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[Senate Hearing 109-561]
[From the U.S. Government Publishing Office]

                                                        S. Hrg. 109-561
 
                   HEARING ON CONSTRUCTION AND LEASE 
       AUTHORIZATION NEEDS OF THE DEPARTMENT OF VETERANS AFFAIRS

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

                                HEARING

                               BEFORE THE

                     COMMITTEE ON VETERANS' AFFAIRS
                          UNITED STATES SENATE

                       ONE HUNDRED NINTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 6, 2006

                               __________

       Printed for the use of the Committee on Veterans' Affairs

 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 senate

                                 ______

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                     COMMITTEE ON VETERANS' AFFAIRS

                      Larry Craig, Idaho, Chairman
Arlen Specter, Pennsylvania          Daniel K. Akaka, Hawaii, Ranking 
Kay Bailey Hutchison, Texas              Member
Lindsey O. Graham, South Carolina    John D. Rockefeller IV, West 
Richard Burr, North Carolina             Virginia
John Ensign, Nevada                  James M. Jeffords, (I) Vermont
John Thune, South Dakota             Patty Murray, Washington
Johnny Isakson, Georgia              Barack Obama, Illinois
                                     Ken Salazar, Colorado
                  Lupe Wissel, Majority Staff Director
               D. Noelani Kalipi, Minority Staff Director

                            C O N T E N T S

                              ----------                              

                             April 6, 2006
                                SENATORS

                                                                   Page
Craig, Hon. Larry E., Chairman, U.S. Senator from Idaho..........     1
Allard, Hon. Wayne, U.S. Senator from Colorado...................     3
    Prepared statement...........................................     4
Akaka, Hon. Daniel K., Ranking Member, U.S. Senator from Hawaii..     5
Reid, Hon. Harry, U.S. Senator from Nevada, prepared statement...     6
Salazar, Hon. Ken, U.S. Senator from Colorado....................     7
    Prepared statement...........................................     8
Martinez, Hon. Mel, U.S. Senator from Florida....................     9
    Prepared statement...........................................    10
Nelson, Hon. Bill, U.S. Senator from Florida.....................    11
Murray, Hon. Patty, U.S. Senator from Washington.................    12
Ensign, Hon. John, U.S. Senator from Nevada......................    20
Burr, Hon. Richard, U.S. Senator from North Carolina.............    25
Thune, Hon. John, U.S. Senator from South Dakota.................    29

                               WITNESSES

Perlin, Jonathan B., M.D., Under Secretary for Health, Department 
  of Veterans Affairs; accompanied by Tim McClain, General 
  Counsel, Department of Veterans Affairs; Robert Henke, 
  Assistant Secretary for Management, Department of Veterans 
  Affairs; and James M. Sullivan, Deputy Director, Office of 
  Asset Enterprise Management, Department of Veterans Affairs....    14
    Prepared statement...........................................    16
    Response to written questions submitted by Hon. Larry E. 
      Craig......................................................    19
Cullinan, Dennis M., Director, National Legislative Service, 
  Veterans of Foreign Wars of the United States..................    31
    Prepared statement...........................................    32

                                APPENDIX

DeWine, Hon. Mike, U.S. Senator from Ohio, prepared statement....    37
Lott, Hon. Trent, U.S. Senator from Mississippi, prepared 
  statement......................................................    37

                   HEARING ON CONSTRUCTION AND LEASE 
       AUTHORIZATION NEEDS OF THE DEPARTMENT OF VETERANS AFFAIRS

                              ----------                              

                        THURSDAY, APRIL 6, 2006

                               U.S. Senate,
                    Committee on Veterans' Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 2:04 p.m., in 
room SR-418, Russell Senate Office Building, Hon. Larry E. 
Craig, Chairman of the Committee, presiding.
    Present: Senators Craig, Burr, Ensign, Thune, Akaka, 
Murray, and Salazar.

      OPENING STATEMENT OF HON. LARRY E. CRAIG, CHAIRMAN, 
                    U.S. SENATOR FROM IDAHO

    Chairman Craig. The Senate Committee on Veterans' Affairs 
will come to order.
    Good afternoon, ladies and gentlemen and my colleagues who 
have joined me.
    The Committee today will review and consider VA's request 
for the authority to enter into certain capital construction 
projects and leases. It is the Committee's next hearing in a 
series of examinations of VA's plans to improve both access to 
and the quality of veterans' medical care.
    We know that over the past half century there has been a 
migration movement in America. The general population is moving 
from the Northeast to the South, to the Southwest, and 
certainly to the West.
    At the same time, the practice of medicine in this Nation 
has changed rather dramatically, but no more so than the 
demographics of the veterans population. And they will continue 
to change in the future.
    Regrettably, the declining veterans population is due to 
the passing of many of the World War II veterans. Korean 
veterans now join that age group, and we are losing 1,800 
veterans a day.
    VA facilities were designed and built in an era when 
medical care was synonymous with hospital care. VA's health 
care commitment to most veterans was defined as access to a 
hospital bed to the extent that beds were available.
    In many cases, VA's facilities are located where veterans 
used to live, not where they now live. VA's medical system has 
drastically changed over the past few decades.
    Prior to the mid-1990s, there were virtually no outpatient 
clinics in the VA health care system. Today, there are over 
800. Today, outpatient services outpace inpatient care.
    The Capital Asset Realignment for Enhanced Services 
process, known as CARES, was designed in part to address the 
changes in the demographics of our veterans' population and 
follows America's medicine's transformation from hospital-
centric to patient-centric delivery of care.
    It is VA's comprehensive national plan to modernize its 
medical facilities. As is the case with any systematic 
nationwide effort, this is a journey that must be entered into 
judiciously. We are committed to working with VA to 
successfully see the CARES plan through, and it is this 
Committee's responsibility to authorize the necessary CARES 
initiatives.
    That is why we are here today. We are back together to 
ensure that CARES implementation is done and done properly. 
When the process is complete, the result must be that veterans 
will have improved access to a much more modern health care 
system.
    Title 38 requires statutory authorization for all VA major 
medical facility construction projects, defined as those which 
cost more than $7 million, and for all major medical facility 
leases, defined as those which cost more than $600,000 
annually, prior to the appropriation of funds.
    These projects are in need of immediate fiscal year (FY) 
2006 authorization--New Orleans, Louisiana; Biloxi, 
Mississippi; and Denver, Colorado. In addition, three leases 
require authorization for fiscal year 2006--Baltimore, 
Maryland; Evansville, Illinois; and Smith County, Texas.
    Further, Public Law 108-170 authorizes VA to carry out any 
major medical facility construction projects consistent with 
the final CARES decision. However, the authority under the law 
expires on September 30th of this year.
    Eighteen major medical facility construction projects that 
were authorized as part of the final CARES decision, but for 
which it is unlikely that contract awards will be accomplished, 
are in jeopardy of coming to a halt. Ensuring no delay on these 
particular projects is my priority as we move forward with the 
authorization process.
    We are privileged today to be joined by several of our 
colleagues. Senator Wayne Allard--we welcome you, Wayne. We 
will look forward to your remarks about the impact of 
authorization on Colorado.
    Senator Martinez and Senator Nelson, thank you for joining 
us to comment on Florida's needs. We also have a couple of 
Members of this Committee that may want to comment on projects 
within their State.
    Following our panel of colleagues, we will receive VA 
testimony from Dr. John Perlin, Under Secretary of Health, who 
is accompanied by several of his colleagues, as well as Dennis 
Cullinan, director of National Legislative Service for the 
Veterans of Foreign Wars.
    Gentlemen, I want to welcome all of you. I look forward to 
your testimony.
    Now let me turn to my colleagues. My Ranking Member, 
Senator Akaka, is not yet here. So, Wayne, I will turn to you 
for your testimony.
    Senator Wayne Allard of Colorado.

                STATEMENT OF HON. WAYNE ALLARD, 
                   U.S. SENATOR FROM COLORADO

    Senator Allard. Mr. Chairman, thank you very much.
    First, I want to tell you how much I, for one, and the 
veterans of Colorado appreciate your leadership on veterans' 
issues and your concern about veterans throughout the country. 
You certainly are to be commended for your dedication to that 
group of Americans who have done so much to make sure we have a 
secure Nation.
    Thank you for giving me the opportunity to present before 
the Committee an issue of importance to the veterans of 
Colorado. I strongly support replacing the current Denver VA 
medical center with a new facility at the former Fitzsimons 
Army Medical Center.
    The Denver VA hospital was built more than 50 years ago, 
and medical technology has far surpassed what the builders of 
the Denver VA originally envisioned. While I cannot say enough 
about the care and service our veterans receive at the current 
facility, many changes and improvements can and should be made, 
and a new facility is the only way to accomplish these goals.
    The current construction plans present credible proof that 
a new Fitzsimons facility will increase health care quality and 
quantity for our veterans. It is my hope that a new hospital 
will also serve as a regional beacon for modern veteran medical 
care, and science throughout the VA, and provide a unique 
collaboration with the University of Colorado.
    The Denver VA, the University of Colorado Health Sciences 
Center, and the University of Colorado Hospital already have a 
complex and rewarding partnership in meeting veterans' health 
care needs in the region.
    The University of Colorado strongly supports the move of 
the existing Denver VA medical facility to the Fitzsimons 
campus in Aurora, Colorado, and looks forward to strengthening 
their partnership with the Veterans' Administration, allowing 
each entity to focus on its strengths.
    Of course, the biggest endorsement of this new facility 
comes ultimately from the end-users. The United Veterans 
Committee of Colorado, a coalition of 45 federally chartered 
veteran service organizations, strongly supports the relocation 
of the Denver VA medical center to the Fitzsimons campus.
    As you know, Mr. Chairman, at last week's Military 
Construction and Veterans' Affairs Appropriations hearing with 
Secretary Nicholson, the Secretary stated that in order to move 
forward with the project, an immediate need must be met. This 
need is acquiring the land on which the new medical facility 
will sit.
    The VA has reached agreement with the Fitzsimons 
Redevelopment Authority, the entity that manages the land at 
the former Fitzsimons Army Medical Center, on a site and a 
price, but they need new authority to proceed with the 
purchase.
    I would also stress that while the VA has this agreement in 
place with the Fitzsimons Redevelopment Authority, the FRA is 
anxious to move forward with the sale and has set a deadline of 
August 2006 to finalize the contract for the desired site.
    It is an important point that prior to the current site 
selection, the FRA had originally planned to use the land for 
hotel and retail space, but now will use all proceeds from sale 
to acquire other property for these properties. As you can 
imagine, the FRA is rather anxious to move ahead with the sale 
as soon as possible.
    I have a full statement here, Mr. Chairman, and I would 
request that the--well, let me see how much. I have got about 
two-and-a-half pages. It looked like my time might be expiring. 
Do you have time for that?
    Chairman Craig. Your full statements will all be a part of 
the record.
    Senator Allard. Thank you.
    Chairman Craig. If you could summarize, I think we would 
appreciate it. We have got some of our colleagues here on the 
Committee that also have a time crunch. That would be 
appreciated.
    Senator Allard. Well, thank you very much. Thank you very 
much, Mr. Chairman.
    I just want to recognize, in closing, the strong support of 
my colleague from Colorado, Senator Salazar. Without a 
bipartisan effort, we would not have been able to close this on 
realizing our goal. I look forward to working with the 
Committee on my legislation to make this project a reality.
    [The prepared statement of Senator Allard follows:]

  Prepared Statement of Hon. Wayne Allard, U.S. Senator from Colorado

    Thank you, Mr. Chairman, for giving me the opportunity to present 
before the Committee on an issue of much importance to the veterans of 
Colorado. I strongly support replacing the current Denver VA medical 
center with a new facility at the former Fitzsimons Army Medical 
Center.
    The Denver VA hospital was built more than 50 years ago and medical 
technology has far surpassed what the builders of the Denver VA 
originally envisioned. While I cannot say enough about the care and 
service our veterans receive at the current facility, many changes and 
improvements can and should be made, and a new facility is the only way 
to accomplish these goals.
    The current construction plans present credible proof that a new 
Fitzsimons facility will increase healthcare quality and quantity for 
our veterans. It is my hope that a new hospital will also serve as a 
regional beacon for modern veteran medical care science through the 
VA's unique collaboration with the University of Colorado.
    The Denver VA, the University of Colorado Health Sciences Center 
and the University of Colorado Hospital already have a complex and 
rewarding partnership in meeting veterans' healthcare needs in the 
region. The University of Colorado strongly supports the move of the 
existing Denver VA medical facility to the Fitzsimons Campus in Aurora, 
CO and looks forward to strengthening their partnership with the 
Veterans Administration, allowing each entity to focus on its 
strengths.
    Of course, the biggest endorsement of this new facility comes 
ultimately from the end-users. The United Veterans Committee of 
Colorado, a coalition of 45 federally chartered veterans service 
organizations, strongly supports the relocation of the Denver VA 
medical center to the Fitzsimons campus.
    As you know, Mr. Chairman, at last week's Military Construction & 
Veterans Affairs Appropriations hearing with Secretary Nicholson, the 
Secretary stated that in order to move forward with the project an 
immediate need must be met. This need is acquiring the land on which 
the new medical facility would sit.
    The VA has reached an agreement with the Fitzsimons Redevelopment 
Authority, the entity that manages the land at the former Fitzsimons 
Army Medical Center, on a site and a price but they need new authority 
to proceed with the purchase. I would also stress that while the VA has 
this agreement in place with the Fitzsimons Redevelopment Authority, 
the FRA is anxious to move ahead with the sale, and has set a deadline 
of August 2006 to finalize the contract for the desired site.
    It is an important point that prior to the current site selection, 
the FRA had originally planned to use the land for hotel and retail 
space but now will use all proceeds from sale to acquire other property 
for these properties. As you can imagine, the FRA is rather anxious to 
move ahead with the sale as soon as possible.
    Of course, in addition to the immediate authority for site purchase 
before this August deadline, a larger issue remains: that of the 
authority for the VA to move forward with the entire construction 
project. To that end, I have recently introduced legislation, S. 2547, 
which would accomplish both of these objectives.
    Specifically, the language of bill S. 2547 authorizes the Secretary 
to carry out the entire project and provides authority to the VA 
purchase the land with current year dollars. An identical companion 
proposal was also introduced in the House by my colleague, Congressman 
Bob Beauprez, who has been a stalwart on this issue. I would like to 
specifically recognize Congressman Beauprez for his efforts and 
leadership on this project, which will impact not only his constituents 
but veterans in the entire Rocky Mountain region.
    There was a time not too long ago that it looked like this project 
was in peril. Thankfully, early last year Secretary Nicholson brought a 
much-needed, fresh perspective to this project. He made it a priority 
and made it clear to the entire Colorado delegation that he would 
pursue every opportunity to make the project a reality, and I thank him 
for that.
    In addition, finding a suitable site for the project was of utmost 
importance. Without the hard work and diligence of the Fitzsimons 
Redevelopment Authority and its chairman, city of Aurora Mayor Ed 
Tauer, an agreement would not have been reached.
    Again, I thank you Chairman Craig, for the opportunity to speak 
here today. I would also like to recognize the strong support my 
colleague Senator Salazar has shown for this project. Without a 
bipartisan effort we would not be this close on realizing our goal.
    I look forward to working with the Committee on my legislation and 
making this project a reality.

    Chairman Craig. Senator Allard, thank you very much.
    Senator Martinez, we are going to break in for a moment 
here. My Ranking Member has just arrived, Senator Akaka. 
Senator Salazar does have a time crunch, and I thought maybe we 
could squeeze the Fitzsimons testimony together here.
    Let me turn, first of all, to the Ranking Member of the 
Committee, Senator Akaka, for any opening comments. Then let me 
turn to Senator Salazar and, certainly, to Senator Murray for 
any opening comments she may have. Then we will return to our 
panel.
    Senator Akaka.

      STATEMENT OF HON. DANIEL K. AKAKA, RANKING MEMBER, 
                    U.S. SENATOR FROM HAWAII

    Senator Akaka. Thank you very much, Mr. Chairman.
    I welcome our witnesses to today's hearing. As always, I 
appreciate the work of Chairman Craig.
    Today, we will look at VA's 5-year capital plan. My remarks 
will focus exclusively on CARES and enhancements funded by that 
plan. The goal of CARES is a good one: reduce the level of 
resources spent on underused, inefficient, or obsolete 
buildings and reinvest savings in providing health care more 
efficiently.
    Much of the impetus for VA's asset realignment was GAO's 
assertion that VHA was wasting as much as $1 million a day in 
unneeded and unutilized capital assets. This $1 million a day 
figure took on a life of its own over the years, even though 
the figure was, at best, suggestive and based on a very limited 
sample.
    It is certainly true, however, that VHA will spend billions 
of dollars operating, maintaining, and improving buildings and 
land at health care delivery locations nationwide.
    When CARES began, VA's health care capital assets totaled 
over 4,700 buildings and 18,000 acres of land at 181 major 
delivery locations. These numbers have not changed since GAO's 
1999 assertion.
    While I would suspect that few would disagree that VA's 
current physical plant is not ideal, I am certain that figuring 
what it should be even after the question of which veterans are 
to receive what care is resolved is very challenging.
    Some have argued that buildings no longer embody modern 
medical care. This ignores the reality that all VA care is 
furnished in some sort of facility, whether VA-owned or leased 
or owned by others. The cost associated with a facility is an 
element of the overall cost of care.
    CARES has had its ups and downs. It began with an amazing 
amount of attention paid to the comments of stakeholders. Half 
way into the process, two dozen facilities were told to go back 
to the drawing board and present new plans for closures and 
reductions. The request for these revisions came through last-
minute phone calls and internal mandates. Today, VA is 
restudying plants in all of these places, including Manhattan 
and Walla Walla.
    I understand, however, that this follow-up work has 
stalled. We also know that CARES deliberately excluded the 
potential for much needed long-term care and outpatient mental 
health treatment.
    After all this time, we need this process to be successful. 
If sufficient resources are not dedicated to CARES 
enhancements, the entire process will ultimately be interpreted 
as just one more blow to veterans.
    The cost of CARES improvements will total more than $4.6 
billion. We need to ensure that appropriate resources are 
allocated to this process, and I am pleased about the level of 
funding that has been directed at CARES projects thus far. We 
must keep up this pace.
    Chairman Craig, I ask that a statement from Senator Reid be 
entered into the record, expressing his support for the Las 
Vegas project.
    I thank you and look forward to a hearing and the testimony 
from all the panelists.
    Thank you very much, Mr. Chairman.
    [The prepared statement of Senator Reid follows:]
    Prepared Statement of Hon. Harry Reid, U.S. Senator from Nevada
    Mr. Chairman, I would like to thank you and the Ranking Member 
Senator Akaka, for allowing me to make a few brief remarks today at 
this extremely important hearing about the CARES program and Major 
Medical Construction.
    Taking care of veterans is the right thing to do. We must never 
forget the sacrifices they made to protect our freedom. These people 
served because they love America, and we must honor their service by 
keeping America's promise to them, a promise that includes providing 
quality health care.
    As you know Mr. Chairman, Las Vegas continues to be the fastest 
growing city in the Nation. As a result, southern Nevada has the 
fastest growing veteran population in the country. Current statistics 
show in the next 3 years there will be a 50 percent increase in the Las 
Vegas area veteran population.
    I am delighted the Veterans' Administration will develop a Medical 
Center Campus in Las Vegas that will include a new hospital, nursing 
home and outpatient clinic. These facilities are desperately needed and 
were validated during the CARES process in 2003. Our veterans are 
finally going to get the kind of care they deserve. I applaud the 
Veterans' Administration for taking this action on behalf of Nevada's 
veterans.
    A campus like this will be a magnificent addition to the Las Vegas 
Valley. It will be modern and full-service, and will allow for 
incredible research and collaborative opportunities with doctors, 
scientists and university researchers from across the state. The bottom 
line for veterans is that they will have access to first-rate health 
care in a centralized, modern facility.
    While I am extremely pleased that the Veterans' Administration has 
kept this facility on their high priority list, I hope they will 
continue to move forward and expeditiously complete this project.
    Our veterans have done so much for the freedom and security of our 
country. We can never fully repay them for their service. But the work 
you do here will at least ensure they get the health care they were 
promised and deserve.
    Thank you again, Mr. Chairman and Senator Akaka, for allowing me to 
make this brief statement today.

    Chairman Craig. Danny, thank you very much.
    Now let me turn to Senator Ken Salazar of Colorado, a 
Member of the Committee. Ken, please proceed.
    Senator Salazar. Thank you very much, Chairman Craig.
    I have a longer opening statement, and I will just submit 
that for the record, if that is acceptable?
    Chairman Craig. Without objection. Of course.

                STATEMENT OF HON. KEN SALAZAR, 
                   U.S. SENATOR FROM COLORADO

    Senator Salazar. Let me make two comments. First, the 
bipartisanship, Mr. Chairman, which you show on this Committee, 
I think is exemplary.
    I see others around this table on our Veterans' Affairs 
Committee who walk the talk of bipartisanship every day, 
including my two good friends from Florida, who are currently 
in the middle of trying to figure out this enormous issue on 
immigration that faces our country. I appreciate the example, 
Senator Craig, that you and Senator Akaka set for all of us 
here.
    Secondly, let me focus in on the Veterans' Administration 
hospital facility at Fitzsimons. It is a very important 
project, and it is an important project for the entire Rocky 
Mountain region. It is part of a project that will go into a 
crown jewel of health facilities in the Rocky Mountain region 
and will afford highly needed services to the veterans not only 
of Colorado, but the surrounding States.
    I am honored to join with my colleague from Colorado, 
Senator Allard, in pushing this project forward. It was only 
about a year ago when it seemed that Humpty Dumpty was falling 
apart because there were so many different people who had 
different points of view as to where it ought to go, what kind 
of acreage ought to be allotted to the project.
    It was in a meeting that was pulled together by myself and 
Senator Allard in Denver, I think, in January or February of 
last year where we started the ball rolling to get the kind of 
consensus that we currently have.
    This is a very important project. I know there are still 
many steps along the way toward getting to a completion of a 
project or the authorizing legislation needs to move forward 
through this Committee.
    I support the legislation that was introduced by Senator 
Allard with respect to the veterans hospital at Fitzsimons, and 
I look forward to working with this Committee to make it a 
reality.
    With that, Mr. Chairman, I thank you for letting me 
interrupt the flow here so I can go and present a bill in 
another committee.
    Thank you very much.
    [The prepared statement of Senator Salazar follows:]

   Prepared Statement of Hon. Ken Salazar, U.S. Senator from Colorado

    Thank you, Chairman Craig and Senator Akaka for holding today's 
hearing. The way the VA manages its capital assets is critical to the 
way it provides services to veterans, because it gets at the heart of 
how efficiently and effectively the department allocates resources.
    While much of this subject deals with the details of investment and 
management, we must remember that the underlying purpose of this 
hearing--and of the work of this Committee--is to ensure that our 
government provides the best possible services to the men and women in 
uniform who have sacrificed so much in service of our great country.
    I also want to thank our witnesses for sharing their views on this 
critical issue with us today. In particular, I want to thank the senior 
Senator from my State of Colorado, Senator Wayne Allard, for being here 
today to talk about a project that is close to our heart, and close to 
the hearts of veterans in our State and region.
    It is simple: if the Federal Government is spending too much money 
on old, underused, and inefficient facilities and equipment, then it is 
not doing all it can to ensure that quality health care and benefits 
services are being provided to our veterans.
    We have a long way to go on this front. Unfortunately, this is 
especially true in my home State of Colorado. The existing VA medical 
facility in Denver is aging, and the equipment, personnel, and patient 
load are outgrowing its current capacity at an alarming rate. Our 
veterans need a new, high-quality medical facility now.
    I am pleased that the CARES process recognized this fact and made a 
new VA hospital in the Denver area a top priority. I am also pleased 
that, after months of difficult negotiations, the stakeholders appear 
to be moving toward a deal that will make this hospital a reality.
    When I first came to the Senate 15 months ago, the outlook was not 
so rosy. The deal that VA and the University of Colorado had in place 
had stalled, and the fate of the project was in question.
    That's why, within weeks of being elected to the Senate, along with 
Senator Allard, I worked to bring together Democrats and Republicans; 
Federal, State, and local government officials; and the public and 
private sector to hammer out their differences for the sake of our 
veterans and the promises we have made to them.
    I appreciate the willingness of everyone in Aurora, the University 
of Colorado Health Sciences Center, the VA, my colleagues in the House 
and Senate, and others to work together toward a shared goal. I am 
confident we can make this project one of the Crown Jewels of our 
veterans' health system.
    While I am pleased that the project is back on track and continues 
to make progress, we still have work to do. Legislation to authorize 
funding for these projects, which this Committee will consider, is the 
next step in the process, and I will work to ensure it authorizes the 
resources the VA needs to move forward on the Ftizsimons project.
    I cannot overstate how important this project is to the veterans of 
Colorado and the surrounding region. There are almost half a million 
veterans in my State, and for many of them, the Denver facility is the 
closest VA hospital.
    In addition, Denver is the metropolitan center for the Rocky 
Mountain region. Veterans residing in Colorado and the surrounding 
States deserve a state-of-the-art facility within a reasonable distance 
of their homes, and they deserve to know that the VA hospital in the 
closest major city is equipped to provide the highest-quality care 
available. I urge my colleagues to work with Senator Allard and me to 
accomplish these goals by supporting the construction of a new facility 
at Fitzsimons.
    Thank you again, Chairman Craig and Senator Akaka, for the 
opportunity to address this issue today, and for all the work you do on 
behalf of our Nation's veterans. I look forward to a productive 
hearing.
    Chairman Craig. Thank you, Senator Salazar.
    Now,let me turn to Senator Patty Murray of Washington.
    Patty.
    Senator Murray. Mr. Chairman, I do have an opening 
statement, but I would be happy to defer to the Senators from 
Florida and make mine before Dr. Perlin makes his.
    Chairman Craig. OK. Without objection, we will proceed in 
that manner. Thank you, Senator Murray, for that consideration.
    Then let me turn to Senator Mel Martinez of Florida and his 
colleague, Senator Bill Nelson. Thank you both, gentlemen.
    Mel, please proceed.

                STATEMENT OF HON. MEL MARTINEZ, 
                   U.S. SENATOR FROM FLORIDA

    Senator Martinez. Thank you, Mr. Chairman. I appreciate 
very much your holding this important hearing.
    Ranking Member Akaka, it is great to be in your Committee.
    I am delighted to be here with my senior colleague from the 
State of Florida, Senator Nelson, on a matter that we both 
share great concern and interest in.
    Mr. Chairman, more than 1.8 million veterans reside in the 
State of Florida, and more veterans are choosing to call 
Florida home each and every day.
    Over the past 10 years, outpatient visits to Florida's 
veteran health centers have more than doubled. More than 10,000 
veterans from the global war on terror have sought medical care 
through the VA in the State of Florida.
    Securing plans for a new VA hospital has been one of my top 
priorities since before I came to office and remains a top 
priority today. As former Orange County mayor, I saw firsthand 
the extensive growth of the Orlando area and the definitive 
need to increase access to health care for our veterans.
    Orlando and the surrounding area is the home to the largest 
population of veterans in the State of Florida. Only 45 percent 
of veterans in the Orlando region are within the VA's access 
standards for hospital care.
    The VA, as part of the Capital Asset Realignment for 
Enhanced Services, identified the growing needs of central 
Florida and authorized the design and construction of the 
Orlando VA hospital, which will serve the region's nearly 
400,000 veterans.
    Dr. Robert Ratliff, the director of the Orlando VA medical 
center, is in the process of putting together a leadership team 
to ensure that the needs of veterans in central Florida are 
addressed in the design, placement, and construction of the 
hospital.
    Currently, six sites in southeast Orlando are being 
considered for the hospital. The VA site selection committee 
will be visiting our State in the upcoming weeks to do an 
analysis of each of these sites. I urge the VA to select a site 
in central Florida in a timely manner.
    One of the most important aspects of the Orlando VA 
hospital is accessibility. The new facility will give central 
Florida veterans access to VA health care without traveling 
long distances for their inpatient care.
    The site that is selected will house a 130-bed hospital, 
nursing home, and domiciliary and rehabilitation center and 
will employ 2,000 people from the community. The extension of 
this project is essential to delivering the high quality of 
care our veterans deserve.
    Mr. Chairman, at a time when our men and women in uniform 
have fought for our safety and security, I believe we owe 
America's veterans and their families our gratitude. We, most 
of all, beyond that also owe our veterans to care for them, as 
they have cared for us and for our safety and security.
    At a time when so many of our young people are engaged 
abroad, and many of them are coming back home in need of 
veterans' care for years to come, a fast-growing State like the 
State of Florida absolutely needs this facility to get off the 
ground and on the path to serving America's veterans and 
Florida's veterans.
    Thank you, Mr. Chairman, for the hearing, and I am 
delighted to be here with Senator Nelson on a project that we 
both very passionately care about.
    [The prepared statement of Senator Martinez follows:]

   Prepared Statement of Hon. Mel Martinez, U.S. Senator from Florida

    I would like to thank Chairman Craig and the VA Committee 
for having this hearing on this matter of great importance to 
Florida.
    More than 1.8 million veterans reside in the State of 
Florida and more veterans are choosing to call Florida home 
every day. Over the past 10 years, outpatient visits to 
Florida's veteran health centers have more than doubled. More 
than 10,000 veterans from the Global War on Terror have sought 
medical care through the VA in our State.
    Securing plans for a new Orlando VA Hospital has been one 
of my top priorities since before I came to office and remains 
a priority today. As former Orange County Mayor I saw firsthand 
the extensive growth of the Orlando area and the definitive 
need we have to increase access to healthcare for our veterans.
    Orlando and the surrounding area is the home of the largest 
population of veterans in the State. Only 45 percent of 
veterans in the Orlando region are within the VA's access 
standards for hospital care. The VA as part of the Capital 
Asset Realignment for Enhanced Services identified the growing 
needs of Central Florida and authorized the design and 
construction of the Orlando VA Hospital, which will serve the 
region's nearly 400,000 veterans.
    Dr. Robert Ratliffe, the Director of the Orlando VA Medical 
Center, is in the process of putting together a leadership team 
to ensure that the needs of veterans in Central Florida are 
addressed in the design, placement, and construction of the 
hospital.
    Currently six sites in southeast Orlando are being 
considered for the hospital. The VA site selection committee 
will be visiting our State in the upcoming weeks to do an 
analysis of each of the sites. I urge the VA to select a site 
in Central Florida in a timely manner.
    One of the most important aspects of the Orlando VA 
hospital is accessibility. This new facility will give Central 
Florida veterans access to VA healthcare without traveling long 
distances for their inpatient care.
    The site that is selected will house the 130-bed Hospital, 
Nursing Home, and Domiciliary and Rehabilitation Center and 
will employ 2,000 people from the community.
    The extension of this project is essential to delivering 
the high quality of care our veterans deserve.
    Our men and women in uniform have fought for our safety and 
security. I believe we owe America's veterans and their 
families our gratitude. We must care and provide for our 
veterans as they have fought and cared for us.

    Chairman Craig. Mel, Senator Martinez, thank you very much 
for that testimony.
    Now let me turn to Senator Bill Nelson. Bill, welcome to 
the Committee.

                STATEMENT OF HON. BILL NELSON, 
                   U.S. SENATOR FROM FLORIDA

    Senator Nelson. Thank you, Mr. Chairman, and Ranking 
Member, Senator Akaka.
    Mr. Chairman, you made a statement a while ago that the 
overall veterans population in this country is declining as 
World War II and Korean War veterans are getting older, and we 
are losing many of them.
    Let me assure you that the demographic trend in the State 
of Florida is exactly the opposite----
    Chairman Craig. The opposite, yes.
    Senator Nelson [continuing].--because of veterans retiring 
and moving to Florida. In addition, during the winter months, 
those that the crackers refer to as the ``snow birds'' come and 
enjoy Florida's warm and mild climate bringing additional 
stress and demand upon Florida's VA facilities.
    Mr. Chairman, when you and I were in the House back in the 
1980s, we finally got the VA to come up with a plan for the 
future needs of its hospitals all around the country.
    Because of these demographic trends recognized back then, 
the VA's plan said that Florida was going to need four new 
hospitals. By the way, it was going to break what had been the 
long-standing VA tradition that a veterans hospital was going 
to be co-located next to a medical school.
    It identified priority number one, West Palm Beach--and 
that hospital was built 15 years ago; priority two, central 
Florida; and priority three and four, in the southwest region 
of Florida, around Fort Myers and the Panhandle.
    Here we are, since the mid-1980s, 20 years later, and 
priority number two has not been built. The VA's 5-year capital 
plan lists the top 20 major facilities requested by the VA, and 
Orlando is number four. Yet, what is more concerning, the 
request portfolio inventory of current projects says Orlando's 
target date for a VA hospital is ``to be determined.'' Now, Mr. 
Chairman, that is not good enough.
    As far back as 2002, and again in 2003, the Congress 
directed the VA to include CARES implementation of when 
submitting their 5-year capital plans, but the Orlando hospital 
project continues to be listed as ``to be determined.''
    The VA announced in a 2005 press release that the hospital 
is expected to open in 5 years. The VA's fiscal year 2006 
budget request has it ``to be determined.'' If we are on that 
time schedule, 4 years from the opening, we had better start 
breaking ground early next fiscal year.
    Mr. Chairman, as the Senior Senator from Florida who has 
had this history now ever since I came to Congress 28 years 
ago, I make a plea to you to get to the bottom of this and 
straighten it out.
    By any estimation, because of the demographic trends, 
Florida is expected to be the number one veteran populated 
State within the country in just a few years. I urge this 
Committee, Mr. Chairman, to continue your outstanding support 
that you give to our Nation's veterans. I ask you to give your 
urgent attention to this important project.
    Thank you, Mr. Chairman.
    Chairman Craig. Bill, thank you very much for that 
testimony. Those are important words, and it is important that 
we keep the VA focused, and of course, the CARES overall 
project was to do that.
    As you mentioned, back in the mid-1980s, we were looking at 
numbers and demographic movement in our country and trying to 
make determinations at that time. For your State, some of those 
determinations were made. Now we will see if we can't get them 
completed.
    Thank you very much. Thank you all for joining us.
    Senator Murray. Mr. Chairman, I am happy to give my 
statement at any time.
    Chairman Craig. Yes. We will turn to Senator Murray for her 
opening statement while our next panel is assembling.
    Patty, please.

                STATEMENT OF HON. PATTY MURRAY, 
                  U.S. SENATOR FROM WASHINGTON

    Senator Murray. Absolutely. Thank you very much, Mr. 
Chairman and Senator Akaka, for holding this hearing.
    I want to welcome Under Secretary Perlin for joining us 
today as well.
    Before I talk about the Walla Walla VA medical center, let 
me say I am pretty confused when it comes to the VA's 
construction budget. I am confused about where we are going 
with the CARES process. Some say the process is dead. Others 
say it is moving forward.
    Some look at the fiscal year 2007 budget request and say 
that the VA's low construction funding request means that the 
VA is not willing to or able to move forward with many of the 
projects around the country. I hope that Dr. Perlin today can 
shed some light on this process and on the fiscal 2007 budget.
    I am concerned, frankly, that we are promising great things 
when it comes to construction--new clinics, new hospitals--but 
we are not budgeting to meet those needs. As a Senator with a 
VA hospital being considered for closure in the CARES process, 
I hope this Administration realizes the situation it has put 
itself in.
    On one hand, you say you want to close a hospital. On the 
other hand, you say you want to open new clinics, provide new 
services. In Washington State alone, it took years to even get 
the VA Secretary to sign off on a clinic in north central 
Washington, which I happen to be very pleased with. In total, I 
think the VA has signed off on six CBOCs across the country, 
when the CARES report laid out 80 or more.
    You can see why our veterans really are worried about the 
VA's commitment here. They just simply don't believe the VA 
when they are told that new construction is coming, don't 
worry, and I really don't blame them.
    I do want to talk briefly for a second about Walla Walla. 
Two years ago, when I saw a proposal from the VA to shut down 
one of our medical centers with no study, no alternatives, no 
plan, I had to speak up.
    As I told the CARES Commission during their visit to Walla 
Walla, I support the idea behind CARES. I think it is important 
we do realign services so we can better meet the needs of our 
veterans. It is an important goal.
    Like all of the people at today's hearing, I am committed 
to supporting a robust VA health care system in which our 
veterans receive the highest quality care in a timely fashion.
    As we all know, under the CARES initiative, the Department 
of Veterans Affairs asked its regional offices to study the 
health care needs of their local veterans and to develop a plan 
to meet those needs. Unfortunately, for our veterans who are 
served by the Walla Walla facility, the dedicated VA employees 
who provide outstanding service, and the community itself, the 
CARES process lost some of its legitimacy.
    The original VISN 20 report only highlighted the gaps in 
outpatient, primary, specialty, and mental health care and 
inpatient psychiatry as well as access to primary, acute 
hospital, and tertiary. Yet behind closed doors and under the 
direction of the VA headquarters, VISN leaders across the 
country were directed to call for the closure of more than two 
dozen facilities, including Walla Walla.
    Now, during an official hearing of this Committee, we found 
out that almost 40 percent of the veterans of the rural region 
that is served by the Walla Walla medical center live outside 
the 30- to 45-minute standard for access to care. We heard 
local hospitals testify that they did not have the capacity to 
take on the medical patients that are currently served at the 
VA, and we found out there is no alternative for area veterans 
to get substance abuse or long-term care or mental health care 
services.
    The point really is this. If we make it harder for veterans 
to seek care, in the end, they are not going to get any care. 
That, to me, is unacceptable.
    Now, I can support bringing more VA care closer to our 
veterans. I can't stand by and accept efforts to close 
hospitals when the VA promises new facilities it doesn't have 
the budget to build. The bottom line for me is that we have to 
maintain a VA footprint in Walla Walla.
    I really do appreciate the VA's current willingness to 
discuss the options in Walla Walla. Secretary Perlin, I want to 
thank you and your staff for the continuing dialogue on Walla 
Walla, and I really appreciated discussing this with the VISN 
Director Lewis as well. I know we are all trying to work to a 
good end on this, and I appreciate it.
    Mr. Chairman, I just lay down my concern that we can't do a 
CARES process where we close hospitals and promise new 
facilities that we do not have the capacity to build.
    Chairman Craig. Patty, thank you very much.
    Let me call our panel forward, please.
    Senator Murray. Mr. Chairman, I will be back in just a 
minute. I have to greet a group.
    Chairman Craig. Before you leave, Patty, and as the panel 
is coming forward, let me say this about Walla Walla. I had the 
privilege during the last recess to visit Walla Walla. If you 
were simply driving through it, you would say it is an old 
facility. It is old by its sheer presence. It is old by its 
structure.
    You have said something that I think is tremendously 
important as it relates to services provided, as it relates to 
mental health care and the reputation that it has established, 
from what I understand. One of my reasons for visiting was 
because north central Idaho veterans go to Walla Walla. They, 
like many of your veterans, are concerned about its future.
    I was pleased to hear you say in your statement that you 
felt it necessary that VA keep a footprint in Walla Walla, and 
I think that is a basis from which you and I can work very 
positively together. I don't know the design of the future 
there, but I would concur with you. I think there has to be a 
future there as it relates to services and certain that which 
must be provided.
    I look forward to working with you on that issue and 
working with Dr. Perlin and others to make sure that we get 
that right and get it on track.
    Senator Murray. I very much appreciate both your words now 
and your coming to visit. We do serve a wide three-State area 
there, and the veterans very much appreciated your being there.
    Chairman Craig. You bet.
    Senator Murray. It is something we can, I believe, work 
together in a very positive manner. I appreciate that very 
much.
    I will return in just a minute.
    Chairman Craig. Thank you.
    Dr. Perlin and crew? Tim McClain and, of course, Bob Henke 
and Jim Sullivan. Thank you all for being with us. We will let 
you now proceed with your testimony. I look forward to it.
    You have heard a variety of concerns expressed by 
individual Senators as to their States' futures. I think both 
Senator Akaka and I have given a broad overview of the CARES 
approach and where it was intended to take us.
    It is our belief that it must continue, that it is an idea 
that became a reality that needs to stay alive for the purpose 
of analyzing not only what we have, but where we need to go in 
future service to America's veterans.
    Dr. Perlin, please proceed.

  STATEMENT OF JONATHAN B. PERLIN, M.D., UNDER SECRETARY FOR 
  HEALTH, DEPARTMENT OF VETERANS AFFAIRS, ACCOMPANIED BY TIM 
   McCLAIN, GENERAL COUNSEL, DEPARTMENT OF VETERANS AFFAIRS; 
ROBERT HENKE, ASSISTANT SECRETARY FOR MANAGEMENT, DEPARTMENT OF 
   VETERANS AFFAIRS; AND JAMES M. SULLIVAN, DEPUTY DIRECTOR, 
 OFFICE OF ASSET ENTERPRISE MANAGEMENT, DEPARTMENT OF VETERANS 
                            AFFAIRS

    Dr. Perlin. Thank you, Mr. Chairman. We thank you very, 
very much for your support not only of America's veterans, but 
of VA and the process to refresh, restore, and really realign 
the infrastructure as benefits veterans of the 21st century.
    With your permission, I ask that the full statement be 
submitted for the record.
    Chairman Craig. Without objection, your full statement and 
any accompanying material will become a part of the record.
    Dr. Perlin. Thank you, sir.
    I would like to introduce with title my colleagues. Mr. Tim 
McClain, to my right, is our general counsel, Department of 
Veterans Affairs.
    Chairman Craig. Thank you.
    Dr. Perlin. To my immediate left is Assistant Secretary 
Robert Henke, assistant secretary for management. To his left 
is Mr. Jim Sullivan, the deputy director of the Office of Asset 
Enterprise Management.
    Mr. Chairman, in July 1999, the Government Accountability 
Office study found that VA was spending $1 million a day on 
unneeded or unused facilities. In response to this report, VA 
essentially declared a moratorium on new health care 
construction from 2000 to 2004 in order to develop a coherent 
national plan for modernizing our facilities.
    The Capital Asset Realignment for Enhanced Services, or 
CARES program, is that plan. It provides us with an opportunity 
to impose greater efficiency on our health care operations and 
to more prudently use the funding taxpayers so generously 
entrust to us.
    In the process, it allows us to transform an infrastructure 
created for previous generations of veterans into one that 
provides 21st century care and 21st century technology to 21st 
century veterans.
    Department of Veterans Affairs is the owner, tenant, and 
operator of the largest health care-related real estate 
portfolio in the United States. The Department also maintains 
facilities for Veterans Benefits Administration and most of our 
Nation's national cemeteries. Overall, we own, lease, or 
operate the third largest number of buildings in the Federal 
Government's inventory.
    Former Secretary Anthony Principi released his CARES 
decision on May 7, 2004. Since that time, 11 construction 
contracts under CARES have been awarded and are underway. We 
plan to award an additional 13 contracts by the end of the 
fiscal year.
    VA's draft bill to authorize construction for fiscal year 
2007 has just been submitted to Congress. In it, we are asking 
for reauthorization of 18 previously approved CARES projects, 6 
projects to complement the fiscal year 2007 budget, 8 leases, 
and 2 projects resulting from Hurricane Katrina's devastation--
a replacement facility for New Orleans and restoration of the 
Biloxi hospital.
    It is essential that all VA facilities are appropriately 
planned, designed, constructed, or leased in a manner that 
enhances the care and services that we provide to our Nation's 
veterans and one that is consistent with the efficient use of 
our precious financial resources.
    Our current construction program and 5-year plan provide a 
comprehensive capital investment process, ensuring that our 
buildings and real estate fully support VA's organizational 
goals. For fiscal year 2007, VA's budget request includes a 
total of $714 million in capital funding. This includes $399 
million for major construction projects, $198 million for minor 
construction, $85 million in grants for the construction of 
State veterans homes, and $32 million in grants for the 
construction of State veterans cemeteries.
    Our major construction program provides for constructing, 
altering, and improving any VA facility or project with a total 
cost of more than $7 million. Our minor construction program 
funds construction activities under $7 million.
    VHA's request for construction funding for our medical 
facilities is $457 million. This includes $307 million for 
major construction projects and $150 million for minor 
construction. All of these resources will be devoted to 
implementing projects identified in our CARES program.
    If our 2007 budget request is adopted, VA will have 
received more than $3 billion to implement CARES to date. We 
greatly appreciate Congress's and the President's support as we 
maximize our veterans' access to the high quality care for 
which our Department is renowned.
    Let me highlight just one of the projects currently funded 
under CARES, the renovation of our Biloxi VA medical center. 
Biloxi, as you know, was damaged by Hurricane Katrina, and its 
Gulfport division was completely destroyed. The CARES report 
called for us to collaborate with Keesler Air Force Base to 
meet VA and DOD needs in the area and to transfer Gulfport's 
current patient care services to the Biloxi campus.
    Hurricane Katrina required us to accelerate the process. 
With the $293 million emergency supplemental funding we 
received, we are proceeding rapidly with our DOD partners to 
meet the needs of gulf coast veterans and servicemembers and 
their families.
    We are also working collaboratively in New Orleans to bring 
state-of-the-art medical care back to that city. In February, 
we signed an agreement with Louisiana State University to work 
together to develop plans for new medical facilities. Together, 
we hope to create sharing agreements that will benefit veterans 
and all of the citizens of Louisiana and all American 
taxpayers.
    Mr. Chairman, the $53.4 million in major construction 
funding and the $25 million in minor construction resources in 
this budget provides national cemetery administration, will 
ensure that nearly 84 percent of veterans will be served by 
burial option in a national or a State veterans cemetery within 
75 miles of their residence.
    NCA is now engaged in its largest expansion since the Civil 
War and is making all the national cemeteries it administers 
national shrines commemorating veterans' service to our Nation.
    We thank you, and we thank the Committee for your 
continuing support to our Nation's veterans. We would be 
pleased to answer any of your questions.
    Thank you.

    Prepared Statement of Jonathan B. Perlin, M.D., Under Secretary 
               for Health, Department of Veterans Affairs

    Mr. Chairman and Members of the Committee, good afternoon. I am 
pleased to appear here this afternoon to provide you with an overview 
of the Department of Veterans Affairs' (VA) construction program and 5-
Year Capital Plan. I will also provide information on VA's portfolio 
management approach and how the Capital Asset Realignment for Enhanced 
Services (CARES) process and the Enhanced-Use Leasing program play an 
integral role in the management of VA's portfolio.
    VA has a vast holding of diverse capital assets consisting of 
buildings and real estate, VA-leased buildings, enhanced-use leases, 
and infrastructure. Assets include hospitals, clinics, cemeteries, and 
office buildings. Many of these facilities currently are used, managed, 
and maintained in relation to and for promotion of the respective 
activities of VA's Veterans Health Administration (VHA), Veterans 
Benefits Administration (VBA), National Cemetery Administration (NCA), 
and Staff Offices (General Administration). At the close of fiscal year 
2005, VA held 1,053 operating leases, and owned 5,306 buildings and 
32,527 acres of land. Various construction programs are used to fund 
infrastructure for the Department. Operating dollars fund lease 
requirements and maintenance projects. The major construction program 
provides for constructing, altering, and improving any VA facility with 
a total project cost over $7 million and the minor construction program 
funds construction activities under $7 million. Two grant programs are 
also utilized for building or improving State veterans cemeteries and 
State nursing homes and domiciliary facilities.
    The VA fiscal year 2007 budget request includes $714 million in 
capital funding. Our request includes $399 million for major 
construction projects, $198 million for minor construction, $85 million 
in grants for the construction of State-extended care facilities, and 
$32 million in grants for the construction of State veterans 
cemeteries.
    The 2007 request for construction funding for our medical 
facilities is $457 million-$307 million for major construction and $150 
million for minor construction. These resources will be devoted to 
implementing projects identified in the Capital Asset Realignment for 
Enhanced Services (CARES) program. The projects will renovate and 
modernize VA's health care infrastructure and provide greater access to 
high-quality care for veterans. VA also received funds enacted in the 
Hurricane Katrina emergency supplemental funding in late December 2005: 
$293 million to fund a CARES project for a new hospital in Biloxi, 
Mississippi: and $75 million for planning and design for the 
restoration/replacement of the medical center facility in New Orleans, 
Louisiana. To date, including the fiscal year 2007 budget request, VA 
has received in excess of $3 billion to implement CARES. In addition, 
VA currently has an emergency supplemental request for $600 million 
before the Congress for the construction funding of the restoration/
replacement of the medical center facility in New Orleans.
    Our fiscal year 2007 major construction request for health care 
will fund the continued development of two medical facility projects--
$97.5 million to address seismic corrections in Long Beach 
(California); and $52.0 million to continue the work necessary to 
prepare for construction of a new medical center facility in Denver 
(Colorado). In addition, our request for major construction funding 
includes $38.2 million to construct a new nursing home care unit and 
new dietetics space, as well as to improve patient and staff safety by 
correcting seismic, fire, and life safety deficiencies at American Lake 
(Washington); $32.5 million for a new spinal cord injury center at 
Milwaukee (Wisconsin); $25.8 million to replace the operating room 
suite at Columbia (Missouri); and $7.0 million to design improvements 
through renovation and new construction to reduce underutilized vacant 
space located at the Jefferson Barracks Division campus at St. Louis 
(Missouri) as well as provide land for expansion at the Jefferson 
Barracks National Cemetery.
    We also requested $53.4 million in major construction funding and 
$25.0 million in minor construction resources to support our burial 
program. This includes funds for cemetery expansion and improvement at 
Great Lakes, Michigan ($16.9 million), Dallas/Ft. Worth, Texas ($13.0 
million), and Gerald B. H. Solomon, Saratoga, New York ($7.6 million). 
Our request will also provide $2.3 million in design funds to develop 
construction documents for gravesite expansion projects at Abraham 
Lincoln National Cemetery (Illinois) and at Quantico National Cemetery 
(Virginia). In addition, the major construction request includes $12 
million for the development of master plans and the initial design for 
six new national cemeteries in areas directed by the National Cemetery 
Expansion Act of 2003--Bakersfield, California; Birmingham, Alabama; 
Columbia-Greenville, South Carolina; Jacksonville, Florida; Sarasota 
County, Florida; and southeastern Pennsylvania.

                                 CARES

    Former Secretary Anthony Principi formed the Capital Asset 
Realignment for Enhanced Services (CARES) program to conduct a 
``comprehensive, system-wide approach, identifying the demand for VA 
care and projecting into the future the appropriate function, size, and 
location for VA facilities.'' The CARES Commission, an independent 
body, evaluated VA's CARES program and submitted findings and 
recommendations in February of 2004, and on May 7, 2004, the Secretary 
released his CARES Decision based on the Commission's findings and 
recommendations for each CARES site. This CARES decision became VA's 
roadmap into the future.
    Since that time, much has been done to move these infrastructure 
improvements forward. Architectural and engineering firms have been 
retained to prepare designs and 11 construction contracts have been 
awarded and are underway. An additional 13 construction contracts are 
planned to be awarded by the end of this fiscal year. These projects 
bring needed improvements for veterans at these locations.
    Public law 108-170 provided the Secretary with interim authority to 
proceed with CARES approved projects subject to a 45-day notice to the 
Committees. This legislation was used to provide authorization for the 
first 30 CARES projects. The legislation will sunset on September 30, 
2006. Fourteen projects authorized under this public law are not likely 
to award construction contracts by September 30 and four additional 
projects which will have construction underway will have second phases 
of construction that will begin later. Therefore, the Department has 
requested an extension of that authority until September 30, 2009 in 
the fiscal year 2007 Budget and 5-Year Capital Plan. Also in need of 
authorization are three projects: Biloxi, Mississippi; Denver, 
Colorado; and New Orleans, Louisiana, for which the Department has 
identified as an immediate need in fiscal year 2006. A request for 
authorization for medical facility leases for fiscal year 2006 and 
fiscal year 2007 construction projects and medical facility leases are 
also included in the budget request and capital plan. In total, VA is 
requesting authorization of $3.7 billion for major medical facility 
projects and $51.6 million for major medical facility leases.

                          5-YEAR CAPITAL PLAN

    The Department's 5-Year Capital Plan is the ultimate product of 
VA's capital investment process, which reflects tradeoffs between 
funding the operational expenses for existing assets and the 
acquisition of new assets by the most cost-effective and beneficial 
means. The VA capital plan includes the highest priority capital 
investments that were vetted through a comprehensive Department-wide 
capital investment process to ensure the assets fully support the 
mission, vision, and goals of the agency. The plan outlines VA's 
implementation of the CARES decisions. The plan also includes 
descriptions of other initiatives and capital asset management tools 
that VA is utilizing to better manage its large capital portfolio.
    For fiscal year 2007 the capital plan is published together with 
the Department's construction budget. Combining the two documents 
provides a comprehensive view of the VA construction budget for 2007 
and plans for the future.

                          ENHANCED-USE LEASING

    VA utilizes a capital asset management tool called ``enhanced-use 
leasing'' (EU leasing) to better manage its vacant and underutilized 
real property assets. The authority was initially authorized in 1991, 
is codified at 38 U.S.C. Sec. 8161-8169, and currently is set to expire 
on December 31, 2011. It permits VA to lease Department-controlled real 
property to private or other public entities for a term not-to-exceed 
75 years. Each lease must be in exchange for ``fair consideration'' as 
determined by the Secretary. Such consideration may consist of 
monetary, and/or ``in-kind'' consideration including construction, 
repair, remodeling, improvements, or maintenance services for 
Department facilities, or the provision of office, storage, or other 
usable space.
    The EU leasing program has enabled VA to leverage its diverse, 
underutilized real estate portfolio to generate significant revenues. 
Such revenues are redirected toward the healthcare and capital 
operations of our medical centers, which serve our Nation's veterans 
daily. It also has resulted in several privately financed, developed, 
and operated facilities which provide valuable, mission-compatible 
services to the Department and eligible veterans, non-veterans, and VA 
employees. Such facilities and services have included co-generation 
energy services, office facilities, parking facilities, hospice care, 
mental health, single-room occupancy (homeless shelters), affordable 
housing, transitional housing, low-cost senior housing, and child day 
care services. Notably, VA's varied EU leases also have resulted in a 
substantial short and long-term stimulus for the impacted local, State, 
and Federal Governments and economies, due to tax revenues, sales, and 
job creation.
    In fiscal year 2005, through its EU lease program, VA received over 
$900,000 worth of in-kind consideration, and $28,000,000 via a single 
payment of monetary consideration. The EU Leasing program is a proven 
method of leveraging VA's diverse real estate portfolio and market 
position.

                   VA'S PORTFOLIO MANAGEMENT APPROACH

    VA utilizes a three-tiered portfolio management approach. This 
approach is the blueprint for VA portfolio management nationwide.
    First, VA manages what we have more effectively through Federal 
Real Property Council (FRPC) performance standards as well as using 
unique technology-assisted inventory management system. VA is committed 
to four metrics that set the goals for performance. They include the 
percent of space utilization as compared to overall space (owned and 
direct leased); the percent condition index (owned buildings); the 
ratio of non-mission-dependent assets to total assets; and lastly, the 
ratio of operating costs per gross square foot (GSF) adjusting for 
inflation. These goals are based on the FRPC standards for performance 
measurement in capital portfolio management.
    VA is striving to utilize information technology and established 
capital asset management principles to improve the management of its 
capital resources. VA created the Capital Asset Management System 
(CAMS), an integrated, Department-wide system, enabling VA to analyze, 
monitor, and manage VA's portfolio of capital assets. Data are 
organized and presented to strategically monitor performance against 
capital asset goals within and across asset types and VA 
Administrations (VHA, VBA, and NCA).
    Secondly, VA selects prudent capital investments through 
appropriated dollars. VA uses appropriated dollars to manage CARES 
capital investment projects that have proven to be sound investments. 
Each project's performance is measured to ensure the best use of our 
overall portfolio needs. This innovative approach has allowed VA to 
manage underutilized assets in a more efficient and cost-effective 
manner.
    VA's third approach is the use of its enhanced-use leasing 
authority, which has been previously mentioned. Over the past 14 years 
VA has awarded 47 projects through the enhanced-use leasing authority. 
An additional 100 initiatives are being studied, of which 45 projects 
are currently active.

                                CLOSING

    In summary, Mr. Chairman, the $714 million the VA is requesting in 
fiscal year 2007, in addition to the $293 million provided in the 
Hurricane Katrina emergency supplemental will provide the resources 
necessary for the Department to:
     Continue implementation of the infrastructure improvements 
identified in CARES to insure that facilities are available to support 
the provision of timely, high-quality health care to nearly 5.3 million 
veterans.
     Increase access to our burial program by ensuring that 
nearly 84 percent of veterans will be served by a burial option in a 
national or State veterans cemetery within 75 miles of their residence; 
and
     Provide safe and secure facilities for the Department 
built to current specifications to withstand natural and manmade 
disasters.
    I look forward to working with the Members of this Committee to 
continue the Department's tradition of providing timely, high-quality 
benefits and services to those who have helped defend and preserve 
freedom around the world. I would be pleased to answer any questions 
the Committee may have.
                                 ______
                                 
    Response to written questions submitted by Hon. Larry E. Craig 
                       to Hon. Jonathan B. Perlin

    Question 1a. In responding to my question regarding what VA is 
doing to actively seek enhanced opportunities to further CARES progress 
through new collaboration with DoD following the most recent BRAC 
round, you indicated that VA has submitted ``expressions of interest'' 
in a dozen potential sites.
    Where specifically are these sites?
    Answer. The Department of Veterans Affairs (VA) was approved for 
the transfer of sites made available through the Base Realignment and 
Closure (BRAC) process.
     Army BRAC sites include: Mountain View, California; Ft. 
McPherson, Georgia; Providence, Rhode Island; Dallas, Texas; San 
Antonio, Texas; Seattle, Washington; and Huntington, West Virginia.
     Air Force BRAC sites include: Mesa, Arizona; Sunnyvale, 
California and Buckley, Colorado.
     Navy BRAC sites include: St. Petersburg, Florida and 
Atlanta, Georgia.
    Question 1b. What criteria is VA using to assess its interest in 
these sites?
    Answer. VA developed four criteria to assess its interest in 
property made available through BRAG:
    (1) Does it fulfill an identified need;
    (2) Is it in the right location (proximity, access, etc);
    (3) Is the asset worth it (value, cost-savings or avoidance); and
    (4) Does it provide collocation opportunities?
    Based on the responses to these evaluation criteria, VA issued an 
expression of interest for 24 properties. VA then developed eight 
criteria to assess whether the Department should proceed with a formal 
request for transfer of the property. The eight criteria include:
    (1) Suitability of the property-facility (does it meet VA facility 
needs);
    (2) Suitability of the property-location (does it meet VA location 
needs);
    (3) Special property characteristics that make the property unique 
for addressing VA needs;
    (4) Size of VA need;
    (5) VA facility needs (does it require renovation or construction);
    (6) Market alternatives;
    (7) Existing VA sites (are there available under used VA assets to 
meet the need); and
    (8) Timing.
    Question 1c. Has former VA Secretary and BRAC Commission Chairman 
Anthony Principi had a role in this process?
    Answer. Former VA Secretary and BRAC Commission Chairman, Anthony 
Principi, did not have a role in the VA selection process.
    Question 2. This Committee has clearly indicated its commitment to 
VA's reconstruction efforts in the Hurricane Katrina-affected region. 
What, if anything, is VA doing to prepare in advance for future 
catastrophic damage to its infrastructure?
    Answer. VA has taken several steps to prepare for future 
catastrophic damage to its infrastructure. These actions include:
     The Secretary's Structural Advisory Committee (consisting 
of nationally recognized experts on facility structures) regularly 
reviews VA's structural criteria to ensure compliance with the most 
current codes and extreme disasters requirements.
     VA has developed Physical Security Strategies that support 
VA's requirement of continued operation of critical facilities, 
including medical facilities, after a natural or man made extreme 
event. These strategies are being included in VA's major projects.
     Funding for physical security infrastructure protections 
was requested and provided in the fiscal year 2006 major construction 
appropriation.
     Physical Security Assessments have been completed for all 
critical VA facilities.
     Hurricane Utility Assessments were completed August 2005 
at five VA medical centers with a high risk of hurricane damage, which 
included recommendations for upgrades of infrastructure to maintain 
operation in the aftermath of hurricanes.
     Hurricane Utility Assessments are being conducted at all 
remaining VA medical centers with a high risk of hurricane damage.
     Major projects at high risk hurricane sites have included 
criteria changes that require increase capacities of emergency power to 
ensure full operation of heating and air conditioning systems, 
additional protections for water systems to ensure the availability of 
water and sewer services, and other enhancements for improved 
survivability.
     A number of VA medical centers in high risk hurricane and 
seismic areas have completed or are addressing utility, structural, and 
infrastructure improvements to improve their ability to support full 
medical operations after an extreme event.

    Chairman Craig. Dr. Perlin, thank you.
    We have been joined by our colleague on the Committee, 
Senator John Ensign, of the great State of Nevada.
    John, we will allow you to make your statement, and then I 
think you are on a schedule, time sensitive, and then I will 
return to the panel for questions that we have of you.

                STATEMENT OF HON. JOHN ENSIGN, 
                    U.S. SENATOR FROM NEVADA

    Senator Ensign. Thank you, Mr. Chairman.
    I appreciate you holding this hearing, and I will make my 
statement brief and submit my full statement for the record, if 
that is OK?
    I have worked for quite some time with the rest of our 
delegation to obtain some 154 acres in north Las Vegas for the 
construction of a new VA medical center complex, which would 
consist of a 90-bed, full-service hospital and a 120-bed VA 
nursing home. The specialized care that will be provided at 
this facility will eliminate veterans having to travel long 
distances to southern California and, more importantly, will 
provide the comprehensive health care that these men and women 
so richly deserve.
    Right now, because of the problems that we had with the VA 
medical center in Las Vegas, veterans are traveling all over 
the city for various services. It is all broken up right now. 
There are 50,000 enrolled veterans in southern Nevada, and this 
current situation, while it is working, is unacceptable.
    The VA has done a great job in a bad situation. It has 
tried to alleviate the problems. We know that this is not a 
permanent fix, and the new facility will be that permanent fix.
    We obtained the funding for this new VA medical center/
hospital complex. We really appreciated Secretary Principi, who 
started the whole thing. We are very grateful to the work that 
he did, and to Secretary Nicholson for continuing that work.
    The President did not put any money in the budget this 
year, but we have been assured--from a conversation that I had 
with Secretary Nicholson--that it is on budget. The money is 
going to be there. I just want to get it on the record today 
that it will be there because it is critically important to the 
veterans of our State.
    The construction costs have skyrocketed all over the 
country and especially in my State.
    Now, Secretary Nicholson has said that the money would 
still be there, and so we hope that that is the case. You could 
state for the record that the VA will be committed to making 
sure that this stays on schedule to meet the needs of the 
veterans in southern Nevada.
    We have almost 2 million people in our valley now, and any 
other place in the country that had 2 million people, a 
population center without a full VA complex is unthinkable. We 
appreciate the efforts that you all are making and are going to 
continue to make, and we look forward to working with you on 
it.
    Thank you, Mr. Chairman.
    Chairman Craig. Senator, thank you very much. Before you 
leave, if you have questions of the panel--and you just 
registered one--you may choose to ask them at this time.
    Senator Ensign. Dr. Perlin, would you be willing to put 
yourself on the record while I am here? I would love to hear 
your comments on what we are doing in southern Nevada.
    Dr. Perlin. Absolutely. Thank you, Senator, for your 
support of this great project.
    We recognize fundamentally this facility is needed. We 
estimate it to be a $406 million facility. In fact, there is 
$259 million available as down payment.
    There is a little bit of site preparation to do, as you 
well know. Understanding that that is necessary, we believe 
that we can stick on a fairly tight schedule and complete that 
facility.
    The other thing we recognize is that folks out there, as 
you have stated, are doing a great job, but it is not ideal. We 
don't have the inpatient services that we need to facilitate 
even better partnership with Michael O'Callaghan Federal 
Hospital, or MOFH. This project also reinforces our VA-DOD 
sharing as well.
    Senator Ensign. Thank you, Mr. Chairman.
    Chairman Craig. Thank you.
    We have been joined by our colleague, Senator Richard Burr. 
Senator Burr, do you have any opening comments? All right. Fine 
enough.
    Well, gentlemen, again, thank you for being with us as we 
continue oversight and look at budget requests in relation, of 
course, to both your capital expenditures and your lease 
programs.
    VA is tasked with meeting the needs of veterans in urban, 
suburban, and rural areas across the country. Obviously, the 
cost of doing business--in this case, construction--varies from 
locale to locale.
    However, you have estimated that a replacement medical 
center in the Denver, Colorado, area will cost roughly twice 
what it will cost to construct a new medical center in Orlando, 
Florida. Please explain to the Committee how you estimate 
project costs, and what causes such great differences in 
otherwise seemingly similar projects.
    Dr. Perlin. Thank you very much, Mr. Chairman, for the 
opportunity to address this.
    Let me, if I might start with the answer, because as the 
responsible leader at the Veterans Health Administration, this 
is something that I wondered about as well.
    First, I should point out that there is significant size 
difference between the Denver facility and the Orlando 
facility. I note that. The other is that the cost of 
construction is significantly higher. I understand that the BEC 
index is roughly a third higher between the two cities.
    Let me turn to our deputy director of Office of Asset 
Enterprise Management, Jim Sullivan, to elaborate on the 
pricing and that particular differential.
    Chairman Craig. Please, Jim.
    Mr. Sullivan. Mr. Chairman, there is significant difference 
in the size between the two--1.4 and 1.1 million--and then the 
economic conditions are significantly different in the Denver 
area versus the Orlando area.
    If you would, I would ask--Mr. Neary is here. He is more 
familiar with the exact conditions in those two areas, if he 
would care to comment?
    Chairman Craig. That would be appreciated. Please come 
forward, if you would. Pull up a chair and get next to a 
microphone. Either place. Don't tell me it is altitude.
    [Laughter.]
    Chairman Craig. That is obvious. Please proceed, sir.
    Mr. Neary. Thank you, Mr. Chairman.
    My name is Bob Neary. I am the acting chief facilities 
management officer, Veterans Health Administration.
    As has been said, as you said, in fact----
    Chairman Craig. Is your microphone on?
    Mr. Neary. Yes.
    Chairman Craig. OK. Thank you.
    Mr. Neary. Construction costs, labor rates vary around the 
United States, and there is a significant difference between 
the Denver metropolitan area and in Orlando. We rely on a 
construction cost index known as the ``Boeckh Index''. In 
addition to Boeckh, other construction economic analysis tools 
will bear out the same.
    Denver is about a 31 percent higher cost market than is 
Orlando. In addition, as was said, the space in Denver is 
approximately 23 percent more than the building area in 
Orlando. Part of that is the fact that in Denver there will be 
a spinal cord injury facility, and that is not the case in 
Orlando.
    Chairman Craig. OK. Thank you. I think that is important 
information for the record.
    Please explain to the Committee how you estimated these 
costs. I think you have already done that, and I appreciate 
that. I am amazed at a 31 percent differential. That must be 
altitude.
    Dr. Perlin, any additional comments?
    Dr. Perlin. No.
    Chairman Craig. All right.
    VA, in the 2007 budget request for minor construction, is 
$198 million of which $150 million will be dedicated to CARES 
projects. Those figures are significantly below recent years.
    Although we can all agree that VA's mission is to deliver 
care, not buildings, will this funding level now and into the 
future allow VA to successfully maintain the infrastructure 
needed to deliver CARES?
    Dr. Perlin. Mr. Chairman, I want to thank this Committee 
and everyone, for their support of VA. With the approval of 
this budget, it actually brings to date the total investment in 
CARES activities to about $3 billion.
    I would note that while the request for majors for health 
construction and minors together are about $457 million, this 
year also accelerated some of the CARES construction with the 
unfortunate tragedy of Hurricane Katrina. We appreciate the 
response of Congress and the President's support that brought 
$293 million to accelerate the Biloxi construction, $75 million 
to initiate the planning work in New Orleans, and the support 
of Congress in terms of an additional supplemental.
    It is interesting to note that at this moment in terms of 
the construction portfolio, on top of that $457 million, there 
is $367 million from the 2006 supplemental. With resolution of 
the House and Senate activity on the supplemental, that adds 
nearly another $561 million, for a total of about $1.374 
billion. That is a fair amount of activity to move forward 
with.
    Chairman Craig. Do you expect that the request for 2007 
projects represents all of the funding authority VA will need 
in order to complete both projects under way and the new 2007 
projects?
    Mr. Sullivan. Mr. Chairman, no, it does not. To complete 
all of the projects that are partially funded and the projects 
that are in the 2007 budget would be approximately an 
additional $1.4 billion.
    Chairman Craig. With that in mind, are you planning, what, 
in time to spread those projects? How do you approach that?
    Mr. Sullivan. Yes, sir. We would spread those in our future 
budget requests. One, based upon the priority of the project. 
Two, the constructability, when the money is needed. And three, 
the ability to spend the money in the year in which it is 
requested.
    Chairman Craig. OK. I have gone beyond my time.
    Senator Murray.
    Senator Murray. As I mentioned in my opening statement, as 
the CARES process continues on, I am concerned that promises 
are being made that your budget for VA construction just simply 
won't fulfill. As a Senator from a State with a VA hospital on 
that CARES closure list, I have been assured that all sorts of 
facilities are going to be built if Walla Walla hospital does, 
indeed, close.
    What assurances do we have from you for the veterans in 
Washington, Idaho, Oregon, who access this hospital that when a 
final decision is made, that it is not just going to be a 
hollow promise and the VA truly will fund the construction 
projects and build the facilities that are committed to?
    Dr. Perlin. Well, Senator Murray, thank you for the 
question. That is a very fair question. We appreciate your 
support. As you know, I have been out to the beautiful State of 
Washington and been to Walla Walla a couple of times and met 
those veterans.
    I think we lose sight of the ``ES'' in CARES, the enhanced 
services. What is pretty clear is that we need to make good on 
that promise to not just align the capital infrastructure, but 
enhance the services.
    I appreciate the work with the local advisory panel there 
in Walla Walla and the interests of the community and the 
veterans from further afield who do travel to that facility. 
What I think is understood now is that we can make good on that 
promise of enhancing services through partnerships that allow 
us to have new CBOCs.
    We know for a fact in Walla Walla there are some 
opportunities to partner with the community in really enhancing 
services because, as we know, that Fort Jonathan Wainwright 
celebrated its sesquicentennial a few years ago, and I am not 
thrilled with the condition of the buildings.
    Nineteen hundred and twenty-six is the age of one building 
that has been used for the general health care, and 1906, I 
believe, for the long-term care facility. We can do better for 
our veterans.
    We appreciate the opportunity to work with you and the 
community to find not only more economical, but really much 
better, higher quality physical environment and technologies.
    Senator Murray. Everybody wants to believe that, but what 
they are concerned about is that they will hear that and we all 
want that to be the case, but then we won't see budgets that 
actually have the dollars for construction. I think that is a 
real legitimate fear.
    Dr. Perlin. Well, as we just were discussing, we are 
working with over $1.3 billion in capital construction in this 
period, and our ability to move forward in any of the areas 
that may have mission realignment of a particular facility is 
absolutely predicated on having a viable plan to give care. 
There is no go without those plans.
    Senator Murray. Can you tell us what the current status of 
the VA analysis of the Walla Walla facility is right now?
    Dr. Perlin. Well, as you know, the Secretary has just 
completed receipt of the Phase 1 CARES studies. He will need to 
reflect on that material at this juncture.
    Senator Murray. The community came out with its report. In 
fact, I have it with me. Have you seen the community report?
    Dr. Perlin. Yes, I have seen the community report and do 
appreciate it.
    Senator Murray. OK. In a couple of weeks, a number of the 
stakeholders from Walla Walla are actually going to be here. 
Would you be willing to sit down with them to discuss this with 
you and some of your staff?
    Dr. Perlin. I would commit absolutely, except I am doing an 
extraordinary amount of traveling to actually get out to some 
of these sites. As you know, I have been there. If I am in 
town, I would be delighted to be. If I am not, I am sure our 
staff would be.
    Senator Murray. OK. We will work with you on the schedule, 
but just as I said in my opening statement, there is a lot of 
confusion out there about how this is going to look and how it 
is going to continue.
    As you know, some of the LAPs have not been meeting when 
they were scheduled, and there is not a lot of information 
being shared right now. Maybe if you could just paint a picture 
for all of the Members of this Committee where the CARES 
process is going in general, that would I think be helpful.
    Dr. Perlin. Well, thank you very much. That, I think, would 
be useful.
    As you know, the history of the CARES project is that the 
Secretary received a report in 2004, former Secretary Principi, 
and also in that year came forward with a set of decisions. 
Those decisions required analysis, and this was to be a very 
transparent, open, community-oriented evaluation of the 
possibilities for these different campuses.
    We are at the point now of just completing what is called 
CARES Phase 1, which involved convening local advisory panels, 
made up of community leadership representatives, affiliated 
organization leadership, where that was part of the mix. They 
actually put forward, with the help of PricewaterhouseCoopers 
consultant, a variety of potential possibilities to make best 
use of the physical infrastructure and contemporize the sites 
for VA in the future.
    That Phase 1 culminated in a series of reports where some 
options were evaluated positively by the local advisory panel 
membership, and others were not well received. That winnowed 
down to a broad range of options for presentation to the 
Secretary.
    The Phase 2 of CARES, which will culminate after this, 
there were to actually be very detailed analyses down to 
specifications and costs of buildings and activities for 
selection of the options that the Secretary might choose from 
those presented to him by the CARES Phase 1 and LAP process 
input.
    Senator Murray. My time is up, but I appreciate that 
update.
    Dr. Perlin. Thank you.
    Senator Murray. Thank you, Mr. Chairman.
    Chairman Craig. Thank you, Patty.
    Senator Burr, any questions?

                STATEMENT OF HON. RICHARD BURR, 
                U.S. SENATOR FROM NORTH CAROLINA

    Senator Burr. Thank you, Mr. Chairman.
    Gentlemen, thank you. Dr. Perlin, great to see you.
    Not to state something that you don't already know, but 
North Carolina represents the largest growth of retired 
veterans in this great country that we live in. That has 
stimulated the plans for the addition of quite a few clinics 
across North Carolina of which three are currently in the queue 
and several more to come online between now and 2012.
    I want the record to show that that has to become reality, 
that the single most important thing for the VA to remember is 
that investment must go where the veterans are. To ignore the 
population shift in this country is to plan not to provide the 
level of care that I think individuals expect from us.
    Any departure from that plan for those clinics would, in 
fact, affect our ability to deliver that care in a real way.
    I want to raise two questions with you, if I can today. 
There was a decision to move the fee-based payments to private 
health care providers from Salisbury, North Carolina, to 
Virginia. I think that is current policy. I raise this issue 
only to make a point that I hope you know today, that there has 
been created a backlog of payments.
    In some cases, hospitals have turned veterans over to 
collection agencies because of the inability of the VA to 
reimburse them for services that they have, in fact, contracted 
for. I believe this is a situation that can easily be cleared 
up, if it is not already in the process. I hope that at least 
this example is not one that will be re-created anywhere else 
within the VA.
    Dr. Perlin. Well, Senator, first let me acknowledge that 
North Carolina is absolutely a high-growth area, and we are 
acutely aware of the population shifts there.
    Let me also, if I may, identify that some individuals 
brought that to my attention that there had been a backlog. We 
looked into that. I was told that that was eliminated. I will 
take your counsel today and go back and verify that there is 
not one delinquency in any of those accounts so that no veteran 
should ever have to bear the burden of a delay that might have 
been administrative.
    Senator Burr. I would appreciate it if you would do that. 
The appropriate thing for us to do is to ask, and I appreciate 
your willingness to go back and look at it.
    I can assure you that every Member of Congress would agree 
with the statement that the state of our health care system on 
the private side cannot float indefinitely to the VA the 
reimbursements that are needed. Somebody loses when that 
happens.
    The second issue is with the Salisbury facility itself. As 
I understand it, Salisbury has the second highest patient 
population growth as a percentage of the number of patients in 
the entire VA network. I think that is behind only Tampa, 
Florida.
    Can I leave here today with a comfort level that you have a 
grasp on that from a standpoint of what they are trying to 
provide in service to the number of people that they are trying 
to provide that service to, and that you understand that in the 
regards of the statement that I made, that funds have to follow 
where, in fact, the veterans are?
    Dr. Perlin. Senator, you can absolutely have confidence 
that funds will follow where the veterans are. The allocation 
mechanism, while it is delayed by about 20 to 24 months, works 
on the history and does just that. It puts the resources where 
veterans, in fact, migrate to. North Carolina is certainly a 
high-growth State.
    In terms of tracking to make sure that services are 
delivered timely, one of the areas that we follow vigilantly, 
or I think our network directors would probably say 
obsessively, is in terms of timeliness of care.
    I have been tracking in VISN 6. They are making great 
progress. As you know, nationally, over 9\1/2\ of every 10 
appointments is well within 30 days, and I will personally go 
back and look and review the Salisbury facility and make sure 
that they are performing as you and I would both want.
    Senator Burr. Well, I appreciate that. Again, I would note 
the fact that if, in fact, this growth in that one facility is 
as great as I have been told that it is, I am not sure that a 
24-month lag in the resources that reflect that type of growth 
necessarily provide them with the tools that they are going to 
need to provide the service that I think each one of you at the 
table has expressed that the VA wants to do.
    If you look at that and if, in fact, you find that the 
information that has been shared with me is accurate, I would 
only ask you to look at the timeliness of that reallocation of 
funds. Because I know if you took any private hospital in the 
country, and you injected a degree of growth in them, but told 
them it is going to be 24 months before there are any 
additional resources that come to provide that level of care, I 
am not sure that there is a hospital in the country that would 
survive that type of hit.
    Dr. Perlin. Your points, sir, are very well made. I can 
tell you, just looking at the numbers that I have before me, 
that Durham is in the top three of the highest growth of all 
networks across the country, and VA recognizes that already. We 
will go back and review the data even further.
    Senator Burr. Thank you.
    Dr. Perlin. Thank you, sir.
    Senator Burr. Thank you, Mr. Chairman.
    Chairman Craig. Senator Burr, thank you very much for those 
questions.
    I have one remaining question of this panel. Then I will 
turn back to Senator Murray.
    We all understand the unforeseen effects of Hurricane 
Katrina and what it has had on the CARES process and the 
overall capital planning issues. Reconstruction funding 
represents nearly a quarter of your request today. I am 
interested in knowing how VA is looking at opportunities for 
further CARES objectives through partnering with DOD.
    For instance, are you actively looking for enhanced 
opportunities to further CARES progress through new 
collaborations with DOD following the most recent BRAC round?
    Dr. Perlin. Mr. Chairman, we are absolutely looking at the 
opportunities for partnership following BRAC. Let me divide 
this into two areas. The first one is the actual partnering on 
clinical services, as will be occurring at our Biloxi facility, 
where we share resources and not reduplicate specialty services 
such as radiation oncology, with Keesler Air Force Hospital.
    In fact, right now, there is discussion even to place one 
very high-tech piece of equipment, a linear accelerator, 
actually on the VA side so that there is sharing and non-
reduplication of services.
    Beyond that, we actually have submitted a number of 
expressions of interest in, I think, a dozen sites where there 
are opportunities for VA activities to be improved by making 
use of sites that become available as a result of the BRAC 
process.
    Chairman Craig. Good. I think that is an opportunity. I am 
glad you are looking at it as intently as you are.
    With that, let me turn to Senator Murray. Patty?
    Senator Murray. Dr. Perlin, I am really worried that the 
lack of adequate research space is really leading to the VA 
losing some of its best and brightest researchers to academia 
and the private sector. With those researchers and their staff 
go the breakthroughs on diabetes and PTSD and MS and other 
conditions that affect the veterans populations, not to mention 
the NIH and corporate and private funding that currently 
doubles the VA's research investment.
    Can you share with us what the VA's plan for the next 5 
years is when it comes to expanding research facility space?
    Dr. Perlin. Senator, first, let me absolutely agree with 
the importance of research. It has a number of simultaneous 
advantages. First and most importantly, it helps us improve the 
health and well-being of America's veterans.
    Second, it is also one of the reasons that some of the most 
stellar clinicians come to VA. They have the opportunity to 
teach and be in an academic environment. They are absolutely 
attached to the mission of serving veterans, and the ability to 
conduct research is part of that.
    In point of fact, the CARES plan puts forward as much as 
half a billion dollars of ultimate research space investment. 
Of course, that is a 20-year plan. We realize that needs are 
even more pressing.
    We have made initial improvements in terms of some of the 
security of research areas, and that was something that was 
really a must-do to begin with. I note that our resources for 
research infrastructure improvement come not only from the 
appropriated budget, but I would be remiss if I didn't 
acknowledge the great work of the national or the nonprofit 
research and education foundations.
    These entities actually help also to enhance the research 
infrastructure, including not just the physical space, but also 
some of the very specialized research equipment.
    Senator Murray. Well, let me ask you specifically about the 
Puget Sound VA medical center, which is the sixth-largest VA 
research facility. According to the CARES report, the medical 
center needs nearly 260,000 square feet of research today, and 
it has less than half. It has about 123,000 square feet.
    How is the VA going to get the space that is required for 
the research at the Seattle VA with your current budget 
request?
    Dr. Perlin. Senator, as you may know, I have been out to 
the Seattle VA a couple of times, and they have not only 
phenomenal basic science research, but they also have one of 
the world's best health services research facilities as well. 
In fact, right now, they are resolving that by leasing some of 
the space in town.
    For a more detailed answer, I would have to get back to you 
for the record, if I might?
    Senator Murray. OK. Well, given the need for the additional 
research space there--and I am glad you have been out there--
why did OMB recently deny an effort by the VA to build a new 
Seattle research facility, and are you going to push for that 
facility?
    Dr. Perlin. I am going to support the research overall, but 
I would be really remiss if I didn't look into the specifics. 
If I might get back to you for the record, I would appreciate 
it.
    Senator Murray. OK. Well, I will just make the comment that 
I am really worried that VA researchers are leaving our VA for 
universities, for private sector, and they are taking with them 
a substantial amount of research funds. In all honesty, given 
the nature of medical and research community that I know you 
know really well, Dr. Perlin, you have got to ask why would the 
VA's best and brightest within the research community continue 
to work with the VA?
    I think we have to make a concerted effort to have the 
kinds of facilities that will attract the best and the 
brightest because their research is critical for our veterans' 
community. It is different than what they do in the private 
research facilities. We need to make sure we have the research 
available for our veterans' population and don't lose our 
access to that.
    Thank you, Mr. Chairman.
    Chairman Craig. Senator Murray, thank you.
    Before this Committee stands down, we have just been joined 
by our colleague Senator Thune. Do you have any questions, 
particularly of Dr. Perlin and his team?

                 STATEMENT OF HON. JOHN THUNE, 
                 U.S. SENATOR FROM SOUTH DAKOTA

    Senator Thune. Mr. Chairman, I don't know. I have got maybe 
a couple of questions I could submit for the record. I just can 
make an observation.
    I appreciate very much the panel for being here today and 
addressing this important subject. Thank you, Mr. Chairman, for 
holding a hearing to consider the construction and lease 
authorization needs of the Veterans' Administration.
    I understand the focus of the hearing is to look at major 
construction projects of the VA, and I would simply say that as 
a Member of this Committee from a sparsely populated rural 
State, I believe it is important to mention, too, the 
construction projects needed to accommodate the needs of our 
rural veterans, and specifically our community-based outpatient 
clinics.
    We have currently eight of those operating in South Dakota. 
They cover a wide geography in my State, from Pierre to Winter 
to the Pine Ridge Indian Reservation and the Rosebud Indian 
Reservation. They are very critical to our rural veterans, and 
I believe that many of those veterans often travel hundreds of 
miles to access adequate health care services.
    Having those facilities available in rural areas is awfully 
important. As part of my efforts to improve access to health 
care for our rural veterans, I have been pleased to introduce, 
along with Senator Salazar, a bill called the Rural Veterans 
Care Act of 2006, which will create an assistant secretary for 
rural veterans at the Department of Veterans Affairs to 
basically, the purpose being to improve the care provided to 
veterans living in rural areas.
    Also, implement a pilot program to evaluate the feasibility 
and advisability of utilizing various means to improve access 
of veterans who reside in highly rural or geographically remote 
areas to health care services. I would hope that my colleagues 
on the Committee will support that legislation. I also want to 
thank Senator Burr for cosponsoring it as well.
    I know that the VA Secretary's 2004 Capital Asset 
Realignment for Enhanced Services, or CARES, decision 
determined the need to enhance capacity for outpatient care in 
South Dakota and targeted two new CBOCs for priority 
implementation by 2012--one in Wagner, South Dakota; the other 
in Watertown.
    The Secretary has determined that the VISN in which South 
Dakota is located is below access standards. That the 
implementation of the CBOCs in Winter and Wagner would enable 
that VISN to meet its national access standard. I am keenly 
interested in the progress the VA is making toward 
implementation of the CBOCs planned to be built in Watertown 
and Wagner.
    I appreciate the good work that the VA has done and note 
the presence of Dr. Perlin and Mr. Henke here today, and would 
like to simply bring to their attention the matter of building 
these community-based outpatient clinics in South Dakota as 
soon as possible. It is a top priority of mine, and I look 
forward to any comments the panel may have about ways to 
expedite that process for implementation.
    Again, I want to thank you, Mr. Chairman, for holding the 
hearing, and I appreciate your ongoing interest in making sure 
that we have got high-quality health care available to veterans 
across this country.
    I offer that up. Feel free to comment if you would like. My 
sense is the Chairman is ready to wrap this hearing up. I don't 
want to belabor the point, but I did want to make that point. 
It is a priority of mine, and I hope something that we can work 
together on.
    Thank you, Mr. Chairman.
    Chairman Craig. Any comments you would like to make in 
return, Dr. Perlin?
    Dr. Perlin. Thank you, Mr. Chairman and Senator Thune.
    The Wagner and Watertown clinics are obviously on our 
radar, and we appreciate your support of the veterans in South 
Dakota and your identification of this need to us. It is, as I 
say, on the radar, and we will be evaluating the ability to 
move these clinics forward.
    Chairman Craig. Dr. Perlin, gentlemen on the panel, thank 
you very much for your testimony.
    We will continue to track and work with you to keep CARES 
on track as best we can and to recognize the commitment, the 
obligation, and the demographics of the veterans populations in 
our country.
    Again, gentlemen, thank you very much for being here.
    We have one last panel. We will ask Dennis Cullinan, 
director for the National Legislative Service for the Veterans 
of Foreign Wars, to come forward, please.
    Dennis, again, welcome before the Committee.
    Mr. Cullinan. Thank you very much, Mr. Chairman.
    Chairman Craig. Please proceed.

STATEMENT OF DENNIS M. CULLINAN, DIRECTOR, NATIONAL LEGISLATIVE 
     SERVICE, VETERANS OF FOREIGN WARS OF THE UNITED STATES

    Mr. Cullinan. I shall.
    On behalf of the men and women of Veterans of Foreign Wars 
and the constituent members of the IVA-VSOs, I would like to 
thank you for the opportunity to testify at today's important 
hearing. The VA Construction budget is a critical component of 
the veterans health care system, yet it is frequently one that 
goes unappreciated, at least until problems arise.
    Over the last few years, the construction budget has been 
overshadowed by the Capital Assets Realignment for Enhanced 
Services, the CARES process. We will continue to support CARES, 
so long as VA returns to the primary emphasis of the enhanced 
services portion of CARES.
    We accept that locations and missions of some VA facilities 
may change, so long as these changes allow more resources to be 
devoted to medical care rather than to the maintenance of old 
buildings and wasted space, as well as to accommodate modern 
methods of health care delivery.
    It is time to move forward on construction projects called 
for under CARES, and we are concerned that the Administration's 
paltry request indicates a continued unwillingness to provide 
proper funding. It makes no sense to have spent millions of 
dollars on a planning process not to carry it out.
    We must not lose sight of the health care resources that 
will have been wasted as VA facilities have been forced to make 
do with insufficient construction budgets while waiting for 
CARES to play out. VA and veterans in need have far too much 
invested in this plan.
    Further, along with adversely affecting veterans health 
care, delays cost money. Construction costs have soared 
throughout the country, especially because of massive 
rebuilding efforts in the gulf. Construction inflation is 
roughly 9 percent nationwide and can fluctuate regionally. In 
some parts of the South, for example, inflation is over 30 
percent.
    Pushing these construction projects long into the future 
will only increase the amount of money these projects will need 
in total. Delaying implementation any further would be fiscally 
irresponsible.
    Of particular importance is funding for seismic 
corrections. Currently, 890 of VA's 5,300 buildings have been 
deemed at significant seismic risk, and 73 Veterans Health 
Administration buildings are at exceptionally high risk of 
catastrophic collapse or major damage.
    We also call for funding of an architectural master plan. A 
big picture design is critical. As the cost of construction 
rises with inflation, the importance of optimal planning 
becomes paramount.
    We believe that the architectural master plan will also 
provide a mechanism to address three critical programs the 
CARES study omitted. Specifically, these are long-term care, 
severe mental illness, and domiciliary care. These programs 
should be addressed as quickly as possible.
    Another important issue involves the rebuilding efforts in 
the gulf coast region. We applaud your strong effort in this 
area, Mr. Chairman. The gulf emergency must be managed with a 
special allocation outside of VA's regular construction and 
medical care appropriations, and providing for the needed 
dollars within the emergency supplemental is a sound and 
correct course of action. Again, thank you.
    Although the focus of today's hearing is CARES 5-year plan, 
I would be remiss if I didn't take the opportunity to address 
one other major shortfall--inadequate nonrecurring maintenance 
funding. It is especially pressing because NRM funding has 
lagged far behind what is needed.
    By industry standards, VA should spend no less than $1.6 
billion in fiscal year 2007 alone. Unfortunately, the 
Administration has only allocated $514 million for NRM, which 
will only make the already backlogged maintenance situation 
worse.
    Mr. Chairman, construction certainly isn't as high profile 
as medical care or claims processing, but it is an integral 
part and an essential part of VA in how it goes about carrying 
out its mission now and into the future.
    CARES has provided us with a blueprint on how to transform 
the system and how to more efficiently utilize our resources. 
Pushing forward on CARES and properly funding all necessary 
construction projects, although costly, is the right step and 
is the right thing to do now.
    However, should it emerge that CARES construction projects 
will not be carried out or properly funded, we would have to 
take a dramatic look at the situation.
    This concludes my testimony, and I will be happy to answer 
any questions you may have.
     Prepared Statement of Dennis M. Cullinan, Director, National 
   Legislative Service, Veterans of Foreign Wars of the United States
    Mr. Chairman and Members of the Committee:
    On behalf of the 2.4 million men and women of the Veterans of 
Foreign Wars of the U.S. and our Auxiliaries, I would like to thank you 
for the opportunity to testify at today's important hearing. The VA 
construction budget is a critical component of the veteran's health 
care system, yet it is frequently the one that goes unappreciated, at 
least until problems arise.
    VA has an aging, but massive, physical infrastructure. It cares for 
over 5,300 buildings and over 32,000 acres of land throughout the 
country. Although most attention is focused on the patient and delivery 
side of health care, the physical plant is often just as critical. 
Proper facilities and proper maintenance are essential for the 
effective delivery of health care to this Nation's veteran population. 
It is precisely because of VA's aging infrastructure and because of the 
growing needs of veterans, that increased attention must be paid.
    Unfortunately, over the last several fiscal years, major 
construction has lagged far behind what VA actually has needed. In 
fiscal year 2006, just $607 million was allocated. In the President's 
budget request for fiscal year 2007, he committed a paltry $399 million 
for major construction, a cut of over $200 million. This is 
unacceptable.
    Over the last few years, the construction budget has been 
overshadowed by the Capital Assets Realignment for Enhanced Services 
(CARES) process. CARES aims to reorganize and develop a plan for VA's 
physical infrastructure to properly plan for the future needs of 
veterans, and, in turn, to realize improved health care services. It 
has been a long and difficult process, but it is one that we have 
strongly supported.
    We will continue to support CARES so long as VA returns to the 
primary emphasis and intent: the ``ES,'' enhanced services, portion of 
CARES. We accept that locations and missions of some VA facilities may 
change, so long as these changes allow more resources to be devoted to 
medical care rather than to the maintenance of old buildings and wasted 
space, as well as to accommodate modern methods of health-care 
delivery.
    In July 2004, the previous VA Secretary testified before the 
Subcommittee on Health of the House Veterans' Affairs Committee with 
respect to the CARES process. He stated that CARES ``reflects a need 
for additional investments of approximately $1 billion per year for the 
next 5 years to modernize VA's medical infrastructure and enhance 
veterans' access to care.''
    Using the Secretary's estimate as a baseline, and accounting for 
the CARES projects already being assessed, we, as part of the 
Independent Budget, have called for $860 million to be funded for CARES 
projects.
    It is time to move forward on these projects, and we are concerned 
that the Administration's paltry request indicates a continued 
unwillingness to provide proper funding. When we supported CARES in 
prior years' testimonies, we warned that delays in construction were 
not acceptable because of our concern that funding would not be put in 
place once CARES was ready to be implemented. Thus far, our fears were 
correct. It makes no sense to have spent the millions of dollars on the 
planning process only to shelve it and not implement it. That, too, 
doesn't factor in the health care resources that have been wasted as VA 
facilities have been forced to make do with an insufficient 
construction budget under the guise of waiting for CARES to play out. 
VA has far too much invested in this sound plan to delay and not 
properly carry it out.
    Further, delays cost money. Construction costs have soared 
throughout the country, especially because of the massive rebuilding 
efforts in the gulf coast region. Construction inflation is roughly 9 
percent nationwide, and can fluctuate regionally--in some parts of the 
south, for example, inflation is over 30 percent. Pushing these 
construction projects long into the future will only increase the 
amount of money these projects will need in total. Delaying 
implementation any further would be fiscally irresponsible.
    CARES is just one component of the Major Construction budget. For 
overall Major Construction projects, we and the Independent Budget are 
calling for $1.447 billion in funding:

------------------------------------------------------------------------
                                                             (Dollars in
Construction, Major Appropriation FY 2007 IB Recommendation   thousands)
------------------------------------------------------------------------
CARES......................................................     $860,000
Architectural Master Plans Program.........................      100,000
Historic Preservation Grant Program........................       25,000
Seismic....................................................      285,000
Advanced Planning Fund (VHA)...............................       43,000
Asbestos Abatement.........................................        6,000
Claims Analyses............................................        3,000
Judgment Fund..............................................       10,000
Hazardous Waste............................................        3,000
NCA........................................................       89,000
Design Fund................................................        6,000
Advanced Planning Fund.....................................       11,000
Staff Offices..............................................        6,000
                                                            ------------
    Total, Major Construction..............................   $1,447,000
------------------------------------------------------------------------

    The President's request falls far short of that amount, providing 
just $399 million for major construction, over $1 billion short of what 
we feel is needed.
    Of particular importance on that list is funding for seismic 
corrections. Currently, 890 of VA's 5,300 buildings have been deemed at 
``significant'' seismic risk, and 73 VHA buildings are at 
``exceptionally high risk'' of catastrophic collapse or major damage. 
We understand that the list of major construction priorities that VA 
has provided to Congress includes the seven facilities most at risk of 
damage. Accordingly, this will increase VA's need for construction 
funding. This is a chance to be proactive and fix a problem before the 
health and safety of VA's patients and workers is further compromised.
    We also call for funding for an architectural master plan. Without 
this plan, the benefits of CARES will be jeopardized by hasty and 
shortsighted construction planning. Currently, VA plans construction in 
a reactive manner--i.e., first funding the project then fitting it on 
the site. Furthermore, there is no planning process that addresses 
multiple projects; each project is planned individually. ``Big 
picture'' design is critical so that a succession of small projects 
don't paint the facility into the proverbial corner. If all projects 
are not simultaneously planned, for example, the first project may be 
built in the best site for the second project. The development of 
master plans will prevent shortsighted construction that restricts, 
rather than expands, future options. As the cost of construction rises 
with inflation, the importance of optimal planning becomes paramount.
    We believe that architectural master planning will also provide a 
mechanism to address the three critical programs that the CARES study 
omitted. Specifically, these are long-term care, severe mental illness, 
and domiciliary care. These programs should be addressed as quickly as 
possible.
    Another important issue involves the rebuilding efforts in the gulf 
coast region. Last year's disastrous storms resulted in the total 
destruction of the Gulfport VA Medical Center, near-destruction of the 
New Orleans VA Medical Center, and major damage to other VA facilities 
in the region. Understand that we have the deepest sympathies for the 
veterans and VA staff in the gulf coast region, but we urge Congress 
not to allow a diversion of funds VA needs to revamp infrastructure 
nationwide. The gulf emergency must be managed with a special 
allocation outside VA's regular construction and medical care 
appropriations. It would be patently unfair to delay other projects for 
lack of funds necessitated by reallocation of available funds to the 
gulf coast region.
    Although the focus of today's hearing is the Major Construction 
account, I would be remiss if I didn't take the opportunity to address 
one other major shortfall with VA's overall construction budget: non-
recurring maintenance (NRM).
    NRM is currently funded out of the Medical Care account, in a line 
item separate from other construction funding. Since it's considered 
medical spending, it is allocated according to the Veterans Equitable 
Resource Allocation (VERA) formula. As such, NRM funding does not 
necessarily go to the hospitals that most need it. Projects are not 
triaged and evaluated for need as they are with VA's other construction 
projects. This certainly is not the most effective way to utilize these 
smaller, but essential, dollars.
    It is especially important because NRM funding has lagged far 
behind what has been needed. Price-Waterhouse, following standard 
industry practices, has recommended that VA spend at least 2-4 percent 
of the value of its building on NRM. These small projects, such as 
replacing a roof or improving the fire alarm system, are necessary for 
the safety of patients, but also to maintain the integrity of the 
building so that it is viable for its entire lifespan. Accordingly, VA 
should spend no less than $1.6 billion in fiscal year 2007. 
Unfortunately, the Administration has only allocated $514 million for 
NRM, which will only make the already backlogged maintenance lists 
grow.
    Further, because maintenance comes out the medical care account, 
not the construction budget, much of the funding for the last few years 
has been used to provide medical care. VA needs to cover deferred 
maintenance. In fact, according to VA's own assessment, which is 
conducted on 3-year cycles, the investment necessary to bring all 
facilities currently rated ``D'' or ``F'' up to an acceptable level is 
$4.9 billion. There should not be a choice between fixing a roof and 
buying medical supplies. It is Congress' job to properly allocate 
funding for both.
    Mr. Chairman, construction certainly isn't as high profile as 
medical care or claims processing, but it is an integral part of VA and 
how it goes about carrying out its mission. CARES has provided us with 
a blueprint on how to transform the system, and how to efficiently 
utilize our resources. Pushing forward on CARES and properly funding 
all necessary construction projects, although costly, is the right step 
to do just that.
    This concludes my testimony, and I would be happy to answer any 
questions that you or the Members of this Committee may have.

    Chairman Craig. Well, Dennis, thank you very much.
    I have got a couple of questions, and the Ranking Member 
has just returned. He may have a question or so of you.
    I would like to ask you the same question--I think in part 
you have already answered it--that I asked VA regarding the 
2007 minor construction budget request. VA fiscal year 2007 
budget request for minor construction is $198 million, of which 
$150 million will be dedicated to the CARES project.
    Those figures are significantly below recent years. Do you 
believe the $198 million annually is adequate for VA to 
maintain the infrastructure needed to deliver its world-class 
care?
    Mr. Cullinan. In a word, no, Mr. Chairman. We have 
testified in the past in recent testimony that about $600 
million for minor construction alone is required. Additionally, 
with the deficit in nonrecurring maintenance funding, the 
problems associated with not recapitalizing the system at a 
proper rate, we think this would be disastrous.
    Chairman Craig. Dennis, is VFW actively looking for 
enhanced opportunities for VA to collaborate with DOD following 
the most recent BRAC round? You heard the question I asked of 
Dr. Perlin. Are you looking at that? Do you see any enhanced 
opportunities for furthering CARES objectives through this 
approach?
    Mr. Cullinan. We are certainly supportive of areas where it 
will work. Fitzsimons is one such example.
    Chairman Craig. It is a good example, yes.
    Mr. Cullinan. We have always maintained, however, along 
with the other veterans service organizations, that it is 
essential that VA and DOD health care systems maintain their 
separate identities and their separate approaches to providing 
health care.
    We do believe that VA and DOD and, indeed, other areas that 
associations and sharing arrangements can be highly beneficial 
so long as great care is taken to ensure that veterans remain a 
primary focus in these arrangements.
    Chairman Craig. OK. Dennis, thank you.
    Let me turn to my colleague Senator Akaka for any questions 
he might have.
    Senator Akaka. Thank you very much, Mr. Chairman.
    Mr. Cullinan, as director of the National Legislative 
Service of Veterans of Foreign Wars of the United States, you 
have a broad view of how CARES is doing across the country. 
Your testimony reflected the underfunding of various 
construction accounts.
    In my mind, if the underfunding trend continues, VA will 
never be able to accomplish the enhancements that are suggested 
under CARES. The Chairman has just asked you about whether you 
thought funding was adequate.
    Do you think CARES will turn into something that is 
detrimental to veterans and the VA health care system as a 
whole?
    Mr. Cullinan. Thank you, Senator Akaka.
    One of our greatest concerns all along, fears really, has 
been that CARES will devise--will turn into a means to actually 
downsize the VA health care system without providing the proper 
new facilities and services.
    In testimony earlier today, it was indicated that the first 
phase of CARES 1 is now in the Secretary's hands. This is 
something we are going to watch. If nothing good comes of this 
for VA and veterans, I think that then will be the time whether 
we, veterans service organizations, and, indeed, the Congress 
have to decide whether CARES should come to an end.
    It would be a shame because it is a blueprint to do good 
things for VA. What has been going on is, as a result of CARES, 
needed construction projects have been delayed. If this first 
Phase 1 doesn't emerge with some productive recommendations and 
funding patterns, then it will be time to look at ending it.
    Senator Akaka. Mr. Cullinan, I would like your comments 
regarding nonrecurring maintenance, NRM. This is a big priority 
of mine for the Department of Defense as well as for VA. I 
agree that VA needs to pay a lot of attention to NRM.
    I was particularly disturbed by allegations that NRM funds 
were being used last year to address the VHA funding shortfall. 
I welcome any additional thoughts you may have on this issue.
    Mr. Cullinan. Senator Akaka, that is a conundrum that we 
are often caught in. You know, it could be put this way. One 
could argue, well, what do you want to do? Do you want to paint 
a room or provide a veteran needed medical services? Of course, 
the answer is needed medical services.
    In the long-term and, indeed, the short-term, finally these 
recurring maintenance projects have to be carried out. It 
really comes down to providing enough money.
    Now NRM is funded within the medical care appropriation as 
opposed to the other construction projects, and the money has 
to be in there for those projects. We are now placed in that 
kind of a bind.
    Senator Akaka. Well, thank you very much.
    Thank you very much, Mr. Chairman.
    Chairman Craig. Danny, thank you very much.
    Dennis, thank you for your testimony. You will, I am sure, 
continue to be observant, as we will be, as we move through 
this CARES process.
    There is no question that we do not want it to turn into 
what you have expressed it might turn into. Its original intent 
is something that I think was worthy and appropriate, and we 
are going to watch it.
    The world of health care delivery changes, and we should 
not assume that any model we used in 1970 is a model to be used 
in 2010. It is simply a different world, and it is important we 
transition. Because our goal is, you said it, it is not 
facility. It is service. How that service gets delivered is 
important.
    Thank you very much.
    I guess that concludes our effort here today. The Committee 
will stand adjourned.
    [Whereupon, at 3:30 p.m., the Committee was adjourned.]

                            A P P E N D I X

                              ----------                              

     Prepared Statement of Hon. Mike DeWine, U.S. Senator from Ohio

    I want to thank Chairman Craig and Ranking Member Akaka for 
inviting me to support a construction extension for the Louis Stokes VA 
Medical Center in Cleveland. I appreciate your steadfast dedication for 
quality health care and other social services for our Nation's 
veterans. I feel strongly that quality and accessibility should be top 
considerations in providing healthcare and social services to our 
veterans and support this effort aimed at providing additional superior 
care to our increasing population of veterans.
    As you know, construction is underway to consolidate the 
Brecksville and Wade Park VA inpatient facilities in Northeast Ohio. 
This consolidation will improve the quality of care available to 
veterans in Northeast Ohio and will result in decreased operation 
costs, allowing the facility to reinvest those funds inpatient care 
rather than facility maintenance and duplicate programs. Consolidating 
the two facilities is expected to save $27 million per year, which, 
under the enhanced use lease agreement will stay at the center and be 
redirected to providing patient care.
    Once completed, the Louis Stokes VA Medical Center will provide 
more services than either facility currently provides, including: a 
poly-trauma center, spinal cord nursing home, and a blind 
rehabilitation center. I want to highlight two of the improved services 
that will be available to veterans in Northeast Ohio.
    First, a new nursing home will be constructed at the Wade Park 
facility. Currently, patients at the nursing home and in mental health 
programs at Brecksville must be sent by ambulance or helicopter to and 
from Wade Park. This delays their care, and costs additional money that 
could otherwise be spent on patient care. With a consolidated facility, 
patients can move from long-term to acute or intensive care in a matter 
of minutes, without going outside.
    Second, the consolidation will allow Cleveland to be the site of a 
Blind Rehabilitation Center, providing specialty rehabilitation to 
visually impaired veterans. Cleveland is home to more than 4,700 
veterans who are eligible to receive services as blind veterans. 
Currently these veterans wait up to 1 year to receive this type of 
rehabilitation and must travel to Chicago to receive it.
    In addition to providing superior care to the veterans of northeast 
Ohio, the consolidated center will improve economic conditions in both 
Cleveland and Brecksville. The new center will bring as many as 1,300 
jobs to Cleveland and is incorporated into a local urban renewal 
initiative in the Wade Park neighborhood. In addition, it will free up 
102 acres of land for development in Brecksville. The Brecksville City 
Council supports the private development of this land.
    I want to again thank the Committee for considering a construction 
extension for the Louis Stokes VA Medical Center in Cleveland. This 
facility is truly needed to provide the top quality medical care our 
veterans deserve and have come to expect. In the words of Teddy 
Roosevelt in 1903, ``A man who is good enough to give his blood for his 
country is good enough to be given a square deal afterwards.'' The 
Louis Stokes VA Medical Center will provide the ``square deal'' our 
veterans deserve.
                               __________

  Prepared Statement of Hon. Trent Lott, U.S. Senator from Mississippi

    I would like to thank Chairman Craig and Ranking Member Akaka for 
having this hearing on construction and lease authorization needs.
    Mr. Chairman, I ask for the assistance of this distinguished 
Committee in reconstituting as soon as possible the full range and 
depth of VA healthcare in Mississippi that was available prior to 
Hurricane Katrina.
    Prior to Hurricane Katrina, the Gulf Coast Veterans Health Care 
System was a five-division system with major hospitals at Gulfport and 
Biloxi, Mississippi, and three community-based outpatient clinics 
located in Alabama and Florida.
    Approximately 242,000 veterans live in Mississippi today, and 
almost 40,000 of those veterans received medical care last year from 
the VA. In fiscal year 2003 alone, VA facilities in Mississippi had 
8,966 inpatient admissions and provided 633,758 outpatient visits. Even 
in the wake of Hurricane Katrina, the number of veterans in my State is 
projected to significantly increase, not decrease.
    The Biloxi VA hospital serves as the general medical facility, 
providing outpatient and specialty care and inpatient surgical 
services. Prior to the storm, the Gulfport hospital provided inpatient 
and outpatient mental health services and also housed an Alzheimer's 
dementia unit. Gulfport also included a psychology unit, rehabilitation 
medicine including a therapeutic pool, primary care and audiology.
    Since the Gulfport facility sustained major damage in the 
hurricane, it is my understanding that the Veterans' Administration 
intends to permanently close the facility and transfer all Gulfport 
health care services to the Biloxi VA and Keesler Medical Center.
    In this regard, the recent markup of the 2006 Emergency 
Supplemental, by the Senate Committee on Appropriations, included a 
provision directing the Secretary of Veterans Affairs to transfer the 
title of the land associated with the VA's medical facility in 
Gulfport, Mississippi, to the city of Gulfport.
    Regarding the full reconstitution of VA healthcare on the 
Mississippi Coast, the CARES Commission had already proposed in 2004 to 
transfer all Gulfport health care services to the Biloxi VA or Keesler 
hospital, renovate the nursing home in Biloxi, and establish a 36-bed 
blind rehabilitation center at Biloxi.
    Last fall, it was my understanding that the VA was engaged ``in 
discussions'' with the Air Force to determine if there are 
opportunities for healthcare collaboration with Keesler Air Force Base 
in Biloxi as the military replaces their ``bed tower'' as part of the 
Base Realignment and Closure (BRAC) process. However, as I noted in a 
statement before this Committee last November, it is not evident that 
the Air Force has agreed to take over any of the medical services 
previously performed by the VA in Gulfport.
    In fact, there is no evidence in the 2007 President's Budget 
Request that the Air Force will embark on any construction or augment 
any staff at Keesler Hospital in order to accommodate VA patients. 
Consequently, I still believe it is ill-advised to assume that the Air 
Force has agreed to take over any of the medical services previously 
performed by the VA in Gulfport.
    The concept of collaborative healthcare will only work if the VA 
and DOD formally agree on the distribution of capability between 
Keesler Hospital and the Biloxi VA, and budget for the infrastructure 
and staff that will be required to achieve that goal and maintain it.
    Time is now of the essence. Unless the VA and Air Force can agree 
in the next 30 days regarding a cooperative plan for military and 
veterans' healthcare, and commit to fully fund that plan in the fiscal 
year 2008 budget, I urge the Committee to legislate that the VA 
expedite the full and independent reconstitution of VA healthcare 
services on the Mississippi Coast. At the least, this would include 
construction of a new ``Inpatient Blind Rehabilitation Center'' and bed 
tower(s) at the Biloxi VA and renovation of the Biloxi nursing home 
care unit.
    To facilitate such construction and renovation, the Emergency 
Supplemental Appropriation of December 2005 included $1.2 billion to 
reestablish VA medical care on the gulf coast, with most of that money 
designated to replace the VA hospital in New Orleans (which was flooded 
on the 1st floor, just like Keesler hospital).
    Of that $1.2 billion, I understand that less than 20 percent of 
that money is available to reestablish VA healthcare for 
Mississippians, by building a new ``bed tower'' at the Biloxi VA.
    Further, the recent markup of the 2006 Emergency Supplemental by 
the Senate Committee on Appropriations included an additional $623 
million for major VA construction projects in New Orleans and Biloxi.
    Mr. Chairman, as the Committee does its important work of 
considering how best to invest in construction of VA facilities, I urge 
you to support the following:
    (1) Commit to reestablishing the full range and depth of VA medical 
capability that was available in Mississippi prior to Hurricane 
Katrina;
    (2) Authorize the VA to proceed with design and construction of, at 
the least, the new ``Inpatient Blind Rehabilitation Center'' and bed 
tower(s) at the Biloxi VA and renovation of the Biloxi nursing home 
care unit; and
    (3) If veterans' medical care could be further augmented through a 
partnership between the VA and Keesler hospital, the Committee may 
consider asking the Air Force and the VA to submit a detailed plan of 
action to the Congress within the next 30 days to effect such a 
strategy, including a commitment to fully fund the plan in the fiscal 
year 2008 President's budget request.
    Mr. Chairman, thank you again for the opportunity to participate in 
this hearing.
  

                                  
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