[House Report 107-600]
[From the U.S. Government Publishing Office]
107th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 107-600
======================================================================
VETERANS HEALTH CARE AND PROCUREMENT IMPROVEMENT ACT OF 2002
_______
July 22, 2002.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Smith of New Jersey, from the Committee on Veterans' Affairs,
submitted the following
R E P O R T
[To accompany H.R. 3645]
[Including cost estimate of the Congressional Budget Office]
The Committee on Veterans' Affairs, to whom was referred
the bill (H.R. 3645) to amend title 38, United States Code, to
provide for improved procurement practices by the Department of
Veterans Affairs in procuring health-care items, having
considered the same, reports favorably thereon with an
amendment and recommends that the bill as amended do pass.
The amendment is as follows:
Strike all after the enacting clause and insert the
following:
SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) Short Title.--This Act may be cited as the ``Veterans Health Care
and Procurement Improvement Act of 2002''.
(b) Table of Contents.--The table of contents for this Act is as
follows:
Sec. 1. Short title; table of contents.
Sec. 2. References to title 38, United States Code.
Sec. 3. Limitation on use of local contracts for Department of Veterans
Affairs procurement of health-care items.
Sec. 4. Enhancements to enhanced-use lease authority.
Sec. 5. Eligibility for Department of Veterans Affairs health care of
certain additional Filipino World War II veterans residing in the
United States.
Sec. 6. Outpatient dental care for all former prisoners of war.
Sec. 7. Improved accountability of research corporations established at
Department of Veterans Affairs medical centers.
Sec. 8. Department of Defense participation in Revolving Supply Fund
purchases.
Sec. 9. Name of Department of Veterans Affairs outpatient clinic, New
London, Connecticut.
SEC. 2. REFERENCES TO TITLE 38, UNITED STATES CODE.
Except as otherwise expressly provided, whenever in this Act an
amendment or repeal is expressed in terms of an amendment to, or repeal
of, a section or other provision, the reference shall be considered to
be made to a section or other provision of title 38, United States
Code.
SEC. 3. LIMITATION ON USE OF LOCAL CONTRACTS FOR DEPARTMENT OF VETERANS
AFFAIRS PROCUREMENT OF HEALTH-CARE ITEMS.
(a) IN GENERAL.--Section 8125 is amended to read as follows:
``Sec. 8125. PROCUREMENT OF HEALTH-CARE ITEMS
``(a) Except as provided in subsection (b), any procurement of a
health-care item by the Department shall be made through the use of a
Federal Supply Schedule contract, or a national contract, that meets
the requirements of subsection (d).
``(b)(1) Subsection (a) does not apply to a procurement of a health-
care item in any of the following cases:
``(A) A procurement that is necessary to meet a current or
near-term medical emergency at a medical center.
``(B) A procurement that is for a health-care item that is
not listed in the Federal Supply Schedule or as part of a
national contract and for which there is a valid clinical need.
``(C) A procurement that is for a specialized health-care
item not listed in the Federal Supply Schedule or as part of a
national contract and that is to meet the special needs of an
individual patient who has one of the special needs identified
in section 1706(b) of this title and who has a valid clinical
need for the item.
``(D) A procurement that is part of an approved sharing
agreement between the Department of Defense and the Department
of Veterans Affairs with demonstrable cost-per-item savings for
a health-care item listed on the Federal Supply Schedule or a
national contract.
``(E) A procurement that supports a prime contract or a
subcontract with a small business concern qualifying for a
procurement preference program under section 8 or 15 of the
Small Business Act (15 U.S.C. 637, 644), if the cost of the
item to be procured is no more than the cost (taking price and
value into consideration) of the comparable item on the Federal
Supply Schedule or national contract and if the item meets the
requirements of subsections (d)(1)(A) and (d)(2).
``(2) A procurement may be made as authorized under subparagraph (B)
of paragraph (1) only if the procurement is specifically authorized in
advance in writing by the Secretary. The authority of the Secretary
under the preceding sentence may only be delegated to the Deputy
Secretary or to an official of the Veterans Health Administration not
below the level of a Deputy Under Secretary (or equivalent) acting
jointly with a procurement executive of the Department not below the
level of an Associate Deputy Assistant Secretary.
``(c) In the case of an emergency procurement of a health-care item
as authorized by subsection (b)(1)(A), the quantity of the item
procured may not exceed the quantity of that item that is the
reasonably foreseeable need for the item at the medical center
concerned until resupply can be achieved through procurement actions
other than emergency procurement.
``(d) A contract meets the requirements of this subsection if--
``(1) the contract includes--
``(A) provisions referred to as `preaward and
postaward audit clauses'; and
``(B) a provision referred to as a `price reduction
clause'; and
``(2) in the case of a contract to be made with a vendor that
is a distributor, the contract will be for distribution
services only unless the manufacturer of the product can
clearly demonstrate that at least 60 percent of its sales of
the item through that vendor is to commercial customers with
negotiated product prices and that the vendor actually stocks
and distributes the product.
``(e)(1) The Secretary shall establish procedures to assure
compliance by each Department medical facility with the provisions of
this section and with applicable Federal and Department procurement
regulations.
``(2) The procedures established by the Secretary under paragraph (1)
shall be designed to maximize health-care item variety and the use of
the Federal Supply Schedule.
``(3) The Secretary shall establish and enforce procedures limiting
the standardization of items at the local, regional, or national level
to provide special patient populations (as identified in section
1706(b) of this title) with the range and types of health-care items
required to meet their clinical and quality-of-life needs.
``(4) The Advisory Committee on Prosthetics and Special-Disabilities
Programs established under section 543 of this title shall review the
procedures established under paragraph (3), including the
implementation of those procedures, and shall advise the Secretary when
those procedures are not effectively enforced by the Department.
``(f)(1) The Secretary shall establish annual goals for Department
medical centers for the purchase of health-care items from Federal
Supply Schedule and national contracts meeting the requirements of
subsection (d). Such goals shall be designed to maximize the percentage
of such purchases that are made through such contracts.
``(2) The Secretary shall establish goals for the Department for
procurements from small business concerns qualifying for a procurement
preference program under section 8 or 15 of the Small Business Act (15
U.S.C. 637, 644). Such goals shall be no less than the national goal
for each such procurement preference program under either of those
sections.
``(3) Achievement of the goals established under this subsection
shall be an element in the performance standards for employees of the
Department who have the authority and responsibility for achieving
those goals.
``(g) A provision of law that is inconsistent with any provision of
this section shall not apply, to the extent of the inconsistency, to
the procurement of a healthcare item for the Department.
``(h)(1) Not later than December 31 each year, the Secretary shall
submit to the Committees on Veterans' Affairs of the Senate and House
of Representatives a report on the procurement of health-care items
during the preceding fiscal year. Each such report shall include, for
the year covered by the report, the following:
``(A) The total dollar amount of all items listed in Federal
Supply Classification (FSC) Group 65 or 66 and the total dollar
value of the exceptions to subsection (a) under each of
subparagraphs (A), (B), (C), (D), and (E) of subsection (b)(1),
shown by medical facility.
``(B) A detailed explanation for exceptions to subsection
(a), including--
``(i) the rationale for use of emergency procurement
at Department medical facilities;
``(ii) the rationale for approval of requests under
subsection (b)(1)(B) for procurement of items not
listed on the Federal Supply Schedule or on national
contracts; and
``(iii) exceptions granted for special health-care
needs of veterans with disabilities described in
section 1706(b) of this title.
``(C) Analysis of sharing agreements between the Department
and the Department of Defense to indicate the basic written
sharing initiative and the division of financial responsibility
between the two Departments.
``(D) The stated goal under each procurement preference
program, together with an assessment of the performance of the
Department toward achievement of that goal, especially with
respect to the goal for contracting with businesses that are
owned by veterans with service-connected disabilities.
``(2) The Advisory Committee on Prosthetics and Special- Disabilities
Programs of the Department shall submit comments on each report under
paragraph (1) before the report is submitted under that paragraph, and
the Secretary shall include those comments in the report as submitted.
``(i) For the purposes of this subsection:
``(1) The term `health-care item' includes any item listed
in, or (as determined by the Secretary) of the same nature as
an item listed in, Federal Supply Classification (FSC) Group 65
or 66.
``(2) The term `national contract' means a contract for
procurement of an item that is entered into by the National
Acquisition Center of the Department or another Department
procurement activity, as authorized by the Secretary, that is
available for use by all Department medical facilities.
``(3) The term `valid clinical need' means in the
professional judgment of an appropriate clinician. Such term
applies to health care items, prosthetic appliances, sensory or
mobility aids and supplies that are prescribed by a physician
for special patient populations such as veterans with spinal
cord dysfunction, blindness, amputations, and other veterans
included in section 1706(b) of this title.
``(4) The term `Federal Supply Schedule contract' means a
contract that is awarded and administered by the National
Acquisition Center of the Department under a delegation of
authority from the Administrator of the General Services
Administration.
``(5) The term `emergency procurement' means a procurement
necessary to meet an emergency need affecting the health or
safety of a person being furnished health-care services by the
Department.''.
(b) Effective Date.--The amendment made by subsection (a) shall take
effect on September 30, 2003, and shall apply to procurements by the
Secretary of Veterans Affairs after that date.
SEC. 4. ENHANCEMENTS TO ENHANCED-USE LEASE AUTHORITY.
(a) Increased Flexibility Under Enhanced-Use Leases.--Section
8162(a)(2)(B) is amended--
(1) by striking ``proposed by the Under Secretary for
Health'' and inserting ``proposed by one of the Under
Secretaries''; and
(2) by striking ``to the provision of medical care and
services'' and inserting ``to the programs and activities of
the Department''.
(b) Notification of Property To Be Leased.--Section 8163 is amended--
(1) in the first sentence of subsection (a)--
(A) by striking ``designate a property to be leased
under an enhanceduse lease'' and inserting ``enter into
an enhanced-use lease with respect to certain
property''; and
(B) by striking ``before making the designation'' and
inserting ``before entering into the lease'';
(2) in subsection (b), by striking ``of the proposed
designation'' and inserting ``to the congressional veterans'
affairs committees and to the public of the proposed lease'';
and
(3) in subsection (c)--
(A) in paragraph (1)--
(i) by striking ``designate the property
involved'' and inserting ``enter into an
enhanced-use lease of the property involved'';
and
(ii) by striking ``to so designate the
property'' and inserting ``to enter into such
lease'';
(B) in paragraph (2), by striking ``90-day period''
and inserting ``45-day period'';
(C) in paragraph (3)--
(i) by striking ``general description'' in
subparagraph (D) and inserting ``description of
the provisions''; and
(ii) by adding at the end the following new
subparagraph:
``(G) A summary of a cost-benefit analysis of the proposed
lease.''; and
(D) by striking paragraph (4).
(c) Disposition of Leased Property.--Section 8164 is amended--
(1) in subsection (a)--
(A) by striking ``by requesting the Administrator of
General Services to dispose of the property pursuant to
subsection (b)'' in the first sentence; and
(B) by striking the third sentence;
(2) in subsection (b)--
(A) by striking ``Secretary and the Administrator of
General Services jointly determine'' and inserting
``Secretary determines''; and
(B) by striking ``Secretary and the Administrator
consider'' and inserting ``Secretary considers''; and
(3) in subsection (c), by striking ``90 days'' and inserting
``45 days''.
(d) Use of Proceeds.--Section 8165 is amended--
(1) in subsection (a)--
(A) by striking ``(1)'' after ``(a)'';
(B) by inserting after ``of this title'' the
following: ``, except that any funds received by the
Department under an enhanced-use lease in support of
the Veterans Benefits Administration or the National
Cemetery Administration and remaining after any
deduction from such funds under subsection (b) shall be
credited to applicable appropriations of that
Administration''; and
(C) by striking paragraph (2);
(2) in subsection (b), by adding at the end the following new
sentence: ``The Secretary may use the proceeds from any
enhanced-use lease to reimburse applicable appropriations of
the Department for any expenses incurred in the development of
additional enhanced-use leases.''; and
(3) by striking subsection (c).
(e) Clerical Amendments.--(1) The heading of section 8163 is amended
to read as follows:
``Sec. 8163. Hearing and notice requirements regarding proposed
leases''.
(2) The item relating to section 8163 in the table of sections at the
beginning of chapter 81 is amended to read as follows:
``8163. Hearing and notice requirements regarding proposed leases.''.
SEC. 5. ELIGIBILITY FOR DEPARTMENT OF VETERANS AFFAIRS HEALTH CARE OF
CERTAIN ADDITIONAL FILIPINO WORLD WAR II VETERANS
RESIDING IN THE UNITED STATES.
(a) Eligibility for Health Care.--The text of section 1734 is amended
to read as follows:
``(a) The Secretary shall furnish hospital and nursing home care and
medical services to any individual described in subsection (b) in the
same manner, and subject to the same terms and conditions, as apply to
the furnishing of such care and services to individuals who are
veterans as defined in section 101(2) of this title. Any disability of
an individual described in subsection (b) that is a service-connected
disability for purposes of this subchapter (as provided for under
section 1735(2) of this title) shall be considered to be a service-
connected disability for purposes of furnishing care and services under
the preceding sentence.
``(b) Subsection (a) applies to any individual who is a Commonwealth
Army veteran or new Philippine Scout and who--
``(1) is residing in the United States; and
``(2) is a citizen of the United States or an alien lawfully
admitted to the United States for permanent residence.''.
(b) Limitation.--The amendment made by subsection (a) shall take
effect on the date on which the Secretary of Veterans Affairs submits
to the Committees on Veterans' Affairs of the Senate and House of
Representatives and publishes in the Federal Register a certification
that sufficient resources are available for the fiscal year during
which the certification is submitted to carry out section 1734 of title
38, United States Code, as amended by such amendment, during that
fiscal year at those facilities of the Department of Veterans Affairs
where the majority of veterans described in subsection (b) of such
section will receive hospital and nursing home care and medical
services authorized by subsection (a) of such section.
SEC. 6. OUTPATIENT DENTAL CARE FOR ALL FORMER PRISONERS OF WAR.
Section 1712(a)(1)(F) is amended by striking ``and who was detained
or interned for a period of not less than 90 days''.
SEC. 7. IMPROVED ACCOUNTABILITY OF RESEARCH CORPORATIONS ESTABLISHED AT
DEPARTMENT OF VETERANS AFFAIRS MEDICAL CENTERS.
(a) Audits and Improved Annual Report.--Subsection (b) of section
7366 is amended to read as follows:
``(b)(1) Not later than March 1 each year, each such corporation
shall submit to the Secretary a report concerning the preceding
calendar year. Each such annual report shall include the following:
``(A) A detailed statement of the corporation's operations,
activities, and accomplishments during the preceding calendar
year.
``(B) A description of each research project or activity for
which funds were provided by the corporation during that year
or for which funds were provided by the corporation during a
preceding year and that is ongoing during the year covered by
the report, including, for each such project or activity, the
title of the project or activity and a description of the
purpose of the project or activity.
``(C) A statement of the amount of funds controlled by the
corporation as of the first day, and as of the last day, of the
year covered by the report and a statement of the amount of
funds received, shown by source, during the year.
``(D) An itemized accounting of all disbursements made during
the year.
``(E) The most recent audit of the corporation under
paragraph (2).
``(F) Such other information as may be necessary to enable
the Secretary to prepare the annual report to congressional
committees required under section 7367 of this title.
``(2) A corporation with a balance of funds under its control in
excess of $300,000 at any time during a calendar year shall obtain an
audit of the corporation for that year. Any other corporation shall
obtain an independent audit of the corporation at least once every
three years. The report on any such audit shall specifically state
whether the corporation audited made any payment, or provided any
travel, during the period covered by the audit to a member of the board
of directors of the corporation and, if so, the amount and recipient of
any such payment or travel.
``(3) Any audit under paragraph (2) shall be performed by an
independent auditor and shall be performed in accordance with generally
accepted Government auditing standards and in accordance with Office of
Management and Budget Circular A-133.
``(4) The Inspector General of the Department shall each year review
the most recent audit under paragraph (2) of not less than 10 percent
of the corporations described in the first sentence of paragraph (2)
and not less than 10 percent of the corporations described in the
second sentence of that paragraph. As part of such review, the
Inspector General shall determine whether the audit was carried out in
accordance with generally accepted Government auditing standards, as
required by paragraph (3).''.
(b) Annual Report of Secretary.--(1) Subchapter IV of chapter 73 is
amended--
(A) by inserting after subsection (c) of section 7366 the
following:
``Sec. 7367. Annual report to congressional committees''; and
(B) in the text immediately following the section heading
inserted by subparagraph (A)--
(i) by striking ``(d)'' and inserting
``(a)'';
(ii) by inserting after the first sentence
the following new sentence: ``Each such report
shall be based on the annual reports submitted
by the corporations to the Secretary under
section 7366(b) of this title and shall be
submitted not later than May 1 of the year
following the year covered by such reports.'';
and
(iii) by striking ``The report shall'' and
inserting the following:
``(b) Each such report shall''.
(2) The table of sections at the beginning of such chapter is amended
by inserting after the item relating to section 7366 the following new
item:
``7367. Annual report to congressional committees.''.
(c) EXTENSION OF AUTHORITY TO ESTABLISH RESEARCH CORPORATIONS.--
Section 7368 is amended by striking ``December 31, 2003'' and inserting
``December 31, 2006''.
SEC. 8. DEPARTMENT OF DEFENSE PARTICIPATION IN REVOLVING SUPPLY FUND
PURCHASES.
(a) Enhancement of Department of Defense Participation.--Section 8121
is amended--
(1) by redesignating subsection (b) and (c) as subsections
(d) and (e), respectively;
(2) by designating the last sentence of subsection (a) as
subsection (c); and
(3) by inserting after paragraph (3) of subsection (a) the
following new subsection:
``(b) The Secretary may authorize the Secretary of Defense to make
purchases through the fund in the same manner as activities of the
Department. When services, equipment, or supplies are furnished to the
Secretary of Defense through the fund, the reimbursement required by
paragraph (2) of subsection (a) shall be made from appropriations made
to the Department of Defense, and when services or supplies are to be
furnished to the Department of Defense, the fund may be credited, as
provided in paragraph (3) of subsection (a), with advances from
appropriations available to the Department of Defense.''.
(b) Effective Date.--The amendments made by subsection (a) shall
apply only with respect to funds appropriated for a fiscal year after
fiscal year 2002.
SEC. 9. NAME OF DEPARTMENT OF VETERANS AFFAIRS OUTPATIENT CLINIC, NEW
LONDON, CONNECTICUT.
The Department of Veterans Affairs outpatient clinic located in New
London, Connecticut, shall after the date of the enactment of this Act
be known and designated as the ``John J. McGuirk Department of Veterans
Affairs Outpatient Clinic''. Any reference to such outpatient clinic in
any law, regulation, map, document, record, or other paper of the
United States shall be considered to be a reference to the John J.
McGuirk Department of Veterans Affairs Outpatient Clinic.
Introduction
H.R. 3645, the Veterans Health Care and Procurement
Improvement Act of 2002, addresses issues raised by the
Committee in hearings, meetings, and through other oversight
mechanisms during the course of this Congress.
On May 16, 2002, the Subcommittees on Oversight and
Investigations and Health held a joint hearing on VA Research
Corporations. Witnesses who appeared before the subcommittees
included Mr. Michael Slachta, Jr., Assistant Inspector General
for Audit, Department of Veterans Affairs, accompanied by Mr.
John Bilobran, Deputy Assistant Inspector General for Audit,
and Dr. John Mather, Chief Officer, Office of Research
Compliance and Assurance; the Honorable Robert H. Roswell,
M.D., Under Secretary for Health, Veterans Health
Administration, Department of Veterans Affairs, accompanied by
the Honorable Tim S. McClain, General Counsel, John R.
Feussner, M.D., Chief Research and Development Officer, and
Mindy Aisen, M.D., Director of Rehabilitation Research and
Development; Mr. Antonio Laracuente, Chairman, National
Association of Veterans' Research and Education Foundations and
Executive Director, Atlanta Research and Education Foundation;
Franklin Zieve, M.D., Ph.D., President, McGuire Research
Institute, Inc.; Mr. Ken Hickman, Executive Director, Brentwood
Biomedical Research Institute; and Wendy Baldwin, M.D., Deputy
Director for Extramural Research, National Institutes for
Health. Written testimonies were received from Mr. James R.
Fischl, Director of the National Veterans Affairs and
Rehabilitation Commission, The American Legion; Ms. Joy J.
Ilem, Assistant National Legislative Director, Disabled
American Veterans; and Mr. Richard B. Fuller, National
Legislative Director, Paralyzed Veterans of America.
On June 13, 2002, the Subcommittee on Health held a hearing
on the health care of Filipino World War II veterans within the
Department of Veterans Affairs. Witnesses who appeared before
the subcommittee included His Excellency Albert Del Rosario,
Ambassador to the United States, Embassy of the Philippines;
the Honorable Anthony J. Principi, Secretary, Department of
Veterans Affairs, accompanied by Mr. John H. Thompson, Deputy
General Counsel; the Honorable Benjamin Gilman, Member of
Congress from the State of New York; the Honorable Randy
``Duke'' Cunningham, Member of Congress from the State of
California; the Honorable Dana Rohrabacher, Member of Congress
from the State of California; the Honorable Patsy T. Mink,
Member of Congress from the State of Hawaii; the Honorable
Juanita Millender-McDonald, Member of Congress from the State
of California; the Honorable Robert A. Underwood, Member of
Congress from the Territory of Guam; Mr. Lou Diamond Phillips,
actor and Filipino veterans activist, Los Angeles, California;
Mr. Fritz Friedman, Chair, Assembly for Justice, Los Angeles,
California; Mr. Resty Supnet, President, Filipino World War II
Veterans Foundation of San Diego County, accompanied by Mr.
Romy Monteyro; Mr. Patrick Ganio, President, American Coalition
for Filipino Veterans; Ms. Susan Espiritu Maquindang, Executive
Director, Filipino-American Service Group; Ms. Lourdes Santos
Tancinco, President, San Francisco Veterans Equity Center; Ms.
Joy J. Ilem, Assistant National Legislative Director, Disabled
American Veterans; Mr. Richard Weidman, Director of Government
Relations, Vietnam Veterans of America; and Mr. James Fischl,
Director of National Veterans Affairs and Rehabilitation
Commission, The American Legion. Written testimonies were
received from the Honorable Barbara Boxer, United States
Senator from the State of California; the Honorable Barbara
Lee, Member of Congress from the State of California; the
Honorable Nancy Pelosi, Member of Congress from the State of
California; the Honorable Maxine Waters, Member of Congress
from the State of California; General Tagumpay Nanadiego,
Former Special Presidential Representative, Embassy of the
Philippines; Ms. Wendy Lawrence, Associate Director, National
Legislative Service, Veterans of Foreign Wars; and Mr. Richard
Jones, National Legislative Director, AMVETS.
On June 26, 2002, the Subcommittee on Health held a
legislative hearing to consider H.R. 3645, the Veterans Health
Care Items Procurement Reform and Improvement Act of 2002.
Witnesses who appeared before the subcommittee included Mr.
Mark Catlett, Principal Deputy Assistant Secretary for
Management, Department of Veterans Affairs, accompanied by Mr.
Gary Krump, Deputy Assistant Secretary for Acquisition and
Materiel Management, and Ms. Phillipa Anderson, Assistant
General Counsel; Ms. Cynthia A. Bascetta, Director, Health
Care-Veterans' Health and Benefits Issues, General Accounting
Office; Mr. John S. Bilobran, Deputy Assistant Inspector
General for Auditing, Department of Veterans Affairs,
accompanied by Ms. Maureen T. Regan, Counselor to the Inspector
General. Written testimonies were received from Mr. Terry
Baker, Executive Director of Veterans Aimed Toward Awareness,
Allied Health for Veterans Care; Mr. David Gorman, Executive
Director, Disabled American Veterans; Mr. Paul A. Hayden,
Deputy Director, National Legislative Service, Veterans of
Foreign Wars of the United States; Mr. John F. Sommer, Jr.,
Executive Director, The American Legion; Mr. Richard B. Fuller,
National Legislative Director, Paralyzed Veterans of America;
Mr. Richard Weidman, Director of Government Relations, Vietnam
Veterans of America; and Mr. Thomas H. Miller, Executive
Director, Blinded Veterans Association.
On July 12, 2002, the Subcommittee on Health met and
unanimously ordered H.R. 3645, with an amendment in the nature
of a substitute, reported favorably to the full Committee.
On July 16, 2002, the full Committee met and ordered H.R.
3645, with an amendment in the nature of a substitute, reported
favorably to the House by voice vote.
Summary of the Reported Bill
H.R. 3645, as amended, would:
1. LProvide reform of Department of Veterans Affairs (VA)
programs and policies regarding procurement of certain health
care items used by the VA to care for veterans by requiring
increased use of the Federal Supply Schedule or national
contracts, with improved accountability and strengthened
reporting for exceptions made to the reformed policies.
2. LStreamline the procedures that govern the VA's use of
enhanced-use lease authority; provide the VA additional
flexibility to enhance use of VA properties in complementary
activities.
3. LProvide hospital and nursing home care and medical
services to certain Filipino World War II veterans of the
Philippines Commonwealth Army and former Philippines ``New
Scouts'' who now legally and permanently reside in the United
States.
4. LExpand eligibility for outpatient dental care for all
former prisoners of war.
5. LStrengthen auditing and reporting requirements for VA
research and education corporations established at VA medical
centers.
6. LAuthorize the Department of Defense to participate in
VA's Revolving Supply Fund for the purchase of health care
items.
7. LName the VA outpatient clinic in New London,
Connecticut, for the late John J. McGuirk.
BACKGROUND AND DISCUSSION
Health Care Procurement Reform
The largest health care systems in the United States are
managed by the Federal government, and the Department of
Veterans Affairs (VA) is a major component of the Federal
health care system, with 6,470,224 veterans currently enrolled
for fiscal year 2002. VA's procurement programs spend
approximately $5 billion each year to obtain a wide array of
goods and services needed by VA to provide high-quality health
care to veterans. Based on the Committee's analysis of reviews
by the VA Inspector General (IG) and the General Accounting
Office (GAO), as well as other reports, improved management of
the purchasing of health care items in Federal Supply
Classification (FSC) categories 65 (medical and dental
supplies) and 66 (instruments and laboratory equipment), could
provide significant savings that may be used in furtherance of
VA's essential mission.
In prior years, numerous indicators suggested that VA was
not achieving its potential as a large purchaser of medical and
surgical supply and equipment items to secure the best pricing.
This general perspective was reinforced by a May 31, 2001, VA
IG report on the evaluation of purchasing practices in VA, as
well as testimony provided by the GAO to the Subcommittee on
Health at its hearing on June 26, 2002.
The IG evaluation and GAO testimony identified numerous
deficiencies in current purchasing practices. Among other
findings, the reports linked the cause of many deficiencies to
a VA policy relieving agency procurement officials from the
requirement to purchase health care items from the Federal
Supply Schedule (FSS). In effect, this policy decentralized
VA's contracting and procurement processes for a very
substantial part of procurements. Decentralization may have had
the unintended effect of giving many vendors of health care
items an incentive to remove their products from the FSS and to
seek product sales in a generally more profitable VA local-
market arena.
In recent years, VA local-market purchases have
proliferated, often under contracts without the advantage of
audit requirements or ``most-favored customer pricing'' for the
government, both practices normally required under FSS
procedures. Seemingly cost-effective local purchases of health
care items for a VA facility or a small network of facilities
have been touted as significant gains in economies, but they
obscure other, less efficient contracts and the higher
administrative costs of contracting locally. These practices
frustrate the aims of the FSS to obtain good products at the
best prices on a national basis for the Federal establishment
at large.
Claims of continued cost-effective purchases have been made
by VA, but VA's data reporting on local purchases is often
contradictory and difficult to reconcile. Numerous exceptions
for various classes of health care items purchased under
differing circumstances, coupled with a lack of standardized
definitions for particular items have culminated in reports of
widely variable local purchases. Tracking local purchases is
further complicated by a growing VA practice of small-scale
purchasing using government-issued credit cards, in particular
for purchases below the $25,000 reporting threshold for such
purchase cards.
In June 2001, the Secretary appointed a VA procurement task
force to evaluate the nature and scope of these problems and
recommend solutions. The task force recommended leveraging the
purchasing power of VA through mandated use of the FSS for
medical and surgical purchases.
The Committee bill would require the Secretary to take
actions consistent with the Department's procurement task force
report, and would hold the Secretary accountable to Congress
for tangible results. The Committee bill advances two goals: to
gain greater efficiency for the resources obligated by the
Department for specific classifications of health care items in
FSC categories 65 (medical and dental supplies) and 66
(instruments and laboratory equipment), and to instill more
accountability.
All current indicators demonstrate the desirability of
greater centralization of the Department's acquisition process,
but the Committee considers certain exceptions to this policy
to be necessary and beneficial. The Committee developed five
exceptions to address these needs. They are:
Near-term emergency needs.--Emergency purchases of
health care items would be permitted, not to exceed the
quantities reasonably necessary to meet the foreseeable
need until resupply could be achieved through other
actions. Authority for emergency purchases would remain
a local authority and would be based on defined need.
Bona fide emergency procurements would not require pre-
or post-audit reviews or price reduction clauses
otherwise required by the Committee's bill for all
health care items.
Non-FSS-listed items to meet valid clinical needs.--A
health care item not listed on the Federal Supply
Schedule or on a national contract could be purchased
under the Committee bill if a valid clinical need
existed for the item and its procurement were approved
in advance. While procurement of such an item would be
conducted locally, its ultimate approval would rest
with Departmental senior executives specified in the
Committee bill. The Committee concluded that a
centralization of the level of approval was necessary
to assure the validity and relative rarity of
procurements of this type. The Committee bill would
require reports to the Committees on Veterans' Affairs
of the House and Senate of the Department's use of this
exceptional authority.
Non-FSS-listed items for valid clinical needs
specific to certain patients.--This exception to the
general policy is similar to the previous one, but it
would target the health care item needs of special
patient populations such as veterans with spinal cord
injury, severe visual impairments, amputations, and
other veterans whose disabilities are described in
title 38, United States Code, section 1706(b). Medical
care items procured under this exception would be
obtained to meet the special needs of one of these
severely disabled veterans, determined by the
Department to exhibit a valid clinical need for the
item or items in question. The Committee bill would
require the Secretary of Veterans Affairs to promulgate
procedures to govern such purchases.
Anticipated greater efficiencies from VA-DOD sharing
initiatives.--Department of Veterans Affairs-Department
of Defense health resources sharing initiatives have
long been recognized as a method for improving
efficiency and leveraging the potential of two very
large health care delivery systems under separate
governance. The Committee bill's exception for VA-DOD
sharing ventures involving procurement of medical care
items would be intended to promote the sharing process
and associated joint procurements when in the interest
of the government. However, this exception would
require demonstrable savings (taking price and value
into consideration) in comparison to similar items
procured independently by either Department using FSS
pricing or national contracts.
Protection for small business set-asides.--This
exception would afford protection to small business
concerns qualifying for procurement preference programs
under the Small Business Act. Any contract under this
exception would be required to include pre- and post-
award audit clauses. Also, any such small business
vendor that was a distributor (for other than
distribution services per se) would be required to
clearly demonstrate the commercial value of an item the
Department procured, in accordance with a given
standard.
The Secretary would be required to issue and enforce
procedures that would limit the standardization of items for
patient populations as identified in section 1706(b) title 38,
United States Code. A ``one-size-fits-all'' approach to the
particular needs of severely disabled veterans would be
inappropriate. The Department's clinical practitioners would
not be constrained by limited choices for severely disabled
veterans. When selecting a health care item for the
specialized-care needs of veterans, the clinician would be
authorized under the Committee bill to consider both clinical
and quality of life needs. Under the Committee bill, the
Advisory Committee on Prosthetics and Special Disabilities
Programs, established in section 543 of title 38, United States
Code, would be authorized to oversee the Department's
implementation of the Committee's bill as it would affect
veterans under care in the various programs defined in section
1706(b), title 38, United States Code. The Advisory Committee
would review the procedures promulgated by the Secretary and
advise the Secretary whenever those procedures were not
effectively enforced by the Department.
In summary, the Committee bill would require the Secretary
to establish Department-wide goals for compliance with
specified procurement requirements to maximize the percentage
of purchases that are made from Federal Supply Schedule and
national contracts. The Secretary would be required to
establish performance goals for agency procurements from the
FSS or national contracts, and would be required to report
actual performance toward achievement of these goals to the
Committees on Veterans' Affairs of the House and Senate at the
conclusion of each fiscal year. The Secretary would be required
to analyze and report purchases not made from the FSS or a
national contract, and to evaluate Department employees
responsible for procurement programs of their degree of
compliance with the policies that would be promulgated by
enactment of the Committee bill.
ENHANCED-USE LEASE AUTHORITY
Chapter 81 of title 38, United States Code, authorizes the
Department to conduct an enhanced-use lease program to assist
the Department in providing complementary uses of VA buildings
and land holdings that are not needed for the direct care of
veterans. The Department requested certain amendments be
considered by the Committee to provide more flexibility to the
Department in expanding the enhanced-use lease program to more
facilities and in improving efficiency.
Under current law, business plans for enhanced-use lease
projects are proposed by the Department's Under Secretary for
Health for properties under direct control of the Under
Secretary. The Committee bill would expand this authority to
permit business plans for enhanced-use leases to be proposed by
the Under Secretary for Benefits and the Under Secretary for
Memorial Affairs. This provision would also clarify that the
services which could be provided as in-kind consideration for
an enhanced-use lease would not be limited to those provided on
the leased property.
Two separate notifications to Congress are currently
required by law prior to the Department entering into an
enhanced-use lease. The Committee bill would combine the two
notices into one notification. This report consolidation would
streamline the Department's notification process and increase
the Department's ability to take advantage of opportunities in
private-sector markets.
Also, any disposal of property subject to an enhanced-use
lease currently requires an additional procedural step,
consultation with the Administrator of General Services. The
Committee bill would remove this requirement and enable the
Secretary to determine that such dispositions are in the best
interests of the Department.
Current law requires proceeds received by the Department
from an enhanced-use lease (and remaining after deduction of
appropriate expenses) be deposited into the Health Services
Improvement Fund, and any proceeds from a disposal of property
subject to an enhanced-use lease be deposited into the Nursing
Home Revolving Fund. The Committee bill would allow each of the
three major administrations to be credited proceeds received
from projects under its jurisdiction (after reimbursement of
expenses), and would make these proceeds available for use by
that administration. The provision would also clarify the
Department's ability to use proceeds from an enhanced-use
project to reimburse the account from which funds would be
expended in the development of that project.
HEALTH CARE FOR FILIPINO COMMONWEALTH ARMY AND NEW SCOUT VETERANS
The Filipino soldiers of World War II served side-by-side
with forces from the United States, exhibiting great courage at
the epic battles of Bataan and Corregidor and contributing to
the successful outcome of the war. After the Philippines became
independent, Congress passed the Rescission Act of 1946,
reducing or eliminating many of the veterans' benefits Filipino
veterans had been eligible for based on service in the
Commonwealth Army. Today, almost 60 years later, 60,000 World
War II Filipino veterans are alive and continue to seek
restoration of these benefits.
The Committee bill would provide a significant health care
benefit to Commonwealth Army veterans and New Scouts of the
Philippines who are permanent and legal residents of the United
States, giving them equal status with their American veteran
peers. Approximately 14,000 Filipino veterans in the United
States would be eligible for this health care benefit. The
Department would not offer these veterans access unless the
Secretary of Veterans Affairs certified and provided public
notice in the Federal Register that it had the resources to do
so. The Administration provided testimony in support of this
provision and estimated that the proposal would cost $52.6
million over 5 years.
DENTAL BENEFITS FOR ALL FORMER PRISONERS OF WAR
Chapter 17 of title 38, United States Code, authorizes
dental care and services for any dental condition to former
prisoners of war (POWs) who were interned or incarcerated for
90 days or more by an enemy of the United States in wartime.
The Committee bill would authorize the Department to provide
outpatient dental care to former POWs, regardless of the length
of their detention or internment. The Committee bill would
ensure that former POWs receive all needed care for dental
conditions that may be attributable to the privations
experienced during their service to the Nation while held
prisoner.
HEIGHTENED ACCOUNTABILITY FOR VA RESEARCH AND EDUCATION CORPORATIONS
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. The Act provided a flexible funding mechanism for
the conduct of approved research at medical centers. The
impetus for establishing the research corporations in law was
to provide a conduit for research funds and 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 provide Congress insufficient
information about the activities of the corporations to enable
Congress to provide proper oversight of their functions.
The Department's Assistant Inspector General for Auditing
has testified before the Committee that the VA IG had published
three reports from 1994-97 on concerns about insufficient
information relating to the functions of these corporations.
These reports identified the need for stricter accountability
and oversight with regard to the administration of funds.
The Committee bill would amend section 7366 of title 38,
United States Code, to require each VA research corporation to
submit to the Secretary not later than March 1 of each year a
detailed statement of corporate operations, activities and
accomplishments during the preceding year. The statement would
include the amount of funds received along with the source of
funding and an itemized accounting for all disbursements. Under
the Committee bill, those corporations with funding in excess
of $300,000 would continue to be required to obtain an audit of
the corporation for that year, and corporations with funding
totaling less than $300,000 would obtain an audit every three
years. These audits would continue to be conducted by
independent auditors and performed in accordance with generally
accepted government auditing standards.
Under the Committee bill, the VA IG would be required to
randomly review audits to determine whether they were carried
out in accordance with the auditing standards specified by the
bill. The Committee bill would also extend the authority for
the corporations until December 31, 2006.
AUTHORIZE THE DEPARTMENT OF DEFENSE TO PURCHASE MEDICAL ITEMS AND
SERVICES THROUGH VA'S REVOLVING SUPPLY FUND
The Veterans Millennium Health Care and Benefits Act,
Public Law 106-117, requires the Secretaries of DOD and VA to
jointly report on cooperation in procuring pharmaceuticals and
medical supplies and equipment. Joint VA-DOD procurement is one
of the President's management objectives, and VA recently
adopted the recommendations of its procurement reform task
force that endorsed joint procurement actions as a method to
obtain better prices. However, achievement of these goals is
difficult because the enabling language of the VA's revolving
supply fund does not permit direct support of DOD's medical
supply needs.
The Committee bill would grant direct authority to enable
the Secretary of Veterans Affairs to permit the Secretary of
Defense to use VA's supply fund, and would require the
Secretary of Defense to reimburse the supply fund for such
purchases.
NAMING OF VA COMMUNITY BASED OUTPATIENT CLINIC, NEW LONDON, CONNECTICUT
The Committee bill would honor the late John J. McGuirk for
his service as a devoted World War II veteran and patriotic
American by affixing his name to the Department's outpatient
clinic in New London, Connecticut.
During World War II, Mr. McGuirk, a New London native,
joined the Navy as a salvage diver and served honorably in the
South Pacific. During his service, he was awarded the World War
II Victory Medal, Asiatic Pacific Theatre Medal, and the
Philippine Liberation Medal.
Mr. McGuirk's commitment to his Nation and fellow veterans
was prominent throughout his life. He was an advocate for the
opening of a VA clinic in southeastern Connecticut. His
leadership led the VA to establish a Veterans Outreach Clinic
in New London, on the grounds of the Coast Guard Academy.
The Connecticut Congressional delegation is unanimous in
its support for renaming this facility after Mr. McGuirk, as
are the Disabled Veterans of America, Veterans of Foreign Wars,
Paralyzed Veterans of America, The American Legion, AMVETS, and
the Coast Guard Academy. The naming of this clinic in memory of
Mr. McGuirk is in compliance with the policy of the Committee
for naming Department of Veterans Affairs facilities.
Section-By Section Analysis
Section 1(a) of the bill would provide that this Act may be
cited as the ``Veterans Health Care and Procurement Improvement
Act of 2002.''
Section 1(b) of the bill sets forth the table of contents.
Section 2 of the bill explains that citations made
throughout this Act are understood to be amending, repealing or
referencing sections of title 38 of the United States Code,
unless otherwise stated.
Section 3(a) would limit use of local contracts for VA
procurement of health care items by amending section 8125 of
title 38, United States Code.
Section 8125 would require purchase of health care items
either on a Federal Supply Schedule (FSS) contract or a
national contract.
Section 8125(b)(1) would provide for five exceptions to the
required use of FSS or national contracts.
Section 8125(b)(1)(A) would except a current or near-term
medical emergency at a medical center.
Section 8125(b)(1)(B) would except a legitimate clinical
need for a health care item that is not available on a FSS
contract or part of a national contract.
Section 8125(b)(1)(C) would except the special needs of an
individual patient if specified conditions are present and the
patient's special needs are consistent with those special needs
identified in section 1706(b), title 38, United States Code.
Section 8125(b)(1)(D) would except items that are
fundamental to a sharing agreement between VA and the
Department of Defense (DOD), if a comparative cost savings is
achieved.
Section 8125(b)(1)(E) would except purchases made through a
set-aside for small, disadvantaged, minority or veteran-owned
businesses, with specific conditions.
Section 8125(b)(2) would establish an approval process for
procuring items that are not part of a FSS or national contract
and would establish lines of authority within VA for obtaining
advance approval of such exemptions, which would be required to
be in writing.
Section 8125(c) would establish a standard of ``reasonably
foreseeable need'' for the quantity of an item that could be
purchased using an emergency procurement exemption.
Section 8125(d) would establish the requirements for
contracts under this subsection and impose limitations on
participation by distributors who do not manufacture the
product that would be procured.
Sections 8125(d)(1)(A) and (B) would require such contracts
to contain ``pre- and post-award audit clauses'' and a ``price
reduction clause''.
Section 8125(d)(2) would require that any contract made
with a vendor that is a distributor would be for distribution
services only unless the manufacturer of the product can
clearly demonstrate that at least 60 percent of its sales of
the item through that vendor would be to commercial customers
with negotiated product prices and that the vendor actually
stocks and distributes the product.
Section 8125(e)(1) would require the Secretary to establish
procedures to assure compliance by each VA medical facility
with the provisions of this section and applicable Federal and
VA procurement regulations.
Section 8125(e)(2) would require that new compliance
procedures be designed to maximize both variety of items
available and standard use of the FSS.
Section 8125(e)(3) would require the Secretary to establish
and enforce procedures limiting the standardization of items to
be purchased at the local, regional or national level to
provide patients with special needs, as identified in section
1706(b), title 38, United States Code, the range and type of
health care items required to meet their individual clinical
and quality-of-life needs.
Section 8125(e)(4) would require the Advisory Committee on
Prosthetics and Special-Disabilities Programs to review VA's
procurement procedures and actual performance as they relate to
special-need patient populations and to advise the Secretary
when those procedures are not effectively enforced by the VA.
Section 8125(f)(1) would require the Secretary to establish
annual performance goals maximizing purchases of health care
items from FSS and national contracts.
Section 8125(f)(2) would require the Secretary to establish
performance goals for procurements from small, disadvantaged,
minority or veteran-owned businesses qualifying for a
procurement preference program under the Small Business Act (15
U.S.C. 637, 644), and would require that such goals be no less
than the national goal for each such procurement preference
program.
Section 8125(f)(3) would require that achievement of the
goals established under this subsection would be an element in
performance standards for VA employees with the authority and
responsibility for achieving those goals.
Section 8125(g) would provide that any portion of another
provision of law dealing with the procurement of health care
items that is inconsistent with provisions of this Act would
not apply to VA procurement of a health care item.
Section 8125(h)(1) would require specific annual reports
from the VA detailing its procurement of health care items and
implementation of provisions of this Act; the reports would be
due to the Committees on Veterans' Affairs of the Senate and
House of Representatives by December 31 of each year and cover
the preceding fiscal year.
Sections 8125(h)(1)(A) through (D) would require such
annual reports to include: the total dollar amount of all items
listed in Federal Supply Classification Group 65 or 66 and the
total dollar value by medical facility of the exceptions to the
required use of FSS or national contracts; a detailed
explanation for such exceptions, including the rationale for
use of emergency procurement, approval of requests for unlisted
items and the exceptions for special health care needs of
veterans with disabilities; analysis of sharing agreements
between VA and DOD; and the stated goal under each procurement
preference program and an assessment of performance in
achieving that goal.
Section 8125(h)(2) would require the VA Advisory Committee
on Prosthetics and Special Disabilities to submit comments on
each such report under paragraph (1) and would require the
Secretary to include those comments in the report.
Sections 8125(i)(1) through (5) would for purposes of this
subsection would define the terms ``health care item,''
``national contract,'' ``valid clinical need,'' ``Federal
Supply Schedule contract,'' and ``emergency procurement.''
Section 3(b) of the bill would provide an effective date of
September 30, 2003, for the amendment made by subsection (a);
the amendment would apply to VA procurements after that date.
Section 4(a) of the bill would expand the VA's enhanced-use
lease authority by amending section 8162 of title 38, United
States Code.
Section 4(a)(1) of the bill would amend section
8162(a)(2)(B) to include under enhanced-use leasing authority
each of the VA's Under Secretaries, rather than only the Under
Secretary for Health.
Section 4(a)(2) of the bill would amend section
8162(a)(2)(B) by expanding enhanced-use leasing authority from
provision of medical care and services to all programs and
activities of the VA.
Section 4(b)(1)(A) and (B) of the bill would amend section
8163(a) by changing the requirement for a public hearing from
prior to when the Secretary proposes to designate a property to
be leased to when the Secretary proposes to enter into an
enhanced-use lease for a property.
Section 4(b)(2) of the bill would amend section 8163(b) to
specify that notice must be given to the Committees on
Veterans' Affairs of the House and Senate and to the public
before the required public hearing on the proposed lease.
Sections 4(b)(3)(A) and (B) of the bill would amend section
8163(c)(1) and (2) by changing the requirement for notification
to the Committees on Veterans' Affairs of the House and Senate
from the time of the Secretary's intent to designate the
property involved for an enhance-use lease, to the time of the
Secretary's intent to enter into an enhanced-use lease of the
property involved, and by reducing the period the Secretary
must wait before entering into such a lease from 90 days to 45
days.
Section 4(b)(3)(C) of the bill would amend section
8163(c)(3) by requiring a description of the provisions of the
proposed lease, rather than a general description of the
proposed lease, and by requiring a summary of a cost-benefit
analysis.
Section 4(b)(3)(D) of the bill would strike the requirement
of section 8163(c)(4) that the Secretary report to the
Committees on Veterans' Affairs of the House and Senate not
less than 30 days before entering into an enhanced-use lease.
Section 4(c)(1) through (3) of the bill would amend section
8164(a) by eliminating the request of the Secretary to the
Administrator of the General Services Administration regarding
disposal of the property, and the requirement of notice to the
Committees on Veterans' Affairs of the House and Senate
regarding disposition of property would be reduced from 90 days
to 45 days.
Section 4(d) of the bill would amend section 8165(a) and
(b) to allow funds received under an enhanced-use lease, after
deduction of expenses, to be credited to applicable
appropriations of the administration; and to allow the
Department to use proceeds from an enhanced-use project to
reimburse the appropriations of the Department for expenses
incurred in developing additional enhanced-use leases.
Section 4(e) of the bill would make clerical amendments to
section 8163.
Section 5(a) of the bill would amend section 1734 of title
38, United States Code, to authorize the Secretary to furnish
hospital and nursing home care and medical services to any
individual who is a Commonwealth Army veteran or Philippines
New Scout who is residing in the United States and who is a
citizen of the United States or who is an alien lawfully
admitted to the United States for permanent residence. Such
care and services would be subject to the same terms and
conditions as they apply to individuals who are veterans as
defined in section 101(2) of title 38, United States Code.
Service-connected disabilities for purposes of this subchapter
(as provided for under section 1735(2) of title 38, United
States Code), would be considered to be a service-connected
disability for purposes of furnishing such care and services.
Section 5(b) of the bill would place a limitation on the
provision of such care and services by requiring the Secretary
to submit to the Committees on Veterans' Affairs of the Senate
and House of Representatives and publish in the Federal
Register a certification that sufficient resources are
available for the fiscal year during which the certification is
submitted and at those facilities where the majority of these
veterans would receive their care and services.
Section 6 of the bill would amend section 1712(a)(1)(F) of
title 38, United States Code, to authorize outpatient dental
care for all former prisoners of war without regard to the
length of their internment or detention.
Section 7(a) of the bill would amend section 7366(b)(1) of
title 38, United States Code to require that each research
corporation at a VA medical center submit a report to the
Secretary concerning the preceding calendar by not later than
March 1 of each year. The report would be required to include a
detailed description of the corporation's operations,
activities, and accomplishments during the preceding calendar
year; a description of each funded research project; a
statement of the total funding controlled by the corporation;
an itemized accounting of all disbursements made during the
year; the most recent audit of corporation; and such other
information as necessary to assist Secretary with the report
required under section 7367 of title 38, United States Code.
Section 7366(b)(2) would require that corporations with
funds in excess of $300,000 during a calendar year obtain an
audit for that calendar year. Corporations with funding levels
of less than $300,000 would be required to obtain an
independent audit at least once every three years. The report
would be required to include any payment or travel provided to
members of the board of directors of the corporation and the
amount of any such payment or travel.
Section 7366(b)(3) would require that any audit be
performed in accordance with generally accepted government
auditing standards and in accordance with Office of Management
and Budget Circular A-133.
Section 7366(b)(4) would require that the Inspector General
of the Department review at least 10 percent of all
corporations with funds in excess of $300,000 each year and 10
percent of all corporations with funds below $300,000 at least
once every three years. As part of any such review, the VA's
Inspector General would be required to determine if the audits
were carried out in accordance with generally accepted
government auditing standards.
Section 7(b) of the bill would amend Subchapter IV of
chapter 73 of title 38, United States Code, by adding a new
section 7367 with the title, ``Annual report to congressional
committees''.
Section 7367 would require that annual reports submitted by
research corporations to the Secretary be submitted to Congress
not later than May 1 of the year following the year covered by
such reports.
Section 7(c) of the bill would amend section 7368 of title
38, United States Code, to extend authority to establish
research corporations from December 31, 2003 until December 31,
2006.
Section 8(a) of the bill would amend section 8121 of title
38, United States Code, by adding a new subsection to allow the
Secretary to authorize the Department of Defense to make
purchases through the VA revolving supply fund in the same
manner as activities of the VA, for services, equipment, or
supplies furnished to the Secretary of Defense through the
fund. The reimbursement would be made from Department of
Defense appropriations and the fund could be credited with
advances from appropriations made available to the Department
of Defense.
Section 8(b) of the bill would provide that the amendment
made by section 8(a) would only apply to Department of Defense
funds appropriated for a fiscal year after fiscal year 2002.
Section 9 of the bill would name the Department of Veterans
Affairs' outpatient clinic in New London, Connecticut, the
``John J. McGuirk Department of Veterans Affairs Outpatient
Clinic.''
Performance Goals and Objectives
The provisions of the reported bill that are covered by the
Government Performance and Results Act would affect VA
procurement and enhanced-use leasing activities, auditing and
reporting requirements for research and education corporations
at VA facilities, and health and dental care eligibility for
certain veterans. The VA's program performance goals and
objectives are established in annual performance plans and are
subject to the Committee's regular oversight.
Statement of the Views of the Administration
From the statement of Mr. Mark Catlett, Principal Deputy
Assistant Secretary for Management, Department of Veterans
Affairs, before the Subcommittee on Health, Committee on
Veterans' Affairs, June 26, 2002:
We fully endorse the objective reflected in H.R. 3645
of leveraging the purchasing power of VA and other
Government agencies. . . . We recognize that H.R. 3645
supports the objective of leveraging the purchasing
power of VA and other Government agencies. We believe
that volume-leveraged purchasing in VA is essential.
Our vast purchasing power must not be fragmented and
the Department must employ contracting practices that
achieve the best possible terms and prices in our
acquisitions of health care items. . . . However, after
careful consideration of the bill, VA does not believe
that legislation mandating any particular procurement
method in the acquisition of health care items is
desirable. As acquisition methods and trends continue
to evolve, this legislation may not allow the
Department the necessary flexibility to take advantage
of those improvements. The Department should not be
compelled to seek legislative changes in order to take
advantage of improved procurement practices.
From the statement of the Honorable Anthony J. Principi,
Secretary, Department of Veterans Affairs, before the
Subcommittee on Health, Committee on Veterans' Affairs, June
13, 2002:
Specifically with regard to health care, prior to
October 27, 2000, the law authorized VA to provide care
in the Manila Outpatient Clinic only for the service-
connected conditions of U.S. veterans. The term `U.S.
veterans' includes members of the Old Philippine
Scouts. With enactment of Public Law 106-377 in October
of 2000, Congress authorized VA to begin providing care
in the clinic for the non-service-connected conditions
of those same U.S. veterans. Filipino veterans,
however, including Commonwealth Army veterans and New
Philippine Scouts, are not eligible for VA health care
in the Philippines. The Philippine Government provides
health care to eligible Filipino veterans. The law
regarding care of Filipino veterans residing in the
United States also changed. Prior to the enactment of
Public Law 106-377, VA was authorized to provide care
in the United States only for the service-connected
conditions of Commonwealth Army veterans, members of
recognized guerilla groups, and New Philippine Scouts.
Public Law 106-377 authorized VA to begin providing
hospital care, nursing home care, and medical services
to veterans of the Commonwealth Army and recognized
guerilla forces that have service-connected
disabilities on the same basis as U.S. veterans. In
short the change allowed these veterans to seek care
for their non-service-connected conditions. The change
in law did not expand eligibility for New Philippine
Scout veterans. They continue to be eligible for care
in the United States only on a discretionary basis
(within the limits of VA resources) and only for
service-connected disabilities. Mr. Chairman,
legislation currently pending before the House and the
Senate would further expand benefit eligibility for
Filipino veterans and their survivors. In that regard,
I am pleased to inform the Committee that, in our April
25 letter, addressed to Chairman Rockefeller of the
Senate Committee on Veterans' Affairs, on S. 1042, the
Department expressed the Administration's support for
the following enhancements in benefits to Filipino
veterans and their survivors:
. . .
Lproviding comprehensive care on the same
basis as for U.S. veterans for veterans of the
Commonwealth Army, recognized guerilla forces and New
Philippine Scouts who are residing in the United States
and are either citizens of, or aliens lawfully admitted
for permanent residence in the United States,
regardless of whether they have service-connected
disabilities.
. . . Mr. Chairman, VA continues to work with the
White House to explore opportunities to enhance our
assistance to Filipino veterans. Section 1731 of Title
38 authorizes the President to assist the Republic of
the Philippines in fulfilling its responsibilities in
providing medical care and treatment for Commonwealth
Army veterans and new Philippine Scouts. I am working
to utilize this authority to provide grants of
equipment, as well as assistance in installation and
maintenance of the equipment, to the Philippine
government to improve care at the Veterans Memorial
Medical Center in Manila. I anticipate the equipment
grants would be for $500,000 per year.
Roll Call Votes
During Committee consideration of H.R. 3645, there was a
recorded vote on an amendment offered by Mr. Filner to extend
compensation benefits to certain Filipino veterans. The
amendment was rejected on a roll vote of 14-15.
Date: Tuesday, July 16, 2002
Call to Order: 9:35 a.m.
Adjourn: 11:10 a.m.
Subject: Filner amendment to H.R. 3645 (as amended)
----------------------------------------------------------------------------------------------------------------
NAME YEA NAY NOT VOTING
----------------------------------------------------------------------------------------------------------------
Chris Smith, NJ, Chairman............ ...................... x......................
Bob Stump, AZ........................ ...................... ...................... x
Michael Bilirakis, FL, Vice Chairman. ...................... x......................
Terry Everett, AL.................... ...................... x......................
Steve Buyer, IN...................... ...................... x......................
Jack Quinn, NY....................... ...................... x......................
Cliff Stearns, FL.................... ...................... x......................
Jerry Moran, KS...................... ...................... x......................
Howard (Buck) McKeon, CA............. ...................... x......................
Jim Gibbons, NV...................... ...................... x......................
Mike Simpson, ID..................... ...................... x......................
Richard Baker, LA.................... ...................... x......................
Rob Simmons, CT...................... ...................... x......................
Ander Crenshaw, FL................... ...................... x......................
Henry Brown, SC...................... ...................... ...................... x
Jeff Miller, FL...................... ...................... x......................
John Boozman, AR..................... ...................... x......................
Lane Evans, IL, Ranking.............. x...................... ......................
Bob Filner, CA....................... x...................... ......................
Luis Gutierrez, IL................... x...................... ......................
Corrine Brown, FL.................... x...................... ......................
Julia Carson, IN..................... x...................... ......................
Silvestre Reyes, TX.................. x...................... ......................
Vic Snyder, AR....................... x...................... ......................
Ciro Rodriguez, TX................... x...................... ......................
Ronnie Shows, MS..................... x...................... ......................
Stephen Lynch, MA.................... x...................... ......................
Shelley Berkley, NV.................. x...................... ......................
Baron P. Hill, IN.................... x...................... ......................
Tom Udall, NM........................ x...................... ......................
Susan Davis, CA...................... x...................... ......................
TOTAL...................... 14..................... 15..................... 2
----------------------------------------------------------------------------------------------------------------
Congressional Budget Office Cost Estimate
The following letter was received from the Congressional
Budget Office concerning the cost of the reported bill:
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 19, 2002.
Hon. Christopher H. Smith
Chairman, Committee on Veterans' Affairs,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3645, the Veterans
Health Care and Procurement Reform and Improvement Act of 2002.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Sam
Papenfuss, who can be reached at 226-2840.
Sincerely,
Dan L. Crippen,
Director.
Enclosure.
----------
Congressional Budget Office Cost Estimate
H.R. 3645, VETERANS HEALTH CARE AND PROCUREMENT IMPROVEMENT ACT OF
2002, AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON VETERANS' AFFAIRS
ON JULY 16, 2002
Summary
H.R. 3645 would change how the Department of Veterans
Affairs (VA) procures its health care items. The bill would
require that all health care items be purchased through the use
of the federal supply schedule (FSS) or national contracts,
except for defined exceptions and emergencies approved by the
Secretary of Veterans Affairs. H.R. 3645 also would expand VA's
enhanced-use lease authority. In addition, the bill would
expand health care benefits for certain Filipino veterans, and
provide dental benefits for certain former prisoners of war.
H.R. 3645 would institute new auditing and accountability
standards for research corporations established at VA medical
centers. Finally, H.R. 3645 would name an outpatient clinic in
New London, Connecticut, as the ``John J. McGuirk Department of
Veterans Affairs Outpatient Clinic.''
The expanded authority for entering into enhanced-use
leases would likely generate new federal collections (shown in
this estimate as an offset to direct spending), but spending of
such additional collections would be subject to appropriation
action. CBO estimates that enacting the bill would not affect
direct spending in 2003, but would reduce direct spending by
about $2 million over the 2003-2007 period, and by about $4
million over the 2003-2012 period. Because the bill would
affect direct spending, pay-as-you-go procedures would apply.
In addition, H.R. 3645 would modify provisions governing
discretionary spending for veterans' health care programs,
which CBO estimates would result in outlays of $8 million in
2003 and $65 million over the 2003-2007 period, assuming
appropriation of the estimated amounts.
H.R. 3645 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would not affect the budgets of state, local, or tribal
governments.
Estimated Cost to the Federal Government
The estimated budgetary impact of H.R. 3645 is shown in the
following table. The costs of this legislation fall within
budget function 700 (veterans benefits and services).
----------------------------------------------------------------------------------------------------------------
By Fiscal Year, in Millions of Dollars
-----------------------------------------------------------
2002 2003 2004 2005 2006 2007
----------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING
Estimated Budget Authority.......................... 0 0 a -1 -1 -1
Estimated Outlays................................. 0 0 a -1 -1 -1
SPENDING SUBJECT TO APPROPRIATION
Baseline Spending Under Current Law for Veterans'
Medical Care
Estimated Authorization Level b................... 22,178 22,884 23,684 24,700 25,262 26,094
Estimated Outlays................................. 22,202 22,865 23,485 24,189 24,978 25,801
Proposed Changes
Estimated Authorization Level..................... 0 9 16 15 14 13
Estimated Outlays................................. 0 8 15 15 14 13
Spending Under H.R. 3645 for Veterans' Medical Care
Authorization Level b............................. 22,178 22,893 23,700 24,715 25,276 26,107
Estimated Outlays................................. 22,202 22,873 23,500 24,204 24,992 25,814
----------------------------------------------------------------------------------------------------------------
a Less than $500,000.
b The 2002 level is the estimated net amount appropriated for that year. The current law amounts for the 2003-
2007 period are CBO baseline projections that assume appropriations remain at the 2002 level, with adjustments
for inflation.
Basis of Estimate
For this estimate CBO assumes that the bill will be enacted
near the beginning of fiscal year 2003, and that estimated
amounts will be appropriated each year.
DIRECT SPENDING
H.R. 3645 would expand VA's current authority to enter into
enhanced-use leases and to dispose of certain property. An
enhanced-use lease is one where VA leases out its property on
the condition that at least part of the property is used in a
manner that contributes to VA's mission or improves services
provided to veterans in the region where the lease occurs.
Under current law, only the Veterans Health Administration
(VHA) within VA has the authority to enter into enhanced-use
leases. The lease payments to VHA are deposited into the Health
Services Improvement Fund.
Under current law, amounts deposited into the Health
Services Improvement Fund are considered offsets to direct
spending, but VA may spend amounts in the fund without
appropriation action. Thus, any such collections are spent,
resulting in no net impact on direct spending. In addition, VA
has the authority to sell property it leases to other parties
at any time during the lease period and up to 30 days after the
lease has expired. Proceeds from those sales are deposited into
the Nursing Home Revolving Fund. Amounts deposited into the
Nursing Home Revolving Fund are considered offsets to direct
spending and spending from the fund is subject to appropriation
action.
Veterans Health Administration Leases of Property. CBO
expects that VHA would find it easier to enter into enhanced-
use leases under H.R. 3645 because the bill would shorten the
time period between when VHA notifies the Congress and the
public of its intent to lease out a property and when that
lease can be signed from 90 days to 45 days. CBO estimates that
under this provision VHA would increase its receipts by less
than $500,000 a year because the shorter notification period
would not be a significant change from current practice. (The
VHA currently receives about $1 million in annual receipts from
enhanced-use leases.) Because VHA can spend these collections
without appropriation action, CBO estimates that the net impact
of this provision on the budget would be negligible for each
year.
Veterans Health Administration Sales of Property. CBO also
expects that VHA would be able to sell its leased property more
easily under the bill since it also would shorten the time
period between when VHA notifies the Congress and the public of
its intent to sell a property and when the sale can be
completed from 90 days to 45 days. Under current law, the VHA
must notify the General Services Administration (GSA) about
proposed sales and the two agencies must jointly agree on the
terms of the sale. Under the bill, VHA would be able to sell
its leased property on its own without having to notify or work
with GSA. However, proceeds from the sale of leased property
would no longer be deposited into the Nursing Home Revolving
Fund under the bill, but would be deposited to the General Fund
of the Treasury. While future sales could produce offsetting
receipts, CBO believes that VHA would not dispose of any
property under this bill because it would not be able to spend
the proceeds.
Veterans Benefit Administration and National Cemetery
Administration Leases of Property. H.R. 3645 also would allow
both the Veterans Benefit Administration and the National
Cemetery Administration to enter into enhanced-use leases.
Proceeds from these leases would be credited to each
organization's appropriation account, but spending from the
fund would be subject to annual appropriation action.
Because the increased collections would stem from the
authority granted in H.R. 3645 (and would not be subject to
appropriation action), we show them as a reduction in direct
spending in this cost estimate. Based on the current level of
collections received by the VHA, CBO estimates that enacting
this provision would have no budgetary impact in 2003, but
would increase collections by less than $500,000 in 2004 and by
just over $500,000 every year thereafter. Thus, CBO estimates
the bill would reduce direct spending by about $2 million over
the 2003-2007 period, and by about $4 million over the 2003-
2012 period.
Veterans Benefit Administration and National Cemetery
Administration Sales of Property. As with VHA, the Veterans
Benefit Administration and the National Cemetery Administration
would also be allowed to dispose of leased or recently leased
property with the proceeds reverting to the General Fund of the
Treasury. As discussed above, CBO does not expect that either
of these two organizations would actually dispose of any
property because the proceeds would be deposited into the U.S.
Treasury.
SPENDING SUBJECT TO APPROPRIATION
Three provisions in H.R. 3645 could affect spending subject
to appropriation. The bulk of CBO's estimated impact on
discretionary spending, however, is for a provision that would
make certain Filipino veterans newly eligible for VA health
care benefits.
Filipino Veterans. Under current law, only certain Filipino
veterans who served during World War II are eligible for health
care benefits from VA. Under H.R. 3645, any individual who is a
Commonwealth Army veteran or New Philippine Scout living
legally in the United States would be eligible for VA health
care benefits. Using information from VA, CBO estimates that in
2003 about 11,000 Filipino veterans would qualify for this new
benefit. CBO estimates that about 2,000 of these veterans would
use VA health care benefits in 2003 at an estimated cost of
$4,200 per person. After adjusting for mortality, CBO expects
that the number of eligible Filipino veterans using VA health
care benefits would grow to 2,700 by 2007 as more of these
veterans become aware of the benefit. Accordingly, CBO
estimates that providing health care benefits to these Filipino
veterans would cost $8 million in 2003 and $65 million over the
2003-2007 period, assuming appropriation of the necessary
amounts. Costs could be significantly higher--if a much greater
percentage of the eligible Filipino veterans apply for the
health benefits.
Health Care Procurement. H.R. 3645 would change how the VA
procures its health care items. The bill would require that all
health care items be purchased through the use of the FSS or
national contracts, except for narrowly defined exceptions and
emergencies approved by the Secretary of Veterans Affairs. CBO
believes that implementing the bill might generate some small
savings, assuming appropriations are reduced accordingly, but
we cannot provide a specific estimate.
VA currently spends about $4.5 billion annually from
appropriated funds buying health care items, and many of those
items are already purchased through the use of FSS or national
contracts. That is especially true for pharmaceuticals, which
account for more than $2.5 billion of VA's health care
purchases. Restructuring VA's procedures for buying health care
products under H.R. 3645 might generate some small savings, but
we cannot estimate the amount. Available data from VA is
primarily anecdotal, and while some VA facilities purchase
items locally and pay more than they might under a national
contract, other VA facilities purchase health care items at
prices lower than FSS or national contract rates. Based on this
information and a recent study by the General Accounting Office
of purchasing groups for hospitals, CBO does not believe that
using FSS or national contracts uniformly would lower costs for
all VA facilities. Thus, any savings would be offset to some
extent by increased costs at some hospitals. Without more
specific data, CBO cannot estimate the extent of the net
savings that might occur from implementing H.R. 3645.
Dental Care for Prisoners of War. Under current law, former
prisoners of war are eligible for dental benefits provided by
VA if they were prisoners of war for more than 90 days. Under
H.R. 3645, all former prisoners of war would be eligible for
dental benefits regardless of how long they were held as
prisoners. Using information from VA, CBO estimates that this
provision would cost less than $500,000 a year.
Pay-as-you-go Considerations
The Balanced Budget and Emergency Deficit Control Act sets
up pay-as-you-go procedures for legislation affecting direct
spending or receipts. The net changes in outlays that are
subject to pay-as-you-go procedures are shown in the following
table. For the purposes of enforcing pay-as-you-go procedures,
only the effects through fiscal year 2006 are counted.
----------------------------------------------------------------------------------------------------------------
By Fiscal Year, in Millions of Dollars
----------------------------------------------------------------------------
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
----------------------------------------------------------------------------------------------------------------
Changes in outlays................. 0 0 a -1 -1 -1 -1 -1 -1 -1 -1
Changes in receipts................ Not Applicable
----------------------------------------------------------------------------------------------------------------
a Less than $500,000.
Intergovernmental and Private-Sector Impact
H.R. 3645 contains no intergovernmental or private-sector
mandates as defined in UMRA and would not affect the budgets of
state, local, or tribal governments.
Previous CBO Estimate
On June 26, 2002, CBO transmitted a cost estimate for H.R.
3645, the Veterans Health Care Items Procurement Reform and
Improvement Act of 2002, as introduced on January 29, 2002.
Both versions of the bill would change the way VA procures its
health care items, though H.R. 3645, as ordered reported, would
establish somewhat less stringent restrictions on VA's
procurement practices than the introduced bill. CBO believes
that changing VA's procurement practices as specified in either
version of the bill might produce some small savings in
discretionary spending, but we cannot estimate the amount of
those savings.
In addition, H.R. 3645, as ordered reported, contains
several provisions that are not in the introduced bill,
including the provision of health care to certain Filipino
veterans, expansion of VA's enhanced-use lease authority, and
the provision of dental care to certain veterans. Differences
in the other estimated costs reflect these differences in the
bills.
Estimate prepared by:
Federal Costs: Sam Papenfuss
Impact on State, Local, and Tribal Governments: Greg Waring
Impact on the Private Sector: Sally S. Maxwell
Estimate approved by:
Peter H. Fontaine
Deputy Assistant Director for Budget Analysis
Statement of Federal Mandates
The preceding Congressional Budget Office cost estimate
states that the bill contains no intergovernmental or private
sector mandates as defined in the Unfunded Mandates Reform Act.
Applicability To Legislative Branch
The reported bill would not be applicable to the
legislative branch under the Congressional Accountability Act,
Public Law 104-1, because the bill would only affect certain
Department of Veterans Affairs health care programs.
Statement of Constitutional Authority
Pursuant to Article I, section 8 of the United States
Constitution, the reported bill is authorized by Congress'
power to ``provide for the common Defense and general Welfare
of the United States.''
Changes in Existing Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (existing law
proposed to be omitted is enclosed in black brackets, new
matter is printed in italics, existing law in which no change
is proposed is shown in roman):
TITLE 38, UNITED STATES CODE
* * * * * * *
PART II--GENERAL BENEFITS
* * * * * * *
CHAPTER 17--HOSPITAL, NURSING HOME, DOMICILIARY, AND MEDICAL CARE
* * * * * * *
SUBCHAPTER II--HOSPITAL, NURSING HOME OR DOMICILIARY CARE AND MEDICAL
TREATMENT
* * * * * * *
Sec. 1712. Dental care; drugs and medicines for certain
disabled veterans; vaccines
(a)(1) Outpatient dental services and treatment, and related
dental appliances, shall be furnished under this section only
for a dental condition or disability--
(A) * * *
* * * * * * *
(F) from which a veteran who is a former prisoner of
war [and who was detained or interned for a period of
not less than 90 days] is suffering;
* * * * * * *
SUBCHAPTER IV--HOSPITAL CARE AND MEDICAL TREATMENT FOR VETERANS IN THE
REPUBLIC OF THE PHILIPPINES
* * * * * * *
Sec. 1734. Hospital and nursing home care and medical services in the
United States
[(a) The Secretary, within the limits of Department
facilities, may furnish hospital and nursing home care and
medical services to Commonwealth Army veterans and new
Philippine Scouts for the treatment of the service-connected
disabilities of such veterans and scouts.
[(b) An individual who is in receipt of benefits under
subchapter II or IV of chapter 11 of this title paid by reason
of service described in section 107(a) of this title who is
residing in the United States and who is a citizen of, or an
alien lawfully admitted for permanent residence in, the United
States shall be eligible for hospital and nursing home care and
medical services in the same manner as a veteran, and the
disease or disability for which such benefits are paid shall be
considered to be a service-connected disability for purposes of
this chapter.]
(a) The Secretary shall furnish hospital and nursing home
care and medical services to any individual described in
subsection (b) in the same manner, and subject to the same
terms and conditions, as apply to the furnishing of such care
and services to individuals who are veterans as defined in
section 101(2) of this title. Any disability of an individual
described in subsection (b) that is a service-connected
disability for purposes of this subchapter (as provided for
under section 1735(2) of this title) shall be considered to be
a service-connected disability for purposes of furnishing care
and services under the preceding sentence.
(b) Subsection (a) applies to any individual who is a
Commonwealth Army veteran or new Philippine Scout and who--
(1) is residing in the United States; and
(2) is a citizen of the United States or an alien
lawfully admitted to the United States for permanent
residence.
* * * * * * *
PART V--BOARDS, ADMINISTRATIONS, AND SERVICES
* * * * * * *
CHAPTER 73--VETERANS HEALTH ADMINISTRATION--ORGANIZATION AND FUNCTIONS
* * * * * * *
subchapter iv--research corporations
7361. Authority to establish; status.
* * * * * * *
7367. Annual report to congressional committees.
* * * * * * *
SUBCHAPTER IV--RESEARCH CORPORATIONS
* * * * * * *
Sec. 7366. Accountability and oversight
(a) * * *
[(b) Each such corporation shall submit to the Secretary an
annual report providing a detailed statement of its operations,
activities, and accomplishments during that year. A corporation
with revenues in excess of $300,000 for any year shall obtain
an audit of the corporation for that year. A corporation with
annual revenues between $10,000 and $300,000 shall obtain an
independent audit of the corporation at least once every three
years. Any audit under the preceding sentences shall be
performed by an independent auditor. The corporation shall
include the most recent such audit in the corporation's report
to the Secretary for that year.]
(b)(1) Not later than March 1 each year, each such
corporation shall submit to the Secretary a report concerning
the preceding calendar year. Each such annual report shall
include the following:
(A) A detailed statement of the corporation's
operations, activities, and accomplishments during the
preceding calendar year.
(B) A description of each research project or
activity for which funds were provided by the
corporation during that year or for which funds were
provided by the corporation during a preceding year and
that is ongoing during the year covered by the report,
including, for each such project or activity, the title
of the project or activity and a description of the
purpose of the project or activity.
(C) A statement of the amount of funds controlled by
the corporation as of the first day, and as of the last
day, of the year covered by the report and a statement
of the amount of funds received, shown by source,
during the year.
(D) An itemized accounting of all disbursements made
during the year.
(E) The most recent audit of the corporation under
paragraph (2).
(F) Such other information as may be necessary to
enable the Secretary to prepare the annual report to
congressional committees required under section 7367 of
this title.
(2) A corporation with a balance of funds under its control
in excess of $300,000 at any time during a calendar year shall
obtain an audit of the corporation for that year. Any other
corporation shall obtain an independent audit of the
corporation at least once every three years. The report on any
such audit shall specifically state whether the corporation
audited made any payment, or provided any travel, during the
period covered by the audit to a member of the board of
directors of the corporation and, if so, the amount and
recipient of any such payment or travel.
(3) Any audit under paragraph (2) shall be performed by an
independent auditor and shall be performed in accordance with
generally accepted Government auditing standards and in
accordance with Office of Management and Budget Circular A-133.
(4) The Inspector General of the Department shall each year
review the most recent audit under paragraph (2) of not less
than 10 percent of the corporations described in the first
sentence of paragraph (2) and not less than 10 percent of the
corporations described in the second sentence of that
paragraph. As part of such review, the Inspector General shall
determine whether the audit was carried out in accordance with
generally accepted Government auditing standards, as required
by paragraph (3).
* * * * * * *
Sec. 7367. Annual report to congressional committees
[(d)] (a) The Secretary shall submit to the Committees on
Veterans' Affairs of the Senate and House of Representatives an
annual report on the corporations established under this
subchapter. Each such report shall be based on the annual
reports submitted by the corporations to the Secretary under
section 7366(b) of this title and shall be submitted not later
than May 1 of the year following the year covered by such
reports. [The report shall]
(b) Each such report shall set forth the following
information:
(1) * * *
* * * * * * *
Sec. 7368. Expiration of authority
No corporation may be established under this subchapter after
December 31, [2003] 2006.
* * * * * * *
PART VI--ACQUISITION AND DISPOSITION OF PROPERTY
* * * * * * *
CHAPTER 81--ACQUISITION AND OPERATION OF HOSPITAL AND DOMICILIARY
FACILITIES; PROCUREMENT AND SUPPLY; ENHANCED-USE LEASES OF REAL
PROPERTY
* * * * * * *
subchapter v--enhanced-use leases of real property
8161. Definitions.
8162. Enhanced-use leases.
[8163. Designation of property to be leased.]
8163. Hearing and notice requirements regarding proposed leases.
* * * * * * *
SUBCHAPTER II--PROCUREMENT AND SUPPLY
Sec. 8121. Revolving supply fund
(a) * * *
(b) The Secretary may authorize the Secretary of Defense to
make purchases through the fund in the same manner as
activities of the Department. When services, equipment, or
supplies are furnished to the Secretary of Defense through the
fund, the reimbursement required by paragraph (2) of subsection
(a) shall be made from appropriations made to the Department of
Defense, and when services or supplies are to be furnished to
the Department of Defense, the fund may be credited, as
provided in paragraph (3) of subsection (a), with advances from
appropriations available to the Department of Defense.
(c) At the end of each fiscal year, there shall be covered
into the Treasury of the United States as miscellaneous
receipts such amounts as the Secretary determines to be in
excess of the requirements necessary for the maintenance of
adequate inventory levels and for the effective financial
management of the revolving supply fund.
[(b)] (d) An adequate system of accounts for the fund shall
be maintained on the accrual method, and financial reports
prepared on the basis of such accounts. An annual business type
budget shall be prepared for operations under the fund.
[(c)] (e) The Secretary is authorized to capitalize, at fair
and reasonable values as determined by the Secretary, all
supplies and materials and depot stocks of equipment on hand or
on order.
* * * * * * *
[Sec. 8125. Procurement of health-care items
[(a) Except as provided in subsections (b) and (c) of this
section, the Secretary may not procure health-care items under
local contracts.
[(b)(1) A health-care item for use by the Department may be
procured under a local contract if--
[(A) the procurement is within the limits prescribed
in paragraph (3) of this subsection; and
[(B)(i) the item is not otherwise available to the
Department medical center concerned,
[(ii) procurement of the item by a local contract is
necessary for the effective furnishing of health-care
services or the conduct of a research or education
program at a Department medical center, as determined
by the director of the center in accordance with
regulations which the Under Secretary for Health shall
prescribe, or
[(iii) procurement under a local contract is
demonstrably more cost-effective for the item.
[(2) In the case of the need for an emergency procurement of
a health-care item, such item may be procured under a local
contract, but no greater quantity of such item may be procured
by a local contract than is reasonably necessary to meet the
emergency need and the reasonably foreseeable need for the item
at the medical center concerned until resupply can be achieved
through procurement actions other than emergency procurement.
[(3)(A) Except as provided in subparagraphs (C) and (D) of
this paragraph, not more than 20 percent of the total of all
health-care items procured by the Department in any fiscal year
(measured as a percent of the total cost of all such health-
care items procured by the Department in that fiscal year) may
be procured under local contracts.
[(B) Local contracts for the procurement of health-care items
shall, to the maximum extent feasible, be awarded to regular
dealers or manufacturers engaged in the wholesale supply of
such items.
[(C) The Secretary may increase for a fiscal year the
percentage specified in subparagraph (A) of this section to a
percentage not greater than 30 percent if the Secretary, based
on the experience of the Department during the two fiscal years
preceding such fiscal year, determines that the increase and
the amount of the increase are necessary in the interest of the
effective furnishing of health-care services by the Department.
The authority to increase such percentage may not be delegated.
[(D) Items procured through an emergency procurement shall
not be counted for the purpose of this paragraph.
[(c) A provision of law that is inconsistent with subsection
(a) or (b) of this section shall not apply, to the extent of
the inconsistency, to the procurement of a health-care item for
use by the Department.
[(d)(1) Not later than December 1 of each year, the director
of each Department medical center shall transmit to the
Secretary a report containing a list indicating the quantity of
each health-care item procured at that medical center under a
local contract during the preceding fiscal year and the total
amount paid for such item during such fiscal year.
[(2) No later than February 1 of each year, the Secretary
shall submit to the Committees on Veterans' Affairs of the
Senate and the House of Representatives a report on the
experience in carrying out this section during the preceding
fiscal year.
[(e) For the purposes of this section:
[(1) The term ``health-care item'' includes any item
listed in, or (as determined by the Secretary) of the
same nature as an item listed in, Federal Supply
Classification (FSC) Group 65 or 66. Effective December
1, 1992, such term also includes any item listed in, or
(as determined by the Secretary) of the same nature as
an item listed in, Federal Supply Classification (FSC)
Group 73. Such term does not include perishable items.
[(2) The term ``local contract'' means a contract
entered into by a Department medical center for
procurement of an item for use by that medical center.
[(3) The term ``emergency procurement'' means a
procurement necessary to meet an emergency need,
affecting the health or safety of a person being
furnished health-care services by the Department, for
an item.]
Sec. 8125. Procurement of health-care items
(a) Except as provided in subsection (b), any procurement of
a health-care item by the Department shall be made through the
use of a Federal Supply Schedule contract, or a national
contract, that meets the requirements of subsection (d).
(b)(1) Subsection (a) does not apply to a procurement of a
health-care item in any of the following cases:
(A) A procurement that is necessary to meet a current
or near-term medical emergency at a medical center.
(B) A procurement that is for a health-care item that
is not listed in the Federal Supply Schedule or as part
of a national contract and for which there is a valid
clinical need.
(C) A procurement that is for a specialized health-
care item not listed in the Federal Supply Schedule or
as part of a national contract and that is to meet the
special needs of an individual patient who has one of
the special needs identified in section 1706(b) of this
title and who has a valid clinical need for the item.
(D) A procurement that is part of an approved sharing
agreement between the Department of Defense and the
Department of Veterans Affairs with demonstrable cost-
per-item savings for a health-care item listed on the
Federal Supply Schedule or a national contract.
(E) A procurement that supports a prime contract or a
subcontract with a small business concern qualifying
for a procurement preference program under section 8 or
15 of the Small Business Act (15 U.S.C. 637, 644), if
the cost of the item to be procured is no more than the
cost (taking price and value into consideration) of the
comparable item on the Federal Supply Schedule or
national contract and if the item meets the
requirements of subsections (d)(1)(A) and (d)(2).
(2) A procurement may be made as authorized under
subparagraph (B) of paragraph (1) only if the procurement is
specifically authorized in advance in writing by the Secretary.
The authority of the Secretary under the preceding sentence may
only be delegated to the Deputy Secretary or to an official of
the Veterans Health Administration not below the level of a
Deputy Under Secretary (or equivalent) acting jointly with a
procurement executive of the Department not below the level of
an Associate Deputy Assistant Secretary.
(c) In the case of an emergency procurement of a health-care
item as authorized by subsection (b)(1)(A), the quantity of the
item procured may not exceed the quantity of that item that is
the reasonably foreseeable need for the item at the medical
center concerned until resupply can be achieved through
procurement actions other than emergency procurement.
(d) A contract meets the requirements of this subsection if--
(1) the contract includes--
(A) provisions referred to as ``preaward and
postaward audit clauses''; and
(B) a provision referred to as a ``price
reduction clause''; and
(2) in the case of a contract to be made with a
vendor that is a distributor, the contract will be for
distribution services only unless the manufacturer of
the product can clearly demonstrate that at least 60
percent of its sales of the item through that vendor is
to commercial customers with negotiated product prices
and that the vendor actually stocks and distributes the
product.
(e)(1) The Secretary shall establish procedures to assure
compliance by each Department medical facility with the
provisions of this section and with applicable Federal and
Department procurement regulations.
(2) The procedures established by the Secretary under
paragraph (1) shall be designed to maximize health-care item
variety and the use of the Federal Supply Schedule.
(3) The Secretary shall establish and enforce procedures
limiting the standardization of items at the local, regional,
or national level to provide special patient populations (as
identified in section 1706(b) of this title) with the range and
types of health-care items required to meet their clinical and
quality-of-life needs.
(4) The Advisory Committee on Prosthetics and Special-
Disabilities Programs established under section 543 of this
title shall review the procedures established under paragraph
(3), including the implementation of those procedures, and
shall advise the Secretary when those procedures are not
effectively enforced by the Department.
(f)(1) The Secretary shall establish annual goals for
Department medical centers for the purchase of health-care
items from Federal Supply Schedule and national contracts
meeting the requirements of subsection (d). Such goals shall be
designed to maximize the percentage of such purchases that are
made through such contracts.
(2) The Secretary shall establish goals for the Department
for procurements from small business concerns qualifying for a
procurement preference program under section 8 or 15 of the
Small Business Act (15 U.S.C. 637, 644). Such goals shall be no
less than the national goal for each such procurement
preference program under either of those sections.
(3) Achievement of the goals established under this
subsection shall be an element in the performance standards for
employees of the Department who have the authority and
responsibility for achieving those goals.
(g) A provision of law that is inconsistent with any
provision of this section shall not apply, to the extent of the
inconsistency, to the procurement of a health-care item for the
Department.
(h)(1) Not later than December 31 each year, the Secretary
shall submit to the Committees on Veterans' Affairs of the
Senate and House of Representatives a report on the procurement
of health-care items during the preceding fiscal year. Each
such report shall include, for the year covered by the report,
the following:
(A) The total dollar amount of all items listed in
Federal Supply Classification (FSC) Group 65 or 66 and
the total dollar value of the exceptions to subsection
(a) under each of subparagraphs (A), (B), (C), (D), and
(E) of subsection (b)(1), shown by medical facility.
(B) A detailed explanation for exceptions to
subsection (a), including--
(i) the rationale for use of emergency
procurement at Department medical facilities;
(ii) the rationale for approval of requests
under subsection (b)(1)(B) for procurement of
items not listed on the Federal Supply Schedule
or on national contracts; and
(iii) exceptions granted for special health-
care needs of veterans with disabilities
described in section 1706(b) of this title.
(C) Analysis of sharing agreements between the
Department and the Department of Defense to indicate
the basic written sharing initiative and the division
of financial responsibility between the two
Departments.
(D) The stated goal under each procurement preference
program, together with an assessment of the performance
of the Department toward achievement of that goal,
especially with respect to the goal for contracting
with businesses that are owned by veterans with
service-connected disabilities.
(2) The Advisory Committee on Prosthetics and Special-
Disabilities Programs of the Department shall submit comments
on each report under paragraph (1) before the report is
submitted under that paragraph, and the Secretary shall include
those comments in the report as submitted.
(i) For the purposes of this subsection:
(1) The term ``health-care item'' includes any item
listed in, or (as determined by the Secretary) of the
same nature as an item listed in, Federal Supply
Classification (FSC) Group 65 or 66.
(2) The term ``national contract'' means a contract
for procurement of an item that is entered into by the
National Acquisition Center of the Department or
another Department procurement activity, as authorized
by the Secretary, that is available for use by all
Department medical facilities.
(3) The term ``valid clinical need'' means in the
professional judgment of an appropriate clinician. Such
term applies to health care items, prosthetic
appliances, sensory or mobility aids and supplies that
are prescribed by a physician for special patient
populations such as veterans with spinal cord
dysfunction, blindness, amputations, and other veterans
included in section 1706(b) of this title.
(4) The term ``Federal Supply Schedule contract''
means a contract that is awarded and administered by
the National Acquisition Center of the Department under
a delegation of authority from the Administrator of the
General Services Administration.''
(5) The term ``emergency procurement'' means a
procurement necessary to meet an emergency need
affecting the health or safety of a person being
furnished health-care services by the Department.
* * * * * * *
SUBCHAPTER V--ENHANCED-USE LEASES OF REAL PROPERTY
* * * * * * *
Sec. 8162. Enhanced-use leases
(a)(1) * * *
(2) The Secretary may enter into an enhanced-use lease only
if--
(A) * * *
(B) the Secretary determines that the implementation
of a business plan [proposed by the Under Secretary for
Health] proposed by one of the Under Secretaries for
applying the consideration under such a lease [to the
provision of medical care and services] to the programs
and activities of the Department would result in a
demonstrable improvement of services to eligible
veterans in the geographic service-delivery area within
which the property is located.
* * * * * * *
[Sec. 8163. Designation of property to be leased]
Sec. 8163. Hearing and notice requirements regarding proposed leases
(a) If the Secretary proposes to [designate a property to be
leased under an enhanced-use lease] enter into an enhanced-use
lease with respect to certain property, the Secretary shall
conduct a public hearing [before making the designation] before
entering into the lease. The hearing shall be conducted in the
community in which the property is located. At the hearing, the
Secretary shall receive the views of veterans service
organizations and other interested parties regarding the
proposed lease of the property and the possible effects of the
uses to be made of the property under a lease of the general
character then contemplated. The possible effects to be
addressed at the hearing shall include effects on--
(1) * * *
* * * * * * *
(b) Before conducting such a hearing, the Secretary shall
provide reasonable notice [of the proposed designation] to the
congressional veterans' affairs committees and to the public of
the proposed lease and of the hearing. The notice shall include
the following:
(1) * * *
* * * * * * *
(c)(1) If after a hearing under subsection (a) the Secretary
intends to [designate the property involved] enter into an
enhanced-use lease of the property involved, the Secretary
shall notify the congressional veterans' affairs committees of
the Secretary's intention [to so designate the property] to
enter into such lease and shall publish a notice of such
intention in the Federal Register.
(2) The Secretary may not enter into an enhanced use lease
until the end of the [90-day period] 45-day period beginning on
the date of the submission of notice under paragraph (1).
(3) Each notice under paragraph (1) shall include the
following:
(A) * * *
* * * * * * *
(D) A [general] description of the provisions of the
proposed lease.
* * * * * * *
(G) A summary of a cost-benefit analysis of the
proposed lease.
[(4) Not less than 30 days before entering into an enhanced-
use lease, the Secretary shall submit to the congressional
veterans' affairs committees a report on the proposed lease.
The report shall include--
[(A) updated information with respect to the matters
described in paragraph (3);
[(B) a summary of a cost-benefit analysis of the
proposed lease;
[(C) a description of the provisions of the proposed
lease; and
[(D) a notice of designation with respect to the
property.]
Sec. 8164. Authority for disposition of leased property
(a) If, during the term of an enhanced-use lease or within 30
days after the end of the term of the lease, the Secretary
determines that the leased property is no longer needed by the
Department, the Secretary may initiate action for the transfer
to the lessee of all right, title, and interest of the United
States in the property [by requesting the Administrator of
General Services to dispose of the property pursuant to
subsection (b)]. A disposition of property may not be made
under this section unless the Secretary determines that the
disposition under this section rather than under section 8122
of this title is in the best interests of the Department. [The
Administrator, upon request of the Secretary, shall take
appropriate action under this section to dispose of property of
the Department that is or has been subject to an enhanced-use
lease.]
(b) A disposition under this section may be made for such
consideration as the [Secretary and the Administrator of
General Services jointly determine] Secretary determines is in
the best interest of the United States and upon such other
terms and conditions as the [Secretary and the Administrator
consider] Secretary considers appropriate.
(c) Not less than [90 days] 45 days before a disposition of
property is made under this section, the Secretary shall notify
the congressional veterans' affairs committees of the
Secretary's intent to dispose of the property and shall publish
notice of the proposed disposition in the Federal Register. The
notice shall describe the background of, rationale for, and
economic factors in support of, the proposed disposition
(including a cost-benefit analysis summary) and the method,
terms, and conditions of the proposed disposition.
Sec. 8165. Use of proceeds
(a)[(1)] Funds received by the Department under an
enhanced-use lease and remaining after any deduction from those
funds under subsection (b) shall be deposited in the Department
of Veterans Affairs Health Services Improvement Fund
established under section 1729B of this title, except that any
funds received by the Department under an enhanced-use lease in
support of the Veterans Benefits Administration or the National
Cemetery Administration and remaining after any deduction from
such funds under subsection (b) shall be credited to applicable
appropriations of that Administration.
[(2) Funds received by the Department from a disposal of
leased property under section 8164 of this title and remaining
after any deduction from such funds under the laws referred to
in subsection (c) shall be deposited in the nursing home
revolving fund.]
(b) An amount sufficient to pay for any expenses incurred by
the Secretary in any fiscal year in connection with an
enhanced-use lease shall be deducted from the proceeds of the
lease for that fiscal year and may be used by the Secretary to
reimburse the account from which the funds were used to pay
such expenses. The Secretary may use the proceeds from any
enhanced-use lease to reimburse applicable appropriations of
the Department for any expenses incurred in the development of
additional enhanced-use leases.
[(c) Subsection (a) does not affect the applicability of
section 204 of the Federal Property and Administrative Services
Act of 1949 (40 U.S.C. 485) or the Act of June 8, 1896 (40
U.S.C. 485a), with respect to reimbursement of the
Administrator of General Services for expenses arising from any
disposal of property under section 8164 of this title.]
* * * * * * *
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