VETS administers national programs intended to (1) ensure that veterans receive priority in employment and training opportunities from the employment service; (2) assist veterans, reservists, and National Guard members in securing employment; and (3) protect veterans’ employment rights and benefits. The key elements of VETS’ services include enforcing veterans’ preference and reemployment rights and securing employment and training services. VETS’ programs are among those federal programs whose services have been affected by WIA and other legislative changes aimed at streamlining services and holding programs accountable for their results. VETS carries out its responsibilities through a nationwide network that includes representation in each of the Department of Labor’s 10 regions and staff in each state. The Office of the Assistant Secretary for Veterans’ Employment and Training administers VETS’ activities through regional administrators and a VETS director in each state. These federally paid VETS staff are the link between VETS and the states’ employment service system, which is overseen by Labor’s Employment and Training Administration (ETA). VETS funds two primary veterans’ employment assistance grants to states—the Disabled Veterans’ Outreach Program (DVOP) and the Local Veterans’ Employment Representatives (LVER). Fiscal year 2001 appropriation for VETS was about $183 million, including $81.6 million for DVOP specialists (DVOPS) and $77.2 million for LVER staff. These funds paid for 1,327 DVOP positions and 1,206 LVER positions. The roles of the DVOPS and LVERs have been separately defined in two statutes. LVERs were first authorized under the original GI bill (the Servicemen’s Readjustment Act of 1944) and DVOP specialists were authorized by the Veterans’ Rehabilitation and Education Amendments of 1980. A key responsibility of a DVOP is to develop job and job training opportunities for veterans through contacts with employers, especially small- and medium-size private sector employers. LVERs are to provide program oversight of local employment service offices to ensure that veterans receive maximum employment and training opportunities from the entire local office staff. In addition, DVOPS and LVERs traditionally have provided services that include locating veterans who need services, networking in the community for employment and training programs, bringing together veterans looking for work and employers seeking to making referrals to support services, and providing case management for those veterans in need of more intensive services. Increasingly, however, veterans are accessing services on their own, through tools such as internet-based job listings or resume writing software. As part of the DVOP and LVER grant agreements, states must provide or ensure that veterans receive priority at every point where public employment and training services are available. The DVOP and LVER programs give priority to the needs of disabled veterans and veterans who served during the Vietnam era. States’ employment service systems are expected to give priority to veterans over nonveterans. Generally, this means that local employment offices are to offer or provide all services to veterans before offering or providing those services to nonveterans. To monitor the states’ programs, VETS has been using a set of measures that evaluates states’ performance in five dimensions: (1) veterans placed in training, (2) those receiving counseling, (3) those receiving services, (4) those entering employment, and (5) those obtaining federal contractor jobs. These measures primarily count the number of services that veterans receive and compare the totals with similar services provided to nonveterans. To ensure priority service to veterans, VETS expects levels of performance for services provided to veterans to be higher than levels for nonveterans. For example, veterans and other eligibles must be placed in or obtain employment at a rate 15 percent higher than that achieved by nonveterans. (See table 1 for VETS’ specific performance standards.) To report on performance, VETS currently relies on the Employment and Training Administration’s 9002 system to aggregate data reported by states on veterans and nonveterans who register with state Employment Services (ES) offices, track the services provided to them (such as counseling or job referral), and gather information on their employment outcomes. The 9002 system also collects information such as the registrants’ employment status, level of education (e.g., high school, postsecondary degree/certificate), and basic demographic information, such as age and race. Over the past several years, the Congress has taken steps to streamline and integrate services provided by federally funded employment and training programs. WIA, which the Congress passed in 1998, requires states and localities to use a one-stop center structure to provide access to most employment and training services in a single location. WIA requires about 17 categories of programs, including VETS and ES programs, to provide services through the one-stop center. However, because DVOP and LVER staff can provide assistance only to veterans, and because their roles in one-stop centers are not specifically addressed in WIA, it is unclear how they will function with regard to one-stop centers. According to VETS officials, this lack of clarity has been addressed. Agreements made with each state on planned services to veterans now include provisions on how DVOPS and LVERs will be integrated into the one-stop delivery system. In addition to changing the way services are provided, programs are now increasingly held accountable for their results. Through the Government Performance and Results Act of 1993 (GPRA), the Congress seeks to improve the efficiency, effectiveness, and public accountability of federal agencies as well as improve congressional decision making. GPRA does so, in part, by promoting a focus on what the program achieves rather than tracking program activities. GPRA outlines a series of steps in which agencies are required to identify their goals, measure performance, and report on the degree to which those goals were met. Executive branch agencies were required to submit the first of their strategic plans to the Office of Management and Budget and the Congress in September 1997. Although not required by GPRA, Labor’s component agencies, such as VETS, have prepared their own strategic and performance plans at the direction of the Secretary of Labor. To address the goals of GPRA and in response to recommendations by us and other groups, such as the Congressional Commission on Servicemembers and Veterans Transition Assistance, VETS is currently developing a new system to measure the performance of its programs. Over the last several years, VETS conducted pilot programs in about eight states that tested some new performance measures and the use of new data to support these measures. VETS officials told us that they anticipate implementing their new performance measurement system in July 2001. VETS’ proposed performance measures are a significant improvement over current measures, but certain aspects of these measures raise concerns that VETS may need to address. The proposed measures include an (1) entered-employment rate, (2) employment rate following staff- assisted services, (3) employment retention rate, and (4) increase in the number of federal contractor job openings listed. These measures are an improvement over current measures because they focus more on what the programs achieve and less on the number of services they provide, no longer use the level of services provided to nonveterans as the standard for services that must be provided to veterans, adjust expected state performance to economic conditions within establish two measures that are already collected for WIA-funded services and proposed for ES. However, even with these improvements, the proposed measures continue to send a mixed message to staff about where to place their service priorities. In addition, the proposed measures include a redefined measure for tracking federal contractor job openings, but the measure is process- oriented and outside the scope of the work of DVOPS and LVERs. The proposed performance measures improve accountability because they place more emphasis on employment-related outcomes by eliminating process-oriented measures—measures that simply track services provided to veterans. Current process measures that VETS eliminated from the proposed performance system include the number of veterans referred to counseling, the number placed in training, and the number receiving certain other services, such as job referrals. As we noted in past reports, these process-oriented measures are activity- and volume-driven and focus efforts on the number of services provided, not on the outcomes veterans achieve. These measures offer states little incentive to provide services to those veterans who are only marginally prepared for work and who may need more intensive services requiring more staff time. The VETS’ proposal still includes one process-oriented measure that simply reflects the percentage increase in the number of federal contractor job openings listed with the public labor exchange but adds two outcome-oriented measures—job retention after 6 months and the employment rate following staff-assisted services. The VETS’ proposal also retains an outcome measure that is in the current system—the entered-employment rate. (See table 2.) The proposed performance measures also improve the way VETS establishes the level of performance that states are expected to achieve. VETS no longer requires states to compare the level of services provided to veterans with those provided to nonveterans. In past reports, we have pointed out that the use of these relative standards results in states with poor levels of service to nonveterans being held to lower standards for service to veterans than states with better overall performance. For example, in program year 1999, Rhode Island reported an entered- employment rate of 5.49 percent for nonveterans. Because VETS requires states to ensure that they achieve an entered-employment rate for veterans that is 15 percent higher than that for nonveterans, Rhode Island’s 1999 expected performance level was 6.32 percent of registered veterans entering employment–a low level of performance. Under the proposed system, VETS will negotiate performance levels annually with each state based on that state’s past performance, using guidelines similar to those used for WIA.