VA fires back at Kiewit’s $1B Aurora hospital claim

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AURORA | The Department of Veterans Affairs is demanding proof that Aurora’s new VA hospital is over-budget and will now cost more than $1 billion.

Construction continues April 24 at the new VA Hospital near East Colfax Avenue and I-225. U.S. Rep. Mike Coffman, R-Aurora, said he was disappointed to hear that construction might be delayed on the Veterans Affairs Hospital. However, VA officials said the hospital could still start seeing patients in October 2015 while construction is finishing up.  (Marla R. Keown/Aurora Sentinel)
Construction continues April 24 at the new VA Hospital near East Colfax Avenue and I-225. U.S. Rep. Mike Coffman, R-Aurora, said he was disappointed to hear that construction might be delayed on the Veterans Affairs Hospital. However, VA officials said the hospital could still start seeing patients in October 2015 while construction is finishing up. (Marla R. Keown/Aurora Sentinel)

In an August 12 court filing, the VA lambasted builder Kiewit-Turner’s complaint that the design for the VA hospital now costs $400 million more than the original budget. The court filing is the latest development in an ongoing dispute between the VA and Kiewit-Turner, which veterans and lawmakers say is threatening to delay the project.

According to the filing, Kiewit-Turner “owes it to (the VA) and the veterans in the Rocky Mountain area to specifically provide proof” that the project is dramatically over-budget.

Lawyers for the VA wrote the response to Kiewit-Turner’s complaint letter to the federal Civilian Board of Contract Appeals, filed July 8.

The 1.1 million square-foot replacement facility was originally supposed to cost about $600 million, according to Kiewit-Turner’s letter of complaint. But after the initial agreement over the hospital’s budget in November 2011, the VA submitted design plans to Kiewit-Turner that were more complex and “significantly increased the scope of the work,” according to the complaint.

The VA never provided Kiewit-Turner a design plan that could be built “anywhere close” to $600 million, the complaint said. The VA used its own design firm to plan the hospital.

The VA, in its response letter, doubts Kiewit-Turner’s claims and says it has asked the builder several times to prove that the project is over-budget.

“(Kiewit-Turner) has continually failed to show how the subject project could astronimically increase from $604 million … to an alleged $1 billion plus, particularly when (Kiewit) has been involved in providing constructability reviews throughout the design phase,” VA lawyers wrote in the filing.

The cost of a fixed-price construction project shouldn’t increase just because market prices increase, as the construction firm alleges, lawyers wrote in the filing.

The VA and Kiewit-Turner to date have reached $45 million in cost savings, according to the filing.

Although the VA is putting the onus on Kiewit-Turner to prove that the project is over-budget, a Jan. 23 letter by VA officials says the VA’s own design plans exceeded the estimated cost of construction by $200 million.

U.S. Rep. Mike Coffman said in July that’s proof that the potential delay and cost increase isn’t due to the construction portion of the project, but the project’s design plan.

Officials for the VA and Kiewit-Turner are keeping mum during the lawsuit, however Kiewit-Turner officials said in July the construction firm is continuing to work on the project, despite the lawsuit. “This filing follows the processes outlined in our contract and is not uncommon in the construction industry,” said Celeste Davis Stragand, spokeswoman for Kiewit-Turner, in a statement. “It will not impact our commitment to working with the VA to resolve the challenges on the project and to deliver a world-class facility for area veterans.”

Reach reporter Sara Castellanos at 720-449-9036 or [email protected]