Army Families Who Floated Uncle Sam on Child Care Costs Will Be Reimbursed Soon

Army families who struggled to cover the full cost of private child care because the government failed to pay its share on time will be reimbursed in 30 days, a General Services Administration official told a congressional committee on Thursday.

In some cases, service members and their families were shelling out more than $1,000 per month for child care as part of a government subsidy program -- and waiting months for Uncle Sam to reimburse them.

“On behalf of GSA and its leadership, we offer our sincere apologies to any Army family that experienced hardships because of GSA’s mishandling of this program,” said GSA Chief Financial Officer Gerard Badorrek during a sometimes tense House Oversight and Government Reform Committee hearing.

Rep. Mark Meadows, R-N.C., pressed Badorrek to pledge to pay back affected families within 30 days and clear up the invoice backlog. The GSA official was reluctant to commit to a timeframe, but finally did under questioning from Meadows.

“Will you pay them in 30 days? Do I have your commitment?” Meadows asked.

“Yes, we will pay them,” Badorrek responded.

 But those reimbursements, at least for now, will not include interest on late payments, Badorrek said, responding to a question from Rep. Tammy Duckworth, D-Ill., an Iraq war veteran.

“Do I need to ask my fellow members of Congress to hold a bake sale?” Duckworth asked, pursuing her point about extending interest to families subjected to the mismanagement. “Do we need to go on the air and bring this to the general public, and embarrass the Army? What do we need to do?”

 Meadows agreed that Army families should be reimbursed with interest from the government. “They should not be the government’s bank,” he said. “They should not be the bank for our inefficiencies.” Duckworth said she intended to “stay” on the issue of reimbursements with interest.

The Army Fee Assistance program helps eligible Army families pay for child care in the private sector when there is no on-base care available. Child care providers send monthly invoices to GSA for each child, and the agency pays its portion of the bill when it verifies the information it receives from applicants and providers. Families have to pay all child care costs up front while waiting for GSA approval of their application.

The agency, which has managed the Army Fee Assistance program since 2003, had agreed to approve applications within 10 business days, process invoices within 10 business days, and respond to questions and complaints within one business day. But GSA has fallen far short of that timeframe since the program expanded in 2014 from serving 200 families and 46 child care providers to now serving nearly 10,000 families and more than 6,000 child care providers.

GSA officials said they didn’t have enough staff for the increased workload, and blamed inadequate new technology for what has resulted in a current backlog of nearly 12,000 unpaid invoices, unprocessed subsidy requests, and unanswered email and phone messages, the agency’s inspector general concluded in a new report.

GSA staff had to manually validate the information in applications because of bugs with the software. This has created a backlog of nearly 12,000 “items”—including unpaid invoices—causing financial hardship for many military families. In some instances, it took GSA up to seven months to process some subsidy applications.

The IG gave examples of the hardships Army families faced, including potential bankruptcy, job loss, and no daycare for their children as a result of GSA’s mismanagement of the program. “I am to the point I will have to drop out of school to stay home with my children because the daycare has not received an updated form and I’m now going on two months of possible full price being owed,” said one Army spouse. Another applicant reported that the child care provider “has put my account in collections for fees which were supposed to be paid by GSA from May and June.”

The average cost of a monthly invoice submitted to the government for payment under the program is about $300, said Badorrek.

Capt. Karmon Dyches, whose spouse also is in the military, testified about GSA failing to submit payments to her child care provider and having to cover the full cost for months at a time. When she received responses from the government to her questions, they were confusing or unhelpful, she said. One inexplicable notification to Dyches from GSA said that the agency was recalculating her subsidy payment, which would result in higher child care costs for her family. When Dyches asked for clarification on how GSA arrived at the new cost breakdown, she said agency officials could not explain the reasoning behind it.

To add insult to injury, the personal information of families participating in the child care subsidy program was compromised because of a security breach earlier this summer, as well as GSA’s failure to properly screen contractors before allowing them access to sensitive data. “I appreciate that you are owning up to this but not only did we get behind on payments, we had data breaches,” Oversight and Government Reform Chairman Jason Chaffetz, R-Utah, told Badorrek as well as witness Stephanie Hoehne, director of family and morale, welfare and recreation at the Army Installation Management Command. “We provided access to information that should never have been there. Nobody gets disciplined, nobody’s held responsible, and I think the problem is actually bigger than $8.4 million because now we have credit monitoring that has to go on. You don’t just do that for four months, you’ve got to do that for years.”

The Army tried to save money by moving the administration of the program from a contractor to GSA in 2003; instead that move resulted in a 50 percent net cost increase, totaling more than $8.4 million.  

Badorrek took over as GSA CFO in late December 2014, and said he first learned of the problems with the child care subsidy program in January 2015. The agency has tried to correct the mess by boosting staff, streamlining the application process, and improving overall communication, training and technology. But the challenges have proved too much for GSA, and the Army has decided to hire contractor Child Care Aware to take over responsibility of its subsidy program by the end of December, said Hoehne, who added that the Army failed to do its “due diligence” in monitoring GSA’s performance.

She said the backlog should be at a “stable rate” in December. However, after prodding from Chaffetz, Hoehne acknowledged that Child Care Aware had only been contacted this week by the Army about taking over the contract, which the agency initially planned to transfer to the Agriculture Department.

The GSA IG pointed out that agency officials knew as far back as 2011 about the increased caseload of a proposed expansion of the child care subsidy program, and that the “existing processes and personnel could not support such growth,” said IG Carol Ochoa. “Nevertheless, GSA failed to streamline processes and scale up staffing levels in advance of the expansion.”