House Report 109-643 - DEPARTMENT OF VETERANS AFFAIRS MEDICAL FACILITY AUTHORIZATION ACT OF 2006

[House Report 109-643]
[From the U.S. Government Publishing Office]

109th Congress Report
HOUSE OF REPRESENTATIVES
2d Session 109-643

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DEPARTMENT OF VETERANS AFFAIRS MEDICAL FACILITY AUTHORIZATION ACT OF
2006

_______

September 8, 2006.--Committed to the Committee of the Whole House on
the State of the Union and ordered to be printed

_______

Mr. Buyer, from the Committee on Veterans' Affairs, submitted the
following

R E P O R T

[To accompany H.R. 5815]

[Including cost estimate of the Congressional Budget Office]

The Committee on Veterans' Affairs, to whom was referred the
bill (H.R. 5815) to authorize major medical facility projects
and major medical facility leases for the Department of
Veterans Affairs for fiscal years 2006 and 2007, and for other
purposes, having considered the same, report favorably thereon
with amendments and recommend that the bill as amended do pass.
The amendments (stated in terms of the page and line numbers
of the introduced bill) are as follows:
Page 3, lines 9 and 14, insert ``or nearby'' after ``in''.
Page 19, after line 24, insert the following new section (and
conform the table of contents accordingly):

SEC. 13. REPORT ON OPTION FOR CONSTRUCTION OF A DEPARTMENT OF VETERANS
AFFAIRS MEDICAL CENTER IN OKALOOSA COUNTY, FLORIDA.

Not later than 180 days after the date of the enactment of
this Act, the Secretary of Veterans Affairs shall submit to the
Committees on Veterans' Affairs of the Senate and House of
Representatives a report identifying and outlining the various
options available to the Department for the placement of a
Department of Veterans Affairs Medical Center in Okaloosa
County, Florida. The report shall include the following:
(1) The feasibility of entering into a partnership
with Eglin Air Force Base for the construction and
operation of a new, joint Department of Veterans
Affairs-Department of Defense facility.
(2) The medical, legal, and financial implications of
each of the options identified, including
recommendations regarding any statutory changes
necessary for the Department to carry out any of the
options identified.
(3) A detailed cost-benefit analysis of each of the
options identified.
(4) Estimates regarding the length of time and
associated costs needed to complete such a facility
under each of the options identified.

Introduction

On Thursday, May 11, 2006, the full Committee held a
hearing that preceded the introduction of H.R. 5815, to
consider the Secretary of Veterans Affairs request for
authorization for several major construction projects and
leases which would improve, renovate and/or update patient care
facilities at various locations.
Witnesses who appeared before the Committee included
Honorable Richard H. Baker, Member of Congress from the State
of Louisiana; Honorable Charlie Melancon, Member of Congress
from the State of Louisiana; Honorable Tom Feeney, Member of
Congress from the State of Florida; Honorable Jonathan B.
Perlin, M.D., Ph.D., M.S.H.A., F.A.C.P., Under Secretary for
Health, Veterans Health Administration, accompanied by the
following individuals from the Department of Veterans Affairs
(VA): Honorable Tim S. McClain, General Counsel; Mr. Robert L.
Neary, Jr., Acting Chief Facilities Management Officer,
Veterans Health Administration; Cathleen C. Wiblemo, Deputy
Director, Veterans Affairs and Rehabilitation Commission, The
American Legion; Mr. Dennis Cullinan, Director National
Legislative Service, Veterans of Foreign Wars.
On July 17, 2006, Honorable Henry E. Brown, Jr. and
Honorable Michael H. Michaud, introduced H.R. 5815.
On July 20, 2006, the full Committee met and ordered H.R.
5815 reported favorably to the House by unanimous voice vote.

Summary of the Reported Bill

H.R. 5815, as amended, would:
1. Authorize the Secretary of Veterans Affairs to
carry out a major medical facility construction project
for restoration of the Department of Veterans Affairs
Medical Center (VAMC), Biloxi, Mississippi and
consolidation of services performed at the VAMC,
Gulfport, Mississippi, in an amount not to exceed
$310,000,000;
2. Authorize advance planning and design and site
preparation for a co-located, joint-use major medical
facility project in or near New Orleans, Louisiana with
the Louisiana State University, in an amount not to
exceed $100,000,000;
3. Authorize only advance planning and design for a
co-located, joint-use major medical facility project in
Charleston, South Carolina, with the Medical University
of South Carolina, in an amount not to exceed
$70,000,000;
4. Authorize the Secretary to enter into an agreement
to purchase a site for the replacement of the VAMC,
Denver, Colorado, in an amount not to exceed
$98,000,000;
5. Require VA to submit a report to the Committees on
Veterans' Affairs of the Senate and House of
Representatives on the viability of entering into a
public or suitable non-profit organization partnership
for the construction and operation of a facility that
would replace the current VAMC, Denver, Colorado, not
later than 180 days after the date of enactment;
6. Authorize the construction of an outpatient clinic
and regional office, at the VAMC, Anchorage, Alaska, in
an amount not to exceed $75,270,000;
7. Authorize the consolidation of clinical and
administrative functions of the VAMC in Cleveland,
Ohio, and the VAMC in Brecksville, Ohio, in an amount
not to exceed $102,300,000;
8. Authorize construction of an extended care
building at the VAMC in Des Moines, Iowa, in an amount
not to exceed $25,000,000;
9. Authorize the renovation of patient wards at the
VAMC in Durham, North Carolina, in an amount not to
exceed $9,100,000;
10. Authorize the correction of patient privacy
deficiencies at the VAMC in Gainesville, Florida, in an
amount not to exceed $85,200,000;
11. Authorize the 7th and 8th floor wards
modernization addition at the VAMC in Indianapolis,
Indiana, in an amount not to exceed $27,400,000;
12. Authorize the construction of a new medical
center facility at the VAMC in Las Vegas, Nevada, in an
amount not to exceed $406,000,000;
13. Authorize the construction of an ambulatory
surgery/outpatient diagnostic support center in the
Gulf South Submarket of Veterans Integrated Service
Network (VISN) 8 and completion of Phase 1 land
purchase, Lee County, Florida, in an amount not to
exceed $65,100,000;
14. Authorize seismic corrections, buildings 7 and
126, at the VAMC in Long Beach, California, in an
amount not to exceed $107,845,000;
15. Authorize seismic corrections, buildings 500 and
501, at the VAMC in Los Angeles, California, in an
amount not to exceed $79,900,000;
16. Authorize the construction of a new medical
center facility in the Orlando, Florida, area in an
amount not to exceed $377,700,000 and require the
facility be located at the site in Lake Nona known as
site selection C;
17. Authorize the consolidation of campuses at the
University Drive and H. John Heinz III divisions at the
VAMC in Pittsburgh, Pennsylvania, in an amount not to
exceed $189,205,000;
18. Authorize ward upgrades and expansion at the VAMC
in San Antonio, Texas, in an amount not to exceed
$19,100,000;
19. Authorize the construction of a spinal cord
injury center at the VAMC in Syracuse, New York, in an
amount not to exceed $77,700,000;
20. Authorize upgrades essential electrical
distribution systems at the VAMC in Tampa, Florida, in
an amount not to exceed $49,000,000;
21. Authorize the expansion of the spinal cord injury
center addition at the VAMC in Tampa, Florida, in an
amount not to exceed $7,100,000;
22. Authorize blind rehabilitation and psychiatric
bed renovations and a new construction project at the
VAMC in Temple, Texas, in an amount not to exceed
$56,000,000;
23. Authorize a lease for an outpatient clinic in
Baltimore, Maryland, in the amount of $10,908,000;
24. Authorize a lease for an outpatient clinic in
Evansville, Indiana, in the amount of $8,989,000;
25. Authorize a lease for an outpatient clinic in
Smith County, Texas, in the amount of $5,093,000;
26. Authorize a lease for an outpatient and specialty
care clinic in Austin, Texas, in the amount of
$6,163,000;
27. Authorize a lease for an outpatient clinic in
Lowell, Massachusetts, in the amount of $2,520,000;
28. Authorize a lease for an outpatient clinic in
Grand Rapids, Michigan, in the amount of $4,409,000;
29. Authorize up to four leases for outpatient
clinics in Las Vegas, Nevada, in the amount of
$8,518,000;
30. Authorize a lease for an outpatient clinic in
Parma, Ohio, in the amount of $5,032,000;
31. Authorize appropriations of $578,000,000 for
major medical facility projects in paragraphs 1 through
4 (above);
32. Authorize appropriations of $1,758,920,000 for
major medical facility projects in paragraphs 6 through
22 (above);
33. Authorize appropriations of $24,990,000 for
leases for FY 2006 in paragraphs 23 through 25 (above);
34. Authorize appropriations of $26,642,000 for
leases for FY 2007 in paragraphs 26 through 30 (above);
35. Require the VA to submit a report to the
Committees on Veterans' Affairs of the Senate and House
of Representatives on the viability of entering into a
public or suitable non-profit organization partnership
for the construction and operation of a facility that
would replace the current VAMC in San Juan, Puerto
Rico, not later than 180 days after the date of
enactment;
36. Allow the VA to transfer certain historic
properties on the Fort Thomas, KY campus of the
Cincinnati VAMC to the city of Fort Thomas for fair
market value;
37. Establish within the VA the position of Director,
Construction and Facilities Management. Require this
position to be a career appointment, the individual
appointed to meet certain qualifications and have
responsibility for Department-wide construction and
facility management;
38. Require the VA to submit to the Committees on
Veterans' Affairs of the Senate and House of
Representatives, not later than 180 days after the date
of enactment, a business plan for enhanced access to
outpatient care for primary, mental health and
specialty care through new sites of care, expansions at
existing sites, use of existing authority and policies
to contract for care where necessary, and increased use
of telemedicine in each of the following areas: (1) the
Lewiston-Auburn area of Maine; (2) the area of Houlton,
Maine; (3) the area of Dover-Foxcroft, Maine; and (4)
area of Whiteside County, Illinois;
39. Require the VA to submit to the Committees on
Veterans' Affairs of the Senate and House of
Representatives, not later than 180 days after the date
of enactment, a report on the options for the
construction of a new medical facility in Okaloosa
County, Florida.

Background and Discussion

Section 8104(a)(2) of title 38, United States Code,
requires Congressional authorization of any Department of
Veterans Affairs (VA) major medical facility construction
project, defined as a ``project for the construction,
alteration, or acquisition of a medical facility involving a
total expenditure of more than $7,000,000'' and any medical
facility lease with an annual lease payment of more than
$600,000.
In accordance with the law, on April 5, 2006, the Secretary
transmitted to the Speaker of the House of Representatives a
request for authorization of $1,606,000,000 for major facility
construction projects and $24,990,000 for major facility leases
for FY (FY) 2006 and $351,966,000 for major facility
construction projects and $26,642,000 for major facility leases
for FY 2007. In addition, the Department sought a three-year
extension of the authority granted it under section 221 of
Public Law 108-170 that authorized major construction projects
in connection with the Capital Asset Realignment for Enhanced
Services (CARES) initiative. This authority is set to expire on
September 30, 2006.
H.R. 5815 takes exception with certain of the
Administration's individual requests. A significant exception
is that the Committee, at this time, has chosen not to
authorize six requested FY 2007 major medical facility
construction projects requested by the Department. The
Committee is concerned that a lack of long-term strategic
planning related to infrastructure inside the VA has placed the
Department in a difficult position by allowing a great number
of major projects to accumulate over time. The Committee
encourages the Department to focus on those projects that: (1)
have been previously authorized and begun; (2) have been
authorized under CARES but not begun; and (3) have already
received appropriated dollars. As we have seen with the need
for significant and expensive Hurricane Katrina-related
construction, the VA capital plan requires constant monitoring,
frequent review and, at times, significant modification. It is
not the intent of the Committee to micromanage the VA
construction budget or to delay the Department's capital plan.
The Committee's actions should not be construed as a reflection
concerning the merits of the Department's FY 2007 major medical
facility requests, but rather the Committee wishes to ensure
that proper prioritization is applied to the Department's short
and long-term construction projects. Likewise, the Committee
has decided not to extend the Department's authority under
Public Law 108-170. The Committee believes that any authority
granted to the Department to undertake major medical facility
projects must be granted explicitly by the Committee and be
consistent with the Committee's oversight and authorization
authority.

MAJOR MEDICAL FACILITY PROJECTS

The Committee believes that VA collaboration with the
Department of Defense, its extensive State medical university
affiliations, and other public or suitable non-profit
partnerships, in order to maximize local health care economies
can, in many cases, be mutually advantageous for all
organizations and patient populations and be an important tool
in ensuring that veterans receive the best possible medical
care. The resulting reduction in capital and operational
expenditures and the elimination of duplicative clinical
facilities can result in greater resources being devoted to
direct patient care.
Biloxi, Mississippi: Section 2 of the bill, as amended,
would authorize the requested amount of $310,000,000 for the
restoration of the VA Medical Center in Biloxi, Mississippi and
to consolidate the services performed in Gulfport, Mississippi.
The Committee has also predicated this authorization on the
requirement that VA undertake this consolidation at Biloxi by
constructing a joint-use facility with Keesler Air Force Base.
New Orleans, Louisiana: The Secretary requested
$675,000,000 for the restoration, new construction or
replacement of the medical center facility in New Orleans,
Louisiana, that was damaged due to Hurricane Katrina. Section 3
of the bill, as amended, would only authorize advance planning
and design and site preparation for a co-located, joint-use
medical facility in an amount not to exceed $100,000,000. In
addition to the $75,000,000 provided for advance planning and
design in Public Law 109-148, the Administration requested
$600,000,000. Public Law 109-234 provided $550,000,000, subject
to authorization, of the requested $600,000,000. VA and
Louisiana State University (LSU) Health Care Services Division
signed a Memorandum of Understanding on February 23, 2006, to
establish a mutually beneficial relationship and to foster
discussions addressing the basic framework for a future VA and
LSU medical care delivery collaboration project. A joint
Collaborative Opportunities Study Group (COSG) was formed in
order to carry out that task. The COSG, comprised of experts
from both organizations, was directed to develop options for
shared facilities and/or services that take into account
quality, access, practicality and efficiency; to review related
information management systems and logistics; and to coordinate
related communication. The four-month study culminated with the
New Orleans COSG Report issued on June 12, 2006 with the
recommendation for the construction of essentially two
hospitals, a tower built and operated by VA, and another tower
built and operated by LSU. The two towers would be joined by a
corridor that would contain space for shared clinical services,
capital equipment and lab services. The June report projected
cost avoidances of nearly $400 million over the next 30 years.
Plans for the VA facility are still being developed and the
level of collaboration between VA and LSU is yet to be
determined. Therefore, the Committee has limited the
authorization to advance planning and design and site
preparation for a co-located, joint-use medical facility in or
near New Orleans, assuming that the Department and LSU can
adequately resolve outstanding operational issues. As a result
of the Committee's limitation, the Department will be required
to seek additional, specific authorization for the construction
of a facility in or around New Orleans, consistent with 38
U.S.C. Sec. 8104(a)(2).
The Committee supports the furtherance of the collaborative
investigation in New Orleans and the restoration of a strong VA
presence in and around New Orleans. The Committee is reluctant
to force the VA into a position of collaboration if the
potential relationship with LSU: (1) becomes too costly for the
Department (requiring additional VA resources above levels
identified under the various models contained in the COSG
report); (2) limits the economies of scale that can be realized
to a degree that collaboration no longer makes financial sense;
or (3) threatens to degrade the quality of care provided to
veterans in the region.
Charleston, South Carolina: In Charleston, South Carolina,
the Ralph H. Johnson VA Medical Center (VAMC) and the Medical
University of South Carolina (MUSC) Hospital reside in very
close physical proximity and currently have a strong
collaborative relationship with the sharing of medical staff
and research activities. Some 243 physicians who hold faculty
appointments at MUSC now treat veteran patients at the
Charleston VAMC, representing over 95 percent of the VAMC's
physician staff. The annual amount of clinical sharing between
VA and MUSC amounted to approximately $14,000,000 in 2005. Both
facilities also share some similar infrastructure challenges
including aging facilities, limited ingress and egress and
shortages of parking. MUSC is currently undertaking a five-
phase hospital replacement project that will increase inpatient
capacity from the current 600 beds to 800 beds. In the fall of
2004, MUSC secured $401 million in mortgage bonds insured by
the Department of Housing and Urban Development (HUD) Federal
Housing Administration. These HUD backed bonds provide the
resources needed by MUSC for the project. On April 8, 2005,
MUSC formally broke ground on Phase 1, the construction of a
new $276 million hospital. The new 156-bed hospital is expected
to open in early 2008.
On August 18, 2005, VA and MUSC signed a Memorandum of
Record, creating an ad hoc Collaborative Opportunities Steering
Group (COSG), to develop options for new shared facilities and
resources. Based on the final report, two options stand out as
the most viable, model A and model A-1. Model A would replace
all clinical services in the existing VA facility with
construction of a new VAMC as part of the next phase of MUSC
local construction. Additional inpatient capacity would be
built in order to accommodate additional beds needed by MUSC.
Bed space would be leased by MUSC and the VA would use the
revenue to enhance patient care at the new facility, while
maintaining the right of first refusal for veterans in the
event of a surge in demand or national emergency.
Model A-1 is a sub-option of Model A that would necessitate
MUSC funding its own adjacent bed tower, while still sharing
clinical services and the expense of high-cost capital medical
equipment. Lease revenue would be limited under this model
because MUSC would build its own bed capacity, but the initial
federal outlay would also be diminished. The COSG process
established in Charleston, SC provided a sound blueprint for
collaboration with MUSC. However, there are still outstanding
issues that need to be resolved.
On July 13, 2006, a second Memorandum was issued
establishing an ad hoc Collaborative Opportunities Planning
Group (COPG) to fully develop a viable venture that will create
synergy in the delivery of health care for veterans in this
region. Section 4 of the bill, as amended, would limit the
authorization to $70,000,000 for the advance planning and
design for a co-located, joint-use medical facility
incorporating the findings of the COPG. As a result of the
Committee's limitation, the Department will be required to seek
additional, specific authorization for the construction of a
facility in Charleston, consistent with 38 U.S.C.
Sec. 8104(a)(2).
Denver, Colorado: The Department requested $621,000,000 for
the replacement of the VAMC in Denver, Colorado. On May 20,
2004, the Capital Asset Realignment for Enhanced Services
(CARES) decision document provided notice to Congress of the
Secretary's decision to build a replacement VAMC through a
sharing agreement with the Department of Defense (DOD). The
facility was to be located on the Fitzsimons campus of the
University of Colorado and include some shared facilities with
the University of Colorado Hospital. However, to the
Committee's disappointment, the joint nature of this project
has since been lost. The VA now intends to erect a freestanding
medical center on the Fitzsimmons campus.
Section 5 of the bill, as amended, would limit the
authorization in the amount of $98,000,000 for VA to purchase a
site for the replacement of the Denver VAMC and require VA to
report to the Committee identifying and outlining the various
options available to the Department for the replacement of the
facility. The Committee encourages VA to consider financing
relationships that may be seen as unique to the Department, but
that may also require significantly diminished up-front capital
outlay by the Department. Furthermore, the Committee would
encourage working with other federal, state, local or not-for-
profit entities to develop a suitable financing model that
could be exported to other facilities requiring replacement
throughout the Department. The Committee expects that any
financing options be consistent with the goal of improving
veteran access to the highest quality medical care.
Extension of Authorizations: The Secretary requested the
extension of authorization for 18 major medical facility
construction projects previously authorized in previously
authorized under Public Law 108-170, but for which it is
unlikely that contract awards will be accomplished by September
30, 2006, as required by that law. Section 6 of the bill, as
amended, authorizes 17 of these major medical facility
construction projects that were identified and prioritized
under the CARES process. Two of the projects are for the
construction of new medical centers in Las Vegas, Nevada and
Orlando, Florida. In January, 2006, VA released a list of
potential sites for the Orlando facility. One of the sites,
site selection C, at Lake Nona is of particular interest to the
Committee because this site would be part of a developing
medical park. As currently envisioned, the development would
consist of a 200 acre mixed-use, academic, and medical and
research campus containing the University of Central Florida
(UCF) Science and Research Park, Healthcare Campus and newly
proposed medical college. The bill would require VA to select
the Lake Nona site for construction of the facility. The Lake
Nona site has the distinct advantage of providing VA the means
to partner with the new medical school at UCF to share
facilities and personnel. The Committee believes that
collaboration between VA and its medical affiliations benefits
veterans and the country by providing additional resources for
innovative and cutting edge technologies and enhanced access
and quality of care.
Major Medical Facility Leases: Section 7 of the bill, as
amended, would authorize the three major medical facility
leases requested for outpatient clinics for FY 2006 in
Baltimore, Maryland; Evansville, Indiana, and Smith County,
Texas and appropriations of $24,990,000 to support them.
Section 8 of the bill, as amended, would authorize the
requested major medical facility leases for FY 2007 in Austin,
Texas; Lowell, Massachusetts; Grand Rapids, Michigan; Las
Vegas, Nevada (up to four Outpatient Clinics); and Parma, Ohio
and would appropriate $26,642,000 to support them.
San Juan, Puerto Rico: The San Juan VAMC is a 319 acute
care bed facility with documented condition deficiencies.
Deficiencies in the aging structure include: (1) insufficient
space; (2) lack of patient privacy (especially for female
veterans); (3) issues relating to access for those with
disabilities; (4) significant parking problems; (5) seismic
vulnerabilities; (5) asbestos abatement requirements that are
time consuming, expensive, and challenging; (6) aging air
conditioning and ventilation systems; and (7) inadequate water
storage capabilities. In October 2002, a decision was made to
develop a 2-phased strategy: Phase 1--a new bed tower with 314
beds in 6 floors; Phase 2--seismically correct main building
with renovations that would include asbestos abatement,
sprinklers, and utility improvements. On April 14, 2006, an
$84,050,000 construction contract was awarded to Heery
International/PMC for Phase 1 (the South Bed Tower). The
building is expected to be completed in May 2009. The existing
facility space is approximately 630,845 departmental gross
square feet (DGSF). The proposed new bed tower would provide an
additional 250,000 DGSF. However, the CARES process determined
that San Juan, based on current and projected workload requires
1,283,547 DGSF. The current two-phase plan still falls short of
the requirements identified under CARES by nearly 402,702 DGSF.
Given the documented substantial facility deficiencies, the
Committee is concerned about funding expensive renovations in
San Juan that will ultimately fail to meet capacity needed to
handle the projected workload.
Section 9 of the bill, as amended, expresses the sense of
Congress that VA should take steps to explore all options for
addressing that concerns regarding future capacity and would
require the VA to report to the Committees of Veterans' Affairs
outlining the various financing options available, including
engaging federal, state, local or not-for-profit entities to
develop suitable financing models that would minimize the up-
front capital outlay required by the Department.
Director, Construction and Facilities Management: The
Committee is concerned that the VA has not built a major
medical facility in over a decade and the Department lacks the
consolidated authority and institutional expertise to oversee
the management of major construction and leasing programs and
administration activities for the Department. Consistent with
the recommendations contained in the Secretary's Construction
Advisory Board Committee Report, Section 11 of the bill, as
amended, establishes a new career position with responsibility
for construction and facilities management across all segments
of the Department. The position will provide direct support to
the Secretary and will report to the Deputy Secretary of the
Department. The individual's responsibilities shall include
installation planning, engineering and architecture, facility
design and construction, lease administration and management,
space planning and management, maintenance, repair and
alterations, custodial, building management and administration,
maintenance of roads and grounds, acquisition, property
management, furnishings, and supplies and equipment. The
individual selected for this position shall develop and update
short and long range strategic capital investments strategies.
The Committee is committed to reinstituting a sense of
centralized, consolidated institutional knowledge within the
Department in the areas of construction and project management
for all major medical facilities and minor, local projects. By
adding this position, the Committee is also attempting to
ensure that significant prioritization of major medical
projects is undertaken, that the future Departmental workload
is understood and the infrastructure accurately supports the
out-year health care demands of the veteran population.

BUSINESS PLANS

Section 12 of the bill, as amended, requires the VA to
submit a business plan for enhanced access to outpatient care
for primary care, mental health care, and specialty care to the
Committees on Veterans' Affairs no later than 180 days after
enactment. The business plan is to cover the Lewiston-Auburn
area of Maine; the area of Houlton, Maine; the area of Dover-
Foxcroft, Maine; and Whiteside County, Illinois. In exploring
enhanced access, the VA is to include one or more of the
following: new sites of care; expansions at existing sites of
care; use of existing authority and policies to contract for
care when necessary; and increased use of telemedicine. The
committee urges the Department to consider naming any new or
expanded facility in Whiteside County, Illinois after the
ranking Member of the Committee, Honorable Lane Evans.

Section-by-Section Analysis

Section 1(a) of the bill would name the Act the
``Department of Veterans Affairs Medical Facility Authorization
Act of 2006''.
Section 1(b) of the bill would provide the Table of
Contents.
Section 2(a) of the bill would authorize the Secretary of
Veterans Affairs to carry out a major medical facility project
for restoration of the Department of Veterans Affairs Medical
Center (VAMC), Biloxi, Mississippi, and consolidation of
services performed at the VAMC, Gulfport, Mississippi.
Section 2(b) of the bill would prohibit appropriated funds
for major medical facility projects listed in subsection (a)
from exceeding $310,000,000.
Section 2(c) of the bill would require the project
authorized by subsection (a) to be carried out as part of a
joint-use facility shared by VA with Keesler Air Force Base in
Biloxi, Mississippi.
Section 3(a) of the bill would authorize the Secretary to
enter into an agreement with Louisiana State University to
design, construct, and operate a co-located, joint-use medical
facility to replace the VAMC, New Orleans, Louisiana damaged by
Hurricane Katrina in August 2005. Authority under this section
would be restricted to advance planning and design and site
preparation.
Section 3(b) of the bill would restrict costs for the
advance planning and design and site preparation for a co-
located, joint use medical facility authorized under subsection
(a) to an amount not to exceed $100,000,000.
Section 4(a) of the bill would authorize the Secretary to
enter into an agreement with the Medical University of South
Carolina to design, construct, and operate a co-located joint-
use medical facility in Charleston, South Carolina, to replace
the Ralph H. Johnson VAMC, Charleston, South Carolina.
Authority under this section is limited to advanced planning
and design of the facility.
Section 4(b) of the bill would limit costs for the advance
planning and design for a co-located, joint use medical
facility authorized under subsection (a) to an amount not to
exceed $70,000,000.
Section 5(a) of the bill would authorize the Secretary to
enter into an agreement to purchase a site to replace the VAMC,
Denver, Colorado, in an amount not to exceed $98,000,000.
Section 5(b) of the bill would require the Secretary to
submit a report no later than 180 days after date of enactment
to the Committees on Veterans' Affairs of the Senate and House
of Representatives to identify and outline the various options
available to VA for replacement of the current VAMC, Denver,
Colorado. The report should include: (1) the feasibility of
entering into a partnership with a Federal, State, or local
governmental agency, or a suitable non-profit agency, for the
construction and operation of a new medical facility; (2) the
medical, legal, and financial implications of the identified
options, including recommendations regarding any necessary
statutory changes for the Department to carry out any of the
identified options; (3) a detailed cost-benefit analysis of
each identified option; and (4) estimates on the time frame and
associated costs needed to complete a new facility under each
of the identified options.
Section 6 of the bill would extend authorization for the
following major medical facility projects, requiring each
project to be carried out in the amount specified for that
project: (1) construction of an outpatient clinic and regional
office at the VAMC, Anchorage, Alaska, in an amount not to
exceed $75,270,000; (2) consolidation of clinical and
administrative functions of the VAMC, Cleveland, Ohio, and the
VAMC, Brecksville, Ohio, in an amount not to exceed
$102,300,000; (3) construction of an extended care building at
the VAMC, Des Moines, Iowa, in an amount not to exceed
$25,000,000; (4) renovation of patient wards at the VAMC,
Durham, North Carolina, in an amount not to exceed $9,100,000;
(5) correction of patient privacy deficiencies at the VAMC,
Gainesville, Florida, in an amount not to exceed $85,200,000;
(6) modernization addition of the seventh and eighth floor
wards at the VAMC, Indianapolis, Indiana, in an amount not to
exceed $27,400,000; (7) construction of a new medical center
facility at the VAMC, Las Vegas, Nevada, in an amount not to
exceed $406,000,000; (8) construction of an ambulatory surgery/
outpatient diagnostic support center in the Gulf South
Submarket of VISN 8 and completion of Phase I land purchase,
Lee County, Florida, in an amount not to exceed $65,100,000;
(9) seismic corrections to buildings 7 and 126 at the VAMC,
Long Beach, California, in an amount not to exceed
$107,845,000; (10) seismic corrections to buildings 500 and 501
at the VAMC, Los Angeles, California, in an amount not to
exceed $79,000,000; (11) construction of a new medical center
facility, Orlando, Florida, to be located in Lake Nona known as
site selection C, directly south of the interchange between SR-
417 and Lake Nona Boulevard, in an amount not to exceed
$377,700,000; (12) consolidation of campuses at the University
Drive and H. John Heinz III divisions, Pittsburgh,
Pennsylvania, in an amount not to exceed $189,205,000; (13)
upgrades and expansion to wards at the VAMC, San Antonio,
Texas, in an amount not to exceed $19,100,000; (14)
construction of a spinal cord injury center at the VAMC,
Syracuse, New York, in an amount not to exceed $77,700,000;
(15) upgrade of essential electrical distribution systems, at
the VAMC, Tampa, Florida, in an amount not to exceed
$49,000,000; (16) expansion of the spinal cord injury center
addition at the VAMC, Tampa, Florida, in an amount not to
exceed $7,100,000; and (17) blind rehabilitation and
psychiatric bed renovation and new construction project at the
VAMC, Temple, Texas, in an amount not to exceed $56,000,000.
Section 7(a) of the bill would authorize the Secretary to
carry out the following major medical facility leases in FY
2006 at the following locations, in an amount not to exceed the
amount specified for that location: (1) outpatient clinic in
Baltimore, Maryland, $10,908,000; (2) outpatient clinic in
Evansville, Illinois, $8,989,000; and (3) outpatient clinic in
Smith County, Texas, $5,093,000.
Section 7(b) of the bill would authorize the Secretary to
carry out the following major medical facility leases in FY
2007 at the following locations, in an amount not to exceed the
amount specified for that location: (1) outpatient and
specialty care clinic in Austin, Texas, $6,163,000; (2)
outpatient clinic in Lowell, Massachusetts, $2,520,000; (3)
outpatient clinic in Grand Rapids, Michigan, $4,409,000; (4) up
to four outpatient clinics in Las Vegas, Nevada, $8,518,000;
and (5) outpatient clinic in Parma, Ohio, $5,032,000.
Section 8(a) of the bill would authorize appropriations to
the Secretary for FY 2006 in the total amount of $578,000,000
for the Construction, Major Projects, account, of which: (1)
$310,000,000 is for the Biloxi and Gulfport, Mississippi,
projects authorized in section 2; (2) $100,000,000 is for the
advanced planning and design in New Orleans, Louisiana,
authorized in section 3; (3) $70,000,000 is for the purchase of
a site in Charleston, South Carolina, authorized in section 4;
and (4) $98,000,000 is for the purchase of a site in. Denver,
Colorado, authorized in section 5.
Section 8(b) of the bill would authorize appropriations for
major medical facility projects under the capital asset
realignment initiative: (1) authorization of appropriations for
FY 2007 for the Construction, Major Projects, account,
$1,758,920,000 for the projects specified in section 5; and (2)
amounts appropriated in accordance with the authorization in
paragraph (1) would remain available until September 30, 2009.
Section 8(c) of the bill would authorize appropriations for
major medical facility leases: (1) authorization for
appropriations for FY 2006 for the Medical Care account,
$24,990,000 for the leases authorized in section 6(a),
Baltimore, Maryland; Evansville, Illinois; and Smith County,
Texas; and (2) authorization for appropriations for FY 2007 for
the Medical Care account, $26,642,000 for the leases authorized
in section 6(b), Austin, Texas; Lowell, Massachusetts; Grand
Rapids, Michigan; Las Vegas, Nevada; and Parma, Ohio.
Section 8(d) of the bill would require the projects
authorized in sections 2, 3, 4, and 5 to be only carried out
using only: (1) funds appropriated for FY 2006 or 2007 pursuant
to the authorization of appropriations in subsections (a), (b),
and (c) of section 7; (2) funds available for Construction,
Major Projects, for a fiscal year before FY 2006 that remain
available for obligation; (3) funds available for Construction,
Major Projects, for a fiscal year after FY 2006 or 2007 that
are available for obligation; and (4) funds appropriated for
Construction, Major Projects, for FY 2006 or 2007 for a
category of activity not specific to a particular project.
Section 9(a) of the bill would recognize the need for
medical facility improvements that are not currently being
adequately addressed in San Juan, Puerto Rico and the sense of
Congress that the Secretary should take steps to explore all
options to address the concern, including a possible public or
suitable non-profit partnership to build and operate a facility
to replace the current VA medical center in San Juan, Puerto
Rico.
Section 9(b) of the bill would require the Secretary to
submit a report, no later than 180 days after date of
enactment, to the Committees on Veterans' Affairs of the Senate
and House of Representatives on the feasibility of entering
into a public or suitable non-profit partnership for the
construction and operation of a replacement facility for the
current VA medical center in San Juan, Puerto Rico. The report
should include the following: (1) the feasibility of entering
into a partnership with a Federal, State, or local governmental
agency, or a suitable non-profit agency, for the construction
and operation of a new medical facility; (2) the medical,
legal, and financial implications of the identified options,
including recommendations regarding any necessary statutory
changes for the Department to carry out any of the identified
options; (3) a detailed cost-benefit analysis of each
identified option; and (4) estimates on the time frame and
associated costs needed to complete a new facility under each
of the identified options.
Section 10(a) of the bill would authorize the Secretary to
transfer to the city of Fort Thomas, Kentucky, all right,
title, and interest of the United States in and to a piece of
real property, including the 15 structures located on the
property, consisting of approximately 11.75 acres that is
managed by the Department and located in northeast Tower Park
in Fort Thomas. The transfer would be subject to existing
rights, easements, and rights-of-way.
Section 10(b) of the bill would require the city of Fort
Thomas, Kentucky, to pay an amount equal to the fair market
value of the transferred real property to the United States, to
be determined by the Secretary, as consideration for the land
transfer under subsection (a).
Section 10(c) of the bill would authorize the Secretary, at
his discretion, to deposit the payment received under
subsection (b) in the ``Medical facilities'' account or the
``Construction, minor projects account'' to be available,
without limitation: (1) to cover costs incurred by the
Secretary due to environmental remediation of the property
before transfer under subsection (a); and (2) to cover, with
any remaining funds, costs required under paragraph (1), for
acquisition of a site for use as a parking facility, or
contract (by lease or otherwise) for a parking facility
operation to be used at the VAMC in Cincinnati, Ohio.
Section 10(d) of the bill would release the United States
from being liable for damages due to negligence by the U.S. or
any employee or agent of the U.S. before the date of
conveyance, consistent with chapter 171 of Title 28, United
States Code.
Section 10(e) of the bill would that (1) the city of Fort
Thomas, Kentucky, cover any costs incurred by the Secretary, or
to reimburse the Secretary for such costs, to carry out the
conveyance under subsection (a), including costs related to
surveys, environmental documentation, and other related
administrative costs. The Secretary would be required to refund
any excess amount if the amounts are collected from the city of
Fort Thomas, Kentucky, before the Secretary incurred any actual
costs and the collected amount exceeds the actual cost incurred
by the Secretary to carry out the conveyance; and (2) amounts
received as reimbursement under paragraph (1) would be credited
to the fund or account used for the costs incurred. Credited
amounts would be merged with other amounts in the fund or
account and would be available for the same purposes, and
subject to the same conditions and limitations.
Section 10(f) of the bill would require the exact acreage
and legal description of the conveyed real property under
subsection (a) be determined by a survey satisfactory to the
Secretary.
Section 10(g) of the bill would authorize the Secretary to
require any additional terms and related conditions with the
conveyance under subsection (a) as the Secretary believes
necessary to protect the interests of the U.S.
Section 11(a) of the bill would amend Chapter 3 of title
38, United States Code, to add a new section 312A after section
312.
New Section 312A(a) would create a new career position,
Director, Construction and Facilities Management, with
responsibility for managing construction and facilities across
the Department, including all major and minor construction
projects. The individual is to be appointed by the Secretary
and provide direct support to the Secretary while reporting to
the Deputy Secretary of the Department.
New Section 312A(b) would require the individual appointed
as Director, Construction and Facilities Management, to: (1)
hold an undergraduate or master's degree in architectural
design or engineering; and (2) have substantive professional
experience with construction project management.
New Section 312A(c) would require the individual appointed
as Director, Construction and Facilities Management, to be
responsible for overseeing and managing the planning, design,
construction, and facilities operation (including
infrastructure) of VA's major and minor construction projects
and perform other duties requested by the Secretary. Oversight
and management responsibilities would include all of the
following: (1) developing and updating short and long-range
strategic capital investment strategies and plans; (2)
planning, designing, and building facilities, determining
architectural and engineering requirements, as well as ensuring
compliance with all laws relating to VA's construction program;
(3) overseeing and managing the construction of VA facilities;
(4) managing VA's short and long-term leasing activity; (5)
repairing and maintaining VA's facilities, including custodial
services, building management and administration, and roads,
grounds, and infrastructure maintenance; and (6) managing the
procurement and acquisition process, including the award of
contracts related to design, construction, furnishing, and
supplies and equipment.
Section 11(b) of the bill would amend the table of sections
at the beginning of chapter 3 by inserting ``312A. Director,
Construction and Facilities Management'' after section 312.
Section 12(a) of the bill would require the Secretary to
submit to the Committees on Veterans' Affairs of the Senate and
House of Representatives, no later than 180 days after
enactment of this Act, a business plan for enhanced access to
outpatient care (described in subsection (b)) for primary care,
mental health care, and specialty care in each of the following
areas: (1) the Lewiston-Auburn area of Maine; (2) the area of
Houton, Maine; (3) the area of Dover-Foxcroft, Maine; and (4)
Whiteside County, Illinois.
Section 12(b) of the bill would enhance access to
outpatient care to be covered by the business section under
subsection (a), with respect to each area specified, one or
more of the following: (1) new sites of care; (2) expansions at
existing sites of care; (3) use of existing authority and
policies to contract for care where necessary; and (4)
increased use of telemedicine.
Section 13 of the bill would require a report, not later
than 180 days after date of enactment of this Act, be submitted
from the Secretary to the Committees on Veterans' Affairs of
the Senate and House of Representatives identifying and
outlining various options available to VA regarding the
placement of a VAMC in Okaloosa County, Florida. The report
should include: (1) the feasibility of entering into a
partnership with Eglin Air Force Base for the construction and
operation of a new, joint VA-DOD facility; (2) the medical,
legal, and financial implications of each of the options
identified, including recommendations on any statutory changes
needed for VA to carry out the any of the identified options;
(3) a detailed cost-benefit analysis for each identified
option; and (4) estimates on the length of time and associated
costs needed to complete such a facility under each identified
option.

Performance Goals and Objectives

STATEMENT OF THE VIEWS OF THE ADMINISTRATION

Statement of the Honorable Jonathan B. Perlin, MD, Under Secretary for
Health

Mr. Chairman and members of the Committee, good afternoon.
I am pleased to appear here this afternoon to provide you with
an overview of the Department of Veterans Affairs' (VA)
construction program and 5 Year Capital Plan. I will also
provide information on VA's portfolio management approach and
how the Capital Asset Realignment for Enhanced Services (CARES)
process and the Enhanced-Use Leasing program play an integral
role in the management of VA's portfolio.
VA has a vast holding of diverse capital assets consisting
of buildings and real estate, VA-leased buildings, enhanced-use
leases, and infrastructure. Assets include hospitals, clinics,
cemeteries, and office buildings. Many of these facilities
currently are used, managed, and maintained in relation to and
for promotion of the respective activities of VA's Veterans
Health Administration (VHA), Veterans Benefits Administration
(VBA), National Cemetery Administration (NCA), and Staff
Offices (General Administration). At the close of FY 2005, VA
held 1,053 operating leases, and owned 5,306 buildings and
32,527 acres of land. Various construction programs are used to
fund infrastructure for the Department. Operating dollars fund
lease requirements and maintenance projects. The major
construction program provides for constructing, altering, and
improving any VA facility with a total project cost over $7
million and the minor construction program funds construction
activities under $7 million. Two grant programs are also
utilized for building or improving state veterans cemeteries
and state nursing homes and domiciliary facilities.
The VA FY 2007 budget request includes $714 million in
capital funding. Our request includes $399 million for major
construction projects, $198 million for minor construction, $85
million in grants for the construction of state extended care
facilities, and $32 million in grants for the construction of
state veterans cemeteries.
The 2007 request for construction funding for our medical
facilities is $457 million--$307 million for major construction
and $150 million for minor construction. These resources will
be devoted to implementing projects identified in the Capital
Asset Realignment for Enhanced Services (CARES) program. The
projects will renovate and modernize VA's health care
infrastructure and provide greater access to high-quality care
for veterans. VA also received funds enacted in the Hurricane
Katrina emergency supplemental funding in late December 2005:
$293 million to fund a CARES project for a new hospital in
Biloxi, Mississippi: and $75 million for planning and design
for the restoration/replacement of the medical center facility
in New Orleans, Louisiana. To date, including the FY 2007
budget request, VA will have received in excess of $3 billion
to implement CARES. In addition, VA currently has an emergency
supplemental request for $600 million before the Congress for
the construction funding of the restoration/replacement of the
medical center facility in New Orleans.
Our FY 2007 major construction request for health care will
fund the continued development of two medical facility
projects--$97.5 million to address seismic corrections in Long
Beach (California); and $52.0 million to continue the work
necessary to prepare for construction of a new medical center
facility in Denver (Colorado). In addition, our request for
major construction funding includes $38.2 million to construct
a new nursing home care unit and new dietetics space, as well
as to improve patient and staff safety by correcting seismic,
fire, and life safety deficiencies at American Lake
(Washington); $32.5 million for a new spinal cord injury center
at Milwaukee (Wisconsin); $25.8 million to replace the
operating room suite at Columbia (Missouri); and $7.0 million
to design improvements through renovation and new construction
to reduce underutilized vacant space located at the Jefferson
Barracks Division campus at St. Louis (Missouri) as well as
provide land for expansion at the Jefferson Barracks National
Cemetery.
We also requested $53.4 million in major construction
funding and $25.0 million in minor construction resources to
support our burial program. This includes funds for cemetery
expansion and improvement at Great Lakes, Michigan ($16.9
million), Dallas/Ft. Worth, Texas ($13.0 million), and Gerald
B. H. Solomon, Saratoga, New York ($7.6 million). Our request
will also provide $2.3 million in design funds to develop
construction documents for gravesite expansion projects at
Abraham Lincoln National Cemetery (Illinois) and at Quantico
National Cemetery (Virginia). In addition, the major
construction request includes $12 million for the development
of master plans and the initial design for six new national
cemeteries in areas directed by the National Cemetery Expansion
Act of 2003--Bakersfield, California; Birmingham, Alabama;
Columbia-Greenville, South Carolina; Jacksonville, Florida;
Sarasota County, Florida; and southeastern Pennsylvania.

CARES

Former Secretary Anthony Principi formed the Capital Asset
Realignment for Enhanced Services (CARES) Commission to conduct
a ``comprehensive, system-wide approach, identifying the demand
for VA care and projecting into the future the appropriate
function, size, and location for VA facilities.'' The CARES
Commission submitted findings and recommendations in February
of 2004, and on May 7, 2004, the Secretary released his CARES
Decision based on the Commission's findings and recommendations
for each CARES site. This CARES decision became VA's roadmap
into the future.
Since that time, much has been done to move these
infrastructure improvements forward. Architectural and
engineering firms have been retained to prepare designs and 12
construction contracts have been awarded and are underway. An
additional 12 construction contracts are planned to be awarded
by the end of this Fiscal Year. These projects bring needed
improvements for veterans at these locations.
Public Law 108-170 provided the Secretary with interim
authority to proceed with CARES approved projects subject to a
45-day notice to the Committees. This legislation was used to
provide authorization for the first 30 CARES projects. The
legislation will sunset on September 30, 2006. Fourteen
projects authorized under this public law are not likely to
award construction contracts by September 30 and four
additional projects which will have construction underway will
have second phases of construction that will begin later.
Therefore, the Department has requested an extension of that
authority until September 30, 2009 in the FY 2007 Budget, 5
Year Capital Plan, and the Omnibus 2006-2007 Construction
Authorization Bill. Also in need of authorization are three
projects: Biloxi, Mississippi; Denver, Colorado; and New
Orleans, Louisiana, for which the Department has identified as
an immediate need in FY 2006. A request for authorization for
medical facility leases for FY 2006 and FY 2007 construction
projects and medical facility leases are also included in the
budget request, capital plan, and authorization bill, which was
transmitted to Congress on April 5, 2006. In total, VA is
requesting authorization of $3.7 billion for major medical
facility projects and $51.6 million for major medical facility
leases.

5 YEAR CAPITAL PLAN

The Department's 5 Year Capital Plan is the ultimate
product of VA's capital investment process, which reflects
trade-offs between funding the operational expenses for
existing assets and the acquisition of new assets by the most
cost-effective and beneficial means. The VA capital plan
includes the highest priority capital investments that were
vetted through a comprehensive Department-wide capital
investment process to ensure the assets fully support the
mission, vision, and goals of the agency. The plan outlines
VA's implementation of the CARES decisions. The plan also
includes descriptions of other initiatives and capital asset
management tools that VA is utilizing to better manage its
large capital portfolio.
For FY 2007 the capital plan is published together with the
Department's construction budget. Combining the two documents
provides a comprehensive view of the VA construction budget for
2007 and plans for the future.

ENHANCED-USE LEASING

VA utilizes a capital asset management tool called
``enhanced-use leasing'' (EU leasing) to better manage its
vacant and underutilized real property assets. The authority
was initially authorized in 1991, is codified at 38 U.S.C.
Sec. Sec. 8161-8169, and currently is set to expire on December
31, 2011. It permits VA to lease Department-controlled real
property to private or other public entities for a term not-to-
exceed 75 years. Each lease must be in exchange for ``fair
consideration'' as determined by the Secretary. Such
consideration may consist of monetary, and/or ``in-kind''
consideration including construction, repair, remodeling,
improvements, or maintenance services for Department
facilities, or the provision of office, storage, or other
usable space.
The EU leasing program has enabled VA to leverage its
diverse, underutilized real estate portfolio to generate
significant revenues. Such revenues are redirected towards the
healthcare and capital operations of our medical centers, which
serve our nation's veterans daily. It also has resulted in
several privately-financed, developed, and operated facilities
which provide valuable, mission-compatible services to the
Department and eligible veterans, non-veterans, and VA
employees. Such facilities and services have included co-
generation energy services, office facilities, parking
facilities, hospice care, mental health, single-room occupancy
(homeless shelters), affordable housing, transitional housing,
low-cost senior housing, and child daycare services. Notably,
VA's varied EU leases also have resulted in a substantial
short- and long-term stimulus for the impacted local, state,
and federal governments and economies, due to tax revenues,
sales, and job creation.
In FY 2005, through its EU lease program, VA received over
$900,000 worth of in-kind consideration, and $28,000,000 via a
single payment of monetary consideration. The EU Leasing
program is a proven method of leveraging VA's diverse real
estate portfolio and market position.

VA'S PORTFOLIO MANAGEMENT APPROACH

VA utilizes a three-tiered portfolio management approach.
This approach is the blueprint for VA portfolio management
nationwide.
First, VA manages what we have more effectively through
Federal Real Property Council (FRPC) performance standards as
well as using unique technology-assisted inventory management
system. VA is committed to four metrics that set the goals for
performance. They include: (1) the percent of space utilization
as compared to overall space (owned and direct leased); (2) the
percent condition index (owned buildings); (3) the ratio of
non-mission-dependent assets to total assets; and (4) the ratio
of operating costs per gross square foot (GSF) adjusting for
inflation. These goals are based on the FRPC standards for
performance measurement in capital portfolio management.
VA is striving to utilize information technology and
established capital asset management principles to improve the
management of its capital resources. VA created the Capital
Asset Management System (CAMS), an integrated, Department-wide
system, enabling VA to analyze, monitor, and manage VA's
portfolio of capital assets. Data are organized and presented
to strategically monitor performance against capital asset
goals within and across asset types and VA Administrations
(VHA, VBA, and NCA).
Secondly, VA selects prudent capital investments through
appropriated dollars. VA uses appropriated dollars to manage
CARES capital investment projects that have proven to be sound
investments. Each project's performance is measured to ensure
the best use of our overall portfolio needs. This innovative
approach has allowed VA to manage underutilized assets in a
more efficient and cost-effective manner.
VA's third approach is the use of its enhanced-use leasing
authority, which has been previously mentioned. Over the past
14 years VA has awarded 47 projects through the enhanced-use
leasing authority. An additional 100 initiatives are being
studied, of which 45 projects are currently active.

CLOSING

In summary, Mr. Chairman, the $714 million that VA is
requesting in FY 2007, in addition to the $293 million provided
in the Hurricane Katrina emergency supplemental, will provide
the resources necessary for the Department to:
Continue implementation of the infrastructure
improvements identified in CARES to insure that facilities are
available to support the provision of timely, high-quality
health care to nearly 5.3 million patients. It is important to
note that 79 percent are among those who need VA the most--
those with service-connected disabilities, lower incomes, or
special health care needs;
Increase access to our burial program by ensuring
that nearly 84 percent of veterans will be served by a burial
option in a national or state veterans cemetery within 75 miles
of their residence; and
Provide safe and secure facilities for the
Department built to current specifications to withstand natural
and manmade disasters.
I look forward to working with the members of this
committee to continue the Department's tradition of providing
timely, high-quality benefits and services to those who have
helped defend and preserve freedom round the world. I would be
pleased to answer any questions the committee may have.

Congressional Budget Office Cost Estimate

U.S. Congress,
Congressional Budget Office,
Washington, DC, August 30, 2006.
Hon. Steve Buyer,
Chairman, Committee on Veterans' Affairs,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 5815, the
Department of Veterans Affairs Medical Facility Authorization
Act of 2006.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Michelle S.
Patterson.
Sincerely,
Robert P. Murphy
(For Donald B. Marron, Acting Director).
Enclosure.

H.R. 5815--Department of Veterans Affairs Medical Facility
Authorization Act of 2006

Summary: H.R. 5815 would authorize funding for the
construction, renovation, improvement or leasing of over two
dozen medical facilities by the Department of Veterans Affairs
(VA). The bill would specifically authorize the appropriation
of $578 million for four projects in 2006, $1.76 billion for 18
projects in 2007, and $52 million for the leasing of eight
clinics in 2006 and 2007. It would also authorize VA to sell a
certain property to the city of Fort Thomas, Kentucky.
CBO estimates that implementing H.R. 5815 would cost $114
million in 2007 and about $2.4 billion over the 2007-2011
period, assuming appropriation of the necessary amounts. (We
estimate no additional spending in fiscal year 2006 since the
year is nearly completed. Most of the 2006 funding authorized
by H.R. 5815 has already been appropriated.) CBO estimates that
enacting the bill would also affect direct spending in 2007,
but that the changes would have no net effect.
H.R. 5815 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would impose no costs on state, local, or tribal
governments. Louisiana State University would benefit from the
authorization of a joint project with the VA, and the city of
Fort Thomas, Kentucky, would benefit from the conveyance of
land. Any costs to those entities would be incurred as a
condition of participating in voluntary federal activities.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 5815 is show in the table below. This
estimate assumes the legislation will be enacted near the end
of fiscal year 2006, that the necessary funds for implementing
the bill will be provided each year, and that outlays will
follow historical spending patterns for existing or similar
programs. The costs of this legislation fall within budget
function 700 (veterans benefits and services) and 800 (general
government).

----------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-----------------------------------------------------------
2006 2007 2008 2009 2010 2011
----------------------------------------------------------------------------------------------------------------
SPENDING SUBJECT TO APPROPRIATION \1\

Spending under current law for major construction of
veterans medical facilities:
Budget authority................................ 1,583 0 0 0 0 0
Estimated outlays............................... 167 412 504 499 273 128
Proposed changes:
Major medical facility projects:
Estimated authorization level............... 168 1,770 476 0 0 0
Estimated outlays........................... 0 114 544 736 607 292
Leases for medical facilities:
Estimated authorization level............... 0 52 20 20 20 20
Estimated outlays........................... 0 0 0 46 23 20
Total changes:
Estimated authorization level........... 168 1,822 496 20 20 20
Estimated outlays....................... 0 114 544 782 630 312
Spending under H.R. 5815:
Estimated authorization level................... 1,751 1,822 496 20 20 20
Estimated outlays............................... 167 526 1,048 1,281 903 440
----------------------------------------------------------------------------------------------------------------
\1\ H.R. 5815 also would affect direct spending, but the changes would have no net effect.

Basis of estimate: H.R. 5815 contains provisions that would
authorize appropriations for major construction and the leasing
of medical facilities by VA. It also would require VA to
prepare several reports addressing specific construction
issues. In addition, it also would authorize the sale of VA
property to a local government.

Spending subject to appropriation

CBO estimates that implementing H.R. 5815 would cost $114
million in 2007 and about $2.4 billion over the 2007-2011
period, assuming appropriation of the necessary amounts (see
the table above).
Major Medical Facility Projects. Sections 2 through 6 would
authorize work on a number of medical facility projects. CBO
estimates that implementing these five sections would cost $114
million in 2007 and about $2.3 billion over the 2007-2011
period, assuming appropriation of the necessary amounts.
Section 6 would authorize the construction, renovation,
repairs and upgrades of 17 medical facilities across the
county. Projects range from the construction of a new medical
center facility in Las Vegas to the expansion of the Spinal
Cord Injury Center in Tampa. The bill would authorize $1.76
billion in 2007 for these projects.
Sections 2 and 3 would authorize for 2006 the restoration
or replacement of two medical centers damaged by Hurricane
Katrina, for which most of the necessary funding has already
been appropriated. Public Law 109-148 provided almost $293
million for the restoration of the Biloxi, Mississippi, medical
center, and Public Law 109-234 provided almost $36 million for
the cleanup of this center (along with another nearby medical
facility). Based on VA's current estimate of the total costs of
$310 million, CBO estimates no more funds would need to be
appropriated to restore the Biloxi medical center.
Public Law 109-148 provided $75 million for the planning of
a replacement facility in New Orleans, and Public Law 109-234
provided $550 million for construction of this project. Based
on VA's current estimate of the total construction costs of
$636 million, CBO estimates that the bill would authorize the
appropriation of an additional $11 million for the New Orleans
medical center. (That amount is included in the estimated
authorization level for 2007 in the table above.)
Section 5 would authorize the appropriation of funds to be
used for the purchase of land for a new medical center in
Denver. In 2004, $30 million was appropriated for this project,
and H.R. 5815 would authorize an additional $98 million for
2006, much of which would be used to acquire the necessary
land.
Section 4 would authorize the Secretary of VA to enter into
an agreement with the Medical University of South Carolina to
design, construct, and operate a medical facility in Charleston
to replace the existing VA medical center. The bill would
specifically authorize $70 million in 2006 for the planning of
this facility. A December 2005 report from a working group that
studied the feasibility of this joint venture advised that the
construction model which would optimize the benefits for each
party could cost $546 million to design and build. Because this
construction project was not listed as one of VA's priorities
in the 2007 budget request, CBO assumes that building this
facility would not begin until 2008.
Leases for Medical Facilities. Section 7 would authorize
the Secretary of VA to lease facilities for eight outpatient
clinics. VA reports that there would be no spending for any of
these leases until 2009 because all of the facilities would
have to undergo improvements that would allow them to be used
as clinics. For all eight clinics, the bill would authorize the
appropriation of $52 million to make lump-sum payments for the
cost of modifications along with the first year's rent when
construction is complete. (That amount is included in the
estimated authorization level for 2007 in the table above.)
Though the bill only authorizes payments for the first
year, CBO assumes that VA would enter into 20-year agreements
at an estimated cost of about $20 million a year. Thus, CBO
estimates that implementing this section would cost $46 million
in 2009 and $90 million over the 2009-2011 period, assuming
appropriation of the necessary amounts.
Other Provisions. The following provisions would have an
insignificant budgetary impact on discretionary spending:
Sections 9 and 13 would require VA to prepare
reports on the options and costs for the construction of two
new medical facilities.
Section 11 would create a new position in VA to
oversee construction projects and facilities management.
Section 12 would require VA to prepare a business
plan for improved access to care in four specific areas of the
country.

Direct spending

Section 10 would authorize VA to retain and spend the funds
received from the sale of specified land and buildings to the
city of Fort Thomas, Kentucky. Based on information from VA,
CBO expects that, under H.R. 5815, VA would sell that property
for about $3 million. CBO believes that VA would not sell the
property without the authorization to retain the funds, which
is not allowed under current law. Since the proceeds from the
sale would be spent, however, there would be no net effect on
direct spending.
Intergovernmental and private-sector impact: H.R. 5815
contains no intergovernmental or private-sector mandates as
defined in UMRA and would impose no costs on state, local, or
tribal governments.
Previous CBO estimate: On August 3, 2006, CBO transmitted a
cost estimate for S. 3421, a bill to authorize major medical
facility projects and major medical facility leases for the
Department of Veterans Affairs for fiscal years 2006 and 2007,
and for other purposes, as ordered reported by the Senate
Committee on Veterans' Affairs on June 22, 2006. Many of the
provisions in H.R. 5815 are similar or identical to provisions
in S. 3421, and would have similar or identical costs. The
differences in estimated costs between those estimates reflect
differences in the bills.
Sections 2 and 3 of H.R. 5815, which would authorize the
construction of facilities in New Orleans and Biloxi, are
similar to parts of section 1 of S. 3421, and the estimated
costs for those facilities are identical. Section 5, which
concerns the replacement of a medical center in Denver, would
authorize the appropriation of $98 million for that project,
while the Senate bill would authorize $52 million. Section 4 of
H.R. 5815 would authorize a facility in Charleston, while S.
3421 contains no such provision.
Section 6 of this bill, which would authorize several
construction projects for 2007, is similar to section 2 of S.
3421, except that H.R. 5815 would not authorize seismic
corrections for a medical center in San Juan, Puerto Rico. The
differences in estimated costs for those projects reflect
differences in the provisions. In addition, H.R. 5815 would
authorize the appropriation of about $24 million more than
would be authorized by S. 3421 for the construction of a spinal
cord injury center in Syracuse, New York.
The provisions that would authorize the leasing of medical
facilities are identical, the appropriation of as are the
estimated costs. The provisions in sections 9 through 13 in
H.R. 5815 are not in S. 3421. Those sections would require VA
to prepare certain reports, create a new administrative
position, and prepare a specific business plan.
Estimate prepared by: Federal costs: Michelle S. Patterson;
Impact on State, local and tribal governments: Melissa Merrell;
Impact on the private sector: Allison Percy.
Estimate approved by: Peter H. Fontaine, Deputy Assistant
Director for Budget Analysis.

Statement of Federal Mandates

The preceding Congressional Budget Office cost estimate
states that the bill contains no intergovernmental or private
sector mandates as defined in the Unfunded Mandates Reform Act.

Statement of Constitutional Authority

Pursuant to Article I, section 8 of the United States
Constitution, the reported bill is authorized by Congress'
power to ``provide for the common Defense and general Welfare
of the United States.''

ADDENDUM

MAJOR MEDICAL FACILITY PROJECTS REQUESTED BY MEMBERS
------------------------------------------------------------------------
Description of
H.R. 5815 Provision Amount Requestors
------------------------------------------------------------------------
Sec. 4......... Advance planning $70,000,000 Hon. Steve Buyer
and design for a and Hon. Henry
co-located, joint- E. Brown, Jr.
use major medical
facility project
in Charleston,
South Carolina,
with the Medical
University of
South Carolina.
------------------------------------------------------------------------

Changes in Existing Law Made by the Bill, as Reported

In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italic and existing law in which no change is
proposed is shown in roman):

TITLE 38, UNITED STATES CODE

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PART I--GENERAL PROVISIONS

* * * * * * *

CHAPTER 3--DEPARTMENT OF VETERANS AFFAIRS

Sec.
301. Department.
* * * * * * *
312A. Director, Construction and Facilities Management.
* * * * * * *

Sec. 312A. Director, Construction and Facilities Management

(a) Career Position.--There is in the Department the position
of Director, Construction and Facilities Management. The
position of Director, Construction and Facilities Management,
is a career position with responsibility for construction and
facilities management across the Department, including
responsibility for all major and minor construction projects.
The individual appointed as Director shall be appointed by the
Secretary and shall provide direct support to the Secretary and
report to the Deputy Secretary of the Department.
(b) Qualifications.--The individual appointed to the position
of Director, Construction and Facilities Management, shall be
an individual who--
(1) holds an undergraduate or master's degree in
architectural design or engineering; and
(2) has substantive professional experience in the
area of construction project management.
(c) Responsibilities.--The individual appointed to the
position of Director, Construction and Facilities Management,
shall be responsible for overseeing and managing the planning,
design, construction, and facilities operation, including
infrastructure, of the Department's major and minor
construction projects and performing such other functions as
the Secretary prescribes. Such oversight and management
responsibilities shall include each of the following:
(1) Developing and updating short and long-range
strategic capital investment strategies and plans.
(2) Planning, designing, and building facilities,
determining architectural and engineering requirements
as well as ensuring compliance with all applicable laws
relating to the Department's construction program.
(3) Overseeing and managing the construction of
Department facilities.
(4) Managing the Department's short and long-term
leasing activity.
(5) Repairing and maintaining the Department's
facilities, including custodial services, building
management and administration, and maintenance of
roads, grounds, and infrastructure.
(6) Managing the procurement and acquisition
processes, including contract award related to design,
construction, furnishing, and supplies and equipment.

* * * * * * *