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C O N T E N T S
September 24, 2008

Follow-up Oversight Hearing on GI Bill Implementation

OPENING STATEMENTS

Chairwoman Stephanie Herseth Sandlin
        Prepared statement of Chairwoman Herseth Sandlin
Hon. John Boozman, Ranking Republican Member
        Prepared statement of Congressman Boozman
Hon. Bob Filner

WITNESSES

U.S. Department of Defense, Curtis L. Gilroy, Ph.D., Director, Accession Policy, Office of the Under Secretary of Defense for Personnel and Readiness
    Prepared statement of Dr. Gilroy
U.S. Department of Veterans Affairs, Keith Pedigo, Associate Deputy Under Secretary for Policy and Program Management, Veterans Benefits Administration
    Prepared statement Mr. Pedigo

American Federation of Government Employees, AFL-CIO, Leonard Smith, Veterans Claims Examiner Education Division, Veterans Benefits Administration Atlanta Regional Office, U.S. Department of Veterans Affairs
    Prepared statement of Mr. Smith
American Legion, Joseph Sharpe, Jr., Deputy Director, National Economic Commission
    Prepared statement of Mr. Sharpe
American Veterans (AMVETS), Raymond C. Kelley, National Legislative Director
    Prepared statement of Mr. Kelley
Carnegie Mellon University, College of Engineering, Pittsburgh, PA, Pradeep K. Khosla, Ph.D., Dean
    Prepared statement of Dr. Khosla
Iraq and Afghanistan Veterans of America, Patrick Campbell, Chief Legislative Counsel
    Prepared statement of Mr. Campbell
Military Officers Association of America, Colonel Robert F. Norton, USA (Ret.), Deputy Director, Government Relations
    Prepared statement of Colonel Norton
Veterans of Foreign Wars of the United States, Dennis Cullinan, Director, National Legislative Service
    Prepared statement of Mr. Cullinan

MATERIAL SUBMITTED FOR THE RECORD

Post-Hearing Questions and Responses for the Record:

Hon. Stephanie Herseth Sandlin, Chairwoman, Subcommittee on Economic Opportunity, Committee on Veterans' Affairs, to Hon. James B. Peake, Secretary, U.S. Department of Veterans Affairs, letter dated October 2, 2008, and VA responses

FOLLOW-UP OVERSIGHT HEARING ON GI BILL IMPLEMENTATION

Wednesday, September 24, 2008
U. S. House of Representatives,
Subcommittee on Economic Opportunity,
Committee on Veterans' Affairs,
Washington, DC.

The Committee met, pursuant to notice, at 1:00 p.m., in Room 340, Cannon House Office Building, Hon. Stephanie Herseth Sandlin [Chairwoman of the Subcommittee] presiding. 

Present: Representatives Herseth Sandlin, Donnelly, McNerney, Hall, Boozman, Moran, and Scalise.

Also present:  Representative Filner.

OPENING STATEMENT OF CHAIRWOMAN HERSETH SANDLIN

Ms. HERSETH SANDLIN.  Good afternoon, ladies and gentlemen.  The Committee on Veterans’ Affairs, Subcommittee on Economic Opportunity, follow-up oversight hearing on the implementation of the GI Bill will come to order.

The hearing we had on September 11th gave the Subcommittee a brief insight into the U.S. Department of Veterans Affairs (VA) current status on the outsourcing for the GI Bill implementation.  Unfortunately, it left us with more questions than answers and the primary purpose of last week’s hearing was to give the VA an opportunity to brief Congress on how they intend to implement Public Law 110-252.  We wanted to know the primary plan, VA’s contingency plan, and how the contractor fit into VA’s vision.  In that hearing we received testimony from the VA that the original time frame to develop and implement a new information technology (IT) system was 2013.  Implementation of this IT system four years ahead of schedule, as mandated by Public Law 110-252 increases my apprehension about VA’s capabilities to successfully implement the new GI Bill on time.  This is a major concern and we will continue to observe the VA’s progress every step of the way.

My main concern is over the VA’s lack of information on the implementation plan as required by Public Law 110-252 and a contingency plan should the contractor fail to perform on schedule.  Rather than providing us with peace of mind over the implementation process the VA was unable to discuss the implementation plan or the contingency plan in much detail.  According to the VA, they should have a complete contingency plan 30 to 45 days after awarding the contract.  My colleagues and I have serious doubts that VA is yet planning for the worst case scenario.  The Subcommittee and all stakeholders seek assurance from the VA that no matter what is done VA will be able to process veterans’ education benefits on August 1, 2009.

Today we hope to learn more about the VA’s plan to implement Public Law 110-252.  The Subcommittee needs to have a clear understanding of the VA’s primary plan and the private contractor’s vision for meeting the VA’s goal. 

Finally, I am glad to know that we have a witness from the U.S. Department of Defense (DoD) today.  Having a DoD witness will also allow us to address any concerns or issues that might arise from this important partnership.  We all know that VA and DoD will be working together to execute Chapter 33 benefits and the Department of Defense plays an important role in this partnership by sharing important data elements and confidential information. 

We all want to ensure that this is done successfully, not just for the VA but obviously for the veterans that they serve and who earned this benefit.  I look forward to working with Ranking Member Boozman, Members of this Subcommittee, the Chairman of the full Committee as we continue to provide oversight on the implementation of the new Montgomery GI Bill requirements.  I now recognize Mr. Boozman for opening remarks he may have. 

[The statement of Chairwoman Herseth Sandlin appears in the Appendix.]

OPENING STATEMENT OF HON. JOHN BOOZMAN

Mr. BOOZMAN.  Thank you, Madam Chair.  When we met two weeks ago to begin our oversight of how VA intends to implement the new GI Bill, there was considerable discussion about whether VA should develop the new information technology system in house or hire a contractor for development and possibly some clerical support.  I believe that that is probably not the right question.  Rather, I think we should be discussing the following. 

First, does VA have sufficient numbers of the right people on staff that are required to manage the development program?  And with the technical qualifications needed to develop the necessary computer codes?  VA says they do not.  Second, what are the critical milestones and what are the critical functions and requirements that must be met to proceed to the next development milestone.  In other words, how will VA define success along the way?

Third, what are the key functions or performance parameters of the new IT system, and what are the limitations of the current system that make it unable to implement Chapter 33? 

Fourth, if neither the contractor or in-house staff are able to complete development to meet the August 2009 implementation date, what are VA’s fall back plans to compensate for incomplete or failure?

And fifth, what happens when VA ultimately pushes the on button and digital Armageddon causes all the lights to go out at 810 Vermont and the White House? 

Any IT systems engineer or program manager will tell you that basic program management principles apply to any project regardless of who is doing the development.  So I would note that these questions apply whether VA develops the system in house or through a contractor.  I would also note that even if VA developed the system in house it is highly likely support contractors would be used.  As I said last week, there is ample history of IT development failure by both in-house staff and contractors.  I would also remind our witnesses that the only agenda here today is how to meet the needs of the veterans.  And I think that goes without speaking.  As former VA Administrator General Omar Bradley said, “We are dealing with veterans, not procedures—with their problems, not ours.” 

Finally, the question remains regarding VA’s plans for the existing workforce.  They have stated before that no one will lose their VA job and I hope to hear more details about that today.  And I yield back my time.  Thank you, Madam Treasurer. 

[The statement of Congressman Boozman appears in the Appendix.]

Ms. HERSETH SANDLIN.  Thank you, Mr. Boozman.  I would now like to recognize the distinguished Chairman of the full Committee, Mr. Filner, for opening remarks.

OPENING STATEMENT OF HON. BOB FILNER

Mr. FILNER.  Thank you, Madam Chair.  And I want to thank you and Mr. Boozman both for the incredible work on the original bill that brought us here, everybody around the country is excited about these new benefits and I think you have done a great job.  You realized right away that the implementation is just as important as the original bill and you have held timely hearings on the issue.  This follow-up hearing is just another example of your commitment.  So thank you, both of you, for your leadership.

When I first heard of the contracting decision, my immediate response was, "why can't we do it in house?"  Those were my initial thoughts.  Even though it was part of the computer system, and eligibility, it was not the entire GI Bill program that we were contracting out.  When I saw the Request for Proposal (RFP), which is about 150 pages, I said, “If you have the expertise to do the RFP,” which I think is harder than the actual implementation, “why do we not have the expertise to do the actual program?” 

As I listened to the testimony in the first hearing my concerns deepened and went beyond the contracting out.  I think you spoke very appropriately, Madam Chair, of the questions that were left with us after that testimony.  I think we ended the hearing with less confidence than when we started the hearing that this was going to be handled correctly. 

The two issues that concerned me after I left here was number one, we are calling it a contingency plan.  But what we are really talking about is continuing the same procedures that we had before.  We have had a GI Bill program for 64 years.  We have implementing the program through VA.  We have received letters about employees who have the expertise, knowledge, and relationships with the Department of Defense.  You have the employees and could do it along the same lines as we were doing.  Now, it is not as high-tech or as quick, and I appreciate the intent to do the computer program which will give us a two-minute eligibility type of response.  We should continue that, but it is more important to have the benefits in place.  You might think of having a longer range contract to bring that program online while at the same time keeping the system that you have in place to deal with these issues.  I think that would be a smart thing to do, as Dr. Boozman said, considering a history of failures in both the private and public sector of this type of contracting.  We ought to have what you are calling the "contingency plan."  I am looking at the system that has served us for six decades or more. 

A third issue, which I hope we will address, is the issue of the limited number of bids.  I recently wrote a letter to the Secretary asking for a briefing on this issue but we have not had an official response.  We had some staff response yesterday, I believe.  The original pool of contractors for the bid was limited to a certain list of 32 companies.  I do not understand that at all, frankly, if someone will answer why there was a certain "approved list."  When you are getting in the IT field I do not believe the old lists matter.  There are new companies, new technology, there is more expertise available.  Maybe somebody in Arkansas or in South Dakota would have the answer to this.  But we are not giving them the chance which is why the list of 32 concerns me. 

We have had all kinds of rumors, although there was no official word, that there are four finalists.  We heard that there were conflicts of interest in those finalists and we heard all kinds of nefarious things.  Yet we do not know the reality of the list of contractors or the four finalists.  I asked the Secretary to come and brief us if necessary in private or executive session so we could have that process transparent at least to the Members of Congress before a contract was awarded, not after the contract was awarded.

These are the issues that concern me, Madam Chair.  The in-house/out-house, we will call it the out-house kind of approach.  I am still concerned about that.  But most importantly, is that we get the benefits, as you stated, ready to be delivered on time in the coming school year.  I want to make sure that this contracting process did not eliminate firms that might help, and too, of course, that there was no conflict of interest in the bidding process.

I thank you again for the procedure that you have set up here. 

Ms. HERSETH SANDLIN.  Thank you, Mr. Chairman.  We do have a pending series of votes, three votes.  I am going to invite our first panel of witnesses up and introduce them.  Then we will probably recess for those three votes so no one feels rushed in their opening statements.  We will come back and hear from all five of the individuals on our first panel.

As you come up let me remind you that your complete written statement has been made part of the hearing record.  Please limit your remarks so that we have sufficient time to follow up with questions once everyone has had the opportunity to provide their testimony.

Joining us in our first panel is Mr. Patrick Campbell, Chief Legislative Counsel for the Iraq and Afghanistan Veterans of American (IAVA); Mr. Joseph Sharpe, Jr., Deputy Director of Economic Commission for the American Legion; Mr. Raymond C. Kelley, National Legislative Director for American Veterans (AMVETS); Mr. Dennis Cullinan, Director of National Legislative Service for the Veterans of Foreign Wars (VFW) of the United States; and Colonel Robert F. Norton, Deputy Director of Government Relations for the Military Officers Association of America (MOAA). 

I think we have 10 minutes remaining in the vote.  We will go ahead and get started, Mr. Campbell you are recognized for the first 5 minutes in your opening statement. 

STATEMENTS OF PATRICK CAMPBELL, CHIEF LEGISLATIVE COUNSEL, IRAQ AND AFGHANISTAN VETERANS OF AMERICA; JOSEPH SHARPE, JR., DEPUTY DIRECTOR, NATIONAL ECONOMIC COMMISSION, AMERICAN LEGION; RAYMOND C. KELLEY, NATIONAL LEGISLATIVE DIRECTOR, AMERICAN VETERANS (AMVETS); DENNIS CULLINAN, DIRECTOR, NATIONAL LEGISLATIVE SERVICE, VETERANS OF FOREIGN WARS OF THE UNITED STATES; AND COLONEL ROBERT F. NORTON, USA (RET.), DEPUTY DIRECTOR, GOVERNMENT RELATIONS, MILITARY OFFICERS ASSOCIATION OF AMERICA

STATEMENT OF PATRICK CAMPBELL

Mr. CAMPBELL.  I guess I get to go first, awesome.  Madam Chair, Ranking Member, Mr. Chairman, thank you on behalf of the Iraq and Afghanistan Veterans of America for this opportunity.  It is good to be back.  I have been gone for about six weeks. 

As you know, after we passed the Post-9/11 GI Bill servicemembers all around the world are dreaming bigger dreams because of this new opportunity.  And I am very happy that this Committee is focusing on making sure that those dreams will be delivered on time.  And just a personal experience, when I was demobing out of Iraq in 2005, I remember getting a slide briefing where they said, “All right, you served 14 months overseas.  You will be entitled to $660 a month for education under the Reserve Education Assistance Program (REAP) Program, Chapter 1607.  When I came home I re-enrolled in school two months later.  I took out financial aid based on the fact that I would be getting that $660 only to find out after a month into school that I was not actually going to get the $660.  The REAP Program, which had been passed a year before, could not be implemented in time by the VA.  So even though hundreds of thousands of veterans and servicemembers overseas were being told that they were getting one benefit, they came home to another one. 

Now, as you can imagine this put us in a really big bind because, I could not even make my rent anymore.  And they said, “Eventually, you will get a check.”  And that check came about a year later.  So that experience, to me, has colored what when we were debating this original GI Bill, the need to have a year period of time to process, to get the things in place, so that when veterans are promised, “You will get a benefit,” that that benefit will be delivered on time.

Now, you asked us for our specific opinions about three different issues.  The first is that IAVA believes first and foremost, with the implementation of the new GI Bill, is that veterans must get their benefits on time.  I do not care how you do it.  The veteran getting their benefit is the customer and is the reason why this bill was passed.  And anyway we get to that, we just need to make sure that is delivered. 

We do believe that whatever process we do choose, the VA must retain the ability to make final determinations about benefits.  I know that you have been getting plenty of letters from constituents.  I know that we have all been getting emails from our members.  And I know the VA has been getting thousands of very specific questions.  I know from my personal experience in the military, no one ever fits the exact mold.  Individual cases that fall out of the system, that do not quite make sense, should be determined, the final determinations must be made by VA employees.  Also, direct interaction with veterans should also be made by VA employees. 

Now, I believe that Keith Wilson, throughout the discussion of the GI Bill, was very clear in saying, “If you want this GI Bill to be done internally I need two years to do it.”  Now, I think all of us, when we were debating on what we wanted to happen with the new GI Bill said, “Two years is too long.  That is 400,000 veterans going to school without a GI Bill for another year.”  We said, “We are going to give you a year and that is all you are going to get.”  So pretty much we knew at that point that we were going to have to go outside the system to make sure these benefits are delivered.

Now, I spent the first two months after the GI Bill was passed in kind of going into a hole, and spent those two months developing our Web site, http://gibill2008.org, developing a calculator which is very much similar to the benefits system that the VA is going to develop.  It was an extremely trying process.  Who knew there were 47,000 zip codes out there?  Who knew that the postal service did not know that 5,000 of them do not have States associated with them?  That was just in developing this calculator.  But what I learned in that process is once you are able to develop the rules-based system, it is actually remarkably easy to input very little information about the veteran and output whether or not you are qualified for the claim, or how much benefits you should be entitled to. 

Mr. FILNER.  So you did that alone in about two months?

Mr. CAMPBELL.  Me and two web designers.  But the thing—

Mr. FILNER.  That is worth about $100 million according to the VA.

Mr. CAMPBELL.  I mean, mine only tells you—

Mr. FILNER.  I will give you $50 million and I will take the system.

Mr. CAMPBELL.  We can talk afterwards.  I mean, in that experience I believe that, I realized that because this GI Bill, although it seems complicated, it is essentially a rules-based system.  You can answer certain questions, and if you ask the right questions and make sure that it is intuitive for the person using it, that you can streamline responses.  Now people not only understand what they are entitled to, but also makes the whole process more understandable for them.

The last things I just want to say is that whatever system that we do develop we need to make sure that it is field tested, both by this Committee, the veterans service organizations (VSOs), and the customers.  Which means that it is not ready in July.  It needs to be ready months ahead of time and we need to basically break it down over and over again.  Like we did with our calculator.  I was done after a month.  But we spent a month playing with it to make sure we caught as many of the bugs we could get out.

Thank you for this opportunity to testify.  I look forward to any of your questions. 

[The statement of Mr. Campbell appears in the Appendix.]

Ms. HERSETH SANDLIN.  Thank you.  We will take a short recess and be back following votes.  Then we will resume with Mr. Sharpe.  Thank you. 

[Recess]

Ms. HERSETH SANDLIN.  Okay, thank you for your patience during that series of votes.  We will now resume with our next witness. Mr. Sharpe, you are now recognized for 5 minutes. 

STATEMENT OF JOSEPH SHARPE, JR.  

Mr. SHARPE.  Thank you.  Madam Chairman and distinguished Members of the Subcommittee, thank you for the opportunity to present the views of the American Legion regarding the GI Bill implementation.

Historically, the American Legion has encouraged the development of essential benefits to help attract and maintain servicemembers in the armed services, as well as to assist them in making the best possible transition back to the civilian community.  The Servicemembers Readjustment Act of 1944, the GI Bill of Rights, is a historic piece of legislation authored by the American Legion that enabled millions of veterans to purchase their first homes, attend college, obtain vocational training, receive quality healthcare, and start private businesses. 

The successful and timely transformation from one education benefit to the next, starting with the Servicemembers Readjustment Act of 1944, leading to the Montgomery GI Bill, has been administered and implemented by existing VA employees within the Veterans Benefits Administration (VBA).  Currently the VBA Education Service employs more than 700 full-time employees.  These employees have intimate knowledge of veterans’ often unique needs and how best to serve them.  The American Legion is extremely disappointed that the VA feels it does not have the capabilities in Education Service in information technology to implement this critical service. 

While the American Legion supports improving the delivery of education benefits it should not lead to the VA removing itself from the process.  Any changes to the administration of the GI Bill benefits should aim towards reaching the performance goals, as outlined in the recent RFP, while allowing VA to retain ownership.

The American Legion also recommends that once the software and automated process is developed, VA should train its Education Service personnel so the IT component can be placed under its responsibilities.  It is important that VA retain ownership of one of its more significant and successful programs. 

The new GI Bill has been hard earned and is currently well deserved for the men and women who have protected, sacrificed, and served our country honorably.  An automatic, efficient delivery of education benefits must ultimately remain with VBA Education Service. 

In conclusion, the American Legion strongly supported the enhancement to the Montgomery GI Bill and is grateful that the House and Senate have passed this bill, and that the President signed this vital piece of legislation on June 30, 2008.  On behalf of the American Legion I would like to thank the Chairman and this Subcommittee for presenting us with the opportunity to make our thoughts and considerations known.  Thank you. 

[The statement of Mr. Sharpe appears in the Appendix.]

Ms. HERSETH SANDLIN.  Thank you, Mr. Sharpe.  Mr. Kelley, you are now recognized. 

STATEMENT OF RAYMOND C. KELLEY

Mr. KELLEY.  Madam Chair, Ranking Member, Members of the Committee, thank you for this opportunity to appear before you today to provide AMVETS views and discuss the VA’s strategy for implementing the Post-9/11 GI Bill. 

The Montgomery GI Bill was enacted in late 1984 for servicemembers who completed 24 months of active-duty service if that service began after June 30, 1985.  This provided VA with more than 30 months to develop a system to delivery the benefit.  With only 13 months to meet the statutory requirements of the new Educational Assistance Program it is necessary for VA to rely on contractor support to develop and IT solution that will accurately determine benefits eligibility so our servicemembers and veterans will be able to receive their Chapter 33 benefits in a timely manner.

By VA’s own admission, they do not have the proper IT manpower to develop an acceptable solution by August 2009.  Development of software demands a narrow scope of work over a relatively short period of time, and the most efficient way to solve an IT problem when current staff, for whatever reason, cannot produce the solution is to hire a software development firm to take on the task.  Furthermore, for VA to process the new claims through manual processing while they develop an in-house IT solution VA would be required to hire hundreds of new claim processors for a temporary period of time.  This would beat an increased cost to VA and only provide temporary employment for any veteran who might benefit from the hiring increase.

Because of the scope of the IT solution and the limited time in which VA has to implement this program, AMVETS does not fault VA for their management of the proposal process.  Although AMVETS prefers to see a more open bidding process ,which would include disabled veteran-owned companies, under the circumstances VA was required to select a contractor in a timely manner.  Streamlining the acquisition process was a response to the limited time.

When VA took over the acquisition process, only four contractors had agreed to enter into the bidding competition.  Therefore, VA requested proposals from only those four companies. 

AMVETS is completely confident that no VBA employees will lose Federal employment because of the software development by an outside source.  VA will continue to process Montgomery GI Bill claims as well as take on processing claims that are denied by the IT solution.  There will also be positions within the new system that will move claims processors into oversight roles and any other employees will be properly trained to work in similar positions within VBA. 

Madam Chair, this concludes my testimony and I will be happy to answer any questions.

[The statement of Mr. Kelley appears in the Appendix.]

Ms. HERSETH SANDLIN.  Thank you, Mr. Kelley.  Mr. Cullinan, welcome.  You are now recognized for 5 minutes. 

STATEMENT OF DENNIS CULLINAN

Mr. CULLINAN.  Thank you very much, Madam Chairwoman, Ranking Member, distinguished Members of the Committee, Chairman Filner, of course, on behalf of the men and women of the Veterans of Foreign Wars, I want to express our deep appreciation for inviting us to testify here today.  This is an essential and vital issue for us, and its effective and efficient implementation is a key goal of all of us. 

The VFW commends this Subcommittee for working to ensure that the new GI Bill is implemented and managed properly. This Committee has demonstrated unified bipartisan dedication to improving the GI Bill. The VFW urges this Subcommittee to continue to exercise careful oversight throughout the implementation of the new GI Bill. We thank you for holding hearings on this issue and shedding light on the GI Bill implementation process.

As one of the leading advocates for this GI Bill, the VFW supports using outside contracting in order to get this program fully operational.  We are deeply concerned, however, that under this standard government Request for Proposal, contracting proposal may jeopardize the future efficient running of the program.  It is our reading that under this particular proposal, may result in allowing the contractor to own the software and the source code of the benefits delivery system.  Essentially, this contract allows the contractor to sell the license to VA and when the contract for that license expires the contractor can set the pricing items on their terms.  In this case, the company may bid low to obtain the contract and then once the initial period of service expires the company may increase its price because there is no other cost effective option for the VA.

I would just add to this, I have had a number of my staff take a look at this contract proposal.  It was their estimation that indeed that both the software and, I believe, the source code would at some point revert to VA.  In our National Veterans Service we have an attorney on staff who reviewed it.  I guess that is a good thing.  And it was his opinion that, no, indeed the contractor would hang onto the software.  And at the very least the source code.  This is indeed problematic.  We urge that the VA own the software and the source code so it may eventually operate and further develop this program using its own resources.  Without the source code, even if the software reverts to VA, they would have to further develop it on their own.  Similar to what happens if you own Microsoft Windows.  You may own the software on the licensing agreement and of course not share it with others.  But if you want to change something with respect to what Windows can do for you, you cannot do it without the source code.  That is a key issue here for us.

While we believe VA is capable of administering this program, we are gravely disappointed that leadership has not been more open about its decision-making process, or more consistent in its messaging.  VA leadership only started engaging the VSO community in discussing the contracting situation when the press started to report on the issue.  This was only after rumors had been circulating that VA Educational employees would be terminated and replaced by computers and the administration of all veterans’ education programs was to be outsourced.  VA’s response was clearly too little and too late.

We also share the Subcommittee’s concern that VA has not articulated its fail safe plan.  The American public, and our veterans, need to know what VA will do if the software or contractor fails to deliver services so that the GI Bill benefits will be paid by August 1, 2009.

And with that, I will conclude, Madam Chairwoman, and thank you very much.

[The statement of Mr. Cullinan appears in the Appendix.]

Ms. HERSETH SANDLIN.  Thank you.  Colonel Norton, you are now recognized for 5 minutes.

STATEMENT OF COLONEL ROBERT F. NORTON

Colonel NORTON.  Thank you, Madam Chair, and thank you Ranking Member Boozman, Chairman Filner, and Members of the Subcommittee.  On behalf of the Military Officers Association of America, I am deeply honored to appear before you today on this very important subject.  But first I want to say on behalf of all of our members, that MOAA is deeply grateful to all Members of Congress for enacting the Post-9/11 GI Bill.  Our Nation’s warriors have stood in the breach for more than 7 years and they have dearly earned these new benefits.

As indicated in my prepared statement, MOAA does not have a position on whether the information management system that will support Chapter 33 benefits administration should be built inside the VA Education Service or contracted out.  In either case, the VA may well need contractor support due to the inherent challenges in capturing and managing data all of the stakeholders.  Those stakeholders include the Department of Defense and the Services. 

DoD will be on the hook to validate the qualifying post-9/11 service, including the qualifying service of National Guard and Reserve servicemen and women, and to furnish locality based basic allowance for housing rates for servicemembers in grades E5 with dependents. 

The VA will be responsible for maintaining information on veterans with Chapter 33 service, interacting with postsecondary institutions, and the U.S. Department of Education, and administering payments. 

Veterans themselves will apply for and provide information documenting their Chapter 33 service and school enrollment information. 

There is no doubt that this will be a complex, challenging undertaking.  We are, however, confident that applications similar to commercial tax preparation software, like "Turbo Tax," can be used for this purpose.  Millions of American citizens use these kinds of applications.  Maybe not as good as the one Patrick Campbell has developed.  And we believe that they can be developed to serve as the interface for administering Chapter 33 payments.  The features of any system developed to support Chapter 33 administration should, in our view, be simple, efficient, fast, accurate, secure, and cost effective.

This concludes my statement.  I look forward to your questions, Madam Chair.

[The statement of Colonel Norton appears in the Appendix.]

Ms. HERSETH SANDLIN.  Thank you all for your testimony.  Looking back on other changes that we made to the GI Bill, the Montgomery GI Bill, let us start there.  I believe that it took 32 months, am I right on that?  Thirty-two months for the VA to implement the Montgomery GI Bill.  When we were debating the Post-9/11 GI Bill, were each of your organizations aware of the past implementation issues of new education benefits?  Did each of your organizations, support the 1-year timetable that was included in the Post-9/11 bill?  Mr. Campbell?

Mr. CAMPBELL.  I remember there was actually pretty intense negotiations about that.  The VA had asked for a longer period of time.  We wanted it to be shorter.  With Keith Wilson and Senator Webb and our organization we did agree to the, I think I was the one who said, “Why do we not start it next school year?”  And there was kind of a general nod after that.  The next school year is about the proper time politically and administratively. 

Ms. HERSETH SANDLIN.  And that put it at the 13 months?

Mr. CAMPBELL.  Well, it was August, I just said the beginning of next school year, whenever it passed that would give them that period of time until August 1, 2009. 

Ms. HERSETH SANDLIN.  Okay.  Mr. Sharpe?

Mr. SHARPE.  It was not an issue that we really debated.  But we agreed with the 1-year time frame.

Mr. KELLEY.  Yes and yes to your answers.  Yes, we understood the length of time last time and yes we agreed to the 1-year time.

Mr. CULLINAN.  With respect to the VFW, we questioned whether VA would be able to get it up and running within the year or 13 month period.  Of course, we wanted it functioning as soon as possible.  But also understand that this is a difficult task.  The only way to add to that is, I mean VA was provided a number of months ago a $100 million in appropriation to initiate this.  And that is not just software development.  That is bringing the requisite personnel.  Whether they went ahead in a timely fashion with that I guess I should leave that to VA to respond to.  But that is the extent of our involvement.

Colonel NORTON.  I was on active duty at the time of the implementation of the Montgomery GI Bill working on the task force in the Office of the Secretary of Defense.  So I was aware of that, the long start up period to get the Montgomery GI Bill up and running.  We did not take a position on the time to implement the new GI Bill but we knew it would take some period of time. 

Ms. HERSETH SANDLIN.  Mr. Campbell, I think you had mentioned that there should be extensive field testing by the Committee, VSOs, and the customers, the veterans themselves who would be eligible.  So the program needs to be ready to be field tested months earlier than August 1, 2009.  How many months earlier?

Mr. CAMPBELL.  I would say the, any type of public interface at least a month, if not two.  I know that with our calculator that we developed, it does not output or send checks, we had done a month ahead of time before we even gave it out to anyone.  Had people run through it. 

Now, I did forget one group of people.  Not only do the veterans also have to use it, but the schools.  Those are the people who will be receiving checks.  So they would be another person who would need to field test this. 

Ms. HERSETH SANDLIN.  Are you familiar with whether or not the RFP specifies any dates for field testing, I will pursue this with our witnesses and with the VA as well.  But have you had a chance to review the RFP?

Mr. CAMPBELL.  I have, but I do not remember that specific part.

Ms. HERSETH SANDLIN.  Mr. Cullinan, your concern with the RFP is the issue of whether or not the software reverts in terms of ownership to the VA.  Since the RFP has already gone out, as this process unfolds, if that issue cannot be rectified, in light of the fact that the RFP has already gone out, and we may be looking at a delay.  Do you feel that the issue that you have raised with us rises to the level of concern and importance, perhaps if a delay is necessary, that it warrants a delay to get this right and make sure that the VA is able to retain the software and the source codes?

Mr. CULLINAN.  Madam Chairwoman, it would be very unfortunate if it were to come to that.  And we would trust that something would be worked out.  Although it is a very important issue, because down the road if VA cannot, you know, administer this software, develop it, and make the changes, because undoubtedly there could be a number of changes.  Even its initial implementation, even during the field testing period, we can foresee, you know, big changes will be in order.  If they cannot do it themselves they will be locked into a situation which could cost VA and indirectly veterans money and make the system less effective.  So, yeah, that is something that would really have to be pursued.

Ms. HERSETH SANDLIN.  Okay.  Hopefully, I agree with you, it will not come to that and it can be worked out.  There are a lot of questions that the Committee has and will continue to have about the RFP and the process and how the contractor fulfills the requirements. 

Mr. Boozman?

Mr. BOOZMAN.  Thank you, Madam Chair.  I appreciate your testimony.  It was really very helpful.  But, the good thing is that we are debating a subject and it is great that we are having the debate.  I mean this is by all accounts a massive expansion of the GI Bill and that is great news for everybody.  What we do not want is the situation that you went through, Mr. Campbell, of it being something that we want to get online, it is not there, everybody is all excited.  And then, for many individuals, the money is just not there.  You know, if it is not provided in a timely way.  So that is the purpose of the hearing, that is why we had the last one.  And we are going to, I am sure under the Chairman’s leadership, we will have as many as we need to, you know, again to be helpful in trying to get this thing done. 

Mr. Kelley, let me ask you, you made some comments in your testimony about the bidding process?

Mr. KELLEY.  Yes.

Mr. BOOZMAN.  Can you expand on that?  And then also, Mike was telling me that you were in Iraq and in a very dangerous part of Iraq.  We appreciate your service very, very much.

Mr. KELLEY.  It is my understanding from looking back to the bidding process that, and from my recollection I thought it was ten, that had been sent to bid and four had responded.  And at that point there had been some amendments to that bidding process.  And VA, at that point, took over the bidding process.  Since they had only had four responses they sent back out to only those four.  That is from my recollection.

Mr. BOOZMAN.  Mr. Norton, in your testimony you had noted that Chapter 33 payments can vary infinitely and that MOAA believes a Turbo Tax-like approach automation would service as a model, perhaps.  Is it fair to say that you support a rules-based processing system as a necessary tool to meet the new GI Bill’s payment requirements?

Colonel NORTON.  Yes, absolutely.  And I think I would add to that, too, that as you know there is a technical amendments draft legislation that is in the works in the Senate.  So any rules-based system will also have to be flexible and scalable in order to accommodate needed changes as amendments to the basic program are made.

Mr. BOOZMAN.  Thank you, Madam Chair.  I yield back.

Ms. HERSETH SANDLIN.  Thank you, Mr. Boozman.  Mr. Filner?

Mr. FILNER.  Thank you, Madam Chair.  Let me just make one contextual statement.  While I think we all agreed what a great step forward the educational benefits were, when we look back at the GI Bill of 1944 it had two major parts; education and home ownership or, the home loan program.  I have said many times that I am here because of the GI Bill because my father was able to buy a house for about $2,000.  And we became part of the middle class.  I am disappointed that part was left out of the new GI Bill that was passed.  My bill had a section covering the home loan program.  I want you to know that we have two omnibus bills that are coming from the Senate today on health and benefits issues.  Most of the housing provisions that were in my GI Bill are also in the Senate benefits bill to raise the value of home loans, take off the cap for refinancing, and reduce the equity required.  These are some very important things that not only will help, any first-time homeowner but will also help veterans that are caught in this incredible crunch right now.  The VA had become irrelevant to their situation because of these restrictions.  I think we are going to pass the bill today which will alleviate most of these restrictions and make the VA Home Loan Program relevant to today's veterans and helpful given the current mortgage crisis.  I see the staff shaking their heads, so I hope I characterized that properly.

Mr. CULLINAN.  Again from the VFW, we just want to thank you for those changes.  Because not only does it make the program relevant during this current mortgage crisis, but you did it within what the VA Home Loan Program is.  You did not try and make it into a lender or something different.  With respect to lowering refinance rates, raising the caps on some of these things, you are helping veterans but you did not undermine the program.  So we really salute you for doing that.

Mr. FILNER.  Thank you.  Of course, VA will probably come back and say they need to contract that out.  I share the concerns of the Chair about the repercussions of a delay if we do not important the program on time.  I do not think, Madam Chair, that if they set up the contingency plan properly that a delay in the software development does not necessarily mean a delay in the provisions of benefits .  Because if they are doing it right they have to have a back up if anything goes wrong.  If the program fails, if we do not negotiate these source codes, they have to have a back-up system that provides the benefit.  So I do not believe we should be thinking of playing off a delay in the software development as meaning a delay in the benefits.  They are separate issues.  If they have to take more time to develop the software, they must have a proper contingency plan.  I think we ought to just keep those ideas separate and we will be talking to the VA folks about that.

Mr. Kelley, I was interested in your statements about the fact that there were four finalists.  I had asked the VA, in the last hearing, how many finalists were there and the VA said they could not tell us.  It was a secret.  How do you know this stuff?

Mr. KELLEY.  Evidently, it is not secret anymore.

Mr. FILNER.  I know it too, but they would not answer me in public.

Mr. KELLEY.  I had asked through sources through the VA earlier this week.

Mr. FILNER.  Interesting.  Do you know the names of them, by the way?  Can you tell me?

Mr. KELLEY.  No, I do not.

Mr. FILNER.  I appreciate the information because the VA would not give it to us.  Yet we have had, as I said in my opening statement, sources tell us the information and it seems everybody knows it,  but yet it is a secret.

Mr. KELLEY.  And that may be the case for me, also.

Mr. FILNER.  So you are under arrest for giving the information out, or whoever told you is, but I will not ask for your source.  Madam Chair, again, I think this panel has raised, as Mr. Boozman said, some very important issues and I think we need to separate the software development from the benefits implementation because of these questions.  If we do not like the fact that we will not get ownership of the program, should we say, “Well, let us negotiate that more?”

Ms. HERSETH SANDLIN.  Would the gentleman yield?

Mr. FILNER.  Sure.

Ms. HERSETH SANDLIN.  For purposes of clarifying my question, from the testimony I heard from these witnesses is that at least three, if not four, out of the five anticipated that there would be some contractor support necessary to implement this new benefit.  So my concern is that even with a contingency plan, and this is what we will explore with the VA, are we going to insist on a contingency plan separate from any IT component?  Separate from any contractor component?  Because if that is what we are going to mandate that is what we have to discuss here.  Four out of the five witnesses on this first panel are indicating that their organizations anticipated some level of contractor support and if it is primarily the IT function then if we have some concerns about how the RFP went out to perform that IT function.  I want to make sure there is not a delay either, but I do not know that we can completely separate them in light of some of the testimony that we have heard.

Mr. FILNER.  I think we can.  If it is a catastrophic failure of the whole system we had better have a back up.  But, if it is a failure of policy recommendations we still have the same back up.  That is all I am saying.  Thank you, Madam Chair.

Ms. HERSETH SANDLIN.  Mr. Hall, do you have questions for the witnesses?

Mr. HALL.  Yes, thank you Madam Chair.  And I am very much interested in Mr. Cullinan's comments about ownership of source code.  And I think the discussion about that is extremely important.  To prevent the VA from being in the position down the road, it could be during the trial period or the test period, it could be 10 years or 20 years from now, of being tied to a particular corporation that has a monopoly.  If the VA goes down the road that they appear to be going down they are going to contract out for the writing and the creation of a particular program that has one application.  It is not like Microsoft Word that will be sold to millions of people around the country or around the world.  This is something that would be sold to the VA and used by the VA.  It is created, we can dictate the terms because we are the only customer.  And so I would say that this should absolutely be one of the terms, that the source code is open to us and that we are able to make changes internally.  Or if we wish, VA can hire a different contractor to make changes, knowing the source code.  That is something I would say that the VA should not yield on in negotiations.

And I am curious, just a couple of comments here.  Maybe Mr. Campbell you could tell me if you have heard whether the VA, at any point, gave their own employees a chance to compete for these jobs before deciding that they could not do it in house?  Or if any of the panelists have information about that?

Mr. CAMPBELL.  I have not heard anything like that.  But I know that even before the GI Bill passed the VA did say, “This is how much time we would need to do it internally,” and we did not give, we being the veterans groups and people associated with the Post-9/11 GI Bill, did not give them that amount of time.

Mr. HALL.  Would IAVA have an objection, I know that initially at least my impression is that you would prefer for VA to do this in house, as was my first reaction.  But would you have a problem with a contract being done for the initial development, testing, and implementation of this and then having the VA’s own employees who have been handling these benefits and similar benefits for years trained to run the software, and take that job over?  So in other words, the contractor would be phased out on an as needed basis. 

Mr. CAMPBELL.  That is my impression on what should be happening, is that the contractor, once the software, the rules-based system is developed, the contractor would only be held on to do minor adjustments and data entry. Which, you know basically means keeping the data.  That is what I heard from the VA a couple of weeks ago when they had their conference call with the VSOs.

Mr. HALL.  I just maybe would ask each Member of the panel if they would answer the same question, and maybe comment in that framework on the opportunities for veterans to, as one of the objects that the Secretary has initiated and we all have been asking for, to hire more disabled vets to work for the VA.  And so this is, you know, the more the jobs are retained in the VA, the more possibility there is for that to happen.  So if an outside contractor designs the software, tests it, gets it underway and implemented, and then we have VA employees trained an actually carrying it out, going out to the future, is that acceptable to you, Mr. Sharpe?

Mr. SHARPE.  We prefer that it is done in house.  And that if additional expertise is needed that they hire those additional experts.  However, if some portion of it has to be contracted out, we want to make sure that VA is definitely involved, that they have oversight, and that it eventually comes back to the VA employees, who are the ones trained in the implementation of the program.

Mr. HALL.  Thank you.  Mr. Kelley?

Mr. KELLEY.  AMVETS also agrees that contracting out is probably the only solution and that at some point I think the contract now looks like mandatory three years with an optional two more years for the ownership.  And then I do not know, I did not get the inside information on the ownership.  But the ownership should come back to the VA and VA employees should maintain, do the administrative work and management of that at that point.

Mr. HALL.  Okay.

Mr. CULLINAN.  Mr. Hall, again, thank you for the question.  I would certainly agree with what my predecessor just said here.  You know, additionally VA is not only going to need people to operate the program.  They are going to need programmers to actually be able to keep it up, make the requisite changes.  It seems to us that would be an excellent opportunity to bring in veterans with the requisite skills to carry out those jobs.  You have got two areas.  You have got those who run the programs, operate them, for like typing on Word, to extend that analogy.  And those who are actually going to rewrite the things to make them work better and appropriate to the circumstances.

Mr. HALL.  Thank you.  Colonel Norton?

Colonel NORTON.  It is certainly one approach and we would not object to it if that is what is worked out.

Mr. HALL.  Okay.  A concise answer and my time is up, thank you, Madam Chair.

Ms. HERSETH SANDLIN.  Thank you, Mr. Hall.  Mr. Boozman, did you have any follow up questions?  Mr. Filner?  Okay.  I thank you all for your testimony today and taking our questions.  Thank you for your service to the country and all the work that you are doing on behalf of our veterans.  Thank you. 

Now I would like to invite our second panel.  Joining us on the second panel is Mr. Leonard Smith, a member of the American Federation of Government Employees (AFGE); and Dr. Pradeep Khosla, Dean of the College of Engineering at Carnegie Mellon University.  Gentlemen, welcome to the Subcommittee.  Thank you for being here.  We look forward to your testimony.  Mr. Smith, we will begin with you and you are recognized for 5 minutes. 

STATEMENT OF LEONARD SMITH, VETERANS CLAIMS EXAMINER EDUCATION DIVISION, VETERANS BENEFITS ADMINISTRATION ATLANTA REGIONAL OFFICE, U.S. DEPARTMENT OF VETERANS AFFAIRS, ON BEHALF OF THE AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO; AND PRADEEP K. KHOSLA, PH.D., DEAN, COLLEGE OF ENGINEERING, CARNEGIE MELLON UNIVERSITY, PITTSBURGH, PA

STATEMENT OF LEONARD SMITH

Mr. SMITH.  Thank you, Madam Chairwoman and distinguished Members of the Subcommittee.  My name is Leonard Smith.  I am a 20-year service-connected disabled veteran myself.  And I work in the Education Division at Atlanta as a Veterans Claims Examiner.

Every day employees like myself help veterans obtain education benefits through our offices out of Buffalo, St. Louis, Muskogee, and like I mentioned, Atlanta.  It is my honor to share our perspective with you.  In addition, AFGE would like to submit a supplemental statement to respond to the Subcommittee’s questions about IT and possible restructuring on more detail. 

It is my belief that VA’s own employees would do a far better job than any contractor.  The VA wants the contractor to achieve an objective of an accuracy rate of 98 percent.  My office already has an accuracy rate of 95 percent in Atlanta, and 98.8 percent in Buffalo.  The VA also wants the vendor to process original claims in 10 days and supplemental claims in 7 days.  Our office right now for original claims is at 20.2 days and supplemental claims at 9.8.  The vendor, who does not know the work at al,l can only