[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]


 BUILDING A BETTER VA: ASSESSING ONGOING MAJOR CONSTRUCTION MANAGEMENT 
                     PROBLEMS WITHIN THE DEPARTMENT

=======================================================================

                                HEARING

                              BEFORE THE

                     COMMITTEE ON VETERANS' AFFAIRS
                     U.S. HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                      WEDNESDAY, JANUARY 21, 2015

                               __________

                           Serial No. 114-01

                               __________

       Printed for the use of the Committee on Veterans' Affairs
       
       
       
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                     COMMITTEE ON VETERANS' AFFAIRS

                     JEFF MILLER, Florida, Chairman

DOUG LAMBORN, Colorado               CORRINE BROWN, Florida Ranking 
GUS M. BILIRAKIS, Florida, Vice-         Minority Member
    Chairman                         MARK TAKANO, California
DAVID P. ROE, Tennessee              JULIA BROWNLEY, California
DAN BENISHEK, Michigan               DINA TITUS, Nevada
TIM HUELSKAMP, Kansas                RAUL RUIZ, California
MIKE COFFMAN, Colorado               ANN M. KUSTER, New Hampshire
BRAD R. WENSTRUP, Ohio               BETO O'ROURKE, Texas
JACKIE WALORSKI, Indiana             KATHELEEN RICE, New York
RALPH ABRAHAM, Louisiana             TIMOTHY J. WALZ, Minnesota
LEE ZELDIN, New York                 JERRY McNERNEY, California
RYAN COSTELLO, Pennsylvania
AMATA COLEMAN RADEWAGEN, American 
    Samoa
MIKE BOST, Illinois
                       Jon Towers, Staff Director
                Don Phillips, Democratic Staff Director

Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Veterans' Affairs are also 
published in electronic form. The printed hearing record remains the 
official version. Because electronic submissions are used to prepare 
both printed and electronic versions of the hearing record, the process 
of converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.
                            C O N T E N T S

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                      Wednesday, January 21, 2015

                                                                   Page

Building a Better VA: Assessing Ongoing Major Construction 
  Management Problems Within the Department......................     1

                           OPENING STATEMENTS

Jeff Miller, Chairman............................................     1
    Prepared Statement...........................................    48
Corrine Brown, Ranking Member....................................     2
    Prepared Statement...........................................    48

                               WITNESSES

Hon. Sloan D. Gibson, Deputy Secretary, U.S. Department of 
  Veterans Affairs...............................................     3
    Prepared Statement...........................................    49

    Accompanied by:

        Mr. Dennis Milsten, Associate Executive Director, Office 
            of Programs and Plans, Office of Construction and 
            Facilities Management, U.S. Department of Veterans 
            Affairs

Mr. Lloyd C. Caldwell, P.E., Director of Military Programs, U.S. 
  Army Corps of Engineers........................................     6
    Prepared Statement...........................................    52
Mr. David Wise...................................................    33
    Prepared Statement...........................................    60
Mr. Roscoe Butler, Deputy Director for Healthcare, Veterans 
  Affairs and Rehabilitation Division, The American Legion.......    35
    Prepared Statement...........................................    75
Mr. Ray Kelley, Director, National Legislative Service, Veterans 
  of Foreign Wars................................................    36
    Prepared Statement...........................................    79

                             FOR THE RECORD

Michael Gelber, Deputy Commissioner, U.S. General Services 
  Administration.................................................    81
Mr. Sam Carter, Carter Concrete Structures.......................    85

 
 BUILDING A BETTER VA: ASSESSING ONGOING MAJOR CONSTRUCTION MANAGEMENT 
                     PROBLEMS WITHIN THE DEPARTMENT

                              ----------                              


                      Wednesday, January 21, 2015

            Committee on Veterans' Affairs,
                     U.S. House of Representatives,
                                                   Washington, D.C.
    The committee met, pursuant to notice, at 10:42 a.m., in 
Room 334, Cannon House Office Building, Hon. Jeff Miller 
[chairman of the committee] presiding.
    Present:  Representatives Miller, Lamborn, Bilirakis, Roe, 
Benishek, Huelskamp, Coffman, Wenstrup, Walorski, Abraham, 
Zeldin, Costello, Radewagen, Bost, Brown, Takano, Brownley, 
Titus, Ruiz, McLane Kuster, and O'Rourke.

           OPENING STATEMENT OF CHAIRMAN JEFF MILLER

    The Chairman. Ladies and gentlemen, the hearing will come 
to order.
    I would like to welcome everybody to today's hearing 
entitled Building a Better VA: Assessing Ongoing Major 
Construction Management Problems Within the Department.
    The purpose of this hearing is to address continued 
problems occurring in VA's persistent construction delays and 
cost overruns involving its construction of the replacement 
Aurora, Colorado VA Medical Center.
    VA has been found by the Civilian Board of Contract Appeals 
to have breached its contract with its prime contractor on this 
project and the facility could eventually cost over a billion 
dollars to complete.
    This committee has held numerous hearings in the last few 
years involving VA's inadequate management of its construction 
projects, each of those hearings being based on considerable 
evidence.
    Quote, ``We have come to a point in VA's major construction 
program where the administrative structure is an obstacle that 
is not effective supporting the mission. As a result, our 
veterans are the ones who are left without services and our 
taxpayers are the ones who are left holding the check or 
writing a new one,'' end quote.
    Members, this was part of an opening statement that I made 
March 27th of 2012 at a hearing on VA major construction, but 
it seems that nothing has changed nearly three years later. 
Despite warnings and corrective suggestions being presented 
from inside and outside of the department, very little has 
changed.
    Based on the lengthy committee investigations that gave 
rise to these hearings, the committee asked the GAO to audit VA 
major construction projects. Their report issued in April of 
2013 found that on average, the hospital construction projects 
reviewed were about three years late and $360 million over 
budget.
    Every time we have asked VA about those results, it has 
argued that it is not delayed or over budget based on its own 
accounting.
    Further, when we held a hearing on the Aurora VAMC 
construction project in April of 2014, the tenor of VA 
responses was that it was the contractor's fault that the 
project was not completed and that it was still operating 
within its budget.
    I have a feeling that the VA will not be able to cling to 
those illusions any longer because December 9th of 2014, the 
CBCA found that the VA materially breached its contract with 
its prime contractor on the Aurora construction project, 
Kiewit-Turner.
    It found that VA did not provide a design that could be 
built within the stated budget and it was also the VA's fault 
to the point that CBCA said KT would be well within its rights 
to simply walk off the job. And that is exactly what was done.
    Now VA is left scrambling to make KT whole enough to get 
back to work. VA may even have to come back to Congress to ask 
for perhaps 500 million or more dollars to fix the problems 
that the committee has brought to light year after year only to 
be ignored by the VA.
    I visited the Aurora construction site on Monday with 
Congressman Coffman and Congressman Lamborn to see again in 
person what is taking so long and why this project has been a 
veritable money pit for the last several years.
    Once completed, this facility will be well equipped to 
provide the best possible care available which is exactly what 
the veterans served by every VA facility deserve. It is long 
past time for these projects marred by bureaucratic ineptitude 
to be complete.
    And I look forward to hearing from the VA and other 
witnesses here today on how we can correct the abysmal state 
that VA's major construction program has been in for years.

    [The prepared statement of Chairman Jeff Miller appears in 
the Appendix]

    With that, I yield to the ranking member, Ms. Brown, for 
any opening statement she may have.

       OPENING STATEMENT OF CORRINE BROWN, RANKING MEMBER

    Ms. Brown. Thank you, Mr. Chairman.
    And I would like my complete statement to be entered into 
the record.
    Ms. Brown. As I said from the beginning, I am very excited 
about being the ranking member on this committee. And having 
been on this committee for over almost 23 years, I realize that 
for 20 years the VA has not built any VA facilities.
    The VA has lost a lot of the expertise that has been there 
in the past. I think the role of this committee is to find out 
how we are going to move forward in making sure that the VA is 
able to provide the facilities that we need. Many of the 
facilities we are discussing Las Vegas, Orlando, Denver, New 
Orleans, were authorized years plus years ago.
    These facilities have had major problems. There's enough 
fault and blame to be shared between the VA and the 
contractors. It is not just one issue it's a multiplicity of 
issues.
    I look forward to hearing what VA and others have to say 
about how we should move forward.
    I am going to yield back my time.

    [The prepared statement of Corrine Brown appears in the 
Appendix]

    The Chairman. Thank you very much, Ms. Brown.
    Members, I would ask that you waive your opening 
statements. They will be entered into the record as custom in 
our committee. Without objection, so ordered.
    Our first panel today, we are going to hear from the 
Honorable Sloan Gibson, Deputy Secretary for the Department of 
Veterans Affairs. He is accompanied by Mr. Dennis Milsten, 
Associate Executive Director of the Office for Programs and 
Plans within VA's Office of Construction and Facilities 
Management. And we are also going to hear from Mr. Lloyd 
Caldwell, Director of Military Programs for the Army Corps of 
Engineers.
    Your complete written statements will be made a part of the 
record. And I want to say for the record thank you for meeting 
with me on Monday in Aurora. It is good to see you again.
    And, Deputy Secretary Gibson, you are recognized for your 
opening statement for five minutes.

     STATEMENTS OF SLOAN D. GIBSON, DEPUTY SECRETARY, U.S. 
DEPARTMENT OF VETERANS AFFAIRS, ACCOMPANIED BY DENNIS MILSTEN, 
  ASSOCIATE EXECUTIVE DIRECTOR, OFFICE OF PROGRAMS AND PLANS, 
    OFFICE OF CONSTRUCTION AND FACILITIES MANAGEMENT, U.S. 
                DEPARTMENT OF VETERANS AFFAIRS;

                  STATEMENT OF SLOAN D. GIBSON

    Mr. Gibson. Thank you, Mr. Chairman.
    Chairman Miller, Ranking Member Brown, distinguished 
Members of the committee, thank you for this opportunity to 
update the committee on construction of the Denver VA Medical 
Center in Aurora and the actions that we are taking in light of 
the situation.
    Let me introduce Dennis Milsten to the committee. Dennis is 
Director of VA's Construction and Facilities Management, Office 
of Operations.
    In the wake of the board's decision on Denver, I asked 
Dennis to serve as senior leader on that project. He brings 
over three decades of construction experience in both the 
public sector and private sector including 19 years with the 
Corps of Engineers on projects like the Pentagon renovation.
    Chairman Miller, Representative Coffman, and Representative 
Lamborn, thank all three of you for joining us at the site. 
Thanks for taking the time to be there. I don't think anything 
can take the place of actually being on the ground and seeing 
the facility and gaining an appreciation for the scale and for 
you can imagine what that facility will be like for veterans 
once it is completed.
    I want to acknowledge some important partners. We have a 
long history of collaboration with the Corps of Engineers and 
we are grateful for their advice and support role in the 
interim agreement with Kiewit-Turner. And we are pleased that 
they are going to serve as our agent to manage this project to 
completion.
    Yesterday I met again with leaders of Kiewit-Turner. KT is 
justifiably proud of the work they have done in Denver and they 
are looking forward to see the medical center complete and 
serving Colorado's veterans.
    And we appreciate the good work of the Government 
Accountability Office including their recommendations in 2013 
that we have integrated into our current construction 
practices.
    We will continue to collaborate with these and other 
partners as well as this committee as we move forward.
    To be clear, the situation in Denver is unacceptable and I 
apologize for that. It is not acceptable to veterans. It is not 
acceptable to taxpayers. It is certainly not acceptable to 
Secretary McDonald or me.
    Veterans and taxpayers are right to expect more and they 
deserve much better from their VA. We have two priorities in 
Denver, complete the facility without further delay and deliver 
under the circumstances the best value that we can for 
taxpayers.
    I understand that everyone is anxious to know what it will 
cost to complete the project. Right now we don't know. The 
Corps doesn't know and Kiewit-Turner doesn't know. That will be 
determined over the course of the next several months and we 
will work closely with Congress to develop the best options for 
funding completion.
    Most immediately to settle claims and continue operations 
under the interim agreement, we are going to request 
reprogramming on some selected projects taking care to minimize 
the impact on other projects while we are working to get Denver 
back on track.
    I think it is a very fair question to ask what went wrong 
in Denver. And I think as we explore the history of the 
project, it will be clear that there were many things. Among 
them, we did not have in place the benefit of a 35 percent 
design before we requested funding. We did not have in place a 
clear, structured, effective process to manage change. We 
didn't benefit from rigorous constructability reviews. And 
perhaps most fundamentally, our choice, timing, and management 
of the integrated design and contract vehicle resulted in a 
design that was never reconciled with the firm target price in 
the construction contract.
    While we work to complete the project without further delay 
and deliver the best value we can, we have an obligation to 
ensure that this never happens again. That means learning all 
we can from past mistakes and putting in place corrective 
actions to improve future performance.
    Veterans and taxpayers also expect that a thorough review 
be completed and those responsible be held accountable. There 
are several steps we are taking with these objectives in mind.
    We have asked the Corps to complete a detailed review of 
the Denver project, to review VA's other largest projects, and 
in general to review the department's management of major 
projects.
    I have directed that an administrative investigation board 
be convened to examine all aspects of the Denver project to 
determine the facts that led to the current situation and 
gather evidence of any mismanagement that contributed to this 
unacceptable outcome.
    And effective immediately, the department's Construction 
and Facilities Management organization will report to me 
through the VA's Office of Management.
    Stepping back for a moment from this immediate situation, I 
recall that in the months prior to my confirmation, I spent a 
lot of time reviewing hearing testimony, media clips, and IG 
and GAO reports. Coming in from the private sector, I had 
serious doubts about VA's construction management capability.
    But what I found when I got to VA were many important 
changes already implemented. In some instances, changes that 
would improve projects that were already underway, but in every 
instance that would improve newly started projects.
    For example, we were already committed to designs that 
emphasized functionality and good value. We were already 
requiring a 35 percent design before publishing costs and 
schedule information and requesting funding.
    We were already using private construction management firms 
for constructability reviews at each major design phase. We 
were already using project management plans to improve 
communication among all participants. We were already 
integrating medical equipment planners into construction 
project teams.
    We had already put in place thorough risk management 
practices to mitigate challenges. We had already set up project 
review boards modeled on the Corps of Engineers' district 
office design. And we had already added key talent from the 
outside of the department to strengthen training and require 
project management certification for our project leaders.
    That does not excuse our failure to have these measures in 
place years ago, but it does mean that as they are relevant to 
particular phases of projects and construction, these and other 
measures are being applied now to our 53 ongoing major 
projects.
    Notwithstanding all these changes already in place, I am 
confident that our current construction management practices 
can be further improved. My commitment is that we will learn 
all we can from the mistakes in Denver as revealed by the 
Corps' examination and our internal review. And we will 
implement changes with two fundamental criteria in mind, doing 
the right thing for veterans and getting the best value for 
taxpayers.
    Finally, I don't want to lose sight of the fact that while 
we resolve the situation in Denver, the employees of the VA 
Eastern Colorado Healthcare System have continued to provide 
quality care to our veterans nonstop regardless of any issues 
with the construction of the new medical center.
    Thank you for the opportunity to testify and we look 
forward to answering your questions.

    [The prepared statement of Sloan D. Gibson appears in the 
Appendix]

    The Chairman. Thank you very much, Mr. Gibson.
    Mr. Caldwell, thank you for being here. Again, thank you 
for meeting with us on Monday. You are recognized for five 
minutes.

                 STATEMENT OF LLOYD C. CALDWELL

    Mr. Caldwell. Thank you, Mr. Chairman.
    Mr. Chairman and distinguished Members of the committee, I 
am pleased to be with you today representing the U.S. Army 
Corps of Engineers and Lieutenant General Thomas Bostick, the 
Chief of Engineers.
    I provide leadership for execution of the Corps' 
engineering and construction programs worldwide to include our 
support to other agencies.
    The U.S. Army Corps of Engineers is one of the Department 
of Defense construction agents who execute infrastructure 
projects for the Department of Defense. Interagency 
collaboration is an important element of the Corps' work as a 
part of our service to the Nation.
    My testimony will address the Corps' assistance to the 
Department of Veterans Affairs', project acquisition process 
and our experience in medical facility construction.
    The Corps has an established relationship with the VA from 
the national headquarters levels to our regional offices 
working with the 21 Veterans Integrated Service Network offices 
as well as with the National Cemetery Administration.
    We have supported a broad range of construction and 
maintenance projects totaling almost $1.6 billion with the VA 
since 2007. Authority for the Corps' work with the Veterans 
Administration is based on the Economy Act which provides both 
parties with sufficient authorities to work collaboratively on 
VA projects.
    In December of 2014, the VA requested our assistance to 
complete the Aurora, Colorado replacement VA medical center 
project and we have agreed to do so. We are assessing the 
requirements of the project and are developing a new 
interagency agreement that would transition construction agent 
authority and responsibility for this project to the Corps of 
Engineers.
    We are also advising the VA on the management of their 
interim construction contract with the contractor, Kiewit-
Turner, to allow continued progress on the project.
    The Corps has developed processes and capabilities for 
design and construction which have been refined over the many 
years. Our project management process brings together teams of 
diverse professionals that are necessary for the project life 
cycle to deliver a successful project and that includes our 
construction, our acquisition, our design professionals as well 
as project management professionals. These teams work 
collaboratively to account for project delivery, methods, 
scope, schedule, and cost.
    The Aurora project is unique in that we are entering the 
project at an advanced stage of the work, but with an 
assessment by our experts and with collaboration with the VA, 
we are confident that we can bring the project to successful 
completion.
    Budget and schedule risk is inherent in executing any 
construction projects and medical facilities are among the most 
complex facilities that we construct and deliver. They require 
exacting technical design and construction standards which must 
be carefully managed and are subject to changing requirements 
due to evolving medical technology even during construction.
    To ensure the standards and criteria of the defense health 
system within which we most often operate, we have established 
a medical center of expertise which applies a full range of 
specialized knowledge to address demanding healthcare facility 
requirements. They help to integrate the clinician and other 
medical staff requirements to architectural and engineering 
standards.
    The Corps has a long history of executing some of the 
Nation's most challenging construction programs. In the past 13 
years, the Corps has physically completed 2,499 military 
construction projects to include for other agencies with a 
combined program amount of $52 billion.
    The Corps has delivered or is in the process of designing 
and constructing a full range of medical facilities for the 
Department of Defense to include hospitals valued near a 
billion dollars that are capable of delivering world-class 
medical services for the members of our Armed Forces and their 
families.
    Our relationship with VA is strong and we look forward to 
working with the VA as construction agent to complete the 
Aurora hospital project and, in doing so, to serve the Nation's 
veterans.
    Thank you, Mr. Chairman, for inviting the Corps to testify 
to address its assistance to the Department of Veterans 
Affairs. I welcome your questions.

    [The prepared statement of Lloyd C. Caldwell appears in the 
Appendix]

    The Chairman. Thank you very much, Mr. Caldwell. We 
appreciate you being here to testify and also accept questions 
from Members of the full committee.
    At this point, I want to yield my time for questions to the 
gentleman that represents the facility that we are here to talk 
about today, the subcommittee chair for Oversight and 
Investigations, Mr. Coffman.
    Mr. Coffman, you are recognized.
    Mr. Coffman. Thank you, Mr. Chairman.
    Mr. Milsten, in its February 2014 fact sheet, VA had the 
total completion of the Aurora facility at 42 percent. On 
Monday, Deputy Secretary Gibson confirmed that the total 
completion of the project is now 50 percent. KT, however, 
maintains that the project is only 40 percent complete.
    Either way, how has this project only progressed at best by 
eight percent in nearly a year?
    Mr. Milsten. One of the things that goes into this process 
of determining percentage is we were basing our percentages of 
completion on an artificial budget and so we have lost some 
perspective on what the actual construction completion date is 
or percentages.
    We have had some discussions that it is somewhere between 
50 and 40. My experience from looking at this, we have the 
steel completed. We have the precast completed. We have roofs 
on facilities. We have curtain walls going up. We are about 50 
percent complete with this construction.
    Mr. Coffman. Deputy Secretary Gibson, VA is convening an 
administrative investigation board to investigate the Aurora 
project because VA central office officials have no idea what 
happened, again despite years of warnings from inside and 
outside the department.
    Who at VA's central office was tasked with providing 
oversight for the Aurora construction project?
    Mr. Gibson. I think you would look to the chain of command 
within Construction and Facilities Management which would 
include Stella Fiotes who is a relatively more recent addition 
to VA. It would include Glen Haggstrom. It would include the 
former deputy secretary and the secretary.
    Mr. Coffman. Who is in charge of overseeing Glen Haggstrom?
    Mr. Gibson. The person in that position reports to the 
deputy secretary.
    Mr. Coffman. Okay. So that would be your----
    Mr. Gibson. That would be me now, yes.
    Mr. Coffman [continuing]. Position? Okay. And also, Deputy 
Secretary Gibson, why was the department's standard operating 
procedure opposed to involving the Army Corps for so long in 
Aurora despite repeated warnings of VA mismanagement?
    Mr. Gibson. Having not been a part of that discussion 
process over the years, I don't know that I have a good answer 
for you.
    I think as I looked at the situation following the board's 
decision, it was very clear to me with the priorities to 
complete the project without further delay and with the best 
value for taxpayers that engaging the Corps was the right 
course of action on this project.
    Mr. Coffman. Okay. Mr. Milsten, what is the estimated total 
cost of the Aurora project and what is now the estimated date 
for completion?
    Mr. Milsten. First of all, the estimated date of 
completion, we are looking for a date in 2017 based on where we 
are today. And as far as the cost to complete, that is 
something that the Corps of Engineers is going through to 
determine what the cost to complete this project is.
    As Deputy Secretary Gibson said, we will spend the next 
couple of months trying to figure that out because between the 
contractor, us, and the Corps of Engineers, we don't have that 
number today.
    Mr. Coffman. Okay. And I think, Secretary Gibson, I think 
in our discussions on Monday, I think you discussed when the 
project may run out of money. And I think it kind of sort of 
corresponds in with the interim agreement.
    Do you think with your programming capabilities, you think 
about June, sometime in June if there is not some type of 
supplemental appropriation by Congress that work could stop 
again on this project?
    Mr. Gibson. The idea here is for us to be able to go 
through some steps. We funded the interim contract. We are 
actually doing some internal reprogramming with the notice of 
Congress of some small additional amount. We will need to come 
to Congress for approval to reprogram some more substantial 
amount to carry us on the interim contract all the way through 
until June.
    Our hope is and our expectation is we sync this up with the 
Corps of Engineers is that we are going to be able to provide 
the funding. The expectation is we will provide the funding to 
bridge the period from where we are right now until when the 
Corps is able to negotiate a contract to complete the project.
    Mr. Coffman. My final question. Mr. Caldwell, as bad as the 
cost overruns are right now--we are hundreds of millions of 
dollars over budget. We are years behind schedule.
    But if, in fact, this project were moth-balled, if, in 
fact, Congress didn't appropriate more money and the 
construction stopped in June and the whole project was 
demobilized, moth-balled, wouldn't that really greatly 
aggravate the cost when the project would be restarted?
    Mr. Caldwell. Yes, sir. In fact, it would cause a worse 
situation because you can't-- to begin with, you have to take 
certain actions to close up a project, so you are using funds 
that otherwise would be used for construction to ensure that 
you are not creating a different hazard for the public and so 
forth and that the facility that is constructed doesn't 
degrade. So there are some caretaker requirements associated 
with that and then to restart it, it would be an additional 
cost as well.
    Mr. Coffman. Okay. Mr. Chairman, I yield back.
    The Chairman. Before I yield to Ms. Brown, Deputy 
Secretary, in your reprogramming, do you anticipate the dollars 
that you reprogram to exceed the cap of 800 or 880 with your 
ability to go above that?
    Mr. Gibson. I do expect that would be the case and we would 
need help and support from this committee and from Congress to 
raise that cap.
    The Chairman. Yeah. The cap will have to be raised.
    Mr. Gibson. Yes, sir.
    The Chairman. I mean, we cannot go around it. It is a 
firm----
    Mr. Gibson. Right.
    The Chairman [continuing]. Firm cap. So at what point do 
you think you will know what number that will be, I mean, 
because surely it will be before June? Are you going to try and 
do it all at one time and just have one----
    Mr. Gibson. No. We will need that support prior to June. 
Congressman Coffman and I have been having a series of 
conversations about that. We think raising the cap to $1.1 
billion from the current $800 million would be able to carry us 
during that interim period of time.
    The Chairman. Okay. Thank you.
    Ms. Brown.
    Ms. Brown. Thank you, Mr. Chairman.
    I would have loved to have joined you in Denver, however, 
it was Martin Luther King's birthday and I had other 
commitments in my district. Hopefully I'll be able to join the 
delegation in the future.
    Mr. Gibson. We would love to host you out there.
    Ms. Brown. Thank you.
    The VA facilities are having problems in Denver, Orlando 
and New Orleans.
    This Committee has authorized, and Congress has 
appropriated, billion of dollars for VA construction programs 
over the past decade. The question we must asks ourselves is 
are we getting what we paid for, and has access improved for 
our veterans.
    We must ask ourselves what must be done to make the VA 
construction program function as we intend it to. What must we 
do to make sure that the facilities we are building today do 
not come in over budget and late. If we do not do this we run 
the risk of building facilities that may already be obsolete 
when the doors are open and are merely expensive memorials and 
little else.
    For nearly two decades the VA was out of the major facility 
business. By not building any major medical centers in the 20 
years preceding authorization of the Las Vegas, Orlando, Denver 
and New Orleans Medical Centers, has the VA lost the ability to 
manage a construction portfolio?
    And I am going to say that I think a lot of the expertise, 
20 years not building a facility is part of the problem.
    Please give us not just an update on these projects, but 
tell us what we as Congress need to do to help you move 
forward.
    The Army Corp of Engineers do great work with the ports. VA 
did great work with Katrina.
    Mr. Gibson. Yes, ma'am. First of all, as it relates to 
Orlando, the current schedule would call for construction to be 
complete the end of February.
    Ms. Brown. Then we do the punch?
    Mr. Gibson. We are working through the punch list. As you 
know, some portions of the facility have already been turned 
over. In fact, we are already seeing patients.
    The progress really accelerated in Orlando as we got 
different leadership teams, both parties on the ground, and a 
series of meetings that I held directly with Brassfield & 
Gorrie over the previous seven or eight months. And I think we 
have moved that very expeditiously and Brassfield & Gorrie has 
performed really very well on that project.
    I would say more broadly, and Congressman Coffman and I 
have had conversations about the expanded role for the Corps, 
Turning everything over to the Corps would be a very big 
decision and it would be a decision that we would want to make 
on a very well-informed basis.
    I think some of the work that the Corps is doing for us 
right now to review Denver and other major construction 
activity will inform that process.
    As I mentioned in my opening remarks, what we are after is 
quite simply doing the right thing for veterans and being a 
good steward of taxpayer dollars. And those are really the only 
two parameters.
    If a more expansive role for the Corps is the best route to 
get there, then we are all for it. And, frankly, I would be 
surprised if we don't find ourselves working more closely with 
the Corps in the future.
    Ms. Brown. Right. Like the Jacksonville, I think it is very 
important to have the physicians and others in the planning 
stages. As you design more facilities to build, its important 
to have employees (i.e. doctors) inputs.
    Mr. Gibson. I think one of the lessons learned is the need 
to impose more discipline throughout the entire process. That 
includes a very rigorous requirements definition period and 
then the requirements get locked down. That also includes more 
robust communication with various stakeholders including 
Members of Congress.
    I think what we have done habitually is conducted a fair 
amount of this behind the curtain. Sometimes because we are 
engaged in procurement sensitive activity, sort of been the 
excuse, we have got to find ways to work around that so that we 
are able to engage with various stakeholders on these projects 
on the front end and we have got good consensus and awareness. 
And where there is not a hundred percent agreement, which there 
oftentimes may not be, at least there is an awareness in place 
of where we are going and why we are going there.
    Ms. Brown. Give us the status of the Denver project now? Is 
it moving forward and how much additional funds will you need 
for this facility?
    Mr. Gibson. The construction is back underway at Denver. 
Kiewit-Turner is ramping up the number of trade on the site 
literally every single day. We expect to be up to about a 
thousand on the site by, I believe they told us by the end of 
March, if I am not mistaken, which is close to where they were 
prior to the shutdown.
    We are operating under the interim contract. We will need 
some additional funds through a reprogramming action to extend 
that period of time and then bridge us to the period of when 
the Corps is able to negotiate a contract to complete.
    Ms. Brown. Just one quick question for Mr. Caldwell. The 
Army Corps' involvement in this project, and you mentioned that 
you all have been involved in building many hospitals all over 
the world and, of course, I am aware of that, how is the 
partnership working?
    Mr. Caldwell. The reports I have received have been very 
positive. We have sent a team of about 17 people to the project 
beginning in January. We actually had a couple of people there 
in mid December. And we have had a couple of our senior 
executives attend meetings there.
    And all reports that I am receiving from them have been 
very positive that the Veterans Administration team that is on 
site has been very open and cooperative. And so we believe it 
will be a collaborative relationship as we go forward.
    Ms. Brown. Thank you.
    I yield back the balance of my time.
    The Chairman. Thank you very much, Ms. Brown.
    Mr. Lamborn, you were also in the meeting on Monday. You 
are recognized for five minutes.
    Mr. Lamborn. Thank you. And thank you, Mr. Chair, for being 
there coming from Florida.
    And I want to first of all recognize Representative Coffman 
and his foresight and leadership. When he was first saying the 
Army Corps of Engineers need to be brought in, a lot of people 
didn't believe him. And, yet, here they are now literally 
sitting at the table. So I appreciate that.
    Secretary Gibson, we are all very concerned about the cost 
overruns and the time delays with the Denver hospital.
    Can you reassure veterans in Colorado that the time delays 
will not prevent veterans from receiving the healthcare that 
they need in the meantime?
    Mr. Gibson. As I mentioned during my opening remarks, the 
Eastern Colorado VA Healthcare System continues to provide 
great care to veterans. You know, most recent number, probably 
the month of December, November, December, 64,000 outpatient 
appointments completed during that month, 92 percent of those 
appointments completed within 30 days of when the veteran 
wanted to be seen.
    Still not good enough, but it tells me that there is an 
awful lot of great care being delivered there. We are also 
ramping up both choice and also referrals to care in the 
community under VA's traditional non-VA care. So we are 
committed to delivering to veterans right now and for the 
interim period of time the best possible care.
    Mr. Lamborn. Okay. Thank you.
    And for either one of you, and we have touched briefly on 
this, but when specifically will we know the final and best 
estimate of the cost overrun so we on this committee can begin 
the difficult work of identifying funds needs to bring the 
hospital to completion?
    Mr. Gibson. I will try to answer that and then defer to the 
two experts here.
    The process that we are going to have to go through here, 
and this was a topic of robust discussion just yesterday with 
the senior leaders at KT, in a contract negotiation, typically 
price is the last thing that falls out of the process. And so 
we are applying a lot of pressure to our teams together 
collaboratively to provide as much information as early as we 
possibly can.
    But I think the general time frame, some clarity, several 
months from now is going to be about the earliest I think we 
can hope to have a good idea.
    Mr. Lamborn. Okay. Several months from now.
    Mr. Gibson. Yes.
    Mr. Lamborn. And that is as specific as we can be right 
now?
    Mr. Gibson. That is as specific as I would want to be, yes, 
sir.
    Mr. Lamborn. Okay. And I know you don't want to get ahead 
where wrong figures are thrown out there creating false 
expectations.
    Mr. Gibson. You know, I think one of the biggest problems 
we ran into in this project is we tried to push to a firm 
target price before we had everything locked down. We rushed to 
get there. We were anxious. We were impatient. I think a lot of 
that probably had to do with the fact that it had taken forever 
to get to that point anyway and so everybody wanted to get on 
with it. And I think that is why we find ourselves sitting here 
today.
    Mr. Lamborn. Okay.
    Mr. Gibson. I want to do this right.
    Mr. Lamborn. Exactly. And I understand that. I mean, we are 
eager to move forward, but we want to do it right.
    Mr. Gibson. Yes, sir.
    Mr. Lamborn. And lastly, for either one of you, has the VA 
considered developing a standard hospital design template in 
light of all the current major construction overruns that could 
be used throughout the country with only minor local 
modifications which would, I believe, potentially save tens of 
millions of dollars on each project?
    Mr. Milsten. Sir, I am happy to say that we have begun that 
program. We looked at our clinics, our leased clinics. We have 
developed some standards to go forward. One of the things that 
each one of our medical centers has is a unique program of 
services that they provide to the veterans.
    So what we are looking to do is develop templates that we 
can then say if we have got a 1A hospital with ten operating 
rooms is the workload, this is the configuration or template 
that we would use. And then by adjusting the adjacencies, 
looking at the physical constraints of the site, we can then 
build the building blocks that cut down on the design effort, 
cut down on the customization, if you will, and develop that 
better value for the taxpayers.
    And this is experience that we have learned from the Army 
Corps of Engineers. They have done it with barracks, dining 
halls. They are doing it with some of their facilities. We work 
hand in hand with them on our space and equipment planning 
programs so that when we program out a hospital, we are using 
the same kind of background information that they use also.
    So this is something we are also looking at our other 
partners within the federal space and within the other medical 
communities to make sure we get hospital templates that can be 
delivered, that we can cut down the design effort because one 
of the things that cuts down on the change orders on the back 
end is something that is important drivers, speed to delivery.
    If I can cut down the distance between when a project gets 
visualized and doctors come up with their requirements and 
delivery of it, we cut down on the amount of change and turmoil 
that goes on in a project.
    Mr. Lamborn. Okay. Thank you for being here today. Thank 
you for being in Denver on Monday.
    The Chairman. Mr. Takano, you are recognized.
    Mr. Takano. Thank you, Mr. Chairman.
    Mr. Gibson, I understand that the VA is reprogramming funds 
to the short-term contract with KT until a long-term contract 
can be completed.
    Can you tell me where the funds are coming from that are 
being reprogrammed?
    Mr. Gibson. We have not identified the projects yet. The 
analysis that we are going through is we are trying to identify 
projects where we can reprogram funds with the least possible 
adverse impact on that project from a time table standpoint. 
And the intention certainly is going to be that we replenish 
those reprogrammed funds as quickly as we possibly can.
    Mr. Takano. Okay. On January 19th, the Veterans 
Administration announced it was convening an administrative 
investigation board.
    Can you please walk this committee through the time line 
and what you will accomplish by convening this board, the steps 
that are going to be taken, and who will preside over this 
board and who will serve on the board and any other details 
that you can tell us?
    Mr. Gibson. Sure. I will tell you what I can. An 
administrative investigative board is a formal investigative 
process that we use inside the department to investigate and 
gather evidence to support any misconduct, any wrongdoing, any 
management negligence, or the like.
    It is a fairly routine measure, routine mechanism that is 
applied at various levels across the department. This would be 
one that would be--it is being established at my direction. And 
Office of Accountability Review is working to constitute that 
AIB, typically formed of three. In this case, it will be three 
senior executives.
    Part of our challenge here on this particular AIB is having 
people with the right expertise. And so we are working, I 
suspect over the next several weeks, to identify individuals 
likely from outside the department, from other federal 
departments who will come and serve on this AIB because they 
bring that particular expertise with them.
    The investigative process will last, you know, my guess is 
in this particular case many weeks if not several months at 
least as they work through to gather evidence. These projects 
have been in various degrees, various stages for a decade.
    I think the challenge will be to focus on specific episodes 
and the history of these projects, do a much deeper dive 
exploring exactly what happened, who the involved parties were, 
what their responsibilities were, and was there any negligence 
or any mismanagement that happened and where that happened to 
gather the evidence that then becomes the basis for an 
administrative action.
    Mr. Takano. Mr. Caldwell, you are with the Corps of 
Engineers, correct?
    Mr. Caldwell. Yes, sir, that is correct.
    Mr. Takano. Can you tell me, you know, what is it going to 
cost the VA for the transfer authority to the Army Corps?
    Mr. Caldwell. Sir, as we determine what the scope of the 
effort is, part of that will be to determine what our cost is 
to execute that scope. For our initial work now that we are 
doing, the VA has provided funds to us just based on an 
estimate of the number of people and the amount of time that 
they will be working to scope out the requirements.
    Typically, on large projects of this nature, if we were 
starting at the beginning, we would program an amount of about 
5.6 percent for our cost to administer the contract and perform 
the requirements. And then there is additional funds for 
design. So something in that order of magnitude would be 
likely, although it could be greater in this case because the 
nature of what we are dealing with here is greater.
    So the manner in which that operates is that we will assess 
what the requirements are. We will assess the level of effort. 
We will develop a budget and provide that budget to the 
Veterans Administration. And then our objective is to operate 
within that budget once the two parties have agreed to it.
    Mr. Takano. As of now, you are still trying to assess those 
costs and----
    Mr. Caldwell. Yes, sir. At this point in time, we have got 
a bit of distance to go to have assessed what the entire scope 
of requirements are for this project.
    Mr. Takano. Thank you, Mr. Chairman. My time is up.
    The Chairman. Thank you very much.
    Mr. Milsten, after the CBCA found that the VA, quote, 
``does not have sufficient funds to pay for construction of the 
entire project as currently designed and has no plans to ask 
for money,'' end quote, so the question is, why were there no 
plans after GAO alerted the VA to significant cost overruns and 
delays in April of 2013 and this committee has held three 
hearings highlighting the same thing going back to March 2012, 
May of 2013, and April of 2014?
    Mr. Milsten. I don't have a good answer for why we didn't 
come back and ask for funds other than the fact that our 
project teams out there on site felt that the hospital could, 
in fact, be built within the budget. They were relying on the 
advice of many people within the department to continue pushing 
this project forward.
    The Chairman. On the 22nd of December, our staffs had 
conversations regarding the way ahead or the next steps at 
Aurora. Your staff at that time, according to my staff, 
promised to provide the committee with a risk assessment 
complete with cost estimates by the end of the following 
business day.
    As you know, we don't have that. And from the testimony at 
the table today, it doesn't appear we are getting it any time 
soon.
    Why would somebody promise that without the capability of 
delivering?
    Mr. Gibson. If I could address that, the response, Mr. 
Chairman, I think Mr. Milsten misspoke that day. It was just a 
bit out over the end of his skis. As we have looked at that 
request, and I think you are aware that we offered to make that 
document available in camera late last week to members of the 
staff or Members of the committee.
    As we have discussed with the Corps and as we discussed a 
little bit on Monday, being able to keep close hold information 
that could potentially influence the ultimate negotiation of a 
contract is something that we need to be very cautious about. 
And there is information in the risk assessment that could 
compromise those conversations.
    The Chairman. Again, as we have discussed in the past, and 
I have great understanding of not wanting to compromise any of 
the negotiations, but Congress has total oversight. And if we 
were at the beginning of the project, that might be one thing, 
but we are in the middle of something now. And it is not like 
the committee would intend to make anything public, you know, 
and you have opened the central office much more than it had in 
the past. And we appreciate that.
    And, you know, I understand what getting out over your skis 
means even though I come from the great State of Florida. Ours 
is on the water.
    Mr. Gibson. You can do that on the water too.
    The Chairman. Yeah. I tell you it hurts when you get out 
over your skis.
    So, Mr. Gibson, talk a little bit about accountability 
within the agency because we are not talking about one project. 
We are talking about a number of projects and we are not 
talking about a small amount of money. We are talking about 
tens if not hundreds of millions of dollars in cost overruns.
    The veterans are most important and to get the projects 
completed, we understand that. But, you know, there was 
complete inept abilities at a number of levels. And I don't 
think you necessarily need to name names here, but help assure 
this committee that something is going to be done from within 
that would prevent this from ever occurring again.
    Mr. Gibson. Yeah. I think, first of all, you know that I 
haven't exactly been bashful about enforcing accountability 
where we had evidence to support that. Clearly veterans and 
taxpayers and Members of Congress, our elected representatives 
expect us to conduct a thorough review and where folks have not 
done their jobs that we hold them accountable.
    And my commitment is that we will do that. That is why we 
asked the Corps to undertake an objective, and Joe Calcara, who 
you met on the project, is leading that effort for the Corps. 
And in my conversations with him, I made it very clear what I 
want is on-the-ground truth. Call it like you see it. I don't 
want you to pull any punches. I want to understand what went 
wrong here. We need to understand that.
    And the same guidance will go to the members of the AIB 
once that investigative board is formed to ensure that we 
understand exactly who is accountable, at what point, for what 
decisions and what activities throughout the life of this 
project.
    Ms. Brown Mr. Chairman----
    The Chairman. Yes.
    Ms. Brown [continuing]. Before we move on, may I have just 
30 seconds?
    The Chairman. Certainly.
    Ms. Brown. I was at that particular meeting where we had a 
lengthy discussion and I felt that the person was, I don't want 
to say being threatened, but was pushed to the point that he 
said things that perhaps I didn't think it was appropriate 
because a legal lawsuit was also going on.
    And I think maybe we should hear from counsel, our counsel 
as to our questioning when there is an active lawsuit against 
the VA, so it is against us. And I think we need to consider 
that when we are asking questions of the panel or the 
committee.
    The Chairman. I certainly understand that, but remember 
that the VA is part of the administration and so the lawsuit is 
against the administration, not against the Congress. And we 
cannot abdicate our responsibility to provide oversight.
    And I know that you and I will work together and we have 
assured the agency and the central office that we want to be a 
partner as we try to resolve that. We wouldn't want to do 
anything that would imperil any legal action that may be taken, 
but your comments are taken for the record and well deserved.
    Ms. Brown. Thank you.
    I agree. As the army motto, one team, one fight, we are all 
in this together. And it is all taxpayers' dollars and we got 
to make sure that we protect them.
    So I yield back the balance of my time.
    The Chairman. Okay. Thank you very much.
    And I have got some other questions, but I know there are 
other Members that want to talk. And even though Ms. Brown just 
took two minutes of my time, I would now yield to Ms. Brownley 
for five minutes.
    Ms. Brownley. Thank you, Mr. Chairman.
    And I wanted to just follow-up on the chairman's 
questioning around accountability too. And do you have any sort 
of time line? I think if evidence proves that steps need to be 
taken to hold people accountable within the VA going through 
this process, do you have a time line that you can share with 
us?
    Mr. Gibson. The honest and direct answer is no. And the 
reason has to do with the uniqueness of this particular 
investigation and the complexity of the issues.
    I think our success is going to depend on our ability to 
focus, as I mentioned earlier, on particular episodes. And if 
we do that, I would expect that an investigation could be 
completed within probably several months' time, but it is not 
something--this is sworn testimony and a formal and elaborate 
process because, again, if we are going to take administrative 
action, the evidence that we collect has to withstand scrutiny 
on appeal.
    Ms. Brownley. So we can expect in a couple of months' time 
give or take a little bit that we would have a time line at 
that particular point?
    Mr. Gibson. I would be delighted to keep the Members 
updated on the progress of the AIB as I am aware of it.
    Ms. Brownley. Thank you very much.
    My veterans in Ventura County in California are extremely, 
extremely excited about the prospects of an upcoming plan to 
build a new community clinic in our county really truly to 
fulfill really the long-awaited unmet needs for our veterans 
like dialysis treatment, expanded physical therapy, mental 
health, primary care services, and so on.
    And so, you know, when I hear and understand these cost 
overruns and delays, it makes me very concerned about future 
projects. And so if you could just speak to what you are doing, 
you know, within the VA to ensure that these kinds of cost 
overruns and long delays aren't going to repeat itself again.
    I know construction projects are tough and nothing can be 
perfect, but I want to have some sense of a feeling of security 
that these kinds of things aren't going to happen, we're going 
to repeat the same mistakes.
    Mr. Milsten. Yes, ma'am. Some of the things that we are 
undertaking as we go forward is developing a 35 percent plan 
before we come forward for funding which then makes sure that 
the funding that we ask for is based on a sound set of 
requirements.
    This is a similar process that the Corps uses in the MILCON 
process so that it again eliminates some of that back and forth 
on what the requirements are.
    We have instituted a requirements management, change 
management process that says at the completion of 35 percent, 
the project is examined for how does it go against what the 
department approved as part of its strategic plan.
    That again is looked at about the 65 percent to make sure 
that the project didn't grow without clear, concise reasons for 
the growth and that those changes were approved both in budget 
and in program or square footage and meet the strategic needs 
of the department.
    That project is then again reviewed against the base 
requirement at the completion of the design before we move into 
construction.
    In addition to that, we have instituted a program of 
contracting with the construction managers out there in the 
industry to come in and perform a rigorous constructability 
review. Again, this is something similar to what the Corps does 
with their constructability, bid ability reviews that they go 
through to make sure that the requirement can be built. And 
this begins to eliminate some of those change orders that come 
and delays that come downstream.
    So those are some very important pieces that we put in 
place. In addition to that, we have adopted a project review 
board process similar to the Corps that has my boss looking at 
the projects on a periodic basis as they begin to see 
indicators come up that say their risks are getting a little 
high or their costs are getting close to the programmed amounts 
so that we have the ability as a department to intervene and 
get things back on track before they go totally off the rails 
and we have no option.
    So those are some of the big things that we have put in 
place to make sure that we have control on our projects going 
forward.
    Ms. Brownley. And this is all modeled after the Army Corps 
and their military construction?
    Mr. Milsten. Yes, it is. And that is because we have 
recently acquired a whole bunch of people with Corps of 
Engineers' experience and we are looking to put those sorts of 
controls that a significant number of them are familiar with 
and have demonstrated some success.
    Ms. Brownley. Thank you.
    I yield back.
    The Chairman. Dr. Roe.
    Mr. Roe. Thank you all for being here and also thank you 
for taking on this very difficult project.
    And not to be too flippant or not to be--I am sort of going 
back 40 years. This is a FUBAR on steroids if I have ever heard 
one or seen one. And I look at this and I have been involved in 
building a medical center, an office building, another hospital 
and an office building, another community hospital LEED 
certified, and a $20 million office building that my practice 
is currently in. All projects came in under budget and on time.
    And I found this the most astonish--I feel like I am in the 
twilight zone when I listen to this. And if you are in private 
business, and, Mr. Secretary, you understanding this extremely 
well----
    Mr. Gibson. I do.
    Mr. Roe [continuing]. Your lenders won't lend you any more 
money.
    Mr. Gibson. That is right.
    Dr. Roe. You go out. A project like this would have been 
shut down and moth-balled years ago because it is so 
outrageous. And what I have heard is--I want to ask just a few 
questions and I want to make a statement.
    After listening to this and listening to Ms. Brown for the 
last several years here, I am not sure the VA ought to ever 
build a hospital. I mean, this is not rocket science. There are 
5,700 hospitals in the United States operating right now. And 
this one just can't ever seem to get to the finish line. It is 
amazing to me how badly this has been done.
    And what I heard also today is there is no time line for 
accountability. Maybe sometime this year. And we still don't 
have any idea how much it is going to cost.
    When this hospital first was bid out, what was the number 
that was put out there? So when the bid was made, we were 
supposed to build this hospital for, how much was that?
    Mr. Milsten. The initial contract with the builder was for 
a firm target price of 604 and a ceiling of 610.
    Dr. Roe. Okay. So you had a $600 million hospital?
    Mr. Milsten. Yes.
    Mr. Roe. So what I just heard a minute ago, and I heard the 
secretary say that the next number we are going to hear is $1.1 
billion, and that is not the end of it. And just for the 
English translation for poor country people like me, 
reprogramming means you are going to take money from one 
project and move it over to another project, but you still need 
the money in the first project to move the money from.
    Am I right about that?
    Mr. Gibson. That is correct.
    Dr. Roe. So it is not less money. We are still going to--
and I think we ought to be honest about that, we are at $1.1 
billion.
    Mr. Gibson. And that includes----
    Dr. Roe. And we don't know what the next number is going to 
be. Am I right?
    Mr. Gibson. That is absolutely right. The $1.1 billion 
includes not only the $600 million from construction. It 
includes the land acquisition. It includes the architects and 
engineers. It includes the construction management and other 
incidental costs associated with managing the project. So there 
are other elements to the $1.1 billion.
    Mr. Roe. Look, I have been practicing medicine for over 40 
years and, yes, technology is going to change. The hospital I 
started practicing, a new hospital 35 years ago looks very 
different today. You are going to make modifications to it.
    But building an operating room is building an operating 
room. And if you are building one for cardiac surgery, we know 
what that looks like by the thousands in this country. And I 
for the life of me cannot understand how you could miss a 
number by a hundred percent.
    And the other thing Ms. Brownley brought up was to date--
and this project started when? When did somebody go with a 
shovel and everybody standing out there gets their picture?
    Mr. Gibson. There was actually dirt moving in 2010.
    Dr. Roe. 2010, so five years ago. And the original 
completion date was when?
    Mr. Milsten. Three years after that.
    Dr. Roe. So 2013.
    Mr. Gibson. 2014.
    Dr. Roe. And now we are looking at 2017 maybe. And so I 
certainly can understand the frustration of the veterans who 
would be in this, I think, a phenomenal facility if it ever 
gets built.
    But do you think that the VA ought to build another 
hospital after this and after Orlando and we have got, I guess, 
Louisville coming up, isn't that right, it is going to be 
built, or should we just give that to a company that builds 
hospitals and tell them what you want? Let them go build it and 
get a competent contractor and a competent architect and go 
build it.
    Mr. Gibson. I think the answer to that question----
    Dr. Roe. It is embarrassing for me to go back and face my 
taxpayers at home and the veterans at home when they keep 
saying, Doc, when is this building going to be done. And we 
keep saying, and she has been saying this now for years, so 
maybe we should go another route.
    Mr. Gibson. It is embarrassing to me, too, sir.
    Dr. Roe. I am not blaming you, Mr. Secretary. You weren't 
there at the original--you haven't been on the team very long, 
but I am just asking a rhetorical question.
    Should the VA build another facility?
    Mr. Gibson. I think it is a fair question.
    Dr. Roe. Let the private sector build it.
    Mr. Gibson. I think it is a fair question. And I think as 
we look at the Corps' assessment that we have asked them to do 
on this and other major projects that are under construction or 
have recently been completed, I think they come back and they 
look at what went wrong and they look at our structure and our 
processes.
    And with that as part of the information, we make an 
informed decision about, okay, how do we do this part of your 
business in the future. And it may well be that the best 
outcome, the best outcome for veterans and for taxpayers is 
that we turn to the Corps and we say, Corps, we want you to 
build our hospitals from now on. That may be the decision. And 
if it is, so be it. That is all I am after. I want the best 
decision based on those two parameters.
    Dr. Roe. Well, I don't see how it could have been done much 
worse.
    Mr. Gibson. No. On this one, I don't either. You know, I 
think frankly, and I alluded to it earlier, that the crux of 
the issue here happened as we were trying to push to get to a 
firm target price. And we were doing that without having design 
completed.
    And what we did is we set up an inherent conflict and then 
we obligated ourselves to deliver a design that could be built 
for $604 million when the design was still moving and we never 
reconciled those two. We never forced the issue. And so you are 
right. It is a mess and it is what you referred to as FUBAR.
    Dr. Roe. Thank you for taking this on.
    I yield back.
    The Chairman. I am not going to say anything.
    Ms. Titus, you are recognized.
    Ms. Titus. Thank you, Mr. Chairman.
    I am glad to learn what FUBAR means. I didn't know that.
    The Chairman. Well, ma'am, I didn't say--I didn't say that 
now.
    Ms. Titus. Well, you know I represent Las Vegas, Mr. 
Chairman, and I have appreciated working with you and I thank 
you for being here. It is very important that we talk about 
this issue, not just because of the problems that exist now, 
but we have invested a lot in future expansion and more 
facilities; we want to be sure that they work right.
    The hospital in Las Vegas had a lot of problems. You are 
aware of that. It was too small by the time it got built. They 
had to build a new emergency room. They built it and opened it 
in pieces, so that is confusing to the veteran of what services 
are actually available.
    You have given me some information in the past and you 
probably don't have this right in front of you, but I would ask 
that the VA give me some kind of hard facts about when it is 
going to be opened and what the timeline is for all of the 
facilities and all of that associated with the hospital, if I 
could get that from you in the future?
    Mr. Milsten. Yes, ma'am. Of course.
    Ms. Titus. Thank you.
    Now, one other thing is it seems to me that we need to take 
one step back. You have talked about all of the improvements in 
terms of more oversight for the contractors for the bids and 
how you are going to be doing the construction, but I think 
part of the problem is the metrics leading up to the decision 
of what to build and what to put in a facility. It is one of 
those ``build it and they will come.''
    And Las Vegas, it was anticipated that once you had a 
hospital, the number of veterans served would increase by two 
percent; in Las Vegas, it increased by 19 percent. We are going 
to have more veterans who need these facilities. There are 
going to be different kinds of veterans with more serious 
problems, more women veterans. So can you tell me about what 
you all are doing about the metrics, in advance of deciding 
what you need and what to build?
    Mr. Milsten. One of the other pieces that we have 
instituted in the department is a return to, if you will, 
market-area master planning. So we take an area--in this case, 
we are working with a VISN--and we look at all of the needs 
within the VISN. The Department sends down a set of gaps that 
they have identified that need to be closed by the VISN and 
then a rigorous process is undertaken. It takes about a year 
and a half to go through this where we look at both capital and 
noncapital solutions to close these gaps, and then we put the 
facility master plan together that then informs the SCIP 
process, the strategic capital plan going forward so that we 
have a true look at where we are going; that we have a 
Departmental control on the facilities that fill into a 
marketplace; that we have a better-defined requirement which 
cuts down on changes later on, cuts down on that flux and it 
will get our facilities built in the right fashion; and then 
after the project is built, we have gone back to instituting 
a--or we have instituted a post-occupancy evaluation that comes 
back in and says, okay, here was a set of gaps or requirements 
that the project was set to meet; did we, in fact, meet them? 
And if we didn't, then we still have something to accomplish 
and we also develop a lesson learned that says the way to close 
this gap may not be that particular path, so that we don't 
repeat the same mistakes over and over again.
    Mr. Gibson. And, Dennis, if I understand correctly, we use 
a ten-year planning horizon so that we are not looking out, you 
know, with year or two years; that we are looking much farther 
down the road forecasting changes in veteran population and 
unique patient growth.
    Ms. Titus. Well, I would just encourage you to work closely 
with local forecasters, economic and demographic forecasters, 
when it is at the university think tanks so you can anticipate 
growth. That seems to be a factor that hasn't been a----
    Mr. Milsten. One of the things we are doing is we are 
bringing in planning consultants that have that kind of 
expertise and have the ability to reach into the marketplace. 
We are not depending on our own in-house ability to forecast; 
we are looking at how we bring consultants in that have that 
experience, the same experience that supports the private 
sector, informing them on their healthcare-building decisions 
would be then helping us to help forecast our needs.
    Ms. Titus. Okay. That is good. I am glad to hear that.
    And I would just, again, say please keep in mind women 
veterans. The secretary has assured me of that. The chairman 
has promised to hold a hearing on the needs of women veterans, 
and also keep that in mind, and I will look forward to getting 
the information about the Las Vegas hospital.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    Dr. Benishek, you are recognized.
    Dr. Benishek. Thank you, Mr. Chairman.
    Mr. Gibson, Dr. Roe really said a lot of the things that I 
wanted to say, and to me, I am frankly shocked and I completely 
agree with Dr. Roe in that I don't see why I would ever want to 
trust the VA to build another thing ever. I mean the answers 
that you have given here, the reasons why this has all happened 
sounds to me like you have never built a hospital before.
    We should have had the plans in before we did the bidding, 
oh, yeah. I mean the answers don't make any sense to me. My 
question, from what Dr. Roe has said, has anyone been 
disciplined during this whole process?
    Mr. Gibson. There have been, in Denver, for example, the 
project executive and the contracting officer were removed from 
those particular positions. But I would tell you the more 
comprehensive look at what happened in Denver will be taken by 
the AIB and----
    Dr. Benishek. Frankly, one of your earlier answers sort of 
shocked me too: We are looking for evidence of mismanagement. 
Well, the fact that there is a cost overrun of a half a billion 
dollars is kind of a priori evidence that there has been 
mismanagement. And the answer that you are going to look for 
mismanagement is sort of a wash with me.
    Mr. Gibson. The issue is being able to document the 
individual accountability with evidence because what will 
happen is if we take an action and we don't document it with 
demonstrating that that particular individual was accountable 
for that particular issue and have the evidence to support 
that, our decisions are just going to get overturned. So we 
have to go through this process to gather that evidence.
    Dr. Benishek. It just seems very difficult to me, Mr. 
Gibson.
    Mr. Gibson. It does to me, too.
    Dr. Benishek. My opinion coming in on this committee, we 
shouldn't allow the VA to ever do any construction project 
again; they should just be bid out to the private sector and 
let the Army Corps of Engineers--because if you are telling me 
that you can't even discipline the people that cost a half-a-
billion-dollar-cost overrun because you don't have the right 
tools or your management plan or your union plan doesn't allow 
it to happen, there is a real problem here and the American 
taxpayers are paying for it and our veterans are paying for it 
with the lack of their care, and, you know, I just don't get 
it.
    Let me ask you another question here. Now, do you know what 
the average cost per square foot of this hospital is going to 
end up being?
    Mr. Gibson. We won't know the answer to that question until 
we know the estimated cost to complete.
    Dr. Benishek. All right. How much money have you spent 
already on the project?
    Mr. Gibson. Roughly, $800 million has been obligated.
    Dr. Benishek. So that is the money that you have spent 
already?
    Mr. Gibson. The majority of that is spent, not quite all, 
but all of it has been obligated.
    Dr. Benishek. So that is more than the original--$200,000 
more than the original bid price of the project?
    Mr. Gibson. Well, as I mentioned earlier, there is--was a 
construction contract of about $600 million that didn't include 
architect engineer fees, construction management fees, the 
acquisition of the land, the site preparation, and other costs 
that are associated with building a project of this complexity 
and size.
    Dr. Benishek. So those costs weren't taken into the account 
of the original price of the project?
    Mr. Gibson. They were taken into account.
    Dr. Benishek. So what was the original price of the project 
supposed to be?
    Mr. Gibson. The original appropriated amount was somewhere 
just south of $800 million.
    Dr. Benishek. So we spent all the money that we originally 
thought we were going to spend, but we only got a project that 
is half done?
    Mr. Gibson. That is correct.
    Dr. Benishek. All right.
    I don't have any more questions. I will yield back the 
remainder of my time. Thank you.
    The Chairman. Ms. Kuster, you are recognized.
    Ms. Kuster. Thank you, Mr. Chair.
    And just for the record, I share our colleague's 
frustrations and it is clear that all of you do, as well.
    I want to learn from this in terms of going forward, and 
there was a comment in our brief about the model of hub-and-
spoke medical services in the VA, and I am just wondering, 
given everything we have heard today and we have known for a 
few years now about the cost overruns, the complexity, I think 
I noted your comment about cutting speed to delivery, it seems 
exponential. The longer the delay, the more change orders, the 
more change in the scope, and I think certainly my colleague, 
Ms. Titus talking about let's try to be more focused on 
projecting what the needs are.
    But given all of that, I am just wondering, is there any 
thought going on now at the VA--and this is for Mr. Gibson--
about whether this hub-and-spoke model is the best model. 
Should we be trying to create these megacenters, medical 
centers, and in particular, in light of the major reform that 
this congress passed and the president signed back in July 
about the concept of sending our veterans for private pay? In 
many parts of the country we have outstanding tertiary 
healthcare facilities that are complex and expensive to 
duplicate within the VA system. So I will just leave it for 
your comment.
    Mr. Gibson. I think, first, it is important to note that 
what came first were the hubs, and what you have seen happen at 
VA has happened across all of medicine in the United States 
over the last several decades, is a movement toward a primarily 
ambulatory care or an outpatient-care model. That is where the 
vast majority of your care is delivered. And so what we have 
done over the last 20 years is create these outpatient clinics, 
much more convenient, much more readily accessible, to provide 
a large portion of the healthcare services that our veterans 
require.
    Ms. Kuster. And presumably, less costly to build?
    Mr. Gibson. Yes, they are.
    Ms. Kuster. Okay.
    Mr. Gibson. In fact, principally, we have used a lease 
structure in order to be able to pursue that dramatic 
expansion. But there are still requirements, care requirements 
for veterans that will need hospitalization. So, as is the case 
in this particular instance, it is an instance of replacing an 
old and outdated facility.
    Now, the question you raise is part of a much longer and 
philosophical kind of question about the role for non-VA care, 
the requirements to maintain continuity of care, and the 
recognition that the typical VA healthcare patient is older, 
sicker, and poorer than the average population. So there is a 
sense here of not, you know, do we just dump those veterans 
onto the public healthcare market and let them fend for 
themselves in terms of achieving the best healthcare outcomes 
or do we look to build an integrated system which would include 
medical facilities or hospitals as part of that system, but 
recognizing that some healthcare can and should be provided in 
the community.
    Ms. Kuster. And I appreciate that, the reality test, 
because I think that is a part of it. In terms of congress, our 
oversight is about the care for the veterans----
    Mr. Gibson. Yes.
    Ms. Kuster [continuing]. And the precious tax dollars and 
where we find that balance. But I think for the American people 
and for the Members of Congress, we need to address this issue 
that veterans are coming back with much more complex medical 
conditions. Veterans are aging, and as you say, due to the 
challenges they have, they have less resources on their own to 
seek their own care.
    Mr. Gibson. Right.
    Ms. Kuster. I appreciate what you are doing. I am taking up 
the mantle of being the ranking minority in the oversight 
committee and intend to work very closely with my colleagues on 
both sides of the aisle to help maintain the balance or 
hopefully restore the balance of providing the care in a timely 
way.
    Mr. Gibson. Thank you for your continued support and 
service, ma'am.
    Ms. Kuster. Thank you.
    The Chairman. Thank you, Ms. Kuster.
    Now, to a new member of our committee from New York: Mr. 
Zeldin, you are now recognized.
    Mr. Zeldin. Thank you, Chairman Miller.
    And I appreciate your recognizing that I am a new member 
because I am going to ask a new question. In one of Mr. 
Coffman's questions, with regards to going from a 42 percent 
estimate, going up 8 percent over the course of the year, Mr. 
Milsten, you referred to a term called an artificial budget. 
Can you tell me what an artificial budget is?
    Mr. Milsten. When the court decision came down and they 
said that we had failed to deliver a design that could be built 
for the contract amount of 604, we had been measuring progress 
against 604 and we were measuring it as a term of art where we 
use work in place. So what we paid for was then evaluated 
against what the total contract was. Well, the reality--what 
the court--what the civilian board told us is that the number 
was completely wrong, and so that is the artificial piece that 
we were measuring against.
    So when we were--I mean there were fact sheets that showed 
that I think we were as high as 62 percent at one time out 
there, but that was against that 604 number for what we had put 
in place. And when the court board came down and said that 
number doesn't hold any water, that is the artificial piece 
that I was talking about.
    Mr. Zeldin. I also understand from the questioning that you 
need an authorization by June, but that it is going to be at 
least several months before we know how much money you would 
need. I am just trying to understand, are we going--would we 
find out how much money you would need before you are actually 
getting the money?
    Mr. Gibson. There is two steps in here. The first thing 
that is required will be--or requested, will be an increase in 
the authorization in order to allow us to continue to operate 
during this interim period of time. For reasons that were 
explained earlier, you know, the best course of action we 
believe is that we keep construction underway at this project, 
rather than shuttering, mothballing and demobilizing activity 
on the project. So we will need an increase in the ceiling 
prior to June, probably within the next 60 days or so in order 
to support a higher level of spending during this interim 
period, then there would have to be another one for the full 
construction cost.
    Mr. Zeldin. Right now, the contractor working at the site, 
what budget is the contractor operating off of? What are their 
numbers?
    Mr. Gibson. When we put the interim contract in place, what 
we did was we funded it with $70 million; $50 million to cover 
month-to-month new work that is being undertaken, based upon a 
detailed schedule that is being developed between Kiewit Turner 
and VA that focuses work on critical path items, plus there is 
about $20 million available for settlement of subcontractor 
disputes. And so we are going to be allocating another $31 
million into the contract and we have some amount of money left 
that was unobligated under the contract that we will also use 
to settle subcontractor disputes.
    Mr. Zeldin. The $50 to $70 million numbers, is that between 
now and June? Is that per month?
    Mr. Gibson. That will likely--what we did in the interim 
contract is we put those amounts in place for a 90-day period 
of time. So whatever we run out of first, time or money, that 
ends that contract. Both parties reserve the right to extend it 
and our expectation is to extend it because we don't believe 
the Corps will be in a position to enter into a contract to 
complete the project until probably June.
    Mr. Zeldin. Mr. Takano was asking you about the 
investigation. Is it possible that people who are responsible 
for negligence are still working on this project?
    Mr. Gibson. I think it is unlikely. As I mentioned, we have 
changed the reporting relationship for construction facilities 
management, so that removes one particular senior executive. I 
mentioned earlier that we had also changed out the project 
executive and the contracting officer. I would tell you the 
project executive that we have on the scene now, and have had 
since April, is a star, a young fella named Kevin, Kevin 
Lindsay that came to us from Corps of Engineers.
    Mr. Zeldin. Mr. Caldwell, real quick question: Has the Army 
Corps ever build a hospital before?
    Mr. Caldwell. Yes, we have.
    Within the last, let's say since 2007, about 12 either have 
been completed or are under construction.
    Mr. Zeldin. Okay. Great.
    So this is very informative for me. Chairman Miller, you 
know, I have heard this new term of artificial budgeting. Ms. 
Brownley was asking for a timeline of when she is going to get 
the timeline.
    Asking for funding without knowing what the cost is--that 
came from the State Legislature in New York--with $200,000, our 
county, which has the second-highest vets population of any 
county in the country, highest in the state, with $200,000, we 
created a program for PTSD. Hundreds of veterans--and we are 
saving lives with $200,000.
    And the concern is when you are $500 million over budget, 
you are taking money away from other programs that can save 
lives and give care to our veterans who need it and deserve it. 
I actually think the whole thing is pretty outrageous and I am 
very grateful that Chairman Miller is having this hearing and 
Mr. Coffman is advocating so hard to keep us informed.
    The Chairman. Thank you, Mr. Zeldin. Welcome to Congress.
    (Laughter)
    The Chairman. Mr. O'Rourke.
    Mr. O'Rourke. Thank you, Mr. Chairman.
    Since we last met, there was a strategic shooting at the El 
Paso VA.
    The Court: You can stop the clock on this. Don't need to 
clock him on this.
    Go ahead.
    Mr. O'Rourke. And I just wanted to take a moment, and I 
know that I speak for you and for the Committee in extending 
our condolences to the family of Dr. Fjordbak, who, following 
9/11, left a lucrative practice is, moved to El Paso to work at 
the VA and help treat our veterans who were returning from 
Afghanistan and Iraq, including veterans who had served in 
previous wars. And from everything we know about him, 
exemplified the kind of service and commitment to excellence 
that we wasn't to see more of in the VA.
    And I want to thank the secretary for the leadership at the 
El Paso VA, your Interim Director Pete Dancy is doing a 
remarkable job. And as tragic as this shooting, this murder 
was, I note that the El Paso VA is going to come back better 
and stronger than ever. And I'd also like to conclude this part 
of my time by thanking all of the employees, many of whom are 
veterans, the frontline staff, the doctors, the providers, the 
mental health experts, the volunteers who do a remarkable job 
in El Paso day in and day out under some very trying 
circumstances, especially following the shooting on January 
6th.
    And I commit to you, Mr. Secretary, that we will do 
everything that we can to support that staff, be there for 
them, and make them stronger than ever going forward.
    Mr. Gibson. Thank you. Your support means the world to me 
and I know, to them.
    Mr. O'Rourke. Mr. Chairman, I would like to continue by 
developing on the theme that we are looking at in terms of the 
VA's opportunities and competence when it comes to building 
major medical facilities and providing world-class care and 
outcomes for our veterans in a timely fashion. Again, despite 
what I think are the best efforts of a truly remarkable team at 
the El Paso VA, due to a number of factors from staffing to 
resources to leadership, in some cases, we have not been able 
to deliver on that for the veterans.
    What I hear day in and day out from the veterans that I 
represent and serve is that when they can get in, they are 
treated like royalty and very infrequently have any complaints 
at all. The struggle, of course, has been getting into the VA 
in the first place or having an appointment that is not 
cancelled or not having your records dropped or erased or 
feeling like you have been forgotten. One of the other factors 
that makes it difficult to deliver world-class care in El Paso 
and to better serve our veterans is the age and the state of 
the facility that we are in today. And you were kind enough, 
Mr. Secretary, to visit El Paso in July of last year, and after 
a tour of the facility, you confirmed that conclusion that we 
have reached, now for a very long time in El Paso, that the 
facility we have is inadequate, insufficient and unacceptable 
and we can and must do better for our veterans and for those 
who serve them out of that facility.
    Further complicating things in El Paso is William Beaumont 
Army Medical Center is building a new $1.1 billion facility 
nine miles away from its currently co-located position with the 
VA health clinic. We have, what I would say is an opportunity, 
right now to decide what we can do to improve the kind of 
facility, the delivery of care, and the access to that care in 
El Paso. There are a number of partners there who want to work 
with you and want to work with us, including Texas Tech, which 
has the Paul L. Foster School of Medicine, the first four-year 
medical school built anywhere along the U.S./Mexico border. We 
have University Medical Center. We have Tenet and HCA 
Hospitals. We have a community, though, one of poorest from 
income and property values, is one of the richest in service, 
that is willing to get behind this and make it a success.
    I want to follow-upon your commitment to take El Paso from 
one of the worst performing to one of the best, and I want to 
help answer Dr. Roe's question, and a question that you agreed 
was a valid one, which is, should the VA be in the business of 
building these facilities? We certainly don't expect $1.1 
billion to be spent in El Paso, Texas--we would gladly take it, 
we are not expecting it. What we will offer is that through 
these partnerships, through the commitment and funding from the 
local community, we can make a deal for the VA that would 
prevent you from building a brand new facility or a hospital 
that I think there are some serious questions about the 
competency of the VA to do just that, and instead, perhaps, 
test or prove a different model in the delivery of healthcare. 
It would solve, I think, a lot of problems for VA nationally, 
while meeting the expectations that we should have in El Paso 
of having world-class care for each and every veteran.
    Now, we received a memo that was written by VHA Under 
Secretary Clancy August 18th of last year that said within 60 
days, they would have a game plan for such a facility. I 
probably don't have to tell you that today, at least in our 
office, we do not have a copy of any such plan. And despite, I 
think, our polite but insistent demand that we see one and be a 
partner in that, we have yet to see anything.
    You, current Secretary Bob McDonald, who also visited El 
Paso recently, we want to thank him for that--that was 
following the shooting--have both express to do me your 
commitment, but I need to see some follow-through. I need to be 
part of that process that you admitted often happens behind 
closed doors and doesn't involve members of congress. I want to 
be your partner in this; I don't want to be your adversary. But 
after two years and documented failings, including by VHA and 
the OIG, we absolutely need something better and we need to be 
part of it. So what I am asking you today is from all the 
lessons that we have learned from Aurora, from Florida, from 
other facilities, and from the opportunity that we have in El 
Paso, will you commit to working with us? Will you dedicate 
someone, even on a part-time basis, to working with this 
community to develop that plan? We will be your partner in 
implementing it.
    Mr. Gibson. Yes, we will.
    I think one of the things both Bob and I have emphasized at 
our months at the department is the need to build on the 
strategic partnerships that we have out in our communities, and 
I think that El Paso is a great example of that. As you and I 
discussed a couple of months back, we really don't have a way 
forward there, and we are not positioned for success in El Paso 
today and we need to get ourselves positioned for success. And 
I think the circumstances on the ground you just outlined very 
ably, could create an ideal opportunity for us to leverage on 
those local partnerships and do the right thing for veterans 
and be good stewards of taxpayer dollars.
    Mr. O'Rourke. Thank you, Mr. Secretary.
    And I will conclude by saying that we will follow-up this 
week to share what we have assembled and to gain from you what 
you have----
    Mr. Gibson. Thank you.
    Mr. O'Rourke [continuing]. And then from there, I think we 
need to move very quickly to implement something.
    Mr. Gibson. I understand.
    Mr. O'Rourke. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Mr. Costello, another new member who asked to be on this 
committee from the great state of Pennsylvania, you are 
recognized.
    Mr. Costello. Thank you, Mr. Chairman.
    In applying my experience as a real estate lawyer who has 
been involved in acquisition and land-use approval and 
development and construction matters, but not focusing on what 
happened pre-bid award to KT, I want to share a couple of 
observations with you. In looking through the materials, I am 
just going to cite right from them.
    First, the CBCA finding that VA delayed progress of 
construction by delaying the processing of design changes and 
change orders: Quoting, Much of the blame for the situation 
must be ascribed to the VA by failing to control the joint 
venture design team, delaying approval of the design, 
presenting KT with a design which was allegedly complete, but 
required an enormous number of modifications, failing to 
process change orders for approximately one year.
    And then you look at Mr. Chang's emails, one in 
particular--two in particular, stand out: A June 13th, 2013, 
email where he says we hired a senior resident engineer who has 
never done anything that we have been doing in CFM, but he 
won't take advice from those who came from the VA system. The 
budget schedule and scope are not in control. I have no clue 
when this project is going to be finished and how much it is 
going to cost when this project is done.
    That was in June of 2013. It concerns me from a 
construction-management perspective--again, leaving aside the 
design aspects that went into the actual bid, to which the 
contractor was awarded--it concerns me from a construction-
management perspective that the moment that someone within the 
VA organization would send an email like that or feel that way, 
that it wouldn't simply freeze at that point and say, This 
problem is too big for us; we need to go somewhere else and get 
subject-matter expertise. Because when you are designing--when 
you are managing a construction project and you are bringing 
into the fold, construction-management firms or a construction 
manager, you are not hiring them for a project that 95 percent 
of which is going to go right. There is also going to be 
modifications or change orders along the way. You are hiring 
that construction-management firm or individual for when things 
are going to go really, really bad so that it doesn't become 
worse.
    And when you go back, I think it is a year earlier in an 
email, Mr. Chang indicates, All I can say--this is a year prior 
to the email that I just cited to--all I can say is the storm 
is coming. How we got into this mess, it is simple: Scope, 
schedule, and budget were not managed; no leadership; no 
knowledge and experience in this business; not following 
handbook; no skill and organization.
    That points to, I think, a much more fundamental dynamic 
here, which is that subject-matter expertise on very 
sophisticated construction projects like this do not reside in 
the VA and so moving forward, similar to what Congressman Roe 
said and other Members here, I just question whether, as part 
of a general budget, you should be--we should be looking to 
fill subject-matter expertise of that sophistication when it is 
really better outsourced. And so I would like you to share your 
comments moving forward on the types of questions you are going 
to be asking yourself and what you are going to be presenting 
to the Chairman and this Committee on whether maybe you just 
don't want to be in the business of building hospitals, maybe 
that is something better outsourced, so that, frankly--again, 
looking at what the CBCA's findings were, a lot of the 
additional--at least some of the additional cost is actually a 
function of not merely mismanagement, but not managing it. It 
is not just the design, it is the management or lack of 
management here that has caused further delays and caused 
further expense and I think that is the real troubling--that is 
a deeply troubling aspect of the overall problem.
    Mr. Gibson. I am sure that you understand, based on your 
experience, that using a construction--a contract vehicle such 
as IDC or construction management at risk, in order for that to 
work effectively, you have to have very strong project 
leadership on the job, and frankly, we didn't have it. And 
those emails and the things that you just read make it very 
clear that we did not have it.
    I would love for you to have the opportunity to come visit 
this facility today and sit down and spend time with the 
project engineer, project executive on this particular 
facility, and surmise from your own objective observations 
whether or not that is the kind of person we want leading 
complex projects, whether we do our own hospitals in the future 
or not--I have already put that on the table--and I said 
perfectly willing for us to look at that. All I am after is 
what is best for veterans and what is the right thing for 
taxpayers, and if that means turning over major hospital 
construction to the Corps of Engineers, I think that is fine. 
But that is a big decision, let's make it an informed decision.
    Mr. Costello. And my only follow-up to that would simply 
be, within a project this big you are talking about a team of 
highly skilled professionals----
    Mr. Gibson. Yes.
    Mr. Costello [continuing]. All of whom not only make--hold 
the project accountable, but hold one another accountable.
    Mr. Gibson. Yes.
    Mr. Costello. And the other underlying concern here is that 
there was not, I feel, at least from what I have seen, a lot of 
accountability within that team.
    Mr. Gibson. There was not.
    Mr. Costello. And that led to even more of a runaway 
expense and I think that is really a testament to what happens 
when we try to have--and this isn't a criticism directed at 
you, but a more broader point--that is what happens when we 
have bureaucracy trying to do too many things rather than what 
they are specifically designed to do, and what you are 
specifically designed to do is not build hospitals. Thank you.
    The Chairman. Thank you very much.
    Ms. Radewagen, who is another new member who asked to be on 
this--who comes from the furthest location from any committee 
member, the American Samoa.
    Ms. Radewagen. Thank you, Mr. Chairman.
    It is an honor and privilege for me to be a member of this 
committee. As you know, each May is Asian-Pacific American 
Heritage Month and National Military Appreciation Month. And 
over the years, I have traveled around to many bases to 
celebrate with the military and I discovered that American 
Samoa's vets, like other vets, they tend to settle near the 
base they were last stationed at because their families have 
settled in and their children are in school.
    We have three major exports, canned tuna, NFL football 
players, and soldiers, military personnel. Veterans make up 10 
percent of the territory's population, so access to veterans' 
healthcare is deeply important and I look forward to working 
with this committee.
    My question, Secretary Gibson, is: How long will it take to 
get a new long-term contract with KT? Can you please explain 
the process that will be taken to get to that point?
    Mr. Gibson. Do you want me to answer that one, Lloyd? I'd 
be glad to.
    Mr. Caldwell. Yes, sir. Go ahead.
    Mr. Gibson. Let me take a shot at it and I will let Lloyd 
chime in here.
    The Corps has an assessment team on the ground in and out 
at Denver right now; they are experts from all over the 
country. These are chiefs of sections, not deputies; it is a 
very expert team. They are going through their assessment. They 
are developing right now an acquisition plan, and they will go 
through that process and have that acquisition plan presented 
and, you know, everyone would hope approved during the month of 
February.
    And then between the month of February--and their target 
time period is June--during that period of time, they would go 
through the careful, close work with KT, supported by VA, to 
determine the schedule; to determine the scope of work to 
ensure that the design has been completely locked down, and 
ultimately to determine the cost to complete and settle on a 
contract vehicle to enter into with, whether that is KT or 
whether that is another party, that would be determined as part 
of the acquisition strategy. So that is the general time frame.
    Ms. Radewagen. Thank you.
    And lastly, Mr. Milsten, if you plan to move money from 
other major construction projects that Congress has 
appropriated money to build, what is stopping those projects 
from being mired down by the same cost overruns and delays that 
current VA major construction projects are facing?
    Mr. Milsten. One of the things that we are looking at as we 
go forward with this reprogramming effort is to find those 
projects that taking some of the money off them will not or 
will have minimal impact on their ability to go forward. We 
continue to press for the speed to delivery to get these 
facilities done, and as part of any effort, we want to work 
with the Committee and with Congress to replenish those funds 
that we reprogram off so that those projects can keep on-track 
to provide those services to veterans.
    Mr. Gibson. I would also point out the number of 
improvements that have been implemented over the last couple of 
years that are being applied currently, as well as the lessons 
that we will learn from the Corps' review of Denver, as well as 
other major construction projects, to ensure that we are using 
the very best practices possible in all of our projects.
    Ms. Radewagen. Thank you, Mr. Chairman.
    The Chairman. Thank you very much, Ms. Radewagen.
    And before we go to the second panel, Ms. Brown, do you 
have some comments?
    Ms. Brown. Yes, sir. Thank you, a couple of things.
    Mr. Secretary, the Committee is asking me exactly when do 
we expect the Orlando hospital to be complete because they want 
invitations to come down----
    (Laughter)
    Ms. Brown [continuing]. And former Members want invitations 
to come.
    Mr. Gibson. Yes, ma'am.
    Ms. Brown. So, we all want to participate.
    Mr. Gibson. We will plan a major celebration for the ribbon 
cutting in Orlando.
    Ms. Brown. Yes.
    Mr. Gibson. I know construction is scheduled to be complete 
at the end of February, but there is an activation period that 
will follow that where we are moving equipment in and all that 
sort of thing. We will be sure to get dates to the Committee 
ahead of time.
    Ms. Brown. We will ask the Committee Members to formally 
come down for a site visit when we open.
    I do think that we need to separate building a hospital 
from building a clinic. I don't think that we have had the same 
problems with the clinics as we have had with the hospitals. 
Can you clear that up for me?
    I haven't had any problems with my clinic in my district.
    Mr. Gibson. Yeah. I think there have been challenges with 
clinics, as well as hospitals. The nature of those challenges 
have, in most instances, been somewhat different. I would say 
where they are similar has to do with the early stages of 
developing and defining requirements and then locking down 
those requirements so that we are able to move expeditiously 
through the process.
    Ms. Brown. And at issue that maybe the Committee needs to 
deal with. We had a project in Miami that was two smaller 
projects and once we put them together, it became a larger, you 
know, one big project that you all need to come back for us, 
and maybe we need to develop some kind of authority so that you 
can move forward, because that held up that project. So we need 
to work together in areas that we can to make sure that we can 
expedite the process.
    Mr. Gibson. Yes, ma'am. We would appreciate that 
opportunity. Thank you.
    Ms. Brown. And so with that--and there are many other 
things. Someone said something about mismanagement and I want 
to say that part of the problem--let's say in Orlando, part of 
it was we changed the sites. And in this Denver hospital, it 
was going to be a joint-use hospital and it became a single-use 
facility, so all of those things got to be considered as we 
discuss and decide how we are going to move forward, and you 
can't just say it is one item; it is a multiplicity of reasons 
why projects get delayed, and we need to do our part to make 
sure that doesn't happen also.
    And so with that, Mr. Chairman, I am very excited about 
working with you to move the VA forward.
    The Chairman. Thank you very much, Ms. Brown. We are all 
looking forward to working collaboratively with the VA. I would 
say that the one incident in Miami where there were two 
projects, actually, that was something that this Committee 
uncovered. That was a large project that was purposely split 
into two so that they could proceed forward, and that is why we 
had the problem that we did, and, you know, nobody wants to 
delay anything, but we certainly want to make sure that 
everybody follows the rules.
    But with that, thank you, Mr. Gibson, for being here.
    Mr. Milsten and Mr. Caldwell, thank you so much, and you 
are now excused.
    Mr. Gibson. Thank you, Mr. Chairman.
    Thank you, Members.
    The Chairman. We are going to go ahead and move forward 
with our second panel. We are going to hear from Mr. David 
Wise, director of physical infrastructure issues at the 
Government Accountability Office; Mr. Roscoe Butler, no 
stranger to this committee, the deputy director for healthcare 
for the American Legion's Veterans Affairs and Rehabilitation 
Division; and also Mr. Ray Kelley, also no stranger to this 
committee, director of the national legislative service for the 
Veterans of Foreign Wars.
    As, per the custom, your statements will be entered into 
the hearing record.
    And Mr. Wise, now that you have made it to your seat, we 
are going to let you go first. We will recognize you, sir, for 
five minutes.

                    STATEMENT OF DAVID WISE

    Mr. Wise. Yes,
    Chairman Miller, Ranking Member Brown, and Members of the 
Committee, I am pleased to be here today to discuss information 
from our April 2013 report regarding the construction of new 
major VA medical facilities. Our report examined the Agency's 
actions to address cost increases and schedule delays for VA 
projects in Denver, New Orleans, Las Vegas, and Orlando. At the 
time of our review, VA had 15 major medical facility projects 
underway at a cost of more than $12 billion, including new 
construction and renovation of existing medical facilities.
    For those four projects we originally found that cost 
overruns range from 59 percent to 144 percent. Delays ranged 
from 14 to 74 months; however, costs and delays have since 
increased with cost overruns now ranging from 66 percent to 144 
percent and delays ranging from 14 to 86 months with the 
potential for further increases.
    My statement today discusses three key issues related to 
the VA medical facility construction program. One, the extent 
of and reasons for cost overruns and schedule delays for the 
four new medical facility projects we reviewed; two, actions VA 
has taken to improve its construction management practices; and 
three, VA's response to our 2013 recommendations to improve the 
management of costs, schedule, and scope of these construction 
projects.
    When comparing construction project data updates provided 
by VA for this testimony, with the cost and schedule estimates 
first submitted to Congress, we found the cost increases range 
from 66 to 144 percent representing a total cost increase of 
over $1.5 billion and an average increase of approximately $376 
million per project. Since our 2013 report, some of the 
projects have experienced further cost increases and delays. 
For example, VA's reported delays for the four major projects 
now range from 14 to 86 months with an average delay of 43 
months per project.
    Of those projects, Denver had the highest cost increase and 
the longest estimated years to complete. Estimated costs 
increased from $328 million in June, 2004, to $800 million, as 
of November, 2012. VA moved the estimated completion date from 
February, 2014, to May, 2015; however, these estimates may 
further increase and VA has been unable to provide total 
estimated costs and schedule data for the Denver project at 
this time.
    At each of the four projects, different factors contributed 
to cost increases and schedule delays as follows: Changing 
healthcare needs of the local veteran population expanded the 
scope at the Las Vegas project; decisions to change plans from 
a shared university-VA medical center to a standalone VA 
medical center affected plans in Denver and New Orleans; 
changes to the site location by VA delayed efforts in Orlando; 
unanticipated issues, especially environmental, in Las Vegas, 
New Orleans, and Denver, also led to delays. Some of these 
factors resulted in expensive, cumbersome and lengthy change 
orders.
    Since 2012, VA has taken some steps to improve its 
construction management process including creating a 
construction view council to oversee VA's development and 
execution of its real property program. The council is intended 
as a single point of oversight and program accountability. 
Establishing a new project delivery method, known as integrated 
design and construction, which engages the construction 
contractor early in the design process to streamline 
construction and reduce the need for change orders. VA used 
this procedure in Denver--in the Denver project, but too late 
to fully benefit from it.
    In our 2013 report we made three recommendations to address 
systemic issues that contributed to overall schedule delays and 
cost increases, including developing guidance on the use of 
medical equipment planners, as part of the design and planning 
process; sharing information on the roles and responsibilities 
of VA construction project management staff; and streamlining 
the change order process. VA agreed with our recommendations 
and has taken action to implement them. While we have closed 
out the recommendations, the impact of these actions may take 
time to show improvement, especially for ongoing construction 
projects, depending on several issues including the 
relationship between VA and its contractors.
    Chairman Miller, Ranking Member Brown, and Members of the 
Committee, this concludes my formal statement, and I would be 
pleased to answer any questions you may have at this time.

    [The prepared statement of David Wise appears in the 
Appendix]

    The Chairman. Thank you very much, Mr. Wise.
    Mr. Butler, you are recognized.

                   STATEMENT OF ROSCOE BUTLER

    Mr. Butler. Thank you.
    Due to poor planning and budget execution with VA 
construction management, a project that could have come in 
under $600 million has spiralled into a billion-dollar debacle 
that has tarnished the good faith of the veterans of Colorado, 
the hundreds of workers who labored to build that hospital, and 
honestly, the good faith of veterans across the country. The 
veterans of America are crying out, Enough is enough and demand 
better results.
    Good morning, Chairman Miller, Ranking Member Brown, and 
Members of the Committee. On behalf of our National Commander 
Mike Helm and the 2.4 million members of The American Legion, I 
want to say thank you for the scrutiny that you are applying to 
sorting out the unfortunate and unnecessary chaos with VA's 
construction projects. The veterans of Colorado have waited for 
a replacement hospital since the late 1990s. Three VA 
secretaries made promises, but failed to deliver. Now, VA's 
construction problems have spiralled into epic proportions, 
especially the Colorado replacement facility.
    The American Legion's deputy director for healthcare, I 
have been an active participant in our organization's System 
Worth Saving Task Force. Last year, as you know, the chairman 
of our VA`R commission testified on behalf of The American 
Legion at a field hearing in Denver which critically--where, 
when critical errors were taking place.
    There appears to be systemic problems with how VA manages 
their large construction projects. Let's examine the big four 
projects. In Colorado, they broke ground in 2009 and the 
replacement facility is still incomplete and is hundreds of 
millions of dollars in overruns. In Orlando, they broke ground 
on August 22nd, 2008, and they are hundreds of millions of 
dollars over budget and have missed deadlines after deadliness. 
In Las Vegas they broke ground in 2007 and after numerous 
delays the hospital was opened, but unfortunately needed 
millions of dollars in expansion because they couldn't even 
meet basic needs like a proper ramp for EMS to drop off 
patients at their emergency room. In New Orleans, they broke 
ground on October 24th, 2008, and six years later, veterans are 
still waiting for their replacement facility to open.
    GAO said the average time overdue on these four projects is 
35 months and this is just an average. The average cost 
overruns are $366 million, again, this is just an average. 
Frankly, this is unacceptable. Other agencies and private 
sector organizations continue to build major projects across 
the nation, yet VA replacement on the Fitzsimons campus 
continues to be delayed while the costs continues to skyrocket.
    VA needs to complete their outstanding projects so veterans 
will no longer be required to use inadequate and outdated 
facilities. The American people want a first-rate healthcare 
system for veterans. You look at the internal planning process 
through the Strategic Capital Investment Planning Process and 
you will see that VA is trying to meet the needs of an 
expanding veterans population, but mistakes and mismanagement 
are crippling these projects and nobody seems to be held 
accountable.
    VA also needs to take a look, a long hard look, as how they 
are managing their construction projects because their results 
across the board are unacceptable. All options must be put on 
the table to ensure that no stone is unturned. Steps need to be 
taken to assure that future VA hospitals are planned, designed, 
and built within a transparent, accountable system that puts 
veterans first. You have projects in four states and who knows 
how many more are needed as VA expands to meet the needs of our 
21st Century veterans.
    Falling behind schedule might be standard practice at VA, 
but you have to take--think about what that means. Behind 
schedule means veterans of Colorado, Florida and Louisiana are 
still asking, When is the waiting game going to end? The 
American Legion thanks the Committee for their close attention 
to the problems that veterans face accessing healthcare. The 
American Legion is working diligently and tirelessly to keep 
the focus on the VA hospital in Aurora, as well as other VA 
construction projects.
    After a decade of broken promises, American veterans, those 
who gave 100 percent of the defense of our nation are tired of 
promises and simply ask VA to build them a 21st Century world-
class VA medical hospital and to get the job done now. After 
all, American veterans deserve better.

    [The prepared statement of Roscoe Butler appears in the 
Appendix]

    The Chairman. Thank you, Mr. Butler.
    Mr. Kelly, you are recognized for five minutes.

                    STATEMENT OF RAY KELLEY

    Mr. Kelley. Mr. Chairman, thank you for inviting the 
Veterans of Foreign Wars. I am representing the men and women 
of the Veterans of Foreign Wars and our auxiliary at this 
hearing today.
    Over the past few years, it has been very apparent that 
VA's ability to control costs and deliver major construction 
projects on time is and should be viewed as a great concern. 
Veterans are not being served when construction projects take 
months and years longer than expected to complete and the price 
tags inflate as time drags on.
    Last year, the House passed legislation that would improve 
VA's major medical facility construction process. These 
improvements include using medical equipment planners, 
developing and using a project management plan, peer-reviewing 
all projects, creating and changing--creating a change order 
metric, and using a design-build process when possible. VA 
claims they have started using medical equipment planners. This 
practice will assist in reducing scheduling delays and cost 
overruns. To ensure VA's construction process can be as 
efficient as possible, it is important that the other 
provisions are enacted.
    VA's lack of standardized project management protocol has 
led to poor communication within VA and between VA and general 
contractors, which has led to delays and cost overruns. There 
have been cases where separate VA officials have provided 
contradictory orders to the general contractor. By developing 
and using a project management plan, all parties, at the onset 
of the project will have a clear understanding of the roles and 
authorities of each member of that project team.
    Construction peer excellence review is an important aspect 
of maintaining a high level of construction quality and 
efficiency. When used, these review teams are made up of 
experts in construction management who travel to project sites 
and evaluate the performance of the project team. While 
meetings provide an important feedback, a separate set of eyes 
on the project management plan to ensure the plan is in place 
to make the project come in on time and on budget.
    VA has historically relied on a design-bid-build project 
delivery system which, when entering into contracts to build 
major medical facility projects. With this model, an architect 
is selected to design a facility. The design documents are used 
to secure a bid, and then the successful contractor bid-holder 
builds the facility. Design-bid-build projects often encounter 
disputes between the customer, in this case, VA, and the 
construction contractor.
    Because these contracts are generally firm, fixed price, 
based on a complete design, the construction contractor is 
usually responsible for cost overruns unless a change order is 
issued. This process can be adversarial because neither party 
wants to absorb the costs associated with the change and each 
change order can add months to the project completion date.
    A design-build project places the architectural engineering 
company and the construction contractor under one contract. 
Placing the architect as the lead from start to finish and 
having the prime contractor work side by side with the 
architect allows the architect to be an advocate to VA. Also, 
the architect and the prime contractor can work together early 
in the design phase to reduce the number of design errors. It 
also allows them to identify and modify the building plans 
throughout the project. While these initiatives work for 
improving future projects, the VFW believes a look back at all 
currently funded projects should take place to see what steps 
are needed to finish the nearly 50 partially funded, but not 
complete, major VHA construction projects.
    VA's fiscal year 2015 budget submission showed that there 
was more than $6 billion available for 49 VHA projects through 
the end of fiscal year 2013. What the submission does not show 
is why some projects were initially funded years ago, but 
little to no progress has been made to complete them. Many of 
these projects have safety implications and provide specific 
services for spinal cord injuries and need to be set on course 
that will bring these projects to completion.
    VA's Strategic Capital Plan, or SCIP, has been a great tool 
in identifying gaps and access utilization and safety, but if a 
clear plan is not in place to close these gaps, delays in care, 
safety risks and, an increased cost to close these gaps will 
continue.
    Mr. Chairman, this concludes my testimony. I will be happy 
to answer any questions the Committee has.

    [The prepared statement of Ray Kelley appears in the 
Appendix]

    The Chairman. Thank you very much, Ray. Mr. Coffman, you 
are recognized.
    Mr. Coffman. Thank you, Mr. Chairman. Mr. Wise, what are 
some of the key differences between how VA manages major 
medical facility construction projects compared to federal and 
private sector stakeholders responsible for similar projects? 
What are the likely effects of these differences?
    Mr. Wise. Well Mr. Coffman, two things stood out to us when 
we did the work for the April, 2013 report. One was, and I 
think has been discussed in panel one, the entry of medical 
equipment planners at the early part of the planning process. 
Both the Naval Facilities Engineering Command and the Army 
Corps of Engineers official said this is very important to 
them. These units work hand in glove in order to make sure that 
you have a parallel and symbiotic relationship between the 
people who are building the facility as well as those who are 
bringing in the equipment that the facility needs to house. 
Obviously those things need to be completely compatible, 
otherwise you have some disconnects if not the inevitable 
result is change orders, which add time and cost to the 
project.
    That brings me to my second point. Other with whom we spoke 
the change orders, also in both the public and private sector 
were, rather surprised at the amount of time that it took the 
VA to administer change orders. This was also discussed fairly 
thoroughly in the first panel. We saw VA change orders, that 
had taken up to a year to implement. This caused problems for 
the contractor because then he is waiting for payment while the 
process of winds its way through the Veterans Administration's 
approval process.
    They have done a couple of things I think that may help in 
that process. They have raised the threshold a bit, up to 
$250,000 in some cases. They hired some additional attorneys 
who deal with the change order process. How this will work 
going forward we will see. But those are two things that really 
stood out when we did the research and the work in order to 
produce that report.
    Mr. Coffman. Okay. I think in your report you also 
reference that the Army Corps of Engineers has built similar 
projects for the Department of Defense on schedule and within 
budget. Am I correct in that?
    Mr. Wise. They have a track record of building a lot of 
medical facilities, that is true.
    Mr. Coffman. But on schedule and within budget?
    Mr. Wise. It was not in our scope to analyze USACE and 
NAVFAC projects regarding this timelines and adherence to 
budgets.
    Mr. Coffman. Okay. Mr. Kelley, in your testimony you 
rightly acknowledge that many of VA's major construction 
projects were funded years ago but that very little progress 
has been made, giving rise to safety implications. What would 
you recommend VA do in the future to expedite its processes in 
order to avoid these same mistakes?
    Mr. Kelley. There needs to be a prioritization of these. 
And the SCIP process does that. But then on the implementation 
side there seems to be a failing on that prioritization. So we 
have got nine of 12 seismic correction facilities that are 
partially funded at some phase. Some of them have been funded 
since 2010 and no money has been spent on them. And we need to 
understand why that money has been allocated and no progress 
has been made. And should we have entered into that contract to 
begin with if we were not ready to start the project as soon as 
the contract was completed? What missing link is causing that 
wait? And what, is that money having to be repurposed to 
another program and now we are waiting for money to be 
repurposed so we can start it? There are a lot of questions on 
the timing of funding and where that funding is sitting.
    Mr. Coffman. Okay. Mr. Wise, the GAO report states that the 
problems experienced at the audited construction projects were 
representative of systemic problems throughout the VA. Could 
you elaborate on how these problems extend beyond just the 
facilities you assessed?
    Mr. Wise. Well if you look back at the three 
recommendations that we made they point, to systemic issues 
that have a broader impact. For example, one recommendation 
dealt with the lack of communication and the inability to 
pinpoint exactly who at the VA is responsible for what. We also 
recommended that VA implement steps to streamline the change 
order process. We saw that these are the kinds of issues that 
have broad implications in terms of being able to administer 
what are very complex and very expensive projects.
    Mr. Coffman. Very well. And so I think in your report you 
said that each of the hospitals under construction at that 
time, and I think there were four, I think over several hundred 
million dollars each, on average, over budget, and about three 
years behind schedule on average. Is that correct? And then 
would the Aurora situation be the worst one out of the four?
    Mr. Wise. Aurora had the most egregious overruns, both in 
terms of cost and delay.
    Mr. Coffman. Okay. Okay. Thank you, Mr. Chairman. I yield 
back.
    The Chairman. Thank you very much. Ms. Brown. Mr. Takano.
    Mr. Takano. Yes, Mr. Wise, you know before I came to 
Congress I served on a humble community college district board, 
and I was elected, and we had bonding authority that allowed 55 
percent of the local voters to approve capital construction 
bonds. And, you know, suddenly my district was dealing with 
upwards of a $1 billion program after we leveraged the local, 
the money. It seemed to me that cost overruns, the change 
orders, would frequently come before my committee. My one, I am 
wondering where was Congress' role in oversight? Is that any 
part of your recommendations as part of your GAO report? That 
somehow the oversight function of Congress, the subcommittee of 
this committee, should have been regularly informed about where 
things were with design, the design relationship with the 
contractor? I mean, how did this get out from, well you were 
saying that the DoD has a better track record within its own 
bureaucracy of managing the building of hospitals?
    Mr. Wise. Well--sorry, go ahead.
    Mr. Takano. How was it that, what, how could the 
accountability be tightened up here?
    Mr. Wise. Yes, it is, the relationship between the 
committee or the subcommittee and the Veterans Administration 
is not something I am privy to. But what I can say is that when 
we looked at the kind of activities going on in the Veterans 
Administration we saw that there were certainly a number of 
issues to do with the cost overruns and the delays that were 
extensive. And so it is fair to assume that in some kind of 
normal reporting process that this is something of interest to 
congress,. We make our recommendations obviously to the 
administration, to the federal agencies because we work for 
Congress. We are doing the work on behalf of the committee. So 
hopefully the work we do makes the committee more aware of the 
key issues enabling it to take positive action and work with 
the Veterans Administration to try to improve these projects 
and hopefully provide better services, more timely services, 
and cost effective services to the veteran community.
    Mr. Takano. I am just referencing my experience as a local 
public official managing taxpayer dollars, capital construction 
dollars, and the frequency with which we would have to get 
progress reports from the staff as the elected officials. I am 
just wondering how effective it is for an administration, a 
department like the VA, to be able to provide that sort of 
accountability. I am just wondering if we have staffed up our 
Oversight Subcommittee enough, given it enough resources, so 
that it is able to inject itself on a regular basis to manage 
these hundreds of millions of dollars.
    I am just astounded. I am trying to find enough money to 
fund graduate medical education. People do not know that we 
fund nearly 100 percent of the medical residencies in this 
country. And we are facing a shortage of doctors, both in the 
public sector and within the VA. And I am thinking about the 
hundreds of millions of dollars that we could have saved on 
these cost overruns to fund the education of these doctors.
    Mr. Chairman, I would ask whether or not we are funding our 
oversight function enough on this committee to be able to 
oversee what goes on in that department. I do not see how else 
we are going to be able to hold the department accountable 
without enough of our Oversight Committee being able to be able 
to review these projects and to make sure that the project 
management is adequate.
    The Chairman. Will the gentleman yield?
    Mr. Takano. I know you have a background in this area as 
well.
    The Chairman. If the gentleman will yield, yes. And we have 
asked for additional dollars. Last year we were given 
additional dollars by the Speaker. We have asked for additional 
budget. Ms. Brown and I have talked together, as has our staff, 
to hire additional forensic investigators in regards to 
computers and budgetary issues as it relates to these 
construction issues. So most definitely, our oversight role has 
been beefed up quite a bit since we took over this particular 
committee.
    Ms. Brown. Just 30 seconds?
    Mr. Takano. I will yield.
    Ms. Brown. Thank you. However, I do not think that we want 
to get into cost overruns. I have, in the Orlando situation, 
spent three hours with VA, but I also spent three hours with 
the contractor. So it is not just one party that is at fault. 
Did you do the research on the, Orlando facility and why it 
took so long to move forward?
    Mr. Wise. Well, madam I do recall in your statement you 
alluded to one of the major reasons that had resulted in the 
problems with Orlando i.e. several changes in the site location 
changed.
    Ms. Brown. Whoever was in charge.
    Mr. Wise. I am sorry?
    Ms. Brown. If the Democrats were in charge, it would move 
to one city.
    Mr. Wise. Right.
    Ms. Brown. If the Republicans were in charge, it moved to 
another. So I mean, we need to take the politics out of 
building hospitals. In the end the Secretary should have the 
authority to decide what is in the best interests of the VA. I 
was able to pull all of the players together and we were able 
to move forward. You cannot just say that it is one thing that 
has caused these problems. It is the multiplicity. We have been 
part of the problem. For over 25 years we were talking about a 
hospital in Orlando. It is ludicrous. We have the growth in 
Central Florida. We need that hospital up and operational and 
it will be, I hope, in my lifetime to be open in the next 
couple of months.
    I yield back. But the point I am making is that we can do 
our oversight, and we can do other investigations. But we do 
not need to get into the business of change orders. I mean, if 
so we need to, go to the administration. We have oversight to 
make sure they are doing what they are supposed to do. I yield 
back.
    Mr. Takano. Mr. Chairman, I----
    The Chairman. The gentleman's time has expired.
    Mr. Takano. Thank you.
    Ms. Brown. I took his time. I am sorry.
    The Chairman. Again, you take mine, you take his. But, you 
know, I do not believe anybody on this committee can say that 
we have politicized anything within our purview. And I would 
say that this decision to put the facility where it is now was 
done under a different administration. And had it been a 
Republican administration at this point we would be going after 
them just like we are today. It is for the veterans of this 
country, not for a political reason. I need to go ahead and go 
on to----
    Mr. Takano. Sir, if I could follow-up with you after the 
committee----
    The Chairman. Yes, sir.
    Mr. Takano. Yes.
    The Chairman. Ms. Radewagen, do you have any questions that 
you would like to ask? Okay, thank you very much. Ms. Kuster.
    Ms. Kuster. Thank you, Mr. Chair. I wanted to ask Mr. Wise 
about your examination and this comparison of the, particularly 
the Army Corps and their oversight of the DoD facilities, and 
whether, what recommendations you would have going forward for 
the VA? Or do you have an opinion as to whether or not we 
should, Congress should consider the Army Corps, because of 
their expertise, because of all their experience, supervising 
construction of large medical facilities at the VA going 
forward?
    Mr. Wise. That is a good question and an interesting 
question. It sounded like from what I heard on the first panel 
today that this is something that is on the table. So it 
certainly seems worthy of consideration. It is not something we 
have examined in any detail. But it appears that VA certainly 
is looking to the Army Corps for some of its expertise in 
helping it to resurrect the situation in Aurora and get it 
moving again. And perhaps that could be a model. It is 
something that the Deputy Secretary is certainly open to based 
on his testimony. I presume he will be consulting with the 
committee and others to make that determination. It does sound 
like they have gotten a number of Army Corps people working in 
the construction area in the OACL in the VA. So perhaps VA is 
beginning to adopt some of those methods that have been used by 
the Army Corps.
    Ms. Kuster. That did sound encouraging, the hiring of 
people with this kind of expertise and this methodology of 
oversight for projects this size. And I am just wondering for 
our friends in the VSO community, Mr. Kelly and Mr. Butler, do 
you have an opinion, or does your organization have an opinion, 
about this notion of looking into the future now, particularly 
with, in relation to the reforms that had been passed, as to 
whether the VA should be creating such large hub facilities at 
such an expense? I am picking up on my colleague Mr. Takano's 
testimony. We can all think of lots of great uses for these 
billions of dollars to provide healthcare across this great 
country. Do you have an opinion about this? About the focus on 
these large tertiary facilities?
    Mr. Kelley. Yes, ma'am. I don't think you can wholesale say 
that large facilities should go by the wayside, or that we 
should only use large facilities. You have to look case by 
case. Large metropolitan areas are going to have to have large 
hospitals that are veteran centric. But as you look around the 
country there are services that are underutilized within VA and 
we are building a facility and underutilizing a service just 
because we need to have that service. We need to start looking 
at public-private partnerships to fill those holes. The hub and 
spoke method that you were talking about, having a central area 
and then having areas outside of that are more convenient.--
Working with partner hospitals that can provide a service that 
is just underutilized but needed in the community. There is no 
need to have on staff a cardiology staff if they are doing one 
or two heart surgeries a day, when across the street they are 
doing 20 or 30 and they have got the staff and the expertise to 
do that. Why are we spending resources on that when it could be 
put somewhere else for need within that facility? So VFW is 
open to looking at those public-private partnerships, 
developing new ways to do that. But I cannot say never build a 
large hospital again.
    Ms. Kuster. Sure, yes. And I agree, we have a wonderful, at 
the White River Junction, Vermont, although right on the border 
so we consider it our facility in New Hampshire as well, they 
have a great relationship with Dartmouth Medical School. And 
that is what I am trying to, you know, not only is it 
expensive, the example you gave about the cardiac surgery, it 
is not even safe in some circumstances if they are not doing 
the volume. So I, my time is up, but Mr. Butler, if you have 
anything to add? And I am not suggesting, by the way, that we 
do not build any more of these. But I just, more focus on 
getting the resources where they are needed. And I come from a 
rural district, it is not an urban center.
    Mr. Butler. I would say, agree that you have to look at it 
on a case by case basis. But the challenge for the VA is the 
average age of a VA medical center. You know, a lot of the 
facilities have outlived their life cycle. And so VA needs to 
invest and reinvest in their medical facilities, whether it is 
building a hub and spoke facility or expanding upon its other 
additional resources. The one thing that the American Legion 
does not support is that we do not support voucher out care. We 
do not support shutting down the VA system and turning the VA 
system into a voucher system. We support that the VA system is 
for American veterans and the VA should maintain its system of 
healthcare for our American veterans and continue to build upon 
what it already has.
    Ms. Kuster. Absolutely. Thank you so much. I appreciate 
your service. Thank you. Mr. Chair, I yield back.
    The Chairman. Thank you. Mr. O'Rourke.
    Mr. O'Rourke. Thank you, Mr. Chairman. To Mr. Wise, when we 
recently got a report back from the Office of the Inspector 
General on performance issues at the El Paso VA and we got it 
last month, we asked, our follow-up question to Dr. Day was 
what is the, of the 128 parts of the system, which is the best 
performer? And his response was I cannot single out one, but 
those medical facilities that are affiliated with an academic 
institution perform far better than the average VA medical 
facility. So my question to you is why was the decision made to 
separate Denver from a medical school, and how did that 
contribute to some of the problems that you have uncovered in 
your report?
    Mr. Wise. To the first part of your question, I am not 
exactly sure why although I believe there were some issues 
about governance that the university and the VA were unable to 
resolve about how it would be run. The second part was about 
the contribution to the delay and overrun, right?
    Mr. O'Rourke. Right.
    Mr. Wise. Yes, that was definitely a factor. Because once 
the original idea, of a shared facility, was off the table then 
you got into a situation where you needed to go back in to do 
redesign and then VA became responsible for a lot more costs 
than it had expected to share at the time. VA was absorbing a 
lot of standalone costs that were at that point rather 
unexpected. So all this resulted in numerous change orders, 
resulting in additional loss and delays.
    Mr. O'Rourke. And that also happened in New Orleans, did 
you say? Or did someone mention----
    Mr. Wise. Yes, there was also a situation in New Orleans--
--
    Mr. O'Rourke. Where it was affiliated and then the 
affiliation was separated?
    Mr. Wise [continuing]. Louisiana State University, LSU.
    Mr. O'Rourke. Okay.
    Mr. Wise. It was a similar situation and partnership that 
was originally intended with an academic institution, also did 
not go forward. And that also contributed to some of the delays 
and overruns in New Orleans.
    Mr. O'Rourke. I will follow-up with the VA. I would be 
really interested in understanding why they made that decision 
to separate if in fact VA medical facilities affiliated with 
academic institutions outperform the average. Did the GAO, did 
you look at accountability for the mistakes made related to 
these facilities?
    Mr. Wise. Our parameters in this engagement were really to 
look at what happened and to try to identify the systemic 
issues that were behind it that caused it to happen, and try to 
identify some recommendations that would hopefully help 
mitigate it happening going forward.
    Mr. O'Rourke. And I will say that I understand the scope of 
your study. But one of the systemic problems that we have is a 
culture that has not historically valued accountability. I am 
not speaking about current leadership. I fully believe that 
Secretary Gibson and Secretary McDonald and their team fully 
understand this and are trying to change the culture. But I 
would say that that has contributed to problems. And one of my 
follow-up questions to the VA, perhaps I will submit it for the 
record, is Secretary Gibson said those responsible for some of 
these mistakes were removed from their positions. And I do not 
know if that is a term of art, meaning that they were fired, or 
that they were transitioned into some other position within the 
VA. In other words, was there personal accountability for very 
grievous mistakes, where you are taking resources in a zero sum 
system away from potentially facilities in El Paso to pay for 
facilities in Aurora, Colorado, and you have veterans in El 
Paso who are not getting the service they need. That is the 
urgency behind the question.
    And I realize I only have a minute left. And so to follow-
upon Ms. Kuster's question for Mr. Butler and Mr. Kelly, taking 
out the extremes which is, you know, continuing with the status 
quo, or as you said, Mr. Butler, privatizing, voucherizing VA 
medical care, let us just assume we are not going to do either 
of those. After mistakes of this proportion, what would your 
membership be open to in terms of a different system? In terms 
of having for example what I call the Summers model, core 
competencies delivered at a world class level, very accessible 
out of the VA, and then perhaps non-core competencies, 
diabetes, getting your teeth fixed, having something not 
related to your service, is not performed at the VA but somehow 
managed out of there. I do not know if you, Mr. Butler or Mr. 
Kelley, could quickly comment on that?
    Mr. Butler. Well I think for the American Legion our 
resolution supports the VA remaining intact as a system of 
healthcare for American veterans. We support that VA can refer 
patients out. We supported the VACA with the provision that a 
sunset provision be added into the VACA. We, support veterans 
when they need to go outside the VA system to obtain their 
care, then we surely understand that need and that requirement. 
But our position is that the VA system is a VA system for 
American veterans and that system should be maintained.
    Mr. O'Rourke. Mr. Chair, could I have 20 seconds for Mr. 
Kelley.
    The Chairman. You may.
    Mr. O'Rourke. Thank you.
    Mr. Kelley. I think the goal is to provide care for 
veterans that is conducive for them individually. We have found 
under VACA, under the Choice Act, that we have done a survey of 
our membership and pretty close to 60 percent of them, even 
when they had a choice, stayed with VA. They wanted to wait a 
little longer because that is where their continuum of care 
was. So we need to look at all these factors when we start 
making decisions. Yes, there are areas where veterans are, that 
they are not being served properly by VA. And opening up other 
opportunities outside of VA, whether it is short term or long 
term, need to be looked at. Specialty services that, you said 
diabetes care, may be an area where it is more suitable for 
that to be contracted out in certain areas. But we cannot, 
again, have one solution to be the fix. We need to look at 
every opportunity to improve the delivery of care for veterans.
    Mr. O'Rourke. Thank you. Thank you, Mr. Chair.
    The Chairman. All right, everybody. Look outside, it is 
snowing. Heavily. Even for a Coloradan. Ms. Brown.
    Ms. Brown. Thank you. I guess I am stuck here so I can just 
go ahead and ask my questions now. Mr. Butler, I have a 
question for you. I think my position is closer to yours. But 
we do know that there are some financial restraints that we 
have. I guess my question is in some areas, rural areas, not 
addressing healthcare but cemetery. In some areas, I do not 
know whether it makes sense to build a full-fledged cemetery. 
Maybe we could do something, partner with the local community 
to expand it existing cemeteries. And maybe in some rural areas 
addressing healthcare we could, do some partnerships in order 
to provide, a wing in a hospital for veterans. I mean, there is 
no one answer. What would you all be open to?
    Mr. Butler. Well I think your, under your existing 
authorities they allow for a lot of those opportunities, what 
you just mentioned. So under the current authority for 
healthcare you have your fee basis authority, you have the new 
legislation that was introduced through VACA, you have also 
PC3. The American Legion supports all of those options. So I 
would agree that it is not one option, that fixes everything. 
You have to look at all of the available opportunities and 
determine what is best for American veterans. And that is the 
key. What is best for American veterans, and to ensure that 
their needs are being taken care of and in a system that is 
designed for veterans. And if VA refers those veterans outside 
because they don't have the resources or service to provide 
that care then that is fine as long as VA has the appropriate 
funding to meet the needs of veterans.
    Ms. Brown. And Mr. Kelley.
    Mr. Kelley. I am with Mr. Butler on this in that there is 
no cookie cutter solution. Veterans in rural Montana need to be 
thought of differently than in downtown Chicago. And those 
veterans' expectations of delivery of care are different as 
well. So we need to take that into account. I think there is an 
understanding if you live in a rural remote area that life is a 
little tougher, and it is going to be a little tougher for you 
to get that care and there is some acceptance of that. But we 
need to look at ways to prevent in the middle of a snowstorm 
allowing people, or insisting on people, driving several 
hundred miles for just follow-up care who could be seen in a 
community when, and as Mr. Butler said, those authorities are 
there. We need to exercise them. We need to, we need to not 
make that the exception in some cases and make it the rule 
until we have suitable solutions in place.
    Ms. Brown. Well you know, it was amazing because I am 
pretty old school that a lot of the veterans like the 
telemedicine, wherein they can do a lot from home and then if 
they need to come, they come in. What is your opinion of 
telemedicine?
    Mr. Kelley. Absolutely. We have veterans who swear by it, 
just as you said. And even within a community outpatient 
clinic, I will use myself as an example. I went in for my 
annual physical. My primary care saw a mole on my back that she 
didn't like. She said, do you have a few minutes? Let's have 
somebody take a picture of it, we'll send it up to Baltimore. 
They will look at it and if you need to be seen, you will be 
seen. I did not have to go to Baltimore for a second 
appointment. That was sent up there. Within a few days they 
came back and said, no, it's okay. So it saved me a trip. It 
saved VA resources. And quality healthcare was served. So we 
need to look at all avenues again.
    Ms. Brown. Mr. Butler.
    Mr. Butler. I would agree. I was at a VA hospital in 
Georgia where they had a virtual lab, wherein veterans were 
being treated in their OR and--or, yes, not OR, but in their 
ICU. And the doctor was somewhere else at another place 
monitoring the veterans. So there are many advances in modern 
medicine that we need to bring all together to ensure that all 
of the advanced technologies out there that are made available 
are being used to treat our American veterans.
    Ms. Brown. And Mr. Wise, in closing thank you for your 
testimony. As I said, it is many issues. For example, I know a 
lot more about the New Orleans situation then I do Denver. I 
have been there several times. I was very instrumental in 
making sure that that particular New Orleans project moved 
forward because the hospital there was wiped out completely by 
Katrina.
    Mr. Wise. Right.
    Ms. Brown. And so, you know, in visiting the area I knew it 
was not any other facilities nowhere near for the veterans to 
have the services that they needed. So it was going to be a 
joint between them and the universities. Part of the problem 
was the Governor, the Mayor, I mean, it was a mess. So I am 
happy that it is close to ending, coming to be open. And maybe 
we can find exactly when it is going to be open. Not you, I 
know. But the Secretary.
    Mr. Wise. Okay.
    Ms. Brown. Yes. Thank you, though.
    The Chairman. Thank you very much, Ms. Brown. I appreciate 
the good work and the comments. I have one follow-up question. 
Mr. Wise, I think in your written testimony you stated, 
actually it was your updated report of 2015, you reached out to 
VA and asked them for an estimated cost, final cost for the 
Orlando project and you were not given that cost estimate. At 
least, that is what I have been----
    Mr. Wise. I think that was for the Denver project, that 
reference, no? I believe?
    The Chairman. It is the Denver project?
    Mr. Wise. That is the one we could not get final, well the 
same as what Mr. Gibson said this morning----
    The Chairman. Yes, I just was asking for Ms. Brown's 
hospital. I was under the impression that it was the Orlando 
project, but I apologize. And with that, the one thing I think 
we can all agree, the way healthcare is delivered today is much 
different than it was delivered years ago. The idea of building 
massive hospitals at over $1 billion apiece is not a 
sustainable model. We have to look at other ways and options. 
Nobody on this committee is talking about dismantling the VA 
when we talk about providing choice to people on their 
healthcare. And I believe that we all want to work together to 
make sure that the veterans get the healthcare that they have 
earned, when they need it, where they need it, and that what 
they get is quality healthcare. So with that, we will adjourn.
    [Whereupon, at 1:15 p.m., the committee was adjourned.]

                                APPENDIX

              Prepared Statement of Jeff Miller, Chairman

    Good Morning. This hearing will come to order.
    I would like to welcome everyone to today's hearing titled, 
``Building a Better VA: Assessing Ongoing Major Construction Management 
Problems Within the Department.''
    The purpose of this hearing is to address continued problems 
occurring in VA's persistent construction delays and cost overruns 
involving its construction of the Replacement Aurora, Colorado VA 
Medical Center. The VA has been found by the Civilian Board of Contract 
Appeals (CBCA) to have breached its contract with its prime contractor 
on this project and the facility could eventually cost as much as $1.4 
billion to complete.
    This Committee has held numerous hearings in the last few years 
involving VA's inadequate management of its construction projects, each 
of those hearings being based on considerable evidence. ``We have come 
to a point in VA's major construction program where the administrative 
structure is an obstacle that is not effectively supporting the 
mission. As a result, our veterans are the ones who are left without 
services and our taxpayers are the ones who are left holding the check 
or writing a new one.'' That was part of my opening statement during 
our March 27, 2012, hearing on VA major construction, but it seems 
nothing has changed nearly three years later, despite warnings and 
corrective suggestions being presented from inside and outside the 
Department.
    Based on the lengthy Committee investigations that gave rise to 
these hearings, the Committee asked the GAO to audit VA major 
construction projects. Their report, issued in April 2013, found that 
on average, the hospital construction projects reviewed were about 
three years late and $366 million over budget. Every time we have asked 
VA about those results, it has argued that it is not delayed or over 
budget based on its own accounting.
    Further, when we held a hearing on the Aurora VAMC construction 
project in April 2014, the tenor of VA responses was that it was the 
contractor's fault that the project was not completed and that the 
project was still operating within its budget. I have a feeling that 
the VA will not be able to cling to those illusions any longer.
    On December 9, 2014, the CBCA found that the VA materially breached 
its contract with its prime contractor on the Aurora VAMC construction 
project, Kiewit [Kee-Wit]-Turner (K-T). It found that VA did not 
provide a design that could be built within its stated budget, and it 
was also the VA's fault to the point that the CBCA said K-T would be 
well within its rights to simply walk off the job. And that is exactly 
what it did.
    Now, VA is left scrambling to make K-T whole enough to get back to 
work. VA may even have to come back to Congress to ask for perhaps up 
to 600 million more taxpayer dollars to fix problems the Committee has 
brought to light year after year only to be ignored by the VA.
    I visited the Aurora construction site Monday with Congressman 
Coffman to see again in-person what is taking so long and why this 
project has been a veritable money pit for the last several years. Once 
completed, this facility will be well-equipped to provide the best 
possible healthcare available, which is exactly what the veterans 
served by every VA facility deserve. It is long past time for these 
projects, marred by bureaucratic ineptitude, to be complete. I look 
forward to hearing from the VA, and the other witnesses here today, on 
how we can correct the abysmal state VA's major construction program 
has been in for years.
    With that, I now yield to Ranking Member Brown for any opening 
remarks she may have.

                                 

          Prepared Statement of Corrine Brown, Ranking Member

    Thank you, Mr. Chairman, for holding this hearing today. From day 
one, I have been a member of this Committee, and I am pleased, after 22 
years, to be the Ranking Democrat. I look forward to working with you 
and all the other members to help our nation's veterans.
    We all agree that providing veterans timely, quality healthcare in 
a safe environment is a focus of this Committee. The VA provides the 
best care and treatment for veterans in the world and we need to make 
sure that continues.
    One critical element of this focus is the manner in which VA 
provides veterans access to healthcare.
    For many years, VA has structured itself around a ``hub-and-spoke'' 
system where clinics and other smaller facilities feed into large 
medical centers.
    One of the discussions this Committee must begin to have is whether 
this structure is the best structure for VA healthcare looking into the 
future and again, looking down the road, what steps do we begin to take 
to ensure that veterans have reasonable access to the healthcare they 
need.
    This Committee has authorized, and Congress has appropriated, 
billions of dollars for VA construction programs over the past decade. 
The question we must ask ourselves is are we getting what we paid for, 
and has access improved for our veterans.
    We must ask ourselves what must be done to make the VA construction 
program function as we intend it to. What must we do to make sure that 
the facilities we are building today do not come in over budget and 
late. If we do not do this we run the risk of building facilities that 
may already be obsolete when the doors are open and are merely 
expensive memorials and little else.
    For nearly two decades the VA was out of the major facility 
business. By not building any major medical centers in the 20 years 
preceding authorization of the Las Vegas, Orlando, Denver and New 
Orleans Medical Centers, has the VA lost the ability to manage a 
construction portfolio? Do we need to expect better management and more 
effective processes? What are the barriers currently in place that make 
it difficult for VA to come in on time and within budget? Should we 
look outside the VA for expertise?
    From my personal experience with the years of delay in Orlando, and 
the issues in Denver, it seems the VA continues to struggle with 
construction planning and execution. What we need is to work together 
with the stakeholders to come up with a viable solution.
    One possible solution is for the VA to work closer with the private 
sector and establish relationships with hospitals. One idea might be 
that VA use a ward in an existing hospital, bring it up to VA standards 
and then have a presence in that community. Facilities, resources and 
personnel could be shared, which would reduce costs for everyone 
involved and improve access.
    Mr. Chairman, I am looking forward to hearing from the VA not only 
what they are going to do to address past problems and delays in the 
construction process, but other ideas on how they can ensure these 
problems actually get fixed and are not repeated in the future.
    Thank you Mr. Chairman and I yield back my time.

                                 

               Prepared Statement of Mr. Sloan D. Gibson

    Good morning, Mr. Chairman and Members of the Committee. I am here 
this morning to update the Committee on the status of the construction 
of the replacement medical center in Denver. Joining me today is Mr. 
Dennis Milsten, Director for the VA Construction and Facilities 
Management Office of Operations.
    The Department's main priority regarding the Denver project is to 
complete this facility without further delay, and to do that while 
delivering the best possible value to taxpayers given the difficult 
circumstances that have occurred. Our commitment to completing this 
project intended to serve 390,000+ Colorado Veterans and their families 
has never wavered, and current VA medical facilities and programs 
continue to ensure that no Veteran or their families goes unserved.
    We are working aggressively to rebuild trust, improve service 
delivery, and pursue longer-term excellence and reform. This includes 
initiatives like My VA, which involves building a world-class, 
customer-focused, Veteran-centered organization, and strengthening the 
efficiency and effectiveness of our array of support services.
    Completion of the Denver replacement medical facility is important 
to improving access to care and services, and I again apologize for the 
delays that have occurred. Let me review where we are on this project.
    The Department was notified on December 9, 2014, of the decision by 
the Civilian Board of Contract Appeals in favor of the construction 
contractor, Kiewit-Turner, thus allowing it the option to stop work. VA 
immediately contacted the contractor to determine a course of action to 
continue construction to complete the facility. I personally met with 
Kiewit-Turner leadership to forge a way ahead that would avoid the 
delay and disproportionate costs of stopping and re-starting 
construction activity immediately ahead of the holiday season.
    VA reached an interim agreement on December 17, 2014, that was 
subsequently signed on December 22, 2014. As part of the interim 
contract, the U.S. Army Corps of Engineers (USACE) is on site to 
provide technical and management advice. This will also allow USACE the 
time to review the specifics of the project and formulate the final 
plans to negotiate and administer a long-term agreement for 
construction completion.
    We have undertaken a comprehensive review of VA's major 
construction program and have taken numerous actions to strengthen and 
improve execution of our on-going major construction projects. With the 
acceptance and closure of the April 13, 2013, Government Accountability 
Office report recommendations and the implementation of the 
Construction Review Council recommendations, VA has significantly 
changed the way it conducts business, but more work remains to be done.
    To help ensure that previous challenges are not repeated and to 
lead improvements in the management and execution of our capital asset 
program as we move forward, we will continue to focus on these lessons 
learned:

         Integrated master planning to ensure that the planned 
        acquisition closes the identified gaps in service and corrects 
        facility deficiencies.
         Requiring major medical construction projects to 
        achieve at least 35 percent design prior to cost and schedule 
        information being published and construction funds requested.
         Implementing a deliberate requirements control 
        process, where major acquisition milestones have been 
        identified to review scope and cost changes based on the 
        approved budget and scope.
         Institutionalizing a Project Review Board (PRB)--VA's 
        Office of Acquisition, Logistics, and Construction worked with 
        USACE to establish a PRB for VA that is similar to the 
        structure at the USACE District Offices. The PRB regularly 
        provides management with metrics and insight to indicate if/
        when the project requires executive input or guidance.
         Using a Project Management Plan--outlines for 
        accomplishing the acquisition from planning to activation to 
        ensure clear communication throughout the project.
         Establishment of VA Activation Office Ensures the 
        integration of the facility activation into the construction 
        process for timely facility openings.
         Conducting pre-construction reviews--Major 
        construction projects must undergo a ``constructability'' 
        review by a private construction management firm to review 
        design and engineering factors that facilitate ease of 
        construction and ensure project value.
         Integrating Medical Equipment Planners into the 
        construction project teams--Each major construction project 
        will employ medical equipment planners on the project team from 
        concept design through activation.

    These improvements are being applied to the 53 on-going major 
construction projects and our other major medical center construction 
projects, including the Orlando replacement facility, where 
construction is scheduled to be completed at the end of February, and 
our New Orleans replacement facility, which is currently on schedule, 
and is anticipated to be completed in the fall of 2016.
    In the past five years, VA has delivered 75 major construction 
projects valued at over $3 billion that include the new medical center 
complex in Las Vegas; cemeteries; polytrauma rehabilitation centers; 
spinal cord injury centers; a blind rehabilitation center; and 
community living centers. This is not to diminish our concerns over the 
mistakes that led to the current situation on the Denver project, but 
only to remind that we have successfully managed numerous projects 
through our major construction program. VA takes full responsibility 
for the situation in Denver and we will continue to review our major 
construction program and the details of this project to improve our 
performance. In addition, as identified in section 201 of the Veterans' 
Access, Choice, and Accountability Act of 2014, VA's capital management 
program will undergo an independent assessment, which will be provided 
to you within 60 days of its conclusion.
    In closing, each day, VA is moving toward its goal of improving and 
streamlining our processes to increase access to our Veterans and their 
families. I am personally committed to completing the Denver project 
without further delay and to do that while delivering the best possible 
value to taxpayers given the difficult circumstances that have 
occurred. Bottom line: We want to do what is right for Colorado 
Veterans and to get the Denver medical facility back on track in the 
most effective and cost efficient way.
    This committee has been a strong and supportive advocate for 
Veterans' healthcare, and VA will continue its efforts to be 
transparent about the construction of the Denver replacement facility.
    Mr. Chairman, this concludes my statement. Thank you for the 
opportunity to testify before the Committee today. My colleague and I 
would be pleased to respond to questions from you and Members of the 
Committee. 
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                Prepared Statement of Raymond C. Kelley

    Mr. Chairman, Ranking Member and Members of the Committee:
    On behalf of the men and women of the Veterans of Foreign Wars of 
the United States (VFW) and our Auxiliaries, I would like to thank you 
for the opportunity to testify today regarding the Department of 
Veterans Affairs' (VA) management of major construction projects.
    Over the past few years it has become very apparent that VA's 
ability to control costs and deliver major construction projects on 
time is and should be viewed as a great concern. Veterans are not being 
served when construction projects take months or years longer than 
expected to complete and the price tags inflate as time drags on.
    Last year, the House passed legislation that would improve VA's 
major medical facility construction process. These improvements 
include: using medical equipment planners, developing and using a 
project management plan, peer reviewing all projects, creating a 
change-order metric, and using a design-build process when possible.
    VA claims they have started using medical equipment planners. This 
practice will assist in reducing scheduling delays and cost overruns. 
To ensure VA's construction process can be as efficient as possible, it 
is important the other provisions are enacted.
    VA's lack of standardized project management protocol has led to 
poor communication within VA and between VA and the general contractor 
has also led to delays and cost over-runs. There have been cases 
identified where separate VA officials have provided contradictory 
orders to the general contractor, where one VA employee authorized the 
continuation or start of a new phase of building, while another VA 
employee gave the order not to continue or start a particular phase. 
This lack of VA project management coordination led to a portion of the 
Orlando, Florida facility to be built then removed.
    By developing and using a project management plan, all parities at 
the onset of the project will have a clear understanding of the roles 
and authorities of each member of the project team. Included in the 
plan will be clear guidance on communication, staffing, cost and 
budget, as well as change-order management.
    Construction peer excellence reviews are an important aspect of 
maintaining a high level of construction quality and efficiency. When 
used, these review teams are made up of experts in construction 
management who travel to project sites to evaluate the performance of 
the project team. These meetings provide important feedback--a separate 
set of eyes--on the project management plan to ensure a plan is in 
place to make the project come in on time and on budget.
    VA has historically relied on the design-bid-build project delivery 
system when entering into contracts to build major medical facility 
projects. Sixty percent of current VA major medical facility projects 
use design-bid-build. With this model, an architect is selected to 
design a facility, the design documents are used to secure a bid, and 
then the successful contract bid holder builds the facility.
    Design-bid-build projects often encounter disputes between the 
costumer--VA in this case--and the construction contractor. Because 
these contracts are generally firm-fixed-price, based on the completed 
design, the construction contractor is usually responsible for cost 
overruns, unless VA and the contractor agree on any needed or proposed 
changes that occur with a change of scope, unforeseen site condition 
changes or design errors. VA and the contractor negotiate these changes 
through change orders. This process can become adversarial, because 
neither party wants to absorb the cost associated with the change, and 
each change order can add months to the project completion date.
    A design-build project teams the architectural/engineering company 
and the construction contractor under one contract. This method can 
save VA up to six months of time by putting the design phase and the 
construction performance metric together. Placing the architect as the 
lead from start to finish, and having the prime contractor work side-
by-side with the architect, allows the architect to be an advocate for 
VA. Also, the architect and the prime contractor can work together 
early on in the design phase to reduce the number of design errors, and 
it also allows them to identify and modify the building plans 
throughout the project.
    While these initiatives will work to improve future projects, the 
VFW believes a look back at all currently funded major construction 
projects should take place to see what steps may be needed to finish 
the nearly 50 partially funded but not completed major Veterans Health 
Administration (VHA) construction projects.
    VA's FY 2015 Budget Submission shows there was more than $6 billion 
available for 49 VHA projects through the end of FY 2013. What the 
submission does not show is why some projects were initially funded 
years ago, but little to no progress has been made to complete them. 
Many of these projects have safety implications or provide specific 
services for spinal cord injuries and need to be set on a course that 
will bring these projects to completion.
    VA's Strategic Capital Investment Plan (SCIP) has been a great tool 
in identifying gaps access, utilization and safety, but if a clear plan 
is not in place to close these gaps, delays in care, safety risks and 
the increased cost to close these gaps will continue.
    Mr. Chairman, this concludes my testimony. I will be happy to 
answer any questions you or the Committee members may have.

Information Required by Rule XI2(g)(4) of the House of Representatives

    Pursuant to rule XI2(g)(4) of the House of Representatives, VFW has 
not received any federal grants in Fiscal Year 2014, nor has it 
received any federal grants in the two previous Fiscal Years.
    The VFW has not received payments or contracts from any foreign 
governments in the current year or preceding two calendar years.
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