Questions concerning this policy chapter should be directed to:

• Veterans Health Administration
• Veterans Benefits Administration
• National Cemetery Administration
• Debt Management Center
• Financial Services Center
• Construction and Facilities Management
• All others

0601 Overview

This chapter establishes the Department of Veterans Affairs’ (VA) financial policies for the use of the Cost of War Toxic Exposures Fund (TEF).

Key points covered in this chapter:

• In the “Sergeant First Class Heath Robinson Honoring our Promise to Address Comprehensive Toxics (PACT) Act of 2022” (PACT Act, PL 117-168), Congress authorized the TEF to fund Veterans’ health care and benefits associated with exposure to environmental hazards such as burn pits or Agent Orange;
• As required by the PACT Act, VA will establish a methodology to estimate the health care expenditures and expenses incident to the delivery of health care and benefits associated with exposure to environmental hazards as well as medical and other research relating to exposure to environmental hazards;
• Cost estimates used for the baseline and associated TEF budget will be documented and updated should the technical and underlying assumptions change;
• to ensure budget estimates are accurate and reliable;
• TEF funds will only be used for expenses associated with exposure to environmental hazards in service; and
• VA will maintain program, operating, and financial data for effective internal TEF management.

0602 Revisions

Section	Revision	Office	Reason for Change	Effective Date
Appendix D	Veterans Benefits Administration (VBA) Budget Execution standard operating procedures (SOPs) documented in policy appendix	VBA	Office of Inspector General (OIG) audit finding	January 2026
Appendix F	Removed Appendix F: GenAd TEF Estimation Methodology	OFP	GenAd does not use indirect costing for any TEF purposes	January 2026
Appendix G	Office of General Council (OGC) Budget Execution SOPs documented in policy appendix	OGC	Office of Inspector General (OIG) audit finding	January 2026
Appendix I	Office of Research and Development (ORD) Budget Execution SOPs documented in policy appendix	ORD	Office of Inspector General (OIG) audit finding	January 2026
Appendix K	Human Resources and Administration (HRA) Budget Execution SOPs documented in policy appendix	HRA	Office of Inspector General (OIG) audit finding	January 2026
Various	Removed combined office designation HRA/OSP to HRA only	OFP	SECVA Memo of 9/16/25 partitioning OSP to a standalone entity	January 2026

For a complete list of previous policy revisions, see Appendix A: Previous Policy Revisions.

0603 Definitions

Appropriated Entitlements – A form of mandatory spending (also referred to as direct spending). Spending on entitlements not controlled through the annual appropriations process. Instead, entitlement spending is based on the eligibility and benefit criteria established in law, which is under the jurisdiction of the various authorizing committees of the House and Senate. Veterans’ compensation is an example of an appropriated entitlement.

Budget Execution – the process of implementing, expending, monitoring, adjusting, and reporting on the current year’s budget for which funds were appropriated.  

Budget Scorekeeping – The process of developing and recording measures of the budgetary effects of proposed and enacted legislation. These effects consist of changes in Federal spending, revenues, and deficits.

Environmental Health Hazard – As defined by the Centers for Disease Control, a substance that has the ability to cause an adverse health event. This includes physical, chemical, and biological factors that are external to a person. Hazards can be natural or human made.

Health care associated with exposure to environmental hazards – VA and community provided care with respect to a disability or disease that, in accordance with guidelines issued by the Under Secretary for Health, is found to have resulted from exposure to environmental hazards (38 U.S.C. § 1710(e)(2)).

Incidental costs – Expenses incurred as a result of delivering health care and benefits that are “secondary to” or “occurring in conjunction with” the delivery of toxic exposure-related health care and benefits.

Presumptive List – List of substances, chemical and airborne hazards established and maintained by the Secretary of VA in collaboration with the Secretary of Defense, that presumes specific toxic exposure for any covered veteran.

Priority Group – VA assignment upon Veterans’ enrollment for VA health care in general. Veterans meeting the requirement for more than one priority group will be placed in the highest priority group for which eligible. Veterans placed in priority group 6 are also placed in priority group 7 or priority group 8, as applicable, if the Veteran has previously agreed to pay the applicable copayment for all matters not covered by priority group 6. The enrollment priority group assigned will determine the Veterans’ responsibility for copayments and could determine access to care.

Service Connection – Established when a Veteran’s disability or death was incurred during or aggravated by his or her military service. 38 U.S.C. § 101(16).

Toxic Exposure – Includes the following:

• A toxic exposure risk activity; or
• An exposure to a substance, chemical, or airborne hazard identified in the list under 38 U.S.C. § 1119(b)(2).

Toxic Exposure Risk Activity – Any activity that:

• Requires a corresponding entry in an exposure tracking record system (as defined in 38 U.S.C. § 1119(c)) for the Veteran who carried out the activity; or
• The Secretary of VA determines qualifies when taking into account what is reasonably prudent to protect the health of Veterans (38 U.S.C. § 1710 (e)(4)(C).

Veterans Health Administration (VHA) Priority Group 6 – The Priority Group (at a minimum) in which toxic-exposed Veterans are placed within VHA (38 U.S.C. § 1705(a)(6); 38 U.S.C. § 1710(a)(2)(F); (38 C.F.R. § 17.36). See VA Priority Groups for factors used to assign a Priority Group 6 designation.

0604 Roles and Responsibilities

Secretary of Veterans Affairs (SECVA) is responsible for:

• The content of all budget requests made by VA;
• Establishing, maintaining, and communicating to congress a list of presumptive toxic exposures (substance, chemical, or airborne hazard) as required by 38 U.S.C. § 1119(b)(2) in collaboration with the Secretary of Defense; and
• Determining whether to establish an end date for a covered veteran to qualify for presumptions of exposure.

Administration/Staff Office CFOs, and Fiscal Officers are responsible for compiling annual TEF spend data and for collaborating with the Office of Budget to develop each year’s budget estimate.

Human Resources and Administrations (HRA) are responsible for tracking positions that are established in support of the PACT Act. HRA is responsible for ensuring that HRSmart has the correct cost centers and organization structure at the time of hiring. This information may be obtained and verified by the staff office and Office of Budget prior to hiring or transferring Full-time Employee Equivalent (FTEE).

Office of Management (OM) is responsible for the overall VA spend governance process. OM is responsible for hosting the monthly budget reviews for spend plan oversight and fund execution.

Investment Review Council is responsible for the monthly budget review of the spend plan and fund execution.

Office of Budget (OB) is responsible for:

• Providing guidance and coordinating with the Administrations and Staff Offices on matters relating to the formulation and execution of the Department’s TEF Budget;
• Coordinating and consolidating TEF spend data with the Administrations and Staff Offices; and
• Enforcing VA’s TEF Funds Control policy by confirming the entries made by the FSC align with the ACS and authorizing documents.

Office of General Counsel (OGC) is responsible for providing legal advice and opinions on the PACT Act.

0605 Policies

060501 TEF Establishment

1. VA will request funding for the Toxic Exposure Fund (TEF) to cover costs associated with providing health care and benefits to Veterans exposed to environmental hazards as required by the PACT Act.
2. In accordance with 38 U.S.C. § 1710(e)(2)(B) VA operationalizes health care services for Veterans enrolled in Priority Group 6, the same Priority Group (at a minimum) in which toxic-exposed Veterans are placed. Veterans enrolled in Priority Group 6 may be subject to copayments for care found to not be related to their exposure.
3. VA will only use TEF funds for the delivery of health care and benefits that are associated with exposure to environmental hazards; use of TEF funds for other purposes would be a violation of the Purpose Statute, 31 U.S.C. § 1301(a) and could result in Antideficiency Act (ADA) violation, (31 U.S.C. §1341(a), 31 U.S.C. § 1342, or 31 U.S.C. § 1517(a)).
4. Not less frequently than once every two years after the enactment of the PACT Act, the Secretary shall submit to the Committee on Veterans’ Affairs of the Senate and the Committee on Veterans’ Affairs of the House of Representatives a report identifying any additions or removals to the presumptive list during the period covered by the report.

060502 Budget Authority

1. In accordance with 38 U.S.C. § 324(e), the Secretary will provide detailed estimates of the amounts required to fund TEF in support of the President’s budget request submitted to Congress pursuant to 31 U.S.C. § 1105.
2. No amount appropriated to TEF in FY2023 or any subsequent fiscal year pursuant to TEF appropriation shall be counted as discretionary budget authority and outlays or as direct spending for any estimate of an appropriation Act under the Congressional Budget and Impoundment Control Act of 1974 (2 U.S.C. § 621 et seq.) and any other Act.
3. Notwithstanding the Budget Scorekeeping Guidelines and the accompanying list of programs and accounts set forth in the Joint Explanatory Statement of the Committee of Conference accompanying Conference Report 105–217, and for purposes of the Balanced Budget and Emergency Deficit Control Act of 1985 (2 U.S.C. § 900 et seq.) and the Congressional Budget Act of 1974 (2 U.S.C. § 621 et seq.), the TEF shall be treated as if it were an account designated as ‘Appropriated Entitlements and Mandatories for Fiscal Year 1997’ in the Joint Explanatory Statement of the Committee of Conference accompanying Conference Report 105–217.
4. TEF funds provided in support of interagency agreements (e.g., interagency toxic exposure research workgroup) will adhere to the requirements contained in Volume IX Chapter 7- Buy/Sell Transactions (G-Invoicing)

060503 Estimates for Congressional Consideration

1. In accordance with 38 U.S.C. § 324(f), VA will establish policies and procedures for developing annual TEF estimates. As each TEF estimate will be unique, Administrations and Staff Offices will create procedures specific to the development of their detailed funding estimates, see:
   • Appendix B for VHA’s TEF estimation methodology;
   • Appendix C for VBA’s TEF estimation methodology;
   • Appendix E for OIT’s TEF estimation methodology;
   • Appendix F for OGC’s TEF estimation methodology;
   • Appendix H for ORD’s TEF estimation methodology; and
   • Appendix J for HRA’s TEF estimation methodology.
2. VA may use TEF funds for anticipated expenses if the Administration or Staff Office can demonstrate that an expense is needed to deliver Veterans’ health care and/or benefits associated with exposure to environmental hazards. The TEF is not legally available to fund administrative expenses supporting VA’s delivery of health care and benefits that are not associated with in-service environmental exposure.
3. TEF funds may be used to fund a pro rata share of an expense if an Administration or Staff Office is able to:
   • Estimate the share that is due to environmental hazards exposure work;
   • Track the actual environmental hazards exposure work; and
   • Reconcile the estimate with actual workload in order to adjust accounts (e.g., utilizing an “estimate, track and reconcile”) process.
4. OGC has provided guidance that TEF funds may be used for incidental costs that support VA’s delivery of health care and benefits associated with in-service environmental exposures when the costs are demonstrably estimable and reconcilable (e.g., if VBA estimated that it needed X laptops to process new claims based on assumption that, all claims taking the same time to process, 75% of the new claims would be toxic exposure-related, then the TEF could fund 75% of the laptops and the IT Systems account could fund 25% of the laptops; if VBA’s estimate is wrong and only 50% of new claims are toxic exposure-related, then the accounts should be adjusted so that the TEF is charged for 50% and the IT Systems account funds 50%).
5. Administrations and Staff Offices receiving TEF resources will develop a long-term staffing plan. This plan will identify anticipated human resource requirements associated with the PACT Act for FYs 2023 through 2025, including planned hiring (permanent, temp/term & contractor) and anticipated attrition based upon workload changes.
6. VA Administration and Staff Office CFOs will use Government Accountability Office (GAO) best practices for estimation modeling such that the estimate:
   • Can be audited via traceability to source data and model;
   • Can be replicated by other estimators via well-defined documentation;
   • Identifies and substantiates the costs of resources;
   • Discloses any excluded costs along with the rationale;
   • Addresses key stakeholder requirements that support decision-making; and
   • Is structured to be easily modified to provide answers for unplanned program changes.

060504 Budget Execution Implementing/Allocating Costs

1. VA’s budget execution will align with all relevant laws and regulations including those related to fund management, procurement, and accounting.
2. Oversight and control of appropriations shall be executed in accordance with Volume II, Chapter 1 – Appropriations Law.
3. VA Administrations and Staff Offices will review TEF obligations in accordance with Volume III, Chapter 2 – Obligations, to ensure that recorded amounts are accurate and valid.
4. VA Administrations and Staff Offices will use a similar methodology to the one they used for formulating the budget when determining total allowable costs chargeable to TEF during the budget execution process. When allocating allowable costs, the Administrations and Staff Offices will apply actuals for obligation workload, patients, contracts, etc. in place of estimates used in the formulation process.        
5. VA will not obligate or expend TEF funds before an appropriation is available (31 U.S.C. § 1341).
6. VA will establish budget execution system controls to limit the ability to obligate or expend funds in excess of available amounts or statutory limitations. Refer to Volume II, Chapter 3 – VA Funds Control.
7. Administration and Staff Office CFOs or CFO equivalents will monitor TEF execution to ensure spending is on track with estimated amounts. Administration and Staff Office CFOs or CFO equivalents will make adjustments if spending is significantly higher or lower than expected. OM will monitor as part of the monthly budget execution reviews.
8. VA Administrations and Staff Offices will analyze execution data to determine the need for transfers of resources to properly align program requirements and resources in accordance with changes in timing, program emphasis, pricing, or other determinants.

060505 Tracking/Monitoring/Reconciling Toxic Exposures Fund

1. VA Administrations and Staff Offices will track all TEF obligations and expenses  via the use of fund codes for both VA funded TEF costs and reimbursable activities.
2. VA Administrations and Staff Offices receiving TEF funds must coordinate with human resources to ensure proper coding and tracking of TEF hires according to their guidance.
3. Human resources will track positions that are established in support of the PACT Act by using the Financial Management System fund codes established by the Office of Finance in HRSmart to identify the positions as being funded by TEF appropriations. Temporary positions will have a not to exceed date.
4. Each quarter, VA Administrations and Staff Offices will perform a reconciliation to confirm that TEF expenses are allowable per PACT Act restrictions. If transactions are not allowable, VA Administrations and Staff Offices will perform cost transfers to move the expense to the appropriate funding source.
5. Quarterly, VA Administrations and Staff Offices will review the justifications linking employee costs and non-pay costs incident to the delivery of healthcare and Veterans’ benefits associated with TEF to ensure that they are still valid. If the justification is no longer valid the associated costs will not be allocated to TEF.

060506 Reporting

1. VA Administrations and Staff Offices will report any findings or concerns (i.e., violations of policy, lack of internal control, budget plan, or execution issues) as a result of their internal reviews to their Administration or Staff Office CFO’s or CFO equivalents. Administration and Staff Office CFOs will notify the VA CFO of any findings or concerns as well as their corrective action plan.
2. VA Administrations and Staff Offices CFOs will report financial or operational risks identified with TEF funded activities to the VA CFO.

0606 Authorities and References

• Consolidated Appropriations Act of 2023
• Consolidated Appropriations Act of 2024
• Full-Year Continuing Appropriations and Extensions Act, 2025
• Sergeant First Class Heath Robinson Honoring our Promise to Address Comprehensive Toxics Act of 2022, PL 117-168, PACT Act
• United States Code (U.S.C.)
  • 2 U.S.C. § 621, Congressional Declaration of Purpose
  • 2 U.S.C. § 639, Reports, Summaries, and Projections of Congressional Budget Actions
  • 2 U.S.C. § 900, Statement of Budget Enforcement Through Sequestration; Definitions
  • 2 U.S.C. § 907, The Baseline
  • 2 U.S.C. § 931, Purpose
  • 31 U.S.C. Chapter 13 Appropriations
  • 31 U.S.C. § 1105, Budget Contents and Submission to Congress
  • 31 U.S.C. § 1301, Appropriations, Application
  • 31 U.S.C. § 1341, Limitations on Expending and Obligating Amounts
  • 31 U.S.C. § 1342, Limitations on Voluntary Services
  • 31 U.S.C. § 1517(a), Prohibited Obligations and Expenditures
  • 38 U.S.C. §§ 1171-1176, Determinations Relating to Presumptions of Service Connection Based on Toxic Exposure
  • 38 U.S.C. § 324 Cost of War Toxic Exposures Fund
  • 38 U.S.C. § 1119, Presumptions of toxic exposure
  • 38 U.S.C. § 1705, Management of Healthcare: Patient Enrollment System
  • 38 U.S.C. § 1710, Eligibility for Hospital, Nursing Home, and Domiciliary Care
• Code of Federal Regulations (C.F.R.)
  • 38 C.F.R. § 17.36, Enrollment – Provision of Hospital and Outpatient Care to Veterans
  • 38 C.F.R. § 17.400, Hospital Care and Medical Services for Camp Lejeune Veterans
• OMB Circular A-11, Preparation, Submission and Execution of the Budget 
• GAO Cost Estimating and Assessment Guide
• VA Priority Groups
• VA Financial Policy Publications
  • Volume II, Chapter 1 – Appropriations Law
  • Volume II, Chapter 3 – VA Funds Control
  • Volume III, Chapter 2 – Obligations
  • Volume IX, Chapter 3 – Reclassifications
  • Volume IX, Chapter 7 – Buy/Sell Transactions (G-Invoicing)

0607 Rescissions

Volume XI, Chapter 6 – Toxic Exposures Fund, November 2025

Appendix A: Previous Policy Revisions

Section	Revision	Office	Reason for Change	Effective Date
0603	Update to Definitions to include Budget Execution	OFP	Policy updated to include overarching budget execution expectations	November 2025
0605	Removed previous 060504 Tracking Pact Act Toxic Exposures Fund to expand to Budget Execution tasks including Implementing, Allocating, Tracking, Monitoring, Reconciling, and Reporting of Toxic Exposures funds	OFP	Ensure accountability, consistency, compliance, and transparency of TEF Funds	November 2025
Appendix P	Human Resources Administration/Office of Operations, Security and Preparedness (HRA/OSP) TEF Methodology	OFP	HRA/OSP methodology for estimating TEF application	April 2025
Appendix N	Office of Research and Development (ORD) TEF Methodology	OFP	ORD methodology for estimating TEF application	June 2024
Appendix A	Moved all previous revisions to Appendix A	OFP	Standard policy formatting	May 2024
Appendix L	Office of General Counsel (OGC) TEF Methodology	OFP	OGC methodology for estimating TEF application	May 2024
Appendix I	GenAd Funded Staff Offices Methodology for Administrative Costs for Use of the Toxic Exposures Fund	OFP	GenAd methodology for estimating TEF application	April 2024
Appendix G	Office of Enterprise Integration (OEI) TEF Methodology	OFP	OEI methodology for estimating TEF application	March 2024
Appendix E	Office of Information and Technology (OIT) TEF Methodology	OFP	OIT methodology for estimating TEF application	February 2024
1203	Updated definitions	OFP	OGC clarification of expenses ‘incidental to’ for allowable use of TEF funds	December 2023
1205	Detailed allowable use of TEF funds	OFP	Detailed use of funds for OI&T expenses	December 2023
1205	Detailed allowable use of incidental TEF funds	OFP	OGC determination for incidental expenses incurred as part of Toxic Exposure care	December 2023
Appendix C	VBA TEF Methodology	OFP	VBA methodology for estimating TEF application	December 2023
Appendix E	Added Memo for Initial House and Senate Approved TEF Spend Plan	OFP	Leaderships expectations for Estimating, Tracking, and Reconciling TEF funds	December 2023
New Policy	Establish policy for TEF appropriation, estimation procedures, and authorized use of funds	OFP	PACT Act of 2022	July 2023

Appendix B: VHA TEF Estimation Methodology

1. VHA will identify the total number of Priority Group (PG) 6 Veterans and the costs associated with their care for the initial TEF estimate each fiscal year. PG 6 will be selected as a proxy because most Veterans in this group are eligible due to environmental exposure-related reasons and because VA could determine what portion of their care was attributable to their exposure based on copayment liability.
2. VHA will select a random sample out of PG 6 Veterans receiving care.
3. VHA will review data for visits with and without copayment charges.
4. VHA will calculate the percentage of Care Without Copayment as the proxy for health care associated with exposure to environmental hazards.

PG6 Patients	Patient Count	Care that resulted in Copayment	Care without Copayment	FY21 Total Obligations	% of Care Costs without Copayment
Sample with Billings	157	$1,535,701	$6,728,123	$8,263,824
Sample Without Billings	54	$0	$1,330,882	$1,330,882
Total	211	$1,535,701	$8,059,005	$9,594,706	84%

5. VHA will utilize projected health care costs for Veterans who were deployed during the Post 9/11, Gulf War, and Vietnam eras from the most current Enrollee Health Care Projection Model (EHCPM) scenario (scenario BAB1, the current model as of 11/1/22). These eras’ populations constitute an estimate of the maximum number of Veterans who may have faced exposures to environmental hazards as a result of their service.  

($ millions)	2021	2022	2023	2024	2025
Post 9/11	$10,245	$11,952	$14,408	$16,069	$17,889
Gulf War	$3,345	$3,568	$3,989	$4,149	$4,303
Vietnam Era – Estimate B	$35,844	$39,080	$44,511	$46,943	$49,253
Total	$49,434	$54,600	$62,908	$67,160	$71,445
Estimate B – Based on current enrolleees in FY 2021 aged 69-80 (aged 17-28 in 1969). Note that this is a broad estimate based solely on age during the Vietnam war.

6. VHA will apply the percentage of Care Without Copayment (84%) as the proxy for health care associated with exposure to environmental hazards to the projected health care costs for the identified populations.

($ millions)	2021	2022	2023	2024	2025
Post 9/11	$8,606	$10,040	$12,103	$13,498	$15,027
Gulf War	$2,810	$2,997	$3,351	$3,484	$3,615
Vietnam Era – Estimate B	$30,109	$32,827	$37,389	$39,432	$41,373
Total	$41,525	$45,864	$56,414	$56,414	$60,014

7. VHA will apply a further reduction (1.1%) for lease costs included in the EHCPM-modeled projections that may not be funded by the TEF. This results in the FY 2021 baseline as required by PL 117-168, section 805, and estimated projections for FY 2023, FY 2024, and FY 2025.

($ millions)	2021	2022	2023	2024	2025
Post 9/11	$8,511	$9,929	$11,970	$13,349	$14,861
Gulf War	$2,799	$2,964	$3,314	$3,446	$3,575
Vietnam Era – Estimate B	$29,778	$32,466	$36,978	$38,998	$40,917
Total	$41,068	$45,359	$52,261	$55,794	$59,354

8. VHA will subtract the FY 2021 baseline from the FY 2022 – FY 2025 projections to identify the estimate over the FY 2021 level for health care associated with exposure to environmental hazards or expenses incident to the delivery of health care associated with exposure to environmental hazards that is authorized to be appropriated to the TEF.

($ millions)	2021	2022	2023	2024	2025
Post 9/11	$0.00	$1,418	$3,458	$4,838	$6,350
Gulf War	$0.00	$185	$185	$667	$796
Vietnam Era – Estimate B	$0.00	$2,688	$2,688	$9,221	$11,140
Total	$0.00	$4,292	$11,194	$14,726	$18,286

Appendix C: VBA TEF Estimation Methodology

VBA Toxic Exposures Fund (TEF) Methodology

1. Management Direct and Support Staff (e.g., Human Resources, Finance, Office of Field Operations, and PA&I).
   1. All TEF funded employees are full-time equivalents. There are currently 568 Management Direct and Support Staff (MD&S) Full-Time Employee (FTE) currently in TEF Cost Centers.
   2. In order to identify what the TEF will support in this spending category, VBA used the percentage of management direction and support staff compared with direct service staff as a proxy. Over the past 5 years, the average number of Management Direct and Support (MD&S) staff has been 10.7% of the Direct Service staff which represents 23,349 FTE [Disability Compensation, Pension & Fiduciary (P&F), Education, Housing, Veteran Readiness and Employment (VR&E), Insurance, and Outreach, Transition and Economic Development (OTED)].
   3. VBA will use this as a proxy for normal operations to guide the number of MD&S staff coded to support operations resourced with TEF. In each instance where MD&S staff is allocated because of the requirement to process claims for benefits based on toxic exposure, the requesting office must provide justification to establish the toxic exposure nexus and must recertify the nexus still exists twice per fiscal year – by EOM October and EOM April. Additionally, in instances where staff were hired because of the requirement to process claims for benefits based on toxic exposure are detailed to positions where a nexus does not exist, costs associated with their work will not be allocated to TEF.
2. VBA Central Office Direct Staff (Direct: Disability Compensation, VR&E, OTED).
   1. In order to identify what the TEF supports in this spending category, VBA used the percentage of central office direct staff compared with direct service staff as a proxy. Over the past 5 years, the average number of Direct Service staff at VBA Central Office has been 3.1% of the Direct Service staff in the field [Disability Compensation, Pension & Fiduciary (P&F), Education, Housing, Veteran Readiness and Employment (VR&E), Insurance, and Outreach, Transition and Economic Development (OTED)].
   2. VBA will use this as a proxy for normal operations to guide the number of Central Office Direct Service staff coded to support operations resourced with TEF. In each instance where Central Office Direct staff is allocated because of the requirement to process claims for benefits based on toxic exposure, the requesting office must provide justification to establish the toxic exposure nexus and must recertify the nexus still exists on a quarterly basis. Additionally, in instances where staff hired because of the requirement to process claims for benefits based on toxic exposure are detailed to positions where a nexus does not exist, costs associated with their work will not be allocated to TEF.
3. Training Costs for VBA Claims Processors and National Call Center (NCC) Personnel.
   1. VBA proposes that salary, benefits, and non-pay expenses associated with onboarding and training claims processors be directly attributed to TEF. The sole reason for onboarding this cohort of personnel is based on the detailed PACT Act expansion of toxic exposure-related benefits cost estimate developed to identify the manpower necessary to process claims for and address Veteran inquiries associated with benefits based on toxic exposure.
4. VBA Claims Processing Staff – Weighted Cost Split based on Production Standards.
   1. To account for costs associated with claims processing production, VBA proposes that it take the average cost of a claim if only toxic exposure-related conditions were at issue and subtract that from the average cost of a claim with all issues rated and then divide that by the average cost of a claim with all issues added. 
   2. For example, if we have a claim with two rated issues, and one is a toxic exposure-related condition.  If a one issue claim, with a PACT Act expansion of toxic exposure-related benefits contention, costs $235.76, and a two-issue claim costs $280.21 on average to process.  Based on these cost averages, 84% of the cost of that claim would be attributed to toxic exposure and would be eligible for TEF funding.
   3. The weighted cost split based on rating claims would also be allocated to the development costs and post-rating costs for consistency.
      
      VBA TEF Methodology Chart

5. VBA National Contact Center Staff.
   1. To account for costs associated with interactions related to toxic exposure benefits handled by the NCC, it is proposed that VBA use the total minutes for all toxic exposure-related logged calls, plus total minutes for AskVA responses for toxic-exposure related inquiries, multiplied by the average cost per minute for personnel costs.
6. Non-pay Toxic Exposure-Related Costs.
   1. All non-pay costs incident to the delivery of Veterans’ benefits associated with exposure to environmental hazards, including administrative expenses, will be allocated to the TEF. This includes contracts, travel, and any other specific costs explicitly attributable to implementing and managing toxic exposure-related efforts.
7. Outreach Toxic Exposure-Related Costs.
   1. All outreach costs incident to the delivery of Veterans’ benefits associated with exposure to environmental hazards, including administrative expenses, will be allocated to the TEF. This includes contracts, travel, and any other specific costs explicitly attributable to implementing and managing toxic exposure-related benefits efforts.
8. Scanning Services.
   1. All scanning costs incident to the delivery of Veterans’ benefits associated with exposure to environmental hazards will be allocated to the TEF. This includes all contract, travel, and any other specific costs explicitly attributable to managing toxic exposure-related benefits efforts.
   2. These funds will support the file conversion services contract, enable proactive scanning of military personnel files, to include service treatment records, ultimately improving the speed of processing PACT Act expansion of toxic exposure-related benefits claims. 
9. Automation.
   1. All automation costs incident to the delivery of Veterans’ benefits associated with exposure to environmental hazards will be allocated to the TEF. This includes all contracts, travel, and any other specific costs explicitly attributable to managing toxic exposure-related efforts.
   2. These funds will support the additional capacity needed to meet the volume of claims received; allows for increased accuracy and speed of processing claims. Automation efforts will be expanded and updated to support intake of forms, which reside within existing systems of record in VA as well as third-party medical evidence.
   3. The expansion involves performing claims development, ratings, and award support aimed at easing the workload for VBA claims processors.

Appendix D: VBA TEF Budget Execution

VBA Toxic Exposure Fund (TEF) Budget Execution Policy
Effective Date: December 5^th, 2025

During the year of execution, in accordance with Volume XI, Unique Fund Accounts, Chapter 06 – Toxic Exposures fund, 060504 and 060505, VBA provides the following process for execution, reconciliation, and tracking of TEF pay and non-pay costs:

1. VBA will ensure that charges do not exceed the estimated legally allowable Toxic Exposure Fund (TEF) amount by carefully monitoring the actual spending data of TEF funds via Integrated Financial Management and Acquisition System (iFAMS).
2. Currently, there is no VA methods/systems (including VATAS) in place to track TEF by workload or task. VBA establishes TEF-coded positions in HRsmart with specific cost centers for TEF. These Full-Time Employees (FTE) are recertified twice annually (in October and April) in a memo signed by VBA’s Chief of Staff.
3. VBA will update future years TEF FTE projections, based on trend analysis, workload projections and after a reassessment of TEF programming methodology.
4. VBA identifies TEF payroll costs using TEF cost centers assigned to employees via HRsmart, VA’s system of record.
5. VBA Human Capital Services works with each office to accurately record TEF positions and assign TEF employees in HRSmart based on authorized FTE approved by VBA Under Secretary and issued by Office of Financial Management, Manpower office.
6. Management Direct and Support (MD&S) Staff (e.g., Human Resources Liaison, Support Services Division Finance Offices, and Office of Field Operations District and Regional Offices).
   1. VBA Human Capital Services works with each Regional and District office to accurately record TEF positions and assign TEF employees in HRSmart based on authorized FTE ceiling.
   2. MD&S support is determined by anticipated workload due to increased TEF FTE.
7. VBA Central Office Direct Staff (Direct: Disability Compensation, VR&E, M2CR).
   1. Effective FY26, there will no longer be any TEF coded positions or employees assigned to VBA Central Office (VBACO).
   2. TEF work within VBACO has been integrated into day-to-day operations and merged with normal operating procedures. As a result, the need for specific TEF-coded positions and employees is no longer necessary.
   3. This policy adjustment reflects the administrative restructuring and resource allocation strategy aimed at optimizing operational efficiencies within VBA.
8. Training Costs for VBA Claims Processors and National Call Center (NCC) Personnel:
   1. Contracts for training software are obligated directly from TEF appropriation and oversight are provided by the VBA OFM Discretionary Budget Staff.
9. VBA Claims Processing Staff – TEF Issues Cost Model
   1. The Veterans Benefits Management System (VBMS) is VBA’s claims process system. VBMS has the ability to identify issues within a claim as TEF or non-TEF. OFO counts any claim with at least one TEF issue as a TEF claim. However, to accurately apply a TEF nexus to a claim, OFO, in collaboration with OFM and Office of PA&I, developed the TEF Issues Cost Model that provides the cost of TEF issues. This cost is an average based on employee pay and time to adjudicate by claim and number issue. The cost is then separated into two categories – cost of TEF issues and cost of all issues. The TEF issue costs are divided by the total issues cost. This percentage represents cost of TEF processing.
   2. OFM, Manpower uses this data and compares the actual payroll data of the employees in TEF coded cost centers. This process can be found under section 15. Reconciliation.
10.  VBA National Contact Center Staff
    1. NCC software tracks timing of calls, however, it does not track the funds associated with specific calls, as claim-related calls may contain both TEF and non-TEF issues.
    2. Payroll costs for NCC staff are accounted for by each employee’s TEF cost center identified in HRsmart.
11.  Non-pay Toxic Exposure Related Costs
    1. Related non-pay costs are obligated directly from the TEF appropriation and oversight is provided by the VBA OFM Discretionary Budget Staff.
12.  Outreach Toxic Exposure-Related Costs
    1. Related non-pay costs are obligated directly from the TEF appropriation and oversight is provided by VBA OFM Discretionary Budget Staff. Outreach, specifically attributable to toxic exposure, is no longer being formulated but remains for potential use in the future.
13.  Scanning Services
    1. All scanning services contracts are obligated directly from the TEF appropriation and managed oversight is provided by the VBA OFM Discretionary Budget Staff.
14.  Automation
    1. Related non-pay costs are obligated directly from the TEF appropriation and oversight is provided by the VBA OFM Discretionary Budget Staff.
15.  Reconciliation
    To ensure effective internal TEF management, OFM, in collaboration with the Business Lines, will conduct reconciliation efforts as follows:
    1. Each quarter, the VBA OFM Discretionary Budget Staff will perform a reconciliation to verify that TEF expenses comply with PACT Act restrictions. If any transactions are found to be inconsistent with VA TEF Policy guidance, VBA will initiate cost transfers to reassign the expenses to the correct funding source.
    2. At the end of each pay period, VBA Office of Financial Management (OFM), Manpower Division will complete a cost comparison, comparing the projected TEF employee payroll costs, regular and overtime against actual payroll expenditures for the TEF-specific cost centers for that pay period.
       1. Each month, the VBA Manpower team reconciles the TEF Issues Cost Model and compares it to the TEF-coded payroll costs for the same period. If the cost of TEF issues is higher than the TEF payroll cost, it is assumed that TEF issues are being properly resourced. Conversely, if the cost of TEF issues is lower than the TEF payroll cost, it is assumed that TEF issues are not being adequately resourced.
       2. Quarterly, VBA will review and recertify FTE justifications to ensure that employee costs associated with delivering Veterans’ benefits under TEF remain appropriate. If a justification is found to be no longer valid, the related costs will not be charged to TEF. When TEF-coded employees are no longer needed to support the required workload, they will be reassigned to GOE-coded positions.

References: Volume XI – Unique Fund Accounts, Chapter 06 – Toxic Exposures Fund, 060504/060505

Appendix E:  OIT TEF Estimation Methodology

1. OIT TEF Estimation Methodology Framework
   OIT developed a methodology to estimate costs that are authorized for TEF purposes as required by P.L. 117-168 and further clarified by OIT TEF-related opinions issued by VA OGC. OIT’s TEF estimation methodology framework focused on non-pay and pay activities that meet TEF authorized purposes and four associated cost types (i.e., fixed, variable, allocable, total).
   1. Non-Pay Activities
      1. Fixed Costs. Costs that remain constant whatever the quantity of goods or services produced. These costs are associated with benefits of IT and systems modernization projects that are listed in the 701b Benefits Modernization Plan submitted to Congress. OIT treats these as “fixed costs” based on the assumption that 100% of the project is in support of the overall modernization of VBA IT systems and does not increase based on the volume of claims processed.
         Per OGC, Section 701(a) authorizes the use of TEF funds to continue to modernize systems for the Veterans Benefits Administration and Section 806 appropriation did not limit or exclude the application of section 701(a) to the TEF appropriation.
      2. Variable Costs. Costs that vary with the level of goods or services produced. These costs enable the proportional growth of IT mission support activities (e.g., new user provisioning, enterprise service desk growth, activations) in support of the processing of new toxic exposure presumptive condition disability claims.
         Variable costs are only for IT resources, endpoint equipment, and software licenses that directly tie to staff funded entirely with TEF dollars. Specifically, OIT uses TEF funding to pay for the PC, laptop, cell phone, scanner, printer, and other end user devices assigned directly to 100% TEF-funded staff. OIT will not attempt to derive allocable costs for anything that serves as common infrastructure, such as circuit cost or network switches, that can be assigned to both TEF and base appropriations (i.e., multiple funding streams).
         Example: VA allotted $9 million in TEF funding to “New User Provisioning and Enterprise Service Desk Growth” for new devices for employees hired to support PACT Act activities. These IT costs included laptops, docking stations, 2 monitors, keyboards, mice, and software and management tools required to be on VA’s network. VA estimated “New User Provisioning and Enterprise Service Desk Growth”  funding based a projected hiring of 2,350 FTE and IT cost of $3,823 per FTE.
      3. Allocable Costs. Costs for goods or services involved are chargeable or assignable in accordance with the relative benefits received by the project. These costs are associated with IT systems, programs, projects, and activities that support claims processing of the 23 presumptive conditions in the PACT Act. These IT costs are calculated by only allocating the percentage (%) of cost associated with the claims workload attributable to PACT Act’s new and expanded presumptive conditions.
         Example: If PACT Act contracting actions paid with TEF funding only account for 20% of all acquisition costs, then OIT will only pay 20% of the annual Technology Acquisition Center (TAC) acquisition fees with TEF funding.
   2. Pay Activities
      1. Total Cost. Sum cost incurred to produce a certain quantity of output. This is the composition of total IT costs associated with IT staffing as it relates to staff who work 100% of their time on TEF-fund projects and activities.
         TEF funding can be used to pay for new or existing staff whose work is completely dedicated to toxic exposure efforts. OIT will identify both existing and new staff for whom 100% of their time is spent in support of those fixed cost activities defined in Appendix E, Section A.1.a and may pay for these positions with TEF dollars (up to the TEF pay and administration account budget ceiling). This includes any project managers, engineers, or cybersecurity staff that are assigned 100% to support said product. This guidance applies to both permanent and term positions.
         OIT uses the guiding principle of 100% of OIT staff time is used in support of 100% TEF workload for permissible TEF staffing expenses. OIT prohibits fractional time in using TEF dollars.
2. Tracking TEF Obligations and Expenditures – Non-Pay and Pay Activities
   1. Non-Pay Activities. TEF is tracked in an OIT PACT Act Dashboardthat pulls data from the OIT Budget Tracking Tool (BTT). This dashboard provides real-time TEF data by Treasury Appropriation Fund Symbol (TAFS) and subaccount (i.e., Development, Sustainment, Pay).
      To meet the enhanced reporting requirements guidance shared with Congress and OMB, OIT established TEF transactional codes in financial applications and financial systems of record. For example:
      • BTT,Spend Plan Module: “PA”
      • Integrated Financial and Acquisition Management System (iFAMS): “1126MDMB PACT Act”
        OIT uses these transaction codes in tracking TEF funding through a program, project, and activity (PPA) taxonomy allowing OIT to capture wholistic PACT Act Planning Categories (e.g., Effective Claims Processing and Tracking) as well as more detailed and nested project-level (e.g., Individual Longitudinal Exposure Record (ILER)) costs and outcomes. These codes are further used in tracking hiring plans, acquisition packages, and contracts.
   2. Pay Activities. TEF-funded employees are assigned to a unique TEF Code in OIT’s Payroll Management Database (PMD), an OIT Office of People Science (OPS) database that tracks personnel count and respective cost centers established in the Human Resource and Payroll Application Services (HRPAS) system.
3. Reconciliation of TEF Financial and Performance Metrics – Non-Pay and Pay Activities
   1. Non-Pay Activities. Based on the tracking and enhanced reporting capabilities described in Appendix E, Section B in support of PACT Act, OIT will reconcile estimates with actual expenses, work outputs, and performance outcomes. Such financial reconciliations will occur for each TAFS, subaccount, and project in the TEF taxonomy and align with performance outcomes as defined in the 701b Modernization Plan. This will ensure OIT maintains necessary adjustments to its accounting records. OIT will conduct periodic governance and internal control reviews to ensure the enforcement of the reconciliation process.
   2. Pay Activities. Based on the tracking and enhanced reporting capabilities described in Appendix E, Section B in support of the PACT Act, OIT developed a TEF Payroll Tracker that captures all TEF payroll related costs. This tracker will reconcile estimates to the individual position identifying specific duties and total time dedicated to said duties. Per current guidance, only those permanent and term positions working 100% TEF related duties in support of 100% TEF 701b Modernization Plan (i.e., VBA IT Systems Modernization) project will be authorized to be paid with TEF pay funding. All other OIT staff are to be paid through the base appropriation.

Appendix F: OGC TEF Estimation Methodology

Office of General Counsel Background:  The Office of General Counsel (OGC) requested, and has received payroll funding from the Toxic Exposure Fund (TEF) authorized by Section 805 of the PACT Act.  As of December 14, 2023, OGC has 40 TEF employees onboard whose payroll is funded by the TEF. To ensure that OGC budget execution complies with appropriate use of the TEF, this document provides the OGC comprehensive plan on the utilization and accountability of the TEF. The authorization for the TEF, codified at 38 U.S.C. 324, authorizes additional appropriations for (1) delivery of Veterans’ health care associated with in-service exposure to environmental hazards in programs administered by VHA; (2) any expenses incidental to the delivery of veterans’ health care and benefits associated with in-service exposure to environmental hazards, including administrative expenses, such as IT and claims processing and appeals, and excluding major medical facility leases (38 U.S.C. § 324(c)(2)); and (3) medical and other research relating to exposure to environmental hazards.  

OGC’s TEF Onboards and Projections. OGC estimates the cost of its TEF workload in 2025 to be 30.4 million. This will support the salaries and benefits of 158 FTE and any associated travel and training expenses related to toxic exposure work. The below table provides a breakout of FTE needed by each OGC office utilizing the TEF.

OFFICE	ONBOARD	2025 FTE Projection	2025 PAY PROJECTION	2025 NON-PAY PROJECTIONS
BLG	4	6	$1,155
CALG	35	152	$29,256

OGC’s TEF Case and Workload Tracking Methodology: OGC utilizes GCLaws, a mandatory case and time tracking application that requires tracking of case time and provides a tool for tracking TEF-related work. Management reports are available that return the amount of time spent per attorney for purposes of reconciliation of TEF. OGC employees performing work which directly supports or is incidental to VA’s delivery of health care and benefits associated with in-service environmental exposures will use GCLaws to track the time associated with activities supporting the PACT Act’s expansion of toxic exposure-related health care and benefits.

Nature of Work and Reconciliation Methodology for OGC Offices Utilizing TEF: OGC will reconcile TEF expenses on a quarterly cycle. To validate TEF-related expenses, OGC offices utilizing the TEF will submit a certified reconciliation report to MPA each quarter identifying TEF-related cases or case hours being for each quarter. MPA will review the reports and ensure TEF expenses are charged appropriately to the TEF. MPA and OB will ensure that any expenses charged to the TEF that can’t be justified as TEF-related are immediately transferred to OGC’s annual direct budget authority (BA) fund. In the event the TEF-related workload is considerably less than projected and does not support the number of TEF employees hired, OGC will assist offices in permanently transferring TEF employees to the OGC BA fund or request supplemental funding should OGC’s BA fund not support these transfers.

BLG Nature of Work: In the Benefits Law Group (BLG), TEF attorneys are required to handle a wide variety of legal matters related to benefits based on toxic exposure including, but not limited to, the following:

• The Benefits Law Group (BLG) has supported, and will continue to support, TEF activities in many ways, including the following:
• Regulatory Matters: BLG assists VBA in developing regulations governing benefits based on toxic exposures. The PACT Act resulted in a significant increase in toxic exposures regulatory work, and that surge is likely to continue over the next 2 years or more.
• Legislative Matters: BLG assists VBA and OCLA on all legislative work related to toxic exposures, including drafting, review, and coordination of hearing testimony, legislative views, legislative proposals, technical assistance on draft bills, and congressionally mandated reports (CMRs), as well as in briefings to congressional committees.
• Legal Opinions: BLG regularly provides written legal opinions on complex issues of law related to toxic exposures. These opinions generally are requested by VBA officials and involve matters critical to VBA’s operations and delivery of benefits to Veterans and their families. The related to TEF resulted in a significant increase in requests for legal opinions on toxic exposure matters, and this increase is likely to continue over the next few years. BLG also provides oral advice and opinions to VA employees and senior leaders on a regular basis.
• Litigation: BLG represents the Department in litigation before the U.S. Court of Appeals for the Federal Circuit in cases involving toxic exposures, as well as in cases before Federal district courts. Further, BLG provides legal advice and assistance to the OGC Court of Appeals Litigation Group, which represents VA in litigation before the U.S. Court of Appeals for Veterans Claims (CAVC). Among other things, BLG is responsible for handling the class-action Nehmer litigation, a complex and long- standing class action concerning benefits based on exposure to Agent Orange and other herbicides. We expect a significant increase in this litigation work over the next several years, as TEF-related cases work their way through VA’s adjudication system and result in litigation before the CAVC and Federal Circuit.
• New Presumption Process: Title II of the PACT Act directed VA to develop and implement a new process for determining whether to establish additional presumptions of service connection based on toxic exposures. BLG plays a central role in assisting VBA, VHA, and other offices in designing and implementing this process and will continue to play a central role in administering the new process. This work will be ongoing indefinitely.
• Interagency Collaboration: BLG plays a central role in coordinating activities with other agencies regarding toxic exposure matters. As a result of the PACT Act, BLG has been closely coordinating with the Department of Justice (DOJ) and the Department of the Navy on matters related to toxic exposures at Camp Lejeune. This work includes litigation support and records production pertaining to several hundred TEF-related litigation cases under the PACT Act.
• Emergent Needs: BLG provides immediate advice and assistance on urgent, complex, and high-profile issues relating to toxic exposures, which generally require highly expedited legal opinions and problem-solving. For example, BLG played a central role in developing an effective solution to an urgent issue that arose due to a VA systems issue on the event of the PACT Act’s one-year anniversary. BLG also assists in the development and review of responses to media inquiries and correspondence from Congress and other stakeholders on toxic exposure issues.
• Departmental Planning: BLG plays a critical role in VA-wide planning and coordination related to the PACT Act and toxic exposures, including weekly participation in planning meetings, as well as participation as a member of the VA Military Environmental Exposures Subcommittee (MEESC).
• Oversight Matters: BLG provides legal advice and assistance to VBA and other VA offices concerning investigations and audits by GAO and OIG related to toxic exposure matters.
• Accreditation, Discipline & Fee Matters: BLG administers the VA Accreditation Program, which regulates and oversees the actions of attorneys and other individuals who represent Veterans on their VA benefit claims. This includes responsibility for issuing decisions on the reasonableness of fees charged for representation on cases involving toxic exposures. We anticipate an increase in these fee decisions related to toxic exposure cases over the next few years as a result of the PACT Act. The program’s duties also include duties related to protecting Veterans from financial exploitation by companies that have proliferated since the enactment of the PACT Act and that are illegally charging Veterans fees for services related to their VA benefit claims. Congress has asked VA to increase its efforts on this subject due to the increase in toxic exposure claims related to the PACT Act.

BLG’s Reconciliation Methodology: BLG’s standard annual performance measure per attorney is 1,300 case hours annually plus the completion of annual training, certifications, and licensing requirements required by each state to practice law. During the first year, BLG will expense 100% of the salaries and benefits of attorneys to allow them the time to become proficient in TEF-related matters (See BLG’s TEF Training Plan Appendix 1). After the initial training period, BLG will reconcile salary and benefits based using CALG’s annual attorney performance standard of 1,300 case hours annually or 325 case hours quarterly. See OGC Reconciliation Formula Example in Appendix 3.

CALG Nature of Work: Litigating cases involving TEF matters requires a broad understanding of both the VA benefits system and the Court’s rules of practice and procedure. As a result, attorneys are required to handle a wide variety of legal matters related to VA benefits and programs such as disability and compensation, nonservice-connected pension, dependency and indemnity compensation, domestic-relations issues, burial benefits, and a variety of health-care benefits-related issues. This also includes claims related to toxic exposure. The work includes but is not limited to, the following.

• Reviewing and understanding complex, and often voluminous, Records Before the Agency (RBA).
• Preparing and filing motions, pleadings, briefs, and other related actions with the CAVC.
• Representing the Department in mediation conferences before the CAVC.
• Presenting oral argument on behalf of the Department before Federal judges in open court.
• Initiating and responding to settlement negotiations with sophisticated opposing counsel and following those efforts through resolution.
• Preparing appeal recommendations which contain detailed analysis of the facts, issues, and application law, and recommending the strategy and action(s) to be employed.
• Coordinating with program officials on matters involved in litigation and ensuring compliance by affected components of the Department.

CALG’s Reconciliation Methodology: CALG’s standard annual performance measure per attorney is 63 cases annually plus the completion of annual training, certifications, and licensing requirements required by each state to practice law. During the first year, OGC will expense 100% of the salaries and benefits of attorneys to allow them the time to become proficient at litigating cases before the U.S. Court of Appeals for Veterans Claims (See CALG TEF Training Plan Appendix 2). After the initial training period, OGC will reconcile salary and benefits based using CALG’s annual attorney performance standard of 63 or 15.75 cases per quarter.

Reconciling TEF work for non-TEF employees: There may be cases where other OGC law offices provide legal assistance that supports the delivery of health care and benefits to Veterans with toxic exposures, but the workload is insufficient to qualify for one FTE. In such instances, the office should work with the MPA informatics team to complete a report with actual hours. MPA will transfer the expense of the salary and benefits of the time the employee spent working on toxic exposure-related work to TEF. For example, a non-TEF Health Care Law Group (HCLG) employee works 50 case hours on toxic exposure-related work during a quarter. OGC will calculate the hourly salary of that employee + 37% for benefits and transfer that cost from OGC BA to the TEF. Year-end cost transfers will be recorded to the appropriate accounts no later than October 10th.

Reconciling TEF Non-Pay Training and Travel Expenses: OGC will use the TEF to fund TEF-related training and travel based on actual cost. The office must certify that the training or travel was TEF related on the quarterly reconciliation report.

Approvals and Concurrence of this Memo: On March 5, 2024, the Information and Administrative Law Group reviewed and concurred on OGC’s TEF Reconciliation Standard Operating Procedure.

Michael Gibbs

Appendix 1: BLG’s TEF Initial Training Plan

Appendix 2. CALG’s TEF Initial Training Plan

Appendix 3: OGC’s Reconciliation Formula Examples

Appendix G: OGC TEF Budget Execution

Office of General Counsel
Toxic Exposure Fund (TEF) Budget Execution
Standard Operating Procedures

1. Purpose: This Standard Operating Procedure (SOP) details the Department of Veterans Affairs (VA), Office of General Counsel’s (OGC) processes for executing, allocating, tracking, monitoring, and reconciling the Toxic Exposure Fund (TEF) within the OGC to ensure that TEF resources directly support or are incidental to VA’s delivery of health care and benefits associated with in-service environmental exposures. This SOP is derived from the Department of Veterans Affairs Financial Policy, Volume XI, Chapter 6, TEF, Sections 060504 and 060505 ensuring legal compliance.

2. Scope: This SOP is applicable to all OGC offices utilizing TEF resources, OGC Management, Planning, and Analysis (MPA), and the VA Office of Budget (OB) budget analysts assisting OGC with TEF budget execution.

3. Objective: Ensure proper allocation of TEF resources within OGC, adhering to all relevant laws and regulations, and supporting effective financial oversight.

3.1 Legal Compliance and Financial Management

3.1.1. Budget Allocation and Execution: OGC will ensure budget execution processes comply with all relevant laws and regulations and VA Financial Policy, Volume XI, Chapter 6, TEF, Sections 060504 and 060505, to ensure that TEF related expenses align with their intended purpose.

3.1.2.Fund Oversight: MPA, with assistance from OB budget analysts and OGC offices utilizing TEF resources, will monitor and track TEF appropriations, obligations, and expenses in accordance with VA Financial Policy, Volume II, Chapter 1 – Appropriations Law. MPA, with assistance from OGC offices utilizing TEF resources, and OB budget analysts, reconcile TEF-related expenses quarterly and maintain reconciliation reports on the MPA’s Share Drive at: W:\Budget\TEF\4. Reconciliation Reports

3.1.3 Reviewing and Reporting

3.1.3.1 Reviewing TEF Expenses:

3.1.3.1.1 MPA with assistance from OB budget analysts, will review TEF obligations to ensure they comply with VA Financial Policy Volume III, Chapter 2 – Obligations.

3.1.3.1.2 Each OGC office with allocated TEF resources must provide a quarterly certification of their utilization. MPA will facilitate this process by distributing quarterly reconciliation reports to office leaders.

3.1.3.1.3 MPA with assistance from OB budget analysts, will crosscheck recorded amounts iFAMS against certified quarterly reconciliation reports. If discrepancies are found, OB budget analysts will promptly work with FSC to correct misaligned or incorrect obligations.

3.1.3.1.4 MPA will maintain records of financial transactions, such as iFAMS reclassification requests on the MPA’s Share Drive at W:\Budget\TEF\4. Reconciliation Reports.

3.1.3.2 Validating TEF Expenses:

3.1.3.2.1. OGC will utilize TEF for authorized expenses per 38 U.S.C. 324. MPA, in collaboration with OGC offices utilizing TEF resources, will validate expenses quarterly using certified OGC TEF reconciliation reports.

3.1.3.2.2. Offices utilizing TEF resources will ensure that all TEF related   work is documented appropriately in GCLAWS. GCLAWS reports will be used to validate TEF related work by OGC.

3.1.3.2.3. MPA will work with OGC offices utilizing TEF to review quarterly TEF reconciliation reports to ensure that all TEF expenses are supported by the appropriate documentation.

3.1.3.4 Periodic Reviews and Audits

3.1.3.4.1 MPA will conduct periodic reviews and audits of the recorded obligations to ensure ongoing accuracy and compliance with VA policies and law.

3.1.3.4.2 MPA will promptly work with OGC offices utilizing TEF resources and OB budget analysts to address any identified discrepancies and take appropriate corrective actions.

3.1.3.5 Quality Control Review

3.1.3.5.1 MPA will periodically review the effectiveness of this SOP and update it as required to improve the obligation recording and validation process.

3.1.3.5.2 Any changes to these procedures will be documented and communicated to all relevant stakeholders.

3.2 Allocation Methodology

3.2.1 Estimation and Justification:

3.2.1.1 MPA will collaborate with OGC offices utilizing TEF resources to review and project new or changing TEF resource requirements.

3.2.1.2 The primary methodology for projecting OGC’s TEF requirements includes continuous evaluation and reviewing of OGC’s TEF-related workload, historical indicators such as quarterly TEF reconciliation reports, and identifying projected changes or new TEF workload requirements.

3.2.1.3 MPA will coordinate with OB budget analysts and OGC offices utilizing TEF resources to prepare and submit TEF execution and projection reports to OB as requested. These reports show actual obligations and projected/available funding and allow OGC an opportunity to reproject TEF resources if needed. These reports are maintained on MPA’s Share Drive at the following location:

\\va.gov\ma\VACO Washington\OGC\MPA\Budget\TEF\6. TEF Step Down Projections

3.2.2 Preventing Pre-Appropriation Spending:

3.2.2.1 Notification of TEF Funding: OB budget analysts will advise on the availability of TEF allotments and appropriations. Upon determining that the appropriation is available, OB budget analysts will advise OGC in writing.

3.2.2.2 Verification of Funding: MPA, with the assistance of OB budget analysts will verify the availability of TEF funding and communicate the details, including the amount and specific purposes, to the OGC offices utilizing TEF resources, as needed.

3.2.2.3 Compliance Review: MPA with assistance from the OB budget analysts, will review TEF expenditures quarterly to ensure ongoing compliance with 31 U.S.C. § 1341. Any discrepancies will be addressed promptly, and corrective actions will be taken.

3.3 System Controls and Monitoring

3.3.1. Controls:

3.3.1.1 MPA will establish budget execution system controls in line with VA Financial Policy Volume II, Chapter 3 – VA Funds Control, while utilizing financial management services and support from OB and FSC to manage funding.

3.3.1.2 OGC will ensure funds are obligated and expended in accordance with applicable laws to prevent the obligation or expenditure of funds in excess of available amounts.

3.3.1.3 MPA will monitor and report TEF execution in quarterly reports and monthly briefs to OGC leadership. OB briefs OGC leadership on TEF execution data at OGC’s monthly Status of Funding briefing. Briefings are located at W:\Budget\26 Opplan\Monthly Reporting.

3.3.2 Implementation of Controls

3.3.2.1 MPA will implement the established budget execution system controls and ensure all relevant personnel are trained and informed about the budget execution system controls.

3.3.3 Monitoring Compliance

3.3.3.1  MPA, with support from OB budget analysts, will monitor the execution of TEF funds to ensure compliance with established controls.

3.3.3.2  MPA, with support from OB budget analysts, will regularly review financial reports and identify any potential over-obligation or over-expenditures of TEF funds.

3.3.3.3 MPA will collaborate with OB budget analysts and offices utilizing TEF resources to promptly address any discrepancies or issues.

3.3.4 Quality Control and Review

3.3.4.1  OGC will periodically review the effectiveness of the established controls and this SOP and update it as required to enhance the budget execution control process.

3.3.4.2 Any changes to procedures or processes will be documented and communicated to all relevant stakeholders.

3.4.5 Reporting and Documentation

3.4.5.1. MPA will document any findings of the financial reviews and analyses.

3.4.5.2. MPA, with the assistance of OB budget analysts, will generate a report as needed to summarize the utilization of TEF funds, compliance status, and any identified issues or recommendations for improvement by reviewing OGC quarterly TEF reconciliation reports and new TEF policies.

3.4.6 Corrective Actions: MPA, with assistance from OB budget analysts, will ensure that any non-justifiable TEF-related are immediately transferred to OGC’s annual direct budget authority (BA) fund. If the TEF-related workload is significantly less than projected and does not support the number of TEF employees hired, MPA will assist in permanently transferring TEF these employees to the OGC BA fund or request supplemental funding should OGC’s BA fund not support these transfers.

4. Tracking/Monitoring/Reconciling Toxic Exposures Fund Objective: To ensure comprehensive tracking, monitoring, and reconciling TEF allocations, obligations, and expenditures within OGC, ensuring consistency, accuracy, and timeliness in reporting.

4.1 Fund Tracking

4.1.1 Use of Funding Codes: OGC will utilize iFAMS funding codes created by HRS and Office of Management to track all TEF-related program obligations and expenditures to ensure clear tracking and reporting.

4.1.1.1. BLG: Funding Code 1226.2000 will be utilized to track BLG’s TEF expenses.

4.1.1.2. CALG: Funding Code 1226.5700 will be utilized to track CALG’s TEF expenses.

4.1.2 Coordination with HRA: MPA will coordinate with Human Resources and Administration (HRA) Manpower office and Human Resource Service Center (HRSC) to ensure proper funding codes and cost centers are assigned to OGC TEF employees.

4.1.3 Position Tracking: MPA will track TEF-funded positions using the iFAMS funding codes and positions numbers, with temporary positions having a not-to- exceed date.¹

4.2 TEF Related Casework Tracking and Documentation

4.2.1 GCLAWS

4.2.1.1 OGC utilizes GCLAWS, a mandatory case and time tracking application that tracks case time and TEF-related work. Management reports are available to show the time spent per attorney for reconciliation purposes.

4.2.1.2. OGC employees performing work which directly supports or is incidental to VA’s delivery of health care and benefits associated with in-service environmental exposures will use GCLAWS to track the time associated with activities supporting the PACT Act’s expansion of toxic exposure-related health care and benefits.

4.2.2 Data Entry and Documentation

4.2.2.1 Employees must regularly update GCLAWS with the time spent on TEF- related activities, ensuring entries are made in real-time or as soon as possible to maintain accuracy.

4.2.2.2 Employees will clearly identify casework related to TEF and PACT Act initiatives when documenting casework in GCLAWS.

4.2.3 Generating GCLAWS Management Reports

4.2.3.1. Offices utilizing TEF resources will review reports at least quarterly to monitor the amount of time spent per attorney on TEF-related work. These reports will be used to validate TEF expenses and will be included in quarterly TEF reconciliation reports.

4.2.3.2. MPA will review reports to ensure that documented time aligns with the allocated TEF resources and workload expenditure to TEF.

4.2.4 Reconciliation and Review

4.2.4.1. Review and Validation of TEF Expenses: OGC will use quarterly reconciliation reports to review the justifications linking employee costs and non-pay costs incident to the delivery of healthcare and Veterans’ benefits associated with TEF to ensure that they are still valid. If the justification is no longer valid, the associated costs will not be charged to TEF. MPA will work with OB budget analysts to cost transfer non-validated TEF charges to OGC’s direct BA.

4.2.4.2. Quarterly Reconciliation Reports: OGC will reconcile TEF expenses on a quarterly cycle. To validate TEF-related expenses, OGC offices utilizing the TEF will submit a certified reconciliation report to MPA each quarter identifying TEF-related cases or case hours being expensed for each quarter. The certification of the reconciliation report must be at the senior executive level or equivalent.

4.2.4.3. Initiating Reconciliation Reports: MPA will collaborate with offices utilizing TEF resources to prepare quarterly reconciliation reports detailing TEF expenses, related TEF cases, utilization, and workload trends.

4.2.4.4. BLG’s standard annual performance measure per attorney is 1,300 case hours annually plus the completion of annual training, certifications, and licensing requirements required by each state to practice law. During the first year of employment, BLG will expense 100% of the salaries and benefits of TEF coded attorneys to allow time for the attorney to become proficient in TEF-related matters. After the initial training period, BLG uses its annual attorney performance standard of 1,300 case hours annually, or 325 case hours per quarter, to reconcile salary and benefits.

4.2.4.5. CALG’s Reconciliation Methodology: CALG’s standard annual performance measure per TEF coded attorney is 63 cases annually plus the completion of annual training, certifications, and licensing requirements required by each state to practice law. During the first year of employment, CALG will expense 100% of the salaries and benefits of attorneys to TEF to allow time for the attorney to become proficient at litigating cases before the U.S. Court of
Appeals for Veterans Claims (CAVC). After the initial training period, CALG will use its annual attorney performance standard of 63 or 15.75 cases per quarter, to reconcile salary and benefits.

4.2.4.6. Reconciling TEF work for non-TEF employees: There may be situations where OGC law offices who don’t have TEF coded positions provide work to support the delivery of health care and benefits to Veterans with toxic exposures, but the workload is insufficient to qualify for one FTE. In such instances, the office may work with the MPA informatics team to complete a GCLAWS report to document those hours. Offices would need to follow the procedures for submitting a quarterly reconciliation report to transfer costs from BA to TEF. MPA, with the assistance of the OB budget analysts, will transfer the expense of the salary and benefits of the time the employee spent working on toxic exposure-related work to TEF. For example, a non-TEF Health Care Law Group (HCLG) employee works 50 case hours on toxic exposure-related work during per quarter. OGC will calculate the hourly salary of that employee + 37% for benefits and will work with OB budget analysts to transfer that expense from OGC BA to the TEF.

4.2.4.7. Reconciling TEF Non-Pay Training and Travel Expenses: OGC will only use TEF for TEF-related training and travel based on actual cost. The OGC office submitting the request must certify that the training or travel was TEF related using the OGC quarterly reconciliation report.

4.2.5 Compliance with PACT Act Requirements

4.2.5.1. Employees will ensure that all activities supporting the PACT Act’s expansion of toxic exposure-related health care and benefits are properly documented in GCLAWS.

4.2.5.2. Management will monitor compliance with this requirement and address any issues promptly.

4.2.6 Quality Control and Review

4.2.6.1. OGC will periodically review the effectiveness of this SOP and update it as required to improve casework tracking and reconciliation processes.

4.2.6.2 Any changes to the procedure will be documented and communicated to all relevant stakeholders.

This SOP ensures that the OGC remains compliant with all policies outlined in VA Financial Policy, Volume XI, Chapter 6, while effectively managing, monitoring, and reporting TEF resources specifically within the OGC’s operational scope.

Footnotes
1 OGC does not currently have temporary TEF positions.

Appendix H: ORD TEF Estimation Methodology

A. Purpose

This memorandum provides the legal authorities and associated budget allocation/execution guidance for the Toxic Exposure Fund (TEF) Appropriation to obligate funding for medical and other research relating to exposure to environmental hazards as authorized by 38 U.S.C. § 324(c)(3). The guidance only pertains to research activities administered and funded by the Office of Research and Development (ORD).

B. Background

Section 805 of the PACT Act (P.L. 117-168), codified in 38 U.S.C. 324, established the Toxic Exposure Fund (TEF), and authorized funding to be appropriated to the TEF for “medical and other research relating to exposure to environmental hazards.”

This TEF appropriation is a separate appropriation from the Medical and Prosthetics Research Appropriation. The Research Component of the TEF Appropriation was included in the FY 24 President’s Budget Request and will be included in future budget requests. Approved ORD TEF Allocations and Obligations will only be used to support research Awards (including Merit, CSP, MVP), Research Career Scientist Awards, Research infrastructure, and overall capacity building that fully support medical and other research relating to exposure to environmental hazards.

The guidance below contains the criteria for allocating funding, execution, and reporting guidance in the Office of Research and Development (ORD). For ORD, funding in the TEF will be executed out of fund Codes 1126RD and 1126R5.

C. Specific Criteria for Authorized Medical Research, Oversight, PACT Act Implementation, and Infrastructure Obligations

Approved ORD TEF Allocations and Obligations will only be used to support research Merit Awards (studies), Research Career Scientist Awards, Research infrastructure, and overall capacity building that fully supports medical and other research relating to exposure to environmental hazards. ORD efforts using TEF in support of PACT Act goals may address a range of scientific research activities related to identifying mechanisms, associations, treatments and/or care and care delivery related to toxic exposures related to Military Service.
Additionally, research activities for which TEF funding can be applied include ones intended for evidence-generation and/or implementation of science-based approaches to support access to VA resources and healthcare (treatment and screening) for individuals exposed to toxic exposures during military service. To achieve these objectives, TEF funding may be used to support of a range of needs/resources and/or related activities. Such resources may be centrally coordinated and/ or based in the field to achieve maximum efficiency as part of a larger ORD research enterprise approach.

Categories and examples of activities and/ or resources eligible for TEF supported research include the below:

1. Implementing and Supporting Research activities for ORD’s Military Exposures Research Program (MERP)
   This includes necessary expenses related to medical and other research relating to exposure to environmental hazards (as referenced in the TEF appropriations language), such activities shall include:
   1. Coordination and integration of the ORD military toxic exposure research portfolio.
   2. Establishment of the toxic/military exposure research infrastructure (e.g., technical and scientific research cores, biorepository(ies) to support Research studies on Military Exposures Research.
   3. Staffing cost for Scientific Portfolio Managers (SPMs) and Subject Matters Experts (SMEs) in ORD to manage the scientific portfolio in Military Exposure Research who work exclusively in Military Exposure Research.
2. Funding investigator-initiated and program-directed medical research in the Military and Environmental Exposure and Gulf War Designated Research Areas (DRAs)
   This includes necessary expenses related to medical and other research relating to exposure to environmental hazards (as referenced in the TEF appropriations language), such activities shall include Project Staff Salaries/Costs (Principal Investigators, Laboratory Technicians, Research Associates, and Research Coordinators, etc.), supplies, equipment, subject participation, travel, publication fees, and contracts. Specific Research Projects that are considered a necessary expense under TEF criteria include the following:
   1. Study of the relationship between military toxic exposures and rare diseases, multigenerational studies as well as prevention, diagnostic, and treatment strategies.
   2. Assessing military exposures and care and policy implications
   3. Expanding research on conditions or substances encountered during military service, and the healthcare utilization and delivery of care to Veterans with these exposures. This may include studies on Agent Orange, and other herbicides and pesticides, dioxins, industrial chemicals, industrial materials, oil fires, dioxins, insecticides/pesticides, burn pits, micro-particulates, jet fuel, radiation, electromagnetic and acoustic exposures. Supporting important gaps in exposure assessment research, including exposure assessments that identify and quantify toxic agent(s) to which an individual was exposed during military service. The development of new methods and/or assays that will directly or indirectly identify an exposure to a toxic agent using biological materials or surrogates. This includes studies of novel animal or organoid/tissue chip exposure models. Expanding the workforce in military toxic exposures research and education with the support of clinician and non-clinician career development (CDA) and clinician and non-clinician Senior Career research scientist awards.
   4. Establishing and maintaining military toxic exposures data / biorepository collection sites as enterprise resources.  This includes leveraging data and biorepository sites as active contributors to novel military exposure research.
3. Support and Implementation of Section 501 of the PACT Act (P.L. 117-168), Interagency Working Group on Toxic Exposure Research
   Implementation of title V of the PACT Act is a necessary expense of TEF funds as outlined above, and includes the following activities:
   1. Funding to establish and manage the interagency toxic exposure research workgroup to develop and execute the 5-year strategic plan for research on military toxic exposures.
   2. Funding to support work with interagency partners to identify collaborative research activities and resources.
   3. Agreements to provide funding for interagency partners (under the Economy Act) who participate in the interagency toxic exposure research workgroup.

D. Process for Allocating Funding from the TEF (based on Criteria from Section C and D)

Funding and Resource Allocation decisions/management for use of the TEF will be managed by ORD Finance working in conjunction with the TEF Reviewing Committee, Military Exposures Research Program and ORD Executive Leadership. See Appendix A for the detailed guidance on Allocation, Execution, and Reporting Requirements.

TEF costs for personnel must first be paid out of the Research appropriation because personnel can only be funded out of one Fund Control Point (FCP). Due to this accounting/HR Smart structure, Research Offices and Facility Fiscal/Accounting Office will collaborate and coordinate to perform quarterly expenditure transfers (by the 10^th business day) following the end of the quarter to ensure accurate reporting to VHA Finance, the Department, OMB, Congress, GAO, and OIG.

Questions:

For any questions or concerns, please contact Rudy Johnson (Rudolph.Johnson3@va.gov) Karen Block (Karen.Block@va.gov) for scientific matters and Joy Langston (Joy.Langston@va.gov) and Erin Olson (Erin.Olson@va.gov) for fiscal matters.

Appendix A: Standard Operating Procedure for Allocation, Execution, and Reporting for TEF Funds

I. Submitting Request for TEF Funding

ORD Finance working in conjunction with the TEF Reviewing Committee, and the Military Exposures Research Program Director will maintain the TEF Allocation Request Form. Only ORD Service/Portfolio Administrative Officers (AOs) should add TEF funding requests to the form. Field requests should be submitted through their respective Service/SPM. This will include the associated pertinent data and document the specific criteria for permitting this activity to utilize TEF funding.

1. The form will maintain request/approval for items funded through the Research Allocation Forecasting Tool (RAFT) and non-RAFT based activities.
2. ORD Finance Budget Analyst and ORD Services will work to identify current research efforts that qualify for TEF funds that are currently coded in RAFT under the Military Environmental Exposure and Gulf War designated Research Areas (DRAs) and enter the data in the requested form fields.
3. The purpose of the form is to document the reallocation of the Medical and Prosthetic Research Appropriation (0161A1) to TEF (1126RD or 1126R5) or document request for new TEF allocations through the ORD Request for application (RFA) process. This is required to create an auditable record of approval for a Project/Activity to use TEF funding for internal/external stakeholders.
4. In FY 2024 (and beyond), the form will document the allocations for the Initial Target Allowance (ITA) for TEF funding.

II. TEF Review Committee

The TEF Reviewing Committee provides scientific and program review of applications for funding under the TEF.  The Director of the Military Exposure Research Program (Dr. Rudy Johnson) summarizes the committee’s findings and provides a recommendation to the Deputy Chief of Research and Development for Enterprise Optimization (Dr. Grant Huang). The DCRADO EO provides concurrence to the ORD Office of Finance.  ORD Office of Finance implements funding procedures.

The TEF Reviewing Committee includes the following ORD Staff: The Associate CRADO for Epidemiology and Public Health (Vicky Davey), The Director of the Military Exposures and Research Program (MERP), and the Director of Gulf War Veterans’ Illnesses (Dr. Karen Block).

There is no maximum funding limit on TEF applications, subject to funding availability and funding announcement limits.

III. Approval Steps of TEF Reviewing Committee

1. Information from the TEF Request Form will be forwarded by ORD Finance to the TEF Reviewing Committee.
2. The TEF Reviewing Committee will meet monthly, or as needed, to determine which applications will be recommended for approval. The expected response time for funding applications will be 2 weeks from date of submission.
3. The MERP Director will summarize the TEF Reviewing Committee findings and provide an email recommendation to the DCRADO EO.
4. The Deputy Chief of Research and Development for Enterprise Optimization will provide concurrence. 
5. The MERP Director will then forward the approved applications to ORD finance. 
6. The MERP Director will share all updates with the TEF Reviewing Committee and applicants.

IV. ORD TEF Funding Process
Funding and Resource Allocation decisions for use of the TEF will be managed by the ORD Finance working in conjunction with the TEF Reviewing Committee, Military Exposures Research Program and ORD Executive Leadership.

Below are the specific details on the Allocation of TEF Funding in ORD:

ORD Finance working in conjunction with the TEF Reviewing Committee, and the Military Exposures Research Program Director will maintain the TEF Allocation Request Form. ORD Service/Portfolio Administrative Officers (AOs) can add TEF funding requests to the form. This will include the associated pertinent data and document the specific criteria for permitting this activity to utilize TEF funding.

1. The form will maintain request/approval for items funded through the Research Allocation Forecasting Tool (RAFT) and non-RAFT based activities.
2. ORD Finance Budget Analyst and ORD Services will work to identify current research efforts that qualify for TEF funds that are currently coded in RAFT under the Military Environmental Exposure and Gulf War designated Research Areas (DRAs) and enter the data in the requested form fields.
3. The purpose of the form is to document the reallocation of the Medical and Prosthetic Research Appropriation (0161A1) to TEF (1126RD or 1126R5) or document request for new TEF allocations through the ORD Request for application (RFA) process. This is required to create an auditable record of approval for a Project/Activity to use TEF funding for internal/external stakeholders.
4. In FY 2024 (and beyond), the form will document the allocations for the Initial Target Allowance (ITA) for TEF funding.
5. When completing the form, please take note of the following consideration:
   1. Directly reference from Section C of the guidance to demonstrate how the activity qualifies for TEF funding.
   2. Ensure the abstract/program description directly contains linking information from column N to ensure approval of TEF allocation.
6. In accordance with this memo, ORD Finance (the Director of Finance) working on the recommendation of the Military Exposures Research Program Director and concurrence of the Deputy Chief of Research and Development will issue a funding approval memo documenting the funding decision memo that includes each requested item and itemized table.
7. Once funding decisions are received the ITA will be updated in RAFT for FY 24 and beyond.
8. Any subsequent Project Modification Orders (PMOs) will be handled through existing ORD Service policies.  Any changes in Project/Activity scope or increases in budget requirement will require approval by the MERP director.  ORD Finance and VHA CFO’s Office will coordinate the TDA process in AACS to distribute this funding to the field.

V. Execution of TEF Funding

Below are the specific details on the Execution of TEF Funding managed by ORD:

1. In conjunction with the TDA/AACS actions, ORD Finance will distribute to all Headquarter/Field Stations utilizing TEF funding this guidance, the approval memo, and these detailed requirements for executing TEF funding.
2. For FTE related costs, obligations/expenditure will require an Expenditure Transfer (EW) as personnel can only be hired/funded out of one Fund Control Point (FCP).
3. All other non-pay cost can either be directly obligated out of the TEF appropriation or expenditure transferred from 0161A1 appropriation.
4. In accordance with the VA Financial Policy Volume II-Chapter 1, expenditure transfers are permitted when the payment is recorded in one appropriation and an adjustment is needed to record the payment properly to temporarily charge another appropriation for an expenditure benefiting the TEF appropriation, as long as amounts are available in both appropriations and the accounts are adjusted to reimburse the appropriation initially charged. Ref: Chapter 01 – VA Financial Policies and Procedures Appropriations Law – Financial Policy Documents
5. Expenditure Transfer Transaction Deadlines: Expenditure transfers should be conducted (quarterly in coordination between Research Offices and Facility Fiscal/Accounting Staff to adhere to Congressional Reporting requirements of obligations on the TEF fund. All expenditure transfers are recommended to be completed by the 10^th business day following the end of each quarter (January/April/July/October).
6. ORD Finance will review the status of Expenditure Transfers and obligations in the VSSC (F20 reports) quarterly, and follow-up individually with stations that have not completed expenses transfers.

VI. Auditing of TEF Funding

Each quarter ORD Financewill conduct a randomized audit of the VSSC F20 Report (Daily Activity by Account Classification Code) to ensure that Station level transactions follow ORD TEF Policy. The objective of the audit will be to ensure transactions in the F20 Report are only for activities approved in the TEF approval memo.

Appendix B: Legislative Language

Section 805 of the PACT Act (P.L. 117-168)

38 U.S.C. § 324. Cost of War Toxic Exposures Fund

(a) ESTABLISHMENT. —There is hereby established in the Treasury of the United States an account to be known as the ‘Cost of War Toxic Exposures Fund’ (the ‘Fund’), to be administered by the Secretary.

(b) DEPOSITS. —There shall be deposited in the Fund such amounts as may be appropriated to the Fund pursuant to subsection.

(c) AUTHORIZATION OF APPROPRIATIONS. —There is authorized to be appropriated to the Fund for fiscal year 2023 and each subsequent fiscal year such sums as are necessary to increase funding, over the fiscal year 2021 level, for investment in—

(1) the delivery of veterans’ health care associated with exposure to environmental hazards in the active military, naval, air, or space service in programs administered by the Under Secretary for Health;

(2) any expenses incident to the delivery of veterans’ health care and benefits associated with exposure to environmental hazards in the active military, naval, air, or space service, including administrative expenses, such as information technology and claims processing and appeals, and excluding leases as authorized or approved under section 8104 of this title; and

(3) medical and other research relating to exposure to environmental hazards.

FY 2023 Consolidated Appropriations Act (P.L. 117-328)

COST OF WAR TOXIC EXPOSURES FUND

For investment in the delivery of veterans’ health care associated with exposure to environmental hazards, the expenses incident to the delivery of veterans’ health care and benefits associated with exposure to environmental hazards, and medical and other research relating  to exposure to environmental hazards, as authorized by section 324 of title 38, United States Code, and in addition to amounts otherwise available for such purposes in the appropriations provided in this or prior Acts, $5,000,000,000, to remain available until September 30, 2027: Provided, That not later than 30 days after the date of enactment of this Act, the Secretary of Veterans Affairs  shall submit to the Committees on Appropriations of both Houses of Congress an expenditure plan for funds provided under this heading for fiscal year 2023.

Fiscal Responsibility Act of 2023 (P.L. 118-5)

SEC. 101. DISCRETIONARY SPENDING LIMITS.

(d) APPROPRIATION FOR COST OF WAR TOXIC EXPOSURES FUND.—In addition to amounts otherwise available for such purposes, there are appropriated, out of any money in the Treasury not otherwise appropriated, for investment in the delivery of veterans’ health care associated with exposure to environmental hazards, the expenses incident to the delivery of veterans’ health care and benefits associated with exposure to environmental hazards, and medical and other research relating to exposure to environ mental hazards, as authorized by section 324 of title 38, United States Code—

(1) $20,268,000,000, which shall become available on October 1, 2023, and shall remain available until September 30, 2028; and (2) $24,455,000,000, which shall become available on October 1, 2024, and shall remain available until September 30, 2029.

Appendix I: ORD TEF Budget Execution

Department of Veterans Affairs
Veterans Health Administration
Office of the AUSH for Discovery, Education, and Affiliate Networks
Office of Research and Development

Toxic Exposure Fund (TEF) Standard Operating Procedures
Effective Date: December 05, 2025

1. Introduction
   1. Purpose
      This document outlines the standard processes and procedures for portfolio funding from TEF appropriation within the VA Office of Research and Development (ORD). This SOP aims to provide clear guidelines for budget allocation, review, and management to ensure efficient and effective use of resources in support of VA research priorities. Additionally, this SOP aims to ensure alignment with the VA’s broader strategic objectives, mandates from Congress, and Presidential orders.
   2. Scope
      This SOP applies to all ISRM Broad Portfolios and Managed Portfolios, including Actively Managed Portfolios (AMPs) and Research Programs, CSP, MVP, and CRADO initiatives, and includes management of funds allocated from the Toxic Exposure Funds (TEF) appropriation. It covers the processes for budget determination, allocation, review, and management within the portfolio funding framework.
   3. Definitions

Term/Acronym	Definition
ORD	Office of Research and Development
ISRM	Investigators, Scientific Review, and Management
CSP	Cooperative Studies Program
MVP	Million Veteran Program
OMB	Office of Management and Budget
SPM	Scientific Program Manager
SRG	Scientific Review Group
FCP	Fund Control Point
CRADO	Chief Research and Development Officer
L1	Top level of ORD organizational hierarchy (CRADO)
L2	Direct reports to the CRADO (L1)
ITA	The ITA (Initial Target Allowance) is a budgetary notification tool used to communicate allowable spending levels to field stations and investigators. ITAs are issued at the beginning of each fiscal year for ongoing projects. ITAs do not determine portfolio budgets but guide project-level funding limits.
RAFT	The Research Analysis Forecasting Tool (RAFT) is an ORD web-based software program that helps track all ORD funds allocated and/or distributed to each research project/award. It also includes project-specific details including Principal Investigator names, study sites, titles, specific aims, start and end dates, designated research area codes, etc.
AMPs	Actively Managed Portfolios (AMPs) address a priority area based on legislative or other mandates from Congress, the Administration, the Agency, and/or other key stakeholders.
BPs	Broad Portfolios (BPs) support a broad range of investigator-initiated research.
Portfolio	A portfolio is a group of research projects managed together.
OneStream	ORD’s principal financial management system for budgeting and monitoring execution

2. Budgeting and Funding TEF Research
   1. Congressional Appropriations
      1. Budget Planning: ORD submits an out-year budget request to VHA and the VA Office of Management in the summer prior (June) to the President’s Budget Submission (typically in February). VA provides budget targets based on guidance provided by the Office of Management and Budget (OMB). In August, VA submits guidance for the OMB submission for mid-September. ORD Finance then finalizes the OMB Justification. ORD Finance solicits input from the L2 units on key impacts and proposed budget items for priority research areas to include in subsequent budget years.
      2. Negotiation & Approval: ORD Finance receives the final budget request from OMB in the fall/winter (OMB Pass back). OMB may highlight priorities for VA and VHA during the Pass back period for high-priority initiatives (e.g., OMB Agency Evidence Submission).
      3. Congressional Submission: The President’s Budget is submitted to Congress in the winter/spring timeframe. Congress then reviews the submission and marks-up House and Senate Appropriation bills for consideration and enactment.
      4. Congress appropriates funds for VA research initiatives, including both mandatory and discretionary budgets for high-priority research areas.
   2. ORD Finance Budget Allocation and Planning
      1. Fund Allocation: ORD Finance issues operating plan guidance based on the publicly available President’s Budget Request. ORD L2 units then submit operating plans based on the guidance for ORD leadership review.
      2. Operating Plan Submission: L2 units submit operating plans based on ORD Finance guidance.
      3. Review & Coordination: ORD Finance budget analysts review operating plan submissions in coordination with the L2 units.
      4. Final Operating Plans: With CRADO approval, ORD Finance sets operating plans across all L2 units and guides budget operating plans. If applicable, final budget allocations may be adjusted based on mid-year continuing resolutions, Congressional mandates, Unfunded Requirements Requests (UFRs), or other sources (e.g., VHA or VA Budget Call or OMB Evidence Submission).
      5. Approval Process: By the beginning of the fiscal year, ORD Finance briefs L2 units on proposed operating plan limits aligned with the President’s Budget Request for the current fiscal year.
   3. Portfolio/Program Funding
      1. Fund Distribution: The Operating Plan is approved by the L2 unit. Once approved and concurred upon by the CRADO, L2 units distribute Operating Plan limits to Broad Portfolios, Actively Managed Portfolios, and Research Programs.
      2. Portfolio/Program-Level Decision Making: Overall funding and Resource Allocation amounts for use of the TEF will be managed by the TEF Reviewing Committee, the ISRM research portfolio leads for Military Exposures and Gulf War Illness, and ISRM Executive Leadership. Portfolio/Program leads determine funding for ongoing and new research projects and other awards within their respective portfolios subject to L2 approval, and portfolio funding limits. TEF Reviewing Committee concurs only on projects and/or awards based on military exposures purview/relevance. All TEF budget requests, including project modification cost extensions, must be approved by the TEF program manager. Review of projects/items in the TEF budget will be reviewed to ensure the funding decisions are compliant with the appropriations language of TEF. [1]
      3. Initial Target Allowances (ITAs): ORD Finance and Portfolio/Program Business Managers collaboratively develop ITAs for each portfolio/program.
      4. Adjustments: Once budget limits are set, Portfolio/Program Directors may adjust project budgets within the portfolio/program budget limits.
   4. Portfolio/Program Fund Distribution
      1. Fund Disbursement: ORD Finance distributes funds to VA Medical Centers.
3. ORD TEF Budget Execution
   The primary responsibilities of ORD for implementing, expending, monitoring, adjusting, reconciling, and reporting on budget for which funds are appropriated.
   1. Reprogramming
      1. Determining funds available for new Projects and Redistribution of Funds to Later Fiscal Years
         1. Identify Projects Ending in the Upcoming Year
            1. Portfolio Leads use OneStream to determine projects that will conclude in the next fiscal year.
         2. Calculate Released Funds from Expiring Projects
            1. Business Managers assess the total funds that will no longer be committed.
            2. Business Managers review project end dates in the financial system to estimate the dollar value of projects ending at the time that new projects to be funded would be ready to accept funds
         3. Determine Funding Obligated to New Projects
            1. Business Managers calculate the available budget for new research projects.
            2. Estimated total funds available at that time will be used to estimate the number of new awards that can be chosen for funding.
         4. L2 Approval
            1. The L2 reviews funding availability of the portfolios/programs.
            2. L2 approves list of projects to be funded based on portfolio recommendations and rankings.
      2. Portfolio Budget Requests
         1. The Business Management team prepares the budgets, reviews them with the respective portfolio lead for concurrence, and presents the consolidated budget to the L2 for approval.
         2. Portfolio Directors submit budget requests to the L2 before the start of the fiscal year (typically in July).
      3. L2 Approval Process
         1. The L2 reviews and approves portfolio budget requests, establishing final budgets. The review of projects/items in the TEF budget will be reviewed to ensure the funding decisions are compliant with the appropriations language of TEF. [2]
         2. Any exceptions for adding or swapping projects between portfolios are made on a case-by-case basis, require consent of the affected portfolio leads, and must be reviewed and approved by the L2.
         3. As projects within Portfolios/Program end, the funds designated for those projects may be available to the Portfolio/Program Director to support new projects. Business Managers will maintain working budgets for each assigned Portfolio/Program and provide Portfolio/Program Directors and L2s with up-to-date information, budget projections, and recommendations upon request.
      4. Portfolio Budget Utilization (During the Application Review Cycle)
         1. BPs, AMPs, and Programs utilize their allocated budgets to support approved research projects. Portfolio or program budgets are utilized to fund ongoing projects, new projects, and budget adjustments
         2. Ongoing Projects
            1. Updated in OneStream/RAFT with the most current start and end dates and approved annual allocations by fiscal year.
         3. New Projects
            1. BPs, AMPs, and Programs convene funding recommendation meetings in which the peer-review scores and comments from SRGs and Special review groups are used to rank applications.
            2. Ranked application lists with funding recommendations based on available funds, as determined in concert with the Business Management team, are submitted by the Portfolio/Program lead to leadership for review and discussion. The L2 with the ISRM Leadership Council reviews project lists from each portfolio and discusses the extent to which projects address VA/ORD priorities.
      5. Budget Adjustments:
         1. Project Start: The Business Management team may approve revised fiscal year project budgets as part of the award start negotiation process so long as the overall budget does not exceed the amount approved by the L2 during the intent-to-fund process. If the PI is requesting a larger budget, subparagraph b. below applies.
         2. Project Modifications (requiring additional funding or redistribution): Project cost extensions or redistributions must be reviewed by the Portfolio director and ORD Finance and receive final approval by the L2.
         3. Project Modifications (not requiring additional funding): Project-level adjustments not impacting budgets can be approved at the portfolio director’s level (e.g., project closures, no-cost extensions) but must be reported to the Business Management team for tracking.
         4. Portfolio-level adjustments: Transfer of funds across portfolios will require approval from the L2. ORD Finance will need to be involved in changes to the amount distributed for each year at the project level in OneStream. Note:  Portfolio-level adjustments for TEF funds can only be made to other TEF funded Portfolios.
   2. Tracking appropriations, obligations, and expenditures against the budget
      1. ORD will track all program appropriations, obligations (contract award), and expenditures against a program’s budget via the use of fund codes for VA funded TEF costs.
      2. ORD updates the TEF Spend Plan maintained by VHA Office of Finance quarterly.
      3. ORD utilizes VSSC reports (FMS 887, SF 133 and F20) to conduct quantitative analysis.
   3. Coding and tracking of TEF hires
      1. VA Administrations and Staff Offices receiving TEF funds must coordinate with Human Resources and Administrations, (HRA) to ensure proper coding and tracking of TEF hires. However, due to the unique, temporary nature of Research staffing and the fluidity of support to various projects concurrently, coupled with the fact that personnel can only be hired/funded on one Fund Control Point (FCP), most FTE related costs, obligations/expenditures will require a Cost Transfer (EW) from a 0161 FCP. This will result in an undercounting of FTE supporting TEF via coding and will require estimation by ORD Finance when reporting FTE.
   4. Utilizing FMS fund codes to identify TEF funded positions
      1. HRA will track positions that are established in support of the PACT Act by using the Financial Management System fund codes established by the Office of Finance in HRSmart to identify the positions as being funded by TEF appropriations. Temporary positions must have a not to exceed date. HRA will contact the Staff Office and Office of Budget prior to hiring or transfer of FTEE’s to obtain this information. However, due to the unique, temporary nature of Research staffing and the fluidity of support to various projects concurrently, coupled with the fact that personnel can only be hired/funded on one Fund Control Point (FCP), most FTE related costs, obligations/expenditures will require a Cost Transfer (EW) from a 0161 FCP. This will result in an undercounting of FTE supporting TEF via coding and will require estimation by ORD Finance when reporting FTE.
   5. Quarterly review of justification linking costs to valid TEF purposes.
      1. ORD will review the justifications linking employee costs and non-pay costs incident to the delivery of Veterans’ benefits associated with TEF to ensure that they are still valid and TEF allocations/obligations are compliant with applicable PACT Act law. If the justification is no longer valid the associated costs will not be allocated to TEF.
      2. ORD TEF Review Committee conducts annual review of projects funded. Should a previously funded TEF project fail to meet the requirements for continued funding under TEF, it will either be terminated or an alternative funding source will be identified.
   6. Auditing
      1. Each quarter, ORD will conduct a randomized audit at up to five Research sites to ensure that transactions charged against TEF funds are only for activities approved in the Pact Act.
      2. ORD has developed an audit survey that will be sent, quarterly, to a random subset of stations that have received TEF funds in the current fiscal year. This survey asks the station to self-certify that a) their obligations are compliant with VA Financial Policy Volume III Chapter 2 and are for obligations associated with project ID(s) that were approved for TEF funding compliant with applicable PACT Act law and b) that any expense transfers are compliant with VA Financial Policy Volume IX Chapter 3 Reclassifications and were for obligations associated with project ID(s) that were approved for TEF funding compliant with applicable PACT Act law. This audit form is to be signed by the Preparer, Administrative Officer for Research, Associate Chief of Staff for Research and the Facility Chief Financial Officer.
   7. Reporting
      1. VA Administrations and Staff Offices will report any findings or concerns (i.e., violations of policy, lack of internal control, budget plan, or execution issues) as a result of their internal reviews to their Administration or Staff Office CFO or CFO equivalent. Administration and Staff Office CFOs will notify the VA CFO of any findings or concerns as well as their corrective action plan.
      2. VA Administrations and Staff Offices will report financial or operational risks identified with TEF funded activities to the VA CFO.
      3. ORD maintains an open line of communication with VHA Finance for reporting purposes.
4. Continuous Improvement
   1. Frequency of revisions and review
      1. This SOP will be subject to ongoing review and revision to ensure its effectiveness and adaptability. The initial development of this SOP has been informed by current practices and best practices, recognizing that the actual implementation may evolve as experience is gained with the new processes and systems.
      2. ORD Finance will lead the ongoing review and revision of this SOP, ensuring that it remains a current and accurate reflection of the actual portfolio funding processes.
5. References
   1. Department of Veterans Affairs Toxic Exposures Fund Volume XI, Chapter 6, September 2025

APPROVED:
Matthew Verna
Director of Finance
Office of Research and Development

Footnotes
[1] Section 805 of the PACT Act (P.L. 117-168), codified in 38 U.S.C. 324 established the Toxic Exposure Fund (TEF), and authorized funding to be appropriated to the TEF for “medical and other research relating to exposure to environmental hazards.”
[2] Section 805 of the PACT Act (P.L. 117-168), codified in 38 U.S.C. 324 established the Toxic Exposure Fund (TEF), and authorized funding to be appropriated to the TEF for “medical and other research relating to exposure to environmental hazards.”

Appendix J: HRA TEF Estimation Methodology

Human Resources and Administration (HRA)
Toxic Exposure Fund (TEF) Direct Cost Methodology

Public Law (P.L.) 117-168 or the “Sergeant First Class Heath Robinson Honoring our Promise to Address Comprehensive Toxics Act of 2022” (commonly known as the “PACT Act”) is a comprehensive law, which, among other things, authorized the expansion of healthcare and benefits access for Veterans exposed to toxic substances during military service and requires assessments and reports of the impact of this expansion of access to health care. HRA is leading the work to complete the assessment required to meet the Section 104 requirements for the assessment, and ongoing reporting, of the personnel resources necessary to implement Section 103 of P.L. 117-168 (Expansion of Health Care for Specific Categories of Toxic-Exposed Veterans and Veterans Supporting Certain Overseas Contingency Operations).

Section 1: Allowable Expenditures 

To ensure TEF funds are used only for those limited allowable purposes, HRA will restrict its use to fund allowable activities, which are directly related to work needed to meet P.L. 117-168, Sec. 104 (“Assessment of Implementation and Operation”) requirements, which mandates VA to complete an assessment of the personnel resources necessary and to submit a determination as to whether the Department has the personnel resources to implement Section 103 of P.L. 117-168. Section 103 requires the development of both workload-based and population-based staffing models, and ongoing reports to Congress on findings, to assess the impact of increased demand for health care for the population covered under Section 103. To complete this task, both government employees from HRA’s Manpower Management Service (MMS) and contractor support from VHA’s Partnered Evidence-based Policy Resource Center (PEPReC) office will be used.

HRA is using two approaches to conduct the analysis needed for the personnel assessment, and ongoing reporting, required by Section 104. Primarily the functions determined to be allowable TEF activities fall into the following categories:

• HRA’s Manpower Management Service: 
  • Develop and maintain staffing models for both baseline pre-PACT Act and post-PACT Act workload that will be vetted by the VHA Integrated Service Networks and VA Medical Centers. These staffing models will enable VA to assess the change in demand for staffing resulting from the workload generated by the expanded eligibility under P.L. 117-168 across all medical center functions. While relatively broad in nature and less predictive than population-based models, these models inform the impact of the increased workload on clinical and non-clinical supporting elements required to provide care for Veterans with toxic exposures.
  • Develop and implement business intelligence tools to support vetting of the staffing models and provide VA Medical Centers with information needed to make information-based resource management decisions and plan the staffing levels required to meet the health care needs of the Veterans eligible for the care under Section 103.
  • Manage VHA’s PEPReC Service Level Agreement (SLA).
  • Coordinate with VHA to continually monitor changes in the population, health care delivery patterns, and other factors that will impact staffing for TEF Veterans.
• MMS partnership, via a service level agreement, with PEPReC.
  • Develop population-based staffing models to ensure that VHA has the population-based workload indicators to plan for primary, mental health, and specialty care provider staffing specific to the toxic exposure related population. This approach augments the MMS workload-based staffing model that is based upon expected workload demands by providing the full demand needs of a given population regardless of historical availability of providers.  
  • PEPReC will develop pre-PACT Act staffing guidelines as a baseline that will allow VA to determine the impact of any new personnel over time as part of the PACT Act’s expansion of toxic exposure-related health care. The goal of PEPReC’s models is to determine the personnel needed to provide all health care services detailed in Section 103. PEPReC will do this by inputting the estimated toxic exposure population from the Enrollee Health Care Projection Model (EHCPM) into PEPReC’s staffing model.
  • Develop initial recommended language for required annual updates to Section 104 requirements and collaborate with VHA program offices and VA MMS on changes needed to the report.

Both MMS and PEPReC will work closely with VHA to gather and analyze data to assist in assessing the personnel impact of the expansion of benefits under the PACT Act and to ensure that VHA is provided with the tools needed to successfully implement workforce plans needed to meet the increased demand for care. 

Section 2: Methodology

HRA requires TEF direct funding for both full-time equivalents (FTE) and non-FTE contract support. 

1. FTE: HRA has developed a tracking system that will be populated by the MMS supervisor (much like a timecard) to account for the level of effort for MMS employees each quarter to support TEF-allowable functions.  Significant variations in the actual and expected level of effort will be justified with sufficient information to support an assessment to the reasonableness of the variation. Throughout the quarter the MMS supervisor will track any deviations for the estimates and reconcile variations between the estimate and actual levels of effort prior to the end of each quarter. Since the level of effort to support TEF activities is relatively stable, HRA will provide a reasonably accurate estimate of the proportion of the time at the beginning of each quarter. For employees performing duties associated with allowable TEF expenditures, HRA will coordinate quarterly expenditure reviews with VA’s Office of Management (OM). Reconciliation of the estimated level of effort in terms of total FTE will occur after the MMS supervisor provides a memo to the Principal Deputy Assistant Secretary, HRA certifying the labor hours used in support of TEF activities at the conclusion of the quarter and prior to the quarterly expenditure transfer.
   
2. Non-FTE: HRA and VHA PEPReC have signed a Service Level Agreement outlining the timeline and deliverables for PEPReC’s population-based staffing models. As 100% of this effort is allowable under TEF, HRA is funding this work with a TEF accounting line. HRA will be reimbursing PEPReC on a monthly basis in G-invoicing. Performance will be monitored on a bi-weekly basis via mandatory progress updates. Project results will be documented in interim quarterly reports and a final annual report. HRA will reconcile and de-obligate any remaining funds at the end of the agreement.   

By following this comprehensive methodology, HRA will ensure that TEF execution is in full compliance with the language specified in 38 U.S.C. § 324^[3]. HRA’s commitment to transparency, accountability, and adherence to VA policy will serve as a solid foundation for the successful management of these funds.

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[3] In relevant part, 38 U.S.C. §324(c)(2) authorized appropriations to the TEF for “expenses incident to delivering health care and benefits to Veterans associated with exposure to environmental hazards in service, including administrative expenses, such as information technology and claims processing and appeals.”

Appendix K: HRA TEF Budget Execution

Human Resources and Administration
Toxic Exposure Fund Budget Execution
Standard Operating Procedure

1. Purpose: This Standard Operating Procedure (SOP) details the Office of Human Resources and Administration’s (HRA) processes for executing, allocating, tracking, monitoring, and reconciling the Toxic Exposure Fund (TEF) within the Department of Veterans Affairs (VA) to ensure that HRA is utilizing TEF resources that directly support or are incidental to VA’s delivery of health care and benefits associated with in-service environmental exposures. This SOP is derived from the Department of Veterans Affairs Financial Policy, Volume XI, Chapter 6, Toxic Exposure Fund.
2. Scope: This SOP is applicable to all HRA offices utilizing TEF resources and the Office of Budget (OB) budget analysts assisting HRA with TEF budget execution.
3. 060504 Budget Execution Implementing/Allocating Costs:
   1. TEF resources appropriated in the PACT Act fund requirements attributable to provisions of expanding health care and benefits to specific categories of toxic-exposed Veterans. HRA will comply with appropriations law and follow guidance from VA’s Office of Management (OM) on indirect cost transfer General Administration (GenAd) estimation methodologies and HRA direct costs estimation methodologies both found in Department of Veterans Affairs Financial Policy, Volume XI, Chapter 6, Toxic Exposures Fund. Based on TEF allowable costs, HRA, with assistance from OB budget analysts, will develop spend plans for submission to OM.
   2. HRA’s Management, Planning, and Analysis (MPA) with assistance from OB budget analysts, will maintain internal HRA funds oversight of TEF appropriations to include tracking in VA’s Integrated Financial and Acquisition Management System (iFAMS). HRA, with assistance from OB budget analysts, will ensure funds are obligated and expended in accordance with applicable laws to prevent the obligation or expenditure of funds before an appropriation is available or if in excess of available amounts.
   3. TEF Direct Support Costs. Based on OM review and Office of General Counsel (OGC) opinion, HRA will restrict the use of TEF direct cost transfer requests to a limited area of activities that are required to meet PACT Act requirements directly related to delivery of Veterans’ health care and benefits associated with exposure to environmental hazards, per 38 U.S.C. § 324 or to Section 104 that requires VA to assess the personnel and resources required to implement Section 103. Direct support will not be used for activities authorized under P.L. 117-168, Title VII (“Resourcing”) related to leases for space or to Title IX (“Improvement of Workforce of Department of Veterans Affairs”) implementation for improvements to the VA workforce to reach Veterans in rural areas and the development of best practices to recruit and retain the personnel needed to directly deliver care and benefits to toxic-exposed Veterans. It should be noted that following reviews by OM auditors and OGC of HRA’s initial proposed PACT Act activities, only the service level agreement (SLA) activities between HRA’s Manpower Management Service (MMS) and VHA’s Partnered Evidence-based Policy Resource Center (PEPReC) are allowable as a direct cost.
   4. Non-payroll TEF. As mentioned in paragraph 3.C. above, the MMS-PEPReC SLA is a direct cost and outlines the timeline and deliverables for PEPReC’s population-based staffing models. As 100% of this effort is allowable under TEF, HRA is funding this work with a TEF direct line of accounting provided by the OB budget analysts. Via mandatory progress updates, project results will be documented in interim quarterly reports and a final annual report. HRA will reconcile and de-obligate any remaining funds at the end of the annual agreement.
   5. Full-Time Equivalent (FTE) Payroll TEF costs. For employees performing duties associated with allowable TEF expenditures, HRA will coordinate quarterly expenditure reviews and transfers with VA’s Office of Management (OM). Using the GenAd and HRA estimation methodologies, reconciliation of the estimated employee level of effort in terms payroll costs will occur after the executive leadership from the Office of the Chief Human Capital Officer (OCHCO) and MPA as well as the MMS Supervisor, provide a signed memorandum to the HRA Principal Deputy Assistant Secretary (PDAS) certifying the percentage level of effort used in direct and indirect support of TEF appropriate activities at the conclusion of the quarter and prior to the quarterly expenditure transfer. Quarterly, the HRA PDAS will then provide the Deputy Assistant Secretary for Budget a signed memorandum certifying the direct and indirect payroll costs and request transfer of TEF resources to HRA. OM’s Office of Budget will monitor and report on cost transfers as part of HRA’s monthly budget execution reviews.
4. 060505 Tracking/Monitoring/Reconciling Toxic Exposure Fund
   1. Fund tracking. HRA, with assistance from OB budget analysts, will track all TEF-related obligations, expenditures, and cost transfers to ensure clear tracking and reporting.
   2. Position tracking. MPA’s HR Management Liaison Service (HRMLS) coordinates with MMS and the HR servicing office, currently OCHCO’s Human Resources Service Center (HRSC), to ensure proper cost centers are assigned to HRA’s PACT Act hired employees. HRMLS/MPA will track these positions. Since its passage, it should be noted that the number of hired HRA PACT Act employees has reduced significantly through attrition and reassignment to permanent positions.
   3. Non-Payroll Reconciliation. HRA/MMS receives mandatory progress updates, project results documented in interim quarterly reports and a final annual report from VHA’s PEPReC. The purpose of this reconciliation is to confirm the manpower modeling products of the MMS-PEPReC SLA meet VHA’s needs in submitting the Congressionally Mandated Report required in Section 104 of the PACT Act. During these quarterly reviews, if the TEF justification is no longer valid the associated costs are not allowable and will not be allocated to TEF.
   4. Payroll Reconciliation. At a minimum, HRA offices performing TEF appropriate activities will conduct quarterly reviews of the level of effort employees spend on TEF-related activities. These TEF-related activities may include both direct and indirect levels of efforts throughout the quarter. During this review, if the TEF justification is no longer valid the associated costs are not allowable and will not be allocated to TEF. There are HRA employees who were not hired as a PACT Act employee and yet provide work to support the delivery of health care and benefits to Veterans with toxic exposures. Per OM guidance, the level of effort for these employees is also documented quarterly.
   5. As necessary, HRA/MPA assists OB with TEF obligations reporting and spend plan updates for submission to the Office of Management and Budget (OMB).
5. Compliance:
   This SOP ensures that HRA remains compliant with all policies outlined in VA Financial Policy, Volume XI, Chapter 6, while effectively managing, monitoring, and reporting TEF resources specifically within the HRA’s operational scope.

Appendix L: Initial House and Senate Approved TEF Spend Plan

1. The Cost of War Toxic Exposures Fund (TEF), created by Section 805 of the Sergeant First Class Heath Robinson Honoring our Promise to Address Comprehensive Toxics (PACT) Act, provides resources to invest in the delivery of Veterans’ health care and benefits associated with exposures to environmental hazards during military service. VA’s TEF spend plan fully resources those increased requirements directly attributable to PACT Act provisions.
2. The House Appropriations subcommittee approved the initial TEF spend plan with no notable concerns (Attachment A), while the Senate Appropriations subcommittee approved the spend plan with substantive guidance and “asks” of VA (Attachment B).
3. The following were explicitly approved by the Senate:
   • Permanent staff for Veterans Health Administration (VHA) research and Health Outcomes of Military Exposures Program Office to address incremental PACT Act costs;
   • Permanent staff for Veterans Benefits Administration (VBA) claims processing teams, including raters to address increased workload;
   • Permanent staff for the Board of Veterans Appeals and paying overtime to existing staff to prepare for increased demand;
   • Temporary or contract staff for communications efforts within VHA, Office of Public and Intergovernmental Affairs (OPIA), Office of Enterprise Integration (OEI) and Veterans Experience Office;
   • Contracting for OPIA Veterans outreach to include GovDelivery; Temporary or contract staff and other Office of Information and Technology efforts as outlined;
   • VBA contracting to expedite scanning of records, which should not supplant ongoing efforts planned; and
   • Temporary or contract staff in the Office of the Secretary for Veterans Affairs and the Project Management Office.
4. Additional support staff consistent with our TEF spend plan may also be funded with the TEF. Permanent staff may be hired if the hiring official determines that seeking a temporary or term limited employee will adversely affect the ability to hire or the quality of the applicant pool. We have communicated with our appropriations subcommittee (including staff) that onboarding qualified candidates to meet PACT Act requirements will require hiring permanent employees notwithstanding the request to consider temporary or term limited employees.
5. Accurately tracking and reporting the use of these funds, associated workload and benefits and services delivered to Veterans is critical. In advance of preparing this guidance, the Office of Management (OM), the Office of Human Resources and Administration (HRA) and OEI met with each organization included in the initial TEF spend plan and who will be receiving TEF resources. During these meetings, VA collectively reviewed the 1) purpose of the fund; 2) Congressional intent and in particular Senate feedback and guidance; and 3) metrics and workload VA will track and report in each functional area. It is VA’s intent, at least initially, to begin reporting on execution and related workload/metrics monthly starting December 2022. Guidance on the format for reporting will be developed collaboratively and issued separately.
6. Consistent with requests from our appropriations subcommittees, each office will be asked to begin developing a long-term staffing plan. This plan will identify anticipated human resources requirements associated with the PACT Act for fiscal years 2023 through 2025 to include planned hiring (permanent, temporary/term, and contractor) and anticipated attrition based upon workload changes. Additional guidance on the long- term staffing plan will be forthcoming.
7. HRA will track positions that are established in support of the PACT Act by using the Financial Management System fund codes, established by OM’s Office of Finance, in HRSmart to identify the position as being funded by the TEF appropriations. Temporary positions will have a not to exceed date. The dates will further identify impacted positions if the PACT Act is not extended or made permanent. HRA will work with OM to provide human resources, manpower and financial management professionals with detailed guidance on the process to track these FTE. Each office receiving TEF must coordinate with HRA to ensure they are prepared to code and track all TEF hires according to their guidance.
8. VA will exercise oversight of the TEF funding through the VA governance process. Spend plan oversight and fund execution will be routinely reviewed by the Investment Review Council and during monthly budget reviews hosted by OM.
   
   
   
   
   Jon J. Rychalski                   Gina M. Grosso                    Guy Kiyokawa
   
   

Attachment A

Attachment B