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FIELD HEARING ON DENVER REPLACEMENT 

MEDICAL CENTER 

HEARING 

BEFORE THE

COMMITTEE ON VETERANS’ AFFAIRS 

UNITED STATES SENATE 

ONE HUNDRED FOURTEENTH CONGRESS 

FIRST SESSION 

APRIL 24, 2015 

Printed for the use of the Committee on Veterans’ Affairs 

( 

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

(II) 

COMMITTEE ON VETERANS’ AFFAIRS 

JOHNNY ISAKSON, Georgia, Chairman 

JERRY MORAN, Kansas 

JOHN BOOZMAN, Arkansas 

DEAN HELLER, Nevada 

BILL CASSIDY, Louisiana 

MIKE ROUNDS, South Dakota 

THOM TILLIS, North Carolina 

DAN SULLIVAN, Alaska 

RICHARD BLUMENTHAL, Connecticut, Ranking 

Member 

PATTY MURRAY, Washington 

BERNARD SANDERS, (I) Vermont 

SHERROD BROWN, Ohio 

JON TESTER, Montana 

MAZIE HIRONO, Hawaii 

JOE MANCHIN III, West Virginia 

TOM BOWMAN, Staff Director 

JOHN KRUSE, Democratic Staff Director 

(III) 

C O N T E N T S 

APRIL 24, 2015 

SENATORS 

Page 

Isakson, Hon. Johnny, Chairman, U.S. Senator from Georgia ............................ 1 

Blumenthal, Hon. Richard, Ranking Member, U.S. Senator from Connecticut ... 2 

Bennet, Hon. Michael F., U.S. Senator from Colorado ......................................... 27 

Prepared statement .......................................................................................... 27 

Rogoff, Bernie, Commissioner, Veterans Affairs, City of Aurora; letter ...... 28 

Gardner, Hon. Cory, U.S. Senator from Colorado ................................................. 31 

Rounds, Hon. Mike, U.S. Senator from South Dakota ......................................... 48 

REPRESENTATIVES 

Perlmutter, Hon. Ed, U.S. Representative from Colorado’s 7th District ............ 32 

Coffman, Hon. Mike, U.S. Representative from Colorado’s 6th District ............. 33 

WITNESSES 

Goldstein, Mark, Director, Physical Infrastructure Issues, U.S. Government 

Accountability Office ............................................................................................ 3 

Prepared statement .......................................................................................... 5 

Response to posthearing questions submitted by Hon. Richard 

Blumenthal .................................................................................................... 35 

Rylant, Steve, President, United Veterans Committee of Colorado .................... 19 

Prepared statement .......................................................................................... 21 

Robinson, William ‘‘Robby,’’ Chairman, Colorado Board of Veterans Affairs ..... 23 

Prepared statement .......................................................................................... 24 

Gibson, Sloan D., Deputy Secretary, U.S. Department of Veterans Affairs ....... 35 

Prepared statement .......................................................................................... 37 

Response to posthearing questions submitted by Hon. Richard 

Blumenthal .................................................................................................... 56 

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

of Engineers, U.S. Department of the Army ...................................................... 41 

Prepared statement .......................................................................................... 43 

Response to posthearing questions submitted by Hon. Richard 

Blumenthal .................................................................................................... 57 

(1) 

FIELD HEARING ON DENVER REPLACEMENT 

MEDICAL CENTER 

FRIDAY, APRIL 24, 2015 

U.S. SENATE, COMMITTEE ON VETERANS’ AFFAIRS, Aurora, CO. 

The Committee met, pursuant to notice, at 1:32 p.m. in City 

Council Chambers, Aurora Municipal Center, 15151 E. Alameda 

Parkway, Hon. Johnny Isakson, Chairman of the Committee, presiding. 

Present: Senators Isakson, Rounds, and Blumenthal. 

Also present: Senators Gardner and Bennet; and Representatives 

Coffman and Perlmutter. 

OPENING STATEMENT OF HON. JOHNNY ISAKSON, 

CHAIRMAN, U.S. SENATOR FROM GEORGIA 

Chairman ISAKSON. I call this meeting of the U.S. Senate Committee on Veterans’ Affairs to order. 

I want to, first of all, thank the city of Aurora and all the citizens 

of Colorado for their hospitality. We had a great visit today. I appreciate being in your great State. I wish we could take your 

weather back to Washington, D.C. 

We are here today for two reasons. Michael Bennet from the U.S. 

Senate and Cory Gardner from the U.S. Senate issued an invitation for us to come to Colorado almost immediately upon Senator 

Blumenthal and I being selected chairman and ranking member of 

the Veterans’ Affairs Committee. We have been very well versed by 

them and read everything we could read about the problems at the 

VA hospital in Denver, but we wanted to be here firsthand at their 

invitation. 

The second reason we are here is this. When I was chosen chairman, I told the Members of the Committee that we had no more 

solemn obligation to the veterans of the United States of America 

than to see to it that they got the benefits and the treatment they 

deserve. They risk their lives and limbs for us. We need to do no 

less than the same for them. 

I pledged, rather than sitting in Washington behind a dais, we 

would go to the cities and the towns and the places where the veterans are and where the problems are, holding the VA accountable 

to see to it we deliver the very best possible service we could 

deliver. 

We have been to Wisconsin to look at the problem with the overprescription of opiates. We have been to Arizona, looking at the 

problems that began with the Phoenix hospital where consults 

2 

were canceled, veterans lost appointments and veterans died. Now 

we are here today in Colorado to look at the problems with the cost 

overruns of 427 percent from its inception on the veterans’ hospital 

that is pending here in Aurora, CO. 

We are here to get the answers as to why we are where we are, 

what we need to do to get to where we need to be, and see to it 

we fulfill our promise to our veterans and this hospital is completed, but also that the VA and those people in the VA who need 

to be held accountable for getting us to where we are, are held accountable. As chairman of the Committee, I pledge my complete 

support to the other members of the Senate and the House to do 

exactly that. 

The format of the meeting today is my brief opening statement, 

which you just heard. I will turn to Richard Blumenthal from Connecticut in 1 second as ranking member, and then we will go 

straight to our testimony from our first panel. Then after that, 

each Member of the Senate and the House members that are here 

today will be able to ask questions or make statements after the 

testimony of our first panel. Then we will go to our second panel, 

Sloan Gibson from the VA, later on. 

I now turn it over to Ranking Member Richard Blumenthal from 

the great State of Connecticut. 

STATEMENT OF HON. RICHARD BLUMENTHAL, RANKING 

MEMBER, U.S. SENATOR FROM CONNECTICUT 

Senator BLUMENTHAL. Thank you, Mr. Chairman, and thank you 

to the Colorado delegation, our colleagues, Senator Bennet and our 

good friend Senator Gardner, for being here and for inviting us. 

We are here at a really critical turning point in this project. The 

question is, will the Nation fulfill its commitment to our veterans, 

not only the veterans of Colorado and the Rocky Mountain States 

but of Connecticut and Georgia and all around the country? 

The debacle in Aurora—it is a financial and fiscal catastrophe— 

has to be addressed, and it must be addressed positively in finding 

a path forward, whatever the most practical alternatives are to 

funding completion of this project. Right now there is no clear path 

forward. 

There also has to be accountability. The public officials and private-sector actors who bear blame must be held accountable. There 

must be some financial accountability and perhaps discipline. 

Part of our goal has to be imposing or finding a way to impose 

that accountability in a way that has not happened before. We 

thought there was going to be accountability after the cooking of 

books and delayed treatment times, but so far I am unconvinced 

there has been that accountability in that instance. I remain unconvinced that there is a path forward here, that all the alternatives have been explored, and I want to see the quality of care, 

the caliber of health treatment that our veterans need and deserve. 

I also want it done without sacrificing care elsewhere in the 

country. 

The VA has submitted to us a proposal for how to deal with that 

funding. It means deferring or delaying indefinitely construction 

and maintenance elsewhere in the country, including Georgia, Connecticut, and South Dakota. In fact, in the vast majority of States 

3 

where our colleagues are going to be very reluctant to go back to 

their constituents and their veterans and say you must sacrifice. 

I think a path forward on funding has to be found. 

Thank you, Mr. Chairman. 

Chairman ISAKSON. Before I go to our panelists, I want to make 

sure to acknowledge the other members of the panel who are here 

and their role in this meeting. 

Senator Mike Rounds from the great State of South Dakota, 

thank you. 

He made a long trip to be here, and he is making a long trip 

home tonight. I appreciate him as a Committee Member and a good 

friend being here. 

Welcome Congressman Perlmutter. With a name like Isakson, 

you would think I could pronounce a name like that. 

Congressman Coffman, thank you for being here. 

Senator Gardner, and obviously Senator Bennet I recognized, 

and Senator Blumenthal I have recognized as well. I think that 

covers all of us. 

With that said, we have two of our three panelists who are here. 

One of our panelists, Mr. Robinson, had a family emergency and 

he will either be late or may not be able to attend. So, we are going 

to go immediately to Mr. Goldstein. He is the Director of Physical 

Infrastructure Issues at the Government Accountability Office in 

Washington, D.C. We appreciate your being here today. 

Next we will hear from Steve Rylant, President of the United 

Veterans Committee of Colorado. We are grateful that you are here 

today. 

Mr. Goldstein, we will start with you. Please try to hold your remarks to about 5 minutes, if you can. 

STATEMENT OF MARK GOLDSTEIN, DIRECTOR, PHYSICAL INFRASTRUCTURE ISSUES, GOVERNMENT ACCOUNTABILITY 

OFFICE 

Mr. GOLDSTEIN. Thank you, Mr. Chairman, Ranking Member 

Blumenthal, and Members of the Committee. I am pleased to be 

here today to discuss information from GAO’s April 2013 report regarding the construction of new major Department of Veterans Affairs medical facilities. That report examined VA’s actions to address cost increases and schedule delays at four of its largest and 

most expensive major medical facility construction projects in Denver, Orlando, New Orleans, and Las Vegas. 

At the time of our review, VA had 50 major medical facility 

projects underway, including new construction and renovation of 

existing medical facilities, at a cost of more than $12 billion. 

My statement today discusses VA construction management 

issues, specifically: one, the extent to which the cost, schedule, and 

scope for the four selected medical facility projects changed since 

this information was first submitted to VA’s authorizing committees and the reasons for these changes; two, actions VA has taken 

to improve its construction management practices; and three, VA’s 

response to recommendations in our report for the agency to further improve its management of the costs, schedule, and scope of 

these projects. 

4 

This testimony is based on our April 2013 report. It is also based 

on our May 2013, April 2014, and January 2015 testimonies on this 

topic, as well as selected updates that we received from VA. These 

selected updates include information on the status of VA’s major 

medical center projects in Las Vegas, Orlando, New Orleans, and 

Denver. 

In April 2013, GAO found the cost substantially increased and 

schedules were delayed for VA’s largest medical facility construction projects. In comparison with initial estimates, the cost increases for these four projects now range from 66 percent to 427 

percent, and delays range from 14 to 86 months. 

Since the 2013 report, some of the projects have experienced further cost increases and delays because of design issues. For example, as of April 2015, the cost for the Denver project increased by 

nearly $930 million, and the completion date for this project is unknown. 

In its April 2013 report, GAO found that VA had taken some actions since 2012 to address problems managing major construction 

projects. Specifically, VA established a construction review council 

in April 2012 to oversee the Department’s development and execution of its real property programs. VA also took steps to implement 

a new project delivery method called Integrated Design and Construction, which involves a construction contractor early in the design process to identify any potential problems early and speed the 

construction process. 

However, in Denver, the VA did not implement this method early 

enough to garner the full benefits of having a contractor early in 

the design phase. 

VA has taken actions to implement the recommendations in 

GAO’s April 2013 report. In that report, GAO identified systemic 

reasons that contributed to overall schedule delays and cost increases at one or more of the four reviewed projects and recommended ways the VA could improve its management of the construction of major medical facilities. 

In response, the VA has: one, issued guidance on assigning medical equipment planners to major medical facility projects who will 

be responsible for matching the equipment needed for the facility 

in order to avoid late design changes leading to cost increases and 

delays; two, developed and disseminated procedures for communicating to contractors early to find roles and responsibilities of the 

VA officials who manage major medical facility projects to avoid 

confusion that can affect the relationship between VA and the contractor; and three, it has issued a handbook for construction contract modifications that includes milestones for completing processing of modifications based on their dollar value, and it has taken 

other actions to streamline the change order process to avoid 

project delays. 

While VA has implemented these recommendations, we do not 

have a good idea at this point in time of their impact and how effective they have been. Many of these are going to take time to 

show improvements, especially for ongoing construction projects, 

and depends on several issues, including the relationship between 

VA and its contractors. 

5 

Mr. Chairman, that concludes my opening remarks. I would be 

happy to respond to questions that you and the members have. 

Thank you. 

[The prepared statement of Mr. Goldstein follows:] 

PREPARED STATEMENT OF MARK L. GOLDSTEIN, DIRECTOR, PHYSICAL

INFRASTRUCTURE ISSUES, U.S. GOVERNMENT ACCOUNTABILITY OFFICE


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Chairman ISAKSON. Thank you very much, Mr. Goldstein. 

Mr. Rylant. 

STATEMENT OF STEVE RYLANT, PRESIDENT, UNITED 

VETERANS COMMITTEE OF COLORADO 

Mr. RYLANT. Thank you, Mr. Chairman and Members of the 

Committee, for the opportunity to testify on an issue that is so very 

important to the veterans of Colorado and the surrounding States. 

My name is Steve Rylant, and I am the President of the United 

Veterans Committee of Colorado, also known as UVC, a coalition 

of over 50 different veterans’ service organizations including the 


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Veterans of Foreign Wars, the American Legion, the Disabled 

American Veterans, the Paralyzed Veterans of America, and many 

others. Our organization works to support legislation on veterans 

on the Federal and State level that benefit veterans. 

The need for this replacement hospital goes back many years. I 

became closely involved in 2007 when VA Secretary Peak told us 

they had a new plan to lease 3 or 4 floors of the University of Colorado Medical Center for around $300 million to replace the current 

facility. We told him that was not acceptable. The veterans deserve 

a standalone full service hospital and medical center. When Eric 

Shinseki became the VA Secretary in 2009, he agreed. 

We had a groundbreaking in August 2009. The VA accepted the 

bid from Kiewit-Turner in October 2010. The VA and Kiewit-Turner spent a year negotiating a contract. The UVC told the VA that 

they needed to get a contact signed and start construction or we 

would bring our shovels on Veterans Day 2011 and start digging 

the hole for them. I have a pin that I wear that is a shovel with 

the letters BTDT, ‘‘Build The Damn Thing.’’ A week before Veterans Day the VA and KT signed the contract and we had a celebration. 

Construction began January 2012, two-and-a-half years after the 

groundbreaking. From that day on, we have been meeting with the 

VA, with Kiewit-Turner, and with the Colorado congressional delegation. 

In July 2013, Kiewit-Turner filed a complaint in the U.S. Civilian Board of Contract Appeals that the construction design that 

they had received from the VA could not be completed with the 

$600 million authorized by Congress and that it would take at least 

a billion dollars. 

In May 2014, Eric Shinseki resigned as Secretary of the VA and 

VA Secretary Robert McDonald and Deputy Secretary Sloan Gibson 

were confirmed. They had a big job ahead of them, as we well 

knew. 

This past December, the U.S. Board of Contract Appeals ruled in 

favor of Kiewit-Turner and found the VA in material breach of the 

contract. Since Kiewit-Turner no longer had a valid contract to 

build the facility, they shut down the project. When that happened, 

1,100 workers scrambled to find other projects to replace this one 

to keep their people employed. Another delay. 

Deputy Secretary of the VA Sloan Gibson came to Denver and 

met with the UVC and leadership of many of our member organizations and told us that Kiewit-Turner required three things to restart the project: the U.S. Army Corps of Engineers must take over 

administration of the project; that they be paid a sum of money 

that they had put into the project to keep it going; and that they 

needed a bridge contract on a cost reimbursable basis with the VA 

until the U.S. Army Corps of Engineers could negotiate and sign 

a contract. Deputy Secretary Gibson agreed, and KT started the 

project. 

The next delay. The subcontractors have not come back to the 

project because they no longer trust the VA and Kiewit-Turner to 

not shut down the project again. Only 700 of the original 1,100 

have come back, and this is causing new delays. They are waiting 

to see Congress pass authorization and appropriation bills so the 

21 

Corps can negotiate a completion contract with KT. When that 

happens, they will come back to the project. That is why it is so 

important to get this facility completed. 

There is a serious problem of backlog for veterans to get appointments with the VA doctors and clinicians. It is not a scheduling 

problem. The schedulers can only schedule appointments when 

there is a room available and a doctor available. Getting the medical center completed will begin to solve the problem of shortage of 

patient and examination rooms. 

That is only half of the problem. One of the proposals we have 

heard is to finance the completion of the medical center by taking 

away all bonuses for 3 years until the medical center is completed. 

Because of government regulations, the VA cannot pay the doctors 

and nurses salaries that are competitive with the private sector. 

They make up the difference with bonuses. If you take away the 

bonuses of the doctors and nurses, we could have a mass exodus 

of doctors. When that happens, we have a much worse problem. 

The schedulers will have rooms to schedule, but no doctors to 

schedule. We cannot allow that to happen. 

In conclusion, this situation is not the fault of the veterans. The 

UVC unanimously approved a position 3 years ago, and it continues today. We do not take sides with the VA, or Kiewit-Turner, 

or Congress, or now the U.S. Army Corps of Engineers. We want 

the replacement Eastern Colorado health care system built. We 

want it built with quality. We want it built in the shortest time 

possible. We want it built by veterans. Like the shovel pin says 

that I wear, ‘‘BTDT,’’ build the damn thing. 

My written testimony has some more, and I am more than happy 

to discuss anything you would like me to. Thank you for the opportunity to testify, and I am available for any questions you may 

have. 

[The prepared statement of Mr. Rylant follows:] 

PREPARED STATEMENT OF STEVE RYLANT, PRESIDENT, UNITED VETERANS COMMITTEE

OF COLORADO

My name is Steve Rylant and I am the President of the United Veterans Committee of Colorado, a coalition of over 50 Veterans Service Organizations including 

the Veterans of Foreign Wars, The American Legion, The Disabled American Veterans, The Paralyzed Veterans of America and many others. Our organization works 

to support, testify and help get legislation passed on the Federal Level, and the 

State Level, that benefit veterans. 

The need for this replacement VA Regional Medical Center goes back many years. 

I first became involved in 2007 when VA Secretary James Peak told us they had 

a new plan to lease 3 or 4 floors of the University of Colorado Medical Center for 

around 300 Million Dollars to replace the current facility. We strongly told him that 

would not be acceptable. The veterans deserve a stand alone full service Hospital 

and medical center. 

When Eric Shinseki became the VA Secretary in 2009, he agreed. We had a 

ground breaking in August 2009. The VA put out a call for bids, accepted the bid 

from Kiewit Turner in October 2010. The VA and Kiewit Turner spent a year negotiating a contract. The UVC and its members told the VA that they needed to get 

a contact signed and start construction or we would bring our shovels on Veterans 

Day 2011, and start digging the hole for them. I have a pin that I wear that is a 

shovel with the letters BTDT. Build The Damn Thing! A week before that Veterans 

Day the VA and KT signed the contract and we had a celebration Construction 

began January 2012, Two and a half Years after the ground breaking! From that 

day on we have kept a close eye on what has been going on, meeting with the VA, 

with Kiewit Turner, and with the Colorado Congressional Delegation. 

22 

There have been many other delays since that time as a result of the VA not approving change orders in a timely manner and subcontractors not getting paid for 

the work they had been completed for 4 to 6 months after the change order work 

was finished. 

July 2013 Kiewit Turner filed a complain in the United States Civilian Board of 

Contract Appeals that the construction design that they had received from the VA 

could not be completed with the 600 Million authorized by Congress and that it 

would take at least a billion dollars. 

A hearing by the House Committee on Veterans Affairs was conducted in Denver 

in April 2014 and Glenn Hagstrom, then Chief of Acquisition and Construction, testified that the VA did not need any additional funding from Congress and that they 

would win the litigation and KT would have to build the VA Medical Facility with 

the 600 Million already authorized. That was ridiculous! 

In May 2014 Eric Shinseki resigned as Secretary of the VA and subsequently VA 

Secretary Robert McDonald and Deputy Secretary Sloan Gibson were confirmed. 

They had a Big Job ahead of them, as we will knew. 

This past December, the United States Civilian Board of Contract Appeals ruled 

in favor of Kiewit Turner and found the VA in material breach of the contract. Since 

Kiewit Turner no longer had a valid contract to build the facility, they shut down 

the Project. When that happened, just weeks before Christmas, the subcontractors 

with about 1,100 workers on the project had to scramble to find other projects to 

replace this one to keep their people employed. Another delay 

Deputy Secretary of the VA Sloan Gibson, within a week of the decision, came 

to Denver and met with the UVC and leadership of many of our members, and told 

us that Kiewit Turner required three things to restart the project. The US Army 

Corp of Engineers must take over administration of the Project, that they be paid 

a sum of money that KT put into the project to keep it going, and that they needed 

a bridge contract on a cost reimbursable basis with the VA until the US Army Corp 

of Engineers could negotiate and sign a construction completion contract. Deputy 

Secretary Gibson told us that he was going to agree to all of those requirements 

the next day in a meeting with Kiewit Turner, which he did. 

Kiewit Turner restarted the project and started working to get the subcontractors 

back to work on the construction. 

Then the next delay, The subcontractors have not come back to the Project because they no longer trust the VA and Kiewit Turner to not shut down the project. 

only 700 of the original 1,100 have come back to the project, and this is causing 

new delays. They are waiting to see Congress pass Authorization and Appropriation 

bills so the Corp can negotiate a completion contract with Kiewit Turner before they 

will come back to the project. 

So to your two questions in the letter inviting me to testify on behalf of Colorado’s 

Veterans. There is a serious problem of back log for veterans to get appointments 

with the VA Doctors and Clinicians. It is not a scheduling problem. The schedulers 

can only schedule appointments when there is a room available and a doctor available. Getting the Medical Center completed will begin to solve the problem of shortage of patient and examination rooms. The completion of the facility will solve the 

first part of the equation. 

But that is only half of the problem. One of the ways we have heard suggested 

to finance the completion of the Medical Center was to take away all bonuses for 

three years until the Medical Center is completed. Because of government regulations, the VA cannot pay the doctors and nurses salaries that are competitive with 

the private sector. They make up the difference with bonuses. If you take away the 

bonuses of the Doctors and Nurses, we could have a mass exodus of highly qualified 

and professional people. If that happens, then the problem of access will be worse! 

The schedulers will have rooms to schedule, but no doctors to schedule to examine 

the veterans in those nice new rooms. We can not allow that to happen. 

The delays have obviously negatively impacted the veterans that need access to 

VA Health care with wait times that are totally unacceptable, and the Deputy Secretary has publicly acknowledged that it is unacceptable. 

Prior to my retirement in 2008 I was a project manager for General Electric. 

What I have seen here is alarming because of that experience, but not surprising. 

I have some thoughts on future projects and how to control the costs and delivery 

times and would be happy to discuss them with you. 

In conclusion, this situation is not the fault of the Veterans, The United Veterans 

Committee of Colorado unanimously approved a position three years ago, and it continues today. We do not take sides with the VA, or Kiewit Turner, or Congress, or 

now the US Army Corp of Engineers. We want the replacement Eastern Colorado 

Regional Medical Center Built! We want it built with Quality! We want it built in 

23 

the shortest time possible! And we want it built by Veterans. Like the shovel pin 

says, BTDT, Build The Damn Thing. 

Thank you for the opportunity to testify and I am available for any questions you 

may have. 

Chairman ISAKSON. Thank you very much, Mr. Rylant. 

Mr. Robinson, please come forward. We understand you had an 

emergency, and we are sorry. I hope everything is OK. We appreciate you making it here quickly, and we would love to hear your 

testimony within 5 minutes. 

STATEMENT OF WILLIAM ‘‘ROBBY’’ ROBINSON, CHAIRMAN, 

COLORADO BOARD OF VETERANS AFFAIRS 

Mr. ROBINSON. My apologies, Mr. Chairman, and I appreciate the 

opportunity to be here. 

I am William ‘‘Robby’’ Robinson, and I am the serving Chairman 

of the Colorado Board of Veterans Affairs, which is a seven-member board appointed by the Governor to advise and assist the Department of Military and Veterans Affairs, the Governor, and the 

General Assembly on issues affecting veterans. 

I would like to note that there are several past members of the 

board here in our presence today. 

The board monitors key issues among the State’s veterans, and 

I can tell you that the concern over the progress on the medical 

center remains among the top four issues, which also includes 

claims and appeals processing, homelessness, and access to care 

from our many rural communities. 

We have been monitoring as a board the progress on a new medical center since 1999, virtually since the inception of the whole 

idea. It was obvious that a new facility was required, and we were 

pleased that the Department of Veterans Affairs recognized the requirement and began searching for places to build a new medical 

center. 

I think it is a bit ironic that we are sitting here in Aurora this 

month of 2015, which was originally about the time the facility was 

supposed to be opened. We know, of course, that it is only about 

halfway finished right now. 

The Board of Veterans Affairs has monitored the construction 

process and the interaction of veterans’ representatives with the 

VA and Kiewit-Turner in nearly all aspects of the design and construction. The delays have disappointed the veterans who worked 

hard to bring it to reality. I think more importantly, the delays 

have led to continued reliance on the old facility which, by its very 

size and age, limits access to timely appointments and procedures, 

as well as patient care. That impacts veterans all over Colorado 

and many in adjacent States that are and will be served by the 

Denver VA medical facility. 

We are very concerned about the challenges facing the VA as 

they try to complete the new medical center. We hope that all the 

parties involved can work together productively and cooperatively 

to complete the project expeditiously. 

The Colorado Board of Veterans Affairs stands ready to assist in 

any way we can. Thank you, Mr. Chairman. 

[The prepared statement of Mr. Robinson follows:] 

24 

PREPARED STATEMENT OF WILLIAM ‘‘ROBBY’’ ROBINSON, CHAIRMAN, COLORADO BOARD OF VETERANS AFFAIRS

The Board of Veterans Affairs is a seven member board appointed by the Governor to advise and assist the Department of Military and Veterans Affairs, the 

Governor, and the General Assembly on issues affecting veterans. I would note that 

several past members of the Board are also here today. 

We have been monitoring progress on a new veterans’ medical center since 1999. 

It was obvious that a new facility was required and we were pleased that the Department of Veterans Affairs recognized the requirement and began searching for 

places to build a new medical center. It is ironic that we sit here in Aurora today 

discussing construction of the facility when originally it was supposed to be opened 

about now. The Board of Veterans Affairs has monitored the construction process 

and the interaction of veterans’ representatives with the VA and Kiewit-Turner in 

nearly all aspects of the design and construction. The delays have disappointed the 

veterans who worked hard to bring it to reality. More importantly, the delays have 

led to continued reliance on the old facility which by its very size and age limits 

access to timely appointments and procedures as well as patient care. That impacts 

veterans all over Colorado and many in adjacent states that are and will be served 

by the Denver VA. 

We are very concerned about the challenges facing the VA as they try to complete 

the new medical center. We hope that all parties involved can work together productively and cooperatively to complete the project expeditiously. 

The Board of Veterans Affairs stands ready to assist in any way that we can. 

Chairman ISAKSON. Thank you, Mr. Robinson. Thank you for 

your testimony, and thank you for your service to the people of Colorado and to the country. 

What we are going to do is each Member is going to ask a question, and time permitting we will have a second round of questions 

as well. I will ask the first one. 

Mr. Rylant, when you responded to the question about paying for 

the overruns at the VA hospital here in Denver by docking the pay 

of some of the employees in the Veterans Administration, your response was that it is already hard to hire people for the VA because of what is paid in their salary schedule, and if we had discipline in the VA by lowering the pay of anybody, that they might 

not come to work. Is that right? 

Mr. RYLANT. That is my understanding. I have talked to several 

VA doctors here, and I believe that the doctors and nurses and all 

the people in the VA hospital really are interested in helping veterans. They seem to be more dedicated to veterans than civilian 

hospitals are to civilian patients. 

But there comes a point, the civilian hospitals can offer a lot 

more money to those doctors than the VA can. If I am wrong, somebody please tell me that. It is my understanding that they make 

up the difference to keep them there through bonuses, and also the 

opportunities for research, which is why the research facility at 

this health center is so important, because that helps bring doctors 

and nurses into the system. 

Chairman ISAKSON. I am going to cut you off because we are 

going to try to keep things moving. 

Mr. RYLANT. OK. 

Chairman ISAKSON. I think your point is well taken and you are 

right, but I want to make a point here. When you talk to the VA 

about discipline within the VA in terms of accountability for work 

that is done that is not done well or poorly—and I am not talking 

about nurses and doctors, I am talking about construction superintendents and people building buildings—you are oftentimes told, 

oh, we cannot fire anybody. If we fire somebody, we cannot get anyVerDate Mar 15 2010 21:55 Jun 21, 2016 Jkt 000000 PO 00000 Frm 00028 Fmt 6633 Sfmt 6601 Z:\114TH COMPLETED HEARINGS, MTGS\94462.TXT PAULIN
25 

body to come to work for us for fear of being fired. Therefore, you 

have an agency that is incestuous in terms of less than peak performance. 

So, while I agree about nurses, doctors, and physicians and accountability and how you would be very careful in taking their 

bonus away, I think there is got to be some system, an improved 

system of accountability in the administration of the VA, to hold 

people who are responsible for jobs taking place. When Mr. Goldstein testified a minute ago that there are $12 bil- lion in projects under construction at VA, $4 billion of that $12 billion is in New Orleans, Las Vegas, Denver, and Orlando. Those 

projects, between the three or four of them, are 66 percent, 147 

percent, 427 percent, and 80 percent in cost overruns. There is a 

consistent failure of the VA to be able to manage its money in construction or manage projects without them running over. 

So, I just want to make the point that while your point may be 

well taken on those delivering the services—the physicians and the 

doctors and the nurses—somebody has got to be in charge, and 

somebody who is in charge has got to be held accountable for responsibilities that they take in construction management and cost 

of construction projects. 

Mr. RYLANT. May I briefly respond? 

Chairman ISAKSON. Briefly. 

Mr. RYLANT. We are in complete agreement. Veterans are also 

citizens and taxpayers, and we do not want our money wasted, absolutely. If you have selected to have bonuses taken away from the 

senior management that have done the mismanaging and so forth, 

we are in complete agreement with that. We just would not want 

it to be across-the-board wipeout of bonuses that would hurt people 

at the lower levels that were not responsible for the things that 

happened. We completely agree with you. 

Chairman ISAKSON. Thank you for your testimony. 

Senator Blumenthal. 

Senator BLUMENTHAL. Thanks, Mr. Chairman. 

Thank you to Mr. Rylant and Mr. Robinson for your service to 

our Nation, and thank you for being here today. 

Thank you, Mr. Goldstein, for the work that you have done over 

the years in holding agencies of the Federal Government accountable. 

In this instance, I find your report, even though it is somewhat 

dated, to be absolutely staggering when it talks about some of the 

numbers the Chairman has mentioned. The sheer fact that there 

have been cost overruns in VA construction projects of $2.4 billion, 

and they are still counting, is unacceptable. I guess my question is, 

should the VA be out of the construction business? 

It is not easy to construct a complex and costly building of this 

type. People spend their whole lives figuring out how to do it, and 

maybe the Corps of Engineers should be empowered to do the VA’s 

construction management since that is its business and it has a 

longstanding and distinguished record in this area. Would taxpayers not be better served? That is my question. 

Mr. GOLDSTEIN. Senator, of the 50 projects that we looked at, in 

addition to these four, we found that roughly half of them had cost 

increases or schedule increases. In the appendices to the report 

26 

that you mentioned, for all 50 of the projects, half of them had cost 

increases, half of them had schedule increases. 

So clearly there is a problem at VA that goes, frankly, beyond 

Denver and beyond the four major projects. It goes to the entire 

construction program. 

Whether you decide that VA should continue constructing hospitals is really a policy question not well suited for the GAO. However, I would say that regardless of whether you allow VA to do 

it or the Army Corps, if you do decide to have VA do it, obviously 

capacity has to be instilled into the agency, into the Department 

to be able to do it. If you look at the record—and I have spent some 

time now looking at what happened there—three things come to 

mind throughout: a lack of planning, a lack of communication, and 

a lack of oversight. Those three things are critical to whoever is 

going to manage these programs. 

I am not sure it is a silver bullet to just take it away from VA. 

It may be something you need to do in the short term in order to 

get this job done. I understand that. But capacity would be the critical—— 

Senator BLUMENTHAL. But your testimony and your reports and 

your work indicates deep-seated institutional failings. 

Mr. GOLDSTEIN. Absolutely. 

Senator BLUMENTHAL. We cannot take down the construction 

shelves that have been built in Aurora for the hospital facility 

there. We cannot just start all over again. But, we can start over 

with the VA and adopt a different system so as to avoid these kind 

of systemic failings. They are systematic failings in the VA’s construction history. They may do some things very well, but construction, apparently, is not one of them. Thank you. 

Mr. GOLDSTEIN. Yes, sir. 

Chairman ISAKSON. Senator Mike Rounds of South Dakota. 

Senator ROUNDS. Thank you, Mr. Chairman. 

Gentlemen, thank you for your service to our country. 

Mr. Goldstein, I want to go specifically to this project in particular. I have had the opportunity to review your report, and 

sometimes we try to oversimplify; you did not. You went through 

this pretty specifically. What I was trying to do, then, was turn 

around and put it back into something that we can share as far as 

what the basic challenges are here. 

I appreciate the way you have laid out the three specific broad 

categories in which you saw failings. In this particular case it 

would appear—and I would just like it if you think I am on the 

right track or not—it would appear that the original estimate was 

never correct to begin with in terms of what the cost would be. Second of all, the late change over to the integrated design construction approach late in the game harmed rather than helped the 

process. Finally, there appeared to be literally no effective and efficient change order process that could efficiently get those changes 

necessary in a project this size in for approval and back out again 

so our contractors could get paid on a timely basis. 

Am I on the right track? 

Mr. GOLDSTEIN. You are right on all three counts, Senator. Yes, 

sir. 

Senator ROUNDS. Thank you, sir. 

27 

Thank you, Mr. Chairman. 

Chairman ISAKSON. Thank you, Senator Rounds. 

Senator Bennet. 

STATEMENT OF HON. MICHAEL F. BENNET, 

U.S. SENATOR FROM COLORADO 

Senator BENNET. Thank you, Mr. Chairman. 

I know that we have to decide whether we are going to give an 

opening statement or ask a question. So I would ask that my opening statement be included in the record. 

Chairman ISAKSON. Without objection. 

Senator BENNET. Thank you, Mr. Chairman. 

[The prepared statement of Sen. Bennet follows:] 

PREPARED STATEMENT OF HON. MICHAEL F. BENNET, U.S. SENATOR FROM COLORADO

Chairman Isakson and Ranking Member Blumenthal, thank you for your attention to this important project. 

And, thank you for traveling to Denver to see and hear first-hand what its completion means for our veterans in Colorado and across the Rocky Mountain region. 

Now that you’ve seen the structure and heard from our veterans here in Colorado, 

I’m sure you understand why our delegation has been so outraged and frustrated 

by this process, and also why we’re adamant that this hospital is completed. 

There is no other option. 

Bottom line: those most hurt by the VA’s negligence and mismanagement are our 

veterans and our taxpayers who have lost faith in the VA to complete this project. 

In the words of Steve Rylant and the UVC—‘‘BTDT’’—Build The Damn Thing. 

There is also much work to be done to ensure that the mistakes that were made 

on the Denver replacement facility never happen again—especially since lessons 

learned from previous VA construction projects were not applied to this project. 

That must change. 

We owe that to our veterans and to the taxpayers. 

The story of this Denver replacement facility should have been about the government improving the delivery of care to our veterans, instead of how feckless and 

shortsighted it can be. 

The delegation here today looks forward to working with our colleagues in Congress and our partners in the Rocky Mountain region to do just that. 

Chairman, we will work with you, our veterans and the other Members of the 

Committee to find a solution that completes the hospital so veterans can access the 

care they have been promised. 

Thank you. 

Senator BENNET. I would also ask to put in the record a letter 

that was sent August 9, 2013, to the Inspector General of the Veterans Affairs Commission from Bernie Rogoff, the Commissioner of 

Veterans Affairs for the city of Aurora. 

Chairman ISAKSON. Without objection. 

[The information referred to follows:] 

28 

LETTER FROM BERNIE ROGOFF, COMMISSIONER, VETERANS AFFAIRS, CITY OF AURORA

SUBMITTED BY HON. MICHAEL F. BENNET, U.S. SENATOR FROM COLORADO


424LtrBen1.eps 424LtrBen2.eps
29 

Senator BENNET. He has still not received an answer to that letter. I hope the fact that it is now in the record means he will receive an answer to that letter. 

I want to thank you both, Mr. Chairman and the Ranking Member from Connecticut. Senator Gardner and I are well aware of the 

importance you attach to the oversight of the VA hospital, but your 

willingness to hold this hearing in Colorado—it is very unusual not 

to have it in Washington—is a real demonstration and testament 

to your seriousness, and it honors Colorado’s veterans and the veterans of the Rocky Mountain West. On their behalf, I want to 

thank you very much for being here. 

I would also like to thank the veterans that are here today because we wanted to hold this hearing here so you could be here. 

And in that spirit I guess I would start by asking Mr. Rylant and 

Mr. Robinson, if they would like to comment, what the state and 

condition of the VA hospital is that our veterans are using right 

now in Colorado. In other words, why do we need this new veterans’ hospital, and what efforts did your organizations take and 

have you taken to alert the VA to the challenges that have been 

occurring out at the Aurora site? 

Mr. Rylant, why do not we start with you? 

Mr. RYLANT. In reference to the need, the doctors and nurses 

and—— 

Senator BENNET. I am sorry to interrupt, but also include in the 

need access to care by the rural veterans as well. 

Mr. RYLANT. OK. The doctors and nurses and staff at the present 

medical facility work hard with what they have, but it is an ancient hospital. It has been built on. I mean, the times that I have 

had to go there and find a room, I go through halls trying to figure 

out where I am supposed to go. 

One specific instance. A good friend of mine—and if I said his 

name, I am sure you would know who I was talking about—has developed cancer as a result of Agent Orange exposure in Vietnam. 

The hospitals work very hard to help him, and he tells me that 

they are doing a great job of taking care of him as quickly as they 

possibly can. 

But, he had an appointment to have an MRI, and the day of his 

appointment when he went, they had a shortage of people to do 

that. There were four veterans in wheelchairs waiting in the hallway to get into the MRI room. That is just not acceptable. If you 

went to a civilian hospital and saw that, heads would roll. 

So, we need the new hospital and medical facility to take care 

of people, the veterans who have sacrificed so much, to take care 

of them in a dignified manner. Also, in this hospital we are going 

to have spinal injury facilities. I believe it is 30 spinal injury beds, 

which we have needed for a long time. If somebody has got a spinal 

injury, they have got to go to San Diego or other places. 

A friend of mine right now is in San Diego getting a spinal injury 

problem taken care of that he has had for years and years and 

years. He would not have to go to San Diego if this hospital was 

built. He would be able to stay here with his family and get it 

taken care of. Those are just a couple of personal examples. 

Prior to my retiring in 2008, I was a project manager for General 

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30 

ed having briefings for the UVC to let us know what is going on. 

As I learned about the change order process and the design-to-build 

process, as a project manager, I guess I was not surprised but I 

was horrified. 

When I was a project manager, we had a specific design to build. 

I knew exactly what we had to build. We also had a specific date 

that we had to complete it on, and if we did not complete it on that 

date, we had late delivery penalties. If we delivered early, we had 

early bonuses. 

The change order process that I worked with, we first gave a 

written proposal of scope, cost, and any delay in time that would 

cost the project, and we did not do anything until we had a signed 

document from the customer that he agreed to the scope, he agreed 

to the price he would pay, and he agreed to the change in the delivery date. 

What I saw in the process here, Kiewit-Turner would propose a 

change and the VA would say, OK, go ahead and do the change 

and we will decide how much we are going to pay you. That is 

crazy. I do not know how I would have functioned as a project manager. There was never a specific date. It just kept floating out 

there, and there was no accountability to KT of when they had to 

have it built. I think they have been working hard to get it done 

because they need to minimize their costs. But the moving target 

of an end date has been horrible. 

I have been attending meetings with their activation committee 

that has to buy equipment to put in there, and they have got to 

schedule delivery of that equipment. If they buy it too early, it is 

going to be out of warranty before it ever gets used. The activation 

committee has had horrible problems trying to plan their part of 

it because they do not know when it is going to be built, and we 

do not know when it is going to be built. 

Does that kind of answer your question? 

Senator BENNET. It more than kind of answers my question. 

Chairman ISAKSON. I will inject there two things. One is on the 

spinal cord injury. We have a distinguished Vietnam veteran who 

is in the audience today who has already consulted with me before 

the meeting about the need to pay attention to the needs of veterans with disabilities in the planning process of our facilities, and 

we are going to do that, I promise you. 

Mr. Robinson, you might have a comment? Please try to keep 

your answers a little bit more brief, if you can. 

Mr. ROBINSON. I will echo from personal experience much of 

what he said, but not as chairman of the board. We work for the 

Governor, and this is fundamentally a Federal issue. We stand 

ready to assist in any way we can. 

My personal experience at the VA has resulted in the fact that 

I do not go to the VA anymore, for several reasons. They are too 

antiquated. They are too small, which leads to, in orthopedics for 

instance, waiting 2–3 months in specialty care to get an appointment; that is after you go through your primary care physician. It 

took me 7 months to have a simple scoping of my ankle done. 

I have had several procedures there. I look around and I say I 

have access to other care. I have TRICARE. Now I have Medicare 

and TRICARE for life. I am not going to jam up their system over 

31 

there by being one more person who has access to outside health 

care who has to go to the VA and wait so long but, more importantly, give the access to other veterans who do not have anything 

but the VA. 

That facility and the limited ORs and the limited exam rooms 

really creates a burden on the veterans. Where does the State come 

in to play a role? Well, this board administers about a $1 million 

grant program that goes to veterans, provided by the taxpayers of 

Colorado through the tobacco fund settlement, but also another $1 

million we provided. You would be amazed at how much of that 

money goes for transport of rural veterans into the hospital system 

here, and how much of it goes for homelessness and the other 

projects we mentioned. Part of that is because the Denver VA just 

cannot handle all the medical issues and the appointments and 

what-not, nor the transportation requirements. 

So, that is what the State has done to kind of fill some of the 

gaps. 

Chairman ISAKSON. Senator Gardner? 

STATEMENT OF HON. CORY GARDNER, 

U.S. SENATOR FROM COLORADO 

Senator GARDNER. Thank you, Mr. Chairman, and to Senator 

Blumenthal and Senator Rounds from the Veterans’ Affairs Committee, thank you for coming to Denver today to be a part of this, 

to see the work that has taken place and to see the work that 

needs to be done. 

Believe it or not, it does look a lot more like 50 percent completed than the last time they told us it was 50 percent completed. 

I had the opportunity to travel to Afghanistan and the Middle 

East 2 weeks ago. I met with a young 19-year-old soldier from 

Brighton, CO, and all the way from Colorado to Afghanistan we 

talked about what was happening with the veterans’ hospital, the 

VA hospital here in Colorado. The last thing a 19-year-old soldier 

ought to be worrying about while he is on the frontlines is what 

is happening with his care on the home front. 

Mr. Goldstein, we have seen the report here that you have laid 

out before us. We know there are ongoing conversations that you 

are having with the Veterans Administration. What concerns you? 

What surprises are there? What things are you looking out for as 

we try to solidify an agreement on what is now a $1.73 billion 

project? 

Mr. GOLDSTEIN. I think, Senator, that we would continue to be 

concerned about the overall management of the project and the relationship between the Army Corps and VA to ensure that lines of 

communication and oversight and accountability between those two 

organizations as they go forward are effective. At the end of the 

day, this is still a VA project. VA is still accountable for the results. 

I would hate to see accountability for this project be dissipated by 

yet a new arrangement that VA uses in order to achieve its results. 

That is something that I would be most concerned about right 

now, is making sure that that process works and that people who 

are going to do this are still held accountable for it, if you all decide 

to go down that road. 

Senator GARDNER. Thank you, Mr. Chairman. 

32 

Chairman ISAKSON. Let me just comment. You can rest assured 

that this Committee and the U.S. Senate is going to see to it that 

that does not happen. I mean, this testimony, the visit today, your 

testimony and all that we have learned, it is absolutely incumbent, 

no excuses, that we are going to get the project done, get it done 

right, and hold the VA accountable. I do not care what kind of contractual arrangement they make with anybody. It is their baby, it 

is their responsibility, and we are going to hold them accountable 

for it, you can count on that. 

Let us see. Congressman Perlmutter? I almost got it right. 

STATEMENT OF HON. ED PERLMUTTER, 

U.S. REPRESENTATIVE FROM COLORADO’S 7TH DISTRICTn 

Mr. PERLMUTTER. You got it right, Mr. Chairman. Thank you, 

and thanks to the panel for allowing us to participate in this, and 

thanks to the city of Aurora for sharing their municipal chambers. 

As you heard from Mr. Robinson, we are now on our third administration: the Clinton Administration, the Bush Administration, 

and the Obama Administration. We have been through at least 

seven secretaries. At least six senators have dealt with this, starting with Senator Ben Campbell, Senator Wayne Allard, Senator 

Ken Salazar, Senator Mark Udall, and the two senators from Colorado sitting here today. I think we are on the fifth Member of Congress that is had some level of participation in this, and it is something that we have all wanted to see built. It should have been a 

reward to our veterans. Instead we have all been embarrassed by 

how this has proceeded. But even being embarrassed, all of us still 

have resolve to get this done and to provide the services to our veterans. 

You mentioned Arty Guerro over there. Arty was one of the driving forces, along with many of the other vets in this chamber today, 

to get this done, because we have not had a spinal cord unit of any 

kind for ages and ages. 

I would like to say to Mr. Goldstein, if you go back to 1999, you 

probably would see 1,000 percent increase in cost of this thing. We 

need to keep moving. These delays certainly do not help. 

In your study, did you figure out how much is cost overruns due 

to increases in prices from when we did the original groundbreaking in 2009? Was that part of your study at all? 

Mr. GOLDSTEIN. We looked generally at the cost increases and 

schedule delays overall. We did not break it down into the specific 

reasons beyond that and attribute cost to individual pieces of it, sir. 

Mr. PERLMUTTER. Did you—— 

Mr. GOLDSTEIN. That would be more like an audit. 

Mr. PERLMUTTER. Did your office look at the initial contract that 

was drawn up between the general contractor and the VA for the 

initial construction at the original price of about $600 million? Did 

you analyze that at all? 

Mr. GOLDSTEIN. I do not know if we analyzed it or not, sir. I 

would have to go back and look. 

Mr. PERLMUTTER. Obviously, this is something that has been on 

the drawing board, and I would just want one little thing. Secretary Gibson came out in June of last year. We all met at the old 

facility. All of us—Senator Gardner, Representative Coffman, SenVerDate Mar 15 2010 21:55 Jun 21, 2016 Jkt 000000 PO 00000 Frm 00036 Fmt 6633 Sfmt 6601 Z:\114TH COMPLETED HEARINGS, MTGS\94462.TXT PAULIN
33 

ator Bennet and I, and a number of others—got on an elevator over 

there, and it immediately dropped a foot, and we had to climb out 

of the elevator to then walk up steps, which was no problem. My 

point being the hospital serves, but it is undergone benign neglect 

since at least 1999. 

Chairman ISAKSON. Congressman Coffman. 

STATEMENT OF HON. MIKE COFFMAN, U.S. REPRESENTATIVE 

FROM COLORADO’S 6TH DISTRICT 

Mr. COFFMAN. Thank you, Mr. Chairman. Thank you so much for 

coming out to the State of Colorado, and your colleagues, our counterparts in the U.S. Senate. We deeply appreciate you being here. 

As a combat veteran and as a taxpayer, I could not be more offended by what has occurred by the leadership of the Veterans Administration on building this project, that our veterans in this region have earned the right to state-of-the-art health care that they 

are not receiving because of construction delays and out-of-control 

costs on this hospital. 

The core function of VA is the delivery of health care and benefits. They are clearly not a construction entity. 

Mr. Goldstein, you in your report, I will tell you what amazes 

me, that Senator Bennet, Congressman Perlmutter, and Senator 

Gardner and myself had repeated meetings with the VA after this 

report was issued in April 2013. I have been on the Veterans Committee since January 2013, and before I even got on the Veterans 

Committee, the House Veterans Committee of the Congress of the 

United States requested this study to be done by the GAO. It said 

that this hospital was hundreds of millions of dollars over budget 

and knew it was behind schedule in 2013. That is your analysis. 

Yet we had meeting after meeting with the VA where, quite frankly, we were lied to. We were lied to again and again and again. 

My question to you is that even before this report, the GAO, 

probably for the last three decades, had been looking at VA construction and had been sounding the alarm about problems in 

terms of cost overruns and schedule delays, and I wonder if you 

could comment on that. 

Mr. GOLDSTEIN. We have issued a number of reports over the 

years to get to that very issue of delays, cost increases, and problems in the management of the VA construction program. That is 

correct. 

Mr. COFFMAN. I believe in your report, and when I put forward 

legislation in 2013, passed in 2014 after this report came out, because one thing you referenced in this report, although you did not 

make it a specific recommendation because I think you said that 

was a positive question, was that the Army Corps of Engineers has 

built similar projects for the Department of Defense, and I think 

you also referenced—I am trying to remember the name of the 

Army Corps of Engineers counterpart for the U.S. Navy. 

Mr. GOLDSTEIN. The Naval Engineering Command. 

Mr. COFFMAN. Right, that both these organizations have built 

similar projects for the Department of Defense on schedule, on 

budget. In the four projects that you mentioned here that were ongoing at the time, the four major construction projects, again each 

34 

hundreds of millions of dollars over budget and years behind schedule, I wonder if you could comment on that. 

Mr. GOLDSTEIN. They were, sir. They were over budget and had 

multiple delays for a number of reasons. The principal reason for 

all of them included incomplete designs, change order processing 

delays, construction and approval delays, cost of material increases, 

and risk-based pricing. Because of the processes and the management of VA, the subcontractors and contractors were bidding up 

and asking for prices because they knew there would be problems 

associated with the program. All of those factors led to the delays 

and to the cost increases generally in all those projects. Some were 

specific, of course, to Denver or Orlando and the like. Yet, those 

overall problems were in each one of the projects we looked at. 

Mr. COFFMAN. I firmly believe that the VA has to focus on its 

core mission, and its core mission is delivering health care benefits 

and delivering claims processing and other benefits to the men and 

women who have served this country in uniform, and I think we 

have got to get this hospital built. There is no question about that. 

But in that process, this cost has got to come out of VA’s hide. In 

part, that is going to be bonus money. 

There is got to be an outside investigation. VA cannot be entrusted to do their own investigation. 

Third, they must be stripped of their management construction 

authority on major construction projects going forward. 

With that, Mr. Chairman, I yield back. 

Chairman ISAKSON. Thank you very much. 

While we switch to the second panel, let me thank Mr. Goldstein, 

Mr. Rylant, and Mr. Robinson for your sacrifice, your time, and 

your service to the country. 

As Sloan Gibson and Mr. Caldwell are making their way forward 

I want to ask Mr. Perlmutter to do me a favor. 

Arty Guerro, Vietnam decorated veteran, lost the use of your legs 

from Vietnam—is that correct?—48 years ago. 

Mr. GUERRO. Forty-eight years ago. Yes, sir. 

Chairman ISAKSON. We are contemporaries, you and I. We are of 

the same vintage and the same age. I want you to know I had a 

coin struck when I became chairman of the Committee that has got 

an acronym on it, ‘‘IDWIC.’’ That stands for ‘‘I Do What I Can.’’ 

That is the way a guy named Second Lieutenant Noah Harris used 

to email me from the battlefront in Iraq when he would send me 

updates on how he was doing, right up until the day before he died, 

which was the last email I got. 

I want Congressman Perlmutter to present this medal to you, 

Arty, as a token of our appreciation, from the Senate Veterans’ Affairs Committee, for all your work and sacrifice, and for representing all that veterans have done for the United States of 

America. [Applause.] 

Chairman ISAKSON. It does not get any better than that. 

Thank you very much, Arty. 

35 

1Office of Management and Budget, Supplement to Circular No. A–11: Capital Programming 

Guide (Washington, DC: July 2012). GAO, Executive Guide: Leading Practices in Capital Decision-Making, GAO/AIMD–99–32 (Washington, DC: December 1998). GAO, Federal Courthouses: 

Recommended Construction Projects Should Be Evaluated under New Capital Planning Process, 

GAO–13–263 (Washington, DC: April 2013) 

RESPONSE TO POSTHEARING QUESTION SUBMITTED BY HON. RICHARD BLUMENTHAL

TO MARK GOLDSTEIN, DIRECTOR, PHYSICAL INFRASTRUCTURE ISSUES, GOVERNMENT

ACCOUNTABILITY OFFICE

Question 1. GAO’s written testimony mentions VA’s use of a Construction Review 

Council to assume oversight and accountability roles relative to VA’s real property 

programs. In the April 15, 2015 House Committee on Veterans Affairs hearing on 

VA construction, Deputy Secretary Gibson testified that the Council had not met 

since he was sworn in, and he believed that it ‘‘diffuses responsibility.’’ Do other 

Agencies have bodies that play a role similar to the Construction Review Council, 

and are there best practices in this area? 

Response. We have not done work regarding whether other agencies have a council of high level officials, such as VA’s Construction Review Council, that serves as 

the single point of oversight and performance accountability for the planning, budgeting, execution, and delivery of property capital-asset program. However, we have 

identified leading practices for performing these functions based on OMB and GAO 

guidance.1 For example, before choosing to purchase or construct a capital asset, 

agencies should carefully consider a wide range of alternatives. In addition, agencies 

should establish and follow a formal process for senior management to review and 

approve proposed capital assets. Further, after a construction project is implemented an evaluation team, composed of individuals not directly involved in a 

project should determine how accurately the project meets the objectives, expected 

benefits, and the strategic goals of the agency and indicate the extent to which the 

agency’s decisionmaking processes are sustaining or improving the success rate of 

capital investments. 

Chairman ISAKSON. On our second panel we will hear first from 

the Hon. Sloan Gibson, Deputy Secretary of the U.S. Department 

of Veterans Affairs, and then from Lloyd C. Caldwell, the Director 

of Military Programs, U.S. Army Corps of Engineers. 

I believe, Mr. Gibson, you are accompanied by Stella Fiotes. Is 

that right? Is that the right pronunciation? 

Mr. GIBSON. That is right. Yes, sir. 

Chairman ISAKSON. I have been messing up ‘‘Perlmutter’’ all day 

long, so I wanted to get that right. 

And Dennis Milsten. 

Deputy Secretary, the floor is yours for no more than 5 minutes. 

STATEMENT OF HON. SLOAN D. GIBSON, DEPUTY SECRETARY, 

U.S. DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED 

BY STELLA FIOTES, EXECUTIVE DIRECTOR, OFFICE OF CONSTRUCTION AND MANAGEMENT FACILITIES; AND DENNIS 

MILSTEN, DIRECTOR OF OPERATIONS, OFFICE OF CONSTRUCTION AND MANAGEMENT FACILITIES 

Mr. GIBSON. Yes, sir. The current situation is totally—— 

Chairman ISAKSON. Make sure your mic is on. 

Mr. GIBSON. There is no switch here. I am relying on somebody 

else to switch it on. 

Chairman ISAKSON. You are OK. 

Mr. GIBSON. The current situation is totally unacceptable. The 

VA made mistakes on this project. I apologize again. This must not 

happen another time, not on my watch or in the longer-term future 

at VA. 

36 

Our priorities are to finish the project, make the best use of resources, and put in place sound construction management processes to ensure it never happens again. 

That means embracing lessons learned. It means taking meaningful corrective actions. Some of the improvements are already in 

place: requiring major medical construction projects to achieve at 

least 35 percent design prior to establishing cost estimates or 

schedules, or requesting funds; implementing a rigorous requirements control process; institutionalizing a project review board, 

similar to that used by the Corps of Engineers’ district offices; conducting pre-construction reviews of major construction projects; a 

private construction management firm evaluates design and engineering factors; and integrating medical equipment planners into 

construction project teams from concept through activation. 

In addition to these measures already in place, the Corps of Engineers is conducting a broader examination of the VA’s largest 

construction projects, and we expect that report next month. 

An independent third-party organization is also conducting a 

comprehensive assessment of VA’s entire construction program as 

part of the Choice Act legislation and will report their findings to 

Congress by September of this year. We will use the findings of the 

Corps’ report and the independent third-party assessment to further strengthen VA’s construction management practices. In the future, VA believes the Corps should be designated as construction 

agent for our largest medical facility projects. 

The Denver project has a long history. Let me briefly cover two 

major decision points that I believe led us to where we are today. 

In 2009, we hired an architect-engineer joint venture to complete a design with an estimated cost of $583 million. VA’s acquisition 

strategy for the project was to complete 100 percent design and 

then solicit proposals to build. VA, in a misguided effort to get 

work under way, changed strategies to a contract mechanism 

known as integrated design and construct, the idea being to bring 

the contractor on board early to participate in the design. 

In August 2010, VA entered into contract with Kiewit-Turner to 

perform design constructability and cost reviews, with an option to 

award facility construction. KT maintained that the project could 

not be built for the established cost. Under pressure to move the 

project forward, VA and the contractor executed an option to construct the project in November 2011. This option committed VA to 

deliver a design that could be built for $583 million. 

These two watershed events, the selection of the IDC contract 

form and VA’s commitment to deliver a design that could be built 

for less than $600 million, were both critically flawed. VA’s legal 

interpretation of these two agreements, and our ensuing litigation 

strategy, also compounded these errors. 

In July 2013, KT filed a complaint with the Civilian Board of 

Contract Appeals, and in December VA was found in breach of the 

contract for failure to provide a design that met the contract price. 

I would be remiss in my testimony if I did not take particular note 

of the commitment that Kiewit-Turner has to this project and the 

quality of work that KT and their subcontractors have completed 

over the life of the project. I think the fact that Peter Davoren 

has—who are both sitting here today present at this hearing is an 

37 

indication of their commitment to this project and their desire to 

see veterans being served at this facility. 

That brings us to where we are today. After analysis by the 

Corps of Engineers, we informed Congress that the total estimated 

cost of the facility will be $1.73 billion, which includes the Corps’ 

estimate of $700 million to complete construction. The total would 

require an authorization increase of $930 million and additional 

funding of $830 million. 

After consulting with our partners, reviewing the status of the 

project, considering cost, risk, scope and scale, and time required, 

we believe the best option for veterans and for taxpayers is to contract with KT to complete the project, leveraging the 100 percent 

design, KT’s knowledge of the project, presence on the site, and existing subcontractor relationships. 

Now we must work with this Committee and others to secure 

funding. We have proposed funding the cost by using a portion of 

the $5 billion provided for minor construction and non-recurring 

maintenance in the Choice Act, and we look forward to discussing 

that proposal and other options with the Committee. 

We know that accountability is also central to ensuring that VA 

never repeats the mistakes that led to these delays and cost overruns. As stated earlier, I believe two critical decisions led to the 

current situation, decisions made in 2010 and 2011. None of the 

people who were in positions of responsibility for the project during 

this critical time are still in these positions. In fact, only one still 

remains at VA. 

Our administrative investigation board is still under way, and I 

have also asked our IG to conduct a formal investigation of all aspects of the Denver project. I will continue to pursue accountability 

actions wherever evidence supports it. 

All that said, when completed, the Denver facility will be a tremendous resource for veterans and their family members in Eastern Colorado and throughout the Rocky Mountain area, an exceptional Level 1A facility. 

Thank you, Mr. Chairman. We look forward to answering your 

questions. 

[The prepared statement of Mr. Gibson follows:] 

PREPARED STATEMENT OF HON. SLOAN D. GIBSON, DEPUTY SECRETARY, 

U.S. DEPARTMENT OF VETERANS AFFAIRS

Good morning, Mr. Chairman and Members of the Committee. Thank you for the 

opportunity to update the Committee on the status of the construction of the replacement medical center in Denver. I am accompanied today by Ms. Stella Fiotes, 

Executive Director, and Mr. Dennis Milsten, Director of Operations, of the VA Office 

of Construction and Facilities Management. 

The Department’s main priority regarding the Denver project is to complete the 

facility without further delay, and to do that while delivering the best possible value 

to taxpayers given the difficult circumstances. Our commitment to completing this 

project, which is intended to serve over 390,000 Colorado Veterans and their families, has never wavered, and current VA medical facilities and programs in the area 

continue to ensure that no Veterans or their families go unserved. 

BACKGROUND

I think it is important to review the events that brought us to where we are 

today. I would like to highlight some key events that directly shaped the current 

status of the project. 

38 

The replacement of the existing Denver VA Medical Center began as an idea between the University of Colorado and VA to construct a shared facility. The project 

went through a protracted development period that included a concept to build a 

shared facility with the Department of Defense. VA requested design funds in fiscal 

year (FY) 2004, with an estimated project budget of $328.5 million. In 2004, then 

VA Secretary Principi set forth the requirement for a stand-alone VA facility on the 

Fitzsimmons campus. VA developed a plan for a 1.4 million square foot facility in 

2006, then revised that plan to 945 thousand square feet, and subsequently requested appropriations for an $800 million project in 2010 with final funding being 

requested and received in 2012. 

VA retained the services of an architect engineer firm (AE) to complete a design 

with an Estimated Construction Cost at Award (ECCA) of $582 million. The original 

acquisition strategy for the project was to complete 100 percent design and then solicit construction proposals to build the project. This strategy was changed to use 

a different contract mechanism, known in the Industry as ‘‘Early Contractor Involvement,’’ to bring the contractor onboard early to participate in the design. This 

change in acquisition strategy, intended to expedite project delivery by overlapping 

early phases of construction with completion of the design, was a decisive moment 

in the life of the project. The timing and appropriateness of this specific delivery 

method underlie many of the ensuing issues with the management of the project. 

VA entered into a contract in August 2010 with Kiewit-Turner (KT) to perform design, constructability, and cost reviews. This contract also provided an option to 

award the construction of the facility to the contractor. 

At the time of the 2010 contract award, the design had progressed to a point that 

limited the opportunity for the contractor to influence the design and cost. The contractor provided pre-construction services and amid attempts at cost reconciliation 

with the designer, the contractor maintained that the project was over budget and 

could not be built for the established ECCA. The parties negotiated for a period of 

approximately six months to arrive at a construction contract price but differences 

remained. Feeling the need to finally get to construction award for the project, VA 

and the contractor executed an option on November 11, 2011, to build the replacement hospital, which became known as Supplemental Agreement 07 (SA–07). The 

total design was not 100 percent complete at the time; it was at what was deemed 

an ‘‘enhanced design development or roughly 65% stage.’’ SA–07 stated that VA 

would ensure that the design produced would meet the ECCA of $582.8 million and 

that the contractor, KT, would build the project at the firm target price of $604 million, which included pre-construction services and additional items. This was the 

next and probably most critical point in the project’s evolution. VA’s promise to ensure that the design produced met the ECCA became the centerpiece of diverging 

interpretation and conflicts between VA and the contractor. Course correction opportunities were missed because of the fundamentally different interpretation of SA– 

07, poor project and contract management, and the increasingly strained relationships among the parties. 

KT filed a complaint with the Civilian Board of Contract Appeals (CBCA) in 

July 2013 that further cemented the differing perspectives on the interpretation of 

the contract and ultimately the cost of the project. Despite the less-than-optimal 

business environment during the year-and-a-half of litigation, construction quality 

and progress were maintained. In December 2014, VA was found in breach of contract for failure to provide a design that met the ECCA, and KT began to demobilize 

from the project site. VA entered into immediate negotiations with KT to stop the 

demobilization, recognizing the hospital was approximately 50 percent complete. 

Subsequently, VA entered into an interim agreement with KT to continue the 

project, and with the United States Army Corps of Engineers (USACE) to assess the 

project, and to manage all the pre-award activity related to the follow-on contract. 

VA intends to enter into a separate agreement with USACE to execute a new construction contract and to complete the facility once we have obtained the necessary 

authorization and funding. 

OPTIONS AND COSTS FOR COMPLETION OF PROJECT

After the decision by the CBCA, VA identified two primary courses of action. The 

first was to allow KT to continue demobilizing and have VA assume maintenance 

of the site, update the construction contract documents, and re-compete the contract 

for the remaining work. The second option was to re-establish a contractual relationship with KT for continued construction of the medical center. The option to recompete the project represented a potential 18- to 22-month delay, involving closeout of the existing contract and development and award of a new contract to finish 

the job. While this work was ongoing, VA would also need to engage several contracVerDate Mar 15 2010 21:55 Jun 21, 2016 Jkt 000000 PO 00000 Frm 00042 Fmt 6633 Sfmt 6621 Z:\114TH COMPLETED HEARINGS, MTGS\94462.TXT PAULIN
39 

tors to maintain the site and preserve the work accomplished to date. In addition, 

VA would have to recognize the bidding climate for this project would not be advantageous, and a premium would be applied by subcontractors to cover perceived risk. 

These factors would have served to increase both the length of time to complete the 

project and its ultimate cost. 

The second option of retaining KT leveraged their current knowledge of the 

project, presence on the site, and existing relationships with subcontractors. It reduced delays that could have impacted construction warranties and provided the 

best option for protecting the existing construction. Finally, resuming work with KT 

put over 600 workers back on the job, and also best protected the significant investment already made in this project. In the days immediately following the demobilization, this option represented the clearest path to achieving the two main goals 

stated above. For this reason, it is the path that VA chose. 

On March 17, 2015, VA notified Congress that the total estimated cost for the 

Denver Replacement Medical Center project would be $1.73 billion. This is an authorization increase of $930 million to complete the project and requires additional 

funding of $830 million. The new authorization level reflects input from USACE on 

the required cost to complete the project. USACE has had access to all design documents and VA staff relative to the Denver project. The USACE team included subject matter experts in cost contracting, acquisition, construction management, design management, and cost engineering. The team also looked at the cost to administer the construction. USACE was provided access to all estimates of construction, 

cost paid to-date, and modifications executed. USACE also examined the original 

contract as well as the interim contract to assess cost and completion progress. 

USACE used all this information to form their assessment of the cost to complete 

the effort. Their estimate included a contingency and cost to manage the construction. USACE estimates a need for an additional $700 million following the close out 

of the original and interim contracts. USACE has established a June 2015 target to 

award a new contract for the completion effort. 

VA added the cost necessary to continue the interim contract through June 2015, 

additional funds for closing out the original contract and funds for completing the 

Post Traumatic Stress Disorder residential treatment facility. This totaled $130 million in addition to USACE’s construction completion estimate. The money currently 

on the project of $899.8 million, plus the $700 million and the $130 million, drive 

the $1.73 billion estimate for the project. 

Now, we must work with this Committee and others to secure funding. We have 

proposed funding the increased cost by requesting authority to use funds provided 

to VA in The Veterans Access, Choice, and Accountability Act. 

The Act provided $5 billion in mandatory funding to increase health care staffing 

and improve physical infrastructure. We propose adjusting that language to enable 

VA to redirect a portion of this funding toward the remaining requirements to complete the Denver project. We will forward to the Committee an updated spend plan 

for the $5 billion that shows how this proposed change would impact the allocations 

for other VA programs. We believe this is the best approach among the difficult 

choices before us. 

This hospital complex is an important part of VA infrastructure, and completing 

it will improve access to care for over 390,000 Colorado veterans. The development 

of this new, state-of-the-art medical center will enhance Veteran health care capabilities in the Eastern Rockies by ensuring every patient receives the fullest complement of clinical services. The expansion of Mental Health services will meet a 

projected workload increase of 16% over the next 20 years support VA’s targeted 

goal of improving Veteran wellness and economic security. Clinical education will 

also be significantly enhanced by increasing space to match clinical need and patient demand. 

ACCOUNTABILITY

VA established an Administrative Investigation Board to look at the actions and 

processes that resulted in the current situation and the employees responsible for 

those actions and decisions. At this juncture, while the investigation is ongoing, it 

is premature for VA to identify who may be subject to appropriate disciplinary action. VA intends to hold any individuals found to have acted negligently accountable 

for their actions. As previously discussed during the hearing in January 2015, 

USACE is also conducting a broader, detailed examination of VA’s major construction program to identify gaps and improve management processes, structures, and 

controls in project oversight and delivery. We expect USACE to complete their review and report their findings in May 2015. In the interim, we changed the reporting structure within the Department so that the Office of Construction and FaciliVerDate Mar 15 2010 21:55 Jun 21, 2016 Jkt 000000 PO 00000 Frm 00043 Fmt 6633 Sfmt 6621 Z:\114TH COMPLETED HEARINGS, MTGS\94462.TXT PAULIN
40 

ties Management reports directly to me to ensure continued visibility and accountability in real time. 

In addition to the review of the four large hospital projects by USACE, an independent third-party organization is conducting a comprehensive assessment of the 

entire VA construction program as part of the Choice Act legislation and will report 

their findings to Congress by September 2015. 

THE FUTURE OF VA CONSTRUCTION

Over the past two years, VA has significantly changed the way it conducts business, but more work remains to be done. Unfortunately, many of these changes were 

too late to affect the Denver project. 

To help ensure that previous challenges are not repeated and to lead improvements in the management and execution of our capital asset program as we move 

forward, VA will continue to adopt best-management practices and controls including: 

• Incorporating integrated master planning is essential to ensure that the 

planned acquisition closes the identified gaps in service and corrects facility deficiencies. 

• Requiring major medical construction projects must achieve at least 35-percent 

design prior to cost and schedule information being published and construction 

funds requested. 

• Implementing a deliberate requirements control process, where major acquisition milestones are identified to review scope and cost changes based on the approved budget and scope. Any significant changes in project scope or cost need to 

be approved by the Secretary prior to submission to Congress. 

• Institutionalizing a Project Review Board (PRB). VA worked with USACE to establish a PRB for VA that is similar to the structure at the USACE District Offices. 

The PRB regularly provides management with metrics and insight to indicate if/ 

when a project requires executive input or guidance. 

• Using a Project Management Plan to outline a plan for accomplishing the acquisition from planning to activation to ensure clear communication throughout the 

project. 

• Establishing of VA Activation Office to ensure the integration of the facility activation into the construction process for timely facility openings. 

• Conducting pre-construction reviews—Major construction projects must undergo 

a ‘‘constructability’’ review by a private construction management firm to evaluate 

design and engineering factors that facilitate ease of construction and ensure project 

value. 

• Integrating Medical Equipment Planners into the construction project teams— 

Each major construction project will employ medical equipment planners on the 

project team from concept design through activation. 

These improvements are being applied to our ongoing and upcoming major construction projects. Depending on the stage of development, some projects like the 

Denver Replacement Medical Center did not benefit from many of these improvements. 

In the past five years, VA has delivered 75 major construction projects valued at 

over $3 billion that include the new medical center complex in Las Vegas; cemeteries; polytrauma rehabilitation centers; spinal cord injury centers; a blind rehabilitation center; and community living centers. The New Orleans replacement facility 

is currently on schedule, and is anticipated to be completed in the fall of 2016. This 

is not to diminish our serious concerns over the mistakes that led to the current 

situation on the Denver project, but only to emphasize that we have successfully 

managed numerous projects through our major construction program. VA takes full 

responsibility for the situation in Denver, and we will continue to review our major 

construction program and the details of this project to improve our performance. We 

must ensure these mistakes never happen again. Not only will we rigorously apply 

the best practices above and those included in the Corps’ report, we look forward 

to receiving the independent study directed by The Choice Act. We will work with 

the Independent Commission established by Congress under the Choice act to provide a comprehensive proposal for the future of VA’s construction program. 

In closing, each day, VA is moving toward its goal of improving and streamlining 

our processes to increase access to our Veterans and their families. I am personally 

committed to doing what is right for Colorado veterans, and completing the Denver 

project without further delay and to do that while delivering the best possible value 

to taxpayers given the difficult circumstances. 

41 

Mr. Chairman, this concludes my statement. Thank you for the opportunity to testify before the Committee today. My colleagues and I would be pleased to respond 

to questions from you and Members of the Committee. 

Chairman ISAKSON. Thank you, Deputy Secretary Gibson. 

Mr. Caldwell, am I correct that you all are there in support; you 

are not to testify? 

Mr. MILSTEN. Yes, sir. Correct. 

Chairman ISAKSON. OK. 

Mr. Caldwell, welcome. 

STATEMENT OF LLOYD C. CALDWELL, P.E., DIRECTOR OF 

MILITARY PROGRAMS, U.S. ARMY CORPS OF ENGINEERS, 

U.S. DEPARTMENT OF THE ARMY 

Mr. CALDWELL. Thank you, Chairman Isakson. 

Chairman ISAKSON. I know you are a good man because you married a Georgia girl. [Laughter.] 

Mr. CALDWELL. Yes, sir, and she keeps me straight, that is for 

sure. Thank you. 

Thank you, Chairman Isakson, Senator Blumenthal, Members of 

the Committee and congressmen. We appreciate the opportunity to 

appear before you on behalf of LTG Thomas Bostick, the Chief of 

Engineers. 

My job with the Corps of Engineers is the application of our engineering and construction capability in support of defense agencies 

and other agencies that we may support. 

The Corps recognizes the importance of the service of the members of the Armed Forces and the service of our veterans in sustaining the strength of our Nation. The Corps has significant construction management capabilities and experience in delivering 

medical facilities, primarily for the Department of Defense, but also 

with other agencies. 

Today I will address the actions we are taking in partnership 

with the Department of Veterans Affairs to complete the construction of the Denver hospital and otherwise assist them with their 

construction program. 

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

one. Earlier someone mentioned NAFEC, the Naval Facilities Engineering Command, which is also one. These agencies procure and 

execute the design and construction of projects to deliver the Department of Defense infrastructure requirements, as authorized by 

law. 

Interagency collaboration is an important element of the Corps’ 

work, and the Corps provides interagency support to non-defense 

agencies as well as part of our service to the Nation. The Economy 

Act provides the necessary authority for the Corps to assist the VA 

with any construction requirements, from minor to major construction, to include completion of the Denver hospital. 

There are currently three lines of effort associated with the 

Corps’ support to the VA’s major construction program, which includes completing the Denver hospital project as the construction 

agent. We are also undertaking a review to identify lessons learned 

from the Denver hospital project and three other major projects, 

the Las Vegas, the Orlando, and the New Orleans projects. Finally, 

42 

we are engaging with the VA leadership in discussion regarding 

the application of best practices and other application and execution of their program. 

In December 2014, the VA and the Corps entered into an Economy Act agreement to allow the Corps to assist the Denver project. 

Beginning in January, we had a number of technical experts visit 

the site and assess the completed work and the design documents. 

We later modified that agreement to provide funding and authority 

to prepare for the award of a new contract to complete the construction. Currently we are working with the VA on a new agreement that would allow the Corps to actually award a contract and 

to manage the contract when that action is authorized by Congress. 

Our teams of professionals have made progress to formulate a 

new construction contract. We have identified the preferred course 

of acquisition. In February, we issued a Notice of Intent to industry 

of our intent to negotiate and award a sole-source contract to 

Kiewit-Turner. That gave industry the opportunity to comment on 

our plan of action. We have recently achieved approval per the Federal acquisition regulation from appropriate Army acquisition authorities to proceed in this manner, and we began discussions just 

this week with the senior leadership of Kiewit-Turner to prepare 

for the negotiations of that new contract. 

As we work toward a new contract award, we will continue to assess the developments on this project and the detailed requirements, taking into account the fact that the construction is continuing under an interim separate VA contract with Kiewit-Turner. 

The Corps provided a preliminary estimate for completing construction at Denver, which was one component of the increased authorization requirements reported to Congress by the VA. The VA included the Corps’ estimate, along with other VA costs, for the 

project. Meanwhile, we are developing an independent estimate 

that will be suitable for our negotiation of the new contract. 

As the actions for the new contract are proceeding, the Corps is 

also advising the VA on the management of the interim contract 

with Kiewit-Turner. The interim contract permits continued 

progress on the project while the Corps prepares to assume construction agent responsibilities. Although the Corps will assume a 

lead role in the construction of the Denver hospital, the VA remains the project proponent and is still responsible for project requirements, for resourcing, and for facility transition to full operation. 

In partnership with the VA, and in partnership with KiewitTurner, and by using the Corps of Engineers’ project delivery process, we are confident that the Corps can complete the construction 

of the Denver hospital in a most effective way. 

Concerning the Corps’ review of the four major medical 

projects—Denver, New Orleans, Las Vegas, and Orlando—the purpose of that review is to assess the management processes which 

were then used by the VA and which they may then use to assess 

their organizational structure, processes, and controls. The scope of 

our effort is an analysis of the current techniques and procedures 

used by the VA for these projects, and we will compare those with 

how the Corps of Engineers conducts its business with the Department of Defense process for executing major medical infrastructure 

43 

projects. That review is under way, and the objective is to provide 

a report to the VA in May. 

We have other projects not related to the Denver hospital that 

we continue to execute for the VA. That association predated the 

existing challenges. We are committed to working with the VA as 

construction agent to complete this project, as well as future 

projects, as may be appropriate. 

Mr. Chairman, that concludes my statement. I will be glad to answer questions that you may have. 

[The prepared statement of Mr. Caldwell follows:] 

PREPARED STATEMENT OF LLOYD C. CALDWELL, P.E., U.S. ARMY CORPS OF

ENGINEERS, U.S. DEPARTMENT OF THE ARMY

Mr. Chairman and Members of the Committee, thank you for the opportunity to 

appear before you on behalf of Lieutenant General Thomas Bostick, the Chief of Engineers. I provide leadership for execution of the U.S. Army Corps of Engineers 

(Corps) engineering and construction programs in support of the Department of Defense (DOD) and other agencies of the Federal Government. 

The Corps fully recognizes the importance of the service of members of the Armed 

Forces and the service of our veterans in sustaining the strength of our Nation. We 

understand the vital link between the goals of their service and the technical capabilities we provide, from consultation to delivery of infrastructure. The Corps has 

significant construction management capabilities and experience delivering medical 

facilities for our servicemembers and veterans. 

DOD’s construction program utilizes designated Construction Agents, of which the 

Corps is one, that procure and execute design and construction of projects to deliver 

the Department’s infrastructure requirements authorized by law. The Corps is also 

known for the Civil Works projects it executes for the Nation, and the Corps’ capabilities are perhaps uniquely developed to deliver both defense and non-defense infrastructure. Interagency collaboration is an important element of the Corps’ work, 

and the Corps provides interagency support as a part of its service to the Nation. 

The Economy Act (31 U.S.C. 1535) provides the necessary authority for the Corps 

to assist the VA with any construction requirements, from minor to major construction. 

Today, we have been asked by the Committee to testify on the subject of the Denver Replacement Medical Center in Aurora, Colorado (Denver Hospital), including 

the Corps’ review of the original and interim contracts and the completion estimate. 

We have also been asked to address the Corps’ review of the Department of Veterans Affairs (VA) major construction program and recommendations to improve 

project oversight and delivery. 

There are currently three lines of effort associated with the Corps’ support to the 

VA’s major construction program. One is the completion of the Denver Hospital 

project as the construction agent. Another is a review of management processes 

from the Denver Hospital and three other major projects, which may be used by VA 

to assess their organizational structure, processes and controls. The third is discussion with VA leadership regarding best practices and how we may help support 

major project execution in their future program. 

In December 2014, the VA and the Corps entered into an Economy Act agreement 

to allow the Corps to assess the Denver Hospital construction project. Subsequent 

modifications to this agreement have provided funding and the authority to prepare 

for the award of a new Corps contract to complete the construction. We are currently working with VA to develop a new agreement that would allow the Corps to 

award the new contract and transition the construction agent responsibility to the 

Corps to manage the new contract. Beginning in January, we had a number of technical experts on site to assess the completed work and contract documents. Subsequently those and other teams of professionals, including from the Northwestern Division, Omaha District, Huntsville Engineering and Support Center, and Corps 

Headquarters are undertaking the steps that will lead to award of the new construction contract as well as to managing the contract through to completion. We have 

identified a preferred course for acquisition, and in February we issued a Notice of 

Intent to negotiate and award a sole source contract to Kiewit-Turner, and we have 

requested approval for the acquisition strategy. As we work toward a new contract 

award, we continue to assess the detailed requirements of this project, taking into 

account the fact that construction is continuing under a separate VA contract with 

Kiewit-Turner. 

44 

The Corps provided a preliminary estimate for completing construction at Denver, 

which was one component of the increased authorization requirements reported to 

Congress by the VA. The VA combined the Corps’ estimate with other VA costs for 

completing the project. The preliminary estimate was appropriate to inform the increased authorization requirements. Meanwhile, we are developing an independent 

estimate suitable for negotiation of the new contract. 

As the actions for a new Corps contract are proceeding, the Corps is also advising 

the VA on the management of the VA’s interim construction contract with KiewitTurner. This approach continues progress on the project while the Corps prepares 

to assume construction agent responsibilities. 

While the Corps will assume the lead role in the construction of the Denver Hospital, the VA, as the project proponent, will remain responsible for project requirements, resourcing and facility transition to full operations. By using our project delivery process, we are confident that the Corps, acting as the Construction Agent, 

can complete construction of the Denver Hospital for VA and our veterans. 

Concerning the Corps’ review of VA’s four major medical projects, the purpose is 

to review management processes, which may be used by VA to assess their organizational structure, processes and controls. The scope of the Corps effort is an analysis of current VA techniques and procedures utilized in executing construction of 

their major hospitals compared to procedures used by the Corps in executing major 

medical infrastructure projects. The construction projects under review include the 

medical facilities at New Orleans, Las Vegas, and Orlando, in addition to the Denver Hospital. The review is underway with the objective to provide a report to VA 

in May. There are no findings and conclusions currently to report. 

In regard to the third line of effort, we have assisted the VA to establish a project 

review process for major projects. 

In other efforts, which predate our involvement with the Denver Hospital project, 

we provide assistance to VA to execute multiple minor construction and non-recurring maintenance projects for the Veterans Integrated Service Networks and the 

VA’s National Cemetery Administration. We are committed to work with VA to complete the Denver Hospital, to continue our partnership and to collaborate on future 

major construction projects. 

Mr. Chairman, this concludes my statement. Thank you for allowing me to be 

here today to discuss the Corps’ capabilities and our work to assist VA. I would be 

happy to answer any questions you or other Members may have. 

Chairman ISAKSON. Thank you very much, Mr. Caldwell. 

Secretary Gibson, you made the comment that all those that had 

a responsibility for the problems at the Denver VA are no longer 

working on that project. Is that correct? 

Mr. GIBSON. That is correct. Those directly responsible, yes. 

Chairman ISAKSON. Is it true that the principal person responsible earlier retired with a full pension? Correct? 

Mr. GIBSON. In fact, I believe most of the people that were involved in the project retired. 

Chairman ISAKSON. They either retired or they were transferred 

within the agency. Is that correct? 

Mr. GIBSON. There is one individual that still works at the agency. He was the project executive at the time. He was moved from 

this project, assumed a position without supervisory responsibilities at a lower grade. 

Chairman ISAKSON. My point is that Secretary McDonald told us 

he had made 700 personnel moves in his first year as Secretary. 

Eleven of those were terminations. All the rest of them, 689 of 

them, were transfers, early retirements or things of that nature. 

The reason we are always given for accountability being difficult 

is that you cannot really fire anybody in the Federal Government. 

Well, you can, for cause. It would seem to me, in places where you 

are talking about hundreds of millions or billions of dollars, there 

are causes there that contributed to the losses of the taxpayer, and 

there ought to be accountability more than somebody taking a pension and retiring or transferring within the agency. That is just my 

45 

statement. Since you are not answering that statement, I am going 

to put a question in. 

Mr. GIBSON. I agree with that sentiment precisely. 

Chairman ISAKSON. We will probably make it one out of two because here is my next observation. Senator Blumenthal, Congressman Coffman—— 

Senator BENNET. Can I just say, nothing else in Washington runs 

as well as this Committee runs under this chairman. So, we are 

grateful for the example. 

Chairman ISAKSON. Congressman Coffman made reference to 

some consequences for people in terms of how we pay for this overrun at the Denver VA. The ranking member has made a number 

of comments about it—let me just give you an observation. 

I am sitting in the Committee and the VA comes to me and says we have got a $930 million overrun on top of a $600 million overrun, we need to find some way to pay for it, we are going to take 

it out of Veterans Choice, that is our solution. 

I am going to ask you two questions. How much in the administrative budget of the VA did you first look for to find that money? 

Number 1. Number 2, if you are going to take it out of Veterans 

Choice, who are you going to penalize and how are you going to fix 

them when their problem comes up? 

I will give you one good example. If you go through the Fiscal 

Year 2015 budget for the administrative offices of the VA, there is 

an increase of 73 FTE and $66 million in 1 year for personnel. That 

is some money that should be available for a contribution toward 

the $930 million. That is number 1. 

Number 2. If, in fact, the Corps of Engineers is going to take 

over construction and this thing is going to be out of your hair, I 

do not know why you need $53,874,000 for acquisition, logistics, 

and construction. You might need some of it, but you are certainly 

not going to need all of it. That money ought to be going to the 

overruns, and that is where you need to find as much of the money 

as you can, not in penalizing veterans from the program Congress 

passed to try to improve their access to VA health care. That was 

a statement, not a question. However, if you want to respond, you 

can. 

Mr. GIBSON. I would like to respond, Mr. Chairman. We will take 

a look at those specific areas that you have raised. I would tell you, 

if there was ever a time when VA had the ability to go reach inside 

its organization and scrape out additional resources for any particular purpose, this is not the time. 

We have been working for almost a year now to do everything 

possible to accelerate care for veterans. We have hired 8,000 additional staff in VHA over the last 12 months. We have got emergency leasing activity going on at locations around the country in 

order to be able to provide additional access to care. We had nothing in our 2015 budget for the new Hepatitis C protocol, and we 

were able to go in and find $700 million that we pulled over in 

there which, frankly, we are about to run out of. So, we are trying 

to figure out how to be able to bridge the period until the 2016 

budget to continue to provide that Hepatitis C care. 

Last, while we have not done a good job of executing the Choice 

Program, per se, we have seen an explosion in referrals of veterans 

46 

to VA care in the community, as opposed to allowing them to continue to wait. 

All of these things done to try to accelerate access to care. Historically, what VA did, my view is we managed to a budget, and 

what we are shifting to is managing to veterans’ requirements, 

managing to the needs of the people that we are serving, and that 

is what is happening right now, and that is why we do not find 

ourselves in a situation where we have got buckets of money sitting 

in different places that we can go scrape together to come up with 

a meaningful impact on that $830 million. 

Chairman ISAKSON. I apologize to the Committee, but I want to 

finish the thought. 

Mr. GIBSON. Yes, sir. 

Chairman ISAKSON. We have got maybe 2 months to come up 

with the money or else there is going to be a slowdown in construction further or a stop altogether at the site. 

Mr. GIBSON. Yes, sir. I think we have less than that. 

Chairman ISAKSON. To me, that is unacceptable. 

Mr. GIBSON. It is unacceptable to us. 

Chairman ISAKSON. It is equally unacceptable if there is that 

much of an emergency and half of the Senate committee came all 

the way across the country to hold this hearing. When we go back 

to Washington, having heard what you heard today and what I 

heard today, and knowing what your plans are in terms of turning 

things over to the Corps of Engineers, and we see a request that 

comes in for that money that has some source of finding that 

money within the VA’s budget, if you can find $700 million for 

Hepatitis C on your own volition—and I am not penalizing, that is 

a good thing to do—there is probably some more money somewhere 

else. 

Every contribution that comes from an existing spent dollar rather than a new dollar we have to borrow from China is really important to me. 

Excuse me, Senator Blumenthal, and I apologize for taking more 

time than I should have. 

Senator BLUMENTHAL. Thank you, Mr. Chairman. Again, I want 

to thank all of my colleagues, particularly the Colorado delegation, 

for focusing not only today, not only this year, but over a long period of time on these issues, and we are here because of your advocacy. 

Second, I want to thank Mr. Guerro for being here today and for 

his long-time advocacy, because I think you personify the kind of 

fight that many of our veterans sustain day in and day out, year 

in and year out, so that their brothers and sisters can have the 

kind of care they deserve. 

In that spirit, I would just like to ask all the veterans who are 

here today to please raise your hand so that we can acknowledge 

you and thank you for your service. Thank you. [Applause.] 

Senator BLUMENTHAL. I have got a couple of quick questions for 

you, Mr. Gibson. I would like you to commit to me that you will 

undertake a complete overhaul of construction practices and systems in the VA, including considering, in effect, delegating that authority to the Corps of Engineers or some other similar organization. I have not reached any conclusions about whether it should 

47 

be done, but I want a commitment that you will undertake reform 

of the system. 

Mr. GIBSON. You have that commitment. The good news is that 

a substantial portion of it has already been completed. 

Senator BLUMENTHAL. Well, I do not want to hear about what 

has been completed. I want to hear about what is going to happen, 

because—— 

Mr. GIBSON. Part of it is what will continue to happen. 

Senator BLUMENTHAL. Great. 

Mr. GIBSON. Understood and—— 

Senator BLUMENTHAL. We are here to make sure things go right 

in the future, but also for the sake of transparency, so that people 

understand where the fault lies and what is going to be done in the 

future. In that spirit I would ask that you make available to the 

Committee and to the public the Jones/Lang/LaSalle report that 

was done examining alternatives. That has not yet been made public. 

Mr. GIBSON. We will do that. We just received the report the day 

I gave it to you. That was the day I received it, so the day before. 

We will make that available. 

Senator BLUMENTHAL. All of the cost estimates of specific components going into the overruns that have occurred so far as the 

Corps of Engineers is analyzing them, and all of the components, 

the specific numbers, how they are attributed to the additional 

costs that will be incurred. We spoke about this earlier today, and 

I think that the Corps of Engineers has committed to do it. To the 

extent they are under your control, I would like you to make available those documents. 

Mr. GIBSON. To the extent that those amounts can be determined, we will do that. 

Senator BLUMENTHAL. Well, they need to be determined. Otherwise, it is more of the same. ‘‘Well, we will make it up as we go 

along.’’ If you are building a house, any of us in this room, you do 

not go into it and say, well, we will figure out the cost after we are 

three-quarters of the way through. We need to know with some certainty and finality, when we make a decision about whether to give 

you this money, whether it is going to be what is necessary. So, I 

would like a commitment that you make those numbers available 

as soon as possible. 

Mr. GIBSON. We will make the numbers necessary, as much as 

we can, of the $830 million. The portion that I was referring to was 

the ability to somehow disaggregate the components of the added 

cost to the facility. As you heard Peter Davoren mention earlier 

today, the essence of the issue was VA’s failure to acknowledge 

what it was going to cost to build in the first place. 

Senator BLUMENTHAL. I would like your commitment also that 

you will make available all the relevant documents relating to 

whistleblowers, when their complaints were filed, what the responses were, and what you are going to do, in effect, to correct any 

wrong that has been done unjustly and unfairly. 

Mr. GIBSON. I believe you are referring to the 2012 whistleblower 

related to this particular project. Is that correct? 

Senator BLUMENTHAL. Correct. 

48 

Mr. GIBSON. We will do that. There is a pending action before the 

Merit System Protection Board, but we will do that in a manner 

that is appropriate and protects that confidentiality. 

Senator BLUMENTHAL. I would like your commitment that you 

will support an outside investigation. I know that there is an AIB, 

an IG. For those who do not know, an Administrative Investigation 

Board, the Inspector General. By the way, the Inspector General 

has involved the FBI, but the Inspector General is still the one responsible for investigating the Phoenix delays, and we have yet to 

receive a report from the IG, not yet done. I have complained about 

the amount of time that it has taken, and my questions—your 

predecessor I asked about when that report would be done, and we 

still have no guarantee that it will be done. 

I am asking for your commitment that we will see a request from 

you for an outside investigation, likely the Department of Justice. 

Mr. GIBSON. You asked that I would support it. I agree that I 

will support the request. 

Senator BLUMENTHAL. Thank you. 

Finally, I would like a commitment that you will respond to 

other requests for documents that we will be submitting. I do not 

want to go through the list now because I do not want to take the 

time of my colleagues to cull them out. I think that this document, 

for example, this document is a list of the projects that would be 

deferred or delayed indefinitely from around the country if the $1 

billion is taken from the Choice Program. I do not want to speak 

for any of my colleagues, and they are all affected, the majority of 

my colleagues in the U.S. Senate, by what will happen if the $1 

billion is taken from the Choice Program, but I know in West 

Haven, Connecticut, that this project on primary care facility upgrades has been delayed for years and years and years, and I do 

not want to see it delayed again. I do not want to see any veterans 

across the country have to sacrifice because of the incompetence, or 

worse, on the part of past VA administrations. 

I agree with the Chairman that we need to find an alternative 

path. Thank you. 

Chairman ISAKSON. Senator Rounds. 

STATEMENT OF HON. MIKE ROUNDS, U.S. SENATOR FROM 

SOUTH DAKOTA 

Senator ROUNDS. Thank you, Mr. Chairman. My comments and 

my questions are going to be very brief. 

To Mr. Gibson, I remember the first time when you and I met 

was the same time that Secretary McDonald was in, and the Chairman made it very clear that we as a committee wanted you to be 

successful. We wanted you and the Veterans Administration to succeed, and I thought this is coming from a Republican chairman to 

a member of the Administration saying we want you to be successful, and I thought that is what this is all about. 

I heard the Chairman say here today one of the most important 

things that we can do here is to find the resources to build this 

project, to get this project done. I support him in that. We will find 

a way. The project is not going to hang out there and it will get 

done. 

49 

In looking at it, I thought about this. You have not been with the 

VA that long. You came in at a time literally when the pond was 

already full of alligators, and you and the new Secretary agreed to 

walk into the middle of it to help take care of things and make 

things right again, and I admire you for that, and I thank you for 

that. We want you to be successful, and we want you to drain the 

pond. This pond has got a lot of alligators in it. Construction 

projects that are out there right now are one more alligator you do 

not need. 

I am just curious. There are some folks that do this all the time, 

and I know that part of the process here is you would like to see— 

and we talked about it at lunch today, and I asked you then, why 

do you want to take on the challenge of continuing to try to build 

projects when the expertise could be found and laid out on a regular basis by people that deal with these things all the time and 

do them without the kinds of problems that I believe you have run 

into here, that you found when you walked in. 

What does the VA bring to the table that should convince us that 

you should be the responsible party for construction projects in the 

future? 

Mr. GIBSON. First of all, I will reiterate my commitment that we 

want to work with the Corps, have the Corps work as our construction agent on our largest, most complex projects. 

As I mentioned in our earlier discussion, we look at the 15 or so 

projects that are categorized as active as we look over the next 3 

years. Five of those are already substantially under way. Of the remaining ten, we are prepared to send seven of those, some of which 

are actually under $250 million, to work with the Corps because we 

feel like that is what makes the most sense in those cases. That 

represents 86 percent of the dollars of that prospective construction. 

In the meantime, we have got somewhere on the order of 50 

major construction projects that we are in the middle of, all over 

the country. We have got to see those construction projects through 

to conclusion. 

As you look at VA’s vast infrastructure that includes—I cannot 

even tell you how many buildings, with an average age of 50 years 

or so, what you find are not only requirements to complete non-recurring maintenance but minor construction projects that enhance 

those facilities. It is our knowledge of those requirements—— 

Senator ROUNDS. I do not disagree that you should, for maintenance and so forth. I get that. I understand your desire to try to 

be a part of finishing. But long term, and that is what we are talking about—we are not going to fix all the problems in a matter of 

18 months. But long term, what does the VA bring to the table? 

The reason I ask is because one of the major issues here, even 

the sizes of the rooms had to be upgraded because you did not 

know how big the equipment was that was going to be put in it 

to begin with. It seems to me that if you are one of the providers 

of the services to buy this equipment, you ought to at least be able 

to bring that kind of expertise up front, and it was not included. 

Mr. GIBSON. I am not following the last point, sir. 

Senator ROUNDS. The medical equipment that was required within the rooms themselves, as I look back at the reports and some 

50 

of the problems that were found, I am not sure which one of the 

panelists provided that information, but you had to expand the size 

of the rooms just to fit the medical equipment in. 

Mr. GIBSON. We agree with that point completely, and that is one 

of the reasons why we now include medical equipment planners at 

the very beginning of our process. We did not do that in the past. 

Senator ROUNDS. Thank you, sir. 

Mr. GIBSON. Yes, sir. 

Chairman ISAKSON. Senator Bennet. 

Senator BENNET. Thank you, Mr. Chairman. 

I listened carefully to my colleague from Connecticut’s points, 

and observations from the Chairman earlier and we may not have 

complete agreement on how to find this money to pay for this 

project and to finish this project, but I do think we have complete 

agreement that we need to find the money and that we will finish 

the project. I am very, very grateful because you do not need to do 

that. Thank you. 

Mr. Secretary, it will take me a minute to get through my question, and I am optimistic we are going to get it done. What is so 

depressing about today for me is how predictable it is that we were 

going to end up here in this kind of conversation, and I think I 

speak on behalf of all of my colleagues when I say that. 

You said that the fundamental fatal error, the first error was 

picking a number that was too low for this project. The very first 

time I went to the site and stood there on the same floor where 

we were meeting today, and nothing was yet even constructed, 

there were designs, there was a picture I saw of what is now called 

the concourse and what was then called the spine. The person who 

worked for me who was actually with me that day and with whom 

I would worked in the city, in the County of Denver on various 

projects, took one look at that and said there is no way they are 

going to be able to build this project for the estimated cost—not an 

expert in construction, but an expert in common sense. 

In 2014, in May I think of 2014, in desperation for not having 

been heard, I wrote a letter. I wrote it myself, just as the veterans 

did here, to the preceding Secretary of the VA pointing out all of 

the things I would been hearing from our veterans and from the 

contractor, and with my colleagues who are up here today. Among 

other things, I observed that the VA’s position at that time, in 

2014—that is before you got there, and I want everybody in this 

room to know that—was that 46 percent of the building had been 

built. That was the VA’s position. The contractor’s position was 

that 25 percent had been built. The VA’s position of 46 percent was 

based on the fact that 46 percent of the money had been spent. 

There is not a person here, whatever project they were working on, 

who would say it is 46 percent built because we spent 46 percent 

of the money. It is laughable. 

As I said in my letter to Secretary Shinseki, any passerby would 

know that it is not 46 percent built. Today we learned that it is 

actually 50 percent complete. In the following year, somehow we 

have reached an incremental 4 percent. Obviously, the 46 percent 

was wrong. It was obviously wrong when I wrote the letter. Any 

school kid could have told the Veterans Secretary that. 

51 

Then the legal position of the VA hardened, and the position 

was, over and over again to the delegation, they have to build this 

thing for $660 million, that is our position, even though every single person up here, including some who actually are lawyers, who 

know what they are talking about on this stuff, told them that they 

were going to lose the lawsuit. It was patently obvious that they 

were going to lose the lawsuit. In fact, you did lose the lawsuit, by 

a lot, not by a little. That is what enabled the contractor, who I 

think has done a good job on this project and on so many other 

projects in Colorado, to have to walk off the project until they knew 

what the budgeting was going to be. 

What I want to know is, when you consider the fact that for 

three or more years the congressional delegation made it clear that 

it was wildly off track, and we now know that your own employees, 

some of them, said there was no way you were going to build it for 

what you said you were going to build it. When the contractor was 

telling you we cannot build it for what you are telling us you are 

going to build it, and you are putting out of business subcontractors here in the State of Colorado because of your unwillingness to 

pay the overages—and again, I am talking about the VA, not you— 

your unwillingness to pay the overages of these change orders, how 

is it possible that an institution could be that immune to that level 

of information and that arrogant about what it was doing? What 

are we going to do at the VA to ensure that that never happens 

again? Because that is not about building a building. That is about 

having a culture of disrespect, a culture that does not actually believe in service to our veterans here in Colorado, and a culture that 

is unwilling to learn from what were obvious facts. 

Mr. GIBSON. Is that it? 

Senator BENNET. That is it. Did I leave anything out? 

Mr. GIBSON. I cannot think of anything that you might have left 

out, and I do not know that I would change a single word of what 

you said. 

I think my perception, my personal perception, what I saw as I 

transitioned into the organization, what was a—you might call it 

an insular organization. It was not kind of an open and transparent organization. I hope you have sensed in the last 10 or 12 

months a difference in the tenor and tone of communication and 

openness and the interest in other views and other opinions, and 

the willingness to embrace those other views and other opinions, 

the realization that we cannot accomplish what we want to accomplish without partnering with other organizations. 

I would tell you, when I came in the door, I have known Peter 

Davoren for years. I have known Jim Clark, whose firm is building 

the hospital in New Orleans, and I have known Jim Gorey and his 

dad, Miller Gorey, for 20-some-odd years, who built Orlando. The 

first thing I said when I got on the ground was this is a relationship business. I need to reach out and interact with these folks. We 

have got to get this back on track; But the mindset was no. That 

was the mindset at the time. That has changed. 

In June 2014, in the first week of my tenure, the first week or 

two, I reached out to all three of those contractors, and now I have 

open communication with them regularly. 

52 

Chairman ISAKSON. For the benefit of the three remaining members who have not asked questions, I am going to move on, if that 

is OK, because we have plane connections that are important. 

Senator BENNET. Thank you. 

Chairman ISAKSON. Sorry to cut off the senior senator from Colorado, but I think I just did. [Laughter.] 

Senator Gardner. 

Senator GARDNER. Thank you, Mr. Chairman. 

To the Deputy Secretary, thank you for being here. 

I look out to the participants today in the auditorium, and I have 

known many of them for decades now. There are city council members. There are veterans here, opinion leaders, policymakers. But 

I have got to be honest. Some of the veterans that kicked off this 

project in 1999 are not looking as good today as they were then, 

a little bit older, a little bit grayer. Some of them have oxygen that 

they never were on. 

They started this project in 1999 in good faith, and I honestly believe that you are trying in good faith to get this done. This hearing is about answers. It is about answers looking forward, and it 

is about answers to make sure that what happened to put us here 

is prevented, never happens again. 

Mr. GIBSON. Yes, sir. 

Senator GARDNER. So, while we look out and see the veterans 

here, we know we have an obligation to finish it so that they can 

see their work done, so that they can see their promises fulfilled. 

I have two questions. Is there any cost, litigation, project, construction, new information, is there anything out there that can 

still surprise us? 

Mr. GIBSON. As it relates to Denver, or in construction generally? 

Senator GARDNER. As it relates to the construction of the Denver 

hospital. 

Mr. GIBSON. Pardon me? 

Senator GARDNER. As it relates to Denver and the construction 

of the Denver hospital. 

Mr. GIBSON. There is nothing else. We are in the process, have 

been in the process since probably January, of amicably resolving 

the claims both that KT had made, but also the claims of the subcontractor, and we have been working methodically through those. 

The residual amount of that is part of what we requested in the 

$130 million that will allow us to resolve the last of those claims 

before the Corps takes over the project so it is a complete new 

start. 

There is nothing else that I am aware of. 

Senator GARDNER. No surprises? 

Mr. GIBSON. No, sir. 

Senator GARDNER. The last question I have is this. In August, I 

believe, of 2014, testimony at the State capitol before myself and 

Congressman Coffman, Glenn Haggstrom, then the chief of acquisition—I am reading from Steve Rylant’s testimony today—Glenn 

Haggstrom, then chief of acquisition and construction, testified that 

the VA did not need any additional information from Congress, any 

additional funding from Congress, and that they would win the litigation and KT would have to build the VA medical facility with the 

53 

$600 million already authorized. That is the quote from Mr. 

Rylant’s testimony today. 

Who approved Mr. Haggstrom’s testimony? 

Mr. GIBSON. I do not know the answer to that question, but I will 

pursue an answer to the question. I will tell you that was consistent with what VA’s legal posture was at the time. Not an excuse for it, because it was profoundly wrong. 

Senator GARDNER. I guess we still have to get an answer of when 

legal posture and when the truth can actually prevail. 

Mr. GIBSON. I think the truth prevailed in December when the 

Board of Contract Appeals issued their decision. Somebody else 

said it. I think Congressman Perlmutter is the one who said it to 

me the first time, ‘‘you couldn’t have lost any worse.’’ That is when 

the truth came out, which made it very clear, and that is what you 

heard me reiterate in my opening remarks. This is on us, no 

mistake. 

Senator GARDNER. Mr. Chairman, thank you. 

Chairman ISAKSON. Congressman Perlmutter. 

Mr. PERLMUTTER. Thank you, Mr. Chairman. Again, thanks to 

the Senate Committee for taking the time to come out here. 

I do want to say that since December/January, I have heard 

among the Corps, the VA, and the contractor that what was a horrible working relationship last year, the year before, the year before that, that there is a positive, good working relationship, and 

I want to thank you for that. 

The senators have expressed everything that I have been feeling 

and thinking. We recognize that you are sitting in the hot seat, you 

have stepped into something that is been very difficult to resolve, 

you are working at it. We appreciate that. 

The big question is, why do you want to keep doing this? I am 

just putting it out there rhetorically like he did, OK? You have 

other priorities and responsibilities, and I just appreciate your taking the bull by the horns. I thank the Corps for jumping into this. 

This was not really in your agenda more than 3 months ago. 

I appreciate the senators for listening and taking this so seriously because this is a mess, it is a big mess, and we have got to 

straighten it out. Thank you. 

Chairman ISAKSON. Thank you Congressman Perlmutter, and 

thanks for participating in the hearing today. 

We will end with—— 

Mr. COFFMAN. Mr. Chairman, can I—— 

Chairman ISAKSON. I was saying, we are going to end by hearing 

from Congressman Coffman. 

Mr. GIBSON. Please. I have been waiting to hear Congressman 

Coffman’s questions since the inception. [Laughter.] 

Senator BLUMENTHAL. In the course of Representative Coffman’s 

questioning, I may have to leave to catch a plane. I hope you will 

forgive me. But I want to thank again the Chairman, the Colorado 

delegation, our colleague Senator Rounds; and, Mr. Gibson, thank 

you for your service to our Nation. 

Mr. GIBSON. Yes, sir. 

Senator BLUMENTHAL. I know you have a history of service in 

uniform and now in the VA, and a family history of service in 

54 

World War II. So, thank you for being here today, and also Mr. 

Caldwell. 

I just want to join in the remarks made by Senator Bennet. We 

will get it done. We owe it to the brave veterans and heroes of the 

Rocky Mountain States to make sure that their needs are served, 

and needs of veterans across the country as well. Thank you very 

much. 

Thank you, Mr. Chairman. Sorry to abandon you. 

Chairman ISAKSON. Congressman Coffman. 

Mr. COFFMAN. Thank you, Mr. Chairman. 

This GAO report from April 2013, Mr. Milsten, when did you 

read this report? 

Mr. MILSTEN. Shortly after it was published. Actually, I would 

have read the draft also. 

Mr. COFFMAN. Ms. Fiotes, when did you read this report? 

Ms. FIOTES. Approximately the same time. 

Mr. COFFMAN. Mr. Gibson, when did you read this report? 

Mr. GIBSON. I read the report—actually, the first time might 

have been before I was confirmed. Subsequently, I have been in 

and out of the report as I transitioned into the Department. 

Mr. COFFMAN. This report showed that this project was just totally out of control. This report showed that it was being mismanaged. This report showed that it was way behind schedule. 

This report showed that it was hundreds of millions of dollars over 

budget. I got on the House Veterans’ Committee in January 2013, 

and the Committee had requested this report before I even got on 

it. This was certainly public knowledge. 

What action did you take relative to this report, Mr. Milsten? 

Mr. MILSTEN. One of the things we did relative to all of the reports that we received—and this report in 2013 had its basis in 

2009—we instituted the requirements package that says at 35 percent, 65 percent, and before we work construction now we do a requirements. We check to make sure that the project has not grown 

in scope, it stays in budget, it stays in the requirements. This was 

not done until—— 

Mr. COFFMAN. You have been working on this project, Ms. Fiotes. 

You have been working on this project, too. Am I right? 

Ms. FIOTES. I am sorry? 

Mr. COFFMAN. You have been working on this project, too. Am 

I correct? 

Ms. FIOTES. I have the oversight of this project. 

Mr. COFFMAN. How is it that, Mr. Gibson, you are saying there 

is only one person remaining that has been working on this project 

when we have two people sitting across from us today that have 

been in the meetings with this congressional delegation multiple 

times? 

Mr. GIBSON. The point that I made, sir, was that the two crucial 

decisions that got us to where we are today were made in 2010 and 

2011, and all the people that were involved in the project in any 

kind of a direct role, all but one are gone from—— 

Mr. COFFMAN. So, Mr. Haggstrom, who remained on the project 

all the way up until there was a complete stoppage of work on the 

project, because the general contractor—his remedy in terms of 

prevailing in court—was allowed to walk from the project, which 

55 

they did. They refused to come back on the project until one of the 

conditions met was that you would be replaced by the Army Corps 

of Engineers on the project after a transitional period. 

Now, Glenn Haggstrom was ultimately in charge—am I correct?—on this project. 

Mr. GIBSON. He was the executive director—— 

Mr. COFFMAN. He got a bonus during the very time that this report came out. Can you share with us the criteria for the bonus, 

getting a bonus on a project that was hundreds of millions of dollars over budget and years behind schedule? And not just this 

project; he was responsible for four projects that were all in the 

same category. 

Mr. GIBSON. He did not get a bonus on my watch, and I cannot 

tell you what the criteria were prior to that. 

Mr. COFFMAN. You know, why were you telling the members of 

this Colorado congressional delegation, all the way up until the decision came down from the court, that this project could be built 

for $640 million? 

Mr. GIBSON. Why was he telling you that? 

Mr. COFFMAN. Why was the VA telling us? I met with Secretary 

McDonald just after he was confirmed, and he reiterated to me 

that this project could be built for $640 million despite this report. 

Mr. GIBSON. I cannot explain that statement. 

Mr. COFFMAN. You know, let me tell you that I think what you 

heard from the members certainly of the Senate Veterans Committee who are here today, from Senator Bennet and Senator Gardner, and I believe Congressman Perlmutter, as well as myself, is 

that your core responsibilities are to deliver health care benefits 

and other benefits that our veterans have earned, and you are not 

a construction management entity. In my view, you cannot be 

trusted, as I have said before, to build a lemonade stand, let alone 

a major hospital. So, you have got to extricate yourself from that 

business, and the folks with their fingerprints on these projects 

now need to find another line of work. 

I just think that this is just more of the same. Your predecessor 

and the predecessor before and the predecessor before have all 

been before Congress and said we can make this better, we can 

make this work, and it never has. Unfortunately, I do not believe 

it ever can. 

With that, Mr. Chairman, I want to thank you so much for holding this hearing today, and I yield back. 

Chairman ISAKSON. Thank you, Congressman Coffman. 

Let me just observe this. This has been a great hearing. I have 

attended a lot of hearings. I think everybody stuck to the point, 

and I want to thank our witnesses and each Member of Congress 

and the Senate. 

Nine days ago I, and I think most everybody else in this room, 

wrote a check to the U.S. Treasury. It was painful. It was my 

money that I had worked hard to earn. Let the record show that 

sometimes we waste money in Washington, but sometimes we are 

willing to come and hold people accountable when things go wrong, 

and that is what we are trying to do here. 

We want to see to it that this hospital is finished, it is finished 

efficiently and effectively and without any more cost overruns, and 

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see to it the lesson learned in Denver is not replicated again somewhere else because we forgot about it, because another Secretary 

came in or another congressman got elected or another Senate 

chairman came in. We are going to make this a permanent and indelible lesson to be learned for not just the Veterans Administration but for all the government. 

For those of you who served in the military or have sons and 

daughters who did, God bless you and thank you for that, and God 

bless the United States of America. 

This hearing stands adjourned, with the record open for 7 days. 

[Whereupon, at 3:13 p.m., the hearing was adjourned.] 

RESPONSE TO POSTHEARING QUESTIONS SUBMITTED BY HON. RICHARD BLUMENTHAL

TO HON. SLOAN D. GIBSON, DEPUTY SECRETARY, U.S. DEPARTMENT OF VETERANS

AFFAIRS

Question 1. The Civilian Board of Contract Appeals, GAO, and the Army Corps 

of Engineers all have found that VA faced issues with design completeness on the 

replacement Denver VA Medical Center. These challenges led to issues with change 

order management, and delays in procuring subcontractor work. 

a. Who at VA was responsible for quality control when it comes to reviewing facility designs? 

Response. In general, the Project Manager and Contracting Officer, along with 

subject matter experts, are responsible for quality control reviews of each project’s 

design. Additionally, the Department of Veterans Affairs (VA) employs the use of 

a third party peer architect/engineer (A/E) firm for technical reviews throughout the 

design process. In the future, the United States Army Corps of Engineers (USACE) 

will be the construction agent for the Department of Veterans Affairs projects over 

$250 million. 

b. What is the process VA utilizes to review designs and ensure they meet Federal 

and user standards, and how can it be improved to avoid challenges in the future? 

Response. The Department of Veterans Affairs (VA) reviews major projects at 

three stages during the design process: 1) schematic design (35%); 2) design development (65%); and 3) construction documents (95%). The review team comprises VA 

medical center staff, Construction and Facilities Management (CFM) staff (including 

engineering staff, cost estimators, and scheduling staff), along with private sector 

peer reviewers (at the construction documents (95%) review). All comments are 

gathered, reconciled, and recorded in the United States Army Corps of Engineers 

review system known as Dr. Checks, for response and resolution by the design team 

professionals. As part of the design review, VA has since mandated an independent 

third-party constructability review at the completion of each design phase, which ensures an efficient and effective construction process. 

Question 2. Many parties have provided cost estimates for this project, yet VA 

took little to no action to evaluate them fully or determine what changes could be 

made to stay within the budget. 

a. How do you plan to add more rigor to the Department’s cost estimation policies 

and practices? 

Response. As part of the three stages of the design process, VA has partnered 

with the USACE to implement a management review process that re-examines the 

scope and cost estimates for construction projects to assure the scope and cost remain within the established budget for each project. This management review includes a review of the estimated cost by CFM cost estimators, and will assure there 

is alignment between all estimates and the budget before the design is allowed to 

proceed to the next phase. In this way, VA can assure reconciliation of ALL estimates prepared for the project. As part of the partnership with USACE, they provided two experts to assist VA in developing the internal VA review process. 

b. VA’s testimony notes that it is now doing constructability reviews from outside 

contractors. The initial contract awarded to Kiewit-Turner was for site work and 

preconstruction services to assist the design team on this project. Please explain 

how preconstruction services on this project differ from the constructability reviews 

that are now being conducted. 

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Response. In general, there are minimal functional differences between the 

preconstruction services provided by Kiewit-Turner (KT) and the independent 

constructability reviews. 

While these reviews are a standard practice under an Integrated Design and Construct (IDC) contract—which allows the award of the construction to the company 

that served as the construction management agent and provided the constructability 

review—they were previously not required for all major construction projects. Additionally, VA now requires the independent reviews be conducted at each phase of 

design and each review will require management reviews to assure reconciliation 

between the cost estimates. 

Question 3. Please explain the legal basis upon which VA interpreted that the contractor had agreed to a fixed, target price on this project. 

Response. The legal basis supporting VA’s interpretation that the contractor had 

agreed to a fixed, target price on the project is due to the fixed-price incentive contract between VA and KT pursuant to FAR 16.403–2; 52.216–17. A fixed-price incentive contract is a fixed-price contract that provides for adjusting profit and establishing the final contract price by applying a formula. The formula is based on the 

relationship between the total final negotiated cost and the total target cost. The 

contract modification known as SA–007, that both VA and KT signed, was the document that finalized the profit adjustment formula and the other elements key to the 

fixed-price incentive contract including the firm target price ($604,087,179.00) and 

the ceiling price ($610,087,179.00). That is the modification that KT signed and 

through which it agreed to build the project for the target price of $604M not to 

exceed the ceiling price of $610M. The ceiling price is the maximum that may be 

paid to the contractor. The purpose of fixed-price incentive contracts is to motivate 

the contractor to earn more compensation by achieving better performance and controlling costs. Thus, in this contract, the incentive for KT was to build the design 

as close to the firm target price as possible in order to maximize its profit. 

Question 4. What accountability measures are being taken as a result of the misinterpretation of SA–007, the agreement that set out terms of agreement between 

VA and Kiewit-Turner? 

Response. The ongoing VA Administrative Investigation Board (AIB) has been 

charged with evaluating SA–007 and will make specific findings with respect to the 

roles various VA employees played in its negotiation, execution, and interpretation. 

Question 5. The use of early contractor involvement project management models 

can result in savings, but only if the contractor is involved at the beginning of the 

design process. One of the biggest cost drivers on this project was the decision to 

switch from design-bid-build to an early contractor involvement model after design 

had been underway for some time and the first round of design documents had already been submitted. Who at VA made the decision to switch project management 

methods after the design was so complete, and what were the reasons cited to justify that change at the time? 

Response. The ongoing VA AIB has been charged with determining how and why 

an IDC (Integrated Design and Construct) contract vehicle was chosen for this 

project and will make specific findings with respect to the roles various VA employees played in that decision. Most of the key personnel associated with the use of 

the IDC contract for this project are no longer employed by the VA. However, some 

retired VA employees have agreed to be interviewed by the AIB, which should help 

shed light on some of these early contracting decisions. 

RESPONSE TO POSTHEARING QUESTIONS SUBMITTED BY HON. RICHARD BLUMENTHAL

TO LLOYD C. CALDWELL, P.E., DIRECTOR OF MILITARY PROGRAMS, U.S. ARMY

CORPS OF ENGINEERS, U.S. DEPARTMENT OF THE ARMY

Question 1. The Civilian Board of Contract Appeals ruling noted that when proposed changes were approved, the designer of record refused to incorporate them 

into the design, and even though the independent project manager asked, VA did 

not require the designer to take appropriate action. This made building a challenge, 

and likely complicated the Army Corp’s efforts to review this project. When the 

Army Corps assumes construction agent responsibilities for this project, what plans 

will be in place to ensure that changes are incorporated into design and progress 

is tracked? 

Response. The Army Corps of Engineers has a well documented process for 

change order management, which includes steps for identifying, approving, communicating and documenting or incorporating required changes into the contractual 

documents. On-Site Corps Representatives have different responsibilities and auVerDate Mar 15 2010 21:55 Jun 21, 2016 Jkt 000000 PO 00000 Frm 00061 Fmt 6633 Sfmt 6621 Z:\114TH COMPLETED HEARINGS, MTGS\94462.TXT PAULIN
58 

thorities and play a key role in managing and implementing the change order process. We will use the Corps of Engineers Resident Management System to track and 

manage all Change Orders, both discretionary and mandatory. The Corps of Engineers understands that if the process of identifying, approving, communicating and 

documenting changes is disorderly or disrupted, there is potential for schedule and 

cost impact as well as impact on the working relationship between the Government 

and the contractor. 

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