[House Hearing, 112 Congress]
[From the U.S. Government Printing Office]



 
  DECONSTRUCTING THE U.S. DEPARTMENT OF VETERANS AFFAIRS CONSTRUCTION 
                                PLANNING

=======================================================================



                                HEARING

                               before the

                     COMMITTEE ON VETERANS' AFFAIRS
                     U.S. HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 5, 2011

                               __________

                            Serial No. 112-7

                               __________

       Printed for the use of the Committee on Veterans' Affairs




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                     COMMITTEE ON VETERANS' AFFAIRS

                     JEFF MILLER, Florida, Chairman

CLIFF STEARNS, Florida               BOB FILNER, California, Ranking
DOUG LAMBORN, Colorado               CORRINE BROWN, Florida
GUS M. BILIRAKIS, Florida            SILVESTRE REYES, Texas
DAVID P. ROE, Tennessee              MICHAEL H. MICHAUD, Maine
MARLIN A. STUTZMAN, Indiana          LINDA T. SANCHEZ, California
BILL FLORES, Texas                   BRUCE L. BRALEY, Iowa
BILL JOHNSON, Ohio                   JERRY McNERNEY, California
JEFF DENHAM, California              JOE DONNELLY, Indiana
JON RUNYAN, New Jersey               TIMOTHY J. WALZ, Minnesota
DAN BENISHEK, Michigan               JOHN BARROW, Georgia
ANN MARIE BUERKLE, New York          RUSS CARNAHAN, Missouri
TIM HUELSKAMP, Kansas
Vacancy
Vacancy

            Helen W. Tolar, Staff Director and Chief Counsel

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Veterans' Affairs are also 
published in electronic form. The printed hearing record remains the 
official version. Because electronic submissions are used to prepare 
both printed and electronic versions of the hearing record, the process 
of converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.

                            C O N T E N T S

                               __________

                             April 5, 2011

                                                                   Page
Deconstructing the U.S. Department of Veterans Affairs 
  Construction Planning..........................................     1

                           OPENING STATEMENTS

Chairman Jeff Miller.............................................     1
    Prepared statement of Chairman Miller........................    40
Hon. Bob Filner, Ranking Democratic Member.......................     2
    Prepared statement of Congressman Filner.....................    41
Hon. Silvestre Reyes, prepared statement of......................    42

                               WITNESSES

U.S. Department of Veterans Affairs, Hon. W. Scott Gould, Deputy 
  Secretary......................................................     3
    Prepared statement of Mr. Gould..............................    42
U.S. Government Accountability Office, Lorelei St. James, Acting 
  Director, Physical Infrastructure Issues.......................    32
    Prepared statement of Ms. St. James..........................    46

                                 ______

Veterans of Foreign Wars of the United States, Raymond Kelley, 
  Director, National Legislative Service.........................    33
    Prepared statement of Mr. Kelley.............................    49

                       SUBMISSIONS FOR THE RECORD

Kaiser Permanente, statement.....................................    51
Sacred Heart Health System, Pensacola, FL, Peter Heckathorn, 
  CMPE, Executive Vice President, letter.........................    53

                   MATERIAL SUBMITTED FOR THE RECORD

Post-Hearing Follow-up Information:

  U.S. Department of Veterans, News Release entitled, ``VA & HUD 
    Issues First-Ever Report on Homeless Veterans, Assessment Key 
    to Preventing and Ending Homelessness,'' dated February 10, 
    2011.........................................................    58
  Lorelei St. James, Acting Director, Physical Infrastructure 
    Issues, U.S. Government Accountability Office, to Hon. Jeff 
    Miller, Chairman, Committee on Veterans' Affairs, letter 
    dated April 20, 2011.........................................    59

Post-Hearing Questions and Responses for the Record:

  Hon. Jeff Miller, Chairman, Committee on Veterans' Affairs to 
    Hon. Eric K. Shinseki, Secretary, U.S. Department of Veterans 
    Affairs, letter dated May 13, 2011, and VA responses.........    61
  Hon. Bob Filner, Ranking Democratic Member, Committee on 
    Veterans' Affairs, to Eric K. Shinseki, Secretary, U.S. 
    Department of Veterans Affairs, letter dated May 6, 2011, and 
    VA responses.................................................    77
  Hon. Bob Filner, Ranking Democratic Member, Committee on 
    Veterans' Affairs, to Hon. Gene L. Dodaro, Comptroller 
    General, U.S. Government Accountability Office, letter dated 
    May 6, 2011, and GAO responses...............................    79
  Hon. Bob Filner, Ranking Democratic Member, Committee on 
    Veterans' Affairs, to Raymond C. Kelley, Director, National 
    Legislative Service, Veterans of Foreign Wars of the United 
    States, and VFW responses....................................    82



                           DECONSTRUCTING THE

                  U.S. DEPARTMENT OF VETERANS AFFAIRS

                         CONSTRUCTION PLANNING

                              ----------                              


                         TUESDAY, APRIL 5, 2011

                     U.S. House of Representatives,
                            Committee on Veterans' Affairs,
                                                    Washington, DC.

    The Committee met, pursuant to notice, at 10:30 a.m., in 
Room 334, Cannon House Office Building, Hon. Jeff Miller, 
[Chairman of the Committee] presiding.

    Present: Representatives Miller, Bilirakis, Roe, Buerkle, 
Johnson, Runyan, Stutzman, Filner, Brown, Reyes, Sanchez, 
McNerney, Donnelly, Walz, Barrow, and Carnahan.

              OPENING STATEMENT OF CHAIRMAN MILLER

    The Chairman. I want to welcome everybody here to a hearing 
entitled ``Deconstructing the U.S. Department of Veterans 
Affairs (VA) Construction Planning.'' And we are here to 
examine VA's fiscal year 2012 construction budget request, 
including the methodology used to arrive at the request in VA's 
long-term construction outlook.
    Unlike previous long-term construction modeling that 
covered 5-year projections, VA has now put forth a 10-year 
construction plan using the Strategic Capital Investment 
Planning or SCIP process. The SCIP process is intended to draw 
upon past lessons in VA construction modeling, as well as 
knowledge from the private sector in meeting current needs and 
anticipating future ones.
    Without a doubt a new capital asset planning process 
presents new challenges and it presents new opportunities. The 
opportunities are there to provide veterans with state-of-the-
art health care in modern facilities closer to where veterans 
live. The challenges are that VA has an aging hospital 
infrastructure, a considerable backlog of maintenance projects, 
an aging veteran population that makes long-term planning 
difficult and a constrained fiscal environment within which to 
operate.
    VA's SCIP plan has been described as a 10-year action plan 
that would require a minimum investment of $53 billion to $65 
billion over 10 years. Needless to say, given the fiscal 
environment we are in, that is an ambitious funding 
requirement, one that we must be sure relies on good 
assumptions and reliable analysis. And toward that end, I have 
several questions I would like to have examined at this 
hearing.
    First, I am interested in learning the health care 
utilization assumptions that were used in adopting the plan, 
especially given the expected dramatic decline in the veterans 
population over the next 20 to 30 years.
    Second, I am interested to learn whether the $53 billion to 
$65 billion price tag can realistically be met given the 
President's fiscal year 2012 request because, if carried 
forward annually for 10 years, it would only meet half the 
cost.
    Third, I am interested in learning about the alternatives 
VA considered to meet its service delivery needs other than in-
house construction. Were partnerships with other Federal 
providers adequately explored, and what about public-private 
partnerships? In short, were all available options to meet 
veterans' needs on the table and fully considered?
    Fourth, it is my understanding that the SCIP plan does not 
include costs associated with up-front facility activations or 
annual operating expenses and I'm interested to learn whether 
those costs ought to be known before Congress adopts one 
proposal over another.
    And finally, I am interested in learning about VA's recent 
performance in its management of construction projects. If the 
Committee can be given some assurances that VA has been a good 
steward of the construction funding that Congress has already 
provided, it will help in the decisions that we must make 
moving forward. I believe it is imperative that VA use full 
transparency in presenting its decision-making process on how 
every dollar was spent once it was appropriated.
    VA must also ensure that all cost effective options are 
considered, all bias acknowledged, and due diligence conducted 
as it moves forward in its capital asset planning. 
Comprehensive planning on the front end will prevent massive 
cost overruns and project delays down the road.
    In the end, our overarching objective is clear. Veterans 
expect and we should deliver the best that 21st Century health 
care has to offer. This hearing begins a discussion of how we 
will collectively chart a path towards meeting that objective.
    I do appreciate everyone's attending at this hearing and 
now I yield to the Ranking Member for his opening statement.
    [The prepared statement of Chairman Miller appears on p. 
40.]

              OPENING STATEMENT OF HON. BOB FILNER

    Mr. Filner. Thank you, Mr. Chairman. I ask that my 
statement be made a part of the record, and I just want to 
comment briefly. Mr. Gould, I want to figure out what is the 
clever bureaucratic thinking behind putting forward a 10-year 
plan and asking for a budget appropriation that will take 20 
years to meet the 10-year plan. There must be something really 
clever there that I am missing because it looks like you are 
putting together a 20-year plan.
    But I don't understand it. If you are going to come up with 
a 10-year plan and you say you need X amount of dollars and you 
ask for half of that, I am not sure what the point is. Why have 
a plan if you are not going to even ask for it to be 
implemented? I will put my full statement in the record, Mr. 
Chairman.
    [The prepared statement of Mr. Filner appears on p. 41.]
    The Chairman. Thank you, Mr. Filner. Thanks to the first 
panel who is with us today. We have the Honorable W. Scott 
Gould, Deputy Secretary of Veterans Affairs. Thank you for 
being with us, sir. And Mr. Glenn Haggstrom, Executive 
Director, Office of Acquisition, Logistics, and Construction. 
There are other folks with you today, and I would ask you, 
Deputy Secretary, if you would introduce them to us as well.
    Your complete written statement will be made part of the 
record, and you are recognized, sir.

   STATEMENT OF HON. W. SCOTT GOULD, DEPUTY SECRETARY, U.S. 
    DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY GLENN D. 
     HAGGSTROM, EXECUTIVE DIRECTOR, OFFICE OF ACQUISITION, 
   LOGISTICS, AND CONSTRUCTION, U.S. DEPARTMENT OF VETERANS 
 AFFAIRS; PATRICIA VANDENBERG, MH, BS, ASSISTANT DEPUTY UNDER 
 SECRETARY FOR HEALTH FOR POLICY AND PLANNING, VETERANS HEALTH 
 ADMINISTRATION, U.S. DEPARTMENT OF VETERANS AFFAIRS; JAMES M. 
  SULLIVAN, DIRECTOR, OFFICE OF ASSET ENTERPRISE MANAGEMENT, 
OFFICE OF MANAGEMENT, U.S. DEPARTMENT OF VETERANS AFFAIRS; AND 
 ROBERT L. NEARY, JR., ACTING DIRECTOR, OFFICE OF CONSTRUCTION 
 AND FACILITIES MANAGEMENT, U.S. DEPARTMENT OF VETERANS AFFAIRS

    Mr. Gould. Mr. Chairman, thank you so much, Ranking Member 
Filner, distinguished Members of the House Committee on 
Veterans' Affairs. Thank you for the opportunity to appear 
before you today to discuss the Department of Veterans Affairs 
construction planning.
    Mr. Chairman, thank you for introducing Glenn Haggstrom, 
immediately to my right. May I also introduce Jim Sullivan, 
Director of our Office of Asset Enterprise Management, Office 
of Management, and Pat Vandenberg, Assistant Deputy Under 
Secretary for Policy and Planning. These are, respectively, the 
people leading our construction, financial overwatch and health 
care policy and planning, so I think we will have a very full 
discussion today.
    It is a privilege for me to represent Secretary Shinseki 
today and the hard-working people at VA, the employees who each 
and every day provide veterans and their families with care and 
benefits second to none.
    Our mission at VA is to provide the best possible health 
care and services to veterans wherever they reside. Next to a 
well-trained staff and state-of-the-art technology, our capital 
infrastructure is essential to delivering high quality 
services.
    Today we have a comprehensive array of capital 
infrastructure across the Nation, including over 1,400 points 
of service with a replacement value of over $100 billion. 
Together they comprise the largest direct health care system, 
the largest cemetery system and one of the largest benefits 
services systems in America.
    But it is also true that the average age of our buildings 
is over 60 years. During these years, the medical needs of the 
veterans we serve have evolved. In general, they have chosen to 
live in different cities and towns across the country. Their 
demand for care and benefits has increased. Their needs for 
certain kinds of care, like polytrauma, post-traumatic stress 
disorder (PTSD), traumatic brain injury (TBI) and other 
injuries common to our ongoing conflicts have changed as well.
    Consequently, we at VA are engaged in a constant effort to 
do three things. Number one, anticipate the many changing 
factors that influence our ability to care for veterans. Number 
two, determine the location, size and functionality of the 
buildings that will serve our veterans in the future. And last, 
request the funding that will meet future needs while 
fulfilling the promise of access to high quality care today.
    Our capital infrastructure planning factors in new models 
of care and many technological developments that were not 
available 10 years ago. Telehealth and telemedicine, for 
example, are critically important in providing care to veterans 
in remote areas and often to those with chronic health care 
needs. As a result, we can provide care to more veterans with 
less infrastructure--fewer hospitals, for instance, than we had 
just a few year ago.
    We know that many prosthesis that once required inpatient 
care are now delivered through outpatient care. And we know 
that veterans and taxpayers are often served best in the 
veteran's own community. We also have new ways to finance our 
capital infrastructure. For example, we are leveraging non-
governmental and private-sector interests and expanding our 
capital infrastructure through investment programs, including 
the Enhanced Use Lease, or EUL. We have shed a number of under 
utilized and vacant buildings through our Building Utilization 
Review and Repurposing Program. We not only buy facilities, but 
we lease them, about 1,600 in our system today.
    And finally, in areas where the sparse population makes 
infrastructure impractical and inefficient, we continue to use 
contract care services for veterans' needs.
    The imperative remains the same--ensure veterans and our 
employees have access to safe and secure facilities in which to 
receive and provide care and services. Serving veterans now and 
in the future, therefore, is the principal driver of our 
planning infrastructure and the overarching goal of the new 
Strategic Capital Investment Planning process, known as SCIP.
    To this end, we have developed a new tool to prioritize the 
capital needs across VA's three administrations, as well as 
across the budget accounts through which capital funding is 
provided by Congress. SCIP is a rigorous capital planning 
process that quantifies and prioritizes the need to repair, 
upgrade, or replace VA's aging infrastructure and address the 
current and future needs of America's veterans within the 
context of prudent capital investment decision-making.
    SCIP means that VA capital decisions are no longer made in 
administration or program stove pipes. By taking a corporate 
approach to capital planning, SCIP ensures that our capital 
investments are considered together and are prioritized 
according to the same criteria. In my written statement I 
describe how SCIP supports VA's top three priorities, namely to 
increase access, eliminate the claims backlog and end veterans' 
homelessness.
    I also outline our budget request for fiscal year 2012 and 
I emphasize that we are working toward achieving our 
priorities, while ensuring the best possible use of taxpayer 
dollars. In fact, SCIP is part of a larger effort to establish 
and reinforce the importance of right behaviors, disciplines, 
processes and leadership to become a more effective, 
accountable and efficient department.
    In summary, the VA capital plan and associated fiscal year 
2012 budget before this Congress seeks to support the 
requirements necessary to meet the needs of those who have 
served this country and their families for years to come.
    Mr. Chairman, Members of the Committee, this concludes my 
remarks and I thank you, again, for the opportunity to be here 
today and to respond to your questions.
    [The prepared statement of Mr. Gould appears on p. 42.]
    The Chairman. Thank you very much. The SCIP process does 
project future space needs through 2018, however, it is my 
understanding that SCIP is based on the same Milliman 
utilization projection data that VA uses for the enrollee model 
for the budget.
    In 2008, RAND reported in a review and evaluation of the VA 
enrollee health care projection model that this model is useful 
for short-term budget planning, but has limited utility for 
longer term planning and policy analysis.
    So my question is, how can you accurately project needs to 
2018 using the Milliman data and is this a flaw in SCIP?
    Mr. Gould. Mr. Chairman, we use a variety of methods to try 
to forecast our demand in the system, and you are quite right. 
The purpose of our modeling is to look as far into the future 
as we can. In fact, we try to push ourselves out to a 20 year 
point. We use our Milliman model to help accomplish that, and 
it has proved quite accurate in the near term.
    I would like to ask Pat Vandenberg to give you a little bit 
more detail into how the model is used.
    Ms. Vandenberg. Thank you for that question. Yes, RAND did 
acknowledge that there were some challenges in the long-term 
projections, and since the RAND study has been received, we 
have looked for ways to strengthen the reliability of the 
model. We pay particular attention to better understanding the 
cohort that is enrolled with us, and in particular the needs of 
veterans coming from the current conflicts.
    We have also looked to crosswalk our experience with the 
model to other projection tools such as those that are used by 
Medicare to project the demand for services. Since many of our 
veterans are over 65, we can look at the reliance factor, not 
only within our system but also within Medicare.
    The Chairman. VA's total capital budget request for fiscal 
year 2012 is relatively low and both I and the Ranking Member, 
have both addressed that in our opening statements, when 
compared to the SCIP magnitude costs over 10 years. Given the 
fiscal constraint that we are in, is the SCIP plan realistic? 
And further, as I said, it does not include activation costs or 
annual operating expenses. Don't you think we should know what 
those costs are before embarking on such an ambitious long-term 
plan to meet gaps in service?
    Mr. Gould. Mr. Chairman, first of all, I think the SCIP's 
central contribution to the discussion that we want to have 
about serving our veterans now and in the future is to 
transparently and clearly define how big the problem is. Up 
until this point, there were no figures available over a 5- or 
10-year period that would have allowed this Committee and 
others to evaluate exactly where we were relative to this 
problem.
    It is an eye-watering number. I frankly admit that. We also 
think it is a necessity to be able to build the capital 
infrastructure that our veterans need for the future. At the 
same time, every Member here would frankly admit that we are in 
a tough situation in terms of the budget. Our resources are 
constrained. We need to make sure that every dollar we have 
counts. And it was with those two needs in balance, both the 
large 10-year demand and the near-term constraint on our 
budget, that we arrived at a total figure of $2.8 billion for 
major, minor, non-recurring maintenance (NRM), and leasing in 
our system.
    If you do look at that number and look back over the past 
decade, it is a number that is about average for our 
investment. Can and should we do more? Of course. But in fiscal 
year 2012, given the balance of constraints and the need to 
deliver current services to our veterans, we believe that we 
arrived at the right number for the VA.
    The Chairman. But what about activation costs and operating 
expenses? Isn't that something that should be factored in that 
we should be made aware of?
    Mr. Gould. It is very important and you will note in the 
budget request, we clearly identify that it is not included. 
What we are doing now is developing a model to help us better 
estimate what those activation costs are. You will note if you 
look at our last 10 years of performance, that building large 
infrastructure and major construction has not been something we 
have done often. We are opening new facilities now for new 
hospitals across the U.S. over the next several years, and what 
we found is that our ability to accurately estimate what those 
activation costs are has atrophied.
    And so in recognition of that, we simply identified in the 
model that there were additional activation costs to come, 
clearly stating that in the President's budget proposal, and 
now what this team is doing is working on developing an 
accurate estimate, which we would be happy to share with the 
Committee and provide to you.
    [The VA subsequently provided the following information:]

          The Strategic Capital Investment Planning (SCIP) 10-Year 
        Action Plan is an important planning tool that identifies 
        service gaps (geographical access, utilization, facility 
        condition, space, etc.) and assists VA in planning and 
        identifying the capital projects (and non-capital solutions) to 
        close these gaps.
          As stated in our budget submission, the SCIP Action Plan 
        represents a snapshot in time providing the magnitude costs and 
        specific projects required to meet existing and projected 
        critical infrastructure gaps, while honoring our commitment to 
        serve Veterans in facilities that are safe, modern, and within 
        a reasonable traveling distance for Veterans.
          For a given project, SCIP-generated estimates are refined as 
        the project moves further along in development (action plan 
         business case 
        prospectus  final design). While activation and 
        operating costs were not reported in the 2012 SCIP Plan, they 
        are an important element in VA's planning process. VA is 
        currently in the process of developing a robust and uniform 
        methodology for estimating and including these costs in the 
        2013 SCIP Plans.

    The Chairman. I am a slight bit over my time, but I would 
like to take the prerogative to ask one question I think all of 
us want to hear an answer to. We are currently in ongoing 
negotiations to keep the government open and operating through 
the end of September. Nevertheless, many of our constituents 
want to know how their services might be affected if there is, 
in fact, a government shutdown, and we know, with the exception 
of VA health care, which is already fully funded for the year, 
can you describe for us the effect of a shutdown, what it would 
be on VA programs, and certainly as the Chief Operating 
Officer, you have a contingency plan in place, and if you 
could, let us in on that.
    Mr. Gould. Mr. Chairman, first of all, I have tremendous 
sympathy for your constituents and frankly our employees as 
well, who are quite concerned about the prospect of a potential 
shutdown.
    The first thing I want to say is, we believe that that 
shutdown can still be averted and I know I share the view with 
many here in this room that our negotiating teams can take that 
action to avert a shutdown.
    We are also very grateful for the foresight of this 
Congress, prior Congress and Committee in providing a 2-year 
appropriation. I think one thing that you would hold up to 
Members calling with concern about what might happen to them 
that with an advanced appropriation, we are one of the very few 
agencies that has about 86 percent of our funding for this 
fiscal year already in place, so those operations would 
continue without effect.
    I don't want to speculate on what activities would be 
adversely affected by a possible shutdown, but we have done 
quite a lot of work to try to update our plans and get some 
insights on that. I could share with you from 1995/1996 that, 
to take an example, our Voc Rehab counseling services were not 
offered and you can see that for folks looking at reintegrating 
with jobs in the private sector who are trying to be employed, 
how important that would be, and it was not available in 1995/
1996.
    The Chairman. Well, I appreciate your attempt to not answer 
the question, however, I do think that you need to speculate, 
especially here, particularly on VA construction loans, the 
construction programs that are ongoing today, burials at our 
national cemeteries, GI Bill recipients, you mentioned Voc 
Rehab, disability compensation and pension. I mean, just those 
few areas, you know, I just, I don't see how you can't--I mean, 
you've obviously speculated somewhere. We are real close to one 
of two things, either resolving the issue that's been left to 
be resolved or, unfortunately, seeing the government shut down.
    Mr. Filner. Can I follow up, Mr. Chairman? When you said 
you don't want to speculate, and the Chairman said that we are 
a couple of days off, then you must have a plan. If you don't, 
I'd send you back right now to do one. Are people going to get 
their checks? Are they going to get their services, as the 
Chairman pointed out? Who is going to go to work and who is on 
furlough? You must have a plan. If you don't, then I guess I 
would ask for your resignation now, but come on. The Chairman 
asked you a question. You don't want to speculate, but there 
has to be a plan. Who is going to be essential? Who is not 
essential. Who is going to get their checks? Who is not going 
to get their checks? You have to know something about that.
    Mr. Gould. Yes. Mr. Chairman, Ranking Member Filner, 
obviously there has been a lot of activity to update our 
thinking. We are responsible for being prepared for a variety 
of contingencies. We are a couple days out from the prospect of 
a shutdown. The entire management team at VA shares with you a 
concern for our employees and the veterans who might 
potentially be affected by a shutdown, but I believe that it is 
still possible to avert a shutdown and I hope that the 
negotiating teams charged with that and who are taking that 
responsibility very seriously can proceed to reach an agreement 
unencumbered by any further discussion on potential impact.
    The Chairman. If the government shuts down Friday at 
midnight and we have funerals and burials scheduled for next 
week, what happens?
    Mr. Gould. Reflecting back on the 1995/1996 experience, I 
can tell you that those burials would continue at a modifying 
rate. It might not be possible to conduct every burial as it 
was requested in terms of the specific day, but obviously out 
of a regard for the seriousness of the issue and requests on 
the part of the families in 1995/1996, the government reached 
the conclusion that those services would continue.
    The Chairman. Mr. Filner.
    Mr. Filner. I know this was not the subject of the hearing, 
Mr. Under Secretary, but I am very disappointed in the answer. 
We have to know more. Some of us are going to argue that it is 
necessary to avoid a shutdown. Some are going to argue, no, it 
doesn't matter. Every agency should tell us what are the 
consequences. Again, is somebody's disability check going to be 
cut? Is somebody's disability claim going to be adjudicated, or 
not? Are contracts going to be let?
    These are rather obvious questions, and surely you have 
considered them. So, you have to answer some of them. Do we 
have to go down everything, because the Chairman asked you 
about burials? So, I will ask you about disability claims or 
disability checks. Are they going to be paid or not going to be 
paid or, how about the GI Bill? Are they going to get their 
checks on time?
    I mean, we can go on and on, but you have to give us some 
specifics here.
    Mr. Gould. Well, perhaps I can be helpful on the disability 
claims. Looking back to the 1995/1996 experience where 
government went through this very wrenching process in 
conjunction with Counsel and after reviewing the Appropriations 
language and impact, those checks did flow during that time. So 
I just would ask the Committee to recognize that with respect 
to our veterans, their health care will be continued by virtue 
of the fact that we have an advanced appropriation. About 86 
percent of our budget is covered over that 2-year period.
    And so as you turn to your constituents with obvious 
concern and care, if they are working in VHA, the Veterans 
Health Administration, then clearly they fit in a situation 
where funding has already been provided to them, so they 
would----
    Mr. Filner. What percent of the remaining employees will be 
considered essential or non-essential, roughly?
    Mr. Gould. Well, we don't know what that final number is. 
The Secretary will have an opportunity to make a final decision 
on that on Friday of this week. We hope that it doesn't come to 
that and that the negotiators are able to avert a shutdown in 
the hours and days ahead.
    Mr. Filner. Well, as I said, I think we need a far more 
specific--I think the whole administration should be telling 
the Nation what the possibility is or what the situation is so 
that everybody knows.
    My original question that I asked, I am not sure that I got 
a good response to it. If we are estimating in your first 10-
year plan, it is around $6 billion a year, roughly?
    Mr. Gould. Right.
    Mr. Filner. And you are asking for less than half, plus you 
ask for a contingency of about $1 billion. I don't understand 
the budgeting process that when you rolled out a 10-year plan, 
you didn't ask for enough to fully implement it. You did in the 
first year, but we are going to need you to estimate how much 
it is for the plan so we get stable funding and we put in the 
$6 billion a year or whatever you need. At least that is what I 
would think if it was my house or my business. I would be 
trying to do that, right?
    So you asked for half and then you asked for some 
contingency money that the Chairman and I agreed to. We took 
your SCIP plan a little more seriously maybe than you did, and 
put that money, or suggested that money go into construction. I 
still don't understand the process that led to that. There are 
going to be constraints every year from now on and if you are 
not going to ask for the $6 billion every year, then you are 
going to keep falling behind. As I said, your 10-year plan 
becomes a 20-year plan, which is what you said you would like 
to get. Well, you got it. It is going to take 20 years to take 
care of the 10-year efforts and then you will have a new 10-
year plan.
    I just don't understand how all that was decided.
    Mr. Gould. Let me try to assist on that. First, look, it is 
a big number. We know it is a substantial investment on the 
part of the country as we look forward. I would point out that 
it is about 5 percent of the total amount of money that we are 
going to spend over the next decade on our veterans. Current 
course and speed, about $1.3 trillion. That is a lot of money.
    Now, if we were thinking, to use your analogy of our own 
home or our own business, having first tried to clearly 
identify what the requirements were, we would then step back 
into our current situation, loan capacity, free cash, 
availability of funds, and then we would decide on a specific 
number and that is exactly what we did. We took into 
consideration our big picture, a big aggressive number here 
that we need to move forward on and the reality of our current 
budget environment.
    I think a lot of folks around this table are confident that 
our country is going to spring back, that we are going to do 
better in the future and that these dollar constraints that we 
are facing now are not going to be the same as the ones we face 
in out years. As so there is a belief that we will be able to, 
in a year-by-year basis, return to the funding question with 
the number clearly and transparently stated, a standard out 
there for what we need to achieve and each year the 
administration will come back and evaluate that and obviously 
request funds that we think are appropriate relative to the 
other expenses that we have for current medical services 
benefits and burial in VA.
    So it is not just a pure decision that we make, 
construction alone, but relative to the other needs that our 
veterans have.
    The Chairman. Mr. Johnson.
    Mr. Johnson. Thank you, Mr. Chairman. I need to express 
also my disappointment in the vagueness of the answer. 
Indicating that burials will continue at a modified rate sounds 
to me like some of them will, some of them won't, some of them 
maybe, and I doubt seriously that that is going to be an 
acceptable answer to the families of our veterans or to the 
veterans themselves. It is certainly not an acceptable answer 
to me, but I will leave it to the Chairman to determine where 
we go with that. I am really disturbed by the vagueness of that 
answer.
    If there are contingency plans, this Committee has asked 
what those contingency plans are and all we are being told is 
that they exist, but you can give no specifics and no details 
on them. I find that particularly disturbing.
    As you know, despite the various efforts that the VA has 
undertaken to realign its capital assets, it is evident from 
the testimony presented here that there is a lot of work to be 
done in order to create a more efficient, transparent and cost 
effective approach to the VA's capital asset planning, approval 
and budgeting process.
    We share a common objective of assisting our Nation's 
veterans and providing them with the health care benefits and 
services that they have earned and are entitled to. It is 
unacceptable when resources and funds are being wasted on 
government inefficiencies, instead of directly caring for our 
veterans. And furthermore, a cost analysis assessment of VA's 
construction projects would not only illustrate possible cost 
savings alternatives, but is required by law, and I welcome the 
opportunity to discuss the VA's construction planning and 
budgeting process and to work with my colleagues on this 
Committee to address some of these critical issues that can and 
must be resolved.
    Let me ask just a couple of quick questions. Peter 
Heckathorn, Executive Vice President of Sacred Heart Health 
Systems in Pensacola, Florida, noted in his testimony, 
submitted for the record, that his organization uses an 
independent review process that is quite detailed. Has the VA 
ever considered using an independent review process to make an 
unbiased decision, giving all possible alternatives related to 
VA facilities? And if so, why hasn't it been adopted.
    Mr. Gould. First, Mr. Johnson, if I could say that the 
objective of the SCIP process is exactly what you are calling 
for in your preliminary statement there--for greater business-
like approach to our investment decisions. We are doing cost 
effectiveness analysis. We are developing a business case, over 
930 of them this year alone.
    We have set up a board, internal to VA, to evaluate and 
stringently review and prioritize each of these investments and 
then, most importantly we have applied a set of decision 
criteria, six major criteria that are used to rank and 
prioritize each of these so that we absolutely are sure that 
these are the highest priority, best value investments that we 
could make as an agency. So this is the part--the reason behind 
SCIP is to get at just the issues that you have identified a 
moment ago. We think we are doing it here.
    Mr. Johnson. How long does the VA estimate that it will 
take to complete the major and minor construction projects that 
are ongoing? Do you have a timeline?
    Mr. Gould. Let me ask Glenn Haggstrom to give us a sense. 
As you know, when we take these on, we spread them out over a 
year. There is a reason why we do that. We focus on design 
first, make sure we get that right. Once the design has been 
done, then when we go to a bid, the construction firms are 
clear about what it is they are going to build for us, and then 
we can manage the implementation and construction of those 
facilities over time.
    Mr. Haggstrom.
    Mr. Haggstrom. Congressman, when you look at the large 
major construction projects, much depends on the scope and 
complexity of those projects and the phasing that may be 
necessary to complete those projects. When you look at a 
smaller facility or a national cemetery, we can look at 
probably an 18- to 24-month completion time from the time we 
start to turn dirt. For a major medical facility, it is a 36- 
to 40-month period of time to complete that facility and turn 
it over to VHA for occupation.
    Mr. Johnson. Okay. All right. Thank you. Just one quick 
follow up because I've only got 20 seconds left. Mr. Secretary, 
back to your comments about SCIP and what it provides, would 
you object to an independent third-party review of the SCIP 
plan to validate your findings?
    Mr. Gould. Let me take that question for the record, Mr. 
Johnson. I think, in principle, the idea of oversight and 
review is welcome. This Committee is engaged in that right now. 
We have reached out to our veteran service organizations 
(VSOs). We have employed an internal board of subject matter 
experts in this area. Our techniques and processes recognized 
by the U.S. Government Accountability Office (GAO) are among 
the best practiced in government and we have drawn on private 
sector input.
    However, what we decide obviously has a tremendous 
acquisition and procurement sensitivity. So it is with that 
simple reservation that I would ask to take the question for 
the record and respond to. On a common-sense basis, it makes a 
lot of sense. Would we be revealing competitive information on 
those major projects? I am not quite sure, and I would ask the 
Committee to afford me the chance to provide that answer in 
writing.
    Mr. Johnson. I will look forward to your answer. I yield 
back, Mr. Chairman.
    [The VA subsequently provided the following information:]

          The Strategic Capital Investment Planning (SCIP) is a process 
        comprised of the following four components: gap analysis, 
        strategic capital assessment, 10-year action plan, and business 
        case. SCIP focuses on identifying service gaps and developing a 
        plan to significantly reduce/eliminate those gaps over a 10-
        year period. This process is data driven, but also includes 
        input that is qualitative. The end result is a list of capital 
        projects for the budget year that will contribute to the 
        closure of service gaps. Each of the four components and the 
        process as a whole come together in a way that allows a capital 
        project to be tracked from beginning to end. SCIP also 
        encourages the use of non-capital solutions where possible. The 
        Department welcomes an opportunity to demonstrate the 
        transparency of this process via independent analysis/review.

    The Chairman. Thank you very much, Mr. McNerney.
    Mr. McNerney. Thank you, Mr. Chairman. I think it is 
important what you have tried to accomplish here, looking ahead 
10 years, 20 years, certainly with the veterans issues. This is 
a long-term project. As we have seen, there are veteran 
independents still from World War I and World War II in the 
system, so the need is going to continue to grow. There is no 
question about it. Let me share one of my frustrations in my 
particular district. We have an agreement by the Veterans 
Administration to put in a new facility and it took about 2 
years for the Agency to decide what county to put it in, and it 
has taken another year now that they have decided what county 
to put it in, whether to put it in the City of Stockton or 
whether to put it in the French Camp area and this is very 
frustrating for our veterans who are looking forward to the 
service, for the unemployed people that might be employed and 
so on. And it is also something that is going to increase the 
cost.
    Now, you know, every year you delay a project, the cost 
goes up by 5 percent or so, so you know, in terms of long-term 
planning, I would suggest and I would urge that the 
Department--and I am not sure that your Department's directly 
responsible here, Deputy Secretary Gould but making timely 
decisions is an important function and I haven't been satisfied 
with what has happened so far.
    I don't know if you want to respond to that or not, but it 
certainly had been a frustration of mine.
    Mr. Gould. Sir, I just do want to express my concern for 
our need on the VA's side to make timely decisions on matters 
like this.
    We are making those decisions, unfortunately, in an 
environment where lots of folks get to second guess and review 
and come around a second and a third and a fourth time on all 
of those decisions.
    So when we use our SCIP process to identify places where we 
can put a new facility, we start with a gap analysis that is 
rooted in our best understanding of the community needs and the 
veteran needs in that location. If you would like a specific 
response to the location in your district, I might ask Bob 
Neary who is with us today and sitting behind here to provide 
you a direct answer to your question about that facility.
    Mr. Neary. Thank you, sir.
    The Chairman. If you could, use the microphone and identify 
yourself, please.
    Mr. Neary. Sure. Mr. Chairman. My name is Robert Neary. I 
am the Acting Director of the VA's Office of Construction and 
Facilities Management. With respect to the site selection for 
the clinic, we are very close to doing that. We are in the 
final stage of the environmental assessment. The comment period 
from public and government stakeholders closes in about a week, 
and we will, as quickly as possible after that, make a 
recommendation and make the selection of the site.
    Mr. McNerney. Thank you. I mean, I hope this isn't always 
the case that it takes 3 years to make a decision like this 
because it is going to end up costing more and it certainly 
makes people frustrated about the VA in general, about its 
ability to respond to the needs of our veterans, so please keep 
that in mind in your rule making.
    I have another question. To what extent do you feel that 
having building construction and upgrades accomplished in a 
timely and cost effective manner can help reduce homeless 
veterans populations? So, in other words, is this process, you 
know, impacting the Secretary's prime goal of getting veterans 
off the street?
    Mr. Gould. Thank you, sir, for that question. Absolutely. 
As I mentioned earlier in my remarks, one of our top three 
priorities for VA is ending homelessness, so it was natural for 
us to look to our capital stock and infrastructure and ask the 
question, ``Where could we use these buildings to house 
homeless veterans?'' And so we have been doing that and are 
continuing to do that. We would ask this Committee for their 
help and assistance and making sure that the Enhanced Use Lease 
process is reauthorized after this year. If we do not have it 
reauthorized, we will put in jeopardy about 1,600 beds for our 
homeless veterans, so this is very important. I would ask the 
Committee to assist in whatever way possible.
    The Enhanced Use Lease, as I described earlier, is a way 
where we leverage private-sector investment to be able to 
provide these facilities. I think it makes a lot of sense from 
a business prospective. And as I said earlier, 1,600 beds at 
stake if we can't make this happen.
    Mr. McNerney. Well, I certainly would ask that you keep us, 
the Committee, the Chairman, myself, informed about this 
progress because it is important to myself, it is important to 
every Member of this Committee to keep veterans off the 
streets.
    Mr. Gould. Yes, sir, we will.
    Mr. McNerney. And any impediment you feel is not 
appropriate, I urge you to contact us and make things happen.
    Thank you, Mr. Chairman.
    Mr. Gould. Thank you.
    [The VA subsequently provided the following information:]

          SCIP is a tool used to prioritize capital projects that 
        contribute to the closure of service gaps and completion of 
        Departmental initiatives. The decision criteria used to 
        prioritize those projects is comprised of the many competing 
        priorities within VA. SCIP decision criteria include 
        homelessness as one of the Departmental Initiatives and each 
        project is scored related to how it addresses Veteran 
        homelessness. The SCIP process includes all Enhanced Use Lease 
        (EUL) projects, in addition to the other construction programs, 
        as a way to meet identified service gaps. EULs can assist in 
        meeting space, energy, condition, and functional gaps, as well 
        as providing options for homeless Veteran housing. Each 
        Veterans Integrated Services Network (VISN)-submitted action 
        plan must include a description of how the VISN will address 
        the departmental goal of ending homelessness in 5 years. This 
        may include EUL or other options for addressing local homeless 
        issues.
          As a related capital asset portfolio management tool, VA 
        undertook a strategic effort to identify and repurpose unused 
        and underutilized VA land and buildings nationwide in support 
        of the VA's goal to end Veteran homelessness. The Building 
        Utilization Review and Repurposing (BURR) initiative is 
        assessing existing real estate assets with the potential to 
        develop new housing opportunities for homeless or at-risk 
        Veterans and their families through public-private partnerships 
        and VA's EUL program.
          The Department's EUL authority allows VA to match supply 
        (available buildings and land) and demand among Veterans for 
        housing with third-party development, financing, and supportive 
        services. This approach has multiple benefits: helping to 
        reduce homelessness among our Veterans while leveraging an 
        underutilized asset, reducing the inventory of underutilized 
        real estate, and transferring the operation and maintenance 
        costs to a developer. Other internal and external potential 
        reuse opportunities will be explored for buildings determined 
        unsuitable for housing.
          The entire inventory of unused and underutilized VA land and 
        buildings is incorporated into the SCIP process.

    The Chairman. Mr. Runyan.
    Mr. Runyan. Thank you, Mr. Chairman, and I missed it, but 
thank you for the moment of silence to our colleague. He was--I 
know, personally campaigning against him, he was a great 
advocate for veterans and I appreciate that gesture.
    Mr. Secretary, I have had similar comments that Mr. 
McNerney had. I have a situation, much like I think a lot of us 
do, where I represent Joint Base McGuire-Dix-Lakehurst and, you 
know, we have a community-based outpatient center (CBOC) 
medical facility on the base. How does the SCIP address the 
access? I hear from veterans all the time that they like the 
facility. I have been to the facility. They say it is suitable, 
but it could be better. But the access to our veterans to 
actually get on to the military base, a lot of them are 
ignoring it and then, you know, we are building the problem, 
you know, whether we have enough facilities or they are not 
getting to them, are we creating more medical problems down the 
road that we are going to have to address, and that is my 
number one thing, is access, and is it accounted for in that 
process?
    Mr. Gould. Let me have a general statement on that, and I 
think Mr. Neary might be able to address the specific concerns 
that you have for your CBOC. You said in the Lakehurst area?
    Mr. Runyan. On the old Fort Dix, yes.
    Mr. Gould. On the old Fort Dix. You know, part of what we 
are purchasing here, with the big price tag, what everybody 
sees topping out at $65 billion, plus the activation cost, is 
over 8 million square feet of additional space that over the 
next 10 years is going to do a couple of things for us. One, it 
is going to move our access from 67 percent up to 70, and two, 
it is going to reduce our overcrowding and overutilization of 
our buildings from about over 120 percent down to 95.
    So the big picture is, we look at the system, where 
veterans are going, where their--what their needs are. This 
investment is about improving access and building utilization. 
Now, in your specific area where that all comes to roost and 
your concern for your Members, let me make sure we give you an 
answer that we can on the Lakehurst situation.
    Bob.
    Mr. Neary. Certainly. Mr. Runyan, the SCIP process affords 
the opportunity to evaluate the opportunities and needs for 
expansion or relocation of a facility and I have to provide for 
the record the details about the Fort Dix situation. Be glad to 
do that.
    Mr. Runyan. I would appreciate it because, you know, it is 
a unique situation with the fact that there are over 65,000 
veterans in the district, and McGuire-Dix-Lakehurst being a 
Reserve Guard post, a lot of those people are going to tend to 
stay there after they come out of the conflicts we are in, 
creating a larger demand. So I appreciate your answer and I 
yield back, Mr. Chairman.
    [The VA subsequently provided the following information:]

          Veterans access the Fort Dix CBOC by showing their 
        appointment letter or Veterans Identification Card at the gate. 
        The Fort Dix CBOC also provides a copy of the daily clinic 
        schedule to the base Visitor Center the night prior to each 
        business day. The SCIP submission for the Philadelphia Veterans 
        Affairs Medical Center, the CBOC's parent facility, proposes 
        increasing the size of the Fort Dix CBOC in 2013, possibly by 
        moving off Joint Base McGuire-Dix-Lakehurst and into the 
        community. Moving off the base would eliminate any challenges 
        with ease of access to the CBOC. The project is currently under 
        review and a final decision by VA is anticipated by the end of 
        Fiscal Year 2011.

    The Chairman. Ms. Sanchez.
    Ms. Sanchez. Thank you, Mr. Chairman. Deputy Secretary 
Gould, in his written testimony, Raymond Kelley of the Veterans 
of Foreign Wars (VFW) notes that, ``Community Based Outpatient 
Clinics are crucial to meeting the needs of veterans as the 
veteran population shift.''
    I am wondering if you feel confident that the VA's budget 
request and the likely Congressional funding that you will be 
receiving will be sufficient to continue to place CBOCs where 
they are needed, not just this year or next year, but in years 
to come?
    Mr. Gould. Ms. Sanchez, thank you for that question. 
Obviously, over the next 10 years we believe that our SCIP 
investment plan appropriately emphasizes the use of what we 
call tertiary, excuse me, primary care. And that primary care, 
embodied in the community-based outpatient clinic is really--
the whole purpose of that is to move the point of care closer 
to our veterans, to make the access easier for them. Our goal 
is to have 70 percent of our veterans within a 30-minute drive 
to that facility. So we see a need for an increased number of 
CBOCs and increased square footage on our secondary and 
tertiary facilities, to be able to meet that combined need.
    Ms. Sanchez. Okay. I am pleased to hear that, but I am sort 
of a little concerned because the SCIP seems to rely so much on 
increased funding in the out years and I am wondering if you 
can explain your reason for believing that substantially more 
funding is going to become available down the line. I mean, we 
are living in very challenging economic times and challenging, 
certainly, for budgets at the Federal level.
    So I am sort of curious as to why you believe that there 
will be more funding later on down the line?
    Mr. Gould. Yes, ma'am. And this is obviously a huge need 
that we have. It is going to cost a lot of money. And to the 
best of our ability to calculate and forecast, this is the size 
of the demand that we have for our veterans. We have to step up 
to providing these facilities. Our number one priority is to 
obviously make sure that those who do go into battle have the 
equipment and the training they need and that this VA is there 
for them when they return home.
    And so this quantification through SCIP is all about saying 
this is a very big number, we are going to have to go out and 
fund this over a 10-year period. Our assessment of this year's 
funds availability, relative to the other services that we have 
to continue to provide without interruption was such that we 
arrived at the number of $2.8 billion for our veterans in 2012 
in this Capital Investment. It will need to be more in out 
years, clearly as we go forward, and my hope is that Congress 
will be able to find those funds.
    Ms. Sanchez. So the hope is that down the line Congress 
will fund it at a higher level than now?
    Mr. Gould. I am not asking for additional funds----
    Ms. Sanchez. No, I realize you are not asking for 
additional funding now. But you are sort of relying on the fact 
that Congress will be generous down the line and fund it at a 
higher level.
    Mr. Gould. No, ma'am. The President also will take a look 
at his budget for fiscal year 2013, and again, go through the 
same process. So there will be a number of opportunities to 
step forward with a specific request in 2013 and beyond that we 
believe will and can achieve this total investment over a 10-
year period. It is just that numbers in 2012, which obviously 
the only numbers that have come forward on the budget right now 
are at $2.8 billion.
    Ms. Sanchez. Okay. I am not convinced that that is the best 
way to budget, but you and I will just have to agree to 
disagree on that.
    In your written testimony you noted the importance of 
Enhanced Use Leases, EULs, in getting homeless veterans off the 
streets and into homes, but I am hearing concerns from veterans 
back home that not enough of the benefits of EULs necessarily 
go to veterans and that veterans would like a more transparent 
EUL process in which they can give input and advice. I'm 
wondering if you have heard of similar complaints. And whether 
you have or you haven't, can you explain what might be, or what 
is being done to maybe address that concern.
    Mr. Gould. Yes, ma'am. First of all, the EUL, as a I 
described earlier, is an incredibly useful tool for VA. Since 
about 2006 we have saved a quarter of a billion dollars of 
taxpayer money by the use of EULs. What it does is leverage 
private sector and NGO investment in facilities that we would 
otherwise have to build. With direct capital infusion we can 
spread those costs out over time. So it is extremely useful.
    I would like to ask Mr. Sullivan to talk a little bit about 
the EUL process that we use, how it includes stakeholder input 
and how we make sure that there is transparency in the process.
    Ms. Sanchez. Okay.
    Mr. Sullivan. Let me try and respond to that question about 
transparency in the EUL process. All EU projects and EU efforts 
require a public hearing. We do it locally at the site and give 
notice to all of the interested stakeholders in terms of the 
VSOs, in terms of the local community, the local municipalities 
or counties or other local elected officials.
    We also notify Congress prior to that hearing to make sure 
we get the input of everybody, if there are particular issues 
that are there. Some EU projects there are relatively no issue. 
Other projects there are issues, most of them end up being to 
deal with folks, not necessarily veteran groups or veterans, 
but local jurisdictions that may have issues in terms of a 
homeless veteran project going in and what does that mean for 
the community, not necessarily what it means for veterans, but 
are there other issues.
    If there is a particular issue on the one you talked about, 
we would be happy to meet with you and find out what that is. 
It is a very give-and-take process of developing of an EU and 
we should address that and we will look at that situation.
    Ms. Sanchez. I appreciate the offer and I would appreciate 
an opportunity to discuss those specific concerns with you.
    [The VA subsequently provided the following information:]

          At the onset of every proposed enhanced-use lease (EUL) 
        project, the local VA facility in collaboration with the EUL 
        Program office hosts a public hearing to allow Veterans, the 
        community, and other stakeholders the opportunity to learn 
        about the proposed project and provide input into the 
        development concept. Once the project is underway, the selected 
        developer is required to comply with all local and State 
        building and occupancy codes and ordinances. The EUL process is 
        designed to afford Veterans and the public opportunities at 
        different intervals in the project to provide input whether 
        directly to VA or through the local governance process.
          A meeting with Representative Sanchez was scheduled on 
        Tuesday, May 24, 2011, to continue the dialogue regarding 
        transparency and input from Veterans on VA's EUL program.

    Ms. Sanchez. I am wondering if I can beg the indulgence of 
the Chairman for an additional 30 seconds to ask one last 
questions of the Deputy Secretary? Is there anything being done 
to address the specific needs of homeless female veterans that 
you are aware of?
    Mr. Gould. Ma'am, let me ask Pat Vandenberg to speak to 
that issue. As you know, we have tremendous focus on making 
sure that we are building in our capital infrastructure 
facility suitable for women that has gone directly into one of 
the Secretary's major initiatives in this area, and of course 
all of our prevent activities in VHA are focused on avoiding 
homelessness to begin with for both men and women and then 
obviously the specific intervention in the U.S. Department of 
Housing and Urban Development-Veterans Affairs Supportive 
Housing (HUD-VASH) voucher process and elsewhere is without 
regard to gender.
    Ms. Vandenberg. Thank you for that question. Dr. Patty 
Hayes is our VHA lead on looking at all issues pertaining to 
women's veterans and she has been particularly effective in her 
outreach efforts to better understand what the unique 
circumstance of homeless women veterans is, what gives rise to 
it and she has collaborated extensively with Lisa Pape in the 
lead looking at how we develop the actual initiatives and 
outreach to get our veterans, including our women veterans into 
appropriate housing.
    Ms. Sanchez. Great, and I appreciate that, and I thank the 
Chairman.
    The Chairman. Mr. Bilirakis.
    Mr. Bilirakis. Thank you, Mr. Chairman, I appreciate it and 
I am sorry arrived a little late. For the plan, I know my 
colleagues have asked about what happens, does the Department 
have a plan in the event of a shutdown? I know they have asked 
about burials, if you can answer that question, disability 
claims. How about primary care? I know that it will cover, God 
forbid, an emergency situation, but how about primary care for 
our veterans? I have a 100,000 veterans in my district.
    And also, with regard to the GI Bill, will veterans get 
their checks, that is my question, to go to school?
    The Chairman. Thank you.
    Mr. Gould. Thank you, sir, and I will let my earlier 
remarks stand about how much we all want to avert the 
possibility of a shutdown, but I take your question 
specifically about your Members. As I mentioned earlier, that 
primary medical care will be there. We are fortunate enough to 
have an advanced appropriation for this fiscal year. What that 
means practically is that 86 percent of our operations, which 
are health related, will continue, without interruption because 
of the advanced appropriation.
    And then with respect to your question about the GI Bill, 
we are still working through the legal aspects of that. We do 
not have a standard from 1995/1996. As you know, the GI Bill is 
new, so our lawyers and counsel are working through a proper 
interpretation of what the impact of that rationale would be on 
our ability to send checks out.
    Mr. Bilirakis. One question for Mr. Gould, again. How much 
of the VA's property would you deem to be excess or 
underutilized and how long does it take to make the 
determination that can either be used to meet veterans' needs 
or solved? And then I do have a couple more if we have time.
    Mr. Gould. Let's see. We have about 830 under utilized 
buildings now. One-third of those are empty. Two-thirds of them 
are occupied at 50 percent or below, so a significant number of 
buildings. That number has dropped in the last 10 years by 30 
percent, so we are making progress in that area.
    We go through a very detailed process called the BURR, 
Building Utilization Review and Reports, and I would like Mr. 
Sullivan, if you are interested in additional detail, to 
provide some of that for you now. Would you care to have some 
additional information?
    Mr. Bilirakis. Definitely.
    Mr. Gould. Thank you.
    [The VA subsequently provided the following information:]

          VA had approximately 910 buildings and 10.7 M square feet (Sq 
        Ft) classified as vacant or underutilized as of Feb. 2011. 
        Through disposal, repurposing, or bringing buildings back to 
        full/near full utilization, we have reduced the number of 
        buildings and square footage considered vacant or underutilized 
        by 22 and 28 percent respectively since end of FY 2008.
          VA has plans in place to address much of the remaining vacant 
        or underutilized space. Of the current 910 vacant or 
        underutilized buildings, 430 or 47 percent have an identified 
        plan in place for reuse, repurposing, or disposal. These plans 
        will reduce the overall vacant or underutilized square feet to 
        approximately 5.4 M square feet, which is less than 4 percent 
        of VA's owned inventory.
          VA has 313 vacant buildings. These buildings have no defined 
        use and are not mission dependent. In contrast, underutilized 
        buildings still provide veteran services, albeit not as 
        efficiently as we would prefer. Of the current 313 vacant 
        buildings, 250 or 80 percent are identified for reuse or 
        disposal. The remaining 63 vacant buildings account for only 
        697,073 square feet, less than 0.5 percent of the owned VA 
        inventory.
          To address the second part of the question regarding timing 
        of actions related to vacant or underutilized buildings, VA 
        utilizes inventory reviews to identify the best options for 
        reusing or disposing of the assets. Efforts such as the 
        Building Utilization Review and Repurposing (BURR) process 
        specifically focus on identifying and assessing suitable vacant 
        and underutilized buildings for reuse opportunities to support 
        homeless housing and other outcomes that provide direct 
        benefits to Veterans or VA operations. If a given building is 
        found to be unsuitable for repurposing, other disposal options 
        are evaluated. Decisions on the proposed disposal or reuse 
        strategy can take from a few months where there is known need 
        and opportunity for reuse, to several months to work through 
        the Historic Preservation and Environmental Compliance 
        requirements if demolition is the proposed strategy.

    Mr. Bilirakis. Please. Please.
    With the economy ever changing and costs fluctuating, how 
frequently does the VA reassess the feasibility of its priority 
projects? How adequately do project cost estimates reflect 
actual costs? And one more question. How do you believe the bid 
and acquisition process could be revised to realize greater 
cost savings on construction projects? How adequately do 
project cost estimates reflect actual costs? And one more 
question. How do you believe the bid and acquisition process 
could be revised to realize greater cost savings on 
construction projects?
    Mr. Gould. Sir, that is a good list of questions. I hope I 
caught most of them. This is an annual process, so the beauty 
of what we have done here is for the first time, if it has 
three walls and a roof, it is in the SCIP process. It used to 
be six different processes. Now, it is one. It used to be 
different criteria. Now, there is a common set of criteria and 
we do it on an annual basis. How it works is, everybody out to 
the field, what are the gaps.
    Then we apply the standards, run them through, come up with 
a rigorous prioritized list and then each one of those is 
required to have a business case associated with it so we can 
get in there and take a look at the costs and the associated 
benefit of each of those projects. So you can be assured, your 
constituents can be assured, that this is a process that we are 
doing on a rigorous basis annually.
    Mr. Bilirakis. Since I haven't heard, let us get back again 
to the shutdown. I asked about the disability claims. Are they 
covered under the 2-year budget as well, and then burials?
    Mr. Gould. To your first question, there were disability 
checks provided to individuals in the 1995/1996 experience, and 
I think that is a fair benchmark for the potential for a 
shutdown that we all very much would like to avert. And the 
second area of interest was the burials. Mr. Johnson made a 
similar observation there. Let me be clear in my response. 
Burials will continue. What I said was that they would not 
continue at the level with the sort of customer service 
orientation, being able to fluctuate, but that we would have to 
identify an average number and then have people on board to be 
able to do that.
    What that means practically for someone that experiences a 
death in their family, that called up and were one of the last 
to call and say I want a burial to occur on Monday, it might 
have to occur the following day. So, based on the numbers we 
have, would be some shift in terms of schedule and time, but 
could they bury their loved one with appropriate last rites and 
so forth? Of course.
    Mr. Bilirakis. Okay. Thank you very much. And I may have 
some additional questions, I would ask you to respond. Thank 
you so much. I appreciate it.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, sir.
    Ms. Brown.
    Ms. Brown. Thank you. Thank you, Chairman Miller and 
Ranking Member Filner for holding this hearing, coming from 
Florida with one of the largest elderly populations in the 
country, we desperately need as much construction as possible.
    With the country at war and more and more veterans 
returning from active duty and from combat, it is ill advised 
to be closing facilities or trying to balance the budget on the 
backs of those who have given so much to protect the freedom we 
hold so dearly.
    I have a couple of questions and I don't know whether you 
have the answers now but, one, I am concerned about the time 
table of the Jacksonville VA clinic. You can get back with me 
on that. There has been some problems with the developer and I 
would like an update on that.
    [The VA subsequently provided the following information:]

          The timetable was provided in a meeting that occurred on 
        April 26, 2011.

    Ms. Brown. And also, I am pleased to know that the Orlando 
Medical Center is on track to be completed by next fall after 
27 years of working to get this project online. That is just 
totally unacceptable and the veterans of central Florida 
deserve more.
    But I want to get back to the shutdown and I know it has 
previously been discussed but I am not completely pleased with 
the answers or feel that I have gotten the comprehensive 
answers, based on what I have heard.
    When we pass advanced appropriation, I thought that the 
veterans would be out of the politics of shutdowns and 
Continuing Resolutions (CRs) and all this foolishness. My 
question has to do with, not whether the checks would go out, 
but the processing of the claims of which the backlog we 
discuss all the time. Will someone be there to process the 
claims?
    Mr. Gould. Ma'am, first of all, thank you and this 
Committee and Congress for its foresight in providing an 
advanced appropriation for VA.
    As you just said a moment ago, it really does, I think, 
fulfill our commitment to veterans when we have the money to be 
able to do that on a 2-year basis. It has led to, I think, a 
lot better behavior in terms of the budgeting process and we 
can now turn to our veterans on the eve of potential shutdown 
and assure them that with respect to health care, 86 percent of 
the dollars in the VA budget have already been appropriated for 
this year, and so that does protect them and pull them out of 
that situation and all the doubt and angst that is quite 
rightfully going on right now among our veterans.
    So we thank Congress for that advanced appropriation and 
believe it does address their health care needs for this fiscal 
year.
    Ms. Brown. What about the pension and other programs?
    Mr. Gould. That is an area where in the past, in 1995/1996, 
those checks did go out, as I said earlier to the Chairman and 
the Ranking Member. Our plans are not complete. At VA we have 
been taking prudent action to update those in the unlikely 
event that a shutdown occurs.
    Ms. Brown. Not unlikely.
    Mr. Gould. Well, yes, ma'am. I certainly share your hope 
and view that it doesn't happen, that we can succeed in 
averting a shutdown. I don't think it serves veterans well to 
subject them to that uncertainty, but we continue to update and 
to prepare to take all the precautions that we possibly can to 
be ready for that possibility.
    Ms. Brown. What about the claims process?
    Mr. Gould. Ma'am, in 1995/1996 the claims process, the 
checks came out. If you are referring to new claims that come 
in----
    Ms. Brown. Yes.
    Mr. Gould. Two things happened there in 1995/1996. One is 
we made sure that under a standard of, called, property rights, 
that an individual, there is somebody there to stamp the 
receipt of the claim when it comes in because as you know, the 
dollars go all the way back to the date they got the claim in. 
So to preserve their right in that property, we will have 
somebody there stamping those when they come in.
    Now, it is a different matter to actually be moving forward 
on new claims and those decisions that have not been made yet.
    Ms. Brown. Well, thank you very much. I think my time is 
almost up, but. I think it is a direct correlation between what 
we did in December as far as giving billionaires tax cuts and 
now we are wondering whether or not we have the money for the 
pension checks for veterans. It is a direct correlation between 
what we did in December and what is happening here today 
regarding this government shutdown. Thank you, and I yield back 
the balance of my time.
    The Chairman. Dr. Roe.
    Mr. Roe. Thank you. I don't have many questions, but just a 
couple of things. One, did you have a plan in 1995 and 1996, or 
did you just sort of fly by the seat of your pants since most 
people didn't see it coming?
    Mr. Gould. Sir, we believe, testified, the VA testified in 
1995/1996 about the plan that they--and the approach that the 
Administration took at that time, so there is in the 
Congressional Record a list of the steps that were taken and it 
is, I think, a great place to start to answer some of the 
questions on what might happen in a shutdown.
    Mr. Roe. I share your ``we don't want to do that'' mindset. 
I think that would be bad. And you said 86 percent, so if a 
veteran is going to the clinic, they can continue to go to the 
clinic. Am I correct on that?
    Mr. Gould. Yes, sir. If I heard properly, the hospitals 
will be open and a person can get that care.
    Mr. Roe. And the clinics? And the CBOCs?
    Mr. Gould. And the CBOCs, yes, which is the primary care 
arm of----
    Mr. Roe. Sure. I am a veteran, so if I decide if I need to 
go to see my appointments next Monday and for some reason if 
the government shuts down, I can go keep my appointment. That 
is number one.
    Mr. Gould. Yes, sir.
    Mr. Roe. And number two, is that it sounds like that the 
pension checks and those sources of income are going to 
continue to flow, that veterans can also be at a veteran's 
funeral. Certainly, that is a very bad time to have a family 
concerned about that and we need to allay that concern right 
this instant. So that continues to happen.
    Eighty-six percent of the funds were health care. What is 
the other 14?
    Mr. Gould. Sir, that would be the other two major 
administrations within VA, the National Cemetery Administration 
(NCA) and the Veterans Benefits Administration (VBA). And some 
of our discussion has gotten to the VBA and the NCA elements.
    Mr. Roe. Will research projects that the VA is currently 
involved in continue to be funded and moved forward?
    Mr. Gould. Sir, I do not believe that R and D is fully 
covered. There are, of course, the government has a set of 
investments in making sure that, for example, lab animals have 
been fed and that no human being would ever be put at risk. I 
think that, you know, in details of the criteria that are used 
to decide whether or not and to what extent to shut down R and 
D, that that would be obviously addressed in the plans that 
should be in place by Friday of this week, if we have to go 
there.
    Mr. Roe. If we have to go there. Thinking back to the 
bricks and mortar, there is certainly a need to update your 
facilities. I like the idea that we have a long range plan and 
it is debatable on how that is done, but there is no question 
the VA hospital at Mountain Home where I live is continually 
being updated and needs to be. You have to do that and you have 
to have those maintenance funds in there to keep the 
facilities--and they are constantly changing because the needs 
of care constantly change. What we can do for people constantly 
changes.
    Mr. Gould. Sure.
    Mr. Roe. So I think that is a good thing. The other thing 
that I would like to recommend the VA do is look for more 
partners because in my particular district, for instance, 
Sevierville, Tennessee, has a hospital they just closed and 
they opened a brand new $120 million hospital right across the 
street. They are willing to let the VA use that facility for 
our CBOC for a dollar a year, and there are plenty of partners 
like that out there, I think, that would be willing to do that. 
I believe really want to serve veterans and I would strongly 
encourage you to look for those partnerships in addition to the 
things that you currently--and you may be already doing.
    Mr. Gould. Sir, it just underscores the fact that whenever 
we take a look at medical facilities, health care facilities 
across the country, 152 major medical centers, typically it is 
going to be one of the major businesses in that community, 
certainly one of the top three to five. As a result, it is 
jobs, it is the physical infrastructure, it is the connection 
with the community, it is the services the veterans get there. 
So we want to proceed carefully and we want to proceed with 
information like that that you have just provided about 
partnerships and the availability of those as we develop our 
SCIP plans.
    Mr. Roe. Well, to Ms. Brown's comments, I agree completely 
with her that certainly we do not need to step away from our 
obligation to our veterans. They don't need to be involved in 
this. I certainly want to thank the Ranking Member for his 
support and Mr. Miller, our Chairman, for the advanced 
appropriations that has made whatever happens this week a lot 
easier.
    The other thing that I want to comment on is the 
homelessness issue. That is one of the things that I certainly 
have become very interested in. The fact that we are not 
getting as many of our HUD vouchers out that we have available 
and yet don't have housing available is inexcusable. I mean, we 
had it, but we don't have veterans in the housing. Is there any 
urgency? I know we are doing a veterans count where I am to try 
to find out what is the actual number of homeless veterans. I 
realize that is a moving target. But we are trying to find that 
number out so that we know what the need is. I am disappointed 
when I hear that we have homeless veterans that we have 10,000 
HUD vouchers out there that are not being used.
    Mr. Gould. So sir, a couple of months ago I was out doing a 
homeless count here in Washington, DC, about 8:00 p.m. to 2:00 
a.m., I was just struck by how much suffering goes on in the 
streets in the cities across America. We are making an effort 
to make sure we have an accurate count for that, and as you can 
see in the fiscal year 2012 budget, enormous resources are 
being applied in this area.
    Our whole goal is be able to eliminate, to end veterans 
homelessness by 2015 and we are hard at work on that.
    Mr. Roe. Thank you. I yield back.
    The Chairman. Mr. Reyes.
    Mr. Reyes. Thank you, Mr. Chairman. And I thank you and the 
Ranking Member for having this hearing and I apologize for 
being late, but I came from another hearing. I wanted to make 
sure that I understood what you have testified to here this 
morning. Has the VA issued guidance for designating essential 
and non-essential personnel at all of the locations?
    Mr. Gould. No, sir, we have not yet. We still view a 
shutdown as something that can be averted. We have continued to 
update our plans continuously over the last months and weeks to 
try to make that decision-making process, should it be 
necessary, go smoothly, but we have not issued guidance to the 
field at this point.
    What we are most concerned about is obviously our employees 
and our veterans. We want to be able to communicate clearly and 
well with them, should this decision be made, but it has not 
been made yet and we don't want to color the water with 
information that we hope is not necessary.
    Mr. Reyes. When will you be making that decision?
    Mr. Gould. Congress will have a lot to do with that, the 
negotiations that are ongoing right now. If we do get 
resolution of that, obviously that would affect our time table. 
But if there is no action from a budgetary standpoint and the 
negotiations do not produce either a CR or a bill that gets 
suspended to the end of the year, then we would be likely to 
make that communication on Friday, which would be the day of, 
the midnight Friday, as you know, the end of the continuing 
resolution.
    Mr. Reyes. So you will issue guidance during the day 
Friday, is it on midnight Friday? I ask this question because 
veterans in my district are very concerned.
    Mr. Gould. Sure. They want to know.
    Mr. Reyes. And so far there has not been any guidance 
provided to the local facilities.
    Mr. Gould. That's correct.
    Mr. Reyes. And I think if you are talking about issuing it 
on Friday, how can you reassure the Committee that there will 
be sufficient time to give notice to people that are on 
vacation, people that are working shift work, all those kinds 
of things that need to be planned out before executing that 
plan.
    Mr. Gould. Yes, sir. There are a lot of complexities on 
this. Fortunately, the law is written in such a way that it 
allows the Administration the flexibility to affect an orderly 
shutdown. Our belief is that it can be done in an orderly way 
and that we do not want to provide additional and unnecessary 
information and communication that would cloud the central 
issue, which is our desire to avert a shutdown.
    Mr. Reyes. So next Monday if there has been chaos in my 
facility in El Paso--but that is after the fact. Veterans are 
very concerned right now, and there needs to be some kind of 
reassurance that the Veterans Administration is on top of this 
and that the local director will move forward based on your 
guidance with designating essential and non-essential 
personnel--I went through this twice when I was in the border 
patrol, so I can tell you it is a very disruptive situation, 
and people who get designated non-essential get upset and 
morale is affected in the local facilities. So there has to be 
some reassurance from the headquarters, from the national 
administration, to be able to let people know what is coming, 
if it comes. We can't wait until Friday to do that, at least I 
would not recommend that.
    Mr. Gould. As somebody who has been through this process in 
1995/1996, served at Treasury at the time, and I was intimately 
involved with that. It is enormously disruptive.
    Mr. Reyes. It is.
    Mr. Gould. It has a negative effect on morale. It has a 
negative effect on the services that we provide to taxpayers. 
So for many reasons personally I would like to avert a 
shutdown.
    Our management team is on top of the issue. Just a moment 
ago you said, ``Is there some assurance?'' Absolutely. I think 
folks who know Secretary Shinseki know a leader when they see 
one and who is thinking about the impact on his troops 
throughout the organization and our veterans.
    So absolutely, positively there has been extraordinary care 
in updating and revisiting our contingency plans for a 
shutdown. And then finally I would say for your Members who are 
particularly concerned about health facilities, as I mentioned 
earlier, the health facilities will be open because we have an 
advanced appropriation that provides funds for that period.
    Mr. Reyes. We know that they will be open, but staffing is 
the issue in terms of designating essential----
    Mr. Gould. All the staff, all the staff will come in, sir.
    Mr. Reyes. So everybody would be essential?
    Mr. Gould. Yes, sir. And what I mean by advance 
appropriation for VHA is that all of the--every single one, 
every single one of the normal operations that go on, the 
people, the doctors, the nurses, the deliveries, the cleaning, 
the food and canteen, et cetera, will be done because we have 
an advanced appropriation and I thank this Committee and 
Congress for providing, having the foresight to provide that. 
It really does, as Ms. Brown mentioned earlier, pull our 
veterans back with respect to their health care knowing that we 
have a 2-year advanced appropriation.
    Mr. Reyes. Okay, well, I am going to issue a local 
reassurance based on what you are telling me here this morning.
    Mr. Gould. Yes, sir.
    Mr. Reyes. Okay. Thank you.
    Mr. Gould. Yes, sir.
    Mr. Reyes. Thank you, Mr. Chairman.
    Mr. Gould. Thank you for doing that.
    Mr. Reyes. Thank you.
    The Chairman. I think I have heard you say that 86 percent 
of your budget is basically protected. I have heard four or 
five Members specifically ask you questions regarding a 
potential shutdown. You are, in my opinion, being secretive and 
vague. Look, the Committee on House Administration is putting 
out information today, tomorrow, so that people will know. I 
mean, certainly people in that 14 percent know that they are in 
there.
    What happens on, I mean, Friday at midnight if the 
government shuts down, you have 300,000 employees out there, 
second largest in the country. How do you contact all these 
people, you know, over the weekend? How does that work?
    Mr. Gould. Very quickly and very carefully, sir. In 1995 
and 1996 we did it without essentially email and without the 
web. Now, we have that. Believe me, we have the attention of 
all of our employees. They are obviously concerned, nervous, 
anxious about the lack of certainty in this situation.
    And so, the question you are asking me, sir, is how will we 
communicate to folks. We have a draft strategic communications 
plan that will make that possible, and we also know that there 
is certain flexibility in the law that allows for an orderly 
shutdown, which would include employees coming in on Monday 
just as they normally do, to sit down with their supervisor and 
manager and get letters and information that would help explain 
what has happened, tell them what it is that they need to do 
and how they need to do it to comply with the law.
    The Chairman. Ms. Buerkle.
    Ms. Buerkle. Thank you, Mr. Chairman. I just have a couple 
of follow-up questions from the discussion we are having 
regarding potential shutdown because I am just a little bit 
confused and maybe you can clarify it for me. I heard my 
colleague, Dr. Roe, ask specifically if veterans had to be 
concerned about having access to health care, and if they had a 
problem, to go in and it would be available. And then I heard 
you say that the staffing was also included in that advance 
funding.
    So what is the contingency going to do? What are the 
aspects of the care and all of the veteran services that are at 
risk here if there is a government shutdown?
    Mr. Gould. Yes, ma'am. You can picture sort of a flowchart 
that we are required by law to go through. The flowchart starts 
with the concept of do you have funding. If the answer to that 
question is yes, a shutdown does not apply. In the case of VHA, 
we have an advanced appropriation, so every employee 
conservatively 285,000 of the people who work at VA, will be 
showing up to work under an advanced appropriation in the same 
way that they are working today.
    Mr. Filner. Now, that means 40,000 employees won't be?
    Mr. Gould. Now, Mr. Filner, it does not because of the 
complexities of the law that proceed from there. So you have 
asked earlier who would be engaged in this very detailed update 
process----
    Mr. Filner. So it is 30,000? That is a lot of people.
    Mr. Gould [continuing]. That the law requires has a lot of 
intricacies on this issue. And so we move through a series of 
decision criteria that get us from, ``do you have funding or 
not,'' to ``is life and property at stake,'' to ``are certain 
property rights that would otherwise be lost on the part of 
veterans need to be preserved,'' and the like. We work through 
that logic chain to come up with a final number.
    So if there was ambiguity in my communication in response 
to Dr. Roe, about whether our veterans could get health care 
after a shutdown, I want to eliminate that and remind you that 
we have an advanced appropriation and that VHA, which is one of 
the three principal operating units within the VA, will be open 
for business welcoming our veterans and caring for them for 
whatever need they have.
    Ms. Buerkle. Thank you. I yield back.
    Mr. Gould. Yes, ma'am.
    The Chairman. If a veteran is listening or watching on the 
Web today, they have to think this shutdown isn't going to 
affect them. Basically, your comments today lead this Committee 
to believe that there is not going to be a negative effect on 
VA. Is that true?
    Mr. Gould. No, Mr. Chairman. I wouldn't say that.
    The Chairman. Well, would you please give us the negative 
effects a shutdown would present to VA? You have told us over 
and over the positive.
    Mr. Gould. Right.
    The Chairman. The 86 percent.
    Mr. Gould. Right.
    The Chairman. Would you tell us the negatives?
    Mr. Gould. Right. So your general question is, will there 
be negative impacts on veterans? I have given you three 
illustrations already from the 1995/1996 experience and let me 
just review them. The first is the Voc Rehab Counseling. Those 
appointments will not be processed. They will not be ongoing in 
VA, so our veterans who need assistance in taking on a new 
career or finding a new job or getting help to seek employment 
will not be able to have that service if the 1995/1996 guidance 
stands.
    The Board of Veterans' Appeals, case processing and 
hearing, they are going to be delayed. They were in 1995/1996. 
We think that there is strong guidance there and, of course, 
maintenance on our national cemeteries will also come to a halt 
even though individual burials are likely to continue.
    So I realize that it must be frustrating to you for me not 
to go through chapter and verse. I would say that those 
decisions are very sensitive. They are the product of long 
deliberation inside VA and they have not been made yet. They 
will be made on Friday. Our plan will be finalized on Friday if 
it is necessary, and my fervent hope is that those plans are 
not necessary and that we are not in a situation where we have 
a shutdown.
    I am trying to find an appropriate balance between saying 
that there is no effect, to your comments a moment ago, that is 
not true, and the reality that with an advanced appropriation, 
much of what we do will go forward unchanged. And so if I can 
articulate that in the right way for this Committee, we have to 
find that balance in communicating with our veterans not 
without cost to----
    The Chairman. You said, ``much of what you do wouldn't be 
affected.''
    Mr. Gould. Yes.
    The Chairman. So is it fair to say that little of what you 
do will be negatively affected?
    Mr. Gould. Yes, sir. I think on a dollar basis and an 
employee basis, that would be a fair conclusion.
    The Chairman. Ms. Brown.
    Ms. Brown. Thank you, Mr. Chairman. First of all, I think 
you can tell something about an organization, a group, or 
Congress or whatever how they spend their money, and the 
decisions that were made in December affect what is happening 
now. In addition, the fact is, we should have had a year's CR 
so we didn't have to put the country in this uncertain 
situation, while we figure out where we want cut or the best 
way to balance the budget or whatever we are trying to do.
    But, you know, we practice what I call reverse Robin Hood 
around here, robbing from the poor working people and veterans 
to give tax breaks to the rich. But saying that, let me just 
say I am still concerned. You've talked about the plan for 
1995/1996. This is 2011, and I want to know what plans, what 
contingency plans do we have because some of the things I am 
thinking about are homelessness, housing. I mean that is major.
    A few weeks ago in Jacksonville, I read in the paper that 
they discontinued the meals for homeless people. One-third of 
those are veterans. I called a meeting with the Department of 
Agriculture to find out what could we do to assist veterans 
right there in that clutch. I mean, we are making decisions 
that are affecting the poor people and there is no safety net.
    Mr. Gould. So, ma'am, if there is any veteran that you know 
of, are aware of or that your constituent office can put us in 
touch with, we would love to have that contact information, get 
help to them. The funding for our homeless services in VA has 
not been affected. In fact, as you know, for our fiscal year 
2012, R-10 enacted, it has actually grown, so we are engaged in 
the work every day of ending veteran homelessness and 
preventing veteran homelessness.
    So if there are veterans out there that we can reach out 
and help, that is what the taxpayers invested in the VA to do 
and we would be more than pleased to reach out to those 
individuals.
    Ms. Brown. I have several of my district staff up here. 
Maybe we can meet with the VA because I wish it was one name, 
one person. It is a list. When I pass by my office, the line is 
wrapped around the buildings trying to get a meal, and it is 
more than a meal. I mean, the problem, one of the major 
problems is not just whether or not they get the lunch. It is 
the fact is they need the mental health counseling. We need to 
be coordinating with other non-profit agencies to help the 
veterans, and for some reason we have not been able to make 
that happen, and so, I mean, whatever we could do.
    I wish it was one name. If it was that one name, I would 
take care of it myself.
    Mr. Gould. Yes, ma'am.
    Ms. Brown. But it is wrapped around the buildings.
    Mr. Gould. That is why we have instigated new programs in 
VA for homelessness that try to bring all the NGOs, State and 
local government together into a single service point so that 
our veterans can enter the building. If the day starts, get a 
health care checkup, a dental checkup, get a review to see if 
they have any benefits, get a new set of boots and a jacket, 
get a meal, get a shower.
    So we are focused on trying to create input for our veteran 
homelessness and would more than welcome the opportunity to 
have that conversation with you and your staff to deal with 
this group of veterans.
    Ms. Brown. Thank you. You need to know we want to help.
    Mr. Gould. Yes, ma'am.
    Ms. Brown. I participate in the stand down. I have a job 
fair that I have over 10,000 people attend that is coming up. I 
have different groups that will work with the homeless 
veterans. I mean, I do my part, but it is going to take a team 
effort, and you know, I commend the Secretary but it just is 
not one veteran. I wish it was. But the system is not working 
yet for that veteran that has that problem, that needs that 
counseling and we just--we can't just do it, VA. It is going to 
take a coordinated effort between the VA and those non-profits 
in the community, to give them that support that they need.
    Mr. Gould. Yes, ma'am. I just would add that 2 years ago we 
were at 131,000 homeless veterans, we are at 76,000 now. We 
think that number is going in the right direction. At the end 
of the day, it is about every single individual until there are 
none of them on the street. That is the goal that we have. That 
is the goal that we have set to end the homelessness among our 
veterans.
    [The VA subsequently provided the following information:]

          Homelessness and coordination with other non-profit agencies 
        was discussed at meeting on April 26, 2011. Ongoing efforts 
        will continue.

    Ms. Brown. My last question, and I love the Secretary, but 
what is the 2011 plan in case we shut down Friday? Not 1995/
1996, I was here then. I want to know what is the plan for 
2011.
    Mr. Gould. Yes, ma'am. As I said earlier, we are working on 
a daily basis to update our contingency plans, working to be as 
thorough and as careful as we can, but not to encumber the good 
work of the negotiating teams that is underway right now. It is 
my hope that we do not shut down government, as I tried to 
explain here today, largely unaffected with respect to veterans 
because of the advanced appropriations but not without negative 
effect. And obviously, I would prefer not to be in a world 
where we have a shutdown.
    So we continue to update that contingency. The Secretary's 
plan is to approve and finalize on Friday, should it be 
necessary. And believe me, his staff, myself included, have 
done the work, are continuing to do the work that will be 
required to put him in that position to make the decision.
    Ms. Brown. Thank you. Thank you very much. And it is your 
hope and plan, and it is my prayer. Thank you.
    Mr. Gould. Yes, ma'am.
    The Chairman. Ms. Brown, I will tell you that we will be 
authoring a letter that I welcome any Member of this Committee 
to sign on to to the Secretary asking for an immediate brief on 
what their plan is in regard to the shutdown, potential 
shutdown.
    Mr. Reyes. Mr. Chairman, could I----
    The Chairman. We got another Member that has not had a 
chance to ask their first round of questions.
    Mr. Reyes. Okay. All right.
    The Chairman. So I would recognize Mr. Stutzman.
    Mr. Stutzman. Thank you, Mr. Chairman. Mr. Gould, thank you 
for your willingness to be here and for your testimony. In your 
witness testimony you emphasize that if veterans and their 
families do not have access to the VA, they cannot avail 
themselves of the services and the benefits that they have 
earned while serving our country. I could not agree more.
    In the coming days and weeks, this country will be making 
some very difficult decisions, that at the same time there are 
obligations which must be met prudently and honorably. I would 
add that the accessibility you have emphasized must be 
convenient and excellent. Could you please share with the 
Committee the evaluation process for existing facilities like 
the one in Fort Wayne, Indiana, and the vetting process for 
proposed improvements there?
    Mr. Gould. Thank you. I would be happy to do that. Just 
probably to refresh on the process that we use now for all 
facilities and there are specific issues around Fort Wayne, 
perhaps we can be responsive to you.
    We start with a gap analysis in the field, working to make 
sure that we have access, the facility conditions themselves, 
whether there is any additional space, surplus space that might 
be available in the community. We look at the utilization of 
those facilities and we also look at the energy needs of the 
facilities in terms of their condition.
    We then take a look at that, vis-a-vis, our standards. We 
identify a gap. And where there is a gap, we put together a 
business case and it enters the SCIP process. Once it is in the 
SCIP process, it goes through a rigorous review against six 
criteria. Some of those criteria include safety and security, 
fixing what we have, increasing access, right sizing inventory 
and so on.
    It is then aggregated. The best of the best, the ones that 
have the highest scores, go before a nine member SCIP panel. 
Those then are identified--the very top priorities relative to 
our capacity to pay in terms of the budget--and then it joins 
the budget process and it is reviewed by me and ultimately by 
the Secretary before it goes to the Office of Management and 
Budget (OMB). So it is a very rigorous and thorough process.
    If you are interested in some additional specific 
information about your district, we could perhaps get some help 
from Mr. Neary who is our expert in this area.
    Bob, do you have any additional prospective on the Members' 
request? Would say again the location?
    Mr. Stutzman. Fort Wayne.
    Mr. Gould. Fort Wayne. Yes.
    Mr. Neary. Yes, sir. Again, my name is Robert Neary, Acting 
Director of VA's Office of Construction and Facilities 
Management. We have identified a Fort Wayne facility in our 
authorization request that is in the budget and capital plan 
volume. When authorized, we would proceed to identify a 
geographic area within the Fort Wayne area to search for a 
site, identify a site, acquire a transferrable purchase option 
on that site, and then compete for a developer, a development 
team to build and lease back to the VA the facility, likely for 
20 years.
    Mr. Stutzman. Is there a possibility of an existing 
facility that is already currently built that might be a 
possibility as well, or are you looking to build a new 
facility?
    Mr. Neary. In each case we would look to see if there are 
potentially existing facilities available. It is our experience 
that on a sizeable clinic such as this, that it's typically 
better to construct new in order to get the functionality and 
capabilities and meet energy requirements and that sort of 
thing, but if there were a facility available in the area, we 
would look at it.
    Mr. Stutzman. Okay. And then what about, has the option of 
a public/private partnership, has that been discussed or 
thought about with the Fort Wayne facility in particular?
    Mr. Neary. I am not sure about that. We would have to get 
back to you on that.
    Mr. Stutzman. Okay. All right. Thank you very much. Mr. 
Chairman, I just yield back.
    [Hon. Joan Evans, Assistant Secretary for Congressional and 
Legislative Affairs, spoke with Congressman Stutzman on April 
25, 2011, and answered his questions.]
    The Chairman. We have one more panel that we have to hear 
from. Mr. Reyes has asked if he could ask another question. I 
know the Ranking Member wants to ask. Anybody on our side?
    Mr. Reyes.
    Mr. Reyes. Mr. Chairman, thank you very much. I was going 
to recommend if you would be willing, in the current proposal 
for voting on the CR this week, we are funding the Department 
Defense (DoD) for the year. Would you be amenable for us to 
send a letter to Chairman Rogers that they might want to 
include the VA in there because I don't know about your 
district, but in my district, veterans are very, very concerned 
about the impact that a shutdown would have on them.
    And the second thing is, any cutbacks that might affect 
veterans. I don't know if you or the Ranking Member----
    The Chairman. The only question that I would have, and I 
like the idea, obviously we are funded through VA/HUD, the 
Appropriations Subcommittee. Let me just look at it and just 
see what it would be.
    Mr. Filner.
    Mr. Filner. Just quickly if I may. You threw out the 
figure, the first I have heard of it, of 76,000 homeless 
veterans left. I haven't heard that. I would be pretty 
skeptical that we got it down to that level, but you might give 
me some backup on how you got to 76,000. That seems very, very 
low.
    Second, I just want to throw an idea for all of you because 
we tend to separate the facilities from the substance of the 
health care. Although of course, you state that you must have a 
good facility to have good health care. I was reminded of that 
because Mr. Carnahan was here for a few minutes. There is 
roughly $500,000 or $400,000 going into renovation at the 
Cochran Medical Center in St. Louis.
    At the same time, you have enormous personnel problems. The 
hospital is one of the lowest in patient satisfaction in the 
whole system. I just want to throw out for your thinking, Mr. 
Under Secretary, that you use not the lever, but the occasion, 
of new construction and upgrades to say that now is the time to 
also change the personnel a little bit--to upgrade that.
    That is, you just say to the community that we are changing 
the facility, but we want to make sure that we are also getting 
in better personnel.
    I just throw that out as a way to tell the community we are 
working on a whole lot of things because it is happening in 
different places in the country. That is just one I was at and 
understand better than most. There are a lot of complaints. Why 
not use the fact that you are going to renovate the personnel 
structure also?
    I know there are all kinds of civil service procedures that 
you have to take into account, but it seems to be an excellent 
opportunity to say to the community that we are renovating 
everything. So just keep that in your thinking if you will.
    Thank you, Mr. Chairman.
    [The VA subsequently provided a VA News Release, entitled, 
``VA & HUD Issue First-Ever Report on Homeless Veterans, 
Assessment Key to Preventing and Ending Homelessness,'' dated 
February 10, 2011, which appears on page 58, and a report 
entitled, ``Veteran Homelessness: A Supplemental Report to the 
2009 Annual Homeless Assessment Report to Congress,'' which 
will be retained in the Committee files.]
    Mr. Gould. Thank you, sir.
    The Chairman. On behalf of the full Committee, thank you 
for taking time to talk to us today about construction today 
and in the future, also about things as we look forward to what 
may happen or may not happen on Friday. We appreciate your 
being with us today. Thank you. You are excused.
    Mr. Gould. Mr. Chairman, thank you very much for the 
opportunity to address the Committee on this important issue. 
Big dollars, but we think great goals, 70 percent access, 95 
percent utilization. This is what we are about, taking care of 
our veterans and I, like you, certainly hope that we can do 
everything we possibly can to avert a shutdown.
    The Chairman. Thank you.
    I would like to go ahead and ask the second panel, if you 
could, go ahead and approach the table.
    Members, we welcome Ms. Lorelei St. James, Acting Director 
of the Physical Infrastructure Team at GAO and Raymond C. 
Kelley, Director, National Legislative Service at the Veterans 
of Foreign Wars of the United States.
    Again, each of your written statements will be entered into 
the record and you will each be recognized for 5 minutes.
    Ms. St. James.

  STATEMENTS OF LORELEI ST. JAMES, ACTING DIRECTOR, PHYSICAL 
 INFRASTRUCTURE ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE; 
  AND RAYMOND KELLEY, DIRECTOR, NATIONAL LEGISLATIVE SERVICE, 
             VETERANS OF FOREIGN WARS OF THE UNITED

                 STATEMENT OF LORELEI ST. JAMES

    Ms. St. James. Chairman Miller, Ranking Member Filner, and 
Members of the Committee, good afternoon. I am pleased to be 
here today to talk about GAO's recent work on VA's capital 
planning efforts.
    As you are aware taking care of veterans is a very 
important mission. VA has thousands of facilities to provide 
health care and other services to millions of veterans.
    Today I will cover two topics. First I will talk about the 
steps that VA has taken to improve its capital planning process 
and the challenges it still faces today.
    Second, I will talk about the need for VA to provide 
Congress more information about future project priorities and 
costs.
    As discussed in our January report, for well over a decade, 
VA has taken three major steps to realign its real property. 
The first step taken in 1999 was VA's development of the 
Capital Asset Realignment for Enhanced Services or CARES. CARES 
was the first long-range assessment of VA's health care 
priority since 1981. More importantly, it identified changes in 
real property that VA needed to make in order to close gaps in 
veterans' care. For example, it recommended that VA close some 
hospitals and open smaller more accessible clinics. The second 
step taken in 2004 was VA's development of its 5-year strategic 
capital plan. In this plan, VA incorporated many leading 
capital planning practices. For example, it evaluated different 
alternatives, such as leasing, repairing or building new 
facilities to meet needs.
    VA's third step to improve its planning efforts was taken 
in 2010. It is VA's new planning process, the Strategic Capital 
Investment Planning process or SCIP.
    Under SCIP, VA ranked and selected capital investments 
across the organization using weighted criteria and it expanded 
the 5-year planning horizon to 10 years. We believe these are 
improvements in VA's capital planning process. Between 2004 and 
2009, vacant space owned buildings, vacant buildings, and a 
number of hospitals was reduced. In addition, in April 2010, VA 
reported that it had opened 82 of 156 planned community-based 
outpatient clinics.
    However, despite these improvements, challenges remain. For 
example, in its 5-year plan for fiscal years 2010 through 2015, 
VA reported a backlog of $9.4 billion in repairs, and 24 of the 
69 ongoing major construction projects listed in the plan 
needed an additional $4.4 billion to complete.
    In prior GAO reports and still applicable today, some of 
the reasons for these challenges include difficulty in getting 
stakeholders to agree on identified changes and the need for 
better project cost estimating.
    Lastly, VA could provide Congress more information about 
its future priorities and costs. We feel this is important 
because VA has identified future project costs in the tens of 
billions of dollars. Providing this information, particularly 
in a long-term fiscal crisis would allow Congress to weigh 
current budget decisions against future costs. We recommended 
that VA provide you this information and VA agreed.
    In closing, Mr. Chairman, we believe VA has taken steps to 
improve its planning process. However, it remains to be seen 
that VA's new planning process will be successful. Its success 
is critical because VA faces the need for billions of dollars 
to better meet current and future veterans' needs.
    Using a transparent data-driven planning process will help 
VA better articulate its needs and assist the Congress in 
weighing the needs of veterans against other critical national 
needs.
    Thank you. I am happy to answer any of your questions.
    [The prepared statement of Ms. St. James appears on p. 46.]
    The Chairman. Mr. Kelley.

                  STATEMENT OF RAYMOND KELLEY

    Mr. Kelley. Thank you, Mr. Chairman. On behalf of the 2.1 
million members of the Veterans of Foreign Wars, thank you for 
inviting me to testify today.
    Without adequate and accessible treatment facilities, 
delivery of care will be compromised. This hearing is the first 
step to ensuring that veterans not only receive the best care 
but also receive the care in a location and in a facility that 
best meets their needs.
    Strategic Capital Investment Plan (SCIP) has identified 
4,808 capital projects, with a price tag that ranges between 
$53 billion and $65 billion. All of these projects will need to 
be completed to close condition, utilization, access, and space 
in gaps.
    Currently, all VISNs have at least $100 million in D and F 
rated Facility Condition Assessments gaps with nine having over 
half a billion dollars in gaps. This occurred because of years 
of under funding for non-recurring maintenance.
    Inpatient utilization in 9 VISNs will increase over the 
next 10 years. Outpatient demand will increase in all 21 VISNs 
in that same period. VA has well thought out plans to build new 
and reuse existing space where appropriate, lease when 
available, and demolish and mothball when necessary. VFW 
supports VA's Utilization Gap Reduction Plan, but we believe 
too much of the financial burden is being pushed to out years.
    Currently, 7 VISNs are not meeting the 70 percent of the 
enrollees residing within the VA's drive-time goal. VFW 
supports VA's accessibility gap reduction plan.
    VA's space inventory is at a deficit at 12 of the 21 VISNs, 
and VHA as a whole will reach 125 percent capacity within the 
next few years.
    VA is aggressively repurposing or removing many of its 
underutilized or vacant buildings. Although VFW recognizes the 
need for the removal of buildings, we ask that VA provide more 
information on that decision process. Overall, VFW believes 
VA's gap analysis for future usage and property management is 
acceptable.
    Enhance Use Lease is due to expire at the end of this 
calendar year. Without reauthorization, VA's homelessness 
initiative will be jeopardized. It is vital that this program 
be reauthorized. Since 2006, $266 million has been saved 
through VA because of this program. Please reauthorize this 
program.
    VFW believes that 2012 budget request is extremely low. 
Investing $2.88 billion annually for an overall capital 
infrastructure budget will not meet the needs of these growing 
gaps. VA is admittedly back-loading the capital plan by placing 
more than $16 billion in minor construction and NRM needs in 
the years 2017 through 2021. VA cannot continue to push current 
needs to out-years. Buildings will only continue to deteriorate 
and the capital investment plan will only grow its deficit. VFW 
believes that the VA's major construction account should be 
funded at $1.85 billion, not the Administration's requested 
level of $590 million. This will allow them to complete all 
current, partially funded projects within 5 years, begin 
providing funding for 15 new projects, and complete all 
currently funded seismic corrections within 3 years. In the 
fiscal year 2010, NRM received a total of $2.1 billion. VA is 
requesting only $871 million in the next fiscal year.
    Slight increases in the 2012 budget request will allow VA 
to easily eliminate minor construction gaps over the next 10 
years, and the leasing appears to be on track to close all 
those related gaps in that same time period.
    In closing, VFW is impressed with VA's gap analysis and 
their process of determining corrective actions for all 
identified gaps. However, VFW would like to see more 
information on the building disposal process, as well as 
requests for funding that will set VA's capital plan in the 
right trajectory.
    VFW also requests that this Committee and Congress as a 
whole take a serious look at the long-term effects of not 
having a viable capital infrastructure for VA. Partnerships 
with medical universities will fade, training and recruitment 
of doctors will diminish, and vital research, which has been a 
tremendous recruitment tool for VA, will not be productive. 
Reducing VA's capital infrastructure spending will have second 
and third order of effects that will cost taxpayers more in the 
long-term. There is no short-term fix to the VA's 
infrastructure problem, so we must stop looking for one and 
begin funding VA construction at an appropriate level and set 
VA on a path of correcting gaps so current and future veterans 
will receive the care they earned and deserve.
    Mr. Chairman, this concludes my testimony, and I look 
forward to any questions that the Committee may have.
    [The prepared statement of Mr. Kelley appears on p. 49.]
    The Chairman. Thank you, Mr. Kelley.
    Ms. St. James, you have heard some discussion here with the 
previous panel about basing investment decisions today on 
projections in 2018. What is your view on that type of 
projection?
    Ms. St. James. In leading practices, projecting out 5 to 10 
years is a good thing. What VA has to be able to do is note 
that in its projections are estimates and that as each year 
progresses further to the beginning of projects, those 
estimates get better. That was one reason we recommended that 
VA in their future budget submission, include the full results 
of SCIP so that you can see the priorities and the total cost 
that they are looking at in the future years.
    The Chairman. But they did not add activation and operation 
costs and so, you know, you have heard that asked as well.
    Ms. St. James. Correct.
    The Chairman. So how serious a problem is it in SCIP that 
they don't include those numbers?
    Ms. St. James. Because our report was issued before VA 
implemented SCIP, the way that the timing was reported, we were 
not able to look at SCIP per se, but we did note in preparing 
for the testimony that VA is planning to provide those 
activation costs and operating costs into SCIP. We think that 
is a good idea.
    The Chairman. Do you know when they are planning to provide 
those costs? Because I tried to get them just a minute ago and 
I couldn't get any.
    Ms. St. James. Not at this time. We don't know.
    The Chairman. Mr. Kelley, would you be opposed to a third 
party independent group taking a look at SCIP and just having a 
new set of eyes just to validate VA's findings?
    Mr. Kelley. If Congress is willing to fund a program to put 
another set eyes of it, then it can't hurt anything. But you 
can't expect VA to do more with less. So if you are asking them 
to go out and find a third party to review what they have done, 
you must also account for the funding that it is going to cost 
to do that.
    The Chairman. So if it is funded, you don't have a problem 
with a third party?
    Mr. Kelley. Absolutely. Oversight is the best thing going.
    The Chairman. Ms. St. James, one other question. What other 
actions can VA consider to ensure better management of their 
real estate portfolio?
    Ms. St. James. GAO has been looking at this topic for 
decades and we have made a number of recommendations. For 
example, in 2010 we made some recommendations to VA to improve 
their cost risk analysis as well as doing an integrated 
construction schedule and doing a schedule risk analysis.
    And we are following up with VA, so there are some things 
that we recommended in the past that we will go back and we 
follow up with them to do. I think in the long run as VA looks 
at SCIP, the key thing is linkage. Are they measuring what 
needs to be done? Are they linking their capital facilities to 
what they agree to in their strategic plan and is it necessary 
to do?
    The Chairman. Do you know which of those suggestions the 
GAO made to VA were implemented?
    Ms. St. James. We checked back just recently with them on 
the risk analysis that I mentioned and we understand that they 
are partially implemented, so we are continuing to follow up 
for our own records what that really translates to.
    The Chairman. For the record, would you report back to the 
Committee what you find?
    Ms. St. James. Absolutely.
    [Ms. St. James subsequently followed up in a letter to the 
Chairman, dated April 20, 2011, which appears on p. 59.]
    The Chairman. Ms. Brown.
    Ms. Brown. Thank you, Mr. Chairman. You know, in December 
when we gave those tax cuts, over $700 billion. Now we are 
struggling with how are we going to pay the bills for our 
veterans. And Mr. Kelley, let me just ask you a question 
because in reviewing The Independent Budget, it supports levels 
for minor and major construction as well as way above the 
President's recommended budget. Based on the climate and shared 
sacrifices, please expand your rationale for these 
recommendations.
    Mr. Kelley. In the budgets, The Independent Budget's 
recommendations?
    Ms. Brown. Yes. Uh-huh.
    Mr. Kelley. We made a sacred promise to veterans that we 
will provide them care.
    Ms. Brown. Uh-huh.
    Mr. Kelley. To facilitate that care, you have to provide it 
in a facility. You can't have one without the other. So you 
have to fund facilities and infrastructure to be able to 
provide that care, so it is a top priority. Without 
infrastructure you will not be able to provide the service that 
you have promised veterans.
    Ms. Brown. So giving the climate that we have here and the 
basic billions of dollars that we gave away in December, how do 
you think we are going to do that? They say everybody needs to 
get in the tank. I think the veterans have already been in the 
tank.
    Mr. Kelley. I agree. There is always cost savings. We, as 
The Independent Budget and some other organizations are working 
now to work on finding areas where there are some efficiencies 
that can be found and we will be happy to report those back to 
you to help find offsets, but what our recommendation will also 
state in that is that that money be reinvested back into the 
veterans, that that is money not to be saved but to be 
reinvested for veterans.
    Ms. Brown. So you are saying that you don't think it should 
go for deficit reduction?
    Mr. Kelley. Veterans are not getting what they have been 
promised at this point. So any money that is being spent within 
VA that we can find an efficiency on needs to be reinvested to 
make sure that we fulfill that promise. Yes. So, no, do not 
send that money back for deficit reduction.
    Ms. Brown. So that would not be the priorities of The 
Independent Budget to take your savings and put it in deficit 
reduction?
    Mr. Kelley. That is correct.
    Ms. Brown. Okay. Well, that is my position, too. What 
extent does SCIP, Ms. James, equip VA to address the current 
backlog of maintenance approximately $9.4 billion, as reported 
in the VA 5-year capital plan for fiscal year 2010 and 2015?
    Ms. St. James. There are a couple of things that we think 
that VA is doing through SCIP that are leading best practices 
and that was talked this morning, and one of them is taking a 
centralized view of all of your projects, not just within, you 
know, each separate administration within VA. So that gives 
more oversight and a chance to equally balance what needs to be 
done throughout the organization.
    It also put a cost for all major, minor, non-recurring and 
leases. So you need to have that information to be able to make 
centralized decisions, so we thought that was good.
    We have not verified SCIP. They were just applying to the 
2012 budget, so we see some good leading practices, but we 
couldn't come out and tell you how effective it is because it 
simply wasn't being used at that time we did the report.
    Ms. Brown. Does the VA work very closely with the local 
entities, for example, someone mentioned it earlier and I know, 
that in certain communities, particularly in the rural areas, 
some of the hospitals are closing. Is it possible that VA could 
have some kind of a partnership, so we could have some kind of 
cost sharing to provide services to those veterans that are not 
in an area that they are close to a hospital?
    Mr. Kelley. VA, again, that is part of the Enhanced Use 
Lease that needs to be reauthorized. VA is looking at well over 
100 properties right now that they would like to use that for 
and they range anything from homelessness to shared properties 
for medical treatment, so yes, we support that and VA supports 
that.
    Ms. Brown. All right, Mr. Chairman. Thank you. I yield back 
the balance of my time.
    The Chairman. Mr. Bilirakis.
    Mr. Bilirakis. Thank you, Mr. Chairman. I appreciate it. I 
have a question for Ms. St. James. Do you believe that the VA's 
current system of evaluating construction priorities is 
effectively ranking feasible projections with respect to long-
term costs. And then also, could you elaborate on when you 
think it can be done to best estimate actual costs?
    Ms. St. James. In long-term planning, the costs are going 
to be just that. They are going to be estimates and VA's 
process of prioritizing, if that is what you are asking about, 
they, as was indicated this morning, they are using six 
criteria. The first being safety and security, and then there 
is linkage to the strategic plan and then taking care of what 
they have, and that represents 74 percent of, you know, their 
emphasis on what they are trying to do with those top three 
things.
    And in the cost estimating piece, if you look at how VA 
plans, based upon models that tell them they need certain 
facilities and procedures in very well laid-out guidelines from 
OMB, as well as from our work at GAO is done, this is how cost 
estimates should be done. And part of what I was talking about 
earlier is that we have made some recommendations to better 
improve their costs estimates, so that's part of what we could 
get back to you on what VA has done in regards to those 
recommendations.
    Mr. Bilirakis. Okay. Very good. Thank you. Thank you. I 
yield back, Mr. Chairman.
    The Chairman. Dr. Roe.
    Mr. Roe. Just very briefly. How many veterans do we serve 
in the country now? How many veterans that are actually signed 
up? Do you have that number?
    Mr. Kelley. I believe it is around 6 million.
    Mr. Roe. About six--okay. I helped develop so many offices 
and design them and then two or three hospitals now in the 
local community. I understand that it is not easy to get down 
range and find out how much your need is going to be. It is 
like building a house. You never put enough closets in it. That 
is what you find out. You always need three more.
    So when you design a building or try to estimate what those 
needs are going to be down the road, it is hard. There is no 
question about it. And you never have enough money. So I do 
like the idea that the VA has some criteria because you never 
get enough money to build everything you want. I mean, you have 
to go with what you can afford, so I appreciate that and I am 
glad there is objective criteria out there to try to do that. 
The needs will be greater somewhere else.
    But Mr. Kelley, you made the--I want you to repeat this 
because it may be in your written testimony, about what you 
thought the needs were now that maybe I misunderstood when I 
was listening.
    Mr. Kelley. The needs for funding?
    Mr. Roe. Yeah, right now. I mean, you were a little short 
about how much you said.
    Mr. Kelley. Right. VA for major construction is asking for 
$590 million, for major construction alone. The Independent 
Budget had recommended $1.85 billion for major construction, 
and that puts us on a track to complete everything that is 
already implemented within 5 years, start 15 new projects and 
all seismic deficiencies that have already been started, have 
them completed within 3 years.
    Mr. Roe. Okay. That is what I wanted to know. I think, 
looking down the road, you have to estimate how many veterans 
you will serve, 5, 10 and 15 and 20 years from now, and that 
isn't easy. Military is different now because it is volunteer 
and when I was in, we were all drafted. Because most of us were 
drafted, there were larger numbers of veterans to cover.
    Now, what you have, it looks to me like the intensity of 
the service is much greater because many of these veterans are 
going, being deployed 2, 3, 5, 6 times, but it is the same 
people going over. Whereas, when I was in, there were different 
people going back to Vietnam. So I think finding out what you 
perceive the need to be later on down the road is important to 
us as far as facility structures.
    You don't want to build a bunch of structures and then have 
them empty. For instance, a 100-bed hospital now or 200-bed 
hospital, 500-bed hospital could because of length of stays, 
because of how the technology has improved and how much of it 
is done as an outpatient. So I think all of that going forward 
is important when you look at just facilities. It is not just 
bricks and mortar. That is the cheap stuff really. It is really 
the ongoing costs of the personnel later on down the road is 
important, I think.
    And I know you all have probably done that. I like the 
process. Ms. St. James, any comments?
    Ms. St. James. I would agree with what you said and I think 
when it comes to the planning process, whether it is personnel 
or bricks and mortar or the X-ray machine, whatever equipment 
goes along, they are all instruments in carrying out the 
mission of the VA, and although it sounds simple to do, to 
realign and align all of your resources in towards that 
mission, it is difficult. It is difficult to do.
    Mr. Roe. Thank you. I yield back.
    The Chairman. Any other questions from the Committee? Thank 
you for sitting for a couple of hours waiting to come forward 
and testify, both of you. We appreciate your willingness to be 
here today. I would say that all Members would have 5 
legislative days to revise and extend their remarks. Any other 
comments for the good of the order?
    Without objection, this hearing is adjourned.
    [Whereupon the 12:34 p.m. the Subcommittee was adjourned.]


                            A P P E N D I X

                              ----------                              

           Prepared Statement of Hon. Jeff Miller, Chairman,
                  Full Committee on Veterans' Affairs
    Good morning. This hearing will come to order.
    Before we begin, I ask that everyone please take a moment of 
silence for former Representative John Adler, a distinguished Member of 
this Committee during the 111th Congress, who passed away yesterday.
    He devoted his life to helping others through his service to our 
Nation. John took his role on this Committee very seriously and was an 
advocate for veteran-owned businesses as well as helping to cut the red 
tape to improve the VA claims process. Let us keep the Adler family in 
our thoughts and prayers.
    Before we proceed with today's hearing, I would like to take care 
of one item of Committee business by adopting a resolution filling our 
full Committee roster for the 112th Congress.
    The list is before the Members and I ask Mr. Bilirakis for a motion 
on this resolution.
[Adoption of resolution]
    I thank the Ranking Member and the staff for working with us to 
fill the vacancies. That concludes our business meeting and I would now 
turn the Committee's attention to today's scheduled hearing.
    I want to welcome everyone to today's hearing titled: 
``Deconstructing the Department of Veterans Affairs (VA) Construction 
Planning.''
    We are here to examine VA's FY 2012 construction budget request, 
including the methodology used to arrive at the request, and VA's long-
term construction outlook. Unlike previous long-term construction 
modeling that covered 5-year projections, VA has now put forth a 10-
year construction plan using the Strategic Capital Investment Planning, 
or SCIP (``skip''), process.
    The SCIP process is intended to draw upon past lessons in VA 
construction modeling as well as knowledge from the private sector in 
meeting current needs and anticipating future ones.
    Without a doubt, a new capital asset planning process presents new 
challenges and opportunities. The opportunities are there to provide 
veterans with state-of-the art health care in modern facilities closer 
to where veterans live.
    The challenges are that VA has an aging hospital infrastructure, a 
considerable backlog of maintenance projects, an aging veteran 
population that makes long-term planning difficult, and a constrained 
fiscal environment within which to operate.
    VA's SCIP plan has been described as a 10-year ``action plan'' that 
would require a minimum investment of $53 to $65 billion over 10 years.
    Needless to say, given the fiscal environment we are in, that is an 
ambitious funding requirement, one that we must be sure relies on good 
assumptions and reliable analyses. Toward that end, I have several 
questions I'd like to examine at this hearing.
    First, I'm interested to learn the health care utilization 
assumptions that were used in adopting the plan, especially given the 
expected dramatic decline in the veterans' population over the next 20 
to 30 years.
    Second, I'm interested to learn whether the $53 to $65 billion 
price tag can realistically be met given that the President's FY 2012 
request, if carried forward annually for 10 years, would only meet 
roughly half the total cost.
    Third, I'm interested in learning about the alternatives VA 
considered to meet its service delivery needs other than in-house 
construction. Were partnerships with other Federal providers adequately 
explored? What about public-private partnerships?
    In short, were all available options to meet veterans' needs on the 
table and fully considered?
    Fourth, it is my understanding that the SCIP plan does not include 
costs associated with up-front facility activations, or annual 
operating expenses. I'm interested to learn whether those costs ought 
to be known before Congress adopts one proposal over another.
    Finally, I'm interested in learning about VA's recent performance 
in its management of construction projects. If the Committee can be 
given some assurances that VA has been a good steward of the 
construction funding Congress has already provided, it will help in the 
decisions we must make moving forward.
    I believe it is imperative that VA use full transparency in 
presenting its decision-making process and how every dollar is spent 
once appropriated.
    VA must also ensure that all cost-effective options are considered, 
all bias acknowledged, and due diligence conducted as it moves forward 
in its capital asset planning.
    Comprehensive planning on the front end will prevent massive cost 
overruns and project delays down the road.
    In the end, our overarching objective is clear. Veterans expect, 
and we should deliver, the best that 21st Century health care has to 
offer.
    This hearing begins a discussion of how we will collectively chart 
a path toward meeting that objective.
    I appreciate everyone's attendance at this hearing, and now yield 
to the Ranking Member for an opening statement.

                                 
   Prepared Statement of Hon. Bob Filner, Ranking Democratic Member,
                  Full Committee on Veterans' Affairs
    Good morning everyone, and thank you, Mr. Chairman, for holding 
this important hearing on the capital planning and budgeting process 
for the Department of Veterans Affairs.
    VA is the owner and operator of 33,000 acres of land and over 5,500 
buildings. Many of the VA hospitals and medical facilities are aging 
and are in need of major renovation or replacement. Many VA facilities 
need to be upgraded in order to meet standards for earthquakes, fires 
and patient privacy.
    Central to VA's mission is the operation and delivery of the 
highest quality health care to our Nation's veterans--and we understand 
that a key part of this care is the facilities in which it is provided.
    The VA's fiscal year 2012 budget included the Department's 10-year 
Action Plan and according to VA--the plan is a living document 
reflecting changes in the composition and alignment of assets. It 
represents a snapshot in time based on the current state of VA's 
capital portfolio and projected needs.
    This 10-year action plan comes on the heels of the Capital Asset 
Realignment for Enhanced Services or CARES. I am sure we all remember 
the CARES initiative which was the first comprehensive look at VA's 
infrastructure and alignment since 1981.
    In 1999, VA initiated the CARES process, along with a 5-year 
capital plan for the Department's construction budget. When the VA 
embarked on the CARES process, the VA's health infrastructure was 
thought to be unresponsive to the needs of current and future veterans.
    While about 24 percent of the veteran population was enrolled in 
the VA for health care, the CARES plan assumed that the enrollment 
population would increase to 33 percent by the end of 2022. In 
addition, there were concerns about the ability of the existing health 
infrastructure to meet the demands of the aging veteran population who 
opt for warmer climates in the South and the Southwest.
    CARES was intended to eliminate or downsize underused facilities, 
convert older massive hospitals to more efficient clinics, and build 
hospitals where they are needed in more populated areas.
    In essence, CARES was to direct resources in a sensible way to 
increase access to care for many veterans and to improve the efficiency 
of health care operations across VA facilities. VA informed this 
Committee in order to implement CARES properly they would need $1 
billion dollars a year for 5 years.
    Because of the delays in the process, many of the identified 
projects rose in cost which ended up costing much more than original 
projections.
    CARES was supposed to be a blueprint for future VA facilities 
development. However, here we are, once again, looking at a new process 
implemented by VA in the fiscal year 2012 budget. This year, the VA 
rolled out the Strategic Capital Investment Planning (SCIP) program 
designed to build upon the CARES process.
    With this new process and 10-year look, that includes pending CARES 
projects, VA's projected construction needs are between $53 and $65 
billion. However, if you do the math for the present rate of FY 2012 
request of $2.8 billion, it would take 20 years to meet the minimum 
resource need identified in the 10-year plan.
    It is unclear to me how VA will continue to follow this, and it is 
also unclear how well SCIP will address the medical and demographic 
needs of current and future veterans of Afghanistan and Iraq.
    We look forward to working with the VA to ensure that our veterans 
receive the best possible care in medical facilities that are modern 
and safe--while being built efficiently and cost-effectively.
    I look forward to hearing about the current construction process, 
VA's plans and needs for future construction, and how this Member can 
support this effort--with the end goal always being to provide the best 
possible health care to our veterans.
    Mr. Chairman, I yield back.

                                 
               Prepared Statement of Hon. Silvestre Reyes
    Thank you, Chairman Miller and Ranking Member Filner, for calling 
this hearing to discuss the VA's construction planning. It is clear 
that many VA facilities are old and outdated. So even in a constrained 
budget environment, it is imperative that we continue to update, and 
where necessary, replace VA medical facilities.
    In addition to rehabilitating existing VA health care facilities, 
it is essential that we find a way to make veterans health care more 
accessible. There are many ways to provide health services to America's 
veterans. Secretary Shinseki stated before this Member earlier this 
year that his fiscal year 2012 budget request includes more than $108 
million for the Veterans Relationship Management (VRM) program and $70 
million for the Virtual Lifetime Electronic Record (VLER) program. 
While these are great leaps forward in providing access to veterans, 
there is no substitute to having a local medical facility.
    I want to commend the Veterans Administration in their 
implementation of the 10-year Strategic Capital Investment Plan. By 
looking twice as far into the future than the previous CARE plan, it 
will enable the VA to more effectively provide medical services across 
the country. With the growing number of Iraq and Afghanistan veterans 
returning with persistent wounds like traumatic brain injury and post-
traumatic stress disorder, it is imperative that we ensure they have 
continued access to medical care regardless of where they call home.
    I know it is the goal of every Member of this Member that we ensure 
every veteran has access to health care. I thank you again for your 
work, and I hope that, by working together with your organizations, we 
can continue efforts to ensure that no American Veteran is left without 
the care and support they deserve.

                                 
      Prepared Statement of Hon. W. Scott Gould, Deputy Secretary,
                  U.S. Department of Veterans Affairs
    Chairman Miller, Ranking Member Filner and distinguished Members of 
the Committee, thank you for the opportunity to appear today to discuss 
the Department of Veterans Affairs (VA) construction priorities and 
planning. Joining me today are: Mr. Glenn Haggstrom, Executive 
Director, Office of Acquisition, Logistics and Construction (OALC); Mr. 
James Sullivan, Director, Office of Asset Enterprise Management, Office 
of Management; and Ms. Patricia Vandenberg, Assistant Deputy Under 
Secretary for Policy and Planning with the Veterans Health 
Administration.
    It is an honor and privilege for me to represent Secretary Shinseki 
and the many dedicated, hard-working professionals of the Department 
who support our mission to serve Veterans and their families by 
providing benefits and world class medical services.
    VA's top three priorities are to increase access to services and 
benefits for Veterans, eliminate the claims backlog, and end Veteran 
homelessness. While addressing these priorities it is also imperative 
that we ensure our employees and our Veterans are provided safe and 
secure facilities in which to work and receive care and benefit 
services. These priorities are the principal drivers of our planning 
for VA's infrastructure.
    With regard to access, this is a priority of the first order. 
Simply put, if Veterans and their families do not have access to the 
VA, then they cannot avail themselves of the services and benefits that 
they have earned while serving our country. Access to our benefits and 
services depends on three things: the scope of and breadth of programs, 
technology avenues, and the physical facilities in which we operate. 
This last point, physical facilities, is critical to access in our 
health care and cemetery systems.
    One of Secretary Shinseki's first actions was to declare the need 
to eliminate homelessness among our Nation's Veterans. Since 2008 we 
have reduced the number of homeless Veterans living on the streets on 
any given night from 131,000 to 76,000. We are proud of this early 
success, but we have a long way to go and we will need all possible 
tools at our disposal to make this vision a reality. The Department has 
a number of critical tools or programs available at its disposal that 
assist in eliminating Veteran homelessness by leveraging current VA 
infrastructure to provide housing to our homeless Veterans and their 
families. These programs include the Enhanced-Use Lease (EUL) authority 
and the Building Utilization Review and Repurposing (BURR) program, 
both of which I will provide more details on further in my testimony.
    As I mentioned earlier, the safety and security of our Veterans and 
employees is paramount. While we are increasing access, eliminating 
homelessness, and implementing our other priorities and initiatives we 
must never lose sight of the importance of providing a safe and secure 
environment at our VA facilities across the country.
    To understand what we will need to achieve these priorities we must 
look beyond the annual budget cycle and determine the investments 
needed to meet our projected long term requirements. In the areas of 
capital investment, the recently unveiled Strategic Capital Investment 
Planning (SCIP) process accomplishes this by determining our current 
state and projecting our needs 10 years into the future to determine 
what infrastructure gaps must be addressed in order for the VA to 
provide adequate access to Veterans, ensure the safety and security of 
Veterans and our employees, and leverage current physical resources to 
eliminate homelessness among Veterans.
    But while we are working toward achieving these priorities we must 
also ensure the efficient and effective use of taxpayer's dollars. 
While looking a decade into the future, SCIP prioritizes the capital 
needs across VA's three Administrations (VHA, VBA and NCA) as well as 
across the programs from which capital funding is provided (major 
construction, minor construction, non-recurring maintenance and 
leases). No longer are VA capital decisions made in Administration or 
program stovepipes. By taking a ``corporate'' approach to capital 
planning, SCIP ensures that our capital investments for all Veteran 
needs across the country are considered together and are prioritized 
according to the same criteria.
    It is also important to note that providing needed infrastructure 
improvements also adds the benefit of creating competitively awarded 
short-term construction jobs as well as long-term health care and 
service delivery employment opportunities in local communities 
throughout the Nation.
    The remainder of my testimony will address the Committee specific 
request that VA testify on gap analysis as it relates to current and 
future demand; underutilized or vacant property; how VA evaluates and 
considers alternatives to planned investments; cost analysis and risk 
assessment; prioritization of new projects and renovations; the basis 
for the fiscal year 2012 construction authorization budget request; and 
the viability of the 10-year capital plan. I welcome the opportunity to 
discuss these important issues and address any concerns the Committee 
may have on these topics.
The Basis for the Fiscal Year 2012 Construction Authorization Budget 
        Request
    A little over 6 weeks ago, Secretary Shinseki delivered the 
President's 2012 Budget to this Committee. Some of my testimony may 
repeat information the Secretary shared with you at that time, and much 
of this information can be found in Volume 4 of the Department's 2012 
Budget Submission--``Construction and 10 Year Capital Plan.'' This 
budget volume communicates VA's capital investment needs spanning a 10-
year planning horizon--beginning with the 2012 budget--and discusses 
how the SCIP process was used in the development of the 2012 
construction budget submission.
    My desired outcome for the brief time spent with you today is to 
provide depth and meaning to the numbers and information on SCIP, and 
to provide insights on how all the pieces fit together. Equally 
important, I will highlight some additional innovative strategies and 
tools VA is using across the Department's portfolio of capital assets 
to maximize, repurpose, and right-size our inventory. Our strategic 
capital approach is part of our Integrated Operating Model which is 
designed to strengthen our management infrastructure across VA. These 
tools further support our commitment to VA's strategic priorities such 
as ending Veteran homelessness, and meeting our obligations to all 
Veterans in an effective, accountable, and efficient manner.
    For 2012, VA is requesting more than $2.8 billion for major, minor, 
non-recurring maintenance and leasing programs. New budget authority of 
$1.27 billion is for VA's construction programs: $589.6 million for 
major construction and $550.1 million for minor construction, and $131 
million for grants. VA also plans to apply an additional $135.7 million 
that have been previously appropriated by Congress to 2012 major 
construction projects. In addition to major and minor construction 
programs, the Department is requesting $868.9 million to fund the 
medical facilities' non recurring maintenance account, and an 
additional $834 million for 2012 leasing activities.
    VA's 2012 construction request reflects a continued commitment to 
provide Veterans with quality health care and benefits in modern, safe, 
and secure facilities. The request includes seven ongoing major medical 
facility projects (New Orleans, Denver, San Juan, St. Louis, Palo Alto, 
Bay Pines, and Seattle) and design for three new projects (Reno, West 
Los Angeles and San Francisco). One cemetery expansion project will be 
completed to maintain and improve burial service in Honolulu, Hawaii. 
The 2012 request would also fund needed alterations, improvements and 
renovations of existing hospitals, community based outpatient clinics, 
expansion of national cemeteries and enhancements of other VA 
facilities such as Vet Centers and regional offices.
2012 Authorization for Major Medical Facility Construction/Leasing 
        Projects
    In addition to the 2012 budget request, VA is required to obtain 
authorization for medical facility investments classified as major 
construction as well as for those medical facility leases with annual 
rent of over $1 million. Based on the 2012 SCIP process, VA plans to 
submit a legislative request to authorize seven (7) major medical 
facility projects as follows: Construct a clinical addition and a 
parking garage in Fayetteville, Arkansas; add a Simulation, Learning, 
Education and Research Network Center to the previously authorized new 
medical facility project in Orlando, Florida; construct an Ambulatory 
Care, Polytrauma and Blind Rehabilitation Center in Palo Alto, 
California; Medical Facility Improvements; expand the National Cemetery 
at St. Louis (Jefferson Barracks), Missouri; and to seismically correct 
three buildings at three medical facilities: Building 1 in San Juan, 
Puerto Rico, Building 100 in Seattle, Washington, and Building 209 in 
West Los Angeles, California.
    In addition to these major medical facility construction projects, 
VA plans to seek authorization for major medical facility leases for 
five Outpatient Clinics and three Community Based Outpatient Clinics. 
The Outpatient Clinics are located in Fort Wayne, Indiana; Mobile, 
Alabama; Rochester, New York; San Jose, California; and South Bend, 
Indiana. Three Community Based Outpatient Clinics require 
authorization: Columbus, Georgia; Salem, Oregon and Springfield, 
Missouri.
Overview Strategic Capital Investment Planning (SCIP)
    In developing the 2012 budget, with the initiation of SCIP, VA made 
far-reaching enhancements to its strategic capital planning and 
investment decision-making processes by providing a more comprehensive 
approach to capital investment planning. SCIP builds upon previous 
capital investment processes by capturing, for the first time, the full 
extent of our infrastructure inventory (including underutilized and 
vacant properties), identifying gaps in the provision of service to our 
Veterans and their families, and developing a 10-year strategic capital 
plan, employing both capital and non-capital solutions, to address 
these gaps.
    This transformative tool enables VA to deliver the highest quality 
services by targeting investments now and into the future that balance 
and prioritize competing interests and address our most critical needs 
first. VA's first-ever Department-wide integrated and prioritized list 
of 2012 capital projects is an important outcome of the SCIP process. 
Through SCIP, VA evaluates each capital investment proposal based on 
its contribution to six key criteria--the most important of which is 
``Safety and Security''. The remaining five criteria are, ``Department 
Major Initiatives,'' ``Fixes What We Have,'' ``Increases Access,'' 
``Right-Sizing Inventory,'' and ``Ensuring Value of Investment.''
SCIP's Data Driven Approach to Identify Gaps
    As an integral part of the SCIP process, VA systematically 
identified performance gaps where current infrastructure or services 
need to be enhanced to meet the location and demand of current and 
future Veterans. Guidelines provided to the Administrations required 
capital investments to contribute to correcting corporately-identified 
gaps in access, utilization, space, condition, energy, safety, 
security, parking deficiencies, IT deficiencies, as well as other 
functional deficiencies such as privacy and emergency preparedness for 
each investment proposal.
    VA faces major challenges with its aging infrastructure. On 
average, VA buildings are more than 60 years old. The SCIP process 
directly addresses these challenges with a range of solutions, 
including reuse or repurposing, and working with State and local 
historical societies to identify properties that should be demolished. 
These efforts increase efficiencies and decrease the government spatial 
footprint.
Evaluation and Consideration of Alternatives to Planned Investments
    A business case was required to accompany each 2012 investment 
proposal. Each business case included the following components: Project 
description and justification; a quantification of the performance gaps 
the project would address; the alternatives considered; and, the impact 
the project would have on meeting the Department's strategic 
initiatives to better serve Veterans.
    The business cases were also required to include alternative 
options to the investment proposal. Major construction and lease 
projects were required to provide an ``alternatives analysis'' that 
considered the status quo, new construction and/or renovation, leasing, 
and contracting out for services. Minor construction and non-recurring 
maintenance projects were required to provide an analysis of the status 
quo and two additional options.
Cost Analysis and Risk Assessment
    All business cases also included a cost-effectiveness analysis 
(CEA) that compared the costs of the status quo to the other 
alternatives considered. A portion of each project's total score was 
based upon whether it provides the best value compared to the proposed 
alternatives. Major construction and leases greater than $1 million in 
annual rent that are selected for inclusion in the budget request are 
required to complete OMB's Exhibit 300s. These exhibits provide a more 
comprehensive analysis of the alternatives considered, cost 
effectiveness assessments, risk analysis and risk management plans.
Building Utilization Review and Repurposing
    To best utilize resources and sustain our commitment to good 
stewardship, SCIP requires that existing capital assets be considered 
for reuse or repurposing. SCIP identifies the underutilized and vacant 
properties and the Building Utilization Review and Repurposing (BURR) 
program identifies potential strategies for their reuse or disposal. VA 
has reduced its inventory of owned vacant space by 34 percent, from 8.6 
million square feet in 2001 to 5.7 million square feet in 2010. It is 
anticipated that the BURR process will put a significant number of 
buildings in use to serve our homeless Veterans and their families.
    The BURR process will assess the potential to develop new housing 
opportunities for homeless or at-risk Veterans and their families for 
use in public-private partnerships and VA's enhanced-use lease (EUL) 
program. The Department's EUL authority allows VA to match supply 
(available buildings and land) and demand among Veterans for housing 
with third-party development, financing, and supportive services. This 
approach has multiple benefits: helping to reduce homelessness among 
our Veterans while leveraging an underutilized asset, reducing the 
inventory of underutilized real estate, and transferring the operation 
and maintenance costs to a developer. Other internal and external 
potential reuse opportunities will be explored for buildings determined 
unsuitable for housing. Currently, the Department's authority to enter 
into additional EUL agreements expires as of December 31, 2011. The 
Administration will be submitting a legislative proposal to address 
this expiration.
Viability of the 10-Year Capital Plan
    The 2012 SCIP process identified an estimated cost of $53-$65 
billion to close all currently-identified gaps over the next 10 years. 
The advantage to the SCIP-based 10-year strategic capital plan is its 
data-driven approach in which all projects are prioritized based on 
identified needs and the ability to close known performance gaps. The 
SCIP process is dynamic and will require an annual update as part of 
the budget formulation process to take into account changes in health 
care delivery systems and Veteran demographics.
    The total level of capital resources requested is reassessed each 
year in the annual budget process, where hard choices are made 
balancing capital needs identified in the SCIP 10-year plan and other 
VA priorities (such as the cost to provide medical care and Veteran 
benefits and services) in order to determine the appropriate level of 
funding for the fiscal year.
    We are determined to provide our Veterans with access to high 
quality medical care and benefit services. Capital infrastructure is an 
essential part of our ability to achieve this vision
Conclusion
    I appreciate the opportunity to testify on these important topics. 
With SCIP, VA has instituted a rigorous capital planning process that 
quantifies and prioritizes the need to repair, upgrade, dispose of, or 
replace VA's aging infrastructure and address the current and future 
needs of America's Veterans within the context of prudent capital 
investment decision-making.
    VA must be prepared to meet projected health care demand and any 
future benefits delivery requirements. We are committed and will 
continue to work with Congress, Veteran Service Organizations and other 
stakeholders to refine and improve the SCIP process as needed. VA will 
continue to provide Veterans and their families with the benefits and 
world class medical services they have earned and deserve.

                                 
  Prepared Statement of Lorelei St. James, Acting Director, Physical 
      Infrastructure Issues, U.S. Government Accountability Office
  VA REAL PROPERTY: Realignment Progressing, but Greater Transparency 
                   about Future Priorities Is Needed
                             GAO Highlights
Why GAO Did This Study
    The Department of Veterans Affairs (VA) has undertaken various 
planning efforts to realign its real property portfolio, including the 
Capital Asset Realignment for Enhanced Services (CARES), creation of a 
5-year capital plan, and its newest effort, the Strategic Capital 
Investment Planning process (SCIP). Through these efforts, VA has 
identified numerous real property priorities it believes should be 
completed if the agency's facilities are to meet veterans' needs for 
services now and in the future. In January 2011, GAO reported on the 
extent to which VA's capital planning efforts (1) have resulted in 
changes to its real property portfolio and (2) follow leading practices 
and provide information for informed decision-making. This statement 
summarizes the results of this report. To perform the work for the 
report, GAO reviewed leading capital planning practices and data on 
VA's real property portfolio and future priorities. GAO also 
interviewed VA officials and veterans service organizations and visited 
sites in 5 of VA's 21 veterans integrated service networks.
What GAO Recommends
    In the report, GAO recommended that VA annually provide to Congress 
the full results of its SCIP process and any subsequent capital 
planning efforts, including details on estimated costs of future 
projects. VA concurred with this recommendation.
What GAO Found
    GAO reported that, through its capital planning efforts, VA had 
taken steps to realign its real property portfolio from hospital based, 
inpatient care to outpatient care, but a substantial number of costly 
projects and other long-standing challenges also remain. Several of 
VA's most recent capital projects--such as community based outpatient 
clinics, rehabilitation centers for blind veterans, and a spinal cord 
injury center--were based on its CARES efforts and subsequent capital 
planning. VA officials and veterans service organizations GAO contacted 
agreed that these facilities have had a positive effect on veterans' 
access to services. However, VA had identified several high-cost 
priorities such as facility repairs and projects that have not yet been 
funded. For example, VA reported in its 5-year capital plan for fiscal 
years 2010-2015 that it had a backlog of $9.4 billion of facility 
repairs. The 5-year plan further identified an additional $4.4 billion 
in funding to complete 24 of the 69 ongoing major construction 
projects. Besides substantial funding priorities, GAO also found that 
VA, like other agencies, has faced underlying obstacles that have 
exacerbated its real property management challenges and can also impact 
its ability to fully realign its real property portfolio. GAO 
previously reported that such challenges include competing stakeholder 
interests, legal and budgetary limitations, and capital planning 
processes that did not always adequately address such issues as excess 
and underutilized property.
    VA's capital planning efforts generally reflected leading 
practices, but lacked transparency about the cost of future priorities 
that could better inform decision-making. For example, VA's 2010-2015 
capital plan linked its investments with its strategic goals, assessed 
the agency's capital priorities, and evaluated various alternatives. 
Also, SCIP strengthened VA's capital planning efforts by extending the 
horizon of its 5-year plan to 10 years and providing VA with a longer 
range picture of the agency's future real property priorities. VA 
officials told GAO that SCIP builds on its existing capital planning 
processes, addresses leading practices, and further strengthens VA's 
efforts in some areas. GAO has not fully assessed SCIP and it remains 
to be seen what impact SCIP will have on the results of VA's capital 
planning efforts. While these changes were positive steps, GAO found 
that VA's planning efforts lacked transparency regarding the magnitude 
of costs of the agency's future real property priorities, which may 
limit the ability of VA and Congress to make informed funding decisions 
among competing priorities. For instance, for potential future 
projects, VA's 2010-2015 capital plan only listed project name and 
contained no information on what these projects were estimated to cost 
or the priority VA had assigned to them beyond what was then the 
current budget year. Transparency about future requirements would 
benefit congressional decision makers by putting individual project 
decisions in a long-term, strategic context, and placing VA's fiscal 
situation within the context of the overall fiscal condition of the 
U.S. government.

                               __________
    Chairman Miller, Ranking Member Filner, and Members of the 
Committee:
    I am pleased to be here today as you examine construction planning 
issues related to the Department of Veterans Affairs (VA). VA is one of 
the largest Federal property-holding agencies, with more than 33,000 
acres of land and over 5,500 buildings. VA uses this diverse inventory 
of real property to ensure that veterans receive medical care, 
benefits, social support, and lasting memorials. Over time, VA has 
recognized the need to modernize its facilities and realign its real 
property portfolio to provide accessible, high-quality, and cost-
effective access to its services. Its Capital Asset Realignment for 
Enhanced Services (CARES) planning effort, which began over a decade 
ago, was designed to assess its building and land ownership in response 
to changing veterans' inpatient and outpatient demand for care. Since 
its 2004 CARES decision report, VA has undertaken additional planning 
efforts to realign its real property portfolio. For example, with its 
annual budget submission to Congress, VA began including 5-year capital 
plans that included information about projects it was seeking to start, 
as well as the estimated costs from first year through completion. More 
recently, VA developed a Strategic Capital Investment Planning (SCIP) 
process, which is intended to continue VA's efforts to prioritize its 
most urgent real property priorities. Through these capital planning 
efforts, VA has identified numerous real property priorities that it 
believes should be completed if the agency's facilities are to meet 
veterans' demand for services.
    This statement is primarily based on our January 2011 report, which 
addressed the impact of CARES and the effectiveness of VA's capital 
planning process.\1\ This statement addresses the following questions 
also covered in the report:
---------------------------------------------------------------------------
    \1\ GAO, VA Real Property: Realignment Progressing, but Greater 
Transparency about Future Priorities Is Needed, GAO-11-197 (Washington, 
D.C.: Jan. 31, 2011).

    1.  To what extent have VA's capital planning efforts resulted in 
changes to its real property portfolio and what priorities remain?
    2.  To what extent do VA's capital planning efforts follow leading 
Federal practices and provide the information needed for informed 
decision-making?

    To perform this work, we reviewed leading capital planning 
practices and data on VA's real property portfolio and future 
priorities. We also interviewed VA officials and veterans service 
organizations, and visited sites in 5 of VA's 21 veterans integrated 
service networks. More detailed information on our scope and 
methodology can be found in appendix I of the report.
    Our work was performed in accordance with generally accepted 
government auditing standards. This report did not assess the results 
of VA's capital planning proposals that are reflected in the 
President's fiscal year 2012 budget, which was released after our 
report was issued.
    In summary, we found that through its capital planning efforts, VA 
had taken steps to realign its real property portfolio from hospital 
based, inpatient care to outpatient care, but a substantial number of 
costly projects and other long-standing challenges also remain. Several 
of VA's most recent capital projects--such as community based 
outpatient clinics, rehabilitation centers for blind veterans, and a 
spinal cord injury center--were based on its CARES efforts and 
subsequent capital planning. VA officials and veterans service 
organizations we contacted agreed that these facilities have had a 
positive effect on veterans' access to services. However, VA had 
identified several high-cost priorities such as facility repairs and 
projects that have not yet been funded. For example, VA reported in its 
5-year capital plan for fiscal years 2010-2015 that it had a backlog of 
$9.4 billion of facility repairs. The 5-year plan further identified an 
additional $4.4 billion in funding to complete 24 of the 69 ongoing 
major construction projects. Besides substantial funding priorities, we 
also found that VA, like other agencies, has faced underlying obstacles 
that have exacerbated its real property management challenges and can 
also impact its ability to fully realign its real property portfolio. 
We have previously reported that such challenges include competing 
stakeholder interests, legal and budgetary limitations, and capital 
planning processes that did not always adequately address such issues 
as excess and underutilized property.
    Furthermore, we found that VA's capital planning efforts generally 
reflected leading practices, but lacked transparency about the cost of 
future priorities that could better inform decision-making. For 
example, VA's 2010-2015 capital plan linked its investments with its 
strategic goals, assessed the agency's capital priorities, and 
evaluated various alternatives. Also, SCIP strengthened VA's capital 
planning efforts by extending the horizon of its 5-year plan to 10 
years, and providing VA with a longer range picture of the agency's 
future real property priorities. VA officials told us that SCIP builds 
on its existing capital planning processes, addresses leading 
practices, and further strengthens VA's efforts in some areas. We have 
not fully assessed SCIP and it remains to be seen what impact SCIP will 
have on the results of VA's capital planning efforts. While these 
changes were positive steps, we found that VA's planning efforts lacked 
transparency regarding the magnitude of costs of the agency's future 
real property priorities, which may limit the ability of VA and 
Congress to make informed funding decisions among competing priorities. 
For instance, for potential future projects, VA's 2010-2015 capital 
plan only listed project name and contained no information on what 
these projects were estimated to cost or the priority VA had assigned 
to them beyond what was then the current budget year. Transparency 
about future requirements would benefit congressional decision makers 
by putting individual project decisions in a long-term, strategic 
context, and placing VA's fiscal situation within the context of the 
overall fiscal condition of the U.S. government. It is important to 
note that providing future cost estimates to Congress for urgent, major 
capital programs is not without precedent in the Federal Government. 
Other Federal agencies, such as the Department of Defense, have 
provided more transparent estimates to Congress regarding the magnitude 
of its future capital priorities beyond immediate budget priorities.
    We concluded in our report that billions of dollars have already 
been appropriated to VA to realign and modernize its portfolio. 
Furthermore, VA had identified ongoing and future projects that could 
potentially require several additional billion dollars over the next 
few years to complete. Given the fiscal environment, VA and Congress 
would benefit from a more transparent view of potential projects and 
their estimated costs. Such a view would enable VA and Congress to 
better evaluate the full range of real property priorities over the 
next few years and, should fiscal constraints so dictate, identify 
which might take precedence over the others. In short, more 
transparency would allow for more informed decision-making among 
competing priorities, and the potential for improved service to 
veterans over the long term would likely be enhanced. To enhance 
transparency and allow for more informed decision-making related to 
VA's real property priorities, we recommended that the Secretary of 
Veterans Affairs provide the full results of VA's SCIP process and any 
subsequent capital planning efforts, including details on the estimated 
cost of all future projects, to Congress on a yearly basis. VA 
concurred with the recommendation. We have not yet assessed the extent 
to which VA has implemented our recommendation in relation to the 
President's 2012 budget.
    Finally, I would also like to refer to a report we issued in 
December 2009, on VA construction.\2\ This report may be relevant to 
today's discussion because it assessed VA's cost estimating approach 
for major projects. We found that while about half of 32 major ongoing 
construction projects we reviewed were within VA's budget, 18 projects 
experienced cost increases, and 11 had experienced schedule delays 
since they were first submitted to Congress. Five projects experienced 
a cost increase of over 100 percent. There were several reasons for 
construction project cost increases and schedule delays, including VA 
preparing initial cost estimates that were not thorough, significant 
changes to project scope after the initial estimate was submitted, and 
unforeseen events such as an increase in the cost of construction 
materials. VA had taken steps to improve initial construction project 
cost estimates, but we reported that it could better assess the risks 
to costs and schedules. We recommended that for all major projects, VA 
conduct a cost risk analysis, a schedule risk analysis when 
appropriate, and require the use of an integrated master schedule. VA 
concurred with our recommendations.
---------------------------------------------------------------------------
    \2\ GAO, VA Construction: VA Is Working to Improve Project Cost 
Estimates, but Should Analyze Cost and Schedule Risks, GAO-10-189 
(Washington D.C.: Dec. 14, 2009).
---------------------------------------------------------------------------
    Chairman Miller, Ranking Member Filner, and Members of the 
Committee, this concludes my prepared remarks. I would be happy to 
answer any questions that you may have.
    For further information regarding this statement, please contact 
Lorelei St. James at (202) 512-2834 or at stjamesl@gao.gov. Contact 
points for our Offices of Congressional Relations and Public Affairs 
may be found on the last page of this statement. David Sausville, 
Assistant Director; George Depaoli; and Erica Miles also made key 
contributions to this statement.

                                 
 Prepared Statement of Raymond Kelley, Director, National Legislative 
         Service, Veterans of Foreign Wars of the United States
    MR. CHAIRMAN AND MEMBERS OF THE COMMITTEE:
    On behalf of the 2.1 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. Without adequate and 
accessible treatment facilities, delivery of care will be compromised. 
This hearing is the first step in ensuring that veterans not only 
receive the best care but also receive that care in a location and in a 
facility that best meets their needs.
    VA's 2012-2021 Strategic Capital Investment Plan (SCIP) identified 
4,808 capital projects, with a price tag that ranges between $53 and 
$65 billion. All of these projects will need to be completed to close 
condition, utilization, access, and space gaps.
Gap Analysis
  Condition:
          Currently, all VISNs have at least $100 million in ``D'' or 
        ``F'' Facility Condition Assessments (FCA) gaps. Nine VISNs 
        have more than $500 million in gaps, while four VISNs have more 
        than $700 million in condition gaps. In VISN 3, there are $814 
        million in deficiencies. This occurred because of years of 
        under funding for non-recurring maintenance (NRM). VFW is 
        supportive of VA's 10-year capital plan, but we believe too 
        much of the plan hinges on out-year funding. Current funding 
        must be increased to achieve the SCIP plan. If VA requests and 
        Congress appropriates the funding needed to complete the SCIP 
        action plan, deficiencies across all VISNs will be reduced to 
        approximately $200 million by FY 2021.
  Utilization:
          Utilization can be broken down into two categories: inpatient 
        and outpatient. Inpatient utilization in 12 VISNs will decrease 
        over the next 10 years, while nine will increase. Outpatient 
        demand will increase in all 21 VISNs, with 14 VISNs projecting 
        an increase in outpatient visits by over one million by 2018. 
        In reviewing each of the VISN's plans to ``right size'' for 
        patient demands, it appears to VFW that VA has well thought out 
        plans to build new and/or reuse existing space where 
        appropriate, lease when available, and demolish or mothball 
        when necessary. In VA's 2012 Budget Submission, 131 vacant or 
        underutilized assets will be repurposed for homeless housing, 
        more than 128 will be either mothballed or demolished, and 17 
        will enter the extended use lease (EUL) program. Refitting and 
        removal of these 276 buildings will save VA $18.5 million per 
        year in maintenance costs alone. VFW supports VA's utilization 
        gap reduction plan, but again we believe that too much of the 
        financial burden will be placed on the out-years.
  Accessibility:
          Currently, seven VISNs are not meeting the 70 percent of 
        enrollees residing within the VA drive-time goal. Under SCIP, 
        all VISNs will meet the goal by 2021. This is being done mostly 
        through increasing Community Based Outpatient Clinic (CBOC) 
        leasing, which enables VA to place clinics in communities as 
        veteran populations shift. VFW supports VA's accessibility gap 
        reduction plan.
  Space:
          Many think that space inventory needs is currently reducing; 
        however, space inventory is at a deficit at 12 of the 21 VISNs, 
        and VA as a whole is at 125 percent capacity. Much of the 
        deficit is in outpatient needs. VFW agrees with VA's plan of 
        expansion for CBOCs to close 95 percent of the space gaps 
        currently in place or projected by 2021.
          Part of space management is deciding what to do with vacant 
        or underutilized space. VA is aggressively repurposing many of 
        its buildings, but there is a time when demolition may be 
        necessary. Although VFW recognizes the need for the removal of 
        buildings, we ask VA to provide more information on what the 
        decision process looks like during consideration, as well as a 
        history of the building, to include what the building was last 
        used for, how long had it been vacant or underutilized, and 
        whether EUL was considered as an option for the property. 
        Overall, VFW believes VA's gap analysis for future usage and 
        property management is acceptable.
Alternative investment planning
    VFW is satisfied with VA's investment evaluation and consideration 
process for future needs. VA generally uses five criteria to determine 
the best and most financially sound capital investment plan. The 
criteria are: status quo, renovation, new construction, leasing, and 
contract out. VA weighs each of these options and provides an 
explanation of each option and rationale of their final decision on 
future capital planning.
    The EUL program that was originally authorized in 1991 has formed 
public/private ventures that have generated annual revenue, cost 
avoidance and savings for VA. In FY 2010 alone, $61.5 million was off-
set by EUL, and more than $266 million has been saved since 2006. EUL 
is due to expire at the end of this calendar year. Without re-
authorization, VA's homelessness initiative will be jeopardized. 
Twenty-four current homelessness EULs and the planned repurposing of 
more than 100 underutilized buildings will be impacted. It is vital 
that EUL is re-authorized to enhance services to veterans, as well as 
reduce capital costs to VA.
Cost analysis and risk assessment
    In VA's future needs consideration, cost analysis is always a 
consideration. VA expertly evaluates each critical gap and determines 
which construction option, whether it be leasing, renovating or 
building a new facility, makes the best financial sense but still 
provides the highest quality care with the easiest access for veterans. 
Cost alone should never be the lone factor for determining capital 
needs, and VFW is please that VA appears to use patient needs as a 
first step in deciding how to approach future building needs.
    VFW is also concerned that delays in major construction projects 
will cost more if the projects are delayed. Ten major construction 
projects were designed and ready to begin construction in 2009. In FY 
2012, only two of those projects have been identified to be funded. VFW 
believes that major construction projects should be funded to be 
completed within 5 years of initial funding.
Project prioritization
    VFW views the SCIP prioritization process favorably. Unfortunately, 
funding does not reflect the same level of prioritization. Unless the 
out-years are funded much more aggressively than the current years, VA 
will not be able to meet demands, facilities will require more 
maintenance funding, and the priority list will continue to grow.
2012 construction budget request
    VFW believes the 2012 capital budget request is extremely low. The 
current costs to fill the gaps that have been identified--which are 
planned to be corrected by 2021--are estimated to be between $52 and 
$65 billion. Investing $2.88 billion annually will not meet the needs 
of those gaps. VA is admittedly back-loading the capital plan by 
placing more than $16 billion in minor construction and NRM needs in 
the years 2017-2021. There were ten major construction projects that 
were schematic/design developed in FY 2009, yet only two of those 
projects were identified for funding in the FY 2012 budget request. VA 
cannot continue to push current needs to out-years. Buildings will only 
continue to deteriorate and the capital investment plan will only grow 
its deficit. VFW believes that VA's major construction account should 
be funded at $1.85 billion. This will allow them to complete all 
current, partially funded projects within 5 years, begin providing 
funding for 15 new projects, and complete all currently funded seismic 
corrections within 3 years. In FY 2010, NRM received a total of $2.1 
billion. VA has requested only $871 million for NRM in FY 2012. This 
will fund only 190 of the more than 4,000 NRM projects reported under 
SCIP. Minor construction is in better shape than major construction and 
NRM. Slight increases in the 2012 budget request will allow VA to 
easily eliminate minor construction gaps over the next 10 years. 
Leasing appears to be on track to close all related gaps within the 
desired time frame.
Viability of the 10-year plan
    SCIP is thorough in its examination of current and future capital 
asset needs. It looks at multiple gaps that reduce the safety of 
employees and veterans and limit access and quality of care they are 
tasked to provide. VFW supports VA's SCIP 10-year plan, but recommends 
that funding be increased to match the infrastructure demand.
    VA's capital budget plan comes from several line items: Lands and 
structures under medical facilities, and major and minor construction 
under VA construction accounts. The medical facilities account carries 
NRM and leasing. The FY 2010 actual for this account was $2.3 billion, 
with $2.15 billion used for NRM. The 2011 current estimate is already 
$200 million above the 2011 budget estimate, coming in at $1.4 billion. 
Even with this substantial increase in funding, 3,470 of the 4,808 
identified capital projects within SCIP are NRM. The FY 2012 budget 
recommends an NRM budget of only $868.8 million. At this funding level, 
it will take 24 years to complete currently identified NRM projects.
    If leasing line items are funded at the Administration's requested 
level, VA should be on track to maintain their current leases and fund 
the 61 new projects in FY 2012. VA has a plan to repurpose at least 131 
buildings for the Secretary's homeless initiative, and EUL is needed to 
facilitate most of these programs. As mentioned before, EUL is due to 
expire at the end of 2011. It needs to be reauthorized.
    Major construction projects accounts for the largest cost in 
capital planning. To complete the partially funded and to fully fund 
the 133 new projects in the FY 2012 SCIP plan, Congress will need to 
appropriate between $20 billion and $24.5 billion. VA plans to invest 
only $725 million--$545 million through appropriations request and 
$135.7 million in prior year unobligated funds--for major construction 
projects in FY 2012. At this pace, it will take about 30 years to fully 
fund VA's 10-year plan.
    VA estimates that current and future minor construction projects 
will cost between $8 billion and $10 billion. Again, funding requests 
fell far short at only $550 million for FY 2012. At this pace, VA will 
take 14.5 years to reach its 10-year capital plan. Minor increases in 
current years will reduce the burden of these projects in out-years.
    VFW believes the SCIP 10-year capital investment plan by itself is 
a solid plan. However, implementation of the plan is flawed. Asking for 
extremely low construction funding levels will cause the plan to fail. 
Closing access, utilization and deficiency gaps will only happen if 
Congress is committed to providing approximately $3.5 billion per year 
from FY 2017-2021 for minor construction and NRM alone.
    In closing, VFW is impressed with the breadth and depth of VA's gap 
analysis and their process of determining corrective actions for those 
gaps. However, VFW would like to see more information on the building 
disposal process, as well as requests for funding that will set VA's 
capital plan on the right trajectory. VFW also requests that this 
Committee and Congress as a whole take a serious look at the long-term 
effects of not having a viable capital infrastructure for VA. 
Partnerships with medical universities will fade, training and 
recruitment of doctors will diminish, and vital research--which has 
been a tremendous recruitment tool for VA--will not be productive. VFW 
understands the Nation's financial trouble, reducing VA capital 
infrastructure spending will have second and third causes of effect 
that will cost taxpayers more in the long-term. There is no short-term 
fix to the VA infrastructure problem, so we must stop looking for one 
and begin funding VA construction at an appropriate level to set VA on 
a path of correcting gaps so current and future veterans will receive 
the care they earned and deserve.
    Mr. Chairman, this concludes my testimony, I will be happy to 
answer any questions you or the Committee may have.

                                 
                Prepared Statement of Kaiser Permanente
    Kaiser Permanente would like to thank the Committee on Veterans 
Affairs of the United States House of Representatives for the 
invitation to answer specific questions at today's hearing.
    The Kaiser Permanente Medical Care Program is the largest private 
integrated health care delivery system in the U.S., delivering health 
care to approximately 8.7 million members in nine States and the 
District of Columbia. Kaiser Permanente is comprised of Kaiser 
Foundation Health Plan, Inc., the Nation's largest not-for-profit 
health plan, and its health plan subsidiaries outside California and 
Hawaii; the not-for-profit Kaiser Foundation Hospitals which operates 
36 hospitals and over 400 other clinical facilities; and the Permanente 
Medical Groups, independent physician group practices that contract 
with Kaiser Foundation Health Plan to meet the health needs of Kaiser 
Permanente's members. The vast majority of medical, pharmacy, 
diagnostic, and laboratory services delivered to Kaiser Permanente 
members are performed within Kaiser Permanente.
    Kaiser Permanente's capital scope includes expenditures in three 
major categories; new facility, information technology investments, and 
plant maintenance and renovations. Facility expenditures include 
investments in new hospitals, medical offices, and other ancillary 
space to meet growing membership needs and enable the internalization 
of care and services. These include both owned and leased space. 
Facility expenditures also include the cost of expansion of existing 
facilities, seismic upgrades, regulatory requirements, and maintenance 
projects. Ancillary space includes pharmacies and laboratories, as well 
as administrative space and business services.
    The Professional Staff of the Committee contacted Kaiser Permanente 
to request input to this hearing in the form of specific questions 
regarding our own capital planning processes, as follows.
Questions and answers:
1. Does your organization use a cost analysis in planning construction 
        or renovation projects for purchase or lease?
    All capital projects require the submission of a business case for 
funding approval. There are predetermined thresholds, based on the 
dollar amount associated with the capital investment, which determine 
the specific requirements of each business case. The business case for 
major capital investments includes a full cost analysis of all 
operating expenditures and capital expenditures evaluated over a 10 
year time frame. Individual cost analysis inputs (for example, costs 
expressed as dollars per square foot) are compared to internal metrics. 
Additionally, high level place holders are used for long range capital 
planning. These numbers are determined based on a high level internal 
cost model estimates. At the time of the actual funding request, 
business cases and options are developed and evaluated in more detail. 
Kaiser Permanente is in the process of developing benchmarks that are 
tied to external industry standards.
2. How is an analysis of alternatives conducted?
    We assemble a comparative matrix that allows us to evaluate the 
short list of options for capital projects. This matrix includes the 
pertinent qualitative and quantitative drivers to the decisions (i.e. 
entitlements, parking, hard and soft costs, etc.)
    It is the responsibility of the group who is submitting the 
business case to identify and evaluate the most relevant, realistic 
alternatives to proposed projects. Key considerations include----

      Can existing facilities accommodate forecasted service 
demand?
      Can existing facilities be renovated/modified to 
accommodate forecasted service demand more cost effectively?
      Is there an option to lease space for services in a way 
that is more financially beneficial to the organization?
      Is a lower cost venue available for purchase and 
renovation?
      Can the project be built using a smaller footprint? 
Reduced scope?
      Are there other providers in the market that can 
accommodate demand via contracting or partnership arrangement in an 
appropriate manner?
      Is there a higher and better use for the planned invested 
capital in other parts of the region?

    In addition to describing these alternatives, regions are 
responsible for identifying and to the extent possible quantifying key 
risks associated with each alternative to the end of providing a full 
rationale for the recommended option.

3. On average, how many pages constitute a cost analysis of any given 
        small and large project?
    The length of a cost analysis really depends on the complexity of 
the cash flows and the transactions at hand. A typical business case 
includes the following in the cost analysis: comparative summary, net 
present value (NPV) analysis for each option under consideration, cash 
flow for each option considered, profit and loss (P& L) analysis for 
options considered and capital cost estimates for all options.
4. Who provides the analysis (internal to your organization or 
        independent third party)?
    Comprehensive cost analysis is generated, reviewed and approved 
internally.
5. Is the organization providing analysis contracted to provide the 
        service? If so, is that expense valuable in overall cost 
        savings related to your organizations decision?
    This type of analysis is done using internal resources. While it's 
impossible to assign an accurate dollar amount to the value our 
organization receives through these thorough analyses, experience shows 
that a poorly planned investment can cost the organization millions of 
dollars over the life-cycle of a facility. For example, over-building a 
facility (building more square footage than is needed to meet market 
demands) increases both the initial investment and ongoing operational 
cost. It also ``locks-up'' capital resources that could be utilized to 
address other areas of need. Under-building a facility may force us to 
outsource services at a less efficient cost that could be achieved 
internally.
6. What is the value of comprehensive cost analysis in relation to your 
        organization's construction or renovation projects?
    Comprehensive cost analysis is an essential element of informed 
decision-making and project approvals at Kaiser Permanente. This type 
of analysis allows Kaiser Permanente to:

      better predict total project cost;
      appropriately plan and build a long-term, multi-year 
capital program;
      compare predictive cost models to our actual costs so 
that we may improve analysis of future projects;
      properly evaluate a range of options to make informed 
capital decisions going forward; and
      provide a benchmark against completed project cost and 
published industry cost data.

    We hope that these answers are helpful to the Committee as it 
examines the Department of Veterans Affairs capital planning process. 
Kaiser Permanente would be happy to answer any additional questions the 
Committee may have.

                                 

                                         Sacred Heart Health System
                                                      Pensacola, FL
                                                      April 4, 2011

Hon. Jeff Miller
House of Representatives
U.S. Congress

Hon. Bob Filner
House of Representatives
U.S. Congress

Dear Chairman Miller and Representative Filner:

    I am Peter Heckathorn, Executive Vice President of Sacred Heart 
Health System in Pensacola, Florida. I lead strategic and operational 
planning for the health system and I have been in that role for 14 
years. Prior to that I was involved in various health care 
organizations and was a consultant to large medical systems across the 
country.
    Thank you for the opportunity to provide some information on how 
private health care organizations plan and budget for operations, 
technology, and facility investment. I apologize in advance for not 
being able to see you in person, but I suffered an acute medical 
condition that has temporarily blinded me in one eye and limits my 
ability to both write and travel.
Background
    Sacred Heart Health System (``SHHS'') is part of Ascension Health, 
the largest not-for-profit health care provider in the country, with 
physician clinics, hospitals, and nursing homes in 20 States. Ascension 
Health providers serve the full spectrum of populations, but with a 
special preference for the poor and vulnerable.
    SHHS is an integrated health system providing physician care, 
inpatient community hospital services through 3 hospitals (with 543 
beds operating at 80 plus percent occupancy), as well as highly 
specialized regional services such as heart surgery, cancer care, and 
pediatric specialty services. SHHS provides primary and specialty 
physician care through clinics and medical offices for citizens 
throughout a 10 county region in western Florida and southern Alabama. 
SHHS also provides tertiary care for infants, children, and adults in a 
20 county region including services for active duty military personnel 
and their dependents. Sacred Heart Hospital in Pensacola was named one 
of the best hospitals in the country in 2011 by HealthGrades, an 
independent organization that analyzes clinical quality outcomes for 
all hospitals. Additionally, Thomson Reuters named our Sacred Heart 
Hospital on the Emerald Coast in Destin one of the top 100 hospitals.
    We are presently engaged in the annual development of an integrated 
strategic and financial plan that includes major capital projects. Over 
the last 10 years, SHHS has constructed two new hospitals and over a 
million square feet of ambulatory care space.
    What I will share is a standard practice across the health care 
industry on how large, multi-region health systems engage in effective 
planning.
Strategic, Operational and Financial Planning Process
    Health systems are driven to ensure careful and thoughtful 
financial stewardship and investment in the services for the 
communities we serve. Health care financial operating margins are very 
slim (averaging 1-2%), and the facility and technology driven nature of 
our industry demands tremendous amounts of capital investment. Careful 
planning and cash management are critical to survival. Therefore, it is 
incumbent on multi-regional systems to ensure that each of their local 
regional health systems annually create and update a 5-year strategic, 
operational, and financial plan to support that system's operating and 
capital expenditures budget.
    A well-managed health system (``HS'') will create an integrated 
strategic, operating and financial plan (``ISOF Plan'') that 
incorporates the following elements in a detailed 5-year forecast 
document to be used by managers, executives, boards, and regional/
national staff to track progress:

      Demographic and Market Analysis: Population, economic and 
health care statistics, trends, and forecasts are developed in a 
defined geographic market. Detailed population by age, gender, and race 
are analyzed for changes and trends, as well as employment, local 
business trends, and disease trends to assess their effects on the 
potential demand for services. Existing trends of utilization at the 
local regional system's facilities and other local facilities 
(including private and public) would be articulated and analyzed 
relative to the population and economic activity. All local trends and 
forecasts would be reviewed against national trends. Local, State, and 
Federal Government activities, financing, and regulations would all be 
scrutinized for implications on the demand for care and financing of 
services. All the data can be obtained from commercially available 
health information and planning companies who specialize in providing 
historical data, predictive demand and supply tools, and provide 
information regarding demographic and technology trends.
      Market Dynamics Review: Strategic and operating trends of 
other providers (including the VA medical facilities, the active-duty 
armed forces health care facilities) are analyzed for potential short-
term and long-term impacts. In the private sector, there may be an 
avoidance of duplicating services or a need to provide a competitive 
service to maintain income viability as facilities compete on quality, 
customer service and clinical capability. The opportunities would be 
carefully balanced against the demographic analyses, preferred 
strategies, and financial investments and returns necessary to ensure 
organizational sustainability. This situation and opportunities 
analysis influences strategic planning goals.
      Strategy Plan: Most large health care organizations have 
developed strategies that are derived from their mission and vision. 
Those strategies would then be tailored through specific tactics to fit 
the specific market characteristics of the communities the regional 
health system serves. The operational implementation of each of these 
strategies should be addressed in the detail of the regional health 
system's ISOF Plan with concrete measureable performance goals. 
Performance against those goals should be tracked throughout the year 
by the local health system leadership, the regional/national system 
office, and the local boards of directors to ensure that the local ISOF 
Plan is effectively being pursued and implemented to further local 
regional and collective system-wide plans.
      Financial and Capital Investment Budgets: Annually, in 
concert with the strategic and operational planning process, a 5-year 
financial and capital investment plan is created. These plans reflect 
the strategic and operating commitments of the local health system. The 
financial plan would only be approved for 1 year and although capital 
investments are listed, they are not approved for more than the current 
year without a far more detailed and rigorous process which is outlined 
below. It is the expectation that the 5-year financial and capital 
plans will be reliable and consistent from year to year. Significant 
variation from year to year would be a major concern, unless major 
events (e.g., hurricane) occurred. Such variation would reduce the 
credibility of a local system seeking to add facilities and capacity or 
start a new location.
      Performance Evaluation: The ISOF Plan would be approved 
by the local regional health system's board and the national health 
system's board. Throughout the year, performance against the ISOF 
Plan's specific goals and financial plan would be evaluated. Most large 
private systems link executive's and management's compensation to the 
execution of the ISOF Plan goals.

Major New Technology or Building Projects
    Major new technology and facility projects are analyzed separately 
from routine replacement of equipment. The financial plan described 
above includes routine capital replacements, including equipment and 
facility refreshes.
    Major technology and capital projects (e.g. over $10 million in 
expenditures) would demand a multi-year conceptual planning lead time 
and detailed analysis before receipt of funding approval by the system-
wide office. The process for approval and subsequent funding entails 
written justifications, analyses, and reviews in a thorough, 
disciplined, and documented process that involves multiple external and 
internal experts in planning, technology, operations, and finance. We 
shall call this the ``capital project submission and review process.''
Step 1: Initial Project Vetting
    A prerequisite for a project to be qualified for the ``submission'' 
process is that the conceptual project has been identified and 
discussed in the specific local regional health system's 5-year ISOF 
Plan as a critical goal to implement system strategy, and is in the 
local regional health system's capital investment budget as a priority 
that ``outranks'' other items it seeks. The creation of the ISOF Plan 
should involve a large number of stakeholders (e.g. staff, local health 
system board members [business and community leaders who live in the 
community)) in the preparation, critique, and refinement of the ISOF 
Plan document. Potential projects are carefully debated to ensure that 
the highest-priority, sustainable projects are conceived. Every year 
each local regional health system's ISOF Plan is also reviewed by an 
independent team at the system-wide office with the local regional 
executive that oversees the health system. Each local regional 
executive also annually presents their ISOF Plan and the proposed 
projects to other regional executives and system-wide leadership. This 
process provides for early constructive feedback on the potential 
project's strategic rationale, financial potential, and alternatives. 
This process also alleviates sudden crisis-driven projects.
    It is expected that in each year's version of the ISOF Plan the 
local regional market statistics and strategies pertinent to a 
potential project would have been identified, articulated, and modified 
to identify key rationales and data promoting or proposing other 
alternatives to the project.
    If the regional executive, after feedback from her or his peers, 
determines that a project has sufficient strategic and financial 
probability of success, then a ``master facility plan'' would be 
completed or updated. The master plan would be prepared by a multi-
disciplinary team of independent outside consultants with specific 
expertise in health care planning, finance, operations, and facilities. 
There are many firms that provide these services. The master facility 
plan defines, and rigorously evaluates, current and future options 
including no action, delay, and modifications of current service 
capabilities against multiple demand and volume scenarios. This 
external assessment would have a significant influence on whether 
national system office staff will evaluate the potential project as 
sufficiently competitive to submit. The external consultants and system 
staff collectively identify trends that will affect in- and out-patient 
utilization and how those factors would manifest themselves in that 
specific community and in the organization's facilities. That detailed 
strategy, planning scenario, options, and facility-concepts testing 
process takes 6-8 months to complete. At every evaluation step in the 
process, the external consultants' findings are reviewed with the local 
regional health system.
Step 2: Project Review Upon Submission
    If a project obtains a positive review in the ``master facility 
plan,'' a conceptual project application package is created. This 
includes the master facility plan, preferred options and approaches to 
the project with a detailed integrated strategy, operating, and 
financial plan demonstrating various, but hopefully a high, cost-
benefit ratio. The project is then formally entered into the capital 
project submission and review process. Routinely, large national 
systems have a multi-disciplinary team of experts (``Capital Project 
Review Team'') who review the conceptual project and its plan in 
entirety and provide a written analysis. Those experts generally are 
not involved in the local regional health system's operations and 
therefore can independently evaluate and rank all competing projects 
from the various local regional systems. The Capital Project Review 
Team (``CPRT'') (made up of planning, finance, and operations staff 
integrated with design, construction, technology, and contracting 
staff) provide the ability to evaluate all potential aspects of a 
project. These experts may have selected the outside experts to perform 
the master facility plan. Their assessments coupled with input from the 
submitting regions' staff are vital to determining the project's 
viability, rationality, priority, and timing.
    Acceptance by the CPRT is paramount for a project to proceed into 
the review portion of the process. The CPRT's rejection of a project 
would demand that the conceptual project and its plan be reworked. The 
CPRT team's acceptance is documented in a written summary of the 
conceptual project with specific cost/benefit metrics and forwarded to 
a system-wide committee (``System-Wide Committee'') charged with 
allocating the limited 5-year forward-looking capital project budget. 
The capital budget is determined by the financial capacity of the whole 
national system's financial capacity and cannot exceed established 
limits in order to maintain credit ratings. Therefore, project ranking 
is critical. The System-Wide Committee would approve, pend, or deny a 
project. Approval by the Committee only means that the project can be 
imbedded in the multi-year ISFO Plan of the local regional system and 
has been ``preliminary'' approved subject to subsequent detailed 
analyses and agreed upon implementation timing.
Step 3: Preliminary Approval of Capital Projects
    Once the preliminary approval is obtained, the local regional 
health system would commence to develop a functional design and 
operating program as well as an architectural schematic design. Upon 
completion of that work, which may be overseen by a system-wide 
facilities manager, the project is resubmitted to the CRPT for 
analysis. If the CRPT's analysis concludes that the preliminary-
approved project will meet operating and financial objectives as 
originally submitted, it will recommend the project back the System-
Wide Committee for a second approval review. The System-Wide Committee 
can approve, pend, or deny a project when the project is compared to 
other projects on the Committee's priority list and based on the 
system's current available capital. If a project exceeds a certain cost 
(e.g. $50 million) the project must go to the Board of Directors of the 
national system for approval. If the project was approved, then a 
``Not-To-Exceed'' Budget'' is created and the project is subjected to a 
``best practices test'' to ensure that it will be the best possible 
facility before going to detailed design and bidding.
Step 4: Final Approval for Capital Projects
    After the second national system approval, the project enters 
detailed design and budgeting. The expectation is that the results of 
this activity would result in a project ready for construction bidding. 
If during the detailed design and budgeting process, the project 
appears to have exceeded its approved scope or the detailed cost 
estimates determine that the project will exceed budget, the project is 
halted for a review with the system-wide CPRT and potentially 
facilities consults. If the capital costs cannot be modified to meet 
the budget and the performance objectives, then a project can be 
altered or canceled. Therefore, there is a careful focus at the 
preliminary stages of this process to ensure that the estimates 
employed are reasonable and consistent with industry standards. If the 
project moves forward to bidding and contracting, routine meetings, 
between regional management and the CPRT and facilities staff at the 
system-wide office, would occur (as frequently as monthly) to review 
time schedule and budget adherence. Any variation could result in the 
project being returned for a review by the senior executive level 
System-Wide Committee or the Board of Directors of the national system.
    This process could, in theory, take only 2 years to get to 
drawings. However, based on the need to have orderly long term capital 
planning this process is more likely to have an elapsed time of 3 to 7 
years. This necessitates extremely thoughtful and disciplined ISFO Plan 
processes and analytic capabilities.
Concepts to Potentially Consider:
    In many communities, veterans have significant medical needs that 
cross the continuum of care and require specialized professionals. In 
our region there are hospitals with excess facility and clinical 
capacity, recognized high quality services, and experience with caring 
for active-duty personnel and veterans. Perhaps the VA should consider 
how to encourage public-private partnerships that would meet veterans 
and active duty military needs using existing resources in communities 
in which the beneficiaries reside.
    With implementation of new electronic health information exchanges 
between civilian and military health providers, access to medical 
history, testing results, and medical records will be even faster than 
before. Perhaps the VA might consider the alternatives of contracting 
with community physicians and hospitals to create quick access to care 
without the costs of building new facilities.
    Thank you for letting me share some information and perspectives.

            Respectfully,

                                             Peter Heckathorn, CMPE
                                           Executive Vice President
                   MATERIAL SUBMITTED FOR THE RECORD




                      Office of Public Affairs   Washington, DC
                      Media Relations            (202) 461-7600
                      .........................  www.va.gov
Department of Veterans Affairs                   News Release



FOR IMMEDIATE RELEASE
February 10, 2011
         VA & HUD Issue First-Ever Report on Homeless Veterans
          Assessment Key to Preventing and Ending Homelessness
    WASHINGTON--For the first time, the Department of Veterans Affairs 
(VA) and the Department of Housing and Urban Development today 
published the most authoritative analysis of the extent and nature of 
homelessness among Veterans. According to HUD and VA's assessment, 
nearly 76,000 Veterans were homeless on a given night in 2009 while 
roughly 136,000 Veterans spent at least one night in a shelter during 
that year.
    This unprecedented assessment is based on an annual report HUD 
provides to Congress and explores in greater depth the demographics of 
Veterans who are homeless, how the number of Veterans compare to others 
who are homeless, and how Veterans access and use the Nation's homeless 
response system. HUD's report, Veteran Homelessness: A Supplement to 
the 2009 Annual Homeless Assessment Report to Congress, examines the 
data in the department's annual report to Congress in-depth.
    ``With our Federal, State and community partners working together, 
more Veterans are moving into safe housing,'' said Secretary of 
Veterans Affairs Eric K. Shinseki. ``But we're not done yet. Providing 
assistance in mental health, substance abuse treatment, education and 
employment goes hand-in-hand with preventive steps and permanent 
supportive housing. We continue to work towards our goal of finding 
every Veteran safe housing and access to needed services.''
    Last June, President Obama announced the Nation's first 
comprehensive strategy to prevent and end homelessness, including a 
focus on homeless Veterans. The report, Opening Doors: Federal 
Strategic Plan to Prevent and End Homelessness, puts the country on a 
path to end Veterans and chronic homelessness by 2015; and to ending 
homelessness among children, family, and youth by 2020. Read more about 
the Administration's strategic plan to prevent and end homelessness in 
America.

                               __________
         Key Findings of Opening Doors: Federal Strategic Plan
                    to Prevent and End Homelessness
      More than 3,000 cities and counties reported 75,609 
homeless Veterans on a single night in January of 2009; 57 percent were 
staying in an emergency shelter or transitional housing program while 
the remaining 43 percent were unsheltered. Veterans represent 
approximately 12 percent of all homeless persons counted nationwide 
during the 2009 `point-in-time snapshot.'
      During a 12-month period in 2009, an estimated 136,000 
Veterans--or about 1 in every 168 Veterans--spent at least one night in 
an emergency shelter or transitional housing program. The vast majority 
of sheltered homeless Veterans (96 percent) experienced homelessness 
alone while a much smaller share (four percent) was part of a family. 
Sheltered homeless Veterans are most often individual white men between 
the ages of 31 and 50 and living with a disability.
      Low-income Veterans are twice as likely to become 
homeless compared to all low-income adults. HUD and VA also examined 
the likelihood of becoming homeless among American Veterans with 
particular demographic characteristics. In 2009, twice as many poor 
Hispanic Veterans used a shelter at some point during the year compared 
with poor non-Hispanic Veterans. African American Veterans in poverty 
had similar rates of homelessness.
      Most Veterans who used emergency shelter stayed for only 
brief periods. One-third stayed in shelter for less than 1 week; 61 
percent used a shelter for less than 1 month; and 84 percent stayed for 
less than 3 months. The report also concluded that Veterans remained in 
shelters longer than did non-Veterans. In 2009, the median length of 
stay for Veterans who were alone was 21 days in an emergency shelter 
and 117 days in transitional housing. By contrast, non-veteran 
individuals stayed in an emergency shelter for 17 days and 106 days in 
transitional housing.
      Nearly half of homeless Veterans were located in 
California, Texas, New York and Florida while only 28 percent of all 
Veterans were located in those same four States.
      The report studied the path homeless Veterans take into 
the shelter system and found most Veterans come from another homeless 
location and few entered the shelter system from their own housing or 
from housing provided by family or friends.
      Sheltered homeless Veterans are far more likely to be 
alone rather than part of a family household; 96 percent of Veterans 
are individuals compared to 63 percent in the overall homeless 
population.

    For more information on VA's efforts to end homelessness among 
Veterans, visit VA's Web page at www.va.gov/homelessness.

    [The VA/HUD's report, ``Veteran Homelessness: A Supplement to the 
2009 Annual Homeless Assessment Report to Congress,'' will be retained 
in the Committee files.]

                                 

                              U.S. Government Accountability Office
                                                    Washington, DC.
                                                     April 20, 2011

The Honorable Jeff Miller
Chairman
Committee on Veterans' Affairs
House of Representatives

Subject: Response to Question for the Record; Committee on Veterans' 
Affairs, April 5, 2011, Hearing on ``Deconstructing the U.S. Department 
of Veterans Affairs Construction Planning''

Dear Mr. Chairman:

    This letter responds to your question during the April 5, 2011, 
hearing entitled, Deconstructing the U.S. Department of Veterans 
Affairs Construction Planning.
    We stated that we would answer by submitting a written response for 
the record. Our answer to the question is enclosed and is based on our 
previous work, updates to that work, and our knowledge of the areas 
addressed. Our previous work was conducted in accordance with GAO's 
quality assurance framework or generally accepted government auditing 
standards. We also asked the Department of Veterans affairs to verify 
the factual content of our response, and we incorporated their 
clarifications accordingly.
    If you have any questions or would like to discuss our response, 
please contact me at (202) 512-2834 or stjamesl@gao.gov.

            Sincerely yours,

                                                  Lorelei St. James
                    Acting Director, Physical Infrastructure Issues

Enclosure

                               __________
              Response to Hearing Question for the Record
         Deconstructing the U.S. Department of Veterans Affairs
                         Construction Planning
                             April 5, 2011
     Committee on Veterans' Affairs, U.S. House of Representatives
       Question for Lorelei St. James, Acting Director, Physical 
                         Infrastructure Issues,
                 U.S. Government Accountability Office
                   Question from Chairman Jeff Miller
    Do you know which of those suggestions the GAO made to VA were 
implemented [regarding recommendations in our report, VA Construction: 
VA is Working to Improve Initial Project Cost Estimates but Should 
Analyze Cost and Risk Schedules, GAO-10-189 dated December 14, 2009]?

    As a part of its 2012 Congressional budget submission, VA provided 
an update on actions taken to implement GAO's recommendations regarding 
VA's cost estimate process.\1\ According to VA, these recommendations 
are partially implemented and are on target to be fully implemented in 
fiscal year 2011. We also asked VA to provide any updates to the 
implementation status. GAO publicly reports on agency progress in 
implementing recommendations--including those made to VA in GAO-10-189. 
GAO will continue to monitor and follow up on the implementation of the 
recommendations made to VA on this matter. More specifically:
---------------------------------------------------------------------------
    \1\ The Department of Veterans Affairs: FY 2012 Budget Submission 
Summary Volume, Volume I of 4, (Washington, D.C.: February 2011).

    Recommendation 1: To provide a realistic estimate of when a 
construction project may be completed as well as the risks to the 
project that could be mitigated, we recommend that the Secretary of 
Veterans Affairs direct the Office of Construction and Facilities 
Management (CFM) to require the use of an integrated master schedule 
for all major construction projects.\2\ This schedule should integrate 
all phases of project design and construction.
---------------------------------------------------------------------------
    \2\ An integrated master schedule should be horizontally and 
vertically linked. The schedule should be horizontally integrated, 
meaning that it should link the products and outcomes associated with 
already sequenced activities. The schedule should also be vertically 
integrated, meaning that traceability exists among varying levels of 
activities and supporting tasks and sub-tasks.

      Action Taken: VA has reported progress, but has not yet 
fully implemented this recommendation. In VA's 2012 Congressional 
Budget Submission, VA reported that it was updating its internal 
guidance and requirements to incorporate integrated master schedules 
for all major construction projects. In the meantime, VA reported that 
at the outset of each new project, its project management teams were 
developing integrated master schedules for both the design and 
construction phases. According to VA, this recommendation will be fully 
---------------------------------------------------------------------------
implemented in fiscal year 2011.

    Recommendation 2: To provide a realistic estimate of when a 
construction project may be completed as well as the risks to the 
project that could be mitigated, the Secretary of VA should direct CFM 
to conduct a schedule risk analysis, when appropriate, based on the 
project's cost, schedule, complexity, or other factors. Such a risk 
analysis should include a determination of the largest risks to the 
project, a plan for mitigating those risks, and an estimate of when the 
project will be finished if the risks are not mitigated.

      Action Taken: VA has reported progress, but has not yet 
fully implemented this recommendation. In its 2012 Congressional Budget 
Submission, VA reported that this recommendation was being incorporated 
into its internal guidance. In the meantime, it has updated its 
instructions to architectural/engineering contractors to reflect the 
need to consider schedule risk analysis during schedule development. 
According to VA, this recommendation also will be fully implemented in 
fiscal year 2011.

    Recommendation 3: To improve estimates of the cost of a major 
construction project as well as the risks that may influence the cost 
and how these risks can be mitigated, the Secretary of VA should direct 
CFM to conduct a cost risk analysis of major construction projects.

      Action Taken: VA has reported progress, but has not yet 
fully implemented this recommendation. In its 2012 Congressional Budget 
Submission, VA reported that cost risk analysis considerations are also 
being addressed through updates of internal guidance. VA noted that the 
schedule risk considerations that architectural/engineering contractors 
were being instructed to consider, described above, would enable a 
better assessment of cost risk in the interim. According to VA, this 
recommendation also will be fully implemented in fiscal year 2011.
                                 

                                     Committee on Veterans' Affairs
                                                    Washington, DC.
                                                       May 13, 2011

The Honorable Eric K. Shinseki
Secretary
U.S. Department of Veterans Affairs
810 Vermont Avenue, NW
Washington, DC 20420

Dear Mr. Secretary:

    In reference to our full Committee hearing entitled, 
``Deconstructing the Department of Veterans Affairs Construction 
Planning,'' that took place on April 5, 2011, I would appreciate it if 
you could answer the following hearing questions by the close of 
business on June 10, 2011.

     1.  GAO's recent report on VA real property did not assess the 
extent to which the results of Strategic Capital Investment Planning 
(SCIP) are reflected in the President's fiscal year 2012 budget. How 
does SCIP respond to GAO's recommendation to provide the results of 
your capital planning efforts, including details on the estimated cost 
of all future projects, to Congress on a yearly basis? How will 
effectiveness measured be reported to Congress?
     2.  In the Department's fiscal year 2012 budget submission's 
discussion of the SCIP process, utilization gap is defined as ``the 
difference between current workload and projected 2018 demand.'' When 
conducting future capital investment planning, did VA look at projected 
utilization rates beyond 2018, especially considering the Department's 
aging patient population? If not, why not? What is the justification 
behind the decision to project demand 7 years ahead to 2018?
     3.  Currently, activation and operational costs are not included 
in the SCIP analysis. However, the Committee was told that the 
Department was working on a plan to account for these crucial costs as 
part of SCIP. Please provide details as to how you intend to estimate 
these costs and make it transparent. Further, please provide an 
estimate for activation and operational costs for the new medical 
facility in Orlando, FL; New Orleans, LA; Denver, CO; and Las Vegas, NV 
as well as each major medical facility project submitted in the FY 2012 
budget.
     4.  In January, the Government Accountability Office (GAO) issued 
a report on VA Real Property entitled ``Realignment Progressing, but 
Greater Transparency about Future Priorities is Needed.'' You concurred 
with their recommendation to provide Congress with full SCIP results 
and subsequent capital planning efforts, including details on estimated 
future project costs annually. When can we expect to receive that 
information from the Department? Why was that information not provided 
previously?
     5.  In the past, GAO has reported that VA and the Department of 
Defense (DoD) lacked a joint nationwide market analysis to obtain 
information on what their combined future workloads in the areas of 
services, facilities, and patient needs would be and lacked performance 
measures that would be useful for evaluating how well they are 
achieving joint health care resource-sharing goals. Did SCIP address 
any of these deficiencies? If so, please provide a detailed account as 
to how VA conducted a nationwide market analysis to obtain information 
on what the VA and DoD combined future workloads were in the areas of 
services, facilities, and patient needs and what performance measures 
were used to evaluate if and how well you are achieving joint health 
care resource-sharing goals.
     6.  How will VA measure the effectiveness of SCIP, and how will VA 
inform Congress of its effectiveness?
     7.  GAO's recent report on VA real property did not assess the 
extent to which the results of SCIP are reflected in the President's 
fiscal year 2012 budget. How does SCIP respond to GAO's recommendation 
to provide the results of your capital planning efforts, including 
details on the estimated cost of all future projects, to Congress on a 
yearly basis? To what extent does SCIP define the gaps in meeting its 
capital investment needs?
     8.  The Department's total capital budget for FY 2012 is 
relatively low when compared with the SCIP estimated magnitude cost 
over the full 10 years. Please provide the Committee more detail on how 
the successive requests in following years will come to meet the 
estimated total SCIP costs.
     9.  Are all of the 10-year SCIP projections strictly based on a 
10-year patient projection model? If not, please describe those 
variations. Please describe what tools the Department uses to arrive at 
its projected patient workloads at the 5-, 10-, and 20-year forecasts.
    10.  What methods, including Milliman utilization projection data, 
were used in VA analysis of options for future construction?
    11.  What impact, if any, do you believe the Patient Protection and 
Affordable Care Act will have on utilization rates for VA health care? 
Does VA expect that more low-income veterans will utilize private 
health care providers as a result of this law? If so, how will that 
impact the Department's capital investments?
    12.  In your written statement, you emphasized that in addition to 
ensuring access and safety for veterans and employees in VA facilities, 
``we must also ensure the efficient and effective use of taxpayer's 
dollars.'' Given that, please explain the discrepancy between the 
amount the Department identified as necessary to fulfilling the needs 
identified in the 10-year capital action plan (between $53 billion and 
$65 billion according to the Department's FY 2012 budget submission) 
and a FY 2012 request of $2.876 billion, less than 5 percent of that 
10-year number.
    13.  What performance measures, if any, do you intend to employ to 
centrally monitor the implementation and impact of the SCIP plan and 
how will VA inform Congress of the effectiveness of SCIP?
    14.  What weight, if any, does the Department place on the overall 
fiscal condition of the Federal Government and the Nation's economy 
when conducting long-term strategic property planning?
    15.  To what extent does SCIP define VA's overarching, national 
strategy for its capital investments?
    16.  When did VA complete its most recent gap analysis, including 
facility condition assessments, of its capital investments and what 
were the results?
    17.  For access gap analysis under SCIP, please provide more 
specific information on how the criteria of drive-time and distance 
gaps are decided within a geographical area, and the likelihood of 
these criteria being modified during the 10-year SCIP implementation.
    18.  What is VA doing to address challenges in managing its real 
property, such as improving its project cost estimates?
    19.  How long does VA estimate it will take to complete the major 
and minor construction projects that are ongoing?
    20.  What is the percent weighting factor for reducing excess 
property that VA used to evaluate projects?
    21.  What are the factors and methodologies currently being 
considered for identifying activation costs and annual costs of VA 
facilities?
    22.  What will be the detailed recurring annual costs of the new 
and replacement VA Medical Center facilities, including maintenance and 
operation?
    23.  Of the 830 underutilized buildings identified by VA in the 
April 5 hearing, how many are 60 years or older? Of these buildings 60 
years or older, how many are leased and how many are owned by VA?
    24.  What is the total number of buildings leased by VA? What is 
the total number of buildings owned by VA?
    25.  What plan is in place to speed up final disposition for the 
underutilized facilities?
    26.  Do the targeted energy efficiency and cost savings of 30 
percent higher than current building standards create higher costs or 
slower contracting and construction than could otherwise be achieved? 
What are the targeted energy efficiency and cost savings at other large 
agencies?
    27.  The VA's Facility Condition Assessment (FCA) report compares 
the correction cost of buildings in poor or critical condition compared 
to the total replacement cost of the building. Is there a ratio of 
those two numbers that definitively decides whether VA will move toward 
one action or the other, and if so what is that ratio? If there is not 
a definitive ratio in the FCA report, what are other factors that 
dictate whether to correct versus replace a facility?
    28.  In a report recently submitted to the Committee by the 
Secretary outlining construction and design contracts not awarded by 
the end of the last fiscal year, the replacement medical center 
facility in Denver, Colorado, was referenced. Funds have been 
appropriated for this project since Fiscal Year 2004, and yet the Phase 
I demolition was not awarded until April 2009. The report tells the 
Committee that the ``project went from a replacement medical center to 
a super clinic, then back to a replacement medical center on a smaller 
(emphasis added) scale than the original project.'' Can you explain to 
this committee how the planning started with one size, got 
significantly bigger, then significantly smaller?
    29.  Another contract that was not awarded in the expected time 
pertains to the replacement medical center in New Orleans. The city of 
New Orleans and the state of Louisiana were expected to transfer the 
remaining property to VA by early March 2011. Did this transfer happen?

                a.  Does the transfer mentioned in the report relate to 
                privately-owned property that officials have taken over 
                using eminent domain? How many residents have been 
                displaced because of this project?

    30.  Please provide a status update on all 10 of the projects 
listed in that report.
    31.  What is the review process when revising a construction 
project, such as a change in the square footage of the facility?
    32.  How and by whom are cost analyses conducted and reviewed by 
the Department when examining facility construction options? What are 
the contents of these analyses?
    33.  Has VA ever considered using an independent review process to 
make an unbiased decision given all possible alternatives related to VA 
facilities? If so, why has this process not been adopted yet?
    34.  What are VA's plans to reduce the $9.4 billion backlog in 
repairs?
    35.  The Capital Asset Realignment for Enhanced Services (CARES) 
process identified a gap in inpatient care in Far South TX. However, 
the CARES Commission did not recommend constructing a small VA hospital 
in this region because: a single location would not accommodate the 
dispersed veteran population; the low volume need could not support a 
full range of specialty care; and veterans would still be required to 
travel to the San Antonio Veterans Affairs Medical Center for specialty 
care. CARES did recommend constructing a large specialized outpatient 
health care center (HCC) in collaboration with the University of Texas 
Regional Academic Health Center and establishing contracts with the 
large well-regarded multi-specialty private hospitals for inpatient 
care in the region. In January of this year, VA opened a new Health 
Care Center (HCC) at Harlingen, TX. However, some stakeholders remain 
concerned that an inpatient VA medical center in Far South Texas is 
essential. Did the Strategic Capital Investment Planning (SCIP) process 
evaluate the need for an inpatient VA hospital in Far South Texas? If 
so, please provide details as to the outcome of the SCIP evaluation. 
Additionally, please provide VA's views on the sufficiency of the 
existing infrastructure and services in Far South Texas to meet the 
current and future demand for veterans' health care and any 
recommendations for the need for enhanced services.

    In an effort to reduce printing costs, the Committee on Veterans' 
Affairs, in cooperation with the Joint Committee on Printing, is 
implementing some formatting changes for materials for all full 
Committee and Subcommittee hearings. Therefore, it would be appreciated 
if you could provide your answers consecutively and single-spaced. In 
addition, please restate the question in its entirety before the 
answer.
    Due to the delay in receiving mail, please provide your response to 
Diane Kirkland at diane.kirkland@mail.house.gov. If you have any 
questions, please call 202-225-3527.

            Sincerely,

                                                        JEFF MILLER
                                                           Chairman

                               __________
                  The Honorable Jeff Miller, Chairman
                  House Committee on Veterans Affairs
   ``Deconstructing the Department of Veterans Affairs Construction 
                   Planning,'' April 5, 2011 Hearing
    Question 1: GAO's recent report on VA real property did not assess 
the extent to which the results of Strategic Capital Investment 
Planning (SCIP) are reflected in the President's fiscal year 2012 
budget. How does SCIP respond to GAO's recommendation to provide the 
results of your capital planning efforts, including details on the 
estimated cost of all future projects, to Congress on a yearly basis? 
How will effectiveness measured be reported to Congress?

    Response: The SCIP plan was released after the final GAO report was 
issued. The SCIP plan lists the projects and estimated costs to be 
addressed in FY 2012. It also details the projects (including location, 
description, and estimated cost) and other investment levels needed to 
meet gaps for fiscal years 2013-2021.
    The SCIP process determines the investments needed to address gaps 
in space, access, safety, facility condition, efficiencies, and 
utilization. SCIP's main objective is to identify VA infrastructure 
gaps and propose a systematic and integrated plan to address those 
needs. Therefore, the current metrics used to measure effectiveness are 
primarily process-focused. For example, a key measure was the 
prioritized list of projects and 10-year SCIP plan delivered on-time 
along with the Department's budget. Other measures that are tracked 
include the number of VA staff who are trained on important SCIP 
elements and requirements, and the percentage of projects in budget 
execution that were reviewed during the SCIP process. In the future, 
once projects are funded, constructed and in use, VA will be able to 
measure their impact on the various SCIP-identified gaps. Measured 
results will be included in future VA budget and SCIP submissions.

    Question 2: In the Department's fiscal year 2012 budget 
submission's discussion of the SCIP process, utilization gap is defined 
as ``the difference between current workload and projected 2018 
demand.'' When conducting future capital investment planning, did VA 
look at projected utilization rates beyond 2018, especially considering 
the Department's aging patient population? If not, why not? What is the 
justification behind the decision to project demand 7 years ahead to 
2018?

    Response: Yes, VA looks at projected utilization rates across a 20-
year planning horizon to identify and plan appropriately for the 
degrees of growth or decline across the planning horizon. SCIP uses a 
10-year planning horizon (the current workload used in this case is 
base year 2008 projections) as a realistic time frame for estimating 
future capital requirements, but within the context of 20-year 
projections. Analyzing long-term demand trends help ensure, for 
example, projects are not over built where a near-term peak in demand 
is followed by a steady decline. The 20-year projections are generated 
by VA's Enrollee Health Care Projection Model, which is supported by 
Milliman, Inc., the largest health care actuarial consultancy in the 
U.S.

    Question 3: Currently, activation and operational costs are not 
included in the SCIP analysis. However, the Committee was told that the 
Department was working on a plan to account for these crucial costs as 
part of SCIP. Please provide details as to how you intend to estimate 
these costs and make it transparent. Further, please provide an 
estimate for activation and operational costs for the new medical 
facility in Orlando, FL; New Orleans, LA; Denver, CO; and Las Vegas, NV 
as well as each major medical facility project submitted in the FY 2012 
budget.

    Response: VA is currently working on a methodology to include 
estimated activation costs for future SCIP projects. These costs will 
be included in FY 2013 and future plans.

    Question 4: In January, the Government Accountability Office (GAO) 
issued a report on VA Real Property entitled ``Realignment Progressing, 
but Greater Transparency about Future Priorities is Needed.'' You 
concurred with their recommendation to provide Congress with full SCIP 
results and subsequent capital planning efforts, including details on 
estimated future project costs annually. When can we expect to receive 
that information from the Department? Why was that information not 
provided previously?

    Response: The SCIP plan lists the projects and estimated costs to 
be addressed in FY 2012. It also details the projects (including 
location, description, and estimated cost) and other investment levels 
needed to meet gaps for fiscal years 2013-2021. Prior VA 5-Year Capital 
Plans did include costs for budget year projects and estimated costs 
for other high priority major construction and leasing projects. The 
future costs in the current SCIP plan were provided along with the 
assumption that they are a ``snap shot'' of magnitude costs that will 
be refined as projects move through the budget process including 
preparation of OMB 300 business cases, prospectus details provided in 
budget submission and at completion of project design.

    Question 5: In the past, GAO has reported that VA and the 
Department of Defense (DoD) lacked a joint nationwide market analysis 
to obtain information on what their combined future workloads in the 
areas of services, facilities, and patient needs would be and lacked 
performance measures that would be useful for evaluating how well they 
are achieving joint health care resource-sharing goals. Did SCIP 
address any of these deficiencies? If so, please provide a detailed 
account as to how VA conducted a nationwide market analysis to obtain 
information on what the VA and DoD combined future workloads were in 
the areas of services, facilities, and patient needs and what 
performance measures were used to evaluate if and how well you are 
achieving joint health care resource-sharing goals.

    Response: The SCIP process did not include information on combined 
VA/DoD future workloads in the areas of services, facilities, and 
patient needs. However, both VA and DoD capital investment 
methodologies include criteria that credits these types of projects 
during the prioritization and ranking process. In addition, the Joint 
Executive Council (JEC) through its Construction Planning Committee 
(CPC) is currently exploring ways to develop more robust VA/DoD joint 
strategic capital planning. This includes realigning existing planning 
processes and funding mechanisms to allow for additional joint ventures 
that would enhance services to Veterans.
    All construction projects submitted for the current VA Strategic 
Capital Investment Planning (SCIP) process were reviewed by staff in 
the DoD Collaboration Office to determine opportunities for joint 
construction. DoD staff also reviewed the current SCIP submissions and 
participated in the SCIP review process. This transparency of VA 
construction proposals and evaluation process provided multiple chances 
for DoD and VA to identify future joint construction opportunities 
throughout the SCIP. VA is invited to participate in DoD's Capital 
Investment Decision Model (CIDM) process when DoD will prioritize 
proposed construction projects.
    There currently are feasibility studies being conducted in Fort 
Leavenworth, KS; Wichita, KS; and Bremerton, WA to determine the need/
justification for joint construction projects in those geographic 
areas, again, based on populations and workload. The Fort Leavenworth 
study is a joint effort between the Army and VA; Wichita is between Air 
Force and VA; and Bremerton is between Navy and VA. All studies are 
nearing completion. Pending this nationwide analysis, we have begun to 
analyze joint markets where construction needs have been identified, to 
determine the combined services, facilities, and patient needs. A 
combined multi-service market analysis has just been completed for the 
Oahu market. This study examined the populations and health care 
requirements for all military markets including Army, Navy, and Air 
Force, plus VA.

    Question 6: How will VA measure the effectiveness of SCIP, and how 
will VA inform Congress of its effectiveness?

    Response: The SCIP process determines the investments needed to 
address gaps in space, access, safety, facility condition, 
efficiencies, and utilization. SCIP's main objective is to identify VA 
infrastructure gaps and propose a systematic and integrated plan to 
address those needs. Therefore, the current metrics used to measure 
effectiveness are primarily process-focused. For example, a key measure 
was the prioritized list of projects and 10-year SCIP plan delivered 
on-time along with the Department's budget. Other measures that are 
tracked include the number of VA staff who are trained on important 
SCIP elements and requirements, and the percentage of projects in 
budget execution that were reviewed during the SCIP process. In the 
future, once projects are funded, constructed and in use, VA will be 
able to measure their impact on the various SCIP-identified gaps. 
Measured results will be included in future VA budget and SCIP 
submissions.

    Question 7: GAO's recent report on VA real property did not assess 
the extent to which the results of SCIP are reflected in the 
President's fiscal year 2012 budget. How does SCIP respond to GAO's 
recommendation to provide the results of your capital planning efforts, 
including details on the estimated cost of all future projects, to 
Congress on a yearly basis? To what extent does SCIP define the gaps in 
meeting its capital investment needs?

    Response: The SCIP plan lists the projects to be addressed in FY 
2012. It also details the projects (including location, description, 
and estimated cost) and other investment levels needed to meet gaps for 
fiscal years 2013-2021. The future costs in the current SCIP plan were 
provided along with the assumption that they are a ``snap shot'' of 
magnitude costs that will be refined as projects move through the 
budget process including preparation of OMB 300 business cases, 
prospectus details provided in budget submission and at completion of 
project design. SCIP incorporates service gaps to identify the 
Department's capital investment needs. Service gaps are identified at 
the Departmental level for the Administrations.

    Question 8: The Department's total capital budget for FY 2012 is 
relatively low when compared with the SCIP estimated magnitude cost 
over the full 10 years. Please provide the Committee more detail on how 
the successive requests in following years will come to meet the 
estimated total SCIP costs.

    Response: An important goal of SCIP was to identify the full extent 
of the problem. The SCIP 10-Year Action Plan identified $53-$65 billion 
in magnitude cost estimates over the course of the 10-year planning 
horizon needed to close performance gaps. A second goal of SCIP was to 
start a national conversation about the best way to close our gaps and 
ensure we are providing Veterans, their families, and their survivors 
with the best services and care. VA's 2012 budget submission reflects 
the hard choices that were made in order to balance the construction 
needs identified in the SCIP 10-year plan and other VA priorities (such 
as the cost to provide medical care and Veteran benefits and services).
    The SCIP plan provides a rational, data-driven strategic framework 
to ensure capital investments are focused on the most critical 
infrastructure needs first and these investments are then funded in 
priority order. All projects are prioritized based on identified needs 
and the ability to close known performance gaps. The SCIP plan will be 
updated every year allowing for changes in health care delivery 
technologies, cost saving solutions and changing Veteran demographics 
to be incorporated into the process. VA will work with Congress and the 
VSO's to implement the SCIP plan. We look forward to working with 
Congress to come up with effective solutions to closing these gaps.

    Question 9: Are all of the 10-year SCIP projections strictly based 
on a 10-year patient projection model? If not, please describe those 
variations. Please describe what tools the Department uses to arrive at 
its projected patient workloads at the 5-, 10-, and 20-year forecasts.

    Response: No, the utilization (patient) projection model produces 
annual utilization projections out over a 20-year planning horizon. The 
20-year projections are generated by VA's Enrollee Health Care 
Projection Model (EHCPM), which is supported by Milliman, Inc., the 
largest health care actuarial consultancy in the U.S. The EHCPM is an 
assumption-based demand projection model. The multitude of assumptions 
used in this model make it possible to project future utilization and 
expenditures by making explicit assumptions (through research and 
analysis) about how specific utilization and expenditure patterns may 
differ from current patterns under various scenarios. The model 
projects enrollment, utilization, and expenditures for the enrolled 
Veteran population for over 60 categories of health care services for 
each of the 20 projection years, allowing multiple planning horizon 
options. First, the model determines how many Veterans will be enrolled 
in VA in each projection year and their age, priority, and geographic 
location. Next, the model projects the total health care services 
needed by those enrollees and then estimates the portion of that care 
that those enrollees will demand from VA.

    Question 10: What methods, including Milliman utilization 
projection data, were used in VA analysis of options for future 
construction?

    Response: SCIP is a data driven process based on service and 
infrastructure gaps. Future construction projects are defined as part 
of SCIP based on the gaps identified for closure. Each gap area has a 
process or method used to identify the service gap and quantity of gap 
that needs to be addressed. For workload/utilization, the Milliman 
model projects workload need in the future. This future need is then 
compared with the current actual workload facility by facility. In 
cases where future demand is projected to be higher than current 
demand, a gap is identified that must be filled through SCIP. The 
workload/utilization demand projections from Milliman are also used to 
generate the space gap used in SCIP. Using VA's space criteria, the 
Milliman projections are converted into actual Gross Square Feet 
required, then compared to the current space available or space that 
will become available in the future to meet this demand. The gap is 
determined by comparing the future need for space with the available 
space, resulting in either more space being required or excess space 
for disposal. The remaining gaps, such as security, energy, access, and 
condition, use current data to compare to a standard or target to 
define the service gap to be addressed in SCIP. As shown here, SCIP 
uses detailed methods and processes to define all gaps that potentially 
could require future construction.

    Question 11: What impact, if any, do you believe the Patient 
Protection and Affordable Care Act will have on utilization rates for 
VA health care? Does VA expect that more low-income veterans will 
utilize private health care providers as a result of this law? If so, 
how will that impact the Department's capital investments?

    Response: VHA created a task force in 2009 that continues to 
monitor proposed health care reform legislation for potential impacts 
on VHA health care. VHA does not yet have any projections on impact to 
the system as the regulatory process is still in its infancy.

    Question 12: In your written statement, you emphasized that in 
addition to ensuring access and safety for veterans and employees in VA 
facilities, ``we must also ensure the efficient and effective use of 
taxpayer's dollars.'' Given that, please explain the discrepancy 
between the amount the Department identified as necessary to fulfilling 
the needs identified in the 10-year capital action plan (between $53 
billion and $65 billion according to the Department's FY 2012 budget 
submission) and a FY 2012 request of $2.876 billion, less than 5 
percent of that 10-year number.

    Response: An important goal of SCIP was to identify the full extent 
of the problem. The SCIP 10-Year Action Plan identified $53-$65 billion 
in magnitude cost estimates over the course of the 10-year planning 
horizon needed to close performance gaps. A second goal of SCIP was to 
start a national conversation about the best way to close our gaps and 
ensure we are providing Veterans, their families, and their survivors 
with the best services and care. VA's 2012 budget submission reflects 
the hard choices that were made in order to balance the construction 
needs identified in the SCIP 10-year plan and other VA priorities (such 
as the cost to provide medical care and Veteran benefits and services). 
The SCIP plan provides a rational, data-driven strategic framework to 
ensure capital investments are focused on the most critical 
infrastructure needs first and these investments are then funded in 
priority order. All projects are prioritized based on identified needs 
and the ability to close known performance gaps. The SCIP plan will be 
updated every year allowing for changes in health care delivery 
technologies, cost saving solutions and changing Veteran demographics 
to be incorporated into the process. VA will work with and keep 
Congress informed of progress on implement of the SCIP. We look forward 
to working with Congress to come up with effective solutions to closing 
these gaps.

    Question 13: What performance measures, if any, do you intend to 
employ to centrally monitor the implementation and impact of the SCIP 
plan and how will VA inform Congress of the effectiveness of SCIP?

    Response: The SCIP process determines the investments needed to 
address gaps in space, access, safety, facility condition, 
efficiencies, and utilization. SCIP's main objective is to identify VA 
infrastructure gaps and propose a systematic and integrated plan to 
address those needs. Therefore, the current metrics used to measure 
effectiveness are primarily process-focused. For example, a key measure 
was the prioritized list of projects and 10-year SCIP plan delivered 
on-time along with the Department's budget. Other measures that are 
tracked include the number of VA staff who are trained on important 
SCIP elements and requirements, and the percentage of projects in 
budget execution that were reviewed during the SCIP process. In the 
future, once projects are funded, constructed, and in use, VA will be 
able to measure their impact on the various SCIP-identified gaps. 
Measured results will be included in future VA budget and SCIP 
submissions.

    Question 14: What weight, if any, does the Department place on the 
overall fiscal condition of the Federal Government and the Nation's 
economy when conducting long-term strategic property planning?

    Response: VA works closely with the Office and Management and 
Budget in order to ensure the fiscal condition of the Nation is fully 
integrated into our long term planning. OMB provides the current and 
economic indexes rates (such as discount, inflation rate and economic 
indicators) used in developing many of our capital planning tools and 
documents.

    Question 15: To what extent does SCIP define VA's overarching, 
national strategy for its capital investments?

    Response: The Strategic Capital Investment Planning's (SCIP) 
approach to capital programs reflects VA's priorities and good 
stewardship of resources to maximize benefits and services to Veterans. 
SCIP demonstrates effectiveness and accountability by developing a 
comprehensive review of requirements and prioritizing construction 
needs across all VA organizations. VA's capital program is driven by 
the strategic direction embodied in SCIP--to close performance gaps and 
provide sufficient capital to ensure Veterans receive the best service 
in facilities that are:

      Safe and secure
      Located closer to where Veterans live
      Modern and state-of-the-art
      Capable of supporting the demand for services and 
benefits
      Able to serve homeless Veterans through use of vacant 
facilities

    Question 16: When did VA complete its most recent gap analysis, 
including facility condition assessments, of its capital investments 
and what were the results?

    Response: VA completes gap analysis for SCIP on an annual basis. 
The gap analysis for FY 2012 SCIP was completed in January 2010. Each 
gap area represented in SCIP, such as space or condition, has an 
analysis performed in support of the annual process. For example, 
condition assessments are completed throughout the year and summarized 
in the annual gap analysis. Other gap areas, such as space and energy, 
are tracked throughout the year and the final end of year numbers are 
used to perform the gap analysis. The results of the gap analysis 
performed for SCIP are represented in VA's FY 2012 budget for each gap 
area, by administration.

    Question 17: For access gap analysis under SCIP, please provide 
more specific information on how the criteria of drive-time and 
distance gaps are decided within a geographical area, and the 
likelihood of these criteria being modified during the 10-year SCIP 
implementation.

    Response: VA's current drive-time access guidelines grew out of 
VA's recognition that improving access to Veteran care was necessary to 
improve the quality and value of services. As early as the mid-1990s, a 
structured process of objective data capture, systematic measurement, 
and monitoring of outcomes and benchmarks was developed as a vehicle 
for VHA leaders to manage access performance and promote 
accountability. The current drive-time guidelines, developed during the 
Capital Asset Realignment for Enhanced Services (CARES) study, have 
been used by VHA to assess and manage health care access, and when 
making Capital asset decisions. A work group is currently conducting a 
comprehensive review of existing drive-time guidelines and will make 
recommendations for improvements as necessary. The recommendations and 
findings of the work group will enhance VHA's capability to plan for 
access expansion as well as make accurate policy decisions regarding 
Veterans' access to health care and capital budgeting.

    Question 18: What is VA doing to address challenges in managing its 
real property, such as improving its project cost estimates?

    Response: VA does indeed face many challenges in managing its 
capital portfolio of over 5,500 owned buildings (143 million square 
feet), with an average age greater than 60 years. (VA's portfolio 
includes 1,594 historic buildings.) SCIP represents the best mix of 
projects including the action plans that contain magnitude cost 
estimates based on a ``snapshot'' in time. Project costs are refined 
and improved as the project moves along in the budget process--
beginning with the magnitude cost found in the action plan, refined at 
the business case submission, and later through the detailed OMB 300 
business case. The estimated costs are improved and provided in the 
project prospectus in the budget submission and may be updated again at 
completion of project design. VA is also working to develop a 
methodology for including activation (project estimated start-up cost) 
in future SCIP plans beginning with the 2013 SCIP submission.

    Question 19: How long does VA estimate it will take to complete 
major and minor construction projects that are ongoing?

    Response: The level of major construction funding provided will 
have a critical and direct impact on the time it takes to complete all 
ongoing projects. There are currently 23 partially funded major 
construction projects that total approximately $6 billion in remaining 
need. In order to maximize resources, VA requests funds for phased 
major projects based on the project's schedule and its ability to 
obligate in the request year. VA anticipates a large majority of 
partially funded minor construction projects will be obligated by the 
end of FY 2012.

    Question 20: What is the percent weighting factor for reducing 
excess property that VA used to evaluate projects?

    Response: The two sub-criteria focused specifically on reducing 
excess property are Space--Repurposing and Space--Demolition, each of 
which are valued at a maximum of 1.2 percent of the project score. 
However, capital projects were evaluated on 18 distinct sub-criteria 
for the FY 2012 SCIP process, several of which can apply to a project 
that reduces excess property. The Repurposing and Demolition sub-
criteria are part of the Right-Sizing Inventory major criterion that is 
ranked 5th out of the 6 major criteria. Another component of the 
project score is the rating factor applied to each sub-criterion. The 
rating factor applied to both the Repurposing and Demolition sub-
criteria is the percentage of the gap filled. Not all projects will 
earn a rating of 1 (the highest possible rating) for these sub-
criteria.
    A project that reduces excess space can earn points for various 
other sub-criteria. For example, a project that reduces excess property 
could also receive points for any combination of the following sub-
criteria: Safety/Compliance (10.9 percent); Seismic (11.4 percent); 
Supporting Initiatives (3.3 percent); Energy Standards (3.9 percent); 
Best Value Solutions (3.6 percent); and Maximize Efficiencies (1.2 
percent). Percentage values represent the maximum point value.

                                 Major Construction Projects Funded FY 2006-2011
----------------------------------------------------------------------------------------------------------------
                                                      Total
  Location                        Description       Estimated     Funding       Estimated            Status
                                                       Cost        Year      Completion Date
----------------------------------------------------------------------------------------------------------------
VHA Major Construction Projects:
----------------------------------------------------------------------------------------------------------------
Gainesville   FL              Correct Patient      114,200,000       2004   15-Jun-11........  CO
                               Privacy
                               Deficiencies
----------------------------------------------------------------------------------------------------------------
Las Vegas     NV              New Medical          593,500,000       2004   30-Apr-13........  CO
                               Facility
                               (Overview)
----------------------------------------------------------------------------------------------------------------
Long Beach    CA              Seismic Corrections/ 129,545,000       2004   28-Feb-14........  CO
                               Clinical,B-7 & 126
----------------------------------------------------------------------------------------------------------------
Orlando       FL              New Medical          665,400,000       2004   30-Oct-12........  CO
                               Facility
                               (Overview)
----------------------------------------------------------------------------------------------------------------
Palo Alto     CA              Seismic               54,000,000       2004   30-Nov-11........  CO
                               Corrections, Bldg.
                               2 (Overview)
----------------------------------------------------------------------------------------------------------------
Pittsburgh    PA              Medical Center       295,594,471       2004   28-Feb-14........  CO
                               Consolidation
                               (Overview)
----------------------------------------------------------------------------------------------------------------
Atlanta       GA              Modernize Patient     24,534,000       2005   1-Feb-12.........  CO
                               Wards (Overview)
----------------------------------------------------------------------------------------------------------------
Bay Pines     FL              Outpatient Clinic     89,800,000       2005   30-Sep-11........  CO
                               (Lee County)
----------------------------------------------------------------------------------------------------------------
San Juan      PR              Seismic Corrections  277,000,000       2005   30-Sep-14........  CO
                               Bldg. 1 (Overview)
----------------------------------------------------------------------------------------------------------------
Syracuse      NY              Addition For SCI      86,969,000       2005   13-Jul-12........  CO
                               Center (Overview)
----------------------------------------------------------------------------------------------------------------
Biloxi        MS              Restoration Of       304,000,000       2006   30-Nov-12........  CO
                               Hospital/
                               Consolidation of
                               Gulfport
                               (Overview)
----------------------------------------------------------------------------------------------------------------
Denver        CO              New Medical Center   800,000,000    2004/05   28-Feb-14........  CO
                               Facility
                               (Overview)
----------------------------------------------------------------------------------------------------------------
Fayetteville  AR              Clinical Addition     90,600,000    2006/08   20-Sep-12........  CO
----------------------------------------------------------------------------------------------------------------
New Orleans   LA              New Medical          995,000,000       2006   30-Dec-14........  CD
                               Facility (OV)
----------------------------------------------------------------------------------------------------------------
Columbia      MO              Operating Suite       25,830,000       2007   28-Jan-13........  CO
                               Replacement
----------------------------------------------------------------------------------------------------------------
Milwaukee     WI              Spinal Cord Injury    29,500,000       2007   31-May-11........  PC
                               Center
----------------------------------------------------------------------------------------------------------------
St. Louis     MO              Med Facility Improv  346,300,000       2007   TBD..............  CO
 (JBD)                         & Cem Expansion
                               (Overview)
----------------------------------------------------------------------------------------------------------------
Palo Alto     CA              Centers for          716,600,000       2008   TBD..............  CO
                               Ambulatory Care/
                               Polytrauma-Blind
                               Rehabilitation
                               (Overview)
----------------------------------------------------------------------------------------------------------------
San Antonio   TX              Polytrauma Center,    66,000,000       2008   1-Apr-13.........  CO
                               & Renovation of
                               Exist Bldg. 1
                               (Overview)
----------------------------------------------------------------------------------------------------------------
Tampa         FL              Polytrauma           231,500,000       2008   TBD..............  CO
                               Expansion/Bed
                               Tower (Overview)
----------------------------------------------------------------------------------------------------------------
American      WA              Seismic Corrections   52,600,000       2009   TBD..............  DD
 Lake                          of Bldg. 81
----------------------------------------------------------------------------------------------------------------
Bay Pines     FL              Inpatient/           158,200,000       2009   TBD..............  CO
                               Outpatient
                               Improvements
                               (Overview)
----------------------------------------------------------------------------------------------------------------
Bronx         NY              Spinal Cord Injury   225,900,000       2009   TBD..............  S/DD
                               Center (SCI)
                               (Overview)
----------------------------------------------------------------------------------------------------------------
Dallas        TX              Clinical Expansion   156,400,000       2009   TBD..............  DD
                               for Mental Health
----------------------------------------------------------------------------------------------------------------
Louisville    KY              New Medical                  TBD       2009   TBD..............  MP
                               Facility
----------------------------------------------------------------------------------------------------------------
Omaha         NE              Omaha--Replacement   560,000,000       2009   TBD..............  S/DD
                               Facility
----------------------------------------------------------------------------------------------------------------
Seattle       WA              B101 Mental Health   211,700,000       2009   TBD..............  DD
                               (Overview)
----------------------------------------------------------------------------------------------------------------
Walla Walla   WA              Multi Specialty       71,400,000       2009   TBD..............  CO
                               Care (Overview)
----------------------------------------------------------------------------------------------------------------
West Los      CA              Seismic              326,900,000       2009   TBD..............  DD
 Angeles                       Corrections--Vario
                               us Bldgs.
                               (Overview)
----------------------------------------------------------------------------------------------------------------
Brockton      MA              Long-Term Care       188,000,000       2010   TBD..............  DD
                               Spinal Cord Injury
                               (SCI) (Overview)
----------------------------------------------------------------------------------------------------------------
Canandaigua   NY              New Construction     370,100,000       2010   TBD..............  S/DD
                               and Renovation
----------------------------------------------------------------------------------------------------------------
Long Beach    CA              Seismic              258,400,000       2010   TBD..............  DD
                               Corrections--Menta
                               l Health &
                               Community Living
                               Center
----------------------------------------------------------------------------------------------------------------
Palo Alto     CA              Livermore            354,300,000       2010   TBD..............  SD
                               Realignment (OV)
----------------------------------------------------------------------------------------------------------------
Perry Point   MD              Replacement CLC       90,100,000       2010   TBD..............  AE
----------------------------------------------------------------------------------------------------------------
Saint Louis   MO              New Bed Tower,       433,400,000       2010   TBD..............  AE
                               Research Building,
                               Parking Garage
                               (Overview)
----------------------------------------------------------------------------------------------------------------
Temple        TX              Information           10,552,000       2009   27-Jan-12........  CO
                               Technology (IT)
                               Building
----------------------------------------------------------------------------------------------------------------
San Diego     CA              SCI, Seismic         195,000,000       2010   TBD..............  DD
                               Corrections--(Over
                               view)
----------------------------------------------------------------------------------------------------------------
Sacramento    CA              Alameda Outpatient   208,600,000       2011   TBD..............  AE
                               Clinic
----------------------------------------------------------------------------------------------------------------
NCA Major Construction Projects:
----------------------------------------------------------------------------------------------------------------
San Diego     CA              Miramar Natl Cem--    26,450,000       2006   20-Jan-12........  CO
                               Master Plan and
                               Phase I
                               Development of
                               Miramar Annex
----------------------------------------------------------------------------------------------------------------
Bakersfield   CA              New National          16,232,492       2008   20-Aug-11........  CO
                               Cemetery--Phase 1B
----------------------------------------------------------------------------------------------------------------
Columbia/     SC              Ft. Jackson Natl      16,196,072       2008   10-Sep-11........  CO
 Greenville                    Cem--New National
                               Cemetery--Phase 1B
                               Development
----------------------------------------------------------------------------------------------------------------
Ft. Sam       TX              Phase B--             11,000,000       2008   1-May-13.........  CD
 Houston                       Infrastructure
                               Repairs (SHPO)
----------------------------------------------------------------------------------------------------------------
Jacksonville  FL              New Cemetery--Phase   16,166,438       2008   11-Jul-11........  CO
                               1 B Development
----------------------------------------------------------------------------------------------------------------
Philadelphia  PA              Washington Crossing   23,636,000       2008   14-Feb-12........  CO
                               Natl Cem--New
                               Cemetery--Phase 1B
                               Development
----------------------------------------------------------------------------------------------------------------
Sarasota      FL              New National          23,187,232       2008   12-Jul-12........  CO
                               Cemetery--Phase IB
                               Development
----------------------------------------------------------------------------------------------------------------
Bayamon       PR              Puerto Rico Natl      33,900,000       2009   16-Oct-12........  CO
                               Cem--Gravesite Exp
                               & Cemetery Improv
                               on Remaining Land
----------------------------------------------------------------------------------------------------------------
Bourne        MA              Massachusetts Natl    20,500,000       2009   15-Jun-13........  AA
                               Cem--Gravesite
                               Expansion &
                               Improvements--Phas
                               e 3
----------------------------------------------------------------------------------------------------------------
Calverton     NY              Gravesite Expansion   30,535,000       2009   9-Oct-11.........  CO
                               And Columbaria
----------------------------------------------------------------------------------------------------------------
Elwood        IL              Abraham Lincoln       39,300,000       2010   6-Mar-12.........  CO
                               Cem--Phase 2
                               Gravesite
                               Expansion
----------------------------------------------------------------------------------------------------------------
Houston       TX              Gravesite Expansion   35,000,000       2010   9-Jan-13.........  CO
                               & Improvements--
                               Phase 4
----------------------------------------------------------------------------------------------------------------
Annville      PA              Indiantown Gap        23,500,000       2011   1-Oct-13.........  CD
                               National Cemetery--
                               Phase 4 Expansion
----------------------------------------------------------------------------------------------------------------
Kent          WA              Tahoma National       25,800,000       2011   30-Dec-13........  CD
                               Cemetery--Phase 2
                               Expansion
----------------------------------------------------------------------------------------------------------------
Los Angeles   CA              Columbarium           27,600,000       2011   30-Oct-13........  CD
                               Expansion
----------------------------------------------------------------------------------------------------------------
Status Codes:
AA--Advertise & Award
AE--Selection of the AE Firm for Design
DD--Design Development
CD--Construction Documents
CO--Construction
S/DD--Schematics/Design Development
MP--Master Plan


    Question 21: What are the factors and methodologies currently being 
considered for identifying activation costs and annual costs of VA 
facilities?

    Response: VA is currently working with contractors to develop a 
tool that will calculate all in non-recurring and recurring costs for 
activating VHA facilities, which it expects to incorporate into its 
Strategic Capital Investment Planning (SCIP) process in the 2013 budget 
cycle. This model will factor in space type, change in mission, 
incremental change in workload, locality, estimated construction 
project costs, square footage, net new FTE, and IT requirements in 
order to estimate non-recurring and recurring activation costs for IT 
and total building activation needs. VA will continue to refine its 
estimates over the course of the construction project using planned 
equipment lists and FTE estimates as they become available.

    Question 22: What will be the detailed recurring annual costs of 
the new and replacement VA Medical Center facilities, including 
maintenance and operation?

    Response: The detailed recurring maintenance and operation cost of 
new facilities (major construction) are included in the project 
prospectus (Chapter 2) of Volume 4 of the VA construction budget 
submission.

    Question 23: Of the 830 underutilized buildings identified by VA in 
the April 5 hearing, how many are 60 years or older? Of these buildings 
60 years or older, how many are leased and how many are owned by VA?

    Response: Of the identified underutilized buildings, VA has 662 
buildings that are 60 years or older at the end of FY 2010. All are 
owned by VA.

    Question 24: What is the total number of buildings leased by VA? 
What is the total number of buildings owned by VA?

    Response: VA leased a total of 1,629 buildings and owned an 
additional 5,541 buildings at the end of FY 2010.

    Question 25: What plan is in place to speed up final disposition 
for the underutilized facilities?

    Response: Each year, VA identifies candidates for reuse or disposal 
through the Building Utilization Reuse and Review (BURR) process. The 
BURR process seeks to reuse underutilized assets where feasible, 
resulting in a quicker disposition as compared to demolition. In 
addition, VA has included excess space in the calculation of space gaps 
in Strategic Capital Investment Planning (SCIP), ensuring underutilized 
space is properly planned for. This means that facilities must either 
reuse excess space or have a disposal plan in place, before claiming an 
additional space need, creating a strong incentive to accelerate reuse 
and disposal planning. VA has also emphasized both reuse and disposal 
opportunities in its Real Property Cost Savings and Innovation Plan. In 
this plan, VA has identified 131 vacant or underutilized buildings to 
repurpose for homeless housing, 17 buildings to repurpose for other 
Enhanced-Use Lease initiatives, and 128 vacant or underutilized 
buildings to demolish or mothball.

    Question 26: Do the targeted energy efficiency and cost savings of 
30 percent higher than current building standards create higher costs 
or slower contracting and construction than could otherwise be 
achieved? What are the targeted energy efficiency and cost savings at 
other large agencies?

    Response: As stated in the Energy Policy Act of 2005, all Federal 
agencies are mandated to achieve the 30 percent target under the Energy 
Independence and Security Act (EISA). VA budgets an incremental three 
to 5 percent of total project costs to achieve this target. No delays 
in contracting or construction are associated with meeting this target.

    Question 27: The VA's Facility Condition Assessment (FCA) report 
compares the correction cost of buildings in poor or critical condition 
compared to the total replacement cost of the building. Is there a 
ratio of those two numbers that definitively decides whether VA will 
move toward one action or the other, and if so what is that ratio? If 
there is not a definitive ratio in the FCA report, what are other 
factors that dictate whether to correct versus replace a facility?

    Response: There is no definitive threshold. The final decision 
between repair and replacement will depend on local conditions, 
including historic status of the building and the nature of facility 
space need. However, in general, SCIP Space Analysis recommends 
disposal of buildings in which the correction cost of FCA deficiencies 
is greater than 50 percent of the replacement value of the building.

    Question 28: In a report recently submitted to the Committee by the 
Secretary outlining construction and design contracts not awarded by 
the end of the last fiscal year, the replacement medical center 
facility in Denver, Colorado, was referenced. Funds have been 
appropriated for this project since Fiscal Year 2004, and yet the Phase 
I demolition was not awarded until April 2009. The report tells the 
Committee that the ``project went from a replacement medical center to 
a super clinic, then back to a replacement medical center on a smaller 
(emphasis added) scale than the original project.'' Can you explain to 
this committee how the planning started with one size, got 
significantly bigger, then significantly smaller?

    Response: Chronology of Events--Planning Studies and Key Decisions 
Regarding the Denver VA Medical Center

      In 2000-2003, discussions about options for the Denver 
VAMC began between the Network 19 Director and CEO of the University of 
Colorado Hospital (UCH). The University of Colorado Health Sciences 
Center and the University of Colorado Hospital had secured access to 
the former Fitzsimons Army Medical Center campus through the City of 
Aurora Redevelopment Authority who took over the campus through the 
BRAC process. The University announced their long-range plan to 
completely relocate the Health Sciences Center and the University 
Hospital to the Fitzsimons campus. During this time frame, several 
feasibility studies were done to explore a potential partnership 
between VA and the University of Colorado at the Fitzsimons campus. The 
general consensus was to proceed in further evaluating options for the 
Denver VAMC and a possible joint venture with the University of 
Colorado Hospital (UCH).
      In May 2004, Secretary Principi approved a recommendation 
to replace the 55-year-old Clermont Street hospital. The Secretary's 
CARES decision from May 2004 was that the VA ``will build a replacement 
VA medical center through a sharing agreement with DoD on the 
Fitzsimmons campus with some shared facilities with the University of 
Colorado.''
      In 2005-2007, Secretary Nicholson furthered the 
development of the actual location site of the replacement hospital on 
the Fitzsimons campus and secured congressional delegation 
authorizations and appropriations.
      In January 2008, Secretary Peake was briefed on the 
status of the new replacement hospital which was a modern, state-of-
the-art, regional medical center--with a pricetag of more than $1.1 
billion. Concern was raised that building a hospital of such size would 
not properly serve Veterans outside of the greater Denver area.
      In April 2008, a new plan was developed to build a new 
Ambulatory Care Center that would have the same number of outpatient 
clinics as the existing hospital, and was to have a suite for same-day 
surgeries. The one important difference between the old plan and the 
new one: instead of VA building its own ``bed tower'' to house patients 
who remain in the hospital overnight, we would lease hospital floors 
from the University of Colorado Hospital. Special areas were to be set 
aside for a 22-bed nursing home care unit: and Rocky Mountain area 
Veterans with spinal cord injuries would get a new 12-bed Spinal Cord 
Injury unit. We were to build two new Ambulatory Centers: one in 
Colorado Springs and another in Billings and would provide expanded 
services at existing clinics in Grand Junction, Helena and Cheyenne, 
and expand home care services and telehealth programs. External 
stakeholders, however, did not embrace the concept of a ``hospital 
within a hospital'' and the concept encountered considerable opposition 
from external stakeholders and the Colorado congressional delegation.
      In 2009, Secretary Shinseki made the decision to proceed 
with the construction of a stand alone VA Medical Center in Denver, 
Colorado and supported other aspects of the VISN 19 Expansion of 
Services Plan as a strong model of care that will address the 
challenges of providing quality health care in an accessible and 
integrated manner. This plan will result in the addition of two Health 
Care centers--one in Colorado Springs, Colorado and one in Billings, 
Montana and the addition of ten new sites of care through Rural Health 
initiatives. The design of this plan is in full alignment with national 
VA strategic imperatives and will increase access and provision of 
inpatient and outpatient services for Veterans in their local 
community.
      In 2010-2011, plans have progressed with the construction 
of the new stand alone hospital in concert with Secretary Shinseki's 
vision.

    Question 29: Another contract that was not awarded in the expected 
time pertains to the replacement medical center in New Orleans. The 
city of New Orleans and the State of Louisiana were expected to 
transfer the remaining property to VA by early March 2011. Did this 
transfer happen?

    Response: VA acquired all of the land necessary to construct the 
replacement VA medical center (VAMC) in late April 2011, with the 
exception of one parcel (the Dixie Brewery) to be used for research 
space. VA began site preparation work, awarded the first construction 
change order for Site Surcharging (site dewatering), and began 
construction in May 2011. Activation of the facility is expected to 
commence by December 2014.

    Question 29(a): Does the transfer mentioned in the report relate to 
privately-owned property that officials have taken over using eminent 
domain? How many residents have been displaced because of this project?

    Response: VA is not privy to the exact number of residents that 
have been displaced via either the State of Louisiana using its power 
of eminent domain or for other reasons. The State acquired and 
assembled all 194 parcels for the new VAMC, then deeded the property to 
VA. Before the State acquired the property, there were approximately 
208 people living on 63 of the 194 parcels. The State, using its power 
of eminent domain has acquired 102 parcels (53 residential parcels, 30 
commercial parcels, and 19 vacant parcels), while the remaining parcels 
were acquired through agreed purchase price transactions with the 
landowners.

    Question 30: Please provide a status update on all 10 of the 
projects listed in that report.

    Response: The ten projects are listed below.
DESIGN
1. Louisville, KY--New Medical Facility
    Status: Funds for this project were appropriated in fiscal year 
(FY) 2009. Design cannot be awarded until a final decision can be made 
on project scope and location. A feasibility study, which highlighted 
pros and cons associated with site alternatives, and a market survey, 
which determined potential availability of alternative sites, were 
completed in FY 2010, but real estate due diligence studies must be 
completed to facilitate a final programmatic decision. These due 
diligence studies are currently underway and should be completed in 
July 2011 to facilitate a September 2011 decision. Negotiations for 
master planning and design cannot be completed until a site has been 
selected and if necessary, a site procurement schedule established. 
Until that occurs, the balance of the design and construction schedule 
cannot be determined.
2. West Los Angeles, CA--Seismic Corrections of Several Buildings
    Status: Funds were appropriated in FY 2009. Contract award for 
construction documents (CDs) for the various buildings is still 
anticipated in September 2011. Building 209 is on a separate 
accelerated schedule aimed at completing the building for homeless 
Veterans by September 2012. Additional construction funding will be 
requested in a future budget submission.
3. Brockton, MA--Spinal Cord Injury Center (SCI)/Mental Health 
        Renovation
    Status: Funds were appropriated in FY 2010. The audit by the 
Defense Contract Audit Agency (DCAA) took considerably longer than 
expected. A contract was awarded in August 2010 to develop conceptual 
and schematic designs. A CD award is expected to occur no earlier than 
late fall 2011. Construction funding will be requested in a future 
budget submission.
4. Bronx, NY--Spinal Cord Injury/Disorder (SCI/D) Center
    Status: Funds were appropriated in FY 2009. The audit by DCAA took 
considerably longer than expected. A contract was awarded in September 
2010 to develop conceptual and schematic designs (SDs) for both the 
parking garage and SCI phases of construction. A kick-off meeting was 
held in October 2010 for these design phases. The CD contract is 
anticipated to be awarded no earlier than late summer 2011. 
Construction funding will be requested in a future budget submission.
5. Canandaigua, NY--CARES New Construction and Renovation
    Status: Funds were appropriated in FY 2010. The magnitude and 
complexity of the project led to a number of changes, and the audit by 
the DCAA took more than 8 months to complete. A contract was awarded in 
September 2010 to develop conceptual and SDs for the new community 
living center, domiciliary, clinic, and other planned renovations to 
the existing facility. A CD award is expected to occur in May 2012. 
Construction funding will be requested in a future budget submission.
6. Livermore, CA--Livermore Realignment
    Status: Funds were appropriated in FY 2010. Site selection and 
procurement is ongoing with an anticipated acquisition date in June 
2011. VA awarded a contract for SD and design development (DD) with 
options for construction documents and construction period services in 
June 2010. VA anticipates the option for DDs to be exercised in 
November 2011. Completion of new construction will provide swing space 
allowing renovation of specialty clinics in Palo Alto.
7. Long Beach, CA--Seismic Corrections, Mental Health and Community 
        Living Center (CLC)
    Status: Funds were appropriated in FY 2010. Separating the mental 
health inpatient and outpatient services into two independent 
facilities, major revisions to the CLC space program, additions of a 
parking structure and co-generation plant, and designing the CLC to new 
planning standards have delayed CD award to late summer 2011. 
Construction funding will be requested in a future budget submission.
8. Perry Point, MD--Replacement CLC
    Status: Funds were appropriated in FY 2010. A delay was experienced 
in the architect-engineer selection process and several modifications 
were made to the project plan. SD and DD contract negotiations are 
underway with a contract award scheduled for the third quarter of FY 
2011. Construction funding will be requested in a future budget 
submission.
9. St. Louis, MO--John Cochran Division--New Bed Tower
    Status: Funds were appropriated in FY 2010. The authorization for 
land acquisition was received in April 2010, and the efforts to acquire 
land on the north and south sides of the existing hospital are not 
expected to be finalized until 2012. The architect engineer contract 
award is scheduled for June 2011. Award planned for evaluation of two 
additional layouts for master plan with SDs, DDs, CDs, and construction 
period services (CPS) as option items to be exercised at a later date. 
The outcome of the land acquisition will play a dominant role in the 
overall direction of the project as well as the project phasing and 
schedule. Construction funding will be requested in a future budget 
submission.
10. San Diego, CA--Seismic Deficiency, SCI and CLC
    Status: Funds were appropriated in FY 2010. A contract for 
schematic design and design development was executed in September 2009. 
Design revisions include co-locating the SCI patients and CLC residents 
into one facility increasing the number of SCI inpatient beds, 
increasing the size of the parking structure, and designing the CLC to 
the new planning standards. The revisions have delayed CD award to late 
summer 2011.

    Question 31: What is the review process when revising a 
construction project, such as a change in the square footage of the 
facility?

    Response: The current process for construction scope changes 
includes a review of all increases and decreases to a project's scope 
along with the associated costs and schedule impacts. These recommended 
changes are reviewed internally through the Veterans Health 
Administration's Capital Asset Board, and then a recommendation is sent 
to VHA leadership for concurrence. If the change is recommended for 
approval and triggers congressional notification, the notification will 
occur prior to implementation of the change. Many times these changes 
arise during the early phases of design. Most medical projects 
initially receive design funding, and then construction funding is 
requested in a subsequent fiscal year. Changes are communicated in the 
budget prospectus when requesting the construction funding.

    Question 32: How and by whom are cost analyses conducted and 
reviewed by the Department when examining facility construction 
options? What are the contents of these analyses?

    Response: VA staff use several methods to conduct cost analyses and 
they are reviewed by various VA staff throughout the development of a 
project. At a project's inception, facility staff may conduct market 
surveys to analyze the cost of new construction, lease, and renovation 
options. Next, projects are submitted through the SCIP process, via the 
business case application, for inclusion in the annual budget request 
and a cost-effectiveness analysis (CEA) template is required. The CEA 
is a tool used to analyze the cost of the status quo and viable 
options. The SCIP process is completed approximately 12 months prior to 
funds being appropriated for a capital project and possibly several 
years before a contract is awarded. As a project progresses to the 
contract award stage further cost analysis is conducted.
    Cost is one element in deciding between capital options. VA staff 
at the facilities in need conduct the first cost analyses and 
associated assessments when considering whether a VA structure should 
be leased, renovated, or built new. The first step in deciding which 
capital solution should be chosen is to establish the type and level of 
the health care services needed and their appropriate location(s). VA's 
Health Care Planning Model provides data on the projected Veteran 
population, demographics, utilization, and access that assist in this 
determination.
    The second step is to determine the best solution to meet the need 
(including SCIP identified infrastructure gaps) to provide that care--
with a new facility, leased facility, renovated facility, or contract 
care where appropriate. All capital (major, minor, non-recurring 
maintenance and leases) business case applications are reviewed and 
prioritized by a Department-wide SCIP Board and approved through the VA 
governance process.
    VA staff (in most cases located at the facility), conduct the first 
cost analysis and associated assessments when considering whether a VA 
structure should be leased, renovated, or built new. The preparer of 
the business case application proposes the alternative (build new, 
renovate, lease, etc.) that will be used to meet identified gaps. They 
must also provide additional justification if the most cost effective 
means is the not chosen option. Factors, such as the need for 
additional space, the ability to build on medical center campuses or 
renovate existing buildings, the requirement for quick implementation 
or flexibility to terminate a contract (leasing versus construction), 
and duration (short-term vs. long term) of the need, all go into 
determining the best solution for providing the best quality health 
care. For example, a medical center campus that is landlocked, with no 
excess space would need to pursue leasing or contracting out because 
building on campus or renovating existing space to provide additional 
care is not feasible. A campus with excess building space or acreage 
could more easily renovate space or build new space on the campus.
    The majority of VA projects are awarded on a firm fixed price basis 
as a result of full and open competition. As such, a cost analysis is 
not required for most of our projects as adequate competition 
determines price reasonableness. In those relatively few cases where a 
cost analysis is required, however, VA would request that the Defense 
Contract Audit Agency (DCAA) conduct an audit of the firm's proposal. 
DCAA has an agreement with VA to do this work on a reimbursable basis. 
The DCAA audit lends support to the Contracting Officer in determining 
that a price is fair and reasonable. In addition, we review historical 
data as a preferred method of conducting our cost analysis along with 
the support of the Architect-Engineer of record's independent 
government estimate (IGE). All VA projects have an IGE, which is used 
to compare cost proposals for determining cost/price to be fair and 
reasonable.

    Question 33: Has VA ever considered using an independent review 
process to make an unbiased decision given all possible alternatives 
related to VA facilities? If so, why has this process not been adopted 
yet?

    Response: VA's capital investment processes have in the past been 
reviewed by outside parties, including the General Accounting Office 
(GAO), and VA has been regarded as one of the leaders of these 
processes in the Federal Government. The Department of Defense's Health 
Affairs Capital Investment Planning process is in part modeled after 
VA's process. We would welcome a review by GAO and other independent 
parties and would embrace any recommendations on how to improve our 
SCIP process. VA is responsible and accountable for making decisions 
related to the delivery of health care and benefits services to 
Veterans. This includes deciding the best means or facility type 
(construction, lease, etc.) to provide the services. VA's current 
process ensures projects, along with their possible alternatives, are 
reviewed and approved at the facility level, and the VISN level prior 
to being submitted to a Department-wide Panel and Board who evaluate 
the projects against a standardized set of weighted decision criteria. 
That evaluation results in a prioritized listing of capital projects 
used to develop the annual budget request, which is reviewed and 
approved by the Secretary. Half of the 18 decision criteria are 
directly related to how much of a service gap a project will fill. The 
gap data on access, utilization, facility condition, energy gaps, 
space, etc. that is provided to project developers to guide their 
decisions on possible alternatives, is used to justify the need for a 
capital project and is unalterable. In addition, the decision on which 
type of capital to request to fulfill a need is based on several other 
factors, such as the ability to build new space or renovate existing 
space on campus, or the need for the flexibility to terminate a lease 
contract on short notice, or the availability of private sources to 
provide services.

    Question 34: What are VA's plans to reduce the $9.4 billion backlog 
in repairs?

    Response: Repair projects are prioritized along with other capital 
investments. Most are funded by the VHA medical facilities account--
non-recurring maintenance (NRM) program. In addition, new major and 
minor construction projects may also include components that address 
facility repair needs.
    VA has invested a significant amount in recent years to repair 
existing facilities and building systems. From fiscal years (FY) 2009 
through 2011, NRM funding has totaled $4.6 billion. NRM funding for the 
last 3 years includes:

    FY 2009 (Actual)--$1.6 billion
    FY 2010 (Actual)--$1.9 billion
    FY 2011 (Estimate)--$1.1 billion

    VA will continue to invest in meeting facility condition deficiency 
needs, especially those that have a direct impact on patient safety. 
The SCIP plan provides (for the first time) a 10-year plan (including 
specific projects and out-year requirements) to close the 95 percent 
backlog in facility condition deficiency-related projects.

    Question 35: The Capital Asset Realignment for Enhanced Services 
(CARES) process identified a gap in inpatient care in Far South TX. 
However, the CARES Commission did not recommend constructing a small VA 
hospital in this region because: a single location would not 
accommodate the dispersed veteran population; the low volume need could 
not support a full range of specialty care; and veterans would still be 
required to travel to the San Antonio Veterans Affairs Medical Center 
for specialty care. CARES did recommended constructing a large 
specialized outpatient health care center (HCC) in collaboration with 
the University of Texas Regional Academic Health Center and 
establishing contracts with the large well-regarded multi-specialty 
private hospitals for inpatient care in the region. In January of this 
year, VA opened a new Health Care Center (HCC) at Harlingen, TX. 
However, some stakeholders remain concerned that an inpatient VA 
medical center in Far South Texas is essential. Did the Strategic 
Capital Investment Planning (SCIP) process evaluate the need for an 
inpatient VA hospital in Far South Texas? If so, please provide details 
as to the outcome of the SCIP evaluation. Additionally, please provide 
VA's views on the sufficiency of the existing infrastructure and 
services in Far South Texas to meet the current and future demand for 
veterans' health care and any recommendations for the need for enhanced 
services.

    Response: The SCIP process and Plan includes evaluating the need 
for inpatient services at all Veteran Integrated Service Networks 
(VISNs) and meeting them within the SCIP 10-year time frame. The 
projected inpatient beds for Far South TX continue to support the 
current process of contracting inpatient care to the community; this is 
the most cost effective and advantageous to the government. Therefore, 
a new inpatient hospital in Far South Texas is not needed. To construct 
a hospital, the inpatient demand would need to increase significantly 
to ensure the safety of our patients through maintaining competency 
levels of staff, and to attract high quality providers in a 
competitive, professional environment.
    The new Harlingen clinic was sized and subsequently constructed 
based on the projected workload, so sizing and infrastructure 
deficiencies should be minimal for several years. The new addition to 
the clinic enhanced the existing services of Primary Care, Audiology, 
Dental, Dermatology, Physical Therapy, Orthotics, Podiatry, Mental 
Health (PTSD), Diabetic Retinal Imaging, Radiology and CT Scans, 
Pulmonary, Ophthalmology, and Spinal Cord Injury Primary Care. The 
addition created space for Ambulatory Surgery, Cardiology, Pulmonology 
and Addiction Therapy. Other services are either contracted with the 
University of Texas or offered at the San Antonio VA Medical Center.

                                 

                                     Committee on Veterans' Affairs
                                                    Washington, DC.
                                                        May 6, 2011

The Honorable Eric K. Shinseki
The Secretary
U.S. Department of Veterans Affairs
Washington, DC 20420

Dear Secretary Shinseki:

    In reference to our Full Committee hearing entitled 
``Deconstructing the Department of Veterans Affairs Construction 
Planning,'' that took place on April 5, 2011, I would appreciate it if 
you could answer the enclosed hearing questions by the close of 
business on May 27, 2011.
    In an effort to reduce printing costs, the Committee on Veterans' 
Affairs, in cooperation with the Joint Committee on Printing, is 
implementing some formatting changes for materials for all full Member 
and Subcommittee hearings. Therefore, it would be appreciated if you 
could provide your answers consecutively and single-spaced. In 
addition, please restate the question in its entirety before the 
answer.
    Due to the delay in receiving mail, please provide your response to 
Debbie Smith by fax at 202-225-2034. If you have any questions, please 
call 202-225-9756.

            Sincerely,

                                                         BOB FILNER
                                          Ranking Democratic Member

CW:ds

                               __________
The Honorable Bob Filner, Ranking Member, House Committee on Veterans' 
                                Affairs
   ``Deconstructing the Department of Veterans Affairs Construction 
                               Planning''
                             April 5, 2011
    Question 1: To what extent does SCIP define VA's overarching, 
national strategy for its capital investments?

    Response: The Strategic Capital Investment Planning's (SCIP) 
approach to capital programs reflects VA priorities and good 
stewardship of resources to maximize benefits and services to Veterans. 
SCIP demonstrates effectiveness and accountability by developing a 
comprehensive review of requirements and prioritizing consolidated 
construction needs across all VA organizations. VA's capital program is 
driven by the strategic direction embodied in SCIP--to close 
performance gaps and provide sufficient capital to ensure Veterans 
receive the best service in facilities that are:

      Safe and secure;
      Located closer to where Veterans live;
      Modern and state-of-the-art;
      Capable of supporting the demand for services and 
benefits; and
      Able to serve homeless Veterans through use of vacant 
facilities.

    Question 2: When did VA complete its most recent gap analysis, 
including facility condition assessments, of its capital investment and 
what were the results?

    Response: VA completes annual gap analyses for the SCIP process. 
The analysis for FY 2012 was completed in January 2010. Each gap area 
represented in SCIP, such as space or condition, has an analysis 
performed in support of the annual process. For example, condition 
assessments are completed throughout the year and summarized in the 
annual gap analysis. Other gap areas, such as space and energy, are 
tracked throughout the year and the final end of year numbers are used 
to perform the gap analysis. The results of the analysis performed for 
the SCIP process are represented in VA's FY 2012 budget for each gap 
area, by Administration (Veterans Health Administration, Veterans 
Benefits Administration, National Cemetery Administration). The SCIP 
plan and other VA Budget documents can be found on the Department's Web 
site at http://www.va.gov/budget/products.asp

    Question 3: To what extent does SCIP define the gaps in meeting its 
capital investment needs?

    Response: The SCIP process is gap-driven, such that all capital 
investments are scored and prioritized based on the type and 
criticality of the gaps closed. The outputs of SCIP are projects that 
address the most critical gaps first, with additional projects in out-
years to address the remaining gaps. SCIP includes gap areas that 
affect the needs for capital investment, including but not limited to, 
safety, security, space, condition, energy efficiency, IT-related 
infrastructure, workload, access, and functional gap areas. Although it 
is possible there may be a capital need that addresses a gap not 
included in SCIP, VA believes it has captured the majority of key 
drivers for capital investment as part of the gap analysis process. Any 
additional needs identified may be merged into the SCIP process as it 
continues to mature.

    Question 4: What are VA's plans to reduce the $9.4 billion backlog 
in repairs?

    Response: Repair projects are prioritized along with other capital 
investments. Most are funded by VHA's medical facilities account--non-
recurring maintenance (NRM) program. In addition, new major and minor 
construction projects may also include components that address facility 
repair needs.
    VA has invested a significant amount in recent years to repair 
existing facilities and building systems. From fiscal years (FY) 2009 
through 2011, NRM funding has totaled $4.6 billion. NRM funding for the 
last 3 years includes:

    FY 2009 (Actual)--$1.6 billion
    FY 2010 (Actual)--$1.9 billion
    FY 2011 (Estimate)--$1.1 billion

    VA will continue to invest in meeting facility condition deficiency 
needs, especially those that have a direct impact on patient safety. 
The SCIP plan provides (for the first time) a 10-year plan (including 
specific projects and out-year requirements) to close the 95 percent 
backlog in facility condition deficiency-related projects.

    Question 5: What is VA doing to address challenges in managing its 
real property, such as improving its project cost estimates?

    Response: The SCIP plan states that action plans will contain 
magnitude cost estimates based on a ``snapshot'' in time. Project costs 
are refined and improved as the project moves along in the budget 
process--beginning with the magnitude cost found in the action plan, 
refined at the business case submission, and later through the detailed 
OMB 300 business case. The estimated costs are improved and provided in 
the project prospectus in the budget submission and may be updated 
again at completion of project design. VA is also working to develop a 
methodology for including activation (project estimated start-up cost) 
in future SCIP plans beginning with the SCIP 2013 submission.

    Question 6: How long does VA estimate it will take to complete the 
major and minor construction projects that are ongoing?

    Response: There are currently 23 partially funded major 
construction projects that total approximately $6 billion with 
remaining need. In order to maximize resources, VA requests funds for 
phased major projects based on the project's schedule and its ability 
to obligate in the request year. The level of major construction 
funding provided will have a critical and direct impact on the time it 
takes to complete all ongoing projects. VA anticipates a large majority 
of partially funded minor construction projects will be obligated by 
the end of FY 2012.

    Question 7: What is the percent weighting factor for reducing 
excess property that VA used to evaluate projects?

    Response: Capital projects were evaluated on 18 distinct sub-
criteria for the FY 2012 SCIP process, several of which apply to a 
project that reduces excess property. Two sub-criteria focus 
specifically on reducing excess property, Space--Repurposing and 
Space--Demolition, each of which are valued at a maximum of 1.2 percent 
of the project score. Repurposing and Demolition sub-criteria are part 
of the Right-Sizing Inventory major criterion that is ranked fifth out 
of the six major criteria. Another component of the project score is 
the rating factor applied to each sub-criterion. The factor applied to 
both the Repurposing and Demolition sub-criteria is the percentage of 
the gap filled. Not all projects will earn a rating of 1 (the highest 
possible rating) for these sub-criteria.
    A project that reduces excess space can earn points for various 
other sub-criteria. For example, a project that reduces excess property 
could also receive points for any combination of the following sub-
criteria: Safety/Compliance (10.9 percent); Seismic (11.4 percent); 
Supporting Initiatives (3.3 percent); Energy Standards (3.9 percent); 
Best Value Solutions (3.6 percent); and Maximize Efficiencies (1.2 
percent). Percentage values represent the maximum point value.

    Question 8: GAO's recent report on VA real property did not assess 
the extent to which the results of SCIP are reflected in the 
President's fiscal year 2012 budget. How does SCIP respond to GAO's 
recommendation to provide the results of your capital planning efforts, 
including details on the estimated cost of all future projects, to 
Congress on a yearly basis?

    Response: The SCIP plan lists the projects to be addressed in FY 
2012. It also details the projects (including location, description, 
and estimated cost) and other investment levels needed to meet gaps for 
fiscal years 2013-2021. Specific projects and associated estimated 
costs can be found in volumes 4 and 5 of the Department's FY 2012 
budget submission (http://www.va.gov/budget/products.asp).

    Question 9: How will VA measure the effectiveness of SCIP, and how 
will VA inform Congress of its effectiveness?

    Response: The SCIP process determines the investments needed to 
address gaps in space, access, safety, facility condition, 
efficiencies, and utilization. SCIP does not guarantee that VA will 
receive all the funding needed to close these gaps. Therefore, the 
current metrics used to measure effectiveness are primarily process-
focused. For example, a key measure was the prioritized list of 
projects and 10-year SCIP plan delivered on-time along with the 
Department's budget. Other measures that are tracked include the number 
of VA staff who are trained on important SCIP elements and 
requirements, and the percentage of projects in budget execution that 
were reviewed during the SCIP process. In the future, once projects are 
funded, constructed and in use, VA will be able to measure their impact 
on the various SCIP-identified gaps. Measured results will be included 
in future VA budget submissions.

                                 

                                     Committee on Veterans' Affairs
                                                    Washington, DC.
                                                        May 6, 2011

The Honorable Gene L. Dodaro
Comptroller General
U.S. General Accountability Office
441 G Street, NW
Washington, DC 20548

Dear Comptroller General:

    In reference to our Full Committee hearing entitled 
``Deconstructing the Department of Veterans Affairs Construction 
Planning,'' that took place on April 5, 2011, I would appreciate it if 
you could answer the enclosed hearing questions by the close of 
business on May 27, 2011.
    In an effort to reduce printing costs, the Committee on Veterans' 
Affairs, in cooperation with the Joint Committee on Printing, is 
implementing some formatting changes for materials for all full Member 
and Subcommittee hearings. Therefore, it would be appreciated if you 
could provide your answers consecutively and single-spaced. In 
addition, please restate the question in its entirety before the 
answer.
    Due to the delay in receiving mail, please provide your response to 
Debbie Smith by fax at 202-225-2034. If you have any questions, please 
call 202-225-9756.

            Sincerely,

                                                         BOB FILNER
                                          Ranking Democratic Member

CW:ds

                               __________
                              U.S. Government Accountability Office
                                                    Washington, DC.
                                                       May 26, 2011

The Honorable Bob Filner
Ranking Member
Committee on Veterans' Affairs
House of Representatives

Subject: Responses to Post Hearing Questions for the Record; Committee 
on Veterans' Affairs, April 5, 2011, Hearing on ``Deconstructing the 
Department of Veterans Affairs Construction Planning''

Dear Mr. Filner:

    This letter responds to your May 6, 2011, request that we address 
questions submitted for the record related to the April 5, 2011, 
hearing entitled, Deconstructing the Department of Veterans Affairs 
Construction Planning. Our answers to the questions are enclosed and 
are based on our previous work, updates to that work, and our knowledge 
of the areas addressed. Our previous work was conducted in accordance 
with generally accepted government auditing standards or GAO's quality 
assurance framework. Because our responses are based in large part on 
previously issued products for which we sought and incorporated agency 
comments, we did not seek agency comments on our responses to these 
questions.
    If you have any questions or would like to discuss our response, 
please contact me at (202) 512-2834 or stjamesl@gao.gov.

            Sincerely yours,

                                                  Lorelei St. James
                    Acting Director, Physical Infrastructure Issues

Enclosure

                               __________
           Response to Post Hearing Questions for the Record
           Deconstructing the Department of Veterans Affairs
                         Construction Planning
                             April 5, 2011
   Questions Submitted by the Honorable Bob Filner, Ranking Member, 
     Committee on Veterans' Affairs, U.S. House of Representatives
           Questions for Lorelei St. James, Acting Director,
                     Physical Infrastructure Issues
              U.S. Government Accountability Office (GAO)
    Question 1: What other actions could the Department of Veterans 
Affairs (VA) consider to ensure better management of its real property 
portfolio?

    Response: As we testified during the hearing before your committee 
on April 5, 2011, GAO has been looking at this topic for decades and 
has made a number of recommendations over the years.\1\ For example, in 
2008, we reported that while VA had made significant progress in 
reducing underutilized and vacant property, the agency does not track 
how much it costs to maintain these properties or which authorities, 
such as enhanced use leases, were most effective in property 
reduction.\2\ As such, we recommended that VA develop an annual cost 
estimate for how much it spends on underutilized and vacant property 
and develop a way to track, monitor, and evaluate which authorities 
were most effective at reducing it. VA concurred and has taken steps to 
implement this recommendation. In an effort to review what costs can 
and should be applied to supporting underutilized and vacant property, 
VA told us it analyzes operational cost data to determine actual cost 
to operate per square foot and has developed annual costs to maintain 
vacant and underutilized properties at the individual building level. 
In our 2009 report on VA construction,\3\ we recommended that VA 
improve its cost risk analysis through the use of an integrated 
construction schedule and a schedule risk analysis.\4\ According to VA, 
this recommendation is partially implemented and will be fully 
implemented in fiscal year 2011. More recently, in our 2011 report on 
VA real property, we found that even though VA's capital planning 
efforts led to realignment of its real property portfolio, more 
transparency about the cost of future priorities could enhance 
decision-making.\5\ As a result of this finding, we recommended that VA 
annually provide to Congress the full results of SCIP and any other 
subsequent capital planning efforts, including details on estimated 
cost of future projects. In our response to question 2 of this 
enclosure, we further discuss the implementation of this 
recommendation. GAO publicly reports on agency progress in implementing 
recommendations and will continue to monitor and follow up on the 
implementation of the recommendations made to VA on these matters.
---------------------------------------------------------------------------
    \1\ GAO, VA Real Property: Realignment Progressing, but Greater 
Transparency about Future Priorities Is Needed, GAO-11-521T 
(Washington, D.C.: April 5, 2011).
    \2\ GAO, Federal Real Property: Progress Made in Reducing Unneeded 
Property, but VA Needs Better Information to Make Further Reductions, 
GAO-08-939 (Washington, D.C.: September 10, 2008).
    \3\ GAO, VA Construction: VA is Working to Improve Initial Project 
Cost Estimates but Should Analyze Cost and Risk Schedules, GAO-10-189 
(Washington, D.C.: December 14, 2009).
    \4\ An integrated master schedule should be horizontally and 
vertically linked. The schedule should be horizontally integrated, 
meaning that it should link the products and outcomes associated with 
already sequenced activities. The schedule should also be vertically 
integrated, meaning that traceability exists among varying levels of 
activities and supporting tasks and sub-tasks. A risk analysis should 
include a determination of the largest risks to the project, a plan for 
mitigating those risks, and an estimate of when the project will be 
finished if the risks are not mitigated.
    \5\ GAO, VA Real Property: Realignment Progressing, but Greater 
Transparency about Future Priorities Is Needed, GAO-11-197 (Washington, 
D.C.: Jan. 31, 2011).

    Question 2: What actions can VA take to strengthen its Strategic 
Capital Investment Planning (SCIP) or other capital investment planning 
---------------------------------------------------------------------------
processes?

    Response: In our 2011 report, we determined that VA could continue 
to follow leading capital planning practices by ensuring that SCIP is 
linked to its Strategic Plan.\6\ Further, we recommended that VA 
provide the full results of its SCIP or other capital planning 
processes to Congress on a yearly basis. VA concurred and recently 
updated GAO on its initial efforts to implement this recommendation.
---------------------------------------------------------------------------
    \6\ GAO-11-197.
---------------------------------------------------------------------------
    In its fiscal year 2012 congressional budget submission, we found 
that VA provided its SCIP results and its 10 year capital plan.\7\ The 
10-year plan included the following details:
---------------------------------------------------------------------------
    \7\ The Department of Veterans Affairs: FY 2012 Budget Submission 
Construction and the 10-year Capital Plan, Volume 4 of 4 (Washington, 
D.C.: February 2011).

      fiscal year 2012 and potential future projects through 
fiscal year 2021 with their estimated costs;
      projects and cost estimates, sorted by investment type 
(e.g., major construction, leases, minor construction, non-recurring 
maintenance), location and prioritized rankings; and
      a description of the SCIP process and methodology, 
including the criteria by which projects are evaluated and prioritized.

    Regarding efforts to strengthen SCIP, VA acknowledges that its 
current estimates do not include activation costs. As such, VA stated 
that it plans to develop a methodology to allow for the incorporation 
of activation costs for future SCIP plans and we agree that this, too, 
could strengthen SCIP and its results. While we reviewed VA's budget 
submission, we did not validate VA's SCIP results. Further, VA's 
current 10-year plan does not clarify how the agency plans to evaluate 
and measure the validity of its capital planning results. Given VA's 
effort to effect a large scale transformation of its real property 
portfolio and the substantial capital investment these efforts will 
require, we agree that capital planning is an especially important area 
for VA. Further, measuring the success of VA's capital planning 
efforts, such as SCIP, is critical in understanding the impact of 
capital planning decisions and the extent to which real property 
changes have helped improve service to veterans. Beyond these 
observations, we would need to do additional work, focused on VA's 
progress with SCIP, to identify additional actions that could be taken.

    Question 3: Regarding real property management, what can VA do to 
better close the gaps in veterans' care needs?

    Response: Also in our 2011 report, we identified that VA, in an 
effort to meet veterans' needs, could continue to ensure that its gap 
analyses are linked to areas needed as outlined in its Strategic Plan. 
For example, VA conducts gap analysis on access, utilization, space, 
and condition of its real property and reports the results in its 
annual budget submission.\8\ VA could also continue to explore 
alternatives to dispose of excess property and better use underutilized 
space, with initiatives such as enhanced use leasing,\9\ VA/DoD 
collaborating & sharing,\10\ and addressing veteran homelessness.\11\
---------------------------------------------------------------------------
    \8\ For its gap analysis, VA defines each type of gap as follows: 
(1) Access Gap is the ability of Veterans to obtain needed services 
within a defined geographical area, as defined by drive-time or 
distance; (2) Utilization Gap is the difference between current 
workload and projected 2018 demand for outpatient clinic stops and 
inpatient bed days of care; (3) Space Gap is the difference between 
current space inventory and projected 2018 space need; and (4) 
Condition Gap is the cost estimate to correct all currently identified 
deficiencies in buildings and infrastructure.
    \9\ Enhanced-use leases are typically long-term agreements with 
public and private entities for the use of VA property, resulting in 
cash, in-kind consideration, or both. VA is authorized to enter into an 
enhanced-use lease if it enhances the use of the property or results in 
an improvement of services to veterans in the network in which the 
property is located.
    \10\ VA states that the fiscal year 2003 Defense Authorization Act 
(Public Law 107-314, Section 721) required VA and DoD to establish a 
joint incentive program to identify, evaluate and fund local, regional, 
and national sharing initiatives.
    \11\ VA has made an effort to repurpose unused VA properties for 
the development of new housing opportunities for veterans and their 
families.

    Question 4: To what extent does SCIP better equip VA to address the 
current backlog of maintenance, approximately $9.4 billion as reported 
---------------------------------------------------------------------------
in VA's 5-year capital plan for fiscal years 2010-2015?

    Response: As a part of SCIP, VA centralized its prioritization of 
capital projects across all of its administrations (VHA, NCA, and VBA) 
and staff offices. SCIP resulted in a single, prioritized list of 
projects for all of VA's major construction and minor construction, 
leases, and non-recurring maintenance projects for fiscal year 2012. 
Potential future projects, including non-recurring maintenance, are 
also listed in the 10-year plan. While the potential project list in 
the 10-year plan includes estimated costs, those projects are not 
prioritized. To comment further on how SCIP could better equip VA to 
address its maintenance backlog, we would need to do additional work to 
more comprehensively assess the impact of SCIP, as it was relatively 
new when we performed the work for our January 2011 report.

                                 

                                     Committee on Veterans' Affairs
                                                    Washington, DC.
                                                        May 6, 2011

Raymond C. Kelley
Director, National Legislative Service
Veterans of Foreign Wars
200 Maryland Avenue, NE
Washington, DC 20002

Dear Ray:

    In reference to our Full Committee hearing entitled 
``Deconstructing the Department of Veterans Affairs Construction 
Planning,'' that took place on April 5, 2011, I would appreciate it if 
you could answer the enclosed hearing questions by the close of 
business on May 27, 2011.
    In an effort to reduce printing costs, the Committee on Veterans' 
Affairs, in cooperation with the Joint Committee on Printing, is 
implementing some formatting changes for materials for all full Member 
and Subcommittee hearings. Therefore, it would be appreciated if you 
could provide your answers consecutively and single-spaced. In 
addition, please restate the question in its entirety before the 
answer.
    Due to the delay in receiving mail, please provide your response to 
Debbie Smith by fax at 202-225-2034. If you have any questions, please 
call 202-225-9756.

            Sincerely,

                                                         BOB FILNER
                                          Ranking Democratic Member

CW:ds

                               __________
VFW response to the Honorable Bob Filner regarding questions concerning 
                           the April 5, 2011
   ``Deconstructing the Department of Veterans Affairs Construction 
                           Planning'' hearing
    Question 1: Given that VFW does the construction portion of the 
Independent Budget (IB), to what extent was your organization involved 
in the development of the SCIP process? In other words, were you 
actively involved and asked for input or were you simply given updates 
through a briefing or some other form of communication once decisions 
were made?

    Response: No. VFW was not involved in the development of the SCIP 
process. However, the process closely resembles widely accepted capital 
asset management methods. The main difference between the capital plans 
is how they determine the urgency of repair. Commercial capital plans 
appear to base their decisions on usability while VA places more weight 
on safety while scoring capital priorities. I believe that the only 
place that VA could have sought input from VSOs would have been the 
scoring process through the six criteria that is used to determine the 
final ranking of asset gaps. Even though VSOs were not included in that 
process, VFW would not have weighted the process any differently.

    Question 2: The Independent Budget (IB) supports levels for minor 
and major construction well above the amounts recommended by the 
President's Budget. Please expand on your rationale for this 
recommended increase.

    Response: The Independent Budget (IB) minor construction accounts 
are very comparable to those of the Administration. The main difference 
in the levels can be found in the NCA construction accounts. The IB 
requests funding to complete all partially funded construction projects 
in FY 2012, while VA's plan takes multiple years to complete current 
projects.
    The defining difference between the IB recommendation and VA's 
requested funding levels in Major construction is in the amount of time 
that should be allowable to complete a partially funded project. VFW 
and the IB believe that no major project should take more than 5 years 
to fund. VA's FY 2012 plan funds most of its projects at a level that 
will only pay 10 percent of the needed funding. If this level of 
funding continues and VA is serious about following SCIP, they will 
need to fund at a much higher level to fulfill the capital asset gaps 
that have been identified.