H.R. 3593, the “VA Construction Assistance Act of 2013”
March 25, 2014
RAYMOND C. KELLEY, DIRECTOR
NATIONAL LEGISLATIVE SERVICE
VETERANS OF FOREIGN WARS OF THE UNITED STATES
VETERANS’ AFFAIRS SUBCOMMITTEE
ON OVERSIGHT AND INVESTIGATION
UNITED STATES HOUSE OF REPRESENTATIVES
WITH RESPECT TO
H.R. 3593, the “VA Construction Assistance Act of
WASHINGTON, D.C. MARCH 25,
MR. CHAIRMAN AND MEMBERS OF THE
On behalf of the men and women of the Veterans
of Foreign Wars of the United States (VFW) and our Auxiliaries, I would like to
thank you for the opportunity to testify on today’s pending legislation.
3593, VA Construction Assistance Act of 2013:
It is well documented that the
Department of Veterans Affairs (VA) struggles to complete major medical
facility construction projects on time and on budget. Currently, VA has an
average project delivery delay of 35 months and average cost overruns of more
than $300 million.
VA is in the process of building three
medical centers, each of which has been met with their own unique problems that
have frustrated veterans who live in the communities and rely on the medical
service of the VA, and have caused VA to lose time and money that could have
been used on other projects. VA has a list of major construction projects that
will cost more than $20 billion. Every effort must be made to ensure every
dollar is used efficiently, so VA can close these major construction gaps. H.R.
3593 puts recommendations in place that will help VA achieve these goals.
Section 3 of this bill calls for five
specific reforms in VA’s Major Medical Facility Construction process. These
reforms call on the Secretary to:
medical equipment planners from the onset of a major medical facility construction
and use a project management plan to improve communication among all parties
construction projects under peer excellence review.
a metrics to monitor change-order processing times and ensure the process meets
other federal department and agency best-practices.
a design-build process when possible.
VA wants to equip its facilities with
the most up-to-date equipment. However, procuring medical equipment after the
design of the facility inevitably causes building delays while the designs are
redrawn, and in some cases demolition and reconstruction have taken place to
accommodate the newly purchased medical equipment.
The VFW believes VA would benefit from
the use of medical equipment planners. Using these planners, which is an
industry practice used by the Army Corps of Engineers and other federal
agencies, places an experienced medical equipment expert at the disposal of the
architect and construction contractor. When used properly, a medical equipment
planner can work with the architect during the design phase and then the
construction contractor during the build phase to ensure needed space, physical
structure and electrical support are adequate for the purchased medical
equipment, reducing change orders, work stoppages, and the demolition of newly
built sections of a facility.
Using a medical equipment planner can
reduce schedule delays and cost overruns. Using the Orlando facility as an
example, issues with the purchase of medical equipment caused cost overruns of
more than $10 million and construction had to be suspended until the issues
Poor communication within VA and between
VA and the general contractor has also led to delays and cost over-runs. There
have been cases identified where separate VA officials have provided
contradictory orders to the general contractor, where one VA employee
authorized the continuation or start of a new phase of building, while another
VA employee gave the order not to continue or start a particular phase. This
lack of VA project management coordination led to a portion of the Orlando,
Florida facility to be built then removed.
By developing and using a project
management plan, all parities at the onset of the project will have a clear
understanding of the roles and authorities of each member of the project team.
Included in the plan will be clear guidance on communication, staffing, cost
and budget, as well as change-order management.
Construction peer excellence reviews are
an important aspect of maintaining a high level of construction quality and
efficiency. When used, these review teams are made up of experts in
construction management who travel to project sites to evaluate the performance
of the project team. These meetings provide important feedback – a separate set
of eyes – on the project management plan to ensure a plan is in place to make
the project come in on time and on budget.
VA has historically relied on the
design-bid-build project delivery system when entering into contracts to build
major medical facility projects. Sixty percent of current VA major medical
facility projects use design-bid-build. With this model, an architect is
selected to design a facility, the design documents are used to secure a bid,
and then the successful contract bid holder builds the facility.
Design-bid-build projects often
encounter disputes between the costumer – VA in this case – and the
construction contractor. Because these contracts are generally
firm-fixed-price, based on the completed design, the construction contractor is
usually responsible for cost overruns, unless VA and the contractor agree on
any needed or proposed changes that occur with a change of scope, unforeseen
site condition changes or design errors. VA and the contractor negotiate these
changes through change orders. This process can become adversarial, because
neither party wants to absorb the cost associated with the change, and each
change order can add months to the project completion date.
A design-build project teams the
architectural/engineering company and the construction contractor under one
contract. This method can save VA up to six months of time by putting the
design phase and the construction performance metric together. Placing the
architect as the lead from start to finish, and having the prime contractor
work side-by-side with the architect, allows the architect to be an advocate
for VA. Also, the architect and the prime contractor can work together early on
in the design phase to reduce the number of design errors, and it also allows
them to identify and modify the building plans throughout the project. The VFW
agrees with the recommendations outlined in Section 3 of this legislation.
Section 4 provides for a special project
manager for the on-going construction projects in Denver, Colorado, Orlando,
Florida, and New Orleans, Louisiana. This section calls on VA to enter into an
agreement with the Army Corps of Engineers, so the Corps can provide a special
project manager to conduct oversight of the construction operations regarding
compliance with acquisition regulations, and monitor the relationship of VA and
the prime contractor. It will also authorize the Corps to assist in
construction related activities, such as change-order requests, and provide guidance
on developing best practices in overall project operations.
The VFW supports this provision, but it
should be seen as a stop-gap measure to help VA to quickly complete these three
outstanding major construction projects, and systems must be put in place to
ensure VA can function under similar guidance without the assistance of the
Corps on future projects.
It is important for VA to become more
efficient at facility construction. Veterans have expectations that medical
facilities will be available when VA first states what the completion date will
be. It is obvious by looking at the number of delays and cost overruns that the
contracting and building procedures that VA currently uses are antiquated and are
costing VA millions of dollars more for each project; and causing five to six
year delays in much needed medical facilities.
By passing this legislation, VA will gain better oversight, cost
controls and more efficient procedures for future construction projects.
Mr. Chairman, this concludes my remarks
and I look forward to any question you or the Committee may have.
Information Required by Rule XI2(g)(4) of the
House of Representatives
Pursuant to Rule XI2(g)(4) of the House of
Representatives, VFW has not received any federal grants in Fiscal Year 2013,
nor has it received any federal grants in the two previous Fiscal Years.
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