fbpx

Official Magazine of the Denver Bar Association

The VA Hospital Debacle ~ And This is Why We Can’t Have Nice Things ~ An Opinion Piece by Doug McQuiston

Excavator

With the 2016 presidential primaries quickly approaching, I am once again reminded that in American politics, there are basically two types of people: those who believe in the benign power of a large, all-encompassing federal government to “take care” of us, and those who do not. I am firmly planted in the latter camp.

Still, the categories don’t fit tidily into the contours of the two dominant political parties. The only difference that party affiliation seems to make these days lies in the list of things they believe Big Government should “take care of.” Only the happy few continue to cling to our Founders’ quaint notion that we should have a small, lean federal government that focuses only on doing those few things our Constitution delegates to it in a competent manner.

I cannot understand why this founding notion has become virtually extinct, especially when we are faced with so many examples that prove its wisdom on a daily basis. As the federal government’s reach increases, its ability to do anything well (or at least with well-proportioned accountability) decreases. Yet no one seems to notice or want to do anything about it.

Nowhere in recent memory has this maxim been proven more painfully true than in the ongoing debacle of the Colorado Veterans Administration Hospital project. When first proposed in 2004, the VA told Congress and taxpayers that the entire project could be finished in just a few years for “less than $400 million.”

Dream on. The project stands less than half-finished today, complete with Visqueen wrappings blowing in the wind, giving mute testimony to the incompetence of Big Government. Like many other empty promises made by government officials, this one came with no guarantee of trustworthiness. Even before a shovel-full of ground was broken, the purported price had ballooned to $568 million.

And the story only gets worse. A lot worse.

In 2010, the VA engaged Kiewit-Turner, a joint venture formed by Kiewit Construction Group (a subsidiary of the Nebraska-based Kiewit Corporation) and Turner Construction, to build the complex. Both venture partners had decades of experience in successfully constructing other types of large projects. In fact, a Kiewit company was the lead contractor on Denver’s “T-REX” highway/light rail project, run (locally) by the Colorado Department of Transportation and the Denver Regional Transportation District. Kiewit completed that project, worth over $1.67 billion, on time and under budget. The VA project in Aurora was to be less than half as costly. So, then, what could possibly go wrong? Sadly, the Kiewit group vastly underestimated the ability of an unaccountable federal agency (like the VA) to screw up a big project. In addition, the lack of true partnership between the VA and K-T, so essential to the success of any IDC contract (see below) has caused work stoppages, change orders, needless cost overruns and delays. What could go wrong has gone wrong, on both sides. Let’s take a quick look, shall we?

It is beyond the scope of this short article to expose the complex and disturbing issues within the VA. For those with the stomach to dive into the details of the VA Hospital project, a great place to start is the U.S. Board of Civilian Contract Appeals (BCCA) opinion, dated September 12, 2014. In that opinion, the Board unanimously upheld Kiewit-Turner’s right to stop work on the project because of the VA’s disastrous mismanagement. The opinion reads like an indictment of all that is wrong with Big Government and is readily accessible here: 1.usa.gov/1ZcwYvB.

According to numerous accounts, the project had spiraled out-of-control from the start. When Kiewit-Turner was engaged in 2010, the design plans were still incomplete. The VA had decided to try out a construction method in which they had no experience — “Integrated Design and Construction” (IDC). K-T executives complained early and often that they were not using this method properly, as K-T was being shut out of the design process, which is the opposite of the “full partnership” process contemplated by IDC when done right. They tried to explain to the VA that the whole point of IDC was to involve the contractor in the design and scheduling process, to save time and money. The VA refused to listen.

When the full set of plans was still not delivered by late 2011, Kiewit-Turner requested a meeting with the VA officials responsible for the project. K-T offered a comprehensive description of their proposed cost reductions, value-engineering and other cost-saving strategies that they called “The Book.” They then proposed a more realistic price (well below the current bloated estimated cost of completion), incorporating those cost-saving changes. The Washington-based VA bureaucrat responsible for the project refused to even look at “The Book.”

The VA’s recalcitrance made it impossible for K-T to do what it was hired to do, so it had to go to court to stop work. The Board of Civilian Contract Appeals opinion authorizing K-T to stop work was the inevitable result. Following the BCA ruling, the VA was forced to pay Kiewit both for the work stoppage and for the cost of gearing back up, further ballooning the already bloated price for the project. Though that payment allowed work to resume in early 2015, continued mismanagement from multiple angles presents the constant threat of a complete shutdown. Because of the disorganized approach the VA has taken toward the project even after the BCCA Opinion, costly repairs and change orders were needed to keep the process going. Of course, you are going to have to pay for all of those errors, as the price continues to climb.

As we head into 2016, government officials and political officeholders have once again cranked up their election-year promises that the VA Hospital “will be finished.” The price continues to rocket ever upward, too. The VA has had to come to the imperiled project’s rescue with a recently-approved injection of $625 million, just to keep work going. Meanwhile, our veterans continue to suffer from the lack of adequate facilities for their care. Critical additions, including a PTSD treatment center, have been cut, arguably to come up with enough money just to finish the “bare bones” of the project. Yet, amazingly, the VA recently announced that the parking garage for the hospital is slated to cost over $180 million. Let that sink in a bit—they scratch the PTSD Center “to save money” but have no issue with a 180 million dollar parking garage. Your tax dollars at work.

How much has all of this mismanagement cost you as taxpayers (so far)? I hope you’re sitting down for this part. What the VA once promised to deliver for about $385 million will now allegedly cost $1.73 billion.

So, where did all of that money go? Good question — but don’t expect a straight answer anytime soon. It seems that the VA can’t tell us. Incredibly, when asked by Senator Bennet (and others) for an accounting, VA Deputy Secretary Sloane Gibson blithely tossed us this gem: “You’re not going to find a dollar-by-dollar account.”

Accountability? Not likely. Even now, not a single VA bureaucrat has been sanctioned in any way for this debacle. Many received healthy bonuses last year. Deputy Secretary Gibson’s cavalier blow-off of Senator Bennet’s request for an accounting merely punctuates this story of an arrogant, out-of-control federal agency and its unelected bureaucrats, ignorant of modern construction management techniques, unwilling to learn, careless to the point of contempt with the taxpayers’ money and utterly unsupervised by a stalemated and impotent Congress (which is seemingly obsessed with Beltway sideshows while the Circus burns down around us).

Until we elect politicians with the courage to hold accountable the unelected federal agencies that actually run things, we can expect more, and bigger, debacles than the VA Hospital disaster.
Maybe you should keep this cautionary tale in mind as Campaign Season kicks off, and then in November 2016, when you go behind the curtain to pull the lever. D

McQuistonDoug McQuiston has specialized in civil litigation, complex tort, professional liability and insurance law for more than 34 years. He is a member, contributing writer and past chair of The Docket Committee. He can be reached at mcquisd@nationwide.com.

The views and opinions expressed in this article are solely those of the author and do not necessarily reflect the views and opinions of The Docket and the Denver Bar Association.

Leave a Reply

Basic HTML is allowed. Your email address will not be published.

Subscribe to this comment feed via RSS