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39–468 2008

THE U.S. DEPARTMENT OF VETERANS AFFAIRS 

CONSTRUCTION PROCESS 

HEARING 

BEFORE THE

SUBCOMMITTEE ON HEALTH 

OF THE

COMMITTEE ON VETERANS’ AFFAIRS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TENTH CONGRESS 

FIRST SESSION 

NOVEMBER 1, 2007 

Serial No. 110–59 

Printed for the use of the Committee on Veterans’ Affairs 

( 

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ii 

COMMITTEE ON VETERANS’ AFFAIRS 

BOB FILNER, California, Chairman 

CORRINE BROWN, Florida 

VIC SNYDER, Arkansas 

MICHAEL H. MICHAUD, Maine 

STEPHANIE HERSETH SANDLIN, South 

Dakota 

HARRY E. MITCHELL, Arizona 

JOHN J. HALL, New York 

PHIL HARE, Illinois 

MICHAEL F. DOYLE, Pennsylvania 

SHELLEY BERKLEY, Nevada 

JOHN T. SALAZAR, Colorado 

CIRO D. RODRIGUEZ, Texas 

JOE DONNELLY, Indiana 

JERRY MCNERNEY, California 

ZACHARY T. SPACE, Ohio 

TIMOTHY J. WALZ, Minnesota 

STEVE BUYER, Indiana, Ranking 

CLIFF STEARNS, Florida 

JERRY MORAN, Kansas 

RICHARD H. BAKER, Louisiana 

HENRY E. BROWN, JR., South Carolina 

JEFF MILLER, Florida 

JOHN BOOZMAN, Arkansas 

GINNY BROWN-WAITE, Florida 

MICHAEL R. TURNER, Ohio 

BRIAN P. BILBRAY, California 

DOUG LAMBORN, Colorado 

GUS M. BILIRAKIS, Florida 

VERN BUCHANAN, Florida 

MALCOM A. SHORTER, Staff Director 

SUBCOMMITTEE ON HEALTH 

MICHAEL H. MICHAUD, Maine, Chairman 

CORRINE BROWN, Florida 

VIC SNYDER, Arkansas 

PHIL HARE, Illinois 

MICHAEL F. DOYLE, Pennsylvania 

SHELLEY BERKLEY, Nevada 

JOHN T. SALAZAR, Colorado 

JEFF MILLER, Florida, Ranking 

CLIFF STEARNS, Florida 

JERRY MORAN, Kansas 

RICHARD H. BAKER, Louisiana 

HENRY E. BROWN, JR., South Carolina 

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public hearing records 

of the Committee on Veterans’ Affairs are also published in electronic form. The printed 

hearing record remains the official version. Because electronic submissions are used to 

prepare both printed and electronic versions of the hearing record, the process of converting 

between various electronic formats may introduce unintentional errors or omissions. Such occurrences are inherent in the current publication process and should diminish as the process 

is further refined. 

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iii 

C O N T E N T S 

November 1, 2007 

Page 

The U.S. Department of Veterans Affairs Construction Process ......................... 1 

OPENING STATEMENTS 

Chairman Michael Michaud ................................................................................... 1 

Prepared statement of Chairman Michaud .................................................... 28 

Hon. Jeff Miller, Ranking Republican Member ..................................................... 2 

Prepared statement of Congressman Miller ................................................... 28 

Hon. Corrine Brown ................................................................................................ 2 

Prepared statement of Congresswoman Brown ............................................. 29 

Hon. Cliff Stearns .................................................................................................... 3 

Hon. Shelley Berkley ............................................................................................... 4 

Hon. Henry E. Brown, Jr. ....................................................................................... 5 

Hon. John T. Salazar ............................................................................................... 5 

WITNESSES 

U.S. Department of Defense, Major General David W. Eidsaune, Commander, 

Air Armament Center, Eglin Air Force Base, FL, Department of the Air 

Force ...................................................................................................................... 6 

Prepared statement of General Eidsaune ...................................................... 29 

U.S. Department of Veterans Affairs, Donald H. Orndoff, Director, Office 

of Construction and Facilities Management ...................................................... 23 

Prepared statement of Mr. Orndoff ................................................................. 44 

American Legion, Shannon L. Middleton, Deputy Director, Veterans Affairs 

and Rehabilitation Commission .......................................................................... 18 

Prepared statement of Ms. Middleton ............................................................ 42 

Clarkson Group, L.L.C., The, Jacksonville, FL, Charles A. Clarkson, Founder 

and Chairman ....................................................................................................... 11 

Prepared statement of Mr. Clarkson .............................................................. 39 

Haskell Company, The, Jacksonville, FL, William Wakefield, Vice President, 

Healthcare Division ............................................................................................. 10 

Prepared statement of Mr. Wakefield ............................................................. 34 

Veterans of Foreign Wars of the United States, Christopher Needham, Senior 

Legislative Associate, National Legislative Service .......................................... 17 

Prepared statement of Mr. Needham ............................................................. 40 

MATERIAL SUBMITTED FOR THE RECORD 

Post-Hearing Questions and Responses for the Record: 

Hon. Michael Michaud, Chairman, Subcommittee on Health, Committee 

on Veterans’ Affairs, to Dennis Cullinan, National Legislative Director, 

Veterans of Foreign Wars of the United States, letter dated November 

8, 2007, and VFW response .......................................................................... 46 

Hon. Michael Michaud, Chairman, Subcommittee on Health, Committee 

on Veterans’ Affairs, to Steve Robertson, National Legislative Director, 

American Legion, letter dated November 8, 2007, and American Legion 

response ......................................................................................................... 48 

Hon. Michael Michaud, Chairman, Subcommittee on Health, Committee 

on Veterans’ Affairs, to Hon. Gordon H. Mansfield, Acting Secretary, 

U.S. Department of Veterans Affairs, letter dated November 8, 2007, 

and VA response ........................................................................................... 50 

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(1) 

THE U.S. DEPARTMENT OF VETERANS 

AFFAIRS CONSTRUCTION PROCESS 

THURSDAY, NOVEMBER 1, 2007 

U.S. HOUSE OF REPRESENTATIVES, COMMITTEE ON VETERANS’ AFFAIRS, SUBCOMMITTEE ON HEALTH, Washington, DC. 

The Subcommittee met, pursuant to notice, at 10:00 a.m., in 

Room 334, Cannon House Office Building, Hon. Michael Michaud 

[Chairman of the Subcommittee] presiding. 

Present: Representatives Michaud, Brown of Florida, Snyder, 

Berkley, Salazar, Miller, Stearns, and Brown of South Carolina. 

OPENING STATEMENT OF CHAIRMAN MICHAUD 

Mr. MICHAUD. I would like to call the Subcommittee on Health 

to order. I would like to thank everyone for coming this morning. 

The purpose of this hearing is to learn more about the construction process within the U.S. Department of Veterans Affairs (VA). 

In 2004, the VA completed the Capital Asset Realignment for Enhanced Services (CARES) process. CARES was supposed to be a 

map to future VA facility development. It is unclear to me how 

closely the VA is following this map, and it is also unclear how well 

CARES will address the medical and demographic needs of current 

and future veterans of Afghanistan and Iraq. 

This Subcommittee is committed to providing the highest quality 

of care to our Nation’s veterans, and we understand that a key part 

of this care are the facilities in which it is provided. 

We are here today to get a better understanding of the entire 

construction process from the concept to the opening of a facility. 

Understanding this process is particularly important right now. 

Many of the VA hospitals and medical facilities are aging and 

are in need of major renovation or replacement. Many VA facilities 

need to be upgraded in order to meet the standards for earthquakes, fire and patient privacy. Population shifts require new facilities in new locations. The VA is in the process of planning several new hospitals in cities such as Las Vegas, Denver, and New 

Orleans. This process can be long and drawn out. It can take much 

longer than similar projects built in the private sector. 

We look forward to working with the VA to ensure that our veterans receive the best possible care in medical facilities that are 

modern and safe while being built efficiently and cost-effectively. I 

look forward to hearing about the current construction process, the 

VA’s plans and needs for future construction and how this Comwwoods2 on PRODPC68 with HEARING

2 

mittee can support this effort, with the goal always being to provide the best possible healthcare for our veterans. 

I now would like to recognize Mr. Miller for an opening statement. 

[The prepared statement of Chairman Michaud appears on 

p. 28.] 

OPENING STATEMENT OF HON. JEFF MILLER 

Mr. MILLER. Thank you very much, Mr. Chairman. I appreciate 

you holding this hearing today. 

As you have already said, access to different types of outpatient 

and inpatient facilities is critical in addressing the unique healthcare needs of our changing veteran population. Most of the Department of Veterans Affairs infrastructure was built more than 50 

years ago. Many of these facilities continue to age and are not well 

suited for the 21st century healthcare that is provided now. The facilities need repair and replacement, and they are sometimes simply located too far away from the veteran’s choice of living arrangements. 

I have a full statement that I would like to have entered into the 

record, but because we do have votes coming up in a few minutes, 

I would like to ask unanimous consent that my statement be entered into the record. 

I do want to say a special welcome this morning to our first witness, Major General David Eidsaune, who is here from Eglin Air 

Force Base in my district, the First Congressional District of Florida. 

We are glad to have you here with us this morning, General. 

I yield back. 

[The prepared statement of Congressman Miller on p. 28.] 

Mr. MICHAUD. Thank you very much. Without objection, your full 

statement will be put in the record. 

Ms. Brown. 

OPENING STATEMENT OF HON. CORRINE BROWN 

Ms. BROWN OF FLORIDA. Thank you. Mr. Chairman, I want to 

thank you for calling this hearing today. Thank you very much. I 

had requested this hearing, and have been pressing for it, and now 

we have it. 

This issue is very important to me as I represent part of Orlando, Gainesville, and Jacksonville. I would say most of Florida. 

Some of my colleagues might disagree. Central Florida waited 25 

years before the VA decided to put a VA medical center there earlier this year. Twenty-five years is too long for those men and 

women who have defended this country and their freedom that it 

holds dear. It is 25 years too long for the oldest veterans population 

to wait for proper care. Twenty-five years. I do not want to have 

to wait another 15 years for this hospital to open. 

In New Orleans, it has been 2 years since Hurricane Katrina hit 

the Crescent City and devastated the city. The employees at the 

VA medical center performed heroically for the patients and in 

evacuating everyone safely. However, we are no closer to rebuilding 

that hospital now than we were 2 years ago. 

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I have heard good things about design-build, where the design 

and construction aspects are contracted for or with a single entity 

known as a ‘‘design-builder’’ or a ‘‘design-builder contract.’’ The design-builder is usually the general contractor, but in many cases it 

is also the architect or the engineer. This system minimizes the 

project risks and reduces the delivery schedule by overlapping the 

design phases and construction phases of the project. 

Why can’t the VA use this modern device to speed up the process? 

I look forward to the hearing, the testimony of the witnesses 

today, and I will put my complete statement in the record, Mr. 

Chairman. 

[The prepared statement of Congresswoman Brown appears on 

p. 29.] 

Mr. MICHAUD. Without objection. 

Mr. Stearns. 

OPENING STATEMENT OF HON. CLIFF STEARNS 

Mr. STEARNS. Well, thank you, Mr. Chairman. 

I also share similar things with my colleague from Florida, Ms. 

Brown. We represent the University of Florida, and we have the 

Gainesville Hospital up there, and so we are working together on 

this, and we are trying to get additional money for it and for also 

the new Summerfield Clinic in South Marion County, both of which 

are in the construction budget and are in the process. The one in 

Summerfield is a 95,000-square-foot facility, which is in my hometown. 

I think a lot of us are concerned about a lot of the VA facilities 

that are aging, and in fact, I guess, a U.S. Government Accountability Office (GAO) report found that one out of every four medical 

care dollars goes to the maintenance and operation of the infrastructure, and we are losing millions of dollars annually on the upkeep of these facilities. 

So, obviously, that is why the CARES program got started, and 

that is why we are interested so much in the construction. 

There are, obviously, other projects throughout the United 

States. I think there are about 100 major construction projects in 

37 States, including in the District of Columbia and in Puerto Rico. 

So I am very sensitive to that fact that you have this many in a 

priority situation. The Military Construction and Veterans Affairs 

Appropriations Act, 2008, would provide $1.4 billion for major construction and $650 million for minor projects. So that is the good 

news. 

Like other Members of Congress, we have heard from our districts, and we need the facilities, and so we are particularly pleased 

that there is going to be additional funding for the Gainesville Hospital, and also, we want to get money for the Summerfield Clinic. 

So, Mr. Chairman, I am glad we are having the hearing. I compliment you on it. I look forward to the testimony. 

Thank you. 

Mr. MICHAUD. Thank you very much. 

Ms. Berkley. 

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OPENING STATEMENT HON. SHELLEY BERKLEY 

Ms. BERKLEY. I thank you very much, Mr. Chairman, for holding 

this very important hearing, and thank you very much for being 

here. 

I represent the Las Vegas area, and as you are well aware, we 

are on schedule to get a full VA medical complex that includes a 

VA hospital, a long-term care facility and a VA outpatient clinic, 

a full-service VA outpatient clinic. We have moved heaven and 

earth to do this. We had 147 acres transferred from the U.S. Department of the Interior to the Department of Veterans Affairs to 

save on costs of the land. I was at the Paiute Indian blessing of 

the land, which was quite an extraordinary ceremony. I was there 

for the groundbreaking with then Secretary Nicholson. They are 

moving dirt out there. Right now, it is in the middle of nowhere, 

but I know the growth patterns of my Congressional district and 

the entire State of Nevada. It is going to be in the middle of North 

Las Vegas in very short order. 

My biggest concern—and the appropriations have already been 

made, and we are moving forward. My biggest concern and what 

keeps me up at night, quite frankly, given the fact that I have the 

fastest growing veterans population in the United States in the Las 

Vegas Valley, is that I have 300,000 veterans in the State of Nevada. Two hundred and fourteen thousand of them call my district 

home. They have no healthcare facilities. There is nothing to repair. There is nothing there right now, and that is why this is so 

critical. I have 1,600 veterans who have returned from the Iraq-Afghanistan theater of war, and they are already accessing whatever 

healthcare system we have in Nevada. 

I need to keep this on track, and I need to have periodic—I mean 

other than my going over there and looking at the facilities going 

up, I need to know that we are moving in a positive direction. With 

the construction costs in Las Vegas skyrocketing beyond anybody’s 

wildest beliefs, my concern is that this gets more costly with every 

passing day. The sooner we get it up, the sooner we are going to 

save millions and millions of taxpayers’ dollars. 

So anything I could do to be working with you to move this in 

a very rapid and a positive direction, I am there for you, but I need 

to get these facilities up, and I need to get them up fast. 

Mr. STEARNS. Will the gentlelady yield? 

Ms. BERKLEY. Of course, Mr. Stearns. 

Mr. STEARNS. On this Indian blessing for the site, perhaps others 

might have to have that same kind of ceremony. 

How long a ceremony was it? 

Ms. BERKLEY. It was quite remarkable. 

Mr. STEARNS. Quite remarkable. 

Ms. BERKLEY. The Paiute Indians were in full regalia, and there 

were blessings and a lot of smoke. I do not think it was peyote, but 

it smelled good. It was quite an extraordinary cultural experience. 

Mr. STEARNS. That is the first I have heard of something like 

that occurring. 

So, Mr. Chairman, if you do not mind, I just indulged myself to 

find out a little more about it. Thank you. 

Ms. BERKLEY. By the way, that is all former Paiute land. 

Mr. MICHAUD. Mr. Brown. 

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OPENING STATEMENT OF HON. HENRY E. BROWN, JR. 

Mr. BROWN OF SOUTH CAROLINA. Thank you, Mr. Chairman. 

Thank you, General, for coming, and I look forward to hearing 

your testimony and that of the other members of the panel. 

I represent the First Congressional District of South Carolina. 

We have been working for some time now to try to develop a model 

that we feel would upgrade, I guess, the healthcare delivery for veterans across the Nation. It is to partner with the local, you know, 

State-run Medical University. We have been working on that plan 

for a long time, but it seems to me that we just cannot quite move 

to the next level. 

The Medical University now is in the process of building a complete new hospital complex. What we were hoping to do is to be 

able to incorporate in that development the replacement for the old 

VA hospital now in Charleston. 

We are facing a similar situation that you find in New Orleans 

today where the VA hospital was built on the peninsula of Charleston, which was built in a low-lying area, and we could almost 

sense, if we had a Katrina-type storm come through the region, 

that we would be out of business just like the folks in New Orleans. The Medical University is sensing that concern and is building 

on higher ground, and we were hoping that we would be able to 

replace the old VA hospital in the same time and manner as the 

current Medical University complex. By doing so, we would be able 

to unite some services between the VA and the Medical University 

that we currently are not doing. 

Ninety-five percent of those doctors who operate in the VA hospital actually come from the Medical University, so there is already 

some sharing; some imaging equipment is also being shared. What 

we were looking for is to get the units closer together in a physical 

sense so we would be able to unite more services and, I think, upgrade particularly in the highly specialized areas and, I think, in 

the clinical care area for, I guess, mental patients and some of the 

prostheses and for the heart and for some of the other high-tech 

procedures where we could better utilize the taxpayers’ dollars by 

uniting both of those units, but we cannot seem to move to the next 

level. 

We have appropriated—we have not appropriated, but we au- thorized some $38 million last year in the authorization bill, but 

we cannot seem to get the connectivity with the administration to 

be able to move that project forward, and I certainly would like to 

address that as you make your statements today. 

Thank you, Mr. Chairman. 

Mr. MICHAUD. Mr. Salazar. 

OPENING STATEMENT OF HON. JOHN T. SALAZAR 

Mr. SALAZAR. Thank you, Mr. Chairman. 

I just wanted to thank the General for being here. 

Of course, I share the same concern as many of my colleagues 

here around the table. We have been working on the Fitzsimons 

Hospital construction in conjunction with the University of Colorado, which will be, I hope, soon a state-of-the-art facility. I want 

to thank you for your service as well. 

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So I will submit my full statement for the record, Mr. Chairman. 

Thank you very much for holding this hearing. 

Mr. MICHAUD. Without objection. 

It is my pleasure now to recognize the first panel, Major General 

David Eidsaune. I want to welcome you here. A lot of comments 

you heard this morning so far actually deal with the VA jurisdiction, but hopefully those folks from the VA heard those opening remarks and will be able to address them when they come up to do 

their part. 

So, without further ado, Major General, I want to thank you once 

again for your service to this great Nation of ours. I look forward 

to your testimony here today. 

So please begin. 

STATEMENT OF MAJOR GENERAL DAVID W. EIDSAUNE, COMMANDER, AIR ARMAMENT CENTER, EGLIN AIR FORCE BASE, 

FL, DEPARTMENT OF THE AIR FORCE, U.S. DEPARTMENT OF 

DEFENSE 

General EIDSAUNE. Thank you, Mr. Chairman and Members of 

the Subcommittee, and thank you for this opportunity to speak 

about the ongoing VA construction project we have at Eglin Air 

Force Base, and thank you for your great support of our veterans, 

including the many who live in the community around my base, 

and they are also very vibrant supporters of our mission at Eglin. 

At Eglin and across the Air Force, we are continually working to 

expand and to improve available healthcare services for our active 

duty and veteran populations. This includes renovating and enlarging existing healthcare facilities as well as planning and building 

new facilities such as our own VA community-based outpatient 

clinic, which is under construction. 

The VA Gulf Coast Veterans Healthcare System covers the gulf 

coast of Mississippi, Alabama, and the Florida Panhandle. This extensive area is covered by one VA inpatient facility in Biloxi and 

three outpatient clinics in Mobile, Pensacola, and Panama City. 

Because the Emerald Coast of northwest Florida is one of the top 

10 fastest growing areas in the United States, there is a strong 

need to improve access for veterans to the medical services they deserve. The VA and Eglin Air Force Base have combined forces to 

address this need. The resulting VA community-based outpatient 

clinic is currently under construction and is scheduled to open in 

the spring of 2008. 

Eglin provided a 10-acre parcel, within walking distance of our 

main hospital, at no cost to the VA. The close proximity will enable 

a sharing arrangement for inpatient care, emergency room services, 

radiology, lab work, pharmacy, and specialty care, just to name a 

few. 

In closing, this VA clinic will be a tremendous joint success for 

Eglin, for the VA, and for our combined patient populations. I believe this cooperative effort will serve as a model for future initiatives to support the healthcare needs of our Nation’s veterans. 

Thank you. 

[The prepared statement of General Eidsaune appears on p. 29.] 

Mr. MICHAUD. Thank you very much, Major General. 

I have a couple of quick questions. 

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What major challenges did you face in building the communitybased outpatient clinic (CBOC) at Eglin Air Force Base? Were you 

able to stay on schedule and on budget for this project? 

General EIDSAUNE. In fact, there were no major challenges. It all 

went very well. We have been on schedule, on budget, and I know 

Congressman Miller has been out there to observe the construction, 

and he was very happy with that. So I would say it is a great success story so far. 

Mr. MICHAUD. Great. You are to be commended. 

Mr. Miller. 

Mr. MILLER. Thank you, Mr. Chairman. 

I think the focus of your testimony is unique now; it was not so 

unique 5 years ago. It was not even thought about that much, the 

cosharing between the VA and the U.S. Department of Defense 

(DoD). 

When I was elected in 2001, it was interesting to me that there 

was a huge disconnect between the DoD and the VA. Now, I think 

everybody is trying to bring them together as there is a possibility 

of providing much better service for both DoD and VA patients. 

In El Paso, the VA Medical Center and the William Beaumont 

Army Medical Center at Fort Bliss are colocated. VA inpatient care 

is provided through a VA/DoD cosharing agreement. Obviously, one 

was entered into in Florida because of the Community-Based Outpatient Clinic at Eglin. 

Were there great problems in putting that agreement together? 

What do you see as the future at Eglin or at other facilities of 

being able to expand inpatient care for VA patients? 

General EIDSAUNE. In fact, it made a lot of sense for us to have 

the big hospital right there at Eglin and one of the top five in the 

Air Force, in terms of size, to put a clinic right outside the fence 

and to provide primary care. If a veteran needs specialty care follow-up, they can walk right next door. We plan on putting in a golf 

cart shuttle system to take them back and forth through the gate, 

an electronic-type gate, to make it easy. So it all makes sense that 

we should put these two together and share arrangements. 

Mr. MILLER. What type of security issues are you having to deal 

with, going through the fence between the two facilities? 

General EIDSAUNE. What we plan to do is, for people who have 

appointments the next day, we will provide a list of those patients 

to the security forces, and when they come in the next day, they 

just show a picture ID and their VA patient badge, and they will 

be let right in to go to the hospital. For same-day appointments, 

we will use that gate I talked about—it will be an electronic gate— 

so the staff that accompanies the patient on the golf cart over there 

will just be able to swipe a card through the gate and get through 

to the hospital. So we do not see any major security concerns at 

all. 

Mr. MILLER. Do you think that adding veterans to the mix of patients that Eglin currently has is going to provide a broader range 

of services than currently exists? Do you see VA patients coming 

in helping the physicians and the facility at the hospital expand 

what they do? 

General EIDSAUNE. In fact, I think it will. 

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Part of our certification progress is we have to have a wide range 

of patient population, including aging patients. Well, we do not 

have that many on base right now in terms of the active duty. We 

also have a fairly good active residency program, and those residents need to see those types of patients also, so this really benefits 

our own hospital in terms of these VA patients coming over. 

Mr. MILLER. You came in when the process was already started, 

but what type of stumbling blocks have you seen through the VA 

and the DoD working together that you have had to overcome? 

General EIDSAUNE. Yes, I wish I could give you some, but it has 

been just a very smooth process so far. I know the folks in my hospital worked this really hard with the VA, but nothing has bubbled 

up to my level as being a major stumbling block in making this 

happen. 

Mr. MILLER. I think it is important for the Subcommittee to hear 

that both VA and DoD have worked seamlessly in making this 

transition, in providing the ability for veterans to receive healthcare as close to home as possible. 

As you heard this morning, there is a cry, a need for communitybased outpatient clinics to be located throughout the United States. 

As my colleague, Ms. Berkley, and I go back and forth about who 

has the most veterans, she obviously has a tremendous need and 

has for many years been an advocate for a full service hospital in 

her district. Finally it has been authorized, and the process is beginning. 

The veteran population has changed tremendously over the 

years; therefore, VA has had to modify the way that they provide 

healthcare. I want to say ‘‘thank you’’ to the DoD for being willing 

to partner with VA to help solve the problem. Today, once people 

leave active duty and become veterans or retirees within the system, they are still able to gain the healthcare that they deserve as 

people who have served this country, through VA and DoD collaboration. 

General, thank you for coming and for representing Eglin Air 

Force Base, Big Blue, and certainly the DoD. It is great to have 

somebody from northwest Florida here today. Thank you. 

General EIDSAUNE. Thank you, sir. 

Mr. MICHAUD. Ms. Brown. 

Mr. Brown. 

Ms. Berkley. 

Ms. BERKLEY. Because of your experience, what would you recommend to me? What should I be doing? What can I do to be most 

effective to keep this on track in Las Vegas? 

General EIDSAUNE. Well, what is really important is the working 

level relationships between the VA and the DoD hospital there, and 

to make sure that is vibrant and working very well, and they just 

have a way of working things out. 

Ms. BERKLEY. Okay. I am not sure if I understand how that 

helps get my facility built. 

General EIDSAUNE. Well, I am not familiar with where you are 

going to build it. Are you close to a DoD hospital? 

Ms. BERKLEY. The Michael Callahan Hospital that services Nellis 

Air Force Base. 

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9 

The reason that we are getting this VA facility is because it is 

just totally inadequate for the number of enlisted that we have at 

Nellis and the extraordinary number of veterans. That is why we 

are getting our own separate hospital. 

Mr. MILLER. If the gentlelady would yield for a minute, I think 

part of the issue is, yours is a stand-alone VA facility, and we are 

talking about the joint facility. So there is a difference, but I think 

he is right. What I have learned is the more times you visit the 

site, talk to the contractor, remind people that you are there, and 

your staff is there all the time, that is a lot. What we are looking 

at now is a collaborative effort, not a stand-alone facility. 

Ms. BERKLEY. I think, Mr. Miller, I will bring you to my district, 

and we can talk to them together. I will watch you in operation. 

Mr. MILLER. Let’s go. I am ready. 

Ms. BERKLEY. Thank you. 

Mr. MICHAUD. Mr. Salazar. 

Mr. SALAZAR. Thank you, Mr. Chairman. 

Major General, as you know, out in rural communities, we face 

a severe problem when we try to set up CBOCs. You know, sometimes the sufficiency ratio is not very good, and so sometimes there 

has been some talk in this Committee about partnering with private facilities, such as other hospitals, to help run these CBOCs. 

Do you have any suggestions as to how we address the issue out 

in small rural communities where you are not close to a military 

base? 

General EIDSAUNE. Well, in our own hospital at Eglin, we have 

some sharing relationships with private hospital facilities downtown, and if our workload is too high and we cannot see patients, 

we will send them downtown. We have worked that out. So I would 

suggest the same thing, maybe working with some of the smaller 

medical facilities out in the rural areas in terms of sharing arrangements like that. 

Mr. SALAZAR. Doing, maybe, some type of a contracting arrangement? 

General EIDSAUNE. Right. 

Mr. SALAZAR. I do not know. I know that Mr. Miller has the 

same problem—I believe it is you—and also the Chairman. So we 

might look at something like that in the near future because I do 

believe that, you know, the VA set up a CBOC out in Craig, although it is not a full facility. People have to travel, or veterans 

have to travel over 5 hours to get to a VA hospital from that area, 

and so I would really encourage us to look at something like that. 

I yield back. 

Mr. MICHAUD. I concur, Mr. Salazar. We definitely will. In the 

rural areas we have our own unique problems, and I definitely look 

forward to working with you as we move forward. 

If there are no other questions, once again, Major General, I 

want to thank you very much for your testimony and for coming 

here today and for your enlightening the Subcommittee on how 

well projects can move forward if you work together in a cooperative effort. So, once again, thank you very much, and thank you for 

your service to this great Nation of ours. 

General EIDSAUNE. Thank you, Mr. Chairman. 

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Mr. MICHAUD. I would like to ask the second panel to come forward. 

I will also ask Congresswoman Brown if she would introduce the 

second panel. Ms. Brown has been a very strong advocate, to put 

it mildly, in making sure that we had this hearing today. As well, 

she feels deeply about this issue, and I appreciate her passion and 

her willingness to move forward as we look at the VA construction 

process. 

So, Ms. Brown. 

Ms. BROWN OF FLORIDA. Once again, Mr. Chairman, thank you 

for holding this hearing. 

I would like to introduce the panel and really thank them. Mr. 

William Wakefield is the Vice President of The Haskell Company, 

the division leader for healthcare in Jacksonville. He has been involved in developing medical facilities for over 30 years, and he is 

a board certified architect. Yesterday, he was in Atlanta. He, I 

guess, flew to Jacksonville and flew back up here to be with us. 

So I want to thank you so very, very much, and make sure you 

thank Mr. Haskell, too. 

Mr. Bucky Clarkson, Charles Clarkson, has been involved in the 

real estate industry for over 25 years as an investor, developer and 

manager. Mr. Clarkson has also associated in the past with the 

Ross Company, a large national developer. He received his initial 

real estate experience as a real estate negotiator for the Safeway 

Stores in the Washington, D.C. area. He is a graduate of Princeton 

University and of George Washington Law School, and most importantly, he has been a very personal friend of mine for over 25 

years. 

Thank you very much, also, for flying up here. I talked with him 

yesterday morning. He got on a plane and came up here to be here 

today. 

So thank you all very much. 

Mr. MICHAUD. Once again, thank you as well. 

Mr. Wakefield, would you begin? 

STATEMENTS OF WILLIAM WAKEFIELD, VICE PRESIDENT, 

HEALTHCARE DIVISION, THE HASKELL COMPANY, JACKSONVILLE, FL; AND CHARLES A. CLARKSON, FOUNDER AND 

CHAIRMAN, THE CLARKSON GROUP, L.L.C., JACKSONVILLE, 

FL 

STATEMENT OF WILLIAM WAKEFIELD 

Mr. WAKEFIELD. Yes. Thank you very much for having me today 

on short notice. I would like to make a few comments if I can about 

the—— 

Mr. MICHAUD. Is your microphone on? Press the button. 

Mr. WAKEFIELD. Thank you very much. 

Again, thank you very much for having me today. I am delighted 

to come to talk to you today. 

My principal area of focus today will be on design-build as an alternative delivery model for your consideration. I am, again, Vice 

President for Healthcare Facilities at the Haskell Company. Haskell is a firm that provides design and construction services to a 

number of markets, including healthcare providers, principally in 

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a design-build delivery mode. What I would like to—and I have 

spent most of my career also, similarly, in the design-build delivery 

mode. 

What I would like to comment on just before we get started into 

questions is I would like to particularly draw your attention to a 

Penn State University-published study that was done in 1997, an 

objective study that looked at a variety of delivery models for design and construction. It studied 351 projects, and their findings 

are very interesting in terms of the benefits that design-build can 

offer to clients. 

As to the unit cost in terms of the actual cost of a facility, they 

found that, of the 351 projects that were studied, those delivered 

under the design-build delivery model were the lowest cost. They 

also represented the lowest cost growth, if you will, and that is the 

cost from the initial budget to the final construction cost of the 

completion and occupancy of the building. There were similar results for delivery speed in terms of the shortest period of time 

through design and construction and for the shortest or the least 

scheduled growth during the process. 

Finally, of course, none of that would be of much benefit if you 

did not have similar results in terms of quality, and again, the 

Penn State study indicates that quality, as ranked by the owners 

of the various facilities, was highest for design-build delivery 

projects. 

There are a number of other advantages to design-build and, obviously, a number of nuances in terms of a design-build delivery 

versus a design-bid-build or a construction management-type delivery. 

I would be delighted to entertain your questions on those as we 

get into the discussion. Thank you very much for the opportunity 

to give opening comments. 

[The prepared statement of Mr. Wakefield appears on p. 34.] 

Mr. MICHAUD. Thank you very much, Mr. Wakefield. 

Mr. Clarkson. 

STATEMENT OF CHARLES A. CLARKSON 

Mr. CLARKSON. Thank you, Mr. Chairman. Thank you, Congresswoman Brown and Members of the Subcommittee. 

I am pleased to share the limited amount of knowledge that I 

have on an extremely important topic. I just have three brief comments as I have a slightly different view than my friend Mr. Wakefield and my dear friend Congresswoman Brown. 

In my experience in development, design-build definitely applies 

when you have what I would simply call a cookie cutter opportunity, in my experience. Making sure—and this is not always the 

case in design-build. Making sure that you have complete plans before you break ground is critical in terms of managing time, costs 

and risks. However, clearly, the positive elements of design-build 

that lend itself toward the encouragement of standardization are 

very important points. 

To the extent that products can be standardized, whether for 

hospitals or for any other type of product, the more you can standardize, the more you get the benefits of design-build, because the 

more you standardize, the more you will reduce time in design— 

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you will reduce some cost in the design cost itself, and you also will 

reduce overall risk. 

So, as a developer, I have chosen the alternative, mainly because 

our projects are high-barrier-to-entry opportunities where we have 

to squeeze them into downtown Savannah or into downtown 

Tampa or somewhere like that. 

Clearly, any project that has some previously established standardized approach will really get the benefits of streamlining and 

cost reduction and risk management. 

Thank you. 

[The prepared statement of Mr. Clarkson appears on p. 39.] 

Mr. MICHAUD. Thank you very much, Mr. Clarkson. 

I have a couple of questions for both of you. 

What difference do you see between the private development 

process and the VA development process? What lessons about development and construction do you feel the VA could learn from the 

private sector to make construction more efficient and cost-effective? 

Mr. Wakefield, do you want to start off with that? 

Mr. WAKEFIELD. Yes, I would be happy to. Thank you. 

I do think that Mr. Clarkson’s comments are valid with respect 

to the ability to control cost and schedule, to a large extent, 

through somewhat of a standardization in terms of design. Many 

of our clients, private-sector clients, do have standard designs for 

patient rooms and for other types of patient-care areas. From our 

perspective, of course, each is different, and therefore, each is 

unique. 

So for a design-build firm, we deliver with a variety of design 

concepts, but from our owner’s standpoint, the provider’s standpoint, somewhat of a standardization on design is an important aspect. I do believe that the VA can benefit somewhat from that 

standardization. That is not to imply that a certain facility will not 

provide the service or the quality of service that one would wish, 

but to the degree that you can replicate patient rooms, for example, 

in inpatient facilities, the process becomes much easier, much more 

streamlined, and it can be more predictable in terms of time and 

in terms of cost. 

Mr. CLARKSON. I just thought—I have not done any public 

projects, but I would expect an empowered decisionmaker in the 

private sector would be a critical difference. The public sector is not 

my area. 

You could streamline the decision-making process and have an 

empowered decisionmaker to drive the project forward. There are 

probably a lot of things going on in the public sector. Whereas, in 

the private sector, we cannot afford it. Somebody has got to get it 

done. 

Mr. MICHAUD. Great. Thank you very much. 

Mr. Miller. 

Mr. MILLER. I pass, and will yield my time to Ms. Brown. 

Ms. BROWN OF FLORIDA. Thank you very much. 

Let me just ask; there is another problem, it seems. 

Recently, I visited the Gainesville facility, and it is on-line. We 

have the authorization and the funding, but there is going to be a 

hospital built right next-door, and that hospital will probably come 

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up—you know, and this is private—like 2 years before our VA facility is going to come up. In that facility, you have five patients in 

a room, and they do not have a bathroom. Now, that does not make 

any sense. There has to be a way—like I said earlier, Orlando, 25 

years. 

How can we streamline the process? Should we think about a 

one-stop process? Because part of it is permits and those kinds of 

things, and they are all our agencies. Why can’t we have kind of 

a one-stop facility so that you can get everybody in a room with 

these high-priority projects and work through the permitting process or something like that? 

Mr. CLARKSON. Without knowing that project particularly, it just 

sounds like maybe nobody is in charge, really. Again, my gut would 

tell me to go back to the empowered decisionmaker who is breaking 

the logjam. I know there is bureaucracy at every level of industry. 

In any place where you have more than 300 people involved, there 

is a bureaucracy, and the only way you can get through it is to 

have an empowered decisionmaker. 

Ms. BROWN OF FLORIDA. So you are suggesting something like an 

ombudsman—— 

Mr. CLARKSON. It could be. It could be. 

Ms. BROWN OF FLORIDA. [continuing.] Or a building czar or something? 

Mr. CLARKSON. Right. It is going to make somebody unhappy, 

but that happens in the private sector where the contractor is not 

happy or the architect is not happy, but ‘‘this is what we are going 

to do.’’ That is my gut. I would suspect that nobody is in charge, 

so they are waiting for somebody else to tell them to do something. 

Ms. BROWN OF FLORIDA. Mr. Wakefield. 

Mr. WAKEFIELD. Yes. I do think that the team that is selected 

to implement the project can have an impact on that. Certainly, 

again, I believe that in a design-build arrangement, where you do 

have a single source that is in charge at least from the delivery 

side, it is an important aspect but it is not the only aspect. 

We recently completed a hospital, a 100-bed hospital, in the 

Tulsa area for the St. John Health System 16 months from conceptual design to occupancy. So I think that the delivery speed and the 

cost control, and so forth, are available through an integrated design-build process, but I would reflect the comments that were 

made here, that the decision-making process and the permitting 

processes are probably the largest variables in terms of a schedule 

for completing a new hospital. 

Ms. BROWN OF FLORIDA. So you were able to complete this hospital in 16 months. 

Mr. WAKEFIELD. From beginning conceptual design to occupancy 

in 16 months, yes, ma’am. 

Ms. BROWN OF FLORIDA. What do you think are some of the contributing factors? 

Mr. WAKEFIELD. Well, I think some of the contributing factors 

are the streamline design—or the decision-making process on the 

owner’s part. This is the first new, free-standing hospital that St. 

John Health Systems has built, but nonetheless, they organized 

themselves in a very efficient, committee-like organization to manage the overall process. So from our perspective, the things that 

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slow us down is indecision about design issues, indecision about, 

you know, how patient floors will be organized, and so forth. 

While, again, St. John does have some standards for the design 

process, any new hospital is going to have a lot of custom questions 

and decisions to be made, St. John organized themselves very efficiently in terms of providing that guidance to us that enabled us 

to deliver on such a schedule. 

Ms. BROWN OF FLORIDA. Mr. Chairman. 

Mr. MICHAUD. Thank you very much, Ms. Brown. 

Mr. Salazar. 

Mr. SALAZAR. Thank you, Mr. Chairman. 

I am not quite clear on the difference between design-build and 

whatever. Could you just explain it to a layman farmer? 

Mr. WAKEFIELD. Yes, I would be happy to. 

In what is often referred to as the ‘‘traditional process,’’ an owner 

will hire an architect under a contract where that architect will 

provide design and engineering services. Once the architect’s design is complete, the project would be put out for bid to contractors. 

Contractors would then bid on the project, and you know, the lowest qualified contractor’s bid would be accepted, and that contractor 

would be hired also by the owner under a separate contract with 

the construction firm then. So the owner holds two contracts. They 

hold an architectural agreement with the architect, and they hold 

a construction agreement with the construction company. 

In the design-build setting, the architect and the contractor are 

one in the same; they are the same entity, and the owner holds a 

single contract with that design-build firm. 

The differences are that, in the traditional setting the owner is 

placed in a position of mediating, if you will, reconciling differences. When there are errors in design documents, the contractor is going to come back and look for extras as a result of that, 

and so forth, and that is part of the reason—and because the team 

is not as closely coordinated, that is part of the reason why that 

process does not necessarily result in as fast or as cost-effective a 

delivery. 

In the design-build setting, under a single contract, there is a 

single point of accountability, so the design-builder is responsible 

for not only the close coordination of their work, but they are also 

responsible for the quality of the documents, the completeness of 

the documents, and so forth. So, if there were an error in the design documents, for example, that would result in additional construction costs to remedy, it would be the design-builder’s responsibility, not the owner’s responsibility. 

Again, because it is one integrated party, they can coordinate 

their work much better. We can order materials. Critical lead item 

materials we can order before the design is completed, for example, 

and there are a number of techniques like that we can take advantage of as an integrated firm to increase the delivery speed. 

Mr. CLARKSON. Let me just add to that. 

The enemy of managing construction costs is the change order. 

In a very specialized project, when the contractor and the architect—the architect has had to run off sophisticated designs. Often, 

the contractor—certainly not the Haskell firm—looks for his profit 

opportunity within the change order where the architect did not 

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quite get it right, and he has got to make some changes. Then the 

contractor comes in and makes a nice adjustment in the cost. 

So, to the extent that the project is more specialized and less 

cookie cutter, there is more risk for change orders, and therefore 

more risk for delays, cost controls and people yelling at one another. It also comes back to the importance of making sure those 

plans are not 90 percent, not 95 percent but, hopefully, 100 percent, but even with those that are 100 percent, there are still going 

to be some issues in terms of execution by the contractor and what 

the plans actually said. 

So the more complicated the project, the greater the risk is. So 

when you have tension between the architect and the contractor, 

they are sort of balancing one another. Whereas, if it is a single 

point and the architect screwed up, it will get buried—certainly not 

with this firm—but the project will get built anyway, and that is 

the way to manage the best bottom line for the contractor. 

So there is in my testimony a little bit of reference to the fox 

guarding the hen house. As to the architect’s working for the contractor, is the quality of the resolution of that issue going to be the 

best resolution or is it going to be the best resolution for the contractor? So that is the advantage of the traditional. 

To the extent that you standardize and you reduce the potential 

for confusion between the design and the execution, you are really 

then taking advantage of the design-build approach. So that is why 

I am saying it is cookie cutter. But if it is not cookie cutter, increasing standardization will reduce time issues, cost issues and risk 

issues. The more chance you have for a disagreement between the 

contractor and the design, the more you have change orders, the 

more you have delays, et cetera, et cetera. 

There are contractors that will bid at cost, knowing they are 

going to make money on change orders, but again that applies to 

the very customized project, not a more standardized project. 

As Congressman Miller and the previous witness were talking 

about working with the DoD and the VA, the potential for standardization between those two agencies could be huge, which again 

could spread the savings and risk across a much bigger area. 

Mr. MICHAUD. Ms. Brown, do you have any more? 

Ms. BROWN OF FLORIDA. I do have some follow-up. 

If you all could just kind of walk us through the process, one of 

my questions is: 

A lot of times, it is the lowest possible bid. We start out with 

that. In design-build, maybe the best thing to do is to have 

prequalifying first so that you go through the process, you evaluate 

the participants, and then after the prequalifying you select a firm. 

Maybe the lowest possible bid is not the best thing. Maybe qualifications and experiences have to be included in the building process. 

We are getting ready to fund the largest VA budget in the history of the United States. We have a lot of projects that have been 

shelved, but part of the pressure that I am feeling is the veterans 

are saying, you know, ‘‘What are you all doing?’’ ‘‘Why do we have 

to wait so long?’’ I am with them. So I am trying to find out from 

you what some of the best ways are that we can alleviate this problem. 

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Mr. WAKEFIELD. The second part of my submitted testimony addresses the procurement process, and I chose to treat the delivery 

system as a design-build versus traditional, separate from the procurement process, because any number of procurement processes 

can be followed for either delivery model, and design-build is quite 

often selected on a qualifications-based procurement process because, again, the design-build contractor or the design-build builder 

is selected before final plans are done, of course, before the design 

is started, so the final cost is not necessarily known at the time 

that the design-build firm is engaged. 

So, oftentimes, a process will follow a qualifications-based selection process, which is very similar to the way an architect would 

be hired. So you prequalify a few number of firms that you know 

are experienced in the field and that have the resources to deliver 

and that have a proven track record, and so forth. Then you look 

for their qualifications; also, establish what their costs will be in 

terms of fees, in terms of general conditions, overhead costs, and 

so forth, so that you know that—and design fees so you know that 

the fees that are controlled by the design-builder are competitive, 

and you can look at those across each of the design-build firms. 

Then as the design evolves, additional input is provided from subcontractors for the cost of the masonry work, for the cost of the mechanical system, and so forth, and those are usually taken on a 

competitive basis. So, again, you know that you have a competitive 

price for each of the relative components. 

So it enables one to take advantage of a design-build delivery 

system while being assured that you are getting the best value for 

your dollar. This is a system that is followed, incidentally, especially by the State of Florida now in terms of the procurement of 

a number of their projects, and they similarly realize the benefits. 

Mr. CLARKSON. That idea makes sense, a lot of sense, particularly if that firm has previously built a VA hospital and you know 

exactly what they have done. Standardization. 

Ms. BROWN OF FLORIDA. Thank you very much. 

Mr. MICHAUD. Once again, I would like to thank you, Mr. 

Clarkson and Mr. Wakefield, for your testimony this morning. I 

look forward to working with you, and—— 

Ms. BROWN OF FLORIDA. One other thing. They did not have an 

opportunity to put their written statements into the record. So will 

they have adequate time to do that? 

Mr. MICHAUD. Without objection, they will be included in the 

record. 

Ms. BROWN OF FLORIDA. Thank you. 

Mr. MICHAUD. Thank you. 

Now I would like to call up panel three, Christopher Needham, 

who represents the Veterans of Foreign Wars (VFW), as well as 

Shannon Middleton, who is the Deputy Director for the American 

Legion. 

We will start off with Mr. Needham. 

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STATEMENTS OF CHRISTOPHER NEEDHAM, SENIOR LEGISLATIVE ASSOCIATE, NATIONAL LEGISLATIVE SERVICE, VETERANS OF FOREIGN WARS OF THE UNITED STATES; AND 

SHANNON L. MIDDLETON, DEPUTY DIRECTOR, VETERANS 

AFFAIRS AND REHABILITATION COMMISSION, AMERICAN 

LEGION 

STATEMENT OF CHRISTOPHER NEEDHAM 

Mr. NEEDHAM. Mr. Chairman and Members of the Subcommittee, on behalf of the 2.3 million men and women of the Veterans of Foreign Wars, I am pleased to be before you today and to 

be presenting testimony on the VA construction budget. 

For the better part of a decade, the construction process has been 

dominated by CARES, the Capital Asset Realignment for Enhanced 

Services. CARES was a systematic, data-driven methodology of assessing the VA’s present/future healthcare needs based upon 

changing veterans demographic data. 

While the review was underway, we had strong concerns about 

the lack of funding for VA construction projects. There was a demonstrated need for construction even while the process was ongoing. The House agreed with this when they approved the Veterans’ 

Hospital Emergency Repair Act. Despite this obvious need, little 

funding was actually appropriated, with CARES being used as the 

excuse. 

Upon completion of the CARES review, former VA Secretary Anthony Principi testified before this very Subcommittee in July 2004 

that CARES would require $1 billion of funding each year for the 

next 5 years. Since then, funding has not kept pace. In fiscal year 

2006, it was about $600 million. In fiscal year 2007, it was around 

$400 million for major construction. We sit here today, 1 month 

into the current fiscal year, without a budget. We are certainly 

very appreciative of the money the House has appropriated or has 

chosen to appropriate in their version of the budget, but until that 

money is actually allocated, nothing can be done. All of the construction projects the VA currently has cannot move forward. It 

simply needs on-time funding. 

The need for increased funding is self-evident. The VA’s facilities 

are very old, with an average age of over 50 years. The VA has always recapitalized at a rate well below industry standards. From 

1996 to 2001, for example, the average construction budget, including major and minor construction, was $246 million. This corresponds with a 0.64 percent recapitalization rate. Basically, this 

means that the VA was funded on a level that would have required 

its hospitals to stand for 155 years. 

In 1998, PricewaterhouseCoopers studied the VA’s facility management programs and recommended a recapitalization rate of 4– 

8 percent per year, bringing them in line with the private sector. 

If applied to VA, this would correspond with the total major and 

minor construction budget of at least $1.6 billion per year, far 

above what the VA has historically received. 

Another major issue with VA’s facilities is not directly included 

in the medical construction account but is just as important, and 

that is nonrecurring maintenance, or NRM. Although not a VA facility, the deplorable conditions at Walter Reed were an example of 

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what could happen without proper maintenance, and it is certainly 

something that none of us wants to see happen at the VA. 

After the news of Walter Reed broke, the VA conducted an immediate review of its facilities to identify potential NRM projects. Although the majority were cosmetic, there were a number of them 

that were more serious. One facility found suicide threats and 

problems with fixtures in a mental health unit. Another had problems with smoke barriers and fire alarms. 

While we are certainly appreciative of the VA’s efforts to identify 

these problems and with Congress’ efforts to increase NRM funding 

in the emergency appropriations bill, it should not have come to 

this. These problems should have been cared for before. 

Industry standards in that same PricewaterhouseCoopers review 

cite the need for NRM funding at 2–4 percent of the VA’s plant replacement value. Further, the VA’s own documents cite that same 

figure. Their asset management plan recommends an NRM funding 

level of between $800 million and $1.6 billion per year. Yet, over 

the previous 2 fiscal years, not including that emergency funding, 

only about $1 billion in total was actually appropriated. Future 

funding requests must be large enough so that these problems are 

taken care of before they develop, and if left unchecked, NRM can 

cause minor construction projects to cost much more money, and 

they can inconvenience veterans. 

Providing a safe, clean and modern healthcare environment is 

critical to the overall delivery of care. Congress and the administration must provide the VA with all of the funding it needs to address these maintenance shortcomings but also to fully fund all 

current and future construction priorities. We must be proactive in 

our approach to do what is right for this Nation’s veterans. 

Mr. Chairman, thank you for the opportunity to testify. I would 

be happy to answer any questions you or the Members of the Subcommittee may have. 

[The prepared statement of Mr. Needham appears on p. 40.] 

Mr. MICHAUD. Thank you. 

Ms. Middleton. 

STATEMENT OF SHANNON L. MIDDLETON 

Ms. MIDDLETON. Mr. Chairman and Members of the Subcommittee, thank you for allowing the American Legion to present 

its views on the Department of Veterans Affairs construction process. 

With the rapid advancement in technology and medicine that the 

national healthcare system is experiencing, VA will be compelled to 

perpetuate the evolution of its healthcare delivery system far into 

the future. An important part of this evolution is ensuring that VA 

has adequate facilities that are safe and located in needed areas to 

make access to its healthcare facilities readily available for veterans. 

The healthcare facilities of VA are aging: physical plants in need 

of replacement; substantial renovations and improvements related 

to fires, safety and privacy standards; as well as modernization and 

reconfiguration to meet the demands of the advances in medicine. 

The increasing demands placed on the outpatient ambulatory care 

service facilities of VA require substantial alterations to meet 

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changing space requirements. No healthcare delivery system can be 

expected to provide quality care if the physical setting that houses 

the care is allowed to deteriorate to a state which places it beyond 

redemption. 

In March 1999, GAO published a report on VA’s need to improve 

capital asset planning and budgeting. The report found that VA’s 

asset plan indicated that billions of dollars would be used operating 

hundreds of unneeded buildings over the next 5 years or more. The 

report went on to state that VA did not systematically evaluate veterans’ needs or asset needs on a geographic basis or compared 

asset life cycle costs and alternatives to identify how veterans’ 

needs could be met at a lower cost. 

VA developed a Capital Asset Realignment for Enhanced Services program, or CARES, to address the issue. The CARES decision 

of 2004 contained hundreds of construction requests, upgrades and 

alterations of current buildings that would require a substantial increase in funding for major and minor construction within VA. 

During the initial stages of the CARES process, the construction 

budget was nearly flatlined, pending the outcome; this caused a 

major backup in construction projects and needed seismic repairs. 

Major and minor construction appropriations for VA have been consistently targeted for reduction since such funding is regrettably 

the most vulnerable to annual assault. For several years VA’s facility directors have been forced to use nonrecurring maintenance 

funds to provide care. 

The American Legion urges Congress to annually appropriate 

sufficient funds for the VA’s construction program to ensure the 

continued provisions of quality healthcare to our Nation’s veterans 

and the implementation of the CARES decision. 

VA has a vast physical plant inventory that represents a major 

investment of taxpayer dollars. Despite the large number of aging 

facilities, construction funding has been limited. CARES construction is estimated at $6.1 billion over the next 6 years. 

Sufficient funding to implement new initiatives and the proposed 

physical plant changes will be critical to the success of the planning initiatives. Delays in the process have a profound impact on 

access to healthcare for veterans. 

Veterans serving in Iraq and Afghanistan have returned home 

with severely debilitating injuries. VA must be available to help 

them heal and rehabilitate, be capable of providing programs and 

services needed to help them live the most productive and healthy 

lives possible and be able to accommodate the needs of an everchanging population of veterans. To do this, adequate funding is a 

must. 

The American Legion believes that VA has effectively shepherded 

the CARES process to its current state by developing the blueprint 

for the delivery of VA healthcare. It is now time for Congress to 

do the same and adequately fund the implementation of this comprehensive and crucial undertaking. 

Thank you, Mr. Chairman, again. We look forward to working 

with the Subcommittee to help shape the future of VA’s healthcare 

delivery. 

[The prepared statement of Ms. Middleton appears on p. 42.] 

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Mr. MICHAUD. I would like to thank both of you for your testimony. Just a couple of quick questions. 

The CARES process, both your organizations have been very involved in that particular process. It took a lot of time and effort to 

come up with that final report, and I appreciate that. Since then, 

things have changed somewhat when you look at the war in Iraq 

and Afghanistan and the needs might not be there; as explained in 

the CARES report, they might have changed. 

Do you think we ought not to start over again, but reassess the 

CARES process and update it before we go further with major construction? That is my first question. 

Then my second question, to try to speed up the process we can 

put up more Federal dollars, but do you think there is an opportunity here to work with a private sector, such as, hospitals and 

healthcare clinics in the rural areas to help collaborate and try to 

get more of the facilities up in the rural areas in a timely manner 

by utilizing or working with the private sector? 

So I will start off with Mr. Needham. 

Mr. NEEDHAM. As to the first question about whether to update 

CARES, I mean, certainly—the war has certainly changed things. 

But we sort of view CARES as—one of the strengths of that was 

not that it was a one-time snapshot, but that it really is, in many 

ways, sort of a living document. They use the framework and the 

methodology from that to produce that annual 5-year plan from 

which the construction priorities are drawn. 

To that end, certainly, they probably do need to pay more attention to, particularly, the mental health issue, those sorts of needs. 

But it is not a case of doing it over, but just sort of revising and 

updating. 

As to the second question, in terms of collaboration, that is certainly something we are highly supportive of, particularly, I know, 

the challenges faced in rural healthcare. The catch is—and I think 

we have seen with many other facilities, collaboration sometimes 

introduces a problem with timeliness of construction—that the 

more parties that get involved, the more difficult and more drawn 

out the construction process can be. Not that that should keep us 

from doing collaboration, but that is something to keep in mind, 

particularly some of the concerns expressed earlier today. 

Ms. MIDDLETON. I don’t think I can say it better than that, but 

I will try to give some input. 

As far as redoing CARES, I think that would just take way too 

much time. Reassessing changing needs, that is always important. 

So definitely it should be just reevaluated, just to make sure that 

the changing needs of the returning Operation Iraqi Freedom/Operation Enduring Freedom veterans are being addressed. That part 

is definitely a must because if not then, on down the road the same 

thing might have to happen. You might have to do the whole thing 

over just to make sure that these veterans are being taken care of 

the way that they should be. 

And as far as working with the private sector to improve access 

to care for rural veterans, the American Legion believes that in the 

case of rural veterans it might be necessary to have contracting 

with the private sector that is more local if there is a VA medical 

facility too far away that the veteran can’t get to. 

wwoods2 on PRODPC68 with HEARING

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So, yes, we would definitely be supportive of something like that. 

Mr. MICHAUD. Thank you both. 

Mr. Miller. 

Mr. MILLER. Thank you, Mr. Chairman. 

This question would go to both of you in talking about CARES, 

both of you referenced VA’s aging infrastructure. 

Give me your thought process on the need to continue to maintain some of those aging facilities versus construction of new facilities in better locations. Better locations meaning closer to the veterans, the centers of the veteran population. One of the things, we 

heard during the hearings that were held on CARES, a lot of people were in favor of maintaining the status quo, keeping the exact 

same number of buildings that were already in existence. I am 

wondering if that is smart, keeping the status quo, given the competition for dollars. Would your organizations support new construction over the maintenance issues that we have on existing 

structures today? 

Mr. NEEDHAM. That is a good question. It is definitely a tough 

balance there. I am not sure that we have a position one way or 

another, other than just following the priorities has VA has laid 

out in terms of their five-year capital plan. 

Mr. MILLER. If I could, because CARES recommended some facilities be closed, what were the positions of your organizations 

generally? Did you subscribe to closing some facilities? 

Mr. NEEDHAM. The position we had was that we were generally 

supportive of CARES as long as the ultimate outcome was—the 

emphases on the ES portion of CARES’ enhanced services, that ultimately, if veterans are having their healthcare needs and their 

facilities taken care of in the end, then we were supportive of the 

process. 

Ms. MIDDLETON. I am not exactly sure how we felt about closing 

certain facilities, so I would definitely have to submit a response 

for the record in writing to that part of the question. But I would 

think that if the facility posed a health hazard, if there were certain structures that couldn’t be repaired because there was some 

kind of safety issue, I would think that we would be in support of 

closing something like that. 

As far as, would we prefer maintaining the existing facilities or 

constructing new ones, I think that would have to be on a case-bycase basis. If you are in an area where the veteran population is 

definitely growing, then the demand for healthcare would definitely 

grow with it. And if there is not a facility around or just a distance 

away, I would think that it would make sense to bring the care 

closer to the veteran. 

Mr. NEEDHAM. If I may, one more point to that. Because of the 

aging infrastructure, the majority of—I don’t want to say majority, 

but many of VA’s facilities—the hospitals; they refer to them as a 

Bradley-type building, and it is basically the infrastructure of the 

older healthcare facilities, is not compatible with sort of modern 

healthcare delivery. 

So it is not just simply a matter of being able to renovate some 

of these older facilities. In many cases, it really is an example 

where you do have to provide new construction. 

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Mr. MILLER. Ms. Middleton, reversing your theory, if you have a 

growing population, then you need to move the healthcare to where 

that population is, would you subscribe to the same theory if you 

have a declining veteran population, there may be a need to relocate or move facilities in order to better serve the greater number 

of veterans? 

If you don’t want to take that in an open hearing, I would like 

to know the position of both of your organizations on the CARES 

report in relationship to downsizing or closing facilities that were 

recommended. Again, everybody wants to battle for the facility that 

is in their district, everybody wants to make sure that we have as 

much available healthcare as possible. I think this Congress, and 

when I say ‘‘this Congress,’’ I don’t mean the 110th, the 109th; I 

am talking about Members that are here representing their districts. We want to provide the greatest access to healthcare possible, and in some instances that is going to be relocating facilities 

where some veterans are used to getting their healthcare to a 

newer facility to provide it. Not in all instances, but in some. 

If you would, for the record, I would like to see what your positions were. 

Thank you Mr. Chairman. I yield back. 

[The information was provided in the answer to Question 2 in 

the post-hearing questions and responses for the record from the 

VFW and the American Legion, which appears on p. 47 and p. 49.] 

Mr. MICHAUD. Dr. Snyder. 

Mr. SNYDER. Thank you for holding this hearing. I don’t have 

any questions now. I’m sorry I was late getting here. 

Mr. MICHAUD. Mr. Brown. 

Once again, I would like to thank this panel very much. 

Mr. MILLER. May I ask one question quickly? 

Also, for the record, what are the positions of your organizations 

on VA’s decision in regards to the site of the New Orleans facility? 

VA has made the decision to keep the facility downtown versus 

possibly locating it a couple of miles away. Obviously, the facility 

was not in the CARES process, but New Orleans has a declining 

veteran population with a huge medical center. There are growing 

populations in other parts of the Gulf Coast; therefore, I would like 

to get your position on the New Orleans facility as well. 

[The information was provided in the answer to Question 1 in 

the post-hearing questions and responses for the record from the 

VFW and the American Legion, which appears on p. 47 and p. 49.] 

Mr. MICHAUD. Once again, thank you very much. I appreciate it. 

Our last panel is Donald Orndoff, who is the Director of the Office of Construction Facilities Management with the Department of 

Veterans Affairs; he is accompanied by Robert Neary, who is the 

Director of the Service Delivery Office, Office of Construction and 

Facilities Management; Patricia Vandenberg, who is the Assistant 

Deputy Under Secretary for Health for Policy and Planning; and 

Brandi Fate, who is the Acting Director of Capital Asset Management Planning Service in the Department of Veterans Affairs. 

Mr. MICHAUD. So I would like to thank the fourth panel, and 

without any further ado, I will start off with Mr. Orndoff. 

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STATEMENT OF DONALD H. ORNDOFF, DIRECTOR, OFFICE OF 

CONSTRUCTION AND FACILITIES MANAGEMENT, ACCOMPANIED BY ROBERT NEARY, DIRECTOR, SERVICE DELIVERY 

OFFICE, OFFICE OF CONSTRUCTION AND FACILITIES MANAGEMENT, U.S. DEPARTMENT OF VETERANS AFFAIRS; PATRICIA VANDENBERG, MHA, BSN, ASSISTANT DEPUTY 

UNDER SECRETARY FOR HEALTH FOR POLICY AND PLANNING, VETERANS HEALTH ADMINISTRATION, U.S. DEPARTMENT OF VETERANS AFFAIRS; AND BRANDI FATE, DIRECTOR, CAPITAL ASSET MANAGEMENT PLANNING SERVICE, 

VETERANS HEALTH ADMINISTRATION, U.S. DEPARTMENT OF 

VETERANS AFFAIRS 

Mr. ORNDOFF. Mr. Chairman and Members of the Subcommittee, 

I am pleased to appear here today to discuss VA’s healthcare construction program and, specifically, the processes we use to plan, 

design and construct state-of-the-art healthcare facilities. I will 

provide a brief oral statement and request that my full statement 

be included in the record. 

Mr. MICHAUD. Without objection. 

Mr. ORNDOFF. As Director, Office of Construction and Facilities 

Management, I am responsible for the execution of the VA’s major 

construction program. Joining me today are Ms. Patricia Vandenberg, Assistant Deputy Under Secretary for Health for Policy and 

Planning, Mr. Robert L. Neary, Jr., Director, Service Delivery Office, Office of Construction and Facilities Management, and Ms. 

Brandi Fate, Director, Capital Asset Management and Planning 

Service of Veterans Health Administration (VHA). 

The Department is currently engaged in the largest building program since the immediate post-World War II period. This program 

represents implementation of the Capital Asset Realignment for 

Enhanced Services, or CARES, program, which was initiated systemwide in 2002 and produced initial results announced in May 

2004. At that time, 30 major construction projects were approved 

and funded in whole or part. 

In subsequent fiscal years, six additional projects have been submitted for funding and budget requests. The total cost of these 

projects approaches $5 billion. $2.83 billion, including hurricane 

supplemental funding, has been appropriated between fiscal year 

2004 and 2007. The fiscal year 2008 budget now before the Congress requests an additional $560 million in major construction for 

infrastructure improvement to the veterans healthcare system. 

The minor construction program is also an important part of addressing infrastructure needs of the healthcare system identified by 

CARES. Since fiscal year 2004, $1.08 billion has been appropriated, 

including hurricane supplemental funding. An additional $180 million is requested in the fiscal year 2008 budget. 

VA continues to use a disciplined multi-attribute decision model 

to prioritize capital investment needs for budget development. Once 

a project is approved, the design process begins. The design consists of three phases: schematic design, design development and 

construction document preparation. 

While the timing varies with the size and the complexity of the 

project, typically design takes 18 months. Once design is complete, 

the construction contract is executed and on-site work begins. 

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The Department uses standard industry practices in the design 

and construction of VA facilities. VA selects highly qualified architect-engineer firms with practices that focus primarily on healthcare facilities. 

VA selects highly qualified construction contractors using a combination of quality assessment and price. Contractors are evaluated 

based on experience and past performance in construction on similar healthcare facilities. Approximately one-third of VA projects are 

executed using the design-build method where we award one contract to a designer-constructor team. We also engage highly capable 

construction management firms on VA’s largest projects. 

VA benefits from its reliance on the private sector architects, engineers and contractors. Selection of top firms delivers the highest 

quality healthcare design and construction. 

VA’s construction program is not without challenges. Since 2004, 

the rising cost of construction has had significant impact on all government and private sector organizations with construction requirements. Due to a robust economy, the demand for skilled labor 

and building materials continues to outpace the supply. Coupled 

with rising fuel prices and the impact of recent hurricanes, building programs of all types have experienced significant cost growth. 

Another related challenge is attracting adequate competition for 

major VA projects. The large volume of construction in many markets makes it difficult to attract healthy competition to achieve 

best pricing. During the last 18 months, we have often seen a limited number of proposals on VA solicitations. 

VA is taking a number of steps to minimize the impact to these 

challenges. We regularly conduct market surveys in the cities 

where we have upcoming work to better predict cost. We now 

project our future cost based on a better understanding of construction capacity and activity within individual markets. We are working closely with the contracting community to attract greater interest in performing VA work. 

In closing, I would like to thank the Subcommittee for its continued support for improving the Department’s physical infrastructure 

needs. 

Mr. Chairman, my colleagues and I stand ready to answer your 

questions. 

[The prepared statement of Mr. Orndoff appears on p. 44.] 

Mr. MICHAUD. Thank you very much. I appreciate your testimony. 

And we just got called for votes, and we will have three votes, 

so it might take about 45 minutes. I have several questions; however, I will submit them for the record, if you would kindly answer 

them. So you are saved by the bell, as far as I am concerned. 

[The post-hearing questions and responses for the record from 

VA appear on p. 50.] 

Mr. MICHAUD. Mr. Miller. 

Mr. MILLER. I would like an update on the New Orleans project, 

where it is? 

Mr. NEARY. As you mentioned to the previous panel, we have selected a preferred site in a downtown area of the city. But we have 

not completed the environmental review work, so we are currently 

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performing the environmental assessment of that site, as well as 

a site at the Oschner facility a few miles to the west. 

We expect the environmental review will be completed during the 

month of December, and shortly after the first of the year, the Secretary would be in a position to make a final decision on the site. 

We have selected the architectural team that will design the 

building. We are working with them now to put them under contract. And we are also continuing discussions with Louisiana State 

University (LSU) regarding opportunities for partnering with LSU 

and Tulane as we execute and go forward. 

Mr. MILLER. Do you have an idea of the issue as it relates to the 

downtown site? I am glad to hear that there is an environmental 

study being done on both sites, that we are still tracking this process, because we don’t need any more delays in getting a facility 

built. 

I think when we did the field hearing down there, they were exasperated to learn that it was still 5 years out or longer before the 

doors would actually open once the process began. So, when do you 

expect a final decision from the Secretary on the site? 

Mr. NEARY. Shortly after the first of the year. 

Mr. MILLER. I also have some other questions for the record, but 

I will submit them as well. Thank you very much. 

[No questions were submitted.] 

Mr. MICHAUD. Dr. Snyder. 

Mr. SNYDER. Thank you, Mr. Chairman. I would just like to hear 

from your sidekicks there, Mr. Orndoff, what do each of them do 

and how do they relate to each other? 

Then you have this other group, the Capital Investment Panel. 

Could we kind of go down the line? How do you all—you all have 

four different titles, really. How do you all interrelate to make this 

process smooth? 

Ms. VANDENBERG. In the Office of Policy and Planning. I am responsible for CARES. And so that entails the successful completion 

of the 18 business studies that were indicated in the 2004 decision 

document from the Secretary and integrating the methodology that 

we used in CARES into the ongoing strategic planning process. 

Ms. FATE. We then take those strategic planning documents from 

the medical centers and the VISNs, and identify with the medical 

centers where there are gaps in our infrastructure and where new 

needs for infrastructure and/or renovations are needed throughout 

the country; and then those projects and admissions are sent 

through my office up through VHA. Then the larger ones for the 

major construction projects get scored by the Capital Investment 

Panel, which you just referred to. 

Our offices are members of that panel, as well as some other administrations and offices; and we score all of those based on 

weights and criteria. 

Mr. SNYDER. And then those plans go over to you all? 

Mr. ORNDOFF. Yes, sir. Basically, the output of the Capital Investment Panel, the decision on which projects are moving forward 

for budgeting purposes, at that point, the Office of Construction 

and Facilities Management—of which I am the Director and Bob 

heads up our Service Delivery operations—we will take that and 

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begin the design process and, ultimately, the construction process 

and delivery of the project. 

Mr. SNYDER. And then where does the Office of Management and 

Budget (OMB) get involved? 

Mr. ORNDOFF. As we develop our budget as an output of the CIP, 

Capital Investment Panel, those projects, once approved by the Secretary, will be laid into the project and submitted; and then OMB 

would review at that point. 

Mr. SNYDER. So it may or may not get the funding. 

Ms. Fate, how is it that you are the Acting Director? 

Ms. FATE. My predecessor retired back in January. And now 

about a month ago, I was officially appointed the Director of the 

CAMPS office. 

Mr. SNYDER. So you are no longer the Acting Director? 

Ms. FATE. No longer the Acting. 

Mr. SNYDER. Well, we have out-of-date information here. 

Thank you, Mr. Chairman. 

Mr. MICHAUD. Thank you. 

Mr. Brown. 

Mr. BROWN OF SOUTH CAROLINA. Well, I guess, following Dr. 

Snyder’s questioning—I represent Charleston, South Carolina, and 

we have been working on a ‘‘Charleston model,’’ they call it now, 

which we thought was going to be used down in New Orleans and 

maybe some other parts of—Orlando and then in some of the other 

parts of the United States. But we seem to have some kind of a 

bottleneck, and I am not so sure exactly where we are in the process. 

I know it was identified in CARES that we would develop this 

model, and we have been working on that with the VISN Director 

and, I guess, with the Secretary too. But—we have some funding, 

I guess about $38 million we put in the authorization last year, but 

we have a problem with the administration, and I assume maybe 

you folks or somebody along the line, that they don’t want to advance the project. 

And I think you might have heard my opening statement where 

we actually now have designed and built the Medical University 

Hospital, that has already been completed, and it is adjacent to the 

VA hospital, within probably 100 feet. But we can’t get a movement 

on the old VA hospital, which is over 40 years old. I guess through 

the process, the way the planning and all the development works, 

it is going to be 50 years old before we finally get to that point. 

But we are in a sinkhole, just like the hospital that is in New 

Orleans. And we are certainly in a storm-prone region. 

I am just wondering why that project is not moving. Maybe you 

all can give me a little address. 

Mr. NEARY. Mr. Brown, as you know, we have been evaluating 

the needs in Charleston. And recently our Under Secretary for 

Health visited the Charleston facility. We are continuing to look for 

ways to further the partnership with the Medical University of 

South Carolina and see where that takes us as we move forward. 

Mr. BROWN OF SOUTH CAROLINA. I just mentioned, they have already built their hospital and they have two or three other phases 

to go. But once all of that has been designed and carried out, it is 

going to be difficult to combine those resources. 

wwoods2 on PRODPC68 with HEARING

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I know that we got ourselves in a box down in New Orleans 

where we had Katrina damage. I don’t want us to have the same 

operation down in Charleston where it is going to be maybe 3 or 

4 or 5 years before those veterans now can recover, because nobody 

is thinking forward. And I just feel like it is a real opportunity to 

become proactive and try to address some of the emergency needs 

before they become emergencies. 

The storms are going to come. We have just been blessed in 

Charleston. I guess Hugo was the last, back in 1989. But we know 

that we are vulnerable to those storms. And it looks like, to me, 

with a window of opportunity with the construction going on at 

Medical University, the VA would sense that they could be 

proactive in trying to address storm problems in the future by addressing them today. 

And I am just kind of amazed that nobody is wanting to become 

proactive in that situation, particularly since we have just experienced the problem we have down in New Orleans. 

Mr. NEARY. With respect to the possibility of storms, we have 

completed a study of the Charleston facility and identified steps 

that would need to be taken to further protect the facility. And it 

is my understanding that the medical center, the Charleston VA 

Medical Center, is identifying opportunities to implement some of 

those strategies. 

We certainly have an excellent partnership with the Medical 

University of South Carolina now and will continue to look to foster 

the further development of that. And we certainly would agree with 

you, we wouldn’t want to take steps that would cause us problems 

down the road in terms of meeting our future goals there. 

Mr. BROWN OF SOUTH CAROLINA. I understand, Mr. Chairman, 

my time is gone and we need to go vote. Thank you very much for 

your understanding. 

Mr. MICHAUD. If there are no further questions, I want to thank 

this panel for your testimony. And we will be submitting additional 

questions for the panel in writing. 

So, once again, thank you very much. This hearing is closed. 

[Whereupon, at 11:30 a.m., the Subcommittee was adjourned.] 

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A P P E N D I X 

Prepared Statement of Hon. Michael H. Michaud, Chairman, 

Subcommittee On Health 

I would like to thank the members of the Subcommittee, our witnesses and all 

those in the audience for being here today. 

The purpose of this hearing is to learn more about the construction process within 

the Department of Veterans Affairs (VA). 

In 2004, VA completed the Capitol Asset Realignment for Enhanced Services 

(CARES) process. CARES was supposed to be a map for future VA facilities development. 

It is unclear to me how closely VA is following this map, and it is also unclear 

how well CARES will address the medical and demographic needs of current and 

future veterans of Afghanistan and Iraq. 

This Subcommittee is committed to providing the highest quality healthcare to 

our Nation’s veterans—and we understand that a key part of this care is the facilities in which it is provided. 

We are here today to get a better understanding of the entire construction process, from conception to the opening of a facility. 

Understanding this process is particularly important right now. Many of the VA 

hospitals and medical facilities are aging and are in need of major renovation or replacement. Many VA facilities need to be upgraded in order to meet standards for 

Earthquakes, fires and patient privacy. 

Population shifts require new facilities in new locations. VA is in the process of 

planning several new hospitals in cities such as Las Vegas, Denver and New Orleans. 

This process can be long and drawn out. It can take much longer than similar 

projects built in the private sector. 

We look forward to working with the VA to ensure that our veterans receive the 

best possible care in medical facilities that are modern and safe—while being built 

efficiently and cost-effectively. 

I look forward to hearing about the current construction process, VA’s plans and 

needs for future construction, and how this Committee can support this effort—with 

the end goal always being to provide the best possible healthcare to our veterans. 

I now recognize Mr. Miller for any opening statement that he may have. 

f 

Prepared Statement of Hon. Jeff Miller, 

Ranking Republican Member, Subcommittee on Health 

Thank you, Mr. Chairman. Access to different types of outpatient and inpatient 

facilities is critical in addressing the unique healthcare needs of our changing veteran population. However, most of VA’s infrastructure was built more than 50 years 

ago. Many of these aging facilities are not well suited to 21st century healthcare, 

in need of repair or replacement, and sometimes simply located far from where the 

veterans live. 

Recognizing the need to improve and update VA’s patient care facilities, and address identified gaps in services, VA established the Capital Asset Realignment for 

Enhanced Services (CARES) process. The CARES planning model was intended to 

provide a blueprint for the resources needed to meet the future veteran demand for 

healthcare services. VA has started implementing some CARES decisions and is 

moving to open more than 32 of the 156 outpatient care clinics identified by CARES. 

Still, there are far too many instances of veterans driving several hours for primary 

care, and even more instances of long commutes for acute inpatient care. 

VA must maintain a flexible approach to its current and future construction. At 

times, a solution for providing exceptional care will be obvious. At other times, VA 

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will need to explore potential partnerships and other agreements whereby resources 

and funding are not needlessly wasted and veterans and taxpayers alike get the 

best return. 

My concern still remains for areas such as Okaloosa County in my district in 

Northwest Florida. While a VA outpatient clinic that will serve the basic needs of 

the roughly 50,000 veterans in that surrounding area is currently under construction, these same patients still have to drive over three hours to receive any sort of 

VA inpatient care. It has been more than three years since CARES identified this 

region as underserved for inpatient care. In fact, it is the only market area in the 

VISN, VISN 16, without a medical center. 

There is a tremendous opportunity to collaborate with the Department of Defense 

(DoD) for inpatient medical services on the campus of Eglin Air Force Base that 

would benefit both veterans and active duty servicemembers in this region. The collaboration would expand VA/DoD sharing in a cost-effective manner and provide 

long overdue inpatient care to veterans in Northwest Florida. 

It is my sincere wish that VA constantly monitor and adjust its construction efforts to best meet the geographic and healthcare needs of veterans throughout the 

entire nation, especially those who face the most difficulty in obtaining access to 

that healthcare. 

I look forward to today’s testimony, and would also like to give a special welcome 

to Major General David Eidsaune who joins us from Eglin Air Force Base in Florida’s first congressional district. 

f 

Prepared Statement of Hon. Corrine Brown, 

a Representative in Congress from the State of Florida 

Thank you, Mr. Chairman, for calling this hearing today. 

This issue is very important to me as I represent part of Orlando, Florida. 

Central Florida waited 25 years before the VA decided to put a VA Medical Center there earlier this year. 

Twenty-five years. Too long for those men and women who have defended this 

country and the freedoms it holds dear. 

Twenty-five years. Too long for the oldest veteran population to wait for proper 

care. 

Twenty-five years. I do not want to have to wait for another 15 years for this hospital to open. 

And New Orleans! 

It has been over 2 years since Hurricane Katrina hit the Crescent City and devastated the city. The employees at the VA Medical Center there performed heroically for the patients and evacuate everyone safely. However, we are no closer to 

rebuilding the hospital now than we were 2 years ago. 

I have heard good things about design-build—where the design and construction 

aspects are contracted for with a single entity known as the design-builder or design-build contractor. The design-builder is usually the general contractor, but in 

many cases it is also the architect or engineer. 

This system minimizes the project risk and reduces the delivery schedule by overlapping the design phase and construction phase of a project. 

Why can’t the VA use these modern devices to speed up the process? 

I look forward to hearing the testimony of the witnesses today. 

f 

Prepared Statement of Major General David W. Eidsaune, Commander, 

Air Armament Center, Eglin Air Force Base, FL, 

Department of the Air Force, U.S. Department of Defense 

Executive Summary 

Eglin Air Force Base (AFB) and the Veterans’ Affairs (VA) Gulf Coast Veterans 

Healthcare System (VA GCVHS) have developed a partnership to provide more accessible healthcare to eligible Department of Defense (DoD) and Veterans’ Affairs 

(VA) patients in the Northwest Florida region, that will be the cornerstone for future sharing activities. 

Eglin Air Force Base is continually working to expand available healthcare services for our eligible patients. This has included renovating and expanding existing 

healthcare facilities to meet the needs of our expanding patient population as well 

wwoods2 on PRODPC68 with HEARING

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as planning new facilities such as the VA Community Based Outpatient Clinic 

(CBOC), highlighted today. 

There is a clear need for additional healthcare for our veterans; the VA and Eglin 

AFB have combined forces to address this need. The resulting VA Community Based 

Outpatient Clinic (CBOC) is currently under construction and scheduled to open in 

the spring of 2008. It is a huge step toward meeting the needs of our veterans in 

northwest Florida. 

The Need 

The Veterans Affairs (VA) Gulf Coast Veterans’ Healthcare System (VA GCVHS) 

covers the gulf coast of Mississippi, Alabama, and the Florida panhandle. This extensive area is covered by one VHA inpatient facility located in Biloxi, MS, and 

three outpatient clinics in Mobile, AL, and Pensacola and Panama City, FL. 107,979 

veterans, 47% of the total veteran population for the VA Gulf Coast Veterans 

Healthcare System (VA GCVHS), reside in the Florida panhandle. 

Because the Emerald Coast of Northwest Florida is one of the top ten fastest 

growing areas in the United States, there is a need to provide the VA community 

with the medical services they deserve. This four-county area (Walton, Santa Rosa, 

Holmes and Okaloosa), that will be served by the VA CBOC, is primarily rural, has 

a total population of 347,406 based on the 2000 U.S. census data, and a veteran 

population of 50,902 (based on FY 2003 Veteran Population Projections). The VA 

CBOC will significantly improve access to VA primary care services for veterans residing in the Northwest Florida area, eliminating the need for extended travel. Improved access and timeliness of care will further enhance the quality of healthcare 

services through earlier intervention. 

Quick Facts 

• 16,700 square foot facility 

• Estimated cost is $5.232M 

• Basic clinic with Primary Care, Mental Health, small Lab and Pharmacy 

• Built on 10 acres of AF land 

• Site allows a separate entrance for the VA 

• Oct 2006: Groundbreaking 

• Dec 2007: (Projected) Complete Construction 

• Early 2008: (Projected) Complete Activation/Ribbon Cutting 

Location 

The VA GCVHS requested beddown approval on Eglin AFB to improve access, 

prepare for continued population increases, and satisfy quality and continuity 

issues. This option builds upon the strong relationship locally with Department of 

Defense medical facilities. 

On June 22, 2006, the Deputy Assistant Secretary of the Air Force for Installations signed a land-use permit that authorized the VA to use the 10-acre parcel on 

Eglin AFB as a CBOC building site at no cost to the VA. This arrangement saved 

the VA and taxpayers $1.47M by avoiding the cost of purchasing the land. The 10- 

acre site is adequate for both existing and future requirements. It ensures availability of land for future expansion up to 50% without incurring real estate costs. 

The VA CBOC’s close proximity to Eglin Hospital will provide tremendous opportunities for sharing arrangements. For the past 12 months, Eglin AFB and VA 

GCVHS have been evaluating mutually beneficial sharing agreements for inpatient 

care, emergency room services, radiology, laboratory, pharmacy and specialty care. 

Examples of VA/DoD Sharing Agreements that already exist include the VA 

GCVHCS Panama City CBOC, which is located on the Navy Coastal Station in Panama City Beach, Florida and an agreement with the Pensacola Naval Hospital for 

inpatient and other specialty care. 

Scope of Services 

The clinic will offer primary care, mental health, audiology services and routine/ 

urgent care procedures, such as suturing, simple dermatology procedures, skin testing, dressing changes, injections and immunizations. VA staff will provide Primary 

Care and Mental Health Services. Each team will consist of a physician, nurse and 

a clerk. The VA CBOC will have six teams during the initial startup year with a 

patient load of 1,200 for each primary care team and 800 for the psychiatrist. One 

additional primary care team will be added in year two and year three. 

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Two full-time psychiatrists will be hired for the VA CBOC to provide outpatient 

mental health services. The VA CBOC will feature a modest laboratory, capable of 

performing routine procedures. A sharing agreement will be established for prescription services. Likewise, Specialty Care workload will be accomplished through the 

use of a negotiated sharing agreement between VA GCVHCS and Eglin AFB. 

Benefits 

In addition to providing more accessible healthcare for veterans, the VA CBOC 

will provide backup and support for DoD during times of military conflicts and/or 

national emergencies. 

The Family Residency Graduate Medical Education (GME) Teaching Program at 

Eglin is growing from 8 to 10 residents in FY 08; the Eglin 96th Medical Group’s 

Family Practice residency program is in need of higher acuity patients in order to 

meet GME requirements. Sharing agreements with the VA CBOC will help meet 

this need. At the same time, veterans will benefit by having access to highly qualified professionals participating in the GME program. 

Based on an expected increase in Active Daily Patient Load (ADPL) of 3–5 patients per day, the Eglin Hospital projects to receive $1.8 million to $2.4 million annually in reimbursement for ancillary support and inpatient services rendered. This 

represents a 75% increase in their current reimbursements and will help to offset 

the constrained Operations & Maintenance (O&M) military health care budget. 

In closing, the VA Community Based Outpatient Clinic will be a joint success for 

Eglin AFB, the VA, and our combined patient populations. This cooperative effort 

should serve as a model for future efforts to support the healthcare needs of our 

Nation’s veterans. 

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Prepared Statement of William Wakefield, Vice President, 

Healthcare Division, The Haskell Company, Jacksonville, FL 

Introduction 

The purpose of this summary is to provide an objective summary and comparison 

of the alternatives that healthcare providers may wish to consider for the design 

and construction of new or expanded facilities. 

For this study, project delivery systems and procurement methods are discussed 

as separate, although related topics. A Project Delivery System is the process under 

which design and construction services are provided to complete a project. A Procurement Method is the process by which the Owner selects the team that will provide the services required to complete the project. 

The selection of the most appropriate project delivery system must precede the selection of the procurement method. No single delivery system or procurement method is optimum for all projects and circumstances. 

Project Delivery Systems 

Until recently, the design and construction industry was characterized by highly 

contentious relationships between architects, engineers, contractors and subcontractors. In recent years partnering, alternative delivery systems and more enlightened 

owner-designer-contractor relationships have improved these adversarial relationships. 

Design-Bid-Build 

Design-Bid-Build has been the traditional project delivery system used in the 

United States for about 200 years. Under this system, the Owner contracts separately with a designer and a contractor. The architectural/engineering firm produces 

‘‘complete’’ plans and specifications. Contractors provide bids to perform the work. 

Advantages: 

• Established and familiar system 

• Established legal precedents 

• A/E works directly for the Owner 

• Appropriate for price competition (as opposed to value) 

• Availability of insurance and bonding 

Disadvantages: 

• Diffuses accountability for the overall process 

• Contributes to adversarial relationships and disputes 

• Owner is the arbiter between design and construction 

• Initial low bid does not necessarily result in low final cost or best value 

• Very late knowledge of firm costs 

• Slowest of the delivery systems 

Construction Management at Risk (CM at Risk) 

The CM at Risk delivery system evolved to take advantage of early involvement 

of the construction member of the project team. The Owner contracts separately for 

design and construction services as in the Design-Bid-Build system. However, the 

CM firm is selected earlier and is integrated into the design process. 

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Advantages: 

• Early involvement of construction 

• Greater collaboration between design and construction 

• Construction input during design 

• Earlier knowledge of firm costs 

• Improved cost control 

• Faster than the Design-Bid-Build delivery system 

Disadvantages: 

• Same contractual relationships as Design-Bid-Build 

• Diffuse accountability for the overall process 

• Contributes to adversarial relationships and disputes 

• Owner is the arbiter between design and construction 

• Slower than the Design/Build delivery system 

Design/Build 

Design/Build is a project delivery system in which the Owner contracts with a single entity to perform design and construction, and perhaps additional, services. This 

system offers the Owner the benefits of even greater design and construction integration and singular responsibility for the outcome and the overall process. 

Advantages: 

• Singular responsibility 

• Risk management 

• Early knowledge of firm costs 

• Cost savings and value 

• Improved cost control 

• Time savings 

• Improved quality 

• Reduced Administration 

Disadvantages: 

• Owner’s unfamiliarity with the delivery system 

• Greater reliance on transparency and trust 

• Limited availability of insurance and bonding 

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Comparisons of Delivery Systems 

A major research project, conducted by Penn State University in 1997, studied the 

outcomes for 351 projects and compared those outcomes against the delivery systems used for the projects. The measured outcomes included: 

Unit Cost 

A comparison of the unit cost—the cost per square foot in place—for the different 

systems indicated: 

CM at Risk was 1.6% lower than Design-Bid-Build 

Design/Build was 4.5% lower than CM at Risk 

Design/Build was 6.1% lower than Design-Bid-Build 

Design and Construction Cost Growth 

The cost growth—from initial contract cost to final cost—for the different systems 

was: 

Design-Bid-Build 4.83% 

CM at Risk 3.37% 

Design/Build 2.17% 

Delivery Speed 

A comparison of the delivery speed—taking into account design and construction—indicated: 

Design-Bid-Build 3,250 square feet per month 

CM at Risk 4,712 square feet per month 

Design/Build 6,842 square feet per month 

CM at Risk was 13.33% faster than Design-Bid-Build 

Design/Build was 23.5% faster than CM at Risk 

Design/Build was 33.5% percent faster than Design-Bid-Build 

Design and Construction Schedule Growth 

The schedule growth—from initial schedule to final schedule—was: 

Design-Bid-Build 4.44% 

CM at Risk 0% 

Design/Build 0% 

Quality 

Measured on a scale of 1–10, with 10 being the highest, owners graded the quality 

of their projects at turnover and startup as follows: 

Design-Bid-Build 6.00 

CM at Risk 7.43 

Design/Build 7.50 

Summary of Comparison 

A summary table of the findings of this study follows: 

Design-Bid-Build1 CM at Risk2 Design/Build2

Unit Cost ■ ● ● 

Cost Growth ■ ● ● 

Delivery Speed ■ ● ● 

Construction Speed ■ ★ ● 

Schedule Growth ■ ● ● 

Turnover Quality ■ ● ● 

System Quality ■ ● ● 

● Significantly outperforms ★ No significant difference ■ Significantly underperforms 

1 Compared against other systems 

2 Compared against Design-Bid-Build 

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Further Discussion—Advantages of Design/Build 

Undivided Responsibility 

Design/Build contracting provides both architecture/engineering and construction 

resources under a single contract. A single entity is responsible for cost control, 

quality assurance, schedule adherence, and performance of the finished project. This 

results in clearly fixed responsibility, maximum cost control and immediate responsiveness. 

The Owner can exercise his desired degree of control over design, with the added 

advantage of continuously knowing the cost implications of each decision. The Owner’s control of the entire process is strengthened by contracting with a single firm 

unconditionally committed to the success of his project. It provides a comprehensive 

view of the project, as opposed to the one-piece-at-a-time method of multiple providers. 

Time Savings 

Design and construction are telescoped, bidding periods and redesign time are 

eliminated, and long-delivery components are identified and ordered early in the design process. Therefore, total design construction time is significantly reduced, 

which translates into earlier utilization of the completed facility. 

Reduced Possibility of Project Delays 

The integrated nature of Design/Build results in decreasing the risk of schedule 

erosion and project delay. Bidding periods and redesign time are eliminated. Materials and equipment procurement and construction work can begin earlier—in some 

cases, before the construction documents are fully completed. Since total design-construction time is reduced, Owners enjoy earlier utilization of their completed facility. 

The chance of late entry to market or production downtime is greatly reduced. 

Early Knowledge of Costs 

The Design/Build team, working closely with the Owner, accurately conceptualizes 

the completed project at an early stage. Continuous and concurrent estimating during the development of design results in knowledge of firm, overall cost far sooner 

than is possible with other approaches. This process also permits making early decisions—which have the greatest impact upon cost—in an informed, cost-based environment. 

Cost Savings 

Design and construction personnel, working and communicating as a team, evaluate alternative materials and methods efficiently and accurately. From the outset 

of the project, both design and construction expertise are brought to bear upon all 

components of a project, from site work through mechanical and electrical systems. 

Cost evaluation is continuously ‘‘fed back’’ into the design process and the cost implications of design decisions are known at the time—not after design is complete. 

Because the Design/Builder is responsible for both design and construction, cost 

overruns resulting from design error or faulty coordination are the responsibility of 

the Design/Builder, not the Owner. The Owner pays only for scope changes that he 

initiates. 

Reduced Risk of Cost Overruns 

With Design/Build, risk reduction begins at the design stage. Construction specialists are an integral part of the design team, so construction implications are addressed early. The team works together to decide the most cost-effective materials 

and methods of delivery before a design is finalized, which enables them to provide 

more accurate costs and better scheduling up front. Because the same group is responsible for both drawings and functional performance, the possibility of expensive 

surprises in the construction phase is virtually eliminated. Too often with designbid-build, design impracticalities are discovered during construction, which leads to 

increased cost, blown schedules, and finger pointing between architect, engineer, 

and contractor. 

Because the Design/Builder is accountable for both design and construction, the 

risk of cost overruns from design error or poor coordination are transferred from the 

Owner to the Design/Builder. 

Risk Is Transferred From The Owner To The Design/Builder 

Single source responsibility of Design/Build reduces risk to the Owner. The Owner 

no longer takes the risk of scope gaps, document misinterpretation or design errors. 

The Design/Builder carries singular responsibility for both the design and the construction of the project. This reduces the staff and management requirements for 

the Owner for those that normally manage the risk of those gaps and errors. 

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In the traditional design-bid-build method, multiple entities are used for the various tasks required. This separate engagement of architect/engineer, contractor, and 

other parties means there is no single party responsible for overseeing the entire 

project, and the Owner is therefore at greater risk for undesirable outcomes. 

Design/Build presents less risk from a contractual perspective. There is only one 

contract, so Owners look to a single source for performance. This is a major advantage over the design-bid-build process, where the responsibility for any aspect of a 

project’s outcome may be unclear due to language in the various provider contracts. 

Typical are phrases like, ‘‘The Owner warrants to the contractor that the drawings 

and specifications are complete and free from error . . .’’ This language places the 

responsibility for design solely with the Owner. If problems are encountered during 

construction, the contractor can blame the architect who, in turn, may point the finger right back at the contractor. This method relies on audit, inspection, and, all 

too frequently, the legal system to ensure final project quality. In contrast, the Design/Builder assumes all responsibility by documenting the Owner’s requirements 

and expectations in performance terms. ‘‘The Design/Builder warrants to the Owner 

that it will produce documents that are complete and free from error . . .’’ The Design/Builder essentially guarantees high quality in the finished facility by assuming 

complete responsibility from design through completion and into operation. 

Procurement Methods 

Procurement methods are distinct from, but related to delivery systems. Not all 

procurement methodologies discussed below are applicable to all delivery systems. 

The selection of the procurement method will follow the selection of the delivery system for a particular project. 

Direct Selection 

Direct Selection is the process where the Owner selects a firm without considering 

other firms for the project or service and negotiates the terms under which services 

will be provided. 

Direct Selection may be appropriate when the Owner has considerable positive experience with that firm, the project is so highly specialized that only one firm is 

qualified for the project or where an umbrella purchasing agreement is in place. 

Price Bidding 

Price Bidding is the process under which any reasonably qualified contractor can 

submit a bid for a given scope of work. A variation of this method is bidding by a 

small number of invited firms, who have been pre-qualified (see below). The Owner 

usually selects the lowest reasonable bid. 

Price Bidding requires complete construction documents, which limits its application to the Design-Bid-Build delivery system. 

Qualifications Based Selection (QBS) 

Qualifications Based Selection is similar to the method commonly used for the selection of consultants, architects, engineers and program managers. 

Pre-Qualification: Pre-qualification is the process used by an Owner to restrict the 

pool of firms that will be invited to propose or bid on the work. The Owner may 

restrict the pool in several manners, the most common of which are qualifications, 

relevant experience, capacity or location. 

The Owner will often develop and issue a Request for Qualifications. The Owner 

will evaluate the submittals made by interested firms against criteria that was preestablished by the Owner. A short list of firms will be selected for further consideration, often involving interviews, proposals and reference checks. 

Proposal: The proposal process usually follows a pre-qualification process. Again, 

the Owner would develop the Request for Proposals and evaluate the proposals 

against pre-established criteria. 

Pre-Established Criteria: To create an objective selection process it is essential for 

the Owner to establish the selection criteria in advance. The criteria may include: 

• Firm History 

• Financial strength 

• Backlog and capacity to deliver the project 

• Depth of personnel in key positions 

• Firm and team member experience 

• Project work plan 

• Ability to meet DBE and similar requirements 

• Performance history 

• References 

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Negotiation: Negotiation typically follows a Pre-Qualification, Proposal or Direct 

Selection process. 

Qualifications Based Selection is most often used for the selection of a CM at Risk 

or Design/Build firm. It has the advantages of an accelerated selection process and 

a greater match of firms to the Owner’s objectives. 

Value Based Selection 

Design and price proposals are solicited in a Request for Proposals, which usually 

stipulates program requirements, design criteria, performance specifications, site information and contract terms. The teams invited to submit proposals are often prequalified and limited to a few teams. Teams then submit design and price proposals, 

which are evaluated against pre-established criteria, by a selection panel or jury, 

and the winning team is selected. 

Value Based Selection is limited to the Design/Build delivery system. While it has 

the advantage of providing a variety of design solutions, it can be a time and resource consuming process. Pre-qualification of firms, issuing the RFP, preparing design and price proposals, evaluation of proposals and selection of the winning firm 

can take many months. A jury must be appointed to evaluate the proposals and the 

members must agree on the application of the pre-established evaluation criteria. 

To offset the cost of preparing design and cost proposals, a stipend is often paid to 

the competing firms. For large and complex projects, stipends can exceed $100,000. 

Bibliography 

‘‘Best Value, Performance Based Procurement System’’, by Arizona State University 

‘‘Comparison of U.S. Project Delivery Systems’’, by Mark Konchar and Victor 

Sanvido, published by Penn State University 

‘‘Construction Industry Megatrends’’, by Preston Haskell 

‘‘Design-Build Basics for Owners’’, Design-Build Institute of America 

Design-Build Learning Series, Successful Design-Build Project Delivery, DesignBuild Institute of America 

Design-Build Manual of Practice, published by Design-Build Institute of America 

Design Build—Planning through Development, by Jeffery L. Beard, Michael C. 

Loulakis and Edward C. Wundram 

‘‘Design Teamwork’’, published by Healthcare Design 

‘‘Design and Construction Survey’’, published by Modern Healthcare 

Principles of Design-Build Project Delivery, Texas Chapter, Design-Build Institute 

of America 

‘‘Project Delivery Systems: CM at Risk, Design/Build, Design-Bid-Build’’, by Construction Industry Institute 

Selecting Project Delivery Systems, by Victor Sanvido and Mark Konchar 

‘‘The Integrated Design-Build Firm’’, by David Engdahl 

f 

Prepared Statement of Charles A. Clarkson, Founder and Chairman, 

The Clarkson Group, L.L.C., Jacksonville, FL 

The recent emergence of Design-Build contracts in the U.S. building industry 

speaks to its many attributes. In lieu of the traditional Design-Bid-Build format, Design-Build enables fast tracking through continual designer-builder alignment and 

overlapping of job processes. Further, this single source of designers and contractors 

places the onus on one entity, thus resulting in fewer conflicts. 

On the other hand, Design-Build seemingly generates an equal amount of constraints. Perhaps the greatest disadvantage with Design-Build is the loss of competition inherent to the traditional bid-process. Without this tool, owners typically 

lose cost-savings garnered through competitive bids. Equally disconcerting, the architect (customarily the owner’s agent) pledges allegiance to the engineers and contractor. This borderless relationship essentially dismantles the owner’s checks-andbalances safety net. As many laymen would say, Design-Build is essentially the ‘‘fox 

watching the hen house.’’ Given the obvious advantages and disadvantages of Design-Build contracts, it becomes important to identify the circumstances by which 

such advantages can be put to good use. 

Standardized and/or redundant projects align wonderfully with the mechanisms 

of Design-Build. Projects such as hangers, franchisor prototypes, highways, and industrial centers look to benefit from Design-Build arrangements. Given its predictability and knack for minimizing root causes of disputes, Design-Build proves a viable pick in this arena. Further, development of multiple standardized projects allows 

for future savings through the design’s and methods’ reusability. 

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Another optimal scenario for utilizing Design-Build occurs when the importance 

of time outweighs that of cost. As one common example, government highway 

projects many times look to Design-Build given their need for an accelerated completion schedule in effort to minimize commuter disruption. Further, such public 

projects many times have loose budgetary parameters. In these cases, Design-Build 

proves more effective mainly due to its ability to save time. 

In more customized conditions, Design-Bid-Build tends to be the more risk-averse 

solution. Given the individuality of all sites (e.g. subsurface conditions, wind/rain/ 

snow loads, topography, and zoning restrictions) coupled with the specialty design 

warranted by most structures, Design-Bid-Build typically proves to be the best 

choice. Because of such unknowns, Design-Bid-Build better blockades owners from 

price gauging and consultant mismanagement. In such specialized projects, many 

would recommend finalizing design before committing to a construction cost. Otherwise, untimely design changes will lead to rising costs though change orders. 

Design-Build and Design-Bid-Build are both common to today’s building circles for 

good reason. Each, in their own right, presents advantages beneficial to designers, 

builders, and owners. Given their varying components, however, it should be remembered that choosing one arrangement over the other is circumstantial. Put 

plainly, substantial standardization of multiple projects increases the benefits of Design-Build. Conversely, projects with more unknowns and the inability to standardize make Design-Bid-Build more attractive. Finally, given the continual advancements and standardization of both design techniques and construction methods, one 

should expect the applicability of Design-Build to expand. 

f 

Prepared Statement of Christopher Needham, Senior Legislative Associate, 

National Legislative Service, Veterans of Foreign Wars of the United States 

MR. CHAIRMAN AND MEMBERS OF THE SUBCOMMITTEE: 

On behalf of the 2.3 million men and women of the Veterans of Foreign Wars of 

the United States (VFW) and our Auxiliaries, I would like to thank you for the opportunity to testify today with respect to the construction process of the Department 

of Veterans Affairs (VA). 

For the better part of a decade, the VA construction process had been dominated 

by the Capital Asset Realignment for Enhanced Service (CARES) process. This systematic, data-driven assessment of VA’s capital infrastructure aimed to plan for the 

current and future healthcare needs of veterans. 

Throughout the CARES process, we were concerned with the under-funding of the 

construction budget. Congress and the Administration did not devote many resources to VA’s infrastructure, preferring to wait for the final results of CARES. 

This is despite the fact that many legitimate construction projects were identified 

by VA’s hospital managers and with House passage of the ‘‘Veterans Hospital Emergency Repair Act,’’ which authorized construction at numerous facilities. Needs were 

identified, but Congress never appropriated funding, with the ongoing CARES process being used as the primary excuse. 

We believe that the de facto moratorium on VA major construction projects was 

poor public policy and that some of the extra expenses associated with construction 

costs today are a result of inability to begin projects in previous years. With construction, time equals money, and the longer a project takes, even in planning 

stages, the higher the ultimate cost will be. 

In July 2004, then-VA Secretary Anthony Principi testified before this Subcommittee that CARES ‘‘reflects a need for additional investments of approximately 

$1 billion per year for the next five years to modernize VA’s medical infrastructure 

and enhance veterans’ access to care.’’ Yet, since then, the amount appropriated for 

major construction has lagged far behind. The Fiscal Year 2007 Continuing Resolution, which served as the VA Appropriation, only funded $399 million for major construction. The fiscal year 2006 appropriation was just $600 million. Today, we are 

a month into fiscal year 2008 and there is still no appropriation, meaning not one 

of the current construction priorities can move forward. We are certainly appreciative of the amount appropriated by the House, but for VA to properly manage 

the construction process, the department needs on-time funding. 

Beyond the former Secretary’s statements and the CARES decision documents, 

the need for increased construction funding is evident. VA’s facilities are aging, with 

an average age well over 50 years and VA has historically recapitalized at a rate 

well below industry standards. From 1996–2001, for example, the average $246 million major and minor construction appropriation corresponded with a recapitalization rate of just 0.64 percent of its approximately $40 billion plant replacement 

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value. This low rate means VA would rebuild its aging infrastructure every 155 

years. Numerous reports and studies, including the 1998 Price Waterhouse report 

on VA’s facility management programs, cite the need for a 4–8 percent recapitalization rate, which is consistent with a total construction budget—major and minor— 

of $1.6–$3.2 billion per year. 

One of the strengths of the CARES process was that it was not just a one-time 

snapshot of the VA healthcare system and its infrastructure needs. It provided the 

department and its managers with the tools and a framework to evaluate future 

needs and a prioritization methodology to determine which projects are most critical 

to the department. These prioritizations help the department to determine its budget request, and the full prioritization lists are included with VA’s annual budget 

submission as part of its 5–Year Capital Plan. 

To determine the budget request, VA first assigns priority to previous year’s 

projects that were partially funded and then adds in newly evaluated projects from 

the current budget year to create an ordered list. When setting the budget, VA’s 

managers select projects from the top of this prioritization list. We believe that this 

apolitical methodology for determining construction priorities is an excellent process. 

That process also reveals the inadequacies of the fiscal year 2008 budget request. 

Page 7–12 of the 5–Year Capital Plan shows that the budget request only funded 

six projects, all of which came from the list of projects partially funded in previous 

fiscal years. It included no additional money for six other partially funded construction priorities or any money for any of the top priorities identified for fiscal year 

2008. Some of these projects were later funded as part of the continuing resolution 

that funded VA during the 2007 fiscal year, but it is troubling to us that funding 

was not requested in the first place. 

With respect to minor construction, we were pleased to see the sizeable $326 million increase in the account as part of the fiscal year 2007 supplemental. As with 

the major construction account, there was little progress made on the long list of 

construction priorities laid out in the 5-year Capital Plan. Table 4–8 of that report 

details numerous projects that VA has identified and that will need funding in the 

future. We thank the Congress for upping the account, but we would hope that future funding needs are part of the regular appropriation, not just a supplemental. 

Although not specifically related to the construction budget, I would like to place 

special emphasis on nonrecurring maintenance funding, part of the Medical Services 

budget account. When The Washington Post detailed the deplorable living conditions 

some wounded warriors faced at Walter Reed Army Medical Center, including mold, 

leaky plumbing and holes in walls, the reactions were swift, immediate and universal. These intolerable conditions were a national shame and we as a Nation can 

and must do better for those who have served this country. 

The VFW absolutely agrees, but we view the problems at Walter Reed as the 

manifestation of a problem we have repeatedly pointed out. The unacceptable living 

conditions at Walter Reed were caused, in part, because of an insufficient maintenance budget. Although Walter Reed is not a VA facility, the maintenance problems 

are consistent with the concerns we have had with VA. 

In light of the attention focused on the healthcare of veterans, VA Secretary Jim 

Nicholson ordered an immediate review of the Department’s maintenance needs on 

March 7, 2007. The results, which were released on May 21, 2007, showed that the 

majority of VA’s facilities were in good condition and that most of the deficiencies 

that VA’s internal review identified were, in VA’s words ‘‘normal wear and tear.’’ 

The VFW, however, has some concerns with the report’s findings and what they 

represent. A March 22, 2007 article in The Washington Post reported that VA officials concluded that 90 percent of the problems identified were routine, but that 10 

percent were deemed more critical. Among the critical problems VA identified were 

problems with the fire alarm and smoke barrier systems in a hospital in Amarillo. 

In Fayetteville, the review found problems with fixtures and other objects in patient 

areas that could pose a suicide threat in its mental health unit. The VA Medical 

Center in Saginaw found that, ‘‘[o]ld, worn out carpet may harbor residue/bacteria 

from patients’ personal accidents.’’ In Manchester the damaged and stained carpet 

is over 15 years old and was installed over asbestos floor tiles. Many other facilities 

had leaky pipes or roofs, discolored or defective ceiling tiles, peeling paint or holes 

in walls, and issues with the appearance or quality of the flooring. 

We, as part of The Independent Budget, have identified full and proper funding 

of the NRM account as one of the biggest challenges facing VA. We have cited industry standards, as well as the findings of the aforementioned Price Waterhouse study 

that found a need for VA to spend 2–4 percent of its plant replacement value each 

year on NRM. 

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VA’s Office of Asset Enterprise Management’s most recent Asset Management 

Plan (accessible on the Internet at http://www.va.gov/oaem/docs/ 

FINALAMPsigned.pdf) estimates the current plant replacement value of VA’s facilities to be roughly $40 billion. Accordingly, VA’s own Asset Management Plan rec- ommends an appropriate level of funding ranging from $800 million to $1.6 billion 

on NRM. 

The level of NRM funding in the past few years has fallen far below that. For fiscal year 2008, for example, the Administration recommended a paltry $573 million for NRM. Over the previous two fiscal years, only about $1 billion total was 

appropriated for this critical account, far below what VA itself had identified as a 

need. 

We were pleased to see that Congress stepped up once VA identified these numerous maintenance issues, with an additional $550 million for NRM in the fiscal year 

2007 supplemental appropriation. We would hope, however, that future funding requests would be sufficient enough to eliminate the need for emergency requests. 

These issues must be taken care of before they develop into larger problems. 

We would also thank Congress for listening to our recommendations in previous 

years in exempting this funding from apportionment using the Veterans Equitable 

Resource Allocation (VERA) formula. While VERA does move the funding toward geographic areas with the highest demand for healthcare, it also tends to move funds 

away from facilities with the oldest capital structures—facilities that generally have 

the greatest maintenance needs. We would hope that future NRM goes to the facilities with the greatest demand. 

Providing a safe, clean, hospitable healthcare environment is critical to the effective delivery of healthcare and accordingly Congress must provide VA with all the 

resources it needs to address the shortcomings already identified, but also to stay 

on top of any problems that arise in the future. We cannot afford to have what happened at Walter Reed happen ever again. The VFW encourages Congress and VA 

to be proactive and to do what is right for this nation’s veterans. 

Mr. Chairman, this concludes my testimony and I would be happy to answer any 

questions you or the members of this Subcommittee may have. 

f 

Prepared Statement of Shannon L. Middleton, Deputy Director, 

Veterans Affairs and Rehabilitation Commission, American Legion 

Mr. Chairman and members of the Subcommittee: 

Thank you for allowing The American Legion to present its views on the Department of Veterans Affairs (VA) construction process. With the rapid advancements 

in technology and medicine that the national healthcare system is experiencing, VA 

will be compelled to perpetuate the evolution of its healthcare delivery system far 

into the future. An important part of this evolution is ensuring that VA has adequate facilities that are safe and located in needed areas to make access to its 

healthcare facilities readily available for veterans. 

The healthcare delivery facilities of the Department of Veterans Affairs (VA) are 

increasingly aging physical plants in need of replacement; substantial renovation 

and improvements relating to fire, safety and privacy standards are necessary, as 

well as modernization and reconfiguration to meet the demands of the advances of 

medicine. The increasing demands placed upon the outpatient and ambulatory care 

facilities of VA require substantial alterations to meet changing space requirements. 

No healthcare delivery system can be expected to provide quality care if the physical settings that house that care are allowed to deteriorate to a state which places 

them beyond redemption. 

In March 1999, the then General Accounting Office (now Government Accountability Office, GAO) published a report on VA’s need to improve capital asset planning and budgeting. GAO cited the fact that Veterans Health Administration’s 

(VHA) asset challenge was due, for the most part, to four reasons. First, VHA owned 

4,700 buildings, over 40 percent of which have operated for more than 50 years, including almost 200 built before 1900. Second, over 1,600 buildings (almost one-third) 

have historical significance. Third, VHA used fewer than 1,200 buildings (about onefourth) to deliver healthcare services to veterans. They further noted that VA had 

over 5 million square feet of vacant space, which could cost as much as $35 million 

a year to maintain. Fourth, VHA’s healthcare buildings have significant unused inpatient capacity. 

Basically, the report found that VA’s asset plan indicated that billions of dollars 

might be used operating hundreds of unneeded buildings over the next 5 years or 

more. The report went on to further state that VA did not systematically evaluate 

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veterans’ or asset needs on a market (or geographic) basis or compare assets’ lifecycle costs and alternatives to identify how veterans’ needs could be met at lower 

costs. 

Additionally, GAO estimated that over the next few years, VA could spend one 

of every four of its healthcare dollars operating, maintaining, and improving capital 

assets at its then 181 major delivery locations including 4,700 buildings and 18,000 

acres of land nationwide. Recommendations stemming from the report included the 

development of asset-restructuring plans for all markets to guide future investment 

decisionmaking, among other initiatives. 

VA’s answer to GAO and Congress was the initiation and development of the Capital Asset Realignment for Enhanced Services (CARES) program. The CARES decision, released in May 2004, contained hundreds of construction requests, upgrades, 

and alterations of current buildings that will require a substantial increase in funding for Major and Minor Construction within VA. 

During the initial stages of the CARES process, the construction budget was nearly flat-lined pending the outcome. This caused a major backup in construction 

projects and needed seismic repairs. Major and minor construction appropriations 

for VA have been consistently targeted for reduction since such funding is regrettably the most vulnerable to annual assault. For several years VA facility directors 

have been forced to use non-recurring maintenance funds to provide care. Sufficient 

funding must be provided to maintain, improve and realign VA healthcare facilities. 

The American Legion urges Congress to annually appropriate sufficient funds for 

the VA construction program to ensure the continued provision of quality healthcare 

to our Nation’s veterans and the implementation of the CARES decisions. 

Medical Construction And Infrastructure Support 

VA has a vast physical plant inventory that represents a major investment of taxpayer dollars. Despite the large number of aging facilities, construction funding has 

been limited. VA is seeking to maximize its use of its facilities, through the CARES 

decision. CARES construction is estimated at $6.1 billion over the next six years. 

Sufficient funding to implement new initiatives and the proposed physical plant 

changes will be critical to the success of the planning initiatives. 

Major Construction 

The CARES process identified more than 100 major construction projects in 37 

states, the District of Columbia, and Puerto Rico. Construction projects are categorized as major if the estimated cost is over $7 million. Now that VA has a plan 

to deliver healthcare through 2022, it is up to Congress to provide adequate funds. 

The CARES plan calls for, among other things, the construction of new hospitals 

in Orlando and Las Vegas, and replacement facilities in Louisville and Denver for 

a total cost estimated to be well over $1 billion for these four facilities. VA has not 

had this type of progressive construction agenda in decades. Major construction 

money can be significant and proper utilization of funds must be well planned. Recently, funding for a new VAMC in Denver was approved by Congress. However, 

if timely completion of these projects is truly a national priority, providing adequate 

funding to satisfy this obligation is vital. 

In addition to the cost of the proposed new facilities are the many construction 

issues that have been ‘‘put on hold’’ for the past several years due to inadequate 

funding, and the moratorium placed on construction spending by the CARES process. One of the most glaring shortfalls is the neglect of the buildings sorely in need 

of seismic correction. This is an issue of safety. The delivery of healthcare in unsafe 

buildings cannot be tolerated and funds must be allocated to not only construct the 

new facilities, but also to pay for much needed upgrades at existing facilities. 

Delays in the process have a profound impact on access to healthcare for veterans. 

Restoration of the medical center in Biloxi, MS—which is consolidating with the 

medical center in Gulfport, MS—is only in Design Phase 1. The project’s estimated 

completion date is January 2012. With the medical center in Gulfport completely 

closed, the medical center in Biloxi will have to provide services to even more veterans—but construction to accommodate this increase will not be completed for 

years to come. 

The American Legion believes that VA has effectively shepherded the CARES 

process to its current state by developing the blueprint for the future delivery of VA 

healthcare—it is now time for Congress to do the same and adequately fund the implementation of this comprehensive and crucial undertaking. 

Minor Construction 

VA’s minor construction program has also suffered significant neglect over the 

past several years. Maintaining the infrastructure of VA’s buildings is no small 

task. Because many buildings are old, renovations, relocations and expansions are 

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quite common. When combined with the added cost of the CARES program recommendations, it is easy to see that a major increase over the previous funding 

level is crucial and overdue. 

The American Legion has long recognized the necessity for a healthcare system 

that revolves around the special needs of veterans. Veterans serving in Iraq, Afghanistan and all corners of the globe are returning home with severely debilitating 

injuries and are now faced with new challenges they never considered before. Loss 

of limb(s), Traumatic Brain Injury, mental conditions, stress reactions, Post Traumatic Stress Disorder, spinal cord injury and blindness are now realities to these 

young heroes. VA must be there, leading the way, to help them heal and rehabilitate. VA must be capable of providing the programs and services needed to help all 

qualified veterans lead the most productive and healthy lives possible. VA must continue to look to the future and assess the needs of this ever-changing population. 

To do this, adequate funding is a must. 

Thank you Mr. Chairman, again, for this opportunity to appear before this Subcommittee. We look forward to working with you to help shape the future of VA 

healthcare delivery. 

f 

Prepared Statement of Donald H. Orndoff, Director, 

Office of Construction and Facilities Management, 

U.S. Department of Veterans Affairs 

Mr. Chairman and members of the Committee, I am pleased to appear today to 

discuss the VA’s healthcare construction program, and specifically the processes we 

use to plan, design and construct state of the art healthcare facilities. In August 

2007, I was honored to be appointed the Director, Office of Construction & Facilities 

Management (CFM). In this capacity, I am responsible for the execution of VA’s 

major construction program. My new assignment in the VA follows over 29 years 

of service as an officer in the Civil Engineer Corps of the United States Navy. Joining me today are Mr. Robert Neary, Director, Service Delivery Office, CFM, Ms. Patricia Vandenberg, Assistant Deputy Under Secretary for Health for Policy and 

Planning, and Ms. Brandi Fate, Acting Director, Capital Asset Management Planning Service. Let me begin by briefly reviewing the status of VA’s construction program for healthcare. 

The Department is currently engaged in the largest building program since the 

immediate post-World War II period. This program represents implementation of 

the results from the Capital Asset Realignment for Enhanced Services program or 

CARES which was initiated systemwide in 2002 and produced initial results announced in May 2004. At that time, 30 major construction projects were approved 

and funded in whole or part. In subsequent fiscal years, six additional projects have 

been submitted for funding in budget requests. The total cost of these projects approaches $5 billion and $2.83 billion (including Hurricane Supplemental Funding) 

has been appropriated between FY 2004 and FY 2007. The FY 2008 budget now before the Congress requests an additional $560 million in major construction for infrastructure improvement for the veterans health system. These projects are in various stages of design and construction. I am pleased to note that construction contracts have been awarded on 18 projects. 

The minor construction program is also an important part of addressing infrastructure needs of the health system identified by CARES. Since FY 2004, $1.08 billion has been appropriated (including Hurricane Supplemental Funding) and an additional $180 million is requested in the FY 2008 budget. 

VA has a real property inventory of over 5,000 owned buildings, 1,100 leases, 

32,000 acres of land and approximately 158 million gross square feet (owned and 

leased). As the CARES process revealed, the average age of VA facilities is well over 

50 years old, and many of these older facilities are not designed or constructed to 

meet the demands of clinical care in the 21st century. VA’s management of these 

assets is critical to providing healthcare and services to our veterans. 

Implementing an aggressive real property management program includes use of 

a disciplined capital investment and planning process, development of tools, processes and methods for improved inventory and analytical capability and innovative 

acquisition methods. VA uses internal and external benchmarks and best practices, 

monitoring portfolio performance on a quarterly basis. VA conducts condition evaluations, evaluating a third of VHA facilities each year. VA effectively manages its 

vast holding of capital assets through performance monitoring and analysis, supporting the President’s Management Agenda and Federal Real Property Council efforts to decrease underutilized and vacant space, improve facility condition, decrease 

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operating costs and reduce non-mission dependent assets. In FY06 and FY07, VA 

disposed of 77 and 43 buildings, respectively. Forty-eight buildings are planned for 

disposal in FY08. In addition to disposals, VA also uses its authority under the Enhanced Use Program to engage the private sector and other public entities in the 

adaptive reuse and development of unneeded property with lease consideration flowing to VA. VA develops energy savings performance contracts designed to reduce energy consumption in federally owned facilities, reducing the demand and dependence on natural resources. Further, VA integrates energy and real property initiatives and programs. VA plans to implement energy metering, bill auditing and commodity purchasing for improved efficiency and effectiveness of both real property 

and energy management. VA’s energy pilot is scheduled for implementation in 

FY08. 

VA utilizes a multi-attribute decision methodology enabling a disciplined decisionmaking approach in prioritizing its capital investment needs and requirements. 

Through this methodology, VA establishes its 5 Year Capital Plan. The 5 Year Capital Plan is a living document that reflects the changes in the composition and alignment of VA’s assets. The plan is the document used to describe the selection of VA’s 

capital acquisitions and funding requests by incorporating a formal executive review 

process. 

This process begins with Veterans Health Administration (VHA) strategic planning initiatives that identify capital needs based upon demographic data, workload, 

actuarial projections, cost effectiveness, risk, and alternatives. Once a potential 

project is identified, it is reviewed and scored based on criteria VA considers essential to providing high quality services in an efficient manner. The criteria VA utilizes in evaluating projects include service delivery enhancements, the safeguarding 

of assets, special emphasis programs, capital asset priorities, departmental alignment, and financial priorities. The new funding requirements are considered, along 

with existing CARES decisions, in determining the projects and funding levels to 

request as part of the VA budget submission. Appropriate projects are evaluated for 

joint needs with the Department of Defense and sharing opportunities. 

Selected projects based on VHA strategic process are vetted through the Department’s Capital Investment Panel (CIP) to ensure all projects are based upon sound 

business and economic principles, promote the one-VA vision, align with VA strategic goals, address the Secretary of VA’s priorities, and support the President’s 

Management Agenda. The CIP analyzes and scores these projects and submits the 

results to the Strategic Management Council (SMC) for consideration. The SMC is 

VA’s governing body assigned the responsibility to oversee VA’s capital programs 

and initiatives. The SMC reviews the projects and submits its recommendations to 

the Secretary, who makes the final decision on projects to include in the budget. 

Identification of capital needs through the Secretary’s decision occurs annually. 

Major capital investment needs are requested from facilities in October, prioritized 

through each Administration and the Departmental review process, and vetted for 

the Secretary’s approval by the following summer. Under the current process, once 

a decision has been made to include a project in the Department’s budget, the design process begins with the selection of the design architect. The traditional design 

process consists of three phases—schematic design, design development and construction document preparation. While the timing varies with the size and complexity of the project, design typically takes 18 months. Once design is complete, the 

construction contractor is procured and construction begins. Approximately onethird of VA projects are executed using the design build method in which a contract 

is awarded to an architect/engineer (A/E) and construction contractor team who take 

a preliminary design provided by VA and completes the design and constructs the 

projects. 

The Department utilizes standard industry practices in the design and construction of VA facilities. The architectural and engineering firms that design facilities 

for VA are selected in accordance with established laws and regulations. We are 

pleased that highly qualified A/E firms with healthcare practices compete to be selected as VA designers. These firms are on the cutting edge of modern healthcare 

design for state-of-the-art medical care facilities for the private sector as well as for 

VA. 

Construction contractors are often selected using a combination of quality factors 

and price. Contractors that are selected through a negotiations process are evaluated based on their experience and track record in constructing similar facilities 

from both a corporate perspective as well as the company’s specific personnel that 

will be managing the VA project and the firms’ proposed project management plan. 

VA benefits from its reliance on private sector architects, engineers and contractors. Selection of the top firms in the Nation brings to VA’s construction program 

the highest quality of expertise in healthcare design and construction. VA is also 

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expanding the support received from the private sector through the use of Construction Management (CM) firms for VA’s largest projects. These firms bring extensive 

expertise in managing large projects to support VA’s major construction efforts. The 

first of these contracts has been implemented on the project to construct a new VA 

Medical Center in Las Vegas. Other projects that will benefit from the use of private 

sector CM are Orlando, New Orleans and Denver. 

VA’s construction program is not without challenges. The rising cost of construction has had a significant impact on VA since 2004. This is not a problem unique 

to VA, but has similarly affected all government and private sector organizations 

with construction requirements. Cost growth is largely attributable to the robust 

economy in the United States and around the world. The demand for labor and 

building materials continues to outpace the supply. Coupled with rising fuel prices 

and the impact of the hurricanes of 2004 and 2005, building programs of all types 

have experienced significant cost growth. As VA monitors the industry, we regularly 

learn of major corporate capital projects which are postponed or canceled because 

of the price. 

Another challenge in the construction process is attracting competition for VA 

major projects. The large volume of construction in most markets makes it extremely difficult to attract significant competition. It has not been unusual for only 

one or two bidders to compete for VA work during the past 18 months and this lack 

of competition has diminished the likelihood of good pricing. 

VA is taking a number of steps to minimize the impact of these circumstances 

on the construction program. VA regularly conducts market surveys in the cities 

where we have upcoming work in an effort to better predict the costs we will encounter, and the labor supply that will be available. In our budget estimates we now 

vary the escalation rates included based on the current and predicted construction 

activity in individual markets. We are working with the contracting community to 

improve their awareness of upcoming VA projects and to attract their interest in 

performing VA work. VA is also reviewing the planning process to identify improvements that can be made to insure that when VA commits to a budget cost, a full 

and compete understanding of the project requirements is known and included in 

the budget estimate. 

In closing, I would like to thank the Committee for its continued support for improving the Department’s physical infrastructure to meet the changing needs of 

America’s veterans, and we look forward to continuing to work with the Committee 

on these important issues. 

Again, thank you for the opportunity to appear before the Committee today and 

my colleagues and I would be glad to answer your questions. 

f 

Committee on Veterans’ Affairs 

Subcommittee on Health 

Washington, DC. 

November 8, 2007 

Dennis Cullinan 

National Legislative Director 

Veterans of Foreign Wars of the United States 

200 Maryland Avenue, N.E. 

Washington, D.C. 20002 

Dear Mr. Cullinan: 

Thank you for the testimony of Christopher Needham, Senior Legislative Associate, National Legislative Service, of the Veterans of Foreign Wars of the United 

States at the U.S. House of Representatives Committee on Veterans’ Affairs Subcommittee on Health hearing that took place on November 1, 2007 on ‘‘The VA Construction Process.’’ 

Please provide answers to the following questions by January 2, 2008, to Chris 

Austin, Executive Assistant to the Subcommittee on Health. 

1. The veteran population projection for New Orleans is expected to decline by 

about 18% between 2001 and 2011. Given the declining veteran population, the 

downtown flood risk area, and travel time and distance concerns, could a replacement facility be more conveniently located outside downtown New Orleans, providing for easier accessibility and on higher ground that would be secure regardless of flooding? 

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2. In 1999, the Government Accountability Office (GAO) reported that VA was 

wasting millions of dollars annually on the upkeep of underutilized facilities 

that could be used to enhance veterans’ healthcare. In response, VA initiated 

the Capital Asset Realignment for Enhanced Services (CARES) process to assess VA capital assets and establish a framework to modernize VA’s healthcare 

facilities and use its resources more effectively to improve healthcare delivery. 

The Veterans of Foreign Wars (VFW) always agreed with CARES recommendations to build new facilities. However, specifically in what cases did the VFW 

support recommendations to downsize or close obsolete facilities? 

Thank you again for taking the time to answer these questions. The Committee 

looks forward to receiving your answers by January 2, 2008. 

Sincerely, 

MICHAEL H. MICHAUD 

Chairman 

Responses of the Veterans of Foreign Wars of the U.S. 

to Post-Hearing Questions from the November 1, 2007 

Subcommittee on Health Hearing on the VA Construction Process 

Question 1: The veteran population projection for New Orleans is expected to decline by about 18% between 2001 and 2011. Given the declining 

population, the downtown flood risk area, and travel time and distance 

concerns, could a replacement facility be more conveniently located outside downtown New Orleans, providing for easier accessibility and on higher ground that would be secure regardless of flooding? 

Response: The VFW has traditionally deferred to the Department of Veterans Affairs (VA) with respect to their construction projections and site planning. Their efforts are based upon a rigorous model that aims to project the demand for healthcare and services for the next 25 years, taking into account the age of the veterans 

population, differences in healthcare needs of various localities, and many other demographic factors. VA then uses the information from this model to prioritize its 

construction projects, aiming to come up with an optimal solution. 

In the case of the New Orleans VA facility, VA’s statistics—contained in Page 6– 

25, Volume III of the Fiscal Year 2008 Congressional Budget Submission—cite a 

1.1% growth rate in the number of veterans enrolled in the VA healthcare system 

in Southeast Louisiana area through 2025. This number rises likely due to the 

aging veteran population—older patients typically demand more services—but also 

because of an increasing number of veterans returning to their former homes. 

As we understand it, VA’s plans for the downtown medical facility are in accordance with all standards for hurricane hardening and that it lies above the 100-year 

flood plain. VA’s plans are for all essential mechanical, electrical, and medical 

equipment to be contained on higher floors, allowing the facility to remain open and 

usable should another catastrophe occur. 

Whatever choice is finally made, the VFW’s paramount concern is that VA properly serve New Orleans’ and Southeast Louisiana’s veterans. It is critical that they 

have access to the same levels of first-rate healthcare and services as their fellow 

veterans throughout the country. This is especially true with respect to mental 

health issues. With the stresses and strains of having to rebuild, plus the high number of OEF/OIF veterans in the VISN who are returning from difficult overseas combats, the need is sure to grow. We urge swift action so that VA can properly care 

for those who are in need. 

Question 2: In 1999, the Government Accountability Office (GAO) reported that VA was wasting millions of dollars annually on the upkeep of 

underutilized facilities that could be used to enhance veterans’ healthcare. 

In response, VA initiated the Capital Asset Realignment for Enhanced Services (CARES) process to assess VA capital assets and establish a framework 

to modernize VA’s healthcare facilities and use its resources more effectively to improve healthcare delivery. The Veterans of Foreign Wars (VFW) 

always agreed with CARES recommendations to build new facilities. However, specifically in what cases did the VFW support recommendations to 

downsize or close obsolete facilities? 

Response: The May 2004 CARES decision document, which recommended closing 

or realigning a number of facilities, was not the final word on CARES construction 

issues. The Secretary ordered the creation of a number of CARES Business Plan 

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Studies to further investigate a number of these facilities to determine whether the 

decision document’s recommendations were in the best interest of veterans. These 

18 Business Plan studies are mostly complete, but the net result is that VA has earmarked only one facility—the Gulfport, MS VA Medical Center that Hurricane 

Katrina destroyed—for disposal. 

Since that GAO issued the report referenced in the question, VA has been aggressive about properly disposing of and planning for underutilized or unused space. VA 

has a number of metrics to measure their progress as part of the Federal Real Property Council. By eliminating space, VA is better able to use its operations and maintenance budgets on its primary missions, delivering high-quality healthcare to this 

nation’s veterans. Per Public Law 108–422, VA submits an annual report to Congress on its disposal plans. Page 7–51 of VA’s Five-Year Capital Assets Plan is the 

first of several pages where VA lists buildings, sales, and realignments of its facilities. As these are in accordance with the larger CARES process and the elimination 

of these structures does not impair—and in many cases will allow for the expansion 

of—the healthcare VA provides to veterans, the VFW is supportive of these efforts. 

f 

Committee on Veterans’ Affairs 

Subcommittee on Health 

Washington, DC. 

November 8, 2007 

Steve Robertson 

National Legislative Director 

The American Legion 

1608 K Street, N.W. 

Washington, D.C. 20006 

Dear Mr. Robertson: 

Thank you for the testimony of Shannon L. Middleton, Deputy Director, Veterans 

Affairs and Rehabilitation Commission, The American Legion at the U.S. House of 

Representatives Committee on Veterans’ Affairs Subcommittee on Health hearing 

that took place on November 1, 2007 on ‘‘The VA Construction Process.’’ 

Please provide answers to the following questions by January 2, 2008, to Chris 

Austin, Executive Assistant to the Subcommittee on Health. 

1. The veteran population projection for New Orleans is expected to decline by 

about 18% between 2001 and 2011. Given the declining veteran population, the 

downtown flood risk area, and travel time and distance concerns, could a replacement facility be more conveniently located outside downtown New Orleans, providing for easier accessibility and on higher ground that would be secure regardless of flooding? 

2. In 1999, the Government Accountability Office (GAO) reported that VA was 

wasting millions of dollars annually on the upkeep of underutilized facilities 

that could be used to enhance veterans’ healthcare. In response, VA initiated 

the Capital Asset Realignment for Enhanced Services (CARES) process to assess VA capital assets and establish a framework to modernize VA’s healthcare 

facilities and use its resources more effectively to improve healthcare delivery. 

The Veterans of Foreign Wars (VFW) always agreed with CARES recommendations to build new facilities. However, specifically in what cases did the VFW 

support recommendations to downsize or close obsolete facilities? 

Thank you again for taking the time to answer these questions. The Committee 

looks forward to receiving your answers by January 2, 2008. 

Sincerely, 

MICHAEL H. MICHAUD 

Chairman 

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Questions for the Record/Subcommittee Hearing 

‘‘The VA Construction Process’’ 

November 1, 2007 

Follow-up Answers of Deputy Director Veterans Affairs and Rehabilitation 

Division, The American Legion 

Question 1: The veteran population projection for New Orleans is expected to decline by about 18% between 2001 and 2011. Given the declining veteran population, 

the downtown flood risk area, and travel time and distance concerns, could a replacement facility be more conveniently located outside downtown New Orleans, 

providing for easier accessibility and on higher ground that would be secure regardless of flooding? 

Response: The New Orleans Veterans Affairs Medical Center (VAMC) should remain in the downtown area. The proposed location is within walking distance to the 

Tulane and Louisiana State University (LSU) Medical Schools, which allows staff 

from both medical schools to interact between campuses and the VAMC, all on behalf of patients. The close proximity also allows the medical schools to provide additional staff that is critical to the successful operation of the VAMC. In addition, the 

continued research, which is conducted by the medical schools, provides patients 

with quality medical care. 

To build the new VAMC in an area that is not in the immediate proximity of the 

two medical schools would not be in the best interests of patients, nor the VA Medical System. The American Legion believes building the VAMC anywhere other than 

downtown New Orleans near the aforementioned medical schools would not allow 

for the hospital to provide the level of care needed to properly treat veterans. 

Veterans who use the VAMC New Orleans are generally veterans who do not 

have medical or health insurance. Many are on fixed incomes and have no other alternatives. The VAMC’s location in New Orleans will allow patients, staff and volunteers from throughout the 23-parish catchment area to access the hospital by 

major roadways and interstates; local and regional bus service; and rail. 

Additionally, The American Legion believes veterans and the community would 

benefit from the construction of a joint facility with the LSU teaching hospital. The 

American Legion endorses such a joint facility, with the condition that the veterans 

will be treated in a designated medical dwelling. 

Question 2: In 1999, the Government Accountability Office (GAO) reported that 

VA was wasting millions of dollars annually on the upkeep of underutilized facilities 

that could be used to enhance veterans’ healthcare. In response, VA initiated the 

Capital Asset Realignment for Enhanced Services (CARES) process to assess VA 

capital assets and establish a framework to modernize VA’s healthcare facilities and 

use its resources more effectively to improve healthcare delivery. The American Legion always agreed with CARES recommendations to build new facilities. However, 

specifically in what cases did The American Legion support recommendations to 

downsize or close obsolete facilities? 

Response: Following the 1999 Government Accountability Office (GAO) report, 

the Department of Veterans Affairs (VA) continued to experience an unprecedented 

growth in the number of veterans enrolling for VA healthcare services, which in 

turn warranted a greater presence of its medical facilities nationwide. The American 

Legion continues to support allocation of funding to construct new facilities, as well 

as the upgrade of existing facilities, to include buildings that are old and require 

immediate renovations. 

Enclosed, please find an American Legion report on the CARES process highlighting the key locations of concern. 

f 

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Committee on Veterans’ Affairs 

Subcommittee on Health 

Washington, DC. 

November 8, 2007 

Honorable Gordon H. Mansfield 

Acting Secretary 

U.S. Department of Veterans Affairs 

810 Vermont Avenue, NW 

Washington, D.C. 20420 

Dear Secretary Mansfield: 

Thank you for the testimony of Donald H. Orndoff, Director, Office of Construction and Facilities Management, who was accompanied by Robert Neary, Director, 

Service Delivery Office, Office of Construction and Facilities Management, Patricia 

Vandenberg, Assistant Deputy Under Secretary for Health for Policy and Planning, 

Veterans Health Administration, and Brandi Fate, Acting Director, Capital Asset 

Management Planning Service of the U.S. Department of Veterans Affairs at the 

U.S. House of Representatives Committee on Veterans’ Affairs Subcommittee on 

Health hearing that took place on November 1, 2007 on ‘‘The VA Construction Process.’’ 

Please provide answers to the following questions by January 2, 2008, to Chris 

Austin, Executive Assistant to the Subcommittee on Health. 

1. One of the complaints that this Committee has heard many times is that the 

VA construction process can be slow and inefficient. What are some ways that 

the VA sees that this process can be improved? What can this Committee do 

to help the VA to improve the construction process? 

2. Much of VA’s medical infrastructure has become old and outdated, with the 

average age of VA’s facilities exceeding 50 years. They are increasingly in 

need of either being replaced or substantially renovated to meet fire, safety, 

seismic considerations as well as to accommodate quality of care with the advancement in medicine. What effect has VA’s aging infrastructure had on patient care? What steps has VA taken to mitigate the impact on patient care? 

3. VA stated in it’s testimony that the large volume of construction in most markets makes it extremely difficult to attract significant competition for VA construction projects. What requirements does the VA have for contractors to bid 

on VA construction projects? What can VA do to attract more competition for 

their construction projects? Is there anything that this Committee can do to 

facilitate more competition in this area? 

4. In order to replace and upgrade aging infrastructure, the VA needs to embark 

upon an ambitious construction agenda. Can you talk in detail about the VA’s 

plan for future construction? Does the VA feel that it will be able to upgrade 

and replace aging infrastructure in a timely and efficient manner? 

5. Please provide an update on the status of the New Orleans Medical Center 

reconstruction project, to include a report on the environmental assessments 

underway for the downtown site and the site under consideration located 41⁄2

miles away in Jefferson Parish and anticipated timeline for completion of the 

project. 

6. In June 2007, VA reported to Congress on the option for Construction of Department of Veterans Affairs Medical Center in Okaloosa County, Florida. 

The report stated, ‘‘VISN 16 plans to establish a VA/DoD sharing agreement 

with the Air Force hospital to provide limited inpatient care for veteran enrollees in the Okaloosa Study Area. VA and Air Force are currently negotiating the scope and mix of these services.’’ Has a sharing agreement been established? If so, what is the scope and mix of negotiated services? If not, what 

is the status of the negotiations? 

7. In recent years, VA has experienced significant cost escalation in the construction of medical facilities. For example, the estimate for the construction 

of a new medical facility in Denver has almost doubled to $646 million. What 

are the causes for these increases? What steps has VA taken to prevent such 

escalation in the future? What is the status of a possible collaborative arrangement in Denver between VA and DoD or the University of Colorado? 

8. In 2004, the Secretary agreed with the CARES Commission’s recommendation 

that a new medical facility was needed in Orlando. However, over 3 years 

later, this project has not advanced. Has the site for the new Orlando facility 

been procured? If not, what is the cause for delay? How will this delay impact 

the cost of and time table for constructing a new facility? 

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9. How many major construction projects are currently underway? How many of 

these projects are behind schedule? What are the causes for these delays? 

10. What effect has working under a Continuing Resolution had on your ability 

to move forward with major medical facility construction projects? 

11. VA testified that two of the construction challenges were that the ‘‘rising cost 

of construction has had a significant impact on VA since 2004’’ and ‘‘attracting 

competition for VA major projects.’’ What steps has VA taken to prevent the 

escalation of costs in the future? What steps has VA taken to increase competition? 

12. In March 2007, the Government Accountability Office (GAO) issued a report 

recommending that VA develop performance measures for assessing whether 

CARES is achieving the intended results. Has VA developed any performance 

measures as recommended by GAO? If so, what performance measures have 

been developed? 

13. On January 24, 2007, President Bush issued an Executive Order to improve 

energy efficiency and reduce greenhouse gas emissions of the agency, through 

reduction of energy intensity. How does VA incorporate energy efficiencies 

into its construction planning? Among the major construction projects for fiscal year 2008, how many will include the building of a new power plant? How 

much does the building of a new power plant add to the cost of building a 

VA facility? What other options are available for powering a VA without 

building a new plant? 

Thank you again for taking the time to answer these questions. The Committee 

looks forward to receiving your answers by January 2, 2008. 

Sincerely, 

MICHAEL H. MICHAUD 

Chairman 

Questions for the Record 

Hon. Michael Michaud, Chairman, 

Subcommittee on Health, 

House Veterans’ Affairs Committee 

November 1, 2007 

The VA Construction Process 

Question 1: One of the complaints that this Committee has heard many times 

is that the VA construction process can be slow and inefficient. What are some ways 

that the VA sees that this process can be improved? What can this Committee do 

to help the VA to improve the construction process? 

Response: The Department has taken several steps to address this issue. One 

reason for recent delays has been the impact on the rapid escalation affecting the 

construction economy and the need to address these cost increases through project 

design. In response to cost escalation, VA now routinely conducts cost studies of the 

markets where upcoming VA major construction projects are planned to ensure that 

the best information is available to predict anticipated costs. 

Incomplete early planning can also be a cause for construction delays. Considerable effort is now underway to improve and streamline VA’s construction process to 

increase the amount and quality of planning, project development and design work 

accomplished in advance of including a project in VA’s budget request. This early 

work will enable the project to have a construction contract award made soon after 

the appropriation becomes available and provide less opportunity for delays to occur. 

While VA is certainly not satisfied with the speed of delivery and recognizes that 

opportunities for improvement exist, it should be noted that during the hearing, a 

witness from the private sector referenced a study of construction execution done 

at Penn State University. The study included an examination of several VA projects 

and the data developed indicated that VA projects proceeded approximately one 

third faster that the average of over 300 public and private sector projects studied. 

Question 2: Much of VA’s medical infrastructure has become old and outdated, 

with the average age of VA’s facilities exceeding 50 years. They are increasingly in 

need of either being replaced or substantially renovated to meet fire, safety and seismic considerations as well as to accommodate quality of care with the advancement 

in medicine. What effect has VA’s aging infrastructure had on patient care? What 

steps has VA taken to mitigate the impact on patient care? 

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Response: Despite VA’s aging infrastructure, the quality of care patients receive 

at VA medical centers is among the best in the Nation; VA has been recognized as 

a leader in healthcare delivery. As in any large healthcare system, infrastructure 

deficiencies directly and indirectly affect the environment for patients. VA Medical 

Centers are mitigating this impact by balancing operating and infrastructure needs 

to ensure patients are in comfortable and clean environments. Medical Centers are 

prioritizing their infrastructure needs and substantial funding has been allocated 

for Non-Recurring Maintenance (NRMs) and Minor Construction projects to allow 

VA to address some patient care related projects more quickly. VA is committed to 

maintaining a safe and clean environment for our patients. 

Question 3: VA stated in its testimony that the large volume of construction in 

most markets makes it extremely difficult to attract significant competition for VA 

construction projects. What requirements does the VA have for contractors to bid 

on VA construction projects? What can VA do to attract more competition for their 

construction projects? Is there anything that this Committee can do to facilitate 

more competition in this area? 

Response: VA contracting for construction is in keeping with law and regulation. 

Some aspects of Federal contracting are not attractive to construction contractors, 

but have been found valuable for Federal construction including the use of strict 

rules of competition and requiring contracts to support socioeconomic goals among 

others. In general, many contractors would prefer to do work in the commercial sector over the public sector. This will mostly impact VA when there is a robust commercial construction economy as there is at present. 

VA can make efforts to attract more competition in several ways. One is to choose 

an acquisition strategy most desired by contractors. This might include selecting between design-bid-build and design-build as the contracting vehicle. In some markets, 

contractors will prefer one over the other. Another area has to do with the potential 

to award one large contract or a few smaller ones. This can attract added competition is some markets because it lowers the risk exposure and offers contracts that 

smaller companies can manage. We also need to make sure that contractors are 

aware of the upcoming work. VA has increased it communication with the contracting community throughout the design process in an effort to expand the number of contractors who are aware of the projects that will be going to the market. 

Question 4: In order to replace and upgrade aging infrastructure, the VA needs 

to embark upon an ambitious construction agenda. Can you talk in detail about the 

VA’s plan for future construction? Does the VA feel that it will be able to upgrade 

and replace aging infrastructure in a timely and efficient manner? 

Response: VA’s plan for future construction funding is based on specific identified gaps in capital needs for such issues as: addressing workload gaps, correcting 

patient privacy issues, and reducing wait times. The majority of these capital needs 

are addressed through NRM, Minor and Major Construction projects. Funding for 

projects may be decentralized (Veteran Integrated Services Network prioritize and 

fund their needs based on competing clinical demands and infrastructure needs) or 

centralized (funding approval is based on weighted criteria). 

VA can upgrade and replace aging infrastructure in a timely and efficient manner 

based on available funding. The timing and efficiency for upgrades for VA’s aging 

infrastructure follows the budget submission cycle. The NRMs are a decentralized 

one-year program and Minor and Major Construction lag two years between the selection and submission of the projects in the budget and the project’s appropriation 

and authorization. 

Question 5: Please provide an update on the status of the New Orleans Medical 

Center reconstruction project, to include a report on the environmental assessments 

underway for the downtown site and the site under consideration located 4.5 miles 

away in Jefferson Parish and anticipated timeline for completion of the project. 

Response: The draft environmental assessment (EA) is complete and available 

for public review and comment. When the public comment period is complete in February, VA will be in a position to make a final site determination. VA has indicated 

that of the two sites being considered, the downtown site is preferred. 

VA has recently signed an memorandum of understanding (MOU) with the City 

of New Orleans under which the City will acquire the downtown site if it is selected, 

clear the site and make it available to VA. 

VA continues to evaluate the opportunities for partnering with LSU and it is anticipated that early next year decisions will be made on the extent of the partnership which will guide a determination of the specific scope of VA construction. VA 

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design will then proceed. It is anticipated that design will be completed by July 

2009, and that construction will be completed by July 2012. 

Question 6: In June 2007, VA reported to Congress on the option for Construction of Department of Veterans Affairs Medical Center in Okaloosa County, Florida. 

The report stated, ‘‘VISN 16 plans to establish a VA/DoD sharing agreement with 

the Air Force hospital to provide limited inpatient care for veteran enrollees in the 

Okaloosa Study Area. VA and Air Force are currently negotiating the scope and mix 

of these services.’’ Has a sharing agreement been established? If so, what is the 

scope and mix of negotiated services? If not, what is the status of the negotiations? 

Response: A VA Community Based Outpatient Clinic (CBOC), located on Eglin 

Air Force Base in close proximity to Eglin Air Force Regional Hospital, is currently 

under construction with an expected completion date of February 2008 and activation in April 2008. The VA Eglin CBOC is a satellite VA Gulf Coast Veterans 

Healthcare System (VAGCVHCS). VAGCVHCS and 96th Medical Group (Eglin AF 

Regional Hospital) are nearing completion of a draft resource sharing agreement by 

which 96th Medical Group will provide, on a space-available basis, the following 

services: 

• Inpatient admissions 

• Emergency Room 

• Some Specialty Care Referrals in Medicine, Surgery, and Ancillary Services. 

The VA Eglin CBOC is a 16,700 square foot clinic with primary care and outpatient mental health services. 

The target date to complete the resource sharing agreement is February 1, 2008 

in order to be positioned for the planned activation date or April 2008. 

Question 7: In recent years, VA has experienced significant cost escalation in the 

construction of medical facilities. For example, the estimate for the construction of 

a new medical facility in Denver has almost doubled to $646 million. What are the 

causes for these increases? What steps has VA taken to prevent such escalation in 

the future? What is the status of a possible collaborative arrangement in Denver 

between VA and DoD or the University of Colorado? 

Response: VA is supportive of a possible collaborative arrangement. Collaborations have occurred with Buckley Air Force Base, and design plans have ensued, including Buckley’s identified needs as part of VA’s Denver Major project. Discussions 

are ongoing with the University of Colorado on possible collaborations. The construction economy in recent years has experienced rampant construction cost escalation 

in all market sectors nationwide. There have been significant increases in the cost 

of labor and building materials and this situation has been exacerbated by the rising cost of petroleum for both fuel and building products as well as the hurricanes 

of 2004 and 2005. This situation is not unique to VA or even healthcare in particular. 

The Producer Price Index (PPI), published by Bureau of Labor & Statistics, has 

increased by 27 percent from December 2003 through August 2007. Commercially 

published, historic construction cost indexes indicate a range of approximately 23 

percent to 37 percent increase for January 2003 through July 2007. The robust 

economy has generated an unusually high volume of work in the commercial sector 

resulting in non-competitive markets throughout the country. 

While VA can have little impact on market forces that push construction costs 

higher, we can do a better job of anticipating market pricing at the time VA projects 

will go to bid. In that regard, VA now conducts detailed market assessments periodically in those cities where we expect to be bidding major construction projects. The 

information collected in these studies enables more accurate costs to be included in 

the budget estimates. VA is also revising the planning process in order to have earlier definition of project scope and early design completed before committing to a 

budget estimate. This estimate will be more accurate with this improved planning 

process in place. 

Question 8: In 2004, the Secretary agreed with the CARES Commission’s recommendation that a new medical facility was needed in Orlando. However, over 3 

years later, this project has not advanced. Has the site for the new Orlando facility 

been procured? If not, what is the cause for delay? How will this delay impact the 

cost of and time table for constructing a new facility? 

Response: Funding for this land acquisition of $34 million is included in the fiscal year (FY) 2008 budget. In FY 2004, $25 million was appropriated for design. The 

total estimated cost for the new Orlando VAMC is approximately $656 million. 

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On December 18, 2007 VA and Lake Nona/Tavistock Group (the property owner) 

reached agreement for VA to acquire 65.9 acres of land for the new VAMC Orlando 

through a combination of purchase and donation. A purchase option agreement securing the site for VA acquisition has been developed and signed by owner and VA 

senior leadership is reviewing. It is expected that the option will be signed shortly 

and the closing on the property will occur in the near future. In the meantime, design work has been ongoing. 

Question 9: How many major construction projects are currently underway? How 

many of these projects are behind schedule? What are the causes for these delays? 

Response: As a result of the CARES process, 36 major construction projects have 

been funded in whole or part between fiscal year (FY) 2004 and FY 2007. Eighteen 

are under construction and one is complete. With the exception of one project at 

Temple, TX, the remainder are in the planning and design process. Delays that have 

occurred related to these projects have largely been related to cost issues and specifically the rapid escalation in the construction economy and the associated need 

to insure that designs can be constructed within the available funds to the greatest 

extent possible. Other factors causing delay have been related to site acquisition 

issues and unanticipated planning requirements to validate the scope of projects. 

Attached is the medical care portion of the Department’s report to the Congress on 

major construction delays required pursuant to P.L 109–114. 

CONSTRUCTION 

1. Atlanta, GA—Modernize Patient Wards 

Status: Funds were appropriated in FY 2005. Procurement action was canceled 

after excessive price proposals were received in September 2006. The authorization 

for this project expired on September 30, 2006. The Department has requested reauthorization in the FY 2008 budget request. The Department cannot make a construction award until this project has been reauthorized. 

2. Dallas-Fort Worth National Cemetery, Texas—Phase 2 Burial Expansion 

Status: Funds were appropriated in FY 2006. Protracted negotiations with the architect/engineering design firm and completion of a Defense Contracting Audit 

Agency audit significantly delayed the contract award. A construction documents 

contract was awarded in November 2006. Design is nearing completion. Award of 

a construction contract is scheduled for April 2008. 

3. Leavenworth National Cemetery, Kansas—Gravesite Development 

Status: Funds were appropriated in FY 2000 as One VA project between the Veterans Health Administration (VHA) and the National Cemetery Administration 

(NCA). The original Congressional Budget Prospectus stated that 39 existing structures on 54 acres would be demolished and the existing VA national cemetery would 

be expanded onto those 54 acres. The Kansas State Historic Preservation Office remained steadfast in their desire to maintain all structures as historic. In 2005, the 

Office of Asset Enterprise Management finalized and executed an enhanced use 

lease (EUL) to make use of the buildings through a public/private venture. A contract for the master plan was awarded in February 2007 based on the reduced available acreage. Upon review and acceptance of the revised master plan, a scope 

change notification will be prepared defining the updated project. The revised master plan was presented to NCA in November 2007. Award for the design development is scheduled for April 2008. 

4. Palo Alto, CA—Seismic Corrections Building 2 

Status: Funds were appropriated in FY 2004. The procurement was canceled after 

excessive price proposals were received. The Congressional authorization for this 

project expired on September 30, 2006. The Department has requested reauthorization for the project in the FY 2008 budget request. The Department cannot make 

a construction award until this project has been re-authorized. 

5. Syracuse, NY—Addition for Spinal Cord Injury Center (SCI) 

Status: Funds were appropriated in FY 2005. After design began, it became apparent that a permanent parking loss would be created by the construction of the 

new addition. To offset the loss, expansion of the existing parking garage was added 

to the project as a first phase. Award of the construction contract for this expansion 

is scheduled for September 2008. The phase II portion of the project for the spinal 

cord injury center is under design. The in-progress cost estimate indicated a funding 

shortfall. Additional funds were requested in the FY 2008 budget request. 

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DESIGN AND CONSTRUCTION 

1. Biloxi, MS—Restoration of Hospital 

Status: Funds were appropriated in FY 2006. Start of design was delayed due to 

the impact of extensive storm damage and cleanup activity from hurricane Katrina. 

Discussions have been ongoing with the U.S. Air Force to explore the potential for 

co-location and sharing of services. Schematics, design development, and construction documents for the utility upgrades phase 2, clinical addition and blind rehab 

was made January 10, 2008. A construction award is scheduled for phase 1 of the 

utility upgrades in March 2008. A construction award for extended care is scheduled 

for September 2008. The mental health addition is scheduled for construction award 

in September 2008. 

2. Columbia, MO—Operating Suite Replacement 

Status: Full funding was appropriated in FY 2007. During the early design, concern about the ability to achieve the scope of work within the available funds caused 

a delay. Award of the design development architect engineer contract was made in 

July 2007. The construction document contract award was made in December 2007. 

3. Great Lakes National Cemetery, Michigan—Phase 1B Development 

Status: Design funds were appropriated in FY 2006. Construction funds were appropriated in FY 2007. The phase 1A portion of this project was completed in early 

FY 2007. The same architect engineer firm that developed the initial phase 1A design of the cemetery will be engaged to provide continuity in design for the next 

phase. This design contract required extensive legal review and negotiations, which 

delayed the contract award. The phase 1B construction documents contract was 

awarded in November 2006 and is scheduled for completion in January 2008. A construction award is scheduled for July 2008. 

4. New Orleans, LA—Replacement Medical Center 

Status: Full funding was appropriated in FY 2006 under two separate emergency 

supplemental appropriations—-$75M in Public Law (P.L.) 109–148 and $550M in 

P.L. 109–234. The project is currently undergoing an environmental analysis which, 

upon completion, will allow continuation of the site selection process and the actual 

purchase of the property. An award for schematics is scheduled for March 2008. 

Award of a construction documents contract is scheduled for November 2008. 

5. Temple, TX—Blind Rehabilitation & Psychiatric Beds 

Status: Full funding was appropriated in FY 2005. The project was placed on hold 

pending the completion of the Capital Asset Realignment for Enhanced Services 

(CARES) follow on study at the nearby Waco VA Medical Center. Because the 

CARES study determined that Waco would remain open; there was no longer the 

need for this project, which planned to move functions from Waco. This resulted in 

a proposed cancellation and reprogramming of this project, which was approved in 

the FY 2008 budget. 

6. Fort Rosecrans National Cemetery, California—Phase 1 Development of 

Miramar Annex 

Status: Design funds were appropriated in FY 2005. Construction funds were appropriated in FY 2006. VA plans to develop an annex to the Fort Rosecrans National Cemetery on 300 acres at the Miramar Marine Corps Air Station. All design 

contract awards are on hold pending receipt of an Environmental Impact Statement 

from the Department of the Navy. The Department of Navy is currently in the signoff process on the environmental Finding of Determination. A design award is 

planned for July 2008, and a construction contract award is scheduled for FY 2009. 

DESIGN 

1. Denver, CO—Replacement Medical Center 

Status: Funds were appropriated in FY 2004. Pre-design studies and environmental due diligence are ongoing. A notice to proceed was issued to the architect/ 

engineering firm to begin schematic design. Negotiations/discussions for the remaining property acquisitions are ongoing. The award of a construction documents contract is scheduled for May 2008. 

2. Fayetteville, AR—Clinical Addition 

Status: Funds were appropriated in FY 2006. The master plan and space program 

were revised and completed in November 2006. The architect/engineer contract for 

schematics and design development was awarded in April 2007, and the contract for 

construction documents is scheduled to be awarded in February 2008. 

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3. Riverside National Cemetery, California—Phase 5 Development 

Status: Funds were appropriated in FY 2005. Project requirements were reevaluated based on changes in gravesite use and an updated gravesite depletion date. 

Award of a design development contract is scheduled for FY 2009 with a construction documents contract award in FY 2010. While the project was funded in 2005, 

NCA decided to postpone design until 2009/2010 because the current burial inventory will not deplete until 2012. 

4. San Joaquin Valley National Cemetery, California—Phase 2 Development 

Status: Funds were appropriated in FY 2005. Based on changes in gravesite use, 

project requirements were reevaluated and the scope adjusted to meet these requirements. A series of projects are ongoing to address immediate needs for crypt installation and the site irrigation system through FY 2009. The design development contract award is being deferred indefinitely due to a recount of available burial space. 

The NCA determined that a new expansion project was not required at this time. 

5. San Juan, PR—Seismic Corrections Building 1 

Status: Funds were appropriated in FY 2005. Prior to initiating the development 

of schematic design, several studies were necessary to determine: 1) the exact method for retrofitting the main hospital structure to conform to seismic standards; 2) 

the optimal approach to packaging and sequencing contracts to provide alternative 

space for administration, clinical support and patient care activities; 3) size, siting 

and configuration of these spaces; 4) increased capacities for the utility system infrastructure; and 5) impact on parking and site traffic circulation patterns and the 

attendant modifications needed. Design development is approaching completion, and 

the award of a construction documents contract is scheduled for May 2008. 

6. St. Louis, MO—Medical Facilities Improvements and National Cemetery 

Expansion 

Status: Funds were appropriated in FY 2007. The varied and complex project 

scope involves the demolition of numerous buildings, replacement of the energy 

plant, consolidation of clinical and administrative functions through renovation and 

new construction, and expansion of the adjacent national cemetery to provide additional burial capacity. An architect/engineering firm was commissioned to conduct 

a study of these scope elements and develop a planned approach for completing the 

work. Upon completion of the study, the architect/engineering firm was also tasked 

with preparing an updated cost estimate for the project. The study results indicated 

that the project costs far exceeded what was originally proposed. A master plan is 

to be developed to guide the Department in the approach to the further execution 

of this project. NCA portion of this project will proceed with the design development 

in FY 2008. The early turnover portion of the cemetery project can be built without 

impacting VHA portion of this project. 

Question 10: What effect has working under a Continuing Resolution had on 

your ability to move forward with major medical facility construction projects? 

Response: The continuing resolution did not impact any major medical facility 

project. 

Question 11: VA testified that two of the construction challenges were that the 

‘‘rising cost of construction has had a significant impact on VA since 2004’’ and ‘‘attracting competition for VA major projects.’’ What steps has VA taken to prevent 

the escalation of costs in the future? What steps has VA taken to increase competition? 

Response: Over the last eighteen months, VA has undertaken in-depth market 

surveys in areas for which major projects are planned. These market surveys analyze the current and projected capacity of the local construction industry and depict 

other competing projects in the local area. General and sub contractors are contacted concerning their strategic plans on future work and their interest in pursing 

VA’s project. Material suppliers and fabricators are made aware of VA’s project 

while ascertaining reasonable pricing of goods and services. The surveys also look 

at the availability of skilled and unskilled labor, along with up to date data on the 

local conditions affecting cost, and current and projected construction cost escalation. 

VA uses the market survey process to stimulate interest in our projects within 

the local contracting community. Packaging or phasing of the work may be used to 

attract increased competition when market data dictates. VA is also investigating 

alternative contracting vehicles such as GSA’s Construction Manager as Constructor 

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(CMc) and similar negotiated types of contracts that will make our projects more 

attractive to qualified contractors. 

Question 12: In March 2007, the Government Accountability Office (GAO) issued 

a report recommending that VA develop performance measures for assessing whether CARES is achieving the intended results. Has VA developed any performance 

measures as recommended by GAO? If so, what performance measures have been 

developed? 

Response: VHA is establishing a Department-wide CARES Implementation Monitoring Work Group that will be responsible for finalizing performance measures and 

determining oversight and monitoring responsibilities in response to the Government Accountability Office (GAO) report, ‘‘VA Healthcare: VA Should Better Monitor Implementation of Capital Asset Realignment Decisions’’ (GAO–07–408), issued 

March 2007. The work group will identify new outcome performance measures for 

each of the four foundational goals of CARES and a plan to monitor the implementation and impact of CARES decisions. Existing and new performance measures to 

be considered could include: activation of CBOCs; expansion of healthcare programming; enrollees within drive time access guidelines; underutilized and vacant space; 

patient satisfaction; project execution/status; and support to other VA missions, including DoD collaboration initiatives. The work group is expected to hold a kickoff 

meeting in the winter and complete their responsibilities no later than spring 2008. 

Question 13: On January 24, 2007, President Bush issued an executive order to 

improve energy efficiency and reduce greenhouse gas emissions of the agency, 

through reduction of energy intensity. How does VA incorporate energy efficiencies 

into its construction planning? Among the major construction projects for fiscal year 

2008, how many will include the building of a new power plant? How much does 

the building of a new power plant add to the cost of building a VA facility? What 

other options are available for powering a VA without building a new plant? 

Response: VA has recently completed the Sustainable Design and Energy Reduction Manual, which defines the goals and objectives for all VA construction projects 

of 30 percent energy reduction in new facilities and 20 percent for major renovations, if lifecycle cost effective. The manual includes technical options for consideration by the design teams, subject to climate and building type, which include building orientation, high performance materials, daylight harvesting and lighting controls, as well as a host of high efficiency mechanical system suggestions. Incorporating the principles of integrated design to assure discussion of synergies between systems will also improve energy performance. 

Among the major projects for FY 2008, three include construction of energy 

plants. 

The cost of an energy plant will vary with each project, depending on the amount 

of commercially available power, the cost of that power, and the type of VA facility 

being constructed. The cost for an energy plant for the FY 2008 projects is approximately $40 million each, or 5 percent to 6 percent of the total project cost. 

Options available for powering a medical facility without building a new plant will 

depend on the site, the public utility, and the type of VA facility being constructed. 

Use of utility energy service contracts (UESCs), where the utility provides financing 

to implement energy efficiencies, along with enhanced use leasing, are being pursued. VAMCs require significant amounts of energy, which can be too great a burden for existing municipal or co-facility power infrastructure to accommodate, especially if the facility must remain operational under the 4-day survivability requirements. However, by implementing design strategies that reduce energy demand the 

possibility of being able to utilize existing public services is increased. The use of 

renewable energy alternatives, although first cost intensive, may be cost effective 

if the total energy reduction through the use of all strategies can offset the requirements for on-site power generation. For those locations where power generation on 

VA property is necessary, efficiency options include cogeneration (CHP), groundsource heat pumps, geothermal sources, wind energy, biomass, as well as other possible solutions. 

Æ 

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