GAO Blames VA For Hospital Construction Delays And Overruns

GAO testimony to a House subcommittee last week demonstrated that Veterans Administration supervision of its own major construction projects is dysfunctional and fails to meet construction industry standards for construction management. As a result, according to the GAO  auditors who appeared at the hearing, VA medical center construction projects average three years behind schedule and $366 million over budget. Projects in Las Vegas, Denver, New Orleans and Orlando were the subject of the GAO review.

According to the Congressional testimony, the primary cause of the problem is VA's inability to deal with design changes in a timely manner, resulting in multiple demobilizations and remobilizations on each project, while contractors await, often for many months, VA decisions on proposed expansions or revisions of the projects. In some instances, significant mid-stream changes in dimensions of the latest imaging and other high tech medical equipment have meant on the fly revisions to room dimensions and floor load specifications. Many of the problems resulted from VA's determination to begin construction before finalizing the decisions about facility size and purpose.

During the hearing, several Congressmen questioned the award of significant compensation bonuses to VA administrators charged by GAO with responsibility for the delays and cost overruns. Kansas Congressman Tim Huelskamp said in questioning VA Acquisition, Logistics and Construction head Glenn Haggstrom that Haggstrom's pay should have been docked instead of augmented because of all the decision making delays.

Stalled VA Hospitals And Clinics Dot The Landscape

The Veterans Administration currently has four hospitals and 55 medical clinics under construction around the country since 1998. According to House Veterans Affairs Committee Chairman Jeff Miller, all four hospital projects and 38 of the clinic projects are behind schedule, with a dozen of the clinic projects delayed more than three years. Total construction costs for the 59 buildings: $442 million.

“I am not assured the VA has the right team in place to oversee and manage these projects,” Miller says. “We have seen across VA contracting that there are deep rooted problems, and leadership allows these problems to persist. We hear over and over in testimony that no one is to blame, or held to account. Someone must be accountable for these problems. It appears we have a leadership vacuum which is an even larger problem.”

The delayed VA hospital projects are in Denver, Las Vegas, New Orleans and Orlando. Denver’s hospital construction was delayed over a year when VA changed the concept from a hospital to a clinic, then later back to a hospital. Typical construction delays set the Las Vegas hospital project back four months. In New Orleans, the hospital project was delayed two years because  the City of New Orleans failed to deliver “construction ready” land from  November 2009 until April 2011. In Orlando, the hospital project was set back and pushed over budget by medical equipment purchase decisions that required repeated changes in the designed sizes of rooms to house the equipment.

Chairman Miller says the agency needs to develop an improved construction procurement process. “Until VA applies private sector principles to mitigate cost increases and schedule delays, we’ll have these problems,” he concludes.

Congressional Hearing Details Orlando VA Hospital Construction Delays

Witnesses from the Veterans’ Administration and its contractor Brasfield & Gorrie sparred at a House Committee on Veterans’ Affiars hearing April 10 over the delays of up to a year and cost increases of up to $120 million for construction of a new VA hospital in Orlando, Florida. The contractor for the 314 bed facility, which now could cost as much as $2.5 million per bed, blamed VA designers for the delays and ballooning construction costs, citing an increase from 4,532 design drawings to more than 10,000, and the need for more than 3,200 requests for information from Brasfield & Gorrie to the federal government designers.

“As a result of the lack of completed design for the hospital, it was impossible to construct the hospital efficiently,” said Brasfield & Gorrie Chairman Miller Gorrie at the hearing. Gorrie pointed out that, though the project was supposed to be finished this coming October, the last drawings from the designers were only delivered last week. The poor planning meant Brasfield & Gorrie had to cut its workforce on site from 1,000 to 500 while it waited for finished designs.

Glenn Haggstrom, executive director of VA’s office of acquisitions, accepted some of the blame for the delays and cost increases, confessing that the agency took too long selecting medical equipment for the facility, forcing delays in determining room sizes needed to house it. VA official Robert Petzel echoed Haggstrom’s testimony: “Errors in the initial design along with procuring and integrating specialized medical equipment into the existing design, both VA responsibilities, affected the contractor’s schedule,” he admitted.

House members’ responses were predictably agitated. Representative Corrine Brown (D-Fla) summed up the committee’s sentiments: “I am not a happy camper” she said. “That is unacceptable.”

Federal Construction Budget Tradeoffs

No matter where you may believe the federal Highway Trust Fund spending level will ultimately rest on the spectrum between the House measure’s $34.6 billion annually and the Obama administration’s $79.2 billion annually, the sad fact is that these appropriations are offset by dramatic cuts to other federal construction spending programs, to the ultimate long term continuing injury to this important sector of the American economy. Obama’s own budget proposal cuts $450 million a year from transit construction funding in Illinois alone.

HR 7 takes us “back to the dark ages,” according to Transportation Secretary Ray LaHood, eliminating all funding for building bike paths, bike lanes and pedestrian safety projects. With the current Highway appropriations expiring March 31, 2012, the industry is undoubtedly looking at another series of short term extensions, making government and industry planning impossible until a long term funding measure is ultimately passed through both houses.

Meanwhile, even the comparatively generous Obama budget slashes Defense Department construction spending by 20%, Corps of Engineers civil construction projects by 13%, clean water state revolving funds by 20%, drinking water state revolving funds by 8%, Veterans Administration construction by 10%, and airport improvement grants by 28%. While the heavy civil sector of the US construction economy will feel these cuts most severely, resultant price increases in construction materials and equipment, due to the loss in sales volume, will impact all construction businesses across the country. Our national elected leadership continues to fail our industry.

Full Committee Approves $133.9 Billion Military And VA Appropriation

The Senate Appropriations Committee has voted 21-0 to approve and send to the Senate floor a $133.9 billion spending measure, including $23.6 billion for military and veterans' administration construction. The Senate version of the bill is slightly bigger than the parallel House appropriation, and includes $5.7 billion for construction at military hospitals and dispensaries, $1.9 billion for construction at VA hospitals and clinics, $12.6 billion for construction at active military bases and reserve centers, $2 billion for construction of military family housing, and $1.4 billion for military construction in Afghanistan. The bill was approved by a subcommittee just yesterday.