[House Report 118-625]
[From the U.S. Government Publishing Office]


118th Congress }                                             { Report
                        HOUSE OF REPRESENTATIVES
 2d Session    }                                             { 118-625

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



 
                    VA SUPPLY CHAIN MANAGEMENT SYSTEM  
                            AUTHORIZATION ACT

                                _______
                                

 August 9, 2024.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______ 
                                

            Mr. Bost, from the Committee on Veterans' Affairs,  
                         submitted the following

                              R E P O R T

                             together with

                             MINORITY VIEWS

                        [To accompany H.R. 2499]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Veterans' Affairs, to whom was referred 
the bill (H.R. 2499) to authorize the Secretary of Veterans 
Affairs to carry out an information technology system and 
prioritize certain requirements to manage supply chains for 
medical facilities of the Department of Veterans Affairs, 
having considered the same, reports favorably thereon with an 
amendment and recommends that the bill as amended do pass.

                                CONTENTS

                                                                   Page
Amendment........................................................     2
Purpose and Summary..............................................     2
Background and Need for Legislation..............................     2
Hearings.........................................................     4
Subcommittee Consideration.......................................     4
Committee Consideration..........................................     4
Committee Votes..................................................     5
Committee Oversight Findings.....................................     5
Statement of General Performance Goals and Objectives............     5
Earmarks and Tax and Tariff Benefits.............................     5
Committee Cost Estimate..........................................     6
Budget Authority and Congressional Budget Office Estimate........     6
Federal Mandates Statement.......................................     7
Advisory Committee Statement.....................................     7
Applicability to Legislative Branch..............................     7
Statement on Duplication of Federal Programs.....................     8
Section-by-Section Analysis of the Legislation...................     8
Changes in Existing Law Made by the Bill, as Reported............     8
Minority Views...................................................    15

    The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``VA Supply Chain Management System 
Authorization Act''.

SEC. 2. MANAGEMENT OF SUPPLY CHAINS FOR MEDICAL FACILITIES OF 
                    DEPARTMENT OF VETERANS AFFAIRS.

  (a) Authorization.--The Secretary of Veterans Affairs is authorized 
to--
          (1) purchase or develop for the Veterans Health 
        Administration an information technology system for the 
        management of inventory, including expendable and nonexpendable 
        items; and
          (2) implement such system.
  (b) Pilot.--If the Secretary purchases or develops a system under 
subsection (a), the Secretary shall carry out a pilot program at one 
Department of Veterans Affairs facility before implementing the system 
throughout the Department. The pilot program shall be designed to 
determine whether the functions of the system are satisfactory.
  (c) Authorization of Appropriations.--There is authorized to be 
appropriated for the Department of Veterans Affairs $50,000,000 to 
carry out this section.
  (d) Deadline.--If the Secretary purchases or develops a system under 
subsection (a), the Secretary shall complete the implementation of the 
system by not later than three years after the date of the enactment of 
this Act.

SEC. 3. MODIFICATION OF CERTAIN HOUSING LOAN FEES.

  The loan fee table in section 3729(b)(2) of title 38, United States 
Code, is amended by striking ``November 15, 2031'' each place it 
appears and inserting ``December 17, 2031''.

                          Purpose and Summary

    H.R. 2499, the ``VA Supply Chain Management System 
Authorization Act'' was introduced by Representative Jen 
Kiggans of Virginia on April 6, 2023. The bill, as amended, 
would authorize $50 million for the Secretary of the Department 
of Veterans Affairs (VA) to purchase or develop an inventory 
management information technology system for VA medical 
centers. The bill would also provide an offset for the cost of 
the authorization by extending current rates for VA home loan 
funding fees paid by non-service-connected veterans.

                  Background and Need for Legislation


Section 1: Short Title

    This Act may be cited as the ``VA Supply Chain Management 
System Authorization Act''.

Section 2: Management of Supply Chains for Medical Facilities of 
        Department of Veterans Affairs

    VA spends billions of dollars on medical supplies and other 
goods annually, using several dozen different IT systems and 
disparate processes at the central office, regional, and local 
levels. VA has many different supply chains, and they are not 
well integrated. This was highlighted in 2020 during the COVID-
19 pandemic when VA had no unified view, for months, of supply 
inventories throughout the medical centers and other 
facilities, and no way to move supplies around efficiently to 
resolve shortages.
    VA's primary inventory management system is still the 
Generic Inventory Package (GIP), which was developed in the 
early 1990s and is time consuming and difficult to use. Many VA 
medical centers neglect it and keep inventory manually. VA has 
attempted to replace it at least twice, most recently by 
adopting the Defense Medical Logistics Standard Support (DMLSS) 
system, which was largely abandoned in 2022. In June 2023, VA 
released a Supply Chain Modernization request for proposal 
(RFP) seeking a contractor to build, deliver, and manage a 
cloud-based enterprise supply chain system. ``Enterprise'' 
means encompassing the medical and nonmedical supply chains of 
the Veterans Health Administration, Veterans Benefits 
Administration, National Cemetery Administration, and other VA 
offices. VA determined that the requirements are too broad and 
complex to be met by any single system. Instead, the RFP calls 
for a ``system-of-systems'' approach where a prime contractor 
will integrate systems provided by multiple software companies 
and partners, replacing many of the legacy systems.
    The Committee believes that based on VA's past failed 
attempts to modernize individual components of its supply 
chain, the project as constituted in the June 2023 RFP poses 
significant technical, organizational, and logistical risks 
that VA has not demonstrated the capacity to overcome. During 
the Subcommittee on Technology Modernization's April 19, 2024 
oversight hearing, members examined these risks as well as the 
project's potential cost which, according to VA's initial 
lifecycle cost estimate, could be between $9 and $15 billion. 
The Committee believes that rather than VA attempting to 
replace all of its supply chain information technology systems 
in one project, veterans would be better served by the 
Department focusing its efforts and resources on modernizing 
the most inadequate and operationally important component of 
its supply chain, the medical center inventory management 
system.
    This section would authorize the VA to purchase or develop 
an inventory management information technology system for VA 
medical centers. If the VA purchases or develops said system, 
the section would require the VA to first conduct a pilot 
program before fully implementing the system and would require 
the VA to fully implement the system no later than three years 
after the enactment of this Act. The section would authorize 
$50 million to fully implement the system.

Section 3: Modification of Certain Housing Loan Fees

    Veterans who utilize the VA Home Loan Program pay a small 
fee that is included in their monthly mortgage payments. This 
section would offset the costs of the legislation's other 
sections by extending the expiration of the current rates for 
VA home loan funding fees by 32 days to December 17, 2031. 
Veterans with service-connected disabilities do not pay the 
funding fee and would not be affected by this extension of the 
home loan fees. The Committee believes this short-term 
extension of current funding fee rates is a reasonable way to 
cover the costs associated with this legislation.

                                Hearings

    On April 19, 2023, the Subcommittee on Oversight and 
Investigations held a legislative hearing on H.R. 2499 and 
other bills that were pending before the subcommittee.
    The following witnesses testified:
          Mr. Phillip Christy, Deputy Executive Director, 
        Office of Acquisition, Logistics, and Construction, 
        Department of Veterans Affairs; Ms. Catherine Cravens, 
        Chief of Staff, Office of Information and Technology, 
        Department of Veterans Affairs; Dr. Leslie Sofocleous, 
        Executive Director, Program Management Office, 
        Electronic Health Record Modernization Integration 
        Office, Department of Veterans Affairs; Ms. Shana Love-
        Holmon, Acting Assistant Secretary, Office of 
        Enterprise Integration, Department of Veterans Affairs.
    The following organizations submitted statement for the 
record:
          The American Legion; Fleet Reserve Association.
    On April 9, 2024, the Subcommittee on Technology 
Modernization held an oversight hearing titled ``VA Supply 
Chain Modernization: Ready for Prime Time?'' on the VA 
Logistics Redesign program and the Department's plans to 
modernize its enterprise supply chain.
    The following witnesses testified:
          Mr. Michael Parrish, Chief Acquisition Office and 
        Principal Executive Director, Office of Acquisition, 
        Logistics, and Construction, Department of Veterans 
        Affairs; Mr. Ronald Miller, Deputy Assistant Under 
        Secretary for Health for Support, Veterans Health 
        Administration, Department of Veterans Affairs; Mr. 
        Dewaine Beard, Principal Deputy Assistant Secretary, 
        Office of Information and Technology, Department of 
        Veterans Affairs; Ms. Chanel Bankston-Carter, Acting 
        Program Executive Director, Veterans Affairs Logistics 
        Redesign Program, Department of Veterans Affairs.

                       Subcommittee Consideration

    On July 19, 2023, the Subcommittee on Oversight and 
Investigations held a markup on pending legislation which 
included H.R. 2499. Representative Kiggans offered an amendment 
in the nature of a substitute to narrow the scope of the 
legislation from authorizing an enterprise wide supply chain 
modernization project to authorizing VA to purchase or develop 
an information technology system to modernize a particular 
aspect of the Veterans Health Administration (VHA) supply 
chain--the inventory management system--thereby reducing the 
amount authorized to $50 million. A motion by Representative 
Mrvan to report H.R. 2499, as amended, was favorably forwarded 
to the full Committee.

                        Committee Consideration

    On May 1, 2024, the full Committee met in open markup 
session, a quorum being present, and ordered H.R. 2499, as 
amended, to be reported favorably to the House of 
Representatives. During consideration of the bill, the 
following amendment was considered:
          An amendment in the nature of a substitute offered by 
        Representative Kiggans to add section three which 
        extends the current rates for VA home loan funding fees 
        as an offset for the other sections of the bill.
    The amendment in the nature of a substitute was adopted by 
voice vote.
    A motion by Representative Bergman to report H.R. 2499, as 
amended, favorably to the House of Representatives was agreed 
to after a recorded vote with thirteen members voting in favor 
and ten in opposition.

                            Committee Votes

    In compliance with clause 3(b) of rule XIII of the Rules of 
the House of Representatives, a recorded vote was taken during 
the full Committee open markup session on May 1, 2024 on the 
motion to favorably report H.R. 2499, as amended, to the full 
House. The motion was agreed to with thirteen members voting in 
favor and ten in opposition.
    The following members voted in favor of the motion:
          Chairman Mike Bost, Representative Amata Coleman 
        Radewagen, Representative Jack Bergman, Representative 
        Nancy Mace, Representative Matthew M. Rosendale, 
        Representative Mariannette Miller-Meeks, Representative 
        Scott Franklin, Representative Derrick Van Orden, 
        Representative Morgan Luttrell, Representative Juan 
        Ciscomani, Representative Eli Crane, Representative 
        Keith Self, Representative Jennifer Kiggans.
    The following members opposed the motion:
          Ranking Member Mark Takano, Representative Julia 
        Brownley, Representative Mike Levin, Representative 
        Chris Pappas, Representative Frank J. Mrvan, 
        Representative Sheila Cherfilus-McCormick, 
        Representative Chris Deluzio, Representative Morgan 
        McGarvey, Representative Delia Ramirez, Representative 
        Nikki Budzinski.

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII and clause 
(2)(b)(1) of rule X of the Rules of the House of 
Representatives, the Committee's oversight findings and 
recommendations are reflected in the descriptive portions of 
this report.

         Statement of General Performance Goals and Objectives

    In accordance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the Committee's performance 
goals and objectives of H.R. 2499, as amended, is to authorize 
a VA supply chain modernization project that has a reasonable 
cost and achievable scope.

                  Earmarks and Tax and Tariff Benefits

    H.R. 2499, as amended, does not contain any Congressional 
earmarks, limited tax benefits, or limited tariff benefits as 
defined in clause 9 of rule XXI of the Rules of the House of 
Representatives.

                        Committee Cost Estimate

    The Committee adopts as its own the cost estimate on H.R. 
2499, as amended, prepared by the Director of the Congressional 
Budget Office.

            Budget Authority and Congressional Budget Office
                             Cost Estimate

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
for H.R. 2499, as amended, provided by the Congressional Budget 
Office pursuant to section 402 of the Congressional Budget Act 
of 1974:

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 


    H.R. 2499 would authorize the Department of Veterans 
Affairs (VA) to develop an information technology (IT) system 
to manage inventory at its medical facilities. The bill would 
also increase the fees that VA charges borrowers for its home 
loan guarantees. In total, H.R. 2499 would increase spending 
subject to appropriation by $50 million and reduce direct 
spending by $51 million over the 2024-2034 period.
    The costs of the legislation, detailed in Table 1, fall 
within budget function 700 (veterans benefits and services).

                                                   TABLE 1.--ESTIMATED BUDGETARY EFFECTS OF H.R. 2499
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                     By fiscal year, millions of dollars--
                                                     ---------------------------------------------------------------------------------------------------
                                                       2024   2025   2026   2027   2028   2029   2030   2031   2032    2033   2034  2024-2029  2024-2034
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     INCREASES IN SPENDING SUBJECT TO APPROPRIATION
 
Authorization.......................................      0     50      0      0      0      0      0      0       0      0      0        50         50
Estimated Outlays...................................      0     12     27      4      1      1      1      1       1      1      1        45         50
 
                                                            DECREASES (-) IN DIRECT SPENDING
 
Estimated Budget Authority..........................      0      0      0      0      0      0      0      0     -51      0      0         0        -51
Estimated Outlays...................................      0      0      0      0      0      0      0      0     -51      0      0         0        -51
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Spending subject to appropriation: H.R. 2499 would 
authorize appropriations of $50 million for VA to purchase or 
develop a system for managing inventory of expendable and 
nonexpendable items at its medical facilities and to implement 
that system. VA would initially implement the system at one VA 
medical facility before expanding its use throughout the 
department, assuming functions of the system are satisfactory. 
Using information on spending patterns for similar IT programs, 
CBO estimates implementing the bill would cost $50 million over 
the 2024-2034 period. Such spending would be subject to the 
appropriation of the specified amounts.
    Direct spending: VA provides loan guarantees to lenders 
that allow eligible borrowers to obtain better loan terms--such 
as lower interest rates or smaller down payments--to purchase, 
construct, improve, or refinance a home. VA typically pays 
lenders up to 25 percent of the outstanding mortgage balance if 
a borrower's home is foreclosed upon. Those payments, net of 
fees paid by borrowers and recoveries by lenders, constitute 
the subsidy cost for the loan guarantees.\1\ That subsidy cost 
is reflected in the federal budget as direct spending.
---------------------------------------------------------------------------
    \1\Under the Federal Credit Reform Act of 1990, the subsidy cost of 
a loan guarantee is the net present value of estimated payments by the 
government to cover defaults and delinquencies, interest subsidies, or 
other expenses offset by any payments to the government, including 
origination or other fees, penalties, and recoveries on defaulted 
loans. Such subsidy costs are calculated by discounting those expected 
cash flows using the rate on Treasury securities of comparable 
maturity. The resulting estimated subsidy costs are recorded in the 
budget when the loans are disbursed or modified. A positive subsidy 
indicates that the loan results in net outlays from the Treasury; a 
negative subsidy indicates that the loan results in net receipts to the 
Treasury.
---------------------------------------------------------------------------
    Under current law, the rates for most of the fees that 
borrowers pay to VA for loans guaranteed after November 15, 
2031, will drop from a weighted average of about 2.3 percent to 
about 1.2 percent of the loan amount. The bill would extend the 
higher rates through December 17, 2031, thereby reducing the 
subsidy cost of loans guaranteed during that period. Using its 
forecast of loan volume based on data provided by VA, CBO 
estimates that extending the higher rates would decrease direct 
spending by $51 million over the 2024-2034 period (see Table 
1).
    The CBO staff contacts for this estimate are Logan Smith 
(IT systems) and Paul B.A. Holland (home loans). The estimate 
was reviewed by Christina Hawley Anthony, Deputy Director of 
Budget Analysis.
                                         Phillip L. Swagel,
                             Director, Congressional Budget Office.

                       Federal Mandates Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandate Reform Act, P.L. 104-4 is inapplicable to H.R. 2499, as 
amended.

                      Advisory Committee Statement

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act would be created by H.R. 
2499, as amended.

                  Applicability to Legislative Branch

    The Committee finds that H.R. 2499, as amended, does not 
relate to the terms and conditions of employment or access to 
public services or accommodations within the meaning of section 
102(b)(3) of the Congressional Accountability Act.

              Statement on Duplication of Federal Programs

    Pursuant to clause 3(c)(5) of rule XIII of the Rules of the 
House of Representatives, the Committee finds that no provision 
of H.R. 2499, as amended, would establish or reauthorize a 
program of the Federal Government known to be duplicative of 
another Federal program, a program that was included in any 
report from the Government Accountability Office to Congress 
pursuant to section 21 of Public Law 111-139, or a program 
related to a program identified in the most recent Catalog of 
Federal Domestic Assistance.

             Section-by-Section Analysis of the Legislation


Section 1. Short title

    This section would establish the short title of the bill as 
the ``VA Supply Chain Management System Authorization Act''.

Section 2. Management of supply chains for medical facilities of 
        Department of Veterans Affairs

    Subsection (a) would authorize the VA Secretary to purchase 
or develop an information technology system for the management 
of inventory, including expendable and nonexpendable items, at 
VA medical facilities.
    Subsection (b) would authorize the VA Secretary to complete 
implementation of the system under subsection (a) no later than 
three years after the enactment of this Act.

Section 3. Modification of certain housing loan fees

    This section would offset the costs of the other sections 
of the bill by extending current VA home loan funding fee rates 
as established in 38 U.S.C. Sec. 3729, from November 15, 2031, 
to November 17, 2031.

         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):

         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, and existing law in which no 
change is proposed is shown in roman):

                      TITLE 38, UNITED STATES CODE

           *       *       *       *       *       *       *

              PART III--READJUSTMENT AND RELATED BENEFITS 

           *       *       *       *       *       *       *

             CHAPTER 37--HOUSING AND SMALL BUSINESS LOANS 

           *       *       *       *       *       *       *

              SUBCHAPTER III--ADMINISTRATIVE PROVISIONS

           *       *       *       *       *       *       *


Sec. 3729. Loan fee

  (a) Requirement of Fee.--(1) Except as provided in subsection 
(c), a fee shall be collected from each person obtaining a 
housing loan guaranteed, insured, or made under this chapter, 
and each person assuming a loan to which section 3714 of this 
title applies. No such loan may be guaranteed, insured, made, 
or assumed until the fee payable under this section has been 
remitted to the Secretary.
  (2) The fee may be included in the loan and paid from the 
proceeds thereof.
  (b) Determination of Fee.--(1) The amount of the fee shall be 
determined from the loan fee table in paragraph (2). The fee is 
expressed as a percentage of the total amount of the loan 
guaranteed, insured, or made, or, in the case of a loan 
assumption, the unpaid principal balance of the loan on the 
date of the transfer of the property.
  (2) The loan fee table referred to in paragraph (1) is as 
follows:


 
----------------------------------------------------------------------------------------------------------------
             Type of loan                Active duty  veteran          Reservist              Other obligor
----------------------------------------------------------------------------------------------------------------
(A)(i) Initial loan described in       2.15                     2.40                     NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other initial loan described in
 section 3710(a) other than with 5-
 down or 10-down (closed on or after
 October 1, 2004, and before January
 1, 2020).
(A)(ii) Initial loan described in      2.30                     2.30                     NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other initial loan described in
 section 3710(a) other than with 5-
 down or 10-down (closed on or after
 January 1, 2020, and before April 7,
 2023).
(A)(iii) Initial loan described in     2.15                     2.15                     NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other initial loan described in
 section 3710(a) other than with 5-
 down or 10-down (closed on or after
 April 7, 2023, and before [November
 15, 2031] December 17, 2031 ).
(A)(iv) Initial loan described in      1.40                     1.40                     NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other initial loan described in
 section 3710(a) other than with 5-
 down or 10-down (closed on or after
 [November 15, 2031] December 17,
 2031 ).
(B)(i) Subsequent loan described in    3.30                     3.30                     NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other subsequent loan described
 in section 3710(a) (closed on or
 after October 1, 2004, and before
 January 1, 2020).
(B)(ii) Subsequent loan described in   3.60                     3.60                     NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other subsequent loan described
 in section 3710(a) (closed on or
 after January 1, 2020, and before
 April 7, 2023).
(B)(iii) Subsequent loan described in  3.30                     3.30                     NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other subsequent loan described
 in section 3710(a) (closed on or
 after April 7, 2023, and before
 [November 15, 2031] December 17,
 2031 ).
(B)(iv) Subsequent loan described in   1.25                     1.25                     NA
 section 3710(a) to purchase or
 construct a dwelling with 0-down, or
 any other subsequent loan described
 in section 3710(a) (closed on or
 after [November 15, 2031] December
 17, 2031 ).
(C)(i) Loan described in section       1.50                     1.75                     NA
 3710(a) to purchase or construct a
 dwelling with 5-down (closed before
 January 1, 2020).
(C)(ii) Loan described in section      1.65                     1.65                     NA
 3710(a) to purchase or construct a
 dwelling with 5-down (closed on or
 after January 1, 2020, and before
 April 7, 2023).
(C)(iii) Loan described in section     1.50                     1.50                     NA
 3710(a) to purchase or construct a
 dwelling with 5-down (closed on or
 after April 7, 2023, and before
 [November 15, 2031] December 17,
 2031 ).
(C)(iv) Loan described in section      0.75                     0.75                     NA
 3710(a) to purchase or construct a
 dwelling with 5-down (closed on or
 after [November 15, 2031] December
 17, 2031 ).
(D)(i) Loan described in section       1.25                     1.50                     NA
 3710(a) to purchase or construct a
 dwelling with 10-down (closed before
 January 1, 2020).
(D)(ii) Loan described in section      1.40                     1.40                     NA
 3710(a) to purchase or construct a
 dwelling with 10-down (closed on or
 after January 1, 2020, and before
 April 7, 2023).
(D)(iii) Loan described in section     1.25                     1.25                     NA
 3710(a) to purchase or construct a
 dwelling with 10-down (closed on or
 after April 7, 2023, and before
 [November 15, 2031] December 17,
 2031 ).
(D)(iv) Loan described in section      0.50                     0.50                     NA
 3710(a) to purchase or construct a
 dwelling with 10-down (closed on or
 after [November 15, 2031] December
 17, 2031 ).
(E) Interest rate reduction            0.50                     0.50                     NA
 refinancing loan.
(F) Direct loan under section 3711...  1.00                     1.00                     NA
(G) Manufactured home loan under       1.00                     1.00                     NA
 section 3712 (other than an interest
 rate reduction refinancing loan).
(H) Loan to Native American veteran    1.25                     1.25                     NA
 under section 3762 (other than an
 interest rate reduction refinancing
 loan).
(I) Loan assumption under section      0.50                     0.50                     0.50
 3714.
(J) Loan under section 3733(a).......  2.25                     2.25                     2.25.
----------------------------------------------------------------------------------------------------------------

  (3) Any reference to a section in the ``Type of loan'' column 
in the loan fee table in paragraph (2) refers to a section of 
this title.
  (4) For the purposes of paragraph (2):
          (A) The term ``active duty veteran'' means any 
        veteran eligible for the benefits of this chapter other 
        than a Reservist.
          (B) The term ``Reservist'' means a veteran described 
        in section 3701(b)(5)(A) of this title who is eligible 
        under section 3702(a)(2)(E) of this title.
          (C) The term ``other obligor'' means a person who is 
        not a veteran, as defined in section 101 of this title 
        or other provision of this chapter.
          (D)(i) The term ``initial loan'' means a loan to a 
        veteran guaranteed under section 3710 or made under 
        section 3711 of this title if the veteran has never 
        obtained a loan guaranteed under section 3710 or made 
        under section 3711 of this title.
          (ii) If a veteran has obtained a loan guaranteed 
        under section 3710 or made under section 3711 of this 
        title and the dwelling securing such loan was 
        substantially damaged or destroyed by a major disaster 
        declared by the President under section 401 of the 
        Robert T. Stafford Disaster Relief and Emergency 
        Assistance Act (42 U.S.C. 5170), the Secretary shall 
        treat as an initial loan, as defined in clause (i), the 
        next loan the Secretary guarantees or makes to such 
        veteran under section 3710 or 3711, respectively, if--
                  (I) such loan is guaranteed or made before 
                the date that is three years after the date on 
                which the dwelling was substantially damaged or 
                destroyed; and
                  (II) such loan is only for repairs or 
                construction of the dwelling, as determined by 
                the Secretary.
          (E) The term ``subsequent loan'' means a loan to a 
        veteran, other than an interest rate reduction 
        refinancing loan, guaranteed under section 3710 or made 
        under section 3711 of this title that is not an initial 
        loan.
          (F) The term ``interest rate reduction refinancing 
        loan'' means a loan described in section 3710(a)(8), 
        3710(a)(9)(B)(i), 3710(a)(11), 3712(a)(1)(F), or 
        3762(h) of this title.
          (G) The term ``0-down'' means a downpayment, if any, 
        of less than 5 percent of the total purchase price or 
        construction cost of the dwelling.
          (H) The term ``5-down'' means a downpayment of at 
        least 5 percent or more, but less than 10 percent, of 
        the total purchase price or construction cost of the 
        dwelling.
          (I) The term ``10-down'' means a downpayment of 10 
        percent or more of the total purchase price or 
        construction cost of the dwelling.
  (c) Waiver of Fee.--(1) A fee may not be collected under this 
section from a veteran who is receiving compensation (or who, 
but for the receipt of retirement pay or active service pay, 
would be entitled to receive compensation), from a surviving 
spouse of any veteran (including a person who died in the 
active military, naval, air, or space service) who died from a 
service-connected disability, or from a member of the Armed 
Forces who is serving on active duty and who provides, on or 
before the date of loan closing, evidence of having been 
awarded the Purple Heart.
  (2)(A) A veteran described in subparagraph (B) shall be 
treated as receiving compensation for purposes of this 
subsection as of the date of the rating described in such 
subparagraph without regard to whether an effective date of the 
award of compensation is established as of that date.
  (B) A veteran described in this subparagraph is a veteran who 
is rated eligible to receive compensation--
          (i) as the result of a pre-discharge disability 
        examination and rating; or
          (ii) based on a pre-discharge review of existing 
        medical evidence (including service medical and 
        treatment records) that results in the issuance of a 
        memorandum rating.

           *       *       *       *       *       *       *


                             MINORITY VIEWS

    The Department of Veterans Affairs (VA) Supply Chain 
Modernization (SCM) effort faces significant challenges. 
Without intentional and consistent effort to address these 
systemic issues, VA will be unable to implement a modern, 
enterprise-wide supply chain and logistics system. H.R. 2499 
would compound those issues by authorizing a Veterans Health 
Administration pilot that does not reflect the enterprise-wide 
system that VA requires.
    In VA's written testimony regarding H.R. 2499 for the April 
19, 2023, Oversight & Investigations Subcommittee legislative 
hearing, the Department stated:

          First, as written, the bill may impede ongoing 
        efforts toward an enterprise supply chain solution. 
        Second, the timeline does not accurately reflect the 
        complexities involved in successful procurement and 
        execution. As such, VA welcomes the opportunity to 
        continue working with the Committee to provide 
        additional technical assistance that will create the 
        flexibility and scope of timing needed to ensure 
        success of the mission.

    Despite VA's concerns, the bill was advanced during the 
July 19, 2023, Oversight & Investigations Subcommittee markup. 
At that time, Committee Democratic Members supported the 
authorization of a medical supply chain logistics solution 
within the Veterans Health Association (VHA). Since then, VA 
has taken significant steps to develop an enterprise-wide 
supply chain and logistics solution, one that is much larger 
than what H.R. 2499 seeks to authorize.
    The Committee finally learned of VA's plans during a 
Technology Modernization Subcommittee hearing on April 9, 2024. 
Members questioned VA on a number of issues, such as VA's lack 
of compliance with Sec. 403 of PL 117-328, staffing challenges 
within modernization and acquisition lines, the lack of 
involvement from the Office of Information and Technology, and 
systemic challenges regarding the vendor-contractor 
relationship.
    While H.R. 2499 seeks to legislate a piecemeal approach 
through the deployment of a pilot within the VHA, it does not 
address any of the systemic challenges with VA's current 
modernization efforts. The Government Accountability Office 
(GAO) has acknowledged such challenges within VA, and has 
pushed VA to make these adjustments prior to implementation, as 
it noted in testimony from the April 19, 2023, legislative 
hearing:

          In addition to an effective pilot, to ensure success, 
        the decision-making process leading up to the choice of 
        a system must be sound. In March 2021, we reported that 
        VA was pursuing several major supply chain initiatives 
        that were highly interrelated and had overlapping 
        timelines--potentially leading to cascading effects in 
        the event of changes to initiatives or delays. We 
        recommended that VA develop a comprehensive supply 
        chain strategy to address this complexity and create an 
        implementation plan with key milestones. VA concurred 
        with the recommendation and continues work to develop 
        this strategy. This planned comprehensive supply chain 
        management strategy should drive its acquisition of a 
        new supply chain IT platform--not vice versa.

    Democratic Members are gravely concerned that VA's current 
efforts at SCM are repeating the errors of other major 
modernization efforts, namely poor requirements development, a 
lack of measures of success, and an unclear strategy for 
accomplishing this effort. It would be irresponsible to 
authorize this program before these issues are addressed. 
Democratic Members are prepared to continue working with the 
Majority to conduct oversight of this program at VA, prior to 
yet another failure of VA's modernization efforts for necessary 
supply chain and logistics lines.

                                               Mark Takano,
                                                    Ranking Member.

                                  [all]