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Budget-Busted VA Project Gets New Lead

Wednesday, April 8, 2015

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The U.S. Department of Veterans Affairs has officially handed over the reins of a troubled hospital construction project near Denver that is at the center of an internal investigation.

The U.S. Army Corps of Engineers is now leading construction of the 11-building, 182-bed Denver VA Medical Replacement Project—now the most expensive hospital in the VA’s history.

Meanwhile, the VA's official in charge of nationwide construction has abruptly retired amid the investigation.

Budget Buster

In the works for nearly a decade, the project was originally estimated to cost $328 million and set for a May 2015 completion date. It is now expected to finish in 2017 at a cost of $1.73 billion, reports relate.

Construction of the complex in Aurora, CO, began three years ago with a $600 million budget.

Kiewit Turner

In the works for nearly 10 years, the VA project near Denver was originally estimated at $328 million and set for a May 2015 completion date. It is now expected to finish in 2017 at a cost of $1.73 billion, reports relate. Construction began three years ago with a $600 million budget.

The House Committee on Veterans Affairs has set a hearing on the hospital on April 15 in Washington, D.C., according to reports.

Ceded Project

The Corps of Engineers will serve as the facility's construction project manager, according to VA Deputy Secretary Sloan Gibson.  

During a press conference Thursday (April 2) at the construction site, Gibson told reporters that the hospital was a "shade over" 50 percent complete. He said he hoped the hospital would open in 2017, but reports say that is unlikely.

He estimated that an additional $830 million would be needed to finish the job.

"I apologize to veterans and to American taxpayers for the delays and the added costs," he said.

Incomplete Design Issue

Gibson said that a number of issues had led to the miscalculation, but the biggest misstep was probably presenting an incomplete design to a contractor that hadn’t been involved at the outset.

Sloan Gibson
Official photo

VA Deputy Secretary Sloan Gibson has apologized to veterans and to American taxpayers for the delays and the added costs associated with the Denver hospital project.

“We brought the contractor in late. We didn’t have the design locked down, and then we tried to lock down the price,” he said.

The design team—a joint venture of Skidmore Owings & Merrill, S.A. Miro, Cator Ruma and H+L Architects—has been under contract since January 2006. The contractor, joint venture Kiewit-Turner, was hired in 2011.

In December, Kiewit-Turner walked off the hospital project after a federal board of appeals ruled that the VA had breached its contract.

The VA was then able to negotiate an interim contract with the builders to get the project moving again.

Gibson also pointed to additional factors, including lack of communication, that took a toll on the project’s budget.

Construction Chief Retires

Congress has demanded that the department fire those who are to blame.

Already out is Glenn Haggstrom, the principal executive director of the VA's Office of Acquisition, Logistics and Construction.

VA official seal
Official seal

The billion-dollar Department of Veterans Affairs hospital project in Denver has prompted lawmakers to ask whether VA should be in control of construction to begin with.

Haggstrom submitted his retirement documents March 24—the day after he was questioned under oath as part of the probe, reports said.

Gibson said Haggstrom had a legal right to retire. An Air Force veteran, Haggstrom had worked for the VA for more than six years, according to reports.

However, U.S. Rep. Jeff Miller (R-FL), the chairman of the House Committee on Veterans Affairs, observed, “[A]ny reasonable person would conclude that he should have been fired years ago.”

Miller said Haggstrom “may have tried to do a good job at VA, he certainly did not succeed.”

“What’s most disappointing about this situation, however, is that Haggstrom left on his own terms—with a lifetime pension.”

Other VA Hospital Overruns

Miller added that “[n]early every major VA hospital construction project is behind schedule and hundreds of millions over budget.”

Veterans hospitals in New Orleans, Las Vegas and Orlando, FL, are facing overruns and delays, according to the Associated Press.

On average, each hospital is $336 million over budget, according to a Government Accountability Office report issued in April 2013.

Miller said the department would need to do more “housecleaning” if it wanted to get its construction affairs under control.

Funding Questions

It is not clear where the additional funding for the Denver suburb project will come from.

U.S. Rep. Mike Coffman (R-CO), whose district includes the project, has proposed to fund the hospital by diverting VA bonuses. His is the only legislative proposal to complete the hospital introduced thus far.

U.S. Rep Mike Coffman
Official photo

U.S. Rep. Mike Coffman (R-CO), whose district includes the project, has proposed to fund the project by diverting VA bonuses.

Gibson called the plan "a lousy idea,” saying it would deprive janitors, cemetery workers and other VA employees of bonuses to which they are entitled.

In response, Coffman issued the following statement.

“VA’s leadership refuses to take responsibility for their failure of our veterans and this country’s taxpayers, and that is unacceptable.

“They would rather taxpayers be responsible for financing their mistakes. The only lousy idea I’ve heard so far is that the VA hasn’t fired or disciplined a single employee for this monumental mismanagement. I have put forward a serious solution that forces accountability on an organization that has failed this nation, and it’s no surprise they don’t like it.”

The legislation also calls for VA to be stripped of any future major construction authority and an independent investigation into the billion-dollar project.


Tagged categories: Architects; Bidding; Contractors; Government; Health Care/Hospitals; Project Management; Subcontractors

Comment from Michael Lusich, (4/8/2015, 4:47 PM)

REALLY 9.5 million a bed!!!!!!!!!!! What is the budget? 95% for the administration offices!!

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