	VA Does Not Maintain Reliable Data on the Number of Land-Use Agreements and Their Associated Revenues

In August 2014, we reported that, on the basis of our review of land-use  agreement data for fiscal year 2012, VA does not maintain reliable data  on the total number of land-use agreements and VA did not accurately  estimate the revenues those agreements generate. According to the land- use agreement data provided to us from VA’s Capital Asset Inventory  (CAI) system—the system VA utilizes to record land-use agreements— VA reported that it had over 400 land-use agreements generating over  $24.8 million in estimated revenues for fiscal year 2012. Examples of these corrections include the following: at one medical center, one land-use agreement was recorded 37  times, once for each building listed in the agreement; and
VHA also noted that 13 agreements included in the system should  have been removed because those agreements were terminated prior  to fiscal year 2012. By implementing a mechanism that will  allow it to assess whether medical centers have timely entered the  appropriate land-use agreement data into CAI, and working with the  medical centers to correct the data, as needed, VA would be better  positioned to reliably account for land-use agreements and the associated  revenues that they generate. Additional Monitoring at Three VA Medical Centers Could Improve the Billing and Revenue- Collection Process for Land-Use Agreements

In our August 2014 report, we also found weaknesses in the billing and  collection processes for land-use agreements at three selected VA  medical centers due primarily to ineffective monitoring. For most of these  errors, we found that VA did not adjust the revenues it collected for  inflation. VA officials stated that the department  did not perform systematic reviews of the billings and collections  practices at the three medical centers, which we discuss in more  detail later. This assignment of roles  and responsibilities for one office is not typical of the sites we  examined. We 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 in this case due  to an ongoing lawsuit brought on behalf of homeless veterans about  its land-use agreement authority. VA  officials stated that they had not performed systematic reviews of these  agreements and had not established mechanisms to enable them to do  so. Specifically, we recommended that VA develop a mechanism to independently verify the accuracy, validity,  and completeness of VHA data for land-use agreements in CAI; 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; develop mechanisms to foster collaboration between key offices to  improve billing and collections practices at the New York and North  Chicago medical centers; 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; 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; and develop guidance on managing expiring agreements at the three  medical centers. After reviewing our draft report, VA concurred with all six of our  recommendations.
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.

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.

What GAO Recommends

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.