Good Morning, Chairman Filner, Ranking Member Buyer, and Committee Members.  Thank you for the opportunity to appear before you today to discuss the Department of Veterans Affairs’ (VA) work in responding to recommendations from the VA Office of the Inspector General (VAOIG).  Joining me today are Roger Baker, Assistant Secretary for Information and Technology, and Diana Rubens, Associate Deputy Under Secretary for Field Operations for the Veterans Benefits Administration (VBA).

The scope of VA’s missions extends far beyond the provision of health care to include providing educational benefits so Veterans can receive the knowledge and skills to continue serving the needs of a 21st century America; processing compensation and pension claims in our regional claims processing offices; and showing the utmost respect for Veterans and their families at the end of life in our national cemeteries.  For example, VA:

• Provides educational benefits of $9 billion annually, second only to the amount provided by the Department of Education.
• Guarantees nearly 1.3 million individual home loans with an unpaid balance of $175 billion dollars.  VA foreclosure rate is among the lowest in all categories of mortgage loans.
• Insures Veterans’ lives as the Nation’s eighth largest life insurance enterprise with $1.3 trillion in coverage, 7.2 million clients, and a 96 percent customer satisfaction rating.

To accomplish its diverse mission, VA employs more than 300,000 people–the second largest department in the Federal government.  The standard for each employee who works at one of our facilities is to be fully aware of and committed to our mission to serve Veterans.  I trust that every employee, up to and including our leadership, strives to meet that mission daily with the utmost professionalism and integrity. 

However, improvement is also a goal.  With that in mind, VA recognizes the VAOIG’s valuable work as our partner in ensuring accuracy, integrity, and accountability in the delivery of benefits and services to our Nation’s Veterans.  VA is committed to doing everything possible to ensure that it is delivering the best possible service to our Veterans, and we also recognize the value of working with VAOIG in our current “check and balance” system to ensure that we are being as effective and efficient as possible.  Additionally, VAOIG’s work helps VA to identify areas of waste, fraud, and abuse, as well as to remove persons whose conduct is truly criminal.  This not only improves our operations as a Department in providing services to our Veterans, but it saves the American taxpayer millions of dollars every year.

The scope of the VAOIG’s work is immense and far-reaching, as its investigations can be specific to facilities, or result in broad reviews of VA programs.  Its reports have resulted in hundreds of recommendations for the Department, ranging from administrative actions against specific personnel to large-scale policy reviews.  Additionally, the Department and VAOIG maintain a strong relationship in identifying, investigating, and bringing to justice those who use their positions to defraud or harm our Veterans.

In order to provide timely and appropriate responses to VAOIG’s recommendations, the Administrations and staff offices involved with each report work directly with VAOIG to ensure that action plans are developed and implemented to result in positive change.

Veterans Health Administration

VAOIG conducts several different types of reviews of Veterans Health Administration (VHA) facilities and programs.  VAOIG reviews:

• National programs through audits, broadly focused Healthcare Inspections, and other nationally-focused reviews.
• Single VA medical centers or community-based outpatient clinics (CBOC) through Combined Assessment Program (CAP) reviews and individual CBOC reviews.
• Roll-ups of CAP reviews can summarize a number of findings from several facilities and include recommendations with a broader scope than a single CAP review. 
• Healthcare Inspections can result from a nationwide or broad review initiated by VAOIG, an individual CAP review, or a finding after a review of an allegation made by a call to the VAOIG hotline.  These Healthcare Inspections can be specific to a facility or involve a broader scope. 

VHA has a standardized process to identify and respond to VAOIG recommendations from each type of review.  Initially, once the VAOIG has issued a final report including recommendations and VA responses, VHA staff use its database (VHA Electronic GAO and VAOIG Recommendation Status System - EGORS) to track progress of closing recommendations.  When VHA program offices submit reports about completing tasks that are part of an action plan, VHA records and reports that to VAOIG.  Also, VAOIG requests a status update on the progress in closing a report’s recommendations 90 and 180 days after the issuance of the final report.  At these 90-day intervals, VHA communicates with program offices on the progress of the action plans previously submitted and documents the completion of any items, regularly reporting to VAOIG about the status of closing  recommendations.  This process is repeated until VAOIG closes all pending recommendations.  If progress in implementing changes is delayed, VHA leadership meets with the responsible office to expedite action and close the assignment.  For recommendations that are open more than 6 months, the VHA Chief of Staff meets directly with the program office to review the status of closing a recommendation and does so monthly until the action has been completed. 

For the more narrowly focused CAP reviews, VAOIG requests a status update from VHA 90 days after the issuance of the final VAOIG CAP report.  This request is sent directly to the Veterans Integrated Service Network (VISN), the VA medical center, and VHA leadership in Central Office.  The facility provides an update of its progress in completing the action plan included with the final CAP report directly to VAOIG and informs VHA leadership at the same time.  VHA leadership tracks the facility’s progress in implementing the action plan and communicates with the facility directly when there are delays or questions.  This process is repeated until VAOIG closes all recommendations from a CAP.  This same process applies to Healthcare Inspections that result from a CAP or a finding resulting from a review of an allegation made to the VAOIG hotline.

VHA leadership, including the Chief of Staff, the Office of the Deputy Under Secretary for Health for Operations and Management, the Office of the Principal Deputy Under Secretary for Health, and the Director of the Management Review Service, meet on a monthly basis with VAOIG leadership and staff to discuss ongoing and future reviews and how to continue improving communications.  Less formal discussions between VHA and VAOIG are more frequent.

Veterans Benefits Administration

VBA takes very seriously VAOIG reports’ findings and recommendations, and it works diligently to implement recommendations made in those reports to further strengthen benefit programs.

VBA works closely with VAOIG, Office of Audits and Evaluations and the Office of Management and Administration, to provide timely and accurate status updates on all open recommendations.  VBA provides status updates to VAOIG every 90 days to describe the actions taken or in progress to fully address recommendations until they are satisfactorily closed by VAOIG.  VBA tracks and maintains current information on the status and target completion dates for all open recommendations, and works proactively with VAOIG to reconcile data and address outstanding questions.

The VAOIG Benefits Inspection Division (BID) implemented independent inspections beginning in fiscal year 2009 to provide recurring oversight of VA regional offices by focusing on disability compensation claims processing and performance of Veterans Service Center operations.  The BID’s audits of regional offices include reviews of local claims processing, data integrity, management controls, information security, and public contact.  These inspections incorporate claim file reviews, employee interviews, and management feedback.   VBA leadership reviews and responds to the recommendations provided by the BID, ensuring errors are corrected and recommendations are implemented in a timely manner.  The issuance of the audit report follows 60 days after the BID team conducts a site visit and all initial and follow-up responses to inspection recommendations are reviewed and concurred upon by the regional office, area office, and Office of Field Operations.  Once these steps are completed, the BID determines the recommendation is implemented and the report can be closed.  VBA currently has nine open BID reports of specific VBA regional offices. 

While VAOIG’s audit work in VBA is primarily focused on the compensation and pension program, VAOIG is also currently reviewing the implementation of the Post 9/11 GI Bill.

Office of Information and Technology

Upon receipt of VAOIG’s status request, a notification is sent by the Project Coordination Service to the appropriate points of contact in the Office of Information and Technology (OI&T) staff office responsible for implementing the open VAOIG recommendation.  The Project Coordination Service conducts follow-up reporting and tracking of VAOIG report recommendations to ensure implementation.

IT staff offices are directed to address each open recommendation individually, stating the progress made over the preceding 90 days and providing supporting documentation, if applicable.  Their response also indicates whether OI&T recommends closing any recommendations.  OI&T staff offices then prepare a soft and hard copy submission, to include background information on the IG report/recommendation, a signed briefing note, a memorandum for Senior Level Executive (SES)-level signature, and an attachment containing status updates.

All status updates are submitted to the Project Coordination Service for review no later than five business days before the VAOIG due date.  Once the Assistant Secretary for OI&T signs the memorandum, the response is sent to the VAOIG Operations Division, Office of Management and Administration.

Recommendations Open for Over One Year

The “Federal Acquisition Streamlining Act of 1994,” P.L. 103-355, requires VA to complete final action on each VAOIG report recommendation within one year after the report is finalized.  Although VA strives to meet this target, and does so for the overwhelming majority of reports issued, OIG has identified recommendations that have been open for over one year.

VHA Recommendations Open for Over One Year

VHA has eight VAOIG reports with 19 recommendations that have been open more than one year.

First, the “Audit of VA Acquisition Practices for the National Vietnam Veterans Longitudinal Study (NVVLS)” has one of three recommendations still open.  This recommendation involves initiating formal acquisition and planning and proper contracting processes to expeditiously and successfully complete the NVVLS and ensure that assigned project management and contracting staff have the required knowledge and skills to effectively plan, procure, administer and manage the NVVLS in accordance with pertinent legal, procedural and technical requirements.  We acknowledge that deciding how to proceed with the NVVLS has been a long process.  Since VA decided to re-initiate its work on NVVLS in late 2009, significant progress has been made, and I am pleased to report that VA released a request for proposals (RFP) on May 25, 2010, and expects an award will be made later this year.  Details about the timeline are available in the testimony provided before this Committee on May 5, 2010. VAOIG has indicated it will close the recommendation when the contract award is made.

Second, the “Review of Access to Care in the Veterans Health Administration” report, issued in 2006, has two of nine recommendations that remain open. These involve standardizing tracking methods and appropriate performance metrics to evaluate and improve the timeliness of elective procedures as well as implementing prioritization processes to ensure that Veterans receive clinically indicated elective procedures according to their clinical needs.  Through VHA’s Surgical Quality Improvement Program (SQIP), VA is developing long-term information technology (IT) solutions, and in the interim has standardized appropriate tracking methods to improve the evaluation and timeliness of elective procedures.  VHA has been advised that the IT solution will be implemented in early 2012.  Also, VHA recently issued Directive 2010-018, “Facility Infrastructure Requirements to Perform Standard, Intermediate or Complex Surgical Procedures” in May 2010, requiring each facility to establish a transfer policy based on clinical need.  VHA is currently working with VAOIG to close these recommendations based on these recent and ongoing actions. 

Third, the “Review of the Acquisition and Management of Selected Surgical Device Implants” report from 2007 has one recommendation still open.  This recommendation directed VHA to evaluate aortic valve, coronary stent, and thoracic graft procedures to study the feasibility of establishing national contracts and blanket purchase agreements (BPA) and, where indicated, initiate national contracts and BPAs. 

When OIG issued the recommendation, VHA had been actively seeking national contracts for coronary stents for two years; however, few existing manufacturers indicated a willingness to participate.  VHA has continued to evaluate the procurement history for these products to identify possible targets for standardization.

This spring, a Request for Information (RFI) related to coronary stents was again sent to industry, and VHA expects to respond to the vendor’s questions mid-June as well as develop and distribute an RFP by the end of summer 2010.  VHA acknowledges that based on the current surveys, the price of drug-eluting stents, on average, are likely to decrease by $300-$400 per stent, resulting in significant cost reduction for VA if the RFP process is successful.

In regard to aortic valves and thoracic grafts, VHA recently completed comprehensive reviews of the procurement history for these devices to determine if the use of national contracts or BPAs were feasible.  The completion of these reviews has been time consuming to ensure that the analysis was complete and comprehensive. 

For aortic valves, the procurement history does not support use of a national contract or BPA because of issues involving the complexity of the clinical decisions resulting in vendor choice, the variety and availability requirements of implant types (mechanical, bioprosthetic, etc.) in relationship to the complexity of the disease being treated, the relatively low number of devices implanted by VHA, and the established safety of the devices currently utilized.  

Neither does the review of the procurement history related to thoracic grafts indicate that use of a national contract or BPA is recommended.  This is based on the overall low number of thoracic aortic grafts being implanted by VHA, the complexity of the disease process requiring a choice of available and emerging vendor products, and the established safety of the devices currently utilized.

This information is currently being shared with VAOIG to determine if it is sufficient to close the recommendation. 

Fourth, the “Audit of Veterans Health Administration’s Oversight of Nonprofit Research and Education Corporations” report from 2008 has four of five recommendations still open related to establishing oversight authority parameters for Non-Profit Corporations (NPC); defining minimum control requirements for NPCs and subsequently training NPC Directors about these requirements;  implementing oversight procedures to perform substantive reviews of NPC financial and management controls to ensure NPCs fully comply with Federal laws, VHA policies, and control standards; and developing and implementing procedures to review, monitor and enforce NPC compliance with conflict of interest laws and policies. 

To address these concerns, the Under Secretary for Health (USH) chartered the Nonprofit Corporation Oversight Steering Committee (Steering Committee) in 2008 to develop a plan to assess existing NPC financial and management controls and use that information to develop and implement future processes.  The reviews were completed in December 2009, and a white paper has been subsequently issued.  Also, legislation that would significantly change the operations of NPCs has been pending since early 2009.  Congress passed legislation in April 2010, and Public Law 111-163 was enacted in May 2010.  On May 7, 2010, in response to the new law, the VA Nonprofit Oversight Board decided to delay issuance of any pending changes to NPC practices so that the elements from Public Law 111-163 could be included.   The USH has directed that issuance of a handbook to implement this legislation and respond to the VAOIG concerns will be completed no later than December 7, 2010.  Also, the VHA Nonprofit Program Office is using the results of the reviews completed in December 2009 to guide its continuing review of NPC operations. 

Fifth, an “Audit of Veterans Health Administration’s Government Purchase Card Practices” issued in 2008 has one of four recommendations still open.  Recommendation 2 directed VHA to provide approving officials refresher training on using the revised Approving Official Checklist to ensure cardholders maintain adequate documentation to support their purchases.  On February 18, 2010, the Deputy Under Secretary for Health for Operations and Management (DUSHOM) mandated that all purchase card approving officials receive this refresher training.  Each VISN Purchase Card Manager was to submit written certification when the training was complete.  VHA has received documentation that the training is complete, and it anticipates that OIG will close this recommendation.  

Sixth, the “Audit of Veterans Health Administration Noncompetitive Clinical Sharing Agreements” issued in 2008 still has all seven recommendations open.  An action plan to close these recommendations was developed in September 2008; however, that action plan had to be amended in December 2009 to add a mandatory training component to ensure consistent implementation of new policies and procedures.  The curriculum for this training has been developed and submitted to the VA Office of Acquisition, Logistics, and Construction’s (OAL&C) Acquisition Academy.  The Academy is currently working to contract the completion of the provided material into curriculum for instruction.  The course is scheduled to be available in 2nd Quarter FY 2011.

In regard to Recommendation 5 that directed VHA to instruct the VISN contracting officers to initiate recovery of overpayments identified by the VAOIG audit, as appropriate, VHA has instructed its VISN contracting officers how to initiate recovery of overpayments identified by this audit, and VHA is compiling documentation of this process.  To date, all VISNs have completed their audits, and VA continues to work to resolve questions about the overpayments.

 Seventh, the “Audit of Procurements Using Prior-Year Funds for VA Health Care Facilities” issued in 2008 has two of seven recommendations still open.  Recommendation 5 directed VHA to initiate appropriate administrative action against contracting officers who entered inaccurate contract award dates in the electronic procurement accounting system and later signed the contracts after they should have known the funds had expired.  Recommendation 7 directedVHA and the Assistant Secretary for Management to develop plans to implement controls over obligation of expired funds in other VHA programs, projects, or activities.  VHA has sent documentation to VAOIG showing administrative actions taken in nine VISNs in response to Recommendation 5; VHA believes this may be sufficient to close the recommendation.  Concerning the other item, VHA is working with VAOIG to determine if data extracted from VHA’s sources other than non-recurring maintenance obligation during FY 2009 for FYs 2004 through2008 is acceptable to close the recommendation.

The final report, “Combined Assessment Program Review of the VA Central Iowa Health Care System, Des Moines, Iowa” issued in 2009 has 1 of 13 recommendations still open.  Recommendation 4 directed VHA to ensure that the System Director requires the identified safety, infection control and patient privacy deficiencies be corrected.  VHA continues to communicate with VAOIG about whether the documentation submitted earlier this year is sufficient to close the recommendation.  

The VISN has taken other actions to ensure the high quality of current safety, infection control, and patient privacy practices.  For example, the VISN 23 Readiness/Annual Work Evaluation (AWE) Team surveyed the organization March 8-12, 2010.  A primary purpose of the Readiness/AWE Team visit was to ensure that there was follow-up and closure regarding previous findings by VAOIG, The Joint Commission, and others.  Items cited in Recommendation 4 were reviewed by the team and considered compliant.

Also The Joint Commission surveyed VA Central Iowa Health Care System April 27 to April 30, 2010.  No previous OIG recommendations were identified in The Joint Commission survey as noncompliant at the time of the survey.

We are working with VAOIG to verify that the VISN has implemented the system changes necessary to attain compliance, and that these changes are being sustained.  The VISN currently reports ongoing compliance above the 90 percent level. 

VBA Recommendations Open for Over One Year

VBA has one VAOIG report with two recommendations that have been open more than one year.

The VAOIG Audit of “Veterans Benefits Administration Transition Assistance for Operations Enduring and Iraqi Freedom Service Members and Veterans” was issued on July 17, 2008.  Two of the eight report recommendations remain open and VA action is ongoing. 

Recommendation 6 directed the Acting Under Secretary for Benefits to develop a mechanism to obtain the DD-214 information needed to identify discharged Veterans who should receive outreach letters. The goal is to use separation data from the VA/DoD Identity Repository (VADIR) to systemically issue outreach packages to separating Service-members, replacing the current manual process that utilizes the Veterans Assistance at Discharge System.  VBA is working with VA’s Office of Information and Technology and the Department of Defense to address unresolved technical and data quality issues.  VA anticipates resolving these technical and data quality matters by September 2010. 

Recommendation 8 directed the Acting Under Secretary for Benefits to establish policies and procedures that require staff to provide special outreach to Veterans who do not have a high school diploma or equivalent.    Full implementation of this recommendation is dependent on the receipt of complete and accurate information from DoD’s Defense Manpower Data Center (DMDC) through VADIR.  VBA continues to work with the DMDC to resolve discrepancies in the data necessary to implement this outreach effort.  VBA is also writing the procedures for field offices, which will allow for full implementation once the data issues are resolved and construction is completed for an electronic mechanism to assign and track field outreach activities for this target population.

OI&T Recommendations Open for Over One Year

OI&T has one VAOIG report with one recommendation that has been open more than one year.  The report, “Review of Issues Related to the Loss of VA Information Involving the Identify of Millions of Veterans,” was issued on July 7, 2006.  Recommendation 1d directed the Secretary to ensure all position descriptions (PD) are evaluated and have proper sensitivity level designations, that there be consistency nationwide for positions that are similar in nature or have similar access to VA protected information and automated systems, and that all required background checks are completed in a timely manner.

As a result of the recommendation, the Department has worked diligently to implement use of the US Office of Personnel Management (OPM)-developed Position Designation System and Automated Tool (PDAT).  The PDAT assists VA human resources specialists, managers, and security specialists to designate position risk levels for PDs. The PDAT has been in use since March 2009.  Many VA organizations have used the PDAT to review current PDs and the PDAT is used for new PDs.  Although the PDAT and the resultant new business processes meets the intent of recommendation 1d, the recommendation remains open pending issuance of VA Directive 0710, “Personnel Security and Suitability Program.”  The VA Office of Operations, Security, and Preparedness (OSP) was tasked with authoring the Directive, which has been approved by the Assistant Secretary for Operations, Security, and Preparedness.  The Directive was signed on June 4, 2010.

VA will communicate the new Directive to the field in order for the field to understand the changes from the previous edition, as well as the mandated use of the PDAT. The 0710 Handbook is under development, and an inter-agency workgroup will be established to assist with the Handbook. 

OSP Recommendations Open for Over One Year

VAOIG’s Semiannual Report to Congress, October 1, 2009–March 31, 2009, lists one VAOIG report with one recommendation more than one year old for VA’s Office of Operations, Security and Preparedness.

The report, “Audit of the Veterans Health Administration’s Domiciliary Safety, Security and Privacy,” issued on October 4, 2008, directed the Assistant Secretary for OSP to strengthen controls to ensure physical security surveys are conducted at domiciliaries with controlled substances.  On May 28, 2010, OSP provided information on its directive to VAOIG, following the publication of Appendix B, “Physical Security Requirements and Options, VA Directive and Handbook 0730.02.”  We are awaiting VAOIG’s response, although we anticipate that this recommendation and report will be closed.

Conclusion

As a Department, we strive to meet our mission to care and serve our Veterans to the greatest possible measures of success and professionalism.  However, we value the partnership with VAOIG’s work to identify and work with us to ensure that we appropriately and quickly improve.  In so doing, we are able to provide the kind of service to our Veterans that they deserve and have earned.  Thank you again for the opportunity to appear.  We are prepared to answer any questions you may have.