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Oversight Efforts of the VA IG: Issues, Problems and Best Practices at the VA

Oversight Efforts of the U.S. Department of Veterans Affairs (VA) Inspector General: Issues, Problems and Best Practices at the VA













FEBRUARY 15, 2007

Printed for the use of the Committee on Veterans' Affairs

SERIAL No. 110-4





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BOB FILNER, California, Chairman


VIC SNYDER, Arkansas
JOHN J. HALL, New York
PHIL HARE, Illinois
MICHAEL F. DOYLE, Pennsylvania
TIMOTHY J. WALZ, Minnesota

STEVE BUYER,  Indiana, Ranking
HENRY E. BROWN, JR., South Carolina
BRIAN P. BILBRAY, California




Malcom A. Shorter, Staff Director

HARRY E. MITCHELL, Arizona, Chairman

TIMOTHY J. WALZ, Minnesota
GINNY BROWN-WAITE, Florida, Ranking
BRIAN P. BILBRAY, California

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



February 15, 2007

Oversight Efforts of the U.S. Department of Veterans Affairs (VA) Inspector General: Issues, Problems and Best Practices at the VA


Chairman Harry E. Mitchell
   Prepared  Statement of Chairman Mitchell
Hon. Ginny Brown-Waite, Ranking Republican Member
   Prepared Statement of Congresswoman Brown-Waite
Hon. Timothy J. Walz


U.S. Department of Veterans Affairs, Hon. George J. Opfer, Inspector General
  Prepared statement of Mr. Opfer


Post-Hearing Questions and Responses for the Record:

Hon. Harry E. Mitchell, Chairman and Hon. Ginny Brown-Waite, Ranking Republican Member, Subcommittee on Oversight and Investigations to Mr. Opfer, Inspector General, U.S. Department of Veterans Affairs, letter dated March 21, 2007


Thursday, February 15, 2007
U. S. House of Representatives,
Subcommittee on Oversight and Investigations,
Committee on Veterans' Affairs,
Washington, DC.

The Subcommittee met, pursuant to notice, at 3:00 p.m., in Room 334 Cannon House Office Building, Hon. Harry E. Mitchell [Chairman of the Subcommittee] presiding.

Present:  Representatives Mitchell, Walz, Rodriguez, Brown-Waite.


Mr. MITCHELL.  Good afternoon and welcome to the Oversight and Investigations Subcommittee for the Veterans' Affairs Committee.  This is the meeting of February 15th, 2007.

And I would like to begin by welcoming our new members.  And, actually, you are probably not a new member, are you?  I am the new members, so I guess I welcome—and, Tim, welcome.

First, let me just give a little—and I also want to welcome—forgive me if I make some mistakes here.  I was talking earlier about how I needed to know what the protocol here was.  And this looks like a very friendly group, so please bear with me.

This is our very first Oversight Subcommittee hearing of the 110th Congress.  And today, the VA Inspector General will provide an assessment of issues, problems, and best practices at the VA.

We will also look for avenues in which the Subcommittee can help the Inspector General do a better job.  Thus far, it looks like his team is doing a great job with the resources that are allocated.

This Subcommittee has a long history of working with the VA Inspector General.  They are the first stop, the first call, so to speak, where our Subcommittee needs a firsthand assessment from a field location regarding operations at the VA's central office.

I have asked the Inspector General to be accompanied by his staff of experts in audit, contracting, healthcare, and investigations.  I am interested in their views and as honest brokers as to how the VA as a very large federal organization is doing.

This topic and this hearing are our place to start our oversight assessment of the VA.  The IG has significant knowledge and recent hands-on experience in matters that impact the VA.

I would stress that we do not only want to hear about the VA and what it is doing wrong.  We want to hear about what the VA is doing right.  We want to hear about the best practices of the VA, and we want to do what we can to see that those practices grow and multiply.

The best situation is when the VA is proactive and identifies and solves problems before they become real problems.  We all strive to be proactive, but all too often we end up just being reactive.  Out of necessity, we may do both on this Subcommittee, but we will strive to be proactive as often as practicable.

I will now ask my colleague and Ranking Republican Member, Ms. Ginny Brown-Waite, if she has opening comments.  I look forward to working with her during the next two years, and I recognize Ms. Brown-Waite for opening remarks.

[The prepared statement of Chairman Mitchell appears in the Appendix.]


Mrs. BROWN-WAITE.  Thank you very much, Mr. Chairman, and welcome to the Committee.

This is a Committee that, historically has worked in a very bipartisan manner, because veterans are not Republicans or Democrats.  They are veterans needing our assistance.

I appreciate the Chairman yielding me time.  This is the first Subcommittee hearing for the Subcommittee on Oversight & Investigations.  And, I certainly appreciate the Inspector General coming in and testifying before us regarding the President's proposed budget for fiscal year 2008 as it relates to your office.

The VA's Office of Inspector General is responsible for the audit, investigations, and inspection of all VA programs and operations.  Given the recent demand for greater accountability within the business lines at the VA, I am very sure that the workload within your office has increased significantly in the past year.

Therefore, I find the budget before us very disconcerting in that the amount the Administration has requested for the office is 72.6 million, which provides for 445 full-time equivalence employees to support the activities of your office.

During fiscal year 2006, OIG identified over 900 million in monetary benefits for a return of $12.00 for every dollar expended by your office.  The OIG closed 652 investigations; made 712 arrests, just in one year; 344 indictments; 214 criminal complaints; and 833 administrative sanctions.

My understanding is that, if the President's numbers prevail, it actually would amount in a reduction of 40 employees from your current staffing level.

I am very concerned that the funding levels the Administration is requesting are not going to be sufficient to continue the very excellent work that has been done by your office.  And I look forward to hearing testimony on this matter.

Again, Mr. Chairman, I thank you very much for yielding.

Mr. MITCHELL.  Thank you.

[The prepared statement of Congresswoman Brown-Waite appears in the Appendix]

Mr. MITCHELL.  Mr. Walz?


Mr. WALZ.  Thank you, Mr. Chairman, and also congratulations to you.  I am proud to work with you on this Committee.  I know your reputation far precedes you for your fairness and your work ethic.  So thank you.

And I would also like to thank our Ranking Member for such an eloquent statement and a belief that what your office is doing is something we absolutely believe in.  You should be commended for the work that you have done on the scarce amount of resources that you have.  Protecting those resources for our veterans is a sacred responsibility, and you have taken that obviously to heart and done a very good job with that.

I would concur with our Ranking Member that I am deeply concerned that an area that has proven to be able to return resources to us, an area that has been a good steward of the public trust is an area that we are trying to cut a few corners on.  And I want to make sure that this Committee, this Subcommittee, has a clear understanding of what we need to do and how we need to articulate the needs that your office has so that we can get those resources to you to continue with this work.

And I fully believe that it may be one of the most important positions that a lot of people do not know about that is happening in an organization or in our VA system that I think is absolutely critical, especially at this time.

So I thank you.  I thank you for taking the time, all of you, for coming today, sharing your expertise with us and hopefully letting us know where we can make your job easier.

So thank you, Mr. Chairman.

Mr. MITCHELL.  Thank you. 

At this time, we will begin with Mr. Opfer and make your statement.


Mr. OPFER.  Thank you, Mr. Chairman and members of the Subcommittee.  Thank you for the opportunity to appear before you today.

I am accompanied by the senior members of my staff, Maureen Regan, Counselor to the Inspector General; Dr. David Daigh, the Assistant Inspector General for Healthcare Inspections; Belinda Finn, our Assistant Inspector General for Auditing; and Jim O'Neill, the Assistant Inspector General for Investigations.

I would like to recognize that we have had a long history of working with this Committee, and I appreciate the oversight by this Committee and interest in the work that we do.  A lot of it, as both of you said, Mr. Chairman and the Ranking member, is unfortunately we like to do more proactive work, but a lot of times, we are in reactivemode.

Last year, we had to react to issues such as the cranial implant situation, and there was the data loss, with a significant impact on 26 and a half million veterans.

I am going to list some of our accomplishments.  There is a commercial that says things are priceless.  How do I put a value on maintaining the integrity of the quality and safety of care in the VA hospitals?  It is invaluable.  How do I put a value on maintaining the integrity of the data which is in the hands of VA?  It has a significant impact on the 26 and half million veterans and their families and would have an economic impact.

That work was done collectively with the resources that we had within the OIG.  We did not just use the investigative staff.  We used everyone we had, and I am fortunate to have the staff to do that. 

I am in the twilight of my career, starting government service in 1969, and I have only been the Inspector General here for a year.  But I have been fortunate my entire career working with and for outstanding people.  And nowhere is it more paramount.  I have been blessed to be working as the Inspector General in the Department of Veterans Affairs and have these outstanding people and to visit the field offices and to know what they can do and to know what could be done if we had more resources.

But I am not here to ask for resources.  I am here to explain what we have done and put some initiatives on the table for consideration of the policy makers to see if this is a role for the IG, if this is something that would be useful for you in making the decisions that affect the veterans of this country.

During the past six years, the OIG had a return on investment of $31.00 for every dollar invested in the OIG operations.  We have produced $11.6 billion in monetary benefits and issued 1,200 reports, over 6,600 recommendations.  We also completed nearly 15,000 criminal investigations.  We have processed over 93,000 hotline contacts and completed over 7,300 reviews of allegations of fraud, waste, abuse, and mismanagement.

OIG oversight is not only a sound fiscal investment.  It is investment in good government.  To highlight some of the best practices resulting from our work, the VHA has developed a seamless transfer of medical records for returning war veterans.  Thousands of unscrupulous individuals who preyed on our veterans by stealing their benefits and abusing fiduciary responsibilities have been prosecuted as a result of our investigations.

We have produced unqualified opinions in VA's financial statements and identified material weaknesses that need correcting.  We have also recovered more than $104 million from contractors who overcharged VA.

We have identified systemic problems in major procurements and serious deficiencies in VA's IT security, such as the work I outlined in the theft of the records concerning the 26 and a half million veterans.

Despite our accomplishments, I believe that there is much more we could and should be doing if this is the role for the IG in the future.

While we do the most we can with the resources provided, there are many issues that we are not able to review.  For example, we refer over 70 percent of all the hotline cases that we receive back to the Department for review.

As indicated in my written statement, there are several key challenges facing VA that we are not able to review with existing resources.  For example, in healthcare, the VA is challenged in its delivery of care to the returning war veterans.  Compliance by VA researchers with policies that protect patients and ensure not only sound scientific results is also an area of concern.

VA's research is budgeted for 1.8 billion in fiscal year 2008, which makes the research program commensurate with the IT budget for VA for 2008.  A significant amount of funds are being appropriated for VA or are in the process of being reviewed by Congress.

The increasing geriatric veteran population also presents VA with a growing challenge.  Veterans 85 years and older enrolled in VA health systems is expected to exceed 675,000 by year 2012.  As VA searches for organizational efficiencies, the question of whether the VISN model that they have now in VHA is the best infrastructure to manage the medical care and resources needs to be addressed.

Also drug diversion steals valuable medicine from patients, and makes patients vulnerable to harm from providers impaired by drug use. 

I think the timeliness and accuracy of processing claims is a top priority.

Veterans would benefit from OIG work aimed at reviewing VBA's quality assurance program for rating decisions, and assessing the factors contributing to the serious backlog of claims.

The VA's internal controls and accountability of VA funds remain an area of high concern.  The OIG, I believe, has an important role to play in overseeing the development of the new integrated financial and logistics system to ensure that VA corrects these material weaknesses.

Systemic deficiencies in VA procurement include lack of communication, insufficient planning, poorly-written contracts, inadequate competition, and inadequate contract administration.  Independent oversight efforts would benefit VA in determining how best to address these deficiencies.

VA's budget request for fiscal year 2008 estimates a need of 1.9 billion for IT.  I believe independent oversight is needed to ensure that system development controls are effective, the requirements are accurately identified and planned, contracts are used to support the projects in the best interest of the government and to achieve the desired results.

As I outlined before, protecting VA data is and will remain a primary focus of ours.  It is the society that we live in, the technological age, whether at work or at home.

I would like to emphasize that my office will continue, I believe, to provide a positive return on investment.  While I believe the VA OIG has accomplished a great deal in improving VA, we are faced with the challenges I have just discussed, and I need to greatly expand on the oversight to meet these challenges.

In closing, I would like to add that my current resource level is sufficient to meet the mandatory statutory obligations that have been placed on the IG by Congress, such as reviewing the consolidated financial statement, the FISMA, and other congressional mandates.

However, I believe like most agencies VA is faced with evolving challenges and changing demands.  If the OIG is really going to be an agent for positive change, future resource levels need to be commensurate with this challenge.

Thank you for the opportunity to appear here before you today.  My staff and I will be glad to answer any questions that the Committee would have for us.

[The prepared statement of Mr. Opfer appears in the Appendix]

Mr. MITCHELL.  Thank you very much, Mr. Opfer.

Let me just ask a couple of quick questions.  One, you mentioned how you uncovered some of the contractors who had overcharged and overbilled and so on. 

When you find those kind of people, what happens to them?  Do they get put back on a list because there is a lack of competition?  Are they blackballed?  Are they no longer allowed to bid?  What happens to them?

Mr. OPFER.  Let me have Maureen Regan explain that part of the contractors.  There were areas of debarment and other things like that.  If it was a criminal nature that we could prove, then that would go to our investigations office.  But let Maureen explain.

Ms. REGAN.  The agency has the authority to debar them from future contracts.  Whether or not it goes through the debarment process depends on a number of factors.

One of them may be how old the conduct was.  They also have the opportunity to enter into similar to a corporate integrity agreement.  There has been a number of cases we have worked on that affect other agencies and they may have the responsibility to do a debarment or a corporate integrity agreement.

In criminal cases, they do get referred for debarment to our agency if it is against us.

Mr. MITCHELL.  One last question, if you do not mind.  In response to what Ms. Brown-Waite spoke of think we are all concerned with your staffing level, and you mentioned that.  And the great job that you and your staff are doing is just terrific.

And as you know, the ratio of the Inspector Generals to the number of people who work in a particular department—for example, my understanding is that the Department of Veteran Affairs is the second largest department in the Federal Government and, yet, you have the lowest number of employees in relation to the parent agency.

And seeing the great success you have had with the people that you have working for you, don't you think it would be great for all of us and certainly good business practices if we raised that ratio?

Thinking of HUD, for example, and the Department of Education, both of them have full-time equivalence of Inspector Generals of 33 times greater than the VA has.

And I think the ratio was something like .2 percent.  So it is very, very low.  So we are really getting a bang for our buck.  But maybe we can get better if you had more staff.

Mr. OPFER.  Mr. Chairman, you are correct.  If you look at the IG's Office in relationship to the 26 statutory IGs at the cabinet agencies if you go by the ratio of FTEs in comparison to the IG's Office with the parent agency, we would be 26.  We would be last.

If we look at the ratio of budget authority in comparison to the OIG's budget with the parent agency, we would rank 20th out of 26.  So we are last in the ratio of FTE to FTE with the parent agency and third from the bottom of the budget authority.

From my own experience prior to coming to VA as the Inspector General, I served as the Deputy Inspector General in the Department of Labor, and it was a great organization and I enjoyed working there. 

The comparison I am trying to make is that Agency was of 17,000 employees, and the IG's Office in DoL is about the same size as mine, and, actually, in fiscal year 2008, they would be larger than the VA OIG and that is for an Agency of 17,000 employees.

Mr. MITCHELL.  Thank you.

Ms. Brown-Waite.

Mrs. BROWN-WAITE.  I thank the Chairman.

I think I threw the Chairman off a little bit when I told him we may be related because I have a granddaughter by the name of Mitchell.  My daughter is a Mitchell.  And so we are going to check those family trees.

You all do such a great job in the Inspector General's Office, and I mean that sincerely.  And, you know, I can be a very, very harsh critic.  But the work that you do, we need to be, if anything, plussing up those numbers because of the fact of the dollars saved.

But would you help us to understand the real impact if you lose 40 FTEs?  What current services or audits would be affected, and tell me the effect that it would have on the Fugitive Felon Program?

Mr. OPFER.  Yes, Congresswoman.  Let me give a bit of an answer and then I will rely on the program managers to respond specifically, the Office of Investigations  to respond to your Fugitive Felon question.  And David Daigh will respond to the health care initiatives that would be affected, and Belinda Finn will talk about the audit program.

But overall, in a quick summary, in Healthcare, the OIG inspectors would not review the quality of care and patient safety issues at the outpatient clinics.  The inspectors would have to cancel most of the planned work on VA research and the identification of best practices and PTSD treatment.

Probably an inspection of the VA pharmacy and medical device programs would have to be delayed or put off completely.  We would have to cancel an initiative to expand audit oversight in the VA information systems that would address the material weaknesses that we find in our financial statements and vulnerabilities.

We would have to cancel three national audits.  One would be in looking at the accountability controls over some sensitive IT equipment, an audit of VA DoD electronic data, and an audit of VHA's internal controls of financial activities.

I would rather have Jim explain.  The Fugitive Felon program and if we have time, I would have the program officers elaborate more into the health care initiative and the audit initiative.


Mr. O'NEILL.  Yes.  This would be one program that probably would not be impacted directly.  We have automated a lot of this program.  It has been very successful and I would love to tell you about if you are interested in the number of veterans and beneficiaries who have been identified in the program, and the number of arrests.

In terms of the process, the data is retrieved from a variety of sources, NCIC, 13 different states, the U.S. Marshals, and it is matched electronically against VA records.  We have automated the notification as much as possible to the warrant holders in terms of addresses that we may or may not have for them.

Typically we get involved personally in these investigations in a couple ways.  One is when we learn that a veteran who has a warrant is going to appear at a medical center for an appointment and if we are proximate to that location, we may get involved because the burden of that is only a couple of hours, because we always involve local police to represent the warrant holder, and the arrest is actually made by them, and our agents are instructed to provide cover for the arrest, but not to necessarily effect it.

Then we do it on occasion when the warrant is for a heinous crime and there is serious violence and particularly when the local department asks for assistance, we do our best to assist them.  We believe that this helps us when we need their help.

Mrs. BROWN-WAITE.  Could you just give us an idea of the number of felons that have been identified through this process?

Mr. O'NEILL.  Yes.  Actually, I looked it up.  As of September 30th, we had identified 26,763 VA beneficiaries who were identified as having an active felony warrant.  Once we identify them, of course, the information is passed on to the warrant holders.

We also pass on the information to comply with the law to VBA who would cease monetary benefits after due process and to VHA to let them know they do not have to provide anything but emergency medical care.

Then both VHA and VBA identify the amount that has been spent, and we provide them the data to do this, from the time the individual was a fugitive felon.  There is a start date on that statute.  I forget it now.  But if it falls within that statute, we identify that date so that they can initiate recovery because the law allows VA to recover the money.

Mrs. BROWN-WAITE.  I know my time has expired, but one quick question—

Mr. MITCHELL.  Sure.

Mrs. BROWN-WAITE.  —Mr. Chairman, if you will indulge me.  How many felons have you found actually as employees of the VA?  And I hate to ask that question, but while we are talking about felons, we might as well get it all out here.

Mr. O'NEILL.  Well, I cannot answer how many felons are in VA, but we have identified 154 fugitive felons.  We are not doing background checks.  We are doing wanted person checks in NCIC and in all the databases we have access to.

So we did identify 154 employees.  Ninety-six have been arrested.  The remainder were not arrested for a variety of reasons.  The warrant holder does not want to pay for extradition, so the employee is encouraged to go satisfy the warrant, clear up the problem, or occasionally we will find out that actually it was a misdemeanor.  It was reported improperly to NCIC or whatever.  So that would account for the remainder.

Mrs. BROWN-WAITE.  Thank you.

Thank you, sir, for indulging me.

Mr. MITCHELL.  Thank you.

Mr. Rodriguez.

Mr. RODRIGUEZ.  Thank you very much, Mr. Chairman.

And let me just continue to follow-up.  I am curious.  You said you had 26,000 felons.  And how do I say this?  What percentage of that has to do with drug related?

Mr. O'NEILL.  Well, sir, I would—

Mr. RODRIGUEZ.  You do not know?

Mr. O'NEILL.  I would not hazard a guess because we have not quantified that.  However, I can tell you that a lot of the warrants are for probation and parole violations which, in essence, is a felony, but we do not necessarily always know the predicate offense.

Mr. RODRIGUEZ.  You do not know the reason.  Okay.  Because I know that in prison, we have about 80 percent are due to drug related, and a large number of our veterans, especially Vietnam veterans—I do not want to stereotype—but a lot of them, you know, were, I know, engaged in drugs.  And I kind of have a—

Mr. O'NEILL.  Well, I can tell you this, sir, that we have arrested, I recall, someone on the Tennessee ten most wanted list.  We have had murderers, sexual predators, child sexual rapists.  We have a lot of violent predators that we caused to be arrested. 

I probably did not say this, but we have confirmed with the law enforcement agencies who are the warrant holders that 1,294 fugitive felons have been arrested based upon the information we provided them.  Now, we expect that number is much higher because it is a self-reporting mechanism where they tell us that our data helped them arrest.  So we actually think it is higher.

Mr. RODRIGUEZ.  Twelve hundred over what, a year or—

Mr. O'NEILL.  Oh, no.  This would be from the beginning of the program, 1,294.

Mr. RODRIGUEZ.  Okay.  Which is how long?

Mr. O'NEILL.  I would say it was about—I did not bring the beginning date, but it was about 2002 or 2003.

Mr. RODRIGUEZ.  Okay.  So it has been four years, about 1,200 people.  So the other 26,000 were others?  It was not any of your doing?

Mr. O'NEILL.  Pardon me, sir?

Mr. RODRIGUEZ.  You said 1,200 were as a result of your work.  And so I gather the other 20 something thousand was not?

Mr. O'NEILL.  Well, we do not know what happened to the remainder, whether they were arrested, whether they were arrested before we even forwarded the information that we had, or whether they were arrested based upon our information.  But the departments have not told us.

Mr. RODRIGUEZ.  Thank you.

I was going to ask regarding the audit if that is okay.  On the audit, and I have not seen it and I apologize, you know, and I do not even know if we have it before us, but on the audit report that you have, I know I get a lot of complaints about vacancies that have not been filled.  Is that reflective on the audit in terms of—

Mr. OPFER.  I am not sure, Congressman, I understand which particular audit you are referring to.

Mr. RODRIGUEZ.  I gather you do an audit of the VA?

Mr. OPFER.  We do a series of audits, some of them in the program offices and various things.

Mr. RODRIGUEZ.  Staffing, you know.

Mr. OPFER.  Dr. Daigh did one on staffing.

Mr. RODRIGUEZ.  Okay.  Because I keep getting reports of the number of vacancies that are carried, I guess for the purposes of the budget, but a live person is not there. 

Mr. DAIGH.  Sir, I am not aware that we publish vacancies not filled.  But if you are talking about management of human capital, we are very interested in that.     For instance, we have aggressively advocated that VHA develop standards so that they know how many doctors and nurses they should employ, and I believe that one of the initiatives that audit has under proposal here would be to look at human capital and see how VISNs are staffed and see what the staffing relationships are throughout VA. 

So I cannot directly answer your question in terms of human capital management, we are very interested in that.

Mr. RODRIGUEZ.  Okay.  How do you assess whether what is being said is actually occurring?

Dr. DAIGH.  With respect to?

Mr. RODRIGUEZ.  Staffing.

Dr. DAIGH.  Yes, sir.

Mr. RODRIGUEZ.  I was a school board member, and one of the ways they packed the budget was on staffing.  They said we are going to have 150 teachers when in reality, they only had 125 or whatever.  And they used that other money for something else.  I am sorry.  I do not know how bluntly I could put it.

Dr. DAIGH.  Yes, sir.  We believe that manpower costs are a significant driver for the cost of delivering healthcare, among other things, and we believe that VHA needs to develop standards for how many specialists and nurses they would like to hire. 

VA has made tremendous progress in determining how many primary care providers they should have by determining a panel size so that they would have one family practice or internal medicine physician per 1,200 patients or a number that is reasonable.  But they have made much less progress in determining subspecialty provider standards. 

In our reports, we have pushed VHA to produce those standards.  And we believe that with respect to radiologists, they are nearing production of a standard for radiologists and that they have done a great amount of work to develop standards for other specialties.

Mr. RODRIGUEZ.  So I gather we have some of that data already available, and how much work is being done with the number of staff that they have now?

Dr. DAIGH.  We are currently not doing a great deal of work on seeing whether the numbers are appropriate because we are trying to get VHA to agree on what the appropriate ratio between patients and staffing should be so that we could agree on how many people they should employ.

Mr. RODRIGUEZ.  Okay.  But I gather you do not see that as an area of a difficulty or a problem?

Dr. DAIGH.  We do see that as an area of difficulty and both with respect to administration of VISNs and with respect to the number of nurses and physicians that they need to employ.  We think it is imperative that these staffing standards be developed and adhered to.

Mr. RODRIGUEZ.  So who checks on them if you are not doing it?  Is the GAO the ones who check on that for hospital standards or stuff like that, for existing standards now that exist out there for accreditation of hospitals and clinics?

Dr. DAIGH.  My group goes to each of the 150, thereabout, major medical facilities on a three-year schedule.  And we devote most of our energies to assuring that processes are in place to ensure that veterans get quality healthcare, that peer review is ongoing, that other fundamental administrative processes occur so that if an error occurs in the hospital, the hospital will react appropriately to that.

Mr. RODRIGUEZ.  But are there not some set standards already for hospitals that exist out there, and are we close to any of those standards?  There has got to be some degree of accreditation in certain hospitals already, national standards?  Do we go by those at all?

Dr. DAIGH.  JCAHO accredits hospitals, and that would be an organization different than ours.  And we apply some JCAHO standards to the work we do.  The standards that we normally try to apply are VA's policies that they have agreed to and then there are standards for healthcare outcomes that have been promulgated by entities outside of the VA.

Mr. RODRIGUEZ.  How do we compare, I guess if we are going to look at our hospitals for the VA, how do we compare our hospitals in comparison to other hospitals that exist in the country?

Dr. DAIGH.  Well, one example that we have published that is important is our efforts to look at specific outcomes.  The VA has held as a standard that they would screen for colon cancer 72 percent of the patients enrolled to their facilities.  We checked that standard. 

What we did was we looked at how many patients were actually diagnosed with colon cancer, looked at the medical records, and went backwards and determined that, yes, they did screen 72 percent of the patients or actually better than that.  In our review, they screened 90 percent of the patients. 

The problem was the time to make a diagnosis of colon cancer was way too long, in the order of months.  We reported that data both by facility during our CAP reports and we rolled that data up and reported to VHA and the stakeholders in the summary report. 

And VHA is now making significant strides to decrease the time between screening for colon cancer and then making a diagnosis of colon cancer.  So we have tried to take existing standards and explore VHA's compliance with those standards.


Mr. MITCHELL.  Thank you, Mr. Rodriguez. 

Ms. Brown-Waite.

Mrs. BROWN-WAITE.  Thank you, Mr. Chairman.

I have a report, the semiannual report to Congress that was done September, 2006.  And in it, it lists reports that have been unimplemented for over a year. 

Some of these, having been on this Committee, this is my fifth year on the Committee, and, Mr. Rodriguez, you have been on the Committee, too, I am sure some of these will sound familiar to you, things such as the audit of the part-time physician time and attendance, only this shows nine out of seventeen recommendations have been implemented.

An issue real close to me is the issue at the VA Medical Center in Bay Pines.  Not all of the recommendations have been implemented.  This relates to the CoreFLS System.  When you make these recommendations, and they are not implemented, can we cost that out?  In other words, when they do not implement these, I know Congress stays on them, which is one of the reasons why we ask for this report.  But have you ever been able to quantify when they do not implement them?

Mr. OPFER.  Congresswoman, you are right.  The "IG Act," requires us to list the recommendations not implemented within a year in our semiannual reports and the last report, I think we listed 22 reports with, I believe, 77 recommendations that were more than a year old.  I think one recommendation was over four years old and eleven were over three. 

The consequence, I believe, of not implementing these OIG recommendations in a timely manner can be significant.  I think you have a problem then in your projected cost savings, what could have been achieved during that period when they are not implementing the recommendations.  Inefficiencies still continue to go unresolved.  Poor services to the veterans can be perpetuated.

To address this a little bit more robustly in our office, because, as you know, we only can issue the recommendations, I am looking at our own follow-up procedure.  My goal is not to accept any response from the Department as far as our recommendations if the implementation plan is over a year.  When they respond to our recommendations, if the implementation plan will be taking over a year, we are going to be pushing back very strongly to make sure there is justification why it would take over a year.

Also, I think we want to start doing a quarterly follow-up within the IG Office of looking at the recommendations, where the agency is in achieving the recommendations.  I think we need to be a little more aggressive too. 

If we feel one of the program offices, no matter what level that it is, if we really have a sincere belief that they are deliberately not implementing our recommendation or stalling, then I believe I need to elevate that to the Deputy Secretary and the Secretary.

Also, we just met, my staff met with one of our program offices.  For example, if it is an audit recommendation or a healthcare recommendation, that would be the two primary ones, that they will become more involved in reviewing what the Department says they are implementing to make sure we are doing some verification that it has truly been implemented. 

But we have to do this with the existing resources, both ratcheting up to the Deputy Secretary level and possibly the Secretary level, and also having the program officers that know the issues being more engaged with the Department in looking at what they are doing to implement those recommendations.

Mrs. BROWN-WAITE.  And certainly, if you have your staff cut you will never be able to do it, absolutely never be able to follow-up on these. 

But I think it is incumbent on the Committee members here also to take a look at these reports and let the Secretary and Under Secretary know that these are serious—I do not want to call them flaws—but they are serious problems that need to be remedied.

Mr. OPFER.  I agree.  My experience in the IG community has been since 1994, serving as an Inspector General to different agencies.  And I have always found that when Congress weighs in, the Committees with the agencies, the IG reports are taken much more seriously.

Mr. MITCHELL.  Thank you.  I have one question. 

The IG has been very critical of VA's compliance with the "Federal Information Security Management Act."  And it has reported on FISMA's weakness and vulnerability since 2001.

In May of 2006, the VA eventually reported a loss of information of our veterans that had the potential to compromise millions of veterans' identities.  And in 2007, at Birmingham there was another incident involving lost data.

Two questions on this.  First, how does the VA react to your recommendations and what other areas of concerns besides FISMA and information security has the IG made recommendations that are not being followed?

Mr. OPFER.  Certainly.  And I will give part of this answer on the FISMA to my AIG for audit. 

But in the area of IT security, I think that they are trying to address the issues, but you had a culture established for years.  And we have some leadership problems, not at the main VA, but leadership and accountability and responsibility has to be put down the hospital level, all the facilities.  They have to take ownership.  There has to be responsibility. 

If you have sensitive data, you need to be responsible for how you control that data.  They are implementing policies and procedures.  But, again, for instance, you would need independent oversight. 

But issuing policies and procedures does not necessarily to get to the root of the problem.  You have to go out and verify whether they are being fully implemented, are they being complied, and if not, are you taking appropriate action against the people.  It is a cultural change that we need to do in VA.

As far as the FISMA, I would like Belinda to expand on that answer a little bit.

Ms. FINN.  We are currently finalizing our 2006 report on FISMA.  In that report, we did a follow-up on earlier issues and also reported some new problems that the Department needed to address.

They have been responding very positively to our findings in that they have issued, as Mr. Opfer said, policies and procedures.  The problem is ensuring compliance of the policies and procedures.  It is not automatic as we have seen from recent events.  A policy on encrypting a hard drive does not necessarily mean that all the hard drives are encrypted.

We have a number of recommendations to the Department dealing with access controls and system controls.  Most of that report is not published in the public domain, so we probably need to talk separately.

Other areas that we are looking at, actually right now, we are focusing most of our IT efforts on our work related to the financial statement audit and the FISMA.  So we really do not have a lot of other results that we can talk about.

We would certainly like to do more audit work looking at actual compliance.  We would like to look at controls over removable media.  We would like to evaluate all the implementing instructions and how they have been complied with.

Mr. MITCHELL.  Thank you.

It sounds to me, in both the questions that Ms. Brown-Waite asked and I asked, it is one thing to offer some suggestions and procedures, but it is another thing to be able to follow-up.  And that seems to be the crux of all of this.

Let me just ask hypothetically.  Would you be able to absorb 200 FTEs in 2008 and if you could, how long would it take for them to be productive?

Mr. OPFER.  If we received an increase of that size, I think we could absorb 200 FTEs.  What we would try to do is an aggressive recruitment at the journey-level both from the auditors and investigators and healthcare inspectors so you can bring them in with very little training our programs and start being productive.

Conceptually, we have the initiatives, as I outlined in my statement, where we would use those people.  Recruiting should not be a hard issue. 

About two years ago in our Office of Investigation, just for two 18 11 positions in our Washington office, we had over 50 experienced agents from the FBI, Secret Service, and other OIGs apply for those positions.  These are highly-qualified individuals.  When we put out an announcement for entry-level positions, they had over a thousand responses. 

The mission of VA is something that people like, paying back, helping the veterans who deserve the help.  And it is not me.  I am the new guy in town.  The Office of Inspector General in VA has an outstanding reputation in the IG community and has received a number of awards from the President's Council on Integrity and Efficiency for investigations, healthcare inspections, and audits.  This is prior to my watch, so I am not tooting my horn.

In healthcare, Dr. Daigh, has a unique responsibility.  I am the only IG's Office that has a healthcare inspection unit that has an actual medical professional staff.  We have done a great job at being proactive, looking at things.  Dr. Daigh has brought in extremely talented people.

I do not think that we would have a hard time recruiting the people.  I think almost as they walk in the door, we will get increased monetary returns.  Certainly they would at least pay for themselves and certainly in the out years, the second year, I think you would see tremendous increases that they would be able to produce for us.

Mr. MITCHELL.  Thank you.

I am going to ask Mr. Rodriguez if he has a question, but at the same time, I hope you will excuse me.  I have got to go. 

And I turn it over to you, and thank you very much.

Mr. RODRIGUEZ.  [Presiding]  Thank you. 

Let me ask you.  I think in your report, you had talked about some of the areas where you felt you were lacking or you could do a little bit better.  And one of them was looking at mental health; is that correct?

Dr. DAIGH.  Yes, sir.  If I could comment a minute.  I think the returning war veterans, that mental health issues are among the highest priority issues that they face.  My primary mission, as I stated, is to ensure the veterans get quality healthcare.  And most of my resources are consumed in trying to do that for the 150 something hospitals that VA has.

Veteran mental health issues, in order to address it in a way that I think will bring satisfactory results, I think, requires us to take a more in-depth look at the care actually provided at the sites where healthcare should be provided.

So what I propose that we should do is to look at outcomes of patients who were treated at individual facilities, sit down and talk about the outcomes for those patients with the physicians at those facilities, report our findings as to whether the care was appropriate or not in our cap reports, and then roll up additional data that we uncover as we look at systematic issues in the mental health spectrum across the system and national reports to give data that would be helpful in addressing national policies.

I would also point out that there are 800 CBOCs roughly and 200 vet centers, each of which has a mission in providing mental health activities and care for veterans away from veterans' medical centers.

Mr. RODRIGUEZ.  I have been getting reports of the needs of some of the family members.  And I do not know.  Do we have to do something for the family members to get service now or are they entitled to services? 

I am not aware.  That is why I am asking, because I was hearing about the young people that are—in fact, there were, I think, possible suicides on the part of family members of veterans.

Dr. DAIGH.  Yes, sir.  That is a complex issue.  We recently published a report on traumatic brain-injured veterans who fought in Iraq or Afghanistan.  And in that report, we highlighted the fact that medical care after discharge from the VA and more importantly supportive care after veterans are discharged from the VA, if you live distant from a major medical center can be problematic.  We are continuing to follow-up on that issue. 

The specific issue that you address, I think, relates to the different status of different folks who leave DoD.  For instance, a Reservist might be in a different status than a National Guard Member who might be in a different status from an active duty who all might leave under different circumstances.

We are currently exploring this issue in a current study looking at the benefits that are available to individuals depending on their status when they leave DoD.  So I think that is a very complex question to answer in terms of what an individual is entitled to. 

A simple example might be with respect to healthcare is that some individuals might leave with TRICARE healthcare benefits.  Some individuals might leave with VA healthcare benefits.  Some individuals might leave with neither.  Some might leave with both.  So that complexity exists all across the benefit spectrum for individuals who are veterans.

Mr. RODRIGUEZ.  In your report, you also talk about the material weaknesses that need correcting in the area of procurement.  And you mention also since 2001, they have recommended more than two billion in potential cost savings by contracting officers negotiating fair or reasonable prices.

Let me ask you, especially because I know we highlighted the negotiations with the pharmaceutical companies on prescription drug coverage, but there was also a report that came out by the organization "Families USA" where—and I am curious to know if the pharmaceutical companies, because I know that that report indicated that they upped the prices prior to us moving on the Medicare piece of legislation two years ago, and whether there has been any major changes in that area or whether the negotiations in the part of the VA have been, you know, somewhat positive or, you know, how those costs have changed.  Have you looked at that at all?

Ms. REGAN.  We have a group called the Office of Contract Review and they do the pre-award audits for all the pharmaceutical contracts and the Med-Surge contracts awarded by the National Acquisition Center.  So these are going to be your federal supply schedule contracts.

Part of that, in answer to your question, is going to be it depends on when they had their contract awarded.  If it is a covered drug, which is, I think, more of what you are talking about, the "Veterans Healthcare Act" had a ceiling price for drugs that are on the federal supply schedule that VA, Department of Defense, Coast Guard, and Public Health Service can buy from.

If their contract has been awarded, they can only go up a certain percentage every year depending on the CPIU.  If it is a new contract, they can renegotiate the price.

I do not think I have seen what I would call a significant increase across the board in pricing.  A lot of the pricing depends on competition.  And so you may see it go down, but we have not seen where the prices have gone up significantly in order to verify the statement that you heard.

Mr. RODRIGUEZ.  Thank you.

Make sure we get some additional questions right in.  Okay?  Does the VA have adequate legal contracting oversight for its portfolio of contracts?  Excuse me.  Mrs. Regan.

Ms. REGAN.  I think at the field facilities, they could probably use more support in contracting.  A lot of times, they do a lot of scarce medical specialist contracts, contracts for specialists, for physicians.  And they get into negotiations where the university is represented by counsel, but there is no counsel—there is not sufficient number of attorneys to help the VA in the same negotiations to work day to day with them.  So with the number of contracts that are out in the field, they could use more contract attorneys working directly with them.

Mr. RODRIGUEZ.  So we do not have them at the present time then?

Ms. REGAN.  No.  There is not a sufficient amount of attorneys to do that work.  It is very specialized.

Mr. RODRIGUEZ.  Okay.  Thank you.

And let me just as we are talking about—I was in the San Antonio community, and we had moved on a clinic there.  And I was told that our staff there was pretty good at that aspect of it in terms of looking at that¾but that that was not necessarily the case in the main office.

So I was wondering from a perspective of the agency, does it rely mainly on the local hospitals out there or the local states to follow through or, you know, is there some lack of expertise in the agency that needs to be beefed up in certain areas? 

I know we just mentioned legal, but are there other areas that, you know, in terms of either, housing and other types of contracts that need to be looked at or—

Ms. REGAN.  Are you talking about just on the contracting side?

Mr. RODRIGUEZ.  Yes, the contracting side and also—because I know that on clinics now, we are not purchasing facilities.  We are basically contracting out and moving in.  That is my understanding, or am I wrong?

Ms. REGAN.  I am not sure if I can answer that question.  I have not seen enough of that.

Mr. RODRIGUEZ.  Okay.  So I gather, because I was told that the agency still did not have the expertise in some of those specific areas. 

Are there areas where we really need to beef up on the expertise on the agency for procurement and those kind of things and contracting?

Mr. OPFER.  I think we have issued a number of reports on procurement and have been very critical of the whole procurement process.  And that is one of the initiatives that we have.  I think if we had additional resources, we certainly would want to go into that.  That is a big ticket item for the agency. 

And I think within the last couple of months, we have issued at least three or four reports that are very critical of the procurement processes within the agency, and it is not in one area.

Mr. RODRIGUEZ.  Have you found them to follow through on that or what is lacking there from your perspective?

Ms. REGAN.  I think at this point, we have issued a number of reports on major contracts that were issued, particularly for IT services in which there were a number of problems. 

What we are in the process of doing now is to take the work over the last couple years and kind of look for the trends that were in there, and we plan on issuing a report that looks at the overall problems and where we found problems consistently throughout these contracts.  And those would be large contracts awarded at the central office level.

We have put out reports in the past about buying practices at facilities in 2001, resulted in a Procurement Reform Task Force, and they have a buying hierarchy now to leverage our buying power at the facility level.

We have not been able to go out and—we have not had the resources to go out and look at how compliant, whether or not it is being complied with and how it has affected spending.

With the healthcare resource for physicians, we wrapped all that work up last year.  I guess it was in 2005.  They put out a new directive and made people more accountable to do better contracting.  They actually have steps in there they are supposed to use, including looking at their resources and what resources do I actually need.

And, again, that is another issue that audit would like to go out and look at, to look at the implementation of that policy and how it has affected healthcare and contracting.

Mr. RODRIGUEZ.  Let me yield to my colleague.

Mrs. BROWN-WAITE.  I was just going to ask if you would be kind enough to yield, Mr. Chairman.

I have a constituent waiting for me up in my office, and I am going to have to leave.  But one question along the lines that the Chairman was asking.

Tell me about the Unisys contract, that they were paid $20 million so that you could get out of the contract with no deliverables.  Is that accurate?

Ms. REGAN.  We looked at the Unisys contract at the time where it had been determined, I think by both parties, that it was not working and they needed to end the relationship.  And the issue we were asked to look at was what was the best way for the VA to get out of it or what was in the best interest. 

Did they have a right to terminate for cause because Unisys did not deliver the product during the deadlines that were set in the contract or was it in the government's best interest to buy the product that had been developed thus far and that had not been accepted by the VA for payment?

We determined at that time there was grounds to terminate for cause under the commercial item provisions in the federal acquisition regs.  But VA felt very strongly that the project was moving along, that they had several of the deliverables, or I think they called them iterations, but they were deliverables that were almost complete that they wanted to buy and not have to start over again.

The settlement that was recommended was to pay approximately $8.5 million which was the percentage of work done, and then the rest of the money was supposed to be for travel if Unisys submitt