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BUILDING A BETTER VA: ASSESSING ONGOING 

MAJOR CONSTRUCTION MANAGEMENT PROBLEMS WITHIN THE DEPARTMENT 

HEARING 

BEFORE THE

COMMITTEE ON VETERANS’ AFFAIRS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

WEDNESDAY, JANUARY 21, 2015 

Serial No. 114–01 

Printed for the use of the Committee on Veterans’ Affairs 

( 

Available via the World Wide Web: http://www.fdsys.gov 


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COMMITTEE ON VETERANS’ AFFAIRS 

JEFF MILLER, Florida, Chairman 

DOUG LAMBORN, Colorado 

GUS M. BILIRAKIS, Florida, Vice-Chairman 

DAVID P. ROE, Tennessee 

DAN BENISHEK, Michigan 

TIM HUELSKAMP, Kansas 

MIKE COFFMAN, Colorado 

BRAD R. WENSTRUP, Ohio 

JACKIE WALORSKI, Indiana 

RALPH ABRAHAM, Louisiana 

LEE ZELDIN, New York 

RYAN COSTELLO, Pennsylvania 

AMATA COLEMAN RADEWAGEN, American 

Samoa 

MIKE BOST, Illinois 

CORRINE BROWN, Florida Ranking Minority 

Member 

MARK TAKANO, California 

JULIA BROWNLEY, California 

DINA TITUS, Nevada 

RAUL RUIZ, California 

ANN M. KUSTER, New Hampshire 

BETO O’ROURKE, Texas 

KATHELEEN RICE, New York 

TIMOTHY J. WALZ, Minnesota 

JERRY MCNERNEY, California 

JON TOWERS, Staff Director 

DON PHILLIPS, Democratic Staff Director 

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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C O N T E N T S 

Wednesday, January 21, 2015 

Page 

Building a Better VA: Assessing Ongoing Major Construction Management 

Problems Within the Department ....................................................................... 1 

OPENING STATEMENTS 

Jeff Miller, Chairman .............................................................................................. 1 

Prepared Statement ......................................................................................... 48 

Corrine Brown, Ranking Member .......................................................................... 2 

Prepared Statement ......................................................................................... 48 

WITNESSES 

Hon. Sloan D. Gibson, Deputy Secretary, U.S. Department of Veterans Affairs ....................................................................................................................... 3 

Prepared Statement ......................................................................................... 49 

Accompanied by: 

Mr. Dennis Milsten, Associate Executive Director, Office of Programs 

and Plans, Office of Construction and Facilities Management, 

U.S. Department of Veterans Affairs 

Mr. Lloyd C. Caldwell, P.E., Director of Military Programs, U.S. Army Corps 

of Engineers .......................................................................................................... 6 

Prepared Statement ......................................................................................... 52 

Mr. David Wise ........................................................................................................ 33 

Prepared Statement ......................................................................................... 60 

Mr. Roscoe Butler, Deputy Director for Healthcare, Veterans Affairs and 

Rehabilitation Division, The American Legion .................................................. 35 

Prepared Statement ......................................................................................... 75 

Mr. Ray Kelley, Director, National Legislative Service, Veterans of Foreign 

Wars ...................................................................................................................... 36 

Prepared Statement ......................................................................................... 79 

FOR THE RECORD 

Michael Gelber, Deputy Commissioner, U.S. General Services Administration 81 

Mr. Sam Carter, Carter Concrete Structures ........................................................ 85 


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BUILDING A BETTER VA: ASSESSING ONGOING MAJOR CONSTRUCTION MANAGEMENT 

PROBLEMS WITHIN THE DEPARTMENT 

Wednesday, January 21, 2015 

COMMITTEE ON VETERANS’ AFFAIRS, 

U.S. HOUSE OF REPRESENTATIVES, 

Washington, D.C. 

The committee met, pursuant to notice, at 10:42 a.m., in Room 

334, Cannon House Office Building, Hon. Jeff Miller [chairman of 

the committee] presiding. 

Present: Representatives Miller, Lamborn, Bilirakis, Roe, 

Benishek, Huelskamp, Coffman, Wenstrup, Walorski, Abraham, 

Zeldin, Costello, Radewagen, Bost, Brown, Takano, Brownley, 

Titus, Ruiz, McLane Kuster, and O’Rourke. 

OPENING STATEMENT OF CHAIRMAN JEFF MILLER 

The CHAIRMAN. Ladies and gentlemen, the hearing will come to 

order. 

I would like to welcome everybody to today’s hearing entitled 

Building a Better VA: Assessing Ongoing Major Construction Management Problems Within the Department. 

The purpose of this hearing is to address continued problems occurring in VA’s persistent construction delays and cost overruns involving its construction of the replacement Aurora, Colorado VA 

Medical Center. 

VA has been found by the Civilian Board of Contract Appeals to 

have breached its contract with its prime contractor on this project 

and the facility could eventually cost over a billion dollars to complete. 

This committee has held numerous hearings in the last few years 

involving VA’s inadequate management of its construction projects, 

each of those hearings being based on considerable evidence. 

Quote, ‘‘We have come to a point in VA’s major construction program where the administrative structure is an obstacle that is not 

effective supporting the mission. As a result, our veterans are the 

ones who are left without services and our taxpayers are the ones 

who are left holding the check or writing a new one,’’ end quote. 

Members, this was part of an opening statement that I made 

March 27th of 2012 at a hearing on VA major construction, but it 

seems that nothing has changed nearly three years later. Despite 

warnings and corrective suggestions being presented from inside 

and outside of the department, very little has changed. 


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Based on the lengthy committee investigations that gave rise to 

these hearings, the committee asked the GAO to audit VA major 

construction projects. Their report issued in April of 2013 found 

that on average, the hospital construction projects reviewed were 

about three years late and $360 million over budget. 

Every time we have asked VA about those results, it has argued 

that it is not delayed or over budget based on its own accounting. 

Further, when we held a hearing on the Aurora VAMC construction project in April of 2014, the tenor of VA responses was that 

it was the contractor’s fault that the project was not completed and 

that it was still operating within its budget. 

I have a feeling that the VA will not be able to cling to those illusions any longer because December 9th of 2014, the CBCA found 

that the VA materially breached its contract with its prime contractor on the Aurora construction project, Kiewit-Turner. 

It found that VA did not provide a design that could be built 

within the stated budget and it was also the VA’s fault to the point 

that CBCA said KT would be well within its rights to simply walk 

off the job. And that is exactly what was done. 

Now VA is left scrambling to make KT whole enough to get back 

to work. VA may even have to come back to Congress to ask for 

perhaps 500 million or more dollars to fix the problems that the 

committee has brought to light year after year only to be ignored 

by the VA. 

I visited the Aurora construction site on Monday with Congressman Coffman and Congressman Lamborn to see again in person 

what is taking so long and why this project has been a veritable 

money pit for the last several years. 

Once completed, this facility will be well equipped to provide the 

best possible care available which is exactly what the veterans 

served by every VA facility deserve. It is long past time for these 

projects marred by bureaucratic ineptitude to be complete. 

And I look forward to hearing from the VA and other witnesses 

here today on how we can correct the abysmal state that VA’s 

major construction program has been in for years. 

[THE PREPARED STATEMENT OF CHAIRMAN JEFF MILLER APPEARS

IN THE APPENDIX] 

With that, I yield to the ranking member, Ms. Brown, for any 

opening statement she may have. 

OPENING STATEMENT OF CORRINE BROWN, RANKING 

MEMBER 

Ms. BROWN. Thank you, Mr. Chairman. 

And I would like my complete statement to be entered into the 

record. 

Ms. BROWN. As I said from the beginning, I am very excited 

about being the ranking member on this committee. And having 

been on this committee for over almost 23 years, I realize that for 

20 years the VA has not built any VA facilities. 

The VA has lost a lot of the expertise that has been there in the 

past. I think the role of this committee is to find out how we are 

going to move forward in making sure that the VA is able to provide the facilities that we need. Many of the facilities we are disVerDate Aug 31 2005 07:26 Feb 23, 2016 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 Y:\97-992.TXT PAT

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cussing Las Vegas, Orlando, Denver, New Orleans, were authorized 

years plus years ago. 

These facilities have had major problems. There’s enough fault 

and blame to be shared between the VA and the contractors. It is 

not just one issue it’s a multiplicity of issues. 

I look forward to hearing what VA and others have to say about 

how we should move forward. 

I am going to yield back my time. 

[THE PREPARED STATEMENT OF CORRINE BROWN APPEARS IN THE

APPENDIX] 

The CHAIRMAN. Thank you very much, Ms. Brown. 

Members, I would ask that you waive your opening statements. 

They will be entered into the record as custom in our committee. 

Without objection, so ordered. 

Our first panel today, we are going to hear from the Honorable 

Sloan Gibson, Deputy Secretary for the Department of Veterans Affairs. He is accompanied by Mr. Dennis Milsten, Associate Executive Director of the Office for Programs and Plans within VA’s Office of Construction and Facilities Management. And we are also 

going to hear from Mr. Lloyd Caldwell, Director of Military Programs for the Army Corps of Engineers. 

Your complete written statements will be made a part of the 

record. And I want to say for the record thank you for meeting with 

me on Monday in Aurora. It is good to see you again. 

And, Deputy Secretary Gibson, you are recognized for your opening statement for five minutes. 

STATEMENTS OF SLOAN D. GIBSON, DEPUTY SECRETARY, U.S. 

DEPARTMENT OF VETERANS AFFAIRS, ACCOMPANIED BY 

DENNIS MILSTEN, ASSOCIATE EXECUTIVE DIRECTOR, OFFICE OF PROGRAMS AND PLANS, OFFICE OF CONSTRUCTION AND FACILITIES MANAGEMENT, U.S. DEPARTMENT OF 

VETERANS AFFAIRS; 

STATEMENT OF SLOAN D. GIBSON 

Mr. GIBSON. Thank you, Mr. Chairman. 

Chairman Miller, Ranking Member Brown, distinguished Members of the committee, thank you for this opportunity to update the 

committee on construction of the Denver VA Medical Center in Aurora and the actions that we are taking in light of the situation. 

Let me introduce Dennis Milsten to the committee. Dennis is Director of VA’s Construction and Facilities Management, Office of 

Operations. 

In the wake of the board’s decision on Denver, I asked Dennis 

to serve as senior leader on that project. He brings over three decades of construction experience in both the public sector and private sector including 19 years with the Corps of Engineers on 

projects like the Pentagon renovation. 

Chairman Miller, Representative Coffman, and Representative 

Lamborn, thank all three of you for joining us at the site. Thanks 

for taking the time to be there. I don’t think anything can take the 

place of actually being on the ground and seeing the facility and 

gaining an appreciation for the scale and for you can imagine what 

that facility will be like for veterans once it is completed. 


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I want to acknowledge some important partners. We have a long 

history of collaboration with the Corps of Engineers and we are 

grateful for their advice and support role in the interim agreement 

with Kiewit-Turner. And we are pleased that they are going to 

serve as our agent to manage this project to completion. 

Yesterday I met again with leaders of Kiewit-Turner. KT is justifiably proud of the work they have done in Denver and they are 

looking forward to see the medical center complete and serving 

Colorado’s veterans. 

And we appreciate the good work of the Government Accountability Office including their recommendations in 2013 that we 

have integrated into our current construction practices. 

We will continue to collaborate with these and other partners as 

well as this committee as we move forward. 

To be clear, the situation in Denver is unacceptable and I apologize for that. It is not acceptable to veterans. It is not acceptable 

to taxpayers. It is certainly not acceptable to Secretary McDonald 

or me. 

Veterans and taxpayers are right to expect more and they deserve much better from their VA. We have two priorities in Denver, 

complete the facility without further delay and deliver under the 

circumstances the best value that we can for taxpayers. 

I understand that everyone is anxious to know what it will cost 

to complete the project. Right now we don’t know. The Corps 

doesn’t know and Kiewit-Turner doesn’t know. That will be determined over the course of the next several months and we will work 

closely with Congress to develop the best options for funding completion. 

Most immediately to settle claims and continue operations under 

the interim agreement, we are going to request reprogramming on 

some selected projects taking care to minimize the impact on other 

projects while we are working to get Denver back on track. 

I think it is a very fair question to ask what went wrong in Denver. And I think as we explore the history of the project, it will be 

clear that there were many things. Among them, we did not have 

in place the benefit of a 35 percent design before we requested 

funding. We did not have in place a clear, structured, effective 

process to manage change. We didn’t benefit from rigorous 

constructability reviews. And perhaps most fundamentally, our 

choice, timing, and management of the integrated design and contract vehicle resulted in a design that was never reconciled with 

the firm target price in the construction contract. 

While we work to complete the project without further delay and 

deliver the best value we can, we have an obligation to ensure that 

this never happens again. That means learning all we can from 

past mistakes and putting in place corrective actions to improve future performance. 

Veterans and taxpayers also expect that a thorough review be 

completed and those responsible be held accountable. There are 

several steps we are taking with these objectives in mind. 

We have asked the Corps to complete a detailed review of the 

Denver project, to review VA’s other largest projects, and in general to review the department’s management of major projects. 


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I have directed that an administrative investigation board be 

convened to examine all aspects of the Denver project to determine 

the facts that led to the current situation and gather evidence of 

any mismanagement that contributed to this unacceptable outcome. 

And effective immediately, the department’s Construction and 

Facilities Management organization will report to me through the 

VA’s Office of Management. 

Stepping back for a moment from this immediate situation, I recall that in the months prior to my confirmation, I spent a lot of 

time reviewing hearing testimony, media clips, and IG and GAO 

reports. Coming in from the private sector, I had serious doubts 

about VA’s construction management capability. 

But what I found when I got to VA were many important 

changes already implemented. In some instances, changes that 

would improve projects that were already underway, but in every 

instance that would improve newly started projects. 

For example, we were already committed to designs that emphasized functionality and good value. We were already requiring a 35 

percent design before publishing costs and schedule information 

and requesting funding. 

We were already using private construction management firms 

for constructability reviews at each major design phase. We were 

already using project management plans to improve communication 

among all participants. We were already integrating medical equipment planners into construction project teams. 

We had already put in place thorough risk management practices 

to mitigate challenges. We had already set up project review boards 

modeled on the Corps of Engineers’ district office design. And we 

had already added key talent from the outside of the department 

to strengthen training and require project management certification for our project leaders. 

That does not excuse our failure to have these measures in place 

years ago, but it does mean that as they are relevant to particular 

phases of projects and construction, these and other measures are 

being applied now to our 53 ongoing major projects. 

Notwithstanding all these changes already in place, I am confident that our current construction management practices can be 

further improved. My commitment is that we will learn all we can 

from the mistakes in Denver as revealed by the Corps’ examination 

and our internal review. And we will implement changes with two 

fundamental criteria in mind, doing the right thing for veterans 

and getting the best value for taxpayers. 

Finally, I don’t want to lose sight of the fact that while we resolve the situation in Denver, the employees of the VA Eastern Colorado Healthcare System have continued to provide quality care to 

our veterans nonstop regardless of any issues with the construction 

of the new medical center. 

Thank you for the opportunity to testify and we look forward to 

answering your questions. 

[THE PREPARED STATEMENT OF SLOAN D. GIBSON APPEARS IN THE

APPENDIX] 

The CHAIRMAN. Thank you very much, Mr. Gibson. 


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Mr. Caldwell, thank you for being here. Again, thank you for 

meeting with us on Monday. You are recognized for five minutes. 

STATEMENT OF LLOYD C. CALDWELL 

Mr. CALDWELL. Thank you, Mr. Chairman. 

Mr. Chairman and distinguished Members of the committee, I 

am pleased to be with you today representing the U.S. Army Corps 

of Engineers and Lieutenant General Thomas Bostick, the Chief of 

Engineers. 

I provide leadership for execution of the Corps’ engineering and 

construction programs worldwide to include our support to other 

agencies. 

The U.S. Army Corps of Engineers is one of the Department of 

Defense construction agents who execute infrastructure projects for 

the Department of Defense. Interagency collaboration is an important element of the Corps’ work as a part of our service to the Nation. 

My testimony will address the Corps’ assistance to the Department of Veterans Affairs’, project acquisition process and our experience in medical facility construction. 

The Corps has an established relationship with the VA from the 

national headquarters levels to our regional offices working with 

the 21 Veterans Integrated Service Network offices as well as with 

the National Cemetery Administration. 

We have supported a broad range of construction and mainte- nance projects totaling almost $1.6 billion with the VA since 2007. 

Authority for the Corps’ work with the Veterans Administration is 

based on the Economy Act which provides both parties with sufficient authorities to work collaboratively on VA projects. 

In December of 2014, the VA requested our assistance to complete the Aurora, Colorado replacement VA medical center project 

and we have agreed to do so. We are assessing the requirements 

of the project and are developing a new interagency agreement that 

would transition construction agent authority and responsibility for 

this project to the Corps of Engineers. 

We are also advising the VA on the management of their interim 

construction contract with the contractor, Kiewit-Turner, to allow 

continued progress on the project. 

The Corps has developed processes and capabilities for design 

and construction which have been refined over the many years. 

Our project management process brings together teams of diverse 

professionals that are necessary for the project life cycle to deliver 

a successful project and that includes our construction, our acquisition, our design professionals as well as project management professionals. These teams work collaboratively to account for project 

delivery, methods, scope, schedule, and cost. 

The Aurora project is unique in that we are entering the project 

at an advanced stage of the work, but with an assessment by our 

experts and with collaboration with the VA, we are confident that 

we can bring the project to successful completion. 

Budget and schedule risk is inherent in executing any construction projects and medical facilities are among the most complex facilities that we construct and deliver. They require exacting technical design and construction standards which must be carefully 


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managed and are subject to changing requirements due to evolving 

medical technology even during construction. 

To ensure the standards and criteria of the defense health system within which we most often operate, we have established a 

medical center of expertise which applies a full range of specialized 

knowledge to address demanding healthcare facility requirements. 

They help to integrate the clinician and other medical staff requirements to architectural and engineering standards. 

The Corps has a long history of executing some of the Nation’s 

most challenging construction programs. In the past 13 years, the 

Corps has physically completed 2,499 military construction projects 

to include for other agencies with a combined program amount of 

$52 billion. 

The Corps has delivered or is in the process of designing and constructing a full range of medical facilities for the Department of 

Defense to include hospitals valued near a billion dollars that are 

capable of delivering world-class medical services for the members 

of our Armed Forces and their families. 

Our relationship with VA is strong and we look forward to working with the VA as construction agent to complete the Aurora hospital project and, in doing so, to serve the Nation’s veterans. 

Thank you, Mr. Chairman, for inviting the Corps to testify to address its assistance to the Department of Veterans Affairs. I welcome your questions. 

[THE PREPARED STATEMENT OF LLOYD C. CALDWELL APPEARS IN

THE APPENDIX] 

The CHAIRMAN. Thank you very much, Mr. Caldwell. We appreciate you being here to testify and also accept questions from Members of the full committee. 

At this point, I want to yield my time for questions to the gentleman that represents the facility that we are here to talk about 

today, the subcommittee chair for Oversight and Investigations, 

Mr. Coffman. 

Mr. Coffman, you are recognized. 

Mr. COFFMAN. Thank you, Mr. Chairman. 

Mr. Milsten, in its February 2014 fact sheet, VA had the total 

completion of the Aurora facility at 42 percent. On Monday, Deputy 

Secretary Gibson confirmed that the total completion of the project 

is now 50 percent. KT, however, maintains that the project is only 

40 percent complete. 

Either way, how has this project only progressed at best by eight 

percent in nearly a year? 

Mr. MILSTEN. One of the things that goes into this process of determining percentage is we were basing our percentages of completion on an artificial budget and so we have lost some perspective 

on what the actual construction completion date is or percentages. 

We have had some discussions that it is somewhere between 50 

and 40. My experience from looking at this, we have the steel completed. We have the precast completed. We have roofs on facilities. 

We have curtain walls going up. We are about 50 percent complete 

with this construction. 

Mr. COFFMAN. Deputy Secretary Gibson, VA is convening an administrative investigation board to investigate the Aurora project 

because VA central office officials have no idea what happened, 


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again despite years of warnings from inside and outside the department. 

Who at VA’s central office was tasked with providing oversight 

for the Aurora construction project? 

Mr. GIBSON. I think you would look to the chain of command 

within Construction and Facilities Management which would include Stella Fiotes who is a relatively more recent addition to VA. 

It would include Glen Haggstrom. It would include the former deputy secretary and the secretary. 

Mr. COFFMAN. Who is in charge of overseeing Glen Haggstrom? 

Mr. GIBSON. The person in that position reports to the deputy 

secretary. 

Mr. COFFMAN. Okay. So that would be your—— 

Mr. GIBSON. That would be me now, yes. 

Mr. COFFMAN [continuing]. Position? Okay. And also, Deputy 

Secretary Gibson, why was the department’s standard operating 

procedure opposed to involving the Army Corps for so long in Aurora despite repeated warnings of VA mismanagement? 

Mr. GIBSON. Having not been a part of that discussion process 

over the years, I don’t know that I have a good answer for you. 

I think as I looked at the situation following the board’s decision, 

it was very clear to me with the priorities to complete the project 

without further delay and with the best value for taxpayers that 

engaging the Corps was the right course of action on this project. 

Mr. COFFMAN. Okay. Mr. Milsten, what is the estimated total 

cost of the Aurora project and what is now the estimated date for 

completion? 

Mr. MILSTEN. First of all, the estimated date of completion, we 

are looking for a date in 2017 based on where we are today. And 

as far as the cost to complete, that is something that the Corps of 

Engineers is going through to determine what the cost to complete 

this project is. 

As Deputy Secretary Gibson said, we will spend the next couple 

of months trying to figure that out because between the contractor, 

us, and the Corps of Engineers, we don’t have that number today. 

Mr. COFFMAN. Okay. And I think, Secretary Gibson, I think in 

our discussions on Monday, I think you discussed when the project 

may run out of money. And I think it kind of sort of corresponds 

in with the interim agreement. 

Do you think with your programming capabilities, you think 

about June, sometime in June if there is not some type of supplemental appropriation by Congress that work could stop again on 

this project? 

Mr. GIBSON. The idea here is for us to be able to go through some 

steps. We funded the interim contract. We are actually doing some 

internal reprogramming with the notice of Congress of some small 

additional amount. We will need to come to Congress for approval 

to reprogram some more substantial amount to carry us on the interim contract all the way through until June. 

Our hope is and our expectation is we sync this up with the 

Corps of Engineers is that we are going to be able to provide the 

funding. The expectation is we will provide the funding to bridge 

the period from where we are right now until when the Corps is 

able to negotiate a contract to complete the project. 


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Mr. COFFMAN. My final question. Mr. Caldwell, as bad as the 

cost overruns are right now—we are hundreds of millions of dollars 

over budget. We are years behind schedule. 

But if, in fact, this project were moth-balled, if, in fact, Congress 

didn’t appropriate more money and the construction stopped in 

June and the whole project was demobilized, moth-balled, wouldn’t 

that really greatly aggravate the cost when the project would be restarted? 

Mr. CALDWELL. Yes, sir. In fact, it would cause a worse situation 

because you can’t— to begin with, you have to take certain actions 

to close up a project, so you are using funds that otherwise would 

be used for construction to ensure that you are not creating a different hazard for the public and so forth and that the facility that 

is constructed doesn’t degrade. So there are some caretaker requirements associated with that and then to restart it, it would be 

an additional cost as well. 

Mr. COFFMAN. Okay. Mr. Chairman, I yield back. 

The CHAIRMAN. Before I yield to Ms. Brown, Deputy Secretary, 

in your reprogramming, do you anticipate the dollars that you reprogram to exceed the cap of 800 or 880 with your ability to go 

above that? 

Mr. GIBSON. I do expect that would be the case and we would 

need help and support from this committee and from Congress to 

raise that cap. 

The CHAIRMAN. Yeah. The cap will have to be raised. 

Mr. GIBSON. Yes, sir. 

The CHAIRMAN. I mean, we cannot go around it. It is a firm—— 

Mr. GIBSON. Right. 

The CHAIRMAN [continuing]. Firm cap. So at what point do you 

think you will know what number that will be, I mean, because 

surely it will be before June? Are you going to try and do it all at 

one time and just have one—— 

Mr. GIBSON. No. We will need that support prior to June. Congressman Coffman and I have been having a series of conversations 

about that. We think raising the cap to $1.1 billion from the current $800 million would be able to carry us during that interim period of time. 

The CHAIRMAN. Okay. Thank you. 

Ms. Brown. 

Ms. BROWN. Thank you, Mr. Chairman. 

I would have loved to have joined you in Denver, however, it was 

Martin Luther King’s birthday and I had other commitments in my 

district. Hopefully I’ll be able to join the delegation in the future. 

Mr. GIBSON. We would love to host you out there. 

Ms. BROWN. Thank you. 

The VA facilities are having problems in Denver, Orlando and 

New Orleans. 

This Committee has authorized, and Congress has appropriated, 

billion of dollars for VA construction programs over the past decade. The question we must asks ourselves is are we getting what 

we paid for, and has access improved for our veterans. 

We must ask ourselves what must be done to make the VA construction program function as we intend it to. What must we do to 

make sure that the facilities we are building today do not come in 


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over budget and late. If we do not do this we run the risk of building facilities that may already be obsolete when the doors are open 

and are merely expensive memorials and little else. 

For nearly two decades the VA was out of the major facility business. By not building any major medical centers in the 20 years 

preceding authorization of the Las Vegas, Orlando, Denver and 

New Orleans Medical Centers, has the VA lost the ability to manage a construction portfolio? 

And I am going to say that I think a lot of the expertise, 20 years 

not building a facility is part of the problem. 

Please give us not just an update on these projects, but tell us 

what we as Congress need to do to help you move forward. 

The Army Corp of Engineers do great work with the ports. VA 

did great work with Katrina. 

Mr. GIBSON. Yes, ma’am. First of all, as it relates to Orlando, the 

current schedule would call for construction to be complete the end 

of February. 

Ms. BROWN. Then we do the punch? 

Mr. GIBSON. We are working through the punch list. As you 

know, some portions of the facility have already been turned over. 

In fact, we are already seeing patients. 

The progress really accelerated in Orlando as we got different 

leadership teams, both parties on the ground, and a series of meetings that I held directly with Brassfield & Gorrie over the previous 

seven or eight months. And I think we have moved that very expeditiously and Brassfield & Gorrie has performed really very well on 

that project. 

I would say more broadly, and Congressman Coffman and I have 

had conversations about the expanded role for the Corps, Turning 

everything over to the Corps would be a very big decision and it 

would be a decision that we would want to make on a very wellinformed basis. 

I think some of the work that the Corps is doing for us right now 

to review Denver and other major construction activity will inform 

that process. 

As I mentioned in my opening remarks, what we are after is 

quite simply doing the right thing for veterans and being a good 

steward of taxpayer dollars. And those are really the only two parameters. 

If a more expansive role for the Corps is the best route to get 

there, then we are all for it. And, frankly, I would be surprised if 

we don’t find ourselves working more closely with the Corps in the 

future. 

Ms. BROWN. Right. Like the Jacksonville, I think it is very important to have the physicians and others in the planning stages. 

As you design more facilities to build, its important to have employees (i.e. doctors) inputs. 

Mr. GIBSON. I think one of the lessons learned is the need to impose more discipline throughout the entire process. That includes 

a very rigorous requirements definition period and then the requirements get locked down. That also includes more robust communication with various stakeholders including Members of Congress. 


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I think what we have done habitually is conducted a fair amount 

of this behind the curtain. Sometimes because we are engaged in 

procurement sensitive activity, sort of been the excuse, we have got 

to find ways to work around that so that we are able to engage 

with various stakeholders on these projects on the front end and 

we have got good consensus and awareness. And where there is not 

a hundred percent agreement, which there oftentimes may not be, 

at least there is an awareness in place of where we are going and 

why we are going there. 

Ms. BROWN. Give us the status of the Denver project now? Is it 

moving forward and how much additional funds will you need for 

this facility? 

Mr. GIBSON. The construction is back underway at Denver. 

Kiewit-Turner is ramping up the number of trade on the site literally every single day. We expect to be up to about a thousand on 

the site by, I believe they told us by the end of March, if I am not 

mistaken, which is close to where they were prior to the shutdown. 

We are operating under the interim contract. We will need some 

additional funds through a reprogramming action to extend that 

period of time and then bridge us to the period of when the Corps 

is able to negotiate a contract to complete. 

Ms. BROWN. Just one quick question for Mr. Caldwell. The Army 

Corps’ involvement in this project, and you mentioned that you all 

have been involved in building many hospitals all over the world 

and, of course, I am aware of that, how is the partnership working? 

Mr. CALDWELL. The reports I have received have been very positive. We have sent a team of about 17 people to the project beginning in January. We actually had a couple of people there in mid 

December. And we have had a couple of our senior executives attend meetings there. 

And all reports that I am receiving from them have been very 

positive that the Veterans Administration team that is on site has 

been very open and cooperative. And so we believe it will be a collaborative relationship as we go forward. 

Ms. BROWN. Thank you. 

I yield back the balance of my time. 

The CHAIRMAN. Thank you very much, Ms. Brown. 

Mr. Lamborn, you were also in the meeting on Monday. You are 

recognized for five minutes. 

Mr. LAMBORN. Thank you. And thank you, Mr. Chair, for being 

there coming from Florida. 

And I want to first of all recognize Representative Coffman and 

his foresight and leadership. When he was first saying the Army 

Corps of Engineers need to be brought in, a lot of people didn’t believe him. And, yet, here they are now literally sitting at the table. 

So I appreciate that. 

Secretary Gibson, we are all very concerned about the cost overruns and the time delays with the Denver hospital. 

Can you reassure veterans in Colorado that the time delays will 

not prevent veterans from receiving the healthcare that they need 

in the meantime? 

Mr. GIBSON. As I mentioned during my opening remarks, the 

Eastern Colorado VA Healthcare System continues to provide great 

care to veterans. You know, most recent number, probably the 


VACREP0180 with DISTILLER
12 

month of December, November, December, 64,000 outpatient appointments completed during that month, 92 percent of those appointments completed within 30 days of when the veteran wanted 

to be seen. 

Still not good enough, but it tells me that there is an awful lot 

of great care being delivered there. We are also ramping up both 

choice and also referrals to care in the community under VA’s traditional non-VA care. So we are committed to delivering to veterans right now and for the interim period of time the best possible 

care. 

Mr. LAMBORN. Okay. Thank you. 

And for either one of you, and we have touched briefly on this, 

but when specifically will we know the final and best estimate of 

the cost overrun so we on this committee can begin the difficult 

work of identifying funds needs to bring the hospital to completion? 

Mr. GIBSON. I will try to answer that and then defer to the two 

experts here. 

The process that we are going to have to go through here, and 

this was a topic of robust discussion just yesterday with the senior 

leaders at KT, in a contract negotiation, typically price is the last 

thing that falls out of the process. And so we are applying a lot of 

pressure to our teams together collaboratively to provide as much 

information as early as we possibly can. 

But I think the general time frame, some clarity, several months 

from now is going to be about the earliest I think we can hope to 

have a good idea. 

Mr. LAMBORN. Okay. Several months from now. 

Mr. GIBSON. Yes. 

Mr. LAMBORN. And that is as specific as we can be right now? 

Mr. GIBSON. That is as specific as I would want to be, yes, sir. 

Mr. LAMBORN. Okay. And I know you don’t want to get ahead 

where wrong figures are thrown out there creating false expectations. 

Mr. GIBSON. You know, I think one of the biggest problems we 

ran into in this project is we tried to push to a firm target price 

before we had everything locked down. We rushed to get there. We 

were anxious. We were impatient. I think a lot of that probably 

had to do with the fact that it had taken forever to get to that point 

anyway and so everybody wanted to get on with it. And I think 

that is why we find ourselves sitting here today. 

Mr. LAMBORN. Okay. 

Mr. GIBSON. I want to do this right. 

Mr. LAMBORN. Exactly. And I understand that. I mean, we are 

eager to move forward, but we want to do it right. 

Mr. GIBSON. Yes, sir. 

Mr. LAMBORN. And lastly, for either one of you, has the VA considered developing a standard hospital design template in light of 

all the current major construction overruns that could be used 

throughout the country with only minor local modifications which 

would, I believe, potentially save tens of millions of dollars on each 

project? 

Mr. MILSTEN. Sir, I am happy to say that we have begun that 

program. We looked at our clinics, our leased clinics. We have developed some standards to go forward. One of the things that each 


VACREP0180 with DISTILLER
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one of our medical centers has is a unique program of services that 

they provide to the veterans. 

So what we are looking to do is develop templates that we can 

then say if we have got a 1A hospital with ten operating rooms is 

the workload, this is the configuration or template that we would 

use. And then by adjusting the adjacencies, looking at the physical 

constraints of the site, we can then build the building blocks that 

cut down on the design effort, cut down on the customization, if 

you will, and develop that better value for the taxpayers. 

And this is experience that we have learned from the Army 

Corps of Engineers. They have done it with barracks, dining halls. 

They are doing it with some of their facilities. We work hand in 

hand with them on our space and equipment planning programs so 

that when we program out a hospital, we are using the same kind 

of background information that they use also. 

So this is something we are also looking at our other partners 

within the federal space and within the other medical communities 

to make sure we get hospital templates that can be delivered, that 

we can cut down the design effort because one of the things that 

cuts down on the change orders on the back end is something that 

is important drivers, speed to delivery. 

If I can cut down the distance between when a project gets visualized and doctors come up with their requirements and delivery 

of it, we cut down on the amount of change and turmoil that goes 

on in a project. 

Mr. LAMBORN. Okay. Thank you for being here today. Thank you 

for being in Denver on Monday. 

The CHAIRMAN. Mr. Takano, you are recognized. 

Mr. TAKANO. Thank you, Mr. Chairman. 

Mr. Gibson, I understand that the VA is reprogramming funds 

to the short-term contract with KT until a long-term contract can 

be completed. 

Can you tell me where the funds are coming from that are being 

reprogrammed? 

Mr. GIBSON. We have not identified the projects yet. The analysis 

that we are going through is we are trying to identify projects 

where we can reprogram funds with the least possible adverse impact on that project from a time table standpoint. And the intention certainly is going to be that we replenish those reprogrammed 

funds as quickly as we possibly can. 

Mr. TAKANO. Okay. On January 19th, the Veterans Administration announced it was convening an administrative investigation 

board. 

Can you please walk this committee through the time line and 

what you will accomplish by convening this board, the steps that 

are going to be taken, and who will preside over this board and 

who will serve on the board and any other details that you can tell 

us? 

Mr. GIBSON. Sure. I will tell you what I can. An administrative 

investigative board is a formal investigative process that we use inside the department to investigate and gather evidence to support 

any misconduct, any wrongdoing, any management negligence, or 

the like. 


VACREP0180 with DISTILLER
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It is a fairly routine measure, routine mechanism that is applied 

at various levels across the department. This would be one that 

would be—it is being established at my direction. And Office of Accountability Review is working to constitute that AIB, typically 

formed of three. In this case, it will be three senior executives. 

Part of our challenge here on this particular AIB is having people with the right expertise. And so we are working, I suspect over 

the next several weeks, to identify individuals likely from outside 

the department, from other federal departments who will come and 

serve on this AIB because they bring that particular expertise with 

them. 

The investigative process will last, you know, my guess is in this 

particular case many weeks if not several months at least as they 

work through to gather evidence. These projects have been in various degrees, various stages for a decade. 

I think the challenge will be to focus on specific episodes and the 

history of these projects, do a much deeper dive exploring exactly 

what happened, who the involved parties were, what their responsibilities were, and was there any negligence or any mismanagement that happened and where that happened to gather the evidence that then becomes the basis for an administrative action. 

Mr. TAKANO. Mr. Caldwell, you are with the Corps of Engineers, 

correct? 

Mr. CALDWELL. Yes, sir, that is correct. 

Mr. TAKANO. Can you tell me, you know, what is it going to cost 

the VA for the transfer authority to the Army Corps? 

Mr. CALDWELL. Sir, as we determine what the scope of the effort 

is, part of that will be to determine what our cost is to execute that 

scope. For our initial work now that we are doing, the VA has provided funds to us just based on an estimate of the number of people 

and the amount of time that they will be working to scope out the 

requirements. 

Typically, on large projects of this nature, if we were starting at 

the beginning, we would program an amount of about 5.6 percent 

for our cost to administer the contract and perform the requirements. And then there is additional funds for design. So something 

in that order of magnitude would be likely, although it could be 

greater in this case because the nature of what we are dealing with 

here is greater. 

So the manner in which that operates is that we will assess what 

the requirements are. We will assess the level of effort. We will develop a budget and provide that budget to the Veterans Administration. And then our objective is to operate within that budget 

once the two parties have agreed to it. 

Mr. TAKANO. As of now, you are still trying to assess those costs 

and—— 

Mr. CALDWELL. Yes, sir. At this point in time, we have got a bit 

of distance to go to have assessed what the entire scope of requirements are for this project. 

Mr. TAKANO. Thank you, Mr. Chairman. My time is up. 

The CHAIRMAN. Thank you very much. 

Mr. Milsten, after the CBCA found that the VA, quote, ‘‘does not 

have sufficient funds to pay for construction of the entire project 

as currently designed and has no plans to ask for money,’’ end 


VACREP0180 with DISTILLER
15 

quote, so the question is, why were there no plans after GAO alerted the VA to significant cost overruns and delays in April of 2013 

and this committee has held three hearings highlighting the same 

thing going back to March 2012, May of 2013, and April of 2014? 

Mr. MILSTEN. I don’t have a good answer for why we didn’t come 

back and ask for funds other than the fact that our project teams 

out there on site felt that the hospital could, in fact, be built within 

the budget. They were relying on the advice of many people within 

the department to continue pushing this project forward. 

The CHAIRMAN. On the 22nd of December, our staffs had conversations regarding the way ahead or the next steps at Aurora. 

Your staff at that time, according to my staff, promised to provide 

the committee with a risk assessment complete with cost estimates 

by the end of the following business day. 

As you know, we don’t have that. And from the testimony at the 

table today, it doesn’t appear we are getting it any time soon. 

Why would somebody promise that without the capability of delivering? 

Mr. GIBSON. If I could address that, the response, Mr. Chairman, 

I think Mr. Milsten misspoke that day. It was just a bit out over 

the end of his skis. As we have looked at that request, and I think 

you are aware that we offered to make that document available in 

camera late last week to members of the staff or Members of the 

committee. 

As we have discussed with the Corps and as we discussed a little 

bit on Monday, being able to keep close hold information that could 

potentially influence the ultimate negotiation of a contract is something that we need to be very cautious about. And there is information in the risk assessment that could compromise those conversations. 

The CHAIRMAN. Again, as we have discussed in the past, and I 

have great understanding of not wanting to compromise any of the 

negotiations, but Congress has total oversight. And if we were at 

the beginning of the project, that might be one thing, but we are 

in the middle of something now. And it is not like the committee 

would intend to make anything public, you know, and you have 

opened the central office much more than it had in the past. And 

we appreciate that. 

And, you know, I understand what getting out over your skis 

means even though I come from the great State of Florida. Ours 

is on the water. 

Mr. GIBSON. You can do that on the water too. 

The CHAIRMAN. Yeah. I tell you it hurts when you get out over 

your skis. 

So, Mr. Gibson, talk a little bit about accountability within the 

agency because we are not talking about one project. We are talking about a number of projects and we are not talking about a 

small amount of money. We are talking about tens if not hundreds 

of millions of dollars in cost overruns. 

The veterans are most important and to get the projects completed, we understand that. But, you know, there was complete 

inept abilities at a number of levels. And I don’t think you necessarily need to name names here, but help assure this committee 


VACREP0180 with DISTILLER
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that something is going to be done from within that would prevent 

this from ever occurring again. 

Mr. GIBSON. Yeah. I think, first of all, you know that I haven’t 

exactly been bashful about enforcing accountability where we had 

evidence to support that. Clearly veterans and taxpayers and Members of Congress, our elected representatives expect us to conduct 

a thorough review and where folks have not done their jobs that 

we hold them accountable. 

And my commitment is that we will do that. That is why we 

asked the Corps to undertake an objective, and Joe Calcara, who 

you met on the project, is leading that effort for the Corps. And in 

my conversations with him, I made it very clear what I want is onthe-ground truth. Call it like you see it. I don’t want you to pull 

any punches. I want to understand what went wrong here. We 

need to understand that. 

And the same guidance will go to the members of the AIB once 

that investigative board is formed to ensure that we understand exactly who is accountable, at what point, for what decisions and 

what activities throughout the life of this project. 

Ms. Brown Mr. Chairman—— 

The CHAIRMAN. Yes. 

Ms. BROWN [continuing]. Before we move on, may I have just 30 

seconds? 

The CHAIRMAN. Certainly. 

Ms. BROWN. I was at that particular meeting where we had a 

lengthy discussion and I felt that the person was, I don’t want to 

say being threatened, but was pushed to the point that he said 

things that perhaps I didn’t think it was appropriate because a 

legal lawsuit was also going on. 

And I think maybe we should hear from counsel, our counsel as 

to our questioning when there is an active lawsuit against the VA, 

so it is against us. And I think we need to consider that when we 

are asking questions of the panel or the committee. 

The CHAIRMAN. I certainly understand that, but remember that 

the VA is part of the administration and so the lawsuit is against 

the administration, not against the Congress. And we cannot abdicate our responsibility to provide oversight. 

And I know that you and I will work together and we have assured the agency and the central office that we want to be a partner as we try to resolve that. We wouldn’t want to do anything that 

would imperil any legal action that may be taken, but your comments are taken for the record and well deserved. 

Ms. BROWN. Thank you. 

I agree. As the army motto, one team, one fight, we are all in 

this together. And it is all taxpayers’ dollars and we got to make 

sure that we protect them. 

So I yield back the balance of my time. 

The CHAIRMAN. Okay. Thank you very much. 

And I have got some other questions, but I know there are other 

Members that want to talk. And even though Ms. Brown just took 

two minutes of my time, I would now yield to Ms. Brownley for five 

minutes. 

Ms. BROWNLEY. Thank you, Mr. Chairman. 


VACREP0180 with DISTILLER
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And I wanted to just follow-up on the chairman’s questioning 

around accountability too. And do you have any sort of time line? 

I think if evidence proves that steps need to be taken to hold people accountable within the VA going through this process, do you 

have a time line that you can share with us? 

Mr. GIBSON. The honest and direct answer is no. And the reason 

has to do with the uniqueness of this particular investigation and 

the complexity of the issues. 

I think our success is going to depend on our ability to focus, as 

I mentioned earlier, on particular episodes. And if we do that, I 

would expect that an investigation could be completed within probably several months’ time, but it is not something—this is sworn 

testimony and a formal and elaborate process because, again, if we 

are going to take administrative action, the evidence that we collect 

has to withstand scrutiny on appeal. 

Ms. BROWNLEY. So we can expect in a couple of months’ time 

give or take a little bit that we would have a time line at that particular point? 

Mr. GIBSON. I would be delighted to keep the Members updated 

on the progress of the AIB as I am aware of it. 

Ms. BROWNLEY. Thank you very much. 

My veterans in Ventura County in California are extremely, extremely excited about the prospects of an upcoming plan to build 

a new community clinic in our county really truly to fulfill really 

the long-awaited unmet needs for our veterans like dialysis treatment, expanded physical therapy, mental health, primary care 

services, and so on. 

And so, you know, when I hear and understand these cost overruns and delays, it makes me very concerned about future projects. 

And so if you could just speak to what you are doing, you know, 

within the VA to ensure that these kinds of cost overruns and long 

delays aren’t going to repeat itself again. 

I know construction projects are tough and nothing can be perfect, but I want to have some sense of a feeling of security that 

these kinds of things aren’t going to happen, we’re going to repeat 

the same mistakes. 

Mr. MILSTEN. Yes, ma’am. Some of the things that we are undertaking as we go forward is developing a 35 percent plan before we 

come forward for funding which then makes sure that the funding 

that we ask for is based on a sound set of requirements. 

This is a similar process that the Corps uses in the MILCON 

process so that it again eliminates some of that back and forth on 

what the requirements are. 

We have instituted a requirements management, change management process that says at the completion of 35 percent, the 

project is examined for how does it go against what the department 

approved as part of its strategic plan. 

That again is looked at about the 65 percent to make sure that 

the project didn’t grow without clear, concise reasons for the 

growth and that those changes were approved both in budget and 

in program or square footage and meet the strategic needs of the 

department. 

That project is then again reviewed against the base requirement 

at the completion of the design before we move into construction. 


VACREP0180 with DISTILLER
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In addition to that, we have instituted a program of contracting 

with the construction managers out there in the industry to come 

in and perform a rigorous constructability review. Again, this is 

something similar to what the Corps does with their 

constructability, bid ability reviews that they go through to make 

sure that the requirement can be built. And this begins to eliminate some of those change orders that come and delays that come 

downstream. 

So those are some very important pieces that we put in place. In 

addition to that, we have adopted a project review board process 

similar to the Corps that has my boss looking at the projects on 

a periodic basis as they begin to see indicators come up that say 

their risks are getting a little high or their costs are getting close 

to the programmed amounts so that we have the ability as a department to intervene and get things back on track before they go 

totally off the rails and we have no option. 

So those are some of the big things that we have put in place 

to make sure that we have control on our projects going forward. 

Ms. BROWNLEY. And this is all modeled after the Army Corps 

and their military construction? 

Mr. MILSTEN. Yes, it is. And that is because we have recently acquired a whole bunch of people with Corps of Engineers’ experience 

and we are looking to put those sorts of controls that a significant 

number of them are familiar with and have demonstrated some 

success. 

Ms. BROWNLEY. Thank you. 

I yield back. 

The CHAIRMAN. Dr. Roe. 

Mr. ROE. Thank you all for being here and also thank you for 

taking on this very difficult project. 

And not to be too flippant or not to be—I am sort of going back 

40 years. This is a FUBAR on steroids if I have ever heard one or 

seen one. And I look at this and I have been involved in building 

a medical center, an office building, another hospital and an office 

building, another community hospital LEED certified, and a $20 

million office building that my practice is currently in. All projects 

came in under budget and on time. 

And I found this the most astonish—I feel like I am in the twilight zone when I listen to this. And if you are in private business, 

and, Mr. Secretary, you understanding this extremely well—— 

Mr. GIBSON. I do. 

Mr. ROE [continuing]. Your lenders won’t lend you any more 

money. 

Mr. GIBSON. That is right. 

Dr. ROE. You go out. A project like this would have been shut 

down and moth-balled years ago because it is so outrageous. And 

what I have heard is—I want to ask just a few questions and I 

want to make a statement. 

After listening to this and listening to Ms. Brown for the last 

several years here, I am not sure the VA ought to ever build a hospital. I mean, this is not rocket science. There are 5,700 hospitals 

in the United States operating right now. And this one just can’t 

ever seem to get to the finish line. It is amazing to me how badly 

this has been done. 


VACREP0180 with DISTILLER
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And what I heard also today is there is no time line for accountability. Maybe sometime this year. And we still don’t have any idea 

how much it is going to cost. 

When this hospital first was bid out, what was the number that 

was put out there? So when the bid was made, we were supposed 

to build this hospital for, how much was that? 

Mr. MILSTEN. The initial contract with the builder was for a firm 

target price of 604 and a ceiling of 610. 

Dr. ROE. Okay. So you had a $600 million hospital? 

Mr. MILSTEN. Yes. 

Mr. ROE. So what I just heard a minute ago, and I heard the sec- retary say that the next number we are going to hear is $1.1 billion, and that is not the end of it. And just for the English translation for poor country people like me, reprogramming means you 

are going to take money from one project and move it over to another project, but you still need the money in the first project to 

move the money from. 

Am I right about that? 

Mr. GIBSON. That is correct. 

Dr. ROE. So it is not less money. We are still going to—and I 

think we ought to be honest about that, we are at $1.1 billion. 

Mr. GIBSON. And that includes—— 

Dr. ROE. And we don’t know what the next number is going to 

be. Am I right? 

Mr. GIBSON. That is absolutely right. The $1.1 billion includes not only the $600 million from construction. It includes the land acquisition. It includes the architects and engineers. It includes the 

construction management and other incidental costs associated 

with managing the project. So there are other elements to the $1.1 

billion. 

Mr. ROE. Look, I have been practicing medicine for over 40 years 

and, yes, technology is going to change. The hospital I started practicing, a new hospital 35 years ago looks very different today. You 

are going to make modifications to it. 

But building an operating room is building an operating room. 

And if you are building one for cardiac surgery, we know what that 

looks like by the thousands in this country. And I for the life of me 

cannot understand how you could miss a number by a hundred percent. 

And the other thing Ms. Brownley brought up was to date—and 

this project started when? When did somebody go with a shovel 

and everybody standing out there gets their picture? 

Mr. GIBSON. There was actually dirt moving in 2010. 

Dr. ROE. 2010, so five years ago. And the original completion 

date was when? 

Mr. MILSTEN. Three years after that. 

Dr. ROE. So 2013. 

Mr. GIBSON. 2014. 

Dr. ROE. And now we are looking at 2017 maybe. And so I certainly can understand the frustration of the veterans who would be 

in this, I think, a phenomenal facility if it ever gets built. 

But do you think that the VA ought to build another hospital 

after this and after Orlando and we have got, I guess, Louisville 

coming up, isn’t that right, it is going to be built, or should we just 


VACREP0180 with DISTILLER
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give that to a company that builds hospitals and tell them what 

you want? Let them go build it and get a competent contractor and 

a competent architect and go build it. 

Mr. GIBSON. I think the answer to that question—— 

Dr. ROE. It is embarrassing for me to go back and face my taxpayers at home and the veterans at home when they keep saying, 

Doc, when is this building going to be done. And we keep saying, 

and she has been saying this now for years, so maybe we should 

go another route. 

Mr. GIBSON. It is embarrassing to me, too, sir. 

Dr. ROE. I am not blaming you, Mr. Secretary. You weren’t there 

at the original—you haven’t been on the team very long, but I am 

just asking a rhetorical question. 

Should the VA build another facility? 

Mr. GIBSON. I think it is a fair question. 

Dr. ROE. Let the private sector build it. 

Mr. GIBSON. I think it is a fair question. And I think as we look 

at the Corps’ assessment that we have asked them to do on this 

and other major projects that are under construction or have recently been completed, I think they come back and they look at 

what went wrong and they look at our structure and our processes. 

And with that as part of the information, we make an informed 

decision about, okay, how do we do this part of your business in 

the future. And it may well be that the best outcome, the best outcome for veterans and for taxpayers is that we turn to the Corps 

and we say, Corps, we want you to build our hospitals from now 

on. That may be the decision. And if it is, so be it. That is all I 

am after. I want the best decision based on those two parameters. 

Dr. ROE. Well, I don’t see how it could have been done much 

worse. 

Mr. GIBSON. No. On this one, I don’t either. You know, I think 

frankly, and I alluded to it earlier, that the crux of the issue here 

happened as we were trying to push to get to a firm target price. 

And we were doing that without having design completed. 

And what we did is we set up an inherent conflict and then we 

obligated ourselves to deliver a design that could be built for $604 

million when the design was still moving and we never reconciled 

those two. We never forced the issue. And so you are right. It is 

a mess and it is what you referred to as FUBAR. 

Dr. ROE. Thank you for taking this on. 

I yield back. 

The CHAIRMAN. I am not going to say anything. 

Ms. Titus, you are recognized. 

Ms. TITUS. Thank you, Mr. Chairman. 

I am glad to learn what FUBAR means. I didn’t know that. 

The CHAIRMAN. Well, ma’am, I didn’t say—I didn’t say that now. 

Ms. TITUS. Well, you know I represent Las Vegas, Mr. Chairman, 

and I have appreciated working with you and I thank you for being 

here. It is very important that we talk about this issue, not just 

because of the problems that exist now, but we have invested a lot 

in future expansion and more facilities; we want to be sure that 

they work right. 

The hospital in Las Vegas had a lot of problems. You are aware 

of that. It was too small by the time it got built. They had to build 


VACREP0180 with DISTILLER
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a new emergency room. They built it and opened it in pieces, so 

that is confusing to the veteran of what services are actually available. 

You have given me some information in the past and you probably don’t have this right in front of you, but I would ask that the 

VA give me some kind of hard facts about when it is going to be 

opened and what the timeline is for all of the facilities and all of 

that associated with the hospital, if I could get that from you in 

the future? 

Mr. MILSTEN. Yes, ma’am. Of course. 

Ms. TITUS. Thank you. 

Now, one other thing is it seems to me that we need to take one 

step back. You have talked about all of the improvements in terms 

of more oversight for the contractors for the bids and how you are 

going to be doing the construction, but I think part of the problem 

is the metrics leading up to the decision of what to build and what 

to put in a facility. It is one of those ‘‘build it and they will come.’’ 

And Las Vegas, it was anticipated that once you had a hospital, 

the number of veterans served would increase by two percent; in 

Las Vegas, it increased by 19 percent. We are going to have more 

veterans who need these facilities. There are going to be different 

kinds of veterans with more serious problems, more women veterans. So can you tell me about what you all are doing about the 

metrics, in advance of deciding what you need and what to build? 

Mr. MILSTEN. One of the other pieces that we have instituted in 

the department is a return to, if you will, market-area master planning. So we take an area—in this case, we are working with a 

VISN—and we look at all of the needs within the VISN. The Department sends down a set of gaps that they have identified that 

need to be closed by the VISN and then a rigorous process is undertaken. It takes about a year and a half to go through this where 

we look at both capital and noncapital solutions to close these gaps, 

and then we put the facility master plan together that then informs the SCIP process, the strategic capital plan going forward so 

that we have a true look at where we are going; that we have a 

Departmental control on the facilities that fill into a marketplace; 

that we have a better-defined requirement which cuts down on 

changes later on, cuts down on that flux and it will get our facilities built in the right fashion; and then after the project is built, 

we have gone back to instituting a—or we have instituted a postoccupancy evaluation that comes back in and says, okay, here was 

a set of gaps or requirements that the project was set to meet; did 

we, in fact, meet them? And if we didn’t, then we still have something to accomplish and we also develop a lesson learned that says 

the way to close this gap may not be that particular path, so that 

we don’t repeat the same mistakes over and over again. 

Mr. GIBSON. And, Dennis, if I understand correctly, we use a tenyear planning horizon so that we are not looking out, you know, 

with year or two years; that we are looking much farther down the 

road forecasting changes in veteran population and unique patient 

growth. 

Ms. TITUS. Well, I would just encourage you to work closely with 

local forecasters, economic and demographic forecasters, when it is 


VACREP0180 with DISTILLER
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at the university think tanks so you can anticipate growth. That 

seems to be a factor that hasn’t been a—— 

Mr. MILSTEN. One of the things we are doing is we are bringing 

in planning consultants that have that kind of expertise and have 

the ability to reach into the marketplace. We are not depending on 

our own in-house ability to forecast; we are looking at how we 

bring consultants in that have that experience, the same experience that supports the private sector, informing them on their 

healthcare-building decisions would be then helping us to help forecast our needs. 

Ms. TITUS. Okay. That is good. I am glad to hear that. 

And I would just, again, say please keep in mind women veterans. The secretary has assured me of that. The chairman has 

promised to hold a hearing on the needs of women veterans, and 

also keep that in mind, and I will look forward to getting the information about the Las Vegas hospital. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very much. 

Dr. Benishek, you are recognized. 

Dr. BENISHEK. Thank you, Mr. Chairman. 

Mr. Gibson, Dr. Roe really said a lot of the things that I wanted 

to say, and to me, I am frankly shocked and I completely agree 

with Dr. Roe in that I don’t see why I would ever want to trust 

the VA to build another thing ever. I mean the answers that you 

have given here, the reasons why this has all happened sounds to 

me like you have never built a hospital before. 

We should have had the plans in before we did the bidding, oh, 

yeah. I mean the answers don’t make any sense to me. My question, from what Dr. Roe has said, has anyone been disciplined during this whole process? 

Mr. GIBSON. There have been, in Denver, for example, the project 

executive and the contracting officer were removed from those particular positions. But I would tell you the more comprehensive look 

at what happened in Denver will be taken by the AIB and—— 

Dr. BENISHEK. Frankly, one of your earlier answers sort of 

shocked me too: We are looking for evidence of mismanagement. 

Well, the fact that there is a cost overrun of a half a billion dollars 

is kind of a priori evidence that there has been mismanagement. 

And the answer that you are going to look for mismanagement is 

sort of a wash with me. 

Mr. GIBSON. The issue is being able to document the individual 

accountability with evidence because what will happen is if we take 

an action and we don’t document it with demonstrating that that 

particular individual was accountable for that particular issue and 

have the evidence to support that, our decisions are just going to 

get overturned. So we have to go through this process to gather 

that evidence. 

Dr. BENISHEK. It just seems very difficult to me, Mr. Gibson. 

Mr. GIBSON. It does to me, too. 

Dr. BENISHEK. My opinion coming in on this committee, we 

shouldn’t allow the VA to ever do any construction project again; 

they should just be bid out to the private sector and let the Army 

Corps of Engineers—because if you are telling me that you can’t 

even discipline the people that cost a half-a-billion-dollar-cost overVerDate Aug 31 2005 07:26 Feb 23, 2016 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 Y:\97-992.TXT PAT

VACREP0180 with DISTILLER
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run because you don’t have the right tools or your management 

plan or your union plan doesn’t allow it to happen, there is a real 

problem here and the American taxpayers are paying for it and our 

veterans are paying for it with the lack of their care, and, you 

know, I just don’t get it. 

Let me ask you another question here. Now, do you know what 

the average cost per square foot of this hospital is going to end up 

being? 

Mr. GIBSON. We won’t know the answer to that question until we 

know the estimated cost to complete. 

Dr. BENISHEK. All right. How much money have you spent already on the project? 

Mr. GIBSON. Roughly, $800 million has been obligated. 

Dr. BENISHEK. So that is the money that you have spent already? 

Mr. GIBSON. The majority of that is spent, not quite all, but all 

of it has been obligated. 

Dr. BENISHEK. So that is more than the original—$200,000 more 

than the original bid price of the project? 

Mr. GIBSON. Well, as I mentioned earlier, there is—was a construction contract of about $600 million that didn’t include architect engineer fees, construction management fees, the acquisition of 

the land, the site preparation, and other costs that are associated 

with building a project of this complexity and size. 

Dr. BENISHEK. So those costs weren’t taken into the account of 

the original price of the project? 

Mr. GIBSON. They were taken into account. 

Dr. BENISHEK. So what was the original price of the project supposed to be? 

Mr. GIBSON. The original appropriated amount was somewhere 

just south of $800 million. 

Dr. BENISHEK. So we spent all the money that we originally 

thought we were going to spend, but we only got a project that is 

half done? 

Mr. GIBSON. That is correct. 

Dr. BENISHEK. All right. 

I don’t have any more questions. I will yield back the remainder 

of my time. Thank you. 

The CHAIRMAN. Ms. Kuster, you are recognized. 

Ms. KUSTER. Thank you, Mr. Chair. 

And just for the record, I share our colleague’s frustrations and 

it is clear that all of you do, as well. 

I want to learn from this in terms of going forward, and there 

was a comment in our brief about the model of hub-and-spoke medical services in the VA, and I am just wondering, given everything 

we have heard today and we have known for a few years now about 

the cost overruns, the complexity, I think I noted your comment 

about cutting speed to delivery, it seems exponential. The longer 

the delay, the more change orders, the more change in the scope, 

and I think certainly my colleague, Ms. Titus talking about let’s try 

to be more focused on projecting what the needs are. 

But given all of that, I am just wondering, is there any thought 

going on now at the VA—and this is for Mr. Gibson—about whether this hub-and-spoke model is the best model. Should we be trying 

to create these megacenters, medical centers, and in particular, in 


VACREP0180 with DISTILLER
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light of the major reform that this congress passed and the president signed back in July about the concept of sending our veterans 

for private pay? In many parts of the country we have outstanding 

tertiary healthcare facilities that are complex and expensive to duplicate within the VA system. So I will just leave it for your comment. 

Mr. GIBSON. I think, first, it is important to note that what came 

first were the hubs, and what you have seen happen at VA has 

happened across all of medicine in the United States over the last 

several decades, is a movement toward a primarily ambulatory care 

or an outpatient-care model. That is where the vast majority of 

your care is delivered. And so what we have done over the last 20 

years is create these outpatient clinics, much more convenient, 

much more readily accessible, to provide a large portion of the 

healthcare services that our veterans require. 

Ms. KUSTER. And presumably, less costly to build? 

Mr. GIBSON. Yes, they are. 

Ms. KUSTER. Okay. 

Mr. GIBSON. In fact, principally, we have used a lease structure 

in order to be able to pursue that dramatic expansion. But there 

are still requirements, care requirements for veterans that will 

need hospitalization. So, as is the case in this particular instance, 

it is an instance of replacing an old and outdated facility. 

Now, the question you raise is part of a much longer and philosophical kind of question about the role for non-VA care, the requirements to maintain continuity of care, and the recognition that 

the typical VA healthcare patient is older, sicker, and poorer than 

the average population. So there is a sense here of not, you know, 

do we just dump those veterans onto the public healthcare market 

and let them fend for themselves in terms of achieving the best 

healthcare outcomes or do we look to build an integrated system 

which would include medical facilities or hospitals as part of that 

system, but recognizing that some healthcare can and should be 

provided in the community. 

Ms. KUSTER. And I appreciate that, the reality test, because I 

think that is a part of it. In terms of congress, our oversight is 

about the care for the veterans—— 

Mr. GIBSON. Yes. 

Ms. KUSTER [continuing]. And the precious tax dollars and where 

we find that balance. But I think for the American people and for 

the Members of Congress, we need to address this issue that veterans are coming back with much more complex medical conditions. Veterans are aging, and as you say, due to the challenges 

they have, they have less resources on their own to seek their own 

care. 

Mr. GIBSON. Right. 

Ms. KUSTER. I appreciate what you are doing. I am taking up the 

mantle of being the ranking minority in the oversight committee 

and intend to work very closely with my colleagues on both sides 

of the aisle to help maintain the balance or hopefully restore the 

balance of providing the care in a timely way. 

Mr. GIBSON. Thank you for your continued support and service, 

ma’am. 

Ms. KUSTER. Thank you. 


VACREP0180 with DISTILLER
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The CHAIRMAN. Thank you, Ms. Kuster. 

Now, to a new member of our committee from New York: Mr. 

Zeldin, you are now recognized. 

Mr. ZELDIN. Thank you, Chairman Miller. 

And I appreciate your recognizing that I am a new member because I am going to ask a new question. In one of Mr. Coffman’s 

questions, with regards to going from a 42 percent estimate, going 

up 8 percent over the course of the year, Mr. Milsten, you referred 

to a term called an artificial budget. Can you tell me what an artificial budget is? 

Mr. MILSTEN. When the court decision came down and they said 

that we had failed to deliver a design that could be built for the 

contract amount of 604, we had been measuring progress against 

604 and we were measuring it as a term of art where we use work 

in place. So what we paid for was then evaluated against what the 

total contract was. Well, the reality—what the court—what the civilian board told us is that the number was completely wrong, and 

so that is the artificial piece that we were measuring against. 

So when we were—I mean there were fact sheets that showed 

that I think we were as high as 62 percent at one time out there, 

but that was against that 604 number for what we had put in 

place. And when the court board came down and said that number 

doesn’t hold any water, that is the artificial piece that I was talking about. 

Mr. ZELDIN. I also understand from the questioning that you 

need an authorization by June, but that it is going to be at least 

several months before we know how much money you would need. 

I am just trying to understand, are we going—would we find out 

how much money you would need before you are actually getting 

the money? 

Mr. GIBSON. There is two steps in here. The first thing that is 

required will be—or requested, will be an increase in the authorization in order to allow us to continue to operate during this interim 

period of time. For reasons that were explained earlier, you know, 

the best course of action we believe is that we keep construction 

underway at this project, rather than shuttering, mothballing and 

demobilizing activity on the project. So we will need an increase in 

the ceiling prior to June, probably within the next 60 days or so 

in order to support a higher level of spending during this interim 

period, then there would have to be another one for the full construction cost. 

Mr. ZELDIN. Right now, the contractor working at the site, what 

budget is the contractor operating off of? What are their numbers? 

Mr. GIBSON. When we put the interim contract in place, what we 

did was we funded it with $70 million; $50 million to cover monthto-month new work that is being undertaken, based upon a detailed schedule that is being developed between Kiewit Turner and 

VA that focuses work on critical path items, plus there is about $20 

million available for settlement of subcontractor disputes. And so 

we are going to be allocating another $31 million into the contract 

and we have some amount of money left that was unobligated 

under the contract that we will also use to settle subcontractor disputes. 


VACREP0180 with DISTILLER
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Mr. ZELDIN. The $50 to $70 million numbers, is that between 

now and June? Is that per month? 

Mr. GIBSON. That will likely—what we did in the interim contract is we put those amounts in place for a 90-day period of time. 

So whatever we run out of first, time or money, that ends that contract. Both parties reserve the right to extend it and our expectation is to extend it because we don’t believe the Corps will be in 

a position to enter into a contract to complete the project until 

probably June. 

Mr. ZELDIN. Mr. Takano was asking you about the investigation. 

Is it possible that people who are responsible for negligence are 

still working on this project? 

Mr. GIBSON. I think it is unlikely. As I mentioned, we have 

changed the reporting relationship for construction facilities management, so that removes one particular senior executive. I mentioned earlier that we had also changed out the project executive 

and the contracting officer. I would tell you the project executive 

that we have on the scene now, and have had since April, is a star, 

a young fella named Kevin, Kevin Lindsay that came to us from 

Corps of Engineers. 

Mr. ZELDIN. Mr. Caldwell, real quick question: Has the Army 

Corps ever build a hospital before? 

Mr. CALDWELL. Yes, we have. 

Within the last, let’s say since 2007, about 12 either have been 

completed or are under construction. 

Mr. ZELDIN. Okay. Great. 

So this is very informative for me. Chairman Miller, you know, 

I have heard this new term of artificial budgeting. Ms. Brownley 

was asking for a timeline of when she is going to get the timeline. 

Asking for funding without knowing what the cost is—that came from the State Legislature in New York—with $200,000, our county, which has the second-highest vets population of any county in 

the country, highest in the state, with $200,000, we created a program for PTSD. Hundreds of veterans—and we are saving lives 

with $200,000. 

And the concern is when you are $500 million over budget, you 

are taking money away from other programs that can save lives 

and give care to our veterans who need it and deserve it. I actually 

think the whole thing is pretty outrageous and I am very grateful 

that Chairman Miller is having this hearing and Mr. Coffman is 

advocating so hard to keep us informed. 

The CHAIRMAN. Thank you, Mr. Zeldin. Welcome to Congress. 

(Laughter) 

The Chairman. Mr. O’Rourke. 

Mr. O’ROURKE. Thank you, Mr. Chairman. 

Since we last met, there was a strategic shooting at the El Paso 

VA. 

The Court: You can stop the clock on this. Don’t need to clock 

him on this. 

Go ahead. 

Mr. O’ROURKE. And I just wanted to take a moment, and I know 

that I speak for you and for the Committee in extending our condolences to the family of Dr. Fjordbak, who, following 9/11, left a lucrative practice is, moved to El Paso to work at the VA and help 


VACREP0180 with DISTILLER
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treat our veterans who were returning from Afghanistan and Iraq, 

including veterans who had served in previous wars. And from everything we know about him, exemplified the kind of service and 

commitment to excellence that we wasn’t to see more of in the VA. 

And I want to thank the secretary for the leadership at the El 

Paso VA, your Interim Director Pete Dancy is doing a remarkable 

job. And as tragic as this shooting, this murder was, I note that 

the El Paso VA is going to come back better and stronger than 

ever. And I’d also like to conclude this part of my time by thanking 

all of the employees, many of whom are veterans, the frontline 

staff, the doctors, the providers, the mental health experts, the volunteers who do a remarkable job in El Paso day in and day out 

under some very trying circumstances, especially following the 

shooting on January 6th. 

And I commit to you, Mr. Secretary, that we will do everything 

that we can to support that staff, be there for them, and make 

them stronger than ever going forward. 

Mr. GIBSON. Thank you. Your support means the world to me 

and I know, to them. 

Mr. O’ROURKE. Mr. Chairman, I would like to continue by developing on the theme that we are looking at in terms of the VA’s opportunities and competence when it comes to building major medical facilities and providing world-class care and outcomes for our 

veterans in a timely fashion. Again, despite what I think are the 

best efforts of a truly remarkable team at the El Paso VA, due to 

a number of factors from staffing to resources to leadership, in 

some cases, we have not been able to deliver on that for the veterans. 

What I hear day in and day out from the veterans that I represent and serve is that when they can get in, they are treated like 

royalty and very infrequently have any complaints at all. The 

struggle, of course, has been getting into the VA in the first place 

or having an appointment that is not cancelled or not having your 

records dropped or erased or feeling like you have been forgotten. 

One of the other factors that makes it difficult to deliver worldclass care in El Paso and to better serve our veterans is the age 

and the state of the facility that we are in today. And you were 

kind enough, Mr. Secretary, to visit El Paso in July of last year, 

and after a tour of the facility, you confirmed that conclusion that 

we have reached, now for a very long time in El Paso, that the facility we have is inadequate, insufficient and unacceptable and we 

can and must do better for our veterans and for those who serve 

them out of that facility. 

Further complicating things in El Paso is William Beaumont Army Medical Center is building a new $1.1 billion facility nine 

miles away from its currently co-located position with the VA 

health clinic. We have, what I would say is an opportunity, right 

now to decide what we can do to improve the kind of facility, the 

delivery of care, and the access to that care in El Paso. There are 

a number of partners there who want to work with you and want 

to work with us, including Texas Tech, which has the Paul L. Foster School of Medicine, the first four-year medical school built anywhere along the U.S./Mexico border. We have University Medical 

Center. We have Tenet and HCA Hospitals. We have a community, 


VACREP0180 with DISTILLER
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though, one of poorest from income and property values, is one of 

the richest in service, that is willing to get behind this and make 

it a success. 

I want to follow-upon your commitment to take El Paso from one 

of the worst performing to one of the best, and I want to help answer Dr. Roe’s question, and a question that you agreed was a 

valid one, which is, should the VA be in the business of building 

these facilities? We certainly don’t expect $1.1 billion to be spent 

in El Paso, Texas—we would gladly take it, we are not expecting 

it. What we will offer is that through these partnerships, through 

the commitment and funding from the local community, we can 

make a deal for the VA that would prevent you from building a 

brand new facility or a hospital that I think there are some serious 

questions about the competency of the VA to do just that, and instead, perhaps, test or prove a different model in the delivery of 

healthcare. It would solve, I think, a lot of problems for VA nationally, while meeting the expectations that we should have in El 

Paso of having world-class care for each and every veteran. 

Now, we received a memo that was written by VHA Under Secretary Clancy August 18th of last year that said within 60 days, 

they would have a game plan for such a facility. I probably don’t 

have to tell you that today, at least in our office, we do not have 

a copy of any such plan. And despite, I think, our polite but insistent demand that we see one and be a partner in that, we have yet 

to see anything. 

You, current Secretary Bob McDonald, who also visited El Paso 

recently, we want to thank him for that—that was following the 

shooting—have both express to do me your commitment, but I need 

to see some follow-through. I need to be part of that process that 

you admitted often happens behind closed doors and doesn’t involve 

members of congress. I want to be your partner in this; I don’t 

want to be your adversary. But after two years and documented 

failings, including by VHA and the OIG, we absolutely need something better and we need to be part of it. So what I am asking you 

today is from all the lessons that we have learned from Aurora, 

from Florida, from other facilities, and from the opportunity that 

we have in El Paso, will you commit to working with us? Will you 

dedicate someone, even on a part-time basis, to working with this 

community to develop that plan? We will be your partner in implementing it. 

Mr. GIBSON. Yes, we will. 

I think one of the things both Bob and I have emphasized at our 

months at the department is the need to build on the strategic 

partnerships that we have out in our communities, and I think that 

El Paso is a great example of that. As you and I discussed a couple 

of months back, we really don’t have a way forward there, and we 

are not positioned for success in El Paso today and we need to get 

ourselves positioned for success. And I think the circumstances on 

the ground you just outlined very ably, could create an ideal opportunity for us to leverage on those local partnerships and do the 

right thing for veterans and be good stewards of taxpayer dollars. 

Mr. O’ROURKE. Thank you, Mr. Secretary. 


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And I will conclude by saying that we will follow-up this week 

to share what we have assembled and to gain from you what you 

have—— 

Mr. GIBSON. Thank you. 

Mr. O’ROURKE [continuing]. And then from there, I think we 

need to move very quickly to implement something. 

Mr. GIBSON. I understand. 

Mr. O’ROURKE. Thank you. 

Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you. 

Mr. Costello, another new member who asked to be on this committee from the great state of Pennsylvania, you are recognized. 

Mr. COSTELLO. Thank you, Mr. Chairman. 

In applying my experience as a real estate lawyer who has been 

involved in acquisition and land-use approval and development and 

construction matters, but not focusing on what happened pre-bid 

award to KT, I want to share a couple of observations with you. 

In looking through the materials, I am just going to cite right from 

them. 

First, the CBCA finding that VA delayed progress of construction 

by delaying the processing of design changes and change orders: 

Quoting, Much of the blame for the situation must be ascribed to 

the VA by failing to control the joint venture design team, delaying 

approval of the design, presenting KT with a design which was allegedly complete, but required an enormous number of modifications, failing to process change orders for approximately one year. 

And then you look at Mr. Chang’s emails, one in particular—two 

in particular, stand out: A June 13th, 2013, email where he says 

we hired a senior resident engineer who has never done anything 

that we have been doing in CFM, but he won’t take advice from 

those who came from the VA system. The budget schedule and 

scope are not in control. I have no clue when this project is going 

to be finished and how much it is going to cost when this project 

is done. 

That was in June of 2013. It concerns me from a constructionmanagement perspective—again, leaving aside the design aspects 

that went into the actual bid, to which the contractor was awarded—it concerns me from a construction-management perspective 

that the moment that someone within the VA organization would 

send an email like that or feel that way, that it wouldn’t simply 

freeze at that point and say, This problem is too big for us; we need 

to go somewhere else and get subject-matter expertise. Because 

when you are designing—when you are managing a construction 

project and you are bringing into the fold, construction-management firms or a construction manager, you are not hiring them for 

a project that 95 percent of which is going to go right. There is also 

going to be modifications or change orders along the way. You are 

hiring that construction-management firm or individual for when 

things are going to go really, really bad so that it doesn’t become 

worse. 

And when you go back, I think it is a year earlier in an email, 

Mr. Chang indicates, All I can say—this is a year prior to the email 

that I just cited to—all I can say is the storm is coming. How we 

got into this mess, it is simple: Scope, schedule, and budget were 


VACREP0180 with DISTILLER
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not managed; no leadership; no knowledge and experience in this 

business; not following handbook; no skill and organization. 

That points to, I think, a much more fundamental dynamic here, 

which is that subject-matter expertise on very sophisticated construction projects like this do not reside in the VA and so moving 

forward, similar to what Congressman Roe said and other Members 

here, I just question whether, as part of a general budget, you 

should be—we should be looking to fill subject-matter expertise of 

that sophistication when it is really better outsourced. And so I 

would like you to share your comments moving forward on the 

types of questions you are going to be asking yourself and what you 

are going to be presenting to the Chairman and this Committee on 

whether maybe you just don’t want to be in the business of building hospitals, maybe that is something better outsourced, so that, 

frankly—again, looking at what the CBCA’s findings were, a lot of 

the additional—at least some of the additional cost is actually a 

function of not merely mismanagement, but not managing it. It is 

not just the design, it is the management or lack of management 

here that has caused further delays and caused further expense 

and I think that is the real troubling—that is a deeply troubling 

aspect of the overall problem. 

Mr. GIBSON. I am sure that you understand, based on your experience, that using a construction—a contract vehicle such as IDC 

or construction management at risk, in order for that to work effectively, you have to have very strong project leadership on the job, 

and frankly, we didn’t have it. And those emails and the things 

that you just read make it very clear that we did not have it. 

I would love for you to have the opportunity to come visit this 

facility today and sit down and spend time with the project engineer, project executive on this particular facility, and surmise from 

your own objective observations whether or not that is the kind of 

person we want leading complex projects, whether we do our own 

hospitals in the future or not—I have already put that on the 

table—and I said perfectly willing for us to look at that. All I am 

after is what is best for veterans and what is the right thing for 

taxpayers, and if that means turning over major hospital construction to the Corps of Engineers, I think that is fine. But that is a 

big decision, let’s make it an informed decision. 

Mr. COSTELLO. And my only follow-up to that would simply be, 

within a project this big you are talking about a team of highly 

skilled professionals—— 

Mr. GIBSON. Yes. 

Mr. COSTELLO [continuing]. All of whom not only make—hold the 

project accountable, but hold one another accountable. 

Mr. GIBSON. Yes. 

Mr. COSTELLO. And the other underlying concern here is that 

there was not, I feel, at least from what I have seen, a lot of accountability within that team. 

Mr. GIBSON. There was not. 

Mr. COSTELLO. And that led to even more of a runaway expense 

and I think that is really a testament to what happens when we 

try to have—and this isn’t a criticism directed at you, but a more 

broader point—that is what happens when we have bureaucracy 

trying to do too many things rather than what they are specifically 


VACREP0180 with DISTILLER
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designed to do, and what you are specifically designed to do is not 

build hospitals. Thank you. 

The CHAIRMAN. Thank you very much. 

Ms. Radewagen, who is another new member who asked to be on 

this—who comes from the furthest location from any committee 

member, the American Samoa. 

Ms. RADEWAGEN. Thank you, Mr. Chairman. 

It is an honor and privilege for me to be a member of this committee. As you know, each May is Asian-Pacific American Heritage 

Month and National Military Appreciation Month. And over the 

years, I have traveled around to many bases to celebrate with the 

military and I discovered that American Samoa’s vets, like other 

vets, they tend to settle near the base they were last stationed at 

because their families have settled in and their children are in 

school. 

We have three major exports, canned tuna, NFL football players, 

and soldiers, military personnel. Veterans make up 10 percent of 

the territory’s population, so access to veterans’ healthcare is deeply important and I look forward to working with this committee. 

My question, Secretary Gibson, is: How long will it take to get 

a new long-term contract with KT? Can you please explain the 

process that will be taken to get to that point? 

Mr. GIBSON. Do you want me to answer that one, Lloyd? I’d be 

glad to. 

Mr. CALDWELL. Yes, sir. Go ahead. 

Mr. GIBSON. Let me take a shot at it and I will let Lloyd chime 

in here. 

The Corps has an assessment team on the ground in and out at 

Denver right now; they are experts from all over the country. These 

are chiefs of sections, not deputies; it is a very expert team. They 

are going through their assessment. They are developing right now 

an acquisition plan, and they will go through that process and have 

that acquisition plan presented and, you know, everyone would 

hope approved during the month of February. 

And then between the month of February—and their target time 

period is June—during that period of time, they would go through 

the careful, close work with KT, supported by VA, to determine the 

schedule; to determine the scope of work to ensure that the design 

has been completely locked down, and ultimately to determine the 

cost to complete and settle on a contract vehicle to enter into with, 

whether that is KT or whether that is another party, that would 

be determined as part of the acquisition strategy. So that is the 

general time frame. 

Ms. RADEWAGEN. Thank you. 

And lastly, Mr. Milsten, if you plan to move money from other 

major construction projects that Congress has appropriated money 

to build, what is stopping those projects from being mired down by 

the same cost overruns and delays that current VA major construction projects are facing? 

Mr. MILSTEN. One of the things that we are looking at as we go 

forward with this reprogramming effort is to find those projects 

that taking some of the money off them will not or will have minimal impact on their ability to go forward. We continue to press for 

the speed to delivery to get these facilities done, and as part of any 


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effort, we want to work with the Committee and with Congress to 

replenish those funds that we reprogram off so that those projects 

can keep on-track to provide those services to veterans. 

Mr. GIBSON. I would also point out the number of improvements 

that have been implemented over the last couple of years that are 

being applied currently, as well as the lessons that we will learn 

from the Corps’ review of Denver, as well as other major construction projects, to ensure that we are using the very best practices 

possible in all of our projects. 

Ms. RADEWAGEN. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very much, Ms. Radewagen. 

And before we go to the second panel, Ms. Brown, do you have 

some comments? 

Ms. BROWN. Yes, sir. Thank you, a couple of things. 

Mr. Secretary, the Committee is asking me exactly when do we 

expect the Orlando hospital to be complete because they want invitations to come down—— 

(Laughter) 

Ms. BROWN [continuing]. And former Members want invitations 

to come. 

Mr. GIBSON. Yes, ma’am. 

Ms. BROWN. So, we all want to participate. 

Mr. GIBSON. We will plan a major celebration for the ribbon cutting in Orlando. 

Ms. BROWN. Yes. 

Mr. GIBSON. I know construction is scheduled to be complete at 

the end of February, but there is an activation period that will follow that where we are moving equipment in and all that sort of 

thing. We will be sure to get dates to the Committee ahead of time. 

Ms. BROWN. We will ask the Committee Members to formally 

come down for a site visit when we open. 

I do think that we need to separate building a hospital from 

building a clinic. I don’t think that we have had the same problems 

with the clinics as we have had with the hospitals. Can you clear 

that up for me? 

I haven’t had any problems with my clinic in my district. 

Mr. GIBSON. Yeah. I think there have been challenges with clinics, as well as hospitals. The nature of those challenges have, in 

most instances, been somewhat different. I would say where they 

are similar has to do with the early stages of developing and defining requirements and then locking down those requirements so 

that we are able to move expeditiously through the process. 

Ms. BROWN. And at issue that maybe the Committee needs to 

deal with. We had a project in Miami that was two smaller projects 

and once we put them together, it became a larger, you know, one 

big project that you all need to come back for us, and maybe we 

need to develop some kind of authority so that you can move forward, because that held up that project. So we need to work together in areas that we can to make sure that we can expedite the 

process. 

Mr. GIBSON. Yes, ma’am. We would appreciate that opportunity. 

Thank you. 

Ms. BROWN. And so with that—and there are many other things. 

Someone said something about mismanagement and I want to say 


VACREP0180 with DISTILLER
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that part of the problem—let’s say in Orlando, part of it was we 

changed the sites. And in this Denver hospital, it was going to be 

a joint-use hospital and it became a single-use facility, so all of 

those things got to be considered as we discuss and decide how we 

are going to move forward, and you can’t just say it is one item; 

it is a multiplicity of reasons why projects get delayed, and we need 

to do our part to make sure that doesn’t happen also. 

And so with that, Mr. Chairman, I am very excited about working with you to move the VA forward. 

The CHAIRMAN. Thank you very much, Ms. Brown. We are all 

looking forward to working collaboratively with the VA. I would say 

that the one incident in Miami where there were two projects, actually, that was something that this Committee uncovered. That was 

a large project that was purposely split into two so that they could 

proceed forward, and that is why we had the problem that we did, 

and, you know, nobody wants to delay anything, but we certainly 

want to make sure that everybody follows the rules. 

But with that, thank you, Mr. Gibson, for being here. 

Mr. Milsten and Mr. Caldwell, thank you so much, and you are 

now excused. 

Mr. GIBSON. Thank you, Mr. Chairman. 

Thank you, Members. 

The CHAIRMAN. We are going to go ahead and move forward with 

our second panel. We are going to hear from Mr. David Wise, director of physical infrastructure issues at the Government Accountability Office; Mr. Roscoe Butler, no stranger to this committee, the 

deputy director for healthcare for the American Legion’s Veterans 

Affairs and Rehabilitation Division; and also Mr. Ray Kelley, also 

no stranger to this committee, director of the national legislative 

service for the Veterans of Foreign Wars. 

As, per the custom, your statements will be entered into the 

hearing record. 

And Mr. Wise, now that you have made it to your seat, we are 

going to let you go first. We will recognize you, sir, for five minutes. 

STATEMENT OF DAVID WISE 

Mr. WISE. Yes, 

Chairman Miller, Ranking Member Brown, and Members of the 

Committee, I am pleased to be here today to discuss information 

from our April 2013 report regarding the construction of new major 

VA medical facilities. Our report examined the Agency’s actions to 

address cost increases and schedule delays for VA projects in Denver, New Orleans, Las Vegas, and Orlando. At the time of our review, VA had 15 major medical facility projects underway at a cost 

of more than $12 billion, including new construction and renovation of existing medical facilities. 

For those four projects we originally found that cost overruns 

range from 59 percent to 144 percent. Delays ranged from 14 to 74 

months; however, costs and delays have since increased with cost 

overruns now ranging from 66 percent to 144 percent and delays 

ranging from 14 to 86 months with the potential for further increases. 

My statement today discusses three key issues related to the VA 

medical facility construction program. One, the extent of and reaVerDate Aug 31 2005 07:26 Feb 23, 2016 Jkt 000000 PO 00000 Frm 00037 Fmt 6633 Sfmt 6633 Y:\97-992.TXT PAT

VACREP0180 with DISTILLER
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sons for cost overruns and schedule delays for the four new medical 

facility projects we reviewed; two, actions VA has taken to improve 

its construction management practices; and three, VA’s response to 

our 2013 recommendations to improve the management of costs, 

schedule, and scope of these construction projects. 

When comparing construction project data updates provided by 

VA for this testimony, with the cost and schedule estimates first 

submitted to Congress, we found the cost increases range from 66 

to 144 percent representing a total cost increase of over $1.5 billion 

and an average increase of approximately $376 million per project. 

Since our 2013 report, some of the projects have experienced further cost increases and delays. For example, VA’s reported delays 

for the four major projects now range from 14 to 86 months with 

an average delay of 43 months per project. 

Of those projects, Denver had the highest cost increase and the 

longest estimated years to complete. Estimated costs increased 

from $328 million in June, 2004, to $800 million, as of November, 

2012. VA moved the estimated completion date from February, 

2014, to May, 2015; however, these estimates may further increase 

and VA has been unable to provide total estimated costs and schedule data for the Denver project at this time. 

At each of the four projects, different factors contributed to cost 

increases and schedule delays as follows: Changing healthcare 

needs of the local veteran population expanded the scope at the Las 

Vegas project; decisions to change plans from a shared universityVA medical center to a standalone VA medical center affected 

plans in Denver and New Orleans; changes to the site location by 

VA delayed efforts in Orlando; unanticipated issues, especially environmental, in Las Vegas, New Orleans, and Denver, also led to 

delays. Some of these factors resulted in expensive, cumbersome 

and lengthy change orders. 

Since 2012, VA has taken some steps to improve its construction 

management process including creating a construction view council 

to oversee VA’s development and execution of its real property program. The council is intended as a single point of oversight and 

program accountability. Establishing a new project delivery method, known as integrated design and construction, which engages 

the construction contractor early in the design process to streamline construction and reduce the need for change orders. VA used 

this procedure in Denver—in the Denver project, but too late to 

fully benefit from it. 

In our 2013 report we made three recommendations to address 

systemic issues that contributed to overall schedule delays and cost 

increases, including developing guidance on the use of medical 

equipment planners, as part of the design and planning process; 

sharing information on the roles and responsibilities of VA construction project management staff; and streamlining the change 

order process. VA agreed with our recommendations and has taken 

action to implement them. While we have closed out the recommendations, the impact of these actions may take time to show 

improvement, especially for ongoing construction projects, depending on several issues including the relationship between VA and its 

contractors. 


VACREP0180 with DISTILLER
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Chairman Miller, Ranking Member Brown, and Members of the 

Committee, this concludes my formal statement, and I would be 

pleased to answer any questions you may have at this time. 

[THE PREPARED STATEMENT OF DAVID WISE APPEARS IN THE APPENDIX] 

The CHAIRMAN. Thank you very much, Mr. Wise. 

Mr. Butler, you are recognized. 

STATEMENT OF ROSCOE BUTLER 

Mr. BUTLER. Thank you. 

Due to poor planning and budget execution with VA construction 

management, a project that could have come in under $600 million 

has spiralled into a billion-dollar debacle that has tarnished the 

good faith of the veterans of Colorado, the hundreds of workers 

who labored to build that hospital, and honestly, the good faith of 

veterans across the country. The veterans of America are crying 

out, Enough is enough and demand better results. 

Good morning, Chairman Miller, Ranking Member Brown, and 

Members of the Committee. On behalf of our National Commander 

Mike Helm and the 2.4 million members of The American Legion, 

I want to say thank you for the scrutiny that you are applying to 

sorting out the unfortunate and unnecessary chaos with VA’s construction projects. The veterans of Colorado have waited for a replacement hospital since the late 1990s. Three VA secretaries made 

promises, but failed to deliver. Now, VA’s construction problems 

have spiralled into epic proportions, especially the Colorado replacement facility. 

The American Legion’s deputy director for healthcare, I have 

been an active participant in our organization’s System Worth Saving Task Force. Last year, as you know, the chairman of our VA&R 

commission testified on behalf of The American Legion at a field 

hearing in Denver which critically—where, when critical errors 

were taking place. 

There appears to be systemic problems with how VA manages 

their large construction projects. Let’s examine the big four 

projects. In Colorado, they broke ground in 2009 and the replacement facility is still incomplete and is hundreds of millions of dollars in overruns. In Orlando, they broke ground on August 22nd, 

2008, and they are hundreds of millions of dollars over budget and 

have missed deadlines after deadliness. In Las Vegas they broke 

ground in 2007 and after numerous delays the hospital was 

opened, but unfortunately needed millions of dollars in expansion 

because they couldn’t even meet basic needs like a proper ramp for 

EMS to drop off patients at their emergency room. In New Orleans, 

they broke ground on October 24th, 2008, and six years later, veterans are still waiting for their replacement facility to open. 

GAO said the average time overdue on these four projects is 35 

months and this is just an average. The average cost overruns are 

$366 million, again, this is just an average. Frankly, this is unacceptable. Other agencies and private sector organizations continue 

to build major projects across the nation, yet VA replacement on 

the Fitzsimons campus continues to be delayed while the costs continues to skyrocket. 


VACREP0180 with DISTILLER
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VA needs to complete their outstanding projects so veterans will 

no longer be required to use inadequate and outdated facilities. The 

American people want a first-rate healthcare system for veterans. 

You look at the internal planning process through the Strategic 

Capital Investment Planning Process and you will see that VA is 

trying to meet the needs of an expanding veterans population, but 

mistakes and mismanagement are crippling these projects and nobody seems to be held accountable. 

VA also needs to take a look, a long hard look, as how they are 

managing their construction projects because their results across 

the board are unacceptable. All options must be put on the table 

to ensure that no stone is unturned. Steps need to be taken to assure that future VA hospitals are planned, designed, and built 

within a transparent, accountable system that puts veterans first. 

You have projects in four states and who knows how many more 

are needed as VA expands to meet the needs of our 21st Century 

veterans. 

Falling behind schedule might be standard practice at VA, but 

you have to take—think about what that means. Behind schedule 

means veterans of Colorado, Florida and Louisiana are still asking, 

When is the waiting game going to end? The American Legion 

thanks the Committee for their close attention to the problems that 

veterans face accessing healthcare. The American Legion is working diligently and tirelessly to keep the focus on the VA hospital 

in Aurora, as well as other VA construction projects. 

After a decade of broken promises, American veterans, those who 

gave 100 percent of the defense of our nation are tired of promises 

and simply ask VA to build them a 21st Century world-class VA 

medical hospital and to get the job done now. After all, American 

veterans deserve better. 

[THE PREPARED STATEMENT OF ROSCOE BUTLER APPEARS IN THE

APPENDIX] 

The CHAIRMAN. Thank you, Mr. Butler. 

Mr. Kelly, you are recognized for five minutes. 

STATEMENT OF RAY KELLEY 

Mr. KELLEY. Mr. Chairman, thank you for inviting the Veterans 

of Foreign Wars. I am representing the men and women of the Veterans of Foreign Wars and our auxiliary at this hearing today. 

Over the past few years, it has been very apparent that VA’s 

ability to control costs and deliver major construction projects on 

time is and should be viewed as a great concern. Veterans are not 

being served when construction projects take months and years 

longer than expected to complete and the price tags inflate as time 

drags on. 

Last year, the House passed legislation that would improve VA’s 

major medical facility construction process. These improvements include using medical equipment planners, developing and using a 

project management plan, peer-reviewing all projects, creating and 

changing—creating a change order metric, and using a design-build 

process when possible. VA claims they have started using medical 

equipment planners. This practice will assist in reducing scheduling delays and cost overruns. To ensure VA’s construction process 


VACREP0180 with DISTILLER
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can be as efficient as possible, it is important that the other provisions are enacted. 

VA’s lack of standardized project management protocol has led to 

poor communication within VA and between VA and general contractors, which has led to delays and cost overruns. There have 

been cases where separate VA officials have provided contradictory 

orders to the general contractor. By developing and using a project 

management plan, all parties, at the onset of the project will have 

a clear understanding of the roles and authorities of each member 

of that project team. 

Construction peer excellence review is an important aspect of 

maintaining a high level of construction quality and efficiency. 

When used, these review teams are made up of experts in construction management who travel to project sites and evaluate the performance of the project team. While meetings provide an important 

feedback, a separate set of eyes on the project management plan 

to ensure the plan is in place to make the project come in on time 

and on budget. 

VA has historically relied on a design-bid-build project delivery 

system which, when entering into contracts to build major medical 

facility projects. With this model, an architect is selected to design 

a facility. The design documents are used to secure a bid, and then 

the successful contractor bid-holder builds the facility. Design-bidbuild projects often encounter disputes between the customer, in 

this case, VA, and the construction contractor. 

Because these contracts are generally firm, fixed price, based on 

a complete design, the construction contractor is usually responsible for cost overruns unless a change order is issued. This process 

can be adversarial because neither party wants to absorb the costs 

associated with the change and each change order can add months 

to the project completion date. 

A design-build project places the architectural engineering company and the construction contractor under one contract. Placing 

the architect as the lead from start to finish and having the prime 

contractor work side by side with the architect allows the architect 

to be an advocate to VA. Also, the architect and the prime contractor can work together early in the design phase to reduce the 

number of design errors. It also allows them to identify and modify 

the building plans throughout the project. While these initiatives 

work for improving future projects, the VFW believes a look back 

at all currently funded projects should take place to see what steps 

are needed to finish the nearly 50 partially funded, but not complete, major VHA construction projects. 

VA’s fiscal year 2015 budget submission showed that there was 

more than $6 billion available for 49 VHA projects through the end 

of fiscal year 2013. What the submission does not show is why 

some projects were initially funded years ago, but little to no 

progress has been made to complete them. Many of these projects 

have safety implications and provide specific services for spinal 

cord injuries and need to be set on course that will bring these 

projects to completion. 

VA’s Strategic Capital Plan, or SCIP, has been a great tool in 

identifying gaps and access utilization and safety, but if a clear 


VACREP0180 with DISTILLER
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plan is not in place to close these gaps, delays in care, safety risks 

and, an increased cost to close these gaps will continue. 

Mr. Chairman, this concludes my testimony. I will be happy to 

answer any questions the Committee has. 

[THE PREPARED STATEMENT OF RAY KELLEY APPEARS IN THE APPENDIX] 

The CHAIRMAN. Thank you very much, Ray. Mr. Coffman, you 

are recognized. 

Mr. COFFMAN. Thank you, Mr. Chairman. Mr. Wise, what are 

some of the key differences between how VA manages major medical facility construction projects compared to federal and private 

sector stakeholders responsible for similar projects? What are the 

likely effects of these differences? 

Mr. WISE. Well Mr. Coffman, two things stood out to us when we 

did the work for the April, 2013 report. One was, and I think has 

been discussed in panel one, the entry of medical equipment planners at the early part of the planning process. Both the Naval Facilities Engineering Command and the Army Corps of Engineers official said this is very important to them. These units work hand 

in glove in order to make sure that you have a parallel and symbiotic relationship between the people who are building the facility 

as well as those who are bringing in the equipment that the facility 

needs to house. Obviously those things need to be completely compatible, otherwise you have some disconnects if not the inevitable 

result is change orders, which add time and cost to the project. 

That brings me to my second point. Other with whom we spoke 

the change orders, also in both the public and private sector were, 

rather surprised at the amount of time that it took the VA to administer change orders. This was also discussed fairly thoroughly 

in the first panel. We saw VA change orders, that had taken up 

to a year to implement. This caused problems for the contractor because then he is waiting for payment while the process of winds 

its way through the Veterans Administration’s approval process. 

They have done a couple of things I think that may help in that 

process. They have raised the threshold a bit, up to $250,000 in 

some cases. They hired some additional attorneys who deal with 

the change order process. How this will work going forward we will 

see. But those are two things that really stood out when we did the 

research and the work in order to produce that report. 

Mr. COFFMAN. Okay. I think in your report you also reference 

that the Army Corps of Engineers has built similar projects for the 

Department of Defense on schedule and within budget. Am I correct in that? 

Mr. WISE. They have a track record of building a lot of medical 

facilities, that is true. 

Mr. COFFMAN. But on schedule and within budget? 

Mr. WISE. It was not in our scope to analyze USACE and 

NAVFAC projects regarding this timelines and adherence to budgets. 

Mr. COFFMAN. Okay. Mr. Kelley, in your testimony you rightly 

acknowledge that many of VA’s major construction projects were 

funded years ago but that very little progress has been made, giving rise to safety implications. What would you recommend VA do 


VACREP0180 with DISTILLER
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in the future to expedite its processes in order to avoid these same 

mistakes? 

Mr. KELLEY. There needs to be a prioritization of these. And the 

SCIP process does that. But then on the implementation side there 

seems to be a failing on that prioritization. So we have got nine of 

12 seismic correction facilities that are partially funded at some 

phase. Some of them have been funded since 2010 and no money 

has been spent on them. And we need to understand why that 

money has been allocated and no progress has been made. And 

should we have entered into that contract to begin with if we were 

not ready to start the project as soon as the contract was completed? What missing link is causing that wait? And what, is that 

money having to be repurposed to another program and now we 

are waiting for money to be repurposed so we can start it? There 

are a lot of questions on the timing of funding and where that 

funding is sitting. 

Mr. COFFMAN. Okay. Mr. Wise, the GAO report states that the 

problems experienced at the audited construction projects were representative of systemic problems throughout the VA. Could you 

elaborate on how these problems extend beyond just the facilities 

you assessed? 

Mr. WISE. Well if you look back at the three recommendations 

that we made they point, to systemic issues that have a broader 

impact. For example, one recommendation dealt with the lack of 

communication and the inability to pinpoint exactly who at the VA 

is responsible for what. We also recommended that VA implement 

steps to streamline the change order process. We saw that these 

are the kinds of issues that have broad implications in terms of 

being able to administer what are very complex and very expensive 

projects. 

Mr. COFFMAN. Very well. And so I think in your report you said 

that each of the hospitals under construction at that time, and I 

think there were four, I think over several hundred million dollars 

each, on average, over budget, and about three years behind schedule on average. Is that correct? And then would the Aurora situation be the worst one out of the four? 

Mr. WISE. Aurora had the most egregious overruns, both in 

terms of cost and delay. 

Mr. COFFMAN. Okay. Okay. Thank you, Mr. Chairman. I yield 

back. 

The CHAIRMAN. Thank you very much. Ms. Brown. Mr. Takano. 

Mr. TAKANO. Yes, Mr. Wise, you know before I came to Congress 

I served on a humble community college district board, and I was 

elected, and we had bonding authority that allowed 55 percent of 

the local voters to approve capital construction bonds. And, you 

know, suddenly my district was dealing with upwards of a $1 billion program after we leveraged the local, the money. It seemed to 

me that cost overruns, the change orders, would frequently come 

before my committee. My one, I am wondering where was Congress’ role in oversight? Is that any part of your recommendations 

as part of your GAO report? That somehow the oversight function 

of Congress, the subcommittee of this committee, should have been 

regularly informed about where things were with design, the design relationship with the contractor? I mean, how did this get out 


VACREP0180 with DISTILLER
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from, well you were saying that the DoD has a better track record 

within its own bureaucracy of managing the building of hospitals? 

Mr. WISE. Well—sorry, go ahead. 

Mr. TAKANO. How was it that, what, how could the accountability 

be tightened up here? 

Mr. WISE. Yes, it is, the relationship between the committee or 

the subcommittee and the Veterans Administration is not something I am privy to. But what I can say is that when we looked 

at the kind of activities going on in the Veterans Administration 

we saw that there were certainly a number of issues to do with the 

cost overruns and the delays that were extensive. And so it is fair 

to assume that in some kind of normal reporting process that this 

is something of interest to congress,. We make our recommendations obviously to the administration, to the federal agencies because we work for Congress. We are doing the work on behalf of 

the committee. So hopefully the work we do makes the committee 

more aware of the key issues enabling it to take positive action and 

work with the Veterans Administration to try to improve these 

projects and hopefully provide better services, more timely services, 

and cost effective services to the veteran community. 

Mr. TAKANO. I am just referencing my experience as a local public official managing taxpayer dollars, capital construction dollars, 

and the frequency with which we would have to get progress reports from the staff as the elected officials. I am just wondering 

how effective it is for an administration, a department like the VA, 

to be able to provide that sort of accountability. I am just wondering if we have staffed up our Oversight Subcommittee enough, 

given it enough resources, so that it is able to inject itself on a regular basis to manage these hundreds of millions of dollars. 

I am just astounded. I am trying to find enough money to fund 

graduate medical education. People do not know that we fund nearly 100 percent of the medical residencies in this country. And we 

are facing a shortage of doctors, both in the public sector and within the VA. And I am thinking about the hundreds of millions of dollars that we could have saved on these cost overruns to fund the 

education of these doctors. 

Mr. Chairman, I would ask whether or not we are funding our 

oversight function enough on this committee to be able to oversee 

what goes on in that department. I do not see how else we are 

going to be able to hold the department accountable without 

enough of our Oversight Committee being able to be able to review 

these projects and to make sure that the project management is 

adequate. 

The CHAIRMAN. Will the gentleman yield? 

Mr. TAKANO. I know you have a background in this area as well. 

The CHAIRMAN. If the gentleman will yield, yes. And we have 

asked for additional dollars. Last year we were given additional 

dollars by the Speaker. We have asked for additional budget. Ms. 

Brown and I have talked together, as has our staff, to hire additional forensic investigators in regards to computers and budgetary 

issues as it relates to these construction issues. So most definitely, 

our oversight role has been beefed up quite a bit since we took over 

this particular committee. 

Ms. BROWN. Just 30 seconds? 


VACREP0180 with DISTILLER
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Mr. TAKANO. I will yield. 

Ms. BROWN. Thank you. However, I do not think that we want 

to get into cost overruns. I have, in the Orlando situation, spent 

three hours with VA, but I also spent three hours with the contractor. So it is not just one party that is at fault. Did you do the 

research on the, Orlando facility and why it took so long to move 

forward? 

Mr. WISE. Well, madam I do recall in your statement you alluded 

to one of the major reasons that had resulted in the problems with 

Orlando i.e. several changes in the site location changed. 

Ms. BROWN. Whoever was in charge. 

Mr. WISE. I am sorry? 

Ms. BROWN. If the Democrats were in charge, it would move to 

one city. 

Mr. WISE. Right. 

Ms. BROWN. If the Republicans were in charge, it moved to another. So I mean, we need to take the politics out of building hospitals. In the end the Secretary should have the authority to decide 

what is in the best interests of the VA. I was able to pull all of 

the players together and we were able to move forward. You cannot 

just say that it is one thing that has caused these problems. It is 

the multiplicity. We have been part of the problem. For over 25 

years we were talking about a hospital in Orlando. It is ludicrous. 

We have the growth in Central Florida. We need that hospital up 

and operational and it will be, I hope, in my lifetime to be open 

in the next couple of months. 

I yield back. But the point I am making is that we can do our 

oversight, and we can do other investigations. But we do not need 

to get into the business of change orders. I mean, if so we need to, 

go to the administration. We have oversight to make sure they are 

doing what they are supposed to do. I yield back. 

Mr. TAKANO. Mr. Chairman, I—— 

The CHAIRMAN. The gentleman’s time has expired. 

Mr. TAKANO. Thank you. 

Ms. BROWN. I took his time. I am sorry. 

The CHAIRMAN. Again, you take mine, you take his. But, you 

know, I do not believe anybody on this committee can say that we 

have politicized anything within our purview. And I would say that 

this decision to put the facility where it is now was done under a 

different administration. And had it been a Republican administration at this point we would be going after them just like we are 

today. It is for the veterans of this country, not for a political reason. I need to go ahead and go on to—— 

Mr. TAKANO. Sir, if I could follow-up with you after the committee—— 

The CHAIRMAN. Yes, sir. 

Mr. TAKANO. Yes. 

The CHAIRMAN. Ms. Radewagen, do you have any questions that 

you would like to ask? Okay, thank you very much. Ms. Kuster. 

Ms. KUSTER. Thank you, Mr. Chair. I wanted to ask Mr. Wise 

about your examination and this comparison of the, particularly 

the Army Corps and their oversight of the DoD facilities, and 

whether, what recommendations you would have going forward for 

the VA? Or do you have an opinion as to whether or not we should, 


VACREP0180 with DISTILLER
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Congress should consider the Army Corps, because of their expertise, because of all their experience, supervising construction of 

large medical facilities at the VA going forward? 

Mr. WISE. That is a good question and an interesting question. 

It sounded like from what I heard on the first panel today that this 

is something that is on the table. So it certainly seems worthy of 

consideration. It is not something we have examined in any detail. 

But it appears that VA certainly is looking to the Army Corps for 

some of its expertise in helping it to resurrect the situation in Aurora and get it moving again. And perhaps that could be a model. 

It is something that the Deputy Secretary is certainly open to 

based on his testimony. I presume he will be consulting with the 

committee and others to make that determination. It does sound 

like they have gotten a number of Army Corps people working in 

the construction area in the OACL in the VA. So perhaps VA is beginning to adopt some of those methods that have been used by the 

Army Corps. 

Ms. KUSTER. That did sound encouraging, the hiring of people 

with this kind of expertise and this methodology of oversight for 

projects this size. And I am just wondering for our friends in the 

VSO community, Mr. Kelly and Mr. Butler, do you have an opinion, 

or does your organization have an opinion, about this notion of 

looking into the future now, particularly with, in relation to the reforms that had been passed, as to whether the VA should be creating such large hub facilities at such an expense? I am picking up 

on my colleague Mr. Takano’s testimony. We can all think of lots 

of great uses for these billions of dollars to provide healthcare 

across this great country. Do you have an opinion about this? 

About the focus on these large tertiary facilities? 

Mr. KELLEY. Yes, ma’am. I don’t think you can wholesale say 

that large facilities should go by the wayside, or that we should 

only use large facilities. You have to look case by case. Large metropolitan areas are going to have to have large hospitals that are 

veteran centric. But as you look around the country there are services that are underutilized within VA and we are building a facility 

and underutilizing a service just because we need to have that 

service. We need to start looking at public-private partnerships to 

fill those holes. The hub and spoke method that you were talking 

about, having a central area and then having areas outside of that 

are more convenient.—Working with partner hospitals that can 

provide a service that is just underutilized but needed in the community. There is no need to have on staff a cardiology staff if they 

are doing one or two heart surgeries a day, when across the street 

they are doing 20 or 30 and they have got the staff and the expertise to do that. Why are we spending resources on that when it 

could be put somewhere else for need within that facility? So VFW 

is open to looking at those public-private partnerships, developing 

new ways to do that. But I cannot say never build a large hospital 

again. 

Ms. KUSTER. Sure, yes. And I agree, we have a wonderful, at the 

White River Junction, Vermont, although right on the border so we 

consider it our facility in New Hampshire as well, they have a 

great relationship with Dartmouth Medical School. And that is 

what I am trying to, you know, not only is it expensive, the examVerDate Aug 31 2005 07:26 Feb 23, 2016 Jkt 000000 PO 00000 Frm 00046 Fmt 6633 Sfmt 6633 Y:\97-992.TXT PAT

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ple you gave about the cardiac surgery, it is not even safe in some 

circumstances if they are not doing the volume. So I, my time is 

up, but Mr. Butler, if you have anything to add? And I am not suggesting, by the way, that we do not build any more of these. But 

I just, more focus on getting the resources where they are needed. 

And I come from a rural district, it is not an urban center. 

Mr. BUTLER. I would say, agree that you have to look at it on 

a case by case basis. But the challenge for the VA is the average 

age of a VA medical center. You know, a lot of the facilities have 

outlived their life cycle. And so VA needs to invest and reinvest in 

their medical facilities, whether it is building a hub and spoke facility or expanding upon its other additional resources. The one 

thing that the American Legion does not support is that we do not 

support voucher out care. We do not support shutting down the VA 

system and turning the VA system into a voucher system. We support that the VA system is for American veterans and the VA 

should maintain its system of healthcare for our American veterans 

and continue to build upon what it already has. 

Ms. KUSTER. Absolutely. Thank you so much. I appreciate your 

service. Thank you. Mr. Chair, I yield back. 

The CHAIRMAN. Thank you. Mr. O’Rourke. 

Mr. O’ROURKE. Thank you, Mr. Chairman. To Mr. Wise, when we 

recently got a report back from the Office of the Inspector General 

on performance issues at the El Paso VA and we got it last month, 

we asked, our follow-up question to Dr. Day was what is the, of the 

128 parts of the system, which is the best performer? And his response was I cannot single out one, but those medical facilities that 

are affiliated with an academic institution perform far better than 

the average VA medical facility. So my question to you is why was 

the decision made to separate Denver from a medical school, and 

how did that contribute to some of the problems that you have uncovered in your report? 

Mr. WISE. To the first part of your question, I am not exactly 

sure why although I believe there were some issues about governance that the university and the VA were unable to resolve about 

how it would be run. The second part was about the contribution 

to the delay and overrun, right? 

Mr. O’ROURKE. Right. 

Mr. WISE. Yes, that was definitely a factor. Because once the 

original idea, of a shared facility, was off the table then you got 

into a situation where you needed to go back in to do redesign and 

then VA became responsible for a lot more costs than it had expected to share at the time. VA was absorbing a lot of standalone 

costs that were at that point rather unexpected. So all this resulted 

in numerous change orders, resulting in additional loss and delays. 

Mr. O’ROURKE. And that also happened in New Orleans, did you 

say? Or did someone mention—— 

Mr. WISE. Yes, there was also a situation in New Orleans—— 

Mr. O’ROURKE. Where it was affiliated and then the affiliation 

was separated? 

Mr. WISE [continuing]. Louisiana State University, LSU. 

Mr. O’ROURKE. Okay. 

Mr. WISE. It was a similar situation and partnership that was 

originally intended with an academic institution, also did not go 


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forward. And that also contributed to some of the delays and overruns in New Orleans. 

Mr. O’ROURKE. I will follow-up with the VA. I would be really interested in understanding why they made that decision to separate 

if in fact VA medical facilities affiliated with academic institutions 

outperform the average. Did the GAO, did you look at accountability for the mistakes made related to these facilities? 

Mr. WISE. Our parameters in this engagement were really to look 

at what happened and to try to identify the systemic issues that 

were behind it that caused it to happen, and try to identify some 

recommendations that would hopefully help mitigate it happening 

going forward. 

Mr. O’ROURKE. And I will say that I understand the scope of 

your study. But one of the systemic problems that we have is a culture that has not historically valued accountability. I am not speaking about current leadership. I fully believe that Secretary Gibson 

and Secretary McDonald and their team fully understand this and 

are trying to change the culture. But I would say that that has contributed to problems. And one of my follow-up questions to the VA, 

perhaps I will submit it for the record, is Secretary Gibson said 

those responsible for some of these mistakes were removed from 

their positions. And I do not know if that is a term of art, meaning 

that they were fired, or that they were transitioned into some other 

position within the VA. In other words, was there personal accountability for very grievous mistakes, where you are taking resources 

in a zero sum system away from potentially facilities in El Paso to 

pay for facilities in Aurora, Colorado, and you have veterans in El 

Paso who are not getting the service they need. That is the urgency 

behind the question. 

And I realize I only have a minute left. And so to follow-upon Ms. 

Kuster’s question for Mr. Butler and Mr. Kelly, taking out the extremes which is, you know, continuing with the status quo, or as 

you said, Mr. Butler, privatizing, voucherizing VA medical care, let 

us just assume we are not going to do either of those. After mistakes of this proportion, what would your membership be open to 

in terms of a different system? In terms of having for example 

what I call the Summers model, core competencies delivered at a 

world class level, very accessible out of the VA, and then perhaps 

non-core competencies, diabetes, getting your teeth fixed, having 

something not related to your service, is not performed at the VA 

but somehow managed out of there. I do not know if you, Mr. Butler or Mr. Kelley, could quickly comment on that? 

Mr. BUTLER. Well I think for the American Legion our resolution 

supports the VA remaining intact as a system of healthcare for 

American veterans. We support that VA can refer patients out. We 

supported the VACA with the provision that a sunset provision be 

added into the VACA. We, support veterans when they need to go 

outside the VA system to obtain their care, then we surely understand that need and that requirement. But our position is that the 

VA system is a VA system for American veterans and that system 

should be maintained. 

Mr. O’ROURKE. Mr. Chair, could I have 20 seconds for Mr. 

Kelley. 

The CHAIRMAN. You may. 


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Mr. O’ROURKE. Thank you. 

Mr. KELLEY. I think the goal is to provide care for veterans that 

is conducive for them individually. We have found under VACA, 

under the Choice Act, that we have done a survey of our membership and pretty close to 60 percent of them, even when they had 

a choice, stayed with VA. They wanted to wait a little longer because that is where their continuum of care was. So we need to 

look at all these factors when we start making decisions. Yes, there 

are areas where veterans are, that they are not being served properly by VA. And opening up other opportunities outside of VA, 

whether it is short term or long term, need to be looked at. Specialty services that, you said diabetes care, may be an area where 

it is more suitable for that to be contracted out in certain areas. 

But we cannot, again, have one solution to be the fix. We need to 

look at every opportunity to improve the delivery of care for veterans. 

Mr. O’ROURKE. Thank you. Thank you, Mr. Chair. 

The CHAIRMAN. All right, everybody. Look outside, it is snowing. 

Heavily. Even for a Coloradan. Ms. Brown. 

Ms. BROWN. Thank you. I guess I am stuck here so I can just 

go ahead and ask my questions now. Mr. Butler, I have a question 

for you. I think my position is closer to yours. But we do know that 

there are some financial restraints that we have. I guess my question is in some areas, rural areas, not addressing healthcare but 

cemetery. In some areas, I do not know whether it makes sense to 

build a full-fledged cemetery. Maybe we could do something, partner with the local community to expand it existing cemeteries. And 

maybe in some rural areas addressing healthcare we could, do 

some partnerships in order to provide, a wing in a hospital for veterans. I mean, there is no one answer. What would you all be open 

to? 

Mr. BUTLER. Well I think your, under your existing authorities 

they allow for a lot of those opportunities, what you just mentioned. So under the current authority for healthcare you have your 

fee basis authority, you have the new legislation that was introduced through VACA, you have also PC3. The American Legion 

supports all of those options. So I would agree that it is not one 

option, that fixes everything. You have to look at all of the available opportunities and determine what is best for American veterans. And that is the key. What is best for American veterans, 

and to ensure that their needs are being taken care of and in a system that is designed for veterans. And if VA refers those veterans 

outside because they don’t have the resources or service to provide 

that care then that is fine as long as VA has the appropriate funding to meet the needs of veterans. 

Ms. BROWN. And Mr. Kelley. 

Mr. KELLEY. I am with Mr. Butler on this in that there is no 

cookie cutter solution. Veterans in rural Montana need to be 

thought of differently than in downtown Chicago. And those veterans’ expectations of delivery of care are different as well. So we 

need to take that into account. I think there is an understanding 

if you live in a rural remote area that life is a little tougher, and 

it is going to be a little tougher for you to get that care and there 

is some acceptance of that. But we need to look at ways to prevent 


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in the middle of a snowstorm allowing people, or insisting on people, driving several hundred miles for just follow-up care who could 

be seen in a community when, and as Mr. Butler said, those authorities are there. We need to exercise them. We need to, we need 

to not make that the exception in some cases and make it the rule 

until we have suitable solutions in place. 

Ms. BROWN. Well you know, it was amazing because I am pretty 

old school that a lot of the veterans like the telemedicine, wherein 

they can do a lot from home and then if they need to come, they 

come in. What is your opinion of telemedicine? 

Mr. KELLEY. Absolutely. We have veterans who swear by it, just 

as you said. And even within a community outpatient clinic, I will 

use myself as an example. I went in for my annual physical. My 

primary care saw a mole on my back that she didn’t like. She said, 

do you have a few minutes? Let’s have somebody take a picture of 

it, we’ll send it up to Baltimore. They will look at it and if you need 

to be seen, you will be seen. I did not have to go to Baltimore for 

a second appointment. That was sent up there. Within a few days 

they came back and said, no, it’s okay. So it saved me a trip. It 

saved VA resources. And quality healthcare was served. So we 

need to look at all avenues again. 

Ms. BROWN. Mr. Butler. 

Mr. BUTLER. I would agree. I was at a VA hospital in Georgia 

where they had a virtual lab, wherein veterans were being treated 

in their OR and—or, yes, not OR, but in their ICU. And the doctor 

was somewhere else at another place monitoring the veterans. So 

there are many advances in modern medicine that we need to bring 

all together to ensure that all of the advanced technologies out 

there that are made available are being used to treat our American 

veterans. 

Ms. BROWN. And Mr. Wise, in closing thank you for your testimony. As I said, it is many issues. For example, I know a lot more 

about the New Orleans situation then I do Denver. I have been 

there several times. I was very instrumental in making sure that 

that particular New Orleans project moved forward because the 

hospital there was wiped out completely by Katrina. 

Mr. WISE. Right. 

Ms. BROWN. And so, you know, in visiting the area I knew it was 

not any other facilities nowhere near for the veterans to have the 

services that they needed. So it was going to be a joint between 

them and the universities. Part of the problem was the Governor, 

the Mayor, I mean, it was a mess. So I am happy that it is close 

to ending, coming to be open. And maybe we can find exactly when 

it is going to be open. Not you, I know. But the Secretary. 

Mr. WISE. Okay. 

Ms. BROWN. Yes. Thank you, though. 

The CHAIRMAN. Thank you very much, Ms. Brown. I appreciate 

the good work and the comments. I have one follow-up question. 

Mr. Wise, I think in your written testimony you stated, actually it 

was your updated report of 2015, you reached out to VA and asked 

them for an estimated cost, final cost for the Orlando project and 

you were not given that cost estimate. At least, that is what I have 

been—— 


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Mr. WISE. I think that was for the Denver project, that reference, 

no? I believe? 

The CHAIRMAN. It is the Denver project? 

Mr. WISE. That is the one we could not get final, well the same 

as what Mr. Gibson said this morning—— 

The CHAIRMAN. Yes, I just was asking for Ms. Brown’s hospital. 

I was under the impression that it was the Orlando project, but I 

apologize. And with that, the one thing I think we can all agree, 

the way healthcare is delivered today is much different than it was 

delivered years ago. The idea of building massive hospitals at over 

$1 billion apiece is not a sustainable model. We have to look at 

other ways and options. Nobody on this committee is talking about 

dismantling the VA when we talk about providing choice to people 

on their healthcare. And I believe that we all want to work together to make sure that the veterans get the healthcare that they 

have earned, when they need it, where they need it, and that what 

they get is quality healthcare. So with that, we will adjourn. 

[Whereupon, at 1:15 p.m., the committee was adjourned.] 


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APPENDIX 

PREPARED STATEMENT OF JEFF MILLER, CHAIRMAN

Good Morning. This hearing will come to order. 

I would like to welcome everyone to today’s hearing titled, ‘‘Building a Better VA: 

Assessing Ongoing Major Construction Management Problems Within the Department.’’ 

The purpose of this hearing is to address continued problems occurring in VA’s 

persistent construction delays and cost overruns involving its construction of the Replacement Aurora, Colorado VA Medical Center. The VA has been found by the Civilian Board of Contract Appeals (CBCA) to have breached its contract with its 

prime contractor on this project and the facility could eventually cost as much as 

$1.4 billion to complete. 

This Committee has held numerous hearings in the last few years involving VA’s 

inadequate management of its construction projects, each of those hearings being 

based on considerable evidence. ‘‘We have come to a point in VA’s major construction program where the administrative structure is an obstacle that is not effectively supporting the mission. As a result, our veterans are the ones who are left 

without services and our taxpayers are the ones who are left holding the check or 

writing a new one.’’ That was part of my opening statement during our March 27, 

2012, hearing on VA major construction, but it seems nothing has changed nearly 

three years later, despite warnings and corrective suggestions being presented from 

inside and outside the Department. 

Based on the lengthy Committee investigations that gave rise to these hearings, 

the Committee asked the GAO to audit VA major construction projects. Their report, 

issued in April 2013, found that on average, the hospital construction projects reviewed were about three years late and $366 million over budget. Every time we 

have asked VA about those results, it has argued that it is not delayed or over budget based on its own accounting. 

Further, when we held a hearing on the Aurora VAMC construction project in 

April 2014, the tenor of VA responses was that it was the contractor’s fault that 

the project was not completed and that the project was still operating within its 

budget. I have a feeling that the VA will not be able to cling to those illusions any 

longer. 

On December 9, 2014, the CBCA found that the VA materially breached its contract with its prime contractor on the Aurora VAMC construction project, Kiewit 

[Kee-Wit]-Turner (K–T). It found that VA did not provide a design that could be 

built within its stated budget, and it was also the VA’s fault to the point that the 

CBCA said K–T would be well within its rights to simply walk off the job. And that 

is exactly what it did. 

Now, VA is left scrambling to make K–T whole enough to get back to work. VA 

may even have to come back to Congress to ask for perhaps up to 600 million more 

taxpayer dollars to fix problems the Committee has brought to light year after year 

only to be ignored by the VA. 

I visited the Aurora construction site Monday with Congressman Coffman to see 

again in-person what is taking so long and why this project has been a veritable 

money pit for the last several years. Once completed, this facility will be wellequipped to provide the best possible healthcare available, which is exactly what the 

veterans served by every VA facility deserve. It is long past time for these projects, 

marred by bureaucratic ineptitude, to be complete. I look forward to hearing from 

the VA, and the other witnesses here today, on how we can correct the abysmal 

state VA’s major construction program has been in for years. 

With that, I now yield to Ranking Member Brown for any opening remarks she 

may have. 

f 

PREPARED STATEMENT OF CORRINE BROWN, RANKING MEMBER

Thank you, Mr. Chairman, for holding this hearing today. From day one, I have 

been a member of this Committee, and I am pleased, after 22 years, to be the Ranking Democrat. I look forward to working with you and all the other members to help 

our nation’s veterans. 

We all agree that providing veterans timely, quality healthcare in a safe environment is a focus of this Committee. The VA provides the best care and treatment 

for veterans in the world and we need to make sure that continues. 


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One critical element of this focus is the manner in which VA provides veterans 

access to healthcare. 

For many years, VA has structured itself around a ‘‘hub-and-spoke’’ system where 

clinics and other smaller facilities feed into large medical centers. 

One of the discussions this Committee must begin to have is whether this structure is the best structure for VA healthcare looking into the future and again, looking down the road, what steps do we begin to take to ensure that veterans have 

reasonable access to the healthcare they need. 

This Committee has authorized, and Congress has appropriated, billions of dollars 

for VA construction programs over the past decade. The question we must ask ourselves is are we getting what we paid for, and has access improved for our veterans. 

We must ask ourselves what must be done to make the VA construction program 

function as we intend it to. What must we do to make sure that the facilities we 

are building today do not come in over budget and late. If we do not do this we 

run the risk of building facilities that may already be obsolete when the doors are 

open and are merely expensive memorials and little else. 

For nearly two decades the VA was out of the major facility business. By not 

building any major medical centers in the 20 years preceding authorization of the 

Las Vegas, Orlando, Denver and New Orleans Medical Centers, has the VA lost the 

ability to manage a construction portfolio? Do we need to expect better management 

and more effective processes? What are the barriers currently in place that make 

it difficult for VA to come in on time and within budget? Should we look outside 

the VA for expertise? 

From my personal experience with the years of delay in Orlando, and the issues 

in Denver, it seems the VA continues to struggle with construction planning and 

execution. What we need is to work together with the stakeholders to come up with 

a viable solution. 

One possible solution is for the VA to work closer with the private sector and establish relationships with hospitals. One idea might be that VA use a ward in an 

existing hospital, bring it up to VA standards and then have a presence in that community. Facilities, resources and personnel could be shared, which would reduce 

costs for everyone involved and improve access. 

Mr. Chairman, I am looking forward to hearing from the VA not only what they 

are going to do to address past problems and delays in the construction process, but 

other ideas on how they can ensure these problems actually get fixed and are not 

repeated in the future. 

Thank you Mr. Chairman and I yield back my time. 

f 

PREPARED STATEMENT OF MR. SLOAN D. GIBSON

Good morning, Mr. Chairman and Members of the Committee. I am here this 

morning to update the Committee on the status of the construction of the replacement medical center in Denver. Joining me today is Mr. Dennis Milsten, Director 

for the VA Construction and Facilities Management Office of Operations. 

The Department’s main priority regarding the Denver project is to complete this 

facility without further delay, and to do that while delivering the best possible value 

to taxpayers given the difficult circumstances that have occurred. Our commitment 

to completing this project intended to serve 390,000+ Colorado Veterans and their 

families has never wavered, and current VA medical facilities and programs continue to ensure that no Veteran or their families goes unserved. 

We are working aggressively to rebuild trust, improve service delivery, and pursue longer-term excellence and reform. This includes initiatives like My VA, which 

involves building a world-class, customer-focused, Veteran-centered organization, 

and strengthening the efficiency and effectiveness of our array of support services. 

Completion of the Denver replacement medical facility is important to improving 

access to care and services, and I again apologize for the delays that have occurred. 

Let me review where we are on this project. 

The Department was notified on December 9, 2014, of the decision by the Civilian 

Board of Contract Appeals in favor of the construction contractor, Kiewit-Turner, 

thus allowing it the option to stop work. VA immediately contacted the contractor 

to determine a course of action to continue construction to complete the facility. I 

personally met with Kiewit-Turner leadership to forge a way ahead that would 

avoid the delay and disproportionate costs of stopping and re-starting construction 

activity immediately ahead of the holiday season. 

VA reached an interim agreement on December 17, 2014, that was subsequently 

signed on December 22, 2014. As part of the interim contract, the U.S. Army Corps 


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of Engineers (USACE) is on site to provide technical and management advice. This 

will also allow USACE the time to review the specifics of the project and formulate 

the final plans to negotiate and administer a long-term agreement for construction 

completion. 

We have undertaken a comprehensive review of VA’s major construction program 

and have taken numerous actions to strengthen and improve execution of our ongoing major construction projects. With the acceptance and closure of the April 13, 

2013, Government Accountability Office report recommendations and the implementation of the Construction Review Council recommendations, VA has significantly 

changed the way it conducts business, but more work remains to be done. 

To help ensure that previous challenges are not repeated and to lead improvements in the management and execution of our capital asset program as we move 

forward, we will continue to focus on these lessons learned: 

•Integrated master planning to ensure that the planned acquisition closes the 

identified gaps in service and corrects facility deficiencies. 

•Requiring major medical construction projects to achieve at least 35 percent 

design prior to cost and schedule information being published and construction 

funds requested. 

•Implementing a deliberate requirements control process, where major acquisition milestones have been identified to review scope and cost changes based on 

the approved budget and scope. 

•Institutionalizing a Project Review Board (PRB)—VA’s Office of Acquisition, 

Logistics, and Construction worked with USACE to establish a PRB for VA that 

is similar to the structure at the USACE District Offices. The PRB regularly 

provides management with metrics and insight to indicate if/when the project 

requires executive input or guidance. 

•Using a Project Management Plan—outlines for accomplishing the acquisition 

from planning to activation to ensure clear communication throughout the 

project. 

•Establishment of VA Activation Office Ensures the integration of the facility 

activation into the construction process for timely facility openings. 

•Conducting pre-construction reviews—Major construction projects must undergo a ‘‘constructability’’ review by a private construction management firm to 

review design and engineering factors that facilitate ease of construction and 

ensure project value. 

•Integrating Medical Equipment Planners into the construction project 

teams—Each major construction project will employ medical equipment planners on the project team from concept design through activation. 

These improvements are being applied to the 53 on-going major construction 

projects and our other major medical center construction projects, including the Orlando replacement facility, where construction is scheduled to be completed at the 

end of February, and our New Orleans replacement facility, which is currently on 

schedule, and is anticipated to be completed in the fall of 2016. 

In the past five years, VA has delivered 75 major construction projects valued at 

over $3 billion that include the new medical center complex in Las Vegas; cemeteries; polytrauma rehabilitation centers; spinal cord injury centers; a blind rehabilitation center; and community living centers. This is not to diminish our concerns 

over the mistakes that led to the current situation on the Denver project, but only 

to remind that we have successfully managed numerous projects through our major 

construction program. VA takes full responsibility for the situation in Denver and 

we will continue to review our major construction program and the details of this 

project to improve our performance. In addition, as identified in section 201 of the 

Veterans’ Access, Choice, and Accountability Act of 2014, VA’s capital management 

program will undergo an independent assessment, which will be provided to you 

within 60 days of its conclusion. 

In closing, each day, VA is moving toward its goal of improving and streamlining 

our processes to increase access to our Veterans and their families. I am personally 

committed to completing the Denver project without further delay and to do that 

while delivering the best possible value to taxpayers given the difficult circumstances that have occurred. Bottom line: We want to do what is right for Colorado Veterans and to get the Denver medical facility back on track in the most effective and cost efficient way. 

This committee has been a strong and supportive advocate for Veterans’ 

healthcare, and VA will continue its efforts to be transparent about the construction 

of the Denver replacement facility. 


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Mr. Chairman, this concludes my statement. Thank you for the opportunity to testify before the Committee today. My colleague and I would be pleased to respond 

to questions from you and Members of the Committee. 


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PREPARED STATEMENT OF RAYMOND C. KELLEY

Mr. Chairman, Ranking Member and Members of the Committee: 

On behalf of the 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 regarding the Department of Veterans Affairs’ (VA) management of 

major construction projects. 

Over the past few years it has become very apparent that VA’s ability to control 

costs and deliver major construction projects on time is and should be viewed as a 

great concern. Veterans are not being served when construction projects take 

months or years longer than expected to complete and the price tags inflate as time 

drags on. 

Last year, the House passed legislation that would improve VA’s major medical 

facility construction process. These improvements include: using medical equipment 

planners, developing and using a project management plan, peer reviewing all 

projects, creating a change-order metric, and using a design-build process when possible. 

VA claims they have started using medical equipment planners. This practice will 

assist in reducing scheduling delays and cost overruns. To ensure VA’s construction 

process can be as efficient as possible, it is important the other provisions are enacted. 

VA’s lack of standardized project management protocol has led to poor communication within VA and between VA and the general contractor has also led to 

delays and cost over-runs. There have been cases identified where separate VA officials have provided contradictory orders to the general contractor, where one VA 

employee authorized the continuation or start of a new phase of building, while another VA employee gave the order not to continue or start a particular phase. This 

lack of VA project management coordination led to a portion of the Orlando, Florida 

facility to be built then removed. 

By developing and using a project management plan, all parities at the onset of 

the project will have a clear understanding of the roles and authorities of each member of the project team. Included in the plan will be clear guidance on communication, staffing, cost and budget, as well as change-order management. 

Construction peer excellence reviews are an important aspect of maintaining a 

high level of construction quality and efficiency. When used, these review teams are 

made up of experts in construction management who travel to project sites to evaluate the performance of the project team. These meetings provide important feedback—a separate set of eyes—on the project management plan to ensure a plan is 

in place to make the project come in on time and on budget. 

VA has historically relied on the design-bid-build project delivery system when entering into contracts to build major medical facility projects. Sixty percent of current 

VA major medical facility projects use design-bid-build. With this model, an architect is selected to design a facility, the design documents are used to secure a bid, 

and then the successful contract bid holder builds the facility. 

Design-bid-build projects often encounter disputes between the costumer—VA in 

this case—and the construction contractor. Because these contracts are generally 

firm-fixed-price, based on the completed design, the construction contractor is usually responsible for cost overruns, unless VA and the contractor agree on any needed 

or proposed changes that occur with a change of scope, unforeseen site condition 

changes or design errors. VA and the contractor negotiate these changes through 

change orders. This process can become adversarial, because neither party wants to 

absorb the cost associated with the change, and each change order can add months 

to the project completion date. 

A design-build project teams the architectural/engineering company and the construction contractor under one contract. This method can save VA up to six months 

of time by putting the design phase and the construction performance metric together. Placing the architect as the lead from start to finish, and having the prime 

contractor work side-by-side with the architect, allows the architect to be an advocate for VA. Also, the architect and the prime contractor can work together early 

on in the design phase to reduce the number of design errors, and it also allows 

them to identify and modify the building plans throughout the project. 

While these initiatives will work to improve future projects, the VFW believes a 

look back at all currently funded major construction projects should take place to 

see what steps may be needed to finish the nearly 50 partially funded but not completed major Veterans Health Administration (VHA) construction projects. 

VA’s FY 2015 Budget Submission shows there was more than $6 billion available 

for 49 VHA projects through the end of FY 2013. What the submission does not 

show is why some projects were initially funded years ago, but little to no progress 


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has been made to complete them. Many of these projects have safety implications 

or provide specific services for spinal cord injuries and need to be set on a course 

that will bring these projects to completion. 

VA’s Strategic Capital Investment Plan (SCIP) has been a great tool in identifying 

gaps access, utilization and safety, but if a clear plan is not in place to close these 

gaps, delays in care, safety risks and the increased cost to close these gaps will continue. 

Mr. Chairman, this concludes my testimony. I will be happy to answer any questions you or the Committee members may have. 

Information Required by Rule XI2(g)(4) of the House of Representatives 

Pursuant to rule XI2(g)(4) of the House of Representatives, VFW has not received 

any federal grants in Fiscal Year 2014, nor has it received any federal grants in 

the two previous Fiscal Years. 

The VFW has not received payments or contracts from any foreign governments 

in the current year or preceding two calendar years. 


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