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

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



 
 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

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               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.

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