[Joint House and Senate Hearing, 116 Congress]
[From the U.S. Government Publishing Office]






                      THE STATUS OF THE DEPARTMENT
                     OF VETERANS AFFAIRS' FINANCIAL
                   MANAGEMENT BUSINESS TRANSFORMATION

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

                             JOINT HEARING

                               before the

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                                and the

                SUBCOMMITTEE ON TECHNOLOGY MODERNIZATION

                                 of the

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

                     ONE HUNDRED SIXTEENTH CONGRESS

                             FIRST SESSION

                               __________

                       THURSDAY, DECEMBER 5, 2019

                               __________

                           Serial No. 116-49

                               __________

       Printed for the use of the Committee on Veterans' Affairs



                 [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
               
               

                    Available via http://govinfo.gov




                                 ______
                                 

                 U.S. GOVERNMENT PUBLISHING OFFICE

48-810                    WASHINGTON : 2022







                     COMMITTEE ON VETERANS' AFFAIRS

                   MARK TAKANO, California, Chairman

JULIA BROWNLEY, California           DAVID P. ROE, Tennessee, Ranking 
KATHLEEN M. RICE, New York               Member
CONOR LAMB, Pennsylvania, Vice-      GUS M. BILIRAKIS, Florida
    Chairman                         AUMUA AMATA COLEMAN RADEWAGEN, 
MIKE LEVIN, California                   American Samoa
MAX ROSE, New York                   MIKE BOST, Illinois
CHRIS PAPPAS, New Hampshire          NEAL P. DUNN, Florida
ELAINE G. LURIA, Virginia            JACK BERGMAN, Michigan
SUSIE LEE, Nevada                    JIM BANKS, Indiana
JOE CUNNINGHAM, South Carolina       ANDY BARR, Kentucky
GILBERT RAY CISNEROS, JR.,           DANIEL MEUSER, Pennsylvania
    California                       STEVE WATKINS, Kansas
COLLIN C. PETERSON, Minnesota        CHIP ROY, Texas
GREGORIO KILILI CAMACHO SABLAN,      W. GREGORY STEUBE, Florida
    Northern Mariana Islands
COLIN Z. ALLRED, Texas
LAUREN UNDERWOOD, Illinois
ANTHONY BRINDISI, New York

                 Ray Kelley, Democratic Staff Director
                 Jon Towers, Republican Staff Director

                                 ------                                

              SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS

                 CHRIS PAPPAS, New Hampshire, Chairman

KATHLEEN M. RICE, New York           JACK BERGMAN, Michigan, Ranking 
MAX ROSE, New York                       Member
GILBERT RAY CISNEROS, JR.,           AUMUA AMATA COLEMAN RADEWAGEN, 
    California                           American Samoa
COLLIN C. PETERSON, Minnesota        MIKE BOST, Illinois
                                     CHIP ROY, Texas

                                 ------                                

                SUBCOMMITTEE ON TECHNOLOGY MODERNIZATION

                     SUSIE LEE, Nevada, Chairwoman

JULIA BROWNLEY, California           JIM BANKS, Indiana, Ranking Member
CONOR LAMB, Pennsylvania             STEVE WATKINS, Kansas
JOE CUNNINGHAM, South Carolina       CHIP ROY, Texas


Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Veterans' Affairs are also 
published in electronic form. The printed hearing record remains the 
official version. Because electronic submissions are used to prepare 
both printed and electronic versions of the hearing record, the process 
of converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.





                         C  O  N  T  E  N  T  S

                              ----------                              

                       THURSDAY, DECEMBER 5, 2019

                                                                   Page

                           OPENING STATEMENTS

Honorable Chris Pappas, Chairman, Subcommittee on Oversight and 
  Investigations.................................................     1
Honorable Jack Bergman, Ranking Member, Subcommittee on Oversight 
  and Investigations.............................................     2
Honorable Susie Lee, Chairwoman, Subcommittee on Technology 
  Modernization..................................................     4

                               WITNESSES

Honorable Jon Rychalski, Assistant Secretary for Management and 
  Chief Financial Officer, U.S. Department of Veterans Affairs...     5

        Accompanied by:

    Ms. Terry Riffel, Deputy Assistant Secretary, Financial 
        Management Business Transformation, U.S. Department of 
        Veterans Affairs

    Mr. Daniel McCune, Executive Director, Enterprise Portfolio 
        Management Office, U.S. Department of Veterans Affairs

                                APPENDIX
                     Prepared Statement Of Witness

Honorable Jon Rychalski Prepared Statement.......................    29



 
                      THE STATUS OF THE DEPARTMENT
                     OF VETERANS AFFAIRS' FINANCIAL
                   MANAGEMENT BUSINESS TRANSFORMATION

                              ----------                              


                       THURSDAY, DECEMBER 5, 2019

              U.S. House of Representatives
      Subcommittee on Oversight and Investigations,
          Subcommittee on Technology Modernization,
                             Committee on Veterans' Affairs
                                                   Washington, D.C.

    The subcommittees met, pursuant to notice, at 10:07 a.m., 
in room 210, House Visitors Center, Hon. Chris Pappas [chairman 
of the Subcommittee on Oversight and Investigations] presiding.
    Present from Subcommittee on Oversight and Investigations: 
Representatives Pappas, Rose, Cisneros, and Bergman.
    Present from Subcommittee on Technology Modernization: 
Representatives Lee, Cunningham, and Banks.

 OPENING STATEMENT OF CHRIS PAPPAS, CHAIRMAN, SUBCOMMITTEE ON 
                  OVERSIGHT AND INVESTIGATIONS

    Mr. Pappas. The hearing will come to order. Without 
objection, the chair is authorized to declare a recess at any 
time.
    Today's hearing is held jointly by the Subcommittees on 
Oversight and Investigations, and Technology Modernization. It 
is entitled, ``The Status of the Department of Veterans Affairs 
Financial Management Business Transformation.''
    For years, VA's Inspector General has reported that the 
Financial Management is a major challenge for the Department. 
The Financial Management Business Transformation, or FMBT, is 
an effort to modernize VA's financial management practices. We 
are here today to examine whether VA's current plan for FMBT is 
realistic.
    Strong financial management is about VA keeping an accurate 
track of taxpayer dollars to avoid waste and fraud. Financial 
management affects all of the important services that VA 
provides our veterans on a day-to-day basis, like getting 
medical supplies to VA hospitals to ensure veterans receive 
high-quality care; paying GI Bill benefits to help veterans 
pursue higher education; processing loan guaranties to help 
veterans achieve the goal of home ownership.
    Financial management is also about the Department's ability 
to use reliable budget and spending data to make smart cost-
benefit decisions.
    To put it simply, the need for strong financial management 
and effective IT systems underlies all of VA's operations. 
Unfortunately, VA's financial management faces some major 
problems. The Department's current financial management system 
is around 30 years old and, in VA's own words, ``relying on 
these antiquated and unintegrated IT systems presents a risk to 
VA operations.''
    I understand that the Department's obsolete financial IT 
systems require costly manual workarounds to meet VA's 
financial accountability needs and this makes it much more 
difficult for the Department to serve our veterans in a cost-
efficient and effective manner. It is noteworthy that, although 
the Department passes its annual financial audit, it continues 
to have multiple material weaknesses in internal financial 
controls.
    As we heard in the Oversight and Investigation Subcommittee 
hearing in September, the financial management system also 
contributes to VA's improper payments and debt collection 
processes, which can be particularly difficult on our veterans.
    Fortunately, VA recognizes these major challenges, but here 
is the problem: twice before, VA has tried to replace its 
financial management system, first in 1998 and then in 2006; 
both previous attempts failed after years of development and a 
loss of hundreds of millions of taxpayer dollars.
    I hope to hear today how VA has incorporated lessons 
learned from the past, these past attempts at financial 
modernization. I am sure that the Department agrees that we 
simply can't afford another failed attempt at improving 
financial management.
    VA is now saying it may take 10 years to implement FMBT. 
Yes, the current plan is to complete the project in the year 
2030, and we should ask ourselves if this is the best plan for 
success. Implementation of the new financial management system 
also depends on the success of other significant IT projects 
across the agency, which are also seeing signs of trouble, and 
so the question should be asked if this could derail FMBT.
    Although implementing new integrated IT systems is 
important, robust financial management practices require a 
strong and knowledgeable workforce; in other words, it is about 
people. I hope to hear today about how VA plans to train its 
employees across the agency on how to effectively use this new 
system and new business processes. These steps will be critical 
to ensure successful implementation of the new financial 
management system.
    While FMBT is not a cure-all for VA's challenges, its 
success is critical to improving financial management at the 
Department. Ultimately, strong financial management is 
necessary to help VA serve the veteran community as effectively 
and efficiently as possible. We all agree that we owe our 
veterans nothing less than that.
    With that, I would like to recognize Ranking Member Bergman 
for 5 minutes for his opening remarks.

OPENING STATEMENT OF JACK BERGMAN, RANKING MEMBER, SUBCOMMITTEE 
                ON OVERSIGHT AND INVESTIGATIONS 

    Mr. Bergman. Thank you, Mr. Chairman. Mr. Banks is delayed 
because of a family emergency, but will be joining us as soon 
as he can. He has asked me to make opening remarks on behalf of 
the both of us.
    With that, veterans are best served when both sides of this 
committee are working together, and I thank you for agreeing to 
hold this hearing. We are here today to take the first serious 
look by any committee at the VA Financial Management Business 
Transformation Program, known as FMBT.
    VA's existing financial management and accounting systems 
are antiquated, disconnected, and inconsistent across business 
lines. These systems are the root cause of multiple material 
weaknesses in VA's annual financial statement audit year after 
year. It is a testament to the tenacity of our witnesses that 
the Department consistently manages to pass the audit despite 
these inhibiting factors.
    FMBT began in 2016 when VA partnered with the U.S. 
Department of Agriculture, USDA, under a shared services 
arrangement to purchase and implement Computer Generated 
Imagery's (CGI's) Momentum software. At the time, VA explained 
that the current system used to produce the financial 
statements, Financial Management System (FMS), may have just 5 
to 7 years of operational life remaining. However, on December 
5th, 2017, exactly 2 years ago today, USDA canceled its 
agreement, and VA decided to continue with the Momentum 
implementation on its own. I understand the professed 
importance of FMBT, but am uncomfortable with the fact that 
this program has changed dramatically and repeatedly since its 
inception.
    Since FMBT's initiation, the completion date has stretched 
from 2025, to 2028, to 2030. The number of implementation waves 
has increased from 18 to 33, and its life cycle cost estimate 
has increased from $887 million to over $2.3 billion, with a B, 
which includes the roughly $380 million expended thus far, but 
VA has only implemented one minor software module to date in 
one of the Department's smallest business lines. The current 
schedule does not even contemplate starting to implement 
Momentum in the Veterans Health Administration, which is by far 
the largest VA organization with over 340,000 employees, until 
2023. If the prediction of FMS ceasing to function is correct, 
we only have 2 to 4 years before that happens, but FMBT will 
not complete for roughly 10 years. We have got a gap.
    I want to know how dire the situation truly is with FMS and 
the other systems that are slated for replacement. If the 
situation is dire and if installing Momentum will demonstrable 
benefits in terms of efficiency and cost avoidance, we need to 
have a serious conversation about whether completion is 2030 is 
appropriate.
    Further, I want to know whether the current life cycle cost 
estimate is conclusive and durable, and how it would change if 
the schedule could be accelerated. It seems very possible that 
some of these underlying assumptions were made when USDA was 
involved, but were never reevaluated after the model collapsed.
    Additionally, I am a firm believer in the importance of 
clear chains of command and streamlined organizational 
structures. FMBT has cycled through three different 
organizational models in just over 3 years. The confidence that 
our witnesses express in the current structure is encouraging, 
but I need to better understand it.
    The Office of Management, under the Chief Fiancial Officer 
(CFO), Mr. Rychalski, is being asked to lead all the other VA 
organizations in an IT project that involves a complex redesign 
of their business processes. This is a new role for the office. 
Today, I hope to explore where accountability and authority for 
each decision lies.
    Above all else, I want to understand exactly what to expect 
from FMBT and when to expect it. The fact of the matter is, 
FMBT is one of the largest modernization efforts underway in 
VA, but has almost entirely slipped under the radar until now. 
Congress and the taxpayers deserve to know what we are getting 
into before we are in so deep that there is no way to change 
course. If FMBT's value proposition is persuasive, it is our 
duty to make sure the program receives the attention and 
resources necessary to be successful.
    Again, Mr. Chairman, I would like to thank you for agreeing 
to hold this hearing, and I yield back.
    Mr. Pappas. Thank you very much, Ranking Member Bergman.
    I would now like to recognize Chair Lee for 5 minutes for 
some opening comments.

  OPENING STATEMENT OF SUSIE LEE, CHAIRWOMAN, SUBCOMMITTEE ON 
                    TECHNOLOGY MODERNIZATION

    Ms. Lee. Thank you, Mr. Chairman. Thank you all for being 
here today.
    Like many Federal agencies, the Department of Veterans 
Affairs is on a necessary but challenging journey to update its 
aging and antiquated IT systems. Many of these systems are not 
visible to the average observer, but they are critical systems 
that support the backbone of all VA operations and, without 
them, the VA cannot deliver the care and services that our 
veterans have earned.
    A veteran may not necessarily directly touch the systems 
that support financial management, but these systems touch 
almost every aspect of VA operations: they are what ensures 
that the VA gets the bills paid correctly and on time; they are 
how the VA ensures that programs have the resources they need 
to provide necessary services; they are also what gives the VA 
the data to make informed budgeting decisions every year.
    The systems that do all of this are currently 30 years old 
and use archaic coding language. They are unsustainable and 
have reached the end of their useful life many years over. The 
current condition of these systems leaves the VA vulnerable to 
risk, cyber-security problems, and bad financial decisions. In 
turn, these conditions can lead to harm to veterans and their 
families. The need to replace these legacy systems is clear, 
but the ongoing effort to do this raises questions about 
whether VA is approaching this modernization effort in an 
efficient and effective way.
    The new system must connect to numerous other VA IT 
systems, such as the Electronic Health Record Modernization 
(EHRM), many of which are also undergoing modernization. Having 
so many dependent systems and so much enterprise-wide change 
increases the risk to this project.
    Further, it appears that the VA is facing the same problems 
that plagued and led to failure of other IT modernization 
programs, including the lack of clear governance structure, 
inadequate and shifting requirements development, and uncertain 
resources. In the case of FMBT, schedules have already shifted 
and funding have lagged.
    I also just--I brought this notional timeframe just really 
to underscore the underlying complexity of what we are 
undergoing here. On top of that, we have had a $14 million 
shortfall out of a $2.5 billion project. That may seem small, 
but it leads to strained decision-making, taking shortcuts at 
early stages, and not making the necessary investments to 
support the overall program.
    The funding issue, as I understand it, was partly because 
of a lack of funding from the Office of Information and 
Technology, which is very concerning. We need to better 
understand Office of Information Technology's (OIT's) role in 
this enterprise-wide effort.
    While it may be necessary to refine a modernization plan, 
adjust schedules, and adapt to changing conditions, I am 
concerned that the VA has not demonstrated a high level of 
fidelity in its current plan. We have heard the Secretary say 
that the VA's business transformation is a priority, but we 
need more definitive answers about the how and the when of the 
FMBT program if it is supposed to support this transformation.
    I know the leadership here today is capable and wants this 
program to succeed. Without modernization, there is no way the 
VA's financial health will improve; however, without the 
necessary governance, accountability, and the resources, there 
is no way the VA will be able to successfully implement the 
systems it needs to support good financial management.
    Again, thank you to all the witnesses for being here, and I 
look forward to getting into the details of this program.
    Mr. Chairman, I yield back the remainder of my time.
    Mr. Pappas. Thank you, Chairwoman Lee.
    We have representatives from the Department of Veterans 
Affairs with us here this morning to discuss this important 
project. First, Mr. Jon Rychalksi, Assistant Secretary for 
Management and Chief Financial Officer of the Department of 
Veterans Affairs. Mr. Rychalski has served in this role since 
December 2017. He is accompanied by two additional 
representatives from the Department. First, we have Ms. Terry 
Riffel, Deputy Assistant Secretary for Financial Management 
Business Transformation. Finally, we have Mr. Daniel McCune, 
Executive Director of the Enterprise Portfolio Management 
Office.
    Mr. Rychalksi will provide testimony for the Department and 
each of the VA witnesses will respond to questions.
    The subcommittee thanks you all for appearing today and, 
Mr. Rychalksi, you are recognized for 5 minutes.

                   STATEMENT OF JON RYCHALSKI

    Mr. Rychalski. Good morning. Thank you. Chairs Pappas and 
Lee, Ranking Member Bergman, and distinguished members of the 
subcommittees, thank you for the opportunity to testify today 
in support of the Department of Veterans Affairs' efforts to 
modernize its legacy financial management systems through the 
Financial Management Business Transformation, or FMBT, Program.
    Successful deployment of FMBT is the most impactful thing 
we can do for VA's financial health. This effort is both high 
risk and high reward. We have two previous attempts at 
replacing the VA's legacy financial system. I was a new 
consultant just out of the Air Force with the prime contractor 
on one of the attempts, Core Fiancial and Logistics System 
(Core FLS), that was not successful, so I am aware of how 
difficult something like this can be.
    FMBT arguably had its own rough start. What began as a 
shared service partnership with the U.S. Department of 
Agriculture abruptly transitioned to a sole VA-led effort when 
USDA pulled out of the deal. This might have been the best 
thing that could have happened for this program. We 
painstakingly built very close relationships with our business 
partners, both internal and external. I firmly believe we, the 
collective VA we, are best positioned to execute this 
implementation with strong business partners like CGI, 
Deloitte, and many others.
    The VA's current financial management system, FMS, is 30 
years old and is increasingly difficult to maintain, but 
setting aside age, the real challenge is functionality. To give 
some perspective, I would like to briefly share a common 
accounting scenario, how it is done today under FMS and what it 
will look like under FMBT.
    Currently, when a contract is awarded in our contract 
management system, the award amount is not forwarded to the 
financial management system for processing. Instead, 
communication from contracting personnel to finance personnel 
to manually enter the award amount into the financial 
management system is required. This redundant keying of 
information is error-prone and it is frequently overlooked, 
necessitating tedious and time-consuming reconciliation of the 
contract management and financial management systems. Under 
FMBT, the financial impact of the contract award action, as 
well as any subsequent changes to the contract, will be 
automatically recorded and forever linked to the contract 
award, thus eliminating the need for reconciliations, and 
strengthening the accuracy of financial reporting and 
increasing the speed and accuracy of payments to contractors.
    One of the most important attributes to achieving success 
in an implementation of this complexity is strong commitment 
from senior leadership. FMBT has paired with Logistics and H.R. 
Systems Modernization in one of the Secretary's top three 
priorities that we refer to as our Business System 
Transformation Effort. I meet with the Secretary and Deputy 
Secretary daily as part of the Secretary's sync meeting. It is 
noteworthy that this is the first Secretary in my tenure that 
has included the CFO in daily sync meetings. We routinely 
discuss progress on this transformation.
    Equally important is the person leading the day-to-day 
effort. I carefully selected the FMBT leader, Ms. Terry Riffel, 
who formally headed our Financial Services Center. Ms. Riffel 
started her VA career 33 years ago at the VA Medical Center in 
Columbia, South Carolina. She has the experience and 
credibility to lead this effort. She also has experience 
successfully leading two recent major system deployments, 
Concur Travel and VATAS Time and Attendance, which were both 
deployed VA-wide.
    Our current FMBT deployment schedule takes roughly 10 years 
to complete; that is a long time. We also recently made a 
schedule change that moves the Veterans Health Administration 2 
years to the right. We made this decision because we are 
deploying FMBT at a unique time, concurrent with the deployment 
of our new electronic health record and a new medical logistics 
system, Department of Defense's (DOD's) Defense Medical 
Logistics Standard Support or DMLSS system. It gets more 
complicated than that.
    The accounting system must be tightly linked to the 
logistics system to ensure ordering, delivering, and payments 
are seamless. Some of you may recall the debacle during the 
Core FLS deployment when the accounting system, logistics 
system, and users could not function together, and surgeries 
had to be canceled because medical supplies and equipment were 
not available. This has real-life risk.
    It just so happens that in the same timeframe that DMLSS is 
being deployed across the VA, the DMLSS system itself will be 
upgraded to a more modern, cloud-based version called LogiCole. 
This presents a unique challenge in that, if we deploy FMBT 
quickly, we will need to connect the financial system to the 
logistics system two separate times with two major training 
initiatives. Our current schedule has us connecting to the 
final cloud-based version, LogiCole, one time with one set of 
training.
    Faster deployment means more disruption to end users, 
technical rework, cost, and risk. Slower deployment means it 
will take longer to get the full benefits of the FMBT system. 
None of us working on this program are satisfied with a 10-year 
deployment. The next year will be very telling with respect to 
accelerating our schedule. The electronic health record, DMLSS, 
and FMBT are all scheduled to be deployed in various locations 
for initial operational capability in 2020.
    With respect to cost, I am happy to report that we are 
within our planned budget. The current estimate for FMBT full 
deployment is roughly $2.5 billion. Our most significant 
funding issue is access to IT funds. The IT budget is stretched 
very thin with many new and costly requirements associated with 
the MISSION Act, Colmery Act, needed infrastructure upgrades, 
and a seemingly endless list of system enhancements that 
improve service to veterans. IT funding is an additional hurdle 
that must be overcome if we ultimately accelerate the 
deployment.
    I am proud of the progress we have made and look forward to 
a big year in 2020. Our deep collaboration with and unwavering 
support from VA administrations and staff offices has given the 
program the flexibility and adaptability to work through any 
issue and handle the funding challenges to date. With the 
National Cemetery Administration (NCA) implementation on 
schedule for go-live in July 2020, FMBT is poised for success.
    Chairs Pappas and Lee, Ranking Member Bergman, and members 
of the subcommittee, this concludes my statement. I would be 
happy to answer any questions.
    Thank you.

    [The Prepared Statement Of Jon Rychalski Appears In The 
Appendix]

    Mr. Pappas. Thank you very much for your testimony. We will 
now move on to the questioning period of the hearing and I will 
begin by recognizing myself for 5 minutes.
    I think no one here disagrees with the fact that we need to 
modernize the financial management at the Department, that fact 
is very clear, but there is deep concern about failed attempts 
in the past, and I want to zero in on what lessons were learned 
from those two failed attempts and other implementation efforts 
that have gone on across the VA about how you can focus your 
efforts here, and I would ask that of all three members of the 
panel.
    Mr. Rychalski. Sure. I will give you my perspective. I 
mentioned that I was on Core FLS as a contractor and had been a 
contractor off and on for about 10 years. My impression is, 
having been a consultant, that many times the agency that we 
were supporting was in a better position, frankly, to lead the 
effort. A lot of times they turned it over to the contractor, 
who did not understand the business nearly as well.
    I think number one for me is it should be government-led. I 
think that the leadership team, support from senior leadership 
is incredibly important. Beyond that, I think one of the most 
important things is absolutely having buy-in from the 
administration, staff offices, the customers, both internal and 
external.
    I know that Terry Riffel was here for both previous 
deployments and I think she probably has some insight as well 
she could share.
    Mr. Pappas. Thank you.
    Ms. Riffel. I would just add a couple of things. First of 
all, the involvement of the end users is critical. I was on the 
Veterans Affairs Time and attendance System (VATAS) deployment, 
one of the key lessons learned from that is that you need to be 
onsite, both boots on the ground before, during, and after as 
VA requires that. Most of you know, VA does not handle change 
very well, so making sure that we actually are supporting those 
end users, providing the training, and being there in person, 
they need face-to-face contact whenever you are doing that.
    That was a major lesson learned with Core FLS; we did not 
have as much there as we needed, so that was a big deal.
    Then I would just echo what Mr. Rychalski said in terms of 
the contractor runs. If you look at the audit reports from most 
of those, you will see that the government oversight was 
inadequate and we have significantly addressed that in this 
particular effort.
    Mr. McCune. From an IT perspective, I would echo what Ms. 
Riffel just said. A lot of the lessons learned that we had 
around those prior efforts were having contractors in charge, 
we have government IT people in charge on this program.
    The other thing that we often saw on prior projects or 
failed projects is requirements and clearly those requirements 
need to be clearly defined before we start the IT development 
and, if there are changes once we start development, then that 
is rework. I am fairly confident that through our requirements 
process on this program we are where we need to be, 
particularly for NCA.
    Mr. Pappas. Ms. Riffel, Mr. Rychalski called FMBT high 
risk, high reward; would you agree with those comments?
    Ms. Riffel. So independent, on its own, it is complex; 
adding EHRM and LogiCole increases the complexity, as we all 
know. I would absolutely echo that.
    Mr. Pappas. Could you comment on the need for integration? 
FMBT is only going to be successful if it can be successfully 
integrated with other IT projects that are ongoing. How is the 
prospect for that looking?
    Ms. Riffel. We are actively engaged with those two other 
major initiatives. We have staff that are integrated into both 
at the senior level, at the leadership and governance level, as 
well as the technical level, as they are having detailed 
discussions around how they are going to do both interim and 
future State for those two initiatives. We are highly involved.
    The reason why we have to be connected with LogiCole is 
when you look at the supply chain, there is the requisitioning 
piece, the purchasing, the receiving, there are a lot of 
activities that, quite frankly, there is overlap between what 
we are doing. We have to look at it functionally and determine 
where is the appropriate place for that to occur.
    It is very, very necessary for us to be there, so we do not 
impact patient care at all.
    Mr. Pappas. Mr. Rychalski, I was encouraged to hear you say 
that you support an expedited timeframe, faster than 10 years 
in terms of the implementation. When do you think VA will be 
able to develop a finer schedule on that if acceleration is 
appropriate?
    Mr. Rychalski. I mean, first I would like to have a win 
under our belt. I am looking forward to NCA in 2020 to prove 
and I feel very positive about this program. I was very nervous 
when I took over and, you know, USDA was running this and it 
sort of fell apart; I knew this was high risk, I saw the 
schedule. Early on, though, I wondered about the schedule. We 
talked about some acceleration, but because of complexities on 
the front end with interfaces, we sort of waited.
    What I would say is that through this year with our, you 
know, deployment to NCA and Veterans Benefits Administration 
(VBA), with the deployment of the electronic heath record and 
DMLSS, I think we will have a better sight picture of how 
complicated all of that is, how successful we are with FMBT, 
how disruptive EHRM and DMLSS is to the sites that it is going 
to. Because keep in mind, depending on how we do this, if you 
were a VA medical center director, you could have, you know, an 
electronic health record coming in, you could have a new 
logistics system coming in and, depending on where we try to 
wedge ourselves in, you could have us at the same time or just 
after, at a time when more veterans are coming to VA medical 
centers wanting more care, frankly. We have to sort of weigh 
that.
    My biggest concern is that we would disrupt or somehow 
affect patient care, which is what happened with Core FLS when 
I was involved.
    What I would say is, by the end of 2020, I think that we 
will have a much better idea of what is possible. The only 
thing I will qualify, though, is I think, you know, the first 
rollout is not going to be the like the second. I was at DOD 
when we rolled out the electronic health record recently there, 
Cerner, and even though we thought we--you know, I really 
thought we knew everything, we had everything planned, no plan 
survives contact with the enemy, it was a very rough first 
year. They were just doing the electronic health record, right? 
They already had DMLSS in place and they were not doing a 
financial system.
    After that they sort of--you know, they got their sea legs, 
so to speak, and they moved out I think more smartly. The first 
year, we are going to see what happens, but it will not be like 
the second and the third, because things are going to get 
smoother, so even more will be possible.
    That is kind of a long-winded way of saying I need at least 
through this year to see how we do and then even more may be 
possible once we know, like after the second implementation of 
some of these.
    Mr. Pappas. Thanks. I hope we can continue to unpack that a 
bit, but my time is up.
    I would like now to turn to Mr. Banks and recognize the 
ranking member for 5 minutes.
    Mr. Banks. Thank you, Mr. Chairman.
    Mr. Rychalski, what happens if FMS, the current system, 
fails? What is the impact of that and what is the mitigation 
strategy?
    Mr. Rychalski. I do not think FMS is going to fail. I mean, 
I agree, it is frail, it goes down routinely, it is harder and 
harder to find people to work on the system. The analogy I 
would give you is, you know, when I was new in the Air Force, I 
worked in an aircraft maintenance squadron, we had the B-52, 
and I remember my maintenance supervisor telling me that, you 
know, we have pilots today that are flying the same airframes 
that their fathers flew, this aircraft has passed its life 
expectancy and it is not going to be around much longer, but 
you know what, I think they are still flying it.
    What I would say is, because it is not like a law of 
physics, you know, if we have to--and I would prefer not to, 
but if we have to limp along with FMS longer, we can; it is not 
that it cannot be done, it just becomes more problematic the 
longer we go.
    I would ask Terry Riffel, who has much more experience, and 
to also chime in with that, but that is sort of my take.
    Ms. Riffel. Yes, I do not have a whole lot to add. I think 
that, you know, we have the experts that we need in place today 
to make sure that, you know, the file bins or whatever we can 
actually, you know, come up--so, you know, for that reason, I 
think we would be able to maintain it. We would not be able to 
do improvements and potentially legislative changes would be 
impacted, but otherwise we would be able to maintain it.
    Mr. Banks. All right, let us move on.
    Mr. Rychalski or Ms. Riffel, John Windom reports directly 
to the Deputy Secretary as head of EHRM, and the Deputy 
Secretary is responsible for all the program's funding. Those 
arrangements were put in place to encourage accountability. 
What similar arrangements exist for FMBT?
    Mr. Rychalski. I think I can answer that. I am responsible 
for FMBT, I report directly to the Deputy Secretary. As I 
mentioned, I meet with the Secretary and Deputy Secretary 
daily, and Terry Riffel reports to me directly. I think we have 
a pretty flat organizational chart.
    Mr. Banks. OK. Mr. Rychalski, what could we do to elevate 
FMBT's level of prioritization within the Department given your 
previous answer?
    Mr. Rychalski. I mean, I think it is one of the top three 
priorities, mixed in with DMLSS and the H.R. system 
modernization. I know it has not got a lot of publicity and I 
think that is probably because of EHRM, but within the 
Department it is a high priority. We discuss its--you know, we 
work it daily, we discuss it daily with the Secretary.
    I know maybe from your perspective it does not seem like 
it, but within the Department it is a high priority and, from 
my own perspective, I have not seen that it needs to be, you 
know, brought up any higher. I have no problems with 
approaching the Secretary if we have issues or whatever. So----
    Mr. Banks. Ms. Riffel, is the program management office 
that you lead fully staffed? If not, how many available 
positions are there that are open?
    Ms. Riffel. We have a total of 46 full-time equivalents, we 
are recruiting for about 12 right now. We also have some that 
are paused because the Veterans Health Administration (VHA) was 
moved to the right, but otherwise full staffed, and certainly 
supported by both Deloitte and CGI from a contractor 
perspective.
    Mr. Banks. Do you consider the office fully staffed?
    Ms. Riffel. Once we start Veterans Health Administration, 
we will add to that staffing.
    Mr. Banks. How many of those are Government employees and 
how many are contractors?
    Ms. Riffel. 46 are full-time equivalent Government, we have 
right now probably around 380 total contractors between all the 
contracts that are supporting the effort.
    Mr. Banks. Okay. There are a lot of people working for 
FMBT--or FBMT who do not report to you directly? For example, 
there are employees of OIT, the Office of Acquisition, and the 
National Cemetery Administration. How do you coordinate all 
those people and enforce accountability?
    Ms. Riffel. We are actually a matrixed organization. You 
know, one of the provisions when I came over is I wanted to 
leverage the Financial Services Center IT staff. They are 
actually under the franchise fund, they report directly under 
Dan McCune, but the existing relationship that I had with the 
alignment of business and IT in that organization and the 
delivery of capability that we had had in the past, that was 
very important for me to gain that IT relationship that already 
existed and bring it with me to this program. IT agreed with 
that, we are leveraging that IT staff, and I would tell you we 
are in a much better position as a result.
    Mr. Banks. You provided the committee an organizational 
chart, but there were very few names noted in the chart. Could 
you provide us an updated----
    Ms. Riffel. Sure.
    Mr. Banks.--organizational chart to show which positions 
are filled----
    Ms. Riffel. Absolutely.
    Mr. Banks.--and who those individuals are?
    Ms. Riffel. Yes, we can do that.
    Mr. Banks. Thank you very much.
    I yield back.
    Mr. Pappas. Thank you, Ranking Member Banks.
    I will now turn things over to Chairwoman Lee for 5 
minutes.
    Ms. Lee. Thank you, Mr. Chairman.
    I want to delve in a little bit to the structure of the 
financial management of the VA, because, you know, looking at 
the organizational chart, it is very decentralized.
    Mr. Rychalski, how many CFOs does the VA have?
    Mr. Rychalski. Well, I would say at least--I mean, many 
people call themselves CFO. There is a CFO for each of the 
administrations or each appropriation. You know, NCA, VHA, VBA, 
and the OIT appropriation, and myself. I guess you would say, 
so five.
    Ms. Lee. But there are other people with the CFO title?
    Mr. Rychalski. Well, people that call themselves like a CFO 
of a specific program or office, but I would say, you know, 
five real CFOs.
    Ms. Lee. Of the five, what authority and oversight do you 
have of those?
    Mr. Rychalski. I do not have direct authority over the 
administration CFOs, they report to their respective Under 
Secretary.
    Ms. Lee. Is it really possible to manage the VA's finances 
with this structure?
    Mr. Rychalski. I mean, in my honest opinion, it is. I have 
mentioned this, people have asked me this before, would I be 
any more effective if they reported to me, factually, I do not 
know that that would be the case. You know, there would be a 
different dynamic. If all of the resource or accounting assets 
reported up through me, it would still be embedded in VA 
medical centers and there could be a new--sort of a new 
tension.
    You know, one of the tenets of command is that you have 
command of the assets that you are responsible for, so when you 
get down to the Veterans Integrated Services Network (VISN) and 
the VA medical center, arguably, they should have control of 
their financial people. I do not know that it would be any 
better necessarily.
    Ms. Lee. Well, can you say with confidence that you have 
oversight of and transparency into the VA's spending, major 
spending?
    Mr. Rychalski. I can say I have transparency that is 
greatly limited by FMS, I will acknowledge, but I do have an 
excellent relationship with the CFOs. I think I have absolute 
transparency into the spending, yes.
    Ms. Lee. Who has the oversight?
    Mr. Rychalski. Well, I would say me overall for the 
financial program, but then individually, you know, the Under 
Secretaries are responsible, the CFOs report to the Under 
Secretaries, so it is matrixed.
    Ms. Lee. Do you believe there is spending that happens that 
the VA leadership might not know or have knowledge of?
    Mr. Rychalski. Absolutely. I mean, you know, a $220 billion 
program, I mean, there are programs that I come across that I 
did not realize that we necessarily had. Yes.
    Ms. Lee. What is the--how do you make decisions about which 
projects get funded and what is the threshold for your 
involvement?
    Mr. Rychalski. Well, each administration has their own 
appropriation, so they have autonomy with respect to deciding. 
We work with them on the budget, we look at high priorities, 
secretarial priorities, sort of their execution. It is a 
collaborative effort and we, you know, since Secretary Wilkie 
has been there, have greatly strengthened the governance 
structure.
    Many of these major decisions go through our governance 
structure, so it is a more broad and corporate, I guess, 
decision-making process.
    Ms. Lee. What is the communication between the 
administrations?
    Mr. Rychalski. Well, I chair the CFO Council, we meet 
monthly formally and then informally as needed. We have weekly 
under assistants meetings; we have a VA operations board that 
meets twice a month, one of those is dedicated to financial 
issues, that would probably be one of the most significant 
here. That is chaired by the Deputy Secretary, sometimes the 
Secretary attends that as well.
    There is actually quite a bit--and I am, you know, 
comparing this over my tenure--there is quite a bit of cross-
communication, collaboration today. Early on in my tenure at 
the VA, there was much less so, I guess I would categorize it.
    Ms. Lee. It all sounds a little complex.
    With all of this, who are the decision-makers for the FMBT 
project?
    Mr. Rychalski. Me. I mean, ultimately.
    Ms. Lee. Okay. You sign off on the scheduled, you sign 
off----
    Mr. Rychalski. Correct.
    Ms. Lee.--what order, the order that everything goes in?
    Mr. Rychalski. Correct. Yes, that is correct.
    Ms. Lee. Who determines if the cost is reasonable, who 
makes that decision?
    Mr. Rychalski. Well, you know, collectively--ultimately, it 
is my job to put the budget together and to sell it, but then 
it goes through Office of Management and Budget (OMB), it comes 
to the Hill, and people make value judgments as to whether it 
is too expensive or not expensive enough, I guess.
    Ms. Lee. The reason I was asking this series of questions 
is because one of the goals of the FMBT is to address the 
material weaknesses that the auditors have identified within 
the VA year after year.
    Mr. Rychalski. Right.
    Ms. Lee. These weaknesses include the organizational 
structure of the Department's CFO.
    Mr. Rychalski. Right. FMBT will not address that, it will 
not address the organizational structure of the CFO function.
    Ms. Lee. Do you think this structure needs to be reformed?
    Mr. Rychalski. Again, this is my honest opinion, I would 
not change it. When I first got there, I thought, you know 
what, maybe it would be great if everybody reported to me, but 
as I became more familiar with the VA and how it operates, I 
frankly think that the road we are on now, which is a 
disciplined governance structure, is more effective. There is 
nothing that I can think of that I would do differently or have 
more access to if all of the CFOs reported directly to me. I do 
not know of another agency where that actually happens. I do 
not know if, you know, the Department of Homeland Security, I 
do not think they have like the sort of same structure where 
the CFOs all report up. I know in DOD the comptroller does 
not--the supervisor is not in control of all the service CFOs. 
So----
    Ms. Lee. Okay, thank you. Sorry.
    Mr. Pappas. Thank you, Chairwoman Lee.
    I now recognize Ranking Member Bergman for 5 minutes.
    Mr. Bergman. Thank you, Mr. Chairman.
    You all can see the chart behind me, right? Okay. Can you 
read anything on it? No, it is an eye chart. That is okay, 
because what we have done is we have packed a lot of 
information onto this over an expanded time line, details of 
who is doing what and time lines for implementation and all of 
that. Is the chart behind me, is it about to be changed, 
updated? Have you got anything coming out that is going to 
surprise us here with how we view this?
    Mr. Rychalski. There is one update, I think, and Terry can 
speak to it. There is actually, I think, an improvement that 
has to do--and I will let actually Terry explain sort of what 
we did with VBA.
    Ms. Riffel. Actually the last time we met with staff here, 
they asked us to look at VBA, could we do VBA sooner. We 
actually met with them, met with senior leadership, met with 
appropriate staff on the VBA side. We were able to move VBA in 
2 years.
    What we have done is Compensation and Pension (C&P) and 
VocRehab and Education are now moved over with the existing C&P 
benefits wave. I call it a wave. Think of a wave as a discrete 
implementation that we are going to do. What we did is we moved 
that over, so we have actually shaved 2 years off.
    That is the major change that you would see from, I think 
yours is dated August, the one that we have recently done is 
dated October.
    Mr. Rychalski. I would say, to your point, if you are 
asking if there are going to be any schedule slippages, there 
are not----
    Mr. Bergman. Actually, no, that is not what I was asking.
    Mr. Rychalski. Okay.
    Mr. Bergman. I was asking, is there going to be any changes 
to the visual chart that those of us here would look at to 
determine where we are in the implementation.
    Mr. Rychalski. You mean to make that easier to read?
    Mr. Bergman. I mean, are you thinking any--I guess I am 
leading to, I am going to give you a little guidance.
    Mr. Rychalski. Okay.
    Mr. Bergman. Okay? Because it is one thing what you have 
here, we see--we in the military would call it a POA&M, plan of 
action and milestones. What I do not see to the level of detail 
possible is, as we move along from year to year, if you think 
of just a simple pie chart of 100 percent of the effort that is 
being put in and who has got the dot or the con, whatever you 
want to call it, at that timeframe, you could actually, I 
believe, put a single pie chart above each year and predict is 
it, number one, the contract--you know, whoever is implementing 
the system, have they got 50 percent of the effort or 70 
percent of the effort.
    Break that pie chart down, because I would suggest, if it 
is going to look like what we hope for and count on as a 
successful implementation, the migration of work effort is 
going to change from those creating it to those actually 
implementing it and using it on a daily basis. I believe it 
would be helpful for the committee to be able to see that 
transition of work effort, but what we do not want to all of a 
sudden see at the end is that, whoop, we dropped it into the 
hands of the people who are going to use it every day and it 
does not work.
    Mr. Rychalski. Yep.
    Mr. Bergman. Okay? So----
    Mr. Rychalski. Got it.
    Mr. Banks.--having said that, I would suggest that would be 
helpful at least for those of us visual learners in here. Also 
it provides a visual depiction for all those who have a dog in 
the fight here and at what point, because if you are the design 
person, you know that your work is done early on; if you are 
the training person, you are in the middle; if you are that end 
user, your efforts are going to be as you put it into practice 
and how you give the feedback to the design person, the 
implementation person, so you can iron out the inevitable bugs 
that will be in it.
    Just a thought process as we look at the totality, because, 
let us face it, some of us who are sitting here before you 
today may not be on this committee when we are having a 
discussion, you know, 4 or 6 years from now about where are we 
on the process and what we do not need to do is--well, let us 
put it in the positive--what we do need to be able to do is to 
provide a corporate memo here on the committee level that we 
can, you know, go back and forth with all of you, so that we 
start from a shared experience and a time line.
    With that, I will yield back at this point in the first 
round.
    Mr. Rychalski. I think it is a great suggestion.
    Mr. Pappas. Thank you, Ranking Member Bergman.
    I will now recognize Mr. Cisneros for 5 minutes.
    Mr. Cisneros. Thank you, Mr. Chairman. Thank you all for 
being here today.
    Secretary Rychalski, I want to ask about the training. You 
know, as we discussed in the O&I hearing in September on 
examining VA's overpayments and data collection practices, 
concerns remain as to the VA's problems in reducing improper 
payments. While I appreciate the VA's progress in developing a 
functional and integrated financial management system that will 
help address these weaknesses, what is the VA doing to ensure 
staff across the agency are being trained properly on the new 
system and related business processes to ensure these 
technologies are used effectively? What are the current 
oversight mechanisms in place to ensure this for both the 
training itself and the new processes in place for this 
training module? Will these be reoccurring trains and, if so, 
how frequent?
    Mr. Rychalski. I am going to ask Terry Riffel to take this 
question, because I will not do it adequate justice for the 
amount of time they put into the training program.
    Ms. Riffel. Thank you. I am actually very excited that you 
asked me this question, because I think that we are actually 
doing fantastic in this area. I will focus on NCA, because that 
is the one, the implementation that is underway right now.
    We started actually in April doing what we call 
familiarization sessions, which is actually demonstrations, 
getting users their first peek, let us take a look at what it 
looks like, and that was after we did their initial 
configuration. They are looking at what they are actually going 
to see. We had about 200 users at each one of those sessions. 
That was the first thing we did, then we went to actually doing 
site visits.
    We did what we call a district profile, where we are able 
to actually look at that particular cemetery and determine what 
are the actual users going to be, what are they going to do? 
Are they the guys mowing the lawn or are they the admin people? 
We were able to get in and really understand their needs. Then 
we went in and we actually did additional training and 
demonstrations pertinent to what those users were going to 
actually do.
    After each one of these sessions that we did, we actually 
did a survey for them. You talk about, you know, let us get 
timely feedback, let us make sure that what we are doing is 
what they need. We learned from those; we got really positive 
feedback on that.
    The next thing that comes out after that is we do the 
actual hands-on, instructor-led training, which is when we are 
getting ready right to deploy. After that--and everybody is 
trained--then we have what we call dedicated users. I talked 
about this earlier, boots on the ground, people are there. They 
are going to hand-hold and be there for a while while they 
first come up.
    After that, we have got another dedicated group that are 
customer support that are dedicated that organization that just 
came up. If they need help after the person has left the site 
and they still need help, they have a dedicated group in the 
customer support help desk that they can call and get direct 
support unique to what that particular organization just came 
up on.
    I would tell you we have a very comprehensive training and 
organizational plan in place as we go live.
    Mr. Cisneros. Is this training that is going to--how 
frequently is this training going to be done?
    Ms. Riffel. Right now, we are doing the familiarization 
sessions monthly, and we are in the process of doing the site 
visits right now, we just completed two, and those will 
complete in January. And we are really working directly with 
the customer, in this case NCA, to drive the frequency that 
they want, depending on the availability of their resources and 
so forth, so that we can make sure that--we do not want to show 
up if they are not ready, right? We are working with them to 
make sure that we have got it right for the organization which 
we are working with.
    Mr. Cisneros. As far as the site visits, how long is going 
to take you to complete all the site visits?
    Ms. Riffel. What we are doing is we are doing a cross-
section, so we visited the major cemeteries. A lot of the 
activity in NCA, it occurs in pockets. There is a lot more 
population in certain areas than others. We focused the 
training efforts and the dedication to the site visits where 
the larger stations are.
    Mr. Cisneros. You are talking about the cemeteries right 
now and I am going to assume that is your example, but, I mean, 
the VA is larger than just cemeteries.
    Ms. Riffel. Oh, correct.
    Mr. Cisneros. How are we going to----
    Ms. Riffel. Yes, so----
    Mr. Cisneros.--how long is it going to take us to do site 
visits of all these places?
    Ms. Riffel. The way that our project is structured in terms 
of the methodology that we are employing is we are an agile 
project. What we are doing right now is very unique and 
dedicated to what NCA's needs are. As we go into Veterans 
Benefits Administration, which we are doing right now, the 
model for them might look slightly different. The way that we 
are structured is that we are actually doing the training, we 
are doing the before, during, and after dedicated based on the 
footprint that we see based on those site assessments on 
exactly what VBA needs. We will do the same thing for VHA.
    In other words, it is not going to necessarily mean one 
training is across the board. We have to make sure that the 
users and the way they are going to use the system, which is 
quite different in VHA than it is in NCA, we have to make sure 
that we are doing it the right way.
    Mr. Cisneros. All right. I yield back my time.
    Mr. Pappas. Thank you, Mr. Cisneros.
    We will go into a second round of questioning and I will 
begin by recognizing myself for 5 minutes.
    Ms. Riffel, if I could continue on that line about the 
training. Thank you for walking us through some of the steps 
and components of the training program. I am wondering if you 
can give us a scope in terms of the number of employees that 
need to be reached as part of the training for FMBT across the 
VA system?
    Ms. Riffel. Yes. Right now we probably have--and I can get 
you a total number, but it is over 4,000 users are going to be 
trained. What I will also say is that we are implementing and 
maintaining the invoice payment processing system, which is a 
huge component that a lot of our users use today. Because we 
are maintaining that particular interface, that service is 
about 10,000 users, so it has reduced that population of what 
we would otherwise need to train.
    Mr. Pappas. The number of users you cite, that is over the 
10-year implementation----
    Ms. Riffel. No, no----
    Mr. Pappas.--time horizon?
    Ms. Riffel.--no, that is not over the 10 years. Why do not 
I take that--I do not want to give you a false number, let me 
take that for the record and give you an appropriate number.
    Mr. Pappas. Okay. Yes, I would like to know exactly how--
you know, as this time schedule that we are looking at rolls 
forward, what the capacity of the training program is and how 
many users you have to reach. That would be great.
    Mr. Rychalski, if I can get back to the issue of the 
rollout schedule for FMBT. I maybe was not listening as 
intently as I should have and wanted to dive a little bit 
further into the issue of schedule. Can you let us know, you 
know, in terms of acceleration, what are the key points along 
the road here over the next 10 years and, you know, what are 
the determining factors of when this timeframe can be 
collapsed?
    Mr. Rychalski. I think the biggest consideration is this 
matter of DMLSS and LogiCole. If there was nothing else being 
deployed, you know, I think this would be a matter of let us 
make sure we can do this successfully at NCA. Concurrently, we 
had thought about doing one VHA medical center as well as a 
proof of concept, but then this DMLSS thing came along and then 
this DMLSS upgrade to LogiCole. The big question is, does it 
make--I think, technically, people agree it makes more sense to 
connect one time and to connect one time we have to delay our 
schedule with VHA.
    The big question is, as we roll these out, is there 
significant benefit to rolling it out early doing two 
connections, to major training initiatives, or not. That is 
sort of the big question in my mind.
    Mr. Pappas. How many key milestones are there?
    Mr. Rychalski. You mean to make that----
    Mr. Pappas. That will be decision points?
    Mr. Rychalski. That is a tough, tough question. The first 
decision point for me is, can we successfully deploy this to 
NCA? The next decision point is, how smoothly does DMLSS 
implementation go at Initial Operational Capability (IOC). Then 
I think the third question is, how disruptive--the third 
decision point, which would be later this year, you know, how 
disruptive would it be to try and connect FMBT to DMLSS as that 
goes in.
    At least in this year there are three major decision points 
and I would think after that it would be a matter of--another 
one would be, what benefit is there to waiting for LogiCole or, 
based on probably what we know this year, moving it up and 
connecting twice.
    Mr. Pappas. Next year, when will you be able to come back 
to our committee with something a little bit firmer?
    Mr. Rychalski. I think in the--I would say in the fourth 
quarter of the calendar year, October, November, December. By 
then, DMLSS will have rolled out in the Pacific Northwest, EHRM 
will have deployed as well, and we will have NCA and we will be 
deep into VBA, so we will have a lot more intel on how this is 
going.
    Mr. Pappas. Okay. Mr. Rychalski, you were here in 
September, the O&I Subcommittee did a hearing about debt 
management----
    Mr. Rychalski. Yes.
    Mr. Pappas.--and we are very concerned about the pressures 
that this places on individual veterans. I am wondering if you 
can talk about FMBT and the role it might play in helping the 
Department address the overpayment and debt issue for veterans?
    Mr. Rychalski. I may have to ask Terry to help me. I do not 
know what direct effect FMBT will have on, for example, the 
creation of debt. A lot of that has to do with notification of 
things, as you know, like education or change in spouse, or 
things like that, that is principally--the majority of those 
things create the veteran debt and generate the overpayment. I 
do not know that FMBT is going to have a substantial impact on 
that.
    Mr. Pappas. Well, one of the issues that came out of that 
hearing was the fact that different systems were not always 
talking to one another and I did not know if implementation----
    Mr. Rychalski. Yes, this is probably not the case. I think 
there it has to do with things like, you know, when somebody is 
incarcerated and they are in a system, that information getting 
over to the VBA, so they know when someone gets married or 
divorced or things like that, when they go to school, if they 
drop a class, those types of systems, but less so the 
accounting, unfortunately, in this case. This, as we have sort 
of described, the systems here will help vendor payments, for 
example, companies, things like that, for contractual services, 
goods, that will be expedited----
    Mr. Pappas. Okay.
    Mr. Rychalski.--and more accurate.
    Mr. Pappas. My time has expired. Thank you very much for 
your responses.
    I will now turn it over to Ranking Member Bergman for 5 
minutes.
    Mr. Bergman. Thanks, Mr. Chairman.
    You know, my first 5 minutes we talked about time lines, 
let us talk about money this time. I want to dig--Mr. 
Rychalski, I want to dig into the cost and the schedule, but 
especially the cost.
    You know, FMBT's original life cycle cost estimate was, you 
know, $887 million under USDA. As we know, USDA pulled out. 
Right after they--or right before they pulled out, it increased 
to $1.0009 billion. Then it spiked to $2.34 billion, without 
much explanation, after VA took over. I note that your 
testimony says, alternately, $2.4 billion and $2.5 billion.
    Can you tell, you know, as best you can, what the correct 
number is and, whatever number you give, how confident are you, 
you know, however you want to put the percentages on it, that 
is your call, but what do you think?
    Mr. Rychalski. The current number as I know it is 2.5. 
Being very candid, I do not have high confidence, but I do not 
say that because I think the cost is going to go up, it is 
just--I mean, factually, I just--I do not know, you know--I 
will leave it that, I have low confidence. I mean, I think in 
terms of trying to accelerate the schedule should change the 
cost and things like that.
    I think that some of the changes to the cost estimate are a 
function of, as you mentioned, USDA, the first cost estimate 
was based upon their work. I do not know that that cost 
estimate was accurate and when I saw--when I came over and saw 
the cost estimate of $800 million for doing this system-wide, 
that just did not make sense. I mean, that was to me too low.
    We have since done additional cost estimates, but what I 
have learned through the years both as a consultant and, you 
know, sort of doing CFO functions is, until you get a couple of 
sites under your belt, some experience, then you kind of know 
what it is going to cost. At this point, it is sort of all 
theoretical. I saw this in DOD when we rolled out the 
electronic health record. We had wildly changing cost 
estimates, wildly changing scenarios for systems that we were 
going to save money on, and sunset and not.
    I think my experience just tells me I have low confidence 
at this point, because we are so early into it. I would be 
happy to come back with you, and I am sure that you will insist 
that I do so, once we have more experience and I can provide 
you more confidence with----
    Mr. Bergman. Well, in just listening to you talk--having 
been in similar shoes at a different time in life in uniform 
and having to apply cost estimates to implementation of 
everything from weapons systems to readiness systems, it was a 
moving target--in listening to you talk, I would suggest 
potentially for the committee here and for all of you and 
anybody else, as we talked about, you know, maybe modifying the 
chart here to add who's got the dot percentage-wise of the 
effort at that point, it probably would be helpful for all of 
us to see, as cost estimates revise, whether they be up or 
down, based upon updated data as to where you are, it is kind 
of like you are doing, you know, a check of this are we 
getting--if we are spending $1 million on this, is it going to 
be 1.2 or is it going to be 0.8, whatever it happens to be, but 
that kind of fidelity would be helpful.
    Mr. Rychalski. Agreed.
    Mr. Bergman. You know, what drove, do you think, the 
schedule to stretch out from 2025 to 2028 to 2030 originally, 
what was the driver on that?
    Mr. Bergman. I think the--I will ask Terry to chime in as 
well, but I think the number one driver was the number of waves 
that we were able to accommodate at any one time and then, 
beyond that, it was the shifting of VHA to the right. Terry, if 
you can----
    Ms. Riffel. The main thing was we worked with the 
administrations and staff offices, our direct customers who 
have to support the actual success of the implementation, to 
drive the roadmap on what we knew was achievable. As Mr. 
Rychalski said, that drove the number of waves, it expanded 
them slightly, so that we could actually ensure that we would 
be successful. And then the secondary thing is the alignment 
with LogiCole. Pushing it out to 2030 is the direct alignment 
with LogiCole.
    Mr. Bergman. Okay. Thank you, Mr. Chairman. I yield back.
    Mr. Pappas. Thank you.
    I will now recognize Chairwoman Lee for 5 minutes.
    Ms. Lee. Thank you, Mr. Chairman.
    I have a question for Mr. McCune. What is the OIT's 
responsibility in regards to developing, implementing, and 
funding enterprise-wide technology projects?
    Mr. McCune. That is a big question. Clearly, the 
development of enterprise systems falls within our lane. There 
are a number of ongoing large programs today and many of them 
have been talked about here: MISSION Act, Colmery, FMBT, EHRM, 
and DMLSS. Those fall within the OI&T space.
    Ms. Lee. If the FMBT any different than these other large 
technology modernization projects and can you explain why or 
why not?
    Mr. McCune. Sure. I think it is a little bit more mature. 
It is a little older, it started in 1916, so we have a little 
bit more time to stand up and structure the program. In my 
mind, it is a little bit more mature, largely due to time.
    Ms. Lee. I want to shift now. I am concerned about what 
happened with this $14 million that was designated as coming 
from IT dollars. Did OIT actually commit that funding and, if 
so, when did it get changed and why?
    Mr. McCune. I will answer your question and then I will 
also defer to our CFO, who is sitting to my right.
    From an IT perspective, we are still recovering from that 
change of USDA leaving us. We had a financial plan in place; 
when they left, we had to restart the financial planning, and 
that is a 2-year cycle. We are still catching up from that.
    The other thing that is in play here are the multiple 
priorities within OI&T for funding. Again, those names that I 
just mentioned are all competing for the same amount of money.
    Mr. Rychalski, is there anything you want to add to that?
    Mr. Rychalski. I have nothing to add.
    Ms. Lee. Ms. Riffel, due to this $14 million shortfall we 
discussed, the VA planned to reduce or eliminate funding for 
the independent verification and validation steps. These steps, 
it is a critical piece of the program support that allows for 
third party verification of product development. Does the VA 
continue to face this funding shortfall and will it not be 
funding these Independent Verification & Validation (IV&V) 
activities?
    Ms. Riffel. Right now we still have IV&V actively engaged 
and right now we are in the midst of system integration 
testing. They are actively engaged in the program.
    We are still looking for the results of the VA unfunded 
requirement process. We expect to have favorable results from 
that, which would allow us to maintain them in the future. We 
look forward to hearing that probably within the next couple of 
weeks. In the interim----
    Ms. Lee. Can you walk me----
    Ms. Riffel.--we are using----
    Ms. Lee.--through that process? Walk me through that 
process.
    Mr. Rychalski. Well, I can walk you through. You know, 
there are many claimants for IT dollars, as we have described, 
so we have a process that we are going through to take a look 
and, you know, basically to fund the neediest cases. I think 
FMBT will score very high.
    When you go through the list of claimants, you know, some 
things you can tell are like very important, high risk, some it 
would be nice to have enhancements. The problem is, I think in 
the past they have not done a good job of sort of vetting those 
and so they would just--they would run to IT and say, hey, we 
have got this requirement, and they would be sort of left to 
their own devices to figure out what to do. They have a more 
structured process now, I mentioned the governance structure 
that is working on it. Then we have a long-term sort of 
requirements development process that will instill more 
discipline.
    Even though we do have many claimants, I think we have a 
better process that we are putting in place to manage it.
    Ms. Lee. Who is the they, who makes that--who is making 
those decisions?
    Mr. Rychalski. Ultimately, this will go the Deputy 
Secretary to the VA Operations Board that I mentioned. Then 
below that, my office, the Office of Enterprise Integration and 
IT have a process that we are collaboratively working on to vet 
the requirements, and ensure that we have adequate development 
funding and then, in the long term, adequate sustainment 
funding.
    Ms. Lee. Okay, sounds very complicated. What happens if 
they do not choose this as a critical need?
    Mr. Rychalski. Well, we would not--then we would not deploy 
FMBT, but I think that is not likely.
    Ms. Lee. Okay. All right, thank you.
    Mr. Pappas. Thank you.
    I will now recognize Ranking Member Banks for 5 minutes.
    Mr. Banks. Mr. Rychalski, I want to ask some questions 
about the VA's adoption of DMLSS. You decided to wait for 
LogiCole to become available, which means the implementation of 
FMBT in the VHA cannot begin until 2023. Please walk me through 
how you weighed the pros and cons and made that decision. If 
you could briefly discuss--you did briefly discuss this 
already, but can you give me some numbers as to the cost impact 
and how that affected your decision-making?
    Mr. Rychalski. Yes, I can. I will start with the cost, but 
basically the decision was--again, I mentioned this is a unique 
time, because we are deploying this DMLSS system and then we 
found out that while they are deploying it the Army, which sort 
of owns the DMLSS system, DOD, they are going to upgrade it. 
The decision came back and we looked at different excursions. 
Should we connect to the current client server-based and then 
later go back and reconnect and train for LogiCole? From a 
technical perspective--and maybe Dan McCune has an opinion on 
this--the advice was, you only want to connect one time and 
train one time, and so that would require us delaying and that 
was the basis for that decision.
    The cost associated with it, I am going to ask Terry if she 
can refresh my memory what that meant for cost savings.
    Ms. Riffel. I am not sure that we----
    Mr. Rychalski. We may have take that for the record. There 
was some cost savings associated with it, I do not have the 
figure immediately, but it was fairly substantial, I think.
    Mr. Banks. Okay, let us move on.
    Mr. Rychalski, the local version of DMLSS is being 
installed in Washington State right now----
    Mr. Rychalski. Yes.
    Mr. Banks.--in conjunction with EHRM. Is it going to be 
replaced when LogiCole becomes available?
    Mr. Rychalski. Yes; eventually it will be, yes.
    Mr. Banks. Okay. Mr. McCune, I understand there are 120 
system interfaces involved in FMBT, that is significantly more 
interfaces than there are in EHRM. How many of these interfaces 
are simply going away when the legacy systems are retired and 
how many do you actually have to build?
    Mr. McCune. That is an easier question to answer for NCA 
than it is for the entire system. I am not sure that the EHRM 
interface count will probably go up. I think it is around 72 
for go-live, which is in March, that number will go up outside 
of the go-live. In terms of FMBT, there are 28 interfaces that 
will go live for NCA. I don't think it is dramatically more 
than it is for EHRM.
    Mr. Banks. Can you provide us with the specific numbers for 
the record----
    Mr. McCune. Yes, sir, I will.
    Mr. Banks.--to the best of your ability?
    Mr. McCune, what are CGI's systems integration 
responsibilities as the prime contractor and what are VA's 
system integration responsibilities?
    Mr. McCune. CGI is our system integrator, they are largely 
in charge of the development and integration of the systems, 
they have government oversight. My development teams, my IT 
teams oversee CGI and their work.
    Mr. Banks. Okay. Mr. Rychalski, back to you. How is the VA 
in a better position to replace its financial and accounting 
systems now compared to 10 years ago when Flight was abandoned 
and 15 years ago when Core FLS was abandoned?
    Mr. Rychalski. I had that same question when I came 2 years 
ago, how are we better positioned. I think we are better 
positioned because we have built strong relationships and a 
governance structure around it. I think it is because it is VA-
led, to be honest. I think we know our business the best, I 
think we have good people in place.
    Mr. Banks. Okay.
    Mr. Rychalski. I feel very confident about this and I was 
not so much 2 years ago, but I really do today.
    Mr. Banks. You have already spent about $380 million on the 
program. You are going to install part of the Momentum system 
in NCA next year and install the remainder in 2021. When will 
you have a fully functioning system that represents a return on 
the investment?
    Mr. Rychalski. Well, I think a fully function system across 
VA is going to be 10 years, I mean, when we are really getting 
the full return on it when it is fully deployed.
    Mr. Banks. Okay. Are you sure that implementing the system 
in NCA constitutes a significant return on investment by 
itself?
    Mr. Rychalski. I do. I think--and the big thing for us is 
proving that we can successfully deploy it, the training people 
can use it, it has the functionality that we need, I think all 
of that is critically important. That is our next big thing and 
we have got to knock it out of the ballpark.
    Mr. Banks. Even if NCA has a great accounting system and 
the books look great, but VBA and VHA are still a mess, does 
that really change anything?
    Mr. Rychalski. Well, it is the first increment of a major 
change. I think it does change, yes. When you look at the two 
failed attempts we have had in the past, it proves that we can 
do it. We can bring it up and have, you know, a modern CFO Act 
financial system.
    Mr. Banks. OK.
    Mr. Pappas. Thank you. We have had a request for a third 
round of questioning, so I will turn it over to Chairwoman Lee 
for 5 minutes.
    Ms. Lee. I just wanted to touch base on the integration 
with this project and EHRM, which we are overseeing. Is it safe 
to say that there is a lot going on--it is safe to say that 
there is a lot going on and I am unclear how this is being 
managed from an enterprise level in terms of development of 
program--and program governance.
    The schedule for FMBT has already been changed once to 
align with VHA's implementation of LogiCole. Ms. Riffel, how 
vulnerable is FMBT to changes in plans for other systems that 
it must interface with?
    Ms. Riffel. I think it is prudent upon us to make sure that 
we have got Plan B in place. For example, we have all talked 
about a complexity of not only our program, but then, you know, 
adding the other two initiatives on top. Obviously we need to 
have Plan B that, if we need to go on our own, that we are able 
to do that.
    I think that that is what we have in place and that is what 
we will be able to execute. Although we have reliance on 
others, we are not going to be, you know, stuck if one of the 
other initiatives ends up getting in trouble, we will have the 
ability to go forward. I think that is the most prudent thing 
that we have to do.
    You never know the unknowns, right? I think one of the 
things that we have that I am very proud of is the flexibility 
in which we operate, you know. One of the things that Mr. 
Bergman asked us about was putting in place what I am going to 
call really deciphering the individual project plan, so that we 
can show who is doing what and where that pie is. We can 
actually do that very well and I would like to make sure that 
you see that, so that you understand the degree in which we are 
able to show that. And, because of that, we have the 
flexibility to be able to adapt for those, you know, ever-
changing things that will happen in VA.
    I think we are positioned to do that.
    Ms. Lee. Mr. McCune, what does the Office of Enterprise 
Integration do to facilitate this type of mitigation strategy?
    Mr. McCune. Yes, so the Office of OEI is in charge of those 
large, enterprise-wide decisions. Prioritization between the 
large programs would largely fall on their plate and they 
report directly to the Dep Sec.
    Ms. Lee. What is the OEI's role in coordinating activities 
between the projects and de-conflicting issues between the 
program offices?
    Mr. McCune. They facilitate meetings, coordination meetings 
across the programs, I have been in attendance in a number of 
those.
    Ms. Lee. Who has oversight for all of this IT 
modernization?
    Mr. McCune. Ultimately our CIO is in charge of all IT 
actions, and we are working with the administrations on the 
prioritization and I think also bringing in OEI to help us 
arbitrate when there are conflicting priorities.
    Ms. Lee. That is the person who is watching to make sure 
that one program office changes does not undo the other?
    Mr. McCune. Yes. Yes, ma'am.
    Ms. Lee. Okay, great. That is all I have. Thank you.
    Mr. Pappas. Thank you very much. Any other members have any 
questions?
    Seeing none, just one additional. I am just curious if you 
have looked at the life cycle of this system once fully 
implemented, how long is it and when do we have to do this all 
over again?
    Mr. Rychalski. I think this will last as long as the B-52, 
so--factually, I don't know. I think this is--you know, it is a 
modern CFO Act-compliant system, it is cloud-based. We will 
participate in the upgrades made to it. You know, hopefully for 
many years to come it will be, but--I mean, I don't know if--
maybe Dan knows from an IT perspective.
    Mr. McCune. Yes, I think I would refer to the B-52 life 
cycle as well. It is really unclear. This is a modern 
Statistical Analysis System (SAS) system, so this is, you know, 
kind of a brand--and I guess the F-35 would be the more modern 
example, but this is a brand new system, very modern. 
Predicting what that life cycle is really outside my scope, 
sir.
    Mr. Pappas. Well, thank you very much.
    Before closing today's hearing, just a few observations. 
This morning we heard from VA officials that strengthening 
financial management within the Department is a critical goal, 
and you have everyone up here in agreement. Financial 
management is something that spans every VA administration 
facility. It cannot be understated that FMBT is a major 
undertaking, high risk, high reward, as it was said here this 
morning. Successful implementation will also depend on how well 
VA employees are trained, and whether the Department can 
institute improved and standardized business processes across a 
highly decentralized agency. Creating a modern system that 
allows for accurate and complete accounting, budgeting, and 
planning will take a Department-wide effort.
    However, we also heard that the current time line would see 
a completion date 10 years from now, and this is simply too 
long. VA has promised to reconsider and likely shorten this 
time line by as much as half, but we will not see the details 
until some time next year.
    I fully expect that VA will continue to keep our committee 
members and staff informed of any developments. We need this 
project to succeed. My fear is that we will sit here during a 
future committee hearing, say 12 months from now, and learn 
that VA is still planning for completion in another 10 years, 
and I think that will be unacceptable.
    Improving VA's financial management must remain a high 
priority.
    Chair Lee and Ranking Member Bergman and Banks, I believe 
we should continue to work together during the coming months as 
this story unfolds. And, with that, I would like to turn it 
over to Ranking Member Bergman, if you have any closing 
comments.
    Mr. Bergman. Well, I guess maybe I am the only one here in 
the room that is older than the B-52. Having said that, I am 
not sure what my life cycle is. The point is, we know a long 
time ago when we built airplanes, we did not know how long they 
would last, so we did certain things to ensure that as long as 
you kept them out of corrosion and kept them well maintained 
they would function without end, if you will.
    The reality is, is that in the cycle of digital advance 
that we live in, I could--I do not usually say 100 percent, but 
I can guarantee to 100 percent there is going to be some really 
cool new app, new capability that is going to come out 
somewhere in mid-implementation cycle. The only thing--and that 
is why I suggested about how we visualize on who is working on 
what, do not be like the bird and the shiny nickel and get off 
track for what seems really cool at the time, but in the end is 
only just something that is, again, hot for the moment.
    If we maintain the integrity of the system as we go from 
crawl to walk to run, we will get that 80-plus percent benefit 
in a digital environment, if you will. You are the stewards of 
the day-to-day. What we are here as elected Members of 
Congress, we are that--if you will, in some cases that 
executive board that will figure out ways to logically allocate 
or reallocate money based upon the performance of you all, and 
that is our partnership in there.
    In the end, just remember, if that veteran does not receive 
the goods and services that they rate, we will have failed, no 
matter how quickly or how long that we take to do this. We are 
partners in this and I look forward to staying in the 
partnership with you for a very long time, assuming my life 
cycle continues.
    Thank you.
    Mr. Pappas. I will now turn it over to Chairwoman Lee for 5 
minutes--or for any closing comments she may have.
    Ms. Lee. No, I just--you know, from the complexity of this 
project to the rolling time line, to basically decisions that 
will need to be made further into the future, I personally am 
concerned about the $2.5 billion estimate and the 10-year 
estimate. You know, again, we understand the complexity of 
this. We would like transparency and to be kept abreast of as 
things change rather than after the fact to have that 
knowledge, that would be helpful.
    Wishing you all the best of luck, this is an important 
project, and we certainly are here to work with you on it.
    Mr. Pappas. Well, thank you. I wish to express my 
appreciation to the witnesses for appearing today and providing 
your testimony, your thoughts, and your expertise.
    Members will have 5 legislative days to revise and extend 
their remarks, and include any extraneous material.
    And, without objection, the subcommittee stands adjourned.
    [Whereupon, at 11:28 a.m., the subcommittees were 
adjourned.]


      
      
      
      
      
      
      
      
      
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                         A  P  P  E  N  D  I  X

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                     Prepared Statement of Witness

                              ----------                              


                  Prepared Statement of Jon Rychalski

    Good morning Chairs Pappas and Lee, Ranking Members Bergman and 
Banks, and distinguished Members of the Subcommittees. Thank you for 
the opportunity to testify today in support of the Department of 
Veterans Affairs' (VA) efforts to modernize its legacy financial 
management systems. I am accompanied by Terry Riffel, Deputy Assistant 
Secretary for Financial Management Business Transformation (FMBT) and 
Daniel McCune, Executive Director, Enterprise Portfolio Management 
Office (EPMO), Office of Information Technology (OIT).

                               Background

    I am excited about the prospect of providing VA with a modern 
financial and acquisition management solution, coupled with 
transformative business processes, to increase the transparency, 
accuracy, timeliness, and reliability of financial information. I can 
attest, first hand, that the existing, antiquated financial management 
system is sorely lacking in the capabilities we desperately need. When 
the FMBT is fully implemented, VA will be positioned to eliminate 
numerous long-standing audit and Inspector General findings related to 
financial management. FMBT will improve our ability to distribute 
funds, pay vendors, fully account for resources, perform detailed 
economic analyses, and ultimately serve our Veterans. I am even more 
excited to report that our progress in implementing FMBT is excellent. 
We are on schedule and within budget with no significant problems noted 
to date. Perhaps most noteworthy is the integrated, grass-roots effort 
that has come to define our approach. As I will explain in my 
testimony, our journey started out as a shared-service concept with the 
United States Department of Agriculture (USDA). We have since taken 
FMBT back in-house and have a much stronger team and approach with the 
results to prove it.
    On March 25, 2013, the Office of Management and Budget (OMB) issued 
Memorandum 13-08, Improving Financial Systems through Shared Services, 
directing all executive agencies to use a shared services solution for 
future modernizations of core accounting or mixed systems. VA's 
Financial Management Transformation Service (FMTS) then established the 
Financial Management Business Transformation (FMBT) program in 
accordance with OMB's directive. In collaboration with the Unified 
Shared Services Management (USSM) Office and OMB, VA subsequently 
completed an evaluation of United States Department of Treasury and 
United States Department of Agriculture (USDA) to determine the best 
Federal Shared Service Provider (FSSP) to deliver financial and 
acquisition services. On September 19, 2016, VA selected USDA as its 
FSSP to guide VA's migration to an integrated financial and acquisition 
management solution.
    In December 2017, USDA officially notified VA that they would no 
longer serve as FSSP to VA in support of FMBT. As a result, USDA was 
phased out as VA's FSSP in March 2018 with the successful transfer of 
contracts, licenses, and intellectual and real property from USDA to 
VA. VA has been solely managing the FMBT program since January 2018. 
While daunting at first, this ultimately proved to be fortuitous. By 
being responsible for our own destiny, it forced us to collaborate 
closely with our internal and external customers at a much more 
intimate level than ever before. We have forged a deep understanding of 
each stakeholder's requirements and priorities, and collectively, we 
have forged a closer bond that is paying huge dividends while we 
perform this implementation as true partners.
    VA is migrating to the Momentum commercial cloud solution, allowing 
VA to leverage CGI's proven Software as a Service (SaaS) model. VA will 
gain increased operational efficiency, productivity, agility, and 
flexibility from a modern Enterprise Resource Planning (ERP) cloud 
solution. The new cloud solution will also provide additional security, 
storage, and scalability. In contrast to the extremely limited 
reporting of the legacy Financial Management System (FMS), FMBT will 
deliver robust business intelligence and reporting capabilities 
allowing the Department to leverage data as a corporate asset; enhance 
managerial decision-making through data analytics; and reduce fraud, 
waste, and abuse.
    To effectively utilize all available resources, VA's Office of 
Management (OM) is leveraging the Financial Services Center's (FSC) 
deep expertise in deploying Department-wide transformation efforts. 
FMBT is strongly supported across all VA Administrations and Staff 
Offices and is closely partnered with the Office of Information and 
Technology (OIT) and Office of Acquisition, Logistics, and Construction 
(OALC). Subject Matter Experts from across all VA Administrations and 
Staff Offices, along with VA's Debt Management Center (DMC), Office of 
Business Oversight (OBO), and Office of Finance (OF) are also fully 
engaged with the FMBT initiative.

                           Technical Approach

    The FMBT program utilizes a tailored Scaled Agile approach that 
supports multiple wave implementations and focuses on iterative 
delivery of functionality. Using the Agile methodology lowers risk 
through iterative configuration, testing, and validation, which 
provides transparency for improved decision-making. Higher quality is 
achieved with integrated, cross functional teams that can identify and 
address issues earlier, faster, and with more cost-effective solutions. 
This encourages rapid and flexible response to change and facilitates 
continual customer engagement to reduce the need for later rework and 
requirement changes. To focus and control this inherent adaptability, 
FMBT has instituted a robust change control process, and changes in 
program scope require approval from VA Program Advisors and, as needed, 
the FMBT Executive Steering Committee (ESC), which I chair with 
representation from Administration and Staff Office senior leadership.

               Highlights of Three Major Accomplishments

    One of our most significant accomplishments following our 
separation from USDA and successful transition to a VA-led effort was 
appointing a single leader of FMBT who has exceptional leadership 
skills; has a deep understanding of VA financial operations and 
transactions; and has a proven track record of successfully delivering 
system modernizations in VA (successful travel, payroll, claims 
processing system modernizations). Terry Riffel is this leader with 
over 30 years of experience at VA, most recently serving as the 
Director of FSC. I appointed her as Deputy Assistant Secretary for FMBT 
in July 2018 and as the single point person to lead FMBT 
implementation. There are no confusing matrixed organizational 
alignments; rather, a very clear reporting chain from the Secretary to 
me to Ms. Riffel. This construct effectively removes confusion about 
``who is responsible for what.'' Her experience with VA transformation 
efforts has been invaluable as FMBT moves forward with FMBT 
implementations. In coordination with Ms. Riffel, I oversaw the 
reorganization of the FMBT Program Management Office (PMO) to 
strengthen our focus on service delivery and customer experience in 
alignment with VA Secretary Wilkie's strategic plan for the Department.
    A second major accomplishment was the establishment of VA's 
Accounting Classification Structure (ACS). The ACS will provide much-
needed standardization across the VA and complies with Federal policies 
and guidance, including the Treasury's U.S. Government Standard General 
Ledger (USSGL) and OMB Circular A-11, Section 83, Budget Object Codes 
(BOC). This highly technical endeavor required working closely with 
each business partner to understand their unique reporting 
requirements. The result is, for the first time, VA has a federally 
compliant enterprise-wide accounting classification structure, 
including a uniform chart of accounts, BOCs, fund codes, programs, and 
projects that will drive standardization across the VA, improve data 
integrity and the accuracy of financial reporting, and greatly improve 
auditability.
    Finally, in September 2018, FMBT successfully completed the 
Business Process Reengineering (BPR) sessions. FMBT engaged with all 
internal stakeholders to standardize the Department's core financial 
and acquisition business processes. Those sessions resulted in the VA-
wide enterprise configuration of FMBT, which provides the foundation 
for further configuration to meet the specific needs of each 
Administration and Staff Office.
    While these highlight just three of many accomplishments that we 
are extremely proud of, they are indicative of the progress we are 
making in the FMBT initiative. As such, we feel we are well positioned 
for our first major ``go-live'' in July 2020.

                                Timeline

    In partnership with Administrations and Staff Offices, FMBT 
developed a notional timeline that extends through the final 
implementation wave in 2029. I want to emphasize ``notional'' because 
this is not the final timeline that I intend to stay with. Ten years is 
too long to deploy FMBT. At my request, the FMBT team looked at ways to 
accelerate deployment early on. It ultimately made more sense to take a 
little more time on the front end of our initial deployment in July 
2020 to make sure we were over-prepared and set up for success, 
especially given our past failures. Once we have ``cut our teeth'' at 
the first site and can confidently declare success, we are going to 
strategize acceleration of our timeline. Ideally, I would like to cut 
this timeline in half.
    Our first major implementation effort is at the National Cemetery 
Administration (NCA), which will go live with FMBT in July 2020. The 
NCA acquisitions go-live will follow 1 year later in July 2021. Work is 
also underway at the Veterans Benefits Administration (VBA); the first 
phase of the VBA General Operating Expenses (GOE) implementation is 
scheduled to go live in November 2020, setting FMBT up for continued 
success with VBA as we also work toward the first phase of the VBA 
Insurance go-live in May 2021. All VBA funds are scheduled to go live 
with FMBT by January 2025. Implementation at Staff Offices across VA 
will be completed between 2022 and 2026. The first implementation phase 
at the Veterans Health Administration (VHA) will go live in December 
2024, followed by additional go-lives in each subsequent year until the 
entire Administration is transitioned to FMBT in December 2029. The VHA 
implementations were originally planned for earlier in the schedule, 
but those waves were postponed allowing iFAMS to integrate directly 
with the LogiCole supply chain solution once it is available. This 
eliminates the need for costly interim interfaces and shortens the 
overall VHA implementation schedule.
    By leveraging the adaptability of the Scaled Agile framework, this 
timeline can be easily modified to handle new funding levels and the 
changing needs of VA.

                               IT Funding

    The life cycle cost estimate for FMBT over 10 years is $2.5 
billion. This includes 3 years of sunk costs for fiscal years (FY) 2016 
through 2018, costs for Fiscal Year 2019, and estimated costs for 
Fiscal Year 2020 through Fiscal Year 2029. Although $2.4 billion may 
seem high, the difficulty and complexity of replacing obsolete 
financial and acquisition management systems in the second-largest 
Federal agency cannot be overstated. Nevertheless, we are very 
cognizant of the responsibility a program of this size entails, and we 
are working diligently to be conscientious stewards of taxpayer 
dollars.
    My current State assessment of our FMBT deployment is very 
positive. But I would be remiss if I did not acknowledge that this is 
an extremely high risk, high reward endeavor. VA identified the need to 
replace its aging financial management system architecture in 1999. Two 
previous major modernization efforts were attempted, the Core Financial 
and Logistics System (CoreFLS) in 2004 and the Financial and Logistics 
Integrated Technology Enterprise (FLITE)/Integrated Financial 
Accounting System (IFAS) in 2010. I was a young consultant at a firm 
providing the majority of support for the CoreFLS initiative when it 
failed so I am acutely aware of the complexity and risk. This 
experience convinced me that there are (at least) three key components 
to successfully completing an ERP implementation of this scale: 1) It 
must be Government led; 2) It must have clear lines of authority and 
senior leader support; and, 3) There must be a team effort with all 
business partners equally supportive. I believe that we have that 
recipe for success today.

                               Conclusion

    FMBT will be the most significant investment we can make in VA's 
financial health in my lifetime. I am proud of the progress we have 
made and look forward to a big year in 2020. Our deep collaboration 
with and unwavering support from VA Administrations and Staff Offices 
has given the program the flexibility and adaptability to work through 
any issue and handle the funding challenges to date, as evidenced by 
over 500 subject matter experts participating in program activities. 
With the NCA implementation on schedule for go-live in July 2020, FMBT 
is poised for success next year and beyond.
    Chairs Pappas and Lee, Ranking Members Bergman and Banks, and 
Members of the Subcommittees, this concludes my statement. I would be 
happy to answer any questions.

                                 [all]