RAO Davao City

United States Military Retiree Activities Office Davao City, Philippines


Posted by Service Officer on July 31st, 2008

The title of the House committee report sums up what happened: “Die or Give Up Trying: How Poor Contractor Performance, Government Mismanagement and the Erosion of Quality Controls Denied Thousands of Disabled Veterans Timely and Accurate Retroactive Retired Pay Awards.” The report by the majority staff of the House Oversight and Government Reform domestic policy panel, released Tuesday, concluded that at least 28,283 disabled retirees were denied retroactive pay awards because rushed efforts to clear a huge backlog of claims led program administrators to stop doing quality assurance checks on the claims decisions. And of the original 133,057 potentially eligible veterans, 8,763 died before their cases could be reviewed for retroactive payments, according to the report. At issue are the Concurrent Retirement and Disability Payments and Combat-Related Special Compensation programs, approved by Congress in 2003 and 2004 to allow large numbers of disabled retirees to receive full concurrent military retirement pay and veteran’s disability compensation.


For more than a century before those programs were enacted, disabled retirees were forced to forfeit a dollar of military retirement pay for every dollar they received in veterans’ disability payments. About 223,180 disabled veterans receive monthly CRDP payments, while another 60,155 disabled veterans receive monthly payments under CRSC. Under the programs, many disabled veterans also became eligible for a single retroactive payment due to changes in their disability status. As of SEP 06, the Defense Finance and Accounting Service (DFAS) determined that 133,057 veterans potentially were eligible for these so-called “VA Retro” payments. Over time, another 84,237 newly retired and other veterans were added to the list. Yet as of 1 MAR 08, more than 60,000 eligible veterans were still waiting for reviews of their cases under the two programs. The claims processing shortfall was raised during a February defense budget hearing; Pentagon Comptroller Tina Jonas told the Senate Budget Committee that she had recently asked Zack Gaddy, the director of the DFAS, to triple the number of people working on the backlog. In FRB 08, the backlog was said to be “more than 39,000” cases. Jonas said she had been assured that the backlog would be cleared by APR 08.

That did not happen, according to the subcommittee report, because Lockheed Martin, the contractor hired in JUL 06 to compute the complex retroactive pay awards, had difficulty making the computations fast enough to eliminate the backlog quickly. The complexity of the computations also hindered Lockheed Martin’s ability to develop software to automate the process. Two other factors played a role: The required databases did not exist, and the Department of Veterans Affairs and the military services “were slow to put the data in the necessary form for automation.” As a result, Lockheed Martin was forced to compute the cases manually. It did so, and with just under half the number of workers the government had previously used for the work — a relic of the original contract proposal, according to the report. Lockheed Martin missed its original NOV 07 deadline and every succeeding one, the report stated. The committee said Gaddy personally monitored the program and “frequently complained to Lockheed about low productivity and the high number of errors DFAS quality control auditors were detecting.” Gaddy also expressed concern that the delays were damaging the reputation of DFAS.

To ease congressional concerns and speed up the review process, DFAS chose several “questionable approaches” — assigning federal workers to duties covered by the contract with Lockheed Martin, and suspending independent quality checks on Lockheed’s calculations. After those measures went into effect on 1 MAR, up to 60,051 payments were made to eligible veterans. But the subcommittee concluded that “serious questions” remain about the accuracy of these payments. “While the subcommittee majority staff does not know how many erred payments were sent, we do not believe that DFAS knows either,” the report said. Under Lockheed’s operating procedures, its quality assurance team also did not verify the accuracy of any “No Pay Due” determinations, which are sent directly to veterans without verification, the report added. “Neither DFAS nor Lockheed knows how many ‘No Pay Due’ letters could be in error,” the report states. Such letters were sent to at least 28,283 veterans. DFAS and Lockheed Martin announced that the VA Retro backlog was finally eliminated by the end of June, seven months after the original deadline. Lockheed Martin was paid $18.74 million for its work on the backlog. [Source: AirForceTimes William H. McMichael article Posted 16 Jul 08 ++]

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