Investigation Reveals "Gross Mismanagement" to Blame for Denver VA Facility`s Exorbitant Cost

An internal investigation by the US Department of Veterans’ Affairs (VA) found that the bloated budget and costly delays for construction of a new VA medical campus near Denver, Colorado were caused by gross mismanagement.

“The deficiencies of the management of the Denver project by VA have cost taxpayers hundreds of millions of dollars in increased project costs, and prevented veterans from having the use of a new medical center at an earlier time,” Larry M Reinkemeyer, assistant inspector general of audits and evaluations at the VA wrote in the report. “There are many important ‘lessons learned’ that VA can apply to VA’s remaining and future construction projects.”

At the request of the Senate Committee on Veterans’ Affairs, the investigators conducted a review of the development and construction of the Denver Medical Center, Eastern Colorado Health Care System project between July 2015 and May 2016. The investigation was triggered after significant delays led to massive increases in the prospective budget, which ballooned from $800 million to a current estimate of $1.675 billion — more than double the original amount. The project was announced in 2004 and is not expected to be completed until late 2018.

The investigators reviewed prior audits, reviews, and extensive supporting documentation. They also interviewed numerous VA personnel responsible for the construction and contracting processes, as well as US Army Corps of Engineers officials and other personnel such as non-government contractors and designers.

The office of the inspector general found that the majority of the issues experienced on this project were caused by a myriad of poor management decisions; chief among them was the use of a new contracting method, known as integrated-design and construct (IDC). The VA had never completed a project using this contracting method and staff were not properly trained in executing a project under these terms.  IDC is normally employed to get contractors involved in the design phase with the goals of reducing time and costs, neither of which were achieved in this scenario.

Other major issues were caused by poor business decisions and indecisiveness. According to the report, officials were constantly changing the concept, scope, and design of the project.  The report states that while other “simpler-to-construct” options were explored, officials ultimately decided on the most complicated proposal: a sprawling, multiple-building campus.

“The design chosen consists of many narrow 3-story buildings spread out on the Aurora site,” the investigators wrote. “Among other issues, in our opinion, it could potentially cause greater challenges for veterans, their families, and other visitors to access various services across the campus compared with a compact, multi-storied building with elevators.”

According to a Denver Times report, the part of the final contract which lists the estimated construction contract price was left blank. Furthermore, the report notes that officials missed opportunities to reduce costs and ignored warnings about the rising costs.  The final design included expensive aesthetic features that the contractors warned were beyond the needs of a health care facility, including custom glass, custom walls, and custom flooring.

Finally, the report points to the impenetrable bureaucracy, which slowed the processing of construction change orders. The investigators found that the average change order took 264 days to process, with the longest order taking 1086 days.

When completed, the final facility will span 1.2 million square feet, across 31 acres, and include 12 buildings. —David Costill