[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
A REVIEW OF VETERANS AFFAIRS MAJOR LEASE PROCUREMENT
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HEARING
BEFORE THE
SUBCOMMITTEE ON NATIONAL SECURITY
OF THE
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
JUNE 25, 2015
__________
Serial No. 114-39
__________
Printed for the use of the Committee on Oversight and Government Reform
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Available via the World Wide Web: http://www.fdsys.gov
http://www.house.gov/reform
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U.S. GOVERNMENT PUBLISHING OFFICE
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
JASON CHAFFETZ, Utah, Chairman
JOHN L. MICA, Florida ELIJAH E. CUMMINGS, Maryland,
MICHAEL R. TURNER, Ohio Ranking Minority Member
JOHN J. DUNCAN, Jr., Tennessee CAROLYN B. MALONEY, New York
JIM JORDAN, Ohio ELEANOR HOLMES NORTON, District of
TIM WALBERG, Michigan Columbia
JUSTIN AMASH, Michigan WM. LACY CLAY, Missouri
PAUL A. GOSAR, Arizona STEPHEN F. LYNCH, Massachusetts
SCOTT DesJARLAIS, Tennessee JIM COOPER, Tennessee
TREY GOWDY, South Carolina GERALD E. CONNOLLY, Virginia
BLAKE FARENTHOLD, Texas MATT CARTWRIGHT, Pennsylvania
CYNTHIA M. LUMMIS, Wyoming TAMMY DUCKWORTH, Illinois
THOMAS MASSIE, Kentucky ROBIN L. KELLY, Illinois
MARK MEADOWS, North Carolina BRENDA L. LAWRENCE, Michigan
RON DeSANTIS, Florida TED LIEU, California
MICK MULVANEY, South Carolina BONNIE WATSON COLEMAN, New Jersey
KEN BUCK, Colorado STACEY E. PLASKETT, Virgin Islands
MARK WALKER, North Carolina MARK DeSAULNIER, California
ROD BLUM, Iowa BRENDAN F. BOYLE, Pennsylvania
JODY B. HICE, Georgia PETER WELCH, Vermont
STEVE RUSSELL, Oklahoma MICHELLE LUJAN GRISHAM, New Mexico
EARL L. ``BUDDY'' CARTER, Georgia
GLENN GROTHMAN, Wisconsin
WILL HURD, Texas
GARY J. PALMER, Alabama
Sean McLaughlin, Staff Director
David Rapallo, Minority Staff Director
Art Arthur, Staff Director, Subcommittee on National Security
Sarah Vance, Clerk
Subcommittee on National Security
RON DESANTIS, Florida, Chairman
JOHN L. MICA, Florida STEPHEN F. LYNCH, Massachusetts,
JOHN J. DUNCAN, JR., Tennessee Ranking Member
JODY B. HICE, Georgia ROBIN KELLY, Illinois
STEVE RUSSELL, Oklahoma, Vice Chair BRENDA L. LAWRENCE, Michigan
WILL HURD, Texas TED LIEU, California
C O N T E N T S
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Page
Hearing held on June 25, 2015.................................... 1
WITNESSES
Ms. Stella Fiotes, Executive Director, Office of Construction and
Facilities Management, U.S. Department of Veterans Affairs,
Accompanied by Mr. Norbert Doyle, Chief Procurement and
Logistics Officer, Veterans Health Administration, U.S.
Department of Veterans Affairs
Oral Statement............................................... 4
Written Statement............................................ 5
Mr. Dave Wise, Director of the Physical Infrastructure Team, U.S.
Government Accountability Office
Oral Statement............................................... 6
Written Statement............................................ 7
Mr. Jerry Cameron, Assistant County Administrator, St. Johns
County, Florida
Oral Statement............................................... 7
Written Statement............................................ 8
APPENDIX
A Sketch of Events Surrounding the Relocation of the Saint Johns
County Veteran's Community Based Outpatient Clinic............. 18
A letter to The Hon. Ron DeSantis from William Dudley............ 22
A letter to The Hon. Ron DeSantis from Richard Lofgren........... 24
A REVIEW OF VETERANS AFFAIRS MAJOR LEASE PROCUREMENT
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Thursday, June 25, 2015
House of Representatives,
Subcommittee on National Security,
Committee on Oversight and Government Reform,
Washington, D.C.
The subcommittee met, pursuant to call, at 2:01 p.m., in
Room 2154, Rayburn House Office Building, Hon. Ron DeSantis
[chairman of the subcommittee] presiding.
Present: Representatives DeSantis, Hice, Hurd and Lieu.
Mr. DeSantis. The subcommittee on National Security will
come to order. Without objection, the chair is authorized to
declare a recess at any time.
The Department of Veterans Affairs operates one of the
Nation's largest healthcare delivery systems. To help meet the
changing medical needs of the veteran population, the VA has
increasingly leased medical facilities to provide healthcare to
veterans. This hearing will review the process by which the VA
leases outpatient clinics.
Through the examination of specific cases, such as the
community-based outpatient clinic at St. Johns County Florida,
we will aim to identify inefficiencies in the lease procurement
process in order to formulate solutions that will benefit
veterans who seek access in nearby, modern medical facilities.
The VA's Office of Construction and Facility Management
stated in a VA fact sheet that major lease projects for
replacement or new medical facilities are ready to serve
patients within 5 years from the, ``start date.'' GAO report,
though, on this topic from April 2014 revealed that 39 of the
41 projects reviewed with the contract value of about $2.5
billion experienced schedule delays ranging from 6 months to
13.3 years, with an average delay of 3.3 years.
With respect to the outpatient clinic surveyed in the GAO's
report, 94 percent of the delays occurred prior to signing the
lease agreement. This means that the vast majority of delays
occurred during the planning phase, not during construction or
renovation of new outpatient clinics. Costs also increased for
all 31 lease projects for which VA had complete cost data,
primarily due to delays and changes to the scope of the
project. First-year rents increased a total of $34.5 million,
an annual cost that will extend for the life of the lease
normally for 20 years.
Some specific examples help bring these statistics to life.
The outpatient clinic in Austin, Texas, experienced the largest
size and cost increase from the time the authorization for the
clinic was approved by Congress. The size increased from 85,000
square feet to 135,000 square feet during its first renovation,
and increased during a second renovation a final total of
185,000 square feet.
The total first-year cost tripled from $6.2 million to
$19.8 million. An increase of $8.4 million in the cost of the
lease will impact the VA's annual budget for the duration of
the 20-year lease. The outpatient clinic in Jacksonville,
Florida, experienced the longest delay of the projects reviewed
by GAO in their report. Due to an increase in size and the need
to procure additional land adjacent to the existing property to
fit the new facility, the total delay amounted to more than 13
years.
County officials in St. Johns County, which is the district
that I represent, have been involved in trying to facilitate a
new location for the veterans community-based clinic since late
2011. The outpatient clinic in question serves 5,000 veterans.
St. Johns County notified the VA in 2011 about the sale of the
property, where its current outpatient clinic is located. The
notification provided more than 3 years for the VA to procure a
new permanent clinic site and vacate the current facility by
March 31, 2015.
Today, 3.5 years have passed since the initial
notification, and the VA still has not selected a permanent
site for its new outpatient clinic or vacated the current
facility. After VA's lease expired for the current outpatient
clinic in March, the VA began paying a penalty of approximately
$50,000 per month. At the end of September, the penalty will
double to approximately $100,000 per month.
Without a solution for a permanent clinic in place, the VA
is forced to construct and open interim clinic at even
additional costs to the taxpayers. This situation is not
supporting the services that our veterans need in my district,
and it's not showing good stewardship of taxpayer dollars, and
it is not unique to my district in Florida.
So this hearing is about meeting the needs of veterans in
my district and across the country who could benefit
tremendously from the VA executing lease procurement in a much
more efficient and effective manner than the examples I've
highlighted. We look forward to hearing from our panel of
witnesses today, as we aim to find solutions to this issue.
And I now recognize the gentleman from California, Mr.
Lieu, who is sitting in for Mr. Lynch, who is the ranking
member of our subcommittee, for his opening statement. Five
minutes.
Mr. Lieu. Thank you, Mr. Chair.
Let me first ask for permission to submit the opening
statement of Ranking Member Lynch for the record.
Mr. DeSantis. Without objection.
Mr. Lieu. Okay. Mr. Chairman, I appreciate the opportunity
to examine major lease projects at the Department of Veterans
Affairs. I also want to welcome our witnesses and thank you for
your public service.
Ever since Secretary McDonald was confirmed last year, I
have seen a sea change in leadership. I have seen Secretary
McDonald take seriously the reports of deficiencies at the VA
and work hard to try to fix them. The VA has already undertaken
tremendous efforts to respond to recommendations made by these
various reports, conducted its own studies on how the VA could
improve, and implement department-wide changes.
I am pleased to inform you of the following efforts that VA
has completed: Elimination of redundant approval requirements.
The VA has now eliminated the requirement that a secretary
approve leases between $300,000 and $1 million in annual
unserviced rent when they were already receiving approval
through the VA strategic capital investment process. Instead of
the redundant approval, the Secretary will be briefed regularly
on all projects approved through that process.
Over the past several years, the VA has also issued new
policies and procedures in a number of areas, including leasing
procurements, establishing requirements, procurement steps,
pre-award vetting, compliance, and quality assurance. Many of
the new policies and procedures issued are a result of
recommendations made by the OIG, GAO, and congressional
Members. So, again, the VA leadership is taking seriously
reports made by these various agencies.
Contract reorganization. In fiscal year 2014, the VA Office
of Acquisition, Logistics and Construction restructured its
contracting groups allowing for a clearer division of labor and
decisionmaking authority between contracting officers and
project management. In addition, leasing officials have been
integrated into OALC's contracting arm to provide contracting
assistance review and oversight of lease procurements.
The VA has also engaged in standardization of GSA
delegation requests. The VA has implemented an internal review
and approval process for delegation requests be submitted to
GSA to ensure consistency and completeness of submissions
department wide.
I've also seen significant changes within my own district
at the West Los Angeles VA campus. After four decades of
dysfunction, we now have the Secretary settling a major
lawsuit, having a master plan being set up in October, having
stakeholders come in and improve the quality of healthcare, and
to help address homeless veterans.
I also want to specifically thank Carolyn Clancy, Vince
Kane, and so many others who were turning the West L.A. VA in
my district into a model for other VAs. We're also specifically
working with the VA on enhanced used leases, and I look forward
to this hearing.
With that, I yield back.
Mr. DeSantis. Gentleman yields back.
Mr. DeSantis. Thank you. I will hold the record open for 5
legislative days for any members who would like to submit a
written statement.
We will now recognize our panel of witnesses. I'm pleased
to welcome Mrs. Stella Fiotes, Executive Director Office of
Construction and Facilities Management at the Department of
Veterans Affairs; Mr. Norbert Doyle, Chief Procurement and
Logistics Officer, Veterans Health Administration at the
Department of Veterans Affairs; Mr. David Wise, Director of the
Physical Infrastructure Team at the Government Accountability
Office; and Mr. Jerry Cameron, Assistant County Administrator
for St. Johns County, Florida, although not much longer, as I
understand.
Welcome to you all. Pursuant to committee rules, all
witnesses will be sworn in before they testify. So if you could
please rise and raise your right hand.
Do you solemnly swear that the testimony you're about to
give will be the truth, the whole truth, and nothing but the
truth so help you God?
All witnesses answered in the affirmative.
Thank you. You may be seated.
In order to allow time for discussion, please limit your
testimony to 5 minutes. Your entire written statement will be
made part of the record.
Mrs. Fiotes will be giving one oral statement on behalf of
both witnesses from the Department of Veterans Affairs, and she
is recognized for 5 minutes. Go.
WITNESS STATEMENTS
STATEMENT OF STELLA FIOTES
Mrs. Fiotes. Thank you. Good afternoon, Mr. Chairman and
distinguished members of the committee. Thank you for the
opportunity to discuss the Department of Veterans Affairs
leasing program.
The Department's main priority is to provide high-quality
care and benefits to veterans in facilities that meet our
mission requirements and are procured legally, constructed
soundly, and comply with Federal regulations. In many cases,
leasing some of those facilities rather than constructing and
owning all medical space allows VA flexibility to best adapt to
demographic shifts in the evolving needs of our Nation's
veterans.
While VA is working to deliver world-class facilities to
best care for our veterans, we are also aggressively working to
shorten the delivery timelines for our leases by improving and
streamlining VA's internal and external processes and
implementing agency-wide programmatic changes. We are also
working with our partners in the Office of Management and
Budget, General Services Administration, U.S. Army Corps of
Engineers, and experts from the private sector to achieve
maximum efficiencies and implement best practices in our
leases.
Even though leasing provides an essential tool in helping
ensure veterans have access to VA care and services, we face
limitations in our ability to deliver these leases. We are
often unable to swiftly provide healthcare facilities and make
decisions that are in the best interest, first, of our
veterans, and second, of taxpayers because of the framework
within which we operate.
There is a long list of laws, regulations, and rules that
frequently control and govern our efforts to deliver timely
access to facilities and services. VA's compliance with these
requirements narrows what could be a universe of options into a
small, tightly-controlled box of what we are legally able to
accomplish. When compared with the private sector, we are
critically hamstrung by the impact of these constraints.
Private care providers have greater freedom than VA to
negotiate directly and to select a developer, a site, an
architect, general contractor, and the lease terms that allows
for the fastest possible delivery of care to patients. The St.
Augustine community-based outpatient clinic is an example of
how VA's timelines are affected and our options limited because
of these factors.
We were late starting what we knew was the required,
lengthy, competitive process to find new space. For that, we
accept responsibility. But soon after starting, the project was
placed on hold while VA and GSA worked out issues related to
VA's leasing authority. After the project resumed, we
experienced difficulty with offers achieving operating lease
status according to OMB Circular A-11. As a result, VA has
requested multiple rounds of proposals from offerers.
If we are unable to achieve operating lease status, our
options will be further limited. In compliance with Federal
acquisition regulations and GSA regulations, we will need to
cancel and restart the lease procurement with different
parameters. This does not help provide optimal services in a
timely way to St. Johns County veterans. And while we may be
interested in exploring a partnership with the county
government, our legal options to do so are also limited.
Mr. Chairman, VA is focused on providing veterans top-
quality accessible care and services in the best facilities
possible. We take this duty very seriously and we're looking
for ways to improve the speed, efficiency, and flexibility by
which we provide access to care. VA has faced serious
challenges in the execution of its leasing program in the past.
We have learned from our mistakes and have made great strides
recently in streamlining and managing our processes.
Positive change is happening now. However, we can only
change as much as we control, and we don't have control over
many external factors that affect our processes. We believe
changes are required to regulations governing Federal leases,
particularly in the area of medical facilities. We need the
latitude to act more like a private sector healthcare provider
when it comes to establishing facilities and getting services
to veterans when and where they need them. That's why we exist
as a Department and we need your help to fulfill our
obligation.
We believe too that 4 or 5 years is too long for our
veterans to have to wait for new clinics. We are working to
improve our part, and we will work with Congress and others to
come up with workable solutions to reduce the constraints that
impact our ability to best provide veterans the timely access
to care and services they deserve.
Thank you for the opportunity to discuss these important
issues. We look forward to your questions.
Mr. DeSantis. Thank you.
[The prepared statement of Ms. Fiotes follows:]
[For complete submitted testimony, please see the following
website: [https://oversight.house.gov/hearing/a-review-of-
veterans-affairs-major-lease-procurement/]
Mr. DeSantis. The chair now recognizes Mr. Wise for 5
minutes.
STATEMENT OF DAVE WISE
Mr. Wise. Chairman DeSantis and distinguished members of
the subcommittee, I'm pleased to be here today to discuss our
work examining scheduled delays and cost increases at the VA's
major-leased outpatient clinics. The clinics provide both
primary care and various other medical and dental services.
As of November 2013, VA's leasing program had a long-run
liability of $5.5 billion with a total of 1,889 leases. VA's
Office of Construction and Facilities Management Office of Real
Property Services is responsible for acquiring land and leasing
space for the construction of medical and medically-related
facilities for VA and provides guidance to regional and local
VA offices regarding real property.
My statement today discusses, one, schedule and cost
increases for selected VA outpatient clinics we reviewed and
the contributing factors involved; and two, actions VA has
taken to improve its leasing practices for outpatient clinics
and any opportunities that may exist for VA to improve its
management of project schedules and costs.
This statement is based on our April 2014 report, which
discussed 41 major outpatient clinic leases for which a
prospectus was submitted to Congress as required by law for any
lease over $1 million. The total contract value of these 41
projects was $2.5 billion.
Our report noted that VA has experienced substantial delays
in executing new outpatient clinic-leased projects. Nearly all
of the delays occurred in the planning stages prior to entering
into a lease agreement. Specifically, we found that 39 of the
41 outpatient clinic projects for which VA submitted a
prospectus experienced schedule delays, ranging from 6 months
to 13.3 years, with an average delay of 3.3 years. Two projects
experienced schedule time decreases.
Our analysis showed that 94 percent of these delays
occurred prior to entering into the lease agreement. For all
but one of the projects that experienced a delay, the delay
occurred during the pre-lease agreement stage. A number of
factors contributed to the delays, including VHA's late or
changing requirements, site selection challenges, and outdated
guidance.
In addition to substantial delays, our report noted that VA
also experienced cost increases to its outpatient clinic
projects when compared to the costs in the project's
prospectuses. For the 31 projects with complete cost data,
first-year rents increased a total of $34.5 million when
compared to prospectus cost, an annual cost which will extend
for 20 years the life of these leases.
The causes of the total cost increase can be attributed
primarily to increases in the projects awarded first-year rent
due to the schedule delays and/or changes in the design or
scope of a project. Changes in a project's size expand the
scope of the project requiring design changes and schedule
delays further adding to costs. VA's made some progress in
addressing issues with its major medical facilities leasing
program.
In 2012, VA formed a high-level counsel to oversee its
capital asset program, including leasing. VA has been working
on or planning the following improvements: Requiring detailed
design requirements earlier in the design process to help avoid
the delays, scope changes, and cost increases; developing a
process for handling scope changes; providing Congress with
more complete information on the cost to propose future lease
projects; and refining and updating lease guidance.
To improve the outpatient leasing program, we recommended
the VA update VHA's guidance for leasing outpatient clinics to
better reflect the roles and responsibilities of all VA's staff
involved in leasing projects. VA concurred with our
recommendation and has actions underway to implement it.
Chairman DeSantis and distinguished members of the
subcommittee, this completes my prepared statement, and I'd be
pleased to respond to any questions that you may have.
Mr. DeSantis. Thank you, Mr. Wise.
[The prepared statement of Mr. Wise follows:]
[For complete submitted testimony, please see the following
website: [https://oversight.house.gov/hearing/a-review-of-
veterans-affairs-major-lease-procurement/]
Mr. DeSantis. The chair now recognizes Mr. Cameron for 5
minutes.
STATEMENT OF JERRY CAMERON
Mr. Cameron. Thank you, Chairman DeSantis, and
distinguished members of the subcommittee. It is a privilege to
address you today on this important subject.
The governing body of St. Johns County believes it is not
just the Federal Government that has the responsibility of
coming to the aid and assistance of those who have served this
country, but this responsibility extends to every level of
government.
Up until this spring, our veterans enjoyed having a
veterans service office located directly beside the VA's
community-based outpatient clinic, or CBOC, where they received
assistance in filing for their benefits and appeals. In
addition, at the same site, veterans had access to many other
resources through our division of Health and Human Services,
such as food stamps, temporary assistance to needy families,
affordable housing, credit counseling, and credit repair,
resume development, use of computers for job search and
communication, and a host of other services.
This ideal arrangement ended this spring when the VA
refused to join other service providers and move the CBOC to
the new state-of-the-art facility built by St. Johns County.
Almost 4 years ago, in October of 2011, St. Johns County
first notified the VA regional office in Gainesville there was
a potential for a sale of the existing facilities to Lowe's
Home Improvement. The VA was kept informed as the county
entered into a contract with Lowe's, which ultimately closed in
March 2013. At which time, the VA was notified that the
premises must be vacated no later than March 31 of 2015. Time
does not permit detailing the timeline for this process, but I
have included in your packages a sketch of that timeline.
It became obvious in early 2014 the VA was not going to
meet the March 31, 2015, vacation deadline and would either
have an interruption of clinical services to our veterans or a
delay in the construction of the new Lowe's store, a crucial
economic development and job-producing project. By the summer
of 2014, the county became so alarmed that it offered to build
a separate clinic at the new site, and at one point even
offered to relocate their own agencies so the VA could use the
space.
When the vacation date arrived, the VA had no other viable
options. In order to avoid interruption of services, it fell on
St. Johns County to negotiate an extension with Lowe's and
devise a plan to keep the old building operational, including
penalties and increased cost for operation. The VA's monthly
cost went from approximately $26,000 a month to approximately
$90,000 and will increase to approximately $135,000 a month on
October 1 of 2015.
In addition, taxpayers will now have to pay for site
preparation in modular units to house a temporary clinic. This
is the new Health and Human Services building. The VA clinic
would have been operating out of here today had they not
steadfastly refused any meaningful dialogue with St. Johns
County. Given this experience, it is our fear that the VA will
make a serious error in selecting a site for a permanent
clinic.
The VA has put out at least three different search area
boundary maps, one as far south as the southern county line. To
date, they have refused to consider population growth patterns.
The northern portion of the county is exploding with the new
town of Nocatee being the third fastest-growing community in
the Nation.
It is critical the VA not make a mistake that the veterans
of our county will have to live with for decades to come. St.
Johns County is still willing to provide what has always been
the VA's best option: An opportunity to locate with other
essential services providers in a central location of the
county.
In short, St. Johns County has become a classic example of
the overall problems plaguing the VA throughout the country.
The VA is so insular that it has not only lost touch with those
it has intended to serve, but it has lost connection and
accountability to the Congress created it. As an over-mature
bureaucracy, it suffers from a policy sclerosis that denies it
situational flexibility.
Its focus is now on what is best for the bureaucracy and
not what is best for the veterans it serves. The VA must once
again become responsive to Congress and return its focus first
and foremost to the welfare of the men and women who have
served in our armed forces.
I thank you again for the unique opportunity to appear
before you, and I am confident that this proceeding is an
important step toward finding solutions to this nation-wide
problem. I would be pleased to answer any questions. Thank you.
Mr. DeSantis. Thank you.
[The prepared statement of Mr. Cameron follows:]
[For complete submitted testimony, please see the following
website: [https://oversight.house.gov/hearing/a-review-of-
veterans-affairs-major-lease-procurement/]
Mr. DeSantis. The chair now recognizes himself for 5
minutes.
You know, it just strikes me that the folks who serve our
country in uniform and do so honorably, I mean, they show up on
time. They're there, report for duty, they perform their
duties. Some of them perform very, very difficult duties. Some
of them have the scars and the wounds to prove it. And it's
frustrating that we're here where these delays are really a
matter of course. And that's just unacceptable.
Mr. Cameron, you mentioned this, but when did St. Johns
initially notify the VA that the property where the current VA
clinic is located was sold, and how much time did the VA have
to relocate?
Mr. Cameron. The VA, as well as all other agencies, after
the closing, were notified immediately, and had 2 years in
order to make arrangements.
Mr. DeSantis. And they were notified that this was a
possibility as early as 2011?
Mr. Cameron. Actually, in October of 2011 it was first
brought to the attention that it was a possibility, and they
were notified again in the spring of 2012 that a contract had
been entered into.
Mr. DeSantis. Now, during that same time, St. Johns County
was able to move a number of their human services. And what was
the extent of that project? And was St. Johns able to complete
that project within the time allotted?
Mr. Cameron. Mr. Chairman, St. Johns County was able to
construct that. They broke ground for that new facility in
March of 2014. They built a 72,000-square foot facility in a
little less than 12 months at a cost of $12 million that came
in on time and in budget, and we actually moved our folks in,
in less than a year after ground was broken.
Mr. DeSantis. So, Mrs. Fiotes, has the VA selected a new
permanent site for the outpatient clinic in St. Johns?
Mrs. Fiotes. We have not yet----
Mr. DeSantis. Can you hit your mic, please.
Mrs. Fiotes. We have not yet selected a site, Mr. Chairman.
We are in the final rounds of negotiations and value
engineering of the current offers to see if we can reach an
agreement with an offer that would give us an operating lease.
Mr. DeSantis. But it has been over 3.5 years since the VA
was first notified of this potential to be vacating. So why
hasn't the VA found a site in that intervening period?
Mrs. Fiotes. As I mentioned earlier, Congressman, we were
late getting started, and for that, we accept responsibility.
At the time we did get started, which was in early 2013,
shortly thereafter we were put on a temporary freeze because of
the issues that had arisen with our leasing authorities and
GSA. That stalled us for----
Mr. DeSantis. What did you do to try to rectify that?
Because when we were notified of this problem, we went to the
GSA, and they were very interested in working with us and
providing a waiver if necessary. And so it was--I was expecting
this to be this big issue, but they seemed to be willing to
work with us.
Mrs. Fiotes. Unfortunately, that was not our experience.
All our leases, not just this lease, every single lease, minor
and major, was put on hold until we could come to an
understanding with GSA----
Mr. DeSantis. And did you raise that issue with the
Congress?
Mrs. Fiotes. I cannot remember specifically if we raised it
with the Congress.
Mr. DeSantis. Mr. Doyle, without a permanent site selected,
and given the need to continue uninterrupted services to the
veteran, you're now going to have to build an interim
outpatient clinic. Now, does this strike you as an efficient
use of taxpayer dollars given the fact that VA has had a
significant period of time to build the permanent facility or
choose a permanent facility?
Mr. Doyle. Mr. Chairman, I think the VA has stepped up and
acknowledged that this is not the optimal solution that we had
and wanted. I'm happy to say, though, that of the interim
lease, my contracting officers working with the program office
that it is on schedule. We are confident we will deliver the
services by the end of the summer so that veterans----
Mr. DeSantis. All right. Look, I hope so. I mean, we've
been told that this was going to happen in the past on a
certain schedule, and it hasn't happened.
I'm concerned also about the taxpayer penalties that the
taxpayer is now going to have to pay. The lease expired March
of this year, and so now you're in a situation where you're
paying $50,000 a month. That is then going to go up to, I
believe, at least $100,000 a month. And so given that there was
a lot of time and a lot of notice, how is that a good
stewardship of taxpayer dollars?
Mr. Doyle. Well, I would say, Mr. Chairman, that it is not
a good stewardship of the chairman dollars, and it's not what I
think in hindsight the situation we would have endeavored to
find ourselves in.
Mr. DeSantis. Now, Mr. Cameron, you have informed us that
there is a footprint for a VA outpatient clinic at the location
of the new Health and Human Services campus in St. Johns
County. And you say that the county is still willing to build
the clinic at that site and lease it to the VA at the same rate
per square foot as the recently-expired lease.
And you also say that the facility will be built to the
VA's floor plan design and comply with the VA's elevation
requirements. You've stated this is not financially
advantageous to the county, but, you believe it's the best
outcome for local veterans. How has the VA responded to that
offer?
Mr. Cameron. As far as I know, Mr. Chairman, St. Johns
County is not in consideration for a permanent site. There have
been a number of reasons stated that we were not in
consideration. And my last conversation while we were
negotiating the holdover at the existing facility, when I said
that St. Johns County stands ready to step up and provide this
facility for the VA, I was told--and this is a direct quote--
``that is not happening.''
Mr. DeSantis. Now, one of the VA's arguments for not being
willing to accept the county's offer to have the permanent
clinic within the HHS building is the 100-year flood zone
issue. Now, did the county have similar concerns about building
its own facility in this flood zone?
Mr. Cameron. Mr. Chairman, that building is built on our
campus, and we have hundreds of millions of dollars' worth of
investment in there. We have to be approved by five different
agencies in order to build. We are not going to build a
building in the floodplain.
Mr. DeSantis. And did you mitigate the concern of flooding
when you chose this site and constructed the facility?
Mr. Cameron. Yes, sir, we did considerable fill there.
Mr. DeSantis. And you're willing to offer to mitigate the
same concern if the VA clinic was there?
Mr. Cameron. Yes, sir. We believe that the outcome is worth
any effort we might be required to make.
Mr. DeSantis. Now, the other argument that the VA has put
forward is to do a demographics, that existing veteran
population necessitates the site selection area to be south of
the site where the current or the new HHS building is located.
So how do you respond to the demographic argument that the VA
has made?
Mr. Cameron. From the beginning, Mr. Chairman, the VA has
given us a number of different criteria that we were to proceed
on. And by our GSI analysis in-house and use of the census
data, we have the center of the veterans population located
well north of the existing clinic and actually slightly north
of our new clinic.
Nocatee being an explosive community has got a significant
veterans population coming in there. Veterans services are
locating there. K-9 for Warriors just opened their new facility
this weekend there. Wounded Warriors is looking at it as a
possible site too. And to ignore that growth pattern is
unconscionable.
Mr. DeSantis. Now, Mrs. Fiotes, let me ask you this: I
mean, this has been very frustrating for a lot of folks
certainly in my community, and reading the GAO report, I would
imagine that there is a lot of frustration in other communities
all across the country. Now, you have cited some of the factors
and constraints that limit your ability to act as rapidly as
maybe somebody in the private sector would do.
So my question for you is, what reforms has the VA proposed
to Congress for us to implement so that you will no longer have
this problem?
Mrs. Fiotes. Congressman, I don't believe we have proposed
a specific proposal at this point----
Mr. DeSantis. But why not? You know it's a problem. You've
acknowledged it's a problem. And that's part of the, I think,
the frustration, and not just with the VA. VA has a lot of
frustration because it's such a big bureaucracy, but what we
find is there are always kind of excuses as to why things
aren't done right.
But what we don't tend to get is, okay, well, what should
we do if you're legally constrained, tell Congress what we need
to do to be able to free you to do your job so that the
veterans are being served. And you're saying that the VA does
not have a list of reforms that the Congress could implement
right now?
Mrs. Fiotes. None that we have shared with the Congress.
But we are working with GSA and we are working with OMB to
identify what improvements we might bring forward.
Mr. DeSantis. Well, I think we need to do this as quickly
as possible. I think time is wasting, and I think our veterans
are being left to suffer.
I am out of time, and I will recognize my friend from
California.
Mr. Lieu. Thank you.
Having served on active duty in the Air Force in the 1990s
and still being in the Reserves, I hit 20 years this year, I am
passionate and concerned about veterans.
And I just want to, first of all, say thank you, because
you said something that is far too rare on Capitol Hill. You
uttered the statement, ``we accept responsibility.'' Thank you
for saying that. It tells me that you understand the challenges
that are facing you, that you're working to make the problems
better, and I appreciate that.
I also note that the GAO report talks about things--April
2014 and before that. These did predate Secretary McDonald
coming in. They were not under his watch. So I look forward to
the continuing leadership we are having from the Secretary.
I do have a couple questions for you, Mrs. Fiotes. First,
are some of these challenges facing you because you at the VA
cannot sole source?
Mrs. Fiotes. That is correct, Congressman. We are required
to do our lease procurements in the competitive process because
of the Competition in Contracting Act and because of Federal
regulations. And, therefore, we could not take the county up on
its offer as a sole source offer. We did ask them to
participate when we put out the solicitation, which they did.
They were outside of the delineated area that the VA had
established for that solicitation.
Our methodology for identifying the delineated area is
different from that which the county follows. We do not follow
political boundaries. We do not look at county limits. We look
at catchment areas and we look at enrolled veterans. Those are
some of the basic differences between our methodology. And that
placed the delineated area south of the county's proposed site.
That was the primary reason they were excluded from the initial
competition.
Mr. Lieu. Thank you.
As you may know, in my district at the west Los Angeles VA
campus, we cannot use enhanced use leases, which pretty much
every other VA facility can. Do you believe having enhanced use
leases would be important for the VA and your mission to help
veterans?
Mrs. Fiotes. Absolutely, Congressman. And Secretary
McDonald has repeated the same as well in various venues. I
think it would be one additional tool that we could use to help
us take advantage of more opportunities to get facilities and
to get private partners to help us in delivering those
facilities. Absolutely.
Mr. Lieu. Thank you.
I have no further questions so I'll give you the
opportunity if you want to clarify anything at all during this
hearing. If not, then I will yield back.
Mrs. Fiotes. I would like to offer one more thing, and
that's about the delays that are mentioned in the GAO report,
and we acknowledge those delays, and we have taken many steps,
in addition to the ones you mentioned earlier. I think one of
the most important things--and you noted that yourself, Mr.
Chairman--that a lot of our delays happen in the upfront
planning process and a lot of the changes happen there.
We now have a much more structured process for planning
our--not only our construction but also our major leases to
make sure that we right size them the first time so that when
we get the authorization we can stay with that size that we
have. We also have a process in place to manage scope changes
in the Department that elevates the requirement for change all
the way up to the Secretary if it's above a certain threshold
before we can implement such a change.
So I think we have the right processes in place to avoid
delays and growth such as the ones we saw in the reports--in
the reported leases in the GAO report. And I'm confident that
we are doing much better on that. I just wanted to point that
out.
Mr. Lieu. Thank you. I yield back.
Mr. DeSantis. The gentleman yields back.
It was interesting, because I was in Orlando when we opened
the facility there. It's a great facility. And one of the
speakers had got up and said: Isn't this great? He's like:
Look, it's over budget. It hasn't been done on time. By it's
not that over budget. It hasn't been that much over time, you
know, given some of the other things. And so it was almost as
if we were celebrating the fact that the cost overruns and the
delays were of course they were there but they weren't as much
as you would see in a typical project.
And I know that's not limited to the VA, but I just think
that that's not where we want to be. I mean, this should be a
matter of course where we're getting this stuff done.
Mr. Wise, let me ask you, that April 2014 report indicated
that 39 of the 41 projects that GAO investigated were facing or
faced some sort of delay. What was the nature of those delays,
and what was the average delay?
Mr. Wise. Well, Mr. DeSantis, the--yes. You're correct.
First of all, there were significant delays on almost all the
projects we looked at. And we found that basically the major
issue that it involved was, as I think we've talked about
throughout this hearing, was the real issue with requirements
changing in the preplanning process. And once the requirements
were changing, that led to this kind of a cascading effect of
scope changes and further delays and land acquisition issues.
So one thing all kind of fed on another resulting in what
ended up being pretty significant delays for a number of
projects. I think the average we ended up with was a little
over 3.3 years, if I recall. So this was a--kind of an
interwoven, intertwined process that led to some less-than-
optimal results.
Mr. DeSantis. And so these are by and large pre-lease
delays that are occurring?
Mr. Wise. That's correct, sir.
Mr. DeSantis. So, in other words, if you lease a property
or you hire someone to construct a facility, there may be
problems with that, but these are delays that are solely
attributed to the government planning and execution initial
process. Is that fair to say?
Mr. Wise. That was our conclusion.
Mr. DeSantis. Now, what about common delays. What are the
most significant that you would see?
Mr. Wise. Well, basically we found that--let me give you an
example. We had, you know, just every project seemed to have
kind of its own unique characteristics, but you find a
situation where maybe VA had changed because they had done
demographic studies that maybe went back a number of years. So
you end up with a situation: Well, there was a thought that,
well, maybe we're going to be serving a larger population than
we thought we were, and so therefore we need a larger facility.
So you decide to do some redesign, come up with plans for a
larger facility. Then you say: Oh, wait a minute, now. The land
won't support that building anymore, and the building--we need
a bigger building for the numbers, and we need more land to
support the buildings. So, therefore, you run into the whole
problem. Then you have to acquire additional land, and that
leads to, you know, all kinds of issues. The zoning and the
stakeholder interests come into play, and sometimes there are
problems with environmental issues when you go to another site.
So it just leads to a whole host of complicating factors
that the bottom line is you end up with--you can end up with
some pretty significant delays.
Mr. DeSantis. Now, these requirement changes that you
mentioned, can you just explain that. I mean, this is like
they're in the middle of this and then the requirements change
and so it ends up prolonging everything?
Mr. Wise. Well, they may have decided to add additional
services, or there may be modernization of particular equipment
that needs to be put into the place that maybe wasn't foreseen
earlier. So therefore perhaps a particular facility now needs
to be modified to accept this equipment. So you've got to go
back and do some redesigning in order to make the building
commensurate with the kind of equipment you want to put into
it. That's one aspect of it.
So because some of the facilities, the planning went back a
number of years and by the time you got around to getting into
the leasing aspect of it, you went back and realized that this
doesn't quite fit the bill. And, again, that results in these
kind of--when requirements change, this results in scope
changes and further delays.
Mr. DeSantis. Now, the delays in the report about
determining the location of some of these sites, that struck
me. There was, I think, a 7-year delay for the outpatient
clinic in Las Vegas. For that Las Vegas, that delay, what was
the reason for that?
Mr. Wise. Well, the problem in Las Vegas was one where the
facility was located adjacent to Nellis Air Force Base
northeast of Las Vegas a bit. And I think the main problem they
ran into there was that--that was unforeseen was the fact that
there was--they were close to where the flight area was and
there was then an environmental issue, which is pretty common
in military bases. We've seen them in other real property work
I've done. We often see BRAC'd military bases or other kinds of
former bases with lots of environmental issues. And this had to
do with aircraft and other kinds of residue that were left over
from other kinds of activities at the base. And until you can
get the NEPA requirements resolved, then you really can't
proceed further with that. And so that resulted in a delay for
constructing the Las Vegas facilities.
Mr. DeSantis. Now, what was the longest delay in the
report?
Mr. Wise. I think the longest delay was about 13 years, and
that was in the Jacksonville facility.
Mr. DeSantis. And what was the cause of that delay?
Mr. Wise. Well, again, that was kind of a complicated story
with a number of factors interwoven to cause these delays. You
had a situation where there was a parking garage that was
supposed to be a shared facility between the city and the
health clinic. But at the end, that fell through and, again,
that resulted in having to acquire more land.
Eventually they were able to acquire more land, but that
alone took a number of years, and so until you got all that
resolved and there were additional environmental issues, it
just went on and on until finally it was all able to get
resolved over a very long period of time.
Mr. DeSantis. Now, based on the projects that you reviewed
in your report, how would you characterize the delays, as more
things that were outside the VA's control or more shortcomings
in the development and planning of the basic requirements of
the projects?
Mr. Wise. The latter rather than the former, sir. In the
case of the--there were certain things, in fairness to the VA,
and when we spoke to officials there, they conveyed this to us,
and we took that onboard. There were certain areas that really
they didn't have particular control over. For example, in the
Las Vegas situation, again, they ran into a NEPA problem.
There were a couple other facilities where they ran into
problems with either a contractor defaulted or the contractor
didn't perform and had to be fired, and so you kind of had to
start over again with that. But those were a relatively small
number of cases compared to the problems we identified that
went into the preplanning process with--that was within the
control of VHA.
Mr. DeSantis. Thank you. My time is expired.
My friend from California, do you have another round of
questions?
Mr. Lieu. I do not.
Mr. DeSantis. Okay. Well--we have no more members here. So
let me just thank the witnesses for their testimony and for
answering our questions. We really appreciate it. We hope that
this hearing has highlighted some of the shortcomings in this
process, you know, not just in my district, which is obviously,
you know, a huge concern of mine. I'm concerned about this
happening all over the country. Because there's a lot of good
people who are potentially going to be negatively affected if
we continue down this road.
So thanks again. This hearing is now adjourned.
[Whereupon, at 2:45 p.m., the subcommittee was adjourned.]
APPENDIX
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