STATEMENT
DONALD ORNDOFF
DIRECTOR, OFFICE OF CONSTRUCTION & FACILITIES MANAGEMENT
DEPARTMENT OF VETERANS AFFAIRS
HOUSE VETERANS AFFAIRS COMMITTEEE, SUBCOMMITTEE ON HEALTH

February 27, 2008

Mr. Chairman and members of the Committee, I am pleased to appear today to discuss the Department of Veteran Affairs' ( VA) draft bill to request authorization for six major medical construction projects and twelve major medical facility leases, as well as addressing other issues related to VA's construction program. Joining me today are Joe Williams, Assistant Deputy Under Secretary for Health, Robert Neary, Executive - in - Change, Office of Construction and Facilities Management, Brandi Fate, Director, CAMPS, and Jim Sullivan, Deputy Director, Office of Asset Enterprise Management. Let me briefly begin by reviewing the status of VA's major construction program.

The Department is currently implementing the largest capital investment program since the immediate post-World War II period. This program represents implementation of the results from VA's strategic plan and the Capital Asset Realignment for Enhanced Services program (CARES), initiated system wide in 2002 and yielding results in May 2004. As of Fiscal Year 2008 (FY08), VA has received appropriations totaling $5.3 billion for CARES projects. Currently, VA has 40 active Major Construction projects. Thirty-three of the 40 projects have been funded for a total cost of approximately $2.8 billion. The remaining seven projects have received partial funding totaling $560 million, and have a total estimated cost of $2.3 billion. VA is requesting $471 million in Major Construction appropriations for FY09 for infrastructure improvements and enhancements to its medical facilities. This request will provide additional funding to five of the partially funded projects, and begin the construction process on three new starts. We are seeking authorization for six major medical facility construction projects and twelve major medical facility leases for FY09.

VA has a real property inventory of over 5,000 owned buildings, 1,100 leases, 32,000 acres of land and approximately 158 million gross square feet (owned and leased). VA has reduced in excess of 1.6 million square feet in the last two years. During the CARES process, the average age of VA facilities was calculated at well over 50 years old. Many of these older facilities are not designed or constructed to meet the demands of clinical care in the 21st century. VA's management of these assets is critical to providing health care and services to our veterans.

VA effectively manages its vast holding of capital assets through performance monitoring and analysis, decreasing underutilized and vacant space, improving facility conditions, decreasing operating costs, and reducing non-mission dependent assets. VA also develops energy savings performance contracts designed to reduce energy consumption in federally owned facilities, reducing the demand and dependence on natural resources.

VA utilizes a multi- characteristic decision methodology to foster a decision making approach in prioritizing its capital investment needs and requirements. Through this methodology, VA establishes its Five Year Capital Plan. The plan describes the selection of VA's capital acquisitions and funding requests by incorporating a formal executive review process. The process begins with Veterans Health Administration ( VHA) strategic planning initiatives that identify capital needs based upon demographic data, workload, actuarial projections, cost effectiveness, risk, and alternatives. Once a potential project is identified, it is reviewed and scored based on criteria VA considers essential to providing high quality services in an efficient manner. The new funding requirements are considered, along with existing program requirements and workload projection decisions, when determining the projects and funding levels requested as part of the VA budget submission.

Selected projects based on VHA's strategic process are then examined through the Department's Capital Investment Panel to ensure all projects are based upon sound principles, promote the "One- VA" vision, align with VA strategic goals, address the VA Secretary's priorities, and support the President's Management Agenda. The Capital Investment Panel then scores and analyzes the projects on these principles and submits the results to the Strategic Management Council ( SMC) for consideration. The SMC is VA's governing body responsible for overseeing VA's capital programs and initiatives. The SMC reviews the projects and submits its recommendations to the Secretary, who makes the final decision on which projects to include in the budget.

Major capital investment needs are requested from facilities in the fall, prioritized through each Administration and the Departmental review process, and evaluated for the Secretary's approval by the following summer. Under the current process, once a decision has been made to include a project in the Department's budget, the design process begins with the selection of the design architect. The design process consists of three phases - schematic design, design development and construction document preparation. While the timing can vary with the size and difficulty of the project, design on average takes 18 months. Once design is complete, the construction contractor is obtained and construction begins shortly thereafter. Almost one-third of VA projects are executed using the design build method in which a contract is awarded to an architect/engineer and construction contractor team who take a preliminary design provided by VA and completes the design and then constructs the project accordingly.

Mr. Chairman and members of the Committee, my further comments regard VA's proposed bill submitted to the Speaker and will relate to the four sections separately, rather than the bill as a whole.

Section 1. Authorization of Fiscal Year 2009 Major Medical Facility Projects
Section 1 of the proposed bill would authorize the Secretary to carry out four major medical construction projects in Lee County, Florida; Palo Alto, California; San Antonio, Texas; and San Juan, Puerto Rico.

Section 2. Additional Authorization for Fiscal Year 2009 Major Medical Facility Construction Projects Previously Authorized
Section 2 of the proposed bill authorizes the Secretary to carry out two major medical facility projects located in Denver, Colorado and New Orleans, Louisiana, respectively. Both projects were previously authorized for lesser sums under Public Law 109-461, but additional authorization is required to complete the construction projects at these locations.

Section 3. Authorization of Fiscal Year 2009 Major Medical Facility Leases
Section 3 of the proposed bill authorizes the Secretary to carry out twelve major medical facility leases in fiscal year 2009. These leases will provide an additional eight outpatient clinics, expand two current outpatient clinics, develop a primary care annex facility, and provide needed research space.

Section 4. Authorization of Appropriations
This section requests authorization for the appropriation of $477,700,000 for major construction projects in fiscal year 2009 and $1,394,200,000 for the projects previously authorized for lesser sums. This section also provides $60,114,000 from the Medical Facilities account to authorize twelve major medical facility leases in fiscal year 2009.

In closing, I would like to thank the Committee for its continued support for improving the Department's physical infrastructure to meet the changing needs of America's veterans, and we look forward to continuing to work with the Committee on these important issues. I urge you to support our proposed authorization bill so the Department can provide the highest level of care for veterans in these high priority areas.

Again, thank you for the opportunity to appear before the committee today. My colleagues and I would be glad to answer your questions.