- The main hospital project is between one and two years behind schedule (depending on whether you ask the VA or the contractor);
- It is most likely over budget—though the VA recently stated it didn't think it'd need any more funding.
- Approximately two years after the $260-million contract with Brasfield & Gorrie was first announced, the owner and contractor are arguing over the project's current completion percentage, with B&G estimating it at 45%, and the VA using a 60% figure.
- Numerous design changes are still ongoing—mostly related to continuing changes in medical equipment—despite the fact that the design was reportedly complete prior to bidding.
- The VA has issued a Notice to Cure, basically a threat to terminate B&G's contract. A decision from the VA on this matter is still pending.
Note: This post was updated with the House Committee on Veterans Affairs' video of the Orlando field hearing.
The troubled Dept. of Veterans Affairs hospital project in Orlando continues to earn the watchful glare of politicians, as the VA and general contractor Brasfield & Gorrie continue their back and forth over who's to blame and what can be done to expedite the project.
The latest bit of congressional oversight came on Monday, Aug. 13, when Rep. Jeff Miller (R-Fla.) brought members of the House committee he chairs, the House Committee on Veterans Affairs—along with other members of Florida's congressional delegation—to Orlando for a special field hearing, which was held just across the street from the site of the roughly $300-million hospital project. (It should be noted that the overall project is estimated at about $616 million; that includes several other facilities, built by separate contracts with other firms.)
Here's a brief rundown of the situation:
For Jim Gorrie, president and CEO of Brasfield & Gorrie, the project has been unlike any other. And his testimony at the Aug. 13 hearing in Orlando gave a rare public glimpse into a high-profile, problem project.
The Orlando VA hospital project, Aug. 13, 2012. (Photo by Scott Judy)
The House Committee on Veterans Affairs posted this video of the Aug. 13 field hearing in Orlando. Running time is nearly two-and-a-half hours. Officials with the Dept. of Veterans Affairs testify first. Jim Gorrie begins his testimony at approximately 1:46:00.
A transcript of his testimony provides for some fairly interesting reading—at least for contractors—such as when Gorrie testifies how the company found out about the VA's issuance of a Notice to Cure. Readers can find Gorrie's full testimony at the House Committee on Veterans Affairs website, here. For convenience, an excerpted version of Gorrie's testimony begins below:
"...Poor planning by the VA and design errors have plagued our efforts to construct the VA Medical Center. In March, the VA not only acknowledged these problems and confirmed they were acting to correct them; they also went on to say that Brasfield & Gorrie was not to blame. Between January and March of this year, the VA agreed to furnish over 45 separate design corrections (referred to by the team as the “Design Blitz”) to get the job back on track.
"The Blitz was a major commitment by the VA that required taking responsibility for the design errors. Unfortunately, the Blitz has grown to include over 100 separate design corrections and lasted significantly longer than the VA planned. We are seeing signs that the changes are slowing down but just last week we received another significant revision to the operating rooms and we have been notified that additional changes are coming….
"The project desperately needed the Design Blitz. However, this effort was two years too late. For B&G and its subcontractors, this time is lost forever. The process requires us to submit a Request for Equitable Adjustment (or REA) to recover the impact to us and our subcontractors…. Our first REA was valued at $33.6 million, and it is currently unresolved. The costs of our REA are being carried by us and our subcontractors. I sincerely hope the VA will review the entire REA process in the future as the costs that the general contractor and the subcontractors have incurred create real financial challenges….
"At the March hearing, the VA committed to work with us to expedite the project - but things have not gone as we had hoped. Despite (our) efforts, productive meetings with the VA to develop a new game plan never happened. In June, instead of discussing an accelerated schedule, the VA issued us a Notice to Cure and threatened to terminate us for default. We learned about the Notice to Cure via email approximately 10 minutes before the VA held a press conference announcing its actions. One reason this was so strange is that it was just one week after the VA met with us to discuss our partnering approach.
"A few weeks ago, the VA also withheld $2 million from our monthly payment, without discussion. This action creates an additional financial hardship to us. The VA has also contacted our bonding company for meetings on several occasions without contacting me directly to discuss their concerns first. Our bonding company attended a meeting in Washington, D.C. at the request of the VA in July. This is the first time in our 48-year history our bonding company has attended such a meeting. Last month, the VA gave us the first 'Unsatisfactory' rating we have ever received on a government project in our 48-year history of doing business, again with no advanced warning.
"...The recent actions taken by the VA are extremely disturbing. We have struggled to understand how the VA could take full responsibility for the multi-year design problem at the March hearing and 11 weeks later issue a very public Notice to Cure and Threat of Termination. It just doesn’t make sense....
"For months, the VA has mentioned completion dates in the summer of 2013; but to date they have not been willing to disclose the detailed logic they are using to reach that conclusion. From preliminary reports, we know their analysis is not apples-to-apples with ours and does not include the most current information, including major changes issued during the Blitz. Last week, the VA asked if we could possibly make a late 2013 construction completion date. We said we thought it was possible; however, it would come at a higher premium than our suggested schedule. Nevertheless, we are proceeding with the development of a plan to complete the entire project in 2013, should the VA decide to adopt and support it….
"The most important thing this job needs today is clear, open and direct communications.... The threats of default termination should stop. The only thing that could push this job over the edge into the 'Twilight Zone' would be a termination."
What do you think of what Gorrie had to say? And of the project that Rep. Miller once dubbed a "multi-million-dollar debacle?