In 2011, the agencies decided the solution would be to create a single electronic health-care record together. But after two years, the departments' secretaries in February canceled the plan with little explanation.
"It's frustrating. It's been inefficient for service members to have to hand-deliver records from one system to another when they get out of the military," then-Defense Secretary Leon Panetta said at the time. "It doesn't make a hell of a lot of sense."
Instead of a joint system, Panetta said the two agencies would upgrade their own electronic health-record systems and build software that would allow the two systems to exchange files.
Panetta said the new direction would allow the departments to meet the goal interoperability and do it for a lower cost. But records show the cost may not be lower.
Meanwhile, the VA has moved to invest $12 billion over five years on an entirely new project called Transformation Twenty-One Total Technology, or T4, to upgrade its own technologies. Those upgrades are supposed to include interoperable software that can be used between the VA and DOD.
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According to contract data, the VA began paying companies for the project in July 2011, as money still was still being spent by both the DOD and VA on the single, joint health-care records system.
One of the VA's contractors, Harris Corp., has a multiyear contract with the VA worth $80.3 million to create software allowing the two departments' systems to communicate with each other, a deal that was signed almost a year before the DOD and VA gave up on a single electronic health record.
The DOD also is looking for a replacement for its health record system. The 2014 DOD budget requests $466.9 million for "initial outfitting" and "replacement and modernization" of its current health-care record.
For a disability claim to be processed in 125 days, a goal outlined in a Jan. 25 VA report, the files must be electronic, which means all paper records must be scanned into the system.
The VA scanning system—Veterans Benefits Management System (VBMS)—cost $480 million between 2009 and 2012, yet the VA never set deadlines for the records to be scanned. As of early July, only about 30 percent of paper claims had been scanned—that's 165 million pieces of paper, according to the VA.
That does not include the estimated 26,000 service members who will make their way home within the next year from Afghanistan. Nor does it include veterans who have yet to file disability claims.
Those pieces of paper can make or break a veteran's chance of getting the correct disability compensation. The compensation can help offset costs such as rent and car payments for those who may not be able to work because of issues they suffer, such as post-traumatic stress disorder or chronic back pain.
In 2012, the average time a claim waited for evidence to be processed—which includes those health and service records from DOD as well as physical exams—was 206.7 days, according to Veterans Benefits Administration documents.
The National Defense Authorization Act for 2008 also called for the creation of an agency to fix the interoperability problems between the VA and DOD. The Interagency Program Office was established as the "single point of accountability" between the two departments.
Debbie Filippi, the first director of the office, said restrictions from the VA and DOD, as well as a minimal budget, kept the office from making progress during her two-year tenure. "It takes time to turn an aircraft carrier," said Filippi, who retired in 2011, before the cancellation of the joint electronic health-record project.
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In March, Allison Hickey, undersecretary of the Veterans Benefits Administration, told members of Congress there is an agreement in place requiring the DOD to provide "100-percent-complete service treatment and personnel records in an electronic, searchable format."
The VBA estimates such a move would cut the claims backlog time by anywhere from 60 to 90 days.
An amendment to the 2014 National Defense Authorization Act, proposed by Rep. Ann Kirkpatrick, D-Ariz., would require the DOD to provide complete service treatment records to the VA within 90 days of a service member leaving the military.
Rep. Phil Roe, R-Tenn., in May introduced legislation requiring the VA and DOD to revive plans for the single, integrated health record system. "You don't spend a billion dollars and say we can't do it," Roe told News21.
"This is one we have to get right," he said. "Not for my generation, but for future soldiers I don't even know."
—By Hannah Winston of News 21 for NBC News