New GI Bill Ripoff

One of the key tasks the VA IT shop has assigned to the Space and Naval Warfare Systems Center is the development of a claims processing system for the new GI Bill, formally known as the Post 9/11 Veterans Educational Assistance Act.

VA's legacy systems that process veterans' benefits under older versions of GI bills cannot accommodate the more complicated educational benefits provided under the latest GI bill.

The educational benefits under older versions of the GI bill are set at a flat rate regardless of where a veteran goes to school. The new GI bill calculates tuition benefits based on length of service and the highest tuition charged by a public college in the veteran's home state. Separate housing allowances are based on cost of living allowances computed by the Defense Department for 300 ZIP codes.

Handling claims with so many permutations will require the development of a rules-based claims processing system for the Veterans Benefits Administration similar to those used by the insurance industry.

I have wondered what kind of software and systems VA plans to use, and the VA Inspector General provided the answer.

An IG report released yesterday said the VA plans to use ILOG software to support rules-based educations claims processing. ILOG, an IBM subsidiary, says its software has been used to support the processing of, among other things, loans, healthcare claims and credit card transactions.

ILOG software is available on SEWP from five different vendors. But the report said SPAWAR purchased the ILOG software and related hardware. SPAWAR subsequently billed VA $49,624 in program management fees and another $40,000 in acquisition fees, costs that could have been avoided if VA had followed its own policy.

SPAWAR rakes in a 10 percent management fee from VA the inspector general said, while NASA applies a 0.55 percent surcharge on the orders it handles.

Warren said the VA pays SPAWAR such a high rate because it provides "expertise" along with handling IT purchases. In the case of the ILOG buys, I think the only expertise SPAWAR demonstrated was its ability to rip off the customer.