VA Proposes Flawed Waiver System to Address Conflicts of Interest

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The Department of Veterans Affairs (VA) made another flawed effort to revamp the conflict of interest rule prohibiting agency employees from having a financial interest in for-profit schools accepting GI Bill education benefits. In a letter to the VA Walter Shaub, CLC’s senior director, ethics, explains why the new proposal is fatally flawed.

In the 1950’s, after years of abuse and numerous scandals, Congress enacted a series of laws to prevent for-profit schools from taking advantage of the GI Bill benefits offered to veterans. Among the changes was the conflict of interest rule the VA is currently working to change, despite the fact that the history of for-profit schools targeting veterans for their GI Bill funding is long, documented and still prevalent.

This isn’t the VA’s first attempt to weaken the conflict of interest rule. A 2017 proposal, which would have issued a blanket waiver to all employees so they didn’t have to comply with the law, garnered swift and strong backlash from veterans organizations and government watchdogs, including CLC

Under the new revised proposal, employees must apply for a waiver from the prohibition. While this is an improvement on the originally proposed blanket waivers, for most employees the waiver will still be automatically granted. For other employees—specifically, employees performing one of six duties relating to GI Bill and education oversight, like inspecting educational institutions—the waiver won’t be granted automatically. But the VA has not identified any criteria for how requests from these employees ought to be evaluated.

Without a standard for evaluating waiver requests from employees performing these critical duties, the new plan will result in an arbitrary and capricious process, and will be unlikely to properly prevent conflicts of interest among VA employees. Furthermore, the VA should not be approving any waivers automatically.

That’s why CLC and other organizations have proposed a set of criteria the VA should use in evaluating waiver requests. These criteria will prevent corruption and protect veterans by strictly limiting the waivers granted to employees in positions of power over GI Bill administration. Likewise, the letter proposes rules to govern the granting of waivers to all other employees, ensuring that the VA only grants waivers when the interaction truly poses no threat of conflict.

The letter also addresses a procedural flaw in the VA’s revised proposal: the VA attempts to bypass a statutory public hearing requirement by substituting a hearing with online comments. But only an oral hearing satisfies the law and gives the public the transparency they deserve.

Combined with the fact that the VA has also failed to comply with a nearly-year old Inspector General request that they train their employees on conflicts of interest, the VA’s revised proposal is a recipe for disaster. Not only is the VA proposing to weaken one of its rules preventing conflicts of interest—the VA hasn’t made it possible for its employees to identify exactly what conflicts are so that they can be avoided.

Congress prohibited VA employees from financial entanglements with the for-profit education industry for a reason. For-profit schools have a troubled history, and reap unique financial benefits from veteran students, whose GI bill funding allows the schools to access more federal funds than otherwise allowed. If the VA alters this prohibition without taking the necessary precautions, VA employees may be manipulated or pressured into steering veterans to for-profit schools—putting veterans at risk. In order to prevent conflicts of interest, keep veterans safe, and protect taxpayer dollars, the VA should adopt the recommendations that CLC and other signatories have laid out in their letter.

CLC and other organizations will meet with the VA in early August to discuss these concerns.