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"Modernizing VA: Lessons Learned in the 118th Congress"

House Veterans Affairs Committee, Technology Modernization Subcommittee Hearing

December 12, 2024 (recording here)

HEARING INFORMATION

Witness & Written Testimony (linked) (Panel One):

• Ms. Carol Harris: Director, Information Technology and Cybersecurity Issues, U.S. Government Accountability Office

• Ms. Lynn Overmann: Executive Director, Beeck Center for Social Impact & Innovation, Georgetown University

• Mr. Reynold Schweickhardt: Non-Resident Senior Fellow for Congressional Modernization, Foundation for American Innovation

Witness & Written Testimony (linked) (Panel Two):

• The Honorable Kurt DelBene: Assistant Secretary for Information and Technology and Chief Information Officer, U.S. Department of Veterans Affairs

• Mr. Robert Orifici: Executive Director, Benefits and Memorial Systems Portfolio, Office of Information and Technology, U.S. Department of Veterans Affairs

• Ms. Cherri Waters: Executive Director, Health Portfolio, Office of Information and Technology, U.S. Department of Veterans Affairs

Keywords mentioned:

• Megaprojects, incremental approach, agile development, user research, contract management, cybersecurity, modular development, Office of Information and Technology (OIT), Electronic Health Record Modernization (EHRM)

IN THEIR WORDS

OPENING STATEMENTS FROM THE SUBCOMMITTEE

• Chairman Matt Rosendale described the VA as a large organization with significant IT modernization challenges. He outlined the failure of six multi-billion dollar IT projects, questioning the efficiency of megaprojects and their ability to meet schedules, budgets, or user expectations. Chairman Rosendale commended VA leaders for adopting alternative approaches, such as discontinuing unsuccessful systems and pursuing smaller, more manageable projects. He advocated for a more agile and responsive VA, urging the adoption of best practices from the software industry to better serve veterans and taxpayers.

• Ranking Member Sheila Cherfilus-McCormick expressed concerns about the VA's IT modernization efforts, citing issues like poor requirements development, inadequate contract management, and excessive reliance on contractors. She argued that the VA is attempting to modernize too many systems simultaneously, which leads to project delays and budget overruns. The Ranking Member criticized the insufficient involvement of business leaders in IT projects, resulting in misaligned objectives and increased costs. She also addressed budgetary constraints, emphasizing the need for fully funding the Office of Information and Technology to ensure efficient and effective IT infrastructure for the VA.

SUMMARY OF KEY POINTS (PANEL ONE)

• Ms. Carol Harris summarized the Government Accountability Office’s (GAO) findings on the VA's IT modernization challenges, noting that the department has spent over $21 billion in the past two years without effectively managing its IT projects. She mentioned that the VA's efforts remain high risk due to unimplemented GAO recommendations aimed at improving IT acquisitions and management. Ms. Harris detailed specific issues in the VA's health information and financial management systems, pointing out significant cost escalations and delayed implementations. She pushed for the VA to adopt the GAO's recommendations and leading practices, such as iterative development and stakeholder involvement, to achieve successful IT outcomes.

• Ms. Lynn Overmann discussed the importance of robust and adaptive technology systems for veterans, claiming that federal projects often fail due to rigid approaches and inadequate user-focused design. She introduced the "product model" as a more effective alternative, which involves small, agile teams conducting user research and iterative testing to develop tailored solutions. Ms. Overmann provided the example of the IRS’s direct file tool, which achieved high user satisfaction and low operational costs through this approach. She recommended that Congress support streamlined hiring and flexible investments to enable agencies like the VA to adopt the product model for successful technology modernization.

• Mr. Reynold Schweickhardt addressed the need for the VA to empower its staff with technology that enhances care without restricting medical professionals' problem-solving abilities. He identified three key areas for improvement: VA leadership challenges, electronic health record modernization (EHRM), and financial management and supply chain solutions. Mr. Schweickhardt recommended that the VA establish clear organizational objectives for technology modernization and ensure longer tenures for Chief Information Officers (CIOs) to provide consistent leadership. He also called for breaking down large projects into smaller, more manageable pieces to avoid past failures and promote an agile, incremental approach to IT modernization.

• Chairman Rosendale asked the witnesses whether they could identify any multi-billion dollar IT projects within federal agencies that had been completed on time and within budget. Ms. Overmann responded that she could not find such projects within the VA but mentioned the Department of Defense's (DoD) Defense DIAS cloud migration as a potentially successful example. Mr. Schweickhardt replied that he could not identify any examples of multi-billion dollar IT projects that were completed on time and within budget within federal agencies.

• Chairman Rosendale questioned Ms. Harris about the factors that make IT megaprojects risky and prone to failure. Ms. Harris explained that the waterfall, or monolithic, approach—where all requirements are developed upfront and the system is designed and built over several years—often leads to projects that do not meet mission needs upon deployment. She underscored that such projects involve significant financial investments, increasing the risk of failure.

• Rep. Tim Kennedy addressed the sufficiency of the VA's IT budget in supporting its modernization efforts. Ms. Harris responded that while she had not conducted a comprehensive review of the entire IT budget, she believed that sufficient funding is crucial for the success of large-scale IT acquisitions. She stressed the importance of reliable and credible cost estimates to support budget requests.

• Rep. Kennedy then asked what steps the VA could take to improve its IT acquisition efforts. Ms. Harris recommended breaking down large programs into smaller, more manageable pieces and involving end users early and frequently in the development and testing processes. She emphasized that these practices enhance accountability and increase the likelihood of successful project outcomes.

• Rep. Kennedy inquired about the VA's biggest weaknesses concerning the Federal Information Technology Acquisition Reform Act (FITARA) compliance. Ms. Harris stated that approximately 39% of IT contracts were processed without proper oversight, preventing the CIO from reviewing and approving these contracts. She suggested implementing automated processes to ensure that all IT contracts are routed through the CIO for review, thereby enhancing compliance and oversight.

• Chairman Rosendale questioned Mr. Schweickhardt about the cultural and managerial obstacles that prevent the VA from designing IT systems in an agile and modular manner. Mr. Schweickhardt identified legacy projects and a lack of trust among employees as significant barriers. He explained that past project failures have led to skepticism and burnout, making employees hesitant to engage in new initiatives. Mr. Schweikert spoke in favor of management supporting iterative development processes and building trust by delivering minimal viable products that demonstrate progress and effectiveness.

• Rep. Kennedy asked Ms. Harris whether the GAO had evaluated the effectiveness of business-led versus CIO-led modernization efforts at the VA. Ms. Harris responded that she had observed a mix of both approaches across federal agencies, noting moderate success in each when business and CIO leaders collaborated closely to define requirements and engage stakeholders. Rep. Kennedy then inquired whether the Office of Information and Technology (OIT) should play a larger or different role in the VA's modernization efforts. Ms. Harris suggested that the OIT should be involved early in the acquisition phases to ensure that requirements are well-defined and best practices in IT acquisition are understood and implemented.

• Rep. Kennedy asked Ms. Overmann how an agency like the VA could improve its comprehensive requirements development and conduct deeper user research. Ms. Overmann underlined the importance of starting small, building minimum viable products, testing them with users, and iterating based on feedback. She said that involving both end users and agency staff in the testing process would ensure that the software meets the needs of those providing and receiving services. Additionally, she discussed the need for digital service expertise within the government and flexible, multi-year funding to support iterative development, arguing that this approach is more cost-effective and consistent compared to large, one-time investments.

• Chairman Rosendale inquired which federal agencies successfully implement best practices. Ms. Overmann cited the U.S. Digital Service (USDS) as a prime example. She noted that other agencies like the DoD and Department of Homeland Security (DHS) were making progress by developing internal digital service teams with strong customer experience offices. Ms. Overmann also discussed the pitfalls of agencies buying commercial off-the-shelf (COTS) software, explaining that such systems often fail if agencies do not adjust their processes to fit the software.

• The Chairman then questioned Mr. Schweickhardt about whether the VA's EHR modernization program reflected an agile, incremental, or modular approach. Mr. Schweickhardt responded that the program did not appear to follow any of these methodologies and discussed the need for a modular approach supported by a solid architectural foundation. He focused on the importance of validating requirements with small user groups and achieving full functionality in at least one facility before rolling out to others. Once this is achieved, which he said it likely has been, then the system can continue its rollout to other facilities.

SUMMARY OF KEY POINTS (PANEL TWO)

• Assistant Secretary Kurt DelBene shared the VA’s mission to build a world-class IT organization supporting critical VA work. Over the past three years, the OIT has transitioned from a traditional IT approach to a modern structure modeled after high-tech product development practices, focusing on reliability, agility, and transparency in spending. Mr. DelBene mentioned significant advancements in cybersecurity, claims processing, digital experiences, electronic health records, financial management, and education benefits, citing successes such as the VA health and benefits mobile application and the modernization of financial management systems. Despite these achievements, he acknowledged ongoing challenges, including the need to enhance workforce technical skills, modernize supply chain and HR systems, and maintain sustained investment in major initiatives.

• Rep. Kennedy voiced serious concerns about the size of the VA's fiscal year 2025 IT budget, questioning whether the funding levels were sufficient. Mr. DelBene agreed that the budget was significantly reduced compared to the previous year, leading to substantial cuts in modernization initiatives. He spotlighted specific areas affected, such as infrastructure readiness and financial management, and described the budget as primarily focused on maintenance rather than advancement.

• Rep. Kennedy then asked Mr. DelBene how he would restructure the OIT budget if given the authority. Mr. DelBene suggested that the budget should be increased and structured to allow multi-year funding. He underscored the importance of adopting an incremental investment approach rather than large, one-time expenditures, advocating for sustained funding that supports continuous modernization and the development of evergreen systems through annual investments.

• Chairman Rosendale questioned Mr. DelBene about the VA's Veterans Benefits Management System (VBMS), noting its initial failures and subsequent improvements. Mr. DelBene explained that the focus shifted to operational excellence, improving system uptime, and enhancing scalability to handle increasing demand. He introduced the concept of creating a target platform for modernization and adopting an incremental approach to transition to this new platform. Mr. Robert Orifici detailed the changes made to the VBMS, explaining that prior to 2022, the system could only release updates quarterly due to its complexity. In 2022, the VA adopted a modular approach, allowing for bi-weekly deployments and more agile releases. This shift enabled the VA to deploy functionality more rapidly, ensuring that the system could better meet the needs of the Veterans Benefits Administration (VBA) and improve overall system reliability and user satisfaction.

• The Chairman inquired why the VA decided to abandon a $900 million project aimed at replacing its human capital management systems and instead opted for a modernized in-place strategy. Mr. DelBene responded by citing the fiscal austerity environment, which made it unfeasible to pursue such a large-scale bid. He explained that the VA chose to adopt an incremental approach similar to the one used with the VBMS, focusing on migrating to a cloud-based platform and implementing modernization in smaller, manageable segments over time.

• Chairman Rosendale further asked about the VA's decision not to proceed with a $9 billion project to consolidate 63 supply chain systems and inquired about the current strategy. Mr. DelBene explained that early demonstrations revealed a lack of clear understanding of system gaps and end-user needs, which hindered the project's success. Ms. Cherri Waters described the current approach to the VA's supply chain initiative, emphasizing that the VA is prioritizing the most challenging problems and working on quick wins to deliver minimally viable products. This approach allows the department to improve existing products and processes incrementally, ensuring that each step adds value and addresses specific user requirements.

• Rep. Kennedy expressed apprehension about the VA having shadow IT or IT modernization efforts occurring outside the OIT. He questioned Mr. DelBene about the authority he had over these business-led IT initiatives. Mr. DelBene acknowledged the concern and explained that the OIT had been working to strengthen partnerships with business-led teams by enforcing the authority to operate and FITARA review processes. He pointed to the importance of cybersecurity, stating that all software purchases must meet security standards and that the OIT was developing operational agreements to clearly define responsibilities between teams.

• Chairman Rosendale asked Mr. DelBene why “big bang” solutions should be avoided in favor of incremental approaches. Mr. DelBene explained that large-scale projects often face challenges in accurately determining costs and requirements from the outset, leading to increased technical complexity and costs over time. He advocated for building minimum viable products and iterating based on success, which allows for more manageable and cost-effective project progression.

• The Chairman asked if it was too late to change approaches to the EHRM program and other big-ticket contracts to make them more agile. Mr. DelBene stated his belief that even when things are eventually done right with these programs, moving forward is hard work. He stated, however, that this would be worth the effort in completing the projects and delivering the needed services. Later in the hearing, Mr. DelBene claimed that the Oracle rollout must continue and that he thinks it is “over the hump” in terms of overcoming modernization challenges.

• Chairman Rosendale questioned Mr. DelBene about the difficulties large government agencies, particularly the VA, face in successfully implementing megaprojects. Mr. DelBene responded by highlighting the complexities and underestimated costs associated with large projects. He pointed out that accurately predicting costs and requirements from the beginning is challenging, leading to budget overruns and technical issues. Mr. DelBene restated the necessity of deeper technical expertise within IT organizations to manage and oversee complex projects effectively, arguing that more knowledgeable leadership is crucial for avoiding past failures.

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