[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]




 AVOIDING ``FINANCIAL FRIENDLY FIRE'': A REVIEW OF EFFORTS TO OVERCOME 
                    ARMY NATIONAL GUARD PAY PROBLEMS

=======================================================================

                                HEARING

                               before the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             SECOND SESSION

                               __________

                            JANUARY 28, 2004

                               __________

                           Serial No. 108-131

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpo.gov/congress/house
                      http://www.house.gov/reform


                                 ______

92-951              U.S. GOVERNMENT PRINTING OFFICE
                            WASHINGTON : 2003
____________________________________________________________________________
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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
DAN BURTON, Indiana                  HENRY A. WAXMAN, California
CHRISTOPHER SHAYS, Connecticut       TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
MARK E. SOUDER, Indiana              CAROLYN B. MALONEY, New York
STEVEN C. LaTOURETTE, Ohio           ELIJAH E. CUMMINGS, Maryland
DOUG OSE, California                 DENNIS J. KUCINICH, Ohio
RON LEWIS, Kentucky                  DANNY K. DAVIS, Illinois
JO ANN DAVIS, Virginia               JOHN F. TIERNEY, Massachusetts
TODD RUSSELL PLATTS, Pennsylvania    WM. LACY CLAY, Missouri
CHRIS CANNON, Utah                   DIANE E. WATSON, California
ADAM H. PUTNAM, Florida              STEPHEN F. LYNCH, Massachusetts
EDWARD L. SCHROCK, Virginia          CHRIS VAN HOLLEN, Maryland
JOHN J. DUNCAN, Jr., Tennessee       LINDA T. SANCHEZ, California
JOHN SULLIVAN, Oklahoma              C.A. ``DUTCH'' RUPPERSBERGER, 
NATHAN DEAL, Georgia                     Maryland
CANDICE S. MILLER, Michigan          ELEANOR HOLMES NORTON, District of 
TIM MURPHY, Pennsylvania                 Columbia
MICHAEL R. TURNER, Ohio              JIM COOPER, Tennessee
JOHN R. CARTER, Texas                CHRIS BELL, Texas
MARSHA BLACKBURN, Tennessee                      ------
------ ------                        BERNARD SANDERS, Vermont 
                                         (Independent)

                       Peter Sirh, Staff Director
                 Melissa Wojciak, Deputy Staff Director
                      Rob Borden, Parliamentarian
              Grace Washbourne, Professional Staff Member
                       Teresa Austin, Chief Clerk
          Phil Barnett, Minority Chief of Staff/Chief Counsel


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on January 28, 2004.................................     1
Statement of:
    Chavez, Major Kenneth, Unit Commander, B Company, 5th 
      Battalion, 19th Special Forces, Colorado Army National 
      Guard......................................................    92
    Kutz, Gregory D., Director, Financial Management & Assurance, 
      U.S. General Accounting Office, accompanied by Geoff Frank, 
      Assistant Director, Financial Management & Assurance; John 
      Ryan, Assistant Director, Office of Special Investigations, 
      U.S. General Accounting Office; Ernest J. Gregory, Acting 
      Assistant Secretary of the Army, Financial Management and 
      Comptroller; Patrick T. Shine, Director, Defense Finance 
      and Accounting Service, Military and Civilian Pay Services, 
      accompanied by Colonel James L. Leonard, Director, Defense 
      Finance and Accounting Service, Indianapolis; and 
      Lieutenant General Roger C. Shultz, Director, Army National 
      Guard......................................................    15
Letters, statements, etc., submitted for the record by:
    Chavez, Major Kenneth, Unit Commander, B Company, 5th 
      Battalion, 19th Special Forces, Colorado Army National 
      Guard, prepared statement of...............................    95
    Cummings, Hon. Elijah E., a Representative in Congress from 
      the State of Maryland, prepared statement of...............   112
    Davis, Chairman Tom, a Representative in Congress from the 
      State of Virginia, prepared statement of...................     4
    Gregory, Ernest J., Acting Assistant Secretary of the Army, 
      Financial Management and Comptroller, prepared statement of    55
    Kutz, Gregory D., Director, Financial Management & Assurance, 
      U.S. General Accounting Office, prepared statement of......    17
    Norton, Hon. Eleanor Holmes, a Representative in Congress 
      from the District of Columbia, article dated January 18, 
      2004.......................................................    66
    Ruppersberger, Hon. C.A. Dutch, a Representative in Congress 
      from the State of Maryland, prepared statement of..........    85
    Shays, Hon. Christopher, a Representative in Congress from 
      the State of Connecticut, prepared statement of............   110
    Shine, Patrick T., Director, Defense Finance and Accounting 
      Service, Military and Civilian Pay Services, prepared 
      statement of...............................................    60
    Shultz, Lieutenant General Roger C., Director, Army National 
      Guard, prepared statement of...............................    51
    Waxman, Hon. Henry A., a Representative in Congress from the 
      State of California, prepared statement of.................    11

 
 AVOIDING ``FINANCIAL FRIENDLY FIRE'': A REVIEW OF EFFORTS TO OVERCOME 
                    ARMY NATIONAL GUARD PAY PROBLEMS

                              ----------                              


                      WEDNESDAY, JANUARY 28, 2004

                          House of Representatives,
                            Committee on Government Reform,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:02 a.m., in 
room 2154, Rayburn House Office Building, Hon. Tom Davis 
(chairman of the committee) presiding.
    Present: Representatives Tom Davis, Shays, Lewis, Platts, 
Putnam, Schrock, Turner, Waxman, Lantos, Maloney, Cummings, 
Tierney, Van Hollen, Ruppersberger, and Norton.
    Staff present: Peter Sirh, staff director; Melissa Wojciak, 
deputy staff director; Jennifer Safavian, chief counsel for 
oversight and investigations; David Young, counsel; David 
Marin, director of communications; Grace Washbourne, 
professional staff member; Teresa Austin, chief clerk; Brien 
Beattie, deputy clerk; Corinne Zaccagnini, chief information 
officer; Ryan Kelly, legislative correspondent; Kristin 
Amerling, minority deputy chief counsel; Anna Laitin, minority 
communications and policy assistant; Karen Lightfoot, minority 
communications director/senior policy advisor; David McMillen 
and Andrew Su, minority professional staff members; Earley 
Green, minority chief clerk; Jean Gosa, minority assistant 
clerk; and Cecelia Morton, minority office manager.
    Chairman Tom Davis. Good morning.
    A quorum being present, the Committee on Government Reform 
will come to order.
    I want to welcome everybody to today's hearing on the state 
of the Department of Defense's and the Department of the Army's 
efforts to correct the current inadequacies in payroll 
processes that are negatively affecting Army National Guard 
members mobilized on active duty status.
    This hearing is the first quarterly review promised the 
committee by DOD last year. We look forward to hearing about 
the steps it has taken and proposed to correct problems 
uncovered in the November 2003 GAO study. The study outlined 
the scope and severity of the pay problems, and it was not a 
pretty sight. We are talking about soldiers being erroneously 
billed debts close to $50,000 each. We are talking about 
injured soldiers being denied active duty pay because medical 
extensions were not processed. We are talking about 3-month 
delays in active duty pays. We are even talking about a soldier 
who came under enemy fire during a 4-day trip he had to make to 
deliver records to fix payments errors.
    The traditional concept of Guardsmen serving 1 weekend a 
month and 2 weeks a year to perform state disaster relief and 
train for Federal service was shattered after September 11, 
2001. These men and women are no longer ``weekend warriors.'' 
Today, members of the Army National Guard fight side by side 
with regular armed forces members in combat throughout the 
world. Approximately 100,000 Army National Guard members are 
currently called to active duty for mobilization to Iraq and 
Afghanistan. Since September 11, close to 140,000 have seen 
action in Operation Enduring Freedom, Operation Noble Eagle and 
Operation Iraqi Freedom. As of today, 23 Army National Guard 
personnel have been killed in action in service to our country.
    The fact is, today we are relying on the National Guard as 
never before--to support the regular armed forces in combat, to 
protect the homeland, and to provide emergency and security 
response for each State. With all that we expect of the Guard, 
ensuring that each member receives accurate and timely pay and 
allowances for job performance and risk of life should be a top 
priority for Congress and the administration. If we do not make 
the investments needed to remedy this problem, we will be 
guilty of that old saw about knowing the price of everything 
and the value of nothing.
    I am sure that virtually all members of the committee have 
heard from Guard members and their families about the effects 
of increased mobilizations and increased mission 
responsibilities. In my State of Virginia, Sergeant First Class 
Curtis Dunn of the Virginia National Guard, B Company, 3rd 
Battalion, 20th Special Forces knows well the frustration and 
heartache caused by an inept pay system. At a press conference 
this past November, where we released the GAO study under 
discussion today, Sergeant Dunn gave us this picture: ``Picture 
a soldier, sitting at a firebase, in the middle of nowhere 
Afghanistan. The heat is oppressive, and they have been out on 
patrol all day, sucking dust. He has potentially had a few 
shots taken at him, or watched a couple of rockets head toward 
him out of the night sky. It is finally his turn for the few 
minutes of satellite phone usage that each solider is allotted 
for the week, and he calls home. He would like to spend that 
precious time reassuring his family, telling his wife and 
children how much he loves and misses them. Instead he has to 
utilize the majority of the time discussing finances and trying 
to determine if he has been paid correctly and making sure his 
family has enough money to pay bills.''
    Or the March 23, 2002 letter from Sergeant Dan Romero to 
his fellow sergeant in the Colorado Army National Guard, which 
Major Chavez will mention in his testimony today: ``Are they 
really fixing pay issues, are they putting them off until we 
return? If they are waiting then what happens to those who (God 
forbid) don't make it back?'' Sergeant Romero was killed in 
action 23 days later in Afghanistan, and I would really like to 
hear today that his family isn't wasting their time and energy 
fixing errors in his pay.
    Today's hearing is the Government Reform Committee's first 
in reviewing areas of concern with the National Guard. We have 
followup studies in the works on Army Reserve pay issues, 
medical extensions and readiness, and travel reimbursements. 
This committee has also asked GAO to look at National Guard 
readiness and the effects of increased mission and 
mobilization. The study will focus on the resources available 
to the Guard in an effort to evaluate if they are receiving the 
direction, equipment and training they need. This study will be 
complete in April this year.
    It has also come to the committee's attention that military 
personnel are being blocked from enrolling in supplemental life 
insurance programs. This is troublesome. I don't understand why 
such an anti-competitive, anti-freedom of choice policy is 
being implemented, and we are going to look at this more 
closely.
    The challenge of integrating pay systems and processes is 
not singular to the Department of the Defense, nor is it a 
problem that cropped up over night. We are certain that all the 
Department's witnesses here today are committed to fixing Guard 
payroll problems. To their credit, DOD, the Army and the 
National Guard Bureau have been working diligently to correct 
the problems identified in the GAO report. Certainly the 
integration of payroll systems in such a massive department 
will be a long and difficult process, but there is much that 
can be done in the short term to mitigate the problem.
    We will be hearing today from Assistant Secretary of the 
Army, Mr. Ernest Gregory; Mr. Patrick Shine, Director of the 
Defense Finance and Accounting Service; and Lieutenant General 
Roger Schultz, Director of the Army National Guard. I also 
welcome several representatives from the General Accounting 
Office who worked on this study. We are especially pleased to 
hear from Major Kenneth Chavez, Unit Commander, B Company, 5th 
Battalion, 19th Special Forces, Colorado Army National Guard, 
who has come here to represent his unit by sharing firsthand 
accounts of the problems they are encountering.
    As promised, the Department has mapped out immediate and 
long-range milestones and has made progress in effecting 
changes. I know we all look forward to hearing what has been 
done to date, and what we can expect in the weeks and months to 
come.
    I was an Army National Guardsman for 8 years. I stayed in 
over the 6 years that we had to serve. For the life of me, with 
these problems, I think we are going to have a recruitment 
problem over the long term when these stories get back if we 
don't fix them.
    [The prepared statement of Chairman Tom Davis follows:]

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    Chairman Tom Davis. I now yield to my ranking member, Mr. 
Waxman, for his opening statement.
    Mr. Waxman. Thank you very much, Mr. Chairman.
    I want to commend you on your opening statement. I thought 
it was an excellent presentation of the issue. I want to thank 
you for holding this hearing and calling attention to this 
important issue.
    For over 350 years the Army National Guard has played a 
significant role in ensuring our national security at home and 
abroad. Today, tens of thousands of National Guard soldiers are 
putting their lives at risk fighting terrorism within the 
United States and serving in Iraq and other hostile places 
around the world. As active U.S. troops are rotated out of 
Iraq, the brunt of the dangerous work will lie with the 
National Guard and Reserve troops who are called up and sent 
overseas to replace them.
    Yet in many ways National Guard soldiers are treated as 
second class citizens compared to their Army counterparts. 
While their training is shorter, their deployment has often 
been longer, and their equipment missing or inferior. Today we 
will more closely examine an additional and unacceptable 
injustice: a cumbersome and antiquated payroll system has been 
shortchanging and delaying Guard members' paychecks.
    GAO's recent study of Guard pay problems shows that the 
situation is abysmal. Ninety-four percent of National Guard 
members activated into U.S. Army units reported errors in their 
pay statements, many of which were repeated or compounded in 
subsequent pay statements. National Guard members have received 
deductions on their statements without any explanations, orders 
have been lost, and overwhelmed financial specialists from both 
the Army National Guard and active Army have blamed each other 
over basic data entry responsibilities.
    In fact, GAO's review showed that some National Guard 
members even lost money for housing allowances or medical 
coverage for themselves and their families despite service in 
recent conflicts. This situation is also remarkable in that 
history is repeating itself. Similar payroll problems occurred 
in the Army after the Persian Gulf war in the early 1990's, and 
were never properly fixed.
    Our Nation will be increasingly reliant on Army National 
Guards. If we cannot provide basic pay in return for their 
patriotic service, the Army National Guard will have serious 
morale, troop retention, and recruitment problems on their 
hands.
    I want to thank the witnesses for appearing today. In 
particular, I would like to thank GAO for their investigative 
work, and welcome Major Kenneth Chavez of the Colorado National 
Guard for testifying today. I thank you all who are going to 
make presentations to us.
    Mr. Chairman, as often happens here on the Hill, there are 
conflicts in our schedule and I won't be able to be present for 
the hearing itself but the fact we are holding this hearing, 
that a transcript will be prepared that will be shared with our 
colleagues, my staff behind will also be here to look over the 
testimony and listen to the answers to the questions, will 
allow both the chairman and I to pursue this issue further. I 
appreciate your leadership on the matter, Mr. Chairman.
    [The prepared statement of Hon. Henry A. Waxman follows:]

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    Chairman Tom Davis. Thank you and thank you for your 
statement.
    Do any other Members wish to make opening statements?
    The gentlelady from the District of Columbia.
    Ms. Norton. I very much want to make an opening statement. 
I feel obligated to do so. I very much appreciate your work, 
Mr. Chairman, and that of Mr. Waxman in calling this hearing so 
that this matter can get aired and perhaps yet faster 
treatment.
    The reason I say I feel obligated to do so is that the 
District of Columbia has lost three good men, all of them 
members of the Reserves or the National Guard. I asked my 
legislative assistant to compare our losses with the losses of 
other States and I was simply astonished. This is a 
jurisdiction of 600,000 people and yet many States far larger 
have lost fewer or about the same number, if I could give you 
an idea of what we mean and why we feel so deeply about this. 
Maine has lost, including regular Army and Guard, I believe, 
two; Maryland has lost five; Minnesota has lost three, the 
Iraqi war only; Nevada has lost three. I am purposely staying 
away from the States that are of the same population as the 
District of Columbia. West Virginia has lost one; Utah has lost 
four. These folks have gone without any vote, without equal 
representation, with no voting in the House or no one who can 
vote in the Senate. The Washington Post has run an article 
indicating that after 10 months in Iraq, it names the District 
of Columbia as one of the jurisdictions that has paid 
disproportionately in casualties in this war. So you can 
imagine that I would feel deeply if there is unequal treatment 
here. Gentlemen, that is what I think it is.
    The Army Reserve, the Army tooled up very fast to get 
extended hours from these young men. They haven't tooled up 
nearly as fast to pay them for those hours. What bothers me is 
the chronic nature of this problem, that it is longstanding, 
that the GAO says it doesn't see any relief in sight and yet, 
it looks like the Armed Forces in Iraq will shortly be--at 
about 40 percent--more and more dependent on these young 
people.
    I am among many other Members who have sponsored a bill 
just to get pay equity for Federal reservists who go into the 
Armed Forces and we can't even get that through this Congress, 
even though many Fortune 500 companies and many States just as 
a matter of patriotism and of gratitude to these young people 
automatically do that. The Federal Government doesn't even do 
that.
    We have seen these young people everywhere. We have seen 
them at Reagan after September 11 where we used them. We used 
them here over and over visibly since September 11. Now we 
don't see them as often because they are in disproportionate 
numbers fighting in Iraq.
    I just think, Mr. Chairman, we have to give the Army a 
deadline for getting hold of this problem and for reporting 
back to us in the very near future that at the very least those 
members of the Armed Services on whom we are now 
disproportionately dependent are receiving equal treatment from 
the Army of the United States.
    Thank you, Mr. Chairman.
    Chairman Tom Davis. Thank you very much.
    Do any other Members wish to make statements? If not, we 
are going to move to our first panel of witnesses.
    We have with us, Mr. Gregory D. Kutz, Director, Financial 
Management & Assurance, U.S. General Accounting Office, 
accompanied by Mr. Geoff Frank and Mr. John Ryan. We have the 
Honorable Ernest J. Gregory, Acting Assistant Secretary of the 
Army; Mr. Patrick T. Shine, Director, Defense Finance and 
Accounting Service; and we have Lieutenant General Roger C. 
Shultz, Director, Army National Guard. We thank you for your 
presence today. I also recognize Colonel James Leonard, 
Director, Defense Finance and Accounting Service, Indianapolis 
Office, who is accompanying Mr. Shine.
    It is the policy of this committee that all witnesses and 
those accompanying them be sworn before they testify.
    [Witnesses sworn.]
    Chairman Tom Davis. We have your total testimony as a part 
of the record. In order to move things and get to questions, we 
would like to try to keep it to 5 minutes. There is a light in 
front; it is green. After 4 minutes, it turns orange and after 
5 minutes, it turns red. That will be a guide. When it is red, 
if you could move to try to summarize. I won't gavel you but it 
just makes things go more smoothly.
    I think we will start with Mr. Kutz and then go to General 
Schultz and back to Mr. Gregory and Mr. Shine if that order is 
acceptable.
    Mr. Kutz, thanks for your work and thanks for being with 
us.

STATEMENTS OF GREGORY D. KUTZ, DIRECTOR, FINANCIAL MANAGEMENT & 
ASSURANCE, U.S. GENERAL ACCOUNTING OFFICE, ACCOMPANIED BY GEOFF 
 FRANK, ASSISTANT DIRECTOR, FINANCIAL MANAGEMENT & ASSURANCE; 
       JOHN RYAN, ASSISTANT DIRECTOR, OFFICE OF SPECIAL 
   INVESTIGATIONS, U.S. GENERAL ACCOUNTING OFFICE; ERNEST J. 
  GREGORY, ACTING ASSISTANT SECRETARY OF THE ARMY, FINANCIAL 
MANAGEMENT AND COMPTROLLER; PATRICK T. SHINE, DIRECTOR, DEFENSE 
   FINANCE AND ACCOUNTING SERVICE, MILITARY AND CIVILIAN PAY 
 SERVICES, ACCOMPANIED BY COLONEL JAMES L. LEONARD, DIRECTOR, 
   DEFENSE FINANCE AND ACCOUNTING SERVICE, INDIANAPOLIS; AND 
  LIEUTENANT GENERAL ROGER C. SHULTZ, DIRECTOR, ARMY NATIONAL 
                             GUARD

    Mr. Kutz. Mr. Chairman and members of the committee, thank 
you for the opportunity to be here to discuss pay problems at 
the Army National Guard.
    The recent success of our forces in Iraq has shown once 
again that our military forces are second to none. However, 
that same level of excellence is not evident in many DOD 
business processes, including its financial management. DOD's 
high risk financial management leaves it vulnerable to fraud, 
waste and abuse. Unfortunately, the abuse that I will be 
telling you about today is of mobilized Army National Guard 
soldiers and their families.
    My testimony has three parts. First, examples of pay 
problems. Second, the causes of these pay problems. And third, 
our ongoing work in this area. First, as shown on the poster 
board to my right, 94 percent of the 481 soldiers from our six 
case study units had pay problems. Although the 450 soldiers 
with pay problems are counted only once, many experienced 
numerous errors. These errors included overpayments, 
underpayments and late payments. Further, our review of a unit 
currently deployed to Iraq indicated similar problems.
    Examples of the pay problems include 34 soldiers 
erroneously assessed debts averaging $48,000 each which remain 
unresolved today, nearly 14 months after the original error; 
injured soldiers were denied active duty pay and medical 
benefits; significant delays receiving pay when initially 
mobilized for 48 soldiers from a California military police 
unit. These are just a few of the hundreds of errors totaling 
nearly $2.5 million that we identified for only 481 soldiers. 
The soldiers told us that lingering pay problems distracted 
them from their mission. Further, for some of these units, pay 
issues are negatively impacting retention.
    This brings me to my second point, the causes of the pay 
problems. We found that these problems were caused by a 
combination of people, processes and systems. One primary cause 
are the complex, cumbersome processes used to pay soldiers. 
These pay operations have evolved over time to the point that 
few, if any, in the department fully understand them. With 
respect to human capital, we found weaknesses including 
insufficient personnel, inadequate training and poor customer 
service. Several issues concerning error-prone automated 
systems were a significant factor, including stovepiped 
systems, limited processing capabilities, and ineffective 
system edits.
    Third, at your request, we are now beginning a review of 
the pay experiences of Army Reserve soldiers mobilized to 
active duty. In addition, we have two other ongoing pay-related 
studies for this committee relating to mobilized soldiers. 
These studies relate to travel reimbursements for Army Guard 
soldiers and pay issues for Army Guard and Reserve soldiers who 
were injured or became ill. We plan to complete these studies 
and report back to you later this year.
    In closing, I want to read part of a letter we received 
from a newlywed Florida National Guard soldier that sums up our 
findings: ``I feel as though the system has failed me and many 
others greatly. Our country asks many sacrifices of us as 
soldiers, all of which we have given, but there must be an 
equal give and take relationship. I have a wife to take care of 
back home and I need to know that she has the means to pay our 
bills. How can we be asked to leave our families, our jobs and 
basically our entire lives behind when we are not even paid 
correctly? I have suffered through some of the worst days of my 
life over here but I fear I will suffer more when I redeploy 
and find that the Army does not care enough about us soldiers 
to pay us the money we have earned with our sweat, our blood 
and our pain.'' Special Agent Ryan gave me this letter last 
night. It was written on January 21, 2004 from Baghdad, Iraq.
    Mr. Chairman, this ends my statement. Special Agent Ryan, 
Mr. Frank and I will be happy to answer questions.
    [The prepared statement of Mr. Kutz follows:]

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    Chairman Tom Davis. Thank you very much.
    General Schultz, thanks for being with us.
    General Schultz. Chairman Davis, members of the committee, 
thanks for the opportunity to appear before you today. I want 
to say I appreciate your interest in the well being of our 
soldiers.
    Mr. Chairman, the Army Guard has met every mission. Our 
soldiers have been up to every task and 97,000 of our soldiers 
today are on mobilized, active status. In Iraqi Freedom, the 
mission in Iraq and Kuwait, we have 26,700 soldiers on duty 
today. If you go to the Balkans today, you will find an Army 
Guard-led rotation in the Bosnia and Kosovo area. If we go to 
Sinai today, that mission is a Guard-led rotation. If we go to 
Afghanistan today, you will find soldiers from the Army Guard 
leading the training effort for the Afghan National Army.
    Since September 11, we have mobilized 175,700 soldiers from 
our units. If I could just put this in perspective, the payroll 
system that we now are operating under was prepared and created 
for a very different time, a very different set of 
circumstances, so when we talk about normal weekend drills--as 
you are familiar, it is a weekend a month typically, 15 days of 
training some time during the year--those days have long since 
passed. And so what we found, given our experience over the 
last couple of years, our systems are way out of synch, out of 
cycle with the demands that we now have placed before us. So in 
some respects, I am a customer of the process and yet I can 
share in the responsibility here from the GAO reports to what 
we have done inside the Army and inside the Defense and Finance 
Accounting system.
    Mr. Chairman, I appreciate your interest in our soldiers. 
Thank you.
    [The prepared statement of General Schultz follows:]

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    Chairman Tom Davis. Thank you very much.
    Mr. Gregory, thanks for being with us.
    Mr. Gregory. Thank you, Chairman Davis.
    Distinguished members of the committee, my name is Ernie 
Gregory. I serve as the Acting Assistant Secretary of the Army 
for Financial Management and Comptroller. I am the person 
accountable for the military pay mission at the Department of 
the Army, Headquarters.
    The execution of this mission is a shared responsibility 
between the active and reserve components of the military 
departments and the Defense Finance and Accounting Service. 
DFAS owns, operates, manages, and maintains the pay system, 
known as the Defense Joint Military Payroll System. The U.S. 
Army's responsibility is to make timely and accurate inputs 
into DJMS for changes in status--from reserve to active duty or 
vice versa--and for modifications or adjustments to the 
individual soldier's entitlements resulting from changes in 
status and/or duty location. To the degree that either of the 
partners fails, soldiers' pay will be wrong.
    From my vantage point, there are two key problems at the 
heart of military pay inaccuracies and mistakes. The Department 
of Defense has been actively working to correct both. Changes 
to soldiers' status and/or entitlements originate with 
personnel transactions. Most, if not all, changes to a 
soldier's status and/or entitlements affect pay. Problem No. 1 
is, DOD does not have an integrated personnel and payroll 
process supported by an integrated system solution. This means 
that personnel transactions for individual soldiers have to 
pass through a separate process and system in order to have the 
required effect on pay. The process is manual, labor intensive, 
mistake-prone, and does not produce immediate results. The DOD 
solution to this problem is the Defense Integrated Military 
Human Resource System. As its name suggests, this system will 
integrate and make simultaneous personnel and pay processes. 
Problem No. 2 is, separate military payroll systems for our 
active and reserve components. These separate systems were 
developed and exist to serve the two components, active and 
reserve, in two different environments, which require distinct 
functionality. However, circumstances have changed. Today 
active and reserve soldiers serve together and their pay and 
personnel systems need the same functionality.
    Currently, pay technicians are trained only on their 
component's system and are therefore adept at serving only 
their component's soldiers. The U.S. Army worked with DFAS to 
address this problem in the mid-1990's and produced a partial 
solution: a ``front-end'' application for DJMS called the 
Defense Military Payroll Office. DMO provides both active and 
reserve component pay technicians a uniform set of pay/data 
input screens so that the challenges of learning and 
interacting with two different systems are minimized. The 
split-system problem should be resolved completely when DIMHRS 
is implemented; it will include an integrated pay module that 
will eliminate the two separate pay systems.
    I thank the General Accounting Office for its audit. Its 
results are important to us and form one of the bases for a 
corrective action plan. We have fixed the pay-mission execution 
errors the auditors found and we remain dedicated to preventing 
their recurrence. Accurate and timely pay to all of our 
soldiers and their families is of paramount importance to the 
Army. To address the GAO's findings and to conform to the 
Department of Defense ``way ahead,'' we have established and 
provided to Congressman Shays' subcommittee staff our joint 
corrective plan in advance of DIMHRS' full operational 
capability.
    Mr. Chairman, we have provided as a result of the hearing a 
package for all committee members that includes our October 29 
memorandum to Congressman Shays, the chairman of the 
subcommittee, our December 19 update to Congressman Shays' 
staff, and then, recently, our matrix of corrective actions 
that were updated since the December 19 input and also a set of 
briefing slides that we had prepared for what we planned on 
doing yesterday, a briefing and an update to you and all the 
committee members on our corrective action plan. We made copies 
of that package and provided them for each member.
    In closing, Mr. Chairman, taking care of our soldiers is 
our ultimate mission. Developing a quality, integrated solution 
for a world-class military pay service has been challenging. 
Yet, the Department of Defense has made significant strides in 
achieving the required results. We are not done, but we are 
well on the way. This concludes my formal remarks and I await 
your questions.
    [The prepared statement of Mr. Gregory follows:]

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    Chairman Tom Davis. Thank you very much.
    Mr. Schrock. Mr. Chairman?
    Chairman Tom Davis. Yes?
    Mr. Schrock. I have not seen that report, I don't know if 
any other Members have but I would certainly like to have it.
    Chairman Tom Davis. It should be in the folder. If you look 
in there, it should be in there. If it is not, I will make sure 
staff gets it to you immediately.
    Mr. Shine.
    Mr. Shine. Chairman Davis, distinguished members of the 
committee, my name is Pat Shine and I am the Acting Director of 
the Defense Finance and Accounting Service. Prior to this, I 
was the Director of Military and Civilian Pay Services Business 
Line for DFAS. Thank you for the opportunity to discuss our 
role in paying Army National Guard personnel.
    DFAS shares the responsibility to provide quality pay and 
customer service with the active and reserve components of the 
military departments. DFAS is chiefly responsible for the 
systems issues, which is the focus of my testimony today. 
Currently, DFAS maintains two separate payroll systems for the 
Army, Navy and Air Force. The two systems are Defense Joint 
Military Pay System, Active Component, and DJMS, Reserve 
Component. DJMS-AC is designed to pay active duty 
servicemembers. Once entitlements for pay and allowances are 
entered into this system, they continue until input is made to 
terminate the entitlement. In contrast, DJMS, Reserve 
Component, was designed to pay Reserve and Guard members for 
monthly drill pay. It is a positive reporting system, which 
requires input to be made each month by the soldier's unit to 
certify drill attendance to initiate payment. In addition, most 
active duty pay entitlements that a Reserve and Guard soldier 
are authorized will pay automatically once input is made into 
DJMS-RC, but some entitlements will not. Certain combat zone 
entitlements must be input monthly by the Army finance office 
in the deployed area and others must be input monthly by the 
home station.
    In the 1991 Gulf war, the Army transferred the pay accounts 
of Reserve and Guard soldiers who were mobilized from the DJMS-
RC system to the DJMS-AC system. Since the pay system is not 
integrated with the personnel system, a soldier's duty status 
was not automatically updated in the pay system. As a result, 
many Reserve and Guard soldiers continued to receive active 
duty pay and allowances after they were demobilized. This 
caused millions of dollars in overpayments, as cited in a 1993 
GAO Report. To rectify this situation, the Army made the 
decision in 1995 to keep Reserve and Guard soldiers on DJMS-RC 
when mobilized in the future. That business practice remains in 
effect today. It is a sensible practice, given the lack of 
integration between the DJMS-AC and DJMS-RC systems.
    The long-term fix to the pay problems that occurred during 
the Gulf war requires both the elimination of two separate 
payroll systems and the integration of multiple military 
personnel and payroll systems into one integrated system. The 
Department of Defense solution has been the establishment of 
the Defense Integrated Military Human Resource System Program 
[DIMHRS], under the lead of the Office of the Secretary of 
Defense, Personnel and Readiness.
    To help mitigate some of the problems experienced by 
Reserve and Guard soldiers during mobilization until DIMHRS is 
fielded, DFAS has taken several positive steps. First, DFAS has 
developed a Windows-based input system known as Defense 
Military Pay Office [DMO]. DMO uses common input screens and 
data for both DJMS-AC and DJMS-RC, relieving some of the burden 
associated with dealing with two separate pay systems. Second, 
DFAS has pursued opportunities to add functionality to DJMS-RC 
to address specific problems encountered during mobilization 
and demobilization. For example, DJMS-RC has been enhanced to 
add leave accrual for Reserve and Guard soldiers while they are 
on active duty. Hardship duty pay-location will be added in 
April 2004.
    Another major effort by DFAS is a single payroll system to 
replace DJMS, known as Forward Compatible Payroll System [FCP]. 
FCP is designed to be an interim solution until DIMHRS is 
fielded. FCP will eliminate the two legacy DJMS payroll systems 
in effect today. These aged legacy systems are very difficult 
to change to reflect new or modified pay entitlements. As a 
result, DJMS today has numerous manual workarounds to compute 
items of pay, introducing both delay and potential errors into 
the payroll process. FCP will automate these pay computations 
and thus eliminate manual workarounds, speeding delivery of 
more accurate and complete payments to our servicemembers.
    In closing, Mr. Chairman, I want to assure you that DFAS is 
committed to partnering with the Army and the Army National 
Guard to continue improving and providing quality pay and 
customer services to all the members of the U.S. Armed Forces 
and their families. They deserve the very best.
    Colonel James Leonard, Director, Army Military Pay, DFAS, 
is sitting behind me and has no written statement, but will be 
available to answer any questions, along with myself, that the 
committee may have. This concludes my formal remarks.
    [The prepared statement of Mr. Shine follows:]

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    Chairman Tom Davis. Thanks to all of you and I will have 
some questions in a moment.
    I am going to start with Mr. Putnam and then go to Ms. 
Norton, then Mr. Schrock, and then I will get in.
    Mr. Putnam. Thank you very much, Mr. Chairman, and I 
appreciate your calling this hearing. Certainly Florida has 
contributed a tremendous share of the Guard and Reservists 
serving in Afghanistan and Iraq and it is a very important 
topic.
    I have only been in Congress a very short period of time, 3 
years, and in that time, I have lost count of the number of 
hearings that either the Shays subcommittee or the former Davis 
subcommittee or my Subcommittee on Technology, Information 
Policy, International Relations and the Censes--the former Horn 
subcommittee--has held on the bureaucracy of the Pentagon and 
its repeated failure to serve its men and women in uniform.
    The impression that I have had is that you really don't 
care what the GAO reports say. You endure them and endure one 
or two fairly painful committee hearings and then we move on 
but nothing has changed. There are dozens of legacy systems in 
the Pentagon for purchasing, for payroll, for HR, for 
personnel, for accounting. The IG didn't even submit a report 
to be in compliance with FISMA, to have a scorecard on what IT 
assets you even have that could then be implemented to correct 
payroll mistakes, to correct HR mistakes, to avoid overbilling 
people.
    I have struggled with how outstanding our military is in 
expanding global reach and identifying targets and hitting 
those targets with precision munitions that were developed with 
the brightest and the best research and minds this country can 
collectively put together in one laboratory and how lousy the 
bureaucracy can be. It is the most interesting organization I 
have ever observed and how it can be the best at so much of 
what it does and so bad at all of the logistics that make the 
other things possible.
    I say all that to lead into these questions. Four of the 
Virginia Guard Special Forces soldiers were injured in 
Afghanistan and had major problems with their pay and medical 
benefits extended beyond the end of their original mobilization 
orders. It would seem the Army ought to go out of its way to 
make sure that we take care of all our soldiers but 
particularly those who have been injured fighting for this 
country. Is there a process in place, an ombudsman, a liaison 
to deal with injured soldiers and their families to make sure 
they are not burdened by these mix-ups on payroll and personnel 
issues? We will begin there. I suppose the GAO would be the 
best suited to answer that.
    Mr. Kutz. I can start, Congressman. There is a process; it 
is a documented process. It was revised, I believe, in February 
2003, but it is a complex process where numerous people have to 
sign off to get what is called an active medical extension. 
With the four soldiers in Virginia, I think we found they were 
able to get their initial extension but then, because the 
process takes so long to fill out the paperwork, they kept 
getting dropped off the system and not only losing their pay 
but their medical benefits also.
    So it is a process, it is complex, cumbersome, and we are 
looking at that as an additional study for this committee to 
try to find the root causes and see if there are some short-
term and long-term recommendations to fix it. I believe that it 
is a human capital and process issue, not necessarily an 
automated systems issue from what we have seen.
    Mr. Putnam. You read a letter from a Florida National 
Guardsman and the Virginia Guard soldiers were able to contact 
you. What process is in place for them to know how to give some 
type of feedback? How did they know to contact you and what 
process did you use to followup with those individual soldiers?
    Mr. Kutz. They can contact us at what is called 
[email protected]. It is kind of a hotline that we have that 
soldiers or anybody in the government that identifies fraud, 
waste and abuse or other issues can contact us, so some of 
these e-mails and letters have come in through what is called 
our Fraudnet.
    Special Agent Ryan manages that process and we will contact 
these people, call them, e-mail them, if they are willing to 
talk to us and possibly build cases for purposes of studies 
such as the one we are doing right now for this committee with 
respect to the active duty medical extensions. We have several 
dozen of those e-mails that we are following up right now. That 
was one that just came last week as I mentioned that I thought 
was quite compelling.
    Mr. Putnam. I see that my time has expired, Mr. Chairman. 
Thank you very much.
    Chairman Tom Davis. Thank you very much.
    Ms. Norton.
    Ms. Norton. Thank you very much, Mr. Chairman.
    I would note that my colleague has indicated there have 
been numerous hearings and, therefore, I want to once again 
thank the chairman for bringing this to the full committee 
level. I don't know if that matters or if that helps. Usually 
shining the spotlight on problems like this helps.
    Mr. Chairman, may I ask that the January 18 article that 
talks about the disproportional loss be added to the record?
    Chairman Tom Davis. Without objection.
    [The information referred to follows:]

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    Ms. Norton. The testimony has been largely a description of 
the problem and a description of proposed solutions. As 
outraged as I am about this, I am results-oriented. I certainly 
understand that you confronted a crossover situation that was 
difficult, so I will grant you that. This wasn't something that 
could be handled with, very frankly as I associate it, the 
usual efficiency of the Armed Forces. I find the Armed Forces 
far more efficient, for example, than Federal Government, so 
this really bothers me. It takes from your reputation as far as 
I am concerned.
    You have an interim solution and I wonder if any of you can 
tell me or report to us any specific improvements that have 
occurred since any date you will name as a result of the 
efforts you all say are being made. If you will give me an 
``x''and then give me a ``y.'' You can give me units, you can 
give me overall Guard situation but can you report any 
improvements that are measurable over any period of time that 
you can name?
    Mr. Gregory. Ma'am, I would tell you that in Mr. Shine's 
testimony he referred to our experience with the Persian Gulf 
war. I can tell you that what we had done at that time was with 
the two existing systems we had, one from the Active component 
and one for the Reserve component. We would take Reserve 
component members and we would transfer them from the Reserve 
component system.
    Ms. Norton. I said measurable. I can understand there have 
been a lot of machinations. I want to know if you can say even 
in a single company it was this and now in that company it is 
that. That is why I say you are telling me about the proposed 
solutions. I want to know whether there have been any 
improvements that you can name that are measurable and 
documentable?
    Mr. Kutz. Representative, I can give you a few from the 
standpoint of the followup we did to prepare for this hearing. 
We had a week but we tried to contact all seven units that we 
looked at before. There are still a lot of the problems that we 
identified in the fall that have not been corrected. However, 
there are certain problems that have been corrected. We found 
hundreds of different pay problems, so some of those I can 
report, for example, some problems from the West Virginia Army 
National Guard Company we looked at have been corrected and 
several from the Colorado 220th Military Police Company have 
been corrected. However, there are a lot of others that have 
not and Major Chavez will be telling you probably the most 
troubling one as part of his opening statement for his panel.
    Ms. Norton. Could we try to get at the reason beyond the 
technological reasons for the problem with the interim 
solution? Who are the payroll employees here? Are they members 
of the Guard themselves, are they civilians, how are they 
trained? Who are these poor people who have to manage the 
situation at the gut level during the period of transition, who 
in the world are they and what assistance are they given since 
they are the ones who get beat up first? They never get to your 
level. I would like to know more about them, what assistance or 
training they are getting? Who are they?
    Mr. Gregory. Ma'am, in the Army the pay technicians can be 
civilians at U.S. property and fiscal offices in each of the 
States and territories as in the District of Columbia or they 
can be folks at our Reserve Center up in Ft. McCoy. They can be 
civilians and in tactical units, they can be soldiers, military 
folks, out in tactical units deployed in Iraq and Afghanistan 
and other places. They receive training, they receive unit 
training, they receive organizational training and in addition 
to that, since 2002, we have a list and we can submit that for 
the record, as to who has been visited and who has had that 
training, intensified training over and above the operations 
that are normal training because as we prepared for these 
events, both Iraq and Afghanistan, we went out and did 
additional training. There is training that has been completed 
from fiscal year 2002 up to now and there is additional 
training scheduled in 2004.
    Ms. Norton. If there is intense training, how do you 
account for the continued problems that arise over and over 
again in these units?
    Mr. Gregory. Ma'am, in one case, and I think that is the 
case you are going to hear later from the Colorado National 
Guard, is the fact that a human error was made when the 
soldiers came back from Afghanistan. Rather than doing an 
action that is defined as a curtailment of their active duty, 
which means back into reserve status off active duty.
    Ms. Norton. Is it your testimony that all this is human 
error?
    Mr. Gregory. Ma'am, my testimony is the example that I am 
giving you is human error.
    Ms. Norton. But I am after some systemic information here.
    Mr. Gregory. Ma'am, the systemic information is that as I 
said in my testimony, this is a truncated and stovepiped 
process that begins with personnel input, personnel 
transactions in a non-integrated process that then have to be 
passed to the finance process that affects pay. There are 
ramifications of that which say it is manual, it is error-
prone, and mistakes are made.
    Ms. Norton. My time is up. You are now describing the 
problem again for me. I am very sympathetic. I want to know if 
it is personnel. I want to know if it is something. Mr. Kutz.
    Mr. Kutz. As I mentioned in my opening statement, I think 
it is a combination of people, processes and systems. The error 
that Mr. Gregory described was initially human but the system 
exacerbated it in that the debts that I mentioned, the $48,000 
debts that were issued to those soldiers erroneously, there 
were no system edits in place at DFAS to prevent those from 
going out, no human being looked to see that this is obviously 
an erroneous debt and they could have stopped that problem 
right there.
    Ms. Norton. So once you put it in, it is not checked to see 
if it is correct?
    Mr. Kutz. In that case, yes.
    Ms. Norton. All I am interested in doing is isolating some 
of the causes of the difficulty. For example, if one of the 
things we did was to put people whose job it was to check up 
the line until you get to the end of it when it is harder to 
check because the error has then been passed on, we might get 
toward some kind of remedy here. I am very much interested in 
remedy rather than countless hearings which beat up on you all. 
I would ask you to consider the notion of something that we do 
in other aspects of life in different ways. Computer errors, 
for example, happen all the time and you are going to find that 
when you get to DIMHRS, you are going to find those kind of 
errors. To the extent there can be people who check all the way 
up the line, it seems to me that we would be doing a service 
for those who are injured and for the reputation of the Armed 
Forces.
    Thank you, Mr. Chairman.
    Chairman Tom Davis. Thank you very much.
    Mr. Schrock.
    Mr. Schrock. Thank you, Mr. Chairman.
    First, let me say I want to identify myself with most of 
the statement by my friend from Florida. I agree with him that 
we can create the finest weaponry and the finest platforms in 
the world and let them hit their target with precise accuracy, 
yet when it comes to the people equation we are sorely lacking. 
It seems to me that the people skills are abominable right now. 
That is half of this problem. We can go to war, we can plan and 
go to war in 3 or 4 months, but we simply cannot put these pay 
issues behind us. I do have that report, by the way, Secretary 
Gregory, and it says in here, in the near term 3 to 6 months, 
mid-term 6 to 36 months, long range, 36 months plus. This is 
outrageous. This is absolutely nonsense. We could be in three 
other conflicts by then and to what point are these people 
going to stay and tolerate this stuff. They are going to get 
out. We are not only going to have a recruiting problem, we are 
going to have a retention problem. If I was one of these folks, 
I would get the heck out because it is not worth it. I almost 
agree with Mr. Putnam when he says you really don't care. How 
long does this have to go on? We have had these hearings over 
and over and over again and something has to happen and it has 
to happen quickly.
    The General is absolutely right. Every single person we 
send over there on Reserve, Guard and active duty have met the 
task and they have met it beautifully. I have been privileged 
to be in Afghanistan once and Iraq twice, and you cannot tell 
the difference. They are doing exactly what they have been 
trained to do and they do it better than anybody has in the 
history of this country.
    Why does it take 14 months for a guy to take care of a debt 
that we said he had that he didn't have? Poor customer service, 
bad training, why does it take that long? Why does a kid have 
to get on a plane with a box with his records in it to go get 
his problem resolved and get shot at at the same time? 
Gentlemen, that is unsatisfactory and we have to do something 
about it. We simply cannot allow that to happen. It has taken 2 
years to fix accounting problems. Why? No integrated payroll 
process? Why? Separate payroll systems for both Active and 
Reserve? There is no reason for that. Frankly, I do thank GAO 
for this report.
    Let me go to the question I have. The General Accounting 
Office pointed out multiple times in their report potentially 
hundreds of organizations and thousands of personnel could get 
involved in adjusting and setting in motion various alterations 
to the National Guardsman pay status. They also pointed out 
that the component responsible among active Army, National 
Guard Army and DFAS for taking the required actions was not 
clear. I can assure you in my two and a half decades in the 
Navy, it was always clear to me that I was responsible for the 
health and well-being of the people who worked for me and the 
men and women assigned to me and that ensuring the smooth 
performance of pay and personnel system issues was critical to 
their ability to perform. I would suggest that many, if not 
all, officers and enlisted personnel in the military today 
agree with me. I certainly didn't have these problems in the 2 
years I lived in-country Vietnam and I don't know of anybody 
that did. They probably did but not to the extent now.
    My question is, given the poor performance of this system, 
who is responsible for ensuring that when a soldier is called 
up and deploys, that he or she is receiving the correct amount 
of pay? Who is charged with being an advocate in ensuring the 
system works? My observation is that until we clearly assign 
this responsibility, this problem is going to continue. I would 
appreciate comments from all of you.
    Mr. Gregory. Congressman Schrock, I would say that each and 
every one of us is accountable and we have a process that is 
out of whack with reality. We have a process, for example, in 
the case of a Guardsman, we have the home station and the U.S. 
Property and Fiscal Office that is responsible to make sure 
that pay record for that soldier, National Guardsman, who is 
going to deploy is accurate and has all the information in 
there with regard to entitlements, and so forth. When that 
soldier then goes to a mobilization station, there is 
responsibility at the mobilization station to make sure that 
the input is made to the pay system to ensure, for example, 
that certain entitlements kick in when they are supposed to 
kick in by law. When that soldier moves from that mobilization 
station to the theater, again, there are entitlements that have 
to be changed, that have to come into play given time, for 
example, hazardous duty pay location, and that input has to be 
made.
    Along the way, you start with a National Guardsman, you 
start with the accountability for that National Guardsman to 
make that pay input correctly. You then follow with an active 
duty Army civilian and/or soldier who is responsible to make 
the input for the entitlements as they move from home station 
to mobilization station and then to in-theater. At that point 
in time, DFAS has to receive inputs from those of us who are 
part of this partnership, the National Guard and the Army. Once 
that input is provided, then it is DFAS' responsibility to see 
to it that the pay system reacts to that.
    Mr. Schrock. Is it a series of people that are providing 
this information?
    Mr. Gregory. Sir, it is.
    Mr. Schrock. As I said, thousands of people are getting 
their hands on this thing and obviously somebody is not 
competent, obviously somebody is not trained, and obviously 
they need to have one person working on each person's personnel 
record, including pay, so that this doesn't happen.
    Mr. Gregory. Sir, I agree with you.
    Mr. Schrock. Then why isn't it happening?
    Mr. Gregory. Sir, it is happening.
    Mr. Schrock. Why isn't it getting fixed?
    Mr. Gregory. Sir, we are working to get it fixed. I would 
tell you that when we started to get rid of all of the people 
involved in this process, the numerous, various people from 
different organizations and different places--the issue has to 
be that you need an integrated process and an integrated system 
to support it. That means when soldier whatever, Major Mendez, 
for example, gets activated to get deployed.
    Mr. Schrock. I think it is Chavez.
    Mr. Gregory. Chavez. Excuse me. When that happens, bringing 
him on active duty happens from a personnel order transaction. 
At that time, the personnel and the process and the system 
supporting that action, when it happens to personnel that kicks 
of what happens in the pay system. You can get rid of the 
people and the training requirement and all the hands involved 
in that process. We recognized this several years ago and the 
Department of Defense has granted and has started the effort 
with the Defense Integrated Military Human Resources that is 
going to affect all services, all components in all services, 
that would result in that input coming from a single 
transaction that initiated the personnel transaction of 
starting Major Chavez on his active duty.
    Mr. Schrock. But you know, Mr. Secretary, little more than 
2 years ago, September 11 had not even happened. Afghanistan 
hadn't happened. Iraq hadn't happened. Now they have all 
happened and successfully. Yet the pay system for the kids that 
have made this work are still screwed this work and I think 
that is unconscionable, I think that is unforgivable and I 
think that is incompetency at some level, somewhere, and simply 
has to be fixed.
    I am sorry, Mr. Chairman. I am out of time but I have a lot 
more.
    Mr. Kutz. Can I add one more thing to that?
    Mr. Schrock. You can.
    Mr. Kutz. I got to meet a lot of the soldiers down at Fort 
A.P. Hill which is near Fredericksburg, as you are aware. One 
of the things they told me, I may butcher this the way I say 
it, but each of the soldiers there and I think in Colorado, and 
Major Chavez can tell you this too, carries what they call an 
``I love me'' file or something like that which they feel it 
all falls upon them at the end of the day and that the soldier 
is the one responsible and until this process is fixed.
    Mr. Schrock. But it shouldn't be.
    Mr. Kutz. I know it shouldn't be but I am just trying to 
answer your question. Right now, I think that is where we are 
today, that the soldier feels they are responsible at the end 
of the day and they have to carry around this ``I love me'' 
file with them to make sure all their pays are done correctly. 
So that is why we need to get this fixed.
    Mr. Schrock. As you can tell, I am passionate about this 
but I lived in a uniform for two and a half decades so I 
understand the process. This stuff never happened to me or 
anybody I ever knew. We are in times now unlike any when I was 
active duty. These kids are put in harms way in a greater way 
than I ever was and we have to make sure this gets fixed or we 
are going to lose them.
    Thank you, Mr. Chairman.
    Chairman Tom Davis. Thank you very much.
    The gentleman from Massachusetts, Mr. Tierney.
    Mr. Tierney. Thank you, Mr. Chairman.
    I think the Members who have already spoken have pretty 
much encapsulated what many of us probably feel and want to 
say. It strikes me that this need for resources in the area of 
personnel and for IT is a little bit ironic since even our own 
Secretary Rumsfeld has noted he thinks the size of our 
Department of Defense budget right now and one time he 
expressed a need to terminate cold war systems that were no 
longer directed to 21st century challenges, redundant systems 
and things of that nature. The money certainly is there within 
the overall DOD budget to put some of it over to the support 
and systems that would support the men and women doing the job.
    The only question I have that might add something to what 
we have already heard is, can any of you tell me what might 
have been done since the release of this November 2003 GAO 
report on the customer service end of things? How are our 
members of our National Guard who may be experiencing a problem 
today being better served in terms of taking some of that 
anxiety out of their own, their spouses' and families' lives 
when an issue does arise?
    General Schultz. What we have done inside the Guard, as 
already mentioned is we have increased our training. Some of 
these are soldiers', some of these are civilians but we have 
taken on this issue of understanding a complex pay system, 
looking after the soldier in the process. Customer care is the 
topic of the question and my sense is that through the 
Adjutants General, NTSA, the States, territories, and the 
District of Columbia, what we have said is, this is a priority 
for us. In spite of the fact the system is not friendly, we are 
going to have to work our way through this until an in-State or 
a target kind of software application comes to be. We have 
taken that one on and each of the States has had increased 
training and awareness on the processes of the activity you 
asked about.
    Mr. Tierney. What is your feeling for how that is 
progressing?
    General Schultz. Progress, but slow.
    Mr. Tierney. Mr. Shine.
    Mr. Shine. I would just like to add that I think the best 
customer service we can provide would be obviously not having 
the problem to begin with. What we are trying to do, and I 
actually agree with your statement that it is almost 
unconscionable that the systems are not able to keep pace with 
modern events today. The reality is when we first started 
seeing large numbers of reserve component soldiers, sailors and 
airmen being mobilized during the Bosnia-Croatia conflict, we 
recognized then that the system was not up to what it needed to 
be. The Department's solution was going to be the DIMHRS 
program, the Integrated Pay and Personnel Program. When that 
didn't come along as fast as we wanted, we fully recognized we 
needed to do something.
    There are two things we are doing. First of all, we 
developed the interim system that we call Forward Compatible 
Pay and we are very, very optimistic that is going to be up 
within about a year. While we would like to see it come sooner, 
the reality is it is probably going to take that time to 
develop a system of this magnitude but we can input the Active 
and Reserve component into one system, we can produce a pay 
statement that is understandable. The GAO found that the 
statements in many cases are unreadable. The statement will be 
very readable for these individuals. We feel that is a very 
positive step.
    The second thing we tried to do is while the current system 
is going to be with us for a while, it is manually intensive. 
That means it is a high risk proposition and that increases the 
possibility of human error. As Mr. Gregory described a few 
minutes ago, there are a lot of people that have to touch it as 
the soldier goes through the process. While I understand that 
is one of the weaknesses of the system, I think we also need to 
keep in mind that it is also one of the strengths. By that I 
mean soldiers are in a very dynamic, fluid situation today. 
They don't know if they are going to be doing drill training in 
their home State this month, if they are going to be on active 
duty training the following month, if they are going to be 
deployed overseas the following month. Because of that, I think 
it is important that we have a system that allows them to be 
able to be serviced as they move through those various stages 
of either training or deployments. So the system was designed 
to do that but it does spread the responsibility over a large 
frame.
    General Schultz, Mr. Gregory and I have joined together in 
partnership. You see displayed over here the 49 action items 
that we have agreed on that we are going to work and we have 
already started to make some changes to the system in effect 
today, notwithstanding it is fraught with complications. The 
training we have already done to the people at the mobilization 
and demobilization stations which is really the genesis of 
fixing pay problems, and also the additional training, we 
partnered with the Army and sent people over to the theater in 
Iraq and Kuwait to train members there and also people from 
Afghanistan who came down and received that training. Some of 
the situations the GAO found where the reserve component 
soldiers were actually turned away from the Finance Office's 
example because people were not trained to handle reserve 
component entitlements. We think those things are a thing of 
the past because of the positive things we have done here in 
just the last few months.
    Mr. Tierney. Who was contracted to do the hardware aspect 
of any of the changes being made in terms of getting the proper 
technology that you need and who is doing the actual training? 
Is it being done in-house or is it being outsourced?
    Mr. Shine. We are doing the training ourselves. We have 
subject matter experts in that. It is just a matter of making 
sure the people at the site, whether a mobilizationsite, a 
demobilizationsite or an in-theater deployed tactical finance 
office, the people are there, we just needed to make sure they 
had the proper training to do what they needed to do.
    In terms of the system that we operate today, the Defense 
Joint Military Payroll System, that is a Government-operated 
system. We have Government civilians who actually do the 
software. For the Forward Compatible Payroll System, we are 
actually using what is known as commercial off-the-shelf 
software. We are having to make some updates to it because of 
the unique requirements imposed on us because of the unique 
military requirements.
    In the DIMHRS system, our ultimate system, we have also 
bought commercial off-the-shelf software and we have hired a 
commercial contractor to be the developer/integrator to 
implement and field that in the Department of Defense.
    Mr. Tierney. Who would that be?
    Mr. Shine. Northrop-Grumman was hired as a developer/
integrator, sir.
    Mr. Tierney. Thank you.
    Mr. Gregory. Congressman Tierney, to your questions about 
customer service, I would like to also add that in the Army 
Reserve, a couple of items dealing directly with customer 
service. In the Army Reserve, they have the central facility at 
Ft. McCoy and what they have done is establish two separate 
help lines. These are DSN help lines that can be called from 
anywhere in the world. One is an individual customer, the 
soldier question or the dependent or the family member can call 
this help line and get questions answered. They have also 
established a help line from a technical standpoint so that the 
technicians or the individual doing the pay input or questions 
if they had questions about that, they could also get the 
technical assistance from this help line.
    In addition, we developed a standard flyer and it is a 
front to back and I believe that is included in the package we 
provided you and if it is not, we will make sure you see it, 
and it is also sent to his unit and his leadership like the 
First Sergeant and so forth would have ready access to what 
their entitlements are. For example, if you are in this 
location, these are the entitlements you have a right to, to 
keep them informed and keep them advised.
    The Defense Finance and Accounting Service also provide our 
pay account access called MyPay and so through the Internet 
anywhere in the world, they can get in and see their pay 
account and have access to it. In addition, the individual's 
family member, spouse, whatever, also has a read-only access to 
that same MyPay customer kind of question.
    Mr. Tierney. Thank you.
    Mr. Shays [assuming Chair]. I thank the gentleman.
    Mr. Lantos, you have the floor.
    Mr. Lantos. Thank you very much, Mr. Chairman.
    Before I ask some questions, let me pay public tribute to 
you for the extraordinary series of hearings you have been 
holding as our chairman. You have performed an enormous public 
service and I want you to know how much many of us appreciate 
it.
    Mr. Shays. Thank you.
    Mr. Lantos. The report we are considering raises serious 
concerns about the ability of the brave men and women of the 
National Guard to receive their proper paychecks when they have 
been activated to service in the defense of our country. I am 
particularly concerned about the findings that the California 
Army National Guard Military Police had experienced delays in 
active duty pay for up to 3 months. This is unfortunate and I 
am pleased we all agree it is unacceptable.
    This report obviously details problems members of the 
National Guard have experienced with the active duty pay system 
but it also highlights the problems that the pay gap can cause 
to the families of the Guard. It is bad enough that many 
activated National Guardsmen and women suffer a loss in family 
income when their spouse is activated but it is unconscionable 
that these same families are not even able to receive the 
military paycheck that their spouse is often risking his or her 
life for.
    As some of you may know, I have legislation pending to 
close the pay gap. I have a number of questions and I would 
first like to direct one to General Schultz, if I may. Sir, you 
have a long record of commendable service to our country that 
has involved duty as active military and as activated National 
Guard. I am curious to learn your thoughts about the following 
situation.
    Suppose you had two E-3s in Iraq, one was National Guard 
and the other active duty military. If the employer of the 
National Guardsman has decided to pay his employee the 
difference between his civilian salary and the salary of an E-3 
as over 400 employers to date have decided to do, is it your 
opinion this would cause tension between the Guardsman and the 
full-time military soldiers?
    General Schultz. My sense is it would not cause tension.
    Mr. Lantos. I appreciate that, sir. A second question. 
There have been numerous reports that the Reserve components 
will suffer from retention and recruitment problems. What is 
your opinion of the immediate retention of the National Guard 
and do you think that any retention problems are directly 
connected to the pay problems being experienced?
    General Schultz. Across the Army National Guard today, the 
units with the lowest turnover are those that have already been 
deployed and are back home. Units with the highest retention in 
the Army Guard today are in fact those that have deployed. I 
wouldn't even suggest that all is well and we can get through 
the next year without some concern about the retention of the 
soldiers that are now in Iraq, Afghanistan and stationed around 
the world. So retention is an ongoing item of interest for us, 
for me personally an item of concern, and the issues of pay, 
soldier well-being, family well-being, no doubt is on the top 
of their list as it reasonably should be. We have not seen 
retention concerns in terms of unit readiness to date.
    Mr. Lantos. Let me pursue that because I don't think your 
answer is as clear as I think it should be. When you have an 
individual called up and sent to Iraq, this represents family 
disruption along many lines, we agree on that?
    General Schultz. We agree.
    Mr. Lantos. If the income of that family drops by 70 
percent, does that add to the pressures, does that add to the 
problems that the family faces?
    General Schultz. Yes, it does.
    Mr. Lantos. So closing that gap would improve the moral of 
the individual involved?
    General Schultz. In my opinion, yes.
    Mr. Lantos. Thank you, sir.
    If I may turn to Mr. Shine. The report outlines many of the 
difficulties that members of the National Guard have 
encountered in getting their proper paycheck. In your opinion, 
how likely is it given the current system that the DFAS could 
provide the total salary base military pay allowances and 
special pay so that any employer who wanted to pay his 
activated National Guard the difference between their military 
and civilian salaries would be able to determine if any pay gap 
existed?
    Mr. Shine. DFAS in fact does have the capability to provide 
that information either electronically or in hard copy. We 
would have to investigate if there are any privacy issues that 
would result from it being released outside the Department of 
Defense but we have the capability to answer your question.
    Mr. Lantos. So your testimony is that if I am an employer 
who is civilized enough and far-sighted enough and patriotic 
enough that I wish to close the pay gap, you can provide me 
with the information so my employee now on duty can continue 
receiving his pre-activation salary?
    Mr. Shine. We have that capability, sir, but like I said, I 
would just add the other caveat that I would have to explore to 
determine if there are privacy issues in releasing that 
information to a private employer. But to answer your specific 
question, the capability does exist, yes, sir.
    Mr. Lantos. I appreciate your answer and General Schultz's 
answer.
    Let me just say, Mr. Chairman, I very much look forward to 
your co-sponsoring my legislation which is the most non-
partisan legislation introduced in this session of Congress. 
Our National Guardsmen and Guardswomen and Reservists are 
Republicans and Democrats or Independents. We are calling on 
them to make a major sacrifice as they are activated. We are 
calling on their families to make a major sacrifice and to add 
to the obvious complexities and difficulties that activation 
means for families, to add a financial burden on top of that, I 
think, is unconscionable. I intend to see Secretary Rumsfeld 
and the President on this issue and I hope we can move in a 
bipartisan fashion because this is the least we can do for our 
military.
    Thank you, Mr. Chairman.
    Mr. Shays. I might add that you will have a better chance 
seeing them than I will.
    Mr. Schrock.
    Mr. Lantos. Let me try and arrange an appointment as well.
    Thank you, Mr. Chairman. [Laughter.]
    Mr. Shays. Thank you.
    Mr. Schrock, I am going to go back to you. I have some 
questions but I am going to wait.
    Mr. Schrock. Let me thank my friend from California. I 
really enjoyed those questions. The only problem is those 
people who are self-employed have a real difficulty because 
they don't have an employer to make up that difference. I know 
of a couple in Westerville, OH, he owned two restaurants, she 
was an accountant. He is a Sergeant Major in the Reserves. He 
has been in Iraq for over a year and is being extended. When I 
talked to his wife last, they had put the businesses on the 
market and are about ready to put their house on the market 
because they are going under. That is a huge problem and that 
is something we should not allow to happen in this country, but 
I appreciate what you are doing.
    Mr. Lantos. May I respond to my friend?
    Mr. Shays. Absolutely.
    Mr. Lantos. I fully agree with my good friend and I would 
be delighted to work with him to improve my pending legislation 
to make provisions at some reasonable level for the self-
employed. I think you have raised an extremely important point 
and I appreciate your interest in this issue.
    Mr. Schrock. Thank you. Let me ask one more quick line of 
questions.
    Observations in the GAO report that both military pay 
offices and U.S. property and fiscal offices charged with 
adjusting Guard pay accounts in preparation for deployment were 
not adequately trained on the extensive pay eligibility or 
payroll processing requirements used to provide accurate and 
timely pays to Army Guard soldiers. While this is an 
administrative matter, their poor performance leads not just to 
creating havoc in the personal lives of these soldiers and 
their families when they do not get paid but erodes their 
operations and performance as we know by distracting them. If 
we are going to rely on a total force concept, this must become 
a readiness issue.
    We kind of addressed this earlier but I would like to go 
into more detail. Are the correct people charged with getting 
our Guardsmen paid? If not, should National Guard systems be 
merged with active duty systems and handled by a single 
organization to which training can be focused? Otherwise, a 
simple administrative requirement will become a hindrance to 
readiness. I know it was touched on but I would like to know 
what your thoughts are.
    Mr. Gregory. The first reaction I would have is with regard 
to the National Guard. Each one of the 54 individual States, 
territories and the District of Columbia has that 
responsibility today for their own people. I don't know that 
centralizing that, given today's environment, would make things 
better. I don't believe it would. As a matter of fact, I think 
it would slow the already slow process down even more.
    In the future, with what is already working as far as the 
Forward Compatible Pay System that will come on board before 
DIMHRS and being designed so that it comes on before DIMHRS and 
then the DIMHRS process, I would say within the Guard each one 
of the States and territories initiates its own personnel 
actions. I would say once that process changes so that each one 
of the 54 States and territories and the District is providing 
their individual personnel input data into the system which is 
integrated and will cause the same transaction to happen in 
pay, I think it is better off at the PFOs.
    Mr. Schrock. I probably know the answer to this but active 
duty, we are not having that pay problem with them?
    Mr. Gregory. You have less of a problem but I would tell 
you that what GAO found with regard to the current pay 
processing system also happens and also affects the active 
duty. It does to a lesser degree because there is less 
fluctuation, less change, there is not a ``mob'' and ``demob'' 
kind of process.
    Mr. Schrock. When it comes to combat pay or hazardous duty 
pay, those issues may get goofed up a little bit in the active 
duty as they do with the Reserves?
    Mr. Gregory. Yes, sir, because a soldier at Ft. Campbell 
doesn't get hazardous duty pay when he is at Ft. Campbell but 
when he deploys, and I am sure the GAO will support, when he 
deploys we have to make sure that change happens and it is 
going to happen in-theater because of when the change has to 
happen.
    Mr. Schrock. Thank you, Mr. Chairman.
    Mr. Shays. Thank you.
    I think I will recognize myself and then Mr. Turner, I will 
recognize you.
    I would like to read part of my statement and then I have 
some questions. I don't intend to read all my statement. I will 
say, I don't think we had an idea that the Pentagon's 
Byzantine, leaky financial supply lines would stretch from 
Bridgeport to Baghdad but today with the Guard and Reserve 
units playing indispensable roles in Afghanistan, Iraq and here 
at home, fixing pay and allowance calculations is no mere 
bookkeeping challenge. Timely, accurate compensation is now a 
critical element of readiness, retention and morale. I think 
you gentlemen understand that.
    When you talk about fully 94 percent of the soldiers in the 
six National Guard units audited by GAO encountered problems 
with earning calculations during one or more steps of their 
mobilization, deployment or demobilization, that is not just a 
significant rate of error, it is a virtual systematic meltdown 
of critical support function that will be tested to meet the 
demands of the massive troop rotation now underway. Army units 
cannot wait for the deployment of grand strategies and global 
computer architectures, solutions have to fix problems today 
and build today the simpler, integrated systems envisioned for 
the long term and I think your testimony recognizes that.
    The men and women of the Guard don't serve for the money 
but paying them for what has been promised is a debt of honor 
we owe to those who volunteer to do democracy's most dangerous 
work. If you feel the passion on the part of Members, I think 
we feel we have a role to play which is an understatement--we 
sent them there.
    Inaccurate deployment pay is just one way the Army of One 
does not always fight as one army. Shortages of mission-
critical equipment like armored vehicles limit access to 
training facilities and prolong deployments, undermine the 
unquestioned determination and zeal Guard and Reserve units 
bring to the fight.
    I have to tell you I have constituents who have described 
literally the challenge they have right now getting their 
Humvees to have armor and knowing that 26 Army National Guard 
have lost their lives, I just am haunted by wondering if some 
of them lost their lives because they didn't have the proper 
equipment that others in the military have. I could understand 
that the National Guard would be hand-me-downs when it came to 
what they trained in in the days that they weren't sent off to 
battle but now, I am also haunted by the fact that we have 
literally treated them as a different Army. So I think this pay 
issue is symbolic of something that goes much deeper.
    I would like to ask how representative of the six units in 
the GAO of all Army Guard personnel pay problems is this 94 
percent pay statement inaccuracy in the rest of the Guard?
    Mr. Kutz. I don't think anyone knows that. We found the 
overseas deployments had more errors and the duty folks in 
common if they would concur that would be more systematic but 
the process they are operating under is broken in many ways and 
the Department recognizes that, so similar types of errors are 
occurring. As I mentioned earlier, we are continuing to get e-
mails and talking to people as part of our subsequent work, 
seeing that many of these problems persist today.
    This is a systematic problem, there are lots of errors out 
there and those errors sometimes linger. One small human error 
such as the one that Major Chavez is going to describe in his 
statement can cause a chain reaction of something that now has 
taken 14 months and has not been resolved.
    Mr. Shays. Let me say to all of you, we know you are 
dedicated public employees and we know you don't like this any 
more than we like it but I think we believe that it has not 
gotten the attention it deserves because other things have been 
given higher priority. Hopefully that will have ended.
    Why were these problems not uncovered through Department of 
Army oversight? Why did it take GAO?
    Mr. Gregory. I would say that GAO certainly added 
definition and scope to the problem. I would say we did know we 
had those problems. I would say that because we started 
corrective actions before we even had the GAO report. I would 
tell you that the problems specifically in the GAO report are 
just that, very specific. We know we have had problems. Back in 
the mid-1990's, we knew we had a major problem with the fact 
that we had two separate pay systems. We knew we had a problem 
with the fact that we had separate, stovepiped, non-integrated 
personnel and payroll systems that caused manual input of many 
people at many locations which meant generically errors and 
slowness and responsiveness to give the right pay timely to 
every soldier. We knew that.
    I will tell you honestly, there are different priorities 
for different things. We suffer sometimes with that difference 
in priorities and there are things we would love to get to and 
love to get to quicker and we don't. I would also tell you that 
before DIMHRS, which is now a very important process that, 
because of its complexity, has experienced 3 years of delay. In 
lieu of and in recognition of that delay, that is why the Army 
and the National Guard and the Defense Finance and Accounting 
System got together to pre-work on the Forward Compatible Pay 
System.
    Mr. Shays. We have had Guardsmen who have been bounced 
around from one unit to another. Who can I tell a Guardsman to 
call when they have problems knowing they will be helped 
immediately by someone who has access to all their relevant 
paperwork?
    Mr. Gregory. For all their relevant paperwork.
    Mr. Shays. If we get a call from a Guardsman and we want to 
help them, who can we tell them to call or who can a Member of 
Congress call?
    Mr. Gregory. I would go right back to the State and the 
U.S. property and fiscal officer in that State.
    Mr. Shays. That is the person that is going to take 
ownership?
    Mr. Gregory. Yes, sir. For a Guardsman in the State, the 
first place to go if they have a problem and they came to you 
or if they came to me, the first place I would go for the 
status of their pay record would be the U.S. property and 
fiscal officer.
    Mr. Shays. Not just the status, we want the problem 
resolved.
    Mr. Gregory. That is where I would go.
    Mr. Shays. Tell me the name of the individual again or the 
title?
    Mr. Gregory. The U.S. property and fiscal officer who is in 
each one of the 54 States, territories and/or District of 
Columbia.
    Mr. Shays. You believe their problem would be solved?
    Mr. Gregory. I believe that would be the initiation of the 
problem resolution and if that problem resolution through the 
U.S. property and fiscal officer's records and audit trail for 
that individual soldier would lead either to the Department of 
the Army being the cause of that problem or the Defense Finance 
and Accounting Service being a part of that problem, that is 
where that USPFO knows to go.
    Mr. Kutz. I would say that is correct. They have the 
capability to solve the problem. They are not all equally of 
the same quality, training and ability to do so. We did see 
differences in the quality of people in the different States. 
That is one of the things they are looking at, getting better 
training out there for these folks.
    Mr. Shays. Mr. Turner, I would recognize you at this time. 
I have a meeting to go to and I will come back. I would have 
you take the dais up here.
    How long do you think it is going to take to solve this 
problem?
    Mr. Gregory. This problem won't be solved until we have an 
integrated process and a system to support it.
    Mr. Shays. How long will that take?
    Mr. Gregory. It is going to take at least 3 or 4 years. It 
will take 3 years to get the integrated system up and deployed 
and it will take another to get accustomed to that system, 
people using it correctly. But before that, we will have a new 
pay system and that is why we took the action we did.
    Mr. Shays. I would like to suggest that you think of having 
an ombudsman for the National Guard so that when someone calls 
their particular unit, they don't get the kind of response, 
that there be one person and if there is that person, I would 
like to know about it. There needs to be one person that can be 
aware of all the screw-ups that happen. If it is going to take 
3 or 4 years, you're going to need a manual process to sort 
this out for some people.
    Mr. Gregory. Yes, sir. We will do that.
    Mr. Turner [assuming Chair]. I want to apologize for not 
being here at the beginning of the hearing. I am also on the 
Armed Services Committee, which is currently having a hearing 
on issues relating to service levels in Iraq which also 
includes issues of Reservists and the Guard.
    To follow on with the comment from Mr. Schrock, I too in my 
district have an individual who has lost his business, was self 
employed and received a highlight on the struggles of his 
spouse on his deployment and related to the ability to get 
assistance while he has gone through what are absolutely 
governmental processes. The one thing that strikes me from 
hearing her story and having talked to her and then reading the 
information of the failure to provide appropriate pay is the 
burden not just on the Reservists and National Guard themselves 
but also on the families who many times are probably left with 
the responsibility of sorting this out, not only the financial 
burden of the impact of this.
    In hearing her story, it seems to me that we haven't done 
enough to have an entry point where spouses and family members 
can have an advocacy and assistance process when problems like 
this come about. I would like you to address the issue of, if a 
pay problem like this has occurred, there is a deployment that 
has occurred, the spouse is left behind with the responsibility 
for trying to sort this out for the individual who is trying to 
focus on the task for which we have deployed them, what 
particular assistance might be available to them that could 
help them through this process so that they are not just left 
feeling separated from their loved ones and also left with a 
significant problem. Mr. Kutz.
    Mr. Kutz. I think they can better answer that from the 
Department, but we did see that was a major source of concern 
of the soldiers, that they were in Afghanistan or Iraq and 
their spouse was at home being left to deal with the problem. 
In some cases, there were people there to deal with and in 
other cases there was a source of frustration because they 
weren't sure where to go or wherever they went their problem 
was not satisfied. I think they can speak more systematically 
to what support structures are in place to handle families.
    General Schultz. We have 400 family centers across the 
Nation today that were really created to do just what you are 
asking. That would be a local point of contact, just a phone 
call away, local community. Now 400 won't cover all the 
communities that are supporting our missions today, so in 
addition to the family centers we have rear detachments in 
units that are currently deployed. Some of the units that were 
deployed early on in Operation Iraqi Freedom and Enduring 
Freedom that did not have rear detachments, so in fact we 
uncover some armors, closed the doors and sent the units off to 
missions, we had a gap at the local level but we have since 
responded to that so we at least have a local presence to get 
at that first phone call from a local community to help with a 
person's particular concerns regarding the payroll questions 
you asked.
    Mr. Turner. Do you have any information as to how effective 
that is? If someone goes to one of these centers, is there a 
highlighted responsiveness on the part of the Army or the 
National Guard offices? How effective is it if a spouse who 
obviously is now burdened as a result of deployment to respond?
    General Schultz. Initial effectiveness was not good at all. 
We didn't have the presence in the communities. We have since 
created training programs for the members that are staying back 
home. However, I cannot understate the complexity of the 
question regarding our payroll system, so you have to get to at 
least the State level, State headquarters, basically to work on 
the question of a particular State, unique issues regarding the 
payroll because it is a very complex process.
    Mr. Turner. One of the issues that has been important to me 
and I know in many of these committees there have been 
discussions concerning the lack of health care for the 
Reservists, National Guard and the switch to TRICARE upon 
deployment. In the last supplemental, there was an attempt to 
provide at least a beginning look at how we can provide our 
National Guardmembers health insurance. I know as we look to 
the deployment and the pay issues, switching of health 
insurance plans is also a difficult issue. As we start talking 
about the prospects of expanding health care coverage so that 
the National Guardmembers who do not have coverage might have 
greater ease toward deployment, I am concerned in looking at 
the issues of the pay as to whether administratively the Army 
would be able to handle this. Could you give me your thoughts 
on the issues of how you are going to resolve this; if you are 
given additional responsibilities to track, are you going to be 
able to maintain these?
    Mr. Shine. I will try to take a shot at that. I can only 
give you an answer from the experience we recently went through 
when we enacted the Thrift Savings Plan that was originally 
designed as a 401(k) plan for civil servants in the Federal 
Government and expanded it to include military personnel. 
Because of the payroll platforms that we are dealing with, the 
Defense Joint Military Pay System that exists today, basically 
1960's era COBOL-type coding, implementing the Thrift Savings 
Plan, while we totally supported and embraced the legislation 
and its intent, is extremely difficult. It took us about a year 
and a half to actually do the programming, to get it in place 
and even after it was in place, we did have a few problems 
which we think we now have behind us.
    While I would have to see the exact details of exactly what 
the legislation would entail, I can just tell you that when we 
are dealing with the current system, with the 1960's COBOL 
based system, major changes are somewhat difficult to 
incorporate. Just to amplify on your question, one of the 
things we think we will achieve in the new objective system we 
want to move to, the Defense Integrative Military Human 
Resource System, because of the architecture on which it is 
based, we feel changes like that would be much more 
accommodating.
    Mr. Turner. Thank you.
    I will recognize Mr. Ruppersberger.
    Mr. Ruppersberger. Good morning and I want to apologize for 
not being here at the start of this hearing. Had it not been 
for a markup elsewhere this morning, I would have been here 
from the gavel because I believe there can be no more noble 
effort this committee or Congress can do than assure our men 
and women in uniform that we care for them.
    I would like to commend the leadership of this committee 
and the subcommittees for initiating this critical report. I 
would also like to commend both the GAO and DOD for their 
diligent efforts. It is important to keep in mind that today's 
hearing is not about finger pointing or blaming, it is about 
learning how we can get better at protecting the very service 
men and women who protect our life each and every day. This 
report and this hearing are about learning from our mistakes 
and caring for our soldiers better. In reading this report, I 
was struck by one powerful truth. America's Reserves are no 
longer just weekend warriors. With the days of compulsory 
service long gone, the precious gift of American democracy is 
defended a lot by a voluntary force. The old notions of active 
duty versus reserve components are just that, old.
    Today's Armed Forces serve side by side, men and women, 
full-time, retired and Reserves. They go where they are told 
and carry out missions they do not question. In return, these 
men and women deserve to be treated well. They deserve to be 
paid fairly, accurately and on time, and when mistakes occur, 
those in uniform deserve immediate resolution. Families hearing 
about casualties and wounded should not have to deal with 
payroll errors as well. This is the United States of America 
and we can do better.
    I agree with GAO and the DOD that these problems are 
complex because the make up of our military is complicated. 
Various branches, Reserve components, readiness statuses, and 
mobilization options give the DOD enormous flexibility. The 
price of that is inherently complex processes and procedures 
and there is still no single fix to all these problems.
    I share many of the GAO's concerns but I have one this 
report did not seem to address. There are seven Reserve 
components in our Armed Services and this report focused on 
only one, the Army National Guard. Are the problems highlighted 
in this report common to the other six components and if so, 
what is the DOD doing to address the problems systematically? 
Are we merely ``Band-aiding'' what requires more long range 
thinking?
    From 1945 to 1989, Reserves were activated four times with 
fewer volunteers and smaller mobilizations. Since 1990, the 
Reserves have been activated six times. The era of voluntary 
and Reserve forces is here; the old system employed by DOD must 
keep pace. This is the new way of doing business in military 
readiness planning. Our men and women in uniform are the best 
in the world, fully committed, impeccably trained, and 
incredibly dedicated. These mothers, fathers, husbands, wives, 
sons, and daughters put their lives on hold to keep us safe. We 
owe them better.
    I am proud to serve with my colleagues on both sides of the 
aisle to make sure we find a better way for our men and women 
in uniform. Thank you, Mr. Chairman.
    [The prepared statement of Hon. C.A. Dutch Ruppersberger 
follows:]

[GRAPHIC] [TIFF OMITTED] T2951.054

[GRAPHIC] [TIFF OMITTED] T2951.055

[GRAPHIC] [TIFF OMITTED] T2951.056

    Mr. Turner. Mr. Schrock, do you have additional questions?
    Mr. Schrock. No.
    Mr. Turner. Ms. Norton, additional questions?
    Ms. Norton. No.
    Mr. Turner. Special Agent Ryan, could you please discuss 
with us the context you have had from National Guard soldiers 
who have contacted the GAO concerning pay problems and how do 
they contact you? What process do you use to followup and 
investigate their case? Can you give us some examples?
    Mr. Ryan. After they had the last press conference, we 
started receiving letters from Reserve National Guard. These 
letters were sent to GAO's FraudNet; this is where soldiers can 
e-mail their problems, their complaints and ask us to look into 
things. We record those, we read them, we try to get back to 
them. We find systemic problems that exist and try to address 
that as part of the work.
    The additional work the committee has asked us to do on the 
active medical extensions and travel reimbursements, we are 
getting a lot of letters from soldiers saying they are having 
significant problems. Within the last month, we have probably 
gotten over 50 letters. We try to address those. We have agents 
on the road right now at some military installations 
interviewing the soldiers that have problems with medical 
extensions. We have contacted soldiers that have problems 
getting travel reimbursements and we have contacted family 
members whose husbands have been deployed overseas that are 
having problems with TRICARE, having problems getting health 
insurance, having problems getting doctors who accept TRICARE 
and are following up on those items also.
    Mr. Turner. Thank you. I appreciate your perspective on 
that.
    I have a question concerning DIMHRS. You were talking about 
the process which I understand is the ultimate goal of payroll 
integration at the Department of Defense and currently has a 
start deployment from January 2006 which I think is 12 months 
behind the original scheduled roll-out. And there is some 
confusion in the testimony as to whether or not you are on 
schedule for January 2006 or not.
    Mr. Gregory. At this point, January 2006 for initial 
operational capability is the date that has been set, which 
means I don't know of any delays beyond that. As Mr. Shine 
said, we got a developer and integrator, which is Northrop.
    Mr. Turner. Let us take that sentence for a minute. ``I 
don't know of any other delays beyond that.'' Certainly, for a 
project that was to be done January 2005 to be pushed back 12 
months to January 2006, somebody as of today knows whether or 
not your milestones are being met.
    Mr. Gregory. They are being met today.
    Mr. Turner. As of today, all the milestones have been met 
for completion by January 2006?
    Mr. Gregory. January 2006.
    Mr. Turner. You do not have any information that would 
indicate that you were going to miss that date?
    Mr. Gregory. That is correct.
    Mr. Turner. That would be correct for anyone else who has 
information about this on your panel?
    Mr. Shine. I have no other information than what Mr. 
Gregory provided.
    Mr. Turner. Go ahead.
    Mr. Gregory. The key element here as far as the schedule 
and as far as being on top of the schedule is the fact that the 
developer and integrator, Northrop-Grumman, signed a contract 
for that development and integration at the end of September 
last year. As far as the status of that is concerned, they are 
on target with their dates as of today.
    Mr. Turner. Can you detail for us again the dialog that has 
occurred between you and the State Adjutants General and where 
they are with all these payroll problems? What information is 
being shared between them and between your office?
    Mr. Gregory. I did not speak to the State Adjutants 
General. I worked with the National Guard Bureau, worked with 
General Schultz and he is in direct contact with the Army 
National Guard in all the States with all Adjutants General. I 
will defer that question to him.
    General Schultz. We are in frequent contact with State 
headquarters specifically, and the U.S. Property and Fiscal 
Office is really the location where the payroll responsibility 
lies. In that setting, we deal with the staff of the USPFOs 
every day. So we are working every one of the issues discussed 
here this morning with the State U.S. property and fiscal 
officers.
    Mr. Turner. On an as problems arise issue or on a global 
issue for being able to resolve this?
    General Schultz. Both.
    Mr. Turner. Mr. Ruppersberger, do you have any questions?
    Mr. Ruppersberger. Yes, a couple. Excuse me if I am 
repeating things already asked.
    First, in my statement I referred to the fact that there 
were six other components that were not addressed in this 
report. Are the problems highlighted in this report common to 
the other six components?
    Mr. Shine. I will try to take on that one since DFAS has 
responsibility for those other components in addition to the 
Army National Guard.
    Mr. Kutz has already indicated that GAO is doing a review 
right now, similar to the one they just completed for the Army 
National Guard, for the U.S. Army Reserve. Clearly we will have 
a better understanding when that report is completed. The 
information I can give you, I can't quantify and put on a 
chart. I can just give you the information we are receiving.
    For the Air National Guard, we have not seen anywhere near 
the problems that we have seen for the Army National Guard. The 
U.S. Army Reserve, we have also not seen nearly the high 
frequency that we have experienced with the Army National 
Guard. For the Marine Corps, the Marine Corps is paid on a 
completely different payroll system than the one we have been 
talking about here this morning. It is an integrated pay and 
personnel system called the Marine Corps Total Force System. As 
a result of that, the Marine Corps has not experienced a 
problem with activation of the Marine Corps Reserve. We are not 
responsible for paying the Coast Guard, so I can't comment on 
them. The Navy Reserve also has seen very few pay problems. The 
Navy Reserve has had a much smaller call-up than the Army and 
Air Force have had.
    Mr. Ruppersberger. That is a good starting point for a 
question then. What are the other groups doing that the Army is 
not. Is it because of volume, because of the systems? What is 
the reason why one component is not working as well as the 
other?
    Mr. Shine. I think I alluded to the fact the Marine Corps 
is a different system, so I would definitely attribute the 
difference there.
    Mr. Ruppersberger. What about that system is different?
    Mr. Shine. It is an integrated pay and personnel system, 
unlike the one we use for the Army, Navy and Air Force which 
has two distinct systems, one that pays an active component and 
one that pays the reserve component. The reserve component 
system is really designed to handle monthly drill pay. It's not 
really designed to handle large scale mobilizations. That is 
what we are trying to make it do right now which is the reason 
it requires so many manual work-arounds which increase the 
probability of error.
    Mr. Ruppersberger. Because of the war, there was a 
tremendous amount of volume the system wasn't able to handle 
because it was done on a monthly basis and now it is almost 
like an overload?
    Mr. Shine. Yes, sir, but I would go on to say the exact 
same system that we use to handle the Army National Guard is 
also used for the Air National Guard, also used for the Navy 
Reserve. I think the difference is because they were mobilizing 
a fewer number of people, they were mobilizing fewer sites. If 
I could relate an experience I think will amplify that: When we 
first started seeing large scale deployments of Reserve 
components in the Bosnia-Croatia timeframe, we were primarily 
mobilizing through one dedicated mobilizationsite. While I 
won't try to take away what the GAO has reported here, I will 
tell you that, by and large, the home station has the pay 
correct. When the soldier leaves the States and when the 
mobilization station has trained people there to take care of 
initiating the active duty pay entitlements, we see a much, 
much smaller problem with payroll problems once the individuals 
are mobilized.
    The other services that I was referring to, because they 
had smaller numbers, were able to do it through a smaller 
number of mobilizationsites which had people trained to do 
that. Because the Army National Guard was having such a huge 
call-up, we had to actually increase the number of mobilization 
sites--we had to have 21 different mobilizationsites. Some of 
the issues the GAO discovered were because of the fact that 
people there did not have the proper training.
    The one thing I would like to add to that is that 
partnering with the Army and Army National Guard with DFAS, we 
have now made sure that all 21 sites are fully trained so they 
have the information they need to do the mobilization properly.
    Mr. Ruppersberger. I can understand that explanation and 
that is fine and we have identified the problem, but right now, 
what is the long term plan to fix the problem?
    Mr. Shine. As we described earlier, the system fix, as Mr. 
Gregory was saying, we have an interim solution that will be on 
board in about a year. The long term solution of an integrated 
pay and personnel system is going to be a couple years behind 
that. In the meantime, we feel, or at least I will speak for 
myself, I feel that with the increased training we have done, 
we have a legitimate expectation that we are going to see a 
significant reduction in the number of pay problems resulting 
because of better training we are giving to those providing pay 
support to the Army National Guard while they are in a 
mobilized status.
    Mr. Ruppersberger. Do we have outside vendors working with 
us to try to work on the short term, long term basis?
    Mr. Shine. We are not using any. I can't comment if the 
Army or the Army Guard are.
    General Schultz. We do not.
    Mr. Ruppersberger. Do you think there is a necessity to 
look at that if we can't do it in-house and if we continue to 
have the problems?
    General Schultz. What we have done is work through the DFAS 
and the Army financial staff and have partnered in a way that 
we never have previously. My sense is we have the capability of 
fixing what we are talking about, albeit a little slower than 
anybody is happy with.
    Mr. Ruppersberger. When you are dealing with human beings 
putting their lives on the line, we all want the same thing but 
it is a matter of the right systems, a matter of leadership, 
holding people accountable for performance, a matter of getting 
the right technology and infrastructure in place. It is 
something I would hope is considered a very high priority, not 
only for the National Guard but for all the components there 
right now.
    Mr. Gregory. With regard to the technology piece, we 
mentioned earlier the long term issue and the DIMHRS issue. I 
would say the experience that we have with the Marine Corps' 
older but in-place system, the fact that it is integrated in 
both personnel and finance, is a lesson learned for all of us. 
That is why, the Department of Defense went to DIMHRS as a 
solution. It is more modern and it is commercial, off-the-
shelf. The question about outside vendors and technology, that 
is a commercial, off-the-shelf, software-driven system. And the 
Forward Compatible Pay System to get the pay system fixed 
before DIMHRS is also a commercial, off-the-shelf system.
    Mr. Ruppersberger. That is a good explanation. My only 
concern would be because of the volume and if you look at a 
system that works you want to hopefully learn from that system 
but there are two different components because of the volume. 
Will the Marine system be able to handle the volume you are 
talking about?
    Mr. Gregory. No, sir. We are not going to the Marine 
system. We are going to the principle of what the Marine system 
is based on, namely, integrated personnel. One of the things we 
did to get us to the system we are now in the process of 
developing was to look at scalability and that is why that 
system of a commercial, off-the-shelf solution was selected.
    Mr. Ruppersberger. Who is ultimately responsible to manage 
this entire system and program in the DOD?
    Mr. Gregory. It is the Office of the Secretary of Defense, 
Personnel and Readiness.
    Mr. Ruppersberger. But who is assigned to oversee and to 
work through? There needs to be a boss who is overseeing.
    Mr. Gregory. Right now it is Mr. Able.
    Mr. Ruppersberger. What do you mean right now? What is Mr. 
Able's background?
    Mr. Gregory. I don't know.
    Mr. Ruppersberger. He has experience and expertise in 
management and also in working in these systems?
    Mr. Gregory. He has a staff that does that.
    Mr. Ruppersberger. Thank you.
    Mr. Turner. If there are no other questions by members of 
the committee, we are going to dismiss this panel. I want to 
thank you for testifying. We will ask that you please stay for 
the testimony of the second panel so that you can hear their 
statements and also that you can remain available for questions 
that Members might have at the end of that panel. We thank you 
for your attendance today.
    We will now move to our second panel. Our second panel 
consists of Major Kenneth Chavez, Unit Commander, Colorado Army 
National Guard, B Company, 5th Battalion, 19th Special Forces. 
Major Chavez' unit was one of the six units contained in the 
GAO Army Guard Pay Study. We thank him for coming today to be a 
part of this hearing.
    [Witness sworn.]
    Mr. Turner. In order to allow time for more questions and 
discussions, we are going to ask that you limit your testimony 
to 5 minutes. All written statements will be made a part of the 
record.
    Major.

 STATEMENT OF MAJOR KENNETH CHAVEZ, UNIT COMMANDER, B COMPANY, 
  5TH BATTALION, 19TH SPECIAL FORCES, COLORADO ARMY NATIONAL 
                             GUARD

    Major Chavez. Mr. Chairman and members of the committee, it 
is a distinct honor to be here to discuss important issues 
affecting National Guard Soldiers. Our country's citizen 
soldiers have been devastated by an ineffective pay system that 
cannot pay them accurately, on time and, most importantly, when 
they are called up to active duty to serve our country.
    My testimony has four parts. First, to give a historical 
perspective on the B Company, 5th Battalion, 19th Special 
Forces Group (Airborne) deployment. Second, to explain pay 
problems that members of B Company had during the deployment. 
Third, to discuss what actions were taken to correct these 
problems. And, finally, to present a solution to the overall 
problem which would prevent this from ever happening again.
    First, the 62 members of B Company were activated in 
December 2001 for a 2-year period in support of Operation 
Enduring Freedom. The environment was hostile and the 
conditions were harsh. During their deployment, they were 
involved in numerous combat operations, one that ultimately 
resulted in the death of one soldier and another being 
seriously wounded. These soldiers willingly accepted these 
risks as they put their jobs, homes and families on hold to 
answer the call to duty. Nevertheless, they endured and 
accomplished their mission. Their activation terminated after 1 
year in December 2002. The pay crisis created by this 
deployment remains unresolved to this day.
    Second, during all three phases of their activation--
mobilization, deployment, and demobilization--all 62 soldiers 
encountered pay problems. Efforts that should have been devoted 
to the combat mission were spent trying to resolve pay 
problems. During extremely limited phone contact soldiers 
called home only to find families in chaos because of the 
inability to pay bills due to erroneous military pay. The 
soldier that suffered the fatal injury during the deployment, 
Sergeant First Class Daniel Romero, was embroiled in pay 
problems at the time of his death.
    When the company was released from active duty in December 
2002, 34 soldiers, or 54 percent of the company, were 
erroneously overpaid when their active duty pay was not 
stopped. When it was finally determined that soldiers were 
overpaid, government actions were initiated to recover the 
overpayments. This collection process resulted in collections 
of nearly five times the actual overpayments.
    The Defense Finance and Accounting Service cannot say, with 
any amount of certainty, exactly how much each soldier was 
overpaid. A dedicated DFAS team created spreadsheets for each 
soldier's pay history in an effort to portray each soldier's 
``official'' and complete pay history for the period in 
question. Soldiers formally challenged the ``official'' pay 
history presented by DFAS. The challenges resulted in a 
significant change to the official pay histories in the amount 
of thousands of dollars and have caused continuing soldier 
frustration and family stress.
    Third, throughout the activation, attempts to correct the 
pay problems were made by the unit clerk, the Battalion 
administrative section, and the Colorado U.S. Property and 
Fiscal Office. These steps proved to be ineffective. 
Ultimately, DFAS was contacted to gain assistance in correcting 
the problems. For a short period, the collection of debts was 
suspended in order to again determine the correct amount of 
overpayment for each of our soldiers. Many soldiers disagreed 
with and could not receive a reasonable explanation of their 
debt. Several soldiers gave up and paid off their debts in 
order to end their frustration.
    Finally, in an effort to resolve the overall problem, the 
Adjutant General of the Colorado National Guard launched an 
investigation in December 2003. The investigating officer 
initially asked for and received another suspension of the 
collection of debts until March 2004. The recommendation of the 
investigating officer is as follows: Waive the U.S. claim for 
erroneous payments of pay and allowances; reimbursement of any 
amount of funds paid against a waived claim; and disbursement 
of unpaid pay and allowance due to any soldier as a result of 
the deployment. The current system for paying National Guard 
soldiers is unable to handle the volumes imposed by recent 
activations. The establishment of one integrated system for 
paying active duty, Reserve and the National Guard is 
absolutely necessary. This would ensure a seamless transition 
from Guard to active duty and then back to Guard.
    I implore this committee to promote the necessary steps, 
now and in the future, to prevent another citizen soldier from 
ever suffering the hardships that members of my company had to 
endure. Soldiers are prepared mentally and physically to face 
the rigors of combat in a foreign land. What they are not 
prepared for are the hardships imposed by an ineffective pay 
system. My soldiers have suffered divorces, bankruptcies, lost 
homes, and endured untold family problems that are far more 
destructive to their morale than any enemy they face in combat. 
It is extremely difficult to retain soldiers when they endure 
this type of treatment. How do commanders maintain unit 
strength when situations like this occur? What does this 
demonstrate to our soldiers?
    Twenty-five soldiers have left my unit as a direct result 
of these pay problems. Fifteen more are asking to transfer to 
the Inactive National Guard in order to accept highly paid 
civilian contract work overseas in Iraq in order to heal their 
financial wounds. It will take nearly 2 years and $250,000 to 
train each replacement. This loss has had a significant 
negative impact on our mission capability. We are one of only 
six National Guard Special Forces Battalions in the Nation. A 
secondary effect of these pay problems for our soldiers is in 
the form of tax deductions and improper tax reporting. The 
erroneous debts and subsequent requirement for repayment cause 
great problems in the form of overtaxing or undertaxing, which 
the soldier, alone, is responsible for correcting.
    My soldiers, our soldiers, are some of America's best and 
brightest. Every day Reservists and Guardsmen assume a larger 
role in our global war on terrorism. Let us not let the 
sacrifices of my men and their families go unsupported. Please 
implement changes now to insure that the next call home from 
one of our deployed soldiers is a call to discuss his or her 
daughter's birthday, not anguish about a lack of money to pay 
bills. Our country should be ashamed of treating citizen 
soldiers in this manner. In a word, it is inexcusable.
    In conclusion, I implore this committee to support 
Colorado's efforts to waive the claims for erroneous payments, 
reimburse any amount of funds paid against a waived claim, pay 
the soldiers for entitlements they earned and were not paid 
for, and change the current pay system of the U.S. Army to 
support our brave soldiers and their families.
    Mr. Chairman, this concludes my testimony. I thank you for 
this opportunity to provide testimony and would be happy to 
respond to any questions.
    [The prepared statement of Major Chavez follows:]

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    [GRAPHIC] [TIFF OMITTED] T2951.058
    
    [GRAPHIC] [TIFF OMITTED] T2951.059
    
    Mr. Turner. Thank you for all your efforts and your service 
to your country and certainly all the men and women of your 
unit. They are making an incredible contribution to our 
country. It is clear that the administrative processes are 
harming them and the interests of our country.
    In your comments, you talked about the process of what the 
reaction was from the Army when the pay problems were 
discovered, the efforts of the Department of Defense to collect 
the overpayments if there were overpayments and the process of 
not fully resolving how much overpayment or underpayment there 
were. I wonder if you could describe the process a bit more in 
detail because it sounded as if someone discovered there was a 
problem and there may have been an overpayment of perhaps 
$48,000 per soldier, that a recognition of one responsibility 
for that having occurred and hardship that would occur upon 
asserting that overpayment. What was the process of engaging 
the soldiers or their families in this issue? It sounds like 
the notification and action was relatively abrupt.
    Major Chavez. Yes, sir, it was. On the specific problem of 
the overpayments, the company deactivated in December 2002 and 
subsequently the soldiers received their active duty pay like 
it had not stopped for 2 months after that. They reported that 
overpayment to our unit. Proper notification was made through 
the State Property and Finance Office. However, an error was 
made in not only terminating their active duty pay for the 2 
months they were overpaid but in essence terminating their pay 
for active duty all the way back to March 2002. In essence, 
there was a rebound and instead of taking away the overpayment 
for 2 months, they took away pay for 9 months, 7 of which they 
were entitled to. This added more frustration. Now the soldier 
sees in his leave and earnings statement a debt. A debt of 
what? In asking that and finding out what it is, it was 
determined that an error had taken place and there was an 
overcharge in the debt recovery. That compounded which affected 
their taxes, which affected their payroll and affected their 
deductions from then on.
    Mr. Turner. In your opening statement, you mentioned that 
25 members of your unit have left because of these payroll 
problems. Do you believe the problems of the current DOD pay 
system will continue to cause many Guardsmen to leave? It seems 
essential that a quality pay system would be important to 
retention.
    Major Chavez. Absolutely. Unfortunately, I have to say yes.
    Mr. Turner. One of the issues you have heard many Members 
talk about is the issue of the families and wives left with 
these issues. Could you talk a bit about the extent that family 
members try to assist members of a unit in resolution, how 
systems might be available to bring resources so they 
understand the processes and systems and also to aid in 
resolution? Are those effective or ineffective, how would you 
recommend those processes be enhanced?
    Major Chavez. Initially, when a problem is recognized, the 
first place they go to is the family support group created and 
established while the unit was in the mobilization process. 
This is a conglomeration of spouses within a unit, spouses 
within the State Command and the State Command itself. When 
problems are recognized, they are forwarded to that entity and 
from there they go to the property notifications within the 
State, specifically USPFO. These problems with these soldiers 
were at a much higher level that could not be fixed within the 
State. They had to be fixed at the DFAS level. There were some 
inputs within the State at USPFO that were incorrect.
    Mr. Turner. Ms. Norton.
    Ms. Norton. First, Major Chavez, may I simply thank you and 
your unit for your service. You deserve much more than an 
apology but I think the responsibility comes all the way up 
here. I just want to offer that and indicate that you can see 
the resolve of this committee to simply not allow this any 
more. Your coming forward has been very important because not 
until we hear a case example with real-life people can we 
really understand what has happened here.
    I note that you are from an elite unit with the Special 
Forces, people who have been very highly and specially trained. 
You indicated the amount of funds that go into training and 
that some of them want to transfer in order to go overseas as 
civilians, taking contract positions in order to use that 
training to recoup some of what they have lost and the notion 
that you be able to hold them as long as you have with that 
training is a testament to you and your unit.
    Let me get to the bottom line. Do you know, Major, what it 
would take to get a waiver? This is the first of the three 
recommendations you make, to get a waiver of the claim of the 
United States for the erroneous payment to your men and women.
    Major Chavez. I am not an expert on accounting. I will 
profess that adamantly to this committee but, as I understand 
it, through Title X and Colonel Leonard could highlight it 
better than I, it takes a decision through DFAS and ultimately 
through the Department of Defense to waive this overpayment. In 
fact the amount, I have one spreadsheet that indicates that 
approximately $764,000, much of that amount is in fact not an 
overpayment, it is an error, so it is not a debt to our 
country, it is an error. It is in essence recognizing the error 
and erasing it.
    Ms. Norton. Major, do you know who would have to request 
this waiver?
    Major Chavez. I mentioned that the Adjutant General of 
Colorado launched the investigation and the investigating 
officer is asking for that now. It is being subsequently routed 
up through the chain.
    Ms. Norton. So it is in process?
    Major Chavez. Yes, ma'am.
    Ms. Norton. To the extent that we can support this request, 
Mr. Chairman, it seems to me minimal as to what these soldiers 
deserve.
    I was particularly concerned that there apparently has 
been, whether your unit or not, a burden on the soldiers to 
find the error. Very often if there is an error in payroll, for 
example here in the Congress, somebody will come back and tell 
you about it. Was the burden on your men and women to find the 
error in the first place or was the burden entirely assumed by 
the Army?
    Major Chavez. The burden is systematic, it is the system 
itself. However, when the soldier looks at their leave earnings 
statement, it has their name on it and it makes it their 
responsibility because it says what the debt is. They know what 
pay they are entitled to but in fact have not received. They 
are the ones that have to pay their bills, no one else does. 
They are the ones that have to make answers to the creditors 
and make excuses and come up with delaying tactics. They are 
the ones that have to file bankruptcies, they are the ones that 
have to lose their businesses and they are the ones that 
discuss that with their wives.
    Ms. Norton. To start the process, it is the soldier who has 
to start the process. You found nobody among those who are 
responsible for disbursements who came back to indicate 
initially that there was an overpayment or an error. It had to 
start with the soldier herself or himself?
    Major Chavez. The soldier recognizes it pass through his 
unit but ultimately when it doesn't get corrected, it falls 
upon the soldier and he feels responsible for correcting that 
problem.
    Ms. Norton. Could I ask whether you found in the customer 
service category that there were Army financial officers 
readily available to assist your unit in Afghanistan?
    Major Chavez. Yes. In-country in Afghanistan as well as 
back in Colorado and at DFAS Indianapolis. And I have to 
commend Colonel Leonard; he has been in daily and weekly 
contact with Colorado trying to resolve this issue. 
Unfortunately, it is still unresolved.
    Ms. Norton. From your point of view, recognizing that you 
don't get the opportunity to look at the entire system, does 
the problem appear to be one of competence or some other kind 
of problem?
    Major Chavez. In my personal opinion, I feel it is both 
humans as well as the system that are the contributing factors.
    Ms. Norton. Thank you very much, Major Chavez.
    Chairman Tom Davis [resuming Chair]. I am sorry I wasn't 
here for your testimony but I read it. I had to go manage a 
bill on the floor but we are back successfully.
    You start the process by talking, you go up through the 
chain of command originally when you have a pay problem and you 
identify it?
    Major Chavez. Yes, sir.
    Chairman Tom Davis. And that didn't seem to resolve it and 
then you found it was more complicated and couldn't be handled 
in-country, couldn't be handled in-State. There was a Federal 
problem and it couldn't be handled there basically, right?
    Major Chavez. Yes, sir.
    Chairman Tom Davis. I appreciate all our staff being here. 
I wonder, in a situation like that, you have members who are 
literally cash-poor. There was no immediate resolution, they 
need cash. Were any interest-free loans available while they 
fixed it? Was that made available to any of your colleagues?
    Major Chavez. Yes. In Colorado, there is a fund set up to 
assist soldiers that have financial difficulties on a temporary 
basis, but a situation that prolongs over 14 months or 2 years 
is hard to resolve.
    Chairman Tom Davis. That system was interest-free?
    Major Chavez. Yes. To my knowledge, yes.
    Chairman Tom Davis. These problems are persisting as far as 
you know with some of your colleagues even now?
    Major Chavez. Yes. Some soldiers have been dealing with pay 
problems since December 2001.
    Chairman Tom Davis. What was probably the most egregious 
case you had of a soldier hardship that you recall, a personal 
hardship?
    Major Chavez. I can point out several. Some soldiers that, 
as Mr. Schrock pointed out, privately owned businesses and lost 
them while they were gone. One sergeant that works in Bravo 
Company had his own personal defense and physical fitness 
company which had many storefronts and locations. Without him 
being there to teach and provide that service, his business 
disintegrated and went away. That effect, plus the pay 
problems, caused him to lose his house, caused him to go into 
bankruptcy, and caused him to find some means to support him 
and his family. He is now still on active duty as the only 
method he has left to do that.
    Chairman Tom Davis. He has to re-up just because he needs 
the money right now basically?
    Major Chavez. Yes.
    Chairman Tom Davis. This obviously doesn't help retention.
    Major Chavez. As my figures indicated, as I told you, I 
have people that have left. One specific soldier, a Master 
Sergeant, 19 years of total service in the active and the 
National Guard, his ETS--end of terminal service--was this 
month, January. Rather than re-up, he left the service. He took 
a contract overseas in Iraq as the only means possible to solve 
his financial problems. He in essence has put himself back into 
danger for financial purposes and for financial survival.
    Chairman Tom Davis. He'll get paid by the contractor 
though?
    Major Chavez. Yes. He is putting himself in harm's way but 
he has no ability to get his retirement, he does not have the 
proper tenure.
    Chairman Tom Davis. I can imagine the frustration you and 
your troops have to feel being in harm's way over there. I can 
just imagine. And how we feel here, almost powerless. We bring 
people up, they have all their uniforms on, talking about 
months and months to fix it. A country that can put people on 
the moon, can bomb with precision in Baghdad, where you go 
through and see heaps of rubble next to residential buildings, 
and smart bombs, and we can't pay people. It is incredible to 
me. I was in the computer software business before I came here 
and frankly am shocked that no one in the Department of Defense 
saw this coming and have been slow to act. If nothing else, you 
could put more people on this because a lot of this is manual 
and just make it a priority. It doesn't seem to have been done. 
I feel very, very bad about it and I know the other Members do.
    I can't tell you how much we appreciate your being here. I 
think from our perspective, we are determined to get it fixed 
so at least the next group won't have to go through what you 
did. Thank you very much for your service.
    Major Chavez. It is our pleasure, sir. All I can say is, it 
is a testimony to the citizen soldier that we still serve in 
the same manner that our ancestors, the Minutemen served; to 
drop their work and their families to respond to the call of 
duty for the country.
    Chairman Tom Davis. Thank you very much.
    Mr. Platts.
    Mr. Platts. Thank you, Mr. Chairman.
    Major, I also want to echo the chairman and others in their 
expression of gratitude for your personal service. If you can 
convey to your soldiers my personal gratitude as well as my 
personal apology for the way the Federal Government, our 
Nation, has treated your soldiers; it is certainly a terrible 
wrong that needs to be corrected. The chairman is right. I 
apologize for my not being here for all the testimony but as I 
looked through the various materials in one packet, there is a 
very nice spreadsheet of short and long term tasks to try to 
address these problems but the fact you are telling us 2 plus 
years after the problems began, we still have soldiers being 
wrongly treated tells me this doesn't mean much. We need to fix 
these individual problems and show our Nation's gratitude by 
just doing right by you and your fellow soldiers.
    One of your statements was that DFAS was not able with any 
amount of certainty to tell exactly how much a soldier was 
overpaid or underpaid. Does that remain the case today, that 
DFAS contends that they can't say for certain?
    Major Chavez. There have been many attempts and different 
figures for each soldier. When a soldier sees that his debt 
amount has changed three, four, five, six times he doubts the 
system and also wonders which one of those figures is 
absolutely correct versus the one he has come up with.
    Mr. Platts. They are all coming from the same source as 
they continue to work or rework the numbers?
    Major Chavez. Yes.
    Mr. Platts. Who, if anybody outside fellow soldiers, is 
most directly assisting a soldier to kind of be their advocate 
with DFAS or the government in general, to try to walk through 
exactly here is what you are eligible for, here is what you 
were paid, here is what you should have been paid. Has that 
occurred? Has there been a kind of ombudsman for each of the 
soldiers individually?
    Major Chavez. That process started when we were first 
activated. Those lists of entitlements were provided to all the 
soldiers so they would know accurately what they were able to 
receive based on their particular situation. Throughout the 
deployment, attempts were made both within the unit itself to 
the Battalion and next high in command to the State of Colorado 
and then ultimately to DFAS as well as sometimes in-theater the 
financial entities over there were also assigned and worked on 
that. Because of the complexities of the National Guardsman 
which has similar records back in the United States and the 
USPFO and some of them in-theater it is difficult because as a 
Guardsman we sit and hang between two entities, the National 
Guard and active and our records and our information is between 
these two systems.
    Mr. Platts. I hope as we go forth--the proposed ultimate 
solutions is that unified system. We need to do whatever it 
takes.
    Mr. Chairman, I appreciate your leadership and your 
leadership too, Chairman Schrock, and Chairman Shays. We 
certainly have an absolute duty to you and these other soldiers 
that while we are looking at long term fixes, we ensure that 
each individual soldier is given whatever resources are 
necessary to walk through their situation and ensure they are 
accurately and fully compensated for their patriotic service to 
our Nation.
    Again, my personal thanks to you for your service and your 
testimony here today. I hope we do a lot better. I did not have 
the privilege of visiting with any of the Colorado units in 
Afghanistan but I did visit with the West Virginia Special Ops 
Forces, the West Virginia Guard Forces. Knowing the sacrifices 
that each soldier and their families back home are making on 
behalf of our Nation, it is just horrific that we are treating 
you and your fellow soldiers in this way. I hope we can do a 
lot better.
    Thank you, Mr. Chairman.
    Mr. Schrock [assuming Chair]. Thank you, Mr. Platts.
    Mr. Ruppersberger.
    Mr. Ruppersberger. First, I want to commend the chairman 
for bringing this issue to the table. It is something we must 
resolve. It is complicated. There is volume and we understand 
there are a lot of issues to be dealt with. I agree with your 
comment that we need to integrate the system. It is just going 
to take time, we are all going to have to work together. Our 
role in Congress is to oversee it, to make sure those things 
happen.
    I want to thank you for your service and that of your 
counterparts and being here today to put what is on the table. 
This is a high priority. One of my comments in conversations 
with career and National Guard Army Reserve is that they want 
to be told exactly what the situation is and not be hung out, 
whether it is how long they are going to be assigned to a 
certain area, how long they are going to be away. Just tell 
them exactly that this is what it is. When it comes to dealing 
with the finances and how they pay their mortgages and their 
families take care of themselves, this is something that, 
really, if we can't do it, we need to tell them it is going to 
take this period of time.
    In that regard, do we have an ombudsman, do we have a 
program when the frustration of a family or someone who is 
assigned to Iraq or wherever, that we have individuals that can 
take a case, a problem, and see it through? We do that in 
Congress every day with our staff, our constituent work. Do we 
have any type of program like that you see that is set up at 
this point to help those men and women having problems?
    Major Chavez. Yes, we do, sir.
    Mr. Ruppersberger. If we do, how is that working?
    Major Chavez. As I indicated before, we have a family 
support network within the unit itself when it is mobilized 
that ties in with a larger family support group at that State, 
and our's is Colorado.
    Mr. Ruppersberger. From your point of view, how is it 
working?
    Major Chavez. It works from the fact that when a spouse at 
home has a question because they don't understand the military 
system regarding pay, entitlements or whatever, they have a 
point of contact to call within the unit who can call someone 
who works on this full-time at the State and hopefully get an 
answer and resolution of their problem.
    Mr. Ruppersberger. What are the results of those case 
studies? Are they getting the answers that are needed or what 
are the results? What is the end gain?
    Major Chavez. It depends upon the particular problem. In 
some situations it works rather quickly. In other cases, such 
as I pointed out here today, it is still unresolved in these 
major pay problems. It is because of the fact that, within the 
State itself, they cannot correct that pay problem. It is at a 
much higher level at DFAS.
    Mr. Ruppersberger. Let me give you an example. If you have 
someone who now has IRS problems, a whole new Federal 
bureaucracy, Federal agency, will that ombudsman stay with them 
and work through the IRS issues too?
    Major Chavez. They will point them in the right direction 
and hopefully stay with them.
    Mr. Ruppersberger. What do you mean hopefully? If you don't 
have one person overseeing it, it might not happen. Do you 
think it should be considered as a policy for that person who 
has been assigned that case to take it to the end until it is 
resolved?
    Major Chavez. Absolutely.
    Mr. Ruppersberger. Is that being done, including when you 
deal with IRS? I'm not trying to put you in a corner, I just 
want to know so we can raise that issue.
    Major Chavez. I can say in some cases, yes, and in some 
cases, no.
    Mr. Ruppersberger. It is my suggestion that we try to 
provide the service that is necessary to solve the problem and 
that whoever takes over the responsibility of a certain case 
and a problem, should take that case from beginning to end. If 
that is not the policy, it is my suggestion that we look at it 
very strongly because they want to be serviced. They have 
enough on their mind already and they need to be serviced. I 
would hope and suggest that we look at that very strongly.
    Major Chavez. I concur, sir.
    Mr. Ruppersberger. If you could take that back.
    Major Chavez. Yes, sir.
    Mr. Ruppersberger. Thank you.
    Mr. Schrock. Mr. Platts.
    Mr. Platts. Just one thing I wanted to add kind of along 
with Dutch's comments. In trying to have that ombudsman, I know 
in the military, in following the chain of command and staying 
in the ranks, but if we are seeing the problems for soldiers 
that we have documented that are continuing to exist 2 years 
after the fact, I hope soldiers maybe when they return and are 
back in the civilian life to consider if they haven't already 
done so their Members, their Congressmen where they live, their 
Senators from their home States. It should not make a 
difference and you should get the response without that, but I 
would encourage looking at me and my fellow Members as 
individual ombudsmen for our constituents. As the Congressman 
said, we do that every day on a whole breadth of issues 
constituents come to us with. In my office, I have a person who 
specializes in military issues, whether veterans, the National 
Guard or active duty because, if we don't do right by you and 
all men and women in uniform, it doesn't speak much about our 
priorities. I would encourage your fellow soldiers to look to 
whoever their individual Congressman or Senator is and look for 
them to be an ally in their efforts.
    Thank you, Mr. Chairman.
    Mr. Schrock. Major, let me thank you for being here too. I 
can assure you this can't be easy and I can assure you I would 
not want to appear in front of me, so I appreciate your 
testimony and what you had to say. I think it is something we 
need to listen to and try to fix.
    Everyone says the system broke down, but in the process we 
have ruined some peoples' lives financially, we really have. I 
am talking to my colleagues in the Congress now, unfortunately 
only two of us now, but I don't think this is something we can 
allow to stand. We should make these people whole. They went to 
war because the government told them to go to war and we 
allowed them to go bankrupt and that is wrong. If somebody is 
in trouble with the IRS through no fault of their own, they 
will be dogged the rest of their lives. This just isn't fair 
and we have to do something about it. How we can do it, I don't 
know, but we simply have to do it.
    The chairman, before he left, said these situations 
happened because we didn't see this coming. Well, because we 
didn't see this coming, and by ``we'' I mean up here, doesn't 
mean the men and women in uniform should suffer in any way 
shape or form financially. The fact is they are.
    I wrote down I was going to ask you why five times the 
actual overpayments. It is because they went back to March 
instead of just the 2 months. Didn't they look at their LES's 
and see what the situation was? Couldn't they have determined 
that from the LES's? It has been so long since I have looked at 
an LES, I just can't remember.
    Major Chavez. Yes, that was pointed out. When soldiers saw 
that debt come up, they pointed it out to the unit and it was 
recognized through the Colorado USPF now in DFAS. However, that 
mistake was not corrected and it is still unresolved to this 
day.
    Mr. Schrock. Fourteen months later?
    Major Chavez. Yes, sir.
    Mr. Schrock. My next question is, has it been solved? The 
answer is no. How many of your folks lost houses?
    Major Chavez. I can think of two right off the bat, several 
others that have had to shift or sell because of their 
financial situations, so they didn't lose them, but they 
foresaw what was coming and they shifted over.
    Mr. Schrock. You may not know the answer to this but they 
said you get paid based on where you are in the war zone, but 
in the case of Special Operations Forces, they don't want 
people to know where they are. I don't want people to know 
where they are. How do they solve that?
    Major Chavez. Internally within our unit we do, and our 
payroll clerks can input that data depending where in-theater 
we are in the operation. That is done on a fluid basis going in 
and out of theater and the particular entitlements you have. 
The soldiers are quiet and innocuous when they talk to their 
relatives about that, they just know they are overseas. That is 
the unit's responsibility.
    Mr. Schrock. That isn't a big problem then.
    I don't want to keep dwelling on the problems the families 
have had but I want to go back to that a bit. I would like to 
hear in detail how the wives and children or husbands and 
children of the men and women over there have been affected by 
some of these erroneous military pay situations. What have they 
gone through? What have they endured? Are creditors knocking on 
their doors?
    Major Chavez. Yes, although the soldiers are instructed on 
their rights under the Soldiers and Sailors Relief Act 
regarding civil actions against them while they are activated. 
That does not prevent those documents or those contacts from 
being made. Of course they utilize the family support network 
and also the Inspector General, JAG, and the State to help them 
with those problems. It adds upon the already present stress of 
the soldier overseas with that spouse. So you already have that 
as a foundation. Then you put upon that the financial problems 
that are coming. This compounds the overall stress and in some 
cases, it has contributed to the divorce and the breakdown in 
the family entity of certain members of my command. It may not 
be the total reason but it is a contributing factor.
    Mr. Schrock. It could throw them over the edge?
    Major Chavez. Yes, sir.
    Mr. Schrock. I don't want to put the first panel on the 
spot but I would be curious if any of you have any comments 
about what the Major has said. Mr. Secretary.
    Mr. Gregory. I agree with Major Chavez. There is no excuse 
and there is no way that this is acceptable in any way, shape 
or form. We are not here on different panels as adversaries. We 
are here to get this problem resolved for Major Chavez because 
he is my soldier and his family members are our family members 
and we are going to get this fixed and we are going to fix 
things in the near term and the mid term and some of the 
Members kind of voiced and vented a little bit for 2 years and 
3 years is a lot of time and yes, sir, it is, but that is 
reality.
    Mr. Schrock. That was me you are talking about.
    Mr. Gregory. That is good but I want you to know that it 
is. There are long term issues here and we are going to address 
them. This is great input. GAO's input is very helpful to us. 
Major Chavez's input is critical to us because he is our 
customer from the pay world. I will tell you that if mistakes 
were made that caused invalid debt, the invalid debt will 
always be forgiven. By invalid debt, I mean the problem and 
mistake that was made was his whole tour of duty was canceled 
erroneously as if it never happened. Therefore, the system says 
if it never happened, you never deserved to get paid. So the 
system tries to collect all the pay. We know there is an 
erroneous part of that debt. That debt will be forgiven.
    The debt that is not erroneous yet was caused by our 
process needs to be looked at, there needs to be a waiver 
submitted, that waiver needs to be evaluated and the waiver is 
done at a level that says, ``What is the problem, what is the 
extent of the problem, what money was earned, what money wasn't 
earned, and what money and what hardship was caused; and is the 
waiver justified.'' That is not my decision but it will be done 
with due process and every soldier will be handled honestly and 
openly, I promise you.
    Mr. Schrock. Mr. Secretary, I understand we can't put 
marriages back together but what are we going to do for these 
people who lost their houses through the fault of the system?
    Mr. Gregory. Sorry, I don't have an answer for that.
    Mr. Schrock. Because these people filed bankruptcy which I 
am sure they had to do, that is going to be on their record for 
a long time and could impact them in negative ways for a long 
time to come. We have to fix that. How do we fix that? We have 
to turn back the clock and fix those people we created. I 
include me in that. I include everybody on this side in that. 
We are all in that and we definitely have to fix that. How do 
we do it? I don't know.
    Mr. Gregory. Sir, if we are the cause of it, we will get 
with whatever party is involved--banks----
    Mr. Schrock. If you are not, who is?
    Mr. Gregory. Sir, that is my point. My point is, in the 
adjudication of this, where we are at fault, where we are the 
ones who are causing a business to fail--and the example the 
Major gave, we heard of one individual involved in a physical 
gym, a trainer, the loss of his personal expertise and talent 
from that business caused that business to fail--we exacerbated 
that through the pay problems but I doubt that we were the 
cause of that business failure. I am not being callous, sir.
    Mr. Schrock. But the house.
    Mr. Gregory. Sir, there are issues and we heard the issues 
here. Congressman Lantos talked about legislation he is 
preparing so that, on the government side, if a GS-14 who 
happens to be an E-3 gets activated, do we make up his pay? 
Right now, we can't do that. We have no legislation to do that. 
If a GS-14, because he is part of the Guard or any Reserve 
component, gets activated and now goes to an E-3 pay, his house 
is at risk without any mistakes in the pay process. We are not 
here to say there aren't any problems with the pay. We are here 
validating there are. We are validating we are dedicated to fix 
them.
    Mr. Schrock. Any suggestions you all have on this thing 
please tell us because we have to get it fixed.
    Ms. Norton.
    Ms. Norton. Mr. Chairman you have raised essentially the 
point I would like clarification on. Major Chavez has used the 
words ``erroneous payments,'' waive U.S. claim for erroneous 
payments of pay and allowances. I am trying to understand what 
would be left and what the word ``erroneous'' means.
    Let me preface what I am saying by indicating that this may 
be the most egregious example. I appreciate what you have put 
forward. Whenever someone is called to active duty in the 
National Guard, there are going to be economic hardships. I 
appreciate this therefore, that the Army cannot create a 
precedent that would then have to be met across the board 
because there is always an economic hardship. It is the 
egregious nature of this, the domino effect on the families, 
the repeated nature of the problem that draws this, and I am 
sure the chairman has asked for Major Chavez to come here based 
on what in fact we knew from the GAO report. He didn't just 
come forward and say, ``Listen to me.''
    I certainly hope his coming forward, and I certainly think 
we should hold you accountable that if his career is in any way 
harmed because he has done what this committee has asked of 
him, to come forward to elucidate what we already knew about 
his Colorado unit. I want you to know that this Member, and I 
am sure the chairman and ranking member will be following the 
career of Major Chavez, whom we are very proud of, and there 
will be a presumption that will have to be overcome in my mind 
if anything happens to him because he has come to testify. I am 
not accusing you of anything but I am putting you all on 
notice. Actually it was my colleague who understands better 
than anyone else who alerted me.
    Mr. Schrock. And that is what I fear. The General notes he 
is lucky to have people like Major Chavez, no question about 
that. I know when I was in the military if I had even talked to 
a Congressman or Senator, I was finished. I hope that is behind 
us.
    Ms. Norton. And we don't allege it is not. We just want you 
to know that we both have thought about that matter.
    I want to know whether or not the overpayments would be 
considered erroneous? What is erroneous? Would they be made 
whole?
    Mr. Gregory. The erroneous payment and the example that 
Major Chavez mentioned, there was an action mistakenly taken at 
the U.S. Property and Fiscal Office in Colorado that canceled 
the actual tour of duty that he served. That made the money he 
was rightfully paid while he was on that duty a debt because it 
told the system he didn't really serve.
    Ms. Norton. I am talking about the overpayment.
    Mr. Gregory. That is what I am getting to. The point I am 
making is that once that happened, we put him in debt. I am 
going to tell you that a good portion of that, all but the 2 
months, is an erroneous debt and he is going to be made whole 
for that because there was a mistake made in the beginning at 
the USPFO.
    Ms. Norton. I really don't understand the word overpayment.
    Mr. Gregory. The system thought it was an overpayment. The 
system was wrong because the person making the input made a 
mistake.
    Ms. Norton. Some of these people have already begun to pay 
back.
    Mr. Gregory. I will leave it to Major Chavez. I wasn't the 
one done and I wasn't the one paid. Major Chavez.
    Major Chavez. I can explain. To recount, again, the 
soldiers in the Company were deactivated in December 2002. 
Their pay should have been stopped at that point, they got off 
active duty, they went back to civilian jobs. It did not. It 
kept going as if they were still in the system for 2 months. 
They saw that, they recognized it, they told it to the chain of 
command. The solution, USPFO in Colorado tried to fix that, 
recollect that 2 months they were overpaid, but their actions 
caused them to collect back the entire tour. Rather than trying 
to collect the $2,000, for instance, they were overpaid, it now 
said, ``No, you owe me $40,000.'' So that debt comes on the 
soldier in the payroll system on his LES. The system is 
automatically set up that the next check, the next drill pay, 
now that you are back to National Guard, the National Guard 
weekend drills, they collect $200 on their National Guard drill 
that month in March, April and May. It says you have a debt so, 
therefore, we are going to take one-half or two-thirds of that 
pay and apply it to the debt we show you have, $40,000. So now 
that money is going to a debt he or she never had. The 2 
months, yes, but the 9 months or 11 months, no. That is the 
erroneous part.
    Ms. Norton. He would be due reimbursement for that amount.
    Mr. Gregory. He would be due the reimbursement for the 
mistake that was made that canceled his tour of duty rather 
than curtailing it. Those are the actual technical terms. So 
the amount of debt we put on him and started taking out of his 
pay, but was erroneous, has to be paid back, yes, ma'am.
    Ms. Norton. That last part is the bottom line as far as we 
are concerned.
    Thank you very much, Mr. Chairman.
    Mr. Schrock. Thank you.
    There are no more Members here so I think the questioning 
is done. You have been here a long time and we appreciate it. 
We thank you. I thank all of our witnesses for appearing today. 
I also would like to thank the staff of the full committee and 
Vice Chairman Shays' Subcommittee on National Security, 
Emerging Threats and International Relations who worked on this 
hearing.
    I want to also add that the record will be kept open for 7 
days to allow witnesses and Members to include additional 
information in the record.
    Again, thank you very much and this hearing is adjourned.
    [Whereupon, at 12:42 p.m., the committee was adjourned, to 
reconvene at the call of the Chair.]
    [The prepared statements of Hon. Christopher Shays and Hon. 
Elijah E. Cummings, and additional information submitted for 
the hearing record follow:]

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