[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]


 
                  U.S. DEPARTMENT OF VETERANS AFFAIRS 
                    OFFICE OF INSPECTOR GENERAL AND 
                    OFFICE OF INFORMATION TECHNOLOGY 
                  BUDGET REQUESTS FOR FISCAL YEAR 2011 

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

                                HEARING

                               before the

                     SUBCOMMITTEE ON OVERSIGHT AND
                             INVESTIGATIONS

                                 of the

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

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                           FEBRUARY 23, 2010

                               __________

                           Serial No. 111-60

                               __________

       Printed for the use of the Committee on Veterans' Affairs

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                     COMMITTEE ON VETERANS' AFFAIRS

                    BOB FILNER, California, Chairman

CORRINE BROWN, Florida               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
DEBORAH L. HALVORSON, Illinois       BRIAN P. BILBRAY, California
THOMAS S.P. PERRIELLO, Virginia      DOUG LAMBORN, Colorado
HARRY TEAGUE, New Mexico             GUS M. BILIRAKIS, Florida
CIRO D. RODRIGUEZ, Texas             VERN BUCHANAN, Florida
JOE DONNELLY, Indiana                DAVID P. ROE, Tennessee
JERRY McNERNEY, California
ZACHARY T. SPACE, Ohio
TIMOTHY J. WALZ, Minnesota
JOHN H. ADLER, New Jersey
ANN KIRKPATRICK, Arizona
GLENN C. NYE, Virginia

                   Malcom A. Shorter, Staff Director

                                 ______

              Subcommittee on Oversight and Investigations

                  HARRY E. MITCHELL, Arizona, Chairman

ZACHARY T. SPACE, Ohio               DAVID P. ROE, Tennessee, Ranking
TIMOTHY J. WALZ, Minnesota           CLIFF STEARNS, Florida
JOHN H. ADLER, New Jersey            BRIAN P. BILBRAY, California
JOHN J. HALL, New York

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hearing records of the Committee on Veterans' Affairs are also 
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                            C O N T E N T S

                               __________

                           February 23, 2010

                                                                   Page
U.S. Department of Veterans Affairs Office of Inspector General 
  and Office of Information Technology Budget Requests for Fiscal 
  Year 2011......................................................     1

                           OPENING STATEMENTS

Chairman Harry E. Mitchell.......................................     1
    Prepared statement of Chairman Mitchell......................    30
Hon. David P. Roe, Ranking Republican Member.....................     2
    Prepared statement of Congressman Roe........................    30

                               WITNESSES

U.S. Department of Veterans Affairs:

    Hon. Richard J. Griffin, Deputy Inspector General, Office of 
      Inspector General..........................................     4
        Prepared statement of Mr. Griffin........................    31
    Hon. Roger W. Baker, Assistant Secretary for Information and 
      Technology, Office of Information and Technology...........    11
        Prepared statement of Mr. Baker..........................    36


                  U.S. DEPARTMENT OF VETERANS AFFAIRS
                    OFFICE OF INSPECTOR GENERAL AND
                    OFFICE OF INFORMATION TECHNOLOGY
                  BUDGET REQUESTS FOR FISCAL YEAR 2011

                              ----------                              


                       TUESDAY, FEBRUARY 23, 2010

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

    The Subcommittee met, pursuant to notice, at 10:05 a.m., in
Room 334, Cannon House Office Building, Hon. Harry E. Mitchell
[Chairman of the Subcommittee] presiding.

    Present: Representatives Mitchell, Space, Walz, Roe, 
Stearns, Bilbray, Buyer.

             OPENING STATEMENT OF CHAIRMAN MITCHELL

    Mr. Mitchell. I would like to welcome everyone to the 
Subcommittee on Oversight Investigations hearing on their U.S. 
Department of Veterans Affairs (VA) Office of Inspector General 
(OIG) and Office of Information and Technology (OI&T) Budget 
Request for Fiscal Year 2011.
    This hearing will come to order.
    I ask unanimous consent that all Members have 5 legislative 
days to revise and extend the remarks and that statements may 
be entered into the record. Hearing no objections. So ordered.
    Today we will examine the recently released budget request 
of these two vital offices within VA. The President and 
Secretary Shinseki have made a clear goal of transforming the 
VA into a 21st century organization.
    In the President's budget for fiscal year 2011, the request 
for VA has increased by 10 percent over the 2010 enacted budget 
to $125 billion. The surge of new veterans from our Nation's 
current wars requires a proportional surge in the capacity and 
capabilities of the VA to properly care for all of our veterans 
and their families.
    The Office of Information and Technology and the Office of 
Inspector General are critical in accomplishing this goal. They 
facilitate the VA's mission through the use of modern computing 
infrastructure, as well as by identifying waste, fraud and 
abuse within the VA through internal investigations. These two 
offices work closely with the Subcommittee by providing 
important information regarding urgent challenges facing the 
VA, including full interoperable health records of Oversight 
and Investigations into the serious allegations within the 
Department.
    The OIG has been important to this Subcommittee's work 
providing crucial information concerning VA activities such as 
the Philadelphia Veterans Affairs Medical Center (VAMC) 
brachytherapy cases and improper hiring practices within the 
VA, to name a few.
    Over time we have seen an increased demand being placed on 
the OIG for inspections and audits in order to facilitate 
Secretary Shinseki's goals of improved transparency and 
accountability. We must ensure that the OIG is properly 
resourced and staffed to fulfill this critical role as watchdog 
of the VA.
    Our first panel will address the Office of Inspector 
General's proposed budget. The OIG's request shows an increase 
of $367 thousand over fiscal year 2010 levels. And even though 
funding for the OIG may be increasing, it is important for the 
VA to remain fiscally responsible.
    At the same time, this modest increase is still 
approximately $11 million less than what the office initially 
requested for their fiscal year 2011 budget. The Office of 
Inspector General has a proven track record and for every 
dollar invested in the OIG, we get a return of $38.
    Our second panel will discuss the proposed budget for the 
Office of Information and Technology. The budget request 
remains at the 2010 level. As more demands are placed on the 
VA's IT infrastructure and wide range in programs calling for 
technological advances such as paperless initiatives, the 
office will, of course, need appropriate resources, especially 
as it works to transform the VA into a 21st century agency.
    We are very interested to hear the Department's plan for 
executing this budget and ensure that we will meet the needs of 
our Nation's heroes. Our veterans have borne a tremendous 
burden on our behalf and we are, therefore, obliged to ensure 
that they receive the care and opportunities that were 
commensurate with their selfless service.
    Thank you all, again, for attending today's hearing and I 
look forward to all the testimony being presented today. Before 
I recognize the Ranking Republican Member, I would like to 
swear in our witnesses. I ask that all witnesses stand and 
raise their right hand.
    [Witnesses sworn.]
    I now recognize Dr. Roe for his opening remarks.
    [The prepared statement of Chairman Mitchell appears on p. 
30.]

             OPENING STATEMENT OF HON. DAVID P. ROE

    Mr. Roe. Thank you and good morning, Mr. Chairman. Thank 
you for holding this hearing to discuss the fiscal year 2011 
budgets for the Office of Information and Technology and the VA 
Inspector General.
    As we all know, both these components of VA are critical to 
operations at the VA, OI&T and their IT infrastructure 
responsibility and that of the OIG for their oversight 
responsibilities. I will tell you that I am very interested in 
where the resources are going and have been delegated to OI&T 
and I am quite concerned that the budget for the VA OIG has 
been flat-lined for fiscal year 2011, particularly given the 
amount of oversight this office has had to perform.
    VA OI&T, Assistant Secretary Baker, has undergone a top-
down review of all ongoing IT projects, and at this point put 
on hold the development of approximately 45 IT projects. I am 
interested in learning the downstream prospects for these 
projects, including the stalled Financial and Logistics 
Integrated Technology Enterprise (FLITE) project in which we 
have invested a large amount of resources since 2000. I am also 
interested in future planning for OI&T--how are we going to 
advance joint ventures such as those being used at the North 
Chicago/Great Lakes Venture that Chairman Mitchell and I 
visited earlier this year.
    I am concerned about funding for VA to stop the practice of 
cutting and pasting and altering the VA's electronic medical 
record. I find it disturbing that the VA has not learned its 
$26 million lesson from its data security breach in May of 
2006. I understand VA still allows personal unencrypted laptops 
and other devices on VA's secure networks.
    I am also concerned that VA OIG budget has remained at the 
fiscal year 2010 level. With the increased responsibility of 
conducting Veterans Benefits Administration (VBA) Regional 
Office reviews similar to the Combined Assessment Program (CAP) 
reports issued for VA medical facilities, I am uncertain that 
the resources allocated to VA OIG will be enough for them to 
adequately complete their mission for fiscal year 2011. These 
reports are an invaluable resource to review and correct 
inadequacies within the VA program.
    Without the oversight of the VA OIG, we would not be able 
to conduct proper oversight here at this Committee, and I just 
did some quick math, and I think I am correct that less than 
one-tenth of 1 percent of VA budget is for oversight and that 
is, as the Chairman clearly said, the 38 to 1, I would like to 
invest in that and I think we need to make an investment.
    Mr. Chairman, I look forward to hearing the testimony today 
and working with you on making certain, both, that the VA OI&T 
and the VA OIG have both adequate resources with which to 
perform their duties. Thank you and I yield back.
    [The prepared statement of Congressman Roe appears on p. 
30.]
    Mr. Mitchell. Thank you.
    Mr. Walz.
    Mr. Buyer.
    Mr. Buyer. I would ask unanimous consent to participate in 
your hearing today. Thank you, and I will waive my opening 
statement.
    Mr. Mitchell. At this time I would like to welcome Panel 1 
to the witness table. Joining us on our panel is Richard 
Griffin, Deputy Inspector General, U.S. Department of Veterans 
Affairs. Mr. Griffin is accompanied by James J. O'Neill, 
Assistant Inspector General for Investigations; Dr. John Daigh, 
Jr., Assistant Inspector General for Healthcare Inspections; 
Belinda Finn, Assistant Inspector General for Audits and 
Evaluations and Maureen Regan, Counsel to the Inspector 
General.
    I would ask that all witnesses please stay within the 5 
minutes for their opening remarks. Your complete statements 
will be made part of the hearing record. Mr. Griffin.

STATEMENT OF HON. RICHARD J. GRIFFIN, DEPUTY INSPECTOR GENERAL, 
   OFFICE OF INSPECTOR GENERAL, U.S. DEPARTMENT OF VETERANS 
 AFFAIRS; ACCOMPANIED BY JAMES J. O'NEILL, ASSISTANT INSPECTOR 
 GENERAL FOR INVESTIGATIONS, OFFICE OF INSPECTOR GENERAL, U.S. 
DEPARTMENT OF VETERANS AFFAIRS; JOHN D. DAIGH, JR., M.D., CPA, 
ASSISTANT INSPECTOR GENERAL FOR HEALTHCARE INSPECTIONS, OFFICE 
  OF INSPECTOR GENERAL, U.S. DEPARTMENT OF VETERANS AFFAIRS; 
  BELINDA J. FINN, ASSISTANT INSPECTOR GENERAL FOR AUDITS AND 
 EVALUATIONS, OFFICE OF INSPECTOR GENERAL, U.S. DEPARTMENT OF 
    VETERANS AFFAIRS; AND MAUREEN T. REGAN, COUNSEL TO THE 
INSPECTOR GENERAL, OFFICE OF INSPECTOR GENERAL, U.S. DEPARTMENT 
                      OF VETERANS AFFAIRS

    Mr. Griffin. Mr. Chairman and Members of the Subcommittee, 
thank you for the opportunity to have this hearing and address 
the important work that we are trying to do in the Office of 
Inspector General. As you know, our mission is to provide 
independent and objective oversight of VA programs to ensure 
that veterans receive the care, support and recognition that 
they have earned in service to our country.
    Our efforts include mandated, proactive and reactive 
projects, which continually challenge our resources. We strive 
to be responsive to Congressional requests as reflected in our 
work concerning improper disinfection of endoscopes, 
brachytherapy procedures, informed consent of research 
subjects, the interagency agreement between VA and Space and 
Naval Warfare Systems Command and claims related mail 
processing.
    During fiscal year 2009, we also testified at eight 
Congressional hearings, conducted 52 briefings and responded to 
234 congressional requests. Today's hearing marks the fifth 
hearing of this fiscal year for the VA OIG.
    Other major reactive work is performed by the men and women 
of our Office of Investigations. Significant criminal 
investigations in the past year resulted in convictions of a 
VBA employee, a veterans service organization (VSO) service 
officer, 11 veterans and one non-veteran who conspired to 
defraud VA of $2 million in undeserved benefits; the conviction 
of an Associate Director of a VA consolidated mail-out pharmacy 
and his wife for secretly running an 8A business, having 
contracts with his facility; and the conviction of the Nation's 
first pharmaceutical chief executive officer for off-label 
marketing.
    Our proactive work includes national audits and health care 
reviews; cyclical reviews of medical centers, outpatient 
clinics and VBA regional offices; along with pre-award and 
post-award reviews of VA contracts.
    One proactive audit found that 37 percent of non-VA fee-
basis care had payments that were improper. We recommended 
changes to improve the accuracy that could reduce $1 billion in 
improper payments. Our contract review staff continues to work 
collaboratively with VA's Office of Acquisition, Logistics and 
Construction, and in the current fiscal year they have already 
identified potential cost savings of $243 million and have 
identified more than $10 million in overcharges that are being 
recovered.
    Maureen Regan and her staff have been providing invaluable 
support by sharing their expertise with VA employees, leading 
sessions at the Acquisition Training Center in Frederick, 
Maryland, and at other locations.
    We clearly recognize the growing demand for the full range 
of benefits and services provided by the Department of Veterans 
Affairs and the parallel increase in VA staffing and budget.
    We also recognize our responsibility to ensure every dollar 
appropriated is effectively and efficiently spent for the well-
being of our Nation's veterans.
    In view of our existing workload, our proposed budget of 
$109,367,000 will not allow us to take on any new initiatives, 
to include our desire to focus on the quality of outsourced 
health care; to expand audit coverage of IT systems 
development, acquisition and implementation; and to conduct 
proactive investigations of fiduciary, procurement and workers 
compensation fraud.
    As always, we will prioritize our work and we will continue 
to try to be responsive to requests from the VA Secretary and 
Members of Congress.
    I want to thank you for your continued support and the 
opportunity to testify today. We will be pleased to answer your 
questions.
    [The prepared statement of Mr. Griffin appears on p. 31.]
    Mr. Mitchell. Thank you, Mr. Griffin. I have a couple of 
quick questions. Are there any areas in the VA health care that 
would benefit from OIG oversight that are in jeopardy due to 
the resources that are being limited?
    Mr. Griffin. Well, as you know, Mr. Chairman, we started 
doing reviews of outpatient clinics within the last 12 to 18 
months. There are presently over 800 outpatient clinics under 
the Veterans Health Administration's (VHA's) purview. Current 
staffing allows us to do about 40 clinic reviews a year. If you 
do the math, that is a 20-year cycle before we could get to 
every clinic and ensure that the quality of care at those 
clinics is equal to the quality of care at the primary medical 
centers. I think that is an unacceptable cycle.
    Mr. Mitchell. Let me follow up on that. Of the outpatient 
clinics that you have investigated, are there any conclusions 
that you can drop on that are the top issues facing the VHA?
    Mr. Griffin. We can, and I am going to ask Dr. Daigh to 
speak to those early conclusions because we are just getting 
into the initiative.
    Dr. Daigh. Yes, sir. I would say that we will have a formal 
report that summarizes the work. I would say that the quality 
of care that we have seen in primary care delivery, not mental 
health care delivery, has been about the same. As I said, we 
are very happy to report that what we have seen from the 
community-based outpatient clinics (CBOCs), the quality of care 
is the same, using the same metrics used at the hospital in 
both clinics so that is very satisfying.
    We may find some difference between contracted clinics and 
VA owned and operated clinics but we haven't run that data set 
yet and I am not able from just looking at the data to answer 
that question.
    On the contracting side, we have found significant 
difficulties where VA manages a contract at the CBOC with 
respect to being able to ensure that we are paying the correct 
bill. And what we find, for example, is that the contracting 
officer's technical representative, who often is a clinician or 
nurse or another provider who has this as a side occupation, 
often doesn't have the IT support lined up with the contract so 
that they can easily get the bill from the contractor and 
determine whether or not the work has been done according to 
VA's data, so there will be some findings in the contract area 
there.
    We have not looked at the mental health delivery at CBOCs 
as we would like and we will, in the coming years, spend more 
effort looking at the mental health contract for care provided 
CBOCs.
    Mr. Mitchell. We know that the budget included a lot less 
for the Inspector General than was originally requested. We 
also know, as I mentioned earlier, for every dollar that we 
invested in the OIG, we get $38 back. What explanation did the 
VA give you on why you were getting such a small increase, 
especially since the Department is asking for one of the 
largest increases in its overall budget?
    Mr. Griffin. Mr. Chairman, I believe that in reality we 
have a decrease because when we submitted our budget, we 
projected that we would need about $4.4 million just to 
maintain current services. The amount that we were given over 
2010, the $394,000, is specifically earmarked for the Council 
of the Inspectors General for Integrity and Efficiency 
administrative requirements.
    I think that in view of the current deficit situation, and 
that is speculation on my part. We were straight lined or less 
than current services in this budget.
    Mr. Mitchell. So there really were no programs, just more 
training in Mr. Regan's office, is that right?
    Mr. Griffin. Now this is training, training requirements 
that were mandated by the Inspector General Reform Act and 
funding for the Council of the Inspectors General for Integrity 
and Efficiency. It is a council made up of all the OIGs that 
administers programs, tries to organize training that is unique 
to the OIG community and each OIG had to pay for a pro-rated 
share of that activity.
    Mr. Mitchell. I see. I yield.
    Dr. Roe.
    Mr. Roe. Thank you, Mr. Chairman. I probably am the last 
person up here that wants to see big brother looking over your 
shoulder, but clearly when you have a $125 billion budget, that 
is seven times the budget of the State of Tennessee. That is a 
huge responsibility, and we always talk in Medicare and 
Medicaid about fraud and abuse, and what I found fascinating 
was you, with less than one-tenth of 1 percent of the VA budget 
you were able to, with those resources, find almost 3 percent--
$2.9 billion, I believe.
    And we couldn't, quite frankly, I mean just after a year on 
this job, we can't do our job without you being able to do your 
job because we won't know about brachytherapy problems, and we 
won't know whether the followup is there if you don't have the 
resources to follow up. That is just current.
    We wouldn't know about the endoscopy and the very quick 
response that the OIG did. That was amazing how fast you went 
out and, I think, looked at 42 different facilities and a rapid 
response, which we need that information. Otherwise, we can't 
do our job.
    So I also see that from this relative resource chart that 
you have the least people, also, in addition to budget. I think 
we understand that. I think everybody up here gets that.
    So what things will go undone that you feel are needed this 
year if you have a flat-lined budget? There were critical 
issues out there. Is it relooking at endoscopy or 
brachytherapy. Or, as the Chairman and I went to Great Lakes, 
is it looking at that project or the FLITE project or whatever?
    Mr. Griffin. I would say, before I give you the answer, 
that part of our difficulty is, as I mentioned in my oral 
remarks, we have proactive and reactive work. When we started 
out last year, we had no way of knowing that we were going to 
do the endoscopy review, which tied up a great number of David 
Daigh's assets and removes from us the ability to strategically 
go after areas that we have identified as needing review.
    Right now, there is a lot of money in the current budget 
for homelessness issues. We have, on an episodic basis with the 
homelessness, looked at elderly care, but not to the extent 
that we did a national review and could come forward with 
systemwide conclusions and recommendations. I know that that is 
something that Dr. Daigh would like to get into if we had the 
time and resources to do it. There are a number of audits, 
also, that Ms. Finn could talk about that we also feel are in 
dire need for a review, many things in the IT area that we 
would like to look at more closely.
    As you know it is a very expensive area for the Department. 
Over the past decade there have been some successes and some 
failures in that area and a lot of money involved. We would 
like to have sufficient staff and expertise in our audit 
section to be able to more closely monitor the IT program at 
the Department.
    Mr. Roe. Mr. Griffin, I agree with you a hundred percent 
because if we had had that kind of oversight in the U.S. 
Department of Defense (DoD) and VA, there might, after however 
many 20 years and billions of dollars, be able to talk to each 
other, if someone had looked at it and I could not agree more.
    And you hear things that go on. For instance, the homeless, 
which there is not a person on this Committee that doesn't want 
every homeless veteran to have a place to live, but it is a $4 
billion program ripe for abuse if it is not carefully looked 
at, and I think you have to have the resources to be able to do 
that, to do your job. And right now you are not going to have 
the resources, the best I can tell, to do your job.
    How many people work for your department? Not exact, just 
approximately.
    Mr. Griffin. About 530, with some coming and going, you 
know, from time to time.
    Mr. Roe. Five hundred, somewhere thereabouts.
    Mr. Griffin. Right.
    Mr. Roe. Thank you. I yield back.
    Mr. Mitchell. Thank you. Mr. Walz.
    Mr. Walz. Well, thank you, Mr. Chairman, and thank you to 
each of you for being here.
    Mr. Griffin, I very much appreciate your testimony--very 
candid, very helpful, exactly what I think people expect of how 
we need to work together.
    To the rest of you, Dr. Daigh, you have been here before, 
Ms. Regan, and we thank you for this. I am a huge advocate of 
the work you do and I think the questions being brought up here 
are absolutely relevant.
    Just a couple of things. Dr. Roe, I agree with you. I don't 
think any of us up here wants big brother ever watching, but I 
do think we have a responsibility to the taxpayers as taxpayer 
advocates and watchdogs, making sure that we get this right and 
I think we need to be very clear that when I am looking at some 
of these improper things, 37 percent of the fee-based 
payments--now, I am not sure if that's VA's fault or the 
private sectors. I do know that $2.3 billion on the 
pharmaceutical side, there is not an all benevolent private 
sector either on this.
    This is a job of taking care of our veterans. Nobody in my 
district is saying balance this budget on the backs of 
veterans, but we have a responsibility and I have been saying 
for a long time, as your budgets increase at VA, the 
accountability must increase exponentially to make sure that 
every dime is being spent correctly. So I am very concerned 
that your budget is not there. I appreciate the candidness of 
tell us exactly what it means by not having that money there 
and I think it is important for all of us to understand when we 
vote on VA appropriations when we vote--did you receive money 
from the Recovery Act dollars? Did any of the Recovery Act 
dollars go to you?
    Mr. Griffin. We received $1 million out of the $1.4 
billion----
    Mr. Walz. That went to VA.
    Mr. Griffin [continuing]. That the VA got, which was less 
than one-tenth of 1 percent.
    Mr. Walz. That's right.
    Mr. Griffin. And we spent it in the first year because 
trying to do the audits that were required and to do the 
investigations that Mr. O'Neill's people have undertaken as a 
result of suspected fraud in those areas. We have spent our 
million and we are going to continue to do those audits and do 
the investigations that come to us.
    Mr. Walz. So you didn't even receive enough money from the 
Recovery Act to monitor the Recovery Act dollars that went to 
VA?
    Mr. Griffin. That is right.
    Mr. Walz. Okay. Well, you have come to the right people who 
believe in you. We believe that there is some money--we believe 
it is the proper role of oversight of government of taxpayer 
dollars.
    I have one question to you and it is somewhat subjective, 
but it came up in a round table discussion with the VSOs. They 
are firm supporters of yours. They want--accountability is the 
word I am hearing from them this year--accountability, 
accountability, accountability.
    The Vietnam Veterans of America made a comment to me that 
got me thinking on this because I was touting the OIG's office, 
touting this Committee's--the Ranking Member and the Chairman's 
continuous push together to get more money into this and they 
said they think you do a wonderful job on fraud and abuse. They 
question the waste side of things, and I am wondering, do you 
think that's coming from a perception of, as you said, it is 
very difficult for you to do proactive things when you barely 
can chase down the fires that are started or do you think that 
is a mischaracterization on their part, on the waste side of 
things?
    I just want to get at it so I have a way to go back to 
them.
    Mr. Griffin. I think the old buzz words from the OIG, 
active waste, fraud and abuse, are probably tired. I think if 
it is fraud, that is waste to me, if people are being abused in 
our medical facilities or on the job or whatever. That is a 
waste of taxpayer's money because that is not what we are 
supposed to be about.
    Mr. Walz. I think they were getting at if there is illegal 
activity going on, we are great at it. If there is just simply 
redundant programs that are not providing patient care 
increases, we don't do a very good job of stopping that because 
if it is not illegal and it is under the auspices of the 
Veterans Integrated Services Network (VISN) director or the 
hospital director, you don't really get involved with telling 
them we could streamline.
    When the next panel comes up, I have some folks that ask 
me, with all that money we spent on IT, how come the private 
sector can do it better. And we will ask them. They are saying 
that part of it could be done better. Do you think that is just 
because that is not really your area to comment on?
    Mr. Griffin. No. I think that some of the initiatives that 
we have undertaken several years ago and we started doing our 
medical center inspections under the CAP program. The 
outpatient clinic reviews, the benefit inspection reviews that 
audit is doing now, so we can get out to regional offices (ROs) 
and see what is going on there.
    And as Dr. Daigh alluded to earlier, after 6 or 12 months 
where we have been to a number of facilities where we found the 
same issue at 90 percent of the facilities, and you are not 
talking about an anecdotal problem. You are talking about 
something that is crying out for a systemic fix.
    Mr. Walz. That's right.
    Mr. Griffin. And when we can roll those things up and take 
it to the Under Secretary and say, look, this is what we found 
at the last 20 facilities we have been to, then it is not just, 
you know, one individual hotline that somebody came in with. It 
is a systemic problem, and by addressing those systemic 
problems, that is when you can get at the waste.
    Mr. Walz. Okay.
    Mr. Griffin. And you need to have the capability to 
continue to do those things and not just be like responding to 
a fireman's call every time, you know, some issue that none of 
us can predict comes up because every year there is something 
that was not on the radar screen that winds up consuming 
resources.
    Mr. Walz. Well, thank you. And again, I want to thank each 
and every one of you. The job you do as taxpayer advocates, of 
advocates for the care of our veterans is appreciated by this 
panel, so thank you.
    Mr. Griffin. Thank you.
    Mr. Mitchell. Thank you.
    Mr. Buyer.
    Mr. Buyer. Thank you. First of all, I don't view any of you 
as big brother. I view this as a very important function of 
accountability and one particular question I am going to ask 
is, the endoscopy review, what did that cost, do you know? I 
know it is not completed, but give me a ballpark figure.
    Mr. Daigh. I am going to say it cost between 3 and 4 man 
years of time, so it probably cost $700,000.
    Mr. Buyer. That is on the cheap.
    Mr. Daigh. It was two reports. The first report was a 
statistical review where we came up with, identified a problem. 
The second report we visited about 153 medical centers 
personally, so that took about 40 of my people about a week to 
accomplish, so.
    Mr. Buyer. You know, even if you, by the time you complete 
your work, let us say it is $1 million, what we have to pay out 
on the back end on claims on this one alone is going to shock 
you, how much we are going to have to pay on claims on this 
one. So I agree, Sergeant Major. Your comments about the 
payoff--actually both of you also talked about the multiplier 
effect, Mr. Chairman. That level of investment, the ability to 
have an office that can do that type of oversight so we can get 
ahead of the curve before it ends up costing us more money in 
the end.
    Let me ask this question. Our staff is, on the Republican 
side, is we are preparing our views and estimates and we will 
work together with the majority. You have been shorted, with 
regard to your budget, as it went over to the Office of 
Management and Budget in final analysis. If we take the 
President's budget number and were to plus it up $50 million, 
what would that $50 million do for you?
    Mr. Griffin. Fifty million dollars?
    Mr. Buyer. We would plus it up $50 million, so actually we 
cover your hole. Your hole is what, about $19?
    Mr. Griffin. We requested 122 in our initial submission 
which is, you know, a matter of record. That 122 would have 
covered the $4.4 million that we needed to maintain current 
services over fiscal year 2010 and it would have allowed us to 
bring on 44 additional full-time employees, 20 of whom we had 
intended to dedicate to the health care area, 6 which we 
intended to dedicate to beefing up our IT audit capacity and 18 
for proactive investigations.
    Mr. Buyer. So Mr. Griffin, if we were to plus it up 50, 
then you have a hole--your boggy is 12, so we actually plus you 
up by 38. What would that plus of $38 million do for you?
    Mr. Griffin. Well, the $38 million, certainly in view of my 
comments about a 20 year cycle to see outpatient clinics, we 
would try to shrink that to something that is more comparable 
to the CAP reviews where we are getting to every facility every 
3 years. We are going to try to shrink the Regional Office 
cycle. It is a new initiative. When we started out with the 
initial resources, we are able to get to 12 Regional Offices a 
year. Of course, there are 57. We would like to cut that cycle 
in half, so we would do that.
    There are--the criminal investigative work, which again is 
reactive, but even though their job is to put people in jail 
that need to be there, our criminal investigators return about 
$1.6 million a year in addition to locking people up. So we 
could staff up our criminal investigative unit. We could staff 
up our audit personnel and in health care to get into 
homelessness and elderly care and to look at non-VA care. Dr. 
Daigh's people recently did a study in Montana of mental health 
care and they found that 85 percent of 
the mental health care provided in Montana is by non-
VA physicians.
    Well, we need to make sure--it is good that we are making 
care available in rural areas. I know that is a big issue, but 
we want to make sure that it is quality and that is correct 
from the standpoint of what we are being charged for.
    Mr. Buyer. I think, as I work with the majority on this 
one, I think we will probably come together on a number. We 
would--any plus-up that is headed your way, we would want it to 
be more on the, I would ask, that it be more on the front end 
to bringing those efficiencies and economies to scale and being 
proactive rather than being reactive and that would be the 
purpose of that form of plus-up. Would the gentlemen on the 
Committee agree?
    All right. I yield back.
    Mr. Mitchell. Well. Thank you very much. We want to excuse 
you and thank you again for your service and what you are 
doing. I think we all know and I have said many times, as I use 
to teach government in high school, and we all know that you 
teach that the legislative branch's main job is to make laws, 
but I am finding out here that right up there next to it is 
what we are doing here and that is holding people accountable 
for what we do and making sure that the laws are carried out 
the way we intended and making sure that the government is 
getting what it should.
    So we thank you very much, and as Mr. Walz said, that you 
have a real friend up here because you help us. Well, I guess 
we help each other. It is one of those situations that you let 
us know and we will bring it to light. So thank you very much.
    Mr. 
Griffin. Mr. Chairman, thank you for your continued support.
    Mr. Mitchell. I would like to welcome Panel Number 2 to the 
witness table and for our second panel we will hear from the 
Honorable Roger W. Baker, Assistant Secretary for Information 
and Technology, U.S. Department of Veterans Affairs. Mr. Baker 
is accompanied by Rom Mascetti, Deputy Assistant Secretary for 
Information Technology Resource Management, as well as the 
Acting Deputy Chief Information Officer for Information 
Technology Enterprises Strategy, Policy, Plans and Programs 
with the U.S. Department of Veterans Affairs.
    And I would like to recognize Mr. Baker for up to 5 minutes 
and we appreciate you being here.

   STATEMENT OF HON. ROGER W. BAKER, ASSISTANT SECRETARY FOR 
     INFORMATION AND TECHNOLOGY, OFFICE OF INFORMATION AND 
TECHNOLOGY, U.S. DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY 
   ROM MASCETTI, DEPUTY ASSISTANT SECRETARY FOR INFORMATION 
    TECHNOLOGY RESOURCE MANAGEMENT, AND ACTING DEPUTY CHIEF 
   INFORMATION OFFICER FOR INFORMATION TECHNOLOGY ENTERPRISE 
STRATEGY, POLICY, PLANS AND PROGRAMS, OFFICE OF INFORMATION AND 
        TECHNOLOGY, U.S. DEPARTMENT OF VETERANS AFFAIRS

    Mr. Baker. Thank you, Mr. Chairman. I would like to note my 
oral testimony will be somewhat different from my written.
    So thank you for the opportunity to present the Department 
of Veterans Affairs fiscal year 2011 Budget for the Office of 
Information and Technology. As you noted, I am accompanied by 
Mr. Rom Mascetti, the Department Assistant Secretary for IT 
Resource Management of VA.
    I would like to start by thanking the Members of this 
Committee for the substantial role you have played in creating 
the consolidated IT organization. My first encounter with the 
House Veterans Affairs Committee was in 2006. It was in this 
room in a meeting called with industry to discuss the pros and 
cons of IT consolidation.
    Your leadership was critical and you helped create 
something unique in the Federal Government, the Department 
level IT organization under a single Chief Information Officer 
(CIO). And while the process of consolidation may have been 
painful, in 2010 I can report to you that the consolidated IT 
organization at VA is functioning effectively.
    More importantly, I can tell you the consolidated IT 
organization has given us a platform to drive necessary 
changes. Our goal for 2010 and 2011 is to establish the VA as 
the best managed IT organization in government. I believe we 
must first achieve that goal before we can achieve our long-
term goal, which is for VA to have the best IT organization in 
government. That is what our veterans deserve.
    President Obama and Secretary Shinseki have set forth two 
over-arching goals for the Department, to transform VA into a 
21st century organization, and to ensure that we provide timely 
access to benefits and high quality care for our veterans.
    To achieve the transformation of VA into a 21st century 
organization, we must effectively leverage the power of 
information technology. IT is absolutely integral to everything 
we do at the Department and it is imperative that VA have a 
strong IT organization, one capable of creating and operating 
the new technologies required.
    Simply put, an effective IT organization is essential to 
achieving VA's mission. Over the last 8 months, we have focused 
on implementing five key management approaches to improve the 
results of VA's IT investments. They are the Program Management 
Accountability System (PMAS), a prioritized IT operating plan, 
transparent operational metrics, a next-generation IT security 
plan and a customer service focus in every area of IT.
    While my written testimony provides detail on each of these 
approaches, I would like to make two key points. First, that 
taken together, these management approaches will instill in the 
organization the level of discipline seen in well-run private 
sector IT organizations.
    When these approaches are fully implemented during fiscal 
year 2010, we will be able to track every IT project and ensure 
that it is on schedule, we will be able to track every IT 
dollar to the results we expect from its expenditures, we will 
be able to track operational metrics across the enterprise to 
ensure our systems and processes are functioning well, we will 
have increased visibility into and control over the security of 
our IT systems and information to better protect veterans' 
privacy, and most importantly, we will work closely with the 
administrations as our customers to ensure that we are a strong 
partner in our joint mission to serve our Nation's veterans.
    My second point is that none of this would have been 
possible without the consolidated IT organization, combined 
with the strong leadership and support of Secretary Shinseki.
    As we steadily improve our management effectiveness, our 
customer service and the results of our IT investments, I hope 
that the Members of this Committee will take great pride in the 
benefits that both taxpayers and veterans are seeing for the 
work you have done.
    The VA 2011 budget provides $3.3 billion for IT, the same 
level of funding provided in 2011. The IT budget request for 
2011, while level with 2010, is fully supportive of our goals, 
and I note that it is a 32-percent increase over our 2009 IT 
appropriation.
    The new management approaches we have implemented over the 
last 8 months will help ensure we obtain maximum value for 
veterans from taxpayer dollars invested.
    While we are realizing the benefits from these changes 
during fiscal year 2010 and 2011, we expect the full 
implementation will result in substantial performance 
improvements and cost avoidance. In effect, by implementing 
approaches to maximize the value of every dollar we spend, we 
are giving ourselves a budget increase without asking for an 
increased appropriation.
    As an example, our implementation to the Program Management 
Accountability System on 45 of our IT projects, which we 
announced last July, has generated $54 million in cost 
avoidance during fiscal year 2010.
    Of the 45 projects we placed under PMAS last July, we 
restarted 17 immediately, we replanned and eventually restarted 
15 and we terminated 12. For 2010, we will use the $54 million 
to fund other higher priority projects that create more value 
for veterans.
    Today we will announce that effective February 15th, all VA 
IT projects will be placed under PMAS. As we fully implement 
PMAS for all of our projects, I expect further savings. PMAS 
gives us much greater insight into our IT projects and ensures 
that they continue to meet their scheduled milestones. Projects 
that are not meeting milestones are stopped and either 
replanned or terminated.
    I expect that we will see continued improvement of the 
results of our systems development projects throughout 2010 and 
2011 and an increased probability that each project will stay 
on track and continue to meet its scheduled milestones.
    In closing, I would like to thank you again for your 
continued support and for the opportunity to testify before 
this Committee on the important work we are undertaking to 
improve VA's IT results. We will use these more rigorous 
management approaches as we create the new IT systems necessary 
to support the President's vision of a 21st century VA, 
committing to serving those who have selflessly served our 
Nation.
    I will now address any questions you might have. Thank you.
    [The prepared statement of Mr. Baker appears on p. 36.]
    Mr. Mitchell. Thank you very much, Mr. Baker. I have a 
couple of questions.
    Even though the IT budget was the same from last fiscal 
year to this, can you explain the decrease? If there is going 
to be a negative effect on the medical IT and the benefits IT, 
with this cut or the budget being flat, do you expect to see a 
negative effect on both the medical IT and the benefits IT?
    Mr. Baker. I actually do not expect to see that. I think of 
the budget in three main areas. There is operational support 
and sustainment or, I phrase it, keeping the lights on in the 
facilities. Clearly, we will not see any decrease in that. That 
is a mandatory spend from our standpoint.
    The second is the development of new projects. We are going 
to spend a lot of dollars on the Veterans Benefit Management 
System (VBMS), the paperless system, and several other projects 
inside of the VA, both health and benefits. That is where I 
expect to see the major savings come in. VA in the past has not 
been good at delivering IT projects on budget and on schedule.
    In that area, I expect to spend fewer dollars and get 
better results. That is the main focus of what we are doing and 
why I feel comfortable with a flat-lined budget. The third area 
is on information security. We are going to make certain that 
we spend the appropriate amount of dollars in there. We have a 
lot of work to do still in information security. We have come a 
long way. We have a long way to go. It is an area we can't 
compromise on.
    I believe for 2011 that number, when you take out some 
investments, is relatively flat. If we see that we are not 
spending enough dollars there, we will find ways to move 
dollars, either from infrastructure or development into that 
area. We cannot compromise that information security and 
privacy.
    Mr. Mitchell. The corporate IT support investment is 
decreased by over $25 million. What negative impact does this 
have on the VA?
    Mr. Baker. Let me, for a moment, turn to Mr. Mascetti, and 
just look at--we have just today, I believe, set up a fiscal 
year 2010 baseline letter that adjusts the numbers for 2010 per 
the appropriation. We make certain that we are actually in that 
baseline seeing a reduction and then from there I can address 
what I believe is probably occurring in that area.
    Mr. Mitchell. Thank you.
    Mr. Mascetti. Under the corporate IT investments, our 
appropriation is 2 years. We had a significant carryover from 
our 2009 into fiscal year 2010, such that, for example--and 
corporate IT is our FLITE initiative and we have a substantial 
amount of dollars that we have carried forward into fiscal year 
2010, so that when you look at 2011, compared to 2010, it may 
look like it is down, decreased, but we have funds going 
forward, using fiscal year 2009 funds to support the corporate 
IT systems within our appropriation.
    Mr. Baker. I would also comment that we are being very 
careful on the FLITE program. One of the things that we are 
clearly implementing--we have slowed that project down 
substantially to make certain that we can deliver on the 
initial project, which is the asset management project before 
we spend the significant dollars on the integrated financial 
system. And so those dollars, while I believe they are 
appropriated in 2010, are likely to roll into 2011 for actual 
expenditures, presuming that the FLITE project stays on the 
schedule it is on right now.
    Mr. Mitchell. One last question. First of all, are you 
satisfied with the IT budget, and if you had more money, what 
would you spend it on?
    Mr. Baker. Mr. Chairman, thank you for asking that 
question. I am, I guess I would say a number of things, but I 
am a taxpayer. I believe we have to have some fiscal discipline 
in the government and, I guess, looking in the mirror, my 
organization is a good place to start.
    I think we can give ourselves a budget increase by spending 
the dollars better. We did get a substantial increase in 2010. 
We had a substantial carryover from 2009 to 2010. I have to 
recognize that it is likely we will carryover from 2010 into 
2011.
    My goal, before I come back to this Committee and ask for 
substantial additional dollars, is to be able to tell you that 
for every dollar we spent, I know we spent it well, that the 
results are documentable and that they are well known.
    I think we have the things in place to move that forward. I 
think by the time we come in for our 2012 request, I will be 
able to make that representation very forthrightly to this 
Committee.
    Right now we have a lot of work to do in that area and I 
think that there are places where we can tighten down and, as I 
said, give ourselves an increase.
    Mr. Mitchell. Thank you.
    Dr. Roe.
    Mr. Roe. Mr. Baker, thank you for your remarks. I 
appreciate that and all the taxpayers in the United States 
should appreciate that, and I think you have one of the most 
important jobs in the VA system. When I first came here, I 
didn't realize the enormity of the IT problem, being able to 
manage all this data and information and reams of when--and the 
Chairman and I visited in Detroit to see this enormous amount 
of paperwork.
    And it also has a lot to do with the customer service part. 
When you can't--when you start digging through a veteran's 
chart this thick and you can't find the paper chart and you 
don't know where it is, I mean, I think it is absolutely 
critical going forward that you be successful and you have the 
resources to be successful.
    I think that is why the Chairman asked the question, ``Do 
you have the resources you need,'' because what we hear in 
the--I am sure what every Member up here on this Committee when 
they go home and visit the VAs, is about ``how I can't get my 
claim looked at,'' ``I don't have my education benefits, it is 
all messed up,'' ``I can't track it.'' Is it possible with this 
IT system--and I was thinking about that this morning. Fedex 
can track where your package is. You know you can order your 
coat from L.L. Bean and you know exactly where it is before it 
gets to you. Will it be possible when a veteran puts in for 
their benefits to track where their claim is with this current 
system that we are setting up, so that a veteran will know you 
don't have to call my office, my office has to call the VA, 
take up all these man hours, is it possible to use technology 
just to say, hey, it is in Nashville, we will hear something 
from it in 3 weeks and I, as a customer, know exactly where 
that is?
    Mr. Baker. Absolutely. Let me give you an example. Where we 
are going with Veterans Benefit Management, I am confident, 
will include that, but an example I can speak very 
straightforward to because I know the project plan is on the 
Chapter 33 education benefits long-term solution.
    The final deliverable of that system in fiscal year 2010 
will be a Web site to which veterans can come and see the exact 
status of their claim from the point where it is received by 
the VA from the school, to the point where the check is cut and 
sent to the veteran and be able to tell them everywhere along 
the process where they sit in that.
    So self service is a large part of good service for our 
customer service organization. So absolutely, that part has to 
be there for the Veterans Benefit Management System as well.
    Mr. Roe. Will that be on time? The Veterans Benefit package 
is supposed to be up and operable by December of this year, as 
I read in the packet. Is that correct? December 2010?
    Mr. Baker. I don't know if the initial pilot of the VBMS--
the Chapter 33, the long-term solution that I know is scheduled 
for December 2010 is on schedule----
    Mr. Roe. Okay.
    Mr. Baker [continuing]. And will make December 2010. The 
date I have in my head for VBMS is the full roll-out, which we 
are still committing to Congress, will occur throughout 2012, 
that we will move to a fully paperless system in that time 
frame. There are interim milestones along the way, but I can't 
speak to whether there is one in December of 2010 on that.
    Mr. Roe. Right. Well, in the FLITE program, just, I had a 
chance to look at that a little bit. That is now entering into 
its almost teenage years. It is not a toddler anymore. When is 
that going--how much have we spent on that?
    Mr. Baker. I will tell you that there is a difference of 
opinion as to whether or not the previous Core Financial and 
Logistics System (CoreFLS) should be viewed as a precursor to 
FLITE, but let us just say that it should because we have tried 
to implement at VA an integrated financial management system in 
the past and we failed. And I think anybody who goes into this 
project looking at FLITE has to recognize that track record.
    The discipline that I am trying to drive and the 
transparency I am trying to drive is to talk about the reality 
of where we are and what the best thing for the taxpayer is, 
given that we need a new financial system at the VA, but we 
have a problematic process and project to get there, you know, 
the combination of those.
    We have delayed further large expenditures on the 
integrated financial system part of FLITE because we have not 
yet demonstrated that we can successfully deliver the asset 
management part of FLITE. And I really want to credit the 
Deputy Secretary, Secretary Gould, on this, for making a very 
hard decision to decide we are going to take the hard path. 
Sometimes the right path for the taxpayer is the hard path, 
which is we are just going to prove we can succeed or prove 
that we are going to fail on the small project before we get to 
the big project, so we are working through that. I liken it to 
a swamp fairly frequently. You know, I am hoping that the water 
gets lower, but sometimes it seems to get a little bit higher 
as we go through it.
    Mr. Roe. Will you sort of keep, could you keep us informed 
about where in the swamp we are?
    Mr. Baker. Yes, absolutely. I can tell you there are 
alligators right now.
    Mr. Roe. Okay. Thank you for your testimony.
    And Mr. Chairman, I ask unanimous consent that the Minority 
Counsel sit following Mr. Buyer's comment. I am going to run 
over to another Committee for just about 10 minutes. I will be 
right back.
    Mr. Mitchell. Mr. Walz.
    Mr. Walz. Well, thank you, and thank you, both, for the 
work you are doing. I am a broken record around here about 
seeing this transition. I believe it is the systemic change 
that needs to happen between DoD and VA, and a large part of 
that, not all--it is cultural, it is integration on a different 
level, but a large part of it is tech and so I have just a 
couple of questions here and before this hearing, in 
preparation, I met with a group of folk from IAVA, the Iraq and 
Afghanistan Veterans of America, and what they know is, is 
given--they understand the demographics of this. The vast 
majority, 90-plus percent of our incoming warriors never lived 
in a world without the Internet. They never lived in a world 
without social networking.
    And the question that I have is several on this and I would 
go back to where Dr. Roe was at. We have been developing 
paperless claim systems, whether it was RBA 2000 Virtual VA and 
all that. By the time they come online, the technology is gone 
and they are outdated.
    And my question today is, and I will be the strongest 
advocate for the money that is needed to get this done, but 
there are some questions that I have that trouble me with the 
amount that we put into IT and the lack of progress that I see.
    Mr. Baker, you talk about 2006, meeting with those 
professionals on the IT sector. Is the VA up to industry 
standards on software development?
    Mr. Baker. No.
    Mr. Walz. Okay. Because my question was, is how can Google 
come up with Chrome and Android in months and we are 15 years 
into things and those are obviously powerful. I look today and 
I think of this group that is out there. I have my iPhone here 
and I go to this and I have an app here call VA and I can open 
it up and go down here and it says ``VA Office of Inspector 
General,'' and I can go to that. Is this yours?
    Mr. Baker. No, that's an encrypted device, so it wouldn't 
be possible to----
    Mr. Walz. It wouldn't be possible for me to look up Title 
38 and my benefits as I am seeing here and I see an official 
time, Northridge Chicago VA Medical Center, what is going on 
and things like that. I am talking about where veterans can get 
this. I go to IAVA Web site and there has been a calculator on 
there for months, months and months and months for every 
college in my district to say exactly what their benefits were 
going to be, how they applied and all of that. Does your site 
do that as easily?
    Mr. Baker. I actually believe that in the last week we 
brought up a site that has a benefits calculator on it. I just 
saw an email on that in the last 2 or 3 days.
    Mr. Walz. They did all this, plus their social networking 
for $200,000. They are having hundreds of thousands of hits 
from veterans going there, but we are going to be asked to 
budget $3.3 billion in care of our veterans improving their 
lives. It is medical records and all that, but what does a 
returning Iraq veteran who wants to go to college get from your 
site in IT up until a week ago?
    Mr. Baker. So from a detail standpoint, I will start with, 
I am not satisfied. I resonate with what you are saying. We do 
have an online application for the Chapter 33 benefits. We did 
have when we did the emergency payments, an online site to 
request the emergency payment check. And I will tell you that 
our Chief Technology Officer, Peter Levin, is really trying to 
drive exactly that point, which is why it can't be quicker and 
bring up things that people expect, with that said.
    Mr. Walz. Are we doing something to inhibit that? Is there 
some reason we are not doing that because I am going to be the 
advocate here for the multiplier effect of the private sector 
and the non-profits to maybe be able to pick up some of this 
because I have to tell you right now, I have a hard time going 
home justifying it when IAVA is actually a better site right 
now for these guys on the GI Bill. I would recommend it to them 
and that is at no cost to the government.
    Mr. Baker. Well, let me tell you that we certainly 
appreciate what IAVA is doing and they are of great assistance. 
We have some things that hold us back.
    You know, clearly we have a lot of legacy systems. You 
enumerated a few of them--you know, Vets.net, Virtual VA and 
others and, you know, those are not systems that are easy to 
integrate into that environment.
    The second thing and realistically, there is a balance and 
I am going to get as far away from causing this to sound like 
an excuse as I can, but there is almost no way. We have certain 
privacy and security requirements that, as the senior privacy 
official, I will not compromise, and I know, you know, we just 
have to go this route.
    What I thought you were asking me about, the iPhone, is a 
very, very straightforward thing. We are trying to do a lot 
more with mobile devices on the health side. The doctors really 
want to have those capabilities. Unfortunately, as you go 
through what we have to have for encryption and information 
protection, a device like the iPhone simply will not support 
what we have to have on the inside of the enterprise. And so--
--
    Mr. Walz. But it can, as a connection device, as a portal 
to benefits and things like that, that we had VA in here a 
couple of years ago and had to make the point that you do have 
the ability to reach out and advocate to get people in.
    Mr. Baker. Yes, absolutely. Browser interfaces from that 
standpoint. My point is that the moment I handed an iPhone to a 
doctor and he loaded a health record on it, I have an 
information breach. So I just have to be careful about what we 
put into our infrastructure.
    But back to your main point. We have a lot of legacy 
systems that do not respond well to the Internet. We do not 
have an Internet driven organization. It certainly--while we 
have parts of the organization that do those things well, I am 
sure you look at our VA Facebook pages, you know, that get out 
and communicate with veterans and Facebook and there is Twitter 
and there are other things that we are doing, that is at the 
forefront and we have a big tail that we are dragging to try 
and bring along those lines.
    Mr. Walz. I will come back on this as we come back around 
again. And the one thing and I would just say, and just 
something to think about, these groups are telling me that we 
are trying to reach out and a year ago we showed them this 
wonderful calculator application and they were basically 
treated as, ``Go away. We know how to do this better.'' And the 
fact is, on this case, I am not sure you do and that and that 
attitude is something I am concerned with because it is all 
about--and trust me, this is not a criticism. I know the two of 
you are sitting here because you care deeply about the best 
possible care to our veterans. That is not the question.
    I am trying to get at how do we cut through some of this 
for you and the privacy concerns are genuine, real and have to 
be there, but how do we cut through to make us more flexible, 
make this truly a 21st century VA. I am afraid you are 
operating still on a 20th century technology. That is really a 
concern to me with the bulk of our veterans being so far ahead 
of us on--and that is a trust issue.
    Mr. Baker. Yes.
    Mr. Walz. They start to lose trust in the VA, then, if they 
can't respond. So I will yield back my time, and thank you. I 
am sorry to go so long, Mr. Chairman.
    Mr. Mitchell. Thank you.
    Mr. Buyer.
    Mr. Buyer. Thank you. Mr. Baker, I want you to know that I 
put you in a class of individuals that when I see them, I 
smile.
    Mr. Baker. Thank you.
    Mr. Buyer. And I smile because I reflected on your opening 
statement. So let us go back to 2006. You know, you had had 
that experience of being the CIO at the Department of the 
Interior. Then you go out into the private sector. You are now 
at Visa. Your country is struggling, trying to figure out how 
we can do things a better way with greater efficiencies within 
our IT sector. We had so many projects that really had become 
legacy systems, it seems, before they were ever launched.
    And little did you ever know at that moment in 2006, as you 
were sitting here in the room helping design the system, that 
you would be implementing that very same system.
    Mr. Baker. I am.
    Mr. Buyer. There is not--neat----
    Mr. Baker. I am honored.
    Mr. Buyer [continuing]. Is a good word for that, isn't it? 
It is pretty neat.
    Mr. Baker. Yes.
    Mr. Buyer. And I want to thank you, because we reflected on 
before the hearing. But I will never forget. You know, I 
thought what I would do is pull in 50 of the greatest 
companies, some of the best companies in America, with great 
minds like yours and others.
    And I remember having that chalkboard right behind you 
where you are sitting right now. And I took that chalkboard. 
And I started, you know, writing these diagrams and had this 
idea of how best we could consolidate. And once I put the idea 
up on the chalkboard, I want all of you to shoot holes in it.
    And it was a great day, because it was the genesis of--
actually it was the crucible and the genesis of this 
consolidation. And it happened on that day. And you were part 
of it, so I want to thank you for your contribution.
    The other--I want you to look back at one of your 
predecessors too and that is Bob McFarland. To change anything, 
you have to have an agent of change. And Bob McFarland was that 
agent of change. And it was very challenging.
    You know, we reached out and the Secretary at the time took 
a great mind from Dell Computer. And he sought to bring that 
consolidation and, boy, he got beaten up. His heart was right, 
his sincerity, his intellect was correct. But it was very, very 
challenging on him. I know you know Bob. But I just want to 
take a moment and reflect upon that.
    Also this is a great example though of how we could perfect 
change. Every Member of this Committee supported that 
consolidation effort.
    Mr. Baker. Right.
    Mr. Buyer. Every Member of this Committee in a bipartisan 
fashion. And that is the power of the House when we move in 
consensus.
    And, you know, the Administration, the culture wasn't just 
as bad, so was the U.S. Senate. You know, but we were able to 
get it done. So I want to thank you for that.
    The one thing that I sense a continuation of a challenge is 
within the Health Services Administration. The feedback that I 
am getting on the quality assurance and security issues is that 
doctors still are using their personal laptops and taking 
information with them. And it has been challenging for you to 
get your arms around that; is that true?
    Mr. Baker. I have been doing some recent research on that. 
We clearly have the policies in place on this at this point. 
And we have the training.
    I think the way that I look at it is that doctors have one 
thing they want to do and one thing only and that is provide 
great care to the veterans that come in. I know for a fact that 
some things we have had to do to increase security have had an 
impact on that. And it is a balance.
    Every time I visit a VAMC I hear about how slow encrypted 
laptops are. And the answer to that is we would like to find 
better technology that would be faster. But we are going to 
encrypt our laptops. There is no choice there.
    I think my personal perspective is that I believe the 
environment of VA has changed a lot. And I think it takes a 
while to get out into--you know, across the country from the 
cooperation standpoint.
    I am not today able to state that it is impossible for 
someone to bring in their personal home computer and put 
information on it. I think it is highly unlikely, and it is 
difficult to do.
    One of the things that we do on a local basis is block 
those sort of devices from connecting. We have to be at the 
point where across the enterprise I can make an affirmative 
statement to you that we are able to do that. And I know that 
it is done 100 percent of the time.
    There may well in the past have been a lot of resistance to 
the CIO doing that. I believe Secretary Shinseki has made it 
plain that that time is in the past. He clearly makes it plain 
to any facility director who wants to come in and complain 
about the IT consolidation. That they should find a different 
Secretary of Veterans Affairs to complain.
    So maybe I am being a little naive in my customer service 
approach to this. But I don't believe that today the issue is 
pushed back from the organizations. I believe today it is 
getting out and getting it done.
    I fully admit that a year ago the main issue may have been 
pushed back from the organizations. But today we have to go out 
and execute and make it so that it is impossible for someone to 
connect. And I believe by the end of 2010 we will have done 
that.
    Mr. Buyer. Thank you.
    Mr. Space. Mr. Chairman, Mr. Baker, I would like to focus 
for a moment on some of the telehealth initiatives that you 
deal with and the VA is undertaking. My district is in 
southeastern Ohio. It is Appalachian Ohio. It is very rural. 
And the population is very widely dispersed, no urban centers. 
And as a result, oftentimes our veterans lack access to health 
care.
    And we see the promise afforded by telemedicine is great as 
a way to bridge that divide that exists right now between the 
access of urban and suburban areas have to health care versus 
that which those in rural America have. Certainly veterans are 
no exception to that.
    We see the access to broadband as also being important for 
economic development, education. There is a whole litany of 
things. Certainly in the realm of veterans, we see it as an 
important tool to provide awareness for benefits and access to 
the system overall.
    The problem is that in areas that need it the most, those 
areas that would benefit the most from access to broadband, are 
the areas that don't have it. It is a marvelous tool to help 
overcome some of the problems we have. But just obtaining that 
access in the first place is a real challenge, because the 
Internet providers don't find it profitable to reach out in 
underserved or unserved areas because of the terrain, or the 
dispersion of the population, or the economic demographics.
    And my question for you is I understand the benefits of 
telehealth and certainly as it relates to veterans and areas 
where we have shortages of psychologists and psychiatrists. 
Certainly in dealing with some of the signature wounds of these 
recent conflicts and wars, it has enormous potential.
    But my question is have you or has the Veterans 
Administration been working with National Telecommunications 
and Information Administration (NTIA), or the U.S. Department 
of Agriculture, or any other Federal agencies that are charged 
with attempting to broaden access to the Internet, high-speed 
Internet in particular, in an effort to further or advance 
service to veterans?
    And do you have a particular strategy or any ideas as to 
how we can open up access to broadband among the veteran 
community in rural America that don't have access right now, 
which, of course, could again lead to better health care and 
more economic development opportunities, et cetera?
    So what are your thoughts regarding the access to broadband 
issue vis-a-vis the challenges facing rural veterans?
    Mr. Baker. Thank you, Congressman. I would like to do two 
things. One is I believe we are working with NTIA and the 
Federal Communications Commission (FCC) and others. But I think 
what we should come back to you with is specifically what are 
we doing in those areas.
    And I say that because I would like to know, you know, 
specifically in those. You know, I know work is ongoing. But I 
think the point is well taken.
    I have had several interactions with our rural health and 
telehealth folks. One of the things that I bring to this is 
that what I did at Visa. Creating telebanking and Internet 
banking at a time when that really didn't exist. And the 
thought was how do we get lots of folks to get access to their 
bank instead of having to go there, an easier problem than on 
the health side.
    We are moving telehealth ahead. In the past, the telehealth 
work we were doing was all focused around local telephone 
lines. We are moving that ahead now into wireless. I think 
there are things we can do with satellite connections for some 
of the folks that are substantially out of range. And move 
ahead a lot of work with, in effect, the slow speed devices. 
There are a lot of things that can be transmitted back to the 
VA that don't require a high bandwidth.
    At the same time, we also have quite a number of pilots 
ongoing to look at what will work well. One of my favorites 
uses the concept of very high bandwidth from a VA medical 
center into a relatively remote town, 4 or 5 hours drive away 
from the medical center, with very good video, high definition 
1080p sort of things from a video. And the ability to have 
people from the local area come in and in effect have their 
appointment with their doctor in a local facility instead of 
having to make the travel.
    Now some things they are obviously going to have to travel 
for. But if we could cut out 50 percent of their travel, it 
would have a substantial, positive impact as well. There are a 
lot of pilots going on, you know, for how to use the bandwidth 
that we have available.
    And then to your point, what can we do to expand the 
bandwidth available? There are things that the VA can do on the 
VA's nickel, existing technologies, using satellite, cellular, 
et cetera. But we need to make certain that we are being the 
veteran's advocates inside of FCC and other people that have 
substantial dollars to drive broadband into much further 
reaches.
    Mr. Space. Thank you, Mr. Baker.
    And in closing, I want to reiterate the enormous potential 
that broadband brings in bridging some of the divides that 
exist between rural veterans. And access to health care can 
only be achieved ultimately through the expansion of broadband 
throughout this country, yet another compelling reason to move 
forward in that direction under the jurisdiction of Committees 
elsewhere.
    Thank you, Mr. Baker.
    Mr. Baker. Thank you.
    Mr. Mitchell. Thank you. Mr. Bilbray.
    Mr. Bilbray. Thank you, Mr. Chairman.
    You know, I appreciate my colleagues pointing out about how 
access is a big problem in rural areas. You know, a lot of us 
that have worked on the health issue realizes that it may not 
be just a rural issue.
    We may all be calling away to India on a 1-800 number to 
get our medical advice in the future if we don't address the 
comprehensive crisis of health providers, not just insurance.
    But that aside, I think that one of the issues that you 
brought up was a bureaucracy that was or a system that was not 
Internet based. You know, the mindset that somehow cyber 
realities are something they don't want to grapple with, how do 
you move that on? How does a consumer gain access if we do not 
move toward that cyber-based system? I mean, how does it--how 
does the gentleman in rural Midwest gain access and get 
knowledge of exactly what to do, how to do it, and where his 
situation is in the system if you don't use the Internet?
    Mr. Baker. One of the initiatives that we have starting in 
2010 and going into 2011 is something called the Veterans 
Relationship Management System. And the focus on that is to be 
able to give veterans consistent information from across the 
enterprise no matter how they reach out to the VA.
    So some folks may want to use the phone to ask questions. 
Some folks may want to use the Internet. Some folks may have 
iPhones and other devices that they want to use from a mobile 
standpoint.
    Mr. Bilbray. Well let me stop you right there. Let us just 
say I do make a call to my local guys. If it is not available 
on the Internet, even my local guys aren't going to be able to 
pull this up, right?
    Mr. Baker. No. Actually part of the issue right now is that 
the local folks may have a screen in front of them that will 
let them have access to the system that we have not yet been 
able to make that information available on the Internet.
    So today I believe you can get much more information by 
calling to the VA----
    Mr. Bilbray. Right.
    Mr. Baker [continuing]. Than you can get over the Internet. 
And of course two problems with that. One is it is more 
expensive for us. And the other is if you call at the wrong 
time, you may have a wait time to get in touch with somebody. 
Whereas the Internet tends to be able to handle a much more 
substantial volume.
    Mr. Bilbray. And 24 hours a day.
    Mr. Baker. And 24 hours a day no matter where you are.
    Mr. Bilbray. Yes. It just worries me that when you--when 
you talk about any operation, let alone one as large as the VA, 
that is not Internet based or is not electronically data based, 
it almost is, you know, earmarks a mentality that is not 
sustainable in today's reality.
    Both financially and culturally, the fact is is that going 
to electronic then once you go to electronic record files, 
recordkeeping and everything else, the Internet ends up being 
the vehicle for making the connection between the consumer and 
those capabilities.
    Trying to get the bureaucracy to understand that, you know, 
the institutional mindset has to be that this is the way we are 
going. This is the way we need to work out. There is a great 
benefit if the consumer doesn't have to call me personally. It 
gives me time now to talk about working on those cases that are 
really technical. And I really have to sort of use my grey 
matter rather than just regurgitating information that the 
consumer can pull up themselves.
    Mr. Baker. Correct.
    Mr. Bilbray. Now the key is the security in the system. How 
many units do we have out there that are not encrypted that 
have access to the system? Do we have any idea of how many 
official and ``unofficial'' computers or capabilities are 
plugged in the system now that does not have the security 
systems integrated into them?
    Mr. Baker. Sir, if I could take that top down and talk 
about the access devices.
    Policy at VA is that if there is a laptop it will be 
encrypted unless it is a bar code medication laptop, which is 
bolted to a cart. A bar code medication application won't work 
on an encrypted laptop.
    Desktop computers by policy today are not encrypted. The 
ones that--you know, the big box systems that sit inside the 
facility. Anything portable, a BlackBerry, must be encrypted. 
So if it is a device that is meant to be outside the facility, 
it has to be encrypted.
    Policy is clear; training is clear. Some level of 
electronic enforcement is clear at this point. We are able to 
in many of our VISNs and many of our regional offices assert 
that no one can bring a device that is not authorized and 
connected to the network.
    The thing that I am not able to do sitting in Washington 
today is call up my central network operations center and say, 
you know, assure me that nobody with an unauthorized system has 
connected to the network in the last 24 hours.
    We will be there by the end of 2010 where we are able to 
look 100 percent across the enterprise. And I am able to make a 
very positive assertion to you that we know that no one has 
connected with that.
    So I think the way I characterize it is the aperture on 
that has been closing since 2006. We are not yet at the point 
where I can tell you that it is completely closed. But I 
believe it is very difficult today to bring in a personal non-
encrypted device, an unauthorized device, and connect it to our 
network and expect to actually get connectivity.
    Mr. Bilbray. Okay. Thank you, Mr. Baker. Mr. Chairman, I 
appreciate that.
    Mr. Baker, I will say what I say to everybody in the 
Veterans Department that it is working on this issue. You are 
not just creating the future for the veteran's community. You 
are creating the reality for all of the Nation's information 
systems when it comes to this issue. You are the prototype. You 
are the petri dish. And we have to make it work right for you 
before we can talk about the general public or the rest of the 
country having this kind of system.
    Thank you very much.
    Mr. Baker. Thank you.
    Mr. Mitchell. Mr. Stearns.
    Mr. Stearns. Thank you, Mr. Chairman.
    Mr. Baker, I thought I would go into interoperability a 
little bit. But before we go, do you have the appropriate funds 
to encrypt all the security initiatives that you want? Do you 
feel that you have the funding to complete the job?
    Mr. Baker. I believe we do, yes. I am not aware of any 
shortfalls in that area.
    Mr. Stearns. Okay. And right now I understand Mr. Buyer 
talked to you about all the laptop devices are encrypted now?
    Mr. Baker. All the non-medical----
    Mr. Stearns. Non-medical.
    Mr. Baker [continuing]. Laptops.
    Mr. Stearns. Okay.
    Mr. Baker. And back to my previous comments to Mr. Bilbray, 
by policy they are encrypted. Anything that the IT organization 
issues is encrypted. We believe it is very difficult to bring 
in a personal, non-authorized laptop and connect it.
    But I am not yet at the point where I can give you a 100 
percent assertion across the enterprise that it is impossible 
to do that.
    Mr. Stearns. I understand. I guess in October there is 
going to be a ribbon cutting dealing with interoperability, the 
Kaiser Permanente system; is that true?
    Mr. Baker. The October one I am aware of is the North 
Chicago.
    Mr. Stearns. The North Chicago, right.
    Mr. Baker. Which is the DoD and the VA.
    Mr. Stearns. Right.
    Mr. Baker. I would love to talk about Kaiser Permanente and 
the National Health Information Network. But I think you would 
probably----
    Mr. Stearns. Yes.
    Mr. Baker [continuing]. Rather talk about the DoD.
    Mr. Stearns. Now, how long has that project been going on?
    Mr. Baker. Beyond my history. I don't know how long the 
North Chicago project has been going on.
    Mr. Stearns. And I understand it is at least 9 years I 
think. Does that sound right?
    Mr. Baker. That is a long time.
    Mr. Stearns. I know as long as I have been on the Veterans' 
Affairs Committee, at least in recent history, we have been 
talking about this. What, in your opinion, is the way to solve 
this? Because I don't think it is actually to the point where 
it is working yet, is it?
    Mr. Baker. No. IT development is ongoing at this point. Now 
to be clear, I believe that DoD and VA, the ribbon cutting in 
October will be the physical facility that has been completed. 
And the project plan for moving into the facility is roughly 
the middle of November at this point. But, you know, there is 
equipment to go on once the facility is turned over to us.
    Right now the IT project plan says that the IT necessary to 
join together the two systems in one facility, DoD's AHLTA and 
VA's VistA will be available for users at the end of November. 
That is what the current project plan says.
    We have been quite clear with Committee staff that that is 
an aggressive project plan. I have my concerns about whether or 
not it will be possible to meet that. It will be managed.
    Under our new management system for those projects, we will 
be able to detect issues pretty early on. And my view is that 
we will be transparent about those issues when we see them. 
Make certain that we are communicating what they are and what 
the impact might be.
    Mr. Stearns. But right now it is not actually working?
    Mr. Baker. No.
    Mr. Stearns. And why isn't it working after all this money 
and all this time; do you know?
    Mr. Baker. You know, what I can speak to is that the 
project plan for the software would not have had it working at 
this point in time. Until the facilities open, the need isn't 
there for the software.
    And so it makes sense to aim the project plan at completing 
in roughly the same time frame as the facility. It would be 
nice to be done a little bit early. But the expenditures have 
been planned out for having the software done roughly 
concurrent with the physical facility.
    Mr. Stearns. Well, considering how much money we spent on 
this, shouldn't they have been concurrent by now?
    Mr. Baker. Unfortunately, I don't have the history on what 
has actually been spent on the North Chicago interoperability.
    I know that the project plan--in none of the project plans 
I have seen has there been a plan to have it completed by this 
time. Various project plans have had it done in late summer. 
That has now been compressed into the November time frame.
    And as I said, I am--I will remain concerned about whether 
or not it will be possible to make that November time frame 
given that it is a compressed schedule. And the history of 
making those schedules has not been good.
    Mr. Stearns. Mm-hmm. Is that under your bailiwick? I mean, 
are you----
    Mr. Baker. Absolutely. The VA portion of that is part of my 
organization. Clearly there is a DoD portion. But the right way 
to view this is, you know, building a bridge to meet in the 
middle.
    Mr. Stearns. Do you think it is possible there is another 
way to do this through the Internet that would make it simpler?
    Mr. Baker. The main issue with that approach through a 
single viewer is that--is the concept of orders portability. 
And that is that if as a doctor, as a DoD doctor, I am working 
at AHLTA, which is the system that I normally would work in. 
And I want to have a lab order fulfilled. The order needs to 
flow from AHLTA into VistA, because the lab is going to use 
VistA, the work get performed, all the data entered in VistA, 
and then the information flow back into AHLTA. And that is what 
we call orders portability.
    That is something that no other medical systems in the 
country or potentially even the world do right now. It is a 
level of interoperability that does not exist anywhere else.
    Our technical folks tell us they know how to do it. We have 
had good meetings with external folks, folks that have a lot of 
experience in joining their systems together with viewers but 
have never merged them that tightly together.
    We think we understand all the issues that are going to be 
encountered in that and that the project plan is a--is one that 
can be made. But, again, we are doing something that other 
folks haven't done anywhere.
    We frankly explored whether or not we could operate on one 
medical system, instead of operating both of them. And the 
issue is that with the requirements in North Chicago, because 
it is the--it is where much of the Navy staff starts and where 
they begin their medical record, DoD absolutely believes that 
they have to have that record fully populated in AHLTA. Because 
it is a large VA hospital with a lot of VA doctors, we fully 
believe that medical and patient safety requires the use of 
VistA in the hospital.
    With those two things together, the decision so far has 
been we have to figure out how to knit them together instead of 
trying to choose one over the other for that facility.
    So that is kind of a long-winded explanation. But that is 
kind of where we are on this one.
    Mr. Stearns. Thank you.
    Mr. Mitchell. Thank you. Dr. Roe.
    Mr. Roe. Just a couple of brief questions. First I would 
like to welcome two of my constituents, Gerald Thomas and Joe 
Grandy for being here today from Tennessee.
    Also just to--Mr. Baker, to let you know that there is 
nothing new about telemedicine.
    Mr. Baker. Right.
    Mr. Roe. We had a crude method. A patient would call my 
office and say I have symptoms of a urinary tract infection. I 
would take her history. If I knew her well, I would call her in 
a prescription. I know that 95 percent of these acquired 
outside of a hospital are E. coli. Ninety-five percent of those 
are responsive to say Macrobid or some over--I mean, basically 
very simple. So that is a $4 treatment. I didn't get paid 
anything. But it was a service to my patients.
    You can save an enormous amount of money, I am convinced, 
if you expand just that very crude phone message. We talk to 
people on the phone about a cold or whatever we talk to them 
about to be able to get the care they need.
    So I would encourage you to make sure that as much as we 
can to make that accessible to our veterans. It is easy to do. 
And once you get comfortable with it.
    And a lot of it has to do with knowing your patient. I knew 
my patients very well. So when they called up, I knew them 
personally. Maybe they were neighbors or whatever. It made it 
easier.
    But you get to know your patients as a VA physician, too, 
and especially with the CBOC format that is being out there. 
Those doctors in the communities, we have four of them in my 
District, and they know their patients just like I did mine in 
private practice. So I would encourage you to do that.
    Mr. Baker. Okay.
    Mr. Roe. Second, just to comment, we had that breach that 
cost us $26 million. And I certainly appreciate all the effort 
you have made. Do you feel comfortable that something like that 
wouldn't happen again, because that was embarrassing----
    Mr. Baker. Right.
    Mr. Roe [continuing]. As a veteran myself and then as a 
Congressman to have that happen.
    Mr. Baker. So do I feel comfortable that----
    Mr. Roe. It won't happen again.
    Mr. Baker. I think the most accurate way to convey that to 
you is that I believe we have made major strides. And as I 
said, we have closed the aperture on the possibility of that 
substantially.
    I want to be very careful about accurately representing 
where we are to Congress, which is I will not represent to you 
that it is completely closed. I think it is difficult for 
someone to do it now. They would have to violate all sorts of 
policies, all sorts of training. And at this point, it would 
pretty much have to be a malicious thing. As you know, the 
previous one was not malicious.
    Mr. Roe. Right.
    Mr. Baker. There have been a lot of lessons learned from 
those pieces. My goal by the end of 2010 is to be able to sit 
here and tell you that it is impossible for that to occur 
without us knowing it. Today I cannot tell you that. I don't 
have the electronic checks that tell me that it is not 
occurring.
    But there is a lot of work that has gone into making that 
very difficult to occur inside a VA facility. It is nowhere 
like what it was like in 2006.
    Mr. Roe. The reason I ask is I was informed in my own 
office it was almost impossible, and we were breached in our 
own office here in the Congress. So that has happened.
    One quick question, Mr. Chairman, and I will be through. 
The VA OIG has in several of their recent CAP reports have 
mentioned problems with the copy and paste functions.
    Mr. Baker. Yes.
    Mr. Roe. Which allow information to be, of course, moved 
around, copied and pasted. Some monitor but don't check their 
monitoring. Is there a reason why these organizations, these 
hospitals, are given that latitude, or is there just not enough 
resources to monitor that they are doing that, or what is it? 
Why do some do it and some don't?
    Mr. Baker. That is a great question. I am still trying to 
research that one. You know, the ability in some organizations 
to monitor and others not to, I can't really state to that one.
    What I have done very recently is look at the requirements 
that were put forward for tracking cut and paste inside a 
Computerized Patient Record System (CPRS). You know, 
Congressman Walz made some comments about difficulties inside 
the bureaucracy. I can understand why implementing the 
requirements as they were laid out would be very, very 
difficult inside a CPRS.
    I am somebody who believes in the 80 percent rule. I think 
we ought to at least be able to track just that information 
inside if it has been cut and paste, so that it is obvious that 
it is there. All the other requirements to me are secondary and 
kind of nice to have.
    And so what I am trying to drive inside the organization is 
give me a quick 80 percent solution that we can implement 
across the organization. And then let us go looking for the 100 
percent solution that may take years to implement.
    Mr. Roe. Our EMR at our own practice, you couldn't--you 
couldn't--that data stayed in there. And you added this has 
been changed.
    Mr. Baker. Right.
    Mr. Roe. But that data that was added in there, you knew. 
And you knew which device it came from, so there wasn't any 
doubt about who. I entered my code to get in my computer. I 
knew that I changed it. We knew that. So I think that system 
needs to be.
    Mr. Chairman, I won't take any more time. I yield back. And 
thank you for holding this hearing.
    Mr. Mitchell. Thank you very much.
    And, Mr. Baker, I think you realize that in order to bring 
the VA into the 21st century, you are the one that it falls on.
    Mr. Baker. The Secretary has explained that to me several 
times. Thank you.
    Mr. Mitchell. Thank you very much.
    Mr. Baker. Thank you.
    [Whereupon, at 11:37 a.m. the hearing was adjourned.]


















                            A P P E N D I X

                              ----------                              

             Prepared Statement of Hon. Harry E. Mitchell,
         Chairman, Subcommittee on Oversight and Investigations
    Thank you to everyone for attending today's Oversight and 
Investigations Subcommittee hearing entitled, U.S. Department of 
Veterans Affairs Office of Inspector General and Office of Information 
and Technology Budget Requests for FY 2011.
    Today, we will examine the recently released budget requests for 
these two vital offices within the U.S. Department of Veterans Affairs. 
The President and Secretary Shinseki have made clear goals of 
transforming the VA into a 21st century organization.
    In the President's Budget for Fiscal Year 2011, the request for the 
U.S. Department of Veterans Affairs has increased by 10 percent over 
the 2010 enacted budget to $125 billion. The surge of new veterans from 
our Nation's current wars requires a proportional surge in the capacity 
and capabilities of the VA to properly care for all of our veterans and 
their families.
    The Office of Information and Technology and the Office of the 
Inspector General are critical in accomplishing this. They facilitate 
the VA's mission through the use of modern computing infrastructure as 
well as by identifying waste, fraud and abuse within the VA through 
internal investigations. These two offices work closely with this 
Subcommittee by providing important information regarding urgent 
challenges facing the VA including full interoperable health records 
and oversight and investigations into serious allegations within the 
Department.
    The IG has been important to this Subcommittee's work, providing 
crucial information concerning VA activities such as the Philadelphia 
VAMC brachytherapy cases, and improper hiring practices within the VA, 
to name a few. Over time, we have seen an increased demand being placed 
on the IG for inspections and audits, and in order to facilitate 
Secretary Shinseki's goals of improved transparency and accountability, 
we must ensure that the IG is properly resourced and staffed to fulfill 
its critical role as watchdog of the VA.
    Our first panel will address the Office of the Inspector General's 
proposed budget. The IG's request shows an increase of $367,000 over FY 
2010 levels. And even though funding for the IG may be increasing, it 
is important for the VA to remain fiscally responsible. At the same 
time, this modest increase is still approximately $11 million less than 
what the office initially requested for their FY 2011 budget. The 
Office of Inspector General has a proven track record and for every 
dollar invested in the IG, we get a return of 38 dollars.
    Our second panel will discuss the proposed budget for the Office of 
Information and Technology. The budget request remains at the FY 2010 
levels. As more demands are placed on the VA's IT infrastructure and 
wide ranging programs call for more technological advances, such as 
paperless initiatives, the office will, of course need appropriate 
resources, especially as it works to transform the VA into a 21st 
century agency.
    We are very interested to hear the Department's plan for executing 
this budget, and ensuring that it will meet the needs of our Nation's 
heroes. Our veterans have born a tremendous burden on our behalf and we 
are therefore obliged to ensure they receive the care and opportunities 
that are commensurate with their selfless service. Thank you all again 
for attending today's hearing, and I look forward to all the testimony 
being presented today.

                                 
  Prepared Statement of Hon. David P. Roe, Ranking Republican Member,
              Subcommittee on Oversight and Investigations
    Good Morning, Mr. Chairman,
    Thank you for holding this hearing to discuss the FY 2011 budgets 
for the Office of Information and Technology and the VA Inspector 
General.
    As we all know, both these components of the VA are critical to 
operations at the VA-OI&T for their IT infrastructure responsibility 
and OIG for their oversight responsibilities. I will tell you, I am 
very interested in where the resources are going that have been 
delegated to OI&T, and am quite concerned that the budget for the VAOIG 
has been flat-lined for FY 2011, particularly given the amount of 
oversight this office has had to perform.
    The VA OI&T, under Assistant Secretary Baker, has undergone a top-
down review of all the ongoing IT projects, and at this point has put 
on hold the development on approximately 45 IT projects. I am 
interested in learning the downstream prospects for these projects, 
including the stalled FLITE project, in which we have invested a large 
amount of resources since 2000. I am also interested in future planning 
for OI&T. How are we going to advance the joint ventures, such as those 
being used up at the North Chicago/Great Lakes Naval venture that 
Chairman Mitchell and I visited earlier this year?
    I am concerned about funding for VA to stop the practice of cutting 
and pasting and altering the VA's electronic medical record. I find it 
disturbing that VA has not learned its $26 million lesson from its data 
security breach in May 2006. I understand VA still allows personal 
unencrypted laptops and other devices on VA's secure network.
    I am also concerned that the VA OIG budget has remained at the FY 
2010 level. With the increased responsibility of conducting VBA 
Regional Office reviews similar to the CAP reports issued for VA 
Medical facilities, I am uncertain that the resources allocated to VA 
OIG will be enough for them to adequately complete their mission in FY 
2011. These reports are an invaluable resource to review and correct 
inadequacies within the VA system. Without the oversight of the VA OIG, 
we would not be able to conduct proper oversight here at this 
Committee.
    Mr. Chairman, I look forward to hearing the testimony today, and 
work with you on making certain that both the VA OI&T and the VA OIG 
both have adequate resources with which to perform their duties.
    Thank you.

                                 
    Prepared Statement of Hon. Richard J. Griffin, Deputy Inspector 
                                General,
    Office of Inspector General, U.S. Department of Veterans Affairs
    Mr. Chairman and Members of the Subcommittee, thank you for the 
opportunity to discuss the budget request for fiscal year (FY) 2011 for 
the Office of Inspector General (OIG). I am accompanied today by Mr. 
James J. O'Neill, Assistant Inspector General for Investigations; Ms. 
Belinda Finn, Assistant Inspector General for Audits and Evaluations; 
Dr. John D. Daigh, Jr., Assistant Inspector General for Healthcare 
Inspections; and Ms. Maureen T. Regan, Counselor to the Inspector 
General.
ACCOMPLISHMENTS
    As an overview, in FY 2009, the OIG identified $2.931 billion in 
actual and potential monetary benefits; issued 235 reports on VA 
programs and operations; and achieved 539 arrests, 303 indictments, 186 
criminal complaints, 367 convictions, 809 administrative sanctions, and 
46 pretrial diversions. The OIG return on investment is $38 in monetary 
benefits for every $1 invested in OIG investigations, audits, and 
contract reviews.
    Some of our noteworthy accomplishments in the past year include:

      A national review on improper disinfection of endoscopes 
that resulted in VA making major changes in training, purchasing, and 
organizational structure and will make endoscopic procedures safer at 
VA facilities.
      An audit that found 37 percent of fee basis payments were 
improper and recommended changes to improve the accuracy of payments 
that could reduce over $1 billion in improper payments.
      An audit that identified how the Veterans Benefits 
Administration (VBA) could substantially reduce the time veterans wait 
for a decision on their claims; when implemented, VBA could reduce 187 
days from their processing time for claims pending over 365 days.
      An investigation that resulted in the first successful 
felony conviction of a company's chief executive officer for off-label 
marketing of pharmaceuticals, and another off label marketing 
investigation that resulted in a major pharmaceutical manufacturer 
agreeing to pay $2.3 billion, the largest health care fraud settlement 
in Department of Justice history.

    In FY 2009, we also testified before Congress on the following 
topics:

      Shredding and mishandling of documents at VA Regional 
Offices (VAROs).
      Challenges facing VA in FY 2010.
      VA's Mental Health Strategic Plan.
      VA's endoscopy procedures.
      VHA's quality management program.
      VA's interagency agreement with the Space and Naval 
Warfare Systems Center.
      VA's pharmacy benefits program.
      Senior Executive Service bonuses and other administrative 
issues.

    Also in FY 2009, our Office of Audits and Evaluations and our 
Office of Investigations received the highest rating possible in their 
respective external peer reviews. The Comptroller General's Government 
Auditing Standards and the Council of the Inspectors General on 
Integrity and Efficiency require that audit and investigative offices 
be reviewed every 3 years by other OIGs.
    For FY 2011, the President's budget has requested $109,367,000 for 
the OIG which amounts to less than current services. We intend to 
reprioritize projects planned in 2010 and 2011 and to achieve 
contracting efficiencies to enable us to complete our mandatory work 
and to the extent possible, perform reactive work requested by Congress 
and the VA Secretary.
OFFICE OF INVESTIGATIONS
    The Office of Investigations (OI) conducts criminal and 
administrative investigations of wrongdoing in VA programs and 
operations, and seeks prosecution, administrative action, and monetary 
recoveries as it strives to establish an environment in VA that is safe 
and free from criminal activity and management abuse. Subjects of our 
investigations include VA employees and contractors, and anyone else 
committing crimes against VA.
    In 2011, OI expects to conduct about 1,200 criminal investigations 
with a result of approximately 2,000 arrests, indictments, convictions, 
administrative sanctions, and pre-trial diversions. OI also expects to 
achieve over $300 million in fines, penalties, restitutions, civil 
judgments, and cost savings. Priority will be on investigating 
allegations of criminal activity associated with health care, benefits, 
information management, financial management, and procurement.
    Health Care--Most investigations of fraud, waste, and abuse in VA 
health care programs come to the attention of OI from various sources, 
including veterans and employees. In 2011, OI expects to conduct 350 
criminal investigations in the following health care related areas:

      Patient abuse, which includes homicides, assaults, and 
sexual assaults.
      Thefts, robberies, and threats at VA medical facilities.
      Drug diversion, which includes employees stealing from 
patients, employees stealing from the pharmacy, illegal use of 
prescription pads, family members not reporting the death of a veteran 
in order to continue to receive controlled prescription drugs, and 
theft of drugs mailed to veterans from the Consolidated Mail-Out 
Pharmacies.
      Identity theft, which includes individuals stealing 
veterans' identities to get VA health care.
      Drug distribution, which includes veteran patients 
illegally selling their prescription drugs, and drug dealers on VA 
property selling ``street drugs.''

    Benefits Fraud--OI will continue to aggressively pursue leads that 
provide indications of fraudulent and criminal activity across VA 
benefit programs. In addition to responding to allegations, OI will 
also utilize several proactive data matching initiatives to reduce 
erroneous payments and deter benefits fraud. OI expects to complete 
approximately 600 benefits fraud cases in 2011. Examples of benefits 
fraud investigations include:

      Theft of monetary benefits by fiduciaries or survivors of 
deceased veterans.
      Those who fabricate or grossly exaggerate either military 
service or disabilities to obtain disability compensation benefits they 
would otherwise not be entitled to receive.
      Individuals who steal the identity of a veteran to 
illegally obtain compensation and pension, education, and housing 
benefits.

    OI will also conduct several proactive computer matching 
initiatives to detect and deter criminal activity. For example, the 
Fugitive Felon Program involves computerized matches between fugitive 
felon files of Federal and State law enforcement organizations and VA 
benefit files. When a veteran fugitive felon is identified, VA can 
suspend benefits and initiate recovery of any benefit payments made 
while the veteran was in fugitive status. Since its inception in 2002, 
this program has resulted in 2,006 arrests, of which 138 were VA 
employees. Reported monetary benefits exceed $1.4 billion.
    The Death Match Program compares the Social Security 
Administration's ``Death File'' with a database of VA beneficiaries, 
which enables us to identify instances of benefits continuing to be 
paid out to deceased veterans. OI work in this area focuses on 
investigating and prosecuting those individuals taking advantage of a 
beneficiary's death for personal gain. This program has resulted in 
more than 382 arrests, recovery of more than $40 million, and a 5-year 
cost avoidance of more than $113 million.
    Other Criminal Activity--An additional 250 criminal investigative 
cases related to financial, information technology (IT), and 
procurement fraud, as well as employee theft and threats against VA 
employees and facilities, are also expected to be conducted in 2011. In 
the area of procurement, OI expects to devote additional resources to 
uncovering fraud in the Service-Disabled Veteran-Owned Small Business 
program and contracts funded by the American Recovery and Reinvestment 
Act of 2009 (ARRA). OI will also investigate allegations of criminal 
activities associated with acquisition and maintenance of IT supplies 
and services, and unlawful access and use of information systems and IT 
resources.
    In addition to criminal investigations, OI also conducts 
administrative investigations of allegations of serious misconduct by 
senior VA managers. These allegations include such issues as use of 
public office for private gain, inappropriate use of resources, 
nepotism, and hiring irregularities. During 2011, OI expects to conduct 
25 administrative investigations and issue reports with recommendations 
for appropriate administrative action when allegations are 
substantiated.
OFFICE OF AUDITS AND EVALUATIONS
    The Office of Audits and Evaluations conducts independent financial 
and performance audits and inspections that address the economy, 
efficiency, and effectiveness of VA operations. Our efforts focus on 
providing independent assessments that focus on accountability for 
achieving results and provide oversight over all VA programs, 
operations, and business processes.
    In 2009, we established a Benefits Inspection Program to help 
ensure veterans receive timely and accurate benefits and services. Our 
independent inspections provide recurring oversight of VA Regional 
Offices (VAROs) by focusing on disability compensation claims 
processing and performance of Veterans Service Centers operations. We 
performed six inspections focusing on VSC operations in the areas of 
claims processing, data integrity, management controls--including date 
stamping and review of the implementation of a new policy regarding 
shredding and information security. In addition we focused on the 
timeliness and accuracy of VBA's Public Contact teams, who provide 
information in response to veterans, beneficiaries, and congressional 
requests. In 2010, we could perform 18 benefits inspections by 
establishing a second Benefits Inspections Division. Once this second 
division is staffed, we could expand the number of inspections so that 
we can establish a 3-year inspection cycle. Further, we plan to perform 
followup inspections at VAROs experiencing persistent performance 
issues and management challenges.
    We also expect to continue our oversight of VA's ARRA funds through 
2010 and 2011, which is consistent with VA's spending plans for the 
$1.4 billion that they received under ARRA.
    Mandatory Work--Annually, we perform mandatory audits and reviews 
in financial management areas such as VA's consolidated financial 
statements, VA's statement on the use of drug control monies, and the 
Federal Information Security Management Act (FISMA). These reviews of 
information security management policies and practices have identified 
systemic issues and resulted in numerous recommendations and 
opportunities to strengthen enterprise security deficiencies. While VA 
has made progress in its efforts to safeguard sensitive information, 
significant oversight is still needed in this area because VA has yet 
to improve and remediate about 8,000 enterprise-wide security 
deficiencies. Further, independent assessments are needed to ensure VA 
actions to eliminate these weaknesses are effective.
    In addition to our mandatory work in 2011, we plan to issue 20 
national audits related to the following strategic areas. These audits 
are expected to identify opportunities for better use of funds and to 
identify monetary benefits exceeding $340 million.
    Health Care Delivery--Budgeting, planning, and resource allocation 
in VA are extremely complex, and remain critical components to serving 
veterans' health care 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.
    Benefits Processing--In FY 2011, VBA is expected to provide 
compensation and pension services to over 3.8 million veterans and 
beneficiaries including returning Operation Iraqi Freedom/Operation 
Enduring Freedom (OIF/OEF) veterans, veterans with chronic progressive 
conditions, and the aging veteran population. Our inspection work will 
identify trends and risk areas that need further review on a systemwide 
level. We also expect to follow up on the deployment of an automated 
system for processing applications under the Post-9/11 GI Bill; we 
anticipate focusing on the accuracy and timeliness of payments in that 
program.
    Financial Management--VA faces major challenges in financial 
management as it lacks an integrated financial management system and 
has material weaknesses that impact VA's ability to safeguard and 
account for financial operations. Given the significant financial 
investment VA is making in the development and implementation of a new 
financial logistics integrated technology enterprise system (FLITE) we 
will continue our oversight of system development and related financial 
activities.
    Procurement Activities--VA cannot effectively manage its 
contracting activities because it has not leveraged or fully embraced 
the VA Electronic Contract Management System that can provide national 
visibility over procurement actions and identify contract awards, 
individual purchase orders, credit card purchases, and the amount of 
money spent on goods and services. We are also concerned about VA's 
vendor identification and contract award processes for Service-Disabled 
Veteran-Owned Small Businesses.
    Information Management--IT management is a high risk area that VA 
has clearly struggled to manage effectively. In addition to our FISMA 
work, we are concerned about VA's IT governance and capital planning 
along with the overall management of its IT investment portfolio. VA 
will be challenged to effectively manage high cost IT projects such as 
the paperless claims processing initiative, Post-9/11 GI Bill, and 
HealtheVet, which are slated to receive $145.3 million, $100 million, 
and $346.2 million, respectively, in VA's FY 2011 proposed budget.
    Unfortunately, there are several high priority areas that would 
benefit from OIG oversight but that we will not be able to address. 
These include evaluating the effectiveness of VBA's Appeals Management 
Center and VBA's workload management systems, the process for enrolling 
veterans for health benefits, timeliness and quality of prosthetics 
provided to veterans, and the activations and management of major 
construction projects.
OFFICE OF HEALTHCARE INSPECTIONS
    The Office of Healthcare Inspections (OHI) reviews the quality of 
health care provided to veterans in VA hospitals, clinics, and nursing 
homes, in addition to the care provided to veterans through various 
health care contracts. OHI workload is divided into two main 
categories--proactive and reactive work. Proactive work includes our 
Combined Assessment Program (CAP) reviews of medical centers that are 
conducted on a 3-year cycle. For those facilities that we believe are 
at risk, we may review them in consecutive years. These reviews focus 
on ensuring that medical centers have procedures in place and comply 
with VA policy to ensure that veterans receive quality health care. We 
plan to publish 55 CAP reports in 2011.
    VA has over 800 community based outpatient clinics (CBOCs) that 
provide medical care to veterans who reside some distance from a VAMC, 
especially those in rural areas. In addition to reviewing medical 
centers, OHI reviews CBOCs to ensure that processes are in place to 
ensure veterans receive high quality health care. The CBOC inspection 
process consists of four components: (1) CBOC site-specific information 
gathering and review, (2) medical record reviews for determining 
compliance with Veterans Health Administration (VHA) performance 
measures, (3) onsite inspections, and (4) CBOC contract review. We plan 
to complete 40 reviews in 2010 and to increase that to 80 in 2011; 
these plans may be scaled back, however, if other higher priority work 
arises.
    OHI also conducts health care inspections on a national scope 
addressing significant issues. Two examples of national reports are 
Healthcare Inspection--Readjustment Counseling Service Vet Center 
Report, and Review of Informed Consent in the Department of Veterans 
Affairs' Human Subjects Research. In 2011, we plan to publish 10 
national reports.
    Reactive work comes from allegations that we receive through a 
variety of sources, including Congress, the VA Secretary, and the OIG 
Hotline. Because of the volume of work, we are unable to accept all 
cases of credible allegations for independent review, and refer many to 
VA for review, fact-finding, and corrective action. OHI expects to 
publish 45 reports in 2011.
    During 2011, we will focus on the following issues:
    Quality of Care Controls--Several reports published in early FY 
2010 indicate that issues remain in VHA's quality management program. 
We will continue to monitor and review VHA's controls in 2010 and 2011.
    The OIG has been concerned about the quality of medical care from 
non-VA sources, when medical care is purchased via contract or fee 
basis programs. Current work on brachytherapy treatments for prostate 
cancer indicates that contracts to procure veteran health care may not 
contain requirements to share outcome data. Several CBOC reports from 
2010 demonstrate that where CBOC contracts are in place, effective 
oversight of the contracts may be lacking. OHI will undertake a body of 
work to address these deficiencies in 2011.
    OIF/OEF Veteran Health Care Issues--Veterans who have returned from 
recent conflicts experience two medical traumas with great frequency: 
Traumatic Brain Injury and Post Traumatic Stress Disorder. OHI has 
reported on the mental health issues of this population through 
individual care reports and through programmatic reviews. In March 
2009, OHI reported on Access to Mental Healthcare in Montana by 
veterans, and found access, using a drive time standard, was good as VA 
had partnered with community mental health clinics to supplement VA 
facilities; however there was an unmet need for substance abuse 
treatment. In 2010 and 2011, the OIG will report on issues related to 
the diagnosis, treatment, and disability compensation for female 
veterans of OIF/OEF and related projects.
    Medical Care for Elderly Veterans--OHI will publish a report on 
elderly veterans who are at special risk of harm because of their age, 
medical conditions, and living arrangements in February 2010. In 2011, 
OIG plans to review aspects of VA's nursing home program.
    Homeless and Other Non-Health Care Programs--Additional high 
priority areas that would benefit from OIG oversight include programs 
designed to assist veterans who are at great risk because of their 
homelessness or other lifestyle characteristics. With $4.2 billion in 
VA's FY 2011 budget for homeless veteran programs, we would like to 
build on past reports, such as our June 2009 review of VA residential 
mental health care facilities, including domiciliary facilities. 
However, we have not been able to review programs such as health care 
and supportive care for homeless veterans and VHA elder care as 
consistently or as thoroughly as they warrant.
OFFICE OF CONTRACT REVIEW
    The Office of Contract Review (OCR) conducts pre-award, post-award, 
drug pricing, and special reviews of vendor proposals and contracts 
through a reimbursable agreement with VA's Office of Acquisition, 
Logistics, and Construction. The majority of reviews are related to 
Federal Supply Schedule (FSS) contracts awarded by the VA National 
Acquisition Center for pharmaceutical, medical and surgical supplies, 
and equipment; and contracts for health care resources awarded by VA 
medical facilities. Since 2005, OCR has issued 463 reports with a total 
monetary impact of $1.9 billion. In 2011, OCR plans on issuing 75 
reports with monetary benefits of approximately $300 million.
    Pre-award reviews are required for both FSS and health care 
resources proposals where the estimated contract costs exceed 
predetermined dollar thresholds. The pre-award reviews provide valuable 
information to assist VA contracting officers in negotiating fair and 
reasonable contract prices.
    OCR continues to identify information submitted by vendors that is 
not accurate, complete, and current that would result in VA paying 
inflated contract prices. Also, OCR continues to identify the lack of 
communication between procurement and program officials and inadequate 
planning as a management challenge for health care resources contracts. 
The lack of communication and poor planning results in higher and 
unnecessary contract costs because requirements have not been properly 
identified, the statement of work is inadequate, and the estimated 
quantities are overstated. We also routinely find that VA's health care 
resources contracts lack adequate oversight provisions to ensure VA has 
received the services that it has paid for. During 2011, OCR plans on 
conducting 50 pre-award reviews.
    Post-award reviews are conducted to determine if a contractor 
submitted accurate, complete, and current pricing data to the 
contracting officer during negotiations as required by the terms of the 
contract and also to ensure the vendor adhered to other terms and 
conditions of the contract such as the Price Reductions Clause. The 
post-award reviews also include OCR's efforts to ensure pharmaceutical 
vendors are in compliance with statutory drug pricing provisions 
contained in Section 603 of P.L. 102-585, The Veterans Health Care Act 
of 1992, which sets statutory price limits of covered drugs for VA, the 
Department of Defense, the United States Public Health Service, and the 
Coast Guard. Since October 2005, post-award reviews have resulted in 
$116 million in actual recoveries to VA. These moneys are returned to 
the VA Supply Fund. OCR's post-award program is a significant factor in 
the success of VA's voluntary disclosure program where a vendor can 
disclose noncompliance with contract terms and conditions that resulted 
in the government overpaying for goods or services. These voluntary 
disclosures are typically resolved administratively but are referred to 
the Department of Justice if warranted. In 2011, we plan to conduct 25 
post-award reviews.
    OCR is routinely asked to conduct special reviews of contracts 
awarded by VA in areas other than FSS or health care resources. These 
reviews are requested by Congress, the VA Secretary, or as a result of 
OIG Hotline contacts. Many of these projects involve large dollar 
procurements. OCR finds many of the same issues that have been already 
identified such as the lack of effective communication, inadequate 
acquisition planning, poorly written statements of work, inadequate 
competition, lack of documentation of fair and reasonable pricing, poor 
contract administration, and inadequate technical reviews. These 
deficiencies have led to services being ordered that the customer did 
not want, the goals of procurements not being satisfied, VA paying 
inflated prices, and even duplicate orders being placed for the same 
deliverables. While VA has taken steps in the right direction such as 
establishing the Contract Review Board and the VA Electronic Contract 
Management System, these tools have yet to prove their effectiveness.
    Our pre-award workload is ultimately dependent on the proposals 
that exceed the dollar threshold for review and determines the 
resources available to conduct post-award reviews. The priority of 
reviews does change depending on special review requests from VA 
management which ultimately impacts the total number of reports to be 
issued. Most special reviews are extensive reviews of individual 
contracts with short deadlines requested by Congress or the VA 
Secretary. OCR constantly assesses and prioritizes the reviews to meet 
these demands.
OUTREACH ACTIVITIES
    The OIG also proactively assists in the training of VA leaders and 
employees through the following efforts:

      To increase awareness of the OIG's mission and work, we 
make presentations to participants at VA's premier leadership 
development program, Leadership VA; to new managers at VBA's Management 
Academy; and on a biweekly basis to all newly hired employees at VA 
Central Office.
      To help deter crime, criminal investigators provide fraud 
awareness briefings to about 10,000 employees annually at VA facilities 
nationwide. These briefings have resulted in additional referrals of 
alleged criminal activity and have greatly improved our partnership 
with the VA Police in helping provide a safe and secure environment for 
veteran patients and employees.
      To strengthen VA procurement, OCR provides training to 
VA's contracting officers at the Acquisition Training Academy in 
Frederick, Maryland.
      To improve the management of VA medical centers, we 
present information on OIG review processes and past findings at VHA's 
program for new medical center leaders.
CONCLUSION
    The OIG provides Congress, the VA Secretary, and taxpayers with 
independent oversight of VA's programs and operations. We believe the 
OIG is a sound fiscal investment. We will continue to be flexible so as 
to focus our resources on the most urgent issues facing VA. However, 
OIG oversight of issues such as the review of endoscopy equipment is 
reactive work that is labor intensive and requires us to postpone or 
cancel other ongoing or planned work.
    Thank you for the support you have shown the OIG and the 
opportunity to testify today. We would be pleased to answer your 
questions.

                                 
   Prepared Statement of Hon. Roger W. Baker, Assistant Secretary for
   Information and Technology, Office of Information and Technology,
                  U.S. Department of Veterans Affairs
    Chairman, distinguished Members of the Subcommittee, thank you for 
this opportunity to present the Department of Veterans Affairs (VA) 
Fiscal Year 2011 budget for the Office of Information and Technology 
(OI&T). Our budget provides the resources necessary to continue our 
aggressive pursuit of the President's two overarching goals for the 
Department--to transform VA into a 21st century organization and to 
ensure that we provide timely access to benefits and high quality care 
to our veterans.
    To achieve the transformation of VA into a 21st century 
organization capable of meeting veterans' needs today and in the years 
to come, we must leverage the power of information technology (IT). 
OI&T is absolutely integral to everything we do at the Department, and 
it is vital we continue the development of IT systems that will meet 
new service delivery demands and modernize or replace increasingly 
fragile systems that are no longer adequate in today's health care and 
benefits delivery environment. Simply put, IT is indispensable to 
achieving VA's mission.
    The Department's IT operations and maintenance program supports 
334,000 users, including VA employees, contractors, volunteers, and 
researchers situated in 1,400 health care facilities, 57 regional 
offices, and 158 national cemeteries around the country. Our IT program 
protects and maintains vital health and benefits records for 8.5 
million veterans with the level of privacy and security mandated by 
both statutes and directives.
    VA's 2011 budget provides $3.3 billion for IT, the same level of 
funding provided in 2010. The resources we are requesting will fund the 
development and implementation of an automated solution for processing 
education claims ($44.1 million), the Financial and Logistics 
Integrated Technology Enterprise project to replace our outdated, 
noncompliant core accounting system ($120.2 million), development and 
deployment of the paperless claims processing system ($145.3 million), 
and continued development of Telehealth and Home Care Model ($48.6 
million). In addition, the 2011 budget request includes $52 million for 
the advancement of the Virtual Lifetime Electronic Record, a 
Presidential priority that involves our close collaboration with DoD.
    The IT budget request for FY 2011, while level from FY 2010, is 
fully supportive of our goals as well as a 32-percent increase over our 
FY 2009 IT appropriation. Over the past 8 months we have implemented 
new management approaches within IT that will help ensure we obtain 
maximum value for veterans from the taxpayer dollars invested. While we 
are realizing benefits from these changes during FY 2010, by FY 2011 we 
expect that full implementation will result in substantial performance 
improvements and cost avoidance.
    Improved IT Management Systems: Over the last 8 months, we have 
focused on implementing five key management approaches to improve the 
results of VA's IT investments. They are:

      The Program Management Accountability System (PMAS).
      A prioritized IT operating plan.
      Transparent operational metrics.
      The next generation IT security plan.
      And, most importantly, a customer service focus in every 
area of IT.

    I will discuss each of these management approaches below:

    PMAS: A rigorous internal review of VA information technology 
development projects was conducted in the spring of 2009. The review 
documented a longstanding failure to deliver major software products on 
schedule and at cost. Of the more than 280 projects reviewed, many were 
more than 13 months behind schedule and over half were more than 50 
percent over cost estimates. Some of the causes included insufficient 
program documentation, insufficient change control processes, and 
program manager burn out.
    In response, VA instituted a rigorous management approach to 
address performance shortcomings, the Program Management Accountability 
System. Under PMAS, projects must deliver smaller, more frequent 
releases of new functionality to customers. PMAS mandates that specific 
program resources and documentation be in place before development 
begins and mandates that approved processes be used during the system 
development life cycle (SDLC). Most importantly, PMAS mandates strict 
adherence to achieving project milestones, and implements strong 
corrective measures if a project misses multiple milestones. This 
ensures that customers, project members, and vendors working on a 
project are aligned, accountable, and have access to the resources 
necessary to succeed before work begins.
    In July 2009, VA temporarily stopped 45 of our most problematic IT 
projects. Since then, 17 of those projects were given the go-ahead to 
continue developing in order to meet near-term milestones, 15 projects 
were completely re-planned and restarted, 12 of the projects were 
stopped, and one project is pending. The cost avoidance from re-
planning or stopping projects is $54 million for FY 2010. We are using 
those funds and personnel resources on other projects, to help increase 
their probability of success.
    PMAS provides near-term visibility into troubled programs, allowing 
us to provide help earlier and avoid long-term project failures. 
Frequent software deliveries allow customers to provide earlier 
feedback on system functionality, eliminates ``big bang'' program/
project failures, and increases the probability of successfully 
developing and deploying IT systems.
    Prioritization: In implementing PMAS, we quickly identified that 
one issue causing projects to fail at VA was insufficient resources. 
Quite simply, VA was trying to do too much. Many projects failed to 
meet expectations because they were under-resourced and destined to 
fail from the start. To address this issue, VA recently ranked all of 
our IT spend items--approximately 1,000 line items including projects 
and recurring costs such as leases and licenses--from most to least 
important from the customer's point of view. VA determined how many of 
those items can be successfully completed with our current resources 
and, most importantly, determined which items could not be completed. 
We obtained buy-in for these decisions from our internal customers 
throughout the process. VA will make hard decisions during FY 2010 
based on this prioritization. For the customer, this means fully 
resourcing the most important projects even though it means not 
resourcing important, but lower priority items.
    Operational Metrics: Well-managed IT organizations are heavily 
oriented toward tracking and reporting their operational metrics. These 
are the real ``score-card'' items in IT: system availability, system 
response, customer service volumes and customer response. By focusing 
on operational metrics, an IT organization quickly determines how well 
it is serving its customers, where it is weak, and what it needs to do 
to provide better services. Over the last 8 months we have made 
progress on identifying and tracking the metrics that matter most in 
VA. Today, VA tracks the IT operational metrics that cover about 25 
percent of our existing infrastructure, and we continue to add new 
metrics to our tracking list.
    This includes keeping VistA, the information system that houses our 
Electronic Health Record system, available well over 99.9 percent of 
the time nationally. We also monitor performance of our help desk 
environments where, on average, over 60 percent of issues are resolved 
on the first phone call and the average speed of answer for our help 
desk attendants is less than 30 seconds.
    Tracking operational metrics has also helped us identify long-term 
strategies to improve the system availability of VistA and other key VA 
systems, and to obtain concurrence in those strategies. We have 
identified that VistA systems perform more consistently and reliably in 
a data center environment, and I have directed that all VistA systems 
migrate to this model. From a customer service perspective, we are 
adopting an enterprise help desk strategy to standardize our business 
processes based on both industry and experiential best practices. As we 
gain more insight into how well our IT systems and processes are 
operating to serve our customers, we will be able to continually 
improve our results.
    Data Security/Information Protection: In support of VA's vision and 
mission, it is important that veterans' most sensitive information 
about their personal identity and medical records is protected. In the 
FY11 budget, we requested $112.5 million for: cyber security; privacy; 
electronic freedom of information act (E-FOIA); identity and access 
management; and personal identity verification (PIV). Our goal is to 
ensure that VA safeguards veterans' information in a way that minimizes 
interference with the business processes that are used to deliver 
services to our Nation's veterans.
    A prime example is our medical device information architecture 
(MDIA) initiative, which requires medical center facility Chief 
Information Officers (CIOs) to certify that all networked medical 
devices are isolated within a virtual local area network (VLAN), where 
firewalls allow medical devices to communicate while reducing the risk 
that medical device system will be compromised. An area that we 
continuously look to improve is remediating the significant number of 
outstanding plans of action and milestones (POA&Ms) that identify 
security deficiencies at each facility. In the recently released VA 
Inspector General's (IG) draft FY09 Federal Information Security 
Management Act (FISMA) report, the IG notes that we have significantly 
reduced (by more than half) the number of outstanding POA&Ms in FY09. 
However, we still need dedicated resources to aggressively remediate 
the more than 11,000 unresolved POA&Ms to improve our overall 
information security posture.
    In addition, the quality of individual system security plans will 
be a focused effort continuing in 2011 with several initiatives aimed 
at increasing content awareness, validity of security control status, 
and specific definition of accreditation boundaries.
    We are also moving to a continuous monitoring program of evaluating 
security controls where we will transform from a self-evaluation method 
to a more technical method where we will actively scan our systems for 
vulnerabilities. VA is a large, distributed organization and we are 
improving centralized access to management systems to continuously 
monitor our gateways and security compliance.
    The VA PIV project is a Departmental initiative to provide 
compliance with Homeland Security Presidential Directive (HSPD)-12, 
Federal Information Processing Standard (FIPS) 201, the Federal Common 
Policy, and related standards that address the Federal Government's 
need for a standardized identity credential to be issued to all Federal 
employees and contractors. The VA PIV system is designed to deliver 
``security as a service'' by integrating with the VA Enterprise 
Architecture service-oriented systems model and providing a more 
integrated and standardized approach to security.
    In addition to implementing new technologies and processes to 
improve information security, we are also mindful of the ongoing need 
to enhance security training and awareness efforts to reinforce the VA 
culture of vigilance in protecting sensitive information.
    Customer Service Focus: These four management approaches have a 
common goal--to excel in improving IT service to our customers. Using a 
variety of techniques to monitor, measure, and improve our performance, 
a renewed focus will allow us to build on our successes and to identify 
and quickly address and resolve areas not working so well. We are 
establishing IT advocates for medical, benefits and corporate customers 
to streamline communications between customers and the IT organization. 
We have asked our customers to provide feedback through the performance 
appraisal process and have invited medical center and regional office 
Directors to submit input on the IT customer service they are receiving 
at their facility. A nationwide customer service survey is in the 
planning stages and will gauge areas that seem to be working and those 
requiring improvement. The results from these actions will assist in 
refining our staff's performance plans to ensure we are measuring what 
our customers feel is most important to support their mission.
    Paperless/Veterans Benefit Management System (VBMS): Our major 
investments will continue to increase above the FY 2010 level to meet 
the ongoing demands for our veterans and transforming VA. We will 
request $145.3 million for the VBMS.
    In FY 2009, OI&T and Veterans Benefits Administration (VBA) started 
the VBMS Initiative, which will serve as a cornerstone of VBA's long-
term, comprehensive plan to achieve timely processing of benefits to 
veterans. The VBMS Initiative is a business transformation initiative 
supported by technology and designed to improve VBA's service delivery. 
It is a holistic solution that integrates a business transformation 
methodology (to address process, people, and organizational structure 
factors) and a 21st century paperless claims processing system. The 
VBMS Initiative will work in conjunction with other VBA initiatives and 
efforts, such as the Veterans Relationship Management Program (VRM), a 
veteran-facing program featuring multi-channel information exchange 
between veterans and VA, including, for example, online self-service 
capabilities. The VBMS Initiative will further integrate with the 
Veterans Services Network (VETSNET), which is VBA's present suite of 
applications supporting Compensation and Pensions claims processing.
    The first major milestone of the VBMS Initiative, targeted for 
delivery in April 2010, is a Virtual Regional Office (VRO). The VRO 
will initiate the design process by creating a flexible, iterative, 
user-in-the-middle development process to solidify user needs and 
business requirements through a living specification. Following 
establishment of the VRO prototype, VBA will conduct additional pilots 
through December 2011 to further validate, refine, and harden process 
and systems requirements. Finally, production environments will be 
established for a nationwide rollout in FY 2012.
    Post-9/11 GI Bill (Chapter 33): The Post-9/11 GI Bill creates a 
robust enhancement of VA's education benefits, evoking memories of the 
World War II Era GI Bill. Because of the significant opportunities the 
Act provides to veterans and their families in recognition of their 
service, and their particular value in the current economic 
environment, we must deliver the benefits in this Act effectively and 
efficiently, and with a client-centered approach. In August 2009, the 
new Post-9/11 GI Bill program was launched. We received more than 
397,000 original and 219,000 supplemental applications since the 
inception of this program.
    The 2011 budget provides $44.1 million to complete the automated 
solution for processing Post-9/11 GI Bill claims and to begin the 
development and implementation of electronic systems to process claims 
associated with other education programs. The automated solution for 
the Post-9/11 GI Bill education program is scheduled to be implemented 
by December 2010.
    In 2011, we expect the total number of all types of education 
claims to grow by 32.3 percent over 2009, from 1.70 million to 2.25 
million. To meet this increasing workload and to complete education 
claims in a timely manner, VA has established a comprehensive strategy 
to develop an end-to-end solution that uses rules-based, industry-
standard technologies to modernize the delivery of education benefits.
    Virtual Lifetime Electronic Record (VLER): Each year, more than 
150,000 active and reserve component servicemembers leave the military. 
This transition is heavily reliant on the transfer of paper-based 
administrative and medical records from the Department of Defense (DoD) 
to the veteran, the VA, or other non-VA health care providers. A paper-
based transfer carries risks of errors or oversights and delays the 
claim process.
    In April 2009, the President charged VA Secretary Shinseki and 
Defense Secretary Gates with building a fully interoperable electronic 
records system that will provide each member of our Armed Forces a 
Virtual Lifetime Electronic Record (VLER). This virtual record will 
enhance the timely delivery of high-quality benefits and services by 
capturing key information from the day they put on the uniform, through 
their time as veterans, until the day they are laid to rest. The VLER 
is the centerpiece of our strategy to better coordinate the user-
friendly transition of servicemembers from their service component into 
VA, and to produce better, more timely outcomes for veterans in 
providing their benefits and services.
    In December 2009, VA successfully exchanged electronic health 
record (EHR) information in a pilot program between the VA medical 
center in San Diego and a local Kaiser Permanente hospital. We 
exchanged EHR information using the Nationwide Health Information 
Network (NHIN) created by the Department of Health and Human Services. 
Interoperability is key to sharing critical health information. Using 
the NHIN standards will allow organizations like VA and DoD to partner 
with private sector health care providers and other Federal agencies to 
promote better, faster, and safer care for veterans. Last month DoD 
joined this pilot and we will soon announce additional VLER health 
community sites. VA has $52 million in IT funds in 2011 to continue the 
development and implementation of this Presidential priority.
    Financial and Logistics Integrated Technology Enterprise (FLITE): 
The 2011 budget provides $120.2 million to continue developing the 
FLITE program. FLITE is a multi-year initiative to standardize business 
processes and modernize the information technology environment 
supporting financial and asset management within VA. The program has 
three primary components: a financial management component referred to 
as the Integrated Financial Accounting System (IFAS); an asset 
management component referred to as the Strategic Asset Management 
System (SAM); and a FLITE data warehouse project.
    The FLITE program is a collaborative effort between the VA's Office 
of Management (OM) and the OI&T. The SAM pilot contract was awarded to 
General Dynamics Information Technology in late April 2009 and is 
underway at the Milwaukee VA Medical Center. This program is being 
managed closely by OM and OI&T. The FLITE Program Office provides 
updates to the Deputy Secretary every 2 weeks. The SAM pilot project of 
FLITE has been managed under PMAS since last summer. While the project 
missed its first milestone under PMAS, it has subsequently been re-
planned and has made its first milestones under the new project plan.
    Home Telehealth: Our increasing reliance on non-institutional long-
term care includes an investment in 2011 of $48.6 million for 
Telehealth and the Home Care Model. Taking greater advantage of the 
latest technological advancements in health care delivery will allow us 
to more closely monitor the health status of veterans and will greatly 
improve access to care for veterans in rural and highly rural areas. 
Telehealth will place specialized health care professionals in direct 
contact with patients using modern IT tools. VA's home telehealth 
program cares for 35,000 patients and is the largest of its kind in the 
world. A recent study found that patients enrolled in home telehealth 
programs experienced a 25-percent reduction in the average number of 
days hospitalized and a 19-percent reduction in hospitalizations. 
Telehealth and telemedicine improve health care by increasing access, 
eliminating travel, reducing costs, and producing better patient 
outcomes.
                           Closing Statement
    In closing, I would like to thank you again for your continued 
support and for the opportunity to testify before this Committee on the 
important work we are undertaking to improve VA's IT project 
development. We will use these more rigorous management approaches as 
we create the new IT systems necessary to support the President's 
vision of a 21st century VA. The following pages provide the details on 
a number of our high-visibility and/or investments planned for FY 2011. 
And with the support of the FY 2011 budget, OI&T will continue to 
demonstrate its unwavering goal in achieving both President Obama's and 
Secretary Shinseki's vision of a 21st century Department committed to 
serving those who have selflessly served our Nation. I would now like 
to address any questions you might have.

                                 
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