January 21, 2015

For well over a decade, the veterans of Colorado have been promised a new, full service, state of the art Department of Veterans Affairs (VA) Medical Center.  No less than three previous VA secretaries -- Anthony Principi, James Nicholson, and James Peak – have all failed to deliver.  Secretary Shinseki approved the current site on Fitzsimmons campus in 2009 and as Congress appropriated funding, VA broke ground in August of that year – half a decade ago. 

Six hundred million dollars later, Colorado veterans are still waiting.

Chairman Miller, Ranking Member Brown and distinguished Members of the committee, on behalf of National Commander Mike Helm and the 2.4 million members of The American Legion, I thank you and your colleagues for turning your attention to the problems inherent in the VA construction process.  Not only are the failures of VA construction hurting the veterans of Colorado, systemic VA problems with communication, transparency and accountability threatens VA operations nationwide.  The veterans of America deserve better.

This is not just a Coloradan veterans’ problem – this is an American veterans’ problem.  Last fall Chairman Jeff Miller of the House Committee on Veterans’ Affairs called for the Government Accountability Office (GAO) to determine why the “Big Four” VA construction projects were all delayed.[1]  All four of these projects: Orlando, New Orleans, Las Vegas, and Colorado are delayed beyond their initial time and cost estimates.  The previous year, GAO found the average delay on these four medical projects was 35 months and the lowest cost overruns were still 59 percent over initial estimates, while the highest cost overruns were a full 144 percent over estimate.[2]  The average cost overrun was a staggering $366 million.[3]

Even when VA displays that they can complete a construction project, as they were finally able to do in Nevada in August of 2012, the projects can hardly be considered flawless success stories.  Despite an over $600 million budget on the Las Vegas VA Medical Center (VAMC) the project immediately drew fire for an emergency room that required a $16 million expansion because it was too small and lacked a drop off ramp for ambulances.[4]  Just to be clear, the VA spent over $600 million building a major hospital without a drop off ramp for ambulances at the emergency room.

Throughout all of the “Big Four” construction projects VA has displayed questionable competency at best, but at least gross mismanagement.  In October 2013, the Department of Veterans Affairs own Office of the Inspector General (VAOIG) admonished VA for lack of guidance, inaccurate milestones, lack of documentation and lack of central tracking.[5]  Before VA managed to finish the Las Vegas project, they had not completed a major hospital construction project since 1995. 

After meeting with VA construction officials, The American Legion believes VA needs to seriously examine how VA manages major construction projects, and that reform is needed in this process.

Recent events in Colorado further demonstrate the point.  On December 9, 2014, Kiewit-Turner, the Colorado project's prime contractor, ceased work on the new VA hospital in Aurora after the Civilian Board of Contract Appeals (CBCA), a federal appeals board, afforded Kiewit-Turner the relief it was seeking and ruled that the VA breached its contract by failing to deliver a facility design that could be built for the approved budget of $582,840,000.

In the ruling, CBCA found that the “behavior of the VA has not comported with standards of good faith and fair dealing required by law.  The agency failed to provide a design that could be constructed within the [estimated construction cost at award]...”[6]

CBCA also found that VA delayed progress of construction by delaying the processing of design changes and change orders. “Much of the blame for this situation must be ascribed to the VA; by failing to control the [joint venture design team], delaying approval of the design, presenting Kiewit-Turner with a design which was allegedly complete but required an enormous number of modifications, failing to process change orders for approximately one year, failing to process joint supplemental instructions in a timely fashion, and failing to make timely payment to Kiewit-Turner, the VA drove up the costs of construction.”[7]

Finally, the CBCA also ruled that, “VA disregarded cost estimates by Kiewit-Turner and Jacobs, even to the point of rejecting a Jacobs’ estimate because it was developed under restrictions which the agency itself had imposed.”[8]  The VA ultimately directed Kiewit-Turner to continue its construction work for their agreed firm target price, even though VA had not been paying Kiewit-Turner properly.

After a two-week work stoppage, workers returned to the jobsite after VA and Kiewit-Turner came to an interim agreement.  To assist with management of the project, VA called on the U.S. Army Corps of Engineers for assistance in Aurora, an action that falls in line with a resolution passed by the Legion last May, calling on Congress and VA to consider “all available options” (including the Corps of Engineers) “to ensure major construction programs are completed on time and within budget.”[9]

The healthcare system operated by the Veterans Health Administration (VHA) is an area of special focus for The American Legion.  The American Legion’s System Worth Saving Task Force has been conducting nationwide visits to monitor the state of affairs in VA medical centers (VAMCs) since 2003.  Through these visits, The American Legion has found that when veterans can access these healthcare facilities, they receive an excellent level of care and in many cases superior to what they could receive outside the VHA system.  But veterans can’t access that care if VA can’t get the facilities built.

The American Legion supports VA’s Strategic Capitol Investment Program (SCIP), which determines the system needs and provides long range planning to determine what facilities are needed to serve veterans. The American Legion strongly supports ensuring that budget appropriations match the deficiencies identified by SCIP, and that VA’s construction budgeting not fall behind the levels needed to maintain this schedule of construction.[10]

However, it is vitally important that VA maintain transparency about the process involved in SCIP, and urges VA to continue publically posting all information about SCIP projects and costs.[11]  When VA fails to be transparent, everyone loses.  As in all processes within VA, whether they relate to construction, health safety, or the claims process, VA must improve their transparency with the veterans’ community. 

The American Legion calls on VA to critically evaluate how it conducts the management of construction projects, and recognize that the current state of affairs cannot be allowed to continue.  With budgets drawn so tight in Washington, hundreds of millions of dollars of cost overruns on hospital projects hurt all veterans.  Every dollar wasted in cost overruns on current projects is a dollar that can’t be spent on future needs elsewhere. 

The American Legion is deeply involved in tracking these projects because we are committed to ensuring that our nation’s veterans continue to have access to the best possible care anywhere.  We cannot continue to allow these projects to disappear into the maze of a faceless bureaucracy that allows spiraling cost overruns and fails to punish the responsible parties.  The American Legion strongly urges VA to provide meaningful communication and transparency with the veterans’ community, to provide visible accountability for failures, and to provide a clear roadmap to how the situation will improve.

Questions concerning this testimony can be directed to The American Legion Legislative Division (202) 861-2700, or lprovost@legion.org.

[1] American Legion Magazine, OCT 2013

[2] GAO Report 13-302 “Additional Actions Needed to Decrease Delays and Lower Costs of Major Medical-Facility Projects” April 4, 2013

[3] Ibid

[4] http://www.reviewjournal.com/news/reid-heller-say-growing-pains-root-new...

[5] Testimony of Linda Halliday, Assistant Inspector General for Audits and Evaluations, Office of the Inspector General – HVAC “Building VA’s Future: Confronting Persistent Challenges in VA Major Construction and Lease Programs” November 20, 2013

[6] United States Civilian Board of Contract Appeals CBCA 3450 Kiewit-Turner, A Joint Venture v. Department of Veterans Affairs

[7] Ibid.

[8] Ibid.

[9] Resolution: Department of Veterans Affairs Construction Programs, 2014 Spring National Executive Committee meetings

[10] Resolution No. 150: “Strategic Capital Investment Planning (SCIP) Program” August 2014

[11] Ibid