    [Senate Hearing 114-788]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 114-788

         MILITARY CONSTRUCTION, VETERANS AFFAIRS, AND RELATED AGENCIES
                      APPROPRIATIONS FOR FISCAL YEAR 2017

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

                                    HEARINGS

                                    before a

                              SUBCOMMITTEE OF THE

                COMMITTEE ON APPROPRIATIONS UNITED STATES SENATE

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 SECOND SESSION

                                       on

                               H.R. 4974/S. 2806

      MAKING APPROPRIATIONS FOR MILITARY CONSTRUCTION, THE DEPARTMENT OF
       VETERANS AFFAIRS, AND RELATED AGENCIES FOR THE FISCAL YEAR ENDING
                   SEPTEMBER 30, 2017, AND FOR OTHER PURPOSES

                                   __________

                             Department of Defense

                       Office of the Secretary of Defense
                          Department of the Air Force
                             Department of the Army
                             Department of the Navy

                         Department of Veterans Affairs

                        Veterans Benefits Administration
                         Veterans Health Administration

                        Government Accountability Office

                                   __________

             Printed for the use of the Committee on Appropriations

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

       Available via the World Wide Web: http://www.gpo.gov/fdsys/browse/
            committee.action?chamber=senate&committee=appropriations

                                   __________

                     U.S. GOVERNMENT PUBLISHING OFFICE

     98-769 PDF             WASHINGTON : 2018

                          COMMITTEE ON APPROPRIATIONS

                      THAD COCHRAN, Mississippi,  Chairman
    MITCH McCONNELL, Kentucky            BARBARA A. MIKULSKI, Maryland,
    RICHARD C. SHELBY, Alabama               Vice Chairwoman
    LAMAR ALEXANDER, Tennessee           PATRICK J. LEAHY, Vermont
    SUSAN M. COLLINS, Maine              PATTY MURRAY, Washington
    LISA MURKOWSKI, Alaska               DIANNE FEINSTEIN, California
    LINDSEY GRAHAM, South Carolina       RICHARD J. DURBIN, Illinois
    MARK KIRK, Illinois                  JACK REED, Rhode Island
    ROY BLUNT, Missouri                  JON TESTER, Montana
    JERRY MORAN, Kansas                  TOM UDALL, New Mexico
    JOHN HOEVEN, North Dakota            JEANNE SHAHEEN, New Hampshire
    JOHN BOOZMAN, Arkansas               JEFF MERKLEY, Oregon
    SHELLEY MOORE CAPITO, West Virginia  CHRISTOPHER A. COONS, Delaware
    BILL CASSIDY, Louisiana              BRIAN SCHATZ, Hawaii
    JAMES LANKFORD, Oklahoma             TAMMY BALDWIN, Wisconsin
    STEVE DAINES, Montana                CHRIS MURPHY, Connecticut

                          Bruce Evans, Staff Director
                  Charles E. Kieffer, Minority Staff Director
                                     ------

     Subcommittee on Military Construction, Veterans Affairs, and Related
                                    Agencies

                         MARK KIRK, Illinois, Chairman
    MITCH McCONNELL, Kentucky            JON TESTER, Montana, Ranking
    LISA MURKOWSKI, Alaska                   Member
    JOHN HOEVEN, North Dakota            PATTY MURRAY, Washington
    SUSAN M. COLLINS, Maine              JACK REED, Rhode Island
    JOHN BOOZMAN, Arkansas               TOM UDALL, New Mexico
    SHELLEY MOORE CAPITO, West Virginia  BRIAN SCHATZ, Hawaii
    BILL CASSIDY, Louisiana              TAMMY BALDWIN, Wisconsin
    THAD COCHRAN, Mississippi (ex        CHRIS MURPHY, Connecticut
        officio)                         BARBARA A. MIKULSKI, Maryland
                                           (ex officio)

                               Professional Staff

                                   Bob Henke
                                 D'Ann Lettieri
                                Patrick Magnuson

                           Christina Evans (Minority)
                          Chad C. Schulken (Minority)
                            Michael Bain (Minority)

                             Administrative Support

                                  Carlos Elias
                           Samantha Nelson (Minority)

                                C O N T E N T S

                                  ----------

                                    hearings

                            Thursday, March 3, 2016

                                                                       Page

    Department of Veterans Affairs:
        Veterans Benefits Administration.............................     8
        Veterans Health Administration...............................     1

                            Thursday, March 10, 2016

    Department of Veterans Affairs...................................    47

                            Thursday, April 7, 2016

    Department of Defense:
        Department of the Air Force..................................   143
        Department of the Army.......................................   130
        Department of the Navy.......................................   136
        Office of the Secretary of Defense...........................   115

                            Wednesday, July 13, 2016

    Department of Defense............................................   196
    Department of Veterans Affairs...................................   177
    Government Accountability Office.................................   188

                    Statements of Nondepartmental Witnesses

    Nondepartmental Witnesses........................................   221

                                  ----------

                                  back matter

    List of Witnesses, Communications, and Prepared Statements.......   225

    Nondepartmental Witnesses........................................   221

    Subject Index:

        Department of Defense:
            Office of the Secretary of Defense.......................   227
        Department of the:
            Air Force................................................   227
            Army.....................................................   228
            Navy.....................................................   228
        Department of Veterans Affairs...............................   228
        Government Accountability Office.............................   230
        Veterans:
            Benefits Administration..................................   230
            Health Administration....................................   230

         MILITARY CONSTRUCTION, VETERANS AFFAIRS, AND RELATED AGENCIES
                      APPROPRIATIONS FOR FISCAL YEAR 2017

                                  ----------

                            THURSDAY, MARCH 3, 2016

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:55 a.m., in room SD-124, Dirksen
    Senate Office Building, Hon. Mark Kirk (chairman) presiding.
        Present: Senators Kirk, Murkowski, Boozman, Capito,
    Cassidy, Tester, Murray, Udall, Schatz, Baldwin, and Murphy.

                         DEPARTMENT OF VETERANS AFFAIRS

                         Veterans Health Administration

    STATEMENT OF HON. DAVID J. SHULKIN, MD, UNDER SECRETARY
                FOR HEALTH
    ACCOMPANIED BY MARK YOW, CHIEF FINANCIAL OFFICER

                     opening statement of senator mark kirk

        Senator Kirk. The subcommittee is holding a hearing today
    to review the 2017 budget request. The President's request is
    for $78 billion for funding the Department of Veterans Affairs
    (VA), an increase of 4.9 percent. About $68 billion of that, 87
    percent, is for veterans' medical care.
        This subcommittee and this Congress have given all of the
    funding that you have requested and more. The answer to every
    VA problem is not just more money and not just give us
    flexibility. We need to talk about the VA's culture of
    corruption with results and talk about performance. We need to
    talk about accountability and putting veterans first, not
    bureaucrats.
        First, a few housekeeping items. We will follow the early
    bird rule, alternating sides, majority and minority, to defer
    opening statements, and do 5-minute rounds of questions. And we
    will do a second round if needed.
        Let me now recognize my friend, the man representing the
    entire Big Sandy metroplex in Montana.

                        statement of senator jon tester

        Senator Tester. Thank you, Mr. Chairman, and a metroplex it
    is. I want to thank all of you for being here today in front of
    the appropriations subcommittee, VA military construction
    (MILCON), and I want to thank you for your service to this
    country's veterans. You have difficult jobs, and I appreciate
    the work that you do. In many ways, both the Veterans Health
    Administration (VHA) and the Veterans Benefit Administration
    (VBA) have made some significant progress over the past year,
    but I am sure that you would agree that we have much more work
    to do.
        The intent of the Choice Act was to give veterans more
    opportunity to seek timely care in their communities, but as we
    all know, in practice it simply has not happened. Some of the
    fault lies with the VA. Some of the fault lies with us in
    Congress. And at least in my opinion, much of that fault, which
    we have to bear the responsibility for, bears with a third-
    party administrator, at least it does in the State of Montana.
        Veterans in places like Butte continue to be frustrated by
    the time and hassle it takes to schedule appointments through
    Choice, and that is directly related to the third-party
    administrator. Community providers in places like Billings
    continue to be frustrated by the time it takes to get
    authorization and reimbursement for care. As a result, the
    largest healthcare provider in my State of Montana will not
    participate in Choice, and that is because of that third-party
    administrator.
        VA employees continue to be frustrated because they have to
    go through a middleman, the third-party administrator, to
    connect veterans with the care that they need. And I have heard
    these frustrations directly from Montanans, and their
    frustration, along with mine, is not getting less. It is
    getting greater each day.
        Dr. Shulkin, we have had conversations about this. They are
    the same conversations that I have had with Secretary McDonald
    multiple times over the past weeks. Yes, fixing the VA, making
    sure that we provide the benefits to our veterans does require
    some resources, and that is what we are here today to discuss,
    your budget.
        But it also requires using all the tools that are available
    to you in a more effective way. If you do not have the tools
    that you need, we need to know about it because if you are not
    effectively using the tools you have because of a problem we
    have created, we need to fix it. Today I want to hear more
    about the budgetary needs of the VA, but I also want to hear
    about how the VA is going to make more effective use of the
    tools that you already have at your disposal.
        Again, I want to thank all of you for being here today. I
    look forward to this discussion. And, Mr. Chairman, I
    appreciate your work on this subcommittee. Thank you.
        Senator Kirk. I would like to welcome our witnesses. David
    Shulkin is the Under Secretary for Health. Mr. Shulkin--Dr.
    Shulkin--I will give you a chance for first testimony, and we
    welcome you now.

                 summary statement of hon. dr. david j. shulkin

        Dr. Shulkin. Thank you. Good morning, Chairman Kirk,
    Ranking Member Tester. Thank you for this opportunity to appear
    before you to discuss the Veterans Health Administration's
    fiscal year 2017 and 2018 medical care appropriations budget
    request. I am accompanied today to my right by Mark Yow, who is
    our Chief Financial Officer.
        Last year in 2015 it was a very big year for addressing
    some of the critical issues that we have before us in VHA. The
    Department is working hard to rebuild trust with veterans and
    the American people, improving service delivery, setting the
    long-term course for VA excellence and reform, while delivering
    better access to care and benefits. This includes the
    Department's MyVA initiative, which reorients VA around the
    veterans' needs and empowers employees to assist them in
    developing excellent customer service to improve the veteran
    experience.
        As we enter into 2016, all of us in the VA healthcare
    system will be focused on the MyVA initiative, as well as VHA's
    Blueprint for Excellence. The Blueprint is aligned with the
    Department's strategic plan and supports the MyVA initiative.
    The Blueprint for Excellence will serve as a guide in all of
    the programs I mentioned in my written testimony. I am
    confident that the deep sense of mission we carry through the
    next year and any challenges that we may face will be addressed
    by this.
        VHA's 2017 budget request will support VA's goals to expand
    access to timely, high-quality healthcare, and to continue to
    transform the Department through its MyVA initiatives. Through
    the fiscal year 2017 budget, we will continue to develop and
    expand our mental healthcare system with the goal to reduce
    veteran suicides. We are committed to increasing access to care
    for veterans and focus our efforts on addressing veterans who
    have the most significant health needs first.
        We have placed a special emphasis on telehealth services
    for those in rural and remote locations, and for areas that
    have a shortage of specific healthcare professionals, such as
    psychiatrists. This past weekend, in fact, VHA held its second
    system-wide access stand down where every medical center across
    the country this past Saturday was working hard to reduce the
    wait times for veterans who were waiting for care.
        To address the growing number of women veterans, VA is
    strategically enhancing the services and access for female
    veterans. Another high priority is ensuring that all enrolled
    veterans who require treatment for hepatitis C have access to
    the necessary therapies. VA is also dedicated to promoting the
    health and well-being of Caregivers. It is important to know
    that this budget allows us to continue our commitment to
    innovative and cutting-edge medical research that is focused on
    improving veteran health outcomes.
        I want to highlight our Million Veteran Program and
    research in precision medicine that will allow VA to remain a
    leader in advancing discoveries to improve healthcare for all
    Americans.
        The cost of fulfilling this care and other obligations to
    our veterans grows, and we expect it will continue to grow for
    the foreseeable future. We know that services and benefits for
    veterans do not peak until roughly 4 decades after a conflict
    ends. Therefore, more resources will be required to ensure that
    VA can provide timely, high-quality healthcare into the future.
        We know that we have much work to do in fixing access
    issues for veterans, and filling our critical leadership and
    healthcare professional openings, and ensuring our new Veterans
    Choice Plan works better for veterans than it has over the past
    year. I came to VA approximately 8 months ago from the private
    sector to fix these problems, and I am building a leadership
    team that is now committed to doing this and implementing
    sustainable change. The fiscal year 2017 budget requests
    additional resources which are critical to providing veterans
    the care they have earned through their service and sacrifice.
        In conclusion, I appreciate the hard work and dedication of
    VA employees, our partners from veteran service organizations
    who are important advocates for veterans, our community
    stakeholders, and our dedicated VA volunteers. I respect the
    important role that Congress has in ensuring veterans receive
    quality healthcare and benefits that they rightly deserve. I
    look forward to continuing our strong collaboration and
    partnership with the subcommittee, and other committees of
    jurisdiction, and the entire Congress as we work together to
    continue to enhance the delivery of healthcare to our Nation's
    veterans.
        Mr. Chairman, members of the subcommittee, this concludes
    my remarks. Thank you again for this opportunity to testify. My
    colleagues and I will be happy to respond to any questions from
    you and members of the subcommittee. Thank you.
        [The statement follows:]
               Prepared Statement of Hon. David J. Shulkin, M.D.
        Good morning Chairman Kirk, Ranking Member Tester, and members of
    the subcommittee. Thank you for the opportunity to appear before you to
    discuss the Department of Veterans Affairs (VA) Veterans Health
    Administration (VHA) fiscal year 2017 and fiscal year 2018 Medical Care
    Advance Appropriations budget request. I am accompanied today by Mark
    Yow, VHA's Chief Financial Officer.
        The year 2015 was a big year in addressing some of the critical
    issues that we have before us in VHA. VA, as a whole, is working to
    rebuild trust with veterans and the American people, improve service
    delivery, and set the course for long-term VA excellence and reform.
    This initiative is called ``MyVA.'' As we enter 2016, all of us in the
    VA healthcare system are focused on the ``MyVA'' initiative as well as
    VHA's Blueprint for Excellence. The Blueprint is aligned with the
    Department's Strategic Plan and supports the ``MyVA'' initiative. The
    Blueprint lays out themes and supporting strategies for transformation
    to improve the performance of VA healthcare now--making it not only
    more veteran-centric, but also veteran-driven by putting our customers
    in control of their VA experience. The Blueprint for Excellence will
    serve as a guide in all of the programs I mention throughout my
    testimony.
        To ensure that we remain aligned with ``MyVA'' and the Blueprint
    for Excellence, I have five priorities that are the focus of VHA.
    First, we must fix the access issues and continue to work on reducing
    the wait time for veterans who need our services. Second, VHA must be a
    model for high-performance care and develop a high-performance network.
    Third, we must improve staff and employee morale and make VA a place
    where all of our employees feel comfortable and supported in an
    environment that allows them to do the best job to serve our veterans.
    Fourth, to ensure consistency of best practices and resource
    prioritization, we must share promising practices among facilities and
    focus on the things that we know are working best within VA. Finally,
    and most important, VHA must restore the trust and confidence that the
    American public and veterans have in the services that we provide.
        The President's fiscal year 2017 budget request will support VA's
    goals to expand access to timely, high-quality healthcare; sustain
    funding to support programs dedicated to ending homelessness among
    veterans; and continue to transform the Department through its ``MyVA''
    initiative, which reorients VA around veteran needs and empowers
    employees to assist them by delivering excellent customer service to
    improve the veteran experience.
        The cost of fulfilling this care and other obligations to our
    veterans grows, and we expect it will continue to grow for the
    foreseeable future. We know that services and benefits for veterans do
    not peak until roughly four decades after a conflict ends. Therefore,
    more resources will be required to ensure that VA can provide timely,
    high-quality healthcare into the future. The fiscal year 2017 budget
    requests additional resources, which are critical in providing veterans
    the care that they have earned through their service and sacrifice.
                            improved access to care
        VA is taking multiple steps to expand capacity at our facilities by
    focusing on staffing, space, productivity, and VA Community Care. The
    fiscal year 2017 budget request provides $65 billion for VA medical
    care, a 6.3-percent increase above the 2016 enacted level. The increase
    in 2017 is driven by veterans' demand for VA healthcare as a result of
    demographic factors, economic assumptions, investments in access, high-
    priority investments for Caregivers, and new hepatitis C treatments.
        Building on momentum generated by the November 14, 2016, Stand
    Down, VA is continuing efforts to improve access to care, improve the
    veteran experience, and improve the VA employee experience by
    maximizing accessibility to outpatient services and initiating a second
    Stand Down held on February 27, 2016. We are re-focusing people, tools,
    and systems as we embark on a continuous improvement journey towards
    same day access for primary care and urgent specialty care.
        We are empowering each VA facility to focus on the needs of its
    specific population under the aforementioned guiding principles.
    Clinical operations will meet customer demand through resource-neutral,
    continuous improvements at the facility level and scaling-up excellence
    across the enterprise.
        VA has placed special emphasis on increasing access for veterans in
    rural and remote locations. Telehealth services are mission-critical to
    the future of VA care to veterans. Telehealth utilizes information and
    telecommunication technologies to provide healthcare services when the
    patient and practitioner are separated by geographical distance. The
    fiscal year 2017 budget requests $1.2 billion, an increase of $56
    million (5.1 percent) above the 2016 enacted level for telemedicine.
    The number of veterans receiving care via VHA's telehealth services
    grew approximately 5 percent in fiscal year 2015, and is anticipated to
    grow by approximately 6 percent in fiscal year 2016. In fiscal year
    2015, during more than 2.1 million telehealth episodes of care, VHA
    provided care to more than 677,000 veterans via the three telehealth
    modalities (i.e., Clinical Video Telehealth, Home Telehealth and Store
    and Forward Telehealth). Forty-five percent of these veterans lived in
    rural areas, and otherwise may have had limited access to VA
    healthcare.
        We are appreciative of Congress' support to improve access as we
    build capacity within the VA system to better serve veterans who rely
    on us for healthcare. My testimony will now discuss key initiatives
    highlighted in the President's 2017 budget request.
           mental health care (suicide prevention--a call to action)
        Long deployments and intense combat conditions require
    comprehensive support for the emotional and mental health needs of
    veterans and their families. Accordingly, VA continues to develop and
    expand its mental health system. VA has integrated mental health
    services into primary care in the Patient Aligned Care Team model.
    Providing mental healthcare within the primary care clinic minimizes
    barriers that may discourage veterans from seeking mental healthcare.
    This integrated healthcare is not seen in other healthcare systems
    nationally.
        VA has many entry points for mental healthcare, including 167
    medical centers, 1,035 Community-Based Outpatient Clinics and
    Outpatient Services sites, 300 Vet Centers providing readjustment
    counseling, 80 Mobile Vet Centers, a national Veterans Crisis Line, VA
    staff on college and university campuses, and a variety of other
    outreach efforts.
        VA's Primary Care-Mental Health Integration (PC-MHI) program, which
    provides mental healthcare as a routine component of primary care, is
    now established in 98.8 percent of VHA divisions, 98.5 percent of the
    very large and 81.2 percent of large community based outpatient
    clinics. VHA provided over 1 million PC-MHI encounters in 2015, an
    increase of 8 percent from 2014 and an increase of 28 percent from
    2013.
        The fiscal year 2017 budget requests $7.8 billion, an increase of
    $347 million (4.6 percent), to ensure the availability of a range of
    mental health services, from treatment of common mental health
    conditions in primary care to more intensive interventions in specialty
    mental health programs for more severe and persisting mental health
    conditions. We will continue to focus on expanding and transforming
    mental health services for veterans to ensure that accessible and
    patient-centered care, including treatment for posttraumatic stress
    disorder (PTSD), ensuring timely access to mental healthcare, and
    treatment for military sexual trauma.
        On February 2, 2016, Secretary Robert McDonald and I held a
    groundbreaking event ``Preventing Veteran Suicide: A Call to Action.''
    This day-long summit was attended by over 230 participants, including
    members of Congress, the Department of Defense, other Federal partners,
    veterans, their family members, Veterans Service Organizations,
    academics, and other stakeholders. The primary goal of the event was to
    develop a concrete plan of action to engage more veterans at risk for
    suicide by bringing them into VA's system. Independent studies have
    shown that veterans who engage in VA care are at lower risk of suicide
    than those who do not engage in VA care. VA continues to develop a
    proactive action plan with steps to move forward with suicide-
    prevention efforts based on the feedback and presentations of the
    summit.
        VA is committed to ensuring the safety of our veterans, especially
    when they are in crisis. Our suicide prevention program is based on
    enhancing veterans' access to high-quality mental healthcare and
    programs specifically designed to help prevent veteran suicide. Losing
    one veteran to suicide shatters an entire world. Veterans who reach out
    for help must receive that help when and where they need it and in
    terms that they value.
                               hepatitis c virus
        VA places a high priority on ensuring that all enrolled veterans
    who require treatment for the hepatitis C virus (HCV) have access to
    the necessary therapies. Chronic infection with HCV is the most common
    blood-borne infection in the world and is a major public health problem
    facing not only veterans, but the United States in general. The fiscal
    year 2017 budget requests $1.5 billion to capitalize on the
    availability of new therapies to improve access to and quality of HCV
    care. These new drugs will save veterans' lives. During fiscal year
    2015, VA medical facilities treated over 30,000 veterans for HCV with
    these new drugs with remarkable success, achieving cure rates of 90
    percent.
                             care in the community
        VA is committed to providing veterans access to timely, high-
    quality healthcare. The 2017 budget includes $12.3 billion for Care in
    the Community and includes a new Medical Care in the Community budget
    account, as mandated in the VA Budget and Choice Improvement Act
    (Public Law 114-41). Of the total, $7.2 billion will be provided
    through a transfer of the 2017 advance appropriations for Medical
    Services to the new budget account, $250 million will be provided
    through anticipated collections in the new account, and $4.8 billion
    will be provided through the Veterans Choice Program. The 2017 budget
    will support over 15.6 million visits/procedures for veterans by non-VA
    providers.
        On October 30, 2015, VA provided Congress with its plan for the
    consolidation and improvement of all purchased care programs into one
    New Veterans Choice Program (New VCP).
        In today's complex and rapidly changing healthcare environment
    where VA is experiencing a steep increase in demand for care, it is
    essential for VA to work with providers in communities across the
    country to meet veterans' needs. To be effective, these relationships
    must be principle-based, streamlined, and easy to navigate for
    veterans, community providers, and VA employees.
                           caregiver support program
        VHA recognizes the crucial role that family caregivers play. These
    individuals are central to our mission in caring for those who have
    ``borne the battle.'' They are partners in helping veterans as they
    recover from injury and illness, in supporting veterans in their daily
    lives in their communities, and in helping veterans remain at home. VHA
    is dedicated to providing caregivers with the support and services they
    need.
        The fiscal year 2017 budget requests $725 million for the National
    Caregivers Support Program to support nearly 36,600 Caregivers, an
    increase of $102 million (16.4 percent) from fiscal year 2016, of which
    $629 million in 2017 will be for the monthly stipends paid to
    designated primary family caregivers under VA's Program of
    Comprehensive Assistance for Family Caregivers, an increase of $140
    million (29 percent) from fiscal year 2016. The increases to the
    stipend obligations are due to an increase in the number of caregivers
    approved to participate in the Program of Comprehensive Assistance as
    well as the increases in the underlying hourly wages used to calculate
    the monthly stipend rates.
        In addition to the Program of Comprehensive Assistance for Family
    Caregivers, VA offers a variety of services and resources through the
    General Caregiver Support Program, including: local Caregiver Support
    Coordinators, the National Caregiver Support Line staffed by licensed
    social workers, the VA Web site dedicated to family caregivers, as well
    as the Peer Support Mentoring Program. Additionally, VA offers a
    variety of training and provides many educational opportunities for
    caregivers of veterans. VA is dedicated to promoting the health and
    well-being of caregivers who care for our Nation's veterans, through
    education, resources, support, and services.
                          ending veterans homelessness
        Ending and preventing veteran homelessness is now becoming a
    reality in many communities. Between 2010 and 2015, overall veteran
    homelessness dropped by 36 percent, as measured by the yearly Point-in-
    Time count, and we have achieved a nearly 50-percent decrease in
    unsheltered veteran homelessness. Through unprecedented partnerships
    with Federal and local partners, we have greatly increased access to
    permanent housing, a full range of healthcare including primary care,
    specialty care, and mental healthcare; employment; and benefits for
    homeless and at risk for homeless veterans and their families. As a
    result of these investments, in fiscal year 2015 alone, VA provided
    services to more than 365,000 homeless or at-risk veterans in VHA's
    homeless programs. Nearly 65,000 veterans obtained permanent housing
    through VHA Homeless Programs interventions, and more than 36,000
    veterans and their family members, including 6,555 children, were
    prevented from becoming homeless.
        In fiscal year 2017, VA will continue to focus on prevention and
    treatment services. The fiscal year 2017 budget request of $1.6 billion
    will support programs such as Grant and Per Diem, Veterans Justice
    Outreach, Supportive Services for Veteran Families and case management
    services for the Department of Housing and Urban Development-VA
    Supportive Housing program. All of these programs will continue to work
    towards achieving a systematic end to homelessness, meaning that there
    are no veterans sleeping on our streets and every veteran has access to
    permanent housing.
                  advances in medical and prosthetic research
        For over 75 years, VA Research has produced innovative and cutting-
    edge medical and prosthetic advances that are broad and significant. VA
    research is focused on the U.S. veteran population, and allows VA
    research to uniquely address scientific questions to improve veterans
    healthcare. Most VA researchers are also clinicians and healthcare
    providers who treat patients. Thus, VA research arises from the desire
    to heal rather than pure scientific curiosity, and yields remarkable
    returns.
        In 2017, Medical Research will be supported through a $663 million
    direct appropriation, and an additional $1.2 billion from VA's medical
    care program and other Federal and non-Federal grants. Total funding
    for Medical and Prosthetic Research will be over $1.9 billion in 2017.
        The 2017 budget submission emphasizes transformational elements
    emanating from VA research and incorporating the evolving science of
    Genomic Medicine--how genes affect health--to support Precision
    Medicine innovations. This budget directly supports the President's
    initiative to invest in Precision Medicine to drive personalized
    medical treatment.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Beyond VA's support of over 2,200 ongoing research projects, VA
    will leverage our Million Veteran Program (MVP)--already one of the
    world's largest databases of genetic information--to support several
    Precision Medicine Initiatives. The first initiative will evaluate
    whether using a patient's genetic makeup to inform medication selection
    is effective in reducing complications and getting patients the most
    effective medication. This initiative will focus on up to 21,500
    veterans with PTSD, depression, pain, and/or substance abuse.
        The second initiative will focus on additional analysis of
    Deoxyribonucleic acid (DNA) specimens already collected in the Million
    Veteran Program. More than 438,000 veteran volunteers have contributed
    DNA samples so far. Genomic analysis on these DNA specimens allows
    researchers to extract critical genetic information from these
    specimens. There are several possible ``levels'' of genomic analyses,
    with increasing cost. Built into the design of MVP and currently funded
    within VA's research program is a process known as ``exome chip''
    genotyping--the tip of the iceberg in genomic analysis. Exome chip
    genotyping provides useful information, but newer technologies promise
    significantly greater information for improving treatments.
        VA proposes conducting the next level of analysis, known as ``exome
    sequencing'' on up to 100,000 veterans who are enrolled in MVP. This
    exome sequencing analyzes the part of the genome that codes for
    proteins--the large, complex molecules that perform most critical
    functions in the body. Sequencing efforts will begin with a focus on
    veterans with PTSD and frequently co-occurring conditions, such as
    depression, pain, and substance abuse, and expand to other chronic
    illnesses such as diabetes and heart disease, among others. This more
    detailed genetic analysis will provide greater information on the
    biological factors that may cause or increase the risk for these
    illnesses.
                                   conclusion
        In conclusion, VA is committed to providing the highest quality
    care, which our veterans have earned and deserve. I appreciate the hard
    work and dedication of VA employees, our partners from Veterans Service
    Organizations--that are our important advocates for veterans--our
    community stakeholders, and our dedicated VA volunteers. I respect the
    important role that Congress has in ensuring that veterans receive the
    quality healthcare and benefits that they rightfully deserve. I look
    forward to continuing our strong collaboration and partnership with
    this subcommittee, our other committees of jurisdiction, and the entire
    Congress, as we work together to continue to enhance the delivery of
    healthcare services to our Nation's veterans.
        Mr. Chairman, members of the subcommittee, this concludes my
    remarks. Thank you again for the opportunity to testify. My colleague
    and I will be happy to respond to any questions from you or other
    members of the subcommittee.

        Senator Kirk. Thank you. And, Mr. Pummill, after 30 years
    of service in the Army infantry, I will say--I want to say that
    you now should be addressed as Colonel Pummill.

                        Veterans Benefits Administration

    STATEMENT OF DANNY G.I. PUMMILL (RET.), ACTING UNDER
                SECRETARY FOR BENEFITS
    ACCOMPANIED BY JAMIE MANKER, CHIEF FINANCIAL OFFICER

        Mr. Pummill. Thank you, Chairman Kirk. Chairman Kirk,
    Ranking Member Tester, and members of the subcommittee, thank
    you for the opportunity to present VBA's 2017 budget request. I
    am accompanied today by Jamie Manker, our Chief Financial
    Officer. I am going to pose all the real tough questions to
    him.
        Our 2017 budget request includes $2.8 billion in
    discretionary funds and $103.6 billion in mandatory funds,
    reflecting the ever-growing demand for VA benefits and
    services. The budget also requests a 2018 advanced
    appropriation of $103.9 billion for VBA's three mandatory
    appropriations, including compensation and pensions,
    readjustment benefits, and insurance indemnities.
        The demand for benefits and services for veterans of all
    eras continues to increase and will continue to increase
    decades after conflicts end. For the past 15 years, the
    percentage of the veteran population receiving disability
    compensation has increased to 20 percent from 8.5 percent where
    it had remained steady for the past 40 years.
        The average disability rating has also increased. For 45
    years, the average disability rating degree of disability held
    steady at 30 percent, but since 2000 that has risen to 49
    percent. Despite these challenges, VBA has made major strides
    in increasing productivity and reducing the claims backlog.
        As a direct result of our transformation initiatives, we
    have reduced the pending disability claims inventory by 60
    percent and the claims backlog by 87 percent. In making this
    progress, we also ensured that quality was not compromised. We
    have increased claim-based accuracy from 83 percent to 90
    percent, and issue-based accuracy has improved to 96 percent.
    Veterans are waiting less time for decisions and benefits. The
    average time to decide a claim has improved by 90 days from
    fiscal year 2014, and the average age of a pending claim has
    improved by 188 days.
        VBA is also working to further improve services to veterans
    in alignment with the Secretary's MyVA vision to become the
    number one customer service agency in the Federal Government.
    We are focused on improving veterans' experiences in the
    compensation and examination process as one of the Secretary's
    MyVA breakthrough priorities to help veterans better the exam
    process as it relates to their claims and enhanced procedures
    for exam scheduling. We are working on another MyVA
    breakthrough initiative to simplify and streamline the appeals
    process so veterans can receive their final decision on an
    appeal within 365 days from filing.
        This budget supports this simplified appeals process which
    also requires Congress's continued support through legislative
    action. Our budget request includes funding for technology
    investments and other initiatives necessary to provide
    veterans, their families, and survivors with the benefits and
    services they earned and deserve. By moving to a paperless
    electronic claims processing system, VBA increased claim and
    medical issue productivity, which helped mitigate the effects
    of a 131-percent increase in workload between 2009 and 2015.
    The transformation from a paper intensive process to a full
    electronic processing system resulted in VA completing a record
    breaking 1.4 million disability compensation pension claims for
    veterans and their survivors.
        Our technological advancements will expand and enhance
    existing services, and will also focus on delivering key
    functionality that enables quicker, more accurate and
    integrated claims processing. As VBA continues to receive and
    complete more rating claims, the volume of appeals, non-rated
    claims, and fiduciary exams correspondingly increase. To
    address this, we are requesting an additional $29.1 million for
    300 personnel to process non-rating compensation and pension
    claims, as well as an additional $25 million to help meet
    veterans' expectations for more timely claim decisions.
        We appreciate the opportunity to discuss our budget request
    and look forward to working with you to identify and prioritize
    spending in the best interest of our veterans, their families,
    and survivors, and our Nation. I welcome any questions you and
    the subcommittee may have.
        [The statement follows:]
                   Prepared Statement of Danny G. I. Pummill
        Chairman Kirk, Ranking Member Tester, and distinguished members of
    the Senate Appropriations Committee, Subcommittee on Military
    Construction, Veterans Affairs, and Related Agencies: Thank you for the
    opportunity to present the President's 2017 budget and 2018 advance
    appropriations requests for the Veterans Benefits Administration (VBA).
    I am accompanied today by Mr. Jamie Manker, VBA's Chief Financial
    Officer.
                         summary of 2017 budget request
        The President's 2017 budget for the Department of Veterans Affairs
    (VA) will allow VA to manage the comprehensive array of integrated
    benefits and services provided for our Nation's veterans, their
    families, and survivors, administered through our nationwide network of
    56 regional offices (ROs). The 2017 budget request includes $2.8
    billion in discretionary funds and $103.6 billion in mandatory funds
    for VBA. The budget also requests 2018 advance appropriations of $103.9
    billion for VBA's three mandatory appropriations: compensation and
    pensions, readjustment benefits, and insurance and indemnities. With
    the resources requested in the 2017 budget, VA will provide:

      --Disability compensation for 4.4 million veterans with service-
            connected disabilities;
      --Dependency and indemnity compensation for 405,000 veterans'
            survivors;
      --Pension for 297,000 wartime veterans and almost 210,000 of their
            survivors;
      --Vocational rehabilitation and employment benefits paid for nearly
            141,000 disabled veterans;
      --Education and training assistance for nearly 1.1 million veterans
            and family members;
      --Home loan assistance for over 2 million veterans and family members
            with active VA loans;
      --Fiduciary activities providing estate protection services for
            224,000 VA beneficiaries unable to manage their own funds; and
      --Life insurance programs for over 6 million veterans,
            servicemembers, and their families.

        The President's 2017 budget request also includes funding for
    technology investments and other initiatives necessary to timely
    provide veterans, their families, and survivors with the benefits and
    services they earned and deserve.
                     rising demand for disability benefits
        As VBA becomes more productive through our implemented people,
    process, and technology initiatives, the demand for benefits and
    services from veterans of all eras continues to increase, exceeding our
    capacity to meet it. This increased demand is fueled by more than a
    decade of war, agent orange-related disability claims, a disjointed and
    redundant claim appeal process, demographic shifts, increased medical
    issues claimed, and other factors. In addition, VBA is providing
    services to an older veteran population with more chronic conditions.
        Veterans' benefit requirements continue to increase decades after
    conflicts end, which is a fundamental, long-term challenge for VA. Even
    though the Vietnam war ended 40 years ago, the number of Vietnam-era
    veterans receiving disability compensation has not yet peaked. We
    anticipate a similar trend for Gulf war-era veterans, of whom only 26
    percent have been awarded disability compensation. For the past 15
    years, the percentage of the veteran population receiving disability
    compensation increased to 20 percent from 8.5 percent where it had
    remained steady for over 40 years. Moreover, the total number of
    service-connected disabilities for veterans receiving disability
    compensation grew from 11.8 million in 2009 to 19.7 million in 2015, an
    increase of more than 67 percent in just 6 years. This dramatic growth,
    along with estimates based on historic trends, predicts an even greater
    increase in claims for more benefits as veterans' age and disabilities
    become more acute.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Along with the increase in the number of veterans receiving
    disability compensation, there has been a significant rise in the
    average degree of disability compensation granted to veterans. For 45
    years, from 1950 to 1995, the average degree of disability held steady
    at 30 percent. But, since 2000, the average degree of disability has
    risen to 49 percent. VBA's mandatory request for 2017 is $103.6
    billion, twice the amount spent in fiscal year 2009.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                        claims processing transformation
        VBA underwent the largest transformation in its history by
    modernizing the delivery of VA benefits and services. To achieve VA's
    goal of processing all claims within 125 days with improved accuracy,
    VBA aggressively implemented its transformation plan--a set of actions
    targeted to reorganize and retain its people, streamlined its
    processes, and deployed technology--and, as of January 31, 2016, VBA
    has achieved the following results:

      --VBA is reducing the pending disability claims inventory.
        --Peak: 884,000 claims in July 2012.
        --Now: 352,554 claims--Improvement: 60 percent.
      --Rating accuracy has improved.
        --12-month claim-based accuracy increased from 83 percent in 2011
                to 90 percent--Improvement: 6 percentage points.
        --12-month issue-based accuracy increased from 95 percent in fiscal
                year 2013 to 96 percent--Improvement: 1 percentage point.
      --Veterans are waiting less time for decisions and benefits.
        --The average time to decide a veteran's disability claim was
                reduced from 218 days in fiscal year 2014 to 128 days--
                Improvement: 90 days.
        --The average age of pending disability claims:
          -- Peak: 282 days in March 2013.
          -- Now: 94 days--Improvement: 188 days.
      --Despite the challenges of an increase in disability claims workload
            as well as increased complexity of workload, VBA has made major
            strides in increasing its productivity.
      --The number of claims pending over 125 days and considered part of
            the claims backlog has decreased.
        --Peak: over 611,000 claims in March 2013.
        --As of January 31, 2016: 79,106 claims--Improvement: 87 percent.
                  myva transformation--meeting veterans' needs
        In addition to improving the quality and timeliness of disability
    claim decisions through our transformative people, processes, and
    technology initiatives, VBA is working to further improve services to
    veterans in alignment with the Secretary's MyVA vision: to become the
    Number 1 customer-service agency in the Federal Government. We are
    putting the needs and interests of veterans and their families foremost
    in all that we do.
        VBA has realigned its ROs into 5 districts under the MyVA framework
    that simplifies internal coordination, facilitates partnering, enhances
    customer service, and allows veterans to more easily navigate VA. As
    the districts continue to mature, there is increased coordination and
    collaboration among VA entities, veterans, community partners, and
    stakeholders to transform our agency into a more customer-centric
    organization. VA has enabled 36 Community Veterans Engagement Boards, a
    national network designed to leverage all community assets, not just VA
    assets, to meet local veteran needs. VBA ROs actively participate and
    engage with communities and Veterans Service Organizations (VSO) to
    focus on identifying solutions for veterans in the local communities
    and to establish the foundation for a strong MyVA community.
        VA launched the Veterans Economic Communities Initiative (VECI) in
    May 2015 to complement the goals of MyVA and VA's Transition Assistance
    Program, promoting local collaboration, dialogue, and partnerships
    among organizations that serve transitioning servicemembers, veterans,
    and their families. Economic liaisons in each VECI community
    collaborate and partner with government leaders, businesses, policy
    experts, educational institutions, and nonprofit organizations to build
    an integrated network of support and resources and to maximize impact
    to improve outcomes for veterans and their families. We are expanding
    to 25 new VECI communities in early 2016, bringing the total to 50 U.S.
    metropolitan statistical areas.
        One of VA's MyVA 12 breakthrough priorities is focused on improving
    veterans' experiences in the compensation and pension examination
    process. We are working to help veterans better understand the exam
    process as it relates to their claims. We are enhancing procedures for
    examination scheduling to facilitate veterans' direct involvement and
    providing training to ensure VA employees understand how their role
    directly impacts veterans' experiences and perceptions of VA.
        We are also working collaboratively with our partners on the MyVA
    breakthrough priority to simplify the appeals process. Our goal is to
    provide veterans with a simple, fair, and streamlined appeals procedure
    in which they would receive a final appeals decision within 365 days
    from the filing of an appeal by fiscal year 2021. This goal would
    require Congress' continued support through legislative action and
    additional funding. The 2017 budget supports this simplified appeals
    process, which is explained in more detail later.
       transformation initiatives in the president's 2017 budget request
        The MyVA transformation will ensure that VA is a sound steward of
    taxpayers' dollars as a result of instituting operational efficiencies,
    cost savings, and service innovations to support this and future budget
    requests. Few realize that when it comes to the general operating
    expense of delivering over $100 billion in benefits to over 5.3 million
    veterans and survivors, VBA spends only 3 cents on the dollar. To boost
    efficiency and employee productivity, VBA moved to paperless claims
    processing from its historically manual, paper-intensive process.
    Modernizing to an electronic claims processing system helped VBA
    increase claim productivity per claims processor by 25 percent since
    2011 and medical issue productivity by 82 percent per claims processor
    since 2009. This significant productivity increase helped mitigate the
    effects of the 131-percent increase in workload between 2009 and 2015,
    when the number of medical issues rose from 2.7 million to 6.4 million.
    The President's 2017 budget will allow VBA to continue building on the
    success of these initiatives.
        Veterans Claims Intake Program (VCIP).--VBA shifted to electronic
    claims processing by converting paper files to eFolders through VCIP,
    which streamlined processes for receiving digital records and data into
    the Veterans Benefits Management System (VBMS) and other VBA systems.
    VCIP scans paper claims, converts them into digital format, and
    extracts important data for input into electronic folders. VBMS has
    also expanded document conversion services to include centralized mail
    processing. More than 1.9 billion images have been converted from
    paper, and over 99.8 percent of compensation claims are now being
    electronically processed in VBMS. In addition to supporting scanning
    operations and centralized mail processing, VBA's 2017 request of
    $142.9 million will sustain current operations, support future
    conversion efforts, and enable the disposition of paper materials.
        Centralized Mail Initiative (CMI).--CMI consolidates inbound paper
    mail from VA's ROs to a centralized intake site, expands VBA's
    capabilities for scanning and conversion of claims evidence, increases
    electronic claims processing capabilities; and assists in converting
    100 percent of received source materials to an electronic format. VBA
    has already deployed centralized inbound mail for all ROs. When coupled
    with VBA's contract examination vehicle, this will enable VBA to
    improve and enhance the speed and consistency for requesting VA
    examinations. The 2017 budget request of $26.7 million provides
    resources to sustain operations and expand this initiative to include
    in-bound and out-bound mail for all benefits through fiscal year 2020.
        Veterans Benefits Management System (VBMS).--VBMS is a Web-based,
    paperless claims process solution complemented by improved business
    processes. As the cornerstone of VBA's claims transformation strategy,
    VBMS serves as enabling technology to provide veterans and their
    dependents with timely, high-quality decisions. VBA's shift to
    electronic folders in VBMS addressed the inefficiencies of the paper
    folders and the problems of misplaced files and records. Through a Web-
    based application, multiple, geographically separated users can view
    the electronic folders simultaneously, thereby minimizing the need for
    sequential processing and eliminating the delays of receipt of paper
    folders at ROs. VBMS also provides automation of processes, such as the
    receipt of evidence, movement of claims to the next stage, and updates
    to the claims status, which means more veterans are receiving faster
    decisions. As of January 31, 2016, VBA completed over 4.2 million
    rating decisions and processed over 2.4 million claims end-to-end in
    VBMS.
        Under the VBMS initiative, we will continue to reduce our reliance
    on legacy systems with planned improvements to the electronic folder,
    such as adding a unique identifier on VA correspondence. When veterans
    return information with the identifier, it will automatically upload
    the information in the veteran's electronic folder. Both this fiscal
    year and in fiscal year 2017, VBMS enhancements will focus on
    delivering key functionality that enables quicker, more accurate, and
    integrated claims processing while laying the foundation for future,
    veteran-centric enterprise business capabilities. These include the
    delivery of electronic service treatment records, establishing one
    authoritative source for veteran contact information, and collaborating
    with the Board of Veterans' Appeals (Board) to define the appeals
    functionality needed both at the ROs and as part of the broader appeals
    modernization efforts. The 2017 budget request for $37.4 million for
    VBA and $143 million for the Office of Information &Technology (OI&T)
    provides resources to sustain operations and expand future enhancements
    and initiatives.
        National Work Queue (NWQ).--In conjunction with VBMS, VBA is
    implementing a national workload strategy through NWQ, which will
    provide greater flexibility in management of workload and performance
    by enabling automated distribution of claims across VBA. NWQ
    prioritizes and distributes our claims inventory at a national level
    and further standardizes claims processing. NWQ will distribute claims
    electronically from a centralized queue based on RO capacity, so that
    veterans' claims will be automatically directed across all ROs to
    efficiently match claim demand with available expertise and processing
    capacity regardless of RO jurisdiction. Generally, the veteran's State
    of residence will continue to be the first filter for assigning claims,
    thereby increasing the likelihood that the RO in the veteran's State of
    residence will process the claim. Veterans are still able to receive
    assistance with their claims by visiting their RO for personal
    assistance at the public contact sites, going online through eBenefits,
    and utilizing VBA's National Call Centers. Veterans, congressional
    staff, and VSO representatives will continue to have access to claim
    status and information through current venues. The electronic inventory
    provides real-time updates, no matter where the claim is assigned for
    processing. The 2017 budget request of $3.3 million provides resources
    to fully implement the NWQ to all ROs and will expand this initiative
    to include electronically routing non-rating claims (claims that in
    most cases do not require a rating decision but directly impact
    benefits, such as survivors pension, burial claims, dependency claims,
    income adjustments, and drill pay adjustments).
        new agency priority goal to improve dependency claim processing
        As VA continues to improve timeliness of disability claim
    decisions, VA is now also focusing on the dependency claims that are
    the direct result of the dramatic increase in completed disability
    rating decisions and the growth in the number of veterans receiving
    compensation at the higher disability evaluation levels (30 percent and
    above). VA has established as one of its Agency Priority Goals (APGs)
    to reduce the overall inventory of dependency claims to 100,000 and
    improve the average days to complete (ADC) dependency claims to 125
    days by the end of fiscal year 2017. Our improvement efforts include
    expansion of rules-based processing, promotion of online dependency
    claim submission, and streamlining of policies and procedures. The new
    dependency claims APG represents a 56-percent improvement from the
    fiscal year 2015 baseline of 227,000 pending dependency claims, and a
    43-percent improvement from the fiscal year 2015 ADC baseline of 221
    days.
                            all vba benefit programs
        The transition from a paper-intensive process to a fully electronic
    processing system resulted in VA deciding a record-breaking 1.4 million
    disability compensation and pension claims for veterans and their
    survivors in fiscal year 2015. VBA's success in processing an
    unprecedented number of rating claims in recent fiscal years has also
    resulted in other unmet workload demands. With increases in rating
    claims receipts and completions, the volume of non-rating claims,
    fiduciary field examinations, and appeals increases correspondingly. To
    address this, VBA requests $2.8 billion for general operating expenses,
    an increase of $118.4 million (4.4 percent) over the 2016 enacted
    level. These resources will support 22,171 full-time equivalent (FTE)
    employees and includes an additional $29.1 million for 300 FTE to
    process non-rating compensation and pension claims. In 2015, VA
    completed nearly 37-percent more non-rating work than in 2013 and 15-
    percent more than in 2014. These additional FTE are needed to reduce
    the non-rating claims inventory and provide veterans with more timely
    decisions on non-rating claims. To ensure that all aspects of the
    claims process are improved for veterans, VBA is also requesting an
    additional $25 million to help meet veterans' expectations for more
    timely claim decisions, for a total increase of $118.4 million over the
    2016 enacted level.
        This budget will allow VBA to administer compensation and pension
    benefits totaling $86 billion to over 5.3 million veterans and
    survivors. It will also enable VA to administer education benefits and
    vocational rehabilitation and employment benefits and services to over
    1.2 million participants; guarantee more than 429,000 new home loans;
    and provide life insurance coverage to 1 million veterans, 2.2 million
    servicemembers, and 2.8 million family members.
        Insurance.--VBA's insurance program maintains life insurance
    programs, giving financial security and peace of mind to
    servicemembers, veterans, and their families. In 2017, we anticipate
    that our insurance programs will provide $1.2 trillion of insurance
    coverage to 2.2 million servicemembers, 1 million veterans, and 2.8
    million spouses and children. The 2017 budget request for $35.4
    million, of which $879,000 is in the general operating expenses
    appropriation and $34.5 million is reimbursable by the Insurance funds,
    will support 345 FTE and provide servicemembers and their families with
    universally available life insurance, as well as traumatic injury
    protection insurance for servicemembers.
        Education.--VA's education programs provide education and training
    benefits to eligible servicemembers, veterans, and dependents.
    Education programs assist them in their readjustment to civilian life
    and also help the armed forces with recruitment and retention of
    members. In addition, these programs enhance our Nation's economic
    competitiveness by developing a more highly educated and productive
    workforce. Through the Post-9/11 GI Bill program, as of February 8,
    2016, we have issued approximately $60.4 billion in benefits payments
    to 1,546,035 individuals and their educational institutions since the
    program's inception in August 2009. With the successful automation of
    Post-9/11 GI Bill claims, we are currently issuing benefits to the
    majority of beneficiaries in an average of 7 days at 99-percent
    accuracy. The 2017 budget request is $212.4 million and 1,904 FTE to
    continue providing veterans, servicemembers, Reservists, and qualified
    family members with such educational resources.
        Vocational Rehabilitation and Employment (VR&E).--The VR&E program
    provides the services and assistance necessary to enable veterans with
    service-connected disabilities to become employable and obtain and
    maintain suitable employment, or, to the maximum extent feasible,
    achieve independence in daily living. VR&E services include career
    vocational counseling, job search assistance, and post-secondary
    training for service-disabled veterans. VBA seeks to enhance outreach
    and service delivery of education and vocational counseling services.
    Counselors from VR&E and Integrated Disability Evaluation System, as
    well as contract rehabilitation counselors will provide these
    counseling services through the VetSuccess on Campus programs at more
    than 94 schools.
        Our alignment with the MyVA initiatives and objectives include
    investments in the Veterans Employment Center (VEC), which provides
    transitioning servicemembers, veterans, and their families with a
    single authoritative Internet source that connects them with job
    opportunities, and provides tools to translate their military skills
    into plain language and build a profile that can be shared--in real
    time--with employers. Employers have made commitments to hire over a
    million individuals and over 2.2 million private- and public-sector
    jobs are listed on the VEC. In addition, our Transition GPS program
    helps separating servicemembers prepare for civilian life by providing
    benefits briefings and other transition activities. So far, VBA has
    provided over 45,000 benefits briefings, career technical training
    courses, and support for capstone events to over 550,000 attendees.
    (Because servicemembers and their family members can attend more than
    one briefing, this count does not represent unique servicemembers). As
    previously mentioned, VBA is involved in the MyVA Economic Opportunity
    Campaign, which involves the collaboration with public and private
    partners in communities across the country to help connect and amplify
    available resources and support for veterans and their families.
        The VR&E program request is $331.3 million and 1,594 FTE. This
    funding will help ensure that VA continues to build pathways to
    meaningful career opportunities for veterans by bringing them together
    with educators and employers across U.S. cities and communities and
    leveraging unique VA and interagency programs and resources to improve
    economic outcomes for veterans.
        Home Loan Guaranty.--Our request of $170 million and 907 FTE for
    the housing program is funded through appropriations to credit accounts
    and helps eligible veterans, active duty personnel, surviving spouses,
    and members of the Reserve components and National Guard to purchase,
    retain, and adapt homes in recognition of their service to the nation.
    The 2017 budget includes $34 million for the VA Loan Electronic
    Reporting Interface (VALERI) to manage over 2 million VA-guaranteed
    loans for veterans and their families. VA uses the VALERI tool to
    manage and monitor efforts taken by private-sector loan servicers and
    VA staff in providing timely and appropriate loss mitigation assistance
    to defaulted borrowers. In addition to supporting the payment of
    guaranty and acquisition claims, it connects VA with more than 320,000
    veteran borrowers and more than 225,000 mortgage servicer contacts.
    Without these resources, approximately 90,000 veterans and their
    families would be in jeopardy of losing their homes each year,
    potentially costing the Government an additional $2.8 billion per year.
                                  legislation
        The 2017 President's budget also proposes legislative actions that
    are necessary to ensure that veterans receive timely and quality
    delivery of benefits. Designated as one of our MyVA breakthrough
    priorities, VA proposes to streamline and modernize the appeals
    process.
        The current VA appeals process is broken. The more than 80-year-old
    process was conceived in a time when medical treatment was far less
    frequent than it is today, so it is encumbered by antiquated laws that
    have evolved since World War I and steadily accumulated in layers.
        Under current law, the VA appeals framework is complex,
    ineffective, confusing, and understandably frustrating for veterans who
    wait much too long for final resolution of their appeal. The system has
    no defined endpoint, and multiple steps are set in statute. The system
    requires continuous evidence gathering and multiple re-adjudications of
    the very same or similar matter. A veteran, survivor, or other
    appellant can submit new evidence or make new arguments at any time,
    while VA's duty to assist requires continuous development and re-
    adjudication. The VA appeals process is unlike other standard appeals
    processes across Federal and judicial systems.
        Fundamental legislative reform is essential to ensure that veterans
    receive timely and quality appeal decisions, and we must begin an open,
    honest dialogue about what it will take for us to provide veterans with
    the timely, fair, and streamlined appeals decisions they deserve. To
    put the needs, and interests of veterans and beneficiaries first--a
    goal on which we can all agree--the appeals process must be modernized.
        The 2017 budget proposes a Simplified Appeals process--legislation
    and resources (i.e., people, process, and technology) --that would
    provide veterans with a simple, fair, and streamlined appeals process
    in which they would receive a final decision on their appeal within 1
    year from filing the appeal by fiscal year 2021.
        Over the last 20 years, appeal rates have continued to hold steady
    at between 11 and 12 percent of completed claims. As VBA received and
    completed record-breaking numbers of disability rating claims, the
    number of appeals correspondingly increased. Between December 2012 and
    November 2015, the number of pending appeals rose by 34 percent. Under
    current law with no radical change in resources, the number of pending
    appeals is projected to soar by 397 percent--from 437,000 to 2.17
    million--between November 2015 and fiscal year 2027.
        Without legislative change or significant increases in staffing, VA
    will face a soaring appeals inventory, and veterans will wait even
    longer for a decision on their appeal. If Congress fails to enact VA's
    proposed legislation to simplify the appeals process, Congress would
    need to provide resources for VA to sustain more than double its
    appeals FTE, with approximately 5,100 appeals FTE onboard. The prospect
    of such a dramatic increase, while ignoring the need for structural
    reform, is not a good result for veterans or taxpayers.
        While the Simplified Appeals proposal would require FTE increases
    for the first several years to resolve the more than 440,000 currently
    pending appeals, by fiscal year 2022, VA would be able to reduce
    appeals FTE to a sustainment level of roughly 1,030 FTE (including 980
    FTE at the Board and 50 at VBA), a level sufficient to process all
    simplified appeals in 1 year. Notably, such a sustainment level is
    1,135 FTE less than the current 2016 budget requires, and is 4,070 FTE
    less Department-wide than would be required to address this workload
    with FTE resources alone.
        In 2015, the Board was still adjudicating an appeal that originated
    25 years ago, even though the appeal had previously been decided by VA
    more than 27 times. Under the Simplified Appeals process, most veterans
    would receive a final appeals decision within 1 year of filing an
    appeal. Additionally, rather than trying to navigate a multi-step
    process that is too complex and too difficult to understand, veterans
    would be afforded a transparent, single-step appeals process with only
    one entity responsible for processing the appeal. Essentially, under a
    Simplified Appeals process, as soon as a veteran files an appeal, the
    case would go straight to the Board where a Judge would review the same
    record considered by the initial decision-maker and issue a final
    decision within 1 year; the veteran would be informed quickly whether
    that initial decision was substantially correct, contained an error
    that must be corrected, or was simply wrong. There would be a limited
    exception allowing the Board to remand appeals to correct duty to
    notify and assist errors made on the part of the agency of original
    jurisdiction (AOJ) prior to issuance of the initial AOJ decision. If a
    veteran disagrees with any or all of the final appeals decision, the
    veteran always has the option of pursuing an appeal to the Court of
    Appeals for Veterans Claims or reopening the claim with new and
    material evidence.
        VA firmly believes that justice delayed is justice denied. The VA
    team is passionate about fixing the broken, antiquated appeals process;
    this is a MyVA breakthrough priority. We look forward to working with
    Congress, veterans, and other stakeholders to implement improvements to
    provide veterans with the timely and fair appeals decisions they
    deserve and we appreciate the collaboration and feedback received from
    our ongoing discussions with Veterans Service Organizations on
    modernizing the appeals process.
                                    closing
        Thank you for the opportunity to appear before you today to provide
    additional information on VBA's 2017 budget request. We are committed
    to administering benefits effectively and efficiently as responsible
    stewards of the taxpayers' dollars, while continuing to strive to
    improve the delivery of benefits and comprehensive information and
    assistance to our veterans, their families, and survivors. We are
    grateful for your continuing support and appreciate your efforts to
    pass legislation enabling VA to provide veterans with the benefits they
    have earned and deserve.
        This concludes my remarks. I am happy to respond to any questions
    from you or other members of the subcommittee.

                              VETERAN CRISIS LINE

        Senator Kirk. Let me ask the first question here. Over the
    weekend I met with the family of Illinois Army Specialist, Tom
    Young, who has served two tours in Iraq with the 10th Mountain
    Division. This 30-year-old father of Vivian and Maggie called
    your suicide hotline looking for help, but was sent to
    voicemail. Afterwards, he laid down on the metro tracks near
    the Prospect Heights train station and was killed by an
    oncoming train. The next morning, Tom's family answered the
    call from the Veterans Crisis Line calling him back telling him
    that there were beds available.
        Three weeks ago, the VA inspector general released a report
    on the suicide hotline calls being sent to voicemail or
    answered by staff who are not properly trained. Just last week,
    Deputy Secretary Sloan Gibson said that the report was based on
    old data and that VA had taken steps months ago. Question for
    you. If the changes occurred months ago, how could Tom Young
    have been sent to voicemail just 7 months ago?
        Dr. Shulkin. First of all, this is a terrible tragedy that
    happened to Tom Young, and should never happen, and is totally
    unacceptable. The inspector general report that was mentioned
    found that there was an episode of approximately a two-week
    period of time in 2014 where calls went to voicemail was also
    unacceptable. This actually happened with a contractor. This
    was not the VA staff at the service line when----
        Senator Kirk. David, let me follow up.
        Dr. Shulkin. Yes.
        Senator Kirk. Who is responsible for the Veterans Crisis
    Line under you? I would just like a name.
        Dr. Shulkin. Yes. His name is Matt Eitutis.
        Senator Kirk. Matt Eitutis.
        Dr. Shulkin. E-I-T-U-T-I-S. That is a recent change that we
    put in place. After the inspector general report came out, we
    made a management change. We put this under professional
    business practices, and we are doing everything that we can.
    And steps have been taking place over the last year to update
    the technology, the staffing, the physical location. And our
    goal, it is one of our priorities in the Secretary's MyVA
    initiative, is to make sure that these calls are answered by VA
    staff, and that they do not roll over to secondary contractors.
        Senator Kirk. When you say there was a contractor involved,
    who was the contractor involved?
        Dr. Shulkin. It is--Senator Kirk, I will get you the
    specific name. It is--we use an acronym, something--I do not
    want to say the wrong name. I would probably get another
    company in trouble that have nothing to do with this, but----
        Senator Kirk. But, David----
        Dr. Shulkin. Yes.
        Senator Kirk [continuing]. My staff has been trying for
    weeks to find out who was the person responsible for the
    Veterans Crisis Line. It is almost impossible to find out.
        Dr. Shulkin. Oh, yes. You know, I know that your office had
    a name, that that person has now subsequently left. If you tell
    the time period you are looking for, Senator, we can get you a
    specific name.
        Senator Kirk. The time period that I am most interested
    in----
        Dr. Shulkin. Yes.
        Senator Kirk [continuing]. Is when my constituent called
    the crisis line. You know, for a veteran to admit that there is
    a big enough problem that he is contemplating a suicide, that
    is a huge decision to get on the phone with the Veterans Crisis
    Line.
        Dr. Shulkin. Absolutely.
        Senator Kirk. And we are dealing with a very fragile
    person. In the case of Tom Young, he just walked in front of
    the train and got killed.
        Dr. Shulkin. This is--as I said, there is no excuse for
    this. The Veterans Crisis Line saves lives every day. They
    actually have referred 11,000 veterans to emergency services,
    dispatched ambulances, saved lives every day. These are some of
    the hardest working staff in the VA. This is a tough, tough
    job. They do miraculous things.
        But the phone calls have to be answered. That is why we
    have put new management in place. We are not going to accept
    even a call--there is no voicemail today, I can assure you
    that. That is unacceptable. That was done by a contractor.
        Senator Kirk. Great.
        Dr. Shulkin. But absolutely, we will get you that name, but
    we are working extremely hard. This will not happen again, but
    these people are being supported the way that they need to
    answer those calls.

        [The information follows: the requested information was not
    available at the time this publication went to print.]

        Senator Kirk. One of the acting directors of mental health
    operations in 2014, at the time of the Office of Inspector
    General investigation, was Ira Katz. Was he the same Ira Katz
    who, according to CBS News, in 2008 covered up the veterans
    suicide rates leading both Senators Akaka and Murray to call
    for his resignation?
        Dr. Shulkin. Senator, Dr. Katz is a psychiatrist who works
    out of our Philadelphia area.
        Senator Kirk. So you had two United States Senators at the
    time of the congressional majority calling for his resignation,
    and he is still on the job.
        Dr. Shulkin. Dr. Katz is actively on the job. I am actually
    not aware of what the specific issues were with the Senators.
    So, again, since I am not aware of exactly what those
    allegations are----
        Senator Kirk. If the Choice Act gave you the authority
    using the Secretary's authority to fire employees, could you
    consider getting rid of Ira Katz when Senators Akaka and Murray
    have already called for him to resign?
        Dr. Shulkin. Well, I will commit to you today that I will
    go back and look into those issues. But any time there is an
    allegation, it is our responsibility to make sure that we look
    into it, that we have an objective evaluation, but we do make
    our disciplinary decisions based upon that.
        I happen to have known Dr. Katz for about 25 years. He is a
    well-respected psychiatrist. But I absolutely will go back and
    make sure that we look into that and provide follow up.

        [The information follows: the requested information was not
    available at the time this publication went to print.]

        Senator Kirk. Thank you.
        Mr. Tester.
        Senator Tester. Go with Tom.
        Senator Kirk. Mr. Udall.

                                 ACCESS TO CARE

        Senator Udall. Thank you. Thank you very much, Mr.
    Chairman. And, Dr. Shulkin and Mr. Pummill, thank you for
    taking the time to speak here and be with us today. Almost more
    than any other issue that we work on here in Congress, helping
    veterans access benefits and healthcare is one of the most
    important services my office offers to veterans.
        But it is also one of the most frustrating. As I have said
    here before, the majority of veterans are satisfied with the
    care they receive from the VA when and if they can get it. And
    I would just underline that ``when and if they can get it.''
    Most veterans I have spoken to believe that the care you
    provide is second to none, and this budget helps support that.
    This budget, however, also helps to ensure that the VA's care
    remains in place for the future and that improvements are made
    where care is lacking.

                          OPEN AIR BURN PITS REGISTRY

        Dr. Shulkin, I am glad to see that the VA's budget
    justification specifically supports research into exposure to
    airborne particulate matter from burn pits. The Open Air Burn
    Pit Registry is the result of a bill I authored. National
    Guardsman Master Sergeant Jessey Baca, and his wife, Maria, of
    Albuquerque were the driving force behind this effort. Jessey
    has battled cancer, bronchiolitis, PTSD, and numerous other
    ailments believed to be connected to his contact with toxic
    burn pit fumes while deployed in Iraq.
        In last year's omnibus, I secured a provision requiring the
    VA and the Department of Defense (DOD) to share information
    about when and how servicemembers may have been exposed to
    airborne hazards and open burn pits. Does the new research
    called for in the fiscal year 2017 request include data from
    DOD and the Open Air Burn Pits Registry?
        Dr. Shulkin. Well, first of all, thank you. Thank you for
    that bill. I think that that is very, very important for us to
    fulfill our mission to the veterans who served in Iraq and
    Afghanistan. As you know, we have 45,000 veterans who have
    registered into your registry. And we are working with DOD to
    do interagency cooperation exactly as you have suggested to be
    able to study this.
        Our research will be active this year. As you know, we
    worked with the Institute on Medicine, the National Academy of
    Sciences in the past to look at this issue. Some of those
    questions actually that were asked about the exposure and the
    risk hazard, there was not enough evidence. So we do need to
    continue that research, and that is something that we are
    committed to making progress on in our current fiscal year.
        The registry helps us considerably in being able to track
    these long-term outcomes of the veterans. So thank you, and,
    yes, we are committed to following up on that.

                                APPEALS BACKLOG

        Senator Udall. Great. Thank you very much. And, Mr.
    Pummill, I am happy to see that the Albuquerque VA has made
    significant progress, the percentage of backlog claims from
    around 60 percent in 2013 to 20 percent just last month.
    However, more veterans are unhappy with the decisions on their
    claims, which has led to more appeals. What can be done to make
    sure the appeals process does not fall victim to the same
    backlog that we saw in initial claims while also guaranteeing
    appeals receive the due process they deserve?
        Mr. Pummill. Senator, that is an excellent question.
    Appeals is the number one concern for VBA right now. The
    Secretary has directed us to get with our constituents and
    figure out how to resolve the current appeals process. We are
    meeting next with the VSOs, the veterans service organizations,
    the State and county veterans service organizations. We are
    basically locking everybody in a room for 3 days, and the
    Secretary told us you do not leave the room until you come up
    with something that you can present to the Congress to change
    the way that we are doing appeals right now.
        The appeals process is tied up in laws. It is one of the
    most complicated processes that exist in the Federal
    Government. We are going to need some kind of legislative
    change. What we need to present to you is something that we,
    the VSOs, and the veterans all agree that is the right thing to
    do so that we can offer that legislative change.
        Senator Udall. Thank you for that answer. And I have a
    couple of other questions--I am near the end of my time here--
    on reform of the Comp and Pen exam, and also rural telehealth,
    which I think is very, very important to our vets. And I see
    that you are trying to increase investments in that area and
    get additional telehealth out into rural areas. So I will
    submit those for the record and yield back, Mr. Chairman. Thank
    you.
        Senator Kirk. Mr. Tester.

                    MONTANA'S CHOICE PROGRAM WITH HEALTH NET

        Senator Tester. Thank you, Mr. Chairman. Dr. Shulkin, in my
    opening remarks, I talked about the problems veterans are
    having in Montana. Could I get your personal assurance that you
    will directly engage in the efforts to address the frustrations
    with veterans in my State with the Choice Program, specifically
    with Health Net?
        Dr. Shulkin. Yes, Senator. In fact, we have committed to
    having a team out to Montana. That is going to be the week of
    March 28th where Dr. Yehia and his team will personally be
    there to meet with Health Net and with your staff, as well as
    the staff at VA to work this out.

             IMPROVING VETERANS ACCESS TO CARE IN THE COMMUNITY ACT

        Senator Tester. Good. I want to follow up with you, but we
    can do that offline as we move forward.
        So, while pushing to make changes, I also fully recognize
    that Congress needs to do what we need to do to allow you to do
    your job. Today with a number of my colleagues, including
    Senator Udall and Blumenthal, I am introducing legislation
    called the Improving Veterans Access to Care in the Community
    Act. This bill includes a number of provisions, many drafted in
    consultation with the VA and other stakeholders, that will
    greatly empower your efforts to deliver more timely and quality
    care for our veterans.
        By including provider agreement language sought by the VA,
    this legislation would ensure that you are able to provide care
    in the community for veterans in a timely manner. Would you
    agree with that?
        Dr. Shulkin. Absolutely would agree with that.
        Senator Tester. Okay. The VA has previously said that a
    failure to address this issue would have enormous negative
    impacts on veterans' access to healthcare. A huge issue.
        Dr. Shulkin. We are seeing this every day, Senator.
        Senator Tester. So you would agree with that statement,
    too.
        Dr. Shulkin. I would.
        Senator Tester. Okay. By providing funding--spending--I am
    sorry. By providing spending flexibility across community care
    programs, this legislation would provide the VA with the
    ability it needs in places like Montana and other areas, by the
    way, to steer veterans to care in the manner that makes the
    most sense for that veteran. Would you agree it would do that?
        Dr. Shulkin. It absolutely will. It will help simplify the
    program for veterans, no question about it.
        Senator Tester. Okay. And by consolidating the VA's
    multiple community care programs, and there are many, into one
    single program with consistent and streamlined eligibility
    criteria and administrative rules, that that would reduce the
    confusion for veterans and VA employees alike. Is that correct?
        Dr. Shulkin. Yes, seven programs at least into one would be
    very helpful.
        Senator Tester. Okay, and streamlined.
        Dr. Shulkin. Streamlined.
        Senator Tester. Smooth.
        Dr. Shulkin. Exactly.
        Senator Tester. No red tape, or minimal. Let us put it that
    way.
        Dr. Shulkin. Yeah.
        Senator Tester. And it would greatly reduce administrative
    burdens for the community providers, too, then.
        Dr. Shulkin. Provider agreements and the streamlined
    funding would make it easier for community providers by a huge
    amount, Senator.
        Senator Tester. So you would anticipate that it would make
    it--this Choice Program better for the providers and, thus,
    entice them to come on board.
        Dr. Shulkin. And I would hope your largest provider in
    Montana would consider coming back.
        Senator Tester. Well, so do I. Together all of these things
    would assure that the VA is better able to utilize the tools at
    its disposal to better meet the healthcare needs of veterans.
    You would agree on that also.
        Dr. Shulkin. I would.
        Senator Tester. Okay. So we are going to be working with
    Chairman Isakson and others hopefully in this room so that we
    could get this to the President as quickly as possible.

                               VBA BUDGET REQUEST

        I got about a minute and a half in this round. Mr. Pummill,
    how does this budget ensure that the VBA is able to fulfill its
    mission 1 year down the road, 5 years down the road, even 10
    years down the road?
        Mr. Pummill. We are going to have to take the budget that
    you have provided to us, which I believe is an appropriate
    budget, and with the proper training of the people that we have
    on board, and with automation, take care of the needs of the
    veterans into the future. We know just from past history that
    20, 30, 40 years after a conflict, as veterans age we get a
    large number of veterans coming in for increased benefits and
    services.
        We have to be prepared for the Iraq and Afghanistan
    veterans that come in requesting those services in the future.
    We just need to capitalize on our automation systems and our
    training to make sure we are ready for them when they come.

                      MILITARY SEXUAL TRAUMA ADJUDICATION

        Senator Tester. Could you speak specifically to the
    progress that is being made, if any, and I hope there is being
    progress made on this, by the way, to more properly adjudicate
    claims involving military sexual trauma?
        Mr. Pummill. Yes, we have made massive and substantial
    changes in how we do military sexual trauma (MST). We have
    actually trained people--there is at least one person in each
    RO that specializes in that now so that they understand that it
    is something that is not always right out front in somebody's
    military records, that you have to dig and you have to find the
    markers that support that.
        Senator Tester. Okay. To test this a little more, do you
    believe that the standards for adjudicating PTSD claims from
    combat trauma should be the same standards used to adjudicate
    PTSD from claims from MST?
        Mr. Pummill. I believe that PTSD is PTSD. It should be the
    same.

                    FULLY DEVELOPED CLAIMS EXPEDITED PROCESS

        Senator Tester. Okay, thank you. Earlier this year I
    introduced legislation with Senator Sullivan and some others
    that would provide veterans with the option of filing a fully
    developed appeal that would be adjudicated through an expedited
    process. Do you support that? Do you think it is a step in the
    right direction?
        Mr. Pummill. I think it is a step in the right direction.
    That is one of the things that we are going to be pushing at
    our meeting next week.
        Senator Tester. Do you think other changes need to be made?
        Mr. Pummill. Yes, I do.
        Senator Tester. What are they?

                            SIMPLIFY APPEALS PROCESS

        Mr. Pummill. We have to simplify the appeal process so that
    there are not so many bites at the apple. The best example is a
    veteran who has been appealing for 25 years and has added 27
    different variances to his claim as he goes through. That ties
    up the whole system. It is just a waste of everybody's time.
        Senator Tester. Do you have any statistics on claims that
    are put forth that are bogus?
        Mr. Pummill. Not off the top of my head. I do not know. We
    would have to get back to you on that. Frankly it is my
    experience, it is not very high. The vast majority of veterans
    are honest and forthright. They are just frustrated about how
    long things take. I do not see very much fraud, to be honest
    with you.
        Senator Tester. Okay. I will wait for the second round.
    Thank you, Mr. Chairman.
        Senator Kirk. Mr. Schatz.

                          TELEHEALTH AND TELEMEDICINE

        Senator Schatz. Thank you, Mr. Chairman. Dr. Shulkin, I
    wanted to talk to you about telemedicine and telehealth. I know
    VA has done leading-edge work in this space. I want to--I want
    to ask you two questions. First of all, generally speaking,
    where do you see the future opportunities in telehealth and
    telemedicine in terms of serving veterans?
        Dr. Shulkin. Very briefly, Senator, VA is actually the
    largest provider of telehealth services, 2.1 million visits
    last year, but we need to be doing much more. We need to be
    going to mobile devices because that is where people are
    carrying their information. And we need to be using telehealth
    as a way to keep veterans at home and out of institutions, and
    having to have them travel several hundred miles to reach
    facilities. They should be able to get the care where they are.
        Senator Schatz. So we have a different problem on the
    Department of Health and Human Services (HHS) side. They lack
    some of the statutory authorities that you have. But I have a
    concern in terms of funding requests because it seems to me
    that you--and this is great. You expect the number of veterans
    receiving telehealth services to increase by 12.6 percent
    through 2017, but you have asked for a roughly 5 percent
    increase in funding. Now, that may be because this is a highly
    leveraged thing, but I want to--I want to understand that
    discrepancy.
        Dr. Shulkin. Yeah. VA, because of its early adoption of
    telehealth because, frankly, we have needed to do this, has
    invested hundreds of millions of dollars in infrastructure that
    can be leveraged, and we can add to its capabilities without
    dollar-for-dollar investments.
        Senator Schatz. How did you get to the 12.6-percent target?
        Dr. Shulkin. The 12.6-percent target was done out of our--
    out of our projections, out of our enrollment projects, and
    targeting specific areas that we believe that we can expand.
    Quite frankly, I think that is conservative when you see what
    is happening in the healthcare industry. We are seeing much,
    much larger increases year to year. And so, I think that that
    will be a conservative estimate.
        Senator Schatz. How much of the challenge is introducing
    patients to telemedicine, you know, at the front end? It seems
    to me that on the one hand for psychology, psychiatry, case
    management in terms of mental health services, there might be
    less--eventually less of a barrier to accessing services. But
    on the front end, it may just seem odd for people to utilize a
    device to get the services they need. So how are you dealing
    with that sort of getting the veteran through the threshold?
        Dr. Shulkin. Well, you know, as you know, I have spent my
    career in the private sector, so coming into VA months ago this
    was one of the surprises, how many different specialties VA is
    using telehealth in. It is doing teledermatology,
    telepathology, teleradiology, telehepatology. I mean, all sorts
    of things.
        And we have studied the acceptance use of veterans, and it
    is sky high. It is in the 90s, and we are publishing on this
    now. So the acceptance really has been extraordinary because it
    saves a veteran from sometimes having to travel hundreds of
    miles, and they are getting the care that they need.
        Senator Schatz. Absolutely, and thank you for your good
    work in this area. You can count on me to try to support this
    as much possible. And if you can keep talking to HHS, we would
    really appreciate it as well.
        Dr. Shulkin. Sure, absolutely.

                ELECTRONIC HEALTH RECORD AND GAO HIGH RISK LIST

        Senator Schatz. I want to talk to you about the electronic
    health records. I was told that the initial read-only version
    of the system would be available by the end--would be available
    on some sites in 2015 with full deployment by 2018. But last
    fall, GAO testified that you are not on track. DOD is not on
    track. And so, my question is, what is the new timeframe, and
    when do you anticipate being taken off the GAO's high-risk
    list?
        Dr. Shulkin. Okay. I think there are a couple of questions
    there. I think your question about the electronic medical
    record is about interoperability with the Department of
    Defense?
        Senator Schatz. Yes.
        Dr. Shulkin. We currently have a joint viewer up and
    operational. In fact, 35,000 VA providers are actively using
    this today. So if you come into a VA, we are able to access
    through what we call the joint viewer DOD records. So we are
    currently operational, and would be glad to demonstrate that
    for you if you are open to that, how that is working.
        The GAO high-risk list, we were put on that list by GAO not
    specifically because of the electronic medical record, but many
    other issues. We, again, are meeting with GAO on a regular
    basis and actively working that list down to close all the
    recommendations. And you do not come off the GAO list very
    quickly. You really have to demonstrate that you have addressed
    these commitments. And so, we are working towards that. We hope
    that we are making good enough progress to be able to give an
    indication of where are towards the end of the year.
        Senator Schatz. Thank you.
        Senator Kirk. Mr. Boozman.
        Senator Boozman. Thank you, Mr. Chairman, Ranking Member.
    Thank you all very much for being here. We appreciate your hard
    work.

                         STANDARD PRODUCTIVITY MEASURES

        Dr. Shulkin, I know that one of the things I have been
    pleased with that you all really are trying to do a good job
    regarding metrics, measuring things. In regard to being able to
    determine the cost associated with providing care versus buying
    care in the community, I know your IT infrastructure is maybe
    not quite as good as you would like for it to be. Can you talk
    a little bit about that and how you are trying to determine
    that, again, in a difficult environment?
        Dr. Shulkin. Right. Thank you, Senator. We are very data
    rich at the VA. It is one of our strengths, why we have been
    able to drive improvements particularly on the clinical side.
    And wherever we can, we are trying now to use metrics that we
    can compare to the private sector because I think that is
    appropriate. In fact, we have too many metrics, so we are
    trying to pare it down to what is most important.
        The area that we struggle the most with are financial
    comparisons because what we do in the VA does not directly
    compare always--sometimes it does, but does not always directly
    compare to the private sector. So we have begun to measure
    relative value units (RVUs), so we know--which is standard
    productivity measure both in the private sector and the VA, so
    we can tell you VA actually increased its RVU, its productivity
    measures, 10 percent last year.
        The direct financial comparisons are a challenge, so what
    we are beginning to do is to ask specific questions. What would
    it do for an eye exam in the VA healthcare system versus
    outside? And so, we are going to be making specific choices
    about what is better for veterans, what is better for taxpayers
    as part of the new Veterans Choice Plan to bring those
    financial considerations in place.
        And let me just ask whether our Chief Financial Officer has
    a better or more specific answer about these comparisons.
        Mr. Yow. One of the challenges we have had is we do a lot
    of things in the VA that are not comparably done in the private
    sector, things like homeless programs, things like the fact
    that we have a richer mental health benefit, things like if we
    have a richer long-term care benefit program than in the
    private sector insurance would have.
        So when we get asked questions like cost per RVU, it really
    becomes an apples and oranges comparison unless we try and
    drill down and get that further. And our systems are so old
    right now, it is very difficult for us to go through to get
    that granularity to do that. It is not for lack of wanting that
    we have not been able to do it thus far.

                      HEALTHCARE FACILITIES BUDGET REQUEST

        Senator Boozman. Very good. Not in follow up, but another
    question to our chief financial officer, the VA budget requests
    $836 million for the activation of new and enhanced healthcare
    facilities. What are the VA's priorities for the upgrades? How
    much of this funding will be used for new facilities versus
    enhancements? And has the VA determined where the projects will
    be located?
        Mr. Yow. Yes, sir, we have a list that we provided the
    staff, and we can provide that to you again, the specific
    projects locations. They are all from what we call major
    construction or major lease projects, so they are essentially
    new facilities more so than renovations or replacement leases.
    That is where we fund activations from.
        It primarily does two things. It does what we call non-
    recurring cost, initial outfitting, if you will, of a new
    facility, things like equipment, supplies, and so forth, to get
    it ready to open its doors. And then recurring costs for about
    a 2- to 3-year period as they prepare to open their doors and
    make their way into the healthcare projection model and get
    funding for them into the future.
        So, for example, if it is a recurring lease and there is no
    new staff, they would not need as much recurring funding. But
    if it is expanding or a brand new facility, we would have to
    hire new staff as well. So it varies a great deal by project.
        Senator Boozman. And the average age of our infrastructure
    is what, 50?
        Dr. Shulkin. We have about 60 percent of our facilities are
    50 years old or older.
        Senator Boozman. Very much. Thank you, Mr. Chairman. Thank
    you. Thank you, guys.
        Senator Kirk. Mr. Murphy.
        Senator Murphy. Thank you very much, Mr. Chairman. Thank
    you all for your fantastic work.

                       OTHER THAN DISHONORABLE DISCHARGE

        You are probably aware of reports that the U.S. Army has
    forcibly separated over 22,000 soldiers for misconduct after
    they return from deployment in Iraq and Afghanistan that were
    also diagnosed with mental health problems or traumatic brain
    injury (TBI). As a result of this disclosure, the Army
    inspector general and the surgeon general are going back and
    doing a review of those 22,000 cases and apparently are going
    to make recommendations as to some of them and some
    recommendations going forward.
        But as I understand it, the VA looks at the character of
    discharge to determine whether a person meets the basic
    eligibility requirements, and you determine whether the
    incidents that led to the discharge are found to be under
    conditions other than dishonorable. So you have essentially a
    chance to look at those conditions of discharge and make a
    determination as to whether they would be able to be able for
    benefits.
        So I do not know whether this is a question for you, Dr.
    Shulkin, or for you, Mr. Pummill, but to ask a question about
    what has the VA done in the wake of this disclosure, and
    pending this review that is happening in the Army, what can you
    do to perhaps remedy some of those 22,000 who should have not
    been given a discharge under non-medical terms?
        Mr. Pummill. Yes, Senator. First of all, it is a serious
    concern for the VA. We know that most of these men and women
    are going to end up homeless, that they already have one foot
    in a bad place, and this does not help. Some of the things that
    we--first of all, we cannot change the character of discharge.
    Only the military service can do that. We do contact the
    veterans. We advise them how to get to the Army Board for
    Correction of Military Records or the equivalent in the other
    services so they can request a change in their discharge and
    upgrading their discharge.
        We have worked with the services. The services have sent
    out letters to veterans saying, hey, if you feel that your
    discharge may have been improper because of something that
    happened to you in combat or deployment, please come back, file
    your paperwork. They are not getting a very high response rate,
    so we sent letters out underneath the Under Secretary of
    Benefits' signature to those same veterans to see if maybe a
    letter from the VA saying, hey, go back to your military
    department, if we could help it out.
        Senator Murphy. But let me just clarify.
        Mr. Pummill. Certainly.
        Senator Murphy. My understanding is that you have the
    ability to review the circumstances of the discharge. If there
    is a discharge for misconduct, you are saying their only
    recourse is to go back to have the conditions of discharge
    changed.
        Dr. Shulkin. Senator, that is our understanding that this
    is a Department of Defense decision. This is not a VA decision.
    And we are prohibited by law from treating somebody in what we
    call bad paper, a dishonorable discharge.
        Senator Murphy. And that is your understanding as well?
        Mr. Pummill. It is my understanding that we cannot change
    the character of the discharge, Senator, yes.
        Senator Murphy. Okay.
        Dr. Shulkin. One of the things that VA is doing because
    they take this very seriously, and I know this is where you are
    coming from, too. It is one of the reasons why we have worked
    so hard to develop strategic partnerships with community groups
    because when we find these veterans and they show up at VA, we
    are working with community groups to actually help in the
    treatment of these patients.
        Senator Murphy. Mr. Chairman, I just want to underscore
    this, and Senator Tester has been a great leader on this. There
    are 22,000 veterans out there today just since 2009----
        Senator Kirk. Yes.
        Senator Murphy [continuing]. Who have been discharged for
    misconduct, who prior to that discharge had a diagnosis of TBI
    or PTSD. There is an ongoing investigation as to the
    circumstances of those discharges. We as a subcommittee have to
    grapple with the fact that you have--it is not just what we
    know about it, right? Twenty-thousand brave men and women who
    were potentially wrongfully discharged for misconduct who
    cannot access VA services who are going to be out on the
    streets. So I would love to follow up with you----
        Mr. Pummill. Yes.
        Senator Murphy [continuing]. On this topic to think about
    ways in which--while this review is happening. I have asked for
    a moratorium on discharges for misconduct with respect to
    individuals who have been diagnosed with PTSD or TBI during
    this period of review. The Army has not looked favorably upon
    that request, so the numbers are just going to continue to
    mount.
        I have another question, but I will put it in for the
    record.

            CONNECTICUT CAMPAIGN TO END CHRONIC VETERAN HOMELESSNESS

        Senator Murphy. I just want to thank you for your work with
    Connecticut on our campaign to end chronic veteran
    homelessness.
        Dr. Shulkin. Congratulations.
        Senator Murphy. We are the first big State in the Nation to
    do that.
        Dr. Shulkin. Yes.
        Senator Murphy. And that is a consequence of a dramatic
    increase in HUD vouchers, which we desperately need to keep or
    we will slide back on that commitment. But it is also a
    consequence of your very successful integration of mental
    health services with physical help services that has allowed us
    to make those great gains. And I congratulate you on doing
    something in the VA that the private sector should be doing at
    a much greater rate.
        Dr. Shulkin. What we have learned, Senator, is this is all
    about working with the community, and the Connecticut
    leadership coming out of the Governor and your community groups
    have really--they deserve the credit for this. And we thank you
    for your support.
        Senator Murphy. Thank you very much, Mr. Chairman.
        Senator Kirk. Senator Cassidy.
        Senator Cassidy. Dr. Shulkin, you have got an impressive
    resume, man. I wish my resume looked like yours.
        Dr. Shulkin. I think you are doing all right.
        Senator Cassidy. My son does not think so, but that is a
    son, huh? We are both physicians, so as you know there is a
    collegiality. I will go around the country and visit with
    different--Murphy and I have this connection with mental
    health, so the mental health folks in the VA will come and
    approach me. I have learned, at least this is a little bit
    dated, but your administration is new, so I will ask you again
    to see if it has changed.

                    MENTAL HEALTH NO-SHOW RATE APPOINTMENTS

        There is great variability in the systems used for mental
    health. I gather there might be a place in Kansas which is
    really working well, but you go elsewhere and the doc will,
    say, oh, yes, if they miss their appointment, they are
    scheduled 3 weeks later. The better system is to leave some
    slack at the end of the day, and to know that there are going
    to be a certain percent late, but that some of the folks will,
    you know, frankly be pleased that they are less busy.
        To what degree do you have the ability to look at no show
    rates, average time to rescheduling, average time for new
    appointment, et cetera, and compare them against one another?
    If you are able to do that, what is the current variability
    between different clinics?
        Dr. Shulkin. Excellent questions. We have a 20-percent-plus
    no-show rate in mental health appointments.
        Senator Cassidy. Now, is that standard or, no, here it is
    three, and there it is 60?
        Dr. Shulkin. There is a wide spectrum. And so, what you are
    describing is the situation that I found when I came in, which
    is that VA has tremendous variability in many of these clinical
    measures. And what healthcare systems that are accepting the
    challenge of being healthcare systems are doing now are
    decreasing that variability. They are identifying best
    practices and standard----
        Senator Cassidy. Totally get that. So that is what your
    expertise is.
        Dr. Shulkin. Absolutely.

                             BEST PRACTICES SYSTEM

        Senator Cassidy. To what degree can I go to a clinic now
    that formerly told me, oh, man, we got all kinds of no shows,
    and I cannot get anybody to change it, to, no, we actually have
    the system such as best practices?
        Dr. Shulkin. The first thing that we have done already is
    we have identified these best practices. We had a call for best
    practices in the last month where we identified 250 of the best
    practices in VA, many related to access. Today we have brought
    in those best practice leaders to share and map out their best
    practices. Tomorrow we are bringing in the industry leaders in
    how to do best practice implementation to advise VA.
        We are committing towards the end of the year to have these
    best practices in place. It is exactly what we need to do, and
    it relates to what the GAO found that put us on the high-risk
    list.
        Senator Cassidy. So I know that--again, you and I both know
    this--in healthcare systems, it is data, data, data. To what
    degree can you share with each of us as regards what the
    institutions in our State are doing at this moment in time, and
    then the trajectory of how they are improving over time.
        Dr. Shulkin. Be glad to do that. VA is actually very good
    at producing those metrics. We have clinical metrics, outcomes
    called the sail measurement system, which we can share with you
    and show improvement, or actually those that are not improving,
    and on access measures, lots of data that we can share and
    other process measures. And, in fact, we are targeting this.
    This is one of my five priorities to implement these best
    practices.

                         FRONT LINE DISCIPLINARY ACTION

        Senator Cassidy. Now, also related to all this, again, the
    kind of conversation someone will tell me, but will not do it
    under oath, that there is at the front desk perhaps someone who
    is abusive to that patient who comes in, the veteran who
    perhaps is different because he has a mental health issue, and
    very rude. We have focused a lot on high-ranking officials
    within the VA and the difficulty of replacing them. What this
    doc tells me, I cannot get rid of that clerk, that that
    actually has to go here and then there.
        I toured a VA and asked the director, and he goes, well,
    there is a report, and we counsel, and it comes back. What I
    really got a sense of is that it would take months, maybe even
    a year or two, in order to get rid of someone who is at the
    front desk. Again, not talking about the person padding their
    check by everything we have read about in the paper, but that
    person right there speaking to that vet who is having a hard
    time keeping it together, and, therefore, acts a little
    strangely.
        To what degree is that true, and to what degree do the
    union contracts kind of limit the ability to discipline,
    replace, make it better for the veteran? I will stop there.
        Dr. Shulkin. Well, one of the things when the Secretary
    came in, as you know he had us all sign and agree to the I Care
    Principles, of which respect and customer service is right
    there. When we find that people are not sharing our values, my
    expectation is, the Secretary's expectation, is that we are
    going to take actions to remove people who are not following
    the VA values.
        Then you get into due process, and we have due process, and
    we need to adhere to it, and it is longer than some of us want
    and more complex. But we are not going to let somebody be
    disrespectful to veterans and stay in those positions.
        Senator Cassidy. Now, let me say I have worked in a public
    hospital, and there are 95 percent great people struggling to
    make it work, and there is 5 percent that really--but that 5
    percent becomes the face of the organization, and at times that
    one person destroys it for that patient, if you will. Believe
    me, I have worked in a hospital in Louisiana. I know that.
        You spoke of due process. Let us assume that there is
    someone, as we have described, as I have been told of. I have
    learned to say what I have been told, not what I know, but that
    what I have been told of. How long would it take for that
    person to be dismissed?
        Dr. Shulkin. Our expectation is that if there is a behavior
    that is not consistent with our values, they would be removed
    from that position, the veteran patient position. And then we
    have to assign them to other work, hopefully not involving
    direct contact with veterans, and let the due process, you
    know, work its way through. But it would not be acceptable
    because of bureaucracy and red tape to allow a person who we
    know is not sharing our values to continue with a direct
    veteran-facing position.
        Senator Cassidy. So that person could be reassigned fairly
    quickly----
        Dr. Shulkin. Absolutely.
        Senator Cassidy [continuing]. As in a month or a week?
        Dr. Shulkin. Oh, no. I am talking about immediate. When
    somebody comes to us with a concern or allegation, it is
    investigated because, as you know, as you said, in a lot of
    these situations in my experience, you know, it is not always
    what you first hear the story.
        Senator Cassidy. I get that.
        Dr. Shulkin. So you have to get the facts. But if the facts
    confirm that this is a person who is not treating veterans the
    way that we believe they should be treated, then they should be
    removed from that position immediately, reassigned to something
    else while there is due process. There are certain violations
    that would be immediate termination, and we certainly do that
    as well.
        Senator Cassidy. There is an inspector general report about
    a fellow who actually killed a patient who is still on the job,
    so that is kind of what--just to say that is high profile. But
    just to say it seems as in in theory sometimes it takes a long
    time.
        Dr. Shulkin. I would like to get that specific situation
    from you and then follow up with you on that. That certainly is
    a circumstance that I would want to know about.
        Senator Cassidy. Okay. I yield back. Thank you.
        Senator Kirk. Mrs. Capito.
        Senator Capito. Thank you, Mr. Chairman, and thank all of
    you. I apologize for not being able to hear the entire hearing,
    but we have got several going on at the same time, as Senator
    Murray and I have seen each other a couple of times today. So I
    appreciate your--and so if I repeat a little bit, please excuse
    me.

                   CHOICE PROGRAM THIRD PARTY ADMINISTRATORS

        I wanted to talk about the Choice Program. We just had some
    veterans in our office the other day. In one instance, the
    veteran had an appointment with a specialist, only to find when
    he called that office, the entire facility did not have that
    type of specialist. And it was the second call that that
    facility had had for that type of specialist. The same veteran
    had another instance where he had called Health Net Choice four
    times to have an appointment made and did not get satisfaction.
    We are hearing these stories all over the place.
        And I guess, what is being done from your perspective, and
    I am going to say are these the third-party administrators that
    are not filling the gaps? What are you all doing to hold the
    third-party administrators' feet to the fire here?
        Dr. Shulkin. Okay. I should start off by saying that the
    Choice Program is not working the way that any of us want it.
    So I am aware that you are probably not the only Senator who is
    getting a lot of these issues.
        We are continually meeting with the third-party
    administrators, and not only letting them know it is our
    expectation that they adhere to the contract. The contract says
    that a routine consult needs to be scheduled in 5 days. An
    urgent consult needs to be scheduled in 2 days. And when they
    are not able to do that, we need those authorizations returned
    to the VA so we can use our community relationships to help the
    veteran.
        We are not only working with them, but we are throughout
    the country now trying new models of delivering care, like
    embedding their staff alongside our staff to be able to try
    this. So we are doing this in Alaska and several other sites.
        But the program is just simply not working the way that we
    intended it to work, and we are going to stick at this until we
    can get this working better for veterans. So we would ask if
    you are hearing specific veterans having issues, please let us
    know with their names so we can help them.
        Senator Capito. Okay. That I will do, and I know that it
    just seems like there is a lot of confusion.
        Dr. Shulkin. Yes.
        Senator Capito. Best intentions aside, it is still, as you
    said. And I appreciate your candor there really.
        Dr. Shulkin. One of the things that you missed, Senator, is
    Senator Tester had mentioned that part of this we need your
    help on. And Senator Tester and Senator Blumenthal and Udall
    just submitted a bill that helps us consolidate community care,
    simplify this for the veterans, simplify it for the VA. And so,
    this is where we could use your help because have identified
    where the program needs to change and what we have learned over
    the past year. That would help us a great deal.

                        VETERANS TO AGRICULTURE PROJECT

        Senator Capito. Thank you. Thank you. One of the programs
    that I have been sort of interested, it is a small program, and
    it is growing--it is in West Virginia and growing in some other
    States. And it is the West Virginia Warriors and then Veterans
    to Agriculture Project. It seems to have met with quite some
    success with some of our younger veterans.
        So I do know, Mr. Pummill, I do not know who would take
    this question. What are you doing with--in terms of encouraging
    veterans to transition to agriculture? Is that part of an
    emphasis within the VA, and how is that going?
        Mr. Pummill. We have expanded what we encourage veterans to
    do when they leave military service greatly under the new
    transition program. It used to be, you know, pretty much your
    only option was use the GI bill and go to college. Now we are
    offering a GI bill, agriculture, entrepreneurship where they
    can learn how to start their own business, or technical
    training, technical schools, truck driving, things like that,
    realizing that one size does not fit all. And we are trying to
    find the thing that best suits that individual and lead them in
    the transition to that
        The best success we have had, like you just said, in West
    Virginia is working with the State and local agencies so that
    when we know where the individual, which State he or she is
    going back to, they have somebody to link up back there with
    what they need to do.

                       OPIOID DEPENDENCE AND ALTERNATIVES

        Senator Capito. Right. Good. And then lastly, Senator
    Baldwin and I have under her leadership worked on the Opioid
    Safety Act, which as a result for me was from a young man,
    Andrew White, who I believe died in his sleep, I think, as a
    result of a shoebox of prescriptions that had been filled--
    prescribed to him by the VA.
        What are you doing in this area now that you have more of a
    directive and I think more of an area of emphasis because of
    what we have done here?
        Dr. Shulkin. I think as you know, and we appreciate your
    leadership in this, the opioid dependence crisis is really a
    national crisis. I was at a dinner last night with the director
    of the Centers for Disease Control and Prevention (CDC) who
    said this is the area he is most concerned about nationally.
    Fortunately I think VA, and thanks again to several of you who
    have taken the lead on this, has really understood this for
    several years. And we are doing really what the rest of the
    country should be doing. Our numbers are going down while the
    rest of the country is going up.
        Senator Capito. In terms of prescribing?
        Dr. Shulkin. In terms of number of veterans on opioids and
    finding alternatives for them. So we have instituted mandatory
    training. We have instituted mandatory reporting into all the
    States that require the drug monitoring programs. We use a
    stepped management approach. We are encouraging providers with
    what we call academic detailing where we train them to use
    other non-medication approaches to pain management, like
    integrative therapies. We have adopted not only the CDC
    guidelines, but work with DOD on DOD-VA guidelines for opioid
    management.
        So we are making progress. We need to do much, much more,
    but our numbers are coming down, and I think we are headed in
    the right direction. And we are going to stick at this until we
    can actually get to this to the very minimum number of patients
    who need to be on opioids.
        Senator Capito. Thank you.
        Senator Kirk. Mrs. Murray.
        Senator Murray. Thank you, Mr. Chairman.

                               CAREGIVERS PROGRAM

        Mr. Secretary, Dr. Shulkin, I am really pleased to see that
    you are requesting a significant increase for the Caregivers
    Program, which, as you know, gives veterans more control over
    their own healthcare and supports the loved ones who sacrifice
    their life, their own time, their health, their energy to
    provide that care. This is really a personal issue for me. My
    mother cared for my father, who was a World War II veteran,
    after he developed MS, and I know the impacts to these
    families.
        So now as demands on the VA continues to rise, I strongly
    believe that the Caregivers Program is really a key to helping
    VA carry out its duty to provide accessible high-quality care.
    And to make this program work, the VA is continuing to increase
    the number of Caregiver support coordinators. Considering the
    expected increase in Caregivers, and if we can finally pass the
    legislation to expand the Caregivers Program to all veterans, I
    am concerned we will need more.
        And my question for you today is, is the workload for
    individual Caregiver support coordinators going down, or do you
    need more staff to keep up with the demand?
        Dr. Shulkin. Yeah, it is a great question. This is--Senator
    Murray, I know you are passionate on this, and I thank you for
    that. This is an area that VA is so different than the private
    sector in recognizing this and supporting Caregivers.
    Interestingly, the data is coming out now to say this is a
    cost-effective way to manage healthcare costs.
        Senator Murray. I am not surprised, but I am glad there is
    data.
        Dr. Shulkin. Without Caregivers, these patients end up back
    in the institutions, and they do not want to be there, and it
    is very expensive to keep them there. So we are expanding this.
    And you are correct, we do need to keep up with the caseload
    because Caregivers need support. Elizabeth Dole, Secretary
    Dole, is very articulate about this, and has actually been
    working with us to help us support our Caregivers.
        So the workload is going up, but we are so pleased to be
    able to expand this program with this budget request.
        Senator Murray. Okay, great. Secondly, I have heard from
    veterans in my home State of Washington who are frustrated
    always about waiting months or even longer to get answers to
    questions about benefits and care. So I am really pleased to
    see that you are requesting significantly more funding for both
    the Health and Benefits Administration. That is really
    essential to providing good customer service.
        But I am concerned again whether that will be enough and
    whether the Department is managing its money appropriately. The
    crisis that we faced last year when the VA threatened to shut
    down the healthcare system and nearly ran out of money cannot
    be repeated. So the funding that we provide in 2017 and 2018
    has to account for major increasing demands on the VA,
    including providing, as you know, treatment for hepatitis C,
    increasing demand for care both in the VA and in the community,
    and the costs associated with the VA's new proposal to
    consolidate care in the community.

                          FORECAST FOR BENEFITS DEMAND

        So in light of all of those pressures, how do you
    anticipate demand for care benefits growing over the next 2
    years?
        Mr. Manker. So we--as look at the caseload, what we see
    is--in 2017 and 2018 we see an increase in the request for
    claims. And the second and third order of effective claims is
    as folks file claims that we--they go over to the Health
    Administration for care there.
        Senator Murray. So you see increasing demand.
        Mr. Manker. We do.
        Senator Murray. And does this budget accommodate that?
        Mr. Manker. I know from the VBA perspective it does, yes.
        Senator Murray. Okay, because that is what we hear
    constantly from our constituents when we do not have enough
    people out there to process. So we are going to be looking at
    this closely.

                           CAREGIVER TRACKING SYSTEM

        Let me go back again, Secretary Shulkin, to you. The budget
    request actually attributes most of the increase in the
    Caregivers Program to more Caregivers receiving stipends. But
    as you know, one of the GAO recommendations for the Caregiver
    Program is to create a new IT system to administer the program
    and to make it more efficient. This system will be really
    essential as we come closer to expanding the Caregiver Program.
    I wanted to ask you, is there enough funding in your request
    for the new Caregiver Tracking System, and will it be ready on
    time?
        Dr. Shulkin. Senator, that is something that I going to ask
    if I can back to you on because that is--I am going to need to
    work with counsel and the OI&T on that, and make sure that
    there is the appropriate resources to do that. And if I could,
    I would get back to you.
        Senator Murray. Okay. If you could answer me for the
    record.
        Dr. Shulkin. Yes.

        [The information follows: the requested information was not
    available at the time this publication went to print.]

        Senator Murray. And that is a really important part of
    making this work effectively.
        Dr. Shulkin. Yes.
        Senator Murray. So we need to have that ready, on time, and
    at capacity.
        Dr. Shulkin. Absolutely.
        Senator Murray. Thank you very much, and I will submit the
    rest for my record--questions for the record.
        Senator Kirk. Now, the Senator from King Cove, Alaska.

                         VA HEALTHCARE SYSTEM IN ALASKA

        Senator Murkowski. Thank you, Mr. Chairman. Dr. Shulkin, it
    is has been about a year since you last visited my office. I do
    appreciate you coming to the State last summer, but I regret to
    tell you that we have seen very little follow up on the state
    of the VA health system in Alaska. So let me tell you where I
    think we are right now in Alaska, and this is not necessarily
    through my eyes. This is through the members of the Veterans
    Service Organizations that have been flooding my office in the
    past several weeks.
        Before you and Secretary McDonald came to your jobs, we had
    a VA system--a healthcare system that worked up in the State.
    Our vets were seen in a timely fashion. Those that had
    conditions that could not be handled by the VA were seen in the
    community at fee-based care providers. We had good partnerships
    with our community health centers and with the native
    healthcare system to back up.
        But the vets who have been coming in, again, over these
    past weeks and when I have been up home, they are telling me
    that the current leadership team at the VA took a system that
    was working well in our State and went about dismantling it.
    And a couple of illustrations here with regards to the Choice
    Act that did not require the VA abandon its legacy fee-based
    programs. VA reads it otherwise, and canceled fee-based
    appointments. These vets were forced to deal with the
    dysfunctional TriWest referral system. They still are. Veterans
    who have been forced to use the Choice Act then discovered that
    VA did not pay for their care as they had done previously. And
    now what we are getting--the letters that I am getting from
    vets are saying my bills are being sent to collection agencies
    when the VA does not pay.
        We do not have very deep representation with medical
    specialists, but specialists who were willing to take the
    Choice card are now telling me they do not want to have
    anything to do with the hassle, nothing at all. So we have got
    a loss there.
        We had a great and innovative director at Anchorage VA
    Healthcare System. Not there anymore. That position has still
    not been filled. There is still no full-time physician at the
    Wasilla CBOC (Community-based Outpatient Clinic). The VA is
    able to find some providers who may consider relocation, but
    then they pull out after the relocation promises that have been
    made by the VA recruiters are withdrawn because they never
    should have been made. And, again, we are not seeing VA senior
    leadership coming and saying we have got--we are willing to
    work with you. We are going to solve these problems.
        So the question to you, Dr. Shulkin, is how would you
    assess--I have given you my assessment and the assessment of so
    many of the veterans who are coming to my office. But how would
    you assess the state of the Alaska healthcare system for the VA
    in my State right now? What needs to be done to restore the
    access and the quality of care that our veterans had, but they
    no longer are experiencing?
        Dr. Shulkin. Okay. Well, you have mentioned a lot, Senator,
    and so let me try to briefly just tell how I look at this. I
    think that you have identified several things. So pre-Choice I
    think Alaska had a very innovative system that was working
    well.
        Senator Murkowski. It took a long time, but we got there.
        Dr. Shulkin. No question about that. Choice was implemented
    and system was changed. And I think that some of the situation
    you are talking about was dated a while ago where essentially
    we were not using fee-based programs. We were not using
    community care programs, and we were only using Choice. That
    situation has now changed in Alaska where after our visits up
    there, we are working very closely with the Indian Health
    Service, we are working with the South Central Foundation, we
    are working with the DOD facilities there where I think that
    you are not seeing some of the problems that had existed
    before.
        The Choice Program still continues to be a challenge, and
    that is why we have worked closely with TriWest to actually
    embed TriWest employees in with our VA people, and there are
    three embedded TriWest employees today in the Anchorage
    facility. It still is somewhat problematic, and that is why we
    are continuing to ask for a contract modification so that VA
    can take over the scheduling of those patients, very similar to
    what you had before. And we are waiting for that contract
    modification to be approved.
        So Alaska is--was a system that, frankly, was a great model
    for the country. It went through some tough times. We are
    trying to get that back. I think that part of what we are
    trying to do with this new legislation that Senator Tester has
    taken the lead on is to bring back the customer service pieces,
    what you had in Alaska back to the VA. And we know that we have
    a lot of work to do.
        Senator Murkowski. Well, and I am sure you can appreciate
    the frustration of the many veterans who for years had
    struggled with a system that did not work, and then through the
    good work of cooperation and collaboration between IHS,
    community health centers, we kind of built this system.
        Dr. Shulkin. Yes.
        Senator Murkowski. And we were providing the care that our
    veterans deserved and expected, and we wanted to be able to
    provide, and it worked throughout agencies. And then we come in
    and we have got this top down approach, and we are starting all
    over. And your term ``somewhat problematic''--``somewhat
    problematic''--is not what I am hearing from our veterans. They
    are saying it is fouled up! It is screwed up. It is a mess. And
    it is unacceptable. It is unacceptable because we know how to
    correct it because we corrected it. And then you come in and
    you create chaos.
        So we had asked in the fiscal year 2016 approps bill that a
    report be submitted on the current status of VA healthcare in
    Alaska. We are waiting for a status of that report. You know,
    you suggest that some of the information that I have here is
    dated. It is not--it is not dated, not based on the experience
    of veterans who are trying to access their healthcare now, who
    are getting these bills from collection agencies now. This is
    not based on some things that were happening a year ago, 6
    months ago.
        So I am--we will have Secretary McDonald here before the
    subcommittee, and I certainly intend to ask him what corrective
    actions plans you have regarding all of these issues that I
    have outlined. In the interim, it might be helpful certainly
    for you all and my staff to meet to have a more comprehensive
    conversation about the quality and the access because what is
    happening now is the--is the quality of care, the access to
    care has been compromised for these Alaskan veterans. And there
    will be no compromise. There cannot be no compromise for these
    healthcare benefits.
        And, again, I think part of the frustration that we have is
    we have come so far only to see it turned over literally within
    the course of a couple months. And you cannot pull the rug out
    from underneath those who have earned these healthcare
    benefits, and that is exactly what your system has done.
        And we thought that the visits to Alaska were going to
    materialize in some changes that our veterans could see, but I
    am pressing each and every one of them. I am saying you got to
    be honest with me because the information that we get from you
    is the most telling. And what they are telling me is it has not
    been fixed, it has not been corrected, and they are not doing
    enough.
        There is no compromise on what our veterans have earned, so
    know that we are going to keep working at it. And it would be
    great if we could set up some time to sit down on that.
        Dr. Shulkin. Senator, I just want to mention a few things.
    First of all, I appreciate where you are coming from. I heard
    it personally----
        Senator Murkowski. I know you did.
        Dr. Shulkin [continuing]. In Fairbanks, and Anchorage, and
    the Kenai Peninsula. And these were packed houses of people
    saying exactly what you are saying.
        But I just do want to say a couple of things that I hope
    will be helpful. First of all, this was the Choice Program.
    This was Congress' program that we are trying to make work, and
    we understand that it is not working well, and that is why we
    are working with you, and we look for your support to make the
    changes that we need to make.
        But currently, 96 percent of all appointments are scheduled
    within 30 days in Alaska. We have 120 outstanding consults more
    than 30 days that are urgent consults. They are all out in the
    Choice Program. They are all scheduled, but that is too long,
    and that is what we are working with TriWest to fix to make
    sure that we can improve that.
        In terms of putting veterans in line with their own credit,
    unacceptable. We do not want that happening. We have
    established a toll free hotline now that is 1 (877) 881-7618
    that veterans should call if they are being hounded by
    creditors so we can intervene on their behalf because we do not
    want them put in that position. And I know that is happening
    for people in Alaska and across the country, and we are going
    to--we are going to help them with that. Thank you.
        Senator Murkowski. Well, I look forward to our sit down.
    Thank you, Mr. Chairman.
        Senator Kirk. Senator Baldwin.
        Senator Baldwin. Thank you, Mr. Chairman.

          ADMINISTRATIVE INVESTIGATION BOARD ON MILWAUKEE DOMICILIARY

        Dr. Shulkin, as a result of concerns that I reported and
    shared with the VA, the VA convened an Administrative
    Investigation Board in October of last year to review many
    allegations regarding improprieties at the Milwaukee
    domiciliary. One conclusion reached by the Administrative
    Investigation Board, otherwise known as AIB, was that the
    domiciliary environment was not safe and secure.
        An issue raised to corroborate this assertion was that the
    non-inspection of veterans' belongings. Veterans were found to
    have alcohol, box cutters, and straight razors. More alarming,
    during the time of that review, while the AIB members were
    there, a veteran tried to commit suicide.
        Mr. Chairman, I would like to insert in the record a news
    article that appeared last night on CBS 58 in Milwaukee that
    has to do with the story that I am about to tell.
        Senator Kirk. So ordered.
        Senator Baldwin. Thank you.

        [The information follows: the requested information was not
    available at the time this publication went to print.]

        Senator Baldwin. In my view, this puts a finer point on the
    need to inspect what veterans and visitors are bringing into
    the domiciliary. Last year, a young veteran, a resident of the
    VA domiciliary in Milwaukee, he was recently out of a rehab
    program, overdosed on heroin, and was found dead in his room at
    the facility. My understanding is that he was able to bring in
    needles into the facility and potentially the drugs that caused
    that overdose. This is someone who came to the VA for help.
        Dr. Shulkin, I am very concerned about the whole
    domiciliary program. At my request, the inspector general's
    office is reviewing the issues surrounding the death of this
    young veteran. But I think we need to go a step further and
    reassess the program to determine whether security measures
    nationwide are appropriate, and whether domiciliaries are the
    right place for veterans such as ones who have attempted
    suicide or who have overdosed. It seems to me that a facility
    like this has lax oversight of its resident population, and may
    not be the best place for these veterans.
        So can you speak today to the security of VA domiciliaries,
    and whether you are willing to take a hard look at the
    appropriateness of the program for veterans who may need
    greater supervision?
        Dr. Shulkin. Yeah. Senator, what we are talking about is
    the best approach towards this issue that, frankly, is a
    national epidemic we are seeing all over the country on
    substance abuse. And veterans are a particular risk for
    substance abuse.
        And so, the domiciliary programs are part of our approach,
    and I do think, and I am open to taking a look at better ways
    of doing this and better ways of trying to address both
    treatment and prevention of substance abuse. And I wish I could
    tell you that we have found the magic bullet for this, but we
    need to be trying harder.
        On the issue of security, I will tell you this is a problem
    for hospitals everywhere. I have struggled with this throughout
    my career. It is simply is not possible to search every patient
    and every visitor and ensuring what they are bringing in does
    not contain drugs or paraphernalia like syringes. It just
    simply would not be effective. You would have to have
    essentially what amounts to what they do in prisons, which we
    do not want our facilities to be like that.
        So what we do is we need to set up rules about behaviors
    that we expect and what happens and consequences if you break
    those rules, being discharged from the programs. Do we need to
    look at new ways to be able to make sure these are safer
    places? Absolutely we need to. But I do not want to give the
    expectation that by searching people we are going to be able to
    prevent this completely.
        Senator Baldwin. Okay. Just in follow up and based on your
    answer, there is absolutely a range of activities and
    procedures that could be put into place to increase safety and
    security beyond the search issue. I will note that I have heard
    that the AIB members who were present on site to conduct their
    investigation were able to gain access the facility with no one
    checking them at the door or even, you know, they were already
    wandering about. And so, that obviously suggests a lax set of
    protocols.
        I would appreciate it if you can commit to reporting back
    to this subcommittee on at least an initial review of the use
    of these domiciliaries, and the security, and supervision
    levels, and safety. This is a big concern.

        [The information follows:]

        Context of Inquiry: Will VA commit to reviewing the domiciliary
    program, including the security and safety protocols and the
    appropriateness of participation of veterans who may require greater
    supervision? When can we expect the results of that review? [reference
    Dr. Shulkin's testimony that he is ``open to taking a look at better
    ways of doing this.'' And ``Do we need to look at new ways to be able
    to make sure these were safer places? Absolutely, we need to.'']
        Response: VHA Domiciliary Care programs are safe, effective and an
    appropriate level of care for Veterans with mental health and substance
    use disorders when appropriately operated in conformance with national
    policy. VHA will continue to closely monitor domiciliary safety and
    security and look for opportunities to improve Veteran care. One
    Veteran death is too many and every effort will continue to support the
    medical centers in providing a safe and secure environment focused on
    recovery. Veterans admitted to the residential treatment programs are
    assessed as needing increased supervision and support for symptom
    reduction and engagement in recovery and for whom outpatient care has
    not been effective. VHA's residential treatment programs provide vital
    services in the mental health continuum of care which includes general
    outpatient, intensive outpatient, residential and acute inpatient. VHA
    fully recognizes the increased risk in serving Veterans with mental
    health and substance use disorders in a residential level of care.
        At the end of fiscal year 2015, VHA operated 244 Mental Health
    Residential Rehabilitation Treatment Programs (MHRRTP) with 8,148 beds
    at 113 VA Medical Centers. During fiscal year 2015, there were over
    37,500 admissions to domiciliary care with 87 percent of the Veterans
    admitted having a Substance Use Disorder (SUD) diagnosis. Over 15,000
    Veterans were provided residential specialty care specifically to treat
    their SUD. In fiscal year 2015, there were over 2 million patient bed
    days of care provided in VHA Domiciliary programs. During this period,
    there were 13 reported Veteran overdoses resulting in four overdose
    deaths. The mortality rate for Veterans during their residential stay
    during fiscal year 2014 was 0.06 percent and has decreased by 56.8
    percent since 2004.
        VHA is currently revising and updating the VHA MHRRTP Handbook,
    1162.02. The revisions will include updates to safety and security
    policy and procedures based on lessons learned since the Handbook was
    published in 2010. VHA recently updated guidance clarifying
    expectations for contraband detection and prevention in Domiciliary
    programs. This guidance has been shared with key stakeholders and was
    recently shared with the field. Concepts discussed in the guidance
    document have been routine topics of conversation with the field
    through regular monthly calls and at the National MHRRTP Managers
    conference on May 3-5, 2016. A significant step forward in the safety
    and supervision of VHA's residential care is the current development of
    a Nursing Model that will guide the provision of 24/7 nursing services
    in Domiciliary programs based on the Veteran's needs. This
    collaborative effort between the Office of Nursing Service and Mental
    Health Services is currently being piloted at ten Domiciliary locations
    and when completed will be implemented at all locations. This
    initiative is expected to result in improved patient care and the
    supervision of the residential units.

                        NALOXONE KITS AS A HIGH PRIORITY

        Senator Baldwin. I want to just briefly pivot to the
    related issue of over reliance on opioids, and I appreciated
    Senator Moore Capito talking about the bill we have worked
    jointly together named in honor of a marine veteran in
    Wisconsin, Jason Simcakoski, who died at a VA hospital in
    Tomah.
        You may recall that the inspector general report released
    last August detailing his death from mixed drug toxicity
    revealed that antidotes to overdose, like naloxone and
    flumazenil, were not available on the emergency crash carts
    that were brought to Jason's room, and that a facility staff
    member was tasked with securing an antidote from the urgent
    care clinic, and then it arrived in his room some 33 minutes
    later after he was found unresponsive.
        So I understand that the availability of naloxone and
    related antidotes are tremendously important. They can and do
    save lives. That leads me to the VA's legislative proposal to
    eliminate co-pay requirements for naloxone kits it distributes
    to high-risk veterans. Since its implementation more than 2
    years ago, they have been extensively distributed, and lives
    have been saved.
        But I also know, and you know, that the recently signed
    Omnibus Appropriations Bill and the Jason Simcakoski Memorial
    Act that I referred to would expand the VA's overdose education
    and naloxone distribution program to ensure that every VA
    medical facility and pharmacy is equipped with opioid receptor
    antagonists such as naloxone.
        I want you to please to speak to why providing these kits
    free of charge is such a high priority.
        Dr. Shulkin. Yes. Well, I think you have said it very well,
    Senator, which is that in the case of overdose, these are
    lifesaving drugs. I have personally used them, and people go
    from being essentially unconscious to waking up and talking to
    you in a matter of seconds. And so, if you do not take the
    right actions, they stop breathing, and obviously they can die.
        So I could not agree with you more. Having these available,
    much like years ago we did with the automatic implantable
    defibrillators that you see now in waiting rooms, and airports,
    and restaurants. VA has been distributing these kits out to
    community partners in various areas. We have been doing it by
    the thousands and successfully. I think that getting more of
    them out will be helpful.
        Last year we prescribed 18,000 prescriptions for naloxone.
    I think you mentioned the issue of co-pays. Fifty percent of
    them required a co-pay. Eight dollars is our average co-pay. So
    anything that we can do to help eliminate barriers to the use
    of these drugs I think would be important, and education is a
    primary target of ours as well.
        Senator Baldwin. Thank you. And, Mr. Chairman and Ranking
    Member, I will submit some additional questions for the record.
    I thank you for the time.

                           HEPATITIS C DRUG TREATMENT

        Senator Kirk. With your indulgence, I will go with a second
    round here. Let me get you on the record about hepatitis C.
    Last year the subcommittee appropriated $1.5 billion for
    treatment of hepatitis C. We have also appropriated another
    $1.5 billion for advance appropriations in 2017 for the
    treatment of hepatitis C, which should be a good news story.
    There are dramatically different figures put out by you and the
    Department about how many new patients starts will be achieved
    in this fiscal year on hepatitis C.
        I would like to see how many do you project will be started
    in fiscal year 2016.
        Dr. Shulkin. Yes. Well, first of all, I could not agree
    more. We thank you for your leadership in providing this to
    veterans. This is one of those miracle drugs that have come
    through----
        Senator Kirk. I would say this is a chance for us to have a
    hepatitis C free veteran population.
        Dr. Shulkin. Yes, absolutely.
        Senator Kirk. Probably the best legacy for the President on
    his way out of office.
        Dr. Shulkin. Well, with a 95 percent cure rate, I am not
    sure that you can do that many things this well, so thank you
    again for that support.
        Let me go over the numbers. There should not be any
    confusion about this. VA estimates, using its databases, that
    we have 120,000 veterans who have hepatitis C. You can measure
    hepatitis C in the blood. We were originally given the $1.5
    billion and, given our pricing for hepatitis C drugs, able to
    treat this year 35,000 veterans. However, the price of the drug
    has dropped.
        Senator Kirk. They have to go through a course as I
    remember, and for those 35,000 new starts----
        Dr. Shulkin. It's a series of treatments, yes.
        Senator Kirk [continuing]. We would then expect a 97-
    percent success rate with the new starts.
        Dr. Shulkin. I think--I think that is pretty good. But the
    reason why there may be some confusion, we have had additional
    good news, and that is the pricing on this drug has dropped.
    That means we are going to be able to treat more veterans this
    year. So instead of 35,000, we potentially--potentially--could
    treat 70,000. That means that if you were able to treat 70,000
    veterans and you only have 120,000, we could actually eliminate
    or cure those that have hepatitis C today because new veterans
    will enter the system----
        Senator Kirk. Right.
        Dr. Shulkin [continuing]. In approximately 2 years. What
    a--what a great story. This would be a miracle and, frankly, a
    great thing to do for veterans.
        The reason why my staff may be using a different number
    than the 70,000 is that this is the potential. To get 70,000
    veterans through the VA to screen them, to make sure they are
    appropriate to put them through all these treatments, that
    would require us right now given where we are in fiscal year
    2016 already, we have treated 9,100 patients this year in
    fiscal year 2016, to do 2,000 starts per week.
        We have once done that in a week in September of 2015 when
    we went through extraordinary efforts right before the budget
    year ended to get as many veterans in to spend last year's $1.5
    billion. But maintaining 2,000 veterans a week for the rest of
    the year, frankly is not going to be practical given our
    current resources.
        So what we are looking to do is to ask for some flexibility
    in the $1.5 billion, 5 percent of it, to actually increase our
    staffing in these clinics so we can bring through 2,000
    veterans a week. So if we can actually staff up a tiny bit in
    these hepatology clinics, these hepatitis C clinics, that would
    be our goal in 2 years to essentially eliminate this from the
    VA system.
        It is going to take an effort operationally to catch up.
    Right now we are very comfortable that our staffing levels are
    doing about 1,300 starts a week, okay? That is really our
    capacity given our current staffing that we could sustain. That
    would get us part way towards that number. It would get us, you
    know, in the 40- to 50,000 a year, and, frankly, we are going
    to do everything we can to treat every veteran with hepatitis
    C.

                          OVER PRESCRIPTION OF OPIOIDS

        Senator Kirk. Good. Could I divert from you to what I have
    noticed is what I would call a VA way of practicing medicine.
    This has happened in my own family where it seems like--you
    already described the over prescription and ways to deal with
    opioids. Last night the Senate passed the Kirk amendment that
    would bring the VA into the reporting system that we created
    under the legislation to make sure that we are going downward
    on over prescription.
        In my experience, the over prescription has been Xanax and
    Ambien, too much of that where you develop a real dependency.
    Is there a way that we can make sure that with psychotropic
    drugs that we are doing less and less and less of that just to
    get the patient out of the door?
        Dr. Shulkin. Yeah, actually VA does have measures on this.
    I do not have the statistics off the top of my head, but we not
    only know how many patients are on benzodiazepines, but
    actually the combination between benzodiazepines and opioids.
    And we have targeted that as a high-risk sort of high-alert
    area.
        Senator Kirk. Just see if it is part of socialized medicine
    to get the patient quickly out the door to give them Xanax and
    Ambien in nearly unlimited quantities. I would note that
    Senator Baldwin has talked about the Tomah facility----
        Dr. Shulkin. Yes.
        Senator Kirk [continuing]. Which was called the candy
    factory because so much was over prescribed there.
        Dr. Shulkin. Yes. Yes. So I think we recognize this is a
    challenge. That is why we are doing so much provider and
    mandatory training on this, something that I think that we are
    looking to make significant progress on. Thank you.
        Senator Kirk. Mr. Tester, any final words?

                            VHA 2018 ADVANCE REQUEST

        Senator Tester. I do. Thank you, Mr. Chairman. I want to
    drill down a little bit on the numbers, particularly with the
    2018 advance request. I do not see any of the annualized costs
    for the new doctors and nurses that are going to be hired with
    the Choice Act funding. Now, you are going to get another bite
    at the apple next year as far as fiscal year 2018 goes. But
    does this not leave a huge hole in your future budget?
        Dr. Shulkin. It does. I think you are correct. There is no
    continued funding in fiscal year 2018 for these new hires. And
    I would also add there are some other components, such as our
    graduate medical education residents. The 5,000 residents that
    were granted, they also did not continue. And so, and there are
    actually some other components. But I am going to ask the
    expert on this to just clarify exactly what you are asking
    about, Senator.
        Senator Tester. Yes.
        Mr. Yow. Yes, sir. We would need about $1.3 billion to
    continue the hires in fiscal year 2018.
        Senator Tester. Yeah.
        Mr. Yow. We would need about $280 million to continue
    leases that were funded with VACCA section 801 funding, and we
    need about $90 million to continue the residents that were
    hired under section 301 of VACCA.
        Senator Tester. Okay. I got it, and I appreciate your
    frankness. $1.3 billion, $280 million, $90 million for the
    residency. This is going to leave a hell of a hole, guys. I
    mean, why are we putting an emphasis on getting healthcare
    providers across the system, urban and rural areas. We are
    going to be laying these folks off.
        Dr. Shulkin. Well, the advance appropriation is to be able
    to supply us with a stable amount of money going forward, but
    there has to be a second step, as you mentioned, Senator, for
    us to identify what our actual needs are. Now, with the new
    Veterans Choice Program, what we are trying to understand is
    what those exact numbers are so we can come back and talk about
    that.

                   VA AND DOD JOINT ELECTRONIC HEALTH RECORD

        Senator Tester. Okay. I gotcha, and I just want to tell you
    that from my perspective, if you need $1.3 billion for the new
    hires that we are hiring and it is not in the budget for 2018,
    we are not doing our job, I will just tell you that. I mean, it
    becomes a problem. And the worst thing that could happen, and
    by the way, it would hurt for recruitment, is hire these folks
    and then not keep them around. I want to talk about IT for a
    second, but we really do need to get that fixed if we could.
        The IT, I mean, we have included language in the omnibus
    requiring the VA to develop and submit to this subcommittee a
    detailed plan on how to replace or fix the IT. I know you do
    not lead the IT team over at VA, by the way.
        Dr. Shulkin. No, I do not.
        Senator Tester. But I do know that you have probably been
    involved in these discussions.
        Dr. Shulkin. Yes.
        Senator Tester. Why is it taking so long to fix this
    system?
        Dr. Shulkin. That is one that I would be glad to defer to
    Laverne Council, who ably leads our IT Department. I have a
    great deal of confidence in her. She has gone in like you would
    want with her private sector background, and really challenged
    all of the assumptions that frankly have led to an
    underperforming part of the organization. And so, Laverne, I am
    sure when we come back to talk to you March 10th or 11th--I
    forget the specific day--would be glad to address that in a
    very clear way.
        Senator Tester. That would be good because, I mean, I think
    it has been 10 years ago----
        Senator Kirk. Remind him we are going to do a hearing on
    the joint records April 14th----
        Dr. Shulkin. Okay.
        Senator Kirk [continuing]. And would want your best
    possible details on that for the subcommittee.
        Dr. Shulkin. Absolutely. We will be prepared.
        Senator Kirk. I have been holding back as prerogative as
    chairman to tell you what my IT program would be to make sure
    that we would require all narratives in the Microsoft world and
    all documents in .jpg to make sure there was complete usability
    for everybody in the industry.
        Dr. Shulkin. Okay.
        Senator Kirk. And make sure that we do not have a separate
    beltway bandit code. And when I talked about this with
    Secretary Shinseki, wanting to make sure that everything was
    open code based on the success that Motorola has had with the
    Android system when they made Android all open code, and got
    70,000 apps to that system. My hope is eventually if we take
    25, 27 million patients in DOD and VA with an open code system
    will establish the medical records technologies, undeniably
    American. And an entire industry will always--worldwide will be
    here. And that is my hope that we do not let an individual
    beltway bandit create their own code.
        Dr. Shulkin. Okay. Well, thank you. Thank you for giving us
    a little insight as to what your approach is on that. Thank
    you.
        Senator Tester. So when the hearing comes around, you said
    on April 14th? Is that correct?
        Senator Kirk. April 14th, right.
        Senator Tester. April 14th, it would be great to know where
    we are as far as the status for replacing or modernizing that
    system. It would be great to know what the cost estimates are
    for that replacement.
        Dr. Shulkin. Absolutely.
        Senator Tester. So that it is. I just want to thank you all
    for being here. It is a bit of mental gymnastics for you guys,
    and I appreciate your professionalism, and I appreciate your
    honesty. And I look forward to working with you as I know
    others on this subcommittee do to making sure that we meet the
    needs of our veterans. Thank you.
        Dr. Shulkin. Thank you.
        Senator Kirk. Let us--we have beat you up enough here--
    close. I want to thank our witnesses, especially my partner,
    Senator Tester.
        And the record will be open until the close of business
    next week, Thursday, so that members can submit questions for
    the record.

                              SUBCOMMITTEE RECESS

        Senator Kirk. The next hearing of the subcommittee will be
    on Thursday, March 10.
        Dr. Shulkin. That is better than 1:00 a.m.
        Senator Kirk. Better than 1:00 a.m.
        Dr. Shulkin. Yeah. Yeah.
        Senator Tester. Thank you, Mr. Chairman.
        Dr. Shulkin. Thank you.
        Senator Kirk. And we will stand adjourned.
        Senator Tester. Thanks, Kirk.
        [Whereupon, at 12:34 p.m., Thursday, March 3, the
    subcommittee was recessed, to reconvene Thursday, March 10, at
    a time subject to the call of the Chair.]

         MILITARY CONSTRUCTION, VETERANS AFFAIRS, AND RELATED AGENCIES
                      APPROPRIATIONS FOR FISCAL YEAR 2017

                                  ----------

                            THURSDAY, MARCH 10, 2016

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 11:05 a.m., in room SD-124, Dirksen
    Senate Office Building, Hon. Mark Kirk (chairman) presiding.
        Present: Senators Kirk, Murkowski, Hoeven, Collins,
    Boozman, Capito, Cassidy, Tester, Udall, Schatz, and Baldwin.

                         DEPARTMENT OF VETERANS AFFAIRS

    STATEMENT OF HON. ROBERT A. MCDONALD, SECRETARY
    ACCOMPANIED BY:
            HON. DAVID J. SHULKIN, M.D., UNDER SECRETARY FOR HEALTH,
                VETERANS HEALTH ADMINISTRATION
            DANNY G.I. PUMMILL, ACTING UNDER SECRETARY FOR BENEFITS,
                VETERANS BENEFITS ADMINISTRATION

                     OPENING STATEMENT OF SENATOR MARK KIRK

        Senator Kirk. The subcommittee will come to order. Good
    morning. This is the subcommittee's second hearing on the
    fiscal year 2017 and fiscal year 2018 advance budget request.
        The President has requested over $78 billion in
    discretionary funding for the Department of Veterans Affairs
    (VA), an increase of 4.9 percent. This year, there was a
    request for $104 billion in advance mandatory benefits funding.
        This subcommittee of this Congress has given you everything
    you wanted, and more. The answer to every VA problem is not
    ``give us more money, give us more flexibility.'' We need to
    fix the VA's corrupt culture and all too often poor
    performance.
        We also need to talk about accountability and veterans
    first and not bureaucrats.
        Mr. Secretary, I understand that you will be visiting
    Illinois next week while in Chicago. I hope you will notice the
    difference in the culture at a facility that combines the
    military's healthcare standards with veterans' care.
        I want to recognize my friend, the Senator from the Big
    Sandy metroplex in Montana, Mr. Tester.

                        STATEMENT OF SENATOR JON TESTER

        Senator Tester. Thank you, Chairman Kirk. Thank you for
    holding this hearing on the VA's budget.
        Secretary McDonald, it is great to have you here today,
    with your team. Thank you for your service to the veterans of
    this country.
        Last week, we heard testimony from Dr. Shulkin and Mr.
    Pummill about VA and the Veterans Benefits Administration's
    (VBA) budget request. I look forward to continuing that
    discussion today.
        As you know, one of my top concerns continues to be the
    long wait times for veterans trying to get the healthcare
    through the Choice program. You and I, Mr. Secretary, have had
    numerous discussions about the failures of the Choice program
    in my home State. Some of the fault lies with the VA, some lies
    with Congress. As I said last week, a lot of lies with the
    third-party administrator in Montana. What they have done and
    what they are doing is completely unacceptable.
        I know time is tight today, so I am not going to rehash the
    litany of complaints that I receive on a daily basis from
    frustrated veterans. I know these issues are not isolated to
    Montana. They are in other States, including Senator Collins'
    State of Maine.
        I do not have to tell you the frustrations are growing up
    here. I know you hear them. I know you share them. The bottom
    line is the Choice program is broken. We need to fix it, and we
    need to fix it as soon as possible.
        That is why I introduced legislation last week that will
    fix the issues we are having with Choice. Moving forward, it
    will put in place a less complex and confusing framework for
    Care in the Community. That will reduce administrative burdens
    both for community providers and for the VA, and connect
    veterans to the care they need in a more timely manner, and
    more streamlined.
        Earlier this week, I met with Chairman Isakson, who is
    chairman of the Senate Veterans' Affairs Committee on this
    issue. We share the same goals and we share the same concerns.
    We are now committed to finding a bipartisan solution to
    address these problems in a comprehensive manner.
        Mr. Secretary, I hope we can enlist your effort in that
    regard. When all is said and done, we have to get it right. Our
    veterans deserve nothing less.
        With regard to your budget request, as I see it, there are
    some very good things in it, but there are also some things
    that need further explanation.
        Failure to account for sustained costs of doctors and
    nurses that we have hired with Choice Act funds is one. The
    overall reduction in capital budget is yet another.
        I look forward to addressing these issues and other issues
    with you today and in the weeks ahead. Again, I want to thank
    you for your service. Thank you for being here today.
        Thank you, Mr. Chairman.
        Senator Kirk. Thank you.
        I want to welcome our witnesses. Secretary McDonald is a
    graduate of West Point and the Secretary of Veterans Affairs.
    He is accompanied by Dr. David Shulkin, the Under Secretary for
    Health, and Mr. Danny Pummill, the Acting Under Secretary for
    Benefits. I welcome you both back to the subcommittee. Welcome,
    gentlemen.

                  SUMMARY STATEMENT OF HON. ROBERT A. MCDONALD

        Secretary McDonald. Chairman Kirk, Ranking Member Tester,
    members of the subcommittee, thanks for the opportunity to
    present the President's 2017 budget and 2018 advance
    appropriations request for the Department of Veterans Affairs.
    I have submitted a written statement for the record.
        The President's 2017 budget proposal is another tangible
    sign of his devotion to veterans and their families. It
    proposes $182.3 billion for the department in fiscal year 2017,
    which includes $78.7 billion in discretionary funding, a 4.9-
    percent increase above the 2016 enacted level, largely for
    healthcare. It includes $65 billion for medical care, a 6.3-
    percent increase of $3.9 billion over 2016's enacted level. It
    includes $12.2 billion for Care in the Community and the new
    Medical Community Care budget account to increase transparency
    on VA spending for non-VA care, as required in the VA budget
    and Choice Improvement Act. It provides $66.4 billion in
    advance appropriations for VA medical care programs in 2018, a
    2.1 percent increase above the 2017 request. It provides $7.8
    billion for mental health. It funds veteran contact centers,
    and it funds veteran crisis line modernization.
        This proposal provides $1.5 billion for effective hepatitis
    C treatments for at least 35,000 veterans, but perhaps
    significantly more depending upon the pricing of the drugs.
        It provides $1.2 billion for telehealth access, $725
    million for veteran caregivers, and $515 million for health
    programs for women veterans.
        The proposal includes $103.6 billion in mandatory funding
    for veteran benefit programs in 2017 and $103.9 billion in
    advance appropriations for our three major mandatory Veteran
    Benefits Accounts.
        It requests $2.8 billion for the Veterans Benefits
    Administration, including support for an additional 300 staff
    to reduce the nonrating claim inventory and provide veterans
    with more timely decisions on nonrating claims.
        And it includes $156.1 million for the Board of Veterans
    Appeals, an increase of 42 percent over the 2016 level. This is
    a down payment on a long-term, sustainable plan to eliminate
    the appeals backlog.
        The budget supports the VA's four agency priority goals. It
    supports our five MyVA transformational objectives to improve
    the veteran experience, to improve the employee experience, to
    improve internal support services, to establish a culture of
    continuous improvement, and to expand strategic partnerships.
        It provides $2.6 million for the MyVA program office to
    help integrate MyVA initiatives across the enterprise, and
    $72.6 million for the Veterans Experience Office, so we can
    continue establishing high customer service standards.
        And it supports our 12 breakthrough priorities for 2016 and
    fiscal year 2017. These are critical investments, if we are
    serious about transforming VA into the high-performing
    organization veterans deserve and taxpayers expect.
        Over 3 decades in the private sector, I learned first-hand
    what it takes to be a high-performance organization, and that
    goal is within our reach. We already have a clear purpose and
    strong values and strong strategies. We have a growing team of
    talented business and healthcare professionals making
    innovative changes. Ten of our top 16 executives are new since
    I became Secretary, and we are building responsive systems and
    processes shaped by design to meet veterans' needs.
        For veterans, that means they have 24/7 access to VA
    systems and know where to get answers. Veterans calling or
    visiting primary care facilities at a medical center have
    clinical needs addressed the same day. Veterans engaged in
    mental healthcare needing urgent attention speak to a provider
    the same day. And veterans calling for a new mental health
    appointment receive suicide risk assessments and immediate
    care, if needed.
        For employees serving veterans, it means training on
    advanced business techniques that drive responsive and
    innovative change. It means clear performance expectations,
    continuous feedback, and performance management systems that
    encourage continuous improvement and excellence.
        It means that executive performance ratings and bonuses
    reflect actual performance and relevant inputs like veteran
    outcomes, employee surveys, and 360-degree feedback. And it
    means modern, automated systems in place of antiquated and
    costly paper processes.
        We are advancing along all of these lines and many others.
    Growing a high-performing culture is what our Leaders
    Developing Leaders (LDL) program is all about. Leaders
    Developing Leaders is a continuous, enterprise-wide process to
    instill lasting change.
        We launched LDL last November with 450 senior field
    leaders, and we have trained more than 5,000 leaders so far. We
    met again last week to build on growing momentum and share best
    practices that we will leverage across the VA. By year's end,
    we will have over 12,000 senior leaders empowering more and
    more teams to dramatically improve care and service delivery to
    veterans.
        Private sector experts are teaching cutting-edge business
    skills like Lean Six Sigma and Human Centered Design. Human
    Centered Design and Lean are helping leaders reshape the
    compensation and pension exam that veterans find burdensome.
        We are planning to automate performance management to
    streamline the process and improve rating accuracy. And we are
    finding new ways to provide higher quality care and benefits
    more efficiently.
        Our pharmacy benefits management program avoided $4.2
    billion in unnecessary drug expenditures last year. We have
    saved over $500 million in travel spending since 2013,
    exceeding goals of the President's campaign to cut waste.
        We have reduced employee award spending $150 million, and
    Senior Executive Service (SES) bonuses 64 percent between 2011
    and 2015 by rigorously linking awards to performance.
        Since 2011, we have saved $16.6 million using more
    efficient training and meeting methods. We have already saved
    $10 million a year under the MyVA five district structure that
    we announced in January 2015.
        We saved approximately $5.5 million from 2011 to 2015 by
    strengthening controls over permanent change of station moves.
    And we will save millions each year in paper storage since we
    implemented electronic claims processing.
        So we are committed to doing everything we can for veterans
    with everything we are given.
        But more than 100 legislative proposals for meaningful
    change require congressional action. Over 40 are new this year,
    some absolutely critical to maintaining our ability to purchase
    non-VA care.
        To best serve veterans, we need your help streamlining VA's
    Care in the Community systems and programs. We have to
    modernize and clarify VA's purchase care authorities to
    preserve the veterans' access to timely community care
    everywhere in the country.
        Above all, this needs to be done in this Congress. I have
    consistently identified it as a top legislative priority. We
    provided detailed legislation addressing this challenge over 9
    months ago. Members of this Committee and others in Congress
    have introduced legislation to address these issues. Now we
    look forward to working with you to ensure we get this right.
        The budget proposes a simplified, streamlined, and fair
    appeals process, so that in 5 years, veterans could have
    appeals resolved within 1 year of filing. The statutory appeals
    process is archaic and unresponsive, not serving veterans well.
    Last year, the board was still adjudicating an appeal that
    originated 25 years ago and had been decided more than 27
    times.
        Legislating a simplified process can save over $139 million
    annually beginning in 2022.
        We compete with the private sector for talent, especially
    in healthcare, so we are proposing flexibility on the 80-hour
    pay period maximum for certain medical professionals and
    critical compensation reforms for network and hospital
    directors.
        Likewise, we are looking at how we can treat our career
    executives more like their private sector counterparts, and we
    are working with our stakeholders to shape a plan that best
    serves veterans.
        The budget proposes appropriations language for general
    transfer authority that allows me some measured spending
    flexibility to respond to veterans' emerging needs.
        We need congressional authorization for 18 leases submitted
    in the VA's 2015 fiscal year and 2016 budget request. We need
    authorization for eight major construction projects included in
    VA's 2016 fiscal year request. And we need support for the six
    additional replacement major medical facility leases in the
    2017 budget. And passing special legislation for VA's West Los
    Angeles campus will get positive results for veterans there who
    are most in need.
        This Congress with today's VA leadership team can make
    these changes and more. And it is all for veterans. Then we can
    look back on this year as the year that we turned the corner.
        I appreciate this opportunity and the support you have
    shown veterans, the department, and the MyVA transformation,
    and I look forward to answering your questions.
        Thank you, Mr. Chairman.
        [The statement follows:]
                 Prepared Statement of Hon. Robert A. McDonald
        Good morning, Chairman Kirk, Ranking Member Tester, and
    distinguished members of the Senate Appropriations Subcommittee on
    Military Construction and Veterans Affairs. Thank you for the
    opportunity to present the President's 2017 budget and 2018 advance
    appropriations (AA) requests for the Department of Veterans Affairs
    (VA). This budget continues the President's faithful support of
    veterans and their families and survivors, and it sustains VA's
    historic transformation. It will provide the funding needed to enhance
    services to veterans in the short term, while strengthening the
    transformation of VA that will better serve veterans in the future.
                            a vision for the future
        VA's vision for the future is to be the No. 1 customer-service
    agency in the Federal Government. The American Customer Satisfaction
    Index already rates our National Cemetery Administration No. 1 with
    respect to customer service. In addition, for the sixth year in a row,
    VA's Consolidated Mail Outpatient Pharmacy received J.D. Power's
    highest customer satisfaction score among the Nation's public and
    private mail-order pharmacies. These are compelling examples of
    excellence. We aim to make that so for all of VA.
        We are transforming the entire Department, not just making
    incremental changes to parts of it. We began in July 2014 by
    immediately reinforcing the importance of our inspiring mission--caring
    for those ``who shall have borne the battle,'' their families, and
    their survivors. Then, we re-emphasized our commitment to our
    exceptional I-CARE Values--Integrity, Commitment, Advocacy, Respect,
    and Excellence. To provide timely quality care and benefits for
    veterans, everything we are doing is built, and must be built, on the
    rock-solid foundation of mission and values.
        MyVA is the catalyst making VA a world-class service provider. It
    is a framework for modernizing VA's culture, processes, and
    capabilities so we put the needs, expectations, and interests of
    veterans and their families first, and put veterans in control of how,
    when, and where they wish to be served.
        Listening to others' perspectives and insights has been, and
    remains, instrumental in shaping our transformation. We have taken
    advantage of an unprecedented level of outreach to the field and our
    stakeholders. In my first months as Secretary, I assessed VA and
    recognized that we would need to change fundamental aspects of every
    part of VA in order to rise to excellence. I shared my assessment's
    results with President Obama and received his guidance. I discussed my
    findings with you and other Members of Congress--privately and during
    hearings. And I consulted with literally thousands of veterans, VA
    clinicians, VA employees, and Veteran Service Organizations (VSOs) and
    other stakeholders in dozens of meetings.
        Since my July 29, 2014, confirmation, I have made 277 visits to VA
    field sites in more than 100 cities, including 47 visits to VA Medical
    Centers, 30 visits to homeless veterans program sites, 16 visits to
    Community Based Outpatient Clinics, 15 Regional Offices, and 9
    Cemeteries. I have attended 61 veteran engagements through public and
    private partnerships and 60 stakeholder events to hear firsthand the
    problems and concerns impacting our veterans. To recruit individuals to
    work for VA as medical professionals and in other critical fields, I
    have visited 50 medical schools, universities, and other educational
    institutions. This kind of outreach, partnership, and collaboration
    underpins our department-wide transformation to change VA's culture and
    make the veteran the center of everything we do.
    Progress
        Transforming an organization of VA's size is an enormous
    undertaking. It will not happen overnight. But we are now running the
    Government's second largest Department like a $166 billion Fortune 6
    organization should be run. That is, balancing near term performance
    improvements while rebuilding VA's long-term organizational health.
        Effective change often requires new leadership, and we have made
    broad changes. Of our top 16 executives, 10 are new to their positions
    since I became Secretary. Our team today includes extensive executive
    expertise from the private sector: a former banking industry Chief
    Financial Officer and President of the USO; the former Chief Executive
    Officer of Beth Israel Medical Center in New York City and Morristown
    Medical Center in New Jersey; a former Chief Executive of Jollibee
    Foods and President of McDonald's Europe; a former Chief Information
    Officer of Johnson & Johnson and Dell Inc.; a former partner in
    McKinsey & Company's Transformational Change and Operations
    Transformation Practices; a retired partner in Accenture's Federal
    Services Practice; a former Chief Customer Officer for the City of
    Philadelphia who previously spent 10 years at United Services
    Association of America (USAA), one of the best and foremost customer-
    service organizations in the country; a former entrepreneur and CEO of
    multiple technology companies; and a retired Disney executive who spent
    2010-2011 at Walter Reed National Military Medical Center enhancing the
    patient experience.
        Most members of the executive leadership team are veterans
    themselves. They have served from Vietnam to Iraq and Afghanistan, and
    each is here because he or she demonstrates a personal commitment to
    our mission. These fresh, diverse perspectives, combined with our more
    experienced government and healthcare executives, will continue to
    catalyze innovation and change.
        Thanks to the continuing support of Congress, VSOs, union leaders,
    our dedicated employees, states, and private industry partners, we have
    made tremendous headway over the past 18 months. In 2015, we made
    notable progress building the momentum that will begin delivering
    transformational changes that VA needs.
        Congress has passed key legislation--such as the Veterans Access,
    Choice, and Accountability Act and the Clay Hunt Suicide Prevention for
    American Veterans Act--that gives VA more flexibility to improve our
    culture and ability to execute effectively.
        Consistent with the culture of a High Performance Organization that
    serves veterans and their families, we have turned VA's structural
    pyramid upside down. Veterans and their families are at the top. The
    Office of the Secretary is at the bottom, supporting subordinate
    leaders and the workforce who are serving veterans. This method of
    thinking and operating is a reminder to all employees and stakeholders
    that we are here to support our veterans, not our bosses.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        While reinforcing our I-CARE Values, we are transitioning from a
    rules-based culture that may neglect the human dimension of service to
    a principles-based culture grounded in values, sound judgment, and the
    courage and opportunity ``to choose the harder right instead of the
    easier wrong. . . .''
        We formed a MyVA Advisory Committee (MVAC) to advise us on our
    transformation. The MVAC is comprised of a diverse group of business
    leaders, medical professionals, experienced government executives, and
    veteran advocates. The Chairman is retired Major General Joe Robles,
    former Chairman and CEO of USAA. The Vice Chairman is Dr. J. Michael
    Haynie, Air Force veteran, Vice Chancellor of Syracuse University and
    founder of the Institute for Veteran and Military Families (IVMF). The
    MVAC includes executives with deep customer service and transformation
    expertise from organizations such as Amazon, The Cleveland Clinic,
    McKinsey & Company, Johns Hopkins, Mayo Clinic, as well as a former
    Surgeon General, a former White House doctor for three US Presidents, a
    university president who was a Rhodes Scholar from the Air Force
    Academy who currently serves as a reserve Air Force Lieutenant Colonel,
    and advocates for both the traditional VSOs and post-9/11 veterans'
    organizations.
        Private sector leadership experts are bringing cutting-edge
    business skills and developing VA teams in new ways. We are training
    critical pockets of our workforce on advanced techniques like Lean and
    Human Centered Design. For example, working with the University of
    Michigan, we have already trained more than 5,000 senior leaders across
    the Nation in our ``Leaders Developing Leaders.'' The Veterans Benefits
    Administration (VBA), Veterans Health Administration (VHA), and our
    Veterans Experience team collaborated using Human Centered Design and
    Lean techniques to redesign the Compensation and Pension Examination
    (C&P Exam) process because we received consistent feedback that the
    process--often, a veteran's first impression of the VA when separating
    from service--can be a confusing and uncomfortable experience.
        Across VA, we are encouraging different perspectives and listening
    to all of our key stakeholders, even those who are critical of VA. To
    benchmark and capture ideas and best practices along our transformation
    journey, we have been working collaboratively with world-class
    institutions like Procter & Gamble, USAA, Cleveland Clinic, Wegmans,
    Starbucks, Disney, Marriott and Ritz-Carlton, NASA, Kaiser Permanente,
    Hospital Corporation of America, Virginia Mason, DOD, and GSA, among
    others.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        VA named the Department's first Chief Veteran Experience Officer
    and began staffing the office that will work with the field to
    establish customer service standards, spread best practices, and train
    our employees on advanced business skills.
        Rather than asking veterans to navigate our complicated internal
    structure, we are redesigning functions and processes to fit veteran
    needs in the spirit of General Omar Bradley's 1947 proposition that
    ``We are dealing with veterans, not procedures; with their problems,
    not ours.''
        We are realigning VA to facilitate internal coordination and
    collaboration among business lines--from nine disjointed, disparate
    organizational boundaries and organizational structures to a single
    framework. That means down-sizing from 21 service networks to 18 that
    are aligned in five districts and defined by State boundaries, except
    in California. This realignment means opportunities for local level
    integration, and it promotes consistently effective customer service.
    Veterans from Florida to California, Puerto Rico to Maine, Alaska and
    Guam, and all parts in between, will see one VA.
        We have developed a multi-year plan for creating a world-class
    Information Technology organization, and on November 11, Veterans Day,
    we launched the Vets.gov initial capability. Developed with support
    from the U.S. Digital Services Team and informed by extensive feedback
    from veterans, Vets.gov is a modern, mobile-first, cloud-based website
    that will replace numerous other websites and website logins with a
    single, easy to navigate location. The website puts veteran needs and
    wishes first, and we will continue to add the capability that's
    required to improve its accessibility and usefulness. As Vets.gov
    evolves, it will simplify the veteran experience by re-using and making
    consistent veteran information, including mailing address and phone
    number, across the agency.
        At VA, we know that serving veterans is a collaborative exercise,
    so we will not function in a vacuum. We are operating as part of a
    community of care, forming strategic partnerships with external
    organizations to leverage the goodwill, resources, and expertise of
    valuable partners to better serve our Nation's veterans and help
    address a wide variety of veteran needs, including employment,
    homelessness, wellness, and mental health. Partners include respected
    organizations like the YMCA, the Elks, the PenFed Foundation, LinkedIn,
    Coursera, Google, Walgreens, academic institutions, other Federal
    agencies, and many more. These partnerships reflect our commitment to
    re-thinking how VA does business so we can leverage the strengths of
    others who also care for veterans.
        We have enabled 39 Community Veterans Engagement Boards, a national
    network designed to leverage all community assets, not just VA assets,
    to meet local veteran needs. Sixteen more communities are in
    development right now.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        We have renewed and redefined working relationships with our union
    partners, and union leaders are part of the team, and have had
    significant input into MyVA. We continue to work with them to address
    issues and make sure our employees are involved often and early in
    every major decision.
        We are continuing to develop a robust provider network while we
    streamline business processes and re-imagine how we obtain services
    such as billing, reimbursement credentialing, and information sharing.
        We continue to listen, learn, and grow.
                           va's agency priority goals
        In 2015, we were guided by and made notable progress toward
    reaching our three Agency Priority Goals (APGs)--(1) Improve Veteran
    Access to VA Benefits and Services, (2) End Veteran Homelessness, and
    (3) Eliminate the Disability Claims Backlog. These accomplishments
    toward achieving our APGs demonstrate VA's commitment to using our
    resources effectively to improve care and benefits for veterans.
    Access
        We expanded capacity by focusing on staffing, space, productivity,
    and VA Community Care.
        Since discovering the access challenges in Phoenix, Arizona, we
    have aggressively improved access to care, not just in Phoenix but
    across VA as a whole. For instance, in the first 12 months after
    discovering the Phoenix appointment problem, from June 2014 to June
    2015, we completed 7 million more appointments than during the same
    period the year prior: 2.5 million of those appointments were at VA;
    4.5 million appointments were in the community. Altogether in fiscal
    year 2015, we completed 56.7 million appointments, nearly 2 million
    more than in fiscal year 2014. More than 97 percent (55 million) of
    those 56.7 million appointments were completed within 30 days of the
    clinically indicated or veteran's preferred date, an increase of 1.4
    million over the fiscal year 2014 numbers.
        Veteran access is one of the five critical priorities supporting VA
    healthcare transformation with far-reaching impact across VA that Under
    Secretary for Health, Dr. David J. Shulkin announced in September 2015.
    With the Access Stand Downs, VHA is empowering each facility to focus
    on the needs of its specific population and refocusing people, tools,
    and systems on a journey of continuous improvement towards same-day
    access for primary care and urgent specialty care. The immediate goal
    is that no patients with urgent appointment requests in VA clinics with
    the most critical clinical needs, such as cardiology, urology, and
    mental health, are waiting more than 30 days.
        From November 9, through November 13, 2015, VHA conducted a
    complete review of all veterans waiting for appointments--with a focus
    on those veterans waiting for clinically important and acute services--
    to ensure that the wait was clinically appropriate as determined by the
    veteran's treatment team. This process culminated with the VHA's first-
    ever Access Stand Down on November 14. The Stand Down was a nationwide
    effort to ensure veterans get the right care at the right time.
        In the first Access Stand Down, VHA reviewed nearly 55,800 of the
    more than 56,000 urgent consults that remained open more than 30 days
    (as of November 6, 2015), a herculean effort. Of those 55,800 urgent
    open consults reviewed, 82 percent (45,849) were scheduled or closed by
    the end of that first Stand Down.
        Building on the November 14th Access Stand Down momentum and
    success, VHA continued to maximize accessibility to outpatient services
    with the February 27th, 2016 Access Stand Down. The February Stand Down
    provided an opportunity to make another significant leap in
    dramatically enhancing veterans' access to care. Clinical operations
    will meet customer demand through resource-neutral, continuous
    improvement at the facility-level and scaling-up excellence across the
    enterprise.
        VetLink data is another way we are listening to veterans. Since
    September 2015, VHA has analyzed preliminary data from VetLink, our
    kiosk-based software that allows us to collect real-time customer
    satisfaction information. In all three separate VetLink surveys to
    date--related to nearly half-a-million appointments--veterans told us
    that about 90 percent of the time, they are either ``completely
    satisfied'' or ``satisfied'' with getting the appointment when they
    wanted it. However, about 3 percent of veterans who participated in the
    survey were either ``dissatisfied'' or ``completely dissatisfied,'' so
    we have more work to do.
        Staffing. We increased net VHA staffing. In fiscal year 2015, VHA
    hired 41,113 employees, for a net increase of 13,940 healthcare staff,
    a 4.7 percent increase overall. That increase included 1,337 physicians
    and 3,612 nurses, and we filled several critical leadership positions,
    including the Under Secretary of Health.
        Space. We activated an additional 2.2 million square feet of
    clinical space in fiscal year 2015, adding to the more than 1.7 million
    square feet of clinical space activated in fiscal year 2014.
        Productivity. We increased physician work Relative Value Units
    (RVUs) by 9 percent from fiscal year 2014 to fiscal year 2015. VA
    completed more than 1.4 million extended hour completed encounters in
    primary care, mental health and specialty care in fiscal year 2014 and
    more than 1.5 million in fiscal year 2015, an increase of 5.7 percent
    in extended hour encounters.
                Care in the Community
        In 2015, VA obligated $10.5 billion for Veterans Care in the
    Community, including resources provided through the Veterans Choice
    Act--an increase of $2.3 billion (28 percent) over the 2014 level--
    which resulted in nearly 2.4 million authorizations for veterans to
    receive Care in the Community from December 3, 2014 through December 2,
    2015. Programmatically, this included care in the community for
    veterans' dialysis, state home programs, community nursing care,
    veterans home programs, emergency care, private medical facilities
    care, and care delivered at Indian health clinics. It also includes
    care under VA's CHAMPVA program for certain dependents entitled to that
    care.
    Homelessness
        Veteran homelessness has continued to decline, thanks in large part
    to unprecedented partnerships and vital networks of collaborative
    relationships across the Federal Government, across State and local
    government, and with both non-profit and for-profit organizations.
    Ending and preventing veteran homelessness is now becoming a reality in
    many communities, including: the Commonwealth of Virginia; the State of
    Connecticut; New Orleans, Louisiana; Houston, Texas; Las Vegas, Nevada;
    Philadelphia, Pennsylvania; Syracuse, New York; Winston-Salem, North
    Carolina; and Las Cruces, New Mexico. In collaboration with our Federal
    and local partners, we have greatly increased access to permanent
    housing; a full range of healthcare including primary care, specialty
    care, and mental healthcare; employment; and benefits for homeless and
    at-risk for homeless veterans and their families.
        In fiscal year 2015 alone, VA provided services to more than
    365,000 homeless or at-risk veterans in VHA's homeless programs. Nearly
    65,000 veterans obtained permanent housing through VHA Homeless
    Programs interventions, and more than 36,000 veterans and their family
    members, including 6,555 children, were prevented from becoming
    homeless.
        Overall veteran homelessness dropped by 36 percent between 2010 and
    2015, based on data collected during the annual Point-in-Time (PIT)
    Count conducted on a single night in January 2015. We saw a nearly 50
    percent drop in unsheltered veteran homelessness. Since 2010, more than
    360,000 veterans and their family members have been permanently housed,
    rapidly rehoused, or prevented from falling into homelessness.
    Disability Claims Backlog
        VA transitioned disability compensation claims processing from a
    paper-intensive process to a fully electronic processing system; as a
    result, 5,000 tons of paper per year were eliminated.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        In fiscal year 2015, VA decided a record-breaking 1.4 million
    disability compensation and pension (rating) claims for veterans and
    their survivors--the highest in VA history for a single year. As of
    December 31, 2015, VA had driven down the disability claims backlog to
    75,480, from a peak of over 611,000 in March 2013.
    2016-2017 VA's Agency Priority Goals
        In a collaborative, analytical process, VA has established our four
    new Agency Priority Goals (APGs). In fiscal years 2016 and 2017, our
    four APGs build upon and preserve progress we made in 2015. The new
    APGs will help accelerate the MyVA transformation and advance our
    framework for allocating resources to improve veteran outcomes. Our new
    APGs are to (1) Improve Veterans Experience with VA, (2) Improve VA
    Employee Experience, (3) Improve Access to Health Care as Experienced
    by the veteran, and (4) Improve Dependency Claims Processing. While no
    longer APGs, VA will continue to build upon the progress it has already
    made related to increasing access to care and services, ending
    Veterans' Homelessness and eliminating the compensation rating claims
    backlog.
                        fiscal year 2017 budget request
        Our 2017 budget requests the necessary resources to allow us to
    serve the growing number of veterans who selflessly served our Nation.
        The 2017 budget requests $182.3 billion for VA--$78.7 billion in
    discretionary funding (including medical care collections) and $103.6
    billion in mandatory funding for veterans benefit programs. The
    discretionary request reflects an increase of $3.6 billion (4.9
    percent) over the 2016 enacted level. The budget also requests 2018
    advance appropriations (AAs) of $66.4 billion for Medical Care and
    $103.9 billion for three mandatory accounts that support veterans
    benefit payments (i.e., Compensation and Pensions, Readjustment
    Benefits, and Insurance and Indemnities).
        We value the support that Congress has demonstrated in providing
    the resources needed to honor our Nation's veterans. We are seeking
    your support for legislative proposals contained in the 2017 budget--
    including many already awaiting congressional action--to enhance our
    ability to provide veterans the benefits and services they have earned
    through their service. The budget also proposes appropriations language
    to provide a new General Transfer Authority that would allow VA to move
    discretionary funds across line items. Flexible budget authority would
    give VA greater ability to avoid artificial restrictions that impede
    our delivery of care and benefits to veterans.
                     rising demand for va care and benefits
        Veterans are demanding more services from VA than ever before. As
    VA becomes more productive, the demand for benefits and services from
    veterans of all eras continues to increase, and veterans' demand for
    benefits has exceeded VA's capacity to meet it.
        In 2014, when the Phoenix access difficulties came to light, VA had
    300,000 appointments that could not be completed within 30 days of the
    date the veteran needed or wanted to be seen. To meet that demand, VA
    rallied to add capacity to complete 300,000 more appointments each
    month, or about 3.5 million additional appointments annually.
        Despite these extraordinary measures to increase capacity, VA was
    unable to absorb veterans' increasing demand for healthcare. The number
    of veterans waiting for appointments more than 30 days rose by about 50
    percent, to roughly 450,000 between 2014 and 2015, so we are
    aggressively working on innovative ways to address that challenge, and
    VHA's new Access Stand Downs are central to VHA's healthcare
    transformation efforts and addressing that challenge.
        The trend of a growing demand for VA healthcare is fueled by more
    than a decade of war, Agent Orange-related disability claims, an
    unlimited claim appeal process, demographic shifts, increased medical
    issues claimed, and other factors. Additionally, survival rates among
    Americans who served in conflicts have increased, and more
    sophisticated methods for identifying and treating veteran medical
    issues continue to become available. And, VA now serves a population
    that is older, has more chronic conditions, and is less able to afford
    care in the private sector. Workload will continue to increase as the
    military downsizes and veterans regain trust in VA.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        In 2017, the number of veterans receiving medical care at VA will
    be over 6 million. VA expects to provide more than 115 million
    outpatient visits in 2017, an increase of 8.4 million visits over 2016,
    through both VA and Care in the Community.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Compared to fiscal year 2009, the number of patients is projected
    to increase by 22 percent by fiscal year 2017. And, as veterans see the
    results of VA's transformation, we are confident that the number of
    veterans utilizing VA services will continue to rise. Currently, 11
    million of the 22 million veterans in this country are registered,
    enrolled, or use at least one VA benefit or service.
        Veterans' healthcare and benefit requirements continue to increase
    decades after conflicts end, and this fact is a fundamental, long-term
    challenge for VA. Forty years after the Vietnam war ended, the number
    of Vietnam era veterans receiving disability compensation has not yet
    peaked. VA anticipates a similar trend for Gulf war era veterans, only
    26 percent of whom have been awarded disability compensation.
        Today, there are an estimated 22 million veterans. The number of
    veterans is projected to decline to around 15 million by 2040. However,
    while the absolute number may decline, an aging veteran population
    requires greater care, services, and benefits. In 2017, 46 percent (or
    9.8 million) of the 22 million veteran population will be 65 years old
    or older, a dramatic increase since 1975, when only 7.5 percent (or 2.2
    million) of the veteran population was 65 years old or older.
        While the percent of the veteran population receiving compensation
    was nearly constant at 8.5 percent for more than 40 years, over the
    past 15 years there has been a striking increase to 20 percent. The
    total number of service-connected disabilities for veterans receiving
    compensation grew from 11.8 million in 2009 to 19.7 million in 2015, an
    increase of more than 67 percent in just 6 years. This dramatic growth,
    combined with estimates based on historic trends, predicts an even
    greater increase in claims for more benefits as veterans age and
    disabilities become more acute.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The increase in veterans receiving compensation is accompanied by a
    significant increase in the average degree of disability granted to
    veterans for disability compensation. For 45 years, from 1950 to 1995,
    the average degree of disability held steady at 30 percent. But, since
    2000, the average degree of disability has risen to 49 percent. VBA's
    mandatory request for 2017 is $103.6 billion, twice the amount spent in
    fiscal year 2009.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        As VA continues to improve access and quality of care, more
    veterans will come to VA for more of their care. Veterans today often
    choose VA for care either because of personal preference or because of
    VA's economic edge. Some 78 percent of enrolled veterans at VA have
    other choices like Medicare, Medicaid, Tricare, or private insurance.
    Out-of-pocket cost for veterans at VA is often lower, and cost
    considerations are a key factor in veterans' demand for VA healthcare.
    In 2014, veteran enrollees received only 34 percent of their total
    healthcare through VA, accounting for about $53 billion in 2014 costs.
    Just a 1 percent increase in veteran reliance on VA healthcare will
    increase costs by $1.4 billion.
                   productivity improvements and stewardship
        The MyVA transformation will ensure VA is a sound steward of the
    taxpayer dollar. We are instituting operational efficiencies, cost
    savings, productivity improvements, and service innovations to support
    this and future budget requests. We are assessing all aspects of VA
    operations using a business lens and pursuing changes so VA will
    deliver care and services more efficiently and effectively at the
    highest value to veterans and taxpayers. For instance, few realize that
    when it comes to the general operating expense of distributing over a
    hundred-billion dollars in benefits to over 5.3 million veterans and
    survivors, VBA spends only about 3 cents on the dollar. By any measure,
    that's an excellent return on investment. Our Reports, Approvals,
    Meetings, Measurements, and Policies (RAMMPs) process identifies
    practices to streamline or, in some cases, eliminate entirely. To free
    capacity and empower employees to identify counter-productive or
    wasteful activities that management can eliminate, VA leaders at all
    levels of the organization are using RAMMP to address opportunities for
    improvement that employees have identified.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        To boost efficiency and employee productivity, VA is quickly moving
    to paperless claims processing from its historically manual, paper-
    intensive process. Modernizing to an electronic claims processing
    system has helped VBA increase claim productivity per claims processor
    by 25 percent since 2011 and medical issue productivity by 82 percent
    per claims processor since 2009. This significant productivity increase
    helped mitigate the effects of the 131 percent increase in workload
    between 2009 and 2015, when the number of medical issues rose from 2.7
    million to 6.4 million. VA's shift to electronic claims processing has
    meant converting paper files to eFolders. Between 2012 and 2015, the
    Veterans Claims Intake Program (VCIP) scanned nearly 6 million claims
    files into veterans' eFolders in the Veterans Benefits Management
    System (VBMS). VBA has removed more than 7,000 tons of claims-related
    papers formerly undermining efficiency, hampering productivity, and
    cluttering workspace.
        In fiscal year 2015, VBA deployed its innovative Centralized Mail
    Initiative to 56 regional offices (ROs) and one pension management
    center (PMC). Centralized Mail reroutes inbound compensation and
    pension claims-related mail directly to Claims and Evidence Intake
    Centers at document conversion services vendor sites, an innovation
    that improves productivity and enabled digital analysis of more than
    four million mail packets. Through Centralized Mail, VBA can more
    efficiently manage the claims workload, and prioritize and distribute
    claims electronically across the entire RO network, maximizing
    resources and improving processing timeliness.
        To strengthen financial management and stewardship, in fiscal year
    2015 VA launched its multi-year effort to replace VA's antiquated, 30-
    year-old core Financial Management System (FMS) with a 21st century
    system that will vastly improve VA financial management accuracy and
    transparency. The modernization effort requires robust enterprise-wide
    support across the Department. In fiscal year 2015, VA committed to
    using a shared service solution and engaged the Department of
    Treasury's Office of Financial Innovation and Transformation (FIT) to
    pursue a Federal Shared Service Provider that leverages existing,
    successful investments and infrastructure across the government and
    meets our financial management system needs while supporting VA's
    mission of serving veterans. VA also stood up a Program Management
    Office, initially staffed with 5 FTE from existing resources to lead
    and manage the effort, and identified an OIT Project Manager. VA has
    worked to compile lessons-learned from other agencies engaged in this
    effort and from VA's previous attempts to modernize the FMS, to ensure
    the effort is successful. Tasks ahead include strategies, roadmaps, and
    project plans, business process re-engineering, and engaging in
    significant change management activities.
        Recent challenges managing non-VA care program finances have
    demonstrated the great risks and immense burden of the FMS legacy
    system. FMS failure would severely impede the Department's ability to
    execute its budget, pay vendors and veterans, and produce accurate
    financial statements.
                        closing unsustainable facilities
        It is well-past time to close VA's old, substandard, and
    underutilized facilities. VA's 2016 budget testimony last year
    explained that VA cannot be a sound steward of taxpayer resources with
    the asset portfolio it carries, and each year of delay makes the
    situation more costly and untenable. No sound business would carry such
    a portfolio, and veterans and taxpayers deserve better.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        VA currently has 370 buildings that are fully vacant or less than
    50 percent occupied, which are in excess to our needs. These vacant
    buildings account for over 5.2 million square feet of unneeded space.
    In addition, we have 770 buildings that are underutilized, accounting
    for more than 6.3 million square feet that are candidates to be
    consolidated to improve utilization and lower costs. This means we have
    to maintain over 1,100 buildings and 11.5 million square feet of space
    that is unneeded or underutilized--taking funding from needed veteran
    services. We estimate that it costs VA $26 million annually to maintain
    and operate these vacant and underutilized buildings. For example, when
    attempting to demolish the vacant storage facility in Bedford,
    Massachusetts, VA encountered environmental issues that prevented the
    demolition, forcing VA to either pay costly remediation costs to
    demolish a building we no longer need or maintain facilities such as
    this across the system.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        As the veteran population has migrated, VA's capital infrastructure
    has not kept pace. We continue to operate medical facilities where the
    veteran population is small or shrinking. Our smallest hospitals often
    do not have sufficient patient volume and complexity of care
    requirements to maintain the clinical skills and competencies of
    physicians and nurses.
                        ensuring veterans access to care
        The President's 2017 budget will allow VA to operate the largest
    integrated healthcare system in the country, including nearly 1,300 VA
    sites of healthcare and approximately 6 million veterans receiving
    care; the eleventh largest life insurance provider, covering both
    active duty servicemembers and enrolled veterans; compensation and
    pension benefit programs serving more than 5.3 million veterans and
    survivors; education benefits to more than one million students;
    vocational rehabilitation and employment benefits to more than 140,000
    disabled veterans; a home mortgage program that will guarantee more
    than 429,000 new home loans; and the largest national cemetery system
    that leads the industry as a high-performing organization, with
    projections to inter more than 132,000 veterans and family members in
    2017.
        The 2017 budget requests $65 billion for medical care, an increase
    of $3.9 billion (6.3 percent) over the 2016 enacted level. The increase
    in 2017 is driven by veterans' demand for VA healthcare as a result of
    demographic factors, economic assumptions, investments in access, and
    high priority investments for caregivers, new Hepatitis C treatments,
    and support for Veterans Care in the Community. The 2017 request
    supports programs to end and prevent veteran homelessness, invests in
    strategic initiatives to improve the quality and accessibility of VA
    healthcare programs, continues implementation of the Caregivers and
    Veterans Omnibus Health Services Act, and provides for activation
    requirements for new or replacement medical facilities. The 2017
    appropriations request includes an additional $1.7 billion above the
    enacted 2017 AA for veterans medical care. The request assumes
    approximately $3.6 billion annually in medical collections in 2017 and
    2018. For the 2018 Advance Appropriations for medical care, the current
    request is $66.4 billion.
    Hepatitis C Treatment
        Although the Hepatitis C virus infection (HCV) takes years to
    progress, it is the main cause of advanced liver disease in the United
    States. Treatment of this disease remains a high priority because its
    cure dramatically lowers patients' risk of liver failure, liver cancer,
    and death.
        VA is the largest single provider of care in the Nation for chronic
    HCV, and over the next 5 years, VA will strive to provide treatment to
    all veterans with HCV who are treatment candidates. For fiscal year
    2017, VA is requesting $1.5 billion for the cost of Hepatitis C drugs
    and clinical resources. With a budget of $1.5 billion in fiscal year
    2017, VA expects to treat at least 35,000 patients with HCV; the actual
    number of patients treated will depend on the cost to VA of Hepatitis C
    drugs. At the beginning of fiscal year 2016, almost 120,000 veterans in
    VA care were awaiting HCV treatment, of whom approximately 30,000 have
    advanced liver disease.
        VA successfully negotiated extremely favorable pricing for both of
    the new treatments available--Harvoni and Viekira--from two different
    drug manufacturers by stressing VA's proven ability to deliver market
    share, VA's large HCV population, and the long-term impact that VA's
    physician residency programs can have on post-residency prescribing
    practices.
        During fiscal year 2015, VA medical facilities treated more than
    30,000 veterans for HCV with these new drugs with remarkable success,
    achieving cure rates of 90 percent, similar to those seen in clinical
    trials.
        VA clinicians have rapidly adopted new, more effective therapies
    for HCV as they have become available. New therapies are costly and
    require well-trained clinical providers and support staff, presenting
    resource challenges for the Department. VA will focus resources on the
    sickest patients and most complex cases and continue to build capacity
    for treatment through clinician training and use of telehealth
    platforms. Patients with less advanced disease are being offered
    treatment through the Veterans Choice program in partnership with
    community HCV providers.
    Care in the Community
        VA is committed to providing veterans access to timely, high-
    quality healthcare. The 2017 budget includes $12.2 billion for Care in
    the Community and includes a new Medical Community Care budget account,
    consistent with the VA Budget and Choice Improvement Act (Public Law
    114-41). Of the total that will be spent on non-VA care in fiscal year
    2017, $7.5 billion will be provided through a transfer of the 2017
    enacted AA from the Medical Services account to the new budget account,
    and $4.7 billion will be provided through the resources provided in the
    Veterans Choice Act for implementation of the Veterans Choice Program.
        The Choice Act increased VA's in-house capacity by funding medical
    personnel growth in VA facilities and expanded eligibility for Care in
    the Community to ensure access to care within 30 days and to provide
    care closer to home for enrollees residing more than 40 miles from a VA
    facility (the 40-mile group).
        This additional capacity facilitated an increase in enrollees'
    reliance on VA healthcare by more than half a percent over the level
    expected in fiscal year 2015. This growth was the result of enrollees
    increasing their use of VA funded healthcare versus their use of other
    healthcare options (Medicare, Medicaid, commercial insurance, etc.).
        The fiscal year 2015 growth in enrollee reliance was largely in
    Care in the Community, with the 40-mile group generating a more
    significant increase in care:

      --In fiscal year 2015, enrollees' reliance on VA healthcare increased
            by 0.7 percent overall. Reliance for the 40-mile group
            increased by 2.8 percentage points from 32.5 percent to 35.3
            percent.
      --The increase in reliance was mostly driven by growth in Care in the
            Community. Cost sharing levels in VA are lower than what is
            typically available elsewhere, which provides an incentive for
            enrollees to use VA-paid Care in the Community.

        Enrollee reliance on VA healthcare is expected to continue to
    increase in 2016 and beyond to service the unmet demand that the Choice
    Act was enacted to address.
        On October 30, 2015, VA provided Congress with a plan for the
    consolidation and improvement of all purchased care programs into one
    New Veterans Choice Program (New VCP). Consistent with this report, the
    2017 budget includes legislative proposals to streamline and improve
    VA's delivery of Community Care.
    Caregiver Support Program
        Caregivers give their time and love in countless behind-the-scenes
    ways. Whether they are helping with transportation to and from
    appointments, helping the veteran apply for benefits, or helping with
    meals, bathing, clothing, medication, the spectrum of care is wide and
    compassion runs deep.
        The 2017 budget requests $725 million for the National Caregivers
    Support Program to support nearly 36,600 caregivers, up from about
    30,600 in fiscal year 2016. Funding requirements for caregivers are
    driven by an increase in the eligible veteran population, with
    caregiver enrollment increasing by an average of about 500 each month.
                          ending veteran homelessness
        The ambitious goal of ending veteran homelessness has galvanized
    the Federal Government and local communities to work together to solve
    this important National problem. Our systems are designed to help
    prevent homelessness whenever possible, and our goal is a systematic
    end to homelessness, meaning that there are no veterans sleeping on our
    streets and every veteran has access to permanent housing. Should
    veterans become homeless or be at-risk of becoming homeless, there will
    be capacity to quickly connect them to the help they need to achieve
    housing stability.
        The 2017 budget supports VA's commitment to ending veteran
    homelessness by emphasizing rescue for those who are homeless today and
    prevention for those at risk of homelessness. The 2017 budget requests
    $1.6 billion for VA homeless-related programs, including case
    management support for the Department of Housing and Urban Development
    (HUD)-VA Supportive Housing program (HUD-VASH), the Grant and Per Diem
    Program, VA justice programs, and the Supportive Services for Veteran
    Families program.
        In fiscal year 2015 and fiscal year 2016, VA committed more than
    $1.5 billion annually to strengthen programs that prevent and end
    homelessness among veterans. Communities that have reached the goal or
    are close to effectively ending homelessness rely heavily on VA
    targeted homeless resources. Communities that have a sustainment plan
    are depending on those resources to be available as they continue to
    tackle homelessness and sustain the support for veterans who have moved
    into permanent housing, ensuring that they maintain housing stability
    and do not fall back into homelessness.
        VA will continue to advocate for its continuum of homeless services
    to address the needs associated with preventing first-time
    homelessness, as well as the needs of those who return to homelessness,
    and focus on the root causes associated with homelessness, including
    poverty, addiction, mental health, and disability.
        Congress has an important role, as well, in ensuring adequate
    resources to meet the needs of those most vulnerable veterans by
    enacting authorizations and other legislation to provide VA with a full
    complement of tools to combat homelessness--including legislation that
    is a prerequisite to carry out dramatic improvements to our West Los
    Angeles campus centered on the needs of veterans.
                               benefits programs
        The 2017 budget requests $2.8 billion and 22,171 FTE for VBA
    General Operating Expenses, an increase of $93.4 million (3.4 percent)
    over the 2016 enacted level. The request includes an additional 300
    full-time equivalent (FTE) employees for non-rating claims.

        With the resources requested in the 2017 budget, VA will provide:

      --Disability compensation and pension benefits for 5.3 million
            veterans and survivors, totaling $86 billion;
      --Vocational rehabilitation and employment benefits to nearly 141
            thousand disabled veterans, totaling $1.4 billion;
      --Education benefits totaling $14 billion to more than one million
            veterans and family members;
      --Guaranty of more than 429,000 new home loans; and
      --Life insurance coverage to 1.0 million veterans, 2.2 million
            servicemembers, and 2.8 million family members.

        Improving the quality and timeliness of disability claim decisions
    has been integral to VBA's transformation of benefits delivery. VBA
    successfully streamlined a complex and paper-bound compensation claims
    process and implemented people, process, and technology initiatives
    necessary to optimize productivity and efficiency. In alignment with
    the MyVA transformation, VBA is working to further improve its
    operations with a focus on the customer experience. We are implementing
    enhancements to enable integration across our programs and
    organizational components, both inside and outside of VBA.
        VBA has processed an unprecedented number of rating claims in
    recent fiscal years (nearly 1.4 million in 2015, and more than 1
    million per year for the last 6 years). However, its success has
    resulted in other unmet workload demands. As VBA continues to receive
    and complete more disability rating claims, the volume of non-rating
    claims, appeals, and fiduciary field examinations increases
    correspondingly.

      --Non-rating claims. VA completed nearly 37 percent more non-rating
            work in 2015 than 2013--and 15 percent more than 2014. The 2017
            budget requests $29.1 million for an additional 300 non-rating
            claims processors to reduce the non-rating claims inventory and
            provide veterans with more timely decisions on non-rating
            claims.
      --Appeals. Over the last 20 years, appeal rates have continued to
            hold steady at between 11 and 12 percent of completed claims.
            As VBA continues to receive and complete record-breaking
            numbers of disability rating claims, the volume of appeals
            correspondingly increases. As of December 31, 2015, there were
            more than 440,000 benefits-related appeals pending in the
            Department at various stages in the multi-step appeals process,
            which divides responsibility between VBA and the Board of
            Veterans' Appeals (Board)--355,803 of those benefits-related
            appeals are in VBA's jurisdiction and 85,682 are within the
            Board's jurisdiction.
          Under current law, VA appeals framework is complex, ineffective,
            and opaque, and veterans wait on average 5 years for final
            resolution of an appeal. The 2017 budget supports the
            development of a Simplified Appeals Process to provide veterans
            with a simple, fair, and streamlined appeals procedure in which
            they would receive a final appeals decision within 365 days
            from filing of an appeal by fiscal year 2021. The 2017 budget
            provides funding to support over 900 FTE for the Board and
            proposes a legislative change that will improve an outdated and
            inefficient process which will benefit all veterans through
            expediency and accuracy. We look forward to working with
            Congress, veterans, and other stakeholders to implement
            improvements.
      --Fiduciary program. The fiduciary program served 29 percent more
            beneficiaries in 2015 than it served in 2014. Program growth is
            primarily due to an increase in the total number of individuals
            receiving VA benefits and an aging population of beneficiaries.
            Additionally, in 2015 the fiduciary program changed the way it
            captures beneficiary population data and now reports all
            beneficiaries served during the course of the fiscal year. In
            2015, fiduciary personnel conducted more than 84,000 field
            examinations, and VBA anticipates field examination
            requirements will exceed 97,000 in 2017.
      --Housing program. The 2017 budget includes $34 million for the VA
            Loan Electronic Reporting Interface (VALERI) to manage the 2.4
            million VA-guaranteed loans for veterans and their families.
            VALERI connects VA with more than 320,000 veteran borrowers and
            more than 225,000 mortgage servicer contacts. VA uses the
            VALERI tool to manage and monitor efforts taken by private-
            sector loan servicers and VA staff in providing timely and
            appropriate loss mitigation assistance to defaulted borrowers.
            Without these resources, approximately 90,000 veterans and
            their families would be in jeopardy of losing their homes each
            year, potentially costing the Government an additional $2.8
            billion per year. VALERI also supports payment of guaranty and
            acquisition claims.

        The budget requests the following advance appropriations amounts
    for 2018: $90.1 billion for compensation and pensions, $13.7 billion
    for readjustment benefits, and $107.9 million for insurance and
    indemnities. VA will continue to closely monitor workload and monthly
    expenditures in these programs and will revise cost estimates as
    necessary in the Mid-Session Review of the 2017 budget, to ensure the
    enacted advance appropriation levels are sufficient to address
    anticipated veteran needs throughout the year.
                       the simplified appeals initiative
        The current VA appeals process is broken. The more than 80-year-old
    process was conceived in a time when medical treatment was far less
    frequent than it is today, so it is encumbered by some antiquated laws
    that have evolved since WWI and steadily accumulated in layers.
        Under current law, the VA appeals framework is complex,
    ineffective, confusing, and understandably frustrating for veterans who
    wait much too long for final resolution of their appeal. The current
    appeals system has no defined endpoint, and multiple steps are set in
    statute. The system requires continuous evidence gathering and multiple
    re-adjudications of the very same or similar matter. A veteran,
    survivor, or other appellant can submit new evidence or make new
    arguments at any time, while VA's duty to assist requires continuous
    development and re-adjudication. Simply put, the VA appeals process is
    unlike other standard appeals processes across Federal and judicial
    systems.
        Fundamental legislative reform is essential to ensure that veterans
    receive timely and quality appeals decisions, and we must begin an
    open, honest dialogue about what it will take for us to provide
    veterans with the timely, fair, and streamlined appeals decisions they
    deserve. To put the needs, expectations, and interests of veterans and
    beneficiaries first--a goal on which we can all agree--the appeals
    process must be modernized.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The 2017 budget proposes a Simplified Appeals Process--legislation
    and resources (i.e., people, process, and technology) that would
    provide veterans with a simple, fair, and streamlined appeals process
    in which they would receive a final decision on their appeal within 1
    year from filing the appeal by fiscal year 2021.
        The 2017 budget requests $156.1 million and 922 FTE for the Board,
    an increase of $46.2 million and 242 FTE above the fiscal year 2016
    enacted level. This is a down-payment on a long-term, sustainable plan
    to provide the best services to veterans. This policy option also
    represents the best value to taxpayers (as outlined in the chart,
    Analysis of Alternatives).

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Without legislative change or significant increases in staffing, VA
    will face a soaring appeals inventory, and veterans will wait even
    longer for a decision on their appeal. If Congress fails to enact VA's
    proposed legislation to simplify the appeals process, Congress would
    need to provide resources for VA to sustain more than double its
    appeals FTE, with approximately 5,100 appeals FTE onboard. The prospect
    of such a dramatic increase, while ignoring the need for structural
    reform, is not a good result for veterans or taxpayers.
        While the Simplified Appeals proposal would require FTE increases
    for the first several years to resolve the more than 440,000 currently
    pending appeals, by 2022, VA would be able to reduce appeals FTE to a
    sustainment level of roughly 1,030 FTE (including 980 FTE at the Board
    and 50 at VBA), a level sufficient to process all simplified appeals in
    1 year. Notably, such a sustainment level is 1,135 FTE less than the
    current 2016 budget requires, and is 4,070 FTE less Department-wide
    than would be required to address this workload with FTE resources
    alone. In addition, this reform would essentially eliminate the need
    for appeals FTE at VBA, allowing these resources to be redirected
    within VBA to other priorities.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        In 2015, the Board was still adjudicating an appeal that originated
    25 years ago, even though the appeal had previously been decided by VA
    more than 27 times. Under the Simplified Appeals Process, most veterans
    would receive a final appeals decision within 1 year of filing an
    appeal. Additionally, rather than trying to navigate a multi-step
    process that is too complex and too difficult to understand, veterans
    would be afforded a transparent, single-step appeal process with only
    one entity responsible for processing the appeal. Essentially, under a
    simplified appeals process, as soon as a veteran files an appeal, the
    case would go straight to the Board where a Judge would review the same
    record considered by the initial decision-maker and issue a final
    decision within 1 year; informing the veteran whether that initial
    decision was substantially correct, contained an error that must be
    corrected, or was simply wrong. If a veteran disagrees with any or all
    of the final appeals decision, the veteran always has the option of
    filing a new claim for the same benefit once the appeal is resolved, or
    may pursue an appeal to the Court of Appeals for Veterans Claims.
        Rapid growth in the appeals workload exacerbates this challenge. As
    VBA has produced record-setting claims-decision output over the past 5
    years, appeals volume has grown commensurately. Between December 2012
    and November 2015, the number of pending appeals rose by 34 percent.
    Under current law with no radical change in resources, the number of
    pending appeals is projected to soar by 397 percent--from 437,000 to
    2.17 million (chart, Status of Appeals)--between November 2015 and
    fiscal year 2027.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        VA firmly believes that justice delayed is justice denied. In the
    streamlined appeals process proposed in the fiscal year 2017
    President's budget (chart, Proposed Simplified Appeals), there would be
    a limited exception allowing the Board to remand appeals to correct
    duty to notify and assist errors made on the part of the Agency of
    Original Jurisdiction (AOJ) prior to issuance of the initial AOJ
    decision.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                        medical and prosthetic research
        The 2017 budget continues VA's program of groundbreaking, high
    standard research focused on advancing the healthcare needs of all
    veterans. The 2017 budget requests $663 million for Medical Research
    and supports the President's Precision Medicine Initiative (PMI) to
    drive personalized medical treatment and the evolving science of
    Genomic Medicine--how genes affect health. In addition to the direct
    appropriation, Medical Research will be supported through $1.3 billion
    from VA's Medical Care program and other Federal and non-Federal
    research grants. Total funding for Medical and Prosthetic Research will
    be more than $2.0 billion in 2017.
        VA research is focused on the U.S. veteran population and allows VA
    to uniquely address scientific questions to improve veteran healthcare.
    Most VA researchers are also clinicians and healthcare providers who
    treat patients. Thus, VA research arises from the desire to heal rather
    than pure scientific curiosity and yields remarkable returns.
        For more than 90 years, VA research has produced cutting-edge
    medical and prosthetic breakthroughs that improve the lives of veterans
    and others. The list of accomplishments includes therapies for
    tuberculosis following World War II, the implantable cardiac pacemaker,
    computerized axial tomography (CAT) scans, functional electrical
    stimulation systems that allow patients to move paralyzed limbs, the
    nicotine patch, the first successful liver transplants, the first
    powered ankle-foot prosthesis, and a vaccine for shingles. VA
    researchers also found that one aspirin a day reduces by half the rate
    of death and nonfatal heart attacks in patients with unstable angina.
    More recently, VA investigators tested an insulin nasal spray that
    shows great promise in warding off Alzheimer's disease and found that
    prazosin (a well-tested generic drug used to treat high blood pressure
    and prostate problems) can help improve sleep and lessen nightmares for
    those with post-traumatic stress disorder.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Beyond VA's support of more than 2,200 continuing research
    projects, VA will leverage our Million Veteran Program (MVP)--already
    one of the world's largest databases of genetic information--to support
    several Precision Medicine Initiatives. The first initiative will
    evaluate whether using a patient's genetic makeup to inform medication
    selection is effective in reducing complications and getting patients
    the most effective medication for them. This initiative will focus on
    up to 21,500 veterans with PTSD, depression, pain, and/or substance
    abuse.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The second initiative will focus on additional analysis of DNA
    specimens already collected in the MVP. More than 438,000 veteran
    volunteers have contributed DNA samples so far. Genomic analysis on
    these DNA specimens allows researchers to extract critical genetic
    information from these specimens. There are several possible ``levels''
    of genomic analyses, with increasing cost.
        Built into the design of MVP and currently funded within the VA
    research program is a process known as ``exome chip'' genotyping--the
    tip of the iceberg in genomic analysis. Exome Chip genotyping provides
    useful information, but newer technologies promise significantly
    greater information for improving treatments. VA proposes conducting
    the next level of analysis, known as ``exome sequencing,'' on up to
    100,000 veterans who are enrolled in MVP. This exome sequencing
    analyzes the part of the genome that codes for proteins--the large,
    complex molecules that perform most critical functions in the body.
    Sequencing efforts will begin with a focus on veterans with PTSD and
    frequently co-occurring conditions such as depression, pain, and
    substance abuse, and expand to other chronic illnesses such as diabetes
    and heart disease, among others. This more detailed genetic analysis
    will provide greater information on the biological factors that may
    cause or increase the risk for these illnesses.
        VA's research and development program improves the lives of
    veterans and all Americans through healthcare discovery and innovation.
                                other priorities
    Information Technology
        The 2017 budget demonstrates VA's commitment to using cutting-edge
    information technology (IT) to support transformation and ensure that
    the veteran is at the center of everything we do. The budget requests
    $4.28 billion--an increase of $145 million (3.5 percent) from the 2016
    enacted level--to help stabilize and streamline core processes and
    platforms, eliminate the information security material weakness, and
    institutionalize new capabilities to deliver improved outcomes for
    veterans. The request includes $471 million for new efforts to develop,
    improve, and enhance clinical and benefits systems and processes and
    supports VA's strategy to replace FMS. The 2017 budget was developed
    through Federal IT Acquisition Reform Act (FITARA) compliant processes
    led by the Chief Information Officer (CIO), in concert with the Chief
    Financial Officer and Chief Acquisition Officer.
        In fiscal year 2015, the Office of Information and Technology (OIT)
    developed an IT Enterprise Strategy and an Enterprise Cybersecurity
    Strategy. These strategies support OIT's vision to become a world-class
    organization that provides a seamless, unified veteran experience
    through the delivery of state-of-the-art technology. OIT is
    implementing a new IT Security Strategy to improve VA's security
    posture and eliminate the Federal Information Security Management Act/
    Federal Information System Controls Audit Manual material weakness.
        The 2017 budget includes $370.1 million for information security,
    an increase of 105 percent over the fiscal year 2016 funding level. In
    addition, the 2017 budget includes $50 million to launch a new Data
    Management program to use data as a strategic resource. Under this
    program, VA will inventory its data collection activities--with the
    objective of requesting data from the veteran only once--and dispose
    expired information in a secure and timely way. These two aspects will
    reduce VA costs for data storage and support safeguards for veterans'
    information.
    National Cemetery Administration
        The National Cemetery Administration (NCA) has the solemn duty to
    honor veterans and their families with final resting places in national
    shrines and with lasting tributes that commemorate their service and
    sacrifice to our Nation. The 2017 budget requests $286 million, an
    increase of $15 million (5.5 percent) to allow VA to provide perpetual
    care for more than 3.5 million gravesites and more than 8,800 developed
    acres. The budget supports NCA's efforts to raise and realign
    gravesites and repair turf in order to maintain cemeteries as national
    shrines. The budget also continues implementation of a Geographic
    Information System to enable enhanced accounting of remains and
    gravesites and enhanced gravesite location for visitors. The budget
    positions NCA to meet veterans' emerging burial and memorial needs in
    the decades to come by ensuring that veterans and their families
    continue to have convenient access to a burial option in a National,
    State, or Tribal veterans cemetery and that the service they receive is
    dignified, respectful, and courteous.
                               va infrastructure
        The 2017 budget requests $900.2 million for VA's Major and Minor
    construction programs. The budget invests in infrastructure projects at
    existing campuses that will lead to seismically safe facilities,
    ensuring that veterans are safe when they seek care. The capital asset
    budget request demonstrates VA's commitment to address critical Major
    construction projects that directly affect patient safety and seismic
    issues, and reflects VA's promise to provide safe and secure facilities
    for veterans. The 2017 budget also requests funding to ensure that VA
    has the ability to provide eligible veterans with access to burial
    services through new and expanded cemeteries, and prevent the closure
    to new interments in existing cemeteries.
        VA acknowledges the transformation underway in the landscape for
    healthcare delivery. Our future space needs may be impacted by the
    changes we are already implementing in how we deliver care for
    veterans. In addition, we plan to potentially incorporate any
    recommendations from the Commission on Care and their impact on our
    changing service delivery into our long-term infrastructure strategy.
        Leasing provides flexibility and enables VA to more quickly adapt
    to changes in medical technology, workload, new programs, and
    demographics. VA is also looking to Congress for authorization of 18
    leases submitted in VA's fiscal year 2015 and 2016 budget requests. The
    pending major medical facility lease projects will replace, expand, or
    create new outpatient clinics and research facilities and are critical
    for providing access for veterans and enhancing our research
    capabilities nationwide. The 2017 budget includes a request to
    authorize six additional replacement major medical facility leases
    under VA's authority in 38 U.S.C. Sec. Sec. 8103 and 8104 and with the
    anticipated delegation of leasing authority from the General Services
    Administration. The Department is awaiting authorization of its request
    to expand the definition of ``Medical Facilities'' in VA's authorizing
    statutes to allow VA to more easily partner with other Federal
    agencies. Another proposal that deserves attention is authorization of
    enhanced use lease (EUL) authority to encompass broader possibilities
    for mixed-use projects. This change would give VA more opportunities to
    engage the private sector, local governments, and community partners by
    allowing VA to use underutilized property that would benefit veterans
    and VA's mission and operations.
    Major Construction
        The 2017 budget requests $528.1 million for Major Construction. The
    request includes funds to address seismic problems in facilities in
    Long Beach, California, and Reno, Nevada. These projects will correct
    critical safety and seismic deficiencies that pose a risk to veterans,
    VA staff, and the public. Consistent with Public Law 114-58, the
    Department must identify a non-VA entity to execute these two projects,
    as they are more than $100 million. We have identified the U.S. Army
    Corps of Engineers as our construction agent to execute these projects.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        We must prevent the devastation and potential loss of life that may
    occur because our facilities are vulnerable to earthquakes--such as the
    one that occurred in 1971 in San Fernando, California. As shown, a 6.5-
    magnitude earthquake caused two buildings in the San Fernando Medical
    Center to collapse and 46 patients and staff to lose their lives.
        These images show a known seismic deficiency at the San Francisco
    Medical Center--built in 1933--wherein the rebar does not extend into
    the ``pile cap.''

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The request also includes funding for new national cemeteries in
    western New York and southern Colorado, and national cemetery
    expansions in Jacksonville, Florida and South Florida. These cemetery
    projects support NCA's goal to ensure that eligible veterans have
    access to a burial option within a reasonable distance from their
    residences.

      --The new western New York national cemetery will establish a
            dignified burial option for more than 96,000 veterans plus
            eligible family members in the western New York region.
      --The new southern Colorado national cemetery will establish a
            dignified burial option for more than 95,000 veterans plus
            eligible family members in the southern Colorado region.
      --The Jacksonville National Cemetery expansion will develop
            approximately 30 acres of undeveloped land to provide
            approximately 20,200 gravesites.
      --The South Florida National Cemetery expansion will develop
            approximately 25 acres of undeveloped land to provide
            approximately 21,750 gravesites.
    Minor Construction
        In 2017, the budget requests $372 million for Minor Construction.
    The requested amount would provide funding for ongoing projects that
    renovate, expand and improve VA facilities, while increasing access for
    our veterans. Examples of projects include enhancing women's health
    programs; providing additional domiciliaries to further address
    veterans' homelessness; improving safety; mitigating seismic
    deficiencies; transforming facilities to be more veteran-centric;
    enhancing patient privacy; and enhancing research capabilities.
        The Minor Construction request will also provide funding for
    gravesite expansion and columbaria projects to keep existing national
    cemeteries open, and will support NCA's urban and rural initiatives. It
    will also provide funding for projects at VBA regional offices
    nationwide and will fund infrastructure repairs and enhancements to
    improve operations for the Department's staff offices.
    Leasing
        The 2017 budget includes a request to authorize six replacement
    major medical facility leases located in Corpus Christi, Texas;
    Jacksonville, Florida; Pontiac, Michigan; Rochester, New York; Tampa,
    Florida; and Terre Haute, Indiana. These leases will allow VA to
    provide continued access to veterans that are served in these
    locations.
                              myva transformation

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        MyVA puts veterans in control of how, when, and where they wish to
    be served. It is a catalyst to make VA a world-class service provider--
    a framework for modernizing VA's culture, processes, and capabilities
    to put the needs, expectations, and interests of veterans and their
    families first. A veteran walking into any VA facility should have a
    consistent, high-quality experience.
        MyVA will build upon existing strengths to promote an environment
    where VA employees see themselves as members of one enterprise,
    fortified by our diverse backgrounds, skills, and abilities. Moreover,
    every VA employee--doctor, rater, claims processor, custodian, or
    support staffer, or the Secretary of Veterans Affairs--will understand
    how they fit into the bigger picture of providing veteran benefits and
    services. VA, of course, must also be a good steward of public
    resources. Citizens and taxpayers should expect to see efficiency in
    how we run our internal operations.
        The fiscal year 2017 budget will make investments toward the five
    critical MyVA objectives:

        1.  Improving the veteran experience: At a bare minimum, every
    contact between veterans and VA should be predictable, consistent, and
    easy; however, we are aiming to make each touchpoint exceptional. It
    begins with receptionists who are pleasant to our veteran clients, but
    there is also a science to this experience. We are focusing on human-
    centered design, process mapping, and working with leading design firms
    to learn and use the technology associated with improving every
    interaction with clients.
        2.  Improving the employee experience--so we can better serve
    veterans: VA employees are the face of VA. They provide care,
    information, and access to earned benefits. They serve with distinction
    daily. We cannot make things better for veterans without improving the
    work experience of our dedicated employees. We must train them. We must
    move from a rules/fear-based culture to a principles/values-based
    culture. I learned in the private sector that it is absolutely not a
    coincidence that the very best customer-service organizations are
    almost always among the best places to work.
        3.  Improving internal support services: We will let employees and
    leaders focus on assisting veterans, rather than worrying about ``back
    office'' issues. We must bring our IT infrastructure into the 21st
    century. Our scheduling system, where many of our issues with access to
    care were manifest, dates to 1985. Our Financial Management System is
    written in COBOL, a language I used in 1973. This is simply
    unacceptable. It impedes all of our efforts to best serve veterans.
        4.  Establishing a culture of continuous improvement: We will apply
    Lean strategies and other performance improvement capabilities to help
    employees examine their processes in new ways and build a culture of
    continuous improvement.
        5.  Enhancing strategic partnerships: Expanding our partnerships
    will allow us to extend the reach of services available for veterans
    and their families. We must work effectively with those who bring
    capabilities and resources to help veterans.
    Breakthrough Priorities for CY 2016
        While we have made progress, we are still on the first leg of a
    multi-year journey. We have narrowed down our near-term focus to 12
    ``breakthrough priorities.''
        Many of these reflect issues which are not new--they have been
    known problems, in some cases, for years. We have already seen some
    progress in solving many of them. However, we still have much work to
    do.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        The following are our 12 priorities and the 2016 outcomes to which
    we aspire. We understand that it will be a challenge to accomplish all
    of these goals this year, but we have committed ourselves to producing
    results for veterans and creating irreversible momentum to continue the
    transformation in future years.
    Veteran Facing Goals
         1.  Improve the Veteran Experience.
          -- Breakthrough Outcome for 2016:
            -- Strengthen the trust in VA to fulfill our country's
                commitment to veterans; currently measured at 47 percent,
                we want it to be 70 percent by year end.
            -- Establish a Department-wide customer experience measurement
                framework to enable data-driven service improvements.
            -- Make the Veterans Experience office fully operational.
            -- Expand the network of Community Veteran Engagement Boards to
                more than 100.
            -- Additionally, in order to deliver experiences to veterans
                that are effective, easy, and in which veterans feel
                valued, medical centers will ensure that they are fully
                staffed at the frontline with well-prepared employees who
                have been selected for their customer service.
                Functionally, this means new frontline staff will be
                assessed through a common set of customer service criteria,
                hired within 30 days of selection, and provided a
                nationally standardized onboarding and training program.
         2.  Increase Access to Health Care.
          -- Breakthrough Outcome for 2016:
            -- When veterans call or visit primary care facilities at a VA
                Medical Center, their clinical needs will be addressed the
                same day.
            -- When veterans call for a new mental health appointment, they
                receive a suicide risk assessment and immediate care if
                needed. Veterans already engaged in mental healthcare
                identifying a need for urgent attention will speak with a
                provider the same day.
            -- Utilizing existing VistA technology, veterans will be able
                to conveniently get medically necessary care, referrals,
                and information from any VA Medical Center, in addition to
                the facility where they typically receive their care.
         3.  Improve Community Care.
          -- Breakthrough Outcome for 2016: Improve the veterans'
            experience with Care in the Community. Following enactment of
            our requested legislation, by the end of the year:
            -- VA will begin to consolidate and streamline its non-
                Department Provider Network and improve relationships with
                community providers and core partners.
            -- Veterans will be able to see a community provider within 30
                days of their referral.
            -- Non-Department claims will be processed and paid within 30
                days, 85 percent of the time.
            -- Healthcare claims backlog will be reduced to less than 10
                percent of total inventory.
            -- Referral and authorization time will be reduced.
         4.  Deliver a Unified Veteran Experience.
          -- Breakthrough Outcome for 2016:
            -- Vets.gov will be able to provide veterans, their families,
                and caregivers with a single, easy-to use, and high-
                performing digital platform to access the VA benefits and
                services they have earned.
            -- Vets.gov will be data-driven and designed such that the top
                100 search terms will be available within one click from
                search results. The top 100 search terms will all be
                addressed within one click on the site.
            -- All current content, features and forms from the current
                public-facing VA websites will be redesigned, rewritten in
                plain language, and migrated to Vets.gov, in priority order
                based on veteran demand.
            -- Additionally, we will have one authoritative source of
                customer data; eliminating the disparate streams of
                Administration-specific data that require veterans to
                replicate inputs.
         5.  Modernize our Contact Centers (Including Veterans Crisis
    Line).
          -- Breakthrough Outcome for 2016:
            -- Veterans will have a single toll free phone number to access
                the VA Contact Centers, know where to call to get their
                questions answered, receive prompt service and accurate
                answers, and be treated with kindness and respect. VA will
                do this by establishing the initial conditions necessary
                for an integrated system of customer contact centers.
            -- By the end of this year, every veteran in crisis will have
                his or her call promptly answered by an experienced
                responder at the Veterans Crisis Line.
        6. Improve the Compensation & Pension (C&P) Exam Process.
          -- Breakthrough Outcome for 2016:
            -- Improved veteran satisfaction with the C&P Exam process. We
                have a baseline satisfaction metric in place and have
                established a goal for significant improvement.
            -- VA will have a national rollout of initiatives to ensure the
                experience is standardized across the Nation.
         7.  Develop a Simplified Appeal Process.
          -- Breakthrough Outcome for 2016:
            -- Subject to successful legislative action, put in place a
                simplified appeals process, enabling the Department to
                resolve 90 percent of appeals within 1 year of filing by
                2021.
            -- Increase current appeals production to more rapidly reduce
                the existing appeals inventory.
         8.  Continue Progress in Reducing Veteran Homelessness.
          -- Breakthrough Outcome for 2016:
            -- Continue progress toward an effective end to veteran
                homelessness by permanently housing or preventing
                homelessness for an additional 100,000 veterans and their
                family members.
    VA Internal Facing Goals
         9.  Improve the Employee Experience (Including Leadership
    Development).
          -- Breakthrough Outcome for 2016:
            -- Continue to improve the employee experience by developing
                engaged leaders at all levels who inspire and empower all
                employees to deliver a seamless, integrated, and responsive
                VA customer service experience.
            -- More than 12,000 engaged leaders skilled in applying LDL
                principles, concepts, and tools will work projects and/or
                initiatives to make VA a more effective and efficient
                organization.
            -- Improve VA's employee experience by incorporating LDL
                principles into VA's leadership and supervisor development
                programs and courses of instruction.
            -- VA Senior Executive performance plans will include an
                element that targets how to improve employee engagement and
                customer service, and all VA employees will have a customer
                service standard in their performance plans.
            -- All VA supervisors will have a customer service standard in
                their performance plans.
            -- VA will begin moving from paper-based individual development
                plans to a new electronic version, making it easier for
                both supervisors and employees.
        10.  Staff Critical Positions.
          -- Breakthrough Outcome for 2016:
            -- Achieve significantly improved critical staffing levels that
                balance access and clinical productivity, with targets of
                95 percent of Medical Center Director positions filled with
                permanent appointments (not acting) and 90 percent of other
                critical shortages addressed--management as well as
                clinical.
            -- Work to reduce ``time to fill'' hiring standards by 30
                percent.
        11.  Transformation the Office of Information & Technology (OIT).
          -- Breakthrough Outcome for 2016: Achieve the following key
            milestones on the path to creating a world-class IT
            organization that improves the support to business partners and
            veterans.
            -- Begin measuring IT projects based on end product delivery,
                starting with a near-term goal to complete 50 percent of
                projects on time and on budget.
            -- Stand up an account management office.
            -- Develop portfolios for all Administrations.
            -- Tie all supervisors' and executives' performance goals to
                strategic goals.
            -- Close all current cybersecurity weaknesses.
            -- Develop a holistic veteran data management strategy.
            -- Implement a quality and compliance office.
            -- Deploy a transformational vendor management strategy.
            -- Ensure implementation of key initiatives to improve access
                to care.
            -- Establish one authoritative source for veteran contact
                information, military service history, and veteran status.
            -- Finalize the Congressionally mandated DOD-VA
                Interoperability requirements.
        12.  Transform Supply Chain.
          -- Breakthrough Outcome for 2016:
            -- Build an enterprise-wide integrated Medical-Surgical supply
                chain that leverages VA's scale to drive an increase in
                responsiveness and a reduction in operating costs. More
                than $150 million in cost avoidance will be redirected to
                priority veteran programs.

        We are rigorously managing each of these ``breakthrough
    priorities'' by instituting a Department level scorecard, metrics, and
    tracking system. Each priority has an accountable and responsible
    official and a cross-functional, cross-Department team in support. Each
    team meets every other week in person with either the Secretary or
    Deputy Secretary to discuss progress, identify roadblocks, and problem
    solve solutions. This is a new VA--more transparent, collaborative, and
    respectful; less formal and bureaucratic; more execution and outcome-
    focused; principles based, not rules-based.
                             legislative priorities
        The Department is grateful for your continuing support of veterans
    and appreciates your efforts to pass legislation enabling VA to provide
    veterans with the high-quality care they have earned and deserve. We
    have identified a number of necessary legislative items that require
    action by Congress in order to best serve veterans going forward:

        1.  Improve Care in the Community: We need your help, as discussed
    on many occasions, to help overhaul our Care in the Community programs.
    VA staff and subject matter experts have communicated regularly with
    congressional staff to discuss concepts and concerns as we shape the
    future plan and recommendations. We believe that together we can
    accomplish legislative changes to streamline Care in the Community
    programs before the end of this session of Congress.
        2.  Flexible Budget Authority: We need flexible budget authority to
    avoid artificial restrictions that impede our delivery of care and
    benefits to veterans. Currently, there are more than 70 line items in
    VA's budget that dedicate funds to a specific purpose without adequate
    flexibility to provide the best service to veterans. These include
    limitations within the same general areas, such as healthcare funds
    that cannot be spent on healthcare needs. These restrictions limit VA's
    ability to deliver veteran care and benefits based on demand, rather
    than specific funding lines. The 2017 b`udget proposes appropriations
    language to provide VA with new authority to transfer up to 2 percent
    of the discretionary appropriations for fiscal year 2017 between any of
    VA's discretionary appropriations accounts, excluding Medical Care.
    This new authority would give VA greater ability to address emerging
    needs and overcome artificial funding restrictions on providing
    veterans' care and benefits.
        3.  Support for the Purchased Health Care Streamlining and
    Modernization Act: This legislation would clarify VA's ability to
    contract with providers in the community on an individual basis,
    outside of Federal Acquisition Regulations (FAR), without forcing
    providers to meet excessive compliance burdens, while maintaining
    essential worker protections. The proposal allows this option only when
    care directly from VA or from a non-VA provider with a FAR-based
    agreement in place is not feasibly available. Already, we have seen
    certain nursing homes not renew their agreements with VA because of the
    excessive compliance burdens, and as a result, veterans are forced to
    find new nursing home facilities for residence.
             VA further requests your support for our efforts to recruit
    and retain the very best clinical professionals. These include, for
    example, flexibility for the Federal work period requirement, which is
    inconsistent with private sector medicine, and special pay authority to
    help VA recruit and retain the best talent possible to lead our
    hospitals and healthcare networks.
        4.  Special Legislation for VA's West Los Angeles Campus: VA has
    requested legislation to provide enhanced use leasing authority that is
    necessary to implement the Master Plan for our West Los Angeles Campus.
    That plan represents a significant and positive step for veterans in
    the Greater West Los Angeles area, especially those who are most in
    need. We appreciate the Committee's hearing in December 2015 on
    legislation to implement that Master Plan, and VA urges your support
    for expedited consideration of this bill to secure enactment of it in
    this session of Congress. Enactment of the legislation will allow us to
    move forward and get positive results for the area's veterans after
    years of debate in the community and court action. This bill would
    reflect the settlement of that litigation, and truly be a win-win for
    veterans and the community. I believe this is a game-changing piece of
    legislation as it highlights the opportunities that are possible when
    VA works in partnership with the community.
        5.  Overhaul the Claims Appeals Process: As mentioned earlier, VA
    needs legislation that sets out structural reforms that will allow VBA
    and the Board to provide veterans with the timely, fair, and quality
    appeals decisions they deserve thereby addressing the growing inventory
    of appeals.

        Lastly, let me again remind everyone that the vast majority of VA
    employees are hard workers who do the right thing for veterans every
    day. However, we need your assistance in supporting the cultural change
    we are trying to drive. We are working to change the culture of VA from
    one of rules, fear, and reprisals to one of principles, hope, and
    gratitude. We need all stakeholders in this transformation to embrace
    this cultural transformation, including Congress. In fact, I think
    Congress, above all, recognizes the policy window we have at hand and
    must have the courage to make the type of changes it is asking VA and
    our employees to make. Congress can only put veterans first by caring
    for those who serve veterans.
        Our dedicated VA employees, if given the right tools, training, and
    support, can and go out of their way to provide the best care possible
    to our veterans and their families.
                                    closing
        VA exists to serve veterans. We have spent the last year and a half
    working to find new and better ways to provide high quality care and
    administer benefits effectively and efficiently through responsible use
    of taxpayer dollars. We will continue to face enormous challenges, and
    this budget request will provide the resources needed to continue the
    transformation of this Department.
        This budget and associated legislative proposals will allow us to
    streamline care for veterans and improve access by addressing existing
    gaps, develop a simplified appeals process, further the progress we
    have made to eliminate the VBA claims backlog and end veteran
    homelessness, and improve our cyber security posture to protect veteran
    and employee data. It will also allow us to continue implementing MyVA
    to guide overall improvements to VA's culture, processes, and
    capabilities.
        I have pledged that VA will ensure that the funds Congress
    appropriates to VA will be used to improve both the quality of life for
    veterans and the efficiency of our operations. I am proud to continue
    this work and recognize there is much left to be done. We have made
    great strides and are grateful for the support of Congress through this
    transformation.
        Thank you for the opportunity to appear before you today and for
    your continued steadfast support of veterans. We look forward to your
    questions.

                HINES VAMC SCHEDULING MANIPULATION INVESTIGATION

        Senator Kirk. Let me start the questions here, and say, Mr.
    Secretary, Ms. Germaine Clarno is a social worker at the VA
    hospital in Hines, Illinois. She has been calling for the VA to
    fix failures at the hospital for years.
        I introduced you to Germaine in Chicago in January of 2015
    and again in my office on April 21, so you know her. It was 11
    months after I asked your predecessor, General Shinseki, to
    investigate the allegations of Ms. Clarno at the Veterans
    Hospital in Hines similar to the scandal at the Phoenix VA, all
    to acquire bonuses and promotions.
        This is why I called for the resignation of Joan Ricard,
    the person who led the Hines VA, and then she retired.
        Fourteen months after my call to General Shinseki on July
    20, 2015, your chief of staff, Rob Nabors, concluded that the
    Inspector General investigation had ``thoroughly addressed the
    concerns of the complainant Germaine Clarno'' as summary number
    one. In response, both Germaine and the Office of Special
    Counsel (OSC) asked for the full Inspector General
    investigation report. That was 7 months ago.
        Summary number two of the Inspector General investigation
    on Hines' scheduling manipulation also came from the Inspector
    General on September 8. And in response, 2 weeks ago, the OSC
    wrote President Obama on the Hines investigation that the
    report was ``incomplete'' and ``not responsive,'' did not
    respond to the whistleblower's concerns raised and ``did not
    meet the statutory requirements,'' and was, ``not responsive to
    the serious allegations of significant wait times and delays in
    the veterans' access at Hines.'' It also said, ``it
    demonstrated hostility'' toward Ms. Clarno apparently for
    having spoken publicly, as well as an attempt to minimize her
    allegations.
        Again, summary number three was released, but not a report
    with the VA's instructions for change.
        Secretary McDonald, the VA-MilCon section of the funding
    bill of the omnibus did require all ``work products'' to be
    transmitted to the Appropriations Committee. I would ask you if
    you have brought this full report, and I would like you to
    bring the full report to the subcommittee as required by law,
    which would really help Ms. Baldwin on the candy factory at
    Tomah to get the complete Inspector General report, as required
    by law. I have also discussed this with our ranking member, Mr.
    Tester.
        Secretary McDonald. Mr. Chairman, we want all of the
    Inspector General reports to be released. In fact, as you
    properly pointed out, I have met with Ms. Clarno on numerous
    occasions. We appreciate her coming forward and describing what
    was wrong at Hines.
        As you properly pointed out, these investigations occurred
    in the middle of 2014 before I was confirmed. The President has
    nominated a new Inspector General, and we would like the Senate
    to immediately confirm that new Inspector General, Mike Missal,
    because we have a lot of work to do with the Inspector General
    to get these reports out.
        Also, in the letter that you referenced from the Inspector
    General, if you read the next paragraph, the Inspector General
    says that she is optimistic that this new Inspector General
    will conduct more thorough investigations in a more appropriate
    and comprehensive direction for the Department.
        Our Deputy Secretary is digging into all of these issues
    and sorting out the differences in opinion between the
    Inspector General report and between the Office of Special
    Counsel. We are working with both parties to do that. As soon
    as we are done doing that, we will get back to [you]
    immediately.
        But again, I just want to say we appreciate Ms. Clarno
    pointing these things out.
        Senator Kirk. She is sitting right behind you there.
        Let's keep going. Mr. Tester.
        Senator Tester. Thank you.

                         INSPECTOR GENERAL CONFIRMATION

        Just very quickly, Secretary McDonald, what you are saying
    is that if Mike Missal can get confirmed, you could get that
    information to us quicker?
        Secretary McDonald. Yes, sir. I think we have been short-
    staffed at the Inspector General since the Inspector General
    retired.
        Senator Tester. So it is important. I believe he is cleared
    on our side and so if, Mr. Chairman, if you and the other
    members of this subcommittee can make that plea to your caucus
    to take off the hold so we can get him confirmed, it could make
    a big difference.
        I think it is important we get this report. I think we need
    to get the good information on this report and get it as soon
    as possible, so I support the chairman's efforts here, but you
    guys need the tools to be able to do that. So please help.

                    BETTER CARE IN THE COMMUNITY LEGISLATION

        As I said in my opening, I am working on a bipartisan piece
    of legislation, a number of issues including provider
    agreements, spending flexibility that will allow you to provide
    better care in the community in a timely manner.
        Can I get a commitment from you, Mr. Secretary, that you
    will help get this bill across the finish line, particularly
    with the VA Committee?
        Secretary McDonald. Yes, sir. I believe we are doing that
    Tuesday.
        Senator Tester. Would you agree that if we do not get that
    bill done, that it could have a dramatic impact or continue the
    kind of impacts we are having on veterans right now with
    Choice?
        Secretary McDonald. Yes, sir. One of the reasons our
    service is so bad with a third-party administrator, like Health
    Net, is resolved in this bill.
        Senator Tester. Okay, good. That is good. Thank you for
    that.

                           2018 ADVANCE APPROPRIATION

        Last week, when Dr. Shulkin was here, we questioned him
    about a gaping hole in the fiscal year 2018 advance
    appropriations for medical care. You are going to get a second
    bite at this apple, but this is going to be a big bite.
        My understanding is the VA's future costs for all hires
    under the Choice Act is $1.3 billion and the future costs for
    leases and activation is about $318 million. None of these
    costs have been built into that 2018 advance request. Is that
    correct?
        Secretary McDonald. Yes, sir.
        Senator Tester. Okay. So on top of that, between the Choice
    Act funds and discretionary appropriations, I think you are
    planning on spending about $12 billion on Care in the Community
    in fiscal year 2017. Your head is nodding, so I assume that is
    correct.
        But in 2018, the advance appropriations request for Care in
    the Community is about $9.4 billion. I hope you can track these
    numbers. You know them. That is almost a $3 billion reduction,
    and Choice funding will probably be exhausted by then. How are
    you going to make up the difference?
        Secretary McDonald. I think, again, you mentioned the
    second bite idea, but I think the issue here, Senator Tester,
    is we have to know what we are actually going to provide before
    we can cost it out. That is why Tuesday's hearing with the
    authorizing committee is so important, because if we can deal
    with your bill, your consolidation bill, consolidation of Care
    in the Community from the seven different methods to one, we
    will know exactly how to cost it out.
        But as you know, there are choices within that bill, there
    are choices available, so we are waiting to see what the
    authorizers authorize. Then we will know exactly what the cost
    will be.
        Senator Tester. So you know, and I think you probably know
    this, the nondefense discretionary cap is going to be $3
    billion lower than it is this year, so we are going to get a
    double whammy off this thing, if you know what I mean.
        So we look forward to making sure we do not have a
    shortfall in your monies.

                           SES EXECUTIVES TO TITLE 38

        Mr. Secretary, you put forth a proposal that would allow
    the VA to move all of its senior executives to title 38. Can
    you explain how this move will impact the accountability at
    your Department?
        Secretary McDonald. The idea of moving our Senior Executive
    Service staff to title 38 was to help us recruit, because we
    would have direct hiring authority. It was to help us pay more
    competitively. Most of our medical center directors make less
    than 50 percent of what they can get from the private sector,
    because they are Readjustment Counseling Service (RCS)
    employees.
        It would also have the appeal authority for disciplinary
    actions within the Department, so I would be the appellate
    authority rather than the Merit Systems Protection Board
    (MSPB).
        In working within the executive branch, we have come to the
    point of view that that is appropriate for medical people in
    the Veterans Health Administration (VHA), but there is some
    pause whether or not we should apply that it people in the
    [Veterans] Benefits Administration.
        Senator Tester. Would it make a difference in
    accountability?
        Secretary McDonald. We are coming up with a proposal, which
    we will share with you on Tuesday, that would make a difference
    in accountability, yes, sir.

                      SIMPLIFIED APPEALS PROCESS PROPOSAL

        Senator Tester. Okay. You put forth a proposal, very
    quickly, on the appeals process.
        Secretary McDonald. Yes, we have.
        Senator Tester. Have you contacted the Veterans Service
    Organizations (VSOs) on that proposal?
        Secretary McDonald. We have had people locked in the room
    this week, including Veterans Service Organizations, AHF
    members, working on the proposal.
        Senator Tester. So you cannot tell me whether they support
    it or not at this point in time?
        Secretary McDonald. I think it is safe to say that they
    support most of the elements in the proposal. I think the most
    difficult element in that proposal is freezing the form 9,
    which would cause a veteran to reapply.
        Senator Tester. All right. Thank you.
        Thank you, Mr. Chairman.
        Senator Kirk. Ms. Collins.
        Senator Collins. Thank you, Mr. Chairman.

                         ACCESS RECEIVED CLOSER TO HOME

        Mr. Secretary, welcome. We have discussed many times the
    ARCH (Access Received Closer to Home) program, which exists in
    northern Maine, which is one of the five pilot sites across the
    country. This program, as you well know, allows veterans in
    rural areas to receive exceptionally high-quality care close to
    home, close to their families, and when they need it.
        It has a 90 percent patient satisfaction rate. And
    according to the VA's own figures, the average cost per veteran
    in Maine using the ARCH program is less than the average cost
    for the VHA direct care.
        This is a program that has been very well-received. It has
    been extremely well-operated. And it contrasts sharply with the
    experience that Maine veterans have had with the Choice program
    where fewer than 50 percent of eligible Choice program patients
    in Maine have received the appointments they need when they
    need it. And the contractor chosen by the VA, Health Net, has
    performed very poorly in my State.
        Given the huge success of the ARCH program and how happy
    our veterans are with it, and how cost effective it is, I do
    not understand the resistance of the VA to preserving the
    program.
        I hear all of this discussion of folding ARCH into the
    Choice program. To me, ARCH ought to be the model for the
    Choice program. ARCH is working, working well. The Choice
    program is not working well.
        So will you consider extending the ARCH program in its
    current form, so that we are not taking a program that is
    working well and breaking it by folding it into a program that
    is not working well?
        Secretary McDonald. Senator Collins, the new program that
    we are talking about, taking the seven different ways of
    achieving care in the community, including ARCH, and
    consolidating them into one is not consolidating them into the
    old Choice program. It is creating a whole new program that
    takes the benefits, the things we learned from the ARCH pilot,
    and folds them into a wholly new program that provides care in
    the community in one way with one reimbursement rate.
        So I think we should look at the bill Senator Tester has
    authored and others in our authorization committee have all
    have authored as a wholly new program that will take everything
    we have learned from Choice and from ARCH and actually
    consolidate it in a new program that will make things easier
    for veterans and make things easier for our employees.
        David, would you like to comment?
        Dr. Shulkin. Senator Collins, I think you are accurate. The
    ARCH program predated Choice. It has worked extremely well.
        As you know, it is a relatively small number of veterans. I
    think in the State of Maine, it is about 1,400 veterans. It is
    pretty small.
        So that idea of expanding the ARCH program to be this
    consolidated program is one that we have looked at. But the
    cost of that would be extraordinary because, as you know, ARCH
    was meant to get veterans access in rural areas, in areas where
    there are provider shortages. So we tend to have a
    reimbursement rate for providers that would be really
    unsustainable for the rest of the country.
        So we are trying to preserve what has worked in ARCH in
    this new Veterans Choice program.
        Senator Collins. Well, let me just point out that the
    hospital, Cary Medical Center, that is administering the ARCH
    program is paid at Medicare reimbursement rates. And according
    to the VA's own figures, the average cost per veteran in Maine
    using ARCH is $2,708.70--a pretty precise number--which is less
    than the VHA direct care.
        So my concern is that you are going to cause disruption in
    a program that has been cost-effective and has worked very
    well. That is what I am really worried about.
        I just cannot overstate how satisfied the veterans are with
    this program.
        My time has expired, and I know we have a vote. I have an
    important question on the opioid problem and the prescriptions
    that are prescribed by the VA. The risk of death by accidental
    overdose among patients at the VA facilities is nearly twice
    that of nonveterans, so I would ask to submit that question and
    others for the record.
        Thank you.
        Senator Kirk. I think since we have a vote that has just
    been called, we will take a short recess.
        [Recess.]
        Senator Murkowski [presiding]. At this time, I will turn to
    Senator Hoeven.

                        VETERANS CHOICE IMPROVEMENT ACT

        Senator Hoeven. Thank you, Madam Chairman.
        Mr. Secretary, good to have you here.
        We need to improve the Veterans Choice Act. That is why I
    have worked with Senator Burr and others to introduce the
    Veterans Choice Improvement Act. We are looking to combine that
    with the work that the VA Committee has already done, which
    includes legislation that I have crafted relative to long-term
    care and in-home care, combine that with healthcare.
        We are looking to bring all this together and move it as
    soon as we can. You and I have talked about this.
        Secretary McDonald. Yes, we have.
        Senator Hoeven. But this provides the important flexibility
    so that you can not only provide quality institutional care
    within the VA for veterans that want to access that, but also
    so that we make the Veterans Choice Act work.
        We have a big problem with these third-party service
    providers, like Health Net, that are not providing quality
    service, and that is giving Veterans Choice a bad name.
        So we have an opportunity here to make this thing work, but
    we have to figure out how to do it. This legislation empowers
    you to do that.

                      CHOICE THIRD PARTY SERVICE PROVIDERS

        So what I would like you to respond to is how you intend to
    handle these third-party service providers.
        Secretary McDonald. Over time, I think what we need to do,
    and this is why a change in legislation is so important, is
    change the contractual relationship with third-party service
    providers.
        I think we can't outsource customer service. In my opinion,
    that was the big mistake with the original Choice Act. We
    basically just outsourced customer service to the third-party
    providers. So the third-party provider, we would literally just
    give the veteran a phone number to call. That is just not
    right.
        I mean, we are in the customer service business. Our vision
    is to be the best customer service organization in government.
    We should not be outsourcing customer service.
        We have to change that relationship. That is part of what
    the new law, that we are very appreciative for, would do.
        David.
        Dr. Shulkin. Senator, the other thing I would say is, as
    you know, the Choice program, we had to bring it from
    conception to start in 90 days, so it was a very short time
    period. What we have been doing since then is we have been
    meeting with private industry, mostly the managed care industry
    and the outsourced industry, and getting the very best
    practices and the very best thoughts so that we can develop a
    request for proposal (RFP) when we go out under the new
    Veterans Choice program to have a much better program that is
    really state-of-the-art.
        Senator Hoeven. Then one of the keys is that this
    legislation will also give you the ability to provide that
    service directly. In other words, the VA itself work with
    veterans to go to private healthcare providers. I think that is
    a very important piece.
        For example, in our State, with the Fargo VA Health Care
    Center, which serves all of North Dakota and most of Minnesota,
    they have a very good reputation for providing quality care.
    You have a director there, Lavonne Liversage, who has people in
    her customer service area that can work with private healthcare
    providers, and she is willing to do that. Thank you for
    committing to come out and help us set that up.
        So, one, are you willing to let us set up that kind of
    approach to show that it works? I think you have already done
    it in Alaska, in Montana. We need to be able to do it.
        Then will you keep that option, which we allow you to do
    under the legislation? So if you want to go bid for a service
    provider and not work for somebody, well, that may be okay, but
    we can also do it directly so we can ensure that our veterans
    get that access to quality care, whether it is at the VA or
    through a private healthcare provider.
        Secretary McDonald. Senator, that is exactly what we want
    to do. We envision an optimized network of great providers all
    across the country, so that the issues that Senator Murkowski,
    for example, has raised in Alaska, where the Choice program cut
    out the Alaska Native Health system, we can get them back in,
    because they are great providers, they are great partners of
    us, and we would like to be able to develop that optimized
    system rather than only having one entrance door for the
    veterans, which is ``call this phone number.''
        So that is exactly what we have in mind. We appreciate your
    advocacy for it.
        Senator Hoeven. Than the other piece, if you would touch on
    for a minute, is we have worked to include legislation that
    enables nursing homes and other providers of long-term care,
    including in-home care, the ability to get provider status in a
    way that works for them without a lot of red tape and
    bureaucratic complications.

                            LONG-TERM AND HOME CARE

        Are you willing to support that and help us institute that?
    That is going to give veterans long-term care and in-home care
    in their communities. They can still go to the veteran center
    in their State if they want, but it gives them that access to
    care in the community, long-term care.
        Secretary McDonald. We are very much appreciative for you
    introducing that bill. We need these provider agreements. Right
    now, we have providers around the country who are refusing to
    do business with us because of the Federal Acquisition Rules,
    and the cost, the red tape that that adds to their operation.
    These small businesses can't afford that. We have, in some
    cases, where they are literally threatening to throw our
    veterans out of their homes because they do not want to do this
    red tape.
        So this bill would give us the ability to continue to do
    business with them and lessen the Federal Acquisition Rules red
    tape for them.
        Senator Hoeven. Thank you, Mr. Secretary.
        And, Dr. Shulkin, thank you as well. I appreciate it.
        Senator Murkowski. Thank you, Senator Hoeven.
        Senator Cassidy.

             VA HEALTHCARE STAFFING PRODUCTIVITY TO PRIVATE SECTOR

        Senator Cassidy. Dr. Shulkin and I had a conversation the
    other day regarding best practices, productivity, mental
    health. But again, kind of continuing on the theme that I speak
    to colleagues, physician colleagues, who work in VAs around the
    country, I am told by some that they may see two patients an
    hour.
        So I mentioned your staffing, some of your budget for
    staffing, and their productivity is far less than private
    practice. Now, that is important, because obviously the doc
    is--but I am sure it is true for the nurse practitioner (NP)
    and physician assistant (PA), et cetera.
        So first question is, to what degree is the physician
    productivity, the PA, the NP productivity, less than the
    private sector, both on an average per doc and then
    collectively across the system?
        And then I guess the next step would be, as we are talking
    about staffing, it seems like the better step would be to first
    get your systems down so that the physician is seeing 20 or 30
    patients a day instead of 14 patients a day, which I gather it
    is sometimes even less than that.
        So I will toss that out.
        Secretary McDonald. Senator Cassidy, we measure
    productivity, and we track it very closely. We use the common
    industry practice of relative value units (RVUs). Our
    productivity is up roughly 9 percent to 10 percent over the
    last year.
        I would argue that the reason, on an absolute level, we may
    seem more less productive is, one, our patients have much more
    complex situations.
        Senator Cassidy. Now can I challenge you a little bit on
    that?
        Secretary McDonald. Surely.
        Senator Cassidy. Because you are going to have in the mix
    the follow-up. I used to see very complex patients and so for
    one I would have booked out a 45-minute or even an hour visit,
    but it would later come back as a 5-minute visit or even my
    nurse walking in, giving the results, and me making sure there
    are no questions. So that we I could see four patients in an
    hour, five patients in an hour.
        Some I am going to challenge you little bit, because they
    are not very complex every single time.
        Secretary McDonald. I agree. They are not very complex
    every single time.
        Also, our providers work on a team basis in order to do a
    lot of alternative therapies that you would not see in the
    private sector.
        For example, if our primary care physician and our mental
    health professional discover the person has posttraumatic
    stress, they may then work with them to get them into
    acupuncture or yoga or some----
        Senator Cassidy. But that can only be--this limited time,
    so I am sorry to interrupt.
        That can only be 5 percent or even 10 percent of your
    patients. Most of it is going to be straightforward diabetes,
    hypertension, cholesterol check, lab check.
        Secretary McDonald. Well, when I look over the productivity
    numbers, this is what I see.
        David practices, so maybe he has a different point of view.
        Dr. Shulkin. Yes, Senator Cassidy. First of all, we do
    measure on RVUs. The Secretary is correct.
        We have increased productivity 10 percent over the past 2
    years. But now I have some greater insights into what you are
    talking about, since I now have begun to practice as an
    internist in the VA.
        I get 30 minutes for a follow-up, an hour for new patient.
    What you see when you practice in the VA is we are doing a much
    more comprehensive approach toward preventative care, screening
    for depression, screening for opioid abuse, substance abuse.
        So the care that we are delivering in the VA is one of the
    reasons why we have such better quality metrics than in the
    private sector.
        Senator Cassidy. So can I ask?
        Dr. Shulkin. Yes.
        Senator Cassidy. So again, just going to my field, which
    was managing ascites, for example, sometimes I would see them
    every 2 to 3 weeks, just to counsel on whether they are on a
    sodium restriction, checking creatinine, et cetera.
        If I got 30 minutes for every visit every 2 weeks, that
    would just gobble up my schedule.
        Dr. Shulkin. Right.

                          VA PATIENT SCHEDULING SYSTEM

        Senator Cassidy. So is it automatic, because in your GUI,
    by example, graphical user interface, it has a 30-minute block
    for everybody. So no matter the complexity, is it possible to
    make three patients each 10 minutes or is every single patient
    30 minutes?
        Dr. Shulkin. Our scheduling system is pretty fixed.
        Senator Cassidy. So that, I have to tell you, I used to do
    a pretty good job of preventive health, so I will not concede
    that you must be so wasteful with time in order to accomplish
    everything. Would you agree with that?
        Dr. Shulkin. I agree, and I do think it is worth us looking
    at that, having a brief visit.
        Senator Cassidy. I have to imagine that you could increase
    the productivity of your physicians dramatically in both number
    of patients per physician as well as--we do not need to hire
    more, by golly, we now have it, just by kind of allowing
    somebody to say this is really just a follow-up to make sure
    they are taking their fluid pills.
        Dr. Shulkin. I think we are looking at all of these things
    since access is our top priority. So you are identifying
    something that absolutely is worth looking at.
        I think the Secretary is also correct. What most of our VA
    doctors are saying to us is, give us some additional team-based
    help. Give us the RNs, the pharmacists, the social workers to
    be able to use our time more productively, to be able to get
    patients through faster. So it is going to be multifactorial.
        I can assure you, we are laser-focused on increasing access
    and productivity right now, and we are going to take your
    comments back about seeing whether we can adjust for some brief
    visits as well, because I agree with you. There are many
    patients who come back for simple reasons.
        Senator Cassidy. Okay. I yield back. Thank you.
        Senator Murkowski. Thank you, Senator Cassidy.
        I am now going to turn to Senator Baldwin, and I am going
    to pop out and go vote. I am sure we have other members who are
    coming back, so you may get more than 5 minutes.
        Senator Baldwin. [Presiding.] Oh, terrific. I hope everyone
    is as pleased as I am about that opportunity.
        Secretary McDonald. We are.

                  JASON SIMCAKOSKI MEMORIAL OPIOID SAFETY ACT

        Senator Baldwin. Especially since I want to start with a
    thank you, Mr. Secretary. I very much appreciate your support
    for the legislation that I drafted, along with Senator Capito.
        I know you are well-familiar with the Jason Simcakoski
    Memorial Opioid Safety Act that passed out of the Veterans'
    Affairs Committee late last year. I will also note that the
    chairman of this subcommittee, Ranking Member Tester, Senator
    Murray, are also cosponsors of the bill.
        We hope that this bill will pass the Senate and become law
    in short order, and I hope that we can count on you for your
    continued support and advocacy, Mr. Secretary, to help us move
    this across the finish line.
        Secretary McDonald. For sure. I believe that we have a
    leading role to play in American medicine in showing the way
    forward on reducing opioid use and also in preventing suicide.
        Senator Baldwin. I appreciate that very much.
        I want to turn your attention to an issue that has recently
    been subject of many media accounts in my State.
        When I am not the only person here, I will ask unanimous
    consent to add a number of articles for the record, or maybe I
    can just----
        Secretary McDonald. I think you are the chairwoman right
    now.
        Senator Baldwin. I am in charge, so I ask unanimous consent
    to enter several news articles in the record. We will hold the
    record open so somebody can object if they would like, but I
    doubt it.

        [The information follows: the requested information was not
    available at the time this publication went to print.]

           SOCIAL SECURITY NUMBERS AS IDENTIFIER TO VETERANS' RECORDS

        Senator Baldwin. Anyways, quite seriously, these articles
    detail an incident that occurred last year in Wisconsin when a
    VBA employee sent to VSOs at the Wisconsin Department of
    Veterans Affairs a spreadsheet that identified 638 veterans
    whose claims had been recently closed.
        Mr. Secretary, because the spreadsheet contained veterans'
    names and Social Security numbers, it was encrypted before
    transmission.
        I apologize [that I] am going to get into the weeds here,
    because I really want to make sure that the facts of what
    happened become a part of this record.
        Thereafter, one of the VSOs who received the spreadsheet
    from the VA forwarded that email to a number of State and
    county VSOs so that they could reach out and offer assistance
    to the veterans listed. Because the recipients were not
    affiliated with the VA and did not have VA email addresses to
    which encrypted emails could be sent, the VSO's message was
    sent unencrypted.
        In addition, although the VA security tools and procedures
    generally prevent the emailing of personally identifiable
    information without encryption, this transmission was
    nevertheless successful because the content did not meet the
    criteria that would have otherwise prevented transmission.
        One recipient included a veteran who is not a VSO or a
    representative of any of those listed individuals. That
    individual and his representative alerted the Wisconsin
    Department of Veterans Affairs, the media, and my office
    concerning the problem.
        Mr. Secretary, we can certainly have quite a back-and-forth
    about whether the VA bears some responsibility for what
    happened, but what I would like to see is the VA discontinue
    using Social Security numbers to identify individuals in all
    information systems. Until that is done, veterans will be at
    risk for identity theft and fraud.
        I am going to ask you, Mr. Secretary, what your thoughts
    are on this proposition.
        Secretary McDonald. I would have to take a closer look at
    it, but I can tell you that we take the disclosure of personal
    information very, very seriously, even to the point that we
    always fault on the side of the veteran. So this is a very
    unfortunate circumstance.
        I know there was an issue with our software that if the
    numbers were strung together without the hyphens, and you and I
    are both getting into the weeds on this, that it could go out,
    even though it is a Social Security number.
        Senator Baldwin. Right.
        Secretary McDonald. I know we have taken immediate steps to
    fix that, but going all the way to using some other mechanism
    other than Social Security numbers to identify an individual, I
    would have to get back to you on that.

        [The information follows:]

          [From Channel3000.com, WISC-TV, News 3, Madison, Wisconsin]

    _______________________________________________________________________

                               (By Adam Schrager)

        MADISON, Wis.--The Social Security numbers of Wisconsin veterans
    are being sent via email without encryption despite numerous Federal
    laws and U.S. Department of Veterans Affairs regulations requiring
    personally identifiable information be password-protected.
        It partly explains how a random Wisconsin veteran received an
    unsolicited email on April 1 with the Social Security numbers and
    disability claim information of hundreds of Wisconsin veterans. Since
    the Vietnam War, veterans' file numbers or disability claim numbers
    have been their Social Security numbers.
        ``I got up, was working at the computer and had an email from the
    Department of Veterans Affairs in Wisconsin. Not knowing what it was, I
    opened up the attachment and I panicked,'' the veteran said. ``It was
    nine-digit numbers. There were no hyphens. It wasn't like 111-11-111.
    It was nine numbers straight.''
        A Wisconsin Department of Veterans Affairs spokesperson said the
    software program, Ironport, which is used by the Federal VA,
    intentionally does not flag nine-digit numbers without dashes because
    of the concern that there would be too ``many false positives.'' She
    said nine-digit number sequences where dashes are used would require
    the person sending the email to encrypt it before it could be sent or
    to remove the nine-digit number sequence with the dashes.
        The veteran who received the email immediately notified the
    Wisconsin Department of Veterans Affairs of its error. He forwarded it,
    with the attachment, to his advocate, a retired colonel who used to
    work for the WDVA. Together, they notified numerous elected officials
    and the Federal VA about what had happened.
        ``There is absolutely no reason in the world for me to have this
    information,'' he said. ``We were told it was an error. We should not
    have received that.''
        The veteran and his advocate sent an email to the WDVA a week after
    the privacy breach stating they would assure the department that they
    ``(had) not forwarded this very confidential information.'' Kim
    Michalowski, who was in charge of the WDVA office that sent the email,
    thanked them in a follow-up email for their ``assurances.''
        However, any good will between the parties soured when the WDVA,
    and subsequently the Wisconsin Attorney General's Office, demanded the
    veteran and his advocate destroy all records associated with the
    privacy breach. The veteran responded in an email obtained by News 3
    that multiple groups were investigating the matter and he wanted to
    know if he was being asked to ``destroy evidence.''
        His answer came less than a month later when he and his advocate
    were sued in Dane County Circuit Court, in an effort to compel them to
    destroy all evidence of the email and the attachment. The veteran and
    his advocate sought legal counsel, paid to completely scrub their
    computers and were forced to sign an affidavit that they had no record
    any more of the email and its attachment before the lawsuit was
    subsequently dismissed.
        ``We were told we had to clean them off the computer, off all
    servers, off the cloud. My God, how do I do that? I can barely turn on
    a computer,'' said the veteran, who is remaining unidentified because
    he is fearful of further retaliation. ``I believe the process needs to
    be rectified. We have very dedicated veterans out there who need to
    have their privacy, their security, respected, and when this kind of
    information is released unsolicited, that's a travesty.''
        Nine days after the email was sent, WDVA Secretary John Scocos sent
    a note to the 637 veterans whose names and file numbers were in the
    attachment offering credit monitoring for a year and said the incident
    was a ``one-time disclosure to one unauthorized individual, who is a
    Veteran.'' However, less than a week after that, the department's own
    investigator determined that the data report inappropriately sent on
    April 1 had also been sent to ``unaccredited recipients.''
        ``The email filter, on the U.S. Department of Veterans Affairs
    computer network, which typically alerts the sender to this type of
    disclosure did not block the sensitive data in this instance,'' WDVA
    Communications Director Carla Vigue wrote in a statement emailed to
    News 3. ``When we contacted the USDVA Network Security Operations
    Center regarding this occurrence, they were already aware of the
    problem of certain emails making it past the filter.''
        News 3 has learned the April 1 incident is not an isolated one. On
    at least three other occasions (June 1, 2014, Oct. 1, 2014 and Dec. 1,
    2014), the same data report was also sent unredacted to ``unaccredited
    recipients,'' or as defined by the VA, people who are not trained to
    view such personally identifiable information. In fact, the
    administrator doing the internal investigation is himself
    ``unaccredited,'' according to USDVA documents, and thus, not supposed
    to look at personally identifiable information of Wisconsin veterans
    such as the material erroneously sent.
        Combined, the four data reports contained the disability claim
    numbers of nearly 2,000 Wisconsin veterans. An open records request to
    learn who received the emails from June 1, 2014-April 1, 2015, has not
    been answered by the WDVA.
        ``The WDVA has tightened protocols regarding privacy to safeguard
    sensitive information,'' Vigue wrote. ``We no longer share the report
    in question.''
        The internal investigation recommended Michalowski and his
    subordinate, Colin Overstreet, who actually sent the email, be
    suspended for one day. Both have since left their positions at the
    WDVA. Neither Michalowski nor Overstreet agreed to comment on what
    happened.
        Multiple requests for an on-camera interview with Scocos were
    denied. An on-camera interview with his deputy, Kathy Marschman, was
    canceled less than two hours before it was scheduled. In a meeting to
    discuss an interview, Marschman said protecting the personally
    identifiable information of Wisconsin veterans was one of the
    department's top priorities, but a review of the department's 2015-16
    strategic plan does not mention that.

        Secretary McDonald. Danny, do you have any?
        Mr. Pummill. The only thing I would add, Senator, is that
    when the list was sent out unencrypted, we should not have
    relied just on the computer software to catch the serial number
    sequences of the Social Security numbers and stop it. The
    individual should not have sent out an unencrypted list to
    anybody with Social Security numbers on it.
        We put extra emphasis on that. We check it constantly now,
    and we reiterate to everybody that it is personal
    responsibility. You do not rely on software. Under no
    circumstances do you send a Social Security number unencrypted.
        But we are looking at other ways of modifying it. As you
    know, the VA claim number is actually the Social Security
    number of the individual, and we are trying to find an
    alternate way of doing that.
        Senator Baldwin. I hope to work with you in that process.
    Other major governmental agencies have made the change from
    using Social Security numbers as identification numbers to
    alternatives. I understand the scope of that undertaking with
    agencies as large as the VA.
        But I just want you to know that we are drafting
    legislation and seeking your technical assistance. We are
    getting that technical assistance, and I hope that we can be
    partners in this effort as we move forward.
        Secretary McDonald. May I say, Senator, that one of the
    things we are undertaking right now is we do not have a single
    data backbone within VA, so if you are a veteran and you want
    to change your address, you have to do it in about eight
    different places, nine different places. One of the things we
    have taken on with our new Chief Information Officer (CIO),
    LaVerne Council, who is sitting behind me, is creating that
    single data backbone.
        That would be a great opportunity to move away from Social
    Security numbers, because we could put some other kind of
    identifier there, and it would simplify everything.
        Senator Baldwin. Well, I am all for seizing opportunity, so
    I look forward to continuing to work together on that.
        As temporary chair of the subcommittee, I would be happy to
    now recognize my colleague, Tom Udall, for questions.
        Senator Udall. Thank you very much, Senator Baldwin.
        Secretary McDonald, it is so good to see you here, and
    accompanied by Dr. Shulkin and Mr. Pummill. Thank you, all of
    you, for your service to the country and to our veterans. There
    could not be a more important task that we undertake.
        I fully respect the fact that you took this assignment, Mr.
    Secretary, at a difficult time during great publicity around a
    serious scandal. Working with Congress and additional
    resources, I think you have made some good progress, including
    yesterday's announcement that the VA is now able to fund care
    for all veterans with hepatitis C. That is a very, very welcome
    development there.
        We are going to have to keep that up to regain and maintain
    the trust of America's veterans, and I know that you all are
    committed to that.
        I was pleased to meet with you 2 weeks ago and talk about
    some of the issues with VA care in New Mexico.
        I am also glad to see that the VA budget justification
    specifically supports research and exposure to airborne
    particulate matter from burn pits. I look forward to an update
    on this research as it moves forward on how we can ensure
    veterans get the treatment they need for such exposure.
        The hearing today is important to discuss ways to improve
    the department and its services for veterans. The subcommittee,
    as you know, funds your agency and we ensure that this
    essential care is ready to support more veterans and, in
    particular, the new veterans who are coming home from
    Afghanistan and Iraq. We need to make sure that there is a
    seamless transition there.

                        RECRUITMENT OF VA MEDICAL STAFF

        Now, my first question, as you know, access is essential
    and can be particularly difficult in rural areas like New
    Mexico, partially due to problems with retaining practitioners.
    How does this budget aim to recruit talented medical staff in
    VA facilities? And what can be done, in your opinion, to either
    incentivize or streamline the process to hire new doctors and
    nurses?
        Secretary McDonald. Senator Udall, as you and I have talked
    before, having the providers in place is hugely important. I
    have been to over two dozen medical schools myself recruiting,
    and we have hired over 1,400 doctors since I have been
    Secretary.
        Nevertheless, I think we have a shortage of medical schools
    in this country and one of the things I think also, VA has a
    shortage of osteopathic doctors, which is a lost opportunity.
        So I would like David to talk about this. We are
    increasing, ramping up, our recruiting of osteopathic doctors
    and all kinds of doctors nationally in order to recruit them
    and get them to particularly operate in rural areas. We know
    that osteopathic doctors are more willing to live in rural
    areas. They are also more primary care than specialty, which is
    exactly what we need.
        Senator Udall. Dr. Shulkin, please proceed.
        Dr. Shulkin. Yes, thank you.
        I think the Secretary is right. We are looking to explore
    all avenues. The osteopathic physicians are certainly one
    avenue that we are really working hard at, making those
    relationships.
        We have added new residency affiliations with osteopathic
    medical schools, and we are looking to enhance those
    relationships. We now have about 300 osteopathic trainees in
    the VA healthcare system, and we are looking to expand that.
        In addition, because of your support through the Veterans
    Access, Choice and Accountability Act (VACAA) legislation, we
    have been able to expand residencies desperately needed for
    American medicine. When they have a great experience in the VA,
    they tend to want to stay in the VA healthcare system. So we
    are working on that.
        We are using educational debt reduction programs to help
    young physicians come in and stay in the VA. That is an
    incentive.
        And we are looking at our compensation pay tables to make
    sure that we are adjusting the pay, particularly for physicians
    that we have a very difficult time recruiting in rural areas.
        But any help that you could provide us, any ideas that you
    have that we are not exploring, particularly with primary care
    and mental health in rural areas, we really could use
    additional help.
        Senator Udall. I was very excited to hear that you all are
    working with medical schools and standing up medical schools
    and additional residencies, which really make a difference.
        As I have told you, we have a new osteopathic school that
    is about ready to get going in southern New Mexico that we hope
    you will work with.

                INSPECTOR GENERAL MISSAL NOMINATION FOR APPROVAL

        I want to shift over here to the Inspector General, because
    you have asked, and Senator Tester has said, and other others
    on the subcommittee have said, how important the Inspector
    General is. I would echo what the others have said.
        We have to approve your Inspector General. Nothing pushes
    that idea more than the fact of what happened as you were
    coming in.
        I worked in New Mexico, I had many people approaching me
    and saying there are problems going on, there are scheduling
    problems, there is this, there is that. We did not have the
    expertise to deal with it, but we were able to take the
    information, work with the complainants, get them into the
    Inspector General, and then have the Inspector General work
    with them and do a report to you. So I think we need to find a
    way.
        I would call on everybody to remove those holds and put the
    Inspector General in place for the Veterans Administration.
        How do we strengthen employee trust in the VA Office of
    Inspector General (OIG) operation?
        Secretary McDonald. One of the things we have done is
    through our Leaders Developing Leaders program, which I
    discussed earlier, we have taken our top 450 leaders offsite.
    We have done 3 days of training. Part of that training is in
    values and, importantly, in the values of the Inspector General
    and the role the Inspector General plays.
        We have also tried to partner with the Inspector General,
    so we are working together. So we are helping the Inspector
    General identify trouble spots, because during the time of
    change, like we are having with the transformation, the MyVA
    transformation, that can create challenges for us. So we want
    the Inspector General to be vigilant on where those challenges
    are.
        But just for an example, we have had over 110
    investigations just on scheduling alone. Of those 110-plus,
    only 77 have been completed. Of those 77, we have had roughly
    10 sites that have been discovered problematic, and 28
    individuals that we have had disciplinary action against.
        So it shows you the enormity of what we are talking about
    and also the fact that we are not done yet. We still have a lot
    of work to do.

                 ALBUQUERQUE VAMC MEDICAL INVESTIGATION REPORT

        Senator Udall. Secretary McDonald, just one more brief
    question. I understand that you recently signed off on a
    medical investigator report pertaining to the Albuquerque VA
    medical center. Can you provide the details of the three
    recommendations contained in the report? And when will you be
    able to share that report with me and release it publicly?
        Secretary McDonald. I think David has the report, Senator.
        Dr. Shulkin. This is concerning allegations with the
    appropriate use of using psychological testing, particularly
    for traumatic brain injuries. We have seen the initial draft
    report.
        We will be able to get you a specific date that it will be
    able to be released to you and make sure that we do that. In
    fact, I think we may be able to get you a redacted report even
    sooner than its official release date. We will be glad to do
    that.
        I will tell you that when I have reviewed the report, I am
    comfortable with the findings in terms of what was
    substantiated and what was not substantiated, so that we do not
    feel at VA that we need to take immediate action right now for
    patient safety, or else we would be taking that action.

        [The information follows: the requested information was not
    available at the time this publication went to print.]

        Senator Udall. Great. Thank you, Dr. Shulkin, very much.
        I will submit my additional questions for the record,
    because my time has expired. One is on 3-D printing and the
    other is on Comp and Pen, which I think you all have discussed
    very thoroughly here.
        I yield back, Mr. Chairman.
        Senator Kirk [presiding]. Thank you, Mr. Udall.

                           HINES VAMC WAIT TIMES DATA

        I requested all documents the VA had about wait time abuse
    at Hines VA. Did you bring those documents?
        Secretary McDonald. I do not have them with me, Senator,
    but we will get them to you.
        David may have them.
        Dr. Shulkin. Senator, I apologize. I did not see a specific
    request from you, but I do have the current wait times data at
    Hines VA that I will be glad to leave with you and share with
    you.
        Senator Kirk. Thank you.

                   HINES VAMC INSPECTOR GENERAL INVESTIGATION

        As I mentioned earlier, the Office of Special Counsel wrote
    to the President in defense of Germaine Clarno, that the
    Inspector General investigation was ``incomplete'' and ``failed
    to address the whistleblower's legitimate concern about access
    to care for mental health patients at Hines.''
        Let me tell you what this means in real life. My
    constituent Army specialist Tom Young served twice in Iraq with
    the 10th Mountain Division. At Hines, he asked for help with
    his posttraumatic stress disorder (PTSD). Two times, Hines
    turned Tom away because he was ``not suicidal.''
        After a suicide attempt, Tom went back to Hines, and they
    did not have room for him. Tom laid down on the Metra tracks in
    Prospect Heights on July 20, 2015.
        Two days after Tom killed himself, your own Office of
    Accountability Review said no additional investigation is
    required of Germaine's complaints that were addressed by the
    Inspector General. The Chief of Staff agreed.
        Another constituent of mine, Army veteran Michael Swan
    waited over a year to see a neurologist and a year to see an
    endocrinologist. Even worse, doctors gave him a clear
    colonoscopy report showing no polyps. He then went to a
    civilian doctor later, and the doctor found 130 polyps.
        The VA is saying that Germaine is wrong about Hines wait
    times in the mental health department, yet the Office of
    Special Counsel has criticized the Inspector General, saying it
    was ``willfully ignorant about the allegations.''
        Do you still stand by your Office of Accountability Review
    report on this matter?
        Secretary McDonald. First, I think it is important to say
    that any veteran suicide is unacceptable. We all take it deeply
    personally, all of us, myself, yourself, being veterans.
        So that is one of the reasons we held the suicide
    prevention summit that we held in February, to see what more we
    can do, what more can all us do as a community in order to
    eliminate the possibility of any veteran committing a suicide.
        It was March 8, just a couple days ago, where we put out a
    press release of the steps we are going to take in order to
    increase our suicide prevention program. It is incredibly
    important.
        Relative to mental health at Hines, the average wait time
    is 4.3 days. If that differs from what Germaine thinks it is, I
    would love to talk with her again.
        As I told you, we have our Office of Medical Inspector at
    Hines now, trying to reconcile the difference between the
    Inspector General reports and what the Office of Special
    Counsel found. Our Deputy Secretary is digging deeply into
    this. We will contact Germaine to get more information.

        [The information follows: the requested information was not
    available at the time this publication went to print.]

        Senator Kirk. Thank you.
        Secretary McDonald. Yes, sir.

                        VETERANS CRISIS LINE CONTRACTOR

        Senator Kirk. Let me follow up with Dr. David Shulkin.
        You were here last week and testified about the veterans'
    crisis line putting new people in charge. I wanted to get the
    name of the contractor who was handling that voicemail that
    dealt with my constituent. Do you have the name of that
    contractor?
        Dr. Shulkin. I do. Link2Health, with the number two,
    Link2Health.
        Senator Kirk. Link2Health. Are they still working on the
    veterans' crisis line?
        Dr. Shulkin. Yes, they are a backup contractor.
        Senator Kirk. And since they have messed up Tom's call, why
    are they still hired?
        Dr. Shulkin. Well, after the issue was discovered with the
    voicemails, we went back to them and we put in new stringent
    requirements as part of the contract, and they have been
    adhering to that. There is no voicemail being used today.
        Senator Kirk. Good. Thank you.
        Ms. Murkowski.

                            CHOICE PROGRAM IN ALASKA

        Senator Murkowski. Thank you, Chairman.
        Secretary, I think this is the first time that we have seen
    one another since you visited us in Alaska. I appreciate your
    willingness to be there in Wasilla at an open mike. I think you
    got it unfiltered from our veterans.
        You had some time since that visit to kind of process not
    only what Alaska veterans have said, but obviously veterans
    around the country.
        Dr. Shulkin was here before the subcommittee last week. We
    had an exchange back and forth about the failings of the Choice
    program in Alaska.
        Kind of the short sum of it was that Alaska VA healthcare
    system had long been resistant to sending patients to community
    facilities. They viewed that a better alternative was to send a
    vet all the way down south to Seattle rather than just using
    the services there at the Fairbanks Memorial.
        Your predecessor, Secretary Shinseki, worked with us. We
    really thought we were on the road to that model VA health
    system. Then the Phoenix incident comes around.
        Now, our veterans are saying very clearly, very loudly, our
    VA health system in Alaska is a mess. I referred to it last
    week as chaotic.
        Without exception--without exception--the veterans who are
    talking to me say we need to ditch Choice, we need to go back
    to what we had built where VA have identified community
    providers, wrote referrals, paid the bills. It was a system
    that worked.
        So I am concerned with the various proposals out there that
    we are seeing that ``consolidate community care.'' We do not
    want to participate in a national consolidated program. Those
    are all the buzzwords that just do not work for us.
        We need a program that is like what we had, which is
    custom-developed for the fact that we are noncontiguous; we are
    highly rural; we have a mismatch between demand for providers,
    which is very, very high, and the supply of providers, which
    is, unfortunately, terribly low; and because our medical
    community is really self-sustained within the State.
        So we do not want to be part of this consolidated national
    program. It scares me to death.
        Given what you heard in Alaska, given the conversations
    that we have with Dr. Shulkin, how can we do this? How can we
    draw outside the lines, because that is what we have to do with
    Alaska? That is what we have to do, I think you know--a way we
    can figure out this integrated system of VA health system that
    works for Alaska.
        I do not expect you to have the full answer in 2 minutes,
    but we need to have a better understanding as to where we are.
        Secretary McDonald. Believe it or not, I do have an answer,
    because as we put this program together, consolidated care,
    this network of great providers, it is with the learnings from
    Alaska as part of it.
        We need to have in that network the Alaska Native Health
    System. We need to return to all the things we had before
    Choice. The problem with Choice was it created--it was well-
    intentioned----
        Senator Murkowski. It was non-Choice.
        Secretary McDonald. It was non-Choice. It created a single
    entry point call to a third-party administrator where you had
    the veteran given a phone number. And I know that does not
    work. I mean, I was in Alaska. I went up to Point Hope to watch
    how the Alaskan health system worked.
        We need to get back to where we were in Alaska. This bill
    will do to that or we are not advocating it. So that certainly
    is our intention.
        Senator Murkowski. Well, okay. You are saying that this
    bill gets us there. I need to know that we are all in agreement
    as to where there is, because your words are good. I think you
    recognize it and you see. But again, part of the frustration
    that our veterans have right now is that they saw how we had
    corrected a system that had failed our vets for years.
        We built it, and then it was disassembled literally in a
    matter of months. So what I need to hear from you is that you
    agree that where we were before Choice came on is where we can
    get back to, and that is the direction that you want to take a.
        Secretary McDonald. That is certainly the direction I want
    to take it, and I am going to make sure that is built into any
    bill, because I thought the Alaska system, and it worked. It
    was Choice. It did provide choice.
        David, do you want to say anything?
        Dr. Shulkin. I think, very specifically, we want to bring
    back the customer service piece. The Alaska VA staff had a
    great relationship with Alaska providers, the Southcentral
    Foundation, as well as the Indian Health Service, and other
    Federal programs up there.
        We also had a great relationship with our veterans, and we
    want that back.
        Senator Murkowski. You know that you do not have it now.
        Dr. Shulkin. No, we are working hard to repair all the
    damage that happened up there, and there has been a done a lot
    of damage. There is no question. Both the Secretary and I heard
    this personally when we were up there.

                   VA HEALTHCARE OPERATIONAL ISSUES IN ALASKA

        Senator Murkowski. Let me ask about that then, just with
    regard to the day-to-day operations, because I think this
    really goes a long way to improving that relationship, to
    rebuilding that credibility.
        We are sitting with a situation where, once again, we do
    not have a permanent director. We have not had one since Susan
    Yeager left. I personally think it was a tragedy that we could
    not keep her. I do not think I have met the director of the
    Northwest network.
        We are having a difficult time with provider attrition. We
    are still having serious issues with provider recruitment.
        Again, it is not that we can't figure this out. The Alaska
    Native Health Care System has figured it out. They seem to be
    up to keeping folks. VA cannot keeping folks. I do not
    understand why.
        On a month-to-month basis, we do not know how well or how
    poorly our community-based outpatient clinics (CBOCs) are
    operating. We have a revolving door of providers there. We have
    low morale. We have fear of retaliation.
        So I hear what you are saying about what we have to do, but
    you have a whole series of strikes against you right now that
    are going to make it hard to ensure that that veteran feels
    like, okay, we are back on the right track.
        At a minimum, it seems to me that we have to have some kind
    of framework for measuring the performance of what is going on.
    I do not know on a month-to-month basis whether our local VA
    system is improving or whether it has just entirely collapsed.
        So is that something that you are considering and trying to
    put in place as you are looking at the bigger picture of how we
    get back to where we once were?
        Dr. Shulkin. Senator, I do not think that we have the time
    to go into the very specifics now. I will say that your
    assessment of the local VA situation is probably somewhat
    different than mine. We do have a lot of metrics. We have an
    excellent acting director, Linda Boyle, there. I would love to
    have you spend some time with her.
        Senator Murkowski. I know Linda well.
        Dr. Shulkin. Right. We have a search going on. We will name
    a permanent director in the very near future.
        I have been there. The care at the VA is truly excellent.
    We have statistics we will be glad to show you.
        The problem is our reputation has been hurt incredibly, and
    you are hearing it from the veterans because the Choice program
    has not worked. That is what we are working very, very hard
    right now to repair with TriWest. They have been working very
    hard with us to do that.
        But we need these legislative fixes to fix the program once
    and for all.
        So we will reach out to your staff and sit down and review
    those statistics with you. We have a lot of data on Alaska.
        Senator Murkowski. Well, I appreciate the statistics. But I
    also know that when I am sitting on an airplane with a veteran,
    he is not talking statistics. He is talking about his care. He
    is talking about how he was treated. He is talking about what
    it meant for him to basically feel like there was no response.
        So I appreciate statistics. I know that we have to be
    paying attention to that. But I need to make sure that we have
    providers that we can recruit and we can retain. I need to make
    sure that we have a level of responsiveness that is more than
    just scheduling an appointment. It is one thing to say, yes, I
    got an appointment. It is another thing to get the care that
    our veterans have clearly earned.
        So know that we need to stay very closely engaged with
    this, and we certainly intend to do that.
        Secretary McDonald. Senator, I would like to send over our
    team working on this new bill and make sure that we are
    aligned, that this will include the Alaska Native Health System
    and all the needs that we were able to address with the
    previous system.
        Senator Murkowski. I would look forward to sitting down
    with your folks. I appreciate that.
        Thank you, Mr. Chairman.
        Senator Kirk. I would like to ask Secretary McDonald for
    you, when you come to Chicago, to meet with Germaine and the
    Hines staff. I would like you to commit to that.
        Secretary McDonald. I have not been to Hines yet. I would
    like to go.

                         ADDITIONAL COMMITTEE QUESTIONS

        Senator Kirk. Thank you.
        I think with that, we will thank our witnesses and thank my
    partner, Senator Tester.
        The hearing record will remain open until the close of next
    week. Members may submit questions at any time they want, until
    that time.
        [The following questions were not asked at the hearing, but
    were submitted to the Department of response subsequent to the
    hearing:]
                 Questions Submitted to Hon. Robert A. McDonald
                 Questions Submitted by Senator Mitch McConnell
        Question. I am very concerned about the recent reports of
    dysfunction and wrongdoing at the Cincinnati VA Medical Center,
    particularly as a number of my constituents rely on this facility for
    medical care. I understand the former VISN 10 Director recently
    resigned and the former Director of the Cincinnati facility has been
    removed. Are either of these individuals receiving benefits or
    salaries? What steps is the VA undertaking to correct the failures of
    leadership at this facility to ensure veterans are receiving the
    quality care they were promised and deserve?
        Answer. The previous Director of the Cincinnati VA Medical Center
    (VAMC), Linda D. Smith, retired December 2, 2014, and she receives
    retirement benefits commensurate with her service. John Gennaro became
    Director of the Cincinnati VAMC in July 2015, but he recently accepted
    an assignment to another facility as Director. Mr. Gennaro was not
    implicated in any allegation of wrong doing, and he currently receives
    a salary and benefits as appropriate to his new position. The current
    interim Director of the Cincinnati VAMC, Glenn Costie, is not
    implicated in any allegation of wrong doing.
        The former Director of Veterans Integrated Service Network 10, Jack
    Hetrick, retired February 24, 2016, and receives retirement benefits
    commensurate with his service.
        To ensure quality care for our Veterans through our leadership
    means sustainable accountability in them and our supervisors. We will
    recognize what is going well and provide coaching and re-training where
    improvements are necessary. We will train our leaders to lead and our
    employees to exceed expectations and if not take corrective action when
    it's warranted and supported by evidence.

        Question. Please provide an updated timeline for the design and
    construction phases of the Louisville VAMC--and ultimately for the
    facility's completion. This project was announced in 2006, and
    Kentucky's veterans have had to wait for too long to begin receiving
    care at this new facility.

        [Clerk's Note: The Department was unable to submit a response to
    this question.]

        Question. In June 2014, the VA Office of Inspector General (OIG)
    was directed to conduct investigations of more than 100 VA medical
    facilities regarding potential scheduling manipulation practices,
    including at Kentucky's Fort Knox and DuPont VA facilities. What is
    that status of the OIG investigations of these facilities, and when
    will they be completed? I would ask that you please share any available
    information with my office regarding the investigation findings at
    these Kentucky facilities.
        Answer. VA's OIG Report on Kentucky facilities was released, and
    summaries are provided below. VA's OIG did not find evidence to
    substantiate the allegations.

    ------------------------------------------------------------------------

    ------------------------------------------------------------------------
    Louisville KY-2014-2890-DS-53..........  No intentional manipulation
                                              substantiated.

    ------------------------------------------------------------------------
    Louisville KY-2014-2890-DS-56..........  No intentional manipulation
                                              substantiated.

    ------------------------------------------------------------------------

        Question. As the VA continues with reform efforts to improve and
    expedite healthcare for our Nation's veterans, does the agency need any
    additional authority from Congress to remove bad actors from the VA?
        Answer. On March 23, 2016, the Secretary of Veterans Affairs
    submitted a legislative proposal to Congress entitled, ``Department of
    Veterans Affairs Accountability Enhancement Act.'' This legislation
    would provide VA with the authority it needs to recruit, compensate,
    appraise, and, when necessary, discipline career healthcare executives
    to ensure that VA can operate as a values-based, high performance
    organization.

        Question. Mental health issues remain a significant concern for
    many veterans. Are there any additional resources or authorities that
    the VA needs from Congress in order to provide effective treatment and
    care to veterans with mental health issues?
        Answer. With the current resources and authorities, VA continues to
    be the largest integrated healthcare system in the United States, with
    numerous reports validating the quality of mental healthcare services.
    This is the result of a long history of research, academic
    affiliations, and a deep commitment to training and recruitment. For
    example, Psychiatric Services, a peer-reviewed journal of the American
    Psychiatric Association, has published a report comparing the quality
    of mental healthcare provided by VA to Veterans with a comparable
    population in the private sector. According to the study, ``in every
    case, VA performance was superior to that of the private sector by more
    than 30 percent. Compared with individuals in private plans, Veterans
    with schizophrenia or major depression were more than twice as likely
    to receive appropriate initial medication treatment, and Veterans with
    depression were more than twice as likely to receive appropriate long-
    term treatment.'' \1\
    ---------------------------------------------------------------------------
        \1\ The Quality of Medication Treatment for Mental Disorders in the
    Department of Veterans Affairs and in Private-Sector Plans, Katherine
    E. Watkins, Brad Smith, Ayse Akincigil, Melony E. Sorbero, Susan
    Paddock, Abigail Woodroffe, Cecilia Huang, Stephen Crystal, and Harold
    Alan Pincus Psychiatric Services 2016 67:4, 391-396.
    ---------------------------------------------------------------------------
        Additional resources and authorities are needed from Congress in
    order to maintain this leadership and to provide effective treatment
    and care to Veterans with mental health problems. Among other
    priorities, VA needs to explore all potential resources for recruiting
    and retaining high caliber mental health providers, including the
    availability of education debt reduction programs (EDRP). Most
    recently, through the Clay Hunt Suicide Prevention for American
    Veterans Act, new EDRP efforts have focused on psychiatry, but no
    additional funding was provided. Further, such incentives need to be
    broadened to other clinical specialties in short supply including
    psychologists. Funding EDRPs is a partnership between VA Central Office
    and local VA healthcare facilities.
        The delivery of effective mental health treatment and care is best
    managed within a predictable funding strategy matched to the evolving
    needs of Veterans. Legislative requirements without additional
    appropriations not only limit VA's ability to act upon new mandates but
    also limit VA's ability to focus on/implement solutions in response to
    other key priorities. The Clay Hunt Act, as an example, did not provide
    additional appropriations while imposing multi-million dollar,
    multiyear obligations which could only be met by diverting funding from
    other important projects including suicide prevention projects.
        VA recognizes that to be effective in reducing Veteran suicide, VA
    must continue to develop Federal and community strategic collaborations
    that reach deep into all Veteran communities. To support this effort,
    VA stood up the Office of Suicide Prevention. The VA Suicide Prevention
    Office will create new inter-agency and public- private collaborations
    in order to reach each of our Nation's 22 million Veterans.
        VA recognizes Congress as an important partner in preventing
    suicides. This partnership will be supported by reoccurring
    congressional briefings on the Office of Suicide Prevention's plans of
    action. Congress' feedback as well as working with their local
    districts across the Nation will be crucial to this effort.
        VA practitioners report that they value being able to employ the
    full spectrum of their clinical skills and using interventions that are
    evidence based while practicing in VA. This requires an on-going
    requirement to train staff on emerging practices and create teams of
    providers to allow everyone to work within the scope of their unique
    area of competence. Over recent years, the addition of Peer Specialists
    has brought an additional resource to the healthcare team, has helped
    to combat any stigma associated with asking for mental healthcare, and
    has provided the opportunity to reach Veterans and Servicemembers (for
    example, Active Duty members seeking care after Military Sexual Trauma)
    who may otherwise go untreated.
        Ongoing training and education of VA mental health practitioners
    and Peer Specialists contributes to staff retention and helps to ensure
    that Veterans have access to state of the art mental healthcare.

        Question. It has been brought to my attention that some VA
    healthcare facilities lack the capability to provide care that meets
    the specific medical needs of female veterans. With this in mind, what
    efforts is the VA taking to ensure that all of its healthcare
    facilities are fully equipped to provide care to female veterans? What
    plans are being made in this regard for the new Louisville VA Medical
    Center?

        [Clerk's Note: The Department was unable to submit a response to
    this question.]

        Question. Many Kentucky veterans have expressed concerns that as
    the VA continues its efforts to reduce the agency's backlog of pending
    claims that there is now a growing backlog of claims appeals. What
    efforts is the VA taking to continue reducing the claims backlog while
    also ensuring that veterans' appeals are processed in a timely fashion?
    Does the VA need any additional authority from Congress to assist with
    the reduction in either of these backlogs?
        Answer. The Veterans Benefits Administration (VBA) has reduced the
    number of disability compensation claims pending more than 125 days by
    87 percent, from a peak of 611,000 in March 2013 to a historic low of
    79,004 claims, as of March 31, 2016. VBA's process and enhanced
    technology improvements, such as the Veterans Benefits Management
    System (VBMS) and the National Work Queue (NWQ), continue to provide
    increased efficiencies in the electronic claims process. By modernizing
    to an electronic claims processing system, VBA has increased claim
    productivity per claims processor by 25 percent since 2011 and medical
    issue productivity by 82 percent per claims processor since 2009. To
    continue this progress in 2017, VBA will build on the success of its
    transformation initiatives to further streamline and modernize the
    claims process with enhanced automation through VBMS, electronic
    workload management through NWQ, centralized mail, and the Veterans
    Claims Intake Program, which aims to further streamline and modernize
    the claims process.
        With VBA's completion of record-breaking numbers of disability
    rating claims in recent years, a concomitant increase in the volume of
    appeals resulted. While VBA continues to prioritize rating claims, it
    is also placing additional focus on appeals. VBA is grateful for the
    funding that allowed us to hire 100 appeals full-time equivalents (FTE)
    in fiscal year 2015 and 200 appeals FTEs in fiscal year 2016. As of
    February 2016, VBA has increased its appeals workforce from 1,195
    employees to over 1,490 employees and allocated $10 million in overtime
    funds to support the appellate workload. In addition, we are leveraging
    our technology initiatives in support of modernizing the appeals
    process. However, VA will not be able to provide Veterans with timely
    decisions on their appeals without legislative reform to streamline and
    modernize the current appeal system. In the President's budget for
    fiscal year 2017, VA requested resources to lower the pending inventory
    of appeals and proposed legislation to simplify the appeals process. VA
    is working closely with Veterans Service Organizations, other Veteran
    stakeholders, and Congressional staff to develop legislative proposals
    that would achieve our shared goal of timely and high quality appeal
    decisions.

        Question. In the summer of 2016, the Army is scheduled to begin
    construction of a new medical facility to replace the Ireland Army
    Community Hospital (IACH) at Fort Knox, Kentucky. Does the VA have a
    plan to replace the Fort Knox VA facility currently located at IACH to
    ensure area veterans see no disruption in care currently provided at
    this facility?
        Answer. This new VA Clinic is necessary as a result of the Army's
    plans to build a new healthcare facility to replace the existing
    Ireland Army Community Hospital (IRACH). Currently, VA occupies space,
    via a sharing agreement, within the existing IRACH. However, VA will be
    unable to co-locate services within the Army's new healthcare facility
    because DoD and VA are not allowed to share appropriated funds for
    joint facility projects. In order to continue to provide healthcare to
    Veterans, VA seeks to obtain a permit from the Army and then build a
    separate clinic adjacent to the new Army healthcare facility. VA
    contemplates that the VA Clinic will be physically connected to the new
    Army health facility, through a covered walkway or other structure, and
    offer primary care and mental health services to Veterans in the Fort
    Knox area.
        Current law does not allow for detailed planning/design,
    construction, or leasing of shared medical facilities that are not
    specifically under the jurisdiction of the Secretary, or for
    appropriated funds to be transferred to, or retained from, DoD or other
    Federal agencies for use in joint capital projects with VA. VA has
    proposed legislation (described in VA's fiscal year 2016 and fiscal
    year 2017 budget submissions and developed in consultation with DoD)
    that would provide for the inherent authority to do more detailed
    planning and design, leasing, and construction of joint facilities in
    an integrated manner. However, such legislation has not been enacted.
    Accordingly, VA lacks the authority to permit capital investment for
    shared medical facilities.
        Earlier this year, VA began negotiating a permit with the Army to
    provide VA with the necessary access to the Army's land for
    construction and occupancy. The permit is for four acres in order to
    accommodate the building footprint and necessary parking. The Army has
    taken the lead on drafting the permit. A design-build contract was
    awarded to the United States Army Corps of Engineers (USACOE) for the
    construction of the VA CBOC in September 2016. An Architectural-
    Engineer (A/E) firm is drafting the final request for proposal (RFP) to
    be completed by March 2017.

        Question. Substance abuse disorders, particularly opioids, continue
    to be a challenge for many veterans. What steps are being taken by the
    VA to improve education, monitoring and treatment of addiction? Does
    the VA need any additional authority from Congress to better coordinate
    care for veterans with substance abuse issues?
        Answer. Providing additional funding to expand recruitment
    incentives, such as loan repayment for psychiatrists and other mental
    health providers, would be helpful in attracting and retaining
    addiction treatment providers in what is currently a highly competitive
    market in many locations.
        Currently, VA is engaged in multiple efforts to improve education,
    identification and monitoring for substance use disorder (SUD) in
    patients, including those Veterans with chronic pain. VA has been
    working to expand access to evidence-based pharmacological and
    psychosocial addiction treatment services. This includes national
    training initiatives in evidence-based psychotherapies, such as
    cognitive behavioral therapy for substance use, motivational
    interviewing, and motivational enhancement therapy, which have been
    shown to effectively treat substance use disorders. VA, in concert with
    the 2011 Institute of Medicine (IOM) Report, Pain in America, and the
    National Pain Strategy from the Department of Health and Human Services
    (HHS), published in 2016, has recognized that improved competency in
    pain treatment across our health systems will lead to less reliance on
    opioid therapy, less exposure to the potential harms of opioid therapy,
    and better patient outcomes. To support these goals, VA and the
    Department of Defense (DoD) have developed the Joint Pain Education
    Program for primary care providers, a 31 module, evidence-based,
    comprehensive pain management curriculum that includes training in the
    appropriate screening for SUD in Veterans with chronic pain, and
    training in the safe use of opioids, including SUD monitoring.
        VA, as part of its Opioid Safety Initiative (OSI), has created
    multiple tools and processes to help clinicians identify SUD in
    Veterans being treated for chronic pain before and during treatment
    with opioid analgesics, to monitor their clinical outcomes, and ensure
    referral to appropriate treatment to reduce risk of activating SUD, or
    to manage SUD when it is co-morbid with chronic pain. Such tools and
    procedures include:
      --The Opioid Therapy Risk Report (OTRR), which provides detailed
            metrics on all the risks and strategies for managing risk for
            Veterans prescribed long-term opioid therapy for pain. The OTRR
            metrics are available in the clinic on the electronic medical
            record to support providers' efforts to monitor and manage
            risks when caring for patients with chronic pain who are
            prescribed long-term opioids.
      --VA developed predictive model-based clinician decision support
            tools which are available nationally. The Stratification Tool
            for Opioid Risk Mitigation tracks patients receiving opioid
            analgesics or with opioid use disorders, estimates risk of
            overdose or other adverse events, flags prior non-fatal
            overdose and suicide-related events, identifies personal risk
            factors, and suggests and tracks use of patient-tailored risk
            mitigation strategies and non-pharmacological pain treatments.
            Suggestions include a variety of guideline recommended
            strategies, including avoidance of high dose prescribing and
            risky medication combinations; timely follow-up; medication
            reconciliation; side-effect management; screening for substance
            use; ensuring mental health assessment and addiction treatment
            when needed; and use of physical therapy, Integrative Health,
            and behavioral therapies. It additionally provides information
            about patients' care providers and appointments to facilitate
            care coordination. The tool can be used to improve the safety
            of care for individual patients, or on a population level to
            facilitate systematic application of specific risk mitigation
            strategies to patients with the greatest risk of overdose or
            suicide-related events.
        The OSI Toolkit, developed and maintained by an interdisciplinary
    expert pain task force provides evidence-based guidance and trainings
    to help clinicians manage pain and opioids safely, including clinical
    guidance on safe medication tapering.
        Additionally, VA has been working to expand access to medication-
    assisted treatment (MAT) for opioid use disorders since fiscal year
    2000. VA efforts have included specific funding for hiring Addiction
    Medicine specialists to expand MAT access in under-served areas,
    clinical mentorship programs to support newly trained buprenorphine
    prescribers, a technical assistance program consisting of monthly
    webinars and email consultation, and on-going management monitoring,
    attention, and action planning regarding meeting needs for MAT
    services. As a result, VA has substantially expanded access to MAT from
    just under 12,000 patients (27 percent of those diagnosed with opioid
    use disorders (OUD)) in fiscal year 2010 to over 20,000 patients (30
    percent of those diagnosed with OUD) in fiscal year 2015. In the fourth
    quarter of fiscal year 2015, 35.4 percent of OUD patients received MAT
    (methadone, buprenorphine or injectable naltrexone). Prioritization of
    expansion of MAT services is encouraged by inclusion of MAT access
    measures on leadership performance plans and as part of VA's
    Psychotropic Drug Safety Initiative. VA continues to work to expand MAT
    access in locations with lower capacity or barriers to access to
    services (e.g. rurality), including through innovative models such as
    group practice visits and telemental health models.
        The Ryan Haight Online Pharmacy Consumer Protection Act generally
    requires that VA telehealth providers must have at least one in-person
    medical evaluation prior to prescribing controlled substances via
    telemedicine.
        This can be a problem when VA telehealth providers are not located
    close to the Veteran or when the Veteran's provider retires and another
    provider needs to begin furnishing care to the patient. We believe that
    the Drug Enforcement Administration could assist VA with this issue
    through the regulatory process; however, Congress could also assist by
    granting VA telehealth providers special authority to prescribe
    controlled substances without having conducted a prior in-person
    medical evaluation.
        We note that on July 22, 2016, the President signed into law the
    Comprehensive Addiction and Recovery Act of 2016 (Public Law 114-198),
    which authorizes a range of measures intended to combat opioid
    addiction and overdoses. We are working to implement the provisions of
    this law affecting VA. For example, the law requires all practitioners
    (including VA) to certify certain information when registering to
    prescribe controlled substances; VA must establish guidance that each
    provider must use the Opioid Therapy Risk Report tool before initiating
    opioid therapy to treat a patient; VA must require all employees
    responsible for prescribing opioids to receive education and training
    on pain management and safe prescribing practices; and Each VA medical
    facility director must identify and designate a pain management team of
    healthcare professionals. We will alert the Committees if we identify
    any legislative changes that are needed as a result of these new
    authorities.
                                     ______

                Questions Submitted by Senator Susan M. Collins
                dysfunctional continuum of care--choice program
        Question. I have heard from veterans, veteran services
    organizations, and VA officials that the Choice Program's continuum of
    care process is broken and dysfunctional.
        Last month, the entire Maine congressional delegation sent you a
    letter regarding the VA's incredibly flawed administration of the
    Choice Program in our State. According to the Department's own data,
    fewer than 50 percent of eligible Choice Program patients in Maine have
    received the appointments they need and have requested. The contractor
    chosen by the VA, Heath Net, has performed poorly. The process to
    correct many of the issues with Choice may take years. In the meantime,
    there are veterans in rural communities waiting to receive access to
    desperately needed care.
        Can you provide an assurance regarding when these veterans can
    expect to receive the appointments they need?
        Answer. VA is continuing to examine how VCP interacts with other VA
    health programs, including the delivery of direct care. In addition, VA
    is evaluating how it will adapt to a rapidly changing healthcare
    environment and how it will interact with other health providers and
    insurers. VA anticipates improving the delivery of community care
    through incremental improvements as outlined in the October 30, 2015,
    Plan to Consolidate Community Care Programs, building on certain
    provisions of the existing VCP. Implementation of these improvements
    requires balancing care provided at VA facilities and in the community,
    and addressing increasing healthcare costs. VA is committed to
    improving Veteran's health outcomes and experience, as well as
    maximizing the quality, efficiency, and sustainability of VA's health
    programs.
        Relevant to Maine Veterans, the ARCH program expired on August 7,
    2016. Veterans who participated in the ARCH program will continue to
    receive care under VCP and will be eligible for same services that ARCH
    offered. Veterans who did not previously participate in the ARCH must
    meet the Choice eligibility criteria (living 40 miles away from a VA
    facility with a full time primary care physician or a VA facility is
    not able to provide needed care within the wait time goals of the
    Department (30 days)). VCP should work to expand the availability of
    hospital care and medical services for eligible Veterans. We continue
    to work with our VCP contractor in Maine, HealthNet, to recruit more
    eligible VCP providers to improve VCP and help us ensure that all
    Veterans in Maine have access to care. VA has also begun using VCP
    Provider Agreements in Maine to improve our ability to get our Veterans
    timely appointments with eligible community care providers.
        Effective care coordination is critical to enabling a Veteran-
    centric care experience and supporting positive health outcomes through
    clear continuity of care and appropriate care and disease management.
    Under VA's ``Plan to Consolidate Community Care Programs,'' VA would
    define a clear process for transfer of medical documentation between VA
    and community providers when Veterans are referred into the community.
    VA would also establish objectives, roles, and processes for care
    coordination to enable a smooth Veteran experience across VA and
    community providers. The care coordination process would be centered on
    Veterans' relationships with their PCP. The PCP and supporting
    coordinator staff, whether at a VA facility or in the community, would
    assist Veterans with basic care coordination and patient navigation
    regarding scheduling appointments and seeking appropriate follow-up
    care. Veterans receiving care from community PCPs that do not have the
    capacity or capability to provide required coordination would be able
    to rely on VA for those services. For Veterans requiring more robust
    care coordination, regardless of whether they see a VA or community
    PCP, VA would provide programs for care and disease management and case
    management, as appropriate. This model would integrate with and utilize
    established and evolving care coordination models at VA, such as the
    Patient Aligned.
            va participation in prescription drug monitoring program
        Question. Prescription opioid and heroin abuse has reached epidemic
    proportions in our communities. A recent study estimated that nearly
    one million veterans are taking prescription opioids and more than half
    use them ``chronically'' or beyond 90 days. Although these
    prescriptions may be necessary to a patient's care, another study noted
    that the risk of death by accidental overdose among patients at
    Veterans Administration facilities is nearly twice that of the non-
    veteran population.
        Prescription drug monitoring programs, or ``PDMPs,'' are one of the
    most important tools available to confront and prevent prescription
    opioid abuse. These State systems can give doctors crucial information
    about a patient's prescription drug history, particularly when patients
    are receiving care both inside and outside of the VA system. VA
    healthcare providers have the authority to share information with State
    PDMPs, but they are not required to do so, and participation varies
    widely across the country. For example, in Maine the VA Health Care
    System reports to and queries the State PDMP, but this was a long time
    coming and is not the practice in all States.
        Has the VA considered establishing standards for PDMP use among
    prescribers and pharmacies in the VA system?
        Answer. Prescription opioid and heroin abuse has reached epidemic
    proportions in our communities. A recent study estimated that nearly
    one million veterans are taking prescription opioids and more than half
    use them ``chronically'' or beyond 90 days. Although these
    prescriptions may be necessary to a patient's care, another study noted
    that the risk of death by accidental overdose among patients at
    Veterans Administration facilities is nearly twice that of the non-
    veteran population.
        Prescription drug monitoring programs, or ``PDMPs,'' are one of the
    most important tools available to confront and prevent prescription
    opioid abuse. These State systems can give doctors crucial information
    about a patient's prescription drug history, particularly when patients
    are receiving care both inside and outside of the VA system. VA
    healthcare providers have the authority to share information with State
    PDMPs, but they are not required to do so, and participation varies
    widely across the country. For example, in Maine the VA Health Care
    System reports to and queries the State PDMP, but this was a long time
    coming and is not the practice in all States.

        Question. Has the VA considered establishing standards for PDMP use
    among prescribers and pharmacies in the VA system?
        Answer. The Veterans Health Administration (VHA) is developing a
    policy, VHA Directive, Querying State Prescription Drug Monitoring
    Programs, which will govern the querying of State PDMPs by VA
    providers. The policy will establish a minimum standard for querying
    PDMPs and ensure compliance with applicable Federal and State laws. It
    is anticipated that this policy will be published in mid-fiscal year
    2017.
        In addition, VA's Virtual Lifetime Electronic Record Health program
    continues to actively partner with the eHealth Exchange to encourage
    PDMPs to move towards the use of national standards for the exchange of
    opioid prescription information. As PDMPs adopt these national
    standards, it will enable a bi-directional exchange of information,
    improving access by VA and non-VA clinicians nationwide to prescription
    history for their patients in order to make the most appropriate and
    safe treatment decisions.
                                     ______

                  Questions Submitted by Senator Tammy Baldwin
           use of social security numbers as identifiers for veterans
        Question. Mr. Secretary, I would like to see VA discontinue using
    social security numbers to identify individuals in all VA information
    systems. Until that is done, veterans will be at risk for identity
    theft and fraud. What are your thoughts on this proposition? Is the VA
    currently working to discontinue the use of social security numbers to
    identify individuals? If not, why not? If the absence of a single data
    backbone at VA is a barrier to achieving the discontinuation of social
    security numbers, please provide a status update on the Department's
    efforts to create a single data backbone and what additional resources
    are needed to fully bring it online.
        Answer. VA's primary uses of Social Security Numbers (SSNs) are to:
    (1) locate Veterans and their dependents to ensure correct
    identification associated with the delivery of benefits and services,
    and (2) identify employees for employment-related record keeping. As
    mistaken identity in the delivery of healthcare can result in
    catastrophic and tragic outcomes, VA must ensure 100 percent accuracy
    in patient identification. Until such time when a comprehensive and
    equally accurate means to do this is established and implemented, the
    use of SSNs remains the single best means of ensuring patient
    identification. In addition, SSNs must be used if required by law or
    regulation, for purposes such as:
      --Background investigations;
      --Security checks for validation purposes, such as computer matching
            of records between government agencies; and
      --Support of unique identification.
        VA currently relies on the SSN to ensure that the correct records
    are obtained and utilized to determine eligibility for VA benefits such
    as compensation, disability, education, and rehabilitation. VA is
    required by law (38 U.S.C. 5103A) to request evidence from third
    parties on behalf of Veterans to support their claims. In these
    requests for evidence, VA must sufficiently identify the party for whom
    it is seeking information. Many entities holding Veterans' records,
    including the Department of Defense (DoD), other government agencies,
    and private parties, continue to utilize SSNs as a primary identifier.
    As such, VA will face substantial challenges in obtaining records from
    these entities on behalf of Veterans if precluded from identifying
    Veterans by their SSNs. This will negatively impact Veterans by
    delaying the time required to process their claims and possibly even
    preventing VA from obtaining the records needed to establish Veterans'
    eligibility to benefits.
        VA's success rate in matching records with other Federal and non-
    Federal organizations is over 85 percent when the SSN is available
    compared to 20 percent when the SSN is not used. VA providers will not
    have access to important outside care information and could order
    redundant tests, slow decisionmaking, or make incorrect and even
    harmful decisions when such data is unavailable. VA also participates
    in Health Information Exchanges with DoD, Walgreens, Kaiser Permanente,
    etc., and without the use of the SSN to positively identify the
    Veteran, critical health information will not be available leading to
    poor healthcare decisions and slower treatment.
        Elimination of SSN use is not solely a function of information
    technology (IT). The business processes used by the Veterans Health
    Administration (VHA), Veterans Benefits Administration, and other VA
    offices require a complete overhaul in how they establish absolute
    identity verification inside VA and most importantly outside of VA. IT
    solutions to eliminate SSN use can only occur after the integrated and
    comprehensive review of the prevalence and inter-connectedness of SSN
    use is complete.
    SSN Reduction Effort
        VA recognizes the growing threat posed by identity theft and the
    impact on Veterans, dependents and employees. In 2009, VA created and
    implemented the enterprise-wide Social Security Number Reduction (SSNR)
    effort, in response to the Office of Management and Budget Memorandum
    07-16, ``Safeguarding Against and Responding to the Breach of
    Personally Identifiable Information (May 2007). The key goal of the
    SSNR is to reduce or eliminate the unnecessary collection and use of
    SSNs as the Department's primary identifier, while maintaining the 100
    percent requirement for proper Veteran-Patient identification. For
    example:
      --VHA eliminated the use of SSNs on appointment letter correspondence
            and the Veterans Health Identification card.
      --VBA is currently evaluating the elimination of SSNs from
            correspondence.
      --The National Cemetery Administration has reviewed and reevaluated
            all of its forms requiring SSNs.
      --VA/DoD health information exchange Joint Legacy Viewer is using the
            Integration Control Number (ICN), Electronic Data Interchange
            Personal Identifier and other demographics for trait matching
            while phasing out use of the SSN.
      --VHA is utilizing a SSNR tool to collect VHA's SSN holdings data but
            it has limitations due to outdated technology. The Office of
            Information & Technology (OIT) is currently developing a new
            SSNR tool for VA wide use which is expected to be completed by
            September 2017.
    Master Veteran Index System
        As VA works to migrate away from the use of SSNs as the sole means
    of Veteran identification, OIT is collaborating with the Veterans
    Relationship Management Initiative to create the Master Veteran Index
    (MVI) system and require MVI integration for every VA system. MVI
    serves as the authoritative identity service within VA. MVI assigns an
    ICN, a unique identifier, for each Veteran. The ICN is a sequentially
    assigned, non-intelligent number that, in itself, does not provide any
    protected sensitive information about the Veteran-patient. The ICN is a
    means to accurately and securely track the individual and confirm their
    identification. ICNs conform to the American Society for Testing and
    Materials International standard for a universal healthcare identifier.
    MVI now has information on over 26 million Veterans and beneficiaries
    who have applied for healthcare. While additional work remains to fully
    extricate SSNs from Veteran identification, including re-engineered
    business processes and legacy system upgrades, programs like MVI have
    made significant progress towards the goal of SSN reduction.
    Conclusion
        VA has made considerable progress in implementing the SSN reduction
    initiative since the Office of Management and Budget's mandate in 2007.
    VA continues ongoing activities to either eliminate or reduce the use
    of SSN's with the goal to replace the SSN with an alternative primary
    identifier. The timeframe to implement an alternate primary identifier
    would be contingent upon laws, business needs, technology upgrades, and
    funding.
                     disposition of final reports on tomah
        Question. Mr. Secretary, I want to emphasize to you my belief that
    the Office of Accountability Review's investigation of accusations of
    widespread retaliation against whistleblowers and the culture of fear
    at the Tomah VA Medical Center must be made publically available so
    that veterans, VA employees and the American public are assured that
    the Department has uncovered and addressed the troubling events at the
    Tomah VA and related issues nationwide. The same goes for the outside
    clinical review, which is being done in follow-up to the Agency's
    initial review of the incidents at Tomah.
        I have previously discussed this issue with other members of the VA
    leadership team. I want to reiterate its importance to you as I did
    with the Deputy yesterday.
        When will VA make public its findings on these matters? I would
    like to know the timeline of VA's plan for transparency on:
      --The OAR investigation of accusations of widespread retaliation
            against whistleblowers and the culture of fear at the Tomah
            VAMC and
      --The outside clinical review.
        Answer. As of June 10, 2016, litigation is pending for one of the
    subjects of the Administrative Investigation Board (AIB). Consequently,
    we are currently unable to release the AIB Report.
                                 choice program
        Question. Mr. Secretary, in early February, I wrote to VA
    expressing my frustration with the Choice Program. Recently, there has
    been an alarming increase in the number of complaints from my
    constituents about their interactions with HealthNet, the 3rd Party
    Administrator for the area in which my constituents receive their
    healthcare services. For example, a veteran recently shared with me
    that after months of delay at VA, he was referred to the Choice Program
    and scheduled for surgery at a non-VA hospital. When he called to
    confirm the surgery with the hospital, it had no record of him or a
    surgery being scheduled for him. A month later he received the surgery
    at a different hospital. It is not uncommon for a veteran to call me
    after spending many frustrating hours on the phone trying to get an
    appointment scheduled.
        What is the Department doing to address these problems and improve
    the administration of and veteran experience with Choice?
        Answer. The purpose of the Veterans Choice Program (VCP) was to
    improve access to care for Veterans by allowing them to seek care in
    the community if they were eligible based on certain criteria specified
    in statute.
        Since the implementation of VCP on November 5, 2014, a number of
    amendments to the law and to VA's regulations have further expanded the
    number of Veterans eligible for VCP.
        VA recognizes there have been and continue to be challenges
    implementing VCP. We are identifying those challenges, implementing
    immediate fixes where we can, and building long-term solutions, as
    needed. VA's overarching plan for community care is to consolidate
    programs and simplify eligibility criteria and processes. VA is
    continuing to examine how VCP interacts with other VA health programs,
    including the delivery of direct care. In addition, VA is evaluating
    how it will adapt to a rapidly changing healthcare environment and how
    it will interact with other health providers and insurers. VA
    anticipates improving the delivery of community care through
    incremental improvements as outlined in the October 30, 2015, Plan to
    Consolidate Community Care Programs, building on certain provisions of
    the existing VCP. Implementation of these improvements requires
    balancing care provided at VA facilities and in the community, and
    addressing increasing healthcare costs. VA is committed to improving
    Veteran's health outcomes and experience, as well as maximizing the
    quality, efficiency, and sustainability of VA's health programs. While
    VA can implement some of the provisions from the Plan within the
    constraints of the current budget, there are certain provisions that
    require legislation. The Plan identified key legislative changes needed
    to consolidate the community care programs and standardize Veteran
    eligibility for community care. While some legislation has been
    proposed, none has been passed into law as of October 2016. Without the
    legislation identified in the Plan, full consolidation cannot be
    achieved.
        Among other improvements, the Veterans Health Administration (VHA)
    simplified the scheduling procedures and published a Deputy Under
    Secretary for Health for Operations and Management memorandum on June
    9, 2015, which revised procedures to require providers to write a
    return-to-clinic order and schedulers to enter the date contained in
    that order as the clinically indicated date (CID). This new process
    keeps future appointment decisionmaking with the provider and patient,
    rather than the scheduler. Associated training was provided to
    schedulers at that time. Additionally, VHA uses the ``scheduling
    trigger tool'' database to identify and notify facility leadership of
    scheduling irregularities. Of note, a root cause of scheduling errors
    is the highly manual, 30-year old scheduling software. VistA Scheduling
    Enhancement (VSE) has been deployed to about 30 clinics at 5 sites and
    is planned for national deployment starting in February 2017. VHA
    anticipates this new scheduling software will reduce the number of
    scheduling errors.
        Several initiatives are planned for VHA's ``Summer of Scheduling,''
    including:
      --National Rollout of VSE: The rollout of VSE will be achieved
            through a train the trainer or ``Super User'' approach,
            developing local experts to train others. The rollout began in
            May 2016 and is planned for national deployment starting in
            February 2017, with ongoing associated training.
      --Hire Right, Hire Fast: This project's goal is to ensure that every
            facility has the right number of Medical Support Assistants
            (MSA), with the right skills, who can provide the right
            experience for Veterans.
      --Own the Moment: VA knows that every interaction between an employee
            and a Veteran matters. This project reinforces the importance
            of serving with a focus on principles and values, empowering VA
            employees to pursue what's right for the Veteran when
            procedures serve to limit services.
      --Standardized MSA Onboarding/Training: New MSA onboarding would
            include a two-week training program that draws its curriculum
            from scheduling rules for technical training, customer
            experience training, and medical center policies. The
            onboarding will provide a mentor for all new MSAs and use the
            VSE ``Super Users'' model. Deployment will follow the national
            rollout of VSE.
           va graduate medical education (gme) expansion and staffing
        Question. The 2014 VA reform law was a comprehensive response to
    system-wide barriers to veterans' access to care. The law's Choice
    Program is an important step to remove those barriers through non-VA
    care, but it is no substitute for increasing the internal provider
    capacity of the VA. The VA reform law included a provision I authored
    to increase by 1,500 over 5 years the number of graduate medical
    education residency positions. Can you please provide me an update on
    VA's plans for ensuring that the goal of 1,500 positions is met?
        I note in your testimony that in fiscal year 2015, VHA hired 41,113
    employees, for a net increase of 13,940 healthcare staff. What did you
    do to bring all those people on board? Can you also please briefly
    discuss the Department's efforts to attract qualified physicians to VA
    to care for our veterans? I know that in Tomah, VA increased the pay
    available for hard-to-fill positions.
        Answer. To help reach the goal of up to 1,500 new residency
    positions, VA is conducting outreach and providing consultative
    services, and strategic and targeted funding to assist VA facilities
    and academic affiliates when addressing the complex and time intensive
    process of GME residency expansion. VHA has authorized more than 372
    new GME positions during the first 2 years of the 5 year program. In
    addition:
      --The accreditation process for each new GME residency program can
            take up to 3 years and is managed by our affiliated partners
            (the program sponsors).
      --Once a program is accredited, incremental expansion to full
            capacity takes 3 to 4 additional years.
      --Since VA residency positions are rotational and complementary to
            other clinical experiences, each full-time VA position is
            occupied by three to four unique medical residents; thus, the
            affiliated academic program sponsor must secure additional
            support for the remaining portion of the residency training
            outside of VA, and this support may be limited by existing
            Medicare program ``caps.''
        VA encourages all stakeholders, including Members of Congress
    working with community stakeholders, to use this unique opportunity to
    help Veterans improve access to care by identifying potential new
    affiliates, while VA facilities expand their existing VA GME programs
    or create new ones.
                                female veterans
        Question. Your request includes $372 million for Minor Construction
    and would provide funding for ongoing projects that renovate, expand
    and improve VA facilities, while increasing access for our veterans. My
    understanding is one emphasis for this funding will be projects that
    enhance women's health programs. Can you please describe these
    projects?
        I met with several veterans groups recently who were concerned with
    the lack of women healthcare professionals at VA. I support hiring more
    female healthcare professionals for the growing population of women
    veterans using VA primary care and mental healthcare clinics. Many
    women prefer receiving healthcare services from female providers. My
    understanding is that since 2003, women veterans' healthcare usage at
    VA facilities has increased by more than 100 percent. What is the
    Department doing to bring more female healthcare professionals to VA?
        Answer. Approximately 98 percent of Women's Health providers are
    women. VHA's NRP is available to provide recruitment support for
    Women's Health providers (Primary Care and Obstetrics/Gynecology).
    Also, there is no longer a prohibition on specifically targeting female
    PCPs to consider women's health careers in VHA through recruitment
    marketing/advertising.
        In addition to hiring, VHA is focused on training to enhance skills
    of its workforce to provide care for women Veterans. VHA has provided
    training to nearly 2500 primary and emergency room providers through a
    2\1/2\-day intensive review of gender specific women's healthcare that
    includes training hands-on training for breast and pelvic examination.
    The majority of providers trained are women. One hundred percent of
    Medical Centers and 90 percent of Community Based Outpatient Centers
    have Designated Women's Health Providers.
        VA provides a full range of services to women Veterans, including
    comprehensive primary care, gynecology care, maternity care, specialty
    care, and mental health services. VA has focused on improvement of its
    facilities to meet the needs of the growing numbers of women Veterans
    we serve.
        In order to review facilities in terms of accommodations for women
    Veterans, including required privacy and security, VHA has adopted
    Environment of Care (EoC) standards. These standards are now
    incorporated into a tablet-based EoC survey that is conducted monthly.
    The Women Veteran Program Manager is a member of the team conducting
    this survey monthly. All deficiencies detected must have a remediation
    plan attached, and the correction of these is tracked electronically.
    The EoC data is rolled up to the facility and the Veterans Integrated
    Services Network (VISN) monthly, and is the responsibility of the VISN
    Capital Asset Manager.
        When there is a need for remodeling or construction to enhance the
    facilities, the VISN submits plans through the Strategic Capital
    Investment Planning (SCIP) process. The SCIP Board reviews and
    prioritizes the requests, and projects that include the needs of women
    Veterans are given additional points in the prioritization. The VHA
    Office of Women's Health Services subject matter expert support for
    reviews related to women's needs within the SCIP process. This allows
    for input on the specific facility needs for accommodations for women
    Veterans.
        VA is proud of high quality healthcare for women Veterans. VA is on
    the forefront of information technology for women's health and is
    redesigning its electronic medical record to track breast and
    reproductive healthcare. Many women Veterans entering the VA system are
    of child-bearing age. VA provides full gynecological care, including
    maternity care, and 7 days of newborn care for all women Veterans
    either on-site or through Care in the Community, paid VA. VA is
    implementing a policy that requires maternity care coordinators at all
    VA medical centers that stay in contact with women during their
    pregnancies to support and coordinate their care.
        Quality measures show that women Veterans using VA healthcare are
    more likely to receive breast cancer and cervical cancer screening than
    women in private sector healthcare. VA also tracks quality of care by
    gender and, unlike other healthcare systems, has been able to reduce
    and eliminate gender disparities in important aspects of health
    screening, prevention, and chronic disease management. Some of our
    national accomplishments include the following:
      --VA completed two mobile applications for Women's Health, Caring for
            Women Veterans and Pre-Conception Care, that are available for
            providers in the community to download when caring for women
            Veteran patients.
      --Maternity Care Coordination Telephone Care Program provided care
            coordination services to over 2000 unique pregnant Veterans,
            over 20 percent of whom resided in rural zip codes.
      --Breast Care Registry to enhance care coordination of breast cancer
            screening and treatment for women Veterans.
      --Women Veterans Call Center (WVCC), created to contact women
            Veterans to inform them about eligible services. As of February
            2016, WVCC received 30,399 incoming calls and made 522,038
            outbound calls, successfully reaching 278,238 women Veterans.
      --An enhanced provision of care to women Veterans by focusing on the
            goal of developing Designated Women's Health Providers (DWHP)
            at every site where women access VA. One hundred percent of VA
            medical centers and 90 percent of VA community based outpatient
            clinics have DWHPs
      --The training of nearly 2,500 providers in women's health and
            continued training of additional providers to ensure that every
            woman Veteran has the opportunity to receive her primary care
            from a DWHP.
      --Pursuant to Veterans Access, Choice, and Accountability Act,
            expanding the eligibility for Veterans in need of mental
            healthcare due to military sexual trauma (MST) experiences of
            sexual assault or sexual harassment that occurred during their
            military service. All MST-related healthcare is provided
            without copayment requirements.
        VA is enhancing facilities, training healthcare staff, and
    improving access to services to meet the current and future healthcare
    needs of women Veterans.
    exempting copayment requirements for naloxone rescue kits and education
        Question. Please explain why the Department believes it is so
    critical to veteran patient safety to eliminate copayments for naloxone
    kits and related education.
        Answer. Patients who are told by their medical providers that they
    are at high-risk for drug overdose often still do not believe that
    overdose will happen to them. During efforts to implement the Overdose
    Education and Naloxone Kit program nationally in VA, numerous
    healthcare providers have reported that patients who are considered at
    high-risk for drug overdose have refused the naloxone kits because they
    do not believe they will need it and therefore, they are unwilling to
    pay the co-pay for the medication. We greatly appreciate Congress'
    enactment of provisions eliminating copayment requirements for
    medication and education and counseling for opioid antagonists in
    section 915 of the Comprehensive Addiction and Recovery Act of 2016
    (Public Law 114-198), and we are working to implement these changes as
    quickly as possible.

                              SUBCOMMITTEE RECESS

        Senator Kirk. The next meeting of the subcommittee will be
    on Thursday, April 7.
        We will stand adjourned. Thank you, Mr. Secretary.
        [Whereupon, at 12:20 p.m., Thursday, March 10, the
    subcommittee was recessed, to reconvene Thursday, April 7, at a
    time subject to the call of the Chair.]

         MILITARY CONSTRUCTION, VETERANS AFFAIRS, AND RELATED AGENCIES
                      APPROPRIATIONS FOR FISCAL YEAR 2017

                                  ----------

                            THURSDAY, APRIL 7, 2016

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:34 a.m., in room SD-124, Dirksen
    Senate Office Building, Hon. Mark Kirk (chairman) presiding.
        Present: Senators Kirk, Murkowski, Hoeven, Collins,
    Boozman, Cassidy, Tester, Udall, Schatz, Baldwin, and Murphy.

                             DEPARTMENT OF DEFENSE

                       Office of the Secretary of Defense

    STATEMENT OF PETER J. POTOCHNEY, PERFORMING THE DUTIES
                OF ASSISTANT SECRETARY OF DEFENSE, ENERGY,
                INSTALLATIONS AND ENVIRONMENT

                     OPENING STATEMENT OF SENATOR MARK KIRK

        Senator Kirk. The subcommittee will come to order. This is
    the third hearing for fiscal year 2017.
        I want to welcome my friend Senator Jon Tester, who we hope
    will be with us at some point later on. He is on the way, I
    think.
        I want to welcome our four witnesses from the Office of
    Secretary Mr. Pete Potochney; from the Army, Assistant
    Secretary Katherine Hammack; from the Navy, Principal Deputy
    Assistant Secretary Iselin; and from the Air Force, we have
    Assistant Secretary Miranda Ballentine.
        We will proceed in this hearing with the early bird rule,
    alternating sides. I ask members to defer from any opening
    statements, and we will go to 5-minute question rounds.
        I will just hold off here, waiting for Mr. Tester to come,
    then we will formally begin. We will just suspend for Jon
    Tester, the senior Senator for the Big Sandy metroplex.
        Let's go to our statements. In this hearing, I want to hear
    how the funding that is being requested directly supports the
    Nation's men and women in uniform and how our military strategy
    is supported by the request.
        Military construction is more than just bricks and mortar.
    It is also something that is a vital part of the strategic
    goals of the United States.
        I want to hear more about how the request strengthens our
    ballistic missile defenses with key allies like Poland. I want
    to hear how this request supports the missile defense in
    Redzikowo, Poland, and to hear how this request improves the
    quality of life for our men and women who choose to wear the
    uniform, and specifically the quality and safety of the places
    where they live.
        I want to recognize our witnesses for their opening
    remarks. We will start you guys off.
        Pete, why don't you kick it off?

                    SUMMARY STATEMENT OF PETER J. POTOCHNEY

        Mr. Potochney. Thank you, sir. I am Pete Potochney,
    currently the Deputy Assistant Secretary for basing and also
    the Acting right now, performing the duties of Assistant
    Secretary for Energy, Installations, and Environment, and have
    been acting in that capacity since December and will continue
    to do so until we have a nominee and confirmation.
        I am pleased, proud, and honored to be here. I appreciate
    this opportunity to talk to you, and I also will appreciate my
    remarks being in the record.
        Senator Kirk. Without objection.
        Mr. Potochney. I'll be very brief. The people at this
    table, in my view, and I know for myself, are doing the best we
    can in a tough budget environment. Mr. Chairman, you talked
    about things like quality of life, and how our construction is
    supporting our readiness and our capabilities and the men and
    women who serve us so well. That is what we are about.
        We do the best we can to ensure that those dollars are
    spent wisely, and we do the best we can to compete for those
    resources within a tough budget environment. That is what we
    do. We fight pretty strongly for those resources.
        In that regard, in a tough budget environment, we are
    asking once again for base realignment and closure (BRAC). We
    need it. It allows us to avoid wasting resources on unnecessary
    facilities and channeling those resources into our readiness
    and quality of life, and they are directly linked.
        So we ask that you entertain that, because we do feel it is
    important.
        And I will conclude my remarks with that. Thank you.
        [The statement follows:]
                    Prepared Statement of Peter J. Potochney

                                  Introduction

        Chairman Kirk, Ranking Member Tester and distinguished members of
    the subcommittee: Thank you for the opportunity to present the
    President's fiscal year 2017 budget request for the Department of
    Defense programs supporting energy, installations, and the environment.
        In my testimony, I will focus first on the budget request. As you
    will note, the administration's budget includes $7.4 billion for
    Military Construction (including family housing), and $10.2 billion for
    Facility Sustainment and Recapitalization. These are both decreases
    from last year, as the Bipartisan Budget Act of 2015 caps overall
    defense spending. Although this request allows a reduction in
    facilities risk due to a slight increase in Sustainment funding by the
    services, the Department is still accepting risk in facilities. As this
    subcommittee well knows, facilities degrade more slowly than readiness,
    and in a constrained budget environment, it is responsible to take risk
    in facilities first.
        My testimony will also address the environmental budget. This
    budget has been relatively stable, and we continue to show progress in
    both our compliance program, where we've seen a decrease in
    environmental violations, and in cleanup, where 84 percent of our
    39,000 sites have reached Response Complete. We remain on track to meet
    our goals of 90 percent Response Complete in 2018, and 95 percent in
    2021.
        As you know, Operational Energy Plans and Programs merged with
    Installations and Environment office in 2015 to form the Office of
    Assistant Secretary of Defense for Energy, Installations and
    Environment (EI&E). EI&E now oversees all energy that is required for
    training, moving and sustaining military forces and weapons platforms
    for military operations, as well as energy used on military
    installations. While the budget request for Military Construction and
    Environmental Remediation programs includes specific line items, the
    Department's programs for Operational Energy and Installation Energy
    are subsumed into other accounts. With that in mind, I will summarize
    the newly released 2016 Operational Energy Strategy and address the
    budgets for the Department's operational and installation energy
    portfolio.
        In addition to budget, I will also highlight a handful of top
    priority issues--namely, the administration's request for BRAC
    authority, European consolidation efforts, European Reassurance
    Initiative, the status of the movement of Marines from Okinawa to Guam,
    an overview of our energy programs, and climate change.

       Fiscal Year 2017 Budget Request--Military Construction and Family
                                    Housing

        The President's fiscal year 2017 budget requests $7.4 billion for
    the Military Construction (MILCON) Appropriation--a decrease of
    approximately $1.0 billion from the fiscal year 2016 budget request
    (see Table 1 below). This decrease is directly attributable to the
    resourcing constraints established by the Bipartisan Budget Agreement
    and the Department's need to fund higher priority readiness and
    weapon's modernization program. The request does recognize the
    Department's need to invest in facilities that address critical mission
    requirements and life, health, and safety concerns, while acknowledging
    the constrained fiscal environment. In addition to new construction
    needed to bed-down forces returning from overseas bases, this funding
    will be used to restore and modernize enduring facilities, acquire new
    facilities where needed, and eliminate those that are excess or
    obsolete. The fiscal year 2017 MILCON request includes projects that
    directly support operations and training, maintenance and production,
    and projects to take care of our people and their families, such as
    medical treatment facilities, unaccompanied personnel housing, and
    schools.
        As shown by the decrease in this year's budget request, the DOD
    Components continue to take risk in the MILCON program in order to
    lessen risk in other operational and training budgets. While the
    Department's fiscal year 2017 budget request funds critical projects
    that sustain our warfighting and readiness postures, taking continued
    risk across our facilities inventory will degrade our facilities and
    result in the need for significant investment for facility repair and
    replacement in the future. Our limited MILCON budget for fiscal year
    2017 leaves limited room for projects that would improve aging
    workplaces, and therefore, could adversely impact routine operations
    and the quality of life for our personnel.

                     TABLE 1. MILCON APPROPRIATION REQUEST, FISCAL YEAR 2016 VERSUS FISCAL YEAR 2017
    ----------------------------------------------------------------------------------------------------------------
                                                                                            Change From Fiscal Year
                                                                Fiscal Year  Fiscal Year             2016
                         Account Category                           2016         2017    ---------------------------
                                                                 Request ($   Request ($   Funding ($
                                                                 Millions)    Millions)     Millions)      Percent
    ----------------------------------------------------------------------------------------------------------------
    Military Construction.....................................        6,653        5,741         (912)          (14)
    Base Realignment and Closure..............................          251          205          (46)          (18)
    Family Housing............................................        1,413        1,320          (93)           (7)
    Chemical Demilitarization.................................            0            0            0             0
    NATO Security Investment Program..........................          120          178           58            48
                                                               -----------------------------------------------------
          TOTAL...............................................        8,437        7,444         (993)          (12)
    ----------------------------------------------------------------------------------------------------------------

                             military construction
        The fiscal year 2017 military construction request of $6.1 billion
    addresses routine requirements for construction at enduring
    installations stateside and overseas, and for specific programs such as
    Base Realignment and Closure and the NATO Security Investment Program.
    This is a 13 percent decrease from our fiscal year 2016 request, and
    this level of funding remains significantly less than historic trends
    prior to the Budget Control Act. In addition, we are targeting MILCON
    funds to three key areas.
        First and foremost, our MILCON request supports the Department's
    operational missions. MILCON is key to supporting forward deployed
    missions as well as implementing initiatives such as the Asia-Pacific
    rebalance, European Infrastructure Consolidation, European Reassurance
    Initiative, and cyber mission effectiveness. Our fiscal year 2017
    budget request includes $473 million for 13 F-35A/B/C maintenance,
    production, training, and support projects to accommodate initial F-35
    deliveries; $194 million to support 8 fuel infrastructure projects;
    $62.2 million for a power upgrades utility project in support of the
    U.S. Marines relocation to Guam; $260 million for recapitalization of
    National Security Agency facilities; and $53.1 million for the third
    phase of a Joint Intelligence Analysis Complex Consolidation at Royal
    Air Force Croughton, United Kingdom. The budget request also includes
    $470 million to address new capabilities/mission, force structure
    growth, and antiquated infrastructure for Special Operations Forces;
    $176 million for 3 Missile Defense Agency projects, including $156
    million for Phase 1 of the Long Range Discrimination Radar System
    Complex in Alaska; a $76 million investment to recapitalize facilities
    at three Naval Shipyards; and $124 million for 4 unmanned aerial
    vehicle operational facilities.
        Second, our fiscal year 2017 military construction budget request
    continues the Department's 10 year plan (which started in fiscal year
    2011) to replace and recapitalize more than half of the DODEA schools.
    Funding in fiscal year 2017 includes $246 million to address four
    schools in poor condition at Dover, Delaware; Kaiserslautern, Germany;
    Kadena AB, Japan; and RAF Croughton, United Kingdom.
        Third, the fiscal year 2017 budget request includes $304 million
    for medical facility recapitalization. This includes $50 million for
    the first increment of a $510 million project for the Walter Reed
    Medical Center Addition/Alteration; $58.1 million for increment six (of
    a $982 million seven increment project) for the Medical Center
    Replacement at Rhine Ordnance Barracks in Germany; and $195.9 million
    for five other smaller medical/dental facilities. All the projects are
    crucial for our continued delivery of quality healthcare that our
    service members and their families deserve whether stationed stateside
    or during overseas deployments.
                        overseas contingency operations
        The fiscal year 2017 Overseas Contingency Operations budget request
    includes $47.9 million for projects supporting the mission in East
    Africa (Djibouti). The request also includes $113.6 million in European
    Reassurance Initiative military construction funding for military
    construction activities for the Active components of all Military
    Services, and Defense-Wide Activities supporting military operations in
    Europe in direct support of NATO, Operation Freedom's Sentinel, and
    Operation Inherent Resolve. Funds provided would bolster security of
    U.S. NATO Allies and partner states in Europe and deter aggressive
    actors in the region by enhancing prepositioning and weapons storage
    capabilities, improving airfield and support infrastructure, providing
    5th generation warfighting capability, and building partnership
    capacity.
                        family and unaccompanied housing
        A fundamental priority of the Department is to support military
    personnel and their families to improve their quality of life by
    ensuring access to suitable, affordable housing. Service members are
    engaged in the front lines of protecting our national security and they
    deserve the best possible living and working conditions. Sustaining the
    quality of life of our people is crucial to recruitment, retention,
    readiness and morale.
        Our fiscal year 2017 budget request includes $1.3 billion to fund
    construction, operation, and maintenance of Government-owned and leased
    family housing worldwide as well as to provide housing referral
    services to assist military members in renting or buying private sector
    housing, and oversight of privatized family housing (see Table 2
    below). Included in this request is $356 million for construction and
    improvements; $232 million for operations (including housing referral
    services); $229 million for maintenance; $154 million for utilities;
    and $349 million for leasing and privatized housing oversight.
        This funding request supports over 38,000 Government-owned family
    housing units, almost all of which are on enduring bases in foreign
    countries now that the Department has privatized the vast majority of
    our family housing in the United States (over 206,000 units). The
    Department is also leasing more than 9,000 family housing units where
    Government-owned or privatized housing is not feasible. Our request
    also includes $3.3 million to support administration of the Military
    Housing Privatization Initiative (MHPI) Program as prescribed by the
    Federal Credit Reform Act of 1990, to ensure the project owners
    continue to fund future capital repairs and replacements as necessary
    to provide quality housing for military families and to ensure that
    these projects remain viable for their 40-50 year lifespan.
        In fiscal year 2015, the Department notified Congress of DOD's
    intent to transfer $96 million of Navy family housing construction
    funds into the Department's Family Housing Improvement Fund (FHIF) to
    execute Hawaii Phase 6 to support Marine Corps housing requirements in
    Hawaii. Execution of Hawaii Phase 6 brings the Department's total
    privatized family housing inventory to nearly 202,000 homes.

                    TABLE 2. FAMILY HOUSING BUDGET REQUEST, FISCAL YEAR 2016 VERSUS FISCAL YEAR 2017
    ----------------------------------------------------------------------------------------------------------------
                                                                                            Change From Fiscal Year
                                                                Fiscal Year  Fiscal Year             2016
                         Account Category                           2016         2017    ---------------------------
                                                                 Request ($   Request ($   Funding ($
                                                                 Millions)    Millions)     Millions)      Percent
    ----------------------------------------------------------------------------------------------------------------
    Family Housing Construction/Improvements..................          277          356           79            29
    Family Housing Operations & Maintenance...................        1,136          961         (175)          (15)
    Family Housing Improvement Fund \1\.......................            0            3            3           100
                                                               -----------------------------------------------------
          TOTAL...............................................        1,413        1,320           93            (7)
    ----------------------------------------------------------------------------------------------------------------
    \1\ We made no fiscal year 2016 request for funds to oversee privatized housing because we had sufficient fiscal
      year 2015 cost savings to cover our fiscal year 2016 expenses.

        The Department also continues to encourage the modernization of
    Unaccompanied Personnel Housing (UPH) to improve privacy and provide
    greater amenities. In recent years, we have heavily invested in UPH to
    support initiatives such as BRAC, global restationing, force structure
    modernization, and the Navy's Homeport Ashore initiative. However, this
    constrained budget request only includes five UPH projects totaling
    $161 million, all of which are for transient personnel or trainees such
    as a $67 million Recruit Dormitory at Joint Base San Antonio, Texas.
                  facilities sustainment and recapitalization
        In addition to new construction, the Department invests significant
    funds in maintenance and repair of our existing facilities. Sustainment
    represents the Department's single most important investment in the
    condition of its facilities. It includes regularly scheduled
    maintenance and repair or replacement of facility components--the
    periodic, predictable investments that should be made across the
    service life of a facility to slow its deterioration, optimize the
    Department's investment, and save resources over the long term. Proper
    sustainment slows deterioration, maintains safety, preserves
    performance over the life of a facility, and helps improve the
    productivity and quality of life of our personnel.

           TABLE 3. SUSTAINMENT AND RECAPITALIZATION BUDGET REQUEST, FISCAL YEAR 2016 VERSUS FISCAL YEAR 2017
    ----------------------------------------------------------------------------------------------------------------
                                                                                            Change From Fiscal Year
                                                                Fiscal Year  Fiscal Year             2016
                         Account Category                           2016         2017    ---------------------------
                                                                 Request ($   Request ($   Funding ($
                                                                 Millions)    Millions)     Millions)      Percent
    ----------------------------------------------------------------------------------------------------------------
    Sustainment (O&M).........................................        8,022        7,450         (572)           (7)
    Recapitalization (O&M)....................................        2,563        2,088         (475)          (19)
                                                               -----------------------------------------------------
          TOTAL...............................................       10,585        9,538       (1,047)          (10)
    ----------------------------------------------------------------------------------------------------------------

        The accounts that fund these activities have taken significant cuts
    in recent years. For fiscal year 2017, the Department's budget request
    includes $7.4 billion for sustainment and $2.1 billion for
    recapitalization (see Table 3 above) in Operations & Maintenance
    funding only. The combined level of sustainment and recapitalization
    funding ($9.5 billion) is a 10 percent decrease from the fiscal year
    2016 President's budget (PB) request ($10.6 billion), and reflects an
    acceptance of significant risk in DOD facilities. In fact, the request
    supports average DOD-wide sustainment funding level that equates to 74
    percent of the FSM requirement as compared to the Department's goal to
    fund sustainment at 90 percent of modeled requirements.
        Recent and ongoing budget constraints have limited investment in
    facilities sustainment and recapitalization to the point that 11.7
    percent of the Department's facility inventory is in ``poor'' condition
    (Facility Condition Index (FCI) between 60 and 79 percent) and another
    14.8 percent is in ``failing'' condition (FCI below 60 percent) based
    on recent facility condition assessment data. Compared to last year
    (see Table 4), the Department is seeing more poor facilities moving
    into failing conditions. Until the out-year sequestration challenges
    are overcome, the Department will continue to take risk in funding to
    sustain and recapitalize existing facilities. This will ultimately
    result in DOD facing larger bills in the out-years to restore or
    replace facilities that deteriorate prematurely.

                TABLE 4.--COMPARISON OF FISCAL YEAR 2014 AND FISCAL YEAR 2015 FACILITY CONDITION INDICES
    ----------------------------------------------------------------------------------------------------------------
                                                   End of Fiscal Year 2014 FCI (%)   End of Fiscal Year 2015 FCI (%)
                                                 -------------------------------------------------------------------
                                                   Poor (60-79%)    Failing (<60%)   Poor (60-79%)    Failing (<60%)
    ----------------------------------------------------------------------------------------------------------------
    Army........................................             31.3             10.2             12.8             26.1
    Navy........................................             17.4              6.4             15.8              6.4
    Air Force...................................              2.6              4.1              5.7              3.9
    Washington Headquarters Service.............              2.2              4.7              2.1              5.8
                                                 -------------------------------------------------------------------
          TOTAL.................................             19.7              7.4             11.7             14.8
    ----------------------------------------------------------------------------------------------------------------

            Fiscal Year 2017 Budget Request--Environmental Programs

        The Department has long made it a priority to protect the
    environment on our installations, not only to preserve irreplaceable
    resources for future generations, but to ensure that we have the land,
    water and airspace we need to sustain military readiness. To achieve
    this objective, the Department has made a commitment to continuous
    improvement, pursuit of greater efficiency and adoption of new
    technology. In the President's fiscal year 2017 budget, we are
    requesting $3.4 billion, a slight decrease from fiscal year 2016, to
    continue the legacy of excellence in our environmental programs.
        The table below outlines the entirety of the DOD's environmental
    program, but I would like to highlight a few key elements where we are
    demonstrating significant progress--specifically, our environmental
    restoration program, our efforts to leverage technology to reduce the
    cost of cleanup, and the Readiness and Environmental Protection
    Integration (REPI) program.

                 TABLE 5: ENVIRONMENTAL PROGRAM BUDGET REQUEST, FISCAL YEAR 2017 VERSUS FISCAL YEAR 2016
    ----------------------------------------------------------------------------------------------------------------
                                                                                            Change From Fiscal Year
                                                                Fiscal Year  Fiscal Year             2016
                         Account Category                           2016         2017    ---------------------------
                                                                 Request ($   Request ($   Funding ($
                                                                 Millions)    Millions)    Millions)      Percent
    ----------------------------------------------------------------------------------------------------------------
    Environmental Restoration.................................        1,107        1,030          -77           -7
    Environmental Compliance..................................        1,389        1,493          103            7
    Environmental Conservation................................          389          420           31            8
    Pollution Prevention......................................          101           84          -17          -17
    Environmental Technology..................................          200          186          -14           -7
    BRAC Environmental........................................          217          181          -36          -17
                                                               -----------------------------------------------------
          TOTAL...............................................        3,405        3,395          -10           -0.3
    ----------------------------------------------------------------------------------------------------------------

                           environmental restoration
        We are requesting $1.2 billion to continue cleanup efforts at
    remaining Installation Restoration Program (IRP--focused on cleanup of
    hazardous substances, pollutants, and contaminants) and Military
    Munitions Response Program (MMRP--focused on the removal of unexploded
    ordnance and discarded munitions) sites. This includes $1.0 billion for
    ``Environmental Restoration,'' which encompasses active installations
    and Formerly Used Defense Sites (FUDS) locations and $181 million for
    ``BRAC Environmental.'' The amount of BRAC Environmental funds
    requested will be augmented by $108 million of land sale revenue and
    prior year, unobligated funds, bringing the total amount of BRAC
    Environmental funding planned for obligation in fiscal year 2017 to
    $289 million. These investments help to ensure DOD continues to make
    property at BRAC locations safe and environmentally suitable for
    transfer. We remain engaged with the Military Departments to ensure
    they are executing plans to spend remaining unobligated balances in the
    BRAC account.

                                         TABLE 6: PROGRESS TOWARD CLEANUP GOALS
    ----------------------------------------------------------------------------------------------------------------
      Goal: Achieve Response Complete at 90% and 95% of Active and BRAC IRP and MMRP sites, and FUDS IRP sites, by
                                  fiscal year 2018 and  fiscal year 2021, respectively
    -----------------------------------------------------------------------------------------------------------------
                                                                   Projected Status at the   Projected Status at the
                                         Status as of the end of   end of fiscal year 2018   end of fiscal year 2021
                                          fiscal year 2015  (%)              (%)                       (%)
    ----------------------------------------------------------------------------------------------------------------
    Army..............................                       90                        94                        97
    Navy..............................                       80                        86                        92
    Air Force.........................                       80                        89                        94
    DLA...............................                       86                        97                        97
    FUDS..............................                       80                        89                        94
                                       -----------------------------------------------------------------------------
          Total.......................                       84                        91                        95
    ----------------------------------------------------------------------------------------------------------------

        We are cleaning up sites on our active installations in parallel
    with those on bases closed in previous BRAC rounds--cleanup is not
    something that DOD pursues only when a base is closed. In fact, the
    significant progress we have made over the last 20 years cleaning up
    contaminated sites on active DOD installations is expected to reduce
    the residual environmental liability in the disposition of our property
    made excess through the BRAC process or other efforts.
        By the end of 2015, the Department, in cooperation with State
    agencies and the Environmental Protection Agency, completed cleanup
    activities at 84 percent of Active and BRAC IRP and MMRP sites, and
    FUDS IRP sites, and is now monitoring the results. During fiscal year
    2015 alone, the Department completed cleanup at over 870 sites. Of the
    roughly 39,500 restoration sites, almost 31,500 are now in monitoring
    status or cleanup completed. We are currently on track to meet our
    program goals--anticipating complete cleanup at 95 percent of Active
    and BRAC IRP and MMRP sites, and FUDS IRP sites, by the end of 2021.
        Our focus remains on continuous improvement in the restoration
    program: minimizing overhead; adopting new technologies to reduce cost
    and accelerate cleanup; refining and standardizing our cost estimating;
    and improving our relationships with State regulators through increased
    dialogue. All of these initiatives help ensure that we make the best
    use of our available resources to complete cleanup.
                            environmental technology
        A key part of DOD's approach to meeting its environmental
    obligations and improving its performance is its pursuit of advances in
    science and technology. The Department has a long record of success
    when it comes to developing innovative environmental technologies and
    getting them transferred out of the laboratory and into actual use on
    our remediation sites, installations, ranges, depots and other
    industrial facilities. These same technologies are also now widely used
    at non-Defense sites helping the Nation as a whole.
        While the fiscal year 2017 budget request for Environmental
    Technology overall is $191 million, our core efforts are conducted and
    coordinated through two key programs--the Strategic Environmental
    Research and Development Program (SERDP--focused on basic research) and
    the Environmental Security Technology Certification Program (ESTCP--
    which validates more mature technologies to transition them to
    widespread use). The fiscal year 2017 budget request includes $65
    million for SERDP and $32 million for ESTCP for environmental
    technology demonstrations, with an additional $20 million requested
    specifically for energy technology demonstrations.
        These programs have already achieved demonstrable results and have
    the potential to reduce the environmental liability and costs of the
    Department--developing new ways of treating groundwater contamination,
    reducing the life-cycle costs of multiple weapons systems, and
    improving natural resource management.
        As an example, this past year SERDP-sponsored project to conduct
    basic research that is will develop an environmentally benign Chemical
    Agent Resistant Coating (CARC), which is critical technology for the
    protection of military assets. Current CARC coatings contribute
    approximately 2.3 million pounds of volatile organize compounds (VOCs)
    and hazardous air pollutants (HAPs) to the environment each year. The
    new novel powder CARC is absent of solvent, emits nearly zero VOCs, can
    be recycled, and is compatible with existing CARC systems. In addition,
    testing to date proves that the exterior durability of this coating is
    superior to any liquid CARC system, supporting DOD's initiative for
    corrosion prevention and mitigation. Coating products are currently in
    transition to Original Equipment Manufacturers, Depots, and the Defense
    Logistics Agency (DLA).
        Looking ahead, our environmental technology investments are focused
    on the Department's evolving requirements. In the area of Environmental
    Restoration, we are launching a new 3-year initiative to support
    sustainable range management by researching the environmental impacts
    of new munitions compounds and we will continue our investments in
    technologies to address the challenges of contaminated groundwater
    sites where no good technical solutions are currently available. We are
    working to understand the behavior of contaminants in fractured bedrock
    and large dilute plumes, which represent a large fraction of these
    sites, and to develop treatment and management strategies. We will
    continue our efforts to develop the science and tools needed to meet
    the Department's obligations to assess and adapt to climate change.
    Finally, to transition the important work of improving the
    sustainability of our industrial operations and reducing life-cycle
    costs by eliminating toxic and hazardous materials from our production
    and maintenance processes we are initiating a program to demonstrate
    that our most hazardous chemicals can be eliminated from a maintenance
    production line.
             environmental conservation and compatible development
        To maintain access to the land, water and airspace needed to
    support our mission needs, the Department continues to successfully
    manage the natural resources entrusted to us--including protecting the
    many threatened and endangered species found on our lands. DOD manages
    approximately 25 million acres containing many high-quality and unique
    habitats that provide food and shelter for nearly 520 species-at-risk
    and over 400 that are federally listed as threatened or endangered
    species. That is 9 times more species per acre than the Bureau of Land
    Management, 6 times more per acre than the United States Fish and
    Wildlife Service (USFWS), 4.5 times more per acre than the Forest
    Service, and 3.5 times more per acre than the National Park Service. A
    surprising number of rare species are found only on military lands--
    including more than 15 listed species and at least 75 species-at-risk.
        The fiscal year 2017 budget request for Conservation is $420
    million. The Department invests these funds to manage its imperiled
    species as well as all of its natural resources in an effort to sustain
    the high quality lands our service personnel need for testing, training
    and operational activities, and to maximize the flexibility our
    servicemen and women need to effectively use those lands. Species
    endangerment and habitat degradation can and does have direct mission-
    restriction impacts. That is one reason we work hard to prevent species
    from becoming listed and, if they do become listed, to manage these
    species and their habitat in ways that sustain the resource and enable
    our ability to test and train. All of our plans now adequately address
    these species, and we have successfully and consistently avoided
    critical habitat designations because our plans adequately address
    management concerns for species that exist on our lands. Getting ahead
    of any future listings has been a prime, natural resource objective for
    the last several years and will remain so in the future.
    Readiness and Environmental Protection Integration (REPI) Program
        To help ensure DOD sustains its national defense mission and
    protects species under duress, the Department has developed a strategy
    that supports conservation beyond installation boundaries. Under this
    strategy DOD engages with other governmental and non-governmental
    partners, as well as private landowners, to develop initiatives and
    agreements for protecting species for the purposes of precluding or
    mitigating regulatory restrictions on training, testing, and operations
    on DOD lands. Expanding the scale and options for protecting species on
    non-DOD land benefits conservation objectives while helping sustain
    access to, and operational use, of DOD live training and test domains.
        This strategic focus is a key element of the Readiness and
    Environmental Protection Integration (REPI) Program. Under REPI, the
    Department partners with conservation organizations and State and local
    governments to preserve buffer land and sensitive habitat near
    installations and ranges. Preserving these areas allows the Department
    to avoid more costly alternatives such as workarounds, restricted or
    unrealistic training approaches, or investments to replace existing
    test and training capability. Simultaneously, these efforts ease the
    on-installation species management burden and reduce the possibility of
    restricted activities, ultimately providing more flexibility for
    commanders to execute their missions.
        Included within the $420 million for Conservation, $60 million is
    directed to the REPI Program. The REPI Program is a cost-effective tool
    to protect the Nation's existing training, testing, and operational
    capabilities at a time of decreasing resources. In the last 13 years,
    REPI partnerships have protected more than 437,000 acres of land around
    86 installations in 29 States. In addition to the tangible benefits to
    training, testing, and operations, these efforts have resulted in
    significant contributions to biodiversity and recovery actions
    supporting threatened, endangered and candidate species.
        The REPI Program supports the warfighter and protects the taxpayer
    because it multiplies the Department's investments through unique cost-
    sharing agreements. Even in these difficult economic times, REPI is
    able to directly leverage the Department's investments at least one-to-
    one with those of our partners, effectively securing critical buffers
    around our installations for half-price.
        In addition, DOD, along with the Departments of the Interior and
    Agriculture, continues to advance the Sentinel Landscapes Partnership
    to protect large landscapes where conservation, working lands, and
    national defense interests converge--places defined as Sentinel
    Landscapes. Established in 2013, the Sentinel Landscapes Partnership
    further strengthens interagency coordination and provides taxpayers
    with the greatest leverage of their funds by aligning Federal programs
    to advance the mutually-beneficial goals of each agency.
        Thus far, three Sentinel Landscapes have been identified around
    Joint Base Lewis-McChord, Washington; Fort Huachuca, Arizona; and Naval
    Air Station (NAS) Patuxent River and the Atlantic Test Ranges,
    Maryland. The pilot Sentinel Landscape project at JBLM influenced the
    USFWS decision to avoid listing a butterfly species in Washington,
    Oregon, and California. The USFWS cited the ``high level of protection
    against further losses of habitat or populations'' from investments
    made by Joint Base Lewis-McChord's REPI partnership, actions that allow
    significant maneuver areas to remain available and unconstrained for
    active and intense military use at JBLM. At Fort Huachuca, NAS Patuxent
    River and the Atlantic Test Ranges, DOD is working with USFWS, the
    Natural Resources Conservation Service, the U.S. Forest Service, and a
    variety of State and private conservation organizations to protect
    important swaths of special use airspace used for aircraft testing and
    training, while also benefiting ecologically sensitive watersheds and
    the installations, wildlife, and working lands dependent on those
    resources.

                Fiscal Year 2017 Budget Request--Energy Programs

        Unlike the Department's Military Construction and Environmental
    Remediation programs, where the budget request includes specific line
    items, our energy programs are subsumed into other accounts. The
    following sections describe the Energy portion of the budget request.
    Further discussion of energy follows in the highlighted issues section.
                               operational energy
        In fiscal year 2017, the Department's budget request includes an
    estimated $9.8 billion for 93.3 million barrels of fuel. In order to
    increase warfighting capability and reduce operational risk, the
    Department's fiscal year 2017 budget request also includes $2.5 billion
    for adaptations and improvements in our use of operational energy.
    Operational energy is the energy used to power aircraft, ships, combat
    vehicles, and mobile power generation at contingency bases. While there
    is no explicit budget request for Operational Energy, these investments
    across multiple accounts and appropriations are intended specifically
    to improve military capability.
        Within this overall request, the Department is requesting $37.3M in
    RDT&E funding to support the Operational Energy Capabilities
    Improvement Fund (OECIF). OECIF provides funding to DOD research
    programs that improve operational energy performance organized around a
    specific annual theme or focus area, as well as sustain funding to
    those programs already underway. The fiscal year 2017 President's
    budget will provide funding for new programs, as well as support those
    programs established in fiscal year 2014-fiscal year 2016.
        Finally, the Department is requesting $5.4 million in fiscal year
    2017 to fund the operations of OASD(EI&E) and oversee operational
    energy activities. Each year, EI&E certifies that the President's
    budget is adequate for carrying out the Department's Operational Energy
    Strategy. The full certification report, which will be provided to
    Congress in the near future, will provide a more comprehensive
    assessment of the alignment of operational energy initiatives with the
    goals of the recently released 2016 Operational Energy Strategy.
    2016 Operational Energy Strategy
        Reflecting lessons learned, strategic guidance, and the evolving
    operational environment, the 2016 Operational Energy Strategy is
    designed to improve our ability to deliver the operational energy
    needed to deploy and sustain forces in an operational environment
    characterized by peer competitors, asymmetric insurgents, and
    unforgiving geography. The strategy identifies the following three
    objectives:

      --Increase Future Warfighting Capability. Foremost, the strategy
            focuses on increasing warfighter capability through energy-
            informed force development. In addition to energy Key
            Performance Perimeters (eKPP) informed by energy supportability
            analyses that improve the combat effectiveness and
            supportability of major acquisition programs, the Department
            will continue to invest in energy innovation that improves the
            long-term capability of the Department, such as increasing the
            unrefueled range or endurance of platforms. With this knowledge
            of inherent energy constraints and risks, the Military
            Departments will be better able to make energy-informed
            decisions related to force development and future capabilities.
      --Identify and Reduce Logistics and Operational Risks. To effectively
            reduce logistics risks, the Department will address energy
            risks in near-term operation plans as well as more exploratory,
            longer-term concepts of operation. Initiatives that fall into
            this category seek to mitigate warfighting gaps found in
            Integrated Priority Lists, OPLANs, and wargames. The
            Department's focus on risk will ensure future forces are better
            aligned to mitigate potential threats to operations.
      --Enhance Mission Effectiveness of the Current Force. Finally, the
            strategy will improve the effectiveness of U.S. Forces
            operating around the globe today. To do so, the Department will
            emphasize improved energy use in operations and training, and
            enhanced education of operators, logisticians, and system
            developers. These initiatives may include material and non-
            material enhancements to day to day operations, as well as
            adaptations in training, exercises, and professional military
            education.

        In coordination with the Combatant Commands, Military Departments,
    Joint Staff, and Defense Agencies, my office is overseeing the
    execution of 15 targets arrayed across the three objectives. For
    instance, we are supporting Joint Staff oversight of the energy KPP,
    facilitating operational energy advisors at the Combatant Commands, and
    assessing the role of operational energy in war games and operation
    plan reviews. In addition to the Defense Operational Energy Board, we
    will use existing requirements, acquisition, programming, and budgeting
    processes to review Department progress against these targets.
                              installation energy
        As with Operational Energy, there is no explicit request in the
    overall budget for Facilities Energy--utilities expenditures are
    included in the Base Operations O&M request. Facilities Energy remains
    our single largest base operating cost and in fiscal year 2015, we
    spent $3.9 billion to heat, cool, and provide electricity to our
    buildings. To reduce this cost the Department is pursuing energy
    efficiencies through building improvements, new construction, and third
    party investments.
        The Department's fiscal year 2017 budget request includes
    approximately $618 million for investments in conservation and energy
    efficiency, most of which will be directed to existing buildings. The
    majority ($468 million) is in the Military Components' operations and
    maintenance accounts, to be used for sustainment and recapitalization
    projects. Such projects typically involve retrofits to incorporate
    improved lighting, high-efficiency HVAC systems, double-pane windows,
    energy management control systems, and new roofs. The remainder ($150
    million) is for the Energy Conservation Investment Program (ECIP), a
    Military Construction account used to implement energy efficiency,
    water conservation, and renewable energy projects. Each individual ECIP
    project has a positive payback (i.e. Savings to Investment Ratio (SIR)
    > 1.0) and the overall program has a combined SIR greater than 2.0.
    This means for every dollar we invest in ECIP, we generate more than
    two dollars in savings.
        The Military Component investments include activities that would be
    considered regular maintenance and budgeted within the O&M accounts for
    Facilities Sustainment, Restoration, and Maintenance activities. The
    risk that has been accepted in those accounts will not only result in
    fewer energy projects, but failing to perform proper maintenance on our
    buildings will without question have a negative impact on our energy
    usage. In plain terms, upgrades to air conditioning systems will not
    reduce energy usage as projected if the roof is leaking or the windows
    are broken.
        In addition to retrofitting existing buildings, we continue to
    drive efficiency in our new construction. Our new buildings must be
    constructed using the high-performance sustainable buildings standards
    issued by my office 2 years ago which include greater energy efficiency
    requirements.
        Additionally, the Department is taking advantage of third-party
    financing through Energy Savings Performance Contracts (ESPCs) and
    Utility Energy Service Contracts (UESCs), to implement energy
    efficiency improvements in our existing buildings. Under these
    contracts private energy firms or utility companies make energy
    upgrades to our buildings and are paid back over time using utility
    bill savings.
    Facilities Energy Management
        With respect to facilities energy management the Department has
    made great progress towards improving the energy efficiency of its
    installations. Since fiscal year 2009, the Department reduced the
    energy consumed on our military bases by 10 percent, avoiding over $1.2
    billion in operating costs.
        In addition to using appropriated funding for energy conservation
    and efficiency initiatives, the Department is continuing to take
    advantage of third-party financing tools through energy performance
    based contracts (ESPCs and UESCs) to implement energy efficiency
    improvements in our existing buildings. While such performance-based
    contracts have long been part of the Department's energy strategy, the
    Services have significantly increased the use of ESPCs and UESCs in
    response to the President's Performance Contracting Challenge (PPCC)
    originally issued in December 2011 and extended in May 2014. The PPCC
    challenged Federal agencies to award $4 billion in energy performance
    based contacts by the end December 2016. The DOD's commitment to the
    challenge is just over $2 billion in contracts. To date the Department
    has awarded $1.3 billion in ESPCs and UESCs.
        Regarding renewable energy, the Department has a goal to deploy 3
    gigawatts of renewable energy by fiscal year 2025. Most renewable
    energy projects we pursue are financed by private developers. DOD's
    authorities for renewable energy--particularly the ability to sign
    power purchase agreements of up to 30 years--provide incentives for
    private firms to fund the projects themselves, and can also provide a
    strong business case that they are able to offer DOD lower energy rates
    than are being paid currently. The DOD does not make any capital
    investment in these renewable energy projects. When feasible, renewable
    energy projects are being built with micro-grid-ready applications that
    can enable the provision of continuous power in the event of a
    disruption.
        As of the end of fiscal year 2015 the Department has 702 megawatts
    in renewable energy projects in operation. The services also have more
    than 550 megawatts of projects under construction including a 15 MW
    Solar PV/50 MW wind ``hybrid'' project at Ft Hood, Texas and an off-
    site 210 MW solar PV facility that will supply power to 14 Department
    of Navy installations in California. Further, there is another 1.3
    gigawatts of renewable energy projects in various stages of
    development; putting the Department well on track towards meeting its 3
    gigawatt goal.

                               Highlighted Issues

       merger of the energy, installations, and environment organizations
        As you know, the fiscal year 2015 National Defense Authorization
    Act directed the merger of the Assistant Secretary of Defense for
    Operational Energy Plans and Programs and the Deputy Under Secretary of
    Defense for Installations and Environment to create the Assistant
    Secretary of Defense for Energy, Installations and Environment. The ASD
    (EI&E) is now the principle advisor to the Secretary of Defense for
    Acquisition, Technology, and Logistics on matters relating to energy,
    installations, and environment and the principal advisor to the
    Secretary of Defense and the Deputy Secretary of Defense regarding
    operational energy plans and programs.
        The Department is currently developing the required report on the
    status of the merger, and will provide that to the Congress later this
    year. I can tell you that through the merger operational energy
    functions have benefited from additional resources and collaboration
    with complementary functions related to installation energy, facilities
    investment and management, and basing.
                          base realignment and closure
        Given the need to find efficiencies and reexamine how our
    infrastructure is configured, the Administration is requesting the
    authority from Congress to conduct a 2019 BRAC round. As indicated in
    testimony last year, the Department has excess capacity. The Army and
    Air Force have analyzed their infrastructure and have found that they
    have 18 percent and 30 percent excess capacity, respectively. We are
    currently conducting a DOD wide parametric analysis as directed by the
    fiscal year 2016 National Defense Authorization Act, which will likely
    indicate excess of around 20 percent. This level of excess is not
    surprising given the fact that in 2004 we found that the Department had
    24 percent excess and BRAC 2005 reduced infrastructure by 3.4 percent
    (as measured by plant replacement value).
        As we have said, a new BRAC round will be different than BRAC 2005.
    The new round will be efficiency focused. It will save about $2 billion
    a year after implementation; with costs and savings during the 6 year
    implementation being a wash at approximately $7 billion. Our projection
    is based on the efficiency rounds of the 1990s.
        In addition to being a proven process that yields savings, BRAC has
    several advantages that we have outlined before in our testimony. I
    want to highlight a few of these:

      --BRAC is comprehensive and thorough--all installations are analyzed
            using certified data aligned against the strategic imperatives
            detailed in the 20-year force structure plan;
      --The BRAC process is auditable and logical which enables the
            Commission to conduct an independent review informed by its own
            analysis and testimony from affected communities and elected
            officials;
      --The Commission has the last say on the Department's
            recommendations--being fully empowered to alter, reject, or add
            recommendation;
      --The BRAC process has an ``All or None'' construct which prevents
            the President and Congress from picking and choosing among the
            Commission's recommendations; thereby insulating BRAC from
            politics;
      --The BRAC process imposes a legal obligation on the Department to
            close and realign installations as recommended by the
            Commission by a date certain that facilitates economic reuse
            planning by impacted communities and grants the Department the
            authorities needed to satisfy that legal obligation.

        In recognition of your concerns about cost and the amount of time
    the BRAC Commission has to review our recommendations, the Department's
    request for BRAC authorization includes four key changes from prior
    year submissions as well as a handful of administrative and timeline
    changes. Each of the changes are narrowly tailored to address
    congressional cost concerns while not altering the fundamental
    principles of the BRAC process: treating all bases equally; all or none
    review by both the President and Congress; review by an independent
    Commission; making military value the priority consideration; and a
    clear legal obligation to implement all of the recommendations in a
    time certain together with all the authorities needed to accomplish
    implementation.
        To ensure the next BRAC round is focused on saving money and
    maximizing efficiency, our legislation adds a requirement for the
    Secretary of Defense to certify that the BRAC round will have the
    primary objective of eliminating excess infrastructure to maximize
    efficiency and reduce cost. Like the existing requirement to certify
    the need for a BRAC round, this certification occurs at the outset of
    the BRAC process and is a precondition to moving forward with
    development of recommendations. Additionally, subject to the
    requirement to give priority consideration to the military value
    selection criteria, the legislation now requires the Secretary to
    emphasize those recommendations that yield net savings within 5 years
    of completing the recommendation and limits the Secretary's ability to
    make recommendations that do not yield savings within 20 years. In
    order to make a recommendation that does not yield savings within 20
    years, the Secretary must expressly determine that the military value
    of such recommendation supports or enhances a critical national
    security interest of the United States.
        Finally, the legislation also now specifically delineates those
    costs that must be considered when determining the costs associated
    with a recommendation. As revised, the legislation specifies that the
    Department must consider costs associated with military construction,
    information technology, termination of public-private contracts,
    guarantees, the costs of any other activity of the Department of
    Defense or any other Federal agency that may be required to assume
    responsibility for activities at the military installations, and such
    other factors as the Secretary determines as contributing to the cost
    of a closure or realignment. Previous versions of the legislation had
    only specifically mentioned the costs of any other activity of the
    Department of Defense or any other Federal agency that may be required
    to assume responsibility for activities at the military installations
        Our proposal extends the Commission review period to run from April
    15 to October 1 which adds 2 months to Commission review and requires
    that Commissioners be named by February 1 which enables the Commission
    to be up and running for ten weeks before our recommendations come to
    them. Our revision also requires the Chair of the Commission to certify
    that the Commission and its staff have the capacity to review the
    Department's recommendations.
        Heretofore, we've addressed every concern raised by Congress. We
    conducted the European Infrastructure Consolidation to address concerns
    that we need to look at overseas installations first; we programmed the
    costs and pledged the next round will reduce excess instead of the 2005
    round's more costly ``transformation'' focus in response to concerns
    that we could not afford BRAC; and we have demonstrated that excess
    capacity exists--Army and Air Force testified to 21 and 30 percent.
    We've updated our DOD-wide (parametric) analysis and will provide it to
    Congress soon; it indicates over 20 percent excess.
        We hope the Department's efforts will result in a real dialog with
    members of Congress regarding the need for and value of the BRAC
    process, ultimately resulting in authority for a 2019 BRAC round.
                     european infrastructure consolidation
        In response to our recent requests for BRAC authority, Congress
    made it clear that it wanted DOD to look at reducing our overseas
    infrastructure first--particularly in Europe. We did so by conducting
    the European Infrastructure Consolidation (EIC) analysis--the first
    holistic and joint review of our legacy infrastructure in Europe.
        To analyze our European infrastructure we used a process very
    similar to the proven U.S. BRAC process. We looked at capacity,
    requirements (including surge), military value, cost, and the
    diplomatic dynamics involved with each action. As we consolidate our
    footprint, the infrastructure remaining in place will continue to
    support our operational requirements and strategic commitments, but we
    will not need as many support personnel (military, civilian, and host
    nation employees) to do so.
        The 26 approved EIC actions will allow us to create long-term
    savings by eliminating excess infrastructure without reducing our
    operational capabilities. In other words, operationally we will
    continue to do everything we currently do but at a lower cost. After a
    one-time investment of approximately $800 million in Military
    Construction to implement 2 major base closures, 8 minor site closures,
    and 16 realignment actions, the Department will realize approximately
    $500 million in annual recurring savings.
        These actions will be executed over the next several years, but
    that does not mean that everything will remain static in Europe while
    these changes occur. There were consolidations made before EIC and
    there will undoubtedly be future basing actions--especially given the
    evolving security environment. However, our holistic review and the
    resultant actions allow us to redirect resources supporting unneeded
    infrastructure and apply them to higher priorities, thus strengthening
    our posture in Europe.
        Although we continually seek efficiencies as we manage
    installations worldwide, the Department does not conduct this degree of
    comprehensive analyses of its infrastructure on a regular basis. That's
    one of the reasons we have requested BRAC authority from Congress to do
    a review of our U.S. installations. In this fiscal environment it would
    be irresponsible of us not to look for such savings.

                         Rebalance to the Asia-Pacific

                    rebasing of marines from okinawa to guam
        The movement of thousands of Marines from Okinawa (and elsewhere)
    to Guam is one of the most significant re-basing action in recent
    years. We appreciate Congress' support allowing us to move forward on
    this essential component of our rebalance to the Asia-Pacific region,
    resulting in a more geographically dispersed, operationally resilient,
    and politically sustainable posture in the area. As a U.S. territory,
    Guam offers strategic advantages and operational capabilities that are
    unique in the region. Presence in Guam is a force multiplier that
    contributes to a force posture that reassures allies and partners and
    deters aggression.
        Now that the very complex National Environmental Policy Act (NEPA)
    process (nearly 5 years of study) is complete, there is a clear path
    for construction to proceed in earnest. Utilities and site improvements
    ($300 million funded by the GoJ) for the main cantonment area at
    Finegayan, and a live-fire training range ($125 million) at Andersen's
    Northwest Field will be the first projects under the new Record of
    Decision (ROD). Construction for the Marine Aviation Combat Element
    (ACE) at the North Ramp of Andersen proceeded earlier because it was
    covered under the original 2010 ROD; it remains on track.
        We understand Congress' concerns regarding both the cost and
    feasibility of the relocation and we are firmly committed to the
    principles of operational effectiveness and fiscal responsibility. We
    remain confident in the estimate of $8.7 billion for the program, which
    includes $3.1 billion provided by the Government of Japan (GoJ) ($1.152
    billion transferred to date). The Department is evaluating this program
    in advance of each year's budget submission to pursue efficiencies that
    have the potential to reduce overall cost. For example, the
    Department's decision to relocate housing to Andersen Air Force Base
    reduced the requirement for a water works project (at the main
    cantonment area) saving the Department approximately $50 million.
    Additionally, we continue to provide the necessary oversight,
    conducting quarterly Deputy Secretary led Guam Oversight Council
    meetings to address issues related to the program's implementation.
        The Marines, in conjunction with the Naval Facilities Engineering
    Command (NAVFAC), have an established program management organization
    for construction execution and oversight. NAVFAC is standing up an
    Officer in Charge of Construction office and anticipates it will be in
    place by the first quarter of 2017. The Marines continue with planning
    to meet operational requirements on the ground. This is the largest
    infrastructure program ($9 billion) that has been executed in many
    years, so it is prudent to have the necessary management structure in
    place to ensure success.
        The Economic Adjustment Committee Implementation Plan (EIP)
    (submitted to Congress in October 2015) was the last Congressional
    requirement restricting project execution on Guam. The Plan outlines
    the five ``outside the fence'' projects (listed in the table below)
    associated with the impacts of the build-up on Guam's civilian
    infrastructure. Last year's fiscal year 2016 NDAA provides
    authorization for moving forward with the water/wastewater projects--
    but not for the cultural repository and the public health lab projects.
    Our fiscal year 2017 President's budget requests authority for these
    two projects and the balance of funding ($87 million).

                                 TABLE 7: EAC PROJECTS SUPPORTING DON RECORD OF DECISION
    ----------------------------------------------------------------------------------------------------------------
                                                                             Previous Fiscal      Fiscal Year 2017
                     Project Title                    Project Total  ($   Year(s) Appropriated       Request  ($
                                                          Millions)            ($ Millions)           Millions)
    ----------------------------------------------------------------------------------------------------------------
    Upgrade Wastewater Treatment Plan.............                  139                    71                    68
    Refurbishment sewer line Andersen AF..........                   31                    31                     0
    Repair/expansion Aquifer monitoring system....                    4                     4                     0
    Public Health Laboratory......................                   32                    13                    19
    Cultural Repository...........................                   12                    12                     0
                                                   -----------------------------------------------------------------
          Total...................................                  218                   131                    87
    ----------------------------------------------------------------------------------------------------------------

        The cumulative impact of this stationing was carefully evaluated
    within the environmental analysis process and we determined that water/
    wastewater, public health, and our obligation to care for artifacts
    uncovered in our construction need to be addressed. The associated
    projects total $218 million, which is a relatively small, but
    absolutely necessary, portion of this relocation.
        Failure to provide authorization for these projects increases the
    risk of litigation and project delay and will affect DOD's credibility
    with the Guam's populace. Our inability to meet commitments to the
    Government of Guam will also adversely affect our credibility with the
    Government and people of the Commonwealth of Northern Mariana Islands
    (CNMI) since they have similar concerns, as discussed below.
          commonwealth of northern mariana islands (cnmi) initiatives
        The Department continues to pursue two key military initiatives in
    CNMI--the CNMI Joint Military Training (CJMT) Complex (a U.S. Pacific
    Command (PACOM) initiative (led by USMC) to reduce joint training
    deficiencies in the Western Pacific); and an Air Force Divert and
    Exercise Field on Tinian.
        PACOM requires a Joint Military Training Complex in-theater to meet
    Department of Defense training requirements in the theater. The Complex
    will make a key contribution to the readiness of Marines relocating to
    Guam and provide bilateral and multilateral training opportunities with
    foreign allies and partners. The Department sought to design the CJMT
    complex on Tinian and Pagan in a manner that minimizes the impacts on
    the local communities and provides direct economic and other benefits
    while meeting PACOM and its Service Components' training requirements.
        The training complex includes a series of live-fire Range Training
    Areas, training courses, maneuver areas, and associated support
    facilities located in close proximity to each other. The total cost of
    the complex is $900 million with GoJ contributing $300 million. In
    April 2015, the Department of Navy (DON) released the draft
    Environmental Impact Statement (DEIS) for the proposed action with an
    original public comment period of 60 days (extended to 180 days to
    accommodate requests by the CNMI Governor to give him more time in
    light of Internet problems and damage from Typhoon Soudelor). In
    response to the over 28,000 comments received in October 2015 the DON
    announced its intent to prepare a Revised DEIS to more fully address
    potential impacts to water, coral, and other natural resources. The DON
    now estimates the ROD will be issued in the summer of 2018. This
    timeline still supports force flow to Guam in 2022.
        The Air Force needs to establish a divert capability for up to 12
    tankers if access to Andersen Air Force Base is unavailable. The Air
    Force proposes to construct facilities and infrastructure to support a
    combination of cargo, tanker, and similar aircraft and associated
    personnel not only for divert operations, but also to support periodic
    exercises and disaster relief activities. Efforts to establish this
    capability are on track for a Record of Decision in mid-April 2016. The
    Air Force is now pursuing a Tinian-only solution consistent with CNMI's
    desires.
     building and maintaining resilience in the face of a changing climate
        Resilience to climate change continues to be a priority for the
    Department. Both the 2010 and 2014 Quadrennial Defense Reviews (QDRs)
    discussed the impacts associated with a changing climate that present a
    threat to DOD's national security mission. We recognize these impacts
    and their potential threats represent one more risk that we must
    consider as we make decisions about our installations, infrastructure,
    weapons systems and, most of all, our people. We have always dealt with
    the risks associated with extreme weather events and its impacts on our
    operations and missions. Our challenge today is how to plan for changes
    in the environment we will be operating from and in.
        Even without knowing precisely how or when the climate will change,
    we know we must build resilience into our policies, programs, and
    operations in a thoughtful and cost effective way. In January 2016, we
    issued a DOD Directive on climate change adaptation and resilience that
    identifies roles and responsibilities across the Department for
    implementing these strategies over the next 10 years.
        Specifically, I am focusing on our installations and
    infrastructure. Sea level is rising and many coastal areas are
    subsiding or sinking. This impacts the operation and maintenance of our
    existing installations and infrastructure. As Arctic Sea ice melts and
    breaks apart, our early warning radar sites are being eroded away at a
    much greater rate than before. Drought and flooding, which ironically
    go together, threaten water resources for us and our surrounding
    communities and exacerbate wildfire issues across the country.
        The Military Services have conducted a screening level assessment
    of all DOD sites world-wide to identify where we are potentially
    vulnerable to extreme weather events and tidal anomalies today. The
    information gleaned from this initial look will help to focus reviews
    of installation footprints, and shape planning for current and future
    infrastructure.
        Given the projected increases in major storms, DOD continues its
    progress to ensure energy resilience for its military installations. We
    completed our power resilience review, and are now updating Department-
    level instructions to include energy resilience requirements. These
    requirements will ensure that the Department has the ability to prepare
    for and recover from energy disruptions that impact mission assurance
    on its military installations.
        Our goal is to increase the Department's resilience to the impacts
    of climate change. To achieve this goal, we are integrating
    consideration and reduction of climate risks into our already
    established mission planning and execution.
                    financial improvement & audit readiness
        In order to effectively manage its financial resources, the
    Department remains focused on improving financial record keeping and
    conducting an independent audit of DOD's financial books beginning in
    fiscal year 2017. This includes not only an audit of the Department's
    Statement of Budgetary Resources, but also validating the existence and
    completeness, rights and obligations, and financial valuation of
    slightly less than 562,000 facilities located at 513 installations
    world- wide. The results of a more accurate and reliable real property
    inventory will better inform our decisions and actions in addressing
    our real property management challenges.
        The Department has made significant progress towards the
    environmental liabilities associated with our cleanup program and
    disposal of equipment aspects of the financial audit. Last fall we
    issued clarifying policies through which we are refining the cost
    estimates associated with those liabilities; thereby giving the
    Department a better understanding of our future environmental costs and
    the ability to plan for any required remediation.
                    mission compatibility evaluation process
        The Department appreciates the legislative changes made in fiscal
    year 2016 to section 358 of the Ike Skelton National Defense
    Authorization Act of Fiscal Year 2011. These changes significantly
    streamlined the Mission Compatibility Evaluation Process, and ensured
    that DOD's mission capabilities are protected from incompatible energy
    developments. As a result of congressional direction and our own
    efforts we are effectively evaluating the mission impact of utility-
    scale energy projects, while being mindful of the need for a clean
    energy future. In 2015 the Department reviewed over 3,400 applications
    for energy projects that were forwarded by the Federal Aviation
    Administration. The DOD Siting Clearinghouse worked aggressively with
    the Military Departments, energy project developers, and relevant
    States to implement affordable and feasible mitigation solutions where
    DOD missions might have been adversely impacted. No project reviewed in
    2015 rose to the level of an unacceptable risk to the national security
    of the United States, which is the threshold established in Section 358
    of the fiscal year 2011 NDAA to object to a project. The Department is
    prepared for an increased number of renewable energy project
    developments as newly approved tax credits become available to
    developers.
                                   conclusion
        Thank you for the opportunity to present the President's fiscal
    year 2017 budget request for DOD programs supporting installations,
    energy, and the environment. Our budget situation requires that we take
    risk in our facilities. No one is happy about that, but we are
    effectively managing within this budget constrained environment and we
    appreciate Congress' continued support for our enterprise and look
    forward to working with you as you consider the fiscal year 2017 budget
    request.

        Senator Kirk. Thank you.

                             Department of the Army

    STATEMENT OF HON. KATHERINE HAMMACK, ASSISTANT
                SECRETARY OF THE ARMY, INSTALLATIONS,
                ENERGY, AND ENVIRONMENT
        Ms. Hammack. Good morning, Chairman Kirk, Ranking Member
    Tester, and distinguished members of the subcommittee. I am
    here to present the Army's fiscal year 2017 budget for
    Installations, Energy, and Environment.
        Chairman Kirk, to your comment on how this supports
    combatant commanders of the Army's military construction
    (MILCON) budget (of the Army's budget of about $1 billion), a
    little over 28 percent supports combatant commanders'
    requirements.
        And our budget is at historic lows. We haven't seen this
    low of a budget since 1993. It is an 18-percent reduction from
    last year's budget.
        To Pete Potochney's comments, we are struggling in an era
    with very low toplines, and the Army has decided to take
    strategic risk in funding installations, so that we can support
    soldier readiness.
        Twenty-three percent of our MILCON request goes to the
    National Guard. It is about $233 million. That is to support
    readiness centers as part of the total force strategy.
        The National Guard put together a readiness center
    transformation master plan, which identifies that there are
    critical facility shortfalls. Those are not only in the
    National Guard, but they are across the Army. Our budget
    addresses some of the shortfalls in the National Guard. It is a
    step toward achieving the objectives they identify.
        But the National Commission on the Future of the Army, a
    report that was issued in January, identifies that Congress and
    the administration should look for cost saving opportunities in
    areas such as energy savings and reduced inventory of military
    facilities.
        So with the planned reductions in the Army in force
    structure, we will have an excess of 21 percent. If the Army
    has to get smaller, our excesses will only increase.
        So therefore, I echo Mr. Potochney's request for a BRAC
    authorization. The Army estimates that it could save over $500
    million annually, and that is money that we could invest in
    training. That is money that we could invest in force structure
    to ensure that we can support this Nation the way we need to.
        Without a BRAC, we continue to spend scarce resources to
    maintain unneeded infrastructure or underutilized
    infrastructure. I believe this is an unacceptable result for
    the Army and a disservice to the American taxpayer, so I look
    forward to working with Congress to help shape a future BRAC
    round.
        We are focused on energy efficiency. We have seen a
    reduction in our energy consumption by over 22 percent in the
    last 10 years. We have a focus on renewable energy, and our
    renewable energy program is primarily funded with private-
    sector capital where we are leveraging the private sector to
    install renewable energy systems on our bases at no cost to the
    Army, and we are going to see over $250 million savings in
    projects already identified.
        At the same time, we have over 12 million acres of land
    that have historic characteristics, and over 200 endangered
    species. That requires a little over $1 billion to ensure that
    we are meeting our environmental requirements, so that the Army
    can train and test the way that is needed.
        But the Army's top priority remains readiness. So this
    budget is focused on ensuring we can get as much readiness as
    possible out of limited dollars, but supporting the soldiers
    and trying to get them the quality of life that they require.
        Thank you for the opportunity to appear before you today
    and I look forward to your questions.
        [The statement follows:]
                Prepared Statement of Hon. Katherine G. Hammack
                                  introduction
        Chairman Kirk, Ranking Member Tester, and members of the
    subcommittee: on behalf of the soldiers, families, and civilians of the
    United States Army, thank you for the opportunity to present the Army's
    fiscal year 2017 budget request for Installations, Energy, Environment,
    and Base Realignment and Closure.
        The U.S. Army's top priority continues to be readiness: the Army
    must be ready to shape the global security environment, defend our
    homeland, and win the Nation's wars. To meet these missions, the Army
    requires ready and resilient installations--our power projection
    platforms--to enable regional engagement and global responsiveness. Our
    fiscal year 2017 budget request reflects the Army's decision to take
    risk in our installation facilities and services to maximize available
    funding for operational readiness and modernization. The request
    focuses our limited resources on necessary and prudent investments in
    military construction, installation energy programs supporting
    operational activities, and environmental compliance.
        The Army recognizes that reduced funding of installations accounts
    will lead to the continued degradation of our facilities and
    infrastructure, and risks our long-term ability to adequately support
    Army forces and meet mission requirements. The Army is stretched thin
    at a time when we are facing a global security environment that is more
    uncertain than ever. Without increased funding in the outyears or the
    authority to close and realign our installations, these problems will
    only get worse--expending precious funds and putting the readiness and
    welfare of our soldiers at risk. It is therefore particularly critical
    that we maximize the efficient use of our resources at this time to
    meet mission requirements and ensure soldier readiness.
        The Army's fiscal year 2017 military construction appropriations
    request strikes a careful balance to meet these growing and changing
    demands. We look forward to working with Congress to ensure that our
    national security needs and priorities are met in the upcoming fiscal
    year and well into the future.
                    making efficient use of army facilities
        To meet readiness requirements, the Army must maintain
    installations that make efficient and effective use of available
    facilities. Army installations should be sized and resourced to meet
    the needs of our current and future missions, both at home and
    overseas.
        Efficient use of our installations includes the closure of low
    military value installations and the divestment of excess facilities
    that burden Army budgets. Reducing the portfolio of Army facilities was
    among the recommendations of the National Commission on the Future of
    the Army (NCFA), established by Congress as part of the fiscal year
    2015 National Defense Authorization Act (NDAA). The NCFA's report,
    released in January 2016, states that ``Congress and the Administration
    should look for cost-saving opportunities in areas such as . . . a
    reduced inventory of military facilities.'' \1\ The report recommends
    that the Army pursue these and other efficiency initiatives to free up
    funds that could be used to meet warfighting needs and other high-
    priority initiatives identified by the Commission.
    ---------------------------------------------------------------------------
        \1\ National Commission on the Future of the Army, ``Report to the
    President and Congress of the United States,'' 28 January 2016, p. 44:
    Recommendation 5.
    ---------------------------------------------------------------------------
        The Army has made every effort to be fiscally prudent in the
    maintenance of excess infrastructure. The Army has employed its current
    authority to minimize costs and maximize the use of existing
    facilities. We have identified and are working to reduce excess
    capacity overseas through the European Infrastructure Consolidation
    (EIC) initiative, in addition to implementing efficiency measures
    across the board. Nevertheless, the modest savings attained from these
    efforts cannot substitute for the significant savings that can be
    achieved through base realignments and closures. Without them, the Army
    is forced to make deep cuts at our highest military value installations
    because we continue spending scarce resources maintaining and operating
    lower military value installations.
        As the Army is planning to reduce its Active Component end strength
    to 450,000 by fiscal year 2018, we will have over 170 million square
    feet of facilities that are not fully utilized--an excess facility
    capacity averaging 21 percent. Depending on the facility type, the
    excess infrastructure ranges from 18 percent to 33 percent. At an
    annual cost of about $3 per square foot to maintain these facilities,
    the Army is incurring over $500 million a year in unnecessary
    expenditures. If fiscal year 2018-2021 budget caps remain, the Army
    will need to further reduce the number of soldiers, and our excess
    capacity will continue to increase.
        The Army cannot afford this status quo. Although Base Realignment
    and Closure (BRAC) forces difficult choices affecting the local
    communities surrounding our installations, they are already seeing
    fewer and fewer soldiers and families as force structure continues to
    decline. BRAC allows the Army to use a fair and non-partisan process to
    close a few lower military value locations and realign the remaining
    missions to help fill the excess capacity at our higher military value
    installations.
        Not authorizing BRAC is still a choice with real consequences. The
    lack of authorization for a BRAC results in our highest military value
    installations bearing the deepest impacts. This is an unacceptable
    result for the Army and a disservice to American taxpayers.
        Facilities needed to support readiness, training exercises,
    airfields, and other priorities are deteriorating, while resources are
    diverted to supporting installations that could be closed. The Army
    cannot carry excess infrastructure costing over half a billion dollars
    per year indefinitely. Half a billion dollars represents the annual
    personnel costs of about 5,000 soldiers, which is slightly less than
    the number assigned to a Stryker Brigade Combat Team. It represents
    five annual rotations at the Army's Combat Training Centers, which are
    the foundation of Army combat readiness.
        Until we get the BRAC authority to analyze what types of excess
    exist at individual installations and develop recommendations on how to
    best consolidate into the highest military value installations we have,
    we do not know which lower military value installations should be
    closed and/or realigned. However, we do know BRAC is a proven process
    producing significant reoccurring savings of roughly $2 billion per
    year for the Army, as validated by the Government Accountability Office
    (GAO). A future BRAC round has the capability to save the Army hundreds
    of millions of dollars per year. Once the up-front costs are paid, the
    intermediate and long-term savings from BRAC can fund any number of
    important Army warfighter initiatives, including force structure,
    additional CTC rotations, and modernizations.
        The BRAC process is a proven, cost-effective means for reducing
    costly excess infrastructure, while ensuring a continued focus on
    efficiency and consolidation. The Army strongly supports DOD's request
    for a BRAC round, and urges Congress to enact legislation in fiscal
    year 2017 authorizing the Department to begin the process.
                         preserving ready installations
        Army installations--where soldiers live, work, and train--are where
    Army readiness is built to meet future challenges and ensure the
    security of our Nation. Increasing global threats generate installation
    requirements for force protection, cyber security, and energy security.
    Installation budgets provide the premier all-volunteer Army with
    facilities that support readiness and quality of life for our soldiers,
    families, and civilians.
        The Army continues to focus its limited resources on supporting
    readiness initiatives and replacing failed facilities. As we remain
    under pressure from current law budget caps, our installation services
    must continually be adjusted. Increases in deferred maintenance and
    reduced investments in installations and infrastructure ultimately
    increase our growing backlog of failing facilities. This degrades the
    Army's ability to be ready to project full spectrum forces over time.
    Excess facility capacity burdens the Army sustainment and base
    operations--consuming limited dollars that need to be better invested
    elsewhere.
        Sustainment, Restoration, and Modernization (SRM) accounts fund
    investments to maintain and improve the condition of our facilities.
    Periodic restoration and modernization of facility components are
    necessary to ensure the safety of our soldiers and civilians. Efforts
    are focused on preventing the degradation of our facilities and
    optimizing the use of Army investments, to prevent small maintenance
    issues from turning into large and expensive problems.
        The fiscal year 2017 $3.1 billion budget request will help support
    our sustainment and restoration requirements. However, the Army is
    assuming risk in installation readiness to preserve operational
    readiness. The $2.7 billion request for Sustainment meets 71 percent of
    our Facility Sustainment Model for long-term sustainment, whereas DOD
    recommended meeting an 80 percent threshold to stem the tide of further
    facility degradation.
        Reduced funding in the outyears for installation readiness
    adversely impacts facility condition and ultimately increases future
    military construction and restoration and modernization requirements.
    This shifts the Army's investment focus to the worst facilities,
    diverting resources needed to preserve our newest and best
    infrastructure. Deferred sustainment over the long term can lead to
    higher life-cycle repair costs and component failure, significantly
    reducing facility life expectancy.
        Responsibly managing over 12 million acres of real property also
    means that the Army must maintain extensive base operations. Through
    funding for Base Operations Support (BOS) accounts, Army installations
    provide services similar to those associated with a municipality:
    public works, security protection, logistics, environment, and Family
    programs. These programs and services enable soldiers, civilians, and
    families to live and work on 154 Army installations worldwide.
        Balancing BOS needs in a changing global environment calls for
    continued due diligence. The President's fiscal year 2017 budget
    therefore requests a total of $9.43 billion for BOS accounts, including
    $7.82 billion for the Active Component; $1.04 billion for Army National
    Guard; and $573.8 million for Army Reserve.
                     investing in essential infrastructure
        The Army's request for Military Construction provides secure and
    sustainable facilities and infrastructure critical to supporting the
    Combatant Commander's top priorities, enabling Army missions, and
    maintaining soldier and unit readiness. For fiscal year 2017, the Army
    requests just over $1 billion for Military Construction, a reduction of
    $229 million--18 percent--from fiscal year 2016 appropriations. The
    budget allocates $503 million (approximately 50 percent) for the Active
    Component; $233 million (23 percent) for the Army National Guard; $68
    million (7 percent) for Army Reserves; and $201 million (20 percent)
    for Army Family Housing Construction.
        The Army continuously reviews project scope and costs. We must
    continue to adapt to evolving missions, account for emerging
    organizational changes, and meet unit readiness needs, while
    simultaneously seeking efficiencies at every opportunity. However,
    funding for Army Military Construction has reached historically low
    levels. This reduces the Army's ability to recapitalize inadequate and
    failed facilities into infrastructure that supports operations,
    readiness, and the welfare of the all-volunteer force.
        The Army National Guard (ARNG) is the oldest component of the U.S.
    Armed Forces. The Guard has courageously participated in every war and
    every conflict this Nation has ever fought, including Iraq and
    Afghanistan, and is our first line of defense in responding to domestic
    emergencies. These men and women perform an important mission for our
    country, and our military construction budget endeavors to ensure that
    the needs of their facilities are met.
        The Guard's fiscal year 2017 Military Construction request is
    $232.9 million. This includes $161.3 million to support seven Readiness
    Centers, $50.9 million to construct three maintenance facilities, $12
    million to fund minor projects, and $8.7 million for planning and
    design. Our ARNG budget request is focused on recapitalizing readiness
    centers--the heart and soul of the National Guard--as well as
    maintenance facilities, training areas, ranges, and barracks to allow
    the Guard to be ready to perform State and Federal missions. These
    projects will address space constraints and focus on replacing failing
    facilities.
        In the 2014 ARNG Readiness Center (RC) Transformation Master Plan,
    a key finding was that the RC portfolio is experiencing ``critical
    facility shortfalls.'' This budget request is a small step toward
    addressing the ARNG's challenges.
        The fiscal year 2017 budget request for the Army Reserve totals
    $68.2 million, with four critical projects totaling $57.9 million.
    Three of these will focus on replacing some of our most dilapidated and
    failing facilities on Army Reserve installations that are in the most
    dire need. This includes $21.5 million to replace an Emergency Services
    Center at Fort Hunter Liggett, California--currently in failing
    condition--which will provide life-saving police, fire, crash and
    rescue, and Emergency Medical Team (EMT) services. An additional $10.3
    million will support planning and design of future year projects, as
    well as to address unforeseen critical needs through the Unspecified
    Minor Military Construction account.
        The Army Family Housing budget allows us to provide homes and
    services to the soldiers and their families living on our installations
    around the world. For fiscal year 2017, the Army requests $200.7
    million for family housing construction. This will fund two projects in
    Korea, at Camp Humphreys and Camp Walker, critical to supporting
    consolidation and quality of life for our soldiers and their families.
    The projects are necessary to eliminate dilapidated family housing
    units and meet the U.S. Forces Korea (USFK) Commander's requirements
    for housing. An additional $326 million is requested to help sustain
    all family housing operations, cover utility costs, ensure proper
    maintenance and repair of Government family housing units, lease
    properties where advantageous, and provide privatization oversight and
    risk mitigation.
                            ensuring energy security
        It is operationally necessary, fiscally prudent, and mission
    essential that the Army have assured access to the energy required to
    achieve our primary objectives for the United States. The Army has led
    the way toward increasing energy efficiency on our installations,
    harnessing new energy technologies to lessen soldier battery loads, and
    improving our operational capabilities to reduce the need for fuel
    convoys. Our installation energy budget request is focused on enhancing
    mission effectiveness, and is supported by strong business case
    analyses. For fiscal year 2017, the Army is requesting $1.716 billion
    to pay utility bills on our installations, leverage private sector
    investment in renewable energy projects, and invest in discrete energy
    efficiency improvements.
        In response to risks posed to our vulnerable energy grid, the Army
    is improving the ``resiliency'' of its installations through the use of
    on-base renewable sources of energy. A resilient Army installation is
    one that can withstand threats to its security--be they power
    interruptions, cyber-attacks, or natural disasters--and endure these
    hazards to continue its own operations and those of the local
    community. With this in mind, the Army conducted a test and temporarily
    disconnected Fort Drum, New York from the energy distribution network
    this past November, validating the installation's ability to operate
    independently from the wider grid.
        The Army leads the Federal Government in the use of Energy Savings
    Performance Contracts (ESPCs) and Utility Energy Service Contracts
    (UESCs), which allow private companies and servicers to provide the
    initial capital investment needed to execute projects using repayments
    from Utilities Services Program savings. The amount of energy saved by
    Army ESPC and UESC projects awarded between fiscal year 2010 and fiscal
    year 2015 is equal to the amount of energy consumed by Fort Bragg--one
    of the Army's largest and most populous installations--in a year. In
    total, the Army has reduced its facilities energy consumption by 22.6
    percent since fiscal year 2003, while also leading the Federal
    Government in reductions of its potable water intensity use and non-
    tactical vehicle (NTV) fossil fuel use.
        In addition, our energy program account funds the Office of Energy
    Initiatives (OEI), which helps to plan and develop third party-financed
    renewable energy projects. OEI currently has 14 projects completed,
    under construction, or in the final stages of the procurement process--
    together providing an incredible 350 megawatts (MW) of generation
    capacity. These projects represent over $800 million in private sector
    investment, saving funds that would otherwise be appropriated for
    military construction. Further, all of these projects provide
    electricity that is at or below the cost of conventional power.
        The Army's operational energy initiatives provide extended range
    and endurance, increased flexibility, improved resilience, and force
    protection, all while enhancing mobility and freedom of action for our
    soldiers. Operational energy investment in science and technology has
    been a proven force multiplier, providing our soldiers with a distinct
    advantage on the battlefield. Therefore, the bulk of our operational
    energy budget request, $1.28 billion, is for investments in energy
    efficient equipment by the Army acquisition community that will reduce
    physical and logistical burdens on our soldiers and, most importantly,
    help save lives.
        The Army's energy program has proven results--reducing our reliance
    on the grid, improving energy security and efficiency, and contributing
    to mission readiness--all at a minimal impact to Army budgets. Energy
    performance on our installations is a testament to the Army's success
    in leveraging its limited resources to achieve considerable results. We
    urge Congress to continue to support the Army's energy initiatives both
    in operational and installation environments.
                          safeguarding our environment
        The mission of the Army's environmental program is three-fold: (1)
    to comply with environmental laws and regulations and ensure proper
    stewardship of our natural, cultural, and Tribal resources; (2) to meet
    DOD's goals for installation restoration and munitions response; and
    (3) to invest in environmental technology research, development,
    testing, and evaluation.
        The Army manages over 12 million acres of land, which requires the
    Army to protect endangered species and historic sites or structures.
    Efforts are made to remediate environmental contaminants that pose a
    danger to human health or the environment, while supporting Army
    operations and our soldiers, families, and communities. Our fiscal year
    2017 budget request of $1.05 billion will allow the Army to fulfill
    these objectives, keeping the Army on track to meet our cleanup goals
    and maintain full access to important training and testing lands, which
    are integral components of Army readiness.
                                   conclusion
        Readiness is the U.S. Army's top priority--there is no other
    ``number one.'' The Army's fiscal year 2017 Military Construction
    budget request takes moderate risk to ensure our readiness needs are
    met by focusing our financial resources where they are needed most.
        Maintaining failing facilities and low-military value installations
    takes money away from critical investments in the readiness of our
    soldiers and the acquisition of advanced weapons and technology. BRAC
    allows the Army to optimize installation capacity and achieve
    substantial savings, freeing up scarce resources that could easily be
    applied elsewhere.
        The strength of the U.S. Army is its people, and our installations
    serve as the platforms for this strength. Without ready and resilient
    installations, our soldiers will be ill-equipped to fight the growing
    threats facing our Nation. We owe it to our men and women who wear the
    Army uniform to be prudent in the use of our installation budgets and
    prioritize them appropriately to ensure they have the best resources
    available to defend our homeland.
        Thank you for the opportunity to present this testimony and for
    your continued support of our soldiers, families, and civilians.

        Senator Kirk. Thank you.

                             Department of the Navy

    STATEMENT OF STEVEN R. ISELIN, PRINCIPAL DEPUTY
                ASSISTANT SECRETARY OF THE NAVY, ENERGY,
                INSTALLATIONS, AND ENVIRONMENT
        Mr. Iselin. Good morning, Chairman Kirk, Ranking Member
    Tester, members of the subcommittee. I am Steve Iselin. I am
    the Principal Deputy for Energy, Installations, and Environment
    for the Department of the Navy and I am pleased to provide this
    overview of our energy infrastructure and environmental
    programs.
        Navy and Marine Corps installations and facilities are
    platforms for preparing marines and sailors; for deploying
    ships, aircraft, and operational forces to meet their mission
    requirements; and for supporting military families.
        The President's fiscal year 2017 budget requests $11.9
    billion to operate, maintain, and recapitalize these
    installation platforms. That is about 10 percent less than the
    fiscal year 2016 levels.
        The Department, including the senior leaders of the
    Department, realize this funding level impacts long-term
    ownership costs and is mindful that continued funding at these
    levels will cause degradation and future operational impacts.
        Importantly, though, over the last few years, the
    Department has significantly improved its condition assessment
    process and its risk-based strategy to ensure the money we do
    get supports the most critical projects.
        The following are a few specifics from this year's request.
        The request includes $1.1 billion for military construction
    to support warfighting requirements and to modernize some
    utility and critical infrastructure. It is a 35-percent
    reduction from fiscal 2016 levels. And separately, the
    Department provided an unfunded priority list that includes
    other priority military construction projects that were
    unaffordable within the available budget authority.
        The request includes $1.9 billion for facility sustainment,
    restoration, and modernization, also a decrease from last
    year's levels. This funds Navy sustainment at 70 percent and
    Marine Corps sustainment at 74 percent of the Department of
    Defense (DoD) sustainment model.
        We are continuing to carefully accept risk and recognize
    that continued funding below these amounts will also cause our
    portfolio to deteriorate. The unfunded priority list also
    includes additional sustainment and restoration funding this
    year.
        The budget requests $7.6 billion for base operation
    support. That is about the same level as last year. And both
    the Navy and Marine Corps consciously invest at a level
    necessary to meet minimum acceptable standards in how we
    operate and maintain our facilities.
        The request includes $1 billion to meet environmental
    program statutory and stewardship responsibilities. We take our
    environmental stewardship responsibilities seriously and are
    really proud of our record in environmental planning,
    compliance, and cleanup, and in our efforts to be good stewards
    of cultural, natural, and historic resources.
        The Navy and Marine Corps energy programs have two central
    goals, first, enhancing combat capabilities, and second,
    advancing energy security. Like the other services, we have
    partnered with other government agencies, academia, and,
    importantly, the private sector, and we are achieving these
    goals with the same spirit of innovation that has marked our
    naval history.
        I must also say that I am very proud of the many dedicated
    professionals who over the last 5 years have persevered despite
    furloughs, pay and hiring freezes, limited awards and rewards,
    reduced budgets, and restrictions on travel and training. They
    have and will continue to effectively manage our Navy and
    Marine Corps installations, despite the challenges and
    constraints.
        In conclusion, this year's budget request makes the
    required investments to support current readiness while
    accepting known risks in the sustainment and modernization
    accounts. I appreciate the opportunity to testify today. I look
    forward to your questions.
        [The statement follows:]
                     Prepared Statement of Steven R. Iselin
        Chairman Kirk, Ranking Member Tester, and members of the
    subcommittee, I am pleased to appear before you today to provide an
    overview of the Department of the Navy's (DON) investment in its
    infrastructure, energy, and environment programs.
        Our Navy and Marine Corps installations and facilities are the
    platform to train and prepare our marines and sailors, to deploy ships,
    aircraft and operational forces, as well as to support our military
    families. We are stewards of a large portfolio of installations--valued
    at $229 billion ($173 billion Navy and $56 billion USMC, respectively)
    in plant replacement value--that is vital to our operational forces.
    Against the backdrop of world events and competing requirements and
    resources, we must balance our desired level of funding with the
    principal purposes for our existence: to optimize readiness of the
    operational forces and preserve their quality of life. Readiness-
    enablers include runways, piers, operations & maintenance facilities,
    communications & training facilities, and utilities; those that enable
    quality of life include barracks, mess halls, and recreation and
    fitness centers. We have a responsibility to balance the investments
    for this portfolio according to current year authorizations while being
    mindful of the impacts to life cycle and ever-evolving mission
    requirements.
                        investing in our infrastructure
        We thank Congress for passage of the Bipartisan Budget Act (BBA) of
    2015, the National Defense Authorization Act (NDAA) for fiscal year
    2016 and the Consolidated Appropriations Act, 2016. Although the BBA of
    2013 provided some budget stability for fiscal year 2014-2015, and
    limited relief from the Budget Control Act (BCA) of 2011 sequestration
    levels, the unfortunate consequence of constrained DON funding levels
    and timing is that many of our installations' piers, runways, and other
    facilities are degrading. We continue to make progress in replacing and
    demolishing unsatisfactory infrastructure, yet still have challenges
    based on BCA caps and on the prospect of a return to sequestration
    levels in fiscal year 2018.
        In fiscal year 2017, the President's budget (PB) is requesting
    $11.9 billion in various appropriations, a 10.4 percent decrease ($1.4
    billion) from amounts appropriated in fiscal year 2016 to operate,
    maintain and recapitalize our shore infrastructure. Figure 1 compares
    the fiscal year 2016 enacted budget and the fiscal year 2017 PB request
    by appropriation. Each appropriation is discussed more fully in the
    following sections.

                                  FIGURE 1: DON INFRASTRUCTURE FUNDING BY APPROPRIATION
    ----------------------------------------------------------------------------------------------------------------
                                                                 Fiscal year  President's
                                                                     2016     budget 2017    Delta ($
                           Appropriation                          enacted ($       ($        millions)    Delta (%)
                                                                  millions)    millions)
    ----------------------------------------------------------------------------------------------------------------
    Military Construction, Active and Reserve..................        1,739        1,126         -613         -35.3
    Family Housing, Construction...............................           17           94           77         452.9
    Family Housing, Operations.................................          353          301          -52         -14.7
    BRAC.......................................................          170          154          -16          -9.4
    Sustainment, Restoration and Modernization.................        3,110        2,356         -754         -24.2
    Base Operating Support.....................................        7,625        7,610          -15          -0.2
    Environmental Restoration, Navy............................          300          282          -18          -6.0
                                                                ----------------------------------------------------
          Total................................................       13,314       11,923       (1,391)        -10.4
    ----------------------------------------------------------------------------------------------------------------
    Notes:
      MILCON, SRM and BOS include OCO
      BOS includes BSIT

        We strive to maintain a shore infrastructure that is mission-ready,
    resilient, sustainable and aligned with Fleet and operational
    priorities. Toward that end, and especially important given the risks
    inherent at these funding levels, Navy and Marine Corps have taken
    actions to more proactively manage the installations portfolio. For
    example, Navy has taken the initiative to:

      --Standardize the facility inspection and Facility Condition Index
            (FCI) process that quantifies facility condition and documents
            the needed maintenance and repair work within our facilities
            portfolio. This information helps guide spending of available
            dollars.
      --Incorporate principles of condition-based maintenance across all
            buildings, utilities and structures, in order to prioritize
            work on only the most critical components (e.g. roofs and
            exterior walls) at our most critical facilities or on
            components that relate to life, health and safety. We are able
            to focus resources on specific building components and systems
            where failure jeopardizes personnel safety or a warfighting
            mission.
      --Led by Commander, Navy Installations Command, exercise a single
            integrated forum to receive and adjudicate demand signals from
            Fleet and Enterprise Commanders to identify and prioritize
            projects, optimizing the available resources.
      --Maintain focus on reducing footprint by demolishing or divesting
            unneeded buildings as funds are available, and recapitalizing
            existing facilities in lieu of new construction when possible.
      --Supplement available appropriated dollars by the increased use of
            authorities that leverage third party financing for improving
            infrastructure while lowering energy consumption and energy
            costs.
                         military construction (milcon)
        Navy's MILCON program funds infrastructure at home and abroad,
    supports our warfighters, and meets the objectives in CNO's Design for
    Maintaining Maritime Superiority and the Secretary of Defense's
    Strategic Guidance. Together, Navy and Marine Corps will invest $1.13
    billion worldwide in military construction funds to support warfighting
    and modernization of our utilities and critical infrastructure.
        For Navy, the fiscal year 2017 request is for 25 projects, Planning
    and Design and Unspecified Minor Construction, at a budget of $700
    million, which is 29 percent lower than the fiscal year 2016 as-enacted
    budget of $986 million. Navy has invested an average of $1 billion
    annually in MILCON since 2010, and the fiscal year 2017 request is the
    lowest since 1999. Navy continues to invest prudently in MILCON, but
    assumes long-term risk in deferring recapitalization of our existing
    infrastructure.
        The Navy's fiscal year 2017 MILCON request supports Combatant
    Commander requirements, enables new platforms/missions, upgrades
    utilities and energy infrastructure, recapitalizes Naval Shipyard
    facilities, and supports weapons of mass destruction (WMD) training
    requirements. They include:

    Combatant Commander Support ($233 million, 9 projects):
        Medical/Dental Facility--Camp Lemonnier Djibouti
        Harden POL Infrastructure--NAVBASE Guam
        Coastal Campus Utilities Infrastructure--NAVBASE Coronado
        Coastal Campus Entry Control Point--NAVBASE Coronado
        Communication Station--NAVSTA Rota
        Grace Hopper Data Center Power Upgrades--NAVBASE Coronado
        Missile Magazine--NAVWPNSTA Seal Beach
        P-8A Hanger Upgrade--NSA Naples (Keflavik, Iceland)
        P-8A Aircraft Rinse Rack--NSA Naples (Keflavik, Iceland)

    New Platform/Mission ($198 million, 6 projects):
        UCLASS RDT&E Hangar--Naval Air Station PAX River
        Triton Mission Control Facility--NAS Whidbey Island
        Triton Forward Operating Base Hangar--VARLOCS
        EA-18G Maintenance Hangar--NAS Whidbey Island
        F-35C Engine Repair Facility--NAS Lemoore
        Air Wing Simulator Facility--NAS Fallon

    Utilities and Energy Infrastructure ($85 million, 4 projects):
        Upgrade Power Plant & Electrical Distribution System--PMRF Barking
                Sands
        Energy Security Microgrid--Naval Base San Diego
        Service Pier Electrical Upgrades--Naval Base Kitsap
        Shore Power (Juliet Pier)--COMFLEACT Sasebo

    Naval Shipyards ($76 million, 4 projects):
        Sub Refit Maintenance Support Facility--Naval Base Kitsap
        Nuclear Repair Facility--Naval Base Kitsap
        Utilities for Nuclear Facilities--Portsmouth Navy Shipyard (New
                Hampshire)
        Unaccompanied Housing Consolidation--Naval Shipyard Portsmouth (New
                Hampshire)

    WMD Training ($21 million, 1 project):
        Applied Instruction Facility--NAS Whiting Field, Milton, Florida

    MILCON Reserves ($11 million, 1 project):
        Joint Reserve Intelligence Center--NAS JRB New Orleans

        For the Marine Corps, the fiscal year 2017 request is for 11
    projects, Planning and Design and Unspecified Minor Construction, at a
    budget of $426 million, which is 44 percent lower than the fiscal year
    2016 as enacted budget of $754 million. Investments in MILCON will
    primarily support new warfighting platforms, weapons support, force
    relocation facilities (Rebalance to the Pacific, Aviation Plan),
    improve security and safety posture, and recapitalize and replace
    inadequate facilities. The 11 projects in the Marine Corps fiscal year
    2017 MILCON budget include:

    New Platform and Weapons Support Facilities ($110 million, 2 projects):
        F-35 aircraft maintenance hangar at MCAS Beaufort, South Carolina;
                and
        F-35 aircraft maintenance shops at Kadena Air Base, Japan.

    Facilities to Support Force Relocations/Increased Force Requirements
    ($119 million, 3 projects):
        Aircraft maintenance hangar for VMX-22-MCAS Yuma;
        Expansion of Reserve Center Annex--Galveston; and
        Utility upgrades for Finegayan cantonment area--Guam.

    Safety, Security, and Environmental Compliance ($31 million, 2
    projects):
        EPA-required central heating plant conversion--MCAS Cherry Point;
                and
        Range safety improvements at MCB Camp Lejeune.

    Recapitalize and Replace Inadequate Facilities ($117 million, 4
    projects):
        Replace and consolidate communications, electrical, and maintenance
                shops--MCB Hawaii;
        Replace unreliable electrical power supply at reserve center--
                Brooklyn, New York;
        Replace reserve training facilities--Syracuse, New York; and
        Modernize recruit barracks and construct a recruit reconditioning
                center for injured recruits at MCRD Parris Island.

        Reduced funding availability in MILCON will result in reduced
    investments in projects that support the consolidation of functions or
    replacement of existing facilities, which will cause degradation of the
    long-term health of existing facilities.
        Relocation of marines to Guam remains an essential part of the
    United States' larger Asia-Pacific strategy of achieving a more
    geographically distributed, operationally resilient and politically
    sustainable force posture in the region. Guam provides a critically
    important forward base for our expeditionary Marine ground and air
    forces and also provides key sustainment capabilities for our forward-
    deployed ships and submarines. The permanent basing of marines in Guam
    significantly contributes to maintaining regional stability and
    provides reassurance for key allies and partners across the Pacific
    region.
                                 family housing
        The Department continues to rely on the private sector as the
    primary source of housing for sailors, marines, and their families.
    When suitable, affordable, private housing is not available in the
    local community, the Department relies on government- owned,
    privatized, or leased housing. The fiscal year 2017 request of $395
    million supports Navy and Marine Corps family housing operation,
    maintenance, renovation, and construction requirements. Of this amount,
    $79 million is for the first phase of replacement of inadequate family
    housing at Naval Support Activity Andersen, Guam and $11 million is for
    the renovation of family housing at Marine Corps Air Station Iwakuni,
    Japan. The budget request also includes $301 million for the daily
    operation, maintenance, and utilities expenses of the military family
    housing inventory.
        To date, over 62,000 Navy and Marine Corps family housing units
    have been privatized through the Military Housing Privatization
    Initiative (MHPI). MHPI has enabled the Department to leveraged private
    sector resources to improve living conditions for sailors, marines, and
    their families.
          facilities sustainment, restoration and modernization (fsrm)
        To maximize support for warfighting readiness and capabilities, the
    President's fiscal year 2017 budget request continues to carefully
    accept risk in FSRM.
        The fiscal year 2017 budget requests $1.9 billion to sustain
    infrastructure, a 16 percent reduction from the fiscal year 2016
    enacted value of $2.3 billion. Navy and the Marine Corps have resourced
    fiscal year 2017 facilities sustainment at 70 percent and 74 percent,
    respectively, of the Department of Defense (DOD) Facilities Sustainment
    Model. Over time, this lack of sustainment will cause our facilities to
    deteriorate.
        To restore and modernize our existing infrastructure, the the
    fiscal year 2017 budget request is $463 million, a 38 percent reduction
    from the fiscal year 2016 enacted value of $749 million. Budget
    constraints have compelled the Department to focus its limited
    resources to address life/safety issues and the most urgent
    deficiencies at our mission-critical facilities, piers, hangars,
    runways and utility systems. We are committed to fully funding
    infrastructure at strategic weapons facilities, accelerating Naval
    shipyard infrastructure improvements, supporting the Marine Corps
    Aviation Plan, and force relocations. However, as the Department defers
    less critical repairs, especially for facilities not directly tied to
    DON's warfighting mission, certain facilities degrade and the overall
    facilities maintenance backlog increases. At current funding levels,
    the overall condition of DON infrastructure will slowly, but steadily,
    erode over the Future Years Defense Plan (FYDP). Although we are
    proactively managing the risk we are taking in our shore
    infrastructure, we acknowledge that this risk must eventually be
    addressed.
                          base operating support (bos)
        The fiscal year 2017 BOS request of $7.6 billion is essentially the
    same as fiscal year 2016 levels. Similar to the risk taken in our
    facility investments, the Department is accepting lower standards in
    base operating support at our installations. Base operations at Navy
    and Marine Corps installations are funded to the minimum acceptable
    standards necessary to continue mission-essential services. We have
    enforced low service levels for most installation functions
    (administrative support, base vehicles, grounds maintenance, janitorial
    and facility planning) in order to maintain our commitment to
    warfighting operations, security, family support programs, and child
    development. These measures, while not ideal, are absolutely necessary
    in the current fiscal environment.
                                 safety program
        Our initiatives are improving the skills of our Safety
    Professionals directly benefiting over 800,000 personnel (uniformed
    personnel (Active and Reserve) and civilian) executing diverse, complex
    missions across the globe. DON's safety program has expanded its global
    online training resources to ensure the Naval Safety workforce is
    educated and trained through more effective and modernized cost
    efficient methods. We are acquiring commercial off-the-shelf
    information technology tools to enhance our tireless fight to reach our
    objective of zero mishaps. The Risk Management Information initiative
    will comprise a streamlined mishap reporting system, data base
    consolidation, state-of-the-art analytical innovations, and data
    capabilities to improve our predictive abilities for safer sailors and
    marines.
                             managing our footprint
    Base Realignment and Closure (BRAC)
        We appreciate the congressional support for additional fiscal year
    2016 funds for environmental cleanup at BRAC properties. For fiscal
    year 2017, the Department has planned to expend $154 million to
    continue cleanup efforts, caretaker operations, and property disposal.
    By the end of fiscal year 2015, we disposed of 94 percent (178,180
    acres) of our excess property identified in previous BRAC rounds
    through a variety of conveyance mechanisms. Of the remaining 6 percent
    (11,674 acres), the majority is impacted by complex environmental
    issues. Of the original 131 installations with excess property, Navy
    only has 17 installations remaining with property to dispose.
        Although many tough cleanup and disposal challenges remain from
    prior BRAC rounds, we have fostered good working relationships with
    regulatory agencies and local communities to tackle these complex
    issues and provide creative solutions to support redevelopment
    priorities.
    Compatible Land Use
        DON has an aggressive program to promote compatible land use
    adjacent to our installations and ranges. This program helps Navy and
    Marine Corps to operate and train in cooperation with surrounding
    communities, while protecting important natural habitats and species.
    We conduct Air Installation Compatible Use Zone Studies and Range Area
    Compatible Use Zone Studies, and provide them to nearby communities for
    their consideration in the exercise of their land management
    responsibilities.
        A key element of the program is Encroachment Partnering, which
    involves cost- sharing partnerships with States, local governments, and
    conservation organizations to acquire interests in real property
    proximate to our installations and ranges. The Department is grateful
    to Congress for providing funds for the DOD Readiness and Environmental
    Protection Integration (REPI) Program. Since 2005, DON has acquired
    restrictive easements on approximately 91,000 acres.
                           protecting our environment
        The Department is committed to environmental compliance,
    stewardship and responsible fiscal management that support mission
    readiness and sustainability, investing over $1 billion across all
    appropriations to achieve our statutory and stewardship goals. The
    funding request for fiscal year 2017 is about 2.3 percent less than
    enacted in fiscal year 2016, as shown in Figure 2:

                                     FIGURE 2: DON ENVIRONMENTAL FUNDING BY PROGRAM
    ----------------------------------------------------------------------------------------------------------------
                                                                  Fiscal year  President's
                                                                      2016     budget 2017    Delta ($
                              Category                             enacted ($       ($       millions)    Delta (%)
                                                                   millions)    millions)
    ----------------------------------------------------------------------------------------------------------------
    Conservation................................................           86           93            7          8.1
    Pollution Prevention........................................           22           19           -3        -13.6
    Compliance..................................................          480          485            5          1.0
    Technology..................................................           36           37            1          2.8
    Active Base Cleanup (ER,N)..................................          300          282          -18         -6.0
    BRAC Environmental..........................................          158          141          -17        -10.8
                                                                 ---------------------------------------------------
          TOTAL.................................................        1,082        1,057          -25         -2.3
    ----------------------------------------------------------------------------------------------------------------

        The Department continues to be a Federal leader in environmental
    management by focusing resources on achieving specific environmental
    goals, implementing efficiencies in our cleanup programs and regulatory
    processes, proactively managing emerging environmental issues, and
    integrating sound policies and lifecycle cost considerations into
    weapon systems acquisition to achieve cleaner, safer, more energy-
    efficient and affordable warfighting capabilities without sacrificing
    operational capability.
        In fiscal year 2017 we will complete environmental planning for
    Navy's Records of Decision (RODs) for EA-18G Growler training at
    Whidbey Island, Washington. As an example of our land stewardship
    responsibilities, we will complete natural and cultural surveys to
    support Marine Corps air and ground training at Twentynine Palms,
    California. To maintain our environmentally responsible operations at
    sea, we will continue to be leaders in ocean research by studying
    marine mammal behavioral response to sound in water. We will also build
    on our accomplishments this past fiscal year, which included finalizing
    the environmental planning processes for the new Marine Corps Base on
    Guam; completing a 5 year authorization for testing and training in the
    Marianas Island Testing and Training area with National Marine
    Fisheries Service; and successfully rearing 500 hatchlings and
    releasing 35 mature tortoises with the University of California, Los
    Angeles (UCLA) at the Marine Corps Twentynine Palms Desert Tortoise
    Head Start Facility.
                         enhancing combat capabilities
        The Department of the Navy's Energy Program has two central goals:
    (1) enhancing Navy and Marine Corps combat capabilities, and (2)
    advancing energy security afloat and ashore. Partnering with other
    government agencies, academia and the private sector, we strive to meet
    these goals with the same spirit of innovation that has marked our
    history--new ideas delivering new capabilities in the face of new
    threats.
        Our naval forces offer us the capability to provide power and
    presence --to deter potential conflicts, to keep conflicts from
    escalating when they do happen, and to take the fight to our
    adversaries when necessary. Presence means being in the right place,
    not just at the right time, but all the time; and energy is key to
    achieving that objective. Using energy more efficiently allows us to go
    where we're needed, when we're needed, stay there longer, and deliver
    more firepower when necessary.
        Improving our efficiency and diversifying our energy sources also
    saves lives. During the height of operations in Afghanistan, we were
    losing one marine, killed or wounded, for every 50 convoys transporting
    fuel into theater. That is far too high a price to pay. Reducing demand
    at the tip of the spear through energy efficiency, behavior change and
    new technologies takes fuel trucks off the road.
        I'll mention just a couple of examples. The work that the Marine
    Corps is doing to integrate solar power and software into autonomous
    UAVs will allow them to take advantage of environmental conditions and
    provide persistent surveillance for periods far in excess of our
    current capabilities without refueling. They are also working on
    technologies that harvest kinetic and other forms of energy into an
    integrated power system capable of running a marine's radios and
    electronic gear. These are real combat capabilities that will result in
    increased lethality.
        Navy is pursuing similar combat capabilities. In 2016 we will begin
    installing hybrid electric drives in our destroyers, enabling our ships
    to remain on station longer during low speed missions and extend time
    between refueling. This is the same technology that is now onboard USS
    MAKIN ISLAND and USS AMERICA, allowing those ships to stay on station
    between refueling far longer than their predecessors.
    Improving Energy Security and Resilience
        Reliable and affordable electricity at our installations is
    critical to mission effectiveness. Measures to reduce vulnerability and
    to increase resiliency of the electrical system improve and protect
    national security. The 2013 attack on key grid infrastructure in
    California is a reminder of how fragile the commercial system can be.
    The Department of the Navy recognizes this vulnerability and is working
    to enhance our energy security.
        Navy's Renewable Energy Program Office (REPO) has brought one
    gigawatt (GW) of renewable energy into procurement. We expect those
    renewable energy projects to yield hundreds of millions in projected
    utility cost savings and even more important energy security benefits.
    For example, last August we celebrated the procurement of 210 megawatts
    (MW) of solar generation for 14 installations in California, with a
    projected cost savings of $90 million over a 25-year term. At Naval
    Submarine Base Kings Bay, Georgia Power Company is constructing a 42 MW
    solar generation facility, which the base will have access to during
    external grid outages. Marine Corps Logistics Base Albany will receive
    access to a 44 MW on-base solar generation facility for use during grid
    outages and a second feeder line from Georgia Power Company's grid.
        DON's successful industry partnerships form a foundation for future
    third party-financed energy resiliency projects in the form of
    microgrids, battery storage, fuel cells, and distributed generation,
    where these capabilities make sense. Industry has shown interest in
    battery storage by proposing facilities located at two Navy
    installations in California. The Arizona Power Service recently signed
    an agreement to develop a microgrid at Marine Corps Air Station Yuma
    and will provide the base unlimited access to onsite backup power,
    eliminating the need for up to 41 diesel generators. These and future
    energy security efforts using existing Title 10 authorities will help
    make DON's installations more energy secure and resilient mission
    platforms.
    Strategic Investments in the Future
        We endeavor to make investments that enhance our operational
    flexibility. Our program to test and certify emerging alternative fuels
    is critical for us to keep pace with developments in the private sector
    and maintain interoperability with commercial supply chains. In
    addition, the Defense Logistics Agency (DLA) Energy (through which Navy
    buys operational fuels) recently awarded a contract to provide us with
    an alternative fuel blend of F-76--the fuel we use to power our ships.
    The contract was awarded at a cost competitive rate with traditional
    fossil fuels and represents an important step toward diversifying our
    fuel supply chains.
                                   conclusion
        Navy-Marine Corps Energy, Installations and Environment team will
    continue to carefully and deliberately manage our portfolio to optimize
    mission readiness, and improve quality of life. The Department's fiscal
    year 2017 request makes needed investments in our infrastructure and
    people, preserves access to training ranges, and promotes
    environmentally prudent and safe actions, while ensuring energy
    resiliency and security.
        Thank you for the opportunity to testify before you today. I look
    forward to working with Congress to deliver an innovative, resilient,
    sustainable and secure shore infrastructure that enables mission
    success for the United States Navy and Marine Corps, the most
    formidable expeditionary fighting force in the world.

        Senator Kirk. Thank you.
        Let me ask, Katherine, you talked about strategic risks
    with the Army. I will show you what I regard as the face of
    strategic risk at Al Udeid Air Base, which we all call in the
    military the Deid.
        If you could take a look, these pictures were taken by a
    guardsman, and they have gone somewhat viral on Facebook. I
    want to make sure that our men and women in uniform are not
    facing mold contamination like this.
        When you talk about strategic risk, that is a very
    bureaucratic way of saying that this is what you would stick
    our soldier to live in.
        Ms. Hammack. One of the challenges that I am sure Secretary
    Ballentine will talk about is that the Air Force, just like the
    Army, is not funded to 100 percent of our sustainment
    requirements.

                              SUSTAINMENT FUNDING

        The Navy just talked about being funded at around 73
    percent. The Army is at 71 percent. I know that the Air Force
    is facing challenges.
        When we have known problems, we work to address them and
    identify resources or reprioritize resources. It is a challenge
    that all services are facing, to keep up with the environmental
    requirements.
        Senator Kirk. Thank you.

                          Department of the Air Force

    STATEMENT OF HON. MIRANDA A.A. BALLENTINE, ASSISTANT
                SECRETARY OF THE AIR FORCE, INSTALLATIONS,
                ENVIRONMENT, AND ENERGY
        Ms. Ballentine. Good morning, Mr. Chairman. Chairman Kirk,
    Ranking Member Tester, esteemed members of the subcommittee, it
    is a great pleasure and honor to represent America's airmen
    before you today.
        The bottom line is the Air Force installations are too big,
    too old, and too expensive to operate. Twenty-four years of
    continuous combat in a fiscal environment constrained by the
    Budget Control Act have truly taken their toll.
        In order to afford other Air Force priorities, like our
    sister services, our total fiscal year President's budget 2017
    facilities budget at $8.3 billion is down 4 percent from last
    year, including MILCON, facilities sustainment, restoration and
    modernization (FSRM), housing, BRAC, and environmental
    programs.
        The Air Force has prioritized MILCON over FSRM in fiscal
    year 2017, requesting $1.8 billion in MILCON, that is a 14-
    percent increase over last year, and $2.9 billion in FSRM,
    which is down about 10 percent compared to last year.
        I expect the backlog of degrading facility requirements to
    grow.
        Our MILCON program is three-tiered. First, MILCON to
    support combatant commander requests is about 16 percent of the
    MILCON budget. Second, 34 percent of the fiscal year 2017
    MILCON program ensures that we have the infrastructure to
    support new weapons systems beddown. Third, about 40 percent of
    the fiscal year 2017 MILCON request allows us to chip away at
    the very significant backlog of existing mission infrastructure
    recapitalization needs.
        In fiscal year 2017, we funded only about 30 projects of
    the 500 top priority projects that our commanders submitted.
        Let me briefly address Air Force energy programs. The Air
    Force is focused on mission assurance through energy assurance.
    We are taking a holistic enterprise approach to installation
    energy with an emphasis on resilient cost-competitive, cleaner
    power. The Air Force is also developing, acquiring, and
    improving aviation energy technologies and behaviors to improve
    the range and endurance of our weapons systems.
        Finally, the Air Force needs another round of base
    realignment and closure. We have about 30 percent excess
    infrastructure capacity. Since the Gulf War, we have reduced
    combat coded fighter squadrons from 134 to 55, a nearly 60-
    percent reduction. Yet, all BRACs in that time period have only
    reduced U.S. Air Force bases by 15 percent.
        BRAC is not easy, and Congress has shared three very
    specific concerns.
        First, communities. Air Force communities are some of our
    greatest partners. The Association of Defense Communities
    recently asked community leaders what they thought about BRAC.
    About 92 percent said that they believe the status quo of
    hollowed-out bases, reduced force structure, and reduced
    investments is worse for their communities than another round
    of BRAC--92 percent.
        Without BRAC, many communities will continue to suffer the
    economic detriment of hollowed-out bases without the economic
    support that BRAC legislation provides.
        Second, cost. Congress rightly wants to ensure that the
    savings of BRAC justify the costs, and, of course, we agree.
    Simply put, the results of BRAC have been staggering.
        Previous rounds of BRAC saved the Air Force $2.9 billion
    each and every year, and the Air Force supports new BRAC
    legislation that emphasizes recommendations that yield net
    savings within 5 years.
        Third, mission. Some have questioned the wisdom of
    rightsizing infrastructure to our current force structure. I
    want to assure you that we have no intent to close
    infrastructure that may support future needs. Through five
    previous rounds of BRAC and numerous force structure changes,
    we have always left the room for future maneuvering, and we
    always will.
        We will continue to leverage community partnerships,
    enhanced use leases, power purchase agreements, but we really
    need BRAC authority to get at those significant savings.
        In closing, the Air Force made hard strategic choices
    during the formulation of this budget request in attempting to
    strike that delicate balance between a ready force for today
    and a modern force for tomorrow. We believe it is the right way
    ahead.
        Chairman Kirk, Ranking Member Tester, and esteemed members,
    I request your support for the fiscal year 2017 MILCON request.
    Thank you, and I look forward to your questions.
        [The statement follows:]
              Prepared Statement of Hon. Miranda A. A. Ballentine
                                  introduction
        Ready and resilient installations are a critical component of Air
    Force operations. Unfortunately, 24 years of continuous combat, a
    fiscal environment constrained by the Budget Control Act (BCA), and a
    complex security environment have taken their toll on Air Force
    infrastructure and base operations support investments. Furthermore,
    the Air Force is currently maintaining installations that are too big,
    too old and too expensive for current and future needs. This forces us
    to spend scarce resources on excess infrastructure instead of
    operational and readiness priorities.
        Air Force installations are foundational platforms comprised of
    both built and natural infrastructure. Our installations serve as the
    backbone for Air Force enduring core missions delivering air, space and
    cyberspace capabilities; sending a strategic message to both allies and
    adversaries signaling commitment to our friends and intent to our foes;
    foster partnership-building by stationing our airmen side-by-side with
    our Coalition partners; and enable worldwide accessibility when our
    international partners need our assistance and, when necessary, to
    repel aggression. Taken together, these strategic imperatives require
    us to provide efficiently operated, sustainable installations to enable
    Air Force core missions.
        The total Air Force fiscal year 2017 facilities budget request is
    down 4 percent from fiscal year 2016 at $8.5 billion including Military
    Construction (MILCON), Facility Sustainment, Restoration and
    Modernization (FSRM), Housing, BRAC implementation and Environmental
    programs. As in fiscal year 2016, the fiscal year 2017 President's
    budget (PB) request for the Air Force attempts to strike the delicate
    balance between a ready force today and a modern force for tomorrow
    while also continuing its recovery from the impacts of sequestration
    and adjusting to sustained budget reductions. The result is the Air
    Force facilities budget accepts near term risk in the entire
    infrastructure Maintenance and Repair portfolio of MILCON and
    Sustainment, Restoration and Modernization accounts in order to protect
    readiness and maintain credible capabilities in other core missions. In
    doing so, it acknowledges this choice will have long term effects on
    the overall health of infrastructure.
        The Air Force's fiscal year 2017 President's budget includes $1.8
    billion in Military Construction (MILCON) requirements, a 14 percent
    increase over the fiscal year 2016 President's budget. This allows the
    Air Force to replace degraded facilities that can no longer wait, while
    still meeting Combatant Commander (COCOM) needs and new weapon systems
    beddown requirements that must be accomplished now. This also allows us
    to provide an equitable distribution of $333 million to the Guard and
    Reserve components. This increase was funded by reductions in our
    Sustainment, and Restoration and Modernization accounts for which we
    request $2.9 billion, about 10 percent less than last year. We
    recognize this reduction will expand a backlog of facility investment
    requirements that already totals nearly $20 billion. To assure
    continued focus on taking care of our airmen and their families, the
    fiscal year 2017 President's budget also requests $274 million for
    Military Family Housing operations and maintenance, and $61.4 million
    for Military Family Housing Construction, $56.4 million for Base
    Realignment and Closure and $842 million for Environmental programs.
                             military construction
        The fiscal year 2017 MILCON program consists of three primary
    tiers. The first is support to the COCOMs; the second is providing
    facilities for the beddown of new weapons systems by their need dates;
    and the third is replacing our most critical existing mission degraded
    infrastructure on a worst-first basis.
    COCOM Support
        This year's President's budget request includes $293 million for
    COCOM requirements; $35 million for Central Command (CENTCOM), $97
    million for European Command (EUCOM), $29 million for Northern Command
    (NORTHCOM), and $293 million for Pacific Command (PACOM). The Air Force
    continues with phase three of the U.S. European Command Joint
    Intelligence Analysis Center consolidation at Royal Air Force (RAF)
    Croughton, United Kingdom, which also supports four other COCOMs.
    Additionally, the Asia-Pacific Theater remains a focus area for the Air
    Force where we will make a $109 million investment in fiscal year 2017
    to ensure our ability to project power into areas which may challenge
    our access and freedom to operate, and continue efforts to improve
    resiliency. Guam remains one of the most vital and accessible locations
    in the western Pacific. For the past 10 years, Joint Region Marianas
    (JRM)-Andersen AFB, Guam has housed a continuous presence of our
    Nation's premier air assets, and will continue to serve as the
    strategic and operational center for military operations in support of
    a potential spectrum of crises in the Pacific. Additionally, fiscal
    year 2017 investments in the Pacific Theater include Kadena Air Base,
    Japan; Royal Australian Air Force Base (RAAF) Darwin, Australia; and
    the Commonwealth of Northern Marianas Islands (CNMI).
        To further support PACOM's strategy, the Air Force is committed to
    hardening critical structures, mitigating asset vulnerabilities,
    increasing redundancy, fielding improved airfield damage repair kits
    and upgrading degraded infrastructure as part of the Asia-Pacific
    Resiliency program. In 2017, the Air Force plans to construct a
    Satellite Communications Command, Control, Communications, Computers
    and Intelligence facility at JRM-Andersen AFB, Guam to sustain Guam's
    continued functionality. The Air Force also intends to recapitalize the
    munitions structures in support of the largest munitions storage area
    in the Air Force. Furthermore, the fiscal year 2017 budget invests in
    the aircraft parking apron expansion and aircraft maintenance support
    facility projects at RAAF Darwin supporting the Air Force's
    participation in bilateral training exercises. The fiscal year 2017 PB
    investment also includes a land acquisition in CNMI, to support the Air
    Force's operational capability to execute weather diverts, accomplish
    training exercises and respond to natural disasters. Our total fiscal
    year 2017 COCOM support makes up 16 percent of the Air Force's MILCON
    request.
    New Mission Infrastructure
        The fiscal year 2017 President's budget request includes $623
    million of infrastructure investments to support the Air Force's
    modernization programs, including the beddown of the F-35A, KC-46A,
    Combat Rescue Helicopter (CRH) and the Presidential Aircraft
    Recapitalization. The Air Force's ability to fully operationalize these
    new aircraft depends not only on acquisition of the aircraft
    themselves, but also on the construction of the aircraft's accompanying
    hangars, maintenance facilities, training facilities, airfields and
    fuel infrastructure.
        The fiscal year 2017 PB includes $132.6 million for the beddown of
    the KC-46A at five locations. This consists of $11.6 million at Altus
    AFB, Oklahoma, the Formal Training Unit (FTU); $8.6 million at
    McConnell AFB, Kansas, the first Main Operating Base (MOB 1); $1.5
    million at Pease International Tradeport Air National Guard Base
    (ANGB), New Hampshire, the second Main Operating Base (MOB 2); $17
    million at Tinker AFB, Oklahoma, for KC-46A depot maintenance; and
    $93.9 million at Seymour Johnson AFB, NC, the preferred alternative for
    the third Main Operating Base (MOB 3).
        This request also includes $340.8 million for the beddown of the F-
    35A at five locations consisting of $10.6 million at Nellis AFB,
    Nevada; $20 million at Luke AFB, Arizona; $10.1 million at Hill AFB,
    Utah; $315.6 million at Eielson AFB, Alaska; and $4.5 million at
    Burlington International Airport, Vermont. Additionally, the fiscal
    year 2017 investment includes $7.3 million in support of the CRH
    beddown at Kirtland AFB, New Mexico. As the Air Force continues its
    efforts to modernize its fleet, we have moved forward to select
    installations to beddown our newest airframes. In January of this year,
    we announced the enterprise and criteria for the fourth KC-46A Main
    Operation Base (MOB 4).
        In preparation for the Presidential Aircraft Recapitalization
    acquisition, the Air Force's 2017 budget request accounts for the
    planning and design requirements essential to this future beddown and a
    project to relocate the Joint Air Defense Operations Center Satellite
    Site at Joint Base Andrews, Maryland.
    Existing Mission Infrastructure Recapitalization
        This year's President budget request also includes $723 million in
    MILCON recapitalization projects addressing existing mission
    infrastructure. Existing mission projects include requirements that
    revitalize the existing facility plant and projects that address new
    initiatives for capabilities already contained in the Air Force
    inventory. The Air Force's fiscal year 2017 PB supports Nuclear
    Enterprise priorities and includes three MILCON projects, totaling $41
    million. With this budget submission, the Air Force intends to provide
    a Missile Transfer Facility at F.E. Warren AFB, Wyoming, which
    recapitalizes the current facility and continues to ensure proper
    processing of missiles in support of the Missile and Alert Launch
    Facilities at three sites. The fiscal year 2017 budget also includes a
    Consolidated Communications Facility recapitalization project at
    Barksdale AFB, Louisiana. Additionally, a new Missile Maintenance
    Dispatch Facility at Malmstrom AFB, Montana will be built in support of
    the UH-1 Helicopter and Tactical Response Force facilities beddown.
    Together, these projects will consolidate scattered installation
    functions and provide adequately sized and configured operating
    platforms for the UH-1 recapitalization. Additionally, the fiscal year
    2017 PB request includes three munitions storage projects to
    accommodate the realignment and relocation of primary Standard Air
    Munitions Package assets from McConnell Air Force Base, Kansas to Hill
    Air Force Base, Utah.
        The Air Force's fiscal year 2017 PB supports airfield
    recapitalization requirements to include a project to construct an
    updated, properly sized Air Traffic Control Tower at McConnell Air
    Force Base, Kansas and a new aircraft maintenance hangar in support of
    the Global Hawks at JRM-Andersen AFB, Guam. Additionally, the Air
    Force's fiscal year 2017 PB supports force protection recapitalization
    requirements to include a project that constructs a compliant main gate
    complex at RAF Croughton, United Kingdom and new Combat Arms Training
    Maintenance facilities at Buckley Air Force Base, Colorado, Yokota Air
    Base, Japan, and Joint Base-Andrews, Maryland.
        In total, our fiscal year 2017 request represents a balanced
    approach ensuring critical infrastructure requirements to meet mission
    needs and operational timelines.
              facility sustainment, restoration and modernization
        In fiscal year 2017, the Air Force requests $2.9 billion for
    Facilities Sustainment, Restoration and Modernization (FSRM), which is
    approximately 10 percent less than our fiscal year 2016 PB request and
    funds sustainment to 77 percent of the OSD modeled requirement. The
    Restoration and Modernization account is reduced by 34 percent in
    fiscal year 2017 as compared to fiscal year 2016. The Air Force cut
    this account in order to increase the MILCON program and therefore
    reduce the greatest risk within the facility infrastructure portfolio
    this year. Nonetheless, the Air Force's fiscal year 2017 FSRM request
    attempts to keep ``good facilities good'' as the AF continues to focus
    limited resources on ``mission critical, worst-first'' facilities
    through application of asset management principles.
                                    housing
        During periods of fiscal turmoil, we must never lose sight of our
    airmen and their families. Airmen are the source of Air Force air
    power. Regardless of the location, the mission, or the weapon system,
    our airmen provide the innovation, knowledge, skill, and determination
    to fly, fight and win. There is no better way for us to demonstrate our
    commitment to service members and their families than by providing
    quality housing on our installations. The Air Force has privatized its
    military family housing (MFH) at each of its stateside installations,
    including Alaska and Hawaii. The Air Force has 32 projects at 63 bases,
    with an end-state of 53,240 homes and we are now focused on long-term
    oversight and accountability of the sustainment, operation and
    management of this portfolio.
        Concurrently, the Air Force continues to manage approximately
    18,000 Government-owned family housing units at overseas installations.
    Our $274 million fiscal year 2017 Family Housing Operations and
    Maintenance (O&M) sustainment funds request allows us to sustain
    adequate units and improve inadequate units, and our $61.4 million
    request for Family Housing Construction funds improves 204 tower units
    at Camp Foster, Okinawa and 12 units on Kadena Air Base. This request
    will ensure we support the housing requirements of our airmen and their
    families as well as the Joint Service members the Air Force supports
    overseas.
        Similarly, our focused investment strategy for dormitories enables
    the Air Force to achieve the DOD goal of 90 percent adequate dormitory
    rooms for permanent party unaccompanied airmen, while continuing to
    support airmen in formal training facilities. The fiscal year 2017 PB
    MILCON request includes two training dormitories at Fairchild AFB,
    Washington and Joint Base San Antonio, Texas. With congressional
    support, we will continue to ensure wise and strategic investment in
    these quality of life areas to provide modern housing and dormitory
    communities. More importantly, your continued support will take care of
    our most valued asset--our airmen and their families.
                    air force community partnership program
        In support of the Air Force priority to ``make every dollar
    count'', the Air Force has put a concentrated effort to cultivate
    partnerships between our installations and the local communities. The
    Air Force Community Partnership program has been heralded by our Wing
    Commanders and community leaders as an ideal forum for exploring win-
    win partnerships. To date, there are 53 installations and communities
    participating in the Air Force Community Partnership program. Since the
    program's inception in 2013, we have completed more than 140
    partnership agreements that have generated over $23 million in Air
    Force benefits and $24 million in community benefits. Beyond the
    tangible savings, the program creates an invaluable forum for fostering
    relationships and promoting innovation. Installations and communities
    now have the framework and tools needed to finalize many of the over
    1,000 potential initiatives identified to date, such as shared medical/
    EMT training, joint small arms ranges, and shared refuse management
    services.
        Without losing focus on fostering a partnership mentality across
    the Air Force, we are now turning our attention to cultivate
    initiatives that show significant promise of large returns-on-
    investment (ROI) or have Air Force-wide application. In the future, the
    Air Force Community Partnership program will continue to strengthen its
    foundation by building upon concepts under development while
    reallocating resources towards initiatives with large returns on
    investment.
        Of course, we need your help to pursue the initiative, which has,
    by far, the largest return-on-investment--Base Realignment and Closure.
                      base realignment and closure (brac)
        The Air Force has more infrastructure capacity than our missions of
    today and tomorrow require. Our numbers of aircraft and personnel have
    drawn down significantly since the Cold War. Since the last round of
    BRAC in 2005, we have continued to drawdown our forces, but we have not
    paired these drawdowns with comparable reductions in our
    infrastructure. Since BRAC 2005, the Air Force has thousands fewer
    personnel and hundreds fewer aircraft in our planned force structure,
    yet we have not closed a single installation in the United States.
    Ultimately, we are paying to retain more installations than we require,
    and that money could be used to recapitalize and sustain our weapons
    systems, on readiness training, and on investing in airmen quality of
    life programs.
        Congress has expressed concerns that BRAC may cost too much, is
    often hard on communities, and may not adequately consider potential
    future growth of our forces.
        Regarding cost, Air Force experience shows that BRAC provides
    significant savings. BRAC pays for itself. In each prior round of BRAC,
    including BRAC 2005, the Air Force achieved net savings during the
    implementation period. Couple that with the plain truth that the Air
    Force simply cannot afford to maintain our current infrastructure
    footprint, and our request for BRAC makes fundamental economic sense.
    The Air Force has a $20 billion facility investment backlog. We
    estimate (parametrically) that we currently have about 30 percent
    excess infrastructure capacity when measured against our fiscal year
    2019 force structure. Sustaining and maintaining this extra
    infrastructure further strains our limited funds by forcing us to
    spread them even thinner to support infrastructure that we simply do
    not need. Without previous rounds of BRAC, the Air Force infrastructure
    bill would be about $3 billion higher each year than it is now. BRAC
    has been effective in reducing our infrastructure cost and we need
    another round to truly align our infrastructure to our force structure.
    We acknowledge there will be upfront costs, but those costs are the
    down payment to significant savings in the future.
        Regarding BRAC's impact on communities, we understand that Air
    Force installations are key components of their communities. These
    communities house not only our missions but also our families; our kids
    go to the local schools; our airmen attend the local sporting events;
    our families volunteer across the spectrum of activities--these
    communities are our neighbors. With that in mind, the Association of
    Defense Communities asked our neighbors what they thought about BRAC,
    and 92 percent of community leaders \1\ believe BRAC is better for
    their community than the status quo of hollowed bases, reduced manning
    and minimal investment. As BRAC is, by nature, a consolidation effort,
    some installations will be the recipients of new missions and these
    communities will benefit from the economic boost that increased
    installation activity will provide. Other installations will close;
    however, it is only under BRAC that communities whose bases are closing
    will receive direct economic support through redevelopment guidance and
    financial assistance. Based on prior rounds of BRAC, communities in
    which bases closed had lower unemployment rates and higher per capita
    income growth than national averages.\2\ Additionally, the Air Force is
    committed to partnering with DOD, Congress, and communities to consider
    alternative approaches to the prolonged BRAC analysis and selection
    process that puts an economic drag on all communities surrounding
    military installations. In sum, without a BRAC, the Air Force will
    continue to spread out our people and force structure, and as this
    occurs many communities will continue to suffer the economic detriment
    of hollowed out bases without the economic support that BRAC
    legislation provides. This lose-lose scenario can only be reversed
    through BRAC.
    ---------------------------------------------------------------------------
        \1\ From the June 2015 Association of Defense Communities National
    Summit at which General Session audience members were asked: ``What
    would be worse for defense communities?'' and chose from ``Status Quo''
    or ``BRAC''.
        \2\ From Government Accountability Office (GAO) studies GAO-05-138
    and GAO-13-436.
    ---------------------------------------------------------------------------
        Finally, Congress has expressed concerns that a BRAC will enable
    reductions in infrastructure that do not account for potential future
    force structure growth. In asking for the authority to permanently
    reduce our infrastructure footprint, the Air Force has considered both
    its needs for today and its needs for the future. The Air Force has no
    intent to close infrastructure that may support any realistically
    achievable surge or contingency needs of the future. While we estimate
    30 percent excess infrastructure capacity, the Air Force would build
    specific reduction targets on future needs, and seek to reduce only
    infrastructure that exceeds future scenarios. BRAC would be driven
    first by a military value assessment grounded in operational needs, and
    would not compromise future growth in force structure. In comparing
    infrastructure capacity with force structure requirements going back to
    the 1990s, the Air Force has never dipped below 20 percent excess
    infrastructure capacity \3\ despite numerous force structure changes
    and five previous rounds of BRAC. Thus, we believe we have the
    opportunity to significantly reduce excess capacity while ensuring more
    than adequate infrastructure to support any envisioned force structure.
    Further, we are certain that BRAC provides the most effective means for
    our infrastructure to achieve the right balance of effectiveness,
    efficiency, and support to AF missions.
    ---------------------------------------------------------------------------
        \3\ From DOD reports to Congress on BRAC and capacity in April 1998
    and March 2004 in accordance with section 2912 of the Defense Base
    Closure and Realignment Act of 1990.
    ---------------------------------------------------------------------------
                                 climate change
        The 2010 and 2014 Quadrennial Defense Reviews (QDRs) recognized
    that climate change will shape DOD's operating environment, roles, and
    missions, and that we will need to adjust to the impacts of climate
    change to our facilities, infrastructure and military capabilities. As
    part of a larger DOD effort, the Air Force recently collected data from
    over 1,500 sites regarding impacts from past severe weather events.
    Surveyed sites not only included major installations, but also radar/
    communications sites, housing annexes, training ranges, missile sites,
    etc. Sixty percent of all sites reported some impact due to past
    flooding, extreme temperatures, drought, wildfire, and wind. The single
    most prevalent factor was drought which accounted for 42 percent of all
    reported impacts, followed by non-storm surge flooding and wind with 19
    percent each. Further, roughly a third of the 78 sites within 2
    kilometers of the coast reported having experienced storm surge
    flooding.
        There are several pertinent examples of how climate change is
    affecting our plans for current and future infrastructure operations.
    The Air Force recently completed a study on the risks of coastal
    erosion to remote Alaskan radar sites. Our radar stations are at risk
    due to rapid, significant coastal erosion because the shore ice that
    used to protect the coast from waves has melted. We continue to study
    the rate of erosion, mitigate impacts and incorporate considerations in
    future planning for these sites.
        The DOD climate survey provided qualitative data that helped to
    frame a more holistic understanding of the impacts of climate on
    installations and operations. For the majority of reported severe
    weather events, bases reported emergency preparedness actions and
    procedures were successful in mitigating impacts on mission and
    personnel. That being said, mitigation becomes more difficult and
    cumulative impact to missions more crippling with increasing frequency
    and/or magnitude of severe weather events. The Air Force continues to
    integrate climate considerations into individual mission and
    installation planning efforts to produce informed and resiliency-
    focused decisions.
                                     energy
        The Air Force is the largest single consumer of energy in the
    Federal Government. Air Force budgetary constraints have strained
    investments in right-sizing, modernizing, and maintaining power
    systems. As energy costs increase and budgets decrease, energy places
    greater pressure on the constrained Air Force budget. From a cost
    perspective, in fiscal year 2015, the Air Force spent approximately
    $8.4 billion on fuel and electricity, with more than 86 percent going
    towards aviation fuel. That $8.4 billion represented approximately 8
    percent of the total Air Force budget; only 10 years ago, less than 4
    percent of the budget went towards energy expenses. As we refocus our
    efforts, the Air Force will take a multi-faceted energy investment
    approach to enhance mission assurance.
                   mission assurance through energy assurance
        The Air Force's ability to accomplish its mission--whether
    executing today's fight or training for future fights--is dependent on
    fuel and installation electricity. We must ensure reliable, resilient,
    cost-competitive power for our airmen to fly, fight and win. To do so,
    the Air Force has revectored its installation energy program from a
    largely conservation oriented stance to one of energy resilience
    through strategic agility in installation energy programs and projects.
    The guiding tenet for this strategic agility is ``Mission Assurance
    Through Energy Assurance.'' This new paradigm focuses on providing the
    Air Force with the ability to complete its mission in light of
    disruptions to electricity and fuel, as well as optimizing its energy
    productivity through improvements in technology and process.
                              installation energy
        Over the last several years, the Air Force has seen installations
    lose power for significant periods of time as a result of ice storms,
    hurricanes, fallen trees, and other forms of denial of service. So far,
    the Air Force has been able to mitigate the most critical mission
    impacts due to those power losses by exercising alternatives such as
    moving missions in the case of weather events. There are several
    critical missions, however, that cannot be moved and where even a
    microsecond interruption in power puts Air Force mission capabilities
    at risk. Even though the Air Force has reduced its energy intensity by
    more than 23 percent since fiscal year 2003, we still rely almost
    exclusively on expensive, non-networked diesel generators limited to
    very specific systems to provide the only depth of resiliency beyond
    that inherent in the electrical grid in our system. While that can be
    sufficient for short outages, today's grid is increasingly threatened
    by cyber incursions and physical attacks designed to disrupt power;
    increasing frequency and severity of natural disasters; and
    malfunctions from human error, aging equipment, and faulty
    infrastructure; all with the potential for long-term outages. To that
    end, we must enhance the energy resilience of Air Force installations
    through the adoption of innovative technologies and business models.
        Going forward, the Air Force will transition to a more
    comprehensive approach to installation energy challenges, and it will
    holistically optimize cost and provide resilient, cleaner sources of
    energy by balancing the objectives of AF energy projects, including
    energy efficiency, renewable energy, energy resilience, and other
    energy projects. The core principles below will continue to
    characterize Air Force installation energy projects, but with an
    increased focus on meeting multiple objectives within single projects.

      --Resilient: Every Air Force energy project should be designed
            through the lens of enhancing energy resilience; the strategic
            energy agility to maintain critical mission functions even
            during unexpected disruptions. Air Force missions require agile
            networks of platforms, communications equipment, satellites,
            and other technology and equipment. The Air Force will secure
            critical infrastructure and missions through a layered approach
            to energy resilience, taking advantage of rapidly evolving
            energy technologies to meet both home station and expeditionary
            needs. The Air Force will buttress commercial power with on-
            site electricity generation (preferably cleaner) paired with
            smart distribution networks and cyber-secure control systems,
            enabled to power critical infrastructure during grid
            disruptions.
      --Cost-competitive: Air Force installations and commands should
            continue to ``make every dollar count'' when acquiring
            advanced, cleaner energy projects, while also examining trade-
            offs between lowest price and other priorities such as
            resilience. The Air Force will continue to pursue energy
            projects or transactions that will save money, leverage third-
            party investment, and prioritize resources to projects that
            also enhance energy resilience and reliability.
      --Cleaner: Three global trends identified in ``America's Air Force: A
            Call to the Future'' (rapidly evolving technologies, decreasing
            availability of natural resources, and diverse operating
            environments) work in favor of energy modernization. Renewable
            and other distributed energy technologies are key components of
            energy agility and assurance, especially when projects are on
            site and capable of delivering continuous energy when the grid
            is disrupted.
                                   resilience
        To help achieve Air Force energy resiliency goals, the Secretary
    and the Chief of Staff of the Air Force established the Air Force
    Office of Energy Assurance (AF-OEA) to serve as a central management
    office dedicated to the development, implementation, and oversight of
    privately-financed, large-scale renewable and alternative energy
    projects. This office leverages partnerships with the Army's Office of
    Energy Initiatives and Navy's Renewable Energy Program Office to
    develop projects that contribute to strategic energy agility by
    identifying and awarding third-party financed energy projects that
    provide 10MW or greater and cleaner (but preferably renewable) power
    that increases energy resiliency. These projects will provide
    significant energy alternatives to assure Air Force missions in the
    event of grid outages for short or long periods. The Air Force is
    establishing this office with existing personnel resources and will not
    include any new headquarters personnel; rather, it will co-locate AF-
    OEA with the Army's Office of Energy Initiatives to share support and
    processes, and move forward as a team. The AF-OEA will proactively team
    with the Navy's Renewable Energy Program Office to optimize
    opportunities that office identifies.
        Finally, AF-OEA is charged to take a holistic, enterprise-level
    approach to its energy assurance programs brought to bear on the Air
    Force's mission assurance through an energy assurance approach. This
    includes clean, cost-competitive, reliable and resilient energy through
    the application of utilities privatization, power purchase agreements,
    direct investment (e.g., energy conservation investment program), and
    third-party financed (e.g., ESPCs, etc.) authorities Congress has
    granted the Air Force. All available tools will be used.
                                cost competitive
        Although current and projected energy prices are relatively low,
    from a mission perspective, price volatility does not change mission
    vulnerability. With mission assurance as our focus, the Air Force still
    recognizes the need to reduce the cost of energy to allow our dollars
    to support readiness and recapitalization requirements. The Air Force
    directly invests in facility energy projects primarily using FSRM
    funding based on Air Force priorities. Based on an historical average,
    the Air Force anticipates approximately $223 million of its FSRM
    funding going towards projects with energy benefits such as increased
    resiliency and efficiency through modernized infrastructure.
        While the Air Force has made considerable progress to avoid costs
    through reduced energy consumption, there is more to do. The Air Force
    is pursuing Energy Savings Performance Contracts (ESPC) and Utility
    Energy Service Contracts (UESC) to fund energy conservation projects.
    Since fiscal year 2012, the Air Force has awarded approximately $128
    million across eight ESPCs and UESCs. In fiscal year 2016, the Air
    Force expects to award up to $359 million in such contracts. To take
    advantage of existing expertise, the Air Force has also partnered with
    the Defense Logistics Agency (DLA) and the U.S. Army Corps of Engineers
    (USACE) to expand its ability to identify and execute third-party
    performance contracts.
                                  clean energy
        The Air Force recognizes both clean energy, and its more desirable
    renewable subcomponent, are key elements to diversifying our energy
    portfolio to achieve strategic energy agility. By the end of fiscal
    year 2015, the Air Force had 311 renewable energy projects on 104
    sites, either installed, in operation, or under construction, across a
    wide variety of renewable energy sources, including wind, solar,
    geothermal, and waste-to-energy projects. Cumulatively, the Air Force
    has 104.3 megawatts of on-base renewable energy capacity. These
    projects, which are typically owned and operated by private industry,
    have increased energy production on Air Force installations by more
    than 26 percent from fiscal year 2014 to fiscal year 2015. About 8
    percent of the Air Force's total electrical energy consumption in
    fiscal year 2015 came from a mixture of renewable on-base projects and
    purchased commercial renewable supply. Unfortunately, little of this
    energy can be directly consumed by our bases in the event of a grid
    outage. As we evaluate both direct investment and third party
    investment opportunities, the Air Force will exhibit preference for
    renewable solutions where cost effective, followed by clean but not
    renewable solutions, and ultimately by solutions that provide mission
    assurance through energy assurance without a clean element.
                                 the sweet spot
        Each of the principles above are spectrums, and the Air Force does
    not consider them ``either-or'' choices. The ``sweet spot'' projects
    will have elements of all three core principals, but not every project
    will demonstrate every characteristic. The Air Force will expect each
    project to demonstrate a clear connection to at least two principles.
    Projects that only achieve one principle will need strong mission
    justification. In short, energy projects should move toward the ``sweet
    spot.''
                               operational energy
        Similar to the installation energy program, mission assurance is
    the basis for the Air Force's operational energy program. Through
    behavioral and technological advancements, the Air Force is optimizing
    its capabilities in order to maximize combat readiness and reduce the
    mission risks posed by our fuel supply challenges. With more than 5,000
    aircraft in the Air Force fleet, and a demand for over two billion
    gallons of jet fuel every year, improving how the aircraft and crew use
    their fuel can generate significant increases in capabilities. To
    address the risks posed by that demand, the Air Force has a goal to
    improve its fleet aviation energy efficiency, defined as productivity
    per gallon, by 10 percent by 2020. Since developing the goal in fiscal
    year 2011, the Air Force has improved its aviation energy efficiency by
    almost 6 percent through a combination of materiel solutions and
    changes to policies and processes.
        The Air Force is requesting $682.6 million in operational energy
    related funding for fiscal year 2017. Included in this is $567.1
    million to increase future warfighter capabilities, $4.5 million to
    reduce the logistical risks to the mission from energy, and $111.0
    million to improve current mission effectiveness.
                               materiel solutions
        The Air Force faces a challenge when implementing materiel
    solutions, as many of them require high upfront investments with long-
    term paybacks. However, those paybacks often provide significant
    returns in both fuel savings and reduced maintenance requirements. The
    Air Force is in the midst of a propulsion upgrade program for the KC-
    135 at a rate of 100 to 120 engines per year for the next 12 years, at
    a cost of approximately $106 million per year. While this is primarily
    a service-life extension effort, it provides a 1.5 percent reduction in
    its fuel consumption rate per engine. Additionally, by improving
    reliability and durability, these upgrades will provide lifetime fuel
    and maintenance savings approaching $3 billion.
                             science and technology
        Part of the Air Force's funding request for fiscal year 2017 is for
    research, development, test and evaluation (RDT&E) opportunities with
    operational energy benefits. One of the main operational energy related
    projects is developing new adaptive engine technology, which provides
    revolutionary advances in turbine engine performance. By incorporating
    these advanced technologies, the Air Force will be demonstrating a
    transformational engine that can operate with the power and performance
    needed for a combat aircraft, while maintaining the higher fuel
    efficiency of large aircraft. Based on the results of Air Force lab
    experimentation, this engine will provide 25 percent greater fuel
    efficiency, 30 percent greater range, 10 percent greater thrust, and
    improved thermal management compared to current engines.
                            modeling and simulation
        While the Air Force is enhancing its fleet through current and
    future materiel solutions, it is also looking to improve how it manages
    fuel usage for future conflicts. As part of the Joint Operational
    Energy Modeling and Simulation (JOEMS) project, the Air Force is
    leading a collaborative effort to examine how technology upgrades
    impact operations in various scenarios through identification of fuel
    usage requirements and logistical fuel supply challenges. By
    incorporating energy considerations in wargames and other modeling and
    simulation efforts, the Air Force can better understand the role fuel
    and logistics can play in future operations. The way it manages and
    consumes fuel can be a catalyst towards a successful mission, and the
    Air Force is driving forward to ensure it maintains an energy advantage
    against potential adversaries.
                                process changes
        The Air Force is also actively fostering an energy-aware culture
    that empowers airmen to take a smart approach to energy to better
    complete their mission. Simple changes in how a pilot flies and trains
    can affect aircraft fuel consumption. Through the Energy Analysis Task
    Force (EATF), the Air Force studied how instructor pilots and simulator
    instructors at Vance AFB in Oklahoma could incorporate fuel efficiency
    concepts into pilot training to ensure new pilots understand how to
    optimize fuel use. As part of a year-long trial, the EATF developed
    four training techniques to reduce fuel consumption in the T-1A
    Jayhawk, which were tested in T-1 simulators with a small group of
    students. The energy efficiency techniques explored for integration
    into the T-1 syllabus have the potential to save up to 6 percent in
    fuel requirements on navigation training sortie profiles. One of these
    techniques, called the Fuel Efficient Descent, involves teaching
    student pilots to select the optimal point to begin their descent into
    an airfield. When the students select the correct point to begin their
    descent, they are able to reduce engine power to idle and descend using
    minimum fuel. So far, the new technique has proven the potential to
    reduce fuel usage by 35 percent during the descent phase of flight.
        While this effort saves fuel today, it goes much further by
    instilling an energy aware culture in those new pilots, which
    proliferates into the Air Force's major weapons systems and will
    potentially provide exponential savings. This type of savings can be
    seen in the process changes executed at Altus AFB in Oklahoma, which
    instituted scheduling and airspace utilization initiatives in 2013 that
    are providing over $60 million in cost savings on an annual basis.
                           alternative aviation fuel
        The Air Force is also committed to diversifying the types of energy
    and securing the quantities necessary to perform its missions, both for
    near-term benefits and long-term energy resiliency. The ability to use
    alternative fuels in its aircraft provides the Air Force with enhanced
    capabilities by increasing the types of fuels available for use. The
    entire Air Force fleet has been certified to use two alternative
    aviation fuel blends; one of these is generated from traditional
    sources of energy and the other one is generated from bio-based
    materials.
                           environmental stewardship
        While the Air Force strives to prevent or minimize environmental
    degradation from our training activities and operations, we recognize
    that sustaining the world's most capable Air, Space, and Cyber Force
    inevitably results in environmental impact. As a result, we view our
    responsibility to protect human health and the environment as an
    extraordinary duty. The Air Force is subject to the same environmental
    statutes and regulations as any other organization in the country and
    recognizes both its legal and inherent environmental responsibility.
    The Air Force fiscal year 2017 PB request assures our programs comply
    with applicable regulatory requirements but, more significantly, in a
    manner that ensures the ready installations and resilient natural
    infrastructure necessary to support the Air Force mission now and in
    the future.
    Environmental Program Funding Details
        Within our environmental programs, the Air Force continues to
    prioritize resources to ensure our defense activities fully comply with
    legal obligations and our natural infrastructure remains resilient to
    support our mission and our communities; restore sites impacted by Air
    Force operations; and continuously improve. The fiscal year 2017 PB
    seeks a total of $842 million for environmental programs. This is $20
    million less than last year due to sustained progress in cleaning up
    contaminated sites and efficiencies gained through centralized program
    management. By centrally managing our environmental programs we can
    continue to fund full compliance with all applicable laws, while
    applying every precious dollar to our highest priorities first.
    Further, our environmental programs are designed to provide
    environmental stewardship to ensure the continued availability of the
    natural infrastructure; the air, land and water necessary to provide
    ready installations and ensure military readiness.
    Environmental Quality
        The Air Force's fiscal year 2017 PB request seeks $422.6 million in
    Environmental Quality funding for environmental compliance,
    environmental conservation, and pollution prevention. With this
    request, the Air Force ensures a resilient natural infrastructure and
    funds compliance with environmental laws in order to remain a good
    steward of the environment. We have instituted a standardized and
    centralized requirements development process that prioritizes our
    environmental quality program in a manner that minimizes risk to airmen
    and surrounding communities, the mission and the natural
    infrastructure. This balanced approach ensures the Air Force has ready
    installations with the continued availability of the natural
    infrastructure it needs at its installations and ranges to train and
    operate today and into the future.
        The environmental compliance program focuses on regulatory
    compliance for our air, water and land assets. Examples of compliance
    efforts include more detailed air quality assessments when analyzing
    environmental impacts from Air Force activities; protecting our
    groundwater by improving management of our underground and aboveground
    storage tanks; and properly disposing of wastes to avert contaminating
    our natural infrastructure.
        Efforts in pollution prevention include recycling used oil,
    fluorescent lights and spent solvents, as well as sustaining our
    hazardous materials pharmacies to manage our hazardous materials so
    they don't turn into waste. We continue to make investments in
    minimizing waste and risk to airmen through demonstrating and
    validating new technology such as the robotic laser de-painting process
    on aircraft.
        The Air Force remains committed to a robust environmental
    conservation program. Prior appropriations allowed the Air Force to
    invest in conservation activities on our training ranges, providing
    direct support to mission readiness. The conservation program in fiscal
    year 2017 builds on past efforts to continue habitat and species
    management for 96 threatened and endangered species on 45 Air Force
    installations. This year's budget request also provides for continued
    cooperation and collaboration with other agencies, like the U.S. Fish
    and Wildlife Service, to provide effective natural resources management
    and safeguard military lands from wildfire hazards through coordinated
    planning and incident response, and the application of prescribed burn
    techniques. The fiscal year 2017 budget will further the Air Force's
    implementation of tribal relations policy to ensure that the unique
    trust relationship the U.S. Government shares with tribes continues,
    and to provide opportunities to communicate aspects of the Air Force's
    mission that may affect tribes.
        As trustee for more than 9 million acres of land including forests,
    prairies, deserts, wetlands, and costal habitats, the Air Force is very
    aware of the important role natural resources plays in maintaining our
    mission capability. Sustained military readiness requires continued
    access to this natural infrastructure for the purposes of realistic
    training activities. The Air Force utilizes proactive ecosystem
    management principles and conservation partnerships with other Federal
    and State agencies to minimize or eliminate impacts on the training
    mission. We are challenged by the fact that in many instances, our
    installations have become the last bastion of habitat for certain
    species due to the increased development outside the installation
    boundary. The fiscal year 2017 PB request includes $53.4 million to
    implement the Air Force's conservation strategy, which will ensure that
    all aspects of natural resources management are successfully integrated
    into the Air Force's mission.
        The Air Force remains committed to good environmental stewardship,
    ensuring compliance with legal requirements, mitigating mission
    impacts, reducing risk to our natural infrastructure, and honing our
    environmental management practices to ensure the sustainable management
    of the resources we need to fly, fight, and win now and into the
    future.
    Environmental Restoration
        The Air Force fiscal year 2017 PB request seeks $419 million in
    Environmental Restoration funding for cleanup of current installations
    and those closed during previous BRAC rounds. Our focus has been on
    completing investigations and getting remedial actions in place, to
    reduce risk to human health and the environment in a prioritized
    manner. Ultimately, the Air Force seeks to make real property available
    for mission use at our active installations, and to facilitate
    community property transfers and reuse at our closed installations.
        The Air Force has made progress over time in managing this complex
    program area, with more than 13,500 restoration sites at our active and
    closed installations (over 8,200 active and almost 5,300 BRAC). The Air
    Force BRAC restoration program is on-track to achieve, at least, a
    ``response complete status'' at 90 percent of its Installation
    Restoration Program (IRP) sites at closed installations by the end of
    fiscal year 2018. Our active installation restoration sites are
    currently projected to achieve the same 90 percent response complete
    level by fiscal year 2020.
        A new topic of focus is Emerging Contaminants (EC). ECs pose
    significant risk management challenges to the Air Force environmental
    program. Regulatory requests for environmental sampling and
    implementation of EC response actions are on the rise.Characterizing
    the extent of Air Force environmental releases of an emerging
    contaminant, assessing the potential risk and impact to human health
    and the environment, and initiating response actions and implementing
    appropriate mitigation measures, drive unforeseen, chemical- and site-
    specific environmental liabilities and program costs.
        The Air Force response to releases of ECs from its facilities is a
    deliberate, science-based and data-driven process that is focused on
    protection of human health and the environment, conducted in accordance
    with the Defense Environmental Restoration Program, and consistent with
    the Comprehensive Environmental Response, Compensation, and Liability
    Act (CERCLA).
        The Air Force continues to work with regulators, city and State
    officials and other stakeholders to develop the best solution to an
    emerging problem. For example, for confirmed perfluorinated compounds
    (PFC) releases, the Air Force is determining the extent of
    contamination and taking steps to mitigate any validated human
    exposures with interim actions until cleanup standards and effective
    remedial technologies are available. When groundwater sampling results
    indicate PFC levels exceed the EPA's provisional health advisory for
    drinking water, the Air Force reduces PFC levels with filtration
    technologies or provides an alternate drinking water source. When PFCs
    are detectable, but below the provisional health advisory level, the
    Air Force may conduct well monitoring to track PFC level changes and
    determine if further action is needed.
        While we cannot compromise on the protection of the public, our
    airmen and civilian workforce and their families, neither can we
    endlessly absorb the operational and financial risks of attempting to
    work with a myriad of unregulated contaminants without some level of
    certainty that the cost of controlling exposure will have a
    commensurate public health and operational benefit.
                                   conclusion
        The Air Force made hard strategic choices during formulation of
    this budget request. The Air Force attempted to strike the delicate
    balance between a ready force for today with a modern force for
    tomorrow while also recovering from the impacts of sequestration and
    adjusting to budget reductions. Our fiscal year 2017 PB request
    increases funding in MILCON to support COCOM and new weapon system
    requirements, reduces Restoration and Modernization (R&M) and continues
    to address the current mission backlog of deferred infrastructure
    recapitalization from the fiscal year 2013 PB strategic pause.
    Sequestration will halt this recovery. We also must continue the
    dialogue on right-sizing our installations footprint for a smaller,
    more capable force that sets the proper course for enabling the Defense
    Strategy while addressing our most pressing national security issue--
    our fiscal environment.
        In spite of fiscal challenges, we remain committed to our
    servicemembers and their families. Privatized housing at our stateside
    installations and continued investment in Government housing at
    overseas locations provide our families with modern homes that improve
    their quality of life now and into the future. We also maintain our
    responsibility to provide dormitory campuses that support the needs of
    our unaccompanied servicemembers.
        Finally, we continue to carefully scrutinize every dollar we spend.
    Our commitment to continued efficiencies, a properly sized force
    structure, and right-sized installations will enable us to ensure
    maximum returns on the Nation's investment in her airmen, who provide
    our trademark, highly valued air power capabilities for the Joint team.

        Senator Kirk. Let me start with the questioning. I will
    recognize myself.
        Missile defense is one of my greatest priorities as chair
    of this subcommittee. I would say that I am favorably looking
    at the expeditionary deployment of Terminal High Altitude Area
    Defense (THAAD) to Guam as a permanent funding item that we
    would look at.
        I would say to Mr. Potochney, could you tell me more about
    the $155 million that you guys are planning for the long-range
    discrimination radar in Clear, Alaska.
        Mr. Potochney. Thank you, sir.
        It is in our budget. It is important. We are strongly
    behind it. We hope you all are. We want the money appropriated
    this year, so that we can execute it holistically. I think it
    is a key element of our approach to missile defense.
        Senator Kirk. Mr. Tester.
        Senator Tester. I will yield to Senator Udall.
        Senator Udall. Okay, Thank you, Jon. I appreciate your
    courtesy.
        Thank you both, Chairman Kirk and Ranking Member Tester.
        As we all know, the military's ability to meet future
    global challenges is directly tied to its facilities. That is
    what it uses to train, to test, to evaluate, and to carry out
    its mission. So when I look at my home State of New Mexico, I
    see an array of military installations that provide unique
    capabilities to the Department of Defense and our mission on
    the 21st century battlefield.
        At Kirtland, we have the Air Force research lab and the
    nuclear weapons center; at Cannon, the 27th Special Operations
    group; Holloman has the high-speed test track; and the White
    Sands Missile Range, otherwise known as WSMR, has 3,200 square
    miles of unique and pristine testing and evaluation territory
    that is used across DoD and other agencies.
        WSMR is capable of testing next-generation technologies.
    These will emerge from what DoD is calling the third offset,
    the focus on technological innovation. Combined, all of New
    Mexico's bases help build and sustain a 21st century military.
        Ms. Hammack, I will direct this question to you. What
    concerns me is that years of reduced MILCON budgets and
    deferred maintenance have resulted in facilities and
    infrastructure that may not be adequate or may not be advanced
    enough to test and evaluate new technologies. For example, the
    White Sands Missile Range sustainment, restoration, and
    modernization budget is funded at only 69 percent. But WSMR has
    repairs and maintenance backlogs of over $220 million.
        Do you agree that the White Sands Missile Range offers
    unmatched testing and evaluation capabilities that will help
    develop the next generation weapons systems of third offsets
    such as directed energy?

                            WSMR/SUSTAINMENT FUNDING

        Ms. Hammack. The answer is yes. WSMR offers unmatched
    testing capabilities, which is used by all services. You are
    absolutely right. Sustainment funding is lagging. That is the
    effect to sequestration.
        So not only does WSMR have a backlog, but across the
    Department of Defense, across the Army, in particular, we have
    a backlog of sustainment that is well over $7 billion today.
        So it is one of the significant risks that we are taking in
    our installation budgets. We are doing our best to ensure,
    though, that we do not fail the mission. So the money that we
    have is focused on critical mission requirements and life,
    health, safety.
        Senator Udall. Could you discuss the Army's plan to address
    WSMR's maintenance backlog and the budget shortfalls that face
    us?
        Ms. Hammack. Unfortunately, right now, we have no plan to
    handle the maintenance backlog, because we don't have money to
    handle the maintenance backlog. That is why we are addressing
    the worst first.
        But the challenge is, as we continue to be unfunded due to
    budgeting constraints, the backlog will increase.
    Unfortunately, that means that facilities will fail faster.
        Right now, in the Army, 20 percent of our infrastructure
    that is over 52,000 buildings are in poor or failing condition
    due to the underfunding in our installation accounts.
        Senator Udall. Mr. Potochney, as you know, a QF-4 unmanned
    aerial vehicle crashed at White Sands National Monument over 2
    years ago. That was in February 2014. But a 4-mile stretch of
    the monument remains closed today due to serious concerns about
    contamination in the soil, including access to two popular
    family-friendly trails.
        There have been some frustrating bureaucratic issues
    preventing cleanup related to interagency funding, but we are
    not aware of any specific legal obstacle to DoD funding this
    cleanup.
        Will the DoD pay for the cleanup? And can you commit to a
    timeframe to get it done?
        Mr. Potochney. Sir, thank you for that question.
        I am frustrated as well, but we are on a path right now to
    reconcile the bureaucratic delay that we have had.
        The delay resulted from the fact that it was a Navy
    mission, an Air Force plane, on a facility handled by the Army,
    and the Army had the agreement with the Park Service for
    cleanup. So we had to work through that.
        I'm not happy at all with the fact that it has taken us
    this long. I can assure you we are watching it very carefully
    now, and I cannot commit to a timeline to clean it up, but I do
    not think it will be too long, and it will be done
    expeditiously.
        The reason why I say I can't commit to a timeline is I
    don't know how long it will take us to get the last contract in
    place and how long that contractor will take. But we can take
    that for the record, as soon as we have that plan in place.
        [The information follows:]
                             information memorandum
    Subject: Timeline for Army Cleanup at White Sands Missile Range (WSMR)

    Cleanup:  Contract award June 2016. Expected completion mid-January
    2017, with anticipated regulatory approval by July 2017.

      --WSMR Commanding General and White Sands National Monument (WSNM)
            Superintendent agree that the existing 2-year old site
            assessment requires a refresh and re-analysis of the crash
            site.
        --The crash site will be re-assessed to determine extent of
                contamination
        --Once the new assessment is completed, personnel will excavate and
                properly dispose of the contaminated soil from the areas
                showing the highest concentration of jet fuel
        --Personnel will analyze soil samples to verify cleanup levels
        --The Army plans to complete the cleanup of the White Sands Missile
                Range (WSMR) site by mid-January 2017, with anticipated
                regulatory approval by July 2017
        --Completion of cleanup could require additional time if the
                contamination proves to be more extensive or has
                potentially spread

      --Major Milestones are as follows:
        --Contract award--June 2016
        --Work Plan and Site Assessment complete--mid-October 2016
        --Cleanup Action complete--mid-January 2017
        --Regulatory review & approval--complete July 2017

      --WSMR has the estimated $500,000 funds on hand to contract for
            remediation and will follow the existing Memorandum of
            Understanding (MOU) to be subsequently reimbursed by the Navy.
        --U.S. Army Corps of Engineers (Tulsa) will award the remediation
                contract and use a qualified contractor

        Senator Udall. Yes. That's good to hear, and I think it's
    important we move forward, so we make sure that we have a good,
    long-term relationship between the Air Force and the White
    Sand's National Monument, which worked very closely together to
    achieve, as you know, a lot of these national security
    objectives.
        Mr. Potochney. Yes, sir. And if I could just add one thing?
    I'm using it as an illustrative test case, if you will, of how
    we can do a better job at an interagency decisionmaking, and we
    will do that.
        Senator Udall. Thank you.
        Mr. Potochney. Thank you.
        Senator Kirk. Senator Collins.
        Senator Collins. Thank you very much, Mr. Chairman.
        Secretary Iselin, first, let me tell you that I'm very
    pleased to see that the President's budget request includes
    funding for three important projects at the Portsmouth Naval
    Shipyard in Kittery, Maine.
        This shipyard is considered the gold standard. It's the
    most productive of our four public shipyards. I can say that
    not only because it's true but there are no other members here
    representing the other three who could contradict that
    statement. But it is, indeed, the case, and we're very proud of
    that.
        I particularly am pleased to see that funding of $27
    million has been requested to replace the medical and dental
    clinic. That facility is over 100 years old, and it does not
    meet standards for safety, for accessibility. And it does not
    allow for a smooth and efficient delivery of services, as you
    might imagine, given the age of the building.
        So I just want to go on record in support of those three
    projects, and thank you for including them and recognizing
    their importance.
        I do want to bring up a longer range issue that is of
    concern to me. We all know that fleet readiness is a key
    component of our Navy's capability to project power and deploy
    assets. Our Nation's four public shipyards ensure this
    readiness as they restore, repair, and modernize ships and
    submarines at dry docks.
        According to NAVSEA and the Navy Shore Mission Integration
    Group, however, naval shipyard dry dock capacity is inadequate
    to service future fleet maintenance needs. And my concern is,
    without this capacity, the readiness of our ships and
    submarines is placed at risk, and we will be left vulnerable,
    particularly as we look at what China and Russia are doing.
        So to respond to these threats, we must invest in dry
    docks, a critical component of fleet maintenance.
        The necessary levels of investment in those dry docks is
    currently estimated at $2 billion divided among the four public
    naval shipyards.
        Can you give us some concept of how the Navy plans to fund
    these future requirements and ensure that dry docks are
    available and properly maintained, and able to keep our fleet
    operationally ready and strong?
        Mr. Iselin. Yes, ma'am.
        First, thanks for your compliment on supporting the funding
    for those facilities at Portsmouth. I was stationed there over
    30 years ago and have fondness in my heart. I had a broken
    thumb set at that medical facility, and it was old then and
    it's older now. So we're happy to be able to make those
    investments.
        As to your broader question about dry docks and really
    shipyard facilities writ large, we recognize those are critical
    assets.
        There's a finite number of those around the Navy, and we
    pay close attention in our fiscal year 2017 request. Although
    it's not overtly visible to you, we have over $70 million
    targeted for repair projects, six repair projects at the dry
    docks, some at each of those four public shipyards.
        To the bigger question about how we are going to get after
    the $2 billion backlog, know that we prioritize shipyards and
    their maintenance.
        During the last couple of years, particularly during the
    days when we were at furlough, the Navy leaders recognized very
    directly the importance of ship repair capability. We had
    weight handlers who operated cranes at a shipyard unable to
    come to work because of a furlough, and we ended up with four
    star senior leaders directly managing people's days on and days
    off to make sure that we met the ship repair capability,
    because that has direct implications on operational readiness.
        So we know where our challenges are. As I mentioned, in my
    opening remarks, we have a very good system of understanding
    what our critical facilities are. Dry docks clearly are at the
    top of the list, and we know the condition of them. And the
    challenge will be to prioritize those facilities along with
    everything else as we spend the dollars that we have.
        I mentioned senior leader's awareness. I've been involved
    in this business for a long time, and it's an unprecedented
    level of attention by the Secretary of the Navy, the Chief of
    Naval Operations (CNO), and the Commandant on the challenges
    that we're describing here today. So I feel comfortable that
    the senior leaders are paying close attention on where to make
    the best investments that we can.
        Senator Collins. Thank you very much for that thorough
    response, and please know that you are welcome back to Kittery,
    to the shipyard, at any time.
        Mr. Iselin. Yes, I was up there last year, and I was really
    pleased to see how far it's come over the last couple of
    decades, and the pride that the workforce has in what they do.
        Senator Collins. That pride is really evident, and I'm very
    proud of the workers there. Thank you so much.
        Senator Kirk. Senator Murphy.
        Senator Murphy. Thank you very much, Mr. Chairman.
        Welcome, to all of our witnesses.
        Mr. Iselin, I'm going to stay with you. I have the same
    pride that Senator Collins does in representing the Navy's
    first submarine base in New London, Connecticut, and I can say
    the finest base, so long as Senator Schatz is not here.
        And Senator Wicker and I got the real honor about 2
    weekends ago to actually spend 24 hours on board the USS
    Hartford as it conducted operations in and around the Arctic
    Circle. And of course, as always, I was incredibly impressed
    with their skill and professionalism.
        But as you are aware, we have committed through the
    Appropriations Committee process along with the Navy to
    continuing the two Virginia-class submarines, build a year
    while simultaneously integrating the new Virginia payload
    module into the Block V submarines starting in 2019. And as you
    also know, these new Virginia-class submarines are going to be
    a lot bigger than the existing Virginia-classes and the Los
    Angeles class submarines.
        And so I wanted to ask you about how our military
    construction budget is going to keep pace with this increase in
    the number and the size of Virginia-class submarines.
        Specifically, in New London, Pier 32 needs to be upgraded
    in order to meet this new requirement starting in 2019. And I'm
    hoping that you can maybe speak even more generally to the
    necessary upgrades that are being planned and the needed
    military construction projects that are in the budget over the
    next few years to make sure that we have the capacity to deal
    with this increase in both volume of production but also size
    of the submarines.
        Mr. Iselin. Yes, sir. Thanks for your question.
        And I was fortunate to make a visit up to Sub Base New
    London last year as well and got a great tour from the
    installation commander and the staff there who are responsible
    to look after those very situations.
        And I agree with you. We have challenges with the condition
    of that pier, and that will factor into our future investment
    plans. Certainly, a pier to support nuclear submarines is high-
    priority item.
        And as it relates to the Virginia payload module and the
    changes in the size and the nature of submarines as a result,
    that will factor in. The installation team has a long-range
    plan to make adjustments to the infrastructure to accept that
    new platform, and that will factor into future planning
    initiatives.
        Senator Murphy. We look forward to working with you to make
    sure that that plan stays on track.
        The second question for you as well, I certainly understand
    that you're going to support the broader request from the
    Department for a BRAC. But I wanted to ask you as to the Navy's
    very specific disposition. The immediate past CNO Admiral
    Greenert said in earlier testimony very clearly that the Navy
    didn't believe that it had a need for base closures or for a
    BRAC process.
        He said, ``I'm very satisfied with our lay down of bases.
    People ask me do you see a great need for BRAC, I say, no, I
    don't.''
        And so I understand you'd be supporting the broader
    request, but has the Navy's disposition changed in terms of its
    need for a base closure process?
        Mr. Iselin. Thanks for that question and you assume
    correctly. We do support the Department's request for BRAC. I
    would say, on a high level, we have much less excess
    infrastructure capacity than the Army or the Air Force.
        We played very aggressively in prior rounds of BRAC to try
    to get to the right size. We've had the benefit, unlike the
    other services, of having less fluctuation in our force
    structure over time, including the projected force structure.
        And so we look forward to completing the required capacity
    analysis, and if a BRAC is authorized, we'll, of course,
    participate in that process. But I think our challenge is less
    severe than the Army or the Air Force.
        Senator Murphy. Okay.
        Thank you very much, Mr. Chairman.
        Senator Kirk. Senator Boozman.
        Senator Boozman. Thank you, Mr. Chairman.
        Ms. Hammack, tell us about the excess infrastructure in the
    Army.
        Ms. Hammack. Thank you for that question.
        Currently, the Army has approximately 18 percent excess
    infrastructure. As force structure continues to decline, we
    will have 21 percent excess infrastructure when we reach a
    total force of 980,000. That amounts to over 170 million square
    feet of unutilized or underutilized facilities.
        As we've reduced our force, quite often, we see buildings
    that are partially occupied. One of the things a BRAC offers us
    is the ability to consolidate into our best facilities and
    consolidate missions, and that's why we are asking for BRAC
    authority.
        The previous rounds have consolidated about 5 percent of
    our infrastructure, and we anticipate that this next round of
    BRAC would do the same: Consolidate about 5 percent of our
    existing 21-percent excess, so that we would retain some
    capacity for surge or other unanticipated requirements.
        Senator Boozman. For the panel, if Congress were to grant
    you the ability to go forward with BRAC, can you tell us what
    you learned from the last BRAC that we did, some of the things
    that we should have done better?
        Mr. Potochney. I'll start, if I could.
        Senator Boozman. Yes, sir, if you would.
        Mr. Potochney. Congress was rightly concerned about the
    cost growth from the last round. We had anticipated around $22
    billion in cost, and we came in at $35 billion. Some of that
    was attributable to fact-of-life things. We had a Katrina
    effect that put our construction materials through the roof.
    Environmental cleanup is an issue that we have to handle
    carefully in BRAC, those kinds of things.
        But, we, frankly, used the last BRAC round as a
    recapitalization engine and as a transformation tool, so that
    we weren't just skinning down excess capacity in place. We were
    actually looking more broadly. And that's expensive, but it
    does position us for the future.
        What we're saying to you all now is that we're looking at
    the next round being an excess capacity round to reduce our
    costs. So that is, if you will, to use your words, a lesson
    that we've learned.
        I would argue, though, that the transformation that was
    accomplished in the last round was absolutely worthwhile, at
    least in my judgment and others as well. But as far as a tool
    to reduce our infrastructure and save money directly, excess
    capacity is the way to go, and that's what we're looking at
    now.
        Senator Boozman. Ms. Hammack.
        Ms. Hammack. Let me comment on that.
        One of the things that the Army learned is that the Reserve
    component has an opportunity to participate in BRAC, which they
    did for the first time in 2005: They closed 387 facilities,
    consolidating into 125 new readiness centers, which were shared
    by Guard, Reserve, and, quite often, other Federal agencies
    like the Fish and Wildlife Service or Department of the
    Interior Bureau of Land Management.
        So the National Guard found that it increased their
    capabilities and reduced their costs, and, just like the Active
    Duty and the industrial base, found that there are significant
    opportunities for efficiencies to save money and prepare us for
    the future.
        Senator Boozman. Very good.

                           AIR FORCE--2005 BRAC ROUND

        Ms. Ballentine. I would like to add that for the Air Force
    in the 2005 BRAC round, it really was a good money-saving
    exercise, as well as a good transformational exercise. The 2005
    round cost the Air Force about $3.7 billion, and we're saving
    $1 billion a year. That's a pretty good return from the
    business perspective.

                     EUROPEAN INFRASTRUCTURE CONSOLIDATION

        I would also encourage all of us to look at our recent
    European infrastructure consolidation as a strong process. We
    would seek to replicate many of the elements of that process in
    the next round.
        It was very much focused on savings for the Air Force.
    We're doing nine actions in Europe, and we'll save considerable
    money with zero loss of operational capability. It really was
    designed to find ways to be as or more operationally capable
    from lower cost, fewer installations.
        So I would encourage us to look at both, the most recent as
    well as prior, to get the best lessons learned.
        Thank you for the question, sir.
        Senator Boozman. Thank you.
        Mr. Iselin. Sir, I don't have anything additional to add. I
    think they've covered it.
        Senator Boozman. Good. Well, that worked out perfectly or
    the chairman would yell at me, because my time is up. So thank
    you all very much.
        Thank you, Mr. Chairman.
        Senator Kirk. Senator Murkowski.
        Senator Murkowski. Thank you, Chairman. I appreciate you
    letting me jump in here.
        I would like to start my questions and direct them to you,
    Assistant Secretary Ballentine.
        As you know, we had a pretty good start of the week in
    Alaska, particularly in Fairbanks, with the announcement of the
    record of decision (ROD) assigning the two squadrons of F-35
    aircraft to Eielson Air Force Base. With a signature of that
    ROD, we are really very excited for a host of different
    reasons. This is the first F-35A beddown in the crucial Pacific
    area of responsibility (AOR).
        The administration has requested $295.6 million in fiscal
    year 2017 to construct seven different projects there at
    Eielson.
        Can you please speak to the importance of this week's
    decision and explain why it is essential that this subcommittee
    fully appropriate the administration's request in the 2017 bill
    and how any possible delay in appropriations could adversely
    affect the beddown of these two squadrons there at Eielson?

                       F-35A BEDDOWN--2017 MILCON PROGRAM

        Ms. Ballentine. Thank you, Senator.
        This is a very short, straightforward answer. It's
    absolutely critical that the full fiscal year 2017 MILCON
    program that we submitted is funded this year.
        With the current timing of the beddown of the first
    aircraft for both Squadron 1 and Squadron 2, if we do not fully
    fund this MILCON program, we will be late to need.
        And in an environment like Alaska with very harsh winter
    conditions, it's very difficult for us to create mitigations if
    we don't have the proper facilities.
        In fact, as you also know, we announced a swap of timing
    for the first squadron with Burlington, Vermont, which in many
    ways helps to solve some problems that we had previously where
    we would have been late to need.
        So it's absolutely critical with this current timing that
    we get all of this program funded for both squadrons.
        Senator Murkowski. And also, we had discussed the reality
    that we have a limited construction season in Alaska. You just
    can't be doing all this outside work 365 days out of the year.
    So the timing on this is critical.
        Ms. Ballentine. Yes, ma'am.
        Senator Murkowski. Thank you. I appreciate that and would
    certainly encourage the subcommittee to take very seriously the
    Assistant Secretary's words here.
        Finally, to Assistant Secretary Hammack, this relates to
    the $47 million for a hangar to house the Gray Eagle unmanned
    aerial vehicles at Fort Wainwright. Anything you would like to
    say in support of this request? And, again, in terms of the
    timing, a very important asset there in the interior as well.
        Ms. Hammack. Absolutely, and thank you for that question.
        I echo Secretary Ballentine. It's critical that we get the
    money. The vehicles, some are already there in adequate
    facilities. We need the money so that we can progress within
    the planned timeframe so that we have the ability to both work
    on the equipment, maintain, repair, and do the appropriate
    training that Alaska affords to our soldiers.
        Senator Murkowski. Thank you. I appreciate that.
        And I understand, Mr. Chairman, that you had already
    directed a question regarding the Long-Range Discrimination
    Radar, the significance of that, why it's essential that we
    provide for the administration's request on that. So I
    appreciate that, and I also appreciate your commitment to that
    at Clear.
        My final comment would be not directed to any of you
    necessarily at the table, but I know that General Halverson is
    with us today, and I know that you have been invited to join us
    up in Fairbanks perhaps for the military appreciation event
    coming soon, and I know that that is something that is under
    consideration. So I saw you in the audience there and just take
    the time to do that.
        Thank you all for your commitment to ensuring that as we
    advance these priorities around the Nation, that we do so in a
    timely and efficient manner.
        Thank you, Mr. Chairman.
        Senator Kirk. Senator Baldwin.
        Senator Baldwin. Thank you, Mr. Chairman.
        High-quality installations like the Wisconsin Air National
    Guard Truax Field, which is home to the 115th Fighter Wing,
    rely on adequate capital investments to ensure readiness and
    support mission success.
        The 115th is under consideration to be one of the new
    National Guard homes of the F-35 with aircraft fielding in
    2022. I expect it to be a very strong competitor for a number
    of strategic, geographic, and economic reasons.
        So I'm pleased that this year's budget includes a fiscal
    year 2019 project at Truax to improve the condition of the
    facilities used by the 115th medical group. It's a subunit,
    obviously, of the 115th. This project is the number one
    priority of the Wisconsin National Guard and will support the
    training of medical professionals assigned to that unit, the
    medical readiness evaluation of military members assigned, and
    a domestic operations capability.
        Secretary Ballentine, projects in the Future Year Defense
    Program (FYDP) sometimes are moved forward and sometimes are
    pushed back, as the Department builds it budget request.
        Considering that by the time this fiscal year 2019 project
    breaks ground, there will not have been an Air Force MILCON
    project in Wisconsin for a whole decade, I strongly believe
    that this project must not be delayed.
        Can I have your commitment on that?
        Ms. Ballentine. Thank you, ma'am.
        We do our best to prioritize our mission-critical, worst-
    first facilities for our existing facilities. Our existing
    facilities MILCON budgets are highly, highly strained. Of the
    500 top priorities submitted by our major command commanders
    this year, we only were able to fund 30.
        So it's a very difficult budget environment for those
    existing facilities, and I think we've heard that a lot today.
        So we certainly do hope that everything that's in the
    current program will stay in the program, and we will continue
    to prioritize mission critical worst-first.
        I also thought I would just touch on the timing for the Ops
    5, 6, and 7 F-35 beddown strategic basing process, which you
    mentioned. We will be announcing later this month the
    enterprise definition as well as the criteria, and then we'll
    go into the scoring period of time.

                                 MILCON BACKLOG

        This summer, we hope to approve the candidates and then
    begin site surveys and hope to be able to announce a preferred
    and reasonable alternative this fall.
        Senator Baldwin. Thank you.
        Secretary Hammack, your testimony notes that the fiscal
    year 2017 request for the Army National Guard is a small step
    toward addressing the Guard's facility challenges, and I
    appreciate your candid assessment of the request and share your
    concerns with the critical facility shortfalls in the Guard's
    readiness center portfolio.
        The Wisconsin Army National Guard has a 40-percent facility
    shortfall that directly and significantly affects readiness,
    recruiting, and equipment management.
        My question to you is how can we take bigger steps toward
    fixing the problem, particularly in this tight budget
    environment? And specifically, how can the Army support the
    funding levels called for by the readiness center
    transformation master plan?
        Ms. Hammack. I would love to say that there is a solution
    but the best solution is to lift sequestration. With the budget
    constraints we're facing, we're having to balance readiness and
    the missions that are asked of the Army against installations.
    When we look at manning the Army, training the Army, and
    equipping the Army, there is very little left for supporting
    installations and supporting readiness centers.
        So we do our best with the limited funding we have, but we
    have a tremendous backlog in military construction requests,
    just like the Air Force. We have a tremendous backlog in
    maintenance requirements, restoration, and modernization
    requirements. It amounts into the tens of billions of dollars
    currently, and is only going to grow with time.
        So we are taking significant risk in installations and
    creating a bill for the future by the underfunding that we are
    forced to live with in this restricted budget environment.
        Senator Baldwin. I know my time is about to run out. Let me
    just note that as a total force training center, Wisconsin's
    Fort McCoy plays a crucial role in the training and
    mobilization of our Armed Forces, ensuring that service members
    are fully prepared to respond to any contingency. And as such,
    it's critical that the Army continues to invest in Fort McCoy,
    maintaining the installation's ability to support the readiness
    and quality of life of our soldiers and their families.
        I'm pleased that the budget does include three projects for
    Wisconsin's Fort McCoy, including a fiscal year 2017 project to
    construct a new dining facility to support mobilizing and
    training soldiers. I will ask you to submit any extra comments
    for the record as I run out of time.

                                   FORT MCCOY

        But, Secretary Hammack, if you can expound in the future
    about how this budget reflects a strong recognition by the Army
    that Fort McCoy is essential, not only to the Reserves, but to
    the total force.
        And I thank the chairman.
        Ms. Hammack. Just a brief reply on that, Senator Baldwin.
    Fort McCoy is a strategic training asset for the total force.
    When I was last there, we had Active Duty from Fort Drum
    training with Guard and Reserve together, training in a
    realistic environment, and training the way we fight, and that
    is a great thing. The three projects that were included in our
    fiscal year 2017 budget request, together with the 17 projects
    (totaling $223 million) provided over the last 10 years, are a
    clear testament to the Army's recognition of Fort McCoy as an
    essential training platform for the total force.
        Senator Kirk. Senator Cassidy.
        Senator Cassidy. Thank you, Mr. Chair.
        Assistant Secretary Ballentine, we spoke yesterday. Thank
    you for coming by. Reflecting on our conversation, you
    mentioned the need to buy back some force, that the force
    reductions have been such that now you all need to bring folks
    back in. Knowing that you're in a rock and a hard place,
    nonetheless, I'll emphasize the quality-of-life issues that you
    said in this budget are somewhat deemphasized. If you're going
    to buy back folks in, it just seems as if they would want to
    have daycare or such like that, if they're going to rejoin,
    knowing that you know that, but just to make that point.
        Ms. Hammack, knowing, again, that you all are having to
    prioritize that which is important, and as you might guess,
    being from Louisiana, I'm very sensitive to the Fort Polk
    issue, that combat training center. It's fair to say that as
    you all prioritize, you'll recognize the importance of combat
    training centers and the need to modernize the joint readiness
    training centers such as at Fort Polk?
        Ms. Hammack. Yes, sir, and we do prioritize. Our highest
    value goes to training land, airspace, and testing ranges, and
    Fort Polk is a great training environment. But we do have a
    backlog in construction, and so that's one of the challenges
    finding enough money to suit all of our requirements.
        We are going to be investing there, but it is out in the
    future years.
        Senator Cassidy. Combat readiness though is almost by
    definition--it seems to be the number one priority of the Army,
    to be ready for combat. So that's why I just advocate, not just
    as a fellow from Louisiana, but as someone who wants to see our
    troops ready, less likely to be harmed, more likely to affect
    their mission, to have that at the highest priority.
        You also, in your testimony, speak at length regarding the
    Army's green energy initiative. And you suggest but don't
    outright state that the investment has paid for itself. Has it?
    Because it seems as if it's one thing to say that the cost of
    electricity from a renewable is cheaper than that which you can
    buy off the grid, but it's another to say that once you factor
    in the cost of the installation of the infrastructure and the
    maintenance, that it is still cost effective. So, thoughts?

                                RENEWABLE ENERGY

        Ms. Hammack. Absolutely, Senator.
        That is why we're not investing Army money in it. The
    private sector is designing, building, owning, operating, and
    then delivering us the energy at a lower cost than would
    otherwise be available.
        Senator Cassidy. What I find interesting though is that
    you're accomplishing that which others have not, unless they
    are using the other Federal subsidies that go with green
    energy. Am I to presume that this energy being received is
    taking advantage of Federal tax credits? Because otherwise,
    green energy typically is not cheaper all in than is
    conventional, if you will, electricity.
        Ms. Hammack. Many of them are taking advantage of Federal
    tax credits, but we have seen the cost of renewable energy
    decrease whether it's wind, solar, or biomass, it has decreased
    in all areas. That's why it's a good business decision to have
    the private sector invest money, because they have to be able
    to make money out of it, yet deliver us energy at or lower than
    current energy costs.
        Senator Cassidy. I see that. But at all-in cost to the
    Federal taxpayer. We also have to consider the cost of the
    production tax credits or whatever. So granted, it offloads off
    you, but it's still on the Federal budget.
        I just say that not to accuse or to challenge, but just to
    understand. In a sense, this is a stackable payment.
        Okay. I get that.
        I yield back. Thank you.
        Senator Kirk. Senator Schatz.
        Senator Schatz. Thank you, Mr. Chairman.
        With the exception of our longstanding commitments to the
    Republic of Korea and Japan, we've largely had a ``places, not
    bases'' defense posture in the Asia Pacific. But our footprint
    is changing, and we have marines in Darwin for half of the year
    as part of a broader realignment in the region. We also have a
    new, enhanced defense cooperation agreement with the
    Philippines where we look to bring rotational forces.
        And while this doesn't mean new bases, it does mean new
    infrastructure to store equipment and support training.
        So my question for Secretaries Hammack, Iselin, and
    Ballentine is, how do you see the overseas MILCON evolving in
    light of increasing requirements and increasing partnerships in
    the Asia Pacific region, in addition to what's happening in
    Korea and Japan?

                                  COST SHARING

        And we'll start with Secretary Hammack.
        Ms. Hammack. Thank you, Senator Schatz, for that question.
        One of the things we are evaluating is working very closely
    with our allies and partners over there to leverage their
    resources and their capabilities and their bases for storage,
    so that we can reduce the cost of partnership and joint
    training exercises. A lot of that is under development right
    now.
        Senator Schatz. Are you talking about actual cost-sharing
    or are you talking about sort of leveraging assets that they
    already have in terms of physical plant and land?
        Ms. Hammack. All of the above.
        Senator Schatz. Okay.
        Ms. Hammack. That's the Army strategy.
        Mr. Iselin. Senator, thank you for that question.
        I can't speak specifically to the Philippines because I'm
    not yet read up on those issues. I know that we've recently had
    an agreement to go to five locations there. I think the
    predominance were either Air Force or Army support.
        But in Darwin, there's ongoing intergovernmental
    discussions about cost-share arrangements, and those aren't
    completed yet. So until those are done, I can't comment on
    specifics.
        Certainly, it's in our interests to ensure that there's a
    fair cost-sharing agreement in place, such that we're not
    carrying an undue burden.
        Ms. Ballentine. Senator, the first leg to the Air Force's
    three-legged military construction stool is to ensure that we
    are supporting the combatant commanders' (COCOM) military
    construction requests. And this year, the COCOM support in our
    MILCON budget is about $293 million, $131 million of that is
    for Pacific Command (PACOM) projects. And when we look across
    the FYDP, there are 19 projects in the FYDP to the order of
    $566 million.
        The shift to the Pacific is important to our Nation. It
    certainly is important to the Air Force and is reflected in our
    budget.
        Senator Schatz. Thank you.
        And, Mr. Potochney, where are we with cost-sharing
    arrangements, given these new enterprises?
        Mr. Potochney. Some of them are in negotiation, as you
    heard, in Australia. But I would highlight what we're doing in
    Guam. It's almost a $9 billion effort. The Japanese are going
    to contribute about a third of that, as well as building the
    Futenma replacement facility, which is completely at their
    expense.
        So there is a fair amount of participation here with our
    allies.
        Senator Schatz. Essentially, the Department expects cost-
    sharing in some form or fashion wherever we are, whether it's a
    base or rotational force. Is that fair to say?
        Mr. Potochney. Yes.
        Senator Schatz. Okay.
        Mr. Potochney. Subject to negotiations.
        Senator Schatz. Sure. I understand it's all negotiated.
    Some of it is already done, and some of it is pending, and some
    of it is in the future.
        Mr. Potochney. Right.
        Senator Schatz. I wanted to talk about the area cost
    factor. In Hawaii, it costs more than twice what it does to
    construct a military facility in most places than on the
    mainland. And I often hear my local commanders say that the
    area cost factor makes it more difficult for certain projects
    to compete in the budget process.
        Obviously, mission essential projects are going to compete
    reasonably well. But I worry that others, such as quality-of-
    life and infrastructure improvement projects are getting pushed
    to the right or cut entirely.
        Mr. Potochney, what guidance has the Department given
    military services about weighing area cost factors when
    determining which MILCON projects should be included in their
    budget requests?
        Mr. Potochney. It is what it is. If it costs us $120 to
    build something in Hawaii that might cost $100 on the mainland
    but we need it, it competes for the investment dollars that we
    have.
        Senator Schatz. Right. If it is absolutely mission-
    critical, I have no doubt that we get it, because that's
    essential. The question becomes if you're talking about the $3
    million cap in sustainment, restoration, and modernization
    (SRM), if you're talking about something that is not absolutely
    mission critical, I fear that places like Alaska, places like
    Hawaii, get harmed in that process because things get pushed to
    the right.
        Is that not a concern I should have?
        Mr. Potochney. I think that from what I've seen, based on
    my experience, is it's worst first. So if we need something,
    the need competes, and then the resources compete as well. So
    there is no policy that we put out saying, for instance, let's
    say with one area, the cost factor is twice as much as somebody
    else, they should only get half the projects that they need.
        However, the fact is, if it's more expensive to build
    something somewhere, it's tougher to allocate resources to do
    that. There's nothing anybody can do about that.
        But I think, though, that we do have, at least in my view,
    a fair, equitable, worst-first process.
        Senator Schatz. Thank you.
        Senator Kirk. Senator Hoeven.
        Senator Hoeven. Thank you, Mr. Chairman. I'd like to thank
    you and the ranking member for calling this hearing today. I
    appreciate it.
        And to all of our witnesses, thank you for being here, and
    thank you for the good work you do.
        My questions are for Assistant Secretary Ballentine. Thanks
    for being here and, again, for our conversations that we've had
    on some of these issues previous to this hearing.
        But my first question goes to acquisition of helicopters
    for the missile fields, the three bases that have missile
    fields, Minot, Malmstrom, and F.E. Warren. Our airmen and -
    women are still flying Huey helicopters vintage 1969.
        They're doing an amazing job, but we need new helicopters.
    We have the authorization. We have the funding. Now Air Force
    is working through the process of getting them.
        We hope Air Force will piggyback on an Army existing
    contract, which went through the bid process, so that we can
    get Blackhawks by 2018 versus 2020 or 2021, if they have to
    start the whole bidding process over again separately.
        What we think Air Force may do is bifurcate that and, at
    least for the missile fields, go ahead and work with Army. And
    then they can go ahead through a bid process for the other
    helicopters, and that would help meet our need.
        But it would necessitate some MILCON, probably in 2017, to
    house the Blackhawks, because the existing facilities aren't
    large enough.
        Now Senator Tester, being really sharp and on the ball, is
    ahead of the rest of us, so I think Malmstrom is starting in
    2017 or they have made arrangements. But certainly for Minot
    and F.E. Warren, we would need some help there.
        So I'm asking what you think the prospects might be to do
    that.

                            UH-1N REPLACEMENT MILCON

        Ms. Ballentine. Thank you, Senator. I would say that you're
    correct, that the current MILCON program to support the
    recapitalization of the helicopter is based on our current
    strategy for acquisition. If that strategy were to change, if
    the Secretary were to change her strategy for acquisition and
    move the acquisition to the left in any way, we would need to
    relook at the out-year military construction programs and/or
    find mitigations for the in-between time when the helicopters
    arrive and when the facilities would be prepared.
        Senator Hoeven. Right. We'll know here pretty soon. I'm
    hopeful, again, working with Senator Tester and others, we get
    this done. It's important, I think, for our security police out
    there.
        So we'll know soon, and then we'll come back to you and
    just ask that you work with us on it. We'll obviously try to
    help make it happen.
        Ms. Ballentine. Yes, sir, of course. Thank you.
        Senator Hoeven. The next question really goes to the KC-46
    basing decision. It'd be Main Operating Base 4. I anticipate
    you are starting that process.
        Could you tell me about the timeline and anything you can
    about the process you'll be going through for that basing
    decision?

        KC-46 STRATEGIC BASING PROCESS--MAIN OPERATING BASE FOUR BEDDOWN

        Ms. Ballentine. Yes, sir.
        So in January of this year, we announced the enterprise
    definition and the criteria for Main Operating Base 4 beddown
    of the KC-46. The criteria are the same as prior rounds.
        We expect in the spring we will have the candidates
    approved. We are going through the scoring process of the
    enterprise currently as we speak. And we expect, in the next
    couple of months, we will have the candidates identified for
    site visits.
        Once those site visits are complete, we would anticipate
    that this coming winter, the winter of 2016-2017, the Secretary
    will be able to make a preferred and reasonable alternatives
    decision.
        Then, of course, we need to go through the National
    Environmental Policy Act (NEPA) process, which puts us into the
    winter of 2017-2018 for a final basing decision, and we are on
    track for a spring 2020 beddown of the first aircraft arrival.
        Senator Hoeven. So you were ready for that one. Thank you.
    I was trying to make notes. Usually, I keep up really well, but
    that was a great answer. I appreciate it, and I appreciate you
    moving forward the way you are. That's good.
        Along the same lines, my next question relates to remotely
    piloted aircraft (RPA), and I understand now you're looking at
    some basing decisions for RPA. And basically, the same
    question. And then also, what aircraft would you likely be
    considering? And then the same question as far as timeline,
    basing decision, and so forth.

                                RPA WING BEDDOWN

        Ms. Ballentine. Sure, thank you.
        So slightly different timeline for the beddown of the new
    RPA wing.
        As you know, the Air Combat Commander General Carlisle,
    over the course of the last year, recently did a Culture and
    Process Improvement study of the MQ-1 and MQ-9 programs, and he
    recommended a number of changes, including the standup of a new
    wing, which, of course, triggered a strategic basing process.
    So let me just walk through the timeline, just like I did for
    KC-46.
        We intend, in the next couple of weeks here, before the
    spring is out, to be able to announce both the criteria and the
    enterprise definition for the RPA wing beddown.
        And that puts us into the scoring period. And in the
    summer, we will have the scoring completed. That's the plan.
        So we'll be able to announce then the candidates. Then
    once, of course, the candidates are announced, we'll proceed
    with the site visits, which puts us into this coming winter,
    2016-2017 winter.
        We'll be teed up for the Secretary to make a decision for
    her preferred and reasonable alternatives, which then puts us
    into the National Environmental Policy Act (NEPA) process over
    the course of this summer of 2017.
        And we would hope to, over the course of summer 2017-2018,
    depending on how long the NEPA process takes, be able to
    announce the final beddown location or locations.
        Senator Hoeven. Okay, thank you.
        And then just a final comment, and that is that, on the
    Grand Forks Air Force Base, we have the Grand Sky technology
    park. It wouldn't happen without your leadership and the
    leadership of Secretary James, former Assistant Secretary
    Ferguson, and many others.
        So I just want to say to the civilian leadership in Air
    Force, I really appreciate your good work and how you're going
    about getting things done and being creative looking to the
    future, innovative, looking at these public-private
    partnerships, not only to strengthen the force but to leverage
    resources at a time when we need to do it.
        So again, of course, we appreciate the leadership of our
    men and women in the Air Force, General Welsh and everybody
    else. They are fantastic, as they've always been fantastic. But
    I want to make a special point to thank the civilian leadership
    in the Air Force as well. We appreciate it very much.
        Ms. Ballentine. Thank you very much, sir. That's always
    appreciated to hear.
        Senator Hoeven. Thank you.
        Senator Kirk. Senator Tester.
        Senator Tester. Thank you, Mr. Chairman.
        I also want to echo my thanks for all of you being here.
        I'm going to start with you, Mr. Potochney, and it deals
    with the question that Senator Udall raised on a drone that
    crashed over 2 years ago. The cleanup hasn't been done--Navy
    mission, Air Force plane, Army site.
        The thought occurred thought to me, it's been 2.5 years.
    I've got a farm. It's in the middle of an Air Force military
    operations area (MOA)--not in the middle, on the edge of it.
        If the same thing would have happened there on private
    property, would it have been 2 years for the cleanup under the
    same circumstances? I hope not.
        Mr. Potochney. I hope not as well.
        Senator Tester. So what I would say is that you guys are
    three branches of the same arm, and it really kind of worries
    me on different things. I mean, we're fighting a war on terror
    out there. You guys are in the middle of that. And if we can't
    work to do something simple like this, we got problems. So I
    just want to point that out.
        Now I want to talk about the BRAC. All four of you talked
    about BRAC, so just let me ask you a couple questions. And you
    can answer a simple yes or no, or however you want to do it.
        If we do another round of BRAC, will it improve readiness
    or will it take away from our readiness?
        Mr. Potochney. I'd say it will improve readiness, yes. It
    will improve readiness, and I'd be happy to explain why.
        Ms. Hammack. It'll improve readiness for the Army.
        Mr. Iselin. And the Navy wouldn't support any
    recommendation that didn't improve readiness.
        Senator Tester. That's good to know.
        Ms. Ballentine. Absolutely improve readiness.
        Senator Tester. And tell me why, Mr. Potochney.

                                      BRAC

        Mr. Potochney. Well, for one thing, we wouldn't be spending
    money on facilities that we don't need.
        Senator Tester. Okay.
        Mr. Potochney. That's important.
        The second reason is it would allow us to make changes. We
    have an evolving force structure. We have an evolving threat.
        Senator Tester. Yes.
        Mr. Potochney. Technology changes. We need to adapt to it.
    And a periodic review of our infrastructure, I think, is a
    reasonable thing for us to do.
        Senator Tester. Okay.
        For the Army, for a BRAC, do you have any idea on how many
    of your facilities would be mothballed?
        Ms. Hammack. We do not have an idea, sir, as to the number
    of facilities that would be mothballed, but our target would be
    to achieve savings of about $0.5 billion.
        Senator Tester. Over how many years?
        Ms. Hammack. Over approximately a 5- to 6-year period, so
    we would expect a return on investment. It is usually stated
    the kind of return on investment that would be targeted in the
    BRAC round, but this would be an efficiency BRAC round, not a
    restructuring BRAC round.
        Senator Tester. Right.
        Ms. Hammack. We'd be looking at consolidations, which would
    give us this kind of return on investment and position us for
    the future that we envision.
        Senator Tester. Okay. So over 5 or 6 years, in the Army's
    case, you anticipate it would save $500 million.
        Ms. Hammack. And then it would continue to save $500
    million annually.
        Senator Tester. It's $500 million.
        Ms. Hammack. Million dollars, yes, one-half billion.
        Senator Tester. Okay.
        The Navy took severe cuts in previous BRACs. We wouldn't
    even ask that question of you.
        How about the Air Force?
        Ms. Ballentine. I can't tell you specifically the number of
    bases we would or will close in the next round of BRAC. I can
    give you a historic perspective.
        Senator Tester. Yes.
        Ms. Ballentine. We've never closed more than about 8
    percent of our excess capacity, and we've averaged around eight
    bases per BRAC round, some major, some minor. I should say
    averaged eight installations, not necessarily full bases, as
    you think of bases.
        Senator Tester. Right. What kind of savings?
        Ms. Ballentine. Our returns on investment have averaged
    between 3 to 5 years, and we would anticipate at least that
    good this time, because we have such significant excess
    infrastructure.
        We are very supportive of new legislation that would put
    boundaries on high return on investment.
        Senator Tester. Can you give me a dollar figure?
        Mr. Potochney. Sir, if I could add, for the Department?
        Senator Tester. Sure.
        Mr. Potochney. Based on taking the average of the 1993 and
    1995 rounds, which were excess capacity rounds and inflating
    those dollars up, we're looking at saving across the Department
    $2 billion a year after they're implemented.
        Senator Tester. $2 billion a year.
        Mr. Potochney. $2 billion a year, and with an investment of
    approaching $7 billion upfront and then $2 billion a year
    forever.
        Senator Tester. And the $7 billion would be used for
    repurposing?
        Mr. Potochney. For repurposing, building the construction
    at receiving sites, moving people, severance pay, you name it.
        Senator Tester. Okay.
        I do have some issues that are more parochial. I will put
    those forward to you in writing to get back to me. It deals
    with Malmstrom Air Force Base weapons storage facility, what
    Senator Hoeven talked about, about the hangars for the
    helicopters.
        I just have one more question for you, Mr. Potochney, and
    that is, you noted about 12 percent of the DoD facilities were
    in poor condition, 15 percent in failing condition, that one of
    four facilities need major repairs or replacement. Even more
    concerning, you note that a number of facilities slipping from
    poor to failing is going up instead of going down.
        Given the current budget constraints, how does the
    Department plan to reverse the continuing deterioration of
    existing facilities and address them in the near term?
        Mr. Potochney. Through the most astute prioritization
    approach that we can exercise.
        Senator Tester. And do you have that done now?
        Mr. Potochney. We're doing that, and we'll continue to do
    it. It just becomes more important as our budgets go down.
        Senator Tester. Okay. So we're looking at a budget here,
    and you're looking at spending it, which is what your job is
    and it is what our job is.
        Mr. Potochney. Yes, sir.
        Senator Tester. Correct me if I'm out of bounds here, you
    should have a short- and long-term plan for facilities, and
    what kind of monies are needed, and where they're needed moving
    forward. And I am making the assumption, you correct me if I'm
    wrong, that this budget is going to address some of both, some
    of the short-, some of the long-term needs that are out there.
    Is that correct?
        Mr. Potochney. That's right.
        Senator Tester. And do you feel this budget is adequate?
        Mr. Potochney. No, I do not.
        Senator Tester. How much is it inadequate by?
        Mr. Potochney. I think the services can each tell you what
    they need to spend above what they could right now. But I would
    say it's inadequate because we have facilities in failing
    condition.
        Senator Tester. Domestically.
        Mr. Potochney. Domestic and----
        Senator Tester. And international, too.
        Mr. Potochney. Right.
        Senator Tester. Could you get back to me with an idea on
    how much this is--I mean, you told me how much we could save
    with the BRAC. You ought to be able to tell me how much this is
    underfunded. You can do that. I've got head nods behind you,
    and probably at the table, too.
        So if you could do that, I would appreciate that.
        [The information follows:]

        The Department of Defense's goal is to fund facilities sustainment
    at 90 percent of the Facility Sustainment Model forecasted requirement.
    For fiscal year 2017, the Department would need an additional $1.6
    billion to achieve the sustainment goal. Sustainment provides the
    annual maintenance needs of the real property portfolio. It does not
    address the growing backlog of maintenance and repairs that have been
    deferred. The Department's fiscal year 2015 Financial Statement
    reported its Deferred Maintenance and Repair backlog for real property
    exceeds $140 billion.

        Senator Tester. I appreciate your guys' commitment to the
    country. I very much do. And for those of you who served, your
    service to the country. And thank you for being here today.
        Thank you, Mr. Chairman.
        Senator Kirk. Peter, let me just follow up with my top
    priority, making sure that we could withstand or repel a
    missile attack by Iran against the United States.
        My question to you is on the MILCON for Deveselu, Romania,
    which happens to be right underneath the flight path of a
    missile aimed at New York from Iran.
        Mr. Potochney. I'm sorry, sir, the question is?
        Senator Kirk. I wanted to get an update from you on the
    MILCON for----
        Mr. Potochney. Can I do that for the record, sir? I would
    rather give you----
        Mr. Iselin. Sir, I can answer that.
        Senator Kirk. Thank you.
        Mr. Iselin. With strong support from the Army Corps of
    Engineers, those facilities in Romania are complete, and the
    forces are there.
        And your question during your opening remarks about Poland,
    we expect two MILCONs. One has just been awarded, and the other
    will be awarded in a couple of months, to get after the
    facility in Poland.
        Senator Kirk. Anybody else? Anything else, Jon?
        Senator Tester. Just thank you all.
        Senator Kirk. I think we can wrap up.
        Let me thank our witnesses for coming.
        And thanks, Senator Tester. I thank all the members of the
    subcommittee, and say that the record will remain open until
    the close of business on Tuesday, April 13.

                              SUBCOMMITTEE RECESS

        Senator Kirk. And we will stand adjourned.
        [Whereupon, at 11:51 a.m., Thursday, April 7, the
    subcommittee was recessed, to reconvene at a time subject to
    the call of the Chair.]

         MILITARY CONSTRUCTION, VETERANS AFFAIRS, AND RELATED AGENCIES
                      APPROPRIATIONS FOR FISCAL YEAR 2017

                                  ----------

                            WEDNESDAY, JULY 13, 2016

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.
        The subcommittee met at 10:31 a.m., in room SD-124, Dirksen
    Senate Office Building, Hon. Mark Kirk (chairman) presiding.
        Present: Senators Kirk, Hoeven, Boozman, Capito, Cassidy,
    Tester, and Udall.

                         DEPARTMENT OF VETERANS AFFAIRS

    STATEMENT OF HON. LAVERNE H. COUNCIL, ASSISTANT
                SECRETARY FOR INFORMATION AND TECHNOLOGY
                AND CHIEF INFORMATION OFFICER
    ACCOMPANIED BY:
            DAVID W. WALTMAN, CHIEF INFORMATION STRATEGY OFFICER, VETERANS
                HEALTH ADMINISTRATION
            DR. JONATHAN R. NEBEKER, DEPUTY CHIEF MEDICAL INFORMATION
                OFFICER, VETERANS HEALTH ADMINISTRATION

                     OPENING STATEMENT OF SENATOR MARK KIRK

        Senator Kirk. This hearing is to review the Department's
    health record and progress towards full interoperability with
    the Department of Defense (DOD).
        Last year for the first time, the GAO put veterans'
    healthcare on its high risk list for programs that are likely
    to experience fraud, waste, abuse, and mismanagement. The
    Government Accountability Office (GAO) cited information
    technology challenges, one of the five reasons why veterans'
    healthcare was on this list.
        I want to share with you my vision for going forward here,
    that we are aiming for. Whenever a soldier, sailor, airman
    leaves Active Duty and becomes a veteran, we should have a 100-
    percent seamless transmission of their health records to the
    VA.
        Here is a data point. We have about 250,000 servicemembers
    leave the DOD and become veterans every year. That works out to
    about 700 per day, a data flow which is well within the
    possibility of everybody to cover.
        We want to make sure there is a seamless continuity of
    care. I have a friend now who is navigating the Department of
    Veterans Affairs (VA) disability system, she was deployed in
    Iraq, and had 38 separate combat events, and wanted to make
    sure all of those are documented and transferred and are in her
    disability petition.
        Number two, we should also use the combined size of the DOD
    and VA in the marketplace to establish a worldwide standard for
    health medical records, encompassing 22 million people. I
    figure about 2 million come from DOD and 25 million come from
    VA. To have that 27 million people all as a core of people
    covered by one electronic health record (EHR) standard, all
    open source code would allow us to make sure that the industry
    now has one Federal standard.
        The rock candy mountain here is to make sure the system is
    covering so many patients that the industry follows, and we
    make sure the medical record industry is established along the
    lines of a U.S. Code and U.S. standards.
        In my State of Illinois, we have Motorola that made the
    Android System all open source code. Luckily for them, it was
    the right decision. The marketplace developed 70,000 apps for
    the Android system to make it the most flexible and user
    friendly in the world. We want to make sure that open source
    environment allows us to create medical records for people with
    U.S. standards.
        I think we are on our way towards a several billion dollar
    industry now based on this work between DOD and VA.
        I just talked yesterday with the leading company that is in
    this space. They told me when I talked with Judy Faulkner who
    is one of the founders of a company called Epic that now
    employs 5,000 people in Tammy Baldwin's State--they cover a
    vast number of the patients' medical records in my State of
    Illinois.
        She said there are really exciting things in this field to
    gather all those data and do analytics on that. She was
    particularly excited about Epic's sepsis analytics, which she
    said could be traced to the saving of 54,000 lives, patients
    who are liable for sepsis.
        Using these analytics, we could reach a new 22nd century
    level of care for veterans. I want to make sure analytics are a
    deep part of this electronic healthcare revolution that we have
    for VA and DOD.
        Let me turn it over to my good friend, Mr. Tester.

                        STATEMENT OF SENATOR JON TESTER

        Senator Tester. Thank you, Mr. Chairman. Thank you for your
    leadership on this subcommittee. We very much appreciate it.
    Thank you, Secretary Council, and Ms. Melvin, and Dr. Thompson
    for being here today for this hearing, I appreciate the work
    you do.
        We all know and we agree that accountability of VA is
    critically important, whether we are talking about delivering
    quality and timely care or whether we are talking about IT
    initiatives such as electronic health records and scheduling
    systems. We live in the 21st century, and our IT systems should
    reflect that.
        I do look forward to hearing from you about the progress
    made and the challenges involved with VistA, electronic health
    record systems, and other key IT programs. We are obviously
    very interested in the direction VA is heading in terms of
    modernizing VistA, and whether we are talking about going to a
    commercial off-the-shelf system or developing a hybrid of the
    two. Whatever decision is made, we will have long-ranging
    ramifications not only for the VA and veterans but also for the
    American taxpayer who will have to foot this bill.
        Although we are focused on electronic health records, we
    realize that EHR is only one component of a much broader IT
    modernization effort and conversation. Electronic record
    sharing is a great asset for both clinicians and patients, but
    only if the veteran can get an appointment in the first place,
    and that remains a huge challenge for many veterans in my State
    and across this country.
        In fact, scheduling difficulties are the top complaint that
    I hear from folks in Montana, and I hear a lot of them. I can
    tell you that the current system is not going to cut it, so I
    am concerned that the current medical appointment scheduling
    system plan is on hold, if it is not the right plan, then it
    should be revised or replaced, but it cannot be put on the back
    burner. We need to fix it. We need to fix it today.
        So, I look forward to hearing about how the VA is working
    to devise and implement a better plan, and when that will
    happen. Cybersecurity is another urgent priority. As the VA's
    IT system has to provide for greater interoperability among VA
    providers, private sector providers, and the Department of
    Defense, cybersecurity must also evolve and adapt.
        The challenges facing the VA are formidable, and they are
    only going to become more complicated with time.
        I am also a member of the Senate Veterans' Affairs
    Committee, and I am proud that Committee has advanced
    legislation, the Veterans First Act, that includes a lot of
    critical provisions to empower the VA to better serve our
    veterans. As we all know, that bill is being held up, just the
    latest example of Senate dysfunction. Nonetheless, Congress can
    actually be a constructive partner in this effort.
        As the pressure grows on the VA to provide seamless medical
    record sharing and scheduling, I fully expect you to keep us
    apprised of your efforts and your challenges. That line of
    communication is critical as we move forward, and it is
    critical today.
        Again, I want to thank you for your service, and I look
    forward to hearing your testimony. Once again, thank you, Mr.
    Chairman.
        Senator Kirk. Thank you. We want to welcome our witnesses
    here. We have Valerie Melvin, the Director of Information
    Management and Technology Resources Issues at the Government
    Accountability Office; and Dr. Lauren Thompson, Director of the
    DOD/VA Interagency Program Office in the Department of Defense;
    and the Honorable LaVerne Council, with the Department of
    Veterans Affairs, the VA's Chief Information Officer. We also
    have Mr. David Waltman and Dr. Jonathan Nebeker, both with the
    Veterans Health Administration (VHA).
        Let's proceed and have Ms. Council begin.

                  SUMMARY STATEMENT OF HON. LAVERNE H. COUNCIL

        Ms. Council. Chairman Kirk, Ranking Member Tester,
    distinguished subcommittee members, thank you for the
    opportunity to discuss how the Office of Information and
    Technology (OI&T) is transforming technology that we deliver to
    support our veterans.
        I am joined today by Mr. David Waltman, who is VHA's Chief
    Information Strategy Officer, and Dr. Jonathan Nebeker, VHA's
    Deputy Chief Medical Informatics Officer.
        As described in our media review, we have shifted our focus
    to outcomes versus activity by emphasizing transparency,
    accountability, innovation, and team work. We are building on
    the legacy of VHA innovations and maintaining a united
    partnership between medicine and technology. Through
    implementation of a prioritized set of strategic initiatives
    across our now, near, and future time horizons, we are focused
    on providing a consistent high quality experience to our users
    and veterans.
        We are evolving into a dynamic proactive posture. We are
    leaning forward, simplifying and standardizing our
    infrastructure through buy first and Cloud-based delivery
    models, utilizing Cloud-based technology will allow us to buy
    IT services while consolidating our infrastructure and driving
    the market to facilitate innovation.
        Through implementation of our new strategic sourcing
    function, we will be poised to take advantage of a wealth of
    innovation that already exists in the marketplace to reduce
    development overhead costs and speed delivery of services to
    our veterans.
        For the first time, we have IT portfolios in place for all
    administrations. We have filled all of our new IT account
    managers or ITAM positions. The ITAMs keep us connected to our
    partners and ensure that we are meeting their needs.
        I am proud to report that over the last year, VA's OI&T's
    rating was upgraded from 19th to 5th, out of 24 Federal
    agencies, in the recently released OMB Benchmarks for IT
    Customer Satisfaction.
        We have made strong headway toward modernizing how the VA
    does business but we are also recognizing that change is not
    easy and modernization is not a one time act. It requires a
    relentless focus on execution and constant emphasis on
    impactful outcomes.
        In addition, we are transforming OI&T's leadership team,
    with 74 percent of OI&T's executive leadership being in new
    roles or they are new to the agency.
        We are on track with our plans to close 100 percent of the
    Office of Inspector General's (OIG's) 2015 recommendations by
    the end of 2017, of our Federal Information Security
    Modernization Act (FISMA) material weakness, and in July 2015,
    VA had 267,000 accounts with elevated privileges, which allows
    special access to VA systems. We have reduced that number of
    accounts by 95.5 percent, exceeding all original expectations.
        To reduce complexity and manage access, we are
    standardizing our device policy to no more than two devices,
    such as a Smartphone and laptop for each staff member. Since
    March 2015, our team has identified, corrected and remediated
    21 million critical and high vulnerabilities utilizing Nexus
    monthly scans and enterprise patching.
        We have developed an IT/non-IT policy to ensure IT dollars
    are spent appropriately. We have reduced the number of
    applications by 500 percent, closing off any potential path for
    attackers. We have our quality and compliance function, and we
    are finalizing our governance, structure and strategic sourcing
    function.
        OI&T is committed to safeguarding our veterans'
    information, and tools, technology, and people of the highest
    caliber are required. We have increased our cybersecurity
    funding to $370 million, and I would like to thank this
    subcommittee for helping us to fully resource our cybersecurity
    capability for the very first time.
        We recognize that effective cybersecurity requires
    vigilance and a security conscious culture. We take security
    risks seriously. We are addressing all key FISMA findings, and
    we are prioritizing our efforts to close the most critical
    risks first.
        We know that a veteran's complete health history is
    critical to providing seamless, high-quality integrated care
    and benefits. We are happy to say on April 8, we certified an
    interoperative with DOD in accordance with the National Defense
    Authorization Act's (NDAA's) section 713(b)(1), well ahead of
    the December 2016 deadline.
        Last year on July 6, 2015, I was sworn in as the Assistant
    Secretary and CIO of OI&T. After 1 year, I have learned a lot
    about the purpose, passion, and drive it takes to make change
    in a governmental agency. I have also experienced the true grit
    of the people who are dedicated to the mission of serving our
    veterans.
        Mr. Chairman and members of the subcommittee, thank you
    again for the opportunity to discuss our progress with you. I
    look forward to continuing the conversation, and am happy to
    take any questions you might have at this time.
        [The statement follows:]
                 Prepared Statement of Hon. LaVerne H. Council
        Good morning,

        Chairman Kirk, Ranking Member Tester, distinguished members of the
    subcommittee, thank you for the opportunity to discuss the progress
    that the Department of Veterans Affairs (VA) is making towards
    modernizing our information technology (IT) infrastructure to provide
    the best possible service to our VA business partners and our Nation's
    veterans. I will also discuss scheduling, medical record sharing, and
    cyber security initiatives at the Department.
        In order to successfully carry out these major IT initiatives and
    the department's consolidation of community care programs, VA will need
    a digital health platform and IT solutions that will meet the evolving
    needs of our veterans, as well as support our streamlined business
    processes.
        I am joined by Mr. David Waltman, VHA's Chief Information Strategy
    Officer, and Dr. Jonathan Nebeker, VHA's Deputy Chief Medical
    Informatics Officer.
        The Veterans Health Administration (VHA) and the Office of
    Information & Technology (OI&T) are essential partners in delivering
    quality service to our veterans. Meeting the demands of 21st century
    veterans requires an interconnected system of systems, based on a
    single platform, which supports an electronic health record (EHR) as
    one of several components.
        IT plays a critical role in enabling care for our Nation's
    veterans. VA's current EHR modernization efforts focus on delivering
    the tools for clinicians to provide more comprehensive, patient-
    centered care and will support VA's progress to a digital health
    platform.
        We have made substantial progress in delivering new capabilities
    leveraging VistA, the VA Health System's EHR, while also strategizing
    for our future needs. Our efforts to modernize the VA's EHR and our
    plans for the digital health platform are not mutually exclusive. The
    success of the digital health platform is not dependent on any
    particular EHR.
                        vista evolution/interoperability
    Current State of VistA Evolution
        VistA Evolution is the joint VHA and OI&T program for improving the
    efficiency and quality of veterans' healthcare by modernizing VA's
    health information systems, increasing data interoperability with the
    Department of Defense (DOD) and network care partners, and reducing the
    time it takes to deploy new health information management capabilities.
    We will complete the next iteration of the VistA Evolution Program--
    VistA 4--in fiscal year 2018, in accordance with the VistA Roadmap and
    VistA Lifecycle Cost Estimate. VistA 4 will bring improvements in
    efficiency and interoperability, and will continue VistA's award-
    winning legacy of providing a safe, efficient healthcare platform for
    providers and veterans.
        VA takes seriously its responsibility as a steward of taxpayer
    money. Our investments in VistA Evolution continue to make our
    veterans' EHR system more capable and agile. VA has obligated
    approximately $510 million in IT Development funds to build critical
    capabilities into VistA since fiscal year 2014, when Congress first
    provided specific funding for the VistA Evolution program. In addition,
    VA has obligated $151 million in IT Sustainment funds and $110 million
    in VHA funds for VistA Evolution. The VHA funding supports the
    operational resources needed for requirements development, functional
    design, content generation, development, training, business process
    change, and evaluation of health IT systems.
        It is important to note that VistA Evolution funding stretches
    beyond EHR modernization. VistA Evolution funds have enabled critical
    investments in systems and infrastructure, supporting interoperability,
    networking and infrastructure sustainment, continuation of legacy
    systems, and efforts--such as clinical terminology standardization--
    that are critical to the maintenance and deployment of the existing and
    future modernized VistA. This work was critical to maintaining our
    operational capability for VistA. These investments will also deliver
    value for veterans and VA providers regardless of whether our path
    forward is to continue with VistA, a shift to a commercial EHR platform
    as DOD is doing, or some combination of both.
    Interoperability
        We know that a veteran's complete health history is critical to
    providing seamless, high-quality integrated care and benefits.
    Interoperability is the foundation of this capability as it enables
    clinicians to provide veterans with the most effective care and makes
    relevant clinical data available at the point of care. Access to
    accurate veteran information is one of our core responsibilities. The
    Department is happy to report that, thanks to a joint VA and DOD
    effort, on April 8, 2016, we jointly certified, to the House and Senate
    Committees on Appropriations, Armed Services, and Veterans' Affairs
    that we have met the interoperability requirement of the fiscal year
    2014 National Defense Authorization Act (NDAA) Section 713(b)(1). We
    have not stopped our modernization efforts, as we envision further
    enhancements that we know are necessary for greater efficiency.
        For front-line healthcare teams, the two most exciting products
    from VistA Evolution are the Joint Legacy Viewer (JLV) and the
    Enterprise Health Management Platform (eHMP). JLV is a clinical
    application that provides an integrated, chronological display of
    health data from VA and DOD providers in a common data viewer. VA and
    DOD clinicians can use JLV to access, on demand, the health records of
    veterans and Active Duty and Reserve servicemembers. JLV provides a
    patient-centric, rather than facility-centric view of health records in
    near real time. Veterans Benefits Administration (VBA) offices have
    access to JLV and can use it to expedite claims in certain situations.
        As of July 7, 2016, JLV had more than 198,000 authorized users in
    VA and DOD together, including 158,159 authorized VA users. The team is
    authorizing several thousand new users in VA each week. In VA, more
    than 11,000 VBA personnel are authorized to use JLV to help process
    claims.
        The process for granting access to JLV is both simple and secure.
    JLV allows us to monitor access and usage by capturing logins, records
    viewed, activities by users, and transactions per hour. In the interest
    of privacy, security, and safety, JLV is restricted to healthcare
    providers and benefits administrators. Beneficiaries cannot access JLV,
    but this in no way affects their rights to copies of their health
    records upon request. We simultaneously maintain tight controls over
    the system and ensure efficient access to clinicians and benefits
    administrators who need it to do their jobs.
        JLV has been a critical step in connecting VA and DOD health
    systems, but it is a read-only application. Building on the
    interoperability infrastructure supporting JLV, the Enterprise Health
    Management Platform (eHMP) will ultimately replace our current read-
    write point of care application. The current application, called the
    Computerized Patient Record System, or CPRS, has been in use since
    1996. CPRS served VA for many years as an industry leading point of
    care tool for providers, but it has many limitations for modern care
    delivery.
        eHMP will overcome these limitations, and provide a modern web
    application and clinical data services platform to support veteran-
    centric, team-based, quality driven care. eHMP will also natively
    support interoperability between VA, DOD and community health partners.
    We are deploying an initial read only version of eHMP now, and will
    begin deploying eHMP version 2.0 with write-back capabilities in the
    second quarter of fiscal year 2017. Clinicians will be able to write
    notes and order laboratory and radiology tests in version 2.0. eHMP 2.0
    will also support tasking for team-based management and communication
    with improved tracking to ensure follow through on tasks.
        Veterans will benefit from eHMP in several ways. For example, eHMP
    will provide a complete view of a veteran's health history from all
    available VA, DOD and community provider sources of information. This
    will help providers develop a more complete picture of a veteran's
    history, enabling better treatment decisions.
        The veteran's voice will also be front and center in eHMP.
    Veterans' goals and preferences for care will become part of the
    information all providers see. eHMP will also provide a feature
    dedicated to recording and maintaining a veteran's service history,
    including duty locations and what type of work they performed during
    their service. This information could then be used in proactively
    identifying veterans who may be at risk for certain health issues, or
    eligible for medical care based on locations or times in which they
    served.
        Veterans will also benefit from VA care teams who can work together
    more efficiently and effectively using the care coordination and task
    management tools eHMP will provide. For example, if a veteran is
    referred for a particular test or consultation with a specialist,
    workflow management tools in eHMP will ensure the right activities have
    taken place in advance of the referral. This will help reduce wasted or
    unneeded appointments, save time for both veterans and providers. In
    turn, if providers are more efficient, they are able to serve more
    veterans, which will have an overall positive impact on veteran access
    to care. All of these efforts align with the goals outlined by the
    Federal Health Information Technology Strategic Plan 2015--2020 and
    Connecting Health and Care for a Nation: A Shared Nationwide
    Interoperability Roadmap, produced by the Office of the National
    Coordinator for Health Information Technology (ONC) in collaboration
    with VA, DOD and other partners.

        Upon completion, eHMP will support the following capabilities:

      --Veteran-centric healthcare.--eHMP will allow clinicians to tailor
            care plans to specific clinical goals and help veterans achieve
            their healthcare goals.
      --Team-based healthcare.--eHMP will provide an interoperable care
            plan in which clinical care team members, including the
            patient, will understand the goals of care and perform explicit
            tasks to execute the plan. eHMP will also monitor tasks that
            are not completed as specified and escalate them to the
            appropriate team.
      --Quality-driven healthcare.--eHMP will support the diffusion of best
            practices, including evidence-based clinical process
            standardization. eHMP will collect data on how clinicians
            address conditions and power analytics to generate new evidence
            for better care and best practices.
      --Improved access to health information.--eHMP will integrate health
            data from VA, DOD, and community care partners into a
            customizable interface that provides a holistic view of each
            veteran's health records.

        Fundamentally, our efforts to improve information systems are about
    data, not software. Regardless of the software platform, we need to be
    able to access the right data at the right time. Health data
    interoperability with DOD and network providers is important-- but it
    is equally important to understand that this is just one aspect of
    having a comprehensive profile to streamline and unify the veteran
    experience.
        Using eHMP as a tool, healthcare teams will better understand
    veterans' needs, coordinate care plans, and optimize care intensity in
    VA and throughout the high-performing network of care.
                             looking to the future
        Modernization is a process, not an end, and the release of VistA 4
    in fiscal year 2018 will not be the ``end'' of VA's EHR modernization.
    VA has always intended to continue modernizing VA's EHR, beyond VistA
    4, with more modern and flexible components.
        Technology and clinical capabilities must consistently evolve to
    meet the growing needs of our veterans. The VistA Evolution program is
    just that--an evolving capability that is an invaluable part, but not
    the end of VA's EHR modernization.
    Digital Health Platform
        Due to the expansion of care in the community, a rapidly growing
    number of women veterans, and increased specialty care needs, the need
    for more agility in our EHR has never been greater. We are looking
    beyond what VistA 4 will deliver in fiscal year 2018, and we are
    evaluating options for the creation of a Digital Health Platform to
    ensure that we have the best strategic approach to modernizing our EHR
    for the next 25 years.
        The VA healthcare system must keep the veteran experience at its
    core and incorporate effective clinical management, hospital operations
    capability, and predictive analytics. We do not have all of this today
    with VistA.
        To prepare for this new era in connected care, VA is looking beyond
    the EHR to a digital health platform that can better support veterans
    throughout the health continuum. These factors drive the need for
    continuous innovation and press us to plan further into the future.
        The EHR is the central component of the digital health platform.
    However, an EHR by itself does not have all of the capabilities
    required to manage care in the community, respond to the changing needs
    of the veteran population, support clinical management, and provide the
    best overall veteran experience with the VA healthcare system.
        We have conducted a business case outlining our vision for the
    digital health platform. Our goal is to have a modern and integrated
    healthcare system that would incorporate best-in-class technologies and
    standards to give it the look, feel, and capabilities users have come
    to expect in the private sector.
        The digital health platform will be agile, and will leverage
    international open-source standards such as the Fast Healthcare
    Interoperability Resources (FHIR) framework.
        FHIR converts granular health data points into standardized data
    formats already well known to healthcare IT application developers. The
    main goal of FHIR is to simplify implementation without sacrificing
    information integrity. VA is working with standards organizations and
    industry partners to further refine FHIR to allow the level of
    interoperability necessary for the functionality described above.
        Health Level 7 International (HL7), a not-for-profit American
    National Standards Institute (ANSI)-certified standards developing
    organization, developed FHIR. HL7 has produced healthcare data exchange
    and information modeling standards since its founding in 1987. Emerging
    industry practices and lessons learned from previous standards
    frameworks informed HL7's development of FHIR.
        The digital health platform will be a system of systems. It is not
    dependent on any particular EHR, and VA can integrate new or existing
    resources into the system without sacrificing data interoperability.
    One of the digital health platform's defining features will be system-
    wide cloud integration, a marked improvement over the more than 130
    instances of VistA that we have today.
        OI&T and VHA have agreed upon a strategy to guide the formal
    planning of modernizing VA healthcare delivery beyond the conclusion of
    VistA 4 in fiscal year 2018. Our vision calls for a digital health
    platform that will go beyond EHR modernization to create a better
    overall experience for the veteran throughout the continuum of care. We
    continue to work closely with VHA to formulate our approach and apply
    the rigor of formalized program planning, and will keep this
    subcommittee updated as the process unfolds.
                                   scheduling
        We recognize the urgent need for improvement in VA's appointment
    scheduling system. We are evaluating the Veteran Appointment Request
    (VAR) application and the VistA Scheduling Enhancement (VSE) through
    simultaneous pilot programs. We are testing VAR at two facilities. We
    have been testing VSE at 10 locations, and are in the training phase
    for national deployment of VSE.
        VAR is a new veteran facing capability allowing veterans to
    directly request primary care and mental health appointments as face-
    to-face, telephone, or video visits by specifying three desired
    appointment dates. The software allows established primary care
    patients to schedule and cancel primary care appointments directly with
    their already-assigned Patient Aligned Care Team provider.
        We are testing VAR at two facilities in the VA New England Health
    System (Veterans Integrated Service Network (VISN) 1)--the VA
    Connecticut Healthcare System (West Haven) and the VA Boston Healthcare
    System (Jamaica Plain).
        VSE updates the legacy command line scheduling application with a
    modern graphical user interface. This capability reduces the time it
    takes schedulers to enter new appointments, and makes it easier to see
    provider availability. VSE provides critical, near-term enhancements,
    including a graphical user interface, aggregated facility views,
    profile scheduling grids, single queues for appointment requests, and
    resource management reporting.

        Our 10 VSE Initial Operational Capability sites are:

         1.  Charles George VA Medical Center in Asheville, North Carolina
         2.  West Palm Beach VA Medical Center in West Palm Beach, Florida
         3.  Chillicothe VA Medical Center in Chillicothe, Ohio
         4.  VA Hudson Valley Health Care System in New York
         5.  Louis Stokes Cleveland VA Medical Center in Cleveland, Ohio
         6.  VA New York Harbor Health Care System in New York, New York
         7.  VA Salt Lake City Health Care System in Utah
         8.  VA Southern Arizona Health Care System in Tucson, Arizona
         9.  James H. Quillen VA Medical Center in Mountain Home, Tennessee
        10.  Washington, DC VA Medical Center in Washington, DC

        VA schedulers tell us that they need a system focused purely on
    scheduling. VSE and VAR pilots are available now and show positive
    results in meeting the business requirements of our partners. In
    contrast, the Medical Appointment Scheduling System (MASS) project
    includes additional features that add complexity, leading us to put
    MASS on a strategic hold while our team ensures that we meet all
    requirements without undue processing difficulties. VA will carefully
    measure the results of the VSE pilot to determine the best use of
    resources that will meet veteran needs. VA is working hard to ensure
    that every technological tool and improvement makes judicious use of
    taxpayer dollars while providing solutions that support today's
    veterans' needs.
                       enterprise cybersecurity strategy
        OI&T is facing the ever-growing cyber threat head on--we are
    committed to protecting all veteran information and VA data and
    limiting access to only those with the proper authority. This
    commitment requires us to think enterprise-wide about security
    holistically. We have dual responsibility to store and protect veterans
    records, and our strategy addresses both privacy and security.
        In order to achieve and maintain the highest level of security, we
    need the active participation of everyone who accesses VA systems. We
    are providing comprehensive education to ensure that all VA employees
    remain vigilant. We have updated our National Rules of Behavior and our
    annual security training, and we are emphasizing continuous engagement
    with our employees. Information security poses constant challenges, and
    it is only through continuous reinforcement that our employees can
    support us in this battle.
        The first step in our transformation was addressing enterprise
    cyber security. We delivered an actionable, far-reaching, cybersecurity
    strategy and implementation plan for VA to Congress on September 28,
    2015, as promised. We designed our strategy to counter the spectrum of
    threat profiles through a multi-layered, in-depth defense model enabled
    through five strategic goals.

      --Protecting Veteran Information and VA Data: We are strongly
            committed to protecting data. Our data security approach
            emphasizes in-depth defense, with multiple layers of protection
            around all veteran and VA data.
      --Defending VA's Cyberspace Ecosystem: Providing secure and resilient
            VA information systems technology, business applications,
            publically accessible platforms, and shared data networks is
            central to VA's ability to defend VA's cyberspace ecosystem.
            Addressing technology needs and operations that require
            protection, rapid response protocols, and efficient restoration
            techniques is core to effective defense.
      --Protecting VA Infrastructure and Assets: Protecting VA
            infrastructure requires going beyond the VA-owned and VA-
            operated technology and systems within VA facilities to include
            the boundary environments that provide potential access and
            entry into VA by cyber adversaries.
      --Enabling Effective Operations: Operating effectively within the
            cyber sphere requires improving governance and organizational
            alignment at enterprise, operational, and tactical levels
            (points of service interactions). This requires VA to integrate
            its cyberspace and security capabilities and outcomes within
            larger governance, business operation, and technology
            architecture frameworks.
      --Recruiting and Retaining a Talented Cybersecurity Workforce: Strong
            cybersecurity requires building a workforce with talent in
            cybersecurity disciplines to implement and maintain the right
            processes, procedures, and tools.

        VA's Enterprise Cybersecurity Strategy is a major step forward in
    VA's commitment to safeguarding veteran information and VA data within
    a complex environment. The strategy establishes an ambitious yet
    carefully crafted approach to cybersecurity and privacy protections
    that enable VA to execute its mission of providing quality healthcare,
    benefits, and services to veterans, while delivering on our promise to
    keep veteran information and VA data safe and secure.
        In addition, we have a large legacy issue that we need to address.
    In the fiscal year 2017 budget request, VA ha increased requested
    spending on security to $370 million, fully funding and fully
    resourcing our security capability for the first time. We are committed
    to eliminating our material weakness in fiscal year 2017, and these
    funds are enabling those efforts. In addition, VA is investing over $50
    million to create a data-management backbone. I want to thank this
    subcommittee for fully funding the President's request in this area.
           it transformation and enterprise program management office
        OI&T is transforming. Persistent internal challenges exist in
    delivering IT services, and external pressures have compelled us to
    change and adapt. Through the MyVA initiative, VA is modernizing its
    culture, processes, and capabilities to put veterans first, and is
    giving our team the opportunity to make a real difference in veterans'
    lives. This momentum is driving us to transform OI&T on behalf of our
    partners, our employees, and veterans.
        EPMO is building our momentum in OI&T's transformation. EPMO hosts
    our biggest IT programs, including the Veterans Health Information
    Systems and Technology Architecture (VistA) Evolution,
    Interoperability, the Veterans Benefits Management System, and Medical
    Appointment Scheduling System (MASS). EPMO also supports the Federal
    Information Technology Acquisition Reform Act (FITARA)
    requirements.

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        EPMO ensures alignment of program portfolios to strategic
    objectives and provides visibility and governance into the programs.
        For enterprise initiatives, EPMO helps program and project teams to
    better develop execution plans, monitor progress, and report the status
    of these programs and projects. EPMO enables partnerships with IT
    architects for enterprise collaboration and serves as a program/project
    resource for the delivery of enterprise and cross-functional programs.
    This helps identify Shared Services Enterprise Programs and will help
    plan resource requirements with portfolios and architecture.
        EPMO has already produced results. The Veteran-focused Integration
    Process (VIP) is a project-level based process that replaces the
    Program Management Accountability System (PMAS). VIP streamlines IT
    product release activities and increases the speed of delivering high-
    quality, secure capabilities to veterans. VIP is revolutionary because
    it utilizes a single release process--designed to eliminate redundancy
    in review, approval, and communications--that all VA organizations will
    follow by the end of 2016. These releases are scheduled on a 3-month
    cadence--an improvement over the previous 6-month standard--and allow
    greatly needed IT services to be delivered to veterans more frequently.
        VIP reduces overhead and is more efficient and cost effective than
    PMAS. VIP's efficiencies include reducing the review process from 10
    independent groups with 90 people to a single group of 30 people
    focused on ensuring that products meet specified, consistent criteria
    for release.
        VIP focuses on doing rather than documenting, with a reduction of
    artifacts from more than 50 to just 7, plus the Authority to Operate,
    and the shift from a 6-month to a 3-month delivery cycle. Further, as a
    guarantee to our work, EPMO will ensure that product teams stay
    assigned to their projects for at least 90 days after the final
    deployment.
                                   conclusion
        VA is at a historic crossroad and will need to make bold reforms
    that will shape how we deliver IT services and healthcare in the
    future, as well as improve the experiences of veterans, community
    providers, and VA staff. Throughout this transformation, our number one
    priority has and will always be the veteran--ensuring a safe and secure
    environment for their information and improving their experience is our
    goal.
        As with all issues, VA strongly values the input and support of all
    its stakeholders. We realize the vital role they play in assisting us
    in providing timely, high-quality care to veterans, and we look forward
    to continued open dialogue.
        This concludes my testimony, and I am happy to answer your
    questions.

        Senator Kirk. Thank you. We will hear from Valerie Melvin,
    Director, Information Management and Technology Resources
    Issues, U.S. Government Accountability Office.

                        GOVERNMENT ACCOUNTABILITY OFFICE

    STATEMENT OF VALERIE C. MELVIN, DIRECTOR, INFORMATION
                MANAGEMENT AND TECHNOLOGY RESOURCES ISSUES
        Ms. Melvin. Good morning, Chairman Kirk, Ranking Member
    Tester, and members of the subcommittee. Thank you for inviting
    me to testify today. VA's electronic health records system,
    VistA, is essential to the healthcare of veterans, and the
    Department has been taking steps over many years toward
    modernizing the system.
        Also, for almost two decades, it has been working with DOD
    to advance electronic health record interoperability between
    their systems. However, while the Department has made progress
    in these efforts, significant IT challenges have contributed to
    our designating VA's healthcare as high risk, as you mentioned
    earlier.
        At your request, my testimony today summarizes key findings
    and concerns about the Department's efforts based on previous
    reports that we have issued and VA's actions in response to our
    recommendations.
        With regard to electronic health record interoperability,
    we have consistently pointed to a troubled path toward
    achieving this capability. Since 1998, VA has undertaken a
    patchwork of initiatives with DOD to increase health
    information exchange between their systems. These efforts have
    yielded increasing amounts of standardized health data, and
    made an integrated view of the data available to clinicians.
        Nevertheless, a modernized VA electronic health record
    system that is fully interoperable with DOD's system is still
    years away.
        In 2011, VA and DOD announced that they would develop one
    integrated system to replace both Departments' separate
    systems, and thus sidestep many of their previous challenges to
    achieving interoperability. However, after 2 years and
    approximately $564 million reportedly spent, the Departments
    abandoned this plan, saying separate systems with interoperable
    capabilities between them could be achieved faster and at less
    overall cost.
        Yet, as VA and DOD have proceeded on separate paths, we
    have continued to highlight three primary concerns with their
    approach. First, the Departments have lacked outcome-oriented
    goals and metrics to clearly define what they aim to achieve
    from their interoperability efforts. Thus, an important
    question remains as to when VA intends to define the extent of
    interoperability it needs to provide the highest quality of
    patient care, and when the Department intends to achieve this
    with DOD.
        VA concurred with our recommendation that it develop such
    goals and metrics, and subsequently said it is defining an
    approach for identifying health outcome-oriented metrics and
    baseline measurements.
        Second, VA's plan to modernize VistA raises concerns about
    duplication with DOD's system acquisition. The Departments have
    identified 10 areas in which they have common healthcare
    business needs, and a study has identified over 97 percent of
    inpatient requirements for electronic health record systems as
    being common to both Departments.
        Further, despite our recommending that it do so, VA has yet
    to substantiate its claim that modernizing VistA, together with
    DOD acquiring a new system, can be achieved faster and at less
    cost than a single joint system. Thus, an important question
    that remains as to how VA and DOD can continue to justify the
    need for separate systems.
        Finally, while VA has begun implementing VistA
    modernization plans, it is doing so amid uncertainty about its
    approach. A recent independent assessment of its health IT
    raised questions about the lack of any clear advances in the
    Department's efforts over the past decade, and recommended that
    VA assess its alternatives for delivering modernized
    capabilities.
        Nevertheless, the Under Secretary for Health has maintained
    that the Department is following through with plans to complete
    a modernized system in fiscal year 2018, while the CIO has
    indicated that VA is reconsidering how best to meet its needs.
        Thus, with regard to VA's electronic health record
    interoperability and system modernization efforts, uncertainty
    and important questions remain about what the Department is
    prepared to accomplish, in what timeframes, and at what costs.
        This concludes my oral statement. I would be pleased to
    respond to your questions.
        [The statement follows:]
                    Prepared Statement of Valerie C. Melvin

                                 GAO HIGHLIGHTS

        Highlights of GAO-16-807T, a testimony before the Subcommittee on
    Military Construction, Veterans Affairs, and Related Agencies,
    Committee on Appropriations, U.S. Senate.

                             Why GAO Did This Study

        VA operates one of the Nation's largest healthcare systems, serving
    millions of veterans each year. For almost two decades, the department
    has undertaken a patchwork of initiatives with DOD to increase
    interoperability between their respective electronic health record
    systems. During much of this time, VA has also been planning to
    modernize its system. While the department has made progress in these
    efforts, it has also faced significant information technology
    challenges that contributed to GAO's designation of VA healthcare as a
    high risk area.
        This statement summarizes GAO's August 2015 report (GAO-15-530) on
    VA's efforts to achieve interoperability with DOD's electronic health
    records system. It also summarizes key content from GAO's reports on
    duplication, overlap, and fragmentation of Federal Government programs.
    Lastly, this statement provides updated information on VA's actions in
    response to GAO's recommendation calling for an interoperability and
    electronic health record system plan.

                              What GAO Recommends

        In prior reports, GAO has made numerous recommendations to VA to
    improve the modernization of its IT systems. Among other things, GAO
    has recommended that VA address challenges associated with
    interoperability, develop goals and metrics to determine the extent to
    which the modernized systems are achieving interoperability, and
    address shortcomings with planning. VA generally agreed with GAO's
    recommendations.
        View GAO-16-807T. For more information, contact Valerie C. Melvin
    at (202) 512-6304 melvinv@gao.gov.

                           ELECTRONIC HEALTH RECORDS

    VA's Efforts Raise Concerns about Interoperability Goals and Measures,
                     Duplication with DOD, and Future Plans

                                 what gao found
        Even as the Department of Veterans Affairs (VA) has undertaken
    numerous initiatives with the Department of Defense (DOD) that were
    intended to advance the ability of the two departments to share
    electronic health records, the departments have not identified outcome-
    oriented goals and metrics to clearly define what they aim to achieve
    from their interoperability efforts. In an August 2015 report, GAO
    recommended that the two departments establish a timeframe for
    identifying outcome-oriented metrics, define related goals as a basis
    for determining the extent to which the departments' systems are
    achieving interoperability, and update their guidance accordingly.
    Since that time, VA has established a performance architecture program
    that has begun to define an approach for identifying outcome-oriented
    metrics focused on health outcomes in selected clinical areas and has
    begun to establish baseline measurements. GAO is continuing to monitor
    VA's and DOD's efforts to define metrics and report on the
    interoperability results achieved between the departments.
        Following an unsuccessful attempt to develop a joint system with
    DOD, VA switched tactics and moved forward with an effort to modernize
    its current system separately from DOD's planned acquisition of a
    commercially available electronic health record system. The department
    took this course of action even though, in May 2010, it identified 10
    areas of healthcare business needs in common with those of DOD.
    Further, the results of a 2008 study pointed out that more than 97
    percent of inpatient requirements for electronic health record systems
    are common to both departments. GAO noted that the departments' plans
    to separately modernize their systems were duplicative and recommended
    that their decisions should be justified by comparing the costs and
    schedules of alternate approaches. The departments agreed with GAO's
    recommendations and stated that their initial comparison indicated that
    separate systems would be more cost effective. However, the departments
    have not provided a comparison of the estimated costs of their current
    and previous approaches. Further, both departments developed schedules
    that indicated their separate modernization efforts will not be
    completed until after the 2017 planned completion date for the previous
    joint system approach.
        VA has developed a number of plans to support its development of
    its electronic health record system, called VistA, including a plan for
    interoperability and a road map describing functional capabilities to
    be deployed through fiscal year 2018. According to the road map, the
    first set of capabilities was delivered by the end of September 2014
    and included a foundation for future functionality, such as an enhanced
    graphical user interface and enterprise messaging infrastructure.
    However, a recent independent assessment of health information
    technology (IT) at VA reported that lengthy delays in modernizing VistA
    had resulted in the system becoming outdated. Further, this study
    questioned whether the modernization program can overcome a variety of
    risks and technical issues that have plagued prior VA initiatives of
    similar size and complexity. Although VA's Under Secretary for Health
    has asserted that the department will complete the VistA Evolution
    program in fiscal year 2018, the Chief Information Officer has
    indicated that the department is reconsidering how best to meet its
    future electronic health record system needs.
                                     ______

        Chairman Kirk, Ranking Member Tester, and members of the
    subcommittee:

        Thank you for inviting me to testify at today's hearing on the
    Department of Veterans Affairs' (VA) electronic health record system--
    the Veterans Health Information Systems and Technology Architecture
    (VistA)--and the department's progress toward achieving
    interoperability with the Department of Defense (DOD). For almost two
    decades, VA has been working with DOD to advance electronic health
    record interoperability between their systems, in an attempt to achieve
    the seamless sharing of healthcare data and make patient data more
    readily available to healthcare providers, reduce medical errors, and
    streamline administrative functions. Also, for much of this same time
    period, VA has been planning and taking steps toward the modernization
    of its electronic health record system, with the intent of ensuring
    that the department can effectively deliver care for the millions of
    veterans and others that it serves.
        Since 2001, we have issued a number of reports that addressed VA's
    progress, in conjunction with DOD, toward achieving interoperable
    electronic health records between their separate systems,\1\ as well as
    its project with DOD to jointly develop a shared electronic health
    record system.\2\ In addition, we have reported on actions that VA has
    taken with regard to modernizing its electronic health record
    system.\3\ While the department has made progress in these efforts, it
    has also faced significant information technology challenges that
    contributed to our designation of VA healthcare as a high risk area.\4\
    ---------------------------------------------------------------------------
        \1\ GAO, Electronic Health Records: Outcome-Oriented Metrics and
    Goals Needed to Gauge DOD's and VA's Progress in Achieving
    Interoperability, GAO-15-530 (Washington, D.C.: Aug. 13, 2015);
    Opportunities to Reduce Potential Duplication in Government Programs,
    Save Tax Dollars, and Enhance Revenue, GAO-11-318SP (Washington, D.C.:
    Mar. 1, 2011); Electronic Health Records: DOD and VA Should Remove
    Barriers and Improve Efforts to Meet Their Common System Needs, GAO-11-
    265 (Washington, D.C.: Feb. 2, 2011); Electronic Health Records: DOD
    and VA Interoperability Efforts are Ongoing; Program Office Needs to
    Implement Recommended Improvements, GAO-10-332 (Washington, D.C.: Jan.
    28, 2010); Electronic Health Records: DOD and VA Have Increased Their
    Sharing of Health Information, but More Work Remains, GAO-08-954,
    (Washington, D.C.: July 28, 2008); and Computer-Based Patient Records:
    Better Planning and Oversight By VA, DOD, and IHS Would Enhance Health
    Data Sharing, GAO-01-459 (Washington, D.C.: Apr. 30, 2001).
        \2\ GAO, Electronic Health Records: VA and DOD Need to Support Cost
    and Schedule Claims, Develop Interoperability Plans, and Improve
    Collaboration, GAO-14-302 (Washington, D.C.: Feb. 27, 2014).
        \3\ GAO, Veterans Affairs: Health Information System Far from
    Complete; Improved Project Planning and Oversight Needed, GAO-08-805
    (Washington, D.C.: Jun. 30, 2008).
        \4\ GAO, High Risk Series: An Update, GAO-15-290 (Washington, D.C.:
    Feb. 11, 2015).
    ---------------------------------------------------------------------------
        At your invitation, my testimony today summarizes our key findings
    and concerns from this overall body of work. Specifically, in
    developing this testimony, we relied on our previous reports, as well
    as information that we obtained and reviewed on VA's actions in
    response to our previous recommendations. The reports cited throughout
    this statement include detailed information on the scope and
    methodology for our reviews.
        The work upon which this statement is based was conducted in
    accordance with generally accepted government auditing standards. Those
    standards require that we plan and perform the audit to obtain
    sufficient, appropriate evidence to provide a reasonable basis for our
    findings and conclusions based on our audit objectives. We believe that
    the evidence obtained provides a reasonable basis for our findings and
    conclusions based on our audit objectives.

                                   Background

        VA operates one of the largest healthcare systems in America,
    providing care to millions of veterans and their families each year.
    The department's health information system--VistA--serves an essential
    role in helping the department to fulfill its healthcare delivery
    mission. Specifically, VistA is an integrated medical information
    system that was developed in-house by the department's clinicians and
    information technology (IT) personnel, and has been in operation since
    the early 1980s.\5\ The system consists of 104 separate computer
    applications, including 56 health provider applications; 19 management
    and financial applications; 8 registration, enrollment, and eligibility
    applications; 5 health data applications; and 3 information and
    education applications. Within VistA, an application called the
    Computerized Patient Record System enables the department to create and
    manage an individual electronic health record for each VA patient.
    ---------------------------------------------------------------------------
        \5\ VistA began operation in 1983 as the Decentralized Hospital
    Computer Program. In 1996, the name of the system was changed to VistA.
    ---------------------------------------------------------------------------
        Electronic health records are particularly crucial for optimizing
    the healthcare provided to veterans, many of whom may have health
    records residing at multiple medical facilities within and outside the
    United States. Taking these steps toward interoperability--that is,
    collecting, storing, retrieving, and transferring veterans' health
    records electronically--is significant to improving the quality and
    efficiency of care. One of the goals of interoperability is to ensure
    that patients' electronic health information is available from provider
    to provider, regardless of where it originated or resides.
        Since 1998, VA has undertaken a patchwork of initiatives with DOD
    to allow the departments' health information systems to exchange
    information and increase interoperability.\6\ Among others, these have
    included initiatives to share viewable data in the two departments'
    existing (legacy) systems, link and share computable data between the
    departments' updated heath data repositories, and jointly develop a
    single integrated system that would be used by both departments. Table
    1 summarizes a number of these key initiatives.
    ---------------------------------------------------------------------------
        \6\ DOD uses a separate electronic health record system, the Armed
    Forces Health Longitudinal Technology Application, which consists of
    multiple legacy medical information systems developed from customized
    commercial software applications.

    TABLE 1: HISTORY OF THE DEPARTMENTS OF VETERANS AFFAIRS' AND DEFENSE'S ELECTRONIC HEALTH RECORD INTEROPERABILITY
                                                       INITIATIVES
    ----------------------------------------------------------------------------------------------------------------
                   Initiative                          Year begun                         Description
    ----------------------------------------------------------------------------------------------------------------
    Government Computer-Based Patient Record  1998.......................  This interface was expected to compile
                                                                            requested patient health information in
                                                                            a temporary, ``virtual'' record that
                                                                            could be displayed on a user's computer
                                                                            screen.
    Federal Health Information Exchange.....  2002.......................  The Government Computer-Based Patient
                                                                            Record initiative was narrowed in scope
                                                                            to focus on enabling the Department of
                                                                            Defense (DOD) to electronically transfer
                                                                            service members' health information to
                                                                            the Department of Veterans Affairs (VA)
                                                                            upon their separation from active duty.
                                                                            The resulting initiative, completed in
                                                                            2004, was renamed the Federal Health
                                                                            Information Exchange. This capability is
                                                                            currently used by the departments to
                                                                            transfer data from DOD to VA.
    Bidirectional Health Information          2004.......................  This capability provides clinicians at
     Exchange.                                                              both departments with viewable access to
                                                                            records on shared patients. It is
                                                                            currently used by VA and DOD to view
                                                                            data stored in both departments' heath
                                                                            information systems.
    Clinical Data Repository/Health Data      2004.......................  This interface links DOD's Clinical Data
     Repository Initiative.                                                 Repository and VA's Health Data
                                                                            Repository to achieve a two-way exchange
                                                                            of health information.
    Virtual Lifetime Electronic Record......  2009.......................  To streamline the transition of
                                                                            electronic medical, benefits, and
                                                                            administrative information between the
                                                                            departments, this initiative enabled
                                                                            access to electronic records for service
                                                                            members as they transition from military
                                                                            to veteran status and throughout their
                                                                            lives. It also expands the departments'
                                                                            health information-sharing capabilities
                                                                            by enabling access to private-sector
                                                                            health data.
    Joint Federal Health Care Center........  2010.......................  The Captain James A. Lovell Federal
                                                                            Health Care Center was a 5-year
                                                                            demonstration project to integrate DOD
                                                                            and VA facilities in the North Chicago,
                                                                            Illinois, area. It is the first
                                                                            integrated Federal healthcare center for
                                                                            use by beneficiaries of both
                                                                            departments, with an integrated DOD-VA
                                                                            workforce, a joint funding source, and a
                                                                            single line of governance.
    ----------------------------------------------------------------------------------------------------------------
    Source: GAO summary of prior work and department documentation  GAO-16-807T.

        In addition to the initiatives mentioned in table 1, VA has worked
    in conjunction with DOD to respond to provisions in the National
    Defense Authorization Act for fiscal year 2008,\7\ which required the
    departments to jointly develop and implement fully interoperable
    electronic health record systems or capabilities in 2009. Yet, even as
    the departments undertook numerous interoperability and modernization
    initiatives, they faced significant challenges and slow progress. For
    example, VA's and DOD's success in identifying and implementing joint
    IT solutions has been hindered by an inability to articulate explicit
    plans, goals, and timeframes for meeting their common health IT needs.
    ---------------------------------------------------------------------------
        \7\ Public Law No. 110-181, Sec. 1635, 122 Stat. 3, 460-463 (2008).
    ---------------------------------------------------------------------------
        In March 2011, the secretaries of VA and DOD announced that they
    would develop a new, joint integrated electronic health record system
    (referred to as iEHR). This was intended to replace the departments'
    separate systems with a single common system, thus sidestepping many of
    the challenges they had previously encountered in trying to achieve
    interoperability. However, in February 2013, about 2 years after
    initiating iEHR, the secretaries announced that the departments were
    abandoning plans to develop a joint system, due to concerns about the
    program's cost, schedule, and ability to meet deadlines. The
    Interagency Program Office (IPO), put in place to be accountable for
    VA's and DOD's efforts to achieve interoperability,\8\ reported
    spending about $564 million on iEHR between October 2011 and June 2013.
    ---------------------------------------------------------------------------
        \8\ The National Defense Authorization Act for fiscal year 2008
    called for the departments to set up an interagency program office to
    be a single point of accountability to implement fully interoperable
    electronic health record systems or capabilities by September 30, 2009.
    This office was chartered in January 2009.
    ---------------------------------------------------------------------------
        In light of VA and DOD not implementing a solution that allowed for
    the seamless electronic sharing of healthcare data, the National
    Defense Authorization Act for fiscal year 2014 \9\ included
    requirements pertaining to the implementation, design, and planning for
    interoperability between the departments' electronic health record
    systems. Among other actions, provisions in the act directed each
    department to (1) ensure that all healthcare data contained in their
    systems (VA's VistA and DOD's Armed Forces Health Longitudinal
    Technology Application, referred to as AHLTA) complied with national
    standards and were computable in real time by October 1, 2014; and (2)
    deploy modernized electronic health record software to support
    clinicians while ensuring full standards-based interoperability by
    December 31, 2016.
    ---------------------------------------------------------------------------
        \9\ Public Law No. 113-66, Div. A, Title VII, Sec. 713, 127 Stat.
    672, 794-798 (Dec. 26, 2013).
    ---------------------------------------------------------------------------
        In August 2015, we reported that VA, in conjunction with DOD, had
    engaged in several near-term efforts focused on expanding
    interoperability between their existing electronic health record
    systems. For example, the departments had analyzed data related to 25
    ``domains'' identified by the Interagency Clinical Informatics Board
    and mapped health data in their existing systems to standards
    identified by the IPO. The departments also had expanded the
    functionality of their Joint Legacy Viewer--a tool that allows
    clinicians to view certain healthcare data from both departments in a
    single interface.
        More recently, in April 2016, VA and DOD certified that all
    healthcare data in their systems complied with national standards and
    were computable in real time. However, VA acknowledged that it did not
    expect to complete a number of key activities related to its electronic
    health record system until sometime after the December 31, 2016,
    statutory deadline for deploying modernized electronic health record
    software with interoperability. Specifically, the department stated
    that deployment of a modernized VistA system at all locations and for
    all users is not planned until 2018.

       Together with DOD and the Interagency Program Office, VA Needs to
            Develop Goals and Metrics for Assessing Interoperability

        Even as VA has undertaken numerous initiatives with DOD that were
    intended to advance electronic health record interoperability, a
    significant concern is that these departments have not identified
    outcome-oriented goals and metrics to clearly define what they aim to
    achieve from their interoperability efforts, and the value and benefits
    these efforts are expected to yield. As we have stressed in our prior
    work and guidance,\10\ assessing the performance of a program should
    include measuring its outcomes in terms of the results of products or
    services. In this case, such outcomes could include improvements in the
    quality of healthcare or clinician satisfaction. Establishing outcome-
    oriented goals and metrics is essential to determining whether a
    program is delivering value.
    ---------------------------------------------------------------------------
        \10\ GAO, Electronic Health Record Programs: Participation Has
    Increased, but Action Needed to Achieve Goals, Including Improved
    Quality of Care, GAO-14-207 (Washington, D.C.: March 6, 2014);
    Designing Evaluations: 2012 Revision, GAO-12-208G (Washington, D.C.:
    Jan. 31, 2012); Performance Measurement and Evaluation: Definitions and
    Relationships, GAO-11-646SP (Washington, D.C.: May 2, 2011); and
    Executive Guide: Effectively Implementing the Government Performance
    and Results Act, GAO/GGD-96-118 (Washington, D.C.: June 1, 1996).
    ---------------------------------------------------------------------------
        The IPO is responsible for monitoring and reporting on VA's and
    DOD's progress in achieving interoperability and coordinating with the
    departments to ensure that these efforts enhance healthcare services.
    Toward this end, the office issued guidance that identified a variety
    of process-oriented metrics to be tracked, such as the percentage of
    health data domains that have been mapped to national standards. The
    guidance also identified metrics to be reported that relate to tracking
    the amounts of certain types of data being exchanged between the
    departments, using existing capabilities. This would include, for
    example, laboratory reports transferred from DOD to VA via the Federal
    Health Information Exchange and patient queries submitted by providers
    through the Bidirectional Health Information Exchange.
        Nevertheless, in our August 2015 report, we noted that the IPO had
    not specified outcome-oriented metrics and goals that could be used to
    gauge the impact of the interoperable health record capabilities on the
    departments' healthcare services. At that time, the acting director of
    the IPO stated that the office was working to identify metrics that
    would be more meaningful, such as metrics on the quality of a user's
    experience or on improvements in health outcomes. However, the office
    had not established a timeframe for completing the outcome-oriented
    metrics and incorporating them into the office's guidance.
        In the report, we stressed that using an effective outcome-based
    approach could provide the two departments with a more accurate picture
    of their progress toward achieving interoperability, and the value and
    benefits generated. Accordingly, we recommended that the departments,
    working with the IPO, establish a timeframe for identifying outcome-
    oriented metrics; define related goals as a basis for determining the
    extent to which the departments' modernized electronic health record
    systems are achieving interoperability; and update IPO guidance
    accordingly.
        Both departments concurred with our recommendations. Further, since
    that time, VA has established a performance architecture program that
    has begun to define an approach for identifying outcome-oriented
    metrics focused on health outcomes in selected clinical areas, and it
    also has begun to establish baseline measurements. We intend to
    continue monitoring the department's efforts to determine how these
    metrics define and report on the results achieved by interoperability
    between the departments.

      VA's Plan to Modernize VistA Raises Concern about Duplication with
               DOD's Electronic Health Record System Acquisition

        Following the termination of the iEHR initiative, VA moved forward
    with an effort to modernize VistA separately from DOD's planned
    acquisition of a commercially available electronic health record
    system. The department took this course of action even though it has
    many healthcare business needs in common with those of DOD. For
    example, in May 2010, VA (and DOD) issued a report on medical IT to
    Congressional committees that identified 10 areas--inpatient
    documentation, outpatient documentation, pharmacy, laboratory, order
    entry and management, scheduling, imaging and radiology, third-party
    billing, registration, and data sharing--in which the departments have
    common business needs.\11\ Further, the results of a 2008 study pointed
    out that over 97 percent of inpatient requirements for electronic
    health record systems are common to both departments.\12\
    ---------------------------------------------------------------------------
        \11\ Department of Defense and Department of Veterans Affairs Joint
    Executive Council and Health Executive Council, Report to Congress on
    Department of Defense and Department of Veterans Affairs Medical
    Information Technology, required by the explanatory statement
    accompanying Department of Defense Appropriations Act 2010 (Public Law
    111-118).
        \12\ Booz Allen Hamilton, Report on the Analysis of Solutions for a
    Joint DOD-VA Inpatient EHR and Next Steps, Task Order W81XWH-07-F-0353:
    Joint DOD-VA Inpatient Electronic Health Record (EHR) Project Support,
    July 2008.
    ---------------------------------------------------------------------------
        We also issued several prior reports regarding the plans for
    separate systems, in which we noted that the departments did not
    substantiate their claims that VA's VistA modernization, together with
    DOD's acquisition of a new system, would be achieved faster and at less
    cost than developing a single, joint system. Moreover, we noted that
    the departments' plans to modernize their two separate systems were
    duplicative and stressed that their decisions should be justified by
    comparing the costs and schedules of alternate approaches.\13\
    ---------------------------------------------------------------------------
        \13\ GAO, Electronic Health Records: VA and DOD Need to Support
    Cost and Schedule Claims, Develop Interoperability Plans, and Improve
    Collaboration, GAO-14-302 (Washington, D.C.: Feb. 27, 2014). See also
    GAO, 2014 Annual Report: Additional Opportunities to Reduce
    Fragmentation, Overlap, and Duplication and Achieve Other Financial
    Benefits, GAO-14-343SP (Washington, D.C.: Apr. 8, 2014), and 2015
    Annual Report: Additional Opportunities to Reduce Fragmentation,
    Overlap, and Duplication and Achieve Other Financial Benefits, GAO-15-
    404SP (Washington, D.C.: Apr. 14, 2015).
    ---------------------------------------------------------------------------
        We recommended that VA and DOD develop cost and schedule estimates
    that would include all elements of their approach (i.e., modernizing
    both departments' health information systems and establishing
    interoperability between them) and compare them with estimates of the
    cost and schedule for developing a single, integrated system. If the
    planned approach for separate systems was projected to cost more or
    take longer, we recommended that the departments provide a rationale
    for pursuing such an approach.
        VA, as well as DOD, agreed with our recommendations and stated that
    an initial comparison had indicated that the approach involving
    separate systems would be more cost effective. However, as of June
    2016, the departments had not provided us with a comparison of the
    estimated costs of their current and previous approaches. Further, with
    respect to their assertions that separate systems could be achieved
    faster, both departments had developed schedules which indicated that
    their separate modernization efforts are not expected to be completed
    until after the 2017 planned completion date for the previous single-
    system approach.

     VA Has Begun to Implement VistA Modernization Plans amid Uncertainty
     about Its Approach; the Department Is Currently Reconsidering How to
                                    Proceed

        As VA has proceeded with its program to modernize VistA (known as
    VistA Evolution), the department has developed a number of plans to
    support its efforts. These include an interoperability plan and a road
    map describing functional capabilities to be deployed through fiscal
    year 2018. Specifically, these documents describe the department's
    approach for modernizing its existing electronic health record system
    through the VistA Evolution program, while helping to facilitate
    interoperability with DOD's system and the private sector. For example,
    the VA Interoperability Plan, issued in June 2014, describes activities
    intended to improve VistA's technical interoperability,\14\ such as
    standardizing the VistA software across the department to simplify
    sharing data.
    ---------------------------------------------------------------------------
        \14\ Technical interoperability refers to the ability of multiple
    systems to be able to transmit data back and forth.
    ---------------------------------------------------------------------------
        In addition, the VistA 4 Roadmap, last revised in February 2015,
    describes four sets of functional capabilities that are expected to be
    incrementally deployed during fiscal years 2014 through 2018 to
    modernize the VistA system and enhance interoperability. According to
    the road map, the first set of capabilities was delivered by the end of
    September 2014 and included access to the Joint Legacy Viewer and a
    foundation for future functionality, such as an enhanced graphical user
    interface and enterprise messaging infrastructure.
        Another interoperable capability that is expected to be
    incrementally delivered over the course of the VistA modernization
    program is the enterprise health management platform.\15\ The
    department has stated that this platform is expected to provide
    clinicians with a customizable view of a health record that can
    integrate data from VA, DOD, and third-party providers. Also, when
    fully deployed, VA expects the enterprise health management platform to
    replace the Joint Legacy Viewer.
    ---------------------------------------------------------------------------
        \15\ The enterprise health management platform is a graphical user
    interface that is intended to present patient information to support
    medical care to the veteran from a standardized set of information,
    regardless of where the veteran receives care. Clinical information
    captured at the point of care is made available to all authorized
    providers across the enterprise.
    ---------------------------------------------------------------------------
        However, a recent independent assessment of health IT at VA
    reported that lengthy delays in modernizing VistA had resulted in the
    system becoming outdated.\16\ Further, this study questioned whether
    the VistA Evolution program to modernize the electronic health record
    system can overcome a variety of risks and technical issues that have
    plagued prior VA initiatives of similar size and complexity. For
    example, the study raised questions regarding the lack of any clear
    advances made during the past decade and the increasing amount of time
    needed for VA to release new health IT capabilities. Given the concerns
    identified, the study recommended that VA assess the cost versus
    benefits of various alternatives for delivering the modernized
    capabilities, such as commercially available off-the-shelf electronic
    health record systems, open source systems, and the continued
    development of VistA.
    ---------------------------------------------------------------------------
        \16\ Independent Assessment of the Health Care Delivery Systems and
    Management Processes of the Department of Veteran Affairs, Integrated
    Report (Sept. 1, 2015).
    ---------------------------------------------------------------------------
        In speaking about this matter, VA's Under Secretary for Health has
    asserted that the department will follow through on its plans to
    complete the VistA Evolution program in fiscal year 2018. However, the
    Chief Information Officer has also indicated that the department is
    taking a step back in reconsidering how best to meet its electronic
    health record system needs beyond fiscal year 2018. As such, VA's
    approach to addressing its electronic health record system needs
    remains uncertain.
        In summary, VA's approach to pursuing electronic health record
    interoperability with DOD has resulted in an increasing amount of
    standardized health data and has made an integrated view of that data
    available to department clinicians. Nevertheless, a modernized VA
    electronic health record system that is fully interoperable with DOD's
    system is still years away. Thus, important questions remain about when
    VA intends to define the extent of interoperability it needs to provide
    the highest possible quality of care to its patients, as well as how
    and when the department intends to achieve this extent of
    interoperability with DOD. In addition, VA's unsuccessful efforts over
    many years to modernize its VistA system raise concern about how the
    department can continue to justify the development and operation of an
    electronic health record system that is separate from DOD's system,
    even though the departments have common system needs. Finally, VA's
    recent reconsideration of its approach to modernizing VistA raises
    uncertainty about how it intends to accomplish this important endeavor.
        Chairman Kirk, Ranking Member Tester, and members of the
    subcommittee, this concludes my prepared statement. I would be pleased
    to respond to any questions that you may have.

        Senator Kirk. Thank you. Dr. Thompson, we will hear your
    statement.

                             DEPARTMENT OF DEFENSE

    STATEMENT OF DR. LAUREN THOMPSON, DIRECTOR, DOD/VA
                INTERAGENCY PROGRAM OFFICE
        Dr. Thompson. Chairman Kirk and Ranking Member Tester,
    thank you for the opportunity to address the Subcommittee on
    Military Construction and Veterans Affairs. I am honored to
    represent the Department of Defense and Department of Veterans
    Affairs as Director of the DOD/VA Interagency Program Office,
    or IPO.
        As part of the current strategy to achieve the President's
    goal of electronic health record interoperability and
    modernization, the IPO was re-chartered in 2013 to serve as the
    single point of accountability for identifying, monitoring, and
    improving the health data standards to create seamless
    integration of health data between the DOD, the VA, and private
    healthcare providers.
        Health data interoperability is essential to improving the
    care delivered to our servicemembers, veterans, and their
    beneficiaries. Working closely with the Office of the National
    Coordinator for Health Information Technology (ONC) and
    standards development organizations, the IPO helps identify,
    implement, and map the appropriate national standards
    associated with both Departments' electronic health record
    systems.
        Assisting the Departments with their interoperability and
    modernization milestones, the IPO serves as a central resource
    as DOD and VA develop, adopt, and update a technical framework
    that is clinically driven to align identified standards with
    approved use cases.
        To that end, the IPO monitors industry best practices and
    provides technical guidance to facilitate data interchange
    between the Departments. We also serve as a conduit for the
    Departments' engagement with ONC and standards development
    organizations to facilitate knowledge sharing on a national
    level.
        We have been integrated into ONC's planning for a national
    health IT ecosystem and we are key contributors in the
    development of ONC's nationwide interoperability roadmap that
    seeks to advance nationwide health IT.
        The IPO also plays an important role in monitoring the
    progress that DOD and VA continue to make in enhancing their
    interoperability efforts. Specifically, we have established a
    health data interoperability metrics dashboard to identify
    Department-specific targets for transactional metrics and
    trends.
        In addition to these efforts, last year the Government
    Accountability Office recommended that DOD and VA adopt outcome
    oriented metrics to provide a basis for assessing and reporting
    on the progress of the Departments' interoperability efforts.
    We concurred with GAO's guidance, and I am pleased to report
    that we have made substantial progress addressing the
    recommendations.
        Specifically, we have been working closely with ONC, DOD,
    VA, and other public and private partners to develop outcome
    oriented metrics that not only measure the impact
    interoperability has on healthcare but specifically focuses on
    the impact interoperability has on patients and providers.
        The IPO is fully committed to assisting DOD and VA as they
    continue to enhance health data interoperability between their
    electronic health record systems and the private sector, which
    will serve as the foundation for a patient-centric healthcare
    experience, seamless care transition and improved care for our
    servicemembers, their families, and our veterans.
        Again, thank you for the opportunity today, and I look
    forward to your questions.
        [The statement follows:]
                   Prepared Statement of Dr. Lauren Thompson
        Chairman Kirk and Ranking Member Tester, thank you for the
    opportunity to address the Subcommittee on Military Construction and
    Veterans Affairs. I am honored to represent the Departments of Defense
    and Veterans Affairs as the Director of the DOD/VA Interagency Program
    Office (IPO).
        As part of the current strategy to achieve the President's goal of
    electronic health record interoperability and modernization, the IPO
    was rechartered in 2013 to serve as the single point of accountability
    for identifying, monitoring, and approving the health data standards to
    create seamless, integration of health data between DOD, the VA, and
    private healthcare providers.
        As you know, DOD and VA are two of our Nation's largest healthcare
    systems, and share more health data than any two other major systems.
    Currently, the Departments share more than 1.5 million data elements
    daily, and more than 100,000 DOD and VA clinicians are able to view the
    real-time records of the more than 7 million patients who have received
    care from both Departments.
        Health data interoperability is essential to improving the care
    delivered to our servicemembers, veterans, and their beneficiaries.
    Working closely with the Office of the National Coordinator for Health
    Information Technology (ONC) and Standards Development Organizations,
    the IPO helps identify, implement, and map the appropriate national
    standards associated with both Departments' electronic health record
    systems. These steps are vital and provide the building blocks
    necessary for the Departments to achieve health data interoperability
    as required by the fiscal year 2014 National Defense Authorization Act.
    In fact, earlier this year the Departments met this requirement and
    provided certification to Congress that their systems are interoperable
    with an integrated display of data.
        The IPO is a collaborative entity, comprised of staff from both
    Departments with technical expertise in health data standards and
    information sharing. Assisting the Departments with their
    interoperability and modernization milestones, we serve as a central
    resource as DOD and VA develop, adopt, and update a technical framework
    that is clinically driven to align identified standards with approved
    use cases. To that end, the IPO monitors industry best practices and
    provides technical guidance to facilitate data interchange between the
    Departments. We also serve as a conduit for the Departments' engagement
    with ONC and Standards Development Organizations to facilitate
    knowledge sharing on a national level; we have been integrated into
    ONC's planning for a national health IT ecosystem, and were key
    contributors in the development of ONC's Interoperability Roadmap that
    seeks to advance nationwide IT interoperability.
        The IPO also plays an important role in monitoring the progress
    that DOD and VA continue to make in enhancing their interoperability
    efforts. Specifically, we have established a Health Data
    Interoperability Metrics Dashboard to identify Department-specific
    targets for transactional metrics and trends. We share this and much
    more information with Congress in our quarterly Data Sharing Reports
    and regular briefs with Committee staff. In addition to these efforts,
    last year, the Government Accountability Office (GAO) recommended that
    DOD and VA adopt outcome-oriented metrics to provide a basis for
    assessing and reporting on the progress of the Departments'
    interoperability efforts. We concurred with GAO's guidance and I am
    pleased to report that we have made substantial progress to address
    this recommendation. Specifically we have been working closely with
    ONC, DOD, VA, and other public and private partners to develop outcome-
    oriented metrics that not only measure the impact interoperability has
    on healthcare but specifically focus on the impact interoperability has
    on our patients and providers.
        The field of health data is constantly evolving. For the
    Departments to maintain and enhance the interoperability of their
    electronic health record systems, we must continue our collaboration
    with ONC and industry partners to ensure that DOD and VA map their data
    to the latest national standards, and that ONC and the private sector
    can continue to learn from our experience.
        The IPO is fully committed to assisting DOD and VA as they continue
    to enhance health data interoperability between their electronic health
    record systems and the private sector. Enabling health information
    exchange between EHR systems in DOD, VA, and the private sector will
    serve as the foundation for a patient-centric healthcare experience,
    seamless care transitions, and improved care for our servicemembers,
    their families, and our veterans. As IPO Director, I am happy to answer
    any questions you may have on the IPO and work of DOD and VA to
    identify and adopt health data standards.
        Again, thank you for this opportunity, and I look forward to your
    questions.

        Senator Kirk. Thank you. Let me start with questions. I
    will ask LaVerne, since you have been in office for about a
    year now, and coming out of J&J and Dell Computer, can you give
    me your first impressions when you came into the VA IT
    business?

                        CIO COUNCIL IMPRESSION OF VA IT

        Ms. Council. Thank you for the question. I think one of the
    biggest surprises was the lack of an integrated data management
    capability, which I think is critical to being able to share
    the right information, have the right analytics, and be able to
    disseminate the information out to everyone.
        Also, the number of custom systems, having well over 800
    different applications out, that tends to be a fairly high
    number, and most organizations might have a few but not that
    many, and also the age of those systems was also something that
    was surprising to me.
        In addition, not having a program or project management
    office.

                            OVER 800 VA APPLICATIONS

        Senator Kirk. Let me interrupt you to make a key point.
    What you are telling the committee is you have several hundred
    customization projects underway to current software that would
    make you one of the largest software development operations in
    the country right there at VA, not a core competency for you
    guys.
        Ms. Council. Most of the work is managed by contractors, to
    your point, we have about 218 projects going on right now, and
    the level of customization is a concern because it does make it
    harder to maintain those systems.
        Senator Kirk. Thank you.
        Ms. Council. Thank you.
        Senator Kirk. Over to you.

           INTEROPERABILITY AND ENTERPRISE HEALTH MANAGEMENT PLATFORM

        Senator Tester. Thank you, Mr. Chairman. Thank you all for
    your testimony. Secretary Council, you mentioned in your
    testimony that deployment of the Joint Legacy Viewer (JLV) has
    been a major step towards interoperability. As you well know,
    this is a read-only application, and we know the enterprise
    health management platform (eHMP) will eventually be a
    replacement, and it will bring more capabilities to add to the
    record, I would assume.
        On April 8, you jointly certified with the DOD
    interoperability. Could you tell me, number one, how
    interoperability will be improved as you implement the
    enterprise health management platform?
        Ms. Council. Thank you for the question. I will start and
    then I will pass it over to Mr. Waltman to add some more parts
    to it. Clearly, being able to certify interoperability of the
    JLV was exciting. We have to date 178,000 users of the JLV
    today. We have used it to support about 7 million different
    intentions, and going forward, the eHMP is going to augment it.
    David, if you want to share some information, that would be
    great.
        Mr. Waltman. Thank you, Ms. Council, Senator. The
    enterprise health management platform is a great opportunity
    for us to build on the interoperable information exchange base.
        Senator Tester. I got you. Let me cut right to it, because
    my time is going to be limited. Right now----

                          INTEROPERABILITY DEFINITION

        Senator Kirk. We are getting to the heart of this hearing,
    would you please define ``interoperability'' as you understand
    it from the NDAA?
        Mr. Waltman. Yes, Mr. Chairman. The NDAA required us to
    have an exchange of all health record information between the
    two departments.
        Senator Kirk. I will read to you Webster's definition of
    ``interoperability.'' Interoperability is ``The ability of a
    system to work with and use another system.''
        Mr. Waltman. Understand.
        Senator Kirk. In the case of the Joint Legacy Viewer, which
    is kind of a kludgy Band-Aid that we have. When I talked to
    Cerner, they told me it does not provide the x-ray data of a
    patient, so we would say now welcome to the VA, we have no x-
    ray data on you from all the x-rays, the Navy, the Army, Air
    Force did for you.
        Mr. Waltman. Yes, Mr. Chairman. Agree and understand that
    definition.
        Senator Kirk. I think most members of this committee would
    say that is not interoperable.
        Mr. Waltman. Understand. I think that----

                     JOINT LEGACY VIEWER AND IMAGING ISSUES

        Senator Kirk. What about CAT scans?
        Mr. Waltman. Right. The data that we are exchanging now is
    all of the health record data, which includes 25 domains of
    standardized data where standards exist, so that includes
    progress notes, lab reports. It includes the reports from all
    of those imaging studies.
        As we know, the size of data for the studies themselves is
    exponentially larger than----
        Senator Kirk. If we had a veteran who had a spot on his
    lung indicating cancer, the Joint Legacy Viewer would not share
    that with the VA so VA would not know about that emerging
    cancerous situation, is that correct?
        Mr. Waltman. I think Dr. Nebeker may be able to answer this
    question in a clinically precise way, but I would say there
    would be a radiology report from the study that was done
    identifying the spot, and that report is available today.
        Senator Kirk. This is a narrative thing?
        Mr. Waltman. That is correct.
        Senator Kirk. I am actually talking about the imagery.
        Mr. Waltman. Right.
        Senator Kirk. Most people would think that a medical record
    includes x-rays that they had taken when they were in the
    service.
        Mr. Waltman. Yes, and that is certainly part of the medical
    record, and the report that the radiologist completes after
    such imaging studies are done are what other providers
    typically use to address findings from those reports and follow
    their course of care.
        That said, we are working and in the process now of
    delivering the image viewer component of the Joint Legacy
    Viewer, which will be available in the next release, and now
    the challenge there is to make sure that we have the bandwidth
    and ability to exchange the images when they are needed to be
    exchanged for clinical purposes.
        I think the point was that we wanted to ensure we have
    interoperability and exchange of all the clinically relevant
    information, so Dr. Nebeker, you may want to make a comment
    about images and reports and their relevance.
        Dr. Nebeker. Images are critical to the provision of
    medicine. In most cases the narrative is the most important
    part of that because as people are planning operations or
    leading up to an operation or planning treatment, most of us--I
    am a geriatrician and primary care provider as well as a
    consultant, I usually rely on the interpretation because I am
    not expert in all the various domains of radiology to make
    those types of calls.
        Definitely for many types of operations, it is critical to
    have the images, so we agree with your statement.
        For the interoperability, certification of
    interoperability, there was fairly clear instruction in the
    statute and also in the response, and Ms. Thompson may be able
    to take this on a little bit more, but interoperability is a
    concept. You brought up the dictionary. It is really critical
    to have use cases about what are the problems we are trying to
    solve with interoperability.
        Clinicians, between VA and DOD, jointly developed a number
    of use cases, and the conditions for interoperability were
    meant for those use cases. Ms. Thompson, if you would like to
    elaborate.
        Senator Kirk. This is the only subcommittee that has joint
    jurisdiction of both DOD and VA, so we are the only guys that
    can really ride herd on something like bringing you two
    together, DOD and VA together.
        Senator Tester. I just want to continue real quick. I
    actually am going to be very interested to hear Dr. Cassidy's
    questions on this because you are in the business.
        You were asked a question and your response was what we are
    trying to solve here, what we are trying to solve here is not
    have to rewrite the book again. Quite frankly, where the person
    was hurt, how the person was hurt, the x-rays, the CAT scans,
    all that would be on there so that when a veteran is going to
    get rated, it would be a much easier process, and it would not
    take forever, and it would not be like a very complicated math
    problem. It would be right there.
        The information has to be there. It is interesting that you
    would say the notes are more important than the pictures. I am
    not a doctor, but do you ever do a surgery and not look at
    pictures of the x-rays and that kind of stuff? You just start
    cutting based on notes?
        Dr. Nebeker. Yes, sir, I completely agree that for
    operations the pictures are critical.

                        FULL INTEROPERABILITY TIMETABLE

        Senator Tester. Okay, good. The question is when and at
    what point in time are we going to be interoperable to the
    point where the information that the DOD has, and by the way,
    if it is not good information coming to you, you do not have
    good information, but assuming they give you the information,
    you will have all the information on those medical records in
    your hands, when is that going to happen?
        Ms. Council. The image viewer is going into deployment to
    get these images moved into the JLV----
        Senator Tester. When does that happen?
        Ms. Council. September of this year.
        Senator Tester. You will have access to x-rays, CAT scans?
        Ms. Council. Of the records that are in JLV, yes. In
    addition, I think it goes one step further, and the one step
    further is why I think enterprise data management is so
    important. You are both 100 percent correct.
        We have to have seamless movement of that information from
    DOD as far as I am concerned at the Active Duty point of the
    enlisted person, even knowing before they become a veteran, and
    we have to work on that. That is one of the reasons that the
    enterprise level is so important versus just having a pipe that
    is only health.
        Remember, there is much more to the veteran than just their
    healthcare. It is their benefits, it is their ability to use
    our National Cemetery System, it is all the things they have a
    right to, education, and we have to do a much better job of
    creating that seamlessness.
        To your point, the semantic use of that information is that
    information comes one to one, and the veteran does not have
    anything to do to ensure that we have their data. That is the
    most important thing and that is what we are striving for.
        Senator Tester. I have got it. I have been here almost 10
    years now, and I serve on the Senate Veterans' Affairs
    Committee, as does Senator Cassidy, as does Senator Murray and
    others, as well as Senator Boozman.
        The very first meetings that I was at in Senate Veterans'
    Affairs, we talked about interoperability between the DOD and
    VA. That was in 2007. We are 10 years later. We have had
    incredible advances in technology, just flying up through the
    roof. Yet I still have the feeling----

                     JOINT LEGACY VIEWER LACKING ANALYTICS

        Senator Kirk. If the Senator will suspend, I want to add on
    to that. When I talked to Cerner this morning, they talked
    about something that really addresses a key VA priority, which
    is suicide prevention. I understand from the press we had the
    suicide hotline that had not enough responses for people. One
    of my constituents had called in and also committed suicide
    after they called back.
        The exciting thing for what Cerner told me was they had an
    algorithm that could predict suicide likelihood. When I talked
    to Cerner, they said the Joint Legacy Viewer cannot do
    analytics like this.
        David, you are nodding your head. This critical upgrade in
    suicide prevention, they are not capable of doing with this
    Joint Legacy Viewer.
        Senator Tester. You talked about the images coming in in
    September. When do you get to a point where you are satisfied
    with the transfer of information being complete, to deal with
    issues like the chairman said and others?
        Mr. Waltman. Thank you, Senator. I was nodding my head
    because I agree 100 percent, JLV is 100 percent incapable of
    those analytics. JLV, of course, was----

                              ANALYTIC CAPABILITY

        Senator Tester. Okay, I have you. When do we get to a point
    where you are capable of those analytics?
        Mr. Waltman. That is the enterprise health management comes
    in, health management platform, and I will allude to the
    concept of the digital health platform which Ms. Council has
    talked about.
        We need an integrated capability of all the clinical data
    for process management, for managing clinical pathways,
    clinical workflows, integrated with analytics which can use
    algorithms such as described by the chairman, which can predict
    based on the information in the record, based on pathways and
    courses of action available, what interventions should be taken
    and what the processes and care pathway should be.
        Dr. Nebeker can talk in a little bit more detail about
    clinically what that looks like.
        Senator Tester. Do not have to do that. I asked you a
    question, and the question was when are you going to be able to
    do this. I am going to tell you I can filibuster you better
    than you can filibuster me. The question is pretty clear, and
    you are smart people. Tell me when you are going to be able to
    achieve this level. That is it. Is it going to be next year, 5
    years, 10 years, next month?
        Mr. Waltman. 2018.
        Senator Tester. 2018. January 1, 2018?
        Mr. Waltman. The end of fiscal year, so middle of calendar
    year 2018.
        Senator Tester. When we have this hearing on July 15, 2018,
    you are going to be totally interoperable, absolutely there is
    going to be no gaps, the system is going to work?
        Mr. Waltman. I would like to give a yes or no answer to
    that question but I cannot. What I can tell you is that we will
    have the ability to incorporate all of the information between
    the Departments, to use it, process with the type of algorithms
    that are being discussed, but I cannot say that every use case
    that we may have identified for use of interoperable data will
    be used.
        Senator Tester. Thank you. Thank you, Mr. Chairman.
        Senator Kirk. Mrs. Capito.
        Senator Capito. Thank you, Mr. Chairman. I want to thank
    all of you as well. I guess I am going to say I am a bit
    confused because Secretary Council said that on April 8, you
    were certified interoperable. Then Ms. Melvin said that an
    interoperability system is still years away. I think that was
    part of your statement.
        Help me with those--that seems like a direct conflict
    there. Are we talking about the same thing? How do I square
    those two statements?
        Ms. Council. I am going to try to simplify this and talk in
    normal ease versus technical ease.
        Senator Capito. Thank you. I am grateful for that.
        Ms. Council. Let me start with the concept of a system. The
    system, if you want to think about it, the inner workings, the
    system, what all works together. The data is the artifact
    coming out of the system, going into the system, and it
    actually can sit separately from the system--data, system.
        I think Ms. Melvin was referring to an engaged system,
    being on the same system platform, and therefore, assuming
    interoperability would be driven by being on the same system
    platform.

                          SINGLE VA AND DOD EHR SYSTEM

        Senator Capito. What is the objection of having a single
    system, as she mentioned?
        Ms. Council. The reality of a single system, in order for
    you to ensure that you are going to drive the same level of
    data out of that system is that you would have to sit on the
    same instance, time of that system, not just the same name
    system, but the same capabilities, no difference in that
    system.
        Senator Capito. Why can we not do that?
        Ms. Council. The reality is there is no system that can
    support both DOD and VA at the same time, it will not scale.
        Senator Capito. We have Amazon that can scale.
        Ms. Council. At the same time, there is no system that will
    support all the things you have to do, the clinical management
    and the clinical operations at the same time.
        Senator Capito. Ms. Melvin, do you have any comment on
    that?

                             FULL INTEROPERABILITY

        Ms. Melvin. I would start by saying that we are not trying
    to define what an interoperable system is for VA. We have been
    looking at this over the years, and as has been discussed, the
    question has been and what they have been working toward as we
    understand it is a fully interoperable capability.
        When we talk about fully interoperable, we are asking them
    to define what they mean by the data exchange, what has to be
    exchanged, what capabilities and to what extent. Those are
    questions that have not been answered yet in terms of when you
    talk about full interoperability, exactly what is it.
        What kind of performance measures and metrics would you put
    in place to know that you have gotten the full capability when
    you get there.
        Senator Capito. Excuse me. For the discussion on whether
    your x-rays and tests and everything are a part of that, are
    you including that as part of defining what
    ``interoperability'' is?
        Ms. Melvin. Absolutely. It is understanding all of the
    medical information, all of the systems that information would
    have to come through, and what are they doing in the way of the
    exchange capability, how will they know when all of the
    information that they need to ensure that a patient's
    healthcare is fully taken care of, how will they know when they
    have gotten to that point or they have a system that gets to
    that point.
        We did encourage one system, and they in fact had stated
    that one system was the way to go when they went with an
    integrated electronic health record approach in 2011.

                              ONE SEAMLESS SYSTEM

        Senator Kirk. I would say that they are coming up with two
    different systems, and the only government bureaucracy that can
    mandate one system--my preferred outcome would be since LaVerne
    owns about 20 million patients and Dr. Waltman owns about 2
    million patients, that it is only this committee that can
    mandate a VA lead to make sure we have one seamless system.

               PRIVATE PROVIDERS AND HEALTH INFORMATION EXCHANGE

        Senator Capito. In my final 2 minutes, let me ask you, Dr.
    Thompson, because you mentioned private sources, so we have
    just created the Choice card, we now have our veterans going
    out to private providers because of the issue of getting an
    appointment timely, distance, all the things we know exist, and
    this has been going on in the VA system for a while, but we
    have expanded it by the Choice card, how is this going to be
    interoperable with private providers? You have no guarantee.
        I will just give you an example in my State, West Virginia,
    we have a lot of issues with broadband deployment. We just
    started a broadband caucus yesterday, I did, to meet this
    issue. What do you anticipate in this area? That is my final
    question.
        Dr. Thompson. I can speak to DOD, and I would defer to Ms.
    Council to speak for the VA. The DOD participates in what is
    called the eHealth Exchange, which is a public/private
    partnership of both government, including DOD, providers, and
    private sector providers, providing data through health
    information exchange organizations.
        Senator Capito. Would you say your private providers are on
    the same e-records as the DOD?
        Dr. Thompson. For those providers that are participants in
    eHealth Exchange, they do have access to the DOD data.
        Senator Capito. There could be providers that were not on
    the eHealth Exchange?
        Dr. Thompson. Providers who are not presently on the
    eHealth Exchange do not have access to that data.
        Senator Capito. You could have an active military person go
    to a private physician and they could not be on this eHealth
    Exchange, and they would not have that data back at the DOD? Am
    I hearing that correctly?
        Dr. Thompson. That is correct presently. The DOD is moving
    aggressively to increase the number of health information
    exchanges and providers that are participants.
        Senator Capito. This layers on a whole other issue.
    Quickly.
        Ms. Council. We do participate in HIE at the VA with over
    1,500 of those in the United States. What that is is a
    standardized data structure, and that is what I was getting to,
    the data. At the end of the day, that is what you have to have
    to be interoperable, and you need a standard across that.
        Within the United States today, the standard is called
    health information exchange or HIE, and we participate in those
    HIEs as a way to engage that information today.
        Senator Capito. Veterans using the Choice card could go to
    a physician that is not in the health information exchange and
    therefore, their records are not interoperable with you?
        Ms. Council. What we do at the VA is if they go to a doctor
    that is outside of our process, we will reach out to that
    doctor and get that information one way or the other. If we can
    get it electronically, we will get it.
        One of the things about interoperability, and I just think
    it is important to remember, it has a continuum. One part of
    the continuum is non-electronic, which is how we moved things
    before, I hate to say it, but it is paper. The other one is
    called semantics, which is data flowing and data moving and
    talking to each other.
        We are on that continuum constantly, and healthcare has
    been on that continuum constantly, moving to that standard
    called HIE.
        Senator Capito. Thank you.
        Senator Kirk. With everybody's indulgence, I will do a
    brief recess so we can make this vote. If you guys can hang
    loose for a second, since we are paid by the vote here.
        [Recess.]
        Senator Tester. I am going to call the hearing back to
    order. Thank you for your patience. Senator Udall has some very
    important questions, and we will let him go.

                      APPOINTMENT SCHEDULING IMPROVEMENTS

        Senator Udall. Thank you, Senator Tester. Thank you so
    much, and thank you to all the witnesses for being here today,
    we really appreciate your service to the country and service to
    our veterans.
        My first question revolves around the VA scheduling
    scandal. Ms. Council, this question is on scheduling, an issue
    that is critically important to the veterans in my State.
        The VA Office of Inspector General recently released a
    report related to the scheduling scandal from 2014
    substantiating claims that the managers at the VA Medical
    Center in Albuquerque abused scheduling software to manipulate
    metrics and make it appear the wait times were shorter than
    they actually were.
        This is similar to the earlier reports of scheduling
    mismanagement in at least seven other States, including
    Illinois and Arizona.
        The findings of this report confirmed allegations that the
    schedule was rigged to make the center look better. That is
    very troubling. Our veterans have earned the best care we can
    provide, the appointment scandal showed a disturbing disregard
    for health and safety of our heroes.
        I have had a chance to discuss the report with the local
    medical center director in Albuquerque. I appreciate that since
    I raised these concerns the VA has taken several steps to
    improve access to care and reduce wait times. That includes
    extended hour and weekend clinics, same-day primary care
    clinic, hiring additional staff, and expanding the use of
    telemedicine.
        However, I hear from VA employees and from veterans there
    is still much work to do. What steps has the Office of
    Information and Technology taken to eliminate opportunities to
    game the system, and aside from changes in traditional
    management practices and training, are there changes that can
    be made in the software to increase accountability and ensure
    that these work arounds are no longer possible?
        Ms. Council. Thank you, Senator Udall, for the questions
    and the background. We agree with you that this is the most
    important thing, to make sure the veterans have access to the
    care they need.
        To your point, within the VSE product, there is a
    capability to keep people from having to go in and change, it
    tracks any change that could be made, and makes sure we can see
    it.
        In addition, there is a product we call Care Now, which is
    a mobile access for the veteran, which will allow them to
    actually schedule with a doc in real time, in a telemedicine
    way, but on a mobile device. We are working with the doctors
    now to put that into full test.
        It was developed to allow the most capable way for the
    veteran to get help whenever they need it, primarily around
    mental health, but it could also be used for urgent care. It is
    a quite nice interactive system. We look forward to sharing
    that with you as we go forward, but our objective is to make it
    as seamless and as easy for the veteran to engage.
        In addition, their ability to make appointments using a
    mobile device through a system called VAR, which you have also
    heard about, which will allow them to request when they want to
    come in, what date they want to come in, what time, based on
    what is available.
        Trying to put those things in their hands using technology
    is core and key, but we are really excited about this Care Now
    application.
        Senator Udall. Thank you. One of the other things I wanted
    to focus on is Federal information technology management. Many
    of these problems are caused at least in part by legacy IT.
        Ms. Council, I have been working in a bipartisan way with
    Senator Moran, Senator Milkulski and others on the
    Appropriations Committee. We want to improve the oversight of
    how we spend over $80 billion annually on information
    technology across the Federal Government.
        At a hearing following the healthcare.gov Web site debacle,
    we called for OMB to publish a top 10 list for the highest
    priority IT investments across the government. We also called
    for better OMB oversight of these IT projects.
        According to the OMB, three of the Nation's highest
    priority IT projects are at the Veterans Administration. The
    first one, electronic health records/VistA; the medical
    appointment scheduling system (MASS); and third, the Veterans
    Benefit Management System (VBMS).

                     MEDICAL APPOINTMENT SCHEDULING SYSTEM

        Ms. Council, I want to ask specifically about the new
    medical appointment scheduling system, the scheduling
    replacement project was terminated in September 2009 after
    spending an estimated $127 million over 9 years.
        What lessons has the VA learned from the failure of its
    previous scheduling replacement project, which was terminated
    at the cost I just noted?
        Are you using agile or incremental development or best
    Federal acquisition practices for the new medical appointment
    scheduling system, and by what dates will the VA's three
    highest priority IT projects be completed? The three that I
    mentioned there, VistA, MASS, and VBMS.
        Ms. Council. That was three questions, I want to make sure
    I address them properly, sir. Upon arrival in 2015, the
    question of scheduling was on point as what we were going to do
    with that.
        I am going to ask David to share where we are on the
    scheduling process and also why we decided to do some of the
    things we have done, because I think he can give the best feel
    on that because he has been here.

                    THREE HIGH RISK VA DEVELOPMENT PROJECTS

        On the three key projects, however, that you mentioned,
    that was brought to my attention immediately upon arrival, that
    VistA is a 40-year-old system, what we are doing on
    modernization. The MASS project had just kicked in, and it was
    all around the scheduling issue and trying to get this right
    and what we were going to do against that.
        The third area was VMBS, which is handling our claims
    business and how we are going to make that work, and some of
    the underlying parts of it, including the BDN system, which is
    over 50 years old.
        When you ask when all of those are going to get done, the
    reality is you always are in a maintenance mode on any
    sustained application. I would like to say you put them in and
    never see them again, it is not true.
        Applications always cost you, so you are always going to
    have maintenance, you are always going to be doing patching,
    you are always going to try to stay ahead of the cybersecurity
    issues that come with day to day issues on applications.
        As far as being done and the capability, I think the
    reality for us as we talk about EHR and VistA in particular,
    there are new capabilities that have to be added.
        I think the team went forward with an honest and open
    process for trying to decide what those could be, but we all
    know we are not able to move fast enough, and did not move fast
    enough to keep it up to speed where it needs to be, and that is
    why we are talking about a new platform called the digital
    health platform.

                              MASS AND SCHEDULING

        On MASS and scheduling, David, if you would give the
    Senator some of the dates on those.
        Mr. Waltman. Thank you. Senator, the question about MASS
    comes back to what Ms. Council referred to in talking about the
    digital health platform. We made an award of the MASS contract
    last fall.
        That was very soon after Ms. Council and Dr. Shulkin
    arrived, and under their leadership, we had to look at the
    bigger picture and whether VistA in the go forward plan made
    sense.
        Since MASS was to be integrated with VistA, with a specific
    COTS product and had a lot of expense and overhead to do that,
    while determining what our path forward was, the decision was
    made to pause MASS.
        We have worked since then with the VistA scheduling
    enhancements, which Ms. Council mentioned, which allows us to
    do some of the things, auditing, lock down clinical indicated
    data, things like that, and we are currently working to
    complete that and have it deployed and is being piloted in
    three sites right now.
        The answer to when MASS will be completed is there is not a
    completion date determined for that because in the context of
    discussing our EHR way forward and a commercial off-the-shelf
    system, we have to consider whether we need to address
    scheduling in that context or separately.
        Senator Udall. Thank you very much, and thank you for your
    courtesies, Mr. Chairman.
        Senator Kirk. Dr. Cassidy.

                   COMPREHENSIVE DEFINITIONS FOR ALL DATASETS

        Senator Cassidy. First, thank you for that reply, just so
    it is on the record. I learned from you earlier that VistA--VA
    is upgrading the VistA system but will eventually replace it
    with a commercial product.
        I know from staff an RFI has been put out, a request for
    information, to understand what the commercials can do in terms
    of capabilities for the VA. You have mentioned the enterprise,
    just for context.
        My head was turned around just for a little bit. One of the
    issues that has been raised for semantic interoperability is
    comprehensive definitions of all the datasets.
        If we wish the VA system and the DOD system to one, talk
    with one another, and two, talk with providers who are outside
    your system, has the DOD and VA established a common set of
    comprehensive semantic definitions? That is my first question
    to Ms. Thompson, I suppose, and Assistant Secretary Council,
    and maybe Ms. Melvin.
        Ms. Council. I will pass this over to Dr. Thompson.
        Dr. Thompson. Thank you for the question. The IPO's role is
    in working with the DOD and VA for that express purpose. We
    work with the Office of the National Coordinator and standards
    development organizations to determine the health data standard
    that the two Departments should implement in their systems, and
    we work with them presently through a process of mapping to
    those standard definitions to ensure that the systems in place
    in the departments comply with those----
        Senator Cassidy. Yes or no, because that is a lot of
    ``we's.'' Yes or no, you have established a comprehensive set
    of semantic definitions or no, but we are working to do so, and
    are committed to doing so prior to the letting of the contract,
    and these are or are not compatible with those who might be
    outside the system but yet providing for those within?
        Dr. Thompson. Yes, sir, we have established those
    definitions.
        Senator Cassidy. You have established those definitions?
    Thank you. These are common as well with the non-DOD/VA
    providers?
        Dr. Thompson. That is correct.

                APPLICATIONS FOR FUTURE DIGITAL HEALTH PLATFORM

        Senator Cassidy. Secondly, for the DOD, are you all
    requiring--I believe Cerner is your vendor or one of your two
    vendors for your EHR, and do you require them to publish their
    APIs, and do you require they allow plug and play of any future
    app that might be developed that would allow someone to again
    put in their blood pressure monitor at home into the EHR, so I
    guess two questions there.
        One, do you require them to publish the API, and two, do
    you require them to do plug and play, and three, if you do
    require them, do you require them to do it at a reasonable
    cost?
        Dr. Thompson. If I may take those questions for the record,
    that program falls outside of my particular domain. I would
    want to make sure I am providing you with the correct
    information.
        [The information follows:]

        Unrestricted publishing of APIs is not required; however, the
    contract provides for all rights necessary to operate, maintain and
    sustain the EHR system solution; modify interfaces; perform
    cybersecurity and software assurance; and, train on the EHR system
    solution, including disclosure within or outside of the Government as
    necessary to perform these functions.
        The contract contains requirements for the integration of future
    health IT applications or modules, as ordered by the Government once
    any such applications or modules are identified as requirements by the
    functional community. Further, in order to simplify the integration of
    possible future applications, the contract requires adherence to
    modular open system architecture design and development approaches.
        Finally, all negotiations are conducted in accordance with FAR 15.4
    which requires establishing the reasonableness of offered prices.

        Senator Cassidy. The VA, and in your RFP, because I am sure
    you are already thinking about it, again, are you going to
    require whichever vendor wins to publish the API because for
    some, it is not proprietary?
        I have also been told they effectively limit plug and play
    even if somebody comes up with a lower cost app, and they limit
    it by basically charging so much to come up with a custom
    design to allow the plug that they effectively eliminate the
    ability to develop plug and play, so my question there.
        Ms. Council. Our recommendation for a digital health
    platform is that it is all open source and we be able to move
    in and out of the platform.
        Senator Cassidy. Again, they will be required to publish
    their APIs as part of the RFP? I see Dr. Nebeker nodding yes.
        Ms. Council. Yes, that is the expectation of our digital
    platform. We are asking for what is not done today because we
    feel it needs to be open. That is part of how you drive
    innovation, and that will be the best way to ensure that we
    have full interoperability.
        Senator Cassidy. That is good. I have also understood that
    under your current VistA platform that one of the problems is
    that each VISN has done a customization of the VistA program
    for their VISN.
        Indeed, VISN 16 does not necessarily communicate with VISN
    10 because they have both been customized, you can tell they
    are related, but they are first cousins, they are not one and
    the same.
        Ms. Council. Yes, there are 130 plus and distinct instances
    of VistA within the VHA today.
        Senator Cassidy. So, the modernization process, are you
    just going to kind of okay, we have to tolerate that until we
    replace, or are you attempting to reconcile that?
        Ms. Council. I think some of the modernization--I will pass
    this on--I think much of the modernization is to ensure safety,
    health, and the clinical side to assure we are capturing the
    things we need to, just to keep the system whole.
        Also, there is security, things we want to make sure the
    system has the capability to do that might not have been
    thought about 40 years ago. David, if you would like to share
    some of the other modernization efforts.
        Mr. Waltman. Yes, thank you. A key part of the
    modernization work that we are doing now that will continue
    into 2018 with the enterprise health management platform is to
    federate that information from those 130 VistA instances, as we
    just talked about, because you are right----
        Senator Cassidy. ``Federate'' implies to me they are
    allowed to continue to have their own domain.
        Mr. Waltman. Until we move to a COTS solution on the
    digital health platform, there is not an intention to collapse
    all of those instances into one because of time, cost, and
    complexity.
        Senator Kirk. Let me just jump in and have you formally
    define ``federate.''
        Mr. Waltman. ``Federate'' means that we take all of the
    health information from those VistAs and bring it into one
    place so it can be used together. That is what the DHP does.
        It also allows us--we have a software development kit to do
    exactly what you just described, exposing the APIs, people are
    able to write and provide apps into the platform using that
    collected, assembled federated data.

                            DIGITAL HEALTH PLATFORM

        Ms. Council. But to avoid this problem of multiple
    instances in the future, that is the recommendation, a digital
    health platform, that we can keep it on one instance, one
    capability, one solution, and everybody has to come to it. The
    fact is that 130 is what makes it slow, makes it cumbersome,
    makes it take a long time, and it makes it inconsistent.
        To your point, moving to an open architecture that allows
    APIs to come in, allows us to use that information, share it,
    and get it back out and do it in a much more seamless area is
    where we want to go with DHP.
        Senator Cassidy. I am also told that Cerner has DOD, let's
    imagine even that Cerner gets VA, as it turns out now, if you
    have one hospital at Cerner and another hospital with Cerner or
    Epic and Cerner, there is information blocking. Whether it is
    because of technological challenges or because of a proprietary
    instinct is a subject of debate, but nonetheless, it occurs.
        What are you all doing in your RFI or RFP to ensure that we
    will not end up with let's just say technological information
    blocking?

                            OPEN SOURCE APPLICATIONS

        Ms. Council. The recommendation that we are making is that
    is not part of our process, and it will have to be
    interoperable and have to be open source.
        This is an IT recommendation, it is so unusual because we
    are asking for software as a service component, which changes
    the way that works, and we are also saying that we would have
    that level of interoperability, to give you an example, you go
    in and you fill a prescription at Walgreens, and then you go
    and you try to fill that same prescription at Rite Aid, it is
    very hard for you to do it because they have to go get the
    information.
        What we are saying is that would not be the case because
    they are all based on the same information about you, so they
    would each see that prescription.

                       GAO SKEPTICISM ON VA'S ASSERTIONS

        Senator Cassidy. I am taking more time and I apologize, but
    I want to ask one more question. Ms. Melvin, I was so struck by
    your skepticism, so we have heard the vision for the VISNs.
        Nonetheless, it seems as if you are skeptical. Were you
    skeptical about the VistA product, coordinating outside of VA,
    are you skeptical about the VA itself and their vision of a
    commercial product being able to coordinate outside of VA?
        Ms. Melvin. The questions that we raised really deal with
    the fact that we have not seen clear planning across VA and DOD
    relative to what they are trying to achieve.
        Senator Cassidy. Let me ask, would you agree with the
    statement that they have worked out a comprehensive set of
    semantic definitions?
        Ms. Melvin. We understand they have from what they say. We
    are still obtaining information from them. We know they have
    identified some of the standards that they need. We have not
    seen other aspects of what they intend to do in terms of
    putting either the interoperable component together for their
    systems, between VA and DOD, or the planning that is necessary
    for VistA modernization.
        One of the things----
        Senator Cassidy. Can I ask, have they committed to you a
    date on which they will provide that information?
        Ms. Melvin. No, we do not have dates yet.
        Senator Cassidy. That seems like a follow up for our
    committee, that we would also obtain that information because
    that seems like one of the key issues here, correct? I am
    sorry, continue.
        Ms. Melvin. One of the points I would make in going back to
    a statement earlier from Ms. Council where she was saying that
    they have not identified one system that is large enough to fit
    their needs, this is the kind of assertion that we would like
    to see, and that we think it is important for them to have the
    analysis and the transparency as to why a particular
    alternative is not sufficient for their needs.
        It kind of goes to the overall concern that we have in
    terms of analysis, planning, looking at the alternatives, and
    what the departments have in fact done that support where they
    tend to be at this time, and then of course, the specifics for
    what it is they are trying to achieve, and how they will know
    when they get there.
        Senator Cassidy. You have been very generous with your
    time, thank you, Mr. Chairman.
        Senator Kirk. Thank you. Mr. Boozman.

                        VA'S PLANNING FOR THE EHR FUTURE

        Senator Boozman. Thank you, Mr. Chairman. Thank you so much
    for having the hearing. Can somebody respond to Ms. Melvin's
    concern about the clear planning?
        Ms. Council. Yes, I can. She is 100 percent correct in what
    you need to do to provide the kind of background information,
    and one of the things that we have done with this
    recommendation is talk to industry leaders including Gardner
    Medical, very large medical organizations, as well as the KLAS
    Group, which is known as the premiere organization for EHR, and
    they are actually working with us to help us build that
    business case, look at the various options.
        We have a 200-page document which they have gone through
    and explained to us from the industry perspective on what is
    out there in COTS, how well they have been received. They
    talked to over 2,300 providers in these areas about what they
    are developing, so we are leveraging an independent view as to
    what makes sense and what will make sense for us, and why
    certain things do and certain things do not.
        Our objective is by the end of this year we will have a
    business case that the next administration or whomever is there
    has real data based on an independent group to understand
    exactly why we made the decisions we did.

                   ELECTRONIC HEALTH RECORDS AVAILABLE TO JLV

        Senator Boozman. Thank you, Ms. Council. I would like to go
    back to a previous discussion that I did not quite understand.
    You mentioned the image viewer would go on line this September
    for those records that are in the JLV. Which records are not in
    the JLV, and who are you missing?
        Mr. Waltman. Thank you, Senator. All electronic health
    records that have been generated in the VA or since DOD has had
    electronic health records are available and accessible for JLV.
    That includes anything that would be in AHLTA, for example, on
    the DOD side, records from back to----
        Senator Kirk. David, I will interrupt you since you used
    the term ``AHLTA,'' that is the data processing system for DOD.
        Mr. Waltman. Correct.
        Senator Kirk. When I was at Walter Reed, the doctors and
    nurses said that stood for okay, let's all try again.
        Mr. Waltman. I will not comment on that. The point is not
    all records that exist for every veteran are electronic, some
    veterans' records predate the electronic record era. The
    records that are electronic are in JLV. The images are in a
    separate image store in both the DOD and the VA, and that is
    the viewer that is going to allow those to be seen that we are
    speaking of.
        Ms. Council. Lauren, did you have anything you wanted to
    add from a DOD point of view?
        Dr. Thompson. No, I think that was an excellent summary.
    Thank you.

                           INDIVIDUAL SERVICE RECORDS

        Senator Boozman. Good, that is helpful. I was pleased to
    hear about the VA's goals with the electronic management
    platform, particularly with the proposed inclusion of the
    veteran's service history to include duty stations and type of
    work they performed during their service, which is really
    important.
        I would like to get a better understanding of how this
    would work in practice. As you know, servicemembers currently
    face a very challenging transition from DOD to the VA.
        When a servicemember separates from their Active Duty, the
    information populating their DD-214 is not automatically made
    available to the VA. It is the veteran's responsibility to make
    sure the VA has the appropriate documentation in order to
    verify their service and eligibility for VA benefits.
        How would eHMP obtain the member's individual service
    record?
        Mr. Waltman. Thank you, Senator. At the present time, the
    military history feature in the HMP is limited to being able to
    have a place for information the veteran provides directly. As
    you said, that is insufficient, and inadequate for seamless
    care.
        It is our desire that with what we have learned about
    clinical record exchange, health information exchange, with
    building JLV, that we will be able to work with our DOD
    colleagues to get the electronic exchange of the service
    history information and be able to feed that directly into the
    platform.
        Ms. Council. I think it is broader than just the
    healthcare. When we look at the totality of the veteran, we are
    looking at the whole veteran dataset, and our enterprise data
    management process is putting that backbone across VHA, VBA,
    NCA, so that way we have the whole look at the veteran, not
    just pieces and parts, and also we want to mitigate the veteran
    having to put information into various data marts as they have
    to do today.
        Senator Boozman. When do you anticipate the platform
    happening?
        Ms. Council. We are beginning that process this year,
    laying out the architecture, bringing in leadership to guide
    that, as well as we have set up a governance council so there
    are data stewards across the organization that will be
    responsible for that data, and veteran data will be owned and
    responsible for our veteran experience team.
        Senator Boozman. One of the problems that we have is making
    sure the servicemember's history and data is accurate. What is
    DOD doing in regard to that? What support would DOD be
    providing?
        Dr. Thompson. If I may, I would like to take that question
    for the record to ensure I provide you with the correct
    information. That falls outside of my immediate domain of
    health data standards.
        [The information follows:]

        Joint Legacy Viewer (JLV) displays servicemember information
    exactly as it's found in the authoritative system (Clinical Data
    Repository (CDR), Composite Health Care System (CHCS), Essentris,
    Theater Medical Data Store (TMDS), etc.). Accuracy is a critical factor
    DOD tests thoroughly before each release. System Integration Testing
    tests patient records in test authoritative data sources like the CDR.
    The testers validate that the data in the disparate data sources
    matches what is displayed in JLV. Further, the operational test report
    also specifies that DMIX has information accuracy.

        Senator Boozman. Good. Thank you, Mr. Chairman. We
    appreciate you all being here. This is certainly something that
    is frustrating in the sense that this has been going on for a
    long time, and as you can tell, there is uniform frustration. I
    know you all are frustrated, too, and working hard to get this
    right.
        Hopefully, we will be able to follow up in the near future
    both in this committee and the Veterans' Committee, DOD, and
    make sure that we are moving in the right direction. Thank you
    very much.
        Senator Kirk. Mr. Hoeven.
        Senator Hoeven. Thank you, Mr. Chairman. Ms. Council, you
    mentioned some of the challenges with your current scheduling
    systems, specifically not having the capabilities to keep up
    with the growing Care in the Community program.
        In North Dakota, where there has been some challenges with
    scheduling Veterans Choice appointments, currently the VA is
    working to implement a pilot project in our State to bring the
    scheduling aspect back to the VA, instead of relying on the
    third-party administrator, which in our case is Health Net.

                       NATIONAL LEVEL IN-HOUSE SCHEDULING

        My questions are does VA have the IT system in place to
    accomplish in-house scheduling on a national level, if not,
    when will we see an updated scheduling system in place that is
    capable of managing Care for the Community appointments for
    Veterans Choice, and what is your near and long-term goal of
    modernizing your current scheduling system?
        Ms. Council. The first part of that question relates to
    Care in the Community, which is led by Dr. Yehia, and we are
    very lock step on that because the Care in Community has a
    bigger issue with the exchange, as I think you well understand,
    Senator, so getting to where we can understand what appointment
    is needed, helping the veteran to make their appointment with
    the doctor, ensuring that the right referrals are happening,
    all the things we are doing using the health interchange that
    we mentioned prior to your arrival.

                               SCHEDULING SYSTEMS

        The scheduling systems, David, I will refer those to you as
    far as making sure we are straight on the timing and
    deployment, but the objective was to put in what is called VSC,
    which is a scheduler that is simpler than what our CPRS system
    is, and I think that was really the core issue around
    scheduling, it was convoluted, very difficult to understand.
        What you are talking about with the veteran in the
    community is how best we make sure we know when they want an
    appointment, and today we are putting in a mobile capability
    called VAR that will allow them to actually request on their
    Smartphone or a call, if they have to, if they are not using
    something electronic, so we could be much more responsive to
    them.
        This is something we are working on daily. As you know,
    Choice has grown, and then figuring out exactly how to get
    these hand shakes clear is something we are very committed to.
    We have to do better. We have a lot more work to do there.
        The Choice program and the scheduling program in general
    are both under engagement, and we are now testing a new
    scheduling capability in dual locations, looking to roll that
    out nationally.
        Senator Hoeven. What are those locations?
        Mr. Waltman. Where that system is being used to see
    patients are at Ashville VA Medical Center, Salt Lake City, and
    Cleveland.

                         SEAMLESS CARE IN THE COMMUNITY

        Senator Hoeven. What I am after, and any one of the three
    of you from VA who want to take a stab at addressing it, under
    the old model, when a veteran wanted care, they called the VA,
    and they either got institutional VA care from a health center
    or community-based outpatient clinic (CBOC), or they got care
    through what was called non-VA healthcare. That was in the
    community.
        For the most part, that system seemed to work, not
    everywhere in the country, but certainly in our part of the
    country that worked pretty well. They were getting their
    appointments and they were getting to the VA or to a local
    private provider if they needed to.
        With the third-party providers in place, that system has
    totally bogged down Veterans Choice, which is creating a real
    problem. That is why we have the pilot project going in North
    Dakota, which will serve North Dakota and Western Minnesota. I
    am very appreciative the VA is doing that, and I am just trying
    to keep it moving along.
        I think somehow nationally we have to get to a more
    seamless process so veterans are not held up from their
    appointments, so they get timely appointments, and so that the
    private providers get paid so they will take those veterans and
    take them in a timely way, and they are not trying to get
    payment out of the veteran then rather than the VA.
        If you could just address how we are going to get there and
    how soon we can get there, I would appreciate it.
        Ms. Council. I will come back to you on some of the
    business issues that are going on with some of the early pay
    and some of the things Dr. Shulkin and his team are doing to
    ensure that people get paid faster and quicker.
        Getting there and completion requires that we must also
    sort of know what the program is going to look like in the
    future. As you know, that is part of the process that is
    currently ongoing.
        We are working very aggressively. We have over 1,500 health
    interchanges in which information is shared with providers. We
    are paying early. We are paying faster. We do not want to have
    that sort of log jam because there has always been a referral
    process within the VA, but as you know with Choice, it requires
    that we step further.
        A date certain for all completion nationally, I do not
    have, but I will come back to you with that.
        [The information follows:]

        The Community Care Scheduling pilot at the Fargo VAMC was initiated
    in September 2016. The Office of Community Care provided routine
    updates to Senator Hoeven's office. On August 31, 2016, the Senator and
    his staff met with VAMC leadership and the Office of Community Care to
    receive a status update on major milestones for the pilot. The key
    milestones included contract modifications to the HealthNet contract,
    union negotiations, process flows and standard operating procedures for
    implementation, and staff training.

        Senator Hoeven. It seems to me that is a real key for your
    data systems, to be able to get----
        Ms. Council. It is.
        Senator Hoeven. Mr. Waltman or Dr. Nebeker.
        Dr. Nebeker. The level of interoperability, this is like a
    wonderful case for interoperability, right, to be able to
    schedule for a veteran to come to us and say hey, look, we
    think we can help you better if you go across the street or
    more locally to your town to get an appointment, let us help
    you get an appointment.
        Technology does exist for this, but we are analyzing the
    maturity of this technology to see if there is
    interoperability. University Health Network has some technology
    for this.
        Also, Boston University was doing a pilot several years ago
    that could do this, and now with North Dakota and Louisiana
    State University, so we are working with these partners to
    assess the maturity and suitability to bring these
    technologies. We look forward to the lessons learned from North
    Dakota.
        Senator Hoeven. Mr. Waltman, anything you want to add?
        Mr. Waltman. Thank you, Doctor, you hit the nail on the
    head there. That is exactly what we are after, and I appreciate
    you saying so. That is what will serve the veteran. It will
    serve them through the VA in the best way possible, but also
    when they need to go to a local provider either for a certain
    capability or just proximity, distance and time, so thank you.
    I think that is exactly right, that is what we need to do. I
    would like to thank all three of you for your work in this
    area.
        Senator Hoeven. Thank you, Mr. Chairman.
        Senator Kirk. Thank you. I will start with my questioning,
    because I am pretty seized with this issue. LaVerne, when we
    met, I want to tell you my tale of woe, because I am so focused
    on this issue.

                               INCEPTION OF VISTA

        Could you please tell the committee when VistA was started,
    what year?
        Ms. Council. I have seen a date from 1973 to 1975, but in
    1975.

                              HEALTHCARE ANALYTICS

        Senator Kirk. I was so concerned about this, I went down to
    the Smithsonian and went to the Innovations Station Exhibit and
    took pictures of computers, like this one, the Altair 880,
    which is considerably younger than all the systems that you
    have. This was the state-of-the-art in 1975, and for $500, I
    can get you one.
        Is it the state of VistA, it is at this level of
    technology? Let me follow up. When we got to the heart of this
    hearing, you certified that you are interoperable based on the
    JLV's existence, and we now know that the JLV does not have x-
    rays or CAT scans, and that is interoperable from your
    viewpoint.
        I would say you could expect some further definition from
    this committee on that point, that we need to move forward on
    this point to make sure there is no net burden on the soldier
    and sailor when they come out of the Service, that we 100
    percent transfer data to the VA, so that VA can see all the
    imagery and everything.
        In the case of my friend who came back from Iraq, all 38
    events in her combat career are included in the record for
    disability adjudication.
        The long term vision that I have, want to make sure that we
    go with a full blown Apple app on the Apps store. I talked to
    Cerner this morning. They said they already have several apps
    through the Apps store. I would like VA--remembering that the
    average age of people coming out of Service is going to be
    about 19, if you are a full blown citizen of the 21st century,
    you will live on this device.
        We are going to have to make sure that there is an app
    right there with full access to their record, including
    imagery, to make sure their clinicians can do the analytics.
        When I got deeper into this, I realized I was going farther
    and farther ahead of my own constituents who may not know what
    analytics does for their healthcare. I would say analytics
    takes us to the next level.
        In the case of being able to predict sepsis or suicide, in
    the case of Epic, they said in the case of sepsis, that was
    54,000 lives that they think were saved by analytics on
    probability of sepsis.
        When I talked to Cerner, they said the Joint Legacy Viewer
    cannot do analytics of the kind to take us to the next level. I
    want to make sure that--only this committee, I think, with
    jurisdiction over military construction and VA, can lean on
    both bureaucracies.
        When I first seized with this issue, I thought let's go
    with a Mark Kirk version, which would be to make all narratives
    Microsoft Word, all images JPEG, so we force the bureaucracy to
    talk to itself and make sure that when you serve the United
    States in uniform, you can make sure that all of the work the
    taxpayers already paid for and your medical record is there for
    the VA.
        Ms. Council. Sir, I think you know from our conversations
    that I concur with you 100 percent, and just to be clear, our
    certification of interoperable with JLV was against NDAA
    section 713(b)(1). It is not to say that it is semantically
    interoperable, it is not.
        Senator Kirk. When you cite that section of the law, it
    does use the word ``interoperable.'' I want to make sure we are
    not in a situation where it depends on what the definition of
    ``is'' is. We have to get away from that kind of thinking.
        Ms. Council. Totally agree. I think you and I also agree on
    the fact that having an open platform that will allow new
    innovation to come to bear, allow us to really use the best and
    the brightest, and also do more around analytics is core and
    key to predictive medicine.
        This is where the organization is moving, probably not
    moving as fast as any of us would like, but certainly we
    understand the value of that, and the value of supporting our
    veterans with the best.
        Senator Kirk. Thank you. I want to go with a full blown
    Apple app and make sure all these 19 year olds when they come
    out, they just hit the application and can see a full blown
    record and can contact VA if they see errors.
        Ms. Council. Yes.
        Senator Kirk. And that we move forward on that basis. You
    will be getting some pretty strong recommendations from this
    subcommittee on that point.

                         ADDITIONAL COMMITTEE QUESTIONS

        Let me move to closing here. I want to thank everybody for
    coming today, and especially my partner, Senator Tester. We
    will leave the record open until the close of next week. Our
    members may submit questions for the record.
        [Clerk's note: No questions were submitted to the
    Department for response subsequent to the hearing.]

                             CONCLUSION OF HEARINGS

        Senator Kirk. We stand adjourned.
        [Whereupon, at 12:10 p.m., Wednesday, April 10, the
    hearings were concluded, and the subcommittee was recessed, to
    reconvene at a time subject to the call of the Chair.]

       MILITARY CONSTRUCTION AND VETERANS AFFAIRS, AND RELATED AGENCIES
                      APPROPRIATIONS FOR FISCAL YEAR 2017

                                  ----------

                                           U.S. Senate,
               Subcommittee of the Committee on Appropriations,
                                                        Washington, DC.

                           NONDEPARTMENTAL WITNESSES

        [Clerk's Note.--The subcommittee was unable to hold
    hearings on nondepartmental witnesses. The statements of those
    submitting written testimony are as follows:]
            Prepared Statement of the American Physiological Society
        The American Physiological Society (APS) thanks the subcommittee
    for its ongoing support of Medical and Prosthetic Research at the
    Department of Veterans Affairs (VA). VA medical research facilities
    across the country provide veterans access to state-of-the-art
    healthcare and conduct research that specifically addresses the medical
    needs of veterans. The APS urges you to make every effort to fund the
    VA Medical and Prosthetic Research Program at a level of $664.7 million
    in fiscal year 2017.
                  challenges for va research and medical care
        The VA research program specifically addresses medical needs of
    veterans, but new technologies and treatments developed at VA medical
    centers lead to healthcare improvements for all Americans. VA
    scientists have done seminal research into rehabilitation following
    traumatic injury, development of state of the art prosthetic devices to
    recover functionality, and treatment for post-traumatic stress
    disorder, traumatic brain injury, and mental health issues including
    suicide. These medical problems are more prevalent among veterans but
    are also common in the general population. VA research also explores
    other conditions such as dementia, diabetes, pain, addiction and cancer
    and offers hope for the veteran and non-veteran alike. The research
    carried out in these areas and their resulting innovations will be
    particularly important in the coming decades as an aging population
    brings new challenges to the American healthcare system.
        VA scientists are increasing research on issues specific to female
    veterans to better understand gender-specific healthcare needs, women's
    experiences in service, and future health risks. The VA also has a
    long-standing research portfolio aimed at addressing minority
    healthcare needs and disparities in access, delivery and quality.
                       bringing innovation to healthcare
        Because most VA researchers are also clinicians caring for
    patients, the VA research system is ideally situated to foster the
    translation of basic biomedical research findings into clinically
    relevant diagnostics and treatment modalities. The VA has developed a
    number of programs that facilitate the translation of knowledge gained
    in the lab to use in a clinical setting. One example is the Million
    Veteran Program (MVP) which collects genetic samples and general health
    information from 1 million veterans and tracks them over 5 years,
    creating a wealth of information that will inform research and efforts
    to improve healthcare.
        Finally, in addition to focusing on research and patient care, VA
    medical researchers also play a critical role in educating the next
    generation of physician-scientists. Currently, more than half of all
    practicing physicians in the US receive some of their training at a VA
    facility.
                            investing in the future
        In recent years, Congress has increased funding for the VA Medical
    and Prosthetic Research Program, allowing clinicians and researchers to
    pursue new ideas that would otherwise go unexplored and expand research
    in promising areas of science. In order to build on this investment in
    the VA research enterprise, the APS joins our colleagues at the
    Federation of American Societies for Experimental Biology in urging you
    to appropriate $664.7 million for VA Research in fiscal year 2017. This
    level of investment will allow the VA to maintain their current
    research program while pursuing new directions to address the needs of
    the veteran population.
                    about the american psysiological society
        The APS is a professional society dedicated to fostering research
    and education as well as the dissemination of scientific knowledge
    concerning how the organs and systems of the body work. The Society was
    founded in 1887 and now has more than 10,000 member physiologists. Our
    members conduct research at colleges, universities, medical schools,
    and other public and private research institutions across the U.S.,
    including VA facilities.
                                     ______

        Prepared Statement of the Federation of American Societies for
                              Experimental Biology
        The Federation of American Societies for Experimental Biology
    (FASEB) respectfully requests a minimum of $664.7 million for the VA
    Medical and Prosthetic Research Program in fiscal year 2017. This
    funding level is needed to keep pace with inflation and sustain support
    for research on conditions common among service members returning from
    conflicts overseas, as well as the aging veteran population from
    previous eras.
        FASEB, a federation of 30 scientific societies, represents 125,000
    life scientists and engineers, making it the largest coalition of
    biomedical research associations in the United States. Our mission is
    to advance health and welfare by promoting progress and education in
    biological and biomedical sciences.
        The Department of Veterans Affairs (VA) Medical and Prosthetic
    Research Program provides leadership in creating discoveries and
    developing innovations that advance healthcare for our veterans.
    Outcomes from this research, however, provide benefits to the entire
    Nation. Research supported by the VA serves as a model for how
    scientific inquiry and innovative thought can transform medicine.
        It is an obligation to provide the highest quality care to those
    who have made great sacrifices in service to this country. More than 70
    percent of VA researchers are also clinicians who provide direct
    patient care, allowing the agency to quickly translate discoveries in
    the laboratory to healthcare improvements. VA-clinician investigators
    identify new research questions at the patient's bedside and also
    undertake a wide array of research to improve the lives of veterans.
        VA-funded research has produced significant returns, from advancing
    basic knowledge about disease mechanisms to the development of new
    treatments and therapies. Partnerships between VA and biotechnology
    companies have led to the creation of state-of-the-art prosthetics,
    including a bionic ankle-foot that is now in clinical use and systems
    that activate residual or paralyzed nerves, muscles, and limbs. In
    addition, a unique collaboration between VA researchers and private
    pharmaceutical companies supported a successful clinical trial that led
    to the development of a vaccine for the shingles virus. Previous VA
    clinical trials and studies found that vitamin E can significantly
    delay functional decline among those with mild to moderate Alzheimer's
    disease and helped shape national guidelines on the use of statin drugs
    for patients with high cholesterol.

        Additional examples of VA-supported research include:

      --Nano-Scale Bone Regeneration Technology: Researchers from the
            Atlanta VA medical center have developed a new method for
            regenerating bone that could lead the way into a new realm of
            osteoporosis therapies. The researchers were able to promote
            regeneration of bone in laboratory mice by injecting tiny,
            ball-shaped particles covered in silica. These studies of
            silica nanoparticle therapies will shed light on the precise
            mechanisms of bone formation and repair, and may one day lead
            to the development of reliable treatments for bone
            degeneration.\1\
    ---------------------------------------------------------------------------
        \1\ http://www.research.va.gov/currents/0815-6.cfm.
    ---------------------------------------------------------------------------
      --microRNA Cancer Therapy: Small RNA molecules called microRNAs are
            crucial regulators of genes throughout the genome. Scientists
            at the VA Northern California Health System have discovered a
            particular microRNA that seems to be deficient in bladder
            tumors. The team subsequently was able to demonstrate that
            reintroduction of this microRNA molecule reduces tumor cell
            viability and is now exploring ways in which such molecules
            might be translated into effective therapies.\2\
    ---------------------------------------------------------------------------
        \2\ http://www.research.va.gov/currents/june15/0615-6.cfm.
    ---------------------------------------------------------------------------
      --Genomic Medicine at the VA: As part of the president's Precision
            Medicine Initiative, the VA is undertaking the Million Veterans
            Program (MVP). The program is collecting genomic and other
            health data from a million veterans in the hopes of finding
            medical solutions for the ailments afflicting our Nation's
            veterans and the broader American public. For example, in a
            pilot study using MVP data, VA researchers are looking at how
            genetics might predict patients' response to antidepressants,
            thus informing how best to treat depression.\3\
    ---------------------------------------------------------------------------
        \3\ http://www.research.va.gov/currents/1015-2.cfm.
    ---------------------------------------------------------------------------
      --Heart Attack Detection Technology: In the event of a heart attack,
            rapid access to care is critical in order to prevent damage to
            the heart muscle and to save the patient's life. Researchers at
            Michael E. DeBakey VA Medical Center in collaboration with
            Baylor College of Medicine have begun to develop a technology
            that can use a person's saliva to rapidly diagnose heart
            attacks when chest-pain or other symptoms are first reported.
            This new technology has the potential to increase both the
            speed and accuracy of heart attack diagnosis, thus greatly
            improving outcomes for heart diseases sufferers.\4\
    ---------------------------------------------------------------------------
        \4\ http://news.rice.edu/2010/05/06/diagnosing-heart-attacks-may-
    be-a-lick-and-a-click-away/.
    ---------------------------------------------------------------------------
      --Personalized Medicine for Pain Management: Millions of Americans
            suffer from chronic pain. By investigating the genetic
            underpinnings of a specific type of agonizing chronic pain
            called ``Man on Fire Syndrome,'' researchers at the West Haven
            VA and the Yale School of Medicine were able to discover an
            association between a particular protein variant and a positive
            response to a pain-killing drug. This finding opens up the
            possibility for pain treatments tailored to specific patients
            based on their individual genotypes.\5\
    ---------------------------------------------------------------------------
        \5\ http://medicine.yale.edu/cnrr/news/article.aspx?id=4412.
    ---------------------------------------------------------------------------
    sustained research efforts are critical to meeting increased demand for
                              health care services
        VA research efforts support innovations in care for the growing
    population of veterans and non-veterans with chronic illnesses. Hearing
    loss is the most common service-connected disability in the VA
    healthcare system and affects nearly 30 million Americans. Research
    funded by the VA is examining new methods of harnessing technology to
    diagnose and treat individuals with hearing disorders. In addition, the
    VA is at the forefront of developing treatments to restore vision and
    design new assistive devices for the nearly 1 million veterans who are
    estimated to be coping with severe visual impairments.
        The demand for mental health services is especially acute.
    Approximately one in five veterans who served in Iraq and Afghanistan
    currently have Post Traumatic Stress Disorder (PTSD) and 300,000 VA
    patients seek treatment for major depressive disorder annually. From
    fiscal year 2013-fiscal year 2014, the total number of all veterans
    receiving compensation for service connected disabilities increased by
    10 percent even though VA's research budget grew by only 0.6 percent in
    the same time period.\6\
    ---------------------------------------------------------------------------
        \6\ http://www.benefits.va.gov/REPORTS/abr/ABR-Compensation-FY14-
    10202015.pdf.
    ---------------------------------------------------------------------------
        To address the full spectrum of veterans' healthcare needs and meet
    the increasing requests for services, the VA Medical and Prosthetic
    Research Program must be provided with additional resources. The
    Medical and Prosthetic Research Program will need a budget of $664.7
    million (an increase of $34 million over fiscal year 2016) in fiscal
    year 2017 in order to keep pace with inflation and sustain support for
    research on conditions common among servicemembers returning from
    conflicts overseas, as well as the aging veteran population from
    previous eras. Funds are also required to continue to enhance and
    further develop the MVP.
        FASEB recommends a minimum of $664.7 million for the VA Medical and
    Prosthetic Research Program in fiscal year 2017 to address the
    healthcare problems of the veteran population and ensure they receive
    the high quality care they have earned.

                Sincerely,

    The American Physiological Society
    American Society for Biochemistry and Molecular Biology
    American Society for Pharmacology and Experimental Therapeutics
    American Society for Investigative Pathology
    American Society for Nutrition
    The American Association of Immunologists
    American Association of Anatomists
    The Protein Society
    Society for Developmental Biology
    American Peptide Society
    Association of Biomolecular Resource Facilities
    The American Society for Bone and Mineral Research
    American Society for Clinical Investigation
    Society for the Study of Reproduction
    The Teratology Society
    The Endocrine Society
    The American Society of Human Genetics
    International Society for Computational Biology
    American College of Sports Medicine
    Biomedical Engineering Society
    Genetics Society of America
    American Federation for Medical Research
    The Histochemical Society
    Society for Pediatric Research
    Society for Glycobiology
    Association for Molecular Pathology
    Society for Redox Biology and Medicine
    Society for Experimental Biology and Medicine
    American Aging Association (AGE)
    U.S. Human Proteome Organization (US HUPO)

           LIST OF WITNESSES, COMMUNICATIONS, AND PREPARED STATEMENTS

                                  ----------
                                                                       Page

    American Physiological Society, Prepared Statement of the........   221

    Baldwin, Senator Tammy, U.S. Senator From Wisconsin, Questions
      Submitted by...................................................   108
    Ballentine, Hon. Miranda A.A., Assistant Secretary of the Air
      Force, Installations, Environment, and Energy:
        Prepared Statement of........................................   145
        Statement of.................................................   143

    Collins, Senator Susan M., U.S. Senator From Maine, Questions
      Submitted by...................................................   107
    Council, Hon. Laverne H., Assistant Secretary for Information and
      Technology and Chief Information Officer:
        Prepared Statement of........................................   181
        Statement of.................................................   177
        Summary Statement of.........................................   179

    Federation of American Societies for Experimental Biology,
      Prepared Statement of the......................................   222

    Hammack, Hon. Katherine, Assistant Secretary of the Army,
      Installations, Energy, and Environment:
        Prepared Statement of........................................   131
        Statement of.................................................   130

    Iselin, Steven R., Principal Deputy Assistant Secretary of the
      Navy, Energy, Installations, and Environment:
        Prepared Statement of........................................   137
        Statement of.................................................   136

    Kirk, Senator Mark, U.S. Senator From Illinois, Opening
      Statements of

    Manker, Jamie, Chief Financial Officer, Veterans Benefits
      Administration.................................................     8
    McConnell, Senator Mitch, U.S. Senator From Kentucky, Questions
      Submitted by...................................................   102
    McDonald, Hon. Robert A., Secretary, Department of Veterans
      Affairs:
        Prepared Statement of........................................    52
        Questions Submitted to.......................................   102
        Statement of.................................................    47
        Summary Statement of.........................................    49
    Melvin, Valerie C., Director, Information Management and
      Technology Resources Issues, Government Accountability Office:
        Prepared Statement of........................................   190
        Statement of.................................................   188

    Nebeker, Dr. Jonathan R., Deputy Chief Medical Information
      Officer, Veterans Health Administration........................   177

    Potochney, Peter J., Performing the Duties of Assistant Secretary
      of Defense, Energy, Installations and Environment:
        Prepared Statement of........................................   116
        Statement of.................................................   115
        Summary Statement of.........................................   116
    Pummill, Danny G.I. (Ret.), Acting Under Secretary for Benefits,
      Veterans Benefits Administration:
        Prepared Statement of........................................    10
        Statement of.................................................     8
        Witness in the Department of Veterans Affairs Hearing on
          Thursday, March 10, 2016, Accompanying Hon. Robert A.
          McDonald, Secretary, Department of Veterans Affairs........    47

    Shulkin, Hon. David J., MD, Under Secretary for Health, Veterans
      Health Administration:
        Prepared Statement of........................................     4
        Statement of.................................................     1
        Summary Statement of.........................................     2
        Witness in the Department of Veterans Affairs Hearing on
          Thursday, March 10, 2016, Accompanying Hon. Robert A.
          McDonald, Secretary, Department of Veterans Affairs........    47

    Tester, Senator Jon, U.S. Senator From Montana, Statements of

    Thompson, Dr. Lauren, Director, DOD/VA Interagency Program
      Office, Department of Defense:
        Prepared Statement of........................................   197
        Statement of.................................................   196

    Waltman, David W., Chief Information Strategy Officer, Veterans
      Health Administration..........................................   177

    Yow, Mark, Chief Financial Officer, Veterans Health
      Administration.................................................     1

                                 SUBJECT INDEX

                                  ----------

                             DEPARTMENT OF DEFENSE

                       Office of the Secretary of Defense

                                                                       Page

    Base Realignment and Closure.....................................   125
    BRAC.............................................................   172
    Building and Maintaining Resilience in the Face of a Changing
      Climate........................................................   129
    Commonwealth of Northern Mariana Islands (CNMI) Initiatives......   128
    Environmental:
        Conservation and Compatible Development......................   122
        Restoration..................................................   120
        Technology...................................................   121
    European Infrastructure Consolidation............................   127
    Facilities Sustainment and Recapitalization......................   119
    Family and Unaccompanied Housing.................................   118
    Financial Improvement & Audit Readiness..........................   129
    Fiscal Year 2017 Budget Request:
        Energy Programs..............................................   123
        Environmental Programs.......................................   120
        Military Construction and Family Housing.....................   117
    Highlighted Issues...............................................   125
    Installation Energy..............................................   124
    Merger of the Energy, Installations, and Environment
      Organizations..................................................   125
    Military Construction............................................   117
    Mission Compatibility Evaluation Process.........................   130
    Operational Energy...............................................   123
    Overseas Contingency Operations..................................   118
    Rebalance to the Asia-Pacific....................................   127
    Rebasing of Marines from Okinawa to Guam.........................   127
                                   __________

                          DEPARTMENT OF THE AIR FORCE

    Air Force:
        2005 BRAC Round..............................................   162
        Community Partnership Program................................   148
    Alternative Aviation Fuel........................................   153
    Base Realignment and Closure (BRAC)..............................   148
    Clean Energy.....................................................   151
    Climate Change...................................................   149
    Cost:
        Competitive..................................................   151
        Sharing......................................................   167
    Energy...........................................................   150
    Environmental Stewardship........................................   153
    European Infrastructure Consolidation............................   162
    F-35A Beddown--2017 MILCON Program...............................   163
    Facility Sustainment, Restoration and Modernization..............   147
    Housing..........................................................   147
    Installation Energy..............................................   150
    KC-46 Strategic Basing Process--Main Operating Base Four Beddown.   170
    Materiel Solutions...............................................   152
    Military Construction............................................   145
    Mission Assurance through Energy Assurance.......................   150
    Modeling and Simulation..........................................   152
    Operational Energy...............................................   152
    Process Changes..................................................   153
    Resilience.......................................................   151
    RPA Wing Beddown.................................................   170
    Science and Technology...........................................   152
    The Sweet Spot...................................................   152
    UH-1N Replacement MILCON.........................................   169
                                   __________

                             DEPARTMENT OF THE ARMY

    BRAC.............................................................   172
    Cost Sharing.....................................................   167
    Ensuring Energy Security.........................................   134
    Fort McCoy.......................................................   165
    Information Memorandum...........................................   157
        Timeline for Army Cleanup at White Sands Missile Range.......   157
    Investing in Essential Infrastructure............................   133
    Making Efficient Use of Army Facilities..........................   132
    MILCON Backlog...................................................   164
    Preserving Ready Installations...................................   133
    Renewable Energy.................................................   166
    Safeguarding our Environment.....................................   135
    WSMR/Sustainment Funding.........................................   156
                                   __________

                             DEPARTMENT OF THE NAVY

    Base Operating Support (BOS).....................................   140
    Cost Sharing.....................................................   167
    Enhancing Combat Capabilities....................................   142
    Facilities Sustainment, Restoration and Modernization (FSRM).....   140
    Family Housing...................................................   139
    Investing in Our Infrastructure..................................   137
    Managing Our Footprint...........................................   140
    Military Construction (MILCON)...................................   138
    Protecting Our Environment.......................................   141
    Safety Program...................................................   140
    Sustainment Funding..............................................   143
                                   __________

                         DEPARTMENT OF VETERANS AFFAIRS

    2018 Advance Appropriation.......................................    84
    A Vision for the Future..........................................    52
    Access Received Closer to Home...................................    85
    Additional Committee Questions

    Albuquerque VAMC Medical Investigation Report....................    96
    Analytic Capability..............................................   203
    Applications for Future Digital Health Platform..................   209
    Appointment Scheduling Improvements..............................   206
    Benefits Programs................................................    66
    Better Care in the Community Legislation.........................    83
    Choice:
        Program......................................................   110
            Alaska...................................................    98
        Third Party Service Providers................................    87
    CIO Council Impression of VA IT..................................   199
    Closing Unsustainable Facilities.................................    63
    Comprehensive Definitions for All Datasets.......................   209
    Digital Health Platform..........................................   211
    Disposition of Final Reports on Tomah............................   110
    Dysfunctional Continuum of Care--Choice Program..................   107
    Electronic Health Records Available to JLV.......................   213
    Ending Veteran Homelessness......................................    66
    Ensuring Veterans Access to Care.................................    64
    Enterprise Cybersecurity Strategy................................   185
    Exempting Copayment Requirements for Naloxone Rescue Kits and
      Education......................................................   113
    Female Veterans..................................................   111
    Fiscal Year 2017 Budget Request..................................    58
    Full Interoperability............................................   204
        Timetable....................................................   201
    GAO Skepticism on VA's Assertions................................   212
    Healthcare Analytics.............................................   217
    Hines VAMC:
        Inspector General Investigation..............................    97
        Scheduling Manipulation Investigation........................    82
        Wait Times Data..............................................    97
    Inception of VistA...............................................   217
    Individual Service Records.......................................   213
    Inspector General:
        Confirmation.................................................    83
        Missal Nomination for Approval...............................    96
    Interoperability and Enterprise Health Management Platform.......   199
    IT Transformation and Enterprise Program Management Office.......   186
    Jason Simcakoski Memorial Opioid Safety Act......................    91
    Joint Legacy Viewer Lacking Analytics............................   202
    Legislative Priorities...........................................    80
    Long-Term and Home Care..........................................    88
    Looking to the Future............................................   183
    MASS and Scheduling..............................................   208
    Medical:
        Appointment Scheduling System................................   207
        Prosthetic Research..........................................    72
    MyVA Transformation..............................................    76
    National Level In-House Scheduling...............................   215
    One Seamless System..............................................   204
    Open Source Applications.........................................   211
    Other Priorities.................................................    73
    Over 800 VA Applications.........................................   199
    Private Providers and Health Information Exchange................   205
    Productivity Improvements and Stewardship........................    61
    Recruitment of VA Medical Staff..................................    95
    Rising Demand for VA Care and Benefits...........................    58
    Scheduling.......................................................   184
        Systems......................................................   215
    Seamless Care in the Community...................................   216
    SES Executives to Title 38.......................................    84
    Simplified Appeals Process Proposal..............................    85
    Single VA and DOD EHR System.....................................   204
    Social Security Numbers as Identifier to Veterans' Records.......    91
        Article From Channel3000.com, WISC-TV, News 3, Madison,
          Wisconsin, (By Adam Schrager)..............................    92
    The Simplified Appeals Initiative................................    68
    Three High Risk VA Development Projects..........................   208
    Use of Social Security Numbers as Identifiers for Veterans.......   108
    VA:
        Agency Priority Goals........................................    55
        Graduate Medical Education (GME) Expansion and Staffing......   111
        Healthcare:
            Operational Issues in Alaska.............................   100
            Staffing Productivity to Private Sector..................    89
        Infrastructure...............................................    74
        Participation in Prescription Drug Monitoring Program........   107
        Patient Scheduling System....................................    90
        Planning for the EHR Future..................................   212
    Veterans:
        Choice Improvement Act.......................................    87
        Crisis Line Contractor.......................................    98
    VistA Evolution/Interoperability.................................   181

                        GOVERNMENT ACCOUNTABILITY OFFICE

    Background.......................................................   192
    Electronic Health Records........................................   190
    Full Interoperability............................................   204
    GAO:
        Highlights...................................................   190
        Skepticism on VA's Assertions................................   212
    One Seamless System..............................................   204
    Single VA and DOD EHR System.....................................   204
    Together with DOD and the Interagency Program Office, VA Needs to
      Develop Goals and Metrics for Assessing Interoperability.......   194
    VA:
        Efforts Raise Concerns About Interoperability Goals and
          Measures, Duplication With DOD, and Future Plans...........   190
        Has Begun to Implement VistA Modernization Plans Amid
          Uncertainty About Its Approach; the Department Is Currently
          Reconsidering How to Proceed...............................   195
        Plan to Modernize VistA Raises Concern about Duplication with
          DOD's Electronic Health Record System Acquisition..........   194
    What GAO:
        Found........................................................   190
        Recommends...................................................   190
    Why GAO Did This Study...........................................   190
                                   __________

                        VETERANS BENEFITS ADMINISTRATION

    Access to Care...................................................    19
    All VBA Benefit Programs.........................................    14
    Appeals Backlog..................................................    20
    Claims Processing Transformation.................................    12
    Forecast for Benefits Demand.....................................    34
    Fully Developed Claims Expedited Process.........................    23
    Legislation......................................................    16
    Military Sexual Trauma Adjudication..............................    22
    MyVA Transformation--Meeting Veterans' Needs.....................    12
    New Agency Priority Goal to Improve Dependency Claim Processing..    14
    Other Than Dishonorable Discharge................................    27
    Rising Demand for Disability Benefits............................    10
    Simplify Appeals Process.........................................    23
    Summary of 2017 Budget Request...................................    10
    Transformation Initiatives in the President's 2017 Budget Request    13
    VBA Budget Request...............................................    22
    Veterans to Agriculture Project..................................    32
                                   __________

                         VETERANS HEALTH ADMINISTRATION

    Access to Care...................................................    19
    Additional Committee Questions

    Administrative Investigation Board on Milwaukee Domiciliary......    38
    Advances in Medical and Prosthetic Research......................     7
    Albuquerque VAMC Medical Investigation Report....................    96
    Analytic Capability..............................................   203
    Appeals Backlog..................................................    20
    Best Practices System............................................    29
    Care in the Community............................................     6
    Caregiver:
        Program......................................................    33
        Support Program..............................................     6
        Tracking System..............................................    35
    Choice:
        Program Third Party Administrators...........................    31
            Alaska...................................................    98
        Third Party Service Providers................................    87
    Connecticut Campaign to End Chronic Veteran Homelessness.........    28
    Electronic Health Records:
        And GAO High Risk List.......................................    25
        Available to JLV.............................................   213
    Ending Veterans Homelessness.....................................     7
    Front Line Disciplinary Action...................................    30
    Healthcare:
        Analytics....................................................   217
        Facilities Budget Request....................................    26
    Hepatitis C:
        Drug Treatment...............................................    41
        Virus........................................................     6
    Hines VAMC:
        Inspector General Investigation..............................    97
        Wait Times Data..............................................    97
    Improved Access to Care..........................................     5
    Improving Veterans Access to Care in the Community Act...........    21
    Inception of VistA...............................................   217
    Individual Service Records.......................................   213
    Inspector General Missal Nomination for Approval.................    96
    Interoperability Definition......................................   200
    Jason Simcakoski Memorial Opioid Safety Act......................    91
    Joint Legacy Viewer:
        Lacking Analytics............................................   202
        Imaging Issues...............................................   200
    Long-Term and Home Care..........................................    88
    Mental Health:
        Care (Suicide Prevention--A Call To Action)..................     5
        No-Show Rate Appointments....................................    29
    Montana's Choice Program With Health Net.........................    21
    Naloxone Kits as a High Priority.................................    40
    National Level In-House Scheduling...............................   215
    Open Air Burn Pits Registry......................................    20
    Opioid Dependence and Alternatives...............................    33
    Other Than Dishonorable Discharge................................    27
    Over Prescription of Opioids.....................................    43
    Recruitment of VA Medical Staff..................................    95
    Scheduling Systems...............................................   215
    Seamless Care in the Community...................................   216
    Social Security Numbers as Identifier to Veterans' Records.......    91
        Article From Channel3000.com, WISC-TV, News 3, Madison,
          Wisconsin, (By Adam Schrager)..............................    92
    Standard Productivity Measures...................................    25
    Telehealth and Telemedicine......................................    23
    VA:
        DOD Joint Electronic Health Record...........................    44
        Healthcare:
            Operational Issues in Alaska.............................   100
            Staffing Productivity to Private Sector..................    89
            System in Alaska.........................................    35
        Patient Scheduling System....................................    90
    Veterans:
        Choice Improvement Act.......................................    87
        Crisis Line..................................................    17
            Contractor...............................................    98
    VHA 2018 Advance Request.........................................    43

                                       -