July 16, 2003

Honorable C.W. Bill Young

Chairman

Committee on Appropriations

U.S. House of Representatives

Washington, DC  20515

 

Dear Mr. Chairman:

 

          We are writing to express our strong opposition to an amendment requested by the Administration that would authorize VA to spend $50 million to study outsourcing positions in the Veterans’ Health Administration (VHA).  It is our understanding that the Administration has requested authority for VA to spend $50 million of its appropriated resources to perform studies identified in section 8110(a)(5) of title 38, U.S. Code. 

 

Section 8110(a)(5) prohibits the Department of Veterans Affairs (VA) from using its medical accounts to undertake “any study comparing the cost of the provision by private contractors with the cost of the provision by the Department of commercial or industrial products and services for the Veterans Health Administration...”  This law was clearly intended to protect the limited resources available for veterans’ health care.

 

          VA officials have advised Congress that VA intends to study almost a quarter of its workforce (about 53,000 positions) in 18 different functional areas of health care delivery, in addition to the Congressionally created Veterans Canteen Service.  Although VA has acknowledged that delivery of health care services is a “core function” within the Department, it nonetheless felt compelled to label more than 92% of the positions in its health care workforce as “commercial” under the Federal Activities Inventory Reform (FAIR) Act of 1998.  The commercial designation connotes an assumption on the part of the Administration that the duties performed could be undertaken by private-sector workers without a dimunition in the quality of services delivered.  We disagree with that assumption.

 

Previously, it was considered inappropriate to target positions in clinical areas for outsourcing.  Guidance about categorizing government workers as commercial under the FAIR Act once expressly allowed government agencies to omit employees involved in direct patient care.  In this latest round of studies, however, VA plans to target a third of the studies at positions in pharmacies, diagnostic radiology, and pathology and laboratory medical services.  Ultimately it is the Administration’s stated goal to compete 50% of the federal workforce deemed commercial under the FAIR Act.  Since most of the remaining positions in VA’s workforce are involved in direct patient care activities, in the future, these positions would necessarily include doctors, nurses, and other providers directly at the bedside. 

 

In addition to the obvious questions we have about the VA’s ability to maintain a unique health care delivery system for veterans in a largely outsourced environment, we share some of VA’s concerns about the types of employees that will most likely be affected by competitive outsourcing.  Of the positions in the function groups to be studied, one VA official stated, “these occupations have the highest proportions of women and minorities and any significant effort to outsource these jobs will have huge diversity implications.” 

 

Information requested by Representative Lane Evans from the Office of Management and Budget indicates that almost 20% of the positions to be studied are currently encumbered by veterans.

 

We are also concerned that estimates of potential savings of $1.3 billion over five years may be highly optimistic.  The Office of Management and Budget (OMB) uses a “best-case-scenario” in the U.S. Budget to forecast potential savings of $3.0 billion over 5 years.  However, OMB acknowledges that this is an optimistic projection and that its estimates lack refinement.  Before siphoning $50 million from the scarce resources designated for veterans’ health care, we hope you would share our desire to understand the steps VA and OMB are taking to improve their analytical methods.

  

Mr. Chairman, we implore you to reject inclusion of this proposed amendment in your mark of appropriations for VA, Housing and Urban Development and Independent Agencies.  The Department of Veterans Affairs was created to serve veterans’ needs that could not be easily addressed in the private sector.  Through the years it has gained expertise in managing complex conditions such as blindness, spinal cord injury, and post-traumatic stress disorder that are not available in other health care delivery systems.  We believe our veterans continue to deserve access to such a system.

 

Sincerely,

 

 

LANE EVANS                                                HENRY WAXMAN

Ranking Democratic Member                           Ranking Democratic Member

Committee on Veterans Affairs                         Committee on Government Reform

 

 

 

cc:  The Honorable James Walsh, Chairman, Subcommittee on VA, HUD

               and Independent Agencies, Committee on Appropriations

       The Honorable Alan Mollohan, Ranking Democratic Member, Subcommittee

               on VA, HUD and Independent Agencies, Committee on Appropriations

       The Honorable Anthony J. Principi, Secretary of Veterans Affairs

       The Honorable Joshua B. Bolten, Director, Office of Management and Budget

 

 

July 16, 2003

 

Honorable David Obey

Ranking Democratic Member

Committee on Appropriations

U.S. House of Representatives

Washington, DC  20515

 

Dear Mr. Obey:

 

          We are writing to express our strong opposition to an amendment requested by the Administration that would authorize VA to spend $50 million to study outsourcing positions in the Veterans’ Health Administration (VHA).  It is our understanding that the Administration has requested authority for VA to spend $50 million of its appropriated resources to perform studies identified in section 8110(a)(5) of title 38, U.S. Code. 

 

Section 8110(a)(5) prohibits the Department of Veterans Affairs (VA) from using its medical accounts to undertake “any study comparing the cost of the provision by private contractors with the cost of the provision by the Department of commercial or industrial products and services for the Veterans Health Administration...”  This law was clearly intended to protect the limited resources available for veterans’ health care.

 

          VA officials have advised Congress that VA intends to study almost a quarter of its workforce (about 53,000 positions) in 18 different functional areas of health care delivery, in addition to the Congressionally created Veterans Canteen Service.  Although VA has acknowledged that delivery of health care services is a “core function” within the Department, it nonetheless felt compelled to label more than 92% of the positions in its health care workforce as “commercial” under the Federal Activities Inventory Reform (FAIR) Act of 1998.  The commercial designation connotes an assumption on the part of the Administration that the duties performed could be undertaken by private-sector workers without a dimunition in the quality of services delivered.  We disagree with that assumption.