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House of Representatives,
Subcommittee on Oversight and Investigation,
Committee on Veterans' Affairs,
Washington, DC.
    The subcommittee met, pursuant to call, at 9:34 a.m. in room 334, Cannon House Office Building, Hon. Terry Everett (chairman of the subcommittee) presiding.
    Present: Representatives Everett, Clyburn, Snyder, Evans, Mascara.

    Mr. EVERETT. The hearing will come to order. This morning's hearing is on planning by the Department of Veterans Affairs on the Government Performance Results Act. I will call GPRA the Results Act. Our witnesses will explain much more precisely what the Results Act is and requires, but basically it requires the Federal Government's departments and agencies to operate in a more business-like way by having real plans that resemble those used in the private sector.
    These plans are to achieve and define measurable outcomes linked to the operations and operating budgets that support them. The Results Act was passed in 1993 with bipartisan support and House Majority Leader Dick Army has made the implementation of Results Act a high-priority. In fact, he has used the VA's Results Act pilot program to improve health care at VA hospitals as one of the early Results Act success stories.
    Efficient government should provide better services to veterans. The VA has had active and cooperative consultations with the VA Committee and is off to a positive start. But it is important to recognize that this is only the start and much remains to be done over the next several years to continue developing and refining the planning for veterans to the point where it achieves full Results Act compliance.
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    We will hear from the General Accounting Office, the Congressional Research Service of the VA, as well as the Departments of Defense and Labor. Our last panel will be several of the veterans' service organizations who represent our veterans. I look forward to hearing their testimony because this is an important subject. The planning to be done will define virtually every aspect of the VA in years to come. Our veterans are depending on Congress and the Administration for improved results in the services and benefits they have earned.
    I now will welcome Panel 1, but prior to that, while Panel 1 is being seated, if any of the other members would like to make a statement or, otherwise we will get right to the hearing.
    Thank you very much.
    I would like to recognize Dr. Dennis Snook of the Congressional Research Service and Ms. Cindy Fagnoni, Associate Director of Health, Education, and Human Services Division of GAO and ask her to introduce her panel.
    Ms. FAGNONI. Thank you. With me today I have Bruce Layton and Greg Whitney.
    Mr. EVERETT. Thank you very much.
    Ms. FAGNONI. Thank you.
    Mr. EVERETT. Dr. Snook, if you will begin, I will appreciate it. By the way, with your cooperation please, I would like to hold your statements to 5 minutes. your entire statements will be entered into the record. Thank you.
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    Mr. SNOOK. Thank you Mr. Chairman. Good morning Mr. Chairman and members of the subcommittee. The Congressional Research Service appreciates the invitation to appear before you as you consider the strategic plan prepared by VA. My brief remarks provide additional introduction to the concepts that GPRA instructs agencies to use in responding to the Act's requirements and to how those concepts and terms relate to the VA efforts to develop the strategic plan. As required by GPRA, the GAO has prepared a formal evaluation of the VA plan, and my counterparts from that agency will present that evaluation.
    Mr. Chairman, GPRA envisions a rational government with measured effects. In order to achieve such an ideal, the Act requires that the Executive Branch describe itself in terms of the effectiveness of its efforts as well as provide a detailed account of what it does. Through this coherent and comprehensive look at the interrelated aspects of federal functions, GPRA encourages more efficient operations by providing Congress more objective information on achieving statutory objectives on the relative effectiveness and efficiency of federal programs and spending.
    GPRA set in motion a process by which such a plan could be produced: the Act established a series of steps and a timetable to produce an accounting of government functions from the bottom up, and it requires that this explanation focus on purposes rather than simply accepting the basis for the activities as given.
    Thus, the Act seeks to link the performance of activities with indicators and measurements of the results of those activities. Currently, performance itself is generally measured through the amounts of money expended, actions taken, manpower and resources engaged, or the number of persons, places, or things affected. GPRA asks that the evaluation process be extended to the ordinary activities of the Federal Government at every level: what is the activity trying to accomplish, and how do we know if it accomplished it?
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    The Act establishes a method for determining the feasibility of a comprehensive, government-wide plan, to be in place as early as fiscal year 2002. As interpreted by OMB and GAO, a strategic plan contains six elements: comprehensive mission statement; long-term goals and objectives; strategies to achieve those goals and objectives; the relationship between long-term objectives and annual performance goals; identification of key factors beyond the control of the agency; and a description of how program evaluations might help with the process.
    In the strategic plan, general goals elaborate policy, programmatic, or management directions that follow from the agency mission, and objectives are more specific statements of something to be accomplished within those directors. For example, VA has a general goal of improving the health care of veterans, which is furthered by an objective of increasing the number of veterans using the VA health care system. Within these objectives are performance goals, which are specific milestones to be attained each year. GPRA requires that agencies establish annual performance plans, with performance goals identified, as part of the annual budget process.
    According to GPRA, performance goals must be measurable, and the Act emphasizes the need for agencies to develop performance indicators. Such indicators measure progress toward goals, such as the number or ratio of persons entering a rehabilitation program who regain lost abilities, rather than simply quantifying input into agency activities, such as dollars spent or employee-years, or as simple output from agency program operations, such as clients served or benefits paid.
    The VA's strategic plan identifies clear and measurable goals for some agency functions that could be measured through performance indicators. In others, the identification of performance goals that could be linked directly to general mission goals awaits systematic evaluation program evaluation and the data such evaluations would provide. In these instances, VA has listed program evaluations as their short-term objectives, with performance goals met by the conduct of the evaluations themselves.
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    Achieving the GPRA objective of rational, results-linked government program operations will take time. In addition GPRA does not fully distinguish between performance linked to mandatory program operations, and performance in which the agency is permitted considerable discretion in the pursuit of goals outlined and authorized by Congress.
    In VA, over one-half of its $40 billion budget is mandatory spending for entitlements, and the VA plan contains objectives for increasing efficiency of its benefits administration, and for improving its outreach to veterans and their families. Program evaluations could provide a basis for VA to recommend legislative changes, but in the absence of such changes, VA will proceed on the assumption that appropriate objectives are satisfied when it complies with the law as written. For example, evaluations could lead VA to conclude that the basis for compensation ratings is inadequate to the goal of linking appropriate compensation to service-connected conditions, but it will continue to rate and compensate service-disabled veterans under current rules until Congress tells it otherwise.
    On the other hand, developing strategic goals for discretionary programs could require balancing competing objectives. While two competing objectives may be necessary and defensible, the emphasis on one may mean less success on meeting the other.
    Substantial time and effort has been expended in the preparation of the strategic plan, an investment in staff resources partially shared by your Committee and by your support agencies. I am sure all of us who participated in the consultative process came away with a renewed sense, not only of the broad range of functions within VA, but with the difficulty of creating a unified explanation of those functions.
    Now I turn to my counterparts from GAO for their more specific evaluation. Thank you.
    [The prepared statement of Mr. Snook appears on p. 38.]

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    Mr. EVERETT. Ms. Fagnoni, if you will continue, thank you.

    Ms. FAGNONI. Thank you. Good morning Mr. Chairman and members of the subcommittee. We are pleased to be here today to provide our views on VA's draft strategic plan which is required under the Government Performance and Results Act of 1993. As you know, the Results Act was one of the major steps the Congress has taken in recent years to fundamentally change the way Federal agencies go about their work. The Results Act requires agencies to clearly define their missions, set goals, measure performance, and report on their accomplishments. One of the act's major milestones, that Federal agencies submit their strategic plans to the Congress, is September 30, less than 2 weeks away.
    With fiscal year 1996 spending of over $38 billion, VA is responsible for administering laws that provide numerous types of benefits to many of this Nation's 26 million veterans and their families. The information I am presenting today will address VA's progress in implementing the Results Act. My observations are based on our review of VA's June 1997 draft strategic plan and have been up dated to reflect revisions VA made between June and its latest version, dated August 15.
    In summary, VA has made significant progress in its strategic planning, based in part on consultations with the Congress. This is reflected in the progress VA has made in improving its strategic plan. VA's June draft was confusing, because there were numerous layers of goals, objectives and strategies. Also, it contained significant gaps where goals were missing and lacked a clear focus on results. The latest version is clearer and easier to follow, more complete and better organized to focus more on results and less on process. In addition, VA has filled significant gaps in the discussion of program goals. The largest gap in the June draft was the lack of goals for four of the five major veteran's benefit programs. The current plan includes goals for each of these programs, stating them in terms of ensuring that VA benefit programs meet veterans needs.
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    While VA's current draft plan represents progress, VA, like many other agencies, will need to continue to improve its strategic planning well after the September 30 deadline. Perhaps the most significant deficiency in VA's draft strategic plan, in both the earlier and current versions, is the lack of results-oriented goals for major VA programs, particularly for the benefit programs. While discussions of goals for benefit programs have been added to the current version, they are placeholders for results-oriented goals that have not yet been developed. The objectives supporting VA's general goal for its compensation and pensioning area, for example, are to evaluate the compensation and pension programs to determine their effectiveness in meeting the needs of veterans and their beneficiaries, and modify these programs as appropriate.
    VA has noted that developing results-oriented goals will be difficult until it has completed program evaluations. Evaluations can be an important source of information for helping the Congress and others ensure that agency goals are valid and reasonable, providing baselines for agencies to use in developing performance measures and performance goals, and identifying factors likely to affect agency performance. VA expects to set priorities for evaluating its programs sometime in fiscal year 1998, to complete the highest priority evaluations by the end of fiscal year 2000, and to complete at least one evaluation in each of ten major program areas by fiscal year 2003.
    Another observation we made about VA's June draft plan was that VA's discussion of external factors that could affect its strategic planning was incomplete. VA's current draft has added discussions of the implications of demographic changes on VA's programs. For example, VA notes that the death rate for veterans is increasing, which will lead VA to explore various options for meeting increased demands for burials in VA and State veterans' cemeteries. What is missing in the draft, however, is a link between the projected increase in veteran deaths and the proposed schedule of specific cemetery projects.
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    In our comments on the June draft, we also noted that VA has not clearly identified the areas where its programs overlap with those of other Federal agencies, nor has it coordinated its strategic planning efforts with those of other agencies. VA's current draft strategic plan addresses the need to improve coordination with other Federal agencies and State governments. This will involve identifying overlaps and links with other Federal agencies, enhancing and improving communications links with other agencies, and keeping State directors of veterans' affairs and other State officials apprised of VA benefits and programs, and of opportunities for collaboration and coordination.
    VA is aware that it has much work to do to fully implement the Results Act. Some of this work is identified in the current plan. VA's success in implementing the Results Plan will depend on how successful it is in ensuring that its strategic plan focuses on results and how well it integrates these plans with the plans of other Federal agencies, and the Congress will continue to play an important role in consulting with VA in developing results-oriented goals in overseeing VA's efforts to successfully implement the Results Act.
    Mr. Chairman, this completes my statement this morning. I would be pleased to respond to any questions you or members of the subcommittee might have.
    [The prepared statement of Ms. Fagnoni appears on p. 42.]

    Mr. EVERETT. Thank you very much. Dr. Snook the VA's mission statement, includes being the principal advocate for America's veterans in ensuring that they receive their benefits and services. Is that consistent with the VA statutory mandate?
    Mr. SNOOK. There is nothing in the statute that gives VA the authority to regard itself as the principal advocate for veterans, and, furthermore, I think that the statement itself runs contrary to the view expressed by Congress, I think, that it is the principal advocate by passing laws that improve benefits for veterans.
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    Mr. EVERETT. I appreciate that response. Is the Results Act just some sort of management fad with a statutory input, or, how potential important can this be?
    Mr. SNOOK. Well I think public administration scholars have long tried to improve the operations of the Federal Government, and this is another example of those attempts. Previous attempts, however, tended to accept government as it was already structured, and attempted to provide a more efficient operation through evaluating its various levels of performance. I think this one follows from a school of thought that says that government should look to see its results first, to try to determine whether the things that it is doing are appropriate. In that regard, a coherent strategic plan, both from an individual agency's perspective, and from the Federal Government as a whole, would be a very important document, and it would allow all of government to determine its appropriate place by looking at the effect of what it actually does. In that regard, I think it could but let me commend you for the work that you all have done with this. We appreciate it very much and certainly it has been very valuable to the committee.
    Ms. FAGNONI. Thank you.
    Mr. EVERETT. Would you please explain in more detail, how the VA's annual performance plans and future budget requests relate to each other?
    Ms. FAGNONI. Well, the strategic plan, the annual performance plans and the budget requests are three components that, together under the Results Act, the whole goal is really trying to enable a closer and clearer link between what the Government is spending and what the results are, or the difference the spending is making in people's lives. The first component, and what agencies are currently working on, is the strategic plan which is supposed to set out the overall mission of the agency, the overall goals and objectives, and strategies for achieving those goals and objectives.
    The next item is the annual performance plan; at this point under the Results Act, agencies were supposed to have submitted their first attempts at annual performance plans to OMB this month. Those plans are supposed to show for the next fiscal year, in this case for fiscal year 1999, what the agency hopes to accomplish, what are its goals and measures for that particular year. So it is taking the overall strategic plan and focusing on a specific year.
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    What is probably the most difficult piece of the Results Act is going to be exactly how the strategic plan and annual plans link up with the budget requests. Right now the annual plan and a budget request go together, and the hope is that there will be links between an agency's goals and objectives for a specific year and what it is asking for in its budget, and ideally and ultimately the goal of the Results Act is for budget decision makers to have some information about an agency's performance and the results it is achieving, to help inform budget decisions.
    Chairman Mr. Mascara, for any questions he may have.

    Mr. MASCARA. Well, I will be very brief. I tried to read this and it is very esoteric and arcane and very boring, so I gave up and I said, ''Well maybe, I can just ask a question that you can answer in 30 words or less.'' What I am attempting to ascertain, is, does your study deal with the current budgeting and the amounts of money being spent on these programs? Are you able to determine whether there is insufficient funding, and that is part of the problem, and does your study include that particular phase of whether or not the Federal Government was funding these programs at a sufficient level. You know, you could study, and study and study, but the VA does not have the money to do its job, does your report say that? Is there a sufficient amount of money to achieve the results of your study?
    Ms. FAGNONI. What we focused on is the first step in this process, which is VA attempting to lay out its overall goals and what it hopes to achieve. With that in place, over the coming years, under the Results Act, we will be looking at, for an individual year, what is VA asking for, and how does its performance look and how is that measuring up. But at this point, the information is not there for us to put all those pieces together. But the hope is under the Results Act that, over time, that information will be there to allow somebody to look at the program result and say, what do we get for our money, is it enough?
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    Mr. MASCARA. If we implement the results of your study, will the amount of time that it takes to expedite a claim to the VA, is that going to improve?
    Ms. FAGNONI. Well actually——
    Mr. MASCARA. I have heard people in here say, ''Well it used to take 300 days, now it only takes 160-some days,'' and, I mean, is this a part of your study to determine the efficiency of delivering services?
    Ms. FAGNONI. Well, actually, in VA's strategic plan, it has a piece that is focused more broadly on what it hopes to accomplish with its programs. Part of its strategic plan is also looking at how it can operate more efficiently and effectively, and VA does have goals that are directed at, for example, improving claims processing. So, yes, that is a component of what VA has laid out in its strategic plan. And that is something, then, that one can measure them against. Are they going to meet these goals they have set in terms of improving the speed of their claims processing and the accuracy?
    Mr. MASCARA. Well obviously the strategic planning process cannot take place over night. I saw in there that you had the June version, and then the August version. In your view, how far along do you believe the VA is in the strategic planning process? And, how long can we reasonably expect it to take the VA to complete a workable plan, that sets forth the realistic performance goals and establishes a framework for achieving desirable results?
    Ms. FAGNONI. This is really VA's first attempt to do a department-wide plan, and I think they have come a long way, even in the short period of time since they have been trying to put things on paper and trying to communicate effectively what it is they were trying to do. As we say in our assessment while they have made progress in their strategic planning, they still need to make improvements. Particularly in becoming more specific in defining the results of their programs and really assessing how much their programs are achieving. I guess the thing that we are looking at now is, we would encourage VA to set some interim results goals that are a bit more specific than some of the ones they have, particularly in the benefits programs, and that they really lay out a program evaluation schedule and adhere to it, that allows them to look more carefully at their programs and see what they are accomplishing, and determine how they can measure their success in how well they are achieving their goals. So, I think they have come a long way. What we are trying to say, through our work and what I am sure will be continuing work in looking at implementing the Results Act, is for Congress and other stakeholders should to continue to work with VA and to keep VA moving along the direction it is moving and continue to make progress. How long that will take at this point, I would be reluctant to say. Besides, I think partly it depends on how much continued attention there is to this entire effort. Anything that takes over a period of years has the danger that there will be a letup, and I think it will take continued monitoring and consultation to keep this effort moving. It is not an easy effort that they are undertaking. Nor is it for any agency.
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    Mr. EVERETT. I will not prolong this, but let me say I appreciate the gentleman's line of questioning and if you can take the computer modernization situation, I would say it often takes VA a very, very long time to complete a business plan, and, of course, this business plan is integral to the—Dr. Snyder.
    Dr. SNYDER. Thank you Mr. Chairman. I will address this to both of you. This is a specific question. In the Results Act, when we talk about strategic plan, is there a time framework, are we talking over the next 5 years, 10 years, indefinite period of time?
    Ms. FAGNONI. Well, under the Results Act, the strategic plans are required to cover 5 years. They can be extended more than that, but it is supposed to cover a 5-year period and the plans are supposed to be updated at least every 3 years. And, as I said, the plan that VA officially submits to the Congress and OMB in a couple of weeks will be their first strategic plan under the Results Act.
    Dr. SNYDER. And what block of time, then, would that likely be, 1998 through 2003?
    Mr. WHITNEY. Yes sir. That is the period the VA's plan that they are preparing now is covering.
    Dr. SNYDER. As you may know, I am a family doctor and people in health care, we tend to whine a lot about all the dramatic changes that have occurred in health care over the last decade. And as I look, say, at the National Park Service, I see their mission as being essentially the same as it has been for 5 years ago or 10 years ago. When you look at areas in government that are providing health care, whether it is the Indian Health Service or the Department of Defense, their health facilities and VA health facilities, it would seem that if there has not been some dramatic change within the agencies, there is going to need to be. I think there has been some fairly dramatic change as they are adapting to all the marketplace changes that have gone on. Is some of the concerns that you have about the VA, similar to concerns you would have about, say Department of Defense health services, or Bureau of Indian Affairs health services?
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    Mr. SNOOK. I think so. First of all, a strategic plan could lay out very carefully I think, what trade offs are necessarily made in the disbursement of resources among various kinds of objectives that it might seek. And in VA, with a tremendous changeover occurring as a result of moving from a hospital-based system to an outpatient care system, from a system that was initially designed to provide intensive care and treatment for veterans as they returned from wartime to one which provides basic care, the internal tensions that must be going on there must be very great, and the strategic plan does not reveal those tensions, but one would assume they are there. Now I would think that over the long period of time, that VA, as with other agencies, will have to begin to make explicit, exactly how it does intend to address demographic changes and the changes in the practice of medical care.
    Dr. SNYDER. And we have the whole issue of medical education, also the role of the VA system. You are firing off there. The whole role the VA health care system plays in medical education, I would think is one that is going to be a tricky one for them to sort out, too, much differently than a private hospital.
    You talk about external factors, do you, is Congress considered an external factor in this process? When you look ahead, or when the VA looks ahead at the strategic plan, where do they put the role of Congress? How do they integrate into their plan? For example, I am thinking now of the efforts by this Committee and others to bring about the Medicare subvention demonstration project, and that was clearly part of the budget process for this next year and we seem to be, hopefully temporarily, stymied on that issue, but clearly we are stymied right now. How, if you are planning a plan, I mean, how do they write in these plans the impacts that Congress' action or inaction can have? I means, I guess I am saying, is it a dream? Is the plan intended to be a dream?
    Mr. SNOOK. No, I do not think it is a dream at all. I think that, if anything, it understates how far they can and will be going with respect to improving the overall medical care system. VA has a very ambitious plan for providing itself, providing its facilities with resources beyond normal appropriations, because of actions on the part of facility directors in the future. So, I think that over the long run, you are going to see a very aggressive VA medial care system expanding and attempting to address more veterans, with more services and doing so more efficiently and with different sources of funds.
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    Dr. SNYDER. Are these plans written in a contingent fashion? I mean it does not get as much detail as talking about Medicare subvention, but are they written in such a way, if we get these things, then we can aggressively pursue third-party payments. If we do not, then our plan will go this direction. Because if I were the VA right now, I would look over here and I would think I do not know what they are going to do on this Medicare subvention.
    Ms. FAGNONI. Well, to some extent, for example in this section, they have an overall goal of improving the health care of veterans. That is one of their major goals, and they do talk about, and one of the goals and objectives to achieve that goal is to increase the nonappropriated funds sources of income. Now they got the medical care cost recovery piece of that, but not the Medicare subvention. And they do mention that as an external factor, that their effort is in part contingent on some actions by the Congress. They have tried to factor that in. But, also, again this is a plan at the department-wide level and as I am sure you know, underneath that plan VHA has its own much more detailed planning effort, Prescription for Change that lays out in more detail some of the efforts it has underway.
    Dr. SNYDER. Thank you, Mr. Chairman.
    Mr. EVERETT. Thank you, Dr. Snyder. Let me mention for the record that our friend colleague, Congressman Clyburn had some emergency dental work to be done and he hopefully may be here before the end of the hearing, but I know that he apologizes for missing your testimony, but on the other hand we can fully understand why he is not here and his statement will be entered into the full record.
    I would like to thank this panel and we will have additional questions for you for the record please.
    Ms. FAGNONI. Thank you.
    Mr. EVERETT. Thank you.
    I would like to call Panel 2 please. Mr. Dennis Duffy, Assistant Secretary for Policy and Planning for the Department of Veterans Affairs, and please ask him to introduce his panel.
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    Mr. DUFFY. Good morning, Mr. Chairman. It is a pleasure to testify today on behalf of the Department of Veterans Affairs concerning our strategic plan through the year 2003. I wish to congratulate you and Committee staff on conducting what I hope will be the first of many hearings on VA's strategic direction. I think it is absolutely critical that Congress, the Executive Branch and the veteran service organizations enter into a long-term dialogue on ensuring that we meet the very real needs of veterans into the 21st century.
    I am accompanied today by Mark Catlett, our Acting Assistant Secretary for Management and Nora Egan, our Deputy Assistant Secretary for Planning.
    As you know, the plan is due to Congress in less than 2 weeks and we are still in the process of revising it, based on comments we have received from various stakeholders.
    I can truly say to this committee that VA recognizes the Government Performances and Results Act as a real opportunity to ensure that we remain able to meet the changing needs of veterans in recognition of their sacrifice for America. GPRA promotes a focus on results, on service quality and on customer satisfaction. By now it is also clear to us that GPRA treats planning as an ongoing process of asking and, I hope, answering the tough questions. We have already had to consider fundamental questions like, do veterans programs actually achieve their intended purposes? And what are veterans and the American taxpayer getting in return for the dollars that are expended on these veterans programs?
    We are proud of our strategic plan and I am especially proud of the many employees whose efforts produced it, particularly those on my own planning staff. Still, as these questions illustrate, the plan is only a point of departure, not a final destination. We are optimistic about this journey into the strategic planning process, but we are also mindful that the road is a long one.
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    Four years ago, we began by seeking and obtaining GPRA pilot status for our national cemetery system, our loan-guaranty program, and the New York VA Regional Office. These pilot programs, gave us certain insights that have strengthened our efforts.
    Movement accelerated 2 years ago, when VA top managers participated in an intense 2 1/2 day planning conference led by then Deputy Secretary Hershel Gober. That conference led directly to formation of VA's strategic management process. And, as you know, my written statement included a diagram of that process, through which we have already achieved, I believe, some major milestones. We have reaffirmed the Department's vision and goals. We have established a one-VA approach to world-class customer service, and we have developed for the first time a department-wide strategic plan. We have also set the stage for further progress with a thorough environmental scan, an organizational assessment survey of all VA employees, development of what I believe to be truly meaningful customer service goals, and initiation of strategic scans of all of our various benefit and program lines.
    Last year's environmental scan allowed us to assess the strengths and weaknesses of the Department and review key veterans issues through the eyes of our stakeholders, who responded to us through a series of interviews and questionnaires. In addition, almost 126,000 VA employees responded to a recent organizational assessment, which is producing tremendous insights into our work environments as we strive to develop VA into a true high-performance organization.
    New customer service goals focus on the previously neglected need at the Department to operate as a unified organization, and to provide seamless service that veterans so rightly expect. These goals, benchmarked against the best in business, will lead us to providing true world-class service.
    Our strategic scans of the various business lines will identify data gaps, assess our current performance measures, and highlight issues that still must be addressed to truly evaluate the effectiveness of our programs. These scans will be completed in the next several months and will provide us with the critical underpinnings for truly effective program evaluations.
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    We have work to do and we have improvements to make, but we are ready to move ahead. As I said, I am proud of what we have accomplished to date, but we are not completely satisfied. I welcome candid discussion of the weaknesses that we have identified, during this hearing and afterward.
    Before I describe the plan itself, I want to mention the consultations we have had with staff of this committee and other parts of the Congress. Discussions were at all times frank and professional and contributed immensely to our work. Similar valuable consultations occurred with other stakeholders, including veteran service organizations, OMB, our labor union partners and other Federal agencies. Building on that base, consultation and cooperation will continue.
    Let me briefly describe the strategic plan. First the Department's mission and vision were identified, along with major planning assumptions. The opening section also described the veteran population and trends that we anticipate in coming years.
    Part one of the plan contains VA's strategic goals for all VA programs through which services and benefits are provided. It describes planned improvements, goals, and objectives. Strategies are identified for each of our various business lines, as well as for all our special-emphasis programs. We sought to provide sufficient information without being overly descriptive. This section also attempts to outline plans for substantive program evaluations, a subject that I hope to address shortly.
    Mr. Chairman, VA is genuinely committed to meeting the changing needs of our veteran clients in the 21st century and we recognize that effective program evaluations are critical to that goal.
    Part two of our plan attempts to identify management strategies that reflect our strong belief that the future of VA requires true customer service, a high performing workforce, efficient operations and careful exercise of our fiduciary responsibility to the American taxpayer. Our workforce goals include fostering performance accountability and innovative practices. Our return-on-investment goals include better activity-based cost accounting and an effective capital investment program. In constructing our plan, results of the environmental scan and various customer surveys are reflected in the goals and objectives. However, we did not conduct formal program evaluations.
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    Throughout our consultations with you and with others, that lack of program evaluations and a closely-related subject, a need for meaningful outcome-based measures, came up again and again. Program evaluations under GPRA are expected to address statutory intent, which will not be so easy. We believe statutes governing VA programs generally do not describe intended results, rather, more often they establish specific benefits and criteria for receipt. Even Congressional oversight has focused almost exclusively on delivery, not on outcomes. And, given this background, we are taking an approach that we believe is both careful and practical. The strategic scans of each of our business lines come first. We then hope to identify the pertinent programs, revalidate our statutory mandates, and formulate the key questions to be addressed. Recognizing the sensitive nature of certain aspects of both program evaluations and outcome-based performance goals, we expect to involve our stakeholders at every step.
    We anticipate instances where our statutory intent may be a matter of disagreement among the various players, especially where the common understanding of our programs has evolved in directions different from original intent. These evaluations will provide a firm basis for establishing true outcome-based performance measures. In the meantime, we have taken Chairman Stump's suggestion that we use interim results-oriented goals to the extent possible in our 1997/1998 performance plans.
    At this point, I want to shift quickly to another concern for the Congress: better cooperation among agencies. Now, admittedly, planning to date has largely centered on our own internal strategic management process in development of this first department-wide plan. But I would point out that we have long cultivated coordination with related non-VA programs. I will not bother you with the details, I know they will be explained in some detail with the next panel. But we have participated in numerous government-wide seminars and training sessions on GPRA, to share our best practices. And we have exchanged our draft strategic plan with many other agencies. The plan explicitly addresses elimination of duplicate effort and greater coordination of services among multiple Federal agencies. We are fully aware of the need to enhance such cooperation.
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    In summary, Mr. Chairman, VA's strategic plan represents a huge and, I believe, unprecedented effort. We believe it is a good start, a road map for the future. We are committed to a strategic management process refined by experience. Our annual performance plan and our budget will reflect the plan and we intend to track and report our accomplishments. The plan will change in coming years to reflect the environment in which we operate, the results of meaningful program evaluations, and the extent to which our accomplishments match our intents.
    I thank you for this opportunity to present our views. Mr. Catlett, Ms. Egan and I are pleased to answer any questions you or the committee may have.
    [The prepared statement of Mr. Duffy, with attachment, appears on p. 49.]

    Mr. EVERETT. Thank you very much and you know that I appreciate my working relationship with the VA. Over the past years we have faced and talked about some difficult issues and I appreciate the ability to do that and do it candidly. I remember years ago, I was serving in the U.S. Air Force Intelligence Service and I was sitting in a meeting and the head of that group, a Captain Kelly, I never will forget his name, asked us about a very complex situation. All of us, all four of us came up with the same answer, and he looked at us and said well you know if you guys all agree, then somebody is not thinking. And I think that that can sort of describe, if you will, the tension that also exists between this Committee and the VA. Let me also say that while perhaps oversight has historically focused on program delivery rather than program outcomes, this Committee is extremely interested in, I think some of you know, in program outcomes, and we will continue to stress that focus.
    Before I ask my first question, I will ask unanimous consent to place in the record, letters from Chairman Stump to the Secretary of Veteran Affairs, dated May 20, 1997, and August 12, 1997, regarding the VA's draft strategic planning under the Results Act. Without objection, so ordered.
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    (The information follows:)

House of Representatives,
Committee on Veterans' Affairs,
Washington, DC, May 20, 1997.
The Secretary of Veterans Affairs,
Department of Veterans Affairs, Washington, DC.

    DEAR MR. SECRETARY: As you are aware, the Government Performance and Results Act (Results Act) requires the Department of Veterans' Affairs (VA) to formally file its strategic plan with Congress by September 30, 1997. Full and effective Results Act implementation is a priority for the Committee and is consistent with the type of strategic planning the Committee has long urged VA to do.
    The VA Committee has concerns about the Department's progress in implementing the Results Act. While I am encouraged that VA is not on the ''trouble list'' that the Office of the Majority Leader recently conveyed to the Office of Management and Budget, I agree that it is appropriate for VA to be on the ''watch list.'' However, my statement of concerns about the progress and substance of VA's Results Act efforts is not intended as a criticism of the cooperation or openness shown in consulting with the Committee. To the contrary, I believe VA exhibits a strong commitment to making the changes in thinking and action necessary to achieve the objectives of the Results Act.
    In the required consultations with Congress, VA has participated in a number of meetings and briefings and has provided the Committee with draft vision and mission statements, as well as with some drafts of plan elements and performance measures. The VA Committee is consulting extensively with the General Accounting Office and the Congressional Management Institute in reviewing the draft materials submitted thus far I have the following observations about what we have seen:
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    Vision and Mission Statements: VA has not yet articulated adequate vision and mission statements. VA's draft vision statement is essentially inward looking and does not capture the contemporary expression of VA's mission that it should. The draft mission statement should be considerably more specific about the benefits VA is mandated to bring to veterans and their families. It should reflect each of VA's major activities as set forth in title 38 of the United States Code.

    Strategies: The Committee does not have a sufficient picture of VA's strategies to comment at this point.

    Goals and Performance Measures: VA's performance measures appear to be largely process rather than results oriented. I recognize the difficulty of defining with precision and measuring what VA's programs should be achieving as outcomes. The Committee will continue its dialogue with VA as the performance measures are refined.

     Coordination: Both from the standpoints of efficiency and improving services to veterans, VA should give more attention to coordination with other entities important to achieving the goals for veterans, particularly with the Departments of Defense and Labor.

    Sufficient time remains for considerable refinement of VA's first strategic plan under the Results Act. Of course, the first plan will be the starting point for year two and continued improvement. A detailed description of how VA carried out its strategic assessment and the results of that assessment would greatly facilitate planning efforts.
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    Also, major data integrity, issues continue to confront VA and could seriously undermine efforts to accurately measure performance. Finally, the essentially bottom-up planning to date is inconsistent with Results Act intent and is likely to perpetuate the lack of unity between the major administrations within the Department, despite the stated vision of functioning as a unified department.
    The Committee is informed that VA's draft strategic plan is scheduled to be ready on June 1, 1997. It is absolutely essential that the draft plan be timely to allow adequate consultation and review by all stakeholders, including Congress. I look forward to continued cooperation and openness in meeting the challenges of true strategic planning under the Results Act.
Bob Stump,
House of Representatives,
Committee on Veterans' Affairs,
Washington, DC, August 12, 1997.
Department of Veterans Affairs, Washington, DC.

    DEAR MR. SECRETARY: I am pleased that the Department of Veterans Affairs (VA) has continued its active consultations with the VA Committee. These have included both informal meetings and a day-long meeting with a facilitator. One of the most encouraging aspects of the consultations from the beginning has been the open and cooperative way in which the VA has approached them.
    The VA also has continued to exhibit its commitment to the long-term process of Results Act strategic planning and to making it a central part of the Department's culture. This involves fundamental improvements in designing, planning and providing veterans' benefits and services. The Department's first real strategic plan in fiscal year 1998 is particularly important because it will be the foundation for each succeeding year's refinements and modifications.
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    The General Accounting Office has assisted the VA Committee in its review of the August 1, 1997. draft of the plan. although the views expressed in this letter are solely the Committee's. The latest draft incorporates several of the stakeholder suggestions made during the consultations and is considerably strengthened overall. The Department itself has identified areas it recognizes still need improvement and has outlined how it will address them.
    My specific observations about the August 1 draft are as follows:

    Overall Organization of Plan: Perhaps the biggest stumbling block stakeholders encountered in analyzing the earlier draft of the plan was understanding its basic organization because of its confusing structure and missing parts. It is now better organized. more complete, and clearer.

    Mission Statement: While the mission statement remains essentially unchanged due to the plan's improved organization it relates more clearly to the VA's business lines. As previously observed during the consultations, the statement's inclusion of the Department's role as ''principal advocate'' for veterans may be an aspiration but lacks a statutory basis. The veterans service organizations, a number of which are chartered by Congress. have legal recognition as the advocates for veterans.

    External Factors: (1) The VA has expanded the plan's discussion of the demographic changes in the veteran population. The characteristics and trends of the veteran population will undergo changes so profound over the next fifteen years that, in the Committee's view, the discussion of demographic factors, including profiles of veterans seeking VA health care, could be further expanded.
    (2) Also, the VA Committee understands the difficulties of coordination with other departments and agencies. Nonetheless, the VA should aggressively continue to pursue cross-cutting issues with the Departments of Defense and Labor in the context of strategic planning.
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    Results-Oriented Goals: (1) The VA's draft plan continues to lack results-oriented goals for many programs. particularly in the Veterans Benefits Administration, because no program evaluations have been accomplished. The acknowledged lack of program evaluations is the most serious single deficiency in the VA's preparations for strategic planning under the Results Act. This regrettable failure to comply with a Results Act requirement has put the VA possibly two years or more behind where it should be in its strategic planning. At this point. the VA appears to be doing what it can to catch up by establishing a schedule for program evaluations. The schedule should be as rigorous as possible.
    (2) While moving toward program evaluations and the data integrity necessary to perform them, the VA Committee expects the VA to develop interim results-oriented goals rather than to rely on placeholders. Those goals can then be progressively validated and adjusted as necessary. Without results-oriented goals derived from program evaluations, the VA cannot complete its strategic plan and attain full compliance with the Results Act.
    The VA Committee fully appreciates how far the VA has come in a short time with its strategic planning efforts. These efforts will define virtually every aspect of the Department in the future and will in large part determine its ability to perform its missions on behalf of veterans. I believe the VA is now off to a good start

Bob Stump,

    Mr. EVERETT. Mr. Duffy, the committee advocated this general sort of strategic planning long before there was a Results Act, as Chairman Stump has observed and the VA is now off to a good start. But it is only a start as you mentioned, and implementation is ahead. Without consistent follow-up and annual performance and budget plans, and emphasized by VA's top leadership and I stress that, the planning process could lose its momentum before it amounts to too much. How is the VA going to make this planning and annual performance planning its permanent approach to providing federal benefits and services to veterans and their families? Not a quick fix here, we want long-term solutions.
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    Mr. DUFFY. We have taken very seriously our commitment to a long-term strategic management process at the department level and I can speak without reservation as to top management's complete buy-in to a process which is intended to tie our strategic planning, budget formulation, resource allocation and program evaluation efforts into one continuous whole, so that indeed the strategic plan drives budget formulation and resource allocation and so that indeed we are able to identify for you the real value of these programs to the veterans we have an obligation to serve.
    Mr. EVERETT. How is the coordination of issues, the so-called cross-cutting issues, been accomplished with other Federal departments and agencies who also have veterans programs that interfaces with the VA, how much coordination has there been under the Results Act? This appears to be the least-developed of the VA's planning. Why is that?
    Mr. DUFFY. I would fully concur with your observation that it is the least-developed part of our strategic planning initiatives to date. I think the reason for that is the lack of maturity in our planning process. I think we are struggling like all other Executive departments and agencies in putting together a meaningful and substantive strategic plan that is completely compliant with the Government Performance and Results Act requirements. Clearly, we have had substantial success working with the Department of Defense, Health and Human Services, Social Security and other Executive departments and agencies on issues of mutual concern to veterans. But, beyond sharing with them copies of our draft strategic plan and reviewing copies of their draft strategic plans and attempting to identify areas of mutual concern, we have not done the necessary substantive coordination of issues. That remains to be done and I will tell you that we are fully committed to doing that with our partners in the Executive Branch.
    Mr. EVERETT. Thank you very much. Mr. Mascara.
    Mr. MASCARA. I note in your statement that you speak to the outcome-base performance. In Pennsylvania, we have that in education, refer to it as the OBE and I was just wondering, is there some board or commission that will be responsible for analyzing that information and that performance, and then reporting back to you or to us?
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    Mr. DUFFY. There will be Congressman. I would make a couple of points on that. First of all, the Results act requires that the Department provide to you a performance plan that will be submitted with our fiscal year 1999 budget. In addition, the law requires that we provide you with an accountability report showing the specific progress made in achieving the various goals and objectives identified in our strategic plan. We are committed at the Department level to do this through our Strategic Management Group, which is a board composed of our most-senior level officials in the Department.
    Mr. MASCARA. Your testimony indicates the VA conducted an extensive survey of employee views on strategic planning. Can you outline how this survey was conducted and provide the subcommittee with a copy of the survey and its results and what other steps has the VA taken to involve managers, outside of the Central Office and the strategic planning process?
    (The information follows:)

Department of Veterans Affairs,
Under Secretary for Health,
Washington, DC, September 26, 1997.
Subcommittee on Oversight and Investigations, Committee on Veterans' Affairs,
House of Representatives, Washington, DC.

    DEAR CONGRESSMAN MASCARA: Thank you for the opportunity to discuss our strategic planning process with you and the other members of the Subcommittee on Oversight and Investigations. Your comments will help us to continue to improve the Department of Veterans Affairs' strategic plan.
    As promised, I am enclosing a copy of the 1997 ''One VA'' Employee Survey Report. The survey instrument is contained in Appendix A.
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    We are in the process of analyzing data, both at the Departmental level and for each independent facility to determine priority areas upon which to focus. It is our intention to link the employee survey results with some of our key GPRA performance outcome measures, such as customer satisfaction. Overall, we will be able to use employee data as part of our strategic data base to enhance our ability to improve service to the Nation's veterans.
    We plan to re-administer the survey in late FY 1999 or early FY 2000. Data from this future survey will help us measure growth and re-examine how well we are doing in comparison to other Federal agencies and the private sector organizations.
    If you or your staff have questions or need any additional information on the survey results, please let me know. I look forward to further discussions of how we can work together in making sure the GPRA process works for the veterans and the taxpayer.
Dennis M. Duffy.

    Mr. DUFFY. We would be pleased to provide you with a copy of the Organizational Assessment Survey instrument and the results to date. I would ask Ms. Egan to respond in more detail to the specifics.
    Ms. EGAN. Thank you. The survey that we conducted, and it was a census survey, provided the opportunity for some 230,000 employees to respond. We worked in conjunction with the office of Personnel Management, using a government-wide survey instrument that assesses not only what our employees feel about our strategic planning efforts, but how they feel about their work environment, the degree to which they feel involved in problem solving at the department level or at their local level, and what they see as the strengths and weaknesses in the department with regard to customer service. There were actually 18 dimensions. The information we got back is providing us with a very rich database. Our employees are telling us that they recognize that customer service and understanding our mission are the most important things to VA. But we still have to build on that. The information is going to be used at the department level to look at how we might refine our approach to accomplishing our mission, particularly with regard to customer service or with education and training and succession planning for our employees. The information is also being rolled down. Every single employee will receive information on the results of the survey. Managers and employees, and the labor management councils at the local level are going to be encouraged to embrace the findings and identify areas where we can strengthen ourselves or, where problems have been identified, the things we can do to resolve them. At all times we will be keeping the focus on how we are improving our ability to take care of those whom we are charged to serve.
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    We are involving managers by cascading levels of information, not just for the survey, but for the strategic plan, through the department down to the administrations where their business plans are developed, down to the Veterans Integrated Service Networks (VISN) level, the area level, the facility level. There is a sense of connectivity between what we are doing at the department level and what we are doing at the facility level. Information is not just going down, it is also then rolling back up to us, so we can adjust our course or make decisions—getting us where we need to go.
    It is an ambitious plan, but hopefully we can keep it going.
    Mr. MASCARA. Did the survey provide for individuals to offer information and remain anonymous so that they might be forthright in answering the survey or the questions?
    Ms. EGAN. Absolutely, that was one of the main things we were concerned about. As managers we wanted to make sure we could create an environment in which people felt comfortable responding. We also worked with our Labor Partnership Council and that was an issue that, of course, the union was concerned about, too. One of the reasons we went with the Office of Personnel Management is that they have a lot of experience with confidential administration of surveys. The forms went to the employees, they put them in a sealed envelope, which went back to the contractor. Most importantly, we will be able to benchmark our results against other Federal agencies and some private sector corporations.
    Mr. MASCARA. Thank you Ms. Egan.
    Thank you Mr. Chairman.
    Mr. EVERETT. Dr. Snyder.
    Mr. Evans, our ranking member, has joined us. And by the way, I would like to make his letter to Secretary Gober, part of the permanent record and so ordered.
    (The information follows:)
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House of Representatives,
Committee on Veterans' Affairs,
Washington, DC, August 11, 1997.
Acting Secretary,
Department of Veterans Affairs, Washington, DC.

    DEAR MR. GOBER: I am pleased to note the significant improvements the Department of Veterans Affairs (VA) has made in its Draft Strategic Plan. The August 1, 1997 version of the plan is much more readable than the earlier version. While work continues to be needed in identifying goals which can be measured in terms of ''results'', the latest draft is clearly a step in the right direction.
    I also want to commend the VA for the extensive efforts made to consult with Congressional staff and other stakeholders in the development of the plan. In spite of the progress which has been made, I remain concerned regarding the long time lines projected for evaluation of the VA's programs. The failure to have significant program evaluations in the recent past has made VA compliance with the Government Performance and Results Act extremely difficult. I encourage you to take appropriate steps to ensure the program evaluation components of the plan are on a ''fast track''. These evaluations are essential if results oriented goals are to be developed and achieved.
    Again thank you for the remarkable work which has been accomplished over the past two months. Assuming that this progress continues, I trust that we will have a dramatically improved plan by the start of the coming fiscal year.

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Lane Evans,
Ranking Democratic Member.

    Mr. EVANS. Sir I have an opening statement that I would ask might be included in the record. No questions at this time.
    [The prepared statement of Congressman Evans appears on p. 35.]

    Mr. EVERETT. I want to thank the panel for its testimony today, and now we will have Panel 3.
    Charlie Cragin, the Principal Deputy Assistant Secretary of Defense (Reserve Affairs), Gary Christopherson, the Acting Principal Deputy Assistant Secretary of Defense (Health Affairs); Lieutenant General Norman Lezy, The Deputy Assistant Secretary of Defense (Military Personnel Policy); Al Borrego, Assistant Secretary-Designate for the Veterans' Employment and Training Service, Department of Labor
    If you will, begin your testimony, please and by the way, welcome to this place.


    Mr. CRAGIN. Good morning, Mr. Chairman. Well, thank you very much, it is always a pleasure to appear before the Committee on Veterans' Affairs and its Subcommittees. Mr. Chairman and members of the subcommittee, on behalf of the Secretary of Defense, we appreciate the opportunity to appear before you today to address the cooperation and coordination that exists between the Department of Defense and the Department of Veterans Affairs with respect to the day-to-day operation of a variety of programs that require us to maintain effective interagency relationships.
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    Many of the goals and objectives of the DVA strategic plan will directly support these ongoing relationships and will serve to enhance their effectiveness. I have provided prepared testimony which I request be incorporated in the record. But let me briefly summarize that testimony.
    Mr. EVERETT. The complete testimony will be put into the record.
    Mr. CRAGIN. Thank you Mr. Chairman. First let me emphasize that the compensation, care and recognition afforded America's veterans by the Department of Veterans Affairs helps to ensure that DOD is able to continue to recruit and retain a quality armed force. Recruiting and retention are important elements of one of our own corporate-level goals. The DVA assistance programs provided to our active and reserve service members and veterans, contributes directly to the recruitment and sustainment of a robust military force. The Department of Defense interfaces with Veterans' Affairs in many program areas covered by the DVA's strategic plan, to include health care services, compensation benefits, serviceman's group life insurance, the Montgomery GI Bill, housing loan assistance and burial and cemetery services. DOD works closely with DVA to accurately define the characteristics and needs of our military members to include those needs that will take effect upon their transition into the Nation's veteran population.
    We strongly support DVA's strategic objective to continue to improve the awareness and knowledge of VA benefits and services for veterans and service members. DOD has been exchanging data with DVA in a number of program areas for over two decades to support the objectives of the Montgomery GI Bill, Servicemen's Group Life Insurance, reconciliation of DOD retired pay and DVA disability pay, and Government-wide debt collection. Business process improvements have been implemented and there is continuous dialogue between DOD and DVA to identify data requirements and sources. The expeditious exchange of program records provides for more timely response to the claims of veterans and former service members.
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    DOD and DVA share a common goal of transforming our respective health care delivery systems to managed, patient-centered, primary care systems that assure high quality cost-effective care. In addition to sharing ideas, programs and a number of facilities with DOD, a memorandum of understanding provides for planning and procedures to support DVA's responsibility to serve as a medical backup to DOD in a national emergency situation.
    In the immediate future, we hope to be able to expand collaborative medical research efforts in order to maximize research opportunities and to enhance the research dollars available to both agencies. DOD supports DVA's objective of establishing stronger and more online linkages, including programmatic links between the DOD and DVA disability evaluation systems. DOD uses the DVA schedule for rating compensable disabilities and a DVA representative is a member of the DOD disability council. We work together to assess the impact of the current compensation programs that serve our disabled military members.
    Improving educational opportunities for military members and veterans is certainly a goal we share with DVA in that it assists recruiting, enhances the qualifications of those serving and meets the needs of veterans. Since the inception of the DVA-managed Montgomery GI Bill in 1985, over 2.5 million service members have enrolled in the program. Another 1.1 million National Guardsmen and Reservists are eligible for the Montgomery GI Bill with the Selected Reserve. We support DVA's strategic goal and are engaged with them in their educational assistance, business process re-engineering effort to further increase the value of the Montgomery GI Bill benefits and to continuously assess the education needs of military members and veterans.
    The Assistant Secretary of Defense for Health Affairs and the Under Secretary for Health Veterans' Affairs are continuing a high-level program of cooperation and have established a DOD/VA Executive Council made up of senior DOD and DVA health care executives. In the spirit of a May 1996 report to the Vice President entitled, Strategies for Jointly Improving VA and DOD Health Systems, the Executive Council is overseeing a number of joint efforts to reduce costs and improve health care for veterans, active duty military personnel, retirees and dependents and to capitalize on the resources and experience of both departments.
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    As I have indicated, DOD and DVA have a long history of interaction, cooperation, and coordination on our related programs. We believe that there will be opportunities to further strengthen the existing alliance between DOD and DVA based on the strategic planning within both organizations. The result will be greater efficiencies and improved performance for both organizations in the accomplishments of our respective missions.
    Mr. Chairman, my colleagues and I are prepared to answer your questions.
    [The prepared statement of Mr. Cragin appears on p. 58.]

    Mr. EVERETT. Thank you very much, I think we will go to Mr. Borrego first for his statement and then we will get into questions.

    Mr. BORREGO. Thank you. Good morning, Mr. Chairman and members of the subcommittee. I am pleased to represent the Secretary of Labor Alexis Herman and to present testimony on how the Labor Department's Veterans' Employment and Training Service interacts with the goals and strategies presented in the strategic plan of the Department of Veteran Affairs.
    In the process of developing its strategic plan, the Department of Veterans Affairs shared early drafts with the Department of Labor, specifically the Veterans' Employment and Training Service, and asked us to comment on the goals and strategies which impact DOL programs. In turn, my agency shared our strategic plan with the VA.
    VETS has had a strong working relationship with the DVA, due in large part to the committed support of former Secretary Jesse Brown and current Secretary-designate Hershel Gober. Both agencies are dedicated to bringing the highest quality services to our Nation's veterans. I look forward to building on that relationship in the future.
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    VETS and the VA coordinate policy and share information in a number of ways. The Secretary of Veterans' Affairs and the Director of the Vocational Rehabilitation and Counseling Service are ex-officio members of the Secretary of Labor's Advisory Committee on Veterans' Employment and Training. This committee keeps the Secretary of Labor informed and advised about issues affecting a wide range of benefits and services for veterans. Their participation ensures the Labor Department has timely knowledge of and input into DVA programs where our activities coincide.
    While VETS interacts with the Department of Veterans Affairs in only a few of its many activities, I believe it is important to note that we have had a good working partnership for quite some time. In areas specifically mentioned in the strategic plan—vocational rehabilitation and counseling, compensated work therapy, services to homeless veterans, the Transition Assistance Program, the Disabled Transition Assistance Program and targeted services to women and minority veterans—we interact with the DVA on a continuous basis. In the past, the Department of Veterans Affairs joined the Labor Department in administering the Service Members Occupational Conversion Training Act (SMOCTA), a highly successful pilot program.
    In the performance goal of assuring that the vocational rehabilitation meets the needs of veterans, the DVA has stated that its first objective is to increase the number of disabled veterans who acquire and maintain suitable employment. Since 1995, VETS has had a Memorandum of Understanding with DVA that brings together our employment service representatives with VA Vocational Rehabilitation Program participants at least 90 days before these participants complete their program. This allows us to begin to tailor an individual job search and labor exchange program while the veteran is still in rehabilitation. Sharing case information on a timely basis between the VA Vocational Rehabilitation Program counselor and the employment specialist is helping VA Vocational Rehabilitation Program graduates find and keep jobs for which they are qualified.
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    Our State directors of veteran's employment and training are working with both the State employment service and the DVA to provide veterans with an effective continuum of care. Our long-term goal is to eliminate the unproductive time between completion of therapy and the beginning of gainful employment. I believe that this type of partnership will help both agencies accomplish their goal.
    A directive to VETS field staff just last month stated our intention to develop a similar MOU with the DVA for veterans participating in the Compensated Work Therapy Program. To improve our day-to-day working relationship with the Department of Veterans Affairs, Ken Greenberg, from the DVA, is serving on a detail with VETS to help us build more effective delivery systems. We are also working closely with the DVA to help those veterans caught in the tragic cycle of homelessness. The DVA provides outreach, case management, residential, medical and psychological treatment and transitional housing. In short, DVA gets them ready for the job market.
    At the same time, VETS is working with these veterans to help them find unsubsidized employment that will enable them not only to regain their ability to pay rent and buy food and clothes, but to regain their dignity and self respect. I believe our combined efforts on behalf of homeless veterans are among the most gratifying and important activities undertaken by our agencies. I am pleased that VETS' fiscal year 1998 budget contains a request for $2.5 million to put some muscle behind our efforts to turn homeless veterans into productive citizens.
    Finally, both agencies are committed to improving conditions for women and minority veterans. Representatives from both agencies participated in the recent National Summit on Women Veterans' Issues, which identified issues and concerns of women veterans on the eve of the 21st century.
    VETS uses statistical information developed by the DVA's National Survey of Veterans to assess how well our employment service efforts targeted to minority veterans are doing. We are continuously seeking to improve our service delivery systems and to sensitize our service providers to the unique experiences and needs of all minority veterans.
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    Working in close partnership, and speaking with one voice on veterans issues, VETS and the Department of Veterans Affairs will succeed in helping America's veterans participate fully in the life of this great Nation.
    Thank you, that concludes my prepared testimony. I will be glad to answer any questions you may have.
    [The prepared statement of Mr. Borrego appears on p. 65.]

    Mr. EVERETT. Thank you very much. We have about 10 minutes to get to the Floor. I have one question. Are you going to have any questions? Let me tell you, I appreciate all of your testimony, but let me bring up a point of contention that, and I know you just assumed this position, but I am going to give you a challenge and let me just say as hard as I can, that frankly, if this challenge is not met, I feel like this Committee and the National Security Committee, they are going to come down on DOD and VA, like a ton of bricks. Now, I will note for your consideration that the Chairman of the National Security Committee is also a member of this Committee as well as the next in line and our ranking member is one of our senior Democrats on that Committee. And, what I am talking about, frankly, is the failure of a standardized medical record, electronic or paper, which could greatly improve the handoff of information. I will be honest with you. I know you have said that you appreciate the work you have done in the last 20 years on the GI Bill and all that kind of stuff, but we are talking about something here that is extremely important, and I want you to know, right now, that I intend to look at this over and over again. Mr. Buyer, who is Chairman of the National Security Personnel Subcommittee, is also a member of this Committee. We think this is extremely important. I do not want to see any bureaucratic finger pointing any, passing the buck. I would like to see something done about this, because we are hurting veterans health care by not having a common medical record between the two of you and that has got to be done and it has got to be done in a hurry.
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    I hope I am being very clear on this.
    Mr. CRAGIN. Mr. Chairman, I think you are being unequivocally clear. I note that my colleague, Mr. Christopherson is chomping to at least make an observation with respect to the challenge you have laid down to both Departments.
    Mr. EVERETT. Well, I appreciate that and I am going to at this time dismiss this Panel. We have a vote going on and I, again, appreciate your testimony here.
    Mr. CRAGIN. Thank you Mr. Chairman.
    Mr. EVERETT. I will have additional questions for the record. We are going to recess for a few minutes and we will be back for the final panel, hopefully, in just a few minutes.
    Mr. EVERETT. I will now ask our fourth panel to step forward. Rick Surratt, Assistant National Legislative Director for DAV; Carroll Williams, Director of National Veterans Affairs and Rehabilitation Commission of the American Legion; Chuck Burns, National Service Director for AMVETS and Bob Manhan, the Assistant Director for National Legislative Services of Veterans of Foreign Wars.
    Mr. Burns, if you will proceed, and we will get each person in order. I will ask you to hold your comments within 5 minutes and I assure you will get all your statements in the record. Thank you.

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    Mr. BURNS. Thank you, Mr. Chairman. We appreciate this opportunity this morning to comment on the Results Act.
    As a result of input from Congress, VSOs and their customers, VA has published a draft of their strategic plan. I believe it is important to restate the fact that this is a draft, not a final document. As far as the draft is concerned, AMVETS does not have any major problems with its content. We will be continuing our dialogue with VA until the final document is presented.
    I must admit that when we first heard the term One VA, a few flags went up. When you think about it though, I think that is the way that most veterans view VA, they do not see it as separate entities like the Veterans Health Administration, the Cemetery System, Veterans Benefits Administration. I believe the Office of Management and Budget also gave them the same feedback and although we applaud the concept, we will be watching the approach and we will offer guidance.
    Regarding VA's mission statement which was addressed earlier this morning, we some people complaining about the use of this term, including Dr. Snook earlier in this hearing. His response, Mr. Chairman, to your question about advocacy and the role of advocacy for the VA, Dr. Snook's response that Congress is the advocate for veterans, was quite frankly a little bit chilling for me. Given what Congress did this year in flat-lining the VA budget through the year 2002, AMVETS is going to put its faith in VA's advocacy for veterans.
    Why can VA not be the veterans advocate? If the Department of Education is an advocate for teachers and children, why not VA? And if not VA, who?
    We believe the best way to evaluate this plan is to see if it meets the criteria that was established and we believe that the division of VA's strategic plan states that it will function as a unified department delivering high quality, timely benefits and services to veterans and their families in a cost-effective world-class manner. This is a living document which will have changes and modifications. We believe that this is an adequate strategic plan at this time, we will continue to monitor its change and growth.
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    Mr. Chairman, this concludes my statement and I will be happy to take any questions.
    [The prepared statement of Mr. Burns appears on p. 68.]

    Mr. EVERETT. And now the man from DAV.

    Mr. SURRATT. Mr. Chairman, good morning. Thank you for allowing us to offer our views on VA's strategic plan.
    A strategic plan is a broad outline and perspective on the agency's future direction. A strategic plan's general nature and the fact that VA's plan is an initial one, necessarily makes it somewhat rudimentary. Yet, in places, it identifies specific problems to be overcome and provides methods, performance targets and time tables. As VA completes more comprehensive program evaluations, we would expect its plan to expand and evolve.
    Because this is an exercise in improvement, it is an exercise in change. We would expect VA not to cling tightly to the old ways, but at the same not change merely for the sake of change. VA should build on past experience, make prudent calculated changes and go with caution and forethought, not reinvent the wheel as the first step and not overhaul if fine tuning is all that is needed. In DAV's view, VA's initial plan exhibits a good-faith effort not only to comply formally with GPRA, but also to actually give more meaning to its programs, to perform its tasks with efficiency and effectiveness we rightfully expect of a government agency, and to improve the quality, timeliness and level of service to veterans. It appears VA understands well its mission, appreciates its stakeholders' expectations and has good ideas on how to fulfill its mission. While it is much easier to present a good plan than it is to execute it, VA's efforts so far suggest that its plan is much more than just to improve appearance.
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    VA knows its stakeholders demand the changes necessary for it to fulfill its mission with the highest standards of performance, proficiency and service. VA's mission statement demonstrates that VA's appreciation for its role goes beyond the mechanics of its assigned tasks. The law makes it VA's responsibility ultimately to ensure veterans receive all due consideration and benefits to which they are entitled. Therefore, for VA to assume the posture of the veteran's adversary or even to deal with a veteran at arm's length would violate its heightened duties to the veteran. The veteran's interests are VA's interests. As a final guarantor of veterans' rights by law, VA is necessarily their advocate, and VA's mission statement does not simply acknowledge that, but proudly declares it. The spirit with which VA approaches its mission is just as important as the technical soundness of its strategy.
    VA's goal of world-class customer service is also consistent with its benevolent relationship with veterans. VA sees seamless service delivery as an essential of world-class service. By seamless, VA means coordinated service by an agency whose separate functions cooperate and operate as an integrated whole, rather than compartmentalized service from disconnected units.
    This approach by the Veterans Health Administration has yielded positive results, and there is potential for department-wide improvements. For example, improved coordination between the Veterans Benefits and Veterans Health Administrations could improve disability claims processing. Lack of coordination results in inconsistent decisions between VA's business lines. For example, rating boards not infrequently hold that a veteran's service connected disability is not serious enough to prevent work, when Vocational Rehabilitation and Counseling Service has determined the disability is so profound it makes it infeasible for the veteran even to pursue a course of training and vocational goal.
    We see instances where indebtednesses are created against veterans because they were not notified of impending foreclosures on their VA-guaranteed mortgages in cases of default by non-veterans who assumed the loans. The excuse of the loan guarantee service is that it had no current address in its files, even though the veteran's current address was on file in the Compensation and Pension Service because the veteran was on the Compensation and Pension rolls. We caution, however, although this unified approach has its benefits, it also has its limits. The diversity of VA's products limits the transferability of methodologies and strategies.
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    VA's new emphasis on quality and getting it right the first time has more potential to improve performance, efficiency and customer service, we believe. If the practice is to not do it completely and correctly the first time, it is done with the expectation it will routinely have to be done again, and veterans come to expect that they will have to appeal to get a proper decision. I do not need to explain how that affects efficiency and customer service.
    Mr. Chairman, the DAV agrees with VA's statement in its plan that its reason for existence is to improve the quality of life for veterans. Though its strategic plan is preliminary and though we cannot fully evaluate it until it is carried out, VA appears to have charted the right course for itself.
    That concludes my statement Mr. Chairman, I would be happy to answer any questions you may have.
    [The prepared statement of Mr. Surratt appears on p. 72.]

    Mr. EVERETT. Thank you very much, Mr. Surratt.
    Mr. Williams.
    Mr. WILLIAMS. Thank you very much. Good morning Mr. Chairman and members of this subcommittee.
    The American Legion appreciates this opportunity to provide its comments and views on the Department of Veterans Affairs efforts at implementing relevant revisions to its system under the Government Performance Act of 1993. The Results Act mandate has presented a major challenge for the Department, in the opinion of the American Legion. We believe the VA has developed a range of initiatives and changes intended to conform with the requirements of the Results Act, as well as for improved delivery of services to both today's and tomorrow's veterans. Our written testimony, as customary, is a part of the record and we encourage this committee to review and assess our statement in detail on this important issue.
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    Nonetheless, I would like to just orally express some of the concerns the American Legion has with VA's efforts at implementing changes in accordance with the Results Act.
    First off, the American Legion is very supportive of VA's efforts, however, we do have several concerns. The Department's initial planning effort was not without controversy and criticism. For example, as part of VA's business re-engineering plan, a number of field or regional offices restructuring initiatives were developed. Some were adequately supported by acceptable data and justified in our judgment. Several of the initiatives entailed the closing of regional offices and shifts in major work loads. The plans for these initiatives lacked the necessary documentation and proper legality under the law as defined in U.S. Code Title 38.
    After considerable thought and lengthy deliberation by then Secretary Jesse Brown, those initiatives were stopped. The American Legion is concerned that many ongoing initiatives, while well intended, provide conceptually appealing solutions which lack certain performance goals and applicable performance measures. Similarly, the current system cannot at present provide the type of information and data needed for effective operational management, forecasting and determining true resource needs. Just recently, the American Legion noted comments and recommendations of the Veterans Claims Adjudication Commission and the testimony of the Chairman of the National Academy of Public Administration, which both concurred that the Department lacked the capacity for full integrated strategic management and programmatic revisions.
    The General Accounting Office reported also in its May 14 report on VA's BPR initiatives, that appropriate performance goals and measures need to be developed by VA in order for its plan to be effective. Last month the American Legion had the opportunity to review a draft of VA's revision of its strategic plan for fiscal year 1998 to 2003. The American Legion appreciated the fact that VA has made extensive use of information it had gathered through feedback mechanisms such as environmental scans, customer service surveys and focus groups as well as external reports to develop the goals and objectives in its strategic plan.
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    The revised strategic provides significantly more detailed information and data and preparation for evaluations of ms a department-wide benchmarking effort as a major component. The American Legion believes that a disciplined benchmarking process will reduce information VA can use to measure progress or achievement toward its intended goals and objectives.
    We are further concerned with the substantial reduction of FTE in VA over the past several months. We believe that further reduction in the FTE will adversely impact on VA's efforts and ability to meet the GPRA mandate. The loss of 1,200 FTE in 2 years, in our judgment, has contributed to VA's continuing problems and its ability to serve veterans, dependents and survivors in a timely and accurate manner. We are aware that 133 FTE are scheduled to be lost in the compensation and pension service. We believe a further loss of FTE by well experienced adjudicators will result in further delay in approving the delivery of benefits. The American Legion is of the opinion that any future staffing cuts should be shifted to the out years so as to allow the Department to achieve and solidify progress at this important juncture of its strategic goals and planning.
    The Veterans Health Administration Initiatives, in our judgment, reaffirm the viability of the health care system. We believe that the ongoing efforts by VHA will provide better health care and improved services to the Nation's veterans who are eligible and have access to care. The American Legion believes that the American people will settle for nothing less than the beset for its citizens who, at one time or another, were known as soldiers, sailors, marine and airmen.
    In closing, the American Legion is equally committed and interested in the Department's strategic initiatives as it proceeds along the long, narrow road to improve services to our Nation's veterans in the form of health care, compensation, pension and all the other generous benefits bestowed by a grateful Nation to its veterans. The American Legion is eager to play a major part in the Department's plan and demonstrate our willingness and desire to work and complement VA's vision for the 21st century.
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    Mr. Chairman, that concludes my statement. Thank you.
    [The prepared statement of Mr. Williams appears on p. 83.]

    Mr. EVERETT. Thank you very much Mr. Williams.
    Mr. Manhan.

    Mr. MANHAN. Thank you very much Mr. Chairman. The VFW appreciates being part of your overall hearing to discuss a very important issue, the Department of Veterans Affairs Strategic Plan. I am accompanied at the witness table this morning by Mr. John McNeill who is the VFW's Assistant Director of Veterans Benefits.
    For the past several years, the VFW has always identified three problem areas that should be fixed in the processing of claims. They are: first, to improve the quality of the decision making at the regional office level. Second, is to reduce the Board of Veterans Appeals decision time lag from start to stop and third to reduce the high BVA remand rate.
    We are very satisfied, in fact we are delighted to see for the first time, that part of the strategic plan that we have discussed this morning sets specific goals to address these areas. The first is that there will be a clear performance objective to process all claims within 60 days, with a 97 percent accuracy rate and with no greater than a 20 percent BVA remand rate. Those are very positive statements or objectives.
    Along with this, the Business Process Reengineering, or the BPR implementation plan includes another very favorable strategy on how veteran service organizations will and should operate in the future claims processing system. We look forward to working very much with this procedure. However, the VFW sees one critical vulnerability and that is the success of BPR is very heavily dependent on information management and technology enforcement. Specifically, it is clearly stated that the final development and delivery of the long-awaited veterans service network, which we all know by the acronym VETSNET, is crucial. Consequently, VETSNET must be allowed to replace the current benefits delivery network, BDN, which is universally condemned by our service officers as being extremely cumbersome and archaic in providing the necessary assistance and information our service officers need in the field to better advise and counsel veterans.
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    That is why the VFW is very concerned to see that both the House and Senate in their very recent appropriation markup report language, direct the transfer of $5 million from VETSNET to other programs. This is particularly disconcerting, because the VA only requested $2.4 million for VETSNET in fiscal year 1998. Lacking any other information, the VFW can only conclude that it is Congress' intention to kill or abolish VETSNET.
    This concludes my very succinct summary or our written statement which I know will be part of the record. Thank you Mr. Chairman.
    [The prepared statement of Mr. Manhan appears on p. 87.]

    Mr. EVERETT. Thank you very much. I would say a couple of things. I do not have any questions, but I would say that the Acting Secretary of VA made the suggestion to this Committee Chairman to transfer that money, not the Congress.
    Mr. MANHAN. Thank you very much. The VFW was unaware of that.
    Mr. EVERETT. In addition, I would say that the advocates of veterans are sitting at this table and it is chilling to me that somebody would suggest that it ought to be the VA or the Congress, very frankly.
    With that, Mr. Mascara, do you have any questions?
    Mr. MASCARA. I do, Mr. Chairman, thank you.
    Mr. EVERETT. Go right ahead.
    Mr. MASCARA. Mr. Williams, are you satisfied with the role that you were allowed to play in the VA strategic planning process? Do you have any recommendations for improvement?
    Mr. WILLIAMS. Mr. Congressman, we are somewhat pleased at our role in assisting VA in their effort. We have provided our input and some of our recommendations have been included in their plan. However, there is considerable room for improvement and we have been working rather closely with the Department of Veterans Affairs, along with my counterparts from the other veteran service organizations. So, in the interest of brevity, to answer your question, yes, we have been a major player in this effort.
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    Mr. MASCARA. Okay. Either you or Mr. Surratt, how receptive was the VA to your involvement?
    Mr. SURRATT. I believe the VA takes very seriously what the veteran service organizations have to say, and I think they changed their plan based on that input, and I would like to say, even before this process, perhaps VA and the veterans' service organizations had a closer inter-reaction and working relationship than a lot of customers do with their particular Federal agency and so I think in the area of taking seriously stakeholder and the customer into it, the VA is to be commended.
    Mr. MASCARA. Mr. Burns are you satisfied with the role that the AMVETS have been playing in this process?
    Mr. BURNS. I have no problem, Congressman. As my two colleagues have stated, we have been consulted, our input has been provided and we feel that we have genuinely been listened to.
    Mr. MASCARA. I guess this is Mr. Williams, yes on page 3 of your statement, you point out the number of FTEs that have been reduced.
    Mr. WILLIAMS. Yes.
    Mr. MASCARA. And I think there is 1,200 over 2 years and then there is a plan to cut it an additional 133 and this raises a question. I think I asked the question of the other panel but not in the same context. I spoke to the overall budget and how that would reflect on the analysis that they are currently doing, but do you think that the analysis that is going on, and the Government Performance and Results Act, will address the problems associated with the reduction of FTEs?
    Mr. WILLIAMS. Well, we would hope so, but also we believe any further reduction of the FTE may have some adverse impact on VA's ability to meet the Results Act mandate. We have found out that, for example, that the number of FTE that I made reference to, Compensation and Pension Service, they are being overworked to a certain degree with more cases involving more complex issues and it is a very difficult task for them not only to meet the mandates, but also to timely and accurately serve our Nation's veterans. So to conclude my response to you, I would just indicate as it is pointed out in my testimony, that a further reduction in the FTE, in that area can have an adverse affect on the VA's ability to meet the mandates of the Results Act.
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    Mr. MASCARA. Well I would be hopeful that the analysis would include an honest approach to the problems that we are seeking to solve. I do not know how they could divorce themselves, those people who are responsible for the final draft of the Results Act should——
    Mr. WILLIAMS. Well when you are talking about the individuals that we were referring to, you are talking about experienced adjudicators and it takes years to learn that type of work and with this reduction, I think they are going to lose the experience that is required, which is necessary to meet these mandates. And as I indicated earlier, it may adversely impact on their ability to provide timely and sufficient service to our Nation's veterans.
    Mr. MASCARA. Thank you very much.
    Mr. WILLIAMS. You are welcome, sir.
    Mr. MASCARA. Thank you Mr. Chairman.
    Mr. EVERETT. Thank you. I want to thank this panel. As always, we enjoy getting your testimony. I was particularly interested in, I agree also in the observation that the performance objectives to process all claims within 60 days is extremely important and with a little modesty, I would point out and I see Mr. Catlett is still here, that as Chairman of the Pensions and Benefits Subcommittee 2 years ago when the VA's target was 106 days, that it was this Committee Chairman that suggested that they put it at 60 days. So I am pleased to see that that has happened.
    Again, I want to thank this panel for showing up and giving us the benefit of their testimony.
    Mr. SURRATT. Mr. Chairman, I would like to make one final comment, if I may.
    Mr. EVERETT. Please.
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    Mr. SURRATT. I think the DAV has viewed this subcommittee and the Veterans' Affairs Committee as a veterans advocate. We view ourselves as advocates and we view the VA as a veteran's advocate and as long as we all quibble and quarrel over who is the principal advocate, only the veteran can benefit, so let us continue that competition.
    Mr. EVERETT. I have to agree with you. I do thank all today's witnesses for their testimony. We will continue to ask GAO to evaluate VA's strategic planning as we will have hearings periodically to monitor results at compliance and advocacy of strategic planning. We look forward to continued cooperation with all parties interested and let me just finally say, I was extremely concerned in my comments to DOD. I do not intend to let the issue rest on the fact that we cannot simply transfer a piece of paper from the active military, reserve or the guard, over to the VA and it be the same piece of paper with the same medical history.
    I come out of a business background and I can assure you that this has cost hundreds of thousands of dollars, literally, hundreds of thousands of dollars and I do not care if it is bureaucrat finger-pointing, I do not care if we have food fights going on somewhere, it is going to stop. As I pointed out earlier, the members of this Subcommittee are also members, most of them, of the National Security Committee and this is asinine that this situation exists and I intend to follow-up and if I have to follow-up with hearings on the subject, then we will do that.
    Mr. WILLIAMS. I would just like to make a comment. I appreciate the fact that you are going to look into this because there are a number of stories that I could tell you about involving our services officers trying to assist veterans whose service medical records are missing, have been misplaced from the records processing center in St. Louis, to the regional offices throughout the country. It is a chronic problem and the American Legion is there to assist you if need be. So I appreciate your effort on this important topic, believe me.
    Mr. EVERETT. I thank you very much and I do understand the complexities of the electronic transfer, but we can certainly start off with paper transfer and then get to electronic transfer when we can hopefully marry the two systems together.
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    Again, I want to thank all witnesses for appearing. This hearing is adjourned.
    [Whereupon, at 11:38 a.m., the subcommittee was adjourned.]