House Subcommittee Seeks Answers From Veterans Affairs on $7.5 Billion IT Project

U.S. Rep.-elect Matt Rosendale (R-Mont.) delivers remarks in the House chamber during the third day of elections for Speaker of the House at the U.S. Capitol Building in Washington on Jan. 5, 2023. (Win McNamee/Getty Images)

Since 2016, the Department of Veterans Affairs (VA) has been trying to replace its aging and inefficient legacy financial and acquisition computer system with the Integrated Financial Acquisition Management System (iFAMS).

The iFAMS overhaul is a project of the VA’s Financial Management Business Transformation (FMBT) program.

At a June 20 hearing of the House Veterans’ Affairs Subcommittee on Technology Modernization, committee members conducted a check on FMBT’s progress, with a big focus on how much money the department has already spent and how much more will be needed.

The VA planned several iFAMS starts that were all delayed before the department finally began implementing the cloud-storage system in 2020.

“FMBT is VA’s third attempt to modernize its hodgepodge of aging, inadequate financial and accounting systems,” said Committee Chair Matt Rosendale (R-Mont.) in his opening statement. “These systems are a serious problem.”

Rosendale also said the VA barely manages to pass its financial statement audit each year with a clean opinion, “despite carrying the same material weaknesses and deficiencies for a decade.”

The VA estimates that it will cost $4.2 billion to fully install iFAMS, up from an early estimate of $2.3 billion. But after the VA calculated operating and maintenance expenses for the life of the system through 2047, the total cost estimate is close to $7.5 billion, officials said at the hearing.

While not yet in place across the entire VA, iFAMS is installed and running in some areas of the agency, including the National Cemetery Administration, the Office of Information and Technology, Office of Inspector General, and portions of the Veterans Benefits Administration (VBA) and Office of Acquisition, Logistics, and Construction.

Chairman Criticizes VA System

Rosendale explained that a lack of a central and coordinated financial system allows for waste and fraud and hinders oversight and accountability.

The chairman referenced the VA’s purchase card program that was established to economize and bring down costs in purchasing and acquiring goods and services, yet which has ended up costing billions of dollars, in part because of poor supervision.

“The department’s purchase card spending continues to be the Wild West,” said Rosendale. “It has been nearly 10 years since the former VA senior procurement executive blew the whistle on billions of dollars of unauthorized commitments, and nothing has fundamentally changed. With so many purchase cards in so many different facilities and no central tracking, the Department is practically helpless to enforce its policies—much less root out waste and fraud.”

The iFAMS system is at the nexus of one of the most critical and vital roles of government: responsibly spending taxpayer money to care for and support those who served in defense of the nation.

Discussing the Problems and Solutions

The June 20 hearing was the first congressional update on the VA’s financial management project in over three years.

Lawmakers listened to testimony from VA officials and from a senior executive at a consulting firm that the VA retained to advise on installing and managing iFAMS.

It was an event in which, even as Congressional hearings go, the dialogue and discussion were heavy with tech-speak and acronyms.

Representative Sheila Cherfilus-McCormick (D-Fla.). (Photo by U.S. House of Representatives)

Ranking Member Sheila Cherfilus-McCormick (D-Fla.) spoke to the problems that the outdated legacy system causes the VA, and that it also prevents Congress from maintaining accurate review and scrutiny of VA spending.

“As the Inspector General has reported, the use of the aging financial management system has led to manual workarounds, which impedes VA and Congress’s ability to conduct oversight on spending,” said Cherfilus-McCormick. “VA is the second largest federal agency, and it relies on IT infrastructure that is decades old.”

Cherfilus-McCormick added: “IT modernization is mandatory, not optional. It is everyone’s interest to finally do this in a way that does not upset veterans and employees and waste billions of dollars.”

Teresa Riffel, the deputy assistant secretary for FMBT, described the progress and successes of the program in her remarks.

“I am proud to report that iFAMS is no longer a proof of concept,” said Riffel. “It is successfully replacing VA’s antiquated 1980s-era financial management system. It has been successfully up and running at VA for almost three years. VA completed six successful deployments of iFAMS encompassing 20 offices and 4700 users across the enterprise.”

Riffel shared more numbers, among them that “iFAMS users have collectively processed over 3.5 million transactions, representing almost $10 billion in treasury disbursements.” She said that on June 12, the VA went “live with its largest deployment to date, increasing the user base by 60 percent.”

The VA estimates that deployment of iFAMS across the department will be completed in November 2027.