[Congressional Record (Bound Edition), Volume 148 (2002), Part 9]
[Extensions of Remarks]
[Page 12570]
[From the U.S. Government Publishing Office, www.gpo.gov]




DEPARTMENT OF VETERANS AFFAIRS RESEARCH CORPORATION ACCOUNTABILITY ACT 
                                OF 2002

                                 ______
                                 

                            HON. STEVE BUYER

                               of indiana

                    in the house of representatives

                        Wednesday, July 10, 2002

  Mr. BUYER. Mr. Speaker, today I am introducing the ``Department of 
Veterans Affairs Research Corporation Accountability Act of 2002.''
  In 1988 Congress enacted Public Law 100-322, the Veterans' Benefits 
and Services Act, which included a provision that gave the VA the 
authority to establish nonprofit research corporations. This was done 
to provide a flexible funding mechanism for the conduct of approved 
research at medical centers. Prior to giving VA this authority any 
funding received from private sources such as pharmaceutical companies 
was placed in a General Post fund. However, it became virtually 
impossible to track the funding stream. There was no way to identify 
the source of the funding, nor how the money was being spent. The 
impetus behind establishing the research corporations was to create an 
accounting mechanism whereby the VA would submit to Congress an annual 
report on the number and location of corporations established and the 
amount of contributions made to each such corporation. Unfortunately, 
these reports have turned out to be nothing more than ledger sheets 
with numbers with little or no detail.
  Earlier this year, my Subcommittee held a hearing on VA Research 
Corporations and we heard from the VA's Assistant Inspector General for 
Auditing that during the years 1994 through 1997, that his office 
published three reports that identified the need for stricter 
accountability and oversight with regard to the administration of funds 
by the Veterans Health Administration research corporations. For 
instance, in 1994, the IG audit of a million dollars of the $3.6 
million in expenditures spent at three research corporations and 
identified approximately $625,000 that was spent on salaries of medical 
residents, staff travel not clearly related to research or 
administration. Funds were also spent for non-research related 
conferences, honorary gifts, awards, entertainment, other than non-
research expenditures. This one but one example of how money can be 
misspent when in this case the corporation is not held accountable.
  Under current law, the VA nonprofit research corporations are 
required to provide Congress with an annual report summarizing their 
activities and accomplishments. These reports have turned out to be 
nothing more than bare bones financial statements. The legislation I 
have introduced today amends section 7366 of Title 38 of the United 
States Code to require each VA corporation submit a detailed statement 
that includes the corporation's operations, activities, and 
accomplishments during the preceding year to the Secretary of the VA by 
not later than March 1 of each year. The report should include the 
amount of funds received along with the source of funding; and an 
itemized accounting of all disbursements. Those corporations with 
funding in excess of $300,000 must obtain an audit of the corporation 
for that year, corporations with funding totaling less than $300,000 
must obtain an audit every three years. These audits must be conducted 
by an independent auditor and shall be performed in accordance with 
generally accepted Government auditing standards.
  The VA's Inspector General will be required to randomly review audits 
to determine whether or not they were carried out in accordance with 
the auditing standards outlined in the legislation. My bill would also 
extend the life of the corporations by providing authority to establish 
such corporations until December 31, 2006.
  The VA has made tremendous contributions in the field of medical 
research. I think we all recognize the many accomplishments made by the 
VA in discovering new drug therapies and developing medical devices 
that have benefited not only veterans but all Americans. For instance, 
the VA invented the implantable cardiac pacemaker, developed the 
nicotine patch, performed the first successful liver transplant, and 
the development of the first oral vaccine for smallpox.
  It is not my intention to prevent VA research from continuing to make 
great strides as it has in the past, but we must ensure that all 
research funds are directed with focus and accountability.

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