AURORA | A Dec. 9 letter from a Kiewit Turner executive to the secretary of the Veterans Affairs said the giant construction firm would immediately stop work on the embattled and over-budget Aurora hospital.
The letter, sent by Executive Vice President Scott Cassels to VA Secretary Robert McDonald and Deputy Secretary Sloan Gibson, said the VA was in “material breach” of its contract to build the massive hospital in Aurora, and that Kiewit had made every effort to continue despite suing the department.
“From the very beginning of this important project, Kiewit-Turner went to extraordinary efforts to try to work with the VA, spending $100 million out of pocket to keep the project moving forward for Colorado-area veterans,” the letter states.
Aurora Congressman Mike Coffman was critical of what he deemed mismanagement by the VA and said he would immediately meet with other members of Congress and VA officials to get the project back on track.
“The mismanagement of the Aurora construction project is not an isolated problem, every major construction project that the VA is currently working on is dramatically over budget and behind schedule,” Coffman said in a statement. “I’ve introduced legislation to have the Army Corps of Engineers, who have built similar projects for the Department of Defense, on schedule and within budget, to oversee all ongoing VA construction projects. My legislation passed the House unanimously and is awaiting action in the Senate.
” We have an obligation to our veterans to get this hospital built and we have an obligation to the taxpayers to do everything we can to bring down the cost.”
In a statement accompanying the letter, officials from Kiewit-Turner say the hospital, which was budgeted at $604 million by Congress, would cost more than $1 billion to build.
In September, the House has passed a bill to increase oversight of veterans’ hospitals under construction, following a report that some medical centers take three years longer to complete than estimated and cost an extra $366 million per project.
Coffman says the Veterans Affairs Department’s oversight of construction projects is dysfunctional and leads to delayed health care. A report by the Government Accountability Office last year found that at least four medical centers were behind schedule and hundreds of millions of dollars over budget. The hospitals are in Las Vegas, Denver, New Orleans and Orlando, Florida.The House bill would require the VA to appoint a project manager from the Army Corp of Engineers to oversee construction projects that cost more than $60 million.
Colorado Congressman Ed Perlmutter, who previously represented Aurora and was instrumental in pushing through the VA hospital project, said it’s now time for both sides to return to the negotiating table to get the project completed.
“There has been a serious dispute between the VA and the prime contractor for too long,” Perlmutter said in a statement. “Now it is time for the VA and Kiewit/Turner to come to the negotiating table to work out this dispute so veterans will have the state-of-the-art facility they have long deserved.”
The replacement medical center was deemed years behind and hundreds of millions of dollars over budget earlier this year with no clear path for how to rein in costs, leaving officials across the country to shake their heads and offer little in the way of new direction.“By the end of this year, we will be out $100 million,” said Kiewit spokesman Tom Janssen said in May. He said the cost dispute between Kiewit and the Veterans Administration has delayed the opening of the hospital until 2017, two years behind the VA’s anticipated schedule.
Illustrating what has become a huge disconnect between the VA and Kiewit, VA officials have consistently kept saying the hospital will be completed by May 25, 2015 for $800 million.
The new medical center is slated to offer 1.2 million square feet with nine buildings that will include two inpatient facilities, three clinics, as well as a research facility and an energy center with solar panels. There are plans for three parking structures, one which will be located underground next to the outpatient buildings.
A 2013 Government Accountability Office report that surveyed four major VA regional hospital projects in the U.S. found them on average, 35 months behind schedule and $336 million over budget. Aurora’s VA hospital cost increase of 144 percent was the largest of any of the four surveyed at $472 million, with an increase from $328 million in June 2004 to $800 million in November 2012.
Steve Rylant, president of the United Veterans Committee said his organization is not taking sides on the issue.
“We simply want the VA Replacement Hospital to be built, to be built in the shortest time possible, to be built with quality, and to be built by veterans,” he said. “We appreciate that the Civilian Board of Contract Appeals issued their ruling in an expeditious manner and we urge the VA and KT (Kiewit-Turner) to resolve this issue and to move forward with completing the hospital.”
This is insane. If Kiewit walks away then decay will start and very expensive remediation will be required. Costs could explode.
I have no sympathy for Kiewit, they have a team of lawyers to look at contracts including the VA hospital. If there wasn’t enough money to do the work, they shouldn’t have bid so low.
Anyone else think its awfully convenient that this company got the RTD light rail expansion, the VA hospital, and the Xcel Natural gas plant at the same time?
John, read the ruling and you’ll discover that Kiewit is in the right here. They did not bid the current version of the project as you purport. Additionally, there is absolutely no connection between the three projects you mention, especially considering that Xcel is a private company. Large projects can generally only be built by large companies so it’s not surprising that the three projects you mentioned, which are worth hundreds of millions each happen to all be built by Kiewit. Your conspiracy theories are unfounded and naive.
This is truly an ignorant statement. This is referred to as a design build contract so when kiewit was selected the project was probably at best 30 percent designed. What happens next is the owner (VA) continues with design but if done responsibly should always keep in mind the budget at hand. Often times the design team is at such a disconnect with real on the ground dollars and budget they are just arbitrarily over designing and fail to listen when told their wishful designs cannot be built within the approved budget. This one is on the design team and the owner (VA). If kiewit had fully protected themselves early and walked off before losing millions of dollars they would be the ones in breach of contract but they did the right thing and the hard thing costing them 100 million dollars that at best after litigation they may recoup sometime in the next decade. Be informed before chiming in with such ignorance please!
Corporate corruption should be dealt with criminally. But then, Obama doesn’t know what a budget is, so how can we blame Kiewit?
so now it’s Obama’s fault HA HA HA HA HA HA HA! really
Um, yes!
this one you can blame on government agency stupidity and incompetence, not corporate corruption
This is just temporary. Keiwet needs more money to complete the project. VA doesn’t have any more money approved by congress. Congress will have to approve more funds. If its one thing congress can agree on politically its helping veterans.
Actually just read the VA has reserved funds they can unlock to get this done. Without congress.
KT started the project with design based drawings. The VA was to take KT’s advise for cost savings, which the VA ignored
The VA is incompetent and wholly to blame for this mess. If you look at Kiewit and Turner’s track record you will see a long list of big projects built on time and on budget, EVERY VA project is hundreds of millions of dollars over budget and late.