Although 50% of the design had been finished in 2005, the construction price wasn't negotiated until 2010. The VA originally said the hospital would open in May 2015.

Kiewit-Turner disputed that date, targeting the earliest possible opening to be early 2017. Last August, Kiewit-Turner asked to leave the project—claiming the agency failed to agree on a design that could be finished for the agreed-upon $604-million price and that the VA owed it $100 million for unpaid work and materials.

In a Dec. 9 ruling, the U.S. Civilian Board of Contract Appeals essentially endorsed the joint venture's version of what had happened, adding that the VA had failed to "control its designer" and "comport itself with standards of good faith."

Problems With Design Team

To be sure, the VA also has pointed fingers at the design team—a joint venture led by Skidmore Owings & Merrill—claiming that it created an overly complex design that was too focused on aesthetics and misled the agency about whether the design could be built within budget.

The VA "may have gotten the contractor in early but not early enough," said one engineer with extensive experience in federal facilities who asked not to be quoted by name. "For one reason or another, the VA probably got caught between a designer saying, 'I can't make it any cheaper' " and a builder saying 'it can't be built any cheaper.' "

With a still unfolding controversy over delays in healthcare to veterans, the agency may not have been able to go back to Congress for more funds.

A day after the board ruling, Kiewit-Turner walked off the project and demanded immediate payment of $157 million in past costs, transference of management to the Corps from the VA and a delivery model based on federal cost-reimbursable principles.

Soon after, the joint venture agreed to tentative terms under which the Corps would provide advice to the VA but isn't in charge.

The terms were finalized and Kiewit-Turner now is back on the job.

In their appearances before congressional committees, VA officials have reassured Congress about agency capabilities. Glenn Haggstrom, principal executive director of acquisition, logistics and construction, told a House committee last year that change orders are "not unusual during the construction of any large, complex project" and that the VA had taken steps to streamline a "too cumbersome" process.

In March, Stella S. Fiotes, executive director of the VA's office of construction and facilities management, testified against a proposed bill that would have required, among other things, that the agency use a special project manager from the Corps on its New Orleans, Orlando and Aurora medical centers.

She said the new measure, which was not adopted, would "complicate, if not confuse, the project delivery process and lead to increased management and overhead."

Added Fiotes, "The way the [agency]is doing business today has changed significantly since the Orlando, Denver and New Orleans projects were undertaken."