Transcripts For CSPAN2 Veterans 20240705

Is extremely rare. But friends dont have to be. When youre connected, youre not alone. A house Veterans Affairsn. Subcommittee hears testimony about efforts to improve the va Financial Management. Officials from the Veterans Affairs department spoke specifically about the agencys Financial Management Business Transformation Program which is the third attempt to modernize its financial and Accounting Systems good afternoon. The subcommittee will come to order. We are here to review the progress in the Financial Management Business Transformation Program with efm bt, the vas third attempt toie modernize the hodgepodge of aging and adequate financial and Accounting Systems. The systems are a serious problem. Every year the va barely manages to pay the Financial Statement audit with a clean opinion despitefi carrying the same Material Weaknesses and deficiencies. At the same time the departments Spending Continues to be much similar to the wild west. Its been nearly ten years since the former senior procurement executive blew the whistle with billions of dollars of unauthorized commitments and nothing isea fundamentally changed. With so many purchase cards and so many different facilities and no central tracking the department is practically helpless to enforce its policies much less rule out the waste and fraud. Basic Financial Management functions stressed the capabilities of the systems like maintaining records when they transfer to the care and aarp funds. When the committee asked basic questions about how the funding was handled during the last month securing the va witnesses struggled to answer. Additionally one witness showed contempt to members for trying to perform the basic oversight duties. This situation is untenable and i would appreciate the Witnesses Today are attempting to solve it. Simply put, fm bt programs have succeeded after a false start in 2016y and 2017 they relaunched the effort in 2018. Since then the integrated financial Acquisition Management systems has been implemented in the National Cemetery administration a few offices within the Veterans Benefits administration, the office of information and technology, the office of the Inspector General and part of the office of acquisition logistics and construction. The information we have come of the system seems to be relatively successful in those offices but theres still reason to be concerned. These organizations only added to a few thousand users in a small fraction of the budget. Implementing the major organizations like the Veterans Health administration and big spenders into benefit administration keeps getting pushed out and now is not scheduled for a rollout until 2024 and beyond. Meanwhile the programs programs implementation costs continue to rise. Im not suggesting that we have another on our hands. Like poor coordination between the various organizations within the va, struggles to fit the operational practices with commercial software and extremely long schedules. Its been three and a half years since the subcommittee last examined the program. I think veterans and the taxpays are overdue for an update. I appreciate the witnesses joining us today to help us better understand the challenges that you face. I look forward to working through the difficulties deliver the systems successfully. With that i would yield Opening Statement time to the Ranking Member. Thank you mr. Chairman. First i would like to say that im happy we are having this hearing on the it Modernization Program that is so important to the future s of the va. As the Inspector General reported, the use of the Financial Management system has led to manual workarounds that impede the va and congress ability to conduct oversight. It relies on it infrastructure that is decadesold and while we are aware of the failures of the healthcare record and supply chain modernization this program has largely gone unnoticed. This isca a good thing. When a program goes well we usually dont hear about them. Unfortunately the program is experiencing delays. The committee needs to understand the underlining issue the program is foundational to creating not only financial efficiencies but the department for the accountability and oversight. I hope to hear from the witnesses and of the account of how we can ensure the Successful End of time development. I wont belabor the point that ive made out every hearing weve had in the subcommittee this congress. Uc they obviously do not have the management infrastructure in place to coordinate and ensure the success of the large modernization efforts. There are bills that have cosponsored that would at the very least start moving them in the right direction and i hope that we can start acting on these soon in the house. It modernization is mandatory, not optional. Ioits in everyones interest to finally do this in a way that doesnt upset veterans and employees and waste billionst f dollars. Commitment to the processes across the department is essential to the futures success. Thank you again and i look forward to hearing from the witnesses this morning. Thank you, Ranking Member. I will now introduce the witnesses on the first panel. First the department of Veterans Affairs we have the deputy chief Information Officer for Software Product management at the office of information and technology. Finally we have thege Inspector General for the audits and evaluations at the office of Inspector General for the department of Veterans Affairs. If you all will please rise and raise your right hand. Do you solemnly swear under penalty of perjury the testimony youre about to provide is the truth, the whole truth and nothing but the truth . Thank you and let the record reflect all witnesses have answered in the affirmative. You are recognized for five minutes to deliver your Opening Statement. Good afternoon all members of the subcommittee. Thank you for the opportunity to testify today in support of the department of Veterans Affairs financial Transformation Program and its implementation of the integrated financial acquisitin Management Systems. Imar accompanied by the deputy chief Information Officer for Software Product management and the chief Financial Officer of the Veterans Administration. The va shouldnt continue to rely on its legacy financialpr Management System due to the enormous risk it presents to the operations. Its becoming increasingly difficult to support from the ability standpoint to not tocorrect new audit findings ani its not compliant with todays internal control standards. Im proud to report its no longer proof of concept it is a successfully replacing the antiquated 1980s era Management Systems. The va completed deployments encompassing 20 offices and 4700 users across the enterprise and that includes the entirety of the National Administration a portion of the Veterans Administration and several major staff offices including the office of information and technology and Inspector General. Of the users collectively processed over 3. 5 million transactions representing almost 10 million in the treasury disbursements. Achieving over 99. 9 of the time on june 12, 2023 the va went to live with its largest deployment to date increasing the current user base pay 60 . It was also the first time they went to live with the finance and acquisition components which demonstrates the viable solution capable of becoming the next generation financial acquisition solution. Its important to understand its not just a new accounting and acquisition system. Its crucial to transforming the business processes and capabilities so we can meet our goals and objectives and compliance with Financial Management legislation and continue to execute the mission to provide veterans with the healthcare and benefits theyve earned and deserved with so much at stake both in terms of taxpayer dollars and the departments ability to serve veterans it is vital that they accurately track and report how the funds are used. Among many other benefits help a ensure the proper tracking. With the timeliness and reliability of the Financial Information the va is gaining planning analysis and decisionmaking capabilities because of improved data integrity reporting functionality and intelligence. F the associated targets based on industry best practices. The process changes are a part of the strategy to resolve longstanding financial weaknesses and strengthen internal control. In contrast to the system that cannot capture the transaction approval the documents to improve in the lab supporting documentation to be attached to the transaction for the high dollar transaction they also eliminate the need for the external tool for the Financial Reporting. Perhaps most importantly they comply with reporting requirements from the office of management and budget at the department of the treasury to capture the attributes and conform to the standard general ledger. The Current System is unable to meet those requirementss which led to extensive and inefficient workarounds. Accordingly theyve established a dedicated toes chief experiene officer to coordinate the user interaction to change management activityc. Reestablished Lessons Learned reestablish Lessons Learned and deployment. They continue to stay on budget despite the changes and the successes wouldnt be possible without the ongoing support of congress and we appreciate the opportunity today to discusses this important initiative. We work with veterans foremostng in mind to modernize the financial acquisition managemens system and provide you with updates as you may further progress. We are focused on the work that lies ahead in the steadfast commitment to see this initiative through. This concludes my Opening Statement and i would be happy to answer any questions. The written statementai wille entered into the hearing record. You are now recognized to deliver your Opening Statement. Other distinguished members of the subcommittee thank you for the opportunity to appear today. I am a Senior Vice President of cgi federal. For the last five years i served as a project manager on the federals contract for the Financial Management Business Transformation Program known as fm bt. The subcommittees invitation im here today to provide the requested status update and underscore the federal ongoing commitments to the success of the program. As you knowui in 2016 the va established the program and Financial Management system. In compliance with applicable regulatory requirements to accomplish this complex modernization effort they select a cgi federal to deploy its momentum enterprise Resource Planning solutions. Momentum known in the va as the integrated financial Land Acquisitions Management System is an approved Financial Management system that is operational with many federal government agencies. To mitigate the program risk the program is migrating from the financial acquisition system using an incremental deployment approach and each deployment delivers specifically configured capabilities to the defiant set of organizations. The program has completed six waves deploying them to 4700 users at 20 different offices. While there are still milestones and challenges that had to be sure, theyve already delivered benefits to the finance and acquisition User Community and accommodating new regulatory requirements. A prime example the realtime Transaction Processing and today the users can easily generatemm the financial acquisition reports and drill down into the current accurate data on demand. This is because when transactions are entered they are first verified to meet the standards and automatically update in the ledger inon real time. They also have the capability to refresh reports hourly rather than daily and can run most reports of the Administration Level or other levels of the organization. Some similar reports took days to report over the resource intensive spreadsheet processes. As with other complex programs, theep success often depends on e focus on the Key Performance factors. The same holds true where the teams focus on collaboration and transparency enterprise standardization continuous improvement, diligent change management and execution of the riskbased approach with the program moving forward. To illustrate this point, let me share how the team has maximized the value of the user acceptance. In the first its towards the end of each wave. Tithis is a common and standard approach. Lessons learned taught us we improve the user adoption by having them perform handson testing of the functionality business processes much earlier in each wave, so we are flying to Program Implementation methodologies and apply this approach to the most recent wave. By helping gainingso an early appreciation theylo gain useful feedback to the management and training. It also allowed us to identify and resolve issues earlier saving both time and resources. I. E. End of the testimony where i began by reiterating the unwavering commitment to collaborate with the program to deliver theg entire user base fr the veterans. I look forward to answering your question. The written statement will be entered into the record. You are now recognized to deliver your Opening Statement. Chairman, Ranking Member and subcommittee members, thank youn for the opportunity to discuss the oversight of the va financial oversight management atchallenges. Since 2015 the audit of the Financial Statement has reported a Material Weakness due to problematic Financial Management systems. Full implementation could help resolve this Material Weakness and increase the transparency, accuracy, timeliness and reliabilitypl of Financial Information across the va. Accordingly we began oversight of the implementation shortly after in november of 2020. The prior modernization efforts fell in part because of poor planning and flawed execution combined with challenges, transitioning from the legacy systems. The decentralized oversightaw unrealistic timelines and adequate engagement of stakeholders and end users and minimal testing have plagued the projects. The resulting delays, changes interaction and user resistance carries deep costs. In the most recent Financial Statements the auditor found three Material Weaknesses into two significant deficiencies. The Material Weakness most pertinent to this testimony focuses on the limited functionality of theia Current System to meet the Financial Management reporting needs. Over time the vas complex andy antiquated Financial System has deteriorated and no longer meets the increasingly stringent requirements mandated in the treasury department. D deficiencies in the Financial Management systems areer illustrated in findings be made related to the funding which showed they lacked those as intended. The three reports found for thecomplying with reporting requirements however we identify concerns with a completeness ans and accuracy of the va reporting. Of the major cause for this is the reliance on several systems for payroll and purchase Card Transactions acquiring manualng entries my staff to increase the risk of the reporting errors. The practice of the manual expenditure transfers led to ths lack of transparency and accountability over the purchases seen in the audit on the care act funds. We found the staff not properly documenting the transfers and inadequate guidance from the office of finance. This happened because of the Financial Reporting limitations and the lack ofin oversight for that resulted in the medical facility staff determining on their own what constituted appropriate documentation. Additionally staff did notig follow basic controls like documenting purchasingti authority, splitting duties between requesting the items, verifying the goods were received. Ase a result we reported an estimated 187 million in costs. We issued two memoranda. One detailed they havent ensured they had the comprehensive reports needed to monitor the budgets. The Financial Reporting to consider addressing. In march of 2023 the audit found they needed to do more work to fully address the barriers related to the programs goal of stray streamlining the processes with a focus on contracts converted from the legacy contract system. The enhanced communication requirements developed methodologies we begin to follow the process on these recommendations. They could mitigate major issues and improve the va operations. These initial findings are Early Opportunities for improvement. That concludes my statement and i will be happy to answer any questions that you may have. We now move and proceeded to thu questioning and i will recognize myself for fivee minutes. During last months hearing the chief Financial Officer about the 714,000. 235 714,235 expenditure transfer. Thank you for that question. We had the ability now for those customers to actually trace expenditures down to that level that are able to load the budget and actually reflect expenditures against it. To give one caveat around payroll, and i think this is a response the va recently provided. We stated this as well that we do have to work with our interface partners predominantly on the payroll side to make sure that they are sending us the information to be able to trace it and record it appropriately against the right account so the answer is yes they will address this 100 . As long as the proper information is entered in. Good information in and out. The va struggles to manage its purchase card spending for the thousands of individual facilities make purchases and at the data on the purchases is fragmented. Can you explain why this is the case and how the system with track thates data . The purchase card ability to purchase with a purchase card is substantially different than what it is in the legacy system today. I would also differ as i know i am on a couple of subcommittees with them and they are making a concerted effort on reducing the use of the purchase card and driving users to contracts where contracts are appropriate but again i would defer to them on more elaboration on that effort underway. Thank you very much. And in last months hearing, they tell to the reduction in the vas improper payment but you still have a 3. 5 billion in the proper payment last year. The annual purchase card spending is about 5 billion. How much of the 3. 5 billion represents purchase card spending and would do system thm ever allow you to get that number down to or at least near zero . I will have to take that particular question for the record in terms of the amount. The report on the va care act spending found every single one of the 10,064 supply purchasers had some sort of procedural noncompliance. This led to your office questioning over 187 million of transactions most of which were made using purchase cards. Which of the Current Systems process the purchase Card Transactions, what is wrong with them and why is this such a big liability for the Financial Management . I think the issue with the purchase card comes down to oversight. Many purchase cardholders without appropriate oversight from the accountable officials theres nothing thats going to stop people currently. An official should be reconciling their spending on a basis to make sure that the purchases are appropriate and supported. So in your opinion are the supervisors not given good guidance on what is acceptable and what isnt in the processes were or are they not conveying that information down to their subordinates . I would say that its likely a mix of both of the situations. I understand the system went live in the office of Information Technology last week and all the purchase Card Transactions are now being run through the system. How is it that the process is different now, and what improvements has it made . Thank you for that question. I just talked a few minutes ago before the hearing to check in to make sure how things were going. The module is substantially different than what they currently do. We are consistently working with users to make sure they understand the differences. I would also tell you the reconciliation process is substantially different than what it is in legacy and so so far and again we are only one week and with that User Community. So d we have no issues that have been concerned or expressed at that time. I would yield five minutes to the representative for questions. Thank you, mr. Chairman. As the office of inspector igeneral highlighted in the report the need to modernize, the need for modernization for the Financial System is imperative. Largest agency in the federal government and has to rely on a 30yearold system to manage billions of dollars it receives from Congress Every year. The limited functionality off te Financial Management system continues to consider a weakness in the Financial System audit. Caner you explain the ramifications of not having a modern Financial Management system not only to your work but the success of managing the funds of the va . Without a modern system the va is likely to continue to have a Material Weakness on that audit. They have to continue to rely on manual processes and interventions to accomplish transactions. They will be lacking the transparency and accountability over the funds. I would say those would be the key concerns. How do you catch any mistakes . That would come down to is there a supervisor checking on that. Frankly im not sure that is always happening. Theres always a risk of error. Its more likely to happen when someone is having to manually process the transaction. It would be hard for me to characterize that. Its so far back in the past certainly people were not envisioning the current needs and environment. It would be a huge step forward. I am sure you heard about the manual workarounds that were a part of not being able to use the transfers of implementable funds. Can you provide some insight . Yes. Thank you for the question. It limits the ability to have a strategic Decision Making capabilities to be able to look across the enterprise and at the resources that weve been provided. It also limits the ability to implement new legislation and can provide the proper insight in terms of whats been spent and how quickly its been spent without using excel spreadsheets. You want to use the system of record to be able to capture that information when it comes down to the reporting on expenses that we have, the system is working as intended for the operating but certainly using the legacy system it has limitations that we are glad to help resolve. It was extremely difficult i cant imagine in the manual override how are you able to realistically forecast the next year of savings. That has been a challenge because of how the expenses are brought together by the object class they are lumped together. Certainly it allows us to be more dynamic in a more granular level what weve spent and it allows us to do more analysis as we look forward to using again the granular detail so the transparency and of the the regy is certainly enhanced. Thank you. I yield back. Thank you, representative. I yield five minutes to the representative. Thank you mr. Chairman. Basically he said people are involved in everything. I think that is fair sorry. Are you getting pushback on the field about the new system . As we get more and more into the va, what we are starting to see is people coming around to being encouraged by what they see and so i think that we are, i wouldnt say we are over the hurdle by any means because change is hard but i will tell you we are not seeing as much pushback as we were if you were to ask me this question two years ago. I understand youve got abou 4700 users out of the workforce, totall workforce of 400,000 thereabouts we have one half of 1 . What i will say is the largestt organization that we have yet to implement. I would also tell you that by design we want to make sure that we are addressing any improvements that we need to make with of the deployment strategy and also the complex program that they have remaining those obviously would impact veterans in some way. If wee dont do them correctly o we purposely established this in the manner that we have and we will leverage all of this improvement activities when we implement. Is there any chance that the delay of systemsil and Loan Guarantee and acquisition can be moved faster as you learn lessons or are you committed to as late as 29 . Right now we just completed a walkin on the Loan Guarantee and weve addressed the six items on how we will implement and we are in the process of baselining the schedule right now. Em as soon we finalize that we will finalize if theres opportunity to accelerate and move other programs to the left after we finalize that baseline. Very good. In your written testimony you talk about the two reports and the eight recommendations. I pulled the most recent recap of the program. Can you reconcile affirming your testimony with the updates . I will get back to you and take that for the record of that we will reconcile that it may be a timing issue on some of those that we will make sure weve got that reconciled for you. About at least three of them i can find the date february, 2023 they were still open and i still would like to see a response on your implementation of the recommendations. These are the concerns i have when i start looking back at some of the other software programs. At the conclusion slipped from 2028 to 2030 or later. Similar to the representatives question, why has the implementation caused increasing and can you guarantee it wont go above the 4. 2 billion mark . Thanks for that question. So, currently the projected lifecycle estimate is at 7. 46 out to 2047 which is accounting for the use of. What we will tell you is that based on the methodology that we are using to deploy, there will be instances from time to time where we find for example with a new interface that wasnt originally identified as you can imagine we are doing constant modernization across the enterprise so we are going to have discovery from time to time. The way that we are structured in an agile faction its allowed us tote continue to proceed to actually move other ways forward or begin activity on another way while we are pending getting more intel on modernization, interface or Something Like that. So although you are seeing some increases, but youre also seeing is the ability to deflect with that and to ebb and flow as the modernization efforts continue. We have the modernization thats happening simultaneously in our program the way we are structured. You have to be structured to be able to absorb that and to be able to flex with it. I understand. And i understand as youre going through this process there are enterprises and functions that nobody anticipated. Its like doing the renovation on an old home and you start finding additional things. Thats why all these jobs are based on typically time materials. However we are using taxpayer funds so im trying to establish some kind of cap, can you assure me we arent going to go to that 2. 2 billion range . That is the cost estimate at this point in time, sir. So that would be an estimate you cant guarantee thats where we are going to finish. The va spent over 1 billion bon this project so far. How much of that has your Company Received . Approximately 440 million. Since the inception of the contract in 2018. How much of the 7. 5 billion over lifecycle cost including implementing the system as well as maintaining it does your companye expect to get paid . Ive not even thought about that. Focused on just the implementation. So you havent run a lifecycle cost estimate to determine . We have not. So how is it that they have their estimate . If you were not included in that . It is the cost implementation plus the Maintenance Cost for whatever contract we have. At some point it turns over to the operations and thats a different way of looking at. Began ive got the lifecycle estimate but they had to get those numbers from somewhere and thats why im trying to figure out how much of it would be from you. They had to get some kind of estimate from you. We have data. Understanding the size and complexity theres a lot of basis that is used going into it weve got Program Costs related to the organizations. I understand. The overall categories of cost that we have so from the Technology Program management perspective its inclusive of the other contractors that are supporting the activity in that area so i would have to take for the record specifically. Kei will yield another five minutes. Thank you mr. Chairman. Executing a program is an incredible challenge in itself. The program with the modernization efforts that are currently not a recipe for failure. To now being acquired to integrate in the modern supply chain system thatur suffered frm years of delays. What are you as the leader able to do to mitigate the risk of the program . We worked significantly with the supply chain and in order to proceed understanding where the other initiatives are right now we are proceeding with integrating the legacy supply chain so as we move in, which obviously weve been working for the past two years but we are at the point now we need to start working on the implementation. Weve been coordinating with that office and they have all the requirements and we will continue to do that collaboration across the board and then we will be prepared for that integration. It allows me to integrate with whats available right now as im going to implement and also understanding that when the enterprise supply Chain Solution becomess available we will pivot and integrate with that future solution. We know we need to do it but we are going to integrate withes whats available right now so we can proceed. I think what i just laid out in terms of how we are going to actually do the future state for vha and at the end state when the supply chain is known as a solid plan to allow us to proceed. Thank you. Theres the Impossible Task of coordinating a number of Modernization Programs as well as including supply chain and hr modernization. How do they manage the development and delivery of these programs . Thank you for that question and for appreciating the complexity of managing these efforts at the same time. I think the solid process allows us to do this effectively. Number one i look at having the clear business objectives and number two looking at the solid Risk Management process. I look at the coordination with ofthe customer around the change management. Who was ultimately responsible for the time and coordination of these programs . Thats a joint responsibility. In the case of the Business Office Office Management and accountability. We focus on the technology and the security of the systems, so we use the process that falls under the cio. Do they have enough authority to make significant changes to schedule programs. Thank you very much, representative. I recognize you for an additional five minutes. I think i will yield for the timep being. How are payments structured in your contract . Theres a couple of different ways. There are parts of the contract . The contract is the timing materials and a lot of uncertainty. What we did at the beginning of the fiscal year we would look at the program to determine what work there is to be done in the next fiscal year to provide the estimates and then we are paid for that material. As some of the most importantan waves have been delayed by multiple years. Since they are all timing materials, the payments are determined by the work done. Weve got the estimates of this project is supposed to be and yetr as weve been discussing te smallest portion of them has been implemented and we have at the back and a lot more that is left to be done. How much is each implementation worth and roughly what percentage is that of the contracts annual value . If its not being based on the wave its own estimates of timing material and we have the total estimate of the cost of this project and we know that this is getting to the what is the eventual course going to be. We see that not that many people are being served right now or are being accounted for right now. The back end is where the work is going to be piled up and get a lot of this has been burned up already. So what im trying to get at is how are we going to reconcile that. Referring to the fact that is planning going on to determine the rest look like and the degree to which there would be the parallel combined and once we have that we will be able to provide a solidd estimate on wht the rest of the work looks like. Youre telling me you have estimates andd again when they look at this and see that there is a very small percentage of the y work that has been done ad the Contract Value a lot of that has been utilized already this is not reconciling. Does the structurera of this sound typical based on what youve seen elsewhere . I personally dont have any teams that have been involved in looking at the contract. There is a team in the office looking at the contract so i could take that for the record. I would appreciate that. Do you believe it is sufficient to drive accountability when they look at this contract someone is going to need too report back to us and help us understand if it was structured in such a way to provide accountability for the work thats being done based upon the projected total cost of the project . I wouldnt be in the position to answer that. Youve already spent five years and more than 1 billion to implement the system and seven offices. I understand the project has a lot of costs, got that. But this is an enormous amount of money to cover with a few of the offices. Wheres the money going besides the implementation of the waves . Its important to understand what it takes to implement and we have a large portion that is going to project management contracts to help us make sure the planning and execution and the documentations surrounding the project management and how youre going to implement. We also have data conversion which is a huge effort for us. We do a number of conversions up front to make sure the accuracy and the Development Effort in terms of Interface Development thats needed so substantial costs. This is an enterprise solution both acquisition and finance, so the cost is going to be significant to get it done. The other huge piece of the contract is the organizational change management to the substantial work weve been increasing some of the work based on Lessons Learned making sure we get the user the option as we need to. So to me theres a lot going on to make sure we get it right. This is exactly the concern that i have. As you go through and do these startupxa costs with the smallel institutions, we are going to have to do the same thing for the larger ones, are we not . We have probably about 300 additional users and a lot of activity around interfaces. Thats where a lot of the hard work is going to come in. We have been working for two and a half years now but we have a lot of information and understanding. Credit to them theyve actually been working on the data cleansing activities that is substantial for the data conversion the past couple of years that continue to do that. Theyve worked on standardizing the classification structures and where possible looking at standardizing the business processes so a lot of work has gone into the discoveries known. Again i still dont understand when you say that there are larger institutions we have to go through the conversions and the start up, how that is going to cost less than the much smaller organizations weve already brought on. As isot often the case when discussed. I personally dont find it funny this organization is language progress and it modernization. Theresbe no modernization acros the system. Has your staff begun efforts to standardize workflows using the new Financial Systems across the country . Thanks for that question. As i mentioned weve beenws working for the past couple of years we have standardized the classification structure so that they will have visibility at the enterprise level. They have the injury activity and others have open heart surgery for those organizations from the accounting perspective a lot of it is very similar. They are looking at it from the standardization perspective. It doesnt mean that they are universal and each medical center. We will work with them to make icsure we standardize as best we can the business processes. Given the uniqueness. I can tell you the Senior Executive thats leading that effort has field experience which i think is very good. Hes looking to do the standardization. And how long do you see this process identifying the practice . Our intent is that we will address that in the first couple of pilots so that we can make sure we take the Lessons Learned and that we are prepared at that point to evaluate and accelerate. We want to give a couple of pilots. Looking at full implementation what is the timeline . Right now on the schedule its 2029. We have a sitdown scheduled session coming up in the month of july based on the known direction with of the supply chain so we willsi start to lay that out more definitively. If its not prioritized. The transparency with the users all the way from the Senior Executive down to the person doingg the receiving is critical meeting people where they are. So the program is structured in a manner that we are geared for success the way that weve approached changed management and i think within 37 years i understand the cultural and difficult to change that they are going to undergo and i think you have to make sure people are heard and making adjustments where you need to. The risk to success if the user adoption is not prioritized . You hit the nail on the head of the biggest risk is the user adoption. The founded implementation and continuing to be a part of the culture that weon have as far aa tool and culture. We have three generations of users those that are five years or less or those that have been working with the va for two decades or longer. Ive been doing some scratching here and im with the chairman i just cant make the figures work. We certainly can give you the detailed methodology behind the lifecycle cost estimate. Is this scalable . There is less than 4 of the users that currently on the system. For the operations and maintenance, i just dont know how youre going to get there. Let me ask you a specific question though. Theres a huge percentage of your implementation and project management. Lets get a little more granular than your chart. How much is procurement, training,ti infrastructure organizational . Organizational change . Just trying to get a handle on why theres such a huge there ie percentage in Program Management. Thanks for that question. The Program Management includes implementation costs within that particular category as well as organizational change management in the piece for technology thats the hardware and licensing and where appropriately Interface Development worked so thats where i can tell you the preponderance of the category of things that make up those cost components. My question to your lifecycle the way youve got it laid out. I dont think youve got enough to get it done. We will see if its because youre going to have to get a whole lot more efficient as you move forward. We would expect to get efficient. The other thing i would offer that is a part of the office we have the independent group doing if lifecycle cost independent lifecycle cost right now for the program and that will certainly inform us if we are offbase with what weve done ourselves on this cost estimate and that is expected in the december timeframe. I willdo tell you in the summars that we mentioned, the word metric scattered throughout many of them. That goes back to what im asking here what are the metrics of moving forward that youre going to have to meet in order to meet your goals . I look forward to that explanation. Thanks very much, representative. A separate from the different supply chain modernization efforts i understand you need to integrate the system with an inventory Management System and still dont know what the management u system is going to make. How long have you been waiting for this decision and what problems has the uncertainty caused . Thanks for that question. As i indicated weve been s working even absent understanding what the future supply Chain Solution was there was still valid work we could do to move that particular implementation forward which weve continued to do. In terms of the inventory package because we are going to be implementing with legacy at least right now in the beginning until the supply chain is known we will integrate the package that is part of the application in order for the facilities to lymaintain their inventory leve. With the investment of time and energy and resources that youre using that you are going to once another decision is made that youre going to have to go through all the conversion work and everything again to have this duplication of efforts when a final decision a is made . Inn, terms of conversion for us, certainly supply chain would have to evaluate have to do conversion activities. We would certainly work towards that but once they understand exactly where they are going we have accounted for the understanding once they getin an enterprise solution we will move at that point and we will continue to work on that direction. Its supposed to be in the final state and what do you need to proceed to the final state . I can respond as it relates to the solution. What we are doing is implementing the inherent momentumum functionality across the enterprise. Theres two major components that are supplyem chain driven. One is the catalog ordering capability where they need to go ina and determine what they are ordering at the catalog. The other is the inventory piece. The other components have commitment from supply chain from the legacy integrating with legacy. How long have you been waiting for the decision ford what youre going to be dealing withpa in this system . I dont want to speak for how long theyve been working on the effort but its probably been almost close to two years and as i indicated we continue to work on the absence of understanding what that would look like so i dont think weve had a significant waste of time. Weve continued to move that effort forward. Is this a technical problem or lack of management. I think i would defer to the supply Chain Program office and im not sure weve got the right people here to answer that question today. I would be happy to take that for the record. Please do. You cant address a problem if you dont know who it is or who is responsible for it. In the current Inventory System how much improvement and what else do they need to truly improve the Inventory Management . It is an old system as well we are not using barcodes and they are ordering based on automatedn the software. Its people taking initiative to do whatra they are supposed to , the followed process. That is certainly part of it. A part of it could be the frustration with the system. Thats the purpose. What are the risks for the Financial Managementnt practice . I talked about the Material Weaknesses they would still be doing the manual workaround and i would say Bigger Picture you have to look at it the va recognized the need to replace two decades ago they were not successful in the lesser flight and they are now working i would say if the system isnt a successful, how much longer will it take, how much effort, how much financial resource. Im very hopeful that its going to be successful because obviously we are dealing with the system thats 40yearsold and its not meeting the needs so it really is vital the va does all they can to get the system online. What would it take to change their culture around the it modernization . Weve seen thel issue from the best practices and im assuming theres an even larger issue that contributed to the lack of success for the Modernization Programs. I think its been a challenging situation right now for a number of major systems all at once. Theres opportunities or the need for people to engage in stakeholders and define the requirements to come up with reliable and reasonable project schedules andpl cost estimates. I think its important that they do systems testing and the User Feedback stays at the forefront that they consider and they take the Lessons Learned from whatever systems are currently working or any other system theyve implemented, take those Lessons Learned and go forward with that. Can you please answer the same question . What would it take to change the culture . Thank you for the question. I think what we are finding is all these programs are not the same. Some in particular have the advantage of an early start and we are definitely looking at best practices to apply those to the other products so im excited about what we are seeing on the success to date in the early coordination and business process reengineering that happens so weve got the consistency andxc standardizatin of the business processes and incremental releases that allow you to do multiple things in parallel those are all best practices that we are seeing and we are looking at applying those elsewhere as well. I think congress is supporting us and we certainly welcome your ongoing support. Thank you so much. I yield back. Thank you, mr. Chairman. Im not going to belabor this but i will turn to the 2022 audit findings. There were ten findings here in the previous years findings of the ten of three have modified repeat Material Weaknesses. These are financial audits. The two are significant deficiencies. Five are noncompliant. Those are the internal audits i do believe. Would you like to comment on these . There are a number of challenges we talked quite a bit today about the Financial Management and reporting systems. That is a Material Weakness. It isnt likely to go away without upgrading and getting the audit system online so we are likely years away from that. Other materialho weaknesses revolve around Information Technology security and the need to work on the estimates for future liabilities. Those are the ones the auditors are most concerned about but youre right we find the same or almost the same thing year after year. I think thats my point. How can you assure us that this time its going to be different. The chicago cubs did that for 50 years. The red sox stated for longer unfortunately. I wish i had a crystal ball. It could say that this is going to solve all problems but its not. This is just one significant piece of the solution to words having an easier time getting a clean audit opinion. Thank you mr. Chairman i will yieldv back. One more question according to the schedule, the system will not be implemented in the majority of the Veterans Health administration for another four years and it will not be implemented in the Veterans Administration disabilityno Compensation Service which spends more than half the departments into your budget until 2029. When do you consider the project to have reached Critical Mass and demonstrated success . Thanks for that question. One of the things i would like to point out about the Veterans Administration is although we still have Loan Guarantees in education and insurance, we do have approximately 70 of their expected users in the system right now, so most of the work with these missioncritical programs is surrounding the interface work. They have about 100 users for each of o those programs that wl come on to support those programs. I just want to point out we do have a large percentage of those users in the system. As i mentioned earlier, we are ins, the process now of laying t what the schedule will look like given the direction with supply chain and i do believe that once we get a couple of pilots to get Lessons Learned and make any modifications we need to, we will look for opportunities in the future to accelerate that. I will say and i dont want to speak for charles, but as we re baseline theie schedule, we will certainly look to work to try to accelerate the remainder of that work. Any more questions . I would like to thank all the witnesses for their testimony today, and at the panel is excused from the table. With that i will yield to the Ranking Member for your closing statement. Thank you. The consensus to move forward and to bend successful as other Modernization Programs. I feel that the management in charge is very capable with other failed programs employees, veterans and members of congress have had enough with the current lack of success and i look forward to working together to ensure we have more positive outcomes in the future. Thank you and i yield back. I want to thank the witnesses for joining us this afternoon. Congress has always prioritized the Healthcare Benefits and the size of the budget 325 billion reflects that but its inexcusable and irresponsible for the department to be managing that much money with that Accounting System and to be barely functioning. The program has to succeed with some significant bumps in the road. We need to see the system rolled out to the offices that handle the majority of the budget. The committee will be watching the improvements that have been promised are actually delivered and monitoring whether the project is able to hit its timelines and recover its delays. Im committed to keeping it moving forward, not struggling repeatedly like the system. No more projects can be permitted to fail again and again and continue to receive funding for the taxpayers. That isan unacceptable. With that i ask unanimous consent all members have five days to revise and extend the remarks to exclude and include extraneous material. Without objection, so ordered. [inaudible conversations]