[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.

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    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.


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                    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.

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    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.

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    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.

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    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.

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    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.

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    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.

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    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.

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    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.

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    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.

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    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.

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    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.

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    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.

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    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).

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    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.

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    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.

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    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.

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                    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.

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    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.

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    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.

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    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.''

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    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
                          
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    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.

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    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 [email protected].

                       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

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