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Witness Testimony of Hon. Eric K. Shinseki, U.S. Department of Veterans Affairs, Secretary

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;

·       I mprove 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.