VA Construction: Strengthened Pilot Design and a Dedicated Team Could Improve Real-Property Donation Pilot Program

VA has pressing infrastructure needs. The Communities Helping Invest through Property and Improvements Needed for Veterans Act of 2016 (CHIP-IN Act) authorized VA to accept donated real property—such as buildings or facility construction or improvements—through a pilot program. VA has initiated one project in Omaha, Nebraska, through a partnership with a donor group. VA can accept up to five donations through the pilot program, which is authorized through 2021.

The CHIP-IN Act includes a provision for GAO to report on donation agreements. This report (1) examines the extent to which the VA's pilot design aligns with leading practices and (2) discusses what VA has learned from the pilot to date. GAO reviewed VA documents, including plans for the pilot program, and visited the Omaha pilot project. GAO interviewed VA officials, the Omaha donor group, and three non-federal entities that responded to VA's request seeking donors. GAO compared implementation of VA's pilot to leading practices for pilot design, organizational transformation, and cross-functional teams.

The Department of Veterans Affairs (VA) is conducting a pilot program, called CHIP-IN, that allows VA to partner with non-federal entities and accept real property donations from them as a way to help address VA's infrastructure needs. Although VA signed its first project agreement under the program in April 2017, VA has not yet established a framework for effective design of the pilot program. Specifically, VA's pilot program design is not aligned with four of five leading practices for designing a well-developed and documented pilot program. VA has begun to implement one leading practice by improving its efforts to communicate with relevant stakeholders, such as including external stakeholders in key meetings. However, the VA offices involved have not agreed upon and documented clear, measurable objectives for the pilot program, which is a leading practice. Further, VA has not developed an assessment methodology or an evaluation plan that would help inform decisions about whether or how the pilot approach could be expanded. While VA officials said they intend to develop these items as tasks for the newly formed CHIP-IN steering committee, they have no timeline for doing so. Without clear objectives and assessment and evaluation plans, VA and Congress may have difficulty determining whether the pilot approach is an effective way to help address VA's infrastructure needs.

To date, the CHIP-IN pilot suggests that donation partnerships could improve construction projects, but identifying donors and establishing a team for the pilot program have presented challenges. Officials from VA and the donor group for the first pilot project—an ambulatory care center in Omaha, Nebraska—said they are completing the project faster than if it had been a standard federal construction project, while achieving potential cost savings by using private sector practices. However, VA officials said it is challenging to find partners to make large donations with no financial return, and VA's lack of marketing and philanthropic development experience exacerbates that challenge. VA and the donor group agreed that a dedicated team of individuals with relevant expertise could facilitate the pilot's implementation. The new CHIP-IN steering committee could serve this purpose, but it lacks documented roles and responsibilities. Establishing a team with clear roles and responsibilities and identifying both available and needed staff resources could assist VA in partnering with additional donors and creating new opportunities to meet veterans' needs.

GAO is recommending that VA: (1) establish pilot program objectives, (2) develop an assessment methodology and an evaluation plan, and (3) document roles and responsibilities and identify available and needed staff resources. VA concurred with GAO's recommendations.

The Department of Veterans Affairs (VA) operates one of the largest  health care systems in the country with over 1,200 sites serving 9-million  veterans each year, as VA reported in 2018. However, VA’s infrastructure  is aging and many facilities, designed for an inpatient health care system,  do not align with VA’s current and future needs—such as providing more  care in outpatient settings, similar to trends in the health care industry  overall. Further, our prior work has identified instances of VA facility  construction experiencing cost overruns totaling hundreds of millions of  dollars and schedule delays exceeding several years.

In December 2016, a pilot program was enacted that helps to address  VA’s infrastructure needs by allowing VA to partner with and accept  donations from non-federal entities to construct or improve some facilities.  Specifically, the Communities Helping Invest through Property and  Improvements Needed for Veterans Act of 2016 (CHIP-IN Act) authorizes  VA to accept donated real property, such as buildings, from non-federal  entities. The legislative history suggests that Congress was seeking innovative ways to help VA meet its pressing infrastructure needs. CHIP- IN donations can include an already constructed facility or construction of  a facility on either VA property or donated property. Examples of non- federal entities that can make donations under the pilot include state or  local authorities, a donor or donor group, limited liability corporations, or  tax-exempt organizations. The CHIP-IN Act allows VA to use funds that  have already been appropriated for a particular facility’s construction  project to assist a donor of real property and improvements with  financing, designing, or constructing the facility. VA may accept up to five  donations through the pilot program, which is authorized through 2021.  As of September 2018, VA has entered into a formal agreement for one  CHIP-IN project—the construction of an ambulatory care center on the  VA medical center’s campus in Omaha, Nebraska (Omaha project). This  agreement created a partnership between VA and a nonprofit corporation  formed by a donor group in Omaha (Omaha donor group). In this case,  the donor, in consultation with VA, is leading the project’s design and  construction efforts and will donate the completed facility to VA. VA plans  to use this facility to provide various outpatient services, including primary  care and certain surgical services. Additionally, according to agency  officials, VA has engaged in discussions with potential partners regarding  CHIP-IN donation opportunities in locations across the country but has  not signed any other formal agreements as of September 2018.

The CHIP-IN Act included a provision for us to report on the pilot’s  donation agreements on a biennial basis. This report (1) examines the  extent to which VA’s CHIP-IN pilot program design aligns with leading  practices and (2) discusses what VA has learned from the pilot program  to date.

To address both objectives, we reviewed statutes, journal articles and  published reports on real property donations, and VA documents,  including plans for the pilot program and the donation agreement for the Omaha project. We visited the Omaha project, where we toured the  construction site. We interviewed VA officials, representatives from the  Omaha donor group, and three of the five non-federal entities that  responded to VA’s request for information (RFI) seeking CHIP-IN  donations but that had not met the CHIP-IN Act requirements. To  determine the extent to which VA’s pilot design aligns with leading  practices, we compared steps VA has taken in developing the pilot to a  set of leading practices that we developed and identified in 2016. We  also reviewed the pilot’s design in comparison to relevant federal  standards for internal control. In determining what VA has learned from  the pilot program to date, we reviewed the CHIP-IN pilot’s implementation  as compared to several relevant leading practices, including our prior  work on organizational transformation, collaboration, and effective  cross-functional teams.

We conducted this performance audit from March 2018 to December  2018 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.

According to VA officials and Omaha donor group representatives, two  main factors coalesced to become the impetus for the CHIP-IN Act.

One factor was an Omaha donor group’s interest in constructing an  ambulatory care center that could help address the needs of veterans  in the area, given uncertainty about when or whether VA would be  able to build a planned replacement medical center. In 2011, VA  allocated $56 million for the design of the replacement medical center  in Omaha, which had a total estimated cost of $560 million. However,  VA officials told us that given the agency’s backlog of construction  projects, the replacement medical center was not among its near-term  projects. In the meantime, according to VA officials and the Omaha  donor group, they discussed a change in the scope of the project— from the original plan of a replacement medical center to a smaller- scope project for a new ambulatory care center—that could potentially  be constructed using the existing appropriation of $56 million plus a  donation from the Omaha donor group.

Another factor was the Congress’s and VA’s broader interest in  testing innovative approaches to meeting VA’s infrastructure needs.  According to VA officials, the agency was interested in constructing  medical facilities in a more expeditious manner and developing  legislation that allowed private money to help address VA’s needs.

The CHIP-IN Act authorized a total of five pilot projects but did not name  any specific project locations. Subsequently, the Omaha donor group  applied to participate in the pilot program—with the construction of an  ambulatory care center—and VA executed a donation agreement in April 2017. VA may accept up to four more real property donations under the  pilot program, which is authorized through 2021.

The CHIP-IN Act places certain requirements on donations under the pilot  program. VA may accept CHIP-IN donations only if the property: (1) has  already received appropriations for a VA facility project, or (2) has been  identified as a need as part of VA’s long-range capital planning process  and the location is included on the Strategic Capital Investment Planning  process priority list provided in VA’s most recent budget submission to  Congress. The CHIP-IN Act also requires that a formal agreement  between VA and the non-federal entity provide that the entity conduct  necessary environmental and historic preservation due diligence, obtain  permits, and use construction standards required of VA, though the VA  Secretary may permit exceptions.

VA entered into an agreement with the Omaha donor group for the design  and construction of an ambulatory care center in April 2017—4 months  after enactment of the CHIP-IN Act. According to this agreement, which  establishes the terms of the donation, the Omaha donor group will  complete the design and construction of the facility and consult with VA.  The facility will provide approximately 158,000 gross square feet of  outpatient clinical functions, including primary care, an eye clinic, general  purpose radiology and ambulatory surgery, specialty care, and mental  health care.

According to VA officials, planning for the facility began in April 2017,  after the donation agreement was executed, and the project broke ground  in April 2018. This donation agreement includes the mutually agreed- upon design and construction standards, which incorporate both VA’s standards and private sector building standards. The donation agreement  also sets the terms of VA’s review of the design and construction  documents and establishes escrow operations for the holding and  disbursement of federal funds. Upon the Omaha donor group’s  completion of the facility (scheduled for summer 2020) and VA’s  acceptance, the Omaha donor group will turn the facility over to VA. The  total estimated project cost is approximately $86 million. VA is  contributing the $56 million that had already been appropriated for the  design of the replacement medical facility. The Omaha donor group will  donate the remaining approximately $30 million in private sector  donations needed to build the facility.

As shown in figure 2 and described below, VA officials told us that several  offices are involved in various aspects of the CHIP-IN pilot—such as  executing the Omaha project, seeking additional partnerships, and  establishing the overall pilot program effort. The VA Office of Construction  and Facilities Management (CFM) includes its Office of Real Property  (ORP) and Office of Operations. ORP has taken a lead role in  establishing the pilot program, while CFM Operations has led the execution of the Omaha project. Other VA offices that have been involved  at different stages include the Office of General Counsel and the  Secretary’s Center for Strategic Partnerships. Within the Veterans  Health Administration (VHA), the local medical-center leadership was  involved with developing the Omaha project, and the Office of Capital  Asset Management, Engineering, and Support (Capital Asset  Management Office) has contributed to efforts to identify additional  projects. Some of these offices are involved with a steering committee  created to implement the CHIP-IN Act (CHIP-IN steering committee). This  steering committee met for the first time in September 2018.

VA Has Not Yet Established a Framework for Effective Pilot Design for the CHIP-IN Pilot Program

In 2016, we identified five leading practices for designing a well- developed and documented pilot program: articulating an assessment methodology, developing an evaluation plan, assessing scalability, and ensuring stakeholder communication. (See fig. 3.)

These practices enhance the quality, credibility, and usefulness of pilot  program evaluations and help ensure that time and resources are used  effectively. While each of the five practices serves a purpose on its own,  taken together, they form a framework for effective pilot design.

VA officials have worked to communicate with relevant stakeholders, but  have not yet established objectives, developed an assessment  methodology and evaluation plan, or documented how they will make  decisions about scalability of the pilot program.

In 2016, we reported that clear, measurable objectives can help ensure  that appropriate evaluation data are collected from the outset of a pilot  program. Measurable objectives should be defined in qualitative or  quantitative terms, so that performance toward achieving the objectives  can be assessed, according to federal standards for internal control. For  example, broad pilot objectives should be translated into specific  researchable questions that articulate what will be assessed. Establishing  well-defined objectives is critical to effectively implementing the other  leading practices for a pilot program’s design. Objectives are needed to  develop an assessment methodology to help determine the data and  information that will be collected. Objectives also inform the evaluation  plan because performance of the pilot should be evaluated against these  objectives. In addition, objectives are needed to assess the scalability of  the pilot, to help inform decisions on whether and how to implement a  new approach in a broader context (i.e., whether the approach could be  replicable in other settings).

Relevant VA stakeholders have not yet collectively agreed upon and  documented overall objectives for the CHIP-IN pilot program, but the  stakeholders said they are planning to do so. However, at the time of our  review, each of the VA offices we interviewed presented various ideas of  what the objectives for the pilot should be, reflecting their varied missions  and roles in the CHIP-IN pilot. For example,

A senior VHA official said the objectives should include (1)  determining whether the CHIP-IN donation partnership approach is an  effective use of VA resources and (2) defining general principles for  the pilot, including a repeatable process for future CHIP-IN projects.

A senior VA official who has been closely involved with the pilot said  one objective should be determining how VA can partner with the  private sector for future construction projects, whether through  donation partnerships or other means.

Officials from ORP, who have taken a lead role in establishing the  pilot, told us their objectives include identifying the four additional  projects authorized by the CHIP-IN Act, developing a process to  undertake potential projects, and determining whether a  recommendation should be made that Congress extend VA’s CHIP-IN  authority beyond the 5-year pilot. ORP officials said they have written  some of these objectives in an early draft of plans for the CHIP-IN  steering committee, but they have also discussed other objectives that  are not yet documented.

While the various VA offices involved may have somewhat different  interests in the pilot program, developing a set of clear, measureable  objectives is an important part of a good pilot design. For example,  several VA officials who are involved in the pilot told us that it would be  useful for relevant internal stakeholders to collectively agree upon and  document overall objectives. ORP officials told us that the newly formed  CHIP-IN steering committee will discuss and formalize objectives for the  pilot. However, at the time of our review, a draft of these objectives had  not been developed and a timeline for developing objectives was not yet  established. A discussion of objectives was planned for the steering  committee’s first meeting in September but had been rescheduled for the  next meeting in October 2018.

VA officials told us that they did not immediately move to establish a  framework for the pilot program—which would include objectives for the  pilot—for various reasons. Some officials said that VA and the Omaha  donor group entered into formal discussions shortly after the CHIP-IN Act  was enacted, and that their focus at the time was on negotiating and then  executing a donation agreement for that particular project. As such,  formal efforts to establish the framework for the overall pilot effort were in  initial stages at the time of our review. ORP officials also said that the  enactment of the CHIP-IN Act was not anticipated at the time CFM was  planning and budgeting its resources for fiscal years 2017 and 2018, so  work on the pilot had to be managed within available resources, largely  as an additional duty for staff. In addition, a senior VHA official said a  meeting to agree upon the pilot program’s objectives was needed but had  not been held yet, noting that VA has competing priorities and vacancies  at the senior executive level. ORP officials said they are now following  project management principles in implementing the pilot. As part of this  effort, they said that they intend to develop foundational documents for  review by the CHIP-IN steering committee—such as a program plan  containing objectives—but they have not done so yet.

Without clearly defined and agreed-upon objectives, stakeholders within  VA may have different understandings of the pilot’s purpose and intended  outcomes. As a result, the agency risks pursuing projects that may not  contribute to what VA hopes to learn or gain from the pilot. While VA  officials are planning to establish objectives as they formalize the CHIP-IN  steering committee, at the time of our review these objectives had not  been documented and no timeline has been established for when they  would be. Without clear, measurable objectives, VA will be unable to  implement other leading practices for pilot design, such as determining  how to make decisions about scalability. Further, not defining objectives  in the near future would ultimately affect VA’s ability to evaluate the pilot  and provide information to Congress about its results.

VA Has Not Developed and Documented an Assessment Methodology or Evaluation Plan

We have reported that developing a clearly articulated assessment  methodology and a detailed evaluation plan are leading practices for pilot  design. The assessment methodology and evaluation plan should be  linked to the pilot’s objectives so that evaluation results will show  successes and challenges of the pilot, to help the agency draw  conclusions about whether the pilot met its objectives. The assessment  methodology and evaluation plan are also needed to determine  scalability, because evaluation results will show whether and how the pilot  can be expanded or incorporated into broader efforts. Given that several  VA offices are involved in the pilot’s implementation, it is important for  relevant stakeholders to be involved with defining and agreeing upon the  assessment methodology and evaluation plan.

VA has not yet fully developed and documented either an assessment  methodology or evaluation plan for the pilot, but VA officials told us they  plan to do so. For example, ORP officials said they intend to collect  lessons learned and then evaluate the pilot at its end in 2021 by  reviewing this information with relevant stakeholders. However, more  specific details for this assessment methodology have not been defined in  accordance with this leading practice. For example, we found that ORP  has not yet determined which offices will contribute lessons learned, how  frequently that information will be collected, or who will collect it. Similarly,  details for an evaluation plan have not been defined, including who will  participate in the evaluation and how information will be analyzed to  evaluate the pilot’s implementation and performance. Now that the CHIP- IN steering committee has met for the first time, this group intends to  discuss assessment of the pilot at a future meeting, but it is not clear  when that discussion will occur, what leading practices will be considered,  and when plans will be defined and documented.

According to VA officials, an assessment methodology and evaluation  plan have not been developed because, as discussed above, after the  CHIP-IN Act was enacted, efforts were focused on negotiating the Omaha  donation agreement and then executing that project. As such, formal  efforts to establish the pilot through the CHIP-IN steering committee were  in initial stages at the time of our review. Further, until VA has agreed- upon and documented objectives for the pilot program, it may be difficult  to determine what information is needed for an assessment methodology  and how the pilot will be evaluated.

Unless VA establishes a clear assessment methodology that articulates  responsibilities for contributing and documenting lessons learned, VA  may miss opportunities to gather this information from the pilot. For  example, while some stakeholders are documenting lessons learned  relevant to their roles in the pilot, others are not. Specifically, ORP and  CFM Operations are documenting lessons learned, but other VA offices  and the Omaha donor group have not, though some told us they would be  willing to share lessons learned if asked. Without an assessment  methodology, there may also be confusion about who is responsible for  documenting lessons learned. For example, a senior CFM official said  that the Omaha donor group was compiling lessons learned from the pilot  overall and would subsequently share those with VA. However,  representatives from the donor group told us they have not been asked to  share lessons learned with VA, but they would be willing to do so. When  key individuals leave their positions—a situation that has occurred a  number of times during implementation of the CHIP-IN pilot—their  lessons learned may not be captured. For example, VA officials and  donor group representatives told us that two VA officials who were  involved in developing the pilot have since left the agency. In addition,  stakeholders’ memories of lessons learned may fade unless they record  them. Waiting to develop an evaluation plan—which should include  details about how lessons learned will be used to measure the pilot’s  performance—may ultimately affect VA’s preparedness to evaluate the  pilot and provide information to Congress about its results.

VA Has Not Documented Plans to Assess Scalability

The purpose of a pilot is to generally inform a decision on whether and  how to implement a new approach in a broader context—or in other  words, whether the pilot can be scaled up or increased in size to a larger  number of projects over the long term. Our prior work has found that it is  important to determine how scalability will be assessed and the  information needed to inform decisions about scalability. Scalability is  connected to other leading practices for pilot design, as discussed above.  For example, criteria to measure scalability should provide evidence that  the pilot objectives have been met, and the evaluation’s results should  inform scalability by showing whether and how the pilot could be  expanded or how well lessons learned from the pilot can be incorporated  into broader efforts.

VA officials have begun to implement this leading practice by considering  the pilot as a means of testing the viability of the donation partnership  approach; however, plans for assessing scalability have not been fully  defined and documented. A senior VA official said scalability is seen as a  way to determine if the donation approach or other types of private sector  partnerships are a viable way to address VA’s infrastructure needs.  Similarly, ORP officials told us they are first considering scalability in  terms of whether the CHIP-IN donation approach is an effective or  feasible way of delivering VA projects. These officials said scalability will  be largely determined by whether all five authorized projects can be  executed before authorization for the CHIP-IN pilot program sunsets. For  example, if VA can find four additional projects and execute donation  agreements before the pilot’s authority expires, then potentially VA could  seek congressional reauthorization to extend the program beyond the 5- year pilot. ORP officials are also considering scalability in terms of any  changes to the program, such as incentives for donors, that could  potentially increase its effectiveness. However, ORP officials explained  that scalability may be limited because the types of projects that can be  accomplished with the CHIP-IN donation approach may not be the  projects that are most needed by VA. Along with other pilot design topics,  the CHIP-IN steering committee intends to discuss scalability at a future  meeting, but it is not clear when that discussion will occur. Thus, while VA  officials have considered what scalability might look like, they have not  fully determined and documented how to make decisions about whether  the pilot is scalable.

Since VA has not defined and documented the pilot’s objectives and its  evaluation plans, it may be more difficult to determine how to make  decisions about scalability. Considering how the pilot’s objectives and  evaluation plans will inform decisions about scalability is critical to  providing information about the pilot’s results. For example, at the end of  the pilot, VA and Congress will need clear information to make decisions  about whether the CHIP-IN donation approach could be extended beyond  a pilot program, if any changes could enhance the program’s  effectiveness, or if particular lessons learned could be applied to VA  construction projects more broadly. Without clear information about  scalability, VA may be limited in its ability to communicate quality  information about the achievement of its objectives. Such communication  is part of the federal standards for internal control.

VA Is Making Efforts to Improve Communication with Relevant Stakeholders

We have reported that appropriate two-way stakeholder communication  and input should occur at all stages of the pilot, including design,  implementation, data gathering, and assessment. To that end, it is  critical that agencies identify who or what entities the relevant  stakeholders are and communicate with them early and often. This  process may include communication with external stakeholders and  among internal stakeholders. Communicating quality information both  externally and internally is also consistent with federal standards for  internal control.

VA has begun to implement this practice, with generally successful  communication with the Omaha donor group. While VA has experienced  some external and internal communication challenges about the pilot,  officials have taken steps to help resolve some of these challenges.

External communication. VA officials and representatives from the  Omaha donor group generally described excellent communication  between their two parties. For example, donor group representatives  told us that in-person meetings helped to establish a strong  relationship that has been useful in negotiating the donation  agreement and executing the project to date. Further, VA officials and  donor group representatives said that all relevant stakeholders—such  as the donor group’s construction manager, general contractor, and  architect, as well VA’s engineer, project manager, and medical center  director—were included in key meetings once the Omaha project  began, and said that this practice has continued during the  construction phase.

Although the Omaha donor group reported overall effective relations  and communications with VA, donor group representatives noted that  additional public relations support from VA would have been helpful.  For example, after the CHIP-IN project was initiated in Omaha, the  donor group encountered a public relations challenge when news  reports about unauthorized waiting lists at the Omaha medical center  jeopardized some donors’ willingness to contribute to the project.  While donor group representatives said this challenge was addressed  when the donor group hired a public relations firm, they also explained  that it would be helpful for VA headquarters to provide more proactive  public relations support to the local areas where future CHIP-IN  projects are located.

VA officials stated that they experienced some initial challenges  communicating pilot requirements to external entities that are  interested in CHIP-IN donation partnerships, but officials said that in  response the agency has changed its outreach approach. As  discussed below, the donation commitment aspect of the pilot can be  a challenge. When interested entities contact VA to request  information on the CHIP-IN pilot, VA officials told us they find the  entities are often surprised by the donation commitment. For example,  two entities that responded to VA’s RFI told us they were not clear  about the donation requirement or the expected level of donation, or  both. One respondent did not understand the pilot required a  donation and would not provide an opportunity for a financial return on  investment. Another respondent indicated that when they asked VA  for clarification about the expected project’s scope, personnel from a  headquarters office and the local VA medical center could not fully  answer their questions. VA officials acknowledged these challenges  and said they have changed their outreach efforts to focus on certain  potential CHIP-IN locations, rather than RFIs aimed at a broader  audience. Further, VA officials said that when speaking with potential  donors going forward, they plan to involve a small group of officials  who are knowledgeable about the pilot and its donation approach.

Internal communication. While VA initially experienced some  challenges in ensuring that all relevant internal stakeholders have  been included in the pilot’s implementation, according to officials, the  agency has taken recent steps to address this concern and involve  appropriate internal offices. For example, officials from the Capital  Asset Management Office said they could have assisted ORP in  narrowing the list of potential projects in the RFIs but were not  consulted. Later, after revising the marketing approach, ORP reached  out to the Capital Asset Management Office and other relevant offices  for help in determining priority locations for additional CHIP-IN  projects, according to an ORP official. Officials from the Capital Asset  Management Office told us that with improved engagement they were  able to participate more actively in discussions about the pilot. In  addition, initial plans for the CHIP-IN steering committee did not  include VHA representation. However, in summer 2018 ORP  expanded the planned steering committee to include VHA  representatives, a plan that some other VA offices told us is needed to  ensure that the pilot addresses the agency’s healthcare needs and  that VHA offices are informed about pilot efforts.

CHIP-IN Pilot Suggests That Donation Partnerships Can Improve Project Implementation, but Challenges Include Identifying Donors and Establishing Responsibilities

VA and Omaha Donor Group Agree That the CHIP-IN Donation Approach and Private Sector Practices Have Improved the Omaha Project’s Implementation

Based on the experience with the Omaha project, the CHIP-IN donation  approach can result in potential cost and time savings—through the  leveraging of private-sector funding, contracting, and construction  practices—according to VA officials and the Omaha donor group.  Regarding cost savings, one VA official stated that using donations  makes VA’s appropriated funds available to cover other costs. In addition,  based on the experience with the Omaha project, other VA officials told  us that a CHIP-IN project can potentially be completed for a lower cost  because of practices resulting from private sector leadership. Specifically,  VA estimated that the Omaha ambulatory care center would cost about  $120 million for VA to build outside of a donation partnership—as a  standard federal construction project. Under the CHIP-IN pilot, however,  the total estimated cost of the Omaha facility is $86 million—achieving a  potential $34 million cost savings. Regarding time savings, CHIP-IN  projects can potentially be completed at a faster pace because of the use  of certain private sector practices and because projects can be addressed  earlier than they otherwise would be, according to VA officials.

The use of private-sector building practices can result in cost and time  savings in a number of ways, according to VA officials and the Omaha  donor group, as follows:

The use of private-sector building standards contributed to cost  savings for the Omaha project, according to VA officials and donor  group representatives. VA and the donor group negotiated a  combination of industry and VA building standards. A CFM official told  us that using this approach and working with the private sector donor  group encouraged the design team to think creatively about the risk  assessment process and about how to meet the intent of VA’s  physical security standards, but at a lower cost than if they were  required to build a facility using all of VA’s building standards as  written. For example, when assessing the safety and physical-security  risk, the donor group and VA identified a location where two sides of  the facility will not have direct exposure to the public or roadway  traffic. Prohibiting exposure to roadways on two sides of the facility  will mean spending less money to harden (i.e., protect) the facility  against threats such as vehicular ramming. According to VA officials,  using the combined standards did not compromise security on the  Omaha project.

Involving the general contractor early on in the design for the Omaha  project, an approach VA does not typically take, contributed to both  time and cost savings. VA officials told us that engaging the general  contractor during the project’s design stage allowed the project to  begin more quickly and was also helpful in obtaining information about  costs and keeping the project within budget. However, VA officials  said that depending on the project and contracting method used, it  might not be possible to apply this contracting practice to VA  construction projects outside of the pilot program.

A private-sector design review method helped to save time. The  Omaha donor group used a software package that allowed all design- document reviewers to simultaneously review design documents and  then store their comments in a single place. VA officials said this  approach was more efficient than VA’s typical review method and cut  about 18 weeks from the project’s timeline. VA officials also said use  of this software was a best practice that could be applied to VA  construction projects more broadly. In addition, the donor group and  VA employed fewer rounds of design reviews than VA typically uses;  this streamlining also helped to save time during the design process,  according to VA officials.

Further, VA officials said that the CHIP-IN donation approach can allow  VA to address projects more quickly because they are addressed outside  of VA’s typical selection and funding process. For example, VA officials  told us that because of the agency’s current major construction backlog,  using the CHIP-IN donation approach allowed work on the Omaha project  to begin at least 5 years sooner than if the CHIP-IN approach had not  been used. The Omaha project’s priority was low relative to other  potential projects, so that it was unlikely to receive additional funding for  construction for several years. For example, one agency official noted  that even if the project was at the top of VA’s priorities, there is a backlog  of 20 major construction projects worth $5 billion ahead of it—meaning  the Omaha project would probably not be addressed for at least 5 years.  VA officials also told us that as they consider future CHIP-IN projects,  they are looking for other projects that, like the one in Omaha, are  needed, but may not be a top priority given available funding and could  be moved forward with a private sector donation. In addition, use of the  CHIP-IN donation approach and decision to pursue an ambulatory care  center contributed to an earlier start on a project to address veterans’  needs. However, as mentioned earlier, VA officials said that future  construction projects will be necessary to address some needs that were  part of the original replacement medical center plan.

Stakeholders Agreed That Relying on Philanthropic Donations and Identifying Donors Is a Challenge to Establishing Pilot Partnerships

A main challenge to establishing pilot partnerships is the reliance on large  philanthropic donations, according to VA officials, the Omaha donor  group, and RFI respondents. In general, the potential donor pool may not  be extensive given the size of the expected donations—in some cases  tens or hundreds of millions of dollars—and the conditions under which  the donations must be made. For example, as discussed earlier, VA  officials said that when interested entities contact them about the pilot,  they are often surprised by the donation commitment. When we spoke  with two entities that responded to VA’s RFI, one told us that they “could  not afford to work for free” under the pilot while another told us that  developers are more likely to participate in the pilot if they see an  incentive, or a return on their financial contribution. Also, VA officials told  us that some potential project locations have not received any  appropriations—making the projects’ implementation less appealing to  potential donors. The Omaha donor group noted that a VA financial  contribution at or above 50 percent of a project’s estimated cost is  essential for demonstrating the agency’s commitment and for leveraging  private-sector donations.

To address challenges involving the philanthropic nature of the pilot, ORP  officials told us that VA has tried to identify strategies or incentives that  could encourage donor involvement. For example, the CHIP-IN steering  committee is considering what incentives might be effective to encourage  greater participation. One ORP official told us that such incentives could  include potential naming opportunities (that is, authority to name items  such as facility floors, wings, or the actual facility), although offering such  incentives may require changes in VA’s authority. Further, because it  may be difficult to secure donations for larger, more costly projects, some  VA officials, donor group representatives, and one RFI respondent we  spoke to suggested that VA consider developing less costly CHIP-IN  projects—giving VA a better chance of serving veterans by filling gaps in  service needs. Other VA officials, however, said they wanted to focus on  larger projects because the pilot allows only five projects.

Another challenge is that VA generally does not possess marketing and  philanthropic development experience. VA officials told us that this makes  the inherent challenge of finding donors more difficult. While VA officials  have used the assistance of a nonprofit entity that has marketing  expertise, they also said that going forward it would be helpful to have  staff with relevant marketing and philanthropic development experience to  assist with identifying donors. VA officials said this expertise could  possibly be acquired through hiring a contractor, but funding such a hire  may be difficult within their existing resources.

CHIP-IN Team Lacks Documented Roles and Responsibilities and Has Limited Available Staffing

As discussed above, the CHIP-IN pilot presents an uncharted approach  to VA’s implementation of projects, and using CHIP-IN has aspects of an  organizational transformation in property acquisition for the agency  because it leverages donation partnerships and streamlines VA’s typical  funding process. We have found that a key practice of organizational  transformation includes a dedicated implementation team to manage the  transformation process  and that leading practices for cross-functional  teams include clear roles and responsibilities, and committed members  with relevant expertise. VA officials and Omaha donor group  representatives acknowledged that a dedicated CHIP-IN team could help  focus pilot implementation—and that no such team existed within the  agency. ORP officials told us that the newly formed CHIP-IN steering  committee would provide the necessary leadership for pilot  implementation. They anticipate that a working group will be part of the  committee and serve as a dedicated team for the pilot. However, as  discussed below, roles and responsibilities have not been defined and  staff resource decisions have not been made.

Clear and documented roles and responsibilities. Several VA officials  told us that responsibility for managing the overall pilot effort had not  been assigned, and that they had different interpretations of which office  had responsibility for leading the pilot. Some officials identified ORP as  the leader, while others thought it was CFM or the Center for Strategic  Partnerships. One CFM official told us that a clear definition of  responsibilities is needed under the pilot along with a dedicated office or  person with the ability to make decisions when an impasse across offices  exists. Similarly, a senior VHA official told us that leadership roles and  responsibilities for the pilot are not fully understood within the agency,  which has made establishing partnerships under the pilot a challenge. For  example, both VA officials and Omaha donor group representatives  identified the lack of a senior-level leader for the pilot as a challenge and  emphasized the need for strong pilot leadership going forward. Now that  a CHIP-IN steering committee is being formed to provide pilot leadership,  ORP officials intend to discuss committee members’ roles and  responsibilities. This discussion was planned for the first committee  meeting but was rescheduled for the next meeting in October 2018. ORP  officials, however, told us that they do not expect to assign individual  members’ roles and responsibilities until a future date. VA officials did not  have a timeline for when committee or individual members’ roles and  responsibilities would be formally documented.

ORP officials said that roles and responsibilities for the pilot have not  been defined because after enactment of the CHIP-IN Act, their first  priority was to engage the Omaha donor group and negotiate an agreement. Later, after the Omaha project was progressing, ORP officials  said they turned their attention to formalizing the pilot program and  identifying additional donation partnerships. While it is important to  concentrate on completion of individual projects, it is also important to  plan for the overall pilot’s implementation—to help ensure that the pilot’s  purpose and goals are met and in a timely manner. We have found that  clarifying roles and responsibilities is an important activity in facilitating  strong collaboration and building effective cross-functional teams. In  addition, we have found that articulating roles and responsibilities is a  powerful tool in collaboration and that it is beneficial to detail such  collaborations in a formal, written document.

Committed team members. Various VA offices and staff members have  worked on the CHIP-IN pilot in addition to their other responsibilities, but  several VA officials told us the resources currently dedicated to the pilot  are insufficient. During our review, an ORP official told us that two ORP  staff each spent about 4 to 6 hours per week on the pilot, as collateral  duties. However, since that time, one of these two staff members has left  the agency. A senior VA official told us that ORP and the Center for  Strategic Partnerships could each use two to three more dedicated staff  members to work solely on the pilot. While one ORP official said that  additional staff would likely be assigned after other CHIP-IN projects are  identified, a Center for Strategic Partnerships official said a specified  percentage of staff time should be dedicated now to identifying potential  donors. As mentioned above, VA officials told us they anticipate a  working group will be part of the CHIP-IN steering committee and will  serve as the dedicated team to implement the pilot. However, VA has not  yet documented how it will staff the working group, including how it will  obtain the needed expertise within its existing resources.

According to one VA official, staff had not been initially dedicated to the  pilot because the CHIP-IN Act did not provide resources to fund a  dedicated team for the pilot, so VA has needed to implement the pilot  within its existing resources. This VA official also told us that they were  not certain VA could support a dedicated team with existing resources.  Another official indicated that VA would need to consider how to  incorporate CHIP-IN into the agency’s operations if the pilot program  were expanded beyond the initial pilot and then dedicate needed resources. Dedicating a strong and stable implementation team is  important to ensuring that the effort receives the focused, full-time  attention needed.

Team members with relevant knowledge and expertise. As previously  discussed, VA officials told us that it would be helpful for a CHIP-IN team  to include stakeholders with certain expertise, such as marketing and  philanthropic development experience. In addition, representatives from  the Omaha donor group said going forward, proactive public relations  expertise is needed from VA headquarters (in particular, for external  communications outside of the partnership) to quickly and positively  address any incidents that could negatively impact VA’s ability to  encourage donor participation in the pilot at the local level. For example,  in the event of critical news reports about a local VA facility, such as what  occurred in Omaha, donor group representatives said that additional  public relations support would be helpful. VA officials also told us that a  CHIP-IN team should be a collaborative effort across several offices.  Specifically, one senior VA official said a cross-functional team with  representation from ORP, CFM Operations, the Center for Strategic  Partnerships, VHA, and the Office of Asset Enterprise Management  (which has budget and finance expertise) would be useful in focusing and  implementing the pilot. Leading practices for cross-functional teams  include having members with a wide diversity of knowledge and  expertise.

Having a dedicated team or working group that consists of committed  members with clear roles and responsibilities could assist VA in  implementing the CHIP-IN pilot. For example, the working group could  focus time and attention on strengthening design of the pilot program as a  whole, instead of implementing projects on a piecemeal basis. Further,  clearly identifying and documenting roles and responsibilities could help  relevant stakeholders define and agree upon pilot objectives as well as an  assessment methodology and evaluation plan. In addition, including  stakeholders with relevant expertise on the dedicated team may assist VA  in identifying viable projects and negotiating partnership agreements  more readily.

The CHIP-IN pilot is a unique, time-limited opportunity for VA to test a  new way of building needed medical facilities by using non-federal  funding sources—donors—to leverage federal funds. Though the first  project is still under way, stakeholders have already noted benefits of the  donation partnership approach, including potential cost and time savings  as well as learning about private sector practices that could be applied  more broadly to VA construction. However, VA is not yet collecting the  information it needs to support decisions by VA or Congress about the  pilot. Without a strengthened pilot design—including measurable  objectives, an assessment methodology, and an evaluation plan—that  can help inform decisions about the scalability of the pilot, it may not be  clear to VA and Congress whether the CHIP-IN approach could be part of  a longer-term strategy or how lessons learned could enhance other VA  construction efforts. While leadership for the pilot had not been previously  assigned, a newly formed CHIP-IN steering committee is meant to focus  on the pilot’s implementation. Defining and documenting roles and  responsibilities for this committee—and identifying the resources needed  to effectively implement the pilot—could assist VA in partnering with  additional donors and creating new opportunities to meet the urgent  needs of veterans.

We are making the following three recommendations to VA.

The Secretary of VA should ensure that internal stakeholders—such  as the CHIP-IN steering committee’s members—agree to and  document clear, measurable objectives for the CHIP-IN pilot that will  help inform decisions about whether and how to scale the program.  (Recommendation 1)

The Secretary of VA should ensure that internal stakeholders—such  as the CHIP-IN steering committee’s members—develop an  assessment methodology and an evaluation plan that are linked to  objectives for the CHIP-IN pilot and that help inform decisions about  whether and how to scale the program. (Recommendation 2)

The Secretary of VA should ensure that the CHIP-IN steering  committee documents the roles and responsibilities of its members  and identifies available staff resources, including any additional  expertise and skills that are needed to implement the CHIP-IN pilot  program. (Recommendation 3)

We provided a draft of this report to VA for comment. In its written  comments, reproduced in appendix I, VA concurred with our  recommendations and stated that it has begun or is planning to take  actions to address them. VA also provided a general comment on the role  of VHA in the CHIP-IN pilot, which we incorporated in our report.

We are sending copies of this report to the appropriate congressional  committees, the Secretary of Veterans Affairs, and other interested  parties. In addition, the report is available at no charge on the GAO  website at http://www.gao.gov.

If you or your staff have any questions regarding this report, please  contact me at (213) 830-1011 or vonaha@gao.gov. Contact points for our  Offices of Congressional Relations and Public Affairs may be found on  the last page of this report. GAO staff who made key contributions to this  report are listed in appendix II.

Appendix I: Comments from the Department of Vetera ns Affairs

Appendix II: GAO Contact and Staff Acknowledgments

In addition to the contact named above, Cathy Colwell (Assistant  Director), Kate Perl (Analyst in Charge), Melissa Bodeau, Jennifer  Clayborne, Peter Del Toro, Shirley Hwang, Terence Lam, Malika Rice,  Crystal Wesco, and Elizabeth Wood made key contributions to this report.

A 2016 law allows a VA pilot program to accept donations for facility construction or improvements. In Omaha, Nebraska, one donor group—in consultation with the VA—is building an ambulatory care center. The VA and the donor group said this project is proceeding faster and at a lower cost than a typical VA project. However, VA officials said it is hard to find partners to make large donations.

We made 3 recommendations, including ways to make the program's steering committee more effective at finding partners.