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House of Representatives,
Subcommittee on Benefits,
Committee on Veterans' Affairs,
Washington, DC.
    The Committee met, pursuant to notice, at 10:05 a.m., in room 334, Cannon House Office Building, Hon. Jack Quinn (chairman of the subcommittee) presiding.

    Present: Representatives Quinn, Filner, Evans, and Rodriguez.

    Mr. QUINN Good morning. The subcommittee will come to order. Today, we are here to take testimony regarding VBA's progress towards meeting the requirements of the Government Performance and Results and Act. I have also asked Under Secretary Thompson to present his vision as we head toward the future, and we're all eager to hear what he sees as the challenges and opportunities facing the VBA. I know this can be a very dry topic at times, but our Government Performance and Results Act is the foundation for the future, and it's important that we meet with VA to discuss their progress from time to time during the year.
    GAO, as we know, has published a guide to use in analyzing performance plans. This guide lists three core questions: first, does the VA performance plan provide a clear picture of intended performance across the agency? Second, how well does the VA's performance plan discuss the strategies and resources needed to achieve the goals? And, finally, does the VA's performance plan instill confidence that the performance data will be credible.
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    I consider this hearing to be a continuation of the consultation process required by the act, and we are interested in VA's ongoing process to improve their performance plan. Last year, VA managers met with our staff for a one-day offsite working session that was very productive, I know, from our standpoint. I would hope that we could arrange to repeat that success this spring. In short, we want to help, and it's easier if we are involved in the process at the beginning stages instead of after everything has begun.
    I know that Bob Filner, our ranking member, is interested not only in the process and the issue, but we've relied on him for input and advice all along the way, and I would turn to him now for any remarks he may have. Bob?

    Mr. FILNER. I thank the chairman as always for his graciousness and kind words, and we look forward to this hearing to review the Department of Veterans Affairs compliance with the requirements of the Government Performance and Results Act.
    I know from my own years in San Diego as a member of the school board and a member of the city council, it is difficult both to understand or to make known the actual results of what a bureaucracy is doing and to hold that bureaucracy accountable. I think the efforts that the VBA is making to change the present assembly line claims process seems to be on track. I hear from veterans in my own district of San Diego and various groups who have studied this issue that serious problems do exist in the adjudication of veterans' compensation and pension claims. I hope that the requirements of GPRA as well as the commitment expressed by Mr. Thompson will help the VA to turn the battleship of its bureaucratic system around and direct it toward the result we all desire, an improvement in the lives of American veterans.
    I also welcome the candor which the new Under Secretary, Mr. Thompson, has brought to his job. We had been informed, for example, that the error rate in the adjudication of compensation and pensions claims is an unacceptable 36 percent; that the information used to track the claims of Persian Gulf veterans was unreliable and that a new system has been developed to provide verifiable data and that the VA had no national training program for new adjudicators to provide consistency and quality to the decision making process.
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    These facts demonstrate that constant vigilance and a well defined supervision system are essential to addressing the problems of an entrenched bureaucracy. I trust that Mr. Thompson will take appropriate steps to address the recently discovered problem involving the manipulation of data entered in the VA's computer systems as well as the high error rate in decisions involving veterans' compensation and pension benefits, and I hope Mr. Thompson will address that today.
    Obviously, once we define a problem and identify it, then we have to solve it. Like the chairman, I encourage the VA to work with members of Congress and the staff of this committee and other committees to implement the GPRA requirements and to improve the performance of our employees in achieving the results that we all want. Thank you, Mr. Chairman.
    Mr. QUINN. Thank you, Mr. Filner. We're also joined by the ranking member of the Full Committee, Mr. Lane Evans, and, Lane, thanks for joining us. I don't think you've missed a single one of our subcommittee meetings. We're keeping attendance, and we appreciate you being here. Thanks, and I turn to you for any opening remarks, Lane.

    Mr. EVANS. Well, thank you, Mr. Chairman. Thank you also for your work on this subcommittee, and I believe this is one of the most important hearings we'll be having this year. Although it may be sometimes difficult to get excited about the VA's ability to clearly define its missions and goals than it is to get excited about a program that provides direct benefits and service to veterans, the effect of this legislation on the lives and well being of our veterans may be just as significant. After all, we can, on this committee, design effective, imaginative programs for the veterans we represent, but the Veterans Administration must implement these programs as Congress intended if our veterans are to benefit.
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    For example, what good is the GI Bill if the benefit level is too low for real use by an average veteran? What good is the Compensation Program if it takes years for a veteran to establish his or her eligibility? What good is the Vocational Rehabilitation Program if the goal for a participating veteran is unclear. The VA must understand its mission and focus on the results of the programs it administers if America's veterans are to be well served.
    I do want to take the opportunity to, again, tell Joe Thompson how glad we are to have him here today. In his statement before the committee yesterday, the national commander of AM-VETS described you as a talented an innovative manager who's building a team to implement and manage change. I agree with the commander's remarks, and we look forward to working with you in the future.
    Mr. Chairman, I am sorry that the Armed Services Committee is meeting at this hour with the Joint Chiefs of Staff, and I've got to get back there in a few minutes, but I appreciate your holding this hearing today.
    Mr. QUINN. Thank you. Well, we appreciate your being with us and for your comments and remarks. We also look to you for advice and counsel during the course of the rest of these hearings. Thanks very much.
    Mr. Filner will return. He has taken off for just a minute or two, but we're going to proceed as he does a little bit of other business. Our first panel is from the General Accounting Office, and Ms. Cynthia Fagnoni is back with us this morning to present the agency's analysis of the VA's current performance plan. Would you please step forward and I know you're joined by, today, Ms. Irene Chu, from GAO to assist in answering some of the questions. Glad to have you both back again.
    We also begin by saying that, of course, any full statement, for the record, that you have will be accepted and become part of the record of the hearing today, but I also ask if your opening remarks could be limited to about 5 minutes or so. Thank you. Please proceed.
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    Ms. FAGNONI. Thank you. Good morning, Mr. Chairman. We're pleased to be here today to discuss VBA's progress in implementing the Results Act. As you know, the Congress has taken steps in recent years to fundamentally change the way Federal agencies go about their work. The Results Act was passed to require agencies to clearly define their missions, set goals, measure performance, and report on their accomplishments.
    In fiscal year 1997, VBA received over $22 billion in appropriated funds to provide benefits and services to the Nation's veterans and their families. My statement will address the progress VBA has made and the challenges it faces in implementing the Results Act. The information in this statement is based on reports we have issued over the past year on VA's efforts to develop a strategic plan; a review of VBA's business plan, and discussions with VBA officials.
    In summary, VBA continues to make progress in setting goals and measuring its program's performance but faces significant challenges in its efforts to successfully implement the Results Act. VBA has efforts underway to address these challenges which, if continued, will help ensure success. These efforts are focused on four key Results Act requirements: focusing on results; coordinating related performance goals; developing strategies to achieve performance goals, and measuring and assessing performance.
    Regarding the first point, focusing on results, VBA is in the process of developing results oriented goals and measures for each of its programs in response to concerns we and others have raised. To measure the effectiveness of Vocational Rehabilitation Program efforts to help veterans find and maintain suitable jobs, for example, VBA has developed an outcome success rate which it defines as the percentage of veterans who have terminated their program and who have met accepted criteria for program success. The outcome measure VBA has established for its housing program is the percentage of veterans who say they would not have been able to purchase any home or would have purchased a less expensive home without a VA guaranteed loan.
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    VBA officials told us they plan to develop results-oriented goals and measures for its three other programs by this summer. They consider these as well as the goals and measures already developed for the VR and Education Programs to be interim pending further analyses and evaluations VBA plans to complete over the next 3 to 5 years.
    Developing more results-oriented goals and measures will require VBA to address difficult, sensitive questions regarding specific benefit programs such as whether disabled veterans are being compensated appropriately under the existing Disability Compensation Program structure. To address these questions, VBA is continuing its consultations with the Congress begun last year in conjunction with VA's strategic planning efforts—and I might add that in the last year when they had the offsite session, GAO participated in that session.
    A second area of focus for VBA is the need to ensure that it is coordinating efforts with other parts of VA as well as Federal and State agencies that support veterans' benefits programs. VBA has efforts under way to coordinate within an outside VA to achieve specific goals. For example, VBA is working with VHA to improve the quality of the disability exams VHA physicians conduct. The lack of adequate exams has been a primary reason why appealed decisions are remanded to VBA. VBA will need to continue to coordinate with organizations that are critical to veterans' benefits programs to ensure overall, high quality service to veterans.
    A third Results Act requirement is that an agency highlight in its annual performance plan the strategy needed to achieve specific goals. VBA is in the early stages of developing clear and specific strategies. For example, VBA is relying on business process reengineering to enable it to reduce the time it takes to complete compensation claims. However, VBA does not describe the specific actions needed; set a time table for implementing needed changes, or show a clear linkage between BPR initiatives and reduced processing time.
    A fourth focus for VBA is on the need for accurate, reliable data to effectively measure and assess its performance. However, in developing performance measures, VBA has identified numerous data gaps. For example, one goal is to ensure that VBA is providing the best value per taxpayer dollars. However, VBA is currently unable to calculate the full cost of providing benefits and services to veterans.
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    In addition, completed and ongoing VA inspector general audits have identified data system internal control weaknesses and data integrity problems which, if not corrected, will undermine VA's ability to reliably measure its performance. For example, in assessing whether key claims process of timeliness data are valid, reliable, and accurate, IG auditors recently found instances where VBA's regional office staff were manipulating data to make their performance appear better than it really was. VBA officials have told us that they're in the process of assessing the data systems vulnerability so they can take steps to correct the problems identified.
    Mr. Chairman, this completes my short statement this morning. We'd be happy to answer any questions you may have.
    [The prepared statement of Ms. Fagnoni appears on p. 22.]

    Mr. QUINN. Thank you very much. First off, just an observation: I think those offsite visits, while I have not participated, the response I get back is that they're helpful and would suggest that when we schedule the springtime one, which would be shortly, that we would include GAO again to join the day, and——
    Ms. FAGNONI. Sure, we'd be happy to.
    Mr. QUINN (continuing). Then, I don't know that we'd necessarily run across anything earth shattering on those days, but it seems to make more sense that if we're all involved in the beginning, we don't have to come back and reeducate and rebrief. So, thanks for joining, and I'd also like to know when that one's set up in the spring once we get a date and time and a place. It's possible that if I'm here, maybe I could stop for a little bit. I didn't get to the last one, but if you know the dates, I'd at least share that with the subcommittee members.
    You talk about the 3 to 5 years in terms of developing final goals and measures. Is that three to five adequate? Is it too long? Is it too short? Obviously, it wouldn't have been suggested but your sense from the GAO in terms of that time period. Can you comment?
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    Ms. FAGNONI. Well, we've been—we and others have been pushing VBA pretty hard since last year to focus on program results and to set goals recognizing that, particularly, with entitlement programs, this can be very difficult and very sensitive, and we have seen some progress. VBA is now starting to set some initial goals. I think their take on this—and I think it's reasonable—is that the first set of goals they come up with—and they are apparently in the process with the other two programs and hope to complete that this summer—that the first set they develop are going to need work probably, but they feel they have to get something down on paper and get a start and get some reaction to that rather than simply saying, ''We're working on it.'' So, I think it's reasonable, assuming they can really get the rest of them down on paper for people to look at; and over some period of time they would be fine tuning those goals.
    Mr. QUINN. Well, I think whenever you look at those kind of goals, fine tuning is what becomes critical, so I was trying to find out if it's reasonable and realistic, and it sounds like you think it is.
    Ms. FAGNONI. I think so in this case. I think, particularly, with entitlement programs it's difficult, because the focus not just from the agencies but from the Congress and others has tended to be on the timeliness and accuracy of the process rather than the ultimate goal of the program.
    Mr. QUINN. Particularly, if you can define the focus of Congress. (Laughter.)
    Good luck. Thank you both. I know that Mr. Filner had to step out. Mr. Rodriguez, thank you for joining us this morning. I don't know at this time if you have any questions for the panel or not, but you have the floor if you'd like it.
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    Mr. RODRIGUEZ. Thank you very much, Mr. Chairman, and I apologize for coming in a little late, and it's an area that I was hoping to kind of listen to some of your feedback. I did review the report that you put out, and it's an area—I've been in the Congress, now—I'm going to complete a year in April, and it's one of the frustrations that just in one year that I've encountered, and I'm going to give you my—I'm a social worker by profession, so it really frustrates me that we're unable to get veterans to really get the proper services that they should, and I've made the analogy in my examples in the past of calling a 1–800 number that they have and having the difficulty in terms of trying to get through, and I'm real pleased I think that the recent person that's been put in charge of that, I think, has been trying to make an attempt in responding to some of the problems.
    I was reading where you had—I had kicked out a series of questions to them and I asked for an investigation, and I'm hoping that we continue to investigate, because there's some real—and you've kind of indicated that there was some fraud occurring—I don't know if you want to use that term—but some manipulation of the data in terms of the amount of time that it takes to service a veteran. And I questioned what was occurring in Houston, and I even sent staff person down there, and I got her the report that just tells me that they're real bureaucratic. What I want is some actual work done on the specific cases and get them out of the way, and because of the fact that you found that the manipulation is occurring, how do you—and I gather that you've made some recommendations to try to correct that, is that the case?
    Ms. FAGNONI. Well, let me clarify, these recent findings were actually from the VA inspector general who is taking a lead in looking at the adequacy of the data that VBA has in place to measure such performance. My understanding from talking to VBA officials is that the IG auditors found instances where in order for the staff to make it look like they were quickly processing claims, they were doing some things like pulling the claim and processing a piece of it and saying they processed the whole claim; that kind of stuff to try to make their timeliness numbers look good. In talking to VBA officials, they indicated they're now trying to—the IG study isn't complete yet; it's supposed to be complete this summer—they're trying to get a better understanding of what exactly the problems are; where the vulnerabilities are in the data so they can figure out how to keep that from happening in the future. So, it's not our work specifically; it was ongoing IG audits that uncovered this.
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    Mr. RODRIGUEZ. But the bottom line is that when I send them—and they responded to me and told me that they respond in 120 days and that the average is 130, and now they tell me—or give or take a few points; a few days—and now we're saying that that data is fraud, how can we believe that that's occurring or not occurring if in the process of coming up with that there's been some manipulation?
    Ms. FAGNONI. Well, that's where they need to look at their systems and figure out how to protect those systems from that kind of abuse, but we can't be sure of the data.
    Mr. RODRIGUEZ. How do you correct data? How do you recommend anything if it's tied to, also, their salary that they're given? My understanding is that merit pay is based on—or some of the salary is based on how much they accomplish. Isn't that the case?
    Ms. FAGNONI. Maybe indirectly linked to the specific performance goals.
    Mr. RODRIGUEZ. Okay, it was my impression that it was tied into performance and their whole merit stuff was based on how much they accomplish, so—and that really bothers me. The other thing is that, in terms of any other recommendations to try to improve the service for veterans, it seems that it's very bureaucratic, and I don't know how you get to the attitude of people that they need to be more responsive. I just had a person in San Antonio—and this just kind of reflects the attitude—that walked out of the hospital and got lost and died. He was found 3 months dead, and I think he suffered from diabetes, some other—you know, the bottom line is that their response was, ''Well, he walked out to get some of the air.'' They don't know why. He walked out—the individual was ill. There was no need for that, and so they were very—instead of saying, ''Yes, we made a mistake. We need to try to do this, this, and that,'' that didn't occur. And, so there's an attitude, and how do you—I know from the GAO you look at numbers, but how do you get to that kind of people that are burned out, and maybe shouldn't be there or you need to—how do we deal with that?
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    Ms. FAGNONI. Well, we look at a lot more than numbers, and, in fact, we have quite a bit of ongoing work that is looking at VBA's claims processing system; the quality of the claims they're processing; looking at how they can improve their process. So, we are very concerned and interested in service delivery and how that affects the veterans, because to the extent that a veteran isn't served well, then the program's going to be unable to meet its intended results. So, we do have work underway that will take a look at this issue.
    Mr. RODRIGUEZ. One last comment—I know you—but if some of them—and I go to a couple of cases—I have five cases right now that I just—and I don't know what—I'm not going to keep blasting them until they hopefully clean up or something. The other one is in some of them it doesn't take a rocket scientist to figure out that individuals deserve some benefits in certain areas, and we have some postponing and postponing and postponing and postponing and just dragging out the thing that probably causes more work for the veterans and the workers there, instead of coming up with a decision whether the person qualifies or not. And I don't know if it's the bureaucratic junk that's in there, and I'm sorry that it's come up, but I'm frustrated as hell, and a lot of the veterans are too, and they're tired of it. I think that we're fed up with it, and I think we really need to do something about that.
    Ms. FAGNONI. This is one area—what VBA is trying to do through business process reengineering is to dramatically reduce the amount of time it's taking to process a claim and come to a claims decision, but I don't think they're that far along in the process. But you're right, it's something that needs attention and something we will continue to look at.
    Mr. RODRIGUEZ. Can you all—I don't, Mr. Chairman, if we can ask if there's some other types of audits that can be done in terms of recommendations?
    Mr. QUINN. Surely. I was just going to—along this line of thinking here—I was going to suggest since it's an IG study, that maybe what we might want to do, if it's okay with you—we can talk after the meeting—but I'd be certainly willing to ask the inspector general to come over here and maybe either outside of a formal hearing talk to you and to me and anyone else who wants to come or actually schedule some kind of hearing to have him come over. I'll take your guidance on that, but, clearly, I think GAO is trying to help us here——
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    Mr. RODRIGUEZ. Yes, yes. No, I understand that.
    Ms. FAGNONI. Yes, there are pieces that the IG is doing which have to do with data reliability, but other aspects having to do with far more broadly service delivery, that we would get involved in.
    Mr. QUINN. Sure. You're on the right track. May I ask, is anybody in the room this morning from the inspector general who wants to say they're from—excuse me, who's here? (Laughter.)
    We're going to check I.D. in a few minutes just to see if they're back there and they won't say they are. But sure, I think you're on the right track. I have the same sense, and I also think that maybe if you can stay a few minutes when Joe and his group are at the table, giving them a shot at responding to this too just in the sense of fair play to get at it. But let's maybe you and I talk about what the next step would be to try to get the inspector general over to either a meeting or hearing. I'd be certainly willing to do that.
    And, now, I want to yield to Bob Filner who was out when we had questions for the floor. Bob?
    Mr. FILNER. Just to follow up—and thank you, Mr. Rodriguez, for your questions—when you talked about the possibility of incentives, are there financial incentives, for example, that would lead people to deal with the data differently than the actual case? The VA employee is caught in a bind. We want accountability and we want measurement, and we say we're going to reward you or penalize you by the measurement, and then if that's going to be the way we reward people as opposed to a more difficult way of quality of service and empathy and relationship to the veteran which is hard to measure, we're trying to have it both ways as Congress, it seems to me, which is very difficult. If we want accountability through the data and we're going to reward or punish through the data, then we're going lead to these problems as opposed to other measurements which may be more important which would lead to more honesty. So, we have to somehow work with that and with the GPRA context to figure out how to deal with it. That's a real problem in any service institution.
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    Ms. FAGNONI. If I might say something: if you look at the full set of measures VBA has, they are not just measuring time limits, they're also focusing on accuracy and customer satisfaction. The tricky thing is to get people to focus on the full set of measures and not have an emphasis on one type of performance measure negatively affect another. In other words, in an effort to do something more quickly when, in fact, it's not as accurate or involves data manipulation to make it look that way. So, it's the balancing of those different important pieces that's difficult but important.
     Mr. FILNER. Ciro mentioned—I don't know if he had gotten in writing—our office did—a list of supposedly all the cases we had with the VA and the time it took by their records to respond. I looked at that, and it had no relationship to the reality that I understood or I personally participated in. It looked like the average was somewhere in the neighborhood of 3 or 4 days to respond to a congressional inquiry, and when we tried—we couldn't even correlate their data with our data, and we have very good computer data. It looked like if we made a call, either on a case or not, just asked a question, it got reported as a one-day turnaround of a congressional inquiry. Whether that was a part of a case or just a separate thing, we couldn't figure out how they got these one-day turnarounds, and all the times that I have to personally get involved is when paper goes back and forth between our office and the VA's, and the only thing that's happening is after weeks and weeks and weeks and weeks, someone says, ''Well, your answer is in some other office,'' or ''Now, we are shipping the papers to this other office,'' and that's the response after weeks or months. All they've done is tell us something we should have known the first day or did something they should have done the first day.
    And so the data does not correlate with reality, and I would like you or the IG to sit down with some of us on that set of data and figure out why our perception—and maybe we're thinking about this wrong—our perception is different than the VA, whether the regional or who's ever dealing with congressional inquiries. I mean, it's a similar situation, and we only get involved—we wish we didn't have to get involved—we only get involved because someone is frustrated from dealing with the system themselves and think we can do a better job. I'm not sure we can or can't, but then we're brought into the same paper going back and forth and back and forth and back and forth with nothing really happening. Whether that action is favorable or unfavorable to the veteran, we need an answer, and all we get is a lot of paper.
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    I would like someone to look at that analysis with our office and anybody else who wants to participate just to see why we have a different perception of what's going on.
    Ms. FAGNONI. Because it may be, you're right, that if they're measuring two-thirds of—when you're looking at it from the first time you make a contact to the time something is resolved as opposed to pieces of——
    Mr. FILNER. I don't know that that's what's being done.
    Ms. FAGNONI. I mean, what's happening with veterans in some cases.
    Mr. FILNER. That would be a terrible way to do the data in my opinion, although, I understand there are problems because somebody doesn't know if that was the first call of something that's gone on or not, but, surely, the computer input is flexible enough for us to distinguish that, I would think. Anyway, I would ask the IG or your office to talk to some of us about that, because I think that's at least worthwhile. There's a difference in perceptions here, and whether that's venal or just by misunderstanding, it would be good to know for all us to understand, because all of us want the same thing. We all want both the people in the VA and in our office to be responsive, and if we're being unfair or unreasonable, we need to know that too. Thank you, Mr. Chairman.
    Mr. QUINN. Thank you, Bob, and I think, to wrap this discussion up, I know that the IG doesn't expect their final work product to be done for a month or two into the summer?
    Ms. FAGNONI. I think they're expecting this first round—they're looking at some of the performance measures—I think they hope to have it completed by this summer.
    Mr. QUINN. Well, we'll check with them. I've asked staff to follow up with the IG and you. We don't want to either, Ciro, just get a response that says our study will be done in June. Leave us alone until then; we'll get back to you, because I think we need something before that, and there's no reason why they can't talk to us even informally here on the Hill with those of us who are interested short of a full hearing. I'd like to do that in the next couple three or four weeks. Okay? Thanks.
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    I don't have any further questions for this panel. Mr. Rodriguez, anything?
    Mr. RODRIGUEZ. No, I just wanted to add—and I recognize, I don't want any more paperwork, because I think we've got plenty of that. What we need is service, and I think the Congressman from California kind of put it into perspective that a lot of time the paperwork in between and the junk they send me and the junk I have to send them, somehow—and we probably have a lot of workers that are burned out, and I don't know how we can be able to respond. Maybe with the VA, that's where we need to deal with, but somehow either we've got too many in between people—too many directors or supervisors and people that are bureaucratic in nature and not really doing the work that needs to be done and deal directly with that. But I would be real concerned about adding any more paperwork, and so maybe the GAO can help us as to how we can do that without increasing the paperwork.
    Ms. FAGNONI. Sure.
    Mr. QUINN. Thank you, sir. Bob, do you have anything further for the panel?
    Cynthia and Irene, thanks very much for your attention this morning. We'd like to call the second panel forward, Under Secretary for Benefits, Joe Thompson, and his team. He'll be joined at the table—we'll allow you to come forward, Joe.
    Thank you for joining us again today, and thanks since our last meeting for your cooperation with that so-called offsite session. We're going to—as you heard—try to do some more of that coming up here in the springtime, and we appreciate that. Joe, I want to echo what some of what Lane Evans said, before he had to leave, about how all of us here think that you and your team are making a difference over there. I really can see a difference in morale of the employees and response times and all of those things, so congratulations on that. I think when you have GAO say things like, ''We're pushing pretty hard,'' is what Cynthia said, and then she said she's seeing progress coming from the GAO, and that's a compliment to you and your team and the staff there. Whenever we have these hearings sometimes we drum up some of the bad news. But to start out here today I want you to know that I think that, from the subcommittee's viewpoint, there are some good changes happening there, and we appreciate those, and we're here to help you do some more of that if I can just flesh-out some suggestions.
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    Now, as I understand it, you're really going to have sort of two statements to make; a brief statement on the vision section and then some remarks on the GPRA. So, if it's okay with you, I'd like you to go ahead with the vision statement, and then we'll stop and see if Bob or Ciro have any questions or comments or suggestions, and then we'll go to the second part. Is that okay?
    Mr. THOMPSON. Sure.

    Mr. THOMPSON. Thank you, Mr. Chairman. If I could, I'd like to introduce my colleagues, because this is the team. On my left is Rick Nappi. Rick's in charge of the line operations. In other words, he's in charge of all the regional offices around the country. He was formerly the Central Area Director and has more than 20 years experience in this business.
    Mr. QUINN. Good morning, welcome.
    Mr. THOMPSON. On my right is Nora Egan. Nora is in charge of the central office side of the house, running the programs and managing the policy formulation. Nora, before this, was the Deputy Assistant Secretary for Planning which gives her a wonderful amount of knowledge and experience in planning and GPRA.
    Mr. QUINN. She may not think it's wonderful, but we think it is.
    Mr. THOMPSON. And on the far right is Bob Gardner. Bob's our Chief Financial Officer. He's really led the charge in the last 3 or 4 years in VBA to get the Government Performance and Results Act up and running and trying to nail down our plan. Bob's the only Californian, and we have three New Yorkers here, but Bob did go to school in Syracuse, so we do have a link.
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    Mr. QUINN. We count him as a New Yorker. Welcome, all of you. Thank you, Joe. Go ahead and start.
    Mr. THOMPSON. Mr. Chairman, I did submit a written statement, if I could have that put into the record, I'll try and summarize my thoughts.
    Mr. QUINN. Without objection, it's so ordered and received.
    Mr. THOMPSON. Thank you. In the 1950's, when VBA was being built, we used the organizational administrative practices that were common to the business world at that time. We took an assembly line approach to work. We had a multi-leveled, hierarchical type of organization. We had stovepipe types of operating divisions. We highly specialized individual tasks and work. We focused on rules and procedures to control human behavior, and we looked at production as more important than the quality of the things we did. Most of our standards of performance were entirely internally driven. They were about meeting VA's goals and expectations versus anyone else's, and we took a rather paternalistic approach towards both veterans and their families and our own employees.
    When I was nominated for the Under Secretary position, I spent 3 or 4 weeks going around and meeting with the stakeholders in this system; with members of Congress, staff, service organizations, the other parts of VA. I did my own internal environmental scan coupled with my own experience. Let me summarize the concerns that were expressed to me—and I shared most of them, actually all of them: the quality of the work we were doing, particularly, in compensation and pension claims was not acceptable; we had too many remanded claims from the Board of Veterans' Appeals; workload backlogs were too high; we were much too slow to meet anyone's needs; and our information technology which could be a wonderful resource to help us really has hindered us in many ways.
    Succession planning—we were becoming, in many of our key decision making jobs, rating specialists, realty specialists, counseling psychologists. They're baby boomers. The average age is around 50. They're nearing retirement age, and we will have this massive turnover in the near future. We need to be planning on bringing in the replacements today. We can't wait until they leave.
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    We've had unclear and fragmented organizational direction. Work processes, themselves, were an artifact of an earlier time. Our data systems, the way we collect information, the way we use it, was highly unreliable and inefficient. We had insufficient numbers of veterans being rehabilitated, in Vocational Rehabilitation. We had unacceptably low participation in the GI Bill. Our financial management systems were weak, and we had budget requests that were not very well supported in terms of providing data.
    Based on the results of this environmental scan, we began assembling the top managers in the organization, and we sat down and looked at what needs to be done right away and what do we need to do to turn this organization around over the long haul?
    We had a meeting in Baltimore. We spent a few days looking at those particular issues, and we came out with a strategy. The basic part of the strategy was that we were going to widen the circle. We brought in people from VA headquarters, from the VA field offices. We brought in veteran service organizations, the unions, other parts of the Department of Veterans Affairs. We formed them into teams, and we asked them to look at the different pieces of this very large and very complex puzzle.
    I won't go into the details of each of the team's findings, but if I could summarize a little bit about what we tried to do: the teams put together some recommendations and we worked those—tried to integrate these recommendations, and we came out with what we call our Roadmap to Excellence. It's a draft document at this point in time. It's been widely circulated among all of our interested parties, and we're in the process now of getting back information on that particular document, but it's not designed to be a plan. We have a strategic plan, and we will use that to get very specific about tasks we're going to undertake.
    What we're trying to do is take this 1950's model organization and make it fit the 21st century, and we're looking for just a few general outcomes in terms of the values that we hold dear to us, but we are saying we want it to be fast; we want it to be fair. We want to make decisions in accordance with Federal law. We want it to be flexible. Today, any change that the VBA undertakes is remarkably labor intensive and extraordinarily difficult. We're not trying to create an organization that will stand for the next 50 years. What we're trying to do is create an organization that can change as the needs of veterans change; as the programs change; as any type of circumstances that we see day-in and day-out change. We'll have an organizational structure that will be able to adapt to that, and most importantly, we want to make sure we're veteran focused. What we see as our fundamental premise, our reason for being, is to deliver service to veterans, and that's a bit of shift away from where we're at today. Frankly, we've been more concerned by our own internal and VA type needs than veteran needs. That's our goal, and we've spelled it out in quite a bit more detail in the Roadmap to Excellence, and there's some in the written statement as well, but that is our vision for the future.
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    If I could, I could either go on with the GPRA piece, or——
    Mr. QUINN. I think it's okay with me if you continue. We'll give you another 5 minutes on the bulbs up there, though, so don't get nervous, Joe.
    Mr. THOMPSON. Did I say brief in the beginning? (Laughter.)
    Mr. QUINN. That's fine. Thank you.
    Mr. THOMPSON. The VBA has been actively engaged in implementing the Government Performance and Results Act. We got started back when the act was first passed in 1993. Our two primary pilot sites were, at first, a loan guaranty program and later the insurance program. They helped to develop a good system of measures linking them with the planning and budget cycles, and we tried to develop a good strategic management process.
    As the director of the New York Regional Office back in 1993, we volunteered to become a GPRA pilot site. We were very interested in the legislation because we thought it was absolutely on point to drive, in this case, the VA into doing what it's in business to do which is to help veterans. In New York, we focused on developing one particular part of GPRA which is how do you measure success. Much of the discussion you had with GAO just recently concerned measures, how you measure performance, and how do you make sure you have integrity in the systems. We developed something in New York which we're now attempting to push out nationwide throughout VBA, something called a balanced scorecard. The scorecard provides us with a strategic management system that looks at the total system's delivery, not just a piece of it, but you look at the whole system and the whole process.
    In our traditional way of measuring performance, we looked at three things: we looked at speed, how quickly you do things; we looked at accuracy; and we looked at costs, but really speed gets primacy today over all other measures, and you do get what you measure. It led to some undesirable outcomes by focusing in on a narrow area. Number one, we create the illusion of speed when it doesn't exist. The subject of manipulation of data—sometimes just bad data, it doesn't even have to be manipulated—makes you look like you're faster than you are. We had unacceptably high error rates. People attempting to meet speed goals would rush things through, perhaps, before they were really completed with them. When we go back and review the work done, we can see it was done too quickly, and we made too many errors. We drive up costs unnecessarily. If you rework enough times, you're obviously squandering money. We had very little knowledge of what veterans thought of these processes. We had little knowledge of what our own employees needed.
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    We're looking to replace that with a balanced scorecard system where we retain many of the original measures. We still look at speed, but it's one of five measures; it's not the only measure. We look at accuracy, and in the case of disability compensation and pension claims, they will get much greater emphasis because we know we have a quality problem right there. We're looking at costs in a different way. Our traditional measures measure productivity, and it's a system that gets really skewed results in my opinion. Now, we're moving towards something called activity-based costing. It's a private sector model, but it will allow us to tell how much it costs to do each individual piece of business that we engage in our regional office including all costs, not just salaries, but rent, phone bills, and all the overhead. We're looking at measures of customer satisfaction. In each of our business lines, that will be one of our key measures, and then employee development. We need to make sure our employees are coming along for the ride here; that as the organization changes, we're giving them the tools they need to do the job. These measures will be in each of our business lines. While we can boil down, and we will boil down, to one measure for each business line, all the subsets will be imbedded in there. We'll have full reporting on all of the different pieces of the scorecard.
    In sum, we can use this as a strategic management tool by directing our attention on the different pieces of the business lines. We can use this to drive our own behavior. We're now beginning to integrate the planning requirements into our annual budget cycle. Our budget documents have become business plans and in fiscal year 1998 and 1999, our business plans do incorporate both budget and planning. We're trying to use planning to drive the budget instead of the reverse which is normally what we do.
    While we're proud of what we've done with GPRA, we realize we have a lot of work to do. We know that our data collection is woefully inadequate at this point, and we're just starting to develop some new systems on how to collect information. We know that data integrity is an issue and one we will deal with. I promise you we will solve that problem. Outcome measures, we've just begun to get some of those in place, are the key to the Government Performance and Results Act. Program evaluations, we need to know whether programs are meeting public policy goals. Again, we're just getting started with the broader agency, the Department of Veterans Affairs strategic planning. We need to do a better job of coordinating with VA, DOD, other Federal agencies, with VSOs, unions, schools, real estate communities, all the people that play a part in what we do.
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    We have a lot to do, and we have a lot of material weaknesses; we recognize that, but I'll say the thing that makes me feel the best is that we have an extraordinarily talented group of people; people who are absolutely committed to helping veterans. Most of the things that stand in their way; most of the things that make life difficult are systemic in nature, and we intend, fully, to solve those problems. I thank you, Mr. Chairman, for giving me the time.
    [The prepared statement of Mr. Thompson appears on p. 31.]

    Mr. QUINN. Thank you, Joe, and to the extent, as you concluded, that we can help you solve those systemic problems, that's what we're here for.
    Mr. THOMPSON. I appreciate that.
    Mr. QUINN. I see that improving, and I want to give Mr. Rodriguez some time to talk as a follow-up to his questions on the GAO, so I'll leave my questions here, but I did want to talk just for a minute or two about going back to the visions part of your statement, the first part of it. I also want to by saying that we appreciate receiving your testimony in a timely fashion for the hearing. As a matter of fact, we like to get what we can from you when we can, so that we can talk about it this morning.
    We know that VA currently spends over about $1 billion on medical research and development and has a significant infrastructure to support the R&D Program, but we don't know that there's an equivalent R&D Program for how veterans function in society. It's nobody's fault that it's not there, it's just not there. We constantly hear about that back home in our districts. There doesn't seem to be much social research on what happens to veterans once they leave the service and how they operate in society and what we can do to help them whether it's you or society in general.
    I've asked the staff to look into the possibility of trying to come up with some foundation idea, and it's done in all different kinds of private sector medical walks of life to see what we could do about trying to establish a foundation to do that type of research. I think if we could administer that, that kind of research could provide valuable input not only to the GPRA but all legislative processes to help you and the rest of the VA do its work.
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    If we're to get to that point—here's my question, where would you try to place a research program like that or is there a place for it?
    Mr. THOMPSON. Well, off the top of my head, I would say that the proper place is probably in VA headquarters working with Nora and the policy formulation side of the house. I don't know that it needs to be a physical presence there, but I guess the responsibility for it or the relationship with it would be through that part of the organization. I would also like to say that I personally believe it's a wonderful idea. I think that the programs that VBA administers have had a fundamental impact on shaping the lives of veterans and have had sometimes even a more profound impact on shaping American society. I think the GI Bill is a perfect example of that; it has done a wonderful job for veterans and opened up higher education and housing to broad segments of society. I think those things are not known as well as they could. I don't think we have a good handle on what exactly veterans' transitions issues are, unless they come in contact with us, or how they're faring in society, so I would fully support that.
    Mr. QUINN. Well, thank you, and it comes to my attention because of some other issues. One of them was this whole housing issue as it relates to veterans. We've had some hearings on that with other people advising us, but when you talk about that whole social aspect of how our veterans do once they leave the service, what they do, how they do, their families, and the problems they encounter whether it's employment problems, housing, it's a whole host of things, so we will like to get back to you on that. We appreciate the response.
    Mr. THOMPSON. Okay.
    Mr. QUINN. And I just don't want to get started down the road of dropping something on you that won't be helpful or you don't have a place for it, so we'll continue to talk with Nora or you to find out where the best spot is, and then we'll need some help to work on it.
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    Okay, Mr. Filner?
    Mr. FILNER. Just briefly, I think we all appreciate your efforts, and you've been making yourself available to meet with us. I just want to underline something I guess I said in private, but I want to make sure you all understand the spirit in which we want to work with you. This is a spirit of constructive work together, and I had mentioned, I think, to you some specific problems I had with our situation and then your folks got in touch with us, and I sensed a defensiveness. They had to prove they were doing it right, and they gave us all these statistics. We're not trying to catch somebody, and people shouldn't be defensive about it. I would have liked for them to say, ''Well, why do you think it's taking us so long? Our records say we're answering everything in one day;'' rather than, ''Here's our proof; you're wrong, and we're right,'' or ''We're trying to defend ourselves, and we're creating the paper trail to make sure that we've covered ourselves.'' We're not trying to criticize anybody unfairly, and maybe it's something we're doing. What can we do to help speed up the process?
    I think I mentioned to you—my district is right on the border between U.S. and Mexico, and I have a large number of both Mexican and Filipino Americans, so I deal a lot with consuls and immigration issues, and I visited the consulate in Manila and in Mexico City and saw how our requests were coming in and what they did and which ones were just taking their time for no reason. We could have done it a different way, but nobody told us. They just thought they had to get the paper back to us, and we sat down in a few hours and worked out a relationship where we don't put in unnecessary inquiries and they know that we need a quick response on some other ones. It's communication more than a defensiveness, and we're prepared to do that. I think the spirit we want is to try to get a mutual relationship on these issues so that we help each other.
    Mr. THOMPSON. Absolutely, I understand that, Mr. Congressman, and I agree with you. We have relied on paper so long, and, as I said, we've relied on our own statistics that it's hard to break that habit, but break it we will. When we discussed that particular issue, I completely agreed with you. There's no need to fill the air with paper to resolve a relatively straightforward issue. It will take some time, in some cases a bit more than I would like, but I promise you, we won't stop—and you're absolutely right, it's a communication issue more than anything else.
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    Mr. FILNER. And in dealing with the paper problem, more paper was created to say there was no problem. (Laughter.)
    Mr. THOMPSON. I can believe that.
    Mr. FILNER. Thank you, Mr. Thompson.
    Mr. QUINN. Thank you, Bob. Ciro?
    Mr. RODRIGUEZ. Thank you. Let me also—the chairman has indicated that you have been real responsive, and I want to just add to that. I know I've sent you some letters, and you've been real responsive in terms of trying to meet the situation there, and my caseload backload—I've just gotten the figures just now—we have 95 cases that deal with veterans, and, of course, I have a whole bunch of other stuff—Social Security and other things—that I have to deal with.
    We had five cases that we just sent a staff all the way to Houston to visit, and your staff down there was very cordial, very helpful, but as far as I know, nothing has been done in those cases, and I have a letter of people that are individual veterans—and I'll just read part of this—it says, ''Congressman Rodriguez, dealing—'' and it's addressed to me—it says, ''Dealing with the Veterans' Administration in Houston has become a total frustration for me, because it's like talking to someone who's lost his or her memories, and I have to keep repeating myself over and over again.'' And he goes on in terms of the fact of the frustrations and dealing with that. It would be okay if it was just one, but it's not just one case; it's several.
    I've gotten some other confidential stuff that I've been even asked not to give to you, but to ask for an investigation that deals some nepotism in Houston; that deals with some sexual harassment in Houston; that deals with some people that have been promoted in their field that some of the other members feel that that's not appropriate, and they've asked me specifically not to use it unless it's for the purposes of asking for an investigation in the Houston area, and I think the last time I talked to you I asked just to send someone down there without knowing that they're part of the DA, so you can get a picture of the frustration that a veteran feels in dealing with the office down there. And in between—and I hope that the person who is the liaison person to me does not get hurt because they're trying to do their job, and I know that part of the answer is not more bureaucracy and a nice—now, on those five cases, I got a nice little response which I'm thinking, I took away time from those people to write this response to them, and then they're probably saying, ''I'm wasting my time responding to that congressman instead of helping a client.'' But, somehow, we need to come to grips with that, and I know you're in the right track in trying to do that, but if you can—I don't know what you can do; maybe call for a specific investigation in Houston. I've been told they have about 2,000 cases in the backlog, and I don't know if proportionately some regions have more than others. You might want to check on that, and the other thing, the 7 years I worked in mental health with drug abuse and adolescents, I know that you can not evaluate people by the number of cases, because one case can take the majority of your time, and it's not fair, because I have 10 cases and you have 20 to say that you're doing more than I am, and I recognize that fully, but somehow we need to get to some of those cases that just outright qualify or don't qualify and be able to get a response.
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    The final one on that letter just says, ''Look, all I want is yes or no in my request,'' and some of these people just want to be able to get a response, and I'd like to get maybe some feedback from you in seeing what we can do. I'd like to be able to—I've asked for an investigation. If you can ask—you know, do something in Houston, I would really appreciate it.
    Mr. THOMPSON. If we could, Mr. Congressman, I'd like to come and speak to you; speak to your staff, and get as much as information as we can, and I promise you we'll——
    Mr. RODRIGUEZ. Yes, and if you find that this—that that's not going on, and there's no discrimination in terms of sexual abuse of some of the workers there and or nepotism or any of the other stuff, that's fine, but we need to see what's going on.
    Mr. THOMPSON. Those are serious issues, and I promise you that I won't ignore them, so if we could spend some time, I'd be delighted to do that.
    Mr. RODRIGUEZ. And you've been real responsive, and I want to thank you for that, and I know nothing worse than having a situation that people are burned out, and I can see that in some of the workers there, and they're fed up also. They're also frustrated, and they're feeling the frustration from the client, and they're frustrated too, and that builds up a situation where I've gotten calls—and I know other congressmen have, and I know some of them have problems, mental health problems, and that's understandable from some of the veterans, but I think that we need to begin to see. Now, if you need some additional help or if you feel—and I don't know what—some time ago, you went away and did away with the case workers, and I don't know what the other congressmen—but it looks like I'm handling your caseload now. So, you just turned that caseload to me, and so I don't know if you have to reassess that and whether you need additional monies there or you need to get rid of some of your supervisors and directors and get them to do some direct work, if that's some of the answers.
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    Mr. THOMPSON. Well, I will say in general, in Texas, and this is both for Houston and Waco, they have a lot of work that's contributing to this. I don't use that as an excuse, but I would say that there is a very high volume of work in the State of Texas, and it's one we're concerned about, but, again, I would like to sit down with either you or your staff or both and we'll go through the specific issues you have. We also have some concerns that involve processing claims down there, and I promise you we will find out what the answers are.
    Mr. RODRIGUEZ. And I know that there's a disproportionate number of veterans in certain areas of the country, and the money doesn't necessarily follow that pattern, and if we need to look at that, let me know.
    Mr. THOMPSON. Okay.
    Mr. QUINN. Thank you, Mr. Rodriguez. We'll rely on you to make that appointment. The offer's been made here on the record. And if you need help from the staff here, Ciro, I know you have your own congressional staff; your staff back in the district; your staff here in Washington, but it goes without saying that the staff here on this subcommittee and the Full Committee I would offer them to you to help you to the best of your ability to serve your constituents.
    Mr. RODRIGUEZ. Well, Mr. Chairman, the only thing I can say that—and I spent 11 years in the Texas house, and I thought it was bureaucratic. You know, when I came up here, it seemed like we were running a good ship in comparison, and I'm glad that at least you're bringing up to the 21st century in terms of the technology, and that's important, but we need to move a lot quicker.
    Mr. QUINN. I agree, I agree.
    Mr. RODRIGUEZ. And later on, hopefully, things will work out okay, but I want to thank you for asking them to come before us, and I think all of this can be helpful in the long run.
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    Mr. QUINN. Sure, and I think your questions are not unlike a lot of other questions the other 434 Members of the House of Representatives are having. I mean, caseload is different between States and between districts, but, certainly, we do all the Members a favor by straightening this out and cutting through the bureaucracy and in turn do favors of the right kind for our constituents.
    I don't have any further questions. I know that we've sort of ignored the time clock, but we fleshed out what we wanted to, and, Bob, you're all set, I think, in terms of questions. Mr. Under Secretary, we've come a long way since we first began these discussions 3 years ago. As you say, there's a way to go with some of the performance plans before we get them up, but I think we're headed in the right direction. As I said earlier, I look forward to having our staffs meet again outside of the hustle and bustle of the Hill and your headquarters in those offsite meetings to get the final push ready push ready for the GPRA requirements. So, we thank you, and we thank GAO for their testimony today. If there's no other further business, we'll declare that the hearing is adjourned.
    [Whereupon, at 11:08 a.m., the subcommittee adjourned subject to the call of the chair.]