[House Report 113-284]
[From the U.S. Government Publishing Office]
113th Congress Report
HOUSE OF REPRESENTATIVES
1st Session 113-284
======================================================================
DEPARTMENT OF VETERANS AFFAIRS MAJOR MEDICAL FACILITY LEASE
AUTHORIZATION ACT OF 2013
_______
December 9, 2013.--Committed to the Committee of the Whole House on the
State of the Union and ordered to be printed
_______
Mr. Miller of Florida, from the Committee on Veterans' Affairs,
submitted the following
R E P O R T
[To accompany H.R. 3521]
[Including cost estimate of the Congressional Budget Office]
The Committee on Veterans' Affairs, to whom was referred
the bill (H.R. 3521) to authorize Department of Veterans
Affairs major medical facility leases, and for other purposes,
having considered the same, report favorably thereon without
amendment and recommend that the bill do pass.
CONTENTS
Page
Purpose and Summary.............................................. 2
Background and Need for Legislation.............................. 3
Hearings......................................................... 10
Committee Consideration.......................................... 10
Committee Votes.................................................. 10
Committee Oversight Findings..................................... 10
Statement of General Performance Goals and Objectives............ 10
New Budget Authority, Entitlement Authority, and Tax Expenditures 10
Earmarks and Tax and Tariff Benefits............................. 11
Committee Cost Estimate.......................................... 11
Congressional Budget Office Estimate............................. 11
Federal Mandates Statement....................................... 15
Advisory Committee Statement..................................... 15
Statement of Constitutional Authority............................ 15
Applicability to Legislative Branch.............................. 15
Statement on Duplication of Federal Programs..................... 15
Disclosure of Directed Rulemaking................................ 16
Section-by-Section Analysis of the Legislation................... 16
Changes in Existing Law Made by the Bill as Reported............. 18
Purpose and Summary
H.R. 3521, the ``Department of Veterans Affairs Major
Medical Facility Lease Authorization Act of 2013,'' was
introduced by Representative Jefferson Miller of Florida,
Chairman of the Committee on Veterans' Affairs, on November 18,
2013.
H.R. 3521 would:
1. Authorize the Department of Veterans Affairs (VA) to
carry out specified major medical facility leases (requested by
the Department in the fiscal year 2014 budget submission) at
the following locations: (1) Albuquerque, NM, for an amount of
$9,560,000; (2) Brink, NJ, for an amount of $7,280,000; (3)
Charleston, SC, for an amount of $7,070,250; (4) Cobb County,
GA, for an amount of $6,409,000; (5) Honolulu, HI, for an
amount of $15,887,370; (6) Johnson County, KS, for an amount of
$2,263,000; (7) Lafayette, LA, for an amount of $2,996,000; (8)
Lake Charles, LA, for an amount of $2,626,000; (9) New Port
Richey, FL, for an amount of $11,927,000; (10) Ponce, PR, for
an amount of $11,535,000; (11) San Antonio, TX, for an amount
of $19,426,000; (12) San Diego, CA, for an amount of
$11,946,100; (13) Tyler, TX, for an amount of $4,327,000; (14)
West Haven, CT, for an amount of $4,883,000; (15) Worcester,
MA, for an amount of $4,855,000; (16) Cape Girardeau, MO, for
an amount of $4,232,060; (17) Chattanooga, TN, for an amount of
$7,069,000; (18) Chico, CA, for an amount of $4,534,000; (19)
Chula Vista, CA, for an amount of $3,714,000; (20) Hines, IL
for an amount of $22,032,000; (21) Houston, TX, for an amount
of $6,142,000; (22) Lincoln, NE, for an amount of $7,178,400;
(23) Lubbock, TX, for an amount of $8,554,000; (24) Myrtle
Beach, SC, for an amount of $8,022,000; (25) Phoenix, AZ, for
an amount of $20,757,000; (26) Redding, CA, for an amount of
$8,154,000; and (27) Tulsa, OK, for an amount of $13,269,200.
2. Make the following Congressional findings: (1) VA is
required under title 31, United States Code (U.S.C.), to record
the full cost of its contractual obligation against funds
available at the time a contract is executed; (2) the Office of
Management and Budget (OMB) Circular A-11 provides guidance to
agencies in meeting the requirements of title 31, U.S.C., with
respect to leases; and, (3) OMB Circular A-11 requires VA to
record the up-front budget authority for operating leases in
the amount of the total payments under the full term of the
lease or sufficient payments to cover the first year lease
payments plus cancellation costs.
3. Require VA, subject to the availability of
appropriations provided in advance, to record the full cost of
the contractual obligation at the time a contract is executed
either in an amount equal to total payments required under the
full term of the lease; or equal to an amount sufficient to
cover the first year lease payments and any specified
cancellation costs in the event that the lease is terminated
before its full term.
4. Require VA to provide a detailed analysis of how such
lease is expected to comply with OMB Circular A-11 and section
1341 of title 31, U.S.C. in a prospectus for a proposed lease.
5. Require VA to submit to the Committees on Veterans'
Affairs not less than 30 days before entering into a major
medical facility lease, the following information: (1) notice
of the intent to enter into a lease; (2) a copy of the proposed
lease; (3) an explanation of any difference between the
prospectus and the lease submitted under this subsection; and
(4) a scoring analysis demonstrating compliance with OMB
Circular A-11.
6. Require VA to submit to the Committees on Veterans'
Affairs a report of any material differences between the lease
VA ultimately enters into and the proposed lease in VA's
prospective not less than 30 days after entering into a major
medical facility lease.
7. Stipulate that the legislation does not relieve VA from
any statutory or regulatory obligation or requirements existing
prior to the enactment of the legislation.
Background and Need for Legislation
VA is the third largest real property owner in the Federal
government, maintaining more than 170 million square feet of
medical facilities and administrative space across
approximately 7,786 buildings located on more than 35 thousand
acres of land. The Veterans Health Administration (VHA) is
comprised of approximately 5,439 buildings across more than
14.8 million square feet. VHA's capital asset portfolio
includes both VA-owned and VA-leased property. As of November
2012, VHA encompassed approximately 1,636 leased assets.
Section 8104 of title 38, U.S.C., requires that VA major
medical facility leases, defined as ``a lease for space for use
as a new medical facility at an average annual rent of more
than $1 million,'' be specifically authorized by law.
To obtain Congressional authorization, VA is required to
submit a prospectus containing detailed information about each
proposed lease. According to the statute, each prospectus
should include a detailed description of the proposed project;
the estimated total cost of the project; estimated equipment
costs; current and projected operating costs; demographic data;
current and projected workload and utilization data; and, the
priority score assigned to the lease under the Department's
prioritization methodology.
VA's fiscal year (FY) 2013 and 2014 budget submission
requested authorization for the following 27 major medical
facility leases.
Albuquerque, New Mexico: VA's FY 2013 and 2014 budget
submissions request $9.56 million for the replacement of the
current leased space containing the Clinical Research Pharmacy
Coordinating Center (CRPCC) in Albuquerque, New Mexico.
According to VA, the proposed replacement lease would continue
valuable and unique programs which include all pharmaceutical,
regulatory, and research participant safety monitoring support
for all VA Cooperative Studies Programs aimed at improving
veteran health. The current lease agreement for the existing
facility is set to expire on August 31, 2015. The proposed
leased facility would occupy 80,000 net usable square feet.
Brick, New Jersey: VA's FY 2013 and 2014 budget submissions
request $7.28 million for a replacement community based
outpatient clinic (CBOC) in Brick, New Jersey, supporting the
parent facility, the East Orange Campus of the New Jersey
Veterans Health Care System. According to VA, the proposed
replacement CBOC lease would expand the current facility by
increasing the net usable square feet from 34,000 to 60,000,
which would accommodate future workload growth and allow for
expanded services including, radiology, dental, optometry,
physical therapy, and ophthalmology care.
Charleston, South Carolina: VA's FY 2013 and 2014 budget
submissions request $7.07 million for leasing of a Clinical
Annex Lease in Charleston, South Carolina, which will allow for
relocation and consolidation of services with another expiring
lease, and expansion of services in support of the parent
facility of the Charleston VA Medical Center. According to VA,
the proposed lease would provide expanded services, increase
access to care for veteran patients, and address future
utilization, workload and space requirements. The proposed
leased facility would occupy 75,000 net usable square feet and
would serve approximately 20,722 veterans.
Cobb County; Georgia: VA's FY 2013 and 2014 budget
submissions request $6.41 million for a new, leased CBOC in
northern Cobb County, Georgia, to consolidate and expand
services currently offered at an existing CBOC that supports
the Atlanta VA Medical Center. According to VA, the proposed
leased facility would expand outpatient and mental health care
services, increasing access to veterans in Northern Cobb
County. The proposed leased facility would occupy 64,000 net
usable square feet and be expected to serve approximately
64,000 veterans.
Honolulu, Hawaii: VA's FY 2013 and 2014 budget submissions
request $15.89 million for a new lease of an outpatient medical
care center in Ewa Plain, Oahu, Hawaii. According to VA, the
proposed leased facility would increase access to primary care,
mental health care, specialty care, radiology care, laboratory
services, pharmacy services, and telehealth services, while
lessening the need for veteran travel to the Honolulu VA
medical center. The proposed leased facility would encompass a
collocated clinic for military branch entities, with VA and the
Department of Defense sharing clinical, ancillary, and support
functions. It would also allow for the collocation of several
VA functions, including the Veterans Benefits Administration
Honolulu Regional Office and the Kapolei Vet Center. The
proposed leased facility would occupy 118,823 net usable square
feet.
Johnson County, Kansas: VA's FY 2013 and 2014 budget
submissions request $2.26 million for a new CBOC lease in
Johnson County, Kansas. According to VA, the proposed leased
facility would increase access to care for Johnson County
veterans who currently travel more than 30 minutes to access
care at the Kansas City VA medical center and provide
comprehensive outpatient services as well as ancillary and
support services including radiology care and laboratory and
pharmacy services. The proposed leased facility would occupy
22,910 net usable square feet and would be expected to serve
approximately 11,327 veterans.
Lafayette, Louisiana: VA's FY 2013 and 2014 budget
submissions request $2.99 million for a replacement CBOC in
Lafayette, Louisiana. According to VA, the proposed leased
facility would mitigate space and workload gaps throughout
Veterans Integrated Service Network 16 and alleviate the need
for veterans to travel 180 miles to the Alexandria VA medical
center. It would also provide increased access to primary,
specialty, mental health, and women's health care and dental,
imaging, physical therapy, urology, ophthalmology, and
dermatology services to Louisiana veterans. The proposed leased
facility would occupy 29,224 net usable square feet and serve
approximately 7,227 veterans.
Lake Charles, Louisiana: VA's FY 2013 and 2014 budget
submissions request $2.63 million for a new CBOC in Lake
Charles, Louisiana. According to VA, the proposed leased
facility would provide outpatient services that would alleviate
current access deficiencies. The proposed leased facility would
occupy 24,088 net usable square feet and would be expected to
serve approximately 6,000 veterans.
New Port Richey, Florida: VA's FY 2013 and 2014 budget
submissions request $11.93 million for a new CBOC in New Port
Richey, Florida. According to VA, the proposed lease facility
would consolidate and expand services currently offered in five
different clinics located within 20 miles of New Port Richey
into one, single facility and provide access to expanded
outpatient services. The proposed leased facility would occupy
114,000 net usable space square feet and would be expected to
serve approximately 14,845 veterans.
Ponce, Puerto Rico: VA's FY 2013 and 2014 budget
submissions request $11.54 million for a replacement CBOC lease
in Ponce, Puerto Rico. According to VA, the proposed leased
facility would provide expanded outpatient services to address
utilization and space deficiencies and reduce patient waiting
and travel times. The current CBOC lease will expire in
February 2015. The proposed leased facility would occupy
114,300 net usable square feet and would be expected to serve
approximately 11,619 veterans.
San Antonio, Texas: VA's FY 2013 and 2014 budget
submissions request $19.43 million for a replacement Outpatient
Clinic (OC) lease in San Antonio, Texas. According to VA, the
proposed leased facility would replace and consolidate the
current OC, two annex leases, three specialty care clinic
leases, and one contract clinic. The new consolidated clinic
would provide increased access to expanded services including
primary, mental health, specialty, surgery, dental, vision, and
women's health care. The proposed leased facility would occupy
190,800 net usable square feet and would be expected to serve
approximately 55,753 veterans.
San Diego, California: VA's FY 2013 and 2014 budget
submissions request $11.95 million for a replacement CBOC lease
in San Diego, California. According to VA, the proposed leased
facility would integrate primary, mental health, and specialty
care and ancillary services and provide increased access to
expanded services including women's health, audiology, eye, and
blind rehabilitation care. It would also increase operational
efficiencies. The proposed leased facility would occupy 99,986
net usable square feet and would be expected to serve
approximately 32,832 veterans.
Tyler, Texas: VA's FY 2013 and 2014 budget submissions
request $4.33 million for a replacement CBOC lease in Tyler,
Texas. According to VA, the proposed leased facility would
consolidate services currently offered in two existing CBOCs,
which would improve the provision of primary, specialty, and
mental health care to Texas veterans. It would also alleviate
current primary and specialty care deficiencies in the Smith
County, Texas, area and lessen the need for veterans to travel
to the Dallas VA medical center for some specialty services.
The proposed leased facility would occupy 48,425 net usable
square feet and would serve approximately 4,489 veterans.
West Haven, Connecticut: VA's FY 2013 and 2014 budget
submissions request $4.88 million for a new Community Care
Center lease in West Haven, Connecticut. According to VA, the
proposed leased facility would replace and expand the current
Errera Community Center, which provides intensive support
services, substance use counseling, psychosocial
rehabilitation, and integrated psychosocial and biomedical
treatment to aging veterans, at-risk veterans, and veterans
with mental health issues. The proposed facility would occupy
45,000 net usable space square feet.
Worcester, Massachusetts: VA's FY 2014 budget submissions
request $4.86 million for a replacement CBOC lease in
Worcester, Massachusetts. According to VA, the proposed leased
facility would replace the current CBOC and alleviate existing
space deficiencies. It would provide increased access to
outpatient primary care and other services including
cardiology, audiology, dermatology, geriatric, nutritional,
vision, imaging, and mental health services. The proposed
leased facility would occupy 40,000 net usable square feet.
Cape Girardeau, Missouri: VA's FY 2014 budget submissions
request $4.23 million for a new CBOC lease in Cape Girardeau,
Missouri. According to VA, the proposed leased facility would
enhance existing VA outpatient services in the Cape Girardeau
area and alleviate existing patient waiting times and space,
utilization, and parking deficiencies. It would also provide
increased access to primary, specialty, women's, and mental
health care and rehabilitative, home health, and ancillary
services. The proposed leased facility would occupy
approximately 43,000 net usable square feet and would be
expected to serve 4,997 veterans.
Chattanooga, Tennessee: VA's FY 2014 budget submissions
request $7.07 million for the expansion of a multispecialty
CBOC in Chattanooga, Tennessee. According to VA, the proposed
leased facility would expand clinical services and increase
access to primary, specialty, and mental health care. It would
also provide increased access to outpatient services and
alleviate existing patient waiting times, and space
deficiencies. The proposed leased facility would occupy 75,000
net usable square feet and would serve approximately 18,322
veterans.
Chico, California: VA's FY 2014 budget submissions request
$4.53 million for a replacement CBOC lease in Chico,
California. According to VA, the proposed leased facility would
replace the existing Chico CBOC and increase access to
telemedicine services including, allergy, nephrology,
rheumatology, infectious disease, and immunology services. It
would also alleviate existing patient waiting times and
projected utilization and space needs. The proposed leased
facility would occupy 42,000 net usable square feet and would
be expected to serve approximately 8,489 veterans.
Chula Vista, California: VA's FY 2014 budget submissions
request $3.71 million for a replacement CBOC lease in Chula
Vista, California. According to VA, the proposed leased
facility would address current and projected space shortages
and provide increased access to audiology, speech pathology,
vision, mental health, laboratory, radiology, and primary care.
The proposed leased facility would occupy 31,000 net usable
square feet and would be expected to serve 7,327 veterans.
Hines, Illinois: VA's FY 2014 budget submissions request
$22.03 million for a new research lease in Hines, Illinois.
According to VA, the proposed leased facility would alleviate
current facility condition deficiencies and provide a safe
research space in support of multiple VA research programs
including Basic Laboratory Research and Development and Health
Services Research and Development. The proposed leased facility
would occupy 164,000 net usable square feet and would replace
the outdated current research facility that was built in 1921.
Houston, Texas: VA's FY 2014 budget submissions request
$6.14 million for a replacement research lease in Houston,
Texas. According to VA, the proposed leased facility would
replace the existing research lease and support increases in
grant funding and a new Veteran Engineering Resource Center, as
well as provide space for research-related equipment, library,
offices, and meeting rooms. The proposed leased facility would
occupy 48,000 net usable square feet.
Lincoln, Nebraska: VA's FY 2014 budget submissions request
$7.18 million for a new CBOC lease in Lincoln, Nebraska.
According to VA, the proposed leased facility would integrate
the delivery of primary, specialty, and mental health care and
ancillary services and allow for the replacement of the current
84-year-old facility. The proposed leased facility would occupy
72,000 net usable square feet and would be expected to serve
approximately 15,200 veterans.
Lubbock, Texas: VA's FY 2014 budget submissions request
$8.55 million for a new CBOC lease in Lubbock, Texas. According
to VA, the proposed leased facility would replace the current
Lubbock CBOC, increase access to outpatient services, and
alleviate existing patient waiting time and space deficiencies.
It would also increase access to endoscopy, day surgery,
gastroenterology, and audiology care to Texas veterans. The
proposed leased facility would occupy 94,000 net usable square
feet.
Myrtle Beach, South Carolina: VA's FY 2014 budget
submissions request $8.02 million for a new CBOC lease in
Myrtle Beach, South Carolina. According to VA, the new leased
facility would replace and consolidate two existing CBOCs and
accommodate projected workload and space needs. It would also
accommodate projected workload increases. The proposed leased
facility would occupy 84,000 net usable square feet and would
serve approximately 11,106 veterans.
Phoenix, Arizona: VA's FY 2014 budget submissions request
$20.76 million for a new CBOC lease in Phoenix, Arizona.
According to VA, the proposed leased facility would enhance VA
outpatient services and alleviate existing patient waiting
time, and workload and space deficiencies. It would also allow
for increased education, recruitment, and research initiatives
in closer proximity to the Phoenix VA health care system's
university affiliate. The proposed leased facility would occupy
203,000 net usable square feet and would be expected to serve
approximately 64,878 veterans.
Redding, California: VA's FY 2014 budget submissions
request $8.15 million for a replacement CBOC lease in Redding,
California. According to VA, the proposed leased facility would
replace the current Redding CBOC and accommodate patient
workload growth in primary, specialty, and mental health care.
It would also increase access to telemedicine and improve
clinical, administrative, and support function workspace. The
proposed leased facility would occupy 77,000 net usable square
feet and would serve approximately 14,856 veterans.
Tulsa, Oklahoma: VA's FY 2014 budget submissions request
$13.27 million for a replacement CBOC in Tulsa, Oklahoma.
According to VA, the proposed leased facility would replace the
existing Tulsa OC and Tulsa Behavioral Medicine Clinic,
increase access to VA outpatient services, and alleviate
existing patient waiting time, utilization, and space
deficiencies. It would also improve the provision of primary,
specialty, surgical and mental health care and imaging,
laboratory, and pharmacy services to Oklahoma veterans. The
proposed leased facility would occupy 140,000 net usable square
feet and would be expected to serve approximately 25,806
veterans.
Deficiencies in VA's lease procurement and management process
It is the responsibility of the Committee to ensure that VA
is given the appropriate authority to undertake necessary
capital investments for the purpose of effectively serving our
nation's veterans and ensuring access to the care and services
they need. The Committee is deeply troubled by the ineffective
management and deficiencies uncovered through Committee
oversight of VA's lease procurement process. On October 22,
2013, the VA Inspector General (IG) issued a report, entitled,
``Review of VA's Management of Health Care Center Leases.'' The
findings in this report substantiate the ongoing significant
and serious failures in VA's lease procurement and management.
Specifically, the IG found:
--Lack of Guidance--VA's management of the timeliness
and costs in the Health Care Center (HCC) lease
procurement process has been ineffective due to the
lack of guidance available for planning lease projects
with such high annual rent as the HCCs;
--Inaccurate Milestones--VA established identical
milestones for completing the seven HCCs even though
the projects varied in size and budget and failed to
meet the milestones, in spite of providing Congress
with an aggressive project schedule;
--Lack of Documentation--VA could not provide
documentation to support whether the Department
adequately assessed the feasibility of accomplishing
the HCCs in the promised 32-month time frame; and,
--Lack of Central Tracking--VA could not provide
accurate information on HCC spending into April 2013 as
central cost tracking was not in place to ensure
transparency and accurate reporting of all HCC
expenditures.
The IG recommended that VA: (1) establish adequate guidance
for management of the procurement process of large-scale build-
to-lease facilities; (2) provide realistic and justifiable
timelines for HCC completion; (3) ensure HCC project analyses
and key decisions are supported and documented; and, (4)
establish central cost tracking to ensure transparency and
accurate reporting of HCC expenditures.
VA concurred with each of the IG's recommendations. It is
the Committee's expectation that VA will fully implement each
of these recommendations prior to initiating lease procurement
in the 27 major medical facility leases included in this
legislation.
Budgetary treatment of VA Major Medical Facility Leases
The Anti-Deficiency Act (31 U.S.C. Sec. 1341(a)(1)
prohibits federal employees from making or authorizing an
expenditure from, or creating or authorizing an obligation
under, any appropriation or fund in excess of the amount
available in the appropriation or fund unless authorized by
law, and involving the government in any obligation to pay
money before funds have been appropriated for that purpose,
unless otherwise allowed by law, in addition to other
requirements. OMB Circular A-11 provides instructions to
agencies on the budgetary treatment of lease-purchase and
leases of capital assets consistent with the scorekeeping rules
originally promulgated in connection with the Budget
Enforcement Act of 1990 (BEA) and the Anti-Deficiency Act.
Agencies are required to obligate at the time they enter into a
binding commitment budget authority in the amount necessary to
cover the Government's legal obligations, consistent with the
requirements of the Anti-Deficiency Act and in the manner
directed in OMB Circular A-11. OMB Circular A-11 and the Anti-
Deficiency Act require budgeting for both the estimated total
payments expected to arise under the full term of the contract
or, if the contract includes a cancellation clause, an amount
sufficient to cover the lease payments for the first year plus
an amount sufficient to cover the costs associated with
cancellation of the contract.
After receiving information about how VA had exercised the
authority provided in prior VA major medical facilities leasing
authorizations, the Congressional Budget Office (CBO) has
concluded that VA has been entering into binding obligations
for the full period of the lease. Consistent with the
longstanding laws and budget rules discussed above, VA is
required to obligate the budget authority upfront for the full
amount of those obligations. This is consistent with the plain
language of the law, OMB's A-11 guidance, and the underlying
principle of congressional control over public spending.
There is serious doubt as to whether VA has been properly
recording the cost of its leases when using the leasing
authority provided in the prior medical facilities
authorizations acts. Given VA's prior practice, CBO has
determined that VA has implemented priori authorizations as if
they provided contract authority, a type of mandatory budget
authority that permits an agency to enter into obligations on
behalf of the U.S. Government in advance of funds being
appropriated to liquidate that obligation. This legislation
includes language designed to ensure that VA exercises the
authority provided in this legislation consistent with the
express congressional intent that the agency only enter into
binding commitments on behalf of the U.S. Government once funds
have been appropriated for the purpose of that proposed
commitment and that VA obligate the full cost of that
commitment at the time it executes the lease.
Specifically in furtherance of congressional intent, the
legislation would:
(1) require VA to comply with the Anti-Deficiency Act
and OMB Circular A-11 in exercising the authority to
enter into leases provided by the bill;
(2) authorize VA to enter into obligations on behalf
of the U.S. Government only to the extent amounts are
provided in advance in appropriations acts;
(3) require VA to provide a lease analysis to
Congress prior to signing any lease agreement under the
authority provided in this bill including detailed
information on how it is exercising its leasing
authorities in compliance with OMB Circular A-11 and
the Anti-Deficiency Act; and,
(4) require VA to submit to Congress, not more than
30 days after entering into a major medical facility
lease, a report on any material differences between the
lease that was entered into and the proposed lease,
including how the lease that was entered into changes
the previously submitted scoring analysis.
If VA fails to faithfully execute the intent of this
legislation and to comply with the longstanding laws governing
obligations, Congress will revisit this issue in the context of
future requests for leasing authority.
Hearings
On June 27, 2013, the Full Committee held an oversight
hearing regarding the implications of CBO's scoring of major
medical facility lease authorizations and possible alternate
options for effectively meeting the care needs of veterans.
Committee Consideration
On November 20, 2013, the Full Committee met in an open
markup session, a quorum being present and ordered H.R. 3521
reported favorably to the House of Representatives by voice
vote.
Committee Votes
Clause 3(b) of rule XIII of the Rules of the House of
Representatives requires the Committee to list the recorded
votes on the motion to report the legislation and amendments
thereto. There were no recorded votes taken on amendments or in
connection with ordering H.R. 3521 reported to the House. A
Motion by Mr. Michaud of Maine to order H.R. 3521 reported
favorably to the House of Representatives was agreed to by
voice vote.
Committee Oversight Findings
In compliance with clause 3(c) of rule XIII and clause
(2)(b)(1) of rule X of the Rules of the House of
Representatives, the Committee's oversight findings and
recommendations are reflected in the descriptive portions of
this report.
Statement of General Performance Goals and Objectives
In accordance with rule 3(c)(4) of rule XIII of the Rules
of the House of Representatives, the Committee's performance
goals and objectives are reflected in the descriptive portions
of this report.
New Budget Authority, Entitlement Authority, and Tax Expenditures
In compliance with clause 3(c)(2) of rule XIII of the Rules
of the House of Representatives, the Committee adopts as its
own the estimate of new budget authority, entitlement
authority, or tax expenditures or revenues contained in the
cost estimate prepared by the director of the Congressional
Budget Office pursuant to section 402 of the Congressional
Budget Act of 1974.
Earmarks and Tax and Tariff Benefits
H.R. 3521 does not contain any congressional earmarks,
limited tax benefits, or limited tariff benefits as defined in
clause 9 of rule XXI of the Rules of the House of
Representatives.
Committee Cost Estimate
The Committee adopts as its own the cost estimate prepared
by the director of the Congressional Budget Office pursuant to
section 402 of the Congressional Budget Act of 1974.
Congressional Budget Office Estimate
Pursuant to clause 3(c)(3) of rule XIII of the Rules of the
House of Representatives, the following is the cost estimate
for H.R. 3521 provided by the Congressional Budget Office
pursuant to section 402 of the Congressional Budget Act of
1974.
U.S. Congress,
Congressional Budget Office,
Washington, DC, December 6, 2013.
Hon. Jeff Miller,
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. 3521, the
Department of Veterans Affairs Major Medical Facility Lease
Authorization Act of 2013.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is David Newman.
Sincerely,
Douglas W. Elmendorf.
Enclosure.
H.R. 3521--Department of Veterans Affairs Major Medical Facility Lease
Authorization Act of 2013
Summary: H.R. 3521 would authorize the Department of
Veterans Affairs (VA) to enter into leases to obtain the use of
major medical facilities at 27 specified locations. Based on
VA's long-established practice, CBO expects that the department
would implement that authorization by awarding contracts for
the construction and long-term use of those facilities without
recording the full amount of the government's commitment as an
obligation of its appropriated funds. Thus, H.R. 3521 would
effectively be providing budget authority for an amount of
obligations that exceeds what we expect VA initially would
charge against its appropriation. By CBO's estimate, that
additional budget authority would amount to $1.4 billion.
Hence, CBO estimates that enacting this bill would increase
direct spending by about $1.4 billion over the 2014-2023
period. Because the bill would affect direct spending, pay-as-
you-go procedures apply. We also estimate that, assuming
appropriation of the necessary amounts, implementing the bill
would have a discretionary cost of $124 million over the 2014-
2023 period. Enacting H.R. 3521 would not affect federal
revenues.
H.R. 3521 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would not affect the budgets of state, local, or tribal
governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of H.R. 3521 is shown in the following table.
The costs of this legislation fall within budget function 700
(veterans benefits and services).
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
---------------------------------------------------------------------------------------------------------------
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2014-2018 2014-2023
--------------------------------------------------------------------------------------------------------------------------------------------------------
CHANGES IN DIRECT SPENDING
Estimated Budget Authority.............. 41 0 1,378 0 0 0 0 0 0 0 1,419 1,419
Estimated Outlays....................... 2 11 83 382 459 345 137 0 0 0 937 1,419
CHANGES IN SPENDING SUBJECT TO APPROPRIATION\a\
Estimated Authorization Level........... 0 0 124 0 0 0 0 0 0 0 124 124
Estimated Outlays....................... 0 0 87 31 6 0 0 0 0 0 124 124
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\Changes in spending subject to appropriations exclude $3 million that CBO expects would be paid from currently available appropriations.
Basis of estimate: For this estimate, CBO assumes that the
legislation will be enacted early in 2014 and that outlays will
follow historical spending patterns for major construction
projects carried out by VA.
CBO's Assessment: VA's long-term obligations as purchases
Section 2 of H.R. 3521 would authorize VA to acquire the
use of 27 medical facilities and would set a limit on the cost
of each lease. VA classifies its contracts for acquiring
similar facilities as operating leases. However, on the basis
of information from VA regarding those transactions, CBO has
concluded that most of them are akin to government purchases of
facilities built specifically for VA's use--but instead of
being financed by the U.S. Treasury, they rely on third-party
financing (that is, funds raised by a nonfederal entity), which
is generally more expensive.\1\ That conclusion is based on
those leases having many of the following key features:
---------------------------------------------------------------------------
\1\For more information on the budgetary treatment of third-party
financing, see Congressional Budget Office, Third-Party Financing of
Federal Projects (June 2005), www.cbo.gov/publication/16554.
---------------------------------------------------------------------------
The facilities are designed and constructed
to the unique specifications of the government;
The facilities are constructed at the
request of the federal government;
The leases on the newly constructed
facilities are long term--usually 20 years;
Typically, payments from the federal
government are the only or primary source of income for
the facilities;
The term of the contractual agreements
coincides with the term of the private partner's
financing instrument for developing and constructing
the facility (that is, a facility financed with a 20-
year bond will have a 20-year lease term);
The federal government commits to make fixed
annual payments that are sufficient to service the debt
incurred to develop and construct the facility,
regardless of whether the agency continues to occupy
the facility during the guaranteed term of the lease;
and
The fixed payments over the life of the
lease are sufficient to retire the debt for the
facility.\2\
---------------------------------------------------------------------------
\2\See the Statement of Robert A. Sunshine, Deputy Director,
Congressional Budget Office, The Budgetary Treatment of Medical
Facility Leases by the Department of Veterans Affairs, before the House
Committee on Veterans' Affairs, (June 27, 2013), www.cbo.gov/
publication/44368.
---------------------------------------------------------------------------
Thus, although those transactions are structured as leases,
they are essentially government purchases. Following the normal
procedures governing the budgetary treatment of such purchases,
budget authority should be available and obligations should be
recorded up front when the acquisitions are initiated in
amounts equal to the development and construction costs of the
medical facilities. Instead, VA records a small fraction of the
costs as obligations when it awards the contracts for such
transactions.
To the extent that the full costs of developing and
constructing the facilities exceeds the relatively small amount
that VA would initially record as obligations against its
appropriation, CBO treats the legislative authorization for
those transactions as contract authority--a type of budget
authority that allows an agency to enter into a contract and
incur an obligation before receiving an appropriation for those
activities. Because the contract authority would be provided in
authorizing legislation, H.R. 3521, rather than in an
appropriation act, the resulting spending is categorized as
direct spending (as distinguished from discretionary spending,
which results from appropriation acts).
CBO's estimate of direct spending for H.R. 3521 shows the
additional budget authority needed for the costs of developing
and constructing the facilities when the contracts would be
awarded, over and above the $127 million that CBO estimates
would be charged against VA's discretionary appropriations at
those times. (VA would obligate those appropriations for
certain special features of the facilities; the initial annual
lease payments would begin later, after the facilities were
constructed.) CBO expects that $3 million of the $127 million
would be paid from already enacted appropriations for the
special features of two facilities for which the contracts
would be awarded in 2014. That amount is not included in this
estimate.
Documentation for the projects indicates that contracts for
the rest of the facilities would be awarded in 2016. Thus, CBO
estimates that the bill would create $41 million of additional
budget authority in 2014 for the first two projects, and
another $1.4 billion in 2016 for the others. Outlays are
estimated to occur over the 2014-2020 period, when the
facilities would be constructed. All told, the bill would
increase direct spending by about $1.4 billion over the 2014-
2023 period, CBO estimates.
VA's Categorization: Long-term obligations as leases
VA considers its long-term agreements for medical
facilities to be straightforward operating leases (and not
effectively purchases). Even if that was the case, however, it
appears that the department generally has not been properly
recording its obligations for such leases. Circular A-11 issued
by the Office of Management and Budget specifies that operating
leases require up-front budget authority in an amount equal to
total payments over the full term of the lease or an amount
sufficient to cover first-year lease payments plus cancellation
costs.\3\ But for lease contracts that do not permit early
cancellation, VA has only recorded obligations for payments due
in the year the lease was awarded; as a result, the
government's actual obligations for contracts have exceeded the
amount the agency has recorded.
---------------------------------------------------------------------------
\3\See the Office of Management and Budget, Preparation,
Submission, and Execution of the Budget, Circular A-11 (August 2012),
Appendix B.
---------------------------------------------------------------------------
H.R. 3521 would not require VA to change its current
practices. Section 3 of the bill would require VA to record an
obligation at the time a contract is signed in an amount equal
to either the total payments that would be made under its full
term, or an amount equal to the sum of the first annual lease
payment and any specified cancellation costs. That requirement,
however, would be contingent upon the availability of
sufficient appropriations to record those amounts. Moreover,
the amounts specified for the leases in section 2 of the bill
are consistent only with the up-front payments for certain
design features of the facilities and for the first annual
lease payment. Appropriations of those amounts would not be
sufficient to cover the contractual obligations under either
recording method specified in section 3. Nevertheless, VA's
authority to enter into the leases under section 2 would not be
constrained if appropriations were not sufficient to cover the
full amount of the lease obligations as properly recorded.
VA has not indicated whether it would interpret H.R. 3521
as requiring it to increase the amount of the obligations it
records when it awards such contracts. CBO expects that when VA
awards contracts for the authorized projects, the department
might well determine that sufficient appropriations were not
available to record those larger amounts, and it would continue
its practice of recording obligations equal only to the
payments due in the year a contract is awarded.
Thus, even if the contracts for the 27 facilities were to
be considered operating leases, CBO believes that enacting H.R.
3521 would have the effect of providing VA with the authority
to enter into those leases without sufficient appropriations to
cover the obligations as required by Circular A-11. If the new
leases did not specify cancellation costs (as was the case for
the past leases CBO has reviewed), obligations recorded for
these 27 contracts if they were considered operating leases
should be the total payments due over the term of the lease.
CBO estimates that those obligations would total $2.3 billion.
Hence, the additional budget authority provided by this bill--
that is, the full cost of the leases other than the first-year
payments--would amount to $2.2 billion. The outlays would be
spread over the term of the leases, so that the additional
outlays would come to about $670 million over the 2014-2023
period, with the remaining $1.5 billion occurring in subsequent
years. However, because CBO views the leases as essentially
government purchases, this estimate does not reflect those
amounts but instead reflects the amounts described in the
previous section.
Pay-As-You-Go Considerations: The Statutory Pay-As-You-Go
Act of 2010 establishes budget-reporting and enforcement
procedures for legislation affecting direct spending or
revenues. The net changes in outlays that are subject to those
pay-as-you-go procedures are shown in the following table.
CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR H.R. 3521 AS ORDERED REPORTED BY THE HOUSE COMMITTEE ON VETERANS' AFFAIRS ON NOVEMBER 20, 2013
--------------------------------------------------------------------------------------------------------------------------------------------------------
By fiscal year, in millions of dollars--
-------------------------------------------------------------------------------------------
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2014-2018 2014-2023
--------------------------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN THE DEFICIT
Statutory Pay-As-You-Go Impact.............................. 2 11 83 382 459 345 137 0 0 0 937 1,419
--------------------------------------------------------------------------------------------------------------------------------------------------------
Intergovernmental and private-sector impact: H.R. 3521
contains no intergovernmental or private-sector mandates as
defined in UMRA and would not affect the budgets of state,
local, or tribal governments.
Estimate prepared by: Federal costs: Ann E. Futrell and
David Newman; Impact on state, local, and tribal governments:
J'nell L. Blanco; Impact on the private sector: Elizabeth Bass.
Estimate approved by: Theresa Gullo, Deputy Assistant
Director for Budget Analysis.
Federal Mandates Statement
The Committee adopts as its own the estimate of federal
mandates regarding H.R. 3521 prepared by the director of the
Congressional Budget Office pursuant to section 423 of the
Unfunded Mandates Reform Act.
Advisory Committee Statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act would be created by this
legislation.
Constitutional Authority Statement
Pursuant to clause 3(d)(1) of rule XIII of the Rules of the
House of Representatives, the Committee finds that the
constitutional authority for this legislation is provided by
Article I, section 8 of the United States Constitution.
Applicability to Legislative Branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment, or to access to public
services or accommodations within the meaning of the
Congressional Accountability Act of 1995, 2 U.S.C.
Sec. 1302(b)(3).
Statement on Duplication of Federal Programs
Pursuant to section 3(j) of H. Res. 5, 113th Cong. (2013),
the Committee finds that no provision of H.R. 2072, as amended,
establishes or reauthorizes a program of the Federal Government
known to be duplicative of another Federal program, a program
that was included in any report from the Government
Accountability Office to Congress pursuant to section 21 of
Public Law 111-139, or a program related to a program
identified in the most recent Catalog of Federal Domestic
Assistance.
Disclosure of Directed Rulemaking
Pursuant to section 3(k) of H. Res. 5, 113th Cong. (2013),
the Committee estimates that H.R. 2072, as amended, does not
require any directed rule making.
Section-by-Section Analysis of the Legislation
Section 1. Short title
Section 1 of the bill would provide the short title of the
legislation as the ``Department of Veterans Affairs Major
Medical Facility Lease Authorization Act of 2013.''
Section 2. Authorization of Major Medical Facility Leases
Section 2(1) of the bill would authorize a lease for a
clinical research and pharmacy coordinating center in
Albuquerque, NM, for an amount not to exceed $9,560,000.
Section 2(2) of the bill would authorize a lease for a
community-based outpatient clinic in Brick, NJ, for an amount
not to exceed $7,280,000.
Section 2(3) of the bill would authorize a lease for a
primary care and dental clinic annex in Charleston, SC, for an
amount not to exceed $7,070,250.
Section 2(4) of the bill would authorize a lease for a
community-based outpatient clinic in Cobb County, GA, for an
amount not to exceed $6,409,000.
Section 2(5) of the bill would authorize a lease for the
Leeward Outpatient Healthcare Access Center in Honolulu, HI,
for an amount not to exceed $15,887,370.
Section 2(6) of the bill would authorize a lease for a
community-based outpatient clinic in Johnson County, KS, for an
amount not to exceed $2,263,000.
Section 2(7) of the bill would authorize a lease for a
replacement community-based outpatient clinic in Lafayette, LA,
for an amount not to exceed $2,996,000.
Section 2(8) of the bill would authorize a lease for a
community-based outpatient clinic in Lake Charles, LA, for an
amount not to exceed $2,626,000.
Section 2(9) of the bill would authorize a lease for an
outpatient clinic consolidation in New Port Richey, FL, for an
amount not to exceed $11,927,000.
Section 2(10) of the bill would authorize a lease for an
outpatient clinic in Ponce, Puerto Rico, for an amount not to
exceed $11,535,000.
Section 2(11) of the bill would authorize a lease for a
lease consolidation in San Antonio, TX, for an amount not to
exceed $19,426,000.
Section 2(12) of the bill would authorize a lease for a
community-based outpatient clinic in San Diego, CA, for an
amount not to exceed $11,946,100.
Section 2(13) of the bill would authorize a lease for an
outpatient clinic in Tyler, TX, for an amount not to exceed
$4,327,000.
Section 2(14) of the bill would authorize a lease for the
Errera Community Care Center in West Haven, CT, for an amount
not to exceed $4,883,000.
Section 2(15) of the bill would authorize a lease for the
Worcester community-based outpatient clinic in Worcester, MA,
for an amount not to exceed $4,855,000.
Section 2(16) of the bill would authorize a lease for the
expansion of a community-based outpatient clinic in Cape
Girardeau, MO, for an amount not to exceed $4,232,060.
Section 2(17) of the bill would authorize a lease for a
multispecialty clinic in Chattanooga, TN, for an amount not to
exceed $7,069,000.
Section 2(18) of the bill would authorize a lease for the
expansion of a community-based outpatient clinic in Chico, CA,
for an amount not to exceed $4,534,000.
Section 2(19) of the bill would authorize a lease for a
community-based outpatient clinic in Chula Vista, CA, for an
amount not to exceed $3,714,000.
Section 2(20) of the bill would authorize a new research
lease in Hines, IL, for an amount not to exceed $22,032,000.
Section 2(21) of the bill would authorize a replacement
research lease in Houston, TX, for an amount not to exceed
$6,142,000.
Section 2(22) of the bill would authorize a community-based
outpatient clinic in Lincoln, NE, for an amount not to exceed
$7,178,400.
Section 2(23) of the bill would authorize a community-based
outpatient clinic in Lubbock, TX, for an amount not to exceed
$8,554,000.
Section 2(24) of the bill would authorize a community-based
outpatient clinic consolidation lease in Myrtle Beach, SC, for
an amount not to exceed $8,022,000.
Section 2(25) of the bill would authorize a community-based
outpatient clinic in Phoenix, AZ, for an amount not to exceed
$20,757,000.
Section 2(26) of the bill would authorize a lease for the
expansion of a community-based outpatient clinic in Redding,
CA, for an amount not to exceed $8,154,000.
Section 2(27) of the bill would authorize a lease for the
expansion of a community-based outpatient clinic in Tulsa, OK,
for an amount not to exceed $13,269,200.
Section 3. Budgetary treatment of Department of Veterans Affairs Major
Medical Facilities Leases
Section 3(a) of the bill would make the following
Congressional findings: (1) that VA is required under title 31,
U.S.C. to record the full cost of its contractual obligation
against funds available at the time a contract is executed; (2)
that OMB Circular A-11 provides guidance to agencies in meeting
the requirements of title 31, U.S.C., with respect to leases;
and, (3) that OMB Circular A-11 requires VA to record the up-
front budget authority for operating leases in the amount of
the total payments under the full term of the lease or
sufficient payments to cover the first year lease payments plus
cancellation costs.
Section 3(b) of the bill would require VA, subject to the
availability of appropriations provided in advance, to record
the full cost of the contractual obligation at the time a
contract is executed either in an amount equal to total
payments required under the full term of the lease; or equal to
an amount sufficient to cover the first year lease payments and
any specified cancellation costs in the event that the lease is
terminated before its full term.
Section 3(c) of the bill would require VA to provide a
detailed analysis of how such lease is expected to comply with
OMB Circular A-11 and section 1341 of title 31, U.S.C. in a
prospectus for a proposed lease. It would also require VA to
submit to the Committees on Veterans' Affairs not less than 30
days before entering into a major medical facility lease, the
following information: (1) notice of the intent to enter into a
lease; (2) a copy of the proposed lease; (3) an explanation of
any difference between the prospectus and the lease submitted
under this subsection; and (4) a scoring analysis demonstrating
compliance with OMB Circular A-11; and also require VA to
submit to the Committees on Veterans' Affairs a report of any
material differences between the entered lease and proposed
lease not less than 30 days after entering into a major medical
facility lease.
Section 3(d) of the bill would stipulate that the
legislation does not relieve VA from any statutory or
regulatory obligation or requirements existing prior to the
enactment.
CHANGES IN EXISTING LAW MADE BY THE BILL AS REPORTED
H.R. 3521 would not make any amendments to existing law.
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
* * * * * * *
PART VI--ACQUISITION AND DISPOSITION OF PROPERTY
* * * * * * *
CHAPTER 81--ACQUISITION AND OPERATION OF HOSPITAL AND DOMICILIARY
FACILITIES; PROCUREMENT AND SUPPLY; ENHANCED-USE LEASES OF REAL
PROPERTY
SUBCHAPTER I--ACQUISITION AND OPERATION OF MEDICAL FACILITIES
* * * * * * *
Sec. 8104. Congressional approval of certain medical facility
acquisitions
(a) * * *
(b) Whenever the President or the Secretary submit to the
Congress a request for the funding of a major medical facility
project (as defined in subsection (a)(3)(A)) or a major medical
facility lease (as defined in subsection (a)(3)(B)), the
Secretary shall submit to each committee, on the same day, a
prospectus of the proposed medical facility. Any such
prospectus shall include the following:
(1) * * *
* * * * * * *
(7) In the case of a prospectus proposing funding for
a major medical facility lease, a detailed analysis of
how the lease is expected to comply with Office of
Management and Budget Circular A-11 and section 1341 of
title 31 (commonly referred to as the ``Anti-Deficiency
Act''). Any such analysis shall include--
(A) an analysis of the classification of the
lease as a ``lease-purchase'', ``capital
lease'', or ``operating lease'' as those terms
are defined in Office of Management and Budget
Circular A-11;
(B) an analysis of the obligation of
budgetary resources associated with the lease;
and
(C) an analysis of the methodology used in
determining the asset cost, fair market value,
and cancellation costs of the lease.
* * * * * * *
(h)(1) Not less than 30 days before entering into a major
medical facility lease, the Secretary shall submit to the
Committees on Veterans' Affairs of the Senate and the House of
Representatives--
(A) notice of the Secretary's intention to enter into
the lease;
(B) a copy of the proposed lease;
(C) a description and analysis of any differences
between the prospectus submitted pursuant to subsection
(b) and the proposed lease; and
(D) a scoring analysis demonstrating that the
proposed lease fully complies with Office of Management
and Budget Circular A-11.
(2) Each committee described in paragraph (1) shall ensure
that any information submitted to the committee under such
paragraph is treated by the committee with the same level of
confidentiality as is required by law of the Secretary and
subject to the same statutory penalties for unauthorized
disclosure or use as the Secretary.
(3) Not more than 30 days after entering into a major medical
facility lease, the Secretary shall submit to each committee
described in paragraph (1) a report on any material differences
between the lease that was entered into and the proposed lease
described under such paragraph, including how the lease that
was entered into changes the previously submitted scoring
analysis described in subparagraph (D) of such paragraph.
* * * * * * *