Facing strong Capitol Hill criticism for poor management of big hospital projects, the Dept. of Veterans Affairs now is open to considering transferring that part of its construction program to the Army Corps of Engineers, a top VA official says.

Testifying at a House Veterans Affairs Committee hearing on Jan. 21, VA Deputy Secretary Sloan D. Gibson said he’s “perfectly willing” for the VA to examine shifting the major-hospital construction program to the Corps. The decision on whether to make such a dramatic change has not yet been made, however.
Gibson, a former Army officer and head of the USO, moved into the No. 2 VA post about a year ago.

He said, “All I’m after is what’s best for veterans, what’s the right thing for taxpayers. If that means turning over major hospital construction to the Corps of Engineers, I think that’s fine, but that’s a big decision. Let’s make it an informed decision.”

The committee’s prime focus is a troubled Denver-area VA replacement hospital project. Its construction began in 2010 and was to be finished in 2013, said Dennis Milsten, an associate executive director in VA’s office of construction and facilities management. Its total cost was estimated at $800 million, including $604 million for construction.

But the project, located in Aurora, Colo., has fallen far off track and Milsten said now is aiming for a 2017 completion. Its cost has soared to $1 billion, says committee Chairman Jeff Miller (R-Fla.), who referred to it as “a veritable money pit.”
Rep. Phil Roe (R-Tenn.), a physician, said, “It’s amazing to me how badly this has been done.”

Gibson said the “crux” of the Aurora problem was that the VA was “trying to push to get to a firm target [construction] price” without having design completed. 
“It is a mess,” he acknowledged.

The project’s construction team, a Kiewit-Turner joint venture, stopped work on the project on Dec. 10, one day after a federal appeals board ruled that VA had breached its contract with the contractors. Last August, Kiewit-Turner had submitted a request to exit the project, claiming that VA owed the team as much as $100 million for work and materials.

On Dec. 22, VA and Kiewit-Turner signed an interim agreement to allow work to proceed on the job. That pact included a provision for Corps officials to be on site in Aurora to provide technical and management advice, Gibson said.

The Corps also is reviewing the project and aiming to formulate final plans and a long-term agreement to finish the project.
Lloyd Caldwell, the Corps’ director of military programs, told the committee, “We are confident that we can bring the project to a successful completion.”

One open question is what the new construction cost estimate will be. Gibson told the committee that neither VA, the Corps nor Kiewit-Turner knows that figure yet, adding that the estimate should be determined in the next several months.

He did say VA would seek congressional approval to raise the project’s total authorization to about $1.1 billion, from the current $800 million.

Gibson said VA is reviewing its major construction program and has made changes, including having large hospital projects reach at least 35% design before it publishes cost and schedule data and seeks construction funds.

VA announced on Jan. 20, the day before the hearing, that it had asked the Corps to carry out a wide-ranging study of the VA’s major construction program “to improve management processes, structures and controls in project oversight and delivery.”

It also is convening an investigative board to review the Aurora project and “gather evidence of any misconduct or mismanagement” there.

Aurora isn’t the only VA hospital project that has run into problems. Another witness at the hearing, David Wise, head of the Government Accountability Office’s physical infrastructure team, updated a 2013 GAO report on Aurora and VA hospital projects in Las Vegas, Orlando and New Orleans that were running late and experiencing cost overruns.

Aurora topped the list with a 144% overrun, as of December, followed by Orlando at 143%, Las Vegas at 80% and New Orleans at 66%.

The Corps has worked with the VA on about $1.6 billion in small projects since 2007. But it hasn’t assisted on large VA hospitals since 1956.
Caldwell noted that the Corps managed several large Army hospital jobs in recent years. It has three such projects under way, totaling about $2.4 billion.

The House passed a bill last September that would require a Corps’ “special project manager” to oversee VA major hospital projects underway. The proposal was sponsored by VA committee member Mike Coffman (R-Colo.). The Senate did not act on the measure before the last Congress ended.