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[From the U.S. Government Publishing Office]



108th Congress                                                   Report
 1st Session            HOUSE OF REPRESENTATIVES                108-213
======================================================================
 
    HEALTH CARE FOR VETERANS OF PROJECT 112/PROJECT SHAD ACT OF 2003

                                _______
                                

 July 16, 2003.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

   Mr. Smith of New Jersey, from the Committee on Veterans' Affairs, 
                        submitted the following

                              R E P O R T

                        [To accompany H.R. 2433]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Veterans' Affairs, to whom was referred the 
bill (H.R. 2433) to amend title 38, United States Code, to 
authorize the Secretary of Veterans Affairs to provide veterans 
who participated in certain Department of Defense chemical and 
biological warfare testing to be provided health care for 
illness without requirement for proof of service-connection, 
having considered the same, reports favorably thereon with 
amendments and recommends that the bill as amended do pass.

  The amendments are as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Health Care for Veterans of Project 
112/Project SHAD Act of 2003''.

SEC. 2. PROVISION OF HEALTH CARE TO VETERANS WHO PARTICIPATED IN 
                    CERTAIN DEPARTMENT OF DEFENSE CHEMICAL AND 
                    BIOLOGICAL WARFARE TESTING.

  Section 1710(e) of title 38, United States Code, is amended--
          (1) in paragraph (1), by adding at the end the following new 
        subparagraph:
  ``(E) Subject to paragraphs (2) and (3), a veteran who participated 
in a test conducted by the Department of Defense Deseret Test Center as 
part of a program for chemical and biological warfare testing from 1962 
through 1973 (including the program designated as `Project Shipboard 
Hazard and Defense (SHAD)' and related land-based tests) is eligible 
for hospital care, medical services, and nursing home care under 
subsection (a)(2)(F) for any illness, notwithstanding that there is 
insufficient medical evidence to conclude that such illness is 
attributable to such testing.''.
          (2) in paragraph (2)(B), by striking out ``paragraph (1)(C) 
        or (1)(D)'' and inserting ``subparagraph (C), (D), or (E) of 
        paragraph (1)''; and
          (3) in paragraph (3)--
                  (A) by striking ``and'' at the end of subparagraph 
                (B);
                  (B) by striking the period at the end of subparagraph 
                (C) and inserting ``; and''; and
                  (C) by adding at the end the following new 
                subparagraph:
          ``(D) in the case of care for a veteran described in 
        paragraph (1)(E), after December 31, 2005.''.

SEC. 3. IMPROVEMENTS TO THE RETENTION AND RECRUITMENT OF HEALTH CARE 
                    PROFESSIONALS.

  (a) Promotion Standards for Health Care Personnel.--Subsection (c) of 
7403 of title 38, United States Code, is amended by striking 
``Promotions'' and inserting ``Consistent with subsection (a) of 
section 7422 of this title, and notwithstanding subsection (b) of that 
section, promotions''.
  (b) Promotions for Nurses Who Do Not have Baccalaureate Degrees.--
Such section is further amended by adding at the end the following new 
subsection:
  ``(h) In a case in which a registered nurse has accomplished the 
performance elements required for promotion to the next grade, the lack 
of a baccalaureate degree in nursing shall not be a bar to promotion to 
that grade, and in such a case the registered nurse shall not be denied 
a promotion on that basis.''.

SEC. 4. ADDITIONAL PAY FOR SATURDAY TOURS OF DUTY FOR ADDITIONAL HEALTH 
                    CARE WORKERS IN THE VETERANS HEALTH ADMINISTRATION.

  (a) In General.--Section 7454(b) of title 38, United States Code, is 
amended by adding at the end the following new paragraph:
  ``(3) Employees appointed under section 7408 of this title shall be 
entitled to additional pay on the same basis as provided for nurses in 
section 7453(c) of this title.''.
  (b) Applicability.--The amendment made by subsection (a) shall apply 
with respect to pay periods beginning on or after the date of the 
enactment of this Act.

SEC. 5. COVERAGE OF EMPLOYEES OF VETERANS' CANTEEN SERVICE UNDER 
                    ADDITIONAL EMPLOYMENT LAWS.

  (a) Coverage.--Paragraph (5) of section 7802 of title 38, United 
States Code, is amended by inserting before the semicolon a period and 
the following: ``An employee appointed under this section may be 
considered for appointment to a Department position in the competitive 
service in the same manner that a Department employee in the 
competitive service is considered for transfer to such position. An 
employee of the Service who is appointed to a Department position in 
the competitive service under the authority of the preceding sentence 
may count toward the time-in-service requirement for a career 
appointment in such position any previous period of employment in the 
Service''.
  (b) Technical Amendments.--Such section is further amended--
          (1) by striking the semicolon at the end of each of 
        paragraphs (1) through (10) and inserting a period;
          (2) by striking ``The Secretary '' and all that follows 
        through ``(1) establish,'' and inserting ``(a) Locations for 
        Canteens.--The Secretary shall establish,'';
          (3) by redesignating paragraphs (2) through (11) as 
        subsections (b) through (k), respectively, and by realigning 
        those subsections (as so redesignated) so as to be flush to the 
        left margin;
          (4) in subsection (b) (as so redesignated), by inserting 
        ``Warehouses and Storage Depots.--The Secretary shall'' before 
        ``establish'';
          (5) in subsection (c) (as so redesignated), by inserting 
        ``Space, Buildings, and Structures.--The Secretary shall'' 
        before ``furnish'';
          (6) in subsection (d) (as so redesignated), by inserting 
        ``Equipment, Services, and Utilities.--The Secretary shall'' 
        before ``transfer'';
          (7) in subsection (e) (as so redesignated and as amended by 
        subsection (a)), by inserting ``Personnel.--The Secretary 
        shall'' before ``employ'';
          (8) in subsection (f) (as so redesignated), by inserting 
        ``Contracts and Agreements.--The Secretary shall'' before 
        ``make all'';
          (9) in subsection (g) (as so redesignated), by inserting 
        ``Prices.--The Secretary shall'' before ``fix the'';
          (10) in subsection (h) (as so redesignated), by inserting 
        ``Gifts and Donations.--The Secretary may'' before ``accept'';
          (11) in subsection (i) (as so redesignated), by inserting 
        ``Rules and Regulations.--The Secretary shall'' before ``make 
        such'';
          (12) in subsection (j) (as so redesignated), by inserting 
        ``Delegation.--The Secretary may'' before ``delegate such''; 
        and
          (13) in subsection (k) (as so redesignated), by inserting 
        ``Authority To Cash Checks, Etc.--The Secretary may'' before 
        ``authorize''.

  Amend the title so as to read:

      A bill to amend title 38, United States Code, to 
authorize the Secretary of Veterans Affairs to provide veterans 
who participated in certain Department of Defense chemical and 
biological warfare testing with health care for their illness 
without requirement for proof of service-connection, and for 
other purposes.

                              Introduction

    The reported bill reflects the Committee's consideration of 
two bills in the 108th Congress, to include H.R. 2433 and 
certain provisions of H.R. 1951. On June 11, 2003, Honorable 
Ciro D. Rodriguez and Honorable Rob Simmons introduced H.R. 
2433, the Health Care for Veterans of Project 112/Project SHAD 
Act of 2003. On May 5, 2003, Honorable Stephen F. Lynch and 
Honorable Jack Quinn introduced H.R. 1951, the VA Medical 
Workforce Enhancement Act of 2003.
    On October 9, 2002, the Subcommittee on Health held a 
hearing on Project 112 and Operation Shipboard Hazard and 
Defense (SHAD). Witnesses who appeared before the subcommittee 
included Honorable William Winkenwerder, Jr., M.D., M.B.A., 
Assistant Secretary of Defense for Health Affairs, who was 
accompanied by Dr. Michael E. Kilpatrick, Director of 
Deployment Health Support, Dr. Anna Johnson-Winegar, Deputy 
Assistant to the Secretary of Defense, Chemical and Biological 
Defense; and Dr. Jonathan B. Perlin, Deputy Under Secretary for 
Health, Department of Veterans Affairs, who was accompanied by 
Mr. Robert J. Epley, Associate Deputy Under Secretary for 
Policy and Program Management, Veterans Benefits 
Administration.
    On June 24, 2003, the Subcommittee on Health met and 
unanimously ordered H.R. 2433, as amended, reported favorably 
to the full Committee.
    On June 26, 2003, the full Committee met and ordered H.R. 
2433, as amended, reported favorably to the House by unanimous 
voice vote.

                      Summary of the Reported Bill

    H.R. 2433, as amended, would:

    1. LAuthorize the Secretary of Veterans Affairs to provide 
veterans who participated in a test conducted by the Department 
of Defense Deseret Test Center from 1962 through 1973 higher 
priority for hospital care, medical services, and nursing home 
care without any requirement for proof of service-connection.

    2. LExtend the authority to provide care to Project 112/
Project SHAD veterans through December 31, 2005.

    3. LProvide that when a Veterans Health Administration 
registered nurse has accomplished the performance elements for 
promotion to the next higher grade, the lack of a specific type 
of educational degree shall not be an impediment to such 
promotion.

    4. LAuthorize premium pay for Saturday duty to additional 
Veterans Health Administration health care workers with direct 
patient-care responsibilities.

    5. LAllow employees of the Veterans' Canteen Service to be 
considered for appointment in VA positions in the competitive 
service in the same manner that VA employees in the competitive 
service are considered for transfer to a Canteen Service 
position.

                       Background and Discussion

    Health Care for Veterans of Project 112/Project SHAD.--On 
October 9, 2002, the Subcommittee on Health held a hearing on 
``Project 112'', a series of Cold War chemical, nuclear, and 
biological tests conducted both at sea and over land. During 
this hearing the Department of Defense (DOD) announced the 
results of a declassification review to examine the health 
effects of 31 tests from Project 112. In addition, the 
Subcommittee reviewed VA's role in contacting veterans who may 
have participated in these tests, and its progress in 
determining the health status of these veterans.
    The Deseret Test Center was established in 1962 by DOD at 
Fort Douglas, Utah, to manage this testing program. Project 112 
was one of 150 Cold War-era military initiatives directed by 
then-Secretary of Defense, Honorable Robert McNamara, to 
identify U.S. military personnel and warship vulnerabilities to 
chemical, nuclear, and biological attacks. The tests were 
conducted between 1962 and 1973, and according to DOD were 
intended to hypothesize and evaluate survivability of troops 
and equipment (including robustness of ships at sea that were 
sprayed by enemy aircraft) exposed in the battlefield to 
hazardous agents. Some tests were planned in the Project 112/
Operation SHAD series involving the actual use of sarin, VX, 
tularemia, anthrax, and other possibly dangerous agents.
    The results of the testing program were used to develop 
defense mechanisms against enemies' potential use of 
biological, chemical, or nuclear weapons. Operation ``Shipboard 
Hazard and Defense'' (SHAD) was the operational name given to 
the shipboard portion of these tests. Much of the data 
associated with the conduct of these tests has remained 
classified since the tests were conducted.
    DOD has acknowledged that it lacks documentation to prove 
that test participants were informed of the risks involved with 
these tests, or that they received appropriate protective gear 
during testing. Since these activities were not medical in 
nature, and did not involve medical research, no patient care 
records were established to archive health effects.
    Dr. Michael Kilpatrick of DOD stated that DOD's search for 
materials associated with Project 112/Operation SHAD is onerous 
and necessitates manual searches of paper archives to locate 
ship crew manifests in attempts to tie the dates of specific 
tests to on-board personnel. DOD advised the Committee that in 
such searches it must ask basic questions of ``who, what, 
where, and when,'' in order to associate the nature of these 
activities with the scope of the original military effort. The 
stated goal of DOD is to uncover the long-term health 
consequences of these exposures.
    Dr. William Winkenwerder testified at the October 9, 2002, 
hearing that DOD is committed to an uncompromising and thorough 
investigation of all chemical and biological warfare tests 
planned and performed by the Deseret Test Center. Testifying on 
behalf of VA, Dr. Jonathan Perlin discussed the outreach 
efforts to contact the 5,000 veterans whom DOD has identified 
as Project 112 participants, and efforts to establish 
educational programs for its health care providers. The 
Committee has encouraged VA to aggressively follow-up with 
these veterans to ensure that they are afforded an opportunity 
to review their medical histories with VA health care 
providers.
    In August 2000, based on a VA request, DOD began to review 
and declassify information concerning the exact agents used and 
other details of the Project 112 tests. An office in DOD now 
known as the Health Affair's Deployment Health Support 
Directorate was assigned the responsibility of identifying U.S. 
ships, crew manifests, military units, and service members that 
may have been involved in these tests, and thus potentially 
affected by exposure to chemical and biological agents. In 
addition, DOD began working with VA to identify individual 
veterans who participated in these tests to determine whether 
they suffered negative health consequences as a result of their 
participation.
    On June 30, 2003, DOD announced the completion of the 
nearly three year long examination. Investigators confirmed 
that 50 of the 134 planned operational tests at the Deseret 
Test Center were conducted and 84 were canceled. All Deseret 
Test Center tests were designated by test numbers. Initially, 
cover names were also assigned to the tests. However, the 
practice of using cover names was stopped in the later years of 
the program. Tests were conducted on the open sea in the North 
Atlantic, open water locations of the Pacific Ocean and near 
the Marshall Islands, Hawaii, Baker Island, Puerto Rico and the 
California coast. Land-based tests were conducted in the states 
of Alaska, Hawaii, Maryland, Florida, Utah, and Georgia.
    All Project 112 test fact sheets are available to the 
public on the Deployment Health Support Directorate Web site, 
(http://deploymentlink.osd.mil/current--issues/shad/shad--
intro.shtml). The site also includes a chart listing all 
planned tests and what is known about their status.
    The names of 5,842 servicemembers identified as having been 
present in one or more of the tests were provided to VA, the 
majority within the past year. Veterans who believe they were 
involved in Deseret Test Center tests and have medical concerns 
have been encouraged to contact VA for medical evaluations. 
Project 112 veterans have complained of an array of ailments 
from cancer to hypertension. Given the amount of time that has 
passed and the relatively small number of veterans involved in 
each test, VA may not be able to obtain the necessary 
information to fully understand the effects of the testing.
    The Committee bill would provide priority access to VA 
hospital care, medical services, and nursing home care for 
veterans who participated in the tests conducted by the Deseret 
Test Center from 1962 through 1973, and not require medical 
evidence that any illnesses are attributable to such testing.

    Retention and Recruitment of Registered Nurses.--VA's Nurse 
Qualification Standards (the standards) define the performance 
and education requirements for a Registered Nurse (RN) to be 
appointed to and promoted to one of the five nurse grade levels 
in VA. Under these standards, all new hires must have a 
baccalaureate degree in nursing (BSN) to be appointed at the 
Nurse II grade level. RNs may be promoted to a Nurse II grade 
level without a BSN only with a waiver of the education 
requirements.
    RNs must have educational preparation in nursing and meet 
state licensing requirements. However, fewer nurses nationwide 
are receiving a BSN as their educational preparation for 
nursing practice. Sixty-two percent of employed staff nurses 
received their nursing educational preparation through an 
associate degree in nursing (ADN) or diploma nursing program. 
According to the latest survey by the Department of Health and 
Human Services, Health Resources and Service Administration, 45 
percent of RNs in nurse clinician positions and 42 percent of 
RNs in clinical nurse specialist positions have an ADN or 
diploma degree as their highest educational preparation for 
nursing. Further, nearly 40 percent of Certified Nurse 
Anesthetists do not have a BSN.
    As discussed, all RNs, regardless of their educational 
preparation, must take rigorous licensing examinations 
administered by state governments. RNs prepared with an ADN 
have equivalent success rates in their licensing examinations 
as RNs who obtain a BSN. Whether RNs have a two-year or four-
year nursing degree, they are licensed to perform the identical 
scope of nursing practice.
    Notwithstanding their years of experience or expertise in 
nursing, VA will not hire RNs above the entry Nurse Level I 
unless they have a BSN; VA will not hire RNs above the Nurse 
Level II unless they have a master's degree, despite their 
years of bedside experience or clinical proficiency in nursing.
    Currently, VA nurses are also evaluated for promotion based 
on the BSN and nine areas of competencies. The Nurse 
Professional Standards Board evaluates nurses and may 
recommend, subject to the concurrence of the Chief RN and 
approval of the medical center director, a waiver of the BSN 
requirement. If the medical center director denies a waiver, 
the RN has no recourse.
    VA's focus on the level at which a RN received his or her 
educational preparation has created unintended consequences. 
Currently, the U.S. has an estimated nationwide shortage of RNs 
of around 6.5 percent. This shortage is projected to grow, and 
could reach 28.8 percent in 2020 if the current trend continues 
and no mitigating actions are taken. Given the national 
shortage and the reduced number of RNs who want to work in 
hospitals, the Committee believes that VA should focus on a 
RN's expertise and experience, not where he or she went to 
nursing school. The Committee bill would clarify that direct 
patient care performance is the primary criteria in hiring and 
promoting nurses.

    Additional Pay for VA Nursing Personnel Completing Saturday 
Shifts.--VA's hospitals must maintain safe staffing levels 
during the weekends in order to meet veterans' medical needs. 
Most private hospitals offer premium pay for weekend tours-of-
duty as an incentive and compensation for individuals to work 
these shifts. Pursuant to sections 7453 and 7454 of title 38, 
United States Code, registered nurses, licensed practical 
nurses, pharmacists, physical therapists, occupational 
therapists, and respiratory therapists who work regular 
Saturday or Sunday shifts are paid a premium rate of pay (25 
percent) for those shifts. The premium is not for overtime, but 
rather for working a regular shift on the weekend. Federal law 
for civil service employees employed under title 5, United 
States Code, who represent a large group of VA medical support 
personnel including nursing assistants, pharmacy technicians, 
and medical technologists, provides premium pay of 25 percent 
for employees who work regular shifts on Sundays at VA medical 
facilities, but not on Saturdays. By authorizing Saturday 
premium pay for all VA clinical staff members who work a 
regular shift on Saturdays, the Committee bill would allow VA 
to compete in the hiring of necessary staff to maintain 
adequate levels of support on weekends.

    Transfer Rights for VA Canteen Workers.--Veterans' Canteen 
Service (VCS) employees are Federal employees hired under the 
authority of section 7802 of title 38, United States Code. This 
authority provides many of the same benefits that title 5, 
United States Code, federal employees enjoy, such as workers 
compensation, health benefits, retirement, and veterans' 
preference. However, there are other benefits to which they are 
not entitled. In particular, because VCS employees are 
appointed without regard to title 5, United States Code, 
competitive civil service rules, these workers are not 
considered to be in the federal civil competitive service. As a 
result, a VCS employee cannot transfer to another job in VA 
without first going through a civil service competition, as if 
he or she had never been a federal employee.
    In 1979, the Office of Personnel Management (OPM) approved 
a personnel interchange agreement with VA that permitted two-
way movement between the two hiring authorities for VCS 
managers. The agreement allows VCS managers appointed under the 
same statutory authority (38 U.S.C. 7802) as VCS employees who 
are non-supervisors to transfer into other federal jobs as if 
they were originally appointed in the competitive service under 
title 5, United States Code.
    Approximately 3,000 VCS hourly workers do not have the same 
transfer rights to other VA positions that VCS managers enjoy. 
They are prohibited from applying for jobs at VA as an internal 
competitive service candidate. VA attempted to establish an 
interchange agreement for these employees in 1984, 1987, and 
1998, but OPM did not approve these proposals. This limits the 
VA's ability to hire VA workers into needed positions to 
provide ancillary and support services for medical care. The 
Committee bill would provide transfer rights for hourly rate 
VCS employees to title 5, United States Code, VA positions 
through internal competitive procedures.

                      Section-By-Section Analysis

    Section 1 of the bill would name this Act the ``Health Care 
for Veterans of Project 112/Project SHAD Act of 2003''.

    Section 2 of the bill would amend section 1710(e) of title 
38, United States Code, to allow any veteran who participated 
in chemical and biological warfare tests conducted by the 
Department of Defense Deseret Test Center from 1962 through 
1973 (including the program designated as ``Project Shipboard 
Hazard and Defense'' and related land-based tests) to be 
eligible for hospital care, medical services, and nursing home 
care, notwithstanding insufficient medical evidence that links 
any illness to such testing. Authority to provide access to 
care on this basis expires on December 31, 2005.

    Section 3(a) of the bill would amend subsection (c) of 7403 
of title 38, United States Code, to allow labor organizations 
representing physicians, dentists, podiatrists, optometrists, 
registered nurses, physician assistants and expanded-duty 
dental auxiliaries to engage in collective bargaining with 
respect to the promotion policies for those employees.

    Section 3(b) of the bill would amend subsection (c) of 7403 
of title 38, United States Code, so that when a VA registered 
nurse meets the requirements to be promoted to the next higher 
grade, the lack of a specific type of educational degree will 
not impede that promotion.

    Section 4(a) of the bill would amend section 7454(b) of 
title 38, United States Code, to allow VA nursing assistants, 
pharmacy technicians, medical technologists, and other title 5, 
United States Code, employees who complete a Saturday shift to 
receive premium pay for that shift at a rate equal to 25 
percent of their hourly rate of basic pay.

    Section 4(b) of the bill would provide that the amendment 
made by subsection (a) shall apply with respect to pay periods 
beginning on or after the date of the enactment of this Act.

    Section 5(a) of the bill would amend paragraph (5) of 
section 7802 of title 38, United States Code, to allow 
Veterans' Canteen Service employees to be considered for 
appointment in VA positions in the competitive service, just as 
VA employees in the competitive service are considered for 
transfer to a Canteen Service position.

                    Performance Goals and Objectives

    The Department of Veterans Affairs' performance goals and 
objectives are established in annual performance plans and are 
subject to the Committee's regular oversight and evaluation by 
the U.S. General Accounting Office. VA also publishes a 
performance and accountability report for each fiscal year.

              Statement of the Views of the Administration

 Testimony of Honorable William Winkenwerder, Jr., Assistant Secretary 
   for Health, Department of Defense, Health Subcommittee Hearing on 
          Project 112 & Operation Shipboard Hazard and Defense

                            October 9, 2002

    As Assistant Secretary of Defense for Health Affairs, I want to 
stress that the Department of Defense (DoD) is absolutely committed to 
an aggressive and thorough investigation of all chemical and biological 
warfare tests planned and performed by the Deseret Test Center between 
1962 and 1973. The purpose of the investigation is to provide relevant 
medical information to the Department of Veterans' Affairs (VA). The 
Deseret Test Center was established as a result of Project 112. Project 
112 was one of one hundred and fifty management initiatives begun by 
Defense Secretary McNamara, after his review of the Department of 
Defense in 1961. Under Project 112, the Deseret Test Center planned and 
conducted a joint chemical and biological testing program that included 
shipboard and land-based testing. Project Shipboard and Hazard Defense 
(SHAD) was the shipboard portion. SHAD was designed to test ships' 
vulnerability to biological or chemical attack.
    When I testified before the Senate Veterans' Affairs Committee in 
July of this year, I expressed that we are dedicated to finding and 
declassifying all relevant medical information from those tests. 
Additionally, we are committed to sharing this information with the VA 
by June 2003. Today, I would like to discuss what we have done, what we 
have learned and what are currently doing.
    Since August 2000, when the Department of Veterans' Affairs 
requested that the Department of Defense provide information concerning 
classified Project SHAD tests, we have developed a close working 
relationship with the VA. From the beginning of this process, VA staff 
members have met regularly with our investigators to review their 
activities and to verify that the information being sought was what VA 
needed to assist them in addressing health care matters and settle 
benefit questions. A team from our Deployment Health Support 
Directorate meets regularly with VA personnel, to ensure we provide the 
VA with the relevant medical information they need to address veterans' 
concerns.
    To date, our investigation has revealed a great deal about tests 
planned and conducted by the Deseret Test Center. The Center planned 
134 tests between 1962 and 1973. So far we have verified that 46 tests 
were conducted and 62 were cancelled. We are working to determine the 
status of the remaining 26 tests. The majority (24) were planned for 
1970-1974, a period in which plans were being made to close the Deseret 
Test Center.
    We are working closely with the Department of the Army to 
facilitate declassification of the necessary data, focusing on relevant 
medical information. Because many of the same agents remain a threat to 
our Forces today, the records cannot be casually declassified. Our 
investigators identify the relevant medical information and request 
declassification of this specific information in a process that has 
been significantly expedited.
    As information becomes available, it is provided to the VA in the 
form of fact sheets. To date we have published 45 fact sheets on 41 
tests which involved more than 5,000 service members. The fact sheets 
detail which ships and units were involved in tests, when the tests 
took place and what substances the crew may have been exposed to. In 
order to expedite the VA's notification to affected veterans, we now 
provide names and service numbers of service members involved in each 
test to the VA as soon as we identify the ship or unit involved; we do 
not wait for the declassification process to be completed. To date, we 
have provided the VA with the names of 4,990 veterans from 16 of 18 
known shipboard tests and are searching for classified reports which 
identify the ships used in the remaining two tests.
    Our investigation has confirmed that Deseret Test Center tests were 
primarily conducted using simulants believed to be safe in place of 
chemical or biological warfare agents. In those instances when 
potentially harmful substances were used, there is no evidence that any 
of the service members involved were exposed to them without proper 
protection. Service members were vaccinated before testing that 
involved live biological agents. If actual chemical agents were used 
they were confined to airtight sections of their ship. When 
appropriate, protective clothing was also worn. While some service 
members may not have known all the details of these tests, it is likely 
they knew that they were participating in testing due to use of 
precautionary measures. We have learned that the scientists involved 
informed senior leaders about tests using simulants. Like other 
operational activities, service members were not informed of these 
tests.
    Information is presented to the VA as quickly as possible and is 
posted on our web site, DeploymentLINK.mil. A chart located on that web 
site shows the status of our investigation for each of the tests and is 
updated regularly. In addition to responding to letters, e-mails and 
telephone calls placed to our toll-free number, we have also attended 
the reunion of the crew of the USS Power and have asked other crews to 
allow us to attend their reunions to help us better understand the 
concerns of these veterans. We have also sought out scientists and 
senior officials involved with the tests to increase our understanding 
of what happened during the tests.
    With the termination of the U.S. offensive chemical and biological 
weapons programs and with changes to operations and health research 
standards, the use of live agents on humans is severely restricted. 
With modern technology we can determine the effectiveness of defensive 
measures by using mannequins. The military services do still use 
simulants during operational testing and training. We are reviewing all 
policies governing the use of simulants during testing and training. 
Additionally, small amounts of live agent are used in training at the 
chemical school. Our objective is to ensure that concerns like those 
surrounding the Deseret Test Center tests do not arise in the future.
                                ------                                


   Testimony of Jonathan B. Perlin, M.D., Deputy Under Secretary for 
Health, Department of Veterans Affairs, Health Subcommittee Hearing on 
          Project 112 & Operation Shipboard Hazard and Defense

                            October 9, 2002

    I am here today to talk about the 5,000 veterans who have been 
identified as Project 112 participants. I also want to tell you about 
the wide range of outreach activities to veterans, educational programs 
for VA health care providers, and health care services that VA has 
implemented for those veterans who participated in tests conducted by 
the U.S. Army's Deseret Test Center, including Project SHAD.
Deseret Test Center Project 112 and Project SHAD
    According to the Department of Defense, Project SHAD, which stands 
for Shipboard Hazard and Defense, was a portion Project 112, which was 
a chemical and biological warfare test program of the Deseret Test 
Center. DoD conducted these tests between 1962 and 1973. Project SHAD 
itself was a series of tests apparently designed to determine potential 
vulnerabilities of U.S. warships to attacks with chemical or biological 
warfare agents. Other Project 112 tests involved similar tests 
conducted on land rather than aboard ships.
    VA first learned of Project SHAD when a veteran filed a claim for 
service connection for disabilities that he felt were related to his 
participation in those tests. In two meetings held with DoD in late 
1997, VA was advised that all the relevant records about these tests 
were classified and that general access to that material was not 
possible. However, DoD offered to provide such information on a case-
by-case basis.
    In May 2000, VA's Under Secretary for Benefits received a 
congressional inquiry requesting assistance for veterans involved in 
Project SHAD tests. A VA/DoD workgroup was subsequently established, 
which met for the first time in October 2000. Since then, DOD and VA 
have held a series of meetings to ensure that VA would have full access 
to the information needed to provide appropriate health care and 
benefits for veterans involved in these tests. In July 2002, DOD 
committed to provide VA with all medically relevant data, as well as a 
complete roster of participants involved in tests under the aegis of 
Project 112 in the 1960's and 1970's.
    As a result of their ongoing investigations, DOD has begun 
providing to VA the names and service numbers of veterans of Project 
112, including Project SHAD participants. As a consequence, VA has 
initiated a significant outreach program to SHAD veterans and to the VA 
health-care providers they may see. This program has expanded as we 
have received more information from DOD about veterans involved in 
tests conducted by the Deseret Test Center and about possible chemical 
and biological exposures.
VA Outreach Efforts to SHAD Veterans
    As of today, VA has been notified of approximately 5,000 veteran 
participants in 12 declassified and two classified Project 112 tests. 
VA has implemented a process for identifying and locating these 
veterans. Identification is accomplished using a variety of sources, 
including VA's Beneficiary Identification and Records Locator Subsystem 
(BIRLS), its Compensation & Pension (C&P;) Master Record file, the 
National Cemetery Administration's database, and the National Personnel 
Records Center in St. Louis. VA has been able to obtain addresses of 
some of these veterans by matching records with the Internal Revenue 
Service.
    In May 2002, VA mailed outreach letters to 622 SHAD veterans, and 
on August 15, mailed outreach letters to an additional 777 veterans. 
The outreach letters provided them information about their 
participation in Project 112 and the possible health effects related to 
the chemical and biological warfare agents used in those tests.
    Most recently, in September, DOD provided VA with the names and 
service numbers of about 2,100 more veterans who were participants in 
tests just declassified last week. VA is currently matching these data 
against its BIRLS and C&P; Master Record files to identify these 
individuals.
    Efforts to find current addresses for SHAD veterans is ongoing, but 
for those whom VA has not yet been able to locate, we have established 
a SHAD Help line (at 1-800-749-8387), an Internet web-site (at 
www.VA.GOV/SHAD), and an e-mail address ([email protected]). 
Through the week ending September 27, 2002, VA has received 417 calls 
on its toll-free SHAD Help line.
Outreach to VA Health Care Providers
    A has provided relevant information about Project SHAD to VA health 
care providers through Information Letters from the Under Secretary for 
Health. The Information Letters provide VA health care personnel with 
background information on Project SHAD, as well as information about 
the potential short- and long-term health effects of the specific 
chemical and biological agents that DOD tells us were used in these 
tests. They also include recommendations for reviewing the medical and 
military exposure history of Project 112 veterans. The first 
Information Letter was released on December 1, 2000. The most recent 
Information Letter--the third in this series--is dated August 26, 2002. 
It is entitled ``Possible Occupational Health Exposures of Veterans 
Involved in Project SHAD Tests,'' and is based on additional 
information obtained from DOD. This information has also been made 
available on VA's SHAD web site at www.va.gov/SHAD.

    In addition to Information Letters, the Veterans Health 
Administration (VHA) has engaged in an extensive outreach effort to 
ensure that every VA medical center knows about SHAD veterans and their 
potential hazardous exposures during Project 112. VA medical center 
directors and health care personnel have been regularly apprised of 
Project SHAD through a series of national telephone hotline conference 
calls beginning October 20, 2000. VA environmental health physicians 
also have been kept informed of Project SHAD developments through 
regular conference calls. Furthermore, a Directive issued last month 
requires that enrolled SHAD veterans be clinically evaluated by 
knowledgeable health care providers when those veterans present for 
care. VA will continue to provide up-to-date information on Project 112 
to its health care providers to ensure that these veterans receive 
optimal health care. Lastly, as suggested by the Vietnam Veterans of 
America, the VA and DOD web sites, which provide information on Project 
112, have been linked to provide ready access to health data among VA 
and DOD health care personnel and veterans.
Health Care and Benefits Status of Identified SHAD Veterans
    VA prepared a preliminary report on the health and disability 
status of the initial Project SHAD veterans identified for us by DOD in 
follow-up to the July 10, 2002 hearing. A report dated August 5, 2002, 
entitled ``VA Health Care and Compensation for Project SHAD Veterans'' 
was provided to the House and Senate Committees on Veterans' Affairs on 
August 9, 2002. It also included information on compensation claims 
previously filed by Project SHAD participants. The report stated that, 
as of August 1, 2002, there were compensation claims pending decisions 
for 28 veterans alleging disabilities due to exposure to agents and 
substances while participating in Project SHAD. The full report is 
available on our website at www.va.gov/SHAD. As of September 30, 2002, 
VA had compensation claims pending decision for 53 veterans alleging 
disabilities due to exposure to agents and substances while 
participating in Project 112.
    Of the 1,399 veterans who received notification letters in May and 
August, 31 have newly enrolled for VA health care. Available data 
indicate that Project SHAD veterans sought health care from VA during 
FY 2002 at a rate comparable to the overall population of military 
veterans. About 30 percent of Project SHAD veterans known to us as of 
August have used VA services since 1970.
    It has not been necessary to establish a special clinical program 
for Project 112 veterans. In this regard, VA's progressive development 
of its medical record system increasingly permits patient health 
information to be studied. VHA can now track health care utilization by 
special groups of veterans, such as the veterans who participated in 
Project SHAD. The use of these standard health care databases provides 
several important advantages in evaluating the health of Project SHAD 
veterans over specialized clinical programs, such as those used to 
evaluate particular cohorts of veterans, such as Vietnam and Gulf War 
veterans. The use of VA's health databases allows VA to evaluate the 
health care utilization of veterans every time they obtain care from 
VA, not just on the one occasion that they elect to have a registry 
examination. This practice will provide a much broader and longer-term 
assessment of the health status of these veterans because many veterans 
return frequently for VA health care, and because veterans are often 
seen in different clinics or even different parts of the country for 
specialized health care.
Evaluating Health Status of All SHAD Veterans
    On September 30, 2002, VA entered into a three million dollar 
contract with the Institute of Medicine, Medical Follow-up Agency of 
the National Academy of Sciences to fully evaluate the long-term health 
status of Project SHAD participants. They will conduct, over the next 
three years, a formal epidemiological study of Project SHAD 
participants in comparison with veterans who did not participate in 
Project SHAD. This independent, epidemiological study will give us the 
clearest possible picture of the health status of SHAD veterans and 
tell us whether their health was harmed by participation in SHAD tests. 
The study will compare the current health of veterans who participated 
in the SHAD tests more than 30 years ago with the health of veterans 
from the same era who served on ships not involved with the testing. 
The study will also compare the mortality rates of the two groups. This 
project may be expanded, if needed, as we learn the identity and 
military exposures of additional Project 112 participants. Although it 
will take time to conduct a valid epidemiological study, high quality 
medical care is being provided right now for each Project 112 veteran 
who chooses to come to the VA health care system.
    VA welcomes DOD's accelerated schedule for providing relevant 
information about Project 112 and the veterans who were involved in 
these tests. We understand that it is problematic to locate and 
declassify records that are 30 to 40 years old, and we appreciate DOD's 
efforts in this regard. We also look forward to receiving this 
information as quickly as possible so that we can address the health 
concerns of these veterans and properly adjudicate their benefit 
claims.

               Congressional Budget Office Cost Estimate

    The following letter was received from the Congressional 
Budget Office concerning the cost of the reported bill:
                                     U.S. Congress,
                               Congressional Budget Office,
                                      Washington, DC, July 15, 2003
Hon. Christopher H. Smith
Chairman, Committee on Veterans' Affairs,
House of Representatives, Washington, DC

    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2433, the Health 
Care for Veterans of Project 112/Project SHAD Act of 2003.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sam 
Papenfuss, who can be reached at 226-2840.

            Sincerely,
                                       Douglas Holtz-Eakin,
                                                           Director
    Enclosure.

               Congressional Budget Office Cost Estimate

H.R. 2433, Health Care for Veterans of Project 112/Project SHAD Act of 
                                  2003

As ordered reported by the House Committee on Veterans' Affairs on June 
                                26, 2003

Summary
    H.R. 2433 would increase benefits for certain veterans and 
health care workers employed by the Department of Veterans 
Affairs (VA). The bill would allow veterans who participated in 
certain chemical and biological warfare tests while on active 
duty to have greater eligibility for health care offered by VA. 
In addition, the bill would change VA's current regulation 
regarding the promotion of nurses and allow nurses who do not 
have a baccalaureate degree to be promoted to higher pay 
grades. Finally, H.R. 2433 would require VA to pay certain 
health care workers a premium for working on Saturday.
    CBO estimates that implementing the bill would cost $1 
million in 2004 and $8 million over the 2004-2008 period, 
assuming appropriation of the estimated amounts. The bill would 
not affect direct spending or receipts. The estimate does not 
include the costs of the provision that would require VA to pay 
certain health care workers a premium for working on Saturday 
because CBO cannot estimate the costs at this time.
    H.R. 2433 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would not affect the budgets of state, local, or tribal 
governments.
Estimated cost to the federal government
    The estimated budgetary impact of H.R. 2433 is shown in the 
following table. This estimate assumes the legislation will be 
enacted by the end of fiscal year 2003, that the necessary 
funds for implementing the bill will be provided for each year, 
and that outlays will follow historical spending patterns for 
existing or similar programs. The costs of this legislation 
fall within budget function 700 (veterans benefits and 
services).




                                                                    By Fiscal Year, in Millions of Dollars
                                                           -----------------------------------------------------
                                                              2003     2004     2005     2006     2007     2008
----------------------------------------------------------------------------------------------------------------
                                    SPENDING SUBJECT TO APPROPRIATION
 Baseline Spending Under Current Law for Veterans' Medical
 Care
  Estimated Authorization Level a.........................   25,279   26,153   26,987   27,890   28,824   29,452
  Estimated Outlays.......................................   25,677   26,179   26,783   27,655   28,583   29,271
Proposed Changes b
  Estimated Authorization Level...........................        0        1        1        2        2        2
  Estimated Outlays.......................................        0        1        1        2        2        2
Spending Under H.R. 2433 for Veterans' Medical Care
  Estimated Authorization Level...........................   25,279   26,154   27,988   27,892   28,826   29,454
  Estimated Outlays.......................................   25,677   26,180   26,784   27,657   28,585   29,273
----------------------------------------------------------------------------------------------------------------
 a The 2003 level is the estimated net amount appropriated for that year. No full-year appropriation has yet been
  provided for fiscal year 2004. The current-law amounts for the 2004-2008 period assume that appropriations
  remain at the 2003 level with adjustments for anticipated inflation.
 b These amounts do not include the costs of section 4 because CBO cannot estimate the costs at this time.




Basis of estimate
Project 112/Project SHAD
    From 1962 to 1973, the Department of Defense (DoD) 
conducted certain tests to determine the vulnerability of 
personnel, buildings, and ships to various biological and 
chemical threats. Some veterans claim that exposure to the 
agents used in those tests has affected their current health 
status and would like to receive medical treatment for their 
health problems at VA facilities. Under H.R. 2433, those 
veterans who are not currently eligible for medical care from 
VA and those veterans who currently receive care but pay small 
copayments based on their priority level would be eligible to 
receive free health care from VA. This increased eligibility 
would end on December 31, 2005. After December 31, 2005, CBO 
expects that VA would allow those veterans who enroll to 
receive health care from VA under the bill to remain enrolled 
with VA, though with a lower priority level that would require 
them to make copayments.
    According to data from DoD, about 5,800 members of the 
military participated in those tests. After adjusting for 
mortality, CBO estimates that about 5,400 are alive today. 
Based on information from VA, CBO estimates that 60 percent of 
those veterans are already eligible to receive health care from 
VA, though some of those veterans are required to make small 
copayments for the services they receive. Under section 2, the 
remaining 40 percent of these veterans, as well as the veterans 
mentioned above who currently make copayments, would be 
eligible for free health care. Based on enrollment data 
provided by VA, CBO estimates that less than 300 veterans would 
enroll for VA medical care under this bill at an estimated 
average cost of $5,100 in 2004. Thus, CBO estimates that 
implementing this section would cost $1 million in 2004 and $8 
million over the 2004-2008 period, assuming appropriation of 
the estimated amounts.
    Under the bill, eligible veterans who are currently 
enrolled in the VA health care system and pay small copayments 
based on their priority level would no longer make these 
payments through December 31, 2005. CBO estimates that the lost 
receipts would be less than $500,000 each year over the 2004-
2006 period. After December 31, 2005, those veterans who would 
have newly enrolled in the VA health care system under the bill 
would have a lower priority and would start to make copayments. 
CBO estimates that these increased receipts also would be less 
than $500,000 a year over the 2006-2008 period. (Such payments 
are recorded as offsetting collections, credited against 
appropriations.)
Saturday Pay
    Currently, many health care workers employed by VA do not 
receive a pay premium when they work on weekends, although 
nurses and some other specialized workers do receive that 
premium. Section 4 would require that all employees providing 
direct patient-care services or services incident to direct 
patient-care services receive premium pay equal to 25 percent 
of their hourly wage, for all hours worked from midnight on 
Friday through midnight on Sunday. According to VA, these 
workers are already receiving premium pay for working on 
Sunday, so the only effect of implementing this section would 
be to increase the pay they would receive on Saturday. CBO 
cannot estimate the budgetary impact of implementing this 
provision, however, since VA has not yet been able to provide 
information about the amount of premium pay VA currently pays 
for Saturday and Sunday work.
Nurse Promotion
    Under current regulations, VA has five pay grades for its 
nurses. A nurse cannot advance to a higher grade without both 
demonstrating the necessary qualifications and having the 
required college degree. In order to advance from grade 1 to 
grade 2, nurses need a baccalaureate degree. Similarly, to 
advance from grade 2 to grade 3 nurses must have a master's 
degree. VA currently has a waiver program that allows nurses to 
be promoted without the requisite degrees. Section 3 would bar 
VA from requiring a baccalaureate degree as a requirement for 
promotion, essentially affecting nurse promotions from grade 1 
to grade 2.
    According to VA, in 2002, only one nurse who sought a 
promotion from grade 1 to grade 2 was denied a waiver; 468 
nurses received waivers and were promoted. (VA also denied 
promotions to 16 nurses who sought a promotion from grade 2 to 
grade 3, but this bill would not affect nurses in those 
grades.) Because VA already has a waiver program, CBO does not 
expect that the implementation of this bill would affect a 
significant number of nurses, especially since possession of a 
baccalaureate degree is not the sole requirement for promotion. 
Thus CBO estimates that implementing this provision would cost 
less than $500,000 a year over the 2004-2008 period, assuming 
the availability of appropriated funds.
Intergovernmental and private-sector impact
    H.R. 2433 contains no intergovernmental or private-sector 
mandates as defined in UMRA and would not affect the budgets of 
state, local, or tribal governments.
Estimate prepared by:
    Federal Costs: Sam Papenfuss (226-2840)
    Impact on State, Local, and Tribal Governments: Melissa 
Merrell (225-3220)
    Impact on the Private Sector: Allison Percy (226-2900)
Estimate approved by:
    Peter H. Fontaine
    Deputy Assistant Director for Budget Analysis

                     Statement of Federal Mandates

    The preceding Congressional Budget Office cost estimate 
states that the bill contains no intergovernmental or private 
sector mandates as defined in the Unfunded Mandates Reform Act.

                 Statement of Constitutional Authority

    Pursuant to Article I, section 8 of the United States 
Constitution, the reported bill is authorized by Congress' 
power to ``provide for the common Defense and general Welfare 
of the United States.''

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italics, existing law in which no change 
is proposed is shown in roman):

TITLE 38, UNITED STATES CODE

           *       *       *       *       *       *       *


PART II--GENERAL BENEFITS

           *       *       *       *       *       *       *


CHAPTER 17--HOSPITAL, NURSING HOME, DOMICILIARY, AND MEDICAL CARE

           *       *       *       *       *       *       *


 SUBCHAPTER II--HOSPITAL, NURSING HOME OR DOMICILIARY CARE AND MEDICAL 
                               TREATMENT

Sec. 1710. Eligibility for hospital, nursing home, and domiciliary care

  (a) * * *

           *       *       *       *       *       *       *

  (e)(1)(A) * * *

           *       *       *       *       *       *       *

  (E) Subject to paragraphs (2) and (3), a veteran who 
participated in a test conducted by the Department of Defense 
Deseret Test Center as part of a program for chemical and 
biological warfare testing from 1962 through 1973 (including 
the program designated as ``Project Shipboard Hazard and 
Defense (SHAD)'' and related land-based tests) is eligible for 
hospital care, medical services, and nursing home care under 
subsection (a)(2)(F) for any illness, notwithstanding that 
there is insufficient medical evidence to conclude that such 
illness is attributable to such testing.
  (2)(A) * * *
  (B) In the case of a veteran described in [paragraph (1)(C) 
or (1)(D)] subparagraph (C), (D), or (E) of paragraph (1), 
hospital care, medical services, and nursing home care may not 
be provided under subsection (a)(2)(F) with respect to a 
disability that is found, in accordance with guidelines issued 
by the Under Secretary for Health, to have resulted from a 
cause other than the service described in that paragraph.
  (3) Hospital care, medical services, and nursing home care 
may not be provided under or by virtue of subsection 
(a)(2)(F)--
          (A) * * *
          (B) in the case of care for a veteran described in 
        paragraph (1)(C), after December 31, 2002; [and]
          (C) in the case of care for a veteran described in 
        paragraph (1)(D), after a period of 2 years beginning 
        on the date of the veteran's discharge or release from 
        active military, naval, or air service[.]; and
          (D) in the case of care for a veteran described in 
        paragraph (1)(E), after December 31, 2005.

           *       *       *       *       *       *       *


PART V--BOARDS, ADMINISTRATIONS, AND SERVICES

           *       *       *       *       *       *       *


              CHAPTER 74--VETERANS HEALTH ADMINISTRATION--
PERSONNEL

           *       *       *       *       *       *       *


SUBCHAPTER I--APPOINTMENTS

           *       *       *       *       *       *       *


Sec. 7403. Period of appointments; promotions

  (a) * * *

           *       *       *       *       *       *       *

  (c) [Promotions] Consistent with subsection (a) of section 
7422 of this title, and notwithstanding subsection (b) of that 
section, promotions of persons to whom this section applies 
shall be made only after examination given in accordance with 
regulations prescribed by the Secretary. Advancement within 
grade may be made in increments of the minimum rate of basic 
pay of the grade in accordance with regulations prescribed by 
the Secretary.

           *       *       *       *       *       *       *

  (h) In a case in which a registered nurse has accomplished 
the performance elements required for promotion to the next 
grade, the lack of a baccalaureate degree in nursing shall not 
be a bar to promotion to that grade, and in such a case the 
registered nurse shall not be denied a promotion on that basis.

           *       *       *       *       *       *       *


SUBCHAPTER IV--PAY FOR NURSES AND OTHER HEALTH-CARE PERSONNEL

           *       *       *       *       *       *       *


Sec. 7454. Physician assistants and other health care professionals: 
                    additional pay

  (a) * * *
  (b)(1) * * *

           *       *       *       *       *       *       *

  (3) Employees appointed under section 7408 of this title 
shall be entitled to additional pay on the same basis as 
provided for nurses in section 7453(c) of this title.

           *       *       *       *       *       *       *


CHAPTER 78--VETERANS' CANTEEN SERVICE

           *       *       *       *       *       *       *


Sec. 7802. Duties of Secretary with respect to Service

  [The Secretary shall--
          [(1) establish,]
  (a) Locations for Canteens.--The Secretary shall establish, 
maintain, and operate canteens where deemed necessary and 
practicable at hospitals and homes of the Department and at 
other Department establishments where similar essential 
facilities are not reasonably available from outside commercial 
sources[;].
  [(2)] (b) Warehouses and Storage Depots.--The Secretary shall 
establish, maintain, and operate such warehouses and storage 
depots as may be necessary in operating the canteens[;].
  [(3)] (c) Space, Buildings, and Structures.--The Secretary 
shall furnish the Service for its use in connection with the 
establishment, maintenance, and operation thereof, such space, 
buildings, and structures under control of the Department as 
the Secretary may consider necessary, including normal 
maintenance and repair service thereon. Reasonable charges, to 
be determined by the Secretary, shall be paid annually by the 
Service for the space, buildings, and structures so furnished, 
except that the Secretary may reduce or waive such charges 
whenever payment of such charges would impair the working 
capital required by the Service[;].
  [(4)] (d) Equipment, Services, and Utilities.--The Secretary 
shall transfer to the Service without charge, rental, or 
reimbursement such necessary equipment as may not be needed for 
other purposes, and furnish the Service such services and 
utilities, including light, water, and heat, as may be 
available and necessary for its use. Reasonable charges, to be 
determined by the Secretary, shall be paid annually by the 
Service for the utilities so furnished[;].
  [(5)] (e) Personnel.--The Secretary shall employ such persons 
as are necessary for the establishment, maintenance, and 
operation of the Service, and pay the salaries, wages, and 
expenses of all such employees from the funds of the Service. 
Personnel necessary for the transaction of the business of the 
Service at canteens, warehouses, and storage depots shall be 
appointed, compensated from funds of the Service, and removed 
by the Secretary without regard to the provisions of title 5 
governing appointments in the competitive service and chapter 
51 and subchapter III of chapter 53 of title 5. Those employees 
are subject to the provisions of title 5 relating to a 
preference eligible described in section 2108(3) of title 5, 
subchapter I of chapter 81 of title 5, and subchapter III of 
chapter 83 of title 5. An employee appointed under this section 
may be considered for appointment to a Department position in 
the competitive service in the same manner that a Department 
employee in the competitive service is considered for transfer 
to such position. An employee of the Service who is appointed 
to a Department position in the competitive service under the 
authority of the preceding sentence may count toward the time-
in-service requirement for a career appointment in such 
position any previous period of employment in the Service[;].
  [(6)] (f) Contracts and Agreements.--The Secretary shall make 
all necessary contracts or agreements to purchase or sell 
merchandise, fixtures, equipment, supplies, and services, 
without regard to section 3709 of the Revised Statutes (41 
U.S.C. 5) and to do all things necessary to carry out such 
contracts or agreements, including the making of necessary 
adjustments and compromising of claims in connection 
therewith[;].
  [(7)] (g) Prices.--The Secretary shall fix the prices of 
merchandise and services in canteens so as to carry out the 
purposes of this chapter[;].
  [(8)] (h) Gifts and Donations.--The Secretary may accept 
gifts and donations of merchandise, fixtures, equipment, and 
supplies for the use and benefit of the Service[;].
  [(9)] (i) Rules and Regulations.--The Secretary shall make 
such rules and regulations, not inconsistent with the 
provisions of this chapter, as the Secretary considers 
necessary or appropriate to effectuate its purposes[;].
  [(10)] (j) Delegation.--The Secretary may delegate such 
duties and powers to employees as the Secretary considers 
necessary or appropriate, whose official acts performed within 
the scope of the delegated authority shall have the same force 
and effect as though performed by the Secretary[;].
  [(11)] (k) Authority To Cash Checks, Etc.--The Secretary may 
authorize the use of funds of the Service when available, 
subject to such regulations as the Secretary may deem 
appropriate, for the purpose of cashing checks, money orders, 
and similar instruments in nominal amounts for the payment of 
money presented by veterans hospitalized or domiciled at 
hospitals and homes of the Department, and by other persons 
authorized by section 7803 of this title to make purchases at 
canteens. Such checks, money orders, and other similar 
instruments may be cashed outright or may be accepted, subject 
to strict administrative controls, in payment for merchandise 
or services, and the difference between the amount of the 
purchase and the amount of the tendered instrument refunded in 
cash.

           *       *       *       *       *       *       *