The VA's Aurora Hospital Project: How Did Things Get So Bad?
The Dept. of Veterans Affairs remains the target of congressional ire after a recent announcement that a VA replacement hospital in Aurora, Colo., will cost $1.73 billion to build. That's more than five times the project's initial estimate of $328 million and double the $880-million cap set by Congress. The VA broke the news to congressional leaders in a March 17 phone call.
"The number took my breath away," said U.S. Rep. Ed Perlmutter (D-Colo.).
"It's sticker shock," said U.S. Rep. Mike Coffman (R-Colo.) after hearing the new estimate, which came from the Army Corps of Engineers. The Corps is advising the VA on the troubled project and will assume complete management of it this summer. Even after reprogramming $100 million from other VA projects across the U.S., the department needs an additional $830 million for Aurora—money only Congress can provide.
"Congress will not authorize another dime until VA gets its construction affairs in order," said Rep. Jeff Miller (R-Fla.), chairman of the House Committee on Veterans' Affairs, in a written statement. "The department owns this mess, and it's not fair to force taxpayers to bail out the bungling bureaucrats who created it."
The 1.2-million-sq-ft, 182-bed Aurora medical center is years behind schedule and only half complete. Without additional funding, the project will run out of money in mid-May and face its second shutdown within four months. Joint-venture contractor Kiewit-Turner walked off the job in December, after winning an appeal from a federal contracting board. K-T filed a request in August to leave the project, claiming VA owed it nearly $150 million for unpaid work and materials. The appeals board approved the work stoppage, ruling that VA had breached its contract with K-T. The contractor returned to work in late December, after the department paid the tab.
News of the $1.73-billion price tag has brought renewed congressional demands for accountability and a lingering question from critics: How did things get so out of whack in Aurora? The VA has accepted responsibility but shifts some of the blame onto its design team. "The VA owns this," said Dennis Milsten, the director of the VA's Office of Construction and Facilities. "We own this fiasco," he told congressional leaders. But he said project designers did not produce a design that could be built for an earlier revised budget of $600 million. "And we relied on that. We moved forward, we listened to our designer," he said, admitting that K-T advised the project could not be built for that amount. He admitted to a breakdown in VA's due diligence on the project.
Value Engineering
But K-T said in a statement that it worked with the VA in the spring and summer of 2012 to develop alternative design solutions that the contractor later claimed would have had no impact on patient care but could have saved more than $400 million. K-T says the VA accepted only $50 million of those value-engineering ideas.
The joint-venture design team, led by Chicago's Skidmore Owings & Merrill, includes Denver's S.A. Miro Inc., H+L Architecture and Cator, Ruma & Associates. Pointing fingers at designers is "just scapegoating," says Andy Boian, spokesman for the design team. He said that nothing had changed on the design side since all parties agreed on a buildable design priced at $640 million. The VA was correct when it said it did not understand its own process, Boian adds.
VA management of several other hospital projects has drawn fire. A January report by the Government Accountability Office, released before Aurora's latest escalation, found cost increases on several projects, "representing a total cost increase of over $1.5 billion and an average increase of approximately $376 million per project," the GAO said.
