[Senate Hearing 111-176]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 111-176

                  HEARING ON VA'S CONSTRUCTION PROCESS

=======================================================================

                                HEARING

                               BEFORE THE

                     COMMITTEE ON VETERANS' AFFAIRS
                          UNITED STATES SENATE

                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                             JUNE 10, 2009

                               __________

       Printed for the use of the Committee on Veterans' Affairs


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
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                     COMMITTEE ON VETERANS' AFFAIRS

                   Daniel K. Akaka, Hawaii, Chairman
John D. Rockefeller IV, West         Richard Burr, North Carolina, 
    Virginia                             Ranking Member
Patty Murray, Washington             Johnny Isakson, Georgia
Bernard Sanders, (I) Vermont         Roger F. Wicker, Mississippi
Sherrod Brown, Ohio                  Mike Johanns, Nebraska
Jim Webb, Virginia                   Lindsey O. Graham, South Carolina
Jon Tester, Montana
Mark Begich, Alaska
Roland W. Burris, Illinois
Arlen Specter, Pennsylvania
                    William E. Brew, Staff Director
                 Lupe Wissel, Republican Staff Director















                            C O N T E N T S

                              ----------                              

                             June 10, 2009
                                SENATORS

                                                                   Page
Akaka, Hon. Daniel K., Chairman, U.S. Senator from Hawaii........     1
Burr, Hon. Richard, Ranking Member, U.S. Senator from North 
  Carolina.......................................................     2
Isakson, Hon. Johnny, U.S. Senator from Georgia..................     9
Johanns, Hon. Mike, U.S. Senator from Nebraska...................    10
Burris, Hon. Roland W., U.S. Senator from Illinois...............    16
Begich, Hon. Mark, U.S. Senator from Alaska......................    24

                               WITNESSES

Udall, Hon. Mark, U.S. Senator from Colorado.....................     3
    Prepared statement...........................................     4
Perlmutter, Hon. Edward, House Representative from Colorado......     5
    Prepared statement...........................................     6
Bennet, Hon. Michael F., U.S. Senator from Colorado..............     8
    Prepared statement...........................................     9
Orndoff, Donald H., AIA, Director, Office of Construction and 
  Facilities Management, U.S. Department of Veterans Affairs; 
  accompanied by Brandi Fate, Director, Office of Capital Asset 
  Management and Planning Service, Veterans Health 
  Administration; James M. Sullivan, Director, Office of Asset 
  Enterprise Management; and Lisa Thomas, Ph.D., FACHE, Director, 
  Office of Strategic Planning and 
  Analysis, Veterans Health Administration.......................    12
    Prepared statement...........................................    13
    Response to requests arising during the hearing by:
      Hon. Roland W. Burris......................................    22
      Hon. Mark Begich...........................................    27
    Response to post-hearing questions submitted by:
      Hon. Daniel K. Akaka.......................................    28
        Addendum--Implementation Monitoring Report on Capital 
          Asset Realignment for Enhanced Services................    35
      Hon. Mike Johanns..........................................    64
Wise, David, Director of Physical Infrastructure Issues, 
  Government Accountability Office...............................    64
    Prepared statement...........................................    66
Cullinan, Dennis, Director, National Legislative Service, 
  Veterans of Foreign Wars of the United States..................    75
    Prepared statement...........................................    77
Cox, J. David, R.N., National Secretary-Treasurer, American 
  Federation of Government Employees, AFL-CIO....................    79
    Prepared statement...........................................    81

                                APPENDIX

Ilem, Joy, Assistant National Legislative Director, Disabled 
  American Veterans; prepared statement..........................    91

 
                  HEARING ON VA'S CONSTRUCTION PROCESS

                              ----------                              


                        WEDNESDAY, JUNE 10, 2009

                                       U.S. Senate,
                            Committee on Veterans' Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 9:33 a.m., in 
room 418, Russell Senate Office Building, Hon. Daniel K. Akaka, 
Chairman of the Committee, presiding.
    Present: Senators Akaka, Begich, Burris, Burr, Isakson, and 
Johanns.

     OPENING STATEMENT OF HON. DANIEL K. AKAKA, CHAIRMAN, 
                    U.S. SENATOR FROM HAWAII

    Chairman Akaka. The Committee on Veterans' Affairs of the 
U.S. Senate will come to order.
    Aloha. This morning we will take a look at the VA 
construction process, including how VA's vast infrastructure 
needs are managed. I also want to learn more about where we 
stand on the CARES effort--the now 5-year-old plan--to make 
sense of VA's capital assets.
    VA is a large health care system with an aging 
infrastructure and some new and growing needs. Planners have to 
balance large-scale construction projects with costs in the 
hundreds of millions, along with smaller projects and 
nonrecurring maintenance. VA's infrastructure must be adapted 
to meet the needs of today's veterans and prepare to respond to 
the changes that will come.
    VA has moved from a hospital-driven health care system to 
an integrated delivery system that emphasizes a full continuum 
of care. The lion's share of VA's infrastructure was designed 
and built decades ago under a different concept of health care 
delivery. Since then, VA health care has experienced a great 
shift from inpatient to outpatient services, and as a result, 
VA has a system which generally reflects yesterday's 
priorities, not today's.
    The goal of CARES was a good one--shift resources from 
underused, inefficient, or obsolete buildings to support better 
ways of furnishing health care. However, the degree to which 
this has happened, as well as the extent to which this 
continues, remains unclear.
    In terms of current projects, VA has requested over $1.9 
billion for fiscal year 2010 construction programs. While this 
is significant, it is clear that there is an extensive backlog 
of major construction projects, which require far more funding 
with such high dollar figures dedicated to construction 
projects. The Committee must understand the basis for VA's 
decision process.
    I see today's hearing as beginning a focused look at where 
VA is with respect to its capital infrastructure and how we 
might go forward. I hope that we will hear some compelling 
suggestions for expediting the construction process and for 
improving it.
    I would like to now call for the statement of our Ranking 
Member, after which I will introduce our colleagues here for 
their statements.

        STATEMENT OF HON. RICHARD BURR, RANKING MEMBER, 
                U.S. SENATOR FROM NORTH CAROLINA

    Senator Burr. Thank you, Mr. Chairman. Aloha.
    Chairman Akaka. Aloha.
    Senator Burr. Senator Udall, good to have you here. I'll be 
brief.
    Mr. Chairman, thank you for calling this hearing. Welcome 
to all the witnesses of all the panels.
    Mr. Chairman, you have often heard me talk about the need 
to transform the VA's health care system to a 21st Century 
delivery system and organization. In his budget, the President 
states that he wants the VA to be veteran-centric, results-
driven, and forward-looking. Such transformation, and I quote 
``is determined by new times, new technologies, new demographic 
realities, and new commitments to today's veterans.''
    This transformation includes technological advances, new 
pharmaceutical products, and an emphasis on preventative care 
that greatly reduces the need for lengthy hospital stays. 
That's a good thing. And I've never talked to anyone who wanted 
to spend more time in a hospital.
    This transformation also includes providing veterans 
greater access to care closer to where they live; dislocating 
families less. Something we see or have seen with increasingly 
regularity is VA opening new outpatient clinics across the 
country and some with ambulatory units attached.
    The President and Secretary Shinseki have also endorsed the 
HCC approach--the health care centers approach--to health care 
delivery. HCCs have the ability to provide 90 to 95 percent of 
the care veterans need, including primary care, specialized 
care, and ambulatory surgery. One of the first HCCs was opened 
in Columbus, Ohio, last fall. To supplement the outpatient care 
provided at the HCC, VA has collaborated with inpatient 
providers in the community. Although more time is needed to 
fully evaluate the concept, one thing is clear so far, it has 
saved veterans living in Columbus from having to drive 144 
miles to access their health care. I think that is a good 
thing. More HCCs are in the pipeline, including three that are 
in this year's budget for the State of North Carolina. I 
welcome those HCCs.
    These state-of-the-art facilities will eliminate the need 
for many veterans to drive to faraway hospitals for their care 
and will stretch VA's construction dollars far more than it 
otherwise would. We all know that construction dollars are 
limited. There are 66 major medical facility construction 
projects vetted and approved by VA for the fiscal year 2010 
budget. However, appropriations were requested for the design 
of only seven of these facilities. Fifty-nine projects will 
have to wait until another year.
    What this suggests is that the VA and Congress must 
continue to think of innovative ways to meet the vast needs 
that exist in the system. I am pleased we have a panel of 
witnesses today that can help us try to chart that path 
forward.
    One last comment before I conclude, Mr. Chairman. It 
concerns the over $1.4 billion allocated to the VA on the 
stimulus package passed last February, which included $1 
billion for maintenance projects. According to the 
Administration's Web site, the latest numbers indicate that 
just over three hundredths of 1 percent of these dollars has 
actually been spent to date. Three hundredths of 1 percent.
    We are now in the fourth month since the stimulus package 
was signed into law. I am anxious to hear why there has been a 
delay in spending money that was meant to stimulate the economy 
and what the plan is going forward.
    Mr. Chairman, I look forward to the testimony today and to 
being enlightened by our good friend, Senator Udall.
    Thank you, Chair.
    Chairman Akaka. Thank you very much, Senator Burr, for your 
opening statement.
    Now, I would like to welcome two distinguished gentleman 
from Colorado, Senator Mark Udall and Congressman Ed 
Perlmutter. I understand that Senator Bennet is on his way 
here.
    They are all supporters of a new VA standalone medical 
center at the former Fitzsimons Army Base in Aurora, Colorado. 
I can safely say that having two, and possibly three of you, 
certainly gives us full coverage of the Denver issue.
    So, let us begin with Senator Udall. Senator Udall.

                 STATEMENT OF HON. MARK UDALL, 
                   U.S. SENATOR FROM COLORADO

    Senator Udall. Thank you, Chairman Akaka, Ranking Member 
Burr, Senator Isakson, Senator Johanns.
    I appreciate the opportunity to tell you a little bit about 
the history of the VA Hospital and also where we hope to go in 
the near and the immediate future.
    We have a new, and we hope a final plan for the VA Medical 
Center on the Fitzsimons Campus in Aurora, Colorado. As some of 
you may know, the current facility is almost 60 years old. It 
is at full capacity, and it does not meet the needs of our 
veterans. Sometimes veterans, Mr. Chairman, have to wait months 
to see a doctor, and veterans with spinal cord injuries have to 
travel to other States for treatment. And that is why the 
development of a state-of-the-art veterans' facility at 
Fitzsimons was a centerpiece of the VA's Capital Construction 
Plan under the Capital Asset Realignment for Enhanced Services, 
or as it is known, the CARES Program.
    Five years ago, as part of this CARES Program, Denver was 
identified as a city in urgent need of a new VA center. Today 
there is still no hospital and the need is still urgent, as you 
can all imagine, as thousands of young veterans returning from 
Iraq and Afghanistan require care for their wounds, whether 
physical or mental, or both. We also have an additional four 
hundred thousand veterans in the region who require care.
    So, I am pleased to be able to say although there have been 
a few bumps along the road--three secretaries of the VA and 
numerous plans and many intervening years at Fitzsimmons--it is 
again one of the highest priorities for the VA.
    As you know, Secretary Shinseki, who came out of 
retirement--I think in the wonderful State of Hawaii--listened 
to the concerns of our delegation, our local veterans' 
community, and veterans' service organizations, and his own 
advisors. And earlier this year he concluded that a standalone 
facility with comprehensive specialty care services, including 
a 30-bed spinal cord injury center, is essential in order to 
meet the needs of veterans throughout the Rocky Mountain 
region.
    We are excited that the plan also includes constructing new 
health care centers in Colorado Springs, Colorado, and 
Billings, Montana; a number of new clinics in rural health 
sites; and an outpatient administrative building at the Buckley 
Air Force Base, which is in Colorado, as well.
    Mr. Chairman, if I could turn to costs, which are always, 
of course, very, very important. The new estimate for the total 
cost is $800 million dollars with $119 requested in this year's 
President's 2010 budget. So far, we have authorized, Mr. 
Chairman, $568 million for the hospital, but this is not enough 
to get us all the way to the finish line. So, I look forward to 
working with the Committee to increase these levels.
    I want to thank my colleague, Representative Perlmutter, 
for his hard work, and our former colleague, Senator and now 
Secretary Salazar, for leading the charge when it looked like 
the VA was going to back away from its promise to build a 
standalone hospital. Senator Bennet has quickly picked up where 
Senator Salazar left off and he is pushing hard to get the 
project underway.
    In my notes here I am also encouraged to talk about my 
contribution. What I would say is I have been working on this 
for 10 years, and I was working on this when Senator Burr, 
Senator Isakson, and I were all members of the House of 
Representatives--all those glorious years in the past.
    So, I am delighted to be here today. I am delighted to be 
able to, I think, see the end of the light at the end of the 
tunnel.
    There is a groundbreaking scheduled in August, and I want 
to thank the Committee for giving me an opportunity to speak to 
you today. I ask your support so that we can finish this 
project in the way that our veterans deserve.
    Thank you, Mr. Chairman.
    [The prepared statement of Senator Udall follows:]
   Prepared Statement of Hon. Mark Udall, U.S. Senator from Colorado
    I am glad to have the chance to testify today about the new--and, 
we hope, final--plan for the VA Medical Center on the Fitzsimons campus 
in Aurora, Colorado.
    As you know, the current medical center in Denver is nearly 60 
years old, is at full capacity and does not meet the needs of our 
veterans. At the existing VA hospital in Denver, veterans sometimes 
have to wait months to see a doctor, and veterans with spinal-cord 
injuries have to travel to other states for treatment.
    That's why the proposal for the development of a state-of-the-art 
veterans' facility at Fitzsimons was a centerpiece of the VA's capital 
construction plan under the Capital Asset Realignment for Enhanced 
Services, or CARES program.
    Five years ago, as part of the CARES plan, Denver was identified as 
a city in urgent need of a new VA medical center. Today, there is still 
no new hospital, and the need is still urgent, as thousands of young 
veterans returning from Iraq and Afghanistan require care for their 
physical and mental wounds, in addition to more than 400,000 other 
veterans in the region who require care.
    I am so pleased to be able to say that while there have been a few 
bumps on the road--three secretaries of Veterans Affairs, numerous 
plans, and many intervening years--Fitzsimons is again one of the 
highest priorities for the VA.
    As you know, Secretary Shinseki listened to the concerns of the 
Colorado Congressional delegation, our local veterans' community and 
veterans' service organizations, and his own advisors. And earlier this 
year he concluded that a stand-alone full-service hospital with 
comprehensive specialty care services--to include a 30-bed Spinal Cord 
Injury Center--is essential in order to meet the needs of veterans 
throughout the Rocky Mountain Region.
    We are excited that the plan also includes constructing new Health 
Care Centers in Colorado Springs, Colorado, and Billings, Montana; a 
number of new clinics and rural health sites; and an outpatient and 
administrative building at Buckley Air Force Base in Colorado.
    I understand the new estimate for the hospital's total cost is $800 
million, with $119 million requested in the president's fiscal year 
2010 budget. As you know, Mr. Chairman, Congress has so far authorized 
$568 million for the hospital, but this is not enough to get us to the 
finish line with these updated cost estimates. I hope to work with the 
Committee to increase these levels.
    I want to thank my colleague Representative Perlmutter and my 
former colleague and now Secretary Ken Salazar for leading the charge 
when it appeared that the VA would not make good on its promise to 
build a stand-alone hospital at Fitzsimons. Rep. Perlmutter has worked 
tirelessly to make this hospital a reality and to provide care for 
Colorado's veterans. Senator Bennet has quickly picked up where Senator 
Salazar left off and is pushing hard to get the project underway.
    I have also worked hard on behalf of our veterans in Colorado. So I 
am delighted--after fighting for a veterans hospital for years as a 
member of the House--that I am testifying before you in the Senate, at 
a time when we can finally see a light at the end of the tunnel. I know 
all of us here look forward to the groundbreaking in August.

    I want to thank you, Mr. Chairman, and the Members of this 
Committee for your support over the years, and ask that your support 
continue as we work to secure the funding necessary to finally complete 
this project.

    Chairman Akaka. Thank you for your statement, Senator 
Udall.
    I am going to call on Representative Perlmutter for your 
opening statement and your statement about Denver and the 
hospital there.
    Representative Perlmutter.

   STATEMENT OF HON. EDWARD PERLMUTTER, A REPRESENTATIVE IN 
                     CONGRESS FROM COLORADO

    Mr. Perlmutter. Thank you, Mr. Chairman, Senator Burr, and 
Distinguished Members. Thank you for inviting a member of the 
House to come testify before your Committee.
    This is a great opportunity for the veterans of Colorado. 
We have been dealing with this project, as Senator Udall said, 
for at least 10 years, sort of back and forth. And the issue 
that we are dealing with is the need for a new state-of-the-art 
Veterans Administration standalone medical center at the former 
Fitzsimons Army Base in Aurora, Colorado.
    I would like to acknowledge the work of former Senator Ken 
Salazar, as well as Senator Wayne Allard, both of whom were 
strong partners in moving this project forward. I am equally 
pleased that Mark Udall now is a member of your chamber and he 
and Senator Mike Bennet are also champions for this particular 
facility--one that has been long, long overdue.
    Mr. Chairman, in your remarks, you talked about sort of the 
fits and starts within the CARES program, and this is one of 
those examples. But finally, I think with the concerted effort 
of the Congress, as well as the Administration, we can move 
forward and fulfill the promises that we made to these veterans 
a long time ago.
    General Shinseki, 2\1/2\ months ago in a clear statement, 
said we are going to move forward with a standalone facility 
which will serve the Rocky Mountain West and the Western Plains 
veterans. So, Nebraska, Kansas, Colorado, Utah, Idaho, Montana, 
and Wyoming and the 700,000 veterans within that region will be 
served as part of this effort.
    Our veterans deserve this medical facility. This is one 
that is worthy of their service. We found--and the CARES report 
is clear--that the current facility that we have simply is 
obsolete; it is undersized and is not meeting the needs of our 
veterans.
    The Commission had 38 public hearings and over 200,000 
public comments, and was completed and accepted by Secretary 
Principi 5 years ago. We are on our fourth secretary of the VA, 
and we hope that this time things will move forward with the 
groundbreaking scheduled for the end of August.
    The CARES Committee Report concluded that there was a space 
deficit of 242,000 square feet. So, as Senator Udall said, the 
Congress has authorized $568 million for the project, of which 
$188,300,000 has been appropriated. Property has been purchased 
and we are ready to turn dirt. So, Senator Burr, your question 
about the stimulus and moving forward for jobs now to help us 
within this recession--this project is ready to please you.
    The new medical center will provide a full range of 
medical, laboratory, research, and counseling services, 
including a new spinal cord injury unit recommended by the 
CARES report. Moreover, it will be a joint facility with the 
Department of Defense to provide care for personnel stationed 
at installations throughout Colorado and VISN-19. In order to 
accomplish this, the President's budget proposes $119 million 
be appropriated this year for the Fitzsimons facility.
    I applaud Secretary Shinseki and President Obama for 
bringing closure to this long-awaited decision to move forward 
with this project. The veterans of Colorado very much 
appreciate the support of this project which it has received 
from this Committee. The VSOs have been involved from day one 
in this project and are very supportive and very determined to 
have this go forward, as the Chairman knows from a visit he 
made to Colorado a few months ago.
    I thank you for the opportunity to speak to you. This is a 
critical project for our State, and for the Rocky Mountain West 
and Western Plains regions. I look forward to your questions 
and to your support of this project.
    [The prepared statement of Mr. Perlmutter follows:]
       Prepared Statement of Ed Perlmutter, U.S. Representative, 
               Colorado's Seventh Congressional District
    Chairman Akaka, Senator Burr and distinguished Members of the 
Committee, I would like to thank you for the opportunity to briefly 
testify today on an issue that has been of great concern to the 
Colorado veterans and veterans receiving medical care in the Veterans 
Integrated Service Network 19 Rocky Mountain Network. That issue has 
been the need for a new state-of-the-art Veterans Administration stand-
alone medical center at the former Fitzsimons Army Base in Aurora, 
Colorado.
    But before I begin I would like to acknowledge the work of former 
Senator Ken Salazar on this project, he was a strong partner with me, 
as was former Senator Wayne Allard, in ensuring the construction of 
this hospital. Now, I am equally pleased that Senator Mark Udall and 
Senator Michael Bennet picked up where Senators Salazar and Allard left 
off. We are all working together with the rest of the delegation and 
General Shinseki to fulfill our promise to our veterans to provide them 
the best healthcare possible. This is the least we can do for their 
dedicated service to our country.
    There are an estimated 426,000 veterans in Colorado, and 700,000 in 
VISN 19 whose major VA medical facility simply doesn't cut muster. They 
deserve a medical facility worthy of their service. It is our duty to 
give the VA the resources to make world class care available to world 
class soldiers. Many of them were wounded in battle, and many of them 
will rely on intensive medical care from the Veterans Administration 
for the rest of their lives.
    In 1998, with the cost of healthcare and the cost to maintain older 
VA facilities continuing to grow, Congress established the Capital 
Asset Realignment for Enhanced Services Commission, or CARES 
Commission. The goal was to create an objective panel of experts to 
address the best way to consolidate existing VA facilities and 
potentially build new ones. After all, an independent commission is 
really the only venue whereby effective decisions--though sometimes 
politically difficult--can be made.
    In 2004, following 38 public hearings and over 200,000 public 
comments, the CARES study was completed and accepted by then Secretary 
Anthony Principi. The study illustrated the need for a replacement 
facility for the outdated and obsolete, nearly 60 year old, Denver VA 
Medical Center. They concluded the existing facility had a space 
deficit of 242,000 square feet for inpatient and outpatient needs. 
Moreover, they found significant problems with patient privacy at the 
existing facility. These problems were--and continue to be--so bad the 
Commission deemed the replacement facility at Fitzsimons a high 
priority of the VA.
    Since the 2004 CARES study, the process of seeking a final 
resolution to move forward with the actual construction of the new 
Aurora VA Medical Center has been a frustrating history of indecision 
and reversal of construction plans. With each succeeding VA secretary, 
we have seen the plans alternate between a shared facility and a stand-
alone facility. Enough is enough! Congress has authorized $568,400,00 
for the project, of which $188,300,000 has already been appropriated. 
Property has been purchased and we are ready to turn dirt.
    On March 18, 2009, Secretary of Veterans Affairs Eric Shinseki met 
with the Colorado Congressional Delegation to announce the VA will move 
forward with the construction of a new stand alone VA Medical Center at 
the Fitzsimons site in Aurora, Colorado. The new medical center will 
provide a full range of medical, laboratory, research and counseling 
services including a new spinal cord injury unit recommended by the 
CARES Commission report. Moreover it will be a joint facility with DOD 
to provide care for personnel stationed at installations throughout 
Colorado and VISN 19, as stipulated in the CARES report.
    In order to accomplish this, President Obama's budget proposes 
spending $1.19 billion in FY 2010 for construction of major projects 
within the VA. Of that, he has budgeted $119 million for the new 
Fitzsimons facility. We are anticipating a groundbreaking for 
construction of the new facility in August, which will create thousands 
of jobs and put our veterans that much closer to the care they deserve. 
I applaud Secretary Shinseki and President Obama for bringing closure 
to this long awaited decision to move forward with a project that is so 
critical to health care needs of the veterans served by VISN-19.
    The veterans of Colorado very much appreciate the support this 
project has received from the Members of this Committee. They will 
continue to need this support as we move forward to see this vision 
become a reality. In order to do this, we will also need your 
assistance to increase the authorization level. Currently the 
authorization is $568,400,000. However, the VA estimates the 
construction will be $800 million. I look forward to working with both 
senators from Colorado and Members of this Committee to enact this 
necessary authorization.
    Last, I would also like to acknowledge the very active veteran 
service organizations in Colorado who have played such a crucial role 
in fighting for this project for years. This final decision has taken 
well over 10 years for the Department of Veterans Affairs to reach. 
Also critical to this team effort were the University of Colorado 
Health Sciences Center, the Children's Hospital, and the city of 
Aurora.
    I want to thank the Chairman for visiting the Fitzsimons campus 
site several months ago and I want to thank the Committee staff for 
their dedication to ensuring quality healthcare for our veterans. I ask 
the members of the Senate VA Committee to continue their support for 
the stand-alone VA medical center in Aurora, Colorado in order to meet 
the needs of veterans in Colorado and throughout the Rocky Mountain 
West.

    Thank you for this opportunity, and I look forward to answering any 
questions you may have.

    Senator Akaka. Thank you very much, Representative 
Perlmutter. Thank you for your statement.
    Now, we will hear from Senator Bennet from Colorado.

             STATEMENT OF HON. MICHAEL F. BENNET, 
                   U.S. SENATOR FROM COLORADO

    Senator Bennet. Thank you, Mr. Chairman. I apologize for 
being late.
    Mr. Chairman, Ranking Member Burr, and other Members of the 
Committee, thank you very much for inviting me to be a part of 
today's hearing.
    I want to start by thanking Senator Udall for his hard work 
on the Denver VA Hospital, and I would also like the Committee 
to know that Congressman Perlmutter, in particular, has been 
indispensable in getting this critically important project off 
the ground.
    When I came to the Senate just a few months ago, one of the 
first things I did was join Senator Udall, Congressman 
Perlmutter, and the rest of the Colorado delegation, many of 
whom had been working on getting this facility built for 
several years in communicating to the new Administration my 
support for a standalone facility in the Denver area.
    Secretary Shinseki told us he supported a standalone 
facility, and as you know, he and President Obama have included 
$119 million in funding for it in their request for the 
upcoming fiscal year. We were particularly proud that this was 
the first decision that the VA made in capital construction 
this year. This funding will put the $800 million, 200-bed 
facility, which will serve 400,000 Colorado veterans, on track 
to open in 2013. When it does, 92 percent of Colorado veterans 
will be within 1 hour of VA primary care, and 81 percent of 
Colorado veterans will be within 2 hours of a medical center or 
health care center.
    The new Denver facility will set the bar high. It will 
bring together the best resources the VA has to offer and 
enable more veterans to access the high quality care they need 
and deserve. With capacity for addressing mental health needs 
and spinal cord injuries, it will be a shining example of how 
we can do right by our veterans--one that this Committee can 
point to for years to come.
    As the Committee considers the President's budget for 
fiscal year 2010, I join my colleagues and ask on behalf of 
Colorado's veterans that you preserve the $119 million the 
Administration has requested for this important project. I 
would also ask that when the time comes, you increase the 
authorization of the project to reflect its full estimated cost 
of $800 million. As the Congressman said, the project is 
currently authorized at $568 million.
    I want to close by saying thank you for your consideration. 
Thank you for your leadership on these issues. To Congressman 
Perlmutter, everybody in Colorado knows and should know that 
his commitment to this project has been tireless over many, 
many years, and it is extremely gratifying to see it finally 
being brought home. So, I want to thank you on behalf of all 
the citizens of Colorado for your tireless work on this.
    Thank you, Mr. Chairman.
    [The prepared statement of Senator Bennet follows:]
 Prepared Statement of Hon. Michael Bennet, U.S. Senator from Colorado
    Chairman Akaka, Ranking Member Burr, and other Members of the 
Committee, Thank you for inviting me to be a part of today's hearing. I 
want to start by thanking Senator Udall for his hard work on the new 
Denver VA hospital. And I would also like the Committee to know that 
Congressman Perlmutter in particular has been indispensable in getting 
this critically important project off the ground. My predecessor, 
Senator Ken Salazar, also worked hard to make this project at 
Fitzsimons a reality.
    When I came to the Senate just a few months ago, I joined Senator 
Udall, Congressman Perlmutter, and the rest of the Colorado 
delegation--many of whom have worked on getting this facility built for 
several years--in communicating to the new Administration my support 
for a stand-alone facility in the Denver area.
    Secretary Shinseki told us he supported a stand-alone facility, and 
he and President Obama have included $119 million in funding for it in 
their request for the upcoming fiscal year. This funding will put the 
$800 million, 200-bed facility, which will serve 400,000 Colorado 
veterans, on track to open in 2013. When it does, 92 percent of 
Colorado veterans will be within one hour of VA primary care, and 81 
percent of Colorado veterans will be within two hours of a medical 
center or health care center.
    The new Denver facility will set the bar high. It will bring 
together the best resources the VA has to offer and enable more 
veterans to access the high-quality care they need and deserve. With 
capacity for addressing mental health needs and spinal cord injuries, 
it will be a shining example of how we can do right by our veterans--
one that this Committee can point to for years to come.
    As the Committee considers the President's budget for FY 2010, I 
ask on behalf of Colorado's veterans, that you preserve the $119 
million the Administration has requested for this important project. I 
also ask that when the time comes, you increase the authorization of 
the project to reflect its full estimated cost of $800 million.
    Congressman Perlmutter could tell you that getting to this point 
hasn't been easy, but he sets a good example for us all in standing up 
for our veterans. Of course, it is because of the brave commitment of 
our veterans that we can stand here today. Their sacrifices have 
created the need, and the obligation we all have to fulfill that need. 
I'm proud of their service to Colorado and to our country.
    But it also takes leadership in government to make important things 
happen. I know the Chairman and the Committee reflect that leadership. 
So does Ed Perlmutter.

    Thank you, Mr. Chairman for allowing me to add to their voices.

    Chairman Akaka. Thank you very much, Senator Bennet for 
your statement.
    Chairman Akaka. Now I will ask for further opening 
statements. Senator Isakson.

               STATEMENT OF HON. JOHNNY ISAKSON, 
                   U.S. SENATOR FROM GEORGIA

    Senator Isakson. Thank you very much, Chairman Akaka. I 
will not make a statement, except unfortunately given the fact 
the HELP Committee is getting ready to start marking up the 
Health Care bill, I am going to have to leave. But I did want 
to raise a question for the panelists that hopefully they will 
be able to address to my office.
    In Georgia, we are fortunately having a total renovation 
and completion of the VA Hospital on Clairmont Road. We are 
very grateful for that, and I am very grateful to the Committee 
Members who helped me get the appropriations in the 
Appropriations Act to do that.
    However, we have run across a great problem during the 
course of the construction, and that is we have lost almost all 
of our accessible parking--or at least a significant amount of 
it. Clairmont Road is a very busy road that connects Interstate 
85 with downtown Decatur. The VA is operating a shuttle from an 
offsite parking lot to get patients to the hospital, but we 
have a number of people that are on oxygen who are being 
required, even with the shuttle, to walk extensive distances to 
get to the shuttle to get to the hospital. We have expressed to 
the VA our concerns, and we have had some good attention. I am 
not complaining.
    But, I do think when the discussion about logistics and 
planning for construction is done--and that is part of the 
purpose of this particular hearing--when there is a 
displacement of parking, which is oftentimes the case at a site 
when you do a renovation or improvement--we need to be very 
conscious in the planning to make parking a high consideration 
during that period of renovation or construction so as to 
minimize the amount of difficulty it causes our veterans and 
patients.
    With that said, that is my principal question, Mr. 
Chairman. And I hope during the course of the discussion this 
morning, although I will not be here, that can be addressed and 
our office can get a response on the question.
    Thank you, Mr. Chairman.
    Chairman Akaka. Thank you, Senator Isakson.
    Senator Johanns.

                STATEMENT OF HON. MIKE JOHANNS, 
                   U.S. SENATOR FROM NEBRASKA

    Senator Johanns. Mr. Chairman and Ranking Member, thank you 
very much for putting this hearing together.
    If I might just spend a moment talking about the Nebraska-
Western Iowa Veterans' Facility that is there. And I want to 
alert the panelists that, of course, I have an interest in 
that. Having worked my way through government for many, many 
years as a county commissioner, a city council member, a mayor, 
and Governor, et cetera, I am very used to working with capital 
improvement processes and budgets, and I understand that there 
is a process that we need to go through.
    But let me, if I might, cite some of the deficiencies we 
found in this veterans facility. There are dust, contaminants, 
potential infectious vectors being distributed throughout much 
of the hospital via the HVAC system. The hospital could not 
support a pandemic flu outbreak, which, of course, is on 
everybody's mind these days.
    The system was graded F in VA assessments dating back to 
1999. In the electrical system, there is not enough emergency 
power available to support equipment requiring emergency power. 
Now, in our State, like probably so many States, emergency 
power is absolutely necessary. Storms do come through this area 
and we need that power.
    Plumbing and medical gas system repairs and renovations 
require whole hospital shutdowns. For water and oxygen, piping 
is 50 years old. It is corroded. It fails on a recurring basis. 
Moisture is pulled into wall cavities because of the faulty 
HVAC system. It creates a perfect breeding ground for mold in 
that facility.
    Over 4,000 square feet of hospital space is not occupied, 
even though we have a deficiency in space in this hospital 
because there is reactor water and concrete that has yet to be 
removed.
    Now, I could go on and on. That is the bad news of what we 
are dealing with here. It is not a good situation for our 
veterans who need care. I really appreciate the work that 
Colorado is doing, but if you live on the eastern side of the 
State of Nebraska, that is a 10-hour drive to Colorado. Now, we 
love to visit Colorado--except when the football team beats 
us--but that is a long way away. And most of our population, as 
you know, is in Omaha and Lincoln--on that eastern one-third of 
the State. So, nothing I say here stands in the way of what 
they are trying to do. I applaud them for their efforts.
    That is the tough news. The good news about this project is 
the community is pulling together; the State is pulling 
together; and Western Iowa is pulling together to see how can 
we be helpful in bringing first class medical care to these 
veterans who have served our country so well.
    The good news is that in Omaha you have two medical 
centers--two medical schools--Creighton University, my alma 
mater, first class, and the University of Nebraska Medical 
Center. They want to join forces. They want to do everything 
they can to bring the best medical care to bear to help these 
veterans.
    Now, again, I understand capital improvements processes. 
But these conditions are not good, and I am hoping that if we 
can all work together and cooperate on not only this project 
but other projects that have this awful list of problems, that 
we can solve these problems. Hopefully, we can work together to 
get the funding and move these projects forward.
    No one would like front page stories about these 
conditions. They are not good.
    And so, Mr. Chairman, and Ranking Member, again, I thank 
you so very much. This gives us a forum to debate and discuss 
how best to deal with these issues. The reassuring thing about 
this Committee and the people that come before the Committee is 
we share one common goal. And that is, how do we improve the 
conditions for our veterans? I am anxious to be a partner in 
that.
    Thank you.
    Chairman Akaka. Thank you very much, Senator Johanns.
    Now, I want to welcome our principal witness from VA, 
Donald Orndoff, who is the director of the Office of 
Construction and Facilities Management.
    He is accompanied by Brandi Fate, Director of VHA's Office 
of Capital Asset Management and Planning Service; James 
Sullivan, Director of VA's Office of Asset Enterprise 
Management; and Dr. Lisa Thomas, Director of VHA's Office of 
Strategic Planning and Analysis.
    I thank all of you for being here this morning. VA's full 
testimony will appear in the record.

STATEMENT OF MR. ORNDOFF, AIA, DIRECTOR, OFFICE OF CONSTRUCTION 
AND FACILITIES MANAGEMENT, U.S. DEPARTMENT OF VETERANS AFFAIRS; 
 ACCOMPANIED BY BRANDI FATE, DIRECTOR, OFFICE OF CAPITAL ASSET 
       MANAGEMENT AND PLANNING SERVICE, VETERANS HEALTH 
 ADMINISTRATION; JAMES M. SULLIVAN, DIRECTOR, OFFICE OF ASSET 
ENTERPRISE MANAGEMENT; AND LISA THOMAS, Ph.D., FACHE, DIRECTOR, 
  OFFICE OF STRATEGIC PLANNING AND ANALYSIS, VETERANS HEALTH 
                         ADMINISTRATION

    Mr. Orndoff. Mr. Chairman and Members of the Committee, I 
am pleased to appear today to discuss the status of the 
Department of Veteran Affairs facility infrastructure. I will 
provide a brief oral statement.
    Current Medical Infrastructure. VA has a real property 
inventory of more than 5,400 owned buildings, 1,300 leases, 
33,000 acres of land, and approximately 159 million gross 
square feet of occupied space, both owned and leased. Our aging 
facilities were not designed to meet the changing demands of 
clinical care for the 21st Century.
    Continuing our recapitalization program is critical to 
providing world-class health care for veterans now and into the 
future.
    Our Current Major Construction Program. VA continues the 
largest capital investment program since the immediate post-
World War II period. Since 2004, VA has received appropriations 
totaling $4.6 billion in health care projects, including 51 
major construction projects. These projects include new and 
replacement medical centers, poly-trauma rehabilitation 
centers, spinal cord injury centers, ambulatory care centers, 
and new inpatient nursing units.
    Background--CARES. In 2000, the Veterans' Health 
Administration embarked upon the Capital Asset Realignment and 
Enhanced Services program, or CARES. CARES assessed the 
veterans' health care needs and promoted strategic realignment 
of capital assets. In 2003, VA released its draft national 
CARES plan and created the CARES Commission for further 
analysis.
    In May 2004, the Secretary published his CARES decisions 
and identified 18 sites whose complexity warranted additional 
study. The VA completed these studies in May 2008.
    Today--Strategic Facilities Planning Process. The tools and 
techniques acquired through CARES are now incorporated into 
VA's strategic health care facilities planning process. VA no 
longer distinguishes between CARES and other project planning 
needs.
    Our Goal--High Performance Medical Facilities. VA new 
medical facilities contribute to world-class health care for 
veterans today, tomorrow, and into the 21st Century. Our 
designed goal is to deliver high-performance buildings that are 
functional, cost-efficient, veteran-centric, adaptable, 
sustainable, energy efficient, and physically secure.
    Acquisition Strategies. VA uses a range of acquisition 
tools that are tailored to best satisfy the unique requirements 
of each project. We partner with industry leaders through 
architect-engineer design contracts, design-bid-build 
contracts, design-build contracts, integrated design construct 
contracts, construction management contracts, and operating 
leases.
    Our Fiscal Year 2010 Budget Requirement. VA's fiscal year 
2010 budget request continues our recapitalization effort 
supported by Strategic Facilities Planning Process. VA requests 
$1.1 billion in fiscal year 2010 for major construction to 
replace or enhance VA medical facilities and $196 million 
authorization for 15 new medical facility leases. VA also 
requests $112 million for major construction to expand two 
national cemeteries.
    In closing, I thank the Committee for its continued support 
to improve the Department's fiscal infrastructure to meet the 
changing needs of America's veterans. My colleagues and I stand 
ready to answer your questions.
    [The prepared statement of Mr. Orndoff follows:]
   Prepared Statement of Donald H. Orndoff, AIA, Director, Office of 
  Construction and Facilities Management, U.S. Department of Veterans 
                                Affairs
    Mr. Chairman and Members of the Committee, I am pleased to appear 
today to discuss the status of the Department of Veterans Affairs' (VA) 
health care infrastructure, our strategic facilities planning process, 
our facility design objectives, our acquisition strategies, and our 
proposed Fiscal Year 2010 budget. Joining me today are Brandi Fate, 
Director of the Veterans Health Administration's (VHA's) Office of 
Capital Asset Management and Planning Service; James M. Sullivan, 
Director of VA's Office of Asset Enterprise Management; and Lisa 
Thomas, Ph.D., FACHE, Director of VHA's Office of Strategic Planning 
and Analysis.
                     current medical infrastructure
    VA has a real property inventory of over 5,400 owned buildings, 
1,300 leases, 33,000 acres of land and approximately 159 million gross 
square feet (owned and leased). The average age of VA facilities is 
well over 50 years. Our older facilities were not designed to meet the 
changing demands of clinical care in the 21st century. Therefore VA's 
continuing program of recapitalization of these aging assets is very 
important to providing world-class health care to veterans now and into 
the future.
                   current major construction program
    The Department is currently implementing its largest capital 
investment program since the immediate post-World War II period. Since 
2004, VA has received appropriations totaling $4.6 billion for health 
care projects, including 51 major construction projects for new or 
improved facilities across the Nation. These projects include new and 
replacement medical centers; poly-trauma rehabilitation centers, spinal 
cord injury centers; ambulatory care centers; new inpatient nursing 
units; and projects to improve the safety of VA facilities. Thirty-six 
of the 51 projects have been fully funded at a total cost of 
approximately $3.1 billion. The remaining 15 projects have received 
partial funding totaling $1.6 billion against a total estimated cost of 
$4.5 billion. For these larger projects, VA requests design and 
construction funding in increments aligned with the projected multi-
year acquisition schedule.
                           background: cares
    In 2000, the Veterans Health Administration (VHA) embarked on the 
Capital Asset Realignment for Enhanced Services (CARES) process to 
provide a data driven assessment of Veterans' health care needs and to 
guide the strategic allocation of capital assets to support delivery of 
health care services over the next 20 years. The CARES program assessed 
Veterans' health care needs in each Veterans Integrated Service Network 
(VISN), identified service delivery options to meet those needs, and 
promoted strategic realignment of capital assets to satisfy identified 
needs. The goal was to improve access and quality of health care in the 
most cost effective manner, while mitigating impacts on staffing, 
communities, and on other VA missions.
    VA began the CARES process in 2000 with a regional pilot, then in 
2002 expanded nationally. In 2003, VA released its Draft National CARES 
plan and created the CARES Commission, an independent panel established 
to review VA's plans. The Secretary published his decisions in May 2004 
and identified 18 sites whose complexity warranted additional study. VA 
completed these studies in May 2008. One output of the CARES process is 
the development of a Five-Year Capital Plan that lists and ranks 
specific major construction projects.
              today: strategic facilities planning process
    The lessons learned through CARES are now incorporated into VA's 
strategic health care and facilities planning process. VHA no longer 
distinguishes between CARES and non-CARES planning as the tools and 
techniques acquired through CARES have become part of our standard 
operating procedures for strategic planning within our health care 
system.
    VA uses a multi-characteristic decision methodology in prioritizing 
its capital investment needs. Appropriate ``joint'' VA-Department of 
Defense (DOD) projects are evaluated to promote sharing and efficiency 
opportunities. Through this strategic facilities planning process, VA 
annually updates its Five-Year Capital Plan, which supports the 
development of VA's annual capital acquisition funding request.
    VHA employs its Health Care Planning Model to strategically assess 
demographic data, anticipated workload, and actuarial projections for 
health care services. VHA compares this data to its capital asset 
inventory to identify gaps in capability. To close gaps, VHA develops 
investment solutions that may become capital infrastructure projects. 
All proposed projects undergo thorough cost effectiveness, risk, and 
alternatives analyses.
    The Department's Capital Investment Panel (CIP) reviews, scores, 
and priority ranks potential projects based on criteria considered 
essential to providing high quality health care services. The scoring 
criteria include enhancement of service delivery, meeting workload 
projections, safeguarding assets, supporting special emphasis programs, 
addressing capital asset management priorities, promoting department 
alignment, and eliminating facility deficiencies. The CIP integrates 
both new and existing program requirements into a single prioritized 
project list.
    The CIP reports its analysis to the Strategic Management Council 
(SMC) for review. The SMC is VA's governing body responsible for 
overseeing VA's capital programs and initiatives. The SMC submits its 
recommendations to the Secretary, who makes the final decision on which 
projects to include in the budget.
        project design goal: high-performance medical facilities
    New VA medical facilities will contribute to world-class health 
care for Veterans today, tomorrow, and well into the 21st century. Our 
design goal is to deliver high-performance buildings that are:

     Functional, providing cutting-edge clinical spaces that 
leverage the latest medical technologies to produce the highest 
possible health care outcomes.
     Cost efficient, incorporating evidence-based design for 
clinical spaces that are efficiently sized and configured to maximize 
clinical capability for invested capital.
     Veteran-centric, placing special emphasis on design that 
is Veteran and family centered. Buildings welcome patients and visitors 
with effective design, open circulation and waiting areas, and expected 
amenities.
     Adaptable, creating buildings that will serve generations 
of Veterans not yet born. Our buildings must be flexible to adapt and 
support continual changing clinical practices, advancing technology, 
and medical research. Buildings are designed with engineering systems 
organized in interstitial levels between occupied floors to enable 
rapid and less expensive reconfiguration of clinical spaces.
     Sustainable, setting a standard of designing our medical 
centers to a minimum Leadership in Environmental and Energy Design 
(LEED) Silver level as defined by the U.S. Green Building Council, and 
following all relevant Executive Orders, including the High Performance 
& Sustainable Buildings Guidance required under E.O. 13423.
     Energy efficient, designing new facilities to meet or 
exceed energy reduction targets of the Energy Policy Act of 2005 and 
related Executive Orders, shrinking energy use 30 percent below 
American Society of Heating, Refrigerating and Air-Conditioning 
Engineers (ASHRAE) standards. VA is committed to incorporating 
renewable energy technologies in the design of new or renovated 
facilities.
     Physically secure, ensuring medical facilities are 
designed to fully comply with stringent physical security guidelines 
for mission critical, high-occupancy Federal facilities. This includes 
hardened structures, perimeter and access control, redundancy and 
modularity. Water storage, emergency power, and fuel supplies are sized 
to enable continued health care operations for four days in the face of 
natural or man-made disaster.
                         acquisition strategies
    VA uses a range of acquisition tools that are tailored to best 
satisfy the unique requirements of each project.
    For design acquisition, VA selects partners through a targeted 
Architect/Engineer (A/E) contract solicitation. Our selection process 
values past performance and experience on health care projects of 
similar complexity. We carefully evaluate the experience and 
capabilities of the key members of the proposed design team. We require 
our design partners to leverage the power of Building Information 
Modeling (BIM) as a common communication and collaboration tool. We 
engage peer review from separate A/E firms to assist the owner's review 
of proposed design solutions in meeting required design criteria and 
standards.
    For construction acquisition, VA uses a range of contract vehicles, 
including:

     Design-Bid-Build, where we fully develop the project 
design and use best value selection process, which assesses both 
technical and cost proposals. We typically use this contract vehicle 
for large, complex medical facility projects, such as large medical 
clinics.
     Design-Build, where a single contractor performs both the 
design development and the construction. We typically use this approach 
for smaller, less complex projects, such as parking structures.
     Integrated Design-Construct, where we bring the general 
contractor on board early in the design process, initially performing 
construction management functions, then construction work as design 
packages become available. This is VA's version of [email protected] approach 
that is widely used in the private sector of the construction industry. 
We plan to use this approach on our largest, most complex projects, 
such as new medical centers.
     Operating Leases, where we engage a developer to act as 
owner, designer, and constructor of ``build to suit'' leases. VA pays 
annual lease payments for terms up to 20 years. We typically use this 
strategy for smaller projects where VA does not currently own property, 
such as outpatient clinics.
     Construction Management, where we augment our capacity to 
perform the important owner role for cost analysis, schedule control, 
and field testing. We typically use CM support on larger, more complex 
projects, such as new medical centers.

    VA is a leader among Federal agencies in meeting socio-economic 
goals for small business categories. We place special emphasis on 
contracting with veteran owned businesses, especially service-disabled 
veteran owned businesses.
             major construction acquisition process review
    In late April 2009, VA's Office of Inspector General (OIG) issued a 
follow-up audit report to a February 2005 IG report related to CFM 
major construction acquisition processes. OIG found that CFM had 
implemented 10 of the 12 recommendations from the original report. OIG 
made four new recommendations in their follow-up audit, including one 
implemented before the report was issued. CFM is addressing the 
remaining three recommendations which will require new policies, 
procedures, and additional oversight staff within the CFM Quality 
Assurance Office.
                        fiscal year 2010 request
    VA's FY 2010 budget request continues our recapitalization effort 
supported by our strategic facilities planning process. VA requests 
$1.1 billion in FY 2010 for major construction in support of the 
Veterans Health Administration to replace or enhance VA medical 
facilities. Of this amount, $649 million provides construction funding 
for five ongoing projects at Denver, CO; Orlando, FL; San Juan, PR; St. 
Louis (Jefferson Barracks Division), MO; and Bay Pines, FL. Another 
$211 million will design seven new projects at Livermore, CA; 
Canandaigua, NY; San Diego, CA; Long Beach, CA; St. Louis (John Cochran 
Division), MO; Brockton, MA; and Perry Point, MD. The remainder of the 
major construction request will provide funds for advance planning, 
facility security, judgment fund and land acquisition needs.
    VA requests $112 million in FY 2010 for major construction in 
support of the National Cemetery Administration to expand national 
cemeteries in Joliet, IL and Houston, TX, Also included are funds for 
advance planning and land acquisition.
    VA requests authorization for $196 million for 15 new major medical 
leases. Lease projects are located at Anderson, SC; Atlanta, GA; 
Bakersfield, CA; Birmingham, AL; Butler, PA; Charlotte, NC; 
Fayetteville, NC; Huntsville, AL; Kansas City, KS; Loma Linda, CA; 
McAllen, TX; Monterey, CA; Montgomery, AL; Tallahassee, FL; and 
Winston-Salem, NC.
                               conclusion
    In closing, I thank the Committee for its continued support to 
improve the Department's physical infrastructure to meet the changing 
needs of America's Veterans. We look forward to continuing to work with 
the Committee on these important issues. Thank you for the opportunity 
to appear before the Committee today. My colleagues and I stand ready 
to answer your questions.

    Chairman Akaka. Thank you very much. I would like to now 
call on our Senator from Illinois for any opening statement he 
may have before we continue with the questioning.

              STATEMENT OF HON. ROLAND W. BURRIS, 
                   U.S. SENATOR FROM ILLINOIS

    Senator Burris. Not at the moment, Mr. Chairman. Thank you, 
sir.
    Chairman Akaka. Thank you very much.
    Mr. Orndoff, accompanying you are various officials 
involved in the construction process. At the onset, tell me 
what these other individuals do specifically and how they 
interact with one another.
    Mr. Orndoff. Yes, sir.
    First, I'll begin with Ms. Lisa Thomas on my far left. She 
is in the VHA's Strategic Planning area, which basically 
defines our strategic requirements and ultimately identifies 
where areas of need are--gaps in veteran service need and 
capabilities. So that office basically defines, initially, the 
requirement that needs some type of a solution--a facility 
solution being potentially one of those.
    Moving to my right, Ms. Brandi Fate. Her office then takes 
that output as input and plans projects, further defines 
requirements, and develops a project that would move forward. 
Of course, she works closely with the people at the regional 
level, at the VISN level, and at the local level at the medical 
centers to fully flush out the requirements and make sure that 
a project coming forward is, in fact, a valid requirement and 
would be one that would make--hopefully make--the priority 
list.
    The total output of that effort is the list of projects 
that we have in our 5-year capital plan, which is 66 projects 
that were identified earlier. And all of those projects have 
been validated and are on the list in a priority order.
    Mr. Sullivan, to my left, is from our Office of Management, 
the Asset Enterprise Management Office. He is the key player in 
working within our Office of Management and with our fiscal 
officer to develop the input of where we are in terms of 
prioritizing projects. His office takes the lead in developing 
the criteria that is used--creating a recommendation that comes 
forward ultimately approved by the Secretary.
    Using that established list of criteria against the list of 
projects, we then basically score them and come up with a 
priority order. The top of the priority list, of course, then 
is included in the Department's budget--the annual budget that 
would come forward.
    So, basically, Mr. Sullivan's office sort of manages the 
process of getting the requirements prioritized and into the 
budget working with the fiscal officer. So, it starts with 
strategic requirements, project requirements, prioritization, 
budgeting. And then, at the end, I catch the result of all of 
that and I am the execution guy--the guy that delivers 
projects--the brick and mortar that we all know and love.
    Chairman Akaka. Thank you for that explanation.
    You have stated in your testimony that VA no longer 
distinguishes between CARES and non-CARES planning. Of all the 
projects approved by Secretary Principi and his CARES decision, 
how many were undertaken? And where do we stand on those?
    Mr. Orndoff. Yes, sir. Since fiscal year 2004, basically 
when CARES was initiated, we have had a total of 58 projects 
identified. Nine of those are complete, 20 are under 
construction, 13 are in design, 15 are in planning.
    Many of them are projects that are continuing to work 
through the process, as we said, in construction. Certainly, 
the Denver project that was discussed earlier is one of those 
projects that is moving forward. Many of the projects that we 
have partially funded today are a result of the CARES process. 
All of those requirements have made the prioritization list as 
we continue to refresh it every year moving forward.
    Any time a project is partially funded, at that point there 
is no longer a prioritization of that project. It is 
automatically above the line, if you will, and moves forward to 
completion. So, really, it is just project-specific as to where 
any particular project is in terms of scheduling and delivery, 
but in every case where we have a valid output from CARES they 
have moved forward.
    Chairman Akaka. Thank you. Let me just--before I call on 
Senator Burr--what were the lessons learned from CARES?
    Mr. Orndoff. Let me turn that one to Ms. Thomas, if I may.
    Chairman Akaka. Ms. Thomas.
    Ms. Thomas. Good morning, Mr. Chairman.
    As you know, CARES is a data-driven assessment of our 
health care system and it was used to guide the strategic 
allocation of our assets to support health care delivery.
    Our goals under CARES were to improve access and quality in 
the delivery of health care to make sure that it was done in a 
cost-effective manner and mitigated any impacts to our staffing 
or our communities.
    We have several very good results as a result of our CARES 
program. It did help us identify our priorities and improve our 
physical infrastructure. It also helped us increase access to 
services to veterans. And one of the things it did is it really 
improved our strategic planning and capital facilities planning 
process in that it led to our first ever 5-year capital plan, 
which now drives all of the capital requests from that point 
forward.
    As Mr. Orndoff said in his statement, we no longer 
distinguish between CARES and non-CARES because we learned so 
many lessons as a result of CARES that we have now incorporated 
all of those tools and techniques into our regular standard 
operating procedures for strategic and facility capital 
planning.
    We developed a 10-step health care model that replaced the 
9-step CARES model that we used. It very much is similar to 
that model. It is a web-based portal whereby it increased our 
efficiency with identifying what our strategic needs are and it 
has greatly enhanced our ability to continue on the traditions 
that we learned during CARES.
    Chairman Akaka. Thank you very much.
    Senator Burr.
    Senator Burr. Thank you, Mr. Chairman.
    Just one thing on CARES. Did CARES take into account the 
demographic shift that has happened in America in military 
retirees?
    Ms. Thomas. Absolutely, sir. What we built our planning 
upon is our Enrollee Health Care Projection Model, which 
identifies for us the number of enrollees that we have; where 
they are; the types and volume and kind of health care services 
that they need; and the cost of those services. And that model 
is updated every year.
    Senator Burr. And when the CARES model originally came out, 
North Carolina was not projected to be the recipient of 3 HCCs 
or whatever the equivalent would have been under that. Yet, I 
am not sure whether anything would fully encapsulate the 
demographic shift--the decision of retirees to choose North 
Carolina as home. And it does put tremendous stress and strain 
on the delivery system when the infrastructure is not there to 
deliver that much care to that many veterans. We appreciate 
them making the decision to retire in North Carolina; we just 
want to make sure we have got the capacity to deal with them.
    Let me move to you, Donald, if I can. Relative to my 
opening statement where I made the reference that less than 
three hundredths of 1 percent of the stimulus money had 
actually gone out, I hope you are going to tell me that my 
numbers were wrong.
    Mr. Orndoff. Sir, I am going to, if I may, refer to our 
subject matter expert, Ms. Fate.
    As you mentioned, the funding was targeted at maintenance 
and repair-type projects. And that function is managed from Ms. 
Fate's area. So, if I may let her respond.
    Senator Burr. I would be happy to.
    Ms. Fate. Thank you, Don.
    Sir, the number that we have today as of our obligations is 
$27.5 million for the NRM stimulus funding. While that is a 
small percentage, it took us a while to get engaged because we 
changed our process to be 100 percent competitive in all of our 
contracting, as well as trying to engage in as many small 
businesses and 8(a) set-asides as we could for these contracts.
    So, that took additional contract time to write these 
clauses, incorporating the Buy American Act and a few other 
requirements that were put into the contract requirements from 
OMB.
    Senator Burr. So, is the lesson to Congress that if we are 
looking at divvying out stimulus money that is more immediate 
from a standpoint of its need, we probably should not do 
maintenance projects?
    Ms. Fate. No, absolutely not, sir. We were ready to go with 
several of these projects. And, in fact, in March we had a 
substantial number of projects ready to go, but we wanted to be 
competitive to the local market so that everybody had an 
opportunity to get this stimulus funding. And within the next 
few months we anticipate awarding about at least 40 percent of 
the stimulus funding.
    So, we are gearing up. We just had a few stumbling blocks 
at the very beginning, but we are projected and targeted to end 
fiscal year 2009 on a positive note.
    Senator Burr. I appreciate that and I appreciate your 
diligence at making sure that communities get what, in fact, 
they deserve. I think the difficulty is the American people had 
expectations that stimulus money was going out immediately, and 
that is not exclusive to the VA. I think it is across the 
board. And I think they are shocked at the difficulty we are 
having pushing that money out the door, creating the jobs, 
having the impact that it was intended to have. I think it is 
absolutely vital that we know the reasons so that we can 
explain it to them.
    Let me go on to another point. Let me go to Denver real 
quick.
    Mr. Orndoff, it has been a long process, and I, for one, 
have had objections with it at certain times. Under the 
original footprint, taking Senator Isakson's comments to heart, 
what are the parking conditions at the Denver facility as 
currently designed?
    Mr. Orndoff. Sir, I do not know the specific numbers, but I 
assure you that the full requirement is part of the solution. 
We have both structured parking and surface parking as part of 
the schematic design solution. There is no limitation or, you 
know, tradeoff on parking. It will meet the full requirement.
    Senator Burr. The last time I looked at the plan it was the 
billion dollars plus plan.
    Mr. Orndoff. Yes, sir.
    Senator Burr. And it has been scaled back to $800 million. 
At that time the parking for the Denver facility, because of 
the way the footprint was designed, meant that the parking was 
roughly one half mile from the hospital and that every patient 
and visitor would have to be bused to the hospital. Do you know 
if that is currently still the configuration?
    Mr. Orndoff. No, sir. It is not. The solution is that in 
the northern part of the site--and it is somewhat of a 
challenging site in that it is a relatively narrow, rectangular 
site, so it drives a linear facility solution to work on that 
site.
    But the schematic design has, I think, an incredibly well 
thought-out design solution. I have personally been involved in 
reviews of all the phases of schematic design. The parking is 
located to the north, but it is on the site and it is connected 
literally by a pedestrian bridge. Some of the parking, as I 
mentioned, is structure, and that is actually embedded almost 
essentially within the facility itself at the southern part and 
the mid-part of the design solution.
    So, there is not a long travel distance. It may be a little 
longer than in a perfect scenario where we had a site that was 
larger and a little bit more square in shape or round in shape, 
but I think there is certainly a lot of attention in the design 
process to minimize the travel impacts and to look creatively 
on how to do that.
    Senator Burr. Any concern by you or any of your colleagues 
here today whether the $800 million threshold can be met?
    Mr. Orndoff. In terms of working within that budget?
    Senator Burr. Yes, sir.
    Mr. Orndoff. That is a relatively recent estimation of the 
new solution. As was mentioned earlier, we changed the design 
solution when the Secretary made the decision to return to the 
standalone hospital concept. We did a re-estimation of the 
project based on that.
    And, of course, part of the design solution is growing in 
other areas, as was mentioned, Colorado Springs and in 
Billings, Montana. So, part of the design solution is pushed 
out, which is why the cost has come down a little bit from the 
one I believe you referred to earlier, which was about a $1.1 
billion solution.
    That is not to say we have less service. In fact, we have 
the same level or arguably a higher quality of service as it is 
closer to veterans that are served. But, in aggregate, it is 
the same capability. The Denver project, specifically at $800 
million, will meet the requirement. That also includes an 
additional project scope issue of adding renewable energies 
into the design solution. So, it will be----
    Senator Burr. I am going to try to sneak one more question 
in.
    Mr. Orndoff. Yes, sir.
    Senator Burr. And I assure the Chairman if he gives me the 
latitude I will not have to have a second round.
    There have been 36 major medical facility projects that 
have been fully funded since 2004. How many of those projects 
ended up costing more than the original projection?
    Mr. Orndoff. Sir, I do not have the specifics on that. I 
could certainly get it for the record.
    I think it is fair to say that all projects were delivered 
within, ultimately, what was the approved budget. In some 
cases, we had an extremely aggressive market in the 
construction industry. It is hard to believe with today's news, 
but in the not too distant past there was a very tough 
construction market. We had very difficult times getting 
competition on our projects. Incredible as it may seem to have 
multi-hundred million dollar projects out where in some cases 
we had one or two proposals on a project.
    Senator Burr. Would you, for the record, provide me that 
number that went over budget?
    Mr. Orndoff. Yes, sir.
    Senator Burr. In addition, would you add to that how the VA 
tracks the accuracy of its construction budget forecast?
    Mr. Orndoff. Yes, sir.
    Senator Burr. And more importantly, how the VA tracks 
delays in construction, as well.
    Mr. Orndoff. Right.
    Senator Burr. I appreciate it.
    Mr. Orndoff. And just to be clear, sir, you are talking 
from the original budget?
    Senator Burr. Of those 36 projects since 2004, I would like 
to know how many were over budget. From a standpoint of the 
ongoing process at VA, what your method is to track the budget 
relative to what was forecasted.
    Mr. Orndoff. Yes, sir.
    Senator Burr. And track delays in construction.
    Mr. Orndoff. Yes, sir. Will do.
    Senator Burr. Thank you. Thank you, Mr. Chairman.
    [The response to additional information requested during 
the hearing follows:]




    Chairman Akaka. Thank you very much, Senator Burr.
    Senator Burris.
    Senator Burris. Thank you, Mr. Chairman.
    Mr. Chairman, I would like to indicate that we will be 
submitting some questions for the record because I have points 
that may not have all the data. I was wondering if Mr. Orndoff 
is familiar with what is happening in Danville, Illinois, at 
that facility. Have you had any direct contact with the VA 
Hospital in Danville?
    Mr. Orndoff. Direct contact? Do we have a project there? I 
am not sure.
    Senator Burris. Yeah, well, what the director there is 
saying is that a lot of the buildings are old, and they are 
seeking to have this expansion program.
    Mr. Orndoff. Yes, sir.
    Senator Burris. And I just wondered whether any of that has 
been brought to your level as of yet. They have a great 
innovative program going on in Danville with reference to 
housing, where they are providing community housing for our 
veterans. It is not really assisted living because it is almost 
independent living. And they have at least two of those housing 
developments up and running where at least 10 veterans can be 
served at these homes. And that has all been approved, which I 
thought was a very, very innovative program for some of our 
aging veterans.
    And, they also have these older facilities, because that is 
one of the best run--because I have visited several of the 
hospitals in Illinois, and I was very impressed with what is 
going on in Danville, except for the condition of the 
facilities. There is such a need to upgrade. Some of them are 
probably total reconstructions.
    So, we will be submitting this information to you if you do 
not have it. We will certainly follow up.
    Mr. Orndoff. Yes, sir. I would like to take that for the 
record and give you a full response.

    [This information is held in Committee files.]

    Senator Burris. Thank you. And to Ms. Fate, you mentioned 
you are working on some 8(a) programs. Now, in any of this 
construction, are you all looking at any type of set-aside 
contracts for minorities and women in your construction 
process? What are the requirements there?
    Mr. Sullivan. I do know that we have a lot of our contracts 
focus on the set-asides, including minorities and women. I do 
not have the specifics, but we have our targeted socioeconomic 
goals. So, we can take that for the record, again, and get back 
with you on what those are.
    Senator Burris. I would like to know specifically what 
minorities have gotten any work on contracts or any of the VA 
projects--
minorities and women--and what is your percentage of that; and 
how is your process in reference to selecting those particular 
contractors.
    Mr. Sullivan. We will take that for the record.

    [This information is held in Committee files.]

    Senator Burris. Thank you, Mr. Chairman.
    Chairman Akaka. Thank you very much.
    Senator Johanns.
    Senator Johanns. I, as you know in my opening statement, 
went through some of the challenges we are facing in the 
Western Iowa-Omaha facility.
    As I understand it, a feasibility study has started with 
that facility, and I think it has been completed. Does anybody 
on the panel know the status of that?
    Mr. Orndoff. Yes, sir. Ms. Fate would like to respond.
    Senator Johanns. Great.
    Ms. Fate. Thank you, Don.
    Yes, sir. We received the feasibility study and final 
recommendations at the beginning of May. So it is four 
volumes--a very thick book--very thick four books. And we are 
looking through that and we anticipate having a recommendation 
for VA, hopefully, by and within the next couple of months.
    In the meantime, though, due to concerns raised by Senator 
Nelson of the potential patient safety concerns with the HVAC, 
working with GLHN--who is the contractor for the study--they 
garnered enough information from their analysis to provide us a 
very basic project just to replace the HVAC, which is $90 
million. And VA is committed to ensure that that basic project 
at a minimum is submitted for or approved for VA in fiscal year 
2010 to ensure that we are being proactive to mitigate any 
patient safety potential issues that might occur at that 
facility.
    But, we want to fully vet that study to ensure that we are 
moving forward with the right plan--with the best plan for the 
veterans. We just haven't had a chance to go through all four 
volumes.
    Senator Johanns. OK. Once that is done, kind of walk me 
through the process of what happens next, and maybe even--I 
know it is hard to tell me timelines--but if you could help me 
understand kind of where we are in the process and where we go 
from here.
    Mr. Sullivan. Sure, Senator. What will happen is once the 
need has been verified through the study and the best way to 
address services is made, a resulting capital project will more 
than likely come forward. If it is more of a maintenance issue, 
in terms of HVAC and electrical, it may be handled through the 
nonrecurring maintenance program Ms. Fate spoke about, which 
was the $90-100 million dollar solution.
    Should one of the options look at replacing the entire 
facility or moving the facility, that project then will be put 
through the 2011 budget formulation process where they will 
decide on an option and submit, if you will, a concept paper 
and application for that project. That project then will be 
evaluated against all the other projects that are coming in the 
2011 process.
    In 2010, as Mr. Orndoff referred to where there are 66 
projects that came in for full evaluation--it was a larger 
number than that, which went through a full evaluation--that 
will go through that process as well. That happens during the 
summer. In about a month or two that process will move along 
for 2011. And as the budget formulation process continues 
through July and August, that listing will be submitted to the 
Secretary. There will be a decision made by the VA of what to 
submit to OMB for 2011, which usually happens in the first week 
of September. It goes through the OMB evaluation process 
sometime in December. Pass back will happen from OMB where VA 
will get either a list of projects approved by OMB or a funding 
allocation, and then that decision will then be wrapped into 
the President's Budget submission up to the Hill here in the 
first week of February.
    Senator Johanns. OK. Let me, if I might, just to wrap up my 
questioning here, focus on this hoped for relationship with the 
medical centers in Omaha and the VA. You know, I have such 
confidence in what Creighton and the University of Nebraska 
Medical Center do; and they really want to help here. They tell 
me every time I see the leader of those programs, ``Gosh, we 
want to be on a team to help.''
    Do you see that as a positive? And just in terms of advice 
to the community, how does that interface with what you have 
just described for me?
    Mr. Sullivan. I think the major--I will defer to Ms. Fate--
the major positive in terms of working with the community would 
be on the services, and how those services will be delivered, 
and where those services will be delivered in terms of 
formulating the optimal solution.
    So, in terms of them working with the medical center staff 
and the VISN staff, that would be helpful in terms of 
determining where those services should be and what is the best 
service delivery vehicle--you know, whether it be in a VA-owned 
building, in a renovated VA-owned building, in a shared 
building. So, I mean, that is on the ground. When they define 
those requirements, that is the best place for, I believe, that 
interaction to happen.
    Senator Johanns. When you are ready for that, I hope you 
will reach out to Senator Nelson's office, my office, 
Congressman Terry's office for that matter because we--you 
know, in our State we just work together on these issues.
    And the other thing I would say as I look through some of 
the challenges that we have here, they seem to be quite 
traumatic. Now, I think in what you are doing you are probably 
feeling like you do triage every day because there are old 
facilities out there. They do need complete replacement in 
many, many cases. This one dates back to the 50's. It is old. 
Its space requirements and its plumbing are problematic. You 
could probably say, you know, Mike, we've got a lot on the list 
like that.
    But, what I want to say is this. The Medical Center, 
myself, others, are willing to try to put together--working 
with you, working under your direction--a plan that I think 
really would provide first-class medical care. And we are 
excited about Colorado and this and that, but 10 hours away for 
medical care is not a workable solution to this problem. We 
just simply need something here to try to deal with a facility 
that probably long ago outlived its useful life.
    And the most important message I can deliver is as you are 
working through this, we do not want to interfere but we want 
to try to be a partner in what you are doing. OK?
    Mr. Sullivan. Yes, sir.
    Senator Johanns. Thank you, Mr. Chairman.
    Chairman Akaka. Thank you very much, Senator Johanns.
    Senator Begich.

                STATEMENT OF HON. MARK BEGICH, 
                    U.S. SENATOR FROM ALASKA

    Senator Begich. Thank you, Mr. Chairman. I apologize. I 
will have to leave in a few minutes to go preside, and if these 
questions have already been asked I apologize.
    I caught a little bit of what Senator Burr was talking 
about. I want to follow up on it. And I want to first say thank 
you for the facility in Alaska--the new one that just opened up 
in the Matanuska Valley--the clinic there. It is kind of a 
partial clinic but it is a very good center and well received. 
People are very excited about it. I know you have others 
planned in Juno and elsewhere.
    You know, after being almost 6 years as a mayor, and I am 
just trying to figure out how with the stimulus money you are 
going to achieve--and if I get these numbers wrong I apologize 
because I just caught part of the conversation. You have spent 
maybe $27-30 million and you are trying to get to 40 percent of 
the stimulus numbers expenditure by end of September/October 1, 
give or take, somewhere right in there.
    Reassure me--I know this discussion occurred a little bit 
ago--how are you going to do that? It is a sizable amount. You 
have very diverse facilities all across the country. I know as 
a mayor what we do and how we have to do it in regards to our 
fees and we have to be very aggressive about it. And it means 
that you have to have full force focus, not just normal course 
of business. Give me a couple of comments on that and then I 
will have some additional follow up.
    I do not know who wants to respond to that.
    Mr. Orndoff. Maybe if I could just make an opening comment 
and I will let Ms. Fate speak to it, as well.
    We have a network of acquisition professionals across VA 
that essentially support every local medical center and 
certainly every VISN. That business model is ramping up fast 
and understands the requirement to execute within these 
timelines and has the strategy to do so. As Ms. Fate was 
mentioning earlier, we are marshaling the troops. We had some 
initial startup issues, but we fully understand the requirement 
and the need to execute not only to obligate the funds, but 
also to get the output of those projects which will make our 
medical centers better for our veteran care.
    So, we have the infrastructure in place. It was not, of 
course, sized to this to address this bow wave of requirements 
that came somewhat unexpectedly, but we are making--certainly, 
marshaling the troops and understand that those are the goals 
and objectives. And we certainly have a commitment to make 
that.
    Let me see if Ms. Fate has additional thoughts.
    Ms. Fate. Sure. Thank you, Don. Sir.
    One of the tasks that was first given to us about a month 
ago--or 2 months ago, I'm sorry--was to ensure that NRMs--both 
the normal ones through the fiscal year 2009, as well as the 
stimulus--are the contracting's first priority. The contracting 
staff in the field have made it their first priority. They have 
been given overtime, they have been given comp time to work on 
the weekends and such to ensure that these obligations are on 
track. And they are very aggressive and pursuing obligations 
throughout the year.
    And to ensure that by the end of this year we do not only 
meet the 80 percent rule for our normal Nonrecurring 
Maintenance (NRMs)--which is, I guess, the 20 percent rule for 
obligations in August and September--but it also ensures that 
we have the stimulus funding obligated at least by 40 percent.
    But, the contracting officers have also other 
responsibilities that they are working--that have been 
delegated down to them. It used to be that projects came 
forward to the central office once they passed a certain 
level--$500,000 or $5 million dollars. A new process started 
back in the January-February timeframe that has delegated a lot 
of those tasks to the local level so it increases the 
efficiencies of them getting the jobs done and oversight. And 
they put additional taskings for senior contracting officers so 
that contracting officers were not burdened with all of the 
tasks, but that they leveled it out so that they could be more 
aggressive.
    So, many steps have been taken at the local level to ensure 
that these projects have been the primary focus to ensure 
obligations.
    Mr. Sullivan. And I would just say, Senator, that each of 
these projects were identified and submitted to Congress. Also, 
every week each project is updated and reviewed with the senior 
contracting official to ensure that the project is staying on 
schedule. Or if there is an issue with the project, whether it 
be legal or technical, that the appropriate resource from 
General Counsel or the Procurement side, as Mr. Orndoff said, 
is brought to bear so that they are tracked and reported on 
weekly and sometimes twice a week.
    Senator Begich. Let me--if I can just quickly end on this, 
and again, if you are repeating information, I apologize.
    If I caught your word right, it is 40 percent obligated.
    Mr. Sullivan. Yes.
    Senator Begich. Not expended. Right? Because obligation and 
expenditure are two different things. So, you will have it 
associated with a project but not in the field necessarily 
working the project. Am I right?
    Mr. Sullivan. No, obligated means an actual legal contract 
award. Someone is selected. They have been given notice to 
proceed.
    Senator Begich. Proceed. OK.
    Mr. Sullivan. Expenditure would be actually paying the bill 
after the work is completed or put in place.
    Senator Begich. So obligation--the 40 percent obligation 
level will mean that contracts have been awarded. I want to 
repeat what you said just to make sure we are clear. Awarded. 
Notice to proceed has been given, whatever that timetable is. 
But notice to proceed to the individual contractor or 
contractors. Yes?
    Mr. Sullivan. Yes.
    Senator Begich. And then last, getting at a later time, I 
would be very curious, following up Senator Burris on the 8(a) 
components and how you utilize those. I know the Corps of 
Engineers utilizes 8(a)s--at least Alaska Native 8(a)s--very 
successfully in getting projects out and done quickly, because 
of weather conditions; and very efficiently and very cost 
effectively. I would be very interested in how you utilize 
8(a)s in the competitive process, but also in a sole source 
process.
    Again, the Corps has an incredible record--a positive 
record--of sole source 8(a)s because of weather conditions, 
especially in Alaska and how they utilize 8(a)s. So I would be 
very curious of how you use that and the advantage or 
disadvantage. If you can share that with me at a later time.
    Mr. Sullivan. We also use what is known in VA as SDVOs--the 
Small Disadvantaged Veteran Owned businesses--also in that same 
category.
    Senator Begich. Great. Could you give me an update in 
response to this question on 8(a)s: what is your percentage of 
hit on that. Is it 3 percent you are trying to hit?
    Mr. Sullivan. The Agency goal?
    Mr. Orndoff. Yeah.
    Senator Begich. That's OK. You can just give me--I do not 
want to burn up time, Mr. Chairman--give me that along with the 
8(a) information that would be greatly appreciated.
    Mr. Sullivan. Yes, sir.
    Senator Begich. Thank you, Mr. Chairman.

    [This information is held in Committee files.]

    Chairman Akaka. Thank you very much, Senator Begich.
    Mr. Orndoff.
    Mr. Orndoff. Yes, sir.
    Chairman Akaka. Let me ask my last question on CARES.
    Mr. Orndoff. Yes, sir.
    Chairman Akaka. CARES was a very data-rich, multi-layered 
process that involved a great deal of community input and 
outside review. How much community input and outside review do 
you seek presently?
    Mr. Orndoff. Well, I think the main source of outside input 
happens at the local level--the stakeholders locally, the 
veteran support organizations, veteran patients. There is a 
process of a continual dialog in different forms that are 
developed to try to get input from veterans in the veteran 
support organization of what are the real priorities that the 
local medical centers should be focused on in order to provide 
better care for veterans.
    That input very much influences the development of projects 
coming forward. Once it gets to the central office level here 
in D.C., the headquarters of VA, we look at that list in 
aggregate, of course, and go through a prioritization process. 
Yesterday, there was discussion in a hearing about more 
involvement of VSOs in the prioritization process, and we are 
going to look at how we might do that.
    But, I think the real dialog happens locally. I have been 
personally involved and in the room giving briefings to local 
veteran service organizations on projects. New Orleans is a 
good example. It is a very spirited discussion and you get lots 
of good input. I think it definitely helps shape the direction 
we move on our facility solutions to support veterans.
    Chairman Akaka. Thank you. I have many more questions which 
I will submit in writing reflective of how important good 
construction planning is.
    So, Senator Burr, do you have any? Senator Burris?
    Senator Burris. Yes, Mr. Chairman. To Ms. Fate.
    I just hope that that data I requested of you will be 
broken down by categories--Blacks, Hispanics, Asians, women--in 
terms of their ability to have received--and you can select a 
period of time--these projects.
    Ms. Fate. Yes, sir.
    Senator Burris. Just how many of those projects are going 
to minority contractors.
    Ms. Fate. Yes, sir. We will break it down as far as we can.

    [This information is held in Committee files.]

    Senator Burris. Thank you, Mr. Chairman.
    Chairman Akaka. Thank you very much, Senator Burris.
    I want to thank the panel for your responses. We certainly 
want to continue to work with you and try to move forward with 
these programs.
Response to Post-Hearing Questions Submitted by Hon. Daniel K. Akaka to 
                the U.S. Department of Veterans Affairs
    Question 1. Would VA benefit from a BRAC-like process which would 
bundle a variety of recommendations for the treatment of capital assets 
that would have to be accepted or rejected as a package?
    Response. The Department of Veterans Affairs (VA) underwent a 
thorough evaluation of its capital portfolio known as the Capital Asset 
Realignment for Enhanced Services (CARES) initiative in 2004. CARES was 
a comprehensive analysis that produced recommendations for the 
strategic realignment of capital assets and related resources to better 
serve the needs of Veterans. CARES was not a simple one-time solution, 
but the creation of a set of tools and an evolving process for annual 
capital and strategic planning.
    The CARES strategic planning process provided a system-wide, data-
driven assessment of Veterans' health care needs within geographic 
markets, assessed the condition of the infrastructure, and produced 
recommendations for the strategic realignment of capital assets and 
related resources to better serve the needs of Veterans. The process 
identified the necessary infrastructure to provide high-quality health 
care to Veterans where it was most needed then and in the future.
    In considering the treatment of capital assets, VA evaluates the 
direction initially set by CARES, and uses a process to continually 
update VA's plan for capital investments on an annual basis, based on 
changing Veteran demographics, advances in health care technology, 
analysis from internal modeling, and stakeholder input and evaluation. 
VA is currently updating this process to optimize VA's resource 
allocations, investment choices, and response to Veterans' needs. The 
process will consider a wide variety of inputs, generate options, and 
then learn from implementation to refresh planning on an annual basis. 
This process will consider lessons learned from CARES and the 
Department of Defense's (DOD) base realignment and closure (BRAC) 
process, and will give us the capacity to act on recommendations for 
the treatment of capital assets.

    Question 2. What priority in the construction planning process is 
given to long-term care and mental health care?
    Response. At the Department level of the construction planning 
process, serious mental illness is addressed within the main decision 
criteria ``special emphasis''. (See response to question 13 below for 
VA Decision Model). Special emphasis includes the following programs: 
1) Traumatic Brain Injury (TBI); 2) Post Traumatic Stress Disorder 
(PTSD); 3) amputation/prosthetics; 4) serious mental illness (not 
mental health in general); 5) blindness; 6) spinal cord injury and 
disorders; and 7) polytrauma. The special emphasis major criterion 
carries the second highest priority weight in determining how 
construction projects are selected. In order for a project to receive 
points for special emphasis, 50 percent of the total estimated square 
footage of the project must be attributed to one or more of the seven 
programs.
    VA addresses long-term care and mental health services with major 
construction, minor construction, non-recurring maintenance (NRM), and 
leasing program initiatives. Service gaps and related infrastructure 
needs are identified at the local level and may be addressed through a 
fifth construction program--clinical specific initiatives (CSI)--within 
the Veterans Health Administration (VHA). CSI is decentralized to the 
Veterans integrated service networks (VISN) for weighting and funding. 
This option consists of five high category project profiles: 
polytrauma, Operation Enduring Freedom/Operation Iraqi Freedom (OEF/
OIF), long-term care, high-tech/high-cost, and mental health, which 
address access issues and typically increase space at a medical center. 
Many of the fiscal year (FY) 2009 CSI projects included long-term care 
and/or mental health services.

    Question 3. More and more of the newest veterans are facing 
significant challenges with PTSD and Traumatic Brain Injury. How is the 
need for treatment of those conditions factored into VA's construction 
planning?
    Response. PTSD and TBI are two programs listed under the special 
emphasis major criteria, which carries the second highest priority 
weight in determining the prioritization of major and minor 
construction projects. In order for a project to receive points for 
special emphasis, 50 percent of the total estimated cost of the project 
must be attributed to one of the seven programs mentioned previously in 
response to question 2.
    As with long term care, one of the five categories within the CSI 
program is polytrauma. While not every polytrauma patient has PTSD or 
TBI, the polytrauma umbrella incorporates these categories. The 
inclusion of polytrauma as a high-profile category for the CSI program 
allows an even greater emphasis for construction funding for these 
types of needs.

    Question 4. What is the current backlog in construction, and how 
much money would VA need to be authorized and appropriated over the 
next five years to complete all currently planned construction?
    Response. Assuming VA's FY 2010 major construction request ($1.2 
billion) is fully funded and authorized by Congress; there would be a 
total of 20 ongoing major projects that would require an additional $5 
billion to fully fund. The list of partially funded projects may be 
found in the VA FY 2010 budget submission--Construction and 5-Year 
Capital Plan (chapter 7, pages 166-168). This estimate does not include 
any new projects that may be identified through VA's capital investment 
process beyond 2010. The estimated backlog of major construction 
projects consists of partially funded projects from previous years and 
new projects. Approximately $3 billion is required to complete the 
partially funded projects.

    Question 5. Please explain how maintenance projects are 
prioritized, and describe any difference from the way in which Major 
Construction projects are ranked?
    Response. NRM and maintenance projects are considered station level 
projects. Both of these types of projects are delegated to the VISN for 
prioritization due to a significant variance of infrastructure needs 
throughout VHA. The focus of these two programs is to correct, replace, 
and/or upgrade infrastructure systems, such as boiler plant equipment; 
heating, air conditioning and ventilation equipment; electrical 
systems. These funds are also used to modernize and create state-of-
the-art inpatient units and outpatient clinics within the existing 
medical center's envelope.
    Major construction projects focus on access for either outpatient 
needs and/or special focus needs, such as spinal cord injury, PTSD, 
TBI, polytrauma. Major construction projects are prioritized on a 
national level based on seven main criteria described fully in response 
to question 13.

    Question 6. Due in part to the shift in the health care delivery 
model from inpatient to outpatient-focused delivery, VA last year 
considered a Health Care Center Facility leasing initiative. What is 
the status of that initiative?
    Response. The Health Care Center (HCC) initiative is part of the FY 
2010 budget. There are 7 major leases under HCC (Butler, PA, Charlotte, 
NC, Fayetteville, NC, Loma Linda, CA, Monterey, CA, Montgomery, AL, and 
Winston-Salem, NC) in the authorization chapter.

    Question 7. Leasing is a viable way to bring a new facility on 
line. What is the benefit of using a lease rather than constructing a 
new facility?
    Response. VA looks at several alternatives when determining the 
best course of action to provide the appropriate infrastructure needed 
to provide service delivery. The alternatives considered include new 
construction, renovation, leasing, and contracting out for care. In 
some cases, leasing is the best option. A lease may:

     Provide needed infrastructure faster, as in those cases 
where VA leases existing facilities rather than having to plan, design, 
and build a new facility;
     Provide greater flexibility to change course of service 
delivery based on medical care advancements, workload or service type 
needs. For example, there may be a significant change in workload, and 
a lease (depending on terms) allows for more flexibility to make 
modifications, or in extreme cases allows for termination. New 
construction on VA grounds does not allow such flexibility;
     Be a more cost effective alternative; and
     Be the only viable option in some areas.

    In summary, leasing may be the chosen alternative based on the 
availability of infrastructure, flexibility of terms, and 
functionality, and because it may be the most cost effective option to 
provide the services needed.

    Question 8. Please provide an update on how often VA is entering 
into enhanced use leases, what the results have been with such leases 
over the last ten years, and the extent to which VA plans to continue 
utilizing this process.
    Response. Since the inception of its enhanced-use leasing (EUL) 
authority in 1991.\1\ VA has executed 58 EUL projects. In the last 10 
years, VA has executed 45 leases (an annual average of 4.5 leases). 
Currently, VA has 49 transitional/permanent housing projects for 
homeless Veterans and 40 additional projects under development. An 
additional 15 market-driven sites identified through VA's site review 
initiative are under consideration.
---------------------------------------------------------------------------
    \1\ VA's enhanced-use lease (EUL) authority was enacted in 1991 in 
sections 8161 through 8169 of title 38, U.S. Code. With this authority, 
VA may lease land or buildings under the jurisdiction or control of the 
Secretary to a public or private sector entity for a term not to exceed 
75 years. The leased property may be developed for VA and/or non-VA 
uses that will enhance the property, provided such uses are consistent 
with and do not adversely affect the mission of VA. The proposed leased 
property must include space for an activity that contributes to VA's 
mission, or follow a concept that provides for using consideration from 
the lease to improve health care services to eligible Veterans. 
Benefits to VA from an EUL may include rent, cost savings, cost 
avoidance, revenue, services, space, and buildings.
---------------------------------------------------------------------------
    Results: VA obtains several types of benefits from EULs, including 
cost savings, cost avoidance, revenue, enhanced services, and the use 
of additional space and buildings. VA documented--in an FY 2008 
report--the consideration resulting from our EULs; the report describes 
each lease and its associated benefits. We provided a copy to the 
Government Accountability Office (GAO) and the Office of Management and 
Budget (OMB) and other individuals upon request. Cumulatively, since 
2006, the EUL program has generated $146.5 million in total 
consideration to VA. In addition, VA has been able to use EUL as a 
capital asset tool to obtain 15 housing developments offering services 
for Veterans, i.e., homeless transitional and permanent housing.
    Plans to extend EUL use: The current EUL authorization will expire 
in December 2011. VA will seek approval to extend the authorization to 
continue the EUL program. An extension will allow VA to continue 
pursuing over 100 projects now under development and to seek new 
projects that expand direct benefits to Veterans and the community, 
improve operations, and maximize resources while lowering operational 
costs.

    Question 9. VA uses the Design-Bid-Build contracting process 
predominantly with large projects. Why doesn't VA use the Design-Build 
process for large medical clinics, which some argue would save time and 
money?
    Response. VA does use design build (DB) for large medical clinics. 
It is an excellent delivery method and VA will continue to use it in 
the future as appropriate.
    Since the construction contractor can start some construction 
activities while the architect engineering firm completes the 
construction documents, DB may save time in the overall project 
schedule, but may not always reduce the cost. DB is an appropriate 
delivery method for projects which have a well defined scope and the 
nature of the work is not too technically complex. Those projects that 
are complex or require extensive site acquisition and/or environmental 
remediation work are typically not well suited for DB. Since DB 
involves design and construction in a single contract, full funding 
must be available for this type of procurement to proceed. In some 
markets, the construction contractor community is not supportive of DB 
and thus VA needs to determine if qualified contractors are interested 
in competing for the work.
    Not withstanding the limitations listed above, VA has extensively 
used DB in the past, such as with the outpatient clinic at Brevard, FL, 
and the ambulatory care buildings at SepuAE1lveda, CA, and Martinez, 
CA. Also, a number of the VA CARES projects (such as those listed 
below) used DB:

     North Chicago--VA/Navy Operating Room & Emergency Room 
Renovation
     Minneapolis--Spinal Cord Injury Center
     Tucson--Mental Health Clinic
     Columbus--Outpatient Clinic
     Pensacola--VA/Navy Outpatient Clinic
     Des Moines--Extended Care Building

    Question 10. What is meant by the following statement from the 
Department's testimony: ``VA's continuing program of recapitalization 
of these aging assets is very important to providing world-class health 
care to veterans now and into the future''?
    Response. VA's service to Veterans is largely provided through our 
facilities across the Nation. These facilities are strategic assets 
that enable effective mission accomplishment for the delivery of 
Veterans health care and benefits. VA owns and operates one of the 
largest inventories of land, buildings, and leasehold interests in the 
Federal Government, including nearly 33,000 acres of land, over 5,400 
buildings, 1,300 leased facilities (comprising approximately 159 
million square feet of VA-occupied space). The average age of VA 
facilities is over 50 years old. Therefore, modernizing or replacing 
these assets through recapitalization investments is in an important 
component to ensure we provide Veterans with high-quality health care 
and benefits.

    Question 11. Please provide a detailed description of the 
recommendations made by the CARES Commission and of Secretary 
Principi's Decision document, with a current status on each of the 
recommendations from the Decision document.
    Response. Detailed information on the status of individual CARES 
decisions is provided in the CARES Implementation Monitoring Report, 
which is appended to this document.
    [The Implementation Monitoring Report on Capital Asset Realignment 
for Enhanced Services follows the response to Question 18.]

    Question 12. Written testimony contained the assertion that the 
tools and techniques acquired through CARES have become part of VA's 
standard operating procedures for strategic planning within our health 
care system. What are those tools and techniques?
    Response. Through the CARES process, VA adapted its actuarial model 
to produce 20-year forecasts of the demand for Veteran health care 
services. Ongoing updates allow for more accurate projections of 
Veteran reliance on VA services. The data from the actuarial model is 
used to identify gaps between current and projected demand in services 
within each market using the health care planning model (HCPM), 
implemented as part of the 2008 VHA strategic planning guidance. The 
10-step HCPM planning model facilitates the planning and monitoring of 
strategic initiatives to address gaps in projected health care demand.

    Question 13. In the Department's statement, it is noted that VA 
uses a ``multicharacteristic decision methodology'' in prioritizing its 
capital investment needs. Please describe with specificity what a 
multi-characteristic decision methodology is.
    Response. The analytic hierarchy process (AHP), as depicted on the 
following page, is a tool VA uses to assist in evaluating and 
prioritizing capital needs. The AHP is a multi- attribute decision 
methodology that allows evaluators to consider a number of diverse 
criteria in reaching a decision. The AHP uses a hierarchical model 
comprised of a goal, criteria, and sub-criteria, and combines decisions 
using both quantitative and qualitative criteria. For example, the 
current VHA decision model (which is used to rank and prioritize 
construction projects) is comprised of 7 criteria and 20 additional 
sub-criteria.
    The VA Capital Investment Panel (VACIP) (with representatives from 
across the Department) rates each project on how well it addresses each 
of the 21 scored elements based on answers provided in a standardized 
application form. Data requested in the applications includes 
quantitative data on workload, decreases in operating costs, and energy 
reduction, and qualitative data on realignments and the quality of 
infrastructure enhancements. In addition, many of the application 
questions require a combination of data, including metrics on the 
contribution to strategic goals and an explanation of those numbers. VA 
ranking and prioritization of construction projects are based on the 
VACIP's ratings, with final approval by the Secretary as part of the 
annual capital investment and budget process.
    The VHA decision model for FY 2010 can be found on page 7.10-131 of 
VA's FY 2010 Budget Submission, Construction and 5 Year Capital Plan, 
Volume 4 of 4, May 2009.




    Question 14. In the last five years what ``appropriate `joint' VA/
DOD projects'' were evaluated to promote sharing and efficiency 
opportunities? Looking forward, what joint projects are being evaluated 
now?
    Response. VA and DOD have evaluated several projects to improve 
collaboration and health resource sharing between the Departments (see 
list below). Potential projects include major construction, minor 
construction, and community based outpatient clinics (CBOC). VA 
evaluates and scores business plans for project proposals based on 
established criteria. One of the criteria is DOD collaboration. If a 
project has a DOD/VA collaborative component, it will receive a higher 
score and ranking overall than if it did not.
    The VA/DOD Construction Planning Committee (CPC), a subcommittee of 
the Joint Executive Council, was created in 2003 to foster more 
collaborative capital efforts. The CPC is comprised of individuals with 
comprehensive knowledge of capital asset planning. It provides a 
formalized structure to facilitate cooperation and collaboration on VA/
DOD capital projects. The CPC facilitates an integrated approach to 
construction planning initiatives that are beneficial to both 
Departments.
    Collaborative projects over the past 5 years include:
Major construction
        Biloxi, Mississippi (includes mental health services at Keesler 
        Air Force Base)
        Pensacola, Florida (outpatient clinic (OPC) at Cory Naval Air 
        Station)
        Denver, Colorado (possible DOD presence)
        Anchorage, Alaska (OPC at Elmendorf Air Force Base (AFB))
        North Chicago, Illinois (consolidating services with Naval 
        Hospital Great Lakes)
Minor construction
        Baltimore, Maryland (Fort Meade CBOC)
        Martinsburg, West Virginia (Fort Detrick CBOC)
        Honolulu, Hawaii (Guam hospital and VA CBOC)
        Hilo, Hawaii (PTSD residential rehabilitation)
        North Charleston, South Carolina (Goose Creek CBOC)
        Eglin AFB, Florida (Eglin CBOC)
Community Based Outpatient Clinics
        Charleston Naval Hospital, South Carolina (Goose Creek)
        San Antonio, Texas (NE Bexar)
        Fort Buchanan, Puerto Rico
        Fort Meade, Maryland
        South Prince Georges County, Maryland (Andrews AFB)
        Fort Rucker, Alabama (Lyster Army health clinic)

    The CPC serves to identify capital initiatives that may be suitable 
to enhance service delivery or decrease cost of asset procurement for 
both departments.
    Potential collaborative projects being considered for the future 
include:
Major construction
        El Paso, Texas (OPC at Fort Bliss)
Minor Construction
        Panama City, Florida (CBOC)
Community Based Outpatient Clinics
        Monterey, California
        Colorado Springs, Colorado
        Columbus, Georgia (Fort Benning)

    Question 15. When VHA identifies ``gaps'' in capacity, does that 
refer to geographic gaps or gaps in ability to furnish certain types of 
care?
    Response. When VHA identifies gaps in capacity it refers to the gap 
between current service volume and service volumes projected in the 
future (5, 10, 20 years) either in a geographic market or at a 
particular facility. Future gaps are identified and analyzed to 
determine whether health care systems serving any market have the 
capacity to accommodate the projected gaps, or if use of purchased care 
will be required, or a combination thereof. These and other 
environmental factors, such as geographic access, are examined to 
ensure VA provides timely and appropriate access to health care and 
eliminates service disparities.

    Question 16. Who develops VA's ``capital asset management 
priorities,'' and what are the current priorities?
    Response. Oversight and policy for VA's capital asset management 
priorities/portfolio goals are the responsibility of the Office of 
Asset Enterprise Management. Developed collaboratively with key 
internal stakeholders, the capital asset management priorities provide 
a strategic framework to meet the objectives of VA's core mission and 
asset management--to provide a safe and appropriate environment for the 
delivery of benefits to Veterans in a cost-efficient manner. The 
current goals are: 1) decrease operational costs; 2) decrease underused 
capacity; 3) decrease energy use; 4) increase intra/inter-agency and 
community-based sharing; 5) increase revenue opportunities; 6) 
safeguard assets; and 7) maximize highest and best use of assets.
    In FY 2005, VA implemented the Federal Real Property Council (FRPC) 
tier 1 goals in addition to the established capital asset priorities/
portfolio goals. The FRPC goals are: 1) percent of space use as 
compared to overall owned and direct-leased space (relates to decrease 
in underused capacity; 2) ratio of operating costs per gross square 
foot (relates to decrease operational costs); 3) percent condition 
index of owned buildings; and 4) ratio of non-mission-dependent assets 
to total assets. FRPC goals and VA capital goals are closely related. 
VA capital goals are to: 1) decrease operational costs, 2) decrease 
underused capacity, 3) decrease energy use,\2\ 4) increase revenue 
opportunities, 5) safeguard assets, and 6) maximize highest and best 
use. As a Federal Agency, VA is adopting green and environmental design 
principles in accordance with the mandates of Executive Order 13243, 
Strengthening Federal Environmental, Energy and Transportation 
Management. For example, all new construction and major renovation 
projects are being designed to meet sustainable building principles.
---------------------------------------------------------------------------
    \2\ To support additional capital goals to decrease energy 
consumption, increase use of renewable energies, and reduce the 
Department's carbon footprint, VA developed a comprehensive green 
management program. Over $400 million of VA's $1.4 billion in Recovery 
Act funds will be obligated toward renewable energy and energy 
efficiency projects. VA is dedicated to building sustainable facilities 
with energy efficiency and renewable energy standards as well as 
continuing to reduce VA's overall energy consumption. It is important 
to note that the Department will continue to place more emphasis on 
both energy and ``greening'' and environmental projects when 
prioritizing projects.

    Question 17. What is the timeline for the multiple internal reviews 
before a decision is made to include a project in the President's 
budget for a fiscal year?
    Response. The entire review process may take up to two and half 
years. Approximately 12 months prior to the first submission of a major 
construction project to VHA Central Office, the medical facility and 
VISN level planning take place. VHA Central Office staff review and 
prioritize all major construction applications, narrowing that list 
down to the top 20 or 25 projects. Those top 20-25 projects are then 
evaluated and prioritized by the VACIP, a sub-group of the Strategic 
Management Council (SMC). Results from the VACIP prioritization are 
submitted for approval by the SMC, the VA Executive Board, and finally 
the Secretary, as part of the internal budget process. Decisions from 
the internal budget process are used to develop the list of major 
construction projects that will be included in the annual budget 
request to OMB. Negotiations with OMB result in the final list of 
projects to be included in the Congressional budget submission. Exact 
timelines vary from year to year, and emergency or ``out of cycle'' 
high priority projects may also be expedited. A schedule for a typical 
planning cycle as follows:




    Question 18. To what extent are the potential consequences of the 
overall health care reform effort being integrated into VA's current 
planning for new medical facilities?
    Response. Health care reform has not factored into the planning of 
our facilities. New facilities and/or expansions of existing facilities 
result from a capital asset analysis starting with the need for more or 
less space due to changing projected workload, the current condition 
and age of the existing facility, and the type of services that need to 
be provided. These are the cornerstones of all of our projects.
                        Addendum to Question 11



                                 ______
                                 
 Response to Post-Hearing Questions Submitted by Hon. Mike Johanns to 
                the U.S. Department of Veterans Affairs
    Question 1. When do you estimate the study will be released to the 
Committees on Appropriations of both chambers of Congress as required 
by law? I would appreciate a date certain for the release of the study.
    Response. The study will be released to the Committees on 
Appropriations of both chambers of Congress by July 31, 2009.

    Question 2. Will this study be released to the public? If so, when?
    Response. The study will also be released to the general public, at 
the same time it has been released to the Committees on Appropriations 
of both chambers of 
Congress.

    Question 3. If that study calls for corrective action, including 
major renovations or the construction of a new facility, how will such 
findings affect the ability of the Omaha VAMC to receive the necessary 
corrective action?
    Response. If the study calls for corrective action, including major 
renovations or construction of a new facility, the study and the 
Department of Veterans Affairs' (VA) evaluation of it will guide VA in 
selecting the best correction strategy. The approved option from the 
results of the study will be included in the VA's construction project 
prioritization process during the budget development process.

    Question 4.  Will the feasibility study have any bearing on the 
VA's decision to prioritize the Omaha VAMC for renovation or 
construction?
    Response. Yes the feasibility study and VA's evaluation of it will 
be included in the construction project prioritization process during 
the budget development 
process.

    Chairman Akaka. I would like to welcome our second panel.
    First, I welcome Davis Wise, who is Director of Physical 
Infrastructure Issues at the GAO.
    Next, we have Dennis Cullinan, Director of National 
Legislative Service at the Veterans of Foreign Wars.
    And I also welcome J. David Cox, National Secretary-
Treasurer of the American Federation of Government Employees.
    Thank you so much for being here. Mr. Wise, we will please 
begin with your statement.

  STATEMENT OF DAVID WISE, DIRECTOR, PHYSICAL INFRASTRUCTURE 
            ISSUES, GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Wise. Chairman Akaka, Ranking Member Burr, and Members 
of the Committee. Thank you for the opportunity to discuss the 
Department of Veterans Affairs application of enhanced use 
leases which allows third parties to use government property in 
return for consideration in cash or in kind.
    As GAO noted in its June 9 testimony before the House 
Committee on Veterans' Affairs, Subcommittee on Health, 
enhanced use leasing (EUL) is one of a variety of legal 
authorities available to help VA manage real property and 
reduce underutilized space. With more than 32,000 acres of land 
and over 6,200 buildings on about 300 sites, VA is one of the 
Federal Government's largest property holders.
    However, many VA properties are aged and not particularly 
well-suited to providing care in the current VA system. As a 
result, VA holds a significant amount of property that is 
underutilized or vacant because of age, condition, location, 
and other factors. Maintaining this property requires VA to 
spend funds that could otherwise be used to provide direct care 
and other medical services to veterans. In a report we issued 
in 2008, we estimated the VA spent $175 million in fiscal year 
2007 operating underutilized or vacant space at medical 
facilities.
    My testimony has three parts. I will discuss: (1) VA's 
authority to enter into EULs; (2) how VA has used its EUL 
authority; and (3) the relationship between VA's authorities 
and the amount of real property retained or sold.
    My statement is based upon our report entitled ``Federal 
Real Property: Authorities and Actions Regarding Enhanced Use 
Leases and Sale of Unneeded Real Property'' issued February 17, 
2009.
    On the first point, VA may enter into EULs for 
underutilized or unutilized real property for up to 75 years in 
exchange for cash and/or in-kind consideration, such as 
provision of office space or construction of facilities. After 
covering the cost of the EUL, VA may use the remaining proceeds 
for a variety of purposes, including medical care, 
construction, facility improvement, and other EULs without 
further Congressional appropriation or change in law. VA's 
current EUL authority will terminate on December 31, 2011.
    On the second point, VA has used its EUL authority to 
reduce the amount of underutilized and unutilized property. In 
its fiscal year 2010 budget submission, VA reported disposing 
of 50 buildings and land in fiscal year 2008 using EUL 
authority. VA currently has 52 EULs, including housing, health 
care facilities, mixed use, and other projects.
    In one example in 2006, VA entered into an EUL that will 
use almost 300,000 square feet of vacant space at Fort Howard, 
Maryland, to develop a retirement community with priority 
placement for veterans. While many EULs result in direct 
services to veterans, in some instances the relationship is 
less clear. For example, VA is leasing property in Hillsboro, 
New Jersey, to a company that subleases the property to a 
variety of commercial interests needing warehouse or light 
manufacturing space, as well as the County government.
    On the third point, in addition to EUL authority, VA may 
sell unneeded property and retain the proceeds under its 
Capital Asset Fund, or CAF, authority. However, to do so VA 
must determine that the property is not needed to carry out its 
function and is not suitable for providing services to the 
homeless. Additionally, VA's use of these proceeds is subject 
to further congressional appropriation or change in law.
    Despite this authority to sell property, VA has not sold 
any real property through its CAF authority. VA has sold only 
one property in Chicago, and that sale occurred under its EUL 
authority. According to VA officials, EULs are more attractive 
compared to disposal and sale under CAF, in part because VA can 
enter into EULs with fewer restrictions and has more 
flexibility on how it can use the proceeds. For example, VA can 
use EUL proceeds for medical care but cannot after selling a 
property.
    VA officials said that implementing an EUL can take 
anywhere from 9 months to 2 years. EULs may also be complex due 
to issues such as land due diligence, public hearings 
requirements, and lease drafting and negotiations. VA officials 
said that they are working to streamline the process.
    Mr. Chairman, this concludes my statement. I will be 
pleased to answer any questions you or Members of the Committee 
may have.
    [The prepared statement of Mr. Wise follows:]
   Prepared Statement of Director of Physical Infrastructure Issues, 
                    Government Accountability Office




    Chairman Akaka. Thank you very much, Mr. Wise.
    Mr. Cullinan.

 STATEMENT OF DENNIS CULLINAN, DIRECTOR, NATIONAL LEGISLATIVE 
     SERVICE, VETERANS OF FOREIGN WARS OF THE UNITED STATES

    Mr. Cullinan. Chairman Akaka, Ranking Member Burr, aloha 
and good morning.
    On behalf of the men and women of the Veterans of Foreign 
Wars, I want to thank you very much for inviting us to 
participate in today's very important oversight hearing.
    In April 1999, GAO issued a report on the challenges VA 
faced in transforming the health care system. At the time, VA 
was in the midst of reorganizing and modernizing after the 
passage of the Veterans' Health Care Eligibility Reform Act of 
1996.
    The VA then developed a 5-year plan to update and modernize 
the system, including introduction of system-wide managed care 
principles, such as the Uniform Benefits Package. In response 
to the enormous challenges brought about in implementing this 
plan, VA began the Capital Asset Realignment for Enhanced 
Services or CARES process. It was the first comprehensive, 
long-range assessment of the VA health care system's 
infrastructure needs since 1981.
    CARES was a VA systematic dated revenue assessment of its 
infrastructure that evaluated the present and future demand for 
health care services, identifying changes that would help meet 
veterans' needs. The CARES process necessitated the development 
of actuarial models to forecast future demand for health care 
and the calculation of supply of care in the identification of 
future gaps in infrastructure capacity. Throughout the process 
we continuously emphasize that our support was contingent upon 
the primary emphasis being in ES, or Enhanced Services, of the 
CARES acronym.
    We wanted to see that VA planned and delivered services in 
a more efficient manner that also properly balanced the needs 
of veterans, and for the most part the process did just that. 
The 2004 CARES decision document gave a broad and comprehensive 
roadmap for the future.
    The strength of CARES in our view is not its being a one-
time blueprint, but in the decisionmaking framework that 
produced it. It created a methodology for future construction 
decisions. VA's construction priorities are reassessed annually 
all based on the basic methodology created to support the CARES 
decisions. These decisions are created system wide, taking into 
account what is best for the totality of VA health care and 
what its priorities should be.
    We continue to have strong faith that this basic framework 
serves the needs of the majority of veterans. Despite its 
strengths there are certain challenges. While a huge number of 
projects are underway, a number of these are still in the 
planning and design phase. As such, they are subject to changes 
but they have also not received full funding. The Congress and 
this Administration must continue to provide full funding for 
the major construction account to reduce this backlog and also 
to begin funding future construction priorities.
    With the twin problems of funding and speed in mind, VA has 
recently been exploring ways to improve the process. Last year 
they unveiled the HCCF leasing concept. As we understand it, an 
HCCF was intended to be an acute care center somewhere in size 
and scope between a large medical center and a CBOC. It is 
intended to be a leased facility--enabling a shorter time for 
it to be up and running--that provides outpatient care. 
Inpatient care would be provided on a contracted basis, 
typically in partnership with a local health care facility.
    While supportive of more quickly providing greater health 
care access to veterans on a cost-effective basis, we expressed 
our concerns with the HCCF concept in the Independent Budget, 
or IB. Primarily, we are concerned that this concept--which 
relies heavily on widespread contracting--would be done in 
place of needed major construction.
    Acknowledging the changes taking place in health care, VA 
needs to look more carefully before building facilities. Cost 
plus projected usage must justify full blown medical centers. 
Leasing is the right thing to do only if the agreements make 
sense. VA needs to do a better job of explaining to veterans 
and to Congress what their plans are for every location based 
on the facts. The ruinous miscommunication that plagued the 
Denver construction project amply demonstrates this point.
    We have seen the importance of leasing facilities with 
certain CBOCs and Vet Centers, especially when it comes to 
expanding care to veterans in rural areas. CARES did an 
excellent job of identifying locations with gaps and care, and 
VA has continued to refine its statistics, especially with the 
improved data it is getting from DOD about OEF and OFI 
veterans.
    Providing care to rural veterans is a major challenge for 
the system, and the expansion of CBOCs and other initiatives 
can only help. We do believe, however, that much of what will 
improve access for these veterans will lie outside of the 
construction process. VA must better use its fee-based care 
programs, and the recent initiatives passed by Congress, such 
as the mobile health care vans or the rotating satellite 
clinics in some areas, are helping to fix the demand problems 
facing veterans and VA.
    Mr. Chairman, this concludes my statement. Again, I thank 
you and Ranking Member for inviting us to testify here today.
    [The prepared statement of Mr. Cullinan follows:]
     Prepared Statement of Dennis M. Cullinan, Director, National 
   Legislative Service, Veterans of Foreign Wars of the United States
    Mr. Chairman and Members of the Committee: On behalf of the 2.4 
million men and women of the Veterans of Foreign Wars of the U.S. (VFW) 
and our Auxiliaries, I would like to thank you for the opportunity to 
testify today.
    In April 1999, the Government Accountability Office (GAO) issued a 
report on the challenges the Department of Veterans Affairs (VA) faced 
in transforming the health care system. At the time, VA was in the 
midst of reorganizing and modernizing after passage of the Veterans 
Health Care Eligibility Reform Act in 1996.
    With passage of that bill, VA developed a 5-year plan to update and 
modernize the system, including the introduction of system-wide managed 
care principles such as the uniform benefits package. As part of the 
overall plan, VA increasingly began to rely on outpatient medical care. 
Technological improvements, improved pharmaceutical options and 
management initiatives all combined to lessen the need for as many 
inpatient services. Additionally, the expansion of VA clinics--notably 
the Community Based Outpatient Clinics (CBOCs)--brought care closer to 
veterans.
    These widespread changes represented a management challenge for VA, 
GAO argued: ``VA's massive, aged infrastructure could be the biggest 
obstacle confronting VA's ongoing transformation efforts. VA's 
challenges in this arena are twofold: deciding how its assets should be 
restructured, given the dramatic shifts in VA's delivery practices, and 
determining how a restructuring can be financed in a timely manner.''
    GAO also testified before the House Veterans' Affairs Committee's 
Subcommittee on Health in March 1999 on VA's capital asset planning 
process. They concluded that, ``VA could enhance veterans' health care 
benefits if it reduced the level of resources spent on underused or 
inefficient buildings and used these resources, instead, to provide 
health care, more efficiently in existing locations or closer to where 
veterans live.'' Further, GAO found that VA was spending about 1 in 4 
Medical Care dollars on asset ownership with only about one quarter of 
its then-1,200 buildings being used to provide direct health care. 
Additionally, the Department had over 5 million square feet of unused 
space, which GAO claims cost VA $35 million per year to operate.
    From these findings, VA began the Capital Asset Realignment for 
Enhanced Services (CARES) process. It was the first comprehensive, 
long-range assessment of the VA health care system's infrastructure 
needs since 1981.
    CARES was VA's systematic, data-driven assessment of its 
infrastructure that evaluated the present and future demands for 
health-care services, identifying changes that would help meet 
veterans' needs. The CARES process necessitated the development of 
actuarial models to forecast future demand for health care and the 
calculation of the supply of care and the identification of future gaps 
in infrastructure capacity.
    The plan was a comprehensive multi-stage process.

     February 2002--VA announced the results of the pilot 
program of VISN 12
     August 2003--Draft National CARES Plan submitted to the 
Undersecretary for Health
     February 2004--16-member independent CARES Commission 
submits recommendations based upon its review of the Draft Nationals 
CARES Plan.
     May 2004--VA Secretary announces releases final CARES 
Decision Document, but leaves several facilities up for further study.
     May 2008--Final Business Plan Study released, completing 
the CARES process.

    Throughout the process, we were generally supportive. We 
continuously emphasized that our support was contingent on the primary 
emphasis being on the ``ES''--enhanced services--portion of the CARES 
acronym. We wanted to see that VA planned and delivered services in a 
more efficient manner that also properly balanced the needs of 
veterans. And, for the most part, the process did just that.
    Our main concern with the plans as they unfolded was the lack of 
emphasis on mental health care and long-term care. The early stages of 
the CARES process excluded many of these services for the most part 
because they lacked an adequate model to project the need for these 
services in the future.
    The CARES Commission called for VA to develop a long-term care 
strategic plan, to address the needs of veterans and all care options 
available to them, including state veterans homes. As we discussed in 
the Independent Budget, VA's 2007 Long-Term Care Strategic Plan did not 
address these issues in a comprehensive manner; going forward, this 
must be rectified.
    The 2004 CARES Decision Document gave VA a road map for the future. 
It called for the construction of many new medical facilities, over 100 
major construction projects to realign or renovate current facilities, 
and the creation of over 150 new CBOCs to expand cares into areas where 
the CARES process identified gaps.
    Since FY 2004, 50 major construction projects have been funded for 
either design or actual construction. Eight of those projects are 
complete. Six more are expected to be completed by the end of FY 2009, 
and 14 others are currently under construction. So CARES has produced 
results.
    The strength of CARES in our view is not the one-time blueprint it 
created, but in the decisionmaking framework it created. It created a 
methodology for future construction decisions. VA's construction 
priorities are reassessed annually, all based on the basic methodology 
created to support the CARES decisions. These decisions are created 
system-wide, taking into account what is best for the totality of the 
health care system, and what its priorities should be.
    VA's Capital Investment Panel (VACIP) is the organization within 
the department responsible for these decisions. VA's capital decision 
process requires the VACIP to review each project and evaluate it using 
VA's decision model on a yearly basis to ensure that potential projects 
are fully justified under current policy and demographic information. 
These projects are assigned a priority score and ranked, with the top 
projects being first in line for funding.
    It is a dynamic process that depoliticizes much of the 
decisionmaking process. The projects selected for funding are by and 
large the projects that need the most immediate attention. Because it 
is a dynamic process, some of the projects VA has moved forward with 
were not part of the original CARES Decision Document, but they were 
identified, prioritized and funded through the methodology developed by 
CARES. We continue to have strong faith that this basic framework 
serves the needs of the majority of veterans. Despite its strengths, 
there are certainly some challenges.
    First is that the very nature of the report required a large 
infusion of funding for VA's infrastructure. While a huge number of 
projects are underway, a number of these are still in the planning and 
design phase. As such, they are subject to changes, but they have also 
not received full funding.
    This has resulted in a sizable backlog of construction projects 
that are only partially funded. Were the administration's construction 
request to move forward, VA would have a backlog in funding for major 
construction of nearly $4 billion. This means that to just finish up 
what is already in the pipeline, it would take approximately five full 
fiscal years of funding--based on the recent historical funding 
levels--just to clear the backlog.
    This Congress and this Administration must continue to provide full 
funding to the Major Construction account to reduce this backlog, but 
also to begin funding future construction priorities.
    Another difficulty has been the slow pace of construction. Major 
construction projects are huge undertakings, and in areas--such as New 
Orleans or Denver--where land acquisition or site planning have 
presented challenges, construction is slower than we would like. There 
are, however, many cases where there have been fewer challenges, and 
when the money was appropriated, construction has moved quickly.
    With these twin problems of funding and speed in mind, VA has 
recently been exploring ways to improve the process. Last year, they 
unveiled the Health Care Center Facility (HCCF) leasing concept.
    As we understand it, the HCCF was intended to be an acute care 
center somewhere in size and scope between a large Medical Center and a 
CBOC. It is intended to be a leased facility--enabling a shorter time 
for it to be up and running--that provides outpatient care. Inpatient 
care would be provided on a contracted basis, typically in partnership 
with a local health care facility.
    We expressed our concerns with the HCCF concept in the Independent 
Budget (IB). Primarily, we are concerned that this concept--which 
heavily relies on widespread contracting--would be done in lieu of an 
investment of major construction.
    Acknowledging that with the changes taking place in health care VA 
needs to look very carefully before building new facilities. Cost plus 
occupancy must justify full blown Medical Centers. But leasing is the 
right thing to do only if the agreements make sense.
    VA needs to do a better job explaining to Veterans and the Congress 
what their plans are for every location based on facts. The ruinous 
miscommunication that plagued the Denver construction project amply 
demonstrates this point.
    While promising, the HCCF model presents many questions that need 
answers before we can fully support it. Chief among these is why, given 
the strengths of the CARES process and the lessons VA has learned and 
applied from it, is the HCCF model, which to our knowledge has not been 
based on any sort of model or study of the long-term needs of veterans, 
the superior one?
    We also have major concerns with the widespread contracting that 
would be mandated by this type of proposal. The lessons from Grand 
Island, NE--where the local hospital later canceled the contract, 
leaving veterans without local inpatient care--or from Omaha--where 
some veterans seeking specialized services are flown to Minneapolis--
show the potential downfall of large-scale contracting.
    Leasing clinical space is certainly a viable option. It does 
provide for quicker expansion into areas with gaps in care, and it does 
provide the Department with flexibility in the future.
    But when it is combined with the contracting issue, and presented 
without information and supporting documentation that is as rigorous or 
comprehensive as CARES was, it will be difficult for the VFW and the 
veteran's community to support it.
    We have seen the importance of leasing facilities with certain 
CBOCs and Vet Centers, especially when it comes to expanding care to 
veterans in rural areas. CARES did an excellent job of identifying 
locations with gaps in care, and VA has continued to refine its 
statistics, especially with the improved data it is getting from the 
Department of Defense about OEF/OIF veterans.
    Providing care to these rural veterans is the latest challenge for 
the system, and the expansion of CBOCs and other initiatives can only 
help. We do believe, however, that much of what will improve access for 
these veterans will lie outside the construction process. VA must 
better use its fee-basis care program, and the recent initiatives 
passed by Congress--such as the mobile health care vans or the rotating 
satellite clinics in some areas--are going to fix some of the demand 
problems these veterans face.
    We can always certainly do more, but thanks to the CARES blueprint, 
VA has greatly improved the ability of veterans around the country to 
access the care they earned by virtue of their service to this country. 
And with the annual adjustments and reassessments that account for 
changes within the veterans' population, we can assure that veterans 
are receiving the best possible care long into the future.

    The VFW thanks you and the Committee for looking at this most 
important issue.

    Chairman Akaka. Thank you very much, Mr. Cullinan.
    Now we will hear from Mr. Cox.

STATEMENT OF J. DAVID COX, R.N., NATIONAL SECRETARY-TREASURER, 
      AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO

    Mr. Cox. Chairman Akaka and Ranking Member Burr, I greatly 
appreciate the opportunity to discuss AFGE's concerns about the 
VA's health care center facility leasing program. I also want 
to thank the Chairman and Senator Rockefeller for their efforts 
last year to make the information about this program available 
to the public.
    The leasing program was introduced by former Secretary 
Peake last year, and it appears that the VA considers leasing 
as an alternative to construction of new and replacement VA 
medical centers. The leasing program poses the greatest threat 
to the VA health care system since its creation. If Congress 
does not investigate and put the brakes on this program, VA 
medical centers as we know them today will disappear. Maybe not 
next year or the year after, but this unique source of health 
care for our veterans will become extinct by leasing's slow 
erosion of its core.
    How can a 13-page PowerPoint presentation about enhanced 
leases and large outpatient facilities have a devastating 
effect on VA medical centers? Because the leasing program is 
not really about leases; it is about permanently diverting 
major construction dollars and patient care dollars away from 
standalone VA hospitals and shifting them to private hospitals. 
And doing it without Congressional authority. It is about 
starving VA medical centers of staff, beds, and maintenance in 
order to support health care centers--an untested model that 
has never been used in the public or private sector. It is 
about an entirely new organizational chart for the VA, one that 
has these outpatient facilities reporting to private hospitals 
instead of a VA Medical Center.
    I will focus the rest of my remarks on how the leasing 
program is hurting the facility in my hometown that is 
especially near and dear to my heart--the W.G. Hefner VA 
Medical Center in Salisbury, North Carolina--the facility where 
I worked as a registered nurse for 23 years caring for 
America's veterans. What happened in Salisbury is a useful 
roadmap for how not to adapt VA health care to veterans' 
changing needs.
    First, secrecy and exclusion do not work. When Hefner 
Medical Center Director, Carolyn Adams, announced last year 
that the acute care, intensive care, and emergency services 
were being cut, that veterans would be getting most of the 
inpatient care from private hospitals that do not specialize in 
veterans' conditions and are already struggling to treat 
growing numbers of uninsured, the news came as a complete 
surprise to veterans, employees, and even some Members of 
Congress.
    The facility had recently invested in new operating rooms 
and intensive care units and had recruited more physicians and 
nurses. And veterans in Winston-Salem and Charlotte, the 
proposed sites for health care centers already had large 
outpatient clinics. Neither Ms. Adams, nor VISN-6 Network 
Director, Daniel Hoffman, who also played an active role in the 
proposed plans, included stakeholders in the planning process. 
When the VA contracted for a study to consider different 
options for the facility, the study team did not talk to a 
single veteran using the facility or a single employee 
providing care.
    Second, hospitals with uncertain futures lose staff. And I 
would refer to that as the Walter Reed Syndrome. Upon receiving 
the news of proposed cuts in core inpatient services, many of 
the recently hired physicians and nurses left for more secure 
jobs.
    Third, do not break promises to veterans. After the huge 
outcry from North Carolina veterans and labor last fall, the VA 
put its leasing plans on hold promising no cuts in services or 
staff reductions until 2013. Yet, almost immediately, hiring 
slowed, renovations stopped, and services were cut. Management 
is still talking about closing the ER and replacing it with an 
urgent care facility.
    I would like to close by urging this Committee to 
investigate the impact of the leasing program on the Salisbury 
VA and other facilities before they are irrevocably weakened 
and the only remaining option for other veterans is a network 
of contract hospitals and 
providers.
    As for Salisbury specifically, it is clear that Mr. Hoffman 
and Ms. Adams are not serving the interests of North Carolina 
veterans. North Carolina is home to the fourth largest veterans 
population in this country. Clearly, none of us--and I am 
surely including the Ranking Member--are interested in having 
one less VA Medical Center in the State of North Carolina. Yet, 
management insists on implementing policies that are weakening 
a full-service, nearly 500-bed VA Medical Center that serves as 
a hub in North Carolina.
    Isn't it far better to plan for the future needs of North 
Carolina veterans by including lawmakers, veterans receiving 
this care, and the employees providing this care in the 
planning process?
    Thank you, Mr. Chairman. I will be glad to take any 
questions.
    [The prepared statement of Mr. Cox follows:]
Prepared Statement of J. David Cox, R.N., National Secretary-Treasurer, 
          American Federation of Government Employees, AFL-CIO
    The American Federation of Government Employees, AFL-CIO (AFGE) 
thanks you for the opportunity to testify today on VA medical facility 
construction, specifically, recent Veterans Health Administration (VHA) 
plans for medical facility leasing and other contractual arrangements 
for providing veterans' healthcare. AFGE represents over 160,000 
members of the VA workforce, more than two-thirds of whom are on the 
front lines caring for veterans at VA hospitals, clinics and long term 
care facilities.
    In March 2008, the VA quietly issued a radical new approach to 
providing inpatient and outpatient facilities: the ``Health Care Center 
Facility Leasing Program'' (Leasing Program). Despite its far reaching 
impact, the VA initially provided veterans' groups with very limited 
information about the concept and gave no specifics as to when or where 
it would implemented. Lawmakers in the targeted states and unions 
representing VHA employees received no initial information about the 
new program.
    The impact of the Leasing Program only became evident after the VA 
announced its plans to eliminate and/or downsize standalone VA medical 
centers in several locations, including Denver, CO, and Salisbury, NC, 
and instead provide services through leasing arrangements with non-VA 
facilities and standardized, large outpatient facilities called 
``Health Care Centers.'' The VA did not disclose its list of 22 
proposed sites for enhanced leasing until October 2008; they did so 
only in response to requests made by Chairman Akaka and Senator 
Rockefeller.
    When faced with strong opposition from lawmakers and stakeholders 
at several of the proposed sites, the VA appeared to put its leasing 
plans on hold. However, AFGE has recently received reports that VHA is 
still actively considering the leasing option for a number of locations 
in need of new or replacement medical centers.
    At some of the sites, the first ``warning sign'' of the Leasing 
Program has been a significant reduction in inpatient and emergency 
room (ER) services. These cuts result in the diversion of a greater 
number of veterans to non-VA hospitals for inpatient care (at a higher 
cost to the VA). In addition, veterans with medical and mental health 
emergencies are forced to use overcrowded emergency rooms at non-VA 
hospitals that do not specialize in veterans' conditions, and often 
face enormous medical bills for treatment of non-service-connected 
conditions.
    The loss or imminent loss of core inpatient services sends VA 
medical centers into a downward spiral:

     Physicians, nurses and other staff leave because of the 
facility's uncertain future and limited services;
     Due to staff shortages, more patients have to be diverted 
to non-VA facilities;
     Loss of services also impacts the facility's capacity to 
conduct diagnostic tests;
     Uncertainty also leads to deferred maintenance and 
postponement or cancellation of facility upgrades;
     These conditions cause more staff to leave;
     The facility's services become so limited that often, 
permanent outsourcing becomes the only viable option.

    This scenario is all too familiar. In its 2007 study of 
deteriorated conditions at Walter Reed Army Medical Center, the 
Congressional Research Service discussed a convergence of events--a 
``perfect storm''--that led to that crisis: increased demand for 
services from returning OIF/OEF troops, privatization threats, and a 
base realignment decision to permanently close the facility. At the VA, 
the announcement of plans to permanently cut and privatize core 
hospital services through leasing, coupled with increased demand from 
returning troops and newly eligible Priority 8s, is having a similar 
impact.
    Health Care Centers provide the perfect vehicle for the ``Walter 
Reed-ization'' of the VA because they permanently siphon off the 
``critical mass'' of VA medical centers. The danger they present for 
VA's unique capacity to treat veterans cannot be overstated. The VA has 
evolved into a national health care leader because it relies on a 
single, integrated system that concentrates its resources and expertise 
to provide comprehensive, high quality, cost effective specialized care 
in tandem with invaluable academic affiliations and specialized 
research. The VA's teaching mission produces significant benefits for 
patient care. Similarly, ``[b]ecause more than 70 percent of VA 
researchers are also clinicians who take care of patients, VA is 
uniquely positioned to move scientific discovery from investigators' 
laboratories to patient care'' (citing 2007 testimony by Dr. Joel 
Kupersmith before this Committee.)
    The Leasing Program utilizes an entirely different and untested 
delivery model--a model that has not been used by either the private or 
public sector to date. Currently, VA medical centers operate as the 
``hub'' supporting small, community based outpatient clinics (CBOCs), 
telehealth, limited fee basis care and other ``spokes.'' In contrast, 
the only ``hubs'' available to support the outpatient services provided 
by Health Care Centers are non-VA hospitals that often struggle 
financially to serve the general population, including large numbers of 
the uninsured and underinsured.
    Therefore, AFGE urges the Committee to conduct an immediate 
investigation into the Leasing Program and its impact on VHA and the 
facilities facing plans for substantial changes in their delivery 
infrastructure: For example:
Salisbury, NC:
    The Hefner VA Medical Center has a 150 acre campus and is centrally 
located in the state. Originally created after World War II as a large 
psychiatric facility, the Salisbury VA has evolved into a full service, 
484 bed facility that supports several outpatient clinics, long term 
care and an extensive research program. The Salisbury VA is primarily 
affiliated with the Wake Forest University School of Medicine/Baptist 
Medical Center and offers residency training in eight practice areas, 
and in total has 78 affiliations with academic institutions.
    Over the past four years, the Salisbury VA has undergone a 
significant transformation, including new operating rooms and intensive 
care units, and recruitment of additional physicians and nurses.
    In September 2008, management made a surprise announcement that it 
was eliminating acute care, intensive care (ICU) and emergency room 
care (ER) services, to be replaced by leasing arrangements with 
community hospitals and two new Health Care Centers. The Salisbury VA 
would retain long-term care and outpatient services and add a mental 
health center of excellence. Management did not consult with or provide 
advance notice to veterans' groups or employees. Some members of the 
North Carolina Congressional delegation were also completely taken by 
surprise. At the time, stakeholders were not aware that Salisbury was 
one of the 22 proposed sites for enhanced leasing.
    Management stated that this change was justified by an extensive 
study but would not share the results of the study with stakeholders. 
Once the study became available, AFGE learned that the contractor 
reviewed five options, including renovation or expansion of the 
facility, before reaching its recommendation for leasing, contracting 
and Health Care Centers. The contractor never met with veterans' groups 
or front line employees providing the care or their representatives 
even though it conducted a ``two-day stakeholder site visit.'' 
Researchers acknowledged that this option ``does not promote the 
inpatient veteran community or culture that veterans value.''
    In addition, during the same period, the VA put out a $34.5 million 
bid solicitation for ``potential health care sources . . . to provide 
inpatient hospital medical and surgical services'' including personnel, 
facilities and equipment.
    Many of the recently hired physicians and nurses responded to 
management's announcement by leaving for more secure jobs elsewhere.
    After veterans, labor and some lawmakers expressed strong 
opposition to the leasing plan, the VA appeared to change course. In 
December 2008, it issued a revised plan that ``provides that no changes 
to the health care delivery services at the Salisbury VA Medical Center 
will be made until 2013, nor will there be any staff reductions.'' (VA 
Press Release dated December 11, 2008).
    Despite the VA's commitment, the facility continues to implement 
policies that are leading to more uncertainty, service reductions and 
staff resignations. Specifically:

     Management is not filling physician and nurse vacancies on 
the acute care unit;
     One of the facility's two surgeons has been detailed to a 
non-patient care unit;
     Recruitment bonuses are not being used to attract new 
psychiatrists, even though current mental health caseloads are 
unreasonably large;
     Management has abandoned longstanding renovation plans for 
one building and converted another building recently renovated for 
patient care services into office space and an outpatient endoscopy 
clinic (even though another endoscopy unit in excellent condition is 
available elsewhere);
     Management has also abandoned plans to remodel the 
emergency room (ER) and has announced that the ER will be downgraded to 
an urgent care unit;
     Plans for a new outpatient clinic in Hickory have been 
canceled;
     There have also been early reports that the facility is 
facing a large deficit due to the increased use of costly contract 
care;
     Patient satisfaction scores have recently dropped;
     Due to inadequate nurse staffing, the Medical Unit 
currently has fewer than 30 beds; previously it had 42 beds;
     Management eliminated the facility's Center for Excellence 
for Women's Health;

    If these policies remain place, the Salisbury VA's ``critical 
mass'' will be essentially depleted by 2013, and leasing with non-VA 
facilities may be the only remaining option.
Denver, CO:
    Although this VA medical center is not on the ``proposed site'' 
list, in April 2008, the VA canceled longstanding plans for a 
replacement standalone facility in downtown Denver--plans that evolved 
through extensive analysis and consensus-building. Instead, veterans 
would receive care from a mix of VA and University health professionals 
at leased bed and research towers on the University of Colorado campus. 
Under the new plan, the size and scope of long term care and mental 
health programs would be reduced and the facility's spinal cord injury 
program would be bifurcated into two separate buildings.
    Here too, secrecy prevailed. The VA did not consult with members of 
the Colorado Congressional delegation, veterans or employees prior to 
reaching its decision to shift major construction dollars away from the 
existing plan and use them to radically transform the facility. The VA 
contended that this untested model was the product of reliable data and 
projections but never made these studies available.
    In response to strong opposition from lawmakers and stakeholders, 
the VA completely reversed itself a year after the initial announcement 
and reinstated plans for a new standalone, full service VA facility in 
Denver.
Other locations:
    South Texas: Local veterans' groups have sought a standalone VA 
medical center in the Rio Grande Valley for many years. The VA had 
other plans for South Texas. Last year, it opened the South Texas 
Health Care Center, and announced plans for expanded contracts with 
local hospitals for inpatient and emergency care.
    Fargo, ND: This facility is on the ``proposed site'' list. This 
month, management reported that a proposal was considered, but then 
rejected, to move specialty care clinics and Ambulatory Surgery offsite 
to a large outpatient facility resembling the Health Care Center model. 
Under this proposal, inpatient care would have been provided to 
veterans through contracts with non-VA hospitals.
    Iron Mountain, MI: Last year, the VA medical center director 
announced plans to eliminate surgery, intensive care and emergency room 
services, requiring veterans to use local non-VA facilities or travel 
to Chicago for VA care. After pressure from Michigan lawmakers and 
local stakeholders, these plans were put on hold. However, management 
continues to incrementally erode the facility's capacity: several ICU 
beds have been closed and plans to downgrade the ER to urgent care are 
still pending. In addition, uncertainty about the future and unfair 
human resource policies are causing physicians to leave; the facility 
currently has no surgeons, requiring contracting out of all surgical 
procedures.
    Northern Indiana: The VA Northern Indiana VA Health Care System has 
announced plans for Health Care Centers in Fort Wayne and South Bend. 
``Inpatient medical care will be provided primarily in partnership with 
community hospitals in Fort Wayne and South Bend.'' (NIHCS Web site).
    Fort Worth, TX: Last year, the VA awarded a contract to build its 
largest outpatient clinic to date in Fort Worth. It appears to offer a 
similar array of services as the Leasing Program's Health Care Centers.
    AFGE fully supports the VA's efforts to adapt its health care 
infrastructure to changing patient needs and new technologies. However, 
the use of secrecy, exclusion and unsupported assumptions based on 
shoddy research is simply bad policy. This Program may also represent 
bad law; it appears to be proceeding without adequate statutory 
authority. The VA contends that one of the Program's selling points is 
that ``[n]o authorizing legislation [is] required to initiate [this] 
program.'' VA relies on its existing authority under 38 U.S.C. 
Sec. 8153 to ``make arrangements, by contract or other form of 
agreement'' for the sharing of health-care resources between the VA and 
other entities.
    However, the VA has not offered evidence to support a finding that 
it has satisfied either test under Section 8153. More specifically, the 
VA has failed to show that VA resources are not available to provide 
these services in-house or that leasing is necessary to effectively 
utilize other health-care resources. In addition, we question whether 
the VA's intention to use ``information and planning'' bids to lay the 
foundation for leasing, as in the case of Salisbury, constitute a valid 
use of this sharing authority.
    The other critical question is whether the VA has the authority to 
use major construction dollars for an entirely different delivery 
system without Congressional approval. Although Congress has granted 
the VA substantial discretion to build and renovate medical facilities, 
it has not authorized the VA to engage in large scale privatization of 
its health care system.
                            recommendations
    AFGE urges greater Congressional oversight of the VA's Leasing 
Program and other large scale initiatives to shift the bulk of 
veterans' health care services to non-VA providers. Leasing raises many 
of the same concerns about the long term impact on this world-class 
system as Project HERO, which uses a contractor to arrange and manage 
VA's contract care. (AFGE's concerns about HERO were provided to the 
Committee following the April 22, 2008 legislative hearing.) The most 
critical question of all is whether leasing and contract care are truly 
necessary means of filling gaps in the VA health care system, or 
whether these gaps are merely the result of misused health care dollars 
and poor staffing policies, and unnecessary privatization worsens these 
gaps.
    If the VA is truly going to adapt to changing needs and changing 
times, it must stop operating in secrecy. AFGE and its members on the 
front lines of VA health care want to work with the VA to develop the 
most effective options for keeping the system viable. All 
stakeholders--including veterans' groups, employee representatives and 
academic affiliates--must be part of the planning process. Congress 
also needs to play an active, ongoing oversight role in all VA efforts 
to significantly alter its health care delivery system.
    Finally, Congress should oversee research conducted to identify 
needed changes in the VA's delivery model in order to ensure the 
neutrality and reliability of these studies. Thank you for the 
opportunity to presents AFGE's views on this issue.

    Chairman Akaka. Thank you very much, Mr. Cox, for your 
statement. And since you have been mentioning North Carolina, 
let me call on Senator Burr for his questions.
    Senator Burr. Thank you, Mr. Chairman. I explained to the 
Chairman that I have a mark-up in 3 minutes down at Armed 
Services that I need to attend and some appointments that I 
need to keep, and the Chairman was gracious enough to let me go 
first.
    I am not going to ask questions. I am going to make a 
statement relative to specifically HCCs because they have been 
raised. It has been of great interest. I have spent a 
tremendous amount of time on them. I have worked with General 
Peake. I have worked with General Shinseki. I have worked with 
most at the VA.
    What I have got here is the budget submission. I think it 
was referred to earlier that seven of the projects that were 
ranked got funding this year, and that is pretty much--that is 
not out of the ordinary. That is the available money to handle 
the maintenance requests.
    Now, you heard two impassioned pleas. One from my colleague 
from Nebraska; one from my colleague from Georgia. The Nebraska 
project ranks number 16. That is clearly not one through seven. 
The Atlanta, Georgia, project ranks number 51. That is clearly 
not one through seven.
    Does that lessen what they said? No, we have got veterans 
that in some cases are hauling oxygen across a parking lot. But 
let me assure you that under the process that all of us agree 
has to be followed because there are projects on here, 59, it 
is going to be--I'm sorry that we have not got the last panel 
up. They could tell me how many years it is going to be before 
they are completed, but I think we all know it is probably not 
going to be while I am here.
    Now, where have we benefited the delivery of health care 
for veterans if we just queue people in this system without 
using the flexibility that, in fact, was the CARES 
recommendation. Let me read it because everybody has referred 
to CARES.
    A finding. ``Contracting for care provides VA with the 
flexibility to quickly add and subtract services to meet the 
changing veterans' needs contingent on the availability of 
viable alternatives in the community.''
    What have we screamed about, those of us from States that 
have a demographic shift of veterans, ``Jeez, VA, Mr. 
Secretary, what can you do short-term to address the need that 
we have to deliver care to all these veterans that have moved 
in?'' If we had a stagnant population, I'd agree. Let us do 
exactly what we are doing and we will get exactly the same 
outcome.
    But, in North Carolina and in other States, we have 
conditions that are different than they were last year--not 10 
years ago. And to be honest, Mr. Cox, when you say there is a 
new model--referring to the HCCs--never been used in the public 
or private sector, my god, what is an outpatient clinic with an 
ambulatory unit attached to a hospital? That is exactly what a 
HCC is. It is set up to take individuals out of an inpatient 
setting where health care can deliver a higher quality for less 
money because there is a higher percentage likelihood that they 
do not need inpatient care connected to the outpatient 
procedure.
    But in the unlikely nature that a surgeon who does the 
outpatient procedure says, ``something during this process led 
me to believe I would like to use 24 hours to observe somebody 
in a controlled setting, let me use the facility here versus 
transferring him to Asheville, or to Salisbury, or to Durham, 
or to Fayetteville.''
    Now, in the case of Fayetteville where there is a new HCC, 
the referral is not going to be to a community hospital when we 
have a VA hospital in that community. The likelihood is it is 
going to be to the VA facility. It doesn't lessen the need for 
Salisbury, or Asheville, or Durham, or Fayetteville. It begins 
to compliment the 21st Century delivery system that this 
Administration, the last Administration, and every Secretary of 
the Veterans Administration have strived for. And I believe it 
is the mission of those that have a career at the VA to make 
sure that our veterans have the best possible care.
    If doing something different is wrong, then I am guilty 
because I have pushed every Secretary since I have been here in 
this capacity to do everything we can possibly do to meet the 
needs of veterans across the country. In some cases it is by 
contracting and using that flexibility because there is no 
service provided in that rural marketplace. In some cases it is 
to create new entities like HCCs because we can provide that 
care closer to where veterans live, avoid displacing them from 
their family, and not arguing over what the mileage 
reimbursement rates are. We can't keep up with the price of 
gasoline so we are never going to hit it in an optimal way.
    But at the end of the process having the infrastructure 
needed, whether it is in Denver where I may have had some 
disagreements--not on whether we did it or not but how we did 
it. Not on whether Salisbury is still an integral part of the 
structure of North Carolina. It is how we build out to 
compliment the system that we have got.
    If just building standalone hospitals was the delivery of 
care for the 21st Century, why would every community in the 
United States be doing it differently? Why would they be 
building out these entities that provide a higher level of 
care?
    Mr. Chairman, let me end with this. And I have overshot my 
time.
    Health care in the 21st Century has to be about educating 
people how to stay well--even veterans who are susceptible to 
needing treatment for certain things. A hospital setting is not 
a place to do that. It is done through outpatient facilities. 
It is done through medical homes. Medical homes are not created 
through emergency rooms. Medical homes are established with the 
confidence that an individual has in a health care 
professional. And when that bond is established, the education 
begins.
    I think we all know that if we want to bring down the 
overall cost of health care and raise the outcome, then we have 
got to bring prevention and wellness and disease management 
into the VA system, just like we do the private sector. You are 
not going to do that through an emergency room, though trauma 
facilities are important to this country's veterans and we will 
have them.
    But do not throw something overboard that fills out and 
compliments the health care system just because we have got a 
concern that it is leased and not owned. Or we have a concern 
that we are duplicating an area that already has a CBOC. As a 
matter of fact, we just completed the Charlotte CBOC less than 
a year ago. And the amazing thing is on the day that I was down 
there to shove the first pound of dirt, we all knew that it was 
not big enough. When we decided to build the CBOC in Charlotte, 
we estimated there were 125,000 underserved veterans in the 
metropolitan area of Charlotte, some 45 miles to Salisbury. We 
could not get them to Salisbury.
    If I'm not mistaken, the 290,000 square foot HCC in 
Charlotte, North Carolina, will not replace the CBOC; it is 
going to be in addition to the CBOC. And I would be bold enough 
to say today that 290,000 square feet plus the CBOC is not 
enough to meet the needs of the veterans' population that we 
are going to reach out to in northern South Carolina and 
southern North Carolina. And it is not going to have an effect 
on how many people end up utilizing Salisbury. It is going to 
mean that we are delivering care to that many more veterans. 
And hopefully, we are doing it in the most effective way that 
we can.
    I want to thank all three of you for your willingness to be 
here today. I want to thank the Chairman for what I think is a 
vital hearing. And I want to thank him for his generosity of 
letting me go first.
    Thank you, Mr. Chairman.
    Chairman Akaka. Thank you, Senator Burr, for your 
statement.
    I would like to ask all of you--the three of you--this 
question. And it has to do with BRAC. BRAC has its own 
identity. The question is would VA benefit from a BRAC-like 
process which would bundle a variety of recommendations into 
one package?
    I would like to hear from each of you. Mr. Wise, would you 
begin?
    Mr. Wise. Mr. Chairman, the subject of our report that I 
testified about really dealt with the issue of property 
management among a number of Federal agencies of which VA is 
one. We did not address qualitative aspects of realignment of 
VA resources. From the Enhanced Use Lease perspective, it is 
reasonable to assume that if you can reallocate resources from 
maintenance of unneeded or underutilized property and transfer 
them into providing services to veterans, this should be a plus 
for overall care for the veteran 
population.
    Chairman Akaka. Mr. Cullinan.
    Mr. Cullinan. Thank you, Mr. Chairman.
    The VFW certain agrees that there are facilities out there 
that are not doing the job anymore--they are outdated. In fact, 
they bog down the system. They consume resources that could be 
better applied. However, at this stage we would continue to 
argue that the best course of action would be to go on a case-
by-case basis in addressing these facilities. A key element 
here is to communicate to the veteran population.
    In an instance where VA is going to do away with an 
outdated medical center, for example, what is essential then is 
for VA to determine what is necessary to take that facility's 
place with respect to appropriately providing health care 
services to veterans and then letting that veteran population 
know about it. Tell them in advance. Before it is announced 
that something is going to be taken away, let them know what is 
coming. In place of this outdated VA medical facility, we are 
going to provide three CBOCs or two HCCs to provide better care 
in a more accessible manner. And we think that would go a long 
way to addressing this. We are not quite at the BRAC stage yet, 
we hope.
    Thank you.
    Chairman Akaka. Mr. Cox.
    Mr. Cox. Mr. Chairman, AFGE would be opposed to some 
process that, like BRAC, has been used for the military, or VA. 
We agree also that you need to look State-by-State, facility-
by-facility, at the needs of those veterans. Obviously, I 
believe, the needs of veterans in Alaska and with the vast 
population is going to vary with the needs of veterans in North 
Carolina. I mean, what is happening in North Carolina is, yes, 
we are building a large health center in Charlotte at the 
expense of closing a full fledged VA Medical Center in 
Salisbury.
    Those are real issues that I think have to be looked at. 
How do you close VA medical centers and create outpatient 
clinics when a medical center is a hub of the operations of any 
health care 
system?
    Chairman Akaka. Thank you. Mr. Cullinan, I know that VA's 
construction process is something that you have been keeping 
your eye on for quite a while.
    Mr. Cullinan. Yes, sir.
    Chairman Akaka. What are the biggest challenges for VA at 
this time? And how should those challenges be addressed?
    Mr. Cullinan. It is one of the things that we just talked 
about really. It has to do with VA letting veterans know what 
it is going to do--I am referring to VA as if it were a 
sentient being--but letting the veterans know what they intend 
to do for them to provide proper health care services.
    The other issue, of course, is what to do with facilities 
that have served their purpose because they are outdated, 
because of shifting demographics. You know, the patient loads 
have moved elsewhere.
    Another huge issue, of course, is providing for rural 
veterans. I mean, that is something right now--there are parts 
of the country where not only is there no infrastructure, there 
simply are no providers. The responses to this has to do with 
providing satellite clinics, you know, vans, all the rest of 
it. But the key issue is letting veterans know what it is going 
on--what VA intends to do for them.
    Chairman Akaka. Thank you. Mr. Cox, VA has requested over 
$1.9 billion for fiscal year 2010 for its construction 
projects, and also faces a huge backlog of projects yet to be 
completed. What recommendations would you make to Congress 
about building versus leasing facilities?
    Mr. Cox. Mr. Chairman, I would make the same recommendation 
I believe about homeownership. We all prefer to own our homes 
versus to rent homes. And when the VA builds medical centers, 
owns these clinics and various things of that nature, it is the 
VA's property. They have a pride in it. They take care of it. 
It is operated for veterans, and probably about 50 percent of 
the people that work in it are veterans. It creates that 
community that veterans so often seek. Many studies have shown 
that.
    We need to be building and owning VA facilities. With 
leasing you lose sight of the veterans and they are just 
mainstreamed into a health care system that is already 
struggling greatly in this country. The care of veterans is 
very, very unique. And I also believe veterans deserve first 
priority when it comes to care in this country, sir.
    Chairman Akaka. Thank you for that response.
    Mr. Wise, what are the pros and cons of using Enhanced Use 
Leases? And how does VA's use of them compare with that of 
other Federal agencies?
    Mr. Wise. Mr. Chairman, I think from the perspective of the 
Veterans Administration, a plus for using enhanced use leasing 
is it gives the VA a bit more flexibility compared to other 
forms of property disposal for underutilized or unutilized 
property. Thus, there are some advantages from the VA's 
perspective in that the VA has more certainty that it will be 
able to retain the proceeds and ability to do more with the 
retention of the proceeds.
    As far as comparison with other agencies, the picture is 
varied. Each agency is governed by a different state. The 
majority of the agencies we looked at do have some authority to 
retain proceeds, but it varies somewhat from agency to agency.
    As you may know a bill that has been introduced in the 
House of Representatives that is intended to standarize the 
proceeds retention procedures for agencies.
    Chairman Akaka. I thank you for that. Let me ask my final 
question. I have other questions that I will submit.
    For each of you, how significant of a role should community 
input and outside review play in the VA construction process? 
We have been talking about transparency and you have mentioned 
this. And what are the potential pitfalls of a system that is 
not completely transparent?
    Mr. Wise?
    Mr. Wise. Mr. Chairman, from the perspective of enhanced 
use leasing, there are requirements and provisions that go into 
developing these leases that take into account certain 
community needs and other factors relevant to Administration 
enhanced use leases.
    Chairman Akaka. Mr. Cullinan?
    Mr. Cullinan. Thank you, Mr. Chairman.
    We believe that local involvement is essential to the 
process with respect to determining true need. Who knows better 
what their needs are than the potential patients or customers 
of the VA 
system.
    It also has to do with expectations--letting the veteran 
population in this case know what they can expect--what the 
outcome will be of a new facility, of an alteration, of a 
mission change in a facility.
    And finally, it helps very much in the end once all of 
these things are done in the political process. You are not 
going to have the outcries and outrage that are sometimes 
expressed due not to a bad plan necessarily, but of the fact 
that it is just misunderstood. So, in terms of establishing 
true need and involving them in the process early on to 
avoiding unnecessary problems, we think it vital.
    Chairman Akaka. Thank you.
    Mr. Cox?
    Mr. Cox. Seeking the input of the veterans, the employees 
who take care of the veterans, is essential to any process, as 
well as the community. And also, from Members of Congress.
    I have to share with you, Mr. Chairman, Congressman Mel 
Watt read in the newspaper about the Salisbury VA Medical 
Center and that was the first time he was informed that a 
medical center in his district was being closed and turned into 
an outpatient clinic. He had no knowledge. And I think, 
certainly, involving the Members of Congress is very, very 
important to the process, as it does create a transparency.
    Chairman Akaka. Well, I want to thank all of our witnesses 
for appearing today. The VA's construction process and 
priorities are important to all of us. There is a lot of money 
at stake in these decisions, and the system needs to be 
transparent to the public.
    VA construction projects have a great impact on so many of 
our veterans, and therefore, your input is very, very much 
appreciated.
    As a follow up to this hearing, I will be asking GAO for a 
global review of the CARES process with a detailed analysis of 
all of the proposals.
    Again, I want to say thank you very much for being here.
    [Whereupon, at 11:16 a.m., the Committee was adjourned.]
                            A P P E N D I X

                              ----------                              


    Prepared Statement of Joy Ilem, Assistant National Legislative 
                  Director, Disabled American Veterans
    Mr. Chairman and Members of the Committee: The Disabled American 
Veterans (DAV) is pleased to submit testimony in conjunction with the 
Committee's oversight hearing to examine the Department of Veterans 
Affairs (VA) construction process. We appreciate the opportunity to 
offer our views on progress by VA in delivering on the recommendations 
outlined in the 2004 Capital Asset Realignment for Enhanced Services 
(CARES) report, and to discuss the future of VA's health care 
infrastructure.
    As we near the end of the first decade of the 21st century, we find 
ourselves at a critical juncture with respect to how VA health care 
will be delivered and what the VA of the future will be like in terms 
of its health care facility infrastructure. Although admittedly this 
vision is yet to gain clarity, one fact is certain--our Nation's sick 
and disabled veterans deserve and have earned a stable, accessible VA 
health care system that is dedicated to their unique needs and can 
provide high quality, timely care where and when they need it.
                              cares begins
    Mr. Chairman, VA initiated CARES in 1999 with a pilot program in 
Veterans Integrated Service Network (VISN) 12, through the auspices of 
a contract with the firm of Booz Allen Hamilton. In 2001, that contract 
was canceled and VA integrated the CARES process within its own staff 
and other resources. The process took years to complete and required 
tens of thousands of staff-hours of effort and millions of dollars in 
studies. At its conclusion, with issuance of the so-called ``Draft 
National CARES Plan,'' the VA Secretary chartered and appointed a CARES 
Commission to independently evaluate and consider its outcomes and 
recommendations. These processes were largely conducted and reported in 
public.
    As a general principle, the Independent Budget Veterans Service 
Organizations (IBVSOs)--DAV, AMVETS, Paralyzed Veterans of America, and 
Veterans of Foreign Wars of the United States--concluded that CARES was 
a comprehensive and fully justified road map for VA's infrastructure 
needs, as well as a model that VA could apply periodically to assess 
and adjust those priorities. However, once the Draft National CARES 
Plan was released in 2004, an immediate backlash developed to the 
proposed recommendations affecting the operating missions of a number 
of VA facilities. Many veterans, fearful that they would lose VA health 
care services, and selected Members of Congress, opposed the plans for 
changes in their States--and in their VA facilities, irrespective of 
the validity of the findings or the value of the plan as a whole. Local 
political pressure became intense, and in many cases the proposed CARES 
recommendations were scuttled. In one respect, it became clear that 
veterans and their Members of Congress were passionate and committed in 
keeping targeted VA facilities intact. Unfortunately, this passionate 
defense of the status quo stymied the CARES implementation phase, and 
caused VA to become much more reserved about sharing information about 
any strategic infrastructure 
planning.
                             cares stalled
    Upon completion of the Draft National CARES Plan in 2004, then-VA 
Secretary Anthony Principi testified before the House Veterans' Affairs 
Subcommittee on Health. His testimony noted that CARES ``reflects a 
need for additional investments of approximately $1 billion per year 
for the next five years to modernize VA's medical infrastructure and 
enhance veterans' access to care.'' VA reports that through fiscal year 
(FY) 2009, Congress has appropriated $4.9 billion for construction 
projects since FY 2004.
    On May 20, 2008, while not declaring CARES officially ``dead,'' 
then-VA Secretary James Peake spoke at the National Press Club and 
indicated, in answer to a question, that VA would be looking at factors 
beyond CARES to determine its future capital infrastructure planning 
needs. On July 18, 2008, Secretary Peake wrote to two Members of 
Congress that the planned Denver, Colorado, replacement VA medical 
center was ``. . . not affordable . . .'' as a traditional government-
owned, VA-operated facility of the size, scope and price that had been 
designed.
    For nearly a decade, the IBVSOs have argued that the VA must be 
protected from deterioration of its health infrastructure, and the 
consequent decline in VA's capital asset value. Year after year, we 
have urged Congress and the Administration to ensure that appropriated 
funding is adequate in VA's capital budget so that VA can properly 
invest in its physical assets, protect their value, and ensure health 
care in safe and functional facilities long into the future. Likewise, 
we have stressed that VA's facilities have an average age of more than 
55 years; therefore, it is essential that funding be routinely 
dedicated to renovate, repair, and replace VA's aging structures, 
capital, and plant equipment systems as needed.
               capital funds deficit worsened under cares
    Mr. Chairman, unfortunately, the past decade of deferred and 
underfunded construction budgets has meant that VA has not adequately 
recapitalized its facilities, now leaving the health care system with a 
large backlog of major construction projects totaling between $6.5 
billion to $10 billion, with an accompanying urgency to deal with this 
growing dilemma.
    One of the reasons VA's construction backlog is so large and 
growing today is because both VA and Congress, by agreement with the 
two prior Administrations, allocated little to no capital construction 
funding during the pendency of the CARES process, over a six-year 
period. Agreeing with VA, the Appropriations Committees in both 
chambers provided few resources during the initial review phase, 
preferring to wait for CARES results, a decision the IBVSOs repeatedly 
opposed. We argued that a de facto moratorium on construction was 
unnecessary because a number of these projects obviously warranted 
funding, and would almost certainly be validated through the CARES 
review process. The House agreed with our views as evidenced by its 
passage of H.R. 811, the ``Veterans Hospital Emergency Repair Act.'' 
That bill passed unanimously on March 27, 2001, about two years into 
the CARES process. Let me quote, in part, what the bill's sponsor, then 
Chairman Christopher H. Smith, had to say in introducing H.R. 811 over 
eight years ago:

          Mr. Speaker, for the past several years, we have noted that 
        the President's annual budget for VA health care has requested 
        little or no funding for major medical facility construction 
        projects for America's veterans. As we indicated last year in 
        our report to the Committee on the Budget on the 
        Administration's budget request for fiscal year 2001, VA has 
        engaged in an effort through market-based research by 
        independent organizations to determine whether present VA 
        facility infrastructures are meeting needs in the most 
        appropriate manner, and whether services to veterans can be 
        enhanced with alternative approaches. This process, called 
        ``Capital Assets Realignment for Enhanced Services,'' or 
        ``CARES,'' has commenced within the Department of Veterans 
        Affairs, but will require several years before bearing fruit. 
        In the interim, Mr. Speaker, some VA hospitals need additional 
        maintenance, repair and improvements to address immediate 
        dangers and hazards, to promote safety and to sustain a 
        reasonable standard of care for the Nation's veterans. Recent 
        reports by outside consultants and VA have revealed that dozens 
        of VA health care buildings are still seriously at risk from 
        seismic damage. The buildings at American Lake [Washington] 
        damaged in yesterday's earthquake were among those identified 
        as being at the highest levels of risk.
          Also, Mr. Speaker, a report by VA identified $57 million in 
        improvements were needed to address women's health care; 
        another report, by the Price Waterhouse firm, concluded that VA 
        should be spending from 2 percent to 4 percent of its ``plant 
        replacement value'' (PRV) on upkeep and replacement of its 
        health care facilities. This PRV value in VA is about $35 
        billion; thus, using the Price Waterhouse index on maintenance 
        and replacement, VA should be spending from $700 million to 
        $1.4 billion each year. In fact, in fiscal year 2001, VA will 
        spend only $170.2 million for these purposes.
          While Congress authorized a number of major medical 
        construction projects in the past three fiscal years, these 
        have received no funding through the appropriations process. I 
        understand that some of the more recent deferrals of major VA 
        construction funding were intended to permit the CARES process 
        to proceed in an orderly fashion, avoiding unnecessary spending 
        on VA hospital facilities that might, in the future, not be 
        needed for veterans. I agree with this general policy, 
        especially for those larger hospital projects, ones that 
        ordinarily would be considered under our regular annual 
        construction authorization authority. We need to resist 
        wasteful spending, especially when overall funds are so 
        precious. But I believe that I have a better plan.

    To our regret, the Senate never considered the proposed bill, 
Congress did not appropriate supportive funding, and the construction 
and maintenance backlog continued to grow unabated for the next several 
years. Incidentally, the needed infrastructure improvements for women 
veterans (for privacy, restroom accommodations, etc.) mentioned by 
Representative Smith, were largely never made. The VA projects that the 
number of women veterans turning to VA for care will likely double in 
the next 2-4 years; therefore, it is essential that these 
infrastructure needs are addressed now.
    Another area of concern is VA research capital infrastructure. Over 
the past decade, minimal funding has been appropriated or allocated to 
maintain, upgrade or replace aging VA research facilities. Many VA 
facilities have run out of adequate research space. Plumbing, 
ventilation, electrical equipment and other required maintenance needs 
have been deferred. In some urgent cases, VA medical center directors 
have been forced to divert medical care appropriations to research 
projects to avoid dangerous or hazardous situations.
    The 2003 Draft National CARES Plan (DNCP) included $142 million for 
renovation of existing research space and to cover build-out costs for 
leased research facilities. However, these capital improvement costs 
were omitted from the VA Secretary's final report on CARES, the so-
called ``CARES Decision Memorandum.'' According to Friends of VA 
Medical Care and Health Research (FOVA), over the past decade, only $50 
million has been spent on VA research construction or renovation in 
VA's nationwide research system. Additionally, FOVA noted in its fiscal 
year 2010 budget proposal, endorsed by DAV, that VA was 
congressionally-directed to conduct a comprehensive review of its 
research facilities and report to Congress on the deficiencies found, 
with recommended corrections. During FY 2008, the VA Office of Research 
and Development initiated a three-year examination of all VA research 
infrastructure to assess physical condition, capacity for current 
research, as well as program growth and sustainability of the space to 
conduct research. We urge the Committee to consider this report when 
completed, and for Congress to address VA's research facilities 
improvement needs as part of a separate VA research infrastructure 
appropriation. VA's Medical and Prosthetic Research program is a 
national asset to VA and veterans--it helps to ensure the highest 
standard of care for veterans enrolled in VA health care, and elevates 
health care practices and standards in all of America's health care. 
That program cannot continue its record of achievement without adequate 
maintenance of the capital infrastructure in which it functions.
                         cares projection model
    One of the strengths of the CARES process was that it was not just 
a one-time snapshot of needs. As part of the process, VA developed a 
health care projection model to estimate current and future demand for 
health care services, and to assess the ability of its infrastructure 
to meet this demand. VA uses this projection model throughout its 
capital planning process, basing all projected capital projects upon 
the results of the demand model.
    VA's model, also relied on for VA health care budget, policy and 
planning decisions, produces 20-year forecasts in demand for VA health 
services. It is a complex and sophisticated model that adjusts for 
numerous factors, including demographic shifts, morbidity and 
mortality, changing needs for health care based on aging of the veteran 
population, projections to account for health care innovations, and 
many other relevant factors.
    In a November 2007 House Veterans' Affairs hearing before the 
Subcommittee on Health, VA's testimony summed up the process:

          Once a potential project is identified, it is reviewed and 
        scored based on criteria VA considers essential to providing 
        high quality services in an efficient manner. The criteria VA 
        utilizes in evaluating projects include service delivery 
        enhancements, the safeguarding of assets, special emphasis 
        programs, capital asset priorities, departmental alignment, and 
        financial priorities. VA considers these new funding 
        requirements along with existing CARES decisions in determining 
        the projects and funding levels to request as part of the VA 
        budget submission. Appropriate projects are evaluated for joint 
        needs with the Department of Defense and sharing opportunities.

    VA uses these evaluation criteria to prioritize its projects each 
year, releasing these results in its annual five-year capital plan. The 
most recent one, covering fiscal years 2009--2013, is part of the 
Congressional budget submission in ``Volume III: Construction 
Activities.'' This plan is central to VA's funding requests and clearly 
lists the Department's highest construction priorities for the current 
year, as well as for the immediate future.
                       va moving in new direction
    Mr. Chairman, over the past several years, VA began to discuss with 
the veterans service organization community, its desire to address its 
health infrastructure needs in a new way. VA acknowledged its 
challenges with aging infrastructure; changing health care delivery 
needs, including reduced demand for inpatient beds and increasing 
demands for outpatient care and medical specialty services; limited 
funding available for construction of new facilities; frequent delays 
in constructing and renovating space needed to increase access, and 
particularly the timeliness of construction projects. VA has noted, and 
we concur, that a decade or more is required from the time VA initially 
proposes a major medical facility construction project, until the doors 
actually open for veterans to receive care in that facility. VA 
indicated to us a necessity to consider alternative means to address 
the growing capital infrastructure backlog and the significant 
challenge of funding it.
    Given these significant challenges, VA has broached the idea of a 
new model for health care delivery, the Health Care Center Facility 
(HCCF) leasing program. Under the HCCF proposal, in lieu of the 
traditional approach to major medical facility construction, VA would 
obtain by long-term lease, a number of large outpatient clinics built 
to VA specifications. These large clinics would provide a broad range 
of outpatient services, including primary and specialty care as well as 
outpatient mental health services and ambulatory surgery.
    VA noted, that in addition to its new HCCF facilities, it would 
maintain its VA medical centers (VAMCs), larger independent outpatient 
clinics, community-based outpatient clinics (CBOCs) and rural outreach 
clinics. VA has argued that the HCCF model would allow VA to quickly 
establish new facilities that will provide 95 percent of the care and 
services veterans will need in their catchment areas, specifically 
primary care, and a variety of specialty services, mental health, 
diagnostic testing and same-day ambulatory surgery. According to VA, 
veterans' inpatient hospital services needed by these HCCFs would be 
provided through additional leases, VA staffed units, or other 
contracts or fee-for-service options with academic affiliates or in 
available community hospitals.
    We concur with VA that the HCCF model seems to offer a number of 
benefits in addressing its capital infrastructure problems including 
more modern facilities that meet current life-safety codes; better 
geographic placements; increased patient safety; reductions in 
veterans' travel costs and increased convenience; flexibility to 
respond to changes in patient loads and technologies; overall savings 
in operating costs and in facility maintenance and reduced overhead in 
maintaining outdated medical centers.
                        challenges to hccf model
    Nevertheless Mr. Chairman, while it offers some obvious advantages, 
the HCCF model also portends obvious challenges. Outside the CBOC 
environment, contract management in complex leased health care 
facilities is an untested practice in VA. Congress has spent years 
overseeing efforts to improve VA's contracting performance across a 
range of activities, including obtaining contract health care for 
eligible veterans. Also, we are deeply concerned about the overall 
impact of this new model on the future of VA's system of care, 
including the potential unintended consequences on continuity of high-
quality care, delivery of comprehensive services, VA's electronic 
health record (EHR), its recognized biomedical research and development 
programs, and particularly the impact on VA's renowned graduate medical 
education and health professions training programs, in conjunction with 
longstanding affiliations with nearly every health professions 
university in the Nation. Additionally, we question VA's ability to 
provide alternatives for maintaining its existing 130 nursing home care 
units, homeless programs, domiciliaries, compensated work therapy 
programs, hospice, adult day health care units, the Health Services 
Research and Development Program, and a number of other highly 
specialized services including 24 spinal cord injury centers, 10 blind 
rehabilitation centers, a variety of unique ``centers of excellence'' 
(in geriatrics, gerontology, mental illness, Parkinson's, and multiple 
sclerosis), and critical care programs for veterans with serious and 
chronic mental illnesses. We question if VA has seriously considered 
the probable impact on these programs in developing the HCCF concept.
    In general, the HCCF proposal seems to be a positive development, 
with good potential. Leasing has the advantage of avoiding long and 
costly in-house construction delays and can be adaptable, especially 
when compared to costs for renovating existing VA major medical 
facilities. Leasing options have been particularly valuable for VA as 
evidenced by the success of the leased space arrangements for many VA 
community-based outpatient clinics and Vet Centers. However, VA has 
virtually no experience managing as a tenant in a building owned by 
others, for the delivery of complex, subspecialty VA health care 
services.
                  inpatient services: a major concern
    The IBVSOs are also concerned with VA's plan for obtaining 
inpatient services under the HCCF model. VA says it will contract for 
these essential inpatient services with VA affiliates or community 
hospitals. First and foremost, we fear this approach could negatively 
impact safety, quality and continuity of care, and permanently 
privatize many services we believe VA should continue to provide. We 
have testified on this topic numerous times, and the IBVSOs have 
expressed objections to privatization and widespread contracting for 
care in the ``Contract Care Coordination'' and ``Community Based 
Outpatient Clinics'' sections of the Fiscal Year 2010 Independent 
Budget. We call the Committee's attention to those specific concerns.
    Mr. Chairman, in November 2008, VA responded to yours and Senator 
Rockefeller's request for more information on VA's plans for the newly 
proposed HCCF leasing initiative. To summarize that response, VA 
advised it originally identified 22 sites that could potentially be 
considered appropriate for adoption of the HCCF concept. Following 
additional analysis, that number was reduced to eight potential sites 
for review, including Butler, Pennsylvania; Lexington, Kentucky; 
Monterey and Loma Linda, California; Montgomery, Alabama; and 
Charlotte, Fayetteville and Winston-Salem, North Carolina.
    VA also addressed a number of other specific questions in the 
November 2008 letter, including whether studies had been carried out to 
determine the effectiveness of the current approach; the full extent of 
the current construction backlog of projects, and its projected cost 
over the next five years to complete; the extent to which national 
veterans organizations were involved in the development of the HCCF 
proposal; the engagement of community health care providers related to 
capacity to meet veterans' needs; the ramifications on the delivery of 
long-term care and inpatient specialty care; and whether VA would be 
able to ensure that needed inpatient capacity will remain available.
    I will comment on some of the key responses from VA related to 
these noted questions. Initially, it appears VA has a reasonable 
foundation for assessing capital needs and has been forthright with the 
estimated total costs for ongoing major medical facility projects. For 
this year, VA estimated $2.3 billion in funding needs for existing and 
ongoing projects. The Department estimated that the total funding 
requirement for major medical facility projects over the next five 
years would be in excess of $6.5 billion. Additionally, if the new HCCF 
initiative is fully implemented, VA indicated it would need 
approximately $385 million more to execute seven of the eight new HCCF 
leases.
    We agree with VA's assertion that it needs a balanced program of 
capital assets, both owned and leased buildings, to ensure demands are 
met under the current and projected workload. Likewise, we agree with 
VA that the HCCF concept could provide modern health care facilities 
that would not otherwise be available due to the predictable 
constraints of VA's major construction program.
    VA indicated in its letter that the eight sites proposed for the 
HCCF initiative were chosen to ensure there would be little impact on 
VA specialty inpatient services or on delivery of long-term care. 
However, VA made a statement with respect to the HCCF model for the 
proposed sites that is somewhat confounding (VA's response to question 
5), as follows: ``By focusing the outpatient needs through HCCF's, 
major construction funding could then shift to the remaining capital 
needs.'' What is not clear to us is the extent to which VA plans to 
deploy the HCCF model. In areas where existing CBOCs need to be 
replaced or expanded with additional services due to the need to 
increase capacity, the HCCF model would seem appropriate and beneficial 
to veterans. On the other hand, if VA plans to replace the majority or 
even a large fraction of all VAMCs with HCCFs, such a radical shift 
would pose a number of concerns for DAV.
    Mr. Chairman, before the HCCF concept is permitted to go forward on 
a larger scale, and with a major private sector component as described 
by VA, we believe VA must address and resolve a number of challenges. 
Among these questions are:

     Facility governance, especially with respect to the large 
numbers of non-VA employees who would be treating veterans;
     VA directives and rule changes that govern health care 
delivery and ensure safety and uniformity of the quality of care;
     VA space planning criteria and design guides' use in non-
VA facilities;
     VA's critical research activities, most of which improve 
the lives not only of veterans but of all Americans;
     VA's electronic health record, which many observers, 
including the President, have rightly lauded as the EHR standard that 
other health care systems should aim to achieve; and
     Continuity of care within the mix of public/private 
facilities, as well as for those VA-enrolled veterans who relocate to 
other areas from the HCCF environment.

    Fully addressing these and related questions are important, but we 
see this challenge as only a small part of the overall picture related 
to VA health infrastructure needs in the 21st century. The emerging 
HCCF plan does not address the fate of VA's 153 medical centers located 
throughout the Nation that are on average 55 years of age or older. It 
does not address long-term care needs of the aging veteran population, 
treatment of the chronically and seriously mentally ill, the unresolved 
rural health access issues, or the lingering questions on improving 
VA's research infrastructure.
                   history as a lesson for the future
    Today's VA largely was built during and immediately following World 
War II, to become an exalted place of care for over 500,000 injured war 
veterans. Some of those wounded remained hospitalized in VA for the 
remainder of their lives. VA's spinal cord injury, blind rehabilitation 
and prosthetics and sensory aids programs got their genesis or major 
expansions from World War II veterans' needs. In 1946, Congress 
established the Department of Medicine and Surgery (DM&S), now the 
Veterans Health Administration, and gave DM&S many independent powers 
that other Federal agencies lacked, in order to care for those wounded 
heroes. DM&S Memorandum No. 2 formed the VA-medical school affiliation 
relationships, to guarantee the young and energetic physicians-in-
training of that age would turn their full attention to wounded and ill 
veterans. In conjunction with new affiliations, VA made a collective 
decision to locate its new post-war VA hospitals nearby or alongside 
existing medical schools' academic health centers for the potential 
symbiotic effect and to help ensure a high-quality physician workforce 
remained available to sick and disabled veterans. VA's biomedical 
research and development programs and its remarkable academic training 
programs we see in practice today emerged out of these seminal 
decisions and have become instrumental in both aiding VA with stronger 
academic credentials, advancing evidence-based treatments, and 
promoting a higher standard of care for wounded and sick veterans. Even 
with the advent of primary care and VA's other transformations during 
the past decade, this cooperative VA-academic system of care is still 
largely intact more than 60 years after World War II.
    Mr. Chairman, as Congress considers the future of VA's 
infrastructure, and VA's future overall, it is good to remember our 
history, and to learn from it. Today, the Nation confronts two wars 
that, when concluded, will have likely produced over two million new 
veterans. While early in the process, we know from VA that already more 
than 400,000 of them have contacted VA for health care, for conditions 
ranging from post-deployment mental health conditions to minor 
musculoskeletal problems to severe brain injury with multiple 
amputations. No less than earlier generations and probably more so, 
these veterans will need VA to be sustained for them. The question that 
confronts the Committee today is--what that VA system is going to be, 
what it will offer, and how it will be managed and sustained. We in the 
veterans service organization community cannot plan the future VA, and 
we would not expect your Committee to do so independently. Given the 
President's pledge to create the VA of the 21st century; however, we do 
expect that VA should be mandated to establish its plan in a 
transparent way, vet that plan through our community and other 
interested parties, and provide its plan to Congress. We hope that all 
our communities (both inside and outside VA) share our concerns and 
want to help VA mold a strategic capital plan that all can accept and 
help collectively to accomplish. 
However, until this process materializes, we fear that VA's capital 
programs and the significant effects on the system as a whole and on 
veterans individually, will go unchanged, ultimately risking disaster 
for VA and for America's sick and disabled 
veterans.
                          avoiding the obvious
    As we grapple with the issue of health care and insurance reform in 
America, we must make every effort to protect the VA system for future 
generations of sick and disabled veterans. A well thought-out capital 
and strategic plan is urgently needed, and the tough decisions must be 
made, not avoided as in the response to the seemingly aborted CARES 
process. We are pleased the current Administration has committed to 
building the VA of the 21st century. However, we are not sure what this 
may mean, nor do we have the value of a VA comprehensive infrastructure 
plan. Regardless of the direction VA takes, we must insist there is 
consideration of all the elements we have described throughout our 
testimony. Critical elements in VA make up what are considered by all 
accounts the ``best care anywhere'' in the United States. We want to 
ensure VA's infrastructure plan maintains the integrity of the VA 
health care system, and all the benefits VA brings to its enrolled 
population. We want to ensure care is not fragmented and that high 
quality, safe health care remains the bulwark of VA's programs.
                      cares: an unfulfilled vision
    Mr. Chairman, hitting its apex in 2004, we at DAV believe CARES 
provided a solid foundation for, and a valuable assessment of, what VA 
had in its health care infrastructure portfolio and where VA needed to 
go, but we ask today, what substantive action has been taken since the 
release of the CARES report to overhaul the system to make way for the 
21st century? Currently VA is planning construction of five major VA 
medical centers, in Orlando, Florida; Denver, Colorado; Las Vegas, 
Nevada; Louisville, Kentucky; and, New Orleans, Louisiana. None of the 
decisions to build these facilities was affected by the CARES process 
in any way but the most marginal sense. However, the decisions were 
unquestionably affected by the political process. While VA is 
addressing these political demands, it is still ignoring similar 
deficits at facilities such as in Togus, Maine; Sheridan, Wyoming; 
Wichita, Kansas; East Orange, New Jersey; Hines, Illinois; Mountain 
Home, Tennessee; Battle Creek, Michigan; and more than 100 other older 
VA medical centers, some of which are in, or are reaching, dire need 
for infusion of major infrastructure funding.
                              va: at risk
    At this juncture, we believe VA soon may be in a very precarious 
situation. Operations Iraqi and Enduring Freedom continue. Each day we 
see growth in future health care, rehabilitation and post-deployment 
mental health needs in our newest generation of war veterans, and 
record demand for VA care by previous generations of disabled veterans. 
As a Nation, we must be good stewards of taxpayer dollars, yet we must 
also fulfill the commitment of the Nation to care for those who have 
suffered illness or injury as a result of military service and combat 
deployment. Concurrently, the American economy is unstable, Social 
Security, Medicare and Medicaid are seen by many to be unsustainable if 
not changed, and the new Administration and Congress are trying to 
formulate a plan to ensure access to basic health care services for 
every U.S. resident, and simultaneously reform the private insurance 
system. Changes coming from those trends, and that work, will 
undoubtedly affect the viability of VA in the future, but it is 
impossible to know the depth of that impact or its nature. 
Unfortunately, from what we do know, VA is largely uninvolved in the 
health care reform debate, and therefore, VA may be negatively impacted 
by those larger reforms. In our opinion, the VA, as a cabinet agency, 
cannot be permitted to sit on the sideline of health care reform, but 
must be proactive and fully engaged in the debate.
                    advocates want a 21st century va
    As advocates for veterans, we do not accept VA's contention that 
replacing outdated VA facilities is `` . . . not affordable.'' VA's 
infrastructure needs have been deferred, neglected and delayed for far 
too long, to the advantage of other consumers of Federal dollars; 
therefore, without question facility replacements and updating are 
going to be costly, and both Congress and the Administration are 
confronted with that reality. The FY 2008 VA Asset Management Plan 
provides the most recent estimate of VA's needs. Using the guidance of 
the Federal Government's Federal Real Property Council, the value of 
VA's infrastructure is just over $85 billion. Accordingly, using 
industry standards as a yardstick, VA's capital budget should be 
between $4.25 billion and $6.8 billion annually in order to maintain 
its infrastructure at that value. VA's capital budget request for FY 
2009--which includes major and minor construction, maintenance, leases, 
and equipment--was $3.6 billion.
    The IBVSOs greatly appreciate that Congress provided funding above 
that level this year by an increase over the Administration's request 
of $750 million in Major and Minor Construction alone. That higher 
amount brought the total capital budget for FY 2009 in line with 
industry standards. We strongly urge that these targets continue to be 
met and we would hope that future VA requests use standard guidelines 
as a starting point without requiring Congress to add additional 
funding. We also are mindful that Congress included nearly $1 billion 
in the recent economic stimulus package that will fund VA 
infrastructure improvements and represents a significant re-payment to 
VA of capital funds it should have received years ago while CARES was 
underway.
                           design the future
    Congress and the Administration must work together to secure VA's 
future to design a VA of the 21st century. It will take the joint 
cooperation of Congress and the Administration to support this reform, 
while setting aside resistance to change, even dramatic change, when 
change is demanded and supported by valid data. Accordingly, we urge 
the Administration and Congress to live up to the President's words by 
making a steady, stable investment in VA's capital infrastructure to 
bring the system up to match the 21st century needs of veterans.
                 communications will be key to success
    Finally, one of our community's pent-up frustrations with respect 
to VA's infrastructure is lack of information and communication. 
Communications have been sorely lacking for the past several years, and 
VA has seemingly resisted keeping us informed of its planning. In the 
spirit of the President's very first executive order, on the 
transparency of government, we ask VA do a better job of communicating 
with our community, enrolled veterans, labor organizations and VA's own 
employees, local government and their affected communities, and other 
stakeholders, as the VA capital and strategic planning processes move 
forward. It is imperative that all of these groups understand VA's 
``big picture'' and how it may affect them. Talking openly and 
discussing potential changes will help resolve the understandable angst 
about this complex and important question of VA health care 
infrastructure. While we agree that VA is not its buildings, and that 
the patient should be at the center of VA care and concern, VA must be 
able to maintain an adequate infrastructure around which to build and 
sustain its patient care system. The time to act is now--our Nation's 
veterans deserve no less than our best effort.

    Thank you, Mr. Chairman and Members of the Committee for allowing 
DAV to share our views on this critical topic.