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98–569 2016

AN EXAMINATION OF WASTE AND ABUSE 

ASSOCIATED WITH VA’S MANAGEMENT OF LANDUSE AGREEMENTS 

HEARING 

BEFORE THE

COMMITTEE ON VETERANS’ AFFAIRS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

TUESDAY, FEBRUARY 10, 2015 

Serial No. 114–6 

Printed for the use of the Committee on Veterans’ Affairs 

( 


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COMMITTEE ON VETERANS’ AFFAIRS 

JEFF MILLER, Florida, Chairman 

DOUG LAMBORN, Colorado 

GUS M. BILIRAKIS, Florida, Vice-Chairman 

DAVID P. ROE, Tennessee 

DAN BENISHEK, Michigan 

TIM HUELSKAMP, Kansas 

MIKE COFFMAN, Colorado 

BRAD R. WENSTRUP, Ohio 

JACKIE WALORSKI, Indiana 

RALPH ABRAHAM, Louisiana 

LEE ZELDIN, New York 

RYAN COSTELLO, Pennsylvania 

AMATA COLEMAN RADEWAGEN, American 

Samoa 

MIKE BOST, Illinois 

CORRINE BROWN, Florida, Ranking 

Minority Member 

MARK TAKANO, California 

JULIA BROWNLEY, California 

DINA TITUS, Nevada 

RAUL RUIZ, California 

ANN M. KUSTER, New Hampshire 

BETO O’ROURKE, Texas 

KATHLEEN RICE, New York 

TIMOTHY J. WALZ, Minnesota 

JERRY MCNERNEY, California 

JON TOWERS, Staff Director 

DON PHILLIPS, Democratic Staff Director 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATION 

MIKE COFFMAN, Colorado, Chairman 

DOUG LAMBORN, Colorado 

DAVID P. ROE, Tennessee 

DAN BENISHEK, Michigan 

TIM HUELSKAMP, Kansas 

JACKIE WALORSKI, Indiana 

ANN M. KUSTER, New Hampshire, Ranking 

Member 

BETO O’ROURKE, Texas 

KATHLEEN RICE, New York 

TIMOTHY J. WALZ, Minnesota 

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records 

of the Committee on Veterans’ Affairs are also published in electronic form. The printed 

hearing record remains the official version. Because electronic submissions are used to prepare 

both printed and electronic versions of the hearing record, the process of converting between 

various electronic formats may introduce unintentional errors or omissions. Such occurrences 

are inherent in the current publication process and should diminish as the process is further 

refined. 


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C O N T E N T S 

Tuesday, February 10, 2015 

Page 

An Examination of Waste and Abuse Associated With VA’s Management 

of Land-Use Agreements ..................................................................................... 1 

OPENING STATEMENTS 

Mike Coffman, Chairman ........................................................................................ 1 

Prepared Statement ......................................................................................... 23 

Ann McLane Kuster, Ranking Member ................................................................. 2 

Prepared Statement ......................................................................................... 23 

WITNESSES 

Ms. Janet P. Murphy, Acting Deputy Under Secretary for Health for Operations and Management VHA ............................................................................. 4 

Prepared Statement ......................................................................................... 24 

Accompanied by: 

Dr. Skye McDougall, Ph.D, Action Director, Desert Pacific Healthcare 

Network, VHA 

Mr. Stephen Lord, Managing Director, Forensic Audits and Investigative 

Service, GAO ........................................................................................................ 6 

Prepared Statement ......................................................................................... 27 

Mr. Edward Lilley, Assistant Director for Healthcare, National Veterans Affairs and Rehabilitation Division, The American Legion ................................. 7 

Prepared Statement ......................................................................................... 37 


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AN EXAMINATION OF WASTE AND ABUSE ASSOCIATED WITH VA’S MANAGEMENT OF 

LAND-USE AGREEMENTS 

Tuesday, February 10, 2015 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON VETERANS’ AFFAIRS, 

SUBCOMMITTEE ON OVERSIGHT AND INVESTIGATIONS, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 4:02 p.m., in Room 

334, Cannon House Office Building, Hon. Mike Coffman [chairman 

of the subcommittee] presiding. 

Present: Representatives Coffman, Benishek, Walorski, Kuster, 

O’Rourke, and Rice. 

OPENING STATEMENT OF CHAIRMAN MIKE COFFMAN 

Mr. COFFMAN. Good afternoon, the hearing will come to order. I 

want to welcome everyone to today’s hearing entitled An Examination of Waste and Abuse Associated With VA’s Management of 

Land-Use Agreements. Before we begin, I would like to ask unanimous consent that the Honorable Tim Walz from the State of Minnesota be allowed to join us on today’s hearing. Where is Tim? He 

is not here. He is not here yet. No objection, I hope. 

He is set to be redesignated as a member of this subcommittee 

tomorrow, so I doubt anyone will have any objection. 

Hearing none, so ordered. 

The hearing will address serious problems with VA’s billing and 

collection practices regarding its land-use agreements at VA medical centers, which were substantiated by the GAO. These deficiencies continue to result in an extreme loss of income, waste of 

taxpayer money, and compromised services provided to veterans. 

The primary focus of the hearing will be on issues occurring at the 

West Los Angeles VA Medical Center, including land-use agreements, problems faced by homeless veterans in the area, and other 

issues affecting quality of care. The shortcomings associated with 

VA’s management in West Los Angeles are many. There have been 

multiple embezzlement investigations involving the facility over the 

last few years, at least one of which amounted to a guilty plea involving the theft of over $680,000. 

One additional such investigation is ongoing and is being addressed by the VA inspector general, and the Department of Justice. The nature of land-use agreements in West Los Angeles also 

produces cause for concern. For instance, the facility has agreements with university sports teams, hotel laundry facilities and 


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even a rare bird sanctuary. Considering this land was given to the 

Federal Government specifically to house veterans, VA is violating 

the terms of the original bequest. Notably, a Federal district court 

in California ruled in 2013 that many of the facility’s nonhealthcare related agreements were void because the court stated 

agreements of that sort that did not provide for sharing of 

healthcare resources result in lost access to space and opportunities 

that benefit veterans. On January 27, 2015, the day we informed 

VA of this hearing, the parties agreed to settle the appeal of the 

court’s decision. 

Based on the framework of this settlement, it does not appear 

that there is any impediment VA faces which would discourage its 

continued misuse of the property. In the framework, VA states that 

it will not complete a Master Plan to restructure the West L.A. 

property until October 15, 2015, which will require vigilant oversight considering past efforts to create such a Master Plan have 

largely failed. Many similar stories of waste and misuse of property 

set aside to help veterans, as well as other compromised services 

that inevitably occur due to facility mismanagement, will be discussed today regarding West Los Angeles, New York City and 

North Chicago, which were the sites GAO focused on in the audit. 

We will hear from GAO, as well as from the American Legion, 

which has raised concerns with problems occurring in West Los Angeles, primarily the growing homeless veteran population that is an 

unfortunate and unnecessary byproduct of the VA’s mismanagement of property entrusted to veterans. 

I look forward to hearing from these witnesses as well as from 

the VA so that we can get to the bottom of this issue and look for 

solutions to better serve our Nation’s veterans. With that, I now 

recognize Ranking Member Kuster for her opening statement. 

[THE PREPARED STATEMENT OF CHAIRMAN MIKE COFFMAN APPEARS IN THE APPENDIX] 

OPENING STATEMENT OF RANKING MEMBER ANN McLANE 

KUSTER 

Ms. KUSTER. Thank you, Mr. Chairman. This afternoon the Subcommittee on Oversight and Investigations will be looking into VA 

practices regarding land-use agreements and a report from the 

Government Accountability Office from August of last year. 

This is my first hearing as ranking member of this subcommittee, one of the most important subcommittees in Congress. 

And I look forward to working with Chairman Coffman and with 

all of my colleagues. 

Our efforts to identify where problems exist at the VA could not 

be more important or more timely. But we must also remember 

that our responsibility is not only to identify problems, but to work 

to find solutions. This means all of us, the VA, outside agencies, 

such as the GAO, veterans, including our friends at the VSOs, 

must work together to ensure the highest quality of care is being 

delivered to our veterans. 

Today’s hearing is about an issue we face time and again: How 

can we ensure that the information and data collected by the VA 

is, in the words of the GAO, accurate, valid, and complete? How 

can we ensure that there are processes in place that provide the 


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necessary level of accountability, while ensuring that the job of the 

VA, namely to care for our veterans, gets done? This can, perhaps, 

be best summed up in the title of the GAO’s testimony, Improved 

Data Reliability and Monitoring Needed for the Department of Veterans Affairs. The question we must ask in terms of monitoring 

and accountability is how much management control should be exercised centrally or delegated locally? 

We will not arrive at the answers to these questions today, but 

I am hopeful that the beginning of this discussion will lead us to 

solutions that we can all agree on. Solutions that ensure the proper 

level of accountability and management control, while remaining 

flexible enough not to hinder the VA’s ability to accomplish its mission. This will take real leadership on behalf of the VA and all of 

us here in this room today. 

The VA’s transition from inpatient services to increased outpatient services has meant that VA’s real estate portfolio contains 

many aging facilities, and far too much underutilized space. This 

was first pointed out many years ago. In fact, a June 2012 GAO 

report found that the VA had made progress in this area, though 

reducing the number of underutilized facilities in part through 

land-use agreements. 

The VA is not alone in facing real challenges in property management. The GAO has included property management on its highrisk list since 2003. The GAO looked at three VA sites: North Chicago, New York City, and West Los Angeles, and found that its review raised questions regarding reliability of data in VA’s capital 

asset inventory system, as well as lack of oversight and communication regarding billing, collecting, and contracting. Far too often 

at the three sites looked at by GAO, VA improperly paid for services it did not receive, and failed to collect what it was owed. That 

is why it is crucial to have this discussion this afternoon to learn 

about the GAO’s findings and the steps that the VA has taken to 

address these problems. I look forward to hearing about future efforts to strengthen the management, oversight, and use of land-use 

agreements. 

Going back to the 2012 GAO report, how much confidence should 

we have that using land-use agreements is an effective tool in managed underutilized space, and so we can increase the amount of 

benefits and services being provided to our veterans? If the VA is 

to provide the highest level of benefits and services to veterans in 

the most efficient manner, land-use agreements may, indeed, be an 

important tool in VA’s tool chest, but only if the data is reliable 

and there is real oversight within VA to make sure that VA is 

properly benefiting from these agreements. 

Finally, I look forward to discussing the recent agreement regarding West Los Angeles. As the American Legion points out in 

testimony today, for far too long the needs of veterans were not always the highest priority when it came to agreements between the 

VA and non-VA entities. This practice runs counter to the terms 

of the original deed, as pointed out by our chair. The agreement regarding the parties in Valentini v. McDonald is a way forward, but 

there are milestones that need to be met, and we will need to make 

sure that this committee is a full partner in the progress made in 

meeting those steps. 


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Thank you Mr. Chair, I yield back. 

[THE PREPARED STATEMENT OF RANKING MEMBER ANN KUSTER

APPEARS IN THE APPENDIX] 

Mr. COFFMAN. I thank you, Ranking Member Kuster. I ask that 

all members waive their opening remarks as per this committee’s 

custom. With that, I invite the first and only panel to the witness 

table. 

On the panel we will hear from Janet P. Murphy, Acting Deputy 

Under Secretary for Health for Operations and Management for 

the Veterans Health Administration. She is accompanied by Dr. 

Skye McDougall, Acting Director of the Desert Pacific Healthcare 

Network, also known as VISN 22 for the Veterans Health Administration. Also on this panel are Mr. Steven Lord, Managing Director 

of the Forensic Audits and Investigative Service at the Government 

Accountability Office. And Mr. Edward Lilley, Assistant Director 

for Healthcare of the American Legion, National Veterans Affairs 

and Rehabilitation Division. All of your complete written statements will be made part of the hearing record. 

Ms. Murphy, you are now recognized for 5 minutes. 

STATEMENT OF JANET P. MURPHY, ACTING DEPUTY UNDER 

SECRETARY FOR HEALTH, OPERATIONS AND MANAGEMENT, 

VETERANS HEALTH ADMINISTRATION, ACCOMPANIED BY 

DR. SKYE MCDOUGALL, PH.D., ACTING DIRECTOR, DESERT 

PACIFIC HEALTHCARE NETWORK, VETERANS HEALTH ADMINISTRATION 

Ms. MURPHY. Good afternoon, Chairman Coffman and Ranking 

Member Kuster, and members of the subcommittee. Thank you for 

the opportunity to discuss the VA’s billing and collection practices 

regarding our land-use agreements. As you mentioned, sir, I am 

here with Dr. Skye McDougall, who is the Network Director for 

VISN 22. 

The Department of Veterans Affairs owns and leases real property in hundreds of communities across the United States and overseas. And currently, VA manages over 174 million square feet of 

space, approximately 151 million owned square feet, and 23 million 

leased square feet of building assets. A very large footprint indeed. 

Unlike many Federal agencies, VA owns 87 percent of its square 

footage, which means that real estate plays a very important role 

in our overall asset management strategy. 

To manage these properties, the VA uses land-use authorities 

that allow VA to enter into various types of agreements for the use 

of its property in exchange for revenues or in-kind considerations. 

We at VHA value and appreciate the GAO’s recent insights and 

findings into VA’s land-use agreement procedures. We acknowledge 

the noted deficiencies and recognize that there are many needed 

improvements to the design, implementation, and oversight of the 

VA land-use program. 

The GAO recently examined our land-use program, specifically 

our sharing agreements. They looked into three medical centers 

that Ranking Member Kuster mentioned and made recommendations for improvements at each site. 

At VA medical centers in North Chicago and New York, new collaborative processes have been established to improve billing and 


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collection procedures. The GAO also recommended that VHA develop a plan for West Los Angeles Medical Center that identifies 

steps to be taken, timelines and responsibilities in implementing 

segregation of duties over the billing and collection processes. 

The VA greater Los Angeles asset management office and fiscal 

service recently collaborated with VISN 22 and the network contracting office to finalize the standard operating procedure for the 

West Los Angeles Medical Center’s billing and collection process. 

This SOP clearly defines duties related to billing and collections for 

land-use agreements. 

A follow-up audit of the SOP will be conducted by VISN 22 financial quality assurance management staff in April of this year. 

In addition, VA is considering other system-wide improvements 

for land-use agreements. These include establishing a better set of 

administrative tools for the field to use in managing these complex 

agreements and processes. The VHA’s chief financial officer will 

conduct recurring independent reviews of our billing and collection 

processes to ensure a better separation of duties. 

And finally, we are developing a standardized implementation 

and monitoring tool for land-use agreements that will also include 

reviews of land-use agreements during our normal capital program 

reviews. We are updating our land-use handbook with feedback 

from the GAO, and also instituting mandatory training for those 

who manage land-use agreements. I also might add for leaders who 

have land-use agreements in their areas will also receive this training. These actions are an example of VHA’s commitment to improving the management of our land-use agreements. We are making 

progress to solidify our policies and taking actions to implement 

the GAO’s recommendations. 

I am also pleased to share that Secretary McDonald and attorneys representing homeless veterans in Los Angeles announced an 

agreement that dedicates the West Los Angeles campus to better 

serve veterans. This agreement commits the Department to design 

a plan to help end homelessness among veterans in Los Angeles 

County. Under this agreement, Secretary McDonald will launch an 

accelerated process to develop a new long-term Master Plan. The 

Master Plan will prioritize the provision of bridge housing and permanent supportive housing. It will also describe an exit strategy 

for third-party land-use agreements that do not comply with the 

applicable laws and do not fit the Master Plan. 

In conclusion, Mr. Chairman, VA has a complex and diverse real 

estate portfolio. We seek to leverage our portfolio optimally to provide quality care and services to our veterans. We will correct the 

deficiencies in our oversight and management of our land-use 

agreements. I thank you for the opportunity to discuss this issue. 

And at this time my colleague and I prepared to answer any questions you may have. Thank you. 

[THE PREPARED STATEMENT OF MS. JANET MURPHY APPEARS IN

THE APPENDIX] 

Mr. COFFMAN. Mr. Lord, you are now recognized for 5 minutes. 


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STATEMENT OF STEPHEN LORD 

Mr. LORD. I thank you, Chairman Coffman, Ranking Member 

Kuster, and other distinguished members of the committee. I am 

pleased to be here today to discuss our recent work on VA landuse agreements. This is an important issue because the agreements, if managed properly, can help leverage VA resources and 

help provide needed benefits to veterans. 

Today I would like to highlight the findings of our 2014 report. 

Briefly we looked at the reliability of VA’s data on these holdings, 

its billing and collection process, as well as its systems for monitoring whether the agreements are up to date or have, in fact, expired. I think it is important to first point out that our findings related to the visits to the three centers are not generalizeable. 

Again, we visited West L.A., North Chicago, and a New York facility. 

Regarding the first point, data reliability, when we started this 

audit, I asked my team a very simple question: Well, how many 

land-use agreements does VA currently have in effect? And what 

level of funding is associated with these agreements? And the bottom line is we had a hard time answering that very simple question. For example, we found that some agreements were not loaded 

into the central repository, other agreements were in the database 

that were actually expired and should never have been there. And 

it was really difficult to get full visibility over the overall number 

of holdings. So therefore, we questioned the reliability of the data 

and made some recommendations to VA to help improve that. 

Regarding the second point, the billings and collection process, 

we found weaknesses at the three centers. In the actual billing, the 

bills they actually sent out, we found that VA underbilled by 

$300,000, which is a significant amount. We also found in other 

cases they didn’t bill at all, the agreements had expired and private 

entities continued to occupy VA space, and that concerned us as 

well. 

Finally, we found that VA needed to do a better job of monitoring 

the status of the agreements. They all have different terms, different conditions, they expire at different times. That would have 

helped them identify the one case in West L.A., where a non-profit, 

they simply waived a revenue of $250,000 a year because of financial hardship, even though that is not allowed by VA policy. 

Again, in New York we made a site visit, we observed seven antennas on top of a facility. We said, well, whose antennas are 

those? And bottom line is they didn’t know. They should have been 

receiving revenues associated with the antennas. These are all examples that underscore the importance of sound billing, effective 

monitoring. 

In closing, it is clear VA needs to improve in all these areas. 

There is some good news in all of this. We made six important recommendations to the Secretary to improve the reliability of the 

data, the billings and collection process, their overall monitoring 

system. VA has embraced all six recommendations and they have 

given us several updates on where they are in implementing these 

recommendations. That is going to help strengthen the management of these expensive holdings. However, it is still too early to 

tell whether they are going to be successful. As you know, the devil 


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is in the details. And we are going to continue to monitor that over 

the next few months. Again, once implemented, these recommendations will help ensure additional benefits are provided to needy veterans. 

Chairman Coffman, other distinguished members, that concludes 

my testimony. I look forward to any questions you have about our 

report, as well as the new framework agreement which was just executed in late January. I studied that in great detail in preparation 

for this hearing as well. 

[THE PREPARED STATEMENT OF MR. STEPHEN LORD APPEARS IN

THE APPENDIX] 

Mr. COFFMAN. Thank you. Mr. Lilley, you are now recognized for 

5 minutes. 

STATEMENT OF EDWARD LILLEY 

Mr. LILLEY. Betrayed, that is exactly how the homeless veterans 

in Los Angeles feel when the VA leases property to private businesses, yet they remain homeless. This can not be the way our government fights for our homeless veterans and ultimately ends veterans’ homelessness. 

Good afternoon, Chairman Coffman, Ranking Member Kuster, 

and members of the committee. On behalf of our national commander, Mike Helm, and the 2.4 million members of the American 

Legion, I want to say thank you for the scrutiny you are applying 

to the mismanagement of VA’s land-use agreements, specifically 

the issues currently being faced by the homeless veterans in the 

Los Angeles area. 

When the 387 acres of land was donated in 1888 to the Federal 

Government, it was to be, quote, ‘‘Permanently maintained as a national home for disabled vet volunteer soldiers.’’ The West L.A. 

campus did just that until VA began closing its doors to them and 

allowed the private sector to lease land and buildings. The American Legion first took action in 1983, when we passed a resolution 

urging no part of the West L.A. VA facility be sold or otherwise 

transferred by the United States Government or any agency thereof. 

In the 1990s, when private developers wanted to purchase the 

West L.A. VA and build another Century City shopping center, the 

American Legion reiterated our position and passed another resolution affirming that real property located at the West L.A. VA Medical Center, and elsewhere where such facilities are provided, shall 

be maintained to obtain the greatest benefit for care and well-being 

of the sick, disabled veteran population. 

VA has since leased ground to private companies, yet never fully 

disclosed the terms of the leases or how it spends the proceeds. In 

their latest report on land-use agreements, GAO added that West 

L.A. has used a 12-acre field, Barrington Park, on VA property for 

recreational use without a written agreement. Meanwhile, homeless veterans sleep on skid row sidewalks, while students at one of 

the most exclusive schools in the country play sports on land donated specifically to permanently house former servicemembers. 

Not only has the land donated in 1888 been utilized for recreational use since the 1980s without a signed agreement or payments to the VA, but according to the GAO, the VA has failed to 


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maintain reliable data on the total number of land-use agreements 

nor accurately estimated the revenues those agreements generated. 

Currently, the American Legion supports a publicly transparent, 

enhanced use lease program, and believes strongly that the leasing 

agreements must conform to priority services that meet the needs 

of the veterans community. The American Legion was relieved to 

hear about the recent agreement between the Department of Veterans Affairs and the attorneys representing homeless veterans to 

turn its West Los Angeles VA campus into a facility that truly 

serves veterans, especially those who are homeless, severely disabled or elderly. 

We have grimaced for many years over the irony of a once-thriving veterans campus surrounded by the largest population of homeless veterans in America. We were also pleased about the short 

timelines agreed to for developing a written plan to help end veteran homelessness in greater Los Angeles, and to develop a new 

long-term Master Plan for the future use of the West Los Angeles 

campus. The American Legion expects to be actively involved in 

providing inputs into the Master Plan, and will continue monitoring West L.A. to ensure the correct changes are being made. Ultimately, we want VA to make good on their promise to functionally eliminate veterans’ homelessness, but this will not be possible 

as long as the largest population of homeless veterans in America 

is not addressed. 

The American Legion thanks the committee for their close attention to the problems veterans face, among them, homelessness. We 

want you to know that we remain deeply committee to ensuring 

that the scourge of veteran homeless has ended. 

Mr. COFFMAN. Thank you, Mr. Lilley. 

[THE PREPARED STATEMENT OF MR. EDWARD LILLEY APPEARS IN

THE APPENDIX] 

Mr. COFFMAN. Ms. Murphy, the parties to the lawsuit involved 

in the West L.A. facility are seeking to vacate the decisions of the 

District court, namely those that declared the non-healthcare 

agreements void, and order VA to halt construction of an amphitheater involving one of the voided agreements. I have two questions about what VA will do if the decisions are vacated. Will the 

VA allow land-use agreement holders whose agreements do not involve sharing of healthcare resources to remain on the property? 

Ms. MURPHY. Thank you, Mr. Chairman. The Master Plan that 

is going to be developed will address those issues. And until that 

Master Plan is developed, we will not know what the disposition 

of all of those entities will be. Certainly the Master Plan will be 

consistent with having entities on the property that support services to homeless veterans. And all other entities that do not meet 

the criteria of support for veterans will be looked at critically as 

part of that process. 

Mr. COFFMAN. Well, here is the problem. We already know that 

it is out of compliance. We already know that in 1888, when this 

land was bequeathed to the Federal Government, it was for the 

specific purpose of serving veterans. So I don’t understand why you 

have to go through some kind of bureaucratic process to determine 

that you are in violation of law when you are already in violation 

of law. Can you explain that to me? 


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Ms. MURPHY. I think, sir, in this instance, a very strong and 

well-thought-out Master Planning process could help us answer 

those questions. 

Mr. COFFMAN. Reading the law would help answer these questions. Will VA now resume construction of that amphitheater despite the fact that it provides no direct service to veterans? 

Ms. MURPHY. I would refer that question to my colleague, Dr. 

McDougall. 

Dr. MCDOUGALL. No, the VA has no intention at this point of resuming construction. That will, again, be looked at as part of the 

Master Planning process. 

Mr. COFFMAN. Ms. Murphy, VA’s settlement framework states 

that the Department will develop exit strategies for non-VA entities located on the West L.A. campus if they don’t comply with the 

new Master Plan to be completed by October 2015. When will the 

multiple land-use agreement holders that GAO found have no contract or written agreement with the VA, or have failed to provide 

a payment for the use of the property, be forced to vacate the premises instead of remaining at taxpayer and veteran expense? 

Ms. MURPHY. Sir, I can’t answer that question precisely, but 

again, that will be part of the process. 

Mr. COFFMAN. How long is this process supposed to take place? 

Ms. MURPHY. The Master Plan is intended to be completed in October of this year. 

Mr. COFFMAN. October of this year? 

Ms. MURPHY. Yes, sir. 

Mr. COFFMAN. It is going to take until October of this year to 

find out that you are in violation of the law when you are already 

in violation of the law. Is that what you are telling me? 

I will recognize the ranking member. 

Ms. KUSTER. Thank you very much, Mr. Chair. I want to get at 

the heart of the matter. And I appreciate Mr. Lilley when you said 

what we are looking at is to try to get the greatest benefit for the 

care of veterans. 

We have got an issue here where the Federal Government, 

through the VA, has been bequeathed this property. And you, in 

particular, had said that you didn’t want that property to be sold. 

So presumably if all 300 acres can’t be used for the specific benefit, 

there is a value to the taxpayers and to the veterans through these 

lease agreements. 

I am going to direct my question to Mr. Lord because I think you 

have spent some time with the agreement. Can we get at the heart 

of the question of what is happening? If an audit goes forward, we 

get on top of these agreements, presumably there are rent payments, proceeds that are being paid into the VA. Can that money 

then be directed toward the specific benefit of the veterans, and in 

this case the homeless veterans in West Los Angeles? 

Mr. LORD. Yes, as long as you can establish a nexus to 

healthcare resources or medical services. I read the statement of 

congressional intent in preparing for the hearing. I think that was 

the failing of the prior agreement. They were collecting revenues, 

but there was no direct relationship to the provision of healthcare 

services to veterans. So I would argue you can still maintain the 


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agreements if you do it properly and you can leverage existing resources. That is the issue. 

Ms. KUSTER. I understand it was hard to get on top of all these 

agreements. I commend the work that you have done and urge the 

VA in going forward with your audit, changing your administrative 

processes, getting on top of your billing and collection. 

Mr. Lord or Ms. Murphy, do you have a sense of the scope of 

these resources that we are talking about, either on an annual or 

a monthly basis, if all the rents were collected and were directed 

to the benefit of veterans in West Los Angeles? 

Mr. LORD. Well, a rough order of magnitude when I asked a basic 

question how many agreements are we talking about, it was roughly about 400. And that includes all types of agreements, not just 

sharing agreements. It was over—about $25 million, but some 

agreements they waived the revenue provision, so potentially it is 

much more significant. But you need reliable data to really answer 

that question. That is why I want to be real cautious about providing even rough order of magnitude estimates. 

Ms. KUSTER. Sure. It is fair to say then that this settlement 

agreement, with the promise of an audit going forward, is a positive step, right? We are getting to the heart of the matter here. 

Mr. LORD. I would argue it is positive. Of course, it is going to 

depend on how it is executed and practiced. Not to use the old cliche the devil is in the details, but it includes an exit strategy, as 

Chairman Coffman elaborated on. Also by this Friday, if you read 

it closely, the VA is to submit a strategy for homeless veterans and 

an action plan, so we don’t have to wait until October to see what 

is going to happen. By this Friday, they have to submit this new 

action plan and related strategy. 

Ms. KUSTER. Ms. Murphy or Dr. McDougall, I realize every T has 

not been crossed ever and I dotted, but can you give us some insight into the action plan and what the steps are? Can you foresee, 

Dr. McDougall, where we are headed with this and how we can 

start to address the crux of the matter here that Mr. Lilley has 

pointed out. We have a homeless veterans problem, we have assets 

that aren’t being capitalized, and can we move forward on that? 

Dr. MCDOUGALL. Thank you. I would like to tell the committee 

that I am as appalled by what the GAO uncovered as the committee is and Mr. Lilley is. 

As part of the transition briefing that I was given to assume this 

job on January 1st, I was not happy with what I heard. And so I 

personally called the criminal OIG to make sure that they had all 

the information that I have so that we are all acting in concert. My 

office has taken over, the VISN office has taken over land use from 

this facility so it is now managed by my capital assets manager. 

Both she and my fiscal officer have been up there in the past couple of weeks to make sure that the billing practices and the SOP 

are in place. 

We have—an audit will be done by my financial management 

staff in April, again to ensure that the billing and collection and 

segregation of duties piece is intact. We have a task force and a 

central office fiscal staff that are working with us to conduct a financial audit of our 25 entities on campus and to make sure that 

we are able to recoup whatever we can legally, and to assess all 


VACREP0180 with DISTILLER
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the different types of agreements we have moving forward. And 

then the future use will be governed by the Master Plan. 

Ms. KUSTER. For the record, I would like to make a request that 

the members of this committee receive a copy of that audit in April 

2015 when that becomes available. And if I could, I would like to 

ask the chair if we could have a follow-up hearing next fall, at least 

September, October, in the timeframe when this Master Plan can 

be presented, and so that we can be assured that the assets—as 

your capital assets manager, I think that was a good step, apparently it was not in good hands, I think we will have to leave to the 

DOJ and the IG the steps that need to be taken there. But certainly going forward, we would like to stay in close contact with 

you about this and then work with Mr. Lilley and others in the 

community to make sure that the revenues that are generated in 

an appropriate way be directed toward this plan to end homelessness in West Los Angeles. 

I just have a few seconds left, Mr. Lilley, but is there anything 

else that we could do to assure you that we will be on top of this 

going forward? 

Mr. LILLEY. As long as we could be included on that audit copy, 

we would appreciate that as well. We want to follow up, we are 

here to help and we want to make sure those veterans are taken 

care of. 

Ms. KUSTER. We are here to help you keep their feet to the fire, 

so thank you very much, Mr. Chair. 

Mr. COFFMAN. I want to thank the oversight of the American Legion on this critical issue. And Ranking Member Kuster, I think 

you have a great idea, we will do a follow-on hearing to make sure 

that this is all implemented that we are talking about today. 

Dr. Benishek, you are recognized for 5 minutes 

Dr. BENISHEK. Thank you, Mr. Chairman. 

So Dr. McDougall, you are new on the job, right? January you 

said? 

Dr. MCDOUGALL. Correct, January 1st. 

Dr. BENISHEK. How about you, Ms. Murphy, are you new on the 

job there too then? 

Ms. MURPHY. January 19th. 

Dr. BENISHEK. So you are both relatively new on the job. Have 

you guys been to the West L.A. hospital? Do you know what it 

looks like and have you been all through this area? 

Dr. MCDOUGALL. Yes. 

Ms. MURPHY. Yes. 

Dr. BENISHEK. Let me ask you this: I want to go through one of 

the specifics here, apparently there is this hospital laundry that is 

operating on campus without paying rent. Are you familiar with 

that story there? 

Dr. MCDOUGALL. Yes, I am. And they have completely paid up 

what they owed us and they are off campus. 

Dr. BENISHEK. What is the name of the individual at the VA 

who’s responsible for allowing that to happen? Isn’t there a facilities manager there that would be responsible for that? What would 

be that person’s name? 

Dr. MCDOUGALL. That was our asset manager, Ralph Tillman, 

and he is retired from the VA. 


VACREP0180 with DISTILLER
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Dr. BENISHEK. I see, okay. When did his retirement come about? 

Dr. MCDOUGALL. I believe in September. 

Dr. BENISHEK. I am glad to hear that he is retired. Dr. McDougall, considering that this hearing deals with these wasted resources that could more appropriately have been used to provide 

healthcare to our veterans, how long is the average wait time for 

a new patient at the greater L.A. Medical Center? 

Dr. MCDOUGALL. The average wait time for a new patient right 

now is about 4 days. 

Dr. BENISHEK. Is that true for mental health patients as well? 

Dr. MCDOUGALL. That is true for mental health as well. 

Dr. BENISHEK. Mr. Lilley, does that correspond to your experience there at the VA in L.A.? 

Mr. LILLEY. The American Legion we last visited there in October, and we were conducting a veterans benefit center out there. 

This was something that we have been doing around the country 

in response to the crisis that broke out last year within the VA. 

I don’t know that appointment scheduling was necessarily the 

biggest issue there, we were out there following the homeless issue. 

We were able to help 200 veterans, most of which were homeless 

veterans that were in transition while we were out in Los Angeles. 

Dr. BENISHEK. Dr. McDougall, apparently the Greater Los Ange- les received $24 million for the accelerated care initiative to improve access to care. What was this money spent on in particular? 

Dr. MCDOUGALL. There was a—central office provided a staffing 

algorithm to distribute the funding between mental health providers, specialty care providers and primary care providers and the 

support staff that goes along with this, so that is how the funding 

is being utilized. 

Dr. BENISHEK. Ms. Murphy, does every single VA medical center 

have their own management plan as far as its usage of the facility? 

Is there any central management plan or how is that working? 

Ms. MURPHY. Thank you, sir. They should not have their separate plans. There is a directive and a handbook that governs landuse agreements. These are managed out of the office—out of central office, out of the office of—OCFM, Office of Facilities Management. 

Dr. BENISHEK. Doesn’t seem to me that that was followed in this 

case; is that right? 

Ms. MURPHY. You are correct, it was not. 

Dr. BENISHEK. Mr. Lord, is that a common practice where the 

central management plan is not followed? 

Mr. LORD. Common practice, I don’t know how to respond to 

that. I will acknowledge it is more complicated when you have all 

these stakeholders involved, centrally and at the local level. Even 

at the local level, you have different offices involved in tracking fiscal, contracting, business, operations. 

Dr. BENISHEK. There is not one person in charge of the situation 

in L.A. like Ms. McDougall suggested that there was this guy who 

is now retired who was in charge? 

Mr. LORD. For sharing agreements they have decentralized that 

function to the centers. I am not saying you necessarily have to fail 

given that, if you managed it properly you can still do a good job 

due to the centralized approach. 


VACREP0180 with DISTILLER
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Dr. BENISHEK. I would think decentralized would be the best because you would know the facility rather than some bureaucrat in 

Washington telling them how to do things in L.A. I don’t really like 

that, I like L.A. deciding, but it seems like the people in L.A. would 

have to make sure they collect the damn rent. 

Mr. LORD. Sure. I believe in trust, but you also have to verify, 

verify they are doing things consistently. 

Dr. BENISHEK. Thank you for your testimony here today, I am 

out of time. Thanks, Mr. Chairman. 

Mr. COFFMAN. Thank you, Dr. Benishek. Mr. O’Rourke, you have 

5 minutes. 

Mr. O’ROURKE. Thank you, Mr. Chairman. For Mr. Lord, the 

$300,000 underbilled that you referred to, that was in West L.A.? 

Mr. LORD. No, that was for the three centers we visited of the 

bills they sent out. 

Mr. O’ROURKE. That is New York, Chicago, West L.A. 

Mr. LORD. Yes, that is of the invoices they sent out which is part 

of the problem, but we also reported, and in some cases, they didn’t 

bill at all. 

Mr. O’ROURKE. Was that annually or is that cumulative over a 

period of years? 

Mr. LORD. That was for the one year, we did the drill down at 

the three centers, we looked at fiscal year 2012 data, that was the 

most recent data we had at the time of our review. 

Mr. O’ROURKE. Gotcha. A question you may or may not be able 

to answer now, but I am interested in the answer, how does this 

performance relate to other Federal agencies or departments that 

manage a lot of land, excluding a department like BLM that have 

an expressed purpose for that land and then may or may not enter 

into these land-use or lease agreements with other non-related entities? Does DoD do this or do we have other examples? How do 

they do comparable to the VA? 

Mr. LORD. We have never done a direct comparison, but in general, I am sure you know a Federal real property, it is on GAO’s 

high-risk list, it has been on the list since 2003. So in general there 

is—other agencies experience challenges in managing real property, VA is certainly not the only one in this area. 

Mr. O’ROURKE. Gotcha. 

What level, and this may be for Ms. Murphy or Dr. McDougall, 

at what level are these decisions made and then reviewed? Following up on some of the questions that are already asked, there 

is somebody there who is managing the agreements on site, but 

what is the hierarchy of review through the VISN and on up if it 

goes beyond that? 

Ms. MURPHY. Thank you, sir. It depends upon the type of agreement, but there is a defined process for putting these agreements 

in place, it requires—for example, if the medical center director has 

the authority to move the agreement forward, that has to go 

through that person. Contracting actually is the only entity that 

has the authority to actually obligate the government to those 

agreements. Fiscal has a role. Fiscal has to set up the codes for receiving the revenue and creating the bills. 

So there is actually a very well-defined process for putting these 

agreements in place if it is followed. The problem with West L.A. 


VACREP0180 with DISTILLER
14 

is it wasn’t followed. So depending upon, as I said, the type of 

agreement, it could be at a facility level, it could be at a VISN 

level, it could be at a national level. 

Mr. O’ROURKE. And also for you, Ms. Murphy, one of the issues 

that we have really wrestled with on this committee and on the full 

committee is the issue of accountability and creating a culture that 

values and recognizes and understands accountability. I think you 

alluded to that in your answer to Ms. Kuster’s question about ongoing investigations. I wouldn’t ask you to say anything publicly that 

would jeopardize that. And you, in answer to Dr. Benishek’s questions, both acknowledge that you are relatively new to these positions. But as specifically as you can, can you talk about how important it is for there to be accountability for this and certainly want 

to see people who are responsible for these mistakes held accountable, but how do we gain something beyond that in this organization? 

Ms. MURPHY. I will take the first stab at it, sir. Absolutely, accountability is key and the leadership is responsible for ensuring 

that these agreements are properly put in place, are monitored, audited, and the revenues that they generate actually accrue to the 

government. So there are several ongoing investigations, and we 

expect there are findings that those folks will be held accountable. 

Mr. O’ROURKE. Mr. Lilley, I wanted to ask you a quick question, 

is it your position or the position of the American Legion that you 

are not opposed necessarily to lease agreements as long as ultimately the benefit accrues to the veterans and the immediate 

needs there with homeless veterans or taking care of the primarily 

mental healthcare needs of the veterans are resolved? 

Mr. LILLEY. That is correct, we support the agreements. Currently, that is per resolution that we passed at our last national 

convention provided the benefit is going to the veterans. 

Mr. O’ROURKE. Great, thank you. 

Mr. COFFMAN. Ms. Walorski, you have 5 minutes. 

Ms. WALORSKI. Thank you, Mr. Chairman. Ms. Murphy, the 

original transfer of property on which the West L.A. VA center sits 

was intended to House veterans. How many veterans are being 

housed in that West L.A. campus? I don’t mean the ones who are 

patients at the hospital or treatment facility, but how many homeless veterans are being housed at that facility overall? 

Ms. MURPHY. If I may refer that question to Dr. McDougall. 

Ms. WALORSKI. Sure. 

Dr. MCDOUGALL. Eight hundred eighteen homeless veterans are 

being housed on the campus at this point in time. 

Ms. WALORSKI. That is not inpatient? 

Dr. MCDOUGALL. No, that is not inpatient, this is just homeless 

veterans in one type of housing or another, emergency transitional, 

long-term housing. 

Ms. WALORSKI. Are the housing units full? Is there a waiting 

list? 

Dr. MCDOUGALL. I don’t know if there is a waiting list or not. 

Ms. WALORSKI. Are those houses normally full? 

Dr. MCDOUGALL. Yes, oh, yes. 

Ms. WALORSKI. And then I guess the follow-up, Dr. McDougall, 

would be to you as well, with the massive population of homeless 


VACREP0180 with DISTILLER
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veterans in that L.A. area, I am still trying to figure out the followup to what Dr. Benishek just asked. When he’s asking about the 

hotel laundry, there is also a baseball diamond, and a bird sanctuary. How in the world does that achieve the goal of housing veterans? 

Dr. MCDOUGALL. Moving forward it will be part of the Master 

Planning process and there will be working with any entity that is 

on campus right now to fully leverage—if they want to stay, to 

fully leverage their resources to provide direct benefit to the veterans. 

Ms. WALORSKI. I know you are new, I feel sorry that you are new 

and sitting in a Congressional hearing. Were you aware of this debacle when you were hired? 

Dr. MCDOUGALL. No. Well, peripherally aware of it, but not until 

I read the GAO report did I realize how severe the situation was. 

Ms. WALORSKI. And Dr. McDougall again, I have another question. The former West L.A. director lived in a 3,500 square foot 

house provided by the VA on the facilities campus, and I believe 

other West L.A. execs lived on that property as well; is that correct? 

Dr. MCDOUGALL. That is correct. 

Ms. WALORSKI. Fair market rental rates of multi-bedroom houses 

in that area are approximately $10,000 a month. How much did 

former Director Beiter pay? 

Dr. MCDOUGALL. $2,450 a month. 

Ms. WALORSKI. How much do each of the other facility leaders 

pay to live on that property? 

Dr. MCDOUGALL. It depends on the size of the unit they have, but it is between $1,500 and $2,000, but we do follow the National 

Quarters Management Program and we use the tool provided by 

the Department of Interior to calculate the rental value. 

Ms. WALORSKI. And have they been paying that all the way along 

or just in the last month, since you have come in? 

Dr. MCDOUGALL. No, it is raised—it is a biweekly payroll deduction so we are able to monitor that, and the rent is raised every 

year, or reevaluated every year. I know it is being raised in March. 

Ms. WALORSKI. That is quite a deal. I am sure American taxpayers are interested considering the immense homeless veteran 

population in and around the L.A. area, how the very purpose of 

the property of which that complex sits is to house homeless veterans. 

Aren’t the houses and lands VA provides to facility leadership actually better suited to actually support additional veterans in addition to the 818? 

Dr. MCDOUGALL. We are taking over in my office the Quarters 

Management Program, and we will be rolling that into how we 

evaluate land use in the Master Plan overall. 

Ms. WALORSKI. So it is interesting that given this Master Plan 

that we are all waiting for with bated breath, it is interesting this 

place has sat there, it has housed unaccountable organizations, it 

has been used to do laundry, to play baseball and to provide a bird 

sanctuary for those interested in birds. And yet, the homeless population in this country is the highest it has ever been, and with the 

influx of more veterans coming home and the pleas that we hear 


VACREP0180 with DISTILLER
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from all the associations, definitely the American Legion as well, 

it seems to most Americans that are going to hear this story, it is 

an atrocity that veterans are sleeping outside in the cold while the 

VA again has to stop what they are doing, readjust with new employees, and go back and correct many, many years of wrongs. 

And so I feel bad that the two of you are sitting here as such 

new employees. And I know the VA has a long way to go, but I just 

think that it is such an outrage that—we all have homeless veterans in our areas and we are all trying to make every single tax 

dollar accountable to be used what it was given for in the spirit of 

being good stewards, which is what the American people ask of you 

as well. 

I thank you for being here, and I yield back the balance of my 

time. 

Mr. COFFMAN. Thanks, Doctor—Thanks, Ms. Walorski. We are 

going do a second round of questions. VA’s, I guess, Ms. Murphy, 

VA’s January 2015 fact sheet regarding the settlement of the West 

L.A. lawsuit states that the VA will create a long-term Master Plan 

that prioritizes the creation of temporary and long-term housing for 

homeless veterans. However, VA created an early Master Plan in 

2011 based on a 1998 legislative mandate, which, in part, called for 

creating such housing. So what will be different about this Master 

Plan when the one proposed 4 years ago was not successful? 

Ms. MURPHY. Thank you, sir. I think one thing that will be different is that Secretary McDonald has made a very public commitment to Members of Congress, to the public, to the veterans service 

organizations and to veterans to make it different this time, and 

to use that property for the purpose that it was intended. So I 

think we have a way forward and I think the way forward is different. And the approach and the support that we have this time 

I think is different, and I believe we will be successful. 

Mr. COFFMAN. Well, I kind of challenge that. Simply because 

General Shinseki made it one of his core goals. I think it was probably at the top of his list, was dealing with the veterans’ homelessness, and here under his watch, this whole thing evolves and is 

just out of control. 

Mr. Lilley, do you have any comment on that? 

Mr. LILLEY. I would say it would go beyond Secretary Shinseki, 

this has been going on and we have been involved with this for 

more than 30 years. We are happy that the VA has finally settled, 

but we are going to be on top of this and want to make sure the 

settlement is going to include a very, very, very specific plan that 

is going to get veterans’ homelessness ended. 

So we are here to help. This should be an all-hands-on-deck approach. You’ve got to go beyond what the VA programs have, use 

the community, use the VSOs. You have to get everybody involved; 

it is a community problem. 

Mr. COFFMAN. I must be kind of simple, because I am looking at 

this bird sanctuary on this property that was designated to serve 

the needs of veterans. And can anybody explain to me how a bird 

sanctuary can be somehow inured to the benefit of homeless veterans, can somebody explain that to me? 

Ms. MURPHY. I cannot. 


VACREP0180 with DISTILLER
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Mr. COFFMAN. Well, that is interesting, but I think we just had 

previous testimony that said there will be a consideration of the 

Master Plan of whether it will or it won’t, and I think you just said 

obviously it won’t. 

Ms. MURPHY. If it is in current formation, I don’t know, but we 

will see if as—— 

Mr. COFFMAN. So a bird sanctuary could, in fact, inure somehow 

to the benefit of veterans? 

Ms. MURPHY. I think if that is part of the Master Plan that is 

established, that is a possibility. 

Mr. COFFMAN. Okay, I must be awfully simple, but I just don’t 

get it. Homeless veterans and bird sanctuary on the same grounds, 

meeting the needs of homeless veterans, okay. 

Ms. Kuster. 

Ms. KUSTER. Thank you very much, Mr. Chair. I want to move 

on, and by the way, Mr. Lilley, you and your organization should 

be commended for your efforts over 30 years. It is a bipartisan effort here in terms of stewardship of taxpayer dollars, but also our 

joint commitment to serving the needs of our veterans. 

Just moving past West L.A. and Chicago and New York, I am 

wondering, and this is for you, Ms. Murphy, but also Mr. Lord, if 

you have any thoughts on this, two questions: One is, have you 

identified software, and I understand you are both new to the position, that is available for this type of land-use management, because obviously just as an attorney the contracts are not going to 

look the same, the purposes, the term, the duration, all of that will 

be different. But have you identified software at least to keep track 

of these agreements? 

And secondly, have you undertaken or does the VA intend to undertake a systemwide reassessment of these land-use agreements 

at VA facilities that were not a part of this GAO study? In other 

words, I think what we learned from Phoenix in this committee is 

that it was outrageous, it was atrocious, it may be criminal behavior. And we may have a similar situation here, but we also know 

that there are other VISNs that had the problems we identified in 

Phoenix, and I think we would be remiss if we didn’t suggest to you 

that we want to make sure on a systemwide basis that you are taking steps going forward. 

By the way, I met with Secretary McDonald, I don’t doubt he actually was quite current on this and very aware of not only settling 

the lawsuit, but making sure that we stay on top of it. And I think 

our committee can be helpful keeping your feet to the fire. But 

could you comment, if you would, on the systemwide assessment 

and audit? 

Ms. MURPHY. Thank you, Ranking Member Kuster. Your first 

question was about the software. So we are working with the capital asset inventory, which is a software-based program, to make 

improvements to that. I actually had a chance to look at some of 

the improvements. I asked to see the software to see what kinds 

of things we were looking at and tracking. So some of the improvements provide greater controls, more standardization of nomenclature, business rules, alerts when an agreement is expiring and 

we do not have a new agreement in place or we haven’t given an 

extension or reconsidered. 


VACREP0180 with DISTILLER
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In the future we hope to be able to connect that software with 

the financial management system, so that if a payment does not 

come in, we are alerted that the payment didn’t come in. So I think 

some really good enhancements to that software. 

Then additionally, we used to update the system annually, that 

is going to go to quarterly now. So that there will be quarterly updates, another way of checking to see that things are current and 

that the system is working as it should. 

The other—I think training is really important, and I took the 

training here recently. So I look to see what people are being 

trained on in terms of our land-use agreements. I think the training is actually quite good. I got it, I understood what we were trying to do with the land-use agreements. And so that training is 

going to be made available, certain members of our staff will be required to take it. I am going to also encourage that all leaders take 

the training as well. I think this is a very important issue and one 

that we obviously stumbled. So it is about leadership; leadership 

has to be accountable and responsible. So those are some of things 

that we are doing. 

The other thing is the finance people in our system already we 

are able to—we have a check and balance system on the conflict 

so there is a system in place already where you can’t have certain 

keys to pay bills, create bills, cut checks, et cetera. So our finance 

people are going to be looking very carefully at that to make sure 

we are not giving keys, inappropriate keys to staff to log in to do 

those kinds of transactions. That is separation of duties. We already can run reports to see who has those keys and maybe who 

shouldn’t have those keys, so much more attention to those kind 

of controls, that is really what we need to do. 

Ms. MURPHY. The land-use authorities are good authorities. But 

it is our responsibility to make sure that we are using them properly and the oversight is there. 

Ms. KUSTER. So, I think that would be very helpful. And one additional piece that would be very helpful for our committee is when 

you complete this report and this audit, for us to understand the 

scope, the magnitude of the resources that could be collected, that 

could inure to the benefit of the veterans—and this may be other 

people that would be involved in this, but it would be helpful for 

us to hear the accounting mechanism, so that we can be assured 

that those resources will be directly reinvested to the benefit of the 

veterans. 

And specifically in West L.A. But I would certainly be curious on 

a more macro scale to make sure that wherever these agreements 

exist—you know, you cited this figure, 87 percent of VA facilities 

are owned facilities. So I can’t imagine this is a unique situation. 

And, look, we are accountable to the taxpayers and to the veterans. We need to make sure that, to the extent those resources are 

being used appropriately, that the revenues are being redirected to 

the benefit of the taxpayers. 

So I yield back. 

Thank you, Mr. Chair. 

Mr. Coffman. Ms. Walorski. 

Ms. WALORSKI. Thank you, Mr. Chairman. 


VACREP0180 with DISTILLER
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Ms. Murphy, I think I am directing this to you but it could be 

to the doctor as well, but we heard today from the American Legion 

about a recent article published that explains how a mentally disabled homeless veteran in West L.A. was arrested by VA police for 

taking food out of a trash can. He was fined $1,000, which he paid 

by collecting aluminum cans, which is absolutely deplorable to 

think that this situation is going on. Into what account, though, 

was that money deposited? And what is it used for, that fine, that 

fee money? 

Ms. MURPHY. I am sorry, ma’am. I am not clear what fee money 

you are referring to? 

Ms. WALORSKI. The fine, he was fined $1,000. So he raised the 

money by collecting aluminum cans and paid the VA police $1,000. 

Where does that money go? What account does that money get deposited into? 

Ms. MURPHY. I don’t have that information. But we can get that 

for you. I am guessing some revenue account that tickets and fines 

are paid to. 

Ms. WALORSKI. Could you follow up with the committee and provide us a detailed account of where every dollar of that money that 

he spent went? Can we get that report by the end of the week? Is 

that possible? 

Ms. MURPHY. We can try to find out, yes. 

Ms. WALORSKI. Okay. I appreciate that. 

And I have one more question. Ms. Murphy, again, on January 

3, Los Angeles Neighborhood Council Coalition unanimously voted 

in favor of a motion that declared Los Angeles in a state of emergency for homeless veterans. The motion urges the city and the VA 

to open a large-scale crisis humanitarian relief project on the West 

L.A. property to immediately house and care for thousands of 

homeless and disabled veterans. Does the VA agree with that and 

support that motion? 

Ms. MURPHY. I would presume we would in its essence, yes. I 

think our master planning process will lead us to where we want 

to go with that. 

Ms. WALORSKI. So have you heard of that before, the declaration 

of emergency? 

Ms. MURPHY. I have not heard of that proposition, no. 

Ms. WALORSKI. Go ahead, Doctor. 

Ms. MCDOUGALL. No, I have not heard of it either. But that 

neighborhood council has been one of our community partners that 

is involved in the homeless strategic plan that is being developed 

right now. 

Ms. WALORSKI. And my final question, I think we are all so 

shocked about the bird sanctuary. It is back to this issue, in the 

GAO’s report, it stated that VA guidance does not allow sharing 

partners to sublease the space obtained through sharing agreements. However, GAO found that a not-for-profit organization, the 

Botanical Garden, subleased its space on the West L.A. campus to 

two other organizations, including the exotic bird sanctuary and a 

food pantry, and that the VA contracting officer told GAO he was 

not aware of this sublease. Can you explain, I guess it would be 

Doctor, maybe, how VA allowed subleases to exist? 


VACREP0180 with DISTILLER
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Ms. MCDOUGALL. Again, I can’t address how it happened. And 

the person that was responsible has left the organization. 

But clearly there was not a segregation of duties as there should 

have been. And there was not a bona fide contracting officer involved. Moving forward, we have changed that. That is why it has 

been taken over, land use, by my office so that we can make sure 

there is no conflict of interest. We are working with the Network 

Contracting Office. And we will be auditing what is going on at 

GLA to ensure that this does not happen again. 

Ms. WALORSKI. With the huge amount of responsibility and 

clean-up work that you two have been left with, is there any kind 

of ongoing investigation as to who caused this mess? How they 

mysteriously retired? Why there was never any accountability leveled to them or on them by the VA itself when all this came out? 

And are you seeking internally there or asking the higher-ups in 

the VA to go back and hold these people accountable that you are 

holding the bag for. 

Ms. MCDOUGALL. The Criminal IG is involved right now and is 

looking into it. I have heard, but it is not confirmed, that the FBI 

is also involved. So once we get those reports, we will do whatever 

we can to hold any individual we can accountable for what occurred 

at the facility. 

Ms. WALORSKI. And for whatever you can share with the committee in those reports, will you do that? 

Ms. MCDOUGALL. Yes. 

Ms. WALORSKI. Thank you. 

I yield back my time, Mr. Chairman. 

Mr. Coffman. Mr. O’Rourke. 

Mr. O’ROURKE. Thank you. 

For Ms. Murphy, following up on the ranking member’s questions 

about the systems and software that we use to manage these properties and your answers about what those things might be able to 

do for you, alerting you when a lease is coming due and triggering 

actions or reviews on the part of the VA. 

At this point, does the VA use any third-party, private-sector 

contractors or consultants to assist with these tasks? 

Ms. MURPHY. Thank you, sir. Specifically with the software development or—— 

Mr. O’ROURKE. No. Managing the property and the land and the 

leases and doing it professionally, I mean, a company that does 

that as their sole purpose versus the VA, which is focused on outcomes for veterans. Is that at any level taking place today? 

Ms. MURPHY. Right. I can’t answer specifically. But we certainly 

can get that information for you. 

Mr. O’ROURKE. Are you adverse or opposed to doing that? 

Ms. MURPHY. I don’t actually have an opinion. You know, we will 

take all the help we can get. 

Mr. O’ROURKE. I think part of what excites me about Bob 

McDonald leading the VA right now is his private-sector experience. And just now, as the ranking member was asking her question, I searched for Procter & Gamble real estate. And there was 

a press release announcing, you know, an outside property management firm coming under contract to manage 16.5 million square 

feet of office space globally for Procter & Gamble. 


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And so I think there has got to be something to this idea that— 

understandably, the VA is not good at this. This is just not what 

we want you all to do. We want you to take care of the veterans 

that have served this country. And there are firms and businesses 

who exclusively do this and do it very well. 

And so I hope that, I mean I will just take your answer that you 

don’t have an opinion to mean that you are not necessarily opposed 

to it. And in your review of what you are doing and what you can 

do, I hope that you will include the prospect of talking to an outside firm, maybe not to manage the property but maybe to consult 

on best property management practices, including software and 

systems, processes and procedures. 

I think we would be, you know, at our peril, we would ignore the 

expertise that is out there in the private sector. And I have got to 

think that Secretary McDonald would see the wisdom in that as 

well. 

Ms. MURPHY. Right. I would just add that as part of the master 

planning process, my understanding is that there will be a consultant that will be helping us with that. 

Ms. MCDOUGALL. We will be looking for an urban planning firm 

to assist us with the master planning process. 

Mr. O’ROURKE. Great. But in terms, I mean just systematically 

to manage that, that to me would be just exciting to at least look 

at and get an answer back on. 

So if you do that, I would encourage you to do that. If you do 

that, I would love to see the results of that inquiry and I know that 

probably the other members of the committee would as well. 

Thank you. 

Thanks, Mr. Chair. 

Mr. COFFMAN. Ms. Murphy, the Veterans Park Conservancy 

signed a 90-day revokable license with the VA on November 11, 

2014 which expressly terminated its land use agreement in order 

to build the amphitheater. This licensing agreement expired yesterday. So does that mean that the Veterans Park Conservancy currently has no valid agreement with the VA? If so, have they vacated the premises? 

Ms. MURPHY. I can’t answer your question. But perhaps Dr. 

McDougall can. 

Mr. COFFMAN. Sure. Dr. McDougall. 

Ms. MCDOUGALL. It did expire yesterday. And beyond that, we 

will have to look into the situation as to whether or not they are 

going—what the situation is with them on the campus. 

Mr. COFFMAN. I am sorry, you don’t know if they are still there, 

is that what you are saying? 

Ms. MCDOUGALL. Well, they were building an amphitheater and 

the construction halted. 

Mr. COFFMAN. Okay. Whether they vacated or not—— 

Ms. MCDOUGALL. So they have vacated and they have been off 

the premises since November. 

Mr. COFFMAN. Okay, they are—— 

Ms. MCDOUGALL. Right. 

Mr. COFFMAN. Okay. Because I think one of the Federal Court 

filings stated that the VA and the VPC entered into a revokable 


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license that mandated a termination of the land-use agreement in 

lieu of the license. 

Ms. Murphy, there is an ongoing criminal investigation in West 

L.A. regarding one of the companies operating under a land-use 

agreement with the facility. This company is also under investigation by other Federal agencies. And we have learned the company 

has a 10-year agreement with an additional 10-year option to operate on the property ending in 2022. 

After a search of government contract databases, there was no 

information at all regarding this company. How can the VA enter 

into a contract with a company for a potential 20-year term without having any available referential information to support the 

company’s prior work? 

Ms. MURPHY. Thank you, sir. 

I am not certain which company you are referring to. Perhaps 

Dr. McDougall has more information. 

Ms. MCDOUGALL. If it is the company that I think you are referring to, it shouldn’t have happened. And I agree with you 100 percent. It just never should have happened. 

So that is, as you said, what the Criminal OIG is looking into. 

And we also have a central office fiscal team that is going to be 

looking into exactly what is going on with that company in terms 

of revenue generation. 

Mr. COFFMAN. Do any other members have questions? 

Mr. O’Rourke. 

Ms. Kuster. 

Ms. KUSTER. No further questions. Thank you, Mr. Chairman. 

Mr. COFFMAN. Well, I would like to thank the witnesses today. 

And I look forward to the follow-on committee hearing recommended by the ranking member. 

And this hearing is adjourned. 

[Whereupon, at 5:13 p.m., the subcommittee was adjourned.] 


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APPENDIX 

PREPARED STATEMENT OF CHAIRMAN MIKE COFFMAN

Good afternoon. This hearing will come to order. 

I want to welcome everyone to today’s hearing titled, ‘‘An Examination of Waste 

and Abuse Associated with VA’s Management of Land-Use Agreements.’’ Before we 

begin, I would like to ask unanimous consent that the Honorable Tim Walz from 

the State of Minnesota be allowed to join us on the dais today. He is set to be redesignated as a member of this Subcommittee tomorrow, so I doubt anyone will 

have any objection. Hearing none, so ordered. 

The hearing will address serious problems with VA’s billing and collecting practices regarding its land-use agreements at VA Medical Centers, which were substantiated by GAO. These deficiencies continue to result in extreme loss of revenue, 

waste of taxpayer money, and compromised services provided to Veterans. 

The primary focus of the hearing will be on issues occurring at the West Los Angeles VA Medical Center, including land use agreements, problems faced by homeless Veterans in the area, and other issues affecting quality of care. The shortcomings associated with VA’s management in West Los Angeles are many. There 

have been multiple embezzlement investigations involving the facility over the last 

few years, at least one of which amounting to a guilty plea involving the theft of 

over $680,000. One additional such investigation is ongoing and is being addressed 

by the VA Inspector General and the Department of Justice. 

The nature of land use agreements in West Los Angeles also produces cause for 

concern. For instance, the facility has agreements with university sports teams, 

hotel laundry facilities, and even a rare bird sanctuary. Considering this land was 

given to the federal government specifically to house Veterans, VA is violating the 

terms of the original bequest. 

Notably, a federal district court in California ruled in 2013 that many of the facility’s non-healthcare related agreements were void because, the court stated, agreements of that sort that do not provide for sharing of health-care resources result 

in lost access to space and opportunities that benefit Veterans. 

On January 27, 2015, the day we informed VA of this hearing, the VA settled its 

appeal of the court’s decision. Based on the framework for this settlement, it does 

not appear there is any impediment VA faces which would discourage its continued 

misuse of the property. 

In the framework, VA states that it will not develop a master plan to restructure 

the West LA property until October 2015, which will require vigilant oversight considering past efforts to create such a master plan have largely failed. Many similar 

stories of waste and misuse of property set aside to help Veterans, as well as other 

compromised services that inevitably occur due to facility mismanagement, will be 

discussed today regarding West Los Angeles, New York City, and North Chicago, 

which were the sites GAO focused on in its audit. 

We will hear from GAO as well as from the American Legion, which has raised 

concerns with problems occurring in West Los Angeles, primarily the growing homeless Veteran population that is an unfortunate and unnecessary byproduct of VA’s 

mismanagement of property entrusted to Veterans. I look forward to hearing from 

these witnesses, as well as from the VA, so that we can get to the bottom of this 

issue, and look for solutions to better serve our nation’s Veterans. 

f 

PREPARED STATEMENT OF RANKING MEMBER ANN MCLANE KUSTER

Thank you Mr. Chairman. 

This afternoon, the Subcommittee on Oversight and Investigations will be looking 

into VA practices regarding land-use agreements, and a report from the Government 

Accountability Office from August of last year. 

This is my first hearing as Ranking Member of this Subcommittee, one of the 

most important subcommittees in Congress, and I look forward to working with 

Chairman Coffman and all of my colleagues. 

Our efforts to identify where problems exist at the VA could not be more important. But we must also remember that our responsibility is to not only identify problems, but to work to find solutions. This means all of us—the VA, outside agencies 

such as GAO, and veterans—must work together to ensure the highest quality of 

care is being delivered to our veterans. 

Today’s hearing is about an issue we face time and again—how can we ensure 

that the information and data collected by VA is, in the words of GAO, accurate, 


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valid, and complete? How can we ensure that there are processes in place that provide the necessary level of accountability while ensuring that the job of the VA, to 

care for veterans, gets done? 

This can perhaps be best summed up in the title of GAO’s testimony—‘‘Improved 

Data Reliability and Monitoring Needed for Department of Veterans Affairs.’’ The 

question we must ask in terms of monitoring and accountability is how much management control should be exercised centrally, or delegated locally. 

We will not arrive at the answers to all these questions today. But I am hopeful 

that beginning this discussion today will lead us to solutions that we can all agree 

on, solutions that ensure the proper level of accountability and management control 

while remaining flexible enough not to hinder the VAs ability to accomplish its mission. This will take real leadership on behalf of the VA, and all of us here in this 

room today. 

The VA’s transition from inpatient services to increased outpatient-based services 

has meant that VA’s real estate portfolio contains many aging facilities, and far too 

much under-utilized space. This was first pointed out many years ago. In fact a 

June 2012 GAO report found that VA had made progress in this area, through reducing the number of underutilized facilities in part through land-use agreements. 

The VA is not alone in facing real challenges in property management. The GAO 

has included property management on its high-risk list since 2003. 

The GAO looked at three VA sites: North Chicago, New York City, and West Los 

Angeles and found that its review raised questions regarding the reliability of the 

data in VA’s Capital Asset Inventory system, as well as lack of oversight and communication regarding billing, collecting, and contracting. 

Far too often, at the three sites looked at by GAO, VA improperly paid for services 

it did not receive and failed to collect what it was owed. That’s why it is crucial 

to have a discussion this afternoon to learn about the GAO’s findings and the steps 

VA has taken to address these problems. I look forward to hearing about further 

efforts to strengthen the management, oversight, and use of, land-use agreements. 

Going back to the 2012 GAO report, how much confidence should we have that 

using land-use agreements is an effective tool in managing under-utilized space and 

so we can increase the amount of benefits and services being provided to our veterans? 

If the VA is to provide the highest level of benefits and services to veterans in 

the most efficient manner, land-use agreements may indeed be an important tool 

in VA’s tool chest—but only if the data is reliable, and there is real oversight within 

VA to make sure that VA is properly benefitting from these agreements. 

Finally, I look forward to discussing the recent agreement between the VA regarding West Los Angeles. As the American Legion points out in testimony today, for 

far too long the needs of veterans were not always the highest priority when it came 

to agreements between the VA and non-VA entities. This practice runs counter to 

the terms of the original deed. The agreement regarding the parties in Valentini v. 

McDonald is a way forward, but there are milestones that need to be met and we 

will need to make sure that this committee is a full partner in the progress made 

in meeting these steps. 

f 

PREPARED STATEMENT OF MS. JANET MURPHY

Good morning, Chairman Coffman, Ranking Member Kuster, and Members of the 

Subcommittee. Thank you for the opportunity to discuss VA’s billing and collection 

practices regarding our land use agreements at VA Medical Centers. I am accompanied today by Dr. Skye McDougall, Acting Network Director, Veterans Integrated 

Service Network (VISN) 22. We value the Government Accountability Office’s (GAO) 

insights and findings and recognize there are many needed improvements to the design, implementation, and oversight of VA’s Land Use program. 

Background 

VA’s mission is unique compared to other Federal agencies, in that we operate 

the Nation’s largest integrated healthcare system, with more than 1,700 hospitals, 

clinics, community living centers, domiciliaries, readjustment counseling centers, 

and other facilities. Additionally, VA administers a variety of benefits and services 

and operates 131 national cemeteries nationwide. 

The Department owns and leases real property in hundreds of communities across 

the United States and overseas. Currently, VA manages over 174 million square feet 

(SF) of space, comprised of approximately 151 million owned SF and 23 million 

leased SF of building assets. This is a very large footprint, and unlike many Federal 


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agencies, VA owns the large majority of its portfolio—87 percent of its square footage—which means real estate plays an important role in our overall asset management strategy. 

To manage these properties, VA utilizes land use authorities that allow VA to 

enter into various types of agreements for the use of its property in exchange for 

revenues or in-kind considerations (e.g., outleases, sharing agreements, permits, 

easements, licenses, enhanced-use leases). 

GAO Report on Land Use Agreements 

The GAO recently examined VA’s use of land use agreements, specifically sharing. 

GAO’s report addresses the extent to which VA (1) maintains reliable data on land 

use agreements and the revenue we generate; (2) monitors the billing and collection 

process at selected VA medical centers; and (3) monitors land use agreements at selected VA medical centers. VA appreciates GAO’s review and we acknowledge the 

noted deficiencies in our management of land use agreements. 

GAO looked at three VA medical centers and made recommendations for improvement at each site. At VA medical centers in North Chicago and New York, new collaborative processes have been established to improve billing and collection procedures. Leadership at North Chicago has developed a local Sharing and Support 

Agreement Policy and Joint Policy instruction, which has delineated responsibilities 

and procedures. Leadership at New York Harbor developed a standard operating 

procedure (SOP) for local sharing agreements. GAO also recommended that VHA develop a plan for the West Los Angeles Medical Center that identifies the steps to 

be taken, timelines, and responsibilities in implementing segregation of duties over 

the billing and collection process. 

VA Greater Los Angeles Asset Management Office and Fiscal Service, in collaboration with the VISN 22 Office and Network Contracting Office 22, finalized a SOP 

for Billing and Collection Processes for the West Los Angeles Medical Center to better segregate duties related to billing and collections for land use agreements in the 

fall of 2014. A follow-up audit of the SOP’s billing and collection processes will be 

conducted by VISN 22 compliance staff in April 2015. 

The actions described in the paragraphs above are an example of our commitment 

to improving the management of our land use agreements and to provide better support to Veterans. VHA is making progress to solidify our policies and pursue actions 

for the remaining GAO recommendations. Furthermore, VA will apply the lessons 

learned through the scrutiny of land use agreements in California, New York, and 

Illinois across VA’s healthcare network. 

VA Way Forward 

VA is considering other system-wide improvements to the land use agreement 

process. These include: 

• Establishing a better set of administrative tools for the field to use in managing these complex processes: Our current capital asset management tools are 

not automated. Nor are they sufficiently robust to effectively monitor land use 

sharing agreements across VA’s healthcare system. VHA is working with its 

partners in the Office of Management to identify, fund, and implement an automated asset management system—a system that allows for triggered reminders 

for our field staff based on information about the assets themselves. This 

change will take time. 

• Conducting ongoing independent reviews of our billing and collection processes by VHA’s Chief Financial Officer (CFO), which would ensure proper separation of duties: GAO identified separation of duties concerns at the facilities 

they visited. We have corrected these issues at each of the sites visited by 

GAO’s team. To improve monitoring, VHA’s CFO will issue revised financial 

policy and work with network CFOs to monitor land use agreements. 

• Developing a standardized implementation model that allows VA medical centers to focus on high quality healthcare: As we implement the changes described 

above, we must acknowledge the clear challenge identified in the GAO report. 

Management of multiple land use agreements on VA medical center campuses 

adds additional responsibilities to an already complex management challenge. 

The core mission for VA healthcare facilities remains the delivery of safe, effective, and timely healthcare. Over the long term, we need to evaluate our use 

of VA’s sharing authority for land use agreements and determine whether the 

use of such agreements continues to benefit Veterans. 

The Next Step to End Homelessness Among Los Angeles Veterans 

Secretary McDonald and attorneys representing homeless Veterans in Los Angeles announced an agreement that dedicates the West Los Angeles VA campus to 

serving Veterans in need, and commits the Department to design a plan to help end 


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homelessness among Veterans in Los Angeles County. The agreement is an important step forward in carrying out President Obama’s commitment that no Veteran 

should live on the streets, or forego necessary medical and psychological services. 

Under the agreement, Secretary McDonald will also launch an accelerated process 

to develop a new long-term Master Plan for the future use of the West Los Angeles 

campus. This Master Plan, which is targeted to be completed by October 16, 2015, 

will prioritize the provision of bridge housing and permanent supportive housing. 

It also will describe an exit strategy for third-party land use agreements that do 

not comply with applicable laws, and do not fit within the Master Plan. Representatives from the Veterans’ community will be actively involved in providing input to 

the Master Plan, along with other stakeholders, including the local community. 

Conclusion 

Mr. Chairman, as mentioned earlier, VA has a complex real estate portfolio and 

we seek to maintain the optimal mix of investments needed to provide care, services, and benefits to our Nation’s Veterans. We will correct deficiencies and improve 

oversight in our management of land use agreements by improving the quality of 

our data, enhancing monitoring, and fostering collaboration between key offices. 

Thank you for the opportunity to discuss this issue. At this time, my colleagues 

and I are prepared to answer any questions you may have. 


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