[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]





 
 VA LOGISTICS MODERNIZATION: EXAMINING THE RTLS AND CATAMARAN PROJECTS

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

                                HEARING

                               before the

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                 of the

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

                     ONE HUNDRED FIFTEENTH CONGRESS

                             SECOND SESSION

                               __________

                          TUESDAY, MAY 8, 2018

                               __________

                           Serial No. 115-58

                               __________

       Printed for the use of the Committee on Veterans' Affairs
       
       
       
       
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             U.S. GOVERNMENT PUBLISHING OFFICE 
 35-486              WASHINGTON : 2019        
 
 
 
        
        
                     COMMITTEE ON VETERANS' AFFAIRS

                   DAVID P. ROE, Tennessee, Chairman

GUS M. BILIRAKIS, Florida, Vice-     TIM WALZ, Minnesota, Ranking 
    Chairman                             Member
MIKE COFFMAN, Colorado               MARK TAKANO, California
BRAD R. WENSTRUP, Ohio               JULIA BROWNLEY, California
AMATA COLEMAN RADEWAGEN, American    ANN M. KUSTER, New Hampshire
    Samoa                            BETO O'ROURKE, Texas
MIKE BOST, Illinois                  KATHLEEN RICE, New York
BRUCE POLIQUIN, Maine                J. LUIS CORREA, California
NEAL DUNN, Florida                   KILILI SABLAN, Northern Mariana 
JODEY ARRINGTON, Texas                   Islands
JOHN RUTHERFORD, Florida             CONOR LAMB, Pennsylvania
CLAY HIGGINS, Louisiana              ELIZABETH ESTY, Connecticut
JACK BERGMAN, Michigan               SCOTT PETERS, California
JIM BANKS, Indiana
JENNIFFER GONZALEZ-COLON, Puerto 
    Rico
                       Jon Towers, Staff Director
                 Ray Kelley, Democratic Staff Director

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                    JACK BERGMAN, Michigan, Chairman

MIKE BOST, Illinois                  ANN MCLANE KUSTER, New Hampshire, 
BRUCE POLIQUIN, Maine                    Ranking Member
NEAL DUNN, Florida                   KATHLEEN RICE, New York
JODEY ARRINGTON, Texas               SCOTT PETERS, California
JENNIFER GONZALEZ-COLON, Puerto      CONOR LAMB, Pennsylvania
    Rico

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Veterans' Affairs are also 
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                            C O N T E N T S

                              ----------                              

                          Tuesday, May 8, 2018

                                                                   Page

VA Logistics Modernization: Examining The RTLS and Catamaran 
  Projects.......................................................     1

                           OPENING STATEMENTS

Honorable Jack Bergman, Chairman.................................     1
Honorable Kathleen Rice, Acting Ranking Member, U.S. House of 
  Representatives................................................     3

                               WITNESSES

Ms. Tammy Czarnecki, Assistant Deputy Under Secretary for Health 
  for Administrative Operations, Veterans Health Administration, 
  U.S. Department of Veterans Affairs............................     4
    Prepared Statement...........................................    23

        Accompanied by:

    Mr. Alan Constantian, Deputy Chief Information Officer and 
        Account Manager for Health, Office of Information and 
        Technology, U.S. Department of Veterans Affairs

Mr. Nicholas Dahl, Deputy Assistant Inspector, General for Audits 
  and Evaluations, Office of Inspector General, U.S. Department 
  of Veterans Affairs............................................     6
    Prepared Statement...........................................    26

        Accompanied by:

    Mr. Michael Bowman, Director for Information Technology and 
        Security Audits Division, Office of Inspector General, 
        U.S. Department of Veterans Affairs


 VA LOGISTICS MODERNIZATION: EXAMINING THE RTLS AND CATAMARAN PROJECTS

                              ----------                              


                          Tuesday, May 8, 2018

             U.S. House of Representatives,
                    Committee on Veterans' Affairs,
                      Subcommittee on Disability Assistance
                                      and Memorial Affairs,
                                                   Washington, D.C.
    The Subcommittee met, pursuant to notice, at 2:08 p.m., in 
Room 334, Cannon House Office Building, Hon. Jack Bergman 
[Chairman of the Subcommittee] presiding.
    Present: Representatives Bergman, Poliquin, Dunn, 
Arrington, Rice, Peters, and Lamb.

          OPENING STATEMENT OF JACK BERGMAN, CHAIRMAN

    Mr. Bergman. Good afternoon. This hearing will come to 
order. Please have a seat.
    I want to welcome everyone to today's hearing on VA's 
efforts to modernize its medical supply chain.
    Ordering, stocking, and locating medical equipment and 
supplies are fundamental to VA's mission of providing medical 
care to our veterans. Unfortunately, these logistics functions 
seem to have degenerated in recent years. We read about them in 
the press on a regular basis.
    The Real-Time Location System, or RTLS, and Catamaran 
point-of-use projects were conceived as technological leaps 
forward, enabling VA medical centers to manage logistics more 
efficiently. Catamaran was intended to replace the 25-year-old 
Generic Inventory Package, or GIP, VA's primary inventory 
system. Catamaran included modern point-of-use capabilities and 
analytics tools. And a $55 million contract was awarded in 
September 2013, with a potential value of $275 million.
    Expectations were high, and VA began pilot implementations 
in 22 facilities, including Pittsburgh and Washington, D.C. 
Unfortunately, early results were overwhelmingly negative. In 
Pittsburgh, users reported the software was plagued by login 
failures, slow loading times, malfunctions, and problems 
integrating with VistA. Catamaran was generally cumbersome and 
inefficient, not any better than the existing inventory system.
    In 2015, the Pittsburgh medical center decided to revert to 
GIP. That eventually happened, after the VA central office 
originally ordered Catamaran to remain in place but eventually 
relented.
    Meanwhile, in Washington, D.C., Catamaran was similarly 
unsuccessful. The Office of Inspector General has demonstrated 
that, unlike in Pittsburgh, the D.C. medical center's logistics 
operation was already in disarray before Catamaran came along. 
The staff had largely abandoned GIP and fallen into a pattern 
of tracking inventory manually, in a disconnected fashion, in 
various areas of the hospital.
    It remains a matter of debate to what extent Catamaran was 
ever used in D.C. up until VA halted the project and terminated 
the contract in August of 2016. What is clear is Catamaran was 
a harmful distraction. OIG has reported that logistics at the 
D.C. medical center got worse due to a variety of factors in 
2015 and 2016 during the Catamaran implementation that 
occurred.
    The Subcommittee has determined that logistics operations 
are actually in worse shape today than they were before 
Catamaran began. I hope to determine the reasons for this 
today.
    I will now turn to the Real-Time Location System, which is 
still ongoing.
    The RTLS project entails attaching radiofrequency 
identification tags to a range of medical equipment, some 
supplies, and surgical instruments in the catheterization lab 
and the sterile processing department. With RTLS, VA aims to 
count and track the physical locations of these assets in real-
time on one computer screen.
    VA awarded the RTLS contract, which originally had a 
potential value of $543 million, in June of 2012. After a 
series of modifications, the contract is scheduled to end next 
month.
    An initial pilot in VISN 23, in the Northern Great Plains, 
very quickly became an implementation throughout nearly the 
whole country, before test results had ever come back from VISN 
23. The test results in March 2015 were troubling. There were 
over 200 defects, and the RTLS could only track equipment 
accurately 40 percent of the time.
    This led to conflict between VA and the contractor. 
Specifically, VA threatened to terminate the contract if a 
satisfactory corrective action plan was not produced. Over a 
year later, in June 2016, there were still almost 50 defects. 
The contractor blamed VA's inadequate WiFi, and VISN 23 
withdrew from the project.
    According to the OIG, there were also cybersecurity 
deficiencies. The contractor connected RTLS to VA's network 
before receiving authority to operate.
    In September 2016, VA and the contractor signed a global 
settlement agreement that remains sealed. I requested a copy on 
April 12, and VA has so far declined to provide it. But what we 
do know is that the contract was extended through June 2018, 
its requirements were significantly reduced, and the contractor 
was released from any liability for its performance up to that 
point.
    The facilities slated to receive the RTLS asset tracking 
capability, its main component, were cut from 92 to 47. The 
facilities scheduled to receive RTLS in the catheterization 
labs and sterile processing departments were also pared down. 
The temperature monitoring component of RTLS was almost 
completely eliminated. Today, VA still has a significant amount 
of work to do to meet even these reduced goals.
    The question before us today is: What should be done with 
the RTLS program, how much has been spent, and what has the VA 
gotten for the money? The goalposts have been lowered, but can 
they be met? And how much additional investment will that 
require? The contract's expiration is only weeks away.
    I now yield to Miss Rice, who has graciously agreed to fill 
in for Ranking Member Kuster, for any opening statement or 
remarks she may have.

   OPENING STATEMENT OF KATHLEEN RICE, ACTING RANKING MEMBER

    Miss Rice. Thank you, Mr. Chairman.
    Good afternoon. And I want to thank the Chairman for 
holding this important hearing. I also want to thank all of our 
witnesses for coming here today.
    I continue to be alarmed at the number of mismanaged and 
failed information technology programs at VA. Attempts to 
modernize VA's IT infrastructure always seem to hit 
implementation roadblocks, cost overruns, and result in 
products that are unusable for the frontline employees 
entrusted with delivering health care and benefits to our 
veterans. It is not surprising that IT is one of the five areas 
of concern GAO identified when it decided to place the Veterans 
Health Administration on its high-risk list.
    In its testimony today, the Office of Inspector General yet 
again finds that VA faces significant challenges in managing 
its IT development projects. Whether it is VA's inability to 
manage its medical supply inventory at the Washington, D.C., VA 
Medical Center, too many false starts on an interoperable 
electronic health record with DoD and now the delayed signing 
of the contract with Cerner, or even delayed deployment of the 
caregiver IT system, it seems VA witnesses frequently shift the 
blame on the Office of Information and Technology during 
oversight hearings when things go wrong.
    As late as March of this year, the D.C. VAMC was still 
delaying treatment for veterans due to medical supply 
shortages. It has been over a year since Congresswoman Kuster 
led Committee Members on an oversight visit to the D.C. VAMC 
after the OIG reported that patients were being put at risk due 
to care delays. This site visit revealed that supplies were not 
being tracked by any inventory management system or any 
automated system to process sterile supplies, not the GIP 
system, nor the RTLS, the Real-Time Location Service, nor 
Catamaran system. Due to failed management of RTLS and 
Catamaran, the medical center did not know when it was running 
low on some supplies and, in other cases, was ordering too many 
supplies that remained unused.
    It took extra dedication and commitment from clinical staff 
to ensure no patients were harmed. However, veterans sometimes 
had procedures delayed or canceled. This significantly 
increased patients' risk of harm, in part due to a failed IT 
project that made it difficult for the medical center to manage 
its medical supply chain and ensure sterile equipment was 
processed and available to providers when they needed it to 
treat patients.
    OIG found in its review of the RTLS project that, due to 
inadequate project management, VA did not have assurance that 
it received an effective return on the $451 million it invested 
in RTLS or that Hewlett-Packard met the contract requirements 
because the contract was mismanaged. This mismanagement caused 
delays in veterans' care and wasted taxpayer dollars. It is 
beyond unacceptable.
    We are holding the hearing today to get the necessary facts 
so we can be sure that VA is properly managing its medical 
supply chain. We cannot have what happened at the D.C. VAMC 
take place in other VA hospitals and clinics around the 
country.
    According to the OIG, VA needs enhanced discipline, 
oversight, and resource management to support successful IT 
development. I look forward to hearing from VA about how the 
agency plans to enforce discipline, resource management, and 
ensure proper oversight so we can get this project back on 
track and prevent any future risk of harm for our veterans.
    Thank you, Mr. Chairman. I yield back.
    Mr. Bergman. Thank you, Miss Rice.
    I now welcome the members of our first and only panel, who 
are seated at the witness table.
    With us today from VA, we have Ms. Tammy Czarnecki, the 
Assistant Deputy Under Secretary for Health for Administrative 
Operations in the Veterans Health Administration. She is 
accompanied by Mr. Alan Constantian, the Deputy Chief 
Information Officer and the Account Manager for Health in the 
Office of Information and Technology.
    Also on the panel we have Mr. Nicholas Dahl, Deputy 
Assistant Inspector General for Audits and Evaluations, 
representing the VA Office of Inspector General. He is 
accompanied by Mr. Michael Bowman, the Director for the 
Information Technology and Security Audits Division in the 
Office of Inspector General.
    I ask that the witnesses please stand and raise your right 
hand.
    Mr. Bergman. Let the record reflect that all witnesses have 
answered in the affirmative.
    Ms. Czarnecki, you are now recognized for 5 minutes.

                  STATEMENT OF TAMMY CZARNECKI

    Ms. Czarnecki. Good afternoon, Chairman Bergman, Acting 
Ranking Member Rice, and Members of the Subcommittee. I 
appreciate the opportunity to discuss the Department of 
Veterans Affairs' Real-Time Location System project and the 
point-of-use program.
    I am accompanied today by Dr. Alan Constantian, Deputy 
Chief Information Officer, Office of Information and 
Technology.
    In 2011, VA chartered several major transformation 
initiatives. Two of these initiatives included the RTLS project 
and the point-of-use program.
    The RTLS project was chartered to automate processes and 
improve health care services that VA provides to veterans. In 
June of 2012, VA awarded a contract to Hewlett-Packard 
Enterprise Systems. The contract's scope encompassed design, 
installation, testing, and maintenance of RTLS. Task orders 
were to be issued against the contract, which had a ceiling of 
$543 million.
    The RTLS project is jointly managed by OI&T and VHA per a 
memorandum of understanding signed in 2011 by the Under 
Secretary for Health and the Chief Information Officer. The 
RTLS solution utilizes COTS technology and software to directly 
support patient care delivery and outcomes.
    RTLS requires extensive infrastructure to be installed 
throughout the hospital, with design and installation generally 
taking 1 to 2 years. Fargo VAMC was the first site to complete 
installation and test the system in March of 2015. VA 
identified several issues, and the contractor was charged to 
correct them.
    In September of 2016, VA made a program decision to realign 
the RTLS program and entered into negotiations, with the shared 
goal to expedite the implementation of RTLS. To capture the 
agreements made during these negotiations, VA modified the 
existing RTLS contract and executed a global settlement 
agreement, resulting in an implementation strategy to decouple 
the applications, allowing each application to be tested and 
deployed on their own schedule. Additionally, it was agreed 
that the vendor would install additional technology to improve 
the accuracy, and a new deployment schedule was issued through 
2018.
    The deployment of RTLS was accelerated, with many positive 
outcomes, continuing through present. The sterile processing 
solution has been successfully implemented at 60 facilities. 
With over 1.4 million surgical and dental instruments being 
tracked, VA can be assured instruments have been through the 
required steps of the sterilization process and the right 
instruments are being delivered to the right operating room for 
the right procedure. Also, the cath lab solution has been 
deployed at 28 facilities and is generating notable supply 
savings.
    VHA and OI&T have continued to align and improve project 
management processes following the conclusion and the 
publication of the OIG report. The RTLS deployment efforts have 
been managed utilizing sound project management principles. VA 
will perform continual risk assessments to assure that risks 
associated with deploying RTLS on the VA network are minimized.
    Moving to the point-of-use program, a point-of-use system 
provides asset visibility down to the point at which the asset 
is used. VA defines our point of use as our medical supply 
rooms located throughout the medical center.
    The point-of-use program was envisioned and intended to 
provide an integrated supply chain solution capable of 
providing consolidated data. The consolidated data would be 
used to effectively manage consumable medical supply 
inventories throughout the hospital.
    Shipcom Wireless was awarded the point-of-use contract on 
September 23rd of 2013. While the first and second options of 
the contract were exercised, contract requirements were not 
being met. The contract was not meeting operational or 
contractual deliverables, and, after further review and based 
on a new return-on-investment analysis, it was determined that 
the point-of-use program would not see a break-even in the 
investment for over a decade. These figures were deemed 
unsustainable, and the decision was made not to exercise future 
option periods of the contract.
    A plan has been derived to transition the 22 sites that had 
converted to Shipcom's Catamaran system, including the D.C. VA, 
back to the VA's Generic Inventory Package. In January and 
February of 2017, the point-of-use program team traveled to the 
sites to educate the staff on a tour to transition the data.
    RTLS has made significant improvements in the efficiency 
and safety of health care for our veterans. It's critical that 
we continue to move forward with the gains that we have made 
thus far. Your continued support is essential to providing care 
for veterans and families.
    Mr. Chairman, this concludes my testimony. My colleagues 
and I are prepared to answer any questions.

    [The prepared statement of Tammy Czarnecki appears in the 
Appendix]

    Mr. Bergman. Thank you, Ms. Czarnecki.
    Mr. Dahl, you are recognized for 5 minutes.

                   STATEMENT OF NICHOLAS DAHL

    Mr. Dahl. Mr. Chairman, Congresswoman Rice, and Members of 
the Subcommittee, thank you for the opportunity to appear 
today.
    The focus of my comments are the OIG's review of whether VA 
effectively managed the RTLS project to meet cost and schedule 
targets and performance and security needs.
    OIG audits in recent years establish that IT systems 
development at VA is a longstanding high-risk challenge, with 
projects susceptible to cost overruns, schedule slippages, and 
performance problems.
    In June 2012, VA awarded a contract with a $543 million 
ceiling to Hewlett-Packard Enterprise Services to deploy RTLS 
nationwide over the course of 5 years. The RTLS procurement and 
implementation process was a cooperative effort between VHA, 
the Office of Acquisitions and Logistics, and the Office of 
Information and Technology.
    VA was required by policy to manage the RTLS project under 
VA's Project Management Accountability System, which was a 
project management system intended to establish a discipline to 
ensure that an IT project's customer, project team, vendors, 
and stakeholders would focus on a single compelling mission--
that is, achieving on-time project delivery. PMAS used 
incremental product build techniques, with delivery of new 
functionality tested and accepted by the customer in cycles of 
6 months or less.
    We received a complaint alleging VA management failed to 
comply with VA policy and guidance when it deployed RTLS assets 
without appropriate project oversight and that RTLS assets were 
deployed without meeting VA information security requirements.
    We reported management failed to comply with VA policy and 
guidance when it deployed RTLS assets without appropriate 
project oversight. Specifically, the RTLS Project Management 
Office, or PMO, did not follow guidance from the Technical 
Acquisition Center to use an incremental project management 
approach during the acquisition and deployment of RTLS assets 
to compensate for known project management risks. Also, the 
RTLS PMO did not comply with VA policy requiring the use of 
PMAS for all acquisitions and delivery of RTLS assets.
    Despite the guidance from the Technical Acquisition Center 
and VA policy, the RTLS PMO did not ensure the vendor could 
meet contracted functionality requirements, such as accurate 
asset tracking, on the initial $7.5 million task order before 
ultimately committing a total of $431 million to the same 
vendor for further RTLS deployments.
    VHA had awarded the initial task order to deploy RTLS in 
VISN 23 with an expected delivery date in December of 2013. 
However, initial operational testing in March 2015 identified 
245 functionality defects that resulted in the issuance of a 
contract cure notice to the vendor.
    In June 2016, the cure notice was still unresolved, as 
significant defects, including the inability of RTLS to meet 
contract requirements for asset tracking, remained outstanding.
    In September 2016, VHA renegotiated the RTLS contract due 
to the vendor's inability to implement a functional RTLS 
solution. The renegotiation was intended to expedite the 
implementation of RTLS in each VISN. VA executed a global 
settlement agreement that resulted in extensive changes to the 
vendor's contract requirements, to include expiration of task 
orders, reduction in the scope of RTLS applications deployed, 
extension of the contract period of performance, and commitment 
of $431 million to the vendor as of December 2016. According to 
the agreement, VA also released the contractor from any 
liability claims related to prior performance on the contract.
    We also substantiated the allegation that VA deployed RTLS 
assets without meeting VA's information security requirements. 
We reported inadequate oversight of RTLS risk management 
activities left VA mission-critical systems and data 
susceptible to unauthorized access, loss, or disclosure. 
Consequently, VA's internal network faced unnecessary risks 
resulting from untested RTLS system security controls.
    We reported VA must exercise cost control, sound financial 
stewardship, and discipline in RTLS development. As a result of 
inadequate project management, VA lacked assurance of an 
effective return on the $431 million invested in RTLS. We 
provided recommendations for improving controls over the VA's 
oversight of system development projects, and VHA and OI&T 
concurred with our recommendations.
    Our review of the RTLS project demonstrates VA continues to 
face challenges in managing its IT development projects. VA has 
taken some actions to address issues we identified in our RTLS 
report and in other recent reports. However, it remains to be 
seen whether the actions will effectively improve VA's ability 
to meet cost, schedule, performance, and security goals when 
managing mission-critical system initiatives.
    Mr. Chairman, this concludes my statement. We would be 
happy to answer any questions you or other Members of the 
Subcommittee may have.

    [The prepared statement of Nicholas Dahl appears in the 
Appendix]

    Mr. Bergman. Thank you, Mr. Dahl.
    The written statements of those who have just provided oral 
testimony will be entered into the hearing record.
    We will now proceed to questioning. We'll begin--Miss Rice, 
you're recognized for 5 minutes.
    Miss Rice. Thank you, Mr. Chairman.
    So who--I'm just trying--I can't read any names. Mr. Dahl, 
so this is what I want to ask you about. The contract cure 
notice the VA had issued to Hewlett-Packard in 2015 was still 
unsolved by June of 2016, including RTLS's inability to meet 
fundamental contract requirements for asset tracking and 
software functionality.
    Instead of terminating the contract, it was renegotiated. 
HP's responsibilities were reduced by nearly 50 percent, and 
the vendor was released from any liability claims related to 
prior performance of the contract.
    Can you explain why the VA decided to renegotiate the 
contract with HP?
    Mr. Dahl. Well, I think VA may be better suited to answer 
that question.
    Miss Rice. The VA? Oh, yeah, you're the--all right. I'm 
sorry. Yeah.
    Mr. Dahl. I would speculate the VA management was concerned 
that the contractor was behind schedule and there were concerns 
as to whether they would be able to deliver this system on time 
and within costs.
    Miss Rice. Ms. Czarnecki, maybe you could--
    Ms. Czarnecki. Yes. So there was a number of items that 
were--remember, the RTLS was new in the medical space at that 
time. So there were a number of items that were in the contract 
that there were differences of opinion between the contractor 
and VHA--for example, location accuracy.
    As Mr. Dahl stated, initially there was only a 40-percent 
location accuracy. So in the contract we had placed that we 
needed to have location accuracy for asset tracking. Their 
definition of location accuracy and our definition was 
different. We needed clinical accuracy. We needed to know that 
piece of equipment was in that particular room so that we could 
go to that room, get that piece of equipment, and move it.
    So there were a number of clarifications. So the contractor 
wasn't necessarily wrong; there were definition differences 
between the contractor and VHA in a number of the areas. And so 
those needed to be clarified, and that was part of the change.
    The second piece of it is, initially, VHA went into the 
contract saying that if you were getting asset tracking, cath 
lab, and SPS, you had to have all of those installed and tested 
at the same time. Part of the settlement agreement is that we 
decoupled those so that each one of those applications were 
independent and could be tested and deployed.
    Miss Rice. So can you pinpoint how this mismanagement 
occurred and how the VA is going to ensure that this doesn't 
happen again?
    What I fail to see in all of these hearings that we have is 
any level of accountability. I mean, you're talking about a 
half a billion dollars being spent on a system that was totally 
mismanaged. It doesn't seem like there was a proper protocol 
for how it was going to be implemented.
    I just don't understand--the process, maybe, is what I 
don't understand. Do you learn from these instances of 
mismanagement, and who is accountable?
    Ms. Czarnecki. So, in this case, it takes 1 to 2 years to 
deploy the infrastructure. And, as I stated, in this particular 
case, they were getting two applications, both asset tracking 
as well as sterile processing. And so, when it went into 
testing, that was when we identified errors--not errors, but 
deficiencies, things that were not working the way we 
anticipated that they would work.
    And so, yes, we have learned from those. We issued a cure 
notice. We didn't do any further deployments until after the 
global settlement agreement. We continued the infrastructure 
work, but we didn't test or deploy anything further until we 
were sure that the contractor was able to meet the 
deliverables.
    Miss Rice. So the accountability?
    Ms. Czarnecki. I believe that there is accountability 
throughout the entire process. There was a senior-level project 
manager, both from IT as well as VHA, that worked with the 
contracting--or with the vendor. And I believe we held the 
vendor accountable as well as our own staff.
    Miss Rice. How did you hold the staff accountable?
    Ms. Czarnecki. With the staff being held accountable, the 
staff were required to work through the process with the 
vendor. There was a list of items that needed to be negotiated, 
definitions to be clarified, and so I believe that we worked 
through those issues.
    I don't believe that there was any intention not to have a 
working, functional RTLS system, but this was new in the 
medical space at that time. It was the largest deployment of a 
real-time tracking system in health care. It was a definition 
problem. And we have run into this before, where clinical 
people do not necessarily speak the same language as the 
business community. And those ended up not being performance 
issues but, rather, clarification of requirements.
    There needed to be very clear definitions of what each and 
every requirement was. And I think that we have learned that, 
as well, going forward, as we talk about what does, and I'll 
use, ``accuracy'' mean. There is a very big difference between 
what I think clinical accuracy is as a nurse and what the 
vendor thought accuracy was. The accuracy for them was ``it's 
in the director's suite.'' The accuracy for me, ``it's in the 
director's suite, it's in the director's office''--
    Mr. Bergman. We have to move on. The gentlelady's time has 
expired.
    Miss Rice. Thank you, Mr. Chairman.
    Mr. Bergman. Okay.
    Dr. Dunn, you are recognized for 5 minutes.
    Mr. Dunn. Thank you very much, Mr. Chairman.
    And welcome, to the panel. I'm going to ask everybody to 
try to keep their answers concise, because, as you can see, 
we're on the clock. So let me start with Ms. Czarnecki.
    In your testimony, you described site assessments that were 
conducted to determine where to implement or where to pilot 
Catamaran. How were those sites chosen? And, in retrospect, 
were the chosen sites good choices?
    Ms. Czarnecki. I don't know how the sites were selected.
    Mr. Dunn. Okay. So, in retrospect, would you say that we 
made good choices in site selection?
    Ms. Czarnecki. I do believe we made good choices in site 
selections. We chose a mix of both small and large facilities.
    Mr. Dunn. Okay.
    So, now we know that the D.C. medical center actually had a 
lot of problems ahead of time. Logistically, they were 
struggling. Did the people managing these choices know that the 
D.C. medical center had trouble with logistics?
    Ms. Czarnecki. I do believe they knew that there were 
trouble with logistics. They thought the Catamaran system would 
actually help that.
    Mr. Dunn. So they thought that was the solution. All right.
    So let's turn to the RTLS. Again, Ms. Czarnecki, you 
represent health, and, Mr. Constantian, you represent IT, I 
believe, right? All right. So this is a question for both of 
you. Who should have been in charge of the RTLS implementation 
from each of your organizations, and who actually was in 
charge?
    Ms. Czarnecki. I'll start with that one.
    This was a--RTLS is like a medical device, like an 
anesthesia monitor--
    Mr. Dunn. I know what it is.
    Ms. Czarnecki [continued].--or a medical screen in a 
colonoscopy suite. So it was a mix of VHA and OI&T. So there 
were components--there were 22 task orders--
    Mr. Dunn. The question was who was supposed to be in 
charge, not what is RTLS.
    Ms. Czarnecki. It's comanaged.
    Mr. Dunn. So it's at, what, 50/50? Is there--did you have 
the right people from your department, Mr. Constantian, in 
charge, and did you, Ms. Czarnecki?
    Ms. Czarnecki. Yes. I had a senior-level project manager 
who was certified in project management principles.
    Mr. Dunn. And the same guy actually did it? So it wasn't 
one person said--okay.
    And the same for you?
    Mr. Constantian. Sir, we had a senior lead for this 
implementation. There was a departure. We filled the position 
later. There was a gap, but now we have a senior lead again in 
OI&T.
    Mr. Dunn. Mr. Dahl, what would a well-run project look like 
in the VA or in the civilian world with this kind of 
implementation?
    Mr. Dahl. I would say as we've learned, that this was new 
in the medical space, the RTLS, I think that following an 
incremental approach from the start may have been more prudent, 
in that they probably should have made sure that the things 
that needed to be functional were functional before deploying 
elsewhere.
    Mr. Dunn. We've heard testimony that this is some novel 
technology in the health care space. I'm a physician. I've 
worked in a lot of hospitals, in and out of the military. This 
is not that novel. I mean, we track millions of pieces of 
equipment through multiple hospital systems. Some of them are 
State, some of them are--many of them are private, you know, 
HCA-type hospitals.
    This is not rocket science, and it's not something that 
hasn't been done. It is mature technology that's used 
throughout the business world. Walmart does it, Target does it, 
PetSmart does it. Why can't the VA do it?
    Maybe that's a question for Mr. Dahl. You're the one who 
inspects people, or--go ahead.
    Mr. Bowman. I do think VA has the capability of managing 
these kind of projects. They just chose a big-bang approach as 
opposed to an agile, incremental approach. If you break the 
project up in smaller pieces and get the end-user involved 
early on, you discover early on whether or not your contract 
requirements are being met.
    Mr. Dunn. We've actually had this problem with the EMR, as 
well, right? I mean, this is the same sort of failure to 
implement?
    Mr. Bowman. This is a theme that has showed up in various 
IT development projects over the years.
    Mr. Dunn. It has. And, obviously, it's a disappointment to 
see that we can throw away so many billions of dollars and 
actually tread water, not making any headway on that.
    My time is about to expire, so I will yield. But let the 
record reflect that it is disappointing that we can't implement 
mature technology in an agency that is so very well-resourced.
    Mr. Chairman, I yield back.
    Mr. Bergman. Thank you.
    And, Mr. Lamb, you're recognized for 5 minutes.
    Mr. Lamb. Thank you, Mr. Chairman.
    Ms. Czarnecki, I have a question about the policies in 
place, if any, to identify potential conflicts of interest.
    In Pittsburgh, there was a former VA regional director who 
was identified by our local paper as having an advising role to 
Shipcom, which was one of the contractors that the VA hired to 
do the tracking in the Catamaran system.
    Can you tell me about any policies that would have caught 
that on the front end or that prevented it? Or if they don't 
exist, is that ever discussed?
    Ms. Czarnecki. I'll need to take that one for the record. 
I'm not sure. I'm not sure if general counsel reviewed that or 
not.
    Mr. Lamb. Okay. Are you aware of the incident that I'm 
talking about, where the former regional director was--
    Ms. Czarnecki. Yes, I am.
    Mr. Lamb. Okay.
    Now, I think in the gentleman's previous question we were 
just starting to get into the issue of coordination and project 
implementation between the VHA headquarters and regional VA 
systems. So I'm not sure which of the witnesses is best to 
answer this, but could somebody talk about, going forward, 
what's the best way to allow the regional VA systems to have 
input into a policy or system change like this from the 
beginning so that they can actually implement it more 
successfully than was done here?
    Ms. Czarnecki. So the regions are called our VISNs. And our 
medical centers did, in fact, have input into the RTLS project 
as well as Catamaran. They're involved from a project 
management standpoint, a contracting officer representative is 
part. And then the staff do get to give us feedback and input. 
It's just like trialing any other product, where you would have 
your staff providing ongoing feedback.
    Mr. Lamb. Well, Mr. Bowman, from what you were saying, this 
wasn't done in an incremental manner. Is that right?
    Mr. Bowman. That's correct.
    Mr. Lamb. Would you say that there is an opportunity to do 
that differently in the future by trying this maybe in one 
region and not others or trying--I mean, can you kind of 
address that issue?
    Mr. Bowman. So we recently received a corrective action 
plan in response to our report from VHA and OI&T. And they laid 
out a case where they're using incremental methodologies to 
change the way they're deploying RTLS, which is breaking up the 
application into discrete functionality. That way, they're not 
having to have so many interdependencies that they have to 
resolve.
    So that would be a case where they're changing their 
approach. And so far, from what I hear, they're achieving 
success doing it that way.
    Mr. Lamb. Okay. Thank you.
    Mr. Chairman, I yield the remainder of my time.
    Mr. Bergman. Thank you.
    Mr. Arrington, you're recognized for 5 minutes.
    Mr. Arrington. Thank you, Mr. Chairman.
    I want to first of all congratulate my colleague Mr. Lamb 
on his election victory, and I look forward to getting to know 
you better. And we're glad you're on our Committee, and honored 
to serve with you. So congratulations to you and your family.
    There is not a more perennial issue of disappointment to me 
in the lack of management of the big beast, bureaucratic beast 
of the VA than IT systems. I mean, I have heard this is the--I 
don't know how many stanzas of the same song, but it's getting 
really old.
    So I'm going to ask the same questions I ask at, it seems 
like, every one of these meetings where we can't get IT systems 
right. But let's start by just answering this in a very simple 
way, in a very quick way.
    Ms. Czarnecki, what are we trying to achieve with RTLS? 
What happens to our customer if RTLS or these logistics 
management systems aren't in place? If they're not in place or 
they're not working, what happens to our customer, the veteran?
    Ms. Czarnecki. For RTLS--and I'll use sterile processing as 
the example. Every single instrument is tracked to make sure 
that it is reprocessed appropriately. The trays are built, 
delivered to the right operating room for the right patient.
    Mr. Arrington. So, potentially, if we don't get this right, 
they're not getting the right device or therapy to the right 
patient? It's that serious? I mean, that sounds like life or 
death. That's a public safety issue. Am I overstating it?
    Ms. Czarnecki. Potentially, we couldn't miss a step in the 
reprocessing of sterilization--
    Mr. Arrington. So, I mean, we could have unsterilized 
equipment? I mean, this is serious.
    And we have--our veteran patients who are coming in, where 
do they go if they feel like this thing is just all jacked up 
and you just can't get it right, they don't have any confidence 
you can get it right? Where do they go? Where can they go so 
they can have peace of mind that a health care provider is 
actually going to take care of them and manage all these things 
so they get the right therapy, the right device, it's sterile, 
and it's well-suited to put them on the path of healing? Where 
do they go if you guys can't get it right?
    Ms. Czarnecki. I hate to say this, but it could happen in 
any health care--
    Mr. Arrington. I know it could happen anywhere, but where 
would they go if they couldn't get it at the VHA? Can they 
access other hospitals? I mean, who's competing for their 
business?
    Here's my point: Too many veterans are trapped in this 
system, and it's failing them.
    Who has been fired on account of losing hundreds of 
millions of dollars? Because that's what I'm hearing. We've 
lost hundreds of millions of dollars. Now I'm going to talk 
about the shareholder. We're fiduciaries for the taxpayers. Who 
has been fired on account of hundreds of millions of dollars? 
Because I can tell you, outside of the fantasy world of the VA, 
people would lose their jobs over that.
    How many people have been fired in the mismanagement of the 
Catamaran and the RTLS?
    Ms. Czarnecki. I really don't have that information.
    Mr. Arrington. I can tell you. Nobody has been fired.
    But I'll ask Mr. Dahl. Maybe he knows.
    How many people were fired over this?
    Mr. Dahl. I'm not aware of anyone.
    Mr. Arrington. Nobody gets fired. I've asked that question, 
colleagues have asked that question almost at every hearing, 
and they don't know. And then I ask them to submit it for the 
record. I've never received anything, so I assume that you 
never submitted it.
    There is no accountability. So this is--I almost feel like 
I'm wasting my time at these hearings.
    You say that these are jointly managed between the OI&T and 
the VHA. So, you know, the old saying, if multiple people are 
accountable, nobody is accountable.
    Who is ultimately accountable for information technology 
systems, the enterprise architecture? Who's ultimately 
responsible at the VA for all of this?
    Mr. Constantian. Sir, enterprise architecture is the 
responsibility of the Office of Information and Technology.
    Mr. Arrington. And who is the head of that office?
    Mr. Constantian. The Chief Information Officer.
    Mr. Arrington. And where is he or she?
    Mr. Constantian. At the VA central office.
    Mr. Arrington. How long have they been in that office?
    Mr. Constantian. Mr. Sandoval was appointed Acting in that 
role 2, maybe 3 weeks ago.
    Mr. Arrington. Two or 3 weeks ago. I think there is a 
really issue with continuity over there, but there's certainly 
an issue of accountability.
    I know I've gone over my time. I'm not even close to 
finishing, so I hope we get more opportunities. I yield back, 
Mr. Chairman.
    Mr. Bergman. Thank you.
    Mr. Peters, you're recognized for 5 minutes.
    Mr. Peters. Thank you, Mr. Chairman.
    I mean, I share Mr. Arrington's frustration. I will say 
that we voted for the Accountability Act here in order to give 
more flexibility for hiring and firing. And I did that in good 
faith. And what I saw was that the people who have been fired 
are cooks and gardeners. And those people didn't cost anything 
close to millions of dollars. And I think that I feel a little 
bit taken advantage of, because that was not the intent of the 
vote that I took. The intent was to get to things like this.
    And I will just say, too, you know, when you were 
testifying about the mismatch between what doctors say and what 
IT people say, that's not the first time we've heard this. And 
I was trying to remember what it was. It was the Medical/
Surgical Prime Vendor Program too.
    And I would maybe direct this to Mr. Dahl. What is the 
appropriate response for the Department to take, so that when 
we do these--these are novel contracts, but, you know, you can 
lose $5 million before you lose $500 million. What should they 
be doing up front to make sure that these people are speaking 
the same language and, if they're not, that we catch it early 
and we don't spend so much money, waste so much money down the 
line that we're having a hearing like this?
    Mr. Dahl. In this case, the approach was they awarded that 
initial task order where they were going to deploy this in a 
VISN. It was a $7.5 million task order. So, in theory--
    Mr. Peters. Right.
    Mr. Dahl [continued].--that would seem like a reasonable 
approach.
    But that was due--they awarded that task order in 2012. It 
was due to be completed in late 2013. They didn't get to 
operational testing on that until March of 2015, so they had 
already slipped about 15 months. That's when they identified 
some deficiencies. But, in the meantime, they had been awarding 
additional task orders before they knew that it was functional 
in that VISN.
    I assume that there was a desire to get this RTLS up and 
running across the enterprise, but, with this unproven 
technology, we really believe that they should've been taking a 
more incremental approach.
    Mr. Peters. This is gasoline on the fire. I mean, we would 
all be upset if they lost $7.5 million, right? But before 
figuring out whether this would work, before figuring out 
whether the doctors and the IT people were speaking the same 
language, we went and deployed the same thing over and over 
again, even though it was behind schedule. That's what 
happened, right?
    So, you know, I'm at a little bit of a loss, what to do 
now. I mean, we're going to be under the gun on the budgets. 
Now the Congress is talking about spending a trillion dollars a 
year in deficits in good times. And we can't have this kind of 
money wasted. We got nothing for this.
    And I know we're still paying for this, right? Is that 
right, Mr. Dahl?
    Mr. Dahl. Yes.
    As Mr. Bowman noted, we did recently get an action plan 
from VHA and OI&T in response to our recommendations. They're 
portraying to us that they have gone to a more incremental 
approach and they are making progress. Of course, we haven't 
done any follow-up on that yet to validate or verify that.
    Mr. Peters. We also--we probably can't blackball this 
contractor either, I don't suppose, can we, because of the 
process concerns about that, right?
    Mr. Dahl. I would have to defer to probably the Office of 
Acquisition and Logistics on that, whether there's grounds for 
that.
    Mr. Peters. Well, $500 million, $420 million, whatever it 
is, I guess--I don't--I think we're being taken advantage of. I 
think taxpayers are being taken advantage of. I'm a big fan of 
the VA. I would not describe VA as a failure. I think it gets 
overstated sometimes. But this is really outrageous.
    And I just think the fact that I've heard this same song 
about the doctors not being able to speak the same language as 
the IT people--one, I have heard of that in other contexts. 
That's a management issue. That's a cultural issue that you've 
recognized you've got to get a hold of; you can't do this 
again.
    And the fact that we spent $7 million to figure out if it 
worked, and no one could wait to figure out if it was working? 
You know, it's just shameful to spend that kind of money, 
especially when we all know it's novel. So please don't come 
back to me again with this kind of stuff.
    And as to the Accountability Act, I would say, you know, 
this is exactly what this is meant for, not for cooks and 
gardeners. It's outrageous that my vote was taken advantage of 
in that way, because it's the middle management that's the 
problem in the VA, to the extent there's a problem in the VA, 
and it's not being dealt with.
    I yield back.
    Mr. Bergman. Thank you.
    Mr. Poliquin, you're recognized for 5 minutes.
    Mr. Poliquin. Thank you.
    This nice staffer right in front of me, could you get back 
a little bit so I can make sure I can see everybody at the 
table? Thank you very much.
    Mr. Dahl, make sure I get this straight. Make sure I 
understand this. You're in the IG's office, right?
    Mr. Dahl. Yes, sir.
    Mr. Poliquin. Okay. So you've got the VA that's trying to 
figure out how to control and keep track of their inventory, 
right?
    Okay. So, roughly around 2012, they implement or they 
started to implement a Catamaran system, right? It's one of 
these systems. Right? And then within a year they implement a 
second system called RTLS. Is that correct, roughly?
    Mr. Dahl. I think it's the other way around.
    Mr. Poliquin. Okay. Okay. But you see my point? Okay.
    And, first of all, Ms. Czarnecki, why would you implement 
two programs or two systems, start them at effectively the same 
time? Why? Tell me.
    Ms. Czarnecki. This was during a time where we were trying 
to transform, and we had what we called T21 initiatives. And 
these were two different initiatives. One was for the supply 
chain. The other was sterile processing, cath lab, asset 
tracking--
    Mr. Poliquin. Could you have combined them together? In 
hindsight, could you have done that?
    Ms. Czarnecki. I'm not sure the technology would've been 
able to combine those.
    Mr. Poliquin. Who made that decision to have two programs 
going forward?
    Ms. Czarnecki. I believe that was made at a leadership 
level.
    Mr. Poliquin. Okay.
    Ms. Czarnecki. These were all projects that were--
    Mr. Poliquin. You've got to make sure that we get this from 
your office, who that person was. I want to know if that person 
is still at the VA, and, if so, I want to speak to that person.
    Okay. Let's go down the path here a little bit more. This 
has been discussed a moment ago. I think, Mr. Dahl, you've 
mentioned it. I think Mr. Peters did too.
    To start this thing off, you spent about $7.5 million of 
taxpayer money to see if this thing would work. And then, 
within a short period of time, you found out it wouldn't. But 
then you expanded it anyway to 19 different sites, right? You 
spent about 430 million bucks to do that, and the thing was a 
complete failure, right?
    Okay. Who made that decision?
    Ms. Czarnecki. I believe that the Deputy Under Secretary 
for Health made the decision to go ahead.
    Mr. Poliquin. Okay. Who's that person?
    Ms. Czarnecki. That person would have been Bill Schoenhard.
    Mr. Poliquin. Okay.
    Dennis, I want to make sure that we know this fellow, and I 
want to get him on the phone if he's still at the VA. Okay?
    Is that person still at the VA?
    Ms. Czarnecki. No, sir.
    Mr. Poliquin. Okay. Where is that person?
    Ms. Czarnecki. That person's retired.
    Mr. Poliquin. Okay. How about the other person I mentioned? 
Is that person at the VA? The first person we mentioned, was 
that person at the VA?
    Ms. Czarnecki. No, that person is not at the VA.
    Mr. Poliquin. Retired also?
    Ms. Czarnecki. I believe deceased.
    Mr. Poliquin. Okay.
    All right. Let me ask you this: When this mess that has 
happened over the past 5 or 10 years, which has cost about, I 
think Mr. Peters said, about 400 million bucks, roughly--okay? 
There is a settlement agreement with the RTLS contractor, 
correct? Who negotiated that settlement agreement?
    Ms. Czarnecki. That was negotiated between Dr. Stone and 
Hewlett-Packard and--
    Mr. Poliquin. Who is Dr. Stone?
    Ms. Czarnecki. Dr. Stone, at that time, was the Principal 
Deputy Under Secretary.
    Mr. Poliquin. Okay. Is he still with the VA?
    Ms. Czarnecki. No, he's not.
    Mr. Poliquin. Where is he?
    Ms. Czarnecki. He left the VA about a year and a half ago.
    Mr. Poliquin. Where is he now?
    Ms. Czarnecki. I don't know.
    Mr. Poliquin. Okay. You're going to find out. Dennis will 
find out. Okay.
    Mr. Dahl, have you taken a look at this agreement with the 
contractor?
    Mr. Dahl. No, I don't believe--like the Chairman said, I 
don't believe that we've seen the entire agreement. I think we 
may have seen pieces of it, but VA has not shared that 
agreement.
    Mr. Poliquin. Why not?
    Okay. Jack, we have subpoena power here, don't we, Mr. 
Chairman?
    Do you need help getting that contract settlement 
agreement? Do you have subpoena power?
    Mr. Dahl. We have subpoena power.
    Mr. Poliquin. So what's the problem?
    Mr. Dahl. We reported on the result of that global 
settlement agreement, how it led to decrease in the scope of 
the project, and that was what we reported.
    Mr. Poliquin. Okay. So let me get this straight. So the 
vendor who screwed this whole thing up and the folks within the 
VA that allowed this to happened, hired the vendor in the 
beginning, now you're going through a settlement agreement 
after we've lost 400 million bucks, and you can't get the 
complete terms of the settlement agreement. Is that right? So 
we don't know if the folks that screwed this up have been given 
more time and less liability, correct?
    Mr. Dahl. Our understanding is they have been relieved of 
liability for any issues that happened before the settlement.
    Mr. Poliquin. Okay. So let me get this straight. So they've 
lost $400 million of taxpayer money, which has put some of our 
veterans at risk from a health standpoint, and we've relieved 
them of liability going forward, or liability that they 
could've incurred going backwards?
    Mr. Dahl. It may not be an accurate statement to say--
    Mr. Poliquin. But we don't know, because we don't have the 
contract settlement agreement, right?
    Mr. Dahl. No. What I'm saying is I'm not sure it's an 
accurate statement to say that we lost the entire $430 million. 
I think VA has gained some value from this system. It's just 
hard for us to assess--
    Mr. Poliquin. How much? How much?
    Mr. Dahl. I couldn't answer that question.
    Mr. Poliquin. Okay. But we need that settlement agreement, 
don't we?
    Mr. Dahl. You may find it interesting.
    Mr. Poliquin. Good. Who do we get it from?
    Mr. Dahl. Acquisition and Logistics.
    Mr. Poliquin. Ms. Czarnecki, do you have that contract 
settlement agreement?
    Ms. Czarnecki. We'll get you a copy.
    Mr. Poliquin. Do you have the contract settlement 
agreement?
    Ms. Czarnecki. Do I have the contract?
    Mr. Poliquin. Who signed the contract settlement agreement? 
Did you sign the contract?
    Ms. Czarnecki. No, I did not.
    Mr. Poliquin. Who signed the contract?
    Ms. Czarnecki. Dr. Stone.
    Mr. Poliquin. Who's no longer with the VA. Okay. But we 
have a copy of the contract somewhere? You've got it somewhere?
    Ms. Czarnecki. Yes. Somewhere we have a copy of the 
contract.
    Mr. Poliquin. Okay. Good. We're going to make sure Dennis 
gets the contract, and we're going to make sure Mr. Dahl gets 
the contract.
    Is there any reason why we can't get that contract, Mr. 
Dahl?
    Mr. Dahl. I missed that, sir.
    Mr. Poliquin. Any reason why we can't ask for it? Am I not 
supposed to ask for the contract and settlement agreement?
    Mr. Dahl. No. I would think it would be well within your 
rights to ask for it.
    Mr. Poliquin. Okay. Have you asked for the contract?
    Mr. Dahl. Did we ask for it?
    Mr. Poliquin. Did you ask for it?
    Mr. Bowman. Yes, we did.
    Mr. Poliquin. And who said no?
    Mr. Bowman.--we did ask to--
    Mr. Poliquin. And who said no?
    Mr. Bowman [continued].--go over the settlement agreement--
    Mr. Poliquin. And who said no?
    Mr. Bowman. I believe that we got a majority of it. Not 
sure if we got the complete settlement agreement.
    Mr. Poliquin. Who said no? Who decided to withhold how much 
of that contract settlement agreement? Who was it?
    Mr. Bowman. Could we take that for the record, please? And 
we can give you a more accurate response.
    Mr. Poliquin. This is unbelievable. I'm not even sure I 
want to yield back my time; I'm having fun doing this. What a 
mess.
    Anybody embarrassed here?
    We've got 7 million veterans we're trying to take care of. 
We've got a budget that's gone up from, I don't know, from $90 
billion to $187 billion over 8 years. We can't keep track of 
stethoscopes and tongue depressors?
    We're losing our pants on deals, and after the deal, after 
we find out we've lost it all, we relieve them of 
responsibility. This is unbelievable.
    I yield back my time, but before I do, I want to make it 
short and clear: We want that contract settlement agreement.
    Thank you.
    Mr. Bergman. Thank you.
    In case you haven't figured out--have any of you testified 
in the last 18 months before this panel before?
    Ms. Czarnecki. No, sir.
    Mr. Constantian. Yes, sir, I have.
    Mr. Bergman. You know probably what I'm about to say, 
because you've heard it before, the lack of a sense of urgency 
in all accounts. And the point is we are living one more 
example here, that the need for the sense of urgency on the 
part of everyone within the VA, because when the men and women 
who serve our country in uniform--they have a sense of urgency 
in what they do, and shame on anyone, especially in the VA or 
on this Committee, who doesn't have that same sense of urgency 
when it comes to meeting those veterans' needs and getting it 
done right.
    I'll claim my time here for my 5 minutes.
    Ms. Czarnecki, I'd like to start with the money question. 
How much was spent on the Catamaran point-of-use project up 
until its termination? And how much has been spent on RTLS to 
date? What is the total?
    Ms. Czarnecki. So Catamaran is still going through an 
equitable adjustment, but so far, $117 million. And for RTLS, 
we have obligated $360 million.
    Mr. Bergman. Okay. So you said $117 million or $171 
million?
    Ms. Czarnecki. I believe we have so far paid out $117 
million.
    Mr. Bergman. Okay. Now, we know how much we've paid out. 
How much additional funding is going to be necessary to finish 
RTLS?
    Ms. Czarnecki. My understanding is that we are ending this 
contract, so it will be roughly around $360 million.
    Mr. Bergman. So another $360 million?
    Ms. Czarnecki. No, no, total. We've already obligated the 
$360 million. We are finishing the work on this contract.
    Mr. Bergman. So no more money. We're just terminating, 
finishing the contract?
    Ms. Czarnecki. Right. That's my understanding.
    Mr. Bergman. Okay. So no more funds expended.
    Ms. Czarnecki. No more funds expended. We will be looking 
at our return on investment in the business cases of the 
equipment that has been deployed, the applications that have 
been deployed, to determine if we want to further expand.
    Mr. Bergman. Okay. So you're just terminating the contract 
when it expires, not renewing it?
    Ms. Czarnecki. Right. Not renewing.
    Mr. Bergman. Okay.
    And, again, Ms. Czarnecki, I understand that the chief 
logistics officers in the VISNs inspect the medical center 
logistics departments annually. Is that correct?
    Ms. Czarnecki. Yes, they do.
    Mr. Bergman. Okay. So it's also my understanding that VISN 
5 did not conduct any logistics inspections of the D.C. 
facility, in 2016 or 2017. That was during the OIG's 
investigation when the supply issue was under intense scrutiny.
    How do you explain the fact, when there's a lot of bad 
things going on that you can see, why weren't there 
inspections?
    Ms. Czarnecki. There was actually an inspection done in 
2017 by the program office. We actually had people from the 
program office who staffed the D.C. medical center through 
November of 2017. Their staffing was down to 40 percent of what 
they should have had.
    Mr. Bergman. Okay. Well, I'll tell you what. What was the 
result of the inspection?
    Ms. Czarnecki. They were not, in fact, using the Catamaran 
system. They did not have an inventory management system. They 
were not using GIP. They were using paper systems.
    Mr. Bergman. So, basically, they weren't complying with any 
of the directives. That was determined during an inspection. 
Were the people in charge on a daily basis monitoring the fact 
that they weren't doing what they were supposed to be doing 
with RTLS or Catamaran or whatever else?
    Ms. Czarnecki. The Chief Logistics Officer at the medical 
center would've been ultimately responsible. The medical center 
director was aware of the issues as well. Both of them have 
since been removed from their positions.
    Mr. Bergman. ``Removed'' as in still employed by the VA, or 
removed and terminated?
    Ms. Czarnecki. The medical center director was terminated. 
I believe the Chief of Logistics was also terminated, but I'm 
not positive if he voluntarily left or if he was terminated.
    Mr. Bergman. Okay.
    Mr. Dahl, your colleagues in the Office of Inspector 
General conducted the investigation at the Washington, D.C., 
medical center's logistics and supply practices. As I mentioned 
in my opening remarks, there seem to be varying accounts as to 
the extent Catamaran was ever used there at all. What did your 
office observe?
    Mr. Dahl. The team that was there determined that Catamaran 
was never fully used at the D.C. medical center and that, prior 
to the Catamaran, they weren't using the GIP fully before the 
transition to Catamaran as well.
    Mr. Bergman. So they were a little bit behind the power 
curve, as we might say in flying, already. Why would we even 
consider choosing them if they're already struggling to do 
their day-to-day operations? Why would we choose them as a 
pilot site or a test site if they don't have their act together 
on the front end?
    Ms. Czarnecki. We thought that installing the Catamaran 
system would actually assist them. The Shipcom organization 
came in and built the inventory system for them, so they did 
utilize it for a very short period of time. But it's something 
that you need to maintain, and as soon as folks were not paying 
as much attention, they quit maintaining the system and went 
back to their paper system.
    Mr. Bergman. Okay.
    I see my time has expired here. I'm going to ask my 
colleagues, would anyone like a second round of questions?
    You're good? Okay.
    I'm going to ask one final one here as I go into the 
closing remarks.
    I heard you mention that, in trying the Catamaran system or 
RTLS, there was nothing like this that existed in the health 
care system, in hospitals around the country, outside of 
federally run.
    So why would VA try to eat this elephant, if you will, in 
one bite without having any reference point to start from, as 
far as success or failures, in--whether it be Humana, pick your 
hospital chain that is run around the country. Why would VA 
gamble the valuable, limited taxpayers' dollars focused on the 
veterans? Why would they gamble on being a lab for this? What 
was the risk management involved with that?
    Ms. Czarnecki. So Catamaran is an integrator of software. 
Automated supply chain systems do exist and have existed in 
private sector. Perhaps this wasn't the best choice for us. We 
had made an incorrect assumption that, with a COTS product, it 
was off-the-shelf and that we would be able to implement it 
fairly easily. That did not happen.
    RTLS was kind of new for the health care space back in 
2010. It's being used widely now to manage sterile processing, 
cath labs, track patients, track providers, frankly, so I know 
where a doctor is, whether he's in the OR, or whether he's in 
clinic. So I think that VA wanted to be on the cutting edge and 
make sure that our veterans had the latest technology.
    We have received benefit from the RTLS system. We are 
seeing cost savings every day in our cardiac cath labs. Our 
sterile processing--
    Mr. Bergman. But is the VA, given the fact of maybe its 
decentralized nature of some of the operations and the fact 
that I think we've seen before that some of the VISNs don't 
necessarily coordinate and talk with one another--and when you 
put test sites together or pilot programs together, unless you 
focus the group and hold the people accountable for that 
mission of ``here is what we're trying to accomplish, here are 
our timelines, here are the metrics that we are trying to 
achieve,'' it would seem to me that the VA is not the place 
capable of doing as complex a technology project as objects 
this. And, therefore, because it's not the right place, the 
veterans' care potentially suffers much more than it should.
    So, I guess it concerns me that we are trying to do too 
much, when we may not have the expertise and the tight 
coordination to actually assess the results of what it is we're 
trying to achieve.
    So I would ask that you would submit for the record any and 
all disciplinary action taken as a result of poor performance 
relating to the Catamaran and RTLS projects so that we know who 
in fact was held accountable for those failures.
    With that, I'd like to thank the witnesses for your 
testimony. The panel is now excused.
    The failure of the Catamaran point-of-use system and the 
rocky experience with the RTLS to-date should serve as 
cautionary tales. What the two efforts have in common, beyond 
both being logistics technology projects, is that they are 
complex collaborations between the Veterans Health 
Administration and the Office of Information and Technology. 
Nearly everything VA does in the medical arena relies on 
software, and most of the Department's software impacts that 
medical care.
    In RTLS specifically, many of the problems encountered were 
not just the result of the two organizations struggling to 
cooperate; they were the result of VHA deliberately avoiding 
OI&T and its processes. Although the events in question took 
place several years ago, this sort of friction, the natural 
friction between bureaucracies, between VHA and OI&T, has been 
an issue since OI&T was first established in 2006.
    We have to get it right, because the stakes are 
dramatically increasing. The Electronic Health Record 
Modernization Program, which we have been awaiting since last 
year, is perhaps the largest medical information technology 
collaboration in the history of the Federal Government. Its 
scope and its scale are challenging enough, and the VA cannot 
afford this sort of organizational infighting.
    The Committee is committed to exercising vigorous oversight 
of the Cerner implementation. We are united on this issue. This 
is bipartisan.
    This morning, we approved H.R. 4245 in markup, the EHRM 
Oversight Act. I am proud to cosponsor the legislation with 
Ranking Member Walz, Chairman Roe, and Ranking Member Kuster.
    I believe that the many lessons learned through the RTLS 
project are directly applicable to the Electronic Health Record 
Modernization. RTLS, without a doubt, produced some tangible 
benefits despite its setbacks. And, by all means, it is 
preferable to learn these lessons in a half-billion-dollar 
project--that's ``half-billion'' with a ``B''--before taking on 
the $16 billion project. But VA cannot--I repeat, cannot--
repeat the same mistakes again. That will be totally 
unacceptable.
    We will continue to monitor the RTLS as it enters what I 
hope are its final months, not years.
    I ask unanimous consent that all Members have 5 legislative 
days to revise and extend their remarks and include extraneous 
material.
    Without objection, so ordered.
    I would once again like to thank my colleagues and all our 
witnesses and the audience members for joining us here this 
afternoon.
    With that, the hearing is now adjourned.

    [Whereupon, at 3:16 p.m., the Subcommittee was adjourned.]




                            A P P E N D I X

                              ----------                              

          Prepared Statement of Tammy Czarnecki, MSOL, MSN, RN
    Good afternoon Chairman Bergman, Ranking Member Kuster, and Members 
of the Subcommittee. I appreciate the opportunity to discuss the 
Department of Veterans Affairs (VA) Real-Time Location System (RTLS) 
project and VHA's Point-of-Use (POU) program. I am accompanied today by 
Dr. Alan Constantian, Deputy Chief Information Officer, Office of 
Information and Technology (OIT).

Introduction

    In 2011, VA chartered several major transformation initiatives, 
including two to improve Health Care Efficiency, the RTLS project and 
the POU program. RTLS project was chartered to automate processes and 
improve health care services that VA provides to Veterans. The primary 
objectives of RTLS are tracking medical and surgical instruments 
through sterile processing, automating inventory management of 
specialized medical supplies in Cardiology, extending utilization and 
safety of medical equipment by knowing its location in real time, and 
monitoring temperature of medication storage areas. In addition to 
improving operational efficiency, these RTLS applications create a 
safer system of care for Veterans. VA planned to deploy RTLS in several 
phases within the Veterans Integrated Service Networks (VISN) and 
Consolidated Mail Outpatient Pharmacies, with the goal of deploying 
RTLS to all VA medical facilities.
    The VHA POU program was chartered to acquire and install a 
Commercial-Off-The-Shelf (COTS) supply chain management system to 
effectively manage the consumable medical supply inventories throughout 
the medical center. An effective supply chain management system would 
allow visibility of stock levels of consumable supplies by employing 
different technologies to provide data to minimize stock outs, decrease 
process inefficiencies, and create cost savings by reducing excessive 
supply inventories.
    The RTLS and POU programs had separate and distinct functions 
relating to health care operations and the VHA supply chain. RTLS 
centered on medical equipment and instrument tracking and specialized 
medical supplies specifically in the Cardiac Catheterization (Cath) 
Lab, while POU focused on all consumable supplies used in patient care.

Deployment of RTLS

    While basic RTLS technology (otherwise known as Radio Frequency 
Identification) is commonplace in several industries, it is relatively 
new to health care. VA conducted market research through site visits, 
industry days, and limited scope demonstrations. We defined 
requirements and determined an acquisition strategy. In June 2012, VA 
awarded a firm-fixed-price, indefinite delivery, indefinite-quantity 
contract to Hewlett Packard Enterprise Services (HPES). The contract 
scope encompassed design, installation, testing, and maintenance of 
RTLS. Task orders were to be issued against the contract, which had a 
$543 million ceiling. The two initial task orders issued were for 
deployment of RTLS in VISN 23 and for system design standards and 
interface development. Sixteen task orders were subsequently issued. As 
of April 2018, the total awarded value was $345 million against the 
contract.
    The RTLS project is jointly managed by VHA and OIT, per a 
Memorandum of Understanding signed in 2011 by the Under Secretary for 
Health and the VA Chief Information Officer. The RTLS solution utilizes 
COTS technologies and software to directly support patient care 
delivery and outcomes. VHA established a Project Management Office to 
assist VHA facilities with the procurement and deployment of RTLS and 
to coordinate project execution with OIT. Contracting Officer 
Representatives (COR) were assigned to manage each task order, 
typically a VISN-level biomedical engineer for VISN task orders, or an 
information technology (IT) project manager for IT task orders.
    RTLS requires extensive infrastructure to be installed throughout 
entire hospital buildings, with design and installation generally 
taking 1-2 years. Consistent with objectives of the major 
transformation initiative, installation progressed simultaneously at 
facilities to achieve transformational benefits across VA. The Fargo VA 
Medical Center (VAMC) in VISN 23 was the first site to complete 
installation and test the system in March 2015. VA identified several 
defects, and the contractor was formally charged to correct them. The 
progress on deployment in other facilities was delayed or halted while 
Fargo VAMC discrepancies were investigated. During that time, VISN 23 
and VISN 8 task orders expired.
    With technology projects of the scope and complexity of RTLS, it is 
common to periodically reassess the program and adjust the approach to 
achieve the best outcome and minimize programmatic and cost risks. In 
September 2016, VA made a program decision to realign the RTLS program 
and entered into negotiations with HPES with a shared goal to expedite 
the implementation of the RTLS solution. Specifically, to capture the 
agreements made during these negotiations, VA modified the existing 
RTLS contract and executed a Global Settlement Agreement that resulted 
in a realigned implementation strategy, agreement on system 
requirements, improved clarity of location accuracy objectives, and a 
new deployment schedule through 2018. Changing the implementation 
strategy to deploy applications independently and in phases has led to 
positive deployment progress.

Positive Outlook

    The deployment of RTLS accelerated following the contract 
renegotiation, with many positive outcomes continuing through the 
present. VHA is realizing benefits from all RTLS applications. The 
Sterile Processing solution has been successfully implemented at 60 
facilities. With 1,000,000 surgical and dental instruments being 
tracked, the right instruments are being delivered to the right 
Operating Room for the right surgical procedure. The Cath Lab solution 
has been deployed at 28 facilities and is generating notable supply 
cost savings. In fiscal year (FY) 2017, one VAMC reduced Cath Lab 
supply costs by $700,000 due to more efficient management. Many VISNs, 
including VISNs 8 and 23, are utilizing the Sterile Processing and Cath 
Lab solutions.
    Asset Tracking deployment, the most infrastructure-intensive RTLS 
application, has also progressed. Asset Tracking has enhanced the 
safety, utilization, and maintenance of medical equipment. For example, 
one hospital remediated a safety issue with 300 infusion pumps within 2 
weeks because all infusion pumps were quickly located. Without RTLS, it 
would have taken 2 months and significantly more labor hours to 
complete the safety remediation. Infusion pumps administer medication 
intravenously and equipment errors may lead to patient harm. VA intends 
to use RTLS to track location of its entire fleet of 35,000 infusion 
pumps, which will have immense positive impact on patient safety. An 
additional example of the efficacy of RTLS is that it allows hospital 
staff to proactively retrieve equipment for cleaning after patient use, 
thus maximizing availability of equipment for patient care. Asset 
Tracking installation is substantially complete at 32 sites, with 
system testing in progress. 105,000 equipment assets are tagged for 
real time location awareness.
    VHA is gathering benefits data and will assess the return on 
investment over the next year. The early measures of success in both 
Cath Lab and Sterile Processing is positive and has led to increased 
interest from other VHA facilities to implement the solutions.

VHA and OIT Response to OIG Report Findings

    In September 2015, the VA Office of the Inspector General (OIG) 
received an allegation claiming VA management failed to comply with VA 
policy and guidance when it deployed RTLS without appropriate project 
oversight. OIG conducted an official review, spanning the time period 
during and after completion of the Global Settlement Agreement. The 
review resulted in three findings that VA contested, but agreed to 
implement to further strengthen the program.
    OIG recommended that VA apply additional resources and implement 
improved integrated project management controls for the remainder of 
the project. VHA and OIT have continued to align and improve project 
management processes following the conclusion of the contract 
renegotiation and publication of the OIG report. More than 100 gate 
reviews have occurred since October 2017 at various steps in the 
deployment and testing process.
    The OIG finding that VA did not follow an incremental project 
management approach was based on an interpretation of VA policy 
regarding management of IT projects. The September 29, 2017, OIG 
Report, ``Review of Alleged Use of Wrong VA Funds to Purchase 
Information Technology Equipment,'' concluded that the use of medical 
funds for RTLS was appropriate. The RTLS deployment efforts have been 
managed utilizing sound project management practices. For example, gate 
reviews are conducted for various milestones, and deployment work in 
several VISNs was paused following unsuccessful testing at the Fargo 
facility. Additionally, planned investments were suspended pending 
successful deployment of RTLS at lead facilities.
    OIG identified the need for VA to implement improved risk 
assessment oversight to identify potential vulnerabilities that may 
adversely affect other VA systems. VA conducted risk assessments prior 
to previous RTLS deployments and an Authority to Operate was in place 
for all systems that were deployed to the network. VA will perform 
continual risk assessments to assure that the risks associated with 
deploying additional RTLS systems on the VA network are minimized.

The VHA POU Program

    A POU system provides asset visibility to the asset's POU. VA 
defines our POU as the medical supply rooms scattered in the wards and 
other clinical care facilities located throughout VAMCs. POU systems 
rely on enabling processes and technologies to include automated 
storage units, bar coding, and Kanban. The premise behind Kanban 
involves using a highly visual cue, such as an empty bin, to signal the 
need for replenishment. The VA system would utilize an integrating 
software system to bring these capabilities together to improve asset 
management efficiency. POU system software provides a fully integrated 
and intuitive platform through which an organization can analyze, 
monitor, and conduct the majority of data-driven tasks. There is an 
opportunity to collect, store, and administer data analysis through a 
single convenient portal, ensuring seamless communication within an 
organization. Integration would also allow for optimal tracking, 
collection, and analysis of data on all tasks, records, information, 
and activities performed within a system. This would increase 
efficiency on a large scale, ensuring smoother operations and improved 
productivity.
    On April 11, 2013, the Executive Decision Memorandum creating the 
VHA POU program was funded with $58 million of FY 2013 expiring funds. 
The POU program was envisioned and intended to provide an integrated 
supply chain management system capable of providing consolidated data 
to facilitate supply chain management. The consolidated data would be 
used to effectively manage consumable medical supply inventories 
throughout the VAMC, including the secondary (patient care area) 
inventory level, decreasing excessive stock levels, decreasing process 
inefficiencies and providing costs savings opportunities, and providing 
for expanded use of medical and surgical vendor contracts.
    In June 2013, an acquisition package was assembled and provided to 
the contracting office, Program Contracting Office - East. VA solicited 
a full and open competition request for proposals, ultimately netting 
three proposals. The competitive range reduced the number of offerors 
for consideration to two. Both offers were evaluated in accordance with 
the source selection plan and based upon their technical proposal. 
Shipcom Wireless, Inc., a small disadvantaged business, was awarded the 
contract on September 23, 2013.
    The contract required 20-35 assessments and implementations in each 
contract period. Assessments were to document current state of 
technology, inventory management processes and procedures, and stock 
levels in each facility. After an assessment was completed, the 
Contractor was to propose a POU solution, including automation, storage 
equipment, and processes, designed to create efficiencies and provide 
data to manage inventory stock levels. During the base period of the 
contract 27 site assessments were completed, but due to contractor and 
government delays, only 8 of the 27 sites were implemented with the 
Contractor's solution (Catamaran). The first option period was 
exercised in September 2014 and while no new assessments were 
completed, 14 more sites were implemented. The contractor was 
significantly behind schedule, and because there were other 
implementation delays, it became apparent that they would not be able 
to complete the required number of facilities within the contractually 
specified time period. Thus, modifications to the contract were 
executed. The second option period was exercised in September 2015, but 
due to schedule delays, assessments for this period did not begin until 
December 2015. VHA leadership was committed to the continuation of the 
program, and the Contractor was required to submit a corrective action 
plan, outlining a schedule catch up. No assessments or implementations 
were completed in the second option period as the Contractor proposed 
significant changes to the contract pricing to complete the work.
    In April 2016, a new Contracting Officer and COR were assigned to 
the project who in turn reiterated to the contractor that the contract 
was firm-fixed-price and clearly restated the contract requirements and 
deliverables. The Program Office worked with the vendor to identify 
specific shortcomings in the required site assessment reports, such as 
lack of site implementation plans, billing and invoicing deficiencies, 
and insufficient site documentation and equipment inventory records.
    On June 3, 2016, a corrective action plan was submitted by the 
vendor requesting another time extension for an additional $59.9 
million to complete the contract requirements. This corrective action 
plan did not provide corrective actions based on governmental concerns, 
rather it proposed additional work and additional costs to the 
performance work statement already part of the contract. The contractor 
was unable to complete site assessment reports in accordance with the 
contract requirements despite numerous attempts to review report 
deficiencies and to provide guidance to correct said deficiencies. The 
Program Office also began investigating the recurring costs of future 
software licenses and maintenance. Research showed that these costs 
would be an estimated $54 million per year, even with a proposed 
decrease in license fees. This figure was deemed unsustainable based on 
the following: a new Return on Investment analysis was performed by the 
Veterans Engineering Resource Center, utilizing the vendor's new 
implementation costs and extension request. The result of this analysis 
indicated that the POU program would not see a ``break even'' on the 
investment of $275 million for over a decade.
    In addition to escalating costs proposed by the vendor, the Shipcom 
POU solution, including its supporting Catamaran software, was not 
meeting contractual requirements, nor was it meeting the intended 
operational needs of the program to ``establish an integrated supply 
chain system that was capable of providing consolidated data to 
facilitate supply chain management.'' The decision was made to stop 
further assessments and implementations and not exercise future option 
periods of the contract.
    Upon decision to discontinue the contract effort, a plan was 
derived to transition the 22 sites that had converted to the Catamaran 
system, including the DC VAMC, back to VA's Generic Inventory Package 
(GIP). The POU program team pulled the consumable supply inventory data 
from the Catamaran system and uploaded that into GIP using the Excel 
tool. Over the course of seven weeks in January and February 2016, the 
POU program team traveled to the sites to educate the facility staff on 
use of the tool and to transition the data.

Conclusion

    RTLS has significantly improved the efficiency and safety of health 
care of our Veterans. Patient safety and infection control are improved 
because surgical instruments are being tracked through sterile 
processing. Utilization, safety, and maintenance of medical equipment 
are improved. Cost savings are being realized in Cath Labs. In order to 
sustain these efforts, we ask Congress for continued support of VA 
modernization by investing attention and financial resources into this 
process automation system that is crucial in keeping our Veterans safe. 
It is critical that we continue to move forward with the current 
momentum and preserve the gains made thus far. Your continued support 
is essential to providing care for Veterans and their families. Mr. 
Chairman, this concludes my testimony. My colleague and I are prepared 
to answer any questions.

                                 
                  Prepared Statement of Nicholas Dahl
    Mr. Chairman, Congresswoman Kuster, and Members of the 
Subcommittee, thank you for the opportunity to discuss the Office of 
Inspector General's (OIG) report, Review of Alleged Real Time Location 
System Project Mismanagement. \1\ Our statement today focuses on our 
review of whether VA effectively managed the Real Time Location System 
(RTLS) project to meet cost and schedule targets, and performance and 
security needs. I am accompanied by Mr. Michael Bowman, Director, OIG's 
Information Technology and Security Audits Division.
---------------------------------------------------------------------------
    \1\ Published on December 19, 2017.

---------------------------------------------------------------------------
BACKGROUND

    Since 2000, the VA OIG has identified Information Technology (IT) 
Management as a major management challenge because VA has a history of 
not properly planning and managing its critical IT investments. OIG 
audits in recent years established that IT systems development at VA is 
a long standing high-risk challenge, susceptible to cost overruns, 
schedule slippages, performance problems, and in some cases, complete 
project failures. VA continues to face challenges in developing the IT 
systems it needs to support VA's mission goals.
    In 2011, the Veterans Health Administration (VHA) selected RTLS as 
the technology to provide tools to assist in the automation and 
improvement of operations and health care services that VHA provides to 
its veterans. RTLS was created to support VA's Health Care Efficiency 
major transformation initiative and to enable VHA to achieve clinical 
objectives, administrative process efficiency, and total asset 
visibility. In particular, RTLS uses multiple technologies for locating 
and tracking medical equipment. VHA intended to deploy it at all 
medical facilities nationwide.
    In June 2012, VHA awarded a firm-fixed-price, indefinite-delivery, 
indefinite quantity negotiated contract with a $543 million ceiling to 
Hewlett Packard Enterprise Services to deploy a nationally integrated 
RTLS solution over the course of five years. This solution was to 
include commercial off-the-shelf technologies and software 
applications. The RTLS procurement and implementation process was a 
cooperative effort between VHA, the Office of Acquisitions and 
Logistics, and the Office of Information and Technology (OIT).
    VA policy required that the RTLS project be managed under VA's 
Project Management Accountability System (PMAS). PMAS was a project 
management system intended to establish a discipline to ensure that an 
IT project's customer, project team, vendors, and all stakeholders 
would focus on a single compelling mission-achieving on-time project 
delivery. PMAS used incremental product build techniques for IT 
projects with delivery of new functionality, tested and accepted by the 
customer, in cycles of six months or less.

REAL TIME LOCATION SYSTEM PROJECT

    We received a complaint alleging VA management failed to comply 
with VA policy and guidance when it deployed RTLS assets without 
appropriate project oversight. The complainant also stated that VA 
deployed RTLS assets without meeting VA information security 
requirements. Consequently, we focused our review on whether VA 
effectively managed the RTLS project to meet cost and schedule targets, 
and performance and security needs.
    In December 2017, we reported that management failed to comply with 
VA policy and guidance when it deployed RTLS assets without appropriate 
project oversight. Specifically, we concluded the RTLS Project 
Management Office (PMO) did not follow guidance from VA's Technology 
Acquisition Center (TAC) to use an incremental project management 
approach during the acquisition and deployment of RTLS assets to 
compensate for numerous known project management risks. We also 
reported that the RTLS PMO did not comply with VA policy requiring the 
use of the PMAS incremental oversight processes for all acquisitions 
and delivery of RTLS assets. Despite TAC guidance and VA policy, the 
RTLS PMO did not ensure the vendor could meet contracted functionality 
requirements on the initial $7.5 million task order, such as accurate 
asset tracking, before ultimately committing a total of $431 million to 
the same vendor for further RTLS deployments.
    VHA had awarded an initial $7.5 million task order to deploy RTLS 
to one of its Veterans Integrated Service Networks (VISN) with an 
expected delivery date in December 2013. \2\ However, during initial 
VISN operational testing in March 2015, VHA identified 245 
functionality defects that resulted in the issuance of a contract cure 
notice \3\ to the vendor. By June 2016, the cure notice was still 
unresolved, as 46 significant defects were still outstanding including 
RTLS' inability to meet contract requirements for asset tracking and 
software functionality. Overall, the VISN task order included more than 
20 contract modifications that resulted in changes to the project's 
scope and schedule, and significantly increased the final task order 
costs. The VISN allowed this task order to expire on the contract end 
date in July 2016 and ended its participation with the RTLS project.
---------------------------------------------------------------------------
    \2\ VISN 23 - VA Midwest Health Care Network (Eagan, Minnesota and 
Lincoln, Nebraska)
    \3\ Per FAR 49.607, a cure notice informs the contractor of a 
specific failure and gives them an opportunity to cure the defect 
within 10 days.
---------------------------------------------------------------------------
    In September 2016, VA renegotiated the RTLS contract due to the 
vendor's inability to implement a functional RTLS solution. The 
renegotiation was intended to realign RTLS and expedite the 
implementation of the RTLS solution in each VISN. Specifically, VHA 
executed a Global Settlement Agreement that resulted in extensive 
changes to the vendor's contract requirements, to include expiration of 
task orders for two VISNs, reduction in the scope of RTLS applications 
deployed, extension of the contract period of performance through June 
2018, and commitment of $431 million in total costs to the vendor as of 
December 2016. According to the agreement, VA also released the 
contractor from any liability claims related to prior performance on 
the contract.
    We also found that VA deployed RTLS assets without appropriate 
project oversight because management failed to provide effective 
oversight of the RTLS project from acquisition through development and 
implementation. Specifically, VA's Office of Planning and Policy's 
Enterprise Program Management Office provided minimal oversight of RTLS 
project management activities. Further, the RTLS PMO did not follow 
project implementation policy, including adherence to VA's PMAS process 
and lacked the oversight authority to ensure success of an enterprise 
level deployment involving information technology.
    We also substantiated the allegation that VA deployed RTLS assets 
without meeting VA's information security requirements. VA's 
fundamental mission of providing benefits and services to veterans is 
dependent on the Department deploying secure IT systems and networks. 
VA's information security program and its practices are designed to 
protect the confidentiality, integrity, and availability of VA systems 
and data. Specifically, we reported the RTLS PMO and OIT personnel 
deployed RTLS assets without the appropriate system authorizations 
needed to connect such devices to VA's network. This inadequate 
oversight of RTLS risk management activities left VA mission critical 
systems and data susceptible to unauthorized access, loss, or 
disclosure. Consequently, VA's internal network faced unnecessary risks 
resulting from untested RTLS system security controls.
    Given the uncertainty of the project, future RTLS cost estimates 
are unknown. Further, we reported, that VA must exercise cost control, 
sound financial stewardship, and discipline in RTLS development. VA 
also must demonstrate that RTLS is a worthwhile investment, providing 
taxpayers with a good return on investment. Consequently, we stated 
that it is imperative that VA use incremental and validation-based 
project oversight processes to ensure that VA does not incur additional 
project costs without achieving RTLS required functionality. VA's 
failure to deliver a successful RTLS solution will prevent the 
Department from achieving its Health Care Efficiency goals of facility 
automation, administrative process efficiency, and total asset 
visibility. As a result of inadequate project management, VA lacked 
assurance of an effective return on the $431 million invested in RTLS 
and that deployed assets were operating in accordance with contract 
requirements.
    We provided several value added recommendations for improving 
controls over VA's oversight of system development projects. This 
included recommendations addressing the need for VA to apply additional 
resources and implement improved integrated project management controls 
for the remainder of the project to restrict further RTLS cost 
increases and the need to enforce the use of incremental project 
management and validation controls on all remaining RTLS task orders to 
ensure such efforts will provide an adequate return on investment.
    The Executive in Charge, Office of the Under Secretary for Health 
and OIT's Acting Assistant Secretary concurred with our 
recommendations. The Executive in Charge reported VHA and OIT are 
addressing program resourcing and project management controls and will 
implement improved controls. Management also stated that OIT committed 
a senior project manager resource and VHA will pursue approval of 
increased staffing. Additionally, an RTLS Governance Council, which 
will have responsibility for defining cost, scope, and schedule 
performance metrics, is in development. Furthermore, the Executive in 
Charge reported the RTLS Governance Council will assure implementation 
of project management oversight that includes organizational risk 
management for technology deployment. Regarding the information 
security finding, the Acting Assistant Secretary reported that OIT will 
conduct risk assessments prior to future deployments to minimize risks 
associated with the deployments. The OIG will monitor implementation of 
planned corrective actions to ensure that our recommendations are 
addressed.

CONCLUSION

    Our recent work demonstrated that VA continues to face challenges 
in managing its IT development projects. Our review of RTLS indicated 
VA needs enhanced discipline, oversight, and resource management to 
support successful IT development. VA has taken some actions to address 
issues we identified in our RTLS report and in other recent reports; 
however, it remains to be seen whether the actions will effectively 
improve VA's ability to meet cost, schedule, performance, and security 
goals when managing mission-critical system initiatives.
    Mr. Chairman, this concludes my statement. We would be happy to 
answer any questions you or Members of the Subcommittee may have.