Fiscal Year 2005 Performance and Accountability Report Published November 15, 2005
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Federal real property continues as a governmentwide high-risk area. Since January 2003, some important efforts to address the problems have been initiated by the administration and executive agencies, including a Presidential executive order on real property reform and OMB's development of guiding principles for real property asset management. The executive order is clearly a positive step. However, it has not been fully implemented, and GAO continues to believe that there is a need for a comprehensive, integrated transformation strategy for real property. In addition, further actions are necessary to address the underlying problems and related obstacles, including competing stakeholder interests in real property decisions and legal and budget-related disincentives to optimal, businesslike, real property decisions. (Note: GAO feedback here is not VA-specific.)
VA's Program Response to GAO7:
VA concurs with GAO's recommendation. VA is committed to a comprehensive, corporate-level approach to capital asset management and has taken the necessary steps to address the underlying problems and related obstacles, including competing stakeholder interests in real property decisions and legal and budget-related disincentives to optimal, businesslike, real property decisions. This approach helps VA closely align asset decisions with its strategic goals, elevate awareness of its assets, and employ performance management techniques to monitor asset performance on a regular basis throughout the lifecycle of an asset. At the core of VA's capital asset business strategy is value management - striving to return value to VA's business and managing existing value for greater return.
In June 2004 the Department produced its first 5-year capital plan (FY 2004-2009), a systematic and comprehensive framework for managing the Department's portfolio of more than 5,500 buildings and approximately 32,000 acres of land. It serves as a blueprint for managing the Department's capital investments and leads to improved use of resources and more effective delivery of health care and benefits. It outlines CARES implementation by identifying priority projects that will improve the environment of care at VA medical facilities and ensure more effective operations by redirecting resources from maintenance of vacant and underused buildings and reinvesting them in veterans' health care. The plan was well received by Congress, and 30 major construction projects were funded using 2004 available dollars and the 2005 requested amount. VA provided an updated capital plan for FY 2005-2010 to Congress in February 2005.
In February 2004 the President signed Executive Order 13327, Federal Real Property Asset Management. One central component of the order was the establishment of the Federal Real Property Council (FRPC). This council has a broad range of responsibilities including creating governmentwide principles for effective asset management. The FRPC developed "first-tier" performance measures, which are measures that all federal agencies are expected to calculate, track, and monitor. VA is a member of the FRPC and has taken the necessary steps to fully implement these first-tier measures.
Another important requirement found in the executive order was that all federal departments and agencies develop an asset management plan (AMP). The VA AMP was approved by OMB in December 2004. It serves as a companion document to the 5-year capital plan. The AMP provides information, descriptions, and examples of the following:
- The Department's capital budget, which identifies and categorizes an inventory of assets owned, leased, or managed by VA.
- The VA capital asset management philosophy, which is grounded in the lifecycle approach and details the guiding principles used at each phase.
- A description of VA's capital portfolio goals and illustrations of how they serve as both short- and long-term objectives.
- A description of the important elements found in the business case (OMB Exhibit 300), including strategic alignment, alternatives considered, risk analysis, and cost effectiveness analysis.
- Illustration of the actions being taken by VA to improve the formulation and operational management of its portfolio, including the development of VA's capital portfolio system known as the Capital Asset Management System (CAMS).
- A description of VA's sustainment model, which was recently created to assist in developing facility maintenance needs and measures.
- A description of the valuation mechanism used at VA, including fair market value, replacement value, book value, and land value.
- A description of the human capital strategies employed, including the policies developed to govern asset management at VA.
Over the past several years, VA has undertaken several major initiatives in order to improve and strengthen the capital asset management program including the following:
Creation of the Office of Asset Enterprise Management (OAEM) to promote capital programming strategies including the development of integrated approaches to transform underutilized or unneeded capital assets from liabilities to potential capital resources.
Reorganization of the Office of Management, combining multiple functions into a single office of business oversight and streamlining field operations to a manageable size via regional business offices.
Establishment of Capital Asset Managers at the regional level wherein the position of VISN Capital Asset Manager was established in each of VHA's regional networks to provide corporate (VISN) leadership and direct activities relating to the planning, acquisition, management, and disposal of capital assets. This also involves developing and monitoring VISN capital program goals and performance.
Implementation of CARES and CARES Re-Use to identify the infrastructure VA needs to provide high-quality health care to the 21st century veterans. The CARES process provided data-driven assessment of veterans' health care needs within each market, the condition of the infrastructure, and the strategic realignment of capital assets and related resources to better serve the needs of veterans. VA requested and received approximately $1 billion ($580 million in 2004 and $368 million in 2005) in major construction to begin implementing the realignment of VA infrastructure to enhance health care services for veterans. The CARES recommendations also included a number of sites where further study is required to determine suitability for future health care and re-use activities. These re-use studies are evaluating outstanding health care issues, developing capital plans, and determining the highest and best use for unneeded VA property. All savings generated through implementation of CARES will be reinvested to meet veterans' health care needs.
Development of CAMS, a portfolio management tool for all significant VA capital assets, supports the President's Management Agenda and Executive Order 13327, Federal Real Property Asset Management. Investment protocols and capital asset management policies were developed to provide guidelines for each major phase or milestone in the lifecycle of a capital asset decision. These assets are monitored and evaluated against a set of performance measures (including capital assets that are underutilized and/or vacant) and capital goals to maximize highest return on the dollar to support veteran needs.
CAMS represents the first successful attempt to link asset managers in the field with corporate and oversight branches of VA so that current data are electronically shared and vetted. CAMS includes portfolios for leased assets, owned buildings and land, major equipment, and asset-related agreements as well as an inter-portfolio capacity, which will allow for better integration of data. The information harnessed via CAMS will lead to improved asset performance measurement, which ultimately will provide VA decision-makers with the information needed to either repair and restore assets or to divest assets that are no longer needed.
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