Isakson Demands Answers for Out-of-control Construction Costs at New Denver VA Medical Center

Vows to hold accountable those responsible for blatant disregard for veterans, taxpayer dollars in the VA

AURORA, Colo. – U.S. Senator Johnny Isakson, R-Ga., chairman of the Senate Veterans’ Affairs Committee, today demanded answers from the Department of Veterans Affairs (VA) about rampant mismanagement of the construction of the new 182-bed hospital that will replace the Denver VA medical center.

The committee held a field hearing in Aurora, Colo., a suburb of Denver, to examine what went wrong with the construction project and how the VA intends to address the outrageous surge in costs, delays and mismanagement of the construction at the new Denver VA Medical Center. After several delays and hundreds of millions in cost overruns, the hospital is still unfinished and the projected cost has climbed to $1.7 billion, making this project the most expensive hospital construction in the VA’s history.

“We’re here today in Colorado to look at the problems of cost overruns up to 427 percent since its inception of the veterans’ hospital being built here in Aurora, Colorado,” said Isakson during opening remarks at today’s hearing. “We’re 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 that we get done what we promised to our veterans and that this project is completed; and that the VA and those people in the VA that need to be held accountable are held accountable.”

Isakson admonished the VA’s inability to properly execute the project, pointing to indecision and a lack of leadership as the contributing factors that allowed the cost to balloon to such an egregious extent.

“When you have a lot of changes, you double your costs,” said Isakson. “There were too many changes along the way, there was not enough discipline and the VA waited too long to make final decisions. They started before they were ready and that’s why we’re not finished today. And there were too many bosses and not a central authority [and that] was another contributor to the problem.”

Earlier this month, the VA proposed using money from a one-time $5 billion fund set aside by the Veterans’ Choice Act to pay for the cost overruns of the Colorado hospital. Funding the project with this money, which was originally intended to be used for small infrastructure needs and staffing, means that other projects will be pushed to the side.

Members of the committee were able to tour the half completed construction site firsthand today before the hearing. Isakson criticized the VA’s blatant prioritization of aesthetics over function in the design of the hospital. During the hearing, he noted that while experts in hospital construction estimate that the typical cost of construction per hospital bed should be $2 million per bed, this project will ultimately cost $9.5 million per bed.

Isakson blasted VA Deputy Secretary Sloan Gibson and the VA for failing to fully explore all options to decrease costs and pay for the completion of the new hospital, including finding funds from within the VA’s existing budget. He also expressed dissatisfaction over the lack of accountability or firings of those responsible for the mismanagement of the Denver VA hospital, and raised doubts about the VA’s ability to manage future construction projects.

“There has got to be an improved system of accountability within the administration and the VA to hold people who are responsible for poor jobs that have taken place accountable,” said Isakson. “There is a consistent failure of the VA to be able to manage its money, infrastructure and construction projects, and somebody has got to be put in charge to prevent this type of failure, and someone who was in charge must be held accountable.”

Ultimately, Isakson noted the importance of finishing the construction of the hospital for the sake of Colorado’s veterans.

“The original beneficiary of this facility were the veterans of Colorado and it’s still the veterans of Colorado,” stated Isakson. “To build a building and get it halfway completed and then board it up would be a stupid mistake. However, not learning from the mistake that got us to the cost overruns that were 427 percent greater than the original estimate means we’ve failed at our jobs. We’re here as members of the Senate Committee on Veterans’ Affairs to find where the mistakes were makes, correct the mistakes, find where the money is that is necessary to finish the job. …But we do not need to penalize the veterans of Colorado or the taxpayers of America.”

Additional details regarding today’s hearing including testimony from each of the witnesses is available online here.

Background:

Plans for a VA hospital in Aurora, Colo., date back to 2004, when the VA was originally granted $328.4 million to design the project. After several changes to the original plan for a shared hospital with the University of Colorado, the VA began designing a stand-alone hospital in 2007. The VA eventually requested $800 million for the project in 2010, and final funding for the project was granted in 2012.

In August, 2010, the VA entered into a contract with Kiewit-Turner (KT) to design and build a project at the firm’s target price of $604 million. In December, 2014, VA was found in breach of contract for failure to provide a design that met the estimated cost by the Civilian Board of Contract Appeals. Since then, the VA has entered into an interim agreement with KT to continue the project.

On March 17, 2015, the VA announced that the latest costs estimates for the project, developed in consultation with the Army Corps of Engineers, had reached $1.73 billion. Though the VA has reprogrammed money from other projects, the VA may only exceed the original authorized amount of $800 million by 10 percent. The VA expects to hit this ceiling in mid-May.

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The Senate Committee on Veterans’ Affairs is chaired by U.S. Senator Johnny Isakson, R-Ga., in the 114th Congress.

Isakson is a veteran himself – having served in the Georgia Air National Guard from 1966-1972 – and has been a member of the Senate VA Committee since he joined the Senate in 2005. Isakson’s home state of Georgia is home to more than a dozen military installations representing each branch of the military as well as more than 750,000 veterans.