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Office of Public and Intergovernmental Affairs

Remarks by Former Deputy Secretary W. Scott Gould

Professional Services Council Breakfast
Arlington, VA
April 15, 2010

I’m delighted to be here today and share this venue with so many talented people committed to building relationships between government and industry. A new era of innovation is not possible without it.

It’s an honor to be part of the President’s leadership team at Veterans Affairs. When Secretary Shinseki asked me to help him transform the Department, I saw a real opportunity to make a difference, and to support his tremendous drive for change and progress on behalf of our nation’s Veterans.

President Obama’s management agenda is clear—build a “high-performing government.”

At VA, this means transforming our agency into a 21st century organization, and ensuring that we provide high-quality care and timely delivery of benefits to Veterans over their lifetime, from the day they take the oath of allegiance until the day they are laid to rest.

The President’s remarkable $113 billion 2010 budget—the largest increase in 30 years—demonstrates his personal commitment to Veterans and their families even during times of tremendous budget pressure. For 2011, he has requested is $125 billion for VA—split almost evenly between mandatory and discretionary funding.

Together, our 2010 and 2011 budgets boost VA’s discretionary funding almost 20 percent. These are strong budgets that provide us the resources required to increase Veteran access to benefits and services, reduce the backlog, and end Veteran homelessness within five years.

Overview of VA

Let me tell you some things you may not know about VA.

VA is the second largest agency in the Federal Government, with nearly 300,000 employees and a budget for 2010 of $113 billion. If we were a private corporation, we would rank in the Fortune 15. We are organized in three main operating units: Health (VHA), Benefits (VBA), and Cemeteries (NCA).

The health organization is the largest unified health-care system in the world, maintaining 153 major medical centers, 783 community-based outpatient clinics, and 50 mobile health clinics. Just over 8 million are enrolled in VA health care programs. We treat 5.7 million Veterans per year at our hospitals and clinics, which receive over 74 million outpatient visits per year. We run over 200 million lab test annually. VHA conducts about a billion dollars in research each year that has lead to inventions like the CT Scan, advanced prosthetics, and breakthroughs in treatments of Veterans with spinal cord injuries, diabetes, and Parkinson’s disease.

The benefits organization contains the eighth largest insurance company in America, overseeing more than seven million life insurance policies with a face amount of $1.3 trillion. Over three million (3.1) Veterans receive VA disability compensation payments every month. VA guarantees nearly 1.3 million home loans, with an unpaid balance of $175 billion. VA is second only to the Pell Grant Program in providing education benefits totaling $8.9 billion in 2010.

The National Cemetery Administration is responsible for maintaining America’s 131 National Cemeteries. Nearly three million Veterans are interred or inurned in our National Cemeteries. Last year we conducted more than 103,000 interments—a number we expect to rise as our population of World War II Veterans declines at about 900 a day. NCA recently earned the highest score ever in the American Customer Satisfaction Index (ACSI) performed by the University of Michigan Business School. The NCA score of (95) beat out such well-known leaders in customer satisfaction as Lexus (89), Google (86), and Apple Computers (84).

VA has had its share of problems:

  • Backlogs for claims
  • Data security
  • And fundamental problems with our management infrastructure in the areas of HR, IT, and Acquisition.

The long-term solution to many of our problems and challenges is people, internal business process redesign, and sensible integration of proven information technology—one of reasons I was hired as COO.

Challenges at VA

VA is facing some important challenges:

  • Combating homelessness … with an eye toward vulnerable Veterans.
  • Extending health care to a half million Veterans who lost that entitlement in 2003.
  • Enhancing outreach/services for mental health care and cognitive injuries … focus on rural locations.
  • Providing greater benefits for Veterans medically retired from military service.
  • Providing comprehensive education benefits under the new, post-9/11 GI Bill.
  • Improving technology—not just for the sake of technology, but to improve access, transparency, and outcomes - across the board.

Backlog

A central goal for VA is to reduce the time it takes for a Veteran to have a claim fairly adjudicated. The total number of claims in our inventory today is around 400,000, and backlogged claims that have been in the system for longer than 125 days total roughly 149,000 cases. Regardless of how we parse the numbers, there is a backlog; it is too big, and Veterans are waiting too long for decisions.

Here, too, we’re making steady progress, attacking the problem on three fronts:

  • more trained Veteran service representatives
  • re-designing the process by which claims are adjudicated, and
  • professional, focused, and sensible use of information technologies that promise to slash the backlog significantly.

Last summer, the President and Secretary Shinseki announced the VA Innovation Initiative to accelerate transformation of the VA. This is a program that identifies, prioritizes, funds, tests, and deploys the most promising solutions to the VA’s most important challenges.

We’ve already completed the first competition, which generated over 3,000 ideas from 6,500 VBA employees. The ten winning ideas are being executed now.

Then, in January 2010, we kicked off a second round of competition with a focus on health informatics. This time we got 6,500 ideas from 45,000 VHA employees.

The next phase of the VA Innovation Initiative—or VAi2—will broaden the playing field to include private-sector entrepreneurs and academic leaders. We’re going to ask you for your best ideas for innovations that increase access, reduce or control costs, and improve the quality of services Veterans and their families receive.

Let me give you a specific example of what I mean. Last year the Secretary added three more illnesses to the list of presumptive illnesses related to Agent Orange. This is a hugely important policy change for our Vietnam Veterans. But it also means that we’ll be receiving hundreds of thousands of more claims into a system already under tremendous strain.

So last month we created a so-called “Performance Work Statement” to solicit industry interest and ideas, in anticipation of the RFP that will come out soon. We thought we’d get a couple of comments. What we got were almost two dozen responses (23), with terrific ideas. In fact, several groups asked us to tighten the specifications, to raise the standard, and increase our expectations. We wouldn’t have known if we hadn’t asked. Our RFP will be the better for it, the taxpayers will come out ahead, and, above all, the Veterans are going to see an abrupt improvement in the quality of our service.

The backlog problem didn’t appear overnight, and it isn’t going to disappear overnight. We intend to revolutionize our claims process—faster decisions, better decisions, no lost records, fewer errors. We have work to do here. But we understand what must be done. I’ve got a crack team on it, feeding me progress reports several times a week, and I think we’re finally going to break the back of this difficult and complicated problem. Our goal is no claims over 125 days and 98% accuracy.

IT Issues

VA’s IT issues are significant. Many projects are challenged by the inability to meet cost and schedule performance measures. So last year we instituted a Performance Management and Accountability System (PMAS) to strengthen our IT oversight and performance.

Last June, we placed 47 IT projects under the PMAS; in July, we paused 45 of them. Many were over a year behind schedule. Some are too important not to get done.

About a third of the 45 were committed to meeting near-term milestones, and were meeting their milestones. Another third were re-planned and restarted. The remaining third were halted or had their funding cut.

To move ahead on many IT projects, we need to add staff. We are currently working to fill vacancies at all levels, from senior program manager to fingers-on the-keyboard programmers. We will also need to upgrade the skills of our present IT workforce, and so we have instituted a new training requirement for programs over $5 million that puts our government and commercial partners in the same room for training and review of requirements, governance and expectations at the start of the engagement. Our commercial partners participate on a billable basis. We are also conducting PM training for VA IT managers and expect over 9,230 training instances in FY 2010. The goal is a better outcome for both parties.

We mean business on program management; and we will hold ourselves and our private sector partners accountable for cost, schedule and technical performance.

Electronic Health Records – VLER

Last year President Obama charged VA Secretary Shinseki and Defense Secretary Gates to create a Virtual Lifetime Electronic Record (VLER) that would provide every member of our Armed Forces and every Veteran with a record that would stay with them from the day they put on the uniform until the day they are laid to rest.

VLER will provide Veterans, their families, care-givers, and their service providers with a single source of information for health and benefits needs in a way that is secure and authorized by the Veteran.

DOD and VA spend about half of their combined health-care budget purchasing care in the private sector. We know and have demonstrated the value of health information for both improving care and lowering costs of that high quality care. Knowing that, we must ensure that when Veterans do come to VA for care, we can access—with their permission, of course—to the record of that outside care, to ensure that the care they are getting will be safe and the highest quality possible. This will also make that care more seamless, safe and convenient by giving a provider access to authorized patient information anytime and anywhere that it is needed by the Veteran.

For the same reason, private-sector providers need secure, reliable, and Veteran-authorized access to our patient records when they care for a Veteran. VLER will provide that access, and Veterans will receive better and safer care, sooner.

We have already begun a pilot of the VLER strategy in the San Diego area that uses the Nationwide Health Information Network (NHIN) to exchange health information between VA and Kaiser Permanente, for over 400 Veterans who are patients of both systems. This summer we will expand that pilot to tidewater Virginia, partnering with DoD and other private providers who can exchange data through the NHIN.

Next fall we will begin a third phase of expansion to two more regions, and will expand the capability of the three-way exchange of information between VA, DoD, and private providers and networks. We are also exploring the possibilities of exchanges between VA and local providers across the nation. Again, this will begin with pilot programs and expand with the goal of all VA facilities having the ability to exchange authorized data between federal and private providers in a secure manner through the NHIN. We will also work with the Indian Health Service and other federal partners to improve the access to electronic records in highly rural areas where DoD has a limited presence.

In addition to using VLER to improve health care, we will also work accomplish the goal of bringing benefits into VLER by not only working within the VA but also with the DoD, Social Security Administration and other organizations to use VLER to make benefits delivery more efficient and convenient.

We have a lot of work still to do, but each step builds the capability and knowledge that will expand the next step and take us even further. This process is on an aggressive time line. Building on our past and current experience we have the goal of nationally deploying the foundation functions of VLER by 2012.

Acquisition Issues

VA is the fourth largest federal agency in terms of procurement dollars spent, with annual procurement exceeding $15 billion. It is also one of the most complex procurement and logistics operations. But for various reasons, VA has been slower than some other departments at evolving its acquisition capabilities.

One reason is that the size of our acquisition workforce has not kept up with the volume of our acquisitions. We estimate that VA currently has less than three-quarters of the contracting professionals it needs to handle $15 billion in procurements—short about 592 contracting professionals. We are currently working to make up that deficit, while also providing additional training to over 5,000 contracting and project management professionals already at VA.

We’ve recently begun a new initiative to recruit, train, develop, and retain a dedicated corps of highly qualified contracting officers and program managers. In support of this new Acquisition Corps, we’ve created a VA Acquisition Academy to provide high-quality instruction and certification of acquisition competencies, according to a VA standard curriculum.

Supplier Relationship Transformation (SRT)

This spring we’re conducting the Michigan State University (MSU) Supplier Perception Survey with over 15,600 VA suppliers. Later we’ll hold three regional forums with supplier participation, to deepen our shared business intelligence and understanding of regional concerns. Sometime this fall, we’ll host a “State of the Union” forum to share what we’ve learned from a full year of Supplier Relationship Transformation. Our goal is Perfect Order Fulfillment (POF)—defined as the ability to deliver the right service or product, at the right place, at the right time, with the right quality, and with proper documentation.

Acquisition Transformation

This fiscal year we’ve begun implementing a new acquisition service delivery structure based on commodities and designated acquisition centers to initiate and manage large procurements.

On April 1, Secretary Shinseki approved the Acquisition Transformation Model that will consolidate and integrate acquisition functions. The model provides a specific set of metrics—so 18 or 24 months from now, if outcomes are not satisfactory, we’ll know to move to a more centralized model.

Facilities Management

We’ve also working on construction and facilities management functions to integrate facilities investments and maximize life-cycle performance. VA has over $87 billion invested in real estate and facilities, with the average age of facilities approaching 60 years old. Upkeep has been under-invested. We’ve been spending about $2 billion a year, when we should have been spending over $4 billion, according to industry standards. Keeping up with the changing needs of Veterans will require strategy-driven investments and new, expanded facilities management capabilities.

Transform Human Capital Management

  • As I said earlier, there is a direct link between an organization’s investment in employees and organizational performance.
  • That’s why VA is investing a record $300 million in HR this year including $200M in training alone.
    • An investment in change management.
    • An investment in next generation of VA leaders.
  • And an investment in our successful performance across transformation’s four strategic goals.
  • We are looking to train 22,000 people in change management and transformational leadership, and another 22,000 in leadership, management, and supervision.
  • We have also identified 42,000 positions that are essential to accomplishing VA’s mission and require additional critical skills training in subjects such as project management, acquisition, HR, and IT certification.

Employees are the lynchpin to achieving the outcomes we want for Veterans.

  • Invest in training and development to maximize potential.
  • Establish health and wellness programs throughout the workforce.
  • Strengthen manager accountability for appropriate development of our employees.

Closing

Transformation is a challenging task; shakes up the status quo; upsets traditions. As they say: “Hard work is hardly ever complete.”

But it has been done and, together, we are doing it at VA.

Again, thank you for inviting me here today … you are doing important work for DoD, for the Federal Government, and for the American taxpayer.

And now, if you have any questions, I’ll try to field as many as I can.