[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


 
                  U.S. DEPARTMENT OF VETERANS AFFAIRS
                       FISCAL YEAR 2009 BUDGET--
                    OFFICE OF INSPECTOR GENERAL AND
                  OFFICE OF INFORMATION AND TECHNOLOGY

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

                                HEARING

                               before the

                     SUBCOMMITTEE ON OVERSIGHT AND
                             INVESTIGATIONS

                                 of the

                     COMMITTEE ON VETERANS' AFFAIRS
                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                           FEBRUARY 13, 2008

                               __________

                           Serial No. 110-69

                               __________

       Printed for the use of the Committee on Veterans' Affairs

                               ----------
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41-369 PDF                       WASHINGTON : 2008 

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                     COMMITTEE ON VETERANS' AFFAIRS

                    BOB FILNER, California, Chairman

CORRINE BROWN, Florida               STEVE BUYER, Indiana, Ranking
VIC SNYDER, Arkansas                 CLIFF STEARNS, Florida
MICHAEL H. MICHAUD, Maine            JERRY MORAN, Kansas
STEPHANIE HERSETH SANDLIN, South     HENRY E. BROWN, Jr., South 
Dakota                               Carolina
HARRY E. MITCHELL, Arizona           JEFF MILLER, Florida
JOHN J. HALL, New York               JOHN BOOZMAN, Arkansas
PHIL HARE, Illinois                  GINNY BROWN-WAITE, Florida
MICHAEL F. DOYLE, Pennsylvania       MICHAEL R. TURNER, Ohio
SHELLEY BERKLEY, Nevada              BRIAN P. BILBRAY, California
JOHN T. SALAZAR, Colorado            DOUG LAMBORN, Colorado
CIRO D. RODRIGUEZ, Texas             GUS M. BILIRAKIS, Florida
JOE DONNELLY, Indiana                VERN BUCHANAN, Florida
JERRY McNERNEY, California           VACANT
ZACHARY T. SPACE, Ohio
TIMOTHY J. WALZ, Minnesota

                   Malcom A. Shorter, Staff Director

                                 ______

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                  HARRY E. MITCHELL, Arizona, Chairman

ZACHARY T. SPACE, Ohio               GINNY BROWN-WAITE, Florida, 
TIMOTHY J. WALZ, Minnesota           Ranking
CIRO D. RODRIGUEZ, Texas             CLIFF STEARNS, Florida
                                     BRIAN P. BILBRAY, California

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Veterans' Affairs are also 
published in electronic form. The printed hearing record remains the 
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                            C O N T E N T S

                               __________

                           February 13, 2008

                                                                   Page
U.S. Department of Veterans Affairs Fiscal Year 2009 Budget--
  Office of Inspector General and Office of Information and 
  Technology.....................................................     1

                           OPENING STATEMENTS

Chairman Harry E. Mitchell.......................................     1
    Prepared statement of Chairman Mitchell......................    24
Hon. Ginny Brown-Waite, Ranking Republican Member................     2
    Prepared statement of Congresswoman Brown-Waite..............    25
Hon. Timothy J. Walz.............................................     4

                               WITNESSES

U.S. Department of Veterans Affairs:
    Jon A. Wooditch, Deputy Inspector General, Office of 
      Inspector General..........................................     5
        Prepared statement of Mr. Wooditch.......................    25
    Hon. Robert T. Howard, Assistant Secretary for Information 
      and Technology and Chief Information Officer, Office of 
      Information and Technology.................................    16
        Prepared statement of Mr. Howard.........................    36
U.S. Government Accountability Office, Valerie C. Melvin, 
  Director, Human Capital and Management Information Systems 
  Issues.........................................................    13
        Prepared statement of Ms. Melvin.........................    30

                   MATERIAL SUBMITTED FOR THE RECORD

Hon. George J. Opfer, Inspector General, Office of Inspector 
  General, U.S. Department of Veterans Affairs, to Hon. Harry E. 
  Mitchell, Chairman, Subcommittee on Oversight, Committee on 
  Veterans' Affairs, letter dated March 20, 2008, responding to 
  request for additional information for the record..............    43


                  U.S. DEPARTMENT OF VETERANS AFFAIRS
                       FISCAL YEAR 2009 BUDGET--
                    OFFICE OF INSPECTOR GENERAL AND
                  OFFICE OF INFORMATION AND TECHNOLOGY

                              ----------                              


                      WEDNESDAY, FEBRUARY 13, 2008

             U.S. House of Representatives,
                    Committee on Veterans' Affairs,
              Subcommittee on Oversight and Investigations,
                                                    Washington, DC.

    The Subcommittee met, pursuant to notice, at 2:34 p.m., in 
Room 210, Cannon House Office Building, Hon. Harry E. Mitchell 
[Chairman of the Subcommittee] presiding.

    Present: Representatives Mitchell, Space, Walz, and Brown-
Waite.

             OPENING STATEMENT OF CHAIRMAN MITCHELL

    Mr. Mitchell. Good afternoon. Welcome to the hearing on the 
proposed budget for the U.S. Department of Veterans Affairs 
(VA) Office of Inspector General (OIG) and the proposed budget 
for the VA Office of Information and Technology (OI&T). This is 
the Subcommittee on Oversight and Investigations.
    This hearing will come to order. We are here today to 
examine the President's proposed budgets for fiscal year 2009 
for the Inspector General of the VA and the VA's Office of 
Information and Technology. These budgets are not related, but 
are equally important.
    Our first panel will address the OIG's proposed budget. The 
President's budget proposes $76 million for the OIG for the 
fiscal year 2009, which is $4 million below their fiscal year 
2008 budget. I believe this cut is absolutely irresponsible.
    The Inspector General is an essential, independent, 
nonpartisan check against waste, fraud, and abuse and is one of 
the best ways of ensuring accountability at the VA during time 
of war.
    This reduction would result in a 10 percent cut in OIG 
staffing which would weaken the VA's watchdog when hundreds of 
thousands of veterans need VA to make improvements.
    This Subcommittee held a hearing just 2 weeks ago where Dr. 
Daigh, one of the OIG witnesses today, and his team in the 
Office of Healthcare Inspections testified to the shocking and 
tragic events at the VA hospital in Marion, Illinois.
    The VA Medical Inspector, Dr. Daigh, and his group, found 
nine patients who died in the past 2 years as a result of 
substandard care.
    I will be asking Dr. Daigh what additional resources are 
needed to look at the VA Hospital system to make sure there are 
no more Marions out there. I know he does not have those 
resources now and the President's budget would reduce the OIG 
even further.
    The Federal Government has 25 statutory mandated Inspector 
Generals. If you compare the number of OIG employees with the 
number of employees in the Agency, the VA has the lowest ratio 
in the entire government. The same comparison of budget for the 
OIG and budget for the Agency puts the VA near the bottom.
    Unfortunately, the President's proposed cut does not 
account for the OIG's return on investment. In fiscal year 
2007, the VA's Inspector General had hard dollar recoveries, 
money taken from illegal activities and placed into the United 
States Treasury, of $237.9 million. Return on investment just 
on hard dollars recovery was more than three to one.
    The OIG also saved over $300 million by cutting off 
benefits of payments to fugitive felons, that is people 
receiving benefits who have outstanding arrest warrants for 
felonies.
    Our second and third panels will address the President's 
budget proposal for VA Office of Information and Technology. 
Congress has mandated a separate budget line so that the 
amounts and purposes of information technology (IT) 
expenditures are visible and can be evaluated.
    The VA is doing a better job of categorizing its IT 
expenditures, but there is more work to be done. In order for 
Congress to provide effective oversight, IT costs must be 
allocated to costs that are as precise and accurate as 
possible.
    One specific topic the Subcommittee will explore is the 
funding for IT resources to support the innovation and 
creativity of VA's healthcare providers. The Office of 
Information and Technology has set aside $8 million this year 
to provide IT support to the clinicians in the field to 
continue to improve VistA. Unfortunately, there is nothing set 
aside for this in the President's proposed fiscal year 2009 
budget.
    I think this is a mistake. There are benefits to 
centralization of IT, but centralization has hurt the way VA 
personnel use new technology to take care of our veterans. VA 
must do all it can to preserve and promote the unique talents 
of its healthcare providers to innovate and to keep VistA and 
VA at the forefront of medical care.
    Our veterans have fought for our freedom and the least we 
can do is provide adequate resources to ensure they receive the 
highest quality of care when they become veterans.
    [The prepared statement of Chairman Mitchell appears on p. 
24.]
    Mr. Mitchell. Before I recognize the Ranking Republican 
Member for her remarks, I would like to swear in our witnesses. 
I ask all the witnesses from all panels if they would please 
stand and raise your right hand.
    [Witnesses sworn.]
    Mr. Mitchell. Thank you.
    I now recognize Ms. Brown-Waite for her opening remarks.

          OPENING STATEMENT OF HON. GINNY BROWN-WAITE

    Ms. Brown-Waite. Thank you very much, Mr. Chairman.
    I do not know about you, but it seems like the witnesses 
are so far away. It is not meant to be in an unfriendly manner. 
We would love to have you closer, but this happens to be the 
configuration of this room.
    Mr. Chairman, last Thursday, the full Committee reviewed 
the entire budget for the Department of Veterans Affairs for 
fiscal year 2009. Today we will be focusing on two specific 
portions of that budget, namely the funding for the Office of 
Inspector General and the Office of Information and Technology 
over which this Subcommittee has direct oversight.
    Over the past year, I found that the information reported 
to our Committee by the Office of Inspector General is very 
useful in providing this Subcommittee with the information that 
we need to conduct our oversight responsibilities.
    For fiscal year 2008, the OIG was provided with sufficient 
funding to plus-up their full-time equivalent (FTE) staff to 
488 FTEs, which was an addition of 48 new staff members. I 
understand that the OIG is in the process of hiring these staff 
and they are to be assigned to several new high-profile audits, 
healthcare inspections, and criminal investigations.
    However, I am greatly concerned that the fiscal year 2009 
budget that was proposed reduces the FTE staff by 48, same 
number we just plussed-up. I hope to hear from the OIG as to 
how this reduction in staff funding will affect the 
continuation of the audits already in process and the future 
oversight and investigations conducted by the OIG.
    During this Subcommittee's January 29th hearing on patient 
safety, I raised concerns about a possible reduction in the 
budget for the Office of Inspector General. As I stated at that 
hearing, we, Members of this Committee, and Members of 
Congress, have an obligation to ensure that the funding for the 
OIG is not only maintained at the 2008 level, but that we work 
together to provide additional funds for fiscal year 2009.
    The OIG's Combined Assessment Program, also known as CAP 
review, is an unmatchable cyclical audit that surveys patient 
safety, infrastructure safety, management inefficiencies, and 
also allows the VA to keep its finger on the pulse of the VA's 
health delivery system.
    I was pleased to see that the President has requested a 
plus-up for the Office of Information and Technology. I know 
that the transition to a new centralized IT system has not 
always been smooth. But under the leadership of General Howard, 
it has moved forward and I hold high hopes that the kinks, 
bumps, and turf wars along the way will continue to be worked 
out. VA's centralized IT infrastructure has been a landmark 
decision that all other departments could only hope for.
    I do, however, want to make certain that the funding 
Congress provides to VA for its OI&T operations will be managed 
wisely without unnecessary expenditures on IT systems that are 
stagnant and not moving forward.
    We have often heard about the problems that plagued the 
systems in my own back yard like the CoreFLS $340 million 
debacle and the delays in moving off of Legacy IT systems.
    With the centralization of funding to one officer such as 
Assistant Secretary Howard, I am hopeful that VA can move 
forward on the right track to provide systems that will be able 
to serve our Nation's veterans and give the American taxpayer 
the most bang for the tax dollars.
    In closing, Mr. Chairman, I would like to again reiterate 
that I appreciate your holding this hearing so that we can 
review in more detail the complex nature of each of these 
budget lines in the Department of Veterans Affairs budget.
    And with that, I yield back the balance of my time.
    [The prepared statement of Congresswoman Brown-Waite 
appears on p. 25.]
    Mr. Mitchell. Thank you.
    Mr. Walz.

           OPENING STATEMENT OF HON. TIMOTHY J. WALZ

    Mr. Walz. Thank you, Mr. Chairman. And just briefly, I want 
to thank you, of course, for holding this hearing and for your 
passionate words on what it takes to make sure our veterans are 
receiving their care and to the Ranking Member who has been an 
absolutely sterling voice on these issues of making sure that 
we are not only providing the services, we are providing them 
in a cost-effective and timely manner.
    And to each of you who are here today on all the panels, I 
say every time we are here, but I think it is important for us 
to all keep it in mind, we are all here with a single purpose 
and that is to provide the best quality of care we can to our 
veterans who serve this Nation. And we are partners in this.
    As Members sitting up here, we lean on your expertise and 
your ability to help us figure that out. And our job is to help 
make sure that we are doing the job that we are asked to do as 
providing that oversight. So I truly thank you.
    And I have also spoken passionately and many of you have 
testified before of the Office of Inspector General, for 
starters, that I am a big fan of this office. One is that it is 
absolutely critical in the ability for us to deliver and to 
manage what we are doing in such a large organization. We see 
you as partners in effectiveness and the return we get on our 
money from the OIG Office is one we should be very proud of.
    So I would echo and associate myself with the words of both 
the Chairman and the Ranking Member that when we see the budget 
being cut in the OIG, we know that puts you in a very difficult 
position, if you are going to live with what you are given and 
still trying to carry out your job. Our job is to make sure, 
though, that we deliver that, deliver what you need.
    And I think it is important for us to keep in mind, too, 
the President's budget is a suggestion. The Constitution 
clearly puts the authority for budgeting right here with the 
Members up here. Our goal is to work together. It is a 
different set of eyes. We want to make sure whatever we can do 
to deliver to you.
    And a comment also on the integrity and the hard work of 
the IT, I, as a veteran, am concerned about this. When the 26 
million letters were sent, I was one of those also. I do not 
want to diminish the concern that many veterans have, but I 
once again do think it is important to point out that progress 
has been made. And as the Ranking Member pointed out, too, we 
just want to make sure that we have a lot more of the successes 
and a lot less of the dead ends.
    So with that, Mr. Chairman, I thank you and I really look 
forward to the testimony.
    I do again want to thank you all for being here and the 
work you do for our veterans.
    Mr. Mitchell. Thank you.
    At this time, I ask unanimous consent that all Members have 
five legislative days to submit a statement for the record. 
Hearing no objection, so ordered.
    I want to welcome the first panel. And at this time, I 
would like to welcome Mr. Jon A. Wooditch, the Deputy Inspector 
General, to the witness table. Mr. Wooditch is accompanied by 
experts in the fields of healthcare, audits, and 
investigations.
    Mr. Wooditch, if you would please introduce your team and 
then after that, you have five minutes to make your statement. 
Thank you.

        STATEMENT OF JON A. WOODITCH, DEPUTY INSPECTOR 
   GENERAL, OFFICE OF INSPECTOR GENERAL, U.S. DEPARTMENT OF 
  VETERANS AFFAIRS; ACCOMPANIED BY JOHN D. DAIGH, M.D., CPA, 
ASSISTANT INSPECTOR GENERAL FOR HEALTHCARE INSPECTIONS, OFFICE 
   OF INSPECTOR GENERAL; JAMES O'NEILL, ASSISTANT INSPECTOR 
 GENERAL FOR INVESTIGATIONS, OFFICE OF INSPECTOR GENERAL; AND 
BELINDA FINN, ASSISTANT INSPECTOR GENERAL FOR AUDITING, OFFICE 
   OF INSPECTOR GENERAL, U.S. DEPARTMENT OF VETERANS AFFAIRS

    Mr. Wooditch. Thank you very much. I appreciate the 
opportunity to take a moment to introduce those responsible for 
the OIG's accomplishments.
    Belinda Finn over here to my far right conducts audits 
aimed at improving VA nationwide. During the past year, audit 
work presented before this Committee included outpatient 
waiting times, variances in disability compensation payments, 
and contracting deficiencies.
    To my left is Dr. David Daigh. He conducts healthcare 
inspections to improve patient care. In addition to testifying 
before this Committee on quality management issues at the 
Salisbury Medical Center, he recently appeared, as Mr. Chairman 
mentioned, before this Committee to discuss patient deaths at 
Marion, Illinois.
    Lastly, Jim O'Neill is to my right. His criminal and 
administrative investigative work on the data loss involving 26 
million veterans and the more recent incident at the Birmingham 
Medical Center, has heightened awareness of protecting 
personally identifiable information throughout the entire 
Federal Government.
    That is our senior management team, and I am very proud of 
them.
    Now if I may start my statement. Mr. Chairman, Members of 
the Subcommittee, thank you for the opportunity to address the 
2009 budget for the Inspector General.
    A year ago, we testified before this Committee concerning 
our oversight of VA. Since then, we achieved over $820 million 
in monetary benefits for return on investment of $12.00 for 
every dollar spent. We issued 217 reports with over 800 
recommendations for corrective action and completed over 1,100 
criminal investigations. While we have accomplished much, much 
more remains to be done.
    For fiscal year 2008, OIG funding is $80.5 million, which 
includes $7.9 million in emergency funding authorized by the 
President. This funding supports 488 FTE. We are very 
appreciative of this funding and we have launched an aggressive 
recruiting effort to fill these positions as soon as we can. 
For 2009, the budget submitted for the OIG is $76.5 million 
which supports 440 FTE.
    I would now like to take a moment to highlight some of the 
key issues that we will focus on this year and in 2009. A 
primary focus of our work is on the quality of healthcare. We 
will review internal controls such as the peer review process 
to ensure they are functioning correctly. CAP reviews will be 
expanded to address credentialing and privileging and we will 
begin assessing clinical outcomes to ensure veterans are not 
exposed to excessive risk.
    Veterans who have returned from current conflict experience 
two medical traumas with great frequency, traumatic brain 
injury (TBI) and post traumatic stress disorder (PTSD). We will 
review access, diagnoses, and treatment to identify any unmet 
clinical needs. We will initiate reviews of care provided at 
1,000 outpatient clinics and Vet Centers.
    For many veterans, especially those in rural areas, these 
facilities are their primary access to medical care. It is only 
through a review of this population can we ensure they are 
receiving quality care.
    We believe the disparity between specialty medical care at 
large medical centers compared to small, rural facilities may 
place veterans at risk. We plan to devote attention to this 
issue through a focused nationwide review.
    Budget and resource allocation are critical to meeting 
veterans' healthcare needs. We plan to review the resource 
allocation system that tracks demand and usage across VA to 
ensure equitable distribution of resources as veteran 
demographics change.
    VA spends a significant amount of money on pharmaceuticals. 
We will review the effectiveness of internal controls to 
prevent loss and theft.
    We will assess the timeliness and accuracy of processing 
benefit claims, especially in light of the increasing workload 
associated with Operation Iraqi Freedom/Operation Enduring 
Freedom veterans.
    VA lacks an integrated system to safeguard and account for 
financial operations. We plan to review VA's efforts to replace 
existing legacy systems, which do not adequately support 
preparation of VA's consolidated financial statement.
    We will expand our oversight of the systemic weaknesses 
that we have found and reported on of VA procurement and we 
will continue to follow up on the continuing information and 
security control concerns identified in our annual Federal 
Information Security Management Act (FISMA) audits.
    In closing, we will always focus available resources on the 
most urgent issues. However, reports on issues such as those at 
the Marion Medical Center are examples of reactive work that 
were not planned for. These reviews are very labor intensive 
and require us to postpone and cancel other planned and ongoing 
priority work.
    The VA is faced with evolving challenges. If the OIG is to 
remain an agent of positive change, our resources need to be 
commensurate with this challenge.
    I thank you again for the opportunity to appear before this 
Committee. We are available now to answer your questions. Thank 
you.
    [The prepared statement of Mr. Wooditch appears on p. 25.]
    Mr. Mitchell. Thank you.
    I have a couple of questions. First, Mr. Wooditch, what 
impact would the $4 million cut in the OIG's budget that the 
President's budget proposes, how would this impact your 
operation and your ability to do your job?
    Mr. Wooditch. Well, the obvious impact of that cut is a 
loss of 48 positions. With this comes a corresponding reduction 
in the number of audits we can perform, the number of 
healthcare inspections, and the number of criminal 
investigations that we can perform.
    This translates into less monetary benefits, fewer arrests 
and convictions, fewer report recommendations aimed at 
improving VA's programs and operations. Of particular concern 
is the fact that these 48 positions were given to us this year.
    As I mentioned, we are in the process of filling them with 
experienced staff so they can hit the ground running. We are 
faced with the problem of having to hire these people only to 
lose them in the following year.
    Staffing swings of this magnitude for an organization our 
size not only impacts employee morale and productivity, it also 
makes it extremely difficult to accomplish meaningful, 
strategic, and long-term planning and more importantly, it is 
very, very, very difficult to consider which high-priority 
projects will have to be suspended or canceled.
    Mr. Mitchell. Among other things, the OIG investigates 
fraud, waste, and abuse in the VA programs and contracts and 
recovers money by ways of fines and restitution.
    Am I understanding that in 2007, the actual dollars that 
were deposited in the Treasury was $237.9 million? And the 
question is, how does this compare to the total annual budget 
for the Office of the OIG in 2007?
    Mr. Wooditch. As you mentioned, sir, the monetary benefits 
reported by the OIG are basically derived from three sources. 
First we have the dollar value of economic efficiencies 
associated with improvements in processes and productivity.
    The second category includes savings generated by reducing 
erroneous payments.
    Then lastly, as you mentioned, we have hard dollar 
recoveries that go directly back to either VA or to the U.S. 
Treasury. As you mentioned, these include fines, penalties, 
restitution, the civil judgments resulting from our criminal 
investigations. Importantly, it also reflects recoveries from 
contractors who have overcharged VA which we have identified 
through our post-award contract reviews.
    For 2007, our overall return on investment, as I mentioned, 
was $12.00 for every dollar spent. Briefly I will break down 
these three categories.
    Efficiencies generated by economic improvements return an 
investment of $1.60 for every dollar we spent. Reduced outlays, 
reduced erroneous payments generated $4.10 for every dollar we 
spent. I think the one that is really the most important 
concerning our cost benefit is that we have been able to return 
hard dollars back to the United States Government of $3.20 for 
every dollar we spent.
    No matter how you slice it, the OIG has proven itself to 
not only a sound fiscal investment but one that has 
historically recovered more than its cost to operate.
    Mr. Mitchell. Thank you.
    Dr. Daigh, you testified 2 weeks ago about the shocking and 
tragic situation at the VA Hospital in Marion, Illinois, where 
many patients died as a result of substandard care.
    What resources would you need to conduct a system-wide 
investigation to ensure our veterans and the American public 
that there are no other Marions out there and do you have those 
resources now?
    Dr. Daigh. Sir, it is not possible to ensure that a Marion 
will not occur. I believe that if I had about 20 FTE more that 
I could significantly reduce the likelihood that those events 
would occur and that we could provide comfort and assurance 
that we will have done all we can to ensure that policies are 
followed appropriately with respect to the issues that arose at 
Marion.
    Mr. Mitchell. One quick question. Is there anything you can 
do to help ensure that veterans receive the appropriate mental 
healthcare that they need and do you have the resources to do 
that?
    Dr. Daigh. We have done, I think, a fair amount in this 
area, trying to focus both on specific cases where we think 
practice ought to change. Specifically it would be those 
individuals who died where their care involved both mental 
health issues and usually drug abuse. And getting VA to 
recognize that they need to deal with both problems at one 
time, I think, has been an important change in that area.
    We have also reviewed and will focus on the mental health 
strategic plan to ensure that what is an agreed upon, 
reasonable way to ensure veterans receive mental healthcare is, 
in fact, rolled out as delivered.
    Additionally, we are focusing on and would like to focus 
more, on if we had the resources, the mental healthcare 
provided at community-based outpatient clinics (CBOCs) and Vet 
Centers. There are about 800 CBOCs, a couple hundred Vet 
Centers. And at the Vet Centers, there is a piece of that I 
think is probably healthcare.
    And CBOCs is where most individuals receive care who cannot 
easily get to a major hospital. And I think that with the 
resources I identified to you, I can provide more assurance 
that veterans will receive proper care there.
    We have also put together a data set that identifies all 
returning veterans and cohorts by the year that they leave the 
U.S. Department of Defense (DoD). And I think that by using 
that data set as an analysis tool that we can get a better 
statistical look and provide better assurance as to what care 
the veterans who are returning year by year have been 
receiving.
    So the answer is I think with the additional resources I 
identified, I think we can do a much better job of ensuring 
veterans receive the mental healthcare that they should both 
for TBI, PTSD, and associated disorders.
    Mr. Mitchell. Thank you.
    Ms. Brown-Waite.
    Ms. Brown-Waite. Thank you very much, Mr. Chairman.
    I guess this question would be for Deputy Inspector General 
Wooditch. Obviously the statement was made if you had an 
additional 20 FTE staff people helping in the Office of 
Inspector General where you would use them.
    What if there was an additional 20? Where would you devote 
those personnel to? What areas would you assign them to?
    Mr. Wooditch. We have many projects that we cannot get to 
within our current funding. In addition to the 20 FTE that Dr. 
Daigh just mentioned to provide some sort of assurance that we 
do not have another Marion, if we had 20 more FTE, I think we 
would have to sit down and assess our workload and determine 
where we can get the most bang for the buck.
    But I can tell you right now Jim O'Neill, our AIG for 
Investigations, his investigators right now carry a workload of 
12 cases per agent, one of the highest in the Federal 
Government. With a workload that significant, one thing 
happens. When we have a data loss case, we have to divert 
resources to look at the data loss cases, those criminal 
investigations get postponed. They never get canceled. We will 
get back to them, but some of them take years to get back to.
    So we would probably put some resources into a quick 
response team for data analysis, then the rest of them in the 
criminal investigative arena.
    Ms. Brown-Waite. If I could follow-up on that. Is there a 
list that perhaps you could share with this Committee of 
additional needs that you see for the Inspector General's 
Office to be looking at?
    And I do not know, Mr. Mitchell, do you have such a list?
    Mr. Mitchell. No.
    Ms. Brown-Waite. It would be helpful to us to also know 
what needs our attention as the Oversight Committee. And with 
the concurrence of the Committee, maybe it would be helpful, 
not today, but if you would sit down with the Committee staff 
and I am available and perhaps Mr. Mitchell so that we can take 
a look at that because we want you to have additional staff so 
that the important job that you do can be done, can be 
accomplished in an efficient manner so that we get every cent 
that should be going to the vets that right now may be siphoned 
off into other areas, some illegal areas, so that we can get 
that money out there.
    So if you would be willing to share such a list, we sure 
would appreciate having it. It will help us also to justify 
asking for more money.
    Mr. Wooditch. Well, thank you for the opportunity to meet 
with you and your staff to discuss these issues. We will 
prepare such a list and we will be contacting your staff to set 
up meetings. Thank you.
    Ms. Brown-Waite. Okay. I have another question and I think 
this probably would be for Ms. Finn. And I am asking this 
because I believe, and please correct me if I am wrong, you did 
the study on the problems in the Boston area.
    The VA's acquisition system that they are using right now 
for purchases, does that desperately need to be revised and 
made uniform so that we have real accounting areas that are 
used instead of miscellaneous for millions and millions of 
dollars?
    Ms. Finn. One of the first things VA needs is a system to 
give them visibility over all of the contracting actions. They 
do not have that right now. They are working on a system, but 
they are just starting to implement it. And it is too early to 
say whether or not it is going to have all of the needed 
information.
    Certainly they need to be able to correctly collect and 
track the obligations and the expenditures related to all of 
the contracting. That would be a critical need for good 
financial management.
    Ms. Brown-Waite. Refresh my memory. How long have they been 
looking at this?
    Ms. Finn. I do not know for sure. The Electronic Contract 
Management System has been under development and implementation 
for about three to 4 years, I believe. I do not know totally 
how long they have been developing a system. I will be glad to 
get back to you on that.
    Ms. Brown-Waite. You know, so many times organizations 
think they have to reinvent the wheel when there are major 
software companies out there that have it and they will come in 
and they will modify it for government. And some of them 
specialize just in government. But if you would give us an 
update on that later, that would be wonderful.
    Ms. Finn. Okay.
    [The VA Inspector General, Hon. George J. Opfer, followed 
up in a March 20, 2008, letter, which appears on p. 43.]
    Ms. Brown-Waite. And thank you very much.
    And with that, I yield back my time.
    Mr. Mitchell. Thank you.
    Mr. Walz.
    Mr. Walz. Well, thank you, Mr. Chairman.
    And, once again, thank you all for what you are saying. I 
am going to have you help me and it is somewhat subjective, the 
questions I am going to ask. And I do not say this in any way 
facetiously, but I am trying to get a grasp on this, who 
requested that the budget be dropped for the OIG? How would 
that process work?
    I mean, I would assume that the Secretary was involved in 
that when the cabinet level people sat around and talked about 
how they were going to do this year's budget. Who would make 
the decision and say, send this over to the House with a cut in 
the OIG? Do you have any idea on how that would work?
    Mr. Wooditch. It is difficult to talk about the internal 
budget process in the Government without sounding like I am 
soliciting resources.
    Mr. Walz. Yes. And I know you are in a tough spot because 
of that. I understand that.
    Mr. Wooditch. But I think I could help you a little bit in 
answering that question by saying that the OIG does develop a 
budget on what we think we need to bring us to current services 
and any additional planning initiatives that we think need to 
be addressed.
    Those are submitted to the Department. The Department will 
review those, make a decision on whether they support that. 
They will submit their position to Office of Management and 
Budget (OMB). OMB will make a final decision. They will get 
back to us. If we disagree with it, we are allowed to appeal 
it. They make a final decision and then the President's budget 
is submitted.
    So anywhere between when it leaves this office until it 
arrives in front of Congress, the kind of cuts that you are 
talking about could occur.
    Mr. Walz. And the difficulty that lies in there is because 
of the conflicts there, for us to be able to see what was 
requested by OIG and we see what was agreed upon.
    I am under the assumption that you probably asked for more, 
but I guess that is part of the process, I would assume.
    Mr. Wooditch. Well, we asked for resources to do a lot of 
the things that we are currently not doing.
    Mr. Walz. So bottom line is right now we could do a better 
job of protecting our veterans, and we could do a better job of 
protecting our tax dollars if we were investing more in the 
OIG?
    Mr. Wooditch. Yes, sir, I believe that is true.
    Mr. Walz. Okay. And I want to come back to this issue and 
this is one, Ms. Finn, you can help me with. Did you say we are 
currently having a very difficult time tracking contracts? Is 
that correct?
    Ms. Finn. That is correct. At the present time, VA does not 
have any one system that collectively can provide visibility 
over all of the contract actions.
    Mr. Walz. So, internally in the VA, there is someone 
providing audits and then you are doing the inspections on 
these audits, is that the correct procedure?
    Ms. Finn. Audits of contracts?
    Mr. Walz. Yes.
    Ms. Finn. We actually within the OIG provide some pre- and 
post-award services to the Department on a reimbursable basis.
    Mr. Walz. Is there any redundancy in who is watching these 
contracts or if you do not catch it, it does not get caught?
    Mr. Wooditch. I would like to answer that, sir, if I may. 
VA has their own internal process of monitoring what they do. 
They have reviews done by General Counsel. They have reviews 
done from a technical standpoint in complying with the Federal 
Acquisition regulations. But I think I am safe in saying that 
if you are talking about independent objective reviews, our 
office is the only one that really does that.
    Mr. Walz. Okay. And did somebody have a number or did we 
say we could get it? How much fraud, waste, and abuse was 
caught last year, for example, in contracting? Do we have any 
idea on that?
    Mr. Wooditch. Fraud, waste, and abuse, in our pre-award and 
post-award area, the pre-awards basically look at contract bids 
and we look for opportunities to negotiate a better price. In 
the post-award, we look at where we are overcharged and from 
that, we try to collect the overcharges.
    I think in 2007, our total pre and post-award monetary 
benefits were several hundred million dollars. I can get the 
exact number back to you later.
    [The VA Inspector General, Hon. George J. Opfer, followed 
up in a March 20, 2008, letter, which appears on p. 43.]
    Mr. Walz. About how many firms are involved in that or how 
many contracts would you guess? Is that another one that is 
pretty hard to----
    Mr. Wooditch. It is difficult to estimate what that is. It 
varies by year to year. We do a lot more pre-award work than we 
do post-award. We probably look at over a hundred a year in 
pre-award and probably a third of that in post-award. We could 
look at a lot more, but we are limited to the 25 staff we have 
dedicated to that area.
    Mr. Walz. So at a time of national conflict and war and a 
time when our budgets are pressed, we have people war 
profiteering and at the same time, we are going to cut the 
people who can stop that war-profiteering? Is that an over-
dramatization or is that what we are looking at?
    Mr. Wooditch. I do not think it is an over-dramatization. I 
think, like I said earlier, if you invest more moneys in us, 
you will get a greater return on your investment.
    Mr. Walz. Well, I again want to say to close here before I 
give it back to the Chairman that I do appreciate that and 
please know that we are fighting. And I also understand the 
very sensitive situation you are in with this budgeting. But 
please know that we will do our job of asking these hard 
questions and make sure we get this thing right.
    So I yield back.
    Mr. Mitchell. Thank you.
    Mr. Space.
    Mr. Space. I have no questions.
    Mr. Mitchell. Thank you very much for coming today. We 
appreciate your testimony. And you have a friend up here. You 
have a bunch of them.
    Mr. Wooditch. Thank you very much.
    Mr. Mitchell. At this time, we would like to invite the 
second panel to come forward.
    I might add that at about 3:20, they expect to call for 
votes again. So hopefully we can get through all of this.
    I welcome panel two to the witness table. Ms. Valerie 
Melvin is the Director of Human Capital and Management 
Information Systems Issues for the U.S. Government 
Accountability Office, (GAO). She will be accompanied by her 
Assistant Director, Ms. Barbara Oliver. We look forward to 
hearing her unbiased view of the IT budget.
    And, Ms. Melvin, you have five minutes to make your 
presentation.

  STATEMENT OF VALERIE C. MELVIN, DIRECTOR, HUMAN CAPITAL AND 
    MANAGEMENT INFORMATION SYSTEMS ISSUES, U.S. GOVERNMENT 
ACCOUNTABILITY OFFICE; ACCOMPANIED BY BARBARA OLIVER, ASSISTANT 
  DIRECTOR, HUMAN CAPITAL AND MANAGEMENT INFORMATION SYSTEMS 
         ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE

    Ms. Melvin. Thank you, Mr. Chairman and Members of the 
Subcommittee. I am pleased to participate in today's hearing on 
VA's information technology budget.
    As you know, the use of information technology is crucial 
to helping VA effectively serve our Nation's veterans for which 
the Department is seeking approximately $2.4 billion for fiscal 
year 2009. However, the Department has long been challenged in 
its information technology management, having experienced cost, 
schedule, and performance problems in a number of systems 
initiatives.
    To provide greater accountability and authority over its 
resources, VA has been realigning its organization to 
centralize IT management under the Chief Information Officer 
(CIO) and to standardize budgets, operations, and systems 
development.
    Over the past two years, we have assessed and reported on 
the realignment initiatives and at your request, my testimony 
today summarizes our findings regarding the Department's 
actions and their impact to date in providing greater authority 
and accountability over the Department's IT budget and 
resources.
    In this regard, the Department has taken a number of 
important steps toward a more disciplined approach to 
overseeing and accounting for its budget and resources. Among 
these actions, it designated necessary leadership within the 
CIO's Office to be responsible for developing and tracking 
expenditures against the budget, activated three governance 
boards to facilitate budget oversight and to manage its 
investments, finalized an IT strategic plan that aligns with 
the Department's strategic plan, and developed multi-year 
budget guidance to improve future management of the IT 
investment portfolio.
    All of these steps represent positive movement in VA's 
attempt to establish greater control of its information 
technology. To date, however, their effectiveness in ensuring 
accountability for the Department's resources and budget has 
not yet been clearly established. It remains too early to 
assess the full impact of the Department's actions because a 
number of them have only recently become operational or have 
not yet been fully implemented.
    For example, the Governance Board's first involvement in 
budget oversight only recently began in May 2007 and none of 
the boards have yet been involved in all stages of the budget 
formulation and execution processes.
    In addition, because the multi-year budget guidance is 
applicable to future budgets for fiscal years 2010 through 
2012, it is too early to determine VA's effectiveness in 
implementing this guidance.
    Even more significantly, improved IT management processes 
that are being instituted as a cornerstone of the realignment 
remain behind schedule, with the date that VA plans to complete 
the implementation of certain budget control processes having 
changed from July 2008 to at least fiscal year 2011. However, 
as we have previously noted, it is crucial for the CIO to 
ensure that well-established and integrated processes are in 
place to lead, manage, and control VA's IT resources.
    Thus, Mr. Chairman, while VA's actions to increase IT 
oversight and accountability hold promise for achieving a more 
disciplined management approach, their success will depend on 
the extent to which the Department follows through in ensuring 
that the actions are effectively instituted and executed.
    VA has said that these management processes are essential 
to correcting deficiencies that it encountered with its 
previously decentralized management approach. Thus, 
establishing the processes is crucial to the overall success of 
this initiative and to realizing the potential benefits that 
could accrue from having a solid and sustainable centralized 
approach to managing the Department's IT budget and resources.
    This concludes my prepared statement, and we would be 
pleased to respond to any questions that you have.
    [The prepared statement of Ms. Melvin appears on p. 30.]
    Mr. Mitchell. Thank you.
    I have just a couple questions. How confident are you that 
the current budget proposal accurately identifies the specific 
items, which IT dollars are being spent, and accurately 
identifies the amount of money associated with each item?
    Ms. Melvin. At this time, I do not believe that we could 
attach a level of confidence to it because we have not been 
able to look at the full process implemented throughout the 
Department. As I stated in my testimony, the Department is in 
the process of executing a number of the processes that are 
important to or that is identified, I should say, as part of 
its overall governance process for improved management and 
accountability for the budget. However, to date, it has been 
implemented in a sort of a piecemeal fashion in the sense that 
budget formulation has occurred for the fiscal year 2009 budget 
process and budget execution has occurred for the 2008 budget 
process. Thus far, the formulation as we understand it has been 
based on the use of the exhibit 300s, but we have not seen 
evidence yet based on the full set of practices and processes 
that the Department intends to use in terms of having a more 
solid and centralized approach to managing the resources.
    Mr. Mitchell. Thank you.
    Just one more question. You say in your report that the VA 
has told you that it will not have the management processes 
necessary to centralize the control over IT budget until the 
year 2011. Why would the VA need three more years to do this?
    Ms. Melvin. That is actually stated in their IT strategic 
plan. And we do not know specifically why, but I can say that 
in our past work in looking at their management processes, in 
the discussions that we had with VA's officials, they did 
indicate that they had in some cases overestimated what would 
be required to actually get these management processes in 
place. Perhaps that is still a factor.
    I do know that as they have been moving through this 
process, they have been looking at ways to refine some of the 
efforts that they are undertaking. And that seems to be a major 
piece of what has taken place and why they may not have been 
able to put them in place yet.
    Mr. Mitchell. Thank you.
    Ms. Brown-Waite?
    Ms. Brown-Waite. Thank you.
    I would like to follow-up on the Chairman's line of 
questioning. Having been here for a few years, was it not 
supposed to originally be completed in July of 2008?
    Ms. Melvin. That is correct.
    Ms. Brown-Waite. And the reasons for the delay?
    Ms. Melvin. At the time that we first started looking at 
the processes, there were a number of factors that were being 
considered by VA as reasons why they were not able to. They 
dealt with having to actually start looking at the 
implementation and, once they did, to see that some of the 
processes needed to be refined relative to their overall 
organization's structure.
    We also noted in our prior work that they were in the 
process of staffing their offices, if you will, the process 
offices that would be major players in actually getting their 
business processes in place. Those factors collectively were 
reasons that were given for that.
    I would also add that as a part of our work, one of the 
things that we had looked for are where VA has actually had an 
actual plan, if you will, with performance measures and results 
oriented objectives for what they were trying to achieve. And 
we have also stressed the need for them to have an 
implementation team that could monitor the progress that they 
were making in these areas.
    Ms. Brown-Waite. Did you find such a plan?
    Ms. Melvin. There was not. We have seen in the strategic 
plan that they currently have in place that they do have a 
performance and accountability measurement process that 
hopefully will be beneficial in helping them to actually track 
better the actions that they are taking against the time frames 
and the milestones that they have put in place for this.
    However, we have, I would say, disagreed basically in terms 
of the type of implementation team that would be needed to 
actually make sure that the realignment was undertaken 
effectively.
    Ms. Brown-Waite. Could it be summarized? Give me a 
percentage here of the problem being just institutional 
opposition to change.
    Ms. Melvin. I cannot give you a percentage. I would say, 
though, and we have stated previously that in undertaking an 
effort of the magnitude that VA is undertaking, a lot of what 
they are doing is very ambitious.
    Our past work relative to transformations within 
organizations, especially on a major level, have indicated that 
sometimes it takes up to five to seven years to be able to 
accomplish some of the goals such as VA is trying to achieve.
    A lot of that involves making sure that there is cultural 
buy-in to the initiatives that are being undertaken, to the 
changes that are being made. There is a complex set of factors 
relative to being able to gain organization-wide approval, 
agreement, and acceptance of the changes that are there.
    So I do think that these are factors that are important and 
perhaps are relevant to the situation that VA finds itself in.
    Ms. Brown-Waite. Another question. And, by the way, thank 
you very much for being here----
    Ms. Melvin. You are very welcome.
    Ms. Brown-Waite [continuing]. And doing the presentation, 
both of you. In your testimony, you discussed the challenges in 
maintaining VA's IT projects which according to your statement 
includes cost overruns, schedule slippages, and performance 
problems.
    In your estimate, is the VA doing enough to fix these 
problems and what more could really be done?
    Ms. Melvin. VA is in the process of trying to implement its 
changes through its management process. We do believe that if 
they are able to effectively implement and execute the overall 
IT investment management processes that are a part of the 
realignment that they could go a long way in making sure that 
they have more information, can make more effective and better 
informed decisions relative to their projects.
    A key to all of this is that this does show promise. 
However, we still remain very cautious and we still stress the 
need for them to have the fundamental business processes in 
place. And through doing that, I believe that that will be the 
support or the foundation that they need to be able to move 
forward to make some of the changes within, for example, key 
initiatives that you have seen and we have reported on that 
still have faced challenges for the Agency.
    Ms. Brown-Waite. Thank you.
    And with that, I yield back the balance of my time.
    Mr. Mitchell. Thank you.
    And Mr. Walz has no questions, so thank you very much for 
appearing. We appreciate it.
    Ms. Melvin. You are welcome.
    Mr. Mitchell. And at this time, I welcome the third panel 
to the witness table. Mr. Robert T. Howard is the Assistant 
Secretary for Information and Technology at the VA and the 
Department's CIO. We look forward to hearing Assistant 
Secretary Howard's testimony.
    And if Mr. Howard would please introduce the rest of your 
team and then, Mr. Howard, if you could spend 5 minutes on your 
remarks.

  STATEMENT OF HON. ROBERT T. HOWARD, ASSISTANT SECRETARY FOR 
   INFORMATION AND TECHNOLOGY AND CHIEF INFORMATION OFFICER, 
   OFFICE OF INFORMATION AND TECHNOLOGY, U.S. DEPARTMENT OF 
  VETERANS AFFAIRS; ACCOMPANIED BY STEPHEN WARREN, PRINCIPAL 
     DEPUTY ASSISTANT SECRETARY, OFFICE OF INFORMATION AND 
   TECHNOLOGY; PAUL TIBBITS, M.D., DEPUTY CHIEF INFORMATION 
     OFFICER, OFFICE OF ENTERPRISE DEVELOPMENT, OFFICE OF 
   INFORMATION AND TECHNOLOGY; AND ARNIE CLAUDIO, DIRECTOR, 
OVERSIGHT AND COMPLIANCE, OFFICE OF INFORMATION AND TECHNOLOGY, 
              U.S. DEPARTMENT OF VETERANS AFFAIRS

    Mr. Howard. Thank you, Mr. Chairman.
    Chairman Mitchell and Ranking Member Brown-Waite, good 
afternoon and thank you for your invitation to discuss the 
President's fiscal year 2009 Information and Technology budget 
proposal for the Department of Veterans Affairs.
    I am accompanied today by Steph Warren to my right, my 
Principal Deputy Assistant Secretary. And to his right is Dr. 
Paul Tibbits, the Deputy CIO for Enterprise Development. And to 
my left is Arnie Claudio, Director of Oversight and Compliance.
    Let me begin this afternoon by recapping the major aspects 
of the IT reorganization and highlights of our experience to 
date.
    Throughout fiscal year 2006 and 2007, the VA Office of 
Information and Technology transitioned to a new organization 
with the detailing of 5,010 IT personnel and beginning with the 
fiscal year 2008 budget, we reflect this completed 
consolidation along with the transferred funding for a total 
staffing level of 6,686 personnel.
    We have been operating under this new organization for 
about a year and continue to learn a lot about what it takes to 
provide effective and efficient IT support to an organization 
the size and complexity of the VA.
    As we move forward, we will continue to build upon our 
successes. However, we remain aware that our work is far from 
complete.
    As a result of the enhanced visibility that we have been 
able to bring to the management of IT through the 
consolidation, we are discovering activities that need to be 
improved and enhanced from an overall management standpoint. 
This is especially true in the area of data security and 
infrastructure improvements.
    For example, we have increased our emphasis regarding 
certification and accreditation and are developing better 
procedures regarding asset management. Progress is being made, 
but we have a way to go in establishing the organization and 
providing the high-quality IT support that VA and our veterans 
deserve.
    Working with our new centralized organization has certainly 
been a challenge for all of us. But the other critical 
challenge we are dealing with is the new IT appropriation which 
was established in fiscal year 2006.
    In that regard, we continue to focus our efforts in 
structuring and funding the IT appropriation along programmatic 
lines relating IT to the principle missions of the VA. Since 
this is a line item appropriation, prior planning is critically 
important and getting the funding up right is essential.
    As you are aware, VA is requesting $2.442 billion to 
support IT development, operations, and maintenance expenses, 
including payroll for fiscal year 2009. This request reflects 
the consolidation of all VA IT into one appropriation, with the 
exceptions of non-payroll IT for credit reform programs and 
non-appropriated insurance benefit programs, both of which fall 
under different funding rules.
    In fiscal year 2009, the majority of increases represent 
program priorities to enhance the support to veterans both 
directly and indirectly, especially in the area of medical 
care.
    The non-pay portion of the 2009 budget has been realigned 
from previous submissions to delineate veteran strategic issues 
into two major classifications: veteran-facing IT systems and 
internal facing IT systems. This has been done to better link 
the appropriation to the mission of VA.
    Veteran-facing IT systems support programs for veterans 
such as providing medical care and delivering compensation 
benefits, enhancing education opportunities, and programs of 
that nature. These veteran facing programs account for $1.295 
billion of our request.
    Internal facing IT systems are those that provide the 
capability to work more effectively in managing IT resources 
such as corporate management, financial resources management, 
and programs of that nature. Internal facing programs in our 
budget for 2009 total $418 million.
    Together these amounts reflect a sizeable increase over 
fiscal year 2008 which will obviously be very helpful to us in 
the improvement of IT support to VA.
    Over the past several years, VA IT has had a fairly level 
budget. Yet, at the same time, the organizations we support 
have been increasing in size, especially in terms of facilities 
and people. And as you well know, whenever you do that, you 
have to apply the necessary IT talent and tools to those 
activities.
    The increase will help us provide the needed funding to 
accelerate selected programs, especially in the delivery of 
healthcare and to at least keep most of them on track.
    A few words about veteran-facing medical programs. VA has 
laid a solid foundation for integrating information and 
technology into all aspects of healthcare operations, and will 
continue to lead the Nation in this area.
    In fiscal year 2009, we have asked for an increase in 
funding necessary to sustain and modernize our healthcare 
delivery IT systems.
    In the area of veteran-facing benefit programs, information 
and technology investments over the past several years and 
those planned for the future will enable new technologies to be 
used to facilitate the processing of claims and providing 
benefits to veterans and their families.
    Internal-facing IT systems link to specific management 
categories, corporate management, financial resource 
management, asset management, and human capital management to 
name a few. VA is requesting, as I mentioned, $418 million for 
this area.
    Two significant investments are in the categories of human 
capital management and financial resources management and these 
are necessary to replace existing systems with new 
technologies.
    The Human Resource Information System is an OMB and the 
Office of Personnel Management managed project and the 
Financial and Logistics Integrated Technology Enterprise system 
addresses VA's longstanding weakness in the financial 
management area.
    Mr. Mitchell. Mr. Howard, could you wrap up?
    Mr. Howard. Yes, sir.
    So I want to point out one additional thing and then I will 
close and that is with respect to information security. You 
know we are doing a lot of work there. But one of our success 
stories has been our robust capability for oversight and 
compliance.
    Arnie Claudio sitting to my left can speak to a lot of 
that. He has conducted over 150 assessments since last January 
and that particular information is providing a lot of 
visibility for us in areas that need to be fixed throughout the 
VA.
    Sir, I thank you for the time to make this opening 
statement, and we are prepared to answer any questions you may 
have.
    [The prepared statement of Mr. Howard appears on p. 36.]
    Mr. Mitchell. Thank you. I have one quick question before 
we have to end this. The IT budget submission shows that there 
were $8 million for medical center innovations for fiscal year 
2008. However, there is no money, none included for this 
purpose, in the 2009 proposed budget, ensuring that VA 
continues to benefit from the creativity and innovation of the 
doctors and other healthcare providers who actually do provide 
the care for our veterans.
    The question I have is, should the 2009 budget include 
money for medical center innovations and do you agree or not?
    Mr. Howard. Sir, I totally agree with that and we will find 
a way to fund that. To tell you what you are looking at in 
2008, that line was developed actually after we had completed 
our 2009 budget. It was in response to a concern that we were 
hearing from the field regarding innovation and the need to put 
power assist in that area. The fact of the matter is we 
actually took FTE money out of the IT appropriation in 2008 and 
moved it into that particular line creating an IT innovation 
line for the first time. In fact, there were a couple of memos 
jointly signed by me and Mike Kussman making it clear to the 
field that in no way do we want to kill innovation. The fact of 
the matter is, we want to keep it enhanced, but we want to do 
so in a little bit more structured manner. So we will figure 
out a way to fund that piece in 2009, sir.
    Mr. Mitchell. Thank you.
    One last question before I pass it on. According to the 
GAO, the VA originally stated that it would have the management 
processes necessary for centralized control of the IT budget in 
place by 2008, as Ms. Brown-Waite mentioned. Now VA is telling 
the GAO that this will not happen until 2011.
    Why is it going to take three more years to get this done?
    Mr. Howard. Sir, that is a good question. The fact of the 
matter is, I believe, one of the folks mentioned the ambitious 
nature of what we had put on the table. One of the reasons that 
that has slowed down to some degree is because of all of the 
problems that we are discovering as a result of this 
centralization. I have moved the problems right up to the front 
of the line. In other words, we need to focus on those, but we 
have not ignored putting the process in place because we know 
how important that is.
    The fact of the matter is, we do have a number of things 
ongoing. For example, we have redesigned pilots for risk 
management already ongoing. The budget process has begun. We 
have not gotten it written up yet but there is a process. With 
regards to incident response, you get weekly reports on that. 
There is a very robust process in place for that, but we have 
not gotten it in a nice, neat document yet. That is going on 
though.
    IBM, when they did the work in the reorganization helping 
us out, produced thick volumes for each of the 36 processes, 
about, you know, two or three inches thick. We have taken those 
documents which were very complex, by the way, and skinnied 
them down to workable pamphlets, if you will, that people can 
use in establishing these processes. That is ongoing, and in 
fact, there are several of them already done. Twenty-seven of 
them, in fact, are either in draft or final version.
    Key meetings continue to take place. It has slowed down 
because of the complexity of what we are dealing with and also 
all of the problems. I have charged my senior leaders with the 
responsibility for implementing these processes, but I also 
challenged them to fix all these problems. They can only handle 
so much, so there is a slip.
    Whether 2011, that is probably a little bit more extensive 
than I think will be necessary, but there are some processes, 
and I hate to be long-winded here, but there are some processes 
that may very well take that long.
    Let me give you an example. In its financial management and 
budget process, we actually have to fit inside a VA process 
about that, and that is not very well defined either. In other 
words, we are implementing processes, but those we support, you 
know, also have to adjust so that we can fit inside them with 
the process we have for IT.
    Mr. Mitchell. Thank you.
    Ms. Brown-Waite?
    Ms. Brown-Waite. Thank you, Mr. Chairman.
    General Howard, refresh my memory. At what point was IBM 
brought in?
    Mr. Howard. They were brought in in the early 2006, I 
believe. The key decisions, yes, I believe it was the summer of 
2006. I can get the exact date for you.
    [The following was subsequently received.]

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

    Ms. Brown-Waite. And was it because there were problems in 
attempting to implement this without a major contractor?
    Mr. Howard. No, ma'am. We intended to have a contractor 
right from the very beginning. This was fully intended and we 
worked very well with IBM. They were very helpful to us. But 
that was part of the plan.
    Ms. Brown-Waite. And they are still there today?
    Mr. Howard. The contractor is still in place. They do not 
have much work for us anymore because their work is pretty much 
done.
    Ms. Brown-Waite. Okay. Could you tell me how much the 
Birmingham data breach cost the VA to date?
    Mr. Howard. Within this number I am about to give you, 
there probably are a few other minor incidents. But for credit 
protection in fiscal year 2007, we paid $6.5 million. Now, we 
put a lot more than that on the shelf, so to speak, because we 
had no idea how many people would opt in, you know, and choose 
to have credit protection. But so far, it is $6.5 million.
    We also spent about $1.3 million on the mailings for the 
particular incidents in 2007 and most of that was Birmingham. 
The lion's share of that was Birmingham.
    Ms. Brown-Waite. And the May 2006 data breach, how much did 
that cost?
    Mr. Howard. The May 2006 data breach would have cost us 
$200 million, but the hard drive was discovered. As you know, 
the Federal Bureau of Investigation did a forensic analysis of 
it and were 99.9 percent positive nothing was taken off it. So 
the money for credit protection was stopped and we never did 
move forward with that. So credit protection-wise, zero on the 
2006 May data breach.
    Ms. Brown-Waite. And the mailing?
    Mr. Howard. The mailing, ma'am, I would have to get you 
that number. We did pay. In fact, I believe the number was--I 
better give you that number for the record.
    Ms. Brown-Waite. Is that the mailing that had to be done 
twice?
    Mr. Howard. Yes. Yes. As you know, we sent two letters to 
the veterans. We did send two letters. I do not think we sent 
any more, but two went out and it did cost us quite a bit of 
money.
    [The following was subsequently received:]

    The total cost for first mailing was $6,678,348; the total cost for 
second mailing was $6,376,192; and the grand total was $13,054,540.

    Ms. Brown-Waite. Mr. Chairman, I know we have votes. So 
with that, I will yield back.
    Mr. Mitchell. Thank you.
    Mr. Walz.
    Mr. Walz. Thank you, Mr. Chairman.
    I thank the Ranking Member also for that.
    First of all, General Howard, I really appreciate you 
coming here and the work you have done. I know you have been on 
this job about 17 months. And I think we should take something 
that is positive. When we see this from GAO after the times I 
sit here, I am glad to see that important steps have been made 
and that is exactly what we are trying to look for.
    Please forgive me if I am a bit, after the OIG's testimony, 
a bit preoccupied with this idea of where our money is going. 
You have received a big budget.
    Are there safeguards in place on that? I know I am asking a 
little bit off line on this, but that is a concern of mine now 
to hear. Now, we are going to send more money there. Are we 
taking good care of it?
    Mr. Howard. Sir, that is a very good question. Quite 
frankly, as I mentioned, we are building this organization and 
we are learning all the time. If you were to ask me what does 
an IT organization need to look like to support the VA in a 
centralized way, I would have to tell you I do not know yet as 
I am still learning. We are pretty sure we are getting really 
close. We discover issues all the time.
    One thing for sure that we need to put more emphasis on is 
our management process. In the budget formulation, they 
mentioned the various boards and what have you. Those boards 
have met, but they are absolutely right. We have not been 
through a complete process like 2009 development, 2009, you 
know, with the Congress, and then execution. We need to go 
through that and put all of those mechanisms in place.
    The other thing that we are finding from a staffing 
standpoint is that we need to put more emphasis on making sure 
proper staff of the right skill sets are in place to monitor 
this funding. We also need to have better automated systems 
within the VA. As you know, that is one of the IT programs that 
we are actually working on to better monitor this information.
    It is infinitely better than it was in the past, that is 
for sure. Just the fact that, you know, I get four sheets with 
all the numbers on it is certainly helpful, but I do not want 
to indicate to you that we have our arms all over it. We have 
got a lot of work to do here.
    Mr. Walz. One of the things we hear a lot about is, of 
course, the claims backlog and I noticed in 2009, the Veterans 
Benefits Administration (VBA) has zero for electronic 
monitoring of claims, making sure the rating system is 
electronically done.
    Those are the types of decisions, and I know we do not have 
enough time here. I know that the Ranking Member is generous 
enough to give me a little of hers. I am deeply concerned about 
this. Many Members here and the staff just ended up trying to 
figure out this seamless transition between DoD and all of 
that.
    I guess I would just ask you, is that communication 
happening?
    Mr. Howard. Yes, sir. In fact, IBM is doing a study right 
now because we know we have to move to a paperless environment, 
and you know VBA lives in a sea of paper. You know that.
    Mr. Walz. Yes.
    Mr. Howard. But we also know we have to get out of that 
world. It is extremely difficult. There is a contract with IBM. 
It is Dan Cooper's contract and VBA looking at the various 
processes and how we can go about that. The Deputy Secretary 
has met several times with us on that, on creating a paperless 
environment in VBA so we can speed up the process of claims----
    Mr. Walz. Why was it zeroed out then for 2009?
    Mr. Howard. Sir, which line are you referring to? Sir, 
because we are spending money on that.
    Mr. Walz. They have got us down with VETSNET and Virtual VA 
and nothing new.
    Mr. Howard. Yes, sir. Sir, right now we have VETSNET.
    Mr. Walz. Right.
    Mr. Howard. You know all about that. And Virtual VA is the 
program that we are using to image the paper, you know, run it 
through the imaging machine and at least prepare a veteran 
folder, if you will, in electronic form. But it is not a 
computable form. It is just passing the PDF file around.
    Mr. Walz. But the concern is there and there is movement 
toward it?
    Mr. Howard. Yes, sir. But before we start throwing a lot of 
money at it, we want to get through this IBM analysis and study 
because, quite frankly, we do not really know right now, you 
know, what it is going to take to change pretty well-embedded 
processes. The first thing you have got to do is change the way 
you do business, and that is what IBM is looking at. So we are 
doing it, but it does not appear as a separate line here.
    Mr. Walz. Okay. And I yield back and thank the Chairman.
    Mr. Mitchell. Thank you.
    And I want to thank all of our witnesses today. You know, 
this Committee and I would say all Members of Congress really 
believe that for the veterans who have fought for our freedom, 
the least we can do is to provide adequate resources to ensure 
they receive the very highest quality of care once they become 
veterans. So we want you all to know that this is our concern 
and we appreciate everything that you have done. We appreciate 
you coming today.
    Thank you and that concludes the hearing.
    Mr. Howard. Thank you, sir.
    [Whereupon, at 3:43 p.m., the Subcommittee was adjourned.]





















                            A P P E N D I X

                              ----------                              

             Prepared Statement of Hon. Harry E. Mitchell,
         Chairman, Subcommittee on Oversight and Investigations
    We are here today to examine the President's proposed budgets for 
fiscal year 2009 for the Inspector General (IG) of the VA and for the 
VA's Office of Information and Technology (IT). These budgets are not 
related, but are equally important.
    Our first panel will address the IG's proposed budget. The 
President's budget proposes $76 million for the IG for fiscal year 
2009, which is $4 million below their fiscal year 2008 budget. I 
believe this cut is absolutely irresponsible.
    The Inspector General is an essential, independent, nonpartisan 
check against waste, fraud and abuse, and is one of the best ways of 
ensuring accountability at the VA during a time of war.
    This reduction would result in a 10 percent cut in IG staffing, 
which would weaken the VA's watchdog when hundreds of thousands of 
veterans need the VA to make improvements.
    This Subcommittee held a hearing just two weeks ago where Dr. David 
Daigh, one of the IG witnesses today, and his team in the Office of 
Healthcare Inspections testified to the shocking and tragic events at 
the VA hospital in Marion, Illinois. The VA Medical Inspector and Dr. 
Daigh's group found nine patients who died in the past two years as a 
result of substandard care.
    I will be asking Dr. Daigh what additional resources are needed to 
look at the whole VA hospital system to make sure there are no more 
Marions out there. I know he does not have those resources now and the 
President's budget would reduce the IG even further.
    The Federal Government has 25 statutorily mandated Inspectors 
General. If you compare the number of IG employees with the number of 
employees in the agency, the VA has the lowest ratio in the entire 
government. The same comparison of budget for the IG and budget for the 
agency puts the VA near the bottom.
    Unfortunately, the President's proposed cut does not account for 
the IG's return on investment. In fiscal year 2007, the VA's Inspector 
General had hard dollar recoveries--money taken from illegal activities 
and placed into the United States treasury--of $237.9 million. Return 
on investment just on hard dollar recoveries was over three to one. The 
IG also saved over three hundred million dollars by cutting off 
benefits payments to fugitive felons--people receiving benefits who 
have outstanding arrest warrants for felonies.
    Our second and third panels will address the President's budget 
proposal for VA's Office of Information and Technology. Congress has 
mandated a separate budget line so that the amounts and purposes of IT 
expenditures are visible and can be evaluated.
    The VA is doing a better job of categorizing its IT expenditures 
but there is more work to be done. In order for Congress to provide 
effective oversight--IT costs must be allocated to cost centers as 
precisely and accurately as possible.
    One specific topic this Subcommittee will explore is the funding 
for IT resources to support the innovation and creativity of VA's 
healthcare providers.
    The Office of Information and Technology has set aside $8 million 
this year to provide IT support to the clinicians in the field to 
continue to improve VistA. Unfortunately, there is nothing set aside 
for this in the President's proposed fiscal year 2009 budget. I think 
that is a mistake.
    There are benefits to centralization of IT, but centralization has 
hurt the way VA personnel use new technology to take care of our 
veterans. VA must do all it can to preserve and promote the unique 
talents of its healthcare providers to innovate and keep VistA and VA 
at the forefront of medical care.
    Our veterans have fought for our freedom, and the least we can do 
is provide adequate resources to ensure they receive the highest 
quality of care when they become veterans.
                                 
             Prepared Statement of Hon. Ginny Brown-Waite,
Ranking Republican Member, Subcommittee on Oversight and Investigations
    Thank you for yielding Mr. Chairman.
    Mr. Chairman, last Thursday, the full Committee reviewed the entire 
budget for the Department of Veterans Affairs for FY 2009.
    Today, we will be focusing on two specific portions of that budget. 
The funding for the Office of the Inspector General (OIG) and the 
Office of Information and Technology (OI&T), over which this 
Subcommittee has direct oversight.
    Over the past year, I have found the information reported to our 
Committee by the Office of Inspector General to be immensely useful in 
providing this Subcommittee with the information needed to conduct our 
oversight responsibilities.
    For FY 2008, the OIG was provided with sufficient funding to plus 
up their FTE staff to 488, an addition of 48 new staff members.
    I understand that the OIG is in the process of hiring these staff 
and they are to be assigned to several new high profile audits, 
healthcare inspections, and criminal investigations.
    However, I am greatly concerned about the FY 2009 budget request, 
which reduces the FTE staff by 48. I hope to hear from the IG as to how 
this reduction in staff funding will affect the continuation of the 
audits already in process, and the future oversight investigations 
conducted by the OIG.
    During this Subcommittee's January 29 hearing on Patient Safety, I 
raised concerns about a possible reduction in the budget for the Office 
of Inspector General. As I stated at that hearing, we have an 
obligation to ensure that the funding for the OIG is not only 
maintained at the FY 2008 levels, but that we work together to provide 
additional funding for FY 2009.
    The IG's Combined Assessment Program (CAP) reviews perform an 
unmatchable cyclical audit that surveys patient safety, infrastructure 
safety, management efficiencies and allows VA to keep its finger on the 
pulse of the VA's health delivery.
    I was pleased to see that the President has requested a plus up for 
the Office of Information and Technology. I know that the transition to 
a new centralized IT system has not always been smooth, but under the 
leadership of General Howard, it has moved forward, and I hold high 
hopes that the kinks, bumps, and turf wars along the way will continue 
to be worked out. VA's centralized IT infrastructure has been a 
landmark decision that all other departments could only hope for.
    However, I want to make certain that the funding Congress provides 
to VA for its OI&T operations will be managed wisely, without 
unnecessary expenditures on IT systems that are stagnant and not moving 
forward. We have often heard about the problems that plagued systems 
like the CoreFLS $340 million debacle, and the delays in moving off of 
legacy IT systems. With the centralization of funding to one officer, 
such as Assistant Secretary Howard, I am hopeful that VA can move 
forward on the right track to provide systems that will be serve our 
Nation's veterans and give the American taxpayer the most bangs for the 
buck.
    In closing, I would like to again reiterate that I appreciate the 
Chairman holding this hearing, so we can review in more detail the 
complex nature of each of these budget lines in the Department of 
Veterans Affairs budget, and I yield back the balance of my time.
                                 
                 Prepared Statement of Jon A. Wooditch,
         Deputy Inspector General, Office of Inspector General,
                  U.S. Department of Veterans Affairs
INTRODUCTION
    Mr. Chairman and Members of the Subcommittee, thank you for the 
opportunity to address the FY 2009 budget for the Office of Inspector 
General (OIG). Almost a year ago on February 15, 2007, we testified 
before this Committee and discussed some of the challenges the OIG 
faces in providing useful and helpful oversight of the Department of 
Veterans Affairs (VA) to ensure it effectively and economically 
performs its mission of serving our Nation's veterans. Since then, I am 
proud to say that much has been accomplished, but as we said last year 
there is still much to be done.
    Today, I will highlight some of our accomplishments over the past 
year, present a number of key issues facing VA, and discuss how we 
would invest budget resources made available to the OIG in addressing 
some of these issues. With me today are the Assistant Inspectors 
General for Audit, Healthcare Inspections, and Investigations who will 
answer questions about their specific programs.
RETURN ON INVESTMENT
    The OIG seeks to help VA become the best-managed service delivery 
organization in government. OIG audits, healthcare inspections, 
investigations, and Combined Assessment Program (CAP) reviews recommend 
improvements in VA programs and operations, and act to deter waste, 
fraud, abuse, and mismanagement. For 2007, OIG funding supported 443 
FTE from appropriations. An additional 25 FTE was funded under a 
reimbursable agreement with VA to perform pre-award and post-award 
contract reviews. During 2007, the OIG exceeded its overall performance 
goals. For example, monetary benefits for the year were $820 million, 
for a return on investment of $12 for every dollar expended. 
Collectively, the OIG issued a total of 217 audit, healthcare 
inspection, and contract review reports, with over 500 recommendations 
for corrective action. We also completed 1,181 criminal investigations, 
which led to 2,061 arrests, indictments, convictions, and 
administrative sanctions. We also responded to over 19,000 contacts 
received by the OIG Hotline.
    Examples of some of the more notable accomplishments during 2007 
and the first part of this year by our Office of Healthcare Inspections 
included a national report on the Veterans Health Administration's 
(VHA) mental health strategies for suicide prevention, the development 
of a significant national database to aid in the quantitative 
assessment of care for Operation Iraqi Freedom/Operation Enduring 
Freedom (OIF/OEF) veterans transitioning from DoD to VA, and numerous 
veteran or facility-specific issue reports, such as one involving 
quality of surgical care at the Marion, Illinois, VA Medical Center.
    In the area of information security, an OIG administrative 
investigation found that a breakdown in management controls and 
accountability contributed to the disappearance of a VA-owned external 
hard drive believed to contain personally identifiable information for 
over 250,000 veterans and 1.3 million medical providers. Our audit on 
outpatient waiting times identified data integrity problems impacting 
the reliability of reported waiting times by VA.
    OIG criminal investigators arrested 133 fugitive felons, helped 
gain the conviction of a VA pharmacy manager for taking over $100,000 
in kickbacks from a vendor, and uncovered a VA nurse who had stolen 
controlled and non-controlled substances from a VA medical center for 9 
years and conspired with relatives to distribute the drugs.
    We appeared before this Subcommittee several times during the past 
year where we testified on the following issues.

           Longstanding risks and vulnerabilities associated 
        with protecting and safeguarding VA information and information 
        technology systems.
           Quality management and other facility-specific 
        issues at the Salisbury, North Carolina, VA Medical Center.
           Inappropriate contract modifications at the VA 
        Boston Healthcare System that were paid with expired funds in 
        violation of Federal appropriation laws.
           Continuing concerns with variances in Veterans 
        Benefits Administration disability compensation payments by 
        State.
           Inaccurate reporting by VHA on outpatient waiting 
        times.
           VA credentialing and privileging and its impact on 
        patient safety.

RESOURCE LEVELS 2008 AND 2009
    While we have accomplished much, more remains to be done. For 2008, 
OIG funding is $80.5 million, which includes $7.9 million in emergency 
funding authorized by the President. This funding supports 488 FTE. We 
are very appreciative of this funding and we already have launched an 
aggressive recruiting effort to fill these positions. For 2009, the 
budget submitted for the OIG is $76.5 million, which supports 440 FTE.
    The OIG provides independent and objective oversight that addresses 
mission-critical activities and programs in healthcare delivery, 
benefits processing, financial management, procurement practices, and 
information management. We plan our work in each of these strategic 
areas, which are aligned with VA's strategic goals. The OIG Major 
Management Challenges for VA that are presented in the VA annual 
Performance and Accountability Report are also reported by these 
strategic areas. I would now like to highlight some of the key issues 
that we will focus on this year and in 2009 by strategic goal.
Health Care Delivery
    Most critical among the many challenges VA faces is transition and 
quality of healthcare for veterans. Due to concerns that the controls 
currently in place in VHA are not functioning correctly to ensure that 
veterans receive quality healthcare, we will review compliance with 
VA's new peer review policy. CAP reviews will be expanded to review 
credentialing and privileging actions taken at local facilities. In 
addition, we will compare the complexity of clinical activities 
performed at a facility with the facility's clinical capabilities to 
ensure proper consideration is given during the privileging process so 
that veterans are not exposed to excessive risk of poor clinical 
outcomes based upon the location where care is provided.
    Veterans who have returned from current conflicts experience two 
medical traumas with great frequency: Traumatic Brain Injury (TBI) and 
Post-Traumatic Stress Disorder (PTSD). These conditions have an impact 
that is variably expressed by returning war veterans. We will use data 
sets like the OIF/OEF database developed by the OIG to understand the 
clinical care provided to this population and the extent of their unmet 
clinical needs. OIG has reported on the mental health issues of this 
population through individual care reports and through programmatic 
reviews. Both of these formats will be utilized to evaluate and provide 
data to improve our Nation's response to those afflicted with TBI and 
PTSD.
    We will initiate reviews of the care provided by the more than 800 
community based outpatient clinics (CBOCs) and 200 Vet Centers. For 
many veterans, especially those in rural areas, CBOCs are their most 
available point of access to medical care. This population is called 
upon to either travel some distance for care or be reliant upon the fee 
basis system. It is only through a review of the medical needs of the 
CBOC and Vet Center populations that relevant access to care issues can 
be reviewed. The number of systematic onsite reviews will be based on 
available funding and competing priority work. At CBOCs, the mental 
healthcare provided will be reviewed as a subset of the medical care 
that is provided. At Vet Centers, we will evaluate those activities 
that are considered within the provision of healthcare to ensure that 
veterans receive the same standard of care that they should receive at 
a primary medical clinic.
    As anesthesia capabilities, imaging, and noninvasive surgical 
techniques have improved, there is a risk that the disparity between 
the specialty medical care available at a large VA medical center 
(VAMC) compared to that available at a smaller more rural VAMC will 
place veterans at increased risk if they are unwilling or unable to 
travel to a more sophisticated VAMC, or if they are not provided fee 
basis care when the required care is available privately in their local 
area. We will devote attention to this issue through a focused 
nationwide review.
    VHA research poses inherent challenges. Beyond the obvious fiscal 
accountability issues, VA research must have oversight that keeps it 
from harming patients or getting in the way of needed treatment. We 
will continue to consider research a high priority issue for oversight.
    We will undertake a national review into aspects of the home based 
medical care that is provided to elderly veterans to ensure that these 
programs meet the needs of veterans. CAP reviews will maintain a focus 
on the long-term care issues that each facility must address and will 
highlight discrepancies with national policy and best practices.
    We will continue to review programs designed to assist those 
veterans who are at great risk because of their homelessness or other 
lifestyle characteristics by building on our reports in the past on 
homeless veteran care programs, aid and assistance programs, and 
similar efforts through a national project designed to highlight the 
impact of these programs.
    Budgeting, planning, and resource allocation in VA are extremely 
complex, but critical components to serving veterans' healthcare needs. 
The effectiveness of these activities is compounded by continuing 
uncertainty, from year to year, of the number of patients who will seek 
care from VA. We will assess the Veterans Equitable Resource Allocation 
system which tracks demand and usage across VA, to ensure equitable 
distribution of resources as veteran demographics and demand change 
over time. Further, accurate information on the demand for care is 
critical to effectively manage VA's fee-basis program for providing 
healthcare outside of VA facilities.
    The Veterans Integrated Service Networks (VISNs) oversee and manage 
medical facilities across the Nation but their effectiveness is 
questionable when we and the Government Accountability Office continue 
to identify issues in the management and administration of VA medical 
facilities. We will assess the need for VISNs to adopt a standard 
approach for overseeing and administering the direct management and 
support functions within the VISN, such as the Medical Care Collection 
Fund, equipment accountability, and contracting.
    VHA spends a significant amount of its budget on pharmaceuticals 
and these substances are subject to loss and theft without strong 
controls and continued OIG oversight. In addition to assessing these 
controls it is important to detect drug diversion because of the 
possible impact of impaired healthcare professionals on the quality of 
care provided veterans; patients receiving diluted medication and being 
unable to properly control pain; and physicians who mistakenly believe 
a patient is getting a particular dosage of medication because the 
chart contains erroneous information intentionally entered by the 
diverter. With the increasing number of automated tools available to 
detect drug diversion by VA healthcare professionals, we will exploit 
this technology to proactively detect possible drug diversion instead 
of waiting for allegations to be received. We will also continue to 
work closely with local law enforcement to combat the sale and 
distribution of contraband drugs on or adjacent to VAMC property which 
undermines the rehabilitation of patients with substance abuse 
problems.
Benefits Processing
    Large inventories of pending claims for compensation and pension 
benefits have been a problem for many years. Making headway has proven 
difficult because VA faces an increasing disability claims workload 
from returning OIF/OEF veterans, reopened claims from veterans with 
chronic progressive conditions, and additional claims from an aging 
veteran population. Controls over processing benefit claims and actions 
are not always effective, leading to delays, errors, and increased 
potential for improper payments. The complexity of benefits laws, court 
decisions interpreting those laws, technology issues, workload, and 
staffing issues contribute to VA's benefit processing problems. VA has 
been authorized to hire additional claims examiners that may help to 
reduce the backlog, but it will be challenged to recruit, train, and 
incorporate these raters effectively into a productive workforce. 
Because these factors will continue to present VA with major 
challenges, we will assess the timeliness and accuracy of processing 
disability claims for monetary benefits. In addition to monetary 
benefit programs, VA also provides rehabilitation, educational, and 
independent living benefits to veterans. We believe these programs will 
benefit from increased oversight, scrutiny, and revision to effectively 
serve the needs of our veterans.
Financial Management
    VA's most costly procurement failures involved the development and 
implementation of information technology (IT) systems intended to 
provide better visibility and oversight of VA programs and operations, 
including its financial services. As such, VA lacks an integrated 
financial management system to safeguard and account for financial 
operations. We plan to review VA's efforts to replace existing legacy 
systems, which do not adequately support preparation of VA's 
consolidated financial statement (CFS). While our most recent CFS audit 
reported that key internal controls and reconciliation processes are 
not performed consistently and completely, it did not tell us how this 
condition affects the Medical Care Collection Fund receivables worth 
approximately $1 billion. Other key financial activities, such as 
budget formulation and execution, the accuracy and reliability of VA 
financial, statistical, budget, and performance measures and reports, 
programmatic controls over financial operations, grants management, and 
debt collection activities also remain a daily challenge for VA 
managers and impact the integrity of information at the facility and 
program level. We will prioritize and review these as funds are 
available.
Procurement Practices
    OIG has three critical roles in evaluating VA's procurement 
programs and operations: oversight of procurement practices at VA 
Central Office and the field to ensure compliance with applicable laws 
and regulations; investigations to detect and prevent illegal activity; 
and conducting pre-award and post-award reviews of VA's Federal Supply 
Schedule contracts and contracts for healthcare resources awarded by VA 
medical facilities.
    VA spends over $6 billion annually for supplies, services, 
construction, and equipment. Systemic problems in planning, defining 
requirements, and managing acquisitions supporting major system 
development initiatives along with weaknesses in all phases of contract 
award and administration have impacted VA's ability to effectively 
acquire the goods, services, and systems it needs. The OIG continues to 
identify contracts that do not adequately protect the government's 
interest. These contracts result in large dollars losses to VA as well 
as jeopardizing the success of the Department's programs. We continue 
to see systemic deficiencies that include the lack of effective 
communication, little or inadequate acquisition planning, poorly 
written statements of work, inadequate competition, and poor contract 
administration. These deficiencies have led to services being ordered 
that the customer did not want, procurement goals not being satisfied, 
and VA paying inflated prices. We will expand our oversight of these 
issues, especially with respect to construction, which will be reviewed 
to assess contract and project management to ensure VA receives 
reasonable prices and acceptable performance.
    It is difficult for VA to effectively manage its contracting 
activities since it has no corporate database that provides national 
visibility over procurement actions or identifies contract awards, 
individual purchase orders, credit card purchases, or the amount of 
money spent on goods and services. Without this capability, VA does not 
know what it has purchased, from whom, whether it met competition 
requirements, and whether prices paid are fair and reasonable. VA 
recently began to implement a nationwide information system, electronic 
Contract Management System (eCMS), to capture contracting action. We 
will assess whether VA contracting entities comply with related 
policies and procedures, especially whether the data entered into the 
system is accurate and complete. Although compliance will provide VA 
with more information regarding the number and type of contracts 
awarded, it will not ensure that contracts are in the best interest of 
the government or compliant with procurement laws and regulations. In 
addition to assessing the information system needed to capture 
procurement data, we will assess the need for developing metrics and 
standards to monitor and measure acquisition workload, performance, and 
purchasing throughout VA.
Information Management
    VA continues to struggle with the need to establish and maintain 
strong information security controls. The Federal Information Security 
Management Act (FISMA) mandates an annual review of information 
security management policies and practices. This review has identified 
systemic issues and resulted in numerous recommendations that will 
require a significant amount of management attention and time. We will 
continue to follow up on the continuing information security control 
problems identified in our annual FISMA audits.
    A broader concern than IT security is VA's need to improve its IT 
governance since OMB currently lists numerous VA systems, with a FY 
2007 operating budget of about $349 million, on its management watch 
list. Ongoing audit work indicates that the number of at-risk systems 
could be understated because VA needs to improve the accuracy and 
reliability of its major IT investment information. The multi-million 
dollar failure of VA's Core FLS system development underscores the 
challenges associated with effective IT governance. VA's current 
initiatives to implement a new financial and logistics management 
system will also face significant risk of cost overruns, performance 
problems, and delays if VA does not address the lessons learned from 
the Core FLS system development initiative. Finally, VA has faced 
numerous problems in the protection of personally identifiable 
information that is subject to privacy laws and regulations, and while 
VA has issued additional policy guidance to address many of these 
concerns, we will continue to monitor and report on compliance.
Conclusion
    OIG independent oversight provides VA and Congress with an 
objective assessment of the important issues and challenges facing VA 
in delivering benefits and services to veterans. In closing, I would 
like to add that we will always focus available resources on the most 
urgent issues. However, OIG oversight of issues such as large data loss 
cases and those at the Marion VAMC are examples of reactive work that 
were not planned for. These reviews are very labor intensive and 
require us to postpone or cancel other planned or ongoing priority 
work.
    OIG oversight is not only a sound fiscal investment; it is an 
investment in good government. While I truly believe we have added 
value to VA, I also believe that we have only scratched the surface on 
what we can accomplish. VA is faced with evolving challenges. If the 
OIG is to remain an agent of positive change, we must be able to 
increase our level of oversight. To accomplish this, resource levels 
need to be commensurate with this challenge.
    Thank you again for the opportunity to appear before this 
Committee. We would be pleased to answer your questions.
                                 
                Prepared Statement of Valerie C. Melvin,
   Director, Human Capital and Management Information Systems Issues,
                 U.S. Government Accountability Office
                         INFORMATION TECHNOLOGY
A Has Taken Important Steps to Centralize Control of Its Resources, but 
          Effectiveness Depends on Additional Planned Actions
Why GAO Did This Study
    The use of information technology (IT) is crucial to the Department 
of Veterans Affairs' (VA) mission to promote the health, welfare, and 
dignity of all veterans in recognition of their service to the Nation. 
In this regard, the department's fiscal year 2009 budget proposal 
includes about $2.4 billion to support IT development, operations, and 
maintenance. VA has, however, experienced challenges in managing its IT 
projects and initiatives, including cost overruns, schedule slippages, 
and performance problems. In an effort to confront these challenges, 
the department is undertaking a realignment to centralize its IT 
management structure.
    This testimony summarizes the department's actions to realign its 
management structure to provide greater authority and accountability 
over its IT budget and resources and the impact of these actions to 
date.
    In developing this testimony, GAO reviewed previous work on the 
department's realignment and related budget issues, analyzed pertinent 
documentation, and interviewed VA officials to determine the current 
status and impact of the department's efforts to centralize the 
management of its IT budget and operations.
What GAO Found
    As part of its IT realignment, VA has taken important steps toward 
a more disciplined approach to ensuring oversight of and accountability 
for the department's IT budget and resources. For example, the 
department's chief information officer (CIO) now has responsibility for 
ensuring that there are controls over the budget and for overseeing all 
capital planning and execution, and has designated leadership to assist 
in overseeing functions such as portfolio management and IT operations. 
In addition, the department has established and activated three 
governance boards to facilitate budget oversight and management of its 
investments. Further, VA has approved an IT strategic plan that aligns 
with priorities identified in the department's strategic plan and has 
provided multi-year budget guidance to achieve a more disciplined 
approach for future budget formulation and execution.
    While these steps are critical to establishing control of the 
department's IT, it remains too early to assess their overall impact 
because most of the actions taken have only recently become operational 
or have not been fully implemented. Thus, their effectiveness in 
ensuring accountability for the resources and budget has not yet been 
clearly established. For example, according to Office of Information 
and Technology officials, the governance boards' first involvement in 
budget oversight only recently began (in May 2007) with activities to 
date focused primarily on formulation of the fiscal year 2009 budget 
and on execution of the fiscal year 2008 budget. Thus, none of the 
boards has yet been involved in all aspects of the budget formulation 
and execution processes and, as a result, their ability to help ensure 
overall accountability for the department's IT appropriations has not 
yet been fully established. In addition, because the multi-year 
programming guidance is applicable to future budgets (for fiscal years 
2010 through 2012), it is too early to determine VA's effectiveness in 
implementing this guidance. Further, VA is in the initial stages of 
developing management processes that are critical to centralizing its 
control over the budget. However, while the department had originally 
stated that the processes would be implemented by July 2008, it now 
indicates that implementation across the department will not be 
completed until at least 2011. Until VA fully institutes its oversight 
measures and management processes, it risks not realizing their 
contributions to, and impact on, improved IT oversight and 
accountability within the department.
Abbreviations
    CIO--chief information officer
    IT--information technology
    VA--Department of Veterans Affairs
                               __________
    Mr. Chairman and Members of the Subcommittee:
    Thank you for inviting me to participate in today's hearing on the 
Department of Veterans Affairs' (VA) fiscal year 2009 information 
technology (IT) budget. As you know, the use of IT is crucial to 
helping VA effectively serve our Nation's veterans, with the 
department's just-released budget proposal including approximately $2.4 
billion to support IT development, operations, and maintenance. 
However, as we have previously reported, VA has experienced challenges 
in managing its IT projects and initiatives, including cost overruns, 
schedule slippages, and performance problems. To address these 
challenges, in October 2005, the department initiated a realignment of 
its IT program to provide greater authority and accountability over its 
resources. In undertaking this realignment, the department's goals were 
to centralize IT management under the department-level chief 
information officer (CIO) and to standardize budgets, operations, and 
the development of systems through the use of new management processes 
based on industry best practices.
    At your request, my testimony today summarizes VA's actions as part 
of the realignment and the impact of those actions to date in providing 
greater authority and accountability over the department's IT resources 
and budget. In developing this testimony, we reviewed our previous work 
on the department's realignment and related budget issues. We also 
obtained and analyzed pertinent documentation and supplemented our 
analysis with interviews of responsible VA officials to determine the 
current status and impact of the department's efforts to centralize the 
management of its IT budget and operations. We conducted our work in 
support of this testimony from January 2008 to February 2008 in the 
Washington, D.C., area. All work on which this testimony is based was 
conducted in accordance with generally accepted government auditing 
standards.
Results in Brief
    As part of its IT realignment, VA has taken important steps toward 
a more disciplined approach to ensuring oversight of and accountability 
for the department's IT budget and resources. For example, to establish 
controls, the CIO has designated necessary leadership to be responsible 
for developing the department's annual IT budget and for tracking 
actual expenditures against the budget. In addition, the department has 
established and activated three governance boards to facilitate budget 
oversight and the management of its investments. Further, VA has 
approved an IT strategic plan \1\ that aligns with priorities 
identified in the department's strategic plan, and has provided multi-
year budget guidance to achieve a more disciplined approach for future 
budget formulation and execution. Beyond these actions, VA is in the 
initial stages of implementing new management processes that are 
critical to centralizing its control over the IT resources and budget.
---------------------------------------------------------------------------
    \1\ Department of Veterans Affairs, Information and Technology 
Strategic Plan FY 2006-2011 (Washington, D.C.: Dec. 2007).
---------------------------------------------------------------------------
    While these steps are critical to establishing control of the 
department's IT, it remains too early to assess their overall impact 
because most of the actions taken have only recently become operational 
or have not yet been fully implemented. Thus, their effectiveness in 
ensuring accountability for the resources and budget has not yet been 
clearly established. For example, according to Office of Information 
and Technology officials, the governance boards' first involvement in 
budget oversight only recently began in May 2007, with their activities 
to date focused primarily on formulation of the fiscal year 2009 budget 
and execution of the fiscal year 2008 budget. However, none of the 
boards has yet been involved in all stages of the budget formulation 
and execution processes and, as such, their effectiveness in helping to 
ensure overall accountability for the department's IT budget and 
resources has not yet been fully established. In addition, because the 
multi-year programming guidance is applicable to future budgets (for 
fiscal years 2010 through 2012), it is too early to determine VA's 
effectiveness in implementing this guidance and its impact on improved 
oversight and accountability. Further, while the department has 
initiated its development of management processes that are critical to 
centralizing its control over the IT budget, the date by which it had 
planned to complete the implementation of these processes across the 
department has slipped from July 2008 to at least fiscal year 2011. 
Until VA fully institutes its oversight measures and management 
processes, it risks not realizing their contributions to, and impact 
on, improved IT oversight and accountability within the department.
Background
    VA's mission is to promote the health, welfare, and dignity of all 
veterans in recognition of their service to the Nation by ensuring that 
they receive medical care, benefits, social support, and lasting 
memorials. Over time, the use of IT has become increasingly crucial to 
the department's efforts to provide such benefits and services. For 
example, the department relies on its systems for medical information 
and records for veterans, as well as for processing benefit claims, 
including compensation and pension and education benefits.
    In reporting on VA's IT management over the past several 
years,2 we have highlighted challenges that the department 
has faced in achieving its ``One VA'' vision,3 including 
that information systems and services were highly decentralized and 
that its administrations controlled a majority of the IT budget. For 
example, we noted that, according to an October 2005 memorandum from 
the former CIO to the Secretary of Veterans Affairs, the CIO had direct 
control over only 3 percent of the department's IT budget and 6 percent 
of the department's IT personnel. In addition, in the department's 
fiscal year 2006 IT budget request, the Veterans Health Administration 
was identified to receive 88 percent of the requested funding, while 
the department was identified to receive only 4 percent. We have 
previously pointed out that, given the department's large IT funding 
and decentralized management structure, it was crucial for the CIO to 
ensure that well-established and integrated processes for leading, 
managing, and controlling investments were followed throughout the 
department.4
---------------------------------------------------------------------------
    \\2\\ GAO, Veterans Affairs: Continued Focus on Critical Success 
Factors Is Essential to Achieving Information Technology Realignment, 
GAO-07-844 (Washington, D.C.: June 15, 2007); GAO, Veterans Affairs: 
Progress Made in Centralizing Information Technology Management, but 
Challenges Persist, GAO-07-1246T (Washington, D.C.: Sept. 19, 2007); 
GAO, Veterans Affairs: The Role of the Chief Information Officer in 
Effectively Managing Information Technology, GAO-06-201T (Washington, 
D.C.: Oct. 20, 2005); GAO, Veterans Affairs: The Critical Role of the 
Chief Information Officer in Effective Information Technology 
Management, GAO-05-1017T (Washington, D.C.: Sept. 14, 2005); GAO, VA 
Information Technology: Management Making Important Progress in 
Addressing Key Challenges, GAO-02-1054T (Washington, D.C.: Sept. 26, 
2002); GAO, VA Information Technology: Important Initiatives Begun, Yet 
Serious Vulnerabilities Persist, GAO-01-550T (Washington, D.C.: April 
4, 2001); GAO, VA Information Technology: Improvements Needed to 
Implement Legislative Reforms, GAO/AIMD-98-154 (Washington, D.C.; July 
7, 1998).
    \\3\\ The One VA vision is to create versatile new ways for 
veterans to obtain services and information by streamlining 
interactions with customers and integrating IT resources to enable VA 
employees to help customers more quickly and effectively.
    \\4\\ GAO-07-844.
---------------------------------------------------------------------------
    Further, a contractor's assessment of VA's IT organizational 
alignment, issued in February 2005, noted the lack of control for how 
and when money is spent.5 The assessment found that project 
managers within the administrations were able to shift money as they 
wanted to build and operate individual projects. In addition, according 
to the assessment, the focus of department-level management was only on 
reporting expenditures to the Office of Management and Budget and 
Congress, rather than on managing these expenditures within the 
department.
---------------------------------------------------------------------------
    \\5\\ Gartner Consulting, One VA IT Organizational Alignment 
Assessment Project ``As-Is'' Baseline (McLean, Virginia; Feb. 18, 
2005).
---------------------------------------------------------------------------
VA Establishes Centralized Management Structure to Improve IT 
        Accountability
    The department officially began its initiative to provide the CIO 
with greater authority over the department's IT in October 2005. At 
that time, the Secretary of Veterans Affairs issued an executive 
decision memorandum that granted approval for the development of a new 
centralized management structure for the department. According to VA, 
its goals in moving to centralized management included having better 
overall fiscal discipline over the budget.
    In February 2007, the Secretary approved the department's new 
management structure. In this new structure, the Assistant Secretary 
for Information and Technology serves as VA's CIO and is supported by a 
Principal Deputy Assistant Secretary and five Deputy Assistant 
Secretaries--Senior leadership positions created to assist the CIO in 
overseeing functions such as Cyber Security, IT portfolio management, 
and systems development and operations. In April 2007, the Secretary 
approved a governance plan 6 that is intended to enable the 
Office of Information and Technology, under the leadership of the CIO, 
to centralize its decisionmaking. The plan describes the relationship 
between IT and departmental governance and the approach the department 
intends to take to enhance governance and realize more cost-effective 
use of IT resources and assets. The department also made permanent the 
transfer of its entire IT workforce under the CIO, consisting of 
approximately 6,000 personnel from the administrations.
---------------------------------------------------------------------------
    \\6\\ Department of Veterans Affairs Office of Information and 
Technology VA IT Governance Plan, (March 12, 2007).
---------------------------------------------------------------------------
    In June 2007,7 we reported on the department's plans for 
realigning the management of its IT program and establishing 
centralized control of its IT budget within the Office of Information 
and Technology. We pointed out that the department's realignment plans 
included elements of several factors that we identified as critical to 
a successful transition, but that additional actions could increase 
assurance that the realignment would be completed successfully. 
Specifically, we reported that the department had ensured commitment 
from its top leadership and that, among other critical actions, it was 
establishing a governance structure to manage resources. However, at 
that time, VA had not updated its strategic plan to reflect the new 
organization. In addition, we noted that the department had planned to 
take action by July 2008 to create the necessary management processes 
to realize a centralized IT management structure.8 In 
testimony before the House Veterans' Affairs Committee last September, 
however, we pointed out that the department had not kept pace with its 
schedule for implementing the new management processes.9
---------------------------------------------------------------------------
    \\7\\ GAO-07-844.
    \\8\\ GAO-07-844.
    \\9\\2 GAO-07-1264T.
---------------------------------------------------------------------------
 Important Steps Taken to Centralize Control of IT Resources but Their 
        Effectiveness Will Depend on Additional Planned Actions
    As part of its IT realignment, VA has taken important steps toward 
a more disciplined approach to ensuring oversight of and accountability 
for the department's IT budget and resources. Within the new 
centralized management structure, the CIO is responsible for ensuring 
that there are adequate controls over the department's IT budget and 
for overseeing capital planning and execution. These responsibilities 
are consistent with the Clinger-Cohen Act 1996,10 which 
requires federal agencies to develop processes for the selection, 
control, and evaluation of major systems initiatives. In this regard, 
the department has (1) designated organizations with specific roles and 
responsibilities for controlling the budget to report directly to the 
CIO; (2) implemented an IT governance structure that assigns budget 
oversight responsibilities to specific governance boards; (3) finalized 
an IT strategic plan to guide, manage, and implement its operations and 
investments; (4) completed multi-year budget guidance to improve 
management of its IT; and (5) initiated the implementation of critical 
management processes. However, while VA has taken these important steps 
toward establishing control of the department's IT, it remains too 
early to assess their overall impact because most of the actions taken 
have only recently become operational or have not yet been fully 
implemented. Thus, their effectiveness in ensuring accountability for 
the resources and budget has not yet been clearly established.
---------------------------------------------------------------------------
    \\10\\ 40 U.S.C.  11311-11313.
---------------------------------------------------------------------------
    As one important step, two deputy assistant secretaries under the 
CIO have been assigned responsibility for managing and controlling 
different aspects of the IT budget. Specifically, the Deputy Assistant 
Secretary for Information Technology Enterprise Strategy, Policy, 
Plans, and Programs is responsible for development of the budget and 
the Deputy Assistant Secretary for Information Technology Resource 
Management is responsible for overseeing budget execution, which 
includes tracking actual expenditures against the budget. Initially, 
the deputy assistant secretaries have served as a conduit for 
information to be used by the governance boards.
    As a second step, the department has established and activated 
three governance boards to facilitate budget oversight and management 
of its investments. The Business Needs and Investment 
Board;11 the Planning, Architecture, Technology and Services 
Board;12 and the Information Technology Leadership 
Board13 have begun providing oversight to ensure that 
investments align with the department's strategic plan and that 
business and budget requirements for ongoing and new initiatives meet 
user demands.14 One of the main functions of the boards is 
to designate funding according to the needs and requirements of the 
administrations and staff offices. Each board meets monthly, and 
sometimes more frequently, as the need arises during the budget 
development phase.
---------------------------------------------------------------------------
    \\11\\ This board, which became operational in May 2007, is chaired 
by the Principal Deputy Assistant Secretary and membership consists of 
high ranking officials from the Veterans Health Administration, the 
Veterans Benefits Administration, the National Cemetery Administration, 
staff offices, and the deputy assistant secretaries in the Office of 
Information and Technology.
    \\12\\ This board, which became operational in June 2007, is 
chaired by the Acting Deputy Assistant Secretary for Enterprise, 
Strategy, Policy, Plans and Programs and its membership includes high-
ranking officials from the Veterans Benefits Administration, the 
Veterans Health Administration, the National Cemetery Administration, 
and high-ranking officials from the offices of finance, budget, and 
human resources management.
    \\13\\ This board, which became operational in June 2007, is 
chaired by the Assistant Secretary for Information and Technology and 
its members include undersecretaries for Health, Benefits, and Memorial 
Affairs, the Assistant Secretary for Management, and the Executive in 
Charge of Human Resources and Administration.
    \\14\\ VA IT Governance Plan.
---------------------------------------------------------------------------
    The first involvement of the boards in VA's budget process began 
with their participation in formulating the fiscal year 2009 budget. As 
part of the budget formulation process, in May 2007 the Business Needs 
and Investment Board conducted its first meeting in which it evaluated 
the list of business projects being proposed in the budget using the 
department's Exhibit 300s15 for fiscal year 2009, and made 
departmentwide allocation recommendations. Then in June, these 
recommendations were passed on to the Planning, Architecture, 
Technology, and Services Board, which proposed a new structure for the 
fiscal year 2009 budget request. The recommended structure was to 
provide visibility to important initiatives and enable better 
communication of performance results and outcomes. In late June, based 
on input from the aforementioned boards, the Information Technology 
Leadership Board made recommendations to department decisionmakers for 
funding the major categories of IT projects. In July 2007, following 
its work on the fiscal year 2009 budget formulation, the boards then 
began monitoring fiscal year 2008 budget execution.
---------------------------------------------------------------------------
    \\15\\ The OMB Exhibit 300, also called the Capital Asset Plan and 
Business Case, is a document that agencies must submit to OMB to 
justify resource request for major IT investments. The Exhibit 300 
contains information such as an investment's historical and future 
costs, performance measures and goals, cost-benefits analysis, 
acquisition strategy, risk assessment, and security issues.
---------------------------------------------------------------------------
    However, according to Office of Information and Technology 
officials, with the governance boards' first involvement in budget 
oversight having only recently begun (in May 2007), and with their 
activities to date being primarily focused on formulation of the fiscal 
year 2009 budget and execution of the fiscal year 2008 budget, none of 
the boards has yet been involved in all stages of the budget 
formulation and execution processes. Thus, they have not yet fully 
established their effectiveness in helping to ensure overall 
accountability for the department's IT appropriations. In addition, the 
Office of Information and Technology has not yet standardized the 
criteria that the boards are to use in reviewing, selecting, and 
assessing investments. The criteria is planned to be completed by the 
end of fiscal year 2008 and to be used as part of the fiscal year 2010 
budget discussions.
    Office of Information and Technology officials stated that, in 
response to operational experience with the 2009 budget formulation and 
2008 budget execution, the department plans to further enhance the 
governance structure. For example, the Office of Information and 
Technology found that the boards' responsibilities needed to be more 
clearly defined in the IT governance plan to avoid confusion in roles. 
That is, one board (the Business Needs and Investment Board) was 
involved in the budget formulation for fiscal year 2009, but budget 
formulation is also the responsibility of the Deputy Assistant 
Secretary for Information Technology Resource Management, who is not a 
member of this board. According to the Principal Deputy Assistant 
Secretary for Information and Technology, the department is planning to 
update its governance plan by September 2008 to include more 
specificity on the role of the governance boards in the department's 
budget formulation process. Such an update could further improve the 
structure's effectiveness. In addition, as part of improving the 
governance strategy, the department has set targets by which the 
Planning, Architecture, Technology, and Services Board is to review and 
make department-wide recommendations for VA's portfolio of investments. 
These targets call for the board to review major IT projects included 
in the fiscal year budgets. For example, the board is expected to 
review 10 percent for fiscal year 2008, 50 percent for fiscal year 
2009, and 100 percent for fiscal year 2011.
    As a third step in establishing oversight, in December 2007, VA 
finalized an IT strategic plan to guide, manage, and implement its 
operations and investments. This plan (for fiscal years 2006-2011) 
aligns Office of Information and Technology goals, priorities, and 
initiatives with the priorities of the Secretary of Veterans Affairs, 
as identified in the VA strategic plan for fiscal years 2006-2011. In 
addition, within the plan, the IT strategic goals are aligned with the 
CIO's IT priorities, as well as with specific initiatives and 
performance measures. This alignment frames the outcomes that IT 
executives and managers are expected to meet when delivering services 
and solutions to veterans and their dependents. Further, the plan 
includes a performance accountability matrix that highlights the 
alignment of the goals, priorities, initiatives, and performance 
measures, and an expanded version of the matrix designates specific 
entities within the Office of Information and Technology who are 
accountable for implementation of each initiative. The matrix also 
establishes goals and timelines through fiscal year 2011,16 
which should enable VA to track progress and suggest midcourse 
corrections and sustain progress toward the realignment. As we 
previously reported, it is essential to establish and track 
implementation goals and establish a timeline to pinpoint performance 
shortfalls and gaps and suggest midcourse corrections.17
---------------------------------------------------------------------------
    \\16\\ The matrix uses fiscal year 2007 as the baseline and lists 
targets for fiscal years 2008 and 2011.
    \\17\\ GAO, Results-Oriented Cultures: Implementation Steps to 
Assist Mergers and Organizational Transformations, GAO-03-669 
(Washington, D.C.: July 2003).
---------------------------------------------------------------------------
    As a fourth step, the department has completed multi-year budget 
guidance to improve management of its IT portfolio. In December 2007, 
the CIO disseminated this guidance for the fiscal years 2010 through 
2012 budgets. The purpose of the guidance is to provide general 
direction for proposing comprehensive multi-year IT planning proposals 
for centralized review and action. The process called for project 
managers to submit standardized concept papers and other review 
documentation in December 2007 for review in the January to March 2008 
timeframe, to decide which projects will be included in the fiscal year 
2010 portfolio of IT projects. The new process is to add rigor and 
uniformity to the department's investment approach and allow the 
investments to be consistently evaluated for alignment with the 
department's strategic planning and priorities and the enterprise 
architecture. According to VA officials, this planning approach is 
expected to allow for reviewing proposals across the department and for 
identifying opportunities to maximize investments in IT.
    Nevertheless, although the multi-year programming guidance holds 
promise for obtaining better information for portfolio management, the 
guidance has not been fully implemented because it is applicable to 
future budgets (for fiscal years 2010 through 2012). As a result, it is 
too early to determine VA's effectiveness in implementing this 
guidance, and ultimately, its impact on the department's IT portfolio 
management.
    Finally, the department has begun developing new management 
processes to establish the CIO's control over the IT budget. The 
department's December 2007 IT strategic plan identifies three processes 
as high priorities for establishing the foundation of the budget 
functions: project management, portfolio management, and service level 
agreements.
    However, while the department had originally stated that its new 
management processes would be implemented by July 2008, the IT 
strategic plan indicates that key elements of these processes are not 
expected to be completed until at least fiscal year 2011. Specifically, 
the plan states that the project and portfolio management processes are 
to be completed by fiscal year 2011, and does not assign a completion 
date for the service level agreement process. As our previous report 
noted, it is crucial for the CIO to ensure that well-established and 
integrated processes are in place for leading, managing, and 
controlling VA's IT resources. The absence of such processes increases 
the risk to the department's ability to achieve a solid and sustainable 
management structure that ensures effective IT accountability and 
oversight.
    Appendix I provides a timeline of the various actions that the 
department has undertaken and planned for the realignment.
    In summary, while the department has made progress with 
implementing its centralized IT management approach, effective 
completion of its realignment and implementation of its improved 
processes is essential to ensuring that VA has a solid and sustainable 
approach to managing its IT investments. Because most of the actions 
taken by VA have only recently become operational, it is too early to 
assess their overall impact. Until the department carries out its plans 
to add rigor and uniformity to its investment approach and establishes 
a comprehensive set of improved management processes, the department 
may not achieve a sustainable and effective approach to managing its IT 
investments.
    Mr. Chairman and members of the Subcommittee, this concludes my 
statement. I would be pleased to respond to any questions that you may 
have at this time.
Contacts and Acknowledgments
    For more information about this testimony, please contact Valerie 
C. Melvin at (202) 512-6304 or by e-mail at [email protected]. Key 
contributors to this testimony were Barbara Oliver, Assistant Director, 
Nancy Glover, David Hong, Scott Pettis, and J. Michael Resser.
Appendix I: Timeline of Key VA Activities

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

              Prepared Statement of Hon. Robert T. Howard
     Assistant Secretary for Information and Technology and Chief 
       Information Officer, Office of Information and Technology,
                  U.S. Department of Veterans Affairs
    Chairman Harry Mitchell and Ranking Member Ginny Brown-Waite, good 
afternoon. Thank you for your invitation to discuss the President's 
Fiscal Year (FY) 2009 Information Technology (IT) budget proposal for 
the Department of Veterans Affairs (VA). As we look forward to the 
upcoming year, we remain focused on VA's primary mission-the health and 
well-being of our Nation's veterans. To ensure that we succeed in our 
mission, it is imperative that we employ all of our resources, 
including information technology, in the most effective way possible.
    Let me begin this afternoon by recapping the major aspects of the 
IT reorganization and highlights of our experience to date. Through FY 
2006 to FY 2007, OI&T began the transition to a new organization the 
detailing of 5,010 IT personnel and combining them with the original 
staff of 519 personnel. And in FY 2008, OI&T has the budget authority 
to consolidate all IT development of 1,151 FTE, along with operations 
and maintenance personnel of 5,535 FTE for our total staffing level of 
6,686.
    We have been operating under this new organization for about a year 
and continue to learn a lot about what it takes to provide effective 
and efficient IT support to an organization the size and complexity of 
the VA. As we move forward, we will continue to buildupon our 
successes; however, we remain aware that our work is far from complete. 
As a result of the clarity we have been able to bring to the management 
of IT through the consolidation, we are discovering activities that 
need to be improved and enhanced from an overall management stand 
point. This is especially true in the area of data security and 
infrastructure improvements. For example we have increased our emphasis 
on certification and accreditation and are developing better procedures 
for asset management. Progress is being made but, there is still much 
to be done in establishing the organization and providing the IT 
support that VA and veterans deserve.
    Working with our new centralized organization has certainly been a 
challenge for all of us, but the other critical change we are dealing 
with is the new IT appropriation which was established in 2006. In that 
regard we continue to focus our efforts in structuring and funding the 
IT appropriation along programmatic lines--relating IT to the principal 
missions of the VA. Since this is a line item appropriation, prior 
planning is critically important and getting the funding right up front 
is essential.
    As you are aware, VA is requesting $2.442 billion to support IT 
development, operations, and maintenance expenses including payroll for 
FY 2009, an 18.9-percent increase over the FY 2008 level. This request 
reflects the consolidation of VA IT into one appropriation, with 
certain exceptions such as non-payroll IT for credit reform programs 
and insurance benefits programs. In FY 2009, the majority of increases

represent program priorities to enhance the support to veterans both 
directly and indirectly--especially in the area of medical care.
    The move toward a centralized IT Management System has been 
challenging, but it has also served to reinvigorate IT capability 
within VA. Placing all IT staffing, equipment, and budgetary resources 
under the VA Chief Information Officer (CIO) has provided an objective 
capability with visibility over all IT activities across the 
Department. This capability will also provide for a more standardized 
approach to our critical developmental efforts. Of critical urgency is 
accelerating the design and implementation of electronic health records 
which meet the national health IT standards and are interoperable with 
the Department of Defense (DoD), helping to streamline the benefits 
claims processing through improved IT support so claims may be 
adjudicated timely and efficiently, and ensuring portable IT equipment 
for benefit counselors traveling to DoD sites is encrypted and 
servicemembers' privacy is protected.
    The non-pay portion of the FY 2009 budget has been realigned from 
previous submissions to delineate veteran strategic issues into two 
major classifications--veteran facing IT systems and internal facing IT 
systems. This has been done to better link the appropriation to the 
mission of VA. Veteran facing IT systems enable support of VA programs 
for veterans, such as, providing medical care, delivering compensation 
benefits, providing pension benefits, enhancing education 
opportunities, delivering vocational rehabilitation and employment 
services, promoting home ownership, providing insurance service, and 
delivering burial service. Veteran facing program account for $1.295 
billion of our request (The payroll portion of that budget is $729.2 
million). Internal facing IT systems are those that provide the 
capability to work more effectively in managing IT resources--such as 
corporate management, financial resources management, asset management, 
human capital management, IT infrastructure, and Information 
Protection. Internal facing program budget totals $418 million.
    These amounts reflect a sizable increase over FY 2008 which will 
obviously be very helpful in the improvement of IT support to VA. Over 
the past several years VA IT has had a fairly level budget, yet at the 
same time, the organizations we have to support, have been increasing 
in size; especially, in terms of facilities and people. And, as you 
well know, whenever you do that, you have to apply the necessary IT 
talent and tools to those activities. The increase has allowed us to 
provide the needed funding to accelerate such programs and at least 
keep most of them on track. Highlights are provided below.
                    Veteran Facing Medical Programs
Veterans Health Information Systems and Technology Architecture (VistA) 
                        Application Development
    VistA Application Development consists of the enhancement and 
development activities that support the movement of the existing MUMPS-
based applications from the ``as-is'' into the ``to-be'' VistA 
architecture, new data structures, and desired capabilities (MUMPS is 
an acronym for Massachusetts General Hospital Utility Multi-Programming 
System.). Vista Application Development, in conjunction with VistA 
Foundations Modernization, will take the necessary steps toward 
building VA's next generation healthcare information system.
VistA Foundations Modernization
    Another extremely important developmental program in the medical 
area is the modernization of VA's world class Electronic Health Record. 
For the past two and a half years, VA has been working hard to support 
the President's vision to have electronic health record capability for 
most Americans by 2014, and to implement the associated Executive 
Order. For example, VA and the Department of Defense (DoD) have 
partnered on state-of-the-art software applications, including 
Bidirectional Health Information Exchange (BHIE) and Health Data 
Repository (CHDR). These applications allow VA and DoD to exchange 
health data for veterans including injured servicemembers as they move 
from DoD treatment facilities to VA healthcare facilities for continued 
treatment. This allows VA to care for all veterans, including seriously 
injured servicemembers more efficiently, effectively and safely.
    VistA Foundations Modernization is the capital investment that 
provides the architecture and foundational elements of Vista HealtheVet 
that support the delivery of the re-hosted/reengineered applications. 
In the FY 2009 Deployment Toolkit, Business Rules Engine and Workflow 
Engine will be delivered along with new testing services capabilities. 
Standardization activities in support of VA/DoD sharing will continue 
as well as ongoing work to establish a common architecture to eliminate 
redundancies in coding, support common terminology sources between 
applications, and promote software and data use.
Scheduling Replacement
    The goals of the Scheduling Replacement project are to improve 
access to care for veterans, decrease wait times for appointments, and 
increase provider availability. The first version will be placed in 
production at the VA Medical Center in Muskogee, Oklahoma during June 
2008. Several activities will occur during FY 2009 to prepare 
Scheduling for national deployment. Activities include improvements to 
the application identified by the initial installations, acquisition of 
the hardware and software needed to operate the application at the 
deployment sites, and the launching of a national training campaign. In 
FY 2011, VA anticipates the completion of the national rollout to all 
VA sites.
VistA Laboratory Information Systems (IS) Re-engineering
    The Laboratory System Reengineering project will provide VA with a 
modernized Laboratory Information Management System that supports the 
business processes of the Pathology and Laboratory Medicine Services. 
In FY 2009 the system will undergo independent verification and 
validation and field tests. The FY 2009, increase in funding is to 
acquire 20 percent of the equipment needed for the deployment. National 
deployment will begin in FY 2010, and will be phased over five years.
Health Data Repository
    The Health Data Repository (HDR) is a repository of clinical 
information, normally residing on one or more independent computer 
systems, for use by clinicians and other personnel in support of 
patient centric care. Deliverables for FY 2008, include the addition of 
laboratory data, related to chemistry and hematology to HDR and CDR. 
Upon completion, this additional lab data will be exchanged with DoD on 
shared patients, as well as, all VA medical facilities. Deliverables 
also include the deployment of the new HDR National v2 that replaces 
two applications (HDR National v1 and Clinical Data Service) and 
provides a more robust system. National rollout for the final HDR 
solution is projected to begin in FY 2009.
MyHealtheVet
    One of our real success stories is the application called 
``MyHeatheVet'' (MHV). In FY 2007, MHV which is funded in FY09 at $18.4 
million, stabilized its platform, increased its total number of 
prescriptions refilled online to over 2.8 million, and supported the 
increase in the number of MHV accounts to over 400,000. Nearly 20,000 
veterans have already made the trip to VA medical centers for in-person 
authentication, a prerequisite for a veteran accessing their VistA 
information online.
    In fiscal years 2008 and 2009, veterans will be able to request and 
store copies of key portions of their VA electronic health record in 
their MHV personal eVAult, along with their self-entered health 
information and health assessments. Veterans will be able to record 
medical events, medications, over the counter (OTC) medications and 
herbals, and tests. They will also be able to track vitals and health 
readings (e.g., blood pressure, blood sugar, weight, and pain level) 
and graph results, alongside any readings or lab test results from VA 
care. Veterans can also keep health journals (e.g., activity and food 
journals) and record health histories (family, self and military health 
histories), view upcoming appointments, get health reminders, and 
benefit from increasing mental health information and tools. MHV will 
stand up an architecture, that is ready to support the continued 
increase of veterans seeking the 24/7 access to VA information and 
services from anywhere, and veterans will also benefit from better 
communications and information sharing with their healthcare providers.
Pharmacy Reengineering
    The pharmacy suite of applications is undergoing modernization to 
improve service and safety to veterans and to better support the 
current and future VA business needs. The project scope is to replace 
current pharmacy software modules with new technology through 
reengineering, new development, and purchase of commercial products. 
Plans are to deploy enhanced order checks in FY 2009, which will 
improve patient safety standards by reducing adverse drug events by 50 
percent, with enhanced item management functionality to follow.
Enrollment Enhancements
    Enrollment System Redesign (ESR), scheduled for deployment in June 
2008, will replace Enrollment's Health Eligibility Center (HEC) Legacy 
system. The first in a series of enhancements will produce a workflow 
component to create, assign, view, track and complete work items. It 
also provides for changes to VistA in order to support the technology 
and business changes that will occur with the implementation of ESR. 
The capabilities that are the focus in FY 2009 are the introduction of 
self-service functions to reduce application processing time, access of 
DoD military service data and existing benefits claim information to 
place the eligibility burden of proof on VA rather than the veteran, 
and productivity improvements in the area of veteran financial 
assessments and income verification.
VistA Legacy
    As we continue our modernization efforts, we must maintain our 
current legacy system--called VistA. This system will need to remain 
operational for the foreseeable future as new applications are 
developed and implemented. This approach will mitigate transition and 
migration risks associated with the move to the new architecture. Our 
budget provides $99 million in 2009 in this account.
   Veteran Facing Benefits Programs--IT Support for Compensation and 
                                Pension
    Information and technology investments over the past several years 
and those planned for the future will enable new technologies to be 
used to facilitate processing of veterans claims and for providing the 
vast number of benefits to veterans and their families. The majority of 
development in new technology includes the enhancement of the 
compensation components of VETSNET, development of the Virtual VA 
imaging solution for compensation and pension, and operation of the 
program integrity and data management program. The Benefits Delivery 
Network (BDN) will continue to be sustained until all programs, 
utilizing its shared components, are replaced. The retirement for the 
BDN platform is projected in early 2012. Highlights of the Veteran 
Facing Benefits programs are provided below.
VETSNET
    VETSNET is the replacement system for Compensation and Pension 
functions of the legacy Benefits Delivery Network (BDN). It is a custom 
built suite of applications designed to support end-to-end Compensation 
and Pension claims processing, currently supporting C&P claims 
processing operations nationwide. A key benefit of VETSNET is the 
migration of compensation and pension benefit payments to a modernized, 
stable platform. Over 42 million compensation and pension payments are 
made annually from BDN, which was designed and built in the late 
sixties. Legacy record conversions, necessary for the payment of 
existing and compensation and pension beneficiaries, have begun and 
will be completed by July 2009--a major milestone for VA. Thus far in 
fiscal year '08, over 96 percent of new compensation claims have been 
completed in VETSNET, versus 5 percent in fiscal year 2006. As of the 
end of January 2008, over 863,000 are receiving their monthly 
compensation payments via VETSNET. This includes over 613,000 records 
converted from the BDN in FY 06 and FY 07. Over one billion dollars in 
C&P benefit payments have been made through VETSNET during FY 08.
Virtual VA
    Virtual VA is web-based document and electronic claims-folder 
repository, and is the cornerstone of our Paperless Delivery of 
Veterans Benefits initiative. Planned FY 2008 activities include 
maintenance of the existing application functionality and planning for 
migration to a centralized infrastructure. Expansion of existing pilot 
efforts in support of compensation and pension claims processing will 
also be targeted for FY 2008, along with a development of a 
comprehensive strategy for full development of the Paperless 
initiative. Significant execution of the comprehensive plan will carry 
into FY 09, and will include integration with the C&P claims processing 
system, VETSNET.
IT Support for Education, Vocational Rehabilitation and Employment, 
        Housing, and Insurance
    Education opportunities, rehabilitation and employment services, 
life insurance, and the housing program are provided to eligible 
veterans and their dependents. These programs rely on supporting IT 
systems to ensure benefits and services are provided timely and 
consistently and support staff engaged in ensuring delivery of checks, 
electronic transfers and other related materials are as routine as 
clockwork. BDN supports compensation and pension, as well as education 
and vocational rehabilitation and employment.
    The Education Program IT Support development costs represent 2.2 
percent of the total development costs for veteran facing IT systems. 
During FY 2009, new technology efforts will begin the development of a 
rules based infrastructure, which when completed, will facilitate the 
adjudication of Chapters 30, 32, 35, 1606, and 1607 benefits. At full 
completion, it is planned that VA will automatically process the 
majority of claims, received electronically, by applying benefit-
specific business rules and issuing payment for all claims.
    Vocational Rehabilitation Program IT Support development costs 
represent less than 1.0 percent of the total development costs for 
veteran facing IT systems. C-WINRS is VR&E's system of workflow 
management, control, and reporting. At full implementation, C-WINRS 
will replace BDN in Chapter 31 claims processing. Beneficiary payments 
of subsistence allowance will be completed via interface with the 
VETSNET Finance and Accounting System (FAS). Targeted activities for FY 
09 include completion of functional requirements and technical design.
    Information Architecture and Legacy Document Project for Housing 
Program (funded through credit reform reimbursement from the Housing 
program) will establish online information architecture for Loan 
Guaranty. This project will convert critical microfiche and hand-copy 
documents into an electronic format with indexing capabilities. These 
documents would then be made available to authorized VA staff via 
current Loan Guaranty systems. The project will also enable Loan 
Guaranty to use workflow management by providing online collaboration 
and review capability within a paperless environment.
                      Internal Facing IT Programs
    Internal facing IT systems link to specific management categories--
corporate management, financial resources management, asset management, 
human capital management, IT infrastructure, cyber security, privacy, 
and E-Gov. VA is requesting $418 million in FY 2009. Two significant 
investments are in the categories of human capital management and 
financial resources management to replace existing systems with new 
technologies. The Human Resources Information System is an OMB/OPM 
managed project, and the Financial and Logistics Integrated Technology 
Enterprise system addresses VA's long standing Federal Financial 
Management Integrity Act material weakness--lack of a VA-wide 
integrated financial management system.
    Internal facing IT development and operational systems are those 
that will improve effectiveness and efficiency in managing its 
resources. As VA continues to meet challenges to enhance the delivery 
of timely, high quality services to veterans and their beneficiaries, 
internal system development requirements continue to grow. Operation 
and maintenance consists of those functions that ensure the IT 
infrastructure and business-critical applications have the 
availability, performance, adaptability, and scalability required to 
support business needs. Highlights are provided below.
Human Capital Management Programs
    VA is requesting $92.6 million for IT human capital management 
programs in FY 2009, an increase of $32.8 million or 54.9-percent 
increase. As employees are one of VA's most important assets, 
investments in human resources systems will help VA meet the challenges 
of managing over 240,000 employees. These systems are focused on 
ensuring VA healthcare provider credentials are current and benefit 
claims specialists receive the latest training in an ever improving 
benefits delivery system. These systems also will help VA manage its 
mature workforce with a greater array of succession planning tools. 
Finally, VA will update its payroll system to a more modern, secure 
data information system.
Financial Resources Management Programs
    VA is requesting $65.3 million in FY 2009 for IT financial systems, 
an increase of $14.8 million or 29 percent. These resources will enable 
the overall Department to better manage the $93 billion in Federal 
resources to deliver services to the Nation's veterans. A critical part 
of this program is the Financial and Logistics Integrated Technology 
Enterprise (FLITE) initiative.
Financial and Logistics Integrated Technology Enterprise
    Financial and Logistics Integrated Technology Enterprise (FLITE) is 
a multi-year initiative to replace the existing financial and logistics 
systems with integrated, enterprise-level systems. The two primary 
components are the Integrated Financial Accounting System (IFAS) and 
Strategic Asset Management (SAM) project. FLITE implementation has 
three primary objectives: (1) to effectively integrate and standardize 
financial/logistical data and processes across all VA offices; (2) to 
provide management with access to timely and accurate financial, 
logistics, budget, asset and related information on VA-wide operations 
as well as on specific programs and projects; and (3) to establish an 
advanced technology environment which provides VA with the greatest 
capability and an extended life cycle.
    In FY 2007, VA completed the prerequisite planning, which included 
developing the FLITE governance framework and baseline cost estimates, 
documenting requirements, establishing an acquisition strategy, 
determining the COTS solution for SAM and IFAS, and conducting a 
stakeholder analysis and communications needs assessment as well as 
other project management strategies. In FY 2008, VA will award 
individual implementation/integration contracts for SAM and IFAS. The 
pilot test for SAM will be deployed at the Milwaukee VA Medical Center 
in FY 2008, and the pilot preparation for IFAS will start in FY 2008. 
FY 2009 will include deployment of additional beta sites for SAM and 
pilot testing for IFAS. The budget increase from FY 2008 to FY 2009 
accounts for development and testing activities.
Cyber Security
    VA is thoroughly examining every aspect of our information 
protection program to ensure that sensitive information, primarily 
Personally Identifiable Information (PII) and Personal Health 
Information (PHI), is neither mismanaged nor used for any unauthorized 
purpose. To do this we have requested $93M in FY09 to meet this goal. 
This request can be broken into 2 major categories (as discussed 
below)--support for our Enterprise Cyber Security Program and support 
for the Personal Identification Verification (PIV) program. Highlights 
are provided below.
Enterprise Cyber Security Programs
    An overarching program providing focus to all activity related to 
data security, the Data Security--Assessment and Strengthening of 
Controls (DS-ASC) program includes several hundred specific actions all 
oriented toward improving the position of VA in the area of information 
protection. To date, approximately 40 percent of the original DS-ASC 
items have been completed with the approval of VA Handbook 6500. This 
handbook is the primary cyber security procedural document for the 
Department. Recently, DS-ASC focused on the VA Office of Inspector 
General and GAO recommendations reported to the Congress. By 
reorganizing the DS-ASC around these recommendations, VA is confident 
it will reach the Gold Standard for Data Security and satisfy each 
recommendation within the next three years.
    Through the Enterprise Cyber Security Program (ECSP) VA formulates 
and oversees the implementation of the Department-wide security 
program. ECSP provides a continuous cycle of risk assessment, 
modification of policies and procedures to reflect changes in the risk 
environment, identification of mitigating security controls, and the 
testing of those controls. ECSP is comprised of both management and 
technical components.
    The management components establish VA IT security policies and 
procedures; oversee Department-wide risk management, certification and 
accreditation, and Federal Information Security Management Act (FISMA) 
reporting and compliance programs; update the Department IT security 
program plan; provide for credit monitoring and fraud detection 
services; sponsor the Department's security awareness training, role 
based training for information security officers ISOs, and VA's annual 
information security conference; and provides procurement, budgeting, 
personnel, and capital planning support for the investment. Field 
Security Operations and Information Security Officer Support Service 
(Field Ops) provide oversight for the facility-based ISOs. It also 
includes an incident response and risk management capability to 
monitor, respond, and report on data breach and other information 
security incidents. The incident response team has developed enterprise 
identity strategic and implementation plans for fiscal years 2008 
through 2010.
    Technical components include the Critical Infrastructure Protection 
Program, which directs the operation of the Network and Security 
Operations Center, is responsible for providing the centralized 
incident response and recovery capability as well as other enterprise 
network and security services, such as, firewall management; intrusion 
detection and prevention monitoring; Domain Naming System management; 
content filtering; patch management; antivirus program; and enhanced 
24x7x365 monitoring of core VA infrastructure. The continued deployment 
of the enterprise host-based intrusion prevention, anti-spyware, and 
anti-spam solutions are ongoing as well as initiatives to implement an 
e-Discovery technology and anomaly detection services within VA's 
enterprise architecture to further enhance our security posture and 
network services availability.
    The information protection program is responsible for reporting on 
the deployment of technical controls that bring VA in compliance with 
Federal regulations and VA policy. The technical controls protect 
information in transit and in storage. Such technical controls include 
encryption of laptops, secure network transmissions, mobile device 
security, remote access security, secure emails and documents, tape 
encryption, and scanning of emails being transmitted through VA's 
Internet gateways for Social Security numbers.
Personal Identification Verification (PIV) program
    This initiative replaces VA's Authentication and Authorization 
Infrastructure Project with a system that directly addresses Homeland 
Security Presidential Directive 12 and FIPS 201 with the implementation 
of processes and procedures required to issue PIV cards. PIV includes 
five logical components that support PIV card issuance and the business 
process and procedures necessary to perform data capture, data 
management, identity proofing, identity management, access management, 
logical access control, physical access control, authorization, and 
authentication surrounding the PIV credential. PIV is a VA enterprise 
system that will be interoperable across the Federal Government. 
Coordination with other agencies facilitates knowledge sharing between 
VA and other Federal departments and agencies. In FY 2009 VA will 
deploy the PIV registrar and issuer workstations to 113 of 225 field 
locations and issue 50 percent of the cards to employees.
         IT Infrastructure (Veteran Facing and Internal facing)
    Before closing, I would like to provide an overview of the funds 
requested for IT Infrastructure supporting both Veteran Facing IT 
systems and Internal Facing IT systems. VA's extensive and complex IT 
infrastructure is the foundation for the operation of information 
systems in VA. IT systems are critical for the delivery of veterans' 
services, from the delivery of healthcare using the EHR to timely 
delivery of veterans' benefits claims and burial programs, through 
implementation and on-going management of a wide array of technical and 
administrative support systems. VA is requesting $800 million and an 
increase of $140.2 million over FY 2008 operations. This significant 
investment is needed to begin rebuilding the VA IT Infrastructure to 
one that will provide effective and timely delivery of healthcare, 
benefits, and burial services to the Nation's veterans and their 
dependents. To keep up with growing data, network capacity, information 
sharing (e.g., DoD and business partners), security and privacy, and 
technical requirements created by innovative IT solutions, the VA IT 
infrastructure must be refreshed and modernized.
    In FY 2007, the many different infrastructure accounts were 
combined to form the IT infrastructure activity now centrally managed 
by the CIO. This centralization allows VA to better manage computer 
systems, VA data networks, and voice services to better deliver veteran 
benefits with adequate security and continue to improve cost-
effectiveness. Without proper operation and maintenance of the IT 
infrastructure (including planning and budgeting) and implementation of 
new technologies, the delivery of essential services and business 
operations of this or any other modern governmental function would 
literally halt in days and the health, lives, and well-being of 
veterans would be jeopardized.
    Increased staffing and activation of new VA facilities comes with 
associated IT requirements and assets. Every new person hired requires 
IT tools, such as, a desktop computer, mobile device, laptop, printer, 
etc. For example, VA projects by FY 2009 numerous facility activations, 
including 51 new community based outpatient clinics. By their nature, 
community based outpatient clinics are not generally in close proximity 
to a medical center, and are quite often in rural areas, creating asset 
management challenges. Additionally, there are currently 209 
readjustment counseling vet centers with more projected to be opened 
during fiscal years 2008. Vet centers are typically small in staff size 
and are not located on VA property. In serving veterans, both of these 
facility types require reliable IT equipment that embodies information 
assurance and data standardization.
    In support of the veteran facing IT systems, IT infrastructure 
ensures the underlying platforms and services function properly in 
support of the wide variety of veteran facing applications supporting 
mechanism to ensure funding for. By definition, the infrastructure, 
which is comprised of application licenses, network and computing 
support, and voice, data and video infrastructure, is key to effective 
program delivery. It provides for the hardware and communicationlines 
and systems that allow over 240,000 VA employees to deliver healthcare, 
benefits delivery, and memorial services to a grateful Nation's 
veterans. IT infrastructure support for veteran facing IT systems for 
FY 2009 is $659.04 million. The breakout of this support across the 
major service areas at the VA is as follows:

          Medical Program IT Support: $573.07 million
          Regional Data Processing Center: $30.00 million;
          Compensation Program IT Support: $35.23 million;
          Pension Program IT Support: $6.40 million;
          Education Program IT Support: $3.97 million;
          Vocational Rehabilitation Program IT Support: $5.60 
        million;
          Burial Program IT Support: $4.75 million.

    VA IT infrastructure serves the entire range of business functions 
including primary missions, handling of Congressional and other 
correspondence, financial operations, interaction with veterans service 
organizations and other agencies including DoD healthcare systems, data 
exchange with business partners, Continuity of Operations (COOP) and 
continuity of business, radio frequency spectrum management; and 
implementation infrastructure for new and enhanced business 
applications.
    IT infrastructure programs and activities for FY 2009 include work 
as a major participant in the GSA FTS program; transition of current 
long distance voice and data circuits from the FTS2001 contract to the 
new Network contract; implementing compliance with the Internet 
Protocol version 6 (IPv6) mandate by OMB; continuing to strengthen VA 
Gold Standard for Data Security; operation of a multi-carrier backbone 
wide area network; exploration of new and more efficient network 
technologies, including Internet 2, voice over IP (VOIP), and unified 
communications; and continued standardization of the infrastructure 
architecture from desktop to wide area network. Infrastructure programs 
require an increase to meet service projections for enhancing patient 
care services, additional care for returning war veterans, 
teleradiology and remote medical services, fund the phased replacement 
of PCs across VA, and provide greater network bandwidth for 
facilitating communications. IT infrastructure funding is essential to 
protect IT resources and strengthen data security for keeping sensitive 
veteran and employee data safe, secure, and confidential.
    Telecommunications services are an integral and fundamental 
component of VA. While often taken for granted, these technology 
dependencies and interdependencies are essential to business functions 
and service providers. Without these services, essentially utilities, 
VA modern healthcare and benefit functions would not be possible and 
would be reduced to paper, other physical media (e.g., x-ray films), 
and physical mail or courier delivery. These are services that operate 
24 hours a day, 7 days a week.
    In closing, I want to assure you that VA IT is committed to 
providing effective and efficient support to veterans and in turn to 
the VA community-at-large. We have made progress over this past year 
and have experienced problems as well--so much more remains to be done. 
I appreciate having this opportunity to discuss this with you and will 
gladly respond to your questions.

                                 

                                U.S. Department of Veterans Affairs
                                                    Washington, DC.
                                                     March 20, 2008
The Honorable Harry E. Mitchell
Chairman
Subcommittee on Oversight and Investigations
Committee on Veterans' Affairs
United States House of Representatives
Washington, DC 20515

Dear Mr. Chairman:

    Thank you for the opportunity to testify before the Subcommittee on 
February 13, 2008, on the fiscal year (FY) 2009 budget for the Office 
of Inspector General (OIG). At the hearing, we indicated we would 
provide additional information in two areas, the length of time VA has 
been developing an electronic system to track contracts and purchasing 
and on the monetary return for pre-award and post-award reviews in FY 
2007. A similar letter has been sent to Congresswoman Ginny Brown-
Waite, Ranking Republican Member.
    According to VA's Office of Acquisition and Logistics (OA&L), in 
March 2003 initial development for a new system, Electronic Contract 
Management System (e-CMS) began. This system is a tool for VA 
acquisition staff to create and manage acquisition actions and 
documents, announce solicitations to vendors, receive and evaluate 
offers, make awards, and report awards to the Federal Procurement Data 
System for procurement actions above $25,000. This centralized web 
based system resides on a server and is accessed using a web browser 
and specially configured workstations. In June 2007, OA&L mandated the 
use of e-CMS and they report that currently, approximately 1,500 users 
located at 194 facilities across the VA business lines have completed 
training to gain access to the system. An OIG audit of e-CMS is 
currently ongoing to determine the extent of the system's 
implementation throughout VA and whether e-CMS will provide needed 
information for VA to manage and report the cost of procurement more 
effectively. We will provide you a copy of the audit report, which we 
plan to issue in September 2008.
    In FY 2007, OIG pre-award reviews resulted in $133.7 million in 
potential cost savings; post-award reviews resulted in $15.8 million in 
actual recoveries. We issued 83 reports on 62 unique vendors.
    Thank you for your interest in the Department of Veterans Affairs.
            Sincerely,
                                                    GEORGE J. OPFER
                                                  Inspector General

                                 
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