Thursday, July 29, 2010

Could we get a real leader?








"The US Dept of Veterans Affairs is the second largest agency in our system of government," declared US House Rep Bob Filner this morning as he called to order the House Committee on Veterans Affairs, "and each year, they are authorized billions of dollars to care for our nation's veterans. Miscellaneous obligations are used by the VA to obligate funds in circumstances where the amount to be spent is uncertain. They are used to reduce administrative workload and to facilitate payment for contracted goods and services when quantities and delivery dates are unknown." Bob Fliner is the Chair of the Committee and Steve Buyer is the Ranking Member. In his opening remarks, Buyer noted that, "The hearing today is very timely in light of the VA's announcement to our offices that they plan to halt the development of what the Chairman just talked about -- our integrated financial accounting system [pilot program entitled Financial and Logistics Integrated Technology Enterprise]. I, franky, was surprised the VA would take this step with the supposed blessing of OMB but without any plan for the real future other than to limp along. That's what surprised me the most." The main issue for the hearing was the VA's inability to track millions of dollars filed under "miscellaneous."
The Committee heard from three panels. The first was made up of the GAO's Susan Ragland, the second by the VA's Edward Murry and the third by the VA's Jan Frye. The first two witnesses were accompanied by others, Ragland was accompanied by the GAO's Glenn Slocum. After Ragland finished her opening statement, she was asked a question.
Chair Bob Filner: If you had to give a grade between your initial report and now, what would you give?
Susan Ragland: Oh.
Chair Bob Filner: I'm a teacher, so.
Susan Ragland: Oh, I guess I'd say somewhere between a C+ or a B-. Somewhere in there.
Chair Bob Filner: Sounded like an F to me, but what do I know?
And we're opening with that because it's a call everyone can follow -- whether they agree with it or not (I agree with the call). We're jumping ahead to US House Rep Cliff Stearns who picked up on the grade later in the hearing.
US House Rep Cliff Stearns: Ms. Ragland, you gave this exercise a B-. Now the report in 2008 was roughly 5.7 billion miscellaneous obligations that were unable to be identified as how they were spent and now it's 12 billion in 2009. I mean, so it looks like it's jumped twice. So the problem has gotten . . .
Susan Ragland: Twice as big.
US House Rep Cliff Stearns: Twice as big. And wouldn't that mean that they flunked? I mean, wouldn't you have to be honest to yourself and say, "It appears to me that nothing's been done"? I mean if this had, if you couldn't get $6 billion -- find out where it was spent in 2008 and now it's 12, following this extrapolation, it will be 24, 25 billion when you come back here again with your GAO report. At what point don't you think that there -- How can you say that they're passing?
Susan Ragland: Well you're making a really good point and really the thinking that I had behind my response was that I do think VA is making efforts in these areas and so --
US House Rep Cliff Stearns: So they get a B- because they're making efforts when it doubles?
Susan Ragland: Well.
US House Rep Cliff Stearns: Would you -- would you have a student that --
Susan Ragland: They do-they do have the policies and procedures in place and they are taking actions to monitor them and that's the information that we got from the MQAS [Management Quality Assurance Service] service, that they are doing inspections and finding these things which is what we would look for any agency. That they are looking --
US House Rep Cliff Stearns: I, I understand you're being diplomatic. In reading the summary in your report, you say there are "serious longstanding deficiencies we identifed that are continuing." So here, 2008, 2009, you say these deficiencies -- serious long-standing deficiencies are continuing and that's not very optimistic to me. And then you went on to say that "serious weaknesses continue to raise questions concerning whether VA management has established the appropriate tone at the top necessary to ensure that these matters receive the full sustained attention." So in both the statements I gave you, it appears that the management's not connecting, that you've identified long-standing deficiencies that continue and these serious weaknesses raise further questions. So I think you've done your job. I think you have to be woman enough to say these folks are flunking and you've got to be a little bit more draconian in your statement. Now let me ask you this question, you mention in your report they have outdated systems. Does the VA have the technilogical capabilities to do this? What do you mean by outdated systems?
Susan Ragland: You can take that.
Glenn Slocum: There are -- VA systems sometimes revert to manual processes in order to produce its year-end finan --
US House Rep Cliff Stearns: So they haven't used computers? They haven't use the internet?
Glenn Slocum: No-no, they do have -- they do have all that. But some of the reconciliations that they may need to do at year-end, uh, they have a MinX system which is used to, uhm, produce their year-end statements.
US House Rep Cliff Stearns: It's done manually then?
Glenn Slocum: It's not manually -- it's not totally manually. But there are, uh, reconciliations that take place that, in a better world, would be more automated. And it effects their inventory systems at pharmacies and that's what we're talking about.
US House Rep Cliff Stearns: In 2008, did you bring that to their attention with the same statement that they had outdated systems?
Glenn Slocum: Well -- well there are two reports. You know, there's one with miscellaneous obligation and I think that's the one that Ms. Ragland gave them a B- on. The other report dealt with the financial report deficiencies and those are the problems that have been around since 2000 or longer. And maybe there would be uh -- [looks at Ragland] maybe you would give them a lower grade on that? I'm not sure.
US House Rep Cliff Stearns: Okay, well then the statement says "a lack of sufficient personnel." Uhm, have you found that the personnel is one of the serious problems that they have? Personnel that either don't have the appropriate knowledge or skills or they just don't have the personnel?
Susan Ragland: That's been one of the independent public auditors' findings in the financial reports. And that's been over-over years.
US House Rep Cliff Stearns: Was that true in 2008? That same conclusion?
Susan Ragland: I'm not positive, I believe so.
US House Rep Jerry McNerney noted that fraud seemed very likely in the conditions Ragland described in her opening remarks (at "a level that would be scandalous") and voiced the belief that they should ''bring that to light before the press does, before outside activities do." McNerney also noted that the VA's plan for solving the problems, "those seem a little bit far off" (2011 and 2012). Ragland noted that announcements by the VA in 2008 of deadlines to be met have not been kept by the VA and have been extended.
US House Rep David Roe: I would think that when you have a -- Obviously $12 billion is a lot of money and it's a lot to look after, but there should be a plan that when this isn't implemented and you don't find it, someone ought to be held accountable and-and-and heads ought to roll. And clearly what Congressman Buyer said in the private sector [you get fired], that's clearly what happens. People get fired.
Susan Ragland: Yeah.
US House Rep David Roe: Is that what happens here? Or do we just don't do anything or what do we do?
Susan Ragland: Uh, I don't know if that --
Glenn Slocum: I would just say that OMB Circular A-50 addresses this point. You know, one of the things it talks about is holding people accountable for the remediation of these problems. But we have not looked at the extent to which that's actually taken place. It's part of a monitoring mechanism that should be there. But we haven't looked at that.
US House Rep David Roe: And I think -- and I agree with Congressman McNerney, my colleague, is that it reflects poorly on the VA which they don't want to be -- I mean, I understand that they want to do a good job -- and this Committee if we allow that to happen and if we come back a year or two years from now and the same thing's going on, what happens? Is there any corrective action that can be taken in your recommendation, Ms. Ragland.
Susan Ragland: I think that the only thing that we have is to come back to you all and-and point that out. That's-that's our role. Yeah.
If it reads like the Committee had a consenus building, you're not mistaken. US House Rep Ann Kirkpatrick would note, "And Mr. Chairman, I share the sentiment of the other members of this Committee, that this is a very serious problem that we really need to stay on top of." Following that the Ranking Member would weigh in on a pattern, "I mean, right now, you could look back and the last three or four [VA] Secretaries -- I mean, they have, since 2000, increased these directives without execution." He also wondered that "the VA's own audits showed a continued disregard for your recommendations."
Welcoming the second panel, Chair Bob Filner offered a warning: "I would not underestimate the anger that my colleagues feel on this on both sides of the aisle." And for the second panel, refer to Kat who is reporting on that at her site tonight.

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