29–006 

108TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 2d Session 108–663 

VETERANS HEALTH PROGRAMS AND FACILITIES 

ENHANCEMENT ACT OF 2004 

SEPTEMBER 8, 2004.—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. 4768] 

[Including cost estimate of the Congressional Budget Office] 

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

bill (H.R. 4768) to amend title 38, United States Code, to authorize 

the Secretary of Veterans Affairs to enter into certain major medical facility leases, to authorize that Secretary to transfer real property subject to certain limitations, and for other purposes, having 

considered the same, reports favorably thereon with amendments 

and recommends that the bill as amended do pass. 

The amendment is as follows: 

Strike all after the enacting clause and insert the following: 

SECTION 1. SHORT TITLE; REFERENCES TO TITLE 38, UNITED STATES CODE; TABLE OF CONTENTS. 

(a) SHORT TITLE.—This Act may be cited as the ‘‘Veterans Health Programs and 

Facilities Enhancement Act of 2004’’. 

(b) REFERENCES TO TITLE 38, UNITED STATES CODE.—Except as otherwise expressly provided, whenever in this Act an amendment or repeal is expressed in 

terms of an amendment to, or repeal of, a section or other provision, the reference 

shall be considered to be made to a section or other provision of title 38, United 

States Code. 

(c) TABLE OF CONTENTS.—The table of contents for this Act is as follows: 

Sec. 1. Short title; references to title 38, United States Code; table of contents. 

TITLE I—MEDICAL FACILITIES MANAGEMENT 

Sec. 101. Major medical facility leases. 

Sec. 102. Department of Veterans Affairs Capital Asset Fund. 

Sec. 103. Annual report to Congress on inventory of Department of Veterans Affairs historic properties. 

Sec. 104. Authority to use project funds to construct or relocate surface parking incidental to a construction 

or nonrecurring maintenance project. 

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Sec. 105. Inapplicability of limitation on use of advance planning funds to authorized major medical facility 

projects. 

Sec. 106. Improvement in enhanced-use lease authorities. 

Sec. 107. Extension of authority to provide care under long-term care pilot programs. 

TITLE II—OTHER MATTERS 

Sec. 201. Inclusion of all enrolled veterans among persons eligible to use canteens operated by Veterans’ Canteen Service. 

Sec. 202. Enhancement of medical preparedness of Department. 

TITLE I—MEDICAL FACILITIES MANAGEMENT 

SEC. 101. MAJOR MEDICAL FACILITY LEASES. 

(a) AUTHORIZED LEASES.—The Secretary of Veterans Affairs may enter into contracts for major medical facility leases at the following locations, in an amount for 

each facility lease not to exceed the amount shown for that location: (1) Wilmington, North Carolina, Outpatient Clinic, $1,320,000. 

(2) Greenville, North Carolina, Outpatient Clinic, $1,220,000. 

(3) Norfolk, Virginia, Outpatient Clinic, $1,250,000. 

(4) Summerfield, Florida, Marion County Outpatient Clinic, $1,230,000. 

(5) Knoxville, Tennessee, Outpatient Clinic, $850,000. 

(6) Toledo, Ohio, Outpatient Clinic, $1,200,000. 

(7) Crown Point, Indiana, Outpatient Clinic, $850,000. 

(8) Fort Worth, Texas, Tarrant County Outpatient Clinic, $3,900,000. 

(9) Plano, Texas, Collin County Outpatient Clinic, $3,300,000. 

(10) San Antonio, Texas, Northeast Central Bexar County Outpatient Clinic, $1,400,000. 

(11) Corpus Christi, Texas, Outpatient Clinic, $1,200,000. 

(12) Harlingen, Texas, Outpatient Clinic, $650,000. 

(13) Denver, Colorado, Health Administration Center, $1,950,000. 

(14) Oakland, California, Outpatient Clinic, $1,700,000. 

(15) San Diego, California, North County Outpatient Clinic, $1,300,000. 

(16) San Diego, California, South County, Outpatient Clinic, $1,100,000. 

(b) AUTHORIZATION OF APPROPRIATIONS.—There is authorized to be appropriated 

to the Secretary of Veterans Affairs for fiscal year 2005 for the Medical Care account, $24,420,000 for the leases authorized in subsection (a). 

(c) AUTHORITY FOR LEASE OF CERTAIN LANDS OF UNIVERSITY OF COLORADO.—Notwithstanding section 8103 of title 38, United States Code, the Secretary of Veterans 

Affairs may enter into a lease for real property located at the Fitzsimons Campus 

of the University of Colorado for a period up to 75 years. 

SEC. 102. DEPARTMENT OF VETERANS AFFAIRS CAPITAL ASSET FUND. 

(a) ESTABLISHMENT OF FUND.—(1) Subchapter I of chapter 81 is amended by adding at the end the following new section: 

‘‘§ 8118. Authority for transfer of real property; Capital Asset Fund 

‘‘(a)(1) The Secretary may transfer real property under the jurisdiction or control 

of the Secretary (including structures and equipment associated therewith) to another department or agency of the United States or to a State (or a political subdivision of a State) or to any public or private entity, including an Indian tribe. Such 

a transfer may be made only if the Secretary receives compensation of not less than 

the fair market value of the property, except that no compensation is required, or 

compensation at less than fair market value may be accepted, in the case of a transfer to a grant and per diem provider (as defined in section 2002 of this title). When 

a transfer is made to a grant and per diem provider for less than fair market value, 

the Secretary shall require in the terms of the conveyance that if the property transferred is used for any purpose other than a purpose under chapter 20 of this title, 

all right, title, and interest to the property shall revert to the United States. 

‘‘(2) The Secretary may exercise the authority provided by this section notwithstanding sections 521, 522 and 541–545 of title 40. Any such transfer shall be in 

accordance with this section and section 8122 of this title. 

‘‘(3) The authority provided by this section may not be used in a case to which 

section 8164 of this title applies. 

‘‘(4) The Secretary may enter into partnerships or agreements with public or private entities dedicated to historic preservation to facilitate the transfer, leasing, or 

adaptive use of structures or properties specified in subsection (b)(3)(D). 

‘‘(5) The authority of the Secretary under paragraph (1) expires on the date that 

is seven years after the date of the enactment of this section. 

‘‘(b)(1) There is established in the Treasury of the United States a revolving fund 

to be known as the Department of Veterans Affairs Capital Asset Fund (hereinafter 

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in this section referred to as the ‘Fund’). Amounts in the Fund shall remain available until expended. 

‘‘(2) Proceeds from the transfer of real property under this section shall be deposited into the Fund. 

‘‘(3) To the extent provided in advance in appropriations Acts, amounts in the 

Fund may be expended for the following purposes: 

‘‘(A) Costs associated with the transfer of real property under this section, including costs of demolition, environmental remediation, maintenance and repair, improvements to facilitate the transfer, and administrative expenses. 

‘‘(B) Costs, including costs specified in subparagraph (A), associated with future transfers of property under this section. 

‘‘(C) Costs associated with enhancing medical care services to veterans by improving, renovating, replacing, updating, and establishing patient care facilities 

through construction projects to be carried out for an amount less than the 

amount specified in 8104(a)(3)(A) for a major medical facility project. 

‘‘(D) Costs, including costs specified in subparagraph (A), associated with the 

transfer, lease or adaptive use of a structure or other property under the jurisdiction of the Secretary that is listed on the National Register of Historic 

Places. 

‘‘(c) The Secretary shall include in the budget justification materials submitted to 

Congress for any fiscal year in support of the President’s budget for that year for 

the Department specification of the following: 

‘‘(1) The real property transfers to be undertaken in accordance with this section during that fiscal year. 

‘‘(2) All transfers completed under this section during the preceding fiscal 

year and completed and scheduled to be completed during the year during 

which the budget is submitted. 

‘‘(3) The deposits into, and expenditures from, the Fund that are incurred or 

projected for each of the preceding fiscal year, the current fiscal year, and the 

fiscal year covered by the budget.’’. 

(2) The table of sections at the beginning of such chapter is amended by inserting 

after the item relating to section 8117 the following new item: 

‘‘8118. Authority for transfer of real property; Capital Asset Fund.’’. 

(b) INITIAL AUTHORIZATION OF APPROPRIATIONS.—There is authorized to be appropriated to the Department of Veterans Affairs Capital Asset Fund established under 

section 8118 of title 38, United States Code (as added by subsection (a)), the amount 

of $10,000,000. 

(c) TERMINATION OF NURSING HOME REVOLVING FUND.—(1) Section 8116 is repealed. 

(2) The table of sections at the beginning of chapter 81 is amended by striking 

the item relating to section 8116. 

(d) TRANSFER OF UNOBLIGATED BALANCES TO CAPITAL ASSET FUND.—Any unobligated balances in the nursing home revolving fund under section 8116 of title 38, 

United States Code, as of the date of the enactment of this Act shall be deposited 

in the Department of Veterans Affairs Capital Asset Fund established under section 

8118 of title 38, United States Code (as added by subsection (a)). 

(e) PROCEDURES APPLICABLE TO TRANSFERS.—(1) Paragraph (2) of section 8122(a) 

is amended to read as follows: 

‘‘(2) Except as provided in paragraph (3), the Secretary may not during any fiscal 

year transfer to any other department or agency of the United States or to any other 

entity real property that is owned by the United States and administered by the 

Secretary unless the proposed transfer is described in the budget submitted to Congress pursuant to section 1105 of title 31 for that fiscal year.’’. 

(2) Section 8122(d) is amended— 

(A) by inserting ‘‘(1)’’ before ‘‘Real property’’; and 

(B) by adding at the end the following new paragraph: 

‘‘(2) The Secretary may transfer real property under this section, or under section 

8118 of this title if the Secretary — 

‘‘(A) places a notice in the real estate section of local newspapers and in the 

Federal Register of the Secretary’s intent to transfer that real property (including land, structures, and equipment associated with the property); 

‘‘(B) holds a public hearing; 

‘‘(C) provides notice to the Administrator of General Services of the Secretary’s intention to transfer that real property and waits for 30 days to elapse 

after providing that notice; and 

‘‘(D) after such 30-day period has elapsed, notifies the congressional veterans’ 

affairs committees of the Secretary’s intention to dispose of the property and 

waits for 60 days to elapse from the date of that notice.’’. 

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(3) Section 8164(a) is amended by inserting ‘‘8118 or’’ after ‘‘rather than under 

section’’. 

(4) Section 8165(a)(2) is amended by striking ‘‘nursing home revolving fund’’ and 

inserting ‘‘Capital Asset Fund established under section 8118 of this title’’. 

(f) CONTINGENT EFFECTIVENESS.—The amendments made by this section shall 

take effect at the end of the 30-day period beginning on the date on which the Secretary of Veterans Affairs certifies to Congress that the Secretary is in compliance 

with subsection (b) of section 1710B of title 38, United States Code. Such certification shall demonstrate a plan for, and commitment to, ongoing compliance with 

the requirements of that subsection. 

(g) CONTINUING REPORTS.—Following a certification under subsection (f), the Secretary shall submit to Congress an update on that certification every six months 

until the certification is included in the Department’s annual budget submission. 

SEC. 103. ANNUAL REPORT TO CONGRESS ON INVENTORY OF DEPARTMENT OF VETERANS AFFAIRS HISTORIC PROPERTIES. 

(a) IN GENERAL.—Not later than December 15 of 2005, 2006, and 2007, the Secretary of Veterans Affairs shall submit to the Committees on Veterans’ Affairs of 

the Senate and House of Representatives a report on the historic properties administered or controlled by the Secretary. 

(b) INITIAL REPORT.—In the initial report under subsection (a), the Secretary shall 

set forth a complete inventory of the historic structures and property under the jurisdiction of the Secretary. The report shall include a description and classification 

of each such property based upon historical nature, current physical condition, and 

potential for transfer, leasing, or adaptive use. 

(c) SUBSEQUENT REPORTS.—In reports under subsection (a) after the initial report, 

the Secretary shall provide an update of the status of each property identified in 

the initial report, with the proposed and actual disposition of each property. Each 

such report shall include any recommendation of the Secretary for legislation to enhance the transfer, leasing or adaptive use of such properties. 

SEC. 104. AUTHORITY TO USE PROJECT FUNDS TO CONSTRUCT OR RELOCATE SURFACE 

PARKING INCIDENTAL TO A CONSTRUCTION OR NONRECURRING MAINTENANCE 

PROJECT. 

Section 8109 is amended by adding at the end the following new subsection: 

‘‘(j) Funds in a construction account or capital account that are available for a construction project or a nonrecurring maintenance project may be used for the construction or relocation of a surface parking lot incidental to that project.’’. 

SEC. 105. INAPPLICABILITY OF LIMITATION ON USE OF ADVANCE PLANNING FUNDS TO AUTHORIZED MAJOR MEDICAL FACILITY PROJECTS. 

Section 8104 is amended by adding at the end the following new subsection: 

‘‘(g) The limitation in subsection (f) does not apply to a project for which funds 

have been authorized by law in accordance with subsection (a)(2).’’. 

SEC. 106. IMPROVEMENT IN ENHANCED-USE LEASE AUTHORITIES. 

Section 8166(a) is amended by inserting ‘‘land use,’’ in the second sentence after 

‘‘relating to’’. 

SEC. 107. EXTENSION OF AUTHORITY TO PROVIDE CARE UNDER LONG-TERM CARE PILOT 

PROGRAMS. 

Subsection (h) of section 102 of the Veterans Millennium Health Care and Benefits Act (38 U.S.C. 1710B note) is amended— 

(1) by inserting ‘‘(1)’’ before ‘‘The authority of’’; and 

(2) by adding at the end the following new paragraph: 

‘‘(2) In the case of a veteran who is participating in a pilot program under this 

section as of the end of the three-year period applicable to that pilot program under 

paragraph (1), the Secretary may continue to provide to that veteran any of the 

services that could be provided under the pilot program. The authority to provide 

services to any veteran under the preceding sentence applies during the period beginning on the date specified in paragraph (1) with respect to that pilot program 

and ending on December 31, 2005.’’. 

TITLE II—OTHER MATTERS 

SEC. 201. INCLUSION OF ALL ENROLLED VETERANS AMONG PERSONS ELIGIBLE TO USE CANTEENS OPERATED BY VETERANS’ CANTEEN SERVICE. 

The text of section 7803 is amended to read as follows: 

‘‘(a) PRIMARY BENEFICIARIES.—Canteens operated by the Service shall be primarily for the use and benefit of— 

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‘‘(1) veterans hospitalized or domiciled at the facilities at which canteen services are provided; and 

‘‘(2) other veterans who are enrolled under section 1705 of this title. 

‘‘(b) OTHER AUTHORIZED USERS.—Service at such canteens may also be furnished 

to— 

‘‘(1) personnel of the Department and recognized veterans’ organizations who 

are employed at a facility at which canteen services are provided and to other 

persons so employed; 

‘‘(2) the families of persons referred to in paragraph (1) who reside at the facility; and 

‘‘(3) relatives and other persons while visiting a person specified in this section.’’. 

SEC. 202. ENHANCEMENT OF MEDICAL PREPAREDNESS OF DEPARTMENT. 

(a) PEER REVIEW PANEL.—In order to assist the Secretary of Veterans Affairs in 

selecting facilities of the Department of Veterans Affairs to serve as sites for centers 

under section 7327 of title 38, United States Code, as added by subsection (c), the 

Secretary shall establish a peer review panel to assess the scientific and clinical 

merit of proposals that are submitted to the Secretary for the selection of such facilities. The panel shall be established not later than 90 days after the date of the enactment of this Act and shall include experts in the fields of toxicological research, 

infectious diseases, radiology, clinical care of veterans exposed to such hazards, and 

other persons as determined appropriate by the Secretary. Members of the panel 

shall serve as consultants to the Department of Veterans Affairs. Amounts available 

to the Secretary for Medical Care may be used for purposes of carrying out this subsection. The panel shall not be subject to the Federal Advisory Committee Act (5 

U.S.C. App.). 

(b) PROPOSALS.—The Secretary shall solicit proposals for designation of facilities 

as described in subsection (a). The announcement of the solicitation of such proposals shall be issued not later than 60 days after the date of the enactment of this 

Act, and the deadline for the submission of proposals in response to such solicitation 

shall be not later than 90 days after the date of such announcement. The peer review panel established under subsection (a) shall complete its review of the proposals and submit its recommendations to the Secretary not later than 60 days after 

the date of the deadline for the submission of proposals. The Secretary shall then 

select the four sites for the location of such centers not later than 45 days after the 

date on which the peer review panel submits its recommendations to the Secretary. 

(c) REVISED SECTION.—Subchapter II of chapter 73 is amended by adding at the 

end a new section with— 

(1) a heading as follows: 

‘‘§ 7327. Medical preparedness centers’’; and 

(2) a text consisting of the text of subsections (a) through (h) of section 7325 

of title 38, United States Code, and a subsection (i) at the end as follows: 

‘‘(i) FUNDING.—(1) There are authorized to be appropriated for the centers under 

this section $10,000,000 for each of fiscal years 2005 through 2007. 

‘‘(2) In addition to any amounts appropriated for a fiscal year specifically for the 

activities of the centers pursuant to paragraph (1), the Under Secretary for Health 

shall allocate to the centers from other funds appropriated for that fiscal year generally for the Department medical care account and the Department medical and 

prosthetics research account such amounts as the Under Secretary determines necessary in order to carry out the purposes of this section.’’. 

(d) RULE OF CONSTRUCTION.—No provision of law may be construed to supersede 

or nullify this section, or an amendment made by this section, unless it specifically 

refers to this subsection and specifically states that it is enacted to supersede or nullify this section or a provision of this section. 

Amend the title so as to read: 

A bill to authorize the Secretary of Veterans Affairs to enter into certain major 

medical facility leases, to authorize that Secretary to transfer real property subject 

to certain limitations, otherwise to improve management of medical facilities of the 

Department of Veterans Affairs, and for other purposes. 

INTRODUCTION

On June 24, 2004, the Subcommittee on Health held a hearing 

to consider a draft bill that preceded the introduction of H.R. 4768, 

a bill to authorize major medical facility leases for fiscal year 2005, 

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to amend the authority of the Secretary of Veterans Affairs to enter 

into enhanced-use real property leases, establish a capital asset 

fund and for other purposes. 

Witnesses who appeared before the Subcommittee included Honorable Anthony J. Principi, Secretary of Veterans Affairs, accompanied by the following individuals from the Department of Veterans Affairs (VA): Honorable Tim S. McClain, General Counsel; 

Honorable William H. Campbell, Assistant Secretary for Management; Mrs. Laura Miller, Deputy Under Secretary for Health for 

Operations and Management; and Mr. James M. Sullivan, Deputy 

Director, Office of Asset Enterprise. Honorable Everett Alvarez, Jr., 

the former Chairman of the Capital Asset Realignment for Enhanced Services (CARES) Commission; Mr. Dennis Brimhall, President and Chief Executive Officer of the University of Colorado Hospital and Mr. Lawrence A. Biro, Network Director of the Veterans 

Integrated Services Network (VISN) 19, the Rocky Mountain Network; Mr. John L. Nau, III, Chairman of the President’s Advisory 

Council on Historic Preservation; Mr. Dennis Samic, Treasurer, 

American Veterans Heritage Center, Inc.; Mr. Richard Jones, National Legislative Director, AMVETS; Mr. Rick Weidman, Director, 

Government Relations, Vietnam Veterans of America; Ms. Joy J. 

Ilem, Assistant National Legislative Director, Disabled American 

Veterans; Mr. Richard Fuller, National Legislative Director, Paralyzed Veterans of America; and Mr. Peter S. Gaytan, Principal 

Deputy Director, The American Legion, also provided testimony. 

On July 7, 2004, Honorable Rob Simmons introduced H.R. 4768, 

the Veterans Health Programs and Facilities Enhancement Act of 

2004. The original cosponsors of the bill included Honorable Ciro 

D. Rodriguez, Honorable Christopher H. Smith, Honorable Lane 

Evans, Honorable Cliff Stearns, Honorable Jeff Miller, Honorable 

Bob Beauprez, and Honorable Bob Filner. On July 8, 2004, the 

Subcommittee on Health met and unanimously ordered H.R. 4768 

reported favorably to the full Committee. 

On July 21, 2004, the full Committee met and ordered H.R. 4768, 

as amended, reported favorably to the House by unanimous voice 

vote. 

SUMMARY OF THE REPORTED BILL

H.R. 4768, as amended, would: 

1. Authorize leases to be paid from the medical care account for 

VA outpatient clinics or other health care facilities as follows: Wilmington, North Carolina, in the amount of 

$1,320,000; Greenville, North Carolina, in the amount of 

$1,220,000; Norfolk, Virginia, in the amount of $1,250,000; 

Summerfield, Florida, in the amount of $1,230,000; Knoxville, Tennessee, in the amount of $850,000; Toledo, Ohio, in 

the amount of $1,200,000; Crown Point, Indiana, in the 

amount of $850,000; Fort Worth, Texas, in the amount of 

$3,900,000; Plano, Texas, in the amount of $3,300,000; San 

Antonio, Texas, in the amount of $1,400,000; Corpus Christi, 

Texas, in the amount of $1,200,000; Harlingen, Texas, in the 

amount of $650,000; Denver, Colorado, in the amount of 

$1,950,000; Oakland, California, in the amount of 

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$1,700,000; San Diego, California (two sites), in the amounts 

of $1,300,000 and $1,100,000, respectively. 

2. Authorize appropriations of $24,420,000 for the leases in 

paragraph 1. 

3. Authorize VA to enter into a long-term lease of up to 75 

years for land to construct a new medical facility on the 

Fitzsimons Campus of the University of Colorado, in Aurora, 

Colorado. 

4. Provide the Secretary with additional authority to transfer 

unneeded real property and retain the proceeds from the 

transfer. 

5. Require VA to receive fair market value for any transfer of 

real property, except when transferred to providers of homeless veterans’ services receiving grants under section 2011 of 

title 38, United States Code. 

6. Establish a new ‘‘Capital Asset Fund’’ for deposit of proceeds 

from transfers of real property to defray VA’s cost of such 

transfers, including demolition, environmental remediation, 

maintenance, repair, historic preservation and administrative expenses. 

7. Require the Secretary to include in the Department’s annual 

budget submission to Congress information on real property 

transfers, and Capital Asset Fund deposits and expenditures. 

8. Authorize an appropriation of $10,000,000 for the Capital 

Asset Fund. 

9. Terminate the Nursing Home Revolving Fund and transfer 

unobligated balances to the Capital Asset Fund. 

10. Make the property transfer authority contingent on the Secretary’s certification that VA facilities maintain long-term 

care capacity as required by law. 

11. Require an inventory and annual reports to Congress on the 

status of and plans for VA historic properties. 

12. Authorize the use of project funds to construct or relocate 

surface parking incidental to an authorized major medical facility construction project. 

13. Provide the Secretary flexibility in using funds to develop advance planning for major construction projects previously authorized by law. 

14. Exempt VA from state and local land use laws under the enhanced-use lease authority. 

15. Extend until December 31, 2005, VA’s authority to provide 

care to veterans participating in certain long-term care demonstration projects previously authorized in the Veterans 

Millennium Health Care and Benefits Act. 

16. Clarify that veterans enrolled in VA health care are eligible 

to use the Veterans’ Canteen Service (VCS). 

17. Reduce the amount authorized to establish four National 

Medical Emergency Preparedness Centers from $20 million 

to $10 million per year. 

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BACKGROUND AND DISCUSSION

Major medical facility leases.—Section 8104(a)(2) of title 38, 

United States Code, prohibits VA from obligating or expending 

funds for a lease costing more than $600,000 per year unless that 

lease has been specifically authorized by law. VA’s fiscal year 2005 

budget submission included a request for authority to execute six 

major medical facility leases in the following locations: (1) Greenville, North Carolina, Outpatient Clinic, $1,220,000; (2) Wilmington, North Carolina, Outpatient Clinic, $1,320,000; (3) Oakland, California, Outpatient Clinic, $1,700,000; (4) Toledo, Ohio, 

Outpatient, Clinic, $1,200,000; (5) Crown Point, Indiana, Outpatient Clinic, $850,000; and (6) Denver, Colorado, Health Administration Center, $1,950,000. These leases would replace or expand 

leases for existing facilities in these locations. 

Additionally, VA’s Five-Year Capital Plan for 2005–2009, submitted to the Committees on Veterans’ Affairs in May, 2004, included a request for 11 additional major medical facility leases at 

the following locations: (1) Norfolk, Virginia, Outpatient Clinic, 

$1,250,000; (2) Summerfield, Florida, Marion County Outpatient, 

Clinic, $1,230,000; (3) Knoxville, Tennessee, Outpatient Clinic, 

$850,000; (4) Fort Worth, Texas, Tarrant County Outpatient Clinic, 

$3,900,000; (5) Plano, Texas, Collin County Outpatient Clinic, 

$3,300,000; (6) San Antonio, Texas, Northeast Central Bexar County Outpatient Clinic, $1,400,000; (7) Corpus Christi, Texas, Outpatient Clinic, $1,200,000; (8) Harlingen, Texas, Outpatient Clinic, 

$650,000; (9) Waco/Marlin, Texas, Outpatient Clinic, $2,600,000; 

(10) San Diego, California, North County Outpatient Clinic, 

$1,300,000; and (11) San Diego, California, South County, Outpatient Clinic, $1,100,000. 

Section 101 of the bill would authorize 16 of the 17 requested 

leases and appropriations of $24,420,000 to support them. Of the 

16 leases, the leases in Norfolk, Virginia; Summerfield, Florida; 

Plano, Texas, and San Antonio, Texas, would be for new facilities. 

The remaining 12 leases are replacements or expansions for existing leased facilities. The lease requested for Waco/Marlin, Texas, 

Outpatient Clinic was not included in the bill because the Secretary’s Decision Document on Capital Asset Realignment for Enhanced Services (CARES), submitted to the Committees on Veterans Affairs in May, 2004, required a study to assess the future 

of the mission of the Waco campus. The study is expected to be 

completed by January 1, 2005. Advancing a major medical facility 

lease in Waco/Marlin, Texas, for fiscal year 2005 before the study 

findings are available would be premature. 

Section 213 of Public Law 108–170, the Veterans Health Care, 

Capital Asset, and Business Improvement Act of 2003, authorized 

the Secretary to carry out advance planning of a replacement facility in conjunction with the University of Colorado and the Department of Defense (DOD). As planned, VA would construct a new 

medical facility at the University of Colorado Fitzsimons campus. 

The replacement facility would be a Federal tower housing the 

medical services of the Denver Veterans Affairs Medical Center 

and the medical services of Buckley Air Force Base. VA’s current 

leasing authority is limited to 20 years, an insufficient period of 

time for VA to acquire a land interest for the construction of a new 

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medical facility, given the nature of the pending investment. The 

Committee bill would provide VA with new leasing authority to 

enter into a long-term lease of up to 75 years. The new authority 

would ensure the government a long-term interest in the land, to 

warrant the construction of a multi-million dollar facility. 

Department of Veterans Affairs Capital Asset Fund.—Section 102 

of the bill would amend chapter 81 of title 38, United States Code, 

to add a new section 8118 to provide the Secretary with new authority to transfer by sale, exchange or lease unneeded real properties currently in VA’s portfolio; would establish a new ‘‘Capital 

Asset Fund’’ to finance transfers; and would repeal the Nursing 

Home Revolving Fund in section 8116 of title 38, United States 

Code. 

In place of the Nursing Home Revolving Fund, a new fund would 

be established to be known as the Capital Asset Fund. This change 

would acknowledge that VA has not been aggressive in making 

property transfers for the benefit of the Nursing Home Revolving 

Fund. Developing infrastructure to meet veterans’ needs for longterm care has been a low priority of the VA for many years. Residual balances from the Nursing Home Revolving Fund would be authorized to be deposited into the Fund, and the Fund would be authorized initial appropriations of $10,000,000. 

This Capital Asset Fund would be used as well for the general 

purpose of defraying VA’s cost of transferring real property, including demolition, environmental restoration, maintenance and repair, 

and for historic preservation and administrative expenses. The new 

property transfer authority would establish ‘‘fair market value’’ as 

the basis for property transfers. The Secretary would be required 

to include in each year’s budget submission to Congress a report 

of both the uses of the Capital Asset Fund and descriptive information on each completed, pending and planned property disposal. 

To ensure VA would meet its commitment to the long-term care 

needs of veterans, the property transfer authority in this bill would 

be contingent upon the Secretary certifying that VA facilities maintain long-term care capacity as required by subsection (b) of section 

1710B of title 38, United States Code. The bill would require the 

Secretary to submit an update on that certification every six 

months until the certification is included in the Department’s annual budget submission. 

Annual report to Congress on inventory of Department of Veterans 

Affairs historic properties.—Many of VA’s important historic buildings are poorly maintained or falling into ruin. The Federal Advisory Council on Historic Preservation has testified that some of 

these facilities date from the 19th century following the American 

Civil War, and many more were constructed as a part of the Nation’s response to caring for wounded soldiers and sailors in World 

Wars I and II. Approximately 40 percent of the VA’s medical centers are identified ‘‘historic districts,’’ as defined by the National 

Register of Historic Places, and contain more than 1,900 historic 

structures. In addition, a large number of properties are individually listed or eligible for listing in the National Register, including 

at least 32 archaeological sites. 

Section 103 of the bill would require VA to establish a national 

inventory of historic VA properties, and would require reports to 

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Congress over several years on the status and plans associated 

with any VA property listed on the National Register of Historic 

Places. The Committee concluded that VA should use the new Capital Asset Fund to preserve historic VA properties, among other 

purposes. 

Authority to use project funds to construct or relocate surface 

parking incidental to a construction or non-recurring maintenance 

project.—Non-recurring maintenance and construction projects at 

medical facilities frequently involve relocating existing facility 

parking lots to make way for the construction projects involved. 

Current law requires VA to use the Parking Revolving Fund authorized in section 8109 of title 38, United States Code, as the authority and funding source to establish all VA health care related 

parking facilities. Surface parking lots are included in the definition of parking facilities. This specific-purpose fund is partitioned 

from any non-recurring maintenance or major medical facility construction account authorized by Congress for use for the projects 

themselves. The dual funding necessitates a separate contracting 

process and needlessly complicates projects. 

Section 104 of the bill would provide VA authority to use funds 

for the primary construction project for related parking lot relocation. This would eliminate the administrative burden of separate financial accounting for parking lot projects. 

Inapplicability of limitation on use of advanced planning funds 

to authorized major medical facility projects.—Section 8104 of title 

38, United States Code, prohibits the Secretary from obligating advance planning funds for major medical facility construction 

projects in excess of $500,000 until 30 days after submission of a 

report to the Committees on Veterans’ Affairs of the Senate and 

House of Representatives on the proposed obligation. This reporting requirement delays design planning for projects that have been 

expressly approved by Congress in prior authorization and appropriations acts. Section 105 of the bill would eliminate the burden 

of reporting as it applies to projects that have previously been authorized and appropriated by Congress. 

Improvement in enhanced-use lease authorities.—Section 8166 of 

title 38, United States Code, provides the Secretary permissive authority to disregard State and local laws relating to building codes, 

permits or inspections that would regulate or restrict construction, 

alternation, repair, remodeling or improvement of VA property associated with an enhanced-use lease under section 8162 of title 38, 

United States Code. Section 106 of the bill would add to existing 

exemptions from State and local laws for enhanced-use leases any 

land-use laws. 

Extension of authority to provide care under long-term care pilot 

programs.—The Veterans Millennium Health Care and Benefits 

Act established an innovative three-year pilot program in long-term 

care. To respond to this requirement, VA established a three-site 

program along the lines of the Medicare ‘‘Program of All-Inclusive 

Care for the Elderly,’’ known as the ‘‘PACE’’ program. The Act was 

intended to test the feasibility, acceptability, outcomes and costs of 

care using different models of care management and delivery. The 

three program sites are Dayton, Ohio; Denver, Colorado; and CoVerDate Aug 04 2004 00:50 Sep 09, 2004 Jkt 029012 PO 00000 Frm 00010 Fmt 6659 Sfmt 6601 E:\HR\OC\HR663.XXX HR663
11 

lumbia, South Carolina. The authority for the pilot program expires 

December 31, 2004. VA has requested authority to extend for one 

year the duration of this authority to allow VA to continue to deliver the care participating veterans are receiving in these locations. Section 107 of the bill would extend VA’s authority to provide 

care to veterans in these pilot programs until December 31, 2005. 

This would allow for an orderly transition of health care services 

for those veterans participating in the PACE program at the termination of the current authority. 

Inclusion of all enrolled veterans among persons eligible to use 

canteens operated by Veterans’ Canteen Service.—The Veterans’ 

Canteen Service is authorized in chapter 78, of title 38, United 

States Code, to provide essential commercial products and services 

to veterans hospitalized and domiciled in VA hospitals and homes. 

Over the past ten years, VA’s health care system has shifted significantly from institutional and inpatient services to outpatient 

primary care. Simultaneously, States have taken on a significantly 

larger role in caring for veterans in need of long-term, institutional 

care. Thus, the formal mission statement of the Canteen Service, 

to provide services to veterans ‘‘hospitalized or domiciled,’’ has become increasingly inconsistent with VA’s larger health care mission. Section 201 of the bill would state that the Veterans’ Canteen 

Service mission is to serve veterans enrolled in the VA health care 

system. 

Enhancement of medical preparedness of Department.—The Department of Veterans Affairs Emergency Preparedness Act of 2002 

requires the Secretary to establish four Medical Emergency Preparedness Research Centers. These centers have not been established. Section 202 of the bill would restate the intent of Congress 

that a series of specific actions be taken by the Secretary to establish the centers by dates certain, in accordance with the original intent of Congress. 

SECTION-BY-SECTION ANALYSIS

Section 1 of the bill would name the Act the ‘‘Veterans Health 

Programs and Facilities Enhancement Act of 2004.’’ 

Section 101(a) of the bill would authorize the Secretary of Veterans Affairs to enter into 16 specified major medical facility leases 

that are required to be authorized by law because the cost of the 

lease exceeds $600,000 per year. 

Section 101(b) of the bill would authorize $24,420,000 to be appropriated in fiscal year 2005 to VA for the leases authorized in 

subsection (a). 

Section 101(c) of the bill would authorize the Secretary to enter 

into a lease for real property located at the University of Colorado, 

Fitzsimons Campus, for a period up to 75 years. 

Section 102(a) of the bill would amend subchapter I of chapter 

81 of title 38, United States Code, to add a new section 8118 to provide for the transfer of real property under the jurisdiction or control of the Secretary, and for establishment of a Capital Asset 

Fund. 

New section 8118(a)(1–5) would authorize the Secretary to transfer VA real property, including land, structures and equipment asVerDate Aug 04 2004 00:50 Sep 09, 2004 Jkt 029012 PO 00000 Frm 00011 Fmt 6659 Sfmt 6601 E:\HR\OC\HR663.XXX HR663
12 

sociated with the property by sale or exchange to another Federal 

agency, a state or a political subdivision of a State, or any public 

or private entity; require VA to receive fair market value for any 

transfer of real property, except when transferred to providers of 

homeless veterans’ services receiving grants under section 2011 of 

title 38, United States Code; and provide for expiration of the authority seven years after the date of enactment of this new section. 

New section 8118(b)(1–3) would establish in the Treasury a fund 

known as the Capital Asset Fund and authorize VA to deposit proceeds from the transfer of VA real property into the Fund; authorize VA to expend Fund deposits for costs associated with the transfer of real property, including demolition, environmental remediation, maintenance, repair, historic preservation, related administrative expenses; authorize VA to expend Fund deposits for future 

transfers; authorize VA to expend Fund deposits to enhance medical care services by improving, renovating, replacing, updating, 

and establishing patient care facilities. 

New section 8118(c) would require the Secretary to include in the 

annual VA budget reports submitted to Congress the transfers to 

be undertaken during that fiscal year, completed during the preceding fiscal year, and planned or scheduled to be completed during 

that fiscal year; and deposits into and expenditures from the Fund 

incurred or projected for the preceding fiscal year, current fiscal 

year, and fiscal year covered by the proposed budget. 

Section 102(b) would authorize an initial appropriation for the 

Capital Asset Fund established under new section 8118 in the 

amount of $10,000,000. 

Section 102(c) would repeal section 8116 of title 38, United 

States Code, the Nursing Home Revolving Fund. 

Section 102(d) would authorize the transfer of unobligated balances from the repealed Nursing Home Revolving Fund into the 

Capital Asset Fund established under new section 8118. 

Section 102(e) would amend paragraph 2 of section 8122(a) of 

title 38, United States Code, to establish procedures applicable to 

transfers of VA properties including: notification in the budget submitted to Congress pursuant to section 1105 of title 31, United 

States Code; placing a notice of intent to transfer in applicable 

local newspapers and the Federal Register; holding public hearings; 

notification to the Administrator of General Services and waiting 

30 days after each such notice; and notifying the Committees on 

Veterans’ Affairs of the House and Senate of intention to dispose 

of properties and waiting 60 days from the date of each such notice. 

Section 102(f) would make the property transfer authority established by new section 8118 contingent on the Secretary’s certification to Congress that VA is in compliance with the long-term 

care capacity requirements of subsection (b) of section 1710B of 

title 38, United States Code. 

Section 102(g) would require the Secretary to submit an update 

to Congress on the certification established in section 102(f) every 

six months until the certification is included in VA’s annual budget 

submission. 

Section 103(a) of the bill would require VA to submit a report to 

the Committees on Veterans’ Affairs of the Senate and House of 

13 

Representatives by December 15 for fiscal year 2005 and two subsequent years on the status of and plans for VA historic properties. 

Section 103(b) would require the Secretary to include in the initial report set forth in subsection (a) a description, classification, 

current physical condition and potential for transfer, leasing or 

adaptive use of each historic property. 

Section 103(c) would require the Secretary to include in subsequent reports set forth in subsection (a) an update of the status of 

each property identified in the initial report and recommendations 

for legislation to enhance transfer, leasing or adaptive use of such 

properties. 

Section 104 of the bill would amend section 8109 of title 38, 

United States Code, to add a new subsection (j) to authorize the 

use of available project funds to construct or relocate surface parking, when incidental to an authorized non-recurring maintenance 

or major medical facility construction project. 

Section 105 of the bill would amend section 8104 of title 38, 

United States Code, to add a new subsection (g) to eliminate the 

existing limitation that requires VA to submit a report to Congress 

and wait 30 days before obligating advanced planning funds over 

$500,000 for the design or development of a major medical facility 

construction project previously authorized by law. 

Section 106 of the bill would amend section 8166(a) of title 38, 

United States Code, to include ‘‘land-use’’ in the existing list of permissive exemptions from state and local laws for enhanced-use 

leases. 

Section 107 of the bill would amend subsection (h) of section 102 

of the Veterans Millennium Health Care and Benefits Act to extend 

VA’s authority to provide services under the long-term care pilot 

programs authorized by that Act until December 31, 2005. 

Section 201 of the bill would amend section 7803 of title 38, 

United States Code, to expand the definition of persons eligible to 

use the Veterans’ Canteen Service to include all individuals enrolled in VA health care under section 1705 of title 38, United 

States Code, or employed at VA facilities, as well as families and 

relatives of veteran patients. 

Section 202(a) of the bill would require the Secretary to establish 

a peer review panel not later than 90 days after the date of enactment of this Act to assist VA in selecting facilities to serve as sites 

for centers authorized under section 7327 (formerly section 7325). 

Section 202(b) of the bill would: require the Secretary to solicit 

proposals for centers authorized in new section 7327 not later than 

60 days after enactment of this Act; set a deadline for proposal submissions not later than 90 days after the solicitation is announced; 

require the peer review panel established under subsection (a) to 

submit recommendations to the Secretary not later than 60 days 

after the proposal deadline; and require the Secretary to select four 

sites for the location of such centers not later than 45 days after 

the date on which the peer review panel recommendations are submitted. 

Section 202(c) of the bill would amend subchapter II of chapter 

73 of title 38, United States Code, to add a new section 7327, Medical preparedness centers. 

14 

New Section 7327(a–h) would recodify the text of subsections (a– 

h) of section 7325 of title 38, United States Code. 

New Section 7327(i)(1) and (2) would authorize $10,000,000 to be 

appropriated in fiscal year 2005 and each subsequent year through 

2007 for the centers authorized in new section 7327; and require 

the Under Secretary for Health to allocate from other appropriated 

funds for a fiscal year such sums as necessary to carry out the purposes of new section 7327. 

Section 202(d) of the bill would provide a rule of construction 

with respect to subsequent laws which purport to amend any of the 

provisions contained in this section of the bill. 

PERFORMANCE GOALS AND OBJECTIVES

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. Government Accountability Office. VA also publishes a performance and 

accountability report for each fiscal year. 

STATEMENT OF THE VIEWS OF THE ADMINISTRATION

Statement of The Honorable Anthony J. Principi, Secretary of Veterans Affairs, Before The Subcommittee on Health, Committee on Veterans Affairs, U.S. House of 

Representatives 

June 24, 2004 

H.R. 4768 

Mr. Chairman and Members of the Subcommittee: 

Thank you for providing the Department of Veterans Affairs (VA) this opportunity 

to discuss my recent decisions surrounding the Capital Asset Realignment for Enhanced Services (CARES) and the draft of a proposed bill to be entitled, ‘‘The Department of Veterans Affairs Real Property and Facilities Improvement Act of 

2004.’’ The bill contains several provisions that would significantly enhance VA’s 

ability to manage and expand its capital resources while promoting efficiencies, and 

cost savings. Most importantly, the bill would facilitate the implementation of 

CARES. I request an opportunity to more closely review the specific provisions of 

the bill and supply the results of our review for the record. [Subsequently, the Department provided no additional views on the bill.] 

As you know, last month I announced my decision on the future of VHA’s capital 

infrastructure and publicly released my CARES Decision Document, copies of which 

have been provided to the Committee. It is not my intention today to discuss the 

details of the entire decision document. Instead, I will focus my discussion on the 

following issues of particular interest to the Committee: 

1. The CARES Implementation Board; 

2. Community Based Outpatient Clinics; 

3. Mental Health Strategic Plan; 

4. Long-term Care Strategic Plan; 

5. Veterans Rural Access Hospital; 

6. Special Disability Program for Spinal Cord Injury and Disorders; 

7. Capital Initiatives for the Veterans Health Administration; and 

8. VA/DoD Sharing Opportunities 

Before I address those topics, however, I would like to provide a brief background 

on CARES. 

Background 

CARES is a data-driven planning process designed to project future demand for 

health care services, compare projected demand against current supply, and identify 

the capital requirements and asset realignments VA needs to meet future demand 

for services, improve access to and quality of services, and improve the cost effectiveness of VA’s health-care system. The CARES process is a comprehensive, system-wide approach to projecting into the future the appropriate function, size and 

15 

location of VA facilities. CARES was initiated to provide a plan for management of 

VA’s capital infrastructure into the future that can be improved over time. For that 

reason, the tools and a process used to develop CARES will be integrated into annual capital and strategic planning cycles, ensuring continued and systematic planning for the capital resources VA needs to provide quality health care to veterans. 

On February 12 of this year, the CARES Commission presented its final report 

to me. Following an intensive review of this report, I issued my ‘‘CARES Decision’’ 

on May 7, 2004. In that decision, I formally accepted the CARES Commission’s recommendations using the flexibility the Commission provided to minimize the effect 

of any campus or service realignment on continuity of care to veterans currently receiving services. My Decision and the CARES Commission Report form the blueprint that will effectively guide the Department as it moves forward to enhance and 

improve health-care delivery to veterans by modernizing and more effectively managing its capital infrastructure. 

CARES Implementation Board 

To oversee the many and varied actions needed to carry out my CARES Decision, 

I established the CARES Implementation Board, which I will personally chair. The 

Board will provide Departmental oversight of CARES implementation and advise 

me on CARES-related decisions. The Board is an intra-Departmental, senior-level 

group and will ensure that implementation actions are consistent with my CARES 

Decision, meet the Decision’s aggressive timeframes, and honor the personal and 

public commitments made during the CARES process. 

The Board will actively participate in developing the methodologies and structure 

of CARES reviews and studies as called for in my Decision. All CARES decisions 

will be presented to the Board for my approval, unless approved by me for delegation. Recently the Board held its first meeting and reviewed options regarding the 

composition and membership of committees, task forces and other groups that will 

be established to conduct the various studies outlined in my CARES Decision. I expect that guidance will be finalized for my approval in the near future so that these 

groups may begin their studies and reviews. 

Community-Based Outpatient Clinics (CBOCs) 

VA is committed to continuing its efforts to meet national standards for access 

to care for our Nation’s veterans by establishing new sites of care through CBOCs. 

VA will also continue to explore opportunities to improve management of existing 

CBOCs through more effective staffing, expanding hours of operation, and examining opportunities to augment services where appropriate. 

To ensure that VA fulfills its commitment, I established priority criteria for the 

development of new CBOCs through the CARES process. The priority criteria include the development of CBOCs that: 

1. are in markets with large numbers of enrollees, are outside of access guidelines, and are below VA national standards for primary care access; 

2. are in markets that are classified as rural or highly rural and are below VA 

national standards for primary care access; 

3. take advantage of VA/DoD sharing opportunities; 

4. are associated with the realignment of a major facility; and 

5. are required to address the workload in existing overcrowded facilities. 

These criteria reflect my determination to produce more equitable access to VA 

services across the country, particularly in rural and highly rural areas where there 

are often limited health care options. They also reflect VA’s ongoing commitment to 

strengthening sharing opportunities with the Department of Defense. 

My Decision identifies 156 priority CBOCs. These priority CBOCs are targeted for 

implementation by 2012 pending availability of resources, validation with the most 

current data available, and approval through the National CBOC Approval Process 

and the CARES Implementation Board. As VA proceeds in implementing CARES 

and engages in future planning, the locations of these CBOCs may change, but the 

priorities will remain constant. 

Planning the implementation of new CBOCs has begun. On May 13, 2004, a revised VA Handbook on Planning and Activation of CBOCs was issued to all VISNs. 

At the same time, VISNs were provided guidance on submission of new CBOC business plans. VISNs are now in the process of preparing business plans for priority 

CBOCs identified in my Decision that are planned for activation in FY 2004. Additionally, VISNs are preparing business plans for priority CBOCs planned for FY 

2005 that require immediate review in order to proceed with VA/DoD agreements 

and leasing or contracting obligations. These business plans are to be completed and 

submitted to the Acting Under Secretary for Health by the end of this month. A 

16 

review panel will evaluate the business plans, score the applications and develop a 

recommendation that the Acting Under Secretary for Health will submit to me for 

approval. 

VISNs also received guidance regarding establishing outreach clinics to an existing primary care site, changing the location of an existing CBOC, leasing additional 

space for an existing CBOC, expanding services at an existing CBOC and changing 

management models at CBOCs, such as VA-staffed or contract. To obtain approval 

for any of these changes to CBOCs, the VISNs must submit a justification for the 

change and a summary of stakeholder comments. In the case of establishing an outreach clinic subordinate to an existing primary care site, approval will be granted 

only for areas that meet the distance criteria for highly rural areas specified in the 

national planning criteria. 

I should point out that although I established priority criteria and identified 156 

priority CBOCs that meet these criteria, these priorities do not prohibit the VISNs 

from pursuing other CBOC opportunities. VISNs may submit business plans for establishing CBOCs earlier than originally indicated in my Decision or for establishing CBOCs not referenced in my Decision. In either scenario, however, the VISN 

must demonstrate that it will, at the same time, be able to open any priority CBOC 

on schedule. 

Mr. Chairman, I recognize that resources are not available to open all of the priority clinics immediately. I will work closely with Congress for approval of appropriations to enhance access to VA health care services as well as expand the types 

of services offered in outpatient sites, particularly specialty care such as mental 

health services. Moreover, VA will manage implementation of CBOCs by applying 

the revised CBOC criteria within the existing National CBOC Approval Process and 

through the authority of the CARES Implementation Board. This will ensure a careful and considered implementation that mandates VISNs develop sound business 

plans and ensures that national criteria are met and that resources are available 

to provide the high quality of care veterans expect from VA. 

Mental Health Strategic Plan 

VA is committed to meeting the mental health needs of our Nation’s veterans, and 

it is critical that VA’s health care system consistently provides comprehensive mental health care services at a high level of quality across the country. Effective mental health treatment requires that veterans have appropriate access to a full continuum of mental health care services. 

In my Decision I called for a comprehensive VA Mental Health Strategic Plan. 

This strategic plan, which is nearing completion, incorporates the recommendations 

of the report of the President’s New Freedom Commission on Transforming Mental 

Health Care in America through VA’s Action Agenda for Transforming Mental 

Health Care in VA. The recommendations resulting from the VA Mental Health 

Strategic Plan will require every VISN to develop mental health market plans that 

incorporate revised projections, which must include projected demand for outpatient 

mental health services and acute psychiatric inpatient care. Additionally, policies 

developed in the Mental Health Strategic Plan, such as special emphasis on integrating strategies to meet the future geropsych needs of the enrolled veteran population and incorporating the findings VHA’s Work Group reviewing the President’s 

New Freedom Commission on Mental Health Report, will be incorporated in the 

VISN’s plans to ensure that comprehensive mental health services are included in 

CBOCs; that veterans have access to a full continuum of mental health care services, which are consistent across all VISNs; and ensure acute inpatient mental 

health services are collated with other inpatient services. I expect to receive the 

Mental Health Strategic Plan later this summer. 

Long-term Care Strategic Plan 

Mr. Chairman, many stakeholders have expressed concerns about how VA intends 

to address the provision of long-term care within the context of CARES. In order 

to respond to these concerns, I directed in my Decision that VHA develop a Longterm Care Strategic Plan addressing 

• consistent access for nursing home care; 

• geropsych needs; 

• domiciliary care; 

• long-term psychiatric care for the seriously mentally ill; 

• expanding care coordination in the home; 

• residential care, assisted living facilities; and 

• other less restrictive care settings. 

I am currently considering various policy options that have been designed to adhere to certain core principles, which include a policy that is clinically sound, is fair 

17 

for veterans, can be modeled for VISN planning, and is acceptable to Congress. 

Some of the key elements that I will strongly consider are the extent to which the 

Long-term Care Strategic Plan: 

• focuses on veterans who need care for a short duration, for services to restore 

function following a period of hospitalization, for example, patients who have 

had a heart attack, stroke or hip replacement; veterans in need of respite care, 

and geriatric evaluation and management to stabilize medically complex patients; or end-of-life, hospice and palliative care for those who are terminally 

ill; and • focuses on veterans who can no longer be maintained safely in home and community-based settings such as elderly patients needing help with activities of 

daily living, or who require long-term maintenance care and specialized services not generally available in the community, such as chronically mentally ill 

patients, spinal cord injury or traumatic brain injury patients, and ventilator 

dependent patients. 

The Long-term Care Strategic Plan will be designed to improve the veteran’s quality of life by seeking to preserve personal dignity, enhance emotional well being, and 

provide care in the least restrictive setting possible. 

In addition to long-term nursing home care, VA is reviewing its long term-care 

policy in other key program areas, such as domiciliary and residential rehabilitation 

programs. VA’s long-term care policies relating to these programs will assure that 

programs in domiciliary structures are focused on residential rehabilitation and that 

each patient has a clinical treatment plan. As each program (e.g., mental health, 

substance abuse, and long-term care) defines its discrete capacity for residential rehabilitation, VA will have a more complete picture of the total capacity requirement 

for domiciliaries. 

I will, of course, keep Congress informed of the Long-term Care Strategic Plan 

once adopted. Once again, in all cases, the Long-term Care Strategic Plan will be 

designed to improve the veteran’s quality of life by seeking to preserve personal dignity, enhance emotional well being, and provide care in the least restrictive setting 

possible. 

Veterans Rural Access Hospital 

VA is also reviewing the ‘‘critical access hospital’’ concept that was initially introduced to help ensure the quality of the care that veterans receive at VA’s small facilities. Recognizing that some small and rural facilities will be unable to maintain 

the workload necessary to perform certain surgical procedures or manage some complex illnesses effectively, VA will establish parameters to ensure high quality patient care. A new policy, Veterans Rural Access Hospital (VRAH), is under development and will specifically define the clinical and operational characteristics of small 

and rural facilities within VA. I have directed that the VRAH policy be completed 

later this month. In the interim, the missions of small facilities recommended for 

change will not be altered. Once the new VRAH policy is approved, however, VA 

will study the scope of services performed at VA’s small and rural facilities using 

the policy’s criteria and the guidance that will be provided. I anticipate the outcome 

of this study will be clarification of the type and complexity of surgical procedures 

that can be safely accomplished in small and rural facilities. 

Special Disability Program for Spinal Cord Injury and Disorders (SCI&D) 

I recommitted VA to excellence in care for veterans with SCI&D by approving new 

SCI&D Centers in Syracuse, Denver, Minneapolis, and VISN 16, and a certified 

SCI&D outpatient clinic in Philadelphia. I also approved expansion of existing 

SCI&D Centers in Memphis, Cleveland, Augusta, and Long Beach. As part of the 

implementation process for the new centers and the expansion of existing centers, 

I requested that VHA validate the number of SCI&D beds to ensure the appropriate 

need for and distribution between acute and long-term SCI&D beds. I also requested 

that VHA validate the expansion of the existing SCI&D Center or development of 

a new SCI&D Center in South Florida. 

In preparation for implementation of the new and expanded SCI&D Centers, 

members of VHA’s SCI&D Strategic Health Care Group have reviewed and validated SCI&D beds. A balance has been achieved between acute and long-term care 

planning based on dual, actuarial, demand-forecasting models that have been peerreviewed, scrutinized, and vetted. The ‘‘CARES Major Construction Projects FY 

2004–2010’’ appropriately includes plans for expansion of the existing SCI&D Center 

in Tampa. The new VISN 16 SCI&D Center needs inclusion in the ‘‘CARES Major 

Construction Projects FY 2004–2010’’. Ongoing planning for long-term care outside 

the SCI&D Centers will be refined after publication of VA’s Long-Term Care Strategic Plan. 

18 

Capital Initiatives 

I am pleased to announce that VA has developed a long-term Capital Plan, which 

will be delivered to members of Congress shortly. With more than 5,500 buildings 

and approximately 32,000 acres of land nation-wide, it is critical that VA have a 

systematic and comprehensive framework for managing its portfolio of capital assets. This plan provides that framework and is a sound blueprint for effective management of the Department’s capital investments that will lead to improved resource use and more effective health care and benefits delivery for our Nation’s 

veterans. 

As we strive to meet the many challenges that lie ahead, this plan will act as 

our guide. I recently announced my decisions on the Capital Asset Realignment for 

Enhanced Services (CARES) process. CARES is the most comprehensive analysis of 

VA’s health-care infrastructure that has ever been conducted and my decision provides a 20-year blueprint for the critical modernization and realignment of VA’s 

health care system. Consistent with my decision, the capital plan outlines CARES 

implementation and identifies priority projects that will improve both the environment of care at, and expand access to, VA medical facilities and ensure more effective operations by redirecting resources from maintenance of vacant and underused 

buildings and reinvesting them in veterans’ health care. Implementation of CARES 

will require substantial investment. While I will assess what amounts should be 

funded in future budgets, this plan reflects a need for additional investments of approximately $1 billion per year for the next 5 years to modernize VA’s medical infrastructure and enhance veterans’ access to care. 

The capital plan also identifies our highest priority needs for new construction 

and expansion of cemeteries in areas where burial sites will soon be depleted, new 

benefits administration office facilities, and information technology projects designed 

to improve customer service and enhance delivery of VA benefits. 

Additionally, this plan describes how VA will enhance collaborative efforts with 

the Department of Defense and increase the use of public and private ventures 

through VA’s enhanced-use lease authority. By improving the way that we manage 

the enhanced-use lease process and engaging in productive public and private partnerships, VA can enhance benefits and services to our Nation’s veterans and more 

effectively fulfill our mission. 

As we move forward, VA will continue to improve stewardship of the funds entrusted to us by more effectively managing our capital assets and planning to meet 

the future needs of America’s veterans and their families. By employing best business practices and maximizing the functional and financial value of our capital assets through well thought-out acquisitions, allocations, operations, and dispositions, 

VA will continue to ensure that all capital investments are based on sound business 

principles and—most importantly—meet our veterans’ health care, benefits, and 

burial needs. I am confident that effective implementation of this plan will help us 

to achieve these important results. 

VA’s capital investment planning process and methodology ensure a Departmentwide approach for the use of capital funds and ensure all major investments are 

based upon sound economic principles and are fully linked to strategic planning, 

budget, and performance measures and targets. On May 20, 2004, I transmitted an 

interim report to VA’s 5-Year Capital Plan entitled ‘‘CARES Major Construction 

Projects Fiscal Year (FY) 2004—2010’’ to Congress. This interim report includes 

VA’s highest priority major medical facility construction requirements over the next 

five years. VA’s comprehensive 5-year capital plan will include other specific capital 

requirements such as leasing, minor construction, and community based outpatient 

clinics. 

The projects listed in the interim report were identified through the CARES planning process as well as the VA’s capital investment process, and support decisions 

identified in my CARES Decision. The CARES process focused on capital requirements at a macro-level by using projections of beds and inpatient and outpatient 

services. Once performance gaps were identified in the market plans, business case 

applications were developed for specific major construction projects in order to fill 

these gaps. Business case applications were scored and prioritized based on how 

well they addressed each of the criteria in the capital decision model. Over 100 

CARES concept papers and business case applications were submitted and reviewed 

through VA’s capital investment process utilizing criteria I approved in May 2004. 

Once Congress approves the FY 2005 appropriations, VA will have more than $1 

billion available to begin renovating and modernizing VA’s health care system. In 

the next six months, VA intends to make 28 design awards, one land purchase, and 

a construction award for a bed tower at the West Side VA Medical Center in Chicago, Illinois. VA will use available funds from FY 2004 and prior year appropriations and funds appropriated for FY 2005 to carry out these awards. VA will proceed 

with planning and construction once the requirements of section 221 of Public Law 

19 

108–170 are fulfilled, which allows me to carry out major construction projections 

specified in the final CARES report 45 days after my submission of the interim report that was delivered to Congress on May 20th of this year. 

VA/DoD Sharing Opportunities 

Sharing between the Department of Veterans Affairs and the Department of Defense is a priority of the President and for both Departments. As my CARES decisions are implemented, we will continue to take all necessary steps to identify and 

act on available sharing opportunities. 

My CARES decision identified 35 promising sharing opportunities. Working 

through the VA/DoD Joint Executive Council (JEC), co-chaired by VA’s Deputy Secretary and DoD’s Under Secretary for Personnel and Readiness, VA and DoD have 

already begun to work more closely toward making a reality of many of these opportunities. 

For example, my CARES Decision, as well as VA’s 5-Year Capital Plan, includes 

a number of significant ventures for VA—DoD collaboration including two new federal medical facilities in Denver, Colorado and Las Vegas, Nevada, a joint outpatient clinic in Pensacola, Florida, an outpatient clinic and regional office in Anchorage, Alaska, and an outpatient clinic in Columbus, Ohio. 

In addition, the JEC recently established a Capital Asset Planning and Coordination Steering Committee, which will be responsible for identifying and overseeing 

opportunities that maximize capital asset resource utilization for both Departments. 

This body will oversee implementation of the VA/DoD recommendations that require 

capital planning and will seek to maximize productive collaboration between Departments in developing capital asset management sharing opportunities in the future. Both Departments recognize the importance of capital coordination efforts at 

the local level and the Capital Asset Planning and Coordination Steering Committee 

is working to improve the stability of VA/DoD partnerships through transition of 

management at local facilities. 

With my discussion of the Department’s capital initiatives and VA/DOD Sharing 

Opportunities as a backdrop, I will now turn to Section 2 of the proposed bill. 

Section 2. Capital Leases 

Section 2 would authorize me to enter into contracts for leases for the following 

seventeen facilities: 

(1) Wilmington, North Carolina, Outpatient Clinic, $1,320,000; 

(2) Greenville, North Carolina, Outpatient Clinic, $1,220,000; 

(3) Norfolk, Virginia, Outpatient Clinic, $1,250,000; 

(4) Summerfield, Florida Marion County, Outpatient, Clinic, $1,230,000; 

(5) Knoxville, Tennessee, Outpatient Clinic, $850,000; 

(6) Toledo, Ohio, Outpatient, Clinic, $1,200,000; 

(7) Crown Point, Indiana, Outpatient Clinic, $850,000; 

(8) Fort Worth, Texas, Tarrant County Outpatient Clinic, $3,900,000; 

(9) Plano, Texas, Collin County Outpatient Clinic, $3,300,000; 

(10) Saint Antonio, Texas, Northeast Central Bexar County Outpatient Clinic, 

$1,400,000; 

(11) Corpus Christi, Texas, Outpatient Clinic, $1,200,000; 

(12) Harlingen, Texas, Outpatient Clinic, $650,000; 

(13) Waco/Marlin, Texas, Outpatient Clinic, $2,600,000; 

(14) Denver, Colorado, Health Administration Center, $1,950,000; 

(15) Oakland, California, Outpatient Clinic, $1,700,000; 

(16) San Diego, California, North County Outpatient Clinic, $1,300,000; and 

(17) San Diego, California, South County, Outpatient Clinic, $1,100,000. 

Of these 17 leases, the leases in Norfolk, Virginia; Summerfield, Florida; Plano, 

Texas and San Antonio, Texas are new. The remaining 13 leases are replacement 

or expansions for existing leases. Please note that the leases in Section 2 should be 

identified as operating leases because they do not meet the required characteristics 

of a ‘‘capital lease’’. Capital leases are subject to specific requirements such as being 

scored under the OMB scorekeeping rules and the requirement that the entire cost 

of the lease be expended during the first year of the lease. 

Section 2 of the bill authorizes for appropriation the sum of $27,020,000 for fiscal 

year 2005 for the Medical Care account for the leases listed in this section. My comment on the total amount of the authorization is consistent with my previous comments regarding the authorization of the seventeen leases identified in this section. 

Section 2 further authorizes me to enter into a lease for real property located at 

the Fitzsimons campus of the University of Colorado for a period of up to 75 years. 

We have been involved in evaluating and planning for a facility for the Fitzsimons 

site and there is a potential for a joint venture with DOD to provide health care 

20 

to both veterans and DOD beneficiaries. Of the many issues remaining, the availability of land is a critical one. 

The bill provides the Department a new leasing authority. The bill permits the 

VA to enter into a long-term lease of up to 75 years at the University of Colorado 

Hospital at the Fitzsimons Campus of the University of Colorado. This authority is 

necessary for the VA to acquire a sufficient land interest for the construction of a 

new medical facility on the Fitzsimons Campus. We support this proposal. The VA 

will enter into a sharing agreement with the University of Colorado Hospital, which 

will produce economies of scale of benefit to both parties. It is anticipated that this 

facility will be a joint operation of the Department of Veterans Affairs and the Department of the Air Force. 

Section 3. Department of Veterans Affairs Capital Asset Fund 

Section 3 of the bill would authorize VA to dispose of its excess real property by 

transfer to a Federal agency, a state or political subdivision of a state or to any public or private entity and to retain the proceeds generated by the disposals. We support this provision except for the language that limits the authority to the transfer 

of real property. To prevent any misinterpretation, we recommend that the words 

‘‘sale, exchange, and’’ be inserted before the word transfer. This language will allow 

us to implement the nationwide recommendations of the recent CARES decision in 

a timely and efficient manner. Further, the section provides that VA receive compensation of not less than the fair market value of the property except in the case 

of a transfer to a grant and per diem provider (as defined in section 2002 of title 

38). Further, the property would revert to the United States if the property transferred to a grant or per diem provider is used for other purposes. This latter provision could have government-wide implications, so until a thorough vetting of this 

provision is completed, we are not prepared to opine on it at this time. 

The authority may be exercised notwithstanding 40 U.S.C. § 521, 522 and 541– 

545 and the McKinney-Vento Homeless Assistance Act (which provides that unused 

or underutilized Federal real property may be used to assist the homeless). We support this provision only because VA’s homeless assistance programs now constitute 

the largest integrated network of services in the U.S.. In 2005 VA will spend $1.5 

billion on medical services for the homeless and another $188 million on programs 

to return homeless veterans to stable living. These programs include outreach, case 

management, transitional residential care, rehabilitation care, income support assistance, permanent housing assistance, and follow-up care. We continually ensure 

that our property policies address the needs of the homeless. Section 3 of the proposed bill further provides that any such transfer shall be in accordance with this 

section and section 8122 of title 38. Section 8122 of title 38, requires that VA report 

the proposed transfer in its annual budget document before transferring real property valued in excess of $50,000 to another Federal agency or to a state or a political 

subdivision of a state for fair market value. As most parcels of real property exceed 

the $50,000 threshold, this would require VA to submit disposal information each 

time it sought to transfer real property to another Federal agency or to a state or 

a political subdivision. Therefore, we object to this provision. We suggest the proposal be amended to require the submission of a report along with the budget request for property valued equal to or more than the Major Medical Facility Project 

threshold identified in subsection 8104(a)(3)(A) of title 38. 

The bill further provides that the authority provided by this section may not be 

used in a case in which section 8164 of title 38 (enhanced use) applies. We support 

this provision. The exercise of this authority expires seven years after the date of 

the enactment of this section. We strongly object to this provision. Should a 7-year 

limitation be established, we recommend that the Secretary transfer to any account 

or accounts any unobligated and undistributed dollars remaining in the Fund upon 

expiration of the authority. The proceeds from the transfer of real property under 

this section would be deposited in a Capital Asset Fund (the ‘‘Fund’’), as provided 

for by this legislation. The bill would also terminate the Nursing Home Revolving 

Fund and deposit funds therein into the Fund. Further, the bill would authorize to 

be appropriated to the Fund $10,000,000. 

Amounts in the Fund would have to be used for the costs of actual or planned 

disposals of real estate, including demolition, environmental cleanup, improvements 

to facilitate the transfers and administrative expenses. If amounts remain after 

those expenditures, like expenditures may be made for future transfers. Any remaining amounts are to be used for historic preservation as set forth in legislation. 

We appreciate the provisions that establish use of the Fund. However, we object to 

the limitation on the use of the proceeds to historic preservation after expenses. We 

would strongly support use of the Fund for non-recurring VA Capital projects as 

well as historic preservation. 

21 

Property may only be transferred under this section, or under sections 8117 or 

8164 of title 38, after: (a) placing notice of my intent to do so in the local newspapers and in the Federal Register; (b) holding a public hearing; providing notice 

to the Administrator of General Services; (c) waiting 30 days to determine if another 

Federal agency has an interest in acquiring the property at fair market value; and 

(d) thereafter, providing a 60-day notice period for the congressional veterans’ affairs committees to review the intended property disposal. We support the report 

and wait requirement of this section as it relates to 8117, but object to its application to 8164. The basis for the objection is that section 8164 already has specific 

notification requirements. 

Section 3, additionally, would make two conforming amendments to VA’s enhanced-use lease statute. First, it would amend section 8164(a) to provide that, before disposing of an enhanced-use leased property pursuant to section 8164, I must 

determine that a disposal under that section, rather than under the proposed new 

section 8117 (or under section 8122), would be in the best interests of the Department. Next, it would amend section 8165 (a)(2) to provide that proceeds from a disposal of enhanced-use leased property would be deposited in the proposed new Capital Asset Fund, vice the Nursing Home Revolving Fund. 

Further, Section 3 states that the amendments made therein shall take effect at 

the end of the 30-day period beginning on the date that I certify to Congress that 

I am in compliance with subsection (b) of section 1710B of title 38. Also, following 

this certification, I am required to submit an update to Congress on that certification every six months until the certification is included in the Department’s annual budget submission. The ability to better manage our capital assets through 

this section’s real property disposal authority and compliance with 1710B(b) of title 

38 are not appropriately joined. Conditions that may influence the Department’s 

ability to meet its capacity requirements may not always be within our control. 

Therefore, VA objects to this provision. 

Section 4. Authority to use Project Funds to Construct or Relocate Surface Parking Incidental to a Construction or Non-Recurring Maintenance Project 

Section 4 of the bill would add language to Section 8109 that would allow funds 

in a construction account or capital account that are available for a construction 

project or nonrecurring maintenance project to also be used for constructing or relocating a surface parking lot incidental to that project. VA supports this provision 

of the bill. 

Section 5. Advance Planning Funding for Major Medical Facilities 

This bill would also exempt projects that have already been authorized by law 

from current statutory notice and wait requirements that apply to certain major 

medical facility projects. VA supports this provision of the bill. 

Section 6. Improvement in Enhanced-Use Lease Authorities 

This section would amend section 8166(a) to clarify that, in addition to the bar 

against subjecting any construction, alteration, repair, remodeling, or improvement 

of enhanced-use leased property to any State or local law relating to building codes, 

permits or inspections, such activities are to be exempt from any State or local law 

relating to land use, unless I provide otherwise. We support this provision. 

Section 7. Extension of Authority to Provide Care Under Long-Term Care Pilot 

Programs 

Section 7 of the draft bill would authorize VA to continue furnishing certain longterm care services to a very limited group of veterans still participating in a longterm care pilot program, the authority for which will be expiring soon. VA supports 

section 7 of the bill. 

The Veterans Millennium Health Care and Benefits Act, enacted in 1999, directed 

that VA carry out a relatively small three-year pilot program to furnish veterans 

with all-inclusive long-term care services using three different models of care delivery. The effort was intended to test the feasibility, acceptability, outcomes and costs 

of care using each model. VA patterned the pilot on the Medicare Program of AllInclusive Care for the Elderly, commonly referred to as the PACE Program. VA conducted the pilot program in three separate locations. In Dayton, Ohio, VA directly 

furnished pilot participants with all of the services typically included in the PACE 

Program. In Denver, VA furnished some of the services directly, but paid a capitated 

amount to a private Colorado PACE provider to furnish the remainder of the services. Finally, in Columbia, South Carolina, VA served as the care manager, but a 

private PACE provider furnished all care, receiving a capitated amount from VA. 

22 

The authority for the pilot program will be expiring later this year, and VA will be 

reporting to Congress regarding the program in March of 2005, as required by law. 

At this point in time, the pilot program is winding down. VA has not been enrolling any new veterans in the pilot for some time. However, a few veterans will still 

be receiving care under the program when it ends. To ensure continuity of care and 

avoid disruption in the life of these elderly and frail patients, section 7 would authorize VA to continue to furnish these few veterans with the same services they 

have been receiving, in the same settings, until December 31, 2005. That time period would allow Congress time to review the post-pilot report, including VA’s recommendations, and decide how to proceed. VA also anticipates that by that time, 

most participants will have moved to a different care setting. 

Conclusion 

Mr. Chairman, my CARES Decision and accompanying 5-year Capital Plan represent a blueprint for VA’s future. Sophisticated forecasting models provide new and 

more complete information about the demand for VA health care. A comprehensive 

assessment of VA’s facilities has greatly improved our understanding about the condition of VA’s facilities. These factors, combined with the experience of conducting 

the CARES process, leave the Department well positioned to continue to expand the 

accuracy and scope of its planning efforts. Throughout the CARES implementation 

process we will keep you and other members of Congress informed and involved 

and, just as important, we will keep our patients and their families informed and 

involved. 

This concludes my statement. I will now be happy to answer any questions that 

you or other members of the Subcommittee might have. 

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, August 26, 2004 

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. 4768, the Veterans 

Health Programs and Facilities Enhancement Act of 2004. 

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. 4768, Veterans Health Programs and Facilities Enhancement 

Act of 2004 

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

July 21, 2004 

SUMMARY

H.R. 4768 would authorize the Department of Veterans Affairs 

(VA) to lease 16 facilities, most of which would be for outpatient 

23 

clinics. It also would create a new fund, the Department of Veterans Affairs Capital Asset Fund, that VA could use to pay for certain construction projects, subject to appropriation of the necessary 

amounts. The bill also would extend, through the end of calendar 

year 2005, the authority for VA to provide long-term care for veterans already enrolled in certain pilot programs. Finally, the bill 

would require VA to establish four medical preparedness centers 

and would authorize the appropriation of funds for those centers. CBO estimates that implementing H.R. 4768 would cost $25 mil- lion in 2005 and $168 million over the 2005–2009 period, assuming 

appropriation of the necessary amounts. Enacting the bill would 

not affect direct spending or receipts. 

H.R. 4768 contains an intergovernmental mandate as defined in 

the Unfunded Mandates Reform Act (UMRA), but CBO estimates 

the cost, if any, for state and local governments to comply with that 

mandate would be well below the threshold established by UMRA 

($60 million in 2004, adjusted annually for inflation). H.R. 4768 

would not impose any private-sector mandates as defined in 

UMRA. 

ESTIMATED COST TO THE FEDERAL GOVERNMENT

The estimated budgetary impact of H.R. 4768 is shown in the following table. The costs of this legislation fall within budget function 700 (veterans benefits and services). 

24 

By Fiscal Year, in Millions of Dollars 

2004 2005 2006 2007 2008 2009 

SPENDING SUBJECT TO APPROPRIATION 

Spending Under Current Law for Veterans’ Medical Care 

Estimated Authorization Level a ..... 27,957 28,888 29,706 30,608 31,117 32,104 

Estimated Outlays ............................ 27,141 28,334 29,293 30,210 30,846 31,756 

Proposed Changes: 

Authorization of Leases.

Estimated Authorization Level .... 0 24 24 24 24 24 

Estimated Outlays ........................ 0 12 24 24 24 24 

Medical Preparedness Centers 

Estimated Authorization Level .... 0 10 10 10 10 10 

Estimated Outlays ........................ 0 6 8 10 10 10 

Capital Asset Fund 

Estimated Authorization Level .... 0 10 0 0 0 0 

Estimated Outlays ........................ 0 2 4 3 1 0 

Pilot Program Extension 

Estimated Authorization Level .... 0 5 1 0 0 0 

Estimated Outlays ........................ 0 5 1 0 0 0 

Total Changes 

Estimated Authorization Level 0 49 35 34 34 34 

Estimated Outlays .................... 0 25 37 37 35 34 

Spending for Veterans’ Medical Care 

Under H.R. 4768 

Estimated Authorization Level .... 27,957 28,937 29,741 30,642 31,151 32,138 

Estimated Outlays ........................ 27,141 28,359 29,330 30,247 31,881 31,790 

a The 2004 level is the amount appropriated for that year. No full-year appropriation has yet 

been provided for fiscal year 2005. The current-law amounts for the 2005–2009 period assume 

appropriations remain at the 2004 level with adjustments for anticipated inflation. 

BASIS OF ESTIMATE

For this estimate, CBO assumes that the bill will be enacted before the end of calendar year 2004 and that the authorized and 

necessary amounts for implementing the bill will be appropriated 

for each year. 

AUTHORIZATION OF LEASES

Section 101 would authorize VA to enter into leases at 16 different sites, most of which would be for outpatient clinics, and 

specifies the maximum lease payment for each site. In total, section 

101 would authorize a little more than $24 million for these lease 

payments in 2005. Based on information from VA on previous 

leases and lease proposals, we expect these leases would be for a 

term of more than 10 years. For the purposes of this estimate, we 

assume that all of these leases would meet the criteria for an operating lease. (Those criteria are detailed in the Office of Management and Budget Circular A–11.) Because CBO has not seen any 

contracts that VA might use to enter into these leases, we cannot 

definitively say that these leases would meet the criteria for an operating lease. 

Assuming it would take about six months to sign the lease agreements, CBO estimates that implementing this provision would cost 

$12 million in 2005 and $108 million over the 2005–2009 period, 

assuming appropriation of the authorized and estimated amounts. 

25 

MEDICAL PREPAREDNESS CENTERS

Under current law, VA is authorized to establish four medical 

emergency preparedness centers which have responsibilities to assist with chemical, biological, or radiological threats. In addition, 

the Congress has authorized the appropriation of $20 million a 

year through 2007 for these centers. As of the date of this estimate, 

VA has not established any centers and no appropriations have 

been made for that purpose. 

Section 202 of H.R. 4768 would require VA to create four medical 

preparedness centers that would have the same responsibilities as 

the four medical emergency preparedness centers already authorized under current law. Section 202 would specifically authorize the 

appropriation of $10 million a year through 2007 and would require VA to provide additional funds if necessary. Based on information from VA, CBO believes $10 million a year would be sufficient to operate these four centers. Assuming normal start-up time 

for implementing new programs and the appropriation of the authorized and estimated amounts, CBO estimates that implementing this section would cost $6 million in 2005 and $44 million 

over the 2005–2009 period. 

CAPITAL ASSET FUND

Section 102 would make it easier for VA to dispose of real property to both public and private entities and would establish a new 

fund in the Treasury to be known as the Department of Veterans 

Affairs Capital Asset Fund. Under the bill, VA would be able to 

dispose of real property without the requirement to use the General Services Administration (GSA), though VA would still have to 

notify GSA of its intent to dispose of real property. (The authority 

to dispose of property under this section would expire seven years 

after enactment of the bill.) The proceeds from property disposal 

would be deposited into the Capital Asset Fund and could be used 

to pay for costs associated with the transfer of property as well as 

construction projects with a cost less than $4 million. However, 

under section 102, expenditures from the fund would be subject to 

appropriation action. Thus, CBO does not expect that VA would 

significantly increase its sales or other dispositions of real property. 

Section 102 also would authorize the appropriation of $10 million 

to the Capital Asset Fund where it could be used for the purposes 

stated above. Under the bill, section 102 would not take effect until 

the Secretary of VA certified that the department was in compliance with current law regarding the provision of extended care or 

long-term care to veterans. Assuming that the Secretary makes 

this certification by the end of the calendar year, CBO estimates 

that implementing this provision would cost $2 million in 2005 and 

$10 million over the 2005–2009 period, assuming appropriation of 

the authorized amount. 

PILOT PROGRAM EXTENSION

Section 107 would allow VA to extend three pilot programs for 

long-term care through the end of calendar year 2005. According to 

VA, it spent about $5 million in 2003 on these pilot programs. 

Thus, CBO estimates that implementing section 107 would cost 

26 

about $5 million in 2005 and $6 million over the 2005–2006 period, 

assuming the appropriation of the necessary amounts. 

INTERGOVERNMENTAL AND PRIVATE-SECTOR IMPACT

H.R. 4768 contains an intergovernmental mandate as defined in 

UMRA because it would preempt state and local authority to regulate land use of property leased by VA. Under current law, that 

land is exempt from some state and local laws regulating building 

codes, permits, and inspections. This bill would expand those exemptions to include laws regulating land use. CBO estimates that 

the costs, is any, for state, local, and tribal governments to comply 

with that mandate would be well below the threshold established 

by UMRA ($60 million in 2004, adjusted annually for inflation). 

H.R. 4768 would not impose any private-sector mandates as defined in UMRA. 

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: Carla Murray (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 concludes that the bill would not exceed the intergovernmental mandate threshold and would not impose 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 V—BOARDS, ADMINISTRATIONS, AND 

SERVICES 

* * * * * * * 

27 

CHAPTER 73—VETERANS HEALTH ADMINISTRATION— 

ORGANIZATION AND FUNCTIONS 

* * * * * * * 

SUBCHAPTER II—GENERAL AUTHORITY AND 

ADMINISTRATION 

* * * * * * * 

§ 7327. Medical preparedness centers 

(a) ESTABLISHMENT OF CENTERS.—(1) The Secretary shall establish four medical emergency preparedness centers in accordance 

with this section. Each such center shall be established at a Department medical center and shall be staffed by Department employees. 

(2) The Under Secretary for Health shall be responsible for supervising the operation of the centers established under this section. The Under Secretary shall provide for ongoing evaluation of 

the centers and their compliance with the requirements of this section. 

(3) The Under Secretary shall carry out the Under Secretary’s 

functions under paragraph (2) in consultation with the Assistant 

Secretary of Veterans Affairs with responsibility for operations, 

preparedness, security, and law enforcement functions. 

(b) MISSION.—The mission of the centers shall be as follows: 

(1) To carry out research on, and to develop methods of detection, diagnosis, prevention, and treatment of injuries, diseases, and illnesses arising from the use of chemical, biological, 

radiological, incendiary or other explosive weapons or devices 

posing threats to the public health and safety. 

(2) To provide education, training, and advice to health care 

professionals, including health care professionals outside the 

Veterans Health Administration, through the National Disaster Medical System established pursuant to section 2811(b) 

of the Public Health Service Act (42 U.S.C. 300hh–11(b)) or 

through interagency agreements entered into by the Secretary 

for that purpose. 

(3) In the event of a disaster or emergency referred to in section 1785(b) of this title, to provide such laboratory, epidemiological, medical, or other assistance as the Secretary considers 

appropriate to Federal, State, and local health care agencies 

and personnel involved in or responding to the disaster or 

emergency. 

(c) SELECTION OF CENTERS.—(1) The Secretary shall select the 

sites for the centers on the basis of a competitive selection process. 

The Secretary may not designate a site as a location for a center 

under this section unless the Secretary makes a finding under 

paragraph (2) with respect to the proposal for the designation of 

such site. To the maximum extent practicable, the Secretary shall 

ensure the geographic dispersal of the sites throughout the United 

States. Any such center may be a consortium of efforts of more 

than one medical center. 

(2) A finding by the Secretary referred to in paragraph (1) with 

respect to a proposal for designation of a site as a location of a center under this section is a finding by the Secretary, upon the recVerDate Aug 04 2004 00:50 Sep 09, 2004 Jkt 029012 PO 00000 Frm 00027 Fmt 6659 Sfmt 6601 E:\HR\OC\HR663.XXX HR663
28 

ommendations of the Under Secretary for Health and the Assistant 

Secretary with responsibility for operations, preparedness, security, 

and law enforcement functions, that the facility or facilities submitting the proposal have developed (or may reasonably be anticipated 

to develop) each of the following: 

(A) An arrangement with a qualifying medical school and a 

qualifying school of public health (or a consortium of such 

schools) under which physicians and other persons in the 

health field receive education and training through the participating Department medical facilities so as to provide those persons with training in the detection, diagnosis, prevention, and 

treatment of injuries, diseases, and illnesses induced by exposures to chemical and biological substances, radiation, and incendiary or other explosive weapons or devices. 

(B) An arrangement with a graduate school specializing in 

epidemiology under which students receive education and 

training in epidemiology through the participating Department 

facilities so as to provide such students with training in the epidemiology of contagious and infectious diseases and chemical 

and radiation poisoning in an exposed population. 

(C) An arrangement under which nursing, social work, counseling, or allied health personnel and students receive training 

and education in recognizing and caring for conditions associated with exposures to toxins through the participating Department facilities. 

(D) The ability to attract scientists who have made significant contributions to the development of innovative approaches 

to the detection, diagnosis, prevention, or treatment of injuries, 

diseases, and illnesses arising from the use of chemical, biological, radiological, incendiary or other explosive weapons or devices posing threats to the public health and safety. 

(3) For purposes of paragraph (2)(A)— 

(A) a qualifying medical school is an accredited medical 

school that provides education and training in toxicology and 

environmental health hazards and with which one or more of 

the participating Department medical centers is affiliated; and 

(B) a qualifying school of public health is an accredited 

school of public health that provides education and training in 

toxicology and environmental health hazards and with which 

one or more of the participating Department medical centers is 

affiliated. 

(d) RESEARCH ACTIVITIES.—Each center shall conduct research on 

improved medical preparedness to protect the Nation from threats 

in the area of that center’s expertise. Each center may seek research funds from public and private sources for such purpose. 

(e) DISSEMINATION OF RESEARCH PRODUCTS.—(1) The Under Secretary for Health and the Assistant Secretary with responsibility 

for operations, preparedness, security, and law enforcement functions shall ensure that information produced by the research, education and training, and clinical activities of centers established 

under this section is made available, as appropriate, to health-care 

providers in the United States. Dissemination of such information 

shall be made through publications, through programs of continuing medical and related education provided through regional 

medical education centers under subchapter VI of chapter 74 of 

29 

this title, and through other means. Such programs of continuing 

medical education shall receive priority in the award of funding. 

(2) The Secretary shall ensure that the work of the centers is 

conducted in close coordination with other Federal departments 

and agencies and that research products or other information of the 

centers shall be coordinated and shared with other Federal departments and agencies. 

(f) COORDINATION OF ACTIVITIES.—The Secretary shall take appropriate actions to ensure that the work of each center is carried 

out— 

(1) in close coordination with the Department of Defense, the 

Department of Health and Human Services, and other departments, agencies, and elements of the Government charged with 

coordination of plans for United States homeland security; and 

(2) after taking into consideration applicable recommendations of the working group on the prevention, preparedness, 

and response to bioterrorism and other public health emergencies established under section 319F(a) of the Public Health 

Service Act (42 U.S.C. 247d–6(a)) or any other joint interagency advisory group or committee designated by the President or the President’s designee to coordinate Federal research 

on weapons of mass destruction. 

(g) ASSISTANCE TO OTHER AGENCIES.—The Secretary may provide 

assistance requested by appropriate Federal, State, and local civil 

and criminal authorities in investigations, inquiries, and data analyses as necessary to protect the public safety and prevent or obviate biological, chemical, or radiological threats. 

(h) DETAIL OF EMPLOYEES FROM OTHER AGENCIES.—Upon approval by the Secretary, the Director of a center may request the 

temporary assignment or detail to the center, on a nonreimbursable basis, of employees from other departments and agencies of 

the United States who have expertise that would further the mission of the center. Any such employee may be so assigned or detailed on a nonreimbursable basis pursuant to such a request. 

(i) FUNDING.—(1) There are authorized to be appropriated for the centers under this section $10,000,000 for each of fiscal years 2005 

through 2007. 

(2) In addition to any amounts appropriated for a fiscal year specifically for the activities of the centers pursuant to paragraph (1), 

the Under Secretary for Health shall allocate to the centers from 

other funds appropriated for that fiscal year generally for the Department medical care account and the Department medical and 

prosthetics research account such amounts as the Under Secretary 

determines necessary in order to carry out the purposes of this section. 

* * * * * * * 

CHAPTER 78—VETERANS’ CANTEEN SERVICE 

* * * * * * * 

§ 7803. Operation of Service 

øThe canteens at hospitals and homes of the Department shall 

be primarily for the use and benefit of veterans hospitalized or 

domiciled at such hospitals and homes. Service at such canteens 

30 

may also be furnished to personnel of the Department and recognized veterans’ organizations employed at such hospitals and 

homes and to other persons so employed, to the families of all the 

foregoing persons who reside at the hospital or home concerned, 

and to relatives and other persons while visiting any of the persons 

named in this section.¿ 

(a) PRIMARY BENEFICIARIES.—Canteens operated by the Service 

shall be primarily for the use and benefit of— 

(1) veterans hospitalized or domiciled at the facilities at 

which canteen services are provided; and 

(2) other veterans who are enrolled under section 1705 of this 

title. 

(b) OTHER AUTHORIZED USERS.—Service at such canteens may 

also be furnished to— 

(1) personnel of the Department and recognized veterans’ organizations who are employed at a facility at which canteen 

services are provided and to other persons so employed; 

(2) the families of persons referred to in paragraph (1) who 

reside at the facility; and 

(3) relatives and other persons while visiting a person specified in this section. 

* * * * * * * 

PART VI—ACQUISITION AND DISPOSITION OF 

PROPERTY 

* * * * * * * 

CHAPTER 81—ACQUISITION AND OPERATION OF HOSPITAL AND DOMICILIARY FACILITIES; PROCUREMENT 

AND SUPPLY; ENHANCED–USE LEASES OF REAL PROPERTY 

SUBCHAPTER I—ACQUISITION AND OPERATION OF MEDICAL FACILITIES

Sec. 

8101. Definitions. 

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ø8116. Nursing home revolving fund.¿ 

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8118. Authority for transfer of real property; Capital Asset Fund. 

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SUBCHAPTER I—ACQUISITION AND OPERATION OF 

MEDICAL FACILITIES 

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§ 8104. Congressional approval of certain medical facility 

acquisitions 

(a) * * * 

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(g) The limitation in subsection (f) does not apply to a project for 

which funds have been authorized by law in accordance with subsection (a)(2). 

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§ 8109. Parking facilities 

(a) * * * 

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(j) Funds in a construction account or capital account that are 

available for a construction project or a nonrecurring maintenance 

project may be used for the construction or relocation of a surface 

parking lot incidental to that project. 

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ø§ 8116. Nursing home revolving fund 

ø(a)(1) Amounts realized from a transfer pursuant to section 

8122(a)(2)(C) of this title shall be administered as a revolving fund 

and shall be available without fiscal year limitation. 

ø(2) The revolving fund shall be deposited in a checking account 

with the Treasurer of the United States. 

ø(b)(1) The expenditure of funds from the revolving fund may be 

made only for the construction, alteration, and acquisition (including site acquisition) of nursing home facilities and may be made 

only as provided for in appropriation Acts. 

ø(2) For the purpose of section 8104(a)(2) of this title, a bill, resolution, or amendment which provides that funds in the revolving 

fund may be expended for a project involving a total expenditure 

of more than $2,000,000 for the construction, alteration, or acquisition (including site acquisition) of a nursing home facility shall be 

considered to be a bill, resolution, or amendment making an appropriation which may be expended for a major medical facility 

project.¿ 

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§ 8118. Authority for transfer of real property; Capital Asset 

Fund 

(a)(1) The Secretary may transfer real property under the jurisdiction or control of the Secretary (including structures and equipment 

associated therewith) to another department or agency of the United 

States or to a State (or a political subdivision of a State) or to any 

public or private entity, including an Indian tribe. Such a transfer 

may be made only if the Secretary receives compensation of not less 

than the fair market value of the property, except that no compensation is required, or compensation at less than fair market value may 

be accepted, in the case of a transfer to a grant and per diem provider (as defined in section 2002 of this title). When a transfer is 

made to a grant and per diem provider for less than fair market 

value, the Secretary shall require in the terms of the conveyance 

that if the property transferred is used for any purpose other than 

a purpose under chapter 20 of this title, all right, title, and interest 

to the property shall revert to the United States. 

(2) The Secretary may exercise the authority provided by this section notwithstanding sections 521, 522 and 541–545 of title 40. Any 

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such transfer shall be in accordance with this section and section 

8122 of this title. 

(3) The authority provided by this section may not be used in a 

case to which section 8164 of this title applies. 

(4) The Secretary may enter into partnerships or agreements with 

public or private entities dedicated to historic preservation to facilitate the transfer, leasing, or adaptive use of structures or properties 

specified in subsection (b)(3)(D). 

(5) The authority of the Secretary under paragraph (1) expires on 

the date that is seven years after the date of the enactment of this 

section. 

(b)(1) There is established in the Treasury of the United States a 

revolving fund to be known as the Department of Veterans Affairs 

Capital Asset Fund (hereinafter in this section referred to as the 

‘‘Fund’’). Amounts in the Fund shall remain available until expended. 

(2) Proceeds from the transfer of real property under this section 

shall be deposited into the Fund. 

(3) To the extent provided in advance in appropriations Acts, 

amounts in the Fund may be expended for the following purposes: 

(A) Costs associated with the transfer of real property under 

this section, including costs of demolition, environmental remediation, maintenance and repair, improvements to facilitate the 

transfer, and administrative expenses. 

(B) Costs, including costs specified in subparagraph (A), associated with future transfers of property under this section. 

(C) Costs associated with enhancing medical care services to 

veterans by improving, renovating, replacing, updating, and establishing patient care facilities through construction projects to 

be carried out for an amount less than the amount specified in 

8104(a)(3)(A) for a major medical facility project. 

(D) Costs, including costs specified in subparagraph (A), associated with the transfer, lease or adaptive use of a structure or 

other property under the jurisdiction of the Secretary that is 

listed on the National Register of Historic Places. 

(c) The Secretary shall include in the budget justification materials submitted to Congress for any fiscal year in support of the 

President’s budget for that year for the Department specification of 

the following: 

(1) The real property transfers to be undertaken in accordance 

with this section during that fiscal year. 

(2) All transfers completed under this section during the preceding fiscal year and completed and scheduled to be completed 

during the year during which the budget is submitted. 

(3) The deposits into, and expenditures from, the Fund that 

are incurred or projected for each of the preceding fiscal year, 

the current fiscal year, and the fiscal year covered by the budget. 

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SUBCHAPTER II—PROCUREMENT AND SUPPLY 

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§ 8122. Authority to procure and dispose of property and to 

negotiate for common services 

(a)(1) * * * 

ø(2)(A) Except as provided in paragraph (3) of this subsection, 

the Secretary may not during any fiscal year transfer to another 

Federal agency or to a State (or any political subdivision of a State) 

any interest in real property described in subparagraph (B) of this 

paragraph unless (i) the transfer (as proposed) was described in the 

budget for that fiscal year submitted to Congress pursuant to section 1105 of title 31, and (ii) the Department receives compensation 

equal to the fair market value of the property. 

ø(B) An interest in real property described in this subparagraph 

is an interest in real property that is owned by the United States 

and administered by the Secretary and that has an estimated value 

in excess of $50,000. 

ø(C) Amounts realized from the transfer of any interest in real 

property described in subparagraph (B) of this paragraph shall be 

deposited in the nursing home revolving fund established under 

section 8116 of this title.¿ 

(2) Except as provided in paragraph (3), the Secretary may not 

during any fiscal year transfer to any other department or agency 

of the United States or to any other entity real property that is 

owned by the United States and administered by the Secretary unless the proposed transfer is described in the budget submitted to 

Congress pursuant to section 1105 of title 31 for that fiscal year. 

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(d)(1) Real property under the jurisdiction of the Secretary may 

not be declared excess by the Secretary and disposed of by the General Services Administration or any other entity of the Federal 

Government unless the Secretary determines that the property is 

no longer needed by the Department in carrying out its functions 

and is not suitable for use for the provision of services to homeless 

veterans by the Department or by another entity under an enhanced-use lease of such property under section 8162 of this title. 

(2) The Secretary may transfer real property under this section, 

or under section 8118 of this title if the Secretary — 

(A) places a notice in the real estate section of local newspapers and in the Federal Register of the Secretary’s intent to 

transfer that real property (including land, structures, and 

equipment associated with the property); 

(B) holds a public hearing; 

(C) provides notice to the Administrator of General Services 

of the Secretary’s intention to transfer that real property and 

waits for 30 days to elapse after providing that notice; and 

(D) after such 30-day period has elapsed, notifies the congressional veterans’ affairs committees of the Secretary’s intention to 

dispose of the property and waits for 60 days to elapse from the 

date of that notice. 

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SUBCHAPTER V—ENHANCED–USE LEASES OF REAL 

PROPERTY 

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§ 8164. Authority for disposition of leased property 

(a) If, during the term of an enhanced-use lease or within 30 

days after the end of the term of the lease, the Secretary determines that the leased property is no longer needed by the Department, the Secretary may initiate action for the transfer to the lessee of all right, title, and interest of the United States in the property. A disposition of property may not be made under this section 

unless the Secretary determines that the disposition under this section rather than under section 8118 or 8122 of this title is in the 

best interests of the Department. 

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§ 8165. Use of proceeds 

(a)(1) * * * 

(2) Funds received by the Department from a disposal of leased 

property under section 8164 of this title shall be deposited in the 

ønursing home revolving fund¿ Capital Asset Fund established 

under section 8118 of this title. 

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§ 8166. Construction standards 

(a) Unless the Secretary provides otherwise, the construction, alteration, repair, remodeling, or improvement of the property that 

is the subject of the lease shall be carried out so as to comply with 

all standards applicable to construction of Federal buildings. Any 

such construction, alteration, repair, remodeling, or improvement 

shall not be subject to any State or local law relating to land use, 

building codes, permits, or inspections unless the Secretary provides otherwise. 

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SECTION 102 OF THE VETERANS MILLENNIUM HEALTH 

CARE AND BENEFITS ACT 

SEC. 102. PILOT PROGRAMS RELATING TO LONG-TERM CARE. 

(a) * * * 

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(h) DURATION OF PROGRAMS.—(1) The authority of the Secretary 

to provide services under a pilot program under this section shall 

cease on the date that is three years after the date of the commencement of that pilot program. 

(2) In the case of a veteran who is participating in a pilot program under this section as of the end of the three-year period applicable to that pilot program under paragraph (1), the Secretary may 

continue to provide to that veteran any of the services that could be 

provided under the pilot program. The authority to provide services 

to any veteran under the preceding sentence applies during the period beginning on the date specified in paragraph (1) with respect 

to that pilot program and ending on December 31, 2005. 

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