Department of Veterans Affairs Leases: Is the VA Over-Paying for Leased Medical Facilities?

2253 Rayburn House Office Building

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0 Wednesday, September 28, 2016 @ 10:30 | Contact: Justin Harclerode 202-225-9446

This is a hearing of the Subcommittee on Economic Development, Public Buildings, and Emergency Management.

Summary of Subject Matter
Official Hearing Transcript

Witness List:

  • Ms. Rebecca Shea, Acting Director, Physical Infrastructure, U.S. Government Accountability Office | Written Testimony
  • Mr. James M. Sullivan, Director of Asset Enterprise Management, U.S. Department of Veterans Affairs | Written Testimony
  • Mr. Chris Wisner, Assistant Commissioner for Leasing, Public Buildings Service, U.S. General Services Administration | Written Testimony


    Chairman Lou Barletta (R-PA)
    Subcommittee on Economic Development, Public Buildings, and Emergency Management
    Hearing on “Department of Veterans Affairs Leases: Is the VA Over-Paying for Leased Medical Facilities?”

    September 28, 2016
    Opening Statement
    (Remarks as Prepared)


    I want to thank the witnesses from the Government Accountability Office, the Department of Veterans Affairs and the General Services Administration for being here today.

    The purpose of today’s hearing is to make sure medical facilities are delivered quickly and cost-effectively, so that our veterans can receive the medical care they require. 

    The Transportation and Infrastructure Committee is involved because the Public Buildings Act requires all leases over $2.85 million dollars to be authorized by our committee and the Senate Environment and Public Works Committee.  The GSA can delegate this leasing authority to other agencies, but it cannot waive the requirement for congressional authorization.

    Providing quality health care to our veterans is my top concern.  Our men and women in uniform put their lives on the line to protect our country and our freedoms.  Medical facilities – whether owned or leased – are a critical part of delivering health care services.

    Unfortunately, the VA has struggled greatly to acquire health care facilities on time, on budget, and in compliance with the law.  The VA’s new Colorado hospital is so far over budget and behind schedule that the Army Corps of Engineers has had to take over management of the project.

    And the VA’s leasing program has been too slow, and out of compliance with the Public Buildings Act and the most basic government accounting rules.

    Both the GAO and the VA Inspector General have detailed a history of VA’s mismanagement of its real estate.  In fact, in a 2012 letter from the House Veterans’ Affairs Committee to the VA, the Committee expressed concerns about delays in the VA’s seven Health Care Clinic leases passed in 2009.

    In 2013, the Inspector General reported, “VA’s management of timeliness and costs in the Health Care Clinic lease procurement process has not been effective.”

    On top of all this, the Congressional Budget Office and OMB raised serious questions about how the VA has been accounting and budgeting for these leases.

    Unfortunately, as highlighted at our July hearing, many agencies with leasing authority outside of GSA do not understand the legal limits of their authority.  We’ve seen agencies like the SEC and the Commodity Futures Trading Commission, find themselves in serious trouble because of this.  Exceeding legal limitations can result in Anti-Deficiency Act violations – which have criminal penalties – and significant project delays. 

    In 2013 and 2014, OMB raised serious questions whether the VA had, in fact, exceeded its leasing authority.  As a result, the administration directed GSA to step in.  GSA must ensure the VA’s leases are properly authorized and do not violate the Anti-Deficiency Act.

    On September 12, 2014, the Committee officially received a letter from the VA requesting approval of six leases for health care clinics, recognizing projects over GSA’s threshold of $2.85 million required this Committee’s approval.  The Committee approved them five days later, despite having to gather updated information to evaluate costs.  It has now been two years since this Committee approved those six leases and we have not received any new prospectuses for health care clinics since then.  We understand there are eight additional leases requiring our authorization that were included among the 27 leases in the 2014 Choice Act.

    Because of this Committee’s role in approving these leases, the Committee, along with the Veterans Affairs Committee, requested GAO conduct a review of VA health care clinic leasing.  Specifically, the GAO examined a few key areas: the criteria VA uses to determine whether to lease or own medical facilities; the accuracy of VA’s cost-estimates for projects; and how the VA is aligning its leasing process with that of GSA.

    Today, we want to hear what improvements have been made and what still needs to be done to make sure the VA’s medical leases are cost-effective and comply with the law.  We also want to receive updates on the previous six projects we authorized in 2014 and a timetable on when we will receive the additional eight.

    With all the issues the VA is grappling with to ensure our veterans are served in a timely manner, the VA should take full advantage of the opportunity to leverage GSA’s real estate expertise.


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