High-level talks aim to reboot Aurora VA hospital construction

December 12, 2014

Photo: VA hospital in Aurora aerial shotDays after hitting a major roadblock, the construction of a Veterans Affairs hospital in Aurora is closer to getting back on track.

The U.S. Army Corps of Engineers will take over management of the project from the U.S. Department of Veterans Affairs, Rep. Mike Coffman, R-Aurora, said Thursday.

That shift in responsibility could be the shot in the arm that “Project Eagle” needs. VA spokeswoman Genevieve Billia said senior agency officials and executives from Englewood-based contractor Kiewit-Turner were discussing how to move the project forward.

Senior VA management "is actively reviewing all possible actions to complete the Denver hospital in the most efficient and effective manner that will serve the best interests of our Veterans and their families," Billia wrote in a statement Friday morning. 

However, Tom Janssen, a spokesman for Kiewit-Turner, said Friday they had yet to receive a proposal from the VA.

Coffman has pushed for about a year for management of the project to be moved to the Army Corps, which he says has a better track record on construction projects.

Image: VA hospital in Aurora “I’m very relieved,” Coffman said, citing the VA’s “incompetence” in managing the project. “The Department of Veterans Affairs has never built a major construction project on schedule and within budget.”

A Coffman-sponsored bill aimed at speeding up construction and keeping costs under control at VA hospital projects passed the House earlier this year. It hasn't been taken up in the Senate yet. 

Earlier this week, Kiewit-Turner walked away from the Aurora project after the U.S. Civilian Board of Contract Appeals said the VA had breached its contract. Costs for the new hospital ballooned from an original estimate of $582.8 million to more than $1 billion, Kiewit-Turner claims. The contractor says it’s spent $100 million out of pocket to keep the project alive.

To push the project back onto the rails, Kiewit-Turner says it needs to be reimbursed, for the Corps to take over management of the project, and that the two sides "agree on a delivery model based on Federal Acquisition Regulation (FAR) cost reimbursable principles.

Coffman confirmed Thursday the VA has agreed to the terms. Colorado's Congressional delegation urged the VA in a letter Thursday to push the project forward.

Billia, the VA spokeswoman, added that health care services for veterans will continue uninterrupted at the existing VA facility in Denver, and declined to comment further.

A mismanaged promise

The 1.1 million-square foot facility at the University of Colorado Denver Anschutz Medical Campus will eventually replace the VA Medical Center at East Ninth Avenue and Clermont Street, built in 1950. At its groundbreaking in August of 2009, the Denver Post reported that Colorado’s congressional delegation had lobbied for the hospital for 10 years.

"Today is the beginning of a promise being fulfilled," Rep. Ed Perlmutter said at the groundbreaking. Before redistricting in 2010, Perlmutter represented Aurora.

But that promise has hit many delays since then. An early estimated completion date was 2013. More recently, the VA's head of construction Glenn Haggstrom told a House subcommittee in April 2014 the hospital would open in May 2015; an executive with Kiewit-Turner said during the same month it wouldn't be ready for patients until February 2017.

Court records released earlier this week state:

Photo: VA hospital in Aurora groundbreaking (AP Photo)Differences between Kiewit-Turner and the VA started early on in the process. The two sides agreed to a construction cost target of $582.8 million when the VA awarded the contract in 2010. But the VA soon started floating another figure, $604 million, in official documents. But, as the federal board of appeals wrote, the VA “never came close to providing a design that could be constructed for either amount.”

That difference was hardly the only one. Kiewit-Turner complained of incomplete and late drawings from the VA’s team of architects, no effort on the VA’s behalf to acknowledge rising cost estimates, and late payments to subcontractors.

“The bad name of this project is on the street. No one wants to bid on this project,” a VA resident engineer wrote.

In January 2013, the VA asked Kiewit-Turner and its contracted architecture firms -- Skidmore Owings & Merrill, S.A. Miro, Cator Ruma, and H + L Architects -- to brainstorm ways the project might be redesigned to fit within its budget. More than $400 million in cuts were discussed, but the VA accepted only about $10 million of them.

Word of the cost overruns spread to VA headquarters in April 2013. One executive wrote an email to another referencing a letter the VA sent to the architecture firms about the budget situation. “Can we get a copy of that letter so we can see the context before we all to to the roof and jump[?]” it read.

Court smacks down VA

The federal board of appeals blamed much of the project’s issues squarely on the VA.

“... by failing to control the [design firms], 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 [additional instructions] in a timely fashion, and failing to make timely payment to [Kiewit-Turner], the agency drove up the costs of construction.”

Rep. Coffman said the VA is negotiating a short-term contract with Kiewit-Turner to get construction started again until the Army Corps can step in and work out a long-term solution.

The ultimate costs of the project are still unclear. Estimates from the contractor, the VA’s construction manager, and the design groups all vary from $630 million to $1.085 billion. The VA has not yet sought more funding from Congress to make up the difference. Coffman said the VA could reallocate some of its own funding to the project, raid a contingency fund, or, in a “worst-case scenario,” ask Congress for more money.

“It may be a combination of the three,” Coffman said. “That has yet to be seen.”

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