[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
BUILDING VA'S FUTURE: CONFRONTING PERSISTENT CHALLENGES IN VA MAJOR
CONSTRUCTION AND LEASE PROGRAMS
=======================================================================
HEARING
before the
COMMITTEE ON VETERANS' AFFAIRS
U.S. HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
FIRST SESSION
__________
WEDNESDAY, NOVEMBER 20, 2013
__________
Serial No. 113-46
__________
Printed for the use of the Committee on Veterans' Affairs
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COMMITTEE ON VETERANS' AFFAIRS
JEFF MILLER, Florida, Chairman
DOUG LAMBORN, Colorado MICHAEL H. MICHAUD, Maine, Ranking
GUS M. BILIRAKIS, Florida CORRINE BROWN, Florida
DAVID P. ROE, Tennessee MARK TAKANO, California
BILL FLORES, Texas JULIA BROWNLEY, California
JEFF DENHAM, California DINA TITUS, Nevada
JON RUNYAN, New Jersey ANN KIRKPATRICK, Arizona
DAN BENISHEK, Michigan RAUL RUIZ, California
TIM HUELSKAMP, Kansas GLORIA NEGRETE MCLEOD, California
MARK E. AMODEI, Nevada ANN M. KUSTER, New Hampshire
MIKE COFFMAN, Colorado BETO O'ROURKE, Texas
BRAD R. WENSTRUP, Ohio TIMOTHY J. WALZ, Minnesota
PAUL COOK, California
JACKIE WALORSKI, Indiana
Jon Towers, Staff Director
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C O N T E N T S
__________
November 20, 2013
Page
Building VA's Future: Confronting Persistent Challenges In VA
Major Construction And Lease Programs.......................... 1
OPENING STATEMENTS
Hon. Jeff Miller, Chairman,...................................... 1
Prepared Statement of Chairman Miller........................ 27
Hon. Michael H. Michaud, Ranking Minority Member................. 2
Prepared Statement of Hon. Michaud........................... 27
Hon. Corrine Brown, U.S. House of Representatives, Prepared
Statement only................................................. 28
WITNESSES
Linda Halliday, Assistant Inspector General for Audits and
Evaluations.................................................... 2
Prepared Statement of Ms. Halliday........................... 28
Accompanied by:
Maureen Regan, Counselor to the Inspector General, Office
of the Inspector General, U.S. Department of Veterans
Affairs
Llyod Caldwell, P.E., Director of Military Programs, U.S. Army
Corps of Engineers............................................. 4
Prepared Statement of Mr. Caldwell........................... 33
Glenn D. Haggstrom, Principal Executive Director, Office of
Acquisitions, Logistics, and Construction, U.S. Department of
Veterans Affairs............................................... 5
Prepared Statement of Mr. Haggstrom.......................... 36
Accompanied by:
Stella Fiotes, Executive Director, Office of Construction
and Facilities Management, U.S. Department of Veterans'
Affairs
STATEMENT FOR THE RECORD
Veterans of Foreign Wars......................................... 39
Disabled American Veterans....................................... 41
The American Legion.............................................. 46
QUESTIONS FOR THE RECORD
Letter and Questions From: HVAC, To: VA.......................... 48
Responses From: VA, To: HVAC..................................... 51
BUILDING VA'S FUTURE: CONFRONTING PERSISTENT CHALLENGES IN VA MAJOR
CONSTRUCTION AND LEASE PROGRAMS
Wednesday, November 20, 2013
U.S. House of Representatives,
Committee on Veterans' Affairs,
Washington, D.C.
The Committee met, pursuant to notice, at 9:38 a.m., in
Room 334, Cannon House Office Building, Hon. Jeff Miller
[Chairman of the Committee] presiding.
Present: Representatives Miller, Lamborn, Bilirakis, Roe,
Flores, Denham, Runyan, Benishek, Huelskamp, Coffman, Wenstrup,
Cook, Walorski, Michaud, Brown, Brownley, Titus, Kirkpatrick,
Ruiz, Negrete McLeod, Kuster, O'Rourke, and Walz.
Also present: Representative Mica.
OPENING STATEMENT OF CHAIRMAN MILLER
The Chairman. The Committee will now come to order. Welcome
to today's Full Committee hearing, Building VA's Future:
Confronting Persistent Challenges in VA's Major Construction
and Lease Programs.
As some of you may know, in just about an hour we are going
to recognize 33 Native American tribes and bestow the
Congressional Gold Medal upon the heroic and selfless Native
American Code Talkers who provided invaluable secure
communication to Allied powers during World Wars I and II.
Their courage, dedication, and honorable service enabled
countless lives to be saved and victory to be done.
In the interest of conducting today's business in
sufficient time to allow both Committee Members and members of
the audience today to participate in honoring and celebrating
these brave men and women, I will submit my opening statement
for the record.
However, before I yield to the Ranking Member I do want to
note that we have just authorized 27 major medical facility
leases per the department's request for the fiscal years 2013
and 2014. At today's hearing we will address serious
deficiencies in VA's planning, design, and construction of
lease projects that were authorized in 2009. VA should be on
notice that the approval of H.R. 3521 in no way holds the
department harmless for the mismanagement of major construction
and facility leases that continues today. Moving forward I
expect the department to take immediate corrective actions to
address the serious issues that have plagued the construction
and the leasing programs so that the important projects that we
have just authorized do not experience the same delays and cost
overruns we have seen in the past. And now I yield to our
Ranking Member Mr. Michaud of Maine for any opening statements
that he may have.
[The prepared statement of Chairman Miller appears in the
Appendix]
OPENING STATEMENT OF HON. MICHAEL H. MICHAUD
Mr. Michaud. Thank you, Mr. Chairman. I would ask unanimous
consent my opening remarks be submitted for the record.
[The prepared statement of Hon. Michael Michaud appears in
the Appendix]
The Chairman. Without objection.
Mr. Michaud. I yield back the balance of my time.
The Chairman. Thank you very much.
First I want to welcome our first and only panel of
witnesses today. Thank you for coming. Joining us from the VA
Inspector General is Linda Halliday. If you would, please come
forward? The Assistant Inspector for Audits and Evaluations,
Ms. Halliday is accompanied by Maureen Regan, Counselor to the
Inspector General. We are also joined by Lloyd Caldwell, the
Director of Military Programs, for the U.S. Army Corps of
Engineers. From the VA we are joined by Glenn Haggstrom, the
Principal Executive Director for the Office of Acquisitions,
Logistics, and Construction. Mr. Haggstrom is accompanied by
Stella Fiotes, the Executive Director of the Office of
Construction and Facilities Management. Thank you all for being
here today. Ms. Halliday, we will begin with you. You may
proceed with your testimony. You are recognized for five
minutes.
STATEMENTS OF LINDA HALLIDAY, ASSISTANT INSPECTOR GENERAL FOR
AUDITS AND EVALUATIONS, OFFICE OF THE INSPECTOR GENERAL, U.S.
DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY MAUREEN REGAN,
COUNSELOR TO THE INSPECTOR GENERAL, OFFICE OF THE INSPECTOR
GENERAL, U.S. DEPARTMENT OF VETERANS AFFAIRS; LLOYD CALDWELL,
P.E., DIRECTOR OF MILITARY PROGRAMS, U.S. ARMY CORPS OF
ENGINEERS; AND GLENN D. HAGGSTROM, PRINCIPAL EXECUTIVE
DIRECTOR, OFFICE OF ACQUISITIONS, LOGISTICS AND CONSTRUCTION,
U.S. DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED BY STELLA
FIOTES, EXECUTIVE DIRECTOR, OFFICE OF CONSTRUCTION AND
FACILITIES MANAGEMENT, U.S. DEPARTMENT OF VETERANS AFFAIRS
STATEMENT OF LINDA HALLIDAY
Ms. Halliday. Mr. Chairman and Members of the Committee,
thank you for the opportunity to testify today on the results
of VA Inspector General's work related to VA's construction and
lease programs. With me today is Ms. Maureen Regan, the
Counselor to the Inspector General and the Director of the IG's
Office of Contract Review.
OIG reviews of VA's minor construction program, health care
center leasing and activation process, and selected major
construction process have disclosed a pattern of poor
oversight, ineffective planning, and mismanagement of capital
assets in VA. We reported in 2012 that VA has not effectively
managed the capital asset planning process to ensure minor
construction projects are not changed significantly after
approval, or that leased facilities are the right size and in
the right location to ensure they are fully utilized. In our
2012 review of VA's minor construction program we found that
VHA had integrated the design and construction of seven of 30
minor construction programs into three combined projects, which
the exceeded the minor construction spending limitation of $10
million. Three other projects of the 30 we reviewed were
inappropriately supplemented with medical facility funds, also
known as non-recurring maintenance funds.
These projects had little if any project planning or
oversight. The improper mixing of minor construction with NRM
funding was due to premature approval of poorly planned and
inadequately developed contracts for medical facility design
and construction.
To address the Committee's interest in the management of
VA's health care center lease procurement process, our review
found no health care centers had been built despite VA's
original target completion of June, 2012. Congress authorized
approximately $150 million for seven HCC facility activations.
We also reported that VA could not provide accurate information
on HCC spending into April, 2013 because central cost tracking
was not in place to ensure the transparency or accuracy of
reporting all HCC expenditures.
Further, the review of an anonymous complaint received in
March, 2013 involving the lease for the Butler, Pennsylvania
Healthcare Center led to the cancellation of the lease.
We noted instances where facilities were leased and
constructed, and then stood empty and underutilized. And some
of VA's construction projects, although they were properly
authorized, were executed over budget and delivered well past
their anticipated completion date.
To serve veterans in both New Orleans, Louisiana, and
Orlando, Florida, VA is constructing two new medical centers.
Our review of the financing and budgeting for the construction
of the medical center in New Orleans found nothing
substantially wrong. However, we noted excessive delays and
slippage. Most of it was due to the delivery of the site from
the City of New Orleans, and the need to remediate the
hazardous substances identified after the site was transferred
to and accepted by VA. To mitigate the construction delays VA
was adjusting the construction activities to meet the
completion deadline. In the VA Medical Center in Orlando, we
reviewed the contract change orders amounting to over $9.6
million. After a thorough review we questioned about 30 percent
of these costs. Lack of supporting documentation, inclusion of
costs not associated in the work ordered, and overstatement of
proposed costs were quickly brought to the attention of the VA
contracting officer and negotiations were held to ensure VA was
going to pay only what it was owed.
Our reports have motivated VA to review its minor
construction policies and procedures. VA now ensures its
construction programs managers better track and monitor project
timeliness and cost as well as routinely compare approved
designs with project scope to better manage changes. But given
the practices in the past, such as ineffectively monitoring
projects, untimely executive of leases, and inaccurately
calculating program costs and savings, VA is not recognizing
the full potential of its construction program. VA needs better
oversight, improved capital planning, and stricter asset
management to gain assurance that it can address construction
and lease challenges more effectively. With good management and
stewardship there are opportunities to avoid cost increases and
schedule delays.
Efforts to ensure the adequacy of its processes, especially
the project management process and oversight, will help reduce
the examples like the ones highlighted in our statement.
Regardless, budget performance and schedule risks are inherent
in any effort to deliver construction projects. Further
planning and managing capital assets to align with veterans'
health care needs and new medical treatment changing how and
where care is provided is a challenge. Thus, risk management
and mitigation must be effectively addressed throughout the
life of construction projects.
Mr. Chairman, this concludes my statement today. Maureen
Regan and I will be pleased to answer question on our
respective work.
[The prepared statement of Linda Halliday appears in the
Appendix]
The Chairman. The Committee thanks you for your testimony.
Mr. Caldwell, you are recognized for five minutes.
STATEMENT OF LLOYD CALDWELL
Mr. Caldwell. Mr. Chairman and Members of the Committee, as
the Director of Military Programs for the U.S. Army Corps of
Engineers, I provide leadership for the Execution of the Corps'
engineering and construction programs worldwide to include our
support for other agencies. I am pleased to be with you today.
And I will address our approach to delivering construction,
specifically the construction of medical facilities.
The Department of Defense construction program uses
designated construction agents, of which the Corps of Engineers
is one. The construction agents procure and execute the
delivery of DoD infrastructure. The Corps has a long history of
executing some of the Nation's most challenging construction
programs, both in our military missions as well as in our civil
works responsibilities. We deliver a full range of medical
facilities for the Department of Defense, to include hospitals.
Regardless of the nature of a facility, the Corps has
developed and refined processes and capabilities for design and
construction. We think of four fundamental elements to deliver
successful projects. One, learning what is needed. In that
case, early involvement by the Corps with the project's using
agency to understand and assist the requirement's development,
preferably in their planning and programming process. Two,
planning the work. That is engaging stakeholders to align
scope, budget, and schedule. Three, executing the procurement.
A team effort that concerns all stakeholders from design
through construction. And four, managing the execution. A
governance approach that requires oversight from the job site
to Corps leadership.
Throughout the process we manage scope, cost, and schedule
objectives. We integrate actions and we evaluate issues and
risks with our partners in the process to address and resolve
them.
Budget and schedule risks are inherent in executing
construction projects, and medical facilities are among the
most complex facilities for which we manage design and
construction. They require close, frequent coordination with a
large number of stakeholders. They are subject to changing
requirements during construction, often due to evolving medical
technology. We maintain a medical center of expertise to assist
the Office of Defense Health Affairs and to ensure unique
medical functions are properly included in the larger project
delivery process.
The Corps, as part of its interagency support, also has an
established relationship with the Department of Veterans
Affairs, providing support for a range of facility construction
and maintenance requirements. The Economy Act and our 2007
Interagency Memorandum of Agreement provide authority and basis
for the Corps and the VA's collaborative work. Our Corps
headquarters works with the VA's Office of Construction and
Facility Management. Our Corps regional offices have developed
relationship with the 23 Veterans Integrated Service Network
offices. In the past two years the Corps has managed work at 74
VA facilities.
We are currently assisting the VA to develop and implement
an enterprise construction oversight capability, and we are
collaborating with the VA to provide training opportunities.
We value our support to the VA and to the veterans of the
Nation. We are pleased with the excellent working relationship
that exists between our agencies.
Thank you, Mr. Chairman, for inviting the Corps to testify
in this matter. I am pleased to answer your and the other
Members' questions.
[The prepared statement of Lloyd Caldwell appears in the
Appendix]
The Chairman. Thank you, Mr. Caldwell, for your testimony.
Mr. Haggstrom, welcome and you are now recognized for your
testimony for five minutes.
STATEMENT OF GLENN D. HAGGSTROM
Mr. Haggstrom. Chairman Miller, Ranking Member Michaud,
distinguished Members of the Committee, I am pleased to appear
here today to update the Committee on the Department of
Veterans Affairs' continuing efforts to improve the management
and timely execution of major construction and leased projects.
Joining me this morning is Ms. Stella Fiotes, Executive
Director of the Office of Construction and Facilities
Management. I will provide a brief oral statement and request
that my full statement be included in the record.
The Chairman. Without objection.
Mr. Haggstrom. The department's facility programs are an
integral part of our ongoing mission to care for and
memorialize our Nation's veterans. The department is committed
to meeting our responsibility to design, build, and deliver
quality facilities as tools to meet the demand for access to
health care and benefits. VA continues to improve its real
property portfolio, providing state of the art facilities that
meet the needs of veterans, allowing for the highest standard
of service. We have taken on the challenge of updating our
aging infrastructure to meet increased workload demands,
changing patient demographics, and services delivered closer to
where veterans live.
In the past five years VA has delivered 75 major
construction projects valued at over $3 billion that include
the new medical center complex in Las Vegas, cemeteries,
polytrauma facilities, spinal cord injury centers, a blind
rehabilitation center, and community living centers. We
continue work on 55 major construction projects valued at
approximately $13 billion.
The department has also opened 180 leased medical
facilities, 50 of which are considered major leases.
We have taken steps to improve the management and oversight
of major construction projects which include implementing the
recommendations from the Government Accountability Office, and
the department's Construction Review Council. VA took
aggressive action on the recommendations in the April, 2013 GAO
report and all recommendations have since been closed.
Additionally, we have implemented actions addressing the
four major challenge areas as identified by the Construction
Review Council which is chaired by the Secretary of Veterans
Affairs. These include recommendations to improve the
development of requirements, design quality, funding, and
program management and automation.
Unfortunately the department's major leasing program was
not authorized by Congress for fiscal year 2013 as a result of
the Congressional Budget Office's change in the budgetary
treatment of the program. We are hopeful that for fiscal year
2014 authorization will be reinstated by Congress, permitting
the department's current request for 27 projects that will
serve the needs of approximately 340,000 to move forward.
In preparation of executing a future major leasing program
should it be authorized, and to improve the current ongoing
program, VA is in the process of addressing recommendations in
the October, 2013 OIG report. These actions will be applied to
future major leasing actions should authorization be restored.
VA has a strong history of delivering facilities to serve
veterans. The way the Office of Construction and Facilities
Management is doing business today has changed significantly
since the Orlando, Denver, and New Orleans projects were
undertaken. The recommendations made from previous reports have
resulted in positive changes and are being applied to the
entire program, including the next two proposed major medical
center replacement projects located in Louisville, Kentucky and
Omaha, Nebraska.
Our focus on ensuring well defined requirements and
acquisition strategies that meet the project needs; assessing
project risk; assuring timely project and contract
administration; partnering with our construction and design
contractors; early involvement of the medical equipment
planning and procurement teams; applying the department's
acquisition program management framework to our projects; and
engaging in executive level onsite project reviews, along with
monthly updates to the Committee on key projects, has led to
improvements and transparency in our program. All these actions
will help to ensure the department's future capital program is
delivered on time and within budget.
Thank you for the opportunity to testify before the
Committee today. We look forward to answering any questions the
Committee may have.
[The prepared statement of Glenn D. Haggstrom appears in
the Appendix]
The Chairman. Thank you much, Mr. Haggstrom, for your
testimony on behalf of the department. We did just report
favorably to the full House H.R. 3521, which does in fact
authorize the 27 leases. Of course we have to have a full House
vote, and then the Senate will have to act, but get ready. They
are coming.
Mr. Haggstrom. Thank you very much, Mr. Chairman.
The Chairman. To the Corps of Engineers, what we are going
to do, if we can, we are going to do two two-minute rounds so
that we can try to get everybody in, including myself. So if
you would start the clock?
Of the six Department of Defense leases, or medical
facilities listed in your written statement as ongoing or as
having been recently completed by the Corps, how many of the
projects are currently or are completed on budget and on time?
Mr. Caldwell. Mr. Chairman, your question is directed to
the Corps and you are referring to leases? And----
The Chairman. No, no, I corrected. Facilities, take the
lease, the word lease out. The Department of Defense medical
facilities listed in your written statement, how many of those
either are on time, on budget, or were completed on time or on
budget?
Mr. Caldwell. Sir, I can get you specific numbers. But
virtually all of those are completed with some time growth and
some cost growth. We generally----
The Chairman. That means they are not on time and they are
not on budget?
Mr. Caldwell. Sir it means that we anticipate and
understand that there is risk associated and unknowns
associated with construction. We anticipate a five percent cost
growth on projects, including medical projects, and provide
that in the programmed amount for the projects. And we endeavor
to operate within that five percent. On the whole our
experience is that we are operating within that five percent.
The Chairman. So you do plan on that five percent?
Mr. Caldwell. Yes sir, we do.
The Chairman. Mr. Haggstrom, explain to us why four years
after it was issued the department is still in the process of
implementing recommendations by the GAO made in 2009 concerning
VA's major construction programs?
Mr. Haggstrom. Mr. Chairman, to the best of my knowledge we
have implemented the recommendations from the GAO report in
2009. And among them were the importance of doing a risk
assessment for both the cost and schedule. And shortly after
the report was issued in the future projects that we are
undertaking that was one of the major changes that we work very
closely now with our architect and engineer firm of record on
the project to accomplish that.
Subsequent to moving forward with the new projects we did
go back and we started the process on older projects that we
had started prior to the issuance of that report.
The Chairman. Thank you. Could I ask GAO if you concur with
Mr. Haggstrom's statement in regards to VA fully responding?
Ms. Halliday. Based on our reviews we would think that
while they might be responding, the implementation has not been
sufficient.
The Chairman. Thank you. Mr. Michaud? Ms. Brown?
Ms. Brown. Thank you. Since I only have two minutes I am
going to ask that my statement be placed in the record.
The Chairman. Always.
[The prepared statement of Hon. Corrine Brown appears in
the Appendix]
Ms. Brown. Thank you. Let me just say that this is, Ms.
Halliday, you mentioned New Orleans that I am very familiar
with, I have been there twice, and you mentioned Orlando. But I
was not clear on your feedback as far as Orlando. Because I
thought maybe you made a mistake and you were still talking
about New Orleans when you should have been talking about
Orlando. Would you take a look at that in your statement?
I have been, with the Chairman, to Orlando several times.
This project is over 25 years old, and I have been here 21
years, and we are still working on it. I will be there. I asked
my staff to drive by there and we do, and for the past, what,
three months? We are still at 84 percent completion. I will be
there Monday. I am going to not only drive by but I am going to
stop. I want to know what is the problem? Why is it that we
cannot complete the Orlando project? It is in my area. I was
very instrumental in getting the authorization and the full
funding.
Now I know everybody wants to go down and do the right
thing. But I want to know why is it that we cannot go down and
do the right thing, and help those veterans in Central Florida?
Please?
Mr. Haggstrom. Ms. Brown, first of all I would like to make
it very clear that we agree with you, that the project has
taken too long to do. And there have been inherent problems
which the VA has addressed in the past several years.
I do want to make it clear though to the Committee that in
no case has any veteran who has been enrolled in the veterans
health care system has gone untreated for any maladies or any
issues that they have with regards to their health. The medical
center director down there Tim Liezert has done an excellent
job.
The Chairman. I think you might want, you are talking about
Orlando area.
MR. Haggstrom. I am talking about Orlando, sir.
Ms. Brown. Yes.
Mr. Haggstrom. Tim Liezert, who is the medical center
director has done an excellent job in balancing the needs of
what the veterans require. And we continue to do so.
With regards to the executive of this project there, it
early on was inherent. We had some problems. And VA moved
quickly to address those problems. The issue here now is with
contractor performance. And VA has taken every opportunity, as
the Chairman has often asked me to do, to partner with our
prime contractor in an effort to move this forward. But when
you go down there and you look at the project, there are
inherent problems with scheduling, the number of workers on the
job to do this, the quality of the workmanship. And it goes on
and on and on. And currently VA is taking every opportunity to
exercise our rights to ensure that the contractor moves
forward.
Ms. Brown. Well can you tell me why it is that we have not
had any advancement in the completion in the last three months?
You know, I review the reports and it is stuck at 84 percent.
Anyway, Mr. Chairman, perhaps I can get the answers to my
question in writing. But I will be there Monday.
The Chairman. Thank you very much, Ms. Brown. And if you
would like to submit a question for the record I am sure Mr.
Haggstrom would be glad to answer it. Dr. Roe?
Mr. Roe. Ms. Brown, I would recommend you go every Monday.
I believe I would. We have been building major projects since
the pyramids. And there is nothing magic about building this. I
have been involved in building two hospitals from the ground
up, and one a little bit, and several medical office buildings,
schools, you name it as a public official. And you decide what
you have, what your budget is, what you can pay for in the
private sector, what you allocate or appropriate in the public
sector. You get an architect, you design it, you bid it out,
and as you stated there will be some cost adjustments, things
you run across when you are building something you did not
anticipate. Everybody understand that.
But we are reinventing the wheel here. And especially in
hospitals, I get a little frustrated, and I certainly share Ms.
Brown's frustration, is it, and I did this with schools. It is
a great deal for architects when you redesign every school
differently. And I realize every footpad is slightly different,
the topography is a little different. But when you are building
hospitals an operating room for the most part is an operating
room, and a patient care room is basically a patient care room,
and a laboratory is a laboratory. I have been in hundreds of
them over my career. Why would you not cookie cutter, build
something, basically why could you not do that? The VA is going
to build a hospital, two more facilities. They are going to be
redesigned from the ground up to look something different. You
are going to pay a lot of money doing that. Why would there not
be just a standard that you could change a little bit? And
instead of going four floors, three floors, but essentially a
layout like that instead of reinventing the wheel each time you
do that?
Mr. Haggstrom. Mr. Roe, while the department does not have
and use definitive designs, much like the Department of Defense
does for many of their projects, we do have standardization
across the department in terms of how we relate the various
functions of a medical facility and so forth. I would ask Ms.
Fiotes if she would to comment on that, as that is part of her
responsibility in CFM, to work these standard module designs
with our clients.
Mr. Roe. Well excuse me, not to interrupt but it is not
working too well. Because we had the builders up here, what Mr.
Chairman, a year ago, or something, and the contractors are
begging for mercy. I mean, things have been changed, and here,
and they were asking us to help. I have never seen that in my
life, where, the first time, only time in five years that I
have been here that the contractor actually came up and asked
for some help from Congress. I yield back my time, Mr.
Chairman, I am over time.
The Chairman. Thank you. Ms. Fiotes, if you would take his
question for the record we would appreciate that.
Ms. Fiotes. I will do that, Mr. Chairman.
The Chairman. Mr. Michaud?
Mr. Michaud. Thank you, Mr. Chairman. This is for the
Inspector General. Repeatedly, the IG and the GAO has pointed
out serious issues with mismanagement, overage, delays in
construction within the VA system. What is your opinion
regarding moving the authority for major construction from VA
to the Corps of Engineers?
Ms. Halliday. I would be concerned with the lack of control
that VA would have. I think communications is most important in
defining construction needs and marrying up what is actually
being implemented as part of the project. At this point I
understand that the processes are not well defined as to how
that would operate, and who would have what responsibility. And
I think that before you would make a move of that magnitude you
have to look at that. A transfer of authority could entail
creating some duplicity of capabilities within VA and render
some of our workers nonproductive because the work transfers.
We have had significant problems, although not with the Army
Corps of Engineers, on the management of interagency
agreements. The lack of control, the lack of transparency, the
lack of ability to manage issues as they arise has been very
problematic across VA. And this would be handled very
similarly. So there are definitive risks that have to be
managed. If communications breaks down between the Army Corps
and VA then you know you are going to have problems with the
construction site.
The Chairman. Dr. Benishek?
Mr. Benishek. Thank you, Mr. Chairman. Ms. Halliday, was
there a, did you give us a number that there was like design
changes in every single one of these projects that you
described in your report?
Ms. Halliday. The number I gave comes from a statistical
sample of 30 projects that we looked at. So I did not quantify
the number.
Mr. Benishek. I am kind of concerned about the idea of if
you have a, you are planning for a five percent cost overrun
from the very beginning it sounds like, Mr. Haggstrom. I mean
I, I mean I have done some construction projects as well like
Dr. Roe talked about and you know, we sort of like to hold our
contractors' feet to the fire. You know? The contractors will
say, well, you change the specifications, you know, halfway
through the project it is going to cost you more. I have seen
that. But I find it surprising that you are going to add five
percent to the cost sort of automatically. I mean, how do you
justify that?
Mr. Haggstrom. Mr. Benishek, I think you will find that is
standard practice in the construction industry. And when you
say exceed cost, when you look at the past five years when VA
has delivered 75 major construction projects for the use of our
veterans at over $3 billion, 95 percent of those were delivered
within cost. Because when you look at the cost and how we do
the programming for a major construction project we take into
account as part of the appropriation and authorization request
that there will be change orders associated with construction.
That has been validated both by the Office of the Inspector
General and the GAO.
Mr. Benishek. Well that sort of gets back to my question
from the IG's. I mean, once you have a design you are supposed
to stick to it. I mean, you have to have the design done first
and not have excessive amounts of change orders. I mean, that
is what I was sort of getting to----
Mr. Haggstrom. You are absolutely correct.
Mr. Benishek. --excessive change orders make things more
expensive.
Mr. Haggstrom. And that is one of the things that the
department has done in this past year as part of the forensics
in looking at our program. Is that we found that when we had
gone to Congress previously we did not have a well defined set
of requirements and we have made major changes in that, in how
we approach that. And the very fact that before we would
approach Congress for either an authorization or appropriation
we would achieve a 35 percent level of design. And I believe
this is very similar to the way the Department of Defense, and
the Corps of Engineers, and the Naval Facilities Engineering
Command works in submission of their military construction
program. So we are taking a close look at that and the best
practices----
Mr. Benishek. Could you just forward the changes that you
have made in your----
Mr. Haggstrom. Certainly, sir. We have provided to the
Committee the report out from the Secretary's Construction
Review Council. And that is available to the Committee. If you
do not have it we will again forward it to you.
Mr. Benishek. Thank you. I am out of time.
The Chairman. For the members' information, GAO report says
as of November, 2012 the cost increases for projects ranged
from 59 percent to 144 percent, with a total increase of nearly
$1.5 billion, and the average increase of approximately $366
million. The delays in these projects range from 14 to 74
months, resulting in an average delay of 35 months per project.
Ms. Brownley?
Ms. Brownley. Thank you, Mr. Chair. I actually wanted to
follow up with your original line of questioning. And to the
IG, so in answering the chair's question you said that you had
not seen a marked improvement since you gave your report on the
overall management of design and construction with the VA. So
what do you suggest now? What would be your suggestions?
Ms. Halliday. The reason I made that comment is the new
control with regards to really defining and putting final stamp
of approval on the project scope, have not been in place long
enough to assess implementation of those controls. It is
premature at this point. I think it is a good control. I think
it is appropriate to look at construction contracts that way
but I just do not have any evidence that the control will work
as intended at this stage.
Ms. Brownley. Thank you. And Mr. Haggstrom, you talked
about 95 percent success. What is the percentage when you
calculate the cost of change orders into your overall cost? How
do you calculate that? What is the amount for change orders in
an overall cost scheme?
Mr. Haggstrom. Just as Mr. Caldwell said the way the Corps
calculates those contingency funds is, VA calculates them in a
similar way accounting for approximately five percent of the
cost of the project.
Ms. Brownley. Well just the numbers do not seem to add up
to me. But I do not understand why, and I think that is what we
need to determine. I will yield back.
The Chairman. If again, and I apologize, but Mr. Haggstrom
are you saying that all of your projects, major construction in
particular, that every one of them has met the original budget?
Mr. Haggstrom. Of the 75 projects, sir, only four did we
come back to Congress to ask for an increase in an
authorization or an appropriation. All other projects were
delivered within the appropriated amount, that is correct.
The Chairman. And the major projects that are existing now?
How many have you come back asking for additional funds?
Mr. Haggstrom. With regards to Orlando, Denver, or New
Orleans?
The Chairman. Correct.
Mr. Haggstrom. None.
The Chairman. Will you be?
Mr. Haggstrom. Not as far as I know.
The Chairman. Okay.
Mr. Haggstrom. Right now the way we look at it we are on
track.
The Chairman. Thank you. Mr. Coffman?
Mr. Coffman. Thank you, Mr. Chairman. Mr. Caldwell, has the
VA contacted the Army Corps of Engineers for assistance on the
projects in Orlando, Aurora, or New Orleans?
Mr. Caldwell. Sir, I am not aware of all of those projects.
I can tell you that in Orlando, yes, we have provided support
to them in terms of providing estimate evaluations as well as
schedule evaluations, and providing advice regarding some of
the contract administration matters that they are dealing with.
Mr. Coffman. Can you speak to some of the, I think the
subject came up by the IG about interagency work. And I wonder
if you could give examples of some other agencies outside of,
say, the Department of Defense that you do work for?
Mr. Caldwell. I have a list of probably 12 other Federal
agencies that we provide support to. The total value of the
support that we provided in fiscal year 2013 was about $1.3
billion spread across a number of Federal agencies. The
Environmental Protection Agency, the Department of State,
USAID, the Department of Transportation. So I could go on and
name a number of those that we have done that. And that
support, I should point out, ranges from consultation, where we
have some technical expertise that we can advise them, all the
way to actually managing the execution of projects.
Mr. Coffman. Okay. Could the Army Corps of Engineers aid
and assist those projects if the VA requested help? The
projects that the VA has?
Mr. Caldwell. We would be pleased to work with the VA for
anything they think that we could assist with. I should point
out, when you say those projects, if what you are referring to
is projects that are underway and have some challenges
currently associated with them, there is some question there
about whether we could step in and make a difference in that
project. What we could do is to assess the conditions and
provide some consultation to VA in that regard.
Mr. Coffman. Okay. But going forward you could do, you
could do projects for the VA as you do for other agencies,
could you not?
Mr. Caldwell. Yes sir, we could do that in a support role,
much like a construction agent role, yes.
Mr. Coffman. Thank you, Mr. Chairman. Just one final point,
and that is that I think if we go back to the GAO report of
April 30 of this year I think it stated that the Army Corps of
Engineers projects were consistently within schedule, within
budget, and that the VA projects were consistently not within
schedule and not within the budget. I yield back.
The Chairman. Ms. Titus?
Ms. Titus. Thank you, Mr. Chairman. I have some questions
about how the VA deals with predictions of growth in
populations that they serve. I represent an area in Southern
Nevada that had unprecedented growth for over a decade and as
we move away from the recession we see that growth coming back
in Southern Nevada and across the Southwest with a large number
of veterans moving to those areas. I wonder what the VA does to
predict the movement of veterans when you are considering
construction projects to be sure they are in line with future
needs, not just at one snapshot in time? I would ask that to
Mr. Haggstrom. And then Ms. Halliday, I would ask you if in
terms of future construction has your office done any work to
kind of look at whether the VA is effectively predicting and
reacting to those potential demographic changes?
Mr. Haggstrom. With regards to how the department goes
about developing the requirements, while I am not deeply
involved in that there are many databases that both VHA and
other offices within the department use that track veterans,
track veterans' enrollments, and those kinds of things.
Certainly I would be happy to take that question for the record
and we can get you a more detailed answer.
Ms. Titus. Thank you. Ms. Halliday?
Ms. Halliday. My office has looked at the National Cemetery
Administration, how they are approaching and planning for rural
veterans to be served as well as urban veterans. I do not have
a report at this time. I expect to issue a report shortly. And
NCA has agreed essentially with the OIG to change its
definitions so that there is a clear focus on rural veterans.
Ms. Titus. Well that is fine for rural veterans. I am
curious to see about if you have any plans or any ability to
move resources or change construction goals? If someplace, say,
is losing a population and someplace is gaining one? But if you
all would look at that and get back to me, I thank you, Mr.
Chairman, and yield back.
The Chairman. Thank you, Ms. Titus. Ms. Kirkpatrick?
Mrs. Kirkpatrick. First of all, I thank the Chairman and
Ranking Member for continuing to have these hearings delving
into the construction problems at the VA. And I applaud the VA
for creating the Construction Review Council, that is a step in
the right direction. But it has been exactly a year since they
came up with their recommendations and Mr. Haggstrom I would
like to know what your timeline is for implementing those
recommendations? It is a little amazing to me that not only
have they not been implemented by apparently there are not
instructions to implement. So would you please address that?
Mr. Haggstrom. Congresswoman, all those recommendations
have been implemented. We have briefed the Secretary on that
earlier this year. We told him what we did. We laid out the
program for him. He concurred with it. We moved forward. When--
--
Mrs. Kirkpatrick. Well I am sorry to interrupt but
apparently not----
Mr. Haggstrom. --the costing we did achieve that major
milestone with the submission of the fiscal year 2013 program.
We had design to 35 percent.
Mrs. Kirkpatrick. Let me ask the Inspector General. In the
report that we have in our record here it says those have not
been implemented. Are you changing your report?
Ms. Halliday. We have not provided oversight of that since
it is such a new change. In preparation for this hearing I
tried to get the decisions that came from the council to look
at those clearly to see about the implementation and we were
unable to do that.
Mrs. Kirkpatrick. Can you tell us why?
Ms. Halliday. There are briefing slides with regards to the
Committee meeting to discuss the issues with construction. What
we had a hard time doing was determining those decisions that
were made based on those discussions so we could track the
related implementation. We were certainly scheduling that for
oversight.
Mrs. Kirkpatrick. Okay. I yield back my time. But I am very
concerned about the disconnect with that.
The Chairman. Mr. Ruiz+
Mr. Ruiz. Thank you, Mr. Chairman. Mr. Haggstrom, what are
your internal data measures to measure your success in
accomplishing your milestones?
Mr. Haggstrom. Mr. Ruiz, we are very focused on metrics in
how we look at our program with regards to cost, schedule, and
performance, and quality of what our contractors are putting in
place?
Mr. Ruiz. Can you give me three of your top examples of
data driven measurements of success that you follow? Your top
three priorities?
Mr. Haggstrom. Cost, schedule, and performance. Those are
our top three. Those----
Mr. Ruiz. So how do you measure, how do you measure
performance?
Mr. Haggstrom. We measure performance against a schedule.
Mr. Ruiz. If it is done on schedule?
Mr. Haggstrom. If it is done in accordance with what we
call the master schedule.
Mr. Ruiz. Okay.
Mr. Haggstrom. That is applied against all major
construction programs.
Mr. Ruiz. So that is one. Can you give me two other very
specific examples of how you measure success?
Mr. Haggstrom. The cost. Are we remaining within the
authorization and the appropriated cost. As we go through the
project we look at that through earned value management. And
when we, again, we look at schedule. Is the contractor
complying with the schedule that they provide us at the onset?
And we look at performance in terms of quality, and the number
of workers on the job, and is that job being accomplished as it
should be to meet the standards of the VA? Mr. Ruiz. What are
your top two poorest performing construction projects right
now?
Mr. Haggstrom. Right now we are having a great deal of
difficulty with the contractor in Orlando. And quite frankly
with the other projects we are still within the acceptable
limitations that we have set for ourselves. Orlando is the
major project with regards to schedule.
Mr. Ruiz. Okay. And so what are those obstacles? What are
those problems? And what are you doing to mitigate them?
Mr. Haggstrom. When you look at in the future what we have
put in place from the Construction Review Council I go back to
the whole essence of a successful construction program is
predicated on a clear definition of what the requirements are.
And taking those requirements and translating them into a
design that we can move forward with and have the assurances
that at that point in the design there should be little to few
changes in the future as we go forward with it. At that point
in time we have developed a schedule for the execution of the
program and also a very, very accurate cost in terms of what
the overall cost of the program would be.
Mr. Ruiz. If you fail in achieving your data driven
measurements for success what are your plans to correct that?
Mr. Haggstrom. We work very closely with the contractor. We
find ways to bring them back on schedule. How can we do that?
How can we support them? We can look at value engineering in
terms if costs start to exceed what they are. Are there things
that we can do within the scope of the project that could
potentially save money?
Mr. Ruiz. And how are you informing your veterans regarding
whether or not you are achieving those successes, that are
reliant on that facility to open? Are you being transparent
with your----
Mr. Haggstrom. I believe we are. I know the medical centers
have very robust programs at their respective locations where
we have ongoing construction that continually meet with the
veterans service organizations and the veterans in the area to
keep them informed on the status of the project and where we
are going.
Mr. Ruiz. Thank you.
The Chairman. Thank you, Mr. Ruiz. Ms. Negrete McLeod?
Mrs. Negrete McLeod. Thank you, Mr. Chair. To Mr.
Haggstrom, thank you for attending today's hearing. The VA
hospital at Loma Linda is the main hospital where veterans
from, you have four Members on this Committee that get serviced
by that. Mr. Cook, Mr. Takano, Mr. Ruiz, and myself, that is
where they all seek treatment. In the OIG report the health
center lease for Loma Linda was not awarded until a few months
ago. What were the issues at Loma Linda that led to the lease
not being finalized until this year when it was authorized in
2009?
Mr. Haggstrom. Congresswoman, when you look at these leases
and the execution of the leases I will say very up front that
there was a very aggressive timeline when these leases were
submitted to Congress. As part of the OIG report we were
charged with developing a reasonable timeline to achieve these
leases and in doing so we worked closely with our client. So
when you look at a major lease in terms of these seven HCC
leases, and the process that we go through to secure the land
and then the developer, we are looking at a life cycle
acquisition time of approximately 61 months.
When you take a look at the Loma Linda lease specifically
there was a 46-month duration from the time it was authorized
to the time that we signed the lease with the developer.
However, when you look at that and you take into account things
that were beyond the VA's control, there were 21 months within
that whole process where we were going through negotiations
with the city and the developer that took the excessive amount
of time.
So if you start to normalize these leases, these seven
leases, you will come back to the fact that taking out those
things that VA had no control of we were very much within the
timeline of what we would say is approximately 26 months from
the time we were soliciting an offer for land to the time we
signed a lease with the developer.
The Chairman. Mr. O'Rourke?
Mr. O'Rourke. Thank you, Mr. Chair. And I want to thank you
and the Ranking Member for keeping this Committee focused on
performance and accountability at the VA. I really appreciate
that.
And for Mr. Haggstrom, it was interesting to read the VFW's
statement for today's hearing, where they note that we will
need to invest over $23 billion over the next ten years to
complete our SCIP projects. At current requested funding levels
it will take more than 67 years to complete our ten-year plan.
The proposed veterans hospital in El Paso is number 79 on the
list so I have got some deep concerns, given everything that we
heard today, given past reports by the GAO and the OIG. What
can, to cut to the quick, what can we do to move ourselves up
on that list? What is the essential core criteria used to
determine where a proposed hospital ranks on that list?
Mr. Haggstrom. Mr. O'Rourke, the department uses the
strategic capital investment planning process as part of
helping to define what the most urgent and pressing needs of
the department are. I would ask Ms. Fiotes if she would
comment. She is part of the SCIP board that reviews these
projects.
Mr. O'Rourke. Great. And before you do, let me add
something to the questions and remarks made by Ms. Titus. In El
Paso you have more than 80,000 veterans who are underserved by
the existing clinic. You have had Fort Bliss, which has gone
from 8,000 active duty soldiers six years ago perhaps when
these lists were first made, to 33,000 active duty soldiers.
And you also have an underutilization of the current VA because
it is inadequate. And sometimes that underutilization is used
as an argument for our placement on the list. So with that in
mind, what can we do to make a better case to you and other
members of the SCIP board?
Ms. Fiotes. Congressman, the SCIP board reviews projects
that are scored in a very data driven way based on a lot of the
things that you mentioned.
Mr. O'Rourke. Is utilization a part of that?
MS. Fiotes. Utilization is part of it. The movement of
populations, the projected workloads, the existing
infrastructure, all these things come into bear. And ultimately
the projects are scored using the basic criteria of ensuring
safety and security at our facilities, meeting department
initiatives, fixing what we have, right sizing the inventory,
providing value of our investment, and finally increasing
access. Those are major criteria. They have several
subcriteria. It is very data driven. It is very objective. And
when those projects get presented to the SCIP board the medical
centers and the Veterans Integrated Service Networks have the
opportunity to argue their case, if you will, or plead their
case. It is very objective, very data driven. I would say that
the numbers fall out where they fall out.
Mr. O'Rourke. Before I yield back, would you commit to
meeting with me to discuss that issue of utilization and make
sure that you all have all the data as you make these
objective, data driven decisions?
MS. Fiotes. And I would ask in that case to also be
accompanied by my colleague who actually runs the SCIP from a
different office from our office. I participate on the board
but----
Mr. O'Rourke. Thank you. I look forward to doing that. Mr.
Chair, I yield back.
The Chairman. Thank you very much. Also Members, Dr. Roe
has said that he will stay and continue to chair this for those
who may want to stay and have second round of questions. Mr.
Walz, you are recognized.
Mr. Walz. Thank you Chairman and Ranking Member. And I
encourage you to continue to ride herd on this issue because it
is a challenge and great points have been brought up. Ms.
Halliday, I would just like to comment since I have come to
Congress I have been an unabashed fan of the IG's office and
the work you do never ceases to impress. I am grateful for
that. It helps us do our job better and it helps your partners
in VA do their job better. So thank you for that.
Again, I think Mr. O'Rourke brought up a good point, Mr.
Haggstrom. This is a big undertaking. The independent budget he
was speaking of estimates that we provided about 25 percent of
the funding. But I have to be honest with you, I would be hard
pressed to provide more right now under the circumstances where
we are having some of these challenges. I am absolutely
convinced the VA does things, many things, incredibly well,
world class level. I have yet to be convinced that building
hospitals is one of them. And that is a challenge for me
because I know how important they are.
And just one specific question. And I like Dr. Ruiz getting
at some of the specifics in this. Each VA officials who manages
a major construction project, what are their defined roles and
responsibilities in the change order process? How does that
work?
Mr. Haggstrom. Congressman, we have taken the change order
process very seriously as a result of the GAO report and issues
we have dealt with our contractor in Denver. I would ask Ms.
Fiotes, she has been leading the initiative to look at how we
do change orders, streamline that process, and be more
effective in our ways that we do them.
Ms. Fiotes. Congressman, there are several parties involved
in reviews of change orders. And change orders fall into three
basic categories. They are usually errors or omissions in the
design, they are unforeseen conditions, or they are owner
requested changes. And it is part of the nature of
construction, that change orders will arise in all three areas.
Involved parties, the resident engineers who review the
change orders for technical merit; our architect, engineer, and
construction management consultants who review for cost
validity and help us come up with our cost estimate; and
ultimately the contracting officer who then negotiates the
proposed change order with the contractor who submitted it.
Many times it goes back and forth several times. Those are the
parties and the key roles and responsibilities, if you will.
We did assess that our change order process, while there
was guidance in several places it was not really consistent and
consolidated in one place. We have proceeded since then to
issue a handbook for our project managers and project
executives so that they all follow a consistent process. We
have inserted timelines to ensure the timeliness of the review
of the change orders. We found that some change orders, either
because the contractor was not pushing or because they just
were not as critical, just fell by the wayside and were stale.
Mr. Walz. Okay. My time is going to be up. But I cannot
help get a really, really strong feeling that we are being told
everything seems pretty good and on track and going in pretty
much the norm, and the numbers, as one of my colleagues said, I
am having a hard time matching these up. So I may wait around
for another round. Thank you.
The Chairman. Thank you, Mr. Walz. Members, we have been
joined by Mr. Mica from the east coast of Florida, who many of
his veterans are in fact served by the hospital that is being
constructed in Orlando. And I would like to ask unanimous
consent that he be allowed to participate in the questions.
Without objection, so ordered. And Mr. Mica is recognized for a
round of questions. And Dr. Roe, if you would take the chair?
Mr. Mica. Thank you, Mr. Chairman, and thank you this
Committee for its continued vigilance and pursuit particularly
on the construction side of VA hospitals and medical
facilities. Looking at some of the delays and problems we have
had, as you know we have had some serious problems in Orlando.
And I think it was cited in the testimony that I heard that
that is one of the roughest.
We had sent from Central Florida delegation a letter
regarding payments. Part of the problem we have in Orlando is
the VA has kept changing the design, some of the requirements,
and vendors are not being paid. When the vendors are not being
paid we have had at least one go under and we have had others
that are in serious financial situations because tens of
millions of dollars has not been paid. Can anyone respond to
what we are doing? Is that Mr., I cannot see without my
classes, Mr. Haggstrom?
Mr. Haggstrom. Yes. Mr. Mica, that was the case initially
back in 2012, early 2012. At that point in time the VA sat down
with both the contractor and the AE firms and addressed many of
the issues that the contractor had brought forth. We had asked
the contractor to prioritize those issues, where in the design
and the construction drawings did they have questions that they
felt they needed additional information?
Mr. Mica. Well some were pretty simple. I mean, I was in
the development business, built nothing as big as the VA but a
simple, well it sounds simple, but if you have a toilet and it
is floor mounted and you change the specs to wall mount it
after you have put the plumbing in the floor and you have to
change it to the wall, and support that, the plumber actually
took me and showed me what had been drawn and then what was the
new requirement and was having trouble getting paid for it. I
mean, these are simple things where we need to get a quick
resolution. You are telling me now that that has been the case?
Mr. Haggstrom. When we execute a change order with the
contractor, the contractor may come to us with a proposal. The
government will then pursue looking at an independent----
Mr. Mica. Well just look at that one. Let us----
Mr. Haggstrom. --we will always provide a level----
Mr. Mica. Look at that one and get back with me, if you
can, and tell me if that contractor has been made whole? I do
not have too much time, I know, this clock goes pretty fast
here. You are going to open the nursing home, 120-bed facility
next month?
Mr. Haggstrom. That is correct, sir.
Mr. Mica. What about the domiciliary, 60-bed unit?
Mr. Haggstrom. I believe the domiciliary is scheduled to
open in either January or February.
Mr. Mica. Okay. And it looks like, what can you tell the
Committee as to the time of opening the hospital itself?
Mr. Haggstrom. Currently the legal extended completion date
on the hospital was this past August. We issued Brasfield and
Gorrie a show cause notice----
Mr. Mica. No I----
Mr. Haggstrom. --which they then provided us a recovery
schedule and they told us April of 2014.
Mr. Mica. And you think we can hold to that?
Mr. Haggstrom. Brasfield and Gorrie, every month when they
have submitted us an updated schedule has continued to slip the
hospital and currently they are now projecting they would not
be complete until September of 2014.
Mr. Mica. September of 2014? Okay. And part of that I heard
is issues with the electrical contractor. Can you get back to
me or the Committee and for the record what the issues are? I
want them in the record. Do you leave this open for a week or
ten days? Whatever? And let us know what the issues are so I
have some record of what you are telling me, and what they are
telling us, is the issue right now. Can you do that?
Mr. Haggstrom. We would be pleased to do that.
Mr. Mica. Okay. Thank you. There are other questions. And
if you would, I chair an Investigative Oversight Subcommittee,
Government Operations Subcommittee. I would like a listing of
all of your current VA properties that are vacant or
underutilized. That is facilities vacant, buildings, we will
get the specifics to you. And if you could provide it to the
Committee, and also a copy to me? Because we are looking across
the entire spectrum of the Federal government for underutilized
buildings, facilities, properties, assets that we are sitting
on. Thank you and I yield back.
Mr. Roe. [Presiding] Thank you, Mr. Mica. I now yield three
minutes to Mr. O'Rourke.
Mr. O'Rourke. Thank you, Mr. Chair. I want to join Mr. Walz
in commending the work of the OIG. In addition to holding
monthly town hall meetings I hold a quarterly town hall meeting
just for veterans in El Paso. And we will get anywhere from 200
to 300 veterans who attend those meetings. And my entire
presentation is driven from OIG findings in seven key areas.
And one of them that we look at is access. And right now the
score for the El Paso VHA is 39 percent. And that is below the
VISN, it is below the national average. And it is part of what
I was bringing to the attention of Mr. Haggstrom, is that we
have an access problem. We are very far down on the list to
have it addressed in any meaningful, comprehensive way. I fear
that one of the criteria that is being used right now in terms
of utilization is perhaps being misscored and not taking into
account the broader picture. From your experience in the OIG's
office, can you provide any direction to me in my office and
how we pursue that? Or to the VA and how they can improve their
scoring to take into account issues like those brought up by
Ms. Titus and myself, and other underutilized and underserved
areas?
Ms. Halliday. At this point we would have to spend more
oversight on that. It becomes a little bit subjective with how
you score projects. Our focus had been on the rural health
veterans and were they getting served appropriately and looking
at how rural health veterans were defined made a big difference
between that and the general population. And I see that the
National Cemetery is agreeing to start applying a methodology
that we have actually presented to them so that they can ensure
they do not have gaps in service delivery. The next step, of
course, is to look at the bigger picture of access to VA
medical care. But I do not have specific answers for you right
now.
Mr. O'Rourke. I would love to have the opportunity to speak
with you about that and see if that is something that the OIG
has either data on already or would be interested in pursuing
in the future. And as I said earlier, one of the things that we
would ask that you perhaps consider or look at is when our
community historically has approached the VA about the need for
a full service hospital we are met with this underutilization
argument, that not enough of your veterans are registered with
or are using that. And we see that as a circular argument, in
that the care has been insufficient and so veterans are opting
not the take that. So I appreciate that and I will yield back
to the chair.
Mr. Roe. I thank the gentleman for yielding. Mr. Coffman?
Mr. Coffman. Thank you, Mr. Chairman. Let me just say first
that I think that the VA has, the Veterans Administration, has
a comparative advantage when it comes to running cemeteries
over the Department of the Army. And I think that the
Department of the Army's Corps of Engineers, the Army Corps of
Engineers, has a comparative advantage when it comes to doing
construction projects. So maybe we can switch these functions
around to which organization does a better job in a given area.
Mr. Haggstrom, according to the testimony of Mr. Caldwell
of the Army Corps the VA has the authority to work with the
Army Corps on construction projects. Has the VA formally worked
with the Corps on the current major projects in Orlando,
Aurora, and New Orleans?
Mr. Haggstrom. Mr. Coffman, I do know we have a partnership
with the Corps. We have, as Mr. Caldwell said, worked
extensively with them on the Orlando project with regard to
accessing some of their expertise when it came to looking at
cost and scheduling.
I also believe that as we entered into the Denver and New
Orleans project we tapped into the Corps' expertise with
regards to the type of contract we were using, an integrated
design and construct contract. Since it was relatively new
acquisition vehicle to the department we did ask the Corps to
come take a look at the contract and do an assessment and
provide us some feedback on that.
Mr. Coffman. Given the fact that according to a GAO study
on April 30 of this year the Aurora project is I believe 144
percent over budget and in fact is more so than any other
project that you are working on, why have you not been more,
shown more initiative in terms of reaching out to the Army
Corps of Engineers to help assist on the Aurora project?
Mr. Haggstrom. With regards to the GAO report, VA disagreed
and it is in our response to the GAO in the way they calculated
those costs. They looked at the cost from the inception when it
was in the infancy and planning stages to ultimately what it
was appropriately and authorized for. And they have taken all
that and they said that is a cost growth. When we look at it
what we are working on, we requested $800 million in
authorization and appropriation from the Congress, they
provided that, and we are within that authorization and
appropriation in executing this project.
Mr. Coffman. Where are you at right now, I understand that
the general contractor or the prime contractor is appealing the
cost. And your cost estimate I believe is $604 million for the
Aurora project and the contractor is saying that it is going to
cost over $1 billion to build the project. Where is that at? I
understand there is a dispute resolution going on right now on
that?
Mr. Haggstrom. There is, Mr. Coffman. Currently it is in
the Civilian Contract Board of Appeals. There is a series of
meetings that will take place over the course of I believe the
next seven to eight months where the Contracting Board will
look at both the submissions from the contractor and the
department and make a decision.
Mr. Coffman. Thank you, Mr. Chairman. I yield back.
Mr. Roe. Thank the gentleman. Ms. Brownley, you are
recognized.
Ms. Brownley. Thank you, Mr. Chair. I wanted to ask Ms.
Halliday, it seems in this hearing that the chair's data points
with regards to projects and cost overruns and timeliness does
not add up to VA's testimony with regards to such a large
percentage is on time and on cost. Can you help me and the
Committee to understand the differences here and how we
reconcile this?
Ms. Halliday. In most of our oversight we have problems
actually getting assurance that we have full costing through
the projects. I think I am on record as saying that there is a
problem with not being able to track the full expenditures for
the health care systems, for example, the seven HCCs that VA
was trying to do. This is systemic. It goes across the
department in the inability to really track all expenditures.
So you definitely are going to have variables between what was
originally estimated and what the actual costs were. Maureen
Regan, who handles our contract oversight, looked specifically
at the Orlando Medical Center and had found that almost 30
percent of the expenditures she looked at on change orders
could not be validated or appeared inappropriate charges and
claims from the contractor. I think that is something that
happens in the normal course of business but with good
processes and tracking of expenditures you can sort this out.
Unfortunately VA does not have those systems to really track
expenditures on a per project basis and ensure it gets all of
its expenditures accounted for.
Ms. Brownley. And does the Army Corps have a way to track
costs?
Mr. Caldwell. Ma'am, we do. And it is important to
understand that especially with medical facilities you may have
sources of funds which are from different appropriations that
come together. So when Mr. Haggstrom talks about the cost of a
facility as I think of that I am thinking of what amount has
been authorized by Congress for that project. There may be
other funds that are required for the initial outfitting of the
contents of the facility as well. And so, when someone looks at
a facility to try to sort out what the cost is, the question
becomes which numbers are they looking at and for what
purposes?
Ms. Brownley. I understand. I just think it is certainly
frustrating from my perspective that, at least what the IG is
saying is, that there is really not a way within the VA to
fully track the costs of a project. And that seems to be
fundamentally problematic to me, that the scope and size of the
projects that we are trying to undertake here, the importance
of these facilities to our veterans, and our inability really
to be able to track these costs. I mean, it just seems really
honestly unbelievable to me in a way. And I think that it is
something that we need to fully understand. And I understand
large agencies have systemic problems. I understand that. But
we must address the issue. And I think it must be fixed. I
mean, this is fundamental to any major construction project is
that we should be able to track the costs. And our job
partially is in oversight. And if it cannot be done then I do
not know how we will ever get our arms around some of these
issues. Thank you, Mr. Chair.
Mr. Roe. Thank you for yielding. Ms. McLeod, you are
recognized for three minutes.
Mrs. Negrete McLeod. Thank you, Mr. Chair. For Mr.
Haggstrom, what office was responsible for the management of
the seven health care center leases that have failed to come to
fruition? It is hard for me to believe that the prospectus were
allowed to be published in the budget books. Someone should
have known that the timeline was unrealistic. Would you please
walk me through the process as it existed then and as it exists
now? Thank you.
Mr. Haggstrom. Congresswoman, this is a joint effort
between the Veterans Health Administration and Ms. Fiotes'
office, the Office of Construction and Facilities Management.
If I could ask Ms. Fiotes to comment on that. Well, let me take
that. Better yet, when we look at this the VHA looks at the
databases that the department has in terms of the needs of the
veterans, where they are, what type of health care needs are
there. They will then come forward now through the SCIP process
that was effective in 2013 to put this requirement as part of
the overall portfolio needs of the department in moving forward
of what the health care requirements are.
These seven projects were undertaken prior to the SCIP
process, including the large leased projects. So they come to
us with a requirement in terms of size, location, those types
of things. We then work with them to put a package together
that we normally do what we call a two-step procurement. Step
one being putting a solicitation for offer out to the area for
landholders who may be interested in selling their land to a
developer for future development. Once we look at that we come
to an understanding of is it in the defined area that we are
asking for? And also very importantly we do due diligence with
respect to Federal requirements and environmental requirements
at looking at that land to ensure that there is no
contamination on it.
We then enter into negotiations with that landholder and we
reach what we call an assignable title. That assignable title
is never taken in VA's name. All it is is an agreement to the
purchase price of that land and then once a developer is
brought on board the developer will take title and pay the
landowner.
Step two is to find a developer who will actually do the
final design and construction and potentially hold the lease on
that facility into the future.
Mrs. Negrete McLeod. I yield back.
Mr. Roe. Thank you for yielding. First of all I want to, I
will ask just a couple of questions, yield myself a few
minutes. In some levity the Coliseum in Rome was built in eight
years. Admittedly they did not have the EPA and a few things
they have now, but they did get that construction project done
from the ground up in eight years. It looks like that is far
going to surpass Orlando if it ever gets done. So I know that
you are here. I appreciate what you are doing. I know that
folks are trying to get the right thing done and get these
projects done for veterans. Because the goal, as Mr. O'Rourke
clearly pointed out, is to take care of veterans. I mean, that
is the only reason for us to be here. And we need to do that in
the most efficient way we can because there is not an endless,
bottomless pit of money.
And I can assure you, and Ms. Brownley brought this up,
these cost overruns, the last project that I dealt with myself
personally was a $20-something million office building we
built, our practice built. I can assure you there were not cost
overruns because I signed my name to a note at a bank. It was
me they were going to come after if we had those cost overruns.
And I can assure you we got in under budget and on time. And I
can assure you that the people involved in paying that note
back were paying attention. And Mr. O'Rourke pointed out, and I
think he is absolutely correct, is that we need to pay more
attention here on the VA Committee if we do not have systems in
place that pay attention. And again, I am trying to get my arms
around what the Chairman read out just a minute ago before he
left, what the GAO found were costs substantially increased and
schedules were delayed. It sounds like, when I listen to the
testimony, that everything is going along fine. But then I read
this, as of November, 2012 the cost increases for these
projects, that is Denver, Colorado, Las Vegas, Nevada, New
Orleans, Louisiana, and Orlando, Florida, the cost increases of
these projects range from 59 to 144 percent, which is a lot,
with a total cost increase of nearly $1.5 billion. So we just
appropriated more money which then kept you within the budget.
So I guess you can say that those projects were on budget. And
an average increase of approximately $366 million, these delays
were 14 months to 74 months, and an average of 35 months, and
so on. He has read that before.
I guess what I am going to ask you all is are, and the IG,
are the metrics in place now to prevent an Orlando or a New
Orleans or a Denver again? Are the metrics there so it will not
happen? I know this would not have happened and did not happen
in any of the projects that I have been involved in, numerous
projects, that I was keeping my eye on the project, too.
Ms. Halliday. Dr. Roe, we believe that the metrics are in
place but I think there are other factors that really cone into
play. And one is the reliance that both the Army Corps of
Engineers and VA will have to contract to get these facilities
stood up. So I would like to give Maureen Regan an opportunity
here to speak on her review of Orlando. Because many of the
problems that came about in Orlando were a direct result of the
performance of the primary contractor.
Mr. Roe. Okay.
Ms. Regan. Thank you. I will first say we have not
published anything on Orlando. We did get complaints from a lot
of subcontractors who said they were not paid and I think some
of the names actually came from the Committee for people for me
to call. And I talked to all of them. And we do want to look at
that issue, that a lot of them did not get paid. They did go
under. I think I heard 15 companies went bankrupt because they
were not paid. We had difficulty finding some of them.
But one of the issues I learned was a lot of them were not
direct subcontractors to Brasfield and Gorrie. Some were subs
to subs to subs. When I talked, in at least one case, with one
particular type of service, I did talk to the actual sub. And
he said he got paid everything, and he paid his subs. We do
intend to go in and look at it. But we had determined that the
first thing was to get the building built. And if we are in
there, asking for records, interviewing people, and taking up
people's time, that is going to delay the project even more.
Because at this point we were not even sure in talking to the
subs whether or not the change orders had been submitted to VA
for payment.
So a lot of issues come up in these projects that you do
not exactly anticipate at the time. And one of them in this
case was a lot of the subs walked off the job because they were
not getting paid. Then you have to get new subs to come in. We
did review two change orders in Orlando that Brasfield and
Gorrie had submitted. And I can say we had a difficult time
getting the review of those change orders done because we could
not get the records we needed from Brasfield and Gorrie and one
of their large subs to do the review. And that is the reviews
we found about a 30 percent overcharge.
Mr. Roe. I think that is perfectly acceptable behavior. If
I am a sub and the only thing I have got to sell are my skills
and time that I walk off the job if nobody is paying me for it.
I mean, I think that is perfectly reasonable for them to do
that. Because they have lost that time they cannot get back,
and their equipment and all that they have used, they have
lost.
So I, hopefully this is an isolated situation. And what I
would like to see going forward is a white paper, maybe from
the IG, a one-pager so that we on the Committee here can have
an idea going forward, and this, maybe the VA can help us out
with this, going forward what those metrics are. And I know we
hired a project manager for any project that the City did, that
we hired as our person on the site to be there everyday looking
at that project to be sure it was going along as advertised.
And there are penalties in there, in most contracts, that if
you get done early, you get a reward. If you are late, there
are penalties. And that is a incentive to get the project done
on time and on schedule. But you cannot completely come in,
like he said, and pull a toilet out of the wall, and say that
you have plumbed it into the floor, and now you want it in the
wall for whatever reason. I cannot imagine why that was
important. But anyway, it was, and here is this poor guy who is
not getting paid.
So I want to ask if Mr. O'Rourke has any closing comments?
Mr. O'Rourke. Mr. Chair, just briefly I want to thank the
Office of the OIG, the Corps, and the VA for being here. And I
think that it is the nature of these hearings that we are going
to focus on where we have problems. And I know that there are
so many things that you do well. And I would be remiss if I did
not thank you on behalf of the veterans that I serve for the
facilities that we do have that are working, and the projects
that you have executed successfully.
But the urgency from me, and I think you are hearing it
from many other members, is that we have the projects that we
focused on today that are taking far too long, almost ten years
in the case of Denver. And you think about those veterans whose
care we are deferring, for example in El Paso, number 79 on the
list. If we cannot execute these, what does it mean for their
hopes or their, you know, do not know how long it is going to
take us, their children's or their grandchildren's hopes that
we are going to have adequate access in VA care in El Paso.
So I look forward to working with you constructively in a
partnership to find out how we do a better job in exercising
oversight and managing the resources and are authorized and
appropriated. And then also holding you accountable and working
collaboratively, and in some cases creatively, to find other
ways, maybe better ways, to do these projects in the future.
So I thank you for your participation, I thank the chair
for yielding, and I will yield back.
Mr. Roe. I thank the gentleman for yielding. And I want to
thank you all, both on the oversight and investigation part and
on the VA part, for trying to get these facilities done, and
the Corps of Engineers for getting these done in a timely
fashion so we can take care of veterans. That is our purpose,
our only reason for being here. Thank you all the Committee, I
appreciate your time, and this hearing with no further comment
is adjourned.
[Whereupon, at 11:02 a.m., the Committee was adjourned.]
A P P E N D I X
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Prepared Statement of Hon. Jeff Miller, Chairman
Good morning, and welcome to today's Full Committee hearing,
``Building VA's Future: Confronting Persistent Challenges in VA Major
Construction and Lease Programs.''
Today's hearing is the fifth oversight hearing this Committee has
conducted in the last three years concerning serious issues with the
Department of Veterans Affairs' (VA's) real property capital asset
program - particularly the many failures and deficiencies that have
plagued VA's major medical facility construction and leasing
initiatives and led to significant cost increases and substantial
delays in many important medical center projects.
Though the Department claims to be aware of the many problems
plaguing its construction and capital asset programs and taking initial
steps to correct many of the issues we have identified, cause for
serious concern remains.
In a report released earlier this year on VA construction, the
Government Accountability Office (GAO) found that, though VA has made
some improvements, VA's major medical facility projects continue to
experience cost increases and schedule delays similar to those that GAO
had identified in 2009.
Similarly alarming, the VA Inspector General is going to testify
this morning that they have seen a persistent ``pattern of ineffective
VA capital planning and asset management'' over the past several years.
As I have said before, today's plans and projects are tomorrow's
hospitals and clinics, and - whether it is by building the new,
renovating the old, or leasing the existing - our allegiance must
always be to the veterans who rely on VA to provide the benefits and
services they need to lead healthy, productive lives.
We cannot continue to keep them waiting.
Thank you.
Prepared Statement of Hon. Michael H. Michaud
Thank you, Mr. Chairman, for holding this hearing today.
Providing veterans timely, quality health care in a safe
environment is a focus of this Committee and one I stand firmly behind.
We have authorized and appropriated billions of dollars for the
Department of Veterans Affairs construction programs over the past
decade. It is important that we provide vigilant oversight on the
resulting process of building and leasing of VA facilities.
Just this year, we have held three hearings on the VA's
construction program and processes. In May, a Subcommittee on Oversight
and Investigations hearing examined the VA's construction policy. In
June, the Full Committee examined VA's capital investment options. And
today, we are examining the persistent challenges VA faces in their
Major Medical Facility and Lease Programs.
As you know, there have been multiple reviews conducted by the
Office of Inspector General, the Government Accountability Office, and
this Committee, on VA's ability to manage a construction portfolio
efficiently and effectively.
Unfortunately, most of those reviews have repeatedly pointed out
serious issues of mismanagement, lack of oversight, overages on
expenditures, delays in construction, and multiple instances of
insufficient guidance.
In efforts to manage their construction programs, VA deployed the
Capital Asset Realignment for Enhanced Services, or CARES process, more
than a decade ago. Most recently, the Strategic Capital Investment
Plan, or SCIP, was introduced to formulate VA's construction budget for
Fiscal Year 2012. SCIP is a 10 year plan that integrates all capital
investment planning across the three administrations.
It seems, however, that even though VA has a plan, they struggle to
execute it.
For example, in October of this year, the Inspector General
released a report on VA's management of the seven Health Care Center
Leases that were authorized in P.L. 111-82.
We were told by VA that these Health Centers would be up and
running by 2012. To date, according to the VA IG report, only three of
the seven leases have been awarded and none are operational.
Additionally, I understand that cost overruns and delays have plagued
the process.
Mr. Chairman, I am very concerned. First, I am concerned that the
Committee is not getting accurate information from the onset, and so I
have to question for what are we authorizing these funds?
Secondly, the veteran community is constantly being let down when a
promised facility is not delivered on time.
I consider it a major disservice to the veterans who rely on VA to
provide needed and very important health care services.
I hope we hear today from VA what they are going to do to address
past problems and delays, how they are going to get things back on
track, and what can be done to avoid similar problems in the future.
Thank you Mr. Chairman and I yield back my time.
Prepared Statement of Hon. Corrine Brown
Thank you, Mr. Chairman and Mr. Ranking Member, for calling this
hearing today.
When the process started to authorize a new Medical Center for the
region, Central Florida had been waiting for a hospital for over 25
years. I first started representing this area in Congress 21 years ago.
I brought Jesse Brown, then Secretary for Veterans Affairs to the area
and to show him how important this is. This facility will increase the
treatment options for Central Florida veterans.
I did not think it would take so long to finish the facility. I
have looked at the fact sheets the VA has sent out for the last three
months and the facility has been stuck at 84% percent complete. July-
84%; August-84%; September 84%.
I don't understand what could be taking so long that there has been
no advancement in the completion of the facility for the last 3 months.
I have my staff drive by there every so often and it appears there
is no work going on.
The veterans of the Central Florida cannot wait any longer for a
full Medical Center to be built. Once again we are having a Full
Committee hearing on construction. I am surprised, to say the least,
that after we had the first hearing in March of last year, we are
having yet another hearing on the same facility.
This is not about politics anymore. We must build this facility for
the veterans of Central Florida.
Prepared Statement of Linda A. Halliday
Mr. Chairman and Members of the Committee, thank you for the
opportunity to testify on the results of the Office of Inspector
General's (OIG) work related to the Department of Veterans Affairs (VA)
construction and lease programs. Our focus will be on a recently
released OIG report on health care centers, including issues related to
a health care center in Butler, Pennsylvania, and a facility in
Cleveland, Ohio, as well as OIG reports over the past 2 years related
to the Veterans Health Administration's (VHA) management of its Minor
Construction Program, VA's execution and utilization of capital assets
in Marion County, Florida, and information regarding the new VA medical
centers (VAMCs) under construction in New Orleans, Louisiana, and
Orlando, Florida. I am accompanied today by Ms. Maureen Regan,
Counselor to the Inspector General.
BACKGROUND
VA uses a Strategic Capital Investment Plan (SCIP) to prioritize
its major construction, minor construction, non-recurring maintenance,
and lease projects. SCIP's objective is to produce an annual
consolidated list of capital projects that significantly reduce
identified performance gaps in veterans' access, workload and
utilization, safety, space, and facility conditions over a 10-year
period. SCIP is used to ensure that VA's strategic performance planning
efforts address the needs of VA's three Administrations, VHA, the
Veterans Benefits Administration, and the National Cemetery
Administration.
The OIG has completed reviews that disclosed a pattern of
ineffective VA capital planning and asset management. Our reporting has
shown that VA has not effectively managed the capital asset planning
process to ensure that minor construction projects are not combined or
otherwise significantly changed after approval, or that leased
facilities are of the right size and in the right location to ensure
they are fully utilized. In addition, VA has not effectively executed
authorized construction and lease projects to ensure they are completed
timely and within budget. Until these issues are addressed, VA will not
have assurance that it is timely and cost-effectively acquiring health
care facilities to serve the needs of its veteran population.
HEALTH CARE CENTER LEASE MANAGEMENT
In October 2013, we reported that VA's management of timeliness and
costs in the Health Care Center (HCC) lease procurement process was
ineffective. \1\ As of August 2013, only four of seven leases had been
awarded and no HCCs had been built, despite VA's target completion date
of June 2012. Congress authorized approximately $150 million for the
HCC facility activations.
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\1\ Review of Management of Health Care Center Leases, October 22,
2013.
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We found the following deficiencies:
Lack of Guidance - VA did not meet the aggressive
milestones it set for HCC activation and occupancy due to a lack of
specific guidance for this new initiative. The existing VA handbook did
not cover lease projects with such high annual costs as those of the
new HCCs.
Inaccurate Milestones - VA used identical milestones for
completing the seven HCCs even though the projects varied in size and
budget. VA planned 32 total months for completing the seven HCCs, with
annual lease costs ranging from $3.8 million to $16.2 million. Also, VA
used a two-step process that separated land acquisition and contractor
selection into different phases and should have lengthened each overall
lease acquisition by 8 to 9 months.
Lack of Documentation - Documentation was unavailable to
support whether VA adequately assessed the feasibility of accomplishing
the HCCs in the aggressive 32-month time frame promised. Given the lack
of progress to date and the inadequate planning documentation, it will
take far more time than Congress anticipated for VA to award and
activate the seven leases.
Lack of Central Tracking - VA could not provide accurate
information on HCC spending into April 2013. According to VA officials,
central cost tracking was not in place to ensure transparency and
accurate reporting on all HCC expenditures. During our audit work, VA
officials provided various estimates, ranging from about $4.6 million
to $5.1 million, on the costs to prepare for HCC lease awards, but we
could not gain reasonable assurance that this figure represents a
complete accounting of HCC costs. \2\ Until effective central cost
tracking is instituted, expenditures to acquire the HCC leases will
remain unclear.
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\2\ These costs include architecture-engineer services, due
diligence services such as environmental studies and title
verification, and land options contracts.
We made recommendations to the Principal Executive Director, Office
of Acquisition, Logistics, and Construction (OALC), and the Under
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Secretary for Health to:
Establish adequate guidance for management of the
procurement process of large-scale build-to-lease facilities.
Provide realistic and justifiable timelines for HCC
completion.
Ensure HCC project analyses and key decisions are
supported and documented.
Establish central cost tracking to ensure transparency
and accurate reporting on HCC expenditures.
They both concurred with our recommendations. We consider the
corrective action plans submitted to be acceptable and we will follow
up on their implementation.
Butler, Pennsylvania Health Care Center Lease
In response to an anonymous complaint received in late March 2013,
the OIG's Office of Contract Review conducted a review of the proposal
submitted by Westar Development Company, LLC, for the contract of the
lease to develop an HCC in Butler, Pennsylvania. The complainant
alleged that Westar was actually conducting business for entities
created and controlled by Mr. Michael Forlani who was suspended from
doing business with VA in December 2011. In 2012, he pled guilty to
bribery and racketeering charges, and on April 1, 2013, was sentenced
to 97 months in Federal prison.
On May 31, 2012, VA awarded a 20-year lease to Westar for the
Butler, PA, HCC. The total value of the lease was $151 million. Mr.
Robert J. Berryhill submitted the proposal as the Senior Vice President
of Westar and listed Mr. Samuel E. Calabrese as the President of
Westar. On April 3, 2013, a criminal information was filed in the U.S.
District Court for the Northern District of Ohio against Mr. Berryhill
charging him with five counts of mail fraud, two counts of wire fraud,
one count of false impersonation of a Federal officer, and one count of
aggravated identity theft. On April 23, 2013, he pleaded guilty and on
July 30, 2013, Mr. Berryhill was sentenced to more than 6 years in
prison.
Our review substantiated the initial allegation. The land proposed
by Westar had been purchased by or through individuals and entities
affiliated with Mr. Forlani. In addition, Mr. Calabrese was currently
employed by one of the suspended entities and provided consulting
services to another. We also determined that the proposal submitted by
Westar was replete with false and misleading representations that were
relied on by VA when evaluating the proposal and making the award.
These false representations resulted in points being awarded to Westar
during the technical evaluation. We found:
Westar was not a veteran-owned business as claimed.
Westar grossly misrepresented its past performance and
experience and that of its team members.
Westar did not have an agreement with the general
contractor identified in the proposal.
Westar identified team members with whom there was no
formal arrangement.
On June 13, 2013, we issued a Management Advisory Memorandum to
OALC. In response, VA issued a stop work order and on August 9, 2013,
terminated the contract for cause. In addition, VA has proposed the
debarment of Westar, Mr. Berryhill, Mr. Calabrese, VA Butler Partners,
LLC, and VA Butler Partners Holdings, LLC.
At the request of OALC's Executive Director, we have continued our
review to determine who, if anyone, should be held accountable within
VA. We expect to issue the results of that review in December 2013.
Brecksville, Ohio, Enhanced Use Lease
In December 2011, the OIG's Office of Contract Review initiated a
review of the Enhanced Use Lease (EUL) between VA's Office of Asset
Management and Veterans Development, LLC (VetDev). The EUL was entered
into as part of VA's consolidation of the Cleveland, Ohio, campuses
located in Brecksville and the Wade Park area of Cleveland, Ohio. VA's
EUL authority allows VA to lease underutilized property to private
developers. Under the EUL with VetDev, VA leased the Brecksville campus
to VetDev for a one-time cash payment of $2 million and in-kind
consideration of not less than $4 million. The ``in-kind''
consideration was space provided at no cost to VA in an administrative
building and a parking garage that VetDev constructed adjacent to the
Wade Park campus and leased back to VA. The package also included
payment to VetDev for care provided to veterans in a domiciliary that
VetDev built adjacent to the Wade Park campus. Payments for the space
and domiciliary care are paid under service agreements entered into as
part of the EUL.
We determined that the decision to completely vacate and close the
Brecksville campus and consolidate to the Wade Park campus was not in
VA's best interest because:
There was insufficient space at Wade Park to transfer all
services provided at Brecksville which resulted in increased costs to
VA to lease off-campus space.
The estimated reported cost savings associated with the
consolidation were not supported.
VA is overpaying VetDev for space and services at Wade
Park.
There is an increase in security risk to VA employees and
patients at the leased space at Wade Park.
We concluded that the service agreements associated with the EUL
were used to circumvent the leasing procurement process. The use of a
service agreement for the domiciliary was of particular concern because
it did not include any ``in-kind'' consideration for the EUL and
included patient care services provided by a subcontractor, Volunteers
of America, which was reimbursed on a per patient per day basis, not as
a lease for space. Contracting out domiciliary services is inconsistent
with VA policy.
As previously noted, the criminal charges against Mr. Forlani
included bribes made to obtain an interest in the property adjacent to
the Wade Park campus on which the two buildings and garage were
constructed as well as preferential tax breaks. In addition,
interactions between Mr. Forlani and the Director of the Cleveland
Health Care System at the time, Mr. William Montague, resulted in
criminal charges filed against Mr. Montague in June of this year.
VHA'S MINOR CONSTRUCTION PROGRAM
In response to a request from the Committee on Appropriations, U.S.
House of Representatives, we reviewed the organizational structure,
procedures, and financial controls VHA used to manage its minor
construction projects. \3\ We reported that VHA's Minor Construction
Program lacked adequate internal controls for oversight of individual
projects as a means of ensuring proper use of minor construction funds.
We found that VHA did not ensure that medical facility funding was
consistently used to supplement minor construction projects. In
addition, VHA did not ensure adequate monitoring of minor construction
project schedules and expenditures.
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\3\ Review of VHA's Minor Construction Program, December 17, 2012.
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Proper Use of Minor Construction Funding
VHA integrated design and construction work for 7 of 30 minor
construction projects into 3 combined projects that exceeded the $10
million minor construction spending limit. As a result, we reported
that VHA violated the Anti-Deficiency Act in five of seven projects. We
also found that 3 of 30 projects were inappropriately supplemented with
medical facility funds and project monitoring was ineffective. A third
combined project was in the process of being awarded; however, when the
OIG notified VHA of a potential Anti-Deficiency Act violation, VHA
suspended these projects during the award process.
This improper use of minor construction funding occurred because
Office of Capital Asset Management and Support (OCAMS) and Veterans
Integrated Service Network (VISN) officials did not effectively oversee
project execution and OCAMS fully funded individual projects prior to
medical facilities developing contract solicitations for design and
construction. Once funding was provided to medical facilities, OCAMS
and VISNs were dependent on the facilities to self-report changes in
project scope during the contract solicitation process. This resulted
in OCAMS and VISNs not being fully aware of project scope changes in
the contract solicitation process for design and construction.
According to an OCAMS official, VHA was strongly encouraged to
outsource design and construction contract management to the U.S. Army
Corps of Engineers (USACE) at medical facilities where contracting
resources were scarce. USACE managed 13 of the 30 projects we reviewed.
Typically, after OCAMS officials approved minor construction projects,
USACE managed project execution. USACE was responsible for integrating
the design and construction of five of the seven minor construction
projects we identified as being improperly combined into two major
construction projects.
According to VHA officials, OCAMS maintained no control over
project scope once funding was allotted and did not even review the
construction contract solicitation prepared by the USACE's contracting
officer. Further, at one VA medical facility, project engineers
responsible for the facility's minor construction projects did not have
copies of the USACE contracts signed on the medical facility's behalf.
This condition heightened construction risks and limited oversight and
control of construction costs and change orders.
Medical Facility Funding and Minor Construction Projects
Our report also disclosed that 3 of the 30 minor construction
projects we reviewed were supplemented with medical facility funding.
These three projects received $24.4 million in minor construction and
$14.6 million from medical facility funds. When adding funding from
both appropriations together, two of the three projects exceeded the
$10 million spending limit for minor construction projects.
VA medical facilities did not follow non-recurring maintenance
(NRM) policy limiting the use of medical facility funding to supplement
minor construction projects and limiting renovation projects to
$500,000. OCAMS provided guidance in September 2008 and again in
September 2010 to VA medical facilities on the allowable uses of minor
construction and NRM funds based on draft Handbooks that had not been
officially issued. These draft Handbooks defined the limits of minor
construction projects and expanded NRM to include projects that
renovated and modernized existing facility square footage between
$500,000 and $10 million.
Monitoring of Minor Construction Projects
OCAMS and VISN officials did not routinely monitor minor
construction project schedules and financial performance. Rather, OCAMS
assigned responsibility to VA medical facility project engineers to
monitor the projects and notify OCAMS if significant changes occurred
or additional project funding was required. The draft minor
construction program Handbook required OCAMS to create Minor Program
Review Teams to perform quarterly reviews of project schedules and
financial performance at selected sites. However, we found no evidence
that the Minor Program Review Teams were formed and instead that
internal program reviews were performed. As a result, VHA lacked the
ability to effectively identify projects with cost overruns,
significant schedule slippages, or significant construction scope
changes in a timely manner and take corrective actions when necessary.
Recommendations
To address these issues, we recommended the Under Secretary for
Health publish Minor Construction Program policy, develop procedures to
ensure projects are executed within their approved scope, and determine
whether other combined minor construction projects violated the Anti-
Deficiency Act. VHA also needed to implement a mechanism to ensure
medical facility funding is not used to supplement minor construction
projects, ensure program reviews are performed, and strengthen project
tracking reports. The Under Secretary for Health concurred with our
findings and recommendations, and provided action plans to address our
recommendations. In November 2012, VHA finalized and published policy
for the Minor Construction Program. VHA has new procedures requiring
that design documents be compared to approved project scopes prior to
funding transactions being performed. As of today, one of the six
recommendations remains open.
The Villages Outpatient Clinic, Marion County, Florida
In August 2012, we reviewed allegations received through the OIG
Hotline that The Villages Outpatient Clinic (OPC) was underutilized
during the first 18 months the facility was open. \4\ The 53,000-
square-foot, multi-specialty facility opened in October 2010 and was
expected to provide up to 120,000 primary care, mental health, and
specialty care visits per year. Congress approved funding of about $1.5
million per year for the next 20 years.
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\4\ Review of Alleged Mismanagement of The Villages Outpatient
Clinic, Marion County, Florida, August 7, 2012.
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Our review disclosed that The Villages OPC was not used to provide
primary care, mental health, and specialty care as planned. In
particular, The Villages OPC did not use the surgical suite between the
time the facility opened in October 2010 and August 2012. The surgical
suite consisted of four fully equipped operating rooms and three
gastrointestinal procedure rooms. The surgical suite and procedure
rooms shared a common, eight-bed surgical recovery area, which was also
fully equipped but hardly ever used. We determined The Villages OPC was
likely to achieve only 41 percent of primary care, 34 percent of mental
health care, and 24 percent of specialty care visits planned for FY
2012.
Underutilization of The Villages OPC occurred because of a lack of
oversight over the planning and operations of the facility.
Specifically, VISN 8 did not adequately monitor it on an ongoing basis
as required by VHA policy to determine whether the facility was meeting
the business purposes, goals, and objectives presented in the project
proposal. North Florida/South Georgia Veterans Health System (the
Health System) officials did not effectively determine the overall
demand for medical care or the types of specialty services needed most
in the geographical area where The Villages OPC was located. Health
System officials also could not document that the demand justified the
size of the OPC, or that the specific health care needs of local
veterans justified each of the 13 specialty services planned in the
proposal.
As a result, the Health System spent almost $2 million
inefficiently on facility and equipment costs as well as on staff
salaries and benefits. We conservatively estimated that between October
2010 and April 2012, the Health System incurred about $1 million in
costs for equipment, approximately $668,000 in salaries and benefits
for three surgeons, and about $263,000 for facility space that was not
fully utilized. These funds represented a lost opportunity to provide
veterans with additional access to medical care in an underserved
geographic area.
We recommended that the VA Sunshine Healthcare Network Director
conduct a thorough utilization review of The Villages Outpatient Clinic
to ensure facility resources efficiently target the medical needs of
the most underserved veterans. Further, the Network Director should
determine whether to relocate the unused nuclear medicine machine to
another VA medical facility. The VA Sunshine Healthcare Network
Director agreed with our finding and recommendations. The Villages OPC
began phasing in use of the operating room suite in June 2012. In
addition, the North Florida/South Georgia Veterans Health System has
finalized plans to move the Single Photon Emission Computed Tomography
machine to Gainesville, Florida, to improve utilization. We closed the
recommendations in our report in August 2013.
CONSTRUCTION OF THE NEW ORLEANS VA MEDICAL CENTER
According to VA officials, this project is the largest single
construction project currently underway in the Department. In December
2011, the then Chairman of the Subcommittee on Oversight and
Investigations, Committee on Veterans' Affairs, U.S. House of
Representatives, requested that the OIG provide information related to
construction of the New Orleans VAMC to include reviewing the financing
and budgeting of construction for the New Orleans VAMC and to examine
plans to remove fuel tanks buried at the construction site.
Our review of VA's expenditures did not identify substantive issues
with VA's stewardship of the project. At the time of our review
(February 2012), VA had obligated $359 million (36 percent) and
expended $105 million (11 percent) of the $995 million appropriated for
the New Orleans VAMC. This was due to delays in the City of New Orleans
delivering the site to VA and a need for additional VA remediation of
hazardous substances that was identified after site transfer in April
2011. \5\ VA has preliminary plans to mitigate delays by adjusting
construction activities and if necessary compensating contractors
negatively impacted by delays outside of their control in the
construction phase of the project.
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\5\ Delays totaled approximately 26 months. VA officials attributed
17 months due to the delay in transferring the site and 9 months for
the unanticipated need for additional remediation of hazardous
substances identified after site transfer.
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CONSTRUCTION OF THE ORLANDO VA MEDICAL CENTER
At the request of VA acquisition officials and pursuant to VA
Acquisition Regulations, the OIG's Office of Contract Review completed
reviews of two construction change orders related to the Orlando VAMC
construction project. The change orders were from contractors and
subcontractors seeking compensation from VA for $9.6 million. Our
reviews questioned $2.9 million (30 percent).
For the first change order valued at $4.46 million, we questioned
$1.8 million due to differences between proposed versus actual costs,
lack of supporting documentation for proposed costs, and the inclusion
of costs for specific individuals whose efforts were unrelated to the
scope of the change order. The second change order was valued at $5.15
million and we questioned $1.1 million related to an overstatement of
the proposed costs, the inclusion of costs unrelated to the change
order, and lack of supporting documentation for the proposed costs. We
reported these questioned costs to the VA contracting officer for use
in negotiating payment with the contractors and subcontractors.
CONCLUSION
Without effective capital asset management, VA officials have not
been able to ensure authorized leased projects are completed timely and
within budget, minor construction projects are not combined or
otherwise significantly changed after approval, leased facilities are
the right size and the right location to ensure they are fully utilized
once completed, or authorized lease projects are completed timely and
within budget. Until these issues are addressed, VA will continue to
lack assurance that it is timely and cost-effectively acquiring health
care facilities to serve the needs of veterans.
Mr. Chairman, and Members of the Committee, this concludes my
statement today. We will be pleased to answer any questions you may
have.
Prepared Statement of Lloyd C. Caldwell
Mr. Chairman and Members of the Committee, I am Lloyd Caldwell,
Director of Military Programs for the U.S. Army Corps of Engineers
(Corps). I provide leadership for execution of the Corps' engineering
and construction programs in support of the Department of Defense
(DOD), other agencies of the Federal Government in the United States
and around the globe. Lieutenant General Thomas Bostick, Chief of
Engineers, leads the Corps. Thank you for the opportunity to testify
here today.
The Corps fully recognizes the importance of the service of members
of the armed forces, the support of their families, and the service of
our veterans, in sustaining the strength of our Nation. We understand
the vital link between the goals of their service and missions and the
technical capabilities we provide, from consultation to delivery of
infrastructure. Members of our team have had the opportunity these past
several months to engage some of your staff members as they have
conducted fact-finding on the Corps' construction capabilities and
experience with delivering medical facilities. Today we have been asked
by the committee to address our approach to delivering construction;
more specifically construction of medical facilities.
DOD's construction program utilizes designated construction agents,
of which the Corps is one; who procure and execute design and
construction of projects to deliver the Department's infrastructure
requirements authorized by law. All construction is acquired by
contracting with the private sector. The Corps is also known for the
Civil Works mission it provides for the Nation, and the Corps'
capabilities are perhaps uniquely developed to fulfill both military
and civil engineering responsibilities. Interagency collaboration is an
important element of the Corps' work, and the Corps provides
interagency support as a part of its service to the Nation.
My testimony will address the Corps' project delivery process, with
specific attention to medical facility construction and the interagency
relationship with the Department of Veterans Affairs (VA). First, I
will provide an overview of the principles and processes our teams use
as they plan and execute the projects that we undertake. That will be
followed by a discussion of the relationship the Corps has with the VA
and how we support their mission through the work we do on their behalf
across the Nation.
CONSTRUCTION PROCESS
The Corps has a long history of executing some of the Nation's most
challenging construction projects and programs, whether through our
military missions or Civil Works responsibilities. The past 12 years
have been especially demanding as we have simultaneously provided
support to operations in Iraq, Afghanistan and to DOD as it transforms
and realigns. During this period, the Corps completed 2,165 military
construction projects with a value of $50.3 billion. The Corps has
delivered, or is in the process of designing and constructing, a full
range of medical facilities for DOD, to include very large hospitals
valued near a billion dollars, and capable of delivering world-class
medical services. A summary of some of the recently completed and
ongoing Corps work of significant medical facilities follows.
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Location Description Delivery Authorization
----------------------------------------------------------------------------------------------------------------
Fort Belvoir, VA New Hospital completed 2011 $1.03 billion
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Fort Sam Houston, TX Hospital Addition completed 2011 $802 million
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Fort Riley, KS New Hospital under construction 2014* $404 million*
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Fort Benning, GA New Hospital under construction 2014* $350 million*
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Fort Bliss, TX New Hospital under construction 2016* $966 million*
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Rhine Ordnance Barracks, Germany New Hospital under construction 2021* $990 million*
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* Planned or scheduled as of November 1, 2013
The Corps has long sought to lead, adapt, and apply important
lessons of design and construction in conjunction with our industry
partners to obtain economical and quality facilities meeting the
requirements of DOD in a disciplined manner. For example, we applied
concepts of Evidence Based Design with the DOD Office of Health Affairs
to guide development of world-class medical facilities, and with the
DOD Education Activity (DODEA) we developed design concepts for 21st
Century school facilities.
Regardless of the nature of the facility, the Corps has developed
and implemented processes and capabilities for design and construction,
which have been refined over many years. Our project management
business process brings together the range of diverse professionals and
activities required of a successful project, which includes our design,
construction, acquisition, and project management professionals.
Success depends upon early involvement to understand the overall
project objectives and to plan the approach to execute the project from
design through construction. We think of four fundamental elements to
deliver successful projects:
1. Learning what is needed;
2. Planning the work;
3. Executing the procurement; and
4. Managing the execution.
Each of these elements represents unique skills, involving multi-
disciplined teams who account for project scope, delivery schedule, and
ultimate cost as team members work collaboratively with one another.
These basics must be managed concurrently, in a continuous cycle that
occurs throughout the life of a project.
The responsibility for programming and budgeting for construction
projects rests with the service or agency requiring the facility.
However, the ultimate success of a project depends upon early
development of the scope and acquisition plans of action, including
validation of the scope and cost estimates. Learning about a project
requires early involvement by the Corps with the project-``Using
Agency'' to understand and assist with development of their
requirements. We have found the sooner our professionals are involved,
the greater our ability to deliver a successful project and minimize
cost or time growth.
Planning work begins as requirements are being developed. It
engages all stakeholders and involves more than facility design. We
also define and align requirements that may compete for cost, scope, or
schedule objectives. Plans for acquisition, work phasing, and project
delivery are agreed upon early, and before construction. We will
determine the project acquisition processes, which will influence the
design process and development of the solicitation. For medical
facilities, the medical equipment requirements may be extensive, so
decisions are made among the team for the manner of acquisition of
medical equipment.
Execution is a team effort from design through construction to
include clinicians and medical service personnel of the Using Agency
for medical facilities. During construction, we partner with the prime
contractor and the government management team. Frequent, periodic
meetings ensure open lines of communication to enable clear
understanding of what all parties need throughout the project's life.
A governance approach that involves oversight from the job site to
Corps leadership ensures early recognition, leadership awareness, and
decision-maker involvement in resolving problems. A series of
structured control processes, implemented throughout the organization,
are designed to identify and evaluate issues with our partners as they
arise and minimize the time it takes to address and resolve them.
Training is also a vital component in maintaining professional
standards and keeping up to date on current practices. We maintain
educational courses and require or encourage professional credentialing
in the processes and disciplines required for our mission. We provide
specialized technical training across a broad range of subjects,
providing continuous learning, essential to maintain the highest levels
of expertise in engineering and construction throughout the Corps. We
also draw heavily from the Defense Acquisition University, its
certification and continuing educations programs to maintain
contracting competencies.
Budget and schedule risk is inherent in executing any construction
projects, and medical facilities are among the most complex facilities
we construct and deliver on behalf of DOD. They require close, frequent
coordination with a large number of stakeholders, often with divergent
interests and requirements. They require exacting technical design and
construction standards, both of which must be carefully managed.
Moreover, they are subject to changing requirements due to evolving
medical technology - even during construction. We manage the challenges
posed by those risks, and we seek to minimize the cost and time growth
risk which complex medical facility construction may face.
To assure the standards and criteria of the Defense Health Agency,
and to assist in their planning, we established specialized medical
infrastructure capabilities and employ them across the enterprise to
assist us in delivering medical projects. Our Medical Center of
Expertise at Fort Belvoir, Virginia, applies current specialized
knowledge to address demanding health care facility requirements. It
provides a full range of medical facility design, construction,
outfitting, commissioning, and medical maintenance capabilities that
support the Defense Health Agency. The Center's staff includes subject
matter experts in medical facility design and construction, serve as
technical consultants, and draw on architect-engineer firms experienced
in medical facility design. They participate in every phase of project
delivery, from requirements development to project close out, and
ensure we meet the full range of health care facility standards.
The Corps has broad experience across its enterprise in
construction and delivery of medical facilities. Of our forty-three
local district offices, seventeen of them (40 percent) have significant
experience in medical facility design, construction, outfitting,
repair, and maintenance. They have demonstrated the ability to deliver
this demanding work on time and on budget.
THE CORPS' RELATIONSHIP WITH THE DEPARTMENT OF VETERANS AFFAIRS
The Corps, as part of its interagency capabilities, has an
established relationship with the Department of Veterans Affairs (VA),
providing support for a broad range of facility construction and
maintenance requirements. Authority for the Corps' work with VA is
based on the Economy Act, which, coupled with an interagency agreement,
provides us with sufficient authorities to work collaboratively. During
2007, the Corps of Engineers and the VA formalized its relationship
through a Memorandum of Agreement (MOA) for the Corps to provide the VA
support in the execution of their minor construction and non-recurring
maintenance needs.
As veterans started returning home from service in recent
conflicts, and increased funds to support facilities became available,
VA leadership drew on this MOA, increasingly asking the Corps to assist
with its construction needs. Prior to fiscal year 2007, Corps execution
support to VA was at or below $2 million annually for work for the
Veterans National Cemetery Administration. In 2007, the workload grew
to $7 million and quickly began to rise as follows:
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Fiscal Year Execution Amount ($ millions)
----------------------------------------------------------------------------------------------------------------
2008 14
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2009 108
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2010 348
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2011 377
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2012 340
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2013 239
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As execution funds have grown over the years so has the
collaborative relationship between the Corps and VA. Corps Headquarters
has a good and stable relationship with the VA's Office of Construction
and Facility Maintenance. Our regional and local offices have also
developed relationships with each of the 23 Veterans Integrated Service
Network (VISN) offices around the country; in the most recent two
years, the Corps managed work at 74 different VA facilities nationwide.
Whether and how a VISN incorporates the Corps services into its
projects is at the discretion of each VISN.
One example of our efforts is the recently completed 30,000 square
foot expansion of the Grand Junction, Colorado VA Medical Clinic. We
added a third floor surgery facility to an active facility, including
operating rooms, intensive care units, and sterile processing areas.
The project demonstrated our ability to work closely and
collaboratively. Much of the work was accomplished at night, to
minimize impacts to the operations. The local VA public affairs office
provided project related information to the staff - establishing
expectations and minimizing impacts. When issues arose, VA and Corps
leaders worked through them, never allowing an impasse to divert from
their collective goal - completing a vital facility to serve our
veterans.
Our relationship is growing; we are currently working together to
assist VA develop and implement an enterprise construction governance
capability; we expect to begin this effort within two months. We've
also collaborated with the VA to provide training opportunities using a
variety of instructional modes. We expect to assist with construction
project quality management, schedule analysis and management, and
project management automated information systems familiarization - all
within the next four months.
The Corps plays a unique role in service to the Nation as a
subordinate command of the Army with expertise in both civil works and
military infrastructure; we possess unique capabilities and have a long
history of successfully solving demanding engineering challenges. We
also acknowledge the solemn duty to care for our veterans and will
continue to support those efforts with our most capable teams as we
continue to develop our support and assistance relationships with the
VA.
Mr. Chairman, this concludes my statement. Thank you for allowing
me to be here today to discuss the Corps' construction capabilities. I
would be happy to answer any questions you or other Members may have.
Prepared Statement of Mr. Glenn D. Haggstrom
Chairman Miller, Ranking Member Michaud, distinguished Members of
the Committee, we are pleased to appear here this morning to update the
Committee on the Department of Veterans Affairs' (VA) continuing
efforts to improve construction procedures and planning processes
resulting in the timely execution of major construction and leasing
projects. Joining me this morning is Ms. Stella Fiotes, Executive
Director, Office of Construction and Facilities Management.
The Department's infrastructure programs, which include major and
minor construction, non-recurring maintenance (NRM), and leasing, are
part of our ongoing mission to care for and memorialize our Nation's
Veterans. The Department is committed to meeting our responsibility to
design, build, and deliver quality facilities as tools to meet the
demand for access to health care and benefits.
VA continues to improve its real property capital asset portfolio,
providing state-of- the-art facilities that meet the needs of Veterans,
allowing for the highest standard of service. We have taken on the
challenge of updating our aging infrastructure to allow for flexibility
to meet increased workload demands; changing Veteran patient
demographics; advances in medical technology; new complex treatment
protocols and advanced procedures; patient-centered care and services
delivered closer to where Veterans live; and evolving Federal
requirements.
The focus of our testimony today is on VA's major construction and
leasing program - specifically efforts to improve program execution and
- to provide you a perspective of how we are delivering VA's important
major construction projects.
Program Execution
VA has taken several steps to improve the management and oversight
of its major construction and lease projects. In 2009, the VA Facility
Management (VAFM) transformation initiative was established to improve
planning processes; integrate construction and facility operations; and
standardize the construction process. Our accomplishments include:
1. Integrated master planning - VA has adopted an enterprise
approach to integrated master planning as our business process
standard. Consistent master planning will standardize requirements
development, which will minimize design changes.
2. Systems for project management - VA procured a collaborative
project management software system in 2012 and is completing phase one
fielding and will complete fielding in 2014. This software supports
leases, major construction, and minor construction as well as NRM.
3. Post occupancy evaluations (POE) - The POE program, piloted in
2012, is now the business process standard for the major construction
program, and will expand to the minor construction program in fiscal
year (FY) 2014. POE evaluates the completed construction to assure
closure of all gaps and deficiencies noted in the approved project
scope.
Further, VA has implemented the findings of the December 2009
Government Accountability Office's (GAO) report on ``VA Construction:
VA is Working to Improve Estimates, but Should Analyze Cost and
Schedule Risks'' and now performs risk analysis for potential cost and
schedule delays as part of the project design process. VA has also
implemented and recommended closure of all of the recommendations in
the May 2013 GAO report ``VA Construction: VA Additional Actions Needed
to Decrease Delays and Lower Cost of Major Medical-Facility Projects.''
These include: adding medical planners to the major construction
programs to support integration of medical equipment into the
construction process; consolidating change management guidance for
construction contracts into an updated, handbook for staff; hiring
additional staff attorneys to facilitate faster legal reviews of change
order documents; and hiring additional resident engineers and
contracting officers to reduce processing time for change orders.
In April 2012, as a follow on to the VA Facility Management (VAFM)
initiative, the Secretary of Veterans Affairs established the
Construction Review Council (CRC) to serve as the single point of
oversight and performance accountability for the planning, budgeting,
execution, and management of the Department's real property capital
asset program. Chaired by the Secretary, the CRC identified challenges
in four major areas, and through deliberate process improvements VA has
addressed the following:
1. Development of Requirements - VA now includes planners in the
requirements development phase of the project, resulting in full
requirements development before design commences. Design must advance
to 35 percent completion prior to requesting major construction funds.
This assures that full requirements are identified early and are
designed, estimated, and managed through the construction cycle to
yield more accurate cost estimates and scopes for VA's budget
submissions.
2. Design Quality - VA policy now requires constructability reviews
as part of every design review. These reviews identify potential design
errors and omissions prior to construction, allowing the design to be
corrected, and thereby reducing changes during construction.
3. Activation - VA has implemented an integrated approach to
quantify the full activation costs associated with each project in
order to assure the project construction program is coordinated with
the development of the information technology (IT) and medical
equipment budgets and plans. This prioritizes the funding and planning
necessary for the procurement of medical equipment and IT
infrastructure, in an effort to synchronize major equipment delivery
and installation with the construction schedule.
4. Program Management and Automation - VA has increased the
education and certification requirements of project managers and has
deployed collaborative tools for project management to ensure project
cost, scope, and schedule growth are controlled. VA has also increased
staffing for the oversight and execution of our construction project
contracts in response to the size of the current construction program.
Additionally, we will incorporate the Department's acquisition
program management framework into the project's acquisition life-cycle.
This will ensure that acquisition decision milestones identified during
the design and construction phases of the project are reviewed by the
acquisition decision authority in determining if the project is in
compliance with meeting the identified requirements, cost and scope
before moving on to the next phase.
Through the CRC and continual review through the acquisition life-
cycle, VA will continue to drive improvements in the management of VA's
real property capital programs.
Another key component of our portfolio includes the major leasing
program. VA is in the process of addressing recommendations in the
October 2013 OIG report, ``Review of Management of Health Care Center
Leases.'' OALC and VHA are working together to implement corrective
actions that will provide project managers additional guidance on
acquiring build-to-lease facilities; establishing a reasonable timeline
to award, construct and activate leases; ensuring key decisions and
supporting analysis is documented; and improving the accuracy of
expenditures associated with a project.
Major Project Update
VA bears the responsibility to manage all projects efficiently and
to be good stewards of the resources entrusted to us by Congress and
the American people.
The new Orlando medical center will include 134 inpatient beds, an
outpatient clinic, a 120-bed community living center, a 60-bed
domiciliary, parking garages, and support facilities all located on a
new site. VA expects to serve nearly 113,000 Veteran enrollees through
these facilities. The construction project is 85 percent complete.
Currently, the prime contractor is projecting a completion date of
September 2014, which is a slippage from the April 2014 date the
contractor provided to VA in response to the Show Cause letter VA
issued in January 2013. VA sent a Supplemental Agreement to the
contractor to document the April 2014 date; however, the contractor
declined to sign. While the contractor's performance does not meet our
expectations, VA continues to work with the contractor as the best way
to deliver this project to ensure a quality project is delivered to
meet the needs of Veterans and their families.
The Denver replacement hospital will include 182 inpatient beds, an
outpatient clinic, a 30-bed community living center, 30-bed spinal cord
injury center, and 4-bed blind rehabilitation unit. VA expects to serve
nearly 66,000 Veteran enrollees through these facilities. The
construction project is approximately 30 percent complete. VA is now in
litigation with the contractor regarding the integrated design and
construction contract. Accordingly, I ask the Chairman's and the
Committees' understanding that VA will not be able to respond to the
matters at issue in the litigation as it may compromise the
governments' legal position. However, the construction is ongoing, and
VA continues to work with the contractor.
The New Orleans replacement hospital will include 200 inpatient
beds, an outpatient clinic, and research, parking, and support
facilities. VA expects to serve nearly 72,000 Veteran enrollees through
these facilities. The construction project is approximately 34 percent
complete. We are working closely with the contractor to arrive at a
firm-fixed price for the construction.
VA will continue to apply lessons learned from our current medical
center projects toward future construction. The next two proposed
medical center replacement projects are located in Louisville,
Kentucky, and Omaha, Nebraska where both projects are in the early
stages of design.
The Louisville project is planned to include a new 108 bed medical
center, a Veterans Benefits Administration Regional Office, structured
parking, and associated campus infrastructure improvements. Schematic
design solutions are being developed, concurrent with National
Environmental Protection Act (NEPA) documentation on the 34 acre
Brownsboro Road site in Louisville.
The Omaha project is scoped to replace most of the existing campus,
including a new surgical suite, intensive care unit, bed tower,
diagnostic and administrative services, energy center and parking
garages. This project is further in development, having completed all
required NEPA documentation, and has entered into the Design
Development phase.
Conclusion
In FY 2012 and FY 2013, VA delivered over $1.4 billion in
facilities and continues work on 55 major construction projects valued
at nearly $13 billion to provide the much needed facilities for our
Veterans and their families. VA has a strong history of delivering
facilities to accomplish its mission to serve Veterans. To help ensure
previous challenges are not repeated and to lead to improvements in the
management and execution of our capital program as we move forward we
will focus on:
ensuring well defined requirements and acquisition
strategies that meet the project needs;
assigning additional staff to assure timely project and
contract administration;
partnering sessions that include VA, the construction,
and design contractors;
early involvement of the medical equipment planning and
procurement teams;
applying the acquisition program management framework to
our projects; and
engaging in executive level on-site project reviews.
We continually seek innovative ways to further improve our ability
to design and construct state-of-the-art facilities for Veterans and
their families and we regularly engage in forums composed of both the
private and public sectors that discuss best practices and challenges
in today's construction industry.
As we have done this past year we will continue to meet with
Congressional delegations to discuss their projects, brief the House
and Senate Veterans' Affairs Staff to keep them apprised of the major
construction program and provide regular updates to the Congressional
Committees to ensure they are fully informed on the progress of these
medical centers. Thank you for the opportunity to testify before the
committee today. We look forward to answering any questions the
Committee has regarding these issues.
Statements For The Record
VETERANS OF FOREIGN WARS OF THE UNITED STATES
MR. CHAIRMAN AND MEMBERS OF THE COMMITTEE:
On behalf of the men and women of the Veterans of Foreign Wars of
the United States (VFW) and our Auxiliaries, thank you for the
opportunity to submit our views regarding the Department of Veterans
Affairs (VA) major construction and capital leasing projects.
The vastness of VA's capital infrastructure is rarely fully
visualized or understood. VA currently manages and maintains more than
5,600 buildings and almost 34,000 acres of land. Although VA has
decreased the number of critical infrastructure gaps, there remain more
than 3,900 gaps that will cost between $54 and $66 billion to close,
including $10 billion in activation costs. \1\
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\1\ Department of Veterans Affairs, FY 2013 Budget Submission
Construction and 10 year Capital Plan, Vol. 4 of 4, February 2012, p.
8.1-1.
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Major Construction
Decades of underfunding has led to a major construction backlog
that has reached between $19 billion and $ 23.3 billion. There are
currently 21 Veterans Health Administration (VHA) major construction
projects that have been partially funded dating back to 2007. In the
Administration's budget request for FY 2014, VA requested funding for
only one project. \2\ The total unobligated amount for all currently
budgeted major construction projects exceeds $2.9 billion. \3\ Yet, the
total budget proposal for FY 2014 major construction accounts was less
than $342 million.
---------------------------------------------------------------------------
\2\ Ibid. p. 8.2-12
\3\ Ibid. p. 2-49
---------------------------------------------------------------------------
To finish existing projects and to close current and future gaps,
VA will need to invest at least $23.2 billion over the next 10 years.
\4\ At current requested funding levels, it will take more than 67
years to complete VA's 10-year plan.
---------------------------------------------------------------------------
\4\ Ibid. p. 1-4
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Of VA's 49 current major medical facility construction projects on
which there is data, 23 are over their initial cost estimate, 21 are at
cost and five are under cost. These 49 facilities have a total cost
overrun of $2.9 billion. Some of the changes in cost can be attributed
to a change in the size of the facility or the scope of care it will
deliver, but many of these cost overruns are a result of poor
communication with the general contractors. In addition to cost
overruns, 24 of the 29 projects that have been initiated have gone past
their initial estimated completion date, while only five have been
delivered on time.
Many of these delays are a result of poor communication between VA
and the general contractors. Not having defined roles and
responsibilities for each VA official that manages portions of major
construction projects, particularly within the change order process,
causes contractors to get permission from one VA employee only later to
be denied by a different employee. Failing to place medical equipment
planners at each major construction site has also led to construction
errors and change orders that would not have been necessary if the
planner would have been on site. The lack of a project management plan
makes it difficult to keep both the contractor and VA on the same page
during the construction phase.
The VFW believes VA could improve its major construction projects
by changing to an architect-led design-build process. VA currently
employs two project delivery methods: Design-bid-build and design-
build. Design-bid-build project delivery is appropriate for all project
types. Design-build is generally more effective when the project is of
a low complexity level. It is critical to evaluate the complexity of
the project prior to selection of a method of project delivery.
Design-bid-build is the most common method of project design and
construction. In this method, an architect is engaged to design the
project. At the end of the design phase, that same architect prepares a
complete set of construction documents. Based on these documents,
contractors are invited to submit a bid for construction of the
project. A contractor is selected based on this bid and the project is
constructed. With the design-bid-build process, the architect is
involved in all phases of the project to insure that the design intent
and quality of the project is reflected in the delivered facility. In
this project delivery model, the architect is an advocate for the
owner.
The design-build project delivery method attempts to combine the
design and construction schedules in order to streamline the
traditional design-bid-build method of project delivery. The goal is to
minimize the risk to VA and reduce the project delivery schedule.
Design-build, as used by VA, is broken into two phases. During the
first phase, an architect is contracted by VA to provide the initial
design phases of the project, usually through the schematic design
phase. After the schematic design is completed, VA contracts with a
contractor to complete the remaining phases of the project. This places
the contractor as the design builder.
One particular method of project delivery under the design-build
model is called contractor-led design-build. Under the contractor-led
design-build process, the contractor is given a great deal of control
over how the project is designed and completed. In this method, as used
by VA, a second architect and design professionals are hired by the
contractor to complete the remaining design phases and the construction
documents for the project. With the architect as a subordinate to the
contractor, rather than an advocate for VA, the contractor may
sacrifice the quality of material and systems in order to add to his
own profits at the expense of VA. In addition, much of the research and
user interface may be omitted, resulting in a facility that does not
best suit the needs of the patients and staff.
Use of contractor-led design-build has several inherent problems. A
shortcut design process reduces the time available to provide a
complete design. This provides those responsible for project oversight
inadequate time to review completed plans and specifications. In
addition, the construction documents often do not provide adequate
scope for the project, leaving out important details regarding the
workmanship and/or other desired attributes of the project. This makes
it difficult to hold the builder accountable for the desired level of
quality. As a result, a project is often designed as it is being built,
compromising VA's design standards. Contractor-led design-build forces
VA to rely on the contractor to properly design a facility that meets
its needs. In the event that the finished project is not satisfactory,
VA may have no means to insist on correction of work done improperly
unless the contractor agrees with VA's assessment. This may force VA to
go to some form of formal dispute resolution, such as litigation or
arbitration.
An alternative method of design-build project delivery is
architect-led design-build. This model places the architect as the
project lead rather than the builder. This has many benefits to VA,
such as ensuring the quality of the project, since the architect
reports directly to VA. A second benefit to VA is the ability to
provide tight control over the project budget throughout all stages of
the project by a single entity. As a result, the architect is able to
access pricing options during the design process and develop the design
accordingly.
Another advantage of architect-led design-build is in the
procurement process. Since the design and construction team is
determined before the design of the project commences, the request-for-
proposal process is streamlined. As a result, the project can be
delivered faster than the traditional design-bid-build process.
Finally, the architect-led design-build model reduces the number of
project claims and disputes. It prevents the contractor from ``low-
balling,'' a process in which a contractor submits a very low bid in
order to win a project and then attempts to make up the deficit by
negotiating VA change orders along the way.
Health Care Center Leasing
VA has also fallen behind on awarding the seven health care center
leases that were authorized by Congress in 2009. Currently, four of the
seven leases have been awarded, but none of the facilities are
operational. This has occurred because VA lacks the guidance on how to
manage the purchase process of projects of this size. Before these
leases were authorized, VA only had guidance for projects that were
much smaller in scope. However, they used this guidance to plan the
site selection and award the contract.
On October 22, 2013, the VA Office of the Inspector General (IG)
found that site selection alone should have taken an average of 2.5
times the length of time as the guidance they were using recommended.
Additionally, VA could not accurately account for how much has been
spent to date on the health care center projects, and VA will not be
able to fully account for costs until an effective central cost tracker
is put in place.
The IG provided VA with four recommendations to improve the
timeliness and cost management issues that resulted from the lack of
guidance for lease projects of this size. The VA has concurred with the
recommendations and is in the process of developing the appropriate
guidance and transparency for future health care center leases.
The VA has taken steps to improve their major construction and
health care center leasing projects, but small improvements over a long
period of time will not be sufficient. If VA cannot drastically improve
its major construction operations, it may be time for VA to ask for and
receive assistance from outside its own agency to get its construction
projects on track. VA and the Department of the Army (DA) currently
have an Interagency Agreement (IAA) that allows VA to request
assistance from DA on capital planning, design, engineering, and
construction management services. It is unclear to what extent VA and
DA have worked together under this IAA, but it seems it could be
central in developing and maintaining VA's major construction programs
in the future.
Mr. Chairman, this concludes my testimony and I look forward to any
questions you or the Committee may have.
Disabled American Veterans
Mr. Chairman and Members of the Committee:
Thank you for this opportunity to present testimony for the record
on the views of DAV (Disabled American Veterans) concerning the
Department of Veterans Affairs (VA) and its capital investment
programs, including the necessity for Congress to authorize important
leases for VA community-based outpatient clinics and other necessary
facilities, and to address other capital asset and construction policy
issues. This is a very important hearing on a vital subject that in
many ways has languished for years. We appreciate your conducting it
today.
Mr. Chairman, the Committee titled this hearing, ``Building VA's
Future - Confronting Persistent Challenges in VA Major Construction and
Lease Programs.'' While this title may seem meaningful, newsworthy or
topical to the Committee, DAV would differ on your characterization of
its focus. We believe that, for years, VA's path on capital needs,
including its proposed leases, has been crystal clear, and only seems
``challenging'' now because VA persistently has been obstructed by the
Office of Management and Budget (irrespective of which party controlled
the Administration) and Congress--including the Budget and
Appropriations Committees in both chambers--in actually securing the
resources VA has consistently and clearly identified as necessary to
keep VA's capital plants and facilities in proper, safe and modern
condition for the care and treatment of veterans, including members of
our organization, DAV.
Over the years, VA has used a variety of techniques and approaches
to identify and justify necessary capital resources, to sharpen these
estimates, and to address the doubts and skeptics of VA's true needs.
Nevertheless, any perfunctory review of the end results of these annual
efforts would show massive gaps between what was identified by VA
professionals in the beginning of the process, what the Administration
asked for, and what was ultimately provided by Congress.
In plain language, to remain a viable health care system for the
veterans who need VA today and will unquestionably need it in the
future, we believe VA now needs a reasonable and sustained flow of
billions of dollars in major medical facility construction, minor
construction and maintenance and repair funds.
The latest projection (based on VA's ``Strategic Capital Investment
Planning'' (SCIP) process, demonstrates that VA could easily spend over
$50 billion or more over the next decade in all infrastructure accounts
to modernize, renovate and replace health care facilities. Some of VA's
facilities are over 100 years old, and the facility average age is over
60 years. We estimate that VA's current ``ten year plan'' for
modernization of capital facilities under the SCIP approach would
require 67 years or even longer to achieve its goals if Congressional
funding for these purposes continues at its recently observed pace. We
are unsure why, even facetiously, VA would entitle the current plan a
``ten year plan,'' given this outlandish prospect.
As a partner organization of the Independent Budget, DAV has
regularly endorsed and recommended annual appropriations for major and
minor medical capital facility improvements well in excess of what
Administrations have requested, or that Congresses have provided in
appropriations. Typically, over this decade, Congress has provided
about one-fourth, more or less, of the amounts identified by our
estimates. We believe that, absent sufficient funding, situations such
as embraced by the title of this hearing are inevitable now, and will
be repeated well into the future.
Mr. Chairman, it is no secret that that the IB veterans service
organizations have always relied on VA's internal estimates in making
our infrastructure funding recommendations to both the Administration
and Congress, because we believe professional staff in these VA offices
and facilities know their programs better than anyone, and are making
estimates based on intimate knowledge of the system and its needs,
professional principles associated with capital improvements, and known
construction standards and costs. If these internal needs are overblown
or inflated, are the ``experts'' in the Office of Management and Budget
(OMB) or on Capitol Hill justifying their decisions to gut VA's
estimates and to fund these programs at lesser levels? How is it that
VA develops a solid, professional and defensible budget for
infrastructure, only to have it reduced without any justification or
explanation? DAV believes this is also an oversight question worth the
Committee's efforts, to determine how these decisions are made, and by
whom.
Leased Facilities
One of VA's cornerstones in capital planning is leasing. Leasing
community-based facilities is a proven, cost-effective way for VA to
extend access and provide services without the need to build expensive
government-owned facilities. Such leased facilities are an important
element in the future of VA health care, discussed further in this
testimony, and we appreciate the hoped-for resolution of the paralysis
that has suspended this key program for over a year. VA's current
leasing plan calls for a little over $2 billion to be committed to
leases over the next 10 years. VA leases properties to use for each
administration within VA, ranging from community-based outpatient
clinics (CBOC) and a variety of health care centers, to research,
warehouse space and other valuable uses. The cost of these leases does
not fall under VA construction accounts, but is accommodated from
within each administration's or other VA offices' operating accounts.
\1\
---------------------------------------------------------------------------
\1\ FY 2012 Budget Submission, Construction and 10 Year Capital
Plan, February 2011, Vol. 4 of 4, p. 8.2-85.
---------------------------------------------------------------------------
Well known to this Committee, in a 2012 policy shift, the
Congressional Budget Office (CBO) changed its accounting practices on
how major facility leases are to be funded, effectively halting
Congressional authorization of future VA leases. Currently, there are
28 major capital leases, totaling nearly $247 million, for which VA had
requested Congressional authorization. These leases have been in limbo.
This backlog of leases will only grow as existing leases expire. Lack
of reauthorization could result in closures of current VA clinics, and
newly proposed clinics cannot be activated without authorization.
Inaction will lead to increased costs associated with longer travel
times or the need to authorize fee-basis care that otherwise would be
provided through such leased CBOCs. Access to care will also decline as
veterans will be forced to travel farther and wait longer for the care
they need.
We sincerely compliment the Committee and your professional staff
in working to resolve the lingering dispute of the past year that
delayed VA in opening new community-based clinics through the well-
established and popular leasing program that has been used to extend VA
care to hundreds of communities over the past 25 or more years. Over
that period, Congress improved VA health care access and patient
satisfaction by authorizing and funding nearly 900 VA community-based
outpatient clinics, the vast majority having been in leased space
rather than government-owned facilities. These clinics have provided
local, convenient and cost-effective primary care for millions of
veterans.
While we take no position on which specific community clinics and
other VA facilities should be authorized in the new draft bill the
Committee is considering today, we support the bill developed by the
Chairman and urge its positive consideration by the Committee and the
full House at the earliest possible date, so that the Senate can act on
it this year. Millions of veterans already benefit from the cost-
effective and commonsense approach of VA's leasing facilities, and we
appreciate the hard work of your professional staff in negotiating a
potential resolution of what appeared only days ago to be an insoluble
problem, that pitted the CBO against the OMB in a seemingly endless
dispute about how these clinics should be treated in the budget.
VA ``Challenges,'' or Loss of Talent?
Another concern you articulated in your invitation letter is VA's
``persistent challenge'' in managing the construction of several new VA
medical centers. It is true that until these new facilities were
authorized, VA had not completed construction of a new VA medical
center since 1994. In all probability, hundreds of talented architects,
engineers and other key staff in VA Central Office and facilities who
had worked within VA in years previous to 1994 to build those
facilities (Minneapolis, Portland, Baltimore, Richmond, West Palm
Beach) departed their VA employment, because Congress in its wisdom
determined not to authorize further VA major medical facilities as
replacements for VA's aging facilities. We do not blame those
professionals or VA for these significant resignations and the
subsequent loss of talent; but we have little doubt that the departures
of these professionals affected VA's ability to design, manage and
build VA's newest facilities. They certainly did.
Mr. Chairman, one of your predecessors as Chairman in effect
accurately predicted the current situation about six years ago, and
based his concern on his view that so many of VA's staff who had been
involved in managing new construction in the 1980's and 1990's had
departed that he doubted VA would be successful in building new
facilities that Congress was considering to authorize at that time
(Denver, Las Vegas, New Orleans and Orlando were specifically
identified as among his concerns). It is no surprise to DAV today that
VA has been experiencing difficulties in managing the projects now
identified by this Committee as being of concern because of poor
execution and cost overruns. However, we believe VA is making an honest
and straightforward effort to learn from its past mistakes, and will in
fact surmount the problems that have surfaced in recent times. The
suggestion you made in your invitation letter that the Army Corps of
Engineers or another federal agency could step in and improve this
complex VA program is an unproven theory, and an unlikely scenario in
our judgment.
Considering the example of the Corps, the recently completed
construction of the Fort Belvoir Army Community Hospital, the Army's
newest facility and one of the world's most expensive hospitals, was
managed by the Army Corps of Engineers. That $1.3 billion construction
project was roundly criticized by outside reviewers for both delays and
excessive costs, similar to the types of criticisms levied at VA over
cost overruns at the Orlando and Denver facilities. We do not envision
an Army Corps of Engineers takeover of VA construction to be in the
best interests of veterans, or of VA's capital programs. We know of no
other federal agency with the expertise to build hospitals or other
types of health care facilities suitable for veterans' care.
Mr. Chairman, it is important to remember that VA facilities are
the primary places where our veterans receive their care, and these
facilities are just as important entities as the physicians, nurses and
myriad technicians who actually deliver their care. Every effort must
be made to ensure these facilities remain safe and sufficient
environments to deliver care to veterans. A VA budget that does not
adequately identify and fund facility maintenance and construction
reduces the timeliness and quality of care for veterans.
As indicated above, VA's most recent iteration of facility planning
mechanisms is SCIP. SCIP is described by VA as a tool to help VA make
more informed decisions on its competing capital investment needs, in a
severely constrained funding environment. One key element that appears
to be missing from the SCIP criteria is a comprehensive assessment of
the resources that exist outside of the VA through existing contracts
and sharing agreements, and how those arrangements may affect VA's need
for VA-managed facilities. Unlike VA-built and leased space, contracts
can be amended, cancelled or situated differently to respond to
demographic changes and needs of veterans. VA-owned facilities are more
static and inflexible. This is especially relevant and important to VHA
because VA, Congress and the IBVSOs have increasingly supported
leveraging community resources to provide accessible care to veterans
in rural, remote and underserved areas where VA simply cannot justify
government construction. Without an unambiguous understanding of the
health care resources that exist outside of VA, the Department is
greatly challenged to make sound decisions on capital investments and
right-sizing its inventory for the near-, mid- and long-term planning
vistas. Another apparent flaw of SCIP is the lack of transparency on
the costs of VA's future real property priorities that hinders VA's
ability to make informed decisions. This was among the findings in a
report that the Government Accountability Office (GAO) issued on
January 31, 2011, entitled VA Real Property: Realignment Progressing,
but Greater Transparency about Future Priorities is Needed.
The IBVSOs fully support the GAO's recommendation to enhance
transparency by requiring VA to submit an annual report to Congress on
the results of the SCIP process, subsequent capital planning efforts,
and details on the costs of future projects. Mr. Chairman, your draft
bill's inclusion of a new reporting requirement is consistent with the
need for greater transparency in leased facilities, and we agree with
the sentiment expressed in the bill. We believe a similar detailed
annual reporting requirement should be imposed on all VA SCIP-
prioritized projects.
The IBVSOs also support the inclusion of new criteria that
considers resources that are available to VHA through existing
contracts and sharing agreements. We urge a more rigorous analysis by
VA that informs the priority list of projects in SCIP.
Quality, accessible health care continues to be the focus for DAV
and the IBVSOs. To achieve and sustain that goal, large capital
investments must be made, and should not be avoided or obscured with
partial funding as is the present case. Presenting a well-articulated,
transparent capital building plan is important, and a feat that VA has
actually accomplished fairly consistently, but funding that plan at
nearly half of the prior year's appropriated level and at a level that
is only 25 percent of what is needed to close the access, utilization
and safety gaps is not responsive, and in fact impedes VA's mission to
care for veterans.
As indicated above, decades of underfunding by one Administration
and Congress after another have created a major medical facility
construction crisis that has reached a scope of $19-$23.3 billion in
unmet needs. Currently, 21 VHA major construction projects have been
partially funded by Congress dating back to 2007. In the
Administration's budget request for the current year (FY 2014, still to
be enacted by Congress almost two months into the year), VA requested
funding for only one new project. \2\ The total unobligated amount for
all currently-budgeted major construction projects exceeds $2.9
billion. \3\ Yet the total budget proposal for FY 2014 major
construction accounts was less than $342 million, a small fraction of
needed funds.
---------------------------------------------------------------------------
\2\ Ibid. p. 8.2-12
\3\ Ibid. p. 2-49
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As summarized earlier, to complete existing approved projects and
to close current and future gaps, VA needs to invest at least $23.2
billion \4\ over the next 10 years. At current requested funding
levels, it will take more than 67 years to complete VA's ``10-year
plan.'' In the short term, VA must begin requesting and Congress must
begin providing funding for major construction at levels that at least
begin to address this backlog, such as a level of $1 billion or more in
major construction funding in FY 2015 as a modest down payment on the
backlog. A funding level of this magnitude would enable VA to close the
most severe safety gaps and complete funding on the longest-standing
and previously approved major projects.
---------------------------------------------------------------------------
\4\ Ibid. p. 1-4
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Minor Construction Accounts
To close all the minor construction gaps within a 10-year timeline,
VA would need to invest between $6.8 billion and $8.3 billion. \5\ For
several years, VA minor construction was funded at a level to actually
meet its 10-year goal, and we appreciated that commitment by Congress.
However, over the past two years (2012-2013), Congress has acceded to
the Administration's drastic funding reductions in minor construction
requests. However, VA proposed $715 million in this account for FY
2014, an amount that comes close to the level needed annually to close
all gaps within ten years.
---------------------------------------------------------------------------
\5\ Ibid. p. 1-4
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The IBVSOs believe that minor construction accounts can be brought
back on track by investing approximately $831 million per year over the
next decade to close existing gaps and prevent an unmanageable
situation.
Another unmet and significant challenge for VA in infrastructure is
associated with VA's national Medical and Prosthetic Research Program.
An independent analysis commissioned by VA at the behest of the House
Appropriations Committee, published in 2012 after an unconscionable
delay, clearly showed a need for VA to invest almost $800 million in
upgrades, renovations and outright replacements of VA research
laboratories and associated research facilities. While we realize these
funds will not materialize immediately given VA's other needs as
outlined in this testimony, we urge Congress to begin to address needs
in VA's research program by appropriating new funding for both major
and minor construction projects, and for additional maintenance, at
minimum to address the most serious deficiencies identified in the
research infrastructure report.
Nonrecurring Maintenance Accounts
Even though non-recurring maintenance (NRM) is funded through VA's
Medical Facilities Appropriation account, and not through a
construction appropriation, it, too, is critical to maintenance of VA's
capital infrastructure. NRM embodies the many small projects that
together provide for the long-term sustainability and utility of VA
facilities. NRM projects are one-time repairs, such as modernizing
mechanical or electrical systems, replacing windows and equipment, and
preserving or replacing roofs and floors, among other routine
maintenance needs. Nonrecurring maintenance is a necessary component of
the care and stewardship of a facility. When managed responsibly, these
relatively small, periodic investments ensure that the more substantial
investments of major and minor construction provide real value to
taxpayers and to veterans as well.
With ever-shrinking requests from the Administration and compliant
appropriations from Congress in recent years, VA finds itself slipping
farther behind in addressing a slew of recognized safety, utilization,
and access deficits associated with infrastructure. To simply maintain
VA infrastructure in its current (and often substandard) form, VA's NRM
appropriations account could easily justify $1.35 billion per year,
based on the estimated plant replacement value the IBVSOs have
calculated. The account is currently being funded at $712 million,
about half of what is needed. Even more funds will be needed to prevent
the current documented NRM backlog of $19 billion to $23.3 billion from
growing to more staggering levels. Also, to close the gaps in safety,
access and utilization, VA will need to invest between $27 and $33
billion more in major and minor construction, and $2 billion or more in
leasing.
Plant Replacement Value
The vastness of VA's capital infrastructure is rarely fully
visualized or understood. VA currently manages and maintains more than
5,600 buildings and almost 34,000 acres of land with a plant
replacement value (PRV) of approximately $45 billion. Although VA has
worked to reduce the number of critical infrastructure deficits, there
remain more than 3,900 gaps that will cost between $54 and $66 billion
to close, including $10 billion in activation costs for new facilities
that will be needed downstream. \6\
---------------------------------------------------------------------------
\6\ Department of Veterans Affairs, FY 2013 Budget Submission
Construction and 10 year Capital Plan, Vol. 4 of 4, February 2012, p.
8.1-1.
---------------------------------------------------------------------------
VA is falling behind in closing current NRM safety, utilization and
access gaps. Just to maintain what VA manages, in the condition that it
is in, VA's NRM account should be funded at $1.35 billion per year,
based on the IBVSO estimated PRV. It is currently being funded at about
one-half of need, at $712 million per year. More funds will need to be
invested to prevent the $22.4 billion NRM backlog \7\ from growing even
larger.
---------------------------------------------------------------------------
\7\ Department of Veterans Affairs, FY 2013 Budget Submission
Construction and 10 year Capital Plan, Vol. 4 of 4, February 2012, p.
1-4.
---------------------------------------------------------------------------
The IBVSOs believe VA should develop a PRV schedule and publish its
results. Adding the PRV to the SCIP will allow VA to more accurately
determine the appropriate amount to request for NRM and objectively
determine when a facility becomes more costly to maintain than to
replace. Using PRV as a tool, VA can more accurately determine the
annual funding levels needed for NRM by facility, allowing for the
reduction in the NRM backlog and fully funding future needs in a way
that would be the most cost effective. The industry goal for NRM is
around two percent of the PRV. At that rate, facilities can operate for
50 years or more without outspending what it would cost to replace
them. Knowing what percentage of the PRV is being spent will allow
Congress and VA to take a longer view of capital planning, and to
visualize when a facility will need to be replaced.
In Conclusion
Mr. Chairman, in summary, if Administrations and Congresses
properly fund VA's infrastructure needs into the future, in cognizance
of this testimony that the work of the IBVSOs represents, and if VA
adopts some of the important recommendations in the Independent Budget,
we believe much of VA's deficit in capital infrastructure can be
addressed, and its methods can be improved. However, due to the decades
of underfunding that has occurred in addressing VA's capital needs, we
see no ``quick fix'' to solve VA's current capital crisis. Years of
benign neglect must be replaced with years of dedicated and predictable
investments in infrastructure, if Congress intends to ensure that VA
remains a viable provider of health care services in the future.
Mr. Chairman and Members of the Committee, this completes DAV's
testimony, and we appreciate the opportunity to present it for the
Committee's consideration.
The American Legion
Chairman Miller, Ranking Member Michaud, and distinguished Members
of the Committee;
Building a hospital is no easy task - neither is running one for
that matter. The Department of Veteran Affairs (VA) owns and operates
more than 1,700 hospitals around the country, with 32 hospitals being
recognized as ``Top performers'' by The Joint Commission, a not-for-
profit organization that ensures the quality of U.S. health care by its
intensive evaluation of more than 20,000 health care organizations.
On behalf of our National Commander and the two and a half million
members of The American Legion, thank you for inviting us to share our
views on the VA's major facilities construction program.
When American Legion National Commander Dellinger testified before
a joint session of Congress on September 10th 2013, Congressman Coffman
referred to the Commander's construction background and asked Commander
Dellinger if he would please offer his comments, based on his personal
experience in the construction industry, about construction challenges
that VA was facing in Colorado and other areas. Commander's Dellinger's
responded ``Maybe the VA should get out of the construction business,
and do what they do best - take care of our veterans''
Since September, American Legion leaders and staff have been
researching and reviewing possible policy changes regarding VA's major
construction and leasing programs, and will be presenting our findings
and recommendations to our voting members during our upcoming meeting
in March 2014. It will be at this meeting that The American Legion will
decide whether or not to develop and pass a resolution regarding the VA
construction program.
As part of our research and investigation, The American Legion met
with senior officials from The Army Corps of Engineers, The VA Office
of Acquisition, Logistic & Construction (OALC), and the VA Office of
Construction and Facilities Management to assess the viability of
diversifying VA's construction management responsibilities.
During our evaluation, we found that;
The Army Corps of Engineers
b Is adequately suited to undertake the long-term mission of
managing VA's construction portfolio
b Has a track record that is equal to or better than the federal
industry standard regarding on-time, on-budget construction projects
b Would report directly to VA and not replace OALC
b Has worked on VA construction projects in the past
b Routinely builds hospitals for the Department of Defense
The Corps is not without its criticisms, however most of the
criticisms suffered by the Army Corps of Engineers involve their Civil
Construction arm and the amount of money Congress has dedicated to
disaster relief, beach erosion and other civil engineering projects,
not their construction projects. One note regarding this organization
is that, there is more transparency and ready access to information
regarding overhead expenses and actual costs than with private firms as
the Government Accounting Office has an entire collection of
assessments and evaluations of The Army Corps of Engineers ready for
public review. Information about Army Corps can also be found at the
Congressional Budget Office, The Congressional Research Service, as
well as other federal research activities and offices.
It is also important to note that inserting the Army Corps of
Engineers into the VA construction program would not reduce VA's
authority or oversight in any way, as VA would always maintain the roll
of ``customer'' in any future relationship. Another advantage is the
advocacy role that Army Corps assumes on behalf of VA. In the event of
cost overruns not covered by the reserve fund, Army Corps takes on the
responsibility of representing VA before Congress to request additional
appropriated funds needed to complete the project.
Based on our initial research, we don't believe that Army Corps
would be adequate solutions to interject into the troubled projects
currently in progress, but would have the flexibility and ability to be
retained as a consultant to help evaluate paths to completion, if
requested, and their value to VA on future construction projects will
be the subject of our pending resolutions and recommendations. That
said; it is also true that the Army Corps of Engineers is routinely
relied on to offer oversight and advice when federal projects are not
performing as planned, thus giving Army Corps the reputation of expert
in the construction management industry.
While reviewing VA's construction program we found that the VA
initiated a Construction Review Council (CRC) in April 2012 to serve as
the single point of oversight and performance accountability for the
planning, budgeting, execution, and delivery of the VA real property
capital asset program. It was further explained that the CRC undertook
a complete review of the Department's real property capital asset
program life cycle to ensure the phases of the life cycle were properly
identified and the inputs and outputs of the respective phases were
achieved to ensure the successful completion of the capital program.
The council made four recommendations:
b Requirements - Complete 35 percent of design prior to submitting
project for construction funding. Define processes for capturing origin
requirements, approving requirements, and approving changes to the
requirements once project development has started. Conduct master
planning of all VISNs (include all VBA and NCA facilities) and
integrate plans into the SCIP 10-year plan. Master plans will include
major projects, leases, minor projects, and non-reoccurring maintenance
(NRM) construction for all Administrations.
b Design Quality - Identify and implement steps to reduce design
related issues that increase cost and/or delay construction. Improve
peer review process by including assessment of constructability, using
construction management firms to augment Architectural/Engineering (A/
E) technical peer review.
b Funding - Coordinate SCIP process with budget to assure
alignment with services and related initiatives. Consider a dedicated
design fund to allow design to proceed seamlessly from start to finish.
Recognize and include OI&T costs and activities as part of project cost
and effort. Consider a separate fund for historic preservation
activities.
b Program Management & Automation - Adhere to common leading
indicator metrics for construction. Implement new construction
management software tool. Streamline processes and procedures for
change orders. Increase professional certifications for program/project
managers. Link medical equipment procurement to specific construction
to ensure synchronization.
Since no new projects have been initiated since the implementation
of these recommendations, it is not possible to gage what impact, if
any the recommendations will have on VA's construction program.
VA has developed a change order handbook since the original one was
not consistently applied across project sites. In addition, change
orders below $250,000 will not be submitted to VA Central Office for
approval which should speed up change orders on the local level.
While The American Legion is not prepared to make any specific
recommendations to Congress at this time, we are confident our
Veteran's Affairs and Rehabilitation Commission, who has oversight of
this issue, will present their findings and recommendations to The
American Legion during our Winter Conference, and will then make copies
of our work, and any future approved resolutions available to this
committee.
In conclusion, should this Committee consider any changes to the
current procurement process of VA construction, The American Legion
would insist that language be included into any bill that requires any
contracting agency participating in VA construction activities be
required to adhere to VA's Vets First contracting policies in
accordance with Public Law 109-461, and all applicable VA procurement
policies regarding veteran small business procurement priorities.
Thank you again for inviting The American's Legion to share our
views on this important matter.
For additional information regarding this testimony, please contact
Mr. Louis Celli at The American Legion's Legislative Division, (202)
861-2700 or [email protected].
Questions For The Record
LETTER AND QUESTIONS FROM: HVAC, TO: VA
January 10, 2014
The Honorable Eric K. Shinseki
Secretary
U.S. Department of Veterans Affairs
810 Vermont Avenue, NW
Washington, DC 20420
Dear Mr. Secretary:
In reference to our Full Committee hearing entitled, ``Building
VA's Future Confronting Persistent Challenges in VA Major Construction
and Lease Programs'' that took place on November 20, 2013. I would
appreciate it if you could answer the enclosed hearing questions by the
close of business on February 28, 2014.
Committee practice permits the hearing record to remain open to
permit Members to submit additional questions to the witnesses.
Attached are additional questions directed to you.
In preparing your answers to these questions, please provide your
answers consecutively and single-spaced and include the full text of
the question you are addressing in bold font. To facilitate the
printing of the hearing record, please e-mail your response in a Word
document, to Carol Murray at [email protected] by the close
of business on February 28, 2014. If you have any questions please
contact her at 202-225-9756.
Sincerely,
MICHAEL H. MICHAUD
Ranking Member
MHM:cm
Questions Submitted by Ranking Member Michaud:
1. The VA Office of Inspector General released a report on October
22, 2013 titled ``Review of Management of Health Care Center Leases''
(VAOIG Report). This report states that ``VA could not provide complete
financial information on the seven HCCs. VHA delegates funds tracking
to project-level management at the Veterans Integrated Service Networks
(VISNs) and RPS. VHA's former Chief Financial Officer said VHA
headquarters would need to request HCC information from this level to
compile a complete picture of costs. Although project-level management
at the VISNs and RPS tracked HCC financial information, neither could
provide complete data and support regarding total costs incurred to
procure HCC leases.''
a. Please provide the Committee with the specific steps taken or
proposed to be taken by VA to improve its ability to identify and track
costs associated with the leasing program.
2. The VAOIG Report states that the VAOIG ``could not identify a
common fund code across VISNs for each HCC so costs could be
systematically extracted from VA's Financial Management System.
Further, RPS personnel could not readily provide complete financial
information for all HCC expenses. RPS is responsible for the day-to-day
management of all lease procurement activities from project initiation
to lease award, including tracking associated expenses.''
a. What steps, if any, has VA taken to address this concern and
provide more accurate and complete cost information regarding HCCs and
other VA construction and lease projects.
3. In regards to the project-level management of VA construction
and lease projects:
a. Please provide the Committee with a detailed explanation
regarding the project-level management process used at VA, including
the titles and detailed job descriptions of the project-level
management.
b. Please provide the Committee with an explanation of any changes
that have recently been made or are planned to be made to this process
in order to provide improved function, control, and transparency to the
process.
4. In regards to VA's overall construction and lease program:
a. Please provide the Committee with updated schematics of the
Office of Construction and Facilities Management, the Real Property
Service, and the Office of Acquisition and Logistics. Include the
position titles and incumbent names for all senior-level positions.
b. Are there any statutory barriers presently in place that VA
feels unduly hinders its ability to operate a construction and leasing
program?
c. In VA's view, are the problems with VA's construction and lease
operation that have been identified over the last several years caused
by too much centralization of this operation, or too little?
d. Please provide the Committee with a detailed discussion of what
VA believes to be the advantages, as well as any identified
disadvantages, to the VA of operating an in-house construction program.
5. The VAOIG Report states that ``[a]s part of its FY 2008 Asset
Management Plan, VHA commissioned studies to assess the feasibility of
leasing facilities in lieu of major construction. VA determined that
leasing major outpatient clinics, or HCCs, would provide the
flexibility to increase veterans' accessibility to services and address
critical outpatient needs without the need for additional major
construction funding.''
a. Please provide the Committee with copies of the studies
referenced.
6. The VAOIG Report recommended that ``the Under Secretary for
Health, in coordination with the Executive in Charge of the Office of
Acquisition, Logistics, and Construction, provide realistic and
justifiable timelines for award, construction, and activation of the
Health Care Center leases.''
VA's response stated that ``[t]he Integrated Master Schedules for
all major lease procurements, including the Health Care Centers (HCCs),
are scheduled to be implemented in November 2013. Estimated completion
date: December 2013'' (emphasis in original).
a. Have these schedules been implemented? If so, when were they
implemented?
b. Please provide a copy of the Integrated Master Schedules.
c. In VA's view, what specific factors led to not meeting the
milestones contained in the FY 2010 budget submission for the
completion of the HCCs?
d. What were the reasons underlying the decision to establish
``identical milestone dates for all seven HCC projects outlined in the
prospectuses submitted to Congress even though the projects varied in
size?''
e. Will VA adjust the milestones contained in the Integrated Master
Schedules to accommodate projects that are larger or more complex that
the average schedules as shown in the Integrated Master Schedules?
f. Were there specific factors relating to HCCs that caused the
process to not meet milestones as compared to the then-existing process
and guidance regarding CBOCs, including larger CBOCs?
g. Please provide me with a detailed explanation of the planning
process, including an estimated timeline, in regards to CBOCs within
the current SCIP process.
7. In regards to the VA's Health Care Projection Model (HCPM):
a. Is information generated by the (HCPM) used within the SCIP
Process?
b. If so, please provide the Committee a detailed explanation of
the types of information provided by the HCPM and at what stage of the
SCIP process this information is utilized.
c. In terms of the final decision regarding a project, how much
weight is accorded information derived from the HCPM?
8. In previous testimony provided to the Committee, VA stated that
Vet Centers are placed in locations based upon proximity and
population.
a. Are Vet Centers included in the SCIP planning process?
b. Please describe how proximity and population are determined and
utilized within the planning process.
c. Please provide a detailed description of the planning process as
it relates to determining the need for, and location of, Vet Centers.
9. VA's written testimony states that it has ``procured a
collaborative project management software system in 2012 and is
completing phase one fielding and will complete fielding in 2014.''
a. Please provide a detailed description of this software, as well
as a detailed timeline regarding actions taken with regards to this
software since procurement in 2012.
b. Please describe to the Committee lessons learned by the VA
during initial fielding, and how these lessons will be used to better
manage projects once the software is deployed and fully operational.
c. Please provide a specific date in 2014 when VA believes that
this software will be deployed and fully operational.
Rep. Kirkpatrick:
1. According to the April 2013, GAO Report VA CONSTRUCTION -
Additional Actions Needed to Decrease Delays and Lower Costs of Major
Medical-Facility Project, (600-13-302), VA has not yet developed
specific guidance or instructions on how to implement recommendations
set forth by the Construction Management Review Council. In his
testimony, Mr. Haggstrom indicated that all recommendations have been
implemented:
a. Please provide the committee with a side-by-side list of the
recommendations and how/when they were addressed by VA?
b. If there is a recommendation yet to be implemented, please
provide a timeline for when it will be completed.
Rep. Brown
1. In regards to The Orlando VA Medical Center: The last update
received says the Medical Center will open in August of 2014. What is
the specific date the facility will open?
2. Please explain the lack of any progress over the summer of 2013
on this project? Reference the 84% percent completion rate of the
facility over the three months of July, August and September.
3. In previous meetings and briefings, one of the issues brought up
was that there wasn't enough VA staff on site to oversee the project.
Has this concern been addressed?
4. The previous project manager was removed for not following VA
instructions. How is the new manager working out? Has there been any
advancement on finishing this project?
5. Many concerns regarding this project have involved a large
number of change orders that have been submitted. To date, how many
change orders have been submitted for the project? Have those leveled
off? Are there still changes being made to the design of the facility
at this late date? What are the implications on costs, schedule and
delivery of these late changes?
6. Can this facility be opened in stages? The outlying buildings
are almost complete, except for the landscaping and the food service.
What can we do to get veterans help tomorrow?
Rep. Negrete McLeod
1. How many months of delay in awarding the lease for the Loma
Linda Health Care Center come from finding property owners willing to
sell?
2. How many property owners owned the land currently being
developed for the Loma Linda Health Care Center?
3. What role did VHA Women Veterans Health Committees and Women
Veteran Program Managers contribute to the design of the 7 Health Care
Centers to ensure that they complied with women veteran patient privacy
standards as stated in VA regulations?
RESPONSES FROM: VA, TO: HVAC
Questions for the Record from Ranking Member Michaud
Question 1: I would like to hear from VA why they believe they are
the best agency to handle the construction process for their
facilities?
VA Response: The Department of Veterans Affairs (VA) has a strong
history of delivering facilities to serve Veterans. In the past 5
years, VA has delivered 75 major construction projects valued at over
$3 billion that includes the new medical center complex in Las Vegas;
cemeteries; polytrauma rehabilitation centers; spinal cord injury
centers; a blind rehabilitation center; and community living centers.
The Department also opened 180 leased medical facilities, 50 of which
are considered major leases.
VA has a robust training program that provides Federal Acquisition
Certification in accordance with Federal standards for its Program/
Project Managers, including those managing VA's major construction
projects. VA has provided additional training and invested in a two-
year project manager coaching program to further supplement the skills
and develop project leaders to assure success in the major construction
program. VA's construction site staff supervisors are required to have
Federal Acquisition Certification in Contracting (FAC-C). The same or
equivalent training and certifications are required by other Federal
agencies such as General Services Administration, the U.S. Army Corps
of Engineers and Naval Facilities Engineering Command's project
managers and construction site leaders.
In 2009, with the establishment of the Office of Acquisition,
Logistics and Construction, VA initiated a construction best practice
review as part of its VA Facilities Management Transformation
Initiative. VA studied best practices in the U.S. Army Corps of
Engineers, General Service Administration, the Canadian Health Care
System, Kaiser Permanente, Sutter Health, and others. These studies
resulted in several initiatives such as the development and fielding of
an integrated master planning program; reestablishment of the post
occupancy evaluations; revisions to project execution planning process;
and the establishment of regional offices to improve project execution
and customer support. A significant best practice adopted from the
Department of Defense is the development of designs through concept (or
35%) before announcing the construction budget, requesting funds and
timeline for execution. VA continues to learn and share with its
Federal partners and private industry.
The way we do business today has changed and will continue to be
refined as necessary to deliver timely, high- quality facilities. The
recommendations made from previous reports have resulted in positive
changes that are being applied to the entire capital program.
Additionally, Secretary Shinseki's establishment of a Construction
Review Council (CRC) demonstrates the Department's commitment to
continued stewardship and delivery of high-quality facilities in
support of our Nation's Veterans.
As VA continues to develop one of the most patient-centered and
innovative care delivery models currently in use anywhere, it needs to
be able to coordinate and refine facility design in conjunction with
clinical operations in a seamless manner. Outsourcing contracting,
design, and construction administration would impose new barriers
between clinical care delivery and construction project planning,
design and construction. VA is the best organization to execute its
construction program as VA's construction project managers and
construction managers understand VA's mission to deliver the best
facilities to an ever evolving and advancing medical mission.
Question 2: What office was responsible for the management of the 7
Health Care Center Leases that have failed to come to fruition? It is
hard for me to believe that the prospectuses were allowed to be
published in the budget books. Someone should have known that the
timeline was unrealistic. Please walk me through the process as it
existed then and as it exists now.
VA Response: VA's Office of Acquisition, Logistics, and
Construction (OALC) is responsible for the procurement of the Health
Care Center leases, along with all of VA's major medical leases. While
the process for procuring these large-scale leases is essentially the
same (i.e., VA follows the relevant parts of the Federal Acquisition
Regulation, General Services Acquisition Regulation, VA Acquisition
Regulation, and all laws and Executive Orders pertaining to leases), VA
is refining various tools and internal procedures regarding major lease
procurements.
For example, VA has refined and clarified the internal roles and
responsibilities among the various VA offices involved in VA's leasing
program. OALC has also re-baselined VA's lease procurement estimates to
reflect improved timeframes for performance. These timeframes have been
validated against actual projects. OALC is also currently revising the
leasing handbook that provides guidance, standards, and processes to
ensure lease projects are reported and administered consistently across
the Department.
In order to ensure consistency in the planning process, all leases,
including Health Care Center leases, are now submitted and reviewed
through VA's Strategic Capital Investment Planning (SCIP) process, to
ensure each initiative fulfills medical center gaps for access,
utilization, and/or space. The SCIP process requires an analysis of
alternatives for each project proposed for budget consideration, and
documentation of key decisions.
Question 3: Your testimony is replete with all of the changes and
improvements VA has made to the lease and construction processes yet we
still have failures like the 7 Health Care Center leases. Please
explain to the Committee why you believe that these changes are
tangible and have actually improved the process? Why shouldn't we look
to another agency, such as Corps of Engineers, to build our hospitals
for us?
VA Response: In the past 5 years, OALC has successfully completed
50 major facility leases. VA does not consider its execution of these
seven Health Care Center (HCC) leases as failures. The Department set
an extremely aggressive timeline to deliver these projects. Unforeseen
challenges were encountered during the procurements (i.e., changes in
the real estate markets, inquiries from interests external to VA, bid
protests, and difficulty securing suitable property). To date, VA has
awarded contracts for six of the seven leases, with the seventh lease
in re-procurement.
VA's latest process improvements were introduced too late to impact
these seven HCCs. However, these improvements will have an immediate
impact on new projects through more effective roles and
responsibilities, processes, and timelines for delivery. Efforts to
improve upon these areas will continue, particularly through OALC's
internal reviews and the CRC.
With regard to using the Army Corps of Engineers (COE), VA
evaluates the delivery method for each lease and construction project
on its merits. One of the delivery strategies includes the utilization
of the COE when unique health care mission expertise is not required.
When VA determines that unique health care mission expertise is not
integral, and the best delivery strategy is to employ another agency,
such as the COE, this strategy is executed. VA has utilized COE to
deliver a number of minor construction projects and engaged them in
supporting VA in the construction of the Orlando, New Orleans, and
Denver major medical center projects. Additionally, VA is working
closely with the COE to streamline VA's processes.
Question 4: If you could design a construction and lease process
for the Department of Veterans Affairs, what would it look like? Do you
believe that the big tertiary care facilities are going to be needed in
the future given the advancements in technology and care delivery?
VA Response: It is necessary to have a process that is streamlined/
nimble enough such that implementation of the construction plan is
executed, before changes in technology and care have occurred, that
make initial design features obsolete. In addition, the underlying
designs must be as flexible and creative as possible to allow for
evolutionary changes that minimize future costs. VA is continuously
reviewing and re-validating all aspects of its construction and leasing
programs.
VA has initiated the following:
Increased the number of planners and defined their role
in developing requirements based on established gaps in service.
Increased the technical ability to review designs, thru
stronger peer review and constructability reviews.
Established the SCIP process to help prioritize VA's
capital investment needs and projects and ensure that the underlying
capital programs meet facility needs.
Requested authority to expand the Department's enhanced
use lease authority, and supported the President's proposed Civilian
Property Realignment Act (CPRA), to add to its toolkit for reducing
unneeded assets.
There is a dynamic bi-directional approach to the deployment of
resources involving tertiary care centers in the Veterans Health
Administration's (VHA) future. Tertiary care centers will still be
necessary. `Cutting edge' technology actually drives use of tertiary
type facilities, due to heavy support service for technology and the
need for a critical mass of patients for uncommon medical conditions/
treatments, such that practitioners have sufficient case numbers to be
maximally proficient. As certain established technologies mature,
movement to secondary level facilities from tertiary care facilities
does occur. The use of tele-health technologies, however, can
disseminate the cognitive component of care to primary and secondary
care level facilities in a virtual manner, which diminishes the drive
to place tertiary care to lower level facilities. These dynamics will
continue to re-balance the placement of new technologies over time.
Question 5: In a recent OIG Report on Health Care Centers, it was
recommended that the Under Secretary for Health, in coordination with
Executive in Charge of the Office of Acquisition, Logistics, and
Construction, ensure supporting analyses and key decision regarding the
Health Care Center leases are supported and documented. VHA concurred
and stated that ``all leases, including Health Care Center leases, will
be submitted and reviewed through the Department of Veterans Affairs
(VA) Strategic Capital Investment Planning (SCIP) process to ensure
each initiative fulfills medical center gaps for access, utilization,
and/or space. However, the FY 2012 10 YR Capital Plan already included
the seven HCCs in the SCIP process. What caused the SCIP process to
fail the first time?
VA Response: The seven HCCs were included in the fiscal year (FY)
2010 budget submission, prior to the development of the SCIP process.
The SCIP process was initiated with the FY 2012 budget formulation
process, to prioritize all new capital investments (e.g., major
construction, minor construction, leases, and non-recurring maintenance
projects) based on identified mission needs. As a result of the SCIP
process, VA has a total picture of need and a prioritized integrated
list of capital investments.
All leases since the initiation of SCIP in FY 2012, including any
proposed HCCs, are submitted and reviewed through VA's SCIP process.
Question 6: Are Vet Centers included in the SCIP planning process?
In previous testimony the VA stated that a Vet Center is placed in a
location based on proximity and population. Can you outline for the
committee how proximity and population are calculated and the stages of
the planning process for a Vet Center?
VA Response:
The SCIP planning process involves two phases - the validation that
a proposed capital project will successfully and cost-effectively close
an identified SCIP gap, and the prioritization of all validated
projects so that the most necessary projects are pursued first within
limited resources. All VA leases, including VetCenters, are included in
the validation phase, which requires an approved SCIP business case for
any action being proposed. When a VetCenter lease changes location,
even within the same geographic area, there are many factors taken into
consideration in the business plan, including Veteran proximity and
population, cost, access to mass transit, parking, etc. However, the
VetCenters are not included in the prioritization phase of the SCIP
planning process. VA's Readjustment Counseling Service (RCS), which
administers the Vet Centers, does not compete for any capital asset
funding, as all RCS leases are funded through the RCS Specific Purpose
funding process.
In addition to the business case requirements imposed by the SCIP
process, any new proposed Vet Centers beyond the existing 300 would be
submitted via an Executive Decision Memorandum to the Under Secretary
for Health for concurrence and ultimately to the Secretary for his
review and approval. All Veteran population data that are utilized in
this decision-making process are obtained directly from the Veteran
Population Projection Model (currently VetPop 2011), which is
publically available at www.va.gov/vetdata/. The overall living Veteran
population by county is the best available data source, since currently
no data are available from any approved source that shows Veterans who
served in a combat zone or area of hostility.
Question 7: How is a Veteran Service Area (VSA) defined? How is it
calculated?
VA Response: We do not define nor calculate Veteran Service Areas
(VSA), and we no longer use this terminology. VHA's health care
operations are organized into 21 Veterans Integrated Service Networks
(VISN) which are further broken down into 81 Markets. Each market
consists of a set of contiguous counties that usually contain at least
one, and possibly multiple, VA medical centers (VAMC), and their
associated clinics, which are designed to operate as independent health
care system. Our strategic planning process is based at the market
level. Planners, based on the current and projected future health care
needs of the Veteran population residing within the market, develop the
appropriate level and location of resources to best meet Veteran needs.
Question 8: It is the committee's understanding that before the
SCIP process, the criteria for developing a new CBOC were, among other
things, space deficits at the parent facility, market penetration,
population density, medically underserved, etc. What if any criteria
have changed since the SCIP process was initiated?
VA Response: The criteria for developing a new Community-Based
Outpatient Clinic (CBOC) are largely unchanged. Identifying appropriate
locations to establish VA health care facilities requires extensive
analysis of multiple factors, including but not limited to:
Veteran enrollee population;
Health care demand projections;
Access guidelines (e.g., drive-time);
Market penetration;
Cost-effectiveness;
Waiting times; and
Critical space needs.
Much of the same data and information (access, utilization, space,
cost-effectiveness) are used to justify and appropriately size projects
(including CBOCs) in the SCIP process. All SCIP capital projects (major
construction, minor construction, leases and non-recurring maintenance
projects) are reviewed, scored, and approved through the VA governance
process.
The six SCIP major decision criteria are:
1) Improve safety and security
2) Departmental initiatives
3) Fixing what we have
4) Increasing access
5) Right-sizing inventory
6) Ensure value of investment
This SCIP process results in a prioritized listing of capital
projects that is used to inform the annual capital budget request. The
SCIP decision criteria, priority weights, and the integrated,
prioritized list are provided to the Secretary for approval each year.
Question 9: In VA testimony in 2009 to the House Subcommittee on
Health of the Committee on Veterans' Affairs VA outlined the time from
the planning stage to setting up a CBOC to the time patients are
served. It is our understanding that this time frame was before the
current SCIP process. Under the current SCIP process what is the
current time frame from planning to clinic activation, can you outline
to the committee the various planning phases?
VA Response: VHA's Access Expansion Planning (AEP) process is the
first stage or phase for establishing CBOCs. Through the AEP process,
VISNs detail plans - including establishing CBOCs - to meet the
projected demand and to improve geographic access to primary care and
mental health services for Veteran enrollees. The AEP process, from the
call for AEP submissions to Under Secretary for Health's endorsement of
new sites of care for SCIP process consideration, takes approximately
four months.
In a typical year, the SCIP Action Plan Call is sent out within the
Department in late November/early December, submissions are due late
January/early February. The Business Case call goes out in March with
the Final Business Cases due in May/June. The Department submits its
budget request to OMB in September, and the President's Budget is
typically released in February, approximately 14 months after the
initial SCIP Action Plan Call.
Once authorization and funds have been received, the schedule
includes 26 months to lease award, 26-30 months for build-out, and 3-6
months for activation. This timeline does not include unforeseen
challenges, for example, changes in the real estate markets, political
interest in site location, bid protests, litigation, and difficulty
securing suitable property.
Question 10: In the recent OIG report on HCC's; a HCC is defined as
``a large scale outpatient clinic positioned to provide all the medical
services of a hospital, excluding inpatient beds.'' Using this
definition, is it true that any of your larger CBOCs, are in fact,
HCCs? What was different about these leases that caused them to be so
mismanaged? Are they not like any of the other VA Major Medical
Facility Leases? Please explain.
VA Response: VA does not consider its execution of these seven HCC
leases as mismanagement. VA's position is that these leases were not
inherently different from other large-scale, build-to-suit leased
facilities. All leases of this size can face unforeseen challenges, for
example, changes in the real estate markets, bid protests, litigation,
inquiries from interests external to VA interest in site location, and
difficulty securing suitable property. To date, VA has awarded
contracts for six of the seven HCC leases, with the seventh lease in
re-procurement.
The VA Office of Inspector General report referenced in question 10
above, was generated prior to the issuance of the VHA Site
Classifications and Definitions Handbook (VHA Handbook 1006.02) on
December 30, 2013. In accordance with this new Handbook, ``A Community-
Based Outpatient Clinic (CBOC) is a VA-operated, VA-funded, or VA-
reimbursed site of care, which is located separate from a VA medical
center. A CBOC can provide primary, specialty, subspecialty, mental
health, or any combination of health care delivery services that can be
appropriately provided in an outpatient setting.'' In accordance with
this new Handbook, a HCC is defined as: ``A VA-owned, VA-leased,
contract, or shared clinic operated at least 5 days per week that
provides primary care, mental health care, on-site specialty services,
and performs ambulatory surgery and/or invasive procedures which may
require moderate sedation or general anesthesia.'' The services
provided by an HCC exceed those of a CBOC by performing ``ambulatory
surgery and/or invasive procedures which may require moderate sedation
or general anesthesia.'' A small number of currently open outpatient
facilities, initially classified as CBOCs, will soon be reclassified as
HCCs based on the new classification standards.
Question 11: Can you outline how the Health Care Planning Model
(HCPM) inputs into the SCIP process? And provide us a copy of this
year's HCPM?
VA Response: The HCPM provides a standard 10-step planning tool
used to proactively evaluate the comprehensive health care needs of
Veterans within VISN markets and develop strategies to meet those
needs. The HCPM uses a web-based portal for systematic data analysis.
Appropriate data sources are built into the portal to maximize the time
VISNs spend in analysis versus data gathering. Many of the data
elements that are built-in to the HCPM to project Veteran health care
(such as access, utilization, and space needs) are the same data
elements that VISNs use to build their SCIP Action PlansBecause the
HCPM is a web-based planning tool, it is not possible to provide a copy
of it.
Question 12: Please provide the Committee with an updated schematic
of the Office of Construction and Facilities Management; the Real
Property Service or RPS; and the Office of Acquisition and Logistics.
Please include in the schematic a full and detailed description of how
these offices work together to ensure that the lease and construction
process is moving forward. Please also include the Veterans Health
Administration's construction offices that are part of the construction
process and have responsibility for the construction and lease programs
for VHA.
VA Response: The Office of Construction and Facilities Management
(CFM), Real Property Service (RPS), and the Office of Acquisition and
Logistics (OAL) all fall under the Office of Acquisition, Logistics and
Construction (OALC). OAL, as identified in the question, has no role in
the execution of the Department's construction and leasing programs.
As part of its overall responsibilities relating to VA's real
property portfolio, RPS oversees the administration of VA's ``medical
facility'' lease acquisitions, VA's ``general purpose'' lease
acquisitions (specifically, those not exceeding a 2,500 square feet of
space threshold, per a delegation from GSA), and provides support for
VA space acquisitions conducted through the General Services
Administration (GSA). RPS, as a part of the Office of Operations, works
closely with the Office of Facilities Acquisition (OFA) to make VA
lease awards. OFA develops guidelines and provides technical support to
properly oversee lease and major construction contracting and
architect/engineer selection. Both offices report to the Executive
Director, CFM, who in turn, reports to the Principal Executive
Director, OALC. CFM executes VA's major construction, leasing, real
property management, and other capital asset services in support of
VA's mission, and manages VA's major construction and leasing programs.
CFM's Executive Director serves as the primary advisor to the Principal
Executive Director, OALC, and the Secretary of Veterans Affairs
regarding issues concerning VA's construction, leasing, and real
property programs.
In addition to daily interaction between the offices within CFM,
CFM and its stakeholders (e.g., VA Administrations and Staff Offices)
work closely together as appropriate throughout the acquisition life
cycle of the project. Certain stakeholders (e.g., VHA, VBA, and NCA)
are required to identify their proposed projects and underlying
requirements, which are then included in the SCIP process for
evaluation, and potentially, in a subsequent VA budget. CFM's role is
in the execution of Major Construction projects and leases. CFM also
assists stakeholders during the planning process to refine the
requirements of a project.
Below is a chart indicating the relations between the OALC offices
mentioned above:
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
The Office of Capital Asset Management Engineering and Support
(OCAMES) falls under VHA's Assistant Deputy Under Secretary for Health
for Administrative Operations (ADUSHAO). OCAMES provides the policy,
funding, budget documentation, and oversight for execution and policy
compliance for the upfront planning of Major Construction projects and
Leases and for all aspects of Minor Construction and Non-Recurring
Maintenance projects. OCAMES collaborates with CFM and the medical
centers on the execution of Major Construction projects and leases to
ensure they remain within the approved scope of the project and lease
as well as meet the needs of a dynamic, modern healthcare environment.
Question 13: Are you aware of the Building Information Model, or
BIM, that the Corps uses to simulate designs?
VA Response: Yes, VA is aware of the Building Information Model
(BIM). On April 3, 2008, CFM issued a design alert requiring the BIM be
used on all VA Major projects starting with FY 2009. CFM also released
a BIM Guide in April 2010, which is being used throughout VA. OALC is
aware that its BIM guide has also been adopted by the Commonwealth of
Massachusetts, and the countries of Singapore and Australia.
Question 14: You mention in testimony that you have procured a
collaborative project management software system and should be done
fielding it in 2014. The software supports leases, major construction,
and minor construction as well as non recurring maintenance. During the
test phase of this system, what were the lessons learned and how has it
enhanced your ability to manage projects?
VA Response: The pilot of the collaborative project management
software, TRIRIGA, validated that a commercial off-the-shelf product
could be deployed and used effectively to manage VA construction
projects. During the pilot phase, VA learned the best method for
migrating projects from the current software. VA also identified the
training requirements for VA, contractor, and designer staff to utilize
the collaborative elements. The software improves accountability for
project issues and requests for information and submittals, while
enhancing information sharing between VA and its contractors resulting
in better outcomes.
Question for the Record from Representative Kirkpatrick
Question 1: According to the April 2013 GAO report, VA has not yet
developed specific guidance or instructions on how to implement
recommendations set forth by the Construction Management Review
Council. During Mr. Haggstrom's testimony today, he indicated that all
recommendations have been implemented. Could you please provide a side-
by-side list of the recommendations and how/when they were implemented
by VA? If there is a tactic yet to be implemented, please provide a
timeline for when it will be completed.
VA Response: As of August 2013, the Construction Review Council
(CRC) recommendations were considered closed with ongoing activities.
VA's construction program review is an iterative process that will
continue as VA strives to deliver first- class facilities on time and
within budget. The table below describes CRC findings and
recommendations:
----------------------------------------------------------------------------------------------------------------
CRC Major Finding Action (s) Taken
----------------------------------------------------------------------------------------------------------------
Requirements The recommendation adopted included achievement of the requirement
for 35 percent design completion for complex medical facilities
prior to requesting construction dollars. This policy was
initiated with the FY 2013 budget submission.
----------------------------------------------------------------------------------------------------------------
Design Quality The peer review process has been augmented to include
constructability reviews by professional construction management
firms. The first project to conduct a constructability review was
the Orlando SimLearn Center. This is now a standard practice for
construction projects and is monitored by OALC to ensure it is
completed prior to award.
----------------------------------------------------------------------------------------------------------------
Funding SCIP process is aligned with the budget process. The development
of integrated master schedules allows the projection of activation
funding for medical and IT needs to be forecast. This forecasting
allows coordination of funding at all levels.
----------------------------------------------------------------------------------------------------------------
Project Management Contracting officers have been assigned on site for hospital
replacement projects and other large major programs. Additional
attorneys have been hired and assigned to support major
construction. The increased staff reduces the delays and backlogs
experienced. Local change order thresholds for General Counsel
review have been raised on projects with experienced contracting
officers. A change order handbook was developed and fielded to
ensure consistent processing.
----------------------------------------------------------------------------------------------------------------
In addition to the activities described above, VA reviews
modifications to identify recurring issues and revises the
specifications for use on future projects. This allows for improvement
on future designs. The Acquisition Program Management Framework is
being applied to construction projects to ensure executive level review
and approval of projects advancing in design. The review will look at
the quality of the design and all comments will be reviewed to ensure
designs are correct for construction.
Questions for the Record from Representative Brown
You talk in your testimony about costs and change orders, but I
really only have one concern with this hearing. The Orlando VA Medical
Center.
Question 1: The last update I have received says the Medical Center
will open in August of 2014. What is the date the facility will open?
VA Response: As of December 2013, schedule updates from the
Department of Veterans Affairs (VA) prime contractor, Brasfield and
Gorrie (B&G), show a projected construction estimated completion date
of December 2014. This schedule has continued to slip from the April
2014 date provided by B&G in their response to VA's Show Cause letter.
Once construction is complete, the Medical Center will initiate a 3-
phase activation plan that begins with outpatient services and moves
inpatients in the final phase. The first patients will be seen 120 days
after final turnover of the entire building to VA.
Question 2: Please explain the lack of any progress over the summer
on this project? I refer to the 84% percent completion rate of the
facility over the three months of July, August and September.
VA Response: Completed work did not progress significantly due to
the contractors' lack of productivity and synchronization of trades,
leading to overall inefficiencies of effort. Although the VA meets
regularly with the contractor to discuss observations on performance
and progress, and has consistently provided recommendations regarding
sequencing of work and staff, the responsibility for ``means and
methods'' of completing the work remains with the contractor.
VA is utilizing the current provisions under the Federal
Acquisition Regulation (FAR) to monitor the contractor, and taking the
following steps to protect the Government's interest in project
completion:
Continue to retain funds for performance delays, Davis-
Bacon wage violations, and work deficiencies;
No reimbursement for indirect costs beyond May 12, 2013,
based upon VA Acquisition Regulations; and
Notify contractor of intent to withhold liquidated
damages assessed after extended contract completion date of August 8,
2013..
Question 3: In previous meetings and briefings, one of the issues
brought up was that there was not enough VA staff on site to oversee
the project. How have you addressed this issue?
VA Response: VA has increased the number of resident engineers, as
well as added full-time construction management and architect/engineer
personnel on site in Orlando. These staffing actions occurred over a
year ago, and OALC's perspective is there is no staffing issue.
Question 4: The previous project manager was removed due to not
following the VA instructions. How is the new manager working out? Has
there been any advancement on finishing this project?
VA Response: OALC has seen improvements with the change of the
contractor's personnel. Although the new superintendent's oversight has
yielded advancements in certain areas, it appears that the contractor's
insufficient workforce level makes it challenging to achieve
significant progress in more areas concurrently.
Question 5: One of the concerns in this project is the large number
of change orders that have been submitted. Have those leveled off? Are
there still changes being made to the design of the facility at this
late date?
VA Response: As with any project of this size, scope, and
complexity, changes continue to be identified but have tapered off
dramatically, as expected. In the past 7 months, there have been, on
average, only 13 changes initiated by either VA or the contractor a
month, each with an average value of only $5,100. In each successive
month during this period, the number of changes has progressively
decreased. Additionally, since the design of the facility is complete,
changes at this stage do not impact the design but are changes
primarily associated with utility connections or field conditions.
Question 6: Can this facility be opened in stages? I know the
outlying buildings are almost complete, except for the landscaping and
the food service. What can we do to get veterans help tomorrow?
VA Response: Currently health care services are provided to
Veterans in East Central Florida through six existing CBOCs in Lake
Baldwin, Viera, Daytona Beach, Kissimmee, Leesburg, and Clermont.
Complex outpatient and inpatient services are provided at the Tampa VA
Medical Center (VAMC), Gainesville VAMC, or local community hospital.
When construction of the new Orlando facility is complete, most of
these complex outpatient services and inpatient services will be
provided at the new facility.
The Orlando construction project includes the development of a
medical complex on 65 acres in Lake Nona. The project is being executed
through seven individual and unique contracts. As each of these
contracts is completed, and space is turned over to VA, the space is
activated. For instance, the Community Living Center (120-bed Nursing
Home) was activated in early December. The 60-bed Residential
Rehabilitation Treatment Program was activated in February. The
remaining hospital, clinic, diagnostic and therapeutic facility is
currently being completed under a contract with an estimated completion
date in December 2014. Once space is turned over to VA by the
contractor, the activation plan for this space is planned in 3 phases.
VA has a comprehensive plan to use space quickly and safely as soon as
the contractor completes the contractual requirements and releases the
space to VA. In the meantime, VA is providing health care services for
Veterans at our CBOCs, VA facilities in Tampa or Gainesville; or at one
of the area community partners.
Questions for the Record from Representative McLeod
Question 1: How many months of delay in awarding the lease for the
Loma Linda Health Care Center come from finding property owners willing
to sell?
VA Response: VA experienced delays for several reasons, including
difficulty in locating and securing a preferred site that met the
advertised criteria; site owners who became unwilling or unable to sell
their property; and valuation issues where VA and the site owners could
not reach agreement on a fair market value purchase price for the
property. Three site surveys were held and multiple sites reviewed
before a preferred site was secured through an assignable option to
purchase. The process took approximately 27 months, including about 21
months of delays as explained above.
Question 2: How many property owners owned the land currently being
developed for the Loma Linda Health Care Center?
VA Response: The Loma Linda Health Care Center is currently being
developed on land from one owner.
Question 3: What role did VHA Women Veterans Health Committees and
Women Veteran Program Managers contribute to the design of the seven
Health Care Centers to ensure that they complied with women veteran
patient privacy standards as stated in VA regulations?
VA Response: The Veterans Health Administration's (VHA) design
standards for women's clinics were developed in collaboration between
OALC's Office of Construction and Facilities Management and VHA's
Women's Health Services. This collaboration in part ensured specific
women's privacy requirements were fully incorporated into the latest
design standards to provide a safe environment for women Veterans.
During the design of each Health Care Center, medical center staff and
contracted Architect/Engineering firms were required to use VA's design
standards and requirements as the foundation for developing the design
documents.
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