[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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unintentional errors or omissions. Such occurrences are inherent in the 
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                           C O N T E N T S

                              ----------                              

                       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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