VA may use these authorities to enter into  agreements that include outleases, licenses, permits, sharing  agreements, and EUL agreements with public or private entities to use  land and buildings for revenue or in-kind consideration. According to VA, it uses this system to  evaluate property management by its administrations, regional networks,  and medical centers. VA Does Not Maintain Reliable Data on the Number of Land-use Agreements and Their Associated Revenues

Based on 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.provided to us from VA’s CAI system, VA reported that it had over 400  land-use agreements with over $24.8 million in estimated revenues for  fiscal year 2012. VHA also noted in its revisions that there were 13 agreements that  had been terminated prior to fiscal year 2012 that should have been  removed from the system. However, on the basis of our independent review of  revenue receipts, we found that 5 agreements generated more than  $240,000 in revenue in 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

		Weaknesses Noted in Various Aspects of the Revenue Collection Process at the Selected Medical Centers

At the three medical centers we visited, we found weaknesses with the  billing and collection processes that impair VA’s ability to effectively and  timely collect land-use agreement revenues from its sharing partners. As a result and  according to a VA New York fiscal official, VA did not bill the sharing  partner for several years’ rent that totaled over $1 million. After it  discovered this error, VA began to take collection action on the unpaid  rent in 2012, but over $200,000 in delinquent rent remained  outstanding as of April 2014. At the North Chicago medical center, VA officials did not bill one of its  sharing partners for about $3,000 for the month of August 2012. VA Did Not Effectively Monitor Many of Its Land-use Agreements at Two of the Three Selected Medical Centers

VA did not effectively monitor the status of the land-use agreements at  the medical center level for two selected sites that we visited. Original Payment Terms with Nonprofit Organization Not Enforced. Because of the lack of monitoring, 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 utilized a  12-acre field—Barrington Park—on VA property for recreational use  (e.g., dog park and baseball fields) without a written agreement. VA  officials acknowledged that they had not performed systematic reviews of  these agreements and had not established mechanisms to enable them  to do so. Recommendations for Executive Action

In order to improve the quality of the data collected on specific land-use  agreements (i.e., sharing, outleases, licenses, and permits), enhance the  monitoring of its revenue process and monitoring of agreements, and  improve the accountability of the VA in this area, we recommend that the  Secretary of Veterans Affairs take the following six actions: 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; foster collaboration between key offices to improve billing and  collections practices at the New York and North Chicago medical  centers; and 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. Agency Comments

We provided the Departments of Veterans Affairs with a draft of this  report for its review and comment.
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.