U.S. GOVERNMENT PUBLISHING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Publishing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

96–872 PDF 2015

A REVIEW OF VETERANS AFFAIRS MAJOR LEASE 

PROCUREMENT 

HEARING 

BEFORE THE

SUBCOMMITTEE ON NATIONAL SECURITY 

OF THE

COMMITTEE ON OVERSIGHT 

AND GOVERNMENT REFORM 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

JUNE 25, 2015 

Serial No. 114–39 

Printed for the use of the Committee on Oversight and Government Reform 

( 

Available via the World Wide Web: http://www.fdsys.gov 

http://www.house.gov/reform 


AKING-6430 with DISTILLER
(II) 

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM 

JASON CHAFFETZ, Utah, Chairman 

JOHN L. MICA, Florida 

MICHAEL R. TURNER, Ohio 

JOHN J. DUNCAN, JR., Tennessee 

JIM JORDAN, Ohio 

TIM WALBERG, Michigan 

JUSTIN AMASH, Michigan 

PAUL A. GOSAR, Arizona 

SCOTT DESJARLAIS, Tennessee 

TREY GOWDY, South Carolina 

BLAKE FARENTHOLD, Texas 

CYNTHIA M. LUMMIS, Wyoming 

THOMAS MASSIE, Kentucky 

MARK MEADOWS, North Carolina 

RON DESANTIS, Florida 

MICK MULVANEY, South Carolina 

KEN BUCK, Colorado 

MARK WALKER, North Carolina 

ROD BLUM, Iowa 

JODY B. HICE, Georgia 

STEVE RUSSELL, Oklahoma 

EARL L. ‘‘BUDDY’’ CARTER, Georgia 

GLENN GROTHMAN, Wisconsin 

WILL HURD, Texas 

GARY J. PALMER, Alabama 

ELIJAH E. CUMMINGS, Maryland, Ranking 

Minority Member 

CAROLYN B. MALONEY, New York 

ELEANOR HOLMES NORTON, District of 

Columbia 

WM. LACY CLAY, Missouri 

STEPHEN F. LYNCH, Massachusetts 

JIM COOPER, Tennessee 

GERALD E. CONNOLLY, Virginia 

MATT CARTWRIGHT, Pennsylvania 

TAMMY DUCKWORTH, Illinois 

ROBIN L. KELLY, Illinois 

BRENDA L. LAWRENCE, Michigan 

TED LIEU, California 

BONNIE WATSON COLEMAN, New Jersey 

STACEY E. PLASKETT, Virgin Islands 

MARK DeSAULNIER, California 

BRENDAN F. BOYLE, Pennsylvania 

PETER WELCH, Vermont 

MICHELLE LUJAN GRISHAM, New Mexico 

SEAN MCLAUGHLIN, Staff Director 

DAVID RAPALLO, Minority Staff Director 

ART ARTHUR, Staff Director, Subcommittee on National Security 

SARAH VANCE, Clerk 


AKING-6430 with DISTILLER
(III) 

SUBCOMMITTEE ON NATIONAL SECURITY

RON DESANTIS, Florida, Chairman 

JOHN L. MICA, Florida 

JOHN J. DUNCAN, JR., Tennessee 

JODY B. HICE, Georgia 

STEVE RUSSELL, Oklahoma, Vice Chair 

WILL HURD, Texas 

STEPHEN F. LYNCH, Massachusetts, 

Ranking Member 

ROBIN KELLY, Illinois 

BRENDA L. LAWRENCE, Michigan 

TED LIEU, California 


AKING-6430 with DISTILLER

AKING-6430 with DISTILLER
(V) 

C O N T E N T S 

Page 

Hearing held on June 25, 2015 ............................................................................... 1 

WITNESSES 

Ms. Stella Fiotes, Executive Director, Office of Construction and Facilities 

Management, U.S. Department of Veterans Affairs, Accompanied by Mr. 

Norbert Doyle, Chief Procurement and Logistics Officer, Veterans Health 

Administration, U.S. Department of Veterans Affairs 

Oral Statement ................................................................................................. 4 

Written Statement ............................................................................................ 5 

Mr. Dave Wise, Director of the Physical Infrastructure Team, U.S. Government Accountability Office 

Oral Statement ................................................................................................. 6 

Written Statement ............................................................................................ 7 

Mr. Jerry Cameron, Assistant County Administrator, St. Johns County, Florida 

Oral Statement ................................................................................................. 7 

Written Statement ............................................................................................ 8 

APPENDIX 

A Sketch of Events Surrounding the Relocation of the Saint Johns County 

Veteran’s Community Based Outpatient Clinic ................................................ 18 

A letter to The Hon. Ron DeSantis from William Dudley .................................... 22 

A letter to The Hon. Ron DeSantis from Richard Lofgren ................................... 24 


AKING-6430 with DISTILLER

AKING-6430 with DISTILLER
(1) 

A REVIEW OF VETERANS AFFAIRS MAJOR 

LEASE PROCUREMENT 

Thursday, June 25, 2015 

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON NATIONAL SECURITY, COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, Washington, D.C. 

The subcommittee met, pursuant to call, at 2:01 p.m., in Room 

2154, Rayburn House Office Building, Hon. Ron DeSantis [chairman of the subcommittee] presiding. 

Present: Representatives DeSantis, Hice, Hurd and Lieu. 

Mr. DESANTIS. The subcommittee on National Security will come 

to order. Without objection, the chair is authorized to declare a recess at any time. 

The Department of Veterans Affairs operates one of the Nation’s 

largest healthcare delivery systems. To help meet the changing 

medical needs of the veteran population, the VA has increasingly 

leased medical facilities to provide healthcare to veterans. This 

hearing will review the process by which the VA leases outpatient 

clinics. 

Through the examination of specific cases, such as the community-based outpatient clinic at St. Johns County Florida, we will 

aim to identify inefficiencies in the lease procurement process in 

order to formulate solutions that will benefit veterans who seek access in nearby, modern medical facilities. 

The VA’s Office of Construction and Facility Management stated 

in a VA fact sheet that major lease projects for replacement or new 

medical facilities are ready to serve patients within 5 years from 

the, ‘‘start date.’’ GAO report, though, on this topic from April 2014 

revealed that 39 of the 41 projects reviewed with the contract value 

of about $2.5 billion experienced schedule delays ranging from 6 

months to 13.3 years, with an average delay of 3.3 years. 

With respect to the outpatient clinic surveyed in the GAO’s report, 94 percent of the delays occurred prior to signing the lease 

agreement. This means that the vast majority of delays occurred 

during the planning phase, not during construction or renovation 

of new outpatient clinics. Costs also increased for all 31 lease 

projects for which VA had complete cost data, primarily due to 

delays and changes to the scope of the project. First-year rents increased a total of $34.5 million, an annual cost that will extend for 

the life of the lease normally for 20 years. 

Some specific examples help bring these statistics to life. The 

outpatient clinic in Austin, Texas, experienced the largest size and 

cost increase from the time the authorization for the clinic was apVerDate Sep 11 2014 12:13 Oct 28, 2015 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 F:\96872.TXT APRIL

AKING-6430 with DISTILLER
2 

proved by Congress. The size increased from 85,000 square feet to 

135,000 square feet during its first renovation, and increased during a second renovation a final total of 185,000 square feet. The total first-year cost tripled from $6.2 million to $19.8 million. An increase of $8.4 million in the cost of the lease will impact the 

VA’s annual budget for the duration of the 20-year lease. The outpatient clinic in Jacksonville, Florida, experienced the longest delay 

of the projects reviewed by GAO in their report. Due to an increase 

in size and the need to procure additional land adjacent to the existing property to fit the new facility, the total delay amounted to 

more than 13 years. 

County officials in St. Johns County, which is the district that 

I represent, have been involved in trying to facilitate a new location for the veterans community-based clinic since late 2011. The 

outpatient clinic in question serves 5,000 veterans. St. Johns County notified the VA in 2011 about the sale of the property, where 

its current outpatient clinic is located. The notification provided 

more than 3 years for the VA to procure a new permanent clinic 

site and vacate the current facility by March 31, 2015. 

Today, 3.5 years have passed since the initial notification, and 

the VA still has not selected a permanent site for its new outpatient clinic or vacated the current facility. After VA’s lease expired for the current outpatient clinic in March, the VA began paying a penalty of approximately $50,000 per month. At the end of 

September, the penalty will double to approximately $100,000 per 

month. 

Without a solution for a permanent clinic in place, the VA is 

forced to construct and open interim clinic at even additional costs 

to the taxpayers. This situation is not supporting the services that 

our veterans need in my district, and it’s not showing good stewardship of taxpayer dollars, and it is not unique to my district in 

Florida. 

So this hearing is about meeting the needs of veterans in my district and across the country who could benefit tremendously from 

the VA executing lease procurement in a much more efficient and 

effective manner than the examples I’ve highlighted. We look forward to hearing from our panel of witnesses today, as we aim to 

find solutions to this issue. 

And I now recognize the gentleman from California, Mr. Lieu, 

who is sitting in for Mr. Lynch, who is the ranking member of our 

subcommittee, for his opening statement. Five minutes. 

Mr. LIEU. Thank you, Mr. Chair. 

Let me first ask for permission to submit the opening statement 

of Ranking Member Lynch for the record. 

Mr. DESANTIS. Without objection. 

Mr. LIEU. Okay. Mr. Chairman, I appreciate the opportunity to 

examine major lease projects at the Department of Veterans Affairs. I also want to welcome our witnesses and thank you for your 

public service. 

Ever since Secretary McDonald was confirmed last year, I have 

seen a sea change in leadership. I have seen Secretary McDonald 

take seriously the reports of deficiencies at the VA and work hard 

to try to fix them. The VA has already undertaken tremendous efforts to respond to recommendations made by these various reVerDate Sep 11 2014 12:13 Oct 28, 2015 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 F:\96872.TXT APRIL

AKING-6430 with DISTILLER
3 

ports, conducted its own studies on how the VA could improve, and 

implement department-wide changes. 

I am pleased to inform you of the following efforts that VA has 

completed: Elimination of redundant approval requirements. The 

VA has now eliminated the requirement that a secretary approve 

leases between $300,000 and $1 million in annual unserviced rent 

when they were already receiving approval through the VA strategic capital investment process. Instead of the redundant approval, the Secretary will be briefed regularly on all projects approved through that process. 

Over the past several years, the VA has also issued new policies 

and procedures in a number of areas, including leasing procurements, establishing requirements, procurement steps, pre-award 

vetting, compliance, and quality assurance. Many of the new policies and procedures issued are a result of recommendations made 

by the OIG, GAO, and congressional Members. So, again, the VA 

leadership is taking seriously reports made by these various agencies. 

Contract reorganization. In fiscal year 2014, the VA Office of Acquisition, Logistics and Construction restructured its contracting 

groups allowing for a clearer division of labor and decisionmaking 

authority between contracting officers and project management. In 

addition, leasing officials have been integrated into OALC’s contracting arm to provide contracting assistance review and oversight 

of lease procurements. 

The VA has also engaged in standardization of GSA delegation 

requests. The VA has implemented an internal review and approval process for delegation requests be submitted to GSA to ensure consistency and completeness of submissions department 

wide. 

I’ve also seen significant changes within my own district at the 

West Los Angeles VA campus. After four decades of dysfunction, 

we now have the Secretary settling a major lawsuit, having a master plan being set up in October, having stakeholders come in and 

improve the quality of healthcare, and to help address homeless 

veterans. 

I also want to specifically thank Carolyn Clancy, Vince Kane, 

and so many others who were turning the West L.A. VA in my district into a model for other VAs. We’re also specifically working 

with the VA on enhanced used leases, and I look forward to this 

hearing. 

With that, I yield back. 

Mr. DESANTIS. Gentleman yields back. 

Mr. DESANTIS. Thank you. I will hold the record open for 5 legislative days for any members who would like to submit a written 

statement. 

We will now recognize our panel of witnesses. I’m pleased to welcome Mrs. Stella Fiotes, Executive Director Office of Construction 

and Facilities Management at the Department of Veterans Affairs; 

Mr. Norbert Doyle, Chief Procurement and Logistics Officer, Veterans Health Administration at the Department of Veterans Affairs; Mr. David Wise, Director of the Physical Infrastructure Team 

at the Government Accountability Office; and Mr. Jerry Cameron, 


AKING-6430 with DISTILLER
4 

Assistant County Administrator for St. Johns County, Florida, although not much longer, as I understand. 

Welcome to you all. Pursuant to committee rules, all witnesses 

will be sworn in before they testify. So if you could please rise and 

raise your right hand. 

Do you solemnly swear that the testimony you’re about to give 

will be the truth, the whole truth, and nothing but the truth so 

help you God? 

All witnesses answered in the affirmative. 

Thank you. You may be seated. 

In order to allow time for discussion, please limit your testimony 

to 5 minutes. Your entire written statement will be made part of 

the record. 

Mrs. Fiotes will be giving one oral statement on behalf of both 

witnesses from the Department of Veterans Affairs, and she is recognized for 5 minutes. Go. 

WITNESS STATEMENTS 

STATEMENT OF STELLA FIOTES 

Mrs. FIOTES. Thank you. Good afternoon, Mr. Chairman and distinguished members of the committee. Thank you for the opportunity to discuss the Department of Veterans Affairs leasing program. 

The Department’s main priority is to provide high-quality care 

and benefits to veterans in facilities that meet our mission requirements and are procured legally, constructed soundly, and comply 

with Federal regulations. In many cases, leasing some of those facilities rather than constructing and owning all medical space allows VA flexibility to best adapt to demographic shifts in the evolving needs of our Nation’s veterans. 

While VA is working to deliver world-class facilities to best care 

for our veterans, we are also aggressively working to shorten the 

delivery timelines for our leases by improving and streamlining 

VA’s internal and external processes and implementing agencywide programmatic changes. We are also working with our partners in the Office of Management and Budget, General Services 

Administration, U.S. Army Corps of Engineers, and experts from 

the private sector to achieve maximum efficiencies and implement 

best practices in our leases. 

Even though leasing provides an essential tool in helping ensure 

veterans have access to VA care and services, we face limitations 

in our ability to deliver these leases. We are often unable to swiftly 

provide healthcare facilities and make decisions that are in the 

best interest, first, of our veterans, and second, of taxpayers because of the framework within which we operate. 

There is a long list of laws, regulations, and rules that frequently 

control and govern our efforts to deliver timely access to facilities 

and services. VA’s compliance with these requirements narrows 

what could be a universe of options into a small, tightly-controlled 

box of what we are legally able to accomplish. When compared with 

the private sector, we are critically hamstrung by the impact of 

these constraints. 


AKING-6430 with DISTILLER
5 

Private care providers have greater freedom than VA to negotiate 

directly and to select a developer, a site, an architect, general contractor, and the lease terms that allows for the fastest possible delivery of care to patients. The St. Augustine community-based outpatient clinic is an example of how VA’s timelines are affected and 

our options limited because of these factors. 

We were late starting what we knew was the required, lengthy, 

competitive process to find new space. For that, we accept responsibility. But soon after starting, the project was placed on hold while 

VA and GSA worked out issues related to VA’s leasing authority. 

After the project resumed, we experienced difficulty with offers 

achieving operating lease status according to OMB Circular A–11. 

As a result, VA has requested multiple rounds of proposals from 

offerers. 

If we are unable to achieve operating lease status, our options 

will be further limited. In compliance with Federal acquisition regulations and GSA regulations, we will need to cancel and restart 

the lease procurement with different parameters. This does not 

help provide optimal services in a timely way to St. Johns County 

veterans. And while we may be interested in exploring a partnership with the county government, our legal options to do so are also 

limited. 

Mr. Chairman, VA is focused on providing veterans top-quality 

accessible care and services in the best facilities possible. We take 

this duty very seriously and we’re looking for ways to improve the 

speed, efficiency, and flexibility by which we provide access to care. 

VA has faced serious challenges in the execution of its leasing program in the past. We have learned from our mistakes and have 

made great strides recently in streamlining and managing our 

processes. 

Positive change is happening now. However, we can only change 

as much as we control, and we don’t have control over many external factors that affect our processes. We believe changes are required to regulations governing Federal leases, particularly in the 

area of medical facilities. We need the latitude to act more like a 

private sector healthcare provider when it comes to establishing facilities and getting services to veterans when and where they need 

them. That’s why we exist as a Department and we need your help 

to fulfill our obligation. 

We believe too that 4 or 5 years is too long for our veterans to 

have to wait for new clinics. We are working to improve our part, 

and we will work with Congress and others to come up with workable solutions to reduce the constraints that impact our ability to 

best provide veterans the timely access to care and services they 

deserve. 

Thank you for the opportunity to discuss these important issues. 

We look forward to your questions. 

Mr. DESANTIS. Thank you. 

[The prepared statement of Ms. Fiotes follows:] 

[For complete submitted testimony, please see the following 

website: [https://oversight.house.gov/hearing/a-review-of-veteransaffairs-major-lease-procurement/] 

Mr. DESANTIS. The chair now recognizes Mr. Wise for 5 minutes. 


AKING-6430 with DISTILLER
6 

STATEMENT OF DAVE WISE 

Mr. WISE. Chairman DeSantis and distinguished members of the 

subcommittee, I’m pleased to be here today to discuss our work examining scheduled delays and cost increases at the VA’s majorleased outpatient clinics. The clinics provide both primary care and 

various other medical and dental services. 

As of November 2013, VA’s leasing program had a long-run li- ability of $5.5 billion with a total of 1,889 leases. VA’s Office of 

Construction and Facilities Management Office of Real Property 

Services is responsible for acquiring land and leasing space for the 

construction of medical and medically-related facilities for VA and 

provides guidance to regional and local VA offices regarding real 

property. 

My statement today discusses, one, schedule and cost increases 

for selected VA outpatient clinics we reviewed and the contributing 

factors involved; and two, actions VA has taken to improve its leasing practices for outpatient clinics and any opportunities that may 

exist for VA to improve its management of project schedules and 

costs. 

This statement is based on our April 2014 report, which discussed 41 major outpatient clinic leases for which a prospectus was 

submitted to Congress as required by law for any lease over $1 million. The total contract value of these 41 projects was $2.5 billion. 

Our report noted that VA has experienced substantial delays in 

executing new outpatient clinic-leased projects. Nearly all of the 

delays occurred in the planning stages prior to entering into a lease 

agreement. Specifically, we found that 39 of the 41 outpatient clinic 

projects for which VA submitted a prospectus experienced schedule 

delays, ranging from 6 months to 13.3 years, with an average delay 

of 3.3 years. Two projects experienced schedule time decreases. 

Our analysis showed that 94 percent of these delays occurred 

prior to entering into the lease agreement. For all but one of the 

projects that experienced a delay, the delay occurred during the 

pre-lease agreement stage. A number of factors contributed to the 

delays, including VHA’s late or changing requirements, site selection challenges, and outdated guidance. 

In addition to substantial delays, our report noted that VA also 

experienced cost increases to its outpatient clinic projects when 

compared to the costs in the project’s prospectuses. For the 31 

projects with complete cost data, first-year rents increased a total 

of $34.5 million when compared to prospectus cost, an annual cost 

which will extend for 20 years the life of these leases. 

The causes of the total cost increase can be attributed primarily 

to increases in the projects awarded first-year rent due to the 

schedule delays and/or changes in the design or scope of a project. 

Changes in a project’s size expand the scope of the project requiring design changes and schedule delays further adding to costs. 

VA’s made some progress in addressing issues with its major medical facilities leasing program. 

In 2012, VA formed a high-level counsel to oversee its capital 

asset program, including leasing. VA has been working on or planning the following improvements: Requiring detailed design requirements earlier in the design process to help avoid the delays, 

scope changes, and cost increases; developing a process for hanVerDate Sep 11 2014 12:13 Oct 28, 2015 Jkt 000000 PO 00000 Frm 00012 Fmt 6633 Sfmt 6633 F:\96872.TXT APRIL

AKING-6430 with DISTILLER
7 

dling scope changes; providing Congress with more complete information on the cost to propose future lease projects; and refining 

and updating lease guidance. 

To improve the outpatient leasing program, we recommended the 

VA update VHA’s guidance for leasing outpatient clinics to better 

reflect the roles and responsibilities of all VA’s staff involved in 

leasing projects. VA concurred with our recommendation and has 

actions underway to implement it. 

Chairman DeSantis and distinguished members of the subcommittee, this completes my prepared statement, and I’d be 

pleased to respond to any questions that you may have. 

Mr. DESANTIS. Thank you, Mr. Wise. 

[The prepared statement of Mr. Wise follows:] 

[For complete submitted testimony, please see the following 

website: [https://oversight.house.gov/hearing/a-review-of-veteransaffairs-major-lease-procurement/] 

Mr. DESANTIS. The chair now recognizes Mr. Cameron for 5 minutes. 

STATEMENT OF JERRY CAMERON 

Mr. CAMERON. Thank you, Chairman DeSantis, and distinguished members of the subcommittee. It is a privilege to address 

you today on this important subject. 

The governing body of St. Johns County believes it is not just the 

Federal Government that has the responsibility of coming to the 

aid and assistance of those who have served this country, but this 

responsibility extends to every level of government. 

Up until this spring, our veterans enjoyed having a veterans 

service office located directly beside the VA’s community-based outpatient clinic, or CBOC, where they received assistance in filing for 

their benefits and appeals. In addition, at the same site, veterans 

had access to many other resources through our division of Health 

and Human Services, such as food stamps, temporary assistance to 

needy families, affordable housing, credit counseling, and credit repair, resume development, use of computers for job search and 

communication, and a host of other services. 

This ideal arrangement ended this spring when the VA refused 

to join other service providers and move the CBOC to the new 

state-of-the-art facility built by St. Johns County. 

Almost 4 years ago, in October of 2011, St. Johns County first 

notified the VA regional office in Gainesville there was a potential 

for a sale of the existing facilities to Lowe’s Home Improvement. 

The VA was kept informed as the county entered into a contract 

with Lowe’s, which ultimately closed in March 2013. At which 

time, the VA was notified that the premises must be vacated no 

later than March 31 of 2015. Time does not permit detailing the 

timeline for this process, but I have included in your packages a 

sketch of that timeline. 

It became obvious in early 2014 the VA was not going to meet 

the March 31, 2015, vacation deadline and would either have an 

interruption of clinical services to our veterans or a delay in the 

construction of the new Lowe’s store, a crucial economic development and job-producing project. By the summer of 2014, the county 


AKING-6430 with DISTILLER
8 

became so alarmed that it offered to build a separate clinic at the 

new site, and at one point even offered to relocate their own agencies so the VA could use the space. 

When the vacation date arrived, the VA had no other viable options. In order to avoid interruption of services, it fell on St. Johns 

County to negotiate an extension with Lowe’s and devise a plan to 

keep the old building operational, including penalties and increased 

cost for operation. The VA’s monthly cost went from approximately 

$26,000 a month to approximately $90,000 and will increase to approximately $135,000 a month on October 1 of 2015. 

In addition, taxpayers will now have to pay for site preparation 

in modular units to house a temporary clinic. This is the new 

Health and Human Services building. The VA clinic would have 

been operating out of here today had they not steadfastly refused 

any meaningful dialogue with St. Johns County. Given this experience, it is our fear that the VA will make a serious error in selecting a site for a permanent clinic. 

The VA has put out at least three different search area boundary 

maps, one as far south as the southern county line. To date, they 

have refused to consider population growth patterns. The northern 

portion of the county is exploding with the new town of Nocatee 

being the third fastest-growing community in the Nation. 

It is critical the VA not make a mistake that the veterans of our 

county will have to live with for decades to come. St. Johns County 

is still willing to provide what has always been the VA’s best option: An opportunity to locate with other essential services providers in a central location of the county. 

In short, St. Johns County has become a classic example of the 

overall problems plaguing the VA throughout the country. The VA 

is so insular that it has not only lost touch with those it has intended to serve, but it has lost connection and accountability to the 

Congress created it. As an over-mature bureaucracy, it suffers from 

a policy sclerosis that denies it situational flexibility. 

Its focus is now on what is best for the bureaucracy and not what 

is best for the veterans it serves. The VA must once again become 

responsive to Congress and return its focus first and foremost to 

the welfare of the men and women who have served in our armed 

forces. 

I thank you again for the unique opportunity to appear before 

you, and I am confident that this proceeding is an important step 

toward finding solutions to this nation-wide problem. I would be 

pleased to answer any questions. Thank you. 

Mr. DESANTIS. Thank you. 

[The prepared statement of Mr. Cameron follows:] 

[For complete submitted testimony, please see the following 

website: [https://oversight.house.gov/hearing/a-review-of-veteransaffairs-major-lease-procurement/] 

Mr. DESANTIS. The chair now recognizes himself for 5 minutes. 

You know, it just strikes me that the folks who serve our country 

in uniform and do so honorably, I mean, they show up on time. 

They’re there, report for duty, they perform their duties. Some of 

them perform very, very difficult duties. Some of them have the 

scars and the wounds to prove it. And it’s frustrating that we’re 


AKING-6430 with DISTILLER
9 

here where these delays are really a matter of course. And that’s 

just unacceptable. 

Mr. Cameron, you mentioned this, but when did St. Johns initially notify the VA that the property where the current VA clinic 

is located was sold, and how much time did the VA have to relocate? 

Mr. CAMERON. The VA, as well as all other agencies, after the 

closing, were notified immediately, and had 2 years in order to 

make arrangements. 

Mr. DESANTIS. And they were notified that this was a possibility 

as early as 2011? 

Mr. CAMERON. Actually, in October of 2011 it was first brought 

to the attention that it was a possibility, and they were notified 

again in the spring of 2012 that a contract had been entered into. 

Mr. DESANTIS. Now, during that same time, St. Johns County 

was able to move a number of their human services. And what was 

the extent of that project? And was St. Johns able to complete that 

project within the time allotted? 

Mr. CAMERON. Mr. Chairman, St. Johns County was able to construct that. They broke ground for that new facility in March of 

2014. They built a 72,000-square foot facility in a little less than 

12 months at a cost of $12 million that came in on time and in 

budget, and we actually moved our folks in, in less than a year 

after ground was broken. 

Mr. DESANTIS. So, Mrs. Fiotes, has the VA selected a new permanent site for the outpatient clinic in St. Johns? 

Mrs. FIOTES. We have not yet—— 

Mr. DESANTIS. Can you hit your mic, please. 

Mrs. FIOTES. We have not yet selected a site, Mr. Chairman. We 

are in the final rounds of negotiations and value engineering of the 

current offers to see if we can reach an agreement with an offer 

that would give us an operating lease. 

Mr. DESANTIS. But it has been over 3.5 years since the VA was 

first notified of this potential to be vacating. So why hasn’t the VA 

found a site in that intervening period? 

Mrs. FIOTES. As I mentioned earlier, Congressman, we were late 

getting started, and for that, we accept responsibility. At the time 

we did get started, which was in early 2013, shortly thereafter we 

were put on a temporary freeze because of the issues that had arisen with our leasing authorities and GSA. That stalled us for—— 

Mr. DESANTIS. What did you do to try to rectify that? Because 

when we were notified of this problem, we went to the GSA, and 

they were very interested in working with us and providing a waiver if necessary. And so it was—I was expecting this to be this big 

issue, but they seemed to be willing to work with us. 

Mrs. FIOTES. Unfortunately, that was not our experience. All our 

leases, not just this lease, every single lease, minor and major, was 

put on hold until we could come to an understanding with GSA—— 

Mr. DESANTIS. And did you raise that issue with the Congress? 

Mrs. FIOTES. I cannot remember specifically if we raised it with 

the Congress. 

Mr. DESANTIS. Mr. Doyle, without a permanent site selected, and 

given the need to continue uninterrupted services to the veteran, 

you’re now going to have to build an interim outpatient clinic. Now, 


AKING-6430 with DISTILLER
10 

does this strike you as an efficient use of taxpayer dollars given the 

fact that VA has had a significant period of time to build the permanent facility or choose a permanent facility? 

Mr. DOYLE. Mr. Chairman, I think the VA has stepped up and 

acknowledged that this is not the optimal solution that we had and 

wanted. I’m happy to say, though, that of the interim lease, my 

contracting officers working with the program office that it is on 

schedule. We are confident we will deliver the services by the end 

of the summer so that veterans—— 

Mr. DESANTIS. All right. Look, I hope so. I mean, we’ve been told 

that this was going to happen in the past on a certain schedule, 

and it hasn’t happened. 

I’m concerned also about the taxpayer penalties that the taxpayer is now going to have to pay. The lease expired March of this 

year, and so now you’re in a situation where you’re paying $50,000 

a month. That is then going to go up to, I believe, at least $100,000 

a month. And so given that there was a lot of time and a lot of 

notice, how is that a good stewardship of taxpayer dollars? 

Mr. DOYLE. Well, I would say, Mr. Chairman, that it is not a 

good stewardship of the chairman dollars, and it’s not what I think 

in hindsight the situation we would have endeavored to find ourselves in. 

Mr. DESANTIS. Now, Mr. Cameron, you have informed us that 

there is a footprint for a VA outpatient clinic at the location of the 

new Health and Human Services campus in St. Johns County. And 

you say that the county is still willing to build the clinic at that 

site and lease it to the VA at the same rate per square foot as the 

recently-expired lease. 

And you also say that the facility will be built to the VA’s floor 

plan design and comply with the VA’s elevation requirements. 

You’ve stated this is not financially advantageous to the county, 

but, you believe it’s the best outcome for local veterans. How has 

the VA responded to that offer? 

Mr. CAMERON. As far as I know, Mr. Chairman, St. Johns County is not in consideration for a permanent site. There have been a 

number of reasons stated that we were not in consideration. And 

my last conversation while we were negotiating the holdover at the 

existing facility, when I said that St. Johns County stands ready 

to step up and provide this facility for the VA, I was told—and this 

is a direct quote—‘‘that is not happening.’’ 

Mr. DESANTIS. Now, one of the VA’s arguments for not being 

willing to accept the county’s offer to have the permanent clinic 

within the HHS building is the 100-year flood zone issue. Now, did 

the county have similar concerns about building its own facility in 

this flood zone? 

Mr. CAMERON. Mr. Chairman, that building is built on our campus, and we have hundreds of millions of dollars’ worth of investment in there. We have to be approved by five different agencies 

in order to build. We are not going to build a building in the floodplain. 

Mr. DESANTIS. And did you mitigate the concern of flooding when 

you chose this site and constructed the facility? 

Mr. CAMERON. Yes, sir, we did considerable fill there. 


AKING-6430 with DISTILLER
11 

Mr. DESANTIS. And you’re willing to offer to mitigate the same 

concern if the VA clinic was there? 

Mr. CAMERON. Yes, sir. We believe that the outcome is worth any 

effort we might be required to make. 

Mr. DESANTIS. Now, the other argument that the VA has put forward is to do a demographics, that existing veteran population necessitates the site selection area to be south of the site where the 

current or the new HHS building is located. So how do you respond 

to the demographic argument that the VA has made? 

Mr. CAMERON. From the beginning, Mr. Chairman, the VA has 

given us a number of different criteria that we were to proceed on. 

And by our GSI analysis in-house and use of the census data, we 

have the center of the veterans population located well north of the 

existing clinic and actually slightly north of our new clinic. 

Nocatee being an explosive community has got a significant veterans population coming in there. Veterans services are locating 

there. K–9 for Warriors just opened their new facility this weekend 

there. Wounded Warriors is looking at it as a possible site too. And 

to ignore that growth pattern is unconscionable. 

Mr. DESANTIS. Now, Mrs. Fiotes, let me ask you this: I mean, 

this has been very frustrating for a lot of folks certainly in my community, and reading the GAO report, I would imagine that there 

is a lot of frustration in other communities all across the country. 

Now, you have cited some of the factors and constraints that limit 

your ability to act as rapidly as maybe somebody in the private sector would do. 

So my question for you is, what reforms has the VA proposed to 

Congress for us to implement so that you will no longer have this 

problem? 

Mrs. FIOTES. Congressman, I don’t believe we have proposed a 

specific proposal at this point—— 

Mr. DESANTIS. But why not? You know it’s a problem. You’ve acknowledged it’s a problem. And that’s part of the, I think, the frustration, and not just with the VA. VA has a lot of frustration because it’s such a big bureaucracy, but what we find is there are always kind of excuses as to why things aren’t done right. 

But what we don’t tend to get is, okay, well, what should we do 

if you’re legally constrained, tell Congress what we need to do to 

be able to free you to do your job so that the veterans are being 

served. And you’re saying that the VA does not have a list of reforms that the Congress could implement right now? 

Mrs. FIOTES. None that we have shared with the Congress. But 

we are working with GSA and we are working with OMB to identify what improvements we might bring forward. 

Mr. DESANTIS. Well, I think we need to do this as quickly as possible. I think time is wasting, and I think our veterans are being 

left to suffer. 

I am out of time, and I will recognize my friend from California. 

Mr. LIEU. Thank you. 

Having served on active duty in the Air Force in the 1990s and 

still being in the Reserves, I hit 20 years this year, I am passionate 

and concerned about veterans. 

And I just want to, first of all, say thank you, because you said 

something that is far too rare on Capitol Hill. You uttered the 


AKING-6430 with DISTILLER
12 

statement, ‘‘we accept responsibility.’’ Thank you for saying that. It 

tells me that you understand the challenges that are facing you, 

that you’re working to make the problems better, and I appreciate 

that. 

I also note that the GAO report talks about things—April 2014 

and before that. These did predate Secretary McDonald coming in. 

They were not under his watch. So I look forward to the continuing 

leadership we are having from the Secretary. 

I do have a couple questions for you, Mrs. Fiotes. First, are some 

of these challenges facing you because you at the VA cannot sole 

source? 

Mrs. FIOTES. That is correct, Congressman. We are required to 

do our lease procurements in the competitive process because of the 

Competition in Contracting Act and because of Federal regulations. 

And, therefore, we could not take the county up on its offer as a 

sole source offer. We did ask them to participate when we put out 

the solicitation, which they did. They were outside of the delineated 

area that the VA had established for that solicitation. 

Our methodology for identifying the delineated area is different 

from that which the county follows. We do not follow political 

boundaries. We do not look at county limits. We look at catchment 

areas and we look at enrolled veterans. Those are some of the basic 

differences between our methodology. And that placed the delineated area south of the county’s proposed site. That was the primary reason they were excluded from the initial competition. 

Mr. LIEU. Thank you. 

As you may know, in my district at the west Los Angeles VA 

campus, we cannot use enhanced use leases, which pretty much 

every other VA facility can. Do you believe having enhanced use 

leases would be important for the VA and your mission to help veterans? 

Mrs. FIOTES. Absolutely, Congressman. And Secretary McDonald 

has repeated the same as well in various venues. I think it would 

be one additional tool that we could use to help us take advantage 

of more opportunities to get facilities and to get private partners 

to help us in delivering those facilities. Absolutely. 

Mr. LIEU. Thank you. 

I have no further questions so I’ll give you the opportunity if you 

want to clarify anything at all during this hearing. If not, then I 

will yield back. 

Mrs. FIOTES. I would like to offer one more thing, and that’s 

about the delays that are mentioned in the GAO report, and we acknowledge those delays, and we have taken many steps, in addition 

to the ones you mentioned earlier. I think one of the most important things—and you noted that yourself, Mr. Chairman—that a lot 

of our delays happen in the upfront planning process and a lot of 

the changes happen there. 

We now have a much more structured process for planning our— 

not only our construction but also our major leases to make sure 

that we right size them the first time so that when we get the authorization we can stay with that size that we have. We also have 

a process in place to manage scope changes in the Department that 

elevates the requirement for change all the way up to the Secretary 


AKING-6430 with DISTILLER
13 

if it’s above a certain threshold before we can implement such a 

change. 

So I think we have the right processes in place to avoid delays 

and growth such as the ones we saw in the reports—in the reported leases in the GAO report. And I’m confident that we are 

doing much better on that. I just wanted to point that out. 

Mr. LIEU. Thank you. I yield back. 

Mr. DESANTIS. The gentleman yields back. 

It was interesting, because I was in Orlando when we opened the 

facility there. It’s a great facility. And one of the speakers had got 

up and said: Isn’t this great? He’s like: Look, it’s over budget. It 

hasn’t been done on time. By it’s not that over budget. It hasn’t 

been that much over time, you know, given some of the other 

things. And so it was almost as if we were celebrating the fact that 

the cost overruns and the delays were of course they were there 

but they weren’t as much as you would see in a typical project. 

And I know that’s not limited to the VA, but I just think that 

that’s not where we want to be. I mean, this should be a matter 

of course where we’re getting this stuff done. 

Mr. Wise, let me ask you, that April 2014 report indicated that 

39 of the 41 projects that GAO investigated were facing or faced 

some sort of delay. What was the nature of those delays, and what 

was the average delay? 

Mr. WISE. Well, Mr. DeSantis, the—yes. You’re correct. First of 

all, there were significant delays on almost all the projects we 

looked at. And we found that basically the major issue that it involved was, as I think we’ve talked about throughout this hearing, 

was the real issue with requirements changing in the preplanning 

process. And once the requirements were changing, that led to this 

kind of a cascading effect of scope changes and further delays and 

land acquisition issues. 

So one thing all kind of fed on another resulting in what ended 

up being pretty significant delays for a number of projects. I think 

the average we ended up with was a little over 3.3 years, if I recall. 

So this was a—kind of an interwoven, intertwined process that led 

to some less-than-optimal results. 

Mr. DESANTIS. And so these are by and large pre-lease delays 

that are occurring? 

Mr. WISE. That’s correct, sir. 

Mr. DESANTIS. So, in other words, if you lease a property or you 

hire someone to construct a facility, there may be problems with 

that, but these are delays that are solely attributed to the government planning and execution initial process. Is that fair to say? 

Mr. WISE. That was our conclusion. 

Mr. DESANTIS. Now, what about common delays. What are the 

most significant that you would see? 

Mr. WISE. Well, basically we found that—let me give you an example. We had, you know, just every project seemed to have kind 

of its own unique characteristics, but you find a situation where 

maybe VA had changed because they had done demographic studies that maybe went back a number of years. So you end up with 

a situation: Well, there was a thought that, well, maybe we’re 

going to be serving a larger population than we thought we were, 

and so therefore we need a larger facility. 


AKING-6430 with DISTILLER
14 

So you decide to do some redesign, come up with plans for a larger facility. Then you say: Oh, wait a minute, now. The land won’t 

support that building anymore, and the building—we need a bigger 

building for the numbers, and we need more land to support the 

buildings. So, therefore, you run into the whole problem. Then you 

have to acquire additional land, and that leads to, you know, all 

kinds of issues. The zoning and the stakeholder interests come into 

play, and sometimes there are problems with environmental issues 

when you go to another site. 

So it just leads to a whole host of complicating factors that the 

bottom line is you end up with—you can end up with some pretty 

significant delays. 

Mr. DESANTIS. Now, these requirement changes that you mentioned, can you just explain that. I mean, this is like they’re in the 

middle of this and then the requirements change and so it ends up 

prolonging everything? 

Mr. WISE. Well, they may have decided to add additional services, or there may be modernization of particular equipment that 

needs to be put into the place that maybe wasn’t foreseen earlier. 

So therefore perhaps a particular facility now needs to be modified 

to accept this equipment. So you’ve got to go back and do some redesigning in order to make the building commensurate with the 

kind of equipment you want to put into it. That’s one aspect of it. 

So because some of the facilities, the planning went back a number of years and by the time you got around to getting into the 

leasing aspect of it, you went back and realized that this doesn’t 

quite fit the bill. And, again, that results in these kind of—when 

requirements change, this results in scope changes and further 

delays. 

Mr. DESANTIS. Now, the delays in the report about determining 

the location of some of these sites, that struck me. There was, I 

think, a 7-year delay for the outpatient clinic in Las Vegas. For 

that Las Vegas, that delay, what was the reason for that? 

Mr. WISE. Well, the problem in Las Vegas was one where the facility was located adjacent to Nellis Air Force Base northeast of 

Las Vegas a bit. And I think the main problem they ran into there 

was that—that was unforeseen was the fact that there was—they 

were close to where the flight area was and there was then an environmental issue, which is pretty common in military bases. We’ve 

seen them in other real property work I’ve done. We often see 

BRAC’d military bases or other kinds of former bases with lots of 

environmental issues. And this had to do with aircraft and other 

kinds of residue that were left over from other kinds of activities 

at the base. And until you can get the NEPA requirements resolved, then you really can’t proceed further with that. And so that 

resulted in a delay for constructing the Las Vegas facilities. 

Mr. DESANTIS. Now, what was the longest delay in the report? 

Mr. WISE. I think the longest delay was about 13 years, and that 

was in the Jacksonville facility. 

Mr. DESANTIS. And what was the cause of that delay? 

Mr. WISE. Well, again, that was kind of a complicated story with 

a number of factors interwoven to cause these delays. You had a 

situation where there was a parking garage that was supposed to 

be a shared facility between the city and the health clinic. But at 


AKING-6430 with DISTILLER
15 

the end, that fell through and, again, that resulted in having to acquire more land. 

Eventually they were able to acquire more land, but that alone 

took a number of years, and so until you got all that resolved and 

there were additional environmental issues, it just went on and on 

until finally it was all able to get resolved over a very long period 

of time. 

Mr. DESANTIS. Now, based on the projects that you reviewed in 

your report, how would you characterize the delays, as more things 

that were outside the VA’s control or more shortcomings in the development and planning of the basic requirements of the projects? 

Mr. WISE. The latter rather than the former, sir. In the case of 

the—there were certain things, in fairness to the VA, and when we 

spoke to officials there, they conveyed this to us, and we took that 

onboard. There were certain areas that really they didn’t have particular control over. For example, in the Las Vegas situation, again, 

they ran into a NEPA problem. 

There were a couple other facilities where they ran into problems 

with either a contractor defaulted or the contractor didn’t perform 

and had to be fired, and so you kind of had to start over again with 

that. But those were a relatively small number of cases compared 

to the problems we identified that went into the preplanning process with—that was within the control of VHA. 

Mr. DESANTIS. Thank you. My time is expired. 

My friend from California, do you have another round of questions? 

Mr. LIEU. I do not. 

Mr. DESANTIS. Okay. Well—we have no more members here. So 

let me just thank the witnesses for their testimony and for answering our questions. We really appreciate it. We hope that this hearing has highlighted some of the shortcomings in this process, you 

know, not just in my district, which is obviously, you know, a huge 

concern of mine. I’m concerned about this happening all over the 

country. Because there’s a lot of good people who are potentially 

going to be negatively affected if we continue down this road. 

So thanks again. This hearing is now adjourned. 

[Whereupon, at 2:45 p.m., the subcommittee was adjourned.] 


AKING-6430 with DISTILLER

AKING-6430 with DISTILLER
(17) 

APPENDIX 

MATERIAL SUBMITTED FOR THE HEARING RECORD


AKING-6430 with DISTILLER
18 


AKING-6430 with DISTILLERInsert offset folio 1 here 96872.001
19 


AKING-6430 with DISTILLERInsert offset folio 2 here 96872.002
20 


AKING-6430 with DISTILLERInsert offset folio 3 here 96872.003
21 


AKING-6430 with DISTILLERInsert offset folio 4 here 96872.004
22 


AKING-6430 with DISTILLERInsert offset folio 5 here 96872.005
23 


AKING-6430 with DISTILLERInsert offset folio 6 here 96872.006
24 


AKING-6430 with DISTILLERInsert offset folio 7 here 96872.007
25 

Æ 


AKING-6430 with DISTILLERInsert offset folio 8 here 96872.008