The General Accounting Office (GAO) reviewed the performance measurement system of the Department of Labor's (DOL's) Veterans Employment and Training Service (VETS), which administers programs and activities designed to help veterans obtain employment and training assistance. The GAO review focused on the following items: VETS' proposed performance measures; (2) the data sources VETS proposes to use in its new system; and (3) any other measurement issues that might affect the comparability of states' performance data. The review was based on interviews and discussions with more than 45 officials in 15 states, interviews with VETS officials, and a review of relevant documents. The review established that although VETS' proposed performance measures improve performance accountability over the current system, certain aspects of the new system raise concerns that VETS should address. It is recommended that VETS establish a performance measure that more effectively gauges the success of its staff-assisted services and that it clearly define its target population. The GAO further recommends that VETS eliminate the measure related to the number of federal contractor jobs listed. The following items are appended: a comparison of performance measures used by the VETS, Employment Service, and Workforce Investment Act programs; states' entered-employment rates for veterans in program year 1999; and comments from the DOL. (MN)