College officials heralded this summer's passage of a new, much-bigger GI Bill  for veterans who've served since September 11, 2001. But the new money only matters if educational benefits are processed and paid by the U.S. Department of Veterans Affairs. And in the first Congressional hearing  on the topic Thursday, lawmakers raised grave concerns about the agency’s plans for administering the law, focusing on the VA’s reliance on an outside vendor and its ability, or inability, to roll out a new system before the program's effective date, next August 1.
The VA is contracting out the creation of an automated computer system that would process benefit applications while “minimizing human intervention.” Claims rejected by the automated process would be considered by VA staff members.
“The contractor will be accountable for providing timely and accurate education claims processing by completing original claims [within] 10 days, supplemental claims [within] seven days, and by achieving an accuracy rate of at least 98 percent,” Keith Pedigo, an associate deputy under secretary at the VA, said in his testimony Thursday before the House of Representatives Veterans’ Affairs Subcommittee on Economic Opportunity.
The agency released a request for proposals to a limited number of contractors August 29, with the vendors' responses due this coming Monday and the tentative date for awarding the contract scheduled for September 26.
Details on what the computer system would look like were scarce at this point. “What we tried to do was to give the contractors as much flexibility as possible to propose a solution,” said Keith M. Wilson, director of education service at the VA.
Subcommittee members, however, were decidedly unimpressed with the VA officials’ presentation, and the lack of details specifically.
Representative Bob Filner (D-Calif.), chairman of the full House Committee on Veterans' Affairs, was most aggressive in his questioning, grilling VA officials on the wisdom of outsourcing the new system and its contingency plans if the contractor ultimately fails in its charge.
“I have great doubts about the contracting out. VA employees have administered education benefits since World War II,” said Filner, who, in questioning the vendor's expertise in and commitment to serving veterans, echoed concerns raised by the American Legion . “I bet in the RFP it does not say, ‘Can you relate to veterans?’ ” said Filner.
Beyond the philosophical question of outsourcing the administration of educational benefits, Filner expressed a total lack of confidence in the VA’s procedure. He fixated on March 1 -- the date on which the vendor would have to demonstrate that the system works. “What happens in March if they haven’t met the requirements? We’re back to square one, it seems to me,” said Filner.
Frustrated with the lack of detail, he said, “You don’t know what you’re going to get, you don’t know what it’s going to cost, you don’t know what’s going to happen if it fails. What are you getting us into?”
Filner said he would be writing a letter to the VA secretary asking for many more details about the bidding process before a contract is awarded. "We could," he continued, "pass a sense of the House resolution that this not go forward; we could do that."
“This is going to be a disaster, Madame Chair.”
The subcommittee chair, Rep. Stephanie Herseth Sandlin (D-S.D.), said she was most worried about the tight timetable. The VA originally planned to create such a computerized system by 2013, but, with the passage of the GI Bill, moved up the target date to 2009.
“Preferably, I’d like to see a contingency plan developed by the end of this month. Is that possible?” Sandlin asked.
Wilson replied that he hopes to develop a contingency plan within 30 to 45 days of when a contract is awarded, at the end of this month.
In a phone interview, Terry W. Hartle, senior vice president for government and public affairs at the American Council on Education, said there are legitimate concerns about the new benefits system being ready by August, given the extreme complexity of the VA’s task. And he said that the agency’s choice of contractor -- and that contractor's ability to deliver -- will be a critical factor in whether the VA completes the task and does so on time.
“It’s fundamentally a new program. The VA has not provided payments directly to colleges and universities since World War II,” said Hartle. He added that the switch to making payments directly to colleges is complicated by the fact that a substantial number of vocationally oriented institutions that participate in the GI Bill don't participate in the federal financial aid program -- so it’s not just a matter of adapting current federal systems.
In addition to paying colleges, the VA will continue to make payments directly to veterans for their housing and book stipends. Different payment levels will be calculated for students attending different institutions (the law covers  up to the cost of in-state tuition at the most expensive public college in a veteran’s state). And a Yellow Ribbon program for students attending private colleges adds a whole other dimension.
"Colleges and universities are acutely aware that this is a very big, complex program and that the Department of Veterans Affairs is basically starting from scratch in putting it in place," said Hartle. "I think the VA is doing as much as they can."
At the same time, he said, “If you weren’t worried about their ability [to put it in place by next August], you wouldn’t be paying attention.”