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41–369 2008

U.S. DEPARTMENT OF VETERANS AFFAIRS 

FISCAL YEAR 2009 BUDGET— 

OFFICE OF INSPECTOR GENERAL AND 

OFFICE OF INFORMATION AND TECHNOLOGY 

HEARING 

BEFORE THE

SUBCOMMITTEE ON OVERSIGHT AND 

INVESTIGATIONS 

OF THE

COMMITTEE ON VETERANS’ AFFAIRS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

SECOND SESSION 

FEBRUARY 13, 2008 

Serial No. 110–69 

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 

PHIL HARE, Illinois 

MICHAEL F. DOYLE, Pennsylvania 

SHELLEY BERKLEY, Nevada 

JOHN T. SALAZAR, Colorado 

CIRO D. RODRIGUEZ, Texas 

JOE DONNELLY, Indiana 

JERRY MCNERNEY, California 

ZACHARY T. SPACE, Ohio 

TIMOTHY J. WALZ, Minnesota 

STEVE BUYER, Indiana, Ranking 

CLIFF STEARNS, Florida 

JERRY MORAN, Kansas 

HENRY E. BROWN, JR., South Carolina 

JEFF MILLER, Florida 

JOHN BOOZMAN, Arkansas 

GINNY BROWN-WAITE, Florida 

MICHAEL R. TURNER, Ohio 

BRIAN P. BILBRAY, California 

DOUG LAMBORN, Colorado 

GUS M. BILIRAKIS, Florida 

VERN BUCHANAN, Florida 

VACANT 

MALCOM A. SHORTER, Staff Director 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS 

HARRY E. MITCHELL, Arizona, Chairman 

ZACHARY T. SPACE, Ohio 

TIMOTHY J. WALZ, Minnesota 

CIRO D. RODRIGUEZ, Texas 

GINNY BROWN-WAITE, Florida, Ranking 

CLIFF STEARNS, Florida 

BRIAN P. BILBRAY, California 

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 

February 13, 2008 

Page 

U.S. Department of Veterans Affairs Fiscal Year 2009 Budget—Office of 

Inspector General and Office of Information and Technology .......................... 1 

OPENING STATEMENTS 

Chairman Harry E. Mitchell ................................................................................... 1 

Prepared statement of Chairman Mitchell ..................................................... 24 

Hon. Ginny Brown-Waite, Ranking Republican Member ..................................... 2 

Prepared statement of Congresswoman Brown-Waite .................................. 25 

Hon. Timothy J. Walz .............................................................................................. 4 

WITNESSES 

U.S. Department of Veterans Affairs: 

Jon A. Wooditch, Deputy Inspector General, Office of Inspector General ... 5 

Prepared statement of Mr. Wooditch ....................................................... 25 

Hon. Robert T. Howard, Assistant Secretary for Information and Technology and Chief Information Officer, Office of Information and Technology ............................................................................................................. 16 

Prepared statement of Mr. Howard ......................................................... 36 

U.S. Government Accountability Office, Valerie C. Melvin, Director, Human 

Capital and Management Information Systems Issues .................................... 13 

Prepared statement of Ms. Melvin ........................................................... 30 

MATERIAL SUBMITTED FOR THE RECORD 

Hon. George J. Opfer, Inspector General, Office of Inspector General, U.S. 

Department of Veterans Affairs, to Hon. Harry E. Mitchell, Chairman, 

Subcommittee on Oversight, Committee on Veterans’ Affairs, letter dated 

March 20, 2008, responding to request for additional information for the 

record .................................................................................................................... 43 


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U.S. DEPARTMENT OF VETERANS AFFAIRS 

FISCAL YEAR 2009 BUDGET— 

OFFICE OF INSPECTOR GENERAL AND 

OFFICE OF INFORMATION AND TECHNOLOGY 

WEDNESDAY, FEBRUARY 13, 2008 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON VETERANS’ AFFAIRS, 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, 

Washington, DC. 

The Subcommittee met, pursuant to notice, at 2:34 p.m., in 

Room 210, Cannon House Office Building, Hon. Harry E. Mitchell 

[Chairman of the Subcommittee] presiding. 

Present: Representatives Mitchell, Space, Walz, and BrownWaite. 

OPENING STATEMENT OF CHAIRMAN MITCHELL 

Mr. MITCHELL. Good afternoon. Welcome to the hearing on the 

proposed budget for the U.S. Department of Veterans Affairs (VA) 

Office of Inspector General (OIG) and the proposed budget for the 

VA Office of Information and Technology (OI&T). This is the Subcommittee on Oversight and Investigations. 

This hearing will come to order. We are here today to examine 

the President’s proposed budgets for fiscal year 2009 for the Inspector General of the VA and the VA’s Office of Information and Technology. These budgets are not related, but are equally important. 

Our first panel will address the OIG’s proposed budget. The President’s budget proposes $76 million for the OIG for the fiscal 

year 2009, which is $4 million below their fiscal year 2008 budget. 

I believe this cut is absolutely irresponsible. 

The Inspector General is an essential, independent, nonpartisan 

check against waste, fraud, and abuse and is one of the best ways 

of ensuring accountability at the VA during time of war. 

This reduction would result in a 10 percent cut in OIG staffing 

which would weaken the VA’s watchdog when hundreds of thousands of veterans need VA to make improvements. 

This Subcommittee held a hearing just 2 weeks ago where Dr. 

Daigh, one of the OIG witnesses today, and his team in the Office 

of Healthcare Inspections testified to the shocking and tragic 

events at the VA hospital in Marion, Illinois. 

The VA Medical Inspector, Dr. Daigh, and his group, found nine 

patients who died in the past 2 years as a result of substandard 

care. 


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I will be asking Dr. Daigh what additional resources are needed 

to look at the VA Hospital system to make sure there are no more 

Marions out there. I know he does not have those resources now 

and the President’s budget would reduce the OIG even further. 

The Federal Government has 25 statutory mandated Inspector 

Generals. If you compare the number of OIG employees with the 

number of employees in the Agency, the VA has the lowest ratio 

in the entire government. The same comparison of budget for the 

OIG and budget for the Agency puts the VA near the bottom. 

Unfortunately, the President’s proposed cut does not account for 

the OIG’s return on investment. In fiscal year 2007, the VA’s Inspector General had hard dollar recoveries, money taken from illegal activities and placed into the United States Treasury, of $237.9 

million. Return on investment just on hard dollars recovery was 

more than three to one. 

The OIG also saved over $300 million by cutting off benefits of 

payments to fugitive felons, that is people receiving benefits who 

have outstanding arrest warrants for felonies. 

Our second and third panels will address the President’s budget 

proposal for VA Office of Information and Technology. Congress 

has mandated a separate budget line so that the amounts and purposes of information technology (IT) expenditures are visible and 

can be evaluated. 

The VA is doing a better job of categorizing its IT expenditures, 

but there is more work to be done. In order for Congress to provide 

effective oversight, IT costs must be allocated to costs that are as 

precise and accurate as possible. 

One specific topic the Subcommittee will explore is the funding 

for IT resources to support the innovation and creativity of VA’s 

healthcare providers. The Office of Information and Technology has 

set aside $8 million this year to provide IT support to the clinicians 

in the field to continue to improve VistA. Unfortunately, there is 

nothing set aside for this in the President’s proposed fiscal year 

2009 budget. 

I think this is a mistake. There are benefits to centralization of 

IT, but centralization has hurt the way VA personnel use new technology to take care of our veterans. VA must do all it can to preserve and promote the unique talents of its healthcare providers to 

innovate and to keep VistA and VA at the forefront of medical care. 

Our veterans have fought for our freedom and the least we can 

do is provide adequate resources to ensure they receive the highest 

quality of care when they become veterans. 

[The prepared statement of Chairman Mitchell appears on p. 24.] 

Mr. MITCHELL. Before I recognize the Ranking Republican Member for her remarks, I would like to swear in our witnesses. I ask 

all the witnesses from all panels if they would please stand and 

raise your right hand. 

[Witnesses sworn.] 

Mr. MITCHELL. Thank you. 

I now recognize Ms. Brown-Waite for her opening remarks. 

OPENING STATEMENT OF HON. GINNY BROWN-WAITE 

Ms. BROWN-WAITE. Thank you very much, Mr. Chairman. 


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I do not know about you, but it seems like the witnesses are so 

far away. It is not meant to be in an unfriendly manner. We would 

love to have you closer, but this happens to be the configuration 

of this room. 

Mr. Chairman, last Thursday, the full Committee reviewed the 

entire budget for the Department of Veterans Affairs for fiscal year 

2009. Today we will be focusing on two specific portions of that 

budget, namely the funding for the Office of Inspector General and 

the Office of Information and Technology over which this Subcommittee has direct oversight. 

Over the past year, I found that the information reported to our 

Committee by the Office of Inspector General is very useful in providing this Subcommittee with the information that we need to 

conduct our oversight responsibilities. 

For fiscal year 2008, the OIG was provided with sufficient funding to plus-up their full-time equivalent (FTE) staff to 488 FTEs, 

which was an addition of 48 new staff members. I understand that 

the OIG is in the process of hiring these staff and they are to be 

assigned to several new high-profile audits, healthcare inspections, 

and criminal investigations. 

However, I am greatly concerned that the fiscal year 2009 budget 

that was proposed reduces the FTE staff by 48, same number we 

just plussed-up. I hope to hear from the OIG as to how this reduction in staff funding will affect the continuation of the audits already in process and the future oversight and investigations conducted by the OIG. 

During this Subcommittee’s January 29th hearing on patient 

safety, I raised concerns about a possible reduction in the budget 

for the Office of Inspector General. As I stated at that hearing, we, 

Members of this Committee, and Members of Congress, have an obligation to ensure that the funding for the OIG is not only maintained at the 2008 level, but that we work together to provide additional funds for fiscal year 2009. 

The OIG’s Combined Assessment Program, also known as CAP 

review, is an unmatchable cyclical audit that surveys patient safety, infrastructure safety, management inefficiencies, and also allows the VA to keep its finger on the pulse of the VA’s health delivery system. 

I was pleased to see that the President has requested a plus-up 

for the Office of Information and Technology. I know that the transition to a new centralized IT system has not always been smooth. 

But under the leadership of General Howard, it has moved forward 

and I hold high hopes that the kinks, bumps, and turf wars along 

the way will continue to be worked out. VA’s centralized IT infrastructure has been a landmark decision that all other departments 

could only hope for. 

I do, however, want to make certain that the funding Congress 

provides to VA for its OI&T operations will be managed wisely 

without unnecessary expenditures on IT systems that are stagnant 

and not moving forward. 

We have often heard about the problems that plagued the systems in my own back yard like the CoreFLS $340 million debacle 

and the delays in moving off of Legacy IT systems. 


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With the centralization of funding to one officer such as Assistant Secretary Howard, I am hopeful that VA can move forward on 

the right track to provide systems that will be able to serve our Nation’s veterans and give the American taxpayer the most bang for 

the tax dollars. 

In closing, Mr. Chairman, I would like to again reiterate that I 

appreciate your holding this hearing so that we can review in more 

detail the complex nature of each of these budget lines in the Department of Veterans Affairs budget. 

And with that, I yield back the balance of my time. 

[The prepared statement of Congresswoman Brown-Waite appears on p. 25.] 

Mr. MITCHELL. Thank you. 

Mr. Walz. 

OPENING STATEMENT OF HON. TIMOTHY J. WALZ 

Mr. WALZ. Thank you, Mr. Chairman. And just briefly, I want to 

thank you, of course, for holding this hearing and for your passionate words on what it takes to make sure our veterans are receiving their care and to the Ranking Member who has been an absolutely sterling voice on these issues of making sure that we are 

not only providing the services, we are providing them in a costeffective and timely manner. 

And to each of you who are here today on all the panels, I say 

every time we are here, but I think it is important for us to all 

keep it in mind, we are all here with a single purpose and that is 

to provide the best quality of care we can to our veterans who serve 

this Nation. And we are partners in this. 

As Members sitting up here, we lean on your expertise and your 

ability to help us figure that out. And our job is to help make sure 

that we are doing the job that we are asked to do as providing that 

oversight. So I truly thank you. 

And I have also spoken passionately and many of you have testified before of the Office of Inspector General, for starters, that I am 

a big fan of this office. One is that it is absolutely critical in the 

ability for us to deliver and to manage what we are doing in such 

a large organization. We see you as partners in effectiveness and 

the return we get on our money from the OIG Office is one we 

should be very proud of. 

So I would echo and associate myself with the words of both the 

Chairman and the Ranking Member that when we see the budget 

being cut in the OIG, we know that puts you in a very difficult position, if you are going to live with what you are given and still trying to carry out your job. Our job is to make sure, though, that we 

deliver that, deliver what you need. 

And I think it is important for us to keep in mind, too, the President’s budget is a suggestion. The Constitution clearly puts the authority for budgeting right here with the Members up here. Our 

goal is to work together. It is a different set of eyes. We want to 

make sure whatever we can do to deliver to you. 

And a comment also on the integrity and the hard work of the 

IT, I, as a veteran, am concerned about this. When the 26 million 

letters were sent, I was one of those also. I do not want to diminish 

the concern that many veterans have, but I once again do think it 


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is important to point out that progress has been made. And as the 

Ranking Member pointed out, too, we just want to make sure that 

we have a lot more of the successes and a lot less of the dead ends. 

So with that, Mr. Chairman, I thank you and I really look forward to the testimony. 

I do again want to thank you all for being here and the work you 

do for our veterans. 

Mr. MITCHELL. Thank you. 

At this time, I ask unanimous consent that all Members have 

five legislative days to submit a statement for the record. Hearing 

no objection, so ordered. 

I want to welcome the first panel. And at this time, I would like 

to welcome Mr. Jon A. Wooditch, the Deputy Inspector General, to 

the witness table. Mr. Wooditch is accompanied by experts in the 

fields of healthcare, audits, and investigations. 

Mr. Wooditch, if you would please introduce your team and then 

after that, you have five minutes to make your statement. Thank 

you. 

STATEMENT OF JON A. WOODITCH, DEPUTY INSPECTOR 

GENERAL, OFFICE OF INSPECTOR GENERAL, U.S. DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY JOHN D. 

DAIGH, M.D., CPA, ASSISTANT INSPECTOR GENERAL FOR 

HEALTHCARE INSPECTIONS, OFFICE OF INSPECTOR GENERAL; JAMES O’NEILL, ASSISTANT INSPECTOR GENERAL 

FOR INVESTIGATIONS, OFFICE OF INSPECTOR GENERAL; 

AND BELINDA FINN, ASSISTANT INSPECTOR GENERAL FOR 

AUDITING, OFFICE OF INSPECTOR GENERAL, U.S. DEPARTMENT OF VETERANS AFFAIRS 

Mr. WOODITCH. Thank you very much. I appreciate the opportunity to take a moment to introduce those responsible for the 

OIG’s accomplishments. 

Belinda Finn over here to my far right conducts audits aimed at 

improving VA nationwide. During the past year, audit work presented before this Committee included outpatient waiting times, 

variances in disability compensation payments, and contracting deficiencies. 

To my left is Dr. David Daigh. He conducts healthcare inspections to improve patient care. In addition to testifying before this 

Committee on quality management issues at the Salisbury Medical 

Center, he recently appeared, as Mr. Chairman mentioned, before 

this Committee to discuss patient deaths at Marion, Illinois. 

Lastly, Jim O’Neill is to my right. His criminal and administrative investigative work on the data loss involving 26 million veterans and the more recent incident at the Birmingham Medical 

Center, has heightened awareness of protecting personally identifiable information throughout the entire Federal Government. 

That is our senior management team, and I am very proud of 

them. 

Now if I may start my statement. Mr. Chairman, Members of the 

Subcommittee, thank you for the opportunity to address the 2009 

budget for the Inspector General. 

A year ago, we testified before this Committee concerning our 

oversight of VA. Since then, we achieved over $820 million in monVerDate Aug 31 2005 03:43 Nov 06, 2008 Jkt 041369 PO 00000 Frm 00009 Fmt 6633 Sfmt 6633 E:\HR\OC\41369.XXX 41369

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etary benefits for return on investment of $12.00 for every dollar 

spent. We issued 217 reports with over 800 recommendations for 

corrective action and completed over 1,100 criminal investigations. 

While we have accomplished much, much more remains to be done. For fiscal year 2008, OIG funding is $80.5 million, which in- cludes $7.9 million in emergency funding authorized by the President. This funding supports 488 FTE. We are very appreciative of 

this funding and we have launched an aggressive recruiting effort 

to fill these positions as soon as we can. For 2009, the budget submitted for the OIG is $76.5 million which supports 440 FTE. 

I would now like to take a moment to highlight some of the key 

issues that we will focus on this year and in 2009. A primary focus 

of our work is on the quality of healthcare. We will review internal 

controls such as the peer review process to ensure they are functioning correctly. CAP reviews will be expanded to address 

credentialing and privileging and we will begin assessing clinical 

outcomes to ensure veterans are not exposed to excessive risk. 

Veterans who have returned from current conflict experience two 

medical traumas with great frequency, traumatic brain injury 

(TBI) and post traumatic stress disorder (PTSD). We will review 

access, diagnoses, and treatment to identify any unmet clinical 

needs. We will initiate reviews of care provided at 1,000 outpatient 

clinics and Vet Centers. 

For many veterans, especially those in rural areas, these facilities are their primary access to medical care. It is only through a 

review of this population can we ensure they are receiving quality 

care. 

We believe the disparity between specialty medical care at large 

medical centers compared to small, rural facilities may place veterans at risk. We plan to devote attention to this issue through a 

focused nationwide review. 

Budget and resource allocation are critical to meeting veterans’ 

healthcare needs. We plan to review the resource allocation system 

that tracks demand and usage across VA to ensure equitable distribution of resources as veteran demographics change. 

VA spends a significant amount of money on pharmaceuticals. 

We will review the effectiveness of internal controls to prevent loss 

and theft. 

We will assess the timeliness and accuracy of processing benefit 

claims, especially in light of the increasing workload associated 

with Operation Iraqi Freedom/Operation Enduring Freedom veterans. 

VA lacks an integrated system to safeguard and account for financial operations. We plan to review VA’s efforts to replace existing legacy systems, which do not adequately support preparation of 

VA’s consolidated financial statement. 

We will expand our oversight of the systemic weaknesses that we 

have found and reported on of VA procurement and we will continue to follow up on the continuing information and security control concerns identified in our annual Federal Information Security 

Management Act (FISMA) audits. 

In closing, we will always focus available resources on the most 

urgent issues. However, reports on issues such as those at the Marion Medical Center are examples of reactive work that were not 


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planned for. These reviews are very labor intensive and require us 

to postpone and cancel other planned and ongoing priority work. 

The VA is faced with evolving challenges. If the OIG is to remain 

an agent of positive change, our resources need to be commensurate with this challenge. 

I thank you again for the opportunity to appear before this Committee. We are available now to answer your questions. Thank you. 

[The prepared statement of Mr. Wooditch appears on p. 25.] 

Mr. MITCHELL. Thank you. 

I have a couple of questions. First, Mr. Wooditch, what impact would the $4 million cut in the OIG’s budget that the President’s 

budget proposes, how would this impact your operation and your 

ability to do your job? 

Mr. WOODITCH. Well, the obvious impact of that cut is a loss of 

48 positions. With this comes a corresponding reduction in the 

number of audits we can perform, the number of healthcare inspections, and the number of criminal investigations that we can perform. 

This translates into less monetary benefits, fewer arrests and 

convictions, fewer report recommendations aimed at improving 

VA’s programs and operations. Of particular concern is the fact 

that these 48 positions were given to us this year. 

As I mentioned, we are in the process of filling them with experienced staff so they can hit the ground running. We are faced with 

the problem of having to hire these people only to lose them in the 

following year. 

Staffing swings of this magnitude for an organization our size 

not only impacts employee morale and productivity, it also makes 

it extremely difficult to accomplish meaningful, strategic, and longterm planning and more importantly, it is very, very, very difficult 

to consider which high-priority projects will have to be suspended 

or canceled. 

Mr. MITCHELL. Among other things, the OIG investigates fraud, 

waste, and abuse in the VA programs and contracts and recovers 

money by ways of fines and restitution. 

Am I understanding that in 2007, the actual dollars that were 

deposited in the Treasury was $237.9 million? And the question is, 

how does this compare to the total annual budget for the Office of 

the OIG in 2007? 

Mr. WOODITCH. As you mentioned, sir, the monetary benefits reported by the OIG are basically derived from three sources. First 

we have the dollar value of economic efficiencies associated with 

improvements in processes and productivity. 

The second category includes savings generated by reducing erroneous payments. 

Then lastly, as you mentioned, we have hard dollar recoveries 

that go directly back to either VA or to the U.S. Treasury. As you 

mentioned, these include fines, penalties, restitution, the civil judgments resulting from our criminal investigations. Importantly, it 

also reflects recoveries from contractors who have overcharged VA 

which we have identified through our post-award contract reviews. 

For 2007, our overall return on investment, as I mentioned, was 

$12.00 for every dollar spent. Briefly I will break down these three 

categories. 


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Efficiencies generated by economic improvements return an in- vestment of $1.60 for every dollar we spent. Reduced outlays, reduced erroneous payments generated $4.10 for every dollar we 

spent. I think the one that is really the most important concerning 

our cost benefit is that we have been able to return hard dollars 

back to the United States Government of $3.20 for every dollar we 

spent. 

No matter how you slice it, the OIG has proven itself to not only 

a sound fiscal investment but one that has historically recovered 

more than its cost to operate. 

Mr. MITCHELL. Thank you. 

Dr. Daigh, you testified 2 weeks ago about the shocking and tragic situation at the VA Hospital in Marion, Illinois, where many patients died as a result of substandard care. 

What resources would you need to conduct a system-wide investigation to ensure our veterans and the American public that there 

are no other Marions out there and do you have those resources 

now? 

Dr. DAIGH. Sir, it is not possible to ensure that a Marion will not 

occur. I believe that if I had about 20 FTE more that I could significantly reduce the likelihood that those events would occur and 

that we could provide comfort and assurance that we will have 

done all we can to ensure that policies are followed appropriately 

with respect to the issues that arose at Marion. 

Mr. MITCHELL. One quick question. Is there anything you can do 

to help ensure that veterans receive the appropriate mental 

healthcare that they need and do you have the resources to do 

that? 

Dr. DAIGH. We have done, I think, a fair amount in this area, 

trying to focus both on specific cases where we think practice ought 

to change. Specifically it would be those individuals who died 

where their care involved both mental health issues and usually 

drug abuse. And getting VA to recognize that they need to deal 

with both problems at one time, I think, has been an important 

change in that area. 

We have also reviewed and will focus on the mental health strategic plan to ensure that what is an agreed upon, reasonable way 

to ensure veterans receive mental healthcare is, in fact, rolled out 

as delivered. 

Additionally, we are focusing on and would like to focus more, on 

if we had the resources, the mental healthcare provided at community-based outpatient clinics (CBOCs) and Vet Centers. There are 

about 800 CBOCs, a couple hundred Vet Centers. And at the Vet 

Centers, there is a piece of that I think is probably healthcare. 

And CBOCs is where most individuals receive care who cannot 

easily get to a major hospital. And I think that with the resources 

I identified to you, I can provide more assurance that veterans will 

receive proper care there. 

We have also put together a data set that identifies all returning 

veterans and cohorts by the year that they leave the U.S. Department of Defense (DoD). And I think that by using that data set as 

an analysis tool that we can get a better statistical look and provide better assurance as to what care the veterans who are returning year by year have been receiving. 


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So the answer is I think with the additional resources I identified, I think we can do a much better job of ensuring veterans receive the mental healthcare that they should both for TBI, PTSD, 

and associated disorders. 

Mr. MITCHELL. Thank you. 

Ms. Brown-Waite. 

Ms. BROWN-WAITE. Thank you very much, Mr. Chairman. 

I guess this question would be for Deputy Inspector General 

Wooditch. Obviously the statement was made if you had an additional 20 FTE staff people helping in the Office of Inspector General where you would use them. 

What if there was an additional 20? Where would you devote 

those personnel to? What areas would you assign them to? 

Mr. WOODITCH. We have many projects that we cannot get to 

within our current funding. In addition to the 20 FTE that Dr. 

Daigh just mentioned to provide some sort of assurance that we do 

not have another Marion, if we had 20 more FTE, I think we would 

have to sit down and assess our workload and determine where we 

can get the most bang for the buck. 

But I can tell you right now Jim O’Neill, our AIG for Investigations, his investigators right now carry a workload of 12 cases per 

agent, one of the highest in the Federal Government. With a workload that significant, one thing happens. When we have a data loss 

case, we have to divert resources to look at the data loss cases, 

those criminal investigations get postponed. They never get canceled. We will get back to them, but some of them take years to 

get back to. 

So we would probably put some resources into a quick response 

team for data analysis, then the rest of them in the criminal investigative arena. 

Ms. BROWN-WAITE. If I could follow-up on that. Is there a list 

that perhaps you could share with this Committee of additional 

needs that you see for the Inspector General’s Office to be looking 

at? 

And I do not know, Mr. Mitchell, do you have such a list? 

Mr. MITCHELL. No. 

Ms. BROWN-WAITE. It would be helpful to us to also know what 

needs our attention as the Oversight Committee. And with the concurrence of the Committee, maybe it would be helpful, not today, 

but if you would sit down with the Committee staff and I am available and perhaps Mr. Mitchell so that we can take a look at that 

because we want you to have additional staff so that the important 

job that you do can be done, can be accomplished in an efficient 

manner so that we get every cent that should be going to the vets 

that right now may be siphoned off into other areas, some illegal 

areas, so that we can get that money out there. 

So if you would be willing to share such a list, we sure would 

appreciate having it. It will help us also to justify asking for more 

money. 

Mr. WOODITCH. Well, thank you for the opportunity to meet with 

you and your staff to discuss these issues. We will prepare such a 

list and we will be contacting your staff to set up meetings. Thank 

you. 


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Ms. BROWN-WAITE. Okay. I have another question and I think 

this probably would be for Ms. Finn. And I am asking this because 

I believe, and please correct me if I am wrong, you did the study 

on the problems in the Boston area. 

The VA’s acquisition system that they are using right now for 

purchases, does that desperately need to be revised and made uniform so that we have real accounting areas that are used instead 

of miscellaneous for millions and millions of dollars? 

Ms. FINN. One of the first things VA needs is a system to give 

them visibility over all of the contracting actions. They do not have 

that right now. They are working on a system, but they are just 

starting to implement it. And it is too early to say whether or not 

it is going to have all of the needed information. 

Certainly they need to be able to correctly collect and track the 

obligations and the expenditures related to all of the contracting. 

That would be a critical need for good financial management. 

Ms. BROWN-WAITE. Refresh my memory. How long have they 

been looking at this? 

Ms. FINN. I do not know for sure. The Electronic Contract Management System has been under development and implementation 

for about three to 4 years, I believe. I do not know totally how long 

they have been developing a system. I will be glad to get back to 

you on that. 

Ms. BROWN-WAITE. You know, so many times organizations think 

they have to reinvent the wheel when there are major software 

companies out there that have it and they will come in and they 

will modify it for government. And some of them specialize just in 

government. But if you would give us an update on that later, that 

would be wonderful. 

Ms. FINN. Okay. 

[The VA Inspector General, Hon. George J. Opfer, followed up in 

a March 20, 2008, letter, which appears on p. 43.] 

Ms. BROWN-WAITE. And thank you very much. 

And with that, I yield back my time. 

Mr. MITCHELL. Thank you. 

Mr. Walz. 

Mr. WALZ. Well, thank you, Mr. Chairman. 

And, once again, thank you all for what you are saying. I am 

going to have you help me and it is somewhat subjective, the questions I am going to ask. And I do not say this in any way facetiously, but I am trying to get a grasp on this, who requested that 

the budget be dropped for the OIG? How would that process work? 

I mean, I would assume that the Secretary was involved in that 

when the cabinet level people sat around and talked about how 

they were going to do this year’s budget. Who would make the decision and say, send this over to the House with a cut in the OIG? 

Do you have any idea on how that would work? 

Mr. WOODITCH. It is difficult to talk about the internal budget 

process in the Government without sounding like I am soliciting resources. 

Mr. WALZ. Yes. And I know you are in a tough spot because of 

that. I understand that. 

Mr. WOODITCH. But I think I could help you a little bit in answering that question by saying that the OIG does develop a budgVerDate Aug 31 2005 03:43 Nov 06, 2008 Jkt 041369 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 E:\HR\OC\41369.XXX 41369

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et on what we think we need to bring us to current services and 

any additional planning initiatives that we think need to be addressed. 

Those are submitted to the Department. The Department will review those, make a decision on whether they support that. They 

will submit their position to Office of Management and Budget 

(OMB). OMB will make a final decision. They will get back to us. 

If we disagree with it, we are allowed to appeal it. They make a 

final decision and then the President’s budget is submitted. 

So anywhere between when it leaves this office until it arrives 

in front of Congress, the kind of cuts that you are talking about 

could occur. 

Mr. WALZ. And the difficulty that lies in there is because of the 

conflicts there, for us to be able to see what was requested by OIG 

and we see what was agreed upon. 

I am under the assumption that you probably asked for more, 

but I guess that is part of the process, I would assume. 

Mr. WOODITCH. Well, we asked for resources to do a lot of the 

things that we are currently not doing. 

Mr. WALZ. So bottom line is right now we could do a better job 

of protecting our veterans, and we could do a better job of protecting our tax dollars if we were investing more in the OIG? 

Mr. WOODITCH. Yes, sir, I believe that is true. 

Mr. WALZ. Okay. And I want to come back to this issue and this 

is one, Ms. Finn, you can help me with. Did you say we are currently having a very difficult time tracking contracts? Is that correct? 

Ms. FINN. That is correct. At the present time, VA does not have 

any one system that collectively can provide visibility over all of 

the contract actions. 

Mr. WALZ. So, internally in the VA, there is someone providing 

audits and then you are doing the inspections on these audits, is 

that the correct procedure? 

Ms. FINN. Audits of contracts? 

Mr. WALZ. Yes. 

Ms. FINN. We actually within the OIG provide some pre- and 

post-award services to the Department on a reimbursable basis. 

Mr. WALZ. Is there any redundancy in who is watching these 

contracts or if you do not catch it, it does not get caught? 

Mr. WOODITCH. I would like to answer that, sir, if I may. VA has 

their own internal process of monitoring what they do. They have 

reviews done by General Counsel. They have reviews done from a 

technical standpoint in complying with the Federal Acquisition regulations. But I think I am safe in saying that if you are talking 

about independent objective reviews, our office is the only one that 

really does that. 

Mr. WALZ. Okay. And did somebody have a number or did we say 

we could get it? How much fraud, waste, and abuse was caught last 

year, for example, in contracting? Do we have any idea on that? 

Mr. WOODITCH. Fraud, waste, and abuse, in our pre-award and 

post-award area, the pre-awards basically look at contract bids and 

we look for opportunities to negotiate a better price. In the postaward, we look at where we are overcharged and from that, we try 

to collect the overcharges. 


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I think in 2007, our total pre and post-award monetary benefits 

were several hundred million dollars. I can get the exact number 

back to you later. 

[The VA Inspector General, Hon. George J. Opfer, followed up in 

a March 20, 2008, letter, which appears on p. 43.] 

Mr. WALZ. About how many firms are involved in that or how 

many contracts would you guess? Is that another one that is pretty 

hard to—— 

Mr. WOODITCH. It is difficult to estimate what that is. It varies 

by year to year. We do a lot more pre-award work than we do postaward. We probably look at over a hundred a year in pre-award 

and probably a third of that in post-award. We could look at a lot 

more, but we are limited to the 25 staff we have dedicated to that 

area. 

Mr. WALZ. So at a time of national conflict and war and a time 

when our budgets are pressed, we have people war profiteering and 

at the same time, we are going to cut the people who can stop that 

war-profiteering? Is that an over-dramatization or is that what we 

are looking at? 

Mr. WOODITCH. I do not think it is an over-dramatization. I 

think, like I said earlier, if you invest more moneys in us, you will 

get a greater return on your investment. 

Mr. WALZ. Well, I again want to say to close here before I give 

it back to the Chairman that I do appreciate that and please know 

that we are fighting. And I also understand the very sensitive situation you are in with this budgeting. But please know that we will 

do our job of asking these hard questions and make sure we get 

this thing right. 

So I yield back. 

Mr. MITCHELL. Thank you. 

Mr. Space. 

Mr. SPACE. I have no questions. 

Mr. MITCHELL. Thank you very much for coming today. We appreciate your testimony. And you have a friend up here. You have 

a bunch of them. 

Mr. WOODITCH. Thank you very much. 

Mr. MITCHELL. At this time, we would like to invite the second 

panel to come forward. 

I might add that at about 3:20, they expect to call for votes 

again. So hopefully we can get through all of this. 

I welcome panel two to the witness table. Ms. Valerie Melvin is 

the Director of Human Capital and Management Information Systems Issues for the U.S. Government Accountability Office, (GAO). 

She will be accompanied by her Assistant Director, Ms. Barbara 

Oliver. We look forward to hearing her unbiased view of the IT 

budget. 

And, Ms. Melvin, you have five minutes to make your presentation. 


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STATEMENT OF VALERIE C. MELVIN, DIRECTOR, HUMAN CAPITAL AND MANAGEMENT INFORMATION SYSTEMS ISSUES, 

U.S. GOVERNMENT ACCOUNTABILITY OFFICE; ACCOMPANIED BY BARBARA OLIVER, ASSISTANT DIRECTOR, 

HUMAN CAPITAL AND MANAGEMENT INFORMATION SYSTEMS ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE 

Ms. MELVIN. Thank you, Mr. Chairman and Members of the Subcommittee. I am pleased to participate in today’s hearing on VA’s 

information technology budget. 

As you know, the use of information technology is crucial to helping VA effectively serve our Nation’s veterans for which the Department is seeking approximately $2.4 billion for fiscal year 2009. 

However, the Department has long been challenged in its information technology management, having experienced cost, schedule, 

and performance problems in a number of systems initiatives. 

To provide greater accountability and authority over its resources, VA has been realigning its organization to centralize IT 

management under the Chief Information Officer (CIO) and to 

standardize budgets, operations, and systems development. 

Over the past two years, we have assessed and reported on the 

realignment initiatives and at your request, my testimony today 

summarizes our findings regarding the Department’s actions and 

their impact to date in providing greater authority and accountability over the Department’s IT budget and resources. 

In this regard, the Department has taken a number of important 

steps toward a more disciplined approach to overseeing and accounting for its budget and resources. Among these actions, it designated necessary leadership within the CIO’s Office to be responsible for developing and tracking expenditures against the budget, 

activated three governance boards to facilitate budget oversight 

and to manage its investments, finalized an IT strategic plan that 

aligns with the Department’s strategic plan, and developed multiyear budget guidance to improve future management of the IT investment portfolio. 

All of these steps represent positive movement in VA’s attempt 

to establish greater control of its information technology. To date, 

however, their effectiveness in ensuring accountability for the Department’s resources and budget has not yet been clearly established. It remains too early to assess the full impact of the Department’s actions because a number of them have only recently become operational or have not yet been fully implemented. 

For example, the Governance Board’s first involvement in budget 

oversight only recently began in May 2007 and none of the boards 

have yet been involved in all stages of the budget formulation and 

execution processes. 

In addition, because the multi-year budget guidance is applicable 

to future budgets for fiscal years 2010 through 2012, it is too early 

to determine VA’s effectiveness in implementing this guidance. 

Even more significantly, improved IT management processes that 

are being instituted as a cornerstone of the realignment remain behind schedule, with the date that VA plans to complete the implementation of certain budget control processes having changed from 

July 2008 to at least fiscal year 2011. However, as we have previously noted, it is crucial for the CIO to ensure that well-estabVerDate Aug 31 2005 03:43 Nov 06, 2008 Jkt 041369 PO 00000 Frm 00017 Fmt 6633 Sfmt 6633 E:\HR\OC\41369.XXX 41369

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lished and integrated processes are in place to lead, manage, and 

control VA’s IT resources. 

Thus, Mr. Chairman, while VA’s actions to increase IT oversight 

and accountability hold promise for achieving a more disciplined 

management approach, their success will depend on the extent to 

which the Department follows through in ensuring that the actions 

are effectively instituted and executed. 

VA has said that these management processes are essential to 

correcting deficiencies that it encountered with its previously decentralized management approach. Thus, establishing the processes 

is crucial to the overall success of this initiative and to realizing 

the potential benefits that could accrue from having a solid and 

sustainable centralized approach to managing the Department’s IT 

budget and resources. 

This concludes my prepared statement, and we would be pleased 

to respond to any questions that you have. 

[The prepared statement of Ms. Melvin appears on p. 30.] 

Mr. MITCHELL. Thank you. 

I have just a couple questions. How confident are you that the 

current budget proposal accurately identifies the specific items, 

which IT dollars are being spent, and accurately identifies the 

amount of money associated with each item? 

Ms. MELVIN. At this time, I do not believe that we could attach 

a level of confidence to it because we have not been able to look 

at the full process implemented throughout the Department. As I 

stated in my testimony, the Department is in the process of executing a number of the processes that are important to or that is 

identified, I should say, as part of its overall governance process for 

improved management and accountability for the budget. However, 

to date, it has been implemented in a sort of a piecemeal fashion 

in the sense that budget formulation has occurred for the fiscal 

year 2009 budget process and budget execution has occurred for the 

2008 budget process. Thus far, the formulation as we understand 

it has been based on the use of the exhibit 300s, but we have not 

seen evidence yet based on the full set of practices and processes 

that the Department intends to use in terms of having a more solid 

and centralized approach to managing the resources. 

Mr. MITCHELL. Thank you. 

Just one more question. You say in your report that the VA has 

told you that it will not have the management processes necessary 

to centralize the control over IT budget until the year 2011. Why 

would the VA need three more years to do this? 

Ms. MELVIN. That is actually stated in their IT strategic plan. 

And we do not know specifically why, but I can say that in our past 

work in looking at their management processes, in the discussions 

that we had with VA’s officials, they did indicate that they had in 

some cases overestimated what would be required to actually get 

these management processes in place. Perhaps that is still a factor. 

I do know that as they have been moving through this process, 

they have been looking at ways to refine some of the efforts that 

they are undertaking. And that seems to be a major piece of what 

has taken place and why they may not have been able to put them 

in place yet. 

Mr. MITCHELL. Thank you. 


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Ms. Brown-Waite? 

Ms. BROWN-WAITE. Thank you. 

I would like to follow-up on the Chairman’s line of questioning. 

Having been here for a few years, was it not supposed to originally 

be completed in July of 2008? 

Ms. MELVIN. That is correct. 

Ms. BROWN-WAITE. And the reasons for the delay? 

Ms. MELVIN. At the time that we first started looking at the 

processes, there were a number of factors that were being considered by VA as reasons why they were not able to. They dealt with 

having to actually start looking at the implementation and, once 

they did, to see that some of the processes needed to be refined relative to their overall organization’s structure. 

We also noted in our prior work that they were in the process 

of staffing their offices, if you will, the process offices that would 

be major players in actually getting their business processes in 

place. Those factors collectively were reasons that were given for 

that. 

I would also add that as a part of our work, one of the things 

that we had looked for are where VA has actually had an actual 

plan, if you will, with performance measures and results oriented 

objectives for what they were trying to achieve. And we have also 

stressed the need for them to have an implementation team that 

could monitor the progress that they were making in these areas. 

Ms. BROWN-WAITE. Did you find such a plan? 

Ms. MELVIN. There was not. We have seen in the strategic plan 

that they currently have in place that they do have a performance 

and accountability measurement process that hopefully will be beneficial in helping them to actually track better the actions that they 

are taking against the time frames and the milestones that they 

have put in place for this. 

However, we have, I would say, disagreed basically in terms of 

the type of implementation team that would be needed to actually 

make sure that the realignment was undertaken effectively. 

Ms. BROWN-WAITE. Could it be summarized? Give me a percentage here of the problem being just institutional opposition to 

change. 

Ms. MELVIN. I cannot give you a percentage. I would say, though, 

and we have stated previously that in undertaking an effort of the 

magnitude that VA is undertaking, a lot of what they are doing is 

very ambitious. 

Our past work relative to transformations within organizations, 

especially on a major level, have indicated that sometimes it takes 

up to five to seven years to be able to accomplish some of the goals 

such as VA is trying to achieve. 

A lot of that involves making sure that there is cultural buy-in 

to the initiatives that are being undertaken, to the changes that 

are being made. There is a complex set of factors relative to being 

able to gain organization-wide approval, agreement, and acceptance 

of the changes that are there. 

So I do think that these are factors that are important and perhaps are relevant to the situation that VA finds itself in. 

Ms. BROWN-WAITE. Another question. And, by the way, thank 

you very much for being here—— 


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Ms. MELVIN. You are very welcome. 

Ms. BROWN-WAITE [continuing]. And doing the presentation, both 

of you. In your testimony, you discussed the challenges in maintaining VA’s IT projects which according to your statement includes 

cost overruns, schedule slippages, and performance problems. 

In your estimate, is the VA doing enough to fix these problems 

and what more could really be done? 

Ms. MELVIN. VA is in the process of trying to implement its 

changes through its management process. We do believe that if 

they are able to effectively implement and execute the overall IT 

investment management processes that are a part of the realignment that they could go a long way in making sure that they have 

more information, can make more effective and better informed decisions relative to their projects. 

A key to all of this is that this does show promise. However, we 

still remain very cautious and we still stress the need for them to 

have the fundamental business processes in place. And through 

doing that, I believe that that will be the support or the foundation 

that they need to be able to move forward to make some of the 

changes within, for example, key initiatives that you have seen and 

we have reported on that still have faced challenges for the Agency. 

Ms. BROWN-WAITE. Thank you. 

And with that, I yield back the balance of my time. 

Mr. MITCHELL. Thank you. 

And Mr. Walz has no questions, so thank you very much for appearing. We appreciate it. 

Ms. MELVIN. You are welcome. 

Mr. MITCHELL. And at this time, I welcome the third panel to the 

witness table. Mr. Robert T. Howard is the Assistant Secretary for 

Information and Technology at the VA and the Department’s CIO. 

We look forward to hearing Assistant Secretary Howard’s testimony. 

And if Mr. Howard would please introduce the rest of your team 

and then, Mr. Howard, if you could spend 5 minutes on your remarks. 

STATEMENT OF HON. ROBERT T. HOWARD, ASSISTANT SECRETARY FOR INFORMATION AND TECHNOLOGY AND CHIEF 

INFORMATION OFFICER, OFFICE OF INFORMATION AND 

TECHNOLOGY, U.S. DEPARTMENT OF VETERANS AFFAIRS; 

ACCOMPANIED BY STEPHEN WARREN, PRINCIPAL DEPUTY 

ASSISTANT SECRETARY, OFFICE OF INFORMATION AND 

TECHNOLOGY; PAUL TIBBITS, M.D., DEPUTY CHIEF INFORMATION OFFICER, OFFICE OF ENTERPRISE DEVELOPMENT, 

OFFICE OF INFORMATION AND TECHNOLOGY; AND ARNIE 

CLAUDIO, DIRECTOR, OVERSIGHT AND COMPLIANCE, OFFICE OF INFORMATION AND TECHNOLOGY, U.S. DEPARTMENT OF VETERANS AFFAIRS 

Mr. HOWARD. Thank you, Mr. Chairman. 

Chairman Mitchell and Ranking Member Brown-Waite, good 

afternoon and thank you for your invitation to discuss the President’s fiscal year 2009 Information and Technology budget proposal 

for the Department of Veterans Affairs. 


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I am accompanied today by Steph Warren to my right, my Principal Deputy Assistant Secretary. And to his right is Dr. Paul 

Tibbits, the Deputy CIO for Enterprise Development. And to my 

left is Arnie Claudio, Director of Oversight and Compliance. 

Let me begin this afternoon by recapping the major aspects of 

the IT reorganization and highlights of our experience to date. 

Throughout fiscal year 2006 and 2007, the VA Office of Information and Technology transitioned to a new organization with the 

detailing of 5,010 IT personnel and beginning with the fiscal year 

2008 budget, we reflect this completed consolidation along with the 

transferred funding for a total staffing level of 6,686 personnel. 

We have been operating under this new organization for about 

a year and continue to learn a lot about what it takes to provide 

effective and efficient IT support to an organization the size and 

complexity of the VA. 

As we move forward, we will continue to build upon our successes. However, we remain aware that our work is far from complete. 

As a result of the enhanced visibility that we have been able to 

bring to the management of IT through the consolidation, we are 

discovering activities that need to be improved and enhanced from 

an overall management standpoint. This is especially true in the 

area of data security and infrastructure improvements. 

For example, we have increased our emphasis regarding certification and accreditation and are developing better procedures regarding asset management. Progress is being made, but we have 

a way to go in establishing the organization and providing the 

high-quality IT support that VA and our veterans deserve. 

Working with our new centralized organization has certainly 

been a challenge for all of us. But the other critical challenge we 

are dealing with is the new IT appropriation which was established 

in fiscal year 2006. 

In that regard, we continue to focus our efforts in structuring 

and funding the IT appropriation along programmatic lines relating IT to the principle missions of the VA. Since this is a line item 

appropriation, prior planning is critically important and getting the 

funding up right is essential. 

As you are aware, VA is requesting $2.442 billion to support IT 

development, operations, and maintenance expenses, including payroll for fiscal year 2009. This request reflects the consolidation of 

all VA IT into one appropriation, with the exceptions of non-payroll 

IT for credit reform programs and non-appropriated insurance benefit programs, both of which fall under different funding rules. 

In fiscal year 2009, the majority of increases represent program 

priorities to enhance the support to veterans both directly and indirectly, especially in the area of medical care. 

The non-pay portion of the 2009 budget has been realigned from 

previous submissions to delineate veteran strategic issues into two 

major classifications: veteran-facing IT systems and internal facing 

IT systems. This has been done to better link the appropriation to 

the mission of VA. 

Veteran-facing IT systems support programs for veterans such as 

providing medical care and delivering compensation benefits, enhancing education opportunities, and programs of that nature. 


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These veteran facing programs account for $1.295 billion of our request. 

Internal facing IT systems are those that provide the capability 

to work more effectively in managing IT resources such as corporate management, financial resources management, and programs of that nature. Internal facing programs in our budget for 

2009 total $418 million. 

Together these amounts reflect a sizeable increase over fiscal 

year 2008 which will obviously be very helpful to us in the improvement of IT support to VA. 

Over the past several years, VA IT has had a fairly level budget. 

Yet, at the same time, the organizations we support have been increasing in size, especially in terms of facilities and people. And as 

you well know, whenever you do that, you have to apply the necessary IT talent and tools to those activities. 

The increase will help us provide the needed funding to accelerate selected programs, especially in the delivery of healthcare 

and to at least keep most of them on track. 

A few words about veteran-facing medical programs. VA has laid 

a solid foundation for integrating information and technology into 

all aspects of healthcare operations, and will continue to lead the 

Nation in this area. 

In fiscal year 2009, we have asked for an increase in funding necessary to sustain and modernize our healthcare delivery IT systems. 

In the area of veteran-facing benefit programs, information and 

technology investments over the past several years and those 

planned for the future will enable new technologies to be used to 

facilitate the processing of claims and providing benefits to veterans and their families. 

Internal-facing IT systems link to specific management categories, corporate management, financial resource management, 

asset management, and human capital management to name a few. 

VA is requesting, as I mentioned, $418 million for this area. 

Two significant investments are in the categories of human capital management and financial resources management and these 

are necessary to replace existing systems with new technologies. 

The Human Resource Information System is an OMB and the Office of Personnel Management managed project and the Financial 

and Logistics Integrated Technology Enterprise system addresses 

VA’s longstanding weakness in the financial management area. 

Mr. MITCHELL. Mr. Howard, could you wrap up? 

Mr. HOWARD. Yes, sir. 

So I want to point out one additional thing and then I will close 

and that is with respect to information security. You know we are 

doing a lot of work there. But one of our success stories has been 

our robust capability for oversight and compliance. 

Arnie Claudio sitting to my left can speak to a lot of that. He 

has conducted over 150 assessments since last January and that 

particular information is providing a lot of visibility for us in areas 

that need to be fixed throughout the VA. 

Sir, I thank you for the time to make this opening statement, 

and we are prepared to answer any questions you may have. 

[The prepared statement of Mr. Howard appears on p. 36.] 


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Mr. MITCHELL. Thank you. I have one quick question before we 

have to end this. The IT budget submission shows that there were 

$8 million for medical center innovations for fiscal year 2008. However, there is no money, none included for this purpose, in the 2009 

proposed budget, ensuring that VA continues to benefit from the 

creativity and innovation of the doctors and other healthcare providers who actually do provide the care for our veterans. 

The question I have is, should the 2009 budget include money for 

medical center innovations and do you agree or not? 

Mr. HOWARD. Sir, I totally agree with that and we will find a 

way to fund that. To tell you what you are looking at in 2008, that 

line was developed actually after we had completed our 2009 budget. It was in response to a concern that we were hearing from the 

field regarding innovation and the need to put power assist in that 

area. The fact of the matter is we actually took FTE money out of 

the IT appropriation in 2008 and moved it into that particular line 

creating an IT innovation line for the first time. In fact, there were 

a couple of memos jointly signed by me and Mike Kussman making 

it clear to the field that in no way do we want to kill innovation. 

The fact of the matter is, we want to keep it enhanced, but we 

want to do so in a little bit more structured manner. So we will 

figure out a way to fund that piece in 2009, sir. 

Mr. MITCHELL. Thank you. 

One last question before I pass it on. According to the GAO, the 

VA originally stated that it would have the management processes 

necessary for centralized control of the IT budget in place by 2008, 

as Ms. Brown-Waite mentioned. Now VA is telling the GAO that 

this will not happen until 2011. 

Why is it going to take three more years to get this done? 

Mr. HOWARD. Sir, that is a good question. The fact of the matter 

is, I believe, one of the folks mentioned the ambitious nature of 

what we had put on the table. One of the reasons that that has 

slowed down to some degree is because of all of the problems that 

we are discovering as a result of this centralization. I have moved 

the problems right up to the front of the line. In other words, we 

need to focus on those, but we have not ignored putting the process 

in place because we know how important that is. 

The fact of the matter is, we do have a number of things ongoing. 

For example, we have redesigned pilots for risk management already ongoing. The budget process has begun. We have not gotten 

it written up yet but there is a process. With regards to incident 

response, you get weekly reports on that. There is a very robust 

process in place for that, but we have not gotten it in a nice, neat 

document yet. That is going on though. 

IBM, when they did the work in the reorganization helping us 

out, produced thick volumes for each of the 36 processes, about, you 

know, two or three inches thick. We have taken those documents 

which were very complex, by the way, and skinnied them down to 

workable pamphlets, if you will, that people can use in establishing 

these processes. That is ongoing, and in fact, there are several of 

them already done. Twenty-seven of them, in fact, are either in 

draft or final version. 

Key meetings continue to take place. It has slowed down because 

of the complexity of what we are dealing with and also all of the 


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problems. I have charged my senior leaders with the responsibility 

for implementing these processes, but I also challenged them to fix 

all these problems. They can only handle so much, so there is a 

slip. 

Whether 2011, that is probably a little bit more extensive than 

I think will be necessary, but there are some processes, and I hate 

to be long-winded here, but there are some processes that may very 

well take that long. 

Let me give you an example. In its financial management and 

budget process, we actually have to fit inside a VA process about 

that, and that is not very well defined either. In other words, we 

are implementing processes, but those we support, you know, also 

have to adjust so that we can fit inside them with the process we 

have for IT. 

Mr. MITCHELL. Thank you. 

Ms. Brown-Waite? 

Ms. BROWN-WAITE. Thank you, Mr. Chairman. 

General Howard, refresh my memory. At what point was IBM 

brought in? 

Mr. HOWARD. They were brought in in the early 2006, I believe. 

The key decisions, yes, I believe it was the summer of 2006. I can 

get the exact date for you. 

[The following was subsequently received.] 

The date of award on the IBM contract was June 28, 2006. 

Ms. BROWN-WAITE. And was it because there were problems in 

attempting to implement this without a major contractor? 

Mr. HOWARD. No, ma’am. We intended to have a contractor right 

from the very beginning. This was fully intended and we worked 

very well with IBM. They were very helpful to us. But that was 

part of the plan. 

Ms. BROWN-WAITE. And they are still there today? 

Mr. HOWARD. The contractor is still in place. They do not have 

much work for us anymore because their work is pretty much done. 

Ms. BROWN-WAITE. Okay. Could you tell me how much the Birmingham data breach cost the VA to date? 

Mr. HOWARD. Within this number I am about to give you, there 

probably are a few other minor incidents. But for credit protection 

in fiscal year 2007, we paid $6.5 million. Now, we put a lot more 

than that on the shelf, so to speak, because we had no idea how 

many people would opt in, you know, and choose to have credit protection. But so far, it is $6.5 million. 

We also spent about $1.3 million on the mailings for the particular incidents in 2007 and most of that was Birmingham. The 

lion’s share of that was Birmingham. 

Ms. BROWN-WAITE. And the May 2006 data breach, how much 

did that cost? 

Mr. HOWARD. The May 2006 data breach would have cost us 

$200 million, but the hard drive was discovered. As you know, the 

Federal Bureau of Investigation did a forensic analysis of it and 

were 99.9 percent positive nothing was taken off it. So the money 

for credit protection was stopped and we never did move forward 

with that. So credit protection-wise, zero on the 2006 May data 

breach. 


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Ms. BROWN-WAITE. And the mailing? 

Mr. HOWARD. The mailing, ma’am, I would have to get you that 

number. We did pay. In fact, I believe the number was—I better 

give you that number for the record. 

Ms. BROWN-WAITE. Is that the mailing that had to be done 

twice? 

Mr. HOWARD. Yes. Yes. As you know, we sent two letters to the 

veterans. We did send two letters. I do not think we sent any more, 

but two went out and it did cost us quite a bit of money. 

[The following was subsequently received:] 

The total cost for first mailing was $6,678,348; the total cost for second mailing 

was $6,376,192; and the grand total was $13,054,540. 

Ms. BROWN-WAITE. Mr. Chairman, I know we have votes. So 

with that, I will yield back. 

Mr. MITCHELL. Thank you. 

Mr. Walz. 

Mr. WALZ. Thank you, Mr. Chairman. 

I thank the Ranking Member also for that. 

First of all, General Howard, I really appreciate you coming here 

and the work you have done. I know you have been on this job 

about 17 months. And I think we should take something that is 

positive. When we see this from GAO after the times I sit here, I 

am glad to see that important steps have been made and that is 

exactly what we are trying to look for. 

Please forgive me if I am a bit, after the OIG’s testimony, a bit 

preoccupied with this idea of where our money is going. You have 

received a big budget. 

Are there safeguards in place on that? I know I am asking a little bit off line on this, but that is a concern of mine now to hear. 

Now, we are going to send more money there. Are we taking good 

care of it? 

Mr. HOWARD. Sir, that is a very good question. Quite frankly, as 

I mentioned, we are building this organization and we are learning 

all the time. If you were to ask me what does an IT organization 

need to look like to support the VA in a centralized way, I would 

have to tell you I do not know yet as I am still learning. We are 

pretty sure we are getting really close. We discover issues all the 

time. 

One thing for sure that we need to put more emphasis on is our 

management process. In the budget formulation, they mentioned 

the various boards and what have you. Those boards have met, but 

they are absolutely right. We have not been through a complete 

process like 2009 development, 2009, you know, with the Congress, 

and then execution. We need to go through that and put all of 

those mechanisms in place. 

The other thing that we are finding from a staffing standpoint 

is that we need to put more emphasis on making sure proper staff 

of the right skill sets are in place to monitor this funding. We also 

need to have better automated systems within the VA. As you 

know, that is one of the IT programs that we are actually working 

on to better monitor this information. 

It is infinitely better than it was in the past, that is for sure. 

Just the fact that, you know, I get four sheets with all the numbers 


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on it is certainly helpful, but I do not want to indicate to you that 

we have our arms all over it. We have got a lot of work to do here. 

Mr. WALZ. One of the things we hear a lot about is, of course, 

the claims backlog and I noticed in 2009, the Veterans Benefits Administration (VBA) has zero for electronic monitoring of claims, 

making sure the rating system is electronically done. 

Those are the types of decisions, and I know we do not have 

enough time here. I know that the Ranking Member is generous 

enough to give me a little of hers. I am deeply concerned about 

this. Many Members here and the staff just ended up trying to figure out this seamless transition between DoD and all of that. 

I guess I would just ask you, is that communication happening? 

Mr. HOWARD. Yes, sir. In fact, IBM is doing a study right now 

because we know we have to move to a paperless environment, and 

you know VBA lives in a sea of paper. You know that. 

Mr. WALZ. Yes. 

Mr. HOWARD. But we also know we have to get out of that world. 

It is extremely difficult. There is a contract with IBM. It is Dan 

Cooper’s contract and VBA looking at the various processes and 

how we can go about that. The Deputy Secretary has met several 

times with us on that, on creating a paperless environment in VBA 

so we can speed up the process of claims—— 

Mr. WALZ. Why was it zeroed out then for 2009? 

Mr. HOWARD. Sir, which line are you referring to? Sir, because 

we are spending money on that. 

Mr. WALZ. They have got us down with VETSNET and Virtual 

VA and nothing new. 

Mr. HOWARD. Yes, sir. Sir, right now we have VETSNET. 

Mr. WALZ. Right. 

Mr. HOWARD. You know all about that. And Virtual VA is the 

program that we are using to image the paper, you know, run it 

through the imaging machine and at least prepare a veteran folder, 

if you will, in electronic form. But it is not a computable form. It 

is just passing the PDF file around. 

Mr. WALZ. But the concern is there and there is movement toward it? 

Mr. HOWARD. Yes, sir. But before we start throwing a lot of 

money at it, we want to get through this IBM analysis and study 

because, quite frankly, we do not really know right now, you know, 

what it is going to take to change pretty well-embedded processes. 

The first thing you have got to do is change the way you do business, and that is what IBM is looking at. So we are doing it, but 

it does not appear as a separate line here. 

Mr. WALZ. Okay. And I yield back and thank the Chairman. 

Mr. MITCHELL. Thank you. 

And I want to thank all of our witnesses today. You know, this 

Committee and I would say all Members of Congress really believe 

that for the veterans who have fought for our freedom, the least we 

can do is to provide adequate resources to ensure they receive the 

very highest quality of care once they become veterans. So we want 

you all to know that this is our concern and we appreciate everything that you have done. We appreciate you coming today. 

Thank you and that concludes the hearing. 

Mr. HOWARD. Thank you, sir. 


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[Whereupon, at 3:43 p.m., the Subcommittee was adjourned.] 


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A P P E N D I X 

Prepared Statement of Hon. Harry E. Mitchell, 

Chairman, Subcommittee on Oversight and Investigations 

We are here today to examine the President’s proposed budgets for fiscal year 

2009 for the Inspector General (IG) of the VA and for the VA’s Office of Information 

and Technology (IT). These budgets are not related, but are equally important. 

Our first panel will address the IG’s proposed budget. The President’s budget proposes $76 million for the IG for fiscal year 2009, which is $4 million below their 

fiscal year 2008 budget. I believe this cut is absolutely irresponsible. 

The Inspector General is an essential, independent, nonpartisan check against 

waste, fraud and abuse, and is one of the best ways of ensuring accountability at 

the VA during a time of war. 

This reduction would result in a 10 percent cut in IG staffing, which would weaken the VA’s watchdog when hundreds of thousands of veterans need the VA to make 

improvements. 

This Subcommittee held a hearing just two weeks ago where Dr. David Daigh, one 

of the IG witnesses today, and his team in the Office of Healthcare Inspections testified to the shocking and tragic events at the VA hospital in Marion, Illinois. The 

VA Medical Inspector and Dr. Daigh’s group found nine patients who died in the 

past two years as a result of substandard care. 

I will be asking Dr. Daigh what additional resources are needed to look at the 

whole VA hospital system to make sure there are no more Marions out there. I 

know he does not have those resources now and the President’s budget would reduce 

the IG even further. 

The Federal Government has 25 statutorily mandated Inspectors General. If you 

compare the number of IG employees with the number of employees in the agency, 

the VA has the lowest ratio in the entire government. The same comparison of budget for the IG and budget for the agency puts the VA near the bottom. 

Unfortunately, the President’s proposed cut does not account for the IG’s return 

on investment. In fiscal year 2007, the VA’s Inspector General had hard dollar recoveries—money taken from illegal activities and placed into the United States 

treasury—of $237.9 million. Return on investment just on hard dollar recoveries 

was over three to one. The IG also saved over three hundred million dollars by cutting off benefits payments to fugitive felons—people receiving benefits who have outstanding arrest warrants for felonies. 

Our second and third panels will address the President’s budget proposal for VA’s 

Office of Information and Technology. Congress has mandated a separate budget 

line so that the amounts and purposes of IT expenditures are visible and can be 

evaluated. 

The VA is doing a better job of categorizing its IT expenditures but there is more 

work to be done. In order for Congress to provide effective oversight—IT costs must 

be allocated to cost centers as precisely and accurately as possible. 

One specific topic this Subcommittee will explore is the funding for IT resources 

to support the innovation and creativity of VA’s healthcare providers. 

The Office of Information and Technology has set aside $8 million this year to 

provide IT support to the clinicians in the field to continue to improve VistA. Unfortunately, there is nothing set aside for this in the President’s proposed fiscal year 

2009 budget. I think that is a mistake. 

There are benefits to centralization of IT, but centralization has hurt the way VA 

personnel use new technology to take care of our veterans. VA must do all it can 

to preserve and promote the unique talents of its healthcare providers to innovate 

and keep VistA and VA at the forefront of medical care. 

Our veterans have fought for our freedom, and the least we can do is provide adequate resources to ensure they receive the highest quality of care when they become 

veterans. 

f 


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Prepared Statement of Hon. Ginny Brown-Waite, 

Ranking Republican Member, Subcommittee on Oversight and 

Investigations 

Thank you for yielding Mr. Chairman. 

Mr. Chairman, last Thursday, the full Committee reviewed the entire budget for 

the Department of Veterans Affairs for FY 2009. 

Today, we will be focusing on two specific portions of that budget. The funding 

for the Office of the Inspector General (OIG) and the Office of Information and Technology (OI&T), over which this Subcommittee has direct oversight. 

Over the past year, I have found the information reported to our Committee by 

the Office of Inspector General to be immensely useful in providing this Subcommittee with the information needed to conduct our oversight responsibilities. 

For FY 2008, the OIG was provided with sufficient funding to plus up their FTE 

staff to 488, an addition of 48 new staff members. 

I understand that the OIG is in the process of hiring these staff and they are to 

be assigned to several new high profile audits, healthcare inspections, and criminal 

investigations. 

However, I am greatly concerned about the FY 2009 budget request, which reduces the FTE staff by 48. I hope to hear from the IG as to how this reduction in 

staff funding will affect the continuation of the audits already in process, and the 

future oversight investigations conducted by the OIG. 

During this Subcommittee’s January 29 hearing on Patient Safety, I raised concerns about a possible reduction in the budget for the Office of Inspector General. 

As I stated at that hearing, we have an obligation to ensure that the funding for 

the OIG is not only maintained at the FY 2008 levels, but that we work together 

to provide additional funding for FY 2009. 

The IG’s Combined Assessment Program (CAP) reviews perform an unmatchable 

cyclical audit that surveys patient safety, infrastructure safety, management efficiencies and allows VA to keep its finger on the pulse of the VA’s health delivery. 

I was pleased to see that the President has requested a plus up for the Office of 

Information and Technology. I know that the transition to a new centralized IT system has not always been smooth, but under the leadership of General Howard, it 

has moved forward, and I hold high hopes that the kinks, bumps, and turf wars 

along the way will continue to be worked out. VA’s centralized IT infrastructure has 

been a landmark decision that all other departments could only hope for. 

However, I want to make certain that the funding Congress provides to VA for 

its OI&T operations will be managed wisely, without unnecessary expenditures on 

IT systems that are stagnant and not moving forward. We have often heard about 

the problems that plagued systems like the CoreFLS $340 million debacle, and the 

delays in moving off of legacy IT systems. With the centralization of funding to one 

officer, such as Assistant Secretary Howard, I am hopeful that VA can move forward 

on the right track to provide systems that will be serve our Nation’s veterans and 

give the American taxpayer the most bangs for the buck. 

In closing, I would like to again reiterate that I appreciate the Chairman holding 

this hearing, so we can review in more detail the complex nature of each of these 

budget lines in the Department of Veterans Affairs budget, and I yield back the balance of my time. 

f 

Prepared Statement of Jon A. Wooditch, 

Deputy Inspector General, Office of Inspector General, 

U.S. Department of Veterans Affairs 

INTRODUCTION 

Mr. Chairman and Members of the Subcommittee, thank you for the opportunity 

to address the FY 2009 budget for the Office of Inspector General (OIG). Almost a 

year ago on February 15, 2007, we testified before this Committee and discussed 

some of the challenges the OIG faces in providing useful and helpful oversight of 

the Department of Veterans Affairs (VA) to ensure it effectively and economically 

performs its mission of serving our Nation’s veterans. Since then, I am proud to say 

that much has been accomplished, but as we said last year there is still much to 

be done. 

Today, I will highlight some of our accomplishments over the past year, present 

a number of key issues facing VA, and discuss how we would invest budget resources made available to the OIG in addressing some of these issues. With me 

today are the Assistant Inspectors General for Audit, Healthcare Inspections, and 

Investigations who will answer questions about their specific programs. 


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RETURN ON INVESTMENT 

The OIG seeks to help VA become the best-managed service delivery organization 

in government. OIG audits, healthcare inspections, investigations, and Combined 

Assessment Program (CAP) reviews recommend improvements in VA programs and 

operations, and act to deter waste, fraud, abuse, and mismanagement. For 2007, 

OIG funding supported 443 FTE from appropriations. An additional 25 FTE was 

funded under a reimbursable agreement with VA to perform pre-award and postaward contract reviews. During 2007, the OIG exceeded its overall performance 

goals. For example, monetary benefits for the year were $820 million, for a return 

on investment of $12 for every dollar expended. Collectively, the OIG issued a total 

of 217 audit, healthcare inspection, and contract review reports, with over 500 recommendations for corrective action. We also completed 1,181 criminal investigations, which led to 2,061 arrests, indictments, convictions, and administrative sanctions. We also responded to over 19,000 contacts received by the OIG Hotline. 

Examples of some of the more notable accomplishments during 2007 and the first 

part of this year by our Office of Healthcare Inspections included a national report 

on the Veterans Health Administration’s (VHA) mental health strategies for suicide 

prevention, the development of a significant national database to aid in the quantitative assessment of care for Operation Iraqi Freedom/Operation Enduring Freedom (OIF/OEF) veterans transitioning from DoD to VA, and numerous veteran or 

facility-specific issue reports, such as one involving quality of surgical care at the 

Marion, Illinois, VA Medical Center. 

In the area of information security, an OIG administrative investigation found 

that a breakdown in management controls and accountability contributed to the disappearance of a VA-owned external hard drive believed to contain personally identifiable information for over 250,000 veterans and 1.3 million medical providers. Our 

audit on outpatient waiting times identified data integrity problems impacting the 

reliability of reported waiting times by VA. 

OIG criminal investigators arrested 133 fugitive felons, helped gain the conviction 

of a VA pharmacy manager for taking over $100,000 in kickbacks from a vendor, 

and uncovered a VA nurse who had stolen controlled and non-controlled substances 

from a VA medical center for 9 years and conspired with relatives to distribute the 

drugs. 

We appeared before this Subcommittee several times during the past year where 

we testified on the following issues. 

• Longstanding risks and vulnerabilities associated with protecting and safeguarding VA information and information technology systems. 

• Quality management and other facility-specific issues at the Salisbury, 

North Carolina, VA Medical Center. 

• Inappropriate contract modifications at the VA Boston Healthcare System 

that were paid with expired funds in violation of Federal appropriation laws. 

• Continuing concerns with variances in Veterans Benefits Administration disability compensation payments by State. 

• Inaccurate reporting by VHA on outpatient waiting times. 

• VA credentialing and privileging and its impact on patient safety. 

RESOURCE LEVELS 2008 AND 2009 

While we have accomplished much, more remains to be done. For 2008, OIG funding is $80.5 million, which includes $7.9 million in emergency funding authorized 

by the President. This funding supports 488 FTE. We are very appreciative of this 

funding and we already have launched an aggressive recruiting effort to fill these 

positions. For 2009, the budget submitted for the OIG is $76.5 million, which supports 440 FTE. 

The OIG provides independent and objective oversight that addresses mission-critical activities and programs in healthcare delivery, benefits processing, financial 

management, procurement practices, and information management. We plan our 

work in each of these strategic areas, which are aligned with VA’s strategic goals. 

The OIG Major Management Challenges for VA that are presented in the VA annual Performance and Accountability Report are also reported by these strategic 

areas. I would now like to highlight some of the key issues that we will focus on 

this year and in 2009 by strategic goal. 

Health Care Delivery 

Most critical among the many challenges VA faces is transition and quality of 

healthcare for veterans. Due to concerns that the controls currently in place in VHA 

are not functioning correctly to ensure that veterans receive quality healthcare, we 

will review compliance with VA’s new peer review policy. CAP reviews will be exVerDate Aug 31 2005 03:43 Nov 06, 2008 Jkt 041369 PO 00000 Frm 00030 Fmt 6604 Sfmt 6621 E:\HR\OC\41369.XXX 41369

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panded to review credentialing and privileging actions taken at local facilities. In 

addition, we will compare the complexity of clinical activities performed at a facility 

with the facility’s clinical capabilities to ensure proper consideration is given during 

the privileging process so that veterans are not exposed to excessive risk of poor 

clinical outcomes based upon the location where care is provided. 

Veterans who have returned from current conflicts experience two medical traumas with great frequency: Traumatic Brain Injury (TBI) and Post-Traumatic Stress 

Disorder (PTSD). These conditions have an impact that is variably expressed by returning war veterans. We will use data sets like the OIF/OEF database developed 

by the OIG to understand the clinical care provided to this population and the extent of their unmet clinical needs. OIG has reported on the mental health issues 

of this population through individual care reports and through programmatic reviews. Both of these formats will be utilized to evaluate and provide data to improve 

our Nation’s response to those afflicted with TBI and PTSD. 

We will initiate reviews of the care provided by the more than 800 community 

based outpatient clinics (CBOCs) and 200 Vet Centers. For many veterans, especially those in rural areas, CBOCs are their most available point of access to medical care. This population is called upon to either travel some distance for care or 

be reliant upon the fee basis system. It is only through a review of the medical 

needs of the CBOC and Vet Center populations that relevant access to care issues 

can be reviewed. The number of systematic onsite reviews will be based on available 

funding and competing priority work. At CBOCs, the mental healthcare provided 

will be reviewed as a subset of the medical care that is provided. At Vet Centers, 

we will evaluate those activities that are considered within the provision of 

healthcare to ensure that veterans receive the same standard of care that they 

should receive at a primary medical clinic. 

As anesthesia capabilities, imaging, and noninvasive surgical techniques have improved, there is a risk that the disparity between the specialty medical care available at a large VA medical center (VAMC) compared to that available at a smaller 

more rural VAMC will place veterans at increased risk if they are unwilling or unable to travel to a more sophisticated VAMC, or if they are not provided fee basis 

care when the required care is available privately in their local area. We will devote 

attention to this issue through a focused nationwide review. 

VHA research poses inherent challenges. Beyond the obvious fiscal accountability 

issues, VA research must have oversight that keeps it from harming patients or getting in the way of needed treatment. We will continue to consider research a high 

priority issue for oversight. 

We will undertake a national review into aspects of the home based medical care 

that is provided to elderly veterans to ensure that these programs meet the needs 

of veterans. CAP reviews will maintain a focus on the long-term care issues that 

each facility must address and will highlight discrepancies with national policy and 

best practices. 

We will continue to review programs designed to assist those veterans who are 

at great risk because of their homelessness or other lifestyle characteristics by 

building on our reports in the past on homeless veteran care programs, aid and assistance programs, and similar efforts through a national project designed to highlight the impact of these programs. 

Budgeting, planning, and resource allocation in VA are extremely complex, but 

critical components to serving veterans’ healthcare needs. The effectiveness of these 

activities is compounded by continuing uncertainty, from year to year, of the number of patients who will seek care from VA. We will assess the Veterans Equitable 

Resource Allocation system which tracks demand and usage across VA, to ensure 

equitable distribution of resources as veteran demographics and demand change 

over time. Further, accurate information on the demand for care is critical to effectively manage VA’s fee-basis program for providing healthcare outside of VA facilities. 

The Veterans Integrated Service Networks (VISNs) oversee and manage medical 

facilities across the Nation but their effectiveness is questionable when we and the 

Government Accountability Office continue to identify issues in the management 

and administration of VA medical facilities. We will assess the need for VISNs to 

adopt a standard approach for overseeing and administering the direct management 

and support functions within the VISN, such as the Medical Care Collection Fund, 

equipment accountability, and contracting. 

VHA spends a significant amount of its budget on pharmaceuticals and these substances are subject to loss and theft without strong controls and continued OIG 

oversight. In addition to assessing these controls it is important to detect drug diversion because of the possible impact of impaired healthcare professionals on the 

quality of care provided veterans; patients receiving diluted medication and being 


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unable to properly control pain; and physicians who mistakenly believe a patient is 

getting a particular dosage of medication because the chart contains erroneous information intentionally entered by the diverter. With the increasing number of automated tools available to detect drug diversion by VA healthcare professionals, we 

will exploit this technology to proactively detect possible drug diversion instead of 

waiting for allegations to be received. We will also continue to work closely with 

local law enforcement to combat the sale and distribution of contraband drugs on 

or adjacent to VAMC property which undermines the rehabilitation of patients with 

substance abuse problems. 

Benefits Processing 

Large inventories of pending claims for compensation and pension benefits have 

been a problem for many years. Making headway has proven difficult because VA 

faces an increasing disability claims workload from returning OIF/OEF veterans, reopened claims from veterans with chronic progressive conditions, and additional 

claims from an aging veteran population. Controls over processing benefit claims 

and actions are not always effective, leading to delays, errors, and increased potential for improper payments. The complexity of benefits laws, court decisions interpreting those laws, technology issues, workload, and staffing issues contribute to 

VA’s benefit processing problems. VA has been authorized to hire additional claims 

examiners that may help to reduce the backlog, but it will be challenged to recruit, 

train, and incorporate these raters effectively into a productive workforce. Because 

these factors will continue to present VA with major challenges, we will assess the 

timeliness and accuracy of processing disability claims for monetary benefits. In addition to monetary benefit programs, VA also provides rehabilitation, educational, 

and independent living benefits to veterans. We believe these programs will benefit 

from increased oversight, scrutiny, and revision to effectively serve the needs of our 

veterans. 

Financial Management 

VA’s most costly procurement failures involved the development and implementation of information technology (IT) systems intended to provide better visibility and 

oversight of VA programs and operations, including its financial services. As such, 

VA lacks an integrated financial management system to safeguard and account for 

financial operations. We plan to review VA’s efforts to replace existing legacy systems, which do not adequately support preparation of VA’s consolidated financial 

statement (CFS). While our most recent CFS audit reported that key internal controls and reconciliation processes are not performed consistently and completely, it 

did not tell us how this condition affects the Medical Care Collection Fund receivables worth approximately $1 billion. Other key financial activities, such as budget 

formulation and execution, the accuracy and reliability of VA financial, statistical, 

budget, and performance measures and reports, programmatic controls over financial operations, grants management, and debt collection activities also remain a 

daily challenge for VA managers and impact the integrity of information at the facility and program level. We will prioritize and review these as funds are available. 

Procurement Practices 

OIG has three critical roles in evaluating VA’s procurement programs and operations: oversight of procurement practices at VA Central Office and the field to ensure compliance with applicable laws and regulations; investigations to detect and 

prevent illegal activity; and conducting pre-award and post-award reviews of VA’s 

Federal Supply Schedule contracts and contracts for healthcare resources awarded 

by VA medical facilities. 

VA spends over $6 billion annually for supplies, services, construction, and equipment. Systemic problems in planning, defining requirements, and managing acquisitions supporting major system development initiatives along with weaknesses in all 

phases of contract award and administration have impacted VA’s ability to effectively acquire the goods, services, and systems it needs. The OIG continues to identify contracts that do not adequately protect the government’s interest. These contracts result in large dollars losses to VA as well as jeopardizing the success of the 

Department’s programs. We continue to see systemic deficiencies that include the 

lack of effective communication, little or inadequate acquisition planning, poorly 

written statements of work, inadequate competition, and poor contract administration. These deficiencies have led to services being ordered that the customer did not 

want, procurement goals not being satisfied, and VA paying inflated prices. We will 

expand our oversight of these issues, especially with respect to construction, which 

will be reviewed to assess contract and project management to ensure VA receives 

reasonable prices and acceptable performance. 


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It is difficult for VA to effectively manage its contracting activities since it has 

no corporate database that provides national visibility over procurement actions or 

identifies contract awards, individual purchase orders, credit card purchases, or the 

amount of money spent on goods and services. Without this capability, VA does not 

know what it has purchased, from whom, whether it met competition requirements, 

and whether prices paid are fair and reasonable. VA recently began to implement 

a nationwide information system, electronic Contract Management System (eCMS), 

to capture contracting action. We will assess whether VA contracting entities comply 

with related policies and procedures, especially whether the data entered into the 

system is accurate and complete. Although compliance will provide VA with more 

information regarding the number and type of contracts awarded, it will not ensure 

that contracts are in the best interest of the government or compliant with procurement laws and regulations. In addition to assessing the information system needed 

to capture procurement data, we will assess the need for developing metrics and 

standards to monitor and measure acquisition workload, performance, and purchasing throughout VA. 

Information Management 

VA continues to struggle with the need to establish and maintain strong information security controls. The Federal Information Security Management Act (FISMA) 

mandates an annual review of information security management policies and practices. This review has identified systemic issues and resulted in numerous recommendations that will require a significant amount of management attention and 

time. We will continue to follow up on the continuing information security control 

problems identified in our annual FISMA audits. 

A broader concern than IT security is VA’s need to improve its IT governance 

since OMB currently lists numerous VA systems, with a FY 2007 operating budget 

of about $349 million, on its management watch list. Ongoing audit work indicates 

that the number of at-risk systems could be understated because VA needs to improve the accuracy and reliability of its major IT investment information. The multimillion dollar failure of VA’s Core FLS system development underscores the challenges associated with effective IT governance. VA’s current initiatives to implement 

a new financial and logistics management system will also face significant risk of 

cost overruns, performance problems, and delays if VA does not address the lessons 

learned from the Core FLS system development initiative. Finally, VA has faced numerous problems in the protection of personally identifiable information that is subject to privacy laws and regulations, and while VA has issued additional policy guidance to address many of these concerns, we will continue to monitor and report on 

compliance. 

Conclusion 

OIG independent oversight provides VA and Congress with an objective assessment of the important issues and challenges facing VA in delivering benefits and 

services to veterans. In closing, I would like to add that we will always focus available resources on the most urgent issues. However, OIG oversight of issues such as 

large data loss cases and those at the Marion VAMC are examples of reactive work 

that were not planned for. These reviews are very labor intensive and require us 

to postpone or cancel other planned or ongoing priority work. 

OIG oversight is not only a sound fiscal investment; it is an investment in good 

government. While I truly believe we have added value to VA, I also believe that 

we have only scratched the surface on what we can accomplish. VA is faced with 

evolving challenges. If the OIG is to remain an agent of positive change, we must 

be able to increase our level of oversight. To accomplish this, resource levels need 

to be commensurate with this challenge. 

Thank you again for the opportunity to appear before this Committee. We would 

be pleased to answer your questions. 

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Prepared Statement of Valerie C. Melvin, 

Director, Human Capital and Management Information Systems Issues, 

U.S. Government Accountability Office 

INFORMATION TECHNOLOGY 

A Has Taken Important Steps to Centralize Control of Its Resources, but 

Effectiveness Depends on Additional Planned Actions 

Why GAO Did This Study 

The use of information technology (IT) is crucial to the Department of Veterans 

Affairs’ (VA) mission to promote the health, welfare, and dignity of all veterans in 

recognition of their service to the Nation. In this regard, the department’s fiscal 

year 2009 budget proposal includes about $2.4 billion to support IT development, 

operations, and maintenance. VA has, however, experienced challenges in managing 

its IT projects and initiatives, including cost overruns, schedule slippages, and performance problems. In an effort to confront these challenges, the department is undertaking a realignment to centralize its IT management structure. 

This testimony summarizes the department’s actions to realign its management 

structure to provide greater authority and accountability over its IT budget and resources and the impact of these actions to date. 

In developing this testimony, GAO reviewed previous work on the department’s 

realignment and related budget issues, analyzed pertinent documentation, and 

interviewed VA officials to determine the current status and impact of the department’s efforts to centralize the management of its IT budget and operations. 

What GAO Found 

As part of its IT realignment, VA has taken important steps toward a more disciplined approach to ensuring oversight of and accountability for the department’s 

IT budget and resources. For example, the department’s chief information officer 

(CIO) now has responsibility for ensuring that there are controls over the budget 

and for overseeing all capital planning and execution, and has designated leadership 

to assist in overseeing functions such as portfolio management and IT operations. 

In addition, the department has established and activated three governance boards 

to facilitate budget oversight and management of its investments. Further, VA has 

approved an IT strategic plan that aligns with priorities identified in the department’s strategic plan and has provided multi-year budget guidance to achieve a 

more disciplined approach for future budget formulation and execution. 

While these steps are critical to establishing control of the department’s IT, it remains too early to assess their overall impact because most of the actions taken 

have only recently become operational or have not been fully implemented. Thus, 

their effectiveness in ensuring accountability for the resources and budget has not 

yet been clearly established. For example, according to Office of Information and 

Technology officials, the governance boards’ first involvement in budget oversight 

only recently began (in May 2007) with activities to date focused primarily on formulation of the fiscal year 2009 budget and on execution of the fiscal year 2008 

budget. Thus, none of the boards has yet been involved in all aspects of the budget 

formulation and execution processes and, as a result, their ability to help ensure 

overall accountability for the department’s IT appropriations has not yet been fully 

established. In addition, because the multi-year programming guidance is applicable 

to future budgets (for fiscal years 2010 through 2012), it is too early to determine 

VA’s effectiveness in implementing this guidance. Further, VA is in the initial 

stages of developing management processes that are critical to centralizing its control over the budget. However, while the department had originally stated that the 

processes would be implemented by July 2008, it now indicates that implementation 

across the department will not be completed until at least 2011. Until VA fully institutes its oversight measures and management processes, it risks not realizing their 

contributions to, and impact on, improved IT oversight and accountability within the 

department. 

Abbreviations 

CIO—chief information officer 

IT—information technology 

VA—Department of Veterans Affairs 

Mr. Chairman and Members of the Subcommittee: 

Thank you for inviting me to participate in today’s hearing on the Department 

of Veterans Affairs’ (VA) fiscal year 2009 information technology (IT) budget. As you 


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1Department of Veterans Affairs, Information and Technology Strategic Plan FY 2006–2011 

(Washington, D.C.: Dec. 2007). 

know, the use of IT is crucial to helping VA effectively serve our Nation’s veterans, 

with the department’s just-released budget proposal including approximately $2.4 

billion to support IT development, operations, and maintenance. However, as we 

have previously reported, VA has experienced challenges in managing its IT projects 

and initiatives, including cost overruns, schedule slippages, and performance problems. To address these challenges, in October 2005, the department initiated a realignment of its IT program to provide greater authority and accountability over its 

resources. In undertaking this realignment, the department’s goals were to centralize IT management under the department-level chief information officer (CIO) 

and to standardize budgets, operations, and the development of systems through the 

use of new management processes based on industry best practices. 

At your request, my testimony today summarizes VA’s actions as part of the realignment and the impact of those actions to date in providing greater authority and 

accountability over the department’s IT resources and budget. In developing this 

testimony, we reviewed our previous work on the department’s realignment and related budget issues. We also obtained and analyzed pertinent documentation and 

supplemented our analysis with interviews of responsible VA officials to determine 

the current status and impact of the department’s efforts to centralize the management of its IT budget and operations. We conducted our work in support of this testimony from January 2008 to February 2008 in the Washington, D.C., area. All 

work on which this testimony is based was conducted in accordance with generally 

accepted government auditing standards. 

Results in Brief 

As part of its IT realignment, VA has taken important steps toward a more disciplined approach to ensuring oversight of and accountability for the department’s 

IT budget and resources. For example, to establish controls, the CIO has designated 

necessary leadership to be responsible for developing the department’s annual IT 

budget and for tracking actual expenditures against the budget. In addition, the department has established and activated three governance boards to facilitate budget 

oversight and the management of its investments. Further, VA has approved an IT 

strategic plan 1 that aligns with priorities identified in the department’s strategic 

plan, and has provided multi-year budget guidance to achieve a more disciplined approach for future budget formulation and execution. Beyond these actions, VA is in 

the initial stages of implementing new management processes that are critical to 

centralizing its control over the IT resources and budget. 

While these steps are critical to establishing control of the department’s IT, it remains too early to assess their overall impact because most of the actions taken 

have only recently become operational or have not yet been fully implemented. 

Thus, their effectiveness in ensuring accountability for the resources and budget has 

not yet been clearly established. For example, according to Office of Information and 

Technology officials, the governance boards’ first involvement in budget oversight 

only recently began in May 2007, with their activities to date focused primarily on 

formulation of the fiscal year 2009 budget and execution of the fiscal year 2008 

budget. However, none of the boards has yet been involved in all stages of the budget formulation and execution processes and, as such, their effectiveness in helping 

to ensure overall accountability for the department’s IT budget and resources has 

not yet been fully established. In addition, because the multi-year programming 

guidance is applicable to future budgets (for fiscal years 2010 through 2012), it is 

too early to determine VA’s effectiveness in implementing this guidance and its impact on improved oversight and accountability. Further, while the department has 

initiated its development of management processes that are critical to centralizing 

its control over the IT budget, the date by which it had planned to complete the 

implementation of these processes across the department has slipped from July 

2008 to at least fiscal year 2011. Until VA fully institutes its oversight measures 

and management processes, it risks not realizing their contributions to, and impact 

on, improved IT oversight and accountability within the department. 

Background 

VA’s mission is to promote the health, welfare, and dignity of all veterans in recognition of their service to the Nation by ensuring that they receive medical care, 

benefits, social support, and lasting memorials. Over time, the use of IT has become 

increasingly crucial to the department’s efforts to provide such benefits and services. 

For example, the department relies on its systems for medical information and 


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2GAO, Veterans Affairs: Continued Focus on Critical Success Factors Is Essential to Achieving 

Information Technology Realignment, GAO–07–844 (Washington, D.C.: June 15, 2007); GAO, 

Veterans Affairs: Progress Made in Centralizing Information Technology Management, but Challenges Persist, GAO–07–1246T (Washington, D.C.: Sept. 19, 2007); GAO, Veterans Affairs: The 

Role of the Chief Information Officer in Effectively Managing Information Technology, GAO–06– 

201T (Washington, D.C.: Oct. 20, 2005); GAO, Veterans Affairs: The Critical Role of the Chief 

Information Officer in Effective Information Technology Management, GAO–05–1017T (Washington, D.C.: Sept. 14, 2005); GAO, VA Information Technology: Management Making Important 

Progress in Addressing Key Challenges, GAO–02–1054T (Washington, D.C.: Sept. 26, 2002); 

GAO, VA Information Technology: Important Initiatives Begun, Yet Serious Vulnerabilities Persist, GAO–01–550T (Washington, D.C.: April 4, 2001); GAO, VA Information Technology: Improvements Needed to Implement Legislative Reforms, GAO/AIMD–98–154 (Washington, D.C.; 

July 7, 1998). 3The One VA vision is to create versatile new ways for veterans to obtain services and information by streamlining interactions with customers and integrating IT resources to enable VA 

employees to help customers more quickly and effectively. 4GAO–07–844. 

5Gartner Consulting, One VA IT Organizational Alignment Assessment Project ‘‘As-Is’’ Baseline 

(McLean, Virginia; Feb. 18, 2005). 6Department of Veterans Affairs Office of Information and Technology VA IT Governance 

Plan, (March 12, 2007). 7GAO–07–844. 

records for veterans, as well as for processing benefit claims, including compensation and pension and education benefits. 

In reporting on VA’s IT management over the past several years,2 we have highlighted challenges that the department has faced in achieving its ‘‘One VA’’ vision,3

including that information systems and services were highly decentralized and that 

its administrations controlled a majority of the IT budget. For example, we noted 

that, according to an October 2005 memorandum from the former CIO to the Secretary of Veterans Affairs, the CIO had direct control over only 3 percent of the department’s IT budget and 6 percent of the department’s IT personnel. In addition, 

in the department’s fiscal year 2006 IT budget request, the Veterans Health Administration was identified to receive 88 percent of the requested funding, while the department was identified to receive only 4 percent. We have previously pointed out 

that, given the department’s large IT funding and decentralized management structure, it was crucial for the CIO to ensure that well-established and integrated processes for leading, managing, and controlling investments were followed throughout 

the department.4

Further, a contractor’s assessment of VA’s IT organizational alignment, issued in 

February 2005, noted the lack of control for how and when money is spent.5 The 

assessment found that project managers within the administrations were able to 

shift money as they wanted to build and operate individual projects. In addition, according to the assessment, the focus of department-level management was only on 

reporting expenditures to the Office of Management and Budget and Congress, rather than on managing these expenditures within the department. 

VA Establishes Centralized Management Structure to Improve IT Accountability 

The department officially began its initiative to provide the CIO with greater authority over the department’s IT in October 2005. At that time, the Secretary of Veterans Affairs issued an executive decision memorandum that granted approval for 

the development of a new centralized management structure for the department. According to VA, its goals in moving to centralized management included having better overall fiscal discipline over the budget. 

In February 2007, the Secretary approved the department’s new management 

structure. In this new structure, the Assistant Secretary for Information and Technology serves as VA’s CIO and is supported by a Principal Deputy Assistant Secretary and five Deputy Assistant Secretaries—Senior leadership positions created to 

assist the CIO in overseeing functions such as Cyber Security, IT portfolio management, and systems development and operations. In April 2007, the Secretary approved a governance plan 6 that is intended to enable the Office of Information and 

Technology, under the leadership of the CIO, to centralize its decisionmaking. The 

plan describes the relationship between IT and departmental governance and the 

approach the department intends to take to enhance governance and realize more 

cost-effective use of IT resources and assets. The department also made permanent 

the transfer of its entire IT workforce under the CIO, consisting of approximately 

6,000 personnel from the administrations. 

In June 2007,7 we reported on the department’s plans for realigning the management of its IT program and establishing centralized control of its IT budget within 


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8GAO–07–844. 

92 GAO–07–1264T. 

10 40 U.S.C. §§ 11311–11313. 11This board, which became operational in May 2007, is chaired by the Principal Deputy Assistant Secretary and membership consists of high ranking officials from the Veterans Health 

Administration, the Veterans Benefits Administration, the National Cemetery Administration, 

staff offices, and the deputy assistant secretaries in the Office of Information and Technology. 12This board, which became operational in June 2007, is chaired by the Acting Deputy Assistant Secretary for Enterprise, Strategy, Policy, Plans and Programs and its membership includes 

high-ranking officials from the Veterans Benefits Administration, the Veterans Health Administration, the National Cemetery Administration, and high-ranking officials from the offices of finance, budget, and human resources management. 13This board, which became operational in June 2007, is chaired by the Assistant Secretary 

for Information and Technology and its members include undersecretaries for Health, Benefits, 

and Memorial Affairs, the Assistant Secretary for Management, and the Executive in Charge 

of Human Resources and Administration. 14 VA IT Governance Plan. 

the Office of Information and Technology. We pointed out that the department’s realignment plans included elements of several factors that we identified as critical 

to a successful transition, but that additional actions could increase assurance that 

the realignment would be completed successfully. Specifically, we reported that the 

department had ensured commitment from its top leadership and that, among other 

critical actions, it was establishing a governance structure to manage resources. 

However, at that time, VA had not updated its strategic plan to reflect the new organization. In addition, we noted that the department had planned to take action 

by July 2008 to create the necessary management processes to realize a centralized 

IT management structure.8 In testimony before the House Veterans’ Affairs Committee last September, however, we pointed out that the department had not kept 

pace with its schedule for implementing the new management processes.9

Important Steps Taken to Centralize Control of IT Resources but Their 

Effectiveness Will Depend on Additional Planned Actions 

As part of its IT realignment, VA has taken important steps toward a more disciplined approach to ensuring oversight of and accountability for the department’s 

IT budget and resources. Within the new centralized management structure, the 

CIO is responsible for ensuring that there are adequate controls over the department’s IT budget and for overseeing capital planning and execution. These responsibilities are consistent with the Clinger-Cohen Act 1996,10 which requires federal 

agencies to develop processes for the selection, control, and evaluation of major systems initiatives. In this regard, the department has (1) designated organizations 

with specific roles and responsibilities for controlling the budget to report directly 

to the CIO; (2) implemented an IT governance structure that assigns budget oversight responsibilities to specific governance boards; (3) finalized an IT strategic plan 

to guide, manage, and implement its operations and investments; (4) completed 

multi-year budget guidance to improve management of its IT; and (5) initiated the 

implementation of critical management processes. However, while VA has taken 

these important steps toward establishing control of the department’s IT, it remains 

too early to assess their overall impact because most of the actions taken have only 

recently become operational or have not yet been fully implemented. Thus, their effectiveness in ensuring accountability for the resources and budget has not yet been 

clearly established. 

As one important step, two deputy assistant secretaries under the CIO have been 

assigned responsibility for managing and controlling different aspects of the IT 

budget. Specifically, the Deputy Assistant Secretary for Information Technology Enterprise Strategy, Policy, Plans, and Programs is responsible for development of the 

budget and the Deputy Assistant Secretary for Information Technology Resource 

Management is responsible for overseeing budget execution, which includes tracking 

actual expenditures against the budget. Initially, the deputy assistant secretaries 

have served as a conduit for information to be used by the governance boards. 

As a second step, the department has established and activated three governance 

boards to facilitate budget oversight and management of its investments. The Business Needs and Investment Board;11 the Planning, Architecture, Technology and 

Services Board;12 and the Information Technology Leadership Board13 have begun 

providing oversight to ensure that investments align with the department’s strategic 

plan and that business and budget requirements for ongoing and new initiatives 

meet user demands.14 One of the main functions of the boards is to designate funding according to the needs and requirements of the administrations and staff offices. 


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15The OMB Exhibit 300, also called the Capital Asset Plan and Business Case, is a document 

that agencies must submit to OMB to justify resource request for major IT investments. The 

Exhibit 300 contains information such as an investment’s historical and future costs, performance measures and goals, cost-benefits analysis, acquisition strategy, risk assessment, and security issues. 

Each board meets monthly, and sometimes more frequently, as the need arises during the budget development phase. 

The first involvement of the boards in VA’s budget process began with their participation in formulating the fiscal year 2009 budget. As part of the budget formulation process, in May 2007 the Business Needs and Investment Board conducted its 

first meeting in which it evaluated the list of business projects being proposed in 

the budget using the department’s Exhibit 300s15 for fiscal year 2009, and made departmentwide allocation recommendations. Then in June, these recommendations 

were passed on to the Planning, Architecture, Technology, and Services Board, 

which proposed a new structure for the fiscal year 2009 budget request. The recommended structure was to provide visibility to important initiatives and enable 

better communication of performance results and outcomes. In late June, based on 

input from the aforementioned boards, the Information Technology Leadership 

Board made recommendations to department decisionmakers for funding the major 

categories of IT projects. In July 2007, following its work on the fiscal year 2009 

budget formulation, the boards then began monitoring fiscal year 2008 budget execution. 

However, according to Office of Information and Technology officials, with the governance boards’ first involvement in budget oversight having only recently begun (in 

May 2007), and with their activities to date being primarily focused on formulation 

of the fiscal year 2009 budget and execution of the fiscal year 2008 budget, none 

of the boards has yet been involved in all stages of the budget formulation and execution processes. Thus, they have not yet fully established their effectiveness in 

helping to ensure overall accountability for the department’s IT appropriations. In 

addition, the Office of Information and Technology has not yet standardized the criteria that the boards are to use in reviewing, selecting, and assessing investments. 

The criteria is planned to be completed by the end of fiscal year 2008 and to be used 

as part of the fiscal year 2010 budget discussions. 

Office of Information and Technology officials stated that, in response to operational experience with the 2009 budget formulation and 2008 budget execution, the 

department plans to further enhance the governance structure. For example, the Office of Information and Technology found that the boards’ responsibilities needed to 

be more clearly defined in the IT governance plan to avoid confusion in roles. That 

is, one board (the Business Needs and Investment Board) was involved in the budget formulation for fiscal year 2009, but budget formulation is also the responsibility 

of the Deputy Assistant Secretary for Information Technology Resource Management, who is not a member of this board. According to the Principal Deputy Assistant Secretary for Information and Technology, the department is planning to update 

its governance plan by September 2008 to include more specificity on the role of the 

governance boards in the department’s budget formulation process. Such an update 

could further improve the structure’s effectiveness. In addition, as part of improving 

the governance strategy, the department has set targets by which the Planning, Architecture, Technology, and Services Board is to review and make department-wide 

recommendations for VA’s portfolio of investments. These targets call for the board 

to review major IT projects included in the fiscal year budgets. For example, the 

board is expected to review 10 percent for fiscal year 2008, 50 percent for fiscal year 

2009, and 100 percent for fiscal year 2011. 

As a third step in establishing oversight, in December 2007, VA finalized an IT 

strategic plan to guide, manage, and implement its operations and investments. 

This plan (for fiscal years 2006–2011) aligns Office of Information and Technology 

goals, priorities, and initiatives with the priorities of the Secretary of Veterans Affairs, as identified in the VA strategic plan for fiscal years 2006–2011. In addition, 

within the plan, the IT strategic goals are aligned with the CIO’s IT priorities, as 

well as with specific initiatives and performance measures. This alignment frames 

the outcomes that IT executives and managers are expected to meet when delivering 

services and solutions to veterans and their dependents. Further, the plan includes 

a performance accountability matrix that highlights the alignment of the goals, priorities, initiatives, and performance measures, and an expanded version of the matrix designates specific entities within the Office of Information and Technology who 

are accountable for implementation of each initiative. The matrix also establishes 


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16The matrix uses fiscal year 2007 as the baseline and lists targets for fiscal years 2008 and 

2011. 17GAO, Results-Oriented Cultures: Implementation Steps to Assist Mergers and Organizational 

Transformations, GAO–03–669 (Washington, D.C.: July 2003). 

goals and timelines through fiscal year 2011,16 which should enable VA to track 

progress and suggest midcourse corrections and sustain progress toward the realignment. As we previously reported, it is essential to establish and track implementation goals and establish a timeline to pinpoint performance shortfalls and gaps and 

suggest midcourse corrections.17

As a fourth step, the department has completed multi-year budget guidance to improve management of its IT portfolio. In December 2007, the CIO disseminated this 

guidance for the fiscal years 2010 through 2012 budgets. The purpose of the guidance is to provide general direction for proposing comprehensive multi-year IT planning proposals for centralized review and action. The process called for project managers to submit standardized concept papers and other review documentation in December 2007 for review in the January to March 2008 timeframe, to decide which 

projects will be included in the fiscal year 2010 portfolio of IT projects. The new 

process is to add rigor and uniformity to the department’s investment approach and 

allow the investments to be consistently evaluated for alignment with the department’s strategic planning and priorities and the enterprise architecture. According 

to VA officials, this planning approach is expected to allow for reviewing proposals 

across the department and for identifying opportunities to maximize investments in 

IT. 

Nevertheless, although the multi-year programming guidance holds promise for 

obtaining better information for portfolio management, the guidance has not been 

fully implemented because it is applicable to future budgets (for fiscal years 2010 

through 2012). As a result, it is too early to determine VA’s effectiveness in implementing this guidance, and ultimately, its impact on the department’s IT portfolio 

management. 

Finally, the department has begun developing new management processes to establish the CIO’s control over the IT budget. The department’s December 2007 IT 

strategic plan identifies three processes as high priorities for establishing the foundation of the budget functions: project management, portfolio management, and 

service level agreements. 

However, while the department had originally stated that its new management 

processes would be implemented by July 2008, the IT strategic plan indicates that 

key elements of these processes are not expected to be completed until at least fiscal 

year 2011. Specifically, the plan states that the project and portfolio management 

processes are to be completed by fiscal year 2011, and does not assign a completion 

date for the service level agreement process. As our previous report noted, it is crucial for the CIO to ensure that well-established and integrated processes are in 

place for leading, managing, and controlling VA’s IT resources. The absence of such 

processes increases the risk to the department’s ability to achieve a solid and sustainable management structure that ensures effective IT accountability and oversight. 

Appendix I provides a timeline of the various actions that the department has undertaken and planned for the realignment. 

In summary, while the department has made progress with implementing its centralized IT management approach, effective completion of its realignment and implementation of its improved processes is essential to ensuring that VA has a solid and 

sustainable approach to managing its IT investments. Because most of the actions 

taken by VA have only recently become operational, it is too early to assess their 

overall impact. Until the department carries out its plans to add rigor and uniformity to its investment approach and establishes a comprehensive set of improved 

management processes, the department may not achieve a sustainable and effective 

approach to managing its IT investments. 

Mr. Chairman and members of the Subcommittee, this concludes my statement. 

I would be pleased to respond to any questions that you may have at this time. 

Contacts and Acknowledgments 

For more information about this testimony, please contact Valerie C. Melvin at 

(202) 512–6304 or by e-mail at melvinv@gao.gov. Key contributors to this testimony 

were Barbara Oliver, Assistant Director, Nancy Glover, David Hong, Scott Pettis, 

and J. Michael Resser. 


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Appendix I: Timeline of Key VA Activities 

f 

Prepared Statement of Hon. Robert T. Howard 

Assistant Secretary for Information and Technology and Chief Information 

Officer, Office of Information and Technology, 

U.S. Department of Veterans Affairs 

Chairman Harry Mitchell and Ranking Member Ginny Brown-Waite, good afternoon. Thank you for your invitation to discuss the President’s Fiscal Year (FY) 2009 

Information Technology (IT) budget proposal for the Department of Veterans Affairs 

(VA). As we look forward to the upcoming year, we remain focused on VA’s primary 

mission-the health and well-being of our Nation’s veterans. To ensure that we succeed in our mission, it is imperative that we employ all of our resources, including 

information technology, in the most effective way possible. 

Let me begin this afternoon by recapping the major aspects of the IT reorganization and highlights of our experience to date. Through FY 2006 to FY 2007, OI&T 

began the transition to a new organization the detailing of 5,010 IT personnel and 

combining them with the original staff of 519 personnel. And in FY 2008, OI&T has 

the budget authority to consolidate all IT development of 1,151 FTE, along with operations and maintenance personnel of 5,535 FTE for our total staffing level of 

6,686. 

We have been operating under this new organization for about a year and continue to learn a lot about what it takes to provide effective and efficient IT support 

to an organization the size and complexity of the VA. As we move forward, we will 

continue to buildupon our successes; however, we remain aware that our work is 

far from complete. As a result of the clarity we have been able to bring to the management of IT through the consolidation, we are discovering activities that need to 

be improved and enhanced from an overall management stand point. This is especially true in the area of data security and infrastructure improvements. For example we have increased our emphasis on certification and accreditation and are developing better procedures for asset management. Progress is being made but, there 

is still much to be done in establishing the organization and providing the IT support that VA and veterans deserve. 

Working with our new centralized organization has certainly been a challenge for 

all of us, but the other critical change we are dealing with is the new IT appropriation which was established in 2006. In that regard we continue to focus our efforts 

in structuring and funding the IT appropriation along programmatic lines—relating 

IT to the principal missions of the VA. Since this is a line item appropriation, prior 

planning is critically important and getting the funding right up front is essential. 

As you are aware, VA is requesting $2.442 billion to support IT development, operations, and maintenance expenses including payroll for FY 2009, an 18.9-percent 

increase over the FY 2008 level. This request reflects the consolidation of VA IT into 

one appropriation, with certain exceptions such as non-payroll IT for credit reform 

programs and insurance benefits programs. In FY 2009, the majority of increases 


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represent program priorities to enhance the support to veterans both directly and 

indirectly—especially in the area of medical care. 

The move toward a centralized IT Management System has been challenging, but 

it has also served to reinvigorate IT capability within VA. Placing all IT staffing, 

equipment, and budgetary resources under the VA Chief Information Officer (CIO) 

has provided an objective capability with visibility over all IT activities across the 

Department. This capability will also provide for a more standardized approach to 

our critical developmental efforts. Of critical urgency is accelerating the design and 

implementation of electronic health records which meet the national health IT 

standards and are interoperable with the Department of Defense (DoD), helping to 

streamline the benefits claims processing through improved IT support so claims 

may be adjudicated timely and efficiently, and ensuring portable IT equipment for 

benefit counselors traveling to DoD sites is encrypted and servicemembers’ privacy 

is protected. 

The non-pay portion of the FY 2009 budget has been realigned from previous submissions to delineate veteran strategic issues into two major classifications—veteran facing IT systems and internal facing IT systems. This has been done to 

better link the appropriation to the mission of VA. Veteran facing IT systems enable support of VA programs for veterans, such as, providing medical care, delivering compensation benefits, providing pension benefits, enhancing education opportunities, delivering vocational rehabilitation and employment services, promoting 

home ownership, providing insurance service, and delivering burial service. Veteran 

facing program account for $1.295 billion of our request (The payroll portion of that 

budget is $729.2 million). Internal facing IT systems are those that provide the 

capability to work more effectively in managing IT resources—such as corporate 

management, financial resources management, asset management, human capital 

management, IT infrastructure, and Information Protection. Internal facing program budget totals $418 million. 

These amounts reflect a sizable increase over FY 2008 which will obviously be 

very helpful in the improvement of IT support to VA. Over the past several years 

VA IT has had a fairly level budget, yet at the same time, the organizations we have 

to support, have been increasing in size; especially, in terms of facilities and people. 

And, as you well know, whenever you do that, you have to apply the necessary IT 

talent and tools to those activities. The increase has allowed us to provide the needed funding to accelerate such programs and at least keep most of them on track. 

Highlights are provided below. 

Veteran Facing Medical Programs 

Veterans Health Information Systems and Technology Architecture (VistA) 

Application Development 

VistA Application Development consists of the enhancement and development activities that support the movement of the existing MUMPS-based applications from 

the ‘‘as-is’’ into the ‘‘to-be’’ VistA architecture, new data structures, and desired capabilities (MUMPS is an acronym for Massachusetts General Hospital Utility MultiProgramming System.). Vista Application Development, in conjunction with VistA 

Foundations Modernization, will take the necessary steps toward building VA’s next 

generation healthcare information system. 

VistA Foundations Modernization 

Another extremely important developmental program in the medical area is the 

modernization of VA’s world class Electronic Health Record. For the past two and 

a half years, VA has been working hard to support the President’s vision to have 

electronic health record capability for most Americans by 2014, and to implement 

the associated Executive Order. For example, VA and the Department of Defense 

(DoD) have partnered on state-of-the-art software applications, including 

Bidirectional Health Information Exchange (BHIE) and Health Data Repository 

(CHDR). These applications allow VA and DoD to exchange health data for veterans 

including injured servicemembers as they move from DoD treatment facilities to VA 

healthcare facilities for continued treatment. This allows VA to care for all veterans, 

including seriously injured servicemembers more efficiently, effectively and safely. 

VistA Foundations Modernization is the capital investment that provides the architecture and foundational elements of Vista HealtheVet that support the delivery 

of the re-hosted/reengineered applications. In the FY 2009 Deployment Toolkit, 

Business Rules Engine and Workflow Engine will be delivered along with new testing services capabilities. Standardization activities in support of VA/DoD sharing 


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will continue as well as ongoing work to establish a common architecture to eliminate redundancies in coding, support common terminology sources between applications, and promote software and data use. 

Scheduling Replacement 

The goals of the Scheduling Replacement project are to improve access to care for 

veterans, decrease wait times for appointments, and increase provider availability. 

The first version will be placed in production at the VA Medical Center in 

Muskogee, Oklahoma during June 2008. Several activities will occur during FY 

2009 to prepare Scheduling for national deployment. Activities include improvements to the application identified by the initial installations, acquisition of the 

hardware and software needed to operate the application at the deployment sites, 

and the launching of a national training campaign. In FY 2011, VA anticipates the 

completion of the national rollout to all VA sites. 

VistA Laboratory Information Systems (IS) Re-engineering 

The Laboratory System Reengineering project will provide VA with a modernized 

Laboratory Information Management System that supports the business processes 

of the Pathology and Laboratory Medicine Services. In FY 2009 the system will undergo independent verification and validation and field tests. The FY 2009, increase 

in funding is to acquire 20 percent of the equipment needed for the deployment. National deployment will begin in FY 2010, and will be phased over five years. 

Health Data Repository 

The Health Data Repository (HDR) is a repository of clinical information, normally residing on one or more independent computer systems, for use by clinicians 

and other personnel in support of patient centric care. Deliverables for FY 2008, include the addition of laboratory data, related to chemistry and hematology to HDR 

and CDR. Upon completion, this additional lab data will be exchanged with DoD 

on shared patients, as well as, all VA medical facilities. Deliverables also include 

the deployment of the new HDR National v2 that replaces two applications (HDR 

National v1 and Clinical Data Service) and provides a more robust system. National 

rollout for the final HDR solution is projected to begin in FY 2009. 

MyHealtheVet 

One of our real success stories is the application called ‘‘MyHeatheVet’’ (MHV). 

In FY 2007, MHV which is funded in FY09 at $18.4 million, stabilized its platform, 

increased its total number of prescriptions refilled online to over 2.8 million, and 

supported the increase in the number of MHV accounts to over 400,000. Nearly 

20,000 veterans have already made the trip to VA medical centers for in-person authentication, a prerequisite for a veteran accessing their VistA information online. 

In fiscal years 2008 and 2009, veterans will be able to request and store copies 

of key portions of their VA electronic health record in their MHV personal eVAult, 

along with their self-entered health information and health assessments. Veterans 

will be able to record medical events, medications, over the counter (OTC) medications and herbals, and tests. They will also be able to track vitals and health readings (e.g., blood pressure, blood sugar, weight, and pain level) and graph results, 

alongside any readings or lab test results from VA care. Veterans can also keep 

health journals (e.g., activity and food journals) and record health histories (family, 

self and military health histories), view upcoming appointments, get health reminders, and benefit from increasing mental health information and tools. MHV will 

stand up an architecture, that is ready to support the continued increase of veterans 

seeking the 24/7 access to VA information and services from anywhere, and veterans 

will also benefit from better communications and information sharing with their 

healthcare providers. 

Pharmacy Reengineering 

The pharmacy suite of applications is undergoing modernization to improve service and safety to veterans and to better support the current and future VA business 

needs. The project scope is to replace current pharmacy software modules with new 

technology through reengineering, new development, and purchase of commercial 

products. Plans are to deploy enhanced order checks in FY 2009, which will improve 

patient safety standards by reducing adverse drug events by 50 percent, with enhanced item management functionality to follow. 

Enrollment Enhancements 

Enrollment System Redesign (ESR), scheduled for deployment in June 2008, will 

replace Enrollment’s Health Eligibility Center (HEC) Legacy system. The first in a 

series of enhancements will produce a workflow component to create, assign, view, 


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track and complete work items. It also provides for changes to VistA in order to support the technology and business changes that will occur with the implementation 

of ESR. The capabilities that are the focus in FY 2009 are the introduction of selfservice functions to reduce application processing time, access of DoD military service data and existing benefits claim information to place the eligibility burden of 

proof on VA rather than the veteran, and productivity improvements in the area of 

veteran financial assessments and income verification. 

VistA Legacy 

As we continue our modernization efforts, we must maintain our current legacy 

system—called VistA. This system will need to remain operational for the foreseeable future as new applications are developed and implemented. This approach will 

mitigate transition and migration risks associated with the move to the new architecture. Our budget provides $99 million in 2009 in this account. 

Veteran Facing Benefits Programs—IT Support for Compensation and Pension 

Information and technology investments over the past several years and those 

planned for the future will enable new technologies to be used to facilitate processing of veterans claims and for providing the vast number of benefits to veterans 

and their families. The majority of development in new technology includes the enhancement of the compensation components of VETSNET, development of the Virtual VA imaging solution for compensation and pension, and operation of the program integrity and data management program. The Benefits Delivery Network 

(BDN) will continue to be sustained until all programs, utilizing its shared components, are replaced. The retirement for the BDN platform is projected in early 2012. 

Highlights of the Veteran Facing Benefits programs are provided below. 

VETSNET 

VETSNET is the replacement system for Compensation and Pension functions of 

the legacy Benefits Delivery Network (BDN). It is a custom built suite of applications designed to support end-to-end Compensation and Pension claims processing, 

currently supporting C&P claims processing operations nationwide. A key benefit of 

VETSNET is the migration of compensation and pension benefit payments to a modernized, stable platform. Over 42 million compensation and pension payments are 

made annually from BDN, which was designed and built in the late sixties. Legacy 

record conversions, necessary for the payment of existing and compensation and 

pension beneficiaries, have begun and will be completed by July 2009—a major 

milestone for VA. Thus far in fiscal year ’08, over 96 percent of new compensation 

claims have been completed in VETSNET, versus 5 percent in fiscal year 2006. As 

of the end of January 2008, over 863,000 are receiving their monthly compensation 

payments via VETSNET. This includes over 613,000 records converted from the 

BDN in FY 06 and FY 07. Over one billion dollars in C&P benefit payments have 

been made through VETSNET during FY 08. 

Virtual VA 

Virtual VA is web-based document and electronic claims-folder repository, and is 

the cornerstone of our Paperless Delivery of Veterans Benefits initiative. Planned 

FY 2008 activities include maintenance of the existing application functionality and 

planning for migration to a centralized infrastructure. Expansion of existing pilot 

efforts in support of compensation and pension claims processing will also be targeted for FY 2008, along with a development of a comprehensive strategy for full 

development of the Paperless initiative. Significant execution of the comprehensive 

plan will carry into FY 09, and will include integration with the C&P claims processing system, VETSNET. 

IT Support for Education, Vocational Rehabilitation and Employment, 

Housing, and Insurance 

Education opportunities, rehabilitation and employment services, life insurance, 

and the housing program are provided to eligible veterans and their dependents. 

These programs rely on supporting IT systems to ensure benefits and services are 

provided timely and consistently and support staff engaged in ensuring delivery of 

checks, electronic transfers and other related materials are as routine as clockwork. 

BDN supports compensation and pension, as well as education and vocational rehabilitation and employment. 

The Education Program IT Support development costs represent 2.2 percent of the 

total development costs for veteran facing IT systems. During FY 2009, new technology efforts will begin the development of a rules based infrastructure, which 

when completed, will facilitate the adjudication of Chapters 30, 32, 35, 1606, and 


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1607 benefits. At full completion, it is planned that VA will automatically process 

the majority of claims, received electronically, by applying benefit-specific business 

rules and issuing payment for all claims. 

Vocational Rehabilitation Program IT Support development costs represent less 

than 1.0 percent of the total development costs for veteran facing IT systems. C– 

WINRS is VR&E’s system of workflow management, control, and reporting. At full 

implementation, C–WINRS will replace BDN in Chapter 31 claims processing. Beneficiary payments of subsistence allowance will be completed via interface with the 

VETSNET Finance and Accounting System (FAS). Targeted activities for FY 09 include completion of functional requirements and technical design. 

Information Architecture and Legacy Document Project for Housing Program 

(funded through credit reform reimbursement from the Housing program) will establish online information architecture for Loan Guaranty. This project will convert 

critical microfiche and hand-copy documents into an electronic format with indexing 

capabilities. These documents would then be made available to authorized VA staff 

via current Loan Guaranty systems. The project will also enable Loan Guaranty to 

use workflow management by providing online collaboration and review capability 

within a paperless environment. 

Internal Facing IT Programs 

Internal facing IT systems link to specific management categories—corporate 

management, financial resources management, asset management, human capital 

management, IT infrastructure, cyber security, privacy, and E–Gov. VA is requesting $418 million in FY 2009. Two significant investments are in the categories of 

human capital management and financial resources management to replace existing 

systems with new technologies. The Human Resources Information System is an 

OMB/OPM managed project, and the Financial and Logistics Integrated Technology 

Enterprise system addresses VA’s long standing Federal Financial Management Integrity Act material weakness—lack of a VA-wide integrated financial management 

system. 

Internal facing IT development and operational systems are those that will improve effectiveness and efficiency in managing its resources. As VA continues to 

meet challenges to enhance the delivery of timely, high quality services to veterans 

and their beneficiaries, internal system development requirements continue to grow. 

Operation and maintenance consists of those functions that ensure the IT infrastructure and business-critical applications have the availability, performance, 

adaptability, and scalability required to support business needs. Highlights are provided below. 

Human Capital Management Programs 

VA is requesting $92.6 million for IT human capital management programs in FY 

2009, an increase of $32.8 million or 54.9-percent increase. As employees are one 

of VA’s most important assets, investments in human resources systems will help 

VA meet the challenges of managing over 240,000 employees. These systems are focused on ensuring VA healthcare provider credentials are current and benefit claims 

specialists receive the latest training in an ever improving benefits delivery system. 

These systems also will help VA manage its mature workforce with a greater array 

of succession planning tools. Finally, VA will update its payroll system to a more 

modern, secure data information system. 

Financial Resources Management Programs 

VA is requesting $65.3 million in FY 2009 for IT financial systems, an increase 

of $14.8 million or 29 percent. These resources will enable the overall Department 

to better manage the $93 billion in Federal resources to deliver services to the Nation’s veterans. A critical part of this program is the Financial and Logistics Integrated Technology Enterprise (FLITE) initiative. 

Financial and Logistics Integrated Technology Enterprise 

Financial and Logistics Integrated Technology Enterprise (FLITE) is a multi-year 

initiative to replace the existing financial and logistics systems with integrated, enterprise-level systems. The two primary components are the Integrated Financial 

Accounting System (IFAS) and Strategic Asset Management (SAM) project. FLITE 

implementation has three primary objectives: (1) to effectively integrate and standardize financial/logistical data and processes across all VA offices; (2) to provide 

management with access to timely and accurate financial, logistics, budget, asset 

and related information on VA-wide operations as well as on specific programs and 

projects; and (3) to establish an advanced technology environment which provides 

VA with the greatest capability and an extended life cycle. 


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In FY 2007, VA completed the prerequisite planning, which included developing 

the FLITE governance framework and baseline cost estimates, documenting requirements, establishing an acquisition strategy, determining the COTS solution for SAM 

and IFAS, and conducting a stakeholder analysis and communications needs assessment as well as other project management strategies. In FY 2008, VA will award 

individual implementation/integration contracts for SAM and IFAS. The pilot test 

for SAM will be deployed at the Milwaukee VA Medical Center in FY 2008, and the 

pilot preparation for IFAS will start in FY 2008. FY 2009 will include deployment 

of additional beta sites for SAM and pilot testing for IFAS. The budget increase 

from FY 2008 to FY 2009 accounts for development and testing activities. 

Cyber Security 

VA is thoroughly examining every aspect of our information protection program 

to ensure that sensitive information, primarily Personally Identifiable Information 

(PII) and Personal Health Information (PHI), is neither mismanaged nor used for 

any unauthorized purpose. To do this we have requested $93M in FY09 to meet this 

goal. This request can be broken into 2 major categories (as discussed below)—support for our Enterprise Cyber Security Program and support for the Personal Identification Verification (PIV) program. Highlights are provided below. 

Enterprise Cyber Security Programs 

An overarching program providing focus to all activity related to data security, 

the Data Security—Assessment and Strengthening of Controls (DS–ASC) program 

includes several hundred specific actions all oriented toward improving the position 

of VA in the area of information protection. To date, approximately 40 percent of 

the original DS–ASC items have been completed with the approval of VA Handbook 

6500. This handbook is the primary cyber security procedural document for the Department. Recently, DS–ASC focused on the VA Office of Inspector General and 

GAO recommendations reported to the Congress. By reorganizing the DS–ASC 

around these recommendations, VA is confident it will reach the Gold Standard for 

Data Security and satisfy each recommendation within the next three years. 

Through the Enterprise Cyber Security Program (ECSP) VA formulates and oversees the implementation of the Department-wide security program. ECSP provides 

a continuous cycle of risk assessment, modification of policies and procedures to reflect changes in the risk environment, identification of mitigating security controls, 

and the testing of those controls. ECSP is comprised of both management and technical components. 

The management components establish VA IT security policies and procedures; 

oversee Department-wide risk management, certification and accreditation, and 

Federal Information Security Management Act (FISMA) reporting and compliance 

programs; update the Department IT security program plan; provide for credit monitoring and fraud detection services; sponsor the Department’s security awareness 

training, role based training for information security officers ISOs, and VA’s annual 

information security conference; and provides procurement, budgeting, personnel, 

and capital planning support for the investment. Field Security Operations and Information Security Officer Support Service (Field Ops) provide oversight for the facility-based ISOs. It also includes an incident response and risk management capability to monitor, respond, and report on data breach and other information security 

incidents. The incident response team has developed enterprise identity strategic 

and implementation plans for fiscal years 2008 through 2010. 

Technical components include the Critical Infrastructure Protection Program, 

which directs the operation of the Network and Security Operations Center, is responsible for providing the centralized incident response and recovery capability as 

well as other enterprise network and security services, such as, firewall management; intrusion detection and prevention monitoring; Domain Naming System management; content filtering; patch management; antivirus program; and enhanced 

24x7x365 monitoring of core VA infrastructure. The continued deployment of the enterprise host-based intrusion prevention, anti-spyware, and anti-spam solutions are 

ongoing as well as initiatives to implement an e-Discovery technology and anomaly 

detection services within VA’s enterprise architecture to further enhance our security posture and network services availability. 

The information protection program is responsible for reporting on the deployment 

of technical controls that bring VA in compliance with Federal regulations and VA 

policy. The technical controls protect information in transit and in storage. Such 

technical controls include encryption of laptops, secure network transmissions, mobile device security, remote access security, secure emails and documents, tape 

encryption, and scanning of emails being transmitted through VA’s Internet gateways for Social Security numbers. 


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Personal Identification Verification (PIV) program 

This initiative replaces VA’s Authentication and Authorization Infrastructure 

Project with a system that directly addresses Homeland Security Presidential Directive 12 and FIPS 201 with the implementation of processes and procedures required 

to issue PIV cards. PIV includes five logical components that support PIV card 

issuance and the business process and procedures necessary to perform data capture, data management, identity proofing, identity management, access management, logical access control, physical access control, authorization, and authentication surrounding the PIV credential. PIV is a VA enterprise system that will be 

interoperable across the Federal Government. Coordination with other agencies facilitates knowledge sharing between VA and other Federal departments and agencies. In FY 2009 VA will deploy the PIV registrar and issuer workstations to 113 

of 225 field locations and issue 50 percent of the cards to employees. 

IT Infrastructure (Veteran Facing and Internal facing) 

Before closing, I would like to provide an overview of the funds requested for IT 

Infrastructure supporting both Veteran Facing IT systems and Internal Facing IT 

systems. VA’s extensive and complex IT infrastructure is the foundation for the operation of information systems in VA. IT systems are critical for the delivery of veterans’ services, from the delivery of healthcare using the EHR to timely delivery of 

veterans’ benefits claims and burial programs, through implementation and ongoing management of a wide array of technical and administrative support systems. 

VA is requesting $800 million and an increase of $140.2 million over FY 2008 operations. This significant investment is needed to begin rebuilding the VA IT Infrastructure to one that will provide effective and timely delivery of healthcare, benefits, and burial services to the Nation’s veterans and their dependents. To keep up 

with growing data, network capacity, information sharing (e.g., DoD and business 

partners), security and privacy, and technical requirements created by innovative IT 

solutions, the VA IT infrastructure must be refreshed and modernized. 

In FY 2007, the many different infrastructure accounts were combined to form the 

IT infrastructure activity now centrally managed by the CIO. This centralization allows VA to better manage computer systems, VA data networks, and voice services 

to better deliver veteran benefits with adequate security and continue to improve 

cost-effectiveness. Without proper operation and maintenance of the IT infrastructure (including planning and budgeting) and implementation of new technologies, 

the delivery of essential services and business operations of this or any other modern governmental function would literally halt in days and the health, lives, and 

well-being of veterans would be jeopardized. 

Increased staffing and activation of new VA facilities comes with associated IT requirements and assets. Every new person hired requires IT tools, such as, a desktop 

computer, mobile device, laptop, printer, etc. For example, VA projects by FY 2009 

numerous facility activations, including 51 new community based outpatient clinics. 

By their nature, community based outpatient clinics are not generally in close proximity to a medical center, and are quite often in rural areas, creating asset management challenges. Additionally, there are currently 209 readjustment counseling vet 

centers with more projected to be opened during fiscal years 2008. Vet centers are 

typically small in staff size and are not located on VA property. In serving veterans, 

both of these facility types require reliable IT equipment that embodies information 

assurance and data standardization. 

In support of the veteran facing IT systems, IT infrastructure ensures the underlying platforms and services function properly in support of the wide variety of veteran facing applications supporting mechanism to ensure funding for. By definition, 

the infrastructure, which is comprised of application licenses, network and computing support, and voice, data and video infrastructure, is key to effective program 

delivery. It provides for the hardware and communicationlines and systems that 

allow over 240,000 VA employees to deliver healthcare, benefits delivery, and memorial services to a grateful Nation’s veterans. IT infrastructure support for veteran 

facing IT systems for FY 2009 is $659.04 million. The breakout of this support 

across the major service areas at the VA is as follows: 

• Medical Program IT Support: $573.07 million 

• Regional Data Processing Center: $30.00 million; 

• Compensation Program IT Support: $35.23 million; 

• Pension Program IT Support: $6.40 million; 

• Education Program IT Support: $3.97 million; 

• Vocational Rehabilitation Program IT Support: $5.60 million; 

• Burial Program IT Support: $4.75 million. 


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VA IT infrastructure serves the entire range of business functions including primary missions, handling of Congressional and other correspondence, financial operations, interaction with veterans service organizations and other agencies including 

DoD healthcare systems, data exchange with business partners, Continuity of Operations (COOP) and continuity of business, radio frequency spectrum management; 

and implementation infrastructure for new and enhanced business applications. 

IT infrastructure programs and activities for FY 2009 include work as a major 

participant in the GSA FTS program; transition of current long distance voice and 

data circuits from the FTS2001 contract to the new Network contract; implementing 

compliance with the Internet Protocol version 6 (IPv6) mandate by OMB; continuing 

to strengthen VA Gold Standard for Data Security; operation of a multi-carrier 

backbone wide area network; exploration of new and more efficient network technologies, including Internet 2, voice over IP (VOIP), and unified communications; 

and continued standardization of the infrastructure architecture from desktop to 

wide area network. Infrastructure programs require an increase to meet service projections for enhancing patient care services, additional care for returning war veterans, teleradiology and remote medical services, fund the phased replacement of 

PCs across VA, and provide greater network bandwidth for facilitating communications. IT infrastructure funding is essential to protect IT resources and strengthen 

data security for keeping sensitive veteran and employee data safe, secure, and confidential. 

Telecommunications services are an integral and fundamental component of VA. 

While often taken for granted, these technology dependencies and interdependencies 

are essential to business functions and service providers. Without these services, essentially utilities, VA modern healthcare and benefit functions would not be possible 

and would be reduced to paper, other physical media (e.g., x-ray films), and physical 

mail or courier delivery. These are services that operate 24 hours a day, 7 days a 

week. 

In closing, I want to assure you that VA IT is committed to providing effective 

and efficient support to veterans and in turn to the VA community-at-large. We 

have made progress over this past year and have experienced problems as well— 

so much more remains to be done. I appreciate having this opportunity to discuss 

this with you and will gladly respond to your questions. 

f 

U.S. Department of Veterans Affairs 

Washington, DC. 

March 20, 2008 

The Honorable Harry E. Mitchell 

Chairman 

Subcommittee on Oversight and Investigations 

Committee on Veterans’ Affairs 

United States House of Representatives 

Washington, DC 20515 

Dear Mr. Chairman: 

Thank you for the opportunity to testify before the Subcommittee on February 13, 

2008, on the fiscal year (FY) 2009 budget for the Office of Inspector General (OIG). 

At the hearing, we indicated we would provide additional information in two areas, 

the length of time VA has been developing an electronic system to track contracts 

and purchasing and on the monetary return for pre-award and post-award reviews 

in FY 2007. A similar letter has been sent to Congresswoman Ginny Brown-Waite, 

Ranking Republican Member. 

According to VA’s Office of Acquisition and Logistics (OA&L), in March 2003 initial development for a new system, Electronic Contract Management System (eCMS) began. This system is a tool for VA acquisition staff to create and manage 

acquisition actions and documents, announce solicitations to vendors, receive and 

evaluate offers, make awards, and report awards to the Federal Procurement Data 

System for procurement actions above $25,000. This centralized web based system 

resides on a server and is accessed using a web browser and specially configured 

workstations. In June 2007, OA&L mandated the use of e-CMS and they report that 

currently, approximately 1,500 users located at 194 facilities across the VA business 

lines have completed training to gain access to the system. An OIG audit of e-CMS 

is currently ongoing to determine the extent of the system’s implementation 

throughout VA and whether e-CMS will provide needed information for VA to manVerDate Aug 31 2005 03:43 Nov 06, 2008 Jkt 041369 PO 00000 Frm 00047 Fmt 6604 Sfmt 6621 E:\HR\OC\41369.XXX 41369

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age and report the cost of procurement more effectively. We will provide you a copy 

of the audit report, which we plan to issue in September 2008. 

In FY 2007, OIG pre-award reviews resulted in $133.7 million in potential cost 

savings; post-award reviews resulted in $15.8 million in actual recoveries. We issued 

83 reports on 62 unique vendors. 

Thank you for your interest in the Department of Veterans Affairs. 

Sincerely, 

GEORGE J. OPFER 

Inspector General 

Æ 


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