[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
STRUCTURING THE U.S. DEPARTMENT OF VETERANS AFFAIRS OF THE 21ST CENTURY
=======================================================================
HEARING
before the
COMMITTEE ON VETERANS' AFFAIRS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
SECOND SESSION
__________
MARCH 10, 2010
__________
Serial No. 111-66
__________
Printed for the use of the Committee on Veterans' Affairs
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COMMITTEE ON VETERANS' AFFAIRS
BOB FILNER, California, Chairman
CORRINE BROWN, Florida STEVE BUYER, Indiana, Ranking
VIC SNYDER, Arkansas CLIFF STEARNS, Florida
MICHAEL H. MICHAUD, Maine JERRY MORAN, Kansas
STEPHANIE HERSETH SANDLIN, South HENRY E. BROWN, Jr., South
Dakota Carolina
HARRY E. MITCHELL, Arizona JEFF MILLER, Florida
JOHN J. HALL, New York JOHN BOOZMAN, Arkansas
DEBORAH L. HALVORSON, Illinois BRIAN P. BILBRAY, California
THOMAS S.P. PERRIELLO, Virginia DOUG LAMBORN, Colorado
HARRY TEAGUE, New Mexico GUS M. BILIRAKIS, Florida
CIRO D. RODRIGUEZ, Texas VERN BUCHANAN, Florida
JOE DONNELLY, Indiana DAVID P. ROE, Tennessee
JERRY McNERNEY, California
ZACHARY T. SPACE, Ohio
TIMOTHY J. WALZ, Minnesota
JOHN H. ADLER, New Jersey
ANN KIRKPATRICK, Arizona
GLENN C. NYE, Virginia
Malcom A. Shorter, Staff Director
______
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Veterans' Affairs are also
published in electronic form. The printed hearing record remains the
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C O N T E N T S
__________
March 10, 2010
Page
Structuring the U.S. Department of Veterans Affairs of the 21st
Century........................................................ 1
OPENING STATEMENTS
Chairman Bob Filner.............................................. 1
Prepared statement of Chairman Filner........................ 22
Hon. Harry E. Mitchell, prepared statement of.................... 22
WITNESSES
U.S. Department of Veterans Affairs, Hon. Eric K. Shinseki,
Secretary...................................................... 2
Prepared statement of Secretary Shinseki..................... 23
MATERIAL SUBMITTED FOR THE RECORD
``VA to Automate its Agent Orange Claims Process,'' by Gregg
Zoroya, USA Today, Updated March 9, 2010....................... 28
STRUCTURING THE U.S. DEPARTMENT OF VETERANS AFFAIRS OF THE 21ST CENTURY
----------
Wednesday, March 10, 2010
U.S. House of Representatives,
Committee on Veterans' Affairs,
Washington, DC.
The Committee met, pursuant to notice, at 10:37 a.m., in
Room 334, Cannon House Office Building, Hon. Bob Filner
[Chairman of the Committee] presiding.
Present: Representatives Filner, Brown of Florida, Michaud,
Herseth Sandlin, Halvorson, Rodriguez, Donnelly, McNerney,
Walz, Adler, Kirkpatrick, Buyer, Stearns, Brown of South
Carolina, Boozman, Bilbray, Lamborn, and Roe.
OPENING STATEMENT OF CHAIRMAN FILNER
The Chairman. Good morning. The Committee on Veterans'
Affairs hearing on ``Structuring the U.S. Department of
Veterans Affairs (VA) of the 21st Century'' will come to order.
I want to thank the Members of the Committee and, of
course, the Secretary of the Department of Veterans Affairs,
General Shinseki, for being with us.
We all know that the VA is the second largest agency in the
Federal Government. With about a quarter of a million
employees, the VA oversees the largest integrated health care
system in the country along with a vast array of benefit
programs to compensate the service and sacrifice of our 25
million veterans.
Reforming the VA and bringing it into a 21st Century
organization is a monumental task and one that our Secretary
has not shied away from.
We are here to listen to your comments, Mr. Secretary. We
want to hear your views on the future of the VA, the challenges
that face the VA in the future, and what your needs are to
transform the agency into a 21st Century organization.
We are not looking at specific bills right now. We want to
hear about your vision and your assessment of what tools you
need, including a proposal that you support put forth by
Secretary Nicholson that would amend title 38 to add an
additional Assistant Secretary and eight Deputy Assistant
Secretaries.
We are not looking, as you have said, for a piecemeal
approach, but we want to look at a comprehensive program.
We look forward to the hearing with you and we are going to
work together in a bipartisan way to act on your suggestions.
I recognize Mr. Brown for any comments he may make.
[The prepared statement of Chairman Filner appears on p.
22.]
Mr. Brown of South Carolina. Thank you, Mr. Chairman.
And, Mr. Secretary and the rest of the panel, we welcome
you here today and look forward to a great discussion.
I know we just passed a goodly number of bills that we
think will help our veterans and particularly those that are
homeless and unemployed. And we look forward to your testimony.
The Chairman. Mr. Secretary, you have the floor.
STATEMENT OF HON. ERIC K. SHINSEKI, SECRETARY, U.S. DEPARTMENT
OF VETERANS AFFAIRS; ACCOMPANIED BY W. TODD GRAMS, ACTING
ASSISTANT SECRETARY FOR MANAGEMENT AND CHIEF FINANCIAL OFFICER,
U.S. DEPARTMENT OF VETERANS AFFAIRS; JAN R. FRYE, DEPUTY
ASSISTANT SECRETARY FOR ACQUISITIONS AND LOGISTICS, OFFICE OF
ACQUISITION, LOGISTICS, AND CONSTRUCTION, U.S. DEPARTMENT OF
VETERANS AFFAIRS; AND STEPHEN W. WARREN, PRINCIPAL DEPUTY
ASSISTANT SECRETARY FOR INFORMATION AND TECHNOLOGY, U.S.
DEPARTMENT OF VETERANS AFFAIRS
Secretary Shinseki. Chairman Filner, Congressman Brown,
distinguished Members of the Committee, thank you for this
opportunity to discuss our desire to restructure the Department
of Veterans Affairs into a more effective and more efficient
organization.
Joining me today here at the witness table, let me begin on
my left, Mr. Steph Warren, who is our Principal Deputy
Assistant Secretary for Information and Technology; to my
immediate left, Todd Grams, our Acting Assistant Secretary for
Management; and to my right, Mr. Jan Frye, Deputy Assistant
Secretary for Acquisition and Logistics.
Mr. Chairman, I provided written testimony to the Committee
and I ask that it be entered into the record.
The Chairman. It will be. Thank you, sir.
Secretary Shinseki. Thank you, sir.
Our thoughts about redesign seek an organization that is
going to accomplish several things. First, we want it to be
capable of agilely leveraging the significant opportunities
that are provided to the VA in the next two budgets, the 2010
budget and the 2011 budget, that gives us resources at our
disposal.
Second, we want to produce demonstrable returns on
investments and then, third, we want to improve access,
quality, safety of our services while still being able to
control costs involved.
Let me be clear. Underpinning our intent is a commitment
never to squander nor diminish the quality of care and benefits
we provide to veterans. That is our mission.
You have shared your insights with me both during our
testimonies and also in our meetings together about changes
many of you feel are necessary to fulfill President Obama's
charge to transform this Department into a 21st Century
organization. And this hearing provides VA an opportunity to
continue that dialogue.
The veterans service organizations who are represented here
today also have insights into some of the challenges that we
wrestle with every day to raise our effectiveness and
efficiencies. And I have listened to their comments as well.
During this Committee's recent budget hearing in February,
I outlined four strategic goals which have already begun to
guide our path to the future.
First, increase access, improve quality, and enhance the
value of health care benefits and memorial services.
Second, raise veterans' satisfaction with VA benefits and
services.
Third, improve the quality of internal systems to build a
more competent organization, competency from the top to the
lowest level of execution inside the organization, no single-
point failures, and last, assure our readiness to protect our
people and our assets daily and especially during crises.
Now, during that testimony, I also highlighted six
performance goals around which we focus our efforts.
First, automate the GI Bill education benefits. And as I
reported then, the first set of tools I expect in April, the
next set in July, the third set in November. And there may be a
fourth iteration in December. But by the end of this year, we
will be fully automated in the new GI Bill process.
The second of those performance goals attack the claims
backlog. In fact, the language we use is break the back of the
backlog this year.
Third, set the conditions culturally for veterans' advocacy
within VA.
Next, improve mental health care. Then establish a virtual
lifetime electronic record, something that President Obama in
April mandated, and both Secretary Gates and I have that
charter.
And then, finally, eliminate veterans' homelessness. So
these are the six performance goals around which we organize
ourselves.
Now, internal management and organizational changes, which
we have already put into motion, are strengthening the trust
and confidence of stakeholders in our transformation
initiatives, some of the feedback that I get as we travel.
Now, we seek to strengthen VA's management infrastructure
across all five of our core functions. Those functions are
common to any large organization like VA. It is acquisition and
logistics. It is construction and facilities management. It is
information technology (IT), human resources management, and
the fifth core function is financial management.
Of specific importance and interest is our need for
acquisition reform. Along with the rapid deployment of robust
and effective IT tools, acquisition reform is equally important
to fulfilling those strategic goals that I identified.
We are hard pressed to improve our return on investments
without an appropriate acquisition management structure, which
we lack today.
There is similarity between IT success or failure and
contracting. The IT setbacks that have tested your patience and
our confidence have largely been project management and
acquisition failures. For both IT and acquisitions, past
weaknesses have stemmed from overly decentralized control, lack
of enterprise-wide management information, the ability to see
what we are doing and how we are doing it, and in some cases
improvised policies.
Managers in the field lacked supervision, guidance, and
sustained support, and policies were inconsistently applied.
And to me, those are my responsibilities to put in place.
VA is large and diverse enough that having all operational
IT decisions passing through a single office would slow
operations, so we balanced centralized policy with
decentralized execution of those policies to empower our
employees and, yet, maintain consistency across the
organization.
After 3 years of work to centralize IT, we are beginning
just now to reap intended benefits.
While they are sufficiently different disciplines requiring
individualized solutions, the issues we dealt with during IT
reform are also present in acquisition reform.
VA's procurement spending, almost $15 billion annually, has
been highly decentralized, resulting in a lack of
standardization, accountability, and controls.
I seek a $2 billion return on acquisition reform and that
is what we are about.
To accomplish these savings, we need your authorization to
proceed with my request for an Assistant Secretary for
Acquisition, eight DAS positions, Deputy Assistant Secretary
positions, and the associated authorities included in draft
legislation, which the Department provided to this Committee.
Great IT development and execution depend on well-managed,
disciplined acquisition support and project management.
Sensible policies and consistency in delivering high-value
customer services are crucial. The link between IT success or
failure and contracting is clear, but we have made progress,
beginning with IT centralization, which was initiated at your
behest in 2007 and with PMAS, the Program Management
Accountability System, which was VA's initiative launched last
year by Assistant Secretary Baker.
We have more work to do and we seek the support of this
Committee in order to continue improving, as I said at the
outset, our effectiveness and our efficiency. We have spent a
year fundamentally and comprehensively reviewing our mission,
what it is we are supposed to be doing, and the processes and
procedures we have in place to control that.
We have challenged all the assumptions and believe we are
ready to take this next step. Your support in restructuring
VA's acquisition and IT programs is much needed. We seek
Secretary Baker's counterpart in acquisition, logistics, and
construction, which we do not have.
Changes to restructure acquisition and IT were included in
the budget we sent to Congress in the first session of the
111th Congress. We propose authorizing VA to establish an
Office of Assistant Secretary for Acquisition, Logistics, and
Construction, a fundamental step in consolidating the
acquisition function and elevating it to its central role in
controlling costs and contracting and acquisitions.
Going forward, our programs need coherence, intellectual
rigor, and decisiveness that an Assistant Secretary will
provide.
VA only recently, I think you will recall, established its
Office of Acquisition, Logistics, and Construction, in October
2008. We have a Director performing that role.
We need authorization to appoint an Assistant Secretary
level leader who will direct this office, consolidate
functions, centralize procurement policies, which are currently
scattered across and throughout the Department.
This proposal is not about creating a new layer of
bureaucracy. It is about streamlining our organization in ways
that will better align our priorities with the most responsible
use of VA's funds.
It is to be implemented within existing resources and it
will not require an increase in VA SES, Senior Executive
Service, authorizations.
Last, I can appreciate some of the frustration on the part
of Members of this Committee with the pace of change,
especially regarding some long-standing deficiencies. I have
read the U.S. Government Accountability Office (GAO) reports. I
have read the Inspector General (IG) reports. We believe this
proposal will give us the agility and discipline we seek.
I intend to consult and share our progress with this
Committee so that you can monitor the rate of reform with this
initiative.
Again, Mr. Chairman, I thank you and the Members of this
Committee for inviting me here to discuss these issues. And,
again, I would like to thank you for tremendous support during
my first year as Secretary of this Department. Your insights
were generously shared and most helpful. Thank you, and I look
forward to your questions.
[The prepared statement of Secretary Shinseki appears on p.
23.]
The Chairman. Thank you, Mr. Secretary.
I am going to be calling on my colleagues after I make just
two quick comments.
I believe you saw, while you were waiting, the bills that
we passed on homelessness. We certainly are strongly committed
to, and supportive of, your commitment to end veterans'
homelessness in 5 years. And we thank you----
Secretary Shinseki. Thank you very much, Mr. Chairman.
The Chairman [continuing]. For your energy on that. I must
say that during 18 years I have been sitting here, I have not
heard a Secretary acknowledge problems, mistakes, or failings
at the VA, and their responsibility and your accountability for
improving them. We thank you for your candor and we look
forward to supporting you.
Ms. Brown.
Ms. Brown of Florida. Thank you, Mr. Secretary. And I want
to thank you for your service and your commitment to continuing
to serve. And I keep saying that you are really a bright spot
in the Administration. And I was reading in USA Today about
your proposal.
And I want to get that article, Mr. Chairman, and make sure
everybody gets it. It was an interesting article in yesterday's
USA Today.
[The USA Today article, entitled ``VA to Automate its Agent
Orange Claims Process,'' dated March 9, 2010, appears on p.
28.]
But my question comes to as you develop a plan for the
Veterans Affairs Medical Center in Orlando. I was in Orlando
and I had three meetings with labor groups. They are concerned
about agreements that when the VA contracts to do work, to make
sure there has not been a waiver dealing with Buy America or
some other reason why they are not able to be more competitive
as far as getting the opportunity to work on these projects.
I need a more intensive explanation as to the bid process
and how we are selecting the contractors for the various VA
hospitals that we have because they even mentioned the one in
New Orleans.
Secretary Shinseki. Congresswoman, I know there is probably
a longer history than I have on the way contracting is done.
Part of my effort here is to bring this under control, under
discipline, but also increase the level of transparency so
people can see what we do and then make their judgments about
whether we are fair and we are doing the right things.
Let me just use as an example, a year ago, we were given by
the Congress and the Administration $1 billion in recovery
funds.
Ms. Brown of Florida. Yes.
Secretary Shinseki. We took that $1 billion opportunity and
we competed 98 to 99 percent of that. So it was put out for
competitive bidding. Of those contracts, over 80 percent went
to small businesses owned by veterans, which for us is
important because, as I have said a number of times, we find
that veterans hire veterans because they are comfortable and
they know what they are getting.
This creates churn in the workplace. That means veterans
are being hired and veteran-owned small businesses have an
opportunity to compete. It is the fairness factor. It is not a
disadvantage for anyone else, but it is a fairness factor for
them.
And so what I would offer is that model that we use to
track our contracts, it is an electronic model, is the same
model we will use and then improve on as we seek the
opportunity to consolidate contracting in a way that it has not
been in the past.
Ms. Brown of Florida. I want to mention minorities, and
women. You have already indicated that you are doing
preferences or however we want to frame it today with helping
veterans get employment and contracts because the VA does quite
a bit of contracting.
So thank you.
Secretary Shinseki. We do have a Veterans First Program at
VA where we look at contracting opportunities for them, again
to level the playing field. And then within that, we also track
the other categories that are important and so that we have
visibility and others can transparently see our work.
Ms. Brown of Florida. Thank you again for your service.
And I yield back, Mr. Chairman.
The Chairman. Thank you, Ms. Brown.
I do want to point out, Mr. Secretary, that this Committee
included in its FY 2011 Views and Estimates that we submitted
to the Budget Committee, a section that stated that if there
are additional stimulus jobs bills going forward that we
recommend almost $1 billion for the VA since there are minor
and major construction projects ready to go. We hope that if
there are additional stimulus bills that some of that money
gets into the VA.
Secretary Shinseki. Great. Thank you. Thank you very much,
Mr. Chairman.
The Chairman. Thank you.
Mr. Lamborn.
Mr. Lamborn. Thank you, Mr. Chairman.
Mr. Secretary, and it is good to hear your testimony today.
When addressing the new IT system for the GI Bill, I believe
you mentioned delivery of phased improvements in July and
November. I believe at our last oversight hearing, the delivery
dates were June, September, and December.
Could you please clarify these dates for us.
Secretary Shinseki. I will try to. The dates I have are
April, July, and November. Let me ask Mr. Warren to provide
some technical----
Mr. Warren. The dates that we are working to, sir, are the
end of March, beginning of April the first increment. June is
the second increment. November is the third. And we delayed it
a little bit so we did not hit the peak for the fall semester.
And the full system is deployed by the end of December.
Secretary Shinseki. Well, I would say that I am probably a
little bit of the pressure here. I do not know that anything is
magical about April, July, and November. And so if there is a
variance in the dates, it is my pressure to say what is the
best we can do and perhaps that is a little bit of the response
you are hearing here.
But, you know, if we can put the July target in May or
June, because I know what happens in the summer, the crunch
points are July, August is registration time, if I can get
those inserted earlier so people can be fully trained, that is
what I would like to do. And so that is a little bit of my
pressure.
But in reality, the date I was provided as sure-fire, no
fail is a July date. And I am working to see if we can move
that up.
Mr. Lamborn. Okay. Thank you for that answer.
And, Mr. Chairman, I yield back.
The Chairman. Thank you, Mr. Lamborn.
Mr. Michaud.
Mr. Michaud. Thank you very much, Mr. Chairman.
I want to thank you, Mr. Secretary, for your testimony this
morning on how we can better support the VA administratively to
provide the best care for our veterans.
In your testimony, you propose to add a new Secretary of
Acquisition, Logistics, and Construction and eight additional
Deputy Assistant Secretaries, yet you also indicated the
proposal would be cost neutral and would not require additional
budgetary resources.
What areas in the current VA budget will be providing the
offset for these new positions and will these funding reduction
offsets have any detrimental effect to those programs?
Secretary Shinseki. I am probably here better off providing
you an answer, a detailed answer for the record. But I do
intend savings to come out of this. If I am able to convince
the Committee this is the right way to go. I already indicated
that my target is $2 billion in terms of contract savings.
I am already committed. The President has asked all of the
departments to reduce contract awards in the next 2 years to a
tune of seven percent over the next 2 years. And for VA, that,
I think, comes in around $958 million. I have confidence that
we can improve on that and that is why I have set $2 billion as
our target.
These decisions will help me get there. I have said I do
not foresee a need for any more SES positions and I think this
is what I can see as cost neutral because of the savings I
intend.
Mr. Michaud. Thank you.
In your testimony, you also say VA's partnership with
Congress is critical to achieve transformation. Veterans
benefit from a strong partnership between VA and the Congress,
which I agree 100 percent with those comments.
However, sometimes when we actually pass something in law,
and I agree with what your intention with this new
administrative change is, but sometimes when we enact something
into law, the actual implementation is at odds. And I do have a
concern as far as whether this might slow down the process for
new clinics or community-based outpatient clinics (CBOCs) that
are to be built and actually whether the saving is going to be
there.
And the reason why I say that, and I am just going to give
an example because we actually just had a hearing last week in
the Subcommittee on Health dealing with a law that we passed in
Congress in 2006, but the implementation is, in my opinion,
contrary to the law. And it actually deals with reimbursement
for nursing homes. The law was very clear that the VA will
provide full cost of nursing home care. The implementation of
that law actually defining the full cost of nursing home care
was narrowed as to these costs.
When the VA testified at the hearing, they said many
States, in their written testimony, agreed with the new
regulations. The testimony was a few States. When I asked the
VA what States agree with it, they named two. And out of the
two, Connecticut, actually we heard from the State Veterans
Nursing Homes, that they disagree. The problem being is the
language in the law was full cost. The VA narrowed what that
full cost was to be.
When I further asked, well, how are they going to make up
the difference for the additional cost that the VA does not
cover, they said, well, they can charge it to third-party
billing. The problem is because the rules that were implemented
stated that if they accept payment from the VA, that is payment
in full.
So you have State-run nursing homes that have a large
Medicare, Medicaid population, they cannot collect it. So I
said because it is payment in full, where else are they going
to get the money. The answer was long-term health care, which
veterans have long-term health care.
So my concern is the fact that when we enact laws, the
implementation sometimes might not be in the proper manner. And
my concern if we give you this new administrative change, you
know, exactly whether or not that might be contrary to what we
are enacting.
And I wanted to feel comfortable that what you are saying
and how it actually gets implemented is correct, not like the
situation that we ended up hearing last week with reimbursement
rates for nursing homes because it does have a negative effect,
where actually we had a hundred percent service-connected
disabled veteran who was refused access to a nursing home and
ultimately passed away before he could get the care that he
needed because of how the VA implemented the law.
So I just want to make sure that what you are saying today
and how you want to see this new administrative change work is
actually how it is going to work.
Secretary Shinseki. Fair question, Congressman. And I will
go back and take a look at this case that you have cited and
see whether whatever answer, whatever position we gave makes
sense to me. I will get into that and provide you a response.
I guess you will have to take my oral statement for what it
is worth and that is that nowhere in this request is there an
intent to squander or diminish the care we provide to veterans.
That is the first statement in the mission. In fact, I have to
do this in order to be able to fulfill that because just
looking at the cost curve, not just for health care, but just
the cost of operating government, the President has asked us to
do a good hard look. And so I want to do this. But for every
dollar that I am able to save, the intent is to turn this
around and return it in terms of care and benefits and
increased access and higher quality services we provide
veterans. That is the end result here. That is the target we
are shooting for.
Mr. Michaud. Well, thank you very much. And I do take you
for your word. You are a very honorable man and really
appreciate all that you have been doing.
And I know on the nursing home issue, that started before
you became Secretary, but the culture within the VA is, you
know, that is a big concern of fours. I know it is hard to turn
it around and you are doing the best that you can.
I want to be very supportive of what you are doing. But at
the same token, I am also concerned that once we pass laws, our
intent is implemented by the VA because I can see the whole
nursing home area reimbursement could be the Walter Reed of the
VA system if it is not addressed quickly.
Secretary Shinseki. Okay. Thanks for that insight,
Congressman.
Mr. Michaud. Thank you.
Secretary Shinseki. I will provide it for the record.
[The Committee staff has been meeting with VA on the State
Veterans Homes issue.]
The Chairman. Ms. Brown, did you want to follow-up on that?
Ms. Brown of Florida. I will just listen and then I will.
The Chairman. Okay. Thank you.
Regarding the issue that Mr. Michaud brought up, I ask you
to provide the Committee with your investigative work on that.
Secretary Shinseki. I will.
The Chairman. Mr. Brown.
Mr. Brown of South Carolina. Thank you, Mr. Chairman.
Mr. Secretary, just so I can get, I guess, a little handle
on the process today as we move forward, I guess, to
consolidate the acquisitions, is each hospital basically
independent in their acquisitions and supply of their needs?
Secretary Shinseki. One hundred and fifty-three hospitals.
I think that is for the most part true. There may be a number
of hospitals that are linked together where those orders are
done in combination, working together, or a Veterans Integrated
Services Network (VISN) has imposed some kind of control. But
for the most part, contracting is done across the spread of VA.
Mr. Brown of South Carolina. Is there any oversight? Do the
VISNs have any kind of an oversight over those purchases or are
they pretty well independent themselves?
Secretary Shinseki. They do have, but it is difficult at my
level to see how well we do that, what we buy, how we buy it,
and when we buy.
The impact on cost could be influenced by when you decide
to buy a certain product, especially when we are buying in such
large volume as we are.
I will just use the example, after this winter, of snow
blowers. If we buy it at the beginning of the snow season, we
are going to pay a certain price. If we buy it at the end of
the snow season and demand that for our purchase we want a full
warranty, we are going to get a far different price. I just
want us to be smart about it.
Mr. Brown of South Carolina. So you are saying that you are
going to have this Under Secretary then. And then all the
requisitions will come through that one station?
Secretary Shinseki. We want to centralize the policy on
procurement and acquisition and list what it is that we are
going to underwrite. And then decentralized execution of that
means people can off of that list be able to execute the
purchases.
And there is a practical side to this as well. We all
remember the endoscopy set of events that we went through. When
I went to take a look at it, we had, I do not know, 25 versions
of endoscopes, 28 versions of endoscopes. And I think everyone
who had an interest in having a particular endoscope was very
happy with that arrangement, but all of the responsibility for
assuring the safety that goes along with performing endoscopies
falls on the youngsters in the basement of a hospital that are
in the steam room trying to clean each of 24, 25 versions and
meeting the established regimen for, according to that
manufacturer, of meeting the mark, each using a different set
of cleaning tools, each using a different set of solvents or
whatever is used, so the risk in the system falls on youngsters
who are doing the best they can, but we have created for them
an almost impossible task.
I think manufacturers also have a role they can help us
with, and that is to improve the engineering interface. As I
have said, if we have a valve, two valves, one is a one-way
valve which is safe and another one is a two-way valve which is
not safe and we color code it the same color and we allow them
to be hooked up, then it is going to require someone to be
especially attentive to make sure that we have got a one-way
valve in place for that procedure.
With our ability to bring contracting under our control, we
can seek the help of manufacturers to give us color coding or
other safety features that do not allow the wrong valve to be
coupled.
Mr. Brown of South Carolina. It would be a whole lot
easier, too, to transfer personnel between the different
hospitals.
Secretary Shinseki. Absolutely.
Mr. Brown of South Carolina. How about the pharmaceuticals
now? Are they under one master requisition or each hospital has
their own purchasing plan?
Secretary Shinseki. Let me call on Mr. Frye.
Mr. Brown of South Carolina. Okay.
Mr. Frye. Thank you for that question. That is a great
question.
And I would argue that the VA, the Veterans Health
Administration (VHA) specifically, has one of the best managed
pharmaceutical programs in the government. And it is centrally
managed.
There is a Program Management Office located in Hines,
Illinois, out at our National Acquisition Center that is
staffed by people that have all sorts of experience and
expertise in the pharmaceutical arena. There is a Program
Manager located at the Central Office here in Washington. And
in my opinion, they do a great job of managing that program,
but it is centralized management of the Pharmaceutical Program.
Mr. Brown of South Carolina. So I guess ultimately the
other parts of the purchasing will be similar to the
pharmaceuticals then?
Mr. Frye. Yes. The way it works is there is a formulary and
the stockage is based on that formulary. And orders are placed
by the individual pharmacies against that formulary. And so it
is run very efficiently and I think we have seen the GAO
reports that have said just that.
Mr. Brown of South Carolina. That is a real bright spot in
the VA. And I wanted to bring that up because you all are doing
such a good job with it and so I can, you know, understand now
maybe, you know, some parallel as you move forward in it.
But we are excited about this new venture. In particular,
we can save, you know, $2 billion a year. Mr. Secretary, that
is a sizeable savings. And I think, too, you will have a whole
lot better uniformity, too, throughout the process.
And so I commend you on this. Thank you very much for being
here today.
Secretary Shinseki. Thank you.
The Chairman. Thank you, Mr. Brown.
Mrs. Halvorson.
Mrs. Halvorson. Thank you, Mr. Chairman.
And thank you, Mr. Secretary, for being here. It is good to
see you guys.
I have a couple questions. But first of all everybody knows
that I have bothered you every single time I see you about
Silver Cross in my district, which is going to be vacant soon
because they are building down the street. And, you know, it
has presented the VA with a wonderful opportunity because they
built it 3 years ago for a cost of $20 million and here you
have this opportunity to get it for almost free.
Now, I am worried about this time-sensitive bureaucracy not
being flexible. So you are bringing on possibly an Assistant
Secretary who is in charge of that sort of thing.
Would he be in charge of this time-sensitive bureaucracy,
procuring or acquiring property? Would he be in charge of
something to help through the bureaucracy because I feel that
it is moving a little slower than I would like it and
especially my constituents want because they think it is just
something that I can flip the switch and it would happen?
The Chairman. I would like to correct the record. She meant
he or she.
Mrs. Halvorson. Yes, he or she, the person.
Secretary Shinseki. Congresswoman, the intent is to be able
to look long term, think strategically, and see what our
opportunities are so we have in place decision makers that will
then leverage these decisions faster.
I have said that for the next 2 years, we have strong
budgets and I need to get this in place and be able to force a
return on investment. So when I say think strategically, I
think we should be out there understanding what our
requirements are, out there looking for opportunities like
this.
In this case, thanks to you, it was brought to our
attention. And I understand a team has visited and found it a
very strong option.
Mrs. Halvorson. Uh-huh.
Secretary Shinseki. So we are in the process of following
up on that. But we ought to have that capability as well to be
looking out there on how we understand our requirements and see
what our options are out there and then, yes, absolutely, take
the insights from Members of Congress.
But I think in this case, had you not brought it up to us,
we might have missed it. So hopefully this will come out well.
Mrs. Halvorson. Great. And then my other question is the
fact that, and Chairman Filner has been out there and he is the
one that keeps bringing up the fact that there are 200 beds
also attached because it used to be a hospital or it still is a
hospital, it will be vacant. You know, we are talking about the
emergency room med center that you all are looking at. But
there are 200 beds connected to it, which could be used for
many things, whether it is the homeless, whether it is, you
know, a hospital, or long-term care because there are so many
waiting lists.
I have two veterans homes in my district and the State
keeps cutting back and cutting back.
Is it your practice to purchase then other property to
house veterans in long-term care?
Secretary Shinseki. Our intent is to take care of veterans
however we need to do that. And so we look at a variety of
options. We try to settle on the one that is most cost
effective, but the primary driver here is how do we best take
care of veterans, whether it is build, lease, purchase, assume.
We are willing to look at the whole list of opportunities.
Mrs. Halvorson. Because it is very frustrating in my office
to hear from the veterans who have done so much for us who are
on waiting lists and a lot of them die before they even get to
the front of the list to get into these veteran homes. And I--
--
Secretary Shinseki. These are the State Veteran Homes?
Mrs. Halvorson. Yes. They are the State ones.
Secretary Shinseki. Yes.
Mrs. Halvorson. But it would be nice if, you know, you have
those 200 beds, if we could just keep that on your radar screen
also, that is connected to the facility.
Secretary Shinseki. I will.
Mrs. Halvorson. Thank you.
And I yield back.
Secretary Shinseki. Thank you, Congresswoman.
The Chairman. Thank you, Mrs. Halvorson.
Mr. McNerney.
Mr. McNerney. Thank you, Mr. Chairman.
I was expecting you to call Mr. Stearns first, but I will
go ahead and take your----
Mr. Stearns. And I yield to the Ranking Member, Mr. Buyer.
Mr. McNerney. Okay. Thank you.
Mr. Secretary, I have to say I respect your sense of duty
in taking on this position as Secretary. And also, I admire
your ambition. I mean, the goals that you have laid out here
specifically and the ones that drive me the craziest are the
backlog and the homelessness. And if we can attack those with
the vigor that you are showing, we will make a lot of progress.
So I thank you for that service, Mr. Secretary.
Regarding the new positions, are there people within the VA
now carrying out those duties and responsibilities, as far as
you know, or is this something that is sort of a new structure
that will bring in people for entirely new responsibilities?
Secretary Shinseki. Let me call on Mr. Frye.
I would say there, as you might imagine in any
organization, there is somebody covering these
responsibilities, but without the authority and without the
resources.
We centralized IT 3 years ago. Five of the eight Deputy
Assistant Secretaries I am requesting go into the IT Program to
flesh out the responsibilities that they should be providing.
One of the Deputies would look at strategic architecture
and design. Another Deputy Assistant Secretary will look at
product development and delivery, overseeing 900 employees. A
third IT Deputy Assistant Secretary would address enterprise
program management that cuts across the entire Department,
another DAS would be responsible for performance management,
tracking our commitments on IT, and then the fifth Deputy
Assistant Secretary for Operations and Engineering would have
leadership responsibilities of over 5,000 people.
There is somebody filling a seat without the authority they
need and they are doing the best they can. And what I am
looking for is the opportunity to give them the authority so
they can move out.
I think part of the reason it has taken us 3 years--this
was the right move--to get to this point is that we needed to
put a structure in place and that is what we are asking to do
now so we can move out smartly.
Let me just ask Mr. Frye if he has anything else to add.
Mr. Frye. Sir, if I could address the Assistant Secretary
position. The Services Acquisition Reform Act of 2003 requires
that we have a Chief Acquisition Officer. That Chief
Acquisition Officer is filled today. It is filled by my boss,
Mr. Glenn Haggstrom, who is the Executive Director of
Acquisition, Logistics, and Construction. He is delegated that
authority by the Secretary and the Secretary, of course, serves
as the head of the activity.
So those functions have been undertaken. They are being
embraced by the Chief Acquisition Officer. And the Chief
Acquisition Officer further delegates authority to myself, the
Senior Procurement Executive, to develop policy and promulgate
that policy across the VA.
We have all heard of these breaches in performance out
there and it may be that we do not have appropriate policy
developed and promulgated or it may be that we simply have
individuals that do not adhere to the policy. And in many
cases, that is the result. And you have seen the GAO and the IG
reports that reflect that.
But to answer your question, yes, we have a Chief
Acquisition Officer. Currently that Chief Acquisition Officer
is not at the Assistant Secretary level. This acquisition and
procurement machine has many, many moving parts. It is my
personal opinion that we need this Assistant Secretary to
synchronize the movement of these parts and provide unity of
effort across the enterprise.
Mr. McNerney. Well, the thing I liked about your answer was
that it will give somebody the responsibility or the authority,
but from our point of view, the responsibility so that we can
call him in front of us and ask questions if things go wrong
and giving him praise if things go right.
So the point in my asking this is that we want the VA to be
responsive to the veterans and to the needs and just making
sure that those new positions do not create a layer of
bureaucracy, as you mentioned, or the sort of red tape that has
characterized the VA in the past and actually makes it more
responsive. And if we can carry out and achieve that objective,
then you have been successful. So----
Secretary Shinseki. I would also add the law requires that
the Chief Acquisition Officer be a noncareer individual and we
are not quite in compliance right now. And so the intent here
is to meet the obligation here.
Mr. McNerney. Okay. Well, thank you for your Herculean
ambitions here and your efforts. I appreciate it.
Secretary Shinseki. Thank you.
The Chairman. Mr. Stearns?
Mr. Stearns. Mr. Chairman, I think the Ranking Member was
here before me, but if I could, I would like to strike a point
of order, Mr. Chairman.
I have been to Committee hearings here a number of times in
which you have gone to the Democrats without coming to the
Republicans. So I asked the staff to give me the rules on this.
On page three, Rule three, paragraph F, let me just read it to
you.
The questioning of witnesses in both Committee and
Subcommittee hearings shall be initiated by the Chairman
followed by the Ranking Minority party Member and all other
Members alternating between the Majority and Minority.
These are rules that you approved and these are the rules
of the Veterans' Affairs Committee. So I would say to you I
appeal to your fairness here and appeal to regular order that
in this Committee and all future Committees, you alternate
between Majority and Minority. And I would request that you do
that.
The Chairman. I thank you for pointing out the rule. I have
expressed several times that we would recognize Members who
were not here at the gavel in the order of their appearance at
the hearing.
I would appreciate also, Mr. Stearns, the courtesy of being
here for the testimony if you are going to ask questions. So
you are recognized.
Mr. Stearns. Oh, I understand. But I think you want to
abide by the rules because----
The Chairman. Yes, sir. You are recognized for your 5
minutes.
Mr. Stearns. Okay. Mr. Secretary, let me just thank you for
coming here today and just tell you how much we appreciate your
hard work.
When I came to Congress, the budget of the Veterans
Administration was quite smaller than it is today. In fact, the
Department of Education's budget was, I believe, higher. Now
except for the U.S. Department of Defense (DoD), it is the
second highest amount of money we spend--$125 billion proposed.
My question is, before I get into details and talking about
some of the problems we have had, are you finding it
frustrating to control such a bureaucracy?
I know that you are going to outside sources,
PricewaterhouseCoopers (PWC), to do some kind of accounting. I
mean, is it a possibility that systemic to the Veterans
Administration through this huge increase in funding and the
demands of veterans coming back that it is maybe something that
is difficult to operate, shall we say, from an accounting
standpoint and know where all the money is going? That is just
a general question.
Secretary Shinseki. Congressman, I think your point is a
good one. These two budgets, 2010, 2011, are significant. But I
know this kind of funding cannot continue and so I have to put
in place now those investments that are going to create for us
the opportunity to be as effective in the future of caring for
veterans even as we try to increase quality and, you know, open
access to more veterans because of the economic difficulties
who are coming to us and more veterans who are coming back.
So the issue of how do we do this, control, I think, is the
word you used, centralization is one way of doing that. But my
experience on either end, centralization versus
decentralization, I think we can look back at the lack of
control and discipline in place and say that was a result of
decentralization. We know what that has cost us in
opportunities and we are trying to put in place the fixes.
By the same token, going to the other end of that spectrum
and talking about full centralization, my concern would be that
we lock down our processes in a way that it lacks
responsiveness and agility to respond to veterans who come to
us and seek the kind of support and services and benefits that
we provide.
I have run a study. I have asked internally for a review of
the options. Frankly, I was given two options to consider, one
to integrate where we stand today or to go to full
centralization. I turned the study around and I said there was
a third option here that I wanted to have described for me and
that is the option that begins with the integration step and
then a discussion of whether or not to go to centralization as
a second step. And then what are the conditions that would
allow that kind of a decision and how long might it take to
achieve those conditions? And that is what I am waiting for, a
return report, probably within the month, to be able to lay out
a decision.
Mr. Stearns. The staff informed me about a hearing that I
attended dealing with how money was spent and the $5 plus
billion in the miscellaneous fund. And during that hearing and
subsequent hearings, we had a little difficulty understanding
where all that money was the miscellaneous obligations.
And I understand that you have hired
PricewaterhouseCoopers, a consulting firm, accounting firm, at
$850,000 to help you. And then you have a follow-on contract
for $350,000, is that correct, with PricewaterhouseCoopers?
Mr. Frye. Sir, actually, we hired PricewaterhouseCoopers to
do an initial study of the VA procurement structure and our
command and control issues in 2008. That study was completed.
As the Secretary has already said, some of the recommendations
were implemented, three important ones.
First, we reduced the numbers of heads of contracting
activity from 31 to 6, a significant reduction in the VA.
Secondly, out in VHA where virtually every hospital managed
their own procurement affairs, a structure was established
whereby a Chief Procurement Officer position was put in place
in VHA and a Deputy Chief Procurement Officer. Today I will
report to you that all of the procurement personnel in VHA
report up to that Chief Procurement Officer.
So we think those changes were significant changes and they
really add to that unity of effort and our ability to exercise
command and control over those contracting professionals that
are out in VHA.
I hope I answered your question.
Mr. Stearns. Okay. And the follow-up contract is for what,
the $350,000?
Mr. Frye. Oh, I am sorry, sir. Yes. We then contracted with
PWC this year in January to conduct a follow-on contract. And
the Secretary has already talked about the purpose of that
contract, but it is to do a follow-on to the initial study that
was done in 2008 and look at our structure and see if there is
not a better way of doing business, so to speak, and that is
where we are at now. And as the Secretary has already stated,
the results of that study and the executive decisions will come
about in about 30 days.
Mr. Stearns. Thank you, Mr. Chairman.
I think you, as Chairman----
The Chairman. Thank you, Mr. Stearns.
Mr. Stearns [continuing]. Should consider, you know,
pursuing this area and to see with the Secretary if we have the
need for oversight, a simple oversight policy on a running
basis that continues to look at the Veterans Affairs budget.
The Chairman. Thank you.
Mr. Walz.
Mr. Walz. Thank you, Mr. Chairman and Ranking Member.
Mr. Secretary and your staff, thank you for being here.
It is a compliment, but maybe a sad state of affairs for
me. I think I see you more than I see my family now. So you are
here often. You are very accessible. Your staff is, too, and
for that, I am very, very appreciative.
Yesterday we had a hearing and Mr. Buyer was talking about
some of his initiatives and one has been acquisition reform.
And it is something that I have watched go on. And he talked
about our Ranking Member is going to be retiring. And I said
how we need to make sure that this legacy continues and having
this hearing today is that.
I also reminded him that many of us may be retiring in
November, but our veterans will still be there. The care for
them must still be there and our responsibility to make sure
that the things are in place that stay behind as a legacy
behind us are there.
So I am appreciative of what you are saying. I am
interested about a couple of things I would ask. I want to ask
just a quick question.
The PMAS, you talked about implementing that. Are folks
buying into that?
Secretary Shinseki. Absolutely. I think we have been able
to demonstrate to all of our folks that are involved in IT that
this makes good business sense.
I am sure there are going to be a couple which are either
over schedule, over budget, or behind schedule that are not
happy with where they are, but they understand why they are
there and what we expect.
So in terms of transparency, in terms of getting folks to
understand where we are headed, and getting them to take the
corrective actions here, it is easier than chasing down each
little----
Mr. Walz. Well, I am interested in this because what you
are doing is you are getting at the heart of systemic change of
the organization and the culture and it is turning that
battleship type of thing. And I am interested in this because I
think all of us understand it is care for the veterans as well
as safeguarding those dollars.
And as we are putting in money, Mr. Stearns is right, we
need to be very, very critical of where the money is going and
make sure that it is making an impact because if we do not then
we will not be able to get it in the future.
So I have watched this acquisition process and I understand
that everybody has this great idea. They want it to be adopted
right away or whatever. I understand it is a two-fold process
for you to make sure we are watching for fraud, waste, and
abuse. We are making sure that it goes through there. But I
have to tell you I have seen some pretty interesting things.
We have a one o'clock meeting with Bill Gates today and I
was talking I am not sure if Bill Gates came in with an IT
solution for us he would get through the red tape and get his
product in at this point. So I am very happy you are moving
down this.
And what I wanted to say is you, Mr. Secretary, have a
unique ability here. You have worked with the Joint
Capabilities Integration and Development System on the other
side. You have seen it work with Abrams. You have seen it knock
out Crusader and things like that.
The one I was really interested in is, is there anything to
learn from DoD, not that it is perfect. But something my staff
and myself and I have seen personally work is the Program
Executive Office (PEO) Soldier thing, of being able to cut
through that, to see a great piece of technology, to see a
great program, and be able to reach down, pull that out and
implement it quicker.
Do you have that ability? If you have that ability, would
it be better? Could we still have accountability of the dollars
as well as fielding things quicker whether it is, you know,
telemed or whatever? I just ask if you think that is a way to
go?
Secretary Shinseki. Well, just very quickly, two points.
First of all, on PMAS, we have already saved $56 million on the
17 projects that were not meeting standard and which we have
stopped and harvested that money and reinvested it in other
projects that seem to be moving in the right direction. So
this----
Mr. Walz. Before PMAS, would that have happened?
Secretary Shinseki. I am sorry?
Mr. Walz. Before PMAS, would that have happened----
Secretary Shinseki. As a result----
Mr. Walz [continuing]. Or would they have continued to run
a natural course?
Secretary Shinseki. Probably not.
Mr. Walz. Okay.
Secretary Shinseki. Probably not. I will attribute that to
the changes that have occurred since Secretary Baker arrived--
--
Mr. Walz. Okay.
Secretary Shinseki [continuing]. Someone who has a great
background in the IT world and who thinks strategically. And
this what--it has been a year--this is what he has been able to
accomplish. What I am looking for is Baker's counterpart in a
$15 billion enterprise of acquisition, logistics, and
construction.
To get to your question, we do not have a PEO Program
Manager, a doctrinally-based acquisition program as you are
describing.
Mr. Walz. Could we have a PEO Vet like we have a PEO
Soldier?
Secretary Shinseki. We could, and that is part of this
first step is to create the conditions under which we might
investigate how we put together a formal acquisition program
that looks long term strategically that develops the workforce
to have the strengths that DoD has been able to grow with their
program management acquisition.
Mr. Walz. And this request for the Assistant Secretary is
the first step in leading to the next thing of maturing this
acquisition process?
Secretary Shinseki. Yes.
Mr. Walz. Okay. That is all I had. I yield back.
The Chairman. Thank you, Mr. Walz.
Mr. Buyer.
Mr. Buyer. Thank you. Thank you very much.
Sergeant Major, I would ask of you to help us with your
academician as we proceed with this. Okay? You bring some
expertise.
And I am also hopeful, Mr. Chairman, that some years back
when we gave the Oversight and Investigations Subcommittee
legislative authorities, they have a great deal of investment
of time in the acquisition, all the hearings that they have
done, and that might be the best Subcommittee, I think, to move
the acquisition and acquisition bill. I just throw that up for
consideration.
I think what would be really helpful here over the next 30
days, Mr. Secretary, is as we try to formulate this
legislation, please, what I am going to ask of you since we can
leave the record open, articulate your acquisition policy. So
submit that for the record.
So it is one thing to ask for the positions. Let us couple
that with your specific intent. So we will take the policy, put
that into the record. It will help substantiate why you are
asking for these eight positions. And we will have a better
understanding.
With regard to us then outlining these positions by title,
I also believe it will be fruitful for us to outline their
responsibilities. And I will embrace your recommendation to the
Committee that when we do with specificity on each of these
titled positions, that each one of them, we will put in proper
language giving you as Secretary authority to take that
position and move it throughout the, quote, the Department.
So I am not going to hold you to particular silos. I think
it would be good to give you that flexibility. Would you work
with us to do that?
Secretary Shinseki. Definitely I will. And we will be happy
to provide the requested description of what each of the eight
DASs will be doing and what their responsibility and scope
would be. But I do appreciate the flexibility that allows the
Secretary, whoever the Secretary is, the opportunity to be
agile.
[The VA met with Congressman Buyer and staff regarding VA's
acquisition policy in June 2010.]
Mr. Buyer. Yes. I think you made a good point from our
discussions. You know, we may not touch this for 30 to 40 years
and who knows what a future Secretary finds that some new need
may be required.
And if, in fact, we have things running smooth over here,
he might need that political appointment in some other
Department. So I think that would be a good thing for us to
talk about and work that through.
And that is an implementation issue, Sergeant Major. That
is why I think putting your eyes on it will be helpful to us.
The question on resellers, in the proposed legislation that
I have--if I may, Mr. Secretary, could I go directly to Mr.
Frye? Would that be all right?
Mr. Frye, I would like for you to put your eyes on Section
7 of the bill. I know you do not have it in front of you.
But earlier, Mr. Secretary, I made a pledge to you that I
would not try to be as prescriptive and I will take out of the
bill areas that I could move to report language and give you as
much deference for executive authority as I can. Okay? So I
will do that.
But please, Mr. Frye, on Section seven of the bill, we
addressed these issues making sure that the contract for the
purchase of a commercial item that the vendor the item is
either a manufacturer or a regular dealer. And we get in to
then address these issues for which Chairman Mitchell and
Ranking Member Roe got into dealing with the resellers.
So we get into this whole issue about resellers. And I
would like your thoughts about this issue because there are
legitimate and then there are not so legitimate.
Mr. Frye. Thank you, Mr. Buyer.
Your concerns are shared by those of us involved in this
issue in the VA. It perhaps is a government-wide issue, but it
certainly affects us in the VA and it certainly affects us in
the execution of our duties with our Federal supply schedules
that are run and managed out of the National Acquisition Center
in Chicago.
We agree that the reseller business model is a legitimate
business model. It certainly is. And we deal with resellers on
a daily basis out of our National Acquisition Center.
The problem arises when--and by the way, it is also a
commercial model--but the problem arises when firms--and I will
use the word storefronts--establish themselves and declare
themselves to be resellers and there is no value added.
In some instances, we found where literally a vendor set up
operation in a garage. They had no stock. They had no supplies.
And they simply drop-ship products to VA facilities. There was
no value added there. And what it does for us is add six,
seven, eight, ten percent to the cost of those items at the
expense of our veterans.
So that is the issue that we need to look at and perhaps we
need help in establishing the definition of reseller because I
do not believe one exists across the government today.
And I think that is where our Office of Inspector General
has been reaching out to. They would like to see a definition
of reseller there so that when we send our auditors to the
field to do these pre- and post-award audits with these Federal
supply schedule vendors, we have the ability to look at a
storefront operation and say that is not where we need to go.
We need a legitimately run operation here, a legitimate
reseller.
Mr. Buyer. Mr. Frye, I do not believe it would be prudent
for us to legislatively define the word reseller. Would you
agree with that?
Mr. Frye. It is my personal and professional opinion that
yes.
Mr. Buyer. We should not statutorily define reseller. In
the language, what we have done here is we said that you ought
to be working with that specific vendor, a manufacturer, and
then we actually then say unless the Secretary specifically
provides for a waiver of such requirement for such concern.
So if you have got legitimate resellers that add value,
then the Secretary ought to be able to utilize them.
Mr. Frye. Absolutely.
Mr. Buyer. I attended one of the Subcommittee hearings that
Chairman Mitchell had done with Ranking Member Roe and they
went right at this issue. And the IG testified. And it was
pretty deplorable.
And what I am going to ask of you is please put your eyes
on Section seven. If there is a way that we can best work
through this, I do not want to exclude legitimate resellers
that add value.
So the savings, Mr. Secretary, that you are hoping to
accomplish, much can come from Section seven. But I want to be
able to write this in a manner that does not harm the
legitimate ones.
The other issue with regard to--may I?
The Chairman. Certainly.
Mr. Buyer. With regard to the issue of the proposal for a
fourth branch dealing with the economic opportunity issues, I
note that you had shared with me in private that you have a lot
of challenges on your plate. And I recognize that and I have no
interest in sending a bow-wave to you.
So maybe the best for us to do is have a meeting of the
minds whereby in the legislation we ask for an analysis on if
we move this way, what is the best way that it would be
implemented. So we can move it to a study and analysis.
Mr. Secretary, would that be workable with you?
Secretary Shinseki. That would be agreeable. I think I
would just say on the fourth administration, I know I could not
implement it now with the challenges that I have taken on about
breaking the back of the backlog, about the homeless issue.
But until I get the acquisition, the reforms into place, I
do not know that I could even begin to answer that question. So
I think a study of some kind might be a worthy way to go. And I
am happy to work with the Committee on that.
Mr. Buyer. Okay. May I in conclusion?
The Chairman. Yes.
Mr. Buyer. All right. Thank you.
I believe that you should have these political appointments
and if you get us that policy that helps move this in place, we
will make sure that you have the flexibility. We will do a
Study Committee on the fourth branch and we will have Mr. Frye
put his eyes on that Section seven to make sure that you get
what you need. Is that good? Awesome. Thank you.
The Chairman. Just for the record, you were not speaking
for the Committee. You were speaking for yourself. We have not
passed that legislation yet, so we have not done any of this,
right? Am I correct?
Thank you.
There was nothing settled, it was simply ideas.
I appreciate you being here, and your laying out your
vision. We look forward to working with you to realize it.
Secretary Shinseki. Thank you very much, Mr. Chairman.
The Chairman. This hearing is adjourned.
[Whereupon, at 11:46 a.m., the Committee was adjourned.]
A P P E N D I X
----------
Prepared Statement of Hon. Bob Filner, Chairman,
Committee on Veterans' Affairs
I would like to thank the Members of the Committee, Secretary
Shinseki, and all those in the audience, for being here today.
The VA is the second largest agency in the Federal Government. With
more than 245,000 employees, the VA oversees the largest integrated
health care system in the country along with a vast array of benefits
programs to compensate the service and sacrifice of our 25 million
veterans.
Reforming the VA and remaking it into a 21st Century organization
that can serve as a model for other areas of the Federal Government is
a monumental task. Today's hearing enables this Committee, and the VA,
to begin the conversation on how best to undertake this transformation.
Mr. Secretary, today, we are here to listen to you. We want to hear
your views on the future of the VA, the challenges that face the VA in
the future and what your needs are to transform this agency into a 21st
Century organization.
Today's hearing is not a legislative hearing on specific bills.
Rather, we want to hear about your vision and your assessment of what
tools you need, including a proposal you support that was first put
forth by Secretary Nicholson that would amend title 38 to add an
additional Assistant Secretary and eight Deputy Assistant Secretaries.
We are not looking for a piecemeal approach to structuring VA to
best address the needs of America's veterans.
We look forward to hearing your thoughts, sharing our thoughts, and
examining proposals to provide the important structure and change we
need at the VA to ensure it is responsive to our veterans. Our hope is
to come out of this with a plan we can all get behind that meets the
needs of the Department and our veterans.
Historically this Committee has worked in a bipartisan fashion to
address the needs of veterans. And at the end of the day, regardless of
our differences, that is what we are all here to do.
Mr. Secretary, on both sides of the aisle, you have Members
committed to working with you to make the VA the very best organization
it can be. Many of us have ideas, proposals, or thoughts on how to do
that. The Committee believes in providing the Executive Branch wide
latitude in organization matters, but we retain a strong interest in
ensuring that organizational changes will improve the VA's ability to
administer benefits and services to veterans while improving
accountability.
We wish to thank you, Mr. Secretary, for your leadership, as well
as the employees of the VA, for the devotion to veterans that you all
demonstrate day after day.
Prepared Statement of Hon. Harry E. Mitchell
Thank you Chairman Filner, and thanks to Secretary Shinseki for
coming to participate in the hearing today.
The President and Secretary Shinseki have made a clear goal of
transforming the VA into a 21st Century organization, and we are here
today to move toward that goal.
I wish to highlight two of the many important issues that this
Congress and Administration must address to meet that goal:
First, I believe, in order to transform the VA into a 21st Century
Organization, we must ensure that the acquisition process within the VA
is one that is fair, fiscally responsible, and effective.
Mr. Secretary, I know from my role as Chairman of the Oversight and
Investigations Subcommittee some of the long-standing challenges in
acquisitions. Recently, we held a hearing examining the extent of the
reform needed in order to improve the acquisition process.
One recent report, produced by the U.S. Government Accountability
Office revealed that Network and Medical Center staff within the
Veterans Health Administration failed to use the Federal Supply
Schedule, or FSS, due to a lack of information and the proper tools
needed to use the FSS. This resulted in a lost savings of almost $8.2
million a year or $41 million over 5 years.
This is simply unacceptable.
And I know you share this same concern, and I know you know how
much work needs to be done to improve the acquisition and procurement
process.
Additionally, I believe the VA needs to aggressively reduce the
claims backlog. The VA must deliver these earned benefits in a timely
manner.
As many have noted, there is a backlog of disability claims that
stretches hundreds of thousands of veterans long. I am pleased that the
Administration has requested more than 4,000 new claims processors in
their FY 2011 request. However, I believe that the VA needs more than
additional manpower to reduce the backlog.
The VA needs a long term strategy and plan.
This will provide better services to our veterans and increase
their morale and confidence in the VA.
Finally, I want to say that I am encouraged by Secretary Shinseki's
commitment to reform the VA, and I look forward to working with him, as
well as with my colleagues on this Committee, to bring veterans the
benefits and services that they have earned in an effective and
efficient manner.
Thank you all again for attending today's hearing, and I look
forward to all the testimony being presented today.
Prepared Statement of Hon. Eric K. Shinseki, Secretary,
U.S. Department of Veterans Affairs
Introduction
Chairman Filner, Ranking Member Buyer, distinguished Members of the
House Committee on Veterans Affairs: Thank you for this opportunity to
discuss our plan for structuring the Department of Veterans Affairs
into the most effective and efficient organization possible, focused on
providing veterans the best care and benefits they have earned through
their service. You have shared important insights with me--both during
hearings and in personal meetings--on changes that are necessary at VA
to fulfill President Obama's charge to transform this department into a
21st Century organization. This hearing is an opportunity to continue
those conversations.
VA's Strategic Goals
We've established four strategic goals to guide our path to the VA
of the future:
Improve the quality, accessibility, and value of health
care, benefits, and memorial services;
Increase veteran satisfaction with VA benefits and
services;
Improve workforce satisfaction and make VA an employer of
choice; and
Protect people and assets continuously, and in times of
crises.
You may recall me mentioning these goals during your Committee's
hearing on the President's proposed budget for 2011, on 4 February,
2010. In that testimony, I also set out six, key, high-priority
performance goals: reducing the claims backlog, eliminating veteran
homelessness, automating the GI Bill benefits system, establishing a
Virtual Lifetime Electronic Record, improving mental health care, and
deploying a Veterans Relationship Management System.
We have done much to improve services for our veterans, but much
more remains to be done. Our intent is to effectively advocate for
veterans by improving their access to, and the quality and value of,
our services. Achieving that goal requires VA to strengthen our
management infrastructure in order to leverage results even better than
our programs have produced to date, instituting greater internal
accountability in the process.
How will VA make the organizational and management changes to achieve
those goals?
The budget I presented to this Committee on 4 February gives a
detailed answer to the question of what VA plans to achieve with the
resources it is requesting. I believe this hearing poses the valuable
and vital question of how VA will achieve those goals. What does VA
need to do as an organization to provide veterans the access,
timeliness, and quality of services they deserve? How will VA achieve
this level of excellence and become a model for the effective use of
taxpayers' dollars?
Three hundred thousand good people come to work everyday at VA to
serve veterans. Not a single one of them comes to work to make
mistakes. My job is to focus all our efforts on providing veterans the
highest quality and safety in benefits and services. Transformation of
an enterprise our size requires that we act with both deliberation and
the right sense of urgency--creating haste slowly--making change in a
systematic, controllable way. We must cut through the barriers that
have confounded veterans and VA employees, as well, for years now. We
owe it to those, who have served, to deliver a better VA--more
responsive, more transparent, more accountable, and more cost
effective. We need to proceed in a way that allows stakeholders to
review our plans, internalize them, and use them to help us get it
right.
We have made a real commitment to listening carefully to veterans'
experiences with VA, both the good and the disappointing, and our
employees about what the front lines of care and benefits delivery are
like. I've gotten tremendously valuable insights from my meetings with
veterans and their families, hearing for myself their experiences with
VA. To learn the nuances and diversity of VA's operations throughout
the country, I spent four hours with each of 21 Veteran Integrated
Service Network (VISN) leadership teams, as well as significant
additional hours with every business line at VBA and NCA. We have
surveyed over 20,000 employees and conducted many detailed sessions
looking with fresh eyes at our policies and operational performance
from top to bottom. We have fundamentally and comprehensively reviewed
our mission, our organization, and our resources, and challenged all
our assumptions to find ways to better serve veterans. These
assessments have allowed some conclusions about how to improve
effectiveness and efficiency within current resources. We have, in
fact, moved ahead with some of the logical changes that were needed to
dramatically improve services veterans are already receiving.
The next step to dramatically better results: strengthening management
infrastructure, especially pursuing acquisition reform, paired
with continued consolidation of Information Technology
management
I am confident that management and organizational changes already
underway are moving us in a direction that will incrementally give
veterans, the Congress, and the taxpayers ever-growing trust and
confidence in our transformation initiatives.
We seek to strengthen VA's management infrastructure across all
five of our departmental management functions:
Acquisition and Logistics;
Construction and Facilities Management;
Information Technology (IT);
Human Resources Management; and
Financial Management.
Stronger departmental coordination and control lead to better
service, value, and accountability. All of the varied programs,
initiatives, and services to veterans outlined in our fiscal year 2011
budget will only work well and consistently when these central
management functions operate effectively and efficiently. We know you
are especially interested in programs and proposals for acquisition
reform. Along with effective deployment of IT tools, we see those
proposals as critically important to fulfilling VA's strategic goals.
State-of-the-art planning and execution of IT will be vital across
all of VA. While we cope with claims backlogs through increased hiring,
we all know that any long-term solution will require modernizing the
claims processing infrastructure. Great IT development and execution,
in turn, depends on very well-managed and disciplined acquisitions
support and project management, which are based on sensible policies
and consistently applied customer service from knowledgeable
specialists. This link between IT success or failure and contracting is
evident--VA's past IT setbacks, that have tested your confidence in,
and patience with, our program, have largely been project management
and acquisition failures.
For both IT and acquisitions, past weaknesses have stemmed from
overly decentralized control, lack of enterprise-wide information and,
in some cases, improvised policies. Managers in the field lacked
supervision, guidance, and sustained support; and policies were applied
inconsistently. As you know, positive changes in our IT program,
including greater centralization, began before my tenure here. With
that, I missed some of the friction and delay that often occur during
the earliest parts of a significant transition.
There is now evidence that these changes are resulting in a more
centralized and focused IT team. This consolidation allows for the kind
of discipline represented by the Project Management Accountability
System (PMAS), which has already begun to help us and which will soon
produce an effective process distinguishing between best-run projects
from those requiring revision or termination. It also has enabled
better management of our IT portfolio, and focused the management team
on training and development of IT professionals.
We know, as well, that VA is too big and diverse to have every IT
decision pass through a single office, so we seek a balance of
centralized policy and decentralized execution to empower our front-
line employees and maintain consistency and efficiency across the
organization. We are making progress towards this end.
While they are very different disciplines, requiring their own
multi-faceted solutions, some of these same themes in IT reform are
present also in acquisition reform. In the past, VA's procurement
spending--almost 15 billion dollars annually--has been highly
decentralized, resulting in a lack of standardization, accountability,
and controls.
We have made progress--initiatives are underway to improve its
acquisition processes, including:
Instilling a management approach that aligns system-wide
policies with mission accomplishment;
Increasing the collection and use of enterprise-wide
data;
Improving training and raising the competence of the
acquisition workforce; and
Improving our relationships with over 15,000 suppliers.
Examples of these improvements:
Developing a professional workforce and establishing the
VA Acquisition Academy (VAAA): The VAAA is the only Federal civilian
acquisition academy, and represents a significant investment in
growing, training, and retaining a 21st century, professional
acquisition workforce. The academy's programs include intern,
contracting, and program management schools. This cutting-edge effort
was recognized with a 2009 Team Excellence Award by the Office of
Management and Budget's Chief Acquisition Officer Council. The results
are evident: 98 percent of VA contracting officers have Federal
acquisition certification, up from 65 percent in 2008. We have
increased our dedicated contract specialists from 766 to 1,405 full-
time employees since 2003.
Executing specialized attention in information technology
procurement: Recognizing how central IT is to VA's transformation, we
have established a VA Technology Acquisition Center (TAC) to provide
dedicated, specialized contracting support to VA's Office of
Information and Technology (OIT).
Providing better information management for better
central decision-making and accountability. VA is working on both
short-term and long-term improvements to systems and data analysis
tools to provide decision makers at all levels the necessary
information for the wise stewardship of taxpayer dollars.
Mandating integrated teams for all procurements over five
million dollars: Established in 2009, these Integrated Product Teams
(IPTs) include subject-matter experts from program offices,
procurement, legal counsel, and the Office of Small and Disadvantaged
Business Utilization. Having these components involved at the front end
of the acquisition process will help ensure VA's requirements and
acquisition strategies are properly defined and developed.
Increasing oversight over acquisition offices across VA:
VA's acquisition executive will evaluate every VA procurement office on
a regularly scheduled basis. These compliance reviews will help
identify problems and institute corrective actions, minimizing risk to
the Department that may result from poor procurement practices.
Promoting a clear and consistent acquisition business
model: Using recommendations from a PricewaterhouseCoopers (PWC) study,
VA has established an acquisition business model that carries out
centralized decision-making and decentralized execution. A follow-on
study by PWC will be completed shortly, and we will look at the results
to further enhance our business model.
Partnering with the private sector: VA established an
innovative Supplier Transformation Relationship Initiative, recognizing
that the supplier community is a critical component to VA's success.
Better and more transparent communications with vendors yields better
results--this is why we hosted a forum in August of last year with more
than 90 companies representing every material, service, and
socioeconomic area of VA's purchasing. This effort is expanding to
reach more than 15,000 VA industry partners.
Promoting advances in management of construction
acquisition: We have undertaken a transformation initiative in our
Office of Construction and Facilities Management (CFM) to improve the
planning and execution of our major and minor construction, and non
recurring maintenance programs by:
Having CFM engaged with the
administrations throughout the Capital Planning
Process;
Maximizing the performance of our
facilities through an enterprise facilities management
system;
Establishing critical engineering
capability to support the Department's infrastructure
program; and
Aligning our programmatic investment with
strategic objectives and performance targets.
Collectively, these measures will improve acquisition service
delivery outcomes.
What Congress can do to help structure the VA of the 21st Century
VA needs support from this Committee to fully realize these
reforms. We appreciate and rely on a close partnership with the
Congress to effect change at the Department. Your steadfast commitment
to providing the resources VA needs to serve veterans is deeply
appreciated. The oversight that this Committee provides also challenges
VA to perform better, and helps us learn and incorporate the right
lessons and remedies when we sometimes fall short.
VA-proposed Legislation to Structure VA Acquisition and IT for the 21st
Century
There are legislative changes that would benefit the Department. In
our 2011 budget package, we described 51 legislative proposals to
improve and adjust programs across VA. We would appreciate your
consideration of all of them, but a proposal included in our fiscal
year 2010 budget in May of last year would be an especially important
step in structuring our acquisition and IT offices for the 21st
Century. I advocated for it before this Committee in your April 2009
``Funding the VA of the Future'' hearing, again when I appeared before
you on 4 February of this year to present our fiscal year 2011 budget,
and also in individual meetings with some of you.
Our proposal would give VA the authority to establish an Assistant
Secretary for Acquisition, Logistics, and Construction. This is a
fundamental step in elevating and consolidating the acquisition
function to its central role in carrying out everything we do in
support of veterans.
We have been able to move forward on many of these initiatives,
even without an acquisition office headed by an Assistant Secretary.
But these are piecemeal moves of opportunity. Going forward our
programs need coherence, intellectual rigor, and decisiveness. This
overdue change will help cement and accelerate all these efforts, past
and future. The Services Acquisition Reform Act requires the
appointment of a non-career employee as a Chief Acquisition Officer
(CAO). The General Accounting Office has identified as a weakness
situations where the CAO has other duties not related to acquisitions.
VA remedied this by establishing an Office of Acquisition, Logistics,
and Construction in October, 2008. But we do not have a senior level,
assistant secretary to lead that office, and I believe that is
critical.
As a practical matter, VA often receives recommendations on new
technologies or promising innovations, which we are not organized to
accommodate in more than a superficial courtesy meeting. Polite as
those conversations are, they usually don't easily lead to leveraging
potential solutions to some of our challenges. A senior Assistant
Secretary for Acquisition, Logistics, and Construction would be an
ideal place to receive, evaluate, and act on the most meritorious
ideas.
We have chosen to give acquisition reform prominence--speaking
bluntly, it is obvious we must do so. If VA is going to be a top-
performing Department, the organizational lines should match up with
our priorities. Much of this we can do under existing authority, and we
are--but some actions will require legislation. In an agency this size,
with programs so diverse and in so many cases having complex
requirements, such as building major medical facilities, and purchasing
almost 15 billion dollars in goods and services annually, the need for
an Assistant Secretary with an exclusive focus on acquisition is
obvious.
In addition, this legislation would create eight new Deputy
Assistant Secretary (DAS) slots. Two of the DAS positions would be for
a Principal Deputy Assistant Secretary (PDAS) for Acquisition,
Logistics, and Construction, and a Principal Deputy Assistant Secretary
for Construction and Facilities Management.
We would utilize five new DAS positions in the Office of
Information and Technology (OIT), based on a comprehensive IBM study
informed by corporate best practices. There currently are only two DAS
offices in OIT, with responsibility for Information Protection and IT
Resource Management--holdovers from our pre-centralized OIT
organization.
Our proposal would provide for the following additional lines of
authority, which were transferred to OIT as part of the centralization,
to support the leadership structure necessary to lead one of the
largest consolidated IT offices in the world:
DAS leaders responsible for:
Strategy, Architecture, and Design,
Product Development and Delivery,
Enterprise Program Management Office,
IT Performance Management, and
IT Operations and Engineering.
Finally, VA would utilize the last DAS position to support the
Assistant Secretary for Management. This official would be responsible
for oversight of VA's capital programs and capital budget formulation.
I believe these issues are prominent enough to require a new DAS.
This legislative proposal is not about creating a new layer of
bureaucracy--it is about streamlining and aligning our organization in
ways that will better align our priorities with the most responsible
use of funds entrusted to this Department. This proposal is cost-
neutral, to be implemented with existing resources. It would not
require additional Senior Executive Service authorizations.
Our fiscal year 2011 budget also includes two legislative proposals
regarding personnel authorities for OIT staff who work with the
Veterans Health Administration. These two new authorities would
harmonize differences that emerged when personnel were moved from VHA
(which had its own personnel authorities under Title 38) to OIT (which
is governed by personnel rules found in Title 5).
VA's partnership with Congress is critical to achieve transformation
Veterans benefit from a strong partnership between VA and the
Congress. For both the conduct of oversight and the formulation of
legislation, open communication and collaboration is vital. In that
spirit, I'd like to offer some cautions on legislation regarding
transformation that is well-intentioned but could be counterproductive.
Locking detailed and prescriptive organizational changes into the
United States Code would be unwise, even if VA were to agree with the
underlying concepts in the legislation. These changes are a complex
undertaking and will require Departmental agility to adjust this
organizational addition as we learn by implementing its principles
along the way.
I understand that frustration with the pace of change, especially
for long-standing deficiencies, can lead to an urge to mandate very
specific procedures and organizational structures. We would urge
Congress to forego such prescriptive measures at this time while we
undertake the efforts I've described. VA would offer instead close
consultations with the Congress to build confidence in the Department's
plans and hopefully demonstrate success in reforms that are underway,
which can also be furthered under the organizational changes I'm
advocating again today.
We also know one legislative idea for restructuring under
consideration would make dramatic changes in the VA's structure, by
moving certain programs now under the Veterans Benefits Administration
into a new fourth administration. We would counsel against such changes
at this time, in favor of first making the essential improvements in
the management functions described above. We see that as the first step
in improving program performance VA-wide. Consideration of serious
functional reorganizations, we believe, should wait until these core
management infrastructure have been implemented. In the meantime, we
would welcome creation of a new Assistant Secretary and the DAS
authority on which that organization would rely.
Closing
Again, I want to thank the Committee for inviting me here to
discuss these issues. We depend on your counsel, and support. Together,
we can deliver the changes we need so that VA can be an even more
positive provider of care and benefits to our Nation's Veterans.
``VA to Automate its Agent Orange Claims Process''
Updated March 9, 2010, 1:15 PM
By Gregg Zoroya, USA TODAY
WASHINGTON--The Department of Veterans Affairs plans to announce
today that it will fully automate how it pays claims for illnesses
related to exposure to the chemical Agent Orange to keep an
overburdened system from collapse.
It is the department's first effort at automating claims processing
in its 80-year history, says VA chief technology officer Peter Levin.
It comes as the agency struggles to cut a backlog of more than 1
million disability claims, appeals and other cases.
The system ``is likely to break'' if nothing is done, Levin says.
``Look, the bottom line is why the hell they didn't do (automation)
30 years ago,'' says John Rowan, national president of Vietnam Veterans
of America. ``The question is whether they will do it right.''
VA Secretary Eric Shinseki took office last year and said no
disability claim should take longer than four months to process.
However, department records show that almost 40 percent take an average
of 161 days to process and that will increase to 190 days without
automation.
The increase is largely the result of Shinseki's efforts to allow
more Agent Orange disability claims.
The military used Agent Orange to defoliate plants and trees in
which Vietnamese insurgents hid during the Vietnam War. It was later
shown to cause cancer, birth defects and other ailments. After years of
debate and medical research, the VA began compensating veterans for
illnesses linked to Agent Orange with non-taxable, monthly payments to
those without dependents ranging from $123 to $2,673.
In October, Shinseki added three more illness to those linked to
the herbicide: Parkinson's disease, B-cell leukemia and heart disease.
He told Congress this would generate another 228,000 claims in the next
two years.
The automated claims system will apply only to veterans filing
these new Agent Orange claims. If it works, the VA hopes to expand
automated claims processing through the department, says Roger Baker,
an assistant secretary for information and technology.
Shinseki said in a statement that veterans harmed during military
service deserve the ``best this Nation has to offer.''
Old, incomplete or complicated records have hampered the VA's move
to automation, says former VA secretary James Peake, who applauded
Shinseki's move. Many records require hands-on investigation, says
Peake, who led the department from 2007 to 2009.
Agent Orange cases, however, may be a good place to start, Peake
says. Once the information from a veteran's discharge papers is entered
into a computer, the VA can quickly verify service in Vietnam in many
cases--a key factor in determining eligibility for Agent Orange
benefits.