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VA building projects riddled with mistakes and cost overruns

Partial completed buildings at the new Veteran Administrator hospital in Aurora, Colo. on Dec. 10, 2014. The contractor, Kiewit-Turner, walked away from the construction site after the VA was found in breach of contract. (Brent Lewis/Denver Post via Getty Images)

There are hospital doors at the half-built ­Veterans Affairs medical center outside Denver that were supposed to cost $100 each but ended up ­running $1,400. There's a $100-million-and-still-rising price tag for an atrium and concourse with curving blond-wood walls and towering glass windows. And entire rooms that had to be refashioned because requests for medical equipment changed at the last minute and in other cases the equipment didn't fit. No one had bothered to measure.

Not even completed yet, this $1.7 billion facility is already among the most expensive hospitals in the world, and it’s just one of several VA hospital projects that are greatly over budget and behind schedule, according to the Government Accountability Office, the investigative arm of Congress.

“Everything that could have gone wrong did. It’s just an astounding price tag,” said David Wise, who wrote in a GAO report about the Aurora project and VA construction problems in Orlando, Las Vegas and New Orleans.

The hospital construction woes are the latest in a long line of troubles that the Department of Veterans Affairs faces, from accusations of retaliation against whistleblowers to a backlog of compensation benefits to reports that wait times for appointments in some parts of the country still haven’t improved. Wait times range from 30 days to more than six months.

The isolated, harassed lives of VA whistleblowers

Last May, President Obama accepted the resignation of VA Secretary Eric K. Shinseki in the wake of a coverup of months-long hospital wait times for veterans seeking treatment for everything from cancer to post-traumatic stress disorder. Obama and Robert McDonald, Shinseki’s replacement, have vowed to restore trust in the agency.

At a hearing of the House Veterans’ Affairs Committee on Wednesday, one of nine held on the Colorado hospital cost overruns and delays, members will discuss whether they should allocate an additional $830 million to finish the project.

The GAO report, written by Wise in 2013, highlighted the failure of VA in Orlando to hire specialists in medical-equipment construction who could have ensured that the rooms would accommodate MRI machines and other crucial equipment. Multiple revisions to lists of medical equipment meant plans kept changing, to the tune of $14 million, according to the GAO report.

“Think of it like this — you’re building a kitchen,” Wise said. “But you don’t check how big your stove or refrigerator is. You measure too late. And nothing fits, so you have to hack up a whole another piece of wall. That’s very expensive and time-consuming.”

The combination of extravagant planning divorced from financial reality and bungled ­execution has bedeviled several recent VA projects, the GAO found.

In Orlando, VA shifted the location of the proposed hospital project three times, inflating the cost by more than $350 million and delaying it at least three years.

In Las Vegas, the department added ambitious changes to a medical center after construction had begun, increasing the price by more than $260 million. And in New Orleans, where VA wanted to replace a hospital devastated by Hurricane Katrina, disputes with local government and repeatedly revamped plans for building and facilities operation added more than $370 million to the bill.

VA has disagreed with the findings of the GAO report, saying it was unfair to compare initial budgets with later revisions.

VA as builder

All this raises a question among congressional leaders: Why is VA, already overburdened with providing health care and benefits to former troops, in the construction business?

The responsibility for real estate and development across the federal government usually falls to the General Services Administration, which specializes in setting up federal buildings. The Defense Department looks to the Army Corps of Engineers and the Naval Facilities Engineering Command to build its hospitals and other facilities.

VA’s role in building hospitals is a legacy of ambitious leasing and construction programs the agency undertook to help soldiers exposed to mustard gas and other chemicals in World War I or wounded in World War II.

Today, experts such as Phil Carter, a senior fellow at the Center for a New American Security, say VA’s management of the medical projects amounts to malpractice.

“The VA can’t afford to experiment and learn on the job how to do construction,” Carter said. ­“Every time they change their mind, the bill to the taxpayer is running, not to mention the lost opportunity to provide health care to veterans who need it.”

Rep. Mike Coffman (R-Colo.), whose district includes Aurora, has called for banning VA from managing a major construction project again. “The VA couldn’t lead starving troops to a chow hall when it comes to managing a construction project,” he said. “They need to get out of the construction business.”

In a statement last week, the agency said, “VA has taken lessons learned from this project in Denver and applied many of them to our construction projects moving forward.” Deputy Secretary Sloan Gibson has vowed to get the Aurora facility opened in 2017.

Efforts to build the Aurora hospital have dragged on since the late 1990s. It is to be a state-of-the-art medical campus with 10 buildings, three parking garages, a research and treatment center fpr spinal-cord injury, and a 30-bed nursing home and rehabilitation center. It would provide care for one of the country’s largest concentrations of veterans — nearly half a million in Colorado alone.

But the price tag has soared more than $1 billion over budget. It will cost significantly more than the Dallas Cowboys stadium, which at $1.2 billion is one of the most expensive construction projects in recent years. The 182-bed Aurora hospital costs about $9.5 million per bed — experts in hospital construction say the price tag should be $2 million, at most. The bill is enough is to give $17 million to every family in Colorado who lost a member in the wars in Iraq and Afghanistan, according to calculations by 9News in Denver.

The cost is so high because VA did not produce a design that could be built for an estimated $604 million but instead one that would run more than $1 billion, Wise said.

Warnings of cost overruns

Internal VA e-mails dating to 2010 show that VA contracting officials were ignored when they warned their supervisors about mounting cost overruns.

“I must beg you once again that we re-think our strategies in New Orleans and Denver,” Adelino R. Gorospe Jr., a contract specialist with the VA Office of Construction and Facilities Management, said in an e-mail on Sept. 1, 2011. “Without a change in strategy, my estimate would be around half a billion dollars in total cost overrun: $500 Million! That’s how risky this type of contract is. Another reality check! Where in this economy are you going to find the money?”

Gorospe, who says he was a whistleblower, was fired in 2012 by Glenn Haggstrom, executive director of the VA Office of Acquisition, Logistics and Construction (OALC), on the grounds that he had failed to follow his supervisor’s instructions. Haggstrom retired last month in the midst of a VA-initiated investigation into the Aurora medical center, according to a VA news release.

Adding to the cost was the discovery of an underground spring that flooded the construction site. The contractor was forced to pump water from the site, slowing plans to build an underground parking garage.

Amid rising tensions between the agency and its contractor, ­Kiewit-Turner, judges on the federal Civilian Board of Contract Appeals ruled in December that VA was in breach of its contract and that the contractor could bow out of the project.

The board said VA repeatedly failed to provide a design for the hospital that could be built for the agreed-upon price and faulted the department for paying “no heed” to suggestions on how to cut costs. In January 2013, for instance, the contractor recommended $355 million in suggested cuts; VA accepted $45 million and said the rest were “unacceptable.”

“There were repeated warnings that the project’s design was far more expensive than the agency had money for or had agreed to pay,” the decision said. The board also found that it took so long to process change orders that firms bidding on subcontracts “increased their prices to account for the risk of not being paid timely, or even not being paid at all.”

House Veterans’ Affairs Committee Chairman Jeff Miller (R-Fla.) says VA didn’t concede there were any major problems until the board ruled in favor of the contractor. Last week, amid congressional pressure, VA tapped the Army Corps of Engineers to take over the project from the VA and work with Kiewit-Turner, which is now back on the project.

Gibson, the agency’s deputy secretary, acknowledged at a news conference last week that “the design was finalized too late and the contractor wasn’t brought into the process early enough.” Speaking at the project site, he said, “I apologize to veterans, and I apologize to American taxpayers for the delay and the added cost.”

He added that VA has worked with the Corps of Engineers on previous projects and said, “I would expect to see a very strong collaboration and a major role for the corps in any comparable hospital projects in the future.”

The source of funding to complete the project remains uncertain. The department last month reallocated $56 million to pay for work through late spring. VA officials have told Congress they will ask for an additional $830 million.

The Associated General Contractors of America has said it no longer wants VA to oversee any construction. “It’s a real vote of no confidence,” said Brian Turmail, a spokesman for the trade association, whose membership is made up of more than 27,000 construction-related firms. “There are enough issues with the VA that it’s in the interest of the veterans that the VA serves, our companies and taxpayers generally. VA construction should be out of the VA’s hands.”

Meanwhile, some Aurora-area veterans say they never wanted what they came to call a “Taj Mahal”; all they wanted was a modern hospital to replace a crowded, three-to-a-room facility dating to the 1950s.

“I was first in line for the biopsy the other day and immediately we were behind schedule because our procedure room was bumped,” said Ralph Bozella, a Vietnam War veteran who is an American Legion leader and has pushed for a new hospital. “So they just sat us in our hospital gowns in wheelchairs in the hallway. There was nowhere else to put us.”

He recalled how the new hospital was supposed to be finished this year.

“Now,” he said, “it’s anyone’s guess.”

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