who would be more 

reasonable in their pricing while still delivering acceptable services. We attempted 

to meet that requirement, but have been rebuffed at every turn, not the least of 

which is the VA’s current gambit of delaying payments to us so severely that we 

are now not able to pay our subcontractors. These subcontractors are now refusing 

to take on additional case work, exacerbating the difficult situation the VA has creVerDate Nov 24 2008 01:36 Jan 15, 2010 Jkt 051879 PO 00000 Frm 00058 Fmt 6604 Sfmt 6621 E:\HR\OC\51879.XXX GPO1 PsN: 51879

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ated for our service-disabled veteran-owned small business. A backlog in overdue 

payments for our company alone of over $400,000 has existed for months. 

Contract extension alternatives were available that would have allowed VA officials time to work out problems with the prime contractors while maintaining better 

continuity of service to veterans. We made numerous attempts to address these options with the Contracting Officer and the Contracting Officer’s representative; however they would not respond to our written communication or return our telephone 

calls. 

Time is of the essence, as VA has already not exercised the first option year of 

this contract and has no plan in place to furnish these services to veterans after 

the end of the base year on July 20, 2009. Please take appropriate action to force 

VA to extend the current contract for 6 months and to pay the invoicing at the rates 

quoted in the awards to each company in a timely manner. Please make sure the 

VA is required to fix these problems, rather than allowing the VA to simply escape 

the situation it has created. 

f 

Prepared Statement of Richard Daley, Associate Legislation Director, 

Paralyzed Veterans of America 

Chairwoman Herseth Sandlin, Ranking Member Boozman, and Members of the 

Subcommittee, PVA would like to thank you for the opportunity to testify today concerning vocational rehabilitation and counseling services for veterans. The Global 

War on Terror has produced a large number of men and women that have served 

the country and have returned to civilian life. Thousands of these new veterans will 

have physical and mental needs that will require years or a lifetime of care. 

Many of these new disabled veterans along with the existing veterans with disabilities will seek help from the Department of Veterans Affairs’ Vocational Rehabilitation & Employment Program (VR&E). VR&E provides service-connected veterans with the necessary services to assist them to achieve maximum independence 

in daily living and to the maximum extent feasible, to become employable and to 

obtain and maintain suitable employment. This continued flow of new veterans into 

the VR&E program will place a strain on this system that has received unfavorable 

criticism in recent years for their performance in reaching its goal of helping veterans. 

In the 110th Congress this Subcommittee’s Ranking Minority Member, John 

Boozman (R-AR) introduced H.R. 3889, a bill that would require the VA to conduct 

a 20 year study of veterans that enter the Vocational Rehabilitation and Employment (VR&E) program. PVA along with other veterans’ service organizations supported this bill since there is currently little data on how the VR&E program improves the lives of our more seriously injured veterans. The VA has information on 

how long a veteran spends in a program, the cost related to participating in a program and when, or if a veteran successfully completes a program. The VA is not 

required to collect information on the earnings of the veteran, the promotions 

achieved during their career, and other long term employment data. This information would be essential to determine the effectiveness of the VR&E program and 

perhaps weaknesses that exist within this program. 

Due to the fact that VR&E is limited in resources and staff, in an effort to better 

serve all eligible veterans, the VA contracted with private and state entities to provide VR&E services. Much of the workload contracted out was facilitated and monitored by the VA’s regional offices. The primary responsibilities of the contracts were 

to perform testing and assessment phases of the vocational rehabilitation process. 

This is one area that the VA’s VR&E counselors have been trained to perform, and 

have years of experience. This initiative of removing an element of the one-on-one 

work with the disabled veteran did not relieve the VA counselors of the heavy paper 

work and administrative duties that they are required to perform. This process of 

contracting to alleviate some of the burden from the VR&E regional offices did not 

produce the results that the VA anticipated. 

In February 2005 the VA Inspector General made a recommendation that the current contracts for VR&E services be renegotiated to better reflect market rates for 

services because the VA was at risk of paying excessive prices for services purchased through national contracts. The report also noted that the VA should 

strengthen regional office oversight and management of contracts. 

A recent GAO report (GAO–07 568R, April 23, 2007) states that the VA has 

achieved some progress in implementing contract-related recommendations of the 

VA Inspector General. This report also stated that key challenges remain for improving VA’s management of VR&E service contracts. Among the significant challenges that remained at that time were: 


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• Regional offices are not fully applying VA’s contracting guidance. 

• Current training does not adequately prepare contracting officers to manage 

contracts. 

• Regional offices report delays in communicating with VA headquarters on contracting questions. 

• VA’s management of VR&E contracting is limited by inadequate reporting capabilities. 

Current legislation introduced in the 111th Congress would improve access to the 

VR&E program. Senate bill S. 514, the ‘‘Veterans Rehabilitation and Training Improvement Act of 2009,’’ will increase the amount of subsistence allowed for veterans enrolled in the VR&E program. On the House side, H.R. 1821, the ‘‘Equity 

for Injured Veterans Act of 2009,’’ also pays a monthly subsistence to enrolled veterans. This will attract some disabled veterans that should be using the VR&E program, but otherwise would choose to enroll in the Post-9/11 GI Bill for the increased 

living allowances that program provides. When faced with the decision of selecting 

the recommended path for ones future career, or selecting the option that will help 

provide basic living necessities for the veteran and their family, many veterans 

chose the basic living option. This legislation will correct that inequity. 

Senate bill S. 514 would also remove the enrollment cap of 2600 veterans per year 

for the VR&E, Independent Living Program (IL). This meaningless cap, established 

during peacetime, may be prohibiting veterans from receiving the treatment they 

need. The VA VR&E program would never deny services to the severely injured veteran, but, place that veteran in another program until they could accommodate the 

veteran in the IL program. 

With the influx of veterans into the VR&E program, the VA will continue contracting VR&E services. Instead of contracting out a portion of the vocational rehabilitation process, such as testing, perhaps they should contract out a segment of 

that consumer population. The Social Security Administration (SSA) has found success with its Ticket to Work (TTW) program. This program rewards the agency that 

performs the vocational rehabilitation when the consumer is successfully employed, 

and remains employed. 

Without having all of the facts involved, or, in this case, any of the facts pertaining to both parties performance with regard to fulfilling their obligations as defined in individual contracts to perform a needed service for America’s veterans, it 

would be unrealistic for PVA to make credible recommendations pertaining to improving those contracts. 

When considering future contracts, perhaps the VA could develop a demonstration 

project in their VR&E program. The VA would reward the contractor for making 

changes in the veterans’ lives, not for processing veterans through another government program. 

PVA has recognized some basic facts that are important in the preparation of a 

disabled veteran for employment. We know that smaller caseloads are absolutely essential. The counselor must know and understand the veteran they are trying to 

help. They must be able to explain to the employer that veteran’s needs for certain 

accommodations that will enable the veteran to perform the necessary work. 

A veteran can advise a veteran, in most cases, with better results that a non-veteran. A veteran will have a common bond with another veteran that a non-veteran 

can never have. The fact that a counselor has served three, four, or 10 years in the 

military, two decades ago, is not an achievement that goes on the top of ones resume. But it can indicate that person has a unique perspective to understand and 

be sensitive to the needs of that disabled veteran that was not achieved in a college 

classroom. 

The goal of the VR&E process is to prepare the disabled veteran with the skills 

needed to find and maintain meaningful employment. Perhaps the entities that receive contracts for this role should be paid for performance. Basic funding must be 

awarded to enable an organization to function on the day-to-day basis. Funds beyond basic functioning would be paid (rewarded) to the contractor in the form of bonuses paid for placing and keeping the veteran in a career position. 

Placing a disabled veteran in a career is the goal behind PVA’s new vocational 

rehabilitation employment program. We first spoke of this program with this Subcommittee during the 110th Congress when PVA opened its first program in the 

Richmond, Virginia VA hospital 2 years ago. PVA has since expanded that program 

in Minneapolis, Minnesota and San Antonio, Texas VA hospitals. Soon we will open 

a fourth location in Long Beach, California. PVA’s goal is to some day have twentytwo employment counselors, one in each VA spinal cord unit. This expansion of the 

program will depend on obtaining corporate sponsorship, or other funding sources 

for each location. 


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PVA is providing vocational rehabilitation employment service to the segment of 

VR consumer population that is severely disabled, those veterans that are paraplegic or quadriplegic. Our success rate for placement of this population far exceeds 

the average placement rate in the vocational rehabilitation field. The three locations 

have a combined caseload of 356 veterans. Of that total, 56 have entered the workforce, most in career positions with two veterans earning over $100,000 per year. 

An important fact that contributes to our success is the smaller caseload each 

counselor maintains. This allows the counselor to better understand each disabled 

veteran, their needs, and their abilities, as they develop a one-on-one relationship 

with the veteran while discussing plans for their future. 

PVA’s counselors, each having years of VR experience, use their knowledge to explore all available resources to help the veteran. These resources start at the Federal level with each VR office being in the VA hospital. Working in that environment, our counselors build a relationship with the medical staff and start the disabled veteran thinking about their future early in the rehabilitation process. 

The PVA counselors also learn and access any State program that is available. 

There may be State grant funds available to purchase items needed for accessibility 

or possible employment opportunities within the State government with a preference for disabled workers or disabled veterans who want to return to the workforce. 

Local governments, non profit organizations, and corporations in the community 

all are aware of the employment needs of disabled veterans. In the Richmond, Virginia PVA Voc Rehab office a non-service connected paralyzed veteran completed 

employment training and was ready for that first job he would execute from his 

wheelchair. The employer was waiting for the veteran to start at the work location, 

but, transportation was a problem. The veteran did not own a vehicle, and public 

transportation was not available. The counselor arranged for the veteran to receive 

a van, with hand controls, free of charge from a corporate sponsor that was willing 

to help the veteran return to work. 

PVA’s VR&E program has recently applied for and qualified as an approved Employer Network (EN). Being an approved EN allows PVA to participate in the Social 

Security Administrations’ (SSA) Ticket to Work (TTW) program. SSA will reimburse 

PVA up to $4,000 annually for each veteran that succeeds in returning to the workforce and earns an income that is above the Substantially Gainfully Employed 

benchmark, which is approximately $650 per month. This $4,000 per year will help 

defray some of the cost involved with operating this program. 

This PVA program is one example of how non-profits can use various resources 

to provide support to disabled veterans. If the VA made similar funding programs 

available to nonprofits, perhaps those organizations that currently work with these 

special populations, Traumatic Brain Injury, Post-traumatic stress disorder, or visually impaired, could use their expertise to help veterans. 

PVA is an organization of veterans who are catastrophically disabled by spinal 

cord injury or disease. Our members rely on the services provided by the VR&E program. We support the Subcommittee’s effort as it works with the VA to improve this 

program. Chairwoman Herseth Sandlin, Ranking Member Boozman that concludes 

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

f 

Prepared Statement of Joe Wynn, Treasurer, Veterans 

Entrepreneurship Task Force (VET-Force), President, Veterans Enterprise 

Training and Services Group (VETS Group), and Legislative Liaison, 

National Association for Black Veterans 

Due to the growing demand of VR&E services beyond VA’s current capacity, the 

VA implemented a national program called the National Acquisition Strategy (NAS) 

for Vocational Rehabilitation and Employment (VR&E) Services. Perhaps this strategy is an attempt by the VA to respond to findings and recommendations made in 

recent years to improve the VR& E program by GAO, the VA Task Force, the President’s Commission on the Care of America’s Wounded Warriors, and the Veterans 

Disability Benefits Commission. 

The VA’s objective for NAS is to use Contractor assistance to both supplement 

and complement the services provided to veterans and servicemembers under Title 

38 USC Chapter 31 and individuals under Chapters 18, 35 and 36, Title 38 United 

States Code, by VA’s regional Vocational Rehabilitation and Employment Service 

(VR&E) offices within VBA. 

Under this National Acquisition Strategy (NAS), the VA issued a contract in July 

2008 (#VA–101–07–RP–0306–00 1rfp) to use Contractor assistance to supplement 


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and complement vocational rehabilitation and employment services in the following 

service groups: 

Service Group A: Initial Assessment/Evaluation 

Service Group B: Case Management/Rehabilitative Services 

Service Group C: Employment Services 

Service Group D: Educational and Vocational Counseling 

Service Group E: Discrete Services 

Services to be provided under this requirement included educational and vocational counseling and a major rehabilitation track for those Veterans whose primary 

rehabilitative objectives include: (1) training and/or employment services resulting 

in suitable employment which is compatible with the individual’s aptitudes, abilities, and interests; or (2) achievement of independence in daily living. 

But for reasons still yet to be known, the VA has announced that it’s NAS contract was canceled as of July 20, 2009. This cancelation takes place at the 1-year 

mark since its official start date; but actually occurs in less than 1-year since the 

operational phases of the contract were delayed. Now the eight prime contractors 

selected to perform the services are out of work and have incurred significant losses 

of time, money, capital, and other resources. 

Since the VA has not requested corrective measures of the contractors involved, 

and has reportedly stated that it intends to reissue the NAS contract later, it appears that the strategy was not well thought out before being implemented. 

This action by the VA will have an adverse impact on the veterans it is 

intended to serve. Hundreds of service-connected disabled veterans in need of vocational rehabilitation and employment will experience additional delays in receiving the services that they so desperately need to successfully transition back into 

the communities that they fought so hard to protect. For some, this delay could be 

life threatening. 

INTRO: 

Good Afternoon, Chairwoman Herseth Sandlin, Ranking Member Boozman, 

other Members of this Subcommittee, fellow veterans, and guests. 

Let me thank you for your prompt response for convening this hearing to review 

the issues related to VA’s National Acquisition Strategy (NAS) to provide vocational rehabilitation and employment counseling services for all qualified serviceconnected disabled veterans. 

Today I come before you as a representative of the Veterans Entrepreneurship 

Task Force (VET-Force), which is composed of over 200 organizations and affiliates representing thousands of veterans throughout the United States; a high percentage of which, are small businesses; who have made it their mission to monitor 

the implementation of the programs, agencies, and organizations referenced under 

the law and to present a strong unified veterans’ voice for virtually all of the 

major veterans groups, as well as, veteran entrepreneurs; and to advocate for opportunities for veterans, particularly disabled veterans, seeking assistance to succeed in small business and self-employment. 

And as a Vietnam-era Veteran of the U.S. Air Force, President of the Veterans 

Enterprise Training and Services Group, and the Legislative Liaison for the National Association for Black Veterans, I spend a great deal of my time advocating 

for the rights and benefits of veterans. As such, I have come to appreciate the 

steadfast support that veterans have received from this Subcommittee and the 

HVAC under the leadership of Congressman Bob Filner, where in the past few 

years, a number of significant pieces of legislation for veterans have been passed 

in the areas of health care, mental health, veterans benefits, compensation and 

VA small business procurement. 

Madam Chairwoman, you may recall that I recently came before this Subcommittee to discuss the issues related to the VA’s Veteran Small Business 

Verification Program (see appendix A). At that time I expressed concerns over the 

VA’s nearly 2-year delay in fully implementing the regulations that would 

prioritize contracting with the VA for service-disabled and veteran business owners. I also expressed concerns regarding the VA’s inefficient verification process 

and its verification policies of veteran business owners that are being utilized by 

the Center for Veterans Enterprise (CVE). 

Under CVE’s existing verification procedures and policies, in 9 months only 

1300 veteran business owners have been verified out of more than 17,000. Veterans who own more than one company are only allowed to have one company 

verified and the company will not be verified by CVE if the owner cannot demVerDate Nov 24 2008 01:36 Jan 15, 2010 Jkt 051879 PO 00000 Frm 00062 Fmt 6604 Sfmt 6621 E:\HR\OC\51879.XXX GPO1 PsN: 51879

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onstrate that they are in the primary office on a daily basis in order to show that 

they are participating in the day-to-day operations of the company. 

Having attended the 5th Annual National Veterans Small Business Expo in Las 

Vegas last week, I heard firsthand, that CVE considers its policies to be in good 

standing and seemingly have no intentions of making any changes unless otherwise directed by a higher authority to do so. Now, before that matter can be 

resolved, we are here today to discuss another example of VA’s poor judgment in making management decisions that not only affect service-disabled and veteran business owners, but also affect hundreds of serviceconnected disabled veterans. 

VA’s Vocational Rehabilitation and Employment Program 

The Department of Veterans Affairs (VA) has authority, pursuant to Title 38 USC 

Chapters 18, 31, 35 and 36, to provide all services and assistance necessary to enable eligible veterans with service-connected disabilities to obtain and maintain 

suitable employment and, if not employable, achieve independence in daily living to 

the maximum extent feasible. In the discharge of this responsibility, each Vocational 

Rehabilitation and Employment Service Division (VR&E) within the Veterans Benefit Administration (VBA) Regional Office undertakes an initial evaluation of the 

veteran to determine his or her eligibility and entitlement for these services and assistance; develops, in cooperation with the veteran, an Individualized Written Rehabilitation Plan (IWRP); provides the veteran with employment placement under an 

Individualized Employment Assistance Plan (IEAP); or if employment is not possible, services to enhance the veteran’s independence in daily living under an Individualized Independent Living Plan (IILP). 

VR&E Background—VDBC Findings 

Over the past several years, criticisms and recommendations were made concerning the VA’s less than adequate oversight of contracting, improving uniformity 

of benefits delivery nationwide, and VA’s ability to obtain better pricing from contractors through a national approach. References to this statement can be found in 

the VA Secretary’s report on ‘The Vocational Rehabilitation and Employment Program for the 21st Century’, completed in March 2004; GAO’s report entitled, ‘Vocational Rehabilitation: VA Has Opportunities to Improve Services, but Faces Significant Challenges,’ completed in April 2005; and in a report presented by the President’s Commission on Care of America’s Returning Wounded Warriors, completed 

in July 2007. 

In 2006–07, while serving as a Commissioner on the Congressional Veterans Disability Benefits Commission (VDBC), I had the opportunity to review and discuss 

these and other reports related to the operation of the VR&E Program. In the published report we submitted to Congress in October 2007, Chapter 6 on the Appropriateness of the Benefits, the VA’s Vocational Rehabilitation and Employment Program (VR&E) is discussed. In that chapter, we noted that GAO generally agreed 

that (1) VR&E had not been a VA priority in returning disabled veterans to the 

workforce; (2) VR&E had a limited capacity to manage its growing workload; and 

(3) VR&E needed to be redesigned for the modern employment environment. 

The Commission also agreed that VR&E needed to improve its process of defining, 

tracking, and reporting on participants, which we found was confusing and inconclusive in its current state. Our research indicated that while the number of participants in the VR&E program increased in recent years, the number of individuals 

rehabilitated (as measured by obtaining a job or achieving independent living) had 

remained constant. As a result of our findings, our recommendation number 6.12— 

called for the administration of the VR&E program to be enhanced by increased 

staffing and resources, tracking employment success beyond 60 days, and conducting satisfaction surveys of participants and employers. And our recommendation 

number 6.13—called for VA to explore incentives that would encourage disabled veterans to complete their rehabilitation plan. 

VA’s National Acquisition Strategy (NAS) 

Due to the growing demand of VR&E services beyond VA’s current capacity, the 

VA implemented a national program called the National Acquisition Strategy (NAS) 

for Vocational Rehabilitation and Employment (VR&E) Services. Perhaps this strategy is an attempt by the VA to respond to the findings referenced above. The VA’s 

objective for NAS is to use Contractor assistance to both supplement and complement the services provided to veterans and servicemembers under Title 38 USC 

Chapter 31 and individuals under Chapters 18, 35 and 36, Title 38 United States 

Code, by VA’s regional Vocational Rehabilitation and Employment Service (VR&E) 

offices within VBA. 


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Under this National Acquisition Strategy (NAS), the VA issued a contract in July 

2008 (#VA–101–07–RP–0306–00 1rfp) to use Contractor assistance to supplement 

and complement vocational rehabilitation and employment services in the following 

service groups: 

Service Group A: Initial Assessment/Evaluation 

Service Group B: Case Management/Rehabilitative Services 

Service Group C: Employment Services 

Service Group D: Educational and Vocational Counseling 

Service Group E: Discrete Services 

Services to be provided under this requirement included educational and vocational counseling and a major rehabilitation track for those Veterans whose primary 

rehabilitative objectives include: (1) training and/or employment services resulting 

in suitable employment which is compatible with the individual’s aptitudes, abilities, and interests; or (2) achievement of independence in daily living. 

NAS Contract Canceled in First Year 

For reasons still yet to be known, the VA has announced that it’s NAS contract 

was canceled as of July 20, 2009. This cancelation takes place at the 1-year mark 

since its official start date; but actually occurs in less than 1-year since the operational phases of the contract were delayed. Now the eight prime contractors selected to perform the services are out of work and have incurred significant losses 

of time, money, capital, and other resources. 

It’s reported that of the 8 prime contractors, most were small businesses, including 3 that were service-disabled veteran owned small businesses (SDVOSBs) and 

one was a service-disabled veteran owned business that is now considered to be 

large. Having interviewed representatives from 3 of the SDVOSBs, I have collected 

a list of complaints regarding VA’s inefficiency in managing this NAS contract. Such 

complaints included but not limited to: (1) VA contracting officers being non-responsive to contractor’s operational concerns of inconsistency of VA reporting requirements across States and regions; (2) delays in receiving payments; (3) background 

investigation procedures paid for by contractors is unfairly administered; and (4) 

complicated procedures. 

By virtue of the fact that VA has chosen to cancel the entire contract is 

such a short period of time leads many to believe that the VA implemented 

a national strategy that was flawed from the start. Since the VA has not reportedly requested corrective measures of the contractors involved, and has reportedly stated that it intends to reissue the contract later, it appears that the strategy 

was not well thought out before being implemented. 

This action by the VA will have an adverse impact on the veterans it is 

intended to serve. Hundreds of service-connected disabled veterans in need of vocational rehabilitation and employment will experience additional delays in receiving the services that they so desperately need to successfully transition back into 

the communities that they fought so hard to protect. For some, this delay could be 

life threatening. 

This action by the VA will also contradict the VA’s policy created by Public Law 

(PL) 109–461, the Veterans Benefits, Health Care, and Information Technology Act of 2006, Title V, Sections 502 and 503 that authorized a unique ‘‘Veterans First’’ approach to VA contracting. This approach was to change the priorities 

for contracting preferences within the Department of Veterans Affairs (VA), by placing Service-Disabled Veteran Owned Small Businesses (SDVOSBs) and Veteran 

Owned Small Businesses (VOSBs) first and second, respectively, in satisfying VA’s 

acquisition requirements. 

Recommendations: 

Madam Chairwoman and Members of this Subcommittee, I strongly urge you 

to compel the VA to reconsider their action to cancel the above referenced contract 

until such time as their procedures can be improved or other capable and qualified SDVOSBs can be hired. 

I further urge you to consider appointing a non-partisan Task Force to review 

the issues, goals, and accomplishments related to the above referenced VA NAS 

contract for VR&E program services. 

This concludes my statement. 


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Appendix A 

Overcoming Barriers to Federal Contracting for Veteran Business Owners 

If veterans and service-disabled veteran owned businesses are to succeed in the 

public sector agencies will have to stop making excuses for why they can’t make the 

3 percent mandatory minimum SDVOSB contracting requirement. Veterans also 

will have to overcome a number of impediments: (1) The pervasive ignorance of the 

law and resistance to change across all agencies; (2) No enforcement of Large Prime 

subcontracting plans; (3) Inaccurate agency data, miscoding, and double counting; 

(4) The perception that the procurement pie for small businesses is shrinking or limited to 23 percent; and (5) The over use of Contract Bundling. 

Agencies and veteran small business assistance providers must assist in identifying and registering the capabilities of veteran business owners where required, demand that all Large Prime contractors comply with their subcontracting plans, create situations that foster the development of relationships between agency procurement officers and veteran business owners, and improve the process of identifying 

and matching veteran businesses with procurement opportunities. 

VA’s ‘Veteran’s First’ Approach to VA Contracting 

Public Law (PL) 109–461, the Veterans Benefits, Health Care, and Information Technology Act of 2006. While this legislation provided a number of benefits for veterans; what’s of particular importance for the purposes of this hearing 

today, is that Title V, Sections 502 and 503 of this legislation, authorized a 

unique ‘‘Veterans First’’ approach to VA contracting. This approach would change 

the priorities for contracting preferences within the Department of Veterans Affairs 

(VA), by placing Service-Disabled Veteran Owned Small Businesses (SDVOSBs) and 

Veteran Owned Small Businesses (VOSBs) first and second, respectively, in satisfying VA’s acquisition requirements. 

In so doing, it required that certain conditions must be met. All SDVOSBs and 

VOSBs, must register in the VA’s Vendor Information Pages (VIP), aka Veterans 

Small Business Database, available at www.VetBiz.gov, and be ‘VERIFIED’ by 

the VA’s Center for Veterans Enterprise (CVE), to be eligible for award of a contract 

exclusively within the Department of Veterans Affairs. 

It further directed the VA, for SDVOSBs and VOSBs, to: (1) Establish Contracting 

Goals & Review Mechanisms; (2) Allow Non-competitive, Sole Source, & Restricted 

Competition; (3) Permit Survivorship for 10 yrs, if the deceased veteran business 

owner was 100 percent disabled; (4) Produce Annual Progress Reports; and (5) Conduct a 3-Year Study. 

For more than 2 years, veteran business owners have been anxiously awaiting the 

publishing of the governing regulations needed to carry out Title V of PL 109–461; 

but for some reason, VA’s Acquisition Officials, their General Counsel, and/or the 

Office of Management and Budget still have not come to an agreement on a start 

date. But on May 19, 2008, the VA issued an interim final rule (38 CFR Part 74) 

to immediately implement procedures to assure that a business concern is 

‘VERIFIED’ in their Veterans Business Database as a SDVOSB or VOSB. 

Since the VA has been developing and populating its Veterans Small Business 

Database for several years, the interim final rule required the VA to complete the 

examination of all 13,380 businesses that were already registered, by June 19, 2008; 

then all new registrants would follow. 

However, at the March 10, 2009 meeting of the Veterans Entrepreneurship Task 

Force (VET-Force), a representative for CVE reported that there have only been 868 

businesses verified and 491 in process out of a total of approximately 17,000 registered businesses. It was also reported at the meeting that CVE is processing 

only 50 applications per week. At that rate, it could take 6 or 7 years just to 

verify the businesses currently registered. 

Major Issues Affecting the VA’s Veterans Business Verification Process 

There are a number of issues that have surfaced regarding the verification process 

undertaken by CVE to ensure that a business concern is a SDVOSB or VOSB; here 

are just a few: 

I. Verification of Veterans Status, Ownership & Control. CVE is either 

understaffed or lack a sufficient number of staff persons qualified to conduct the 

veteran business verification procedures as defined by 38 CFR Part 74. It’s CVE’s 

task to collect the necessary documents from veteran business owners who have 

registered in the Veterans Small Business Database. 

Veterans Status. The documents needed are to verify that the business owner 

is a veteran who was discharged under conditions other than dishonorable or is 


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a service disabled veteran who possesses either a disability rating letter issued 

by DoD or the VA. 

Ownership, Control & Management. Additional documents are needed to establish if the veteran(s) or service disabled veteran(s), or in the case of a veteran 

with a permanent or severe disability, the spouse or permanent caregiver of such 

veteran, meet the majority ownership requirement, and that they have Control of 

the company and participate in the Day-to-Day operations. 

Verifying Ownership. Verifying the status of the veteran seems to be the 

easiest part; particularly since the VA already maintains or has access to the 

records of veteran and service disabled veterans. Verifying Ownership is somewhat more challenging because CVE must verify if the Ownership is direct and 

unconditional. It must verify if the type of Ownership is that of a Partnership, 

Limited Liability Co., or a Corp.; and if stock is involved, it must verify the stock 

options’ effect on the Ownership. There’s also the matter of determining Ownership interests when an owner resides in any of the community property States 

or territories of the United States. 

Verifying Control. According to 38 CFR 74.4, Control is not the same as 

Ownership, even though both may reside in the same person. Control 

means management of the Day-to-Day operations and long-term decision-making 

authority. CVE must verify that the service disabled veteran or veteran business 

owner has both. But where this gets more involved, is when control is sometimes 

contingent on who has the expertise or licenses to run the operation. An owner 

who is a computer engineer may not be the best Chief Executive Officer. But according to CVE’s verification requirements, the owner must hold the highest officer position in the company. 

Then there is also the somewhat conflicting view that owners need not work in 

the company full-time but must show sustained and significant time invested in 

the business. But there is also the requirement that one or more veteran or service disabled veterans who manage the company must devote full-time to the business during normal working hours. And even though the veteran owner has an 

unexercised right to cause a change in the management quickly or easily, use of 

a non-veteran manager may disqualify the company as being veteran owned. 

In addition, all of these control issues have to be verified in the context of the 

type of company—Partnership, Limited Liability Co., or Corp.. And it must be determined to what extent do non-veterans have the power to influence or control 

the company—either directly or indirectly via critical financial or bonding support, 

Board actions, etc. 

II. Verification of Only One Co. per Owner. A number of veterans have 

questioned CVE’s position to verify only one company per veteran business owner. 

This ruling is not clearly listed in 38 CFR Part 74. All throughout the Nation, 

there are people who own more than one company. When CVE representatives 

were asked about this issue at the March 10, 2009 meeting of the VET-Force, 

which CVE hosted at the VA Small Business Office; they reported that verifying 

only one company per owner would prevent the VA from potential harm 

that could be caused by a veteran or service disabled veteran business 

under performing or defaulting on a contract. 

It was further reported that more stringent verification requirements were implemented by CVE following a recent GAO report that exposed flaws in the 

verification process previously being utilized by the SBA to verify HUBzone business owners. Thus CVE reportedly does not want to increase the chances of error 

by allowing one owner to have multiple companies. 

III. Misperception of CVE’s ‘VERIFIED’ status. Many if not all Federal 

agency contracting personnel believe that SDVOSBs and VOSBs must or soon will 

have to first be registered in the VA’s Veteran Small Business Database and 

produce a document stamped with a ‘‘VERIFIED’ seal of approval by CVE in order 

to be recognized as a genuine SDVOSB or VOSB. And it’s not hard to determine 

how this misperception came about. 

For several years now, CVE, other organizations, including the VET-Force, have 

been encouraging veteran business owners to register in the Veterans Small Business Database and for Federal agencies and Large Primes to use the Veterans 

Small Business Database as the ‘Authoritative Place’ to locate capable and qualified veteran business owners. However, this was before the actual verification 

standards and procedures had begun. 

According to Public Law 108–183, the Veterans Federal Procurement Program, 

a veteran is only required to SELF–CERTIFY as a SDVOSB, in order to do business under this small business preference group. There is no formal certification 

by SBA or any other entity required. However, under Public Law 109–461, in 

order to do business with the VA, a veteran or service disabled veteran owned 


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business must successfully complete VA’s verification process and register in the 

same database that’s open for use by all Federal agencies, Large Primes, and the 

public. 

While these issues listed above may be considered to be the major ones creating 

controversy about the VA’s Veterans Verification Process, there may be others considered to be equally as important. 

Recommendations to Address the Major Issues. 

1. For now, separate the verification process into two phases. Phase One: Verify 

Veteran Status Only for all registrants in the database. Continue Self-Certification of Ownership as allowed under Public Laws 106–50 and PL 108–183 

while verifying—whether the business owner is a veteran or service disabled 

veteran. CVE should complete Phase One for all veterans currently registered 

in the database and for all newly registered veterans. However, this will still 

require an expedited process so as not to cause a veteran to have to wait as 

long as 6 years for their status to be verified. Once the status has been 

verified, it does not have to be re-verified each year. The status will seldom, 

if ever, change. 

Phase Two: Verify Ownership and Control. Review of documents for 

ownership starting with SDVOBs and then VOSBs seeking to perform contracts with the VA. Later, other registrants in the database can be reviewed 

for Ownership, since PL 109–461 only pertains to contracting with the VA. 

It should be noted however, that verification of Control should only be to the 

extent necessary to support the Ownership and to ensure that the company is 

not being used as a ‘Rent-A-Vet’ or a pass through company. 

2. Allow the verification of more than one company owned by the same veteran(s). 

Entrepreneurship should not be stifled for the sake of convenience. Each company should be evaluated and verified on its own merit. Any agency will always have the right to determine the select criteria to satisfy contract requirements. 

3. Immediately direct the SBA and the VA to conduct promotional campaigns to 

inform all Federal agencies, including all military departments, Large Primes, 

and the public about the VA’s Verification Process being exclusively for contracting with the VA. However, Congress should consider extending the provisions of sections PL 109–461 to all Federal agencies and the DoD military departments; and authorize sufficient resources to perform the verification process efficiently and timely. 

Appendix 2 

VET-FORCE MISSION STATEMENT 

The Veterans Entrepreneurship Task Force (VET-Force), organized in 1998, to advocate for the development and passage of Public Law 106–50, the Veterans Entrepreneurship and Small Business Development Act 1999, wherein Congress realized 

that the United States must provide additional assistance to veterans, particularly 

service disabled veterans, with forming and expanding their own small businesses, 

and thereby enabling them to ‘‘realize the American dream that they fought so hard 

to protect.’’ 

The VET-Force, which is composed of over 200 organizations and affiliates representing thousands of veterans throughout the United States; a high percentage of 

which, are small businesses; has made it their mission to monitor the implementation of the programs, agencies, and organizations referenced under the law and to 

present a strong unified veterans’ voice for virtually all of the major veterans 

groups, as well as, veteran entrepreneurs; and to advocate for opportunities for veterans, particularly disabled veterans, seeking assistance to succeed in small business and self-employment. 

Though PL 106–50 did much to establish the infrastructure and goals for Federal 

and prime contracting for veterans and service disabled veterans, evidence shows 

that the agencies did little to get contracts to veterans; and with no accountability 

required, government agencies, and especially their prime contractors, failed to ever 

meet the minimum 3 percent goals for service disabled veteran business owners. 

Thus the VET-Force continues to advocate for additional legislation, as in October 

2003, when Congress and Members of the Administration passed legislation that 

was signed into law by the President. Under that Public Law, 108–183, a Veterans 

Procurement Program for Service Disabled Veteran Business Owners was created. 

Contracting officers were authorized more ‘‘tools to work with’’ to achieve the manVerDate Nov 24 2008 01:36 Jan 15, 2010 Jkt 051879 PO 00000 Frm 00067 Fmt 6604 Sfmt 6621 E:\HR\OC\51879.XXX GPO1 PsN: 51879

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datory minimum 3 percent requirements of the law. Now procurement officials can 

restrict or sole source contracts exclusively for Service Disabled Veteran Owned 

Businesses (SDVOBs). Though the veterans’ community has had a great deal of optimism surrounding this piece of legislation, there is still a lack of urgency within 

many of the agencies to implement the program. 

Therefore, the VET-Force will continue its vigilant oversight of legislation and 

continue its advocacy of ideas in the areas of acquisition, planning, marketing, and 

outreach to ensure that veterans and service disabled veterans receive the full benefits of this program as promised to them by Congress, and that the language of the 

law is implemented ‘‘expeditiously and transparently,’’ now as opposed to later! 

For additional info about the Task Force and the Veterans Procurement Program 

and other initiatives Go to: www.VET-Force.org, www.VVA.org or www.ASDV.org. 

Note: VET-Force meets monthly in the Nations Capitol to discuss the issues pertinent to the success of Veteran Business Owners. For more information contact Joe 

Wynn at JoeWynn@VetsGroup.org. 

f 

Prepared Statement of Ruth A. Fanning, Director, 

Vocational Rehabilitation and Employment Service, Veterans Benefits 

Administration, U.S. Department of Veterans Affairs 

Madam Chairwoman and Members of the Subcommittee, thank you for inviting 

me to appear before you today to discuss VA’s Vocational Rehabilitation and Employment (VR&E) program. My testimony will provide an overview of the VR&E 

Program and the services we provide, a review of contract services used to support 

our mission, issues of concern pertaining to VR&E National Acquisition Strategy 

(NAS) contracts and prime contractor performance, and VA’s plans to streamline 

and improve contracting requirements and oversight. In addition, I will discuss how 

VR&E is meeting, and will continue to meet, the needs of veterans with disabilities 

to achieve their employment and independent living goals. 

Overview of VR&E 

VR&E provides career and independent living services to Veterans and 

Servicemembers through two programs, Coming Home to Work (CHTW) and 

VetSuccess. Approximately 1,100 employees in 57 regional offices and over 100 outbased offices provide services to Servicemembers and Veterans with disabilities resulting from their military service, as well as to certain family members. 

Servicemembers and Veterans are assisted in obtaining and maintaining suitable 

careers and living as independently as possible in their homes and communities. 

Through the VR&E Coming Home to Work program, VA provides interested 

Servicemembers and Veterans career and adjustment counseling during their transition from active duty and throughout their enrollment in VA sponsored education 

programs. VR&E’s VetSuccess program assists Veterans to prepare for and enter careers, and live as independently as possible at home and in their communities. 

Counseling and employment staffs assist Veterans to plan for their future careers, 

receive necessary training or education, and successfully compete for careers. For 

those Veterans whose disabilities are too severe to make employment feasible, 

VR&E provides a wide range of independent living services, including volunteer 

work placement, assistance using public transportation, life skills coaching, counseling, and other services. 

VR&E services are tailored to meet each individual Veteran’s needs and are provided within five general ‘‘tracks’’ or types of services. These tracks include re-employment with a previous employer; rapid access to employment through job-readiness preparation and incidental training; self-employment, for those who wish to 

own their own businesses; employment through long-term services that include formal training and education programs leading to suitable employment; and services 

to maximize independence in daily living, for veterans who are currently unable to 

work or participate in other programs of vocational rehabilitation. 

Overview of VR&E National Acquisition Strategy 

Background 

VA adopted the NAS to award contracts at the national level to complement and 

supplement services provided by VA and ensure that veterans have access to the 

same quality and types of VR&E services across all regional offices. The NAS contracts were developed using a sub-area approach to reduce the total number of contracts awarded and correspondingly reduce the administrative burden to oversee 

contractors. 


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Training was provided during the solicitation phase to assist small businesses to 

partner together and/or to develop subcontracting relationships. All contracts were 

awarded to small businesses and service-disabled veteran-owned small businesses. 

Large companies were unsuccessful in competing for awards. NAS contracts were 

awarded to eight prime contractors in regional sub-areas who had, or asserted that 

they could develop, a local presence throughout the sub-area(s). 

NAS contracts were awarded on July 21, 2008. A 1-week pre-performance training 

session was held in August 2008 in Baltimore, MD. The training session was attended by VR&E Central Office staff; regional office staff, including contract specialists and VR&E officers who serve as contracting officer technical representatives 

(COTRs); the procuring contracting officer (PCO/OA&L); and principals from the 

eight prime contractors. Training covered implementation and administration of the 

entire contract for all parties. 

Throughout the post-award period, VR&E Service management and contracting 

staff regularly held calls with VR&E officers and field contract specialists to provide 

ongoing training and ensure consistency of contract implementation and administration. A contract administration board comprised of VR&E Service, Office of Acquisitions and Logistics (OA&L) staff, and General Counsel staff also met routinely postaward to provide a mechanism for VR&E to elevate contract concerns and obtain 

advice and guidance in the administration phase of the contract. At the local level, 

VR&E officers and contract specialists worked closely with prime contractors to implement contracts and monitor performance. As necessary, officials from OA&L and 

VR&E Service worked directly with prime contractors to provide guidance and resolve issues. 

Current Status of NAS Contracts 

Services delivered by approximately half of the prime contractors have not met 

contract performance standards. Prime contractors with contracts in multiple jurisdictions around the country have struggled to develop subcontract relationships, to 

successfully recruit appropriate staff, and to deliver timely and high quality services 

to Veterans throughout areas for which contracts were awarded. 

During the base year of the contract, VA experienced significant contractor performance issues, specifically in the areas of quality and timeliness of counseling and 

case management, compliance with contract terms, appropriate invoicing, and contractor refusal of referrals. In one instance, a vendor did not comply with the contract terms and conditions, despite direction provided by the Contracting Officer 

(CO). VA attempted to resolve issues with vendors, but as the contract year progressed, we became increasingly concerned about some contractors’ failure to meet 

timeliness and performance standards and the corresponding impact on services to 

Veterans. 

In accordance with a settlement agreement entered into between the Department 

of Justice and an unsuccessful offeror who filed a protest before the U.S. Court of 

Federal Claims, VA agreed not to exercise the four option years remaining on the 

contract after expiration of the base year. Instead of exercising the options, VA 

agreed to revisit its requirements and acquisition strategy and solicit new contracts 

in the fall of 2009. The Court dismissed the protest without prejudice on April 24, 

2009, in Veterans Vocational Services v. United States, No. 08–589C, based on the 

protester’s representation in its motion to dismiss based on VA’s intent to solicit 

new contracts. Work on cases that have already been awarded by task order under 

the current NAS contract will continue through the end of the performance period 

identified in those task orders. 

VR&E Service Contracting Improvements 

VR&E Service has utilized feedback from field staff and from various studies to 

improve support, administration, and oversight of contracting activities. Studies include the Secretary’s 2004 VR&E Task Force, the 2005 VA Inspector General study 

of contracting, and the 2007 GAO study of contracting. 

Improvements made include the addition of contract specialist staff in the VA 

Central VR&E office, who serve as a resource at both the national and local level; 

new VBA contract specialist positions throughout the country to provide contracting 

support in the field offices; national training for VR&E contract staff prior to contract implementation; standardization of contract procedures; evaluation of contract 

training for VR&E staff; strengthening of contract oversight reviews, including site 

visit and management review protocols; enhancement of information systems used 

to track contract expenditures; requirement for VR&E staff administering contracts 

during performance period to be warranted and trained as COTRs, and to complete 

training for the proper completion of task orders; and increased collaboration with 


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the Office of General Counsel and the Office of Acquisitions and Logistics during 

all phases of the solicitation, award, and implementation process. 

A draft governance structure has been developed for future contracts to further 

strengthen oversight of contracting activities. This structure focuses on a continual 

improvement model, designed to identify and address gaps in training, implementation, oversight, communication, and administration. In order to maximize selection 

of vendors that understand and can readily respond to VA’s service needs, a thorough analysis has been conducted of the current NAS contract to ensure that the 

upcoming solicitation clearly outlines VA’s requirements. The solicitation for the 

new VR&E contracts is being developed to ensure administrative items such as referrals, invoicing, and reporting are clearly defined and to ensure clear requirements 

and performance expectations are outlined in order to obtain timely and quality 

services. Also, under the revised national contracting strategy, delegations of authority in contract administration will flow from the PCO to the administrative contracting officers and COTRs to ensure maximum compliance with regulatory and 

contracting requirements. 

Future VR&E Contracting Services 

In order to support VR&E’s continued contracting needs for services that supplement and complement rehabilitation counseling, case management, and employment 

assistance provided by VR&E counselors, VA is developing a new national solicitation for service contracts. These contracts are designed to ensure that new contractors are capable and staffed to provide timely and professional services for Veterans 

throughout awarded jurisdictions. 

The solicitation for the new national contracts is anticipated to be released during 

the last quarter of 2009, with awards expected during the first quarter of fiscal year 

2010. In the interim, VR&E offices will procure services locally as needed. Local contract performance period(s) will be linked to the forthcoming national replacement 

contract and will, therefore, be for short duration that allows sufficient lead-time for 

an orderly transfer. Local procurements will be awarded based on standardized requirements and processes to ensure consistency of contract awards and implementation. Working in collaboration with the Office of General Counsel, and OA&L, 

VR&E Service is developing a governance plan to ensure both local and new national contracts are consistently and effectively implemented and monitored. 

Conclusion 

VR&E has taken action to significantly improve the administrative oversight and 

implementation of contract services. We significantly strengthened oversight by adding acquisition professionals throughout the country; focused on continual training 

both at the beginning of the contract and throughout the administration cycle; provided contracting and COTR training to all VR&E managers; and strengthened policy and guidelines. We will continue to focus on effective governance of contracts to 

ensure consistency of contract administration. 

The current NAS contracts were developed in an effort to decrease the administrative burden of managing a large number of national contracts. Implementation 

of this strategy has demonstrated that a larger number of qualified service providers across the Nation are required to ensure timely delivery of quality services 

to Veterans. As we move forward with the interim contracts and new national contracts, VA’s contracting strategy will continue to encourage maximum participation 

by Veteran-owned businesses. Above all, our contracting strategy will emphasize selection and management of vendors who can provide timely and high quality services to Veterans participating in the VR&E program. 

Madam Chairwoman, this concludes my statement. I would be pleased to answer 

questions from you or any of the other Members of the Subcommittee. 

f 

Statement of John Wilson, Associate National Legislative Director, 

Disabled American Veterans 

Madam Chairwoman, Ranking Member and Members of the Committee: 

On behalf of the 1.2 million members of the Disabled American Veterans (DAV), 

I am honored to present this testimony to address the Department of Veterans Affairs, Veterans Benefits Administration, Vocational Rehabilitation and Employment 

(VR&E) contracts for veteran counseling. In accordance with our congressional charter, the DAV’s mission is to ‘‘advance the interests, and work for the betterment of 

all wounded, injured, and disabled American veterans.’’ We are therefore pleased to 

discuss VR&E contracts insofar as they fall within that scope. 


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DAV and our Independent Budget co-authors and endorsers have presented this 

Congress with our perspective regarding the VR&E. Specifically, success in the transition of disabled veterans to meaningful employment relies heavily upon VA’s ability to provide vocational rehabilitation and employment services in a timely and effective manner. 

Unfortunately, the demands and expectations being placed on the VR&E are exceeding the organization’s current capacity to effectively deliver a full continuum of 

comprehensive programs. The Service continues to experience a shortage of staff nationwide, and as consequence, has little option but to purchase program services on 

a contractual basis. 

To increase emphasis on employment, the VR&E has begun an initiative titled 

‘‘Coming Home to Work’’ as an early outreach effort to provide VR&E services to 

eligible servicemembers pending medical separation from active duty at military 

treatment facilities. This and other new services will require additional staff to 

maintain efforts nationwide. We must stress the point again, that VA must increase 

VR&E staffing levels to meet the increasing demand our Nation’s veterans have for 

services. 

Absent unique geographical barriers, disabled veterans apply for services from the 

VR&E and frequently vent disappointment when services are subsequently contracted to third parties, which, in some cases, subcontract the services again to a 

fourth party. It is a shame that the second largest Federal agency in America can’t 

adequately staff the VR&E Service with Certified Rehabilitation Counselors to ensure the post service rehabilitation of those who become disabled while in service 

to our country. 

The DAV currently has two legislative resolutions (Resolution Nos. 223 and 245) 

that solidify our belief that if contracting is deemed necessary by the VR&E service, 

then service-disabled veteran-owned business should be given priority as set forth 

by law (P.L. 109–461) and consistent with VA Information Letter 049–07–08, dated 

June 19, 2007: 

38 U.S.C. § 8128. Small business concerns owned and controlled by 

veterans: contracting priority. (a) Contracting Priority.—In procuring 

goods and services pursuant to a contracting preference under this title or 

any other provision of law, the Secretary shall give priority to a small business concern owned and controlled by veterans, if such business concern 

also meets the requirements of that contracting preference. 

The VR&E utilizes contractors to supplement and complement the services to veterans participating in the various programs. A National Acquisition Strategy (NAS) 

was instituted in order to standardize and streamline the acquisition procedures 

used by VR&E staff to obtain contractors who provide these services to veterans. 

VR&E established the NAS, effective October 1, 2002, to develop a more cost-effective approach to providing services to disabled veterans participating in rehabilitation programs. The NAS has undergone several changes based on staffing, experience and quality assurance oversight by the Office of the Inspector General (OIG). 

The changes that were necessary are noted in the report referenced below: 

Extract from, Evaluation of VBA Vocational Rehabilitation and Employment Contracts (OIG Report No. 04–01271–74). We identified significant vulnerabilities upon evaluating the pre-award and award phases of 

VA’s contracting process. Consequently, VA is at risk of paying excessive 

prices on all of the 241 VR&E contracts. To illustrate: 

• There was no evidence that VA conducted price reasonableness determinations to ensure the best prices had been obtained. 

• Key clauses and references designed to protect the interest of the government were not included in contract specifications and the Statement of 

Work (SOW). In addition, information contained in the contract specifications and SOW was vague and subject to multiple interpretations. 

• VA did not adequately document contract award actions and decisions. 

• Technical evaluations and assessments were incomplete. 

The NAS includes a national acquisition contract. As stated in M28–1: Vocational 

Rehabilitation and Counseling Procedures Under 38 U.S.C. Chapter 31: Part II, 

Chapter 3, section A. The NAS contract was designed to (1) increase consistency 

among regional offices, and (2) allow for local customization of contracting to accommodate specific regional needs within each regional office’s jurisdiction. In addition, 

the overall limit of NAS contracts is much higher than one approved by regional 

office personnel. NAS contracts standardize services and prices over many States, 


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allow negotiation of a fixed price, and eliminate local negotiations for the same services at different prices. 

The VA’s problem with managing contracts in general is not new, as seen in another report from the OIG. 

Extract from, Audit of VA Electronic Contract Management System (OIG 

Report No. 08–00921–181 of July 30, 2009). The Office of Inspector General 

(OIG) performed an audit to evaluate the effectiveness of the Electronic Contract Management System (eCMS), which was designed to improve VA’s contract management. The audit objective was to determine if information in 

eCMS enables VA to use the system as a comprehensive management tool 

to improve the procurement process and the effectiveness of the system for 

oversight of VA procurements. 

The audit revealed that eCMS is not used effectively and procurement information in eCMS is incomplete. VA cannot achieve the expected benefits 

of eCMS, including the ability to integrate and standardize procurement 

processes, reduce workload, and improve communications without complete 

information. In addition, because procurement information in eCMS is incomplete, reports generated by the system cannot be relied upon when making procurement management decisions. VA expends about $10 billion annually on supplies and services. Until management enforces compliance for the 

mandatory use of the system, VA cannot benefit from the full capabilities of 

the system including the ability to integrate and standardize procurement 

processes, reduce workload, and improve communications. 

Integrating eCMS with IFCAP or FMS would provide VA with improved 

acquisition efficiency, reporting, and control over spending. This will help 

ensure increased management visibility and transparency needed to manage 

acquisitions nationwide and make good procurement decisions. 

In closing, I wish to reaffirm DAV’s positions: 

(1) VA must increase VR&E staffing levels to meet the increasing demand our 

Nation’s veterans have for services. 

(2) Service-disabled veteran-owned businesses should be given priority as set 

forth by law (P.L. 109–461), and consistent with VA Information Letter 049– 

07–08, dated June 19, 2007. 

(3) An effective NAS must provide for: 

(a) Clear lines of authority and oversight; 

(b) Standards of accountability; 

(c) Detailed guidance regarding the scope of contracts and the SOW; 

(d) Contracting officers of technical responsibility maintaining open and well 

documented communication with vendors to provide timely resolution of 

concern; 

(e) Prompt payments so as not to interfere with services being rendered; and 

(4) Oversight and quality assurance must be mandatory to ensure veterans are 

well served. 

Madam Chairwoman, this concludes DAV’s testimony. We appreciate the opportunity to have provided our views on this important issue. I will be pleased to respond to any questions that you or other Members of the Committee may have. 


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MATERIAL SUBMITTED FOR THE RECORD 

Committee on Veterans’ Affairs 

Subcommittee on Economic Opportunity 

July 31, 2009 

Mr. Patrick F. Chorpenning 

President and Chief Executive Officer 

Heritage of America, LLC 

17505 North 79th Ave, Suite 102 

Glendale, AZ 85308 

Dear Mr. Chorpenning: 

I would like to request your response to the enclosed questions for the record and 

deliverable I am submitting in reference to our House Committee on Veterans’ Affairs Subcommittee on Economic Opportunity Hearing on ‘‘Vocational Rehabilitation 

and Employment Contracts for Veteran Counseling’’ on July 30, 2009. Please answer 

the enclosed hearing questions by no later than Friday, September 11, 2009. 

In an effort to reduce printing costs, the Committee on Veterans’ Affairs, in cooperation with the Joint Committee on Printing, is implementing some formatting 

changes for material for all Full Committee and Subcommittee hearings. Therefore, 

it would be appreciated if you could provide your answers consecutively on letter 

size paper, single-spaced. In addition, please restate the question in its entirety before the answer. 

Due to the delay in receiving mail, please provide your response to Ms. Orfa 

Torres by fax at (202) 225–2034. If you have any questions, please call (202) 226– 

4150. 

Sincerely, 

Stephanie Herseth Sandlin 

Chairwoman 

JL/ot 

Heritage of America, LLC. 

Glendale, AZ 

September 9, 2009 

The Honorable Stephanie Herseth Sandlin 

Chairwoman 

Subcommittee on Economic Opportunity 

Committee on Veterans’ Affairs 

U.S. House of Representatives 

335 Cannon House Office Building 

Washington, DC 20515 

Dear Chairwoman Herseth Sandlin: 

On behalf of everyone connected with Heritage of America (HOA) and the veterans we are privileged to serve, I want thank you for holding the July 30th hearing 

on VR&E contracts for veteran counseling. Despite a very challenging afternoon 

schedule, interrupted by several floor votes, you managed to conduct a very useful 

hearing, highlighting many of the problems surrounding implementation of this contract. 

While the enclosed pages answer the Subcommittee’s questions for the record, it 

occurs to me there are so many issues that need to be thoroughly reviewed in regard 

to VA’s implementation of this contracts, as well as contractor performance, that the 

Subcommittee might need additional resources. I would respectfully suggest and 

hope you will seriously consider having the Government Accountability Office conduct an investigation into all the issues presented during the Subcommittee’s hearVerDate Nov 24 2008 01:36 Jan 15, 2010 Jkt 051879 PO 00000 Frm 00073 Fmt 6621 Sfmt 6621 E:\HR\OC\51879.XXX GPO1 PsN: 51879

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ing. HOA would welcome such an investigation and I personally guarantee our full 

cooperation. 

Sincerely, 

Patrick F. Chorpenning 

President and Chief Executive Officer 

Question 1: What should the VA have done to correct the problems in the States 

you listed as problematic? 

Response: The Under Secretary for Benefits and the Director of VR&E should 

have insisted on frequent and regular communications between Central Office, contractors and VA regional managers to identify problems early on. Unfortunately, the 

total absence of such communications exacerbated all the problems that arose. Unbelievably, the Under Secretary for Benefits refused to meet with the Chief Executive Officer of the largest NAS prime contractor, providing services to veterans in 

44 States and much of the rest of the world. 

The Director of VR&E should have mandated that all regional managers and personnel abide by and implement the provisions of the NAS contract, as signed by the 

VA, as well as all other applicable provisions of law and Federal acquisition regulations. Central Office personnel at the highest levels don’t seem to have understood 

that VA’s signing the NAS contract transformed NAS goals from policy objectives 

to legally binding obligations of the VA. 

Abiding by those NAS contract provisions within all regions and subareas would 

have provided for uniform processes across regional offices nationally, as applied to: 

a. the way cases were referred to contractors by Regional offices; 

b. requirements for initial evaluation information; 

c. Regional Office training obligations to contractors; 

d. standardization of format for forms used for reporting and invoicing; 

e. delineation of lines of communication between contractors and Regional Office 

and VR&E personnel; 

f. VA payment for services complying with legal timeliness requirements; 

g. approval of contractor counselors to provide services; and 

h. VA establishing an IT system to track cases and invoices; 

When the VA’s interpretation of contract pricing under Case Management did not 

prevail in the case of Houck Limited vs. the Department of Veterans Affairs, before 

the Civilian Board of Contract Appeals, the VA should have stopped imposing its 

pricing interpretation for such cases on the remaining seven prime contractors. 

Additionally, the Director of VR&E should have taken disciplinary action against 

personnel refusing to abide by the provisions and policies of the NAS contract. Employment should have been terminated for those VA employees actively working to 

undermine performance of the NAS contract. Heritage of America (HOA) terminated 

the employment of a number of its personnel, whose performance was inadequate. 

VA should have done the same. 

Basically, the NAS failed because VA Central Office could not get all its own local 

and regional offices to cooperate. Many in these offices resented losing power and 

control over the contracts for counseling services. Some of them actively subverted 

the program and hindered performance. 

Additionally, while HOA established a very sophisticated information management system, capable of tracking work flow, invoices and VA payments for services 

performed, the VA failed to set up a corresponding tracking system. 

One of the primary motivations for undermining the NAS would seem to be the 

fear of many in the bureaucracy that non-governmental third party entities would 

be able to track VA performance and timeliness of service to disabled veterans better than the VA itself. With control over these contracts back at the local level and 

little oversight from Central Office, local officials would not be under such potentially critical, objective scrutiny. 

The above listed items only scratch the surface of the ways in which the conduct 

of VA employees in certain regions delayed, impeded or disrupted HOA’s contract 

performance, interfered with HOA’s subcontractor relationships, or ultimately 

caused HOA to incur increased costs of performance on the NAS contract. 

Heritage of America truly appreciates the Subcommittee’s time and interest in this 

matter but believes the best way to achieve a thorough and impartial inquiry into 

the NAS Contract for VR&E services debacle is through a formal GAO investigation. 


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Such an investigation might be able to determine if VA leadership sincerely tried 

to implement a national acquisition strategy or simply gave it lip service while actually intending to demonstrate that such a strategy would not work, in order to justify going back to local/regional control over these contracts. While the contract 

called for a national process implementation, VACO actions would indicate the VA 

never intended to honor that commitment to its prime contractors, as those officials 

did nothing to ensure consistency between regions in processes or procedures. These 

problems were pointed out to VACO officials early on in the contract in weekly reports from HOA that never received any response. 

Question 2: Who are these regional directors who you claim that have little interest in the national VR&E strategy? 

Response: Unfortunately, in many areas regional officials have disregarded the 

NAS agreement provisions, insisting that procedures revert back to previous local 

practices rather than working to implement the new strategy cooperatively. These 

areas include Washington, Oregon, Idaho, New Mexico, Wyoming, Texas, North and 

South Dakota, Nebraska, Iowa, Louisiana, Ohio, Mississippi, New Jersey, Pennsylvania, and Puerto Rico. All problems with regional officials have been exacerbated 

by the total absence of VACO leadership, virtual refusal to communicate with 

primes on any regular basis, and incompetence of the contracting officer. The National Acquisition Strategy is that in name only. Standardized business practices 

and procedures were not imposed on the ROs by VA Central Office (VACO) officials. 

There are still many VAs, represented by many ROs, that are being ‘‘managed’’ by 

regional directors, who have little interest in the ‘‘national’’ VR&E strategy. This reality became a confounding trap in time and money for prime contractors trying 

their best to abide by the NAS agreement and expecting ROs to do the same. 

Due to the behavior of local officials in certain regions throughout the short life 

of this contact, it can be assumed that in all of the Subareas where Heritage of 

America (HOA) experienced the most problems, the Regional Directors enabled the 

destructive attitudes and processes put forth by the VR&E Officers who worked for 

them. These locations included Subarea 4 (Ohio, Indiana, and Michigan), Subarea 

17 (Washington and Oregon), Subarea 10 (Texas), Subarea 12 (North and South Dakota), and Subarea 6 (Florida and Puerto Rico). 

For example, Carol Filman was the Regional Director in Seattle. In the presence 

of an HOA manager and former VR&E employees, she stated that she did not approve of the NAS Contract and had less than good things to say about HOA’s operation. 

Heritage of America believes a thorough investigation by the government Accountability Office would provide more evidence of disinterest in the NAS strategy on the 

part of local VA officials. 

Question 3: What did the security procedures entail and how long should they 

have taken to be approved by the VA? 

Response: The background procedure entails: 

a. Getting entered into the background system by the VA. Heritage of America 

(HOA) asked to be allowed to enter these for the VA to save time but it was 

denied. 

b. Completing the Declaration of Federal Employment (OF306) and Questionnaire 

for Non Sensitive Positions (SF85). A copy of each is attached to these answers. 

c. Getting fingerprinted at a local Law Enforcement center. 

d. Sending the original paperwork to HOA to be screened prior to sending to Little Rock. 

e. Sending all copies stapled together to Little Rock. (In the beginning HOA paper 

clipped all paperwork together but Little Rock would send it back stating pages 

were missing. Once we started stapling it, the problem was alleviated) 

This process should have taken about one work week. The biggest issue in Little 

Rock was the backlog of paperwork. The staff there stated many times that they 

were weeks or up to a month behind. There is also an academy or training facility 

at their location and they pulled the trainees in to assist and screen the paperwork 

and enter it in the system. Unfortunately, many times the paperwork and data 

entry were incorrect and HOA would have to contact Little Rock by phone or in 

writing to correct the errors. 

The other delays in approvals for the counselors included getting them entered 

into the Learning Management System (LMS) training system to complete their online classes. The VA had an unknown procedure to do this which was faulty in many 

areas and the VA never entered the counselors. HOA had to resort to the Employee 


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Education System (EES) training Web site to complete the online training. The EES 

site allowed the counselor to create their own user name and password to complete 

the training, but many ROs insisted we use the LMS because that ‘‘would help them 

track the training.’’ 

In the startup phase of performance, HOA set up a trained ‘‘Rapid Response 

Team’’ to travel to any location to provide services, while permanent personnel were 

being put in place. HOA had to spend time and money and effort getting that team 

trained and retrained for each RO location—not anybody’s idea of a national training program. Unfortunately, only the LMS supervisor at each location could track 

the training (the Quality Assurance Manager, who was the one that needed the information, could not do so) and the LMS supervisor could only track his or her own 

location—not nationwide as should have been established by the VA. 

Question 4: Can you give us the names of regional office staff who refused to 

provide instruction to contractor personnel on criteria for initial evaluation? 

Response: James Jacobs, Assistant VR&E Officer in Cleveland, refused to provide training even though in Ohio they required something they characterized as 

a ‘‘Psychological/Vocational/Social/Rehabilitation’’ Assessment instead of the contracted-for Initial Assessment. Though Heritage of America (HOA) tried to obtain 

information concerning their special requirements via telephone, email, and personal visits by two of its middle managers to his location, (and at one point it looked 

like they were going to tell HOA what they wanted in the way of this special assessment that was clearly not part of the contract), at the last minute Mr. Jacobs, upon 

instruction from his supervisor, Mr. Kolin Van Winkle (VR&E Officer in Ohio), canceled the training and subsequently canceled all HOA case referrals in Ohio. 

Question 5: Who in the VA Central Office ‘‘instructed the VR&E officers not to 

provide the prime contractors with the names of their best contract counselors from 

prior arrangements until it was too late to [have] any favorable impact on the prime 

contractor operations’’? 

Response: Ms. Ruth Fanning, Director, VR&E; her assistant Marguerita Cocker; 

the Contracting Officers, Rosa Asencio and Belinda Thomas-Wright; and the Contracting Officers Technical Representatives, Carolyn Thomas and Emmanuel 

McKeever, maintained dysfunctional, resistant attitudes toward Heritage of America 

(HOA) throughout the procurement, preventing optimal performance. 

HOA’s initial approach to this NAS program was to set up HOA regional offices 

managed by former VR&E Officers, who we thought would be able to interact with 

their former colleagues in a productive, cooperative way, enabling quick and efficient recruitment and retention of the best counselors in each area. On July 21, 

2008, the same day HOA was awarded the contract, HOA tasked its regional managers with contacting VR&E Officers in each of the 44 states where HOA was 

awarded a contract to begin this process. By 9:00 the next morning, HOA’s managers were being told by VR&E Officers that VACO had instructed them not to talk 

with HOA until further notice and under no circumstances was HOA to be given 

names of the counselors preferred by those VR&E Officers. This was changed later, 

and HOA was able to obtain some such name lists, but by that time it was too late 

to have any favorable impact on operations. 

Question 6: Who is the VR&E officer in Cleveland who refused to provide the 

mandated training required by the contract and VA regulations? 

Response: Mr. Kolin Van Winkle. See response to question number 4, above. 

The contract was clear in how and when the VR&E offices were to provide training. Most of them complied sooner or later, but Mr. Van Winkle, refused to do so 

as explained above in number 4. 

Deliverable: 

1) Can you provide us with a copy of the letter from the Vocational Rehabilitation Counselor in the Northwest which predicted Heritage of 

America was going to fail even before it began to provide services? 

Mr. David Kaplan, Chief Professional Officer at the American Counseling Association, received this email from ACA member, and Medford, Oregon VRC, 

Janice Stevens on August 14, 2008, while contract awardees were still attending 

the post-award conference in Baltimore. Ms. Stevens could not possibly have 

any legitimate knowledge at that point as to how HOA was going to perform 

or even how much we were going to pay our counselors because VACO had not 

yet promulgated our pricing to the ROs: 


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f 


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74 

Committee on Veterans’ Affairs 

Subcommittee on Economic Opportunity 

July 31, 2009 

Mr. Anthony Tarkowski 

President/Chief Executive Officer 

Sygnetics, Inc. 

2514 S. Rochester Road 

Rochester Hills, MI 48307–3817 

Dear Mr. Tarkowski: 

I would like to request your response to the enclosed questions for the record I 

am submitting in reference to our House Committee on Veterans’ Affairs Subcommittee on Economic Opportunity Hearing on ‘‘Vocational Rehabilitation and Employment Contracts for Veteran Counseling’’ on July 30, 2009. Please answer the enclosed hearing questions by no later than Friday, September 11, 2009. 

In an effort to reduce printing costs, the Committee on Veterans’ Affairs, in cooperation with the Joint Committee on Printing, is implementing some formatting 

changes for material for all Full Committee and Subcommittee hearings. Therefore, 

it would be appreciated if you could provide your answers consecutively on letter 

size paper, single-spaced. In addition, please restate the question in its entirety before the answer. 

Due to the delay in receiving mail, please provide your response to Ms. Orfa 

Torres by fax at (202) 225–2034. If you have any questions, please call (202) 226– 

4150. 

Sincerely, 

Stephanie Herseth Sandlin 

Chairwoman 

JL/ot 

Sygnetics Incorporated 

Rochester Hills, MI 

September 9, 2009 

Chairwoman Stephanie Herseth Sandlin 

U.S. House of Representatives 

Committee on Veterans’ Affairs 

One Hundred Eleventh Congress 

335 Cannon House Office Building 

Washington, DC 20515 

Dear Chairwoman Sandlin: 

I am submitting the answers to the hearing questions that were submitted to me 

on July 31, 2009 from the House Committee on Veterans’ Affairs Subcommittee on 

Economic Opportunity Hearing on Subcommittee on Economic Opportunity ‘‘Vocational Rehabilitation and Employment Contracts for Veteran Counseling’’. 

I have provided as detailed answers as possible to assist the Committee in understanding the impact this contract will have on the well-being of Sygnetics, Inc. and 

it’s many sub-contractors. I have made certain to provide both the questions and the 

answers in single spaced form as requested. 

Should there be any additional information you might need please do 

not hesitate to contact me via email, or by phone. My email address is 

Tony.Tarkowski@sygnetics.com and my phones are (248) 844–1900 ext 1220 or cell 

at (248) 709–4100. 

I sincerely hope this helps bring a quick resolution to the difficulties that have 

been caused by VA and now are impacting my business negatively due to my testimony in July. I appreciate the attention Congress has directed to this matter. 

Sincerely, 

Tony Tarkowski 

President/Chief Executive Officer 


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Deliverable from the House Committee on Veterans’ Affairs 

Subcommittee on Economic Opportunity 

Hearing on Vocational Rehabilitation and 

Employment Contracts for Veteran Counseling 

July 30, 2009 

Questions for the Record: 

Question 1: One of the concerns you mentioned in your testimony was that the 

startup cost of the contract was ‘‘huge due to the fact that the contract started late.’’ 

Did the VA ever mention the potential high cost of the startup of the contract? 

Response: The VA did not mention there were going to be high start up costs. 

Although we knew there were start up costs involved the fact that we did not get 

our first file until October when the contract actually started in July did not allow 

sufficient time to obtain enough work to support the outlay. We also signed a lease 

late because we did not know what areas were being awarded until July and then 

couldn’t get Counselors approved so there was a delay in opening the office. Since 

no direct numbers of files were provided in the proposal it was impossible to project 

where we would be awarded and what would be necessary to start and operate in 

any certain area. We were led to believe that if we did a good job, this contract was 

a 5 year contract and therefore in order to keep costs down, signed a multi year 

lease to handle the volume in San Diego. We also bought new Accounting software 

and new I.T. equipment, desks, phone system, etc. We even wrote a case management system to provide the best in service. 

Question 2: After attending the 5 day workshop for the awarded contract, did 

any of the Regional Offices provide any follow-up training? 

Response: There was only minimal training provided by the Regional office in 

Los Angeles and Oakland. These sessions provided training on security and contract 

issues. The Oakland office did briefly discuss the report requirements for their office 

only. Most of the offices continually failed to respond to our requests for assistance. 

This was one of the most important issues when it came to learning what was required on the reports. 

Question 3: In your written testimony you state that VA created additional obstacles for you. What additional obstacles did VA create that were not part of the 

contract? 

Response: By not allowing us to be trained, and not utilizing a standard form 

for invoices, as well as many of the VR&E Officers not working as a team, we could 

not ascertain what was desired in many cases and therefore could not complete reports on a timely basis. There were so many different invoices that were requested 

and forms for reports by each individual office that it caused significant delays in 

getting the reports and invoicing in on a timely basis. Each office had its own way 

of doing business and we had to adjust to each. 

Question 4: How has VA’s administration of this contract been unconscionable? 

Response: I believe that it is unconscionable because no reasonable person would 

expect VA to not communicate, not train, not have standard documents that must 

be used by all offices, not pay invoices on time, reject reports based on punctuation, 

not care about Traumatic Brain Injury and request it be removed from reports, not 

understand that when a person lives several hundred miles away travel should be 

paid to the Counselor. The most unconscionable conduct was from the VA central 

office. They instructed the Regional offices not to communicate with the contractors 

and consistently ignored our requests for meetings and dialog with the contracting 

officer and COTR. Our detailed rates, and several other companies rates, were released to the competitors by VA and are causing unfair competition. The VA is holding the fact that we cooperated with your Committee against us. It has already been 

used against us in California. We have been told that our chances of winning a new 

national contract will be slim due to our testimony. To take away our livelihood because we told the truth is by far the most unconscionable event yet. 

Question 5: Can you give examples of when veterans were denied services? 

Response: Anytime a file is not accepted once turned in for a disabled veteran 

that file cannot be processed for claims. We have had many files rejected after being 

QA’D by two retired VR&E Officers and veteran Counselors that have worked with 

VA for years. It is difficult to believe that these people don’t know what is expected 


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on a report. In the meantime the veteran waits for services he deserves and potentially gets rejected for TBI since we were instructed to remove it from reports. 

Question 6: You state that, ‘‘Many Department of Veterans Affairs offices, either 

by omission or commission, have undermined the efforts of the eight prime contractors . . .’’ that were providing services. Who were these individuals and what were 

the omissions and commissions? 

Response: The VR&E officers in Missouri, North Dakota, South Dakota, Maine, 

Washington and Alabama made statements from time to time that they only wanted 

to work with local contractors. They provided incomplete cases, no contact information for veterans and refused to approve cases that were properly completed. 

Question 7: Who specifically had a predisposed attitude not make the contract 

work and who specifically was not going to let it work? 

Response: See answer to question 6. With no communication from the Contracting Officer, or Director there was no direction on how to resolve these issues 

and it continues on today even though Congress has had testimony given and seems 

to have shown great interest in making a national contract work, the Contracting 

Officer will not assist in getting invoicing issues resolved. This is especially true 

with level II case management. 

Question 8: How big was your small business before the contract, and how much 

did it grow after the contract? 

Response: When Sygnetics turned in the proposal we were at an annual 3 year 

average of $5,767,468 and our current 3 year average is $10,296,843. Part of this 

growth was due to a large contract we had for 1 year only primarily in 2006 with 

the Army under our HR Solutions contract. Our contract for VA Vocational Rehabilitation brought in over $2,800,000 this past year with a large portion of this being 

in 2009 sales. We added 7 people in San Diego, 1 in Oakland CA, 6 in Michigan, 

a sub-contract office in VA with 6 people and hundreds of sub-contract companies 

all over the United States to handle the volume of files that were provided after 

award. Much of this growth happened in November through December 2008 and 

January 2009. 

Question 9: How often did a Vocational Rehabilitation Counselor give a case to 

one of your counselors and how did that violate the contract? 

Response: All cases were to be given directly to our company for assignment to 

counselors. On approximately 10 to 12 occasions files were provided directly to a 

counselor. 

Question 10: To your knowledge how often was there a deliberate withholding 

of payment to ensure that the National Acquisition Strategy and your company 

failed? 

Response: Anytime a VR&E Officer returns files on a continual basis and will 

not work with us to train on how they want the reports done, or conveyed why it 

was returned it seems deliberate that they do not want us to succeed. There also 

were instances where we were not provided the 1985 (authorization for services) on 

a timely basis and therefore were delayed on our invoicing and payment. This delay 

is partly responsible for my bank increasing my interest level on loans by 1.25 percent. 

Question 11: If security issues were ‘‘ill defined’’ is this something that a prudent 

contractor doing due diligence should have requested clarity on? 

Response: When it was mentioned at the 5 day workshop that it would take several months to get counselors approved, all the contract companies were told that 

was not true and that approval would happen within days. That was proven wrong 

when we attempted to get approval through. The process was not defined as to 

length and all that was needed to finish this process. This delay in processing information caused a group of files to be lost in California as an example because we 

did not have counselors approved to work the files that were given to us prior to 

those personnel leaving for home. Cost was not mentioned in the solicitation for the 

‘‘vetting’’ (security) process. This cost was passed on to us and we had to pay whatever they dictated. 


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Question 12: Who directed local VR&E officers not to have any conversations 

with contractors until August 2008 and what impact did it have on your company? 

Response: Ruth Fanning and since we couldn’t have discussions we could not 

have any idea of what they expected to be done. This caused great delays in getting 

the necessary forms in place for the reports, and invoicing. 

Question 13: Why should the VA be concerned about any business start-up costs? 

Don’t most enterprises consider it a cost of doing business with a Federal agency? 

Response: Although it is correct to assume a business knows the start up cost, 

it was very difficult to project since there were no actual numbers of files that would 

be provided in each area. The other difficulty is that if you were provided a full year 

to amortize cost it would work. We were only provided at best 9 months with a very 

slow ramp up since there were other contracts still in place with local contractors. 

We also were not told what the fee would be for getting counselors approved and 

how much work it would be from our end. On top of this, instead of accepting reports in electronic form to save trees and mail service costs they insisted on having 

FedEx services for tracking numbers. Even after using these services, we still have 

one office in particular that says they did not receive files when we can prove they 

received the envelope and we sent a backup email. 

Additionally to try and overcome the resistance of some of the VR&E offices we 

expended considerable funds to establish a local presence in their area. After our 

testimony we have been treated differently across the board and not been awarded 

contracts. This means the start up cost including our office rent etc are all to be 

paid from other revenues putting a large strain on a small business that has performed well and even provided value added services with TBI self assessment. 

Counselors that we have paid for the vetting of, are now being picked up by the 

competition with no cost involved for them. 

f 

Committee on Veterans’ Affairs 

Subcommittee on Economic Opportunity 

July 31, 2009 

Mr. Richard Daley 

Associate Legislative Director 

Paralyzed Veterans of America 

801 18th Street, NW 

Washington, DC 20006 

Dear Mr. Daley: 

I would like to request your response to the enclosed questions for the record and 

deliverable I am submitting in reference to our House Committee on Veterans’ Affairs Subcommittee on Economic Opportunity Hearing on ‘‘Vocational Rehabilitation 

and Employment Contracts for Veteran Counseling’’ on July 30, 2009. Please answer 

the enclosed hearing questions by no later than Friday, September 11, 2009. 

In an effort to reduce printing costs, the Committee on Veterans’ Affairs, in cooperation with the Joint Committee on Printing, is implementing some formatting 

changes for material for all Full Committee and Subcommittee hearings. Therefore, 

it would be appreciated if you could provide your answers consecutively on letter 

size paper, single-spaced. In addition, please restate the question in its entirety before the answer. 

Due to the delay in receiving mail, please provide your response to Ms. Orfa 

Torres by fax at (202) 225–2034. If you have any questions, please call (202) 226– 

4150. 

Sincerely, 

Stephanie Herseth Sandlin 

Chairwoman 

JL/ot 


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Paralyzed Veterans of America 

Washington, DC. 

September 10, 2009 

Honorable Stephanie Herseth Sandlin 

Chairwoman 

House Committee on Veterans’ Affairs 

Subcommittee on Economic Opportunity 

335 Cannon House Office Building 

Washington, DC 20515 

Dear Chairwoman Herseth Sandlin: 

On behalf of Paralyzed Veterans of America (PVA), I would like to thank you 

again for the opportunity to testify before the House Committee on Veterans’ Affairs, Subcommittee on Economic Opportunity on July 30, 2009. 

Following the hearing, you submitted additional questions with regards to the 

issue of ‘‘Vocational Rehabilitation and Employment Contracts for Veteran Counseling.’’ The attached document provides PVA’s response to your further inquiry 

about our testimony. 

PVA looks forward to working with you in the future to ensure that the VR&E 

program continues to provide the best serve for our veterans. Thank you again. 

Sincerely, 

Richard Daley 

Associate Legislation Director 

Questions for the record 

Question 1: You cite the GAO report 07568R, dated April 2007. In your estimation do you think that the same challenges remain today as noted in that GAO 

report? 

Response: Since that GAO report (April 23, 2007) the VA has taken aggressive 

measures with respect to providing VR&E services through contractors. Each Regional Office has added to their staff contract specialists. This individual has the 

knowledge and authorization to facilitate contracts for the Federal Government 

which could include contract amounts of several million dollars. In the past the personnel performing this role did not have this background or authorization. 

The VA has provided specific annual VR&E contract training and contract training to Regional Office staff. The VA has also made modifications to their case management system ‘‘Corporate WINRS’’ that will provide additional controls and reporting capabilities for contract management. 

Question 2: Should the Department of Veterans Affairs continue to contract out 

for counseling services? 

Response: The Department of Veterans Affairs will continue to contract out for 

counseling services in some situations. We do recognize the importance of contract 

services to the function of VR&E. Due to the fact that VR&E is limited in resources 

and staff, it is often forced to contract vocational rehabilitation services to private 

and State entities. Contracting for services is necessary when the veteran requiring 

VR&E services is living in a geographic area where VR&E has no representation. 

Contracting for services with a local provider would be in the best interest for the 

veteran. 

However, we have a concern that we maintain when dealing with contract services of any kind. PVA believes that contract services are often more expensive than 

services provided directly by the VA. We also do not think that contractors necessarily have the best interest of the veteran in mind. We urge Congress to make 

available adequate resources so that VR&E services can be provided by the VA directly to all veterans seeking help. 

Question 3: You state in your testimony that the Department of Veterans Affairs 

should develop a demonstration project where a contractor is rewarded for making 

changes in the life of the veteran. How would this work and how much would a contractor be compensated? 


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Response: The VR&E program currently works with veterans as they prepare for 

employment and their transition to the workplace. The statement of ‘‘changes in the 

veteran’s life’’ refers to continued employment over many years with advances in a 

veteran’s career along with increases in income. In the current program, after the 

veteran completes a period of 60 days of employment, or, achieves their VR&E 

goals, they are declared rehabilitated and VA’s role is complete. 

When a veteran returns to work after sustaining a disabling medical condition, 

or in the case of PVA members, a severely disabling condition, there is a likelihood 

that the stringent and uncompromising demands of full time employment could 

soon, or eventually, conflict with the veteran’s emotional and/or physical well-being. 

In these situations the veteran would simply drop out of the workforce, convinced 

that they could no longer hold a job. 

A contractor performing this role for the VA would be required to perform continued follow-up of 6 months, 12 months, and up to a minimum of 24 months. The contractor, the employer and the veteran would be working close together for this extended period. The VR&E counselor, working with the employer, and the veteran 

could discus and arrange for needed accommodations in the work place, or modifications in the work schedule. Perhaps the veteran could be retrained to perform another function within the organization. The contractor providing the VR&E counseling in this situation would have a vested interest in the continued employment 

of the veteran, and a satisfactory outcome with the employer. 

The amount the contractor should be paid would depend on the current rate for 

providing the services, plus a substantial yearly bonus for ensuring the veteran remains employed. This bonus could be paid for 3 or 4 years. Receiving this bonus 

amount should naturally be projected and accounted for in the contracted entities 

business plan for the next 4 years, or the agencies projected budget. Therefore, 

keeping the veteran employed is in their best interest. This would allow the entity 

to plan their resources based on a multi-year relationship working with the veteran. 

It would also facilitate the contractor in developing multi-year relationships with 

the local business community and local government employers. 

Question 4: You write in your testimony that a veteran can advise a veteran, 

in most cases better than a non-veteran. First are there enough counselors who are 

veterans to fill the needs and can a non-veteran help a veteran? 

Response: PVA has known for 60 years that there is no work experience or educational courses that can take the place of having served the Nation in the military 

service when advising another veteran, or counseling a veteran during their rehabilitation. There is often a shared experience that veterans have that cannot be duplicated in a college class. That bond can be greater when veterans have served in 

the same military campaign or era. All of PVA’s service officers are veterans, disabled veterans, or veterans with a spinal cord injury. PVA provides the knowledge 

for a man or woman to become a service officer and work with veterans during their 

16 months of paid training. But, the experience of serving in the Nation’s defense 

cannot be taught. In addition, each of PVA’s thirty-four Chapters have volunteer 

members that visit the VA hospital regularly to inform newly paralyzed veterans 

about some options for their future. PVA knows that the newly injured veteran will 

be more receptive to another veteran who was once in that hospital bed, and now 

living a productive life. 

There may not be enough VA counselors that have served in the military. 

There may be many veterans working in civilian counseling positions, but hiring 

veterans to work with veterans has never been a priority for the VA. Military experience or combat experience means nothing more than the standard five-point preference added to one’s application score. This insignificant five-point preference does 

not ensure that a qualified veteran will receive an interview for any position applied 

for in the VA. If these positions were set aside for veterans only, this message would 

be shared in the educational community and veterans enrolled in social studies 

could direct their education toward helping veterans. Within a few years, with new 

counseling positions restricted to veterans and with replacement as current staff retires, a majority of VA counselors could be veterans. 

Professional staff members that are non-veterans can function well in the VR&E 

program. Non-veterans currently serve in every capacity of the VA’s VR&E program. 

Every person hired has the appropriate education and required work experience. 

Non-veterans are currently working with veterans in counseling positions. This suggestion is to perhaps provide more than qualified help for the veteran. It is also to 

provide the ‘‘best’’ help for the men and women that have been injured serving this 

nation. 


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Question 5: How similar is VA’s VR&E program to the Social Security Administration’s (SSA) Ticket to Work program that we can draw from their experiences? 

Response: Perhaps this is an area that could be explored further. Has the VA’s 

VR&E staff studied the SSA’s Ticket to Work (TTW) program? What similarities can 

they learn from examining this program? 

One similarity of the VR&E’s program to the Ticket to Work program is that the 

consumer, whom the program is designed for, has been out of the workplace for an 

extended period of time. The lack of current work experience for the TTW consumer 

would create a similar problem as that of the disabled veteran enrolled in the VA’s 

VR&E program. In the TTW program much of the ‘‘risk’’ is with the contractor providing the service. Since the financial reward for service performed is extended out 

for 5 years, the contractor performing the service has a goal of helping the individual reenter the workplace, and remain in the workplace. 

Another way that should be explored is to allow VA to implement a program similar to the TTW program. For example, Paralyzed Veterans of America has our own 

Vocational Rehabilitation Program for severely disabled veterans. We maintain a 

contract with the SSA TTW program and are an approved ‘‘Employer Network’’. As 

a non-profit VSO, we are able to recoup some of our costs of providing employment 

services to the severely disabled population through the SSA. There is no logical 

reason that VA could not provide similar reimbursement to a program such as ours 

that would serve as an adjunct team member in providing customized services to 

a specific, severely disabled population. 

Question 6: In your written testimony you write that regional offices are not fully 

applying VA’s contracting guidance. How are the Regional Offices not applying VA’s 

contracting Guidance? 

Response: One of the major complaints that VSOs’ have heard from contractors 

is that payment for services provided has been late. It would be in the Regional Offices best interest to ensure that the contractors providing services to the veterans 

in their region are paid on time. Neither an existing contractor, nor a contractor 

expanding into a new geographic area can function without being paid. We do not 

know if this is the fault of the VA Regional Office, or the VA Central Office, or the 

contractor. The Regional Office could have played a key role in ensuring the contractors were paid on time. Not paying contractors for performing their work is not the 

standard procedure for VA contracting. 

Question 7: In your written testimony you write that ‘‘current training does not 

adequately prepare contracting officers to manage contracts.’’ What problems have 

occurred in the past that leads you to make this statement? 

Response: In the past, the contracting officers had not received adequate training 

and certification. This was noted in the GAO report (April 2007), that the contracting officers said VA’s training has not prepared them to adequately manage 

contracts. The lack of training and available training in the past, did not fully prepare the VR&E employee for their role as a contract administrator. The technical, 

administrative, and legal requirements of the role of a contract administrator require a professionally trained and certified administrator. As I understand, the contracting responsibility was placed on existing members of the VR&E program. Recently the VA has placed this responsibility with a trained Federal Government contract administrator in each Regional Office. 

f 


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Committee on Veterans’ Affairs 

Subcommittee on Economic Opportunity 

July 31, 2009 

Mr. Joe Wynn 

VET-Force 

1200 18th St., NW 

Suite #LL–100 

Washington, DC 20036 

Dear Mr. Wynn: 

I would like to request your response to the enclosed questions for the record and 

deliverable I am submitting in reference to our House Committee on Veterans’ Affairs Subcommittee on Economic Opportunity Hearing on ‘‘Vocational Rehabilitation 

and Employment Contracts for Veteran Counseling’’ on July 30, 2009. Please answer the enclosed hearing questions by no later than Friday, September 11, 2009. 

In an effort to reduce printing costs, the Committee on Veterans’ Affairs, in cooperation with the Joint Committee on Printing, is implementing some formatting 

changes for material for all Full Committee and Subcommittee hearings. Therefore, 

it would be appreciated if you could provide your answers consecutively on letter 

size paper, single-spaced. In addition, please restate the question in its entirety before the answer. 

Due to the delay in receiving mail, please provide your response to Ms. Orfa 

Torres by fax at (202) 225–2034. If you have any questions, please call (202) 226– 

4150. 

Sincerely, 

Stephanie Herseth Sandlin 

Chairwoman 

JL/ot 

Deliverable from the House Committee on Veterans’ Affairs 

Subcommittee on Economic Opportunity 

Hearing on Vocational Rehabilitation and 

Employment Contracts for Veteran Counseling 

July 30, 2009 

Questions for the Record: 

Question 1: Why would you want Congress to compel VA to extend a contract 

that according to your testimony had so many problems? 

Response: My recommendation for extending the contract was in light of the fact 

that the problems were primarily due to logistical limitations, inconsistent reporting 

requirements, and inadequate communications on the part of the VA contracting officers. From the testimonies provided by the witnesses, it did not appear that the 

VA was dissatisfied with the services being provided to the service disabled veterans. Therefore, the veteran and service disabled veteran contractors should not be 

penalized for the VA’s failure to manage the contract efficiently. Most of the contractors who were awarded contracts had to incur significant costs to prepare for the 

contract. By extending the contract, the technical issues could be resolved while disabled veterans are still receiving services and the contractors are still receiving payments. 

Question 2: How will VA’s action to cancel the contract contradict VA’s ‘‘Veterans 

First’’ approach to contracting when no subsequent contract has been awarded and 

the same contractors can re-compete? 

Response: It’s not solely VA’s action to cancel the contract that contradicts VA’s 

‘‘Veterans First’’ approach to contracting. It’s the action by the VA to cancel the contract within the first year and promote the intent of reissuing the contract and allowing the very same businesses to re-compete. The concept of the ‘‘Veterans First’’ 

approach incorporates not only the priority of using service disabled veteran and 

veteran business owners but also because of the care and concern for the well-being 

and success of those veterans who are now trying to succeed in business after havVerDate Nov 24 2008 01:36 Jan 15, 2010 Jkt 051879 PO 00000 Frm 00085 Fmt 6621 Sfmt 6621 E:\HR\OC\51879.XXX GPO1 PsN: 51879

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ing served their country honorably and some having incurred injuries and disabilities while doing so. 

It’s actually insulting to these veteran business owners for the VA to cancel the 

contract and then state that they will reissue the same contract on some future uncertain date and allow the same businesses to re-compete after causing them a disservice and an undue hardship. These business owners are also employing other veterans who will no longer have jobs as a result of the VA’s termination of the contract. 

Question 3: In your written testimony you state that VR&E has ‘‘limited capacity 

to manage its growing workload,’’ but according to the VA the ratio of veterans to 

counselors is one counselor for 133 veterans. Can you comment on this point? 

Response: I do not have the most recent totals for the number of VR&E Counselors. But as I stated in my written testimony, we do know that VA’s National Acquisition Strategy was implemented due to the growing demand of VR&E services 

beyond VA’s current capacity. In VR&E’s discussion of this topic prior to contract 

award, it’s stated that VA’s objective for this national strategy is to use Contractor 

assistance to both supplement and complement the services provided to veterans 

and servicemembers receiving services by VA’s regional VR&E offices within VBA. 

I also pointed out in my testimony that while serving on the Veterans Disability 

Benefits Commission, research reports revealed that while the number of participants in the VR&E program had increased in recent years, the number of individuals rehabilitated had remained constant. The Commission’s research also revealed 

that VR&E needed to improve its process of defining, tracking, and reporting on 

participants because their process was found to be confusing and inconclusive in its 

current state. As a result of the Commission’s findings, it was recommended that 

the VR&E staffing and resources be increased in order to enhance the program. 

Question 4: In your written testimony you said that you spoke with representatives of three of the Service Disabled Veteran Owned Small Businesses. In your 

opinion, did they have the capacity to provide services nationwide? 

Response: Probably none of the Service Disabled Veteran Owned Businesses participating in this VR&E NAS contract have the capacity to provide services nationwide. But none of them were required to do so. The purpose of making multiple contract awards for the same services was so that no one company would be tasked 

with providing services in each State throughout the country. The use of multiple 

companies to provide the services on a nationwide basis is a good strategy. However, 

it appears that VA’s managing of the multiple contracts is where the problems have 

occurred. 

ADDITIONAL COMMENTS: 

The original contracts were awarded in July 2008, but due to delays on the part 

of the VA, contractors were not allowed to begin processing work for a couple of 

months later. Then right after the very start of the contract, it was revealed in testimony by Ruth Fanning of VR&E, that the VA had made a Court Settlement Agreement to discontinue the contract after the first year due to a protest filed by another 

small business. So with termination after the first year as a mandate, it’s no wonder 

that VA managed the contract poorly in the first 12 months. They had no intention 

of going forward with the contract beyond 1 year. YET THEY NEVER NOTIFIED 

THE EXISTING SDVOBs THAT THE CONTRACT WOULD BE WITHDRAWN AT 

THE END OF THE FIRST YEAR. 

While this hearing mostly revealed testimonies and discussions of why the 

SDVOB contractors were now dissatisfied with the VA’s sudden termination of the 

contract, how SDVOB contractors were misguided with regard to contract process 

and procedures, and VR&E’s vague notion of why they ended the contract—the 

hearing should have been questioning why VR&E (VA) was allowed to deceive 

SDVOBs who they are supposed to consider has their highest priority. To let these 

SDVOB contractors spend their own money and resources and employ people to perform services that the VA knew they were not going to use nor 

pay for—is just down-right wrong and it should be corrected. 

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Committee on Veterans’ Affairs 

Subcommittee on Economic Opportunity 

July 31, 2009 

Ms. Ruth Fanning 

Director 

Vocational Rehabilitation and Employment Service 

U.S. Department of Veterans Affairs 

810 Vermont Ave., NW 

Washington, DC 20420 

Dear Ms. Fanning: 

I would like to request your response to the enclosed questions for the record and 

deliverable I am submitting in reference to our House Committee on Veterans’ Affairs Subcommittee on Economic Opportunity Hearing on ‘‘Vocational Rehabilitation 

and Employment Contracts for Veteran Counseling’’ on July 30, 2009. Please answer 

the enclosed hearing questions by no later than Friday, September 11, 2009. 

In an effort to reduce printing costs, the Committee on Veterans’ Affairs, in cooperation with the Joint Committee on Printing, is implementing some formatting 

changes for material for all Full Committee and Subcommittee hearings. Therefore, 

it would be appreciated if you could provide your answers consecutively on letter 

size paper, single-spaced. In addition, please restate the question in its entirety before the answer. 

Due to the delay in receiving mail, please provide your response to Ms. Orfa 

Torres by fax at (202) 225–2034. If you have any questions, please call (202) 226– 

4150. 

Sincerely, 

Stephanie Herseth Sandlin 

Chairwoman 

JL/ot 

Questions for the Record 

The Honorable Stephanie Herseth Sandlin, Chairwoman 

Subcommittee on Economic Opportunity 

House Committee on Veterans’ Affairs 

July 30, 2009 

Vocational Rehabilitation and Employment 

Contracts for Veterans Counseling 

Question 1: Can you explain how VA determines contractor quality? 

Response: The primary method for determining contractor quality in the national 

acquisition strategy (NAS) contract was to review the completed work to determine 

if the contractor complied with performance requirements outlined in the NAS performance work statement. The quality assurance surveillance plan (see attached) 

also outlined expectations for compliance with the performance standards, including 

timeliness and quality of services and reports. This plan established the process use 

to evaluate the level of services provided by contractors. In addition, quality was assessed based on Veteran feedback. 

Question 2: Do you think that some of the problems from the National Acquisition Strategy contracts were due to the fact that it was awarded to small businesses 

that went from providing local services to immediately providing services nationwide? 

Response: Yes, although research by an integrated project team consisting of Vocational Rehabilitation and Employment (VR&E), Office of Acquisition Logistics and 

Construction (OALC), and Office of General Counsel (OGC), along with support from 

the Office of Small and Disadvantaged Business Utilization (OSDBU), indicated 

that there were adequate service-disabled Veteran owned small businesses and Veteran owned small businesses available to provide the required services. These firms 

also asserted that they could provide the services nationally. However, the performance of NAS contractors demonstrated that vendors overestimated their ability to 

expand staffing and locations. 


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Question 3: In your written testimony, you state the training was provided during the solicitation phase to assist the small businesses. Did any of the small businesses feel that the training was insufficient? 

Response: No, the feedback from small business participants attending the presolicitation training was positive. In addition, as a follow-up to the pre-solicitation 

training, firms were able to submit questions for any clarification needed. OSDBU 

offered additional guidance to assist firms in setting up joint ventures and team arrangements if needed. 

Question 4: You mentioned in your testimony that prime contractors have struggled to: develop subcontract relationships; to recruit appropriate staff; and deliver 

timely and high quality services. Can you elaborate and provide examples? 

Response: Many jurisdictions complained that contractors were refusing referrals 

or not contacting Veterans referred to them due a lack of subcontract relationships, 

ineffective subcontractor relationships, or a lack of prime contractor staff. This directly impacted timeliness and quality of services. When VR&E offices inquired, contractors replied they were unable to recruit qualified staff and/or subcontractors. In 

some jurisdictions the Department of Veterans Affairs (VA) was unable to refer 

cases for several months after award due to the vendors’ inability to perform. In 

other jurisdictions, vendors flew in staff from other States to provide coverage. Complaints from VR&E offices and Veterans indicated that Veterans were asked to meet 

with contract staff at non-professional locations such as hotel rooms and fast food 

restaurants. 

As a result of the complaints from Veterans and field offices, VR&E conducted a 

gap analysis in January 2009. VR&E field offices also completed past performance 

evaluations of contractors in April and August of 2009. Below are examples of problems identified: 

• Untimely services/deliverables or lack of Veteran contact by contractor: 

• The Portland Regional Office (RO) reported 16 Veterans complained about the 

length of time contractors took to contact them. 

• The Seattle RO reported Veterans complained about timeliness, travel burdens, and that no contact information was provided. 

• The Washington RO received 25 Veterans complaints mostly involving untimely services. 

• The Pittsburgh RO made 146 referrals for case management, and 54 Veterans 

were not contacted. The contractor told VA that the referrals were overlooked 

and/or misplaced. Out of all 178 referred cases, VA only received timely reports for 21 cases. 

• The Muskogee RO received untimely reports for 14 of 22 initial assessments 

and 203 of 215 educational vocational counseling reports. 

• The Seattle RO received one timely report out of 1,072, and 151 cases were 

returned for which no service was provided. 

• The Buffalo RO only received 74 timely reports out of 219 while an additional 

255 reports were still outstanding. 

• Unacceptable quality/timeliness: 

• The Portland RO counselors complained about incomplete and poorly performed work. There was an ongoing request for extensions on submitting reports. No reports were received. 

• The St. Petersburg RO referred 928 cases. Only 112 met quality expectations 

and 696 had to be reworked. 

• The Cleveland RO referred 741 cases. Only five timely reports were received, 

and 478 did not meet quality expectations. The contractors were not responsive to VR&E contacts to resolve issues. 

• The Salt Lake City RO received two timely reports out of 78 referred cases. 

Less than half met quality expectations. Contractor held the cases for up to 

3 weeks at a time prior to starting work on the cases. 

• Lack of qualified staff: 

• No qualified or approved providers available in Delaware, San Juan, Canada, 

Guam, and American Samoa. 

• The Pittsburgh RO worked with a contractor who was unable to acquire 

qualified counselors for Veterans in Erie throughout the entire base period. 

• The Buffalo RO reported five out of seven contract staff members were unfamiliar with VR&E services. 


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• One subcontractor covered the entire State of Utah and Eastern Idaho and 

was not properly staffed to respond to the referrals made under the contract. 

Question 5: You mention in your testimony that prime contractors did not deliver 

services in a timely fashion. According to some of the contractors, this is because 

of the varied requirements each regional office had and due to contracting officers 

requiring information and forms that prime contractors did not know were required. 

Can you explain what happened? 

Response: The NAS contracts were standardized in order to ensure that services 

provided in each regional office were delivered and administered in a consistent 

manner. In order to facilitate effective working relationships between new contractors and VR&E staff, and in order to provide consistent training to both contractors 

and VR&E staff regarding the contract and standardized expectations, a 1-week preperformance training session was held. All VA contracting officers’ technical representatives (COTR), contract specialists, and prime contractors were invited to Baltimore in August 2009 for this training, which included specific training on each 

service group, deliverables, resources, and performance expectations. All prime contractors sent representatives to the training. Contractors received information on reporting requirements, and a Web site for access to all forms in the contract. In addition, training was provided to explain performance expectations, contract incentives 

for exceeding performance expectations, rights of the VA for non- or poor-performance, and rights of contractors to bring any issues of concern to the contracting officer (CO) for resolution. The CO attended the training to respond to contractor and 

VR&E staff questions and provided a ‘‘kick-off’’ session to provide an overview of the 

roles and responsibilities of the contractors, COTRs and the CO. 

Because individual Veterans’ needs vary and each rehabilitation plan is tailored 

to those needs, services differ somewhat from Veteran to Veteran. The performancebased contract provided for contractors to use their expertise in providing individualized services while working collaboratively with the involved VR&E office to ensure consistency with VA regulations and policy and with contract specifications. In 

providing oversight to field offices through VA’s site visit program, quality assurance process, and through routine oversight of field contracting activities, VR&E 

found that VR&E offices were compliant with contract specifications. In addition, 

routine calls were held with field offices to address questions and concerns and provide any training or clarification needed to ensure consistent administration of contracts. 

Question 6: When were the contractors informed about the settlement not to exercise any of the 1-year renewal options? 

Response: Contractors were notified by certified mail and e-mail on June 11, 

2009, of VA’s decision not to exercise the option to renew the VR&E NAS contract. 

Question 7: What areas did the National Acquisition Strategy work well and 

what areas did the National Acquisition Strategy not work well? 

Response: The NAS contract was developed collaboratively by VR&E; OALC; and 

OGC. The integrated project team leveraged members’ expertise to evaluate programmatic needs, market conditions, and methods to gain efficiencies in the contracting process while focusing on developing a strategy that would best serve Veterans. The strategy worked well in the following areas: 

• Development of a national performance work statement to include a full scope 

of VR&E requirements, freeing local offices from the burden of developing 

local contracts and ensuring a more standardized approach to contracting. 

• The national oversight of local contract implementation that allowed for direct interaction between local RO and prime contractor staff in the execution 

of local services. 

• A pre-proposal conference and use of Webinar technology that increased the 

number of participants. 

• Use of contract review and contract administration boards. Both boards provide quality assurance in the pre- and post-award areas helping to resolve 

concerns in a proactive manner. 

• The national training approach provided pre-implementation training to VA 

and prime contract staff and provided on-going implementation oversight of 

field offices. 

• Use of an integrated project team that enabled all stakeholders to participate 

in designing the best product while streamlining the acquisition process and 

eliminating piecemeal reviews. 


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The integrated project team used the best information available to craft a strategy 

that would reduce the number of total contracts, target small business, and assist 

vendors to partner and subcontract. In this process, OSDBU provided training to 

potential bidders to assist them in developing joint ventures and subcontracting relationships. Despite the market research and training, small companies were not 

able to successfully expand their businesses. In addition, pricing variances and confusion about pricing by vendors presented challenges. Challenges occurred in the following areas: 

• The approach did not leverage the familiarity of small local rehabilitation providers with local labor market and community resources. 

• The approach required small vendors to partner or develop subcontracting relationships. Some vendors overestimated their capacity to successfully partner 

with other companies and were not able to deliver services in accordance with 

contract requirements. 

• Some contractors interpreted unit pricing in accordance with past experience 

instead of contract specifications, resulting in inappropriate pricing. VA pricing evaluations neither adequately controlled for pricing variation nor evaluated contractors’ professional compensation plans. 

• Awarding a single contract in multiple jurisdictions resulted in lack of alternate coverage when certain contractors failed to provide timely or quality 

services. 

Question 8: Why was there a delay in assigning cases in some states? 

Response: VA was delayed in its ability to order services according to our needs 

due to inadequately staffed prime contractors. However, once contractors were able 

to stand up all or part of their operations, VA was not under any obligation to order 

services except in accordance with VA needs. The NAS contracts were indefinite delivery/indefinite quantity contracts, requiring VA to contract for services only when 

needed. The only guarantees made regarding when and how many cases would be 

referred were contract minimums, which could be ordered at any time during the 

base year. VA ordered at least the quantity of services designated in the schedule 

as the ‘‘minimum.’’ When ordered, the contractor was required to furnish services 

specified in the schedule up to and including the quantity designated as the ‘‘maximum.’’ 

Question 9: You state that the VA attempted to resolve issues with vendors. Are 

you confident all VA employees made a good faith effort to work out the problems? 

Response: VA is confident that offices worked diligently to resolve issues related 

to the NAS contracts and that procedures were in place for contractors to obtain 

assistance if they perceived an office was not working effectively. Routine weekly 

or bi-weekly calls took place with VR&E staff around the nation, and numerous 

calls were made from individual VR&E offices to discuss strategies for working effectively with NAS. If a specific contractor had difficulty working effectively with 

any VR&E staff member or office, VR&E worked with the involved office to address 

the issue of concern, and, as necessary, coordinated with the CO to provide assistance to the contractor. In addition, VR&E held weekly contract administration 

board meetings with the OALC CO and OGC. The purpose of these meetings was 

to elevate issues of concern to the CO for assistance in working with the contractor 

to resolve questions or concerns and to obtain legal or contract guidance for field 

staff working directly with contractors. To strengthen this process for future contracts, VR&E has collaborated with OALC and OGC to develop a governance board 

that oversees and provides guidance in resolving contract issues throughout the contract life cycle. In addition, OALC has determined that field contract specialists will 

be delegated some CO responsibilities in order to proactively resolve concerns or 

performance issues. 

Question 10: You recently had eight contractors. How many do you expect to 

have under the new contract? 

Response: VA cannot predict the exact number of contractors. If a vendor has 

adequate staff, professional office space, an appropriate compensation plan, and professional relationships with subcontractors, then a vendor may be awarded contracts 

in more than one jurisdiction. 

Question 11: You will be using local procurement in the new contract. Why is 

that the better way to go? 


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Response: Local procurement will be used for services at the local level during 

the interim period while the new national contract is being developed and awarded. 

The local procurement package mirrors the national procurement. Local contracts 

will allow VA to gain experience with the revised contract. This experience will ensure that new national contracts are clear and adequately meet the needs of local 

VR&E offices and provide timely and quality services to Veterans. New national 

contracts will be procured by the national OALC acquisition team and will be administered from the national level by a centralized CO. Based on lessons learned 

from the NAS contracts, local contract specialists will be provided limited authority 

to deal with emerging performance issues. In addition, local COTRs will provide 

subject matter expertise and work with contractors as they provide direct community-based services. To ensure consistency, overall oversight of the contract will continue to be provided nationally by the CO, with technical oversight provided by 

VR&E. A governance board will be implemented post award to allow VR&E to continue to benefit from the expertise and guidance of OALC and OGC staff to resolve 

legal and contracting issues in a proactive manner. 

Question 12: Can the recent eight contractors compete again for the local contracts? 

Response: Yes, all vendors may compete for local contracts. No performance actions were taken prohibiting their competition. All vendor proposals will be evaluated based on technical capability, appropriateness of prices, and past performance. 

ATTACHMENT 

VOCATIONAL REHABILITATION AND 

EMPLOYMENT QUALITY ASSURANCE PLAN 

I. Purpose. The quality assurance plan (QAP) establishes the principles, procedures, and criteria for quality assurance (QA) of the Vocational Rehabilitation and 

Employment (VR&E) services administered by VR&E contractors through field station staff. 

a. Quality validation will begin after contractor has performed services under the 

contract for a 60-day period. The baseline will be updated on a monthly basis. 

b. Rating Issues, Quality Criteria, And Scoring— 

c. Rating issues and quality criteria are contained in the attached QAP (attachment 2). Each criterion contains several factors. VR&E staff reviewers will assign a rating score of Yes or No for each criterion. A rating of Yes on a criterion 

indicates that all appropriate issues, are, by definition, rated Yes. For every 

unacceptable performance (No) in a criterion, the reviewer will provide a narrative comment on the unacceptable performance and the steps the Contractor 

must take to resolve the problem. The rating scores are based on the following 

standards: 

d. Rating Score Yes. The score of Yes means all actions and decisions meet each 

of the following: 

1. The intent of law; 

2. Established National VR&E policy; and 

3. Generally accepted professional standards recognized by professional rehabilitation counseling licensing boards or authorities. 

4. The requirements of this contract. 

e. Rating Score No. A score of No means the actions and decisions did not meet 

all the requirements for a Yes score under subparagraph 3.1.b. 

II. Contracting Officer’s Technical Representative (COTR) Responsibilities 

a. The Veterans Benefits Administration (VBA) will assign a VBA liason (on the 

national level) for the overall project. This person will assist the contracting 

officer (CO) in administering the contract within the limits of their delegation. 

b. The local VR&E officer will submit a list of COTR’s for that particular site to 

the CO, who will officially delegate the COTR writing. The COTR is responsible for contract monitoring, conducting quality assurance reviews, and serves 

as the primary point of contact for the contractor. He/she reports directly to 

the CO on issues related to the contract. The COTR or his/her designee is responsible for the certification and payment of invoices from the contractor. Finally, the COTR will perform all other duties specifically defined in this contract. 


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c. Quality Sources. The COTR may obtain information on the quality of work of 

the contractor through regular site visits, periodic spot checks, and other 

sources. COTR’s may not rely solely on formal case reviews or interviews with 

the Veteran. Other readily available sources of information are; reviews of 

audio or video taped counseling, evaluation sessions, and site visits; congressional correspondence reviews; complaint and compliment mail or other communications from Veterans; and service organizations inquiries or contacts 

from other VR&E staff. The CO is the only individual authorized to make 

changes to the contract. 

III. Case Selection for Quality Assurance 

a. Types of Cases. The Department of Veterans Affairs (VA) will perform quality 

assurance reviews on cases referred under this contract as part of its ongoing 

review of quality program. The criteria for the ratings are contained in attachment 2, the Review of Quality Manual (ROQ). 

b. Sampling Procedures. Under the VR&E review of quality process, cases are 

randomly selected each month. Ratings of each case selected for that review 

will also consider any services provided under this contract. Copies of the review sheets for services provided under this contract will be maintained in the 

contractor’s file. 

c. Identification of Problem Areas. If QA reviews reveal a problem area that 

warrants a more detailed examination, the COTR will initiate a systematic 

analysis of operations (SAO) appropriate to the issue. SAO requires a close examination and analysis of each program action under review and is a vital element in the VR&E QA system. The SAO is a systematic examination of a process or operation conducted by the; its purpose is to identify problem areas, and 

take corrective action. This process was designed to assure efficiency and effectiveness in an activity. 

d. Review Results. If the contractor does not agree with the casework review, 

a written request for clarification may be filed with the COTR. If the contractor 

disagrees with the decision of the COTR the issue will be addressed in accordance with the ‘‘Disputes Clause’’ located in section IV, Item 2(d) (Contract 

Clauses, Terms & Conditions) of this document. 

ATTACHMENT D–IIIa QUALITY ASSURANCE SURVEILLANCE PLAN 

ASSESSMENT/EVALUATION CHART 

Service Group A—Initial Assessment/Evaluation 

Performance 

Standards 

Performance 

Target 

Method Of 

Surveillance 

Incentive 

The complete assessment in a written report shall be delivered to the referring 

VR&E Officer within 

30 calendar days 

after receipt of the referral package by VA 

as identified in section IV Performance 

Requirements—Service Group A of the 

PWS. 

The performance target t for Initial Assessment/Evaluation 

is for the contractor 

to submit complete 

assessment within 12 

days after receipt of 

referral and no revisions are required 

Electronic mail date 

stamp by the receiving official 

Counselor review of 

assessment and file 

CWINRS 

10% of the cost of the 

complete assessment 

if the report is received within 12 calendar days after receipt of the referral 

and no revisions are 

required 


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Service Group B—Case Management 

Performance 

Standards 

Performance 

Target 

Method Of 

Surveillance 

Incentive 

Within thirty (30) calendar days after receipt of the referral 

for case management 

services, the Contractor shall conduct 

the initial orientation 

meeting with the individual veteran as 

identified in Section 

IV Performance Requirements—Service 

Group B of the PWS. 

The performance target for Case Management is for contractor 

to conduct the initial 

orientation meeting 

with the veteran 

within 12 days after 

receipt of referral. 

Counselor review of 

files 

CWINRS 

10% of the cost of the 

approved service for 

the fiscal year, if the 

initial orientation 

meeting is held with 

the veteran within 12 

calendar days after 

receipt of the referral 

Service Group C—Employment Services 

Performance 

Standards 

Performance 

Target 

Method Of 

Surveillance 

Incentive 

Level I & II Employment Services 

Job placement services are performed to 

meet the goals of the 

rehabilitation plan 

and to conduct placement follow-up services to assist with a 

smooth transition 

into the job market, 

and to ensure that 

the veteran has the 

best possible chance 

for continued employment success consistent with the goals 

of the rehabilitation 

plan; and to make 

recommendations to 

VR&E for the supplies and services 

specifically required 

for the veteran to secure and maintain 

suitable employment 

as identified in section IV. Performance 

Requirements—Service Group C of the 

PWS 

The performance target t for employment 

services is 90% of the 

referrals are placed 

into suitable employment for a minimum 

of 60 days and within 

150 days from the 

date of the referral. 

Counselor review of 

files 

CWINRS 

Placements will be 

monitored after post 

placement status report is received from 

contractor and reviewed annually 

Additional 10% of the 

cost of Job Placement 

Services for each 

case, over 90% of referrals that are 

placed in suitable 

employment for a 

minimum of 60 days 

and within 150 calendar days from the 

date of receipt of the 

referral 


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Service Group C—Employment Services—Continued 

Performance 

Standards 

Performance 

Target 

Method Of 

Surveillance 

Incentive 

Level III Employment 

Services—Job placement services are 

performed to meet 

the goals of the rehabilitation plan and to 

conduct placement 

follow-up services to 

assist with a smooth 

transition into the job 

market, and to ensure that the veteran 

has the best possible 

chance for continued 

employment success 

consistent with the 

goals of the rehabilitation plan; and to 

make recommendations to VR&E for the 

supplies and services 

specifically required 

for the veteran to secure and maintain 

suitable employment 

as identified in section IV. Performance 

Requirements—Service Group C of the 

PWS 

The performance target for employment 

services is 90% of the 

referrals are placed 

in suitable employment for a minimum 

of 60 days and within 

210 days from the 

date of the referral. 

Counselor review of 

files 

CWINRS 

Placements will be 

monitored after post 

placement status report is received from 

contractor and reviewed annually 

Additional 10% of the 

cost of Job Placement 

Services for each 

case, over 90% of referrals that are 

placed in suitable 

employment for a 

minimum of 60 days 

and within 210 calendar days from the 

date of receipt of the 

referral 

Service Group D—Educational and Vocational Counseling 

Performance 

Standards 

Performance 

Target 

Method Of 

Surveillance 

Incentive 

The educational and 

vocational counseling 

assessment shall be 

delivered to the referring VR&E Officer 

within 30 calendar 

days after receipt of 

the educational and 

vocational counseling 

referral package by 

VA as identified in 

section IV. Performance Requirements— 

Service Group D of 

the PWS 

The performance target for Educational 

and Vocational Counseling is for contractor to submit assessment within 12 

days after receipt of 

referral and no revisions are required 

Electronic mail date 

stamp by receiving 

official 

Counselor review of 

files 

CWINRS 

10% of the cost of the 

educational and vocational counseling 

services, if the assessment is received 

within 12 calendar 

days after receipt of 

the referral and no 

revisions are 

required 

Æ 


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