Land-Use Agreements: Department of Veterans Affairs Needs to Improve Data Reliability and Monitoring
Highlights
What GAO Found
According to the Department of Veterans Affairs' (VA) Capital Asset Inventory system—the system VA utilizes to record land-use agreements and revenues—VA had hundreds of land-use agreements with tens of millions of dollars in estimated revenues for fiscal year 2012, but GAO's review raised questions about the reliability of those data. For example, one land-use agreement was recorded 37 times, once for each building listed in the agreement, 13 agreements terminated before fiscal year 2012 had not been removed from the system, and more than $240,000 in revenue from one medical center had not been recorded. VA relies on local medical center staff to enter data timely and accurately, but lacks a mechanism for independently verifying the data. Implementing such a mechanism and working with medical centers to make corrections as needed would better position VA to reliably account for its land-use agreements and the associated revenues they generate.
GAO found weaknesses in the billing and collection processes for land-use agreements at three selected VA medical centers due primarily to ineffective monitoring. For example, VA incorrectly billed its sharing partners for 14 of 34 agreements at the three centers, which resulted in VA not billing $300,000 of the nearly $5.3 million owed. In addition, at the New York center, VA had not billed a sharing partner for several years' rent that totaled over $1 million. VA began collections after discovering the error; over $200,000 was outstanding as of April 2014. VA stated that it did not perform systematic reviews of the billing and collection practices at the three centers and had not established mechanisms to do so. VA officials at the New York and North Chicago centers stated that information is also not timely shared on the status of agreements with offices that perform billing due to lack of collaboration. Until VA addresses these issues, VA lacks assurance that it is collecting the revenues owed by its sharing partners.
VA did not effectively monitor many of its land-use agreements at two of the centers. GAO found problems with unenforced agreement terms, expired agreements, and instances where land-use agreements did not exist. Examples include the following:
In West Los Angeles, VA waived the revenues in an agreement with a nonprofit organization—$250,000 in fiscal year 2012 alone—due to financial hardship. However, VA policy does not allow revenues to be waived.
In New York, one sharing partner—a local School of Medicine—with seven expired agreements remained on the property and occupied the premises without written authorization during fiscal year 2012.
The City of Los Angeles has used 12 acres of VA land for recreational use since the 1980s without a signed agreement or payments to VA. An official said that VA cannot negotiate agreements due to an ongoing lawsuit brought on behalf of homeless veterans about its land-use agreement authority.
VA does not perform systematic reviews and has not established mechanisms to do so, thus hindering its ability to effectively monitor its agreements and use of its properties.
Why GAO Did This Study
VA manages one of the nation's largest federal property portfolios. To manage these properties, VA uses land-use authorities that allow VA to enter into various types of agreements for the use of its property in exchange for revenues or in-kind considerations. GAO was asked to examine VA's use of land-use agreements.
This report addresses the extent to which VA (1) maintains reliable data on land-use agreements and the revenue they generate, (2) monitors the billing and collection processes at selected VA medical centers, and (3) monitors land-use agreements at selected VA medical centers. GAO analyzed data from VA's database on its land-use agreements for fiscal year 2012, reviewed agency documentation, and interviewed VA officials. GAO also visited three medical centers to review the monitoring of land-use agreements and the collection and billing of the associated revenues. GAO selected medical centers with the largest number of agreements or highest amount of estimated revenue. The site visit results cannot be generalized to all VA facilities.
Recommendations
GAO is making six recommendations to VA including recommendations to improve the quality of its data, foster collaboration between key offices, and enhance monitoring. VA concurred with the recommendations.
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Department of Veterans Affairs | In order to improve the quality of the data collected on specific land-use agreements (i.e., sharing, outleases, licenses, and permits), enhance the monitoring of its revenue process and monitoring of agreements, and improve the accountability of the VA in this area, the Secretary of Veterans Affairs should develop guidance on managing expiring agreements at the three medical centers. |
In September 2014, VA updated their guidance for their Sharing Use of Space Program. The updated guidance includes requirements for VA staff to update VA's Capital Asset Inventory (CAI) database on a regular basis (quarterly and annually) to ensure land-use agreements reflect the most current agreement terms. Additionally, VA officials told us that they developed new CAI reporting capabilities to provide advance notice of agreements that are nearing expiration so that appropriate action can be taken. Lastly, VA officials developed training on regularly updating CAI including when land-use agreements expire or are terminated. By updating their Sharing Use of Space Program guidance, developing CAI reporting capabilities on expiring agreements, and developing training on regularly updating CAI, VA will likely improve oversight of its land-use agreements.
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| Department of Veterans Affairs | In order to improve the quality of the data collected on specific land-use agreements (i.e., sharing, outleases, licenses, and permits), enhance the monitoring of its revenue process and monitoring of agreements, and improve the accountability of the VA in this area, the Secretary of Veterans Affairs should develop mechanisms to monitor the billing and collection of revenues for land-use agreements to help ensure that transactions are promptly and accurately recorded at the three medical centers. |
In June 2018, the VA provided us a copy of a new chapter of their Financial Policy entitled "Accounting for Enhanced Use Leases," which was approved in January 2018. This chapter initiates quality assurance reviews which will evaluate billing and revenue collection accuracy and timeliness. In addition, this chapter specifies the parties responsible and timeframe for data collection and entry, as well as the proper accounts into which funds are to be deposited in certain situations. By instituting quality assurance reviews and clarifying procedures, VA will likely improve their billing and revenue collection process.
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| Department of Veterans Affairs | In order to improve the quality of the data collected on specific land-use agreements (i.e., sharing, outleases, licenses, and permits), enhance the monitoring of its revenue process and monitoring of agreements, and improve the accountability of the VA in this area, the Secretary of Veterans Affairs should develop mechanisms to foster collaboration between key offices to improve billing and collections practices at the New York and North Chicago medical centers. |
As of February 2016, VA officials indicated that both the New York and North Chicago medical centers had put in place additional staffing and procedures as mechanisms to improve collaboration between key offices responsible for the billing and collection of land-use agreement revenue. For example, the New York Harbor VA Medical Center developed a sharing agreement standard operating procedure and assigned the contracting office representative duty to an existing staff member whose duties include reviewing the Capital Asset Inventory database to identify expired agreements; reviewing billing documents to identify any bills that have not been paid; and reaching out to the sharing partner for payments. Similarly, The North Chicago VA Medical Center developed a Sharing and Support Agreement Policy Instruction and hired a new Management and Program Analyst who maintains sharing agreements and collaborates with the relevant contracting and business offices.
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| Department of Veterans Affairs | In order to improve the quality of the data collected on specific land-use agreements (i.e., sharing, outleases, licenses, and permits), enhance the monitoring of its revenue process and monitoring of agreements, and improve the accountability of the VA in this area, the Secretary of Veterans Affairs should develop mechanisms to access and monitor the status of land-use agreements to help ensure that agreement terms are enforced, agreements are renewed as appropriate, and all agreements are documented in writing as required at the New York and West Los Angeles selected medical centers. |
In February 2016, VA officials told us that they developed new reporting capabilities for their Capital Asset Inventory (CAI) database to provide advance notice of agreements that are nearing expiration so that appropriate action can be taken such as renewing or terminating agreements as necessary thereby enforcing land-use agreement terms. Additionally, VA officials developed training outlining the requirement for regularly updating CAI including when land-use agreements expire or are terminated, as well as on ensuring that agreements are in writing. Lastly, VA updated their Healthcare Engineering and Capital Asset Management Guidebook to ensure that VA's CAI is updated throughout the year as needed. By developing CAI reporting capabilities, developing training on regularly updating CAI, and updating their guidance that outlines VA's requirements for continuous updates to their CAI database, VA will likely improve oversight of its land-use agreements.
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| Department of Veterans Affairs | In order to improve the quality of the data collected on specific land-use agreements (i.e., sharing, outleases, licenses, and permits), enhance the monitoring of its revenue process and monitoring of agreements, and improve the accountability of the VA in this area, the Secretary of Veterans Affairs should develop a plan for the West Lost Angeles medical center that identifies the steps to be taken, timelines, and responsibilities in implementing segregation of duties over the billing and collections process. |
In February 2016, VA officials developed a standard operating procedure for billing and collection processes for their West Los Angeles medical center to better segregate duties related to billing and revenue collections for land-use agreements. The standard operating procedure outlines the steps to be taken and responsibilities for implementing segregation of duties on the billing and revenue collections for land-use agreements at the West Los Angeles medical center. Additionally, the standard operating procedure requires that, on a quarterly basis, VA's Financial Quality Assurance Management (FQAM) perform audits ensuring segregation of duties process adherence. The FQAM's corresponding quarterly audit, completed May 2015, confirmed that the separation of duty previously found lacking in the billing/collection process has been established.
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| Department of Veterans Affairs | In order to improve the quality of the data collected on specific land-use agreements (i.e., sharing, outleases, licenses, and permits), enhance the monitoring of its revenue process and monitoring of agreements, and improve the accountability of the VA in this area, the Secretary of Veterans Affairs should develop a mechanism to independently verify the accuracy, validity, and completeness of VHA data for land-use agreements in Capital Asset Inventory. |
In its February 2016 update on the status of our recommendations, VA officials told us that they upgraded their mechanism to validate and ensure completeness of the land-use agreements in their CAI database which includes updating their Enhanced Sharing Use of Space Program policy guidance requiring management to perform periodic monitoring and independent validation of land-use agreement information. Additionally, VA officials told us that they have provided periodic training on the above mentioned policy guidance to their staff. By upgrading their mechanism for validating land-use agreement data in their CAI database, VA will likely be able to reliably account for their land-use agreements and the revenues they generate.
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