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85–871 2014

BUILDING VA’S FUTURE: CONFRONTING PERSISTENT CHALLENGES IN VA MAJOR CONSTRUCTION AND LEASE PROGRAMS 

HEARING 

BEFORE THE

COMMITTEE ON VETERANS’ AFFAIRS 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED THIRTEENTH CONGRESS 

FIRST SESSION 

WEDNESDAY, NOVEMBER 20, 2013 

Serial No. 113–46 

Printed for the use of the Committee on Veterans’ Affairs 

( 

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COMMITTEE ON VETERANS’ AFFAIRS 

JEFF MILLER, Florida, Chairman 

DOUG LAMBORN, Colorado 

GUS M. BILIRAKIS, Florida 

DAVID P. ROE, Tennessee 

BILL FLORES, Texas 

JEFF DENHAM, California 

JON RUNYAN, New Jersey 

DAN BENISHEK, Michigan 

TIM HUELSKAMP, Kansas 

MARK E. AMODEI, Nevada 

MIKE COFFMAN, Colorado 

BRAD R. WENSTRUP, Ohio 

PAUL COOK, California 

JACKIE WALORSKI, Indiana 

MICHAEL H. MICHAUD, Maine, Ranking 

CORRINE BROWN, Florida 

MARK TAKANO, California 

JULIA BROWNLEY, California 

DINA TITUS, Nevada 

ANN KIRKPATRICK, Arizona 

RAUL RUIZ, California 

GLORIA NEGRETE MCLEOD, California 

ANN M. KUSTER, New Hampshire 

BETO O’ROURKE, Texas 

TIMOTHY J. WALZ, Minnesota 

JON TOWERS, 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 

November 20, 2013 

Page 

Building VA’s Future: Confronting Persistent Challenges In VA Major Construction And Lease Programs ............................................................................ 1 

OPENING STATEMENTS 

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

Prepared Statement of Chairman Miller ........................................................ 27 

Hon. Michael H. Michaud, Ranking Minority Member ........................................ 2 

Prepared Statement of Hon. Michaud ............................................................ 27 

Hon. Corrine Brown, U.S. House of Representatives, Prepared Statement 

only ........................................................................................................................ 28

WITNESSES 

Linda Halliday, Assistant Inspector General for Audits and Evaluations ......... 2 

Prepared Statement of Ms. Halliday .............................................................. 28 

Accompanied by: 

Maureen Regan, Counselor to the Inspector General, Office of the Inspector General, U.S. Department of Veterans Affairs 

Llyod Caldwell, P.E., Director of Military Programs, U.S. Army Corps of 

Engineers .............................................................................................................. 4 

Prepared Statement of Mr. Caldwell .............................................................. 33 

Glenn D. Haggstrom, Principal Executive Director, Office of Acquisitions, 

Logistics, and Construction, U.S. Department of Veterans Affairs ................. 5 

Prepared Statement of Mr. Haggstrom .......................................................... 36 

Accompanied by: 

Stella Fiotes, Executive Director, Office of Construction and Facilities 

Management, U.S. Department of Veterans’ Affairs 

STATEMENT FOR THE RECORD 

Veterans of Foreign Wars ....................................................................................... 39 

Disabled American Veterans .................................................................................. 41 

The American Legion .............................................................................................. 46 

QUESTIONS FOR THE RECORD 

Letter and Questions From: HVAC, To: VA .......................................................... 48 

Responses From: VA, To: HVAC ............................................................................ 51 

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BUILDING VA’S FUTURE: CONFRONTING PERSISTENT CHALLENGES IN VA MAJOR CONSTRUCTION AND LEASE PROGRAMS 

Wednesday, November 20, 2013 

U.S. HOUSE OF REPRESENTATIVES, 

COMMITTEE ON VETERANS’ AFFAIRS, 

Washington, D.C. 

The Committee met, pursuant to notice, at 9:38 a.m., in Room 

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

the Committee] presiding. 

Present: Representatives Miller, Lamborn, Bilirakis, Roe, Flores, 

Denham, Runyan, Benishek, Huelskamp, Coffman, Wenstrup, 

Cook, Walorski, Michaud, Brown, Brownley, Titus, Kirkpatrick, 

Ruiz, Negrete McLeod, Kuster, O’Rourke, and Walz. 

Also present: Representative Mica. 

OPENING STATEMENT OF CHAIRMAN MILLER 

The CHAIRMAN. The Committee will now come to order. Welcome 

to today’s Full Committee hearing, Building VA’s Future: Confronting Persistent Challenges in VA’s Major Construction and 

Lease Programs. 

As some of you may know, in just about an hour we are going 

to recognize 33 Native American tribes and bestow the Congressional Gold Medal upon the heroic and selfless Native American 

Code Talkers who provided invaluable secure communication to Allied powers during World Wars I and II. Their courage, dedication, 

and honorable service enabled countless lives to be saved and victory to be done. 

In the interest of conducting today’s business in sufficient time 

to allow both Committee Members and members of the audience 

today to participate in honoring and celebrating these brave men 

and women, I will submit my opening statement for the record. 

However, before I yield to the Ranking Member I do want to note 

that we have just authorized 27 major medical facility leases per 

the department’s request for the fiscal years 2013 and 2014. At today’s hearing we will address serious deficiencies in VA’s planning, 

design, and construction of lease projects that were authorized in 

2009. VA should be on notice that the approval of H.R. 3521 in no 

way holds the department harmless for the mismanagement of 

major construction and facility leases that continues today. Moving 

forward I expect the department to take immediate corrective actions to address the serious issues that have plagued the construction and the leasing programs so that the important projects that 

we have just authorized do not experience the same delays and cost 

overruns we have seen in the past. And now I yield to our Ranking 

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Member Mr. Michaud of Maine for any opening statements that he 

may have. 

[THE PREPARED STATEMENT OF CHAIRMAN MILLER APPEARS IN THE

APPENDIX]

OPENING STATEMENT OF HON. MICHAEL H. MICHAUD 

Mr. MICHAUD. Thank you, Mr. Chairman. I would ask unanimous consent my opening remarks be submitted for the record. 

[THE PREPARED STATEMENT OF HON. MICHAEL MICHAUD APPEARS

IN THE APPENDIX]

The CHAIRMAN. Without objection. 

Mr. MICHAUD. I yield back the balance of my time. 

The CHAIRMAN. Thank you very much. 

First I want to welcome our first and only panel of witnesses 

today. Thank you for coming. Joining us from the VA Inspector 

General is Linda Halliday. If you would, please come forward? The 

Assistant Inspector for Audits and Evaluations, Ms. Halliday is accompanied by Maureen Regan, Counselor to the Inspector General. 

We are also joined by Lloyd Caldwell, the Director of Military Programs, for the U.S. Army Corps of Engineers. From the VA we are 

joined by Glenn Haggstrom, the Principal Executive Director for 

the Office of Acquisitions, Logistics, and Construction. Mr. 

Haggstrom is accompanied by Stella Fiotes, the Executive Director 

of the Office of Construction and Facilities Management. Thank 

you all for being here today. Ms. Halliday, we will begin with you. 

You may proceed with your testimony. You are recognized for five 

minutes. 

STATEMENTS OF LINDA HALLIDAY, ASSISTANT INSPECTOR 

GENERAL FOR AUDITS AND EVALUATIONS, OFFICE OF THE 

INSPECTOR GENERAL, U.S. DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY MAUREEN REGAN, COUNSELOR TO 

THE INSPECTOR GENERAL, OFFICE OF THE INSPECTOR 

GENERAL, U.S. DEPARTMENT OF VETERANS AFFAIRS; 

LLOYD CALDWELL, P.E., DIRECTOR OF MILITARY PROGRAMS, U.S. ARMY CORPS OF ENGINEERS; AND GLENN D. 

HAGGSTROM, PRINCIPAL EXECUTIVE DIRECTOR, OFFICE OF 

ACQUISITIONS, LOGISTICS AND CONSTRUCTION, U.S. DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY STELLA FIOTES, EXECUTIVE DIRECTOR, OFFICE OF CONSTRUCTION AND FACILITIES MANAGEMENT, U.S. DEPARTMENT OF 

VETERANS AFFAIRS 

STATEMENT OF LINDA HALLIDAY 

Ms. HALLIDAY. Mr. Chairman and Members of the Committee, 

thank you for the opportunity to testify today on the results of VA 

Inspector General’s work related to VA’s construction and lease 

programs. With me today is Ms. Maureen Regan, the Counselor to 

the Inspector General and the Director of the IG’s Office of Contract Review. 

OIG reviews of VA’s minor construction program, health care 

center leasing and activation process, and selected major construction process have disclosed a pattern of poor oversight, ineffective 

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planning, and mismanagement of capital assets in VA. We reported 

in 2012 that VA has not effectively managed the capital asset planning process to ensure minor construction projects are not changed 

significantly after approval, or that leased facilities are the right 

size and in the right location to ensure they are fully utilized. In 

our 2012 review of VA’s minor construction program we found that 

VHA had integrated the design and construction of seven of 30 

minor construction programs into three combined projects, which 

the exceeded the minor construction spending limitation of $10 million. Three other projects of the 30 we reviewed were inappropriately supplemented with medical facility funds, also known as nonrecurring maintenance funds. 

These projects had little if any project planning or oversight. The 

improper mixing of minor construction with NRM funding was due 

to premature approval of poorly planned and inadequately developed contracts for medical facility design and construction. 

To address the Committee’s interest in the management of VA’s 

health care center lease procurement process, our review found no 

health care centers had been built despite VA’s original target completion of June, 2012. Congress authorized approximately $150 million for seven HCC facility activations. We also reported that VA 

could not provide accurate information on HCC spending into April, 

2013 because central cost tracking was not in place to ensure the 

transparency or accuracy of reporting all HCC expenditures. 

Further, the review of an anonymous complaint received in 

March, 2013 involving the lease for the Butler, Pennsylvania 

Healthcare Center led to the cancellation of the lease. 

We noted instances where facilities were leased and constructed, 

and then stood empty and underutilized. And some of VA’s construction projects, although they were properly authorized, were 

executed over budget and delivered well past their anticipated completion date. 

To serve veterans in both New Orleans, Louisiana, and Orlando, 

Florida, VA is constructing two new medical centers. Our review of 

the financing and budgeting for the construction of the medical 

center in New Orleans found nothing substantially wrong. However, we noted excessive delays and slippage. Most of it was due 

to the delivery of the site from the City of New Orleans, and the 

need to remediate the hazardous substances identified after the 

site was transferred to and accepted by VA. To mitigate the construction delays VA was adjusting the construction activities to 

meet the completion deadline. In the VA Medical Center in Orlando, we reviewed the contract change orders amounting to over 

$9.6 million. After a thorough review we questioned about 30 percent of these costs. Lack of supporting documentation, inclusion of 

costs not associated in the work ordered, and overstatement of proposed costs were quickly brought to the attention of the VA contracting officer and negotiations were held to ensure VA was going 

to pay only what it was owed. 

Our reports have motivated VA to review its minor construction 

policies and procedures. VA now ensures its construction programs 

managers better track and monitor project timeliness and cost as 

well as routinely compare approved designs with project scope to 

better manage changes. But given the practices in the past, such 

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as ineffectively monitoring projects, untimely executive of leases, 

and inaccurately calculating program costs and savings, VA is not 

recognizing the full potential of its construction program. VA needs 

better oversight, improved capital planning, and stricter asset management to gain assurance that it can address construction and 

lease challenges more effectively. With good management and stewardship there are opportunities to avoid cost increases and schedule delays. 

Efforts to ensure the adequacy of its processes, especially the 

project management process and oversight, will help reduce the examples like the ones highlighted in our statement. Regardless, 

budget performance and schedule risks are inherent in any effort 

to deliver construction projects. Further planning and managing 

capital assets to align with veterans’ health care needs and new 

medical treatment changing how and where care is provided is a 

challenge. Thus, risk management and mitigation must be effectively addressed throughout the life of construction projects. 

Mr. Chairman, this concludes my statement today. Maureen 

Regan and I will be pleased to answer question on our respective 

work. 

[THE PREPARED STATEMENT OF LINDA HALLIDAY APPEARS IN THE

APPENDIX]

The CHAIRMAN. The Committee thanks you for your testimony. 

Mr. Caldwell, you are recognized for five minutes. 

STATEMENT OF LLOYD CALDWELL 

Mr. CALDWELL. Mr. Chairman and Members of the Committee, 

as the Director of Military Programs for the U.S. Army Corps of 

Engineers, I provide leadership for the Execution of the Corps’ engineering and construction programs worldwide to include our support for other agencies. I am pleased to be with you today. And I 

will address our approach to delivering construction, specifically 

the construction of medical facilities. 

The Department of Defense construction program uses designated construction agents, of which the Corps of Engineers is 

one. The construction agents procure and execute the delivery of 

DoD infrastructure. The Corps has a long history of executing some 

of the Nation’s most challenging construction programs, both in our 

military missions as well as in our civil works responsibilities. We 

deliver a full range of medical facilities for the Department of Defense, to include hospitals. 

Regardless of the nature of a facility, the Corps has developed 

and refined processes and capabilities for design and construction. 

We think of four fundamental elements to deliver successful 

projects. One, learning what is needed. In that case, early involvement by the Corps with the project’s using agency to understand 

and assist the requirement’s development, preferably in their planning and programming process. Two, planning the work. That is 

engaging stakeholders to align scope, budget, and schedule. Three, 

executing the procurement. A team effort that concerns all stakeholders from design through construction. And four, managing the 

execution. A governance approach that requires oversight from the 

job site to Corps leadership. 

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Throughout the process we manage scope, cost, and schedule objectives. We integrate actions and we evaluate issues and risks 

with our partners in the process to address and resolve them. 

Budget and schedule risks are inherent in executing construction 

projects, and medical facilities are among the most complex facilities for which we manage design and construction. They require 

close, frequent coordination with a large number of stakeholders. 

They are subject to changing requirements during construction, 

often due to evolving medical technology. We maintain a medical 

center of expertise to assist the Office of Defense Health Affairs 

and to ensure unique medical functions are properly included in 

the larger project delivery process. 

The Corps, as part of its interagency support, also has an established relationship with the Department of Veterans Affairs, providing support for a range of facility construction and maintenance 

requirements. The Economy Act and our 2007 Interagency Memorandum of Agreement provide authority and basis for the Corps 

and the VA’s collaborative work. Our Corps headquarters works 

with the VA’s Office of Construction and Facility Management. Our 

Corps regional offices have developed relationship with the 23 Veterans Integrated Service Network offices. In the past two years the 

Corps has managed work at 74 VA facilities. 

We are currently assisting the VA to develop and implement an 

enterprise construction oversight capability, and we are collaborating with the VA to provide training opportunities. 

We value our support to the VA and to the veterans of the Nation. We are pleased with the excellent working relationship that 

exists between our agencies. 

Thank you, Mr. Chairman, for inviting the Corps to testify in 

this matter. I am pleased to answer your and the other Members’ 

questions. 

[THE PREPARED STATEMENT OF LLOYD CALDWELL APPEARS IN THE

APPENDIX]

The CHAIRMAN. Thank you, Mr. Caldwell, for your testimony. Mr. 

Haggstrom, welcome and you are now recognized for your testimony for five minutes. 

STATEMENT OF GLENN D. HAGGSTROM 

Mr. HAGGSTROM. Chairman Miller, Ranking Member Michaud, 

distinguished Members of the Committee, I am pleased to appear 

here today to update the Committee on the Department of Veterans Affairs’ continuing efforts to improve the management and 

timely execution of major construction and leased projects. Joining 

me this morning is Ms. Stella Fiotes, Executive Director of the Office of Construction and Facilities Management. I will provide a 

brief oral statement and request that my full statement be included 

in the record. 

The CHAIRMAN. Without objection. 

Mr. HAGGSTROM. The department’s facility programs are an integral part of our ongoing mission to care for and memorialize our 

Nation’s veterans. The department is committed to meeting our responsibility to design, build, and deliver quality facilities as tools 

to meet the demand for access to health care and benefits. VA conVACREP180 with DISTILLER

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tinues to improve its real property portfolio, providing state of the 

art facilities that meet the needs of veterans, allowing for the highest standard of service. We have taken on the challenge of updating 

our aging infrastructure to meet increased workload demands, 

changing patient demographics, and services delivered closer to 

where veterans live. 

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 facilities, spinal 

cord injury centers, a blind rehabilitation center, and community 

living centers. We continue work on 55 major construction projects 

valued at approximately $13 billion. 

The department has also opened 180 leased medical facilities, 50 

of which are considered major leases. 

We have taken steps to improve the management and oversight 

of major construction projects which include implementing the recommendations from the Government Accountability Office, and the 

department’s Construction Review Council. VA took aggressive action on the recommendations in the April, 2013 GAO report and all 

recommendations have since been closed. 

Additionally, we have implemented actions addressing the four 

major challenge areas as identified by the Construction Review 

Council which is chaired by the Secretary of Veterans Affairs. 

These include recommendations to improve the development of requirements, design quality, funding, and program management and 

automation. 

Unfortunately the department’s major leasing program was not 

authorized by Congress for fiscal year 2013 as a result of the Congressional Budget Office’s change in the budgetary treatment of the 

program. We are hopeful that for fiscal year 2014 authorization 

will be reinstated by Congress, permitting the department’s current 

request for 27 projects that will serve the needs of approximately 

340,000 to move forward. 

In preparation of executing a future major leasing program 

should it be authorized, and to improve the current ongoing program, VA is in the process of addressing recommendations in the 

October, 2013 OIG report. These actions will be applied to future 

major leasing actions should authorization be restored. 

VA has a strong history of delivering facilities to serve veterans. 

The way the Office of Construction and Facilities Management is 

doing business today has changed significantly since the Orlando, 

Denver, and New Orleans projects were undertaken. The recommendations made from previous reports have resulted in positive changes and are being applied to the entire program, including 

the next two proposed major medical center replacement projects 

located in Louisville, Kentucky and Omaha, Nebraska. 

Our focus on ensuring well defined requirements and acquisition 

strategies that meet the project needs; assessing project risk; assuring timely project and contract administration; partnering with our 

construction and design contractors; early involvement of the medical equipment planning and procurement teams; applying the department’s acquisition program management framework to our 

projects; and engaging in executive level onsite project reviews, 

along with monthly updates to the Committee on key projects, has 

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led to improvements and transparency in our program. All these 

actions will help to ensure the department’s future capital program 

is delivered on time and within budget. 

Thank you for the opportunity to testify before the Committee 

today. We look forward to answering any questions the Committee 

may have. 

[THE PREPARED STATEMENT OF GLENN D. HAGGSTROM APPEARS IN

THE APPENDIX]

The CHAIRMAN. Thank you much, Mr. Haggstrom, for your testimony on behalf of the department. We did just report favorably to 

the full House H.R. 3521, which does in fact authorize the 27 

leases. Of course we have to have a full House vote, and then the 

Senate will have to act, but get ready. They are coming. 

Mr. HAGGSTROM. Thank you very much, Mr. Chairman. 

The CHAIRMAN. To the Corps of Engineers, what we are going to 

do, if we can, we are going to do two two-minute rounds so that 

we can try to get everybody in, including myself. So if you would 

start the clock? 

Of the six Department of Defense leases, or medical facilities listed in your written statement as ongoing or as having been recently 

completed by the Corps, how many of the projects are currently or 

are completed on budget and on time? 

Mr. CALDWELL. Mr. Chairman, your question is directed to the 

Corps and you are referring to leases? And—— 

The CHAIRMAN. No, no, I corrected. Facilities, take the lease, the 

word lease out. The Department of Defense medical facilities listed 

in your written statement, how many of those either are on time, 

on budget, or were completed on time or on budget? 

Mr. CALDWELL. Sir, I can get you specific numbers. But virtually 

all of those are completed with some time growth and some cost 

growth. We generally—— 

The CHAIRMAN. That means they are not on time and they are 

not on budget? 

Mr. CALDWELL. Sir it means that we anticipate and understand 

that there is risk associated and unknowns associated with construction. We anticipate a five percent cost growth on projects, including medical projects, and provide that in the programmed 

amount for the projects. And we endeavor to operate within that 

five percent. On the whole our experience is that we are operating 

within that five percent. 

The CHAIRMAN. So you do plan on that five percent? 

Mr. CALDWELL. Yes sir, we do. 

The CHAIRMAN. Mr. Haggstrom, explain to us why four years 

after it was issued the department is still in the process of implementing recommendations by the GAO made in 2009 concerning 

VA’s major construction programs? 

Mr. HAGGSTROM. Mr. Chairman, to the best of my knowledge we 

have implemented the recommendations from the GAO report in 

2009. And among them were the importance of doing a risk assessment for both the cost and schedule. And shortly after the report 

was issued in the future projects that we are undertaking that was 

one of the major changes that we work very closely now with our 

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architect and engineer firm of record on the project to accomplish 

that. 

Subsequent to moving forward with the new projects we did go 

back and we started the process on older projects that we had 

started prior to the issuance of that report. 

The CHAIRMAN. Thank you. Could I ask GAO if you concur with 

Mr. Haggstrom’s statement in regards to VA fully responding? 

Ms. HALLIDAY. Based on our reviews we would think that while 

they might be responding, the implementation has not been sufficient. 

The CHAIRMAN. Thank you. Mr. Michaud? Ms. Brown? 

Ms. BROWN. Thank you. Since I only have two minutes I am 

going to ask that my statement be placed in the record. 

The CHAIRMAN. Always. 

[THE PREPARED STATEMENT OF HON. CORRINE BROWN APPEARS IN

THE APPENDIX]

Ms. BROWN. Thank you. Let me just say that this is, Ms. 

Halliday, you mentioned New Orleans that I am very familiar with, 

I have been there twice, and you mentioned Orlando. But I was not 

clear on your feedback as far as Orlando. Because I thought maybe 

you made a mistake and you were still talking about New Orleans 

when you should have been talking about Orlando. Would you take 

a look at that in your statement? 

I have been, with the Chairman, to Orlando several times. This 

project is over 25 years old, and I have been here 21 years, and 

we are still working on it. I will be there. I asked my staff to drive 

by there and we do, and for the past, what, three months? We are 

still at 84 percent completion. I will be there Monday. I am going 

to not only drive by but I am going to stop. I want to know what 

is the problem? Why is it that we cannot complete the Orlando 

project? It is in my area. I was very instrumental in getting the authorization and the full funding. 

Now I know everybody wants to go down and do the right thing. 

But I want to know why is it that we cannot go down and do the 

right thing, and help those veterans in Central Florida? Please? 

Mr. HAGGSTROM. Ms. Brown, first of all I would like to make it 

very clear that we agree with you, that the project has taken too 

long to do. And there have been inherent problems which the VA 

has addressed in the past several years. 

I do want to make it clear though to the Committee that in no 

case has any veteran who has been enrolled in the veterans health 

care system has gone untreated for any maladies or any issues that 

they have with regards to their health. The medical center director 

down there Tim Liezert has done an excellent job. 

The CHAIRMAN. I think you might want, you are talking about 

Orlando area. 

MR. HAGGSTROM. I am talking about Orlando, sir. 

Ms. BROWN. Yes. 

Mr. HAGGSTROM. Tim Liezert, who is the medical center director 

has done an excellent job in balancing the needs of what the veterans require. And we continue to do so. 

With regards to the executive of this project there, it early on 

was inherent. We had some problems. And VA moved quickly to 

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address those problems. The issue here now is with contractor performance. And VA has taken every opportunity, as the Chairman 

has often asked me to do, to partner with our prime contractor in 

an effort to move this forward. But when you go down there and 

you look at the project, there are inherent problems with scheduling, the number of workers on the job to do this, the quality of 

the workmanship. And it goes on and on and on. And currently VA 

is taking every opportunity to exercise our rights to ensure that the 

contractor moves forward. 

Ms. BROWN. Well can you tell me why it is that we have not had 

any advancement in the completion in the last three months? You 

know, I review the reports and it is stuck at 84 percent. 

Anyway, Mr. Chairman, perhaps I can get the answers to my 

question in writing. But I will be there Monday. 

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

would like to submit a question for the record I am sure Mr. 

Haggstrom would be glad to answer it. Dr. Roe? 

Mr. ROE. Ms. Brown, I would recommend you go every Monday. 

I believe I would. We have been building major projects since the 

pyramids. And there is nothing magic about building this. I have 

been involved in building two hospitals from the ground up, and 

one a little bit, and several medical office buildings, schools, you 

name it as a public official. And you decide what you have, what 

your budget is, what you can pay for in the private sector, what 

you allocate or appropriate in the public sector. You get an architect, you design it, you bid it out, and as you stated there will be 

some cost adjustments, things you run across when you are building something you did not anticipate. Everybody understand that. 

But we are reinventing the wheel here. And especially in hospitals, I get a little frustrated, and I certainly share Ms. Brown’s 

frustration, is it, and I did this with schools. It is a great deal for 

architects when you redesign every school differently. And I realize 

every footpad is slightly different, the topography is a little different. But when you are building hospitals an operating room for 

the most part is an operating room, and a patient care room is basically a patient care room, and a laboratory is a laboratory. I have 

been in hundreds of them over my career. Why would you not cookie cutter, build something, basically why could you not do that? The 

VA is going to build a hospital, two more facilities. They are going 

to be redesigned from the ground up to look something different. 

You are going to pay a lot of money doing that. Why would there 

not be just a standard that you could change a little bit? And instead of going four floors, three floors, but essentially a layout like 

that instead of reinventing the wheel each time you do that? 

Mr. HAGGSTROM. Mr. Roe, while the department does not have 

and use definitive designs, much like the Department of Defense 

does for many of their projects, we do have standardization across 

the department in terms of how we relate the various functions of 

a medical facility and so forth. I would ask Ms. Fiotes if she would 

to comment on that, as that is part of her responsibility in CFM, 

to work these standard module designs with our clients. 

Mr. ROE. Well excuse me, not to interrupt but it is not working 

too well. Because we had the builders up here, what Mr. Chairman, 

a year ago, or something, and the contractors are begging for 

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mercy. I mean, things have been changed, and here, and they were 

asking us to help. I have never seen that in my life, where, the first 

time, only time in five years that I have been here that the contractor actually came up and asked for some help from Congress. 

I yield back my time, Mr. Chairman, I am over time. 

The CHAIRMAN. Thank you. Ms. Fiotes, if you would take his 

question for the record we would appreciate that. 

Ms. FIOTES. I will do that, Mr. Chairman. 

The CHAIRMAN. Mr. Michaud? 

Mr. MICHAUD. Thank you, Mr. Chairman. This is for the Inspector General. Repeatedly, the IG and the GAO has pointed out serious issues with mismanagement, overage, delays in construction 

within the VA system. What is your opinion regarding moving the 

authority for major construction from VA to the Corps of Engineers? 

Ms. HALLIDAY. I would be concerned with the lack of control that 

VA would have. I think communications is most important in defining construction needs and marrying up what is actually being implemented as part of the project. At this point I understand that 

the processes are not well defined as to how that would operate, 

and who would have what responsibility. And I think that before 

you would make a move of that magnitude you have to look at 

that. A transfer of authority could entail creating some duplicity of 

capabilities within VA and render some of our workers nonproductive because the work transfers. We have had significant problems, 

although not with the Army Corps of Engineers, on the management of interagency agreements. The lack of control, the lack of 

transparency, the lack of ability to manage issues as they arise has 

been very problematic across VA. And this would be handled very 

similarly. So there are definitive risks that have to be managed. If 

communications breaks down between the Army Corps and VA 

then you know you are going to have problems with the construction site. 

The CHAIRMAN. Dr. Benishek? 

Mr. BENISHEK. Thank you, Mr. Chairman. Ms. Halliday, was 

there a, did you give us a number that there was like design 

changes in every single one of these projects that you described in 

your report? 

Ms. HALLIDAY. The number I gave comes from a statistical sample of 30 projects that we looked at. So I did not quantify the number. 

Mr. BENISHEK. I am kind of concerned about the idea of if you 

have a, you are planning for a five percent cost overrun from the 

very beginning it sounds like, Mr. Haggstrom. I mean I, I mean I 

have done some construction projects as well like Dr. Roe talked 

about and you know, we sort of like to hold our contractors’ feet 

to the fire. You know? The contractors will say, well, you change 

the specifications, you know, halfway through the project it is going 

to cost you more. I have seen that. But I find it surprising that you 

are going to add five percent to the cost sort of automatically. I 

mean, how do you justify that? 

Mr. HAGGSTROM. Mr. Benishek, I think you will find that is 

standard practice in the construction industry. And when you say 

exceed cost, when you look at the past five years when VA has deVACREP180 with DISTILLER

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livered 75 major construction projects for the use of our veterans 

at over $3 billion, 95 percent of those were delivered within cost. 

Because when you look at the cost and how we do the programming for a major construction project we take into account as part 

of the appropriation and authorization request that there will be 

change orders associated with construction. That has been validated both by the Office of the Inspector General and the GAO. 

Mr. BENISHEK. Well that sort of gets back to my question from 

the IG’s. I mean, once you have a design you are supposed to stick 

to it. I mean, you have to have the design done first and not have 

excessive amounts of change orders. I mean, that is what I was 

sort of getting to—— 

Mr. HAGGSTROM. You are absolutely correct. 

Mr. BENISHEK. —excessive change orders make things more expensive. 

Mr. HAGGSTROM. And that is one of the things that the department has done in this past year as part of the forensics in looking 

at our program. Is that we found that when we had gone to Congress previously we did not have a well defined set of requirements 

and we have made major changes in that, in how we approach 

that. And the very fact that before we would approach Congress for 

either an authorization or appropriation we would achieve a 35 

percent level of design. And I believe this is very similar to the way 

the Department of Defense, and the Corps of Engineers, and the 

Naval Facilities Engineering Command works in submission of 

their military construction program. So we are taking a close look 

at that and the best practices—— 

Mr. BENISHEK. Could you just forward the changes that you have 

made in your—— 

Mr. HAGGSTROM. Certainly, sir. We have provided to the Committee the report out from the Secretary’s Construction Review 

Council. And that is available to the Committee. If you do not have 

it we will again forward it to you. 

Mr. BENISHEK. Thank you. I am out of time. 

The CHAIRMAN. For the members’ information, GAO report says 

as of November, 2012 the cost increases for projects ranged from 

59 percent to 144 percent, with a total increase of nearly $1.5 billion, and the average increase of approximately $366 million. The 

delays in these projects range from 14 to 74 months, resulting in 

an average delay of 35 months per project. Ms. Brownley? 

Ms. BROWNLEY. Thank you, Mr. Chair. I actually wanted to follow up with your original line of questioning. And to the IG, so in 

answering the chair’s question you said that you had not seen a 

marked improvement since you gave your report on the overall 

management of design and construction with the VA. So what do 

you suggest now? What would be your suggestions? 

Ms. HALLIDAY. The reason I made that comment is the new control with regards to really defining and putting final stamp of approval on the project scope, have not been in place long enough to 

assess implementation of those controls. It is premature at this 

point. I think it is a good control. I think it is appropriate to look 

at construction contracts that way but I just do not have any evidence that the control will work as intended at this stage. 

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Ms. BROWNLEY. Thank you. And Mr. Haggstrom, you talked 

about 95 percent success. What is the percentage when you calculate the cost of change orders into your overall cost? How do you 

calculate that? What is the amount for change orders in an overall 

cost scheme? 

Mr. HAGGSTROM. Just as Mr. Caldwell said the way the Corps 

calculates those contingency funds is, VA calculates them in a similar way accounting for approximately five percent of the cost of the 

project. 

Ms. BROWNLEY. Well just the numbers do not seem to add up to 

me. But I do not understand why, and I think that is what we need 

to determine. I will yield back. 

The CHAIRMAN. If again, and I apologize, but Mr. Haggstrom are 

you saying that all of your projects, major construction in particular, that every one of them has met the original budget? 

Mr. HAGGSTROM. Of the 75 projects, sir, only four did we come 

back to Congress to ask for an increase in an authorization or an 

appropriation. All other projects were delivered within the appropriated amount, that is correct. 

The CHAIRMAN. And the major projects that are existing now? 

How many have you come back asking for additional funds? 

Mr. HAGGSTROM. With regards to Orlando, Denver, or New Orleans? 

The CHAIRMAN. Correct. 

Mr. HAGGSTROM. None. 

The CHAIRMAN. Will you be? 

Mr. HAGGSTROM. Not as far as I know. 

The CHAIRMAN. Okay. 

Mr. HAGGSTROM. Right now the way we look at it we are on 

track. 

The CHAIRMAN. Thank you. Mr. Coffman? 

Mr. COFFMAN. Thank you, Mr. Chairman. Mr. Caldwell, has the 

VA contacted the Army Corps of Engineers for assistance on the 

projects in Orlando, Aurora, or New Orleans? 

Mr. CALDWELL. Sir, I am not aware of all of those projects. I can 

tell you that in Orlando, yes, we have provided support to them in 

terms of providing estimate evaluations as well as schedule evaluations, and providing advice regarding some of the contract administration matters that they are dealing with. 

Mr. COFFMAN. Can you speak to some of the, I think the subject 

came up by the IG about interagency work. And I wonder if you 

could give examples of some other agencies outside of, say, the Department of Defense that you do work for? 

Mr. CALDWELL. I have a list of probably 12 other Federal agencies that we provide support to. The total value of the support that 

we provided in fiscal year 2013 was about $1.3 billion spread across 

a number of Federal agencies. The Environmental Protection Agency, the Department of State, USAID, the Department of Transportation. So I could go on and name a number of those that we have 

done that. And that support, I should point out, ranges from consultation, where we have some technical expertise that we can advise them, all the way to actually managing the execution of 

projects. 

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Mr. COFFMAN. Okay. Could the Army Corps of Engineers aid and 

assist those projects if the VA requested help? The projects that the 

VA has? 

Mr. CALDWELL. We would be pleased to work with the VA for 

anything they think that we could assist with. I should point out, 

when you say those projects, if what you are referring to is projects 

that are underway and have some challenges currently associated 

with them, there is some question there about whether we could 

step in and make a difference in that project. What we could do is 

to assess the conditions and provide some consultation to VA in 

that regard. 

Mr. COFFMAN. Okay. But going forward you could do, you could 

do projects for the VA as you do for other agencies, could you not? 

Mr. CALDWELL. Yes sir, we could do that in a support role, much 

like a construction agent role, yes. 

Mr. COFFMAN. Thank you, Mr. Chairman. Just one final point, 

and that is that I think if we go back to the GAO report of April 

30 of this year I think it stated that the Army Corps of Engineers 

projects were consistently within schedule, within budget, and that 

the VA projects were consistently not within schedule and not 

within the budget. I yield back. 

The CHAIRMAN. Ms. Titus? 

Ms. TITUS. Thank you, Mr. Chairman. I have some questions 

about how the VA deals with predictions of growth in populations 

that they serve. I represent an area in Southern Nevada that had 

unprecedented growth for over a decade and as we move away from 

the recession we see that growth coming back in Southern Nevada 

and across the Southwest with a large number of veterans moving 

to those areas. I wonder what the VA does to predict the movement 

of veterans when you are considering construction projects to be 

sure they are in line with future needs, not just at one snapshot 

in time? I would ask that to Mr. Haggstrom. And then Ms. 

Halliday, I would ask you if in terms of future construction has 

your office done any work to kind of look at whether the VA is effectively predicting and reacting to those potential demographic 

changes? 

Mr. HAGGSTROM. With regards to how the department goes about 

developing the requirements, while I am not deeply involved in 

that there are many databases that both VHA and other offices 

within the department use that track veterans, track veterans’ enrollments, and those kinds of things. Certainly I would be happy 

to take that question for the record and we can get you a more detailed answer. 

Ms. TITUS. Thank you. Ms. Halliday? 

Ms. HALLIDAY. My office has looked at the National Cemetery 

Administration, how they are approaching and planning for rural 

veterans to be served as well as urban veterans. I do not have a 

report at this time. I expect to issue a report shortly. And NCA has 

agreed essentially with the OIG to change its definitions so that 

there is a clear focus on rural veterans. 

Ms. TITUS. Well that is fine for rural veterans. I am curious to 

see about if you have any plans or any ability to move resources 

or change construction goals? If someplace, say, is losing a population and someplace is gaining one? But if you all would look at 

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that and get back to me, I thank you, Mr. Chairman, and yield 

back. 

The CHAIRMAN. Thank you, Ms. Titus. Ms. Kirkpatrick? 

Mrs. KIRKPATRICK. First of all, I thank the Chairman and Ranking Member for continuing to have these hearings delving into the 

construction problems at the VA. And I applaud the VA for creating the Construction Review Council, that is a step in the right 

direction. But it has been exactly a year since they came up with 

their recommendations and Mr. Haggstrom I would like to know 

what your timeline is for implementing those recommendations? It 

is a little amazing to me that not only have they not been implemented by apparently there are not instructions to implement. So 

would you please address that? 

Mr. HAGGSTROM. Congresswoman, all those recommendations 

have been implemented. We have briefed the Secretary on that earlier this year. We told him what we did. We laid out the program 

for him. He concurred with it. We moved forward. When—— 

Mrs. KIRKPATRICK. Well I am sorry to interrupt but apparently 

not—— 

Mr. HAGGSTROM. —the costing we did achieve that major milestone with the submission of the fiscal year 2013 program. We had 

design to 35 percent. 

Mrs. KIRKPATRICK. Let me ask the Inspector General. In the report that we have in our record here it says those have not been 

implemented. Are you changing your report? 

Ms. HALLIDAY. We have not provided oversight of that since it is 

such a new change. In preparation for this hearing I tried to get 

the decisions that came from the council to look at those clearly to 

see about the implementation and we were unable to do that. 

Mrs. KIRKPATRICK. Can you tell us why? 

Ms. HALLIDAY. There are briefing slides with regards to the Committee meeting to discuss the issues with construction. What we 

had a hard time doing was determining those decisions that were 

made based on those discussions so we could track the related implementation. We were certainly scheduling that for oversight. 

Mrs. KIRKPATRICK. Okay. I yield back my time. But I am very 

concerned about the disconnect with that. 

The CHAIRMAN. Mr. Ruiz+ 

Mr. RUIZ. Thank you, Mr. Chairman. Mr. Haggstrom, what are 

your internal data measures to measure your success in accomplishing your milestones? 

Mr. HAGGSTROM. Mr. Ruiz, we are very focused on metrics in 

how we look at our program with regards to cost, schedule, and 

performance, and quality of what our contractors are putting in 

place? 

Mr. RUIZ. Can you give me three of your top examples of data 

driven measurements of success that you follow? Your top three 

priorities? 

Mr. HAGGSTROM. Cost, schedule, and performance. Those are our 

top three. Those—— 

Mr. RUIZ. So how do you measure, how do you measure performance? 

Mr. HAGGSTROM. We measure performance against a schedule. 

Mr. RUIZ. If it is done on schedule? 

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Mr. HAGGSTROM. If it is done in accordance with what we call the 

master schedule. 

Mr. RUIZ. Okay. 

Mr. HAGGSTROM. That is applied against all major construction 

programs. 

Mr. RUIZ. So that is one. Can you give me two other very specific 

examples of how you measure success? 

Mr. HAGGSTROM. The cost. Are we remaining within the authorization and the appropriated cost. As we go through the project we 

look at that through earned value management. And when we, 

again, we look at schedule. Is the contractor complying with the 

schedule that they provide us at the onset? And we look at performance in terms of quality, and the number of workers on the 

job, and is that job being accomplished as it should be to meet the 

standards of the VA? Mr. RUIZ. What are your top two poorest performing construction projects right now? 

Mr. HAGGSTROM. Right now we are having a great deal of difficulty with the contractor in Orlando. And quite frankly with the 

other projects we are still within the acceptable limitations that we 

have set for ourselves. Orlando is the major project with regards 

to schedule. 

Mr. RUIZ. Okay. And so what are those obstacles? What are those 

problems? And what are you doing to mitigate them? 

Mr. HAGGSTROM. When you look at in the future what we have 

put in place from the Construction Review Council I go back to the 

whole essence of a successful construction program is predicated on 

a clear definition of what the requirements are. And taking those 

requirements and translating them into a design that we can move 

forward with and have the assurances that at that point in the design there should be little to few changes in the future as we go 

forward with it. At that point in time we have developed a schedule 

for the execution of the program and also a very, very accurate cost 

in terms of what the overall cost of the program would be. 

Mr. RUIZ. If you fail in achieving your data driven measurements 

for success what are your plans to correct that? 

Mr. HAGGSTROM. We work very closely with the contractor. We 

find ways to bring them back on schedule. How can we do that? 

How can we support them? We can look at value engineering in 

terms if costs start to exceed what they are. Are there things that 

we can do within the scope of the project that could potentially 

save money? 

Mr. RUIZ. And how are you informing your veterans regarding 

whether or not you are achieving those successes, that are reliant 

on that facility to open? Are you being transparent with your—— 

Mr. HAGGSTROM. I believe we are. I know the medical centers 

have very robust programs at their respective locations where we 

have ongoing construction that continually meet with the veterans 

service organizations and the veterans in the area to keep them informed on the status of the project and where we are going. 

Mr. RUIZ. Thank you. 

The CHAIRMAN. Thank you, Mr. Ruiz. Ms. Negrete McLeod? 

Mrs. NEGRETE MCLEOD. Thank you, Mr. Chair. To Mr. 

Haggstrom, thank you for attending today’s hearing. The VA hospital at Loma Linda is the main hospital where veterans from, you 

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have four Members on this Committee that get serviced by that. 

Mr. Cook, Mr. Takano, Mr. Ruiz, and myself, that is where they 

all seek treatment. In the OIG report the health center lease for 

Loma Linda was not awarded until a few months ago. What were 

the issues at Loma Linda that led to the lease not being finalized 

until this year when it was authorized in 2009? 

Mr. HAGGSTROM. Congresswoman, when you look at these leases 

and the execution of the leases I will say very up front that there 

was a very aggressive timeline when these leases were submitted 

to Congress. As part of the OIG report we were charged with developing a reasonable timeline to achieve these leases and in doing so 

we worked closely with our client. So when you look at a major 

lease in terms of these seven HCC leases, and the process that we 

go through to secure the land and then the developer, we are looking at a life cycle acquisition time of approximately 61 months. 

When you take a look at the Loma Linda lease specifically there 

was a 46-month duration from the time it was authorized to the 

time that we signed the lease with the developer. However, when 

you look at that and you take into account things that were beyond 

the VA’s control, there were 21 months within that whole process 

where we were going through negotiations with the city and the developer that took the excessive amount of time. 

So if you start to normalize these leases, these seven leases, you 

will come back to the fact that taking out those things that VA had 

no control of we were very much within the timeline of what we 

would say is approximately 26 months from the time we were soliciting an offer for land to the time we signed a lease with the developer. 

The CHAIRMAN. Mr. O’Rourke? 

Mr. O’ROURKE. Thank you, Mr. Chair. And I want to thank you 

and the Ranking Member for keeping this Committee focused on 

performance and accountability at the VA. I really appreciate that. 

And for Mr. Haggstrom, it was interesting to read the VFW’s 

statement for today’s hearing, where they note that we will need 

to invest over $23 billion over the next ten years to complete our 

SCIP projects. At current requested funding levels it will take more 

than 67 years to complete our ten-year plan. The proposed veterans 

hospital in El Paso is number 79 on the list so I have got some 

deep concerns, given everything that we heard today, given past reports by the GAO and the OIG. What can, to cut to the quick, what 

can we do to move ourselves up on that list? What is the essential 

core criteria used to determine where a proposed hospital ranks on 

that list? 

Mr. HAGGSTROM. Mr. O’Rourke, the department uses the strategic capital investment planning process as part of helping to define what the most urgent and pressing needs of the department 

are. I would ask Ms. Fiotes if she would comment. She is part of 

the SCIP board that reviews these projects. 

Mr. O’ROURKE. Great. And before you do, let me add something 

to the questions and remarks made by Ms. Titus. In El Paso you 

have more than 80,000 veterans who are underserved by the existing clinic. You have had Fort Bliss, which has gone from 8,000 active duty soldiers six years ago perhaps when these lists were first 

made, to 33,000 active duty soldiers. And you also have an underVACREP180 with DISTILLER

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utilization of the current VA because it is inadequate. And sometimes that underutilization is used as an argument for our placement on the list. So with that in mind, what can we do to make 

a better case to you and other members of the SCIP board? 

Ms. FIOTES. Congressman, the SCIP board reviews projects that 

are scored in a very data driven way based on a lot of the things 

that you mentioned. 

Mr. O’ROURKE. Is utilization a part of that? 

MS. FIOTES. Utilization is part of it. The movement of populations, the projected workloads, the existing infrastructure, all 

these things come into bear. And ultimately the projects are scored 

using the basic criteria of ensuring safety and security at our facilities, meeting department initiatives, fixing what we have, right 

sizing the inventory, providing value of our investment, and finally 

increasing access. Those are major criteria. They have several subcriteria. It is very data driven. It is very objective. And when those 

projects get presented to the SCIP board the medical centers and 

the Veterans Integrated Service Networks have the opportunity to 

argue their case, if you will, or plead their case. It is very objective, 

very data driven. I would say that the numbers fall out where they 

fall out. 

Mr. O’ROURKE. Before I yield back, would you commit to meeting 

with me to discuss that issue of utilization and make sure that you 

all have all the data as you make these objective, data driven decisions? 

MS. FIOTES. And I would ask in that case to also be accompanied 

by my colleague who actually runs the SCIP from a different office 

from our office. I participate on the board but—— 

Mr. O’ROURKE. Thank you. I look forward to doing that. Mr. 

Chair, I yield back. 

The CHAIRMAN. Thank you very much. Also Members, Dr. Roe 

has said that he will stay and continue to chair this for those who 

may want to stay and have second round of questions. Mr. Walz, 

you are recognized. 

Mr. WALZ. Thank you Chairman and Ranking Member. And I encourage you to continue to ride herd on this issue because it is a 

challenge and great points have been brought up. Ms. Halliday, I 

would just like to comment since I have come to Congress I have 

been an unabashed fan of the IG’s office and the work you do never 

ceases to impress. I am grateful for that. It helps us do our job better and it helps your partners in VA do their job better. So thank 

you for that. 

Again, I think Mr. O’Rourke brought up a good point, Mr. 

Haggstrom. This is a big undertaking. The independent budget he 

was speaking of estimates that we provided about 25 percent of the 

funding. But I have to be honest with you, I would be hard pressed 

to provide more right now under the circumstances where we are 

having some of these challenges. I am absolutely convinced the VA 

does things, many things, incredibly well, world class level. I have 

yet to be convinced that building hospitals is one of them. And that 

is a challenge for me because I know how important they are. 

And just one specific question. And I like Dr. Ruiz getting at 

some of the specifics in this. Each VA officials who manages a 

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major construction project, what are their defined roles and responsibilities in the change order process? How does that work? 

Mr. HAGGSTROM. Congressman, we have taken the change order 

process very seriously as a result of the GAO report and issues we 

have dealt with our contractor in Denver. I would ask Ms. Fiotes, 

she has been leading the initiative to look at how we do change orders, streamline that process, and be more effective in our ways 

that we do them. 

Ms. FIOTES. Congressman, there are several parties involved in 

reviews of change orders. And change orders fall into three basic 

categories. They are usually errors or omissions in the design, they 

are unforeseen conditions, or they are owner requested changes. 

And it is part of the nature of construction, that change orders will 

arise in all three areas. 

Involved parties, the resident engineers who review the change 

orders for technical merit; our architect, engineer, and construction 

management consultants who review for cost validity and help us 

come up with our cost estimate; and ultimately the contracting officer who then negotiates the proposed change order with the contractor who submitted it. Many times it goes back and forth several 

times. Those are the parties and the key roles and responsibilities, 

if you will. 

We did assess that our change order process, while there was 

guidance in several places it was not really consistent and consolidated in one place. We have proceeded since then to issue a handbook for our project managers and project executives so that they 

all follow a consistent process. We have inserted timelines to ensure the timeliness of the review of the change orders. We found 

that some change orders, either because the contractor was not 

pushing or because they just were not as critical, just fell by the 

wayside and were stale. 

Mr. WALZ. Okay. My time is going to be up. But I cannot help 

get a really, really strong feeling that we are being told everything 

seems pretty good and on track and going in pretty much the norm, 

and the numbers, as one of my colleagues said, I am having a hard 

time matching these up. So I may wait around for another round. 

Thank you. 

The CHAIRMAN. Thank you, Mr. Walz. Members, we have been 

joined by Mr. Mica from the east coast of Florida, who many of his 

veterans are in fact served by the hospital that is being constructed 

in Orlando. And I would like to ask unanimous consent that he be 

allowed to participate in the questions. Without objection, so ordered. And Mr. Mica is recognized for a round of questions. And 

Dr. Roe, if you would take the chair? 

Mr. MICA. Thank you, Mr. Chairman, and thank you this Committee for its continued vigilance and pursuit particularly on the 

construction side of VA hospitals and medical facilities. Looking at 

some of the delays and problems we have had, as you know we 

have had some serious problems in Orlando. And I think it was 

cited in the testimony that I heard that that is one of the roughest. 

We had sent from Central Florida delegation a letter regarding 

payments. Part of the problem we have in Orlando is the VA has 

kept changing the design, some of the requirements, and vendors 

are not being paid. When the vendors are not being paid we have 

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had at least one go under and we have had others that are in serious financial situations because tens of millions of dollars has not 

been paid. Can anyone respond to what we are doing? Is that Mr., 

I cannot see without my classes, Mr. Haggstrom? 

Mr. HAGGSTROM. Yes. Mr. Mica, that was the case initially back 

in 2012, early 2012. At that point in time the VA sat down with 

both the contractor and the AE firms and addressed many of the 

issues that the contractor had brought forth. We had asked the 

contractor to prioritize those issues, where in the design and the 

construction drawings did they have questions that they felt they 

needed additional information? 

Mr. MICA. Well some were pretty simple. I mean, I was in the 

development business, built nothing as big as the VA but a simple, 

well it sounds simple, but if you have a toilet and it is floor mounted and you change the specs to wall mount it after you have put 

the plumbing in the floor and you have to change it to the wall, 

and support that, the plumber actually took me and showed me 

what had been drawn and then what was the new requirement and 

was having trouble getting paid for it. I mean, these are simple 

things where we need to get a quick resolution. You are telling me 

now that that has been the case? 

Mr. HAGGSTROM. When we execute a change order with the contractor, the contractor may come to us with a proposal. The government will then pursue looking at an independent—— 

Mr. MICA. Well just look at that one. Let us—— 

Mr. HAGGSTROM. —we will always provide a level—— 

Mr. MICA. Look at that one and get back with me, if you can, 

and tell me if that contractor has been made whole? I do not have 

too much time, I know, this clock goes pretty fast here. You are 

going to open the nursing home, 120-bed facility next month? 

Mr. HAGGSTROM. That is correct, sir. 

Mr. MICA. What about the domiciliary, 60-bed unit? 

Mr. HAGGSTROM. I believe the domiciliary is scheduled to open 

in either January or February. 

Mr. MICA. Okay. And it looks like, what can you tell the Committee as to the time of opening the hospital itself? 

Mr. HAGGSTROM. Currently the legal extended completion date 

on the hospital was this past August. We issued Brasfield and 

Gorrie a show cause notice—— 

Mr. MICA. No I—— 

Mr. HAGGSTROM. —which they then provided us a recovery 

schedule and they told us April of 2014. 

Mr. MICA. And you think we can hold to that? 

Mr. HAGGSTROM. Brasfield and Gorrie, every month when they 

have submitted us an updated schedule has continued to slip the 

hospital and currently they are now projecting they would not be 

complete until September of 2014. 

Mr. MICA. September of 2014? Okay. And part of that I heard is 

issues with the electrical contractor. Can you get back to me or the 

Committee and for the record what the issues are? I want them in 

the record. Do you leave this open for a week or ten days? Whatever? And let us know what the issues are so I have some record 

of what you are telling me, and what they are telling us, is the 

issue right now. Can you do that? 

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Mr. HAGGSTROM. We would be pleased to do that. 

Mr. MICA. Okay. Thank you. There are other questions. And if 

you would, I chair an Investigative Oversight Subcommittee, Government Operations Subcommittee. I would like a listing of all of 

your current VA properties that are vacant or underutilized. That 

is facilities vacant, buildings, we will get the specifics to you. And 

if you could provide it to the Committee, and also a copy to me? 

Because we are looking across the entire spectrum of the Federal 

government for underutilized buildings, facilities, properties, assets 

that we are sitting on. Thank you and I yield back. 

Mr. ROE. [Presiding] Thank you, Mr. Mica. I now yield three 

minutes to Mr. O’Rourke. 

Mr. O’ROURKE. Thank you, Mr. Chair. I want to join Mr. Walz 

in commending the work of the OIG. In addition to holding monthly town hall meetings I hold a quarterly town hall meeting just for 

veterans in El Paso. And we will get anywhere from 200 to 300 veterans who attend those meetings. And my entire presentation is 

driven from OIG findings in seven key areas. And one of them that 

we look at is access. And right now the score for the El Paso VHA 

is 39 percent. And that is below the VISN, it is below the national 

average. And it is part of what I was bringing to the attention of 

Mr. Haggstrom, is that we have an access problem. We are very 

far down on the list to have it addressed in any meaningful, comprehensive way. I fear that one of the criteria that is being used 

right now in terms of utilization is perhaps being misscored and 

not taking into account the broader picture. From your experience 

in the OIG’s office, can you provide any direction to me in my office 

and how we pursue that? Or to the VA and how they can improve 

their scoring to take into account issues like those brought up by 

Ms. Titus and myself, and other underutilized and underserved 

areas? 

Ms. HALLIDAY. At this point we would have to spend more oversight on that. It becomes a little bit subjective with how you score 

projects. Our focus had been on the rural health veterans and were 

they getting served appropriately and looking at how rural health 

veterans were defined made a big difference between that and the 

general population. And I see that the National Cemetery is agreeing to start applying a methodology that we have actually presented to them so that they can ensure they do not have gaps in 

service delivery. The next step, of course, is to look at the bigger 

picture of access to VA medical care. But I do not have specific answers for you right now. 

Mr. O’ROURKE. I would love to have the opportunity to speak 

with you about that and see if that is something that the OIG has 

either data on already or would be interested in pursuing in the 

future. And as I said earlier, one of the things that we would ask 

that you perhaps consider or look at is when our community historically has approached the VA about the need for a full service 

hospital we are met with this underutilization argument, that not 

enough of your veterans are registered with or are using that. And 

we see that as a circular argument, in that the care has been insufficient and so veterans are opting not the take that. So I appreciate 

that and I will yield back to the chair. 

Mr. ROE. I thank the gentleman for yielding. Mr. Coffman? 

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Mr. COFFMAN. Thank you, Mr. Chairman. Let me just say first 

that I think that the VA has, the Veterans Administration, has a 

comparative advantage when it comes to running cemeteries over 

the Department of the Army. And I think that the Department of 

the Army’s Corps of Engineers, the Army Corps of Engineers, has 

a comparative advantage when it comes to doing construction 

projects. So maybe we can switch these functions around to which 

organization does a better job in a given area. 

Mr. Haggstrom, according to the testimony of Mr. Caldwell of the 

Army Corps the VA has the authority to work with the Army Corps 

on construction projects. Has the VA formally worked with the 

Corps on the current major projects in Orlando, Aurora, and New 

Orleans? 

Mr. HAGGSTROM. Mr. Coffman, I do know we have a partnership 

with the Corps. We have, as Mr. Caldwell said, worked extensively 

with them on the Orlando project with regard to accessing some of 

their expertise when it came to looking at cost and scheduling. 

I also believe that as we entered into the Denver and New Orleans project we tapped into the Corps’ expertise with regards to the 

type of contract we were using, an integrated design and construct 

contract. Since it was relatively new acquisition vehicle to the department we did ask the Corps to come take a look at the contract 

and do an assessment and provide us some feedback on that. 

Mr. COFFMAN. Given the fact that according to a GAO study on 

April 30 of this year the Aurora project is I believe 144 percent 

over budget and in fact is more so than any other project that you 

are working on, why have you not been more, shown more initiative in terms of reaching out to the Army Corps of Engineers to 

help assist on the Aurora project? 

Mr. HAGGSTROM. With regards to the GAO report, VA disagreed 

and it is in our response to the GAO in the way they calculated 

those costs. They looked at the cost from the inception when it was 

in the infancy and planning stages to ultimately what it was appropriately and authorized for. And they have taken all that and they 

said that is a cost growth. When we look at it what we are working 

on, we requested $800 million in authorization and appropriation 

from the Congress, they provided that, and we are within that authorization and appropriation in executing this project. 

Mr. COFFMAN. Where are you at right now, I understand that the 

general contractor or the prime contractor is appealing the cost. 

And your cost estimate I believe is $604 million for the Aurora 

project and the contractor is saying that it is going to cost over $1 

billion to build the project. Where is that at? I understand there 

is a dispute resolution going on right now on that? 

Mr. HAGGSTROM. There is, Mr. Coffman. Currently it is in the Civilian Contract Board of Appeals. There is a series of meetings that 

will take place over the course of I believe the next seven to eight 

months where the Contracting Board will look at both the submissions from the contractor and the department and make a decision. 

Mr. COFFMAN. Thank you, Mr. Chairman. I yield back. 

Mr. ROE. Thank the gentleman. Ms. Brownley, you are recognized. 

Ms. BROWNLEY. Thank you, Mr. Chair. I wanted to ask Ms. 

Halliday, it seems in this hearing that the chair’s data points with 

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regards to projects and cost overruns and timeliness does not add 

up to VA’s testimony with regards to such a large percentage is on 

time and on cost. Can you help me and the Committee to understand the differences here and how we reconcile this? 

Ms. HALLIDAY. In most of our oversight we have problems actually getting assurance that we have full costing through the 

projects. I think I am on record as saying that there is a problem 

with not being able to track the full expenditures for the health 

care systems, for example, the seven HCCs that VA was trying to 

do. This is systemic. It goes across the department in the inability 

to really track all expenditures. So you definitely are going to have 

variables between what was originally estimated and what the actual costs were. Maureen Regan, who handles our contract oversight, looked specifically at the Orlando Medical Center and had 

found that almost 30 percent of the expenditures she looked at on 

change orders could not be validated or appeared inappropriate 

charges and claims from the contractor. I think that is something 

that happens in the normal course of business but with good processes and tracking of expenditures you can sort this out. Unfortunately VA does not have those systems to really track expenditures 

on a per project basis and ensure it gets all of its expenditures accounted for. 

Ms. BROWNLEY. And does the Army Corps have a way to track 

costs? 

Mr. CALDWELL. Ma’am, we do. And it is important to understand 

that especially with medical facilities you may have sources of 

funds which are from different appropriations that come together. 

So when Mr. Haggstrom talks about the cost of a facility as I think 

of that I am thinking of what amount has been authorized by Congress for that project. There may be other funds that are required 

for the initial outfitting of the contents of the facility as well. And 

so, when someone looks at a facility to try to sort out what the cost 

is, the question becomes which numbers are they looking at and for 

what purposes? 

Ms. BROWNLEY. I understand. I just think it is certainly frustrating from my perspective that, at least what the IG is saying is, 

that there is really not a way within the VA to fully track the costs 

of a project. And that seems to be fundamentally problematic to 

me, that the scope and size of the projects that we are trying to 

undertake here, the importance of these facilities to our veterans, 

and our inability really to be able to track these costs. I mean, it 

just seems really honestly unbelievable to me in a way. And I think 

that it is something that we need to fully understand. And I understand large agencies have systemic problems. I understand that. 

But we must address the issue. And I think it must be fixed. I 

mean, this is fundamental to any major construction project is that 

we should be able to track the costs. And our job partially is in 

oversight. And if it cannot be done then I do not know how we will 

ever get our arms around some of these issues. Thank you, Mr. 

Chair. 

Mr. ROE. Thank you for yielding. Ms. McLeod, you are recognized 

for three minutes. 

Mrs. NEGRETE MCLEOD. Thank you, Mr. Chair. For Mr. 

Haggstrom, what office was responsible for the management of the 

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seven health care center leases that have failed to come to fruition? 

It is hard for me to believe that the prospectus were allowed to be 

published in the budget books. Someone should have known that 

the timeline was unrealistic. Would you please walk me through 

the process as it existed then and as it exists now? Thank you. 

Mr. HAGGSTROM. Congresswoman, this is a joint effort between 

the Veterans Health Administration and Ms. Fiotes’ office, the Office of Construction and Facilities Management. If I could ask Ms. 

Fiotes to comment on that. Well, let me take that. Better yet, when 

we look at this the VHA looks at the databases that the department has in terms of the needs of the veterans, where they are, 

what type of health care needs are there. They will then come forward now through the SCIP process that was effective in 2013 to 

put this requirement as part of the overall portfolio needs of the 

department in moving forward of what the health care requirements are. 

These seven projects were undertaken prior to the SCIP process, 

including the large leased projects. So they come to us with a requirement in terms of size, location, those types of things. We then 

work with them to put a package together that we normally do 

what we call a two-step procurement. Step one being putting a solicitation for offer out to the area for landholders who may be interested in selling their land to a developer for future development. 

Once we look at that we come to an understanding of is it in the 

defined area that we are asking for? And also very importantly we 

do due diligence with respect to Federal requirements and environmental requirements at looking at that land to ensure that there 

is no contamination on it. 

We then enter into negotiations with that landholder and we 

reach what we call an assignable title. That assignable title is 

never taken in VA’s name. All it is is an agreement to the purchase 

price of that land and then once a developer is brought on board 

the developer will take title and pay the landowner. 

Step two is to find a developer who will actually do the final design and construction and potentially hold the lease on that facility 

into the future. 

Mrs. NEGRETE MCLEOD. I yield back. 

Mr. ROE. Thank you for yielding. First of all I want to, I will ask 

just a couple of questions, yield myself a few minutes. In some levity the Coliseum in Rome was built in eight years. Admittedly they 

did not have the EPA and a few things they have now, but they 

did get that construction project done from the ground up in eight 

years. It looks like that is far going to surpass Orlando if it ever 

gets done. So I know that you are here. I appreciate what you are 

doing. I know that folks are trying to get the right thing done and 

get these projects done for veterans. Because the goal, as Mr. 

O’Rourke clearly pointed out, is to take care of veterans. I mean, 

that is the only reason for us to be here. And we need to do that 

in the most efficient way we can because there is not an endless, 

bottomless pit of money. 

And I can assure you, and Ms. Brownley brought this up, these 

cost overruns, the last project that I dealt with myself personally 

was a $20-something million office building we built, our practice 

built. I can assure you there were not cost overruns because I 

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signed my name to a note at a bank. It was me they were going 

to come after if we had those cost overruns. And I can assure you 

we got in under budget and on time. And I can assure you that the 

people involved in paying that note back were paying attention. 

And Mr. O’Rourke pointed out, and I think he is absolutely correct, 

is that we need to pay more attention here on the VA Committee 

if we do not have systems in place that pay attention. And again, 

I am trying to get my arms around what the Chairman read out 

just a minute ago before he left, what the GAO found were costs 

substantially increased and schedules were delayed. It sounds like, 

when I listen to the testimony, that everything is going along fine. 

But then I read this, as of November, 2012 the cost increases for 

these projects, that is Denver, Colorado, Las Vegas, Nevada, New 

Orleans, Louisiana, and Orlando, Florida, the cost increases of 

these projects range from 59 to 144 percent, which is a lot, with 

a total cost increase of nearly $1.5 billion. So we just appropriated 

more money which then kept you within the budget. So I guess you 

can say that those projects were on budget. And an average increase of approximately $366 million, these delays were 14 months 

to 74 months, and an average of 35 months, and so on. He has read 

that before. 

I guess what I am going to ask you all is are, and the IG, are 

the metrics in place now to prevent an Orlando or a New Orleans 

or a Denver again? Are the metrics there so it will not happen? I 

know this would not have happened and did not happen in any of 

the projects that I have been involved in, numerous projects, that 

I was keeping my eye on the project, too. 

Ms. HALLIDAY. Dr. Roe, we believe that the metrics are in place 

but I think there are other factors that really cone into play. And 

one is the reliance that both the Army Corps of Engineers and VA 

will have to contract to get these facilities stood up. So I would like 

to give Maureen Regan an opportunity here to speak on her review 

of Orlando. Because many of the problems that came about in Orlando were a direct result of the performance of the primary contractor. 

Mr. ROE. Okay. 

Ms. REGAN. Thank you. I will first say we have not published 

anything on Orlando. We did get complaints from a lot of subcontractors who said they were not paid and I think some of the 

names actually came from the Committee for people for me to call. 

And I talked to all of them. And we do want to look at that issue, 

that a lot of them did not get paid. They did go under. I think I 

heard 15 companies went bankrupt because they were not paid. We 

had difficulty finding some of them. 

But one of the issues I learned was a lot of them were not direct 

subcontractors to Brasfield and Gorrie. Some were subs to subs to 

subs. When I talked, in at least one case, with one particular type 

of service, I did talk to the actual sub. And he said he got paid everything, and he paid his subs. We do intend to go in and look at 

it. But we had determined that the first thing was to get the building built. And if we are in there, asking for records, interviewing 

people, and taking up people’s time, that is going to delay the 

project even more. Because at this point we were not even sure in 

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talking to the subs whether or not the change orders had been submitted to VA for payment. 

So a lot of issues come up in these projects that you do not exactly anticipate at the time. And one of them in this case was a 

lot of the subs walked off the job because they were not getting 

paid. Then you have to get new subs to come in. We did review two 

change orders in Orlando that Brasfield and Gorrie had submitted. 

And I can say we had a difficult time getting the review of those 

change orders done because we could not get the records we needed 

from Brasfield and Gorrie and one of their large subs to do the review. And that is the reviews we found about a 30 percent overcharge. 

Mr. ROE. I think that is perfectly acceptable behavior. If I am a 

sub and the only thing I have got to sell are my skills and time 

that I walk off the job if nobody is paying me for it. I mean, I think 

that is perfectly reasonable for them to do that. Because they have 

lost that time they cannot get back, and their equipment and all 

that they have used, they have lost. 

So I, hopefully this is an isolated situation. And what I would 

like to see going forward is a white paper, maybe from the IG, a 

one-pager so that we on the Committee here can have an idea 

going forward, and this, maybe the VA can help us out with this, 

going forward what those metrics are. And I know we hired a 

project manager for any project that the City did, that we hired as 

our person on the site to be there everyday looking at that project 

to be sure it was going along as advertised. And there are penalties 

in there, in most contracts, that if you get done early, you get a 

reward. If you are late, there are penalties. And that is a incentive 

to get the project done on time and on schedule. But you cannot 

completely come in, like he said, and pull a toilet out of the wall, 

and say that you have plumbed it into the floor, and now you want 

it in the wall for whatever reason. I cannot imagine why that was 

important. But anyway, it was, and here is this poor guy who is 

not getting paid. 

So I want to ask if Mr. O’Rourke has any closing comments? 

Mr. O’ROURKE. Mr. Chair, just briefly I want to thank the Office 

of the OIG, the Corps, and the VA for being here. And I think that 

it is the nature of these hearings that we are going to focus on 

where we have problems. And I know that there are so many 

things that you do well. And I would be remiss if I did not thank 

you on behalf of the veterans that I serve for the facilities that we 

do have that are working, and the projects that you have executed 

successfully. 

But the urgency from me, and I think you are hearing it from 

many other members, is that we have the projects that we focused 

on today that are taking far too long, almost ten years in the case 

of Denver. And you think about those veterans whose care we are 

deferring, for example in El Paso, number 79 on the list. If we cannot execute these, what does it mean for their hopes or their, you 

know, do not know how long it is going to take us, their children’s 

or their grandchildren’s hopes that we are going to have adequate 

access in VA care in El Paso. 

So I look forward to working with you constructively in a partnership to find out how we do a better job in exercising oversight 

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and managing the resources and are authorized and appropriated. 

And then also holding you accountable and working collaboratively, 

and in some cases creatively, to find other ways, maybe better 

ways, to do these projects in the future. 

So I thank you for your participation, I thank the chair for yielding, and I will yield back. 

Mr. ROE. I thank the gentleman for yielding. And I want to 

thank you all, both on the oversight and investigation part and on 

the VA part, for trying to get these facilities done, and the Corps 

of Engineers for getting these done in a timely fashion so we can 

take care of veterans. That is our purpose, our only reason for 

being here. Thank you all the Committee, I appreciate your time, 

and this hearing with no further comment is adjourned. 

[Whereupon, at 11:02 a.m., the Committee was adjourned.] 

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A P P E N D I X 

Prepared Statement of Hon. Jeff Miller, Chairman 

Good morning, and welcome to today’s Full Committee hearing, ‘‘Building VA’s 

Future: Confronting Persistent Challenges in VA Major Construction and Lease Programs.’’ 

Today’s hearing is the fifth oversight hearing this Committee has conducted in the 

last three years concerning serious issues with the Department of Veterans Affairs’ 

(VA’s) real property capital asset program - particularly the many failures and deficiencies that have plagued VA’s major medical facility construction and leasing initiatives and led to significant cost increases and substantial delays in many important medical center projects. 

Though the Department claims to be aware of the many problems plaguing its 

construction and capital asset programs and taking initial steps to correct many of 

the issues we have identified, cause for serious concern remains. 

In a report released earlier this year on VA construction, the Government Accountability Office (GAO) found that, though VA has made some improvements, 

VA’s major medical facility projects continue to experience cost increases and schedule delays similar to those that GAO had identified in 2009. 

Similarly alarming, the VA Inspector General is going to testify this morning that 

they have seen a persistent ‘‘pattern of ineffective VA capital planning and asset 

management’’ over the past several years. 

As I have said before, today’s plans and projects are tomorrow’s hospitals and clinics, and - whether it is by building the new, renovating the old, or leasing the existing – our allegiance must always be to the veterans who rely on VA to provide the 

benefits and services they need to lead healthy, productive lives. 

We cannot continue to keep them waiting. 

Thank you. 

f 

Prepared Statement of Hon. Michael H. Michaud 

Thank you, Mr. Chairman, for holding this hearing today. 

Providing veterans timely, quality health care in a safe environment is a focus 

of this Committee and one I stand firmly behind. 

We have authorized and appropriated billions of dollars for the Department of 

Veterans Affairs construction programs over the past decade. It is important that 

we provide vigilant oversight on the resulting process of building and leasing of VA 

facilities. 

Just this year, we have held three hearings on the VA’s construction program and 

processes. In May, a Subcommittee on Oversight and Investigations hearing examined the VA’s construction policy. In June, the Full Committee examined VA’s capital investment options. And today, we are examining the persistent challenges VA 

faces in their Major Medical Facility and Lease Programs. 

As you know, there have been multiple reviews conducted by the Office of Inspector General, the Government Accountability Office, and this Committee, on VA’s 

ability to manage a construction portfolio efficiently and effectively. 

Unfortunately, most of those reviews have repeatedly pointed out serious issues 

of mismanagement, lack of oversight, overages on expenditures, delays in construction, and multiple instances of insufficient guidance. 

In efforts to manage their construction programs, VA deployed the Capital Asset 

Realignment for Enhanced Services, or CARES process, more than a decade ago. 

Most recently, the Strategic Capital Investment Plan, or SCIP, was introduced to 

formulate VA’s construction budget for Fiscal Year 2012. SCIP is a 10 year plan 

that integrates all capital investment planning across the three administrations. 

It seems, however, that even though VA has a plan, they struggle to execute it. 

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For example, in October of this year, the Inspector General released a report on 

VA’s management of the seven Health Care Center Leases that were authorized in 

P.L. 111–82. 

We were told by VA that these Health Centers would be up and running by 2012. 

To date, according to the VA IG report, only three of the seven leases have been 

awarded and none are operational. Additionally, I understand that cost overruns 

and delays have plagued the process. 

Mr. Chairman, I am very concerned. First, I am concerned that the Committee 

is not getting accurate information from the onset, and so I have to question for 

what are we authorizing these funds? 

Secondly, the veteran community is constantly being let down when a promised 

facility is not delivered on time. 

I consider it a major disservice to the veterans who rely on VA to provide needed 

and very important health care services. 

I hope we hear today from VA what they are going to do to address past problems 

and delays, how they are going to get things back on track, and what can be done 

to avoid similar problems in the future. 

Thank you Mr. Chairman and I yield back my time. 

f 

Prepared Statement of Hon. Corrine Brown 

Thank you, Mr. Chairman and Mr. Ranking Member, for calling this hearing 

today. 

When the process started to authorize a new Medical Center for the region, Central Florida had been waiting for a hospital for over 25 years. I first started representing this area in Congress 21 years ago. I brought Jesse Brown, then Secretary 

for Veterans Affairs to the area and to show him how important this is. This facility 

will increase the treatment options for Central Florida veterans. 

I did not think it would take so long to finish the facility. I have looked at the 

fact sheets the VA has sent out for the last three months and the facility has been 

stuck at 84% percent complete. July-84%; August-84%; September 84%. 

I don’t understand what could be taking so long that there has been no advancement in the completion of the facility for the last 3 months. 

I have my staff drive by there every so often and it appears there is no work going on. The veterans of the Central Florida cannot wait any longer for a full Medical Center to be built. Once again we are having a Full Committee hearing on construction. 

I am surprised, to say the least, that after we had the first hearing in March of 

last year, we are having yet another hearing on the same facility. 

This is not about politics anymore. We must build this facility for the veterans 

of Central Florida. 

f 

Prepared Statement of Linda A. Halliday 

Mr. Chairman and Members of the Committee, thank you for the opportunity to 

testify on the results of the Office of Inspector General’s (OIG) work related to the 

Department of Veterans Affairs (VA) construction and lease programs. Our focus 

will be on a recently released OIG report on health care centers, including issues 

related to a health care center in Butler, Pennsylvania, and a facility in Cleveland, 

Ohio, as well as OIG reports over the past 2 years related to the Veterans Health 

Administration’s (VHA) management of its Minor Construction Program, VA’s execution and utilization of capital assets in Marion County, Florida, and information 

regarding the new VA medical centers (VAMCs) under construction in New Orleans, 

Louisiana, and Orlando, Florida. I am accompanied today by Ms. Maureen Regan, 

Counselor to the Inspector General. 

BACKGROUND 

VA uses a Strategic Capital Investment Plan (SCIP) to prioritize its major construction, minor construction, non-recurring maintenance, and lease projects. SCIP’s 

objective is to produce an annual consolidated list of capital projects that significantly reduce identified performance gaps in veterans’ access, workload and utilization, safety, space, and facility conditions over a 10-year period. SCIP is used to ensure that VA’s strategic performance planning efforts address the needs of VA’s 

three Administrations, VHA, the Veterans Benefits Administration, and the National Cemetery Administration. 

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1 Review of Management of Health Care Center Leases, October 22, 2013. 2These costs include architecture-engineer services, due diligence services such as environmental studies and title verification, and land options contracts. 

The OIG has completed reviews that disclosed a pattern of ineffective VA capital 

planning and asset management. Our reporting has shown that VA has not effectively managed the capital asset planning process to ensure that minor construction 

projects are not combined or otherwise significantly changed after approval, or that 

leased facilities are of the right size and in the right location to ensure they are 

fully utilized. In addition, VA has not effectively executed authorized construction 

and lease projects to ensure they are completed timely and within budget. Until 

these issues are addressed, VA will not have assurance that it is timely and costeffectively acquiring health care facilities to serve the needs of its veteran population. 

HEALTH CARE CENTER LEASE MANAGEMENT 

In October 2013, we reported that VA’s management of timeliness and costs in 

the Health Care Center (HCC) lease procurement process was ineffective. 1 As of August 2013, only four of seven leases had been awarded and no HCCs had been built, 

despite VA’s target completion date of June 2012. Congress authorized approximately $150 million for the HCC facility activations. 

We found the following deficiencies: 

• Lack of Guidance – VA did not meet the aggressive milestones it set for HCC 

activation and occupancy due to a lack of specific guidance for this new initiative. The existing VA handbook did not cover lease projects with such high annual costs as those of the new HCCs. 

• Inaccurate Milestones – VA used identical milestones for completing the seven 

HCCs even though the projects varied in size and budget. VA planned 32 total 

months for completing the seven HCCs, with annual lease costs ranging from 

$3.8 million to $16.2 million. Also, VA used a two-step process that separated 

land acquisition and contractor selection into different phases and should have 

lengthened each overall lease acquisition by 8 to 9 months. 

• Lack of Documentation – Documentation was unavailable to support whether 

VA adequately assessed the feasibility of accomplishing the HCCs in the aggressive 32-month time frame promised. Given the lack of progress to date and the 

inadequate planning documentation, it will take far more time than Congress 

anticipated for VA to award and activate the seven leases. 

• Lack of Central Tracking – VA could not provide accurate information on HCC 

spending into April 2013. According to VA officials, central cost tracking was 

not in place to ensure transparency and accurate reporting on all HCC expenditures. During our audit work, VA officials provided various estimates, ranging 

from about $4.6 million to $5.1 million, on the costs to prepare for HCC lease 

awards, but we could not gain reasonable assurance that this figure represents 

a complete accounting of HCC costs. 2 Until effective central cost tracking is instituted, expenditures to acquire the HCC leases will remain unclear. 

We made recommendations to the Principal Executive Director, Office of Acquisition, Logistics, and Construction (OALC), and the Under Secretary for Health to: 

• Establish adequate guidance for management of the procurement process of 

large-scale build-to-lease facilities. 

• Provide realistic and justifiable timelines for HCC completion. 

• Ensure HCC project analyses and key decisions are supported and documented. 

• Establish central cost tracking to ensure transparency and accurate reporting 

on HCC expenditures. 

They both concurred with our recommendations. We consider the corrective action 

plans submitted to be acceptable and we will follow up on their implementation. 

Butler, Pennsylvania Health Care Center Lease 

In response to an anonymous complaint received in late March 2013, the OIG’s 

Office of Contract Review conducted a review of the proposal submitted by Westar 

Development Company, LLC, for the contract of the lease to develop an HCC in Butler, Pennsylvania. The complainant alleged that Westar was actually conducting 

business for entities created and controlled by Mr. Michael Forlani who was suspended from doing business with VA in December 2011. In 2012, he pled guilty to 

bribery and racketeering charges, and on April 1, 2013, was sentenced to 97 months 

in Federal prison. 

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On May 31, 2012, VA awarded a 20-year lease to Westar for the Butler, PA, HCC. The total value of the lease was $151 million. Mr. Robert J. Berryhill submitted the 

proposal as the Senior Vice President of Westar and listed Mr. Samuel E. Calabrese 

as the President of Westar. On April 3, 2013, a criminal information was filed in 

the U.S. District Court for the Northern District of Ohio against Mr. Berryhill 

charging him with five counts of mail fraud, two counts of wire fraud, one count 

of false impersonation of a Federal officer, and one count of aggravated identity 

theft. On April 23, 2013, he pleaded guilty and on July 30, 2013, Mr. Berryhill was 

sentenced to more than 6 years in prison. 

Our review substantiated the initial allegation. The land proposed by Westar had 

been purchased by or through individuals and entities affiliated with Mr. Forlani. 

In addition, Mr. Calabrese was currently employed by one of the suspended entities 

and provided consulting services to another. We also determined that the proposal 

submitted by Westar was replete with false and misleading representations that 

were relied on by VA when evaluating the proposal and making the award. These 

false representations resulted in points being awarded to Westar during the technical evaluation. We found: 

• Westar was not a veteran-owned business as claimed. • Westar grossly misrepresented its past performance and experience and that of 

its team members. • Westar did not have an agreement with the general contractor identified in the 

proposal. 

• Westar identified team members with whom there was no formal arrangement. 

On June 13, 2013, we issued a Management Advisory Memorandum to OALC. In 

response, VA issued a stop work order and on August 9, 2013, terminated the contract for cause. In addition, VA has proposed the debarment of Westar, Mr. 

Berryhill, Mr. Calabrese, VA Butler Partners, LLC, and VA Butler Partners Holdings, LLC. 

At the request of OALC’s Executive Director, we have continued our review to determine who, if anyone, should be held accountable within VA. We expect to issue 

the results of that review in December 2013. 

Brecksville, Ohio, Enhanced Use Lease 

In December 2011, the OIG’s Office of Contract Review initiated a review of the 

Enhanced Use Lease (EUL) between VA’s Office of Asset Management and Veterans 

Development, LLC (VetDev). The EUL was entered into as part of VA’s consolidation of the Cleveland, Ohio, campuses located in Brecksville and the Wade Park 

area of Cleveland, Ohio. VA’s EUL authority allows VA to lease underutilized property to private developers. Under the EUL with VetDev, VA leased the Brecksville 

campus to VetDev for a one-time cash payment of $2 million and in-kind consideration of not less than $4 million. The ‘‘in-kind’’ consideration was space provided at 

no cost to VA in an administrative building and a parking garage that VetDev constructed adjacent to the Wade Park campus and leased back to VA. The package 

also included payment to VetDev for care provided to veterans in a domiciliary that 

VetDev built adjacent to the Wade Park campus. Payments for the space and domiciliary care are paid under service agreements entered into as part of the EUL. 

We determined that the decision to completely vacate and close the Brecksville 

campus and consolidate to the Wade Park campus was not in VA’s best interest because: 

• There was insufficient space at Wade Park to transfer all services provided at 

Brecksville which resulted in increased costs to VA to lease off-campus space. 

• The estimated reported cost savings associated with the consolidation were not 

supported. 

• VA is overpaying VetDev for space and services at Wade Park. 

• There is an increase in security risk to VA employees and patients at the leased 

space at Wade Park. 

We concluded that the service agreements associated with the EUL were used to 

circumvent the leasing procurement process. The use of a service agreement for the 

domiciliary was of particular concern because it did not include any ‘‘in-kind’’ consideration for the EUL and included patient care services provided by a subcontractor, Volunteers of America, which was reimbursed on a per patient per day 

basis, not as a lease for space. Contracting out domiciliary services is inconsistent 

with VA policy. 

As previously noted, the criminal charges against Mr. Forlani included bribes 

made to obtain an interest in the property adjacent to the Wade Park campus on 

which the two buildings and garage were constructed as well as preferential tax 

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3 Review of VHA’s Minor Construction Program, December 17, 2012. 

breaks. In addition, interactions between Mr. Forlani and the Director of the Cleveland Health Care System at the time, Mr. William Montague, resulted in criminal 

charges filed against Mr. Montague in June of this year. 

VHA’S MINOR CONSTRUCTION PROGRAM 

In response to a request from the Committee on Appropriations, U.S. House of 

Representatives, we reviewed the organizational structure, procedures, and financial 

controls VHA used to manage its minor construction projects. 3 We reported that 

VHA’s Minor Construction Program lacked adequate internal controls for oversight 

of individual projects as a means of ensuring proper use of minor construction 

funds. We found that VHA did not ensure that medical facility funding was consistently used to supplement minor construction projects. In addition, VHA did not ensure adequate monitoring of minor construction project schedules and expenditures. 

Proper Use of Minor Construction Funding 

VHA integrated design and construction work for 7 of 30 minor construction 

projects into 3 combined projects that exceeded the $10 million minor construction 

spending limit. As a result, we reported that VHA violated the Anti-Deficiency Act 

in five of seven projects. We also found that 3 of 30 projects were inappropriately 

supplemented with medical facility funds and project monitoring was ineffective. A 

third combined project was in the process of being awarded; however, when the OIG 

notified VHA of a potential Anti-Deficiency Act violation, VHA suspended these 

projects during the award process. 

This improper use of minor construction funding occurred because Office of Capital Asset Management and Support (OCAMS) and Veterans Integrated Service Network (VISN) officials did not effectively oversee project execution and OCAMS fully 

funded individual projects prior to medical facilities developing contract solicitations 

for design and construction. Once funding was provided to medical facilities, 

OCAMS and VISNs were dependent on the facilities to self-report changes in project 

scope during the contract solicitation process. This resulted in OCAMS and VISNs 

not being fully aware of project scope changes in the contract solicitation process 

for design and construction. 

According to an OCAMS official, VHA was strongly encouraged to outsource design and construction contract management to the U.S. Army Corps of Engineers 

(USACE) at medical facilities where contracting resources were scarce. USACE 

managed 13 of the 30 projects we reviewed. Typically, after OCAMS officials approved minor construction projects, USACE managed project execution. USACE was 

responsible for integrating the design and construction of five of the seven minor 

construction projects we identified as being improperly combined into two major construction projects. 

According to VHA officials, OCAMS maintained no control over project scope once 

funding was allotted and did not even review the construction contract solicitation 

prepared by the USACE’s contracting officer. Further, at one VA medical facility, 

project engineers responsible for the facility’s minor construction projects did not 

have copies of the USACE contracts signed on the medical facility’s behalf. This condition heightened construction risks and limited oversight and control of construction costs and change orders. 

Medical Facility Funding and Minor Construction Projects 

Our report also disclosed that 3 of the 30 minor construction projects we reviewed 

were supplemented with medical facility funding. These three projects received 

$24.4 million in minor construction and $14.6 million from medical facility funds. 

When adding funding from both appropriations together, two of the three projects 

exceeded the $10 million spending limit for minor construction projects. 

VA medical facilities did not follow non-recurring maintenance (NRM) policy limiting the use of medical facility funding to supplement minor construction projects 

and limiting renovation projects to $500,000. OCAMS provided guidance in September 2008 and again in September 2010 to VA medical facilities on the allowable 

uses of minor construction and NRM funds based on draft Handbooks that had not 

been officially issued. These draft Handbooks defined the limits of minor construction projects and expanded NRM to include projects that renovated and modernized 

existing facility square footage between $500,000 and $10 million. 

Monitoring of Minor Construction Projects 

OCAMS and VISN officials did not routinely monitor minor construction project 

schedules and financial performance. Rather, OCAMS assigned responsibility to VA 

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4 Review of Alleged Mismanagement of The Villages Outpatient Clinic, Marion County, Florida, 

August 7, 2012. 

medical facility project engineers to monitor the projects and notify OCAMS if significant changes occurred or additional project funding was required. The draft 

minor construction program Handbook required OCAMS to create Minor Program 

Review Teams to perform quarterly reviews of project schedules and financial performance at selected sites. However, we found no evidence that the Minor Program 

Review Teams were formed and instead that internal program reviews were performed. As a result, VHA lacked the ability to effectively identify projects with cost 

overruns, significant schedule slippages, or significant construction scope changes in 

a timely manner and take corrective actions when necessary. 

Recommendations 

To address these issues, we recommended the Under Secretary for Health publish 

Minor Construction Program policy, develop procedures to ensure projects are executed within their approved scope, and determine whether other combined minor 

construction projects violated the Anti-Deficiency Act. VHA also needed to implement a mechanism to ensure medical facility funding is not used to supplement 

minor construction projects, ensure program reviews are performed, and strengthen 

project tracking reports. The Under Secretary for Health concurred with our findings and recommendations, and provided action plans to address our recommendations. In November 2012, VHA finalized and published policy for the Minor Construction Program. VHA has new procedures requiring that design documents be 

compared to approved project scopes prior to funding transactions being performed. 

As of today, one of the six recommendations remains open. 

The Villages Outpatient Clinic, Marion County, Florida 

In August 2012, we reviewed allegations received through the OIG Hotline that 

The Villages Outpatient Clinic (OPC) was underutilized during the first 18 months 

the facility was open. 4 The 53,000-square-foot, multi-specialty facility opened in October 2010 and was expected to provide up to 120,000 primary care, mental health, 

and specialty care visits per year. Congress approved funding of about $1.5 million 

per year for the next 20 years. 

Our review disclosed that The Villages OPC was not used to provide primary care, 

mental health, and specialty care as planned. In particular, The Villages OPC did 

not use the surgical suite between the time the facility opened in October 2010 and 

August 2012. The surgical suite consisted of four fully equipped operating rooms 

and three gastrointestinal procedure rooms. The surgical suite and procedure rooms 

shared a common, eight-bed surgical recovery area, which was also fully equipped 

but hardly ever used. We determined The Villages OPC was likely to achieve only 

41 percent of primary care, 34 percent of mental health care, and 24 percent of specialty care visits planned for FY 2012. 

Underutilization of The Villages OPC occurred because of a lack of oversight over 

the planning and operations of the facility. Specifically, VISN 8 did not adequately 

monitor it on an ongoing basis as required by VHA policy to determine whether the 

facility was meeting the business purposes, goals, and objectives presented in the 

project proposal. North Florida/South Georgia Veterans Health System (the Health 

System) officials did not effectively determine the overall demand for medical care 

or the types of specialty services needed most in the geographical area where The 

Villages OPC was located. Health System officials also could not document that the 

demand justified the size of the OPC, or that the specific health care needs of local 

veterans justified each of the 13 specialty services planned in the proposal. 

As a result, the Health System spent almost $2 million inefficiently on facility and 

equipment costs as well as on staff salaries and benefits. We conservatively estimated that between October 2010 and April 2012, the Health System incurred about 

$1 million in costs for equipment, approximately $668,000 in salaries and benefits 

for three surgeons, and about $263,000 for facility space that was not fully utilized. 

These funds represented a lost opportunity to provide veterans with additional access to medical care in an underserved geographic area. 

We recommended that the VA Sunshine Healthcare Network Director conduct a 

thorough utilization review of The Villages Outpatient Clinic to ensure facility resources efficiently target the medical needs of the most underserved veterans. Further, the Network Director should determine whether to relocate the unused nuclear 

medicine machine to another VA medical facility. The VA Sunshine Healthcare Network Director agreed with our finding and recommendations. The Villages OPC 

began phasing in use of the operating room suite in June 2012. In addition, the 

North Florida/South Georgia Veterans Health System has finalized plans to move 

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5Delays totaled approximately 26 months. VA officials attributed 17 months due to the delay 

in transferring the site and 9 months for the unanticipated need for additional remediation of 

hazardous substances identified after site transfer. 

the Single Photon Emission Computed Tomography machine to Gainesville, Florida, 

to improve utilization. We closed the recommendations in our report in August 2013. 

CONSTRUCTION OF THE NEW ORLEANS VA MEDICAL CENTER 

According to VA officials, this project is the largest single construction project currently underway in the Department. In December 2011, the then Chairman of the 

Subcommittee on Oversight and Investigations, Committee on Veterans’ Affairs, 

U.S. House of Representatives, requested that the OIG provide information related 

to construction of the New Orleans VAMC to include reviewing the financing and 

budgeting of construction for the New Orleans VAMC and to examine plans to remove fuel tanks buried at the construction site. 

Our review of VA’s expenditures did not identify substantive issues with VA’s 

stewardship of the project. At the time of our review (February 2012), VA had obligated $359 million (36 percent) and expended $105 million (11 percent) of the $995 

million appropriated for the New Orleans VAMC. This was due to delays in the City 

of New Orleans delivering the site to VA and a need for additional VA remediation 

of hazardous substances that was identified after site transfer in April 2011. 5 VA 

has preliminary plans to mitigate delays by adjusting construction activities and if 

necessary compensating contractors negatively impacted by delays outside of their 

control in the construction phase of the project. 

CONSTRUCTION OF THE ORLANDO VA MEDICAL CENTER 

At the request of VA acquisition officials and pursuant to VA Acquisition Regulations, the OIG’s Office of Contract Review completed reviews of two construction 

change orders related to the Orlando VAMC construction project. The change orders 

were from contractors and subcontractors seeking compensation from VA for $9.6 

million. Our reviews questioned $2.9 million (30 percent). For the first change order valued at $4.46 million, we questioned $1.8 million due 

to differences between proposed versus actual costs, lack of supporting documentation for proposed costs, and the inclusion of costs for specific individuals whose efforts were unrelated to the scope of the change order. The second change order was 

valued at $5.15 million and we questioned $1.1 million related to an overstatement 

of the proposed costs, the inclusion of costs unrelated to the change order, and lack 

of supporting documentation for the proposed costs. We reported these questioned 

costs to the VA contracting officer for use in negotiating payment with the contractors and subcontractors. 

CONCLUSION 

Without effective capital asset management, VA officials have not been able to ensure authorized leased projects are completed timely and within budget, minor construction projects are not combined or otherwise significantly changed after approval, leased facilities are the right size and the right location to ensure they are 

fully utilized once completed, or authorized lease projects are completed timely and 

within budget. Until these issues are addressed, VA will continue to lack assurance 

that it is timely and cost-effectively acquiring health care facilities to serve the 

needs of veterans. 

Mr. Chairman, and Members of the Committee, this concludes my statement 

today. We will be pleased to answer any questions you may have. 

f 

Prepared Statement of Lloyd C. Caldwell 

Mr. Chairman and Members of the Committee, I am Lloyd Caldwell, Director of 

Military Programs for the U.S. Army Corps of Engineers (Corps). I provide leadership for execution of the Corps’ engineering and construction programs in support 

of the Department of Defense (DOD), other agencies of the Federal Government in 

the United States and around the globe. Lieutenant General Thomas Bostick, Chief 

of Engineers, leads the Corps. Thank you for the opportunity to testify here today. 

The Corps fully recognizes the importance of the service of members of the armed 

forces, the support of their families, and the service of our veterans, in sustaining 

the strength of our Nation. We understand the vital link between the goals of their 

service and missions and the technical capabilities we provide, from consultation to 

delivery of infrastructure. Members of our team have had the opportunity these past 

several months to engage some of your staff members as they have conducted factVACREP180 with DISTILLER

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finding on the Corps’ construction capabilities and experience with delivering medical facilities. Today we have been asked by the committee to address our approach 

to delivering construction; more specifically construction of medical facilities. 

DOD’s construction program utilizes designated construction agents, of which the 

Corps is one; who procure and execute design and construction of projects to deliver 

the Department’s infrastructure requirements authorized by law. All construction is 

acquired by contracting with the private sector. The Corps is also known for the 

Civil Works mission it provides for the Nation, and the Corps’ capabilities are perhaps uniquely developed to fulfill both military and civil engineering responsibilities. Interagency collaboration is an important element of the Corps’ work, and the 

Corps provides interagency support as a part of its service to the Nation. 

My testimony will address the Corps’ project delivery process, with specific attention to medical facility construction and the interagency relationship with the Department of Veterans Affairs (VA). First, I will provide an overview of the principles 

and processes our teams use as they plan and execute the projects that we undertake. That will be followed by a discussion of the relationship the Corps has with 

the VA and how we support their mission through the work we do on their behalf 

across the Nation. 

CONSTRUCTION PROCESS 

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

construction projects and programs, whether through our military missions or Civil 

Works responsibilities. The past 12 years have been especially demanding as we 

have simultaneously provided support to operations in Iraq, Afghanistan and to 

DOD as it transforms and realigns. During this period, the Corps completed 2,165 

military construction projects with a value of $50.3 billion. The Corps has delivered, 

or is in the process of designing and constructing, a full range of medical facilities 

for DOD, to include very large hospitals valued near a billion dollars, and capable 

of delivering world-class medical services. A summary of some of the recently completed and ongoing Corps work of significant medical facilities follows. 

Location Description Delivery Authorization 

Fort Belvoir, VA New Hospital completed 2011 $1.03 billion 

Fort Sam Houston, TX Hospital Addition completed 2011 $802 million 

Fort Riley, KS New Hospital under construction 2014* $404 million* 

Fort Benning, GA New Hospital under construction 2014* $350 million* 

Fort Bliss, TX New Hospital under construction 2016* $966 million* 

Rhine Ordnance Barracks, Germany New Hospital under construction 2021* $990 million* 

* Planned or scheduled as of November 1, 2013 

The Corps has long sought to lead, adapt, and apply important lessons of design 

and construction in conjunction with our industry partners to obtain economical and 

quality facilities meeting the requirements of DOD in a disciplined manner. For example, we applied concepts of Evidence Based Design with the DOD Office of Health 

Affairs to guide development of world-class medical facilities, and with the DOD 

Education Activity (DODEA) we developed design concepts for 21st Century school 

facilities. 

Regardless of the nature of the facility, the Corps has developed and implemented 

processes and capabilities for design and construction, which have been refined over 

many years. Our project management business process brings together the range of 

diverse professionals and activities required of a successful project, which includes 

our design, construction, acquisition, and project management professionals. Success 

depends upon early involvement to understand the overall project objectives and to 

plan the approach to execute the project from design through construction. We think 

of four fundamental elements to deliver successful projects: 

1. Learning what is needed; 

2. Planning the work; 

3. Executing the procurement; and 

4. Managing the execution. 

Each of these elements represents unique skills, involving multi-disciplined teams 

who account for project scope, delivery schedule, and ultimate cost as team members 

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work collaboratively with one another. These basics must be managed concurrently, 

in a continuous cycle that occurs throughout the life of a project. 

The responsibility for programming and budgeting for construction projects rests 

with the service or agency requiring the facility. However, the ultimate success of 

a project depends upon early development of the scope and acquisition plans of action, including validation of the scope and cost estimates. Learning about a project 

requires early involvement by the Corps with the project–‘‘Using Agency’’ to understand and assist with development of their requirements. We have found the sooner 

our professionals are involved, the greater our ability to deliver a successful project 

and minimize cost or time growth. 

Planning work begins as requirements are being developed. It engages all stakeholders and involves more than facility design. We also define and align requirements that may compete for cost, scope, or schedule objectives. Plans for acquisition, 

work phasing, and project delivery are agreed upon early, and before construction. 

We will determine the project acquisition processes, which will influence the design 

process and development of the solicitation. For medical facilities, the medical 

equipment requirements may be extensive, so decisions are made among the team 

for the manner of acquisition of medical equipment. 

Execution is a team effort from design through construction to include clinicians 

and medical service personnel of the Using Agency for medical facilities. During construction, we partner with the prime contractor and the government management 

team. Frequent, periodic meetings ensure open lines of communication to enable 

clear understanding of what all parties need throughout the project’s life. 

A governance approach that involves oversight from the job site to Corps leadership ensures early recognition, leadership awareness, and decision-maker involvement in resolving problems. A series of structured control processes, implemented 

throughout the organization, are designed to identify and evaluate issues with our 

partners as they arise and minimize the time it takes to address and resolve them. 

Training is also a vital component in maintaining professional standards and 

keeping up to date on current practices. We maintain educational courses and require or encourage professional credentialing in the processes and disciplines required for our mission. We provide specialized technical training across a broad 

range of subjects, providing continuous learning, essential to maintain the highest 

levels of expertise in engineering and construction throughout the Corps. We also 

draw heavily from the Defense Acquisition University, its certification and continuing educations programs to maintain contracting competencies. 

Budget and schedule risk is inherent in executing any construction projects, and 

medical facilities are among the most complex facilities we construct and deliver on 

behalf of DOD. They require close, frequent coordination with a large number of 

stakeholders, often with divergent interests and requirements. They require exacting technical design and construction standards, both of which must be carefully 

managed. Moreover, they are subject to changing requirements due to evolving medical technology – even during construction. We manage the challenges posed by 

those risks, and we seek to minimize the cost and time growth risk which complex 

medical facility construction may face. 

To assure the standards and criteria of the Defense Health Agency, and to assist 

in their planning, we established specialized medical infrastructure capabilities and 

employ them across the enterprise to assist us in delivering medical projects. Our 

Medical Center of Expertise at Fort Belvoir, Virginia, applies current specialized 

knowledge to address demanding health care facility requirements. It provides a full 

range of medical facility design, construction, outfitting, commissioning, and medical 

maintenance capabilities that support the Defense Health Agency. The Center’s 

staff includes subject matter experts in medical facility design and construction, 

serve as technical consultants, and draw on architect-engineer firms experienced in 

medical facility design. They participate in every phase of project delivery, from requirements development to project close out, and ensure we meet the full range of 

health care facility standards. 

The Corps has broad experience across its enterprise in construction and delivery 

of medical facilities. Of our forty-three local district offices, seventeen of them (40 

percent) have significant experience in medical facility design, construction, outfitting, repair, and maintenance. They have demonstrated the ability to deliver this 

demanding work on time and on budget. 

THE CORPS’ RELATIONSHIP WITH THE DEPARTMENT OF VETERANS 

AFFAIRS 

The Corps, as part of its interagency capabilities, has an established relationship 

with the Department of Veterans Affairs (VA), providing support for a broad range 

of facility construction and maintenance requirements. Authority for the Corps’ 

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work with VA is based on the Economy Act, which, coupled with an interagency 

agreement, provides us with sufficient authorities to work collaboratively. During 

2007, the Corps of Engineers and the VA formalized its relationship through a 

Memorandum of Agreement (MOA) for the Corps to provide the VA support in the 

execution of their minor construction and non-recurring maintenance needs. 

As veterans started returning home from service in recent conflicts, and increased 

funds to support facilities became available, VA leadership drew on this MOA, increasingly asking the Corps to assist with its construction needs. Prior to fiscal year 

2007, Corps execution support to VA was at or below $2 million annually for work 

for the Veterans National Cemetery Administration. In 2007, the workload grew to 

$7 million and quickly began to rise as follows: 

Fiscal Year Execution Amount 

($ millions) 

2008 14 

2009 108 

2010 348 

2011 377 

2012 340 

2013 239 

As execution funds have grown over the years so has the collaborative relationship between the Corps and VA. Corps Headquarters has a good and stable relationship with the VA’s Office of Construction and Facility Maintenance. Our regional 

and local offices have also developed relationships with each of the 23 Veterans Integrated Service Network (VISN) offices around the country; in the most recent two 

years, the Corps managed work at 74 different VA facilities nationwide. Whether 

and how a VISN incorporates the Corps services into its projects is at the discretion 

of each VISN. 

One example of our efforts is the recently completed 30,000 square foot expansion 

of the Grand Junction, Colorado VA Medical Clinic. We added a third floor surgery 

facility to an active facility, including operating rooms, intensive care units, and 

sterile processing areas. The project demonstrated our ability to work closely and 

collaboratively. Much of the work was accomplished at night, to minimize impacts 

to the operations. The local VA public affairs office provided project related information to the staff – establishing expectations and minimizing impacts. When issues 

arose, VA and Corps leaders worked through them, never allowing an impasse to 

divert from their collective goal – completing a vital facility to serve our veterans. 

Our relationship is growing; we are currently working together to assist VA develop and implement an enterprise construction governance capability; we expect to 

begin this effort within two months. We’ve also collaborated with the VA to provide 

training opportunities using a variety of instructional modes. We expect to assist 

with construction project quality management, schedule analysis and management, 

and project management automated information systems familiarization – all within 

the next four months. 

The Corps plays a unique role in service to the Nation as a subordinate command 

of the Army with expertise in both civil works and military infrastructure; we possess unique capabilities and have a long history of successfully solving demanding 

engineering challenges. We also acknowledge the solemn duty to care for our veterans and will continue to support those efforts with our most capable teams as we 

continue to develop our support and assistance relationships with the VA. 

Mr. Chairman, this concludes my statement. Thank you for allowing me to be 

here today to discuss the Corps’ construction capabilities. I would be happy to answer any questions you or other Members may have. 

f 

Prepared Statement of Mr. Glenn D. Haggstrom 

Chairman Miller, Ranking Member Michaud, distinguished Members of the Committee, we are pleased to appear here this morning to update the Committee on the 

Department of Veterans Affairs’ (VA) continuing efforts to improve construction proVACREP180 with DISTILLER

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cedures and planning processes resulting in the timely execution of major construction and leasing projects. Joining me this morning is Ms. Stella Fiotes, Executive 

Director, Office of Construction and Facilities Management. 

The Department’s infrastructure programs, which include major and minor construction, non-recurring maintenance (NRM), and leasing, are part of our ongoing 

mission to care for and memorialize our Nation’s Veterans. The Department is committed to meeting our responsibility to design, build, and deliver quality facilities 

as tools to meet the demand for access to health care and benefits. 

VA continues to improve its real property capital asset portfolio, providing stateof- the-art facilities that meet the needs of Veterans, allowing for the highest standard of service. We have taken on the challenge of updating our aging infrastructure 

to allow for flexibility to meet increased workload demands; changing Veteran patient demographics; advances in medical technology; new complex treatment protocols and advanced procedures; patient-centered care and services delivered closer to 

where Veterans live; and evolving Federal requirements. 

The focus of our testimony today is on VA’s major construction and leasing program – specifically efforts to improve program execution and – to provide you a perspective of how we are delivering VA’s important major construction projects. 

Program Execution 

VA has taken several steps to improve the management and oversight of its major 

construction and lease projects. In 2009, the VA Facility Management (VAFM) 

transformation initiative was established to improve planning processes; integrate 

construction and facility operations; and standardize the construction process. Our 

accomplishments include: 

1. Integrated master planning - VA has adopted an enterprise approach to integrated master planning as our business process standard. Consistent master planning will standardize requirements development, which will minimize design 

changes. 

2. Systems for project management - VA procured a collaborative project management software system in 2012 and is completing phase one fielding and will complete fielding in 2014. This software supports leases, major construction, and minor 

construction as well as NRM. 

3. Post occupancy evaluations (POE) - The POE program, piloted in 2012, is now 

the business process standard for the major construction program, and will expand 

to the minor construction program in fiscal year (FY) 2014. POE evaluates the completed construction to assure closure of all gaps and deficiencies noted in the approved project scope. 

Further, VA has implemented the findings of the December 2009 Government Accountability Office’s (GAO) report on ‘‘VA Construction: VA is Working to Improve 

Estimates, but Should Analyze Cost and Schedule Risks’’ and now performs risk 

analysis for potential cost and schedule delays as part of the project design process. 

VA has also implemented and recommended closure of all of the recommendations 

in the May 2013 GAO report ‘‘VA Construction: VA Additional Actions Needed to 

Decrease Delays and Lower Cost of Major Medical-Facility Projects.’’ These include: 

adding medical planners to the major construction programs to support integration 

of medical equipment into the construction process; consolidating change management guidance for construction contracts into an updated, handbook for staff; hiring 

additional staff attorneys to facilitate faster legal reviews of change order documents; and hiring additional resident engineers and contracting officers to reduce 

processing time for change orders. 

In April 2012, as a follow on to the VA Facility Management (VAFM) initiative, 

the Secretary of Veterans Affairs established the Construction Review Council 

(CRC) to serve as the single point of oversight and performance accountability for 

the planning, budgeting, execution, and management of the Department’s real property capital asset program. Chaired by the Secretary, the CRC identified challenges 

in four major areas, and through deliberate process improvements VA has addressed 

the following: 

1. Development of Requirements - VA now includes planners in the requirements 

development phase of the project, resulting in full requirements development before 

design commences. Design must advance to 35 percent completion prior to requesting major construction funds. This assures that full requirements are identified 

early and are designed, estimated, and managed through the construction cycle to 

yield more accurate cost estimates and scopes for VA’s budget submissions. 

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2. Design Quality - VA policy now requires constructability reviews as part of 

every design review. These reviews identify potential design errors and omissions 

prior to construction, allowing the design to be corrected, and thereby reducing 

changes during construction. 

3. Activation - VA has implemented an integrated approach to quantify the full 

activation costs associated with each project in order to assure the project construction program is coordinated with the development of the information technology (IT) 

and medical equipment budgets and plans. This prioritizes the funding and planning necessary for the procurement of medical equipment and IT infrastructure, in 

an effort to synchronize major equipment delivery and installation with the construction schedule. 

4. Program Management and Automation - VA has increased the education and 

certification requirements of project managers and has deployed collaborative tools 

for project management to ensure project cost, scope, and schedule growth are controlled. VA has also increased staffing for the oversight and execution of our construction project contracts in response to the size of the current construction program. 

Additionally, we will incorporate the Department’s acquisition program management framework into the project’s acquisition life-cycle. This will ensure that acquisition decision milestones identified during the design and construction phases of 

the project are reviewed by the acquisition decision authority in determining if the 

project is in compliance with meeting the identified requirements, cost and scope before moving on to the next phase. 

Through the CRC and continual review through the acquisition life-cycle, VA will 

continue to drive improvements in the management of VA’s real property capital 

programs. 

Another key component of our portfolio includes the major leasing program. VA 

is in the process of addressing recommendations in the October 2013 OIG report, 

‘‘Review of Management of Health Care Center Leases.’’ OALC and VHA are working together to implement corrective actions that will provide project managers additional guidance on acquiring build-to-lease facilities; establishing a reasonable 

timeline to award, construct and activate leases; ensuring key decisions and supporting analysis is documented; and improving the accuracy of expenditures associated with a project. 

Major Project Update 

VA bears the responsibility to manage all projects efficiently and to be good stewards of the resources entrusted to us by Congress and the American people. 

The new Orlando medical center will include 134 inpatient beds, an outpatient 

clinic, a 120-bed community living center, a 60-bed domiciliary, parking garages, 

and support facilities all located on a new site. VA expects to serve nearly 113,000 

Veteran enrollees through these facilities. The construction project is 85 percent 

complete. Currently, the prime contractor is projecting a completion date of September 2014, which is a slippage from the April 2014 date the contractor provided 

to VA in response to the Show Cause letter VA issued in January 2013. VA sent 

a Supplemental Agreement to the contractor to document the April 2014 date; however, the contractor declined to sign. While the contractor’s performance does not 

meet our expectations, VA continues to work with the contractor as the best way 

to deliver this project to ensure a quality project is delivered to meet the needs of 

Veterans and their families. 

The Denver replacement hospital will include 182 inpatient beds, an outpatient 

clinic, a 30-bed community living center, 30-bed spinal cord injury center, and 4-bed 

blind rehabilitation unit. VA expects to serve nearly 66,000 Veteran enrollees 

through these facilities. The construction project is approximately 30 percent complete. VA is now in litigation with the contractor regarding the integrated design 

and construction contract. Accordingly, I ask the Chairman’s and the Committees’ 

understanding that VA will not be able to respond to the matters at issue in the 

litigation as it may compromise the governments’ legal position. However, the construction is ongoing, and VA continues to work with the contractor. 

The New Orleans replacement hospital will include 200 inpatient beds, an outpatient clinic, and research, parking, and support facilities. VA expects to serve 

nearly 72,000 Veteran enrollees through these facilities. The construction project is 

approximately 34 percent complete. We are working closely with the contractor to 

arrive at a firm-fixed price for the construction. 

VA will continue to apply lessons learned from our current medical center projects 

toward future construction. The next two proposed medical center replacement 

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1Department of Veterans Affairs, FY 2013 Budget Submission Construction and 10 year Capital Plan, Vol. 4 of 4, February 2012, p. 8.1–1. 2 Ibid. p. 8.2–12 

projects are located in Louisville, Kentucky, and Omaha, Nebraska where both 

projects are in the early stages of design. 

The Louisville project is planned to include a new 108 bed medical center, a Veterans Benefits Administration Regional Office, structured parking, and associated 

campus infrastructure improvements. Schematic design solutions are being developed, concurrent with National Environmental Protection Act (NEPA) documentation on the 34 acre Brownsboro Road site in Louisville. 

The Omaha project is scoped to replace most of the existing campus, including a 

new surgical suite, intensive care unit, bed tower, diagnostic and administrative 

services, energy center and parking garages. This project is further in development, 

having completed all required NEPA documentation, and has entered into the Design Development phase. 

Conclusion 

In FY 2012 and FY 2013, VA delivered over $1.4 billion in facilities and continues 

work on 55 major construction projects valued at nearly $13 billion to provide the 

much needed facilities for our Veterans and their families. VA has a strong history 

of delivering facilities to accomplish its mission to serve Veterans. To help ensure 

previous challenges are not repeated and to lead to improvements in the management and execution of our capital program as we move forward we will focus on: 

• ensuring well defined requirements and acquisition strategies that meet the 

project needs; 

• assigning additional staff to assure timely project and contract administration; 

• partnering sessions that include VA, the construction, and design contractors; 

• early involvement of the medical equipment planning and procurement teams; 

• applying the acquisition program management framework to our projects; and 

• engaging in executive level on-site project reviews. 

We continually seek innovative ways to further improve our ability to design and 

construct state-of-the-art facilities for Veterans and their families and we regularly 

engage in forums composed of both the private and public sectors that discuss best 

practices and challenges in today’s construction industry. 

As we have done this past year we will continue to meet with Congressional delegations to discuss their projects, brief the House and Senate Veterans’ Affairs Staff 

to keep them apprised of the major construction program and provide regular updates to the Congressional Committees to ensure they are fully informed on the 

progress of these medical centers. Thank you for the opportunity to testify before 

the committee today. We look forward to answering any questions the Committee 

has regarding these issues. 

f 

Statements For The Record 

VETERANS OF FOREIGN WARS OF THE UNITED STATES 

MR. CHAIRMAN 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, thank you for the opportunity to submit our 

views regarding the Department of Veterans Affairs (VA) major construction and 

capital leasing projects. 

The vastness of VA’s capital infrastructure is rarely fully visualized or understood. VA currently manages and maintains more than 5,600 buildings and almost 

34,000 acres of land. Although VA has decreased the number of critical infrastructure gaps, there remain more than 3,900 gaps that will cost between $54 and $66 

billion to close, including $10 billion in activation costs. 1

Major Construction 

Decades of underfunding has led to a major construction backlog that has reached 

between $19 billion and $ 23.3 billion. There are currently 21 Veterans Health Administration (VHA) major construction projects that have been partially funded dating back to 2007. In the Administration’s budget request for FY 2014, VA requested 

funding for only one project. 2 The total unobligated amount for all currently budgVACREP180 with DISTILLER

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3 Ibid. p. 2–49 

4 Ibid. p. 1–4 

eted major construction projects exceeds $2.9 billion. 3 Yet, the total budget proposal for FY 2014 major construction accounts was less than $342 million. 

To finish existing projects and to close current and future gaps, VA will need to invest at least $23.2 billion over the next 10 years. 4 At current requested funding 

levels, it will take more than 67 years to complete VA’s 10-year plan. 

Of VA’s 49 current major medical facility construction projects on which there is 

data, 23 are over their initial cost estimate, 21 are at cost and five are under cost. 

These 49 facilities have a total cost overrun of $2.9 billion. Some of the changes in 

cost can be attributed to a change in the size of the facility or the scope of care it 

will deliver, but many of these cost overruns are a result of poor communication 

with the general contractors. In addition to cost overruns, 24 of the 29 projects that 

have been initiated have gone past their initial estimated completion date, while 

only five have been delivered on time. 

Many of these delays are a result of poor communication between VA and the general contractors. Not having defined roles and responsibilities for each VA official 

that manages portions of major construction projects, particularly within the change 

order process, causes contractors to get permission from one VA employee only later 

to be denied by a different employee. Failing to place medical equipment planners 

at each major construction site has also led to construction errors and change orders 

that would not have been necessary if the planner would have been on site. The 

lack of a project management plan makes it difficult to keep both the contractor and 

VA on the same page during the construction phase. 

The VFW believes VA could improve its major construction projects by changing 

to an architect-led design-build process. VA currently employs two project delivery 

methods: Design-bid-build and design-build. Design-bid-build project delivery is appropriate for all project types. Design-build is generally more effective when the 

project is of a low complexity level. It is critical to evaluate the complexity of the 

project prior to selection of a method of project delivery. 

Design-bid-build is the most common method of project design and construction. 

In this method, an architect is engaged to design the project. At the end of the design phase, that same architect prepares a complete set of construction documents. 

Based on these documents, contractors are invited to submit a bid for construction 

of the project. A contractor is selected based on this bid and the project is constructed. With the design-bid-build process, the architect is involved in all phases 

of the project to insure that the design intent and quality of the project is reflected 

in the delivered facility. In this project delivery model, the architect is an advocate 

for the owner. 

The design-build project delivery method attempts to combine the design and construction schedules in order to streamline the traditional design-bid-build method 

of project delivery. The goal is to minimize the risk to VA and reduce the project 

delivery schedule. Design-build, as used by VA, is broken into two phases. During 

the first phase, an architect is contracted by VA to provide the initial design phases 

of the project, usually through the schematic design phase. After the schematic design is completed, VA contracts with a contractor to complete the remaining phases 

of the project. This places the contractor as the design builder. 

One particular method of project delivery under the design-build model is called 

contractor-led design-build. Under the contractor-led design-build process, the contractor is given a great deal of control over how the project is designed and completed. In this method, as used by VA, a second architect and design professionals 

are hired by the contractor to complete the remaining design phases and the construction documents for the project. With the architect as a subordinate to the contractor, rather than an advocate for VA, the contractor may sacrifice the quality of 

material and systems in order to add to his own profits at the expense of VA. In 

addition, much of the research and user interface may be omitted, resulting in a 

facility that does not best suit the needs of the patients and staff. 

Use of contractor-led design-build has several inherent problems. A shortcut design process reduces the time available to provide a complete design. This provides 

those responsible for project oversight inadequate time to review completed plans 

and specifications. In addition, the construction documents often do not provide adequate scope for the project, leaving out important details regarding the workmanship and/or other desired attributes of the project. This makes it difficult to hold 

the builder accountable for the desired level of quality. As a result, a project is often 

designed as it is being built, compromising VA’s design standards. Contractor-led 

design-build forces VA to rely on the contractor to properly design a facility that 

meets its needs. In the event that the finished project is not satisfactory, VA may 

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have no means to insist on correction of work done improperly unless the contractor 

agrees with VA’s assessment. This may force VA to go to some form of formal dispute resolution, such as litigation or arbitration. 

An alternative method of design-build project delivery is architect-led designbuild. This model places the architect as the project lead rather than the builder. 

This has many benefits to VA, such as ensuring the quality of the project, since the 

architect reports directly to VA. A second benefit to VA is the ability to provide tight 

control over the project budget throughout all stages of the project by a single entity. As a result, the architect is able to access pricing options during the design process and develop the design accordingly. 

Another advantage of architect-led design-build is in the procurement process. 

Since the design and construction team is determined before the design of the 

project commences, the request-for-proposal process is streamlined. As a result, the 

project can be delivered faster than the traditional design-bid-build process. Finally, 

the architect-led design-build model reduces the number of project claims and disputes. It prevents the contractor from ‘‘low-balling,’’ a process in which a contractor 

submits a very low bid in order to win a project and then attempts to make up the 

deficit by negotiating VA change orders along the way. 

Health Care Center Leasing 

VA has also fallen behind on awarding the seven health care center leases that 

were authorized by Congress in 2009. Currently, four of the seven leases have been 

awarded, but none of the facilities are operational. This has occurred because VA 

lacks the guidance on how to manage the purchase process of projects of this size. 

Before these leases were authorized, VA only had guidance for projects that were 

much smaller in scope. However, they used this guidance to plan the site selection 

and award the contract. 

On October 22, 2013, the VA Office of the Inspector General (IG) found that site 

selection alone should have taken an average of 2.5 times the length of time as the 

guidance they were using recommended. Additionally, VA could not accurately account for how much has been spent to date on the health care center projects, and 

VA will not be able to fully account for costs until an effective central cost tracker 

is put in place. 

The IG provided VA with four recommendations to improve the timeliness and 

cost management issues that resulted from the lack of guidance for lease projects 

of this size. The VA has concurred with the recommendations and is in the process 

of developing the appropriate guidance and transparency for future health care center leases. 

The VA has taken steps to improve their major construction and health care center leasing projects, but small improvements over a long period of time will not be 

sufficient. If VA cannot drastically improve its major construction operations, it may 

be time for VA to ask for and receive assistance from outside its own agency to get 

its construction projects on track. VA and the Department of the Army (DA) currently have an Interagency Agreement (IAA) that allows VA to request assistance 

from DA on capital planning, design, engineering, and construction management 

services. It is unclear to what extent VA and DA have worked together under this 

IAA, but it seems it could be central in developing and maintaining VA’s major construction programs in the future. 

Mr. Chairman, this concludes my testimony and I look forward to any questions 

you or the Committee may have. 

f 

Disabled American Veterans 

Mr. Chairman and Members of the Committee: 

Thank you for this opportunity to present testimony for the record on the views 

of DAV (Disabled American Veterans) concerning the Department of Veterans Affairs (VA) and its capital investment programs, including the necessity for Congress 

to authorize important leases for VA community-based outpatient clinics and other 

necessary facilities, and to address other capital asset and construction policy 

issues. This is a very important hearing on a vital subject that in many ways has 

languished for years. We appreciate your conducting it today. 

Mr. Chairman, the Committee titled this hearing, ‘‘Building VA’s Future – Confronting Persistent Challenges in VA Major Construction and Lease Programs.’’ 

While this title may seem meaningful, newsworthy or topical to the Committee, 

DAV would differ on your characterization of its focus. We believe that, for years, 

VA’s path on capital needs, including its proposed leases, has been crystal clear, and 

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1FY 2012 Budget Submission, Construction and 10 Year Capital Plan, February 2011, Vol. 

4 of 4, p. 8.2–85. 

only seems ‘‘challenging’’ now because VA persistently has been obstructed by the 

Office of Management and Budget (irrespective of which party controlled the Administration) and Congress—including the Budget and Appropriations Committees in 

both chambers—in actually securing the resources VA has consistently and clearly 

identified as necessary to keep VA’s capital plants and facilities in proper, safe and 

modern condition for the care and treatment of veterans, including members of our 

organization, DAV. 

Over the years, VA has used a variety of techniques and approaches to identify 

and justify necessary capital resources, to sharpen these estimates, and to address 

the doubts and skeptics of VA’s true needs. Nevertheless, any perfunctory review 

of the end results of these annual efforts would show massive gaps between what 

was identified by VA professionals in the beginning of the process, what the Administration asked for, and what was ultimately provided by Congress. 

In plain language, to remain a viable health care system for the veterans who 

need VA today and will unquestionably need it in the future, we believe VA now 

needs a reasonable and sustained flow of billions of dollars in major medical facility 

construction, minor construction and maintenance and repair funds. 

The latest projection (based on VA’s ‘‘Strategic Capital Investment Planning’’ (SCIP) process, demonstrates that VA could easily spend over $50 billion or more 

over the next decade in all infrastructure accounts to modernize, renovate and replace health care facilities. Some of VA’s facilities are over 100 years old, and the 

facility average age is over 60 years. We estimate that VA’s current ‘‘ten year plan’’ 

for modernization of capital facilities under the SCIP approach would require 67 

years or even longer to achieve its goals if Congressional funding for these purposes 

continues at its recently observed pace. We are unsure why, even facetiously, VA 

would entitle the current plan a ‘‘ten year plan,’’ given this outlandish prospect. 

As a partner organization of the Independent Budget, DAV has regularly endorsed 

and recommended annual appropriations for major and minor medical capital facility improvements well in excess of what Administrations have requested, or that 

Congresses have provided in appropriations. Typically, over this decade, Congress 

has provided about one-fourth, more or less, of the amounts identified by our estimates. We believe that, absent sufficient funding, situations such as embraced by 

the title of this hearing are inevitable now, and will be repeated well into the future. 

Mr. Chairman, it is no secret that that the IB veterans service organizations have 

always relied on VA’s internal estimates in making our infrastructure funding recommendations to both the Administration and Congress, because we believe professional staff in these VA offices and facilities know their programs better than anyone, and are making estimates based on intimate knowledge of the system and its 

needs, professional principles associated with capital improvements, and known construction standards and costs. If these internal needs are overblown or inflated, are 

the ‘‘experts’’ in the Office of Management and Budget (OMB) or on Capitol Hill justifying their decisions to gut VA’s estimates and to fund these programs at lesser 

levels? How is it that VA develops a solid, professional and defensible budget for 

infrastructure, only to have it reduced without any justification or explanation? 

DAV believes this is also an oversight question worth the Committee’s efforts, to determine how these decisions are made, and by whom. 

Leased Facilities 

One of VA’s cornerstones in capital planning is leasing. Leasing community-based 

facilities is a proven, cost-effective way for VA to extend access and provide services 

without the need to build expensive government-owned facilities. Such leased facilities are an important element in the future of VA health care, discussed further in 

this testimony, and we appreciate the hoped-for resolution of the paralysis that has 

suspended this key program for over a year. VA’s current leasing plan calls for a 

little over $2 billion to be committed to leases over the next 10 years. VA leases 

properties to use for each administration within VA, ranging from community-based 

outpatient clinics (CBOC) and a variety of health care centers, to research, warehouse space and other valuable uses. The cost of these leases does not fall under 

VA construction accounts, but is accommodated from within each administration’s 

or other VA offices’ operating accounts. 1

Well known to this Committee, in a 2012 policy shift, the Congressional Budget 

Office (CBO) changed its accounting practices on how major facility leases are to be 

funded, effectively halting Congressional authorization of future VA leases. Currently, there are 28 major capital leases, totaling nearly $247 million, for which VA 

had requested Congressional authorization. These leases have been in limbo. This 

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backlog of leases will only grow as existing leases expire. Lack of reauthorization 

could result in closures of current VA clinics, and newly proposed clinics cannot be 

activated without authorization. Inaction will lead to increased costs associated with 

longer travel times or the need to authorize fee-basis care that otherwise would be 

provided through such leased CBOCs. Access to care will also decline as veterans 

will be forced to travel farther and wait longer for the care they need. 

We sincerely compliment the Committee and your professional staff in working 

to resolve the lingering dispute of the past year that delayed VA in opening new 

community-based clinics through the well-established and popular leasing program 

that has been used to extend VA care to hundreds of communities over the past 25 

or more years. Over that period, Congress improved VA health care access and patient satisfaction by authorizing and funding nearly 900 VA community-based outpatient clinics, the vast majority having been in leased space rather than government-owned facilities. These clinics have provided local, convenient and cost-effective primary care for millions of veterans. 

While we take no position on which specific community clinics and other VA facilities should be authorized in the new draft bill the Committee is considering today, 

we support the bill developed by the Chairman and urge its positive consideration 

by the Committee and the full House at the earliest possible date, so that the Senate can act on it this year. Millions of veterans already benefit from the cost-effective and commonsense approach of VA’s leasing facilities, and we appreciate the 

hard work of your professional staff in negotiating a potential resolution of what appeared only days ago to be an insoluble problem, that pitted the CBO against the 

OMB in a seemingly endless dispute about how these clinics should be treated in 

the budget. 

VA ‘‘Challenges,’’ or Loss of Talent? 

Another concern you articulated in your invitation letter is VA’s ‘‘persistent challenge’’ in managing the construction of several new VA medical centers. It is true 

that until these new facilities were authorized, VA had not completed construction 

of a new VA medical center since 1994. In all probability, hundreds of talented architects, engineers and other key staff in VA Central Office and facilities who had 

worked within VA in years previous to 1994 to build those facilities (Minneapolis, 

Portland, Baltimore, Richmond, West Palm Beach) departed their VA employment, 

because Congress in its wisdom determined not to authorize further VA major medical facilities as replacements for VA’s aging facilities. We do not blame those professionals or VA for these significant resignations and the subsequent loss of talent; 

but we have little doubt that the departures of these professionals affected VA’s 

ability to design, manage and build VA’s newest facilities. They certainly did. 

Mr. Chairman, one of your predecessors as Chairman in effect accurately predicted the current situation about six years ago, and based his concern on his view 

that so many of VA’s staff who had been involved in managing new construction 

in the 1980’s and 1990’s had departed that he doubted VA would be successful in 

building new facilities that Congress was considering to authorize at that time (Denver, Las Vegas, New Orleans and Orlando were specifically identified as among his 

concerns). It is no surprise to DAV today that VA has been experiencing difficulties 

in managing the projects now identified by this Committee as being of concern because of poor execution and cost overruns. However, we believe VA is making an 

honest and straightforward effort to learn from its past mistakes, and will in fact 

surmount the problems that have surfaced in recent times. The suggestion you 

made in your invitation letter that the Army Corps of Engineers or another federal 

agency could step in and improve this complex VA program is an unproven theory, 

and an unlikely scenario in our judgment. 

Considering the example of the Corps, the recently completed construction of the 

Fort Belvoir Army Community Hospital, the Army’s newest facility and one of the 

world’s most expensive hospitals, was managed by the Army Corps of Engineers. 

That $1.3 billion construction project was roundly criticized by outside reviewers for 

both delays and excessive costs, similar to the types of criticisms levied at VA over 

cost overruns at the Orlando and Denver facilities. We do not envision an Army 

Corps of Engineers takeover of VA construction to be in the best interests of veterans, or of VA’s capital programs. We know of no other federal agency with the 

expertise to build hospitals or other types of health care facilities suitable for veterans’ care. 

Mr. Chairman, it is important to remember that VA facilities are the primary 

places where our veterans receive their care, and these facilities are just as important entities as the physicians, nurses and myriad technicians who actually deliver 

their care. Every effort must be made to ensure these facilities remain safe and sufficient environments to deliver care to veterans. A VA budget that does not adeVACREP180 with DISTILLER

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2 Ibid. p. 8.2–12 

3 Ibid. p. 2–49 

4 Ibid. p. 1–4 

quately identify and fund facility maintenance and construction reduces the timeliness and quality of care for veterans. 

As indicated above, VA’s most recent iteration of facility planning mechanisms is 

SCIP. SCIP is described by VA as a tool to help VA make more informed decisions 

on its competing capital investment needs, in a severely constrained funding environment. One key element that appears to be missing from the SCIP criteria is a 

comprehensive assessment of the resources that exist outside of the VA through existing contracts and sharing agreements, and how those arrangements may affect 

VA’s need for VA-managed facilities. Unlike VA-built and leased space, contracts 

can be amended, cancelled or situated differently to respond to demographic changes 

and needs of veterans. VA-owned facilities are more static and inflexible. This is especially relevant and important to VHA because VA, Congress and the IBVSOs have 

increasingly supported leveraging community resources to provide accessible care to 

veterans in rural, remote and underserved areas where VA simply cannot justify 

government construction. Without an unambiguous understanding of the health 

care resources that exist outside of VA, the Department is greatly challenged to 

make sound decisions on capital investments and right-sizing its inventory for the 

near-, mid- and long-term planning vistas. Another apparent flaw of SCIP is the 

lack of transparency on the costs of VA’s future real property priorities that hinders 

VA’s ability to make informed decisions. This was among the findings in a report 

that the Government Accountability Office (GAO) issued on January 31, 2011, entitled VA Real Property: Realignment Progressing, but Greater Transparency about 

Future Priorities is Needed. 

The IBVSOs fully support the GAO’s recommendation to enhance transparency by 

requiring VA to submit an annual report to Congress on the results of the SCIP 

process, subsequent capital planning efforts, and details on the costs of future 

projects. Mr. Chairman, your draft bill’s inclusion of a new reporting requirement 

is consistent with the need for greater transparency in leased facilities, and we 

agree with the sentiment expressed in the bill. We believe a similar detailed annual 

reporting requirement should be imposed on all VA SCIP-prioritized projects. 

The IBVSOs also support the inclusion of new criteria that considers resources 

that are available to VHA through existing contracts and sharing agreements. We 

urge a more rigorous analysis by VA that informs the priority list of projects in 

SCIP. 

Quality, accessible health care continues to be the focus for DAV and the IBVSOs. 

To achieve and sustain that goal, large capital investments must be made, and 

should not be avoided or obscured with partial funding as is the present case. Presenting a well-articulated, transparent capital building plan is important, and a feat 

that VA has actually accomplished fairly consistently, but funding that plan at nearly half of the prior year’s appropriated level and at a level that is only 25 percent 

of what is needed to close the access, utilization and safety gaps is not responsive, 

and in fact impedes VA’s mission to care for veterans. 

As indicated above, decades of underfunding by one Administration and Congress 

after another have created a major medical facility construction crisis that has 

reached a scope of $19-$23.3 billion in unmet needs. Currently, 21 VHA major construction projects have been partially funded by Congress dating back to 2007. In 

the Administration’s budget request for the current year (FY 2014, still to be enacted by Congress almost two months into the year), VA requested funding for only 

one new project. 2 The total unobligated amount for all currently-budgeted major 

construction projects exceeds $2.9 billion. 3 Yet the total budget proposal for FY 

2014 major construction accounts was less than $342 million, a small fraction of 

needed funds. 

As summarized earlier, to complete existing approved projects and to close current 

and future gaps, VA needs to invest at least $23.2 billion 4 over the next 10 years. 

At current requested funding levels, it will take more than 67 years to complete 

VA’s ‘‘10-year plan.’’ In the short term, VA must begin requesting and Congress 

must begin providing funding for major construction at levels that at least begin to 

address this backlog, such as a level of $1 billion or more in major construction 

funding in FY 2015 as a modest down payment on the backlog. A funding level of 

this magnitude would enable VA to close the most severe safety gaps and complete 

funding on the longest-standing and previously approved major projects. 

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5 Ibid. p. 1–4 

6Department of Veterans Affairs, FY 2013 Budget Submission Construction and 10 year Capital Plan, Vol. 4 of 4, February 2012, p. 8.1–1. 

Minor Construction Accounts 

To close all the minor construction gaps within a 10-year timeline, VA would need 

to invest between $6.8 billion and $8.3 billion. 5 For several years, VA minor construction was funded at a level to actually meet its 10-year goal, and we appreciated 

that commitment by Congress. However, over the past two years (2012–2013), Congress has acceded to the Administration’s drastic funding reductions in minor construction requests. However, VA proposed $715 million in this account for FY 2014, 

an amount that comes close to the level needed annually to close all gaps within 

ten years. 

The IBVSOs believe that minor construction accounts can be brought back on 

track by investing approximately $831 million per year over the next decade to close 

existing gaps and prevent an unmanageable situation. 

Another unmet and significant challenge for VA in infrastructure is associated 

with VA’s national Medical and Prosthetic Research Program. An independent analysis commissioned by VA at the behest of the House Appropriations Committee, 

published in 2012 after an unconscionable delay, clearly showed a need for VA to 

invest almost $800 million in upgrades, renovations and outright replacements of 

VA research laboratories and associated research facilities. While we realize these 

funds will not materialize immediately given VA’s other needs as outlined in this 

testimony, we urge Congress to begin to address needs in VA’s research program 

by appropriating new funding for both major and minor construction projects, and 

for additional maintenance, at minimum to address the most serious deficiencies 

identified in the research infrastructure report. 

Nonrecurring Maintenance Accounts 

Even though non-recurring maintenance (NRM) is funded through VA’s Medical 

Facilities Appropriation account, and not through a construction appropriation, it, 

too, is critical to maintenance of VA’s capital infrastructure. NRM embodies the 

many small projects that together provide for the long-term sustainability and utility of VA facilities. NRM projects are one-time repairs, such as modernizing mechanical or electrical systems, replacing windows and equipment, and preserving or 

replacing roofs and floors, among other routine maintenance needs. Nonrecurring 

maintenance is a necessary component of the care and stewardship of a facility. 

When managed responsibly, these relatively small, periodic investments ensure that 

the more substantial investments of major and minor construction provide real 

value to taxpayers and to veterans as well. 

With ever-shrinking requests from the Administration and compliant appropriations from Congress in recent years, VA finds itself slipping farther behind in addressing a slew of recognized safety, utilization, and access deficits associated with 

infrastructure. To simply maintain VA infrastructure in its current (and often substandard) form, VA’s NRM appropriations account could easily justify $1.35 billion 

per year, based on the estimated plant replacement value the IBVSOs have calculated. The account is currently being funded at $712 million, about half of what 

is needed. Even more funds will be needed to prevent the current documented NRM 

backlog of $19 billion to $23.3 billion from growing to more staggering levels. Also, 

to close the gaps in safety, access and utilization, VA will need to invest between 

$27 and $33 billion more in major and minor construction, and $2 billion or more 

in leasing. 

Plant Replacement Value 

The vastness of VA’s capital infrastructure is rarely fully visualized or understood. VA currently manages and maintains more than 5,600 buildings and almost 

34,000 acres of land with a plant replacement value (PRV) of approximately $45 billion. Although VA has worked to reduce the number of critical infrastructure deficits, there remain more than 3,900 gaps that will cost between $54 and $66 billion 

to close, including $10 billion in activation costs for new facilities that will be needed downstream. 6

VA is falling behind in closing current NRM safety, utilization and access gaps. 

Just to maintain what VA manages, in the condition that it is in, VA’s NRM account 

should be funded at $1.35 billion per year, based on the IBVSO estimated PRV. It 

is currently being funded at about one-half of need, at $712 million per year. More 

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7Department of Veterans Affairs, FY 2013 Budget Submission Construction and 10 year Capital Plan, Vol. 4 of 4, February 2012, p. 1–4. 

funds will need to be invested to prevent the $22.4 billion NRM backlog 7 from growing even larger. 

The IBVSOs believe VA should develop a PRV schedule and publish its results. 

Adding the PRV to the SCIP will allow VA to more accurately determine the appropriate amount to request for NRM and objectively determine when a facility becomes more costly to maintain than to replace. Using PRV as a tool, VA can more 

accurately determine the annual funding levels needed for NRM by facility, allowing 

for the reduction in the NRM backlog and fully funding future needs in a way that 

would be the most cost effective. The industry goal for NRM is around two percent 

of the PRV. At that rate, facilities can operate for 50 years or more without outspending what it would cost to replace them. Knowing what percentage of the PRV 

is being spent will allow Congress and VA to take a longer view of capital planning, 

and to visualize when a facility will need to be replaced. 

In Conclusion 

Mr. Chairman, in summary, if Administrations and Congresses properly fund 

VA’s infrastructure needs into the future, in cognizance of this testimony that the 

work of the IBVSOs represents, and if VA adopts some of the important recommendations in the Independent Budget, we believe much of VA’s deficit in capital 

infrastructure can be addressed, and its methods can be improved. However, due to 

the decades of underfunding that has occurred in addressing VA’s capital needs, we 

see no ‘‘quick fix’’ to solve VA’s current capital crisis. Years of benign neglect must 

be replaced with years of dedicated and predictable investments in infrastructure, 

if Congress intends to ensure that VA remains a viable provider of health care services in the future. 

Mr. Chairman and Members of the Committee, this completes DAV’s testimony, 

and we appreciate the opportunity to present it for the Committee’s consideration. 

f 

The American Legion 

Chairman Miller, Ranking Member Michaud, and distinguished Members of the 

Committee; 

Building a hospital is no easy task – neither is running one for that matter. The 

Department of Veteran Affairs (VA) owns and operates more than 1,700 hospitals 

around the country, with 32 hospitals being recognized as ‘‘Top performers’’ by The 

Joint Commission, a not-for-profit organization that ensures the quality of U.S. 

health care by its intensive evaluation of more than 20,000 health care organizations. 

On behalf of our National Commander and the two and a half million members 

of The American Legion, thank you for inviting us to share our views on the VA’s 

major facilities construction program. 

When American Legion National Commander Dellinger testified before a joint session of Congress on September 10th 2013, Congressman Coffman referred to the 

Commander’s construction background and asked Commander Dellinger if he would 

please offer his comments, based on his personal experience in the construction industry, about construction challenges that VA was facing in Colorado and other 

areas. Commander’s Dellinger’s responded ‘‘Maybe the VA should get out of the construction business, and do what they do best – take care of our veterans’’ 

Since September, American Legion leaders and staff have been researching and 

reviewing possible policy changes regarding VA’s major construction and leasing 

programs, and will be presenting our findings and recommendations to our voting 

members during our upcoming meeting in March 2014. It will be at this meeting 

that The American Legion will decide whether or not to develop and pass a resolution regarding the VA construction program. 

As part of our research and investigation, The American Legion met with senior 

officials from The Army Corps of Engineers, The VA Office of Acquisition, Logistic 

& Construction (OALC), and the VA Office of Construction and Facilities Management to assess the viability of diversifying VA’s construction management responsibilities. 

During our evaluation, we found that; 

The Army Corps of Engineers 

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➢ Is adequately suited to undertake the long-term mission of managing VA’s 

construction portfolio 

➢ Has a track record that is equal to or better than the federal industry standard regarding on-time, on-budget construction projects 

➢ Would report directly to VA and not replace OALC 

➢ Has worked on VA construction projects in the past 

➢ Routinely builds hospitals for the Department of Defense 

The Corps is not without its criticisms, however most of the criticisms suffered 

by the Army Corps of Engineers involve their Civil Construction arm and the 

amount of money Congress has dedicated to disaster relief, beach erosion and other 

civil engineering projects, not their construction projects. One note regarding this 

organization is that, there is more transparency and ready access to information regarding overhead expenses and actual costs than with private firms as the Government Accounting Office has an entire collection of assessments and evaluations of 

The Army Corps of Engineers ready for public review. Information about Army 

Corps can also be found at the Congressional Budget Office, The Congressional Research Service, as well as other federal research activities and offices. 

It is also important to note that inserting the Army Corps of Engineers into the 

VA construction program would not reduce VA’s authority or oversight in any way, 

as VA would always maintain the roll of ‘‘customer’’ in any future relationship. Another advantage is the advocacy role that Army Corps assumes on behalf of VA. In 

the event of cost overruns not covered by the reserve fund, Army Corps takes on 

the responsibility of representing VA before Congress to request additional appropriated funds needed to complete the project. 

Based on our initial research, we don’t believe that Army Corps would be adequate solutions to interject into the troubled projects currently in progress, but 

would have the flexibility and ability to be retained as a consultant to help evaluate 

paths to completion, if requested, and their value to VA on future construction 

projects will be the subject of our pending resolutions and recommendations. That 

said; it is also true that the Army Corps of Engineers is routinely relied on to offer 

oversight and advice when federal projects are not performing as planned, thus giving Army Corps the reputation of expert in the construction management industry. 

While reviewing VA’s construction program we found that the VA initiated a Construction Review Council (CRC) in April 2012 to serve as the single point of oversight and performance accountability for the planning, budgeting, execution, and delivery of the VA real property capital asset program. It was further explained that 

the CRC undertook a complete review of the Department’s real property capital 

asset program life cycle to ensure the phases of the life cycle were properly identified and the inputs and outputs of the respective phases were achieved to ensure 

the successful completion of the capital program. 

The council made four recommendations: 

➢ Requirements - Complete 35 percent of design prior to submitting project for 

construction funding. Define processes for capturing origin requirements, approving 

requirements, and approving changes to the requirements once project development 

has started. Conduct master planning of all VISNs (include all VBA and NCA facilities) and integrate plans into the SCIP 10-year plan. Master plans will include 

major projects, leases, minor projects, and non-reoccurring maintenance (NRM) construction for all Administrations. 

➢ Design Quality - Identify and implement steps to reduce design related issues 

that increase cost and/or delay construction. Improve peer review process by including assessment of constructability, using construction management firms to augment Architectural/Engineering (A/E) technical peer review. 

➢ Funding - Coordinate SCIP process with budget to assure alignment with 

services and related initiatives. Consider a dedicated design fund to allow design to 

proceed seamlessly from start to finish. Recognize and include OI&T costs and activities as part of project cost and effort. Consider a separate fund for historic preservation activities. 

➢ Program Management & Automation - Adhere to common leading indicator 

metrics for construction. Implement new construction management software tool. 

Streamline processes and procedures for change orders. Increase professional certifications for program/project managers. Link medical equipment procurement to specific construction to ensure synchronization. 

Since no new projects have been initiated since the implementation of these recommendations, it is not possible to gage what impact, if any the recommendations 

will have on VA’s construction program. 

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VA has developed a change order handbook since the original one was not consistently applied across project sites. In addition, change orders below $250,000 will not 

be submitted to VA Central Office for approval which should speed up change orders 

on the local level. 

While The American Legion is not prepared to make any specific recommendations to Congress at this time, we are confident our Veteran’s Affairs and Rehabilitation Commission, who has oversight of this issue, will present their findings and 

recommendations to The American Legion during our Winter Conference, and will 

then make copies of our work, and any future approved resolutions available to this 

committee. 

In conclusion, should this Committee consider any changes to the current procurement process of VA construction, The American Legion would insist that language 

be included into any bill that requires any contracting agency participating in VA 

construction activities be required to adhere to VA’s Vets First contracting policies 

in accordance with Public Law 109–461, and all applicable VA procurement policies 

regarding veteran small business procurement priorities. 

Thank you again for inviting The American’s Legion to share our views on this 

important matter. 

For additional information regarding this testimony, please contact Mr. Louis Celli 

at The American Legion’s Legislative Division, (202) 861–2700 or lcelli@legion.org. 

f 

Questions For The Record 

LETTER AND QUESTIONS FROM: HVAC, TO: VA 

January 10, 2014 

The Honorable Eric K. Shinseki 

Secretary 

U.S. Department of Veterans Affairs 

810 Vermont Avenue, NW 

Washington, DC 20420 

Dear Mr. Secretary: 

In reference to our Full Committee hearing entitled, ‘‘Building VA’s Future Confronting Persistent Challenges in VA Major Construction and Lease Programs’’ that 

took place on November 20, 2013. I would appreciate it if you could answer the enclosed hearing questions by the close of business on February 28, 2014. 

Committee practice permits the hearing record to remain open to permit Members 

to submit additional questions to the witnesses. Attached are additional questions 

directed to you. 

In preparing your answers to these questions, please provide your answers consecutively and single-spaced and include the full text of the question you are addressing in bold font. To facilitate the printing of the hearing record, please e-mail 

your response in a Word document, to Carol Murray at 

Carol.Murray@mail.house.gov by the close of business on February 28, 2014. If you 

have any questions please contact her at 202–225–9756. 

Sincerely, 

MICHAEL H. MICHAUD 

Ranking Member 

MHM:cm 

Questions Submitted by Ranking Member Michaud: 

1. The VA Office of Inspector General released a report on October 22, 2013 titled 

‘‘Review of Management of Health Care Center Leases’’ (VAOIG Report). This report 

states that ‘‘VA could not provide complete financial information on the seven 

HCCs. VHA delegates funds tracking to project-level management at the Veterans 

Integrated Service Networks (VISNs) and RPS. VHA’s former Chief Financial Officer said VHA headquarters would need to request HCC information from this level 

to compile a complete picture of costs. Although project-level management at the 

VISNs and RPS tracked HCC financial information, neither could provide complete 

data and support regarding total costs incurred to procure HCC leases.’’ 

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a. Please provide the Committee with the specific steps taken or proposed to be 

taken by VA to improve its ability to identify and track costs associated with the 

leasing program. 

2. The VAOIG Report states that the VAOIG ‘‘could not identify a common fund 

code across VISNs for each HCC so costs could be systematically extracted from 

VA’s Financial Management System. Further, RPS personnel could not readily provide complete financial information for all HCC expenses. RPS is responsible for the 

day-to-day management of all lease procurement activities from project initiation to 

lease award, including tracking associated expenses.’’ 

a. What steps, if any, has VA taken to address this concern and provide more accurate and complete cost information regarding HCCs and other VA construction 

and lease projects. 

3. In regards to the project-level management of VA construction and lease 

projects: 

a. Please provide the Committee with a detailed explanation regarding the 

project-level management process used at VA, including the titles and detailed job 

descriptions of the project-level management. 

b. Please provide the Committee with an explanation of any changes that have 

recently been made or are planned to be made to this process in order to provide 

improved function, control, and transparency to the process. 

4. In regards to VA’s overall construction and lease program: 

a. Please provide the Committee with updated schematics of the Office of Construction and Facilities Management, the Real Property Service, and the Office of 

Acquisition and Logistics. Include the position titles and incumbent names for all 

senior-level positions. 

b. Are there any statutory barriers presently in place that VA feels unduly 

hinders its ability to operate a construction and leasing program? 

c. In VA’s view, are the problems with VA’s construction and lease operation that 

have been identified over the last several years caused by too much centralization 

of this operation, or too little? 

d. Please provide the Committee with a detailed discussion of what VA believes 

to be the advantages, as well as any identified disadvantages, to the VA of operating 

an in-house construction program. 

5. The VAOIG Report states that ‘‘[a]s part of its FY 2008 Asset Management 

Plan, VHA commissioned studies to assess the feasibility of leasing facilities in lieu 

of major construction. VA determined that leasing major outpatient clinics, or 

HCCs, would provide the flexibility to increase veterans’ accessibility to services and 

address critical outpatient needs without the need for additional major construction 

funding.’’ 

a. Please provide the Committee with copies of the studies referenced. 

6. The VAOIG Report recommended that ‘‘the Under Secretary for Health, in coordination with the Executive in Charge of the Office of Acquisition, Logistics, and 

Construction, provide realistic and justifiable timelines for award, construction, and 

activation of the Health Care Center leases.’’ 

VA’s response stated that ‘‘[t]he Integrated Master Schedules for all major lease 

procurements, including the Health Care Centers (HCCs), are scheduled to be implemented in November 2013. Estimated completion date: December 2013’’ (emphasis in original). 

a. Have these schedules been implemented? If so, when were they implemented? 

b. Please provide a copy of the Integrated Master Schedules. 

c. In VA’s view, what specific factors led to not meeting the milestones contained 

in the FY 2010 budget submission for the completion of the HCCs? 

d. What were the reasons underlying the decision to establish ‘‘identical milestone 

dates for all seven HCC projects outlined in the prospectuses submitted to Congress 

even though the projects varied in size?’’ 

e. Will VA adjust the milestones contained in the Integrated Master Schedules to 

accommodate projects that are larger or more complex that the average schedules 

as shown in the Integrated Master Schedules? 

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f. Were there specific factors relating to HCCs that caused the process to not meet 

milestones as compared to the then-existing process and guidance regarding CBOCs, 

including larger CBOCs? 

g. Please provide me with a detailed explanation of the planning process, including an estimated timeline, in regards to CBOCs within the current SCIP process. 

7. In regards to the VA’s Health Care Projection Model (HCPM): 

a. Is information generated by the (HCPM) used within the SCIP Process? 

b. If so, please provide the Committee a detailed explanation of the types of information provided by the HCPM and at what stage of the SCIP process this information is utilized. 

c. In terms of the final decision regarding a project, how much weight is accorded 

information derived from the HCPM? 

8. In previous testimony provided to the Committee, VA stated that Vet Centers 

are placed in locations based upon proximity and population. 

a. Are Vet Centers included in the SCIP planning process? 

b. Please describe how proximity and population are determined and utilized 

within the planning process. 

c. Please provide a detailed description of the planning process as it relates to determining the need for, and location of, Vet Centers. 

9. VA’s written testimony states that it has ‘‘procured a collaborative project management software system in 2012 and is completing phase one fielding and will complete fielding in 2014.’’ 

a. Please provide a detailed description of this software, as well as a detailed 

timeline regarding actions taken with regards to this software since procurement in 

2012. 

b. Please describe to the Committee lessons learned by the VA during initial fielding, and how these lessons will be used to better manage projects once the software 

is deployed and fully operational. 

c. Please provide a specific date in 2014 when VA believes that this software will 

be deployed and fully operational. 

Rep. Kirkpatrick: 

1. According to the April 2013, GAO Report VA CONSTRUCTION – Additional 

Actions Needed to Decrease Delays and Lower Costs of Major Medical-Facility 

Project, (600–13–302), VA has not yet developed specific guidance or instructions on 

how to implement recommendations set forth by the Construction Management Review Council. In his testimony, Mr. Haggstrom indicated that all recommendations 

have been implemented: 

a. Please provide the committee with a side-by-side list of the recommendations 

and how/when they were addressed by VA? 

b. If there is a recommendation yet to be implemented, please provide a timeline 

for when it will be completed. 

Rep. Brown 

1. In regards to The Orlando VA Medical Center: The last update received says 

the Medical Center will open in August of 2014. What is the specific date the facility 

will open? 

2. Please explain the lack of any progress over the summer of 2013 on this 

project? Reference the 84% percent completion rate of the facility over the three 

months of July, August and September. 

3. In previous meetings and briefings, one of the issues brought up was that there 

wasn’t enough VA staff on site to oversee the project. Has this concern been addressed? 

4. The previous project manager was removed for not following VA instructions. 

How is the new manager working out? Has there been any advancement on finishing this project? 

5. Many concerns regarding this project have involved a large number of change 

orders that have been submitted. To date, how many change orders have been subVACREP180 with DISTILLER

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mitted for the project? Have those leveled off? Are there still changes being made 

to the design of the facility at this late date? What are the implications on costs, 

schedule and delivery of these late changes? 

6. Can this facility be opened in stages? The outlying buildings are almost complete, except for the landscaping and the food service. What can we do to get veterans help tomorrow? 

Rep. Negrete McLeod 

1. How many months of delay in awarding the lease for the Loma Linda Health 

Care Center come from finding property owners willing to sell? 

2. How many property owners owned the land currently being developed for the 

Loma Linda Health Care Center? 

3. What role did VHA Women Veterans Health Committees and Women Veteran 

Program Managers contribute to the design of the 7 Health Care Centers to ensure 

that they complied with women veteran patient privacy standards as stated in VA 

regulations? 

RESPONSES FROM: VA, TO: HVAC 

Questions for the Record from Ranking Member Michaud 

Question 1: I would like to hear from VA why they believe they are the 

best agency to handle the construction process for their facilities? 

VA Response: The Department of Veterans Affairs (VA) has a strong history of 

delivering facilities to serve Veterans. In the past 5 years, VA has delivered 75 

major construction projects valued at over $3 billion that includes the new medical 

center complex in Las Vegas; cemeteries; polytrauma rehabilitation centers; spinal 

cord injury centers; a blind rehabilitation center; and community living centers. The 

Department also opened 180 leased medical facilities, 50 of which are considered 

major leases. 

VA has a robust training program that provides Federal Acquisition Certification 

in accordance with Federal standards for its Program/Project Managers, including 

those managing VA’s major construction projects. VA has provided additional training and invested in a two-year project manager coaching program to further supplement the skills and develop project leaders to assure success in the major construction program. VA’s construction site staff supervisors are required to have Federal 

Acquisition Certification in Contracting (FAC–C). The same or equivalent training 

and certifications are required by other Federal agencies such as General Services 

Administration, the U.S. Army Corps of Engineers and Naval Facilities Engineering 

Command’s project managers and construction site leaders. 

In 2009, with the establishment of the Office of Acquisition, Logistics and Construction, VA initiated a construction best practice review as part of its VA Facilities Management Transformation Initiative. VA studied best practices in the U.S. 

Army Corps of Engineers, General Service Administration, the Canadian Health 

Care System, Kaiser Permanente, Sutter Health, and others. These studies resulted 

in several initiatives such as the development and fielding of an integrated master 

planning program; reestablishment of the post occupancy evaluations; revisions to 

project execution planning process; and the establishment of regional offices to improve project execution and customer support. A significant best practice adopted 

from the Department of Defense is the development of designs through concept (or 

35%) before announcing the construction budget, requesting funds and timeline for 

execution. VA continues to learn and share with its Federal partners and private 

industry. 

The way we do business today has changed and will continue to be refined as necessary to deliver timely, high- quality facilities. The recommendations made from 

previous reports have resulted in positive changes that are being applied to the entire capital program. Additionally, Secretary Shinseki’s establishment of a Construction Review Council (CRC) demonstrates the Department’s commitment to continued stewardship and delivery of high-quality facilities in support of our Nation’s 

Veterans. 

As VA continues to develop one of the most patient-centered and innovative care 

delivery models currently in use anywhere, it needs to be able to coordinate and refine facility design in conjunction with clinical operations in a seamless manner. 

Outsourcing contracting, design, and construction administration would impose new 

barriers between clinical care delivery and construction project planning, design and 

construction. VA is the best organization to execute its construction program as VA’s 

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construction project managers and construction managers understand VA’s mission 

to deliver the best facilities to an ever evolving and advancing medical mission. 

Question 2: What office was responsible for the management of the 7 

Health Care Center Leases that have failed to come to fruition? It is hard 

for me to believe that the prospectuses were allowed to be published in the 

budget books. Someone should have known that the timeline was unrealistic. Please walk me through the process as it existed then and as it exists 

now. 

VA Response: VA’s Office of Acquisition, Logistics, and Construction (OALC) is 

responsible for the procurement of the Health Care Center leases, along with all of 

VA’s major medical leases. While the process for procuring these large-scale leases 

is essentially the same (i.e., VA follows the relevant parts of the Federal Acquisition 

Regulation, General Services Acquisition Regulation, VA Acquisition Regulation, 

and all laws and Executive Orders pertaining to leases), VA is refining various tools 

and internal procedures regarding major lease procurements. 

For example, VA has refined and clarified the internal roles and responsibilities 

among the various VA offices involved in VA’s leasing program. OALC has also rebaselined VA’s lease procurement estimates to reflect improved timeframes for performance. These timeframes have been validated against actual projects. OALC is 

also currently revising the leasing handbook that provides guidance, standards, and 

processes to ensure lease projects are reported and administered consistently across 

the Department. 

In order to ensure consistency in the planning process, all leases, including Health 

Care Center leases, are now submitted and reviewed through VA’s Strategic Capital 

Investment Planning (SCIP) process, to ensure each initiative fulfills medical center 

gaps for access, utilization, and/or space. The SCIP process requires an analysis of 

alternatives for each project proposed for budget consideration, and documentation 

of key decisions. 

Question 3: Your testimony is replete with all of the changes and improvements VA has made to the lease and construction processes yet we 

still have failures like the 7 Health Care Center leases. Please explain to 

the Committee why you believe that these changes are tangible and have 

actually improved the process? Why shouldn’t we look to another agency, 

such as Corps of Engineers, to build our hospitals for us? 

VA Response: In the past 5 years, OALC has successfully completed 50 major 

facility leases. VA does not consider its execution of these seven Health Care Center 

(HCC) leases as failures. The Department set an extremely aggressive timeline to 

deliver these projects. Unforeseen challenges were encountered during the procurements (i.e., changes in the real estate markets, inquiries from interests external to 

VA, bid protests, and difficulty securing suitable property). To date, VA has awarded 

contracts for six of the seven leases, with the seventh lease in re-procurement. 

VA’s latest process improvements were introduced too late to impact these seven 

HCCs. However, these improvements will have an immediate impact on new 

projects through more effective roles and responsibilities, processes, and timelines 

for delivery. Efforts to improve upon these areas will continue, particularly through 

OALC’s internal reviews and the CRC. 

With regard to using the Army Corps of Engineers (COE), VA evaluates the delivery method for each lease and construction project on its merits. One of the delivery 

strategies includes the utilization of the COE when unique health care mission expertise is not required. When VA determines that unique health care mission expertise is not integral, and the best delivery strategy is to employ another agency, such 

as the COE, this strategy is executed. VA has utilized COE to deliver a number of 

minor construction projects and engaged them in supporting VA in the construction 

of the Orlando, New Orleans, and Denver major medical center projects. Additionally, VA is working closely with the COE to streamline VA’s processes. 

Question 4: If you could design a construction and lease process for the 

Department of Veterans Affairs, what would it look like? Do you believe 

that the big tertiary care facilities are going to be needed in the future 

given the advancements in technology and care delivery? 

VA Response: It is necessary to have a process that is streamlined/nimble 

enough such that implementation of the construction plan is executed, before 

changes in technology and care have occurred, that make initial design features obsolete. In addition, the underlying designs must be as flexible and creative as possible to allow for evolutionary changes that minimize future costs. VA is continuVACREP180 with DISTILLER

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ously reviewing and re-validating all aspects of its construction and leasing programs. 

VA has initiated the following: 

• Increased the number of planners and defined their role in developing requirements based on established gaps in service. 

• Increased the technical ability to review designs, thru stronger peer review and 

constructability reviews. 

• Established the SCIP process to help prioritize VA’s capital investment needs 

and projects and ensure that the underlying capital programs meet facility 

needs. 

• Requested authority to expand the Department’s enhanced use lease authority, 

and supported the President’s proposed Civilian Property Realignment Act 

(CPRA), to add to its toolkit for reducing unneeded assets. 

There is a dynamic bi-directional approach to the deployment of resources involving tertiary care centers in the Veterans Health Administration’s (VHA) future. Tertiary care centers will still be necessary. ‘Cutting edge’ technology actually drives 

use of tertiary type facilities, due to heavy support service for technology and the 

need for a critical mass of patients for uncommon medical conditions/treatments, 

such that practitioners have sufficient case numbers to be maximally proficient. As 

certain established technologies mature, movement to secondary level facilities from 

tertiary care facilities does occur. The use of tele-health technologies, however, can 

disseminate the cognitive component of care to primary and secondary care level facilities in a virtual manner, which diminishes the drive to place tertiary care to 

lower level facilities. These dynamics will continue to re-balance the placement of 

new technologies over time. 

Question 5: In a recent OIG Report on Health Care Centers, it was recommended that the Under Secretary for Health, in coordination with Executive in Charge of the Office of Acquisition, Logistics, and Construction, 

ensure supporting analyses and key decision regarding the Health Care 

Center leases are supported and documented. VHA concurred and stated 

that ‘‘all leases, including Health Care Center leases, will be submitted and 

reviewed through the Department of Veterans Affairs (VA) Strategic Capital Investment Planning (SCIP) process to ensure each initiative fulfills 

medical center gaps for access, utilization, and/or space. However, the FY 

2012 10 YR Capital Plan already included the seven HCCs in the SCIP process. What caused the SCIP process to fail the first time? 

VA Response: The seven HCCs were included in the fiscal year (FY) 2010 budget 

submission, prior to the development of the SCIP process. The SCIP process was 

initiated with the FY 2012 budget formulation process, to prioritize all new capital 

investments (e.g., major construction, minor construction, leases, and non-recurring 

maintenance projects) based on identified mission needs. As a result of the SCIP 

process, VA has a total picture of need and a prioritized integrated list of capital 

investments. 

All leases since the initiation of SCIP in FY 2012, including any proposed HCCs, 

are submitted and reviewed through VA’s SCIP process. 

Question 6: Are Vet Centers included in the SCIP planning process? In 

previous testimony the VA stated that a Vet Center is placed in a location 

based on proximity and population. Can you outline for the committee how 

proximity and population are calculated and the stages of the planning 

process for a Vet Center? 

VA Response: 

The SCIP planning process involves two phases – the validation that a proposed 

capital project will successfully and cost-effectively close an identified SCIP gap, and 

the prioritization of all validated projects so that the most necessary projects are 

pursued first within limited resources. All VA leases, including VetCenters, are included in the validation phase, which requires an approved SCIP business case for 

any action being proposed. When a VetCenter lease changes location, even within 

the same geographic area, there are many factors taken into consideration in the 

business plan, including Veteran proximity and population, cost, access to mass 

transit, parking, etc. However, the VetCenters are not included in the prioritization 

phase of the SCIP planning process. VA’s Readjustment Counseling Service (RCS), 

which administers the Vet Centers, does not compete for any capital asset funding, 

as all RCS leases are funded through the RCS Specific Purpose funding process. 

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In addition to the business case requirements imposed by the SCIP process, any 

new proposed Vet Centers beyond the existing 300 would be submitted via an Executive Decision Memorandum to the Under Secretary for Health for concurrence and 

ultimately to the Secretary for his review and approval. All Veteran population data 

that are utilized in this decision-making process are obtained directly from the Veteran Population Projection Model (currently VetPop 2011), which is publically available at www.va.gov/vetdata/. The overall living Veteran population by county is the 

best available data source, since currently no data are available from any approved 

source that shows Veterans who served in a combat zone or area of hostility. 

Question 7: How is a Veteran Service Area (VSA) defined? How is it calculated? 

VA Response: We do not define nor calculate Veteran Service Areas (VSA), and 

we no longer use this terminology. VHA’s health care operations are organized into 

21 Veterans Integrated Service Networks (VISN) which are further broken down 

into 81 Markets. Each market consists of a set of contiguous counties that usually 

contain at least one, and possibly multiple, VA medical centers (VAMC), and their 

associated clinics, which are designed to operate as independent health care system. 

Our strategic planning process is based at the market level. Planners, based on the 

current and projected future health care needs of the Veteran population residing 

within the market, develop the appropriate level and location of resources to best 

meet Veteran needs. 

Question 8: It is the committee’s understanding that before the SCIP 

process, the criteria for developing a new CBOC were, among other things, 

space deficits at the parent facility, market penetration, population density, medically underserved, etc. What if any criteria have changed since 

the SCIP process was initiated? 

VA Response: The criteria for developing a new Community-Based Outpatient 

Clinic (CBOC) are largely unchanged. Identifying appropriate locations to establish 

VA health care facilities requires extensive analysis of multiple factors, including 

but not limited to: 

• Veteran enrollee population; • Health care demand projections; • Access guidelines (e.g., drive-time); • Market penetration; • Cost-effectiveness; • Waiting times; and • Critical space needs. 

Much of the same data and information (access, utilization, space, cost-effectiveness) are used to justify and appropriately size projects (including CBOCs) in the 

SCIP process. All SCIP capital projects (major construction, minor construction, 

leases and non-recurring maintenance projects) are reviewed, scored, and approved 

through the VA governance process. 

The six SCIP major decision criteria are: 

1) Improve safety and security 

2) Departmental initiatives 

3) Fixing what we have 

4) Increasing access 

5) Right-sizing inventory 

6) Ensure value of investment 

This SCIP process results in a prioritized listing of capital projects that is used 

to inform the annual capital budget request. The SCIP decision criteria, priority 

weights, and the integrated, prioritized list are provided to the Secretary for approval each year. 

Question 9: In VA testimony in 2009 to the House Subcommittee on 

Health of the Committee on Veterans’ Affairs VA outlined the time from the 

planning stage to setting up a CBOC to the time patients are served. It is 

our understanding that this time frame was before the current SCIP process. Under the current SCIP process what is the current time frame from 

planning to clinic activation, can you outline to the committee the various 

planning phases? 

VA Response: VHA’s Access Expansion Planning (AEP) process is the first stage 

or phase for establishing CBOCs. Through the AEP process, VISNs detail plans - 

including establishing CBOCs - to meet the projected demand and to improve geoVACREP180 with DISTILLER

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graphic access to primary care and mental health services for Veteran enrollees. The 

AEP process, from the call for AEP submissions to Under Secretary for Health’s endorsement of new sites of care for SCIP process consideration, takes approximately 

four months. 

In a typical year, the SCIP Action Plan Call is sent out within the Department 

in late November/early December, submissions are due late January/early February. 

The Business Case call goes out in March with the Final Business Cases due in 

May/June. The Department submits its budget request to OMB in September, and 

the President’s Budget is typically released in February, approximately 14 months 

after the initial SCIP Action Plan Call. 

Once authorization and funds have been received, the schedule includes 26 

months to lease award, 26–30 months for build-out, and 3–6 months for activation. 

This timeline does not include unforeseen challenges, for example, changes in the 

real estate markets, political interest in site location, bid protests, litigation, and 

difficulty securing suitable property. 

Question 10: In the recent OIG report on HCC’s; a HCC is defined as ‘‘a 

large scale outpatient clinic positioned to provide all the medical services 

of a hospital, excluding inpatient beds.’’ Using this definition, is it true that 

any of your larger CBOCs, are in fact, HCCs? What was different about 

these leases that caused them to be so mismanaged? Are they not like any 

of the other VA Major Medical Facility Leases? Please explain. 

VA Response: VA does not consider its execution of these seven HCC leases as 

mismanagement. VA’s position is that these leases were not inherently different 

from other large-scale, build-to-suit leased facilities. All leases of this size can face 

unforeseen challenges, for example, changes in the real estate markets, bid protests, 

litigation, inquiries from interests external to VA interest in site location, and difficulty securing suitable property. To date, VA has awarded contracts for six of the 

seven HCC leases, with the seventh lease in re-procurement. 

The VA Office of Inspector General report referenced in question 10 above, was 

generated prior to the issuance of the VHA Site Classifications and Definitions 

Handbook (VHA Handbook 1006.02) on December 30, 2013. In accordance with this 

new Handbook, ‘‘A Community-Based Outpatient Clinic (CBOC) is a VA-operated, 

VA-funded, or VA-reimbursed site of care, which is located separate from a VA medical center. A CBOC can provide primary, specialty, subspecialty, mental health, or 

any combination of health care delivery services that can be appropriately provided 

in an outpatient setting.’’ In accordance with this new Handbook, a HCC is defined 

as: ‘‘A VA-owned, VA-leased, contract, or shared clinic operated at least 5 days per 

week that provides primary care, mental health care, on-site specialty services, and 

performs ambulatory surgery and/or invasive procedures which may require moderate sedation or general anesthesia.’’ The services provided by an HCC exceed 

those of a CBOC by performing ‘‘ambulatory surgery and/or invasive procedures 

which may require moderate sedation or general anesthesia.’’ A small number of 

currently open outpatient facilities, initially classified as CBOCs, will soon be reclassified as HCCs based on the new classification standards. 

Question 11: Can you outline how the Health Care Planning Model 

(HCPM) inputs into the SCIP process? And provide us a copy of this year’s 

HCPM? 

VA Response: The HCPM provides a standard 10-step planning tool used to 

proactively evaluate the comprehensive health care needs of Veterans within VISN 

markets and develop strategies to meet those needs. The HCPM uses a web-based 

portal for systematic data analysis. Appropriate data sources are built into the portal to maximize the time VISNs spend in analysis versus data gathering. Many of 

the data elements that are built-in to the HCPM to project Veteran health care 

(such as access, utilization, and space needs) are the same data elements that 

VISNs use to build their SCIP Action PlansBecause the HCPM is a web-based planning tool, it is not possible to provide a copy of it. 

Question 12: Please provide the Committee with an updated schematic of 

the Office of Construction and Facilities Management; the Real Property 

Service or RPS; and the Office of Acquisition and Logistics. Please include 

in the schematic a full and detailed description of how these offices work 

together to ensure that the lease and construction process is moving forward. Please also include the Veterans Health Administration’s construction offices that are part of the construction process and have responsibility for the construction and lease programs for VHA. 

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VA Response: The Office of Construction and Facilities Management (CFM), 

Real Property Service (RPS), and the Office of Acquisition and Logistics (OAL) all 

fall under the Office of Acquisition, Logistics and Construction (OALC). OAL, as 

identified in the question, has no role in the execution of the Department’s construction and leasing programs. 

As part of its overall responsibilities relating to VA’s real property portfolio, RPS 

oversees the administration of VA’s ‘‘medical facility’’ lease acquisitions, VA’s ‘‘general purpose’’ lease acquisitions (specifically, those not exceeding a 2,500 square feet 

of space threshold, per a delegation from GSA), and provides support for VA space 

acquisitions conducted through the General Services Administration (GSA). RPS, as 

a part of the Office of Operations, works closely with the Office of Facilities Acquisition (OFA) to make VA lease awards. OFA develops guidelines and provides technical support to properly oversee lease and major construction contracting and architect/engineer selection. Both offices report to the Executive Director, CFM, who 

in turn, reports to the Principal Executive Director, OALC. CFM executes VA’s 

major construction, leasing, real property management, and other capital asset services in support of VA’s mission, and manages VA’s major construction and leasing 

programs. CFM’s Executive Director serves as the primary advisor to the Principal 

Executive Director, OALC, and the Secretary of Veterans Affairs regarding issues 

concerning VA’s construction, leasing, and real property programs. 

In addition to daily interaction between the offices within CFM, CFM and its 

stakeholders (e.g., VA Administrations and Staff Offices) work closely together as 

appropriate throughout the acquisition life cycle of the project. Certain stakeholders 

(e.g., VHA, VBA, and NCA) are required to identify their proposed projects and underlying requirements, which are then included in the SCIP process for evaluation, 

and potentially, in a subsequent VA budget. CFM’s role is in the execution of Major 

Construction projects and leases. CFM also assists stakeholders during the planning 

process to refine the requirements of a project. 

Below is a chart indicating the relations between the OALC offices mentioned 

above: 

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The Office of Capital Asset Management Engineering and Support (OCAMES) 

falls under VHA’s Assistant Deputy Under Secretary for Health for Administrative 

Operations (ADUSHAO). OCAMES provides the policy, funding, budget documentation, and oversight for execution and policy compliance for the upfront planning of 

Major Construction projects and Leases and for all aspects of Minor Construction 

and Non-Recurring Maintenance projects. OCAMES collaborates with CFM and the 

medical centers on the execution of Major Construction projects and leases to ensure 

they remain within the approved scope of the project and lease as well as meet the 

needs of a dynamic, modern healthcare environment. 

Question 13: Are you aware of the Building Information Model, or BIM, 

that the Corps uses to simulate designs? 

VA Response: Yes, VA is aware of the Building Information Model (BIM). On 

April 3, 2008, CFM issued a design alert requiring the BIM be used on all VA Major 

projects starting with FY 2009. CFM also released a BIM Guide in April 2010, 

which is being used throughout VA. OALC is aware that its BIM guide has also 

been adopted by the Commonwealth of Massachusetts, and the countries of Singapore and Australia. 

Question 14: You mention in testimony that you have procured a collaborative project management software system and should be done fielding it 

in 2014. The software supports leases, major construction, and minor construction as well as non recurring maintenance. During the test phase of 

this system, what were the lessons learned and how has it enhanced your 

ability to manage projects? 

VA Response: The pilot of the collaborative project management software, 

TRIRIGA, validated that a commercial off-the-shelf product could be deployed and 

used effectively to manage VA construction projects. During the pilot phase, VA 

learned the best method for migrating projects from the current software. VA also 

identified the training requirements for VA, contractor, and designer staff to utilize 

the collaborative elements. The software improves accountability for project issues 

and requests for information and submittals, while enhancing information sharing 

between VA and its contractors resulting in better outcomes. 

Question for the Record from Representative Kirkpatrick 

Question 1: According to the April 2013 GAO report, VA has not yet developed specific guidance or instructions on how to implement recommendations set forth by the Construction Management Review Council. During 

Mr. Haggstrom’s testimony today, he indicated that all recommendations 

have been implemented. Could you please provide a side-by-side list of the 

recommendations and how/when they were implemented by VA? If there is 

a tactic yet to be implemented, please provide a timeline for when it will 

be completed. 

VA Response: As of August 2013, the Construction Review Council (CRC) recommendations were considered closed with ongoing activities. VA’s construction program review is an iterative process that will continue as VA strives to deliver firstclass facilities on time and within budget. The table below describes CRC findings 

and recommendations: 

CRC Major Finding Action (s) Taken 

Requirements The recommendation adopted included achievement of the requirement for 

35 percent design completion for complex medical facilities prior to 

requesting construction dollars. This policy was initiated with the FY 2013 

budget submission..

Design Quality The peer review process has been augmented to include constructability 

reviews by professional construction management firms. The first project 

to conduct a constructability review was the Orlando SimLearn Center. 

This is now a standard practice for construction projects and is 

monitored by OALC to ensure it is completed prior to award..

Funding SCIP process is aligned with the budget process. The development of 

integrated master schedules allows the projection of activation funding 

for medical and IT needs to be forecast. This forecasting allows 

coordination of funding at all levels..

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CRC Major Finding Action (s) Taken 

Project Management Contracting officers have been assigned on site for hospital replacement 

projects and other large major programs. Additional attorneys have been 

hired and assigned to support major construction. The increased staff 

reduces the delays and backlogs experienced. Local change order 

thresholds for General Counsel review have been raised on projects with 

experienced contracting officers. A change order handbook was developed 

and fielded to ensure consistent processing..

In addition to the activities described above, VA reviews modifications to identify 

recurring issues and revises the specifications for use on future projects. This allows 

for improvement on future designs. The Acquisition Program Management Framework is being applied to construction projects to ensure executive level review and 

approval of projects advancing in design. The review will look at the quality of the 

design and all comments will be reviewed to ensure designs are correct for construction. 

Questions for the Record from Representative Brown 

You talk in your testimony about costs and change orders, but I really only have 

one concern with this hearing. The Orlando VA Medical Center. 

Question 1: The last update I have received says the Medical Center will 

open in August of 2014. What is the date the facility will open? 

VA Response: As of December 2013, schedule updates from the Department of 

Veterans Affairs (VA) prime contractor, Brasfield and Gorrie (B&G), show a projected construction estimated completion date of December 2014. This schedule has 

continued to slip from the April 2014 date provided by B&G in their response to 

VA’s Show Cause letter. Once construction is complete, the Medical Center will initiate a 3-phase activation plan that begins with outpatient services and moves inpatients in the final phase. The first patients will be seen 120 days after final turnover 

of the entire building to VA. 

Question 2: Please explain the lack of any progress over the summer on 

this project? I refer to the 84% percent completion rate of the facility over 

the three months of July, August and September. 

VA Response: Completed work did not progress significantly due to the contractors’ lack of productivity and synchronization of trades, leading to overall inefficiencies of effort. Although the VA meets regularly with the contractor to discuss observations on performance and progress, and has consistently provided recommendations regarding sequencing of work and staff, the responsibility for ‘‘means and 

methods’’ of completing the work remains with the contractor. 

VA is utilizing the current provisions under the Federal Acquisition Regulation 

(FAR) to monitor the contractor, and taking the following steps to protect the Government’s interest in project completion: 

• Continue to retain funds for performance delays, Davis-Bacon wage violations, 

and work deficiencies; 

• No reimbursement for indirect costs beyond May 12, 2013, based upon VA Acquisition Regulations; and 

• Notify contractor of intent to withhold liquidated damages assessed after extended contract completion date of August 8, 2013.. 

Question 3: In previous meetings and briefings, one of the issues brought 

up was that there was not enough VA staff on site to oversee the project. 

How have you addressed this issue? 

VA Response: VA has increased the number of resident engineers, as well as 

added full-time construction management and architect/engineer personnel on site 

in Orlando. These staffing actions occurred over a year ago, and OALC’s perspective 

is there is no staffing issue. 

Question 4: The previous project manager was removed due to not following the VA instructions. How is the new manager working out? Has 

there been any advancement on finishing this project? 

VA Response: OALC has seen improvements with the change of the contractor’s 

personnel. Although the new superintendent’s oversight has yielded advancements 

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in certain areas, it appears that the contractor’s insufficient workforce level makes 

it challenging to achieve significant progress in more areas concurrently. 

Question 5: One of the concerns in this project is the large number of 

change orders that have been submitted. Have those leveled off? Are there 

still changes being made to the design of the facility at this late date? 

VA Response: As with any project of this size, scope, and complexity, changes 

continue to be identified but have tapered off dramatically, as expected. In the past 

7 months, there have been, on average, only 13 changes initiated by either VA or 

the contractor a month, each with an average value of only $5,100. In each successive month during this period, the number of changes has progressively decreased. 

Additionally, since the design of the facility is complete, changes at this stage do 

not impact the design but are changes primarily associated with utility connections 

or field conditions. 

Question 6: Can this facility be opened in stages? I know the outlying 

buildings are almost complete, except for the landscaping and the food 

service. What can we do to get veterans help tomorrow? 

VA Response: Currently health care services are provided to Veterans in East 

Central Florida through six existing CBOCs in Lake Baldwin, Viera, Daytona 

Beach, Kissimmee, Leesburg, and Clermont. Complex outpatient and inpatient services are provided at the Tampa VA Medical Center (VAMC), Gainesville VAMC, or 

local community hospital. When construction of the new Orlando facility is complete, 

most of these complex outpatient services and inpatient services will be provided at 

the new facility. 

The Orlando construction project includes the development of a medical complex 

on 65 acres in Lake Nona. The project is being executed through seven individual 

and unique contracts. As each of these contracts is completed, and space is turned 

over to VA, the space is activated. For instance, the Community Living Center (120- 

bed Nursing Home) was activated in early December. The 60-bed Residential Rehabilitation Treatment Program was activated in February. The remaining hospital, 

clinic, diagnostic and therapeutic facility is currently being completed under a contract with an estimated completion date in December 2014. Once space is turned 

over to VA by the contractor, the activation plan for this space is planned in 3 

phases. VA has a comprehensive plan to use space quickly and safely as soon as 

the contractor completes the contractual requirements and releases the space to VA. 

In the meantime, VA is providing health care services for Veterans at our CBOCs, 

VA facilities in Tampa or Gainesville; or at one of the area community partners. 

Questions for the Record from Representative McLeod 

Question 1: How many months of delay in awarding the lease for the 

Loma Linda Health Care Center come from finding property owners willing to sell? 

VA Response: VA experienced delays for several reasons, including difficulty in 

locating and securing a preferred site that met the advertised criteria; site owners 

who became unwilling or unable to sell their property; and valuation issues where 

VA and the site owners could not reach agreement on a fair market value purchase 

price for the property. Three site surveys were held and multiple sites reviewed before a preferred site was secured through an assignable option to purchase. The 

process took approximately 27 months, including about 21 months of delays as explained above. 

Question 2: How many property owners owned the land currently being 

developed for the Loma Linda Health Care Center? 

VA Response: The Loma Linda Health Care Center is currently being developed 

on land from one owner. 

Question 3: What role did VHA Women Veterans Health Committees and 

Women Veteran Program Managers contribute to the design of the seven 

Health Care Centers to ensure that they complied with women veteran patient privacy standards as stated in VA regulations? 

VA Response: The Veterans Health Administration’s (VHA) design standards for 

women’s clinics were developed in collaboration between OALC’s Office of Construction and Facilities Management and VHA’s Women’s Health Services. This collaboration in part ensured specific women’s privacy requirements were fully incorporated into the latest design standards to provide a safe environment for women 

Veterans. During the design of each Health Care Center, medical center staff and 

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contracted Architect/Engineering firms were required to use VA’s design standards 

and requirements as the foundation for developing the design documents. 

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