DHA contending with $14.8 billion hospital maintenance backlog

The Defense Health Agency will need to figure out how to wrestle with a $14.8 billion maintenance and modernization backlog at military hospitals and clinics when it fully assumes responsibility of those facilities in 2022.

The price tag comes from a Defense Department Inspector General report published last Friday. It highlights the challenges DHA will inherit as it centralizes the Army, Navy and Air Force’s 576 military treatment facilities (MTFs) and 87 dental clinics under its umbrella.

The backlog isn’t something that DHA can ignore either. The DoD IG examined MTFs at six bases as a sample and found 760 unfunded requirements, costing more than $552 million. Those requirements were to fix safety deficiencies, unsafe working environments, building code failures and more.

“Delays in addressing more than $552 million of unfunded requirements for 60 military MTFs on the six installations reviewed could worsen the overall condition, readiness, use, functionality and services provided,” the IG wrote.

Seven of those unfunded requirements at four of the installations could cause death or major injury, according to management at the facilities.

For example, at Ft. Riley in Kansas, there is an outstanding ticket to move an emergency oxygen shutoff valve for an estimated $20,000.

The reason it needs to be moved is it is 15 feet off the ground and not readily accessible during an emergency.

At Eglin Air Force Base in Florida, there is an outstanding need to replace the fire alarm system in a hospital because it does not meet legal requirements.

Other unfunded requirements keep hospitals from properly treating patients.

At Nellis Air Force Base in Nevada, a hospital is waiting to convert administrative offices into a procedure room to ensure pain management providers can give care to patients.

The money for those requirements has not come down from the medical commands or simply isn’t available. Needless to say, the DoD IG recommends DHA uniformly prioritize the unfunded requirements and fix them. The military services had varied ways of prioritizing work orders.

“Air Force Medical Support Agency officials would review the requirements data from facility management personnel to determine the final risk assessment priority,” the authors wrote.

However, U.S. Army Medical Command and Navy Medicine “officials prioritized the requirements based on the estimated value of the unfunded requirements and reviewed the criticality code, requirement code, to determine whether to fund projects.”

DHA said to prioritize orders, it worked with the military services to create a new standardized set of requirement codes, which the military branches started using in late 2019.

It’s not just the unfunded projects that DHA has to deal with, though.

DoD IG found the data of reported maintenance issues is flawed.

“Unless facilities data quality is improved, the DHA may rely on less than accurate information related to future maintenance requirements when planning for short-term and long-term requirements,” according to the report.

The two systems the hospitals have been using to track building issues were plagued by inconsistencies.

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For example, at Ft. Campbell in Kentucky, the two reporting systems and physical inspections did not match up.

“At the four facilities visited and for the 35 facility component systems reviewed, we identified 23 inconsistencies between the [two systems’] open requirements and physical observations of facility component conditions,” the authors of the report wrote. “At the Blanchfield Army Community Hospital, one database did not include a requirement to replace the infant abduction system, but another database did include the requirement.”

The DoD IG told DHA it will need to standardize and update those systems.

DHA said it released guidance for better reporting to the database; however, not all hospitals are even able to access the system.

DHA said software updates to the databases will help with the efforts.

All of these unfunded requirements and database issues further convolute DoD and Congress’ effort to change military healthcare.

Congress thought centralizing military hospitals under DHA would make for a more efficient system with better patient access.

DoD decided to look at all of its hospitals, group them into 21 marketplaces and then consolidate by closing or reducing services at some facilities.

That process has caused a fair amount of drama. Closing clinics and “rightsizing” the medical infrastructure, as DHA calls it, would also translate to an estimated 200,000 military family members and retirees losing their ability to get health care through MTFs. Those patients would be moved to private healthcare providers in the community.

Then there are reservations from the military services. At the end of 2019, Army Secretary Ryan McCarthy wanted to slow the transition of MTFs to DHA.

In an internal Army memo, obtained by Federal News Network, McCarthy stated he was “concerned about the lack of performance and planning of both the DHA and Defense Department Health Affairs with respect to the MTFs transition.”

“Like all mergers it’s about pacing,” McCarthy later said. “You are bringing thousands of people and functions to one organization. Like all mergers and acquisitions there are cultural dynamics, there are synergies you try to achieve and if you do it too fast you’re going to make a mess. This is the healthcare of our soldiers and their families.”

Congress is taking these concerns into account. The transition was originally supposed to be completed in 2021, but it was pushed off to the fall of 2022.

Now Congress is considering lengthening the transition even more.

The 2021 version of the House defense authorization bill pushes it back to 2023 and asks for an implementation plan from DoD.

“On a bipartisan basis there was great concern over the rigor of the analysis that had gone on to make the justification for the downscoping of the military treatment facilities,” a House Armed Services Committee aide said.

The Government Accountability Office also had concerns about DHA’s MTF consolidation.

“We found that often they used incomplete or inaccurate information — sometimes both,” Brenda Farrell, GAO’s director for Defense capabilities and management said in an interview with Federal News Network. “We had three areas where we found some incomplete and inaccurate information. One dealt with the quality of civilian providers; there was missing information there. The number of available civilian providers was also questionable — we thought it might be understated. And the third one dealt with the standardized time that DoD sets for a patient to drive to their provider.”

For now, DHA is moving ahead with its plan.

Read more: Facilities/Construction news

Last month, Thomas McCaffery, assistant defense secretary for health affairs, said DoD planned to push forward on its plan to “right size” the treatment facilities and to start that work by September.

“There are certain communities where there is either not a private sector network or it’s insufficient, and in that case, we are not making any changes. Again, it’s all very conditions-based,” McCaffery said. “The focus from Congress, which we share, is that the primary purpose of these facilities is to meet military requirements.” — SM

House appropriators say it’s time to eliminate DoD’s OCO accounts

Defense appropriators in the House believe the time has finally come to eliminate the Defense Department’s overseas contingency operations (OCO) accounts.

That message is delivered in a report the Defense appropriations subcommittee approved in a closed-door markup session last week, and that is set to go before the full committee on Tuesday. It is part of a fairly scathing section on DoD’s spending and reprogramming practices in recent years.

As to the OCO accounts, the committee points out that Congress and DoD have routinely used them to circumvent the spending caps in the Budget Control Act, and says that it’s time not only to end that practice — but to eliminate the OCO accounts altogether.

“The OCO experiment has been an abject failure and has given the department a budgetary relief valve that has allowed it to avoid making difficult decisions,” according to a draft version of the report obtained by Bloomberg Government. “The committee believes that the department should cease requesting funding for the OCO accounts following this fiscal year.”

In its 2021 budget request, DoD requested $69 billion in OCO funding, but acknowledged that $16 billion of those dollars were actually for base budget requirements that had nothing to do with wartime operations in Afghanistan or elsewhere. In the committee’s view, 2022 is the perfect time to stop using OCO as a workaround to budget caps, since troops are drawing down from Afghanistan and the caps are expiring anyway.

Appropriators also used the occasion to criticize what they said was a serious decline in budget transparency and a deteriorating “partnership” between DoD and the committee on allocating Defense funding.

Read more: Budget news

The latest evidence of that, they said, was the department’s reprogramming of $3.8 billion in weapons system spending toward border wall construction earlier this year. That type of transfer has historically only happened with the approval of the four Congressional defense committees, but in this case, DoD reprogrammed the funds without consulting lawmakers. That action followed a similar $6.1 billion transfer toward border wall construction in 2019.

“Department leadership has claimed that 3-to-5% annual real growth in the defense budget is necessary to support the National Defense Strategy while transferring nearly $10 billion for non-defense activities not enumerated within the National Defense Strategy,” members wrote. “The committee condemns these decisions, as well as repeated requests for more flexibility within the budget structure and reprogramming authorities … The granting of additional budget flexibility to the department is based on the presumption that a state of trust and comity exists between the legislative and executive branches regarding the proper use of appropriated funds. This presumption presently is false.” —JS

Pentagon signs more DPA contracts to support commercial portions of its industrial base

The Defense Department said Friday it’s approved another round of spending under the Defense Production Act to help prop up parts of its industrial base that have been hit hardest by the coronavirus pandemic.

The contracts — all issued under Title III of the DPA — total $84 million. They’re targeted toward three different types of commercial companies the department says it depends on, but whose commercial business has taken a major hit because of COVID-19.

Read more: Contracting news

In the small unmanned aerial vehicle market, $13 million will go to five different companies: AirMap, ModalAI, Skydio, Graffiti Enterprises, and Obsidian Sensors. The department said those contracts would save 14 jobs and create 20 more, while also producing new military capabilities. All of the companies entered the Defense space via the Defense Innovation Unit’s Commercial Solutions Opening process.

Another $15 million will go to LeoLabs, which DoD said is the only domestic company that can deliver the technology it needs to surveil satellites in low-Earth orbit. The department said the money will “offset direct workforce and financial distress” the company has faced because of the pandemic.

And the department awarded $56 million to ArcelorMittal Inc., one of the world’s largest steel and mining companies, with $71 billion in revenue in 2019. Despite the company’s size, DoD said the funds were needed to expand the company’s capacity to build alloy steel plates for Navy shipbuilding at its facility in Coatesville, Pennsylvania.

The spending will “protect jobs in a region hit hard by the COVID-19 pandemic and ensure critical capabilities are retained in support of U.S. Navy operational readiness,” officials said in a release. —JS

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