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and Department of Veterans Affairs health care fa-
cilities in order to allow more effective and efficient
use of those health resources.
(3) Health care beneficiaries of the Depart-
ments of Defense and Veterans Affairs, whether ac-
tive servicemembers, veterans, retirees, or family
members of active or retired servicemembers, should
have full access to the health care and services that
Congress has authorized for them.
(4) The Secretary of Defense and the Secretary
of Veterans Affairs, and the appropriate officials of
each of the Departments of Defense and Veterans
Affairs with responsibilities related to health care,
have not taken full advantage of the opportunities
provided by law to make their respective health re-
sources available to health care beneficiaries of the
other Department in order to provide improved
health care for the whole number of beneficiaries.
(5) After the many years of support and en-
couragement from Congress, the Departments have
made little progress in health resource sharing and
the intended results of the sharing authority have
not been achieved.
(b) SENSE OF CONGRESS.—Congress urges the Sec-
retary of Defense and the Secretary of Veterans Affairs—
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(1) to commit their respective Departments to
significantly improve mutually beneficial sharing and
coordination of health care resources and services
during peace and war;
(2) to build organizational cultures supportive
of improved sharing and coordination of health care
resources and services; and
(3) to establish and achieve measurable goals to
facilitate increased sharing and coordination of
health care resources and services.
(c) PURPOSE.—It is the purpose of this Act—
(1) to authorize a program to advance mutually
beneficial sharing and coordination of health care re-
sources between the two Departments consistent
with the longstanding intent of Congress; and
(2) to establish a basis for improved strategic
planning by the Department of Defense and Depart-
ment of Veterans Affairs health systems to ensure
that scarce health care resources are used more ef-
fectively and efficiently in order to enhance access to
high quality health care for their respective bene-
ficiaries.
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SEC. 723. REVISED COORDINATION AND SHARING GUIDE-
LINES.
(a) IN GENERAL.—(1) Section 8111 of title 38,
United States Code, is amended to read as follows:
‘‘§ 8111. Sharing of Department of Veterans Affairs
and Department of Defense health care
resources
‘‘(a) REQUIRED COORDINATION AND SHARING OF
HEALTH CARE RESOURCES.—The Secretary of Veterans
Affairs and the Secretary of Defense shall enter into
agreements and contracts for the mutually beneficial co-
ordination, use, or exchange of use of the health care re-
sources of the Department of Veterans Affairs and the De-
partment of Defense with the goal of improving the access
to, and quality and cost effectiveness of, the health care
provided by the Veterans Health Administration and the
Military Health System to the beneficiaries of both De-
partments.
‘‘(b) JOINT REQUIREMENTS FOR SECRETARIES OF
VETERANS AFFAIRS AND DEFENSE.—To facilitate the
mutually beneficial coordination, use, or exchange of use
of the health care resources of the two Departments, the
two Secretaries shall carry out the following functions:
‘‘(1) Develop and publish a joint strategic vision
statement and a joint strategic plan to shape, focus,
and prioritize the coordination and sharing efforts
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among appropriate elements of the two Departments
and incorporate the goals and requirements of the
joint sharing plan into the strategic and perform-
ance plan of each Department under the Govern-
ment Performance and Results Act.
‘‘(2) Jointly fund the interagency committee
provided for under subsection (c).
‘‘(3) Continue to facilitate and improve sharing
between individual Department of Veterans Affairs
and Department of Defense health care facilities,
but giving priority of effort to initiatives (A) that
improve sharing and coordination of health resources
at the intraregional and nationwide levels, and (B)
that improve the ability of both Departments to pro-
vide coordinated health care.
‘‘(4) Establish a joint incentive program under
subsection (d).
‘‘(c) DOD–VA HEALTH EXECUTIVE COMMITTEE.—
(1) There is established an interagency committee to be
known as the Department of Veterans Affairs-Department
of Defense Health Executive Committee (hereinafter in
this section referred to as the ‘Committee’). The Com-
mittee is composed of—
‘‘(A) the Deputy Secretary of the Department
of Veterans Affairs and such other officers and em-
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ployees of the Department of Veterans Affairs as the
Secretary of Veterans Affairs may designate; and
‘‘(B) the Under Secretary of Defense for Per-
sonnel and Readiness and such other officers and
employees of the Department of Defense as the Sec-
retary of Defense may designate.
‘‘(2)(A) During odd-numbered fiscal years, the Dep-
uty Secretary of Veterans Affairs shall chair the Com-
mittee. During even-numbered fiscal years, the Under Sec-
retary of Defense shall chair the Committee.
‘‘(B) The Deputy Secretary and the Under Secretary
shall determine the size and structure of the Committee,
as well as the administrative and procedural guidelines for
the operation of the Committee. The two Departments
shall share equally the Committee’s cost of personnel and
administrative support and services. Support for such pur-
poses shall be provided at a level sufficient for the efficient
operation of the Committee, including a permanent staff
and, as required, other temporary working groups of ap-
propriate departmental staff and outside experts.
‘‘(3) The Committee shall recommend to the Secre-
taries strategic direction for the joint coordination and
sharing efforts between and within the two Departments
under this section and shall oversee implementation of
those efforts.
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‘‘(4) The Committee shall submit to the two Secre-
taries and to Congress an annual report containing such
recommendations as the Committee considers appropriate.
The two Secretaries shall implement the Committee’s rec-
ommendations unless, with respect to any such rec-
ommendation, either Secretary formally determines that
the recommendation should not be implemented or should
be implemented in a modified form. Upon making such
a determination, the Secretary making the determination
shall submit to Congress notice of the Secretary’s deter-
mination and the Secretary’s rationale for the determina-
tion.
‘‘(5) In order to enable the Committee to make rec-
ommendations in its annual report under paragraph (4),
the Committee shall do the following:
‘‘(A) Review existing policies, procedures, and
practices relating to the coordination and sharing of
health care resources between the two Departments.
‘‘(B) Identify changes in policies, procedures,
and practices that, in the judgment of the Com-
mittee, would promote mutually beneficial coordina-
tion, use, or exchange of use of the health care re-
sources of the two Departments, with the goal of im-
proving the access to, and quality and cost effective-
ness of, the health care provided by the Veterans
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Health Administration and the Military Health Sys-
tem to the beneficiaries of both Departments.
‘‘(C) Identify and assess further opportunities
for the coordination and sharing of health care re-
sources between the Departments that, in the judg-
ment of the Committee, would not adversely affect
the range of services, the quality of care, or the es-
tablished priorities for care provided by either De-
partment.
‘‘(D) Review the plans of both Departments for
the acquisition of additional health care resources,
especially new facilities and major equipment and
technology, in order to assess the potential effect of
such plans on further opportunities for the coordina-
tion and sharing of health care resources.
‘‘(E) Review the implementation of activities
designed to promote the coordination and sharing of
health care resources between the Departments. To
assist in this effort, the Committee chairman, under
procedures jointly developed by the Secretaries of
both Departments, may task the Inspectors General
of either or both Departments.
‘‘(d) JOINT INCENTIVES PROGRAM.—(1) Pursuant to
subsection (b)(4), the two Secretaries shall carry out a
program to identify, provide incentives to, implement,
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fund, and evaluate creative coordination and sharing ini-
tiatives at the facility, intraregional and nationwide levels.
The program shall be administered by the Committee es-
tablished in subsection (c), under procedures jointly pre-
scribed by the two Secretaries.
‘‘(2) To facilitate the incentive program, there is es-
tablished in the Treasury, effective on October 1, 2003,
a DOD–VA Health Care Sharing Incentive Fund. Each
Secretary shall annually contribute to the fund a minimum
of $15,000,000 from the funds appropriated to that Sec-
retary’s Department. Such funds shall remain available
until expended.
‘‘(3)(A) The implementation and effectiveness of the
program under this subsection shall be reviewed annually
by the joint Department of Defense-Department of Vet-
erans Affairs Inspector General review team established
in section 724(i) of the Department of Defense-Depart-
ment of Veterans Affairs Health Resources Sharing and
Performance Improvement Act of 2002. On completion of
the annual review, the review team shall submit a report
to the two Secretaries on the results of the review. Such
report shall be submitted through the Committee to the
Secretaries not later than December 31 of each calendar
year. The Secretaries shall forward each report, without
change, to the Committees on Armed Services and Vet-
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erans’ Affairs of the Senate and House of Representatives
not later than February 28 of the following year.
‘‘(B) Each such report shall describe activities carried
out under the program under this subsection during the
preceding fiscal year. Each report shall include at least
the following:
‘‘(i) An analysis of the initiatives funded by the
Committee, and the funds so expended by such ini-
tiatives, from the Health Care Sharing Incentive
Fund, including the purposes and effects of those
initiatives on improving access to care by bene-
ficiaries, improvements in the quality of care re-
ceived by those beneficiaries, and efficiencies gained
in delivering services to those beneficiaries.
‘‘(ii) Other matters of interest, including rec-
ommendations from the review team to make legisla-
tive improvements to the program.
‘‘(4) The program under this subsection shall termi-
nate on September 30, 2007.
‘‘(e) GUIDELINES AND POLICIES FOR IMPLEMENTA-
TION OF COORDINATION AND SHARING RECOMMENDA-
TIONS, CONTRACTS, AND AGREEMENTS.—(1) To imple-
ment the recommendations made by the Committee under
subsection (c)(2), as well as to carry out other health care
contracts and agreements for coordination and sharing
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initiatives as they consider appropriate, the two Secre-
taries shall jointly issue guidelines and policy directives.
Such guidelines and policies shall provide for coordination
and sharing that—
‘‘(A) is consistent with the health care respon-
sibilities of the Department of Veterans Affairs
under this title and with the health care responsibil-
ities of the Department of Defense under chapter 55
of title 10;
‘‘(B) will not adversely affect the range of serv-
ices, the quality of care, or the established priorities
for care provided by either Department; and
‘‘(C) will not reduce capacities in certain spe-
cialized programs of the Department of Veterans Af-
fairs that the Secretary is required to maintain in
accordance with section 1706(b) of this title.
‘‘(2) To facilitate the sharing and coordination of
health care services between the two Departments, the two
Secretaries shall jointly develop and implement guidelines
for a standardized, uniform payment and reimbursement
schedule for those services. Such schedule shall be imple-
mented no later than the beginning of fiscal year 2004
and shall be revised periodically as necessary.
‘‘(3)(A) The guidelines established under paragraph
(1) shall authorize the heads of individual Department of
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Defense and Department of Veterans Affairs medical fa-
cilities and service regions to enter into health care re-
sources coordination and sharing agreements.
‘‘(B) Under any such agreement, an individual who
is a primary beneficiary of one Department may be pro-
vided health care, as provided in the agreement, at a facil-
ity or in the service region of the other Department that
is a party to the sharing agreement.
‘‘(C) Each such agreement shall identify the health
care resources to be shared.
‘‘(D) Each such agreement shall provide, and shall
specify procedures designed to ensure, that the availability
of direct health care to individuals who are not primary
beneficiaries of the providing Department is (i) on a refer-
ral basis from the facility or service region of the other
Department, and (ii) does not (as determined by the head
of the providing facility or region) adversely affect the
range of services, the quality of care, or the established
priorities for care provided to the primary beneficiaries of
the providing Department.
‘‘(E) Each such agreement shall provide that a pro-
viding Department or service region shall be reimbursed
for the cost of the health care resources provided under
the agreement and that the rate of such reimbursement
shall be as determined in accordance with paragraph (2).
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‘‘(F) Each proposal for an agreement under this
paragraph shall be effective (i) on the 46th day after the
receipt of such proposal by the Committee, unless earlier
disapproved, or (ii) if earlier approved by the Committee,
on the date of such approval.
‘‘(G) Any funds received through such a uniform pay-
ment and reimbursement schedule shall be credited to
funds that have been allotted to the facility of either De-
partment that provided the care or services, or is due the
funds from, any such agreement.
‘‘(f) ANNUAL JOINT REPORT.—(1) At the time the
President’s budget is transmitted to Congress in any year
pursuant to section 1105 of title 31, the two Secretaries
shall submit to Congress a joint report on health care co-
ordination and sharing activities under this section during
the fiscal year that ended during the previous calendar
year.
‘‘(2) Each report under this section shall include the
following:
‘‘(A) The guidelines prescribed under subsection
(e) of this section (and any revision of such guide-
lines).
‘‘(B) The assessment of further opportunities
identified under subparagraph (C) of subsection
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progress of health resources sharing between the two De-
partments as a consequence of the Department of De-
fense-Department of Veterans Affairs Health Resources
Sharing and Performance Improvement Act of 2002 and
of other sharing initiatives taken during the period covered
by the report. Such status report shall indicate the status
of such sharing and shall include appropriate data as well
as analyses of that data. The annual report shall include
the following:
‘‘(A) Enumerations and explanations of major
policy decisions reached by the two Secretaries dur-
ing the period covered by the report period with re-
spect to sharing between the two Departments.
‘‘(B) A description of any purposes of Depart-
ment of Defense-Department of Veterans Affairs
Health Resources Sharing and Performance Im-
provement Act of 2002 that presented barriers that
could not be overcome by the two Secretaries and
their status at the time of the report.
‘‘(C) A description of progress made in new
ventures or particular areas of sharing and coordina-
tion that would be of policy interest to Congress con-
sistent with the intent of such Act.
‘‘(D) A description of enhancements of access
to care of beneficiaries of both Departments that
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came about as a result of new sharing approaches
brought about by such Act.
‘‘(E) A description of proposals for which funds
are provided through the joint incentives program
under subsection (d), together with a description of
their results or status at the time of the report, in-
cluding access improvements, savings, and quality-
of-care enhancements they brought about, and a de-
scription of any additional use of funds made avail-
able under subsection (d).
‘‘(g) DEFINITIONS.—For the purposes of this section:
‘‘(1) The term ‘beneficiary’ means a person who
is a primary beneficiary of the Department of Vet-
erans Affairs or of the Department of Defense.
‘‘(2) The term ‘direct health care’ means health
care provided to a beneficiary in a medical facility
operated by the Department or the Department of
Defense.
‘‘(3) The term ‘head of a medical facility’ (A)
with respect to a medical facility of the Department,
means the director of the facility, and (B) with re-
spect to a medical facility of the Department of De-
fense, means the medical or dental officer in charge
or the contract surgeon in charge.
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‘‘(4) The term ‘health-care resource’ includes
hospital care, medical services, and rehabilitative
services, as those terms are defined in paragraphs
(5), (6), and (8), respectively, of section 1701 of this
title, services under sections 1782 and 1783 of this
title, any other health-care service, and any health-
care support or administrative resource.
‘‘(5) The term ‘primary beneficiary’ (A) with
respect to the Department means a person who is el-
igible under this title (other than under section
1782, 1783, or 1784 or subsection (d) of this sec-
tion) or any other provision of law for care or serv-
ices in Department medical facilities, and (B) with
respect to the Department of Defense, means a
member or former member of the Armed Forces who
is eligible for care under section 1074 of title 10.
‘‘(6) The term ‘providing Department’ means
the Department of Veterans Affairs, in the case of
care or services furnished by a facility of the Depart-
ment of Veterans Affairs, and the Department of
Defense, in the case of care or services furnished by
a facility of the Department of Defense.
‘‘(7) The term ‘service region’ means a geo-
graphic service area of the Veterans Health Admin-
istration, in the case of the Department of Veterans
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Affairs, and a service region, in the case of the De-
partment of Defense.’’.
(2) The item relating to that section in the table of
sections at the beginning of chapter 81 of title 38, United
States Code, is amended to read as follows:
‘‘8111. Sharing of Department of Veterans Affairs and Department of Defense
health care resources.’’.
(b) CONFORMING AMENDMENT.—Section 1104 of
title 10, United States Code, is amended by striking
‘‘may’’ and inserting ‘‘shall’’.
(c) EFFECTIVE DATE.—The amendments made by
this section shall take effect on October 1, 2003.
SEC. 724. HEALTH CARE RESOURCES SHARING AND CO-
ORDINATION PROJECT.
(a) ESTABLISHMENT.—(1) The Secretary of Vet-
erans Affairs and the Secretary of Defense shall conduct
a health care resources sharing project to serve as a test
for evaluating the feasibility, and the advantages and dis-
advantages, of measures and programs designed to im-
prove the sharing and coordination of health care and
health care resources between the Department of Veterans
Affairs and the Department of Defense. The project shall
be carried out, as a minimum, at the sites identified under
subsection (b).
(2) Reimbursement between the two Departments
with respect to the project under this section shall be made
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in accordance with the provisions of section 8111(e)(2) of
title 38, United States Code, as amended by section
723(a).
(b) SITE IDENTIFICATION.—(1) Not later than 90
days after the date of the enactment of this Act, the Secre-
taries shall jointly identify no less than five sites for the
conduct of the project under this section.
(2) For purposes of this section, a site at which the
resource sharing project shall be carried out is an area
in the United States in which—
(A) one or more military treatment facilities
and one or more VA health care facilities are situ-
ated in relative proximity to each other, including fa-
cilities engaged in joint ventures as of the date of
the enactment of this Act; and
(B) for which an agreement to coordinate care
and programs for patients at those facilities could be
implemented not later than October 1, 2004.
(c) CONDUCT OF PROJECT.—(1) At sites at which
the project is conducted, the Secretaries shall provide a
test of a coordinated management system for the military
treatment facilities and VA health care facilities partici-
pating in the project. Such a coordinated management
system for a site shall include at least one of the elements
specified in paragraph (2), and each of the elements speci-
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fied in that paragraph must be included in the coordinated
management system for at least two of the participating
sites.
(2) Elements of a coordinated management system
referred to in paragraph (1) are the following:
(A) A budget and financial management system
for those facilities that—
(i) provides managers with information
about the costs of providing health care by both
Departments at the site;
(ii) allows managers to assess the advan-
tages and disadvantages (in terms of relative
costs, benefits, and opportunities) of using re-
sources of either Department to provide or en-
hance health care to beneficiaries of either De-
partment.
(B) A coordinated staffing and assignment sys-
tem for the personnel (including contract personnel)
employed at or assigned to those facilities, including
clinical practitioners of either Department.
(C) Medical information and information tech-
nology systems for those facilities that—
(i) are compatible with the purposes of the
project;
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(ii) communicate with medical information
and information technology systems of cor-
responding elements of those facilities; and
(iii) incorporate minimum standards of in-
formation quality that are at least equivalent to
those adopted for the Departments at large in
their separate health care systems.
(d) PHARMACY BENEFIT.—(1) One of the elements
that shall be tested in at least two sites in accordance with
subsection (c) is a pharmacy benefit under which bene-
ficiaries of either Department shall have access, as part
of the project, to pharmaceutical services of the other De-
partment participating in the project.
(2) The two Secretaries shall enter into a memo-
randum of agreement to govern the establishment and
provision not later than October 1, 2004, of pharma-
ceutical services authorized by this section. In the case of
beneficiaries of the Department of Defense, the authority
under the preceding sentence for such access to pharma-
ceutical services at a VA health care facility includes au-
thority for medications to be dispensed based upon a pre-
scription written by a licensed health care practitioner
who, as determined by the Secretary of Defense, is a cer-
tified practitioner.
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(e) AUTHORITY TO WAIVE CERTAIN ADMINISTRA-
TIVE POLICIES.—(1)(A) In order to carry out subsections
(c) and (d), the Secretary of Defense may, in the Sec-
retary’s discretion, waive any administrative policy of the
Department of Defense otherwise applicable to those sub-
sections (including policies applicable to pharmaceutical
benefits) that specifically conflicts with the purposes of the
project, in instances in which the Secretary determines
that the waiver is necessary for the purposes of the
project.
(B) In order to carry out subsections (c) and (d), the
Secretary of Veterans Affairs may, in the Secretary’s dis-
cretion, waive any administrative policy of the Department
of Veterans Affairs otherwise applicable to those sub-
sections (including policies applicable to pharmaceutical
benefits) that specifically conflicts with the purposes of the
project, in instances in which the Secretary determines
that the waiver is necessary for the purposes of the
project.
(C) The two Secretaries shall establish procedures for
resolving disputes that may arise from the effects of policy
changes that are not covered by other agreement or exist-
ing procedures.
(2) No waiver under paragraph (1) may alter any
labor-management agreement in effect as of the date of
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the enactment of this Act or adopted by either Depart-
ment during the period of the project.
(f) USE BY DOD OF CERTAIN TITLE 38 PERSONNEL
AUTHORITIES.—(1) In order to carry out subsections (c)
and (d), the Secretary of Defense may apply to civilian
personnel of the Department of Defense assigned to or
employed at a military treatment facility participating in
the project any of the provisions of subchapters I, III, and
IV of chapter 74 of title 38, United States Code, deter-
mined appropriate by the Secretary.
(2) For such purposes, any reference in such
chapter—
(A) to the ‘‘Secretary’’ or the ‘‘Under Secretary
for Health’’ shall be treated as referring to the Sec-
retary of Defense; and
(B) to the ‘‘Veterans Health Administration’’
shall be treated as referring to the Department of
Defense.
(g) FUNDING.—From amounts available for health
care for a fiscal year, each Secretary shall make available
to carry out the project not less than—
(1) $5,000,000 for fiscal year 2003;
(2) $10,000,000 for fiscal year 2004; and
(3) $15,000,000 for each succeeding year dur-
ing which the project is in effect.
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(h) DEFINITIONS.—For purposes of this section:
(1) The term ‘‘military treatment facility’’
means a medical facility under the jurisdiction of the
Secretary of a military department.
(2) The term ‘‘VA health care facility’’ means
a facility under the jurisdiction of the Veterans
Health Administration of the Department of Vet-
erans Affairs.
(i) PERFORMANCE REQUIREMENTS.—(1) The two
Secretaries shall provide for a joint review team to conduct
an annual on-site review at each of the project locations
selected by the Secretaries under this section. The review
team shall be comprised of employees of the Offices of the
Inspectors General of the two Departments. Leadership
of the joint review team shall rotate each fiscal year be-
tween an employee of the Office of the Inspector General
of the Department of Veterans Affairs, during even-num-
bered fiscal years, and an employee of the Office of Inspec-
tor General of the Department of Defense, during odd-
numbered fiscal years.
(2) On completion of their annual joint review under
paragraph (1), the review team shall submit a report to
the two Secretaries on the results of the review. The Secre-
taries shall forward the report, without change, to the
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Committees on Armed Services and Veterans’ Affairs of
the Senate and House of Representatives.
(3) Each such report shall include the following:
(A) The strategic mission coordination between
shared activities.
(B) The accuracy and validity of performance
data used to evaluate sharing performance and
changes in standards of care or services at the
shared facilities.
(C) A statement that all appropriated funds
designated for sharing activities are being used for
direct support of sharing initiatives.
(D) Recommendations concerning continuance
of the project at each site for the succeeding 12-
month period.
(4) Whenever there is a recommendation under para-
graph (3)(D) to discontinue a resource sharing project
under this section, the two Secretaries shall act upon that
recommendation as soon as practicable.
(5) In the initial report under this subsection, the
joint review team shall validate the baseline information
used for comparative analysis.
(j) TERMINATION.—(1) The project, and the author-
ity provided by this section, shall terminate on September
30, 2007.
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(2) The Secretaries may terminate the performance
of the project at any site when the performance of the
project at that site fails to meet performance expectations
of the Secretaries, based on recommendations from the re-
view team under subsection (i) or on other information
available to the Secretaries to warrant such action.
SEC. 725. REPORT ON IMPROVED COORDINATION AND
SHARING OF HEALTH CARE AND HEALTH
CARE RESOURCES FOLLOWING DOMESTIC
ACTS OF TERRORISM OR DOMESTIC USE OF
WEAPONS OF MASS DESTRUCTION.
(a) JOINT REVIEW.—The Secretary of Defense and
the Secretary of Veterans Affairs shall jointly review the
adequacy of current processes and existing statutory au-
thorities and policy governing the capability of the Depart-
ment of Defense and the Department of Veterans Affairs
to provide health care to members of the Armed Forces
following domestic acts of terrorism or domestic use of
weapons of mass destruction, both before and after any
declaration of national emergency. Such review shall in-
clude a determination of the adequacy of current authori-
ties in providing for the coordination and sharing of health
care resources between the two Departments in such
cases, particularly before the declaration of a national
emergency.
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(b) REPORT TO CONGRESS.—A report on the review
under subsection (a), including any recommended legisla-
tive changes, shall be submitted to Congress as part of
the fiscal year 2004 budget submission.
SEC. 726. ADOPTION BY DEPARTMENT OF VETERANS AF-
FAIRS OF DEPARTMENT OF DEFENSE PHAR-
MACY DATA TRANSACTION SYSTEM.
(a) ADOPTION OF PDTS SYSTEM.—The Secretary of
Veterans Affairs shall adopt for use by the Department
of Veterans Affairs health care system the system of the
Department of Defense known as the ‘‘Pharmacy Data
Transaction System’’. Such system shall be fully oper-
ational for the Department of Veterans Affairs not later
than October 1, 2004.
(b) IMPLEMENTATION FUNDING.—The Secretary of
Defense shall transfer to the Secretary of Veterans Af-
fairs, or shall otherwise bear the cost of, an amount suffi-
cient to cover three-fourths of the cost to the Department
of Veterans Affairs for initial computer programming ac-
tivities and relevant staff training expenses related to im-
plementation of subsection (a). Such amount shall be de-
termined in such manner as agreed to by the two Secre-
taries.
(c) REIMBURSEMENT
PROCEDURES.—Any reim-
bursement by the Department of Veterans Affairs to the
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Department of Defense for the use by the Department of
Veterans Affairs of the transaction system under sub-
section (a) shall be determined in accordance with section
8111(e)(2) of title 38, United States Code, as amended
by section 723.
SEC. 727. JOINT PILOT PROGRAM FOR PROVIDING GRAD-
UATE MEDICAL EDUCATION AND TRAINING
FOR PHYSICIANS.
(a) IN GENERAL.—The Secretary of Defense and the
Secretary of Veterans Affairs shall jointly carry out a pilot
program under which graduate medical education and
training is provided to military physicians and physician
employees of the Department of Defense and the Depart-
ment of Veterans Affairs through one or more programs
carried out in military medical treatment facilities of the
Department of Defense and medical centers of the Depart-
ment of Veterans Affairs. The pilot program shall begin
not later than January 1, 2003.
(b) COST-SHARING AGREEMENT.—The Secretaries
shall enter into an agreement for carrying out the pilot
program. The agreement shall establish means for each
Secretary to assist in paying the costs, with respect to in-
dividuals under the jurisdiction of that Secretary, incurred
by the other Secretary in providing medical education and
training under the pilot program.
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(c) USE OF EXISTING AUTHORITIES.—To carry out
the pilot program, the Secretary of Defense and the Sec-
retary of Veterans Affairs may use authorities provided
to them under this Act, section 8111 of title 38, United
States Code, and other laws relating to the furnishing or
support of medical education and the cooperative use of
facilities.
(d) TERMINATION OF PROGRAM.—The pilot program
under this section shall terminate on July 31, 2008.
(e) REPEAL OF SUPERSEDED PROVISION.—Section
738 of the National Defense Authorization Act for Fiscal
Year 2002 (Public Law 107–107; 10 U.S.C. 1094 note;
115 Stat.1173) is repealed.
SEC. 728. REPEAL OF CERTAIN LIMITS ON DEPARTMENT OF
VETERANS AFFAIRS RESOURCES.
(a) 
REPEAL
OF
VA 
BED
LIMITS.—Section
8110(a)(1) of title 38, United States Code, is amended—
(1) in the first sentence, by striking ‘‘at not
more than 125,000 and not less than 100,000’’;
(2) in the third sentence, by striking ‘‘shall op-
erate and maintain a total of not less than 90,000
hospital beds and nursing home beds and’’; and
(3) in the fourth sentence, by striking ‘‘to en-
able the Department to operate and maintain a total
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of not less than 90,000 hospital and nursing home
beds in accordance with this paragraph and’’.
(b) EFFECTIVE DATE.—The amendments made by
subsection (a) shall take effect on October 1, 2003.
SEC. 729. REPORTS.
(a) INTERIM REPORT.—Not later than February 1,
2004, the Secretary of Defense and Secretary of Veterans
Affairs shall submit to the Committees on Veterans’ Af-
fairs and the Committees on Armed Services of the Senate
and House of Representatives a joint report on their con-
duct of each of the programs under this Act through the
end of the preceding fiscal year. The Secretaries shall in-
clude in the report a description of the measures taken,
or planned to be taken, to implement the health resources
sharing project under section 724 and the other provisions
of this Act and any cost savings anticipated, or cost shar-
ing achieved, at facilities participating in the project. The
report shall also include information on improvements in
access to care, quality, and timeliness, as well as impedi-
ments encountered and legislative recommendations to
ameliorate such impediments.
(b) ANNUAL REPORT ON USE OF WAIVER AUTHOR-
ITY.—Not later than one year after the date of the enact-
ment of this Act, and annually thereafter through comple-
tion of the project under section 724, the two Secretaries
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shall submit to the committees of Congress specified in
subsection (a) a joint report on the use of the waiver au-
thority provided by section 724(e)(1). The report shall in-
clude a statement of the numbers and types of requests
for waivers under that section of administrative policies
that have been made during the period covered by the re-
port and, for each such request, an explanation of the con-
tent of each request, the intended purpose or result of the
requested waiver, and the disposition of each request. The
report also shall include descriptions of any new adminis-
trative policies that enhance the success of the project.
(c) PHARMACY BENEFITS REPORT.—Not later than
one year after pharmaceutical services are first provided
pursuant to section 724(d)(1), the two Secretaries shall
submit to the committees of Congress specified in sub-
section (a) a joint report on access by beneficiaries of each
department to pharmaceutical services of the other depart-
ment. The report shall describe the advantages and dis-
advantages to the beneficiaries and the Departments of
providing such access and any other matters related to
such pharmaceutical services that the Secretaries consider
pertinent, together with any legislative recommendations
for expanding or canceling such services.
(d) ANNUAL REPORT
ON PILOT PROGRAM
FOR
GRADUATE MEDICAL EDUCATION.—Not later than Janu-
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ary 31, 2004, and January 31 of each year thereafter
through 2009, the two Secretaries shall submit to Con-
gress a joint report on the pilot program under section
727. The report for any year shall cover activities under
the program during the preceding year and shall include
each Secretary’s assessment of the efficacy of providing
education and training under that program.
TITLE VIII—ACQUISITION POL-
ICY, ACQUISITION MANAGE-
MENT, AND RELATED MAT-
TERS
SEC. 801. PLAN FOR ACQUISITION MANAGEMENT PROFES-
SIONAL EXCHANGE PILOT PROGRAM.
(a) PLAN REQUIRED.—(1) The Secretary of Defense
shall develop a plan for a pilot program under which—
(A) an individual in the field of acquisition
management employed by the Department of De-
fense may be temporarily assigned to work in a pri-
vate sector organization; and
(B) an individual in such field employed by a
private sector organization may be temporarily as-
signed to work in the Department of Defense.
(2) In developing the plan under paragraph (1), the
Secretary shall address the following:
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(A) The benefits of undertaking such a pro-
gram.
(B) The appropriate length of assignments
under the program.
(C) Whether an individual assigned under the
program should be compensated by the organization
to which the individual is assigned, or the organiza-
tion from which the individual is assigned.
(D) The ethics guidelines that should be applied
to the program and, if necessary, waivers of ethics
laws that would be needed in order to make the pro-
gram effective and attractive to both Government
and private sector employees.
(E) An assessment of how compensation of in-
dividuals 
suffering 
employment-related 
injuries
under the program should be addressed.
(b) SUBMISSION TO CONGRESS.—Not later than Feb-
ruary 1, 2003, the Secretary shall submit to the Commit-
tees on Armed Services of the Senate and the House of
Representatives the plan required under subsection (a).
SEC. 802. EVALUATION OF TRAINING, KNOWLEDGE, AND
RESOURCES REGARDING NEGOTIATION OF
INTELLECTUAL PROPERTY ARRANGEMENTS.
(a) AVAILABILITY OF TRAINING, KNOWLEDGE, AND
RESOURCES.—The Secretary of Defense shall evaluate the
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training, knowledge, and resources needed by the Depart-
ment of Defense in order to effectively negotiate intellec-
tual property rights using the principles of the Defense
Federal Acquisition Regulation Supplement and determine
whether the Department of Defense currently has in place
the training, knowledge, and resources available to meet
those Departmental needs.
(b) REPORT.—Not later than February 1, 2003, the
Secretary of Defense shall submit to Congress a report
describing—
(1) the results of the evaluation performed
under subsection (a);
(2) to the extent the Department does not have
adequate training, knowledge, and resources avail-
able, actions to be taken to improve training and
knowledge and to make resources available to meet
the Department’s needs; and
(3) the number of Department of Defense legal
personnel trained in negotiating intellectual property
arrangements.
SEC. 803. LIMITATION PERIOD FOR TASK AND DELIVERY
ORDER CONTRACTS.
Chapter 137 of title 10, United States Code, is
amended—
(1) in section 2304a—
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(A) in subsection (e)—
(i) by inserting ‘‘(1)’’ before ‘‘A task’’;
and
(ii) by adding at the end the following
new paragraphs:
‘‘(2) Unless use of procedures other than competitive
procedures is authorized by an exception in subsection (c)
of section 2304 of this title and approved in accordance
with subsection (f) of such section, competitive procedures
shall be used for making such a modification.
‘‘(3) Notice regarding the modification shall be pro-
vided in accordance with section 18 of the Office of Fed-
eral Procurement Policy Act (41 U.S.C. 416) and section
8(e) of the Small Business Act (15 U.S.C. 637(e)).’’; and
(B) by striking subsection (f) and inserting
the following:
‘‘(f) LIMITATION ON CONTRACT PERIOD.—The base
period of a task order contract or delivery order contract
entered into under this section may not exceed five years
unless a longer period is specifically authorized in a law
that is applicable to such contract. The contract may be
extended for an additional 5 years (for a total contract
period of not more than 10 years) through modifications,
options, or otherwise.’’; and
(2) in section 2304b—
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(A) by striking subsection (a) and insert-
ing the following:
‘‘(a) IN GENERAL.—A task order contract (as defined
in section 2304d of this title) for procurement of advisory
and assistance services shall be subject to the require-
ments of this section, sections 2304a and 2304c of this
title, and other applicable provisions of law.’’;
(B) by striking subsections (b), (f), and (g)
and redesignating subsections (c), (d), (e), (h),
and (i) as subsections (b) through (f);
(C) by amending subsection (c) (as redes-
ignated by subparagraph (B)) to read as fol-
lows:
‘‘(c) REQUIRED CONTENT OF CONTRACT.—A task
order contract described in subsection (a) shall contain the
same information that is required by section 2304a(b) to
be included in the solicitation of offers for that contract.’’;
and
(D) in subsection (d) (as redesignated by
subparagraph (B))—
(i) in paragraph (1), by striking
‘‘under this section’’ and inserting ‘‘de-
scribed in subsection (a)’’; and
(ii) in paragraph (2), by striking
‘‘under this section’’.
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SEC. 804. ONE-YEAR EXTENSION OF PROGRAM APPLYING
SIMPLIFIED PROCEDURES TO CERTAIN COM-
MERCIAL ITEMS; REPORT.
(a) EXTENSION OF PILOT PROGRAM.—Section 4202
of the Clinger-Cohen Act of 1996 (divisions D and E of
Public Law 104–106; 110 Stat. 652; 10 U.S.C. 2304
note) is amended in subsection (e) by striking ‘‘January
1, 2003’’ and inserting ‘‘January 1, 2004’’.
(b) REPORT REQUIRED.—Not later than January 15,
2003, the Secretary of Defense shall submit to Congress
a report on whether the authority to issue solicitations for
purchases of commercial items in excess of the simplified
acquisition threshold pursuant to the special simplified
procedures authorized by section 2304(g)(1) of title 10,
United States Code, section 303(g)(1) of the Federal
Property and Administrative Services Act of 1949, and
section 31(a) of the Office of Federal Procurement Policy
Act, should be made permanent.
SEC. 805. AUTHORITY TO MAKE INFLATION ADJUSTMENTS
TO SIMPLIFIED ACQUISITION THRESHOLD.
Section 4(11) of the Office of Federal Procurement
Policy Act (41 U.S.C. 403(11)) is amended by inserting
‘‘, except that such amount may be adjusted by the Ad-
ministrator every five years to the amount equal to
$100,000 in constant fiscal year 2002 dollars (rounded to
the nearest $10,000)’’ before the period at the end.
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SEC. 806. IMPROVEMENT OF PERSONNEL MANAGEMENT
POLICIES AND PROCEDURES APPLICABLE TO
THE CIVILIAN ACQUISITION WORKFORCE.
(a) PLAN REQUIRED.—The Secretary of Defense
shall develop a plan for improving the personnel manage-
ment policies and procedures applicable to the Department
of Defense civilian acquisition workforce based on the re-
sults of the demonstration project described in section
4308 of the Clinger–Cohen Act of 1996 (division D of
Public Law 104–106; 10 U.S.C. 1701 note).
(b) SUBMISSION TO CONGRESS.—Not later than Feb-
ruary 15, 2003, the Secretary shall submit to Congress
the plan required under subsection (a) and a report includ-
ing any recommendations for legislative action necessary
to implement the plan.
SEC. 807. MODIFICATION OF SCOPE OF BALL AND ROLLER
BEARINGS COVERED FOR PURPOSES OF PRO-
CUREMENT LIMITATION.
Section 2534(a)(5) of title 10, United States Code
is amended—
(1) 
by 
striking 
‘‘225.71’’ 
and 
inserting
‘‘225.70’’;
(2) by striking ‘‘October 23, 1992’’ and insert-
ing ‘‘April 27, 2002’’; and
(3) by adding at the end the following: ‘‘In this
section the term ‘ball bearings and roller bearings’
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includes unconventional or hybrid ball and roller
bearings and cam follower bearings, ball screws, and
other derivatives of ball and roller bearings.’’.
SEC. 808. RAPID ACQUISITION AND DEPLOYMENT PROCE-
DURES.
(a) REQUIREMENT TO ESTABLISH PROCEDURES.—
Chapter 141 of title 10, United States Code, is amended
by inserting after section 2396 the following new section:
‘‘§ 2397. Rapid acquisition and deployment proce-
dures
‘‘(a) ESTABLISHMENT.—The Secretary of Defense
shall establish tailored rapid acquisition and deployment
procedures for items urgently needed to react to an enemy
threat or to respond to significant and urgent safety situa-
tions.
‘‘(b) PROCEDURES.—The procedures established
under subsection (a) shall include the following:
‘‘(1) A process for streamlined communications
between the Chairman of the Joint Chiefs of Staff,
the acquisition community, and the testing commu-
nity.
‘‘(2) A process for expedited technical, pro-
grammatic, and financial decisions.
‘‘(3) An expedited procurement and contracting
process.
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‘‘(c) SPECIFIC STEPS TO BE INCLUDED.—The proce-
dures established under subsection (a) shall provide for
the following:
‘‘(1) The commander of a unified combatant
command may notify the Chairman of the Joint
Chiefs of Staff of the need for an item described in
subsection (a) that is currently under development.
‘‘(2) The Chairman may request the Secretary
of Defense to use rapid acquisition and deployment
procedures with respect to the item.
‘‘(3) The Secretary of Defense shall decide
whether to use such procedures with respect to the
item and shall notify the Secretary of the appro-
priate military department of the decision.
‘‘(4) If the Secretary of Defense decides to use
such procedures with respect to the item, the Sec-
retary of the military department shall prepare a
funding strategy for the rapid acquisition of the item
and shall conduct a demonstration of the perform-
ance of the item.
‘‘(5) The Director of Operational Test and
Evaluation shall immediately evaluate the existing
capability of the item (but under such evaluation
shall not assess the capability of the item as regards
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to the function the item was originally intended to
perform).
‘‘(6) The Chairman of the Joint Chiefs of Staff
shall review the evaluation of the Director of Oper-
ational Test and Evaluation and report to the Sec-
retary of Defense regarding whether the capabilities
of the tested item are able to meet the urgent need
for the item.
‘‘(7) The Secretary of Defense shall evaluate
the information regarding funding and rapid acquisi-
tion prepared pursuant to paragraph (4) and ap-
prove or disapprove of the acquisition of the item
using the procedures established pursuant to sub-
section (a).
‘‘(d) LIMITATION.—The quantity of items of a system
procured using the procedures established under this sec-
tion may not exceed the number established for low-rate
initial production for the system, and any such items shall
be counted for purposes of the number of items of the
system that may be procured through low-rate initial pro-
duction.’’.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of such chapter is amended by inserting
after the item relating to section 2396 the following new
item:
‘‘2397. Rapid acquisition and deployment procedures.’’.
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SEC. 809. QUICK-REACTION SPECIAL PROJECTS ACQUISI-
TION TEAM.
(a) ESTABLISHMENT.—Chapter 141 of title 10,
United States Code, is amended by inserting after section
2402 the following new section:
‘‘§ 2403. Quick-reaction special projects acquisition
team
‘‘The Secretary of Defense shall establish a quick-re-
action special projects acquisition team, the purpose of
which shall be to advise the Secretary on actions that can
be taken to expedite the procurement of urgently needed
systems. The team shall address problems with the inten-
tion of creating expeditious solutions relating to—
‘‘(1) industrial-base issues such as the limited
availability of suppliers;
‘‘(2) compliance with acquisition regulations
and lengthy procedures;
‘‘(3) compliance with environmental require-
ments;
‘‘(4) compliance with requirements regarding
small-business concerns; and
‘‘(5) compliance with requirements regarding
the purchase of products made in the United
States.’’.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of such chapter is amended by inserting
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after the item relating to section 2402 the following new
item:
‘‘2403. Quick-reaction special projects acquisition team.’’.
SEC. 
810. 
REPORT 
ON 
DEVELOPMENT 
OF 
ANTI-
CYBERTERRORISM TECHNOLOGY.
Not later than February 1, 2003, the Secretary of
Defense shall submit to Congress a report on—
(1) efforts by the Department of Defense to
enter into contracts with private entities to develop
anticyberterrorism technology; and
(2) whether such efforts should be increased.
SEC. 811. CONTRACTING WITH FEDERAL PRISON INDUS-
TRIES.
(a) ASSURING BEST VALUE
FOR NATIONAL DE-
FENSE AND HOMELAND SECURITY.—(1) The Department
of Defense or one of the military departments may acquire
a product or service from Federal Prison Industries, Inc.
only if such acquisition is made through a procurement
contract awarded and administered in accordance with
chapter 137 of title 10, United States Code, the Federal
Acquisition Regulation, and the Department of Defense
supplements to such regulation. If a contract is to be
awarded to Federal Prison Industries, Inc. by the Depart-
ment of Defense through other than competitive proce-
dures, authority for such award shall be based upon statu-
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member’s duties for providing to a certifying official of
the Department of Defense information, data, or services
that are directly relied upon by the certifying official in
the certification of vouchers for payment.
‘‘(b) PECUNIARY LIABILITY.—(1) The Secretary of
Defense may impose pecuniary liability on a departmental
accountable official to the extent that an illegal, improper,
or incorrect payment results from the information, data,
or services that that official provides to a certifying official
and upon which the certifying official directly relies in cer-
tifying the voucher supporting that payment.
‘‘(2) The pecuniary liability of a departmental ac-
countable official under this subsection for such an illegal,
improper, or incorrect payment is joint and several with
that of any other officials who are pecuniarily liable for
such payment.
‘‘(c) RELIEF FROM LIABILITY.—The Secretary of
Defense shall relieve a departmental accountable official
from liability under subsection (b) if the Secretary deter-
mines that the illegal, improper, or incorrect payment was
not the result of fault or negligence by that official.’’.
(b) CLERICAL AMENDMENT.—The table of sections
at the beginning of such chapter is amended by inserting
after the item relating to section 2773 the following new
item:
‘‘2773a. Departmental accountable officials.’’.
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SEC. 1005. IMPROVEMENTS IN PURCHASE CARD MANAGE-
MENT.
(a) IN GENERAL.—Section 2784 of title 10, United
States Code, is amended to read as follows:
‘‘§ 2784. Management of purchase cards
‘‘(a) MANAGEMENT OF PURCHASE CARDS.—The Sec-
retary of Defense, acting through the Under Secretary of
Defense (Comptroller), shall prescribe regulations gov-
erning the use and control of all purchase cards and con-
venience checks that are issued to Department of Defense
personnel for official use. Those regulations shall be con-
sistent with regulations that apply Government-wide re-
garding use of purchase cards by Government personnel
for official purposes.
‘‘(b) REQUIRED SAFEGUARDS AND INTERNAL CON-
TROLS.—Regulations under subsection (a) shall include
safeguards and internal controls to ensure the following:
‘‘(1) That there is a record in the Department
of Defense of each holder of a purchase card issued
by the Department of Defense for official use, anno-
tated with the limitations on amounts that are appli-
cable to the use of each such card by that purchase
card holder.
‘‘(2) That the holder of a purchase card and
each official with authority to authorize expenditures
charged to the purchase card are responsible for—
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‘‘(A) reconciling the charges appearing on
each statement of account for that purchase
card with receipts and other supporting docu-
mentation; and
‘‘(B) forwarding that statement after being
so reconciled to the designated disbursing office
in a timely manner.
‘‘(3) That any disputed purchase card charge,
and any discrepancy between a receipt and other
supporting documentation and the purchase card
statement of account, is resolved in the manner pre-
scribed in the applicable Government-wide purchase
card contract entered into by the Administrator of
General Services.
‘‘(4) That payments on purchase card accounts
are made promptly within prescribed deadlines to
avoid interest penalties.
‘‘(5) That rebates and refunds based on prompt
payment on purchase card accounts are properly re-
corded.
‘‘(6) That records of each purchase card trans-
action (including records on associated contracts, re-
ports, accounts, and invoices) are retained in accord-
ance with standard Government policies on the dis-
position of records.