19–006

108TH CONGRESS REPORT " HOUSE OF REPRESENTATIVES ! 1st Session 108–213

HEALTH CARE FOR VETERANS OF PROJECT 112/PROJECT 

SHAD ACT OF 2003

JULY 16, 2003.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. SMITH of New Jersey, from the Committee on Veterans’ Affairs, 

submitted the following 

R E P O R T 

[To accompany H.R. 2433] 

[Including cost estimate of the Congressional Budget Office]

The Committee on Veterans’ Affairs, to whom was referred the 

bill (H.R. 2433) to amend title 38, United States Code, to authorize 

the Secretary of Veterans Affairs to provide veterans who participated in certain Department of Defense chemical and biological 

warfare testing to be provided health care for illness without requirement for proof of service-connection, having considered the 

same, reports favorably thereon with amendments and recommends that the bill as amended do pass.

The amendments are as follows: 

Strike all after the enacting clause and insert the following:

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Health Care for Veterans of Project 112/Project 

SHAD Act of 2003’’. 

SEC. 2. PROVISION OF HEALTH CARE TO VETERANS WHO PARTICIPATED IN CERTAIN DEPARTMENT OF DEFENSE CHEMICAL AND BIOLOGICAL WARFARE TESTING. 

Section 1710(e) of title 38, United States Code, is amended—

(1) in paragraph (1), by adding at the end the following new subparagraph: 

‘‘(E) Subject to paragraphs (2) and (3), a veteran who participated in a test conducted by the Department of Defense Deseret Test Center as part of a program for 

chemical and biological warfare testing from 1962 through 1973 (including the program designated as ‘Project Shipboard Hazard and Defense (SHAD)’ and related 

land-based tests) is eligible for hospital care, medical services, and nursing home 

care under subsection (a)(2)(F) for any illness, notwithstanding that there is insufficient medical evidence to conclude that such illness is attributable to such testing.’’. 

(2) in paragraph (2)(B), by striking out ‘‘paragraph (1)(C) or (1)(D)’’ and inserting ‘‘subparagraph (C), (D), or (E) of paragraph (1)’’; and 

(3) in paragraph (3)—

(A) by striking ‘‘and’’ at the end of subparagraph (B); 

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(B) by striking the period at the end of subparagraph (C) and inserting 

‘‘; and’’; and 

(C) by adding at the end the following new subparagraph: 

‘‘(D) in the case of care for a veteran described in paragraph (1)(E), after December 31, 2005.’’. 

SEC. 3. IMPROVEMENTS TO THE RETENTION AND RECRUITMENT OF HEALTH CARE PROFESSIONALS. 

(a) PROMOTION STANDARDS FOR HEALTH CARE PERSONNEL.—Subsection (c) of 7403 

of title 38, United States Code, is amended by striking ‘‘Promotions’’ and inserting 

‘‘Consistent with subsection (a) of section 7422 of this title, and notwithstanding 

subsection (b) of that section, promotions’’. 

(b) PROMOTIONS FOR NURSES WHO DO NOT HAVE BACCALAUREATE DEGREES.—

Such section is further amended by adding at the end the following new subsection: 

‘‘(h) In a case in which a registered nurse has accomplished the performance elements required for promotion to the next grade, the lack of a baccalaureate degree 

in nursing shall not be a bar to promotion to that grade, and in such a case the 

registered nurse shall not be denied a promotion on that basis.’’. 

SEC. 4. ADDITIONAL PAY FOR SATURDAY TOURS OF DUTY FOR ADDITIONAL HEALTH CARE 

WORKERS IN THE VETERANS HEALTH ADMINISTRATION. 

(a) IN GENERAL.—Section 7454(b) of title 38, United States Code, is amended by 

adding at the end the following new paragraph: 

‘‘(3) Employees appointed under section 7408 of this title shall be entitled to additional pay on the same basis as provided for nurses in section 7453(c) of this title.’’. 

(b) APPLICABILITY.—The amendment made by subsection (a) shall apply with respect to pay periods beginning on or after the date of the enactment of this Act. 

SEC. 5. COVERAGE OF EMPLOYEES OF VETERANS’ CANTEEN SERVICE UNDER ADDITIONAL 

EMPLOYMENT LAWS. 

(a) COVERAGE.—Paragraph (5) of section 7802 of title 38, United States Code, is 

amended by inserting before the semicolon a period and the following: ‘‘An employee 

appointed under this section may be considered for appointment to a Department 

position in the competitive service in the same manner that a Department employee 

in the competitive service is considered for transfer to such position. An employee 

of the Service who is appointed to a Department position in the competitive service 

under the authority of the preceding sentence may count toward the time-in-service 

requirement for a career appointment in such position any previous period of employment in the Service’’. 

(b) TECHNICAL AMENDMENTS.—Such section is further amended—

(1) by striking the semicolon at the end of each of paragraphs (1) through (10) 

and inserting a period; 

(2) by striking ‘‘The Secretary ’’ and all that follows through ‘‘(1) establish,’’ 

and inserting ‘‘(a) LOCATIONS FOR CANTEENS.—The Secretary shall establish,’’; 

(3) by redesignating paragraphs (2) through (11) as subsections (b) through 

(k), respectively, and by realigning those subsections (as so redesignated) so as 

to be flush to the left margin; 

(4) in subsection (b) (as so redesignated), by inserting ‘‘WAREHOUSES AND

STORAGE DEPOTS.—The Secretary shall’’ before ‘‘establish’’; 

(5) in subsection (c) (as so redesignated), by inserting ‘‘SPACE, BUILDINGS, AND

STRUCTURES.—The Secretary shall’’ before ‘‘furnish’’; 

(6) in subsection (d) (as so redesignated), by inserting ‘‘EQUIPMENT, SERVICES, 

AND UTILITIES.—The Secretary shall’’ before ‘‘transfer’’; 

(7) in subsection (e) (as so redesignated and as amended by subsection (a)), 

by inserting ‘‘PERSONNEL.—The Secretary shall’’ before ‘‘employ’’; 

(8) in subsection (f) (as so redesignated), by inserting ‘‘CONTRACTS AND

AGREEMENTS.—The Secretary shall’’ before ‘‘make all’’; 

(9) in subsection (g) (as so redesignated), by inserting ‘‘PRICES.—The Secretary shall’’ before ‘‘fix the’’; 

(10) in subsection (h) (as so redesignated), by inserting ‘‘GIFTS AND DONATIONS.—The Secretary may’’ before ‘‘accept’’; 

(11) in subsection (i) (as so redesignated), by inserting ‘‘RULES AND REGULATIONS.—The Secretary shall’’ before ‘‘make such’’; 

(12) in subsection (j) (as so redesignated), by inserting ‘‘DELEGATION.—The 

Secretary may’’ before ‘‘delegate such’’; and 

(13) in subsection (k) (as so redesignated), by inserting ‘‘AUTHORITY TO CASH

CHECKS, ETC.—The Secretary may’’ before ‘‘authorize’’.

Amend the title so as to read:

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A bill to amend title 38, United States Code, to authorize the Secretary of Veterans Affairs to provide veterans who participated in certain Department of Defense 

chemical and biological warfare testing with health care for their illness without requirement for proof of service-connection, and for other purposes.

INTRODUCTION

The reported bill reflects the Committee’s consideration of two 

bills in the 108th Congress, to include H.R. 2433 and certain provisions of H.R. 1951. On June 11, 2003, Honorable Ciro D. Rodriguez 

and Honorable Rob Simmons introduced H.R. 2433, the Health 

Care for Veterans of Project 112/Project SHAD Act of 2003. On 

May 5, 2003, Honorable Stephen F. Lynch and Honorable Jack 

Quinn introduced H.R. 1951, the VA Medical Workforce Enhancement Act of 2003. 

On October 9, 2002, the Subcommittee on Health held a hearing 

on Project 112 and Operation Shipboard Hazard and Defense 

(SHAD). Witnesses who appeared before the subcommittee included 

Honorable William Winkenwerder, Jr., M.D., M.B.A., Assistant 

Secretary of Defense for Health Affairs, who was accompanied by 

Dr. Michael E. Kilpatrick, Director of Deployment Health Support, 

Dr. Anna Johnson-Winegar, Deputy Assistant to the Secretary of 

Defense, Chemical and Biological Defense; and Dr. Jonathan B. 

Perlin, Deputy Under Secretary for Health, Department of Veterans Affairs, who was accompanied by Mr. Robert J. Epley, Associate Deputy Under Secretary for Policy and Program Management, Veterans Benefits Administration. 

On June 24, 2003, the Subcommittee on Health met and unanimously ordered H.R. 2433, as amended, reported favorably to the 

full Committee. 

On June 26, 2003, the full Committee met and ordered H.R. 

2433, as amended, reported favorably to the House by unanimous 

voice vote. 

SUMMARY OF THE REPORTED BILL

H.R. 2433, as amended, would: 

1. Authorize the Secretary of Veterans Affairs to provide veterans who participated in a test conducted by the Department 

of Defense Deseret Test Center from 1962 through 1973 higher priority for hospital care, medical services, and nursing 

home care without any requirement for proof of service-connection. 

2. Extend the authority to provide care to Project 112/Project 

SHAD veterans through December 31, 2005. 

3. Provide that when a Veterans Health Administration registered nurse has accomplished the performance elements for 

promotion to the next higher grade, the lack of a specific type 

of educational degree shall not be an impediment to such promotion. 

4. Authorize premium pay for Saturday duty to additional Veterans Health Administration health care workers with direct 

patient-care responsibilities. 

5. Allow employees of the Veterans’ Canteen Service to be considered for appointment in VA positions in the competitive service in the same manner that VA employees in the competitive 

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service are considered for transfer to a Canteen Service 

position.

BACKGROUND AND DISCUSSION

Health Care for Veterans of Project 112/Project SHAD.—On October 9, 2002, the Subcommittee on Health held a hearing on ‘‘Project 

112’’, a series of Cold War chemical, nuclear, and biological tests 

conducted both at sea and over land. During this hearing the Department of Defense (DOD) announced the results of a declassification review to examine the health effects of 31 tests from Project 

112. In addition, the Subcommittee reviewed VA’s role in contacting veterans who may have participated in these tests, and its 

progress in determining the health status of these veterans. 

The Deseret Test Center was established in 1962 by DOD at Fort 

Douglas, Utah, to manage this testing program. Project 112 was 

one of 150 Cold War-era military initiatives directed by then-Secretary of Defense, Honorable Robert McNamara, to identify U.S. 

military personnel and warship vulnerabilities to chemical, nuclear, and biological attacks. The tests were conducted between 

1962 and 1973, and according to DOD were intended to hypothesize and evaluate survivability of troops and equipment (including 

robustness of ships at sea that were sprayed by enemy aircraft) exposed in the battlefield to hazardous agents. Some tests were 

planned in the Project 112/Operation SHAD series involving the actual use of sarin, VX, tularemia, anthrax, and other possibly dangerous agents. 

The results of the testing program were used to develop defense 

mechanisms against enemies’ potential use of biological, chemical, 

or nuclear weapons. Operation ‘‘Shipboard Hazard and Defense’’ 

(SHAD) was the operational name given to the shipboard portion 

of these tests. Much of the data associated with the conduct of 

these tests has remained classified since the tests were conducted. 

DOD has acknowledged that it lacks documentation to prove that 

test participants were informed of the risks involved with these 

tests, or that they received appropriate protective gear during testing. Since these activities were not medical in nature, and did not 

involve medical research, no patient care records were established 

to archive health effects. 

Dr. Michael Kilpatrick of DOD stated that DOD’s search for materials associated with Project 112/Operation SHAD is onerous and 

necessitates manual searches of paper archives to locate ship crew 

manifests in attempts to tie the dates of specific tests to on-board 

personnel. DOD advised the Committee that in such searches it 

must ask basic questions of ‘‘who, what, where, and when,’’ in order 

to associate the nature of these activities with the scope of the 

original military effort. The stated goal of DOD is to uncover the 

long-term health consequences of these exposures. 

Dr. William Winkenwerder testified at the October 9, 2002, hearing that DOD is committed to an uncompromising and thorough investigation of all chemical and biological warfare tests planned and 

performed by the Deseret Test Center. Testifying on behalf of VA, 

Dr. Jonathan Perlin discussed the outreach efforts to contact the 

5,000 veterans whom DOD has identified as Project 112 participants, and efforts to establish educational programs for its health 

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care providers. The Committee has encouraged VA to aggressively 

follow-up with these veterans to ensure that they are afforded an 

opportunity to review their medical histories with VA health care 

providers. 

In August 2000, based on a VA request, DOD began to review 

and declassify information concerning the exact agents used and 

other details of the Project 112 tests. An office in DOD now known 

as the Health Affair’s Deployment Health Support Directorate was 

assigned the responsibility of identifying U.S. ships, crew manifests, military units, and service members that may have been involved in these tests, and thus potentially affected by exposure to 

chemical and biological agents. In addition, DOD began working 

with VA to identify individual veterans who participated in these 

tests to determine whether they suffered negative health consequences as a result of their participation. 

On June 30, 2003, DOD announced the completion of the nearly 

three year long examination. Investigators confirmed that 50 of the 

134 planned operational tests at the Deseret Test Center were conducted and 84 were canceled. All Deseret Test Center tests were 

designated by test numbers. Initially, cover names were also assigned to the tests. However, the practice of using cover names was 

stopped in the later years of the program. Tests were conducted on 

the open sea in the North Atlantic, open water locations of the Pacific Ocean and near the Marshall Islands, Hawaii, Baker Island, 

Puerto Rico and the California coast. Land-based tests were conducted in the states of Alaska, Hawaii, Maryland, Florida, Utah, 

and Georgia. 

All Project 112 test fact sheets are available to the public on the 

Deployment Health Support Directorate Web site, (http://

deploymentlink.osd.mil/current—issues/shad/shad—intro.shtml). 

The site also includes a chart listing all planned tests and what is 

known about their status. 

The names of 5,842 servicemembers identified as having been 

present in one or more of the tests were provided to VA, the majority within the past year. Veterans who believe they were involved 

in Deseret Test Center tests and have medical concerns have been 

encouraged to contact VA for medical evaluations. Project 112 veterans have complained of an array of ailments from cancer to hypertension. Given the amount of time that has passed and the relatively small number of veterans involved in each test, VA may not 

be able to obtain the necessary information to fully understand the 

effects of the testing. 

The Committee bill would provide priority access to VA hospital 

care, medical services, and nursing home care for veterans who 

participated in the tests conducted by the Deseret Test Center from 

1962 through 1973, and not require medical evidence that any illnesses are attributable to such testing. 

Retention and Recruitment of Registered Nurses.—VA’s Nurse 

Qualification Standards (the standards) define the performance 

and education requirements for a Registered Nurse (RN) to be appointed to and promoted to one of the five nurse grade levels in VA. 

Under these standards, all new hires must have a baccalaureate 

degree in nursing (BSN) to be appointed at the Nurse II grade 

level. RNs may be promoted to a Nurse II grade level without a 

BSN only with a waiver of the education requirements. 

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RNs must have educational preparation in nursing and meet 

state licensing requirements. However, fewer nurses nationwide 

are receiving a BSN as their educational preparation for nursing 

practice. Sixty-two percent of employed staff nurses received their 

nursing educational preparation through an associate degree in 

nursing (ADN) or diploma nursing program. According to the latest 

survey by the Department of Health and Human Services, Health 

Resources and Service Administration, 45 percent of RNs in nurse 

clinician positions and 42 percent of RNs in clinical nurse specialist 

positions have an ADN or diploma degree as their highest educational preparation for nursing. Further, nearly 40 percent of Certified Nurse Anesthetists do not have a BSN. 

As discussed, all RNs, regardless of their educational preparation, must take rigorous licensing examinations administered by 

state governments. RNs prepared with an ADN have equivalent 

success rates in their licensing examinations as RNs who obtain a 

BSN. Whether RNs have a two-year or four-year nursing degree, 

they are licensed to perform the identical scope of nursing practice. 

Notwithstanding their years of experience or expertise in nursing, VA will not hire RNs above the entry Nurse Level I unless 

they have a BSN; VA will not hire RNs above the Nurse Level II 

unless they have a master’s degree, despite their years of bedside 

experience or clinical proficiency in nursing. 

Currently, VA nurses are also evaluated for promotion based on 

the BSN and nine areas of competencies. The Nurse Professional 

Standards Board evaluates nurses and may recommend, subject to 

the concurrence of the Chief RN and approval of the medical center 

director, a waiver of the BSN requirement. If the medical center director denies a waiver, the RN has no recourse. 

VA’s focus on the level at which a RN received his or her educational preparation has created unintended consequences. Currently, the U.S. has an estimated nationwide shortage of RNs of 

around 6.5 percent. This shortage is projected to grow, and could 

reach 28.8 percent in 2020 if the current trend continues and no 

mitigating actions are taken. Given the national shortage and the 

reduced number of RNs who want to work in hospitals, the Committee believes that VA should focus on a RN’s expertise and experience, not where he or she went to nursing school. The Committee 

bill would clarify that direct patient care performance is the primary criteria in hiring and promoting nurses. 

Additional Pay for VA Nursing Personnel Completing Saturday 

Shifts.—VA’s hospitals must maintain safe staffing levels during 

the weekends in order to meet veterans’ medical needs. Most private hospitals offer premium pay for weekend tours-of-duty as an 

incentive and compensation for individuals to work these shifts. 

Pursuant to sections 7453 and 7454 of title 38, United States Code, 

registered nurses, licensed practical nurses, pharmacists, physical 

therapists, occupational therapists, and respiratory therapists who 

work regular Saturday or Sunday shifts are paid a premium rate 

of pay (25 percent) for those shifts. The premium is not for overtime, but rather for working a regular shift on the weekend. Federal law for civil service employees employed under title 5, United 

States Code, who represent a large group of VA medical support 

personnel including nursing assistants, pharmacy technicians, and 

medical technologists, provides premium pay of 25 percent for emVerDate Jan 31 2003 09:54 Jul 17, 2003 Jkt 019006 PO 00000 Frm 00006 Fmt 6659 Sfmt 6601 E:\HR\OC\HR213.XXX HR213
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ployees who work regular shifts on Sundays at VA medical facilities, but not on Saturdays. By authorizing Saturday premium pay 

for all VA clinical staff members who work a regular shift on Saturdays, the Committee bill would allow VA to compete in the hiring of necessary staff to maintain adequate levels of support on 

weekends. 

Transfer Rights for VA Canteen Workers.—Veterans’ Canteen 

Service (VCS) employees are Federal employees hired under the 

authority of section 7802 of title 38, United States Code. This authority provides many of the same benefits that title 5, United 

States Code, federal employees enjoy, such as workers compensation, health benefits, retirement, and veterans’ preference. However, there are other benefits to which they are not entitled. In particular, because VCS employees are appointed without regard to 

title 5, United States Code, competitive civil service rules, these 

workers are not considered to be in the federal civil competitive 

service. As a result, a VCS employee cannot transfer to another job 

in VA without first going through a civil service competition, as if 

he or she had never been a federal employee. 

In 1979, the Office of Personnel Management (OPM) approved a 

personnel interchange agreement with VA that permitted two-way 

movement between the two hiring authorities for VCS managers. 

The agreement allows VCS managers appointed under the same 

statutory authority (38 U.S.C. 7802) as VCS employees who are 

non-supervisors to transfer into other federal jobs as if they were 

originally appointed in the competitive service under title 5, United 

States Code. 

Approximately 3,000 VCS hourly workers do not have the same 

transfer rights to other VA positions that VCS managers enjoy. 

They are prohibited from applying for jobs at VA as an internal 

competitive service candidate. VA attempted to establish an interchange agreement for these employees in 1984, 1987, and 1998, but 

OPM did not approve these proposals. This limits the VA’s ability 

to hire VA workers into needed positions to provide ancillary and 

support services for medical care. The Committee bill would provide transfer rights for hourly rate VCS employees to title 5, 

United States Code, VA positions through internal competitive procedures.

SECTION-BY-SECTION ANALYSIS

Section 1 of the bill would name this Act the ‘‘Health Care for 

Veterans of Project 112/Project SHAD Act of 2003’’. 

Section 2 of the bill would amend section 1710(e) of title 38, 

United States Code, to allow any veteran who participated in 

chemical and biological warfare tests conducted by the Department 

of Defense Deseret Test Center from 1962 through 1973 (including 

the program designated as ‘‘Project Shipboard Hazard and Defense’’ and related land-based tests) to be eligible for hospital care, 

medical services, and nursing home care, notwithstanding insufficient medical evidence that links any illness to such testing. Authority to provide access to care on this basis expires on December 

31, 2005. 

Section 3(a) of the bill would amend subsection (c) of 7403 of title 

38, United States Code, to allow labor organizations representing 

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physicians, dentists, podiatrists, optometrists, registered nurses, 

physician assistants and expanded-duty dental auxiliaries to engage in collective bargaining with respect to the promotion policies 

for those employees. 

Section 3(b) of the bill would amend subsection (c) of 7403 of title 

38, United States Code, so that when a VA registered nurse meets 

the requirements to be promoted to the next higher grade, the lack 

of a specific type of educational degree will not impede that promotion. 

Section 4(a) of the bill would amend section 7454(b) of title 38, 

United States Code, to allow VA nursing assistants, pharmacy 

technicians, medical technologists, and other title 5, United States 

Code, employees who complete a Saturday shift to receive premium 

pay for that shift at a rate equal to 25 percent of their hourly rate 

of basic pay. 

Section 4(b) of the bill would provide that the amendment made 

by subsection (a) shall apply with respect to pay periods beginning 

on or after the date of the enactment of this Act. 

Section 5(a) of the bill would amend paragraph (5) of section 

7802 of title 38, United States Code, to allow Veterans’ Canteen 

Service employees to be considered for appointment in VA positions 

in the competitive service, just as VA employees in the competitive 

service are considered for transfer to a Canteen Service position.

PERFORMANCE GOALS AND OBJECTIVES

The Department of Veterans Affairs’ performance goals and objectives are established in annual performance plans and are subject to the Committee’s regular oversight and evaluation by the 

U.S. General Accounting Office. VA also publishes a performance 

and accountability report for each fiscal year. 

STATEMENT OF THE VIEWS OF THE ADMINISTRATION

Testimony of Honorable William Winkenwerder, Jr., Assistant Secretary for Health, 

Department of Defense, Health Subcommittee Hearing on Project 112 & Operation 

Shipboard Hazard and Defense 

October 9, 2002 

As Assistant Secretary of Defense for Health Affairs, I want to stress that the Department of Defense (DoD) is absolutely committed to an aggressive and thorough 

investigation of all chemical and biological warfare tests planned and performed by 

the Deseret Test Center between 1962 and 1973. The purpose of the investigation 

is to provide relevant medical information to the Department of Veterans’ Affairs 

(VA). The Deseret Test Center was established as a result of Project 112. Project 

112 was one of one hundred and fifty management initiatives begun by Defense Secretary McNamara, after his review of the Department of Defense in 1961. Under 

Project 112, the Deseret Test Center planned and conducted a joint chemical and 

biological testing program that included shipboard and land-based testing. Project 

Shipboard and Hazard Defense (SHAD) was the shipboard portion. SHAD was designed to test ships’ vulnerability to biological or chemical attack. 

When I testified before the Senate Veterans’ Affairs Committee in July of this 

year, I expressed that we are dedicated to finding and declassifying all relevant 

medical information from those tests. Additionally, we are committed to sharing this 

information with the VA by June 2003. Today, I would like to discuss what we have 

done, what we have learned and what are currently doing. 

Since August 2000, when the Department of Veterans’ Affairs requested that the 

Department of Defense provide information concerning classified Project SHAD 

tests, we have developed a close working relationship with the VA. From the beginning of this process, VA staff members have met regularly with our investigators 

9

to review their activities and to verify that the information being sought was what 

VA needed to assist them in addressing health care matters and settle benefit questions. A team from our Deployment Health Support Directorate meets regularly 

with VA personnel, to ensure we provide the VA with the relevant medical information they need to address veterans’ concerns. 

To date, our investigation has revealed a great deal about tests planned and conducted by the Deseret Test Center. The Center planned 134 tests between 1962 and 

1973. So far we have verified that 46 tests were conducted and 62 were cancelled. 

We are working to determine the status of the remaining 26 tests. The majority (24) 

were planned for 1970–1974, a period in which plans were being made to close the 

Deseret Test Center. 

We are working closely with the Department of the Army to facilitate declassification of the necessary data, focusing on relevant medical information. Because many 

of the same agents remain a threat to our Forces today, the records cannot be casually declassified. Our investigators identify the relevant medical information and 

request declassification of this specific information in a process that has been significantly expedited. 

As information becomes available, it is provided to the VA in the form of fact 

sheets. To date we have published 45 fact sheets on 41 tests which involved more 

than 5,000 service members. The fact sheets detail which ships and units were involved in tests, when the tests took place and what substances the crew may have 

been exposed to. In order to expedite the VA’s notification to affected veterans, we 

now provide names and service numbers of service members involved in each test 

to the VA as soon as we identify the ship or unit involved; we do not wait for the 

declassification process to be completed. To date, we have provided the VA with the 

names of 4,990 veterans from 16 of 18 known shipboard tests and are searching for 

classified reports which identify the ships used in the remaining two tests. 

Our investigation has confirmed that Deseret Test Center tests were primarily 

conducted using simulants believed to be safe in place of chemical or biological warfare agents. In those instances when potentially harmful substances were used, 

there is no evidence that any of the service members involved were exposed to them 

without proper protection. Service members were vaccinated before testing that involved live biological agents. If actual chemical agents were used they were confined 

to airtight sections of their ship. When appropriate, protective clothing was also 

worn. While some service members may not have known all the details of these 

tests, it is likely they knew that they were participating in testing due to use of 

precautionary measures. We have learned that the scientists involved informed senior leaders about tests using simulants. Like other operational activities, service 

members were not informed of these tests. 

Information is presented to the VA as quickly as possible and is posted on our 

web site, DeploymentLINK.mil. A chart located on that web site shows the status 

of our investigation for each of the tests and is updated regularly. In addition to 

responding to letters, e-mails and telephone calls placed to our toll-free number, we 

have also attended the reunion of the crew of the USS Power and have asked other 

crews to allow us to attend their reunions to help us better understand the concerns 

of these veterans. We have also sought out scientists and senior officials involved 

with the tests to increase our understanding of what happened during the tests. 

With the termination of the U.S. offensive chemical and biological weapons programs and with changes to operations and health research standards, the use of live 

agents on humans is severely restricted. With modern technology we can determine 

the effectiveness of defensive measures by using mannequins. The military services 

do still use simulants during operational testing and training. We are reviewing all 

policies governing the use of simulants during testing and training. Additionally, 

small amounts of live agent are used in training at the chemical school. Our objective is to ensure that concerns like those surrounding the Deseret Test Center tests 

do not arise in the future.

Testimony of Jonathan B. Perlin, M.D., Deputy Under Secretary for Health, Department of Veterans Affairs, Health Subcommittee Hearing on Project 112 & Operation Shipboard Hazard and Defense 

October 9, 2002 

I am here today to talk about the 5,000 veterans who have been identified as 

Project 112 participants. I also want to tell you about the wide range of outreach 

activities to veterans, educational programs for VA health care providers, and 

health care services that VA has implemented for those veterans who participated 

in tests conducted by the U.S. Army’s Deseret Test Center, including Project SHAD. 

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Deseret Test Center Project 112 and Project SHAD 

According to the Department of Defense, Project SHAD, which stands for Shipboard Hazard and Defense, was a portion Project 112, which was a chemical and 

biological warfare test program of the Deseret Test Center. DoD conducted these 

tests between 1962 and 1973. Project SHAD itself was a series of tests apparently 

designed to determine potential vulnerabilities of U.S. warships to attacks with 

chemical or biological warfare agents. Other Project 112 tests involved similar tests 

conducted on land rather than aboard ships. 

VA first learned of Project SHAD when a veteran filed a claim for service connection for disabilities that he felt were related to his participation in those tests. In 

two meetings held with DoD in late 1997, VA was advised that all the relevant 

records about these tests were classified and that general access to that material 

was not possible. However, DoD offered to provide such information on a case-bycase basis. 

In May 2000, VA’s Under Secretary for Benefits received a congressional inquiry 

requesting assistance for veterans involved in Project SHAD tests. A VA/DoD 

workgroup was subsequently established, which met for the first time in October 

2000. Since then, DOD and VA have held a series of meetings to ensure that VA 

would have full access to the information needed to provide appropriate health care 

and benefits for veterans involved in these tests. In July 2002, DOD committed to 

provide VA with all medically relevant data, as well as a complete roster of participants involved in tests under the aegis of Project 112 in the 1960’s and 1970’s. 

As a result of their ongoing investigations, DOD has begun providing to VA the 

names and service numbers of veterans of Project 112, including Project SHAD participants. As a consequence, VA has initiated a significant outreach program to 

SHAD veterans and to the VA health-care providers they may see. This program 

has expanded as we have received more information from DOD about veterans involved in tests conducted by the Deseret Test Center and about possible chemical 

and biological exposures. 

VA Outreach Efforts to SHAD Veterans 

As of today, VA has been notified of approximately 5,000 veteran participants in 

12 declassified and two classified Project 112 tests. VA has implemented a process 

for identifying and locating these veterans. Identification is accomplished using a 

variety of sources, including VA’s Beneficiary Identification and Records Locator 

Subsystem (BIRLS), its Compensation & Pension (C&P) Master Record file, the National Cemetery Administration’s database, and the National Personnel Records 

Center in St. Louis. VA has been able to obtain addresses of some of these veterans 

by matching records with the Internal Revenue Service. 

In May 2002, VA mailed outreach letters to 622 SHAD veterans, and on August 

15, mailed outreach letters to an additional 777 veterans. The outreach letters provided them information about their participation in Project 112 and the possible 

health effects related to the chemical and biological warfare agents used in those 

tests. 

Most recently, in September, DOD provided VA with the names and service numbers of about 2,100 more veterans who were participants in tests just declassified 

last week. VA is currently matching these data against its BIRLS and C&P Master 

Record files to identify these individuals. 

Efforts to find current addresses for SHAD veterans is ongoing, but for those 

whom VA has not yet been able to locate, we have established a SHAD Help line 

(at 1–800–749–8387), an Internet web-site (at www.VA.GOV/SHAD), and an e-mail 

address (SHADHELPLINE@VBA.VA.GOV). Through the week ending September 

27, 2002, VA has received 417 calls on its toll-free SHAD Help line. 

Outreach to VA Health Care Providers 

A has provided relevant information about Project SHAD to VA health care providers through Information Letters from the Under Secretary for Health. The Information Letters provide VA health care personnel with background information on 

Project SHAD, as well as information about the potential short- and long-term 

health effects of the specific chemical and biological agents that DOD tells us were 

used in these tests. They also include recommendations for reviewing the medical 

and military exposure history of Project 112 veterans. The first Information Letter 

was released on December 1, 2000. The most recent Information Letter—the third 

in this series—is dated August 26, 2002. It is entitled ‘‘Possible Occupational Health 

Exposures of Veterans Involved in Project SHAD Tests,’’ and is based on additional 

information obtained from DOD. This information has also been made available on 

VA’s SHAD web site at www.va.gov/SHAD. 

11

In addition to Information Letters, the Veterans Health Administration (VHA) 

has engaged in an extensive outreach effort to ensure that every VA medical center 

knows about SHAD veterans and their potential hazardous exposures during Project 

112. VA medical center directors and health care personnel have been regularly apprised of Project SHAD through a series of national telephone hotline conference 

calls beginning October 20, 2000. VA environmental health physicians also have 

been kept informed of Project SHAD developments through regular conference calls. 

Furthermore, a Directive issued last month requires that enrolled SHAD veterans 

be clinically evaluated by knowledgeable health care providers when those veterans 

present for care. VA will continue to provide up-to-date information on Project 112 

to its health care providers to ensure that these veterans receive optimal health 

care. Lastly, as suggested by the Vietnam Veterans of America, the VA and DOD 

web sites, which provide information on Project 112, have been linked to provide 

ready access to health data among VA and DOD health care personnel and veterans. 

Health Care and Benefits Status of Identified SHAD Veterans 

VA prepared a preliminary report on the health and disability status of the initial 

Project SHAD veterans identified for us by DOD in follow-up to the July 10, 2002 

hearing. A report dated August 5, 2002, entitled ‘‘VA Health Care and Compensation for Project SHAD Veterans’’ was provided to the House and Senate Committees 

on Veterans’ Affairs on August 9, 2002. It also included information on compensation claims previously filed by Project SHAD participants. The report stated that, 

as of August 1, 2002, there were compensation claims pending decisions for 28 veterans alleging disabilities due to exposure to agents and substances while participating in Project SHAD. The full report is available on our website at www.va.gov/

SHAD. As of September 30, 2002, VA had compensation claims pending decision for 

53 veterans alleging disabilities due to exposure to agents and substances while participating in Project 112. 

Of the 1,399 veterans who received notification letters in May and August, 31 

have newly enrolled for VA health care. Available data indicate that Project SHAD 

veterans sought health care from VA during FY 2002 at a rate comparable to the 

overall population of military veterans. About 30 percent of Project SHAD veterans 

known to us as of August have used VA services since 1970. 

It has not been necessary to establish a special clinical program for Project 112 

veterans. In this regard, VA’s progressive development of its medical record system 

increasingly permits patient health information to be studied. VHA can now track 

health care utilization by special groups of veterans, such as the veterans who participated in Project SHAD. The use of these standard health care databases provides 

several important advantages in evaluating the health of Project SHAD veterans 

over specialized clinical programs, such as those used to evaluate particular cohorts 

of veterans, such as Vietnam and Gulf War veterans. The use of VA’s health databases allows VA to evaluate the health care utilization of veterans every time they 

obtain care from VA, not just on the one occasion that they elect to have a registry 

examination. This practice will provide a much broader and longer-term assessment 

of the health status of these veterans because many veterans return frequently for 

VA health care, and because veterans are often seen in different clinics or even different parts of the country for specialized health care. 

Evaluating Health Status of All SHAD Veterans 

On September 30, 2002, VA entered into a three million dollar contract with the 

Institute of Medicine, Medical Follow-up Agency of the National Academy of 

Sciences to fully evaluate the long-term health status of Project SHAD participants. 

They will conduct, over the next three years, a formal epidemiological study of 

Project SHAD participants in comparison with veterans who did not participate in 

Project SHAD. This independent, epidemiological study will give us the clearest possible picture of the health status of SHAD veterans and tell us whether their health 

was harmed by participation in SHAD tests. The study will compare the current 

health of veterans who participated in the SHAD tests more than 30 years ago with 

the health of veterans from the same era who served on ships not involved with the 

testing. The study will also compare the mortality rates of the two groups. This 

project may be expanded, if needed, as we learn the identity and military exposures 

of additional Project 112 participants. Although it will take time to conduct a valid 

epidemiological study, high quality medical care is being provided right now for each 

Project 112 veteran who chooses to come to the VA health care system. 

VA welcomes DOD’s accelerated schedule for providing relevant information about 

Project 112 and the veterans who were involved in these tests. We understand that 

it is problematic to locate and declassify records that are 30 to 40 years old, and 

we appreciate DOD’s efforts in this regard. We also look forward to receiving this 

12

information as quickly as possible so that we can address the health concerns of 

these veterans and properly adjudicate their benefit claims.

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

The following letter was received from the Congressional Budget 

Office concerning the cost of the reported bill: 

U.S. CONGRESS, CONGRESSIONAL BUDGET OFFICE, Washington, DC, July 15, 2003

Hon. CHRISTOPHER H. SMITH

Chairman, Committee on Veterans’ Affairs, 

House of Representatives, Washington, DC 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.R. 2433, the Health Care for 

Veterans of Project 112/Project SHAD Act of 2003. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Sam Papenfuss, who can 

be reached at 226–2840.

Sincerely, 

DOUGLAS HOLTZ-EAKIN, 

Director 

Enclosure. 

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

H.R. 2433, Health Care for Veterans of Project 112/Project SHAD 

Act of 2003

As ordered reported by the House Committee on Veterans’ Affairs on 

June 26, 2003

SUMMARY

H.R. 2433 would increase benefits for certain veterans and 

health care workers employed by the Department of Veterans Affairs (VA). The bill would allow veterans who participated in certain chemical and biological warfare tests while on active duty to 

have greater eligibility for health care offered by VA. In addition, 

the bill would change VA’s current regulation regarding the promotion of nurses and allow nurses who do not have a baccalaureate 

degree to be promoted to higher pay grades. Finally, H.R. 2433 

would require VA to pay certain health care workers a premium for 

working on Saturday. 

CBO estimates that implementing the bill would cost $1 million 

in 2004 and $8 million over the 2004–2008 period, assuming appropriation of the estimated amounts. The bill would not affect direct 

spending or receipts. The estimate does not include the costs of the 

provision that would require VA to pay certain health care workers 

a premium for working on Saturday because CBO cannot estimate 

the costs at this time. 

H.R. 2433 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA) 

and would not affect the budgets of state, local, or tribal governments. 

13

ESTIMATED COST TO THE FEDERAL GOVERNMENT

The estimated budgetary impact of H.R. 2433 is shown in the following table. This estimate assumes the legislation will be enacted 

by the end of fiscal year 2003, that the necessary funds for implementing the bill will be provided for each year, and that outlays 

will follow historical spending patterns for existing or similar programs. The costs of this legislation fall within budget function 700 

(veterans benefits and services).

By Fiscal Year, in Millions of Dollars 

2003 2004 2005 2006 2007 2008

SPENDING SUBJECT TO APPROPRIATION

Baseline Spending Under Current Law 

for Veterans’ Medical Care 

Estimated Authorization Level a ..... 25,279 26,153 26,987 27,890 28,824 29,452

Estimated Outlays ............................ 25,677 26,179 26,783 27,655 28,583 29,271

Proposed Changes b

Estimated Authorization Level ....... 0 1 1 2 2 2

Estimated Outlays ............................ 0 1 1 2 2 2

Spending Under H.R. 2433 for Veterans’ Medical Care 

Estimated Authorization Level ....... 25,279 26,154 27,988 27,892 28,826 29,454

Estimated Outlays ............................ 25,677 26,180 26,784 27,657 28,585 29,273

a The 2003 level is the estimated net amount appropriated for that year. No full-year appropriation has yet been provided for fiscal year 2004. The current-law amounts for the 2004–2008 

period assume that appropriations remain at the 2003 level with adjustments for anticipated inflation. 

b These amounts do not include the costs of section 4 because CBO cannot estimate the costs 

at this time. 

BASIS OF ESTIMATE

Project 112/Project SHAD 

From 1962 to 1973, the Department of Defense (DoD) conducted 

certain tests to determine the vulnerability of personnel, buildings, 

and ships to various biological and chemical threats. Some veterans 

claim that exposure to the agents used in those tests has affected 

their current health status and would like to receive medical treatment for their health problems at VA facilities. Under H.R. 2433, 

those veterans who are not currently eligible for medical care from 

VA and those veterans who currently receive care but pay small copayments based on their priority level would be eligible to receive 

free health care from VA. This increased eligibility would end on 

December 31, 2005. After December 31, 2005, CBO expects that VA 

would allow those veterans who enroll to receive health care from 

VA under the bill to remain enrolled with VA, though with a lower 

priority level that would require them to make copayments. 

According to data from DoD, about 5,800 members of the military 

participated in those tests. After adjusting for mortality, CBO estimates that about 5,400 are alive today. Based on information from 

VA, CBO estimates that 60 percent of those veterans are already 

eligible to receive health care from VA, though some of those veterans are required to make small copayments for the services they 

receive. Under section 2, the remaining 40 percent of these vetVerDate Jan 31 2003 09:54 Jul 17, 2003 Jkt 019006 PO 00000 Frm 00013 Fmt 6659 Sfmt 6601 E:\HR\OC\HR213.XXX HR213
14

erans, as well as the veterans mentioned above who currently 

make copayments, would be eligible for free health care. Based on 

enrollment data provided by VA, CBO estimates that less than 300 

veterans would enroll for VA medical care under this bill at an estimated average cost of $5,100 in 2004. Thus, CBO estimates that 

implementing this section would cost $1 million in 2004 and $8 

million over the 2004–2008 period, assuming appropriation of the 

estimated amounts. 

Under the bill, eligible veterans who are currently enrolled in the 

VA health care system and pay small copayments based on their 

priority level would no longer make these payments through December 31, 2005. CBO estimates that the lost receipts would be 

less than $500,000 each year over the 2004–2006 period. After December 31, 2005, those veterans who would have newly enrolled in 

the VA health care system under the bill would have a lower priority and would start to make copayments. CBO estimates that 

these increased receipts also would be less than $500,000 a year 

over the 2006–2008 period. (Such payments are recorded as offsetting collections, credited against appropriations.) 

Saturday Pay 

Currently, many health care workers employed by VA do not receive a pay premium when they work on weekends, although 

nurses and some other specialized workers do receive that premium. Section 4 would require that all employees providing direct 

patient-care services or services incident to direct patient-care services receive premium pay equal to 25 percent of their hourly wage, 

for all hours worked from midnight on Friday through midnight on 

Sunday. According to VA, these workers are already receiving premium pay for working on Sunday, so the only effect of implementing this section would be to increase the pay they would receive on Saturday. CBO cannot estimate the budgetary impact of 

implementing this provision, however, since VA has not yet been 

able to provide information about the amount of premium pay VA 

currently pays for Saturday and Sunday work. 

Nurse Promotion 

Under current regulations, VA has five pay grades for its nurses. 

A nurse cannot advance to a higher grade without both demonstrating the necessary qualifications and having the required college degree. In order to advance from grade 1 to grade 2, nurses 

need a baccalaureate degree. Similarly, to advance from grade 2 to 

grade 3 nurses must have a master’s degree. VA currently has a 

waiver program that allows nurses to be promoted without the requisite degrees. Section 3 would bar VA from requiring a baccalaureate degree as a requirement for promotion, essentially affecting nurse promotions from grade 1 to grade 2. 

According to VA, in 2002, only one nurse who sought a promotion 

from grade 1 to grade 2 was denied a waiver; 468 nurses received 

waivers and were promoted. (VA also denied promotions to 16 

nurses who sought a promotion from grade 2 to grade 3, but this 

bill would not affect nurses in those grades.) Because VA already 

has a waiver program, CBO does not expect that the implementation of this bill would affect a significant number of nurses, especially since possession of a baccalaureate degree is not the sole reVerDate Jan 31 2003 09:54 Jul 17, 2003 Jkt 019006 PO 00000 Frm 00014 Fmt 6659 Sfmt 6601 E:\HR\OC\HR213.XXX HR213
15

quirement for promotion. Thus CBO estimates that implementing 

this provision would cost less than $500,000 a year over the 2004–

2008 period, assuming the availability of appropriated funds. 

INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT

H.R. 2433 contains no intergovernmental or private-sector mandates as defined in UMRA and would not affect the budgets of 

state, local, or tribal governments. 

ESTIMATE PREPARED BY: 

Federal Costs: Sam Papenfuss (226–2840) 

Impact on State, Local, and Tribal Governments: Melissa Merrell 

(225–3220) 

Impact on the Private Sector: Allison Percy (226–2900) 

ESTIMATE APPROVED BY: 

Peter H. Fontaine 

Deputy Assistant Director for Budget Analysis 

STATEMENT OF FEDERAL MANDATES

The preceding Congressional Budget Office cost estimate states 

that the bill contains no intergovernmental or private sector mandates as defined in the Unfunded Mandates Reform Act. 

STATEMENT OF CONSTITUTIONAL AUTHORITY

Pursuant to Article I, section 8 of the United States Constitution, 

the reported bill is authorized by Congress’ power to ‘‘provide for 

the common Defense and general Welfare of the United States.’’

CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italics, 

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

TITLE 38, UNITED STATES CODE 

* * * * * * *

PART II—GENERAL BENEFITS 

* * * * * * *

CHAPTER 17—HOSPITAL, NURSING HOME, 

DOMICILIARY, AND MEDICAL CARE 

* * * * * * *

16

SUBCHAPTER II—HOSPITAL, NURSING HOME OR 

DOMICILIARY CARE AND MEDICAL TREATMENT 

§ 1710. Eligibility for hospital, nursing home, and domiciliary care 

(a) * * *

* * * * * * *

(e)(1)(A)***

* * * * * * *

(E) Subject to paragraphs (2) and (3), a veteran who participated 

in a test conducted by the Department of Defense Deseret Test Center as part of a program for chemical and biological warfare testing 

from 1962 through 1973 (including the program designated as 

‘‘Project Shipboard Hazard and Defense (SHAD)’’ and related landbased tests) is eligible for hospital care, medical services, and nursing home care under subsection (a)(2)(F) for any illness, notwithstanding that there is insufficient medical evidence to conclude that 

such illness is attributable to such testing.

(2)(A)***

(B) In the case of a veteran described in øparagraph (1)(C) or 

(1)(D)¿ subparagraph (C), (D), or (E) of paragraph (1), hospital 

care, medical services, and nursing home care may not be provided 

under subsection (a)(2)(F) with respect to a disability that is found, 

in accordance with guidelines issued by the Under Secretary for 

Health, to have resulted from a cause other than the service described in that paragraph. 

(3) Hospital care, medical services, and nursing home care may 

not be provided under or by virtue of subsection (a)(2)(F)—

(A) * * *

(B) in the case of care for a veteran described in paragraph 

(1)(C), after December 31, 2002; øand¿

(C) in the case of care for a veteran described in paragraph 

(1)(D), after a period of 2 years beginning on the date of the 

veteran’s discharge or release from active military, naval, or 

air serviceø.¿; and

(D) in the case of care for a veteran described in paragraph 

(1)(E), after December 31, 2005.

* * * * * * *

PART V—BOARDS, ADMINISTRATIONS, AND 

SERVICES 

* * * * * * *

CHAPTER 74—VETERANS HEALTH ADMINISTRATION—

PERSONNEL 

* * * * * * *

SUBCHAPTER I—APPOINTMENTS 

* * * * * * *

17

§ 7403. Period of appointments; promotions 

(a) * * *

* * * * * * *

(c) øPromotions¿ Consistent with subsection (a) of section 7422 of 

this title, and notwithstanding subsection (b) of that section, promotions of persons to whom this section applies shall be made only 

after examination given in accordance with regulations prescribed 

by the Secretary. Advancement within grade may be made in increments of the minimum rate of basic pay of the grade in accordance 

with regulations prescribed by the Secretary. 

* * * * * * *

(h) In a case in which a registered nurse has accomplished the 

performance elements required for promotion to the next grade, the 

lack of a baccalaureate degree in nursing shall not be a bar to promotion to that grade, and in such a case the registered nurse shall 

not be denied a promotion on that basis.

* * * * * * *

SUBCHAPTER IV—PAY FOR NURSES AND OTHER HEALTH–

CARE PERSONNEL 

* * * * * * *

§ 7454. Physician assistants and other health care professionals: additional pay 

(a) * * *

(b)(1)***

* * * * * * *

(3) Employees appointed under section 7408 of this title shall be 

entitled to additional pay on the same basis as provided for nurses 

in section 7453(c) of this title.

* * * * * * *

CHAPTER 78—VETERANS’ CANTEEN SERVICE 

* * * * * * *

§ 7802. Duties of Secretary with respect to Service 

øThe Secretary shall—

ø(1) establish,¿

(a) LOCATIONS FOR CANTEENS.—The Secretary shall establish,

maintain, and operate canteens where deemed necessary and practicable at hospitals and homes of the Department and at other Department establishments where similar essential facilities are not 

reasonably available from outside commercial sourcesø;¿.

ø(2)¿ (b) WAREHOUSES AND STORAGE DEPOTS.—The Secretary 

shall establish, maintain, and operate such warehouses and storage 

depots as may be necessary in operating the canteensø;¿.

ø(3)¿ (c) SPACE, BUILDINGS, AND STRUCTURES.—The Secretary 

shall furnish the Service for its use in connection with the establishment, maintenance, and operation thereof, such space, buildings, and structures under control of the Department as the Secretary may consider necessary, including normal maintenance and 

18

repair service thereon. Reasonable charges, to be determined by the 

Secretary, shall be paid annually by the Service for the space, 

buildings, and structures so furnished, except that the Secretary 

may reduce or waive such charges whenever payment of such 

charges would impair the working capital required by the 

Serviceø;¿. ø(4)¿ (d) EQUIPMENT, SERVICES, AND UTILITIES.—The Secretary 

shall transfer to the Service without charge, rental, or reimbursement such necessary equipment as may not be needed for other 

purposes, and furnish the Service such services and utilities, including light, water, and heat, as may be available and necessary 

for its use. Reasonable charges, to be determined by the Secretary, 

shall be paid annually by the Service for the utilities so 

furnishedø;¿. ø(5)¿ (e) PERSONNEL.—The Secretary shall employ such persons 

as are necessary for the establishment, maintenance, and operation 

of the Service, and pay the salaries, wages, and expenses of all 

such employees from the funds of the Service. Personnel necessary 

for the transaction of the business of the Service at canteens, warehouses, and storage depots shall be appointed, compensated from 

funds of the Service, and removed by the Secretary without regard 

to the provisions of title 5 governing appointments in the competitive service and chapter 51 and subchapter III of chapter 53 of title 

5. Those employees are subject to the provisions of title 5 relating 

to a preference eligible described in section 2108(3) of title 5, subchapter I of chapter 81 of title 5, and subchapter III of chapter 83 

of title 5. An employee appointed under this section may be considered for appointment to a Department position in the competitive 

service in the same manner that a Department employee in the competitive service is considered for transfer to such position. An employee of the Service who is appointed to a Department position in 

the competitive service under the authority of the preceding sentence 

may count toward the time-in-service requirement for a career appointment in such position any previous period of employment in 

the Serviceø;¿.

ø(6)¿ (f) CONTRACTS AND AGREEMENTS.—The Secretary shall

make all necessary contracts or agreements to purchase or sell 

merchandise, fixtures, equipment, supplies, and services, without 

regard to section 3709 of the Revised Statutes (41 U.S.C. 5) and to 

do all things necessary to carry out such contracts or agreements, 

including the making of necessary adjustments and compromising 

of claims in connection therewithø;¿. ø(7)¿ (g) PRICES.—The Secretary shall fix the prices of merchandise and services in canteens so as to carry out the purposes of this 

chapterø;¿.

ø(8)¿ (h) GIFTS AND DONATIONS.—The Secretary may accept gifts 

and donations of merchandise, fixtures, equipment, and supplies 

for the use and benefit of the Serviceø;¿.

ø(9)¿ (i) RULES AND REGULATIONS.—The Secretary shall make 

such rules and regulations, not inconsistent with the provisions of 

this chapter, as the Secretary considers necessary or appropriate to 

effectuate its purposesø;¿. ø(10)¿ (j) DELEGATION.—The Secretary may delegate such duties 

and powers to employees as the Secretary considers necessary or 

appropriate, whose official acts performed within the scope of the 

19

delegated authority shall have the same force and effect as though 

performed by the Secretaryø;¿. ø(11)¿ (k) AUTHORITY TO CASH CHECKS, ETC.—The Secretary 

may authorize the use of funds of the Service when available, subject to such regulations as the Secretary may deem appropriate, for 

the purpose of cashing checks, money orders, and similar instruments in nominal amounts for the payment of money presented by 

veterans hospitalized or domiciled at hospitals and homes of the 

Department, and by other persons authorized by section 7803 of 

this title to make purchases at canteens. Such checks, money orders, and other similar instruments may be cashed outright or may 

be accepted, subject to strict administrative controls, in payment 

for merchandise or services, and the difference between the amount 

of the purchase and the amount of the tendered instrument refunded in cash. 

* * * * * * *

Æ