VA: Time to leave the construction business?

The House Committee on Veterans’ Affairs (HCVA) held a Nov. 20 hearing that examined the state of the Department of Veterans Affairs’ major construction and lease programs. VA currently has major building projects in Las Vegas, Denver, New Orleans and Orlando, Fla.

VA’s construction programs have been criticized for delays and cost overruns at its four major building sites that have added nearly $1.5 billion of expenses and have stymied construction work for up to 74 months, according to the Government Accountability Office (GAO).

VA’s Office of Inspector General (OIG) has also identified serious deficiencies in VA’s ability to construct new medical centers and other facilities. At the hearing, VAOIG’s Linda Halliday testified that reviews of VA’s construction and leasing programs “have disclosed a pattern of poor oversight, ineffective planning and mismanagement of capital assets in VA.”

Halliday said that VAOIG has noted instances where facilities were leased or constructed by VA, “then stood empty and under-utilized.” Although some VA building projects were properly authorized, they were “executed over-budget and delivered well past their anticipated completion date.”

In testimony submitted for the record, The American Legion said it has been researching and reviewing possible policy changes to VA’s construction and leasing programs. Findings and recommendations will be presented to the Legion’s voting membership in its upcoming Washington Conference in March.

As part of its research, the Legion has met with senior officials from The Army Corps of Engineers, VA’s Office of Acquisition, Logistics & Construction (OALC), and its Office of Construction and Facilities Management (OCFM). Regarding the Corps of Engineers, the Legion found that it:

  • Is adequately suited to undertake the long-term mission of managing VA’s construction portfolio
  • Possesses a track record that is equal to or better than the federal industry standard regarding on-time, on-budget construction projects
  • Has worked on VA construction projects in the past
  • Routinely builds hospitals for the Department of Defense.

The Legion found that the Corps of Engineers has “more transparency and ready access to information regarding overhead expenses and actual costs than with private firms.... Information about Army Corps can also be found at the Congressional Budget Office, the Congressional Research Service, as well as other federal research activities and offices.”
Based on its initial research, the Legion believes the Corps of Engineers should not be inserted into current VA construction projects, but could possibly be used in future ones. That forward-looking approach, the Legion testified, “will be the subject of our pending resolutions and recommendations. That said, it is also true that the Army Corps of Engineers is routinely relied on to offer oversight and advice when federal projects are not performing as planned, thus giving Army Corps the reputation of expert in the construction management industry.”

VA’s recently created Construction Review Council (CRC) has made several recommendations for improvement to the department’s construction practices, including coordination of the department’s SCIP (Strategic Capital Investment Planning) program with budgets adequate enough to assure alignment with services and related initiatives.

At its 2012 national convention in Indianapolis, The American Legion passed a resolution on the SCIP program. It calls on Congress to provide increased appropriations annually to address VA construction deficiencies identified by SCIP, and for VA to include facility activation costs in future SCIP projections and allocations.

Gauging the impact of the CRC’s recommendations is not yet possible, the Legion testified, because “no new projects have been initiated since the implementation of these recommendations...”

If the HCVA were to consider changing the current process for VA construction, The American Legion “would insist that language be included into any bill that requires any contracting agency participating in VA construction activities be required to adhere to VA’s Vets First contracting policies, in accordance with Public Law 109-461, and all applicable VA procurement policies regarding veteran small-business procurement priorities.”