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United States Government Accountability Office: 
GAO: 

Report to Congressional Committees: 

January 2011: 

VA Real Property: 

Realignment Progressing, but Greater Transparency about Future 
Priorities Is Needed: 

GAO-11-197: 

GAO Highlights: 

Highlights of GAO-11-197, a report to congressional committees. 

Why GAO Did This Study: 

The Department of Veterans Affairs (VA) has undertaken various 
planning efforts to realign its real property portfolio, including the 
Capital Asset Realignment for Enhanced Services (CARES), creation of a 
5-year capital plan, and its newest effort, the Strategic Capital 
Investment Planning process (SCIP). Through these efforts, VA has 
identified numerous real property priorities it believes should be 
completed if the agency’s facilities are to meet veterans’ needs for 
services now and in the future. 

This congressionally requested report addresses the extent to which 
VA’s capital planning efforts (1) have resulted in changes to its real 
property portfolio and (2) follow leading practices and provide 
information for informed decision making. To perform this work, GAO 
reviewed leading capital planning practices and data on VA’s real 
property portfolio and future priorities. GAO also interviewed VA 
officials and veterans service organizations, and visited sites in 5 
of VA’s 21 veterans integrated service networks. 

What GAO Found: 

Through its capital planning efforts, VA has taken steps to realign 
its real property portfolio from hospital based, inpatient care to 
outpatient care, but a substantial number of costly projects and other 
long-standing challenges also remain. Several of VA’s most recent 
capital projects—-such as community based outpatient clinics, 
rehabilitation centers for blind veterans and spinal cord injury 
center—-were based on its CARES efforts and subsequent capital 
planning. VA officials and veterans service organizations GAO 
contacted agreed that these facilities have had a positive effect on 
veterans’ access to services. However, VA has identified several high-
cost priorities such as facility repairs and projects that have not 
yet been funded. For example, VA reported in its 5-year capital plan 
for fiscal years 2010-2015 that it had a backlog of $9.4 billion of 
facility repairs. The 5-year plan further identified an additional 
$4.4 billion in funding to complete 24 of the 69 ongoing major 
construction projects. Besides substantial funding priorities, VA, 
like other agencies, has faced underlying obstacles that have 
exacerbated its real property management challenges and can also 
impact its ability to fully realign its real property portfolio. GAO 
has previously reported that such challenges include competing 
stakeholder interests, legal and budgetary limitations, and capital 
planning processes that did not always adequately address such issues 
as excess and underutilized property. 

VA’s capital planning efforts generally reflect leading practices, but 
lack transparency about the cost of future priorities that could 
better inform decision making. For example, GAO found that VA’s 5-year 
capital plan links its investments with its strategic goals, assesses 
the agency’s capital priorities, and evaluates various alternatives. 
Also, SCIP strengthens VA’s capital planning efforts by extending the 
horizon of its 5-year plan to 10 years, and providing VA with a longer 
range picture of the agency’s future real property priorities. While 
these are positive steps, VA’s planning efforts lack transparency 
regarding the magnitude of costs of the agency’s future real property 
priorities, which may limit the ability of VA and Congress to make 
informed funding decisions among competing priorities. For instance, 
for potential future projects, VA’s 5-year capital plan only lists 
project name and contains no information on what these projects are 
estimated to cost or the priority VA has assigned to them beyond the 
current budget year. VA officials said during the review that they are 
considering the release of future year capital cost estimates to 
Congress. Transparency about future requirements would benefit 
congressional decision makers by putting individual project decisions 
in a long-term, strategic context, and placing VA’s fiscal situation 
within the context of the overall fiscal condition of the U.S. 
government. Providing future cost estimates to Congress for urgent, 
major capital programs is not without precedent in the federal 
government. Other federal agencies, such as the Department of Defense, 
have provided more transparent estimates to Congress regarding the 
magnitude of its future capital priorities beyond immediate budget 
priorities. 

What GAO Recommends: 

GAO recommends that VA annually provide to Congress the full results 
of its SCIP process and any subsequent capital planning efforts, 
including details on estimated cost of future projects. VA concurred 
with this recommendation. 

View [hyperlink, http://www.gao.gov/products/GAO-11-197] or key 
components. For more information, contact Lorelei St. James at (202) 
512-2834 or stjamesl@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

VA Has Taken Steps to Realign Its Real Property Portfolio, but a 
Substantial Number of Costly Projects and Other Long-standing 
Challenges Remain: 

VA's Capital Planning Efforts Generally Reflect Leading Practices, but 
Its Capital Plan Lacks Transparency about the Cost of Future 
Priorities That Could Better Inform Decision Making: 

Conclusions: 

Recommendation for Executive Action: 

Agency Comments: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Comments from the Department of Veterans Affairs: 

Appendix III: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Key Components of VA's Strategic Capital Investment Planning 
Process and Planned Implementation Actions: 

Table 2: Net Changes to VA Real Property Portfolio, Fiscal Years 2004 
and 2009: 

Table 3: Net Changes to Selected VA Facility Types, 2004 and 2009: 

Table 4: VA Departments, VISNs That We Interviewed, and Projects That 
We Observed: 

Table 5: VSOs That We Interviewed: 

Figures: 

Figure 1: Selected VA Veterans Integrated Service Networks: 

Figure 2: VA's Real Property Square Footage by Administration as of 
Fiscal Year 2009: 

Figure 3: VA's Capital Planning Steps 1999-2010: 

Figure 4: Ongoing construction of Orlando VA Medical Center, Florida: 

Figure 5: Ongoing construction of Spinal Cord Injury/Disease center at 
Syracuse VA Medical Center, New York: 

Figure 6: Joint Ambulatory Care Center, Pensacola, Florida: 

Figure 7: Polytrauma Transitional Rehabilitation Program at James A. 
Haley Veteran's Hospital, Tampa, Florida: 

Figure 8: Rehabilitation for Blind Veterans at Hines VA Medical 
Center, Illinois: 

Figure 9: CBOCs in Aurora and Chicago, Illinois: 

Figure 10: Leading Capital Planning Practices, as Outlined in OMB and 
GAO Guidance: 

Figure 11: Comparison of Leading Capital Planning Practices to VA's 
Capital Planning Efforts: 

Abbreviations: 

CARES: Capital Asset Realignment for Enhanced Services: 

CBOC: community-based outpatient clinic: 

DOD: Department of Defense: 

NCA: National Cemetery Administration: 

OMB: Office of Management and Budget: 

SCIP: Strategic Capital Investment Planning: 

VA: Department of Veterans Affairs: 

VBA: Veterans Benefits Administration: 

VHA: Veterans Health Administration: 

VISN: Veterans Integrated Service Networks: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

January 31, 2011: 

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

The Honorable Michael H. Michaud:
Ranking Member:
Subcommittee on Health:
Committee on Veterans' Affairs:
House of Representatives: 

The Honorable Daniel K. Akaka:
United States Senate: 

The Department of Veterans Affairs (VA) is one of the largest federal 
property-holding agencies, with more than 33,000 acres of land and 
over 5,500 buildings.[Footnote 1] VA uses this diverse inventory of 
real property to provide health care and other services to millions of 
veterans. Over time, VA has recognized the need to modernize its 
facilities and realign its real property portfolio to provide 
accessible, high-quality, and cost-effective access to services. For 
example, in 1999, VA initiated the Capital Asset Realignment for 
Enhanced Services (CARES) to assess its building and land ownership in 
response to changing veterans' inpatient and outpatient demand for 
care. The CARES assessment resulted in several recommendations to 
modify VA's real property portfolio, including the closing of some 
hospitals and the opening of smaller more accessible clinics. After VA 
released the initial CARES findings, the Secretary of Veterans Affairs 
appointed the CARES commission--composed of independent stakeholders, 
including former VA administrators, veterans, and health care 
professionals--to bring an external perspective to the CARES findings 
and to recommend which projects VA should undertake.[Footnote 2] The 
commission issued its report to VA in February 2004,[Footnote 3] and, 
after reviewing the report, VA issued the CARES Decision report in May 
2004 to Congress and other stakeholders, such as veterans service 
organizations. The decision report listed projects and actions that VA 
planned to take over the next 20 years, as well as the tools and 
principles that the agency planned to use to realign its 
infrastructure and upgrade its facilities.[Footnote 4] 

Since the May 2004 decision report, VA has undertaken additional 
planning efforts to realign its real property portfolio. For example, 
VA now includes with its annual budget submission to Congress, a 5-
year capital plan that includes information about projects it seeks to 
begin in the current budget year, as well as their estimated costs 
from first year through completion. VA is also developing a Strategic 
Capital Investment Planning (SCIP) process, which is intended to 
continue VA's efforts to prioritize its most urgent real property 
priorities. Through these capital planning efforts, VA has identified 
numerous real property priorities that it believes should be completed 
if the agency's facilities are to meet veterans' demand for services. 
As requested, we assessed the impact of CARES and the effectiveness of 
VA's capital planning process. In that context, this report addresses 
the following questions: 

1. To what extent have VA's capital planning efforts resulted in 
changes to its real property portfolio and what priorities remain? 

2. To what extent do VA's capital planning efforts follow leading 
federal practices and provide the information needed for informed 
decision making? 

To answer these questions, we reviewed relevant laws and agency 
documents on the status of VA's capital projects, including CARES 
implementation monitoring reports and VA's annual budget submissions 
to Congress. We also interviewed VA officials located in VA's central 
office in Washington, D.C., and six Veterans Integrated Service 
Networks (VISN).[Footnote 5] To gain further insight on the steps VA 
took to realign its real property portfolio, we observed ongoing and 
completed projects at five of the six selected VISNs. The VISNs were 
selected using a scale of small, medium, and large, based on the 
number of veterans served; we chose two VISNs from each of those 
categories. We visited various types of facilities--renovated or built 
since the CARES decision--in five of those selected VISNs across the 
United States.[Footnote 6] Among the VISNs, we observed various types 
of facilities on the basis of seven CARES decisions that VA is 
tracking.[Footnote 7] Regarding VA's capital planning efforts, we 
reviewed various documents, such as its 5-year capital plan and its 
proposal regarding SCIP. We also interviewed officials from VA and 
five veterans service organizations. Additionally, we considered the 
results of prior GAO reports and the Office of Management and Budget 
(OMB) guidance on leading federal capital planning practices. We 
conducted this performance audit from January 2010 to January 2011, in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. (Appendix I 
contains additional information on our scope and methodology.) 

Background: 

The mission of VA is to serve America's veterans and their families 
with dignity and compassion and to be their principal advocate in 
ensuring that they receive medical care, benefits, social support, and 
lasting memorials. VA is a cabinet-level agency with a budget of over 
$127 billion and is one of the world's largest health care, medical 
research, and insurance benefits organizations. In addition to a 
central office, VA consists of three administrations that generally 
operate as distinct entities: the Veterans Health Administration 
(VHA), the Veterans Benefits Administration (VBA), and the National 
Cemetery Administration (NCA). VHA's facilities are organized into 21 
regional networks, known as VISNs, that are structured to manage and 
allocate resources to VA health care facilities across the United 
States. Each VISN is also responsible for coordination and oversight 
of all administrative and clinical activities within its specified 
region of the country. We reviewed the status of capital projects in 6 
of VA's 21 VISNs, as shown in figure 1. 

Figure 1: Selected VA Veterans Integrated Service Networks: 

[Refer to PDF for image: illustrated map of the U.S.] 

Selected VA Integrated Service Networks: 

(2) VA Healthcare Network Upstate New York; 
(8) VA Sunshine Healthcare Network; 
(11) Veterans in Partnership; 
(12) VA Great Lakes Health Care System; 
(16) South Central VA Health Care Network; 
(19) Rocky Mountain Network. 

Sources: U.S. Department of Veterans Affairs, Map Resources (map), and 
GAO. 

[End of figure] 

To provide services to veterans, VA's current real property portfolio 
consists of U.S.-owned buildings under VA jurisdiction and control. VA 
also generally has authority to enter into enhanced-use leases, 3-year 
outleases, and sharing agreements relating to its real property or 
space.[Footnote 8] The assets include, for example, hospitals, 
clinics, cemeteries, and office buildings where veterans access their 
many benefits and VA administers its programs. VHA is the largest 
administration and, in terms of the number of acres owned and square 
footage, includes the greatest portion of VA's real property 
portfolio, as shown in figure 2. 

Figure 2: VA's Real Property Square Footage by Administration as of 
Fiscal Year 2009: 

[Refer to PDF for image: pie-chart] 

VHA: 143,486,463 square feet (5,153 buildings): 97.7%; 
Staff offices: 1,687,011 square feet (8 buildings): 1.1%; 
NCA: 951,220 square feet (348 buildings): 0.6%; 
VBA: 796,691 square feet (19 buildings): 0.5%. 

Source: VA. 

[End of figure] 

In response to our 1999 recommendations for improving agency capital 
asset planning and budgeting, VA initiated CARES.[Footnote 9] CARES 
was the first comprehensive, long-range assessment of VA's health care 
capital asset priorities since 1981 and was designed to assess 
buildings and land ownership under VA's jurisdiction and control in 
light of expected demand for VA inpatient and outpatient health care 
services across a planning horizon through fiscal year 2022. For 
example, VA recognized that the shift in veterans' demand for services 
could be met at community based outpatient clinics that are more 
geographically accessible to veterans than its hospitals. The CARES 
process validated gaps in VA's infrastructure and health care services 
provided to veterans. The process also included a set of tools for 
annual capital and strategic planning to enable VA to plan for real 
property needs to provide quality health care to veterans. 

Also in response to our 1999 recommendations, VA developed formal 5- 
year capital plans that are submitted with its annual budget requests 
to Congress.[Footnote 10] The 5-year capital plan included in VA's 
fiscal year 2011 budget submission document includes the following: 
capital planning linked to the agency mission, strategic goals, and 
objectives; baseline assessments and identification of performance 
gaps--such as underutilized or vacant property and the backlog of 
repairs needed at its facilities; an alternatives evaluation and 
resulting risk management plan for these performance gaps; a 
description of the agency's planning and approvals process; and a long-
term capital plan. Effective planning for capital investments is 
important for several reasons. First, over time, large amounts of 
federal funds are spent on capital assets. Second, the performance of 
capital assets affects how agencies are able to achieve their 
missions, goals, and objectives to provide service to the public. 
Finally, capital planning drives budgeting, procurement, and 
management of an agency's capital assets. 

As VA increased its emphasis on outpatient care rather than inpatient 
care, it was left with an increasingly obsolete infrastructure, 
including many hospitals built or acquired more than 50 years ago in 
locations that are sometimes far from where veterans live. This 
challenge of misaligned infrastructure is not unique to VA. In January 
2003, we identified federal real property management as a high-risk 
area, and VA was cited among those federal agencies that hold a 
majority of federally owned and leased space.[Footnote 11] We also 
reported on VA's long-standing problems with excess and underutilized 
property,[Footnote 12] deteriorating facilities, unreliable real 
property data, overreliance on costly leasing, and building security 
challenges. We did this to highlight the need for broad-based 
transformation in this area, which, if well implemented, will better 
position federal agencies to achieve mission effectiveness and reduce 
operating costs. 

As its newest capital planning effort, VA has initiated SCIP, which 
will be an agencywide review of VA's real property priorities and will 
inform its fiscal year 2012 annual budget submission.[Footnote 13] 
According to VA, SCIP will include six key components. Table 1 shows 
these components and the VA's planned actions to implement them. 

Table 1: Key Components of VA's Strategic Capital Investment Planning 
Process and Planned Implementation Actions: 

Key component: Gap analysis; 
Planned implementation actions: Identify performance gaps in various 
areas, including access and utilization, space, and condition. 

Key component: Strategic capital assessment; 
Planned implementation actions: Based on the gap analysis, each VISN 
or other area-level project owner prepares a strategic overview of 
their local 10-year plans and a narrative document explaining how gaps 
will be reduced, why certain investments were chosen, and how capital 
investments were prioritized. 

Key component: Internal review and validation; 
Planned implementation actions: Local plans will be centrally 
validated, evaluated, and consolidated into a prioritized project list 
across VA's administrations. The prioritization list will be 
communicated back to the VISNs or other area-level project owners to 
make corrections and adjustments. 

Key component: 10-year capital plan; 
Planned implementation actions: VA will develop a 10-year plan that 
includes a prioritized list of projects with input from local 
networks. The capital plan will identify specific new investments and 
tie each investment to a reduction in gaps. 

Key component: 2012 decision criteria and weights; 
Planned implementation actions: A process to prioritize projects 
across VA's administrations. 

Key component: Feedback: Promote transparency and engage stakeholders; 
Planned implementation actions: External stakeholders--Congress, OMB, 
GAO, and VSOs--were provided updates on the SCIP process at key 
decision points. 

Source: VA. 

[End of table] 

SCIP, which VA said builds on its existing capital planning processes, 
also addresses leading practices. It further strengthens VA's efforts 
in some areas and is still evolving and being refined. The SCIP 
components are linked to VA's previous capital planning efforts, 
including CARES and the development of its 5-year capital plan. Figure 
3 illustrates VA's capital planning steps from 1999 to 2010. 

Figure 3: VA's Capital Planning Steps 1999-2010: 

[Refer to PDF for image: illustration] 

Identified requirements: CARES (1999); 
* First long-range assessment of VA’s capital asset requirements since 
1981; 
* Capital asset requirements linked to expected veteran demand for 
services; 
* Validated gaps in VA’s infrastructure and veterans’ demand for 
services; 
* Developed tools for annual capital planning. 

Established plan: 5-year plan (2004); 
* Developed in response to GAO’s 1999 recommendations regarding its 
capital planning efforts; 
* Submitted as a part of VA’s annual budget submission to Congress; 
* Generally reflects leading capital planning practices established
by GAO and OMB. 

Expanded plan: SCIP (2010); 
* Builds on existing processes from CARES and 5-year plan; 
* Capital planning horizon will expand to 10 years; 
* Developed cost estimates for all of VA’s major, minor, nonrecurring 
and lease projects; 
* Central process for ranking and selecting capital investment based 
on established criteria across all of VA’s administrations (VHA, VBA, 
and NCA). 

Source: GAO analysis of VA capital planning efforts. 

[End of figure] 

VA Has Taken Steps to Realign Its Real Property Portfolio, but a 
Substantial Number of Costly Projects and Other Long-standing 
Challenges Remain: 

VA Has Taken Steps to Realign Its Real Property Portfolio: 

As a part of its shift from hospital based, inpatient care to 
outpatient care, VA has made changes to its real property portfolio on 
the basis of its May 2004 CARES Decision document and subsequent 
capital planning. As for specific CARES Decision projects, VA reported 
in its April 2010 Implementation Monitoring Report on Capital Asset 
Realignment for Enhanced Services that it has completed 13 of 59 
planned major and minor construction projects, opened 82 of 156 
planned community-based outpatient clinics (CBOC), and has another 19 
ongoing major construction projects identified in the CARES Decision. 
[Footnote 14] As for net changes to VA's real property portfolio since 
the CARES Decision, our analysis of the data in VA's 5-year capital 
plans from 2004 to 2009 found that leases and leased space had 
increased due in part to VA's efforts to realign its portfolio towards 
more outpatient facilities, such as CBOCs and vet centers. These 
centers provide readjustment counseling and outreach services to all 
veterans and family members dealing with military-related issues. 
Although U.S.-owned buildings and vacant space[Footnote 15] under VA's 
jurisdiction and control show a decrease because of VA's disposal of 
assets,[Footnote 16] VA shows a net increase as a result of new 
construction projects. Similarly, the net increase in owned acreage 
can be attributed to property acquired by VA's National Cemetery 
Administration for new cemeteries. These results of VA's agencywide 
capital planning efforts since its March 2004 CARES Decision are shown 
in table 2. 

Table 2: Net Changes to VA Real Property Portfolio, Fiscal Years 2004 
and 2009: 

Year: 2004; 
Leases: 997; 
Leased space (square feet): 10,959,275; 
Owned buildings: 5,566; 
Owned space (square feet): 144,536,638; 
Owned acres: 31,975; 
Vacant space (square feet, in millions): 8.57[A]. 

Year: 2009; 
Leases: 1,432; 
Leased space (square feet): 15,689,289; 
Owned buildings: 5,528; 
Owned space (square feet): 146,921,385; 
Owned acres: 33,888; 
Vacant space (square feet, in millions): 6.93. 

Year: Change; 
Leases: 435; 
Leased space (square feet): 4,730,014; 
Owned buildings: (38); 
Owned space (square feet): 2,384,747; 
Owned acres: 1,913; 
Vacant space (square feet, in millions): (1.64). 

Source: GAO analysis of VA 5-year capital plan data. 

[A] CARES Decision baseline used as vacant space was not reported in 
VA's fiscal year 2004 5-year capital plan. 

[End of table] 

Our analysis also showed that, with the exception of hospitals, VA has 
expanded the number and types of buildings by which it delivers 
services. Table 3 shows VA's changes to its real property portfolio in 
terms of facility types. 

Table 3: Net Changes to Selected VA Facility Types, 2004 and 2009: 

Facility type: Independent Outpatient Clinics[A]; 
As of November 2004: 4; 
As of December 2009: 6; 
Net change: 2. 

Facility type: Regional Office - Outpatient Clinics[A]; 
As of November 2004: 1; 
As of December 2009: 1; 
Net change: 0. 

Facility type: VA Hospitals[B]; 
As of November 2004: 157; 
As of December 2009: 153; 
Net change: (4). 

Facility type: VA National Cemeteries; 
As of November 2004: 120[C]; 
As of December 2009: 130; 
Net change: 10. 

Facility type: VA Outpatient Clinics[A]; 
As of November 2004: 702; 
As of December 2009: 783; 
Net change: 81. 

Facility type: Vet Centers[D]; 
As of November 2004: 206; 
As of December 2009: 271; 
Net change: 65. 

Source: GAO analysis of VA fiscal year budget submission data. 

[A] These clinics provide the most common outpatient services, 
including health and wellness visits, without the hassle of visiting a 
larger medical center. 

[B] VA closed or changed the primary hospital mission of the following 
four VA medical center (VAMC) locations: Lakeside (Chicago) VAMC, 
Illinois; Gulfport VAMC, Mississippi; New Orleans VAMC, Louisiana; and 
Canandaigua VAMC, New York. 

[C] This is the number of VA National Cemeteries as of September 30, 
2004. 

[D] Vet Centers provide readjustment counseling and outreach services 
to all veterans who served in any combat zone. Services are also 
available for family members dealing with military-related issues. 

[End of table] 

VA officials and stakeholders generally agreed that changes to the VA 
real property portfolio have benefited veterans. For example, both 
groups reported that the new facilities, such as more accessible 
clinics, had improved veteran access to services by limiting the 
distance that veterans travel to VA health care facilities. Officials 
from veteran service organizations with whom we spoke stated that 
upgrades to VA's real property portfolio had improved care for 
veterans. For example, these officials commented that real property 
changes in VA facilities in Denver, Colorado, and Syracuse, New York, 
have resulted in improved services for veterans with spinal cord 
injuries or diseases. Additionally, officials from VA's central office 
and the VISNs that we contacted cited recent initiatives, such as 
telehealth and telemental health services at CBOCs, as being 
beneficial to veterans. 

To gain further insight on the steps that VA took to realign its real 
property portfolio, we observed ongoing and completed projects at 5 
VISNs that demonstrated VA's changes in the areas that CARES 
identified as priorities: improved access, modernization, special 
disability programs, underutilized or vacant property, CBOCs, VA and 
the Department of Defense (DOD) collaboration, long-term care, and 
mental health. As such, we visited several facilities in those VISNs 
as described in figures 4 through 9. 

Figure 4: Ongoing construction of Orlando VA Medical Center, Florida: 

[Refer to PDF for image: 2 photographs] 

The 1 million-plus, square foot facility is planned to have 134 
inpatient beds, a 120-bed community living center, and a 60-bed 
domiciliary. The hospital will also have radiation oncology services, 
eight operating rooms, two cardiac catheterization laboratories, two 
magnetic resonance imaging machines and several computed tomography 
scanners. An outpatient clinic and a veteran benefits office are also 
planned on-site. VISN officials told us the project is scheduled to 
complete construction in August 2012. 

Source: GAO. 

[End of figure] 

Figure 5: Ongoing construction of Spinal Cord Injury/Disease center at 
Syracuse VA Medical Center, New York: 

[Refer to PDF for image: 2 photographs] 

This six-floor addition includes a 30-bed center for treating spinal 
cord injuries, a therapeutic pool, expanded outpatient services, a 
dialysis program, and six new operating rooms. The construction also
includes adding two levels to the current parking garage, with 
dedicated entrance to the center. VA initiated this project under 
CARES because services to treat acute spinal cord injuries in the VISN
were limited. VISN officials told us the concrete portion of the 
construction project was scheduled to be completed the by the fall of 
2010. 

Source: GAO. 

[End of figure] 

Figure 6: Joint Ambulatory Care Center, Pensacola, Florida: 

[Refer to PDF for image: 2 photographs] 

Opened in September 2008, the center (left) is shared by VA and DOD 
and provides services to veterans who reside in southern Alabama and 
the Florida Panhandle areas. The center provides primary, dental, 
vision (right), and mental-health care, as well as rehabilitation 
services, a women’s clinic, and other specialty services. 

Sources: GAO and VA. 

[End of figure] 

Figure 7: Polytrauma Transitional Rehabilitation Program at James A. 
Haley Veteran's Hospital, Tampa, Florida: 

[Refer to PDF for image: 2 photographs] 

This program provides intensive rehabilitative care to veterans with 
multiple severe injuries, including traumatic brain injuries, that 
have resulted in physical, cognitive, psychological, or psychosocial
impairments. For example, some patients live in dormitory-style 
apartments (left) and receive various treatments, including relearning 
household chores, such as cooking and laundry, in occupational therapy 
areas. Patients also use physical therapy areas in recovering from 
amputations and fractures (right). 

Sources: GAO and VA. 

[End of figure] 

Figure 8: Rehabilitation for Blind Veterans at Hines VA Medical 
Center, Illinois: 

[Refer to PDF for image: 2 photographs] 

Rehabilitation centers (left) provide services to support blind and 
low-vision veterans and active-duty service members in regaining their 
independence and quality of life. VA has a goal that its patients 
acquire the skills and capabilities necessary for the development of 
personal independence and emotional stability. For example, the center 
we visited provided various training on computers, using workshop 
tools such as saws (right), and learning to read Braille. Patients in 
the center are also shown how to use spatial markers–-that is, area 
rugs, carpeting, and floor tiles, among other things-–to help them 
orientate themselves when they are entering or exiting one part of a 
home or building and moving to another. 

Sources: GAO and VA. 

[End of figure] 

Figure 9: CBOCs in Aurora and Chicago, Illinois: 

[Refer to PDF for image: 2 photographs] 

CBOCs were created to place an emphasis on the importance of care for 
rural veterans, the availability of mental health services, and the 
flexibility of VISNs to relieve overcrowding at other facilities by 
moving care to a nearby outpatient setting. CBOCs we visited had 
telehealth capabilities, which allow CBOCs to link veterans to 
services outside their local travel area. Through these telehealth 
capabilities, veterans can receive services at their local clinic via 
video teleconference with specialty-care professionals that are not 
always available on-site. Some locations, such as the Aurora CBOC 
(left), have technology that can take diagnostic readings of the 
patient at the clinic and transmit those images to another location. 
The Chicago CBOC (right) not only has health care services, but
has Department of Labor officials on-site to assist with job 
placement. The Chicago CBOC also has a computer room where veterans 
can use the Internet to apply for jobs and receive training. 

Sources: GAO and VA. 

[End of figure] 

VA Has Identified Several Costly Projects and, Like Other Agencies, 
Faces Persistent Underlying Obstacles in Managing Its Real Property 
Challenges: 

VA has been appropriated about $16.7 billion from fiscal years 2004 
through 2010 for major construction, minor construction, and 
nonrecurring maintenance. In addition, VA has identified several other 
high-cost projects that have not yet been funded. For example, VA 
reported in its 5-year capital plan for fiscal years 2010-2015 that 
agencywide, it has a backlog of $9.4 billion of facility condition 
assessment deficiencies (repairs).[Footnote 17] Furthermore, due to 
incremental funding of projects,[Footnote 18] 24 of the 69 ongoing 
major construction projects listed in the plan needed an additional 
$4.4 billion to complete.[Footnote 19] For example, the plan describes 
funding needed for the new medical facility in Denver. As of fiscal 
year 2010, VA has been funded only $307 million of the estimated $800 
million total project cost. The President's budget for fiscal year 
2011 included a request for $451 million for this project. Even if 
this amount is funded, VA's 5-year capital plan reports that this 
project would still need an additional $42 million to complete 
construction. VA officials commented that this phased approach enables 
the agency to request funding in stages that allow for the funding of 
independent and stand alone portions of projects to be built while 
allowing available resources to be utilized on other high-priority 
projects. 

Like other agencies across the government, VA has faced underlying 
obstacles that have exacerbated its real property management 
challenges and caused them to persist over time. Specifically, we have 
previously reported on such challenges, including competing 
stakeholder interests, legal and budgetary limitations, and the need 
for improved capital planning. These challenges can impact the 
agency's ability to fully realign its real property portfolio. 
Regarding competing stakeholder interests, we have reported that VA 
has faced challenges in coordinating with historic preservation and 
community organizations, as well as managing established relationships 
with other health care providers, such as college and university 
partnerships.[Footnote 20] While joint ventures for facilities present 
unique opportunities for VA to explore new ways to provide health care 
to veterans, it also raises issues for VA. These issues include the 
benefits and costs of investing in a joint facility compared with 
those of other alternatives, such as maintaining the existing facility 
or considering options with other health care providers in the area; 
legal matters associated with the new facility, such as leasing or 
transferring property, contracting, and employment; and potential 
concerns of stakeholders. 

We have also identified legal and budgetary issues that can hamper 
agencies' efforts to address their excess and underutilized real 
property problems.[Footnote 21] For example, federal agencies must 
assess and may be required by law to pay for any environmental cleanup 
that may be needed before disposing of a property--a process that may 
require years of study and result in significant costs. Regarding VA, 
we have reported that some VA managers have retained excess property 
because the administrative complexity and costs of complying with 
these requirements were disincentives to disposal. For example, we 
previously reported that VA stated that except for enhanced-use 
leases, restrictions on retaining proceeds relating to VA controlled 
properties are a disincentive for VA to dispose of property. VA 
officials estimated that the average time it takes to implement an 
enhanced-use lease can range from 9 months to 2 years. VA can also 
dispose of underutilized and vacant property to other federal agencies 
and for programs for the homeless under the McKinney-Vento Act. 
[Footnote 22] However, VA officials stated that the process can 
average 2 years and that the agency may not receive compensation from 
such agreements entered into under this act. 

Over the years, we have reported that (1) prudent capital planning can 
help agencies make the most of limited resources and (2) timely and 
effective capital acquisitions can result in economical acquisitions 
that are on budget, on schedule, and in line with mission needs and 
goals.[Footnote 23] Both OMB[Footnote 24] and GAO guidance[Footnote 
25] emphasize the importance of developing a long-term capital 
investment plan to guide the implementation of organizational goals 
and objectives and to help decision makers establish priorities over 
time. Capital planning is an especially important area for VA, given 
the agency's efforts to effect a large-scale transformation of its 
real property portfolio and the substantial capital investment these 
efforts will require. 

VA's Capital Planning Efforts Generally Reflect Leading Practices, but 
Its Capital Plan Lacks Transparency about the Cost of Future 
Priorities That Could Better Inform Decision Making: 

Leading Practices in Capital Planning Have Been Established by OMB and 
GAO: 

Congress, OMB, and GAO have identified the need for effective capital 
planning. In addition, budgetary constraints and demands to improve 
performance in all areas have put pressure on agencies to make sound 
capital acquisition proposals. In the overall capital programming 
process, planning is the first phase--and, arguably, the most 
important--since it drives the remaining phases of budgeting, 
procurement, and management. OMB has issued various guidance and 
requirements for agencies to follow and use in developing disciplined 
capital programming processes, including the 1997 Capital Programming 
Guide, to provide agencies with a basic reference for establishing an 
effective process for making investment decisions.[Footnote 26] In 
1998, GAO issued its Executive Guide on the basis of a study of 
leading state and local government and private-sector capital 
investment practices.[Footnote 27] Our guide (1) summarizes 
fundamental practices that have been successfully implemented by 
organizations that are recognized for their outstanding capital 
decision-making practices and (2) provides examples of leading 
practices from which the federal government may draw lessons and 
ideas. Although our guide focuses on fundamental practices, rather 
than detailed guidance, the practices represent actions and steps to 
be taken. In addition, the examples presented in our guide illustrate 
and complement many of the phases and specific steps contained in 
OMB's guide. There is a great deal of overlap in the OMB and GAO 
guides since both suggest similar fundamental practices that are 
essential to making effective capital investment decisions. Because of 
the importance of planning, we focused on VA's implementation of the 
concepts that underlie the planning phase of OMB's guide and planning 
practices in our guide (see figure 10). 

Figure 10: Leading Capital Planning Practices, as Outlined in OMB and 
GAO Guidance: 

[Refer to PDF for image: illustrated table] 

Planning practice: Strategic linkage; 
Description: Capital planning is an integral part of an agency’s 
strategic planning process. It provides a long-range plan for the 
capital asset portfolio in order to meet the goals and objectives in 
the agency’s strategic and annual performance plans. Agency strategic 
and annual performance plans should identify capital assets and define 
how they will help the agency achieve its goals and objectives. 
Leading organizations also view strategic planning as the vehicle that 
guides decision making for all spending. 

Planning practice: Needs assessment and gap identification; 
Description: A comprehensive needs assessment identifies the resources 
needed to fulfill both immediate requirements and anticipated future 
needs based on the results-oriented goals and objectives that flow 
from the organization’s mission. A comprehensive assessment of needs 
considers the capability of existing resources and makes use of an 
accurate and up-to-date inventory of capital assets and facilities, as 
well as current information on asset condition. Using this 
information, an organization can properly determine any performance 
gap between current and needed capabilities. 

Planning practice: Alternatives evaluation; 
Description: Agencies should determine how best to bridge performance 
gaps by identifying and evaluating alternative approaches, including 
nonphysical capital options such as human capital. Before choosing to 
purchase or construct a capital asset or facility, leading 
organizations carefully consider a wide range of alternatives, such as 
contracting out, privatizing the activity, leasing, and whether 
existing assets can be used. 

Planning practice: Review and approval of framework with established 
criteria for selecting capital investments; 
Description: Agencies should establish a formal process for senior 
management to review and approve proposed capital assets. The cost of 
a proposed asset, the level of risk involved in acquiring the asset, 
and its importance to achieving the agency mission should be 
considered when defining criteria for executive review. Leading 
organizations have processes that determine the level of review and 
analysis based on the size, complexity, and cost of a proposed 
investment or its organizationwide impact. As a part of this 
framework, proposed capital investments should be compared to one 
another to create a portfolio of major assets ranked in priority order. 

Planning practice: Long-term capital investment plan; 
Description: The long-term capital plan should be the final and 
principal product resulting from the agency’s capital planning 
process. The capital plan, covering 5 years or more, should be the 
result of an executive review process that has determined the proper 
mix of existing assets and new investments needed to fulfill the agency’
s mission, goals, and objectives, and should reflect decision makers’ 
priorities for the future. Leading organizations update long-term 
capital plans either annually or biennially. Agencies are encouraged to
include certain elements in their capital plans, including a statement 
of the agency mission, strategic goals and objectives; a description 
of the agency’s planning process; baseline assessments and 
identification of performance gaps; and a risk management plan. 

Source: GAO analysis of VA capital planning efforts. 

[End of figure] 

OMB and our guidance stress the importance of linking capital asset 
investments to an organization's overall mission and long-term 
strategic goals. The guidance also emphasizes evaluating a full range 
of alternatives to bridge any identified performance gap, informed by 
agency asset inventories that contain condition information. 
Furthermore, the guidance calls for a comprehensive decision-making 
framework to review, rank, and select from among competing project 
proposals. Such a framework should include the appropriate levels of 
management review, and selections should be based on the use of 
established criteria. The ultimate product of the planning phase is a 
comprehensive capital plan, which defines the long-term capital 
decisions that resulted from the agency's capital planning process. 
Both OMB and our guidance highlight the importance of this plan. The 
planning phase is the crux of the capital decision-making process and 
the products that result from this phase are used throughout the 
remaining phases of the process. 

VA's 5-Year Capital Plan and SCIP Reflect Several of the Leading 
Practices: 

We found that VA's 5-year capital plan and SCIP reflect several of the 
leading capital planning practices that we have previously discussed. 
For example, VA's 5-year capital plan is updated annually as part of 
its annual budget submission to Congress and contains lists of 
projects, by administration, for the next 5 years. SCIP is an update 
to VA's capital planning process that builds on existing processes, 
including the principles and tools of CARES,[Footnote 28] and was used 
to inform VA's annual budget submission to Congress for fiscal year 
2012. Figure 11 presents examples of how VA's planning efforts reflect 
leading practices. 

Figure 11: Comparison of Leading Capital Planning Practices to VA's 
Capital Planning Efforts: 

[Refer to PDF for image: illustrated table] 

Leading practice: Strategic linkage; 
Existing 5-year capital plan: Lists projects that received the highest
priority ranking using criteria that reflect VA’s strategic goals and 
mission; 
New strategic capital investment planning process: Uses updated 
weighted criteria to evaluate potential capital investments, including 
one linked to the VA strategic plan. 

Leading practice: Needs assessment and gap identification; 
Existing 5-year capital plan: Criteria include evaluating existing 
assets and assessing whether capital investments improve their 
condition; 
New strategic capital investment planning process: Gap analysis 
completed comparing VA standards with the current conditions and 
locations of facilities. 

Leading practice: Alternatives evaluation; 
Existing 5-year capital plan: Four alternative approaches considered
to bridge any performance gap—leasing; status quo; new construction; and
rehabilitation, repair, or expansion of existing facilities; 
New strategic capital investment planning process: Same process as the 
5-year capital plan. 

Leading practice: Review and approval framework with established 
criteria for selecting capital investments; 
Existing 5-year capital plan: Executive review process includes an
assessment of capital investment proposals, evaluating, scoring, and
prioritizing proposals by the VA administration, and making 
recommendations to the Secretary of VA; 
New strategic capital investment planning process: Maintains a similar 
executive review process; Projects are prioritized by evaluating 
proposals on the basis of updated list of weighted criteria; One 
prioritized list of projects across VA. 

Leading practice: Long-term capital plan; 
Existing 5-year capital plan: VA includes a 5-year capital plan as part
of its annual budget submission to Congress; 
New strategic capital investment planning process: Extends the horizon 
of its 5-year plan to 10 years. 

Sources: GAO and OMB. 

[End of figure] 

We compared VA's 5-year capital plan with the leading practices. In 
the area of strategic linkage, we found that VA's efforts reflect 
leading practices by identifying projects that received the highest 
priority ranking using criteria that reflect the goals and mission 
contained in VA's Strategic Plan. For example, one of the criteria by 
which potential capital projects were prioritized was "Departmental 
Alignment," which includes the Secretary's goals for improving 
management and performance and VA's strategic goals. In regard to 
assessing needs and identifying gaps, in 2004 we reported that VA 
neither had an agencywide inventory of existing capital assets nor 
agencywide information about the condition of those assets, but VA has 
since developed a capital asset database.[Footnote 29] VA officials 
said they recently completed facility condition assessments for all of 
its owned buildings and are considering whether to assess the 
condition of their leased buildings, many of which VA is not 
responsible for maintaining. VA uses facility condition assessments as 
one factor in guiding capital investment decisions to improve the 
condition of its most deteriorated buildings. 

VA's 5-year capital plan also includes steps to evaluate various 
alternatives for addressing real property priorities by requiring that 
four alternative approaches be considered to bridge any capital need-- 
leasing; status quo; new construction; and rehabilitation, repair, or 
expansion of existing facilities. In the area of establishing a review 
and approval framework for VA's capital investment decisions, VA has a 
panel chaired by a department-wide group of senior VA management to 
assess capital investment proposals; evaluate, score, and prioritize 
proposals by VA administration; and make recommendations through the 
VA governance process to the Secretary of VA. VA's 5-year plan uses 
established criteria by which potential capital projects are 
evaluated, such as criteria that reflect VA's goal of increasing 
veterans' access to health care and supporting services for veterans 
suffering from spinal cord injury, traumatic brain injury, and post-
traumatic stress disorder. Finally, in 2004 we reported that VA did 
not have a long-term capital plan that identified agencywide real 
property priorities.[Footnote 30] However, VA has since developed a 5-
year capital plan, updated annually, which is used to inform the 
agency's annual budget submission. It describes VA's capital planning 
process and gives brief descriptions of capital investment projects 
included in its budget submission. 

VA also modified its capital planning efforts in 2010 by developing a 
new process, called SCIP, which was used to inform its fiscal year 
2012 budget submission to Congress. VA officials told us that SCIP 
builds on its existing capital planning processes, addresses leading 
practices, and further strengthens VA's efforts in some areas. Under 
SCIP, VA will continue to link its investments with its strategic 
goals, assess the agency's real property priorities, evaluate various 
alternatives, and use a similar review and approval framework when 
making capital investment decisions. In addition, SCIP also 
strengthens VA's capital planning in some areas. Specifically, SCIP 
extends the horizon of its 5-year capital plan to 10 years, providing 
VA with a longer range picture of the agency's future real property 
priorities. As a result of SCIP, VA officials told us that the agency 
developed cost estimates for all of its major and minor construction 
projects, leases, and nonrecurring maintenance projects for the next 
10 years.[Footnote 31] SCIP is also centralizing VA's process for 
ranking and selecting capital investments on the basis of established 
criteria. For example, in the past, VA would develop a list of 
prioritized projects for each of its administrations, such as VBA, 
NCA, and VHA, for projects less than $10 million dollars. However, VA 
is now prioritizing projects from an agencywide perspective across all 
of its administrations and developing one list to guide its capital 
planning decisions. VA has also drafted a set of weighted criteria by 
which it plans to evaluate projects. The criteria listed below assess 
whether capital investments: 

* improve the safety and security of VA facilities by mitigating 
potential damage to buildings facing the risk of a seismic event, 
improving compliance with safety and security laws and regulations, 
and ensuring that VA can provide service in the wake of a catastrophic 
event; 

* address selected key major initiatives and supporting initiatives 
identified in VA's strategic plan;[Footnote 32] 

* address existing deficiencies in its facilities that negatively 
impact the delivery of services and benefits to veterans; 

* reduce the time and distance a veteran has to travel to receive 
services and benefits, increase the number of veterans utilizing VA's 
services, and improve the services provided; 

* right-size VA's inventory by building new space, converting 
underutilized space, or reducing excess space; and: 

* ensure cost-effectiveness and the reduction of operating costs for 
new capital investments. 

VA officials said that SCIP is still evolving and being refined. For 
example, VA officials said that the agency completed a series of 
"lessons learned" sessions to determine how the process can be 
improved and to make changes, if needed, for the 2013 budget cycle. 

VA's 5-year Capital Plan Lacks Transparency about the Cost of Future 
Priorities That Could Better Inform Decision Making: 

Despite the positive aspects of VA's capital planning efforts, VA's 
resulting 5-year capital plan that it provides yearly to Congress 
lacks transparency about the cost of future priorities beyond the 
current budget year. For projects VA proposes to initiate in the 
current budget year, VA's 5-year capital plan includes current year 
estimates for cost of construction, equipment, and operating costs for 
major and minor construction projects, such as new and replacement 
medical facilities. It also provides estimates to complete these and 
other ongoing projects in future years. However, the plan identifies 
other potential projects, not beginning in the current budget year, 
for which it lists project name but contains no information on what 
these projects might cost or the priority, as VA has not assigned one 
to them. For example, VA's most recent capital plan, submitted with 
its 2011 budget request, lists potential projects--including 100 major 
construction and 1,062 minor construction projects--for which pricing 
estimates are not provided. 

We have previously reported that capital planning should result in a 
long-term capital plan with prioritized projects and justification of 
capital requests, such as project resource estimates and costs. 
[Footnote 33] The cost estimates of prioritized projects can then be 
incorporated into an agency's annual budget request to Congress. The 
yearly request reflects the agency's policy decisions regarding what 
it has determined, in consultation with OMB, should be funded. VA 
officials told us that it has been VA's policy to not include 
multiyear pricing information for projects in their current 5-year 
capital plan and budget submission to Congress. VA's SCIP, according 
to VA officials and VA documents we reviewed, will identify costs for 
future projects and information about their relative priority within 
their organization. VA commented that the future priority of unfunded 
projects cannot be provided as these projects are reprioritized each 
year using updated weights and decision criteria. Further, during our 
review, VA officials told us they are considering the release of 
future year capital cost estimates to Congress. A decision on the 
release of this information is expected to be reflected in the fiscal 
year 2012 budget and SCIP plan to be released in February 2011. VA 
officials added that pricing information is viewed as an internal tool 
for prioritizing projects and preparing budget requests and that 
project cost estimates become more reliable as the projects move 
closer to the year of construction. 

While we agree that cost estimates beyond the current year are less 
reliable, this could be made clear to decision makers, and as the 
projects move closer to the year of implementation, the estimates can 
be refined. VA officials told us that the agency already maintains 
future year estimates internally. While VA may view this information 
as suitable only for internal use, decision makers in Congress would 
benefit from having it for several reasons. Specifically, transparency 
about future priorities allows decision makers to weigh current year 
budget decisions in context with the magnitude of future costs. In the 
case of VA, which has identified a significant number of future 
projects in the tens of billions of dollars, full transparency 
regarding these future priorities may spur discussion and debate about 
actions Congress can take to address them. This could include not only 
appropriations, but also programmatic changes and real property 
management tools that could help VA to leverage its real property to 
more efficiently and effectively meet the future needs of veterans. 
Additionally, transparency regarding future capital costs puts VA's 
priorities in context with the overall fiscal condition of the U.S. 
government. There is widespread agreement that the federal government 
faces formidable near-and long-term fiscal challenges. GAO has long 
stated that increased information and better incentives for budget 
decisions involving both existing and proposed programs that require 
significant future resources could facilitate consideration of 
competing demands and help put our finances on a more sustainable 
footing.[Footnote 34] And lastly, one of VA's key stakeholders, the 
Senate Appropriations Committee, recently asked VA for more 
information on its future capital project costs. The committee is 
aware of VA's SCIP process and requested that the department submit 
with its fiscal year 2012 budget request, all findings associated with 
this review.[Footnote 35] At the time of our review, VA had not 
determined how it would respond to this request. 

Providing cost estimates for future projects to Congress for capital 
programs is not without precedent in the federal government. For 
example, in 1987, Congress directed the Department of Defense to 
submit a 5-year defense program (referred to as the future years 
defense program,(FYDP)) used by the Secretary of Defense in 
formulating the estimated expenditures and proposed appropriations 
included in the President's annual budget to support DOD programs, 
projects, and activities. The FYDP provides DOD and Congress with a 
tool for looking at future funding needs beyond immediate budget 
priorities and can be considered a long-term capital plan.[Footnote 
36] As another example, the judiciary recognized that it was facing 
space shortages, security shortfalls, and operational inefficiencies 
at courthouse facilities around the country.[Footnote 37] In March 
1996, the judiciary issued a 5-year plan for courthouse construction, 
which was intended to communicate the judiciary's urgent housing needs 
to Congress and the General Services Administration, and identified 45 
projects for funding on the basis of information from Congress and GSA 
that $500 million could be used as a planning target in estimating 
funds that will be available for courthouse construction each year. 
The judiciary also developed a methodology, including criteria and 
weights, for assigning urgency scores to projects. As another example, 
we reported earlier this year that House and Senate appropriators have 
voiced interest in having the Army Corps of Engineers include 
additional information in the agency's budget presentation.[Footnote 
38] We found that an information gap is created when an administration 
highlights its priority projects, but does not provide sufficient 
information on other future resource needs. Congressional users of the 
Corps' budget presentation told us that not having information on 
future resource needs limits the ability of Congress to make fully 
informed decisions when making appropriations decisions. Further, such 
information would increase the usefulness and transparency of the 
budget presentation. 

Conclusions: 

VA has an important mission in serving veterans, and its real property 
portfolio is critical to ensuring that veterans have access to 
benefits and services. Billions of dollars have already been 
appropriated to VA to realign and modernize its portfolio. Further, VA 
has identified ongoing and future projects that could potentially 
require several additional billion dollars over the next few years to 
complete. Given the fiscal environment, VA and Congress would benefit 
from a more transparent view of potential projects and their estimated 
costs than VA currently provides. Such a view would enable VA and 
Congress to better evaluate the full range of real property priorities 
over the next few years and, should fiscal constraints so dictate, 
identify which might take precedence over the others. In short, more 
transparency would allow for more informed decision making among 
competing priorities, and the potential for improved service to 
veterans over the long term would likely be enhanced. 

Recommendation for Executive Action: 

To enhance transparency and allow for more informed decision making 
related to VA's real property priorities, we recommend that the 
Secretary of Veterans Affairs provide the full results of VA's SCIP 
process and any subsequent capital planning efforts, including details 
on the estimated cost of all future projects, to Congress on a yearly 
basis. 

Agency Comments: 

We provided a draft of this report to VA for their review and comment. 
VA generally agreed with our conclusions and concurred with our 
recommendation. VA also provided technical corrections and 
clarifications, which we incorporated as appropriate. See appendix II 
for VA's comments. 

As agreed with your offices, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies of this report 
to the appropriate congressional committees, to the Secretary of 
Veterans' Affairs, and other interested parties. The report also will 
be available at no charge on the GAO Web site at [hyperlink, 
http://www.gao.gov]. 

If you or your staff members have any questions about this report, 
please contact me at (202) 512-2834 or stjamesl@gao.gov. Contact 
points for our Offices of Congressional Relations and Public Affairs 
may be found on the last page of this report. GAO staff who made major 
contributions to this report are listed in appendix III. 

Signed by: 

Lorelei St. James: 
Acting Director, Physical Infrastructure Issues: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

We addressed the following objectives: (1) To what extent have the 
Department of Veterans Affairs' (VA) capital planning efforts resulted 
in changes to its real property portfolio and what priorities remain? 
and (2) To what extent do VA's capital planning efforts follow leading 
practices and provide the information needed for informed decision 
making? 

To determine the extent to which VA's capital planning efforts, 
including the Capital Asset Realignment for Enhanced Services (CARES), 
have resulted in changes to its real property portfolio and to 
identify the agency's remaining priorities, we interviewed VA 
officials located in the central office in Washington, D.C., and 6 
Veterans Integrated Service Networks (VISN) and observed VA facilities 
in 5 of these 6 VISNs. (See table 4 for a list of VA departments, 
VISNs interviewed and projects observed.)[Footnote 39] Based on the 
number of veterans served annually, we selected 2 large, medium, and 
small VISNs each, out of a total of 21. To further guide our 
selections, we also considered a number of other factors, including 
the number of completed and ongoing projects, new medical facilities, 
and geographic dispersion. Within each VISN, we selected projects in 
various stages, CARES projects being monitored by VA according to 
seven centrally tracked implementation measures, and sites throughout 
the geographic footprint of each selected VISN.[Footnote 40] We also 
interviewed senior officials at 5 veterans service organizations 
chartered by Congress or recognized by VA for claim representation. 
(See table 5 for a list of the veterans service organizations that we 
interviewed.) We also reviewed agency data in VA's CARES Decision, its 
Implementation Monitoring Report on Capital Asset Realignment for 
Enhanced Services, and its 5-year capital plan about changes to its 
real property portfolio and the number and cost of projects needing 
additional funding. In addition, we reviewed the funding that VA has 
received for major and minor construction projects and nonrecurring 
maintenance since fiscal year 2004 in VA budget submission 
documentation, its 5-year capital plans, and appropriation laws. We 
assessed the funding and facilities data from the VA and determined it 
was reliable for our purposes. 

Table 4: VA Departments, VISNs That We Interviewed, and Projects That 
We Observed: 

VA central office entities: Office of Construction and Facilities 
Management; [hyperlink, http://www.cfm.va.gov]. 

VA central office entities: Veterans Health Administration, Office of 
Policy and Planning; [hyperlink, http://www1.va.gov/op3/]. 

VA central office entities: Office of Management, Office of Asset 
Enterprise Management; [hyperlink, http://www4.va.gov/oaem/]. 

VA central office entities: Veterans Health Administration, Deputy 
Under Secretary for Health for Operations and Management; [hyperlink, 
http://www.carecoordination.va.gov]. 

VA central office entities: Veterans Health Administration, Deputy 
Under Secretary for Health for Operations and Management. 

VISNs interviewed: VISN 2 - VA Health Care Upstate New York; 
[hyperlink, http://www.visn2.va.gov/]; 
Projects observed: 
* Vacant property at Canandaigua, NY, VA Medical Center; 
* Spinal Cord Injury/Disease Center under construction at Syracuse, 
NY, VA Medical Center. 

VISNs interviewed: VISN 19 - VA Rocky Mountain Network; [hyperlink, 
http://www.visn19.va.gov/]; 
Projects observed: 
* Medical Center replacement planning at Denver, CO. 

VISNs interviewed: VISN 11 - Veterans In Partnership Health care 
Network; [hyperlink, http://www.visn11.va.gov/]; 
Projects observed: 
* Not observed because there were no projects completed or under 
construction. 

VISNs interviewed: VISN 12 - VA Great Lakes Health Care System; 
[hyperlink, http://www.visn12.va.gov]; 
Projects observed: 
* Community Based Outpatient Clinic at Hines, IL; 
* Tower addition at Jesse Brown VA Medical Center, Chicago, IL. 

VISNs interviewed: VISN 8 - VA Sunshine Health care Network; 
[hyperlink, http://www.visn8.va.gov/]; 
Projects observed: 
* Spinal Cord Injury/Disease Center addition at James A Haley Veterans 
Hospital Tampa, FL; 
* Medical Center under construction at Orlando, FL. 

VISNs interviewed: VISN 16 - South Central VA Health Care Network; 
[hyperlink, http://www.visn16.va.gov/]; 
Projects observed: 
* Consolidation of Gulfport, MS, VA Medical Center services to Biloxi, 
MS, VA Medical Center related construction; 
* Blind Rehabilitation Center construction at Biloxi, MS, VA Medical 
Center; 
* Joint Ambulatory Care Center (JACC) Pensacola, FL. 

Source: GAO analysis of VA data. 

[End of table] 

Table 5: Veterans Service Organizations That We Interviewed: 

Veterans service organizations: American Legion; Web site: [hyperlink, 
http://www.legion.org]. 

Veterans service organizations: American Veterans; Web site: 
[hyperlink, http://www.amvets.org]. 

Veterans service organizations: National Association of State 
Directors of Veterans Affairs; Web site: [hyperlink, 
http://www.nasdva.net]. 

Veterans service organizations: Paralyzed Veterans of America; Web 
site: [hyperlink, http://www.pva.org]. 

Veterans service organizations: Veterans of Foreign Wars; Web site: 
[hyperlink, http://www.vfw.org]. 

Source: GAO analysis of VSO data. 

[End of table] 

To determine the extent to which VA's capital planning efforts follow 
leading practices and provide the information needed for informed 
decision making, we interviewed VA officials involved in its capital 
planning efforts. We also collected information on leading capital 
planning practices from the Office of Management and Budget's Capital 
Programming Guide[Footnote 41] and GAO's Executive Guide,[Footnote 42] 
and compared it with VA's efforts as described in the agency 5-year 
capital plan. In addition, we collected information and interviewed 
officials on VA's new capital planning process, called SCIP, and 
compared it to leading capital planning practices. To compare VA's 
efforts with the efforts of other federal agencies that have provided 
estimates to Congress regarding the magnitude of future real property 
priorities, we reviewed our previous reports on capital planning 
across the federal government, including the Department of Defense's 
future years defense program[Footnote 43] and efforts by the judiciary 
[Footnote 44] in March 1996 to communicate its urgent housing needs to 
Congress. Finally, we collected VA data on the agency's future real 
property priorities and reviewed a recent request by Congress to VA to 
develop and submit a comprehensive capital plan, along with other 
information related to VA's capital planning efforts.[Footnote 45] 

[End of section] 

Appendix II: Comments from the Department of Veterans Affairs: 

Department Of Veterans Affairs: 
Washington DC 20420: 

January 21, 2011: 

Ms. Lorelei St. James: 
Acting Director, Physical Infrastructure: 
U.S. Government Accountability Office: 
441 G Street, NW: 
Washington, DC 20548: 

Dear Ms. St. James: 

The Department of Veterans Affairs (VA) has reviewed the Government 
Accountability Office's (GAO) draft report, "VA REAL PROPERTY: 
Realignment Progressing, but Greater Transparency about Future 
Priorities Is Needed" (GAO-11-197) and generally agrees with GAO's 
conclusions and concurs with GAO's recommendation to the Department.
The enclosure specifically addresses GAO's recommendation and provides 
technical comments to the draft report. VA appreciates the opportunity 
to comment on your draft report. 

Sincerely, 

Signed by: 

John R. Gingrich: 
Chief of Staff: 

Enclosure: 

[End of letter] 

Department of Veterans Affairs (VA) Comments to Government 
Accountability Office (GAO) Draft Report: VA Real Property: 
Realignment Progressing, but Greater Transparency about Future 
Priorities Is Needed (GAO-11-197): 

GAO Recommendation: To enhance transparency and allow for more 
informed decision making related to VA's real property priorities, we 
recommend that the Secretary provide the full results of VA's SCIP 
process and any subsequent capital planning efforts, including details 
on the estimated costs of all future projects, to Congress on a yearly 
basis. 

VA response: Concur. To enhance transparency and allow for more 
informed decision making related to VA's real property priorities, VA 
will provide all results of its SCIP process and any subsequent 
capital planning efforts, including details on the estimated costs of 
all future projects, to Congress on a yearly basis. 

[End of section] 

Appendix III: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Lorelei St. James, (202) 512-2834, or stjamesl@gao.gov: 

Staff Acknowledgments: 

In addition to the individual named above, David Sausville, Assistant 
Director; Daniel Cain; George Depaoli; Colin Fallon; Wati Kadzai; and 
Erica Miles made key contributions to this report. 

[End of section] 

Footnotes: 

[1] The total acres of U.S. land and buildings under the jurisdiction 
and control of VA are as of October 2009. 

[2] The independent, 16-member CARES commission was chartered in 
December 2003. The commission issued recommendations to the Secretary 
on the basis of its review of the Draft National CARES Plan and 
related information obtained through public hearings, site visits, 
public meetings, written comments from veterans and other 
stakeholders, and consultations with experts. 

[3] CARES Commission, Capital Asset Realignment for Enhanced Services, 
a report to the Secretary of Veterans Affairs (Washington, D.C.: 
February 2004). 

[4] Department of Veterans Affairs, Office of the Secretary, CARES 
Decision (Washington, D.C.: 2004). 

[5] VHA's facilities are organized into 21 regional networks, known as 
VISNs, that are structured to manage and allocate resources to VA 
health care facilities across the United States. 

[6] We interviewed officials from the six VISNs that we selected. 
However, we did not travel to one of these VISNs because there were no 
projects completed or under construction to observe. 

[7] VA is monitoring the implementation progress of seven CARES 
issues: (1) community-based outpatient clinics, (2) veteran rural 
access hospitals, (3) improved access and modernization, (4) special 
disability programs, (5) excess property, (6) VA/Department of Defense 
sharing, and (7) OneVA collaborations. 

[8] Enhanced-use leases are typically long-term agreements with public 
and private entities for the use of VA property, resulting in cash, in-
kind consideration, or both. VA is authorized to enter into an 
enhanced-use lease if it enhances the use of the property or results 
in an improvement of services to veterans in the network in which the 
property is located. Outlease agreements are agreements by which VA 
may lease real property under its jurisdiction and control for up to 3 
years to public and private entities. Sharing agreements are 
agreements with entities to use VA space for the benefit of veterans 
or nonveterans in exchange for payment or services if VA's resources 
would not be used to their maximum effective capacity and would not 
adversely affect the care of veterans. 

[9] GAO, VA Health Care: Improvements Needed in Capital Asset Planning 
and Budgeting, [hyperlink, 
http://www.gao.gov/products/GAO/HEHS-99-145] (Washington, D.C.: Aug. 
13, 1999); and VA Health Care: Capital Asset Planning and Budgeting 
Need Improvement, [hyperlink, 
http://www.gao.gov/products/GAO/T-HEHS-99-83] (Washington, D.C.: Mar. 
10, 1999). 

[10] [hyperlink, http://www.gao.gov/products/GAO/HEHS-99-145] and 
[hyperlink, http://www.gao.gov/products/GAO/T-HEHS-99-83]. 

[11] GAO, High Risk Series: Federal Real Property, [hyperlink, 
http://www.gao.gov/products/GAO-03-122] (Washington, D. C.: January 
2003). 

[12] Excess property means any property under the control of a federal 
executive agency that is not required for the agency's needs or the 
discharge of its responsibility. Underutilized means that other uses 
for these properties (such as enhanced-use leases) have not been 
identified. 

[13] The congressional budget process is one of the phases of the 
overall federal budget process, during which Congress adopts its 
budget and enacts laws appropriating funds for the fiscal year. After 
review and revision, federal agency budget estimates are transmitted 
to Congress in the president's budget request. In accordance with 
current law, the President must transmit the budget request to 
Congress on or before the first Monday in February. 

[14] VA's budgets for new construction exist in two accounts--Major 
Construction and Minor Construction--which are funded as separate line 
items within VA's appropriation. Major construction projects are those 
estimated to cost more than $10 million, while minor construction 
projects are those estimated to cost $10 million or less. See 38 
U.S.C. § 8104(a)(3)(A). Nonrecurring maintenance projects that may 
result in a change in space function or a renovation of existing 
infrastructure and are funded through the VHA Medical Facilities 
budget account. 

[15] VA uses the term "owned" to differentiate between buildings, 
space and acreage the United States owns which are under VA's 
jurisdiction and control versus what it leases. 

[16] GAO, VA Real Property: VA Emphasizes Enhanced-Use Leases to 
Manage Its Real Property Portfolio, [hyperlink, 
http://www.gao.gov/products/GAO-09-776T] (Washington, D.C.: June 10, 
2009). 

[17] VA uses contractors to conduct facility condition assessments to 
evaluate the condition of its assets at least once every 3 years. The 
contractor inspects all major systems in each building (e.g., 
structural, mechanical, plumbing, and others) and gives each system a 
grade of A (like-new condition) through F (critical condition and 
requires immediate attention). As part of this assessment, the 
contractor uses an industry cost database to estimate the correction 
costs for each system graded D or F--in poor or critical condition. 
VA's reported backlog is the sum of all identified correction costs. 

[18] Incrementally funded projects are those for which budget 
authority is provided for only part of the estimated cost. 

[19] GAO, VA Construction: VA Is Working to Improve Initial Project 
Cost Estimates, but Should Analyze Cost and Schedule Risks, 
[hyperlink, http://www.gao.gov/products/GAO-10-189] (Washington, D.C.: 
Dec. 14, 2009). 

[20] GAO, VA Health Care: VA Should Better Monitor Implementation and 
Impact of Capital Asset Alignment Decisions [hyperlink, 
http://www.gao.gov/products/GAO-07-408] (Washington, D.C.: Mar. 21, 
2007); and Federal Real Property: Progress Made Toward Addressing 
Problems, but Underlying Obstacles Continue to Hamper Reform, 
[hyperlink, http://www.gao.gov/products/GAO-07-349] (Washington, D.C.: 
Apr. 13, 2007). 

[21] GAO, Federal Real Property: Progress Made in Reducing Unneeded 
Property, but VA Needs Better Information to Make Further Reductions, 
[hyperlink, http://www.gao.gov/products/GAO-08-939] (Washington, D.C.: 
Sept. 10, 2008). 

[22] The McKinney-Vento Act, as amended, provides that property 
identified by agencies as unnecessary for mission requirements must 
first be made available to assist the homeless. See 42 U.S.C. 11411. 

[23] GAO, VA Health Care: Key Challenges to Aligning Capital Assets 
and Enhancing Veterans' Care, [hyperlink, 
http://www.gao.gov/products/GAO-05-429] (Washington, D.C.: Aug. 5, 
2005). 

[24] Office of Management and Budget, Supplement to Circular No. A-11, 
Part 7, Capital Programming Guide (Washington, D.C.: June 2006). This 
guide provides a single, integrated capital programming process for 
agencies to follow to ensure that capital assets successfully 
contribute to the achievement of agency strategic goals and objectives. 

[25] GAO, Executive Guide: Leading Practices in Capital Decision- 
Making, [hyperlink, http://www.gao.gov/products/GAO/AIMD-99-32] 
(Washington, D.C.: December 1998). 

[26] Capital Programming Guide. 

[27] [hyperlink, http://www.gao.gov/products/GAO/AIMD-99-32]. 

[28] VA officials also noted that its capital planning principles and 
tools from CARES were integrated into VHA's Access Expansion Plan and 
Health Care Planning Model. 

[29] GAO, Budget Issues: Agency Implementation of Capital Planning 
Principles is Mixed, [hyperlink, 
http://www.gao.gov/products/GAO-04-138] (Washington, D.C.: Jan. 16, 
2004). 

[30] [hyperlink, http://www.gao.gov/products/GAO-04-138]. 

[31] Recurring costs are annual resources, including staff, that are 
necessary to support services from a space being built or remodeled. 

[32] VA's major initiatives include eliminating veteran homelessness, 
improving veterans' mental health, enhancing veterans' access to 
health care, and improving VA's human capital management, among 
others. The supporting initiatives provide more detailed goals, 
delegated to specific departments within VA, that are meant to help 
the agency meet its major initiatives and other strategic goals. 

[33] [hyperlink, http://www.gao.gov/products/GAO/AIMD-99-32]. 

[34] GAO, U.S. Financial Condition and Fiscal Future Briefing, GAO-08-
490CG, University of Akron: January 29, 2008; 21ST Century 
Transformation Challenges and Opportunities, [hyperlink, 
http://www.gao.gov/products/GAO-08-260CG] (New Orleans, LA: October 
30, 2007); Federal Oversight: The Need for Good Governance, 
Transparency, and Accountability, [hyperlink, 
http://www.gao.gov/products/GAO-07-788CG] (National Conference 
President's Council on Integrity and Efficiency and Executive Council 
on Integrity and Efficiency: April 16, 2007); Enhancing Performance, 
Accountability, and Foresight, [hyperlink, 
http://www.gao.gov/products/GAO-06-1118CG] (Shanghai, China: September 
13, 2006); 21ST Century Challenges: Reexamining the Base of the 
Federal Government, [hyperlink, 
http://www.gao.gov/products/GAO-05-325SP] (Washington, D.C.: February 
2005). 

[35] S. Rep. No. 111-226, at 64 (2010). 

[36] GAO, Future Years Defense Program: Actions Needed to Improve 
Transparency of DOD's Projected Resource Needs, [hyperlink, 
http://www.gao.gov/products/GAO-04-514] (Washington D.C.: May 7, 
2004). The future years defense program reporting requirement is 
codified at 10 U.S.C.§ 221. 

[37] GAO, Courthouse Construction: Improved 5-Year Plan Could Promote 
More Informed Decisionmaking, [hyperlink, 
http://www.gao.gov/products/GAO/GGD-97-27] (Washington, D.C.: Dec. 31, 
1996). 

[38] GAO, Army Corps of Engineers: Budget Formulation Process 
Emphasizes Agencywide Priorities, but Transparency of Budget 
Presentation Could be Improved, [hyperlink, 
http://www.gao.gov/products/GAO-10-453] (Washington D.C.: Apr. 2, 
2010). 

[39] We interviewed officials from the 6 VISNs that we selected. 
However, we did not travel to one of these VISNs because there were no 
projects completed or under construction to observe. 

[40] VA is monitoring the implementation progress of seven CARES 
issues: (1) community-based outpatient clinics, (2) veteran rural 
access hospitals, (3) improved access and modernization, (4) special 
disability programs, (5) excess property, (6) VA/Department of Defense 
sharing, and (7) OneVA collaborations. 

[41] Office of Management and Budget, Supplement to Circular No. A-11, 
Part 7, Capital Programming Guide (Washington, D.C.: June 2006). This 
guide provides a single, integrated capital programming process for 
agencies to follow to ensure that capital assets successfully 
contribute to the achievement of agency strategic goals and objectives. 

[42] GAO, Executive Guide: Leading Practices in Capital Decision- 
Making, [hyperlink, http://www.gao.gov/products/GAO/AIMD-99-32] 
(Washington, D.C.: December 1998). 

[43] [hyperlink, http://www.gao.gov/products/GAO-04-514]. 

[44] GAO, Courthouse Construction: Improved 5-Year Plan Could Promote 
More Informed Decisionmaking, [hyperlink, 
http://www.gao.gov/products/GAO/GGD-97-27] (Washington, D.C.: Dec. 31, 
1996). 

[45] S. Rep. No. 111-226, at 64 (2010). 

[End of section] 

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