VA to Contract Out Disability Appeals Hearings in Phoenix and Houston Starting Feb. 3, Officials Say

The Pilot Program

The Department of Veterans Affairs will announce as early as Wednesday a pilot program that transfers responsibility for thousands of legacy disability appeals hearings to a private contractor, with the first cases scheduled for Feb. 3 at the Phoenix and Houston regional offices, according to two VA officials familiar with the plan. The initiative, developed inside the Veterans Benefits Administration over the past four months, is intended to cut into a backlog that now exceeds 230,000 pending appeals, the officials said. The contractor will schedule and conduct both video and in-person hearings for veterans who have been waiting more than one year for a decision, the officials said.

The pilot will begin with roughly 14,000 legacy appeals drawn from the Phoenix and Houston queues, with each city receiving equal shares of the initial workload, the officials said. The contract carries a ceiling of $340 million and runs for 18 months, with options to expand to six additional regional offices if the first phase meets timeliness targets, according to one of the VA officials. The contractor will not decide whether benefits are granted; it will gather testimony, manage exhibits, and produce a recommended decision for VA administrative law judges to approve or revise, the official said.

The backlog has grown despite prior attempts to hire more judges and to digitize paper files, leaving tens of thousands of veterans waiting for hearings that can determine monthly compensation, access to vocational rehabilitation, and eligibility for survivor benefits, the officials said. One VA official said the department expects the contractor to complete the initial 14,000 hearings by July 31, with a goal of reducing the average wait from 14 months to eight months by the end of the calendar year.

How the Contract Will Work

Hearings will be conducted at existing VA facilities in Phoenix and Houston, as well as at contractor-operated sites that will open by Feb. 24, the officials said. Veterans will retain the right to appear before a VA judge if they request it within 10 days of receiving notice, but the default path will route most claimants through the contractor-managed process, one official said. The contractor is required to complete scheduling within 45 days of assignment and to issue a recommended decision within 75 days of the hearing, the officials said.

The contractor must use hearing officers who complete a training course modeled on the VA administrative law judge certification program, the officials said. A quality-review team made up of federal employees will audit a random sample of 5 percent of contractor recommendations each month, and the contractor will face financial penalties if error rates exceed 4 percent, one official said. Veterans will continue to file notices of disagreement and substantive appeals through the existing Board of Veterans' Appeals system, the officials said.

The VA selected the contractor through a competitive solicitation issued in September 2025, with proposals evaluated on price, technical approach, and past performance supporting federal health systems, the officials said. The contract includes a 30-day transition period beginning Jan. 20, during which current VA employees will shadow contractor hearing officers at both pilot sites.

A veterans-service-organization representative who was briefed on the plan said the group has pressed VA leaders to guarantee that contracted hearing officers receive the same training as federal administrative law judges and that veterans receive advance notice in writing. The representative, who spoke on condition of anonymity because the announcement is not yet public, said the organization is waiting to see whether the contractor will be held to the same ethical standards that govern VA employees.

A military spouse advocate who advises families at Fort Cavazos, Texas, said the Houston expansion could help spouses and caregivers who now drive hours to downtown Houston for hearings. The advocate said families have reported wait times stretching to 14 months for scheduling and that any reduction would ease financial strain, especially for households relying on a single active-duty income. The advocate added that clearer instructions about how to request a VA judge rather than a contractor would reduce anxiety among veterans with complex medical histories.

Reaction and What Comes Next

The formal announcement is expected between Jan. 14 and Jan. 16, the VA officials said. The department plans to publish a Federal Register notice on Jan. 20 seeking public comment on whether to expand the model to the St. Petersburg, Atlanta, and St. Louis regional offices by May 1, one official said. The notice will also propose updated quality metrics, including a requirement that at least 92 percent of recommended decisions be upheld on review by VA judges.

If the pilot succeeds, the administration could ask Congress for an additional $120 million in fiscal 2027 to cover a nationwide rollout, according to a congressional aide briefed separately on the proposal. The aide said the House Veterans' Affairs Committee has scheduled a closed-door briefing for Jan. 22. Watch for pushback from veterans groups concerned about privatization, as well as for any White House statement tying the pilot to broader plans to reduce the federal civilian workforce.