[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
AN EXAMINATION OF WASTE AND ABUSE
ASSOCIATED WITH VA'S MANAGEMENT OF LAND-USE AGREEMENTS
=======================================================================
HEARING
BEFORE THE
COMMITTEE ON VETERANS' AFFAIRS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
TUESDAY, FEBRUARY 10, 2015
__________
Serial No. 114-6
__________
Printed for the use of the Committee on Veterans' Affairs
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COMMITTEE ON VETERANS' AFFAIRS
JEFF MILLER, Florida, Chairman
DOUG LAMBORN, Colorado CORRINE BROWN, Florida, Ranking
GUS M. BILIRAKIS, Florida, Vice- Minority Member
Chairman MARK TAKANO, California
DAVID P. ROE, Tennessee JULIA BROWNLEY, California
DAN BENISHEK, Michigan DINA TITUS, Nevada
TIM HUELSKAMP, Kansas RAUL RUIZ, California
MIKE COFFMAN, Colorado ANN M. KUSTER, New Hampshire
BRAD R. WENSTRUP, Ohio BETO O'ROURKE, Texas
JACKIE WALORSKI, Indiana KATHLEEN RICE, New York
RALPH ABRAHAM, Louisiana TIMOTHY J. WALZ, Minnesota
LEE ZELDIN, New York JERRY McNERNEY, California
RYAN COSTELLO, Pennsylvania
AMATA COLEMAN RADEWAGEN, American
Samoa
MIKE BOST, Illinois
Jon Towers, Staff Director
Don Phillips, Democratic Staff Director
SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATION
MIKE COFFMAN, Colorado, Chairman
DOUG LAMBORN, Colorado ANN M. KUSTER, New Hampshire,
DAVID P. ROE, Tennessee Ranking Member
DAN BENISHEK, Michigan BETO O'ROURKE, Texas
TIM HUELSKAMP, Kansas KATHLEEN RICE, New York
JACKIE WALORSKI, Indiana TIMOTHY J. WALZ, Minnesota
Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public
hearing records of the Committee on Veterans' Affairs are also
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of converting between various electronic formats may introduce
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C O N T E N T S
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Tuesday, February 10, 2015
Page
An Examination of Waste and Abuse Associated With VA's Management
of Land-Use Agreements......................................... 1
OPENING STATEMENTS
Mike Coffman, Chairman........................................... 1
Prepared Statement........................................... 23
Ann McLane Kuster, Ranking Member................................ 2
Prepared Statement........................................... 23
WITNESSES
Ms. Janet P. Murphy, Acting Deputy Under Secretary for Health for
Operations and Management VHA.................................. 4
Prepared Statement........................................... 24
Accompanied by:
Dr. Skye McDougall, Ph.D, Action Director, Desert Pacific
Healthcare Network, VHA
Mr. Stephen Lord, Managing Director, Forensic Audits and
Investigative Service, GAO..................................... 6
Prepared Statement........................................... 27
Mr. Edward Lilley, Assistant Director for Healthcare, National
Veterans Affairs and Rehabilitation Division, The American
Legion......................................................... 7
Prepared Statement........................................... 37
AN EXAMINATION OF WASTE AND ABUSE ASSOCIATED WITH VA'S MANAGEMENT OF
LAND-USE AGREEMENTS
----------
Tuesday, February 10, 2015
U.S. House of Representatives,
Committee on Veterans' Affairs,
Subcommittee on Oversight and Investigations,
Washington, D.C.
The subcommittee met, pursuant to notice, at 4:02 p.m., in
Room 334, Cannon House Office Building, Hon. Mike Coffman
[chairman of the subcommittee] presiding.
Present: Representatives Coffman, Benishek, Walorski,
Kuster, O'Rourke, and Rice.
OPENING STATEMENT OF CHAIRMAN MIKE COFFMAN
Mr. Coffman. Good afternoon, the hearing will come to
order. I want to welcome everyone to today's hearing entitled
An Examination of Waste and Abuse Associated With VA's
Management of Land-Use Agreements. Before we begin, I would
like to ask unanimous consent that the Honorable Tim Walz from
the State of Minnesota be allowed to join us on today's
hearing. Where is Tim? He is not here. He is not here yet. No
objection, I hope.
He is set to be redesignated as a member of this
subcommittee tomorrow, so I doubt anyone will have any
objection.
Hearing none, so ordered.
The hearing will address serious problems with VA's billing
and collection practices regarding its land-use agreements at
VA medical centers, which were substantiated by the GAO. These
deficiencies continue to result in an extreme loss of income,
waste of taxpayer money, and compromised services provided to
veterans. The primary focus of the hearing will be on issues
occurring at the West Los Angeles VA Medical Center, including
land-use agreements, problems faced by homeless veterans in the
area, and other issues affecting quality of care. The
shortcomings associated with VA's management in West Los
Angeles are many. There have been multiple embezzlement
investigations involving the facility over the last few years,
at least one of which amounted to a guilty plea involving the
theft of over $680,000.
One additional such investigation is ongoing and is being
addressed by the VA inspector general, and the Department of
Justice. The nature of land-use agreements in West Los Angeles
also produces cause for concern. For instance, the facility has
agreements with university sports teams, hotel laundry
facilities and even a rare bird sanctuary. Considering this
land was given to the Federal Government specifically to house
veterans, VA is violating the terms of the original bequest.
Notably, a Federal district court in California ruled in 2013
that many of the facility's non-healthcare related agreements
were void because the court stated agreements of that sort that
did not provide for sharing of healthcare resources result in
lost access to space and opportunities that benefit veterans.
On January 27, 2015, the day we informed VA of this hearing,
the parties agreed to settle the appeal of the court's
decision.
Based on the framework of this settlement, it does not
appear that there is any impediment VA faces which would
discourage its continued misuse of the property. In the
framework, VA states that it will not complete a Master Plan to
restructure the West L.A. property until October 15, 2015,
which will require vigilant oversight considering past efforts
to create such a Master Plan have largely failed. Many similar
stories of waste and misuse of property set aside to help
veterans, as well as other compromised services that inevitably
occur due to facility mismanagement, will be discussed today
regarding West Los Angeles, New York City and North Chicago,
which were the sites GAO focused on in the audit. We will hear
from GAO, as well as from the American Legion, which has raised
concerns with problems occurring in West Los Angeles, primarily
the growing homeless veteran population that is an unfortunate
and unnecessary byproduct of the VA's mismanagement of property
entrusted to veterans.
I look forward to hearing from these witnesses as well as
from the VA so that we can get to the bottom of this issue and
look for solutions to better serve our Nation's veterans. With
that, I now recognize Ranking Member Kuster for her opening
statement.
[The prepared statement of Chairman Mike Coffman appears in
the Appendix]
OPENING STATEMENT OF RANKING MEMBER ANN McLANE KUSTER
Ms. Kuster. Thank you, Mr. Chairman. This afternoon the
Subcommittee on Oversight and Investigations will be looking
into VA practices regarding land-use agreements and a report
from the Government Accountability Office from August of last
year.
This is my first hearing as ranking member of this
subcommittee, one of the most important subcommittees in
Congress. And I look forward to working with Chairman Coffman
and with all of my colleagues.
Our efforts to identify where problems exist at the VA
could not be more important or more timely. But we must also
remember that our responsibility is not only to identify
problems, but to work to find solutions. This means all of us,
the VA, outside agencies, such as the GAO, veterans, including
our friends at the VSOs, must work together to ensure the
highest quality of care is being delivered to our veterans.
Today's hearing is about an issue we face time and again:
How can we ensure that the information and data collected by
the VA is, in the words of the GAO, accurate, valid, and
complete? How can we ensure that there are processes in place
that provide the necessary level of accountability, while
ensuring that the job of the VA, namely to care for our
veterans, gets done? This can, perhaps, be best summed up in
the title of the GAO's testimony, Improved Data Reliability and
Monitoring Needed for the Department of Veterans Affairs. The
question we must ask in terms of monitoring and accountability
is how much management control should be exercised centrally or
delegated locally?
We will not arrive at the answers to these questions today,
but I am hopeful that the beginning of this discussion will
lead us to solutions that we can all agree on. Solutions that
ensure the proper level of accountability and management
control, while remaining flexible enough not to hinder the VA's
ability to accomplish its mission. This will take real
leadership on behalf of the VA and all of us here in this room
today.
The VA's transition from inpatient services to increased
outpatient services has meant that VA's real estate portfolio
contains many aging facilities, and far too much underutilized
space. This was first pointed out many years ago. In fact, a
June 2012 GAO report found that the VA had made progress in
this area, though reducing the number of underutilized
facilities in part through land-use agreements.
The VA is not alone in facing real challenges in property
management. The GAO has included property management on its
high-risk list since 2003. The GAO looked at three VA sites:
North Chicago, New York City, and West Los Angeles, and found
that its review raised questions regarding reliability of data
in VA's capital asset inventory system, as well as lack of
oversight and communication regarding billing, collecting, and
contracting. Far too often at the three sites looked at by GAO,
VA improperly paid for services it did not receive, and failed
to collect what it was owed. That is why it is crucial to have
this discussion this afternoon to learn about the GAO's
findings and the steps that the VA has taken to address these
problems. I look forward to hearing about future efforts to
strengthen the management, oversight, and use of land-use
agreements.
Going back to the 2012 GAO report, how much confidence
should we have that using land-use agreements is an effective
tool in managed underutilized space, and so we can increase the
amount of benefits and services being provided to our veterans?
If the VA is to provide the highest level of benefits and
services to veterans in the most efficient manner, land-use
agreements may, indeed, be an important tool in VA's tool
chest, but only if the data is reliable and there is real
oversight within VA to make sure that VA is properly benefiting
from these agreements.
Finally, I look forward to discussing the recent agreement
regarding West Los Angeles. As the American Legion points out
in testimony today, for far too long the needs of veterans were
not always the highest priority when it came to agreements
between the VA and non-VA entities. This practice runs counter
to the terms of the original deed, as pointed out by our chair.
The agreement regarding the parties in Valentini v. McDonald is
a way forward, but there are milestones that need to be met,
and we will need to make sure that this committee is a full
partner in the progress made in meeting those steps.
Thank you Mr. Chair, I yield back.
[The prepared statement of Ranking Member Ann Kuster
appears in the Appendix]
Mr. Coffman. I thank you, Ranking Member Kuster. I ask that
all members waive their opening remarks as per this committee's
custom. With that, I invite the first and only panel to the
witness table.
On the panel we will hear from Janet P. Murphy, Acting
Deputy Under Secretary for Health for Operations and Management
for the Veterans Health Administration. She is accompanied by
Dr. Skye McDougall, Acting Director of the Desert Pacific
Healthcare Network, also known as VISN 22 for the Veterans
Health Administration. Also on this panel are Mr. Steven Lord,
Managing Director of the Forensic Audits and Investigative
Service at the Government Accountability Office. And Mr. Edward
Lilley, Assistant Director for Healthcare of the American
Legion, National Veterans Affairs and Rehabilitation Division.
All of your complete written statements will be made part of
the hearing record.
Ms. Murphy, you are now recognized for 5 minutes.
STATEMENT OF JANET P. MURPHY, ACTING DEPUTY UNDER SECRETARY FOR
HEALTH, OPERATIONS AND MANAGEMENT, VETERANS HEALTH
ADMINISTRATION, ACCOMPANIED BY DR. SKYE MCDOUGALL, PH.D.,
ACTING DIRECTOR, DESERT PACIFIC HEALTHCARE NETWORK, VETERANS
HEALTH ADMINISTRATION
Ms. Murphy. Good afternoon, Chairman Coffman and Ranking
Member Kuster, and members of the subcommittee. Thank you for
the opportunity to discuss the VA's billing and collection
practices regarding our land-use agreements. As you mentioned,
sir, I am here with Dr. Skye McDougall, who is the Network
Director for VISN 22.
The Department of Veterans Affairs owns and leases real
property in hundreds of communities across the United States
and overseas. And currently, VA manages over 174 million square
feet of space, approximately 151 million owned square feet, and
23 million leased square feet of building assets. A very large
footprint indeed. Unlike many Federal agencies, VA owns 87
percent of its square footage, which means that real estate
plays a very important role in our overall asset management
strategy.
To manage these properties, the VA uses land-use
authorities that allow VA to enter into various types of
agreements for the use of its property in exchange for revenues
or in-kind considerations. We at VHA value and appreciate the
GAO's recent insights and findings into VA's land-use agreement
procedures. We acknowledge the noted deficiencies and recognize
that there are many needed improvements to the design,
implementation, and oversight of the VA land-use program.
The GAO recently examined our land-use program,
specifically our sharing agreements. They looked into three
medical centers that Ranking Member Kuster mentioned and made
recommendations for improvements at each site.
At VA medical centers in North Chicago and New York, new
collaborative processes have been established to improve
billing and collection procedures. The GAO also recommended
that VHA develop a plan for West Los Angeles Medical Center
that identifies steps to be taken, timelines and
responsibilities in implementing segregation of duties over the
billing and collection processes.
The VA greater Los Angeles asset management office and
fiscal service recently collaborated with VISN 22 and the
network contracting office to finalize the standard operating
procedure for the West Los Angeles Medical Center's billing and
collection process. This SOP clearly defines duties related to
billing and collections for land-use agreements.
A follow-up audit of the SOP will be conducted by VISN 22
financial quality assurance management staff in April of this
year.
In addition, VA is considering other system-wide
improvements for land-use agreements. These include
establishing a better set of administrative tools for the field
to use in managing these complex agreements and processes. The
VHA's chief financial officer will conduct recurring
independent reviews of our billing and collection processes to
ensure a better separation of duties.
And finally, we are developing a standardized
implementation and monitoring tool for land-use agreements that
will also include reviews of land-use agreements during our
normal capital program reviews. We are updating our land-use
handbook with feedback from the GAO, and also instituting
mandatory training for those who manage land-use agreements. I
also might add for leaders who have land-use agreements in
their areas will also receive this training. These actions are
an example of VHA's commitment to improving the management of
our land-use agreements. We are making progress to solidify our
policies and taking actions to implement the GAO's
recommendations.
I am also pleased to share that Secretary McDonald and
attorneys representing homeless veterans in Los Angeles
announced an agreement that dedicates the West Los Angeles
campus to better serve veterans. This agreement commits the
Department to design a plan to help end homelessness among
veterans in Los Angeles County. Under this agreement, Secretary
McDonald will launch an accelerated process to develop a new
long-term Master Plan. The Master Plan will prioritize the
provision of bridge housing and permanent supportive housing.
It will also describe an exit strategy for third-party land-use
agreements that do not comply with the applicable laws and do
not fit the Master Plan.
In conclusion, Mr. Chairman, VA has a complex and diverse
real estate portfolio. We seek to leverage our portfolio
optimally to provide quality care and services to our veterans.
We will correct the deficiencies in our oversight and
management of our land-use agreements. I thank you for the
opportunity to discuss this issue. And at this time my
colleague and I prepared to answer any questions you may have.
Thank you.
[The prepared statement of Ms. Janet Murphy appears in the
Appendix]
Mr. Coffman. Mr. Lord, you are now recognized for 5
minutes.
STATEMENT OF STEPHEN LORD
Mr. Lord. I thank you, Chairman Coffman, Ranking Member
Kuster, and other distinguished members of the committee. I am
pleased to be here today to discuss our recent work on VA land-
use agreements. This is an important issue because the
agreements, if managed properly, can help leverage VA resources
and help provide needed benefits to veterans.
Today I would like to highlight the findings of our 2014
report. Briefly we looked at the reliability of VA's data on
these holdings, its billing and collection process, as well as
its systems for monitoring whether the agreements are up to
date or have, in fact, expired. I think it is important to
first point out that our findings related to the visits to the
three centers are not generalizeable. Again, we visited West
L.A., North Chicago, and a New York facility.
Regarding the first point, data reliability, when we
started this audit, I asked my team a very simple question:
Well, how many land-use agreements does VA currently have in
effect? And what level of funding is associated with these
agreements? And the bottom line is we had a hard time answering
that very simple question. For example, we found that some
agreements were not loaded into the central repository, other
agreements were in the database that were actually expired and
should never have been there. And it was really difficult to
get full visibility over the overall number of holdings. So
therefore, we questioned the reliability of the data and made
some recommendations to VA to help improve that.
Regarding the second point, the billings and collection
process, we found weaknesses at the three centers. In the
actual billing, the bills they actually sent out, we found that
VA underbilled by $300,000, which is a significant amount. We
also found in other cases they didn't bill at all, the
agreements had expired and private entities continued to occupy
VA space, and that concerned us as well.
Finally, we found that VA needed to do a better job of
monitoring the status of the agreements. They all have
different terms, different conditions, they expire at different
times. That would have helped them identify the one case in
West L.A., where a non-profit, they simply waived a revenue of
$250,000 a year because of financial hardship, even though that
is not allowed by VA policy.
Again, in New York we made a site visit, we observed seven
antennas on top of a facility. We said, well, whose antennas
are those? And bottom line is they didn't know. They should
have been receiving revenues associated with the antennas.
These are all examples that underscore the importance of sound
billing, effective monitoring.
In closing, it is clear VA needs to improve in all these
areas. There is some good news in all of this. We made six
important recommendations to the Secretary to improve the
reliability of the data, the billings and collection process,
their overall monitoring system. VA has embraced all six
recommendations and they have given us several updates on where
they are in implementing these recommendations. That is going
to help strengthen the management of these expensive holdings.
However, it is still too early to tell whether they are going
to be successful. As you know, the devil is in the details. And
we are going to continue to monitor that over the next few
months. Again, once implemented, these recommendations will
help ensure additional benefits are provided to needy veterans.
Chairman Coffman, other distinguished members, that
concludes my testimony. I look forward to any questions you
have about our report, as well as the new framework agreement
which was just executed in late January. I studied that in
great detail in preparation for this hearing as well.
[The prepared statement of Mr. Stephen Lord appears in the
Appendix]
Mr. Coffman. Thank you. Mr. Lilley, you are now recognized
for 5 minutes.
STATEMENT OF EDWARD LILLEY
Mr. Lilley. Betrayed, that is exactly how the homeless
veterans in Los Angeles feel when the VA leases property to
private businesses, yet they remain homeless. This can not be
the way our government fights for our homeless veterans and
ultimately ends veterans' homelessness.
Good afternoon, Chairman Coffman, Ranking Member Kuster,
and members of the committee. On behalf of our national
commander, Mike Helm, and the 2.4 million members of the
American Legion, I want to say thank you for the scrutiny you
are applying to the mismanagement of VA's land-use agreements,
specifically the issues currently being faced by the homeless
veterans in the Los Angeles area.
When the 387 acres of land was donated in 1888 to the
Federal Government, it was to be, quote, ``Permanently
maintained as a national home for disabled vet volunteer
soldiers.'' The West L.A. campus did just that until VA began
closing its doors to them and allowed the private sector to
lease land and buildings. The American Legion first took action
in 1983, when we passed a resolution urging no part of the West
L.A. VA facility be sold or otherwise transferred by the United
States Government or any agency thereof.
In the 1990s, when private developers wanted to purchase
the West L.A. VA and build another Century City shopping
center, the American Legion reiterated our position and passed
another resolution affirming that real property located at the
West L.A. VA Medical Center, and elsewhere where such
facilities are provided, shall be maintained to obtain the
greatest benefit for care and well-being of the sick, disabled
veteran population.
VA has since leased ground to private companies, yet never
fully disclosed the terms of the leases or how it spends the
proceeds. In their latest report on land-use agreements, GAO
added that West L.A. has used a 12-acre field, Barrington Park,
on VA property for recreational use without a written
agreement. Meanwhile, homeless veterans sleep on skid row
sidewalks, while students at one of the most exclusive schools
in the country play sports on land donated specifically to
permanently house former servicemembers. Not only has the land
donated in 1888 been utilized for recreational use since the
1980s without a signed agreement or payments to the VA, but
according to the GAO, the VA has failed to maintain reliable
data on the total number of land-use agreements nor accurately
estimated the revenues those agreements generated.
Currently, the American Legion supports a publicly
transparent, enhanced use lease program, and believes strongly
that the leasing agreements must conform to priority services
that meet the needs of the veterans community. The American
Legion was relieved to hear about the recent agreement between
the Department of Veterans Affairs and the attorneys
representing homeless veterans to turn its West Los Angeles VA
campus into a facility that truly serves veterans, especially
those who are homeless, severely disabled or elderly.
We have grimaced for many years over the irony of a once-
thriving veterans campus surrounded by the largest population
of homeless veterans in America. We were also pleased about the
short timelines agreed to for developing a written plan to help
end veteran homelessness in greater Los Angeles, and to develop
a new long-term Master Plan for the future use of the West Los
Angeles campus. The American Legion expects to be actively
involved in providing inputs into the Master Plan, and will
continue monitoring West L.A. to ensure the correct changes are
being made. Ultimately, we want VA to make good on their
promise to functionally eliminate veterans' homelessness, but
this will not be possible as long as the largest population of
homeless veterans in America is not addressed.
The American Legion thanks the committee for their close
attention to the problems veterans face, among them,
homelessness. We want you to know that we remain deeply
committee to ensuring that the scourge of veteran homeless has
ended.
Mr. Coffman. Thank you, Mr. Lilley.
[The prepared statement of Mr. Edward Lilley appears in the
Appendix]
Mr. Coffman. Ms. Murphy, the parties to the lawsuit
involved in the West L.A. facility are seeking to vacate the
decisions of the District court, namely those that declared the
non-healthcare agreements void, and order VA to halt
construction of an amphitheater involving one of the voided
agreements. I have two questions about what VA will do if the
decisions are vacated. Will the VA allow land-use agreement
holders whose agreements do not involve sharing of healthcare
resources to remain on the property?
Ms. Murphy. Thank you, Mr. Chairman. The Master Plan that
is going to be developed will address those issues. And until
that Master Plan is developed, we will not know what the
disposition of all of those entities will be. Certainly the
Master Plan will be consistent with having entities on the
property that support services to homeless veterans. And all
other entities that do not meet the criteria of support for
veterans will be looked at critically as part of that process.
Mr. Coffman. Well, here is the problem. We already know
that it is out of compliance. We already know that in 1888,
when this land was bequeathed to the Federal Government, it was
for the specific purpose of serving veterans. So I don't
understand why you have to go through some kind of bureaucratic
process to determine that you are in violation of law when you
are already in violation of law. Can you explain that to me?
Ms. Murphy. I think, sir, in this instance, a very strong
and well-thought-out Master Planning process could help us
answer those questions.
Mr. Coffman. Reading the law would help answer these
questions. Will VA now resume construction of that amphitheater
despite the fact that it provides no direct service to
veterans?
Ms. Murphy. I would refer that question to my colleague,
Dr. McDougall.
Dr. McDougall. No, the VA has no intention at this point of
resuming construction. That will, again, be looked at as part
of the Master Planning process.
Mr. Coffman. Ms. Murphy, VA's settlement framework states
that the Department will develop exit strategies for non-VA
entities located on the West L.A. campus if they don't comply
with the new Master Plan to be completed by October 2015. When
will the multiple land-use agreement holders that GAO found
have no contract or written agreement with the VA, or have
failed to provide a payment for the use of the property, be
forced to vacate the premises instead of remaining at taxpayer
and veteran expense?
Ms. Murphy. Sir, I can't answer that question precisely,
but again, that will be part of the process.
Mr. Coffman. How long is this process supposed to take
place?
Ms. Murphy. The Master Plan is intended to be completed in
October of this year.
Mr. Coffman. October of this year?
Ms. Murphy. Yes, sir.
Mr. Coffman. It is going to take until October of this year
to find out that you are in violation of the law when you are
already in violation of the law. Is that what you are telling
me?
I will recognize the ranking member.
Ms. Kuster. Thank you very much, Mr. Chair. I want to get
at the heart of the matter. And I appreciate Mr. Lilley when
you said what we are looking at is to try to get the greatest
benefit for the care of veterans.
We have got an issue here where the Federal Government,
through the VA, has been bequeathed this property. And you, in
particular, had said that you didn't want that property to be
sold. So presumably if all 300 acres can't be used for the
specific benefit, there is a value to the taxpayers and to the
veterans through these lease agreements.
I am going to direct my question to Mr. Lord because I
think you have spent some time with the agreement. Can we get
at the heart of the question of what is happening? If an audit
goes forward, we get on top of these agreements, presumably
there are rent payments, proceeds that are being paid into the
VA. Can that money then be directed toward the specific benefit
of the veterans, and in this case the homeless veterans in West
Los Angeles?
Mr. Lord. Yes, as long as you can establish a nexus to
healthcare resources or medical services. I read the statement
of congressional intent in preparing for the hearing. I think
that was the failing of the prior agreement. They were
collecting revenues, but there was no direct relationship to
the provision of healthcare services to veterans. So I would
argue you can still maintain the agreements if you do it
properly and you can leverage existing resources. That is the
issue.
Ms. Kuster. I understand it was hard to get on top of all
these agreements. I commend the work that you have done and
urge the VA in going forward with your audit, changing your
administrative processes, getting on top of your billing and
collection.
Mr. Lord or Ms. Murphy, do you have a sense of the scope of
these resources that we are talking about, either on an annual
or a monthly basis, if all the rents were collected and were
directed to the benefit of veterans in West Los Angeles?
Mr. Lord. Well, a rough order of magnitude when I asked a
basic question how many agreements are we talking about, it was
roughly about 400. And that includes all types of agreements,
not just sharing agreements. It was over--about $25 million,
but some agreements they waived the revenue provision, so
potentially it is much more significant. But you need reliable
data to really answer that question. That is why I want to be
real cautious about providing even rough order of magnitude
estimates.
Ms. Kuster. Sure. It is fair to say then that this
settlement agreement, with the promise of an audit going
forward, is a positive step, right? We are getting to the heart
of the matter here.
Mr. Lord. I would argue it is positive. Of course, it is
going to depend on how it is executed and practiced. Not to use
the old cliche the devil is in the details, but it includes an
exit strategy, as Chairman Coffman elaborated on. Also by this
Friday, if you read it closely, the VA is to submit a strategy
for homeless veterans and an action plan, so we don't have to
wait until October to see what is going to happen. By this
Friday, they have to submit this new action plan and related
strategy.
Ms. Kuster. Ms. Murphy or Dr. McDougall, I realize every T
has not been crossed ever and I dotted, but can you give us
some insight into the action plan and what the steps are? Can
you foresee, Dr. McDougall, where we are headed with this and
how we can start to address the crux of the matter here that
Mr. Lilley has pointed out. We have a homeless veterans
problem, we have assets that aren't being capitalized, and can
we move forward on that?
Dr. McDougall. Thank you. I would like to tell the
committee that I am as appalled by what the GAO uncovered as
the committee is and Mr. Lilley is.
As part of the transition briefing that I was given to
assume this job on January 1st, I was not happy with what I
heard. And so I personally called the criminal OIG to make sure
that they had all the information that I have so that we are
all acting in concert. My office has taken over, the VISN
office has taken over land use from this facility so it is now
managed by my capital assets manager. Both she and my fiscal
officer have been up there in the past couple of weeks to make
sure that the billing practices and the SOP are in place.
We have--an audit will be done by my financial management
staff in April, again to ensure that the billing and collection
and segregation of duties piece is intact. We have a task force
and a central office fiscal staff that are working with us to
conduct a financial audit of our 25 entities on campus and to
make sure that we are able to recoup whatever we can legally,
and to assess all the different types of agreements we have
moving forward. And then the future use will be governed by the
Master Plan.
Ms. Kuster. For the record, I would like to make a request
that the members of this committee receive a copy of that audit
in April 2015 when that becomes available. And if I could, I
would like to ask the chair if we could have a follow-up
hearing next fall, at least September, October, in the
timeframe when this Master Plan can be presented, and so that
we can be assured that the assets--as your capital assets
manager, I think that was a good step, apparently it was not in
good hands, I think we will have to leave to the DOJ and the IG
the steps that need to be taken there. But certainly going
forward, we would like to stay in close contact with you about
this and then work with Mr. Lilley and others in the community
to make sure that the revenues that are generated in an
appropriate way be directed toward this plan to end
homelessness in West Los Angeles.
I just have a few seconds left, Mr. Lilley, but is there
anything else that we could do to assure you that we will be on
top of this going forward?
Mr. Lilley. As long as we could be included on that audit
copy, we would appreciate that as well. We want to follow up,
we are here to help and we want to make sure those veterans are
taken care of.
Ms. Kuster. We are here to help you keep their feet to the
fire, so thank you very much, Mr. Chair.
Mr. Coffman. I want to thank the oversight of the American
Legion on this critical issue. And Ranking Member Kuster, I
think you have a great idea, we will do a follow-on hearing to
make sure that this is all implemented that we are talking
about today.
Dr. Benishek, you are recognized for 5 minutes
Dr. Benishek. Thank you, Mr. Chairman.
So Dr. McDougall, you are new on the job, right? January
you said?
Dr. McDougall. Correct, January 1st.
Dr. Benishek. How about you, Ms. Murphy, are you new on the
job there too then?
Ms. Murphy. January 19th.
Dr. Benishek. So you are both relatively new on the job.
Have you guys been to the West L.A. hospital? Do you know what
it looks like and have you been all through this area?
Dr. McDougall. Yes.
Ms. Murphy. Yes.
Dr. Benishek. Let me ask you this: I want to go through one
of the specifics here, apparently there is this hospital
laundry that is operating on campus without paying rent. Are
you familiar with that story there?
Dr. McDougall. Yes, I am. And they have completely paid up
what they owed us and they are off campus.
Dr. Benishek. What is the name of the individual at the VA
who's responsible for allowing that to happen? Isn't there a
facilities manager there that would be responsible for that?
What would be that person's name?
Dr. McDougall. That was our asset manager, Ralph Tillman,
and he is retired from the VA.
Dr. Benishek. I see, okay. When did his retirement come
about?
Dr. McDougall. I believe in September.
Dr. Benishek. I am glad to hear that he is retired. Dr.
McDougall, considering that this hearing deals with these
wasted resources that could more appropriately have been used
to provide healthcare to our veterans, how long is the average
wait time for a new patient at the greater L.A. Medical Center?
Dr. McDougall. The average wait time for a new patient
right now is about 4 days.
Dr. Benishek. Is that true for mental health patients as
well?
Dr. McDougall. That is true for mental health as well.
Dr. Benishek. Mr. Lilley, does that correspond to your
experience there at the VA in L.A.?
Mr. Lilley. The American Legion we last visited there in
October, and we were conducting a veterans benefit center out
there. This was something that we have been doing around the
country in response to the crisis that broke out last year
within the VA.
I don't know that appointment scheduling was necessarily
the biggest issue there, we were out there following the
homeless issue. We were able to help 200 veterans, most of
which were homeless veterans that were in transition while we
were out in Los Angeles.
Dr. Benishek. Dr. McDougall, apparently the Greater Los
Angeles received $24 million for the accelerated care
initiative to improve access to care. What was this money spent
on in particular?
Dr. McDougall. There was a--central office provided a
staffing algorithm to distribute the funding between mental
health providers, specialty care providers and primary care
providers and the support staff that goes along with this, so
that is how the funding is being utilized.
Dr. Benishek. Ms. Murphy, does every single VA medical
center have their own management plan as far as its usage of
the facility? Is there any central management plan or how is
that working?
Ms. Murphy. Thank you, sir. They should not have their
separate plans. There is a directive and a handbook that
governs land-use agreements. These are managed out of the
office--out of central office, out of the office of--OCFM,
Office of Facilities Management.
Dr. Benishek. Doesn't seem to me that that was followed in
this case; is that right?
Ms. Murphy. You are correct, it was not.
Dr. Benishek. Mr. Lord, is that a common practice where the
central management plan is not followed?
Mr. Lord. Common practice, I don't know how to respond to
that. I will acknowledge it is more complicated when you have
all these stakeholders involved, centrally and at the local
level. Even at the local level, you have different offices
involved in tracking fiscal, contracting, business, operations.
Dr. Benishek. There is not one person in charge of the
situation in L.A. like Ms. McDougall suggested that there was
this guy who is now retired who was in charge?
Mr. Lord. For sharing agreements they have decentralized
that function to the centers. I am not saying you necessarily
have to fail given that, if you managed it properly you can
still do a good job due to the centralized approach.
Dr. Benishek. I would think decentralized would be the best
because you would know the facility rather than some bureaucrat
in Washington telling them how to do things in L.A. I don't
really like that, I like L.A. deciding, but it seems like the
people in L.A. would have to make sure they collect the damn
rent.
Mr. Lord. Sure. I believe in trust, but you also have to
verify, verify they are doing things consistently.
Dr. Benishek. Thank you for your testimony here today, I am
out of time. Thanks, Mr. Chairman.
Mr. Coffman. Thank you, Dr. Benishek. Mr. O'Rourke, you
have 5 minutes.
Mr. O'Rourke. Thank you, Mr. Chairman. For Mr. Lord, the
$300,000 underbilled that you referred to, that was in West
L.A.?
Mr. Lord. No, that was for the three centers we visited of
the bills they sent out.
Mr. O'Rourke. That is New York, Chicago, West L.A.
Mr. Lord. Yes, that is of the invoices they sent out which
is part of the problem, but we also reported, and in some
cases, they didn't bill at all.
Mr. O'Rourke. Was that annually or is that cumulative over
a period of years?
Mr. Lord. That was for the one year, we did the drill down
at the three centers, we looked at fiscal year 2012 data, that
was the most recent data we had at the time of our review.
Mr. O'Rourke. Gotcha. A question you may or may not be able
to answer now, but I am interested in the answer, how does this
performance relate to other Federal agencies or departments
that manage a lot of land, excluding a department like BLM that
have an expressed purpose for that land and then may or may not
enter into these land-use or lease agreements with other non-
related entities? Does DoD do this or do we have other
examples? How do they do comparable to the VA?
Mr. Lord. We have never done a direct comparison, but in
general, I am sure you know a Federal real property, it is on
GAO's high-risk list, it has been on the list since 2003. So in
general there is--other agencies experience challenges in
managing real property, VA is certainly not the only one in
this area.
Mr. O'Rourke. Gotcha.
What level, and this may be for Ms. Murphy or Dr.
McDougall, at what level are these decisions made and then
reviewed? Following up on some of the questions that are
already asked, there is somebody there who is managing the
agreements on site, but what is the hierarchy of review through
the VISN and on up if it goes beyond that?
Ms. Murphy. Thank you, sir. It depends upon the type of
agreement, but there is a defined process for putting these
agreements in place, it requires--for example, if the medical
center director has the authority to move the agreement
forward, that has to go through that person. Contracting
actually is the only entity that has the authority to actually
obligate the government to those agreements. Fiscal has a role.
Fiscal has to set up the codes for receiving the revenue and
creating the bills.
So there is actually a very well-defined process for
putting these agreements in place if it is followed. The
problem with West L.A. is it wasn't followed. So depending
upon, as I said, the type of agreement, it could be at a
facility level, it could be at a VISN level, it could be at a
national level.
Mr. O'Rourke. And also for you, Ms. Murphy, one of the
issues that we have really wrestled with on this committee and
on the full committee is the issue of accountability and
creating a culture that values and recognizes and understands
accountability. I think you alluded to that in your answer to
Ms. Kuster's question about ongoing investigations. I wouldn't
ask you to say anything publicly that would jeopardize that.
And you, in answer to Dr. Benishek's questions, both
acknowledge that you are relatively new to these positions. But
as specifically as you can, can you talk about how important it
is for there to be accountability for this and certainly want
to see people who are responsible for these mistakes held
accountable, but how do we gain something beyond that in this
organization?
Ms. Murphy. I will take the first stab at it, sir.
Absolutely, accountability is key and the leadership is
responsible for ensuring that these agreements are properly put
in place, are monitored, audited, and the revenues that they
generate actually accrue to the government. So there are
several ongoing investigations, and we expect there are
findings that those folks will be held accountable.
Mr. O'Rourke. Mr. Lilley, I wanted to ask you a quick
question, is it your position or the position of the American
Legion that you are not opposed necessarily to lease agreements
as long as ultimately the benefit accrues to the veterans and
the immediate needs there with homeless veterans or taking care
of the primarily mental healthcare needs of the veterans are
resolved?
Mr. Lilley. That is correct, we support the agreements.
Currently, that is per resolution that we passed at our last
national convention provided the benefit is going to the
veterans.
Mr. O'Rourke. Great, thank you.
Mr. Coffman. Ms. Walorski, you have 5 minutes.
Ms. Walorski. Thank you, Mr. Chairman. Ms. Murphy, the
original transfer of property on which the West L.A. VA center
sits was intended to House veterans. How many veterans are
being housed in that West L.A. campus? I don't mean the ones
who are patients at the hospital or treatment facility, but how
many homeless veterans are being housed at that facility
overall?
Ms. Murphy. If I may refer that question to Dr. McDougall.
Ms. Walorski. Sure.
Dr. McDougall. Eight hundred eighteen homeless veterans are
being housed on the campus at this point in time.
Ms. Walorski. That is not inpatient?
Dr. McDougall. No, that is not inpatient, this is just
homeless veterans in one type of housing or another, emergency
transitional, long-term housing.
Ms. Walorski. Are the housing units full? Is there a
waiting list?
Dr. McDougall. I don't know if there is a waiting list or
not.
Ms. Walorski. Are those houses normally full?
Dr. McDougall. Yes, oh, yes.
Ms. Walorski. And then I guess the follow-up, Dr.
McDougall, would be to you as well, with the massive population
of homeless veterans in that L.A. area, I am still trying to
figure out the follow-up to what Dr. Benishek just asked. When
he's asking about the hotel laundry, there is also a baseball
diamond, and a bird sanctuary. How in the world does that
achieve the goal of housing veterans?
Dr. McDougall. Moving forward it will be part of the Master
Planning process and there will be working with any entity that
is on campus right now to fully leverage--if they want to stay,
to fully leverage their resources to provide direct benefit to
the veterans.
Ms. Walorski. I know you are new, I feel sorry that you are
new and sitting in a Congressional hearing. Were you aware of
this debacle when you were hired?
Dr. McDougall. No. Well, peripherally aware of it, but not
until I read the GAO report did I realize how severe the
situation was.
Ms. Walorski. And Dr. McDougall again, I have another
question. The former West L.A. director lived in a 3,500 square
foot house provided by the VA on the facilities campus, and I
believe other West L.A. execs lived on that property as well;
is that correct?
Dr. McDougall. That is correct.
Ms. Walorski. Fair market rental rates of multi-bedroom
houses in that area are approximately $10,000 a month. How much
did former Director Beiter pay?
Dr. McDougall. $2,450 a month.
Ms. Walorski. How much do each of the other facility
leaders pay to live on that property?
Dr. McDougall. It depends on the size of the unit they
have, but it is between $1,500 and $2,000, but we do follow the
National Quarters Management Program and we use the tool
provided by the Department of Interior to calculate the rental
value.
Ms. Walorski. And have they been paying that all the way
along or just in the last month, since you have come in?
Dr. McDougall. No, it is raised--it is a biweekly payroll
deduction so we are able to monitor that, and the rent is
raised every year, or reevaluated every year. I know it is
being raised in March.
Ms. Walorski. That is quite a deal. I am sure American
taxpayers are interested considering the immense homeless
veteran population in and around the L.A. area, how the very
purpose of the property of which that complex sits is to house
homeless veterans.
Aren't the houses and lands VA provides to facility
leadership actually better suited to actually support
additional veterans in addition to the 818?
Dr. McDougall. We are taking over in my office the Quarters
Management Program, and we will be rolling that into how we
evaluate land use in the Master Plan overall.
Ms. Walorski. So it is interesting that given this Master
Plan that we are all waiting for with bated breath, it is
interesting this place has sat there, it has housed
unaccountable organizations, it has been used to do laundry, to
play baseball and to provide a bird sanctuary for those
interested in birds. And yet, the homeless population in this
country is the highest it has ever been, and with the influx of
more veterans coming home and the pleas that we hear from all
the associations, definitely the American Legion as well, it
seems to most Americans that are going to hear this story, it
is an atrocity that veterans are sleeping outside in the cold
while the VA again has to stop what they are doing, readjust
with new employees, and go back and correct many, many years of
wrongs.
And so I feel bad that the two of you are sitting here as
such new employees. And I know the VA has a long way to go, but
I just think that it is such an outrage that--we all have
homeless veterans in our areas and we are all trying to make
every single tax dollar accountable to be used what it was
given for in the spirit of being good stewards, which is what
the American people ask of you as well.
I thank you for being here, and I yield back the balance of
my time.
Mr. Coffman. Thanks, Doctor--Thanks, Ms. Walorski. We are
going do a second round of questions. VA's, I guess, Ms.
Murphy, VA's January 2015 fact sheet regarding the settlement
of the West L.A. lawsuit states that the VA will create a long-
term Master Plan that prioritizes the creation of temporary and
long-term housing for homeless veterans. However, VA created an
early Master Plan in 2011 based on a 1998 legislative mandate,
which, in part, called for creating such housing. So what will
be different about this Master Plan when the one proposed 4
years ago was not successful?
Ms. Murphy. Thank you, sir. I think one thing that will be
different is that Secretary McDonald has made a very public
commitment to Members of Congress, to the public, to the
veterans service organizations and to veterans to make it
different this time, and to use that property for the purpose
that it was intended. So I think we have a way forward and I
think the way forward is different. And the approach and the
support that we have this time I think is different, and I
believe we will be successful.
Mr. Coffman. Well, I kind of challenge that. Simply because
General Shinseki made it one of his core goals. I think it was
probably at the top of his list, was dealing with the veterans'
homelessness, and here under his watch, this whole thing
evolves and is just out of control.
Mr. Lilley, do you have any comment on that?
Mr. Lilley. I would say it would go beyond Secretary
Shinseki, this has been going on and we have been involved with
this for more than 30 years. We are happy that the VA has
finally settled, but we are going to be on top of this and want
to make sure the settlement is going to include a very, very,
very specific plan that is going to get veterans' homelessness
ended.
So we are here to help. This should be an all-hands-on-deck
approach. You've got to go beyond what the VA programs have,
use the community, use the VSOs. You have to get everybody
involved; it is a community problem.
Mr. Coffman. I must be kind of simple, because I am looking
at this bird sanctuary on this property that was designated to
serve the needs of veterans. And can anybody explain to me how
a bird sanctuary can be somehow inured to the benefit of
homeless veterans, can somebody explain that to me?
Ms. Murphy. I cannot.
Mr. Coffman. Well, that is interesting, but I think we just
had previous testimony that said there will be a consideration
of the Master Plan of whether it will or it won't, and I think
you just said obviously it won't.
Ms. Murphy. If it is in current formation, I don't know,
but we will see if as----
Mr. Coffman. So a bird sanctuary could, in fact, inure
somehow to the benefit of veterans?
Ms. Murphy. I think if that is part of the Master Plan that
is established, that is a possibility.
Mr. Coffman. Okay, I must be awfully simple, but I just
don't get it. Homeless veterans and bird sanctuary on the same
grounds, meeting the needs of homeless veterans, okay.
Ms. Kuster.
Ms. Kuster. Thank you very much, Mr. Chair. I want to move
on, and by the way, Mr. Lilley, you and your organization
should be commended for your efforts over 30 years. It is a
bipartisan effort here in terms of stewardship of taxpayer
dollars, but also our joint commitment to serving the needs of
our veterans.
Just moving past West L.A. and Chicago and New York, I am
wondering, and this is for you, Ms. Murphy, but also Mr. Lord,
if you have any thoughts on this, two questions: One is, have
you identified software, and I understand you are both new to
the position, that is available for this type of land-use
management, because obviously just as an attorney the contracts
are not going to look the same, the purposes, the term, the
duration, all of that will be different. But have you
identified software at least to keep track of these agreements?
And secondly, have you undertaken or does the VA intend to
undertake a systemwide reassessment of these land-use
agreements at VA facilities that were not a part of this GAO
study? In other words, I think what we learned from Phoenix in
this committee is that it was outrageous, it was atrocious, it
may be criminal behavior. And we may have a similar situation
here, but we also know that there are other VISNs that had the
problems we identified in Phoenix, and I think we would be
remiss if we didn't suggest to you that we want to make sure on
a systemwide basis that you are taking steps going forward.
By the way, I met with Secretary McDonald, I don't doubt he
actually was quite current on this and very aware of not only
settling the lawsuit, but making sure that we stay on top of
it. And I think our committee can be helpful keeping your feet
to the fire. But could you comment, if you would, on the
systemwide assessment and audit?
Ms. Murphy. Thank you, Ranking Member Kuster. Your first
question was about the software. So we are working with the
capital asset inventory, which is a software-based program, to
make improvements to that. I actually had a chance to look at
some of the improvements. I asked to see the software to see
what kinds of things we were looking at and tracking. So some
of the improvements provide greater controls, more
standardization of nomenclature, business rules, alerts when an
agreement is expiring and we do not have a new agreement in
place or we haven't given an extension or reconsidered.
In the future we hope to be able to connect that software
with the financial management system, so that if a payment does
not come in, we are alerted that the payment didn't come in. So
I think some really good enhancements to that software.
Then additionally, we used to update the system annually,
that is going to go to quarterly now. So that there will be
quarterly updates, another way of checking to see that things
are current and that the system is working as it should.
The other--I think training is really important, and I took
the training here recently. So I look to see what people are
being trained on in terms of our land-use agreements. I think
the training is actually quite good. I got it, I understood
what we were trying to do with the land-use agreements. And so
that training is going to be made available, certain members of
our staff will be required to take it. I am going to also
encourage that all leaders take the training as well. I think
this is a very important issue and one that we obviously
stumbled. So it is about leadership; leadership has to be
accountable and responsible. So those are some of things that
we are doing.
The other thing is the finance people in our system already
we are able to--we have a check and balance system on the
conflict so there is a system in place already where you can't
have certain keys to pay bills, create bills, cut checks, et
cetera. So our finance people are going to be looking very
carefully at that to make sure we are not giving keys,
inappropriate keys to staff to log in to do those kinds of
transactions. That is separation of duties. We already can run
reports to see who has those keys and maybe who shouldn't have
those keys, so much more attention to those kind of controls,
that is really what we need to do.
Ms. Murphy. The land-use authorities are good authorities.
But it is our responsibility to make sure that we are using
them properly and the oversight is there.
Ms. Kuster. So, I think that would be very helpful. And one
additional piece that would be very helpful for our committee
is when you complete this report and this audit, for us to
understand the scope, the magnitude of the resources that could
be collected, that could inure to the benefit of the veterans--
and this may be other people that would be involved in this,
but it would be helpful for us to hear the accounting
mechanism, so that we can be assured that those resources will
be directly reinvested to the benefit of the veterans.
And specifically in West L.A. But I would certainly be
curious on a more macro scale to make sure that wherever these
agreements exist--you know, you cited this figure, 87 percent
of VA facilities are owned facilities. So I can't imagine this
is a unique situation.
And, look, we are accountable to the taxpayers and to the
veterans. We need to make sure that, to the extent those
resources are being used appropriately, that the revenues are
being redirected to the benefit of the taxpayers.
So I yield back.
Thank you, Mr. Chair.
Mr. Coffman. Ms. Walorski.
Ms. Walorski. Thank you, Mr. Chairman.
Ms. Murphy, I think I am directing this to you but it could
be to the doctor as well, but we heard today from the American
Legion about a recent article published that explains how a
mentally disabled homeless veteran in West L.A. was arrested by
VA police for taking food out of a trash can. He was fined
$1,000, which he paid by collecting aluminum cans, which is
absolutely deplorable to think that this situation is going on.
Into what account, though, was that money deposited? And what
is it used for, that fine, that fee money?
Ms. Murphy. I am sorry, ma'am. I am not clear what fee
money you are referring to?
Ms. Walorski. The fine, he was fined $1,000. So he raised
the money by collecting aluminum cans and paid the VA police
$1,000. Where does that money go? What account does that money
get deposited into?
Ms. Murphy. I don't have that information. But we can get
that for you. I am guessing some revenue account that tickets
and fines are paid to.
Ms. Walorski. Could you follow up with the committee and
provide us a detailed account of where every dollar of that
money that he spent went? Can we get that report by the end of
the week? Is that possible?
Ms. Murphy. We can try to find out, yes.
Ms. Walorski. Okay. I appreciate that.
And I have one more question. Ms. Murphy, again, on January
3, Los Angeles Neighborhood Council Coalition unanimously voted
in favor of a motion that declared Los Angeles in a state of
emergency for homeless veterans. The motion urges the city and
the VA to open a large-scale crisis humanitarian relief project
on the West L.A. property to immediately house and care for
thousands of homeless and disabled veterans. Does the VA agree
with that and support that motion?
Ms. Murphy. I would presume we would in its essence, yes. I
think our master planning process will lead us to where we want
to go with that.
Ms. Walorski. So have you heard of that before, the
declaration of emergency?
Ms. Murphy. I have not heard of that proposition, no.
Ms. Walorski. Go ahead, Doctor.
Ms. McDougall. No, I have not heard of it either. But that
neighborhood council has been one of our community partners
that is involved in the homeless strategic plan that is being
developed right now.
Ms. Walorski. And my final question, I think we are all so
shocked about the bird sanctuary. It is back to this issue, in
the GAO's report, it stated that VA guidance does not allow
sharing partners to sublease the space obtained through sharing
agreements. However, GAO found that a not-for-profit
organization, the Botanical Garden, subleased its space on the
West L.A. campus to two other organizations, including the
exotic bird sanctuary and a food pantry, and that the VA
contracting officer told GAO he was not aware of this sublease.
Can you explain, I guess it would be Doctor, maybe, how VA
allowed subleases to exist?
Ms. McDougall. Again, I can't address how it happened. And
the person that was responsible has left the organization.
But clearly there was not a segregation of duties as there
should have been. And there was not a bona fide contracting
officer involved. Moving forward, we have changed that. That is
why it has been taken over, land use, by my office so that we
can make sure there is no conflict of interest. We are working
with the Network Contracting Office. And we will be auditing
what is going on at GLA to ensure that this does not happen
again.
Ms. Walorski. With the huge amount of responsibility and
clean-up work that you two have been left with, is there any
kind of ongoing investigation as to who caused this mess? How
they mysteriously retired? Why there was never any
accountability leveled to them or on them by the VA itself when
all this came out? And are you seeking internally there or
asking the higher-ups in the VA to go back and hold these
people accountable that you are holding the bag for.
Ms. McDougall. The Criminal IG is involved right now and is
looking into it. I have heard, but it is not confirmed, that
the FBI is also involved. So once we get those reports, we will
do whatever we can to hold any individual we can accountable
for what occurred at the facility.
Ms. Walorski. And for whatever you can share with the
committee in those reports, will you do that?
Ms. McDougall. Yes.
Ms. Walorski. Thank you.
I yield back my time, Mr. Chairman.
Mr. Coffman. Mr. O'Rourke.
Mr. O'Rourke. Thank you.
For Ms. Murphy, following up on the ranking member's
questions about the systems and software that we use to manage
these properties and your answers about what those things might
be able to do for you, alerting you when a lease is coming due
and triggering actions or reviews on the part of the VA.
At this point, does the VA use any third-party, private-
sector contractors or consultants to assist with these tasks?
Ms. Murphy. Thank you, sir. Specifically with the software
development or----
Mr. O'Rourke. No. Managing the property and the land and
the leases and doing it professionally, I mean, a company that
does that as their sole purpose versus the VA, which is focused
on outcomes for veterans. Is that at any level taking place
today?
Ms. Murphy. Right. I can't answer specifically. But we
certainly can get that information for you.
Mr. O'Rourke. Are you adverse or opposed to doing that?
Ms. Murphy. I don't actually have an opinion. You know, we
will take all the help we can get.
Mr. O'Rourke. I think part of what excites me about Bob
McDonald leading the VA right now is his private-sector
experience. And just now, as the ranking member was asking her
question, I searched for Procter & Gamble real estate. And
there was a press release announcing, you know, an outside
property management firm coming under contract to manage 16.5
million square feet of office space globally for Procter &
Gamble.
And so I think there has got to be something to this idea
that--understandably, the VA is not good at this. This is just
not what we want you all to do. We want you to take care of the
veterans that have served this country. And there are firms and
businesses who exclusively do this and do it very well.
And so I hope that, I mean I will just take your answer
that you don't have an opinion to mean that you are not
necessarily opposed to it. And in your review of what you are
doing and what you can do, I hope that you will include the
prospect of talking to an outside firm, maybe not to manage the
property but maybe to consult on best property management
practices, including software and systems, processes and
procedures.
I think we would be, you know, at our peril, we would
ignore the expertise that is out there in the private sector.
And I have got to think that Secretary McDonald would see the
wisdom in that as well.
Ms. Murphy. Right. I would just add that as part of the
master planning process, my understanding is that there will be
a consultant that will be helping us with that.
Ms. McDougall. We will be looking for an urban planning
firm to assist us with the master planning process.
Mr. O'Rourke. Great. But in terms, I mean just
systematically to manage that, that to me would be just
exciting to at least look at and get an answer back on.
So if you do that, I would encourage you to do that. If you
do that, I would love to see the results of that inquiry and I
know that probably the other members of the committee would as
well.
Thank you.
Thanks, Mr. Chair.
Mr. Coffman. Ms. Murphy, the Veterans Park Conservancy
signed a 90-day revokable license with the VA on November 11,
2014 which expressly terminated its land use agreement in order
to build the amphitheater. This licensing agreement expired
yesterday. So does that mean that the Veterans Park Conservancy
currently has no valid agreement with the VA? If so, have they
vacated the premises?
Ms. Murphy. I can't answer your question. But perhaps Dr.
McDougall can.
Mr. Coffman. Sure. Dr. McDougall.
Ms. McDougall. It did expire yesterday. And beyond that, we
will have to look into the situation as to whether or not they
are going--what the situation is with them on the campus.
Mr. Coffman. I am sorry, you don't know if they are still
there, is that what you are saying?
Ms. McDougall. Well, they were building an amphitheater and
the construction halted.
Mr. Coffman. Okay. Whether they vacated or not----
Ms. McDougall. So they have vacated and they have been off
the premises since November.
Mr. Coffman. Okay, they are----
Ms. McDougall. Right.
Mr. Coffman. Okay. Because I think one of the Federal Court
filings stated that the VA and the VPC entered into a revokable
license that mandated a termination of the land-use agreement
in lieu of the license.
Ms. Murphy, there is an ongoing criminal investigation in
West L.A. regarding one of the companies operating under a
land-use agreement with the facility. This company is also
under investigation by other Federal agencies. And we have
learned the company has a 10-year agreement with an additional
10-year option to operate on the property ending in 2022.
After a search of government contract databases, there was
no information at all regarding this company. How can the VA
enter into a contract with a company for a potential 20-year
term without having any available referential information to
support the company's prior work?
Ms. Murphy. Thank you, sir.
I am not certain which company you are referring to.
Perhaps Dr. McDougall has more information.
Ms. McDougall. If it is the company that I think you are
referring to, it shouldn't have happened. And I agree with you
100 percent. It just never should have happened.
So that is, as you said, what the Criminal OIG is looking
into. And we also have a central office fiscal team that is
going to be looking into exactly what is going on with that
company in terms of revenue generation.
Mr. Coffman. Do any other members have questions?
Mr. O'Rourke.
Ms. Kuster.
Ms. Kuster. No further questions. Thank you, Mr. Chairman.
Mr. Coffman. Well, I would like to thank the witnesses
today. And I look forward to the follow-on committee hearing
recommended by the ranking member.
And this hearing is adjourned.
[Whereupon, at 5:13 p.m., the subcommittee was adjourned.]
APPENDIX
Prepared Statement of Chairman Mike Coffman
Good afternoon. This hearing will come to order.
I want to welcome everyone to today's hearing titled, ``An
Examination of Waste and Abuse Associated with VA's Management of Land-
Use Agreements.'' Before we begin, I would like to ask unanimous
consent that the Honorable Tim Walz from the State of Minnesota be
allowed to join us on the dais today. He is set to be re-designated as
a member of this Subcommittee tomorrow, so I doubt anyone will have any
objection. Hearing none, so ordered.
The hearing will address serious problems with VA's billing and
collecting practices regarding its land-use agreements at VA Medical
Centers, which were substantiated by GAO. These deficiencies continue
to result in extreme loss of revenue, waste of taxpayer money, and
compromised services provided to Veterans.
The primary focus of the hearing will be on issues occurring at the
West Los Angeles VA Medical Center, including land use agreements,
problems faced by homeless Veterans in the area, and other issues
affecting quality of care. The shortcomings associated with VA's
management in West Los Angeles are many. There have been multiple
embezzlement investigations involving the facility over the last few
years, at least one of which amounting to a guilty plea involving the
theft of over $680,000. One additional such investigation is ongoing
and is being addressed by the VA Inspector General and the Department
of Justice.
The nature of land use agreements in West Los Angeles also produces
cause for concern. For instance, the facility has agreements with
university sports teams, hotel laundry facilities, and even a rare bird
sanctuary. Considering this land was given to the federal government
specifically to house Veterans, VA is violating the terms of the
original bequest.
Notably, a federal district court in California ruled in 2013 that
many of the facility's non-healthcare related agreements were void
because, the court stated, agreements of that sort that do not provide
for sharing of health-care resources result in lost access to space and
opportunities that benefit Veterans.
On January 27, 2015, the day we informed VA of this hearing, the VA
settled its appeal of the court's decision. Based on the framework for
this settlement, it does not appear there is any impediment VA faces
which would discourage its continued misuse of the property.
In the framework, VA states that it will not develop a master plan
to restructure the West LA property until October 2015, which will
require vigilant oversight considering past efforts to create such a
master plan have largely failed. Many similar stories of waste and
misuse of property set aside to help Veterans, as well as other
compromised services that inevitably occur due to facility
mismanagement, will be discussed today regarding West Los Angeles, New
York City, and North Chicago, which were the sites GAO focused on in
its audit.
We will hear from GAO as well as from the American Legion, which
has raised concerns with problems occurring in West Los Angeles,
primarily the growing homeless Veteran population that is an
unfortunate and unnecessary byproduct of VA's mismanagement of property
entrusted to Veterans. I look forward to hearing from these witnesses,
as well as from the VA, so that we can get to the bottom of this issue,
and look for solutions to better serve our nation's Veterans.
Prepared Statement of Ranking Member Ann McLane Kuster
Thank you Mr. Chairman.
This afternoon, the Subcommittee on Oversight and Investigations
will be looking into VA practices regarding land-use agreements, and a
report from the Government Accountability Office from August of last
year.
This is my first hearing as Ranking Member of this Subcommittee,
one of the most important subcommittees in Congress, and I look forward
to working with Chairman Coffman and all of my colleagues.
Our efforts to identify where problems exist at the VA could not be
more important. But we must also remember that our responsibility is to
not only identify problems, but to work to find solutions. This means
all of us--the VA, outside agencies such as GAO, and veterans--must
work together to ensure the highest quality of care is being delivered
to our veterans.
Today's hearing is about an issue we face time and again--how can
we ensure that the information and data collected by VA is, in the
words of GAO, accurate, valid, and complete? How can we ensure that
there are processes in place that provide the necessary level of
accountability while ensuring that the job of the VA, to care for
veterans, gets done?
This can perhaps be best summed up in the title of GAO's
testimony--``Improved Data Reliability and Monitoring Needed for
Department of Veterans Affairs.'' The question we must ask in terms of
monitoring and accountability is how much management control should be
exercised centrally, or delegated locally.
We will not arrive at the answers to all these questions today. But
I am hopeful that beginning this discussion today will lead us to
solutions that we can all agree on, solutions that ensure the proper
level of accountability and management control while remaining flexible
enough not to hinder the VAs ability to accomplish its mission. This
will take real leadership on behalf of the VA, and all of us here in
this room today.
The VA's transition from inpatient services to increased
outpatient-based services has meant that VA's real estate portfolio
contains many aging facilities, and far too much under-utilized space.
This was first pointed out many years ago. In fact a June 2012 GAO
report found that VA had made progress in this area, through reducing
the number of underutilized facilities in part through land-use
agreements.
The VA is not alone in facing real challenges in property
management. The GAO has included property management on its high-risk
list since 2003.
The GAO looked at three VA sites: North Chicago, New York City, and
West Los Angeles and found that its review raised questions regarding
the reliability of the data in VA's Capital Asset Inventory system, as
well as lack of oversight and communication regarding billing,
collecting, and contracting.
Far too often, at the three sites looked at by GAO, VA improperly
paid for services it did not receive and failed to collect what it was
owed. That's why it is crucial to have a discussion this afternoon to
learn about the GAO's findings and the steps VA has taken to address
these problems. I look forward to hearing about further efforts to
strengthen the management, oversight, and use of, land-use agreements.
Going back to the 2012 GAO report, how much confidence should we
have that using land-use agreements is an effective tool in managing
under-utilized space and so we can increase the amount of benefits and
services being provided to our veterans?
If the VA is to provide the highest level of benefits and services
to veterans in the most efficient manner, land-use agreements may
indeed be an important tool in VA's tool chest--but only if the data is
reliable, and there is real oversight within VA to make sure that VA is
properly benefitting from these agreements.
Finally, I look forward to discussing the recent agreement between
the VA regarding West Los Angeles. As the American Legion points out in
testimony today, for far too long the needs of veterans were not always
the highest priority when it came to agreements between the VA and non-
VA entities. This practice runs counter to the terms of the original
deed. The agreement regarding the parties in Valentini v. McDonald is a
way forward, but there are milestones that need to be met and we will
need to make sure that this committee is a full partner in the progress
made in meeting these steps.
Prepared Statement of Ms. Janet Murphy
Good morning, Chairman Coffman, Ranking Member Kuster, and Members
of the Subcommittee. Thank you for the opportunity to discuss VA's
billing and collection practices regarding our land use agreements at
VA Medical Centers. I am accompanied today by Dr. Skye McDougall,
Acting Network Director, Veterans Integrated Service Network (VISN) 22.
We value the Government Accountability Office's (GAO) insights and
findings and recognize there are many needed improvements to the
design, implementation, and oversight of VA's Land Use program.
Background
VA's mission is unique compared to other Federal agencies, in that
we operate the Nation's largest integrated healthcare system, with more
than 1,700 hospitals, clinics, community living centers, domiciliaries,
readjustment counseling centers, and other facilities. Additionally, VA
administers a variety of benefits and services and operates 131
national cemeteries nationwide.
The Department owns and leases real property in hundreds of
communities across the United States and overseas. Currently, VA
manages over 174 million square feet (SF) of space, comprised of
approximately 151 million owned SF and 23 million leased SF of building
assets. This is a very large footprint, and unlike many Federal
agencies, VA owns the large majority of its portfolio--87 percent of
its square footage--which means real estate plays an important role in
our overall asset management strategy.
To manage these properties, VA utilizes land use authorities that
allow VA to enter into various types of agreements for the use of its
property in exchange for revenues or in-kind considerations (e.g.,
outleases, sharing agreements, permits, easements, licenses, enhanced-
use leases).
GAO Report on Land Use Agreements
The GAO recently examined VA's use of land use agreements,
specifically sharing. GAO's report addresses the extent to which VA (1)
maintains reliable data on land use agreements and the revenue we
generate; (2) monitors the billing and collection process at selected
VA medical centers; and (3) monitors land use agreements at selected VA
medical centers. VA appreciates GAO's review and we acknowledge the
noted deficiencies in our management of land use agreements.
GAO looked at three VA medical centers and made recommendations for
improvement at each site. At VA medical centers in North Chicago and
New York, new collaborative processes have been established to improve
billing and collection procedures. Leadership at North Chicago has
developed a local Sharing and Support Agreement Policy and Joint Policy
instruction, which has delineated responsibilities and procedures.
Leadership at New York Harbor developed a standard operating procedure
(SOP) for local sharing agreements. GAO also recommended that VHA
develop a plan for the West Los Angeles Medical Center that identifies
the steps to be taken, timelines, and responsibilities in implementing
segregation of duties over the billing and collection process.
VA Greater Los Angeles Asset Management Office and Fiscal Service,
in collaboration with the VISN 22 Office and Network Contracting Office
22, finalized a SOP for Billing and Collection Processes for the West
Los Angeles Medical Center to better segregate duties related to
billing and collections for land use agreements in the fall of 2014. A
follow-up audit of the SOP's billing and collection processes will be
conducted by VISN 22 compliance staff in April 2015.
The actions described in the paragraphs above are an example of our
commitment to improving the management of our land use agreements and
to provide better support to Veterans. VHA is making progress to
solidify our policies and pursue actions for the remaining GAO
recommendations. Furthermore, VA will apply the lessons learned through
the scrutiny of land use agreements in California, New York, and
Illinois across VA's healthcare network.
VA Way Forward
VA is considering other system-wide improvements to the land use
agreement process. These include:
Establishing a better set of administrative tools for
the field to use in managing these complex processes: Our
current capital asset management tools are not automated. Nor
are they sufficiently robust to effectively monitor land use
sharing agreements across VA's healthcare system. VHA is
working with its partners in the Office of Management to
identify, fund, and implement an automated asset management
system--a system that allows for triggered reminders for our
field staff based on information about the assets themselves.
This change will take time.
Conducting ongoing independent reviews of our billing
and collection processes by VHA's Chief Financial Officer
(CFO), which would ensure proper separation of duties: GAO
identified separation of duties concerns at the facilities they
visited. We have corrected these issues at each of the sites
visited by GAO's team. To improve monitoring, VHA's CFO will
issue revised financial policy and work with network CFOs to
monitor land use agreements.
Developing a standardized implementation model that
allows VA medical centers to focus on high quality healthcare:
As we implement the changes described above, we must
acknowledge the clear challenge identified in the GAO report.
Management of multiple land use agreements on VA medical center
campuses adds additional responsibilities to an already complex
management challenge. The core mission for VA healthcare
facilities remains the delivery of safe, effective, and timely
healthcare. Over the long term, we need to evaluate our use of
VA's sharing authority for land use agreements and determine
whether the use of such agreements continues to benefit
Veterans.
The Next Step to End Homelessness Among Los Angeles Veterans
Secretary McDonald and attorneys representing homeless Veterans in
Los Angeles announced an agreement that dedicates the West Los Angeles
VA campus to serving Veterans in need, and commits the Department to
design a plan to help end homelessness among Veterans in Los Angeles
County. The agreement is an important step forward in carrying out
President Obama's commitment that no Veteran should live on the
streets, or forego necessary medical and psychological services.
Under the agreement, Secretary McDonald will also launch an
accelerated process to develop a new long-term Master Plan for the
future use of the West Los Angeles campus. This Master Plan, which is
targeted to be completed by October 16, 2015, will prioritize the
provision of bridge housing and permanent supportive housing. It also
will describe an exit strategy for third-party land use agreements that
do not comply with applicable laws, and do not fit within the Master
Plan. Representatives from the Veterans' community will be actively
involved in providing input to the Master Plan, along with other
stakeholders, including the local community.
Conclusion
Mr. Chairman, as mentioned earlier, VA has a complex real estate
portfolio and we seek to maintain the optimal mix of investments needed
to provide care, services, and benefits to our Nation's Veterans. We
will correct deficiencies and improve oversight in our management of
land use agreements by improving the quality of our data, enhancing
monitoring, and fostering collaboration between key offices.
Thank you for the opportunity to discuss this issue. At this time,
my colleagues and I are prepared to answer any questions you may have.
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