[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
DENVER VA MEDICAL CENTER: CONSTRUCTING A WAY FORWARD
=======================================================================
HEARING
before the
COMMITTEE ON VETERANS' AFFAIRS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
WEDNESDAY, APRIL 15, 2015
__________
Serial No. 114-15
__________
Printed for the use of the Committee on Veterans' Affairs
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Available via the World Wide Web: http://www.fdsys.gov
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COMMITTEE ON VETERANS' AFFAIRS
JEFF MILLER, Florida, Chairman
DOUG LAMBORN, Colorado CORRINE BROWN, Florida, Ranking
GUS M. BILIRAKIS, Florida, Vice- Minority Member
Chairman MARK TAKANO, California
DAVID P. ROE, Tennessee JULIA BROWNLEY, California
DAN BENISHEK, Michigan DINA TITUS, Nevada
TIM HUELSKAMP, Kansas RAUL RUIZ, California
MIKE COFFMAN, Colorado ANN M. KUSTER, New Hampshire
BRAD R. WENSTRUP, Ohio BETO O'ROURKE, Texas
JACKIE WALORSKI, Indiana KATHLEEN RICE, New York
RALPH ABRAHAM, Louisiana TIMOTHY J. WALZ, Minnesota
LEE ZELDIN, New York JERRY McNERNEY, California
RYAN COSTELLO, Pennsylvania
AMATA COLEMAN RADEWAGEN, American
Samoa
MIKE BOST, Illinois
Jon Towers, Staff Director
Don Phillips, Democratic Staff Director
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C O N T E N T S
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Wednesday, April 15, 2015
Page
Denver VA Medical Center: Constructing a Way Forward............. 1
OPENING STATEMENTS
Jeff Miller, Chairman............................................ 1
Prepared Statement........................................... 51
Corrine Brown, Ranking Member.................................... 3
Prepared Statement........................................... 53
WITNESSES
Lloyd C. Caldwell P.E., Director of Military Programs, U.S. Army
Corps of Engineers, U.S. Department of the Army................ 4
Prepared Statement........................................... 54
Hon. Sloan D. Gibson, Deputy Secretary, U.S. Department of
Veterans Affairs............................................... 6
Prepared Statement........................................... 56
Accompanied by:
Stella Fiotes, the Executive Director of the Office of
Construction and Facilities Management
Dennis Milsten, the Director of Operations for the
Office of Construction and Facilities Management
DENVER VA MEDICAL CENTER: CONSTRUCTING A WAY FORWARD
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Wednesday, April 15, 2015
House of Representatives,
Committee on Veterans' Affairs,
Washington, D.C.
The committee met, pursuant to notice, at 10:30 a.m., in
Room 334, Cannon House Office Building, Hon. Jeff Miller
[chairman of the committee] presiding.
Present: Representatives Miller, Lamborn, Roe, Huelskamp,
Coffman, Wenstrup, Abraham, Costello, Brown, Takano, Brownley,
Titus, Kuster, O'Rourke, Rice, and Walz.
OPENING STATEMENT OF CHAIRMAN JEFF MILLER
The Chairman. The committee will come to order. Welcome to
today's full committee hearing entitled Denver VA Medical
Center: Constructing a Way Forward.
I cannot imagine a better day to hold this hearing than
today, tax day. As millions of Americans prepare to send their
hard-earned taxpayer dollars to Washington by midnight tonight,
we gather here to discuss the myriad of ways those dollars have
been squandered by the Department of Veterans' Affairs in the
last several years in Aurora, Colorado.
Discussions surrounding the construction of a replacement
Denver VA Medical Center date back to 1999. In the ensuing 15
years, the project has been marked by failures, delays, and
mismanagement that has culminated in VA's recent announcement
that an additional $830 million in funding and a total
authorization of $1.73 billion triple the original
authorization as needed by mid May in order to continue
progress on the project.
And if that wasn't enough, VA informed the committee that
Denver has a significant space need now of more than 550,000
gross square feet that is above the space that will be provided
in the new medical center.
To simplify all of that for us, the Denver project that has
been discussed for 15 years is a billion dollars over budget,
several years behind schedule, and on the day it opens, it will
apparently be too small.
At a full committee hearing on Denver in January of this
year, Congressman Roe stated that this project is a FUBAR on
steroids. I could not have said it better myself. While Denver
represents a historic construction catastrophe for the
department, it did not come without warning.
Three years ago, this committee held a series of hearings
about the replacement medical center project in Orlando,
Florida that uncovered serious deficiencies with VA's major
medical facility construction management and its oversight.
Admittedly the problems in Orlando yesterday are different from
the problems in Denver today.
But they should have signaled a lightbulb moment for the
department and served to usher in an era of improved VA
leadership surrounding construction projects. Instead, VA
failed to heed the committee's calls for action then which
allowed Denver to balloon into the billion-dollar budget
debacle that it is now.
Deputy Secretary Gibson agrees noting in his prepared
testimony that, quote, ``Course correction opportunities were
missed.'' Yet, to add insult to injury, none of the VA
executives involved have been held accountable, none. This is
not acceptable.
Glenn Haggstrom, a former VA construction executive who
played a key leadership role in the Denver project, was
recently allowed to retire. But make no mistake, failures of
this magnitude represent systemic problems above and beyond the
work of a single person and much more house cleaning and a top-
to-bottom reform is needed before we can even consider whether
VA is competent to manage a construction program.
However, the question at hand remains. What do we do about
Denver? Well, depending on who you ask, the project is either
62 percent complete, 50 percent complete, or 40 percent
complete.
I have heard press reports over the last two days that
indicate that VA is considering allocating a portion of the $5
billion provided for staffing and space in the Choice Act to
the Denver project.
Then with no forewarning or comment, VA emailed the
committee at about 6:45 last night draft construction
authorization language that would increase the authorization
for the Denver project to $1.73 billion, amend the
authorization to include a psychiatric residential
rehabilitation treatment program, and allow unobligated Choice
funds to be used to fund the completion of the Denver project.
Last year, VA indicated that there were critical staffing
and space shortages throughout the VA healthcare system that
limited veteran access and required emergency funding. I had
then and still have now serious doubts about the need and the
justification for those dollars. Nevertheless, Congress
provided emergency funding per VA's request.
With the language sent late yesterday evening, VA officials
are communicating that they would rather avoid identifying
savings that undoubtedly exist in the department's $163 billion
budget, the second largest in the Federal Government, by
instead utilizing money that they claimed just eight months ago
was needed to increase access across the country and all to
complete a bloated construction project that includes a glass
concourse that covers three and a half football fields and now
apparently includes a secret psychiatric residential
rehabilitation treatment program that has never been discussed
previously and is not listed on the reprogramming worksheet VA
provided three weeks ago in support of the needed additional
funding.
Over the last several weeks, I have asked VA via letters to
the secretary and pre-hearing questions for the record to
provide us key demographic workload and cost-benefit data to
identify potential alternatives and to locate possible funding
sources within the department's vast budget.
I have also asked for meeting minutes from VA's
Construction Review Council in order to learn who among VA
senior leadership was aware of the problems in Denver yet
failed to take advantage of the course correction. The
responses I received have either been nonexistent or inept for
a project with a cost overrun exceeding a billion dollars.
Veterans across the country should be appalled that VA
allowed this project to get so out of hand. Forwarding a last-
minute proposal absent supporting detail or justification and
simply stating like the department does in their prepared
testimony that VA takes full responsibility for the situation
in Denver is not enough to convince me that VA leaders have
done the necessary work to identify what went wrong and how to
fix it.
It may be that allocating a portion of Choice Act funding
to complete the Denver project is the best option to move
forward. I am not closing the door on the possibility of that
proposal, but I cannot in good conscience advocate spending
hard-earned taxpayer dollars by throwing good money after bad
without receiving much more information from VA.
[The prepared statement of Chairman Jeff Miller appears in
the Appendix]
And with that, I yield to the Ranking Member, Ms. Brown,
for her opening statement.
OPENING STATEMENT OF RANKING MEMBER CORRINE BROWN
Ms. Brown. Thank you, Mr. Chairman.
Today, we start the process of figuring out how to fix the
mess in Denver. I know from painful experiences with my Orlando
facility what it means to wait years for a facility to be
completed and to open. I know what the veterans in Colorado are
feeling waiting for their facility to open. There will be time
another day to figure out who should be blamed. Today, we must
focus on how to fix the mess we have.
We have been told that VA will reach its authorizing level
next month. We have been told by VA that the only good option
is to more than double this authorization level and come up
with an additional $900 million in order to complete this
project.
Let me clear. This committee, at the end of the day will
take care of our veterans in Colorado like we have take care of
all our veterans across the country. But in order to do this,
and to make sure that actions we take in regards to Denver do
not unduly harm veterans in other areas of the country, we must
have an honest discussion as to what our options are, and a
time line of what we must do, as a Committee and as a Congress.
I look forward to having this frank discussion today, and
working with the VA and our veterans to fix this mess. What are
all of our options?
I also look forward to beginning to figure out how we make
sure that this does not happen again, where veterans have to
wait years and years for a promised facility and taxpayers are
on the hook for hundreds of millions more than planned.
Thank you, Mr. Chairman, and I yield back the balance of my
time.
[The prepared statement of Ranking Member Corrine Brown
appears in the Appendix]
The Chairman. Thanks very much, Ms. Brown.
Joining us on our first and only panel today is Lloyd
Caldwell, the director of Military Programs for the U.S. Army
Corps of Engineers. Mr. Caldwell is joined in the panel by the
Honorable Sloan Gibson, deputy secretary for the Department of
Veterans Affairs, and he is accompanied by Stella Fiotes, the
executive director of the Office of Construction and Facilities
Management, along with Dennis Milsten, the director of
Operations for the Office of Construction and Facilities
Management.
Thank you all for being with us today. Mr. Caldwell, you
are recognized for your opening testimony.
STATEMENTS OF LLOYD C. CALDWELL, DIRECTOR OF MILITARY PROGRAMS,
U.S. ARMY CORPS OF ENGINEERS, U.S. DEPARTMENT OF THE ARMY;
SLOAN D. GIBSON, DEPUTY SECRETARY, U.S. DEPARTMENT OF VETERANS
AFFAIRS, ACCOMPANIED BY STELLA FIOTES, EXECUTIVE DIRECTOR,
OFFICE OF CONSTRUCTION AND FACILITIES MANAGEMENT, U.S.
DEPARTMENT OF VETERANS AFFAIRS, DENNIS MILSTEN, DIRECTOR OF
OPERATIONS, OFFICE OF CONSTRUCTION AND FACILITIES MANAGEMENT,
U.S. DEPARTMENT OF VETERANS AFFAIRS
STATEMENT OF LLOYD C. CALDWELL
Mr. Caldwell. Thank you, Mr. Chairman and members of the
committee. It is good to have the opportunity to appear before
you again on behalf of Lieutenant General Thomas Bostick, the
Chief of Engineers.
The Corps recognizes the importance of the service of
members of the Armed Forces and the service of our veterans in
sustaining the strength of our Nation. As I have previously
testified, the Corps has significant construction management
capabilities and experience in delivering medical facilities.
Today I will address the actions we are taking in
partnership with the Department of Veterans Affairs to complete
the construction of the Denver hospital.
The Department of Defense Construction Program utilizes
designated construction agents of which the Corps of Engineers
is one who procure and execute the design and construction of
projects to deliver the department's infrastructure
requirements as authorized by law.
Interagency collaboration is an important element of the
Corps' work and the Corps provides interagency support to non-
defense agencies as part of our service to the Nation.
The Economy Act provides the necessary authorities for the
Corps to assist the Veterans Administration with construction
requirements whether it be minor or major construction to
include the completion of the Denver hospital.
There are currently three lines of effort associated with
the Corps' support to the VA in its major medical program. That
includes the completion of the Denver hospital as serving as
the construction agent.
We are also undertaking a review to identify lessons
learned from the Denver hospital and three other major
projects, the Las Vegas, Orlando, and New Orleans projects
which may be used by the Veterans Administration to assess
their organizational structure, processes and controls for
executing major projects.
In addition to that, we are engaging with VA leadership in
discussion regarding the application of best practices and
execution of their program as appropriate.
In December of 2014, the Veterans Administration and the
Corps entered into an Economy Act agreement to allow the Corps
to assess the Denver hospital project. Subsequent modifications
to this agreement have provided funding and the authority which
will permit the Corps to develop a contract to complete the
construction.
We are working now with the VA on a new agreement that
would allow the Corps to award the contract at the appropriate
time and to manage that contract as the construction agent when
authorized.
Beginning in January, we had a number of technical experts
that visited the site and assessed the completed work and the
contracting documents. Subsequently we are using those experts
as well as other teams of professionals to undertake the steps
that will lead to award of a new construction contract as well
as to manage that contract through completion.
We have identified a preferred course of acquisition and in
February, we issued a public notice of intent to negotiate and
award a sole-source contract to the current joint venture
Kiewit-Turner.
We have prepared and submitted the appropriate
justification and approval documentation per the federal
acquisition authority to the approval authority within the
Department of the Army.
As we work toward a new contract award, we continue to
assess the detailed requirements of this project and the plans
for completion with the Veterans Administration taking into
account that the construction is continuing under a separate VA
contract currently with Kiewit-Turner.
The Corps of Engineers provided a preliminary estimate for
completing construction at Denver and that preliminary estimate
was one component of the increased authorization requirement
reported to Congress by the VA. The VA included the Corps'
estimate along with other VA costs for the project.
Meanwhile, we are developing an independent estimate which
will be suitable for negotiation of the new contract and next
week, we will have our first meeting with Kiewit-Turner to
begin discussions about the way forward on the next contract.
As the actions for a new contract are proceeding, the Corps
is also advising the VA on the management of the interim
construction contract which the VA has with Kiewit-Turner. The
interim contract permits continued progress on the project
while the Corps prepares to assume construction agent
responsibility.
Although the Corps will assume a lead role in the
construction of the Denver hospital, the Veterans
Administration as the project's proponent is still responsible
for project requirements, resourcing, and facility transition
to full operations. We believe by using our project delivery
process, we have confidence that the Corps can complete
construction of the Denver hospital in the most effective way.
We have other projects not related to the Denver hospital
that we continue to execute for the Veterans Administration and
that association predates the current requirement for the
Denver hospital.
We are committed to working with the VA as the construction
agent as well as to assist them with future major medical
projects as required.
Mr. Chairman, that concludes my statement and I will be
glad to answer questions from you or other members of the
committee.
[The prepared statement of Lloyd C. Caldwell appears in the
Appendix]
The Chairman. Thank you very much, Mr. Caldwell.
Mr. Gibson, you are recognized.
STATEMENT OF SLOAN D. GIBSON
Mr. Gibson. Thank you, Mr. Chairman.
Our priorities are to get this medical center complex
finished and make the best use of resources needed to get the
job done. We are grateful for the help of the members of this
committee and other Members of Congress, the Corps of
Engineers, Kiewit-Turner (KT), and the leaders of many Veteran
Service Organizations (VSO).
VA made mistakes on this project going back years producing
an unacceptable result for veterans and taxpayers who deserve
better from their VA. I apologize again.
This project has a long history going back to the mid
1990s. My record testimony provides a detailed account, but let
me briefly cover some of the major decision points.
In 2006, VA developed a plan for 1.4 million square feet of
facility in Denver. That plan was subsequently revised to
945,000 square feet. And in 2010, VA requested $800 million for
the project.
We hired an architect engineer joint venture to complete
design with an estimated construction cost at award of $583
million. The original acquisition strategy for the project was
to complete 100 percent design and then solicit construction
proposals to build the project, but VA in a misguided effort to
get work underway changed strategies to a contract mechanism
known as early contractor involvement also referred to as
Integrated Design and Construct (IDC).
The idea behind this contract structure is to bring the
contractor onboard early to participate in the design. In
August of 2010, VA entered into a contract with Kiewit-Turner
to perform design, constructability, and cost reviews with an
option to award facility construction to the contractor. But at
the time of this contract award, the design work had already
been underway for 15 months, limiting the ability of KT to
influence design and cost.
KT maintained that the project could not be built for the
established cost. Months of negotiations ensued, but
significant differences remained.
Under pressure to move the project forward, VA and the
contractor executed an option in November of 2011 to construct
the project. That option was known as supplemental agreement 07
or SA07 for short. The design at that time was roughly 65
percent complete.
Under SA07, VA committed to deliver a design that could be
built for $583 million and KT committed to build the project at
the firm target price of $604 million. VA's promise to ensure
that the design would meet the contract cost and KT's
commitment to a firm target price became the centerpiece of
diverging interpretations and conflicts between VA and the
contractor.
While poor project and contract management and increasingly
strained relationships contributed, these two watershed events,
the selection of the IDC contract form and VA's commitment to
deliver a design that could be built for less than $600 million
were critical.
KT filed a complaint with the Civilian Board of Contract
Appeals in July of 2013. In December of 2014, VA was found in
breach of contract for failure to provide a design that met the
contract price.
That brings us to where we are today. After analysis by the
Corps of Engineers, we informed the committee that the total
estimated cost of the facility will be $1.73 billion. That
includes $899 million already spent or available to be
obligated to get the project to the stage it is now, a little
over 50 percent complete.
The Corps estimates an additional $700 million to complete
construction and we estimate $130 million is required to close
out the original contract and complete the PTSD residential
treatment facility.
The $1.73 billion total would require an authorization
increase of $930 million and additional funding of $830
million. This significant increase in cost in my opinion
results from several factors.
First, VA not locking down design early in the process,
some design aspects that clearly added to cost, and increases
to construction costs in the Denver market. At the same time,
we had not effectively negotiated a firm target price, and
premiums paid to contractors for their perceived risk due to a
history of problems on the project.
That is an explanation, not an excuse. It is where we are.
But I want to be absolutely clear this is totally unacceptable
and will not happen again, at least not on my watch.
After consulting with our partners in reviewing the status
of the project, we believe the best option for veterans and for
taxpayers is to contract with KT to complete the project. This
option leverages the 100 percent design, KT's knowledge of the
project, their presence on the site, and existing subcontractor
relationships.
In considering options to move forward, we have considered
cost, risk, time to complete, the scope and scale of the
project, and the fact that it is halfway complete. Now we must
work with this committee and with others to secure funding.
We have proposed funding the increased cost by requesting
authority to use funds provided to VA in the Veterans Access
Choice and Accountability Act. The act provided $5 billion in
mandatory funding to increase healthcare staffing and improve
physical infrastructure.
We propose adjusting that language to fund completion of
the project. We believe this is the best approach among the
difficult choices before us. This hospital complex is an
important part of VA infrastructure and completing it will
improve access to care.
We understand that accountability is central to ensuring
that the department never repeats the mistakes that led to
delays and cost overruns. We owe it to veterans, taxpayers, and
the huge majority of VA employees who do the right thing every
single day.
As stated earlier, I believe the two most critical
decisions leading to the current situation were made in 2010
and 2011. None of the people who were in positions of
responsibility at that time are still in those positions from
the secretary, the deputy secretary, the head of acquisition,
logistics, and construction, the director of CFM, the CFM
director of operations, all the way down to the project
executive and the CFM contracting officer. In fact, of all of
those, only the former project executive is still with VA and
that is after being moved from the project and reassigned to
non-supervisory duties at a lower grade.
Additionally, our ongoing Administrative Investigation
Board deposed Mr. Glenn Haggstrom under oath on March 23rd. On
the morning of March 24th, he came to work with the required
paperwork to retire from federal service effective immediately.
I recognize that his retirement has been criticized and is
frustrating to many. The law allows federal employees to retire
if they are eligible and decide to do so. And, frankly, as I
reflect on 30 years of experience in the private sector, that
is pretty much the way it works there too.
So while I understand and share in the frustration, I will
continue to pursue accountability actions wherever the evidence
from our ongoing Administrative Investigation Board supports
it.
As previously discussed during the hearing in January, the
Corps of Engineers is also conducting a broader detailed
examination of VA's largest construction projects. We expect
them to complete their review and report their findings next
month.
In addition to the Corps' review of our large hospital
projects, an independent third-party organization is conducting
a comprehensive assessment of VA's entire construction program
as part of the Choice Act legislation and will report their
findings to Congress by September of 2015.
Last week, we named Mr. Greg Giddens as the new executive
director of the Office of Acquisition, Logistics, and
Construction. Greg has broad experience in both acquisition and
construction at VA, the Department of Defense, the U.S. Coast
Guard, the Department of Homeland Security, and with Customs
and Border Protection where he managed a multibillion dollar
portfolio with over a thousand facilities. OALC under Greg's
leadership will report directly to me.
We are now in the process of transitioning responsibility
of the project to the Corps of Engineers. Once that transition
is complete, we will still be the customer, but the Corps will
be in charge in Denver on a day-to-day basis to make sure the
project is completed.
We have a long history of working with the Corps. We have
got a fully designed facility and the Corps' acquisition
strategy is to stay with the general contractor that knows the
project, all of which augurs well for reducing risk and
ensuring the completion of the project.
In the future, I would expect to see a very strong
collaboration and a major role for the Corps in any comparable
hospital projects of this scope and scale.
Mr. Chairman, like you and the members of this committee, I
remain committed to doing what is right for veterans and here I
believe that means getting the Denver medical facility
completed in the most effective and cost-efficient way from
where we are right now.
Thank you. We are ready to answer your questions.
[The prepared statement of Sloan D. Gibson appears in the
Appendix]
The Chairman. Thank you very much.
Mr. Caldwell, I will start with the first set of questions.
Do you think that your team has had access to all of the
information to make a fully informed determination as to the
progress in the future for the Denver project?
Mr. Caldwell. Yes, sir. So far as we are aware, we have had
full access to all of the records and information that are
available at the project site. And that has been the primary
source of the information working both with the VA staff on-
site as well as with the designer of record, the construction
contractor, and the firm that was the construction management
support contractor for the VA.
The Chairman. Do you concur with VA's estimated
authorization increase and request for additional funding?
Mr. Caldwell. Sir, I do. I cannot speak to the content of
the costs that have been incurred prior to the estimate that
the Corps provided. The Corps provided an estimate which was
based fundamentally on an estimate that was made by Jacobs
Engineering as the foundation.
We made adjustments to that estimate based on what we
thought would be escalation rates for the increased time of
construction and other overhead costs associated for the
contractors being on the site. So we have made adjustments to
that estimate and that was the basis that was used by the VA
for the reprogramming request.
Now, we are in the process of making a separate independent
estimate. That estimate is not going to be completed probably
for another couple of months. That estimate will be a more
refined estimate. It will be a later estimate and that will be
the estimate that we will use as the basis for entering into
the contract with Kiewit-Turner.
The Chairman. So could I assume that that estimate, refined
estimate could be higher than the estimate that the department
has put forth?
Mr. Caldwell. Sir, I do not expect it to be higher. Our
objective is to come lower than the numbers that you have seen
projected heretofore.
The Chairman. I know you would like to come in lower, but
could it come in higher?
Mr. Caldwell. Sir, I can't say that is not possible, but I
do not expect that to be the case. I expect the number to be
lower and that will be our objective and that is what we are
driving to.
The Chairman. Mr. Deputy Secretary, you know where we are
on accountability. We think that is the cornerstone in many of
the issues that have plagued VA over the years.
And I want to talk to you a little bit about an article
that was in the Denver Post yesterday about an individual, a
former VA individual, Adelino Gorospe, who asserts that he
emailed high-ranking VA officials to warn them that the Denver
project was running significantly over budget. And I think
today we are all aware that that, in fact, was true.
In return for the foresight and attempt to raise the red
flag, he was fired by Glenn Haggstrom. We also know today he
was at the root of many of the problems that exist within the
VA construction program.
Have you read the article?
Mr. Gibson. I have seen the article, yes, Mr. Chairman.
The Chairman. Have you directed VA's Office of
Accountability Review or any other office to review this
gentleman's case?
Mr. Gibson. I have not directed it yet, but I will tell you
my operating assumption and I will see that it is included.
There are thousands of pages of documentation that are being
reviewed as part of this case and particularly becoming aware
of this particular piece of evidence, I will ensure that that
is part of what is considered.
The Chairman. And what is confusing is that VA leaders and
individuals can make mistakes that cost billions and billions
of dollars to the department and they face no accountability,
yet you have a low-level employee who attempted to blow the
whistle and he could be fired and yet I keep being told you
can't fire people, yet the low-level guy got the ax.
So, you don't need to answer that question, but----
Mr. Gibson. It is no more acceptable to me than it is to
you, Mr. Chairman.
The Chairman. Is it fair to say that when Ms. Fiotes
testified before this committee in March in relation to the
project that, and I quote, ``We believe that the project
designs that we have delivered are, in fact, able to be
constructed within the appropriated amount for this project,''
close quote, that was a view that you and others shared at the
time?
Mr. Gibson. The view that was held by VA at the time was
based upon the interpretation of the contract terms and the
reliance on the firm target price that was clearly wrong.
The Chairman. And can you tell me, and my time is running
out, but the addition of the psychiatric residential
rehabilitation treatment program in the draft construction
authorization that we got last night to my knowledge has never
been acknowledged at any point, and so my question is, why was
the need for the program not communicated to the Congress in
any of the numerous conversations that we have had, that this
committee has asked over the last year, why is it not listed on
the reprogramming worksheet that VA provided three weeks ago
regarding changes that will need to be made in Denver and why
is it not listed apparently anywhere else?
Mr. Gibson. First of all, I apologize for the poor
communication. The intention had been for us to have some very
deliberate conversations once the White House had cleared the
formal request. Unfortunately, a lot of that leaked out and
then the White House cleared the communication late last night.
As it relates to the PTSD facility, that was actually part
of the original concept for the facility. It was taken out back
in 2010 as part of a cost-saving measure. As we looked at where
we were on the construction and had conversations with the
Corps, it sits right next door to the Community Living Center
(CLC), the nursing home, and the idea was construct those two
at the same time because you can do it more efficiently and
economically. That is the reason that it was added at this
point.
The Chairman. Mr. Takano.
Mr. Takano. Thank you, Mr. Chairman. I think we both know
what bipartisan heartburn means.
Mr. Gibson, I know that you are contrite. I know that this
project spans three administrations and I don't even know how
many secretaries it spans.
My question to you is, so talk about firing and who we fire
and we can't fire. I mean, that is of some interest to me, but
it seems to me that is kind of a look back. I am worried about
the structure of accountability going forward----
Mr. Gibson. Yes.
Mr. Takano [continuing]. And how we can get that
accountability right. I mean, do you believe it is the role of
a congressional committee oversight to get into the granular
area of looking at change orders?
I mean, I remember doing that as a board of trustees when
we suddenly got all this bonding authority and we had billion-
dollar construction projects to manage. We had a big learning
curve, but suddenly I had a bunch of change orders go across
the board of trustees.
But is that really the role of Congress and, if not, how
are we going to try to get a handle on all this?
Mr. Gibson. Sir, it is not the role of Congress. It is only
because of our failure that you even find yourself having to
ask the question. I think your comment is precisely spot on.
Part of the accountability here is ensuring that we put in
place the construction management practices and that includes
early risk identification on a major project basis that will
allow us to know very early on where we may be getting off
track.
I would tell you as I came into the Department after
reading countless articles and hearing testimony and (GAO)
studies and (IG) reports that I came in convinced that the
construction management function at VA was entirely broken.
What I found as I came in was that many of the practices
that are reflected in a project like Denver have been changed
over the past several years and that is not how we manage
projects prospectively.
Mr. Takano. Well, how do we----
Mr. Gibson. I think we have got to earn back that trust.
Mr. Takano. These projects seem to span a good deal of
time.
Mr. Gibson. Yes.
Mr. Takano. And some by necessity, but how do we try to
construct a structure of accountability that can span
administrations, span secretaries? Do we need to create
something like, you know, an inspector general for
construction? I mean, somebody that has one person who can't
diffuse accountability that Congress can go to and hold
accountable? What are your thoughts on that?
Mr. Gibson. Well, I would say at this point that one person
is me.
Mr. Takano. Okay.
Mr. Gibson. And I would tell you anticipating a question
later on, there has been a lot, you know, back and forth about
the Construction Review Committee. That committee hasn't met
since I was the acting secretary. I don't believe it is an
effective decision forum. I don't believe it is the right forum
for exchange of information. And I believe it does exactly what
you just described, that it diffuses responsibility.
So I wind up meeting directly with the head of Construction
and Facilities Management every single week. I am involved
directly with contractors. I specifically ask for feedback
directly from contractors so that I know what is going on on
our major projects.
Mr. Takano. My time is coming close to running out, but I
want to ask questions about other projects like that same
article in the Denver Post asserts that there is a possible
huge overrun, cost overrun in New Orleans. And I am concerned
about this reprogramming of money from the $5 billion in the
Choice Act.
What projects stand to not be funded that are in the queue
because of not only this project but other projects down the
road? It is better for us to all have the bad news up front.
Mr. Gibson. Sure. I understand. The New Orleans project is
now over 70 percent complete. Stella and I were both on the
ground there about 40 days ago meeting directly with the senior
leadership of Clark/McCarthy Construction, the joint venture
team there.
Clearly the project in its very earliest days ran into a
number of challenges and problems associated with site
acquisition and site contamination. But since the dollars were
appropriated by Congress for the construction of that contract,
we have remained on time and on budget, over 70 percent
complete with an expected completion date of next year.
Mr. Takano. Well, I am interested in knowing going forward
just how we propose to put forward a new structure of
accountability that this committee can have confidence in, that
the Congress can have confidence in. I want my colleague from
Colorado to know that I am committed as I think most members of
the Committee to do right by all our veterans including those
in Denver and across the country.
But we must start getting this accountability right and an
effective accountability so that I don't have to worry about do
I need to get into the granular level of asking the VA for
these change orders.
Mr. Gibson. I agree. We owe that to this committee. We owe
it to the American taxpayer and to veterans. And I am hoping
that the future state that you are describing is informed by
the work that the Corps is doing right now as well as the work
being undertaken by the independent third party under the
Choice Act.
Mr. Takano. Thank you, Mr. Chairman. My time is up.
The Chairman. Thank you.
Mr. Lamborn, you are recognized.
Mr. Lamborn. Thank you, Mr. Chairman. Thank you for having
this important hearing.
Mr. Gibson, do you agree with Representative Coffman's
legislation to turn over all future major construction projects
away from the VA to the Army Corps of Engineers?
Mr. Gibson. Currently we have got more than 50, quote,
``major construction projects.'' Major construction goes all
the way down to $10 million. I don't think it makes sense to
pull the Corps in on every single project over $10 million.
I do think it makes sense for the Corps to be our
construction agent on construction of this kind of size and
complexity and, frankly, on a number of other larger projects
where between the Corps and VA we sit and look at the elements
of that particular project and conclude that their expertise is
best utilized there.
Mr. Lamborn. Well, I will just say that my colleague,
Representative Coffman, has been a leader on so much of this
and has other proposals----
Mr. Gibson. Yes, sir.
Mr. Lamborn [continuing]. Like how to pay for this that
we----
Mr. Gibson. Yes, sir.
Mr. Lamborn [continuing]. Need to seriously consider. And I
don't even know where to begin. This is just beyond my
comprehension how we got to this point. I am appalled and
angry. I think all of us here are.
How much have you considered and explored commonly-used
methods to keep costs down like value engineering or
constructability reviews or something I am familiar with as a
layman on small residential projects that I have run
downgrading plans midstream to less costly alternatives or
deferring some of the construction until you have got the money
later?
You know, when I built a house, we said, oh, we will just
finish the basement in the future and just left that out.
Mr. Gibson. Many of the items you have discussed, in fact,
are practices that we have adopted including constructability
reviews that are undertaken at every single design stage for
all major construction.
We did look at value engineering, or I shouldn't say we,
the Department looked at value engineering opportunities back
in 2012, is that correct, 2013, value engineering opportunities
back in 2013, many of which did involve material changes to
scope on the project. And for that reason, they were not
accepted.
Mr. Lamborn. So the problem would have been worse, but I am
just still amazed that we are at this point.
What about the specific plan or possibility of the plan to
have the parking on-site as opposed to keeping the shuttle
going, which is currently the case, which is less costly?
Mr. Gibson. Well, the two parking decks are the two
structures that are virtually complete. They are the farthest
along. And so, you know, as you look at this particular
project, it is ultimately, assuming we build the CLC and the
posttraumatic stress rehab facility, a 14-building complex and
work is very substantially underway on 12 of those 14
structures.
So the ability even at a relatively early stage to go in
and make major changes to design were fairly limited. That was
the point I made in my opening remarks that we selected an IDC
form of contract and then waited 15 months before we hired the
contractor to come in and be involved in the process. And at
that point, it was very difficult to make the kind of major
changes that you are referring to.
Mr. Lamborn. Thank you.
Lastly, Mr. Caldwell, did I hear you correctly when you
said it will still be several more months before you have the
final cost analysis and timing analysis?
Mr. Caldwell. Sir, the schedule for completion is
associated with the cost for completion. In other words, those
are related, so that assessment is ongoing. We expect that
estimate to be completed in June to the point that we can have
discussions with the contractor. We think that will give us a
fairly tight estimate of what the cost to complete is at that
point in time, so June.
Mr. Lamborn. Okay. June. Okay.
Thank you, Mr. Chairman. I yield back.
The Chairman. Ms. Brown.
Ms. Brown. Thank you. I am going to start with Mr.
Caldwell.
Next month, the VA will run out the authority to go forward
with any additional funding. How important do you think it is
for members of Congress to extend that authority and give them
the additional authority that the VA needs to move forward? Or
should we just stop this project and wait for the additional
information?
Mr. Caldwell. Ms. Brown, we know that if the project were
stopped there would be an increased cost associated with the
project, in addition to the potentially increased cost to
complete when it would be restarted at some point in the
future. It is not as simple for a project of this nature just
to say, let's stop everything.
There is a cost associated with the contractors picking up
their tools and so forth, and closing up what they are doing
and leaving the site. There is a public safety aspect of this
to ensure that we don't leave any hazards there. There is the
aspect of ensuring that the buildings are tight, so there is no
deterioration of facilities that are already constructed, due
to weather and so forth. So there is a lot of aspects of costs
that would be incurred if the project would be stopped.
And of course you know well that, unless the authorized
amount for the project is increased, there is not an ability to
spend additional funds on it in any case.
Ms. Brown. Yes, I think it is important that everybody
understand where we are with this project.
The current estimate is at $1.73 billion to complete the
project. Is that your estimation? Mr. Secretary I would like to
hear your comments as well.
Mr. Caldwell. Ma'am, let me clarify that the 1.73 appears
to be----
Ms. Brown. Is that the high side? That is what I want to
know.
Mr. Caldwell. That appears to be what the total costs of
the project would be at the point when it is completed. Our
estimated cost to complete the project is much less than that.
Ms. Brown. Okay.
Mr. Caldwell. This project, we have determined, has a
complete design. So we are confident that everyone, us and the
contractor, understand what the final objective is for
completion of the project. The challenge that we have, that is
the Corps of Engineers, in getting a final cost to complete is
we are getting on a moving train, if you will, is the term that
some have used. The construction is continuing as we talk. So
as we determine what our final cost to complete is, to a large
extent that will depend on how much work is being accomplished
by the time we get to that point as well.
Ms. Brown. All right. Secretary?
Mr. Gibson. Yes, ma'am.
Ms. Brown. Can you answer that question for me? What
happens--well, I don't want to talk about--you need the
additional authority to move forward; is that correct?
Mr. Gibson. Yes, ma'am, we do. We need the additional
authorization and we need additional funding in order to be
able to bridge--even just to be able to bridge the period of
time between now and when we would expect the Corps to have
completed negotiation of a contract to complete the facility.
Ms. Brown. What my colleagues have expressed to me is they
want to make sure that as we move forward that, depending on
where we take the funds from--not the authorization, the funds
from--it doesn't affect other projects throughout the country.
Mr. Gibson. Yes, ma'am.
Ms. Brown. What comfort level can you give us?
Mr. Gibson. Well, the plan--and we owe the committee a
revised spending plan on the $5 billion--the expectation is
that we would take all of the $830 million in funding from the
portion of the $5 billion devoted to non-recurring maintenance
and to minor construction, which would be scattered over many,
many, many projects, very small projects scattered all over the
country. That would leave about, round numbers, about a billion
dollars in non-recurring maintenance and minor construction
funding available still under the Choice Act funding.
Ms. Brown. I have some concerns about taking the money from
that particular pot. I know that is something we need to have
discussions on. The feedback I am getting from around the
country, is that VA has have many projects that they need
additional spaces, are VA needs to hire additional physicians.
I mean, Congress is doing what we need to do. I have a concern
that Congress would jeopardize the entire VA to deal with this
project, not that we don't need to deal with this project.
Mr. Gibson. Yes, ma'am. I wish there were an easier answer
and I am not aware of an easier answer for funding.
Ms. Brown. Well, perhaps I will get additional time in
another round.
I yield back.
The Chairman. Thank you very much.
Mr. Coffman, you are recognized.
Mr. Coffman. Thank you, Mr. Chairman, for holding this very
important hearing. It is essential that the VA is held
accountable and that this hospital gets built. Our veterans who
have bravely served our Nation have waited years for its
completion. It is essential that we come up with a deficit-
neutral solution that will not compromise veteran healthcare
and holds the VA accountable.
To do so, I have introduced a plan that uses VA bonuses to
pay for the cost overruns on the hospital in Aurora. Mr.
Gibson, you have called this plan, quote, ``a lousy idea,''
unquote, but the only lousy idea I have heard is allowing the
VA to continue paying bonuses to bureaucrats who have overseen
secret waiting lists, billions of dollars in construction cost
overruns, and other travesties that have seriously endangered
our Nation's veterans.
This replacement facility is supposed to directly serve
veterans across many states, including Montana, Wyoming, Utah,
Colorado, and parts of five other states. But this isn't just a
regional problem and, unfortunately, this is not the VA's only
construction failure. The VA has a systemic pattern of
failures.
The bill I introduced, the VA Construction Accountability
Reform Act, goes beyond the Rocky Mountain region and addresses
the broader problems VA has with its major construction
projects. The GAO recently found that the hospital construction
project in Las Vegas was $260 million over budget. The hospital
project in Orlando is $362 million over budget. A hospital
project in New Orleans is $370 million over budget. And of
course the Aurora, Colorado facility is more than $1 billion
over budget. In fact, for over 30 years numerous GAO reports
and Congressional hearings have detailed significant cost
overruns, project delays, and a general lack of accountability
in the VA construction program.
In 1981, the GAO concluded the cost of new hospitals built
during the 1970s averaged 58 percent more than their original
estimates. In 1993, the GAO found that 40 percent of VA
construction projects encountered cost overruns. In 2009, even
before VA broke ground on the Aurora hospital, the GAO found
that five projects had experienced a cost increase of over 100
percent.
Of each of these and many other occasions, just like today,
the VA proudly announces some reform or initiative that will
allegedly fix the problems. Unfortunately, it is clear that the
results of those reports, hearings and reorganizations have
consistently failed to improve VA's construction program. In
fact, the problems have only gotten worse. As the Associated
General Contractors of America has boldly stated, ``VA
construction should be out of the VA's hands.''
The bill I propose gets this hospital built for our
nation's veterans and gets VA out of the construction business
once and for all.
The GAO has spoken highly of the Army Corps of Engineers
and I believe it is the most qualified Federal agency to build
VA's hospitals on behalf of American veterans and taxpayers.
The Corps has successfully built a $648 million hospital at
Fort Bliss, an $870 million hospital at Fort Belvoir, and it is
my understanding that the Corps is planning to build a hospital
for the government of Kuwait. Although I understand that the
Corps may have some reservations about taking on a new
responsibility, I believe that it is absolutely necessary and
in the best interest of our taxpayers and veterans.
I look forward to working with the Corps and the
construction trade associations who support this legislation to
ensure a responsible and effective transition of VA's
construction authority.
Mr. Gibson, given VA's well-documented failures in
construction management that spans decades, why is VA qualified
to build a lemonade stand, let alone a multi-million dollar
facility? Mr. Gibson.
Mr. Gibson. I see I have two seconds left for a response
here, sir.
As I have said before, my expectation is that we would ask
the Corps to serve as our construction agent on our largest
hospital construction projects. They have a great track record,
as you point out, they have deep experience. They have gotten a
lot of the experience over the last 10 or 15 years in that
particular area. I don't believe it is the optimal solution for
them to come in and work on all construction activity at VA, in
part because of the large number of projects that are
undertaken, many at a much smaller level.
The Chairman. Thank you very much, Mr. Coffman. We will
have a second round.
Mr. Walz, you are next. Five minutes.
Mr. Walz. Thank you, Mr. Chairman and Ranking Member for
holding this, and thank you all for being here.
My only glimmer of optimism, Mr. Gibson, is my personal
faith in you. It is not very widespread right now and I am
incredibly skeptical. I think Mr. Coffman showed great
restraint in his angst and anger, and I think there is an
appropriate place for this, because this is nothing new. The
gentleman from Colorado has been speaking about this for years.
There are many of you in this room heard us three years ago
over with the Senate Joint Committee saying that the Corps
needs to be involved or someone else. So I think it is
appropriate.
I can't help but thinking that someone should probably dust
off Senator Proxmire's golden fleece, because it is one for the
next decade on this thing, that is pretty clear.
But those of us who care deeply for veterans know we need
to get answers and we need to get this thing done. And the
thing that is most frustrating to me, I have had the privilege
and the honor of being here since 2006, and I went back to look
at one of the first hearings that we had on this as it was in
process.
This is November of 2007 and here is the question that was
asked. ``In recent years, the VA has experienced significant
cost escalation in construction of medical facilities. For
example, the estimated construction of the new facility in
Denver is almost doubled to $646 million. What are the causes
of this increase and what steps have the VA taken to prevent
such escalation in the future?''
We were asking, we did it here over eight years, if I am
the taxpayer, I think--again, my faith in you is strong, I know
you are there, but I think we would be remiss in our job here
if we believed in any way this isn't going to go further, it is
not going to get fixed and it is going to happen again.
So I would suggest, and this is more for my colleagues, I
would suggest that--I agree with Mr. Gibson, I don't think the
role of Congress is to look at these change orders, but I think
it is our responsibility. And I think we should seriously
consider, week-by-week, before a check is written, come up
here, clean that table off and put the books out there, and get
into this thing at the granular level. Because I for one know
the situation we are in. Those veterans in Colorado need this
hospital. I feel terrible for them that--I see a gentleman in
the paper apologizing because he advocated for this hospital.
It wasn't his fault. He did it and the Legion backed him up.
So we are at this point now, we are not going to leave
half-empty buildings. And we all know, I feel like this is the
shakedown and you are going to get the money, but if I am going
to give it, I want to know damn well where every dollar is
going. So I don't know what the suggestion is, I don't know
what the procedure is. I certainly agree it is not our role,
but I am having great angst. And everything that has been said
here is correct. We need to figure out things going forward,
you need to do all that, but this is a big problem. And I
understand the tough job you are in, but I feel like now we
have got to do this.
What would you suggest we do, Mr. Gibson? Because I trust
your instinct on this, but my taxpayers are going to be asked
to come up with a billion dollars more and that is on us now.
Mr. Gibson. As I have said, it is unacceptable,
unacceptable to this Committee, to taxpayers and to veterans.
I think some of what we have seen historically in terms of,
what I will call it, creep in time line and in cost oftentimes
has to do with the fact that we in the past did not take the
step of going to a 35-percent design with an identified site in
place with costing and constructability reviews before we ever
even come to Congress to ask for funding.
You know, when you look at the history of Denver, I am
astounded that the project has had more incarnations than I can
count, going all the way back to the mid-1990s when we talked
about buying the old Fitzsimmons Army Hospital from them, and
each one of those had a cost associated with them that was
based on somebody's rough back-of-the-envelope estimate.
So even if we wind up working with the Corps in the future,
we have got to get to the point where we have locked down
requirements, we understand what it is in general terms that we
are going to build, before we even come to Congress and ask for
funding. And that has been part of our problem. It is not an
excuse, it is not an excuse.
Mr. Walz. We kept asking for collaboration with like
University of Colorado and things. And I agree and I think we
need to--but this is, I would suggest again, as I give my time,
this is a point of leverage for this Committee, the power of
the purse on this one. If you want things to be done
differently, this is the moment.
So I agree with what the undersecretary is saying, but I
think this is the time for us to step forward, because this is
on us now. Whether we are frustrated or not, we own this thing
and we've got to figure it out.
I yield back.
Mr. Gibson. I think that one other point for the
Committee's----
Mr. Walz. Yes, sir.
Mr. Gibson [continuing]. Consideration is that the Corps is
going to be managing this project, not VA. And so part of this
is a function of what the Committee's confidence is in the
Corps to effectively manage the project.
Mr. Walz. I agree and I would say this, which I do have
great confidence, but I would suggest this too, I have Corps
projects in my district that are having a little issue too. So
I am not certain that that is the out on this. Again, the trust
but verifying. We own this now and before we put our name on
800, I would ask to use our leverage.
I yield back.
The Chairman. Thank you, Mr. Walz.
Dr. Abraham, you are recognized.
Dr. Abraham. Thank you, Mr. Chairman.
Mr. Caldwell, I will ask you first. In the last few years
in the Denver area, St. Anthony's, St. Joseph's, the University
of Colorado, they have completed some private hospital projects
and they have come in at a cost of under $2 million per bed and
a cost of $350 to $750 per square foot. Now, we fast forward to
this project here and the VA, and we are looking at over $10
million per bed and over $1500 per square foot. Why the great
disparity between what private can do and what the VA can do?
Mr. Caldwell. Sir, I don't really have an answer for that.
I think to answer that question would require some sort of
exhaustive audit of decisions that were made long ago.
Dr. Abraham. We are not doing that now?
Mr. Caldwell. Sir.
Dr. Abraham. Aren't we reviewing the VA's construction?
Mr. Caldwell. We are not doing an audit of decisions and
costs. What we are doing is looking at their processes and
their policies and how they do business, and how those impacted
this project. We are making comparisons with how Defense does
business as a good business model for the same sorts of
facilities.
But that is looking at what are, and attempting to identify
what are, best business practices in this business of designing
and building medical facilities, and that is just different
than looking at how decisions were made and how the funds were
being----used
Dr. Abraham. I might suggest we could maybe look in that
direction.
Deputy Under Secretary, do you have a comment, sir?
Mr. Gibson. I just wanted to add one thought. In my opening
statement, I ticked off four different things that I think
contributed to the rise in the cost in this particular
facility. I think the one other point of reference as you
compare whether it is a VA facility or another Federal
Government facility is that there are other construction
requirements that we impose. Some of them are Federal
Government requirements around facility hardening that add
additionally to cost, others of those have to do with
sustainability costs, the ability to operate without external
power supply, the ability to operate without fresh water coming
in in a disaster kind of situation, and that also adds
materially to costs. And, quite frankly, I think we need to be
looking at all of that.
Dr. Abraham. Okay. Now, I am a little confused in your
testimony and please just clarify. On this particular project
in Colorado, is the Corps or is the VA the construction agent?
Mr. Caldwell. Currently, the VA is the construction agent.
At the point in time that a decision is made and the Congress
approves the VA going forward with this project, the
expectation is that the VA and the Corps will enter into an
agreement at that time for us to become the construction agent
to go forward.
So, in other words, we will not award a contract. We are
doing all of the preparatory work that would lead us to the
point of being ready to award a contract, but we will not award
a contract until the point that the VA authorizes us to do
that, and at that point in time we become the construction
agent.
Dr. Abraham. Okay. And, Mr. Sloan, I would echo Mr. Walz's
confidence in you and certainly Secretary McDonald. You all
have----
Mr. Gibson. Thank you.
Dr. Abraham [continuing]. Met when we asked you to meet,
and I also have confidence in you two for sure.
But let's talk about moving money from the Choice to this
project.
Mr. Gibson. Yes, sir.
Dr. Abraham. In my district, we have many, many veterans
that are utilizing this Choice program, and so personally I am
opposed to that particular aspect. And I guess the question is,
if you don't get that money from the Choice program, where are
you going to get that money from to shore up Aurora?
Mr. Gibson. Two quick points. First of all, we are not
touching any of the $10 billion that is funding the actual
Choice program, delivery of care in the community. The portion
we are talking about is the $5 billion that was provided to
increase staffing and to improve facilities.
Dr. Abraham. But that goes still back to the Veteran in a
roundabout way.
Mr. Gibson. It does. Absolutely, it does, yes. There is a
consequence associated with doing that.
Dr. Abraham. Right.
Mr. Gibson. And I would tell you, I don't have a Plan D, if
you will.
Dr. Abraham. Okay.
Mr. Gibson. So if we don't get the funding here, I don't
know where we get the funding from.
Dr. Abraham. Okay. Thank you.
My time is up, Mr. Chairman. I yield back.
The Chairman. Thank you.
Ms. Kuster, you are recognized.
Ms. Kuster. Thank you very much, Mr. Chairman. And thank
you to the panel for being with us today.
I share the bipartisan angst and this is really challenging
for all of us. I was just looking at our side of the aisle
here, seven out of nine of us are new within the last term. So
this is something that we have to take on the accountability
that my colleague Mr. Walz has directed.
And I want to say, with all due respect to my colleague
from Colorado, I am speaking on behalf of constituents and
veterans across the entire country and certainly taxpayers
across the entire country. So I think, you know, obviously we
want to serve our western colleagues and constituents and
veterans, but the trouble that I have is that taking this
funding out of other construction. Most facilities are over 50
years old, I know certainly the facilities in my area, and we
have needs as well.
And one of the questions that I have, and this is to learn
going forward, how did we end up with a design that has an
atrium, a lobby that is four football fields long? I think the
quote in here is, ``perhaps the longest in the world for a
healthcare facility,'' costing $100 million. Who is accountable
for that decision?
And, you know, I have a new role as ranking member on the
Oversight and Investigation Committee and I guess I would like
to say we do need--I don't want every change order, but I want
to know when somebody is putting together a $100 million lobby.
It is not that our veterans don't deserve the best, but let's
focus the best on healthcare and, you know, let's not be going
for architectural awards. So can you talk to me about that
process?
Mr. Gibson. I would be glad to. First of all, Bob McDonald
and I both had the same reaction following our first visits
to--Bob hasn't seen Denver yet, but he has been to Orlando, and
his reaction there was the same as my reaction in Orlando and
Denver.
Ms. Kuster. I don't want to interrupt you, but can you tell
me when Orlando is going to open? Because we just heard from
Representative Brown about her 25-year experience with this
and, you know, it would be great for her to be able to go to a
ribbon cutting to serve her veterans.
Mr. Gibson. We have actually made, working very closely
with Brasfield & Gorrie, we made great progress. They have
turned over virtually all buildings. We are actually already
beginning to see some number of patients and we are looking I
think at a couple of different dates for ribbon cutting. Do we
have a date?
Ms. Kuster. I think if you could lock down that, you would
go a long way with pleasing this committee.
Mr. Gibson. We need to give you a date----
Ms. Kuster. Thank you.
Mr. Gibson [continuing]. Soon.
Ms. Kuster. Yes, and one that she can rely on.
Mr. Gibson. I was down in Orlando visiting the project and
meeting with the general contractor down there three weeks
ago--is that about right?--with Stella.
And really the other issue that we have been working in
Denver is resolving some of the contractor disputes there and
we have been working those amicably.
Ms. Kuster. Well, let me ask you, would it be helpful if
members of our Committee, and I guess I would ask the chair for
this as well, if we were to visit these sites? Maybe this
oversight committee, we could come on a more regular basis and
sit down with you, so that we won't end up with $100 million
atriums?
Mr. Gibson. Well, let me get back to that--first of all, I
think it is wonderful to visit. We actually are hosting a
Senate Veterans Affairs Committee field hearing at the Denver
site a week from Friday.
Ms. Kuster. And I think we would----
Mr. Gibson. So and I have----
Ms. Kuster [continuing]. It would be great to get our
committee out there as well.
Mr. Gibson. And I have strongly encouraged that, because I
think having an opportunity to see the project is very
important.
Back to my comments earlier about the form of contract that
we use, Integrated Design and Construct. The whole idea is you
bring the builder in at the very beginning, so that they are
involved in the design effort. And it is that kind of
constructability engagement very early on that helps you avoid
what I am going to term extravagant features in facility
design.
The other thing, even where you don't use IDC, because we
are not using that anymore, and so----
Ms. Kuster. Yes, I think----
Mr. Gibson [continuing]. We don't use that----
Ms. Kuster [continuing]. That open-ended, open-pocketbook
approach is a problem.
Mr. Gibson. Imposing the constructability review by an
independent construction agent at the 35-percent design stage
and at additional stages along the way helps mitigate that
risk.
Lastly I would tell you, I look at these things on the
front end. I have already looked at conceptual drawings for
Louisville and the first thing that jumps off the page is
functional design.
Ms. Kuster. Good. Well, thank you very much.
My time is up, but I will get to it in the next round, just
say that I also don't want to take this out of the hides of
hardworking folks in the Veterans Administration all across the
country.
So, thank you, Mr. Chair.
The Chairman. Dr. Roe.
Dr. Roe. Thank you all.
Today is a significant day in America, it is April 15th,
and a lot of hardworking taxpayers are sending checks off
today. And where I live, the per capita income is lower than
the average across the country. And it is embarrassing to me to
go home and to look those folks in the eye who work as hard as
they do and write the checks they do to see this big of a
disaster, financial disaster.
And let me tell you exactly why it is that way, it is
because nobody at the VA is spending their own money. If you
were, you wouldn't behave like this. And nobody would spend
their own money like this.
And Dr. Abraham said, look, you heard me say it before, I
have been in the middle of a lot of medical construction, there
is no way to explain this incompetence. There are obviously
some architects who are going to retire and buy places in Vail
a lot cheaper than this thing is costing. It is $1600 a square
foot. That is astounding when you look at that.
And we are caught up in this, we can't stop. You put us in
the ultimate Catch-22. We don't want to go ahead and we can't
quit. So that is exactly where we are and you have made us a
part of it.
And to Mr. Takano, I don't want to be a project manager.
That is not my job. I have been a mayor, I wasn't the project
manager of anything. We hired people to do that, we trusted
them, they brought it in under budget. I am just one lowly
Congressman out of 435, but as long as I am in the Congress I
will never vote to see the VA do a major project again. That is
just me, but I am not ever going to be involved in that again,
to have to go home and explain it.
And I agree with also what others have said. This is not
your fault, Mr. Secretary. You are getting the brunt of this
criticism. It is not your fault and I understand that. And
certainly you have been in the private sector and have done a
great job there. So I am not casting aspersions on you at all.
But we are going to have to go out there and complete this
project.
And let me tell you what I did last night, I had a
telephone town hall meeting. The second call I got was a
veteran who can't be seen for 120 days. The third call I got
was a veteran who had had four primary care physicians in the
last year, because they can't find enough. To everybody's
comment up here, we are taking money away. This billion dollars
could have provided a tremendous amount of healthcare for needy
veterans and deserving veterans, of which they are not getting.
And now we are talking about, even though this is one-time
money you are talking about in this $5 billion pot, it could go
to other things. It could be redirected to patient care, to
PTSD care. And I guess I didn't realize it had a four-football-
length atrium. Nobody on the planet who is spending their own
money would have ever spent the money like that. You would have
put it into examining rooms and bigger operating rooms and more
functional ICUs, that is what you would have spent the money
on.
So I don't know how you prevent this. I mean, I have
watched this fiasco unfold for the last six years. And I don't
see how we do anything but go ahead and provide the resources
to finish this, but I feel like I need a bath after this, I
feel that bad. And I don't know how you explain to people, it
hasn't been explained to me yet. And every single member, I
want to associate my remarks with every single person who said
a thing up here, I couldn't agree more with everything they
have said. So I don't know what we do.
I would like to go out and see it, just to see what it
looks like and see what the project is. And I don't know who it
was that said this, but a veteran--oh, maybe it was Mr. Walz--a
veteran apologizing who brought this, one of the VSOs who
brought it up, it is not their fault, it is not our fault.
And so, anyway, I think that is where I am with this. I am
past frustrated and to see this enormous amount of money being
spent that could have been spent for patient healthcare. As a
physician, I always look at it about how could I help increase
the care? How much medicine could I have bought? Surgeries,
veterans that are waiting. I met a veteran the other day still
waiting three years to hear from a disability claim. Those are
the kind of things we could do to really help people, which is
what I thought we were, not to build monuments.
So with that, I have editorialized and I have gotten it off
my chest, sort of, I don't think it will ever be.
I yield back.
The Chairman. Thank you, Dr. Roe.
Mr. O'Rourke.
Mr. O'Rourke. Thank you, Mr. Chairman.
Mr. Secretary, I have a number of questions, so I will
start right into them without making a statement.
Assuming we needed the $5 billion originally that was
requested that was appropriated, why not ask for a new
appropriation? Because if we really needed that money, then we
are not going to fund something that you thought we needed. If
we didn't really need that money, that brings up some really
serious questions and concerns. Why not ask for a new
appropriation?
Mr. Gibson. I think in the fiscal environment that we are
in right now the sense was that that was going to go nowhere.
Just like the original idea of tapping into the $10 billion
went nowhere.
Mr. O'Rourke. Yes.
Mr. Gibson. And so, again, this from our perspective is the
least worst alternative that we have got in order to be able to
do what we need to do, which is finish the project.
Mr. O'Rourke. Last week, the AP reported that wait times
for all intents and purposes have not changed, have not
improved. There was a story in each one of our districts in El
Paso, we were second and third in the state for wait times.
Like Dr. Roe, I am hearing from constituents who still are not
able to get in.
You visited El Paso and I thank you for that. You called
the conditions in our facility there unacceptable, in your own
words. And yet you are going to take money from potentially
facilities like those that serve the veterans that I represent.
We are going to divert funds that could potentially be used for
what I think is a more urgent crisis, which is seeing veterans
who have mental healthcare needs, who have physical care needs,
who are not being seen today. That to me is unacceptable.
I would be much more inclined to support a new
appropriation than to take money from veterans who need to be
served in communities like mine and communities like those
represented by others here. So I wanted to ask you that
question and make that point.
Mr. Caldwell and Secretary Gibson, I am not totally sold
that the choice is a binary one, either we fund this to $1.7
billion or we don't fund it and it just is left an empty shell.
Are there any other partners that we could work with? I
understand that when this was originally envisioned we were
going to work with an academic institution and co-flag, co-
brand, co-locate a facility there. Why not explore that today?
I mean, if I am only offered those two choices, you know,
then perhaps we have to fund it, but I think there has got to
be a more creative solution to this, it is not either/or.
Mr. Gibson. As part of that process, we have actually
engaged a firm to explore a number of different alternatives,
including partnerships, including identifying other sites,
including trying to refurbish the existing facility. We have
got a preliminary analysis back that strongly indicates that
completing the facility is the optimal choice. And once we get
the final of that back, which we expect next week, we will
provide that to the committee, so that you have got the
opportunity to be able to see that. And it includes the option
of looking at fee-in care out into the community instead of
building a facility.
Mr. O'Rourke. And I want to associate myself with all of my
colleagues who praised your leadership and that of Secretary
McDonald, I can't argue with that, but I also cannot leave it
up to your discretion or the discretion of a future secretary
to make some of these judgments. And so I have got to agree
with my colleague from Colorado when he laid out the litany of
past construction mistakes at the VA. The VA just should not be
in this business.
And so I would love your recommendation back to us or the
secretary's recommendation on a dollar amount above which the
VA should not be involved in design and construction and only
the Corps of Engineers or some other third party.
I would also like to hear some creative, innovative
suggestions about maybe we should no longer be building stand
alone veterans' facilities, maybe we should be forced to co-
locate. If somebody else had skin in this game, there is no way
it would have gone to $1.7 billion, absolutely no way. That
could have been a public partner, a private partner, they would
not have allowed this to happen. The VA will do this because
the VA has always done this. So I no longer trust the VA. It is
not that I do not trust you, I do not trust the VA's ability to
construct these facilities.
In El Paso, with 80,000 veterans very poorly served in an
inadequate facility with very long wait times, it is very hard
for me to go forward without you coming back or this committee
deciding on some very bold, honest changes to this system, and
those that have been offered to date do not meet that mark. And
with my colleague from Minnesota, this one is on us. The first
800 million was on you, this 800 million is on me, any future
overruns are on me. I will not allow it to happen.
So I would love to work with you constructively, hear your
ideas on how we do something a little bit more bold, make some
more significant changes, acknowledge that we should not be in
this business, and then I think we can work together. And I
think there are some creative solutions to this that are out
there and look forward to working with you on that.
Mr. Gibson. Yes, sir.
Mr. O'Rourke. Mr. Chair, I yield back.
The Chairman. Thank you very much.
Dr. Huelskamp.
Dr. Huelskamp. Thank you, Mr. Chairman.
I would like to jump in quickly with questions. I do have a
lot of them and they follow after four years of earlier
questions, Mr. Secretary. And I recognize that you have only
been with the VA since February of 2014, but as I understand,
in the time since then until Mr. Haggstrom retired with full
benefits that he reported directly to you; is that accurate?
Mr. Gibson. He did, yes.
Dr. Huelskamp. And he testified that he briefed you and the
secretary monthly on the status of the Denver project. And what
did he tell you? Did he tell you these cost overruns were
coming? Because he certainly didn't share them with the
committee. And so I want to know, did he tell you or did he lie
to you? And I just would like for you to share that with the
committee.
Mr. Gibson. I think the general sense that was being
presented at the time was that there was a heavy reliance on
the firm target price that was in the contract between KT and
VA. And on that basis and the reliance on that contract
interpretation, there was still this sense that, you know, it
is going to be built for this amount.
And I will tell you, as I waded into all of this, starting
really in the summer, in June and July as the acting secretary,
I began at that point to engage directly with the general
contractors on all three of these projects, Orlando, New
Orleans and Denver, all three. I began to become much better
read in on these projects. So by the time we got to late
summer, very early fall, actually before early fall, you know,
in my mind the conclusion was there was no way that we were
going to get this project built for $600 million.
Dr. Huelskamp. Did Mr. Haggstrom ever admit that to you or
was he still--on the day he retired with full pension, full
benefits and also taking in $50,000 of bonuses during this time
period, did he ever say, you know what, Mr. Secretary, we are
going to have a massive cost overrun?
Mr. Gibson. I don't recall that that was ever his
conclusion. It was really----
Dr. Huelskamp. Did he ever indicate to you this email from
Mr. Gorospe and presumably others that, hey, we have got folks
below me that I have to listen to and say, hey, they are
predicting massive cost overruns four years ago, did he ever
bring that to your attention?
Mr. Gibson. No. And I would tell you, I also don't believe
that that was in the evidence file that I reviewed when I was
reviewing the case associated with Mr. Haggstrom, which I did
the day after he was deposed. But there was other information
that made it very clear that there were clear warnings about
estimated disparities in what different parties thought it was
going to cost to complete the project.
Dr. Huelskamp. Absolutely, and I appreciate that. And I
think I am going to term this the Haggstrom principle. We just
had a hearing earlier this week in which whistleblowers, again
three whistleblowers, and you might have seen the interchange
and exchange numerous folks had with the VA representative. But
we remain concerned that whistleblowers are targeted, they are
intimidated and they are retaliated against.
And here we have just the same week that probably the
biggest cost overrun in the history of the VA, we have an
email, I am looking at it here, that said this was going to
happen. He said $500 million. I mean, he even low-balled the
estimate on that, and apparently he was ignored. Not only was
he ignored, he was fired, perhaps for that reason. And we look
forward to the VA telling us what happened in that situation.
He was fired. The guy that fired him, oversaw him, got a
promotion, benefits, full bonuses. And so the VA seems to be
punishing the whistleblowers, intimidating them, and then
highlighting and giving bonuses to the guys who are screwing it
up.
Now, where is the accountability in that situation, Mr.
Secretary, particularly with the Haggstrom principle?
Mr. Gibson. In that situation, there was no accountability,
period.
Dr. Huelskamp. You did say Mr. Haggstrom was deposed, I was
unaware of this. What was he deposed for? What is the
situation?
Mr. Gibson. As I mentioned in my opening statement, he was
deposed as it relates to the Denver project on Monday the 23rd
of March. I took the evidence binder home with me Tuesday night
and Wednesday morning learned that he had retired.
Dr. Huelskamp. Wow. Well, and I will direct you to his
comments to the committee and to me. We talked a little bit
about a bonus issue. Again, it is $54,000 worth of bonuses. He
said, quote, ``I think you need to put those cost overruns in
context.''
And again, the cost overruns at that time were minimal
compared to what we have learned here. And so we have a
construction chief apparently covering this up. Again, retiring
with full bonuses, full pension, and helping, it looks like,
intimidate and retaliate against the guy that was exposing
that. So that is the principle, the Haggstrom principle, that
has to be changed.
I look forward to learning some more, if we could, about
Mr. Adelino Gorospe and hopefully he will come before the
committee, but I would like to also hear from Mr. Haggstrom and
hopefully will visit with the chairman. Maybe that is something
that maybe he would come voluntarily. I guess that would
probably not be the case, as the secretary talked at that
deposition, but I look forward to that in the future.
I yield back, Mr. Chairman.
The Chairman. Thank you, Mr. Huelskamp.
Ms. Rice, you are recognized.
Ms. Rice. Thank you, Mr. Chairman.
I would like to continue in the line of the issue of
accountability that Mr. Huelskamp has raised, but I first think
it is important for us to remember what is really important
here. And I want to underscore a fact that is very disturbing
that I see as a direct result of all of the shenanigans that
are going on in the building of this facility. Community-based
outpatient clinics near the Denver VA have some of the worst
wait times in the entire country. Enough said right there.
Now, after our last hearing, my colleague Mr. Walz and I
sent a letter to Ms. Fiotes on March 20th, 2015 that said, in
sum and substance, we were requesting a detailed account of
what has been mishandled, who is responsible for the
construction delays, and how the mismanagement of our
constituents' hard-earned money has been allowed to continue
for so long.
On April 1st, I received a response from you, Mr. Gibson.
And you talked about how the Administrative Investigation Board
(AIB) AIB, the report, was not complete, so it was not
available to be shared at this time. But in the paragraph above
that you talked about how the AIB had interviewed four
individuals on March 23rd, 2015, and on the 24th, and it
included Mr. Haggstrom and three other individuals that you did
not name.
Can you please tell me the names of the three individuals
that you spoke to on that day?
Mr. Gibson. I did not interview them, the AIB interviewed
them.
Ms. Rice. Well, I understand that, but you were able to
identify Mr. Haggstrom as one of the individuals who was
interviewed. Who were the others?
Mr. Gibson. That is because I had his sworn testimony in my
evidence binder. I can't----
Ms. Rice. Why did you not have the sworn testimony of
anyone else?
Mr. Gibson. It may not have been relevant to the case. In
the course----
Ms. Rice. Well, it----
Mr. Gibson [continuing]. In the course of--there are
hundreds, if not thousands of pages of evidence that are
reviewed in the process of an investigation, particularly of
this nature, but actually of any nature. What winds up coming
to me when I am taking an action on a senior executive is the
binder that basically takes and culls the relevant testimony
that is relevant to the particular, what ultimately will become
the charges that are levied and that are the basis for removal.
Ms. Rice. Okay.
Mr. Gibson. So I can't tell you offhand who the other three
were.
Ms. Rice. I just want to say, and I don't know if I can
speak for Mr. Walz, but this was an insulting boilerplate form
letter that contained absolutely no information and was
nonresponsive to our request. And I am going to reiterate our
request to get the information. I want to see the depositions,
I want to see the testimony.
So here is the issue. And again, you have said under the
title of accountability, Mr. Gibson, ``The VA established an
administrative investigation board,'' AIB, ``to look at the
actions and processes that resulted in the current situation
and the employees responsible for those actions and decisions.
At this juncture while the investigation is ongoing, it is
premature for VA to identify who may be subject to appropriate
disciplinary action.''
My question--now, by the way, I think this is curious,
because you have already said that most of the people who were
involved in this project prior to today's date have been
removed. So I am not exactly sure why or maybe you don't see
that as disciplinary action, but let me tell you my concern. We
are not just talking about the possibility--well, it is obvious
that there was clearly some negligence, waste, abuse, all of
that, but I believe, and maybe this is my background, that it
is very likely that there are criminal implications here.
Now, I am going to tell you--you have made mention of the
private sector before. This would never happen in the private
sector. I am going to tell you what would happen in the private
sector. If a similar project happened in the private sector
like this and there were hundreds of millions of dollars
wasted--because I think it is fair to say that it is wasted--
this is what would happen. They would make a very quick
determination about criminality. Right? They would either
prosecute or they would defer prosecution and then what they
would do is they would institute a Federal monitorship.
And that is what I, today, am going to ask this Commission
to do. I think the VA needs to have a Federal monitorship. And
what that is going to do is it is going to force the VA once
and for all to change its practices, to get rid of the culture
of putting the VA first and the veterans last. And that is the
only way that we are going to know--I actually think this is
maybe ripe for criminal review. Has there been a referral, a
criminal referral to a local law enforcement agency by the VA
regarding this case?
Mr. Gibson. There has been absolutely no evidence of any
criminal wrongdoing uncovered at any point in this
(indiscernible)----
Ms. Rice. And who is making that determination?
Mr. Gibson. That gets uncovered by investigators and at any
point I----
Ms. Rice. Investigators who work for whom?
Mr Gibson. The investigators work for VA.
Ms. Rice. Okay. So what I am suggesting is a real law
enforcement agency. The VA is not a general contractor, and
they are not a law enforcement agency, so that is not a
satisfactory answer. I do not think it is crazy to say that
there could be some criminality here. And I can tell you that I
will never vote for one more red cent to go to this project
until once and for all someone sitting at that table can tell
all of us why this happened. And I just have not heard it. So
let me just talk----
Mr. Gibson. Just out of curiosity, ma'am, what did you
think my opening statement was?
Ms. Rice. So let me talk about your opening statement
because in the writing, your written statement, your final
paragraph was, ``As we approach design in the future----
Mr. Gibson. I am referring to my opening statement, ma'am--
--
Ms. Rice. ``As we approach design in the future, VA's
emphasis will be on clear up-front definition of requirements,
functional design for easier use by veterans and staff, simple
forms for more efficient and cost-effective construction, and
standardization to the maximum extent possible.'' My question
is why wasn't this paragraph--all of these standards, why
weren't they a part of the original project?
Mr. Gibson. Ma'am, I wish I could change history, but I
cannot.
Ms. Rice. No, no. I am not--I know you----
Mr. Gibson. They weren't part of the construction----
Ms. Rice. But I am asking you in the----
Mr. Gibson [continuing]. Management practices.
Ms. Rice [continuing]. In all of the reviews----
Mr. Gibson. I have----
Ms. Rice [continuing]. You have done on thousands of
papers----
Mr. Gibson [continuing]. I have acknowledged the----
Ms. Rice [continuing]. Why----
Mr. Gibson [continuing]. The weak management.
Ms. Rice. Sir----
Mr. Gibson. I have acknowledge----
Ms. Rice [continuing]. I am asking you one simple question.
I am asking you, in your opinion, why do you think that these
standards were not employed in the original proposal, or under
the original construct of how the VA operates?
Mr. Gibson. I think part of the challenge for VA is they
had not built a major hospital project in, I am going to say,
17 years. That is the number that I am remembering. When we
started with Las Vegas, and the organization frankly had lost
the competency to be able to do that. The business had changed
dramatically in the intervening years, and so what happened is
we sort of caught the bow wave of Las Vegas and Denver and New
Orleans and Orlando, and we weren't ready for it as an
organization, and we bungled it.
Ms. Rice. Okay.
Mr. Gibson. We screwed it up.
Ms. Rice. Okay. On quick thing.
Mr. Gibson. We did not have those good practices in place
at the time.
Ms. Rice. I appreciate you accepting responsibility even
though you were not responsible. But you also said that you
made a point in your written submission that the VA has
delivered 75 major construction projects valued at over $3
billion successfully. You said this is not to diminish our
serious concerns over the mistakes that led to the current
situation on the Denver project, but only to emphasize that we
have successfully managed numerous projects through our major
construction program. It begs the question, why is Denver not
one of your many success stories?
Mr. Gibson. Because of the complexity, the scope, the scale
of the project.
Ms. Rice. Is that the largest project ever in VA history?
Mr. Gibson. In cost it certainly is, and in square footage
it probably----
Ms. Fiotes. Second to New Orleans.
Mr. Gibson. Second to New Orleans.
Ms. Rice. I appreciate that. But that cannot be the only
reason why it is not the most--it is not on the success list.
Thank you, Mr. Chairman.
Mr. Gibson. Well, the success list, major projects, as I
mentioned earlier, include projects all the way down to $10
million. We do those routinely and have been doing those
routinely for decades. It is just building close to $1 billion
hospital projects has not been something that VA has done in
its recent past until these four projects.
The Chairman. Thank you, Ms. Rice. Ms. Brownley.
Ms. Brownley. Thank you, Mr. Chairman. I want to express
what my colleagues have already expressed, their tremendous
amount of angst and accountability that I feel at this moment
in time without question. And I also want to reiterate that I
feel like the only hope we have at this particular moment is
you and your oversight, Mr. Secretary, in making sure that we
move forward and move forward in a correct manner that is going
to complete this project somehow, some way, successfully from
this point forward.
I will say one other point of optimism I probably should
express is that I do have a level of confidence that the Army
Corps of Engineers is not in the business of building Taj
Mahals. I do not think they have a reputation of building Taj
Mahals. They are engineers. I think they prioritize function
over form, and I hope that that acumen will be built into this
project.
So I guess a very simple question that I have for you is at
this moment in time with the estimation that you are saying to
complete the project, do we have a complete design of the
project?
Mr. Gibson. Yes, ma'am, we do. And I am echoing one of
Lloyd's comments, and the Corps' perspective, they also
concluded that we have a completed design.
Ms. Brownley. So we have a completed design and we know
that complete design is not a Taj Mahal. It is a functioning
hospital that is, you know, that does not have all of the gold
plated sinks and everything else that might be included, or
originally included. I am not saying that they had gold-covered
sinks, but----
Mr. Gibson. No.
Ms. Brownley [continuing]. The atrium that has been spoken
of.
Mr. Gibson. Well, the completed design basically reflects
the design, and so if you go out to the project and visit the
project, all 12 of those buildings are up. The steel is up, all
of the steel, or virtually all the steel, virtually all the
concrete is hung. And so basically what you have got is already
the existing frame of the project. My----
Ms. Brownley. So----
Mr. Gibson [continuing]. Earliest conversations with both
the Corps and with KT were are there any plausible, meaningful
value engineering opportunities that we should consider at this
point in the project? And the answer from both parties was,
``No. We are too far along and to try to enter into those now,
you are going to wind up costing more money and costing further
delay than you would save.''
Ms. Brownley. It seems to me that I was not here for your
earlier testimony, but my staff gave me a note saying that
Director Caldwell talked about we won't have complete cost
estimate for completing the Denver project, that they won't be
able to happen for another two months. Was that accurate, it
would be two more months before you could have the complete
estimate?
Mr. Caldwell. Yes, ma'am. Actually, the estimate probably
will not be complete in two months, but it is going to be close
enough that we really know that we can depend on it for our
negotiations. But, yes, that is correct.
Ms. Brownley. Well, doesn't that seem that we are following
a path that we followed earlier by, you know, asking for an
amount of money where we don't know what the final estimates
are?
Mr. Caldwell. Ma'am, the way the process plays out on any
capital project is that the first estimate on which the
programming and appropriations decisions are made are generally
based on parametric estimates, that is based on your experience
from similar projects in recent years in that locale. It is
after the project is authorized and appropriations available
that you begin the hard work of determining what the precise
requirements are and the precise costs. So that is a normal
process. The difference in this case is that because we are
taking on the project in the mid-point, we are not using a
parametric estimate for purposes of reprogramming. We have used
an engineering estimate that was made about two years ago, and
now we will be making our independent estimate to get that more
precise estimate.
Ms. Brownley. Thank you. And I just want to make one final
comment in that I agree with Mr. O'Rourke. We should not have
the only proposal to us be one that is binary, either this
appropriation or not to complete the project, that there should
be other solutions here that we can analyze and look at. So
with that, I will yield back my time.
The Chairman. Thank you very much. Ms. Titus.
Ms. Titus. Thank you, Mr. Chairman. Thank you, Mr. Gibson,
I am sorry you are always the one who has to take the brunt of
this when you aren't responsible. But we appreciate your cool
demeanor and expertise.
Mr. Gibson. It is always a pleasure, ma'am.
Ms. Titus. I am sure it is. Anyway, thank you for being
here. At the risk of sounding like I am piling on, we are
really being presented with a Hobson's choice here. We have
either got to move forward with this project, finish it, and
spend money that could go to other veterans' programs, or we
either stop and waste the money that has already been spent
that could have gone to other veterans' programs. It is not a
very good choice, obviously. But it is one that we have to
make.
And so I am inclined to agree with Mr. O'Rourke in that if
we go forward and spend this money, it has got to be
accompanied by some real reforms, that we can say this will
never happen again, because we have legislated, put in place,
things that will prevent it from occurring. And so those two
things have to go together. We can't just write another check
and hope that whoever comes along next will do a better job.
Now, having said that, I want to ask you again about Las
Vegas. You know, I worry about it. And it has been mentioned
several times here. We know that while Denver apparently got
the big atrium, Las Vegas got an emergency room that was too
small before it even opened. And so we have had to now go back
in and build a second emergency room or department, and I am
afraid that other parts of the facility are also going to turn
out to be too small, because we underestimated the use. Usually
you build a hospital and use increases two to three percent. We
built that hospital in Las Vegas, use increased by 19 percent.
Mr. Gibson. Yes.
Ms. Titus. So I hope these other facilities that are part
of this complex aren't also too small. But the thing that
really bothers me is the timeline. When you gave me a timeline
before in April of 2014, you said it was going to be fully
operational by the middle of this summer. Now that timeline has
slipped, and it is not going to be fully activated until next
spring. Now, there has not been a nexus drawn between pushing
the timeline for Las Vegas and taking the funds for Aurora, and
I just want to be assured that that is not the case, first.
And, second, that this timeline isn't going to keep getting
pushed back as you focus all your energy and resources and
efforts on this fiasco in Colorado.
Mr. Gibson. Yes, ma'am. I would like to ask Ms. Fiotes to
respond to the question on Las Vegas.
Ms. Fiotes. Congresswoman, the delay in schedule that you
are referring to is the difference between construction
completion and actual activation. We always estimate an amount
of time between when we turn over the facility and when the
medical center is actually able to operate it fully. That
timeline is anywhere between 90 to 180 days depending on the
complexity. The facility itself, the construction will be done
this summer.
Ms. Titus. Well, that is good to know. Well, thank you very
much. All right. But let's work on some of those reforms that
we talked about to go hand in hand with this----
Mr. Gibson. Yes, ma'am.
Ms. Titus [continuing]. Increased----
Mr. Gibson. Yes, ma'am.
Ms. Titus [continuing]. Funding. Thank you.
The Chairman. Thank you very much. Mr. Secretary, I asked
in the pre-hearing, questions for the record, what, if any,
alternatives had been considered to re-purpose funding from
other major and minor construction projects and/or Department
programs, initiatives to move forward with the Denver project
without requesting additional funding. And the answer I got
back was all funding available in the VHA major construction
program that will not adversely impact ongoing or previously
funded projects has been identified and reprogrammed to the
Denver project. Now, I hear that you are also looking at other
alternatives. Re-purposing leasing--I think I heard you say
that. And, if so, you made news.
Mr. Gibson. I am sorry. I did not follow the last part.
The Chairman. Are you talking anything other than full
completion of the project?
Mr. Gibson. No.
The Chairman. Okay.
Mr. Gibson. Absolutely not.
The Chairman. Full completion? Okay.
Mr. Gibson. Yes, sir.
The Chairman. I misunderstood. I got another question. I
sent a letter on the 19th of March to the Secretary basically
asking for minutes from the construction review counsel. I have
yet to receive a response. I would direct your attention to the
testimony that was given from Ms. Fiotes on the 25th of March
of last year, where she says, ``In addition to closing GAO
recommendations, VA has worked diligently to address and close
all the recommendations identified through the VA Construction
Review Counsel, which was established in 2012, chaired by the
Secretary to serve as a single point of oversight in
performance in accountability.''
And it goes on to say, ``Through the CRC and the VA
Acquisition Program management framework that provides the
continual project review throughout the project's acquisition
life cycle, VA will continue to drive improvements in the
management of VA's real property capital programs.''
And then Mr. Hagstrom testified to the Committee on April
22nd of last year on this particular project. ``Both the VA
Secretary and Deputy Secretary are briefed monthly on the
status of this project as part of our Construction Review
Council meeting.'' It then goes on to talk about the primary
purpose of the Council, and then I think I heard you say--
somebody has said--the Council has not met?
Mr. Gibson. I believe the Council met maybe one time in
July or August, if I am recalling--correct me. Is that right?
And so since that time, since Secretary Shinseki's departure,
other than that one occasion, the CRC has not met.
The Chairman. Why would two people from senior leadership
of VA come and testify to this Committee that it meets monthly?
And then how hard is it to answer a question as to where the
minutes are if the----
Mr. Gibson. It is----
The Chairman [continuing]. The answer--wait--the answer to
the question is, ``There are no minutes because there were no
meetings.''
Mr. Gibson. Subsequent to June or July, whenever that last
meeting was June, July, or August, there have not been any
additional meetings. Prior to that time, it had been meeting
regularly on a monthly basis. I am aware of your request and
have inquired, and I am told that there are no minutes. There
are, however, decks that were used, presentation decks, that
were maintained, and we have provided those to our general
counsel for their review before turning the material over.
The Chairman. So I am to believe something that is designed
to protect the expenditure of taxpayer money on projects to
hopefully prevent the spending of a billion dollars more than
was originally budgeted, to make sure that there are
appropriate safeguards in place, and nobody took minutes? I
mean, what is it, just a gaggle?
Mr. Gibson. First of all, I am told that there were no
minutes kept. The meeting was a very structured meeting. It
included sometimes upward of 40 or 50 people in the room. As I
mentioned earlier, I did not, from my perspective, view it as a
constructive forum, either for the exchange of information or
for making timely well-informed decisions.
The Chairman. Was there anybody from outside VA that is
part of that review council?
Mr. Gibson. I don't believe so. Correct me if I am wrong? I
don't believe so.
The Chairman. So, Ms. Fiotes, your testimony then at the
time was accurate that there were monthly meetings that were
going on----
Ms. Fiotes. Yes, Congressman, there were monthly meetings
going on until the time frame that Mr. Gibson just mentioned,
the summer of last year.
The Chairman. Okay, staff, I apologize, I haven't reviewed
this yet. Staff just provided it to me. But this is a document
entitled ``VA Construction Review Council Activity Report dated
2012 November,'' and in it there is a complete recollection of
major construction, Denver Medical Center, as of May 16th. The
purpose of the CRC meeting on the Denver replacement was to
review and improve--I mean, so how do you create a document
like this if there is no minutes taken?
Mr. Gibson. Yes, if that is what I think you are referring
to, I have seen a transcript actually, a transposed transcript
of one meeting from 2012. And I am assuming that is a part of
what you have in your hand.
The Chairman. And so there were minutes taken at a meeting
at some point?
Mr. Gibson. It was actually a transcript of a recording of
the meeting.
The Chairman. But then there was never--it was never,
ever----
Mr. Gibson. No.
The Chairman [continuing]. Recorded again?
Mr. Gibson. No.
The Chairman. Any idea----
Mr. Gibson. It was not.
The Chairman [continuing]. Managerially why would you
record one and then not----
Mr. Gibson. I----
The Chairman [continuing]. Record anymore?
Mr. Gibson. It would be pure speculation on my part.
The Chairman. Okay. And again, this is the first I have
seen of it, and that is what it appears it is. Ms. Brown, you
are recognized.
Ms. Brown. Thank you. Mr. Secretary, I just want to clarify
one thing. On the Orlando opening, do you have a date for us?
Mr. Gibson. May 26th.
Ms. Brown. All right. So at this time, Mr. Chairman, I
would like to invite you and any of the other members that
would like to come to that opening.
The Chairman. Thank you.
Ms. Brown. And all of the former members that have worked
over the 25 years of this project to attend. All right. Now, I
have asked if our Democratic Members would like to go to
Denver? I am asking the staff to get with you because I think
it is important that we go and see a project that has gone out
of proportion.
You can talk about it all you want to but unless you go and
visit with these projects and sit down and talk to the VA and
talk to the construction team, you really will not get a good
feel, I did that with Orlando, and I am coming to the end of
that project. I am hoping that some of you will find it in your
busy schedule to go to Denver so that we can learn from that
experience that will help us with the rest of these projects
throughout the country.
Now, Mr. Secretary, we are at a, critical time, we probably
need to at least authorize additional funds and authority to
move this project forward. Once again, where are we going to
get the resources; and there are some concerns about using that
$5 billion that was supposed to be to help with veterans'
facilities and accommodations throughout the country.
Mr. Gibson. As I mentioned earlier, we owe the Committee a
revised spend plan on the $5 billion as part of the support for
the request.
Ms. Brown. And I would also like to know out of that $10
billion, how much of it have we used for the Choice Program?
How many veterans have been served out of the Choice Program?
Mr. Gibson. I have not seen the most recent numbers on
appointments from the program. I can tell you the total
obligations thus far right at $800 million, under the $10
billion portion of the program.
Ms. Brown. And out of the $5 billion, where are we?
Mr. Gibson. Out of the $5 billion, $109 has been obligated,
but----
Ms. Brown. $109 million?
Mr. Gibson. $109 million out of the $5 billion. But one
quick word--two words of caution. One, about 40 percent of the
total $5 billion has been planned for non-recurring maintenance
and minor construction, which has a lead time associated with
requirements definition and the FAR-based contracting process.
So from the time we basically release the funds to the field,
we are still in that portion of the process. So not much
actually obligated yet on the construction side, non-recurring
maintenance and minor construction.
On the staffing side, I am told that we have already hired
roughly 2,500 additional staff. The obligation--I am learning
about Federal accounting here--the obligation is actually
recorded at the time the payroll is processed. So it is not a--
you don't obligate the full year of salary at the time you
bring somebody on. You obligate it in pieces twice a month.
Ms. Brown. We have had lots of discussions about major
projects and smaller projects. Where would you find the
separation, because I do think that the VA should be able to
have the ability to make some decisions as far as particular
smaller projects in, small communities. We don't need the Army
Corps--I mean, Army Corps got a full plate, and we have to
figure out--what portion to give the Corp.
Mr. Gibson. Yes, ma'am.
Congress actually stipulates a $10 billion--excuse me--$10
million threshold, above which is deemed to be a major project.
And so that is a level that hasn't changed in a long time. So
it is, from our perspective, a relatively low threshold, which
is why you see us at any point in time with 50 or 60 ``major
construction projects under way at any point in time.''
Ms. Brown. There was a facility problem down in Miami. VA
had two small projects, and when you put them together, it
became one big project. I felt that the Secretary should have
the authority to do that because it was costing us more money
trying to get it resolved.
Mr. Gibson. I fear that what has happened over the years is
that there are too many instances where we design a project
right up to the $9,999,000 amount, and really if we were doing
what we really needed, we would do more than that. But the
perception is that that adds materially to the time frame to be
able to get a project completed or approved and funded.
Ms. Brown. I am hoping you will come back to us as soon as
possible with a method as to how we are going to come up with
additional----
Mr. Gibson. Yes, ma'am.
Ms. Brown [continuing]. Funding that you need.
Mr. Gibson. Yes, ma'am.
Ms. Brown. I yield back the balance of my time.
The Chairman. Thank you. Mr. Coffman, you are recognized.
Mr. Coffman. Thank you, Mr. Hagstrom. Ms. Brown, just one
point, the----
The Chairman. You just called me Mr. Hagstrom.
Mr. Coffman. No, no. Oh, no. I did not? Build anything
lately?
The Chairman. This hearing is adjourned.
Mr. Coffman. Ms. Brown----
The Chairman. We are out of here.
Mr. Coffman [continuing]. The threshold that I use in the
legislation is the major construction and we leave VA to do the
minor below the $10 million. And that is defined in statute,
the $10 million threshold. Yes?
Ms. Brown. Because when you were talking, I was wondering
where do you stand on this authorization, because if you do not
have the funding, it is going to stop your project?
Mr. Coffman. That is right. The number has to be increased.
Ms. Brown. It--will. You didn't mention that in your
comments.
Mr. Coffman. I said the hospital has to be built. The
authorization is clearly part of it.
Ms. Brown. No, no, no, sir. I didn't hear it.
Mr. Coffman. I did say that. Thank you. I am reclaiming my
time. On January 21st, Mr. Gibson, you testified before this
Committee. And you said, I'll quote, ``I have direct''--this is
on January 21st--``I have directed that an administrative
investigation board be convened to examine all aspects of the
Denver project to determine the facts that led to the current
situation and gather evidence of any mismanagement that
contributed to this unacceptable outcome.'' And so obviously at
the head of all of this is Mr. Hagstrom. But Mr. Hagstrom
wasn't interviewed until March 23rd, by your testimony, and
then he was allowed to retire on March 24th. I mean, why the
gap?
Mr. Gibson. What we had been working to do is to request
and receive approval for a detailee with appropriate subject
matter expertise from another department in the Federal
Government. We have been unable to secure that at this point.
In the meantime, we moved ahead with the AIB based upon the
resources that we had at our disposal. So that was really the
heart of the delay.
Mr. Coffman. When is the AIB expected to be completed?
Mr. Gibson. The honest answer is I don't know. I will tell
you that what I have directed on this AIB--normally what we
would do is we would charge an AIB to look at a series of
issues, and they would go all the way through their work and
complete their final report and then we would consider actions.
What I have directed on this one is, I want them looking at
certain elements of this, because we have got such a large and
complex activity. And as they have sufficient evidence to be
able to support taking a disciplinary action, that we move
ahead on that while the AIB is still operating.
Mr. Coffman. The fact that he is gone, what disciplinary
action can you take?
Mr. Gibson. Against Mr. Hagstrom, none. But the AIB now
proceeds looking at other individuals that were involved in
various manners with the project at various levels.
Mr. Coffman. When was the first person deposed?
Mr. Gibson. I don't remember the answer to that. I am
sorry.
Mr. Coffman. How many people have been fired that are in
leadership positions on major construction projects in the VA,
on these major hospital construction projects?
Mr. Gibson. I am not aware that any senior level officials
have been fired.
Mr. Coffman. Each one is hundreds of millions of dollars
over budget, years behind schedule, and nobody has been fired,
except for we know a whistleblower has been fired.
Mr. Gibson. Unacceptable.
Mr. Coffman. Unacceptable. This is overwhelming. This is
overwhelming. Just incredible. Mr. Chairman, I yield back.
The Chairman. Thank you. Mr. Walz?
Mr. Walz. Well, thank you again. And I think the question--
again I am like so many here, we are kind of within--I am
deeply concerned. I think Mr. O'Rourke's point was on this is
is I would just suggest to you Mr. Gibson maybe go back with
the Secretary. I just think for accountability purposes it may
be right to come for a request to this committee, for an
appropriation request, because I am very uncomfortable with the
proposal that's been put forward.
I see it, especially coming out of the Choice Program, why
would we not enhance the Choice Program in and around the
Denver proposal here with--because we know the wait times are
even higher because they are waiting to get into this delayed
facility.
It just seems to me that it is very hard to not talk to my
constituents that because of these problems it is delaying care
for veterans. Do you have a suggestion for me on this? I mean,
I am just--because I understand it has to be built, and I am
going to stand because this is about veterans and giving you
the authority to get it done, but I just think it needs to be a
clean break from what we have done.
Mr. Gibson. I think, first of all, the fact that we have
requested that the Corps come in and take over as the
construction agent on this particular project. Certainly, what
has been provided at this point is really the formal part of
the request for funding. We owe this Committee additional
information, as I have described earlier, detail on the changes
in the $5 million spend plan, any additional detailed
information that we can possibly provide.
I alluded earlier to the review that the Corps of Engineers
is doing at our request, looking at all four of these projects,
advising us on things that they believe went wrong from a
policy and practice standpoint in these projects, and how we
can operate more effectively.
And then secondly, at Congress's direction there is an
independent review being undertaken of the entire construction
project--or process--or construction program at VA as part of
the Choice Act, and that report, that final report, is due to
Congress in September.
So, frankly, I think under the circumstance if we are
talking about a project, the management of which is going to be
turned over to the Corps of Engineers, and in the meantime what
we are going to be doing is going through two different
independent reviews of our major construction activity to
figure out how do we best operate in the future.
Mr. Walz. And those results will be in front of us?
Mr. Gibson. That (indiscernible), that's fine.
Mr. Walz. And those results will be in front of us----
Mr. Gibson. Absolutely, yes.
Mr. Walz [continuing]. Before we are asked to spend any
more money?
Mr. Gibson. I'm sorry?
Mr. Walz. Those will be in front of us before we are asked
to appropriate more money----
Mr. Gibson. No, sir, they won't be.
Mr. Walz [continuing]. For this?
Mr. Gibson. They won't be. The only way that happens is if
we shut down construction on the project.
Mr. Walz. What does that mean?
Mr. Gibson. And Mr. Caldwell has already responded.
Mr. Walz. Yes, a little bit. That guarantees that it opens
later or?
Mr. Gibson. What happens is you start moth balling the
project. And so there are material additional costs that you
wind up incurring.
Mr. Walz. No, I understand.
Mr. Gibson. You wind up incurring delay. I met two weeks
ago in Denver with 40 or 50 of the largest subcontractors, not
just the general contractor, but subcontractors. And I got to
tell you if there is another walk-off on this project, they are
not coming back. And so just the threat, just the threat that
there is not going to be funding for this project makes it that
much harder for the general contractor to be able to get these
subs----
Mr. Walz. No, I agree and I feel for them too, but I just
think for all the Members to recognize it is pretty clear on
this, you are going to vote for this before you hear any--and
have anything in writing on a guarantee that it is going to be
done and it is a devil's deal, it is a tough one, and I
appreciate exactly what you said. I think----
Mr. Gibson. It is going to be done by the Corps.
Mr. Walz. Yep. And I think you articulated it very well.
Mr. Gibson. That is your confidence on the $800 million.
Look, I am not any happier about this than anybody.
Mr. Walz. No, I know.
Mr. Gibson. I am profoundly embarrassed, I am upset, I am
angry. I get it, I understand that. At the end of the day,
though, I believe we have to finish this facility. I think it
is best from where we are it is the right thing for veterans,
and I believe it is the best outcome for taxpayers, and we owe
you that analysis----
Mr. Walz. I do not disagree with you on that, Mr. Gibson. I
just think that this is our time to leverage changes. I don't
disagree with that analysis and to try and get there.
Mr. Gibson. I think there is an opportunity to do that in a
very informed fashion over the coming, however many--five
months, however many that is, I haven't counted to September.
Mr. Walz. Yep. Well, I appreciate that. Thank you, Mr.
Chairman.
The Chairman. (Indiscernible) Does the Administration
support a deficit neutral solution to this current problem?
Mr. Gibson. The Administration supports the proposed
funding using a portion of the $5 billion in Choice. And if
that translates into a deficit neutral proposal, then that is--
the answer is yes.
The Chairman. Thank you. Dr. Abraham.
Dr. Abraham. Pointing in, I guess, on Dr. Roe's comments,
the average veteran in my district, his average income is
equivalent to 20 square feet of this proposed. And I have
looked while we have been talking, it is about the center of
this horseshoe here, much less a four football field atrium.
So the question is internally in the VA--I understand there
are problems or there are issues with firing an employee in the
Federal system, but has the VA internally come up with some
objective paths to take if they see an employee, a contractor,
an individual go off target, off radar, to reassign or just to
get them out of that area of operation?
Mr. Gibson. I am going to ask one of you two to answer the
question.
Mr. Milsten. Yes, we have done a number of things to look
at how employees perform. We have looked at if on the--
especially on our critical projects, if the project leaders on
that project identify employees that are problematic, rather
than leaving them there for that supervisor to take the
disciplinary action, I have had the discussions with the
regional offices that we reassign those people to somebody who
has the time to take the appropriate documentation, work
assignment process, and manage that so that we don't bog our
already overtaxed project managers trying to deliver these
projects in these trying times with also managing those
performance issues. So we have told them----
Dr. Abraham. We are getting ahead of discussion, but has
anything yet to be actually put in place?
Mr. Milsten. Have we actually removed somebody like that?
Dr. Abraham. Exactly.
Mr. Milsten. No, we have not. None of the project directors
have come back and said there is a problem employee that I
don't have time to get rid of, assign him somewhere where they
do have time to get rid of him.
Mr. Gibson. But I would tell you that actually, shortly
after Stella arrived in early 2013, her sense immediately was
that we needed to make changes on the ground in Denver. And in
fact, that is exactly what we did.
Dr. Abraham. But not only Denver, but all the--New Orleans
and all the----
Mr. Gibson. We have made changes. We made changes in
Orlando, we made changes in New Orleans as well?
Mr. Milsten. No.
Mr. Gibson. Not New Orleans but Orlando.
Ms. Fiotes. Not New Orleans but Orlando, yes, we did.
Dr. Abraham. Okay. Mr. Caldwell, one question for you. Is
the Corps the construction agent, that term, on any other VA
projects to date?
Mr. Caldwell. Sir, I am sorry, can you clarify, is Turner--
--
Mr. Gibson. Is the Corps. Is the Corps construction agent
on----
Dr. Abraham. Yes, is the Corps designated as the
construction agent on any other VA project as of this date?
Mr. Caldwell. Yes, sir, I think it is fair to say. And,
although we may not have used that terminology, we have served,
and are serving, on that--in that capacity on a number of other
projects. I think we----
Dr. Abraham. But doesn't that designation allow you certain
priorities?
Mr. Caldwell. It establishes that we have a responsibility
to make decisions.
Dr. Abraham. Right.
Mr. Caldwell. Understanding what the, in this case,
understanding what the VA's requirements are, then it--we are
then in a position to determine how to best meet those
requirements as opposed to having the agency that identifies a
requirement also telling us how to meet that requirement. If
you understand the----
Dr. Abraham. I do.
Mr. Caldwell [continuing]. The distinction that I am
attempting to make.
Dr. Abraham. I do.
Mr. Caldwell. We have I think, the number is about 78 other
projects currently underway with the VA. Most of those are
minor construction. A number of the projects around the country
that are less than $10 million, but in and of themselves are
standalone projects we have executed with good success for the
VA.
We also have an agreement with the Cemetery Administration
to manage their minor construction projects all over the
country, and that is going well.
Dr. Abraham. Okay, thank you. Mr. Chairman, I yield back.
The Chairman. Thank you very much. Mr. O'Rourke.
Mr. O'Rourke. Thank you, Mr. Chairman. I wanted to offer a
couple of ideas on which I would like to work with you and with
the Secretary, the other Members, VSOs, really anyone who is
interested. One is that any significant change order, and we
could work together to define that, must be funded through a
new appropriation. It is just too easy to take money that has
already been appropriated and redirect it. And that does not
improve accountability. In fact, I think it lessens it. It
doesn't improve transparency, it lessens it.
Imagine having to defend a $1 billion appropriation on the
floor of the House. With everything that we have learned today
it would be a very painful experience. But I think in the
interest of the taxpayer and accountability and transparency it
is one that we should have to go through as painful as today
has been. So I think that is an idea we should at least
explore.
And I, for one, will not be able to vote to move 20 percent
of the $5 billion that has been appropriated for a specific
purpose to cover up a mistake that the VA has made. I think
that should be a new appropriation request that should be
defended and argued by the VA and those who support it.
I think that everything over $10 million, if that is the
threshold that we agree upon, but maybe that should be lowered,
should be built, designed, and overseen by the Army Corps of
Engineers or some other party, not the VA. As you said, and I
agree with you, the VA, for a long time, was just not in the
business of building these large capital projects. And that
might provide some of the explanation for the failures with
this, for Orlando, for New Orleans, for others. So having
learned that, let's do something different and not rely on the
judgment or discretion of the Secretary, but instead in statute
force that to be the case going forward.
And I do think there is some wisdom to pursuing joint use
facilities, joint ownership facilities, joint located
facilities. Again, I think some other partner with skin in the
game is going to provide additional accountability. We are
going to get greater use out of that facility. We have made a
virtue of this necessity in El Paso. We can't get $1.7 billion,
we can't get $600 million, we can't $50 million, so we are
working with Texas Tech, University of Texas at El Paso,
University Medical Center, Tenet, to see if we can bring all
partners together at a facility, and maybe refer some of that
care out there. I know that is very controversial. I know that
we will get opposition from some VSOs, from some veterans, but
this current model is just not sustainable. It is not
affordable.
I read that Secretary McDonald is right now trying to hire
28,000 unfilled positions within the VA. We have critical
positions in El Paso in psychiatry, psychology, primary and
specialty care that are unfilled. We just cannot--let's just
admit it, we cannot continue with this model and expect
anything different. And that is after we just appropriated $15
billion. And AP reported, as I said earlier last week, that the
wait times have not changed since then.
So I want to explore those ideas with the Committee, with
you, Mr. Secretary, with Secretary McDonald, and with the VSOs.
And I think there are other great ideas that have been brought
up today. But as Mr. Walz said, we can't--this isn't about
Aurora, this isn't about another $1.1 billion. This is about
the future of the VA. And we cannot leave this crisis with
simply re-purposing existing appropriations, or even a new
appropriation, without some structural fundamental systemic
change in how we do business.
And I think you and the Secretary, in the 20 months that
remain, have an excellent opportunity to transform the VA. And
you and Secretary McDonald with his experience in the private
sector, maybe better than anyone else before, to make some very
difficult but very bold decisions that are necessary now. And
so let's not allow this opportunity, or this crisis, to go to
waste. And so I, for one, I think I have heard from my
colleagues on this Committee, are willing to work with you and
certainly under the leadership of our Chairman, who I think has
just been outstanding on this issue. I think we can come up
with something. And as painful as all this is, something good
can come out of it.
So those are three suggestions that I would like to start
with and offer. And I am sure we have got more from my
colleagues. So I will include these in a formal letter to you
and to the Chairman, and then would love to get your response
back on it, and perhaps some suggestions that you all have.
Mr. Gibson. We look forward to working with you,
Congressman. I would tell you just very briefly, the question,
or the issue, surrounding the involvement of the Corps, we
agree, the only question is where do you draw the line? And,
again, we have got, at any point in time, 50 or 60 projects in
the $10 million plus range and a very, very small number. You
know, you look at the last 20 years and we have had four
projects of this kind of scope and scale that we are talking
about. So clearly there is a role for the Corps here and we
embrace that.
Secondly, I just, you know, a project of this--even a
project of much smaller size, what would be the average number
of change orders you would expect to see? Hundreds?
Mr. O'Rourke. I tend to put change orders into the cost
category as opposed to the number. And I look for cost growth.
It is within the contingencies of the project which would be
less than five percent on new construction and less than about
seven and a half percent on renovation.
Mr. Gibson. In the course of establishing--in their numbers
that they have come up with, there is a piece in there for
contingency. And in the $130 million portion that we have,
there is actually a piece in there for management reserve that
is intended to be able to accommodate some of those ordinary
course. When you are doing a multi-hundred million dollar
project you are going to have change orders, that is going to
happen. And, frankly, it is already a challenge to be able to
process those and not delay construction. And I can just tell
you, if we are coming in here every time we got a change order,
then we are going to grind all construction to a halt.
Third, the issue of partnerships. I think you understand
the very different approach that Bob and I have taken about
trying to embrace strategic partnerships. But I would also
remind all of us that this particular project went through at
least four incarnations where we were looking at different
stages of partnerships with the University of Colorado,
partnerships with DoD, you know, then back to Colorado, then
back to DoD, and those aren't always easy to accomplish.
In fact, the emergency room in Las Vegas is--if I am
recalling correctly--had originally intended to be using some
shared facility in another location. And as a result we wound
up under-designing the ER when that basically fell through. So
we----
Mr. O'Rourke. I appreciate your responses to that, but it
cannot be the end of the conversation because your responses
imply that those three ideas are non-starters, or there is not
more to them. And so you have satisfied no one today with your
explanation of what the VA is going to do going forward. I am
trying to offer three that, you know, I can support and work on
with you. I do appreciate the response. I think we need
something a little bit more formal and some concession on your
part that you are willing to rethink some assumptions that you
have made going forward.
Status quo will not work. I will not support, as many of my
other colleagues have said, another dime towards construction
projects without some additional accountability or reform
within the VA. And so I am offering three--if these don't work,
give me some others that are better.
Mr. Gibson. I understand.
The Chairman. Mr. Huelskamp.
Dr. Huelskamp. Thank you, Mr. Chairman. Secretary Gibson, I
want to follow up a little bit on the Construction Review
Council because that seemed like a good idea. I didn't know it
existed and apparently it didn't exist very long. But
apparently there were nine meetings, is that correct, of this
Construction Review Council? I guess, let me direct to Ms.
Fiotes who was, I guess, at these council meetings?
Ms. Fiotes. I was at those council meetings from the time I
arrived in January of 2013 at the VA, and they continued. They
started up again. They had initially had very frequent meetings
in 2012 that resulted in the report that I think you were
holding before, Mr. Chairman, with the findings. Those were the
findings that I had mentioned in my testimony that we addressed
by taking several measures in the construction program.
And then subsequently, some time in 2013--I believe around
the middle of 2013--we started again with regular Construction
Review Council meetings monthly. And those continued until
approximately the summer of 2014. So for a period of about a
year we had almost monthly meetings. There might have been one
or two that were missed.
Dr. Huelskamp. Okay. There are nine referenced in the
activity report from November of 2012. And I guess Secretary
indicated that----
Ms. Fiotes. Those were before 2012. Those were in 2012, I
am sorry.
Dr. Huelskamp. Right. And the Secretary did indicate that
one of these meetings was recorded, but there were no minutes
taken. I would like to request any recordings, written
materials, verbal materials of other meetings. Are we aware,
Ms. Fiotes, you were there, any of these?
Ms. Fiotes. I would have to ask Mr. Milsten to respond. I
was not at the VA in 2012, I don't know about those meetings.
Dr. Huelskamp. Oh, okay.
Mr. Milsten. Yes, sir. There was one meeting, at least one
meeting, that was recorded in total and that is--it just so
happens to be that it is also the Denver project that
recently----
Dr. Huelskamp. Yes, you got lucky on that one.
Mr. Milsten. Yes, sir.
Dr. Huelskamp. But no others recorded?
Mr. Milsten. To the best of my knowledge, the contract
didn't work to have the recorder come in. There were no minutes
taken. The presentations were the record that was elected to
stand for the meeting. And----
Dr. Huelskamp. If I might interrupt, I only have a little
bit of time left. The write-up from the recorded media May 9th
of 2012, it is similar in detail to the write-ups for every
other meeting. So who wrote up the meeting without any minutes?
Mr. Milsten. I did. I recollected them from the
presentations that I had sat through.
Dr. Huelskamp. Nine meetings, and you wrote it up after
they were over, and months later, in the----
Mr. Milsten. Yes, sir.
Dr. Huelskamp. Well, that is incredible. But I want to
double check. You are saying you are not--that none of the
other meetings were recorded?
Mr. Milsten. I will have to go back and confirm that.
Dr. Huelskamp. Did you take meeting notes in order to----
Mr. Milsten. I took notes on the slides that were being
presented so that I would have something to go back and create
this record.
Dr. Huelskamp. Okay. Well, I would ask you to provide those
to the committee.
Mr. Milsten. I did not retain them, unfortunately.
Dr. Huelskamp. Well, I would like to--any emails? Did you
email anybody about these meetings?
Mr. Milsten. I am sure I have some draft--emails of the
draft report going around.
Dr. Huelskamp. Okay. And so there were 40 people at these
meetings and you are the only one that took any record and that
was destroyed, and not kept, and you did this fully from memory
this entire report since----
Mr. Milsten. I had those when I was writing the report in
2012, I did not keep them after that.
Dr. Huelskamp. Okay. Well, if they are in an email, they
are on some server. You didn't use a private email server, did
you?
Mr. Milsten. No, sir.
Dr. Huelskamp. That's a serious question.
Mr. Milsten. No, sir.
Dr. Huelskamp. I wanted to double check on that.
I want to follow up on one other question, and Mr. O'Rourke
made reference to it, I have not seen any response from the VA
about the AP report that came out last week that indicated that
the wait time goals were severely behind in terms of--or way
behind in your goals. Is the AP report accurate, Mr. Secretary?
Mr. Gibson. The AP report is accurate. It is out of
context. They make a reference, for example, to 890,000
veterans who waited more than 30 days over a seven-month period
of time. They are absolutely right. There were 31 million
veterans that were seen in less than 30 days, and the vast
majority of those in less than 2 weeks.
There are countless--they refer to the four and a half
percent increase in the number of completed appointments during
that period of time. That happens to add up to two million
additional appointments for veterans.
And so part of the frustration for us--I am not pleased, we
have still got too many veterans waiting too long for care. But
the other thing that I do know is that we are improving access.
I was in Phoenix with----
Dr. Huelskamp. Thank you, Mr. Secretary, for the story. But
you are improving access even though 232,000 of those
appointments involved a delay of longer than 60 days?
Mr. Gibson. Correct.
Dr. Huelskamp. Is that an improvement?
Mr. Gibson. I don't know what the statistic was previously.
The point that I am making here is that access is improving.
Part of what we are seeing--and I was going to make the point
with the illustration in Phoenix. We have hired 300 additional
people in Phoenix since June of last year. What we have seen in
the meantime, their wait times have actually gone up, which
gives me great concern. What we have seen is the number of
primary care patients year over year, you are looking at the
seven months from June through December, up 13 percent,
specialty care patients up 15 percent, mental health patients
up 29 percent in one year.
As we work to improve access to care, what we find is
increasing demand. We saw the same thing that was in
Wilmington, North Carolina. Three months ago we built an 80,000
square foot healthcare center there. About a year and a half
earlier in the first year that it was open, a 14 percent
increase in unique patients coming there for care. I think
Congresswoman Titus mentioned the increase in patients coming
in Las Vegas following the opening of that particular facility.
Dr. Huelskamp. And I am out of time. I appreciate that. If
you could put that response to the AP report.
Mr. Gibson. Sure, would be glad to.
Dr. Huelskamp. (Indiscernible). The report is accurate, you
believe it is out of context, but the----
Mr. Gibson. Yes, sir.
Dr. Huelskamp [continuing]. Claims that nearly 20 some--20
plus percent of those appointments are delays of longer than 60
days which is well over the goal that--is a higher goal than
what----
Mr. Gibson. That happens to be .79 percent of completed
appointments during the time period they looked at.
Dr. Huelskamp. That is not what the report says. It says
nearly 894,000 medical appoints completed, nearly 232,000, that
is approximately two out of nine of these involved delays on
the----
Mr. Gibson. And the 232,000 is .79 percent of total
completed appointments. The 800, almost 900,000, over 30 days
is 2.--I am going to round it--I believe 2.8 percent of total
completed appointments during that period of time. That is my
point about context. You know, the fact of the matter is----
Dr. Huelskamp. You know what----
Mr. Gibson [continuing]. 97 percent----
Dr. Huelskamp [continuing]. Mr. Secretary, if I might say,
I don't care about context. I am worried about the veteran that
waited 61 days, or 90 days, or 120 days, and you and I both
agree on that. It is not working, and I will say this that----
Mr. Gibson. It is not. That is not acceptable. I agree with
you that it is not acceptable.
Dr. Huelskamp. These hearings have generated incredible
demand for veterans that gave up years ago on this system. They
gave up and said, ``We are not even going to try that.'' They
come up to me and say, ``Well, Congressman, should I go try to
get an appointment now? I gave up years ago.'' So we said,
``Well, give it one more chance.'' And now we are saying that
they got one more chance, they are still going in waiting 60
days, and they are going to walk out and say we are not doing
that again. And let's not see that happen. I appreciate the
response to the report. Thank you.
Mr. Gibson. Yes, sir.
Dr. Huelskamp. Yield back.
The Chairman. Ms. Rice.
Ms. Rice. Thank you, Mr. Chairman. Mr. Gibson, are you
aware of any legal impediment to you, or someone in your
agency, sitting down more informally than this with members of
the Committee so that we can understand the content of the
depositions that have been taken thus far?
Mr. Gibson. The honest answer is I don't know.
Ms. Rice. Yes, I don't know either that is why----
Mr. Gibson. We will explore that.
Ms. Rice. Would you?
Mr. Gibson. But I will tell you, I routinely have informal
visits, and Bob even more than me, with members of Congress on
all manner of topics. And so I would be delighted to come sit
down with you, and any other member of Congress, to talk about
how things are proceeding with the AIB. And, whether or not
that involves sharing sworn testimony and depositions, and
things, I don't know about that, I will have to do the homework
on that for you.
Ms. Rice. And I will too, but you probably have in--I am
sure you have in-house counsel that probably----
Mr. Gibson. We do.
Ms. Rice [continuing]. Knows the answer to that.
Mr. Gibson. We do.
Ms. Rice. But if there is any way that that could be done,
I think that would go a long way to making people on the
committee feel better about going forward.
So Mr. Walz asked you whether we would have--this report
would be done by the time we vote on the request. And you said
no.
Mr. Gibson. Which report are we referring to?
Ms. Rice. The AR report, right?
Mr. Walz. Yes, the analysis before we go forward.
Ms. Rice. Right.
Mr. Gibson. Yes, the two reports that I alluded to, one the
Corps of Engineers is working on a review of these four large
hospital construction projects in the broader practices and
policies that we are operating by today. We expect that report
in May. Then under the Choice Act there was one of the 12 study
streams that has been established, and work is well under way
already by an independent third party that we don't have any
control over whatsoever, independent third party that is doing
a comprehensive review of the entire construction program.
And that is due--all of those reports are due to Congress
in September. Those are the reports that the independent
commission, comprised of 15 individuals--three appointed by the
President, and then three each appointed by the Speaker of the
House, the Minority Leader of the House, the Majority Leader of
the Senate, and the Minority Leader of the Senate--those 15
receive those reports, and the Commission produces a set of
findings and recommendations that are based upon all of that
review that--of all of those 12 reports, in addition to
Congress receiving the reports directly.
Ms. Rice. Can you give an actual dollar figure for how much
it would cost to do the mothball? If you were not to be able to
get the money before the present money runs out?
Mr. Gibson. It is not simply just going in and figuring out
what it takes to weatherize, what it takes to secure the
facility. My point earlier is what happens when the Corps of--
if and when the Corps of Engineers negotiates an agreement with
KT, and as a result of that, they wind up--KT goes to their
subcontractors and the subcontractors say I don't want to work
on that project, it has already been stopped twice.
Ms. Rice. Right. No, I understand that.
Mr. Gibson. That was the purpose of me going out. I went
out, as did the Corps of Engineers, and we both spoke directly
with KT to the subcontractor community, their 40 or 50 largest
subcontractors, trying to basically instill confidence in them
to commit to the project, and we have got to keep this thing
going.
Ms. Rice. No, I understand that, I was just----
Mr. Gibson. The idea is to get it finished for the best
value we can.
Ms. Rice. I was just curious because I think it is
important to say, okay, if we took step one, if we chose
choice, if we made, you know, the first choice we go down this
road this is what it is going to cost and if we go down this
road this is what it is going to cost. So you can see if while
there would be a delay in time if you were to go through the
mothball and as we go through all of this, at the end of the
day it might not result in such a high price tag as going down
the other path, but I don't know that, that is why I asked if
you could put a dollar amount on that.
And just out of curiosity, my last question. Have you
brought in a forensic accountant to go through the books on
this project?
Mr. Gibson. Dennis, can you help me on that one?
Mr. Milsten. I assume--well, let me ask a question, a
little clarifying question. Do you mean the books that the
contractor has kept for the cost of the project or do you mean
our----
Ms. Rice. I'm talking about----
Mr. Gibson. Internal expenditures.
Ms. Rice. Every single money in, money out.
Mr. Gibson. Again, for us or for the contractor?
Ms. Rice. Both. I guess my question is I think that this
just calls for bringing in a forensic accountant so you can see
where the money went.
Mr. Milsten. We can show where all our money went when it
goes to the contractor. We have done some initial cost analysis
on the contractor's books to see where they were spending
money. Bringing in a forensic accountant is something that
could be done at a later date possibly.
Ms. Rice. Why would you do it at a later date?
Mr. Gibson. Could I suggest this ma'am?
Ms. Rice. Okay.
Mr. Gibson. What I'd like to do is come sit down with you
and walk through, give you some examples of what a payment
request looks like, what supports the payment request, how that
is reviewed by the contracting officer who is independent of
the project executive and give you some sense of how that
process works.
Ms. Rice. I would love that.
Mr. Gibson. Okay.
Ms. Rice. I would love that. But at the end of the day none
of us, I mean, I don't think--I am not an accountant--and I
think that a project like this, this size, if you talk--you
know, as I was trying to make the point before, Mr. Secretary,
this would never happen in the private sector because every
penny is accounted for because they have shareholders or they
have a, you know, board that they have to worry about making
and--giving an explanation to. So I just thought we should
think about maybe bringing in an outside forensic accountant to
do a real deep dive on the expenditure of every dollar so that
you can learn lessons going forward.
Mr. Gibson. Let us walk you through how expenditures are
documented really in the ordinary course.
Ms. Rice. That would be great. Thank you very much.
Thank you, Mr. Chairman.
The Chairman. Ms. Titus.
Ms. Titus. Thank you, Mr. Chairman. I would like to go back
to the question I asked that was answered by Mr.--I'm sorry,
Ms. Fiotes about the push back--the slippage of the timeline. I
think you told me the construction wouldn't be finished this
summer, but it won't be activated until next spring. Well, that
doesn't do the veterans any good if it is not activated. They
are not getting the service.
But beside that point, I have got here in my hand, the
activation timetable that you all gave us in April of 2014 and
then the activation timeline you gave me in February of 2015,
and this is what slipped, the activation timeline is what
slipped, not the difference between construction and
activation. And maybe I didn't make myself clear when I asked
about that, but I have got it right here, so maybe you can get
together with us afterwards and explain to us why the
activation has slipped. So we can talk about that offline.
Ms. Fiotes. I will look into that.
Ms. Titus. Yes, thank you. So I have got it and we can look
at it. Also I would like to ask--I have just learned, it has
kind of come to my attention sitting here as we have listened
to some of this ad nauseam, that the VA itself has estimated
that the veteran population in the Denver area is expected to
decline--decline--by 25 percent over the next 10 years. Now, we
are going to be spending an extra billion dollars while that
population is declining and we can't even get a bigger
emergency room while the population is growing?
Mr. Gibson. Yes, the veteran population isn't declining 25
percent anywhere in America over the next 10 years.
Ms. Titus. This is supposedly came out of a VA report that
we have got a copy of.
Mr. Gibson. The veteran population in general, as you look
across the country, is in gradual decline. What you see that is
counter to that is what's happening to increasing enrollments
and increasing utilization of VA. I don't think I mentioned
this point earlier, so if I did, forgive me.
When I went back and looked, from 2009 to 2014 the number
of patients that we are caring for, veterans that we are caring
for, in the eastern Colorado healthcare system has increased 31
percent, a 31 percent increase in patients in eastern Colorado
in five years.
So, yes, there is a decline, a very gradual decline, in the
veteran population on a year-by-year basis. I don't know, in
some submarkets it may be going the other way just because of
demographic trends. But nowhere are we seeing a 25 percent
decline in veteran population.
Ms. Titus. Well, it seemed strange to me too, but it is in
this report right here that we got, so maybe you can take a
look at it and explain to us what this report means because it
says very clearly in the VA report that the Denver population
is declining.
I don't know. I came in here thinking that I was just going
to hold my nose and vote for this appropriation. But after
listening to all this testimony, I have kind of come to the
conclusion that this is just a billion dollar earmark for Mr.
Coffman's district at the expense of veterans in Nevada and
across the country.
So unless we know specifically where this money is coming
from, it is not coming out of our veterans' hide and that we
put in some place some reforms, I am going to vote no on this.
Mr. Gibson. We owe the committee a detailed spend plan on
the--revised spend plan on the $5 billion. Yes, ma'am.
Ms. Titus. Thank you. Mr. Chairman?
The Chairman. Thank you very much, Members. I appreciate
your attendance Mr. Secretary and don't give up. We want to
work with you. We say it all the time. I have told Secretary
McDonald the same thing. We have to get this right. There is no
alternative. And I am not just talking about the Denver
debacle. I am talking about many, many other issues.
But I would go back to what Ms. Titus was just referring
to. There is a graph, a table, that your folks have provided
that shows a 25 percent decrease over the next two decades.
Mr. Gibson. Yes, it is over 20 years.
The Chairman. But it is still a 25 percent in----
Mr. Gibson. It is, yes. That is in the veteran population.
But the same chart you see the increase in enrollees that is
happening during that same period of time. So again, the
veteran population is declining everywhere. But what we see is
the percentage increase in enrollees and those that are coming
to VA for care. And that also is compounded by the fact that
the veteran population is getting older. And so therefore, the
care needs and more chronic conditions per veteran.
The Chairman. Thank you very much, Members.
[Whereupon, at 1:10 p.m., the subcommittee was adjourned.]
APPENDIX
Prepared Statement of the Chairman Jeff Miller
Good morning. The Committee will come to order.
Welcome to today's Full Committee oversight hearing
entitled, ``Denver VA Medical Center: Constructing a Way
Forward.''
I cannot imagine a better day to hold this hearing than
today--tax day.
As millions of Americans prepare to send their hard-earned
taxpayer dollars to Washington by midnight tonight, we gather
here to discuss the myriad of ways those dollars have been
wasted by the Department of Veterans Affairs (VA) over the last
several years in Aurora, Colorado.
Discussions surrounding the construction of a replacement
Denver VA Medical Center in Aurora date back to 1999.
In the ensuing fifteen years, the project has been marked
by failures, delays, and mismanagement that culminated in VA's
recent announcement that an additional eight hundred and thirty
million dollars [$830M] in funding and a total authorization of
one point seven three billion dollars [$1.73B]--triple the
original authorization--is needed by mid-May in order to
continue progress on the project.
As if that wasn't enough, VA recently informed the
Committee that Denver has a significant space need of more than
five hundred and fifty thousand [550K] gross square feet that
is, ``above the space that will be provided in the new medical
center.''
To simplify all of that for you, the Denver project has
been discussed for fifteen years, is a billion dollars over
budget, several years behind schedule, and--on the day it
opens--will apparently be too small.
At a Full Committee hearing on Denver in January of this
year, Congressman Roe stated that this project is a ``FUBAR on
steroids.''
I could not have said it better myself.
But while Denver represents a historic construction
catastrophe for the Department, it did not come without
warning.
Three years ago, this Committee held a series of hearings
about the replacement medical center project in Orlando,
Florida, that uncovered serious deficiencies with VA's major
medical facility construction management and oversight.
Admittedly, the problems in Orlando yesterday are different
from the problems in Denver today.
But, they should have signaled a light-bulb moment for the
Department and served to usher in an era of improved VA
leadership surrounding construction projects.
Instead, VA failed to heed the Committee's calls for action
then, allowing Denver to balloon into the billion dollar budget
debacle it is now.
Deputy Secretary Gibson agrees with me, noting in his
prepared testimony that ``course correction opportunities were
missed'' in this project.
Yet, to add insult to injury, none of the VA executives
involved have been held accountable.
None.
This is inexcusable.
Glenn Haggstrom, a former VA construction executive who
played a key leadership role in the Denver project, was
recently allowed to retired.
But make no mistake--failures of this magnitude represent
systemic problems above and beyond the work of a single person
and much more house cleaning and top-to-bottom reform is needed
before we can even begin to consider whether VA is competent to
manage a construction program.
However, the question at hand remains--what do we do about
Denver where, depending on who you ask, the project is either
sixty-two percent complete, fifty percent complete, or forty
percent complete?
I have heard press reports over the last two days that
indicate that VA is considering allocating a portion of the
five billion dollars ($5B) provided for staffing and space in
the Choice Act to the Denver project.
Then--with no forewarning or comment--VA emailed Committee
staffers at six-forty three (6:43) p.m. last night draft
construction authorization language that would increase the
authorization for the Denver project to one-point seven three
billion dollars ($1.73B), amend the authorization to include a
psychiatric residential rehabilitation treatment program, and
allow unobligated Choice Act funds to be used to fund the
completion of the Denver project.
No supporting details were provided.
We have received no official or unofficial word from VA
about whether or not this is true.
Last year, VA indicated that there were critical staffing
and space shortages throughout the VA health care system that
limited veteran access and required additional funding.
I had then--and still have now--serious doubts about the
need and justification for those dollars.
Nevertheless, Congress provided emergency funding, per VA's
request.
With the language sent late yesterday evening, VA officials
are communicating that they would now rather avoid identifying
savings that undoubtedly exist in the Department's one-hundred
and sixty three billion dollars budget ($163B)--the second
largest in the Federal government--by instead utilizing money
that they claimed just eight months ago was needed to increase
access across the country.
And all to complete a bloated construction project that
includes a glass concourse that covers the length of three and
half football fields and would now apparently also include a
psychiatric residential rehabilitation treatment program that
has never been discussed previously and is not listed on the
reprogramming worksheet VA provided three weeks ago to support
the need for additional funding..
Over the last several weeks I have asked VA--via letters to
the Secretary and pre-hearing questions for the record--to
provide key demographic, workload, and cost-benefit data,
identify potential alternatives, and locate possible funding
sources within the Department's vast budget.
I have also asked for meeting minutes from VA's
Construction Review Council in order to learn who among VA
senior leadership was aware of the problems in Denver yet
failed to take advantage of the ``course correction''
opportunities that Deputy Secretary Gibson is going to testify
about.
The responses I have received have been either non-existent
or inept for a project with cost overruns exceeding a billion
dollars.
Veterans across the country should be appalled that VA
allowed this project to get so out of hand.
I am appalled on their behalf.
Forwarding a last minute proposal absent supporting detail
or justification and simply stating, like the Department does
in their prepared testimony, that ``VA takes full
responsibility for the situation in Denver'' is not enough to
convince me that VA leaders have done the necessary work to
identify what went wrong and how to fix it.
It may be that allocating a portion of Choice Act funding
to complete the Denver project is the best option for moving
forward.
I am not closing the door on that possibility or on the
proposal that VA sent last night.
But, I cannot, in good conscience, advocate wasting hard-
earned taxpayer dollars by throwing good money after bad
without receiving much more information from VA.
Prepared Statement of Corrine Brown, Ranking Minority Member
Thank you, Mr. Chairman.
Today, we start the process of figuring out how to fix the
mess in Denver.
I know from painful experience with my Orlando facility
what it means to wait for years for a facility to be completed
and to open. I know what the veterans in Colorado are feeling
waiting for their facility to open.
There will be time another day to figure out who should be
blamed. Today, we must focus on how we fix the mess we have.
We have been told that VA will reach its authorization
level next month. We have been told by VA that the only good
option is to more than double this authorization level and come
up with an additional $900 million in order to complete this
project.
Let me be clear--this Committee, at the end of the day,
will take care of our veterans in Colorado like we take care of
all of our veterans across the country.
But in order to do this, and to make sure that actions we
take in regards to Denver do not unduly harm veterans in other
areas of our country, we must have an honest discussion as to
what our options are, and a timeline of what we must do, as a
Committee, and as Congress.
I look forward to having this frank discussion today, and
working with the VA and our veterans to fix this mess. What are
all of our options?
I also look forward to beginning to figure out how we make
sure that this does not happen again, where veterans have to
wait years and years for a promised facility and taxpayers are
on the hook for hundreds of millions more than planned.
Thank you Mr. Chairman, and I yield back the balance of my
time.
Prepared Statement Lloyd C. Caldwell, P.E.
Mr. Chairman and Members of the Committee, thank you for
the opportunity to appear before you again on behalf of
Lieutenant General Thomas Bostick, Chief of Engineers. I
provide leadership for execution of the U.S. Army Corps of
Engineers (Corps) engineering and construction programs in
support of the Department of Defense (DOD), other agencies of
the Federal Government in the United States and around the
globe.
The Corps fully recognizes the importance of the service of
members of the armed forces, the support of their families, and
the service of our veterans, in sustaining the strength of our
nation. We understand the vital link between the goals of their
service and missions and the technical capabilities we provide,
from consultation to delivery of infrastructure. As I have
testified at prior Congressional hearings, the Corps has
significant construction management capabilities and experience
delivering medical facilities for our service members and
veterans. Today, we have been asked by the Committee to testify
on the subject of completing the construction of the Denver
replacement medical center in Aurora, Colorado (Denver
Hospital). My testimony will address actions we are taking in
partnership with Department of Veterans Affairs (VA) to
complete construction of the Denver Hospital--a unique
undertaking--as well as other support.
DOD's construction program utilizes designated Construction
Agents, of which the Corps is one; who procure and execute
design and construction of projects to deliver the Department's
infrastructure requirements authorized by law. The Corps is
also known for the Civil Works projects it executes for the
Nation, and the Corps' capabilities are perhaps uniquely
developed to fulfill both military and civil engineering
responsibilities. Interagency collaboration is an important
element of the Corps' work, and the Corps provides interagency
support as a part of its service to the nation. The Economy Act
(31 USC 1535) provides necessary authorities for the Corps to
assist the VA with any construction requirements, from minor to
major construction, to include completion of the Denver
Hospital.
In December 2014, the VA and the Corps entered into an
Economy Act agreement to allow the Corps to assess the Denver
Hospital construction project. Subsequent modifications to this
agreement have provided funding and the authority to prepare
for the award of a new Corps contract to complete the
construction. We are currently working with VA to develop a new
agreement that would allow the Corps to award the new contract
and transition the construction agent responsibility to the
Corps to manage the new contract. A team of technical experts
has visited the site and reviewed the completed work and
contract documents. The Corps is using teams of professionals,
including from the Northwestern Division, Omaha District,
Huntsville Engineering and Support Center, and Corps
Headquarters to undertake the steps that will lead to award of
the new construction contract as well as manage the contract
through to completion. We have identified a preferred course
for acquisition, issued a Notice of Intent to negotiate and
award a sole source contract to Kiewit-Turner, and we have
requested approval for the acquisition strategy. As we work
towards a new contract award, we continue to assess the
detailed requirements of this project and plans for completion
with the VA, taking into account the fact that construction is
still continuing under a separate VA contract with Kiewit-
Turner.
The Corps provided a preliminary estimate for completing
construction at Denver, which was one component of the
increased authorization requirements reported to Congress by
the VA. The VA combined the Corps' estimate with other VA costs
for completing the project. The preliminary estimate was
appropriate to inform the increased authorization requirements.
Meanwhile, we are developing an independent estimate suitable
for negotiation of the new contract.
As the actions for a new Corps contract are proceeding, the
Corps is also advising the VA on the management of the VA's
interim construction contract with Kiewit-Turner. This approach
continues progress on the project while the Corps prepares to
assume construction agent responsibilities.
While the Corps will assume a major role in the
construction of the Denver Hospital, the VA, as the project's
proponent, is still responsible for project requirements,
resourcing and facility transition to full operations. By using
our project delivery process, we are confident that the Corps,
acting as Construction Agent, can complete construction of the
Denver Hospital for VA and meet the needs of our veterans.
There are currently three lines of effort associated with
the Corps' support to the VA's major construction program,
which includes completion of the Denver Hospital project as the
construction agent. We are also undertaking a review to
identify lessons learned from the Denver Hospital and three
other major projects which may be used by VA to assess their
organizational structure, processes and controls. In addition,
we are engaging with VA leadership in discussion regarding the
application of best practices and project execution in their
program.
In other efforts, we continue to provide assistance to VA
to execute multiple minor construction and non-recurring
maintenance projects for the Veteran Integrated Service
Networks and the VA's National Cemetery Administration.
Our relationship with VA is strong and is growing. We are
committed to working with VA as Construction Agent to complete
the Denver project and to continue our partnership and
collaboration on future major medical construction projects and
identify best business practices. We continue to be prepared to
support the VA with its major capital program.
Mr. Chairman, this concludes my statement. Thank you for
allowing me to be here today to discuss the Corps' capabilities
and our work to assist VA. I would be happy to answer any
questions you or other Members may have.
Prepared Statement of Mr. Sloan D. Gibson
Good morning, Mr. Chairman and Members of the Committee.
Thank you for the opportunity to update the Committee on the
status of the construction of the replacement medical center in
Denver. I am accompanied today by Ms. Stella Fiotes, Executive
Director, and Mr. Dennis Milsten, Director of Operations, of
the VA Office of Construction and Facilities Management.
The Department's main priority regarding the Denver project
is to complete the facility without further delay, and to do
that while delivering the best possible value to taxpayers
given the difficult circumstances. Our commitment to completing
this project, which is intended to serve over 390,000 Colorado
Veterans and their families, has never wavered, and current VA
medical facilities and programs in the area continue to ensure
that no Veterans or their families go unserved.
Background
I think it is important to review the events that brought
us to where we are today. I would like to highlight some key
events that directly shaped the current status of the project.
The replacement of the existing Denver VA Medical Center
began as an idea between the University of Colorado and VA to
construct a shared facility. The project went through a
protracted development period that included a concept to build
a shared facility with the Department of Defense. VA requested
design funds in fiscal year (FY) 2004, with an estimated
project budget of $328.5 million. In 2004, then VA Secretary
Principi set forth the requirement for a stand-alone VA
facility on the Fitzsimmons campus. VA developed a plan for a
1.4 million square foot facility in 2006, then revised that
plan to 945 thousand square feet, and subsequently requested
appropriations for an $800 million project in 2010 with final
funding being requested and received in 2012.
VA retained the services of an architect engineer firm (AE)
to complete a design with an Estimated Construction Cost at
Award (ECCA) of $582 million. The original acquisition strategy
for the project was to complete 100 percent design and then
solicit construction proposals to build the project. This
strategy was changed to use a different contract mechanism,
known in the Industry as ``Early Contractor Involvement,'' to
bring the contractor onboard early to participate in the
design. This change in acquisition strategy, intended to
expedite project delivery by overlapping early phases of
construction with completion of the design, was a decisive
moment in the life of the project. The timing and
appropriateness of this specific delivery method underlie many
of the ensuing issues with the management of the project. VA
entered into a contract in August 2010 with Kiewit-Turner (KT)
to perform design, constructability, and cost reviews. This
contract also provided an option to award the construction of
the facility to the contractor.
At the time of the 2010 contract award, the design had
progressed to a point that limited the opportunity for the
contractor to influence the design and cost. The contractor
provided pre-construction services and amid attempts at cost
reconciliation with the designer, the contractor maintained
that the project was over budget and could not be built for the
established ECCA. The parties negotiated for a period of
approximately six months to arrive at a construction contract
price but differences remained. Feeling the need to finally get
to construction award for the project, VA and the contractor
executed an option on November 11, 2011, to build the
replacement hospital, which became known as Supplemental
Agreement 07 (SA-07). The total design was not 100 percent
complete at the time; it was at what was deemed an ``enhanced
design development or roughly 65% stage.'' SA-07 stated that VA
would ensure that the design produced would meet the ECCA of
$582.8 million and that the contractor, KT, would build the
project at the firm target price of $604 million, which
included pre-construction services and additional items. This
was the next and probably most critical point in the project's
evolution. VA's promise to ensure that the design produced met
the ECCA became the centerpiece of diverging interpretation and
conflicts between VA and the contractor. Course correction
opportunities were missed because of the fundamentally
different interpretation of SA-07, poor project and contract
management, and the increasingly strained relationships among
the parties.
KT filed a complaint with the Civilian Board of Contract
Appeals (CBCA) in July 2013 that further cemented the differing
perspectives on the interpretation of the contract and
ultimately the cost of the project. Despite the less-than-
optimal business environment during the year-and-a-half of
litigation, construction quality and progress were maintained.
In December 2014, VA was found in breach of contract for
failure to provide a design that met the ECCA, and KT began to
demobilize from the project site. VA entered into immediate
negotiations with KT to stop the demobilization, recognizing
the hospital was approximately 50 percent complete.
Subsequently, VA entered into an interim agreement with KT to
continue the project, and with the United States Army Corps of
Engineers (USACE) to assess the project, and to manage all the
pre-award activity related to the follow-on contract. VA
intends to enter into a separate agreement with USACE to
execute a new construction contract and to complete the
facility once we have obtained the necessary authorization and
funding.
Options and Costs for Completion of Project
After the decision by the CBCA, VA identified two primary
courses of action. The first was to allow KT to continue
demobilizing and have VA assume maintenance of the site, update
the construction contract documents, and re-compete the
contract for the remaining work. The second option was to re-
establish a contractual relationship with KT for continued
construction of the medical center. The option to re-compete
the project represented a potential 18-to 22-month delay,
involving closeout of the existing contract and development and
award of a new contract to finish the job. While this work was
ongoing, VA would also need to engage several contractors to
maintain the site and preserve the work accomplished to date.
In addition, VA would have to recognize the bidding climate for
this project would not be advantageous, and a premium would be
applied by subcontractors to cover perceived risk. These
factors would have served to increase both the length of time
to complete the project and its ultimate cost.
The second option of retaining KT leveraged their current
knowledge of the project, presence on the site, and existing
relationships with subcontractors. It reduced delays that could
have impacted construction warranties and provided the best
option for protecting the existing construction. Finally,
resuming work with KT put over 600 workers back on the job, and
also best protected the significant investment already made in
this project. In the days immediately following the
demobilization, this option represented the clearest path to
achieving the two main goals stated above. For this reason, it
is the path that VA chose.
On March 17, 2015, VA notified Congress that the total
estimated cost for the Denver Replacement Medical Center
project would be $1.73 billion. This is an authorization
increase of $930 million to complete the project and requires
additional funding of $830 million. The new authorization level
reflects input from USACE on the required cost to complete the
project. USACE has had access to all design documents and VA
staff relative to the Denver project. The USACE team included
subject matter experts in cost contracting, acquisition,
construction management, design management, and cost
engineering. The team also looked at the cost to administer the
construction. USACE was provided access to all estimates of
construction, cost paid to-date, and modifications executed.
USACE also examined the original contract as well as the
interim contract to assess cost and completion progress.
USACE used all this information to form their assessment of
the cost to complete the effort. Their estimate included a
contingency and cost to manage the construction. USACE
estimates a need for an additional $700 million following the
close out of the original and interim contracts. USACE has
established a June 2015 target to award a new contract for the
completion effort.
VA added the cost necessary to continue the interim
contract through June 2015, additional funds for closing out
the original contract and funds for completing the post-
traumatic stress disorder residential treatment facility. This
totaled $130 million in addition to USACE's construction
completion estimate. The money currently on the project of
$899.8 million, plus the $700 million and the $130 million,
drive the $1.73 billion estimate for the project. We look
forward to working with Congress to identify additional funding
sources to complete the Denver project.
Accountability
VA established an Administrative Investigation Board to
look at the actions and processes that resulted in the current
situation and the employees responsible for those actions and
decisions. At this juncture, while the investigation is
ongoing, it is premature for VA to identify who may be subject
to appropriate disciplinary action. VA intends to hold any
individuals found to have acted negligently accountable for
their actions. As previously discussed during the hearing in
January 2015, USACE is also conducting a broader, detailed
examination of VA's major construction program to identify gaps
and improve management processes, structures, and controls in
project oversight and delivery. We expect USACE to complete
their review and report their findings in May 2015. In the
interim, we changed the reporting structure within the
Department so that the Office of Construction and Facilities
Management reports directly to me to ensure continued
visibility and accountability in real time.
In addition to the review of the four large hospital
projects by USACE, an independent third-party organization is
conducting a comprehensive assessment of the entire VA
construction program as part of the Choice Act legislation and
will report their findings to Congress by September 2015.
The Future of VA Construction
Over the past two years, VA has significantly changed the
way it conducts business, but more work remains to be done.
Unfortunately, many of these changes take time to show specific
results, and were too late to affect the Denver project.
To help ensure that previous challenges are not repeated
and to lead improvements in the management and execution of our
capital asset program as we move forward, VA will continue to
adopt best-management practices and controls that focus on
these lessons learned:
Incorporating integrated master planning is
essential to ensure that the planned acquisition closes
the identified gaps in service and corrects facility
deficiencies.
Requiring major medical construction projects
must achieve at least 35-percent design prior to cost
and schedule information being published and
construction funds requested.
Implementing a deliberate requirements control
process, where major acquisition milestones are
identified to review scope and cost changes based on
the approved budget and scope. Any significant changes
in project scope or cost need to be approved by the
Secretary prior to submission to Congress.
Institutionalizing a Project Review Board
(PRB). VA worked with USACE to establish a PRB for VA
that is similar to the structure at the USACE District
Offices. The PRB regularly provides management with
metrics and insight to indicate if/when a project
requires executive input or guidance.
Using a Project Management Plan to outline a
plan for accomplishing the acquisition from planning to
activation to ensure clear communication throughout the
project.
Establishing of VA Activation Office to ensure
the integration of the facility activation into the
construction process for timely facility openings.
Conducting pre-construction reviews--Major
construction projects must undergo a
``constructability'' review by a private construction
management firm to evaluate design and engineering
factors that facilitate ease of construction and ensure
project value.
Planners into the construction project teams--
Each major construction project will employ medical
equipment planners on the project team from concept
design through activation.
These improvements are being applied to our ongoing and
upcoming major construction projects. Depending on the stage of
development, some projects like the Denver Replacement Medical
Center did not have the full advantage of these improvements.
In the past five years, VA has delivered 75 major
construction projects valued at over $3 billion that include
the new medical center complex in Las Vegas; cemeteries;
polytrauma rehabilitation centers; spinal cord injury centers;
a blind rehabilitation center; and community living centers.
The New Orleans replacement facility is currently on schedule,
and is anticipated to be completed in the fall of 2016. This is
not to diminish our serious concerns over the mistakes that led
to the current situation on the Denver project, but only to
emphasize that we have successfully managed numerous projects
through our major construction program. VA takes full
responsibility for the situation in Denver, and we will
continue to review our major construction program and the
details of this project to improve our performance.
In closing, each day, VA is moving toward its goal of
improving and streamlining our processes to increase access to
our Veterans and their families. I am personally committed to
doing what is right for Colorado veterans, and completing the
Denver project without further delay and to do that while
delivering the best possible value to taxpayers given the
difficult circumstances.
Mr. Chairman, this concludes my statement. Thank you for
the opportunity to testify before the Committee today. My
colleagues and I would be pleased to respond to questions from
you and Members of the Committee.
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