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New VA hospitals: Months overdue, millions over budget

May. 8, 2013 - 10:30AM   |  
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Building new veterans hospitals is an “abysmal” process filled with delays and cost overruns, says the chairman of a House panel investigating how the Veterans Affairs Department spends money.

“Not only is VA building facilities over budget and late, but it is also failing to pay the contractors for their work in a timely manner,” Rep. Mike Coffman, R-Colo., chairman of the House Veterans’ Affairs subcommittee on oversight and investigations, said Tuesday.

The Government Accountability Office, the investigative and auditing arm of Congress, studied VA hospital construction projects in Denver, Las Vegas, New Orleans and Orlando, finding the average construction delay was 35 months and the average cost overrun was $366 million.

The biggest overrun is in Denver, where a hospital now expected to be finished in April 2015 is now estimated to cost $800 million, a 144 percent jump over initial estimates, said Lorelei St. James, GAO’s physical infrastructure director. The longest delay was in Las Vegas, where a hospital now expected to be done in June is taking more than 10 years to complete, 74 months behind schedule. Its price, now estimated at $585 million, is 80 percent over the initiative estimate.

High costs and delays hurt veterans by taking money that could have been used elsewhere and by making them wait for needed facilities, Coffman said. But one of the things he finds most “distressing” is that “VA failed to learn from its mistakes when it went from project to project.”

“Given the number and variety of facilities VA has built over the last several years, it is disturbing to me that VA continues to employ policies and techniques that have repeatedly fallen short,” Coffman said.

VA officials said they are learning lessons and doing better. They cite as an example an Orlando hospital, scheduled to be completed in June, that is 39 months behind schedule and 143 percent over cost.

The project is expected to serve 113,000 veterans with 134 inpatient beds, a new outpatient clinic, a 120-bed assisted living center and a 60-bed long-term care section.

“The construction project has advanced to approximately 50 percent completion a year ago to approximately 80 percent today,” said Glenn Haggstrom, principal executive director of VA’s office of acquisition, logistics and construction.

“Lessons learned from Orlando and past major construction projects are guiding us in our management of the Denver and New Orleans replacement hospitals,” Haggstrom said.

The New Orleans hospital is expected to be completed in February 2016, 14 months behind schedule and, at $995 million, 59 percent over its initial cost.

There are reasons, outside of VA control, for cost increases and delays, said St. James. The Las Vegas Medical Center was initially going to be a clinic located at Nellis Air Force Base, but VA later determined it needed a bigger medical center, she said. In Denver and New Orleans, VA was going to share facilities with local universities but dropped plans when a deal could not be finalized, she said. Unanticipated constructions delays also happened in Denver, she said, where an unexpected swimming pool was found buried at the construction site that had to be removed, an underground stream forced pumping and treatment of the land, and asbestos and faulty electric wiring from pre-existing buildings had to be removed, she said.

“VA has made improvements in its management of major medical facility construction projects,” she said.

VA needs to make more medical facility improvements, said Raymond Kelley of Veterans of Foreign Wars. He noted that current hospitals and clinics are, on average, 60 years old.

The process is part of the problem, Kelley said, noting that most of the delays at the Orlando medical center result from disputes over changes.

Kelley advocates putting an architect in charge at the start of many medical construction projects, working with a construction contractor. Early agreement on design would reduce errors and give earlier warning about modifications that might be needed, he said.

Having medical equipment planners involved early in the process — something already done by the military and some other federal agencies — would reduce what he called inevitable delays to accommodate equipment.

“When used properly, a medical equipment planner can work with the architect during the design phase and ten the construction contractor during the build phase to ensure needed space, physical structure and electrical support are adequate,” Kelley said. This could reduce work stoppages and change orders, and avoid having to demolish newly built sections to accommodate medical equipment of unexpected dimensions.

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