IIB
107TH CONGRESS
2D SESSION
H. R. 3645
IN THE SENATE OF THE UNITED STATES
JULY 23, 2002
Received; read twice and referred to the Committee on Veterans’ Affairs
AN ACT
To amend title 38, United States Code, to provide for im-
proved procurement practices by the Department of Vet-
erans Affairs in procuring health-care items.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
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SECTION 1. SHORT TITLE; TABLE OF CONTENTS.
(a) SHORT TITLE.—This Act may be cited as the
‘‘Veterans Health Care and Procurement Improvement
Act of 2002’’.
(b) TABLE OF CONTENTS.—The table of contents for
this Act is as follows:
Sec. 1. Short title; table of contents.
Sec. 2. References to title 38, United States Code.
Sec. 3. Limitation on use of local contracts for Department of Veterans Affairs
procurement of health-care items.
Sec. 4. Enhancements to enhanced-use lease authority.
Sec. 5. Eligibility for Department of Veterans Affairs health care of certain ad-
ditional Filipino World War II veterans residing in the United
States.
Sec. 6. Outpatient dental care for all former prisoners of war.
Sec. 7. Improved accountability of research corporations established at Depart-
ment of Veterans Affairs medical centers.
Sec. 8. Department of Defense participation in Revolving Supply Fund pur-
chases.
Sec. 9. Name of Department of Veterans Affairs outpatient clinic, New Lon-
don, Connecticut.
SEC. 2. REFERENCES TO TITLE 38, UNITED STATES CODE.
Except as otherwise expressly provided, whenever in
this Act an amendment or repeal is expressed in terms
of an amendment to, or repeal of, a section or other provi-
sion, the reference shall be considered to be made to a
section or other provision of title 38, United States Code.
SEC. 3. LIMITATION ON USE OF LOCAL CONTRACTS FOR
DEPARTMENT OF VETERANS AFFAIRS PRO-
CUREMENT OF HEALTH-CARE ITEMS.
(a) IN GENERAL.—Section 8125 is amended to read
as follows:
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‘‘§ 8125. Procurement of health-care items
‘‘(a) Except as provided in subsection (b), any pro-
curement of a health-care item by the Department shall
be made through the use of a Federal Supply Schedule
contract, or a national contract, that meets the require-
ments of subsection (d).
‘‘(b)(1) Subsection (a) does not apply to a procure-
ment of a health-care item in any of the following cases:
‘‘(A) A procurement that is necessary to meet
a current or near-term medical emergency at a med-
ical center.
‘‘(B) A procurement that is for a health-care
item that is not listed in the Federal Supply Sched-
ule or as part of a national contract and for which
there is a valid clinical need.
‘‘(C) A procurement that is for a specialized
health-care item not listed in the Federal Supply
Schedule or as part of a national contract and that
is to meet the special needs of an individual patient
who has one of the special needs identified in section
1706(b) of this title and who has a valid clinical
need for the item.
‘‘(D) A procurement that is part of an approved
sharing agreement between the Department of De-
fense and the Department of Veterans Affairs with
demonstrable cost-per-item savings for a health-care
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item listed on the Federal Supply Schedule or a na-
tional contract.
‘‘(E) A procurement that supports a prime con-
tract or a subcontract with a small business concern
qualifying for a procurement preference program
under section 8 or 15 of the Small Business Act (15
U.S.C. 637, 644).
‘‘(2) A procurement may be made as authorized
under subparagraph (B) of paragraph (1) only if the pro-
curement is specifically authorized in advance in writing
by the Secretary. The authority of the Secretary under
the preceding sentence may only be delegated to the Dep-
uty Secretary or to an official of the Veterans Health Ad-
ministration not below the level of a Deputy Under Sec-
retary (or equivalent) acting jointly with a procurement
executive of the Department not below the level of an As-
sociate Deputy Assistant Secretary.
‘‘(c) In the case of an emergency procurement of a
health-care item as authorized by subsection (b)(1)(A), the
quantity of the item procured may not exceed the quantity
of that item that is the reasonably foreseeable need for
the item at the medical center concerned until resupply
can be achieved through procurement actions other than
emergency procurement.
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‘‘(d) A contract meets the requirements of this sub-
section if the contract includes—
‘‘(1) provisions referred to as ‘preaward and
postaward audit clauses’; and
‘‘(2) a provision referred to as a ‘price reduc-
tion clause’.
‘‘(e)(1) The Secretary shall establish procedures to
assure compliance by each Department medical facility
with the provisions of this section and with applicable Fed-
eral and Department procurement regulations.
‘‘(2) The procedures established by the Secretary
under paragraph (1) shall be designed to maximize health-
care item variety and the use of the Federal Supply Sched-
ule.
‘‘(3) The Secretary shall establish and enforce proce-
dures limiting the standardization of items at the local,
regional, or national level to provide special patient popu-
lations (as identified in section 1706(b) of this title) with
the range and types of health-care items required to meet
their clinical and quality-of-life needs.
‘‘(4) The Advisory Committee on Prosthetics and
Special-Disabilities Programs established under section
543 of this title shall review the procedures established
under paragraph (3), including the implementation of
those procedures, and shall advise the Secretary when
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those procedures are not effectively enforced by the De-
partment.
‘‘(f)(1) The Secretary shall establish annual goals for
Department medical centers for the purchase of health-
care items from Federal Supply Schedule and national
contracts meeting the requirements of subsection (d).
Such goals shall be designed to maximize the percentage
of such purchases that are made through such contracts.
‘‘(2) The Secretary shall establish goals for the De-
partment for procurements from small business concerns
qualifying for a procurement preference program under
section 8 or 15 of the Small Business Act (15 U.S.C. 637,
644). Such goals shall be no less than the national goal
for each such procurement preference program under ei-
ther of those sections.
‘‘(3) Achievement of the goals established under this
subsection shall be an element in the performance stand-
ards for employees of the Department who have the au-
thority and responsibility for achieving those goals.
‘‘(g) A provision of law that is inconsistent with any
provision of this section shall not apply, to the extent of
the inconsistency, to the procurement of a health-care item
for the Department.
‘‘(h)(1) Not later than December 31 each year, the
Secretary shall submit to the Committees on Veterans’ Af-
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fairs of the Senate and House of Representatives a report
on the procurement of health-care items during the pre-
ceding fiscal year. Each such report shall include, for the
year covered by the report, the following:
‘‘(A) The total dollar amount of all items listed
in Federal Supply Classification (FSC) Group 65 or
66 and the total dollar value of the exceptions to
subsection (a) under each of subparagraphs (A),
(B), (C), (D), and (E) of subsection (b)(1), shown
by medical facility.
‘‘(B) A detailed explanation for exceptions to
subsection (a), including—
‘‘(i) the rationale for use of emergency pro-
curement at Department medical facilities;
‘‘(ii) the rationale for approval of requests
under subsection (b)(1)(B) for procurement of
items not listed on the Federal Supply Schedule
or on national contracts; and
‘‘(iii) exceptions granted for special health-
care needs of veterans with disabilities de-
scribed in section 1706(b) of this title.
‘‘(C) Analysis of sharing agreements between
the Department and the Department of Defense to
indicate the basic written sharing initiative and the
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division of financial responsibility between the two
Departments.
‘‘(D) The stated goal under each procurement
preference program, together with an assessment of
the performance of the Department toward achieve-
ment of that goal, especially with respect to the goal
for contracting with businesses that are owned by
veterans with service-connected disabilities.
‘‘(2) The Advisory Committee on Prosthetics and
Special- Disabilities Programs of the Department shall
submit comments on each report under paragraph (1) be-
fore the report is submitted under that paragraph, and
the Secretary shall include those comments in the report
as submitted.
‘‘(i) For the purposes of this subsection:
‘‘(1) The term ‘health-care item’ includes any
item other than services listed in, or (as determined
by the Secretary) of the same nature as an item list-
ed in, Federal Supply Classification (FSC) Group 65
or 66.
‘‘(2) The term ‘national contract’ means a con-
tract for procurement of an item that is entered into
by the National Acquisition Center of the Depart-
ment or another Department procurement activity,
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as authorized by the Secretary, that is available for
use by all Department medical facilities.
‘‘(3) The term ‘valid clinical need’ means in the
professional judgment of an appropriate clinician.
Such term applies to health care items, prosthetic
appliances, sensory or mobility aids and supplies
that are prescribed by a physician for special patient
populations such as veterans with spinal cord dys-
function, blindness, amputations, and other veterans
included in section 1706(b) of this title.
‘‘(4) The term ‘Federal Supply Schedule con-
tract’ means a contract that is awarded and admin-
istered by the National Acquisition Center of the
Department under a delegation of authority from
the Administrator of the General Services Adminis-
tration.
‘‘(5) The term ‘emergency procurement’ means
a procurement necessary to meet an emergency need
affecting the health or safety of a person being fur-
nished health-care services by the Department.’’.
(b) EFFECTIVE DATE.—The amendment made by
subsection (a) shall take effect on September 30, 2003,
and shall apply to procurements by the Secretary of Vet-
erans Affairs after that date.
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SEC. 4. ENHANCEMENTS TO ENHANCED-USE LEASE AU-
THORITY.
(a) INCREASED FLEXIBILITY UNDER ENHANCED-
USE LEASES.—Section 8162(a)(2)(B) is amended—
(1) by striking ‘‘proposed by the Under Sec-
retary for Health’’ and inserting ‘‘proposed by one
of the Under Secretaries’’; and
(2) by striking ‘‘to the provision of medical care
and services’’ and inserting ‘‘to the programs and
activities of the Department’’.
(b) NOTIFICATION OF PROPERTY TO BE LEASED.—
Section 8163 is amended—
(1) in the first sentence of subsection (a)—
(A) by striking ‘‘designate a property to be
leased under an enhanced-use lease’’ and insert-
ing ‘‘enter into an enhanced-use lease with re-
spect to certain property’’; and
(B) by striking ‘‘before making the des-
ignation’’ and inserting ‘‘before entering into
the lease’’;
(2) in subsection (b), by striking ‘‘of the pro-
posed designation’’ and inserting ‘‘to the congres-
sional veterans’ affairs committees and to the public
of the proposed lease’’; and
(3) in subsection (c)—
(A) in paragraph (1)—
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(i) by striking ‘‘designate the property
involved’’ and inserting ‘‘enter into an en-
hanced-use lease of the property involved’’;
and
(ii) by striking ‘‘to so designate the
property’’ and inserting ‘‘to enter into such
lease’’;
(B) in paragraph (2), by striking ‘‘90–day
period’’ and inserting ‘‘45–day period’’;
(C) in paragraph (3)—
(i) by striking ‘‘general description’’
in subparagraph (D) and inserting ‘‘de-
scription of the provisions’’; and
(ii) by adding at the end the following
new subparagraph:
‘‘(G) A summary of a cost-benefit analysis of
the proposed lease.’’; and
(D) by striking paragraph (4).
(c) DISPOSITION OF LEASED PROPERTY.—Section
8164 is amended—
(1) in subsection (a)—
(A) by striking ‘‘by requesting the Admin-
istrator of General Services to dispose of the
property pursuant to subsection (b)’’ in the
first sentence; and
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(B) by striking the third sentence;
(2) in subsection (b)—
(A) by striking ‘‘Secretary and the Admin-
istrator of General Services jointly determine’’
and inserting ‘‘Secretary determines’’; and
(B) by striking ‘‘Secretary and the Admin-
istrator consider’’ and inserting ‘‘Secretary con-
siders’’; and
(3) in subsection (c), by striking ‘‘90 days’’ and
inserting ‘‘45 days’’.
(d) USE OF PROCEEDS.—Section 8165 is amended—
(1) in subsection (a)—
(A) by striking ‘‘(1)’’ after ‘‘(a)’’;
(B) by inserting after ‘‘of this title’’ the
following: ‘‘, except that any funds received by
the Department under an enhanced-use lease in
support of the Veterans Benefits Administra-
tion or the National Cemetery Administration
and remaining after any deduction from such
funds under subsection (b) shall be credited to
applicable appropriations of that Administra-
tion’’; and
(C) by striking paragraph (2);
(2) in subsection (b), by adding at the end the
following new sentence: ‘‘The Secretary may use the
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proceeds from any enhanced-use lease to reimburse
applicable appropriations of the Department for any
expenses incurred in the development of additional
enhanced-use leases.’’; and
(3) by striking subsection (c).
(e) CLERICAL AMENDMENTS.—(1) The heading of
section 8163 is amended to read as follows:
‘‘§ 8163. Hearing and notice requirements regarding
proposed leases’’.
(2) The item relating to section 8163 in the table of
sections at the beginning of chapter 81 is amended to read
as follows:
‘‘8163. Hearing and notice requirements regarding proposed leases.’’.
SEC. 5. ELIGIBILITY FOR DEPARTMENT OF VETERANS AF-
FAIRS HEALTH CARE OF CERTAIN ADDI-
TIONAL FILIPINO WORLD WAR II VETERANS
RESIDING IN THE UNITED STATES.
(a) ELIGIBILITY FOR HEALTH CARE.—The text of
section 1734 is amended to read as follows:
‘‘(a) The Secretary shall furnish hospital and nursing
home care and medical services to any individual described
in subsection (b) in the same manner, and subject to the
same terms and conditions, as apply to the furnishing of
such care and services to individuals who are veterans as
defined in section 101(2) of this title. Any disability of
an individual described in subsection (b) that is a service-
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connected disability for purposes of this subchapter (as
provided for under section 1735(2) of this title) shall be
considered to be a service-connected disability for purposes
of furnishing care and services under the preceding sen-
tence.
‘‘(b) Subsection (a) applies to any individual who is
a Commonwealth Army veteran or new Philippine Scout
and who—
‘‘(1) is residing in the United States; and
‘‘(2) is a citizen of the United States or an
alien lawfully admitted to the United States for per-
manent residence.’’.
(b) LIMITATION.—The amendment made by sub-
section (a) shall take effect on the date on which the Sec-
retary of Veterans Affairs submits to the Committees on
Veterans’ Affairs of the Senate and House of Representa-
tives and publishes in the Federal Register a certification
that sufficient resources are available for the fiscal year
during which the certification is submitted to carry out
section 1734 of title 38, United States Code, as amended
by such amendment, during that fiscal year at those facili-
ties of the Department of Veterans Affairs where the ma-
jority of veterans described in subsection (b) of such sec-
tion will receive hospital and nursing home care and med-
ical services authorized by subsection (a) of such section.
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SEC. 6. OUTPATIENT DENTAL CARE FOR ALL FORMER
PRISONERS OF WAR.
Section 1712(a)(1)(F) is amended by striking ‘‘and
who was detained or interned for a period of not less than
90 days’’.
SEC. 7. IMPROVED ACCOUNTABILITY OF RESEARCH COR-
PORATIONS ESTABLISHED AT DEPARTMENT
OF VETERANS AFFAIRS MEDICAL CENTERS.
(a) AUDITS AND IMPROVED ANNUAL REPORT.—Sub-
section (b) of section 7366 is amended to read as follows:
‘‘(b)(1) Not later than March 1 each year, each such
corporation shall submit to the Secretary a report con-
cerning the preceding calendar year. Each such annual re-
port shall include the following:
‘‘(A) A detailed statement of the corporation’s
operations, activities, and accomplishments during
the preceding calendar year.
‘‘(B) A description of each research project or
activity for which funds were provided by the cor-
poration during that year or for which funds were
provided by the corporation during a preceding year
and that is ongoing during the year covered by the
report, including, for each such project or activity,
the title of the project or activity and a description
of the purpose of the project or activity.
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‘‘(C) A statement of the amount of funds con-
trolled by the corporation as of the first day, and as
of the last day, of the year covered by the report and
a statement of the amount of funds received, shown
by source, during the year.
‘‘(D) An itemized accounting of all disburse-
ments made during the year.
‘‘(E) The most recent audit of the corporation
under paragraph (2).
‘‘(F) Such other information as may be nec-
essary to enable the Secretary to prepare the annual
report to congressional committees required under
section 7367 of this title.
‘‘(2) A corporation with a balance of funds under its
control in excess of $300,000 at any time during a cal-
endar year shall obtain an audit of the corporation for that
year. Any other corporation shall obtain an independent
audit of the corporation at least once every three years.
The report on any such audit shall specifically state
whether the corporation audited made any payment, or
provided any travel, during the period covered by the audit
to a member of the board of directors of the corporation
and, if so, the amount and recipient of any such payment
or travel.
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‘‘(3) Any audit under paragraph (2) shall be per-
formed by an independent auditor and shall be performed
in accordance with generally accepted Government audit-
ing standards and in accordance with Office of Manage-
ment and Budget Circular A–133.
‘‘(4) The Inspector General of the Department shall
each year review the most recent audit under paragraph
(2) of not less than 10 percent of the corporations de-
scribed in the first sentence of paragraph (2) and not less
than 10 percent of the corporations described in the sec-
ond sentence of that paragraph. As part of such review,
the Inspector General shall determine whether the audit
was carried out in accordance with generally accepted
Government auditing standards, as required by paragraph
(3).’’.
(b) ANNUAL REPORT
OF SECRETARY.—(1) Sub-
chapter IV of chapter 73 is amended—
(A) by inserting after subsection (c) of section
7366 the following:
‘‘§ 7367. Annual report to congressional committees’’;
and
(B) in the text immediately following the sec-
tion heading inserted by subparagraph (A)—
(i) by striking ‘‘(d)’’ and inserting ‘‘(a)’’;