[House Hearing, 110 Congress]
[From the U.S. Government Printing Office]




                  OVERSIGHT OF GI BILL IMPLEMENTATION

=======================================================================

                                HEARING

                               before the

                  SUBCOMMITTEE ON ECONOMIC OPPORTUNITY

                                 of the

                     COMMITTEE ON VETERANS' AFFAIRS
                     U.S. HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                           SEPTEMBER 11, 2008

                               __________

                           Serial No. 110-103

                               __________

       Printed for the use of the Committee on Veterans' Affairs








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                     COMMITTEE ON VETERANS' AFFAIRS

                    BOB FILNER, California, Chairman

CORRINE BROWN, Florida               STEVE BUYER, Indiana, Ranking
VIC SNYDER, Arkansas                 CLIFF STEARNS, Florida
MICHAEL H. MICHAUD, Maine            JERRY MORAN, Kansas
STEPHANIE HERSETH SANDLIN, South     HENRY E. BROWN, Jr., South 
Dakota                               Carolina
HARRY E. MITCHELL, Arizona           JEFF MILLER, Florida
JOHN J. HALL, New York               JOHN BOOZMAN, Arkansas
PHIL HARE, Illinois                  GINNY BROWN-WAITE, Florida
SHELLEY BERKLEY, Nevada              MICHAEL R. TURNER, Ohio
JOHN T. SALAZAR, Colorado            BRIAN P. BILBRAY, California
CIRO D. RODRIGUEZ, Texas             DOUG LAMBORN, Colorado
JOE DONNELLY, Indiana                GUS M. BILIRAKIS, Florida
JERRY McNERNEY, California           VERN BUCHANAN, Florida
ZACHARY T. SPACE, Ohio               STEVE SCALISE, Louisiana
TIMOTHY J. WALZ, Minnesota
DONALD J. CAZAYOUX, Jr., Louisiana

                   Malcom A. Shorter, Staff Director

                                 ______

                  SUBCOMMITTEE ON ECONOMIC OPPORTUNITY

          STEPHANIE HERSETH SANDLIN, South Dakota, Chairwoman

JOE DONNELLY, Indiana                JOHN BOOZMAN, Arkansas, Ranking
JERRY MCNERNEY, California           JERRY MORAN, Kansas
JOHN J. HALL, New York               STEVE SCALISE, Louisiana

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.






                            C O N T E N T S

                               __________

                           September 11, 2008

                                                                   Page
Oversight of GI Bill Implementation..............................     1

                           OPENING STATEMENTS

Chairwoman Stephanie Herseth Sandlin.............................     1
    Prepared statement of Chairwoman Herseth Sandlin.............    26
Hon. John Boozman, Ranking Republican Member.....................     2
    Prepared statement of Congressman Boozman....................    26
Hon. Bob Filner..................................................     3

                               WITNESSES

U.S. Department of Veterans Affairs, Keith Pedigo, Associate 
  Deputy Under Secretary for Policy and Program Management, 
  Veterans Benefits Administration...............................     6
    Prepared statement of Mr. Pedigo.............................    27

                   MATERIAL SUBMITTED FOR THE RECORD

Post-Hearing Questions and Responses for the Record:
  Hon. Stephanie Herseth Sandlin, Chairwoman, Subcommittee on 
    Economic Opportunity, Committee on Veterans' Affairs, to Hon. 
    James B. Peake, Secretary, U.S. Department of Veterans 
    Affairs, letter dated December 8, 2008, and VA responses.....    31

 
                  OVERSIGHT OF GI BILL IMPLEMENTATION

                              ----------                              


                      THURSDAY, SEPTEMBER 11, 2008

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

    The Subcommittee met, pursuant to notice, at 1:07 p.m., in 
Room 340, Cannon House Office Building, Hon. Stephanie Herseth 
Sandlin [Chairwoman of the Subcommittee] presiding.
    Present: Representatives Herseth Sandlin, Donnelly, 
McNerney, Hall, Boozman, Moran, and Scalise.
    Also Present: Representatives Filner and Snyder.

        OPENING STATEMENT OF CHAIRWOMAN HERSETH SANDLIN

    Ms. Herseth Sandlin. Good afternoon, ladies and gentlemen. 
The Committee on Veterans' Affairs, Subcommittee on Economic 
Opportunity, oversight hearing on the implementation of the GI 
Bill, as updated in Public Law 110-252, will come to order.
    Before we proceed with today's hearing, I would like to 
take a moment to remember the lives we lost on the morning of 
September 11, 2001. As our country continues to heal from this 
tragic event of 9/11, we must never forget that today we have 
thousands of troops serving honorably in Iraq and Afghanistan, 
many of whom have served in multiple deployments overseas.
    I would like to express my sincere thanks and appreciation 
to our men and women in uniform who have answered the Nation's 
call to duty, and reinforced my commitment to serve them 
honorably as they continue to serve us all.
    Keeping this in mind, we must never forget that today's 
servicemembers are tomorrow's veterans, who will require the 
resources to succeed in life after military service. To this 
end, this Subcommittee has held numerous hearings, here in 
Washington, DC, and our Congressional districts, on programs 
critical to their continued success. One such program in which 
we were able to make significant progress is the Montgomery GI 
Bill. Public Law 110-252 will provide our veterans the 
educational entitlements needed to attend a college or 
university of their choice. Certainly this landmark legislation 
makes significant improvements, but we must remain vigilant to 
ensure Congressional intent is fully implemented, and the U.S. 
Department of Veterans Affairs (VA) is afforded the resources 
to meet the needs mandated by Congress.
    Today's hearing will give the Subcommittee the opportunity 
to better understand the VA's implementation plan as required 
by Public Law 110-252. As many of you may be aware, there have 
been numerous concerns over the VA's plan to contract out 
services, contracting transparency, and time constraints to 
implement the requirements of the newly enacted law. Last 
month, we sent a letter inviting Secretary Peake to participate 
in today's hearing. This letter specifically states that the 
purpose of the hearing today was to have the VA present its 
plan on implementing Chapter 33 with as much detail as 
possible. I am deeply disappointed that the testimony that was 
submitted was not as extensive as we were hoping, although we 
did get some additional material at about 12:30 today. I hope 
that over the next few weeks we can be properly informed on the 
VA's plan to meet Public Law 110-252, including the information 
that is presented today.
    I look forward to working with Ranking Member Boozman and 
Members of this Subcommittee to provide oversight on the 
implementation of the new Montgomery GI Bill requirements.
    [The prepared statement of Chairwoman Herseth Sandlin 
appears on p. 26.]
    Ms. Herseth Sandlin. I now recognize Mr. Boozman for any 
opening remarks he may have.

             OPENING STATEMENT OF HON. JOHN BOOZMAN

    Mr. Boozman. Thank you, Madam Chairman. I would like to 
associate my remarks concerning the anniversary of today and 
things, and appreciate you taking the time to mention that, 
along with the recognition of our people in uniform now.
    I would like to concur with the chair's dissatisfaction 
with the prepared testimony. I believe the invitation letter 
was sufficiently detailed regarding our expectations for 
today's hearing. And while I recognize the VA may be 
constrained regarding competition-sensitive information, 
describing the Department's desires expressed in the statement 
of objectives provided to the industry is well within their 
authority.
    I expect the Department to provide the Subcommittee with a 
very detailed briefing on those objectives, and the winning 
bidder's plan to meet them, very shortly after the contract is 
awarded, at the least. It is ironic and fitting that we are 
holding a hearing on the 9/11 GI Bill 7 years after the attack 
on America, an event that contributed to today's global 
conflict. The Global War on Terror has highlighted the need to 
create a new GI Bill that reflects the increased obligations of 
today's servicemembers and their families. In addition to 
caring for our dead and wounded, there is no more important 
benefit to offer a path to personal growth then through a 
generous education benefit. As you may remember, the 
Subcommittee on Economic Opportunity, under Chairwoman Herseth 
Sandlin's leadership, reported a GI Bill that I believe was an 
excellent bill, and I think superior in many ways to what 
eventually became law. H.R. 5684 was simpler to administrate, 
more flexible, and offered $19,000 per year for full-time 
enrollment. The bill was eventually passed by the full 
Committee, but failed to make it to the floor. So we're here 
today to really have the VA describe how they intend to 
implement the very complex program in Chapter 33. Frankly, I am 
very concerned that despite VA's best efforts, they will not 
meet the August 1, 2009, deadline. We are aware that VA intends 
to contract out a significant portion of the effort to bring 
the program online, but they now have less than 11 months to 
get the work done. I hope that we have not given them an 
insurmountable task.
    I am also aware there is some opposition to VA's intent to 
contract out development of the new information technology (IT) 
system, and possibly some personnel issues. I would remind 
those who oppose using modern information technology to manage 
the system that it is the most promising way to shorten the 
processing time. While a small number of cases may require 
manual intervention, because of the complexity, the vast 
majority should lend themselves to automated process. I am 
confident that if we ask veterans whether they would prefer the 
current method that now takes about 20 days, or an automated 
process that could provide an answer in minutes, that they will 
choose the latter. I believe there is an example of this at the 
Department of Education, and I would ask VA whether they have 
looked into that model.
    As to whether the IT should be developed in-house or via 
contract, those who point to the failure of Core FLS should 
also remember that VETSNET is primarily an in-house project 
that has been in development since the late eighties, and has 
experienced numerous failures, and has cost the Government over 
$600 million. From reading VA's testimony, there is ample 
opportunity for VA employees to remain employed in the 
Education Service or elsewhere within the Veterans Benefits 
Administration (VBA).
    My point is that we have given the VA a complex new program 
to manage, and until their selected approach to implementing 
that program fails, we should not interfere. You should be 
about meeting the need of veterans seeking education, and no 
other agenda.
    Madam Chair, this Subcommittee has worked hard for 4 years 
in a bipartisan way to do the right thing by those who have 
borne the battle. If VA believes they need any additional 
legislation, I hope they will provide that to us in time for us 
to act. I look forward to hearing from the Department today, 
and I hope their testimony will not only describe the major 
features of the proposed contract, but also a frank and candid 
assessment of the challenges they face.
    I yield back.
    [The prepared statement of Congressman Boozman appears on
p. 26.]
    Ms. Herseth Sandlin. Thank you very much, Mr. Boozman. I 
would now like to recognize the Chairman of the full Committee, 
Mr. Filner, for an opening statement.

              OPENING STATEMENT OF HON. BOB FILNER

    Mr. Filner. Thank you, Madam Chair. I want to thank you and 
Mr. Boozman for your leadership on these issues over the past 
several years. You have been a model of bipartisan cooperation, 
and the bill that was passed and signed by the President is a 
great bill. And now, of course, timely oversight. So I thank 
you for your leadership.
    As you stated, this was an opportunity for the VA to tell 
us how they were going to meet their deadlines. Like you, when 
I saw only four pages of testimony, and a PowerPoint 
presentation, I am not sure that gives us enough detail to 
understand what is happening. I do not believe that is a 
service to all of the stakeholders who are looking to this with 
such great optimism and hope. The letter that the Chair and 
Ranking Member sent to Secretary Peake stated that the purpose 
of the hearing was to present VA's plan with as much detail as 
possible. We wanted to have a thorough understanding of what 
was going on, and I hope you will do that in the testimony 
today.
    I have great doubts about contracting out. VA employees 
have administered education benefits since the end of World War 
II. We know that many changes have been made over the years and 
they have been successfully implemented. You have, as I 
understand it, about 250,000 employees that are working. You 
have a year to do this and you have close to a $100 billion 
budget. If I was in charge of all of that, I would not be 
asking for more money. I do not know what your ballpark is 
because you have not put that in any of the figures before us 
today. I do not know why you need to contract out services, 
with so many employees, so much money, and so much time.
    I do not think that replacing the VA employees with 
inexperienced contractors is very good business. Many VA 
employees, as you well know, are veterans themselves and 
identify with those veterans applying for benefits. VA 
employees are there for one reason, to help the veterans. How 
can the VA justify replacing employees with contractors, which 
I bet in the Request For Proposal (RFP) it does not say, ``Do 
you relate to veterans?'' Their primary concern is not serving 
veterans. You argue, that the need is to have this in place by 
August of 2009. I do not see how you can meet that deadline 
when you are spending all of your time seeking bids out to 
contract out, implementing a new software program, and training 
new staff with very little or zero experience. If the VA has 
been improving its processing time for educational entitlements 
over the years, why throw away all those gains that have been 
made?
    I notice in the handout, and I am sure you will explain 
this further, your first objective of the RFP is that you will 
meet all the requirements. And then, number four says, ``Oh, by 
March 2009, we will determine if the solution meets these 
requirements.''
    What are you giving out in an RFP about meeting the 
requirements and what happens in March if they have not met the 
requirements? It seems to me that we are back to square one.
    Can you give me a yes or no right now? Are there any 
penalties if they do not meet these deadlines? Where in the RFP 
is a statement of penalties? I did not see any.
    Mr. Pedigo. There are penalties in the statement.
    Mr. Filner. Like what?
    Mr. Pedigo. Statement of objectives----
    Mr. Filner. Do they get any money for the contract if they 
do not meet the objectives?
    Mr. Pedigo. Let me ask Mr. Wilson to address that.
    Mr. Wilson. The RFP proposes that the vendor will propose 
both monetary incentives and monetary disincentives.
    Mr. Filner. Oh, they are proposing?
    Mr. Wilson. And the reason that we did that is that will 
help us get an understanding of how confident they are in their 
proposed solution.
    Mr. Filner. Someday I would like you to read what you just 
said, and see why the public has so little confidence in people 
we call bureaucrats. You want someone, and I do not know how 
much money we are going to pay, perhaps millions of dollars, to 
meet a deadline, and you want to know about their confidence in 
meeting it as part of the RFP? That sounds pretty ridiculous to 
me. I am just a layman, but someone is going to get a lot of 
money, so why should they be paid if they do not even meet the 
objectives that you have laid out here? I do not understand 
that at all.
    You should be right now in the process of implementing this 
program in-house, training your staff, and giving them a year 
of preparation instead of contracting it out. This is a 
Government function, and it should continue to be a Government 
function. If we have capable employees that have been trained 
in this capacity to implement and distribute Montgomery GI Bill 
entitlements, and the VA was given money this year for over 800 
more employees, why is there a need to outsource the whole 
program? The VA's focus should be on building up your internal 
success, and not just saying, ``Hey, we cannot do it.''
    We have received, on this Committee, letters from VA 
employees expressing their concerns. One person wrote that the 
VA employees are better equipped to handle the educational 
benefits because, number one, they are familiar with the U.S. 
Department of Defense (DoD) documents that need to be reviewed 
to establish veterans' benefits eligibility; number two, they 
are trained to use various DoD databases to locate and confirm 
information; they are trained to process claims when veterans 
appeal the decision; they are trained to contact individual 
service branches; and, they are trained to contact State 
approving agencies, colleges, universities, and veterans 
service organizations. Your contractor is going to have to 
figure all that out.
    In addition, employees need to understand all the benefit 
programs, not just the GI Bill. Knowing all of the benefit 
programs helps in processing education benefits, because most 
veterans are eligible for benefits that they may not know about 
or they may be under different categories.
    I do not see how you can expect to train new employees, or 
the contractors, to know all the ins and outs of the VA, be 
familiar with these DoD documents and databases, and be 
familiar with the benefit programs, in 1 year.
    Finally, I am concerned that the contracting bids are not 
as accessible to the public as they should be. There is a need 
for transparency, and the VA has not been totally forthcoming 
with all the information. I hope you take the opportunity today 
to clear up any of these misconceptions, and thoroughly inform 
the Committee of your plans to meet the requirements of Public 
Law 110-252. It is very discouraging to see how all of this 
started. Again, you give us four pages of testimony, and a 
PowerPoint presentation. It does not look like you have any 
accountability in this whole process. It says you are not going 
to determine if they meet the requirements of the GI Bill until 
March 1, 2009. What kind of nonsense is that? That you are 
giving out an RFP, and you do not even know if it is going to 
meet the requirements until next March? And what if it does 
not? As I said, we are back to square one. And the penalties, 
``they'' are going to suggest the penalties? Come on, guys.
    To me, I do not want to pay for this if they do not meet 
the requirements that you have set out. But we should not be 
doing this anyway, because we have the employees who know how 
to do it, and they have been doing it for years and years. Let 
them do the job.
    Thank you, Madam Chair.
    Ms. Herseth Sandlin. Thank you, Mr. Chairman.
    I now want to welcome our two panelists testifying before 
the Subcommittee today. Joining us on the first and only panel 
today is Mr. Keith Pedigo, Associate Deputy Under Secretary for 
Policy and Program Management, Department of Veterans Affairs. 
Mr. Pedigo is accompanied by Mr. Keith Wilson, Director of the 
Office of Education Service, Veterans Benefits Administration, 
Department of Veterans Affairs.
    Mr. Pedigo, you are now recognized to make your 
presentation to the Subcommittee.

STATEMENT OF KEITH PEDIGO, ASSOCIATE DEPUTY UNDER SECRETARY FOR 
       POLICY AND PROGRAM MANAGEMENT, VETERANS BENEFITS 
     ADMINISTRATION, U.S. DEPARTMENT OF VETERANS AFFAIRS; 
ACCOMPANIED BY KEITH M. WILSON, DIRECTOR OF EDUCATION SERVICE, 
 VETERANS BENEFIT ADMINISTRATION, U.S. DEPARTMENT OF VETERANS 
                            AFFAIRS

    Mr. Pedigo. Thank you, Madam Chairwoman. We are happy to be 
here this afternoon. I want to take this opportunity to try to 
provide as much information as possible about the approach that 
we are using to implement the new GI Bill. As I say, we 
appreciate the opportunity to be here, to talk to you about the 
strategy for implementation of Public Law 110-252, the post-9/
11 GI Bill. And as you said, accompanying me today is Mr. Keith 
Wilson, Director of the VA's Education Service.
    My testimony will highlight the staffing information and 
technology solutions being pursued by VA. Mr. Wilson and I are 
also prepared to provide a PowerPoint presentation that 
addresses selected element of the procurement process that is 
presently underway to identify a contractor to provide a secure 
solution to support VA's efforts to administer this new 
program.
    Our strategy for implementation of this program calls for 
contractor support to build upon and accelerate an already 
existing strategy to employ a rules-based industry-standard 
technology in the delivery of education benefits. VA's numerous 
education programs contain eligibility rules and benefit 
determinations that work well with rules-based technology that 
requires minimal human intervention.
    The goal of minimizing human intervention through the 
electronic processing of applications and enrollment 
information was outlined in both the VA's fiscal 2008 and 2009 
budgets. I would like to emphasize that the contractor will not 
have full responsibility over the administration of the post-9/
11 GI Bill. Instead, the contractor will be responsible for 
development of the information technology solution, and general 
administrative and data entry functions. Education claims that 
are rejected by the automated process and require manual 
eligibility determinations will remain the responsibility of 
trained VA personnel.
    VA plans to award a contract for support in the very near 
future. The contractor will be accountable for providing timely 
and accurate education claims processing by completing original 
claims in at least 10 days, supplemental claims in at least 7 
days, and by achieving an accuracy rate of at least 98 percent. 
The technological solution and services provided will be under 
close direction and oversight of VA employees.
    Since enactment of the post-9/11 GI Bill, VA's Education 
Service has been working with other elements of VA to enhance 
key existing VA IT systems. For example, the VA application 
that allows schools' certifying officials to transmit 
enrollment data electronically to VA is being modified to 
accommodate the reporting requirements of the new program.
    VA is also working closely with elements of the Department 
of Defense to establish data requirements and procedures for 
implementation of the transferability provisions of the new 
program. Our goal is to transition servicemembers and veterans 
into the new program with no disruption in the payment of 
educational benefits, in accordance with the August 1, 2009, 
effective date for the new program.
    Based on the implementation strategies being pursued, VA 
does not anticipate a loss of Federal employment for any 
present employees associated with VA's education programs. 
Since the post-9/11 bill will result in tuition and fee 
payments being made directly to educational institutions, some 
current claims processing resources will the shifted to 
increase compliance and oversight responsibilities. VA 
employees will continue to staff and operate our nationwide 
call center in Muskogee, Oklahoma. VA employees will also 
continue to respond to all online inquiries through the VA Web 
site, including post-9/11 GI Bill inquiries.
    The provisions of the post-9/11 GI Bill require VA to 
develop regulations to administer the program. VA is actively 
engaged in this process, and we anticipate publishing the 
program's final regulations in the Federal Register in May of 
2009.
    Outreach to veterans and servicemembers is a key objective 
of our implementation plan for the new program. The VA's GI 
Bill Web site has been updated to include information regarding 
the new program, and already over a quarter of a million have 
viewed the ``frequently asked questions'' section of that site.
    In addition to our web-based outreach, VA is preparing 
posters, pamphlets, and direct mailings to veterans, 
servicemembers, colleges, and university Executives. Also, in 
late 2008, VA will launch a multimedia advertising campaign in 
an effort to reach individuals who may have dropped from our 
direct mailing rolls. These are individuals who have left the 
military and have not used VA benefits, or have relocated since 
last using a VA benefit.
    Madam Chairwoman, this concludes my statement. I will be 
pleased to answer any questions you or other Members of the 
Subcommittee may have.
    [The prepared statement of Mr. Pedigo, and the PowerPoint 
slides, appears on p. 27.]
    Ms. Herseth Sandlin. Did you want to take us through the 
PowerPoint presentation at this time, Mr. Pedigo?
    Mr. Pedigo. We would be happy to do that.
    Ms. Herseth Sandlin. Okay.
    Mr. Pedigo. What I would like to do, if it is okay with 
you, is I will handle the first couple of slides, and then I 
will ask Mr. Wilson to go through the remaining portions of the 
presentation. If we could please go to the first slide.
    What I want to make sure that the Subcommittee understands 
is that our decision to basically provide a secure IT solution 
for the new GI Bill is not a new strategy. As I said in my 
testimony, that strategy was articulated in both the 2008 and 
2009 President's budgets. It has been our intent for at least 
the last 2 years to take our existing systems in VA, and 
primarily, what we call the TEES system, which is The Education 
Expert System, and develop that into a rules-based engine that 
would be capable of making most of the decisions on the 
existing VA education programs. And when I say ``existing 
programs,'' I'm talking about those that existed prior to the 
implementation of the new GI Bill.
    Under the strategy that we are using to implement the new 
GI Bill, we are simply accelerating the already-existing 
strategy. And because of the urgency of meeting the August 1, 
2009, effective date for this program, we felt the need to seek 
vendor support to help build this implementation technology 
solution. At the present time, because of the nature of the 
procurement that we are using, we do not know the details of 
the proposed solution from the vendors to implement the GI 
Bill. And that is because the vehicle that we are using is what 
is known as a performance-based contract, where essentially we 
go out to those who would provide bids to us, and we tell them 
what the basic requirements are that we want them to solve, and 
then they use industry best practices, and propose a solution 
on how we can best implement the new GI Bill.
    So at this point in the procurement process, we do not 
know, we have not seen the proposals that the bidders are going 
to submit to us. But before the end of this month, we will have 
a very good idea of what those proposals are.
    And I want to emphasize that with respect to VA employees, 
we do not have any plans to put any VA employees out on the 
street as a result of this new program. Our intention is to use 
what will probably be a significant number of the existing 
employees to continue to process the programs that existed in 
the education area prior to the new GI Bill, and we have five 
programs that will have to continue to be administered. We are 
going to use these new employees to take all the calls at the 
Muskogee, Oklahoma, call center. And these employees will be 
particularly involved in--if you could go to the next slide, 
please--these employees will be particularly involved with 
handling cases that the information technology solution is not 
able to handle. It is our expectation that the rules-based 
system that we will have will be capable of making most 
decisions on veterans' entitlement and eligibility for the new 
GI Bill in an automated fashion without human intervention, but 
we recognize that because of the complexity of this bill, and 
because of the nuances of the service time and nature of 
military service for some veterans that the system cannot 
handle all cases. And so the exceptions will be handled by 
full-time VA staff.
    I want to mention that the VA, especially VBA, the Veterans 
Benefits Administration, has a solid record over the last 15 
years of making significant consolidations in operations, and 
providing a soft landing for the employees who might no longer 
be engaged in the activity of that particular consolidated 
program. In the VA's insurance program, as well as the 
education program, in the early nineties, and the loan 
guarantee program in the late nineties and the early part of 
this century, we underwent significant consolidations, and no 
employee lost VA employment as a result of that.
    At this point, Madam Chairwoman, I am going to turn it over 
to Keith Wilson, to go through the remainder of the slides.
    Mr. Wilson. Thank you, Keith. Good afternoon.
    I would like to go over, first, two timelines; the first 
being the acquisition timeline, followed by the project 
milestone timelines, once the contract is awarded, starting 
with slide four,the acquisition timeline.
    This is fairly self-explanatory, but I would like to go 
over it anyway. We released a Request for Proposals on August 
29th. The vendors have asked for an extension to respond to 
that Request for Proposals. We granted that extension, and they 
now currently have until this Monday, September 15, to provide 
their proposals to us, their written proposals to us.
    The events that will occur following that are two things. 
First of all, we will have a technical evaluation team that 
will review the proposals themselves. Following that, we will 
allow oral presentation by the vendors themselves. Once those 
two actions are complete, the technical evaluation team will 
rate and rank the vendors, and the contracting officer will 
award the contract. Tentatively, we are looking at September 26 
for that to occur right now.
    Once we have a contractor on board, the RFP that we have 
put on the street is implemented, and we have several 
milestones that provide us what we need in terms of 
implementing this program. Obviously, the first thing we will 
want from them is a draft project plan, within 10 days. By 
October 31, we expect the vendors to submit business 
requirements and process flows to VA. And I would like to 
clarify a little bit about what that is, because it is going to 
be a detailed technical comparison between what VA's business 
requirements were articulated as in the RFP, and what the 
winning vendors' proposed solution will be, and what will be 
needed to interface those two. For example, the technology that 
we have transmits data in certain ways, and provides gateways 
in certain ways, and we need to ensure that the handshakes to 
transmit that data will occur. Those type of things will be 
addressed under that business requirements submission.
    By March first, the vendors will have to demonstrate the 
capabilities of the system itself, and we will begin user 
testing. We do not anticipate that at that point the full 
system will be available for user testing but we do anticipate 
that segments of it will. So we will begin user testing at that 
point. On May 1, the solutions have to be available to begin 
making eligibility and entitlement decisions. At that point we 
do not expect the payment piece to be ready, but we do expect 
entitlement determinations to be able to be made. That will 
give us the opportunity of running test records through, test 
data through, and ensuring that the tool generates the correct 
eligibility information.
    Soon after that, on June 1, we do expect the full payment 
piece to be available. At that point, the functionality needed 
for the entire system would be available, and we could begin 
testing the system end to end, and then of course as in the 
legislation, August 1st of 2009 is our go-live date.
    Slide six provides three basic bullets on the performance 
elements that we are requiring. And these performance elements 
are the same performance goals we have in our strategic plan as 
in the President's budget. No more than 10 days to process 
original claims, no more than 7 days for supplemental claims, 
with 98 percent payment accuracy.
    The following several slides lay out two pieces of 
information, and these are taken bullet-for-bullet directly out 
of the RFP, the Request for Proposal. The first is the 
objectives, and the second is the mandatory tasks. Some of 
these things sound very simplistic, and they could sound like 
no-brainers, and in some respects they are. But we are looking 
at a legal document, and we do have to prescribe things 
verbatim that we will need for a legal basis. We would expect 
them to meet all objectives, obviously, but we do state those 
type of things in the objectives so that legally, there is no 
confusion about what we are looking for. So in the objectives 
we do ask for things like ``the solution will meet all of our 
objectives and address interrelations.'' Obviously, that is 
laid out in all of the document. That is why we provide 
detailed business requirements. But it is a formal legal piece 
of the document.
    Same with the following issues. Consulting with VA experts, 
obviously they will be required to interface with our folks on 
a technical level to ensure that data is talking and the 
interfaces are occurring. There are IT requirements in here, 
too, in terms of industry standards. For instance, objective 
three talks about using an XML standard. That is an industry 
standard for data transmission. That type of objective would 
not come as a surprise to anybody in the industry. But again, 
we are looking at a legal document, so it is prescribed in 
there.
    The rest of the objectives I can go through. I believe they 
are self-explanatory, but perhaps not. Yes? Which one was that, 
Congressman?
    Mr. Filner. Number four.
    Mr. Wilson. Not later than March 1st of 2009, VA will 
determine if a solution meets post-9/11 GI Bill requirements. 
That ties to the March 1 deadline in our timeline, during which 
we will validate that the method that they use to do work and 
the information that we will be sending them and requiring back 
from them match.
    Mr. Filner. What if it doesn't?
    Mr. Wilson. Then we will have a series of backup plans that 
we will have to go to, depending on what the vendor solution 
is. Unfortunately, I cannot provide a lot of detail, because we 
do not know precisely what the vendor solution will be, and our 
contingency strategies are going to be based on what their 
solution will be, and how that relates to our existing 
strategies.
    Mr. Pedigo. Mr. Filner, if I might just add to that. We are 
going to be working closely with this contractor from the date 
that the contract is executed, until it is completed. And we 
are not going to wait until March 1 to take a first look at the 
system to make sure that all the data points are in there, that 
the interfaces are complete, and that everything works 
properly. There will be some testing that goes on as the system 
is being developed by the contractor, and that is just typical 
for the development of any information technology system. So it 
is not as though we are going to get to March 1 and all of a 
sudden, receive that system from the contractor, and start 
pushing the buttons that day to see if it works. We will have 
looked at it considerably before that point in time.
    Ms. Herseth Sandlin. If you do not mind, I think that the 
objectives and the mandatory tasks here in the PowerPoint are 
fairly self-explanatory. If Members have specific questions as 
they review them, they can pose them at that time, but I think 
there are a lot of other questions that need to be posed before 
we get to the specifics of the RFP. I would like to begin with 
the questioning now.
    Mr. Pedigo, you mentioned that this is--a secure IT 
strategy, is not anything new, this has been in the President's 
budget for at least 2 years. This has been the VA's intent, to 
have a rules-based engine; you are simply accelerating the 
strategy.
    What was the timetable for a strategy for the VA to move to 
a rules-based engine? If it was in the President's budget over 
the last 2 years, why has it not moved forward prior to this 
date? Did you always anticipate the need to use an outside 
vendor to help you move to that system?
    Mr. Pedigo. Well, the plan actually has gotten off track a 
couple of times. As I said, it was originally in the fiscal 
year 2008 budget, and we did not do it, and it was in the 2009 
budget----
    Ms. Herseth Sandlin. Why did you not do it then?
    Mr. Pedigo. I would ask Mr. Wilson to comment on the 
technical reasons why we did not do it then.
    Mr. Wilson. Our TEES initiative is a suite of applications, 
and the 2008 budget, and the 2009 budget as well, address the 
specific pieces that will be implemented in order to roll out 
the entire TEES strategy over a period of time. For example, in 
2008, one of the initiatives that we completed was 
implementation of the WEAMS application, which is an online 
tool for school, understanding which schools and programs are 
approved. That would be one piece that would plug into the 
overall TEES strategy. The piece that we have not really done 
any work on is the rules-based core of what would be considered 
the TEES engine.
    Ms. Herseth Sandlin. What was your original timeframe 
before the Post-9/11 GI Bill was passed? What was the timeframe 
that you were working on internally to move to develop the 
rules-based engine?
    Mr. Wilson. I believe it was 2013 for full deployment of 
TEES.
    Ms. Herseth Sandlin. We are trying to move to full 
deployment 4 years ahead of schedule?
    Mr. Wilson. We are hoping to get as much from the industry 
as we can in that period, yes.
    Ms. Herseth Sandlin. Did you anticipate in that timeframe, 
to complete it by 2013? Did you anticipate in your plan the use 
of an outside vendor to help you develop the IT solution?
    Mr. Wilson. I am not as sure of the specifics on that, but 
what I would say is that the discussions that we had concerning 
the post-9/11 GI Bill internally, including with our IT staff, 
it was very clear to us that we internally did not have the 
capabilities of standing this up.
    Ms. Herseth Sandlin. What do you need internally to do so?
    Mr. Wilson. I cannot answer that question. I do not know 
the answer to it. I will have to provide an answer in writing.
    [The response was provided in the Post-Hearing Questions 
and Responses for the Record, which appears on p. 42.]
    Mr. Pedigo. Madam Chairwoman, could I add something to 
Mr. Wilson's response?
    Ms. Herseth Sandlin. Yes.
    Mr. Pedigo. When we had the original plan in place, 
obviously, we did not know that we would get the Post-9/11 GI 
Bill. So initially, the plan was to build a rules-based system 
to overlay existing education programs. Then, when we started 
hearing that we might get a totally new program that we would 
have to administer, we put the brakes on further development of 
the TEES system, because we did not want to start down a road 
and invest money and time building out the TEES system into a 
rules-based system before we knew whether or not we would have 
a new GI Bill.
    And initially, we had given ourselves a generous amount of 
time to get it completed, by 2013. But when we saw the timeline 
on the new GI Bill, we realized that we were going to have to 
dramatically accelerate the process. And it is not at all 
unusual for VA or any element of Federal Government to use 
contractors for support to build an IT systems. In fact, I 
would venture to say that the majority of significant systems 
in VA and other agencies are built with substantial contractor 
support. So that part of our approach is probably not much 
different than what we would have utilized had we gone ahead 
with a full-blown TEES system.
    Ms. Herseth Sandlin. For the rules-based system, right? You 
did the 2008 piece of developing the TEES system internally. So 
it was more anticipating, in the timetable you had set for 
yourselves, year 2013, that moving to the rules-based engine 
may have required the use of an outside vendor. Is that----
    Mr. Pedigo. The 2008 and 2009 initiatives involve 
contractor support as well.
    Ms. Herseth Sandlin. They did?
    Mr. Pedigo. Yes.
    Ms. Herseth Sandlin. Okay. Could you provide the 
Subcommittee, if you can, in writing more detail of the process 
you used, and the vendors you used for the 2008 and 2009 piece?
    Mr. Pedigo. Yes.
    [The Subcommittee staff was subsequently briefed by the 
VA.]
    Ms. Herseth Sandlin. Okay. I will have additional 
questions. I will now defer to the Ranking Member, Mr. Boozman, 
for questions he has of the panel.
    Mr. Boozman. Thank you, Madam Chair.
    What percent of today's education benefit claims require 
off-line processing because of complexity?
    Mr. Wilson. Could you repeat the question, please?
    Mr. Boozman. What percent of today's education benefit 
claims require off-line processing because of their complexity?
    Mr. Wilson. All of our claims, all of our original claims 
now are processed--I am not sure if I understand the term 
``off-line,'' but all of our original claims are processed by 
humans right now. None are processed automated. About 10 
percent of our supplemental claims are processed through an 
automated process.
    Mr. Boozman. Can you explain why you chose a performance-
based approach to acquiring a new IT system?
    Mr. Wilson. I could not. I would have to get--can you?
    Mr. Pedigo. Mr. Boozman, one of the reasons we chose a 
performance-based approach is because that permits a Government 
agency to realize some of the best practices that are being 
used in the industry. I mean, the traditional Government 
procurement for an automated system is to provide a very 
detailed set of prescriptive language, basically a blueprint 
for how a contractor would develop every step of an automated 
system. And what we have found, based on experience, is that 
when we use that approach we sometimes do not get to take 
advantage of the best practices that are out there in the 
industry, because we channel potential contractors into a 
particular approach that does not allow them to utilize the 
full extent of the best practices that are out there. So the 
performance-based approach does allow us to do that by not 
being prescriptive, but by basically giving potential bidders 
some broad parameters and some basic rules, and asking them to 
give us a proposal that they think incorporates the best 
practices that are out there. And then we choose which one we 
want to go with.
    Mr. Boozman. Along with that, we have been told that the 
Department of Education has a system that, an automated system 
that processes benefits, that works well. Are there any other 
applications in Government that you are aware of? Have we 
looked into other applications where they are doing similar 
things, that perhaps could be used?
    Mr. Wilson. We are aware of the Department of Education's 
system. We have had discussions with them. Another similarity 
to what we are looking at would be, there are other claims 
benefit type things that are automated. For example, Medicare-
Medicaid I understand has a significant rules engine type 
capability.
    Mr. Boozman. It does make sense to try and look and learn 
from some of the other similar applications as to what is going 
on?
    One of the keys to successful application of IT will be the 
databases available to the rules-based system. A key data 
component will be the history of a member's service, which will 
to a large extent determine the veteran's benefits. How soon 
does DoD provide DD-214 information to the VA today, and how do 
they provide it?
    Mr. Wilson. The feed we receive from DoD is in essence 
real-time. Once the information gets to DMDC, the Defense 
Manpower Data Center, that information is fed to us. I believe 
it is nightly, is the run. I do not know specifically how long 
it takes to get from, perhaps, one of the service branches into 
DMDC, but the feed that we receive from DoD proper is a real-
time feed.
    Mr. Boozman. What would you guess, though, is the 
timeframe? How long does it take to push the button?
    Mr. Wilson. I would venture to say that it would be no more 
than about 2 weeks in most situations, from separation.
    Mr. Boozman. Thank you, Madam Chair.
    Ms. Herseth Sandlin. Thank you, Mr. Boozman. The Chairman 
of the full Committee has graciously deferred to Mr. Hall, who 
has to be on the floor in a few minutes for a statement. I 
recognize Mr. Hall for questions.
    Mr. Hall. Thank you, Madam Chair, and thank you, Chairman 
Filner.
    Just a couple of quick questions. When was the RFP expanded 
to four vendors? Or is it actually going to four vendors?
    Mr. Wilson. The RFP was provided to the four vendors on 
August 29.
    Mr. Hall. That is the first time it was provided to 
anybody?
    Mr. Wilson. No, that is not the first time it was provided 
to anybody. Originally, we had contacted OPM, and we had begun 
work under a different contracting vehicle called the Training 
and Management Assistance vehicle. And we had originally put 
out an RFP under that vehicle.
    Mr. Hall. And are any of the principals in the four vendors 
who are currently under consideration former secretaries or 
undersecretaries of the VA?
    Mr. Pedigo. We do not have any information on that, at this 
point.
    Mr. Hall. Okay, thank you. What criteria are you using to 
pick them? And do these four have a past record doing work for 
the VA?
    Mr. Wilson. Could you repeat the question?
    Mr. Hall. What criteria are you using to pick from the four 
vendors, and have any of these four vendors any past record 
doing any work for the VA?
    Mr. Wilson. I am personally not aware of any work that they 
have done for VA. The formal evaluation criteria I am not 
familiar with, but there is a formal document that defines the 
evaluation criteria.
    Mr. Hall. Well, that is good to know. A year ago, the 
education call center, the 800 number, was contracted out to 
``free up employees to do cases.'' It turned into a disaster, 
as has been described, bad for vets calling in and more work 
for employees since contractors could not answer the questions. 
As a result, the VA eventually brought the work back into the 
VA and it is now being done by Federal employees at the 
Muskogee Regional Office.
    The question is this. You contracted out the education 
division call center. What did your evaluation of the 
contractor's performance show in terms of costs, quality, and 
timeliness? And how does the work being done in-house now 
compare with the work that was done by the vendor?
    Mr. Wilson. The temporary contract call-center that we had 
in place was for short-term duration, and it was specifically 
designed as such. I think we have been very candid with the 
Subcommittee concerning what we were hoping would have been 
better quality on some of the answers that were provided to the 
callers, and we regret that. However, the core issue that we 
were addressing with the contract call center was a timeliness 
that we were delivering to veterans in terms of claims 
processing. That was what it was designed to address.
    At the time we implemented that call-center, we were 
processing original claims in 46 days. We had that contract in 
place for 
6 months. Within a year, we had cut that timeliness in half, to 
about 23 days, and we have continued to improve from there. So 
I believe it met the core intent of what we were trying to do, 
with reducing the call volume, because of the high volume of 
pending claims. Our current call volume is the lowest it has 
been in 6 years, and I would again attribute that to the fact 
that we were able to process a lot more claims. Veterans simply 
don't need to call the way they use to find out where their 
check is. The current education call center in Muskogee is 
performing very well. They have about a 1 percent abandoned 
call rate.
    Mr. Hall. That is good. That is what we are all looking 
for.
    The solicitation describes extensive training that contract 
employees will need in privacy and in security, as well as 
substantive skills relating to education programs. How much 
time do you estimate between the time that the contract 
employee is brought on board, and when he or she will be fully 
trained in all these aspects, to do the job?
    Mr. Wilson. Contract employees will not be doing work 
commensurate with our adjudicators. So in terms of the training 
that they will be required to go through, it will be minimal. 
Again, what we are looking for is in essence a rules-based type 
process. We would not anticipate significant numbers of bodies, 
certainly not at the decisionmaking level. That will simply not 
be there.
    The work that could perhaps be done by the contractor would 
be administrative support work. For example, if documents are 
received in a hard copy format, we would expect a contractor to 
have those documents scanned into the system and available. 
That type of work.
    Mr. Hall. And that is also works that could be done by VA 
employees, I assume.
    Mr. Wilson. Yes, that is correct.
    Mr. Hall. We have, in our offices, as Congressman Snyder 
and I were talking about, we have Lockheed Martin computers, 
but we have people in our offices who actually work them and 
fix them even most of the time, unless they are too broken down 
for us to fix them. But you know, the data entry and the 
material that is entered into them for their use for our office 
is done in-house. So did you consider just buying the IT 
system, and having your employees do the data entry for the 
rules-based decisionmaking?
    Mr. Wilson. What we tried to do is give the contractors as 
much flexibility as possible to propose a solution. It could be 
that their solution calls for that. Again, we are not going to 
know until we know what the proposals are.
    Mr. Hall. Thank you, Madam Chair.
    Mr. Pedigo. Mr. Hall, can I just add one thing to that?
    Our expectation, our--I guess you could say, if we could 
get the ideal rules-based system, and we think there is a 
chance that we could get that, the vast majority of cases will 
not require data entry. And that is because what we envision, 
if things go according to our understanding of rules-based 
systems, is that a veteran would be able to go online when he 
or she wants to apply for the education benefits, key in, 
themselves, certain basic information; name, maybe Social 
Security or some other identifier information, and then send 
that. And it goes into the rules-based system.
    And that rules-based system then would pull information 
from different sources. It would pull some information from DoD 
on the service. It would pull perhaps some information from the 
U.S. Department of Education on institutions of higher 
learning. And all that information would be pulled and then run 
through the rules that have been built into that system. And 
our hope is that in most cases, in a very short period of time, 
maybe even less than a minute, that system will provide to that 
individual, while he or she is still online, with the result of 
their request. It might tell them that they have been approved 
for the education benefit and that the institution of higher 
learning that they wish to attend and that the course that they 
want to pursue has also been approved. And so that there might 
not be any need in many cases for any type of data entry.
    Ms. Herseth Sandlin. Thank you, Mr. Hall. Mr. Filner?
    Mr. Filner. Thank you, Madam Chair. I would say that I do 
not have a lot of confidence that this is not going to be a 
disaster, just listening to what has been said. Usually, when 
contracting out is argued for, the argument is to save money. 
Now, you are not going to fire anybody, so it does not look 
like we are going to save any money. What is this going to cost 
us roughly, do you think?
    Mr. Wilson. The legislation provided $100 million. We are 
waiting for the proposals from the vendors, and evaluation 
criteria will include consideration of the cost proposals that 
they are submitting.
    Mr. Filner. And this could go as high as $100 million?
    Mr. Wilson. I would not venture a guess. I was just 
articulating----
    Mr. Filner. So we have no idea what this is going to cost 
us, what we are getting here? Everything is--I just find this 
to be simply incredible. I mean, I have never heard an RFP go 
out with so little--you do not know what you are going to get. 
You do not know how much it is going to cost. You do not know 
what is going to happen if it fails. I mean, what are you 
getting us into here?
    Mr. Pedigo. As I explained earlier, Mr. Filner, this is a 
different approach than is often used with Government 
contracting. And we think it is the best approach because we 
have a good chance here of getting the very best practices that 
exist in the private sector. And----
    Mr. Filner. How do you know? You just said you did not know 
how much it is going to cost.
    Mr. Pedigo. Well, I said we had a chance of getting that. I 
do not know with certainty that we will, but I think there is a 
high likelihood that because of the competitive nature of the 
vendors out there who will be submitting bids, that they are 
going to try their best to come up with a better solution than 
their competitors. And we will evaluate those solutions. And 
then at that time we will make a decision as to which one is 
best, and we will implement that process.
    Mr. Filner. I do not know how you are going to make that 
decision with the kind of information you have been giving me. 
But, did I hear that you gave this to 10 vendors to begin with? 
I mean, this does not just go out on the web, this went out to 
10 specific vendors?
    Mr. Wilson. No.
    Mr. Filner. What did you say?
    Mr. Wilson. That is not correct.
    Mr. Filner. What did you say?
    Mr. Wilson. The original Request for Proposals was put out 
under a contracting vehicle referred to as a Training and 
Management Assistance vehicle. I believe there are 32 industry 
vendors that are already approved under that vehicle, and it 
was offered to those 32 vendors. And based on the discussions 
and the involvement of our Office of Information and 
Technology, OI and T staff, our technology staff, that that 
represented the vast majority of the universe that would be 
capable of delivering this system.
    Mr. Filner. So we do not know if the answer is out there on 
number 33, or number 80, or some little company in San Diego, 
California--in my district--that may have an answer, but they 
would not even get this--right?
    Mr. Pedigo. You know, utilizing the approach that----
    Mr. Filner. If Halliburton gets this, you guys are in 
trouble. Do we know if Halliburton was on that list?
    Mr. Pedigo. I am not aware that they are, or that they are 
not.
    Mr. Filner. Who put together--this is your proposal, 165 
pages as I count. Who put this together?
    Mr. Pedigo. VA staff.
    Mr. Filner. Did you go out to a contractor to put out this 
RFP? I mean, you guys have the expertise to put out this 
incredibly detailed proposal, and you do not have the expertise 
to do the job?
    Mr. Pedigo. We have utilized expertise from various 
elements of VA, from our contracting experts to our general 
counsel----
    Mr. Filner. Which is what you could do for the----
    Mr. Pedigo [continuing]. The staff that is in the education 
program, and we had some----
    Mr. Filner. So you spend the whole last month putting this 
thing together? Instead of figuring out how you would do the 
job?
    By the way, I saw the timelines. What happens if we wait 
until March 1, 2009, to determine if the contractor meets the 
objectives, and what if it doesn't?
    Have you ever heard of the Deep Water Program for the Air 
Force? We did this same thing. We gave out billions of dollars 
worth of RFP, and they were supposed to supply cutters and 
helicopters for the Air Force. And the whole thing failed. The 
cutters that they delivered fell apart because they were not 
strong enough.
    So there is a chance, a slight chance, that this might not 
work. What are you going to do then?
    Mr. Pedigo. We are planning for the possibility that it 
could fail. Which means that we are putting together a 
contingency plan.
    Mr. Filner. That means we are going to do it ourselves.
    Mr. Pedigo. That means that we are going to do what a good 
business operation would do, and that is not put all your eggs 
in one basket----
    Mr. Filner. I think a good contingency plan should be----
    Mr. Pedigo [continuing]. And to develop a contingency plan 
that we could implement just----
    Mr. Filner. Maybe the contingency plan should be the plan. 
I mean, why--if you have a contingency plan for non-use of 
contractors, why do we not just use that?
    Mr. Pedigo. It will be available for use if we believe 
that----
    Mr. Filner. Can you give us the contingency plan, please?
    Mr. Pedigo. Well, we have not fully developed a contingency 
plan. It is under development as we speak.
    Mr. Filner. This is going to be a disaster, Madam Chair.
    Ms. Herseth Sandlin. Mr. Snyder, did you have questions for 
the panel?
    Mr. Snyder. Thank you.
    Mr. Pedigo, you started out the way I--I wanted to ask--a 
veteran would go online, enter some fairly basic information. 
Is it your expectation that they could enter that information 
without knowing what school they may be interested in? Are they 
going to be able to--``I just want to check my eligibility for 
benefits, enter that information,'' and get that response back 
right away?
    Mr. Pedigo. They would be able to submit the information 
without the school. What we could do at that point is determine 
that they would be eligible.
    Mr. Snyder. Eligible. And then another part of it is, yeah, 
I could say, ``Okay, I have been accepted at the University of 
Arkansas, is the University of Arkansas in the system?'' And 
then you could--the system could check that and say, ``Yes, the 
University of Arkansas, this program is eligible?'' And then I 
suppose a third part of that would be, ``I have been 
accepted,'' and you hope to have it set up so that the program 
would directly interface with the University of Arkansas; is 
that correct? So that they could corroborate that ``yes, you 
are accepted,'' and set up a payment plan directly to the 
university? Is that----
    Mr. Wilson. Correct. The final piece, the school would 
simply report to us the enrollment information for the veteran.
    Mr. Snyder. Now, from the standpoint of the veteran, if I 
understand what you all are saying, I am going to go on this 
Web site. I assume it will say--may not even have the 
contractor's name, just say the veteran's, your eligibility for 
the GI Bill. You have talked about a secure location. Geography 
of that will be determined by the contractor; is that correct? 
You are not requiring them to be under a Federal building 
somewhere?
    Mr. Wilson. We are requiring them to be in the 50 States, 
or the District of Columbia.
    Mr. Snyder. And so, as long as everything goes smoothly, 
everything is fine. If it comes back indeterminate or something 
like that, so what happens then? What will the veteran be told? 
Will the veteran be told, ``Go to a different Web site,'' or 
will it just say, ``This is taking longer, your claim number 
such-and-such is going to be processed by a Veterans employee 
at this''--are they going to be given some information of who 
to follow up with?
    Mr. Wilson. Yes. If the case would be rejected, for lack of 
a better term at this point, then we anticipate a notice being 
provided to the veteran. And then at that point, that claim is 
going to go to a VA employee. And they would be contacting----
    Mr. Snyder. And they would--their follow-up at that point 
would no longer be through this Web site or this program.
    Mr. Wilson. Correct.
    Mr. Snyder. They would know who they were supposed to 
follow up with? Either a name or a phone number or something?
    Mr. Wilson. Correct. we would develop in the same manner in 
which we do now. If we need to write a veteran for a specific 
piece of information, we would do so.
    Mr. Snyder. Is it your anticipation that this will be the 
only way for a veteran to access GI Bill benefits, is online?
    Mr. Wilson. No.
    Mr. Snyder. Okay. What specific challenges do you see out 
there with regard to Reserve component members?
    Mr. Wilson. I would not anticipate any specific challenges 
for them, in terms of ease of applying for the benefit. The 
will be entitled now to the same benefit as the active-duty 
members.
    Mr. Snyder. The challenge is, right, your end of the 
contract?
    Mr. Wilson. The challenge from our end is ensuring that we 
have the most accurate, current data for the Guard and Reserve 
member. There are some specific exclusions for active service 
in this Bill that we have not had to account for before. We are 
working with DoD to receive that information. Additionally, 
since the Guard and Reserve members will be accruing perhaps 
more active service than they had when they initially applied 
for benefits, we will be required to constantly be receiving 
updated active-duty information from DoD, because the Guard and 
Reserve members especially could be in a situation where--for 
instance, when they first applied for benefits, they qualify at 
the 40 percent tier, because they have between 3 months of 
active duty and 6 months of active duty. If he or she goes on 
active service again, they will qualify at a higher tier. So 
the next time they go to school they will get more----
    Mr. Snyder. You had mentioned earlier about--I forget who 
asked the question about access to DD-214 information. You said 
about 2 weeks, or real-time. For a Reserve component member, 
are you going to have the ability to actually access military 
records? There is not going to be a transfer of data; correct? 
Their record will be an ongoing record.
    Mr. Wilson. We are working actively with DMDC on that issue 
right now. Our anticipation is that we will in fact have that 
data as part of our feed.
    Mr. Snyder. My last question is--I was very supportive, as 
is I think everyone on this Committee, of the legislation. But 
we were aware it was put together pretty quickly. Sometimes in 
the spirit of getting something passed, it can move faster than 
you want it to, and I think there was great recognition there 
was an opportunity to pass this bill. Have you seen anything in 
the legislation, have you gone through it, that you wish 
Congress had done a bit differently, that might make your job a 
little easier? Or you see some glitches there? Or have you been 
in communication at all with the Committee about things that 
you see? I mean, things can certainly be fine-tuned.
    I will put that another way, which is--if you cannot answer 
that, if you see those things I hope you will let us know, 
because we do not want to change things while you are in the 
midst of a contract proposal. On the other hand, sometimes 
improvements need to be made and hearing them from you might be 
helpful.
    Mr. Wilson. There are some technical issues that we think 
would clarify a lot of the points and make it easier to 
administer. We have been working with the Senate Veterans' 
Affairs Committee staff along those lines, and I believe there 
is a technical amendment in the Senate right now. I do not 
believe that there is a companion legislation in the House.
    Mr. Snyder. Maybe you could be in touch with our staff here 
also.
    Thank you, Madam Chair.
    Ms. Herseth Sandlin. Thank you, Dr. Snyder.
    Mr. Boozman, did you have additional questions you would 
like to pose at this time?
    Mr. Boozman. No, I would just like to make a comment. The 
$100 million has come up, and the reality is that that was in 
the bill. It is not a VA request or VA's doing. It was put in 
the Bill because as we went along, there was concern about the 
complexity of this thing, and I voted for the bill so I voted 
for the $100 million, as all of us did, okay? So again, that 
does not have anything to do with you all. So I do not think 
you should have to defend that.
    The other thing is that what I would like to do is see this 
thing move forward, and then look again as you formulate your 
plans. I do not think it is fair--and have not really decided 
where this thing ought to go, because I have not seen exactly 
what you are going to do. But I do not think it is fair to 
arbitrarily say that it is bad to not contract out. The 
Committee, my office, we do not do in-house, we do not take 
care of our computers. We have chosen to contract that out 
because we think that that is the best way to take the 
taxpayers' money and utilize it most efficiently. In the sense 
we could hire a part-time veteran or a part-time person or 
whatever to do those functions, but we feel like that would be 
much more expensive than doing the route.
    So again, what I would like to do is go forward and kind of 
see where it goes. But I do think that the hearing today has 
been good. You have heard a lot of concern. You heard concern 
from the American Legion this morning about the direction that 
we were going. I really would like for you also--we are far 
enough along in the IT stage that there are other agencies I 
think that are doing similar functions. And I really would 
encourage your people to be visiting with them, to see how they 
have tackled some very complex similar things, to see if you 
could put some of their thoughts to work.
    And you know, again, I know you want to do it. I know that 
you all are working hard. I know you want to come up with a 
system that we can all be very proud of, and very efficient, 
that will service our veterans in the very best way that we 
can, and again, use our taxpayers' money wisely.
    Mr. Filner. Will the gentleman yield for 1 minute?
    Mr. Boozman. Yes, sir.
    Mr. Filner. You state a very important point, that 
contracting out is not a priori wrong. But we have to come to a 
judgment based on the information of the people doing the job. 
And in the way VA answered the questions today, or did not 
answer the questions, I do not have the confidence that it is 
being done right.
    You say, ``Well, I hope that it goes on and I hope that it 
comes out right.'' You have to make a judgment from the 
information that you have. Just from the fact that this is a 
very complicated, as you stated, piece of the plan the original 
testimony only lasted 3 minutes to tell us what VA is doing. 
And then when you all complained, they put together the 
PowerPoint presentation. Does that give you confidence that 
this is being handled correctly? That does not give me 
confidence. That is all I have to say.
    I yield back.
    Mr. Boozman. We are complaining today, again. Like I said, 
what I would like to do is just see the process. I would like 
to see the process go forward, and see what is to come. I mean, 
this is just the very, very start of the process.
    Mr. Filner [continuing]. Tens or $100 million----
    Mr. Boozman. Well, again, though----
    Mr. Filner. I hope they will tell--can we make that, Madam 
Chair, a requirement that before they award any bid, we see 
what the bid is?
    Ms. Herseth Sandlin. We are going to have another hearing 
in a couple of weeks. It looks like it will be held about the 
time that you are looking to formally award the contract. So I 
think that it would be, understanding that there are certain 
things that you probably can and cannot share with the 
Committee in the contracting process, as soon as we get that 
hearing scheduled, we would appreciate working with you on your 
timeline during that same week or the following week, in making 
a decision on a final award, so that we can continue to get 
more information from you.
    Let me just state for the record that I have had concerns 
for a number of months now that this was going to be difficult 
to administer, and have repeatedly stated that the job of this 
Subcommittee, regardless of what the new GI Bill is going to 
be, was going to be an important one to make sure that it was 
implemented properly, effectively, and in a timely fashion.
    I appreciate, Mr. Pedigo, that you may have a chance to get 
the best system in place. I am worried about the timetable. You 
essentially wanted this same system by 2013, and you want to 
get a system in place that will work by 2009, by the middle of 
2009. So, we are going to stay on top of this and keep asking 
questions. If we had not had this hearing today, if we had not 
been asking questions before this hearing, we were getting some 
information but not nearly the kind of information that I think 
the entire Congress needs, to make sure that a very important 
piece of legislation that we just passed and signed into law 
actually works for veterans the way we want it to.
    My question is, have you briefed anyone in the Senate, 
either formally, in a hearing before the Senate Veterans' 
Affairs Committee, or any Member of the Senate, on your 
contracting plans? Or staff?
    Mr. Pedigo. Well, there may have been some informal 
discussions with an isolated staff member. I have not been 
privy to that. But I can tell you there have been no formal 
briefings, and no formal discussions with Members on the Senate 
side.
    Ms. Herseth Sandlin. Right. As I said to the American 
Legion earlier today, I want to reserve judgment on what you 
are doing here until we get more information, as we did today 
and will be over the next couple of weeks. inI share Chairman 
Filner's concern, as it relates to what seems like a pretty 
quick decision to move to contracting, and yet contingency 
plans are yet under development. I think that it is important 
for the Subcommittee to understand what the discussions were at 
the VA after this law was implemented.
    Did you do any kind of cost-benefit analysis as to what 
this would take to administer on an accelerated timetable, with 
a rules-based engine, getting an IT solution, versus hiring 
perhaps more employees to help administer the benefit, taking 
advantage of your in-house expertise? Looking at hiring 
opportunities of newly returned veterans that might have an 
interest in working in the VA in the Veterans Benefits 
Administration to help fellow veterans access their education 
benefits, and to work on a timetable of moving to your IT 
solution over a period of two, three, 4 years versus less than 
a year? What were the discussions in your office about those 
two options, and any kind of analysis that was done to look at 
the possibility of moving to this by August of next year?
    Mr. Pedigo. You know, informally, with staff in VA, there 
was a lot of discussion, and you know, with the leadership, 
with my boss, the Under Secretary, the Acting Under Secretary, 
there was some discussion. And the Under Secretary and 
Secretary in the senior leadership of the VA, you know, 
considered, you know, the various options, and made the 
decision that the best approach would be to contract for a 
secure IT rules-based solution.
    And if I could, I just want to go back to a point I made 
earlier. You know, contracting for an IT solution is something 
that is done in Government all the time. That has become the 
norm for how we build information technology systems. So what 
we are doing is really consistent with what other agencies and 
other elements of the VA would do, if they had to build a 
complex system like we are building.
    Ms. Herseth Sandlin. Mr. Pedigo, I do not disagree. I think 
I heard your statement earlier in the week about what veterans 
might consider. Would they prefer a system that could process 
their claim in seconds or minutes, or 10 days to 2 weeks? 
Certainly with this new generation of veterans who are so IT-
savvy themselves, they would prefer something that they could 
enter in and that they would know.
    I do not disagree with that. Here is my concern. You are 
trying to accelerate your own internal timetable of doing this 
by 2013, to doing it by 2009. As you have described to the 
Subcommittee today, it will be based on having to get 
information from the Department of Defense for information that 
is fed into the system. I have been in Congress for just over 4 
years, and every time it seems when we have a problem of 
adequate and timely response to healthcare benefits, for people 
who are not yet medically discharged, or medically retired from 
service, the DD-214s that we have been hearing about in our 
field hearings, the memorandum of understanding that took years 
to get done with the DoD, and sharing healthcare information.
    That is why I am going to invite the Department of Defense. 
They have ignored the last two field hearings we have had, to 
participate in our follow-up Subcommittee hearing in a couple 
of weeks, to see just how well they are working with you, 
cooperatively, to make sure that the information that they have 
for active duty and Reservists, as Dr. Snyder was pursuing, 
that the information is actually available to get into this 
feed, and get into this system, and workable by August of 2009.
    I think you can appreciate the skepticism that some of us 
have. Philosophically, I do not necessarily disagree about the 
importance of contracting for specific functions to help design 
software, to design a system, especially in IT. My concern is 
that you seem to have rushed to this judgment, and we have no 
contingency plan. I would respectfully request and ask for a 
time that you can give me, either Mr. Pedigo or Mr. Wilson, in 
which you can provide the Subcommittee the contingency plan. If 
your timetable here for seeing if the IT solution is working, 
we need to know what the contingency plan is, obviously before 
March 1 of next year. Preferably, I would like to see a 
contingency plan developed by the end of this month. Is that 
possible?
    Mr. Pedigo. We believe that in order to really develop a 
full-blown contingency plan, that we need to see first what the 
solution is that the winning contractor is going to propose. So 
I would----
    Ms. Herseth Sandlin. But will you not have that by the end 
of this month?
    Mr. Pedigo. We should have that. We plan to award at the 
end of the month. And so at that point, we will know what the 
solution is, and we will need to put the finishing touches on 
the contingency plan that the Education Service has already 
begun developing.
    Ms. Herseth Sandlin. Mr. Wilson, you have already begun 
developing the contingency plan. When do you think you could 
provide the Subcommittee a contingency plan?
    Mr. Wilson. I would hope that within 30 to 45 days after 
award, we would have had enough specificity from the 
contractor, enough technical interaction, that we would have 
identified the major risks, and identified contingencies for 
those risks that point.
    Ms. Herseth Sandlin. But when I say ``contingency plan,'' 
and you are kind of tying it to what the contractors' bids are 
going to look like and who you award it to; is the contingency 
plan going to be if they fail to meet certain targets? Or is 
the contingency plan going to be an entirely separate way of 
administering the benefits, should the rules-based engine not 
be fully developed?
    Mr. Wilson. I understand. The contingency plan could be 
exactly what you described, a separate independent method if 
all fails, worst-case scenario type situation, yes. And we are 
working on that fail-safe, for lack of a better term I guess.
    Ms. Herseth Sandlin. So you do not necessarily need to wait 
for the bid to be awarded before you can develop a plan?
    Mr. Wilson. That is correct, yes. Yes.
    Ms. Herseth Sandlin. Okay. So that is something you could 
get to the Subcommittee maybe before 30 to 45 days after the 
proposal is awarded?
    Mr. Wilson. Correct.
    Ms. Herseth Sandlin. Okay.
    Mr. Wilson. If I may, Madam Chairwoman, just to add a 
little bit on to that. You know, once we see the proposed IT 
solution, I mean, our contingency plan could involve kind of a 
multifaceted plan, where we would say, you know, if there are 
five pieces to be--IT solutions being proposed, if piece ``A'' 
does not work by 6 months into the contract, but the other 
pieces are working, then we would need to go one way in terms 
of contingency plan. If piece one and three are not working, 
our contingency plan might be different because it is entirely 
possible that some portions of what the contractor would build 
for us will work perfectly well, and we could go ahead and 
utilize them but have to go to a contingency plan to support 
those functions that have not worked.
    Ms. Herseth Sandlin. I think I understand what you are 
saying. I know that Mr. Filner has. For example, if you have 
the contractor develop the rules-based engine and the trouble 
seems to be with processing reservist claims, maybe because you 
are not getting adequate information from the DoD. Just an 
example, to transferability issues--again, working with the 
DoD--you would have a contingency plan where VA employees--the 
only way to process those claims, then, would be through the 
system that exists now, or what you would set up in a 
contingency to hire an additional individuals to handle those 
claims?
    Mr. Wilson. Yes, yes.
    Ms. Herseth Sandlin. Mr. Filner?
    Mr. Filner. Yes, just briefly. I hope you and Mr. Boozman, 
Madam Chair, will join me in a letter to the Secretary that 
asks the following: number one, he show us--there are four 
finalists, I understand? I do not know how we got there, but 
you have four finalists? Is that what I heard?
    Mr. Pedigo. We have been advised by counsel that we should 
not discuss----
    Mr. Filner. All right, I want the letter to say that we 
want to see the original list of 32 or 33 bidders and the list 
of the bids of the finalists. I want to know who you have 
awarded the bid to before it is officially awarded and if that 
takes us meeting in Executive session to get that because you 
have been advised not to, you can give it to us in Executive 
session. I want to see all this stuff. Based on this 
performance here, I do not have confidence. So I want to see, 
again, the original list of 32. I want to see the finalists, if 
there are four, or eight, or 10. I want to see all the bids of 
those four or eight or 10, and I want to know who you are going 
to award the bid to before you award the bid.
    I hope you will join me in a letter to request this 
information. If we have to do that in Executive session, we 
should do it. We need more information, Madam Chair. We could 
pass a Sense of the House resolution and go forward. We could 
do that. I am prepared to do something like that. But we do not 
have the confidence that is needed here. VA is claiming, ``we 
can't give you this stuff.'' Well, I do not trust them. And so 
if we have to do it in a secret session, we will do it in a 
secret session. But I hope you will join me in that.
    You have any problem with that information coming to us?
    Mr. Pedigo. I am sure that when that letter gets to the 
Secretary, he will consider----
    Mr. Filner. Do you have any problem with that, giving us 
that information in Executive session?
    Mr. Pedigo. I will defer to the Secretary to respond to 
your letter that you plan to send.
    Mr. Filner. Tell him what is coming.
    Thank you, Madam Chair.
    Ms. Herseth Sandlin. Mr. Boozman?
    Mr. Boozman. The only comment that I would have, Madam 
Chair, is that we might consider maybe having--I share the 
Chairwoman's concern with sometimes the lack of cooperation 
with DoD. But we might consider having perhaps a joint hearing 
with Personnel, and then ask them to have DoD and us ask, and 
have you guys, and really kind of hash out some of these 
potential problems. I think if working with the Personnel--it 
would be Personnel, would it not? Is that Ms. Davis? Yes. You 
know, working with them, and them sharing concern along with 
us, that that might be helpful in everybody working together.
    Ms. Herseth Sandlin. I appreciate that, Mr. Boozman. I 
think regardless of how things unfold from here, whether it is 
the perfect system that is developed in the IT solution, 
whether it is the contingency plan, or whether it is an 
entirely separate manner of implementing the bill, the 
legislation, the DoD sharing of information is going to be 
essential to any effective way for the VA to administer this 
new and complicated benefit. I appreciate the suggestion, and 
will look forward to having a joint hearing in that capacity.
    If I have additional questions I will submit them in 
writing. However, since we do plan to have a follow-up hearing 
in just a couple of weeks, we will have another opportunity to 
visit with you again. The Committee Counsel, working with your 
counsel, will hammer out what can be shared and in what 
setting, as it relates to the contracting process that you are 
seeking to complete within the next two to 3 weeks. We will 
work with you in good faith to meet the needs of the Committee, 
as well as respect the needs of the process that you have under 
way.
    We hope that you will understand why we want to get more 
information, to make sure that for our constituents that are 
entitled to this benefit, that by August of next year there are 
not problems in administering it. We appreciate the testimony 
and the information, but we also look forward to additional 
information that you will be presenting to us as soon as 
possible, and we will work closely with you to get it. Okay?
    Thank you, again, for answering our questions today. As 
Chairman Filner indicated, we do hope that Secretary Peake is 
willing to join us maybe at the next hearing, where certainly 
we will be asking questions as it relates to wanting to make 
sure he is fully informed of our concerns. We look forward to 
following up on the implementation status of the new public 
law.
    With that, the hearing now stands adjourned.
    [Whereupon, at 2:32 p.m., the Subcommittee was adjourned.]



                            A P P E N D I X

                              ----------                              

   Prepared Statement of Hon. Stephanie Herseth Sandlin, Chairwoman,
                  Subcommittee on Economic Opportunity
    I would like to take a moment to remember the lives lost on the 
morning of the September 11, 2001. As our country continues to heal 
from this tragic event of 9/11, we must never forget that today we have 
thousands of troops serving honorably in Iraq and Afghanistan, many of 
which have served in multiple deployments overseas. I would like to 
express my sincere thanks and appreciation of our men and women in 
uniform who have answered the call to duty, and reinforce my commitment 
to serve them honorably as they continue to serve us all.
    Keeping this in mind, we must never forget that today's 
servicemembers are tomorrow's veterans who will require the resources 
to succeed in life after military service. To this end, this 
Subcommittee has held numerous hearings, here in Washington, DC and our 
Congressional districts, on programs critical to their continued 
success. One such program in which we were able to make significant 
progress is the Montgomery G.I. Bill.
    Public Law 110-252 will provide our veterans the educational 
entitlements needed to attend a college or university of their choice. 
Certainly, this landmark legislation makes significant improvements but 
we must remain vigilant to ensure Congressional intent is fully 
implemented and the Department of Veterans Affairs is afforded the 
resources to meet the needs mandated by Congress.
    Today's hearing will give the Subcommittee the opportunity to 
better understand the VA's implementation plan as required by Public 
Law 110-252. As many of you may be aware, there have been numerous 
concerns over the VA's plan to contract out services, contracting 
transparency, and time constraints to implement the requirements of the 
newly enacted law.
    Last month we sent a letter inviting Secretary Peake to participate 
in today's hearing. This letter specifically states that the purpose of 
today's hearing was to have VA present its plan on implementing Chapter 
33 with as much detail as possible. I am deeply disappointed by the 
testimony that was submitted and hope we can be properly informed about 
VA's plan to meet Public Law 110-252.
    I look forward to working with Ranking Member Boozman and Members 
of this Subcommittee to provide oversight on the implementation of the 
new Montgomery G.I. Bill requirements.

                                 
  Prepared Statement of Hon. John Boozman, Ranking Republican Member,
                  Subcommittee on Economic Opportunity
    Good afternoon. First, let me concur with the Chair's 
dissatisfaction with VA's prepared testimony. I believe the invitation 
letter was sufficiently detailed regarding our expectations for today's 
hearing. While I recognize VA may be constrained regarding competition 
sensitive information, describing the Department's desires expressed in 
the Statement of Objectives provided to industry is well within their 
authority. I expect the Department to provide the Subcommittee with a 
very detailed briefing on those objectives and the winning bidder's 
plan to meet them very shortly after contract award.
    It is both ironic and fitting that we are holding a hearing on the 
Post 9/11 GI Bill exactly 7 years after that cowardly attack on 
America, an event that contributed to today's global conflict.
    The war on terror has highlighted the need to create a new GI Bill 
that reflects the increased obligations of today's service members and 
their families.
    In addition to caring for our dead and wounded, there is no more 
important benefit to offer a path to personal growth through a generous 
education benefit.
    As you may remember, the Subcommittee on Economic Opportunity, 
under Chairwoman Herseth Sandlin's leadership, reported a GI Bill that 
I believe was superior in nearly every way to what eventually became 
law. Our bill, H.R. 5684, was simpler to administrate, was more 
flexible and offered $19,000 per year for full time enrollment. Our 
bill was eventually passed by the Full Committee but failed to make it 
to the floor. So we are here today to hear VA describe how they intend 
to implement the very complex program in chapter 33.
    Frankly, I am very concerned that despite VA's best efforts, they 
will not meet the August 1, 2009 deadline. We are aware that VA intends 
to contract out a significant portion of the effort to bring the 
program online, but they now have less than 11 months to get the work 
done. I hope we have not given them an insurmountable task.
    I am also aware there is some opposition to VA's intent to contract 
out development of the new IT system and possibly some personnel 
issues. I would remind those who oppose using modern information 
technology to manage the system that it is the mot promising way to 
shorten the processing time. While a small number of cases may require 
manual intervention because of their complexity, the vast majority 
should lend themselves to automated processing. I am confident that if 
we asked veterans whether they would prefer the current method that now 
takes about 20 days or an automated process that could provide an 
answer in minutes, they will choose the latter. I believe there is an 
example of this at the Department of Education and I will ask VA 
whether they have looked at that model.
    As to whether the IT should be developed in-house or via a 
contract, those who point to the failure of COREFLS should also 
remember that VETSNET is primarily an in-house project that has been in 
development since the late eighties and has experienced numerous 
failures and has cost the Government over $600 million. From reading 
VA's testimony, there is ample opportunity for VA employees to remain 
employed in the education service or elsewhere within VBA. My point is 
that we have given VA a complex new program to manage and until their 
selected approach to implementing that program fails, we should not 
interfere. This should be about meeting the needs of veterans seeking 
an education, and no other agenda.
    Madam Chair, this Subcommittee worked hard for 4 years in a 
bipartisan way to do the right thing by those who have born the battle. 
If VA believes they need any additional legislation, I hope they will 
provide that to us in time for us to act. I look forward to hearing 
from the Department today and I hope their testimony will not only 
describe the major features of the proposed contract, but also provide 
a frank and candid assessment of the challenges they face.
    I yield back.

                                 
  Prepared Statement of Keith Pedigo, Associate Deputy Under Secretary
  for Policy and Program Management, Veterans Benefits Administration,
                  U.S. Department of Veterans Affairs
    Good afternoon Chairwoman Herseth Sandlin, Ranking Member Boozman, 
and Members of the Subcommittee. I appreciate the opportunity to appear 
before you today to discuss the Department of Veterans Affairs (VA) 
strategy for implementation of the Post-9/11 GI Bill (chapter 33 of 
title 38, United States Code). Accompanying me today is Mr. Keith 
Wilson, Director, Education Service. My testimony will highlight the 
staffing and information technology solutions being pursued by VA. I 
will also discuss outreach efforts related to this new education 
benefit.
    The Post-9/11 GI Bill program will provide veterans, 
servicemembers, and members of the National Guard and Selected Reserve 
with educational assistance, generally in the form of tuition and fees, 
a monthly housing allowance, and a books and supplies stipend, to 
assist them in reaching their educational or vocational goals. The 
Post-9/11 GI Bill program will also assist in the readjustment to 
civilian life, support the armed services recruitment and retention 
efforts, and enhance the Nation's competitiveness through the 
development of a more highly educated and productive workforce.
Chapter 33 Implementation Strategy
    Our strategy to implement the Post-9/11 GI Bill relies on 
contractor support to buildupon and accelerate what we had developed as 
our longer term strategy to employ rules-based, industry standard, 
technologies in the delivery of education benefits. Many of our 
education programs contain eligibility rules and benefit determinations 
that would work well with rules-based technology that requires minimal 
human intervention. The goal of minimizing human intervention through 
the electronic processing of applications and enrollment information 
was outlined in the President's FY 2009 Budget Submission. It is 
important to understand that the contractor will not have full 
responsibility over the administration of the Post-9/11 GI Bill. 
Instead, the contractor will be responsible for development of the 
information technology (IT) solution, and general administrative or 
data entry functions. Claims that are rejected by the automated process 
and require a manual eligibility determination will remain the 
responsibility of trained VA personnel. The contractor's mission is to 
support VA in its implementation of the Post-9/11 GI Bill by developing 
a secure solution so that VA can meet the statutory requirements of the 
new educational assistance program.
    We plan to award a contract for this support in the very near 
future. The contractor will be accountable for providing timely and 
accurate education claims processing by completing original claims 
within 10 days, supplemental claims within 7 days, and achieving a 98 
percent accuracy rate. The technological solution and services provided 
will be under the close direction and oversight of Veterans Benefits 
Administration (VBA) employees. VA's solicitation for a contractor has 
established June 1, 2009, as the deadline for the contractor to 
demonstrate functionality of the IT solution.
    Additionally, since the enactment of the Post-9/11 GI Bill, 
Education Service has been working with system developers from the VA 
Office of Information and Technology, as well as our Office of Business 
Process Integration, to enhance key existing VA IT systems. For 
example, VA-ONCE, an application that allows school certifying 
officials to transmit enrollment data electronically to VA, is being 
modified to accommodate the reporting requirements of the new program. 
Further, Education Service is working closely with elements within the 
Department of Defense, including the Defense Manpower Data Center, to 
establish data requirements and procedures for implementation of the 
transferability provisions of the Post-9/11 GI Bill program.
    Our goal is to transition servicemembers and veterans into the new 
Post-9/11 GI Bill with no disruption in the payment of education 
benefits in accordance with the August 1, 2009, effective date for the 
new program.
    Based on the implementation strategies being pursued, VA does not 
anticipate the loss of Federal employment for any present employees 
associated with VA's Education programs. Since the Post-9/11 GI Bill 
will result in tuition and fee payments being made directly to 
educational institutions, some current claims processing resources will 
be shifted to increased compliance and oversight responsibilities.
    VA employees will continue to staff and operate our Nationwide 
customer call center in Muskogee. VA employees will also continue to 
respond to all on­line inquiries received through the VA Web site, 
including Post-9/11 GI Bill inquiries.
Regulations
    The provisions of the Post-9/11 GI Bill require VA to develop rules 
and regulations to administer the new program. Education Service is 
actively engaged in the process of developing the required regulations, 
and we anticipate publishing the program's final regulations in the 
Federal Register by May 2009.
Outreach
    The VA's GI Bill Web site was updated to include information 
regarding the Post-9/11 GI Bill within hours of the law's enactment. To 
date, over 3,500 individuals have signed up to receive automatically 
generated e-mails from VA whenever information about the Post-9/11 GI 
Bill is updated on the Web site, and over a quarter million have viewed 
the Post-9/11 GI Bill ``frequently asked questions.'' In addition to 
web-based outreach, Education Service is preparing posters, pamphlets 
and direct mailings to veterans, servicemembers, and college and 
university Executives. In late 2008, VA will launch a multimedia 
advertising campaign in an effort to reach individuals who may have 
dropped from our direct mailing rolls. These are individuals who have 
left the military and have not used VA benefits or have relocated since 
last using VA benefits.
    Madam Chairwoman, this concludes my statement. I would be pleased 
to answer any questions you or any of the other Members of the 
Subcommittee may have.
                [TEXT VERSION OF VA SLIDE PRESENTATION]
                   Chapter 33 Implementation Overview
  Presented to the House Veterans' Affairs Committee, Subcommittee on 
                          Economic Opportunity
Introduction
      The strategy to implement chapter 33 builds upon and 
accelerates the pre-existing strategy to employ rules based technology 
for eligibility determinations and claims processing.
      Vendor support will be utilized to ensure that the 
legislatively mandated August 1, 2009 deadline is met.

          Precise strategy dependent on winning vendor's 
        solution.

      VA employees will continue to process other education 
benefits and will have a role in chapter 33 processing.
      No VA staff will lose Federal employment as a result of 
implementation of the Post-9/11 GI Bill.

          VBA has a longstanding history of managing change 
        without negatively impacting employees.
          VA anticipates shifting some resources from claims 
        processing to increased oversight functions.

      Claims decisions will continue to be made by VA staff.

          Rules engine criteria defined and controlled by VA 
        will automatically adjudicate the majority of claims received.
          ``Rejected'' claims adjudicated individually by VA.
                          Acquisition Timeline

------------------------------------------------------------------------

------------------------------------------------------------------------
8/29/08                                     VA released request for
                                             proposal to vendors.
------------------------------------------------------------------------
9/15/08                                     Deadline for vendor
                                             responses to VA's request
                                             for proposal.
------------------------------------------------------------------------
9/16/08                                     VA proposal evaluation team
                                             begins initial review of
                                             vendor written proposals.
------------------------------------------------------------------------
9/22-9/23/08                                Vendors present oral
                                             presentations to VA
                                             proposal evaluation team.
------------------------------------------------------------------------
9/26/08 (tent)                              Chapter 33 contract formally
                                             awarded to selected vendor.
------------------------------------------------------------------------

                           Project Milestones

------------------------------------------------------------------------

------------------------------------------------------------------------
Within 10 days of contract award            Vendor submits Draft Project
                                             Management Plan to VA.
------------------------------------------------------------------------
10/31/2008                                  Vendor submits Business
                                             Requirements and Process
                                             Flows to VA.
------------------------------------------------------------------------
3/1/2009                                    Vendor demonstrates solution
                                             capabilities to VA. User
                                             testing begins.
------------------------------------------------------------------------
5/1/2009                                    Solution must be available
                                             to begin making eligibility
                                             and entitlement decisions.
------------------------------------------------------------------------
6/1/2009                                    Solution must be available
                                             to make full benefits
                                             awards, payments,
                                             accounting, and all other
                                             required functionalities.
------------------------------------------------------------------------
No later than 8/1/2009                      Solution must be certified
                                             and fully operational.
------------------------------------------------------------------------

Vendor Performance Metrics
      Process original claims in 10 days or less.
      Process supplemental claims in 7 days or less.
      Achieve at least 98 percent accuracy.
RFP Objectives
    1.  Solution shall meet all requirements in all objectives and 
address interrelations.
    2.  Consult with VA subject-matter experts to develop business 
requirements and process flows.
    3.  Data transmissions between solution and VA must use XML 
standards and be bi-directional.
    4.  NLT 3/1/2009 VA will determine if the solution meets Post-9/11 
GI Bill requirements.
    5.  Meet requirements according to section E authorities including 
adhering to finance standards and regs, adhering to moderate system 
sensitivity categorization, ensure privacy is maintained, and meet all 
testing capabilities.
    6.  Support both paper and electronic submission of claims and 
check processing, and provide online access to VA and stakeholders.
    7.  Demonstrate capability to manage and control change. Ensure 
services delivered employ technology that is effective and scalable.
    8.  Establish and maintain a support capability that adheres to 
industry best practices.
    9.  Adhere to the following performance requirements: 10 days or 
less to complete original claims, 7 days or less to complete 
supplemental claims, 98 percent administrative and payment accuracy 
rate.
RFP Mandatory Tasks
    1.  Detailed Project Management Plan.
    2.  Develop business requirements and detailed process flows.
    3.  Provide a secure solution in accordance with the objectives.
    4.  Host the Post-9/11 GI Bill solution in a secure facility.
    5.  Demonstrate an acceptable process that clearly articulates 
inputs and outputs of solution.
    6.  Work with Federal oversight entities and VA's OCIS staff to 
remediate any security issues identified in reviews.
    7.  Propose enhancements that improve efficiency and effectives of 
secure solution and meet evolving needs of VA.
    8.  Propose industry standard best practices for training and other 
adoption requirements.
    9.  Upon termination of the contract, the vendor shall comply with 
the Continuity of Services provisions in FAR 52.237-3.
VA Responsibilities
      Control authorization of benefits and payments through 
established rules for the system and human intervention when automatic 
processing is not possible
      Provide oversight of the work being accomplished through 
the vendor's secure solution
      Ensure that performance metrics are being met

                                 
                   MATERIAL SUBMITTED FOR THE RECORD

                                     Committee on Veterans' Affairs
                               Subcommittee on Economic Opportunity
                                                     Washington, DC
                                                   December 8, 2008
Hon. James B. Peake, M.D.
Secretary,
U.S. Department of Veterans Affairs
810 Vermont Ave., NW
Washington, DC 20420

Dear Secretary Peake:

    I am sending you a deliverable in reference to our House Committee 
on Veterans' Affairs Subcommittee on Economic Opportunity Hearing on 
``Oversight of GI Bill Implementation'' on September 11, 2008. Please 
answer the enclosed hearing questions by no later then Tuesday, January 
13, 2009.
    In an effort to reduce printing costs, the Committee on Veterans' 
Affairs, in cooperation with the Joint Committee on Printing, is 
implementing some formatting changes for material for all full 
committee and subcommittee hearings. Therefore, it would be appreciated 
if you could provide your answers consecutively on letter size paper, 
single-spaced. In addition, please restate the question in its entirety 
before the answer.
    Due to the delay in receiving mail, please provide your response to 
Ms. Orfa Torres at by fax at (202) 225-2034. If you have any questions, 
please call (202) 226-4150.

            Sincerely,

                                          Stephanie Herseth Sandlin
                                                         Chairwoman
                               __________
               VA Response to Chairwoman Sandlin's Letter

                                                   December 8, 2008

    VA's original IT plan (prior to enactment of P.L. 110-252) included 
the development of a rules-based engine to be fully deployed by 2013. 
In our hearing, Mr. Keith Wilson mentioned that the VA's IT staff did 
not have the capabilities to standing up a rules-based system. What do 
you need internally to do so?
                               __________
Congressional Inquiry
Date: January 5, 2009
Source: Cliff Britton, Office of Information and Technology (OIT)
Inquiry from: Representative Stephanie Sandlin, Chairwoman, House 
        Committee on Veterans' Affairs Subcommittee on Economic 
        Opportunity
Context of inquiry:
    Chairwoman Sandlin sent a letter to Secretary Peake on December 8, 
2008, requesting VA respond to a question related to a hearing her 
Subcommittee held on September 11, 2008, related to ``Oversight of G.I. 
Bill Implementation.''
    The Subcommittee understood Mr. Wilson's testimony to be that the 
Department of Veterans Affairs does not have the capability to stand up 
a rules-based system and wants to know what VA needs internally to have 
that capability. The testimony was misunderstood. VA has the capability 
through its relationship with SPAWAR.
VA Response (OIT)
    Mr. Keith Wilson's testimony meant to convey that the Department of 
Veterans Affairs (VA) did not have the resources to support developing 
and deploying a rules-based system in time to meet the legislative 
requirement to pay Chapter 33 benefits by August 1, 2009. VA is working 
with the Space and Naval Warfare Systems Command (SPAWAR), in 
Charleston, South Carolina, to design, develop and deploy a rules-based 
solution as part of the Post 9/11 G.I. Bill long-term solution. The VA 
plans to deploy this rules-based solution in November 2010.
VA Office of Enterprise Development Program Offices: Kai Miller