49–010 

Calendar No. 592 

109TH CONGRESS REPORT " ! SENATE 2d Session 109–328 

TO AUTHORIZE MAJOR MEDICAL FACILITY PROJECTS AND MAJOR MEDICAL FACILITY LEASES FOR THE DEPARTMENT OF VETERANS AFFAIRS 

FOR FISCAL YEARS 2006 THROUGH 2009 

SEPTEMBER 6, 2006.—Ordered to be printed 

Mr. CRAIG, from the Committee on Veterans’ Affairs, 

submitted the following 

R E P O R T 

[To accompany S. 3421 as amended] 

The Committee on Veterans’ Affairs (hereinafter, ‘‘the Committee’’), to which was referred the bill (S. 3421) to authorize major 

medical facility projects and major medical facility leases for the 

Department of Veterans Affairs for fiscal years 2006 and 2007, and 

for other purposes, having considered the same, reports favorably 

thereon with a technical amendment, and recommends that the 

bill, as amended, do pass. 

INTRODUCTION

On June 6, 2006, Committee Chairman Larry E. Craig introduced S. 3421, to authorize major medical facility projects and 

major medical facility leases for the Department of Veterans Affairs for fiscal years 2006 through 2009, and for other purposes. 

The bill, as introduced, would have: authorized fiscal year 2006 

major medical facility projects; extended the authorization and 

VA’s authority to enter into contracts for major medical facility construction projects authorized in Public Law 108–170 under the 

Capital Asset Realignment for Enhanced Services (hereinafter 

‘‘CARES’’) process through September 30, 2009; and authorized fiscal years 2006 and 2007 major medical facility leases. The bill was 

referred to the Committee on Veterans’ Affairs. 

COMMITTEE HEARINGS

Earlier, on April 6, 2006, the Committee held hearings on VA’s 

proposals for construction and lease authorization. Testimony was 

heard from: The Honorable Wayne Allard, United States Senator, 

Colorado; The Honorable Mel Martinez, United States Senator, 

Florida; The Honorable Bill Nelson, United States Senator, Florida; 


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Dr. Jonathan Perlin, MD, VA Under Secretary for Health; and Mr. 

Dennis Cullinan, Director, National Legislative Service, Veterans 

of Foreign Wars of the United States. 

COMMITTEE MEETING

After carefully reviewing the testimony from the foregoing hearing, the Committee met in open session on June 22, 2006, to consider S. 3421. Senator Murray offered an amendment that would 

have authorized six additional construction projects in FY 2007 in 

American Lake, WA; Columbia, MO; Fayetteville, AR; Milwaukee, 

WI; St. Louis, MO; and San Juan, PR. Senator Murray expressed 

discontent that these projects were not included in S. 3421, noting 

that they had been requested by the administration and approved 

through VA’s CARES process. Senator Murray also expressed her 

belief in the immediate necessity of the seismic upgrades at the 

American Lake facility, as well as the San Juan facility. 

Chairman Craig did not dispute the importance of these, or any 

other projects not included in S. 3421, but he expressed his frustration at what has become a convoluted process for forward movement on major construction projects. He went on to explain that 

there are currently VA construction projects that have been authorized but not appropriated, appropriated but not authorized, and 

projects that are in need of additional appropriations and authorizations in order to be completed. Chairman Craig stated that he 

wants to bring order to VA’s convoluted approach to construction. 

He believes that waiting to begin authorizing new projects until 

construction projects that have already begun are completed will 

bring needed order to the process. 

The Committee then voted on Senator Murray’s amendment. The 

amendment failed on a 6–8 vote. The Committee then voted by 

voice vote to report favorably S. 3421, as amended by an amendment offered by Committee Chairman Craig. Committee Member 

Patty Murray of Washington requested that she be recorded as opposed to S. 3421. 

SUMMARY OF THE COMMITTEE BILL AS REPORTED

S. 3421 as reported (hereinafter the ‘‘Committee bill’’), consists 

of, as noted on page 18, no changes to current law, and is summarized below: 

1. Authorize Fiscal Year 2006 major medical facility projects 

in New Orleans, LA; Biloxi, MS; and Denver, CO. The New Orleans project is authorized as a collaborative effort consistent 

with the New Orleans Collaborative Opportunities Study 

Group Report (section 1); 

2. Extend the period during which VA is authorized to enter 

into contracts for major medical facility construction projects 

originally authorized as CARES projects by Public Law 108–

170 (section 2); 

3. Authorize Fiscal Year 2006 major medical facility leases 

(section 3); and 

4. Authorize Fiscal Year 2007 major medical facility leases 

(section 4). 


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BACKGROUND AND DISCUSSION

Section 1. Authorization of fiscal year 2006 major medical facility 

projects 

Section 8104 of title 38, United States Code, requires statutory 

authorization for all VA major medical facility construction projects 

(defined as those which cost more than $7 million) prior to the appropriation or expenditure of funds. Three projects warrant immediate Fiscal Year (hereinafter ‘‘FY’’) 2006 authorization: New Orleans, LA; Biloxi, MS; and Denver, CO. 

The New Orleans project received $75,000,000 in FY 2006 budget 

authority in Public Law (hereinafter ‘‘P.L.’’) 109–148, the emergency legislation that includes, in Divison B, funding for Hurricane 

Katrina recovery. The New Orleans Collaborative Opportunities 

Study Group continues to determine the most efficient and cost-effective manner to provide health care services to veterans in the 

New Orleans service area. Currently, there is no fully functional 

hospital infrastructure or fully staffed VA hospital facility in the 

city of New Orleans. The total cost associated with the restoration/ 

replacement of the New Orleans VA Medical Center facility is estimated at $636,000,000. 

In May 2004, former Secretary of Veterans Affairs, Anthony 

Principi issued his decision to among other things, follow generally 

the CARES Commission’s recommendation to consolidate the services provided at the Gulfport VAMC to the Biloxi VAMC. Prior to 

Hurricane Katrina, VA was developing plans for reuse or divestment of the Gulfport campus, and plans for major construction to 

modernize patient care facilities at the Biloxi campus and opportunities for coordination and sharing with Keesler Air Force Base 

(hereinafter ‘‘AFB’’) were underway. 

Damage to the Gulfport VAMC from Hurricane Katrina in August 2005 was beyond repair. The Biloxi campus also sustained significant damage. The Biloxi project authorized in Section 1 will accelerate the restoration of the hospital at Biloxi and will consolidate and co-locate all clinical and administrative functions of the 

two-division medical center at the Biloxi VAMC campus. The 

project received $17,500,000 in FY 2006 budget authority and an 

additional $295,500,000 in budget authority in the FY 2006 Emergency Supplemental Appropriation Act, P.L. 109–148. This project 

includes the campus consolidation initiative, as well as a separate 

CARES initiative to build a new Blind Rehabilitation Center on the 

Biloxi VAMC campus. The consolidation achieves the objectives of 

CARES to realign and decrease the amount of infrastructure maintained and operated by VA by 383,868 gross square feet at Gulfport. 

The total acquisition cost for a replacement medical center facility at Denver, Colorado, has been estimated in VA’s FY 2006 budget request at approximately $621,000,000. In addition to construction, project costs also include equipment, activation, and land acquisition. The project received $30,000,000 in FY 2004 appropriations. VA asserts that project cost estimates have grown as a result 

of larger than predicted inflation in health care construction costs, 

and that the addition of several mental health programs, as well 

as having received a polytrauma site designation, have increased 

the project costs. The Committee bill authorizes $52,000,000, the 


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amount VA estimates is needed to enter into an agreement to purchase a site for the replacement medical center. Any additional obligation of funding on the Denver project will require additional authorization. 

Section 2. Extension of authorization for major medical facility construction projects authorized under capital asset realignment 

initiative 

In Section 221 of Public Law 108–170, VA was authorized to 

carry out any major medical facility construction project consistent 

with the final CARES decision of the Secretary of Veterans Affairs. 

However, the authority of VA to enter into contract to carry out 

projects under that law expires September 30, 2006. Section 2 of 

the Committee bill contains a list of eighteen major medical facility 

construction projects that were authorized as part of the final 

CARES decision, but for which it is unlikely that contract awards 

will be accomplished by September 30, 2006. A description of each 

of these projects appears below and is also included in the Department’s 5-Year Capital Plan. 

The construction of an outpatient clinic and regional office at the 

Department of Veterans Affairs Medical Center in Anchorage, Alaska received $11,760,000 in FY 2004 for design and an additional 

$63,510,000 in FY 2006 to complete phase 2 construction. The total 

acquisition cost is $75,270,000, the amount that is reauthorized in 

this measure. 

The consolidation of the clinical and administrative function of 

the Department of Veterans Affairs Medical Center in Cleveland, 

Ohio, and the Department of Veterans Affairs Medical Center in 

Brecksville, Ohio, received $15,000,000 in FY 2004 budget authority for design and $87,300,000 in FY 2006 budget authority to complete the project, for an estimated total cost of $102,300,000. The 

total is reauthorized in this measure, so that the project can continue without interruption toward an estimated March 2009 completion. 

Construction of the Extended Care Building at the Department 

of Veterans Affairs Medical Center in Des Moines received 

$25,000,000 in FY 2005 budget authority, its total acquisition cost. 

The project is fully reauthorized in this measure so that it may 

continue without interruption toward an estimated February 2008 

completion. 

The renovation of 46,000 gross square feet of patient wards at 

the Department of Veterans Affairs Medical Center in Durham received FY 2004 budget authority for its total acquisition cost, 

$9,100,000. The project is fully reauthorized in this measure so 

that it may continue without interruption toward an estimated December 2008 completion. 

The correction of patient privacy deficiencies at the Department 

of Veterans Affairs Medical Center in Gainesville received 

$8,800,000 in FY 2004 budget authority and $76,400,000 in FY 

2006 budget authority, to complete phase 2 construction, representing its total acquisition cost of approximately $85,200,000. 

The project is fully reauthorized in this measure so that it may 

continue without interruption toward an estimated June 2009 completion. 


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The 7th and 8th Floor Wards Modernization at the Department 

of Veterans Affairs Medical Center in Indianapolis received 

$27,400,000 in FY 2004 budget authority, representing its total acquisition cost. The project is fully reauthorized in this measure so 

that it may continue without interruption toward an estimated December 2007 completion. 

The construction of a new medical center facility at the Department of Veterans Affairs Medical Center in Las Vegas received 

$60,000,000 in FY 2004 budget authority for design and land purchase, and $199,000,000 in FY 2006 budget authority. An additional $147,000,000 in appropriated funds must be requested by VA 

and is required to complete construction, for a total acquisition cost 

of approximately $406,000,000. The project is fully reauthorized in 

this measure. Although this project will close significant service delivery gaps identified in the CARES process, full funding has not 

yet been requested by VA, and no target completion date has been 

identified. 

Construction of an Ambulatory Surgery/Outpatient Diagnostic 

Support Center in the Gulf South Submarket of Veterans Integrated Service Network (hereinafter ‘‘VISN’’) 8 and completion of Phase 1 land purchase in Lee County, Florida, received $6,510,000 

in FY 2005 budget authority. The total acquisition cost is estimated 

at $65,100,000. The project is fully reauthorized in this measure. 

Although this project will accommodate a growing market share for 

the veteran population in this VISN 8 submarket whose needs are 

not currently being met, VA has not yet requested the remaining 

$58,590,000 necessary to complete the project, and no target completion date has been identified. 

The seismic corrections at the Long Beach VA Medical Center re- ceived $10,300,000 in FY 2004 budget authority for design. VA has 

requested $97,545,000 in FY 2007 budget authority to complete the 

project, for a total acquisition cost of approximately $107,900,000. 

The project is fully reauthorized in this measure. 

The seismic corrections at the Los Angeles VA Medical Center received $8,000,000 in Fiscal Year 2005 budget authority to complete 

phase 1 design, with a total estimated acquisition cost of approximately $79,900,000. The project is fully reauthorized in this measure. Although this structure has not been significantly modified 

since it was built in 1976 and its seismic performance was evaluated according to the requirements of the 2001 California Building 

Code, VA has not yet requested the remaining $71,900,000 necessary to complete the project, and no target completion date has 

been identified. 

Construction of the new medical center facility in the Orlando 

area, received $25,000,000 in FY 2004 budget authority to complete 

phase 1 design, with an estimated total acquisition cost of 

$347,700,000. The project is fully reauthorized in this measure. Although this project will resolve the CARES VISN 8 Central Market 

Acute Care Planning Initiative Gap by increasing access by nearly 

35%, VA has not yet requested the remaining $322,700,000 necessary to complete the project, and no target completion date has 

been identified. 

The consolidation of services at the Highland Drive division of 

the Pittsburgh Health Care system with University Drive and H. 

John Heinz III progressive care divisions in Pittsburgh received 


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$20,000,000 in FY 2004 and an additional $82,500,000 in FY 2006 

budget authority to complete phase 2 construction. This project requires an additional $86,705,000 for completion, with an estimated 

total acquisition cost of approximately $189,205,000. The project is 

fully reauthorized in this measure. This consolidation project will 

provide state-of-the-art care and reduce operating expenses, therefore realigning those assets to enhance services, and it may also include a component that would improve benefits service delivery. 

Yet, VA has not requested the necessary funds to complete the 

project, and no target completion date has been set. 

The construction of 26,000 new square feet and the renovations 

of approximately 62,800 square feet at the San Antonio VA Medical 

Center received $19,100,000 in FY 2004, the estimated project cost. 

The upgrade and expansion project is fully reauthorized in this bill, 

and is slated for a January 2010 completion date. 

The seismic corrections in the main hospital building of the San 

Juan VA Medical Center are necessary to comply with VA seismic 

and immediate occupancy standards. The project received 

$15,000,000 in FY 2005 budget authority, and requires 

$130,200,000 in order to complete the project. This legislation fully 

reauthorizes the project at its estimated cost of $142,200,000. VA 

has not requested the necessary funds to complete the project. 

Construction of a Spinal Cord Injury Center at the Syracuse VA Medical Center received $53,900,000 in FY 2005 budget authority. 

This is the total estimated cost associated with the project, which 

is fully reauthorized in this measure. The construction is scheduled 

for August 2009 completion. 

The Spinal Cord Injury Extended Care addition at the Tampa VA Medical Center received $7,100,000 in FY 2005 budget authority. This project, which is funded entirely, is scheduled for a March 

2007 completion. 

The Blind Rehabilitation and Psychiatric Bed renovation and 

new construction project at the Temple VA Medical Center received 

$56,000,000, the total estimated cost associated with the project, in 

FY 2005 budget authority. This project is fully reauthorized in this 

measure, and no estimated completion date has been identified. 

Section 3 

Section 8104 of title 38, U.S.C., requires statutory authorization 

for all VA major medical facility leases (defined as those which cost 

more than $600,000 annually) prior to the appropriation or expenditure of funds. Three leases require authorization for FY 2006: Baltimore; Evansville; and Smith County. 

The Baltimore outpatient clinic lease proposes the acquisition of 

approximately 132,300 square feet of space in proximity to the existing Baltimore VAMC in order to meet projected space gaps for 

the primary care, mental health, specialty care, and research. The 

lease is fully authorized in the measure for $10,908,000. 

The Evansville outpatient clinic lease would allow for the acquisition of approximately 126,000 square feet of space that will replace and expand the existing Evansville lease that expires on November 20, 2008. The lease is part of an aggressive strategy to correct severe space deficiencies identified during the CARES process 

at the Marion VAMC. The bill fully authorizes the lease for 

$8,988,600. 


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The Smith County/Tyler outpatient clinic lease would allow for 

the acquisition of approximately 72,760 square feet of space for activation of a comprehensive outpatient clinic that will provide primary, specialty, and mental health care services in Smith County/ 

Tyler market area. The bill fully authorizes the lease for 

$5,093,200. 

Section 4 

S. 3421 also includes five leases for FY 2007 requiring authorization [in accordance with 38 U.S.C. 8104]. 

The Austin outpatient and specialty care clinic lease proposes the 

acquisition of approximately 85,000 square feet of space in the area 

to relocate and expand outpatient specialty care services. Doing so 

will free space in the existing south Austin outpatient clinic for primary and mental health expansion. The lease is fully authorized in 

the measure for $6,162,500. 

The Lowell outpatient clinic lease expires on March 14, 2008. 

This project will lease approximately 35,000 square feet of outpatient clinic space which now exists and would fill a CARES-identified gap in access to care. The bill fully authorizes the lease for 

$2,520,000. 

The Grand Rapids outpatient clinic lease would allow for the acquisition of approximately 65,800 square feet to correct space deficiencies. The lease will maintain outpatient medical care for the 

veterans residing in western Michigan. The current clinic is fiftyeight percent undersized, and based on CARES workload projections will be seventy six percent undersize by 2011. The bill fully 

authorizes the lease for $4,409,000. 

VA operates a number of small clinics in the Las Vegas area, 

which continues to experience some of the highest growth rates in 

the country. A number of these leases expire between October 2008 

and June 2009. The Las Vegas project will lease approximately 

109,200 square feet for up to four primary care and mental health 

clinics in the metropolitan area. The bill fully authorizes the lease 

for $8,518,000. 

The Parma outpatient clinic lease will replace the current primary care clinic at the Brecksville Division of the Cleveland VA 

medical center with a new 74,000 square foot clinic in Parma. This 

project is part of the larger consolidation at the Wade Park Division of the Cleveland VAMC, which is expected to save approximately 23 million dollars annually in operating costs. The bill fully 

authorizes the lease for $5,032,000. 

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

In compliance with paragraph 11(a) of rule XXVI of the Standing 

Rules of the Senate, the Committee, based on information supplied 

by the Congressional Budget Office (hereinafter, ‘‘CBO’’), estimates 

that enactment of the Committee bill would, relative to current 

law, authorize the appropriation of $998 million for three projects 

in 2006, $1.75 billion for 18 projects in 2007, and $52 million for 

the leasing of eight clinics in 2006 and 2007. 

CBO estimates that implementing S. 3421 would cost $78 million 

in 2007 and about $1.8 billion over the 2007–2011 period, assuming 

appropriation of the necessary amounts. No additional spending in 


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fiscal year 2006 is estimated since the year is nearly completed. 

Enacting the bill would not affect direct spending or receipts. 

S. 3421 contains no intergovernmental or private-sector mandates and would impose no costs on state, local, or tribal governments. 

The cost estimate provided by CBO, setting forth a detailed 

breakdown of costs, follows: 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, August 3, 2006. 

Hon. LARRY E. CRAIG, 

Chairman, Committee on Veterans’ Affairs, 

U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 3421, a bill to authorize 

major medical facility projects and major medical facility leases for 

the Department of Veterans Affairs for fiscal years 2006 and 2007, 

and for other purposes. 

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

to provide them. The CBO staff contact is Michelle S. Patterson. 

Sincerely, 

DONALD B. MARRON, 

Acting Director. 

Enclosure. 

S. 3421—A bill to authorize major medical facility projects and 

major medical facility leases for the Department of Veterans Affairs for fiscal years 2006 and 2007, and for other purposes 

Summary: S. 3421 would authorize funding for the construction, 

renovation, improvement or leasing of over two dozen medical facilities by the Department of Veterans Affairs (VA). The bill would 

specifically authorize the appropriation of $998 million for three 

projects in 2006, $1.75 billion for 18 projects in 2007, and $52 million for the leasing of eight clinics in 2006 and 2007. 

CBO estimates that implementing S. 3421 would cost $78 million 

in 2007 and about $1.8 billion over the 2007–2011 period, assuming 

appropriation of the necessary amounts. (We estimate no additional 

spending in fiscal year 2006 since the year is nearly completed. 

Most of the 2006 funding authorized by S. 3421 has already been 

appropriated.) Enacting the bill would not affect direct spending or 

receipts. 

S. 3421 contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act (UMRA) 

and would impose no costs on state, local, or tribal governments. 

Estimated Cost to the Federal Government: The estimated budgetary impact of S. 3421 is shown in the following table. This estimate assumes the legislation will be enacted near the end of fiscal 

year 2006, that the necessary funds for implementing the bill will 

be provided each year, and that outlays will follow historical spending patterns for existing or similar programs. The costs of this legislation fall within budget function 700 (veterans benefits and services). 


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By fiscal year, in millions of dollars— 

2006 2007 2008 2009 2010 2011 

SPENDING SUBJECT TO APPROPRIATION 

Spending Under Current Law for Major Construction of Veterans Medical Facilities: 

Budget Authority .............................................................................. 1,583 0 0 0 0 0 

Estimated Outlays ........................................................................... 167 412 504 499 273 128 

Proposed Changes: 

Estimated Authorization Level ......................................................... 52 1,813 20 20 20 20 

Estimated Outlays ........................................................................... 0 78 481 637 460 188 

Spending Under S. 3421: 

Estimated Authorization Level ......................................................... 1,646 1,802 20 20 20 20 

Estimated Outlays ........................................................................... 167 490 985 1,136 733 316 

Basis of estimate: S. 3421 contains provisions that would authorize appropriations for major construction and the leasing of medical 

facilities by VA. CBO estimates that implementing these provisions 

would cost $78 million in 2007 and about $1.8 billion over the 

2007–2011 period, assuming appropriation of the authorized 

amounts. 

MAJOR MEDICAL FACILITY PROJECTS

Section 2 would authorize the construction, renovation, repairs 

and upgrades of 18 medical facilities across the country. Projects 

range from the construction of a new medical center facility in Las 

Vegas to the expansion of the Spinal Cord Injury Center in Tampa. 

The bill would authorize $1.75 billion in 2007 for these projects. 

Section 1 would authorize the appropriation of $998 million for 

three projects in 2006, though most of this funding has already 

been appropriated. In 2004, $30 million was appropriated for the 

replacement of a medical center in Denver, and S. 3421 would authorize an additional $52 million for 2006, much of which would be 

used to acquire the necessary land. 

Section 1 also would authorize the restoration or replacement of 

two medical centers damaged by Hurricane Katrina, for which 

most of the necessary funding has already been appropriated. Public Law 109–148 provided $75 million for the planning of a replacement facility in New Orleans, and Public Law 109–234 appropriated $550 million for construction on this project. Based on VA’s 

current estimate of the total construction costs of $636 million, 

CBO estimates that the bill would authorize the appropriation of 

an additional $11 million for the New Orleans medical center. 

(That amount is included in the estimated authorization level for 

2007 in the above table.) 

Public Law 109–148 provided almost $293 million for the restoration of the Biloxi, Mississippi, medical center, and Public Law 109–

234 appropriated almost $36 million for the clean-up of this center 

(along with another nearby medical facility). Based on VA’s current 

estimate of the total costs of $310 million, CBO estimates no more 

funds would need to be appropriated to restore the Biloxi medical 

center. 

CBO estimates that implementing these two sections would cost 

$77 million in 2007 and about $1.7 million over the 2007–2011 period, assuming appropriation of the authorized amounts. 


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LEASES FOR MEDICAL FACILITIES

Sections 3 and 4 would authorize the Secretary of VA to lease facilities for eight outpatient clinics whose payments, together, would 

not exceed $52 million. (That amount is included in the table’s estimated authorization level for 2007.) VA advises that there would 

be no spending for any of these leases until 2009 because all of the 

facilities would have to undergo improvements that would allow 

them to be used as clinics. A lump-sum payment would be made 

for the cost of modifications along with the first year’s rent when 

construction is complete. 

Though the bill only authorizes payments for the first year, CBO 

assumes that VA would enter into 20 year agreements at an estimated cost of about $20 million a year. Thus, CBO estimates that 

implementing this section would cost $46 million in 2009 and $90 

million over the 2009–2011 period, assuming appropriation of the 

necessary amounts. 

Intergovernmental and private-sector impact: S. 3421 contains no 

intergovernmental or private-sector mandates as defined in UMRA 

and would impose no costs on state, local, or tribal governments. 

Estimate prepared by: Federal Costs: Medical Care: Michelle 

Patterson. Readjustment Benefits: Mike Waters. Compensation, 

Pensions, Burial Benefits and Other Programs: Dwayne M. Wright. 

Housing: Sunita D’Monte. Impact on State, Local, and Tribal Governments: Melissa Merrell. Impact on the Private Sector: R. Derek 

Trunkey. 

Estimate approved by: Peter H. Fontaine, Deputy Assistant Director for Budget Analysis. 

REGULATORY IMPACT STATEMENT

In compliance with paragraph 11(b) of rule XXVI of the Standing 

Rules of the Senate, the Committee on Veterans’ Affairs has made 

an evaluation of the regulatory impact that would be incurred in 

carrying out the Committee bill. The Committee finds that the 

Committee bill would not entail any regulation of individuals or 

businesses or result in any impact on the personal privacy of any 

individuals and that the paperwork resulting from enactment 

would be minimal. 

* * * * * * * 

TABULATION OF VOTES CAST IN COMMITTEE

In compliance with paragraph 7 of rule XXVI of the Standing 

Rules of the Senate, the following is a tabulation of votes cast in 

person or by proxy by members of the Committee on Veterans’ Affairs at its June 22, 2006, meeting. On that date, the Committee, 

as noted on page 2, considered the Murray amendment to add six 

major construction authorizations. The Murray amendment was defeated on a 6–8 vote, with Senators Akaka, Rockefeller, Jeffords, 

Murray, Obama, and Salazar voting aye, and Senators Specter, 

Hutchison, Graham, Burr, Ensign, Thune, and Isakson voting nay. 

The Committee then accepted under unanimous consent a Craig 

amendment to decrease the authorized amount for the New Orleans project and to authorize the Secretary to carry out the project 


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as a collaborative effort consistent with the June 12, 2006 New Orleans Collaborative Opportunities Study Group Report. 

The Committee then, by unanimous voice vote, ordered S. 3421, 

as amended, a bill to amend Title 38, United States Code, to authorize major medical facility projects and major medical facility 

leases for the Department of Veterans Affairs for fiscal years 2006 

and 2007, and for other purposes, reported favorably to the Senate. 

* * * * * * * 

AGENCY REPORT

On April 6, 2006, VA’s Under Secretary for Health, the Honorable Jonathan B. Perlin, MD, appeared before the Committee and 

submitted testimony on the Department of Veterans Affairs’ construction program and 5 Year Capital Plan, as well as VA’s portfolio management approach and how the Capital Asset Realignment for Enhanced Services (CARES) process and the EnhancedUse Leasing program play an integral role in the management of 

VA’s portfolio. 

STATEMENT OF JONATHAN PERLIN, MD, UNDER SECRETARY

FOR HEALTH, DEPARTMENT OF VETERANS AFFAIRS

Mr. Chairman and members of the Committee, good 

afternoon. I am pleased to appear here this afternoon to 

provide you with an overview of the Department of Veterans Affairs’ (VA) construction program and 5 Year Capital Plan. I will also provide information on VA’s portfolio 

management approach and how the Capital Asset Realignment for Enhanced Services (CARES) process and the Enhanced-Use Leasing program play an integral role in the 

management of VA’s portfolio. 

VA has a vast holding of diverse capital assets consisting 

of buildings and real estate, VA-leased buildings, enhanced-use leases, and infrastructure. Assets include hospitals, clinics, cemeteries, and office buildings. Many of 

these facilities currently are used, managed, and maintained in relation to and for promotion of the respective activities of VA’s Veterans Health Administration (VHA), 

Veterans Benefits Administration (VBA), National Cemetery Administration (NCA), and Staff Offices (General Administration). At the close of FY 2005, VA held 1,053 operating leases, and owned 5,306 buildings and 32,527 acres 

of land. Various construction programs are used to fund infrastructure for the Department. Operating dollars fund 

lease requirements and maintenance projects. The major 

construction program provides for constructing, altering, 

and improving any VA facility with a total project cost 

over $7 million and the minor construction program funds 

construction activities under $7 million. Two grant programs are also utilized for building or improving state veterans cemeteries and state nursing homes and domiciliary 

facilities. 

The VA FY 2007 budget request includes $714 million in 

capital funding. Our request includes $399 million for 

major construction projects, $198 million for minor conVerDate Aug 31 2005 00:07 Sep 13, 2006 Jkt 049010 PO 00000 Frm 00011 Fmt 6659 Sfmt 6969 E:\HR\OC\SR328.XXX SR328

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struction, $85 million in grants for the construction of 

state extended care facilities, and $32 million in grants for 

the construction of state veterans cemeteries. 

The 2007 request for construction funding for our med- ical facilities is $457 million—$307 million for major con- struction and $150 million for minor construction. These 

resources will be devoted to implementing projects identified in the Capital Asset Realignment for Enhanced Services (CARES) program. The projects will renovate and 

modernize VA’s health care infrastructure and provide 

greater access to high-quality care for veterans. VA also 

received funds enacted in the Hurricane Katrina emergency supplemental funding in late December 2005: $293 

million to fund a CARES project for a new hospital in Biloxi, Mississippi: And $75 million for planning and design 

for the restoration/replacement of the medical center facility in New Orleans, Louisiana. To date, including the FY 

2007 budget request, VA has received in excess of $3 billion to implement CARES. In addition, VA currently has 

an emergency supplemental request for $600 million before 

the Congress for the construction funding of the restoration/replacement of the medical center facility in New Orleans. 

Our FY 2007 major construction request for health care 

will fund the continued development of two medical facility 

projects—$97.5 million to address seismic corrections in 

Long Beach (California); and $52.0 million to continue the 

work necessary to prepare for construction of a new medical center facility in Denver (Colorado). In addition, our 

request for major construction funding includes $38.2 million to construct a new nursing home care unit and new 

dietetics space, as well as to improve patient and staff 

safety by correcting seismic, fire, and life safety deficiencies at American Lake (Washington); $32.5 million for 

a new spinal cord injury center at Milwaukee (Wisconsin); 

$25.8 million to replace the operating room suite at Columbia (Missouri); and $7.0 million to design improvements through renovation and new construction to reduce 

underutilized vacant space located at the Jefferson Barracks Division campus at St. Louis (Missouri) as well as 

provide land for expansion at the Jefferson Barracks National Cemetery. 

We also requested $53.4 million in major construction 

funding and $25.0 million in minor construction resources 

to support our burial program. This includes funds for 

cemetery expansion and improvement at Great Lakes, 

Michigan ($16.9 million), Dallas/Ft. Worth, Texas ($13.0 

million), and Gerald B. H. Solomon, Saratoga, New York 

($7.6 million). Our request will also provide $2.3 million in 

design funds to develop construction documents for 

gravesite expansion projects at Abraham Lincoln National 

Cemetery (Illinois) and at Quantico National Cemetery 

(Virginia). In addition, the major construction request includes $12 million for the development of master plans and 

the initial design for six new national cemeteries in areas 


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directed by the National Cemetery Expansion Act of 

2003—Bakersfield, California; Birmingham, Alabama; Columbia-Greenville, South Carolina; Jacksonville, Florida; 

Sarasota County, Florida; and southeastern Pennsylvania. 

CARES

Former Secretary Anthony Principi formed the Capital 

Asset Realignment for Enhanced Services (CARES) program to conduct a ‘‘comprehensive, system-wide approach, 

identifying the demand for VA care and projecting into the 

future the appropriate function, size, and location for VA 

facilities.’’ The CARES Commission, an independent body, 

evaluated VA’s CARES program and submitted findings 

and recommendations in February of 2004, and on May 7, 

2004, the Secretary released his CARES Decision based on 

the Commission’s findings and recommendations for each 

CARES site. This CARES decision became VA’s roadmap 

into the future. 

Since that time, much has been done to move these infrastructure improvements forward. Architectural and engineering firms have been retained to prepare designs and 

11 construction contracts have been awarded and are underway. An additional 13 construction contracts are 

planned to be awarded by the end of this Fiscal Year. 

These projects bring needed improvements for veterans at 

these locations. 

Public Law 108–170 provided the Secretary with interim 

authority to proceed with CARES approved projects subject to a 45 day notice to the Committees. This legislation 

was used to provide authorization for the first 30 CARES 

projects. The legislation will sunset on September 30, 

2006. Fourteen projects authorized under this Public Law 

are not likely to award construction contracts by September 30 and four additional projects which will have 

construction underway will have second phases of construction that will begin later. Therefore, the Department 

has requested an extension of that authority until September 30, 2009 in the FY 2007 Budget and 5 Year Capital 

Plan. Also in need of authorization are three projects: Biloxi, Mississippi; Denver, Colorado; and New Orleans, Louisiana, for which the Department has identified as an immediate need in FY 2006. A request for authorization for 

medical facility leases for FY 2006 and FY 2007 construction projects and medical facility leases are also included 

in the budget request and capital plan. In total, VA is requesting authorization of $3.7 billion for major medical facility projects and $51.6 million for major medical facility 

leases. 

5 YEAR CAPITAL PLAN

The Department’s 5 Year Capital Plan is the ultimate 

product of VA’s capital investment process, which reflects 

trade-offs between funding the operational expenses for existing assets and the acquisition of new assets by the most 

cost-effective and beneficial means. The VA capital plan inVerDate Aug 31 2005 00:07 Sep 13, 2006 Jkt 049010 PO 00000 Frm 00013 Fmt 6659 Sfmt 6969 E:\HR\OC\SR328.XXX SR328

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cludes the highest priority capital investments that were 

vetted through a comprehensive Department wide capital 

investment process to ensure the assets fully support the 

mission, vision, and goals of the agency. The plan outlines 

VA’s implementation of the CARES decisions. The plan 

also includes descriptions of other initiatives and capital 

asset management tools that VA is utilizing to better manage its large capital portfolio. 

For FY 2007 the capital plan is published together with 

the Department’s construction budget. Combining the two 

documents provides a comprehensive view of the VA construction budget for 2007 and plans for the future. 

ENHANCED-USE LEASING

VA utilizes a capital asset management tool called ‘‘enhanced-use leasing’’ (EU leasing) to better manage its vacant and underutilized real property assets. The authority 

was initially authorized in 1991, is codified at 38 U.S.C. 

§§ 8161–8169, and currently is set to expire on December 

31, 2011. It permits VA to lease Department-controlled 

real property to private or other public entities for a term 

not-to-exceed 75 years. Each lease must be in exchange for 

‘‘fair consideration’’ as determined by the Secretary. Such 

consideration may consist of monetary, and/or ‘‘in-kind’’

consideration including construction, repair, remodeling, 

improvements, or maintenance services for Department facilities, or the provision of office, storage, or other usable 

space. 

The EU leasing program has enabled VA to leverage its 

diverse, underutilized real estate portfolio to generate significant revenues. Such revenues are redirected towards 

the healthcare and capital operations of our medical centers, which serve our nation’s veterans daily. It also has 

resulted in several privately-financed, developed, and operated facilities which provide valuable, mission-compatible 

services to the Department and eligible veterans, non-veterans, and VA employees. Such facilities and services have 

included co-generation energy services, office facilities, 

parking facilities, hospice care, mental health, single-room 

occupancy (homeless shelters), affordable housing, transitional housing, low-cost senior housing, and child day care 

services. Notably, VA’s varied EU leases also have resulted 

in a substantial short and long-term stimulus for the impacted local, state, and federal governments and economies, due to tax revenues, sales, and job creation. 

In FY 2005, through its EU lease program, VA received 

over $900,000 worth of in-kind consideration, and 

$28,000,000 via a single payment of monetary consideration. The EU Leasing program is a proven method of 

leveraging VA’s diverse real estate portfolio and market 

position. 


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VA’S PORTFOLIO MANAGEMENT APPROACH

VA utilizes a three-tiered portfolio management approach. This approach is the blueprint for VA portfolio 

management nationwide. 

First, VA manages what we have more effectively 

through Federal Real Property Council (FRPC) performance standards as well as using unique technology-assisted 

inventory management system. VA is committed to four 

metrics that set the goals for performance. They include 

the percent of space utilization as compared to overall 

space (owned and direct leased); the percent condition 

index (owned buildings); the ratio of non-mission-dependent assets to total assets; and lastly the ratio of operating 

costs per gross square foot (GSF) adjusting for inflation. 

These goals are based on the FRPC standards for performance measurement in capital portfolio management. 

VA is striving to utilize information technology and established capital asset management principles to improve 

the management of its capital resources. VA created the 

Capital Asset Management System (CAMS), an integrated, 

Department-wide system, enabling VA to analyze, monitor, 

and manage VA’s portfolio of capital assets. Data are organized and presented to strategically monitor performance 

against capital asset goals within and across asset types 

and VA Administrations (VHA, VBA, and NCA). 

Secondly, VA selects prudent capital investments 

through appropriated dollars. VA uses appropriated dollars 

to manage CARES capital investment projects that have 

proven to be sound investments. Each project’s performance is measured to ensure the best use of our overall 

portfolio needs. This innovative approach has allowed VA 

to manage underutilized assets in a more efficient and 

cost-effective manner. 

VA’s third approach is the use of its enhanced-use leasing authority, which has been previously mentioned. Over 

the past 14 years VA has awarded 47 projects through the 

enhanced-use leasing authority. An additional 100 initiatives are being studied, of which 45 projects are currently 

active. 

Closing 

In summary, Mr. Chairman, the $714 million the VA is 

requesting in FY 2007, in addition to the $293 million provided in the Hurricane Katrina emergency supplemental 

will provide the resources necessary for the Department to: 

• Continue implementation of the infrastructure improvements identified in CARES to insure that facilities 

are available to support the provision of timely, high-quality health care to nearly 5.3 million veterans. 

• Increase access to our burial program by ensuring that 

nearly 84 percent of veterans will be served by a burial option in a national or state veterans cemetery within 75 

miles of their residence; and 


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• Provide safe and secure facilities for the Department 

built to current specifications to withstand natural and 

manmade disasters. 

I look forward to working with the members of this committee to continue the Department’s tradition of providing 

timely, high-quality benefits and services to those who 

have helped defend and preserve freedom around the 

world. I would be pleased to answer any questions the 

committee may have. 

CHANGES IN EXISTING LAW MADE BY THE COMMITTEE BILL, AS

REPORTED

Pursuant to paragraph 12 of rule XXVI of the Standing Rules of 

the Senate, the Committee finds no changes in existing law made 

by S. 3421 as reported. 

Æ 


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