The mission of VA is to serve America’s veterans and their families with dignity and compassion and to be their principal advocate in ensuring that they receive medical care, benefits, social support, and lasting memorials. VA is a cabinet-level agency with a budget of over $127 billion and is one of the world’s largest health care, medical research, and insurance benefits organizations. In addition to a central office, VA consists of three administrations that generally operate as distinct entities: the Veterans Health Administration (VHA), the Veterans Benefits Administration (VBA), and the National Cemetery Administration (NCA). VHA’s facilities are organized into 21 regional networks, known as VISNs, that are structured to manage and allocate resources to VA health care facilities across the United States. Each VISN is also responsible for coordination and oversight of all administrative and clinical activities within its specified region of the country. We reviewed the status of capital projects in 6 of VA’s 21 VISNs, as shown in figure 1. To provide services to veterans, VA’s current real property portfolio consists of U.S.-owned buildings under VA jurisdiction and control. VA also generally has authority to enter into enhanced-use leases, 3-year outleases, and sharing agreements relating to its real property or space. The assets include, for example, hospitals, clinics, cemeteries, and office buildings where veterans access their many benefits and VA administers its programs. VHA is the largest administration and, in terms of the number of acres owned and square footage, includes the greatest portion of VA’s real property portfolio, as shown in figure 2. In response to our 1999 recommendations for improving agency capital asset planning and budgeting, VA initiated CARES. CARES was the first comprehensive, long-range assessment of VA’s health care capital asset priorities since 1981 and was designed to assess buildings and land ownership under VA’s jurisdiction and control in light of expected demand for VA inpatient and outpatient health care services across a planning horizon through fiscal year 2022. For example, VA recognized that the shift in veterans’ demand for services could be met at community based outpatient clinics that are more geographically accessible to veterans than its hospitals. The CARES process validated gaps in VA’s infrastructure and health care services provided to veterans. The process also included a set of tools for annual capital and strategic planning to enable VA to plan for real property needs to provide quality health care to veterans. Also in response to our 1999 recommendations, VA developed formal 5- year capital plans that are submitted with its annual budget requests to Congress. The 5-year capital plan included in VA’s fiscal year 2011 budget submission document includes the following: capital planning linked to the agency mission, strategic goals, and objectives; baseline assessments and identification of performance gaps—such as underutilized or vacant property and the backlog of repairs needed at its facilities; an alternatives evaluation and resulting risk management plan for these performance gaps; a description of the agency’s planning and approvals process; and a long-term capital plan. Effective planning for capital investments is important for several reasons. First, over time, large amounts of federal funds are spent on capital assets. Second, the performance of capital assets affects how agencies are able to achieve their missions, goals, and objectives to provide service to the public. Finally, capital planning drives budgeting, procurement, and management of an agency’s capital assets. As VA increased its emphasis on outpatient care rather than inpatient care, it was left with an increasingly obsolete infrastructure, including many hospitals built or acquired more than 50 years ago in locations that are sometimes far from where veterans live. This challenge of misaligned infrastructure is not unique to VA. In January 2003, we identified federal real property management as a high-risk area, and VA was cited among those federal agencies that hold a majority of federally owned and leased space. We also reported on VA’s long-standing problems with excess and underutilized property, deteriorating facilities, unreliable real property data, overreliance on costly leasing, and building security challenges. We did this to highlight the need for broad-based transformation in this area, which, if well implemented, will better position federal agencies to achieve mission effectiveness and reduce operating costs. As its newest capital planning effort, VA has initiated SCIP, which will be an agencywide review of VA’s real property priorities and will inform its fiscal year 2012 annual budget submission. According to VA, SCIP will include six key components. Table 1 shows these components and the VA’s planned actions to implement them. SCIP, which VA said builds on its existing capital planning processes, also addresses leading practices. It further strengthens VA’s efforts in some areas and is still evolving and being refined. The SCIP components are linked to VA’s previous capital planning efforts, including CARES and the development of its 5-year capital plan. Figure 3 illustrates VA’s capital planning steps from 1999 to 2010. As a part of its shift from hospital based, inpatient care to outpatient care, VA has made changes to its real property portfolio on the basis of its May 2004 CARES Decision document and subsequent capital planning. As for specific CARES Decision projects, VA reported in its April 2010 Implementation Monitoring Report on Capital Asset Realignment for Enhanced Services that it has completed 13 of 59 planned major and minor construction projects, opened 82 of 156 planned community-based outpatient clinics (CBOC), and has another 19 ongoing major construction projects identified in the CARES Decision. As for net changes to VA’s real property portfolio since the CARES Decision, our analysis of the data in VA’s 5-year capital plans from 2004 to 2009 found that leases and leased space had increased due in part to VA’s efforts to realign its portfolio towards more outpatient facilities, such as CBOCs and vet centers. These centers provide readjustment counseling and outreach services to all veterans and family members dealing with military-related issues. Although U.S.-owned buildings and vacant space under VA’s jurisdiction and control show a decrease because of VA’s disposal of assets, VA shows a net increase as a result of new construction projects. Similarly, the net increase in owned acreage can be attributed to property acquired by VA’s National Cemetery Administration for new cemeteries. These results of VA’s agencywide capital planning efforts since its March 2004 CARES Decision are shown in table 2. Our analysis also showed that, with the exception of hospitals, VA has expanded the number and types of buildings by which it delivers services. Table 3 shows VA’s changes to its real property portfolio in terms of facility types. VA officials and stakeholders generally agreed that changes to the VA real property portfolio have benefited veterans. For example, both groups reported that the new facilities, such as more accessible clinics, had improved veteran access to services by limiting the distance that veterans travel to VA health care facilities. Officials from veteran service organizations with whom we spoke stated that upgrades to VA’s real property portfolio had improved care for veterans. For example, these officials commented that real property changes in VA facilities in Denver, Colorado, and Syracuse, New York, have resulted in improved services for veterans with spinal cord injuries or diseases. Additionally, officials from VA’s central office and the VISNs that we contacted cited recent initiatives, such as telehealth and telemental health services at CBOCs, as being beneficial to veterans. To gain further insight on the steps that VA took to realign its real property portfolio, we observed ongoing and completed projects at 5 VISNs that demonstrated VA’s changes in the areas that CARES identified as priorities: improved access, modernization, special disability programs, underutilized or vacant property, CBOCs, VA and the Department of Defense (DOD) collaboration, long-term care, and mental health. As such, we visited several facilities in those VISNs as described in figures 4 through 9. VA has been appropriated about $16.7 billion from fiscal years 2004 through 2010 for major construction, minor construction, and nonrecurring maintenance. In addition, VA has identified several other high-cost projects that have not yet been funded. For example, VA reported in its 5-year capital plan for fiscal years 2010-2015 that agencywide, it has a backlog of $9.4 billion of facility condition assessment deficiencies (repairs). Furthermore, due to incremental funding of projects, 24 of the 69 ongoing major construction projects listed in the plan needed an additional $4.4 billion to complete. For example, the plan describes funding needed for the new medical facility in Denver. As of fiscal year 2010, VA has been funded only $307 million of the estimated $800 million total project cost. The President’s budget for fiscal year 2011 included a request for $451 million for this project. Even if this amount is funded, VA’s 5-year capital plan reports that this project would still need an additional $42 million to complete construction. VA officials commented that this phased approach enables the agency to request funding in stages that allow for the funding of independent and stand alone portions of projects to be built while allowing available resources to be utilized on other high-priority projects. Like other agencies across the government, VA has faced underlying obstacles that have exacerbated its real property management challenges and caused them to persist over time. Specifically, we have previously reported on such challenges, including competing stakeholder interests, legal and budgetary limitations, and the need for improved capital planning. These challenges can impact the agency’s ability to fully realign its real property portfolio. Regarding competing stakeholder interests, we have reported that VA has faced challenges in coordinating with historic preservation and community organizations, as well as managing established relationships with other health care providers, such as college and university partnerships. While joint ventures for facilities present unique opportunities for VA to explore new ways to provide health care to veterans, it also raises issues for VA.