Deadline Puts Focus on Denver VA Hospital Project

As if Congress doesn’t have enough to do before its Memorial Day recess, Veterans Affairs Secretary Robert McDonald has warned lawmakers that unless they authorize more money by next week for building the new veterans hospital in Denver, the project will probably come to a halt.

McDonald has sent key lawmakers a memo asking for another $200 million, which would raise the authorization ceiling to $1 billion for the project, which the Government Accountability Office says has been beset by mistakes and cost overruns.

Without an authorization for further funds before May 24, McDonald predicts the primary contractor, Kiewit Turner, will stop work on the beleaguered Denver Replacement Medical Center project.

McDonald acknowledged the “inexcusable delays and cost overruns that have plagued” the construction project, which recent media reports have said may rack up a $1.7 billion bill, nearly a billion over Congress’ initial authorization.

But, the secretary said if the cap is not raised, work could stop, causing subcontractors to walk away and only increasing the cost of the project and further delaying its completion.

“Some subcontractors would likely not return to the project in the future,” he said, “leading to substantial further delays and cost increases.”

The request only adds to a litany of issues lawmakers have on their plate ahead of their Memorial Day recess, including a major surveillance overhaul, Trade Promotion Authority and reauthorizing highway funding.

In the memo, the VA said it does not plan to request further appropriations for the current year to aid the Denver project. In addition to asking Congress for legislation to raise the authorization, the VA has asked for authority to reallocate funds for the current fiscal year for near-term construction. McDonald said the VA has identified $150 million in fiscal 2015 funds that could be shifted toward the project to serve as a “short-term bridge.”

An Array of Problems

In addition to contract disputes between VA and Kiewit Turner that resulted in a 2014 work stoppage, cost overruns at Denver have been attributed, in part, to plan changes to hospital, which was originally conceived as a shared facility between VA and the University of Colorado but changed to be a standalone facility, in addition to VA not involving a contractor until late in the design phase.

The GAO also cited unforeseen events as delaying construction and driving up costs in Denver, including the need to replace electrical systems and remove asbestos in pre-existing facilities, per the report.

Congress has been a loud and frequent critic of the VA’s management of construction projects. An April 2015 report by the GAO noted considerable overruns and delays at projects in Las Vegas, New Orleans and Orlando, Fla., in addition to Denver. In analyzing the four projects, the GAO noted the smallest schedule extension among the sites, as of March 2015, was 14 months for the New Orleans project. The lowest percentage cost increase among the four large-scale projects was 66 percent, also in New Orleans.

The VA has requested some $1.1 billion for major construction projects for the coming fiscal year, and lawmakers appear loath to give them the money, at least not without stings attached.

In response to criticism of VA’s handling of Denver and other major construction projects, McDonald cited changes that include partnering with the Army Corps of Engineers to advise on construction, as well as the retirement of Glenn Haggstrom, the principal executive director of the VA’s primary construction office, after the VA began an investigation. Congressional critics countered that Haggstrom should have been fired much earlier.

The VA has also proposed delaying the Denver campus’s community living center and post-traumatic stress residential rehabilitation facility, while acknowledging that the delay would not be helpful to veterans.

“While we do not believe that this is the best decision for Colorado veterans, we believe that it is the only option available to VA that would satisfy Congressional requirements,” the memo stated.

While veterans organizations have been critical of the VA for poor planning, budgeting and execution of major construction projects, they nonetheless are arguing for the fastest possible completion of the Denver project, which will replace an aging facility. The failure to complete the project on time and at cost, they argue, has only hurt the growing veteran population in the area.

Garry Augustine, the executive director of the Disabled American Veterans, called the project a “perfect storm” that resulted from a lack of planning and budgeting. But he noted the issues in Denver largely predated the VA’s current leadership of McDonald and Deputy Secretary Sloan D. Gibson, and said DAV supports the VA’s request.

“Our main focus is what’s best for veterans in Colorado,” Augustine said. “They need to suck it up, give them the money, make sure they’re doing a better job of accountability and oversight and get it done.”

The national commander of the American Legion, Michael D. Helm, knocked the VA for the overruns in Denver, but said in a statement his organization “cannot in good conscience” oppose the project because of what it considers VA mismanagement.

“The Denver hospital project may be the worst federal construction disaster in recent memory, but that fault lies with VA, not the veterans who still need care,” Helm said.

Reaction on the Hill

Colorado Republican Mike Coffman, a member of the House Veterans’ Affairs Committee whose district includes the hospital project, criticized the VA’s management of the project but agreed with McDonald’s proposal in the memo.

“As a Marine Corps combat veteran, I couldn’t be more appalled at the gross mismanagement by the VA on this project,” Coffman said in a statement. “However, their proposal is a first step to keep this project moving forward.”

Spokespeople for both the House and Senate Veterans’ Affairs committees said their respective panels had only recently received the request from the VA and were reviewing the memo. A Senate committee spokesperson added that Chairman Johnny Isakson, R-Ga., expected “a detailed breakdown of costs from VA very soon.”

The memorandum was addressed to the chairmen and ranking members of both Veterans’ Affairs committees, as well as the House and Senate Appropriations Military Construction-VA subcommittees.

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