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House of Representatives,
Subcommittee on Oversight and Investigations,
Committee on Veterans' Affairs,
Washington, DC.

    The subcommittee met, pursuant to notice, at 9:35 a.m., in room 334, Cannon House Office Building, Hon. Terry Everett (chairman of the subcommittee) presiding.
    Present: Representatives Everett, Buyer, Clyburn, and Mascara.
    Also present: Representatives Bilirakis and Doyle.

    Mr. EVERETT (presiding). The hearing will come to order.
    Good morning. This Subcommittee on Oversight and Investigations hearing is on mismanagement issues at Charleston, South Carolina and Pittsburgh, Pennsylvania Veterans Affairs Medical Centers. Last year Congressman Sanford requested that the VA's Office of Inspector General conduct an investigation into a VA employee's complaint that he had received about mismanagement in Charleston. Earlier this year, Mr. Bilirakis of the full committee requested hearings on both sexual harassment and mismanagement in the Virginia VA facility.
    Mr. Sanford joined the call for a hearing with respect to Charleston. Senator Specter, chairman of the Senate Veterans' Affairs Committee, requested for the other IG investigation and report concerning mismanagement issues at Pittsburgh which had come to his attention. We appreciate his commitment to good government as well.
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    Four panels of witnesses will testify today. First, Congressman Sanford will make a statement. Then we'll hear testimony of two employees with Charleston. We will hear the testimony of the Deputy Inspector General on the IG's findings and recommendations. Finally, we will hear the testimony of two hospital directors involved in these matters, as well as testimony of the new chief network officer of the entire VA medical tier system.
    I, frankly, am disturbed that two of the individuals in Charleston who were invited to testify today declined to come and give public testimony because of fear of reprisal and adverse consequences. This alone is a sad commentary on the state of affairs surrounding the medical center even now.
    These two hospital directors are in the hot seat. They are here voluntarily, not under subpoena. The allegations of mismanagement are basically directed at them or the mismanagement alleged occurred on their watch. Our objective is to stick to the facts and what happened. We do not want to hear any rumors. We will ask the directors some hard questions, and we will ask about employees' perceptions of management, conduct, and leadership because this is highly relevant.
    That's what the hearing is about—good government and accountability. I have stated my concerns before about the culture problems of the VA, where there seems to be a pattern of tolerance for mismanagement and misconduct by senior officials. The VA has a longstanding and well-deserved reputation for transferring problem managers without doing anything about them. This subcommittee, during this session, has already had two hearings on sexual harassment in the VA involving senior managers. Today's hearing shifts focus somewhat to wasteful spending of taxpayers' dollars, but the culture problems are still abundantly evident, and the VA must come to grips with institutional harassment, favoritism, and reprisal.
    Oh, I know that we'll hear that the amounts of money in these situations before us today are relatively small in the big scheme of things, but I think this misses the point entirely. This is about paying attention to public business and responsibilities of public service. Nowhere is that more important than when we are talking about the part of government that's supposed to be meeting the Nation's obligations to our veterans. We want the public to also judge whether $26,000 fish tank for a hospital lobby or a $1,400-a-day consultant and $500 faucets for a hospital director's residence rivals the $600 hammers and $1,200 toilet seats at the Department of Defense. They certainly raise my temperature more than just a few degrees.
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    I'm offended by what the IG has found, and this subcommittee will continue to have these hearings, if need be, to expose mismanagement and waste and to impress upon the VA that it must change its ways. In the past few months, I have seen evidence that there is some change beginning. I hope it will continue, but, frankly, I'm still skeptical about it. We are looking at a culture in the VA of mismanagement. We're looking at a culture that seems to defy oversight. We're looking at a culture that protects the good old boy system, and I intend to see that stopped, if possible.
    At this time I'd like to recognize my very able ranking member of this committee, Mr. Jim Clyburn.

    Mr. CLYBURN. Mr. Chairman, thank you very kindly for recognizing me.
    I would also like to welcome Mark Sanford to our subcommittee and thank him for his willingness to participate in today's hearing. As some of you may know, Mark and I represent the Congressional District that splits Charleston, and I appreciate his concerns for VA employees and veterans in Charleston and the surrounding areas.
    Before I continue my statement, Mr. Chairman, I want to point out that up on the wall here to our left is a portrait of William Jennings Van Dorn, who chaired this committee and was one of the best personal friends that I have, and the VA hospital in Columbia is named for him.
    I also want to point out, because I looked through some of the statements, and there's a reference in one of the statements to something that hangs in the lobby of the VA Medical Center in Charleston. I want point out that that hospital is the Ralph H. Johnson Medical Center. It's named for a young man who gave his life in Vietnam. His portrait hangs in the lobby, and I notice by everybody's testimony that they don't give due deference to that. So throughout my statement I will refer to it as the Ralph H. Johnson Medical Center.
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    Now, Mr. Chairman, I'm reminded today of Winston Churchill's admonition that, if we open a quarrel between our past and our present, we may find that we have lost the future. Now I'm aware that Mr. Churchill's concern was for issues much more global than those that bring us here today, but as this subcommittee's ranking Democrat and as a Member of Congress who represents many of the veterans and VA employees who are served by, or work at, the Ralph H. Johnson VA Medical Center, I am both encouraged and saddened that this subcommittee is hearing testimony concerning the troubling and allegations of past mismanagement and poor decisionmaking at the Charleston facility.
    Now I emphasize past not only because of Mr. Churchill's admonition, but also because I hear the present director, Mr. John Vogel, has moved decisively to address and correct the problems that have been identified, and I am encouraged by that. But I am saddened that the problems at my hometown facility have been so severe as to warrant the attention they will be receiving here today, and I am hopeful that our subcommittee's careful scrutiny will help to ensure that similar allegations of mismanagement do not resurface at the Ralph H. Johnson facility or anywhere else.
    I would also like to personally thank and salute two courageous VA employees who voluntarily agreed to make the trip from South Carolina to provide testimony this morning. By virtue of their willingness to appear before us, Phil Truesdell and Kate Smith are public servants in the truest sense of the word.
    Now, unfortunately, Mr. Chairman, I may not be able to hear in person all of the testimony from the panels because of other committee responsibilities this morning relating to the serious problem of sexual harassment which we've dealt with here, but seems to have cropped up in another committee as well. And so I am looking forward to reading the testimony from the other panels, and I'm hopeful that today's hearings will help quicken the pace of positive change in the VA workplace, not only at the Charleston Ralph H. Johnson facility, but throughout the VA as well.
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    And thank you, Mr. Chairman.
    Mr. EVERETT. Thank you very much, Jim.
    At this time I'll recognize Mr. Buyer for any statements he may have.

    Mr. BUYER. Thank you, Mr. Chairman. I'm going to be brief.
    Actually, what I have today is to announce something that I'm not very pleased to announce, and that is I'm going to send a letter over to Arlen Specter, and what I'm going to ask the chairman is that I have very serious reservations over the nomination of Hershel Gober as the position of Secretary of the Veterans Affairs, and I'm going to send him over my reservations that he should not be named as Secretary of the VA.
    I've gone over part of the file here today. I'm very concerned, and I take to heart the comments of my colleague from Charleston, both of them, I'm sure, and I look forward to your testimony.
    But Mr. Gober, as the former Deputy Secretary of the VA, Mr. Gober presided as second in command over a structure whose mismanagement is only now coming fully into scope. His complacency as Deputy Secretary, and more importantly, the failure to bring these mismanagement issues to light, leaves me limited room for confidence in his fitness for Secretary of the VA.
    Second, the gross mismanagement of the Secretariat is about to be eclipsed by all these recent revelations on sexual harassment that have shown signs of permeating the VA management structure to include the culture. It's a cancer that seems to be eating away at the infrastructure of the country's second-largest agency.
    Finally, to exacerbate these conditions, it is truly very concerning to me, and that is that the most influential oversight medium available to the agency was the Office of the General Counsel, that was headed then by the Acting Secretary Spouse. It has been very disturbing to me that many of the allegations of sexual misconduct, that it was the agency themselves that took the victims of sexual harassment and further victimized them. And so when you had the Office of General Counsel there that should have stepped forward, instead of protecting the victims who are subject to the hostile working environment, they, in turn, became victimized because she sought to protect the agency herself, and that being her husband and the former Secretariat.
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    So I look forward to further testimony here today, and I appreciate the leadership of the ranking member and the chairman, and it is with sad commentary I give these comments today.
    Mr. EVERETT. Thank you. Thank you, Mr. Buyer.
    Now, Mr. Mascara, any comments you may have?

    Mr. MASCARA. Good. Thank you, Mr. Chairman, and good morning to you.
    I think it is important that we are holding this hearing to examine VA management practices at the VA Medical Centers in Charleston, SC and the VA Medical Center in Pittsburgh, PA. I am anxious to hear the explanation of those involved in the alleged mismanagement at these two facilities.
    Over the past several evenings I have read over the testimony that is going to be presented, and I must say I found it to be very disturbing. Is no one overseeing the day-to-day operations of VA facilities?
    Before coming to Congress, I was Chairman of the Board of County Commissioners in Washington County, Pennsylvania. We had various construction and remodeling projects working all the time and someone was always in charge—approving design changes, approving the bills, making sure the project was on time, if possible. While no large construction project is completed without its problems, I was amazed at the lack of coordination and miscommunication among the agencies, especially between the Real Property Management Office, RPMO, and the Pittsburgh facility. I think the problem in both of the cases we will discuss today is that the decisionmaking was not centralized.
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    In the case of Mr. Cappello, it appears he relied entirely too much upon the RPMO for instruction and advice. Couldn't the advice regarding the rules and regulations be verified? I hope today's testimony will shed some light on these very serious allegations. Someone in the VA should be held culpable and accountable for the gross mismanagement demonstrated at these VA facilities.
    It should be noted for the record that the Pittsburgh renovation occurred in 1994, many months before the new Veterans Integrated Service Networks were established. I hope what we are discussing here today regarding mismanagement is not a microcosm of a systemwide breakdown in operations of our facilities. The point is that I fear we could probably look at any VA facility across the country and find examples of similar mismanagement difficulties. I hope that that's not the case.
    Mr. Chairman, I hope we can all work together to see that the Secretary initiates the kind of systemwide changes that are obviously needed to ensure our precious VA budget dollars are spent wisely and for their intended purposes, serving those who fought for their country. Again, I look forward to the testimony, and I yield back the balance of my time.
    Mr. EVERETT. Thank you very much. I think my colleague has certainly made a good point, that someone somewhere should be held accountable. That does not seem to be the case.
    Also with us today we have two members of our full committee, Mr. Bilirakis for Florida and Mr. Doyle. Mr. Bilirakis, would you have a comment at this time?

    Mr. BILIRAKIS. I do, Mr. Chairman, and, first, I also want to thank you for scheduling this hearing, and also thank you for allowing me the opportunity to participate even though I'm not a member of the subcommittee.
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    On February the 23rd, earlier this year, a paper in my district ran an article with the headline, ''Big-Spending VA Officials Retain Top Jobs, Salaries,'' This article reported that top VA officials have routinely misspent taxpayers' dollars and mishandled personnel. However, what is even more disturbing—and others, of course, obviously have mentioned this—is that the VA's procedure for handling these employees seems to be to simply transfer them to other positions within the Department. Many times these employees are given promotions and pay raises in the process.
    My constituents, and veterans in particular, were outraged that a medical center director who spent $26,000 on a fish tank could end up with a promotion and a raise of almost $5,000. The same employee hired a $1,200-a-day management consultant which the VA paid $87,750 in 1995 and $90,117 in 1996. According to the Inspector General's report, this consultant worked 4 days each month.
    In another case, a medical center director spent $201,000 to renovate the director's residence on the VA's grounds. This renovation project exceeded its budget by $79,000, and included faucets that cost $500 and a $2,200 whirlpool bathtub with a shower. The Inspector General concluded that this medical center director was personally responsible for reviewing the interior renovation project, which cost the government $168,000. The IG found that the Pittsburgh Medical Center wasted scarce medical care funds for the project, but the VA promoted the medical center director.
    For years, Mr. Chairman, veterans in Florida—and forgive me for being a little parochial in this regard—but they've been turned away from VA medical facilities because the Department lacks sufficient resources to treat them, and we can only imagine, I guess, how a veteran who has been denied care at a VA medical facility must have felt when he read that the VA spent $26,000 on a fish tank and $500 for faucets.
    And what baffles me, is the VA's response to this type of mismanagement, rather than discipline managers who violate regulations or mismanage their facilities, the VA just transfers them to another position and rewards them with a pay raise.
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    Mr. Chairman, I have more here and I would unanimous consent that it be made a part of the record.
    I guess I would maybe make the same comment that I made when we talked about sexual harassment. That is the concern that we have a pretty darned good health care system in general, but then if you're a veteran—and some of us are—and you read about all these things, you start to maybe develop a little bit of a doubt in your mind: Are all the dollars being spent as well as they should be and as intelligently as they should be, and is the VA really doing everything they possibly can on behalf of the veteran? And I think that's the bottom-line concern that I have. We've got to get to the bottom of all these things, but more than anything else, we've got to raise the credibility of our veteran in our VA health care facilities.
    Thank you very much, sir.
    Mr. EVERETT. Thank you for your statement. I've said on a number of occasions that the VA has a real credibility problem.
    Mr. BILIRAKIS. Yes.
    Mr. EVERETT. We must solve that.
    Mr. Doyle.

    Mr. DOYLE. Thank you, Mr. Chairman. Let me start by thanking you and Ranking Member Clyburn for giving me the opportunity to participate in this hearing. Although I'm not a member of this subcommittee, I have an interest in one of the cases being presented here today.
    The director's residence that was renovated at the Pittsburgh University Drive VA Medical Center is located on the Aspinall campus of that facility, which is in my Congressional District. Mr. Chairman, I'm familiar with this case, probably more so than any member in this room, with the possible exception of my colleague, Frank Mascara, who also represents a District in the Pittsburgh area.
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    The renovation project under scrutiny here today was initiated in 1994. Responding to a complaint passed on by a Congressional office, the Inspector General investigated this incident. The report issued in January of this year is the document that has formed the basis for today's inquiry into the Pittsburgh renovation.
    Following the IG report, the Pittsburgh media revealed the details of this renovation project to the residents of my area, and for some time after the information was reported this project received considerable attention in Pittsburgh. Since that time, however, corrections in management policies have been made at the Pittsburgh VA and our community, working with the VA, has moved on to tackle other issues involved with providing health care to our veterans.
    Clearly, there is little doubt that the renovation of the director's residence was mismanaged. Frankly, I am disappointed that so many oversights could have been made at multiple levels of VA management that would result in an outcome like the one detailed in this report.
    For many of my constituents, the VA health care system is their only source of medical care, and it should concern all members on this committee and all veterans when that care is sacrificed due to poor management. I do think it is important to note, however, that the IG report details not only the mistakes made during the project, but it also included recommendations for management changes within the Pittsburgh facilities designed to prevent similar situations from occurring in the future. I have been assured, and progress reports issued by the IG have acknowledged, that recommendations have been followed.
    What concerns me today, Mr. Chairman, is that this incident not tarnish the reputation of the Pittsburgh VA health care system in general or overshadow the positive accomplishments of its management staff, including Mr. Cappello. I've toured the VA Medical Centers in Pittsburgh many times, and because of my membership on this committee and the Health Subcommittee, I constantly hear from veterans in my district about the quality of medical care they are receiving today from the VA. While I may not agree with all the changes taking place at the VISN or the facility level in my district, the management staff in Pittsburgh have made a number of positive changes to improve the quality of health care being provided to the veterans in our area. Furthermore, they have accomplished this in a very poor budgetary climate and during a time when the entire VA health care system is undergoing drastic reorganization.
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    Mr. Chairman, I agree that this subcommittee should be looking into areas of mismanagement in the VA. Our goal here today should be to ensure that the VA is putting policies in place that will eliminate the possibility of similar events like this occurring in the future. It is this action that can best serve the interest of our Nation's veterans.
    Mr. Chairman, I appreciate the subcommittee giving me some time this morning to read my opening statement and look forward to hearing the testimony today.
    Mr. EVERETT. Thank you very much, Mr. Doyle.
    I might point out to those attending this hearing today that the targets of allegations of mismanagement are people who are making three-digit salaries. We're talking about somebody who should be competent, and we keep seeing over and over again that this is not the case. The subcommittee has seen a number of cases where the directors involved simply were not competent to hold the job that they held. I'm sorry, six-digit salaries—not three-digit salaries, but six-digit salaries.
    All statements will be entered into the record, and I would ask each witness to limit your oral testimony to 5 minutes. As I said, your complete written statement will be made a part of the official hearing record today. I ask that we hold our questions until the entire panel testifies. Because of the nature of some of today's testimony, I decided to have the witness panels with direct knowledge of events or investigative activities testify under oath.
    I'd now like to recognize our colleague, Mark Sanford, and, Mark, I appreciate you listening—being here today and appearing here today. Mark represents South Carolina's First District, and now we will be pleased to hear your statement.

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    Mr. SANFORD. Thank you, sir, and as you already suggested, both written and oral testimony will be submitted for the record. That's my understanding.
    Mr. EVERETT. Yes. Without objection.
    Mr. SANFORD. (A) I would just thank you very much again for holding these hearings. I appreciate that.
    And, too, I would I guess pick up with what my colleague from Charleston and South Carolina said. I admire Jim Clyburn in the way that he is very measured in the way that he approaches things, and he raises a great point on: Where do we go from here? Because you can spend too much of life looking backward rather than looking forward, and yet what's interesting—and I think I'd just make two points—is that in going forward, at times we have to look back. Because if I was to ask you, Mr. Chairman, you know, is history a good thing or a bad thing, you would probably reply, well, it's neither; history is history. The question about history is: What do you do with it? What do you do about it?
    In fact, we work in a city that is covered with memorials, and those memorials are not there just to take up real estate. They are there to remind us, so that we might change our lives on where we go from here, both to remind us of good points in history and to remind us of points in history that are not worth repeating.
    And, in fact, in Charleston, you know, we've got Holocaust survivors, some of whom have made it their life's mission for the rest of their lives to go out into classrooms and to say: This was history; I was there, and this is what I saw. And, yet, the modern American way, if you will, is just the opposite. People at times don't want to get involved, and they say, well, I'll just look the other way because to get involved would take time; it might get messy. And, yet, Jefferson, 200 years ago, said that absolute opposite. He said that a democracy rests on the active participation of its citizens, not the passive, but the active participation of its citizens.
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    And so in that regard, I would simply like to praise Fletcher Truesdell and Kate Smith and Charlie Steiner, who's here but not testifying, and a host of other Veterans' employees for setting forward and saying: This is history and this is what I saw. Because too often people today won't get involved.
    I would also just make one other comment, and that is that I would ask you to do something with this history. I think we can learn from history. And the points that my colleague from Florida raised on, if nothing else, the advancement process within the Veterans' Administration, wherein there can be serious charges of wrongdoing, substantiated by an IG report, wherein the only outcome seems to be advancement of that person. It just doesn't seem to pass the common-sense test back home.
    And so I would simply leave you with the one request that I hear from folks back home, and that is, please do something with this piece of history. I yield back the balance of my time.
    [The prepared statement of Congressman Sanford appears on p. 163.]

    Mr. EVERETT. Thank you very much, Mark. I would also say it does not pass the smell test as well as the common-sense test.
    Mr. SANFORD. Yes.
    Mr. EVERETT. And as we have these hearings, we get deeper and deeper into that. Obviously, history is important. Our obligation is to understand history and then take some action on it that would benefit our veterans.
    Your personal efforts and the interest in behalf of the veterans and employees of the Charleston VA Medical Center are a principal reason we're having this hearing today, and I want to commend you for your work that you've put forth. I'm pleased that you could be with us to give the subcommittee the benefit of your views about what's happening in Charleston, which I understand serves many of your constituents.
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    Let me ask you: How was employee morale and the personnel picture generally when Mr. Billik was Director, and how are things going now?
    Mr. SANFORD. I think, as Jim Clyburn pointed out, morale ahs gone up substantially here lately with Mr. Vogel. What happened at that time—again, what happened, if you were to reconstruct history, was that a number of these employees—morale went up slightly when Mr. Billik first came onboard. Then it began to dip, and we began to get—apparently, a number of the employees placed calls to the Veterans' Administration Waste, Fraud, and Abuse Hotline, or whatever it was. They didn't seem to get much in the way of response, and then they began calling my office and I would suppose Mr. Clyburn's office as well. And morale began to dip very substantially at that point, and, frankly, it was very, very low.
    Mr. EVERETT. What do you feel like this committee can do to help you in this situation? Your previous comment about doing something with the testimony we get here today——
    Mr. SANFORD. If you think about the mandate of the Veterans' hospital system, I think it's to serve those who served. And what's being called into question, the thing that's being wondered about by both the employees and those being served within the system, is: How efficiently is it doing that? Because of you think about priorities, businesses have priorities; individuals have priorities, and the thing that people kept wondering about, when they began to see fish tanks or when they began to see nursing home units that were opened—or built but never opened, or these consultant fees—were priorities. In other words, were the veterans, in fact, the priorities or was cronyism the priority?
    And so I would simply say what would help the most to both the morale of the institution and to the veterans that it serves is for there to be a very clear-cut set of priorities on how money is spent within the veterans' system and, two, how people are advanced within the veterans' system.
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    Mr. EVERETT. What are you hearing from your constituents about the quality and timeliness of the health care there now?
    Mr. SANFORD. You know, again, as I've indicated, I think that the morale is up from where it was. The question I think still continues to be, given the amount of money that goes into the veterans' system, to an extent what the veterans expect is, if not Cadillac care, something close to Cadillac care, and what they feel like is that they're not getting that level of care commensurate with the amount of money that's going into the system.
    Mr. EVERETT. Thank you very much. Mr. Clyburn.
    Mr. CLYBURN. Thank you, Mr. Chairman.
    Congressman Sanford, I don't know that I have any questions. Let me, as I said before, thank you for being here today and for your work on this subject. But let me dwell a little bit on history. As you know, in my other life, I served a tenure as a history teacher. I don't think there's anybody in this Congress who loves history any more than I do. But I think it's one thing for us to look back and learn from our history; it's something else to dwell on the past——
    Mr. SANFORD. Sure.
    Mr. CLYBURN (continuing). And open up all kinds of contentiousness that may or may not do us any real good as we try to launch off into the future.
    Now one of the reasons I never raised a public discussion of what was going on, the allegations at the VA, was because, as some people know, my wife retired after 29 1/2 years as a librarian in the VA system, and she spent her time at the VA in Van Dorn. She'd never spent any time at this facility. But we were getting a lot of phone calls from her friends in the service at home, and I never spoke out publicly about it because of that bit of history. I didn't want anybody to feel that our involvement had more to do with my wife's experiences than what was really going on. And so I admire the fact that you went public and raised those issues to the point that the public could become cognizant of them.
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    One last thing I want to say about this: The reason I raised the issue this morning about the Ralph H. Johnson VA Medical Center is because Monday of last week I spent the day at Courtney School in Charleston, a school that Ralph H. Johnson attended. And the reason I was spending the day at that school is because a gentleman went to a Black History Month Program last February, and he saw all these discussions about people, black people, in the Charleston area. This gentleman had been in Vietnam, and he knew Ralph had lost his life in Vietnam by saving the lives of scores of people around him, and had received the Congressional Medal of Honor, and there was no mention of it. And he thought there was something wrong with that. And so we got involved, and we were having a little essay contest at Courtney School, asking all the students in that school to write about Ralph H. Johnson and what his life and legacy mean to them today, and so that kind of history is important, and we have to deal with it. And I agree with you.
    But I also ask us to take into account what Mike Doyle here has said today about what has taken place in Pittsburgh, because I have talked with people at the headquarters here at the VA, and these are people who have worked with Mr. Vogel. I have talked to veterans in the Charleston area, and they tell me, as you have said, that what is taking place at that facility today is just great. I have not heard one person complain. Now this is not to say there aren't any people complaining, and maybe they are complaining somewhere else, but all that I hear today seems to be positive.
    And I've visited the facility recently, and you can feel it when you walk into the lobby, the difference in the aura there. It's different today than it was a couple of years ago. And we're talking about things that happened 4 and 5 years ago. Somebody reading the headlines tomorrow morning will think it happened yesterday. And so I think we need to be very, very careful with that.
    Mr. EVERETT. Thank you very much, Jim.
    Any other member wish to have any questions?
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    [No response.]
    Mark, thank you very much. We appreciate your testimony.
    Mr. SANFORD. Thank you, sir.
    Mr. EVERETT. I will now ask panel two to please be seated.
    Will the panel please rise and raise your right hand and repeat after me.
    [Witnesses sworn.]
    Thank you. Please be seated.
    I believe we'll begin with you, Mr. Truesdell. Would you please describe your job at the Charleston VA Medical Center?

    Mr. TRUESDELL. I am the full-time National Association of Government Employees president, and I'm also in engineering. I'm a utility systems operator.
    Mr. EVERETT. We would be pleased to hear your testimony now.
    Mr. TRUESDELL. Thank you.
    Good morning, Mr. Chairman and members of the Congressional committee. Thank you for granting me this opportunity to appear before you today. My name is Fletcher P. Truesdell. I am a disabled veteran, and the president of the National Association of Government Employees, local R51–36, representing approximately 700 employees at the Department of Veterans Affairs Medical Center in Charleston, SC. My total commitment is to the American veterans and the employees who care for them. My testimony is filled with emotion and concern. There is no way to impart to you in 5 minutes everything needed to be told today.
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    Mr. Billik was blatant in his mismanagement and abuse of power. The system routinely transferred directors like him out of trouble, leaving behind other top management officials who continued the same management offenses. They are left in place to wreak havoc on the employees who complained of the waste, fraud, and abuse until a ''don't-rock-the-boat mentality'' cloaks all in fear of reprisal and retribution. We have many dedicated and excellent employees remaining at the VA Medical Center in Charleston. We do not want to lose any more due to the poor treatment they are receiving.
    Mr. Billik arrived at Charleston VA Medical Center January 1992 as the Director and was assigned as Acting Director in Columbia, SC. Soon after his arrival, his entourage from Texas began arriving. He had hired and promoted his friends without competition and placed them in positions held by long-time employees. He further abused the system by giving these friends raises at the same time he was announcing hiring freezes, possible contracting-out of services, layoffs, RIFs, and cutbacks due to reduction in Federal funding. All this was done while creating a $2.9 million deficit.
    During an employee forum on June 11, 1996, when asked about the opening of the 38-bed nursing health care unit, Mr. Billik stated that President and Mrs. Clinton health care reform had changed health care overnight, and that the unit would not open. At another forum, Mr. Billik stated that he was not in the nursing home business. Gentlemen, who did he think he was fooling. The funded nursing care unit has not opened to this day.
    The following actions have taken place since Mr. Billik's arrival in Charleston:
    A management official informed me that one quality management employee had been demoted and another chose to leave under duress when a management consultant was hired by Mr. Billik for the VA Medical Centers in Charleston and Columbia, SC to perform tasks normally handled by the Director and the QM staff. This consultant was paid $1,200 a day through medical funds.
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    Mr. Billik hired an interior decorator at a time when the hospital was in a deficit. Costly items ordered for the decorated areas are now elsewhere or missing.
    Mr. Billik remodeled the Director's suite and the carpeting was laid twice.
    During this excessive spending, essential hospital equipment and material was unobtainable due to lack of funds. During a shortage of supplies a nurse supervisor stated, ''We should take one of those fish and sell it to buy paper for the copying machine.'' Yes, it was that bad.
    Under Mr. Billik's management, we experienced $3 million deficit while patient care projects were put on hold. This VA Medical Center received these funds. Where did they go? Will this be investigated? OSHA cited this hospital with willful safety violations such as the absence of hepa filters and unsafe exterior railings, placing patients and employees in unnecessary danger. The corrective measures were disregarded.
    There was an escalation of complaints from employees in all areas. Simple complaints that could have been easily resolved ballooned into major issues due to management's refusal to acknowledge and accept responsibility for the problem.
    Mr. Billik and his managers have a propensity to play the ''is/is not'' game. It is known that correspondence regarding this man was mailed to the Secretary of the Department of Veterans Affairs voicing a variety of concerns about the hospital. The Secretary apparently did not turn this over to the Inspector General for inquiry or investigation. Instead, he forwarded the concern to Mr. Billik, who in turn called the employee into his office and confronted her. There are many more cases of employees suffering the consequence of utilizing the confidential IG hotline. How can stamp out the waste, fraud, and abuse if no one feels safe to speak out? This same scenario is true in reporting harassment of any sort. We are told to go up the chain of command. In most cases the guilty party is in the chain or a pal of someone in the chain.
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    I thank you for you time, and I look forward to possible solutions to this problem. Gentlemen, I am at your service at any time. Additional example follow, and more information is available upon request.
    [The prepared statement of Mr. Truesdell appears on p. 165.]

    Mr. EVERETT. Thank you, Mr. Truesdell.
    Ms. Smith, would you describe your job at the hospital?

    Ms. SMITH. I'm a registered nurse, and 75 percent of my workday is in my department, Mental Health, and 25 percent is as the president of the RN union.
    Mr. EVERETT. We'd be pleased to have your testimony.
    Ms. SMITH. Good morning, Mr. Chairman and members of the Veterans' Affairs Subcommittee on Oversight and Investigations. I appreciate the invitation to come here today and give testimony before you.
    My name is Kate Irene Smith. I am a registered nurse, a veteran, and the president of the National Association of Government Employees, local R–5–150, at the Ralph H. Johnson Department of Veterans Affairs Medical Center in Charleston, SC.
    This is a professional unit representing title 38 registered nurses, and the testimony I gave is in our collective behalf. A statement made by our national president, Kenneth T. Lyons, is begin included in today's hearing.
    The focus of this testimony is on the alleged mismanagement at the Charleston VA Medical Center, as investigated by the Office of the Inspector General. There is no question that over a lengthy recurring period of misspending and mismanagement a negative impact was felt by the nurses in our medical center. Limited to 5 minutes, I cannot bring all the issues forward, so I will concentrate on those that are of greatest concern to our nurses.
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    During Mr. Dean Billik's directorship in Charleston, we faced ongoing problems and adverse working conditions. We were daily faced with critical shortages in nursing staff, threats of downsizing, and reductions in force, commonly called RIFs. Many resigned under duress, and a hiring freeze compounded our problem.
    Additionally, under Mr. Billik, we witnessed a money management style that left each nurse with continued cutbacks in salary. The subsequent reassignment and promotion with accompanying pay raise of Mr. Billik is something that the nurses in Charleston still ponder.
    Mr. Billik explained to us, and I quote, ''During lean times, raises and bonuses are not part of the job, and employees should not even expect them.'' It is a matter of record that during the same lean times Mr. Billik rewarded his staff, those who followed him to Charleston or were formerly acquainted, with promotion and salary advance.
    During periods of critical nursing shortages in nursing staff, daily staffing adjustments were made. Nurses with specialized advanced training, competency, and certification in one area of nursing were assigned with lack of orientation or cross-training to areas of total unfamiliarity. This hardly fits the picture of the best patient care possible with efficiency and effectiveness. Mr. Billik denied this to the local media, that this was occurring, but in fact I was an eye witness and a forced participant in the management practice.
    Currently, title 38 registered nurses are dependent on the annual salary survey conducted under the Nurse Pay Bill Act and other regulations for pay adjustments in pay or shift differentials. This survey is conducted exclusively by management and did little to nothing to keep the nurses in Charleston compensated for their dedicated care to our veterans.
    In a memorandum dated March 31, 1994, Mr. Billik addressed the, and I quote, ''significant impact that the reduction in differential pay would have on nurses.'' One salary survey resulted in the average pay scale nurse getting an increase of $1 a week. We experienced continual downward adjustments.
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    In another memorandum dated 8 April 1996, Mr. Billik again reduced night and evening differential, citing, and I quote, ''Severe budgetary restrictions.'' He further explained, because of the current budgetary restrictions, a more gradual reduction will not be feasible.
    We did have a large deficit variously reported between $2.8 and $3 million. Our lack of advancement was hard to accept in the face of what we knew was happening at the medical center. Mr. Billik's reorganization was thorough in promoting those in management, often noncompetitively, through multiple levels upwards, while nurses were losing ground.
    Nursing provides care to veterans 24 hours a day, 7 days a week, and all nurses, myself included, appreciate a pleasant work environment, but fish tanks, palm trees, and costly office renovations cannot replace our mission, which is putting veterans first. No nurse I have ever spoken to can conceive of earning $800 to $1,200 a day, as was Mr. Billik's consultant.
    It is no surprise that the results of the recently-conducted 1997 ONE-VA employee survey states that 65 percent of employees feel that pay raises do not depend on how well they perform their jobs.
    It was not until January 9, 1997 that the registered nurses in Charleston were recognized for their hard work and dedication to their veteran patients. Our current Medical Director, Mr. John Vogel, was able to use the salary survey and other measures available to him, and Mr. Billik, to give us a modest, but more importantly, an equitable pay raise that mirrored our general schedule co-workers. We were grateful to him for that recognition.
    What I have related are just not minor anecdotal situations, but real conditions affecting a person—oops, may I have the rest put into the written record?
    Mr. EVERETT. Please go ahead and finish.
    Ms. SMITH. What I have related are not just minor anecdotal situations, but real conditions affecting the person's standing directly at the bedside of the veteran, the VA registered nurse. We registered nurses are anxious to be part of the new VA with its new management, new challenges, and the reorganization that gives the stakeholder principle as defined by Dr. Kenneth Kizer, Under Secretary for Health, a chance to include us in decisions affecting our careers and the delivery of care to our patients.
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    I am reminded of an old German proverb that says, to change and to improve are two different things. It is something I use to tell me if I'm doing the right thing.
    In closing, I want to thank the committee for giving me an opportunity to testify on behalf of an excellent, dedicated staff at the Ralph H. Johnson VA Medical Center in Charleston, SC.
    [The prepared statement of Ms. Smith appears on p. 168.]

    Mr. EVERETT. Thank you very much.
    I have some questions that are sort of multi-layered, so the first question will be directed at both of you. As I said, it's kind of multi-layered, and I'll finish the question, then if you will, feel free to answer it.
    A common complaint that the subcommittee has received about the former Director at Charleston, Mr. Billik, is that he showed favoritism toward his office staff, and one member of his staff, in particular. Do you believe he showed favoritism, and what were the employee perceptions of Mr. Billik as a manager and a leader? Did he set an appropriate example and conform to the higher standard of conduct expected of senior management? And then, lastly, would there be employees that would not share your views on that?
    Ms. SMITH. I am sure that there are many employees in management who will not share my views because they were part of that system, having been rewarded. But from my standpoint, from the general employee, there was a very negative perception. It was very, very difficult to work hard, coming in after hours and working hard, coming in and then seeing somebody brought from Texas right to the Director's suite and then promoted upward through several levels, obviously not competitively, while we were at the bedside of the veteran and losing ground. The perceptions were entirely negative.
    Mr. EVERETT. Mr. Truesdell, do you have anything——
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    Mr. TRUESDELL. The perception of most of our employees was that he (Mr. Dean S. Billik) was in power, and that's one person that you shouldn't cross.
    Mr. EVERETT. How was the morale prior to Mr. Billik's arrival at Charleston?
    Ms. SMITH. Prior to Mr. Billik's arrival, we had a Director who paid close attention to both the mission he had to do and the people who had to accomplish the mission, and so the morale was much better. The work was being done. He still had problems that every Director has with how to balance the money, how to get the resources out, but the moral was much better because he took care of both things at the same time, the veteran and the person taking care of the veteran.
    Mr. EVERETT. And, apparently, from your testimony, it took a nosedive on his arrival, and that continued——
    Ms. SMITH. Straight down.
    Mr. EVERETT (continuing). During his tenure there?
    Mr. TRUESDELL. Yes.
    Mr. EVERETT. How's morale now?
    Ms. SMITH. Morale has improved since Mr. Vogel arrived. There are still things to be taken care of. That's an ongoing process in every hospital, but it did improve after he came. We're hoping for further improvements.
    Mr. EVERETT. What are some of the things that need to be improved?
    Ms. SMITH. From my perspective with the nurses, the Nurse Pay Bill Act is not an equitable system compared to the cost-of-living adjustments that the general wage schedule people get. A specific example is that recently——
    Mr. EVERETT. Would you repeat that, please?
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    Ms. SMITH. I said that the Nurse Pay Bill Act of 1990, which authorizes VA nurses, title 38, to get cost-of-living adjustments, only through a salary survey; it is not an automatic process, and in fact your pay can be reduced. This doesn't mirror the cost of living that every other government worker gets as an automatic thing.
    Now it was within Mr. Billik's power to use this, and he did not. Mr. John Vogel this last January did use that, plus other measures, to recognize us.
    Mr. EVERETT. I understand that—as a matter of fact, I mentioned in my opening remarks that two individuals from the Charleston hospital were invited to testify and they declined because of fear of reprisal. If you know who they are, please do not—do not—mention their names, but please tell the subcommittee about the atmosphere of Charleston that would cause them not to want to testify.
    Ms. SMITH. The employee I have most recently spoke to is concerned because she works, this employee works in a department with highly-specialized equipment that carries no maintenance contract, and yet the fish tank is on a maintenance contract of $7,000 a year. But this highly-technical piece of medical equipment lacks a maintenance contract, and she can't rely on its function.
    Mr. EVERETT. I don't think that answers the question of why she fears to come forward and testify.
    Ms. SMITH. Because her supervisor or her boss has threatened to fire her if she says this.
    Mr. EVERETT. I sure would like to hear some mid-level management employee threaten to fire an employee, because I'd like to get that person right in front of this subcommittee and——
    Ms. SMITH. It's an ongoing thing.
    Mr. EVERETT. And we do hear that. We, members of the committee, have strong feelings about that. The problem is that it's very difficult for us to get the proof. But if you can ever find the hard proof, I really, really wish you'd get it to the subcommittee, because I would enjoy getting that type of person in front of this committee.
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    Ms. SMITH. Would the minutes of meetings be all right?
    Mr. EVERETT. I beg your pardon?
    Ms. SMITH. The minutes of meetings in which those statements are made?
    Mr. EVERETT. Yes, certainly, if he used the threat to fire an employee if they did a certain thing, I'd love to have that.
    Do you believe the IG investigation at Charleston has been thorough and independent of VA management? And do you believe it pulled any punches, so to speak?
    Ms. SMITH. I believe it pulled several punches, and, no, I don't believe it was thorough.
    Mr. EVERETT. I did notice—and we'll talk to the IG group about that later—that while the titled report—I don't know if you read it or not—says, ''Alleged Mismanagement,'' there's no direct finding of mismanagement in the report. They don't use the term, and I'm very curious about that. I would assume that if either of you had written that report, you would have had no problem using the term ''mismanagement.''
    Mr. TRUESDELL. Yes, sir.
    Mr. EVERETT. Mr. Clyburn.
    Mr. TRUESDELL. Mr. Chairman?
    Mr. EVERETT. Yes?
    Mr. TRUESDELL. Speaking of the report, we had approximately 30-something employees that were willing to speak to the IG, and only about 21 actually spoke to the IG. We had still about another 10 or more that wanted to speak to the IG over issues. The investigation ended. We weren't informed that it was actually ended, and we never saw or heard from the IG since then.
    Mr. EVERETT. Of course, one of the responsibilities of this subcommittee is to find out why those kind of things happen, and as our colleague, Mr. Mascara said, that somewhere somebody needs to take the consequences of these actions. Now whether it's in the IG's office or upper management's office, or what, this subcommittee intends to find out.
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    Mr. Clyburn.
    Mr. CLYBURN. Thank you, Mr. Chairman. I have a couple of questions, but, first of all, Mr. Truesdell, how would you rate Mr. Vogel's performance since December 1996?
    Mr. TRUESDELL. I really can't.
    Mr. CLYBURN. You can't?
    Mr. TRUESDELL. No, sir.
    Mr. CLYBURN. So after 10 months, you have no impression of what his performance is?
    Mr. TRUESDELL. I'd say it's a neutral, from our standpoint.
    Mr. CLYBURN. Who's ''our?''
    Mr. TRUESDELL. The employees. Nothing's happening.
    Mr. CLYBURN. How would you answer that question, Ms. Smith?
    Ms. SMITH. When Mr. Vogel came in, initially there was a great response to his attention to us. Since then, I feel that some of his attention has been diverted because he has an accompanying VISN assignment.
    Mr. CLYBURN. He has a what?
    Ms. SMITH. Accompanying VISN assignment. Each hospital director also has another duty within VISN. So he spends a great deal of time away from the medical center, and I feel that the system that started under Mr. Billik is still somewhat in effect. So that in Mr. Vogel's absence, things are still being done that he may be unaware of. There are still problems to be taken care of, and he's often not there to see what's going on.
    Mr. CLYBURN. Well, let me say to both of you, as you may or may not know, this is my first elective office. Before I came to Congress, I spent all of my life, since the age of 25, as a manager and an administrator, and I took over an agency that was under severe criticism publicly and by the State legislature. And though you would like to walk in on Monday morning and turn the culture around by 5 o'clock that afternoon, it cannot be done.
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    And so I guess what I'm asking is whether or not there is an attempt on the part of Mr. Vogel to correct, or the right term may be to rectify the situation, at the hospital. I notice you said that Mr. Vogel used this instrument that was available to Mr. Billik but never utilized by him that gave what you thought were equitable pay raises, but Mr. Truesdell still says nothing is happening.
    Ms. SMITH. We come from two different perspectives. We're representing different type schedule employees. What Mr. Vogel did was took the instrument and the information he got, and instead of accepting it, he forwarded it on to Washington for further consideration. He said, ''Please override what the community salary survey says. I don't think it's right.''
    Mr. CLYBURN. Right.
    Ms. SMITH. Mr. Billik had that option and didn't exercise it. Mr. Vogel did, and was able to give us good news.
    And I will say that I've taken many things before Mr. Vogel and he has done everything he can to help rectify some problems. He has done some good things. I do think that the system in the hospital is so ingrained, leaving Mr. Billik's management style, that there are still many more things to be corrected. I do believe he's attempting to do that.
    Mr. CLYBURN. Well, thank you very much.
    Ms. SMITH. We haven't seen a totally positive result yet, but it's like you said, it takes time.
    Mr. CLYBURN. Maybe if he stays there as long as Mr. Billik was there, he might be able to do it.
    Mr. Truesdell, let me ask you, what is your function at the hospital.
    Mr. TRUESDELL. I'm a full-time president of the National Association of Government Employees that was negotiated in July of this year.
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    Mr. CLYBURN. Oh, so you're not an employee——
    Mr. TRUESDELL. I am an employee being paid through the engineering services as a utility systems operator.
    Mr. CLYBURN. But you aren't working there every day?
    Mr. TRUESDELL. No, sir, I work out of an office.
    Mr. CLYBURN. Okay. So you are an advocate for the people who work there?
    Mr. TRUESDELL. Yes, sir.
    Mr. CLYBURN. Okay. Have you had discussions with the people who are working there every day as to what they feel?
    Mr. TRUESDELL. I have many, many people come to me all during the day and even at night, because a lot of times I——
    Mr. CLYBURN. So you don't think that any of the people that you have responsibility to as an advocate think that anything is happening of a positive nature?
    Mr. TRUESDELL. They feel that nothing's happening. There's still hints over whether they're going to be contracting out, whether being RIFed. We were in a deficit earlier in the year, and we were bailed out.
    Mr. CLYBURN. How were you bailed out, the deficit?
    Mr. TRUESDELL. I think the money was given to us through the VISN.
    Mr. CLYBURN. And you don't think Mr. Vogel had anything to do with that?
    Mr. TRUESDELL. Well, I'm sure that they had what they called MCCR, and——
    Mr. CLYBURN. I don't know what all those acronyms mean, but——
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    Mr. TRUESDELL. Okay. They were talking about funds coming back to the hospital through the MCCR program, like a third-party billing, and also through the redirection of northern patients' money (northern patients migrating to southern hospitals) to the southern cities, that we would use the money from that——
    Mr. CLYBURN. Excuse me. Were you in a deficit before Mr. Billik got there?
    Mr. TRUESDELL. Not that I'm aware of.
    Mr. CLYBURN. So you think that he drove you to a deficit?
    Mr. TRUESDELL. It's the first time that I ever heard—I've been at this hospital since 1973, and this is the first time I have heard of a deficit at this hospital.
    Mr. CLYBURN. Okay, but now you're out of the deficit?
    Mr. TRUESDELL. Yes, sir.
    Mr. CLYBURN. So you would blame Mr. Billik for putting you there, but you don't want to give credit to Mr. Vogel for getting you out of there, the deficit situation?
    Mr. TRUESDELL. Well, we were in the deficit earlier, and now we're out of a deficit. He had to be the one responsible for getting out of the deficit.
    Mr. CLYBURN. Well, then, something is happening. All I'm saying to you, Mr. Truesdell, is that what we want to do, I would hope, is try to change the culture, and this is not just Charleston; it's not just the Ralph Johnson facility or the Pittsburgh facility. We're talking about something that we are finding throughout the entire VA system. It's a culture that we're trying to get to, and I think it will be very helpful if we know what's working and what's not working, if you know who is good and who is bad. But to just lead us to believe that, no matter who comes, no manager is going to make a difference is something that I have a real problem with. I thought of myself as a pretty darned good manager, and I would hate to think that it doesn't make any difference who the manager is; that the system is so ingrained or so endemic that nothing can be done about it. I would hope that you'd be helpful to us, especially the people that you advocate for, so that we will know what it is that we can recommend as a subcommittee.
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    When we ask you to come up and testify, we're looking for information, and we would like to know when something is working and when something is not working, but just to say that it ain't going to work, no matter what, is a problem to me as a manager, and I hope you understand where I'm coming from here.
    Mr. TRUESDELL. Yes, sir.
    Mr. CLYBURN. Okay, thank you. Thank you, Mr. Chairman.
    Mr. EVERETT. Thank you very much, Jim.
    I would just point out, on behalf of Mr. Vogel, as former Under Secretary of Benefits for VA, I hope you can understand why he'd be a very attractive candidate to have assignments also with a VISN, as well as the directorship. I do understand your feelings and those of the people you represent that you have immediate problems that need to be solved, and that's perhaps a conflict that can be worked out.
    Now I would like to turn to another member of the subcommittee, Mr. Mascara. Frank, if you will?
    Mr. MASCARA. Thank you, Mr. Chairman.
    Mr. Truesdell and Ms. Smith, I probably am a glutton for punishment; I read all of the testimony, including yours. And, Mr. Truesdell, there are some very serious charges in your testimony. In the first three paragraphs alone, you charge Mr. Billik with mismanagement, misappropriation of funds, abuse of the system, waste of taxpayers' dollars, abuse of employees, fraud, abuse of power. These are very serious charges.
    Mr. TRUESDELL. Yes, sir.
    Mr. MASCARA. They're very serious charges. Have you read the Inspector General's report?
    Mr. TRUESDELL. Yes, sir, a redacted copy.
    Mr. MASCARA. The redacted copy?
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    Mr. TRUESDELL. Yes, sir.
    Mr. MASCARA. You already responded to Chairman Everett's question, but this is something I wrote last night. ''Have you read the Inspector General's report,'' and you responded, ''yes.'' ''If so, do you think the report fairly explains the allegations,'' and you've already responded to Mr. Everett. My note to myself is, ''I have and it does not. It does not address the charges.''
    In your statement, and I quote, ''Will this be investigated?'' That's taken from your statement. So do you think that some other independent agency outside the Department of Veterans Affairs should look into these matters?
    Mr. TRUESDELL. Yes, sir, most definitely.
    Mr. MASCARA. Ms. Smith—thank you, Mr. Truesdell.
    Mr. TRUESDELL. You're welcome.
    Mr. MASCARA. While your testimony is less volatile, you still allege misspending, mismanagement, adverse working conditions, critical shortages in nursing care; many people resigned under duress; nurses were assigned with lack of orientation or cross-training. In your opinion, on this last observation here, did that compromise the care of the patients in any way?
    Ms. SMITH. I'll give you an example. I'm a psychiatry nurse with 20 years' experience, and one morning I was told I would go and work on the surgical ward. I took care of 20 surgical patients, their full care. If you were going to an operating room and they were short a doctor, your surgeon, and they said, ''Well, let's go get a psychiatrist. Both of them went to medical school,'' would you be comfortable?
    Mr. MASCARA. I would not. So you've answered my question.
    Ms. SMITH. I'm not sure my surgical patients were comfortable, but I attended to their mental health needs. I could calm their fears, but I couldn't take care of their surgery.
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    Mr. MASCARA. Do you think that the new network organization structure that has been in place for nearly 2 years will address any of these problems that you cite?
    Ms. SMITH. I believe it's started, and I believe it has a long way to go, but I believe the change has begun.
    Mr. MASCARA. Because the regional directors I believe had in some instances as many as 43 facilities reporting to them, where now some as few as 3, and in fact two of the networks have only 3 facilities reporting to them, and I believe no director has more than 10 reporting to them. So we should see some benefit from the reorganization. Thank you.
    Do you think somebody outside of the VA should investigate the allegations that have been made?
    Ms. SMITH. Yes.
    Mr. MASCARA. Thank you. Thank you, Mr. Chairman.
    Mr. EVERETT. Thank you, Frank.
    A colleague of ours on the full committee, Mr. Bilirakis.
    Mr. BILIRAKIS. Thank you, Mr. Chairman, and thank you, Ms. Smith and Mr. Truesdell, for appearing before the committee.
    I just want to get clear, Ms. Smith, you are president of the National Association of Government Employees, local R–5–150, and that is registered nurses?
    Ms. SMITH. Yes, title 38 registered nurses.
    Mr. BILIRAKIS. Okay. And then Mr. Truesdell is president—what is that R–5–136? Is that all other employees or cover all other employees at the center?
    Mr. TRUESDELL. Except the doctors and the dentists——
    Mr. BILIRAKIS. Except the doctors.
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    Mr. TRUESDELL. We handle all nonprofessional title 38 hybrids and professionals——
    Mr. BILIRAKIS. I see. So you're both presidents of local union groups. How long have you been presidents of those groups?
    Ms. SMITH. The nurses union was certified in August of 1996, which is why I have less testimony. Mr. Truesdell has much more history——
    Mr. BILIRAKIS. So you've been president since August of 1996?
    Ms. SMITH. I don't have the same amount of history to bring forward.
    Mr. BILIRAKIS. Well, you don't have the same amount of history as president of the union, but you have the same amount of history as an employee of the Veterans' Center and caring for veterans, et cetera.
    Ms. SMITH. But not all the information has been made available to me.
    Mr. BILIRAKIS. Yes, I see.
    Ms. SMITH. Things I have requested, I have been denied under the premise of——
    Mr. BILIRAKIS. You have requests that you have been denied?
    Ms. SMITH. Yes, I have requested information that was available before we were certified as an RN union, and I've been told, no, that was before you became certified.
    Mr. BILIRAKIS. You've been told no by whom?
    Ms. SMITH. The Department of Human Resources—that it wasn't relevant.
    Mr. BILIRAKIS. That it wasn't relevant?
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    Ms. SMITH. Yes.
    Mr. BILIRAKIS. Mr. Truesdell, I'm sure somebody wants to follow up on that one——
    Mr. TRUESDELL. Not to interrupt you, but——
    Mr. BILIRAKIS. Go ahead.
    Mr. TRUESDELL. I stepped out of steward shoes into the president's shoes February 5, 1996, and that was during Mr. Billik's term there——
    Mr. BILIRAKIS. February of 1996, but you were a steward for quite a while before that?
    Mr. TRUESDELL. I was a steward for many years before that, and due to that fact, the election that took me through was by 21 votes shy of a unanimous vote, a majority of the votes of the members.
    Mr. BILIRAKIS. All right, now you said in your testimony here, ''It is known that correspondence regarding mismanagement was mailed to the Secretary of the Department of Veterans Affairs voicing a variety of concerns by the hospital. The Secretary apparently turned this over to the IG for inquiry and investigation, instead of forwarding the concerns of Mr. Billik,'' et cetera, et cetera. When did that—you say it is done. What do you mean by that?
    Mr. TRUESDELL. A majority of the employees had heard about it and——
    Mr. BILIRAKIS. But who would have sent this correspondence?
    Mr. TRUESDELL. An employee.
    Mr. BILIRAKIS. An employee? All right. So we know—so there's a fact—it's a fact that an employee sent this correspondence on to the Secretary of the Veterans—the Department of Veterans Affairs?
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    Mr. TRUESDELL. Yes, sir.
    Mr. BILIRAKIS. And that's a fact?
    Mr. TRUESDELL. I was given a copy of the letter, and I also know who the employee is, and they still——
    Mr. BILIRAKIS. Has that been made available to the committee? The letter, do we have a copy of that letter? When did that take place Mr. Truesdell, approximately?
    Mr. TRUESDELL. I believe it was the summer before Mr. Billik left, approximately 1 year ago (1996).
    Mr. BILIRAKIS. The summer of what, 1995?
    Mr. TRUESDELL. Yes, sir. (1996.)
    Mr. BILIRAKIS. The summer of 1995?
    Sorry, Mr. Chairman. Yes?
    Mr. EVERETT. Are we speaking of the letter of complaint that was given to the Secretary——
    Mr. BILIRAKIS. Yes.
    Mr. EVERETT (continuing). And then rerouted back to him?
    Mr. BILIRAKIS. Yes.
    Mr. EVERETT. By the way, a common occurrence.
    Mr. BILIRAKIS. Do we have copies of that?
    Mr. EVERETT. We do not, and it was felt like it would compromise the signer of the letter, but we're still working to get a copy of that.
    Mr. BILIRAKIS. Well, the reason I bring these up is because, yes, you've both been presidents of your unions for a short period of time, but you've been employees there a long time. And I trust that these concerns that you have expressed here, the conduct that has taken place is conduct that hasn't just taken place during the time you've been president of your union; it's conduct that has taken place over a period of time. Is that correct?
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    Ms. SMITH. Yes, it is.
    Mr. BILIRAKIS. All right. I guess I'm trying to get to—you have an Inspector General, and we're going to be having an opportunity to talk to that individual, but if employees have not made a real strong effort to let somebody know about mismanagement, then how in the world—you know, you indicated that things still needed to be corrected, Ms. Smith. We all know that nothing is ever perfect; nothing is ever going to be perfect; we know all that.
    But I guess what I'm trying to find out: Have efforts been made on the part of employees, on the part of the staff, aside even from the union, to let somebody know about things taking place? I mean veterans' lives are being adversely affected when there aren't adequate resources to take care of them, and if those resources are misused, wouldn't you say? I mean, what's your answer to all that? The yellow light is on, but, very quickly, can you respond to my concern?
    Mr. TRUESDELL. They fear retribution. The only——
    Mr. BILIRAKIS. They fear retribution?
    Mr. TRUESDELL. Yes, sir. The only way they could respond was to go off-station, and I agreed to that; we would have arrangements made with the Inspector General off-station, and that was the basis——
    Mr. BILIRAKIS. In other words, an Inspector General—off-station meaning not located, not physically located at the facility?
    Mr. TRUESDELL. We didn't trust anybody walking in and seeing them go into the office with an IG. They asked to remain anonymous, and we honored that.
    Mr. BILIRAKIS. Ms. Smith?
    Ms. SMITH. I would say that if there's any efforts being made, that some of that information doesn't get back to me; I have very, very limited communication with management. So some of the feedback, if attempts are being made, I'm not aware of all of them. They may be occurring. Of course, I'm only going to hear from other people's perspectives when things are not going well——
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    Mr. BILIRAKIS. But before you were president, I mean, you were there; you were there for so many years. You know fellow nurses, et cetera, et cetera. I mean, there's got to have been talk about mismanagement, complaints about this and that. Has there been any talk about any efforts being made to carry these complaints and these concerns up the ladder somewhere?
    Ms. SMITH. People did, but they did it anonymously because they still had retribution fears.
    Mr. TRUESDELL. Retribution was also on the people that did try to go to the Inspector General through the hotline and remain anonymous, and the name was given out, and the employee does not know how.
    Mr. BILIRAKIS. Well, we'll continue on here, because we have other witnesses. Thank you very much. Thank you, Mr. Chairman.
    Mr. EVERETT. We only have about 8 minutes to make a vote. This panel will remain seated, and, Mr. Bilirakis, I misspoke; we do have a copy of that letter. We have not made it public because of fear of reprisals toward the employee, but it is available to members of the committee.
    The committee is in recess until we return from the vote. This panel will remain seated.
    Mr. EVERETT. We will proceed with another round of questioning with this panel. To emphasize the importance of your testimony, I emphasize that you remain under oath at this point.
    Mr. TRUESDELL. Yes, sir.
    Mr. EVERETT. Let me just briefly comment on the letter that went full circle, that was written to the Secretary and then found its way back down to the hospital director. This is not something that we found was uncommon; I hate to tell you that. For instance, we had a situation in our sexual harassment hearings where the people who were complaining to the EEOC officer, that officer was actually director of a hospital, and one of the complainants actually heard the director and someone else laughing about her complaint. This is what I have referred to as ''the culture'' that exists in VA. And it has been very difficult for us to break through that culture. But, frankly, for VA to survive, it has to break through that culture or we're going to have some really, really tough hearings, and it doesn't make any difference if I'm in this chair or the ranking member is in this chair; this is not a partisan issue. This is an issue that we're very much concerned about, and it's one that we are struggling with to find the answer to, because we get people in front of us and they nod very politely, and tell us they're going to change course, and then they go out and do whatever it is they want to do.
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    You will find that this subcommittee will put more and more people under oath. We will use subpoenas when we have to, but we simply are not kidding around about trying to break through the culture that exists at VA.
    Ms. Smith, do you have personal knowledge about what may have happened to some of the new carpeting which was torn up from Mr. Billik's office?
    Ms. SMITH. Yes. One day I was going from the main hospital to the personnel department, and you have to cross the back of the hospital's loading dock, and there's a construction dumpster, and I saw huge sheets that filled the entire dumpster fanfolded in there, and I know it was new carpeting. It was not stained on the backing. It's the same carpeting I had seen going into the Director's office, and it was now in the dumpster. I reached over to feel how thick and plushy it was.
    Mr. EVERETT. Do you have any idea why that occurred?
    Ms. SMITH. No. I know rumor. I don't know fact. I only heard that the first carpeting was not satisfactory; that being black, it showed too much lint.
    Mr. EVERETT. And so the carpeting was then removed and that new carpeting was dumped——
    Ms. SMITH. Yes.
    Mr. EVERETT (continuing). And other carpeting was ordered and paid for?
    Ms. SMITH. Yes, I saw it in the dumpster.
    Mr. EVERETT. And this was at the lean time?
    Ms. SMITH. Excuse me, yes.
    Mr. EVERETT. This was during lean—what was lean times?
    Ms. SMITH. Lean to some.
    Mr. EVERETT. He apparently took care of his own interests very well.
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    You are aware that Mr. Billik was promoted, got a pay raise, as I mentioned earlier, six figures, and was put in charge of three VA hospitals in central Texas after leaving Charleston? You're both aware of that?
    Ms. SMITH. Yes, I heard the news.
    Mr. TRUESDELL. Certainly.
    Mr. EVERETT. How do you think that affects the employee morale at Charleston?
    Mr. TRUESDELL. In my bargaining unit, it confirmed that managers get promoted when they leave, even though they're having problems, and——
    Mr. EVERETT. In other words, this is the same old same old——
    Mr. TRUESDELL. It gives the message that they can do whatever they want and get away with it.
    Mr. EVERETT. You're seeing this time and time again, and VA employees over the country have seen this time and time again. We found that particularly true in the sexual harassment cases. It's incredible that this has been allowed to happen, and I don't think that we can just blame directors who take advantage of the situation. I think the blame goes higher than that, quite frankly.
    At this time, I'll turn it over to my able ranking member for any additional questions he may have.
    Mr. CLYBURN. Thank you, Mr. Chairman. Mr. Chairman, I do have a couple of questions.
    I've gone through the Inspector General's report, and I'm just, certainly as we talk today, counting the allegations, and I think in the allegations of mismanagement at the Ralph Johnson Center there were 27 allegations, and there were 12 the General substantiated. He found substantiation for 12 of the 27 and 2 others, and the Inspector General's report says that one was turned over to the proper judicial authorities, and the other to what I gleaned to be an administrative procedure. So that would bring to 14—that's more than half of the allegations the Inspector General substantiated. And so when you look at that kind of thing, I wonder why if the Inspector General found cause or substantiation in more than half of the allegations, that you still think we need to have another investigation by somebody outside? You don't give the Inspector General credit for finding on your behalf more than half of the time?
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    Mr. TRUESDELL. With respect to that, there was a lot of complaints that the Inspector General was informed of that was not in the IG report.
    Mr. CLYBURN. Well, I noticed that you indicated at one point that there were 30-some-odd people that you had on the list to talk to, and they only talked to 20-some-odd. You know, after a while, if you talk to 10 people, and the next 10 people say the same thing as the first 10 people said, then you might ask why do I need to go to the third 10 to hear the same thing over and over again?
    Do you have any information that led you to think that these 10 people would raise new issues that had not been brought to the attention of the Inspector General in these 27 instances?
    Mr. TRUESDELL. In the 27 instances, there was issues that was brought up that was not in the report.
    Mr. CLYBURN. Sir, you said there are some other, in addition to these 27?
    Mr. TRUESDELL. Well, the 27—no, with the 27 people that was interviewed by the IG, issues was brought up——
    Mr. CLYBURN. Right.
    Mr. TRUESDELL (continuing). To them that was not in the report.
    Mr. CLYBURN. Could you give us an example of—maybe just give me one of them that you think was important or pertinent that was not dealt with by the Inspector General.
    Mr. TRUESDELL. Excuse me?
    Mr. CLYBURN. Can you give me one issue outside of these 27 that you think should have been brought to the IG's before the attention or should have been dealt with in this report which was not dealt with? You're telling me that there are allegations made that the Inspector General did not pursue. Isn't that what I understand you to say?
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    Mr. TRUESDELL. Yes, sir.
    Mr. CLYBURN. Can you give me one allegation that should have been pursued by the Inspector General which was not pursued that you can report to us here today?
    Mr. TRUESDELL. The one by an employee in the operating room is not in there.
    Mr. CLYBURN. What's the allegation?
    Mr. TRUESDELL. The allegation that an anesthesiologist left the operating room while surgery was going on.
    Mr. CLYBURN. That's an allegation that was made, and the Inspector General did not deal with that in the report?
    Mr. TRUESDELL. No, sir.
    Mr. CLYBURN. You don't think it's—I saw something over here, allegation No. 26, yes, allegation No. 26, where they talked about the nursing staff; that's not covered in there, is it?
    Ms. SMITH. No.
    Mr. CLYBURN. Okay. So are you saying that Mr. Billik refused to deal with the issue when it was brought to his attention? You certainly can't blame him for the anesthesiologist walking out of the room. Do you know whether this was brought to the attention of Mr. Billik and was not dealt with?
    Mr. TRUESDELL. I can't——
    Mr. CLYBURN. That would be the management issue.
    Mr. TRUESDELL. I can't say that it was taken to Mr. Billik, because of the anonymity of the employee at the time.
    Mr. CLYBURN. But what I'm saying to you is that the Inspector General was there to investigate allegations of mismanagement. You certainly cannot blame the manager for the negligence or stupidity of any one employee unless that negligence or stupidity was brought to the attention of management and not dealt with. So are you saying that the anesthesiologist that walked out of the room, that this problem was brought to the attention of management, and management refused to deal with it? Is that what you're saying?
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    Mr. TRUESDELL. No, sir. It was brought to the attention of the IG for the IG to deal with it, so the employee wouldn't have to come forward.
    Ms. SMITH. The incident was taken to the attention of management.
    Mr. TRUESDELL. That I didn't know.
    Mr. CLYBURN. And management did not do anything about it?
    Ms. SMITH. There was a report of contact written, and it was torn up and thrown back in the face of the employee.
    Mr. CLYBURN. You said—please, say that again?
    Ms. SMITH. The employee reported something that she thought was significant and took it to management, who tore the document up and threw it back at her.
    Mr. CLYBURN. Can you identify—this is not Billik? This is a supervisor, is that what you're telling us?
    Ms. SMITH. It's the same incident he's referring to.
    Mr. CLYBURN. Okay. Well, Mr. Chairman, this is the kind of stuff I think we probably need to deal with. If there are things like this where management refused to respond, I think we probably may need to get maybe some written report or something; I don't know if you want to do this in open testimony, but this is the kind of stuff that I think that we may need to look at. I don't want us to rehash the same thing over and over again, but if there's something that shows a problem, and that person is still there——
    Ms. SMITH. That person is still there and isn't testifying today because that person's been threatened with being fired.
    Mr. CLYBURN. No, I'm talking the manager still being there. The supervisor——
    Ms. SMITH. Yes.
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    Mr. CLYBURN (continuing). That tore the document is still supervising, and the new management has or is cognizant of this and not doing anything about it?
    Ms. SMITH. I can't answer for what management passes on to its own.
    Mr. CLYBURN. Right. Well, that's what I'm saying. You know, what we want to do is get at the culture and see whether or not the new management, Mr. Vogel and his team, whoever they may be, are dealing with these problems. And so that's a problem if it's brought to his attention, whether or not he's dealt with that kind of a supervisor to see—to make sure that that kind of attitude is taken out of the system, and that kind of action will not be tolerated. So that's what I'm talking about, is whether or not we can find out whether or not that kind of issue has been dealt with by management.
    Ms. SMITH. Well, I think we're singing off the same song sheet. Mr. Billik created a culture which is still there somewhat.
    Mr. CLYBURN. Somewhat?
    Ms. SMITH. He may be gone, but some of the culture is still behind.
    Mr. CLYBURN. Oh, we understand that. We understand that maybe more problems will be there today than will be there 6 days from now, and maybe in another year from now all of it them will be gone.
    Ms. SMITH. There has been——
    Mr. CLYBURN. But the question is whether or not there is any systemic movement toward the eradication of that culture or whether or not the actions being taken by current management simply undergird or reinforce the culture rather than to extricate it from the system. And that's why we're here.
    Ms. SMITH. Well, that's difficult to answer yes or no, because while there are significant improvements in one area, there have been instances where the same system has been going on.
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    Mr. CLYBURN. In other areas?
    Ms. SMITH. Yes, there is.
    Mr. CLYBURN. Yes.
    Ms. SMITH. There's a definite incident that occurred that——
    Mr. CLYBURN. My time's up, Mr. Chairman.
    Mr. EVERETT. Mr. Mascara? And there are no questions for this panel?
    Mr. MASCARA. Not for this panel.
    Mr. EVERETT. Mr. Bilirakis.
    Mr. BILIRAKIS. Well, thank you, Mr. Chairman.
    Let's continue on. Mr. Clyburn made the comment earlier, I guess in his opening remarks, something about not dwelling in the past, and that certainly is true. What we want to try to do is to get at the roots of everything and try to get things straightened out. Obviously, we have to learn from the past in order to be able to do that. So this is why we're still in the past.
    But you said that this employee was threatened with the loss of her, his or her job, if they testified? And this happened today——
    Ms. SMITH. No. If any information were ever told outside of that department.
    Mr. BILIRAKIS. Okay, but that individual was threatened by the current administration at Charleston?
    Ms. SMITH. Required to sign a document——
    Mr. BILIRAKIS. Even though the occurrence that we're talking about took place under the prior administration?
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    Ms. SMITH. There's an ongoing problem in one department in which employees are continually reminded and being told they must sign an affidavit that says that anything in that department will not be discussed outside the department. That is not just exclusive to patients, but just personnel policies, and that if anybody crosses that line, they will be fired.
    Mr. BILIRAKIS. Well, you know, we've got to be open-minded up here. We should be. Otherwise, we can't really do our job adequately.
    To be a manager at any level is tough. I think in today's world it's even tougher than it ever has been. There's no question about that.
    So really this—whether anybody believes it or not, this is not intended to be a witch hunt. It's intended to get to the dadblasted gist of why things are taking place, and try to improve them, and see that they are improved.
    You know, what bothers me is statements like this, Mr. Chairman, where a person is being threatened with maybe being fired. What bothers me is where there is a concern about walking down the hall to the in-house IG because the concern is that that in-house IG might be sort of part of the culture, that we're talking about a pal of someone in the chain of command.
    Mr. Truesdell, ''there are many more cases''—I'm repeating from your testimony—''many more cases of employees suffering the consequence of utilizing the confidential IG hotline. How can we stamp out the waste, fraud, and abuse if no one feels safe to speak out? The same scenario is true in reporting harassment of any sort. We are told to go up the chain of command. In most cases the guilty parties in that chain are a pal of someone in that chain.''
    That really bothers me because an IG—and I was talking to the chairman walking over to the Floor to cast that very important vote that we had to cast on the journal that interrupted an important hearing, but that's the way it is up here. So maybe we need some IG work up here, too.
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    But I remember when I was in the military I went to the IG once, not on behalf of myself; on behalf of another soldier. And I didn't feel any trepidation in having done so. I didn't feel it was going to hurt that other military person in any way whatsoever. And I was comfortable in doing it because that was the job of the IG. And if you're not comfortable in doing something like that—I mean, you know, we're supposed to be living in a system of freedom here. And if you work under conditions of fear, there's nothing free about all that.
    And you all have your job to do as presidents of the union, but I'd like to think, more importantly, you have your jobs to do as people who are concerned about veterans and who have been serving veterans for a long, long time.
    So let's go back to this in-house IG. Where is his—is it a he? Is it a man, to clear up Mr. Clyburn's concern? Is it a he or a she?
    Mr. TRUESDELL. It was a he.
    Mr. BILIRAKIS. It's a he? All right.
    Mr. TRUESDELL. Yes, sir.
    Mr. BILIRAKIS. So where is his office located as against the rest of the offices? Is he in the middle of everything or——
    Mr. TRUESDELL. No, he was from Washington.
    Mr. BILIRAKIS. But you mentioned in-house IG. In Washington? There is no IG located at the Charleston Medical Center?
    Mr. TRUESDELL. No, sir.
    Mr. BILIRAKIS. Oh, there is no IG? Is that usual?
    Ms. SMITH. We have no permanently assigned IG.
    Mr. BILIRAKIS. You have no permanently assigned IG.
    Ms. SMITH. In Charleston the IG has no office.
    Mr. BILIRAKIS. Okay. Well, we——
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    Ms. SMITH. He came into town and——
    Mr. BILIRAKIS. We will be talking to the IG's office in a couple of minutes. So I guess we can go into that.
    So, basically—but you used the term, Mr. Truesdell, you have to go to an outside, or something to that effect, IG? What does that mean?
    Mr. TRUESDELL. It means that they're not—that the employees don't feel that they're protected inside.
    Mr. BILIRAKIS. Well, what's ''inside'' mean if——
    Mr. TRUESDELL. Inside the VA, inside of the walls of the VA. I mean——
    Mr. BILIRAKIS. Oh, inside the VA system?
    Mr. TRUESDELL (continuing). It's in the management system.
    Mr. BILIRAKIS. Ah, so what you're saying is that they feel that they have to go to an IG outside of the VA system?
    Mr. TRUESDELL. They were reluctant to even to go to the IG, but talking to the employees and telling them that everything would be all right and they would remain anonymous—to bring the problem out, to air it, to have somebody come in and take heed to what's going on.
    Ms. SMITH. I think part of the confusion might be that the employees felt more comfortable testifying to someone off the hospital compound at somewhere independent in town, so that you're not seen talking to——
    Mr. BILIRAKIS. Well, all right, but Mr. Truesdell's already told us that the IG is located in Washington and not—and there is no IG located geographically on the compound.
    Ms. SMITH. He came to Charleston.
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    Mr. BILIRAKIS. He came to—I see. But, still, they were not comfortable with talking to him?
    Ms. SMITH. This Inspector General made arrangements to see people wherever they were most comfortable.
    Mr. BILIRAKIS. Well, I kind of commend that. But they still weren't comfortable?
    Mr. TRUESDELL. No, sir.
    Mr. BILIRAKIS. Well, therein I think likes much of the problem, I think, Mr. Chairman. Thank you very much. Thank you.
    Mr. EVERETT. Thank you. Mr. Doyle?
    Mr. DOYLE. No, Mr. Chairman.
    Mr. EVERETT. All right, before I dismiss this panel, let me ask you to furnish for the record a detailed description of all cases of mismanagement reported to the IG that were not addressed in the IG report, and any other mismanagement cases that have occurred since the first issue of allegations to the IG.
    [The information follows:]

Offset folios 1 to 77 insert here
Makes pp. 32 to 108

    Mr. EVERETT. And at this point we thank you very much for your testimony, and this panel is dismissed.
    We will now ask for panel three to be seated—Mr. Merriman. Let me ask you to rise again and raise your right hand.
    [Witnesses sworn.]
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    Thank you. Please be seated.

    Mr. EVERETT. Mr. Merriman, if you'll introduce your staff, and then please feel free to start.
    Mr. MERRIMAN. Mr. Chairman and members of the committee, I am pleased to be here today to discuss two reviews conducted by the IG of alleged mismanagement by senior officials. These reviews involve the VA Medical Centers in Charleston, SC and Pittsburgh, PA. With your permission, I'd like to enter my prepared statement into the record, which addresses these reports, and use this opportunity to discuss the IG's role and responsibility when reviewing and reporting on allegations of mismanagement.
    Mr. EVERETT. Without objection.
    Mr. MERRIMAN. I'd like to start by saying that the IG takes allegations of mismanagement by senior managers very seriously, and when such allegations are brought to our attention, they are pursued vigorously. In doing so, our goal is to perform an independent, objective review of the facts surrounding each allegation in order to determine whether the allegation is true or not.
    Substantiated allegations can sometimes lead to recommendations for appropriate administrative action. For example, incidents of misconduct involving violations of law, rule, or regulation would generally give rise to a recommendation for appropriate administrative action. However, in accordance with standard practice in the IG community, we do not recommend the specific punishments. The decision whether to take action and the specific action that is appropriate is the responsibility of the management official who supervises the employee in question. In our view, it would compromise the IG's independence if the IG recommended specific penalties or disciplinary actions.
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    The IG function of objective oversight makes it especially important that the line between VA management responsibilities and the IG responsibilities be respected. Decisions concerning specific disciplinary are a management responsibility vested in the deciding management official who must consider the Douglas factors and whether the action is consistent with the Department's prescribed table of penalties for specific conduct violations. The Douglas factors include such things as the nature and seriousness of the offense, past disciplinary, and work records, the employee's grade level, penalties previously imposed for similar behavior, and other considerations.
    On the other hand, substantiated allegations of mismanagement do not often result in recommendations for appropriate administrative action. For example, a finding that doesn't give rise to disciplinary actions, such as a poor management decision, is a performance-based problem that is more appropriately dealt with by VA management in performance evaluations. In such situations the IG's role is to identify the facts, present them to the Department, and make recommendations for corrective action to prevent the identified problem from recurring. A decision to take a performance-based action based on an IG finding is once again a management responsibility.
    And I'd like to add that just because the IG does not make a recommendation for appropriate administrative action for performance-related problems, it does not relieve VA management of their responsibility to deal effectively with problem employees. IG managers have been asked why we don't make judgment calls on the overall management of an individual when there are substantiated allegations against that individual. I believe the answer to this is relevant to the two special inquiry reports that are the focus of today's hearings.
    The reason we do not make a judgment call on whether an individual is a satisfactory or unsatisfactory manager, is that our reviews are confined to the evidence that can be collected on specific allegations. Our reviews do not extend to the countless other decisions made by managers in fulfilling their duties and responsibilities, which form the overall basis for evaluating total performance. Even if the IG substantiates allegations, the IG is not in a position to evaluate or comment on an individual's total performance, nor is it the IG's responsibility. Assessing overall employee performance is the responsibility of the managers. The IG's responsibility is to examine the circumstances relevant to the allegations it receives, draw conclusions concerning these allegations, and report the results, along with recommendations for appropriate action or corrective action, if warranted.
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    Thank you, Mr. Chairman, for the opportunity to provide my views on this matter. I'll be pleased to respond to any questions you or the committee members may have concerning my statement or the work of the IG office concerning the VA medical centers at Charleston and Pittsburgh.
    [The prepared statement of Mr. Merriman appears on p. 170.]

    Mr. EVERETT. I hardly know where to begin, but let me start by perhaps repeating and say, did you find mismanagement at Charleston VA Medical Clinic, or waste or abuse?
    Mr. MERRIMAN. In certain instances that we looked at, we found the evidence of poor management. Whether Mr. Billik is a poor manager, I can't answer, for the reasons I described in my statement. I don't know his overall performance as a manager.
    Mr. EVERETT. State for me again the reasons, if you find incidents where poor management took place, if you can't describe whoever is responsible for that as being guilty of mismanagement.
    Mr. MERRIMAN. Well, I——
    Mr. EVERETT. That sounds like a bureaucratic runaround——
    Mr. MERRIMAN. Well, I really don't think it is, Mr. Chairman.
    Mr. EVERETT (continuing). After the fact that it's identified.
    Mr. MERRIMAN. I understand what you're saying, and I understand the frustration of the issue. But if we look at a decision he made and we find it to be a bad decision, and there was waste involved, we call it that. We expect his supervisors to take that into account with his total performance as a manager of that facility. I can't say that he hasn't improved care to veterans in other things he's doing that we haven't been asked to look at or haven't considered. We expect management to do that. I am not a surrogate for the Department's managers.
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    Mr. EVERETT. If management is doing the mismanagement, how can you expect management to do that?
    Mr. MERRIMAN. Well, I expect that the director of a facility may make some poor decisions. We may call him on that. I would expect his supervisors, the VISN directors, to take this into account when they perform his annual performance rating.
    Mr. EVERETT. Would you describe poor management as mismanagement?
    Mr. MERRIMAN. In the instances involved, yes.
    Mr. EVERETT. Well, again, I get back to what my colleague, Mr. Mascara said: Somewhere it seems to me that we're going to have to find somebody somewhere responsible. And it's getting more and more difficult to do that. We can't pin the tail on the donkey. I don't know what's happening, but apparently, if we're ever going to change the culture in the VA—as a matter of fact, if the VA is going to survive, it has got to change that culture. It cannot continue to exist in its present form. It cannot do that. It's losing the patience of this Congress, of this committee. It's losing the patience of the veterans. It's losing the patience of the public, and unless it wakes up, has a big awakening, it's just not going to survive. Now that's about as plain as I can put it.
    Now I don't know if the rules and regulations that have to be followed by the VA office need to be re-evaluated, but somehow somewhere we're going to have find somebody that takes responsibility for this stuff. I am convinced there are millions of dollars wasted each year by the VA. There's no question in my mind about that. And I think that any career employee would tell you that it's probably true.
    We cannot continue to pump taxpayer dollars into the VA and tolerate this kind of mismanagement. We just can't do it. These people are making six-figure salaries. Now you ought to be able to expect some degree of capability from people who are making that kind of salary. And this committee has found on occasion after occasion where these people who are making that kind of salary are poor managers, guilty of sexual harassment, and they're just moved to another place—in some cases one was given a $25,000 buyout. This is incredible.
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    Like my colleague, I come out of a business background, and I tell you what, these people couldn't survive 2 minutes in a business background, but under the bureaucratic situation that we have, the culture we have in the VA, they apparently not only survive, but prosper. And I find that, frankly—it's just despicable. It really is.
    Let me mention also, in response to certain requests, you interviewed the former Director and some other VAMC Charleston employees were interviewed, and you determined that the former Director was having a close personal relationship, to use your words, with an employee at the time who was promoted to the GS–13 level. ''Results of these interviews were,'' and I'm reading from your report, ''were reviewed by the OIG counsel to determine whether the relationship created a hostile work environment as defined under title 7 of the Civil Rights Act.'' It was determined that a hostile work environment, as described under title 7, was not created. That is obviously in direct contrast to the testimony that we received from the employees this morning testifying from the Charleston VA facility.
    Mr. MERRIMAN. I'll let Ms. Regan, who's with me as my counsel, address that in a minute, but I think there's a differentiation here between what is merely a hostile work environment. Clearly, the employees did not like the situation. It created a hostile environment with the employees, but for title 7 purposes of the Civil Rights Act, and whether a person can be prosecuted for a violation of it, it didn't meet the requirements. We're not saying that the employees liked the situation or it didn't have an impact on the employees. We're saying that to take action against him under title 7 of the act, it didn't meet those criteria.
    Ms. REGAN. I think there's a difference between a hostile work environment, because people don't like——
    Mr. EVERETT. Please state your name for the record.
    Ms. REGAN. Maureen Regan. I'm the counselor to the Inspector General.
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    The term you're using ''a hostile work environment,'' under title 7 is strictly limited, and according to the Supreme Court—has to do with a sexually-charged, unwelcome sexually-charged environment. That's not what was alleged in this environment. There was a relationship. But the case law is replete with quotes from the EEO guidelines that state that, the preferential treatment of a paramour or somebody else based on an intimate relationship does not give rise to a title 7 claim, because everybody, both genders, not having the relationship is treated equally. It may be preferential treatment; it may fall under other statutes. It does not create a hostile environment under title 7.
    And nobody complained to us about unwelcome sexual behavior or anything else while we were down there. So the hostile environment issue is not a title 7 claim.
    Mr. EVERETT. I noted that an information letter sent last June by Dr. Kizer, the Under Secretary for Health, on the relationship between managers and subordinates, states that the standards require that even creating the appearance of using public office for private gain violates the standard. Is this the situation with Mr. Billik? Did he create that?
    Ms. REGAN. We looked at every law that could possibly apply to what occurred in this case. We went down the list, and now we're looking at ethics regulations. We put that together; we have sent the issue to the Office of General Counsel, and they are reviewing it because they are the ethics officer for the agency. If there's a violation, they're the ones to make the call. It would be a public office for private gain under the ethics rules, the standards of ethical conduct for Executive Branch employees.
    Mr. EVERETT. Could you give me an example of what would violate title 7? For instance, did you explore whether or not Mr. Billik and this employee were living in the same house?
    Ms. REGAN. It would not have made a difference under title 7, and in fact I could not find a single case where because of an individual having a relationship with another, that a third party could claim hostile work environment. They allude to it in the case law if there was a sexually-charged environment. If there was a lot of touching going on at work, if they were kissing in front of other people, whatever they were doing in the work environment that was sexual in nature, that offended other people, it might give rise to a hostile work environment, but not preferential treatment no matter what the relationship was. That might fall into other legal violations.
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    For example, we looked at whether it a violation of 2302(b)(6), the promotion. It didn't fall into that. We went down the list. We could not find that there was a title 7 violation, and nobody complained about discrimination to us.
    Mr. EVERETT. Of course, we have testimony from employees that the employees were well aware of this relationship and were upset by this relationship. Did you talk to employees who said that to you?
    Ms. REGAN. We've talked to employees about the relationship, but that relationship, under the EEO guidelines, does not give rise to a title 7 claim, because the men and the women would both feel they were discriminated against, based on that relationship. It does not give rise to a title 7 claim. It may give rise to other problems, management issues, an ethics violation, but not a title 7 claim.
    Mr. EVERETT. In other words, although these employees felt that the relationship caused a promotion that was undue and promoted this individual above other individuals, that does not under title 7 create a hostile environment?
    Ms. REGAN. It doesn't create a hostile environment, and it does not create a cause of action for discrimination. As the case law and the guidelines say, both genders are equally discriminated against because they're not involved in the relationship.
    Mr. EVERETT. In other words, if I discriminate against a man and a woman, then I'm not guilty?
    Ms. REGAN. Of a title 7 action. It does not give rise to a title 7 claim. I mean, the guidelines are fairly——
    Mr. EVERETT. Remarkable.
    Ms. REGAN (continuing). Clear. It says, ''Preferential treatment may be unfair, but it is not discrimination under title 7.'' And that's the EEOC's guidelines. And the case law—I believe it's all the way up to the Supreme Court—cites that in cases.
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    Mr. EVERETT. Thank you. My time has run out. We may have a second round.
    Now, Mr. Clyburn?
    Mr. CLYBURN. Mr. Chairman, let me go to Mr. Merriman first, but I think I want to come back to this issue because I'm missing something.
    Mr. Merriman, Mr. Truesdell indicates that your office failed to interview people who you should have interviewed, and that you watered-down some of the complaints; and, thirdly, that the confidentiality of your hotline was compromised. Now can you address those three issues for me, please?
    Mr. MERRIMAN. Sure. I'm not aware of the confidentiality of our hotline being compromised. It is possible that as we start to review allegations, people may guess who gave them to us. We take great pride in defending the confidentiality of the people who come in with a hotline complaint. As a matter of fact, as you may be aware, there's a companion report on Charleston that we issued after somebody claimed retaliation for dealing with IG. We went in and we looked at, and we found they were retaliated against. We issued a report and action was taken.
    Mr. CLYBURN. Yes.
    Mr. MERRIMAN. So we protect the confidentiality of people. Sometimes it's impossible—well, people will assume who made the claim and perhaps pursue action against them, but not because we released the name.
    With respect to who we interviewed and who we didn't, what I'd like to do is let Mr. Mike Staley, who's the Director of our Hotline Special Inquiries Group, speak to that question. I'd like to have him explain to you what he and our other reviewer did down in Charleston, how many they talked to, and what efforts they took to make themselves available to people.
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    Mr. STALEY. Yes, sir. We talked to about 50 people at least down there in three separate visits. We went down in August. We went down again in September. We also went down in late October.
    We published a report on 27 of the allegations, and in page 5 of the report, we did indicate in the scope of our review that we were continuing to look at other issues, which we have done and which we are continuing to do.
    Mr. MERRIMAN. We had 27 items in the report. We probably looked at another 13 or 14 after we got back. We have two criminal investigations ongoing with allegations that were brought to us. Mr. Staley interviewed people off-campus or on-campus, whatever made them most comfortable. We called people who we thought were interested in talking to us. Some of them didn't show up. Some of them chose not to talk to us. We've talked to others subsequently who had nothing to contribute. So I think we've made an effort to touch the people that had an interest or knowledge in the situation existing in Charleston.
    Mr. CLYBURN. Okay. Mr. Chairman, I want to get back to—is it Ms. Regan?——
    Ms. REGAN. Regan.
    Mr. CLYBURN (continuing). Ms. Regan's understanding of title 7. Now unless I missed something in my other life, my memory tells me that in a workplace, if—and I'm going to be a little bit vivid here, if I may, in order to make my point, because I don't want anybody to misunderstand what I'm saying—if a gentleman with authority over the workplace gives favorable treatment to a lady because they have a relationship away from the workplace, and that favorable treatment works to the detriment of other people in the workplace who should have gotten the promotion, now that's a violation. And you're telling me that it's not?
    Ms. REGAN. I'm telling you that the 1990 EEOC guidelines specifically state that preferential treatment based on an intimate relationship—I think they even used the word ''paramour''—does not give rise to a title 7 claim. There are multiple cases on that, which I'd be happy to send to you, because I've pulled up every single one of them. And it's over and over again. When that started, I'm not sure, but I do know that since 1990—in fact, there was something similar in place just before that. In every case in which a title 7 claim has been brought based on preferential treatment because of an intimate relationship between two individuals, the claim's been denied. And these are Federal court cases.
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    Mr. CLYBURN. Okay. I certainly would like for you to submit that to me——
    Ms. REGAN. Sure.
    Mr. CLYBURN (continuing). Because I certainly operated differently.
    But you told me that preferential treatment—I thought that language, that term, is in fact in title 7?
    Ms. REGAN. I believe it's preferential treatment based on gender, but the problem, and what the courts have found, is that members of both genders who are not part of the relationship are treated equally. In other words, they're both discriminated against. Therefore, it doesn't give rise to a title 7 claim. It wouldn't be that just women would be discriminated against and men wouldn't, but that's the case law——
    Mr. CLYBURN. So you're telling me if a gentleman there says, hey, wait a minute, I want you to treat me the same way; I want you to have a close relationship with me, too, then that's what it would take?
    Ms. REGAN. Both women and men not involved in the relationship would not be entitled to the promotion. Therefore, both genders are equally discriminated against, and it doesn't give rise to a title 7 claim.
    Mr. CLYBURN. You're going to have to show me that because—
    Ms. REGAN. I'd be happy to submit the cases to you. I've got a stack of them.
    (The information is retained in committee file.)

    Mr. CLYBURN. Well, okay. Let me take this one step further. Why is it, then, that your office would have to limit itself to concerns of what may or may not violate title 7? Why can't you look at the 1983 statute? Why do you have to limit it to title 7? It certainly violates equal protection.
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    Ms. REGAN. We looked at it under every law we could find, and what happened——
    Mr. CLYBURN. So, then, did you pursue this, then—you keep talking about title 7. I looked at this report here——
    Ms. REGAN. That was the question to me. The question to me, the hostile work environment comes under title 7.
    Mr. CLYBURN. Okay. I want to go beyond title 7. I want to go beyond title 7. I want to go to section 1983. Does this violate the 1983 statute? Would this kind of behavior violate 1983?
    Ms. REGAN. In 1983 it may not have, but in the 1990——
    Mr. CLYBURN. Did you pursue that?
    Ms. REGAN. No, because——
    Mr. CLYBURN. No, wait a minute. I'm not talking about the year 1983; I'm talking about section 1983 of the Civil Rights Act, the code that——
    Ms. REGAN. I don't believe I looked at that specifically.
    Mr. CLYBURN. I'm sorry?
    Ms. REGAN. I don't believe I looked at that specifically. I may have, and I looked at all the cases in which they talked about a hostile work environment; they talked about preferential treatment based on a relationship, and could not find cases where it was found to be a violation of title 7. Hostile work environment is part of that. That's why we looked at it, because that was the allegation.
    Mr. CLYBURN. Okay. Well, let's forget about hostile work environments and talk about all this language that's drawn up around this since even before the Civil Rights Act of 1966. Let's look at what's been there since 1868—I'm sorry, maybe 1877, when the United States Congress created a cause of action based upon the 14th Amendment which drew out of contract law, that I think the law had to do with black people having the same rights to enter into contracts that white people had. That's called section 1983. Now out of that, and since the employment situation is in fact a contract, we have had all kinds of law to have drawn up here in the past 30 years around this issue, and in many instances when title 7, the statute, has not been adequate, most of these issues have been pursued under section 1983, because it deals with equal protection of the law. And you're telling me that the people in this work environment who did not get treated the same way that the person who participated in the preferential sexual activity, that they did not have their constitutional rights in the contract violated?
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    Ms. REGAN. First of all, there was no individual that claimed that they were entitled to any promotion that this individual got based on the relationship. That was No. 1. I have researched all of the cases on this issue and cannot find a case in which they have sustained the plaintiff's claim. So I'll go back and look at it specifically on the issue that you're citing, but I don't believe there's a case that supports that position under these circumstances.
    That's why we went on to look at prohibited personnel practices and ethics violations, which specifically talk about preferential treatment and friendships because we were moving down as we researched the various case laws.
    Mr. EVERETT. Would the gentleman yield?
    Mr. CLYBURN. Yes, sir, I'll yield.
    Mr. EVERETT. In this particular situation the female was promoted noncompetitively. I understand the Director had the discretion to do that. The question is, since he obviously was not able to make an impartial decision, should he have done that, and did you make a judgment on it?
    Ms. REGAN. We looked at it from the issue of whether or not it was a prohibited personnel practice under 2302(b)(6), and we found that it was done according to the government's rules and regulations, that the individual was doing the work of a 13, and it was classified by an individual, not the Director, at that point in time. That's what we looked at.
    We've also looked at it where I think you might be coming into, whether or not he as the Director having the relationship should have done it. That would come under an ethics violation, and that's why we referred it to the Department's Ethics Officer.
    Mr. CLYBURN. Mr. Chairman, I don't want to beat a dead horse here, and I'm not going to, but since this horse may not be dead, let me take another stab.
    I would like very much for this panel to step outside of the vacuum that it's operating in because in my experiences in this area the courts will rule on situations brought under statute without taking into account that the very same fact situation, even admitting—if you remember the case of McLean v. Patterson—what was it?—Patterson Credit Union. In that case, there was a clear violation, but because a young lady brought her claim under title 7, the Court said, well, no, this is not a title 7 violation. If you had come here under 1983, it might have been different.
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    All I'm saying to you, if these allegations that come to you—you know, a lot of people working in these workplaces, they don't know that title 7 of the Civil Rights Act may or may not be limited to statutory construction. I mean, they know when they are receiving unfair treatment or they know when somebody's getting preferential treatment that should have gone to them, and I think that those of us in authority with the power, if you please, ought to really help these people along sometimes, especially when you know that's right.
    I don't think that anybody on this panel thinks it's right for any supervisor to bring a paramour in, promote them up around everybody else who's been there toiling in the vineyards, waiting on that promotion, but because he or she is not sleeping with the supervisor, they can go ahead and suffer detrimental treatment because of it, and that's right, just because the statute doesn't address it.
    But we've got something called the Constitution in this country, and the 14th Amendment of the Constitution deals with due process and equal protection of the law.
    Ms. REGAN. I wouldn't disagree with you, but from a factual standpoint, we did not determine that a paramour was brought in. In fact, the only thing we've been able to substantiate is the last promotion might be related to a relationship.
    Mr. CLYBURN. I only used that term because you used it in dealing with what the EEOC guidelines were.
    Ms. REGAN. Okay, but the factual is nobody was brought in because of a relationship. I don't disagree with you, but nobody has alleged to us that they were denied something because of this relationship. What's been said is that people knew it was going on, and initially it was that the whole office—and, in fact, I thought I heard that today—was getting preferential treatment over other people in the hospital, and not specifically because of this relationship. This was one out of five people that were brought to our attention.
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    And I don't disagree with you. But, our job under the IG Act is supposed to be looking at violations of law, rule, or regulation, and that's what we try to look for. And if we find other problems, then we'll bring them to management's attention, but that's not where our focus is because of the statute. And like I said, we looked at it from all angles and we were left with the ethics violation, or potential ethics violation, which is why we referred it to the Department, which is what we're supposed to do.
    Mr. MERRIMAN. We put some time into this, Mr. Clyburn. I testified on a sexual harassment hearing and we went down this same path, and I knew you were going to have your blowtorch on me on the point again. [Laughter.]
    But we really tried to take a look at it. I mean, you can turn it around. You can say that he promoted some other people through accretion of duties. Two of those five, they did go outside the Department, at least outside the hospital, to get advice from either somebody in Central Office, I think, for a fiscal officer job, and the district office for the engineering job. They were all found to be qualified for it. No one said that this lady didn't have the qualifications. Now if you went ahead and promoted the other ones for accretion of duty, does she have a cause of action if she doesn't get promoted, if she's doing the work?
    Once you enter this environment where you have a relationship with somebody, whether it's an intimate relationship or whether you're just personally involved with them—seen as playing golf with them all the time; a prudent manager would do something to protect himself——
    Mr. CLYBURN. Absolutely.
    Mr. MERRIMAN (continuing). From these kinds of allegations. I would like to think most managers would have found a way to build some separation in and avoided the kind of allegations that we have to deal with here. That certainly was——
    Mr. CLYBURN. Mr. Merriman, you're absolutely correct. I agree with you totally—with the exception of the fact that I don't have a blowtorch. [Laughter.]
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    But the rest of it I agree with.
    I don't have a problem with that. My only problem is I would hate for this subcommittee to go through all of this, look at your statement and this whole section—and I didn't raise it here today; my good friend, Mr. Everett, raised this issue, though I had it underlined to raise, I might note. [Laughter.]
    But for us to go through all of this, and then for the employees back at the Ralph H. Johnson Medical Center to think that this subcommittee dismissed it, ignored it, didn't even pursue it, when it's obviously unfair—and I agree with you, Ms. Regan, there are a lot of things that are unfair that may not be unlawful. And in my 18 years of managing the agency dealing with this, I can tell you I've been beaten up a lot of times for confining my findings to unlawful activity as opposed to what people felt may have been unfair. I understand all of that.
    But there are some unfair things that are in fact unlawful, and I want this committee to do its job and address these things that we know could very well be unlawful if you look beyond the statute or behind the statute and look at the constitutional rights that people have in the workplace. That's all.
    So I want to make sure that's on the record, so when I go back down to Charleston, as I will next year, talking to these employees, they won't be pulling this out and saying, you know, ''We had a problem here that you refused to address,'' because I'm going to address it, and I think that we need to make sure that we put it in the proper context.
    Mr. EVERETT. My friend, Mr. Clyburn, has expressed the concerns of the chairman very well. Before I turn it over to Mr. Mascara, it seems to me that it is obviously—I know it's unfair, but it seems to me it would also be the cause for some sort of action, in a noncompetitive promotion, where someone has a close relationship with the person that they promote, if other people are equally qualified, it seems to me that they've been discriminated against.
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    And I have a problem with the fact that when you discriminate against a man—as long as we discriminate against a woman, then it's okay, and essentially that's what title 7—you're telling me title 7 says.
    At this time let me turn it over to our long-suffering friend, Mr. Mascara. [Laughter.]
    Mr. MASCARA. Thank you, Mr. Chairman.
    Mr. Merriman, I have more questions than I have time. So perhaps some of your responses can be brief, where appropriate.
    First, your statement is replete with references to the former Director. I never saw one time where the name Mr. Billik was mentioned. Is there any reason for the esoteric reference or third person to Mr. Billik rather than a former Director? I'm just curious.
    Mr. MERRIMAN. No.
    Mr. MASCARA. Okay, fine. I want to talk a little bit about the nursing care unit not used for nursing care activities. I guess they refer to that as ''swing space''?
    Mr. MERRIMAN. Yes, sir.
    Mr. MASCARA. Does that bother you, as somebody from the Inspector General's Office, that this was used for something other than its intended purposes?
    Mr. MERRIMAN. Yes, it bothers me that, apparently, a decision was made that there would be a nursing home care unit at the facility, funds were spent to provide it, equipment was brought in to facilitate it, and they made a judgment to do otherwise; Mr. Billik did.
    Mr. MASCARA. Do you know whether or not the Director has that latitude to change the intended purposes of the renovated nursing home care unit?
    Mr. MERRIMAN. I believe he has the latitude to use the resources that he got for activation funds. I mean, the place was renovated for a nursing home. Then the activation funds came in, a goodly portion of them, I believe, for FTEE—in other words, to hire employees, which were hired into other areas of the hospital. I'm sure he has that authority.
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    Mr. MASCARA. But the funding was activated for the nursing care home?
    Mr. MERRIMAN. That was the intent, yes, sir.
    Mr. MASCARA. And is the Director limited as to how he can spend those funds, given that they were for nursing home care?
    Mr. MERRIMAN. No, I don't believe he was limited. As a matter of fact, he could probably make the case that, by applying those 30-some FTEs to other areas in the hospital, he took care of some of the problems that people were complaining about.
    Mr. MASCARA. Well, the nearest nursing home, where I guess they had to use other facilities——
    Mr. MERRIMAN. That's correct.
    Mr. MASCARA (continuing). Contracted and other better nursing care units——
    Mr. MERRIMAN. Right.
    Mr. MASCARA (continuing). The closest one was 110 miles in Columbia, SC. Didn't that pose a problem? And the amount—do you know what amount had to be spent as a result of contracting out to these homes that were private? I mean, did anybody do any computations as to what costs were borne by the South Carolina facility as a result of not having activated that unit?
    Mr. MERRIMAN. I don't——
    Mr. STALEY. No, we did not, sir.
    Mr. MASCARA. So in today's market, what, $3,000 a month——
    Mr. MERRIMAN. I really don't know.
    Mr. MASCARA (continuing). Per person? So we're talking about—I think there were 38——
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    Mr. MERRIMAN. That was my own personal experience when I had to deal with a situation in my family.
    Mr. MASCARA. So that's a lot of money, and so we used it for something else. Does anybody calculate whether that was the right thing to do?
    Mr. MERRIMAN. Well, we felt that the nursing home should have been activated. I think we're fairly clear about that.
    And I think it was largely through our efforts in dealing with the District Director or VISN Director that it was put back on track.
    Mr. MASCARA. I want to get to the cost. In reading your statement, under nursing home care unit, you say that, ''Our report substantiated that there was an unreasonable delay in activating a nursing home care unit,'' which we just talked about.
    Mr. MERRIMAN. Yes, sir.
    Mr. MASCARA. We found that about $2.1 million was spent for construction, renovation, and activation of the unit in February 1994, and what I'm trying to do is reconcile that with the Inspector General's report on page 7, where it restates the allegation that there was a cost overrun of about $489,000 and that in the discussion it's pointed out in the report that the actual cost was $669,927, and then there was a reported cost to renovate Ward 4–A at $571,000, approximately, $572,000, which looks to me like it came in under $98,000. But when you look at the $2.1 million, there's a big disparity there. Can anybody explain what——
    Mr. MERRIMAN. Let me take a shot at it, and then Mr. Staley can fill in the blanks for me. The first cost you deal with is the renovation of the space to accommodate the nursing home. I believe the estimate was something like $600,000. They came under the estimate to do the actual renovation. It cost about $500,000 or so.
    Mr. MASCARA. That was about $100,000 savings there? Rather than overspending——
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    Mr. MERRIMAN. Yes, sir.
    Mr. MASCARA (continuing). We're looking at $98,000?
    Mr. MERRIMAN. They came in under estimate, yes; right. Then the balance of the money, about 1.6, was broken down between supplies and equipment, the electric beds, stuff like that, for the patients, and about 33 FTE; I think it was $1.3 million to pay for the staff that would work in the nursing home. Staff were hired; they simply weren't put in the nursing home. I think that gets you to the 2.1
    Mr. STALEY. Sir, $571,000 was the construction and renovation; the $1.52 million was the equipment and salaries. Of the #1.52 million, the equipment for the nursing home was $174,000. The $1.5 million and the $500,000-plus came to the $2.1 million.
    Mr. MASCARA. Where did the money go for the salaries, since we didn't activate it?
    Mr. MERRIMAN. Salaries for people who worked elsewhere in the hospital.
    Mr. MASCARA. Well, that's what the nurse was talking about this morning, that there was a lack of cross-training and orientation of nurses being used. So this is another example of nurses being used in other parts of the facility that really were not trained to do that?
    Mr. MERRIMAN. I don't——
    Mr. MASCARA. I would imagine you would have somebody in gerontology working in the nursing care units rather than some psychiatrist or rather than some nurse who works in psychiatry?
    Mr. MERRIMAN. I don't know just where the FTE went. They weren't hired for the nursing home and then moved. There was money available to hire people for the nursing home. FTE were hired. I don't know exactly where in the hospital they would fit.
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    Mr. MASCARA. Mr. Chairman, I'm running out of time, but can I have a few more minutes to pursue one other question?
    Mr. EVERETT. Yes, you may or you may come back for the second round, if you'd like.
    Mr. MASCARA. I have a plethora of questions I would like to send to you, Mr. Merriman——
    Mr. MERRIMAN. Yes, sir.
    Mr. MASCARA (continuing). And perhaps you can get back to me in writing.
    Mr. MERRIMAN. Yes, sir, I will.
    Mr. MASCARA. The next question is about the consultant that was paid $90,000 for 1 fiscal year——
    Mr. MERRIMAN. Right.
    Mr. MASCARA (continuing). For 4 days a month, which breaks down, if my arithmetic is correct, to about $1,875 per day. Is that a normal fee for a consultant?
    Mr. MERRIMAN. It's about $1,200—$1,200 a day? Twelve hundred dollars a day. For what he provided, I think you'd have trouble substantiating that cost.
    Mr. MASCARA. The report that I read said something about that this same individual is doing work across the country. Has the Inspector General gone to these other facilities around the country to ascertain what he is being paid or she's being paid or his firm's being paid at all of these other facilities?
    Mr. MERRIMAN. Two parts to that: I think the report says that he worked for a firm that was providing services around the country. He then went into service for himself, but we do have allegations that he's worked elsewhere in the Department. We have about four or five locations that we're looking at to see what's involved.
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    Mr. MASCARA. So you're pursuing that?
    Mr. MERRIMAN. Yes, sir.
    Mr. MASCARA. I have a hundred questions. [Laughter.]
    So I will——
    Mr. EVERETT. We'll come back for the second round.
    Mr. MASCARA. Thank you.
    Mr. EVERETT. On this subject, let me just ask, if the gentleman would allow me, you found that this consultant was working at a number of different hospitals?
    Mr. MERRIMAN. We have an allegation—we believe he's working at four or five other hospitals that he has contracts with. That's part of an investigation that we have going.
    Mr. EVERETT. And, of course, if that provides true, that would be roughly a half million dollars, between $400,000 and $.5 million a year.
    Mr. MERRIMAN. At this point I have no idea what he's paid, what he's doing, or what the circumstances are. I have no feel whether it's valid, invalid, or anything.
    Mr. EVERETT. Do you know what he actually provided?
    Mr. MERRIMAN. At Charleston?
    Mr. EVERETT. Yes.
    Mr. MERRIMAN. As far as we can tell, it was basically in the form of advice. He apparently gave them advice on mail-out pharmacies, strategic plans; some training was involved, some——
    Mr. EVERETT. Do you have any written reports of anything——
    Mr. MERRIMAN. I don't believe we've been given any products that he——
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    Mr. EVERETT. In other words, they just sat down and had a chat?
    Mr. MERRIMAN. Well, I wouldn't—I'd think——
    Mr. EVERETT. That's my characterization.
    Mr. STALEY. He seemed to perform service at the direction of Mr. Billik.
    Mr. EVERETT. All right, thank you.
    Mr. MASCARA. Mr. Chairman.
    Mr. EVERETT. Yes, sir.
    Mr. MASCARA. In Mr. Merriman's statement, it's pointed out that there is a possibility of contracts at other VA facilities, and they're looking at agreements the consultant had with the VA Medical Center in Columbia, SC; Little Rock, AR; Asheville, NC, and a community in California. So there are indications—and I would hope that the Inspector General's Office would pursue this.
    Mr. EVERETT. Mr. Bilirakis.
    Mr. BILIRAKIS. Thank you, Mr. Chairman.
    Mr. Mascara was on a roll, and it's criminal to have interrupted him, but I guess you probably won't have any trouble getting back to your points, Frank.
    Mr. Merriman, with all due respect—and I mean this sincerely—I don't know that you can personally be hit for what appear to be indiscretions, maybe a lack of an appropriate investigation, a lack of appropriate decisionmaking on the part of the IG's office, and that's why I say, ''appear to be.'' But I take a look at the sign in front of you on the desk there. It says, ''Mr. Merriman, DVA,'' Department of Veterans Affairs. It doesn't say, ''Inspector General.''
    Mr. MERRIMAN. It's not my sign.
    Mr. BILIRAKIS. I know it's not your sign, but the title. I mean, here's the organizational chart. I'll get to that in a minute.
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    Let me ask you, sir, you have been—you conduct special inquiries of alleged mismanagement of our senior officials at VA facilities. That is the job?
    Mr. MERRIMAN. Part of the job.
    Mr. BILIRAKIS. Part of the job. Is this special inquiries of alleged mismanagement after they have been requested?
    Mr. MERRIMAN. After they have been requested? No. We will react to hotlines or sometimes we have spinoffs from our other work. We will be doing an audit. We have some indication that there's a problem. We can initiate a review. There's self-initiated work also.
    Mr. BILIRAKIS. So there is self-initiated? I guess that's what I was getting at.
    Mr. MERRIMAN. It's all——
    Mr. BILIRAKIS. And that's what bothers me now. You know, I know that you're the Deputy Inspector General, and you have been in that capacity for at least a couple of years, I guess; right?
    Mr. MERRIMAN. Seven years.
    Mr. BILIRAKIS. How much?
    Mr. MERRIMAN. Seven.
    Mr. BILIRAKIS. Seven years? But you haven't had an Inspector General for a couple of years?
    Mr. MERRIMAN. Twenty-two months.
    Mr. BILIRAKIS. Twenty-two months that's been vacant? Including the job with the Program Assistant, whatever that function would be, to the Inspector General, that's been vacant?
    Mr. MERRIMAN. The Program Assistant?
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    Mr. BILIRAKIS. Yes. That's vacant now, isn't it?
    Mr. MERRIMAN. Well, that's correct.
    Mr. BILIRAKIS. Well, you know, there's so many questions—Mr. Clyburn, Mr. Mascara, the chairman, Mr. Doyle, et cetera—and I haven't gone into some of these details that they have gone into, but I suggest to you that probably they wouldn't be going into so much detail if there weren't a perception, at least a perception, maybe even fact, of the IG being a part of this good old boy network that has been mentioned, a part of the culture that has been mentioned so many times. You were in here not too long ago testifying, and really there's a lot of respect toward you, so please don't take it the wrong way. And it's not your fault, as far as I'm concerned—I'm using the word ''fault''—that this perception is taking place. Now I can't speak for every other member of the committee when I say that, but, you know I take a look at this chart. The Department of Veterans Affairs, and then we have the Secretary and we have the Deputy Secretary in the block, and then offshoots from that is—what?—Chairman, Board of Contract Appeals; Director, Office of Small and Disadvantaged Business Utilization, et cetera; General Counsel; Special Assistant to the Secretary of Veterans' Service Organizations Liaison, et cetera, et cetera. But we have the Inspector General right up there with the rest of them. Now small wonder that there is a perception that we have the fox guarding the hen house. Any comment?
    Mr. MERRIMAN. Sure. I'd hate to think people draw that perception from a wiring diagram; if that was the problem, it could be wired differently. I can guarantee only one thing with our reports—that someone isn't going to like it. We've come full circle now. The committee's questioning the—the title of our report says, ''Mismanagement at Charleston,'' but we're not willing to say that Mr. Billik is totally a poor manager. The VISN Directors, as I go before them, they don't like the title of our reports because it draws attention to the allegation. They would prefer that we had something that said we've taken a look at Charleston, various issues. So we generally please no one in this area.
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    I doubt that you'd find a perception within the Department that we're part of the good old boy network. I'd point out that in sexual harassment it's our work that resulted in the zero tolerance policy through out reports and our initiative, our special inquiries of Atlanta some years ago. It's our report that brought up the Fayetteville issue. It wasn't what the Department had to do. It's that we were persistent; we looked at the issues of sexual harassment. We kept it on the burner and brought attention to it.
    We try to be objective. I have to try to sell my calls in the Department. Everything isn't black and white, particularly when we're doing our audits or where we're pursuing management improvements. The Department has to feel that they get a fair shake, too; many of them don't. Some of them think we're head-hunters, but we try to be fair. We try to be objective, and we try to do our job. And sometimes people are going to perceive it——
    Mr. BILIRAKIS. But doesn't it bother you, sir, that—you heard the testimony—I think you were in the room when those other two employees testified, and they talked about the feeling is that we've got to go outside of—and I took that to mean an IG physically located outside of the particular, you know, VA center, thinking in my mind that there was an IG actually located in the Center when they said, ''outside of it.'' But they didn't even really mean that. They meant outside of the VA system—outside of the VA system, another IG. I don't even know if that's available to them, if that's a remedy that's available to them.
    Mr. MERRIMAN. No, I——
    Mr. BILIRAKIS. But doesn't that bother you that there are people who feel this way?
    Mr. MERRIMAN. It bothers me that they testify to that, yes. I would like to think there are people in that hospital that feel free to talk to us; at least 45 or 50 did. Part of what they seem to be alluding to is that if we set up an office in——
    Mr. BILIRAKIS. Excuse me, sir. Those people that did—forgive me for interrupting——
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    Mr. MERRIMAN. Yes, sir.
    Mr. BILIRAKIS. Those people that did, you initiated that conversation, did you not?
    Mr. MERRIMAN. Well, we——
    Mr. BILIRAKIS. I mean, as a result of your investigation?
    Mr. STALEY. No—well, we opened up an office and we invited people to come and see us——
    Mr. BILIRAKIS. Yes, you came down there; you may it convenient for them, and you invited them to come. So you initiated that. I mean, those are not people that——
    Mr. MERRIMAN. All I'm talking about is the onsite visit in Charleston——
    Mr. BILIRAKIS. Yes.
    Mr. MERRIMAN (continuing). And I can tell you that 20,700 people didn't feel noninclined to call our hotline last year. We have the busiest hotline in the Federal Government. We opened something like 700 hotline cases. We only have enough staff to do about 8 percent of those ourselves. We limit them to the most visible cases, but it's a fairly active hotline. We have helped many employees, and we have looked at many issues. And we have found that many of these issues we can give to management and have them looked at accurately and correctly. It isn't that management cannot be trusted to look at them—I mean, if we've reached that point, then there's no hope, and I don't think we're there.
    Mr. BILIRAKIS. Yes, God willing, we're not there, but, on the other hand, geez, we get—you know, look at the time that we all are spending, valuable time that we're spending on something that you would think would not really be necessary.
    Mr. MERRIMAN. Yes, sir.
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    Mr. BILIRAKIS. Ms. Regan, I guess—Mr. Chairman, just to allow Ms. Regan to respond here, I guess.
    Ms. REGAN. I think one of the things I heard this morning was the perception that we didn't look at things that people allegedly brought to our attention. Unfortunately, because of confidentiality, we don't tell everybody what allegations we have. Somebody sitting back, a union president or another employee, might think we were told about something when, in fact, we were not. And we don't go back and tell them and the person who told us, or didn't tell us, may not go back. So they may have a perception we did or did not do something that we did do or we did look at. We also don't go back to the complainants every time because of Privacy Act violations. They can come to us with a complaint. We get this all the time, that we don't come back to people and tell them what happened, but if it's a complaint about an individual, we can't go back and tell them the results. We'd be violating somebody else's right to privacy, which is a different statute.
    I've heard one issue here today about an employee in the OR coming forward with something, and I think Mr. Staley should address that, because I think the individual who testified did not have all the facts about what we were told or not told about it. We did run down some issues, but other issues we were not told about. And that was a perfect example of where perception is one thing and——
    Mr. BILIRAKIS. That was one of the complaints that was not—that complainant was not interviewed by you. That was at least the claim.
    Mr. MERRIMAN. We're very familiar with that case in the operating room.
    Ms. REGAN. But the perception and reality are two different things there. I also heard some complaints here about abusive employees, and I'm not certain that we got any allegations about abusive employees. I was a little surprised at that particular one.
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    There was another one in the statement here about an employee, about abuses and things. The whole story's not here, either, and that's because of confidentiality.
    Mr. BILIRAKIS. Well, you know, I'm an employee with the VA; I've got a problem, right? I mean, there may be some merit to it; there may not be some merit to it. But I have this feeling on the basis of maybe talking to other employees, history, perception—there's that word again—that if I go through the VA chain of command, it's going to come back to bite me, and not—that good things aren't going to take place, et cetera. And the IG is part of that chain of command. And so I'm just going to be frightened to do so, and I'm going to go—I'm just not going to do anything, I guess. I mean, you know, it's got to bother you.
    And I realize we make the laws and we have established your position on this chart. So I appreciate that. It's not your fault that this is the case, but still there's a perception there, I think, isn't it? Wouldn't you agree that there are—these two people who testified, I don't know what you got when you interviewed these people, when you went down there and what they really told you. I would suspect that probably these were not the only two who made comments like, well, we're afraid of our jobs, and people are afraid of their jobs, and they want to go maybe to an outside—using their term—to an outside IG rather than inside, or in-house, or whatever the term was that they used.
    Mr. MERRIMAN. Well, sure, it bothers me that there's a perception—I can't beat down all perceptions.
    Mr. BILIRAKIS. No, of course not.
    Mr. MERRIMAN. I like to think that we've done a good job in Charleston. We've kept on it, and we've brought to light some of the issues there. People aren't always going to be satisfied with what we do. Some of them have agendas; some of them have complaints which aren't valid. Some of them are pursing other things. They do have other outlets. Some choose not to come to us, and they write to Congress. We have tons of Congressional—tons of hotlines inquiries that are initiated by referrals from Congressional offices. So there's other vehicles available to people. I mean, a lot of it comes back to us, and we have to be held accountable for our job; I understand that. But I think we do a good job.
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    Mr. BILIRAKIS. Do you think that same perception—one last question, Mr. Chairman, please; I appreciate your indulgence, sir. I'm not even a member of the subcommittee, although I am a member of the full committee.
    Do you think that that perception would still exist if the IG's office were completely independent, organizationally, chartwise, and location-wise, and everything else, from the VA, and you're an IG office, Inspector General overall?
    Mr. MERRIMAN. That might take care of that type of a perception, but I think it injects other problems. I think that the IG Act was fairly specific in building in some protections for independence, making us responsible both to Congress and to the Department. We're under the general supervision of the Secretary, but I have a lot of authorities of my own that the Secretary holds also that I don't have to go to him on.
    If we were totally put in a different building, different wiring diagram, I didn't sit at the staff meetings, I think it would hurt our other areas, our audit work, areas like that, where it's important to be able to sell our call, to work with managers and have a feel for their problems, and to have their perception of us, that we're not there simply out to get them, that we have understanding of some of the problems they have to deal with—so it works both ways.
    Mr. EVERETT. I'd ask the gentleman to hold his thought at this particular time——
    Mr. BILIRAKIS. I think in terms of the GAO and the job that they have and the credibility that they have, and that sort of thing, and they're completely separate and completely independent. Well, maybe we'll talk about that.
    Mr. EVERETT. We can come back to this——
    Mr. BILIRAKIS. Thank you, Mr. Chairman.
    Mr. EVERETT (continuing). And I ask the panel to remain seated. I understand that it's a vote on the rule, and we have about 6 minutes, I think, to make the vote.
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    Mr. EVERETT. The committee will come to order.
    Mr. Bilirakis, did you finish your line of questioning? We'll have a second round. Some members mentioned that they would like to make some comments or have brief additional questions.
    I recognize——
    Mr. BILIRAKIS. Excuse me, sir. Mr. Doyle, I know, hadn't had his——
    Mr. EVERETT. Oh, I'm sorry. Forgive me. I looked over there a minute ago and you weren't there. So please.
    Mr. DOYLE. Thank you, Mr. Chairman.
    Let me first compliment you on your rather liberal use of the time clock there for the members of this subcommittee. I've found my subcommittee chairman hasn't been quite as generous, and I want to compliment you upfront before I begin to speak.
    Mr. EVERETT. Well, I will point out that I do like the 5-minute rule, but at least these questions all lead to other questions, which tie into the overall problem that we're having. I would say, for instance, in this particular case, that we obviously—title 7's a problem, and I can understand that. I can understand how employees at the Medical Center cannot understand that title 7 is a problem. But from your viewpoint, I understand that it is a problem. I was not aware of that before, but I am allowing the liberal use of the time because of the fact that so many of these questions do lead to other questions, and a lot of them are very technical.
    Mr. DOYLE. Thank you, Mr. Chairman.
    I've been reading the IG's report with great interest. I want to focus a little bit on Pittsburgh because the facility in question sits in my Congressional District. I read here that in May of 1993 the former Medical Center Director—that is, the Director there prior to Mr. Cappello—requested approval to renovate and upgrade the interior of the Director's residence. VHA did not approve this request. In July of 1994, after the former Director retired, the Acting Director at Pittsburgh obtained instructions on what procedures to follow when renovating the quarters. And then we've got this agency called the Real Property Management Office. An official from that office in Washington told the Acting Director in Pittsburgh to use the income and expense model in the expired VHA Directive 10–93–014 rather than the current VHA Supplement MP–3, paragraph 3.20, which talks about restrictions on the use of operating funds.
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    I see later in the testimony that, following the guidance of VHA Directive 10–93–14, ''Engineering Service completed the VHA income and expense model for the Director's residence prior to Mr. Cappello's arrival, and based on the results, Mr. Cappello approved the renovation of the Director's residence and two other quarters.''
    You go on to say, ''We found that portions of the model caused an overstatement of income available for the Director's residence renovation because the model's instructions were not specific enough. The model did not define terms like 'rent' well enough to exclude other charges, like utilities. The model did not instruct managers to include all quarters' operation costs and projections, and it did not explain how to handle costs of concurrent projects like the NRM project, the non-recurring maintenance project, associated with that particular facility.
    The model also told managers to add projected income losses due to vacancy without specifying that the losses were negative numbers. In other instances, the income and expense model potentially underestimated the amount of money available for major maintenance projects.''
    You go on to say in the conclusions that, ''We found no evidence in our review that Mr. Cappello would have initiated renovations of Aspinall quarters in excess of the limits provided by VHA Supplement MP–3 if this RPMO office had not provided the Medical Center with incorrect guidance. Based on instructions from RPMO, Mr. Cappello believed that he had liberal authority to spend medical care dollars on Aspinall quarters. We concluded that RPMO's instructions led him to believe that he had greater authority and discretion in approving quarter renovations than the policy actually authorized.''
    It seems to me that we're here today talking about the Pittsburgh Center and they've done a lot of good things down in Pittsburgh, and they continue to do that. We're talking about something that happened 4 years ago, but we're here today, it seems to me, because an incoming Director relied on information from an office here in Washington, DC that led him to believe he had more money to spend than he actually did, and had he received this correct supplement, this VHA supplement MP–3, chances are we would just be discussing Charleston, SC here today, and not Pittsburgh, PA.
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    Can you comment on what has taken place since this time in Central Office, here in this Office of—what is this acronym, RPMO?
    Mr. MERRIMAN. Real Property Maintenance Office.
    Mr. DOYLE. The Real Property Management Office—what is happening—I don't know who the official was in the Real Property Management Office that passed this information down through the line. He's not identified in the report, but what has been done since that time to make certain that something like this couldn't happen in the future?
    Mr. MERRIMAN. They just——
    Mr. STALEY. They're in the process now of revising and updating all of the policies that you've mentioned, sir, and——
    Mr. MERRIMAN. As a matter of fact, I think we've just seen the revised handbook lately, that came to us, I believe, to react to or to see whether it had some of the fixes in it. So there has been some movement there to correct some of the bad guidance that they had provided these people.
    Mr. MASCARA. If the gentleman would yield——
    Mr. DOYLE. Yes, I'd yield to my colleague.
    Mr. MASCARA. Thank you. Thank you, Congressman.
    Has anybody spoken to the RPMO about these incidents that Mr. Doyle speaks about? I mean, has anybody been identified in that agency who gave the erroneous information to the Pittsburgh Director? Did that cover part of your work that you were doing as an Inspector General? Did you go that far?
    Mr. STALEY. I don't believe we did, sir.
    Mr. MASCARA. Aren't you curious? I mean, here's a man that's being charged with mismanagement as a result of someone else's actions, and it just bothers me that nobody followed up—I mean, I think the RPMO should be in here today answering questions to us, Mr. Chairman.
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    Thanks, Mr. Doyle.
    Mr. DOYLE. Thank you.
    And we're going to get to Mr. Cappello, too. He's here and he's going to be testifying later, and he can speak to some of these interior renovations. But it is troubling.
    I also see that there was an allegation about the Director and others who had government quarters benefitted from rents that were lower than market levels. The conclusion from the IG is, ''We did not find intentional misconduct in obtaining these benefits by the Director. The lower rents continued because RPMO did not fulfill its responsibility to review rent adjustments in accordance with the Office of Management and Budget guidance, even after RPMO was informed by the Director that he planned to use the existing rental rates until construction was completed, unless otherwise directed.''
    I think my colleague, Frank Mascara, said earlier in his testimony, at some point that we have to decide who's responsible and what we do about it. I'm not sitting here to defend the Director from Pittsburgh. I think he needs to answer some questions about his taste in interior decorating, and we'll ask them when he gets here at his panel.
    But it seems to me that if we want to really look where the source of this is, we don't have to look much further than the beltway here, Mr. Chairman. Right here in Washington, DC, this RPMO I think needs some further looking at, and I'm just very distressed that, if it weren't for some bad directions coming from Washington, DC, my Center—and when I say, ''my Center,'' I mean the people in Pittsburgh, PA and the veterans who take great pride in the facilities in Pittsburgh, PA—wouldn't have to be looking at news stories tonight, unfortunately, that would lead them to believe that we've got widespread mismanagement there, when in fact this appears to be an isolated incident, where the Central Office has given some very bad information to a new, incoming Director. It's just very unfortunate. We ought to make sure this can't happen again.
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    Thank you.
    Mr. EVERETT. Well, I would agree with the gentleman, and think that might be a line of questioning that he might want to submit for the record. And I would also point out that this goes back to my contention about culture. Culture is set at the top. That's the only place it's set. If you ignore things, then people below recognize that you're going to ignore it, and this is part of the problem that we have.
    We will have a second round of questioning, as I indicated. Some of the members would like to explore some details with you. I had mentioned a little earlier that I do understand that, in a sense, you're damned if you do and damned if you don't. I understand that. Having spent 30-something years in the newspaper business, I very much understand that.
    However, I would point out that, for instance, in the case of Fayetteville, that your investigation did come up short there, in my estimation. As a matter of fact, to eventually discharge Mr. Calhoun from the VA, you had to go back in and do an investigation not related to the first investigation. I'm not dragging this all up again, and I do——
    Mr. MERRIMAN. I'd be happy to address that one way or another.
    Mr. EVERETT. Well, you don't have to address it, and I appreciate that. I do appreciate the work you do, but I am, as you recall from the meeting, sometimes Members are frustrated that it does not go as far as it should have. In this particular case, it may have worked in our favor, because in going back, we were able to find other things that led to the dismissal of Mr. Calhoun.
    As I understand, the consultant contract that we've talked a lot about here—Mr. Mascara talked a lot about it, and Mr. Bilirakis—was that not medical fee money?
    Mr. MERRIMAN. Yes, it was fee-based money.
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    Mr. EVERETT. In other words, over 2 years, we're looking at $180,000 worth of medical fee money?
    Mr. MERRIMAN. That's correct.
    Mr. EVERETT. Was this money used correctly or incorrectly?
    Mr. MERRIMAN. I think we point out that that was incorrect.
    Mr. EVERETT. And that would not be mismanagement?
    Mr. MERRIMAN. In that instance, yes.
    Mr. EVERETT. That would be mismanagement?
    Mr. MERRIMAN. I would say it was, yes, mismanagement of that——
    Mr. EVERETT. You stated in the testimony that $26,000 in fish tank funds came from construction money that had to be used for construction and could not be used for nonconstruction purposes. What was not done in the way of construction in order to spend the money on the fish tank?
    Mr. MERRIMAN. I can't say.
    Mr. EVERETT. Was any other construction not done or delayed to make the money available for the fish tank?
    Mr. STALEY. Not that we know of.
    Mr. EVERETT. Would you say that spending $26,000 on a fish tank would be mismanagement?
    Mr. MERRIMAN. Well——
    Mr. EVERETT. If you wouldn't, how would you justify spending $26,000—especially when it was money that was supposed to have been used in construction?
    Mr. MERRIMAN. Managers have some discretion. I saw a newsclip just recently from local Charleston newspapers where the veterans seemed to be lining up in support of this fish tank. He had many things he could have spent the money on other than that. I would think many managers, most would not have chosen to do that. I suspect I could put a fish tank in the IG's office, if I wanted to, but I have other things that I'd put the money on. But it was his discretion to do that. I can't call it mismanagement. I'd say it was a poor choice of use of resources.
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    Mr. EVERETT. Out of curiosity, were rods and reels furnished for this $26,000 fish tank? [Laughter.]
    Mr. MERRIMAN. Not to my knowledge.
    Mr. EVERETT. In terms of waste of taxpayers' dollars, maybe $5,000 is minor waste, as you state, but tearing up brand-new carpeting, bought with the taxpayers' money, because the color doesn't suit the hospital's Director, to me shows a lack of regard for the efficiency and economy that the people of this country, the taxpayers, expect from their government. Would you agree or disagree with that?
    Mr. MERRIMAN. Well, let me put the facts straight at least, to start with. I don't think the carpet was installed and torn up. They bought that black carpet for about 74 yards of installation. It cost, I think, $1,300. They looked at it; they found that it didn't suit them. I'd say, hey, they should have made that determination going in; that money was wasted. They didn't need it for that. They should have had better management of what kind of carpet they wanted. They went and then spent $5,000, I think it was, for 300 yards of carpet for the entire executive suite. My understanding is that perhaps it ended up in the dumpster initially; somebody caught that; it was pulled out. My understanding is some of that carpet was used in Engineering Service and some other rooms. I'm not justifying that they should buy carpet, take a look at it, not like it, throw it away or use it otherwise. Obviously, the money should have been better managed.
    Mr. EVERETT. You understood it was used in the Engineering Department?
    Mr. MERRIMAN. Some of the carpet, it is my understanding, was used in some other area of the hospital, maybe not all of it.
    Mr. EVERETT. As my friend, Mr. Mascara, has recognized and commented on, we've got a lot more questions than we have time, but at this time I'll yield to him for any additional questions he may have.
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    Mr. MASCARA. Thank you, Mr. Chairman.
    Let's get back to this fish tank again. Meanwhile back at the fish tank—it started out as $80,000; then it—there's someplace in here that someone made that—there was an allegation——
    Mr. MERRIMAN. Yes.
    Mr. MASCARA. And then someone said, well, it cost $26,000, and then there was a monthly fee for maintenance. I read in there someplace where they said, we don't even own, the government doesn't even own, the fish tank, that we leased it, so that, as September 30 in the year 2000 comes near, at the time of the expiration of that lease, we don't own that tank. So I think the record should indicate, Mr. Chairman, that after paying $26,000 and after paying the maintenance fees, that this was a lease and not an outright purchase. Am I correct?
    Mr. MERRIMAN. I'm not sure that's correct.
    Mr. MASCARA. Well, it says it in the IGO's report here.
    Mr. MERRIMAN. That it was leased?
    Mr. MASCARA. It was a lease. I mean, that further exacerbates at least——
    Mr. MERRIMAN. There was a lease—there was a contract for the maintenance of it. I'm not sure——
    Mr. MASCARA. Look at the report, sir. I spent most of last night and the night before going through this, and that thing jumped out at me, that this is was a lease and not an outright purchase.
    Explain to me the function of the IG. Do you engage in actual audits or are you just an investigatory arm for the VA? I mean, do you have staff onboard that are certified to do accounting?
    Mr. MERRIMAN. Yes, sir, we have auditors.
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    Mr. MASCARA. And did anybody audit the actual cost of the renovation of the facility, took the contract and sat down? Because we have all of these figures that we discussed, and they seemed to balance out after you explained what that $1.2 million was, but did someone literally audit the renovation of that, go through the invoices to make sure that the government received what it paid for in that renovation? Or is your information coming just as information received from someone who said, well, we paid $1.2 million; no one looked to see whether that was paid and who it was paid to, and when it was paid to them?
    Mr. STALEY. The hard documents that generated the cost were looked at by a reviewer. Whether a detail audit of all of the line items, line by line, was—I don't believe that was done.
    Mr. MASCARA. So nobody did any tests, random sampling of the expenditures to verify that those were the actual amounts? That's information provided you, and you're taking their word that that's the case rather——
    Mr. MERRIMAN. No.
    Mr. MASCARA (continuing). Having a certified audit?
    Mr. MERRIMAN. There was no certified audit done of the invoices. I believe our reviewer pulled the actual invoices and looked at them to come up with the price, but in terms of what we would consider an audit, no.
    Mr. MASCARA. Good. Thank you, Mr. Chairman.
    Mr. EVERETT. Mr. Bilirakis.
    Mr. BILIRAKIS. Mr. Chairman, I don't have any questions. I would just merely ask, Mr. Merriman, you indicated that if the IG, if the process was changed so that the IG was no longer working as a part of any particular department or agency, or whatnot, that it might be helpful in some areas, but there could be problems with it in terms—you mentioned auditing and that sort of thing. I would appreciate it if you would submit to me, anyhow—I don't know whether the committee would want it or not—some of your points that you wish to make in that regard that should be taken into consideration, if one is thinking in terms of changing the process.
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    Mr. MERRIMAN. I would be happy to do that, and I'd also like to point out that the—I believe it's the House Government Reform and Oversight Committee has recently asked the General Accounting Office to look at IG functions in terms of the 20th anniversary of the IG, to make recommendations as to how IGs in Federal Government might be—if there's any changes that might be required, and they'll be having hearings on that.
    Mr. BILIRAKIS. Yes, I appreciate that. Thank you. Thank you, Mr. Chairman.
    Mr. EVERETT. Mr. Doyle.
    Mr. DOYLE. I just have one quick, follow-up question, Mr. Chairman.
    In the process of you investigating this situation in Pittsburgh, did you actually speak to the official at the RPMO who issued the directive—I guess the Pittsburgh people got a directive that was expired instead of the one that they should have gotten, and some person in that office was responsible for sending that down. I mean, did you ever interview the person that was responsible for sending the expired directive to Pittsburgh?
    Mr. STALEY. I'd have to go back to find out whether that specific person was interviewed or whether that person was no longer at that job assignment, but we did speak to the people in the RMPO office to try to get clarification on issues.
    Mr. DOYLE. Okay, but you're not sure if you spoke to that particular individual?
    Mr. STALEY. That particular person, I'm not sure.
    Mr. DOYLE. And I was going to follow up to ask you, what happened to that person who sent this erroneous directive down? Where is that person today?
    Mr. MERRIMAN. We'll have to—I have a——
    Mr. DOYLE. Still working for the VA?
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    Mr. STALEY. I'd have to go back and find out. We can certainly get that information to you, sir.
    Mr. DOYLE. Thank you.
    (Subsequently, the Department of Veterans Affairs provided the following information:)
    In response to Congressman Doyle's question as to whether any action was taken against employees in the VA Real Property Management Office (RPMO) for advising the Director at VA Medical Center Pittsburgh to follow an expired policy directive, the Office of Inspector General (OIG) concluded that there was no basis for taking any appropriate administrative action against RPMO employees because there was no evidence of misconduct or mismanagement. The basis for this conclusion is as follows. The most recent instructions for VA medical center quarters management were issued in February 1993. The recission date for this directive lapsed in February 1994. When Medical Center officials in Pittsburgh asked for policy clarification in July 1994, a RPMO official told them to continue to follow the expired directive while new policy was under development. OIG staff discussed this issue with the RPMO employee responsible for telling Pittsburgh officials to follow the expired directive. The RPMO employee explained that recommended revisions to the expired directive were under Consideration and had to undergo a rigorous departmental concurrence process. In the meantime, RPMO did not have the authority to issue new Department policies without the required input and concurrence from all responsible agency officials. Consequently, RPMO was left with the use of the expired directive as stop-gap instructions until a new policy was available. Recognizing the vulnerability of the circumstances, the OIG recommended that Veterans Health Administration (VHA) Central Office officials expedite its efforts to issue current, consistent quarters guidance. Based on our recommendation, VHA has issued a new directive and a draft handbook. As a result, we believe the conditions that led to the problem have been corrected, and we consider the matter resolved.
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    Mr. EVERETT. I want to thank this panel for enduring this. It's part of the job; I recognize that, like town meetings are part of the job.
    We understand a lot of what you said. I hope you understand that what the Subcommittee on Investigations and Oversight is spotlighting, we're trying to penetrate into the VA's system to learn how to change it, because it's the feeling of, I' d say, every member of this committee that there's a culture that exists in VA that has for years defied oversight, and we certainly have to have the full cooperation, the full, independent cooperation of the IG's office to achieve that.
    So I thank you again for your being here today, and we will now dismiss this panel, and we'll ask for panel four to come up, please.
    Mr. Clark—now that you're all comfortably seated, I'll ask you to rise and raise your right hands, please.
    [Witnesses sworn.]
    Thank you. Please be seated.
    Mr. Clark, if you would please, introduce your panel.

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    Mr. CLARK. To my left is——
    Mr. EVERETT. You may proceed at that point.
    Mr. CLARK. To my left is Mr. Dean Billik; to my right, Mr. Tom Cappello.
    Mr. EVERETT. You will, please, proceed with any testimony anyone may have.
    Mr. CLARK. Thank you.
    Mr. Chairman, members of the subcommittee, I appreciate the opportunity to appear before you to testify this afternoon. My name is Kenneth Clark, and in August I assumed my current duties as Chief Network Officer in the Veterans Health Administration. One of my primary responsibilities is to ensure the integrity and the effectiveness of the day-to-day operations of our medical facilities. I believe that the structure and the tools that we're putting in place will enable me to provide this essential oversight, and I'd like to describe them to you very briefly.
    The cornerstone of this system is the new VHA network organizational structure, which creates 22 separate Veterans Integrated Service Networks comprised of from three to ten separate facilities, each under the direction of a Network Director. The 22 Network Directors have a smaller span of supervisory control than did the four Regional Directors in the former organization, who were responsible for as many as 43 facilities. This simple difference in span of control enables the Network Directors to maintain closer contact with the facilities and its stakeholders and review its operations in greater detail.
    The Network Directors are able to intervene at the first evidence of problem and regularly send site-visit teams to review, investigate, and evaluate allegations of improper or ineffective management or behavior. They are better informed about their facilities, and at the same time can be more accessible to groups or individuals that wish to point out concerns. I intend to work very closely with the Network Directors to ensure that they do perform this vigorous, aggressive oversight role.
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    The Network Directors have been given a very clear, challenging set of performance measures that set forth measurable, objective standards of achievement. Network Directors are able to evaluate the performance of each medical center and its management team using these objective tools and quickly identify out-of-line situations. These measures are a powerful tool for VHA senior management and we're using them to upgrade performance across the system.
    Additionally, VHA is developing a new dimension to their performance appraisal system to more comprehensively evaluate executive performance. This 360-degree evaluation system provides each executive with feedback on specific skills and behavior, not only from their supervisors, but from their peers, their subordinates, and their customers or stakeholders. We expect that this system will help us in our efforts to strengthen our culture of performance and accountability and assist executives to align their individual behavior with organizational values and objectives.
    Secretary-designate Gober has recently implemented several other initiatives to improve our ability to provide oversight and take effective action. Earlier this year, he issued instructions that in all actions involving senior management officials, representatives from the Office of Human Resources, the General Counsel, and the Office of Public Affairs, as well as the line operating officials, will meet to discuss the case, develop comprehensive strategy for taking action, and implement the decisions in a coordinated manner. This will eliminate any possibility that the VA's case will be either compromised through lack of cooperation or not fully developed as possible.
    As you know from his previous testimony before you, Secretary-designate Gober has also developed a new approach to handling equal employment opportunity complaints. Under the terms of this new framework, Medical Center Directors will no longer serve as EEO officers, and a new, independent Office of Employee Complaints Resolution will have counselors and investigators assigned to it.
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    EEO counselors will no longer report to facility Directors, and this should make employees feel freer in initiating complaints against the senior officials at the local level. I believe this new, independent level of review will make management officials even more accountable for their behavior and their decisions.
    Our executives must be effective leaders, not just competent managers. It's not enough that they steer clear of specific violations, but rather we expect that they'll be sensitive to the appearance of their actions.
    There is one other important element to be considered in connection with the focus on accountability. We're asking our executives to make tough decisions and take bold actions in a very difficult environment. Our Medical Center Directors have helped us make dramatic improvements in quality and the cost-effectiveness of our care, using objective measures. They're displaying a remarkable ability to innovate and a robustly entrepreneurial spirit. They have restructured and reorganized the health care delivery system in cases in which there was no clear right or wrong decision, and they have had to take these actions in the best interest of their facilities, when it may have had an adverse impact on individual employees or groups of employees. And I applaud their willingness to take on these difficult tasks.
    It's not surprising that some stakeholders will disagree with their decisions or even mischaracterize them. Under our system, these employees have to right to allege wrongdoing or mismanagement, and it's healthy that they can do so, as it's a constructive check and balance on management.
    However, I urge that these allegations be considered just that—allegations—until they can be proven, and that an executive is considered to be legitimately and conscientiously exercising his or her best judgment until the facts indicate otherwise. If we intend to hold our executives accountable for their misconduct, then I believe we must support them fully in those instances in which they are not at fault. I'm concerned that if we do not, our executives will not continue to embrace the essential changes VHA is making to ensure it provides the highest quality of care in a timely and effective manner.
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    Mr. Chairman, this concludes my formal statements, and the other members of the panel would also like to make statements.
    [The prepared statement of Mr. Clark appears on p. 175.]

    Mr. EVERETT. All right. It doesn't make any difference—just whichever one, proceed, please.

    Mr. BILLIK. Mr. Chairman, my name is Dean Billik. I'm currently the Director of the Central Texas Healthcare System and formerly the Director of the Ralph H. Johnson Medical Center in Charleston. It is an honor and a privilege to appear before you today to testify regarding alleged mismanagement practices while I was the Director at Charleston.
    The VA Inspector General completed a thorough investigation of 27 allegations of mismanagement on January 10, 1997. They found no substantial evidence of mismanagement. Of the 27 allegations ranging from gold fixtures to fish tanks, 5 were substantiated, 4 were partly substantiated, and 6 recommendations were made, and I'll briefly address each of those.
    Ward 4–A, which was renovated in the nursing home care unit and never used for that purpose at the conclusion of the renovation award for a project to remodel another acute medical care unit, had been funded. Rather than reduce the capacity of our acute care patients, we utilized 4–A to care for those. If we had not been able to use 4–A as swing space, we would either have to reduce the number of acute patients we were taking care, close clinics, or not complete necessary improvements. To me, none of those were viable. My intent to use 4–A as a nursing home would have fallen through as soon as the renovations in other parts of the facility were concluded.
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    The general operating and construction funding was received for the project and it was utilized for that project, but funds enabled us also to avoid, if you will, the reduction in employment over that period of time without incurring a reduction in force. We would have had to activate that nursing home care unit when it came time within our existing resources.
    The allegation concerning the renovation of my Director's office without approval, it had—the Director's office had not been renovated in many, many years, and they were renovated. However, before the renovation began, the appropriate request was submitted through my supervisor, the then-Regional Director, and submitted to Central Office. A verbal approval to proceed was received from Central Office, which was documented.
    On issues concerning the consultant, Charleston was blessed to have been included in a VA Central Office national contract with APQC to implement a total quality improvement program throughout the VA. When that contract expired, and I met with our staff and we discussed our progress on total quality improvement, it was concluded that the services of this individual would be considered valuable to continue the process of training and educating our individuals, the program people, in the practices of total quality improvement, and I concurred.
    The other allegation, scarce funds on a maintenance contract for a fish tank, the maintenance contract for the fish tank was $7,800 per year, which included stocking and feeding the fish, cleaning and replacing them. The projected budget shortfall for 1996 did not materialize.
    The perception may have been that the money was being spent frivolously while employees were facing layoffs. However, construction money for renovating the lobby or installing the fish tank, we couldn't have spent on employees' salaries.
    It was also true that the anesthesia machines no longer have a maintenance contract because it was determined that the maintenance of these machines could be accomplished more effective by the Medical Center's Biomedical Engineering staff.
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    Other partly substantiated allegations—one was that a well-known artist paintings were inappropriately discarded as part of the renovation of the suite, and we were never able to determine the source of that or the object in question.
    The allegation about the fish tank costing $40,000—it was actually $26,119, and it was included in a plan that was created by a designer as a part of a master facility plan for the entire Medical Center. She considered other things as a focal point for this lobby renovation, such as a sculpture or a painting, but she chose the fish tank as being appropriate in a seaport, and we agreed. While it was not necessary, it was included as part of the overall lobby renovation.
    Another allegation was management authorized the nonessential landscaping services and redirected old landscaping items to employee residences, and that was partly substantiated because it was, in fact, we determined one employee had taken some old plants home with him. Staff were reminded all the plants were government property and were to be disposed of and not given to employees. A memorandum was issued to employees and the IG was satisfied that the problem had been corrected, and no recommendations were made.
    Management violated its own policy by requiring respiratory therapists to work without backup in the intensive care unit during evening hours—the allegation was partly substantiated. Respiratory therapists were required to work alone in the ICU during the evening hours because of declining inpatient workload. However, in the event another respiratory therapist was needed, that person could come from the sleep lab. That was not consistent with existing policy, and the policy has since been changed.
    There are other recommendations, and I'll be happy to address any questions that the members may have.
    [The prepared statement of Mr. Billik appears on p. 182.]

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    Mr. EVERETT. Thank you, Mr. Billik. Thank you.

    Mr. CAPPELLO. Mr. Chairman, I'm Thomas Cappello, the Director of the Pittsburgh VA Healthcare System. It is a pleasure to be invited to this hearing today and given an opportunity to share my knowledge of the Pittsburgh project and answer any questions you may have of me on this subject.
    As the Director of the VA Pittsburgh Healthcare System, I take full responsibility for all that occurs on our three campuses. I'm pleased to report that the positive stories greatly outnumber any negative stories you may have heard, and the reason for this is that I am blessed with the most wonderful staff in the whole VA system.
    Over the past year, our health care system has integrated two Medical Centers situated on three campuses into one system. We have reorganized in such a manner that expenditures over the past year have been decreased by $8 million, and we have reduced by 318 FTE. At the same time, we have treated 9,000 more patients. We have increased our services to the veterans of Pittsburgh in record numbers, and provide the highest levels of tertiary care, including liver transplantation.
    When I entered on duty in Pittsburgh in 1994, I found a brand-new, state-of-the-art VA Medical Center on the Aspinall campus, flanked by a series of older buildings that were in desperate need of rehabilitation. The quarters buildings, in particular, were unacceptable. The subject building, No. 13, was in the most disrepair, and this fact has been well-documented.
    I was faced with an issue of either repairing these government assets or closing them. A cost-benefit analysis was conducted, and it determined that nearly $3 million had been collected in rents over the past 15 years, and if rehabilitated, these units would provide a positive cash flow that could be reinvested in patient services. In fact, the very reason for the disrepair of these units was directly related to the lack of maintenance and repair over the years. It was decided to renovate three vacant units and to continue this process until all units were completed.
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    It is important to note that I personally never had any long-range plans to live on campus. Thus, the renovations would not be associated with me, but only with the reality that the repairs were desperately needed.
    Various options for rehab were discussed ranging from cost-prohibitive restorations to more cost-effective updating. Shortly after this decision was made to renovate, our Associate Director/Chief Engineer had transferred to other stations and our contracting section consolidated with the Highland Drive contracting section. These key vacancies and changes had a great deal to do with the poor project management that occurred at the operational level.
    I also had never worked on a campus with quarters and was not knowledgeable about the rules and regulations on this subject. I did receive guidance that I could expend up to $126,000 to rehabilitate this structure, and a project was developed whose costs conformed to this budget number.
    When the IG arrived in April 1996, I was pleased and confident that the review would prove that we had followed all applicable guidance and that we had protected the government assets as appropriate. As the IG report indicates, it was determined the guidance used was incorrect and the costing of the project was in error.
    Forty-five thousand dollars of station labor was used on this project and was not appropriately costed to the project. This occurred because of inadvertent, and not malicious, poor cost accounting and an improper interpretation of the rules. It is important to note that this is costing information and not actual cost.
    Over 2,300 hours of labor was charged to this project. I had an independent estimator go through the project and indicate that 540 hours was a more reasonable estimate for the work accomplished. In fact, I was informed that roughly 2,100 hours is the industry estimate to complete the construction of a 2,500-square-foot home. This fact does not mean that VA labor is inefficient. It means that our past systems for tracking cost was done anecdotally and after the fact. We have corrected this problem at Pittsburgh by now insisting on a work order for all work on quarters, to ensure a proper estimate and an accurate cost accounting.
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    Finally, and probably the most publicized aspect of this renovation, is the issue of above-standard amenities. I can assure everyone here that I am conservative by nature and most certainly a conservative manager. I can also assure you I would never have knowingly selected any faucet or bathtub whirlpool that was anything other than mid-grade, tasteful, and serviceable. I believed that all selections that were made were within the budget of the contractor which was $86,000, and I was not aware of the cost of the individual line items until the time of the audit. This was an oversight.
    In closing, I want to assure you, and most importantly, I want the veterans of Pittsburgh to know that I take very seriously the trust placed in me. I assure everyone that the important story about Pittsburgh is not one of project mistakes, but one of stretching resources to provide as many services as possible and to take care of our veterans within the budget. The VA Pittsburgh Healthcare System over the past 3 years has served 10,000 more veterans, reduced costs by $10 million, and increased outpatient visits by 85,000, while at the same time improving customer service.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Cappello appears on p. 189.]

    Mr. EVERETT. Let me start with you, Mr. Billik. We've heard sworn employee and the IG testimony. The IG has found that you had a close personal relationship with a female on your office staff, and that you promoted her after the relationship began. How do you think that appeared to the Medical Center employees?
    Mr. BILLIK. I had a close personal relationship with a staff assistant that I would term as being one of a very close friend. Her progression in the Department was based upon legitimate accretion of duties, and those duties were reflected in a position description which was classified. Our relationship became personal at the time that I discovered that I would be leaving Charleston. The promotion had at that time already been delayed for more than 3 months. I felt it was in the interest of fairness to her, as well as to the other employees in my office whose promotions had been delayed, to allow those to proceed like any other employee.
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    Mr. EVERETT. You very skillfully did not answer my question. My question to you was: How do you think that made the other employees feel?
    Mr. BILLIK. Given some of the statements that I've heard today, Mr. Chairman, I can understand that there would be concern.
    Mr. EVERETT. Well, do you think that's an example and leadership that employees should expect from managers?
    Mr. BILLIK. No, sir.
    Mr. EVERETT. I notice you didn't even mention that in your written testimony. Is there any particular reason you chose to avoid it?
    Mr. BILLIK. No, sir.
    Mr. EVERETT. Is it a fact that during this relationship that you and this female employee rode to work together frequently?
    Mr. BILLIK. There was occasion where that occurred. We did not cohabitate. We on occasion would carpool, yes, sir. We lived in the same general neighborhood in Charleston.
    Mr. EVERETT. And so you found it convenient to ride to work together?
    Mr. BILLIK. When there was a car that needed to be repaired or dropped off or a problem like that, yes, sir.
    Mr. EVERETT. Mr. Billik, I'm going to tell you straight out and on the record that, as far as I'm concerned, what you have set here is a totally unacceptable example of how someone ought to manage. The leadership, frankly, is a disgrace to civil service. You ought to be ashamed of yourself, and as far as I'm concerned, you have no business being a manager in any place in the Federal Government. This is a horrible leadership example. And I don't simply condemn you for it; I also condemn those who promoted you after this example was set at Charleston.
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    Let me ask you, on the $90,000-a-year consulting contract, the IG essentially found, at pages 16 through 19 of the report, that the contract did not use proper funding source, did not follow procedures for obtaining consulting services, and did not have proper approval. Do you disagree with that?
    Mr. BILLIK. In retrospect, yes, sir. At the time that that action took place, I directed our contracting people to sit down with this particular individual that we had been using and to negotiate a contract. And I was informed that that was done, and the price of that contract was considerably less than what it had been under the centralized contract.
    Mr. EVERETT. Where did the money come from used to pay for this consulting?
    Mr. BILLIK. It came from the hospital general operating budget, sir.
    Mr. EVERETT. Medical fee fund?
    Mr. BILLIK. I determined that later, yes, sir. It's general medical care appropriation, yes, sir.
    Mr. EVERETT. Do you think veterans' services suffered because of taking this $90,000 a year, $180,000 over the 2 years, out of medical fee funds?
    Mr. BILLIK. No, sir, I do not.
    Mr. EVERETT. Well, I'd say that's a pretty good difference. If you had that much extra money, why put it in there?
    Mr. BILLIK. Sir, it was a choice that I made at the time that it was extremely important to the VA Medical Center in Charleston that we implement a total quality improvement program in that facility.
    Mr. EVERETT. In other words, this is $100,000, almost $100,000 a year, that actually didn't need to operate the medical facility?
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    Mr. BILLIK. No, sir, we needed every dollar to operate, but it was my belief that these funds expended would come back to us in—multiplied by a large number with our—in our ability to do our work in an improved way.
    Mr. EVERETT. And he met with you how often?
    Mr. BILLIK. He worked directly with our Quality Assurance Department and with the individual service chiefs in our Medical Center to train and to implement the total quality improvement program at each of the services.
    Mr. EVERETT. Again, you've avoided answering my question. He met with you how often each month?
    Mr. BILLIK. He would report to me at the conclusion of his visit and with the Quality Assurance folks and let me know what they had accomplished and what the plans were for the next—for his next visit.
    Mr. EVERETT. Well, let's try it another way. Tell me how many actual days he worked a month at your facility.
    Mr. BILLIK. There was not a fixed number of days, sir. It would vary from 3 days to 5 days.
    Mr. EVERETT. Per month?
    Mr. BILLIK. Usually, yes, sir.
    Mr. EVERETT. Do you have a record of what days he was there?
    Mr. BILLIK. I do not have a record in front of me, sir.
    Mr. EVERETT. Do you have any record of written reports that he submitted to you?
    Mr. BILLIK. Oh, yes, sir. He worked very diligently with us and was the prime author in the strategic planning document for the Medical Center at Charleston.
    Mr. EVERETT. He was the author of that?
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    Mr. BILLIK. He was the primary author of that document.
    Mr. EVERETT. Okay. Are there any other things other than that document?
    Mr. BILLIK. None specifically that come to mind, sir.
    Mr. EVERETT. How lengthy is that document?
    Mr. BILLIK. Well, I don't—I don't recall the length of the document, sir, but it took an enormous amount of effort to work with our staff to produce that document.
    Mr. EVERETT. Well, did the staff produce the majority of it or did the consultant produce the majority of it?
    Mr. BILLIK. He took the information and he collated that information into a usable document.
    Mr. EVERETT. In essence, he typed it up?
    Mr. BILLIK. No, I don't believe——
    Mr. EVERETT. Well, I'm searching—it's very difficult for me to understand, first of all, why this man was hired; secondly, why you funded it the way you did, in addition to the other things the IG has found. And we're now getting reports that this consultant may have worked for three or four or five different VA hospitals, at the same time. I'm finding it very difficult to determine from you testimony exactly what it was that he did.
    Mr. BILLIK. Sir, he was involved every day that he was there and also in between——
    Mr. EVERETT. Okay. He did everything——
    Mr. BILLIK (continuing). In training our staff.
    Mr. EVERETT. You still have not given me specifically what you paid this man $90,000 a year from medical fee funds from the hospital to do, and I would ask you to provide that to us for the record.
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    [The information follows:]

Offset folios 78 to 81 insert here
Makes pp. 143 to 146

    Mr. EVERETT. Now, Mr. Billik, I must observe that your rendition of the IG report in your written testimony is, in my view, self-serving and selective, to say the least, if not downright misleading. And what I'd encourage is for folks, and particularly the press, to read that report because it speaks for itself, and they can draw their own conclusions rather than taking my word for it.
    You heard the IG testify on this just a little while ago that there was mismanagement. How do you answer that?
    Mr. BILLIK. That's the first time I've heard that term used, sir, that it was in fact mismanagement.
    Mr. EVERETT. Let me suggest to you that anybody who can't read the IG report, which you profess to have read, and not come to the conclusion that there was mismanagement does not deserve to be in a management position. This is part of what we're trying to get at in this committee, and I must tell you that somebody making six figures a year should perform at a higher level than you have obviously performed.
    Mr. Cappello, in your testimony you admitted mistakes were made, such things as the $500 faucet and $1,200 whirlpool bathtub, and it caused serious problems to the VA as an institution because of public concern about the government in general. Money that could have helped veterans was wasted, frankly. It appears that you accept responsibility for the cost overruns on the renovations of the Director's quarters in Pittsburgh. Am I right in making that assumption?
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    Mr. CAPPELLO. That's correct, sir.
    Mr. EVERETT. Well, I respect your acceptance of the responsibility, and I sincerely hope your career as a senior management will go forward and will benefit veterans after this.
    Mr. Clark, if my colleagues will allow me, I'm going to finish up my questions, and then we'll let each person finish up their questions, since this is the last set of witnesses.
    You know, I'm not from Missouri, but you're going to have to show me. I've heard this kind of bureaucrat tap dancing before. We've heard quite often, a problem crops up, and then all of a sudden we get all these changes and plans, as we did, for instance, with zero tolerance, and they never materialize. The thing that concerns me is the very people that will run the organization now that you've reorganized it are the same people that have promoted incompetent people over the years. They're the very same people. So I'm not at all impressed with your testimony—not at all. As I said, as far as I'm concerned, you're going to have to show me.
    And I want you to know right off the bat that this subcommittee will continue to look at this, and we're going to start doing it in a little different way. When these type abuses are reported, we're going to find out who made the abuse, and then we're going to track it upward and find out why nobody's accepted responsibility. As my colleague said earlier, somewhere somebody's got to accept responsibility, and there's complete refusal in this organization to do that at any level.
    I have mentioned I think there are actually millions of dollars of taxpayers' money wasted each year, and we have a bunch of bureaucrats that decide that they're not going to do anything about it. And then we're asked to put—the Congress is asked to put more money into VA every year, and nobody seems to have regard for how that money is being spent. And that's going to stop. If this subcommittee chairman has anything to do with it, that is going to stop.
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    Now I'll just say that I've got great respect for some of the people I met in VA. I think anybody that has appeared before my committee, either at this committee or the Compensation and Pensions Subcommittee in the last term, will tell you that I'm direct, but I'm fair. And we all should be responsible for taxpayers' money, and I don't see that happening in the VA.
    As hard as some of us have tried to penetrate the culture that exists in VA, we've not been able to do it. And if we have to have hearings every day and put people under sworn testimony and subpoena people, then that's what we'll end up doing. But I want to see somewhere somebody along the line take responsibility for promoting bad managers to six-figure salaries that shouldn't be promoted, or giving managers $25,000 buyouts that have been accused of sexual harassment, or promoting managers or moving them to other places. It has got to stop. I hope somebody will hear this. It's got to stop. And if it doesn't stop, we're going to have hearings and we're going to flesh this thing all out. We're going to put some sunshine on top of it. That's the best way. I hope we can embarrass the VA into having somebody somewhere along the line take responsibility for what's happening.
    Now having said that, I'll now turn to my able ranking member for his comments.
    Mr. CLYBURN. Thank you, Mr. Chairman. Mr. Chairman, I do want to ask Mr. Billik a question. One of the things that's bothering me swirls around this decision that was made not to use a newly-renovated nursing home care unit for its intended purpose. Now were you aware at the time that you made that decision that the available nursing home beds in Charleston were in short supply?
    Mr. BILLIK. The only way that I can address that, sir, is that at the time that we made that decision there were no veterans in our beds who could not be placed in community nursing homes. In other words, we did not have a waiting list of veterans needing care.
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    Mr. CLYBURN. So you didn't know that the beds were in short supply?
    Mr. BILLIK. The only way that it would have been revealed to me, sir, would be that I wouldn't be able to place——
    Mr. CLYBURN. All you have to do is say yes or no. So you didn't know. Now will you tell me the authority under which you are empowered to make such a decision unilaterally?
    Mr. BILLIK. I can't cite a specific authority.
    Mr. CLYBURN. You just acted on your emotions?
    Mr. BILLIK. No, sir, we acted on what we believed to be the best course to take at that time.
    Mr. CLYBURN. Did you inform superiors that, because of whatever your information was, that you were not going to use this facility for its intended purpose?
    Mr. BILLIK. Absolutely.
    Mr. CLYBURN. Now why didn't you make that decision before the renovation was done?
    Mr. BILLIK. Because the renovation—I think the project to do that project and the funding for that preceded my time at Charleston.
    Mr. CLYBURN. Yes, the authorization preceded your time?
    Mr. BILLIK. Yes, sir.
    Mr. CLYBURN. But did the work? Now maybe I have it wrong, but, as I understand it from what I've seen in this testimony, that this renovation took place after you arrived. I didn't say the authorization for it. You see, what I'm getting to is that if you can decide after the renovation is done that you don't need the facility, why can't you make that decision before the money is spent on the renovation?
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    Mr. BILLIK. I would agree with you, sir. I believe the project had begun just as I arrived. I don't think that, you know, I had the opportunity when that project had begun to fully evaluate the future, if you will. The decision to use that for swing space came when a second project to renovate a medical unit—I mean, the funding came for that second project, and as I said earlier, in order to do that project, we had to move those patients to another unit or close the unit and reduce our capacity to treat acute care patients. So the decision was made at that time to continue to treat acute care patients.
    Mr. CLYBURN. Let's look at another issue. What is the VA policy or procedure that will govern any facilities Director's ability to enter into the kind of contract that you entered into that is being talked about here so much today, this $90,000 a year contract that we don't seem to have any kind of written report on what was done or not done?
    Mr. BILLIK. The Directors are prohibited from negotiated contracts, and our contracting officer negotiates those contracts.
    Mr. CLYBURN. So this contract, this $90,000 was not negotiated by you?
    Mr. BILLIK. Yes, that's exactly right, sir.
    Mr. CLYBURN. So the person who was selected to carry out the contract was selected by somebody else?
    Mr. BILLIK. No, sir, the contracting officer in the Medical Center negotiated the contract.
    Mr. CLYBURN. Okay. So you've got a contract here; now you've got to go and get somebody to implement the contract? I'm listening.
    Mr. BILLIK. I'm not sure of your question, sir.
    Mr. CLYBURN. My question is this: How was this contract entered into? I thought you had to bid these contracts. I thought the regulations would require that such a contract as this would have to be bidded competitively. You're telling me——
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    Mr. BILLIK. Often that's the case. In this case my contracting people informed me that they could continue this individual under contract. You know, my purpose here was that we had begun a process under a broad VA total quality improvement contract. We had made significant process in the implementation of total quality improvement, and it seemed to me to make sense at that time that, if we needed to continue to have that kind of outside support, it should be with the same individual or firm, if you will, that had begun the process.
    Mr. CLYBURN. So you kept someone who had been there when you got there, is what you're telling me?
    Mr. BILLIK. I kept someone who was—who came to Charleston under a VA Central Office contract, sir.
    Mr. CLYBURN. But the person came to Charleston before you got there?
    Mr. BILLIK. No, sir.
    Mr. CLYBURN. Well, what are you trying to tell me? You keep trying to tell me that you find it necessary to keep somebody——
    Mr. BILLIK. There was a national VA contract let with a firm to bring to various medical centers a total quality improvement program. Charleston was one of those facilities that had been selected for that program. And so at the conclusion of that contract year, which had been negotiated here in the Central Office, it was my decision to continue to use that same individual. It appeared to me to be the most reasonable thing to do at the time.
    Mr. CLYBURN. Continue to use the same individual to implement this—the contract had come to a close that this person was originally hired under?
    Mr. BILLIK. Yes, and——
    Mr. CLYBURN. So rather than let that contract close, you decided to open up a new relationship with someone, this person, who had finished this contract? So this contract that he was operating under was a contract that you implemented?
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    Mr. BILLIK. Yes, sir.
    Mr. CLYBURN. Well, that's what I was asking you. I was asking about the contract. I'm not asking about the person. But you implemented this contract and you made the decision to keep this guy, who had already finished the contract with the VA that they originally hired him for?
    Mr. BILLIK. Yes, sir.
    Mr. EVERETT. Would the gentleman yield?
    Mr. CLYBURN. Yes, I'd yield.
    Mr. EVERETT. Let me make sure I understand. In other words, you directed that the contract go to Fuller; is that correct? I remind you that you're under oath.
    Mr. BILLIK. Yes, sir, I asked our folks to continue this individual under contract.
    Mr. EVERETT. How about at Columbia?
    Mr. BILLIK. Yes, sir, we used him at Columbia for a couple of days, in my recollection.
    Mr. EVERETT. Under your direction?
    Mr. BILLIK. Yes, sir.
    Mr. EVERETT. Thank you, Jim.
    Mr. CLYBURN. Oh, well, my time is up. I don't want to take away from these other two gentleman. So maybe, Mr. Chairman—this is the last panel. So I don't want to infringe upon their time. Let me let them go, but I may want to pursue this, because of all the things I see here, I've got a real problem with the IG's office and its interpretation of what title 7 does or does not mean, but when you make these kind of unilateral decisions, as you have made with these nursing home beds, because that affects the people I'm here to represent, whether or not they can get a bed and whether or not they can get a service in Charleston without having to go all the way to Columbia—though I'm pleased to have them come up there, too, because that's also my Congressional District; that's fine, too, but they want to stay near home; I'm concerned about those unilateral decisions, as well as a decision to enter into a contract with somebody that was supposed to be going on his or her merry way, and you decide to keep them to do something else that we can't seem to find out what it is they were doing. Because you don't have any kind of written report. I have never seen anybody work for this much money 4 days a month—that leaves that person 26 days to write the report, and we don't see anything, any written document that this person was doing anything but getting paid.
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    So I may want to come back to this, but I'm going to let them go ahead, Mr. Chairman.
    Mr. EVERETT. Thank you. Frank?
    Mr. MASCARA. Good. Thank you, Mr. Chairman.
    I resist the temptation to make light of these very serious charges, but it reminds me of a sitcom that Larry Storch played in called ''F Troop.'' You know, these are very serious charges, but then I had to look to other alternatives. You know, was it total ignorance, incompetence, or by design in some instances, which could be very serious, as it relates to perhaps a further investigation of the allegations here.
    But I'll get to one of the many questions I'd like to submit to you, Mr. Billik, some questions that maybe perhaps you could reduce to writing and respond to me at a later date?
    Mr. BILLIK. Sure.
    Mr. MASCARA. Getting back to Ward 4–A, which was renovated into a nursing home care unit and never used for that purpose, my question is: Who ultimately had the authority to use these renovated spaces for acute care patients? And as I said earlier, the closest one (nursing home) was 110 miles away in Columbia, SC.
    And the other part of that question is: Were you able to ascertain—did you ask the people in your fiscal department the cost involved in contracting out those services as a result of not using those 38 spaces as a nursing home care facility?
    Mr. BILLIK. No, sir, there was not a discussion about the contract cost for nursing home care. As stated earlier, we did not have patients waiting for placement in a nursing home care unit. The decision was a decision to continue to keep the number of acute care beds at the same level while the construction of a medical unit took place. The decision to do that was made in concert with my supervisors and concurred with.
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    Mr. MASCARA. Without regard to the cost? Didn't somebody—in today's environment it costs about $3,000 a month or more, depending on where the home care facilities are located. Were you able to ascertain what the costs were involved in that decision that you made, or whoever made it? Did someone ever say to you, it's all right not to use this as a nursing home care unit rather than an acute care facility?
    Mr. BILLIK. Yes, sir.
    Mr. MASCARA. Who? Who was that?
    Mr. BILLIK. Well, first, it would have been Dr. Higgins, who was then the Regional Director, but, subsequently, when Mr. Deal, who was the new Network Director, came to Charleston, we had a lengthy discussion about this very, very unit.
    Mr. MASCARA. Were you suspect that something was wrong when they activated the funding for the unit and the unit was not a nursing home care facility? And what were those funds used for? And how much did they amount to?
    Mr. BILLIK. The funds to construct the unit were used to do exactly that. The personal—all of the funds that were identified for the equipment were used to buy equipment for that unit. The funds for personal services or people, dollars were used specifically for people.
    At the time that the projects, the renovation projects, that were going on in the Medical Center were concluded, we would have activated that nursing home care unit with our existing resources, sir.
    Mr. MASCARA. Do you have unilateral authority to spend funding for operations other than what their intended uses were?
    Mr. BILLIK. Not—no, sir, not generally.
    Mr. MASCARA. So to whom do you speak in that regard? Is there some immediate superior that——
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    Mr. BILLIK. Yes, sir, in this case now it would be my Network Director.
    Mr. BILIRAKIS. Would the gentleman yield at this point?
    Mr. MASCARA. Yes.
    Mr. BILIRAKIS. And you can take some of my time, Frank.
    Back to the—continuing with the nursing home thing, Mr. Billik, you made the comment that there was need—you determined that there was no need for nursing home use, but in taking a look at the Attorney General's—the Inspector General's report here, allegation one, they stated that—let's see, ''the former Director stated that there was a strong demand for nursing home care beds in the Charleston area and he could fill the 38 NHCU beds almost immediately if a decision was made to open the NHCU.'' And it says, ''His assessment of the need for nursing home beds was supported by comments we received from staff in Congressman Sanford's office and the fact that there are 33 active nursing home care contracts for Charleston area veterans.''
    So I guess it seems to belie, if you will, your statement that there was no need for them at that point in time, and therefore, you used it for another purpose.
    Mr. BILLIK. May I speak to that, sir?
    Mr. BILIRAKIS. Well, by all means—Mr. Mascara has the time, but yes.
    Mr. BILLIK. What I referred to was, again, going back to a waiting list. The truth on nursing home beds in Charleston, that Charleston in fact had the greatest deficit of nursing home beds in that particular network, and the deficit was identified in community nursing home beds, in VA nursing home beds, you know, and State veteran home beds I think was the third factor that was looked at.
    Yes, there was a need for nursing home beds in the city of Charleston; no question about it. At the time we made the decision to not activate this unit, it was based upon the fact that we were placing successfully those veterans requiring nursing home care at other sites, using other resources, whether it be the resources at Columbia or whether it be the contract sources.
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    Mr. MASCARA. I'm just wondering whether, you know, that made fiscal sense, given that you're talking about 38 beds at $3,000 a month; you're talking $114,000 a month or $1,300,000-and-some annually, whether that decision was the right decision to make, given that you had a deficit in the beds in that region and that people would have to travel 110 miles to get a bed. I have a problem with that.
    Let me ask one more question, Mr. Chairman, to Mr. Clark.
    Mr. EVERETT. Please go ahead, and if the gentleman will yield, I'll give extra time.
    Mr. MASCARA. Thank you, sir.
    Mr. EVERETT. I'm trying to get something square in my mind, too. Did you use the activation money in any other way?
    Mr. BILLIK. No, sir.
    Mr. EVERETT. No, activation money was not used to cover budget shortfalls?
    Mr. BILLIK. No, sir.
    Mr. EVERETT. And activation money is still there and they will not need additional money?
    Mr. BILLIK. As I said earlier, Mr. Chairman, when the unit was activated, it was our intention that we would activate that unit with the resources that were there, present at Charleston at the time. We would have not asked for any more resources.
    Mr. EVERETT. And those resources that were originally intended for that are still at Charleston——
    Mr. BILLIK. Yes, sir.
    Mr. EVERETT (continuing). And have not been used for anything else?
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    Mr. BILLIK. Yes, sir.
    Mr. EVERETT. I appreciate the gentleman yielding to me. Please continue.
    Mr. MASCARA. I'm generally disappointed after reading the Inspector General's reports and given the information that we've had here today—it appears to be, and I say it with tongue in cheek, that we've let the ''fox in the hen house,'' that we need to talk to somebody that doesn't have a ''DVA'' in front of them. But, Mr. Clark, I assume you read the statements being presented here today? Have you read those?
    Mr. CLARK. Yes, sir.
    Mr. MASCARA. Including the reports of the Office of the Inspector General?
    Mr. CLARK. Yes, sir.
    Mr. MASCARA. Are you concerned about these findings?
    Mr. CLARK. The findings regarding Charleston and Pittsburgh? Of course I'm concerned. I did read them thoroughly. I think clearly in both instances there were decisions made that, were they given the opportunity to do it over again, would probably do it differently. There are corrective measures that need to be taken and have been taken. So, yes, I was concerned.
    Mr. MASCARA. Would you recommend further investigations or looking into these matters, especially as they relate to South Carolina.
    Mr. CLARK. I think things have come up in the hearing today that seem to be revelations or new accusations that I was not aware of before that probably warrant a review by the OIG or some other office.
    Mr. MASCARA. So some people should be reprimanded and fired and perhaps we should go forward with an investigation, and as our Chairman said, if we need to put people under oath and take depositions, that we should do that to get to the bottom of this? I'm just totally uncomfortable today in the outcome of these hearings. I mean, they've been revealing, but I just don't see anybody stepping forward and saying—with the exception of Mr. Cappello who has said, ''hey, I was involved; I take responsibility,''—and that's the kind of things I like to hear, to admit that they made mistake, are going to correct those mistakes, and I'm hoping that the new network system will certainly correct some of these problems, but I'm waiting for someone to say, ''We did it. We made a mistake.'' Thank you, Mr. Chairman.
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    Mr. EVERETT. Thank you. Mr. Bilirakis.
    Mr. BILIRAKIS. Well, Mr. Chairman, that word ''accountability,'' it seems like everybody uses it, but not too many practice it.
    Mr. Clark, you just made the comment, the same sort of thing, I guess, we keep hearing, that ''I wasn't aware of some of the problems until the hearing here today.'' You know, it makes me wonder. We all have a job to do. Some of it is written in a job description; most of it is not. Particularly when one reaches a point of leadership, everything should not have to be down there in black and white. We have a job to do, and you're the head of a Medical Center, and you're supposed to know everything that's going on in that Medical Center, everything takes place in an efficient manner, and there's no perfection. It definitely doesn't exist, but it is certainly a lot better than what we've been hearing. And the primary concern should be the veteran. And, still, nothing—nothing is done, and over and over and over again.
    I've been—this is my 15th year on this committee; I have 15 years in the Congress, and we just keep hearing these things.
    Mr. Clark, you—and really I'm going to the top, because if there's a culture problem, I think that's basically where the problem lies. But you stated—it was in your written testimony and you stated orally also—''If we intend to hold our executives accountable for the misconduct, I believe we must support them fully in those instances in which they are not at fault.'' And I commend you for that statement because it's true; you've got to stand by your people, and I don't disagree with that.
    But how about in instances where they are found to be at fault? I mean, can that statement be expanded to include transferring and giving a pay raise to an executive found guilty of sexual harassment? Is that holding him accountable for his actions? Is promoting someone with a salary increase, I might add, a proper means of holding that individual accountable for misconduct? I mean, hell, let's penalize him; let's send him down to St. Petersburg, FL, particularly, or let's send him to Texas, or whatever the case may be. My God, is that accountability?
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    I commend you on the one hand where they're found to be, you know, where they're found to be innocent, standing by your people, and you should; I think that's great.
    Mr. EVERETT. Will the gentleman yield?
    Mr. BILIRAKIS. I'll be glad to yield.
    Mr. EVERETT. Mr. Clark, I refer you to page 9 of the IG report, the bottom half of the first paragraph. You heard Mr. Billik's testimony under oath about my questioning on activation funding being used, and I will quote from the IG report that says, ''Since NHCU was not activated, the salaries and benefits portion of the activation funding in fiscal year 1995 was used to support general operational needs in the Medical Center. The $1.35 million then became part of the Medical Center's base amount for future, 1996 and beyond, budget years.''
    How do you reconcile that with Mr. Billik's statement?
    Mr. CLARK. Well, the activation funds are separate from construction funds. Activation funds become part of the budget, and as you heard in the earlier testimony, that money remains in the budget, and that's why the answer was given to you as it was earlier, that once that nursing home is opened in the end of next month—or the end of the year, I should say—the money to support the staff to open that unit is there in the budget. That's why the VA will not be asking for additional funds to support the nursing home when it does become operational. The money is there in the budget.
    Mr. EVERETT. I appreciate the gentleman yielding.
    Mr. BILIRAKIS. Please continue, Mr. Chairman.
    Mr. EVERETT. I guess I'm being a little thick-headed today; I'm having a problem understanding how the IG, on the one hand, says the money was used and how, on the other hand, you're testifying that the money was not used.
    Mr. CLARK. The money was in fact used to support other medical center services. It was not used for the nursing home as it was intended.
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    Mr. EVERETT. Well, Mr. Billik had just testified that the money was not used.
    Mr. CLARK. It was not used for nursing home staff because the nursing home was not opened.
    Mr. EVERETT. I'm sorry, but that's not what I asked. I asked was it used for operation of the hospital.
    Mr. CLARK. It was, in fact, used for the operation of the hospital, not for the nursing home.
    Mr. EVERETT. I'll yield back my time. I appreciate the gentleman allowing me——
    Mr. BILIRAKIS. Mr. Clark, you recently assumed the current duties as Chief Network Officer, a big job, to be sure. What was your job—you had been with the VA quite a while?
    Mr. CLARK. Twenty-three years.
    Mr. BILIRAKIS. Twenty-three years. Prior to then, this particular function, what was—were you ever Director of a health care center?
    Mr. CLARK. Twice before. For the last 5 1/2 years I was the Director of the West Los Angeles VA Medical Center, and 3 years prior to that, the Director of the Reno VA Medical Center.
    Mr. BILIRAKIS. I see. So you've got some experience. Well, sir, do you believe that transferring and giving a pay raise to an executive found guilty of sexual harassment is holding him accountable for his actions?
    Mr. CLARK. It would seem not, not someone who is guilty of sexual harassment.
    Mr. BILIRAKIS. Did you—you didn't have any input at all into the transfer of this one particular individual to Bay Times, FL? A couple of them were actually transferred down there, one for sexual harassment.
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    Mr. CLARK. I don't—I'm not sure I know which individual you are referring to, but I guess to answer your question more broadly, I would not have been involved in any personnel actions prior to assuming my duties at the end of August.
    Mr. BILIRAKIS. Well, but when these things take place, certainly you all are aware of it. I'm not saying—you're not the head of the VA or anything of that nature, but you certainly are aware of it. I mean, does that rub you wrong, to have heard that—you know, I don't want to really go into names here, and whatnot, but I think you know what I'm referring to.
    Mr. CLARK. Stated as you have, yes, it rubs me wrong. I don't know, the details of that case, and, obviously, each case has to be considered separately. Philosophically, if you're asking me, do I believe that executives should be rewarded if they've been found lacking in character or performance, certainly I don't think they should be.
    Mr. BILIRAKIS. Why in the hell does it take place then? I mean, you've been a part of the system all of these years. Why is done that way then? Why? I mean, is it—and we talked about this in the last hearing. Is it basically a lot of the laws that we, Congress, has put on the books which kind of forces some of these deals to take place, some of these termination deals to take place, and this sensitivity about being—you know, violating somebody's rights and that sort of thing? Is that what does this, these things?
    Mr. CLARK. Some of the laws that are created to provide protections for individuals do make it difficult for the agency to operate with as much swiftness or flexibility as we'd like. Clearly, that's the case.
    Mr. BILIRAKIS. And, yet, you know, a lot of us go into the field, visit the centers, et cetera—I don't know, has anyone ever been taken aside and say, ''Hey, Mike, we could function a heck of a lot better if some changes were made here maybe to improve things.''?
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    You know, the thing that bothers me, that really grabs me badly here, Mr. Chairman, is you all have gone into these details which are so very important, and I'm not belittling those—forgive me; I don't mean to insinuate that, but really I think what it comes down to is the President of the United States, as powerful as he is, is accountable. We have a little bit of power; we're damned accountable. The president of a corporation, all the officers of a corporation are accountable to the stockholders. It seems like practically everybody in the world is accountable except maybe some of our departments here, where it seems like you have this culture thing that Mr. Clyburn keeps referring to, rightly so, and there's almost a feeling of lack of accountability. ''Well, I don't have to bother to answer to anybody because my peers are going to basically always be there for me or else I'm going to kind of get rewarded, in spite of my conduct.'' And that really grabs me pretty darn badly.
    And I guess we tried to cure that, and hopefully, we have cured it, or are in the process of curing it, when it came to the sexual harassment situations, through our legislation, which is something that we tried to do years ago and we were convinced by the VA that there was no need for it. They tried to do it again, didn't they; they tried to convince it there wasn't a need for it, and it seems like something like that's got to be done here now. And I know I keep talking about the IG, and only because I know if the people in the field feel a little more confident that they have somebody to go to to complain or blow the whistle, if you will, without hazard to their job, losing their job, that they might be a little more forthcoming. And that's why I keep offering the IG, and maybe some sort of a change there.
    Mr. Chairman, again, I can't thank you enough for holding this hearing. But here we go again; you know, I don't think I'll be here another 5 years, but if I were, I think we'd probably—I've got the feeling—why do I have the feeling we'd be sitting here 5 years from now covering the same stuff?
    Mr. EVERETT. That's certainly what frightens this chairman, and I would have to agree with the gentleman and point out about the current system that any fair-minded person would take a look at what's happened with the current management system, and I'm talking about the entire system, and, frankly, it promotes this kind of action. It promotes this kind, and encourages this kind, of terrible management power. I mean, you do something bad and you get promoted—just move on.
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    At this time, Mr. Doyle.
    Mr. DOYLE. Thank you, Mr. Chairman.
    Let me start by thanking you. I know that Mr. Bilirakis and I, as members of the full committee, appreciate you giving us the opportunity to participate today, even though we're not members of the subcommittee. I'll be brief, too.
    Mr. Cappello, I don't want you to feel lonely sitting there. So I've got a few questions. But it seems to me that, according to this IG's report, we've had several factors that contributed to this situation in Pittsburgh. We've got a former Medical Director in the Eastern Region approving a nonrecurring maintenance project for quarters without ensuring that the quarters' income could support the expenditures. We've got some nameless, faceless official in the Real Property Management Office in Central Office telling Medical Center officials that they could authorize significantly higher expenditures on quarters than allowed by VA policy. This same individual, who we don't know who that person is, did not provide you and Medical Center officials with an accurate model to determine the quarters' spending limits, and the VA didn't implement uniform design standards required by OMB.
    We also found that your local managers in Pittsburgh were local management of the interior renovation project, and you, the Director, your selections of nonstandard quarters amenities increased spending over the planned levels. It seems to me we've got four culprits in varying levels of culpability in this situation, and that the real culprits seem to be sitting here in Washington, DC. Yet, those people aren't here today, but you are.
    And I've read your testimony, and I see that you take responsibility for all that occurred under your watch. That's admirable. That's refreshing. We don't see it that much here on this committee and elsewhere in life.
    And I've watched your performance as Director of this Medical Center, being intimately involved in that Center. Being a member of the Veterans' Committee, having a father that was 100 percent service-connected disabled veteran, and really caring about just what goes on in Pittsburgh, I have to say that, aside from this single incident here, you've done a good job in Pittsburgh, and I think Frank Mascara and I and others have recognized that.
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    I want you to speak specifically to the part that you've played in this. I think we've documented quite clearly that you got some bad direction from Washington, and that's why this overrun took place. But you have been specifically singled out for selecting nonstandard amenities, and we heard testimony about faucets and a whirlpool. Did you personally select these amenities, and had you to do it all over again, Mr. Cappello, would you have done it differently?
    Mr. CAPPELLO. If I had a chance to do it all over again, I would have done it differently. I did have input into these selections, and I was under the impression, if they didn't fit into the parameters of the contract that they would have been deleted. I had no idea, as I've pointed out, of the cost of those amenities. I would not have done it.
    And I would say that I think we've taken action, including myself—my supervisor put specific language in my performance plan to ensure that I would do a better job of quarters management. I think I've learned a lot about it; I didn't know much about it at the time, and we've also taken action so that we could control these things better in the levels of management beneath me as well.
    With regard to those amenities, I had input into those selections and I thought they fit within the parameters of the contract.
    Mr. DOYLE. You know, they say that hindsight is 20/20, and I would just hope that in the future—and I'm convinced from what I've seen in the IG's report and the recommendations that have been followed that this situation has been corrected in Pittsburgh and can't occur again. I hope you can appreciate the pain that this causes veterans in Pittsburgh, and all of us that work on behalf of veterans and those of us that feel strongly about veterans here on this committee, that these are the types of instances that bring down the whole system.
    We have people, not members of this committee, but we've got Members of this Congress that don't think we should have VA hospitals anymore, that that should all be folded into the private sector. I disagree with them drastically. They don't understand the special needs that VA hospitals and the special needs of veterans that are taken care of in VA hospitals. But things like this is what helps bring this whole system down.
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    And I'm going to just focus on you, Mr. Cappello, because I'm not a member of the Oversight Subcommittee and I'm just here because Pittsburgh's been mentioned and the facility's in my community. I think there's been plenty of comment on the other people on this panel today.
    I hope you've learned from this. I think you're a good manager in Pittsburgh. I think this is an isolated incident. I think your performance since that time has been admirable. I think it says a lot about you that you've had the courage to come here today and say you were wrong and you've made mistakes, and I know members of this committee appreciate that also. I hope I don't ever have to see you or anybody from the Pittsburgh VA in front of this committee again for a situation such as this.
    Mr. MASCARA. Will the gentleman yield?
    Mr. DOYLE. Yes, I would.
    Mr. MASCARA. I just have one question, Mr. Cappello. And when I made reference to the ''F Troop''—on page 5 of the IGO's report, there was a construction company that literally began construction without a signed contract?
    Mr. CAPPELLO. Yes, sir.
    Mr. MASCARA. How? It says here that ''the contracting officer told us, the IG, ''that he permitted the construction work to go forward during negotiations to help the company retain workers.'' Now what kind of excuse is that?
    Mr. CAPPELLO. They were already working on two of the sets of quarters, and the thought was—and this is after the fact, I didn't know this at the time because I didn't involve myself in the actual contract——
    Mr. MASCARA. And the other part of the question——
    Mr. CAPPELLO. The idea was that he could stay onsite there.
    Mr. MASCARA. But you don't begin a construction project without a signed contract.
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    Mr. CAPPELLO. I agree.
    Mr. MASCARA. Never. And the other is that, apparently, the contractor was not doing a good job or couldn't complete some work, and that station employees also performed work on that project. Was the contract that was signed, somehow the cost of the station employees, was that deducted from the contract, from the original contract, or did he receive full payment?
    Mr. CAPPELLO. What——
    Mr. MASCARA. If you don't have the answer, you can get back to me, but I——
    Mr. CAPPELLO. Well, what was projected is that the contract, as I understood it, was for $86,000 to do probably 80 percent of the work in the house. What was supposed to happen is our station labor, we thought, could do it more economically, and so that the total cost of the renovation was supposed to be around $107,000, $86,000 to the contractor and the rest by station labor. And I think in my testimony I showed how the costing practices of the VA system at that time led to what I think were inaccurate cost estimates by our people.
    Mr. MASCARA. Well, there are a lot of people culpable all over the place, but I thank you for your response.
    Mr. CAPPELLO. I would only just say one thing, that I appreciate anything good that's happened in Pittsburgh under my watching, and my greatest regret is in any way that I let anybody down.
    Mr. EVERETT. I'd like to thank all of the members of the committee and all the panelists for appearing here today.
    I have a couple of housekeeping things. Under Secretary Kenneth Kizer in July issued an information letter on relationships between managers and subordinates. I ask unanimous consent that it be made part of the record.
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    [The information follows:]


Offsert folio 83 insert here
Makes p. 161

    Mr. EVERETT. In addition to that, let me just state for the record that Mr. Calhoun retired after additional charges were brought against him.
    Mr. BILIRAKIS. Mr. Chairman——
    Mr. EVERETT. Yes?
    Mr. BILIRAKIS (continuing). If you will yield for—now that's—I read that housekeeping, that sensitivity letter by Kizer. Kizer. Where in the world has all this been all these years? All of a sudden, the newspapers pick up and broadcast this stuff, you know, and all these things are taking place and all of that, and all of a sudden, the head of the VA, his assistant, the doctor in charge, the heads of the Medical Centers, all of a sudden, they're issuing all of these edicts and changing all of these management practices, and whatnot. I mean, these are supposed to be intelligent, educated people, trained, many years in the system, many years in management, and then, all of a sudden, a sensitivity letter is issued regarding a relationship among a supervisor and an employee. I just—it's hard to accept.
    Mr. EVERETT. The gentleman's point is well taken.
    Members have indicated that they would have additional questions for all the panels to respond to.
    Well, we've been here right on 5 hours. I hope we've learned something and accomplished something.
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    As I have stated earlier, we will continue to have these hearings as long as it takes to reform the VA. Certainly, I do recognize there are many dedicated managers and directors who adhere to the high standards expected from them and who are very careful with taxpayers' dollars. However, I do point out that I am not comfortable, as many of my colleagues, that we have penetrated the culture within the VA that finally says we're really going to correct ourselves.
    And, Mr. Clark, I say to you that, again, you'll have to show me. I've taken this at face value now for going on 5 years, and I don't intend to take it at face value any longer.
    As Mr. Doyle pointed out, we believe in VA hospitals. There are many who do not. And the examples that we see being set with 12 Directors transferred to other jobs, 1 given a $25,000 buyout, charged with sexual harassment—this does not go unnoticed by the employees of VA, and it's beginning not to go unnoticed by the public in general. We want the VA to survive, but I must tell you that the VA is going to have to learn to spend its money much better than it's spending its money, and it's going to have to certainly change some management styles, and, again, the culture—the word that we all use—within VA that pretty much listens to these 5-hour meetings and then goes out and changes nothing. I hope this committee meeting is different, but that will remain to be seen.
    Members will have 5 legislative days to revise and extend their remarks and to submit questions to the witnesses for the record.
    Testimony will be available following the hearing on the committee website, WWW.HOUSE.GOV\VA.
    The hearing is adjourned.
    [Whereupon, at 2:27 p.m., the subcommittee adjourned subject to the call of the chair.]
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