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GI Bill Plan Headed for ‘Disaster’

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Responding to the Bush administration’s recent decision to privatize portions of the new G.I. Bill, House Veterans’ Affairs Committee Chairman Bob Filner (D-Calif.) blasted the VA on Thursday, saying the outsourcing plan will end in “disaster.”

The VA stirred up a hornets’ nest last month, when its plan to contract outside the agency for a computer system to screen claims under the newly expanded veterans education benefit was revealed. Administration officials say the outsourcing is needed to meet the Aug. 1, 2009, deadline for installing the new program. But, appearing before a House panel Thursday, some of those same officials said they know almost nothing about how the system will work and what it might cost.


Illustration by: Matt Mahurin

Keith Pedigo, a VA associate deputy undersecretary, told members of the House VA Economic Opportunity Subcommittee that the agency has given potential bidders “the basic requirements,” but indicated the VA would have no details about the IT program until the contract is awarded later this month.

Asked about costs, Pedigo had no idea; asked which companies are in the running, he declined to say; asked about penalties if the system fails, he said the companies would be proposing those themselves; asked about a back-up plan, he said only that it’s in the works, but “not fully developed.”

With the deadline inching closer, the absence of a strategy riled some committee members, particularly the pugnacious Filner, who made headlines last year over an altercation with an airport employee.

“This is incredible,” Filner said. “You don’t know what you get. You don’t know what it costs. You don’t know what happens if it fails. What are you getting us into here?”

Later, Filner told Rep. Stephanie Herseth Sandlin (D-S.D.), the subcommittee chairwomen, “This is going to be a disaster, madam chair.”

Maybe a disaster — but not a surprise. The VA’s outsourcing strategy is just the latest in a long series of steps taken by the Bush administration to privatize tasks once performed by government employees. The trend has included the shifting of billions of dollars in battlefield responsibilities to war contractors, the transfer of seniors’ health coverage from Medicare to private insurers and a high-profile — but failed — attempt to establish private savings plans under Social Security.

In each case, the administration has claimed that the private sector would be more efficient, thus saving taxpayer dollars. “Contracting for an IT solution is something that’s done in government all the time,” Pedigo argued Thursday.

But critics have blasted the strategy as a giveaway to industry at the expense of taxpayers. “This is a government function,” Filner said of the G.I. Bill computer system, “and it should continue to be a government function.”

The California Democrat pointed to a host of reasons that VA employees are better suited than contractors for the job. For example, he said, they have experience with DoD forms and databases; they’re trained to process appeals; and they have a history of working with the various branches of the armed services.

“Your contractor’s going to have to figure all that out,” he said.

Some veterans advocates agree. Last month, The American Legion passed resolutions opposing the VA’s intentions to outsource parts of the new G.I. Bill. David K. Rehbein, the group’s new national commander, said he shares the goal of greater efficiency — but not the move to privatization.

“We have no quarrel with the idea,” Rehbein said in a Sept. 11 statement, “but we believe strongly that VA currently possesses the talents, skills, expertise and resources to implement such modernization. VA was created to fulfill obligations like this, not to hire someone else to do it.”

Privatization opponents have a tough road ahead: Though the new G.I. Bill included funding to help the VA with the transition, it doesn’t direct the agency how to do it.

There is also dispute over how the privatization will affect jobs. Pedigo testified Thursday that the VA “does not anticipate the loss of federal employment” as a result of the computer system outsourcing.

The American Federation of Government Employees, however, estimates the move would “uproot” 400 federal workers. “It’s outsourcing an inherently governmental function,” Alma Lee, president of the AFGE’s National Veterans Affairs Council, said in a statement. Lee said that it was not the intent of the bill’s architects to outsource the VA’s duties.

Signed into law in June after a long and tense partisan debate, the new G.I. Bill expands the heralded veterans education benefit to provide more funding for those who served in the Iraq and Afghanistan wars. The legislation was championed by freshman Sen. Jim Webb (D-Va.), a decorated Vietnam veteran who made the expansion the focal point of his first 18 months in the upper chamber.

Kimberly Hunter, Webb’s spokeswoman, said the Virginia Democrat is watching the VA’s outsourcing plan closely, but has yet to weigh in.

There will be plenty of opportunity to follow the saga. Herseth said Thursday that she’s planning another hearing on the topic later this month. Filner, meanwhile, said he’ll push to learn the bid details — and knowledge of the winner — before the contract award is publicized.

“We need more information,” he said. “I don’t trust them.”

Despite the sharp tone of Thursday’s hearing, there were a few rare moments of levity. After failing to learn which companies remain in contention, for example, Filner offered a light warning: “If Halliburton gets this,” he said to laughter, “you guys are in trouble.”

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