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S. HRG. 111–176 

HEARING ON VA’S CONSTRUCTION PROCESS 

HEARING 

BEFORE THE

COMMITTEE ON VETERANS’ AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

JUNE 10, 2009 

Printed for the use of the Committee on Veterans’ Affairs 

( 

Available via the World Wide Web: http://www.access.gpo.gov/congress/senate 

(II) 

COMMITTEE ON VETERANS’ AFFAIRS 

DANIEL K. AKAKA, Hawaii, Chairman 

JOHN D. ROCKEFELLER IV, West Virginia 

PATTY MURRAY, Washington 

BERNARD SANDERS, (I) Vermont 

SHERROD BROWN, Ohio 

JIM WEBB, Virginia 

JON TESTER, Montana 

MARK BEGICH, Alaska 

ROLAND W. BURRIS, Illinois 

ARLEN SPECTER, Pennsylvania 

RICHARD BURR, North Carolina, Ranking 

Member 

JOHNNY ISAKSON, Georgia 

ROGER F. WICKER, Mississippi 

MIKE JOHANNS, Nebraska 

LINDSEY O. GRAHAM, South Carolina 

WILLIAM E. BREW, Staff Director 

LUPE WISSEL, Republican Staff Director 

(III) 

C O N T E N T S 

JUNE 10, 2009 

SENATORS 

Page 

Akaka, Hon. Daniel K., Chairman, U.S. Senator from Hawaii ........................... 1 

Burr, Hon. Richard, Ranking Member, U.S. Senator from North Carolina ....... 2 

Isakson, Hon. Johnny, U.S. Senator from Georgia ............................................... 9 

Johanns, Hon. Mike, U.S. Senator from Nebraska ............................................... 10 

Burris, Hon. Roland W., U.S. Senator from Illinois ............................................. 16 

Begich, Hon. Mark, U.S. Senator from Alaska ..................................................... 24 

WITNESSES 

Udall, Hon. Mark, U.S. Senator from Colorado .................................................... 3 

Prepared statement .......................................................................................... 4 

Perlmutter, Hon. Edward, House Representative from Colorado ........................ 5 

Prepared statement .......................................................................................... 6 

Bennet, Hon. Michael F., U.S. Senator from Colorado ......................................... 8 

Prepared statement .......................................................................................... 9 

Orndoff, Donald H., AIA, Director, Office of Construction and Facilities Management, U.S. Department of Veterans Affairs; accompanied by Brandi 

Fate, Director, Office of Capital Asset Management and Planning Service, 

Veterans Health Administration; James M. Sullivan, Director, Office of 

Asset Enterprise Management; and Lisa Thomas, Ph.D., FACHE, Director, 

Office of Strategic Planning and Analysis, Veterans Health Administration ... 12 

Prepared statement .......................................................................................... 13 

Response to requests arising during the hearing by: 

Hon. Roland W. Burris ................................................................................. 22 

Hon. Mark Begich ......................................................................................... 27 

Response to post-hearing questions submitted by: 

Hon. Daniel K. Akaka .................................................................................. 28 

Addendum—Implementation Monitoring Report on Capital Asset Realignment for Enhanced Services ......................................................... 35 

Hon. Mike Johanns ....................................................................................... 64 

Wise, David, Director of Physical Infrastructure Issues, Government Accountability Office ......................................................................................................... 64 

Prepared statement .......................................................................................... 66 

Cullinan, Dennis, Director, National Legislative Service, Veterans of Foreign 

Wars of the United States ................................................................................... 75 

Prepared statement .......................................................................................... 77 

Cox, J. David, R.N., National Secretary-Treasurer, American Federation of 

Government Employees, AFL-CIO ..................................................................... 79 

Prepared statement .......................................................................................... 81 

APPENDIX 

Ilem, Joy, Assistant National Legislative Director, Disabled American Veterans; prepared statement .................................................................................. 91 

(1) 

HEARING ON VA’S CONSTRUCTION PROCESS 

WEDNESDAY, JUNE 10, 2009 

U.S. SENATE, COMMITTEE ON VETERANS’ AFFAIRS, Washington, DC. 

The Committee met, pursuant to notice, at 9:33 a.m., in room 

418, Russell Senate Office Building, Hon. Daniel K. Akaka, Chairman of the Committee, presiding. 

Present: Senators Akaka, Begich, Burris, Burr, Isakson, and 

Johanns. 

OPENING STATEMENT OF HON. DANIEL K. AKAKA, CHAIRMAN, 

U.S. SENATOR FROM HAWAII 

Chairman AKAKA. The Committee on Veterans’ Affairs of the 

U.S. Senate will come to order. 

Aloha. This morning we will take a look at the VA construction 

process, including how VA’s vast infrastructure needs are managed. 

I also want to learn more about where we stand on the CARES effort—the now 5-year-old plan—to make sense of VA’s capital assets. 

VA is a large health care system with an aging infrastructure 

and some new and growing needs. Planners have to balance largescale construction projects with costs in the hundreds of millions, 

along with smaller projects and nonrecurring maintenance. VA’s infrastructure must be adapted to meet the needs of today’s veterans 

and prepare to respond to the changes that will come. 

VA has moved from a hospital-driven health care system to an 

integrated delivery system that emphasizes a full continuum of 

care. The lion’s share of VA’s infrastructure was designed and built 

decades ago under a different concept of health care delivery. Since 

then, VA health care has experienced a great shift from inpatient 

to outpatient services, and as a result, VA has a system which generally reflects yesterday’s priorities, not today’s. 

The goal of CARES was a good one—shift resources from underused, inefficient, or obsolete buildings to support better ways of furnishing health care. However, the degree to which this has happened, as well as the extent to which this continues, remains unclear. 

In terms of current projects, VA has requested over $1.9 billion 

for fiscal year 2010 construction programs. While this is significant, 

it is clear that there is an extensive backlog of major construction 

projects, which require far more funding with such high dollar figures dedicated to construction projects. The Committee must understand the basis for VA’s decision process. 

2 

I see today’s hearing as beginning a focused look at where VA 

is with respect to its capital infrastructure and how we might go 

forward. I hope that we will hear some compelling suggestions for 

expediting the construction process and for improving it. 

I would like to now call for the statement of our Ranking Member, after which I will introduce our colleagues here for their statements. 

STATEMENT OF HON. RICHARD BURR, RANKING MEMBER, 

U.S. SENATOR FROM NORTH CAROLINA 

Senator BURR. Thank you, Mr. Chairman. Aloha. 

Chairman AKAKA. Aloha. 

Senator BURR. Senator Udall, good to have you here. I’ll be brief. 

Mr. Chairman, thank you for calling this hearing. Welcome to all 

the witnesses of all the panels. 

Mr. Chairman, you have often heard me talk about the need to 

transform the VA’s health care system to a 21st Century delivery 

system and organization. In his budget, the President states that 

he wants the VA to be veteran-centric, results-driven, and forwardlooking. Such transformation, and I quote ‘‘is determined by new 

times, new technologies, new demographic realities, and new commitments to today’s veterans.’’ 

This transformation includes technological advances, new pharmaceutical products, and an emphasis on preventative care that 

greatly reduces the need for lengthy hospital stays. That’s a good 

thing. And I’ve never talked to anyone who wanted to spend more 

time in a hospital. 

This transformation also includes providing veterans greater access to care closer to where they live; dislocating families less. 

Something we see or have seen with increasingly regularity is VA 

opening new outpatient clinics across the country and some with 

ambulatory units attached. 

The President and Secretary Shinseki have also endorsed the 

HCC approach—the health care centers approach—to health care 

delivery. HCCs have the ability to provide 90 to 95 percent of the 

care veterans need, including primary care, specialized care, and 

ambulatory surgery. One of the first HCCs was opened in Columbus, Ohio, last fall. To supplement the outpatient care provided at 

the HCC, VA has collaborated with inpatient providers in the community. Although more time is needed to fully evaluate the concept, one thing is clear so far, it has saved veterans living in Columbus from having to drive 144 miles to access their health care. 

I think that is a good thing. More HCCs are in the pipeline, including three that are in this year’s budget for the State of North Carolina. I welcome those HCCs. 

These state-of-the-art facilities will eliminate the need for many 

veterans to drive to faraway hospitals for their care and will 

stretch VA’s construction dollars far more than it otherwise would. 

We all know that construction dollars are limited. There are 66 

major medical facility construction projects vetted and approved by 

VA for the fiscal year 2010 budget. However, appropriations were 

requested for the design of only seven of these facilities. Fifty-nine 

projects will have to wait until another year. 

3 

What this suggests is that the VA and Congress must continue 

to think of innovative ways to meet the vast needs that exist in the 

system. I am pleased we have a panel of witnesses today that can 

help us try to chart that path forward. 

One last comment before I conclude, Mr. Chairman. It concerns 

the over $1.4 billion allocated to the VA on the stimulus package 

passed last February, which included $1 billion for maintenance 

projects. According to the Administration’s Web site, the latest 

numbers indicate that just over three hundredths of 1 percent of 

these dollars has actually been spent to date. Three hundredths of 

1 percent. 

We are now in the fourth month since the stimulus package was 

signed into law. I am anxious to hear why there has been a delay 

in spending money that was meant to stimulate the economy and 

what the plan is going forward. 

Mr. Chairman, I look forward to the testimony today and to 

being enlightened by our good friend, Senator Udall. 

Thank you, Chair. 

Chairman AKAKA. Thank you very much, Senator Burr, for your 

opening statement. 

Now, I would like to welcome two distinguished gentleman from 

Colorado, Senator Mark Udall and Congressman Ed Perlmutter. I 

understand that Senator Bennet is on his way here. 

They are all supporters of a new VA standalone medical center 

at the former Fitzsimons Army Base in Aurora, Colorado. I can 

safely say that having two, and possibly three of you, certainly 

gives us full coverage of the Denver issue. 

So, let us begin with Senator Udall. Senator Udall. 

STATEMENT OF HON. MARK UDALL, 

U.S. SENATOR FROM COLORADO 

Senator UDALL. Thank you, Chairman Akaka, Ranking Member 

Burr, Senator Isakson, Senator Johanns. 

I appreciate the opportunity to tell you a little bit about the history of the VA Hospital and also where we hope to go in the near 

and the immediate future. 

We have a new, and we hope a final plan for the VA Medical 

Center on the Fitzsimons Campus in Aurora, Colorado. As some of 

you may know, the current facility is almost 60 years old. It is at 

full capacity, and it does not meet the needs of our veterans. Sometimes veterans, Mr. Chairman, have to wait months to see a doctor, 

and veterans with spinal cord injuries have to travel to other 

States for treatment. And that is why the development of a stateof-the-art veterans’ facility at Fitzsimons was a centerpiece of the 

VA’s Capital Construction Plan under the Capital Asset Realignment for Enhanced Services, or as it is known, the CARES Program. 

Five years ago, as part of this CARES Program, Denver was 

identified as a city in urgent need of a new VA center. Today there 

is still no hospital and the need is still urgent, as you can all imagine, as thousands of young veterans returning from Iraq and Afghanistan require care for their wounds, whether physical or mental, or both. We also have an additional four hundred thousand veterans in the region who require care. 

4 

So, I am pleased to be able to say although there have been a 

few bumps along the road—three secretaries of the VA and numerous plans and many intervening years at Fitzsimmons—it is again 

one of the highest priorities for the VA. 

As you know, Secretary Shinseki, who came out of retirement— 

I think in the wonderful State of Hawaii—listened to the concerns 

of our delegation, our local veterans’ community, and veterans’ 

service organizations, and his own advisors. And earlier this year 

he concluded that a standalone facility with comprehensive specialty care services, including a 30-bed spinal cord injury center, is 

essential in order to meet the needs of veterans throughout the 

Rocky Mountain region. 

We are excited that the plan also includes constructing new 

health care centers in Colorado Springs, Colorado, and Billings, 

Montana; a number of new clinics in rural health sites; and an outpatient administrative building at the Buckley Air Force Base, 

which is in Colorado, as well. 

Mr. Chairman, if I could turn to costs, which are always, of 

course, very, very important. The new estimate for the total cost 

is $800 million dollars with $119 requested in this year’s President’s 2010 budget. So far, we have authorized, Mr. Chairman, 

$568 million for the hospital, but this is not enough to get us all 

the way to the finish line. So, I look forward to working with the 

Committee to increase these levels. 

I want to thank my colleague, Representative Perlmutter, for his 

hard work, and our former colleague, Senator and now Secretary 

Salazar, for leading the charge when it looked like the VA was 

going to back away from its promise to build a standalone hospital. 

Senator Bennet has quickly picked up where Senator Salazar left 

off and he is pushing hard to get the project underway. 

In my notes here I am also encouraged to talk about my contribution. What I would say is I have been working on this for 10 

years, and I was working on this when Senator Burr, Senator Isakson, and I were all members of the House of Representatives—all 

those glorious years in the past. 

So, I am delighted to be here today. I am delighted to be able 

to, I think, see the end of the light at the end of the tunnel. 

There is a groundbreaking scheduled in August, and I want to 

thank the Committee for giving me an opportunity to speak to you 

today. I ask your support so that we can finish this project in the 

way that our veterans deserve. 

Thank you, Mr. Chairman. 

[The prepared statement of Senator Udall follows:] 

PREPARED STATEMENT OF HON. MARK UDALL, U.S. SENATOR FROM COLORADO

I am glad to have the chance to testify today about the new—and, we hope, 

final—plan for the VA Medical Center on the Fitzsimons campus in Aurora, Colorado. 

As you know, the current medical center in Denver is nearly 60 years old, is at 

full capacity and does not meet the needs of our veterans. At the existing VA hospital in Denver, veterans sometimes have to wait months to see a doctor, and veterans with spinal-cord injuries have to travel to other states for treatment. 

That’s why the proposal for the development of a state-of-the-art veterans’ facility 

at Fitzsimons was a centerpiece of the VA’s capital construction plan under the Capital Asset Realignment for Enhanced Services, or CARES program. 

5 

Five years ago, as part of the CARES plan, Denver was identified as a city in urgent need of a new VA medical center. Today, there is still no new hospital, and 

the need is still urgent, as thousands of young veterans returning from Iraq and 

Afghanistan require care for their physical and mental wounds, in addition to more 

than 400,000 other veterans in the region who require care. 

I am so pleased to be able to say that while there have been a few bumps on the 

road—three secretaries of Veterans Affairs, numerous plans, and many intervening 

years—Fitzsimons is again one of the highest priorities for the VA. 

As you know, Secretary Shinseki listened to the concerns of the Colorado Congressional delegation, our local veterans’ community and veterans’ service organizations, 

and his own advisors. And earlier this year he concluded that a stand-alone fullservice hospital with comprehensive specialty care services—to include a 30-bed Spinal Cord Injury Center—is essential in order to meet the needs of veterans throughout the Rocky Mountain Region. 

We are excited that the plan also includes constructing new Health Care Centers 

in Colorado Springs, Colorado, and Billings, Montana; a number of new clinics and 

rural health sites; and an outpatient and administrative building at Buckley Air 

Force Base in Colorado. 

I understand the new estimate for the hospital’s total cost is $800 million, with 

$119 million requested in the president’s fiscal year 2010 budget. As you know, Mr. 

Chairman, Congress has so far authorized $568 million for the hospital, but this is 

not enough to get us to the finish line with these updated cost estimates. I hope 

to work with the Committee to increase these levels. 

I want to thank my colleague Representative Perlmutter and my former colleague 

and now Secretary Ken Salazar for leading the charge when it appeared that the 

VA would not make good on its promise to build a stand-alone hospital at Fitzsimons. Rep. Perlmutter has worked tirelessly to make this hospital a reality and 

to provide care for Colorado’s veterans. Senator Bennet has quickly picked up where 

Senator Salazar left off and is pushing hard to get the project underway. 

I have also worked hard on behalf of our veterans in Colorado. So I am delighted—after fighting for a veterans hospital for years as a member of the House— 

that I am testifying before you in the Senate, at a time when we can finally see 

a light at the end of the tunnel. I know all of us here look forward to the 

groundbreaking in August. 

I want to thank you, Mr. Chairman, and the Members of this Committee for your 

support over the years, and ask that your support continue as we work to secure 

the funding necessary to finally complete this project. 

Chairman AKAKA. Thank you for your statement, Senator Udall. 

I am going to call on Representative Perlmutter for your opening 

statement and your statement about Denver and the hospital 

there. 

Representative Perlmutter. 

STATEMENT OF HON. EDWARD PERLMUTTER, A 

REPRESENTATIVE IN CONGRESS FROM COLORADO 

Mr. PERLMUTTER. Thank you, Mr. Chairman, Senator Burr, and 

Distinguished Members. Thank you for inviting a member of the 

House to come testify before your Committee. 

This is a great opportunity for the veterans of Colorado. We have 

been dealing with this project, as Senator Udall said, for at least 

10 years, sort of back and forth. And the issue that we are dealing 

with is the need for a new state-of-the-art Veterans Administration 

standalone medical center at the former Fitzsimons Army Base in 

Aurora, Colorado. 

I would like to acknowledge the work of former Senator Ken 

Salazar, as well as Senator Wayne Allard, both of whom were 

strong partners in moving this project forward. I am equally 

pleased that Mark Udall now is a member of your chamber and he 

and Senator Mike Bennet are also champions for this particular facility—one that has been long, long overdue. 

6 

Mr. Chairman, in your remarks, you talked about sort of the fits 

and starts within the CARES program, and this is one of those examples. But finally, I think with the concerted effort of the Congress, as well as the Administration, we can move forward and fulfill the promises that we made to these veterans a long time ago. 

General Shinseki, 21⁄2 months ago in a clear statement, said we 

are going to move forward with a standalone facility which will 

serve the Rocky Mountain West and the Western Plains veterans. 

So, Nebraska, Kansas, Colorado, Utah, Idaho, Montana, and Wyoming and the 700,000 veterans within that region will be served 

as part of this effort. 

Our veterans deserve this medical facility. This is one that is 

worthy of their service. We found—and the CARES report is 

clear—that the current facility that we have simply is obsolete; it 

is undersized and is not meeting the needs of our veterans. 

The Commission had 38 public hearings and over 200,000 public 

comments, and was completed and accepted by Secretary Principi 

5 years ago. We are on our fourth secretary of the VA, and we hope 

that this time things will move forward with the groundbreaking 

scheduled for the end of August. 

The CARES Committee Report concluded that there was a space 

deficit of 242,000 square feet. So, as Senator Udall said, the Congress has authorized $568 million for the project, of which 

$188,300,000 has been appropriated. Property has been purchased 

and we are ready to turn dirt. So, Senator Burr, your question 

about the stimulus and moving forward for jobs now to help us 

within this recession—this project is ready to please you. 

The new medical center will provide a full range of medical, laboratory, research, and counseling services, including a new spinal 

cord injury unit recommended by the CARES report. Moreover, it 

will be a joint facility with the Department of Defense to provide 

care for personnel stationed at installations throughout Colorado 

and VISN–19. In order to accomplish this, the President’s budget 

proposes $119 million be appropriated this year for the Fitzsimons 

facility. 

I applaud Secretary Shinseki and President Obama for bringing 

closure to this long-awaited decision to move forward with this 

project. The veterans of Colorado very much appreciate the support 

of this project which it has received from this Committee. The 

VSOs have been involved from day one in this project and are very 

supportive and very determined to have this go forward, as the 

Chairman knows from a visit he made to Colorado a few months 

ago. 

I thank you for the opportunity to speak to you. This is a critical 

project for our State, and for the Rocky Mountain West and Western Plains regions. I look forward to your questions and to your 

support of this project. 

[The prepared statement of Mr. Perlmutter follows:] 

PREPARED STATEMENT OF ED PERLMUTTER, U.S. REPRESENTATIVE, 

COLORADO’S SEVENTH CONGRESSIONAL DISTRICT

Chairman Akaka, Senator Burr and distinguished Members of the Committee, I 

would like to thank you for the opportunity to briefly testify today on an issue that 

has been of great concern to the Colorado veterans and veterans receiving medical 

care in the Veterans Integrated Service Network 19 Rocky Mountain Network. That 

7 

issue has been the need for a new state-of-the-art Veterans Administration standalone medical center at the former Fitzsimons Army Base in Aurora, Colorado. 

But before I begin I would like to acknowledge the work of former Senator Ken 

Salazar on this project, he was a strong partner with me, as was former Senator 

Wayne Allard, in ensuring the construction of this hospital. Now, I am equally 

pleased that Senator Mark Udall and Senator Michael Bennet picked up where Senators Salazar and Allard left off. We are all working together with the rest of the 

delegation and General Shinseki to fulfill our promise to our veterans to provide 

them the best healthcare possible. This is the least we can do for their dedicated 

service to our country. 

There are an estimated 426,000 veterans in Colorado, and 700,000 in VISN 19 

whose major VA medical facility simply doesn’t cut muster. They deserve a medical 

facility worthy of their service. It is our duty to give the VA the resources to make 

world class care available to world class soldiers. Many of them were wounded in 

battle, and many of them will rely on intensive medical care from the Veterans Administration for the rest of their lives. 

In 1998, with the cost of healthcare and the cost to maintain older VA facilities 

continuing to grow, Congress established the Capital Asset Realignment for Enhanced Services Commission, or CARES Commission. The goal was to create an objective panel of experts to address the best way to consolidate existing VA facilities 

and potentially build new ones. After all, an independent commission is really the 

only venue whereby effective decisions—though sometimes politically difficult—can 

be made. 

In 2004, following 38 public hearings and over 200,000 public comments, the 

CARES study was completed and accepted by then Secretary Anthony Principi. The 

study illustrated the need for a replacement facility for the outdated and obsolete, 

nearly 60 year old, Denver VA Medical Center. They concluded the existing facility 

had a space deficit of 242,000 square feet for inpatient and outpatient needs. Moreover, they found significant problems with patient privacy at the existing facility. 

These problems were—and continue to be—so bad the Commission deemed the replacement facility at Fitzsimons a high priority of the VA. 

Since the 2004 CARES study, the process of seeking a final resolution to move 

forward with the actual construction of the new Aurora VA Medical Center has been 

a frustrating history of indecision and reversal of construction plans. With each succeeding VA secretary, we have seen the plans alternate between a shared facility 

and a stand-alone facility. Enough is enough! Congress has authorized $568,400,00 

for the project, of which $188,300,000 has already been appropriated. Property has 

been purchased and we are ready to turn dirt. 

On March 18, 2009, Secretary of Veterans Affairs Eric Shinseki met with the Colorado Congressional Delegation to announce the VA will move forward with the construction of a new stand alone VA Medical Center at the Fitzsimons site in Aurora, 

Colorado. The new medical center will provide a full range of medical, laboratory, 

research and counseling services including a new spinal cord injury unit recommended by the CARES Commission report. Moreover it will be a joint facility 

with DOD to provide care for personnel stationed at installations throughout Colorado and VISN 19, as stipulated in the CARES report. 

In order to accomplish this, President Obama’s budget proposes spending $1.19 

billion in FY 2010 for construction of major projects within the VA. Of that, he has 

budgeted $119 million for the new Fitzsimons facility. We are anticipating a 

groundbreaking for construction of the new facility in August, which will create 

thousands of jobs and put our veterans that much closer to the care they deserve. 

I applaud Secretary Shinseki and President Obama for bringing closure to this long 

awaited decision to move forward with a project that is so critical to health care 

needs of the veterans served by VISN–19. 

The veterans of Colorado very much appreciate the support this project has received from the Members of this Committee. They will continue to need this support 

as we move forward to see this vision become a reality. In order to do this, we will 

also need your assistance to increase the authorization level. Currently the authorization is $568,400,000. However, the VA estimates the construction will be $800 

million. I look forward to working with both senators from Colorado and Members 

of this Committee to enact this necessary authorization. 

Last, I would also like to acknowledge the very active veteran service organizations in Colorado who have played such a crucial role in fighting for this project for 

years. This final decision has taken well over 10 years for the Department of Veterans Affairs to reach. Also critical to this team effort were the University of Colorado Health Sciences Center, the Children’s Hospital, and the city of Aurora. 

I want to thank the Chairman for visiting the Fitzsimons campus site several 

months ago and I want to thank the Committee staff for their dedication to ensurVerDate Nov 24 2008 12:56 Mar 17, 2010 Jkt 000000 PO 00000 Frm 00011 Fmt 6633 Sfmt 6621 H:\ACTIVE\061009.TXT SVETS PsN: PAULIN
8 

ing quality healthcare for our veterans. I ask the members of the Senate VA Committee to continue their support for the stand-alone VA medical center in Aurora, 

Colorado in order to meet the needs of veterans in Colorado and throughout the 

Rocky Mountain West. 

Thank you for this opportunity, and I look forward to answering any questions 

you may have. 

Senator AKAKA. Thank you very much, Representative Perlmutter. Thank you for your statement. 

Now, we will hear from Senator Bennet from Colorado. 

STATEMENT OF HON. MICHAEL F. BENNET, 

U.S. SENATOR FROM COLORADO 

Senator BENNET. Thank you, Mr. Chairman. I apologize for being 

late. 

Mr. Chairman, Ranking Member Burr, and other Members of the 

Committee, thank you very much for inviting me to be a part of 

today’s hearing. 

I want to start by thanking Senator Udall for his hard work on 

the Denver VA Hospital, and I would also like the Committee to 

know that Congressman Perlmutter, in particular, has been indispensable in getting this critically important project off the ground. 

When I came to the Senate just a few months ago, one of the 

first things I did was join Senator Udall, Congressman Perlmutter, 

and the rest of the Colorado delegation, many of whom had been 

working on getting this facility built for several years in communicating to the new Administration my support for a standalone facility in the Denver area. 

Secretary Shinseki told us he supported a standalone facility, and as you know, he and President Obama have included $119 million in funding for it in their request for the upcoming fiscal year. 

We were particularly proud that this was the first decision that the 

VA made in capital construction this year. This funding will put 

the $800 million, 200-bed facility, which will serve 400,000 Colorado veterans, on track to open in 2013. When it does, 92 percent 

of Colorado veterans will be within 1 hour of VA primary care, and 

81 percent of Colorado veterans will be within 2 hours of a medical 

center or health care center. 

The new Denver facility will set the bar high. It will bring together the best resources the VA has to offer and enable more veterans to access the high quality care they need and deserve. With 

capacity for addressing mental health needs and spinal cord injuries, it will be a shining example of how we can do right by our 

veterans—one that this Committee can point to for years to come. 

As the Committee considers the President’s budget for fiscal year 

2010, I join my colleagues and ask on behalf of Colorado’s veterans 

that you preserve the $119 million the Administration has requested for this important project. I would also ask that when the 

time comes, you increase the authorization of the project to reflect 

its full estimated cost of $800 million. As the Congressman said, 

the project is currently authorized at $568 million. 

I want to close by saying thank you for your consideration. 

Thank you for your leadership on these issues. To Congressman 

Perlmutter, everybody in Colorado knows and should know that his 

commitment to this project has been tireless over many, many 

years, and it is extremely gratifying to see it finally being brought 

9 

home. So, I want to thank you on behalf of all the citizens of Colorado for your tireless work on this. 

Thank you, Mr. Chairman. 

[The prepared statement of Senator Bennet follows:] 

PREPARED STATEMENT OF HON. MICHAEL BENNET, U.S. SENATOR FROM COLORADO

Chairman Akaka, Ranking Member Burr, and other Members of the Committee, 

Thank you for inviting me to be a part of today’s hearing. I want to start by thanking Senator Udall for his hard work on the new Denver VA hospital. And I would 

also like the Committee to know that Congressman Perlmutter in particular has 

been indispensable in getting this critically important project off the ground. My 

predecessor, Senator Ken Salazar, also worked hard to make this project at Fitzsimons a reality. 

When I came to the Senate just a few months ago, I joined Senator Udall, Congressman Perlmutter, and the rest of the Colorado delegation—many of whom have 

worked on getting this facility built for several years—in communicating to the new 

Administration my support for a stand-alone facility in the Denver area. 

Secretary Shinseki told us he supported a stand-alone facility, and he and Presi- dent Obama have included $119 million in funding for it in their request for the 

upcoming fiscal year. This funding will put the $800 million, 200-bed facility, which 

will serve 400,000 Colorado veterans, on track to open in 2013. When it does, 92 

percent of Colorado veterans will be within one hour of VA primary care, and 81 

percent of Colorado veterans will be within two hours of a medical center or health 

care center. 

The new Denver facility will set the bar high. It will bring together the best resources the VA has to offer and enable more veterans to access the high-quality care 

they need and deserve. With capacity for addressing mental health needs and spinal 

cord injuries, it will be a shining example of how we can do right by our veterans— 

one that this Committee can point to for years to come. 

As the Committee considers the President’s budget for FY 2010, I ask on behalf of Colorado’s veterans, that you preserve the $119 million the Administration has 

requested for this important project. I also ask that when the time comes, you increase the authorization of the project to reflect its full estimated cost of $800 million. 

Congressman Perlmutter could tell you that getting to this point hasn’t been easy, 

but he sets a good example for us all in standing up for our veterans. Of course, 

it is because of the brave commitment of our veterans that we can stand here today. 

Their sacrifices have created the need, and the obligation we all have to fulfill that 

need. I’m proud of their service to Colorado and to our country. 

But it also takes leadership in government to make important things happen. I 

know the Chairman and the Committee reflect that leadership. So does Ed Perlmutter. 

Thank you, Mr. Chairman for allowing me to add to their voices. 

Chairman AKAKA. Thank you very much, Senator Bennet for 

your statement. 

Chairman AKAKA. Now I will ask for further opening statements. 

Senator Isakson. 

STATEMENT OF HON. JOHNNY ISAKSON, 

U.S. SENATOR FROM GEORGIA 

Senator ISAKSON. Thank you very much, Chairman Akaka. I will 

not make a statement, except unfortunately given the fact the 

HELP Committee is getting ready to start marking up the Health 

Care bill, I am going to have to leave. But I did want to raise a 

question for the panelists that hopefully they will be able to address to my office. 

In Georgia, we are fortunately having a total renovation and 

completion of the VA Hospital on Clairmont Road. We are very 

grateful for that, and I am very grateful to the Committee Members who helped me get the appropriations in the Appropriations 

Act to do that. 

10 

However, we have run across a great problem during the course 

of the construction, and that is we have lost almost all of our accessible parking—or at least a significant amount of it. Clairmont 

Road is a very busy road that connects Interstate 85 with downtown Decatur. The VA is operating a shuttle from an offsite parking lot to get patients to the hospital, but we have a number of people that are on oxygen who are being required, even with the shuttle, to walk extensive distances to get to the shuttle to get to the 

hospital. We have expressed to the VA our concerns, and we have 

had some good attention. I am not complaining. 

But, I do think when the discussion about logistics and planning 

for construction is done—and that is part of the purpose of this 

particular hearing—when there is a displacement of parking, which 

is oftentimes the case at a site when you do a renovation or improvement—we need to be very conscious in the planning to make 

parking a high consideration during that period of renovation or 

construction so as to minimize the amount of difficulty it causes 

our veterans and patients. 

With that said, that is my principal question, Mr. Chairman. And 

I hope during the course of the discussion this morning, although 

I will not be here, that can be addressed and our office can get a 

response on the question. 

Thank you, Mr. Chairman. 

Chairman AKAKA. Thank you, Senator Isakson. 

Senator Johanns. 

STATEMENT OF HON. MIKE JOHANNS, 

U.S. SENATOR FROM NEBRASKA 

Senator JOHANNS. Mr. Chairman and Ranking Member, thank 

you very much for putting this hearing together. 

If I might just spend a moment talking about the NebraskaWestern Iowa Veterans’ Facility that is there. And I want to alert 

the panelists that, of course, I have an interest in that. Having 

worked my way through government for many, many years as a 

county commissioner, a city council member, a mayor, and Governor, et cetera, I am very used to working with capital improvement processes and budgets, and I understand that there is a process that we need to go through. 

But let me, if I might, cite some of the deficiencies we found in 

this veterans facility. There are dust, contaminants, potential infectious vectors being distributed throughout much of the hospital via 

the HVAC system. The hospital could not support a pandemic flu 

outbreak, which, of course, is on everybody’s mind these days. 

The system was graded F in VA assessments dating back to 

1999. In the electrical system, there is not enough emergency 

power available to support equipment requiring emergency power. 

Now, in our State, like probably so many States, emergency power 

is absolutely necessary. Storms do come through this area and we 

need that power. 

Plumbing and medical gas system repairs and renovations require whole hospital shutdowns. For water and oxygen, piping is 50 

years old. It is corroded. It fails on a recurring basis. Moisture is 

pulled into wall cavities because of the faulty HVAC system. It creates a perfect breeding ground for mold in that facility. 

11 

Over 4,000 square feet of hospital space is not occupied, even 

though we have a deficiency in space in this hospital because there 

is reactor water and concrete that has yet to be removed. 

Now, I could go on and on. That is the bad news of what we are 

dealing with here. It is not a good situation for our veterans who 

need care. I really appreciate the work that Colorado is doing, but 

if you live on the eastern side of the State of Nebraska, that is a 

10-hour drive to Colorado. Now, we love to visit Colorado—except 

when the football team beats us—but that is a long way away. And 

most of our population, as you know, is in Omaha and Lincoln— 

on that eastern one-third of the State. So, nothing I say here 

stands in the way of what they are trying to do. I applaud them 

for their efforts. 

That is the tough news. The good news about this project is the 

community is pulling together; the State is pulling together; and 

Western Iowa is pulling together to see how can we be helpful in 

bringing first class medical care to these veterans who have served 

our country so well. 

The good news is that in Omaha you have two medical centers— 

two medical schools—Creighton University, my alma mater, first 

class, and the University of Nebraska Medical Center. They want 

to join forces. They want to do everything they can to bring the 

best medical care to bear to help these veterans. 

Now, again, I understand capital improvements processes. But 

these conditions are not good, and I am hoping that if we can all 

work together and cooperate on not only this project but other 

projects that have this awful list of problems, that we can solve 

these problems. Hopefully, we can work together to get the funding 

and move these projects forward. 

No one would like front page stories about these conditions. They 

are not good. 

And so, Mr. Chairman, and Ranking Member, again, I thank you 

so very much. This gives us a forum to debate and discuss how best 

to deal with these issues. The reassuring thing about this Committee and the people that come before the Committee is we share 

one common goal. And that is, how do we improve the conditions 

for our veterans? I am anxious to be a partner in that. 

Thank you. 

Chairman AKAKA. Thank you very much, Senator Johanns. 

Now, I want to welcome our principal witness from VA, Donald 

Orndoff, who is the director of the Office of Construction and Facilities Management. 

He is accompanied by Brandi Fate, Director of VHA’s Office of 

Capital Asset Management and Planning Service; James Sullivan, 

Director of VA’s Office of Asset Enterprise Management; and Dr. 

Lisa Thomas, Director of VHA’s Office of Strategic Planning and 

Analysis. 

I thank all of you for being here this morning. VA’s full testimony will appear in the record. 

12 

STATEMENT OF MR. ORNDOFF, AIA, DIRECTOR, OFFICE OF 

CONSTRUCTION AND FACILITIES MANAGEMENT, U.S. DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY 

BRANDI FATE, DIRECTOR, OFFICE OF CAPITAL ASSET MANAGEMENT AND PLANNING SERVICE, VETERANS HEALTH ADMINISTRATION; JAMES M. SULLIVAN, DIRECTOR, OFFICE OF 

ASSET ENTERPRISE MANAGEMENT; AND LISA THOMAS, 

Ph.D., FACHE, DIRECTOR, OFFICE OF STRATEGIC PLANNING 

AND ANALYSIS, VETERANS HEALTH ADMINISTRATION 

Mr. ORNDOFF. Mr. Chairman and Members of the Committee, I 

am pleased to appear today to discuss the status of the Department 

of Veteran Affairs facility infrastructure. I will provide a brief oral 

statement. 

Current Medical Infrastructure. VA has a real property inventory 

of more than 5,400 owned buildings, 1,300 leases, 33,000 acres of 

land, and approximately 159 million gross square feet of occupied 

space, both owned and leased. Our aging facilities were not designed to meet the changing demands of clinical care for the 21st 

Century. 

Continuing our recapitalization program is critical to providing 

world-class health care for veterans now and into the future. 

Our Current Major Construction Program. VA continues the 

largest capital investment program since the immediate post-World 

War II period. Since 2004, VA has received appropriations totaling 

$4.6 billion in health care projects, including 51 major construction 

projects. These projects include new and replacement medical centers, poly-trauma rehabilitation centers, spinal cord injury centers, 

ambulatory care centers, and new inpatient nursing units. 

Background—CARES. In 2000, the Veterans’ Health Administration embarked upon the Capital Asset Realignment and Enhanced 

Services program, or CARES. CARES assessed the veterans’ health 

care needs and promoted strategic realignment of capital assets. In 

2003, VA released its draft national CARES plan and created the 

CARES Commission for further analysis. 

In May 2004, the Secretary published his CARES decisions and 

identified 18 sites whose complexity warranted additional study. 

The VA completed these studies in May 2008. 

Today—Strategic Facilities Planning Process. The tools and techniques acquired through CARES are now incorporated into VA’s 

strategic health care facilities planning process. VA no longer distinguishes between CARES and other project planning needs. 

Our Goal—High Performance Medical Facilities. VA new medical 

facilities contribute to world-class health care for veterans today, 

tomorrow, and into the 21st Century. Our designed goal is to deliver high-performance buildings that are functional, cost-efficient, 

veteran-centric, adaptable, sustainable, energy efficient, and physically secure. 

Acquisition Strategies. VA uses a range of acquisition tools that 

are tailored to best satisfy the unique requirements of each project. 

We partner with industry leaders through architect-engineer design contracts, design-bid-build contracts, design-build contracts, 

integrated design construct contracts, construction management 

contracts, and operating leases. 

13 

Our Fiscal Year 2010 Budget Requirement. VA’s fiscal year 2010 

budget request continues our recapitalization effort supported by 

Strategic Facilities Planning Process. VA requests $1.1 billion in 

fiscal year 2010 for major construction to replace or enhance VA 

medical facilities and $196 million authorization for 15 new medical facility leases. VA also requests $112 million for major construction to expand two national cemeteries. 

In closing, I thank the Committee for its continued support to 

improve the Department’s fiscal infrastructure to meet the changing needs of America’s veterans. My colleagues and I stand ready 

to answer your questions. 

[The prepared statement of Mr. Orndoff follows:] 

PREPARED STATEMENT OF DONALD H. ORNDOFF, AIA, DIRECTOR, OFFICE OF CONSTRUCTION AND FACILITIES MANAGEMENT, U.S. DEPARTMENT OF VETERANS AFFAIRS

Mr. Chairman and Members of the Committee, I am pleased to appear today to 

discuss the status of the Department of Veterans Affairs’ (VA) health care infrastructure, our strategic facilities planning process, our facility design objectives, our 

acquisition strategies, and our proposed Fiscal Year 2010 budget. Joining me today 

are Brandi Fate, Director of the Veterans Health Administration’s (VHA’s) Office of 

Capital Asset Management and Planning Service; James M. Sullivan, Director of 

VA’s Office of Asset Enterprise Management; and Lisa Thomas, Ph.D., FACHE, Director of VHA’s Office of Strategic Planning and Analysis. 

CURRENT MEDICAL INFRASTRUCTURE

VA has a real property inventory of over 5,400 owned buildings, 1,300 leases, 

33,000 acres of land and approximately 159 million gross square feet (owned and 

leased). The average age of VA facilities is well over 50 years. Our older facilities 

were not designed to meet the changing demands of clinical care in the 21st century. Therefore VA’s continuing program of recapitalization of these aging assets is 

very important to providing world-class health care to veterans now and into the 

future. 

CURRENT MAJOR CONSTRUCTION PROGRAM

The Department is currently implementing its largest capital investment program 

since the immediate post-World War II period. Since 2004, VA has received appropriations totaling $4.6 billion for health care projects, including 51 major construction projects for new or improved facilities across the Nation. These projects include 

new and replacement medical centers; poly-trauma rehabilitation centers, spinal 

cord injury centers; ambulatory care centers; new inpatient nursing units; and 

projects to improve the safety of VA facilities. Thirty-six of the 51 projects have been 

fully funded at a total cost of approximately $3.1 billion. The remaining 15 projects 

have received partial funding totaling $1.6 billion against a total estimated cost of 

$4.5 billion. For these larger projects, VA requests design and construction funding 

in increments aligned with the projected multi-year acquisition schedule. 

BACKGROUND: CARES

In 2000, the Veterans Health Administration (VHA) embarked on the Capital 

Asset Realignment for Enhanced Services (CARES) process to provide a data driven 

assessment of Veterans’ health care needs and to guide the strategic allocation of 

capital assets to support delivery of health care services over the next 20 years. The 

CARES program assessed Veterans’ health care needs in each Veterans Integrated 

Service Network (VISN), identified service delivery options to meet those needs, and 

promoted strategic realignment of capital assets to satisfy identified needs. The goal 

was to improve access and quality of health care in the most cost effective manner, 

while mitigating impacts on staffing, communities, and on other VA missions. 

VA began the CARES process in 2000 with a regional pilot, then in 2002 expanded nationally. In 2003, VA released its Draft National CARES plan and created 

the CARES Commission, an independent panel established to review VA’s plans. 

The Secretary published his decisions in May 2004 and identified 18 sites whose 

complexity warranted additional study. VA completed these studies in May 2008. 

14 

One output of the CARES process is the development of a Five-Year Capital Plan 

that lists and ranks specific major construction projects. 

TODAY: STRATEGIC FACILITIES PLANNING PROCESS

The lessons learned through CARES are now incorporated into VA’s strategic 

health care and facilities planning process. VHA no longer distinguishes between 

CARES and non-CARES planning as the tools and techniques acquired through 

CARES have become part of our standard operating procedures for strategic planning within our health care system. 

VA uses a multi-characteristic decision methodology in prioritizing its capital investment needs. Appropriate ‘‘joint’’ VA-Department of Defense (DOD) projects are 

evaluated to promote sharing and efficiency opportunities. Through this strategic facilities planning process, VA annually updates its Five-Year Capital Plan, which 

supports the development of VA’s annual capital acquisition funding request. 

VHA employs its Health Care Planning Model to strategically assess demographic 

data, anticipated workload, and actuarial projections for health care services. VHA 

compares this data to its capital asset inventory to identify gaps in capability. To 

close gaps, VHA develops investment solutions that may become capital infrastructure projects. All proposed projects undergo thorough cost effectiveness, risk, and alternatives analyses. 

The Department’s Capital Investment Panel (CIP) reviews, scores, and priority 

ranks potential projects based on criteria considered essential to providing high 

quality health care services. The scoring criteria include enhancement of service delivery, meeting workload projections, safeguarding assets, supporting special emphasis programs, addressing capital asset management priorities, promoting department alignment, and eliminating facility deficiencies. The CIP integrates both new 

and existing program requirements into a single prioritized project list. 

The CIP reports its analysis to the Strategic Management Council (SMC) for review. The SMC is VA’s governing body responsible for overseeing VA’s capital programs and initiatives. The SMC submits its recommendations to the Secretary, who 

makes the final decision on which projects to include in the budget. 

PROJECT DESIGN GOAL: HIGH-PERFORMANCE MEDICAL FACILITIES

New VA medical facilities will contribute to world-class health care for Veterans 

today, tomorrow, and well into the 21st century. Our design goal is to deliver highperformance buildings that are: 

• Functional, providing cutting-edge clinical spaces that leverage the latest medical technologies to produce the highest possible health care outcomes. 

• Cost efficient, incorporating evidence-based design for clinical spaces that are 

efficiently sized and configured to maximize clinical capability for invested capital. 

• Veteran-centric, placing special emphasis on design that is Veteran and family 

centered. Buildings welcome patients and visitors with effective design, open circulation and waiting areas, and expected amenities. 

• Adaptable, creating buildings that will serve generations of Veterans not yet 

born. Our buildings must be flexible to adapt and support continual changing clinical practices, advancing technology, and medical research. Buildings are designed 

with engineering systems organized in interstitial levels between occupied floors to 

enable rapid and less expensive reconfiguration of clinical spaces. 

• Sustainable, setting a standard of designing our medical centers to a minimum 

Leadership in Environmental and Energy Design (LEED) Silver level as defined by 

the U.S. Green Building Council, and following all relevant Executive Orders, including the High Performance & Sustainable Buildings Guidance required under 

E.O. 13423. 

• Energy efficient, designing new facilities to meet or exceed energy reduction targets of the Energy Policy Act of 2005 and related Executive Orders, shrinking energy use 30 percent below American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) standards. VA is committed to incorporating renewable energy technologies in the design of new or renovated facilities. 

• Physically secure, ensuring medical facilities are designed to fully comply with 

stringent physical security guidelines for mission critical, high-occupancy Federal facilities. This includes hardened structures, perimeter and access control, redundancy 

and modularity. Water storage, emergency power, and fuel supplies are sized to enable continued health care operations for four days in the face of natural or manmade disaster. 

15 

ACQUISITION STRATEGIES

VA uses a range of acquisition tools that are tailored to best satisfy the unique 

requirements of each project. 

For design acquisition, VA selects partners through a targeted Architect/Engineer 

(A/E) contract solicitation. Our selection process values past performance and experience on health care projects of similar complexity. We carefully evaluate the experience and capabilities of the key members of the proposed design team. We require 

our design partners to leverage the power of Building Information Modeling (BIM) 

as a common communication and collaboration tool. We engage peer review from 

separate A/E firms to assist the owner’s review of proposed design solutions in meeting required design criteria and standards. 

For construction acquisition, VA uses a range of contract vehicles, including: 

• Design-Bid-Build, where we fully develop the project design and use best value 

selection process, which assesses both technical and cost proposals. We typically use 

this contract vehicle for large, complex medical facility projects, such as large medical clinics. 

• Design-Build, where a single contractor performs both the design development 

and the construction. We typically use this approach for smaller, less complex 

projects, such as parking structures. 

• Integrated Design-Construct, where we bring the general contractor on board 

early in the design process, initially performing construction management functions, 

then construction work as design packages become available. This is VA’s version 

of CM@Risk approach that is widely used in the private sector of the construction 

industry. We plan to use this approach on our largest, most complex projects, such 

as new medical centers. 

• Operating Leases, where we engage a developer to act as owner, designer, and 

constructor of ‘‘build to suit’’ leases. VA pays annual lease payments for terms up 

to 20 years. We typically use this strategy for smaller projects where VA does not 

currently own property, such as outpatient clinics. 

• Construction Management, where we augment our capacity to perform the important owner role for cost analysis, schedule control, and field testing. We typically 

use CM support on larger, more complex projects, such as new medical centers. 

VA is a leader among Federal agencies in meeting socio-economic goals for small 

business categories. We place special emphasis on contracting with veteran owned 

businesses, especially service-disabled veteran owned businesses. 

MAJOR CONSTRUCTION ACQUISITION PROCESS REVIEW

In late April 2009, VA’s Office of Inspector General (OIG) issued a follow-up audit 

report to a February 2005 IG report related to CFM major construction acquisition 

processes. OIG found that CFM had implemented 10 of the 12 recommendations 

from the original report. OIG made four new recommendations in their follow-up 

audit, including one implemented before the report was issued. CFM is addressing 

the remaining three recommendations which will require new policies, procedures, 

and additional oversight staff within the CFM Quality Assurance Office. 

FISCAL YEAR 2010 REQUEST

VA’s FY 2010 budget request continues our recapitalization effort supported by 

our strategic facilities planning process. VA requests $1.1 billion in FY 2010 for 

major construction in support of the Veterans Health Administration to replace or 

enhance VA medical facilities. Of this amount, $649 million provides construction 

funding for five ongoing projects at Denver, CO; Orlando, FL; San Juan, PR; St. 

Louis (Jefferson Barracks Division), MO; and Bay Pines, FL. Another $211 million 

will design seven new projects at Livermore, CA; Canandaigua, NY; San Diego, CA; 

Long Beach, CA; St. Louis (John Cochran Division), MO; Brockton, MA; and Perry 

Point, MD. The remainder of the major construction request will provide funds for 

advance planning, facility security, judgment fund and land acquisition needs. 

VA requests $112 million in FY 2010 for major construction in support of the National Cemetery Administration to expand national cemeteries in Joliet, IL and 

Houston, TX, Also included are funds for advance planning and land acquisition. 

VA requests authorization for $196 million for 15 new major medical leases. Lease 

projects are located at Anderson, SC; Atlanta, GA; Bakersfield, CA; Birmingham, 

AL; Butler, PA; Charlotte, NC; Fayetteville, NC; Huntsville, AL; Kansas City, KS; 

Loma Linda, CA; McAllen, TX; Monterey, CA; Montgomery, AL; Tallahassee, FL; 

and Winston-Salem, NC. 

16 

CONCLUSION

In closing, I thank the Committee for its continued support to improve the Department’s physical infrastructure to meet the changing needs of America’s Veterans. We look forward to continuing to work with the Committee on these important issues. Thank you for the opportunity to appear before the Committee today. 

My colleagues and I stand ready to answer your questions. 

Chairman AKAKA. Thank you very much. I would like to now call 

on our Senator from Illinois for any opening statement he may 

have before we continue with the questioning. 

STATEMENT OF HON. ROLAND W. BURRIS, 

U.S. SENATOR FROM ILLINOIS 

Senator BURRIS. Not at the moment, Mr. Chairman. Thank you, 

sir. 

Chairman AKAKA. Thank you very much. 

Mr. Orndoff, accompanying you are various officials involved in 

the construction process. At the onset, tell me what these other individuals do specifically and how they interact with one another. 

Mr. ORNDOFF. Yes, sir. 

First, I’ll begin with Ms. Lisa Thomas on my far left. She is in 

the VHA’s Strategic Planning area, which basically defines our 

strategic requirements and ultimately identifies where areas of 

need are—gaps in veteran service need and capabilities. So that office basically defines, initially, the requirement that needs some 

type of a solution—a facility solution being potentially one of those. 

Moving to my right, Ms. Brandi Fate. Her office then takes that 

output as input and plans projects, further defines requirements, 

and develops a project that would move forward. Of course, she 

works closely with the people at the regional level, at the VISN 

level, and at the local level at the medical centers to fully flush out 

the requirements and make sure that a project coming forward is, 

in fact, a valid requirement and would be one that would make— 

hopefully make—the priority list. 

The total output of that effort is the list of projects that we have 

in our 5-year capital plan, which is 66 projects that were identified 

earlier. And all of those projects have been validated and are on 

the list in a priority order. 

Mr. Sullivan, to my left, is from our Office of Management, the 

Asset Enterprise Management Office. He is the key player in working within our Office of Management and with our fiscal officer to 

develop the input of where we are in terms of prioritizing projects. 

His office takes the lead in developing the criteria that is used— 

creating a recommendation that comes forward ultimately approved by the Secretary. 

Using that established list of criteria against the list of projects, 

we then basically score them and come up with a priority order. 

The top of the priority list, of course, then is included in the Department’s budget—the annual budget that would come forward. 

So, basically, Mr. Sullivan’s office sort of manages the process of 

getting the requirements prioritized and into the budget working 

with the fiscal officer. So, it starts with strategic requirements, 

project requirements, prioritization, budgeting. And then, at the 

end, I catch the result of all of that and I am the execution guy— 

17 

the guy that delivers projects—the brick and mortar that we all 

know and love. 

Chairman AKAKA. Thank you for that explanation. 

You have stated in your testimony that VA no longer distinguishes between CARES and non-CARES planning. Of all the 

projects approved by Secretary Principi and his CARES decision, 

how many were undertaken? And where do we stand on those? 

Mr. ORNDOFF. Yes, sir. Since fiscal year 2004, basically when 

CARES was initiated, we have had a total of 58 projects identified. 

Nine of those are complete, 20 are under construction, 13 are in design, 15 are in planning. 

Many of them are projects that are continuing to work through 

the process, as we said, in construction. Certainly, the Denver 

project that was discussed earlier is one of those projects that is 

moving forward. Many of the projects that we have partially funded today are a result of the CARES process. All of those requirements have made the prioritization list as we continue to refresh 

it every year moving forward. 

Any time a project is partially funded, at that point there is no 

longer a prioritization of that project. It is automatically above the 

line, if you will, and moves forward to completion. So, really, it is 

just project-specific as to where any particular project is in terms 

of scheduling and delivery, but in every case where we have a valid 

output from CARES they have moved forward. 

Chairman AKAKA. Thank you. Let me just—before I call on Senator Burr—what were the lessons learned from CARES? 

Mr. ORNDOFF. Let me turn that one to Ms. Thomas, if I may. 

Chairman AKAKA. Ms. Thomas. 

Ms. THOMAS. Good morning, Mr. Chairman. 

As you know, CARES is a data-driven assessment of our health 

care system and it was used to guide the strategic allocation of our 

assets to support health care delivery. 

Our goals under CARES were to improve access and quality in 

the delivery of health care to make sure that it was done in a costeffective manner and mitigated any impacts to our staffing or our 

communities. 

We have several very good results as a result of our CARES program. It did help us identify our priorities and improve our physical infrastructure. It also helped us increase access to services to 

veterans. And one of the things it did is it really improved our strategic planning and capital facilities planning process in that it led 

to our first ever 5-year capital plan, which now drives all of the 

capital requests from that point forward. 

As Mr. Orndoff said in his statement, we no longer distinguish 

between CARES and non-CARES because we learned so many lessons as a result of CARES that we have now incorporated all of 

those tools and techniques into our regular standard operating procedures for strategic and facility capital planning. 

We developed a 10-step health care model that replaced the 9- 

step CARES model that we used. It very much is similar to that 

model. It is a web-based portal whereby it increased our efficiency 

with identifying what our strategic needs are and it has greatly enhanced our ability to continue on the traditions that we learned 

during CARES. 

18 

Chairman AKAKA. Thank you very much. 

Senator Burr. 

Senator BURR. Thank you, Mr. Chairman. 

Just one thing on CARES. Did CARES take into account the demographic shift that has happened in America in military retirees? 

Ms. THOMAS. Absolutely, sir. What we built our planning upon 

is our Enrollee Health Care Projection Model, which identifies for 

us the number of enrollees that we have; where they are; the types 

and volume and kind of health care services that they need; and 

the cost of those services. And that model is updated every year. 

Senator BURR. And when the CARES model originally came out, 

North Carolina was not projected to be the recipient of 3 HCCs or 

whatever the equivalent would have been under that. Yet, I am not 

sure whether anything would fully encapsulate the demographic 

shift—the decision of retirees to choose North Carolina as home. 

And it does put tremendous stress and strain on the delivery system when the infrastructure is not there to deliver that much care 

to that many veterans. We appreciate them making the decision to 

retire in North Carolina; we just want to make sure we have got 

the capacity to deal with them. 

Let me move to you, Donald, if I can. Relative to my opening 

statement where I made the reference that less than three hundredths of 1 percent of the stimulus money had actually gone out, 

I hope you are going to tell me that my numbers were wrong. 

Mr. ORNDOFF. Sir, I am going to, if I may, refer to our subject 

matter expert, Ms. Fate. 

As you mentioned, the funding was targeted at maintenance and 

repair-type projects. And that function is managed from Ms. Fate’s 

area. So, if I may let her respond. 

Senator BURR. I would be happy to. 

Ms. FATE. Thank you, Don. 

Sir, the number that we have today as of our obligations is $27.5 

million for the NRM stimulus funding. While that is a small percentage, it took us a while to get engaged because we changed our 

process to be 100 percent competitive in all of our contracting, as 

well as trying to engage in as many small businesses and 8(a) setasides as we could for these contracts. 

So, that took additional contract time to write these clauses, incorporating the Buy American Act and a few other requirements 

that were put into the contract requirements from OMB. 

Senator BURR. So, is the lesson to Congress that if we are looking at divvying out stimulus money that is more immediate from 

a standpoint of its need, we probably should not do maintenance 

projects? 

Ms. FATE. No, absolutely not, sir. We were ready to go with several of these projects. And, in fact, in March we had a substantial 

number of projects ready to go, but we wanted to be competitive 

to the local market so that everybody had an opportunity to get 

this stimulus funding. And within the next few months we anticipate awarding about at least 40 percent of the stimulus funding. 

So, we are gearing up. We just had a few stumbling blocks at the 

very beginning, but we are projected and targeted to end fiscal year 

2009 on a positive note. 

19 

Senator BURR. I appreciate that and I appreciate your diligence 

at making sure that communities get what, in fact, they deserve. 

I think the difficulty is the American people had expectations that 

stimulus money was going out immediately, and that is not exclusive to the VA. I think it is across the board. And I think they are 

shocked at the difficulty we are having pushing that money out the 

door, creating the jobs, having the impact that it was intended to 

have. I think it is absolutely vital that we know the reasons so that 

we can explain it to them. 

Let me go on to another point. Let me go to Denver real quick. 

Mr. Orndoff, it has been a long process, and I, for one, have had 

objections with it at certain times. Under the original footprint, 

taking Senator Isakson’s comments to heart, what are the parking 

conditions at the Denver facility as currently designed? 

Mr. ORNDOFF. Sir, I do not know the specific numbers, but I assure you that the full requirement is part of the solution. We have 

both structured parking and surface parking as part of the schematic design solution. There is no limitation or, you know, tradeoff 

on parking. It will meet the full requirement. 

Senator BURR. The last time I looked at the plan it was the billion dollars plus plan. 

Mr. ORNDOFF. Yes, sir. 

Senator BURR. And it has been scaled back to $800 million. At 

that time the parking for the Denver facility, because of the way 

the footprint was designed, meant that the parking was roughly 

one half mile from the hospital and that every patient and visitor 

would have to be bused to the hospital. Do you know if that is currently still the configuration? 

Mr. ORNDOFF. No, sir. It is not. The solution is that in the northern part of the site—and it is somewhat of a challenging site in 

that it is a relatively narrow, rectangular site, so it drives a linear 

facility solution to work on that site. 

But the schematic design has, I think, an incredibly well 

thought-out design solution. I have personally been involved in reviews of all the phases of schematic design. The parking is located 

to the north, but it is on the site and it is connected literally by 

a pedestrian bridge. Some of the parking, as I mentioned, is structure, and that is actually embedded almost essentially within the 

facility itself at the southern part and the mid-part of the design 

solution. 

So, there is not a long travel distance. It may be a little longer 

than in a perfect scenario where we had a site that was larger and 

a little bit more square in shape or round in shape, but I think 

there is certainly a lot of attention in the design process to minimize the travel impacts and to look creatively on how to do that. 

Senator BURR. Any concern by you or any of your colleagues here 

today whether the $800 million threshold can be met? 

Mr. ORNDOFF. In terms of working within that budget? 

Senator BURR. Yes, sir. 

Mr. ORNDOFF. That is a relatively recent estimation of the new 

solution. As was mentioned earlier, we changed the design solution 

when the Secretary made the decision to return to the standalone 

hospital concept. We did a re-estimation of the project based on 

that. 

20 

And, of course, part of the design solution is growing in other 

areas, as was mentioned, Colorado Springs and in Billings, Montana. So, part of the design solution is pushed out, which is why 

the cost has come down a little bit from the one I believe you referred to earlier, which was about a $1.1 billion solution. 

That is not to say we have less service. In fact, we have the same 

level or arguably a higher quality of service as it is closer to veterans that are served. But, in aggregate, it is the same capability. 

The Denver project, specifically at $800 million, will meet the requirement. That also includes an additional project scope issue of 

adding renewable energies into the design solution. So, it will 

be—— 

Senator BURR. I am going to try to sneak one more question in. 

Mr. ORNDOFF. Yes, sir. 

Senator BURR. And I assure the Chairman if he gives me the 

latitude I will not have to have a second round. 

There have been 36 major medical facility projects that have 

been fully funded since 2004. How many of those projects ended up 

costing more than the original projection? 

Mr. ORNDOFF. Sir, I do not have the specifics on that. I could certainly get it for the record. 

I think it is fair to say that all projects were delivered within, 

ultimately, what was the approved budget. In some cases, we had 

an extremely aggressive market in the construction industry. It is 

hard to believe with today’s news, but in the not too distant past 

there was a very tough construction market. We had very difficult 

times getting competition on our projects. Incredible as it may 

seem to have multi-hundred million dollar projects out where in 

some cases we had one or two proposals on a project. 

Senator BURR. Would you, for the record, provide me that number that went over budget? 

Mr. ORNDOFF. Yes, sir. 

Senator BURR. In addition, would you add to that how the VA 

tracks the accuracy of its construction budget forecast? 

Mr. ORNDOFF. Yes, sir. 

Senator BURR. And more importantly, how the VA tracks delays 

in construction, as well. 

Mr. ORNDOFF. Right. 

Senator BURR. I appreciate it. 

Mr. ORNDOFF. And just to be clear, sir, you are talking from the 

original budget? 

Senator BURR. Of those 36 projects since 2004, I would like to 

know how many were over budget. From a standpoint of the ongoing process at VA, what your method is to track the budget relative 

to what was forecasted. 

Mr. ORNDOFF. Yes, sir. 

Senator BURR. And track delays in construction. 

Mr. ORNDOFF. Yes, sir. Will do. 

Senator BURR. Thank you. Thank you, Mr. Chairman. 

[The response to additional information requested during the 

hearing follows:] 

21 

Chairman AKAKA. Thank you very much, Senator Burr. 

Senator Burris. 

Senator BURRIS. Thank you, Mr. Chairman. 

Mr. Chairman, I would like to indicate that we will be submitting some questions for the record because I have points that may 

not have all the data. I was wondering if Mr. Orndoff is familiar 


C50431burr.eps
22 

with what is happening in Danville, Illinois, at that facility. Have 

you had any direct contact with the VA Hospital in Danville? 

Mr. ORNDOFF. Direct contact? Do we have a project there? I am 

not sure. 

Senator BURRIS. Yeah, well, what the director there is saying is 

that a lot of the buildings are old, and they are seeking to have 

this expansion program. 

Mr. ORNDOFF. Yes, sir. 

Senator BURRIS. And I just wondered whether any of that has 

been brought to your level as of yet. They have a great innovative 

program going on in Danville with reference to housing, where they 

are providing community housing for our veterans. It is not really 

assisted living because it is almost independent living. And they 

have at least two of those housing developments up and running 

where at least 10 veterans can be served at these homes. And that 

has all been approved, which I thought was a very, very innovative 

program for some of our aging veterans. 

And, they also have these older facilities, because that is one of 

the best run—because I have visited several of the hospitals in Illinois, and I was very impressed with what is going on in Danville, 

except for the condition of the facilities. There is such a need to upgrade. Some of them are probably total reconstructions. 

So, we will be submitting this information to you if you do not 

have it. We will certainly follow up. 

Mr. ORNDOFF. Yes, sir. I would like to take that for the record 

and give you a full response. 

[This information is held in Committee files.] 

Senator BURRIS. Thank you. And to Ms. Fate, you mentioned you 

are working on some 8(a) programs. Now, in any of this construction, are you all looking at any type of set-aside contracts for minorities and women in your construction process? What are the requirements there? 

Mr. SULLIVAN. I do know that we have a lot of our contracts 

focus on the set-asides, including minorities and women. I do not 

have the specifics, but we have our targeted socioeconomic goals. 

So, we can take that for the record, again, and get back with you 

on what those are. 

Senator BURRIS. I would like to know specifically what minorities 

have gotten any work on contracts or any of the VA projects— 

minorities and women—and what is your percentage of that; and 

how is your process in reference to selecting those particular 

contractors. 

Mr. SULLIVAN. We will take that for the record. 

[This information is held in Committee files.] 

Senator BURRIS. Thank you, Mr. Chairman. 

Chairman AKAKA. Thank you very much. 

Senator Johanns. 

Senator JOHANNS. I, as you know in my opening statement, went 

through some of the challenges we are facing in the Western IowaOmaha facility. 

As I understand it, a feasibility study has started with that facility, and I think it has been completed. Does anybody on the panel 

know the status of that? 

23 

Mr. ORNDOFF. Yes, sir. Ms. Fate would like to respond. 

Senator JOHANNS. Great. 

Ms. FATE. Thank you, Don. 

Yes, sir. We received the feasibility study and final recommendations at the beginning of May. So it is four volumes—a very thick 

book—very thick four books. And we are looking through that and 

we anticipate having a recommendation for VA, hopefully, by and 

within the next couple of months. 

In the meantime, though, due to concerns raised by Senator Nelson of the potential patient safety concerns with the HVAC, working with GLHN—who is the contractor for the study—they garnered enough information from their analysis to provide us a very 

basic project just to replace the HVAC, which is $90 million. And 

VA is committed to ensure that that basic project at a minimum 

is submitted for or approved for VA in fiscal year 2010 to ensure 

that we are being proactive to mitigate any patient safety potential 

issues that might occur at that facility. 

But, we want to fully vet that study to ensure that we are moving forward with the right plan—with the best plan for the veterans. We just haven’t had a chance to go through all four volumes. 

Senator JOHANNS. OK. Once that is done, kind of walk me 

through the process of what happens next, and maybe even—I 

know it is hard to tell me timelines—but if you could help me understand kind of where we are in the process and where we go from 

here. 

Mr. SULLIVAN. Sure, Senator. What will happen is once the need 

has been verified through the study and the best way to address 

services is made, a resulting capital project will more than likely 

come forward. If it is more of a maintenance issue, in terms of 

HVAC and electrical, it may be handled through the nonrecurring 

maintenance program Ms. Fate spoke about, which was the $90– 

100 million dollar solution. 

Should one of the options look at replacing the entire facility or 

moving the facility, that project then will be put through the 2011 

budget formulation process where they will decide on an option and 

submit, if you will, a concept paper and application for that project. 

That project then will be evaluated against all the other projects 

that are coming in the 2011 process. 

In 2010, as Mr. Orndoff referred to where there are 66 projects 

that came in for full evaluation—it was a larger number than that, 

which went through a full evaluation—that will go through that 

process as well. That happens during the summer. In about a 

month or two that process will move along for 2011. And as the 

budget formulation process continues through July and August, 

that listing will be submitted to the Secretary. There will be a decision made by the VA of what to submit to OMB for 2011, which 

usually happens in the first week of September. It goes through the 

OMB evaluation process sometime in December. Pass back will 

happen from OMB where VA will get either a list of projects approved by OMB or a funding allocation, and then that decision will 

then be wrapped into the President’s Budget submission up to the 

Hill here in the first week of February. 

Senator JOHANNS. OK. Let me, if I might, just to wrap up my 

questioning here, focus on this hoped for relationship with the medVerDate Nov 24 2008 12:56 Mar 17, 2010 Jkt 000000 PO 00000 Frm 00027 Fmt 6633 Sfmt 6601 H:\ACTIVE\061009.TXT SVETS PsN: PAULIN
24 

ical centers in Omaha and the VA. You know, I have such confidence in what Creighton and the University of Nebraska Medical 

Center do; and they really want to help here. They tell me every 

time I see the leader of those programs, ‘‘Gosh, we want to be on 

a team to help.’’ 

Do you see that as a positive? And just in terms of advice to the 

community, how does that interface with what you have just described for me? 

Mr. SULLIVAN. I think the major—I will defer to Ms. Fate—the 

major positive in terms of working with the community would be 

on the services, and how those services will be delivered, and 

where those services will be delivered in terms of formulating the 

optimal solution. 

So, in terms of them working with the medical center staff and 

the VISN staff, that would be helpful in terms of determining 

where those services should be and what is the best service delivery vehicle—you know, whether it be in a VA-owned building, in 

a renovated VA-owned building, in a shared building. So, I mean, 

that is on the ground. When they define those requirements, that 

is the best place for, I believe, that interaction to happen. 

Senator JOHANNS. When you are ready for that, I hope you will 

reach out to Senator Nelson’s office, my office, Congressman Terry’s 

office for that matter because we—you know, in our State we just 

work together on these issues. 

And the other thing I would say as I look through some of the 

challenges that we have here, they seem to be quite traumatic. 

Now, I think in what you are doing you are probably feeling like 

you do triage every day because there are old facilities out there. 

They do need complete replacement in many, many cases. This one 

dates back to the 50’s. It is old. Its space requirements and its 

plumbing are problematic. You could probably say, you know, 

Mike, we’ve got a lot on the list like that. 

But, what I want to say is this. The Medical Center, myself, others, are willing to try to put together—working with you, working 

under your direction—a plan that I think really would provide 

first-class medical care. And we are excited about Colorado and 

this and that, but 10 hours away for medical care is not a workable 

solution to this problem. We just simply need something here to try 

to deal with a facility that probably long ago outlived its useful life. 

And the most important message I can deliver is as you are 

working through this, we do not want to interfere but we want to 

try to be a partner in what you are doing. OK? 

Mr. SULLIVAN. Yes, sir. 

Senator JOHANNS. Thank you, Mr. Chairman. 

Chairman AKAKA. Thank you very much, Senator Johanns. 

Senator Begich. 

STATEMENT OF HON. MARK BEGICH, 

U.S. SENATOR FROM ALASKA 

Senator BEGICH. Thank you, Mr. Chairman. I apologize. I will 

have to leave in a few minutes to go preside, and if these questions 

have already been asked I apologize. 

I caught a little bit of what Senator Burr was talking about. I 

want to follow up on it. And I want to first say thank you for the 

25 

facility in Alaska—the new one that just opened up in the 

Matanuska Valley—the clinic there. It is kind of a partial clinic but 

it is a very good center and well received. People are very excited 

about it. I know you have others planned in Juno and elsewhere. 

You know, after being almost 6 years as a mayor, and I am just 

trying to figure out how with the stimulus money you are going to 

achieve—and if I get these numbers wrong I apologize because I 

just caught part of the conversation. You have spent maybe $27– 

30 million and you are trying to get to 40 percent of the stimulus 

numbers expenditure by end of September/October 1, give or take, 

somewhere right in there. 

Reassure me—I know this discussion occurred a little bit ago— 

how are you going to do that? It is a sizable amount. You have very 

diverse facilities all across the country. I know as a mayor what 

we do and how we have to do it in regards to our fees and we have 

to be very aggressive about it. And it means that you have to have 

full force focus, not just normal course of business. Give me a couple of comments on that and then I will have some additional follow up. 

I do not know who wants to respond to that. 

Mr. ORNDOFF. Maybe if I could just make an opening comment 

and I will let Ms. Fate speak to it, as well. 

We have a network of acquisition professionals across VA that 

essentially support every local medical center and certainly every 

VISN. That business model is ramping up fast and understands the 

requirement to execute within these timelines and has the strategy 

to do so. As Ms. Fate was mentioning earlier, we are marshaling 

the troops. We had some initial startup issues, but we fully understand the requirement and the need to execute not only to obligate 

the funds, but also to get the output of those projects which will 

make our medical centers better for our veteran care. 

So, we have the infrastructure in place. It was not, of course, 

sized to this to address this bow wave of requirements that came 

somewhat unexpectedly, but we are making—certainly, marshaling 

the troops and understand that those are the goals and objectives. 

And we certainly have a commitment to make that. 

Let me see if Ms. Fate has additional thoughts. 

Ms. FATE. Sure. Thank you, Don. Sir. 

One of the tasks that was first given to us about a month ago— 

or 2 months ago, I’m sorry—was to ensure that NRMs—both the 

normal ones through the fiscal year 2009, as well as the stimulus— 

are the contracting’s first priority. The contracting staff in the field 

have made it their first priority. They have been given overtime, 

they have been given comp time to work on the weekends and such 

to ensure that these obligations are on track. And they are very aggressive and pursuing obligations throughout the year. 

And to ensure that by the end of this year we do not only meet 

the 80 percent rule for our normal Nonrecurring Maintenance 

(NRMs)—which is, I guess, the 20 percent rule for obligations in 

August and September—but it also ensures that we have the stimulus funding obligated at least by 40 percent. 

But, the contracting officers have also other responsibilities that 

they are working—that have been delegated down to them. It used 

to be that projects came forward to the central office once they 

26 

passed a certain level—$500,000 or $5 million dollars. A new process started back in the January-February timeframe that has delegated a lot of those tasks to the local level so it increases the efficiencies of them getting the jobs done and oversight. And they put 

additional taskings for senior contracting officers so that contracting officers were not burdened with all of the tasks, but that 

they leveled it out so that they could be more aggressive. 

So, many steps have been taken at the local level to ensure that 

these projects have been the primary focus to ensure obligations. 

Mr. SULLIVAN. And I would just say, Senator, that each of these 

projects were identified and submitted to Congress. Also, every 

week each project is updated and reviewed with the senior contracting official to ensure that the project is staying on schedule. 

Or if there is an issue with the project, whether it be legal or technical, that the appropriate resource from General Counsel or the 

Procurement side, as Mr. Orndoff said, is brought to bear so that 

they are tracked and reported on weekly and sometimes twice a 

week. 

Senator BEGICH. Let me—if I can just quickly end on this, and 

again, if you are repeating information, I apologize. 

If I caught your word right, it is 40 percent obligated. 

Mr. SULLIVAN. Yes. 

Senator BEGICH. Not expended. Right? Because obligation and 

expenditure are two different things. So, you will have it associated 

with a project but not in the field necessarily working the project. 

Am I right? 

Mr. SULLIVAN. No, obligated means an actual legal contract 

award. Someone is selected. They have been given notice to proceed. 

Senator BEGICH. Proceed. OK. 

Mr. SULLIVAN. Expenditure would be actually paying the bill 

after the work is completed or put in place. 

Senator BEGICH. So obligation—the 40 percent obligation level 

will mean that contracts have been awarded. I want to repeat what 

you said just to make sure we are clear. Awarded. Notice to proceed has been given, whatever that timetable is. But notice to proceed to the individual contractor or contractors. Yes? 

Mr. SULLIVAN. Yes. 

Senator BEGICH. And then last, getting at a later time, I would 

be very curious, following up Senator Burris on the 8(a) components and how you utilize those. I know the Corps of Engineers utilizes 8(a)s—at least Alaska Native 8(a)s—very successfully in getting projects out and done quickly, because of weather conditions; 

and very efficiently and very cost effectively. I would be very interested in how you utilize 8(a)s in the competitive process, but also 

in a sole source process. 

Again, the Corps has an incredible record—a positive record—of 

sole source 8(a)s because of weather conditions, especially in Alaska and how they utilize 8(a)s. So I would be very curious of how 

you use that and the advantage or disadvantage. If you can share 

that with me at a later time. 

Mr. SULLIVAN. We also use what is known in VA as SDVOs—the 

Small Disadvantaged Veteran Owned businesses—also in that 

same category. 

27 

Senator BEGICH. Great. Could you give me an update in response 

to this question on 8(a)s: what is your percentage of hit on that. 

Is it 3 percent you are trying to hit? 

Mr. SULLIVAN. The Agency goal? 

Mr. ORNDOFF. Yeah. 

Senator BEGICH. That’s OK. You can just give me—I do not want 

to burn up time, Mr. Chairman—give me that along with the 8(a) 

information that would be greatly appreciated. 

Mr. SULLIVAN. Yes, sir. 

Senator BEGICH. Thank you, Mr. Chairman. 

[This information is held in Committee files.] 

Chairman AKAKA. Thank you very much, Senator Begich. 

Mr. Orndoff. 

Mr. ORNDOFF. Yes, sir. 

Chairman AKAKA. Let me ask my last question on CARES. 

Mr. ORNDOFF. Yes, sir. 

Chairman AKAKA. CARES was a very data-rich, multi-layered 

process that involved a great deal of community input and outside 

review. How much community input and outside review do you 

seek presently? 

Mr. ORNDOFF. Well, I think the main source of outside input happens at the local level—the stakeholders locally, the veteran support organizations, veteran patients. There is a process of a continual dialog in different forms that are developed to try to get 

input from veterans in the veteran support organization of what 

are the real priorities that the local medical centers should be focused on in order to provide better care for veterans. 

That input very much influences the development of projects 

coming forward. Once it gets to the central office level here in D.C., 

the headquarters of VA, we look at that list in aggregate, of course, 

and go through a prioritization process. Yesterday, there was discussion in a hearing about more involvement of VSOs in the prioritization process, and we are going to look at how we might do that. 

But, I think the real dialog happens locally. I have been personally involved and in the room giving briefings to local veteran service organizations on projects. New Orleans is a good example. It is 

a very spirited discussion and you get lots of good input. I think 

it definitely helps shape the direction we move on our facility solutions to support veterans. 

Chairman AKAKA. Thank you. I have many more questions which 

I will submit in writing reflective of how important good construction planning is. 

So, Senator Burr, do you have any? Senator Burris? 

Senator BURRIS. Yes, Mr. Chairman. To Ms. Fate. 

I just hope that that data I requested of you will be broken down 

by categories—Blacks, Hispanics, Asians, women—in terms of their 

ability to have received—and you can select a period of time—these 

projects. 

Ms. FATE. Yes, sir. 

Senator BURRIS. Just how many of those projects are going to minority contractors. 

Ms. FATE. Yes, sir. We will break it down as far as we can. 

[This information is held in Committee files.] 

28 

Senator BURRIS. Thank you, Mr. Chairman. 

Chairman AKAKA. Thank you very much, Senator Burris. 

I want to thank the panel for your responses. We certainly want 

to continue to work with you and try to move forward with these 

programs. 

RESPONSE TO POST-HEARING QUESTIONS SUBMITTED BY HON. DANIEL K. AKAKA TO

THE U.S. DEPARTMENT OF VETERANS AFFAIRS

Question 1. Would VA benefit from a BRAC-like process which would bundle a 

variety of recommendations for the treatment of capital assets that would have to 

be accepted or rejected as a package? 

Response. The Department of Veterans Affairs (VA) underwent a thorough evaluation of its capital portfolio known as the Capital Asset Realignment for Enhanced 

Services (CARES) initiative in 2004. CARES was a comprehensive analysis that produced recommendations for the strategic realignment of capital assets and related 

resources to better serve the needs of Veterans. CARES was not a simple one-time 

solution, but the creation of a set of tools and an evolving process for annual capital 

and strategic planning. 

The CARES strategic planning process provided a system-wide, data-driven assessment of Veterans’ health care needs within geographic markets, assessed the 

condition of the infrastructure, and produced recommendations for the strategic realignment of capital assets and related resources to better serve the needs of Veterans. The process identified the necessary infrastructure to provide high-quality 

health care to Veterans where it was most needed then and in the future. 

In considering the treatment of capital assets, VA evaluates the direction initially 

set by CARES, and uses a process to continually update VA’s plan for capital investments on an annual basis, based on changing Veteran demographics, advances in 

health care technology, analysis from internal modeling, and stakeholder input and 

evaluation. VA is currently updating this process to optimize VA’s resource allocations, investment choices, and response to Veterans’ needs. The process will consider 

a wide variety of inputs, generate options, and then learn from implementation to 

refresh planning on an annual basis. This process will consider lessons learned from 

CARES and the Department of Defense’s (DOD) base realignment and closure 

(BRAC) process, and will give us the capacity to act on recommendations for the 

treatment of capital assets. 

Question 2. What priority in the construction planning process is given to longterm care and mental health care? 

Response. At the Department level of the construction planning process, serious 

mental illness is addressed within the main decision criteria ‘‘special emphasis’’. 

(See response to question 13 below for VA Decision Model). Special emphasis includes the following programs: 1) Traumatic Brain Injury (TBI); 2) Post Traumatic 

Stress Disorder (PTSD); 3) amputation/prosthetics; 4) serious mental illness (not 

mental health in general); 5) blindness; 6) spinal cord injury and disorders; and 7) 

polytrauma. The special emphasis major criterion carries the second highest priority 

weight in determining how construction projects are selected. In order for a project 

to receive points for special emphasis, 50 percent of the total estimated square footage of the project must be attributed to one or more of the seven programs. 

VA addresses long-term care and mental health services with major construction, 

minor construction, non-recurring maintenance (NRM), and leasing program initiatives. Service gaps and related infrastructure needs are identified at the local level 

and may be addressed through a fifth construction program—clinical specific initiatives (CSI)—within the Veterans Health Administration (VHA). CSI is decentralized 

to the Veterans integrated service networks (VISN) for weighting and funding. This 

option consists of five high category project profiles: polytrauma, Operation Enduring Freedom/Operation Iraqi Freedom (OEF/OIF), long-term care, high-tech/highcost, and mental health, which address access issues and typically increase space 

at a medical center. Many of the fiscal year (FY) 2009 CSI projects included longterm care and/or mental health services. 

Question 3. More and more of the newest veterans are facing significant challenges with PTSD and Traumatic Brain Injury. How is the need for treatment of 

those conditions factored into VA’s construction planning? 

Response. PTSD and TBI are two programs listed under the special emphasis 

major criteria, which carries the second highest priority weight in determining the 

prioritization of major and minor construction projects. In order for a project to receive points for special emphasis, 50 percent of the total estimated cost of the project 

29 

1 VA’s enhanced-use lease (EUL) authority was enacted in 1991 in sections 8161 through 8169 

of title 38, U.S. Code. With this authority, VA may lease land or buildings under the jurisdiction 

Continued 

must be attributed to one of the seven programs mentioned previously in response 

to question 2. 

As with long term care, one of the five categories within the CSI program is polytrauma. While not every polytrauma patient has PTSD or TBI, the polytrauma umbrella incorporates these categories. The inclusion of polytrauma as a high-profile 

category for the CSI program allows an even greater emphasis for construction 

funding for these types of needs. 

Question 4. What is the current backlog in construction, and how much money 

would VA need to be authorized and appropriated over the next five years to complete all currently planned construction? Response. Assuming VA’s FY 2010 major construction request ($1.2 billion) is 

fully funded and authorized by Congress; there would be a total of 20 ongoing major 

projects that would require an additional $5 billion to fully fund. The list of partially 

funded projects may be found in the VA FY 2010 budget submission—Construction 

and 5-Year Capital Plan (chapter 7, pages 166–168). This estimate does not include 

any new projects that may be identified through VA’s capital investment process beyond 2010. The estimated backlog of major construction projects consists of partially 

funded projects from previous years and new projects. Approximately $3 billion is 

required to complete the partially funded projects. 

Question 5. Please explain how maintenance projects are prioritized, and describe 

any difference from the way in which Major Construction projects are ranked? 

Response. NRM and maintenance projects are considered station level projects. 

Both of these types of projects are delegated to the VISN for prioritization due to 

a significant variance of infrastructure needs throughout VHA. The focus of these 

two programs is to correct, replace, and/or upgrade infrastructure systems, such as 

boiler plant equipment; heating, air conditioning and ventilation equipment; electrical systems. These funds are also used to modernize and create state-of-the-art 

inpatient units and outpatient clinics within the existing medical center’s envelope. 

Major construction projects focus on access for either outpatient needs and/or special focus needs, such as spinal cord injury, PTSD, TBI, polytrauma. Major construction projects are prioritized on a national level based on seven main criteria described fully in response to question 13. 

Question 6. Due in part to the shift in the health care delivery model from inpatient to outpatient-focused delivery, VA last year considered a Health Care Center 

Facility leasing initiative. What is the status of that initiative? 

Response. The Health Care Center (HCC) initiative is part of the FY 2010 budget. 

There are 7 major leases under HCC (Butler, PA, Charlotte, NC, Fayetteville, NC, 

Loma Linda, CA, Monterey, CA, Montgomery, AL, and Winston-Salem, NC) in the 

authorization chapter. 

Question 7. Leasing is a viable way to bring a new facility on line. What is the 

benefit of using a lease rather than constructing a new facility? 

Response. VA looks at several alternatives when determining the best course of 

action to provide the appropriate infrastructure needed to provide service delivery. 

The alternatives considered include new construction, renovation, leasing, and contracting out for care. In some cases, leasing is the best option. A lease may: 

• Provide needed infrastructure faster, as in those cases where VA leases existing 

facilities rather than having to plan, design, and build a new facility; • Provide greater flexibility to change course of service delivery based on medical 

care advancements, workload or service type needs. For example, there may be a 

significant change in workload, and a lease (depending on terms) allows for more 

flexibility to make modifications, or in extreme cases allows for termination. New 

construction on VA grounds does not allow such flexibility; 

• Be a more cost effective alternative; and 

• Be the only viable option in some areas. 

In summary, leasing may be the chosen alternative based on the availability of 

infrastructure, flexibility of terms, and functionality, and because it may be the 

most cost effective option to provide the services needed. 

Question 8. Please provide an update on how often VA is entering into enhanced 

use leases, what the results have been with such leases over the last ten years, and 

the extent to which VA plans to continue utilizing this process. 

Response. Since the inception of its enhanced-use leasing (EUL) authority in 

1991.1 VA has executed 58 EUL projects. In the last 10 years, VA has executed 45 

30 

or control of the Secretary to a public or private sector entity for a term not to exceed 75 years. 

The leased property may be developed for VA and/or non-VA uses that will enhance the property, provided such uses are consistent with and do not adversely affect the mission of VA. The 

proposed leased property must include space for an activity that contributes to VA’s mission, 

or follow a concept that provides for using consideration from the lease to improve health care 

services to eligible Veterans. Benefits to VA from an EUL may include rent, cost savings, cost 

avoidance, revenue, services, space, and buildings. 

leases (an annual average of 4.5 leases). Currently, VA has 49 transitional/permanent housing projects for homeless Veterans and 40 additional projects under development. An additional 15 market-driven sites identified through VA’s site review 

initiative are under consideration. 

Results: VA obtains several types of benefits from EULs, including cost savings, 

cost avoidance, revenue, enhanced services, and the use of additional space and 

buildings. VA documented—in an FY 2008 report—the consideration resulting from 

our EULs; the report describes each lease and its associated benefits. We provided 

a copy to the Government Accountability Office (GAO) and the Office of Management and Budget (OMB) and other individuals upon request. Cumulatively, since 

2006, the EUL program has generated $146.5 million in total consideration to VA. 

In addition, VA has been able to use EUL as a capital asset tool to obtain 15 housing developments offering services for Veterans, i.e., homeless transitional and permanent housing. 

Plans to extend EUL use: The current EUL authorization will expire in December 

2011. VA will seek approval to extend the authorization to continue the EUL program. An extension will allow VA to continue pursuing over 100 projects now under 

development and to seek new projects that expand direct benefits to Veterans and 

the community, improve operations, and maximize resources while lowering operational costs. 

Question 9. VA uses the Design-Bid-Build contracting process predominantly with 

large projects. Why doesn’t VA use the Design-Build process for large medical clinics, which some argue would save time and money? 

Response. VA does use design build (DB) for large medical clinics. It is an excellent delivery method and VA will continue to use it in the future as appropriate. 

Since the construction contractor can start some construction activities while the 

architect engineering firm completes the construction documents, DB may save time 

in the overall project schedule, but may not always reduce the cost. DB is an appropriate delivery method for projects which have a well defined scope and the nature 

of the work is not too technically complex. Those projects that are complex or require extensive site acquisition and/or environmental remediation work are typically 

not well suited for DB. Since DB involves design and construction in a single contract, full funding must be available for this type of procurement to proceed. In some 

markets, the construction contractor community is not supportive of DB and thus 

VA needs to determine if qualified contractors are interested in competing for the 

work. 

Not withstanding the limitations listed above, VA has extensively used DB in the 

past, such as with the outpatient clinic at Brevard, FL, and the ambulatory care 

buildings at SepuAE1lveda, CA, and Martinez, CA. Also, a number of the VA 

CARES projects (such as those listed below) used DB: 

• North Chicago—VA/Navy Operating Room & Emergency Room Renovation 

• Minneapolis—Spinal Cord Injury Center 

• Tucson—Mental Health Clinic 

• Columbus—Outpatient Clinic 

• Pensacola—VA/Navy Outpatient Clinic 

• Des Moines—Extended Care Building 

Question 10. What is meant by the following statement from the Department’s 

testimony: ‘‘VA’s continuing program of recapitalization of these aging assets is very 

important to providing world-class health care to veterans now and into the future’’? 

Response. VA’s service to Veterans is largely provided through our facilities across 

the Nation. These facilities are strategic assets that enable effective mission accomplishment for the delivery of Veterans health care and benefits. VA owns and operates one of the largest inventories of land, buildings, and leasehold interests in the 

Federal Government, including nearly 33,000 acres of land, over 5,400 buildings, 

1,300 leased facilities (comprising approximately 159 million square feet of VA-occupied space). The average age of VA facilities is over 50 years old. Therefore, modernizing or replacing these assets through recapitalization investments is in an important component to ensure we provide Veterans with high-quality health care and 

benefits. 

31 

Question 11. Please provide a detailed description of the recommendations made 

by the CARES Commission and of Secretary Principi’s Decision document, with a 

current status on each of the recommendations from the Decision document. 

Response. Detailed information on the status of individual CARES decisions is 

provided in the CARES Implementation Monitoring Report, which is appended to 

this document. 

[The Implementation Monitoring Report on Capital Asset Realignment for Enhanced Services follows the response to Question 18.] 

Question 12. Written testimony contained the assertion that the tools and techniques acquired through CARES have become part of VA’s standard operating procedures for strategic planning within our health care system. What are those tools 

and techniques? 

Response. Through the CARES process, VA adapted its actuarial model to produce 

20-year forecasts of the demand for Veteran health care services. Ongoing updates 

allow for more accurate projections of Veteran reliance on VA services. The data 

from the actuarial model is used to identify gaps between current and projected demand in services within each market using the health care planning model (HCPM), 

implemented as part of the 2008 VHA strategic planning guidance. The 10-step 

HCPM planning model facilitates the planning and monitoring of strategic initiatives to address gaps in projected health care demand. 

Question 13. In the Department’s statement, it is noted that VA uses a ‘‘multicharacteristic decision methodology’’ in prioritizing its capital investment needs. 

Please describe with specificity what a multi-characteristic decision methodology is. 

Response. The analytic hierarchy process (AHP), as depicted on the following 

page, is a tool VA uses to assist in evaluating and prioritizing capital needs. The 

AHP is a multi- attribute decision methodology that allows evaluators to consider 

a number of diverse criteria in reaching a decision. The AHP uses a hierarchical 

model comprised of a goal, criteria, and sub-criteria, and combines decisions using 

both quantitative and qualitative criteria. For example, the current VHA decision 

model (which is used to rank and prioritize construction projects) is comprised of 

7 criteria and 20 additional sub-criteria. 

The VA Capital Investment Panel (VACIP) (with representatives from across the 

Department) rates each project on how well it addresses each of the 21 scored elements based on answers provided in a standardized application form. Data requested in the applications includes quantitative data on workload, decreases in operating costs, and energy reduction, and qualitative data on realignments and the 

quality of infrastructure enhancements. In addition, many of the application questions require a combination of data, including metrics on the contribution to strategic goals and an explanation of those numbers. VA ranking and prioritization of 

construction projects are based on the VACIP’s ratings, with final approval by the 

Secretary as part of the annual capital investment and budget process. 

The VHA decision model for FY 2010 can be found on page 7.10–131 of VA’s FY 

2010 Budget Submission, Construction and 5 Year Capital Plan, Volume 4 of 4, May 

2009. 

32 

Question 14. In the last five years what ‘‘appropriate ‘joint’ VA/DOD projects’’ 

were evaluated to promote sharing and efficiency opportunities? Looking forward, 

what joint projects are being evaluated now? 

Response. VA and DOD have evaluated several projects to improve collaboration 

and health resource sharing between the Departments (see list below). Potential 

projects include major construction, minor construction, and community based outpatient clinics (CBOC). VA evaluates and scores business plans for project proposals 

based on established criteria. One of the criteria is DOD collaboration. If a project 

has a DOD/VA collaborative component, it will receive a higher score and ranking 

overall than if it did not. 

The VA/DOD Construction Planning Committee (CPC), a subcommittee of the 

Joint Executive Council, was created in 2003 to foster more collaborative capital efforts. The CPC is comprised of individuals with comprehensive knowledge of capital 

asset planning. It provides a formalized structure to facilitate cooperation and collaboration on VA/DOD capital projects. The CPC facilitates an integrated approach 

to construction planning initiatives that are beneficial to both Departments. 

Collaborative projects over the past 5 years include: 

Major construction 

Biloxi, Mississippi (includes mental health services at Keesler Air Force Base) 

Pensacola, Florida (outpatient clinic (OPC) at Cory Naval Air Station) 

Denver, Colorado (possible DOD presence) 

Anchorage, Alaska (OPC at Elmendorf Air Force Base (AFB)) 

North Chicago, Illinois (consolidating services with Naval Hospital Great Lakes) 

Minor construction 

Baltimore, Maryland (Fort Meade CBOC) 

Martinsburg, West Virginia (Fort Detrick CBOC) 

Honolulu, Hawaii (Guam hospital and VA CBOC) 

Hilo, Hawaii (PTSD residential rehabilitation) 

North Charleston, South Carolina (Goose Creek CBOC) 

Eglin AFB, Florida (Eglin CBOC) 


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2To support additional capital goals to decrease energy consumption, increase use of renewable energies, and reduce the Department’s carbon footprint, VA developed a comprehensive 

green management program. Over $400 million of VA’s $1.4 billion in Recovery Act funds will 

be obligated toward renewable energy and energy efficiency projects. VA is dedicated to building 

sustainable facilities with energy efficiency and renewable energy standards as well as continuing to reduce VA’s overall energy consumption. It is important to note that the Department 

will continue to place more emphasis on both energy and ‘‘greening’’ and environmental projects 

when prioritizing projects. 

Community Based Outpatient Clinics 

Charleston Naval Hospital, South Carolina (Goose Creek) 

San Antonio, Texas (NE Bexar) 

Fort Buchanan, Puerto Rico 

Fort Meade, Maryland 

South Prince Georges County, Maryland (Andrews AFB) 

Fort Rucker, Alabama (Lyster Army health clinic) 

The CPC serves to identify capital initiatives that may be suitable to enhance 

service delivery or decrease cost of asset procurement for both departments. 

Potential collaborative projects being considered for the future include: 

Major construction 

El Paso, Texas (OPC at Fort Bliss) 

Minor Construction 

Panama City, Florida (CBOC) 

Community Based Outpatient Clinics 

Monterey, California 

Colorado Springs, Colorado 

Columbus, Georgia (Fort Benning) 

Question 15. When VHA identifies ‘‘gaps’’ in capacity, does that refer to geographic gaps or gaps in ability to furnish certain types of care? 

Response. When VHA identifies gaps in capacity it refers to the gap between current service volume and service volumes projected in the future (5, 10, 20 years) either in a geographic market or at a particular facility. Future gaps are identified 

and analyzed to determine whether health care systems serving any market have 

the capacity to accommodate the projected gaps, or if use of purchased care will be 

required, or a combination thereof. These and other environmental factors, such as 

geographic access, are examined to ensure VA provides timely and appropriate access to health care and eliminates service disparities. 

Question 16. Who develops VA’s ‘‘capital asset management priorities,’’ and what 

are the current priorities? 

Response. Oversight and policy for VA’s capital asset management priorities/portfolio goals are the responsibility of the Office of Asset Enterprise Management. Developed collaboratively with key internal stakeholders, the capital asset management priorities provide a strategic framework to meet the objectives of VA’s core 

mission and asset management—to provide a safe and appropriate environment for 

the delivery of benefits to Veterans in a cost-efficient manner. The current goals are: 

1) decrease operational costs; 2) decrease underused capacity; 3) decrease energy 

use; 4) increase intra/inter-agency and community-based sharing; 5) increase revenue opportunities; 6) safeguard assets; and 7) maximize highest and best use of 

assets. 

In FY 2005, VA implemented the Federal Real Property Council (FRPC) tier 1 

goals in addition to the established capital asset priorities/portfolio goals. The FRPC 

goals are: 1) percent of space use as compared to overall owned and direct-leased 

space (relates to decrease in underused capacity; 2) ratio of operating costs per gross 

square foot (relates to decrease operational costs); 3) percent condition index of 

owned buildings; and 4) ratio of non-mission-dependent assets to total assets. FRPC 

goals and VA capital goals are closely related. VA capital goals are to: 1) decrease 

operational costs, 2) decrease underused capacity, 3) decrease energy use,2 4) increase revenue opportunities, 5) safeguard assets, and 6) maximize highest and best 

use. As a Federal Agency, VA is adopting green and environmental design principles 

in accordance with the mandates of Executive Order 13243, Strengthening Federal 

Environmental, Energy and Transportation Management. For example, all new construction and major renovation projects are being designed to meet sustainable 

building principles. 

34 

Question 17. What is the timeline for the multiple internal reviews before a decision is made to include a project in the President’s budget for a fiscal year? 

Response. The entire review process may take up to two and half years. Approximately 12 months prior to the first submission of a major construction project to 

VHA Central Office, the medical facility and VISN level planning take place. VHA 

Central Office staff review and prioritize all major construction applications, narrowing that list down to the top 20 or 25 projects. Those top 20–25 projects are then 

evaluated and prioritized by the VACIP, a sub-group of the Strategic Management 

Council (SMC). Results from the VACIP prioritization are submitted for approval by 

the SMC, the VA Executive Board, and finally the Secretary, as part of the internal 

budget process. Decisions from the internal budget process are used to develop the 

list of major construction projects that will be included in the annual budget request 

to OMB. Negotiations with OMB result in the final list of projects to be included 

in the Congressional budget submission. Exact timelines vary from year to year, and 

emergency or ‘‘out of cycle’’ high priority projects may also be expedited. A schedule 

for a typical planning cycle as follows: 

Question 18. To what extent are the potential consequences of the overall health 

care reform effort being integrated into VA’s current planning for new medical facilities? 

Response. Health care reform has not factored into the planning of our facilities. 

New facilities and/or expansions of existing facilities result from a capital asset 

analysis starting with the need for more or less space due to changing projected 

workload, the current condition and age of the existing facility, and the type of services that need to be provided. These are the cornerstones of all of our projects. 


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ADDENDUM TO QUESTION 11 


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RESPONSE TO POST-HEARING QUESTIONS SUBMITTED BY HON. MIKE JOHANNS TO THE

U.S. DEPARTMENT OF VETERANS AFFAIRS

Question 1. When do you estimate the study will be released to the Committees 

on Appropriations of both chambers of Congress as required by law? I would appreciate a date certain for the release of the study. 

Response. The study will be released to the Committees on Appropriations of both 

chambers of Congress by July 31, 2009. 

Question 2. Will this study be released to the public? If so, when? 

Response. The study will also be released to the general public, at the same time 

it has been released to the Committees on Appropriations of both chambers of 

Congress. 

Question 3. If that study calls for corrective action, including major renovations 

or the construction of a new facility, how will such findings affect the ability of the 

Omaha VAMC to receive the necessary corrective action? 

Response. If the study calls for corrective action, including major renovations or 

construction of a new facility, the study and the Department of Veterans Affairs’ 

(VA) evaluation of it will guide VA in selecting the best correction strategy. The approved option from the results of the study will be included in the VA’s construction 

project prioritization process during the budget development process. 

Question 4. Will the feasibility study have any bearing on the VA’s decision to 

prioritize the Omaha VAMC for renovation or construction? 

Response. Yes the feasibility study and VA’s evaluation of it will be included in 

the construction project prioritization process during the budget development 

process. 

Chairman AKAKA. I would like to welcome our second panel. 

First, I welcome Davis Wise, who is Director of Physical Infrastructure Issues at the GAO. 

Next, we have Dennis Cullinan, Director of National Legislative 

Service at the Veterans of Foreign Wars. 

And I also welcome J. David Cox, National Secretary-Treasurer 

of the American Federation of Government Employees. 

Thank you so much for being here. Mr. Wise, we will please 

begin with your statement. 

STATEMENT OF DAVID WISE, DIRECTOR, PHYSICAL INFRASTRUCTURE ISSUES, GOVERNMENT ACCOUNTABILITY OFFICE 

Mr. WISE. Chairman Akaka, Ranking Member Burr, and Members of the Committee. Thank you for the opportunity to discuss 

the Department of Veterans Affairs application of enhanced use 

leases which allows third parties to use government property in return for consideration in cash or in kind. 

As GAO noted in its June 9 testimony before the House Committee on Veterans’ Affairs, Subcommittee on Health, enhanced use 

leasing (EUL) is one of a variety of legal authorities available to 

help VA manage real property and reduce underutilized space. 

With more than 32,000 acres of land and over 6,200 buildings on 

about 300 sites, VA is one of the Federal Government’s largest 

property holders. 

However, many VA properties are aged and not particularly wellsuited to providing care in the current VA system. As a result, VA 

holds a significant amount of property that is underutilized or vacant because of age, condition, location, and other factors. Maintaining this property requires VA to spend funds that could otherwise be used to provide direct care and other medical services to 

veterans. In a report we issued in 2008, we estimated the VA spent 

65 

$175 million in fiscal year 2007 operating underutilized or vacant 

space at medical facilities. 

My testimony has three parts. I will discuss: (1) VA’s authority 

to enter into EULs; (2) how VA has used its EUL authority; and 

(3) the relationship between VA’s authorities and the amount of 

real property retained or sold. 

My statement is based upon our report entitled ‘‘Federal Real 

Property: Authorities and Actions Regarding Enhanced Use Leases 

and Sale of Unneeded Real Property’’ issued February 17, 2009. 

On the first point, VA may enter into EULs for underutilized or 

unutilized real property for up to 75 years in exchange for cash 

and/or in-kind consideration, such as provision of office space or 

construction of facilities. After covering the cost of the EUL, VA 

may use the remaining proceeds for a variety of purposes, including medical care, construction, facility improvement, and other 

EULs without further Congressional appropriation or change in 

law. VA’s current EUL authority will terminate on December 31, 

2011. 

On the second point, VA has used its EUL authority to reduce 

the amount of underutilized and unutilized property. In its fiscal 

year 2010 budget submission, VA reported disposing of 50 buildings and land in fiscal year 2008 using EUL authority. VA currently has 52 EULs, including housing, health care facilities, mixed 

use, and other projects. 

In one example in 2006, VA entered into an EUL that will use 

almost 300,000 square feet of vacant space at Fort Howard, Maryland, to develop a retirement community with priority placement 

for veterans. While many EULs result in direct services to veterans, in some instances the relationship is less clear. For example, 

VA is leasing property in Hillsboro, New Jersey, to a company that 

subleases the property to a variety of commercial interests needing 

warehouse or light manufacturing space, as well as the County 

government. 

On the third point, in addition to EUL authority, VA may sell 

unneeded property and retain the proceeds under its Capital Asset 

Fund, or CAF, authority. However, to do so VA must determine 

that the property is not needed to carry out its function and is not 

suitable for providing services to the homeless. Additionally, VA’s 

use of these proceeds is subject to further congressional appropriation or change in law. 

Despite this authority to sell property, VA has not sold any real 

property through its CAF authority. VA has sold only one property 

in Chicago, and that sale occurred under its EUL authority. According to VA officials, EULs are more attractive compared to disposal and sale under CAF, in part because VA can enter into EULs 

with fewer restrictions and has more flexibility on how it can use 

the proceeds. For example, VA can use EUL proceeds for medical 

care but cannot after selling a property. 

VA officials said that implementing an EUL can take anywhere 

from 9 months to 2 years. EULs may also be complex due to issues 

such as land due diligence, public hearings requirements, and lease 

drafting and negotiations. VA officials said that they are working 

to streamline the process. 

66 

Mr. Chairman, this concludes my statement. I will be pleased to 

answer any questions you or Members of the Committee may have. 

[The prepared statement of Mr. Wise follows:] 

PREPARED STATEMENT OF DIRECTOR OF PHYSICAL INFRASTRUCTURE ISSUES, 

GOVERNMENT ACCOUNTABILITY OFFICE


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Chairman AKAKA. Thank you very much, Mr. Wise. 

Mr. Cullinan. 

STATEMENT OF DENNIS CULLINAN, DIRECTOR, NATIONAL 

LEGISLATIVE SERVICE, VETERANS OF FOREIGN WARS OF 

THE UNITED STATES 

Mr. CULLINAN. Chairman Akaka, Ranking Member Burr, aloha 

and good morning. 

On behalf of the men and women of the Veterans of Foreign 

Wars, I want to thank you very much for inviting us to participate 

in today’s very important oversight hearing. 

In April 1999, GAO issued a report on the challenges VA faced 

in transforming the health care system. At the time, VA was in the 

midst of reorganizing and modernizing after the passage of the Veterans’ Health Care Eligibility Reform Act of 1996. 

The VA then developed a 5-year plan to update and modernize 

the system, including introduction of system-wide managed care 

principles, such as the Uniform Benefits Package. In response to 

the enormous challenges brought about in implementing this plan, 

VA began the Capital Asset Realignment for Enhanced Services or 

CARES process. It was the first comprehensive, long-range assessment of the VA health care system’s infrastructure needs since 

1981. 

CARES was a VA systematic dated revenue assessment of its infrastructure that evaluated the present and future demand for 

health care services, identifying changes that would help meet veterans’ needs. The CARES process necessitated the development of 

actuarial models to forecast future demand for health care and the 

calculation of supply of care in the identification of future gaps in 

infrastructure capacity. Throughout the process we continuously 

emphasize that our support was contingent upon the primary emphasis being in ES, or Enhanced Services, of the CARES acronym. 

We wanted to see that VA planned and delivered services in a 

more efficient manner that also properly balanced the needs of veterans, and for the most part the process did just that. The 2004 

CARES decision document gave a broad and comprehensive roadmap for the future. 

The strength of CARES in our view is not its being a one-time 

blueprint, but in the decisionmaking framework that produced it. 


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It created a methodology for future construction decisions. VA’s 

construction priorities are reassessed annually all based on the 

basic methodology created to support the CARES decisions. These 

decisions are created system wide, taking into account what is best 

for the totality of VA health care and what its priorities should be. 

We continue to have strong faith that this basic framework 

serves the needs of the majority of veterans. Despite its strengths 

there are certain challenges. While a huge number of projects are 

underway, a number of these are still in the planning and design 

phase. As such, they are subject to changes but they have also not 

received full funding. The Congress and this Administration must 

continue to provide full funding for the major construction account 

to reduce this backlog and also to begin funding future construction 

priorities. 

With the twin problems of funding and speed in mind, VA has 

recently been exploring ways to improve the process. Last year 

they unveiled the HCCF leasing concept. As we understand it, an 

HCCF was intended to be an acute care center somewhere in size 

and scope between a large medical center and a CBOC. It is intended to be a leased facility—enabling a shorter time for it to be 

up and running—that provides outpatient care. Inpatient care 

would be provided on a contracted basis, typically in partnership 

with a local health care facility. 

While supportive of more quickly providing greater health care 

access to veterans on a cost-effective basis, we expressed our concerns with the HCCF concept in the Independent Budget, or IB. Primarily, we are concerned that this concept—which relies heavily 

on widespread contracting—would be done in place of needed major 

construction. 

Acknowledging the changes taking place in health care, VA 

needs to look more carefully before building facilities. Cost plus 

projected usage must justify full blown medical centers. Leasing is 

the right thing to do only if the agreements make sense. VA needs 

to do a better job of explaining to veterans and to Congress what 

their plans are for every location based on the facts. The ruinous 

miscommunication that plagued the Denver construction project 

amply demonstrates this point. 

We have seen the importance of leasing facilities with certain 

CBOCs and Vet Centers, especially when it comes to expanding 

care to veterans in rural areas. CARES did an excellent job of identifying locations with gaps and care, and VA has continued to refine its statistics, especially with the improved data it is getting 

from DOD about OEF and OFI veterans. 

Providing care to rural veterans is a major challenge for the system, and the expansion of CBOCs and other initiatives can only 

help. We do believe, however, that much of what will improve access for these veterans will lie outside of the construction process. 

VA must better use its fee-based care programs, and the recent initiatives passed by Congress, such as the mobile health care vans 

or the rotating satellite clinics in some areas, are helping to fix the 

demand problems facing veterans and VA. 

Mr. Chairman, this concludes my statement. Again, I thank you 

and Ranking Member for inviting us to testify here today. 

[The prepared statement of Mr. Cullinan follows:] 

77 

PREPARED STATEMENT OF DENNIS M. CULLINAN, DIRECTOR, NATIONAL LEGISLATIVE

SERVICE, VETERANS OF FOREIGN WARS OF THE UNITED STATES

Mr. Chairman and Members of the Committee: On behalf of the 2.4 million men 

and women of the Veterans of Foreign Wars of the U.S. (VFW) and our Auxiliaries, 

I would like to thank you for the opportunity to testify today. 

In April 1999, the Government Accountability Office (GAO) issued a report on the 

challenges the Department of Veterans Affairs (VA) faced in transforming the 

health care system. At the time, VA was in the midst of reorganizing and modernizing after passage of the Veterans Health Care Eligibility Reform Act in 1996. 

With passage of that bill, VA developed a 5-year plan to update and modernize 

the system, including the introduction of system-wide managed care principles such 

as the uniform benefits package. As part of the overall plan, VA increasingly began 

to rely on outpatient medical care. Technological improvements, improved pharmaceutical options and management initiatives all combined to lessen the need for as 

many inpatient services. Additionally, the expansion of VA clinics—notably the 

Community Based Outpatient Clinics (CBOCs)—brought care closer to veterans. 

These widespread changes represented a management challenge for VA, GAO argued: ‘‘VA’s massive, aged infrastructure could be the biggest obstacle confronting 

VA’s ongoing transformation efforts. VA’s challenges in this arena are twofold: deciding how its assets should be restructured, given the dramatic shifts in VA’s delivery practices, and determining how a restructuring can be financed in a timely manner.’’ 

GAO also testified before the House Veterans’ Affairs Committee’s Subcommittee 

on Health in March 1999 on VA’s capital asset planning process. They concluded 

that, ‘‘VA could enhance veterans’ health care benefits if it reduced the level of resources spent on underused or inefficient buildings and used these resources, instead, to provide health care, more efficiently in existing locations or closer to where 

veterans live.’’ Further, GAO found that VA was spending about 1 in 4 Medical Care 

dollars on asset ownership with only about one quarter of its then–1,200 buildings 

being used to provide direct health care. Additionally, the Department had over 5 

million square feet of unused space, which GAO claims cost VA $35 million per year 

to operate. 

From these findings, VA began the Capital Asset Realignment for Enhanced Services (CARES) process. It was the first comprehensive, long-range assessment of the 

VA health care system’s infrastructure needs since 1981. 

CARES was VA’s systematic, data-driven assessment of its infrastructure that 

evaluated the present and future demands for health-care services, identifying 

changes that would help meet veterans’ needs. The CARES process necessitated the 

development of actuarial models to forecast future demand for health care and the 

calculation of the supply of care and the identification of future gaps in infrastructure capacity. 

The plan was a comprehensive multi-stage process. 

• February 2002—VA announced the results of the pilot program of VISN 12 

• August 2003—Draft National CARES Plan submitted to the Undersecretary for 

Health 

• February 2004—16-member independent CARES Commission submits recommendations based upon its review of the Draft Nationals CARES Plan. 

• May 2004—VA Secretary announces releases final CARES Decision Document, 

but leaves several facilities up for further study. 

• May 2008—Final Business Plan Study released, completing the CARES process. 

Throughout the process, we were generally supportive. We continuously emphasized that our support was contingent on the primary emphasis being on the ‘‘ES’’— 

enhanced services—portion of the CARES acronym. We wanted to see that VA 

planned and delivered services in a more efficient manner that also properly balanced the needs of veterans. And, for the most part, the process did just that. 

Our main concern with the plans as they unfolded was the lack of emphasis on 

mental health care and long-term care. The early stages of the CARES process excluded many of these services for the most part because they lacked an adequate 

model to project the need for these services in the future. 

The CARES Commission called for VA to develop a long-term care strategic plan, 

to address the needs of veterans and all care options available to them, including 

state veterans homes. As we discussed in the Independent Budget, VA’s 2007 LongTerm Care Strategic Plan did not address these issues in a comprehensive manner; 

going forward, this must be rectified. 

The 2004 CARES Decision Document gave VA a road map for the future. It called 

for the construction of many new medical facilities, over 100 major construction 

78 

projects to realign or renovate current facilities, and the creation of over 150 new 

CBOCs to expand cares into areas where the CARES process identified gaps. 

Since FY 2004, 50 major construction projects have been funded for either design 

or actual construction. Eight of those projects are complete. Six more are expected 

to be completed by the end of FY 2009, and 14 others are currently under construction. So CARES has produced results. 

The strength of CARES in our view is not the one-time blueprint it created, but 

in the decisionmaking framework it created. It created a methodology for future construction decisions. VA’s construction priorities are reassessed annually, all based 

on the basic methodology created to support the CARES decisions. These decisions 

are created system-wide, taking into account what is best for the totality of the 

health care system, and what its priorities should be. 

VA’s Capital Investment Panel (VACIP) is the organization within the department 

responsible for these decisions. VA’s capital decision process requires the VACIP to 

review each project and evaluate it using VA’s decision model on a yearly basis to 

ensure that potential projects are fully justified under current policy and demographic information. These projects are assigned a priority score and ranked, with 

the top projects being first in line for funding. 

It is a dynamic process that depoliticizes much of the decisionmaking process. The 

projects selected for funding are by and large the projects that need the most immediate attention. Because it is a dynamic process, some of the projects VA has moved 

forward with were not part of the original CARES Decision Document, but they 

were identified, prioritized and funded through the methodology developed by 

CARES. We continue to have strong faith that this basic framework serves the 

needs of the majority of veterans. Despite its strengths, there are certainly some 

challenges. 

First is that the very nature of the report required a large infusion of funding 

for VA’s infrastructure. While a huge number of projects are underway, a number 

of these are still in the planning and design phase. As such, they are subject to 

changes, but they have also not received full funding. 

This has resulted in a sizable backlog of construction projects that are only partially funded. Were the administration’s construction request to move forward, VA 

would have a backlog in funding for major construction of nearly $4 billion. This 

means that to just finish up what is already in the pipeline, it would take approximately five full fiscal years of funding—based on the recent historical funding levels—just to clear the backlog. 

This Congress and this Administration must continue to provide full funding to 

the Major Construction account to reduce this backlog, but also to begin funding future construction priorities. 

Another difficulty has been the slow pace of construction. Major construction 

projects are huge undertakings, and in areas—such as New Orleans or Denver— 

where land acquisition or site planning have presented challenges, construction is 

slower than we would like. There are, however, many cases where there have been 

fewer challenges, and when the money was appropriated, construction has moved 

quickly. 

With these twin problems of funding and speed in mind, VA has recently been 

exploring ways to improve the process. Last year, they unveiled the Health Care 

Center Facility (HCCF) leasing concept. 

As we understand it, the HCCF was intended to be an acute care center somewhere in size and scope between a large Medical Center and a CBOC. It is intended 

to be a leased facility—enabling a shorter time for it to be up and running—that 

provides outpatient care. Inpatient care would be provided on a contracted basis, 

typically in partnership with a local health care facility. 

We expressed our concerns with the HCCF concept in the Independent Budget 

(IB). Primarily, we are concerned that this concept—which heavily relies on widespread contracting—would be done in lieu of an investment of major construction. 

Acknowledging that with the changes taking place in health care VA needs to look 

very carefully before building new facilities. Cost plus occupancy must justify full 

blown Medical Centers. But leasing is the right thing to do only if the agreements 

make sense. 

VA needs to do a better job explaining to Veterans and the Congress what their 

plans are for every location based on facts. The ruinous miscommunication that 

plagued the Denver construction project amply demonstrates this point. 

While promising, the HCCF model presents many questions that need answers 

before we can fully support it. Chief among these is why, given the strengths of the 

CARES process and the lessons VA has learned and applied from it, is the HCCF 

model, which to our knowledge has not been based on any sort of model or study 

of the long-term needs of veterans, the superior one? 

79 

We also have major concerns with the widespread contracting that would be mandated by this type of proposal. The lessons from Grand Island, NE—where the local 

hospital later canceled the contract, leaving veterans without local inpatient care— 

or from Omaha—where some veterans seeking specialized services are flown to Minneapolis—show the potential downfall of large-scale contracting. 

Leasing clinical space is certainly a viable option. It does provide for quicker expansion into areas with gaps in care, and it does provide the Department with flexibility in the future. 

But when it is combined with the contracting issue, and presented without information and supporting documentation that is as rigorous or comprehensive as 

CARES was, it will be difficult for the VFW and the veteran’s community to support 

it. 

We have seen the importance of leasing facilities with certain CBOCs and Vet 

Centers, especially when it comes to expanding care to veterans in rural areas. 

CARES did an excellent job of identifying locations with gaps in care, and VA has 

continued to refine its statistics, especially with the improved data it is getting from 

the Department of Defense about OEF/OIF veterans. 

Providing care to these rural veterans is the latest challenge for the system, and 

the expansion of CBOCs and other initiatives can only help. We do believe, however, 

that much of what will improve access for these veterans will lie outside the construction process. VA must better use its fee-basis care program, and the recent initiatives passed by Congress—such as the mobile health care vans or the rotating 

satellite clinics in some areas—are going to fix some of the demand problems these 

veterans face. 

We can always certainly do more, but thanks to the CARES blueprint, VA has 

greatly improved the ability of veterans around the country to access the care they 

earned by virtue of their service to this country. And with the annual adjustments 

and reassessments that account for changes within the veterans’ population, we can 

assure that veterans are receiving the best possible care long into the future. 

The VFW thanks you and the Committee for looking at this most important issue. 

Chairman AKAKA. Thank you very much, Mr. Cullinan. 

Now we will hear from Mr. Cox. 

STATEMENT OF J. DAVID COX, R.N., NATIONAL SECRETARYTREASURER, AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL–CIO 

Mr. COX. Chairman Akaka and Ranking Member Burr, I greatly 

appreciate the opportunity to discuss AFGE’s concerns about the 

VA’s health care center facility leasing program. I also want to 

thank the Chairman and Senator Rockefeller for their efforts last 

year to make the information about this program available to the 

public. 

The leasing program was introduced by former Secretary Peake 

last year, and it appears that the VA considers leasing as an alternative to construction of new and replacement VA medical centers. 

The leasing program poses the greatest threat to the VA health 

care system since its creation. If Congress does not investigate and 

put the brakes on this program, VA medical centers as we know 

them today will disappear. Maybe not next year or the year after, 

but this unique source of health care for our veterans will become 

extinct by leasing’s slow erosion of its core. 

How can a 13-page PowerPoint presentation about enhanced 

leases and large outpatient facilities have a devastating effect on 

VA medical centers? Because the leasing program is not really 

about leases; it is about permanently diverting major construction 

dollars and patient care dollars away from standalone VA hospitals 

and shifting them to private hospitals. And doing it without Congressional authority. It is about starving VA medical centers of 

staff, beds, and maintenance in order to support health care cenVerDate Nov 24 2008 12:56 Mar 17, 2010 Jkt 000000 PO 00000 Frm 00083 Fmt 6633 Sfmt 6601 H:\ACTIVE\061009.TXT SVETS PsN: PAULIN
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ters—an untested model that has never been used in the public or 

private sector. It is about an entirely new organizational chart for 

the VA, one that has these outpatient facilities reporting to private 

hospitals instead of a VA Medical Center. 

I will focus the rest of my remarks on how the leasing program 

is hurting the facility in my hometown that is especially near and 

dear to my heart—the W.G. Hefner VA Medical Center in Salisbury, North Carolina—the facility where I worked as a registered 

nurse for 23 years caring for America’s veterans. What happened 

in Salisbury is a useful roadmap for how not to adapt VA health 

care to veterans’ changing needs. 

First, secrecy and exclusion do not work. When Hefner Medical 

Center Director, Carolyn Adams, announced last year that the 

acute care, intensive care, and emergency services were being cut, 

that veterans would be getting most of the inpatient care from private hospitals that do not specialize in veterans’ conditions and are 

already struggling to treat growing numbers of uninsured, the 

news came as a complete surprise to veterans, employees, and even 

some Members of Congress. 

The facility had recently invested in new operating rooms and intensive care units and had recruited more physicians and nurses. 

And veterans in Winston-Salem and Charlotte, the proposed sites 

for health care centers already had large outpatient clinics. Neither 

Ms. Adams, nor VISN–6 Network Director, Daniel Hoffman, who 

also played an active role in the proposed plans, included stakeholders in the planning process. When the VA contracted for a 

study to consider different options for the facility, the study team 

did not talk to a single veteran using the facility or a single employee providing care. 

Second, hospitals with uncertain futures lose staff. And I would 

refer to that as the Walter Reed Syndrome. Upon receiving the 

news of proposed cuts in core inpatient services, many of the recently hired physicians and nurses left for more secure jobs. 

Third, do not break promises to veterans. After the huge outcry 

from North Carolina veterans and labor last fall, the VA put its 

leasing plans on hold promising no cuts in services or staff reductions until 2013. Yet, almost immediately, hiring slowed, renovations stopped, and services were cut. Management is still talking 

about closing the ER and replacing it with an urgent care facility. 

I would like to close by urging this Committee to investigate the 

impact of the leasing program on the Salisbury VA and other facilities before they are irrevocably weakened and the only remaining 

option for other veterans is a network of contract hospitals and 

providers. 

As for Salisbury specifically, it is clear that Mr. Hoffman and Ms. 

Adams are not serving the interests of North Carolina veterans. 

North Carolina is home to the fourth largest veterans population 

in this country. Clearly, none of us—and I am surely including the 

Ranking Member—are interested in having one less VA Medical 

Center in the State of North Carolina. Yet, management insists on 

implementing policies that are weakening a full-service, nearly 

500-bed VA Medical Center that serves as a hub in North Carolina. 

81 

Isn’t it far better to plan for the future needs of North Carolina 

veterans by including lawmakers, veterans receiving this care, and 

the employees providing this care in the planning process? 

Thank you, Mr. Chairman. I will be glad to take any questions. 

[The prepared statement of Mr. Cox follows:] 

PREPARED STATEMENT OF J. DAVID COX, R.N., NATIONAL SECRETARY-TREASURER, 

AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL–CIO 

The American Federation of Government Employees, AFL–CIO (AFGE) thanks 

you for the opportunity to testify today on VA medical facility construction, specifically, recent Veterans Health Administration (VHA) plans for medical facility leasing and other contractual arrangements for providing veterans’ healthcare. AFGE 

represents over 160,000 members of the VA workforce, more than two-thirds of 

whom are on the front lines caring for veterans at VA hospitals, clinics and long 

term care facilities. 

In March 2008, the VA quietly issued a radical new approach to providing inpatient and outpatient facilities: the ‘‘Health Care Center Facility Leasing Program’’ 

(Leasing Program). Despite its far reaching impact, the VA initially provided veterans’ groups with very limited information about the concept and gave no specifics 

as to when or where it would implemented. Lawmakers in the targeted states and 

unions representing VHA employees received no initial information about the new 

program. 

The impact of the Leasing Program only became evident after the VA announced 

its plans to eliminate and/or downsize standalone VA medical centers in several locations, including Denver, CO, and Salisbury, NC, and instead provide services 

through leasing arrangements with non-VA facilities and standardized, large outpatient facilities called ‘‘Health Care Centers.’’ The VA did not disclose its list of 

22 proposed sites for enhanced leasing until October 2008; they did so only in response to requests made by Chairman Akaka and Senator Rockefeller. 

When faced with strong opposition from lawmakers and stakeholders at several 

of the proposed sites, the VA appeared to put its leasing plans on hold. However, 

AFGE has recently received reports that VHA is still actively considering the leasing option for a number of locations in need of new or replacement medical centers. 

At some of the sites, the first ‘‘warning sign’’ of the Leasing Program has been 

a significant reduction in inpatient and emergency room (ER) services. These cuts 

result in the diversion of a greater number of veterans to non-VA hospitals for inpatient care (at a higher cost to the VA). In addition, veterans with medical and mental health emergencies are forced to use overcrowded emergency rooms at non-VA 

hospitals that do not specialize in veterans’ conditions, and often face enormous 

medical bills for treatment of non-service-connected conditions. 

The loss or imminent loss of core inpatient services sends VA medical centers into 

a downward spiral: 

• Physicians, nurses and other staff leave because of the facility’s uncertain future and limited services; 

• Due to staff shortages, more patients have to be diverted to non-VA facilities; 

• Loss of services also impacts the facility’s capacity to conduct diagnostic tests; 

• Uncertainty also leads to deferred maintenance and postponement or cancellation of facility upgrades; 

• These conditions cause more staff to leave; 

• The facility’s services become so limited that often, permanent outsourcing becomes the only viable option. 

This scenario is all too familiar. In its 2007 study of deteriorated conditions at 

Walter Reed Army Medical Center, the Congressional Research Service discussed a 

convergence of events—a ‘‘perfect storm’’—that led to that crisis: increased demand 

for services from returning OIF/OEF troops, privatization threats, and a base realignment decision to permanently close the facility. At the VA, the announcement 

of plans to permanently cut and privatize core hospital services through leasing, 

coupled with increased demand from returning troops and newly eligible Priority 8s, 

is having a similar impact. 

Health Care Centers provide the perfect vehicle for the ‘‘Walter Reed-ization’’ of 

the VA because they permanently siphon off the ‘‘critical mass’’ of VA medical centers. The danger they present for VA’s unique capacity to treat veterans cannot be 

overstated. The VA has evolved into a national health care leader because it relies 

on a single, integrated system that concentrates its resources and expertise to provide comprehensive, high quality, cost effective specialized care in tandem with inVerDate Nov 24 2008 12:56 Mar 17, 2010 Jkt 000000 PO 00000 Frm 00085 Fmt 6633 Sfmt 6621 H:\ACTIVE\061009.TXT SVETS PsN: PAULIN
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valuable academic affiliations and specialized research. The VA’s teaching mission 

produces significant benefits for patient care. Similarly, ‘‘[b]ecause more than 70 

percent of VA researchers are also clinicians who take care of patients, VA is 

uniquely positioned to move scientific discovery from investigators’ laboratories to 

patient care’’ (citing 2007 testimony by Dr. Joel Kupersmith before this Committee.) 

The Leasing Program utilizes an entirely different and untested delivery model— 

a model that has not been used by either the private or public sector to date. Currently, VA medical centers operate as the ‘‘hub’’ supporting small, community based 

outpatient clinics (CBOCs), telehealth, limited fee basis care and other ‘‘spokes.’’ In 

contrast, the only ‘‘hubs’’ available to support the outpatient services provided by 

Health Care Centers are non-VA hospitals that often struggle financially to serve 

the general population, including large numbers of the uninsured and underinsured. 

Therefore, AFGE urges the Committee to conduct an immediate investigation into 

the Leasing Program and its impact on VHA and the facilities facing plans for substantial changes in their delivery infrastructure: For example: 

Salisbury, NC: 

The Hefner VA Medical Center has a 150 acre campus and is centrally located 

in the state. Originally created after World War II as a large psychiatric facility, 

the Salisbury VA has evolved into a full service, 484 bed facility that supports several outpatient clinics, long term care and an extensive research program. The Salisbury VA is primarily affiliated with the Wake Forest University School of Medicine/ 

Baptist Medical Center and offers residency training in eight practice areas, and in 

total has 78 affiliations with academic institutions. 

Over the past four years, the Salisbury VA has undergone a significant transformation, including new operating rooms and intensive care units, and recruitment 

of additional physicians and nurses. 

In September 2008, management made a surprise announcement that it was 

eliminating acute care, intensive care (ICU) and emergency room care (ER) services, 

to be replaced by leasing arrangements with community hospitals and two new 

Health Care Centers. The Salisbury VA would retain long-term care and outpatient 

services and add a mental health center of excellence. Management did not consult 

with or provide advance notice to veterans’ groups or employees. Some members of 

the North Carolina Congressional delegation were also completely taken by surprise. 

At the time, stakeholders were not aware that Salisbury was one of the 22 proposed 

sites for enhanced leasing. 

Management stated that this change was justified by an extensive study but 

would not share the results of the study with stakeholders. Once the study became 

available, AFGE learned that the contractor reviewed five options, including renovation or expansion of the facility, before reaching its recommendation for leasing, contracting and Health Care Centers. The contractor never met with veterans’ groups 

or front line employees providing the care or their representatives even though it 

conducted a ‘‘two-day stakeholder site visit.’’ Researchers acknowledged that this option ‘‘does not promote the inpatient veteran community or culture that veterans 

value.’’ 

In addition, during the same period, the VA put out a $34.5 million bid solicitation for ‘‘potential health care sources . . . to provide inpatient hospital medical 

and surgical services’’ including personnel, facilities and equipment. 

Many of the recently hired physicians and nurses responded to management’s announcement by leaving for more secure jobs elsewhere. 

After veterans, labor and some lawmakers expressed strong opposition to the leasing plan, the VA appeared to change course. In December 2008, it issued a revised 

plan that ‘‘provides that no changes to the health care delivery services at the Salisbury VA Medical Center will be made until 2013, nor will there be any staff reductions.’’ (VA Press Release dated December 11, 2008). 

Despite the VA’s commitment, the facility continues to implement policies that are 

leading to more uncertainty, service reductions and staff resignations. Specifically: 

• Management is not filling physician and nurse vacancies on the acute care unit; 

• One of the facility’s two surgeons has been detailed to a non-patient care unit; 

• Recruitment bonuses are not being used to attract new psychiatrists, even 

though current mental health caseloads are unreasonably large; 

• Management has abandoned longstanding renovation plans for one building and 

converted another building recently renovated for patient care services into office 

space and an outpatient endoscopy clinic (even though another endoscopy unit in 

excellent condition is available elsewhere); 

• Management has also abandoned plans to remodel the emergency room (ER) 

and has announced that the ER will be downgraded to an urgent care unit; 

• Plans for a new outpatient clinic in Hickory have been canceled; 

83 

• There have also been early reports that the facility is facing a large deficit due 

to the increased use of costly contract care; • Patient satisfaction scores have recently dropped; • Due to inadequate nurse staffing, the Medical Unit currently has fewer than 

30 beds; previously it had 42 beds; • Management eliminated the facility’s Center for Excellence for Women’s Health; 

If these policies remain place, the Salisbury VA’s ‘‘critical mass’’ will be essentially 

depleted by 2013, and leasing with non-VA facilities may be the only remaining option. 

Denver, CO: 

Although this VA medical center is not on the ‘‘proposed site’’ list, in April 2008, 

the VA canceled longstanding plans for a replacement standalone facility in downtown Denver—plans that evolved through extensive analysis and consensus-building. Instead, veterans would receive care from a mix of VA and University health 

professionals at leased bed and research towers on the University of Colorado campus. Under the new plan, the size and scope of long term care and mental health 

programs would be reduced and the facility’s spinal cord injury program would be 

bifurcated into two separate buildings. 

Here too, secrecy prevailed. The VA did not consult with members of the Colorado 

Congressional delegation, veterans or employees prior to reaching its decision to 

shift major construction dollars away from the existing plan and use them to radically transform the facility. The VA contended that this untested model was the 

product of reliable data and projections but never made these studies available. 

In response to strong opposition from lawmakers and stakeholders, the VA completely reversed itself a year after the initial announcement and reinstated plans 

for a new standalone, full service VA facility in Denver. 

Other locations: 

South Texas: Local veterans’ groups have sought a standalone VA medical center 

in the Rio Grande Valley for many years. The VA had other plans for South Texas. 

Last year, it opened the South Texas Health Care Center, and announced plans for 

expanded contracts with local hospitals for inpatient and emergency care. 

Fargo, ND: This facility is on the ‘‘proposed site’’ list. This month, management 

reported that a proposal was considered, but then rejected, to move specialty care 

clinics and Ambulatory Surgery offsite to a large outpatient facility resembling the 

Health Care Center model. Under this proposal, inpatient care would have been provided to veterans through contracts with non-VA hospitals. 

Iron Mountain, MI: Last year, the VA medical center director announced plans 

to eliminate surgery, intensive care and emergency room services, requiring veterans to use local non-VA facilities or travel to Chicago for VA care. After pressure 

from Michigan lawmakers and local stakeholders, these plans were put on hold. 

However, management continues to incrementally erode the facility’s capacity: several ICU beds have been closed and plans to downgrade the ER to urgent care are 

still pending. In addition, uncertainty about the future and unfair human resource 

policies are causing physicians to leave; the facility currently has no surgeons, requiring contracting out of all surgical procedures. 

Northern Indiana: The VA Northern Indiana VA Health Care System has announced plans for Health Care Centers in Fort Wayne and South Bend. ‘‘Inpatient 

medical care will be provided primarily in partnership with community hospitals in 

Fort Wayne and South Bend.’’ (NIHCS Web site). 

Fort Worth, TX: Last year, the VA awarded a contract to build its largest outpatient clinic to date in Fort Worth. It appears to offer a similar array of services 

as the Leasing Program’s Health Care Centers. 

AFGE fully supports the VA’s efforts to adapt its health care infrastructure to 

changing patient needs and new technologies. However, the use of secrecy, exclusion 

and unsupported assumptions based on shoddy research is simply bad policy. This 

Program may also represent bad law; it appears to be proceeding without adequate 

statutory authority. The VA contends that one of the Program’s selling points is that 

‘‘[n]o authorizing legislation [is] required to initiate [this] program.’’ VA relies on its 

existing authority under 38 U.S.C. § 8153 to ‘‘make arrangements, by contract or 

other form of agreement’’ for the sharing of health-care resources between the VA 

and other entities. 

However, the VA has not offered evidence to support a finding that it has satisfied 

either test under Section 8153. More specifically, the VA has failed to show that VA 

resources are not available to provide these services in-house or that leasing is necessary to effectively utilize other health-care resources. In addition, we question 

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dation for leasing, as in the case of Salisbury, constitute a valid use of this sharing 

authority. 

The other critical question is whether the VA has the authority to use major construction dollars for an entirely different delivery system without Congressional approval. Although Congress has granted the VA substantial discretion to build and 

renovate medical facilities, it has not authorized the VA to engage in large scale privatization of its health care system. 

RECOMMENDATIONS

AFGE urges greater Congressional oversight of the VA’s Leasing Program and 

other large scale initiatives to shift the bulk of veterans’ health care services to nonVA providers. Leasing raises many of the same concerns about the long term impact 

on this world-class system as Project HERO, which uses a contractor to arrange and 

manage VA’s contract care. (AFGE’s concerns about HERO were provided to the 

Committee following the April 22, 2008 legislative hearing.) The most critical question of all is whether leasing and contract care are truly necessary means of filling 

gaps in the VA health care system, or whether these gaps are merely the result of 

misused health care dollars and poor staffing policies, and unnecessary privatization 

worsens these gaps. 

If the VA is truly going to adapt to changing needs and changing times, it must 

stop operating in secrecy. AFGE and its members on the front lines of VA health 

care want to work with the VA to develop the most effective options for keeping the 

system viable. All stakeholders—including veterans’ groups, employee representatives and academic affiliates—must be part of the planning process. Congress also 

needs to play an active, ongoing oversight role in all VA efforts to significantly alter 

its health care delivery system. 

Finally, Congress should oversee research conducted to identify needed changes 

in the VA’s delivery model in order to ensure the neutrality and reliability of these 

studies. Thank you for the opportunity to presents AFGE’s views on this issue. 

Chairman AKAKA. Thank you very much, Mr. Cox, for your statement. And since you have been mentioning North Carolina, let me 

call on Senator Burr for his questions. 

Senator BURR. Thank you, Mr. Chairman. I explained to the 

Chairman that I have a mark-up in 3 minutes down at Armed 

Services that I need to attend and some appointments that I need 

to keep, and the Chairman was gracious enough to let me go first. 

I am not going to ask questions. I am going to make a statement 

relative to specifically HCCs because they have been raised. It has 

been of great interest. I have spent a tremendous amount of time 

on them. I have worked with General Peake. I have worked with 

General Shinseki. I have worked with most at the VA. 

What I have got here is the budget submission. I think it was 

referred to earlier that seven of the projects that were ranked got 

funding this year, and that is pretty much—that is not out of the 

ordinary. That is the available money to handle the maintenance 

requests. 

Now, you heard two impassioned pleas. One from my colleague 

from Nebraska; one from my colleague from Georgia. The Nebraska 

project ranks number 16. That is clearly not one through seven. 

The Atlanta, Georgia, project ranks number 51. That is clearly not 

one through seven. 

Does that lessen what they said? No, we have got veterans that 

in some cases are hauling oxygen across a parking lot. But let me 

assure you that under the process that all of us agree has to be 

followed because there are projects on here, 59, it is going to be— 

I’m sorry that we have not got the last panel up. They could tell 

me how many years it is going to be before they are completed, but 

I think we all know it is probably not going to be while I am here. 

85 

Now, where have we benefited the delivery of health care for veterans if we just queue people in this system without using the 

flexibility that, in fact, was the CARES recommendation. Let me 

read it because everybody has referred to CARES. 

A finding. ‘‘Contracting for care provides VA with the flexibility 

to quickly add and subtract services to meet the changing veterans’ 

needs contingent on the availability of viable alternatives in the 

community.’’ 

What have we screamed about, those of us from States that have 

a demographic shift of veterans, ‘‘Jeez, VA, Mr. Secretary, what can 

you do short-term to address the need that we have to deliver care 

to all these veterans that have moved in?’’ If we had a stagnant 

population, I’d agree. Let us do exactly what we are doing and we 

will get exactly the same outcome. 

But, in North Carolina and in other States, we have conditions 

that are different than they were last year—not 10 years ago. And 

to be honest, Mr. Cox, when you say there is a new model—referring to the HCCs—never been used in the public or private sector, 

my god, what is an outpatient clinic with an ambulatory unit attached to a hospital? That is exactly what a HCC is. It is set up 

to take individuals out of an inpatient setting where health care 

can deliver a higher quality for less money because there is a higher percentage likelihood that they do not need inpatient care connected to the outpatient procedure. 

But in the unlikely nature that a surgeon who does the outpatient procedure says, ‘‘something during this process led me to 

believe I would like to use 24 hours to observe somebody in a controlled setting, let me use the facility here versus transferring him 

to Asheville, or to Salisbury, or to Durham, or to Fayetteville.’’ 

Now, in the case of Fayetteville where there is a new HCC, the 

referral is not going to be to a community hospital when we have 

a VA hospital in that community. The likelihood is it is going to 

be to the VA facility. It doesn’t lessen the need for Salisbury, or 

Asheville, or Durham, or Fayetteville. It begins to compliment the 

21st Century delivery system that this Administration, the last Administration, and every Secretary of the Veterans Administration 

have strived for. And I believe it is the mission of those that have 

a career at the VA to make sure that our veterans have the best 

possible care. 

If doing something different is wrong, then I am guilty because 

I have pushed every Secretary since I have been here in this capacity to do everything we can possibly do to meet the needs of veterans across the country. In some cases it is by contracting and 

using that flexibility because there is no service provided in that 

rural marketplace. In some cases it is to create new entities like 

HCCs because we can provide that care closer to where veterans 

live, avoid displacing them from their family, and not arguing over 

what the mileage reimbursement rates are. We can’t keep up with 

the price of gasoline so we are never going to hit it in an optimal 

way. 

But at the end of the process having the infrastructure needed, 

whether it is in Denver where I may have had some disagreements—not on whether we did it or not but how we did it. Not on 

whether Salisbury is still an integral part of the structure of North 

86 

Carolina. It is how we build out to compliment the system that we 

have got. 

If just building standalone hospitals was the delivery of care for 

the 21st Century, why would every community in the United 

States be doing it differently? Why would they be building out 

these entities that provide a higher level of care? 

Mr. Chairman, let me end with this. And I have overshot my 

time. 

Health care in the 21st Century has to be about educating people 

how to stay well—even veterans who are susceptible to needing 

treatment for certain things. A hospital setting is not a place to do 

that. It is done through outpatient facilities. It is done through 

medical homes. Medical homes are not created through emergency 

rooms. Medical homes are established with the confidence that an 

individual has in a health care professional. And when that bond 

is established, the education begins. 

I think we all know that if we want to bring down the overall 

cost of health care and raise the outcome, then we have got to 

bring prevention and wellness and disease management into the 

VA system, just like we do the private sector. You are not going 

to do that through an emergency room, though trauma facilities are 

important to this country’s veterans and we will have them. 

But do not throw something overboard that fills out and compliments the health care system just because we have got a concern 

that it is leased and not owned. Or we have a concern that we are 

duplicating an area that already has a CBOC. As a matter of fact, 

we just completed the Charlotte CBOC less than a year ago. And 

the amazing thing is on the day that I was down there to shove 

the first pound of dirt, we all knew that it was not big enough. 

When we decided to build the CBOC in Charlotte, we estimated 

there were 125,000 underserved veterans in the metropolitan area 

of Charlotte, some 45 miles to Salisbury. We could not get them to 

Salisbury. 

If I’m not mistaken, the 290,000 square foot HCC in Charlotte, 

North Carolina, will not replace the CBOC; it is going to be in addition to the CBOC. And I would be bold enough to say today that 

290,000 square feet plus the CBOC is not enough to meet the needs 

of the veterans’ population that we are going to reach out to in 

northern South Carolina and southern North Carolina. And it is 

not going to have an effect on how many people end up utilizing 

Salisbury. It is going to mean that we are delivering care to that 

many more veterans. And hopefully, we are doing it in the most 

effective way that we can. 

I want to thank all three of you for your willingness to be here 

today. I want to thank the Chairman for what I think is a vital 

hearing. And I want to thank him for his generosity of letting me 

go first. 

Thank you, Mr. Chairman. 

Chairman AKAKA. Thank you, Senator Burr, for your statement. 

I would like to ask all of you—the three of you—this question. 

And it has to do with BRAC. BRAC has its own identity. The question is would VA benefit from a BRAC-like process which would 

bundle a variety of recommendations into one package? 

87 

I would like to hear from each of you. Mr. Wise, would you 

begin? 

Mr. WISE. Mr. Chairman, the subject of our report that I testified 

about really dealt with the issue of property management among 

a number of Federal agencies of which VA is one. We did not address qualitative aspects of realignment of VA resources. From the 

Enhanced Use Lease perspective, it is reasonable to assume that 

if you can reallocate resources from maintenance of unneeded or 

underutilized property and transfer them into providing services to 

veterans, this should be a plus for overall care for the veteran 

population. 

Chairman AKAKA. Mr. Cullinan. 

Mr. CULLINAN. Thank you, Mr. Chairman. 

The VFW certain agrees that there are facilities out there that 

are not doing the job anymore—they are outdated. In fact, they bog 

down the system. They consume resources that could be better applied. However, at this stage we would continue to argue that the 

best course of action would be to go on a case-by-case basis in addressing these facilities. A key element here is to communicate to 

the veteran population. 

In an instance where VA is going to do away with an outdated 

medical center, for example, what is essential then is for VA to determine what is necessary to take that facility’s place with respect 

to appropriately providing health care services to veterans and 

then letting that veteran population know about it. Tell them in 

advance. Before it is announced that something is going to be 

taken away, let them know what is coming. In place of this outdated VA medical facility, we are going to provide three CBOCs or 

two HCCs to provide better care in a more accessible manner. And 

we think that would go a long way to addressing this. We are not 

quite at the BRAC stage yet, we hope. 

Thank you. 

Chairman AKAKA. Mr. Cox. 

Mr. COX. Mr. Chairman, AFGE would be opposed to some process that, like BRAC, has been used for the military, or VA. We 

agree also that you need to look State-by-State, facility-by-facility, 

at the needs of those veterans. Obviously, I believe, the needs of 

veterans in Alaska and with the vast population is going to vary 

with the needs of veterans in North Carolina. I mean, what is happening in North Carolina is, yes, we are building a large health 

center in Charlotte at the expense of closing a full fledged VA Medical Center in Salisbury. 

Those are real issues that I think have to be looked at. How do 

you close VA medical centers and create outpatient clinics when a 

medical center is a hub of the operations of any health care 

system? 

Chairman AKAKA. Thank you. Mr. Cullinan, I know that VA’s 

construction process is something that you have been keeping your 

eye on for quite a while. 

Mr. CULLINAN. Yes, sir. 

Chairman AKAKA. What are the biggest challenges for VA at this 

time? And how should those challenges be addressed? 

Mr. CULLINAN. It is one of the things that we just talked about 

really. It has to do with VA letting veterans know what it is going 

88 

to do—I am referring to VA as if it were a sentient being—but letting the veterans know what they intend to do for them to provide 

proper health care services. 

The other issue, of course, is what to do with facilities that have 

served their purpose because they are outdated, because of shifting 

demographics. You know, the patient loads have moved elsewhere. 

Another huge issue, of course, is providing for rural veterans. I 

mean, that is something right now—there are parts of the country 

where not only is there no infrastructure, there simply are no providers. The responses to this has to do with providing satellite clinics, you know, vans, all the rest of it. But the key issue is letting 

veterans know what it is going on—what VA intends to do for 

them. 

Chairman AKAKA. Thank you. Mr. Cox, VA has requested over 

$1.9 billion for fiscal year 2010 for its construction projects, and 

also faces a huge backlog of projects yet to be completed. What recommendations would you make to Congress about building versus 

leasing facilities? 

Mr. COX. Mr. Chairman, I would make the same recommendation I believe about homeownership. We all prefer to own our 

homes versus to rent homes. And when the VA builds medical centers, owns these clinics and various things of that nature, it is the 

VA’s property. They have a pride in it. They take care of it. It is 

operated for veterans, and probably about 50 percent of the people 

that work in it are veterans. It creates that community that veterans so often seek. Many studies have shown that. 

We need to be building and owning VA facilities. With leasing 

you lose sight of the veterans and they are just mainstreamed into 

a health care system that is already struggling greatly in this country. The care of veterans is very, very unique. And I also believe 

veterans deserve first priority when it comes to care in this country, sir. 

Chairman AKAKA. Thank you for that response. 

Mr. Wise, what are the pros and cons of using Enhanced Use 

Leases? And how does VA’s use of them compare with that of other 

Federal agencies? 

Mr. WISE. Mr. Chairman, I think from the perspective of the Veterans Administration, a plus for using enhanced use leasing is it 

gives the VA a bit more flexibility compared to other forms of property disposal for underutilized or unutilized property. Thus, there 

are some advantages from the VA’s perspective in that the VA has 

more certainty that it will be able to retain the proceeds and ability 

to do more with the retention of the proceeds. 

As far as comparison with other agencies, the picture is varied. 

Each agency is governed by a different state. The majority of the 

agencies we looked at do have some authority to retain proceeds, 

but it varies somewhat from agency to agency. 

As you may know a bill that has been introduced in the House 

of Representatives that is intended to standarize the proceeds retention procedures for agencies. 

Chairman AKAKA. I thank you for that. Let me ask my final 

question. I have other questions that I will submit. 

For each of you, how significant of a role should community input 

and outside review play in the VA construction process? We have 

89 

been talking about transparency and you have mentioned this. And 

what are the potential pitfalls of a system that is not completely 

transparent? 

Mr. Wise? 

Mr. WISE. Mr. Chairman, from the perspective of enhanced use 

leasing, there are requirements and provisions that go into developing these leases that take into account certain community needs 

and other factors relevant to Administration enhanced use leases. 

Chairman AKAKA. Mr. Cullinan? 

Mr. CULLINAN. Thank you, Mr. Chairman. 

We believe that local involvement is essential to the process with 

respect to determining true need. Who knows better what their 

needs are than the potential patients or customers of the VA 

system. 

It also has to do with expectations—letting the veteran population in this case know what they can expect—what the outcome 

will be of a new facility, of an alteration, of a mission change in 

a facility. 

And finally, it helps very much in the end once all of these things 

are done in the political process. You are not going to have the outcries and outrage that are sometimes expressed due not to a bad 

plan necessarily, but of the fact that it is just misunderstood. So, 

in terms of establishing true need and involving them in the process early on to avoiding unnecessary problems, we think it vital. 

Chairman AKAKA. Thank you. 

Mr. Cox? 

Mr. COX. Seeking the input of the veterans, the employees who 

take care of the veterans, is essential to any process, as well as the 

community. And also, from Members of Congress. 

I have to share with you, Mr. Chairman, Congressman Mel Watt 

read in the newspaper about the Salisbury VA Medical Center and 

that was the first time he was informed that a medical center in 

his district was being closed and turned into an outpatient clinic. 

He had no knowledge. And I think, certainly, involving the Members of Congress is very, very important to the process, as it does 

create a transparency. 

Chairman AKAKA. Well, I want to thank all of our witnesses for 

appearing today. The VA’s construction process and priorities are 

important to all of us. There is a lot of money at stake in these 

decisions, and the system needs to be transparent to the public. 

VA construction projects have a great impact on so many of our 

veterans, and therefore, your input is very, very much appreciated. 

As a follow up to this hearing, I will be asking GAO for a global 

review of the CARES process with a detailed analysis of all of the 

proposals. 

Again, I want to say thank you very much for being here. 

[Whereupon, at 11:16 a.m., the Committee was adjourned.] 

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A P P E N D I X 

PREPARED STATEMENT OF JOY ILEM, ASSISTANT NATIONAL LEGISLATIVE DIRECTOR, DISABLED AMERICAN VETERANS

Mr. Chairman and Members of the Committee: The Disabled American Veterans 

(DAV) is pleased to submit testimony in conjunction with the Committee’s oversight 

hearing to examine the Department of Veterans Affairs (VA) construction process. 

We appreciate the opportunity to offer our views on progress by VA in delivering 

on the recommendations outlined in the 2004 Capital Asset Realignment for Enhanced Services (CARES) report, and to discuss the future of VA’s health care infrastructure. 

As we near the end of the first decade of the 21st century, we find ourselves at 

a critical juncture with respect to how VA health care will be delivered and what 

the VA of the future will be like in terms of its health care facility infrastructure. 

Although admittedly this vision is yet to gain clarity, one fact is certain—our Nation’s sick and disabled veterans deserve and have earned a stable, accessible VA 

health care system that is dedicated to their unique needs and can provide high 

quality, timely care where and when they need it. 

CARES BEGINS

Mr. Chairman, VA initiated CARES in 1999 with a pilot program in Veterans Integrated Service Network (VISN) 12, through the auspices of a contract with the 

firm of Booz Allen Hamilton. In 2001, that contract was canceled and VA integrated 

the CARES process within its own staff and other resources. The process took years 

to complete and required tens of thousands of staff-hours of effort and millions of 

dollars in studies. At its conclusion, with issuance of the so-called ‘‘Draft National 

CARES Plan,’’ the VA Secretary chartered and appointed a CARES Commission to 

independently evaluate and consider its outcomes and recommendations. These 

processes were largely conducted and reported in public. 

As a general principle, the Independent Budget Veterans Service Organizations 

(IBVSOs)—DAV, AMVETS, Paralyzed Veterans of America, and Veterans of Foreign 

Wars of the United States—concluded that CARES was a comprehensive and fully 

justified road map for VA’s infrastructure needs, as well as a model that VA could 

apply periodically to assess and adjust those priorities. However, once the Draft National CARES Plan was released in 2004, an immediate backlash developed to the 

proposed recommendations affecting the operating missions of a number of VA facilities. Many veterans, fearful that they would lose VA health care services, and 

selected Members of Congress, opposed the plans for changes in their States—and 

in their VA facilities, irrespective of the validity of the findings or the value of the 

plan as a whole. Local political pressure became intense, and in many cases the proposed CARES recommendations were scuttled. In one respect, it became clear that 

veterans and their Members of Congress were passionate and committed in keeping 

targeted VA facilities intact. Unfortunately, this passionate defense of the status 

quo stymied the CARES implementation phase, and caused VA to become much 

more reserved about sharing information about any strategic infrastructure 

planning. 

CARES STALLED

Upon completion of the Draft National CARES Plan in 2004, then-VA Secretary 

Anthony Principi testified before the House Veterans’ Affairs Subcommittee on 

Health. His testimony noted that CARES ‘‘reflects a need for additional investments 

of approximately $1 billion per year for the next five years to modernize VA’s medical infrastructure and enhance veterans’ access to care.’’ VA reports that through 

fiscal year (FY) 2009, Congress has appropriated $4.9 billion for construction 

projects since FY 2004. 

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On May 20, 2008, while not declaring CARES officially ‘‘dead,’’ then-VA Secretary 

James Peake spoke at the National Press Club and indicated, in answer to a question, that VA would be looking at factors beyond CARES to determine its future capital infrastructure planning needs. On July 18, 2008, Secretary Peake wrote to two 

Members of Congress that the planned Denver, Colorado, replacement VA medical 

center was ‘‘. . . not affordable . . .’’ as a traditional government-owned, VA-operated facility of the size, scope and price that had been designed. 

For nearly a decade, the IBVSOs have argued that the VA must be protected from 

deterioration of its health infrastructure, and the consequent decline in VA’s capital 

asset value. Year after year, we have urged Congress and the Administration to ensure that appropriated funding is adequate in VA’s capital budget so that VA can 

properly invest in its physical assets, protect their value, and ensure health care in 

safe and functional facilities long into the future. Likewise, we have stressed that 

VA’s facilities have an average age of more than 55 years; therefore, it is essential 

that funding be routinely dedicated to renovate, repair, and replace VA’s aging 

structures, capital, and plant equipment systems as needed. 

CAPITAL FUNDS DEFICIT WORSENED UNDER CARES

Mr. Chairman, unfortunately, the past decade of deferred and underfunded construction budgets has meant that VA has not adequately recapitalized its facilities, 

now leaving the health care system with a large backlog of major construction 

projects totaling between $6.5 billion to $10 billion, with an accompanying urgency 

to deal with this growing dilemma. 

One of the reasons VA’s construction backlog is so large and growing today is because both VA and Congress, by agreement with the two prior Administrations, allocated little to no capital construction funding during the pendency of the CARES 

process, over a six-year period. Agreeing with VA, the Appropriations Committees 

in both chambers provided few resources during the initial review phase, preferring 

to wait for CARES results, a decision the IBVSOs repeatedly opposed. We argued 

that a de facto moratorium on construction was unnecessary because a number of 

these projects obviously warranted funding, and would almost certainly be validated 

through the CARES review process. The House agreed with our views as evidenced 

by its passage of H.R. 811, the ‘‘Veterans Hospital Emergency Repair Act.’’ That bill 

passed unanimously on March 27, 2001, about two years into the CARES process. 

Let me quote, in part, what the bill’s sponsor, then Chairman Christopher H. Smith, 

had to say in introducing H.R. 811 over eight years ago: 

Mr. Speaker, for the past several years, we have noted that the President’s annual budget for VA health care has requested little or no funding 

for major medical facility construction projects for America’s veterans. As 

we indicated last year in our report to the Committee on the Budget on the 

Administration’s budget request for fiscal year 2001, VA has engaged in an 

effort through market-based research by independent organizations to determine whether present VA facility infrastructures are meeting needs in 

the most appropriate manner, and whether services to veterans can be enhanced with alternative approaches. This process, called ‘‘Capital Assets 

Realignment for Enhanced Services,’’ or ‘‘CARES,’’ has commenced within 

the Department of Veterans Affairs, but will require several years before 

bearing fruit. In the interim, Mr. Speaker, some VA hospitals need additional maintenance, repair and improvements to address immediate dangers and hazards, to promote safety and to sustain a reasonable standard 

of care for the Nation’s veterans. Recent reports by outside consultants and 

VA have revealed that dozens of VA health care buildings are still seriously 

at risk from seismic damage. The buildings at American Lake [Washington] 

damaged in yesterday’s earthquake were among those identified as being 

at the highest levels of risk. 

Also, Mr. Speaker, a report by VA identified $57 million in improvements 

were needed to address women’s health care; another report, by the Price 

Waterhouse firm, concluded that VA should be spending from 2 percent to 

4 percent of its ‘‘plant replacement value’’ (PRV) on upkeep and replacement of its health care facilities. This PRV value in VA is about $35 billion; 

thus, using the Price Waterhouse index on maintenance and replacement, 

VA should be spending from $700 million to $1.4 billion each year. In fact, 

in fiscal year 2001, VA will spend only $170.2 million for these purposes. 

While Congress authorized a number of major medical construction 

projects in the past three fiscal years, these have received no funding 

through the appropriations process. I understand that some of the more recent deferrals of major VA construction funding were intended to permit 

93 

the CARES process to proceed in an orderly fashion, avoiding unnecessary 

spending on VA hospital facilities that might, in the future, not be needed 

for veterans. I agree with this general policy, especially for those larger hospital projects, ones that ordinarily would be considered under our regular 

annual construction authorization authority. We need to resist wasteful 

spending, especially when overall funds are so precious. But I believe that 

I have a better plan. 

To our regret, the Senate never considered the proposed bill, Congress did not appropriate supportive funding, and the construction and maintenance backlog continued to grow unabated for the next several years. Incidentally, the needed infrastructure improvements for women veterans (for privacy, restroom accommodations, etc.) 

mentioned by Representative Smith, were largely never made. The VA projects that 

the number of women veterans turning to VA for care will likely double in the next 

2–4 years; therefore, it is essential that these infrastructure needs are addressed 

now. 

Another area of concern is VA research capital infrastructure. Over the past decade, minimal funding has been appropriated or allocated to maintain, upgrade or 

replace aging VA research facilities. Many VA facilities have run out of adequate 

research space. Plumbing, ventilation, electrical equipment and other required 

maintenance needs have been deferred. In some urgent cases, VA medical center directors have been forced to divert medical care appropriations to research projects 

to avoid dangerous or hazardous situations. 

The 2003 Draft National CARES Plan (DNCP) included $142 million for renovation of existing research space and to cover build-out costs for leased research facilities. However, these capital improvement costs were omitted from the VA Secretary’s final report on CARES, the so-called ‘‘CARES Decision Memorandum.’’ According to Friends of VA Medical Care and Health Research (FOVA), over the past 

decade, only $50 million has been spent on VA research construction or renovation 

in VA’s nationwide research system. Additionally, FOVA noted in its fiscal year 

2010 budget proposal, endorsed by DAV, that VA was congressionally-directed to 

conduct a comprehensive review of its research facilities and report to Congress on 

the deficiencies found, with recommended corrections. During FY 2008, the VA Office of Research and Development initiated a three-year examination of all VA research infrastructure to assess physical condition, capacity for current research, as 

well as program growth and sustainability of the space to conduct research. We urge 

the Committee to consider this report when completed, and for Congress to address 

VA’s research facilities improvement needs as part of a separate VA research infrastructure appropriation. VA’s Medical and Prosthetic Research program is a national asset to VA and veterans—it helps to ensure the highest standard of care for 

veterans enrolled in VA health care, and elevates health care practices and standards in all of America’s health care. That program cannot continue its record of 

achievement without adequate maintenance of the capital infrastructure in which 

it functions. 

CARES PROJECTION MODEL

One of the strengths of the CARES process was that it was not just a one-time 

snapshot of needs. As part of the process, VA developed a health care projection 

model to estimate current and future demand for health care services, and to assess 

the ability of its infrastructure to meet this demand. VA uses this projection model 

throughout its capital planning process, basing all projected capital projects upon 

the results of the demand model. 

VA’s model, also relied on for VA health care budget, policy and planning decisions, produces 20-year forecasts in demand for VA health services. It is a complex 

and sophisticated model that adjusts for numerous factors, including demographic 

shifts, morbidity and mortality, changing needs for health care based on aging of 

the veteran population, projections to account for health care innovations, and many 

other relevant factors. 

In a November 2007 House Veterans’ Affairs hearing before the Subcommittee on 

Health, VA’s testimony summed up the process: 

Once a potential project is identified, it is reviewed and scored based on 

criteria VA considers essential to providing high quality services in an efficient manner. The criteria VA utilizes in evaluating projects include service 

delivery enhancements, the safeguarding of assets, special emphasis programs, capital asset priorities, departmental alignment, and financial priorities. VA considers these new funding requirements along with existing 

CARES decisions in determining the projects and funding levels to request 

94 

as part of the VA budget submission. Appropriate projects are evaluated for 

joint needs with the Department of Defense and sharing opportunities. 

VA uses these evaluation criteria to prioritize its projects each year, releasing 

these results in its annual five-year capital plan. The most recent one, covering fiscal years 2009—2013, is part of the Congressional budget submission in ‘‘Volume 

III: Construction Activities.’’ This plan is central to VA’s funding requests and clearly lists the Department’s highest construction priorities for the current year, as well 

as for the immediate future. 

VA MOVING IN NEW DIRECTION

Mr. Chairman, over the past several years, VA began to discuss with the veterans 

service organization community, its desire to address its health infrastructure needs 

in a new way. VA acknowledged its challenges with aging infrastructure; changing 

health care delivery needs, including reduced demand for inpatient beds and increasing demands for outpatient care and medical specialty services; limited funding 

available for construction of new facilities; frequent delays in constructing and renovating space needed to increase access, and particularly the timeliness of construction projects. VA has noted, and we concur, that a decade or more is required from 

the time VA initially proposes a major medical facility construction project, until the 

doors actually open for veterans to receive care in that facility. VA indicated to us 

a necessity to consider alternative means to address the growing capital infrastructure backlog and the significant challenge of funding it. 

Given these significant challenges, VA has broached the idea of a new model for 

health care delivery, the Health Care Center Facility (HCCF) leasing program. 

Under the HCCF proposal, in lieu of the traditional approach to major medical facility construction, VA would obtain by long-term lease, a number of large outpatient 

clinics built to VA specifications. These large clinics would provide a broad range 

of outpatient services, including primary and specialty care as well as outpatient 

mental health services and ambulatory surgery. 

VA noted, that in addition to its new HCCF facilities, it would maintain its VA 

medical centers (VAMCs), larger independent outpatient clinics, community-based 

outpatient clinics (CBOCs) and rural outreach clinics. VA has argued that the 

HCCF model would allow VA to quickly establish new facilities that will provide 95 

percent of the care and services veterans will need in their catchment areas, specifically primary care, and a variety of specialty services, mental health, diagnostic 

testing and same-day ambulatory surgery. According to VA, veterans’ inpatient hospital services needed by these HCCFs would be provided through additional leases, 

VA staffed units, or other contracts or fee-for-service options with academic affiliates 

or in available community hospitals. 

We concur with VA that the HCCF model seems to offer a number of benefits in 

addressing its capital infrastructure problems including more modern facilities that 

meet current life-safety codes; better geographic placements; increased patient safety; reductions in veterans’ travel costs and increased convenience; flexibility to respond to changes in patient loads and technologies; overall savings in operating 

costs and in facility maintenance and reduced overhead in maintaining outdated 

medical centers. 

CHALLENGES TO HCCF MODEL

Nevertheless Mr. Chairman, while it offers some obvious advantages, the HCCF 

model also portends obvious challenges. Outside the CBOC environment, contract 

management in complex leased health care facilities is an untested practice in VA. 

Congress has spent years overseeing efforts to improve VA’s contracting performance across a range of activities, including obtaining contract health care for eligible 

veterans. Also, we are deeply concerned about the overall impact of this new model 

on the future of VA’s system of care, including the potential unintended consequences on continuity of high-quality care, delivery of comprehensive services, 

VA’s electronic health record (EHR), its recognized biomedical research and development programs, and particularly the impact on VA’s renowned graduate medical 

education and health professions training programs, in conjunction with longstanding affiliations with nearly every health professions university in the Nation. 

Additionally, we question VA’s ability to provide alternatives for maintaining its existing 130 nursing home care units, homeless programs, domiciliaries, compensated 

work therapy programs, hospice, adult day health care units, the Health Services 

Research and Development Program, and a number of other highly specialized services including 24 spinal cord injury centers, 10 blind rehabilitation centers, a variety 

of unique ‘‘centers of excellence’’ (in geriatrics, gerontology, mental illness, Parkinson’s, and multiple sclerosis), and critical care programs for veterans with serious 

95 

and chronic mental illnesses. We question if VA has seriously considered the probable impact on these programs in developing the HCCF concept. 

In general, the HCCF proposal seems to be a positive development, with good potential. Leasing has the advantage of avoiding long and costly in-house construction 

delays and can be adaptable, especially when compared to costs for renovating existing VA major medical facilities. Leasing options have been particularly valuable for 

VA as evidenced by the success of the leased space arrangements for many VA community-based outpatient clinics and Vet Centers. However, VA has virtually no experience managing as a tenant in a building owned by others, for the delivery of 

complex, subspecialty VA health care services. 

INPATIENT SERVICES: A MAJOR CONCERN

The IBVSOs are also concerned with VA’s plan for obtaining inpatient services 

under the HCCF model. VA says it will contract for these essential inpatient services with VA affiliates or community hospitals. First and foremost, we fear this approach could negatively impact safety, quality and continuity of care, and permanently privatize many services we believe VA should continue to provide. We have 

testified on this topic numerous times, and the IBVSOs have expressed objections 

to privatization and widespread contracting for care in the ‘‘Contract Care Coordination’’ and ‘‘Community Based Outpatient Clinics’’ sections of the Fiscal Year 2010 

Independent Budget. We call the Committee’s attention to those specific concerns. 

Mr. Chairman, in November 2008, VA responded to yours and Senator Rockefeller’s request for more information on VA’s plans for the newly proposed HCCF 

leasing initiative. To summarize that response, VA advised it originally identified 

22 sites that could potentially be considered appropriate for adoption of the HCCF 

concept. Following additional analysis, that number was reduced to eight potential 

sites for review, including Butler, Pennsylvania; Lexington, Kentucky; Monterey and 

Loma Linda, California; Montgomery, Alabama; and Charlotte, Fayetteville and 

Winston-Salem, North Carolina. 

VA also addressed a number of other specific questions in the November 2008 letter, including whether studies had been carried out to determine the effectiveness 

of the current approach; the full extent of the current construction backlog of 

projects, and its projected cost over the next five years to complete; the extent to 

which national veterans organizations were involved in the development of the 

HCCF proposal; the engagement of community health care providers related to capacity to meet veterans’ needs; the ramifications on the delivery of long-term care 

and inpatient specialty care; and whether VA would be able to ensure that needed 

inpatient capacity will remain available. 

I will comment on some of the key responses from VA related to these noted questions. Initially, it appears VA has a reasonable foundation for assessing capital 

needs and has been forthright with the estimated total costs for ongoing major medical facility projects. For this year, VA estimated $2.3 billion in funding needs for 

existing and ongoing projects. The Department estimated that the total funding requirement for major medical facility projects over the next five years would be in 

excess of $6.5 billion. Additionally, if the new HCCF initiative is fully implemented, 

VA indicated it would need approximately $385 million more to execute seven of the 

eight new HCCF leases. 

We agree with VA’s assertion that it needs a balanced program of capital assets, 

both owned and leased buildings, to ensure demands are met under the current and 

projected workload. Likewise, we agree with VA that the HCCF concept could provide modern health care facilities that would not otherwise be available due to the 

predictable constraints of VA’s major construction program. 

VA indicated in its letter that the eight sites proposed for the HCCF initiative 

were chosen to ensure there would be little impact on VA specialty inpatient services or on delivery of long-term care. However, VA made a statement with respect 

to the HCCF model for the proposed sites that is somewhat confounding (VA’s response to question 5), as follows: ‘‘By focusing the outpatient needs through HCCF’s, 

major construction funding could then shift to the remaining capital needs.’’ What 

is not clear to us is the extent to which VA plans to deploy the HCCF model. In 

areas where existing CBOCs need to be replaced or expanded with additional services due to the need to increase capacity, the HCCF model would seem appropriate 

and beneficial to veterans. On the other hand, if VA plans to replace the majority 

or even a large fraction of all VAMCs with HCCFs, such a radical shift would pose 

a number of concerns for DAV. 

Mr. Chairman, before the HCCF concept is permitted to go forward on a larger 

scale, and with a major private sector component as described by VA, we believe 

VA must address and resolve a number of challenges. Among these questions are: 

96 

• Facility governance, especially with respect to the large numbers of non-VA employees who would be treating veterans; 

• VA directives and rule changes that govern health care delivery and ensure 

safety and uniformity of the quality of care; 

• VA space planning criteria and design guides’ use in non-VA facilities; 

• VA’s critical research activities, most of which improve the lives not only of veterans but of all Americans; 

• VA’s electronic health record, which many observers, including the President, 

have rightly lauded as the EHR standard that other health care systems should aim 

to achieve; and 

• Continuity of care within the mix of public/private facilities, as well as for those 

VA-enrolled veterans who relocate to other areas from the HCCF environment. 

Fully addressing these and related questions are important, but we see this challenge as only a small part of the overall picture related to VA health infrastructure 

needs in the 21st century. The emerging HCCF plan does not address the fate of 

VA’s 153 medical centers located throughout the Nation that are on average 55 

years of age or older. It does not address long-term care needs of the aging veteran 

population, treatment of the chronically and seriously mentally ill, the unresolved 

rural health access issues, or the lingering questions on improving VA’s research infrastructure. 

HISTORY AS A LESSON FOR THE FUTURE

Today’s VA largely was built during and immediately following World War II, to 

become an exalted place of care for over 500,000 injured war veterans. Some of 

those wounded remained hospitalized in VA for the remainder of their lives. VA’s 

spinal cord injury, blind rehabilitation and prosthetics and sensory aids programs 

got their genesis or major expansions from World War II veterans’ needs. In 1946, 

Congress established the Department of Medicine and Surgery (DM&S), now the 

Veterans Health Administration, and gave DM&S many independent powers that 

other Federal agencies lacked, in order to care for those wounded heroes. DM&S 

Memorandum No. 2 formed the VA-medical school affiliation relationships, to guarantee the young and energetic physicians-in-training of that age would turn their 

full attention to wounded and ill veterans. In conjunction with new affiliations, VA 

made a collective decision to locate its new post-war VA hospitals nearby or alongside existing medical schools’ academic health centers for the potential symbiotic effect and to help ensure a high-quality physician workforce remained available to 

sick and disabled veterans. VA’s biomedical research and development programs 

and its remarkable academic training programs we see in practice today emerged 

out of these seminal decisions and have become instrumental in both aiding VA 

with stronger academic credentials, advancing evidence-based treatments, and promoting a higher standard of care for wounded and sick veterans. Even with the advent of primary care and VA’s other transformations during the past decade, this 

cooperative VA-academic system of care is still largely intact more than 60 years 

after World War II. 

Mr. Chairman, as Congress considers the future of VA’s infrastructure, and VA’s 

future overall, it is good to remember our history, and to learn from it. Today, the 

Nation confronts two wars that, when concluded, will have likely produced over two 

million new veterans. While early in the process, we know from VA that already 

more than 400,000 of them have contacted VA for health care, for conditions ranging 

from post-deployment mental health conditions to minor musculoskeletal problems 

to severe brain injury with multiple amputations. No less than earlier generations 

and probably more so, these veterans will need VA to be sustained for them. The 

question that confronts the Committee today is—what that VA system is going to 

be, what it will offer, and how it will be managed and sustained. We in the veterans 

service organization community cannot plan the future VA, and we would not expect 

your Committee to do so independently. Given the President’s pledge to create the 

VA of the 21st century; however, we do expect that VA should be mandated to establish its plan in a transparent way, vet that plan through our community and 

other interested parties, and provide its plan to Congress. We hope that all our communities (both inside and outside VA) share our concerns and want to help VA mold 

a strategic capital plan that all can accept and help collectively to accomplish. 

However, until this process materializes, we fear that VA’s capital programs and the 

significant effects on the system as a whole and on veterans individually, will go 

unchanged, ultimately risking disaster for VA and for America’s sick and disabled 

veterans. 

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AVOIDING THE OBVIOUS

As we grapple with the issue of health care and insurance reform in America, we 

must make every effort to protect the VA system for future generations of sick and 

disabled veterans. A well thought-out capital and strategic plan is urgently needed, 

and the tough decisions must be made, not avoided as in the response to the seemingly aborted CARES process. We are pleased the current Administration has committed to building the VA of the 21st century. However, we are not sure what this 

may mean, nor do we have the value of a VA comprehensive infrastructure plan. 

Regardless of the direction VA takes, we must insist there is consideration of all 

the elements we have described throughout our testimony. Critical elements in VA 

make up what are considered by all accounts the ‘‘best care anywhere’’ in the United 

States. We want to ensure VA’s infrastructure plan maintains the integrity of the 

VA health care system, and all the benefits VA brings to its enrolled population. 

We want to ensure care is not fragmented and that high quality, safe health care 

remains the bulwark of VA’s programs. 

CARES: AN UNFULFILLED VISION

Mr. Chairman, hitting its apex in 2004, we at DAV believe CARES provided a 

solid foundation for, and a valuable assessment of, what VA had in its health care 

infrastructure portfolio and where VA needed to go, but we ask today, what substantive action has been taken since the release of the CARES report to overhaul 

the system to make way for the 21st century? Currently VA is planning construction 

of five major VA medical centers, in Orlando, Florida; Denver, Colorado; Las Vegas, 

Nevada; Louisville, Kentucky; and, New Orleans, Louisiana. None of the decisions 

to build these facilities was affected by the CARES process in any way but the most 

marginal sense. However, the decisions were unquestionably affected by the political 

process. While VA is addressing these political demands, it is still ignoring similar 

deficits at facilities such as in Togus, Maine; Sheridan, Wyoming; Wichita, Kansas; 

East Orange, New Jersey; Hines, Illinois; Mountain Home, Tennessee; Battle Creek, 

Michigan; and more than 100 other older VA medical centers, some of which are 

in, or are reaching, dire need for infusion of major infrastructure funding. 

VA: AT RISK

At this juncture, we believe VA soon may be in a very precarious situation. Operations Iraqi and Enduring Freedom continue. Each day we see growth in future 

health care, rehabilitation and post-deployment mental health needs in our newest 

generation of war veterans, and record demand for VA care by previous generations 

of disabled veterans. As a Nation, we must be good stewards of taxpayer dollars, 

yet we must also fulfill the commitment of the Nation to care for those who have 

suffered illness or injury as a result of military service and combat deployment. 

Concurrently, the American economy is unstable, Social Security, Medicare and 

Medicaid are seen by many to be unsustainable if not changed, and the new Administration and Congress are trying to formulate a plan to ensure access to basic 

health care services for every U.S. resident, and simultaneously reform the private 

insurance system. Changes coming from those trends, and that work, will undoubtedly affect the viability of VA in the future, but it is impossible to know the depth 

of that impact or its nature. Unfortunately, from what we do know, VA is largely 

uninvolved in the health care reform debate, and therefore, VA may be negatively 

impacted by those larger reforms. In our opinion, the VA, as a cabinet agency, cannot be permitted to sit on the sideline of health care reform, but must be proactive 

and fully engaged in the debate. 

ADVOCATES WANT A 21ST CENTURY VA

As advocates for veterans, we do not accept VA’s contention that replacing outdated VA facilities is ‘‘. . . not affordable.’’ VA’s infrastructure needs have been deferred, neglected and delayed for far too long, to the advantage of other consumers 

of Federal dollars; therefore, without question facility replacements and updating 

are going to be costly, and both Congress and the Administration are confronted 

with that reality. The FY 2008 VA Asset Management Plan provides the most recent estimate of VA’s needs. Using the guidance of the Federal Government’s Federal Real Property Council, the value of VA’s infrastructure is just over $85 billion. 

Accordingly, using industry standards as a yardstick, VA’s capital budget should be 

between $4.25 billion and $6.8 billion annually in order to maintain its infrastructure at that value. VA’s capital budget request for FY 2009—which includes major 

and minor construction, maintenance, leases, and equipment—was $3.6 billion. 

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The IBVSOs greatly appreciate that Congress provided funding above that level 

this year by an increase over the Administration’s request of $750 million in Major 

and Minor Construction alone. That higher amount brought the total capital budget 

for FY 2009 in line with industry standards. We strongly urge that these targets 

continue to be met and we would hope that future VA requests use standard guidelines as a starting point without requiring Congress to add additional funding. We 

also are mindful that Congress included nearly $1 billion in the recent economic 

stimulus package that will fund VA infrastructure improvements and represents a 

significant re-payment to VA of capital funds it should have received years ago 

while CARES was underway. 

DESIGN THE FUTURE

Congress and the Administration must work together to secure VA’s future to design a VA of the 21st century. It will take the joint cooperation of Congress and 

the Administration to support this reform, while setting aside resistance to change, 

even dramatic change, when change is demanded and supported by valid data. Accordingly, we urge the Administration and Congress to live up to the President’s 

words by making a steady, stable investment in VA’s capital infrastructure to bring 

the system up to match the 21st century needs of veterans. 

COMMUNICATIONS WILL BE KEY TO SUCCESS

Finally, one of our community’s pent-up frustrations with respect to VA’s infrastructure is lack of information and communication. Communications have been 

sorely lacking for the past several years, and VA has seemingly resisted keeping us 

informed of its planning. In the spirit of the President’s very first executive order, 

on the transparency of government, we ask VA do a better job of communicating 

with our community, enrolled veterans, labor organizations and VA’s own employees, local government and their affected communities, and other stakeholders, as the 

VA capital and strategic planning processes move forward. It is imperative that all 

of these groups understand VA’s ‘‘big picture’’ and how it may affect them. Talking 

openly and discussing potential changes will help resolve the understandable angst 

about this complex and important question of VA health care infrastructure. While 

we agree that VA is not its buildings, and that the patient should be at the center 

of VA care and concern, VA must be able to maintain an adequate infrastructure 

around which to build and sustain its patient care system. The time to act is now— 

our Nation’s veterans deserve no less than our best effort. 

Thank you, Mr. Chairman and Members of the Committee for allowing DAV to 

share our views on this critical topic. 

Æ