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Hearing Transcript on The New Orlando VA Medical Center: Broken Ground, Broken Promises

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Committee on Veterans' Affairs, Full Committee,The New Orlando VA Medical
Center:  Broken Ground, Broken Promises, August 13, 2012

 

 

THE NEW ORLANDO VA MEDICAL CENTER:  BROKEN
GROUND, BROKEN PROMISES

 



 HEARING

BEFORE  THE

COMMITTEE ON VETERANS' AFFAIRS

U.S. HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

SECOND SESSION


AUGUST 13, 2012


SERIAL No. 112-74


Printed for the use of the Committee on Veterans'
Affairs

 

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COMMITTEE ON VETERANS' AFFAIRS


JEFF MILLER, Florida, Chairman

 

CLIFF STEARNS, Florida

DOUG LAMBORN, Colorado

GUS M. BILIRAKIS, Florida

DAVID P. ROE, Tennessee

MARLIN A. STUTZMAN, Indiana

BILL FLORES, Texas

BILL JOHNSON, Ohio

JEFF DENHAM, California

JON RUNYAN, New Jersey

DAN BENISHEK, Michigan

ANN MARIE BUERKLE, New York

TIM HUELSKAMP, Kansas

MARK E. AMODEI, Nevada

ROBERT L. TURNER, New York

BOB FILNER, California, Ranking

CORRINE BROWN, Florida

SILVESTRE REYES, Texas

MICHAEL H. MICHAUD, Maine

LINDA T. SÁNCHEZ, California

BRUCE L. BRALEY, Iowa

JERRY MCNERNEY, California

JOE DONNELLY, Indiana

TIMOTHY J. WALZ, Minnesota

JOHN BARROW, Georgia

RUSS CARNAHAN, Missouri

 

 

 

Helen W. Tolar,
Staff Director and Chief Counsel


Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House,
public hearing records of the Committee on Veterans' Affairs are also
published in electronic form. The printed hearing record remains
the official version.
Because electronic submissions are used
to prepare both printed and electronic versions of the hearing record,
the process of converting between various electronic formats may
introduce unintentional errors or omissions. Such occurrences are
inherent in the current publication process and should diminish as the
process is further refined.

 

       

C O N T E N T S

August 13, 2012


The New Orlando VA Medical Center:  Broken Ground,
Broken Promises

OPENING STATEMENTS

Chairman Jeff Miller

    Prepared statement of Chairman Miller

Senator Bill Nelson

Hon. Corrine Brown, Democratic Member

  


 

WITNESSES

Mr. Glenn D. Haggstrom, Principal Executive Director Office of
Acquisitions, Logistics, and Construction U.S. Department of Veterans Affairs

Prepared statement of Mr. Haggstrom

Accompanied by:

Mr. Robert L. Neary, Jr., Acting Executive Director Office of Construction &
Facilities Management U.S. Department of Veterans Affairs

Mr. Chris Kyrgos, Supervisory Contracting Officer, Office of Construction and
Facilities Management, U.S. Department of Veterans Affairs

Mr. Bart Bruchok, Senior Resident Engineer, Office of Construction and
Facilities Management, U.S. Department of Veterans Affairs

Mr. Jim Gorrie, President and Chief Executive Officer, Brasfield & Gorrie

Prepared statement of Mr. Gorrie

Accompanied by:

Mr. George Paulson, Vice President/Division Manager, Brasfield & Gorrie

 


MATERIAL SUBMITTED FOR THE RECORD

Post-Hearing Questions and Responses for the Record:

Hon. Jeff Miller, Chairman, Committee on Veterans' Affairs to
Honorable Eric K. Shinseki, Secretary, U.S. Department of Veterans Affairs

Honorable Eric K. Shinseki, Secretary,
U.S. Department Veterans' Affairs to
Honorable Jeff Miller, Chairman, Committee on Veterans Affairs

 


THE NEW ORLANDO VA MEDICAL CENTER:  BROKEN GROUND,
BROKEN PROMISES


Monday, August 13, 2012

U. S. House of Representatives,

Committee on Veterans' Affairs,

Washington, DC.

The committee
met, pursuant to notice, at 9:10 a.m. at College of Medicine Health Sciences,
University of Central Florida, 6850 Lake Nona Boulevard, Orlando, Florida, Hon.
Jeff Miller [chairman of the committee] presiding.

Present:  Senator
Nelson. Representatives Miller, Bilirakis, and Brown.

Also Present: 
Representatives Webster, Nugent, Adams and Mica.

Staff Present: 
Samantha Gonzalez, professional staff member. 



OPENING STATEMENT OF CHAIRMAN MILLER

The CHAIRMAN. 
The committee will come to order.  We will recognize Ms. Brown when she
arrives.  And before we begin, I ask unanimous consent that our colleagues from
Florida, Senator Bill Nelson, Representative John Mica, Sandy Adams, Rich
Nugent, and Danny Webster, be allowed to sit at the dais to participate in
today's hearing. 

Hearing
no objection, so ordered. 

I want
to welcome everybody today.  I appreciate you coming to our full committee
hearing on "The New Orlando Department of Veterans Affairs Medical Center,
Broken Ground, Broken Promises." 

I am
grateful to all of my colleagues that have come today and our witnesses
as well as the interested members of the community and the veterans that are here. 
We appreciate your service and your interest in this facility. 

I
also want to thank UCF for the space that we are using today, the cooperation in
providing us with this room right here in the heart of Medical Center City. 

When
ground was broken in 2008 on what will eventually become the new
Orlando VA Medical Center, this area was a mere shadow of what it is today. 
Since then, ideas and plans that existed on paper and in the minds of architects,
designers and engineers have evolved into existing infrastructure and active
medical and research institutions. 

You
can tell from some of the crowds in the hallway right now, particularly the folks carrying
backpacks, this is the first day back at school for this medical school.  They
broke ground in 2007.  Opened in 2010. 

Behind
us is the Sanford‑Burnham Medical Research Institute, which broke ground
in 2007 and opened its doors in 2009.  Next to Sanford‑Burnham is the University of Florida's Research and Academic Center, which broke ground in 2010 and will open later to
the faculty and students this year. 

Across
the way ‑‑ we passed it on the way in ‑‑ is
the Nemours Childrens Hospital, which broke ground in 2009.  It will open to
patients just two months from now. 

Yet
our Orlando VA Medical Center, which was scheduled to be complete in October of
this year and anchor of this city, is still an empty shell.  Four years and
hundreds of millions of taxpayer dollars later VA has yet to yield anywhere
close to the same results of any of its neighbors. 

It was not our intention to hold this hearing here.  We wanted to hold
it at the
VA Medical Center, but a forum like this would not be possible there.   

Brand
new state of the art facilities are all around us.  Students are being
educated.  Yet, VA can't turn the lights on, much less accept visitors inside
their facility. 

During
our committee's oversight hearing in March the VA acknowledged that design
errors, omissions and changes in medical equipment and procurement delays, as
well as VA oversight and management failures, led to serious construction
delays. 

In
fact, Mr. Glenn Haggstrom, who is here with us today as a VA witness, in
response to questioning, stated that "Brasfield and Gorrie's credentials in
constructing health care facilities are second to none."  And he said, "I
am not placing the blame on Brasfield & Gorrie at all.  We fully recognize
that we did have problems."

The
end result was a commitment to work diligently and collaboratively with the
contractor to complete construction and begin serving the veterans and families
of Central Florida as expeditiously as possible.  Yet the intervening months
have brought more finger pointing and very, very little progress. 

It is
perplexing to me that recently, in June, the department provided a fact sheet
that began by stating the VA is working collaboratively with the prime
contractor to get construction completed as soon as practicable, yet concluded
with the statement that VA has issued a cure notice to Brasfield & Gorrie
citing the contractor's inability to diligently pursue the work and to provide
suitable manpower to make satisfactory progress. 

Today
VA is going to testify that the Medical Center is 60 percent complete and
on track to open in 2013.  However, since January VA has been telling us that
the Medical Center is 60 percent complete and on track to open in 2013, even
though the contractor had repeatedly stated that construction is not
60 percent complete, nor is VA's time line realistic.  My single interest
is the expeditious completion of this facility for the veterans of Central Florida, who have been waiting for almost a decade for a new medical center to
open. 

What
this community is capable of is clear.  All you have to do is look around you
as you leave this facility today.  It is time to finish what was started so
many years ago.  Today I want answers as to how we are going to accomplish this
for our veterans together. 

Again,
I want to thank all the members and Senator Nelson for being with us today.  In
lieu of Miss Brown's late arrival, I would yield the floor to Senator Bill
Nelson, who has been actively watching this facility long before the ground was
ever broken. 

[The statement of Chairman Miller appears in the Appendix.]

OPENING STATEMENT OF SENATOR NELSON

Senator NELSON.  Mr. Chairman, I want you to know how much we appreciate you
bringing this hearing here.  You are a fellow Floridian and you are passionate
about protecting and caring for our veterans, and I want you to know how much
we appreciate it. 

This
project, we need to get off the dime and get it done.  This is a project that
has been over three decades in the works.  It was in the early eighties, when I
had the privilege of serving in the House, that the Veterans Administration
made a policy change that a VA hospital did not have to be located next to a
medical school. 

As a
matter of fact, you think back to the old days, they were in Gainesville.  They
were in Miami.  The one exception was there was a hospital in the Tampa Bay area. 

They
changed that policy.  And the Veterans Administration, because of the explosion
of growth of veterans in Florida, identified four areas in Florida.  And they
said they will go in this order. 

The
first will be the West Palm Beach area.  And that hospital has been up and
operating for a number of years.  The second will be east Central Florida.  And
then the third and fourth will be either in the Panhandle and/or the Fort Myers area. 

Now,
that was over three decades ago.  And so once the West Palm Beach office got
done, then the question was where was it going to be?  And of course that has
been a debate of some magnitude for a long period of time.  And finally it was
located.  And finally it was going to happen in October of 2012. 

I
have talked to Secretary General Shinseki, and he assures me that he is going
to have it done by next summer.  But that is 8 to 10 months late.  And he
used the same figure that you just did, 60 percent complete. 

But
the fact is we were supposed to have well over a thousand workers out here
working on it right now, and there is only somewhere between 2 to 400 that are
working.  And as you get the testimony here, I wish you would get that exact
figure.  And it is because of you, Mr. Chairman, and your committee, I
think you are going to keep the focus of the spotlight on this until it gets
done. 

Now,
this is what they started off with right here, these base drawings.  Then they
got revised to that.  And the question is, why?  Why can't you take a time line
that was supposed to happen and make it happen?  And maybe your panel number
two with Mr. Gorrie will be able to shed some light on that, as we have
seen the finger pointing go as it has gone. 

So,
Mr. Chairman, I want you to know I really appreciate this.  You know,
originally this hospital was going to be in Viera, which is in central
Brevard.  And then the question was, was it going to be as the crow flies some
distance of 25 miles?  Either it was going to be there, or it was going to
be on the east side of Orange County. 

Once
we got the location decided by the VA making their studies, now it is time to
get it done.  So thank you, Mr. Chairman. 

[The statement of Senator Nelson appears in the Appendix.]

The CHAIRMAN.  Thank you very much, Senator, for being here today.  I know your
schedule is very busy.  And we invite you to stay as long as you possibly can. 

Members,
I would also ask that we waive opening statements.  They will be entered into
the record at the appropriate place. 

I
just want to welcome our first panel today.  And, with your indulgence, at some
point I probably will ask Miss Brown if she would like to go ahead and do
her opening statement or wait until we shift panels.  We will just see how
things play out today. 

On our first panel is Mr. Glenn Haggstrom, the principal executive
director of the Office of Acquisitions, Logistics and Construction. 

And
here comes Miss Brown.  So we will ‑‑ I beg your
indulgence ‑‑ we will allow Miss Brown to go ahead
and do her opening statement for us.  We will wait for her arrival at the
dais.  Thank you. 

OPENING STATEMENT OF MS. BROWN

Ms. Brown. 
Well, good morning.  Let me just say that it is always a challenge getting
around in this most diverse district, and the transportation is always an issue,
even when I am coming to the veterans hearing. 

I
have been working on getting a veterans hospital in this area for over
25 years.  When I first was elected to Congress it was right during the
BRAC period.  And I brought in the Honorable Jesse Brown to Central Florida. 
And we went to the VA health facility.  And it was really a mess. 

And
during the BRAC period the hospital that was there was a military hospital. 
They was going to mothball that hospital.  Well, when Secretary Jesse Brown
came to Central Florida and saw that beautiful facility, he worked with the
Department of Defense, and we got that hospital turned over to Veterans'
Affairs. 

And
so we have had that clinic there that was formerly a hospital.  Of course we
had to get additional funding, nearly $25 million.  But it is up and
operational.  It is serving the veterans in this area.  And when we get that
hospital up and operational, I want to make sure we continue to use that
facility. 

But
even with the support of the Secretary, it took another 15 years until we
made it into the VA five‑year construction plan.  Really shouldn't take
that long to get a facility up, operational, and in the system when you have
the needs that we have for veterans. 

The Orlando clinic now serving Orlando is not adequate to properly treat the area veterans,
but it would supplement the new facility and increase the treatment options for
Central Florida veterans.  I strongly encourage the VA to keep this facility
in use. 

I am
very pleased that the VA Medical Center will be co‑located with the University of Central Florida on this beautiful campus here today, Medical Center, and near the urban medical complex.  The new center, along with the Burnham Institute,
will create a biotech cluster at Lake Nona, allowing the area to become one of
which doctors and researchers can work together on the needs of our area
veterans. 

It is
known that teaching hospitals provide the best health care available, which is
invaluable for the VA and Central Florida veterans.  However, the veterans of
the Central Florida area cannot wait any longer for a full medical Central Florida building. 

Once
again, we are having a full committee hearing on a single project.  I am
surprised, to say the least, that after the hearing five months ago, in March, we are
having another hearing on the same facility. 

I
hope this is not political, because the Veterans' Affairs Committee have never
been political in the 20 years I have been on the committee.  But I do
know that tomorrow is a primary. 

And
so it is very strange that we are having a full committee hearing the day
before the primary in Florida, but not at the expense of inferring ‑‑
I hope this hearing would not interfere in the working of getting the facility
built up and operation. 

The
first hearing we demanded that the VA address many situations to get the
facility built.  And they have followed our direction and used established
procedures to resolve differences with the contractors. 

We
must put politics aside when it comes to the VA and the veterans, and do what
is best.  Keeping with the Jesse Brown slogan, let us put veterans first.  And
that is my position. 

I
yield back the balance of my time. 

[The statement of Ms. Brown appears in the Appendix.]

The CHAIRMAN.  Thank you very much.  We are glad to have you with us, as I have
already welcomed all of our Florida contingents with us. 

We
were in the process of introducing Mr. Haggstrom, who is going to testify
on behalf of the VA today.  He is accompanied by Robert Neary, the acting
executive director of the Office of Construction and Facilities Management;
Chris Kyrgos, the supervisory contracting officer for the Office of Construction
and Facilities Management; and Bart Bruchok, senior president, resident
engineer of the Office of Construction and Facilities Management. 

Thank
you again, all of you, for being here today.  Mr. Haggstrom, you are
recognized for five minutes.

STATEMENT
OF GLENN HAGGSTROM, PRINCIPAL EXECUTIVE DIRECTOR, OFFICE OF ACQUISITION,
LOGISTICS AND CONSTRUCTION [OALC], DEPARTMENT OF VETERANS AFFAIRS; ACCOMPANIED
BY ROBERT L. NEARY, JR., ACTING EXECUTIVE DIRECTOR, OFFICE OF
CONSTRUCTION AND FACILITIES MANAGEMENT; CHRIS KYRGOS, SUPERVISORY
CONTRACTING OFFICER, OFFICE OF CONSTRUCTION AND FACILITIES MANAGEMENT; BART
BRUCHOK, SENIOR RESIDENT ENGINEER, OFFICE OF CONSTRUCTION AND FACILITIES
MANAGEMENT.

OPENING STATEMENT OF MR. HAGGSTROM

Mr. HAGGSTROM.  Thank you.  Thank you, Mr. Chairman. 

Mr. Chairman,
Congresswoman Brown, and members of the committee, I am pleased to appear here
this morning to update the committee on the status of the construction of the
new VA Medical Center in Orlando.  I will provide a brief oral statement and
request that my full statement be included in the record. 

The CHAIRMAN.  Without objection. 

Mr. HAGGSTROM.  Our continuing goal is to complete and activate this facility as
quickly as possible to serve Florida's veterans, who deserve nothing less. 
Although the project has not progressed as originally planned, at no time have
veterans been without the care they required. 

As VA
has stated before, our mission is to serve veterans, which includes delivering
first rate facilities.  VA bears the responsibility to manage all projects
efficiently and to be good stewards of the resources entrusted to us by
Congress and the American people. 

In
the execution of the Orlando project six construction contracts have been
awarded.  Work under the first five has been completed, with construction under
the final contract for the main hospital and clinic underway and approximately
60 percent complete. 

Regrettably,
this final phase of construction has experienced problems in two areas:  VA's
revision to facility construction drawings, and the slow progress of
construction by Brasfield & Gorrie, the prime contractor. 

While
VA continues to work with the contractor to resolve issues, there was
increasing concern with the lack of manpower on the job and progress made in
constructing the main hospital and clinic.  As time progressed, the pace of
activity at the job site failed to increase, as Brasfield & Gorrie
indicated it would, and required on a project of this magnitude. 

On
June 15th, 2012, the contracting officer issued a contract cure notice to
Brasfield & Gorrie, identifying two of their failures to comply with the VA
contract.  The first relates to Brasfield & Gorrie's failure and in some
cases refusal to diligently pursue the work.  And the second relates to the
lack of sufficient work force on the project. 

On
June 25th, 2012, in response to the cure notice Brasfield & Gorrie
committed to increasing the work force and pursuing work more broadly within
the building.  In response to Brasfield & Gorrie's commitments, on
July 10th, 2012, the contracting officer established an evaluation period
running through August the 9th, 2012, and advised Brasfield & Gorrie that
their efforts would be observed throughout this period to gauge implementation
of its commitment. 

I
realize that the key question you all have is, when will this hospital be
completed and available to serve veterans?  There has been a substantial
difference in the achievable dates between the two parties, with VA estimating
the project can reasonably be completed in the summer of 2013 based on an
analysis of the remaining work and construction extensions granted at the time
the analysis was performed.  The completion date was determined using Brasfield
& Gorrie's approved baseline schedule and the originally planned
resources. 

Since
the time my written statement was submitted, last week both teams came together
to review the revised schedule Brasfield & Gorrie submitted to VA on August
the 1st.  In that schedule Brasfield & Gorrie estimated that construction
on the hospital being substantially complete the fourth quarter of calendar
year 2013 was achievable. 

Significant
progress was made in gaining a better understanding of how each party views
achieving the completion date.  And there is another meeting scheduled to take
place on August the 16th to continue the dialogue and take into consideration
an additional time extension Brasfield & Gorrie has requested to complete
the project.  The VA looks forward to continuing the scheduling discussions and
working to establish a contractually binding completion date in the coming
weeks. 

As a
result of the challenges faced on the Orlando project, I would like to report
to the committee that the department has undertaken a comprehensive review of
its construction program.  This review, which includes the formation of a
construction review council chaired by the secretary, has examined the
department's infrastructure programs and identified areas where they can be
improved.  We are in the process of compiling a report on the council's
proceedings and will share that with the committee once completed. 

In
closing, we are prepared to answer the questions that the members of the
committee may have.  However, while VA intends no disrespect to the committee,
to ensure the integrity of the contracting process, we are unable to address
questions specifically pertaining to the recently completed evaluation period
or the ongoing scheduling discussions, as the contracting officer is in the process
of making a determination and we do not want anything discussed here today to
potentially influence that decision.  As soon as the determination is completed
we will provide an update to the committee. 

Thank
you for the opportunity to testify before the committee today. 

[The statement of
Glenn Haggstrom appears in the Appendix.]

The CHAIRMAN. 
Thank you very much, Mr. Haggstrom.  I talked about your comments in the hearing back in March.  A lot of people talked about the fact that
we thought that things were beginning to progress, that communication had gotten
better, and then the department decided to proceed with the notice of cure. 

And
so I would like to start off with the first round of questions, in which there
will be several rounds this morning, by asking who participated in making the decision to
issue the cure notice?  And at what point leading up to the decision was the
contractor even maybe not made aware that the cure notice was coming, but that
there was a possibility that something like that would take place? 

Mr. HAGGSTROM.  Mr. Chairman, the cure notice is determined and issued by the
contracting officer.  The contracting officer has the sole discretion within
the federal contracting community to do so. 

That
determination, in terms of whether or not a cure notice would be issued, could
be a result of discussion with subject matter experts, various meetings the
contracting officer attends with the contractor and things like that.  Again,
it is their sole determination to make that decision. 

The CHAIRMAN.  So I am to believe that you and Mr. Neary and maybe
others at the table had no input in whether or not to issue a notice of cure?

Mr. HAGGSTROM.  We did not directly.  The contracting officer would issue a cure
notice.

The CHAIRMAN.  You had no input. 

Mr. HAGGSTROM.  I had input in the standpoint of the discussions that took place as
we met with the contracting officer on what progress had been made on the
project and things like that. 

The CHAIRMAN.  You just told me that you will not be able to comment on when
the contracting officer will make the decision as to how we will go forward.  The review period was up Friday.  Should we
expect something soon? 

I am not trying to nail down five, six, ten days.  Hopefully
sooner rather than later, so that the contractor can move forward, if in fact
the contractor is staying ‑‑ but you have already said that you
won't comment on that. 

In Brasfield & Gorrie's written statement they
describe over $60 million in underfunded change order proposals and
requests for equitable adjustments.  What I would like to know is what VA's
plan is to deal with a discrepancy as large as $60 million?

Mr. HAGGSTROM.  Certainly, Mr. Chairman.  In order to keep projects like this
moving, we use several methods to continue the payment.  First is a change
order, where we will issue a payment to keep the project moving until we
determine what the final pricing on that particular change order may be. 

Subsequent
to that there is a vehicle which we call a settlement agreement.  That
settlement agreement is then used between the two parties once we arrive at a
mutually agreeable price.  Once that settlement agreement is signed, for all
intents and purposes that particular change is off the table and the contractor
has been compensated for it. 

The
final one is the settlement determination.  The settlement determination is a
unilateral vehicle that the contracting officer has at their disposal in which
they will determine what a fair and reasonable price is based on the
independent government cost estimate and other information that would be
available to them. 

This
does not necessarily mean that there is an agreement between the contractor and
the government as to the final cost of that change order, and that the
contractor at some point in time may pursue additional funds to do it. 

Currently
the value of changes that we have issued against this contractor is
approximately $42.7 million.  There is still exposure out there, which we
continue to work within VA and with Brasfield and Gorrie to make a final
determination on what those costs will be. 

The CHAIRMAN.  And one final question.  You said no further appropriations above
$616 million; you should be able to finish it without any other
appropriation.  Does that mean appropriations for this project?  Will funds be
shifted from other projects?  Or do you think 616 or close to that is going to
be the final number? 

Mr. HAGGSTROM.  Currently, Mr. Chairman, we believe we can work within the $616m
appropriated for this project. 

The CHAIRMAN.  Miss Brown. 

Ms. BROWN.  You want me to ‑‑ okay.  Yeah. 

You
know, I am often concerned that when we ‑‑ 616 was the
amount.  We talking about millions.  And we appropriated the money up front. 

And I
guess it is hard for people that are not elected officials or administrators to
understand how you can have all of the money and then have all of these delays
that we have had, and why is it that we could not get VA and the construction
team to move it forward with the date that we initially planned.  I mean, we
are talking about 2013.  And I was hoping that we would be able to open up in
the next couple of months. 

So
can you explain to me ‑‑ at the last meeting in Washington we discussed ‑‑ and I don't want you to discuss anything that
is secretive ‑‑ but what is it that we need to do to move
these projects forward?  Because we got several throughout the country. 

And I
understand that you all have done a comprehensive plan.  But a lot of veterans
feel like it is taking too much time.  And if you have the money, then what is
the issue? 

Mr. HAGGSTROM.  I appreciate that, Miss Brown.  And certainly the department
is very grateful to the Congress for the appropriations that we receive to
build health care facilities, national cemeteries, and provide benefits to our
veterans. 

In
this particular project, if you look back on the history of it, the first
appropriation the department received was in 2004, with the last appropriation
received in the year 2010.  And we do that for a number of reasons, because of
the complexity, the ability to obligate money, the size of these projects, and
things like that. 

And
so it is a phased approach that VA uses.  And Congress has agreed with us up to
this point in time to be good stewards of those money and not obligate funds or
tie up funds in appropriation which may not subsequently be used for a year or
two down the road.  So from the standpoint of being stewards of the money that
you provide to us, it does make sense to approach that in a phased approach. 

When
you look at this project, there have unfortunately been issues, as we have
discussed earlier.  I think overall we try very hard and do a very good job in
providing major construction services to the department. 

I
truly believe we can continue to work this through this project.  And although
we will not deliver it as we had originally intended to in the year 2012, in
October, we will be able to move forward and ultimately deliver this project to
our veterans. 

Ms. BROWN.  And what is the new time frame?  You said August 1 you all decided
on a date. 

Mr. HAGGSTROM.  What had happened is VA, in reviewing the schedule that had been
provided to us and where we should be at this point in time, we firmly believe
that the summer of 2013 is achievable. 

What
we are very encouraged by is that one time Brasfield & Gorrie relayed that
there would be perhaps a 2015 completion date.  In the schedule that we were
provided in response to the government's cure notice on June 25th that was
brought back into late 2014.  And as of a review of the latest schedule
provided to us on August the 1st, it would appear that we could have
substantial completion of the facilities in late 2013. 

So
that is progress to us.  That is dialogue that continues with Brasfield &
Gorrie as a partner in this.  And when you look at these schedules, they are
very complex.  There are over 11,000 lines of activities taking place.  And we
just had a very cursory opportunity to get into the discussions with Brasfield
& Gorrie last Thursday and Friday. 

As I
said, we are moving forward later this week to continue those discussions.  We
will have the opportunity to do a deep dive into the schedule.  And we hope,
and we believe, that perhaps there is still opportunity to move the project to
the left, if you will, and accelerate it. 

Ms. BROWN.  Well, I want to thank you.  And I like the idea that you all are
meeting consistently, and I appreciate that. 

At
the last meeting we had in Washington there was some discussion about bringing
in some consultant.  And I personally do not think that we need an independent
consultant; that the department and the company will be able to resolve the
issues, particularly if you all are meeting constantly, going over these
issues. 

So,
thank you.  And I yield back the balance of my time. 

The CHAIRMAN.  Thank you, Ms. Brown.  Mr. Bilirakis has yielded for the
round of questions to go to Senator Nelson first.  Senator. 

Senator NELSON.  Thank you, Congressman Bilirakis.  I just have one quick line of
inquiry, because you all are going to cover so much of this. 

One
of the great things about this VA center is it is going to have a research
facility.  It is going to have a nursing home.  And it is going to have a
homeless vet's facility. 

Now,
the homeless vets facility is about complete.  So is the nursing home.  So why
don't we put that online?  So when can that open? 

Mr. HAGGSTROM.  Senator Nelson, the issue there is, while the domiciliary is
complete and the CLC is being ready to be turned over to VA, there is a
tendency to not operate those facilities because of the completion of the main
clinic.  And that goes to the kitchen facilities, the laboratory facilities,
the pharmacy facilities and things like that. 

Until
those core areas are finished, it is not advisable to bring these other
facilities online, because we would have to make either deliveries from the
current medical facility or things like that.  So being able to serve the
veterans to the level they need to be serviced, that can't be accomplished
until we finish these core facilities. 

Senator NELSON.  Thank you, Mr. Chairman.  It is too bad.  It is just too bad. 

Ms. BROWN.  Can I follow‑up? 

The CHAIRMAN.  Miss Brown. 

Ms. BROWN.  You know, sometime I think we have to think out of the box.  Because I
found facilities with these similar problems in California.  And I would like
for you all to review what we could do to expedite these other two, the
homeless and the other facility, to complete.  It is worse that we have
completed a facility and it is going to stand there for a year, waiting on the
main facility. 

So if
the services are available in the area, and you can contract them out and get supportive,
how many people will be serviced in this area if we could move forward?  How
many people homeless and how many people will be able to stay in the other
facility? 

Mr. HAGGSTROM.  I believe the domiciliary is a 60‑bed facility, and I believe
the community living center is 120‑bed facility. 

Ms. BROWN.  So we would be able to accommodate over 160 people, and we could put
people that need the services there while we wait for a system that is not
there yet, a year, that we do have these supportive services in the community,
and people are ready to serve.  I really wish you all would follow up and
review what we could possibly do to expedite these projects. 

You
know, I am part military now.  What happens when failure is not an option?  You
get it done.  So please review that. 

The CHAIRMAN.  Mr. Bilirakis. 

Mr. BILIRAKIS.  Thank you.  Thank you.  I appreciate it, Mr. Chairman.  Thank you
so much.  Thank you for your testimony, Mr. Haggstrom.  I have a couple of
questions. 

First
you stated in the opening statement that the veterans are getting the care in
spite of the delays.  However, don't they have to travel far, you know, an
inconvenience, a distance, as maybe Bay Pines, Haley, and other hospitals
around the state to get the cure that they need? 

What
is the percentage of veterans that have to travel to these long distances to
get the care that they need?  For example, go to Haley or Bay Pines.  Could you
give me a percentage? 

Mr. HAGGSTROM.  Mr. Bilirakis, I do not have that number available.

Mr. BILIRAKIS.  I am concerned about the inconveniences. 

Mr. HAGGSTROM.  I understand that.  I do not have the number.  If we could take
that question for the record, we would be happy to respond to that. 

Mr. BILIRAKIS.  I would like to have that information ‑‑

Mr. HAGGSTROM.  Sure. 

Mr. BILIRAKIS.  ‑‑ for the record, if you could, please. 

When
was the last time modified design drawings were submitted to the contractor? 

Mr. HAGGSTROM.  If I could ask Mr. Bruchok to address that, please.  He is our
senior record engineer on the project.  He is stationed here and works on this
project on a day‑to‑day basis. 

Mr. BRUCHOK.  Yes, sir.  Thank you for your question. 

Sir,
frankly, modified drawings are issued weekly.  Part of the construction progress
process, the bulk of the drawings that were issued in the period from January
through March were to address procurement of medical equipment.  Those were
issued on the schedule that we committed to. 

But
certainly each week a project this complex has things that are discovered in
the field and as the report progresses require intervention or clarification
from the architects of record.  And the answer is issued to the contractor in
the form of a drawing. 

Mr. BILIRAKIS.  Thank you.  Next question, sir.  How did you come to the
determination that the hospital was 60 percent complete? 

Mr. HAGGSTROM.  The 60 percent complete is based on the contractor's critical
path and the schedule they had sent to us.  And also that is how we determine
payments that are made to the contractor. 

So, in reality the construction inspection process, aligning that with the critical
path that the contractor has provided to us, those are how we establish the
60 percent completion date. 

Mr. BILIRAKIS.  How often does the VA meet with the prime contractor to ensure that
the VA has provided them with what they need to move forward with the project? 

Mr. HAGGSTROM.  These meetings take place sometimes on a daily basis, on a weekly
basis.  There is a continual dialogue between the onsite resident engineering
staff that VA has here and the contractor's work force. 

Since
the time that the cure notice was issued to Brasfield & Gorrie, both
Mr. Neary and myself have been on site weekly to meet with Brasfield &
Gorrie's senior leadership.  Walk through the hospital.  Allow them to show us
what has been accomplished during this period of time. 

Prior
to that we did have several meetings with Brasfield & Gorrie, especially in
January, to work through some of these issues with the medical equipment.  So
there has been a continual dialogue at all levels of this project and
responsibility in an effort to move it forward. 

Mr. BILIRAKIS.  Thank you, Mr. Chairman.  I yield back the balance. 

The CHAIRMAN.  Thank you very much.  Next is Chairman Mica.  You are
recognized for your questions for five minutes. 

Mr. MICA.  Thank you.  First of all ‑‑ let us get this thing on.  Think
I am at a distance?  Good.

Well,
first of all, thank you, Mr. Chairman, for bringing this hearing to our
community and for your constant attention to making certain that our veterans
are provided with the best medical facilities possible.  You have been
unrelenting.  Thank you also, Mr. Bilirakis, a ranking member today, and
my colleague. 

A
couple of things.  First of all, I guess there is some I guess semi‑good
news.  It sounds like you have gotten some communications going with the
contractor in possibly speeding up the completion of the hospital facility
until last quarter of next year.  Is that correct? 

Mr. HAGGSTROM.  That is correct.

Mr. MICA.  That is a good direction, because 2015 is a long ways away.  And as
Senator Nelson and Chairman Miller and others have pointed out, our veterans
have waited too long. 

I had
an opportunity to be briefed, and there is also some other good news, if you
could confirm it.  The power plant is complete.  The garage is complete.  The
chapel is complete.  The domiciliary care unit, where we met, is complete.  And
soon to be turned over in the next few weeks is the nursing facility.  Is that
correct? 

Mr. HAGGSTROM.  That is correct.  And also the warehouses. 

Mr. MICA.  And I think I was informed around $20 million under estimated
cost.  Is that the neighborhood? 

Mr. HAGGSTROM.  We did have good savings. 

Mr. MICA.  Can you confirm that?

Mr. BRUCHOK.  Yes, sir. 

Mr. MICA.  So those are basically done.  The nursing facility, what, within a month
or so? 

Mr. BRUCHOK.  We are in the process of accepting that now.  The final inspections
are complete.  You are correct, the prior phases did yield savings to the
government of over $20 million. 

Mr. MICA.  Okay.  So there is some good news, over $20 million in savings on
the veterans facility.  But the issue of getting those services online still
remains.  So I look forward to getting those things up and running as soon as
possible.  But it is contingent also, I guess, on the hospital facility. 

And I
am not going to get into pointing fingers on the delays.  We just need to get
it resolved.  And there may be some litigation between VA and the contractors. 
We are not going to get in the middle of that.  The main thing is getting it
done. 

Then
the other thing too ‑‑ well, two things, Mr. Chairman.  I
was glad to hear there won't be any cost overruns.  In case there are any cost overruns,
I would like this colloquy between myself and Chairman Culberson be made part
of the record.

Mr. MICA.  Because I think
it is important if there are cost overruns, our veterans don't want excuses. 
They want their project done.  And Chairman Culberson committed to me on the
floor that, if there are cost overruns, that he would support us if we have an
issue there.

The other thing
I ‑‑ my committee doesn't oversee VA buildings, although we
get into some issues, like the replacement of New Orleans hospital, because of
our jurisdiction in FEMA.  But I am concerned about empty federal buildings,
whether they are VA, GSA, or any others. 

And I
sent last week ‑‑ and I will share a copy and also ask it to
be submitted to the record ‑‑ a letter to the Secretary of
Veterans' Affairs to make certain that the Lake Baldwin facility is not left
vacant. 

Mr. MICA.  This
asks that it remain as a primary care veterans clinic.  And also the possibility
of some of the use of rest of the facility either for inpatient or domiciliary
care, because we have got lots of veterans returning. 

So I
don't want an empty building.  I don't want to have to be talking to you about
empty buildings.  And it is important to our veterans that we have that
service.  And if you could make that a part of the record, I would appreciate
that.  

And I would ask
also my colleagues, I will be circulating a letter from the Florida delegation
and others who wish to sign to also support that we keep the Lake Baldwin facility to the use and benefit of our veterans. 

So I
think ‑‑ do you have a problem with that?  I know you are
acquisitions ‑‑

Mr. HAGGSTROM.  No, sir.  I understand.  I have not seen a copy of the letter that
you have sent to the Secretary.  Nor am I aware of any final decision as to Lake Baldwin and what the final use will be. 

Mr. MICA.  I want to make sure ‑‑ in fact, I will airmail a couple
to you right there.  But thank you, Mr. Chairman.  And thank you again for
holding this hearing and working with us as we get these issues that are
important to our veterans in order. 

Yield
back. 

The CHAIRMAN.  Miss Adams. 

Mrs. ADAMS.  Thank you, Mr. Chairman.  And I too am concerned about the
delays.  I read in the paper just recently that you had come out and said that
we were going to have a completion summer of next year, which was very exciting
to me, but concerning at the same time because of what we were seeing, what we
were hearing here on the ground. 

And
so I want to ask you, how do you come up with the summer of next year, come out
and say it, and then come to this meeting and say, well, we have done some
checking and now it is November, maybe early ‑‑ it could
actually be end of the year, maybe even going into the first of next year, the
following year, 2013? 

Did
you, at the time you made this announcement, had you talked with the
contractors?  Did you have something concrete before making this statement? 
The reason I ask you this is because we have several hundred thousand veterans
that rely and look forward to this hospital. 

And
this is not political to me.  It is very personal to me.  I am a military
family member.  My father was World War II and Korean War.  He is still with
us, and he is old. 

But I
have met with our returning new warriors and all the different programs that
are going on.  And they need this hospital to be completed.  And I know it is
inconvenient.  But it is not just inconvenient.  Some of these men and women,
it is too painful.  It is painful for them to travel these distances. 

So I
ask you, when you made this announcement did you have the information?  Because
now you are here saying it is a different date.  And in the paper you also said
there was a plan B if you couldn't get to this.  So I would like you to explain
that to us. 

Mr. HAGGSTROM.  Thank you, Congresswoman Adams.  When we made those decisions, that
was based on the approved critical schedule, critical path schedule, that Brasfield & Gorrie had provided to us. 

With
regard to what I just mentioned in my oral statement, that was an appreciation
that these projects could be completed in 2013.  It does not reflect what VA
believes is the contractual completion date that has yet to be established. 

And
so while there is a recognition based on the new schedule that Brasfield &
Gorrie has provided us, they have pulled back the completion date substantially
from the 2014 that was provided to us. 

But
at the same time we still believe that if we go into the schedule, there is
opportunity to move to 2013.  If I could ask Mr. Bruchok to comment on
that.  He has been involved very in detail with the scheduling process and can
perhaps shed more light on that for you. 

Mr. BRUCHOK.  Yes ma'am.  That was a good question.  The
information we had in hand when we said summer of 2013 was not only our own assessment, but we had HDR
Architecture, a recognized health care firm, go through and do a month long
analysis of the amount of work that was complete, what was remaining, and using
our resource loading in schedule, what could be achieved.  We still feel that
is achievable. 

But
the date that Mr. Haggstrom referred to is a backing off, if you will, of
the contractor's assessment.  It was totally collaborative with VA.  We sat in
a room and said there are other ways to attack the project different than your
critical path.  And we have all agreed that we are moving that date back. 

Mrs. ADAMS.  Okay.  At the time that you had this person do this, did they have
access to all these extra drawings that were ‑‑

Mr. BRUCHOK.  Absolutely.  I think these drawings and binders make a great visual
impact.  And I am sure they are very meaningful to the people here in the
room. 

But to people like myself, professional engineer and my team and the architect and
engineer, this is the world we live in.  I mean, these drawings and binders sit in our
trailer.  You know, we have received it.  We have analyzed it.  We have issued
it.  And the contractor executes it.  So, I mean, this is nothing new to us. 
This is the job we do. 

Mrs. ADAMS.  I understand that.  And I have a young daughter who is an engineer. 
But I have a lot of concerns.  I hear plan B.  I hear this date.  These dates
are floating around.  I have veterans, we have wounded warriors coming home. 
They are all counting on you guys to get this right and get it done. 

You
know, I am not here for pointing fingers either.  But what we would like to
know is truly what our veterans can hold on to.  What can they believe? 
Because a week or two ago it was the summer.  Now this week it is the end. 

We
need for you to have a real discussion with the contractors, and then make an
announcement based on all the facts. 

I
yield back.

The CHAIRMAN.  Mr. Bruchok, certainly you didn't mean that the issues that we
are having to contend with now are nothing new to you.  Have you ever been involved
in a project that has had this much consternation and problem? 

Mr. BRUCHOK.  I think there are some issues as we attested to back in
March that there were some issues with the design that were certainly not anticipated.  As
far as the equipment drawings themselves, we issued them as a bundle.  They
would have been issued throughout the duration of the project.  I know that
during the
procurement process, a lot of things happened at once. 

I
kind of take exception to the characterization of it as a blitz.  We sat down
with the contractor.  Acknowledged that we did have some issues, which is why
we put the suspension in place.  We asked them in which path would they proceed
through the project and where did they need the information first. 

We
followed that sequence to a T, with the expectation that the contractor would
address those revisions as they received them.  Unfortunately, they kind of
waited until they had everything and marked time for a while.  But as of last week, we are really making a collaborative effort to move things
forward.  But to answer your question, yes, there are some excesses that
perhaps go beyond the norm. 

The CHAIRMAN.  So as I am instructed, the green is what we started with.  The blue
is kind of what got done through the middle of January.  The yellow was what
had been termed a "blitz" and you take exception to the name but that was kind
of the push that took place after some focus was made.

Mr. BRUCHOK.  Yes, sir. 

The CHAIRMAN.  And then the orange is after.  Explain to me why you would have
twice as many, maybe three times as many, additional drawings after the "blitz". 

Mr. BRUCHOK.  The drawings, again, visually look pretty significant.  But what is
not told by those piles are the value.  The equipment drawings certainly have
some value in the value of the changes that result from them. 

The
other drawings are simply clarifications of questions that
the architect ‑‑ or the contractor has asked, an RFI,
request for information.  For a job this big and complex, we have tried to get
away from just handing sketches and saying here is an answer.  You know, we
have done a quick detail and get it out to the field. 

The contractor has actually expressed concern that, with this many issues and
this many drawings, that there has to be a clear and concise way of getting the
direction down to the employees in the field when our inspectors go to review the
work.  The only way to know if something has been changed is to put it on a
revised drawing. 

So, frankly, yes, there is a volume.  But it is clearly the best and most
accurate way of making sure we are literally all on the same page. 

The CHAIRMAN.  And it is my understanding that, based on all of these drawings,
all of the binders behind us are the requests for information, additional
information, that was needed in order to proceed. 

Mr. BRUCHOK.  Yes, sir.  And each request has the question, and there is often
drawings and backup and specification records.  So you could create a
binder for a single RFI.  It is, again, it is impressive to look at,
but it is a very complex project.  I would expect a lot of documentation to
surround these issues. 

The CHAIRMAN.  So this would be normal. 

Mr. BRUCHOK.  For this size project, and like I said, with the exception of, no
bones about it, the electrical design was a problem, and we said that it was. 
But beyond that, yes, this is normal. 

The CHAIRMAN.  No problem with roof design. 

Mr. BRUCHOK.  That is a 50/50 question.  The flat roof, no problem at all.  The
super roof, we did have some issues with drain locations and the material that
we selected, and we did issue change orders for that.

[Phone ringing]

The CHAIRMAN.  Is
that the President?

[Laughter] 

Mr. MICA.  Mr. Chairman, I might say as a developer, I have never had project that
had a problem ‑‑

The CHAIRMAN.  Mr. Nugent. 

Mr. MICA.  ‑‑ without a roof problem. 

Mr. NUGENT.  Thank you, Mr. Chairman.  And thank you for allowing me to
participate in this field hearing. 

I am
concerned about a couple of things or a number of things, obviously.  But these
design drawings are strictly for the hospital; is that correct?  It is not the
other buildings that are already completed. 

Mr. BRUCHOK.  Yes, sir, that is correct. 

Mr. NUGENT.  Let me go, first start with, we have two buildings, the homeless
shelter and the nursing home facility, that will be done or that are done this
year. 

Mr. BRUCHOK.  Right. 

Mr. NUGENT.  And from what I have heard from testimony today is that ‑‑
and I am not clear on when the real date is when the hospital will be
done ‑‑ the clinic will be complete enough to support those
two facilities I just talked about.  What I am concerned about is we are going
to leave two facilities that are already done unoccupied, unutilized for two
years. 

My
question to you is ‑‑ and maybe you are not the one to answer
it ‑‑ but why in God's name would we do that when we have
veterans out there that need those facilities today? 

Mr. HAGGSTROM.  I admit I don't think it was intentional by any means, certainly. 
And as Congresswoman Brown has asked us, we will go back and take a look and
see if there is a possibility to activate those facilities prior to completion
of this. 

As I
had stated earlier, the dependencies of those other two facilities in terms of
the feeding, the pharmacy, the laboratories, those are all tied up in the
completion of the main hospital and what we call the ‑‑

Mr. NUGENT.  Well, I would ask that the VA come back with a proposal in regard to
how they would actually utilize those two facilities.  Because we have no idea
when the clinic and hospital are going to be done, based upon the testimony
today.  I mean, we haven't heard from the contractor yet. 

But
it certainly sounds like there is enough disfunction to go around that we don't
know.  And then we have two facilities that are done and we have veterans in
need.  So I would like to see the VA respond back to the committee in regards
to how do we, going along with Miss Brown's proposal, how do we do that
and get it done so we take care of the veterans?  Because that is really what
we are all here about.  And I know you are.  And I know this committee is.  And
the chairman, obviously, is very committed to it. 

You
know, currently I cover areas that they go to Haley, they go to
Gainesville, and Orlando if and when it ever gets complete, about 215,000
veterans that I am concerned about.  Besides the three that currently live in
my family that are currently serving on active duty, I am concerned about our
ability to meet the needs of our veterans today. 

While,
you know, it is great that we set aside funds to do this.  It is when you heard
the first initial monolog by our chairman, talking about all the facilities
built around this campus and the time that they were able to get them, not only
from design, construction to occupying, and here we are sitting here still
talking about a facility that was designed, that broke ground in 2008, and we
are now still talking that it is going to be, from date of breaking ground,
could be seven years to completion? 

Now,
I don't know who is at fault, but I do know it takes two to tango.  And so I
would suggest that the key to this is getting this done to support our
veterans.  And like I said before, I want, Mr. Chairman, I don't know if
it is improper to ask, but that the VA respond back to how they can get those
two facilities up and serving our veterans tomorrow. 

The CHAIRMAN.  That I think is a very important issue, obviously with the
domiciliary and the other facility completed.  And Mr. Haggstrom has
already said he would go back and ask and, look, is there any way that those
can be activated early?  Obviously it is on the back site of a construction site
that is taking place now.  Miss Adams. 

Mrs. ADAMS.  Yes, Mr. Chairman, we do have the VA clinic that is up in Winter Park.  Is there a way ‑‑ and maybe they can respond back to you and
your committee on how they could maybe utilize their services over there
at the clinic at Winter Park to open up these facilities that, so they don't
sit empty for two years. 

The CHAIRMAN.  Mr. Mica. 

Mr. MICA.  I met several weeks ago with the medical director, and they are
exploring exactly that.  In fact, we had the conversation.  And they are
looking at servicing it, because they do need the food and some other things to
make those happen.  So, there is an active plan underway to try to expedite
utilization of the completed buildings. 

Mr. BRUCHOK.  Sir, if I may, that is accurate.  We are actually going back to a two‑week
track pattern, looking at ways to use the back gate to keep away the
construction traffic.  So that is an active plan underway. 

The CHAIRMAN.  We have got a plan underway.  Do we have any idea how
long it will take to decide whether or not that can be done or not done? 

Mr. BRUCHOK.  I don't want to speak for the medical center, but there is a
commitment from them, sir.

The CHAIRMAN.  Is
there anybody here that can speak to whether it can or can't be done? 
Mr. Neary? 

Mr. NEARY.  I can't really speak for the medical center.  I do know from discussions with the medical center that they are
thinking about how they could do that.  And I think it is likely a possibility
they could, but there are a lot of complications that need to be worked
through.  So ‑‑

The CHAIRMAN.  Mr. Haggstrom, do you subscribe? 

Mr. HAGGSTROM.  Absolutely, Mr. Chairman.  I will work with VHA to do our best
to come up with a plan and advise the committee on such. 

The CHAIRMAN.  Mr. Webster. 

Mr. WEBSTER.  Thank you, Mr. Chairman.  Thank you for being here.  Thank you
for the interest.  Also thank Congressmember Brown for her interest and the
longtime interest also of Senator Nelson for his being involved in this.  I
watched him from afar, but it has been a long, long time. 

I
have a letter here that I got five days ago from Secretary Shinseki, and it
talked about the summer completion date as a confirming date.  It also mentions
the fact that ‑‑ which has already been mentioned ‑‑
about a cure notice that was sent in June of 2012. 

And I
guess my first question would be, if you were to change contractors ‑‑
I am not saying you are or not, I am not asking that question ‑‑
but if you were, how long would it be, if you changed today, how long would it
be before you could restart the project?

Mr. HAGGSTROM.  Thank you, Mr. Webster.  I would like to reiterate that there
has no decision been made in terms of the response to the cure notice.  The
contracting officer is still taking that into consideration for their final
determination.  I do not know what that final determination is. 

If
you look at the mechanisms that are available to the Federal Government in
terms of when we encounter a situation like this, if you put it hypothetically
after a cure notice is issued and the determination is made, if that
determination is not favorable to continue with the current contractor, then
the government would issue what we call a show cause notice. 

And
that show cause then puts the contractor on notice that their response to the
cure notice in terms of what they have been able to accomplish was not
substantial enough to you, mitigating what the government's concerns were. 
They do have an additional opportunity to provide to the contracting officer
what additional actions they would take during that period of time to mitigate
those actions.  Either that would be successful in convincing the contracting
officer they could in fact move forward successfully, or not. 

When
you look at it, the first place the government would go to would be the surety
company, or company that essentially bonds the contractor, and a determination
on whether the surety would assume liability for the remaining portion of the
contract that has been left uncompleted.  It then becomes, if they accept that,
the relationship then becomes one between the surety company and the
government, with the surety essentially becoming the prime contractor to
complete out that facility. 

If
the surety company refuses to accept the remaining responsibility, then the
government would be forced to re‑procure that.  So if you look, in a
rough order of magnitude I believe, if the surety would accept that
responsibility, it would be a four to six‑month period for them to get
another contractor, get them up to speed, do those kinds of things.  If the
government was forced to re‑procure, I would say we would be looking at
an eight to ten‑month delay to go through that re‑procurement
process. 

Mr. WEBSTER.  So, if that took place, whoever the contractor may be, would you be
willing to issue a fixed price contract for completion by say June ‑‑
July, is it July of 2013? 

Mr. HAGGSTROM.  Yeah, if that would be the date.  Our normal procedures for
construction are for a fixed price contract.  We do not normally do a cost plus
or cost contract for construction. 

Mr. WEBSTER.  Could they still finish by July of 2013? 

Mr. HAGGSTROM.  I would have to look at that.  If you are looking at an 8 to 10‑month
delay, probably not in July of 2013.  If you go into an 8 to 10‑month
delay, say at the end of this month, that re‑procurement time would not
be until July.  So finishing in July of 2013 would probably not be viable. 

Mr. WEBSTER.  So from a time standpoint, that would be a, sort of a bad option,
only from the time standpoint? 

Mr. HAGGSTROM.  I think from any standpoint it is a bad option.  Our desire is to
continue to finish this hospital with Brasfield & Gorrie.  I believe that
is doable, with a commitment on behalf of both parties to do so. 

Mr. WEBSTER.  If we were to take the bad option, if that is the only choice the
committee made, would you still stay within the $616 million price tag? 

Mr. HAGGSTROM.  We believe so. 

Mr. WEBSTER.  Okay.  Yield back, Mr. Chairman. 

The CHAIRMAN.  Is the medical center director here today? 

Mr. HAGGSTROM.  No, sir.  The medical center director is not in Orlando today.  He
is attending a class, I believe, a senior executive class sponsored by the
department. 

The CHAIRMAN.  And that was more important than
being here? 

Mr. HAGGSTROM.  Sir, I can't answer to that.

The CHAIRMAN.  Would anybody like to take that for a question? 

Ms. MOONEY.  The chief of staff is here, sir, of the medical center

The CHAIRMAN.  So it is more important that the chief of staff come than the
medical center director to a full committee hearing of the Veterans' Affairs
Committee? 

Mr. HAGGSTROM.  Sir, I am sorry.  I can't answer that.  The director was not part
of the panel.  And so ‑‑

The CHAIRMAN.  That is a good reason not to be here, because you are not on the
panel.  But just, again, there have been, from me, from Miss Brown, from
Mr. Bilirakis, from Mr. Mica, from Miss Adams, from Mr.
Nugent, and from Mr. Webster, there have been questions that could have
easily been answered by that person.  Was that person not here for a
particular reason? 

Mr. HAGGSTROM.  No, sir.

The CHAIRMAN.  Other than they chose to go to a class sponsored by VA? 

Mr. HAGGSTROM.  It was not the choice.  Had Mr. Liezert been a part of this
panel, I can assure you he would have been here. 

The CHAIRMAN.  Well, there was a choice, because the chief of staff is here,
but
Mr. Liezert is not here.  I find it ‑‑ and know it is
not in your wheelhouse but I find it very curious that the medical center
director is not here at a full committee hearing, where this committee will be
having a site visit after this hearing and the medical center director is not
here. 

I
think Mr. Webster was asking the same question.  But I want to delve back
into it if we can.  You said numerous times that Brasfield & Gorrie has
walked back their completion date that started at 2015, 2014 and now you said
substantially complete at the end of 2013.  Have they ever said that it
would cost additional dollars in order to meet that deadline? 

Mr. HAGGSTROM.  Specifically, no.  We have had discussions that we would anticipate
that Brasfield & Gorrie may view this as an acceleration and then ask for
compensation to do that. 

The CHAIRMAN.  Mr. Bruchok, knowing the way the schedule has been established,
is there any way to do it with the current projected number of a thousand
some workers?  Could they do it working in a normal schedule?  Are they going to have
to double schedule and bring some new shifts in in order to do it? 

Mr. BRUCHOK.  No.  Certainly it is past the point of where we could proceed business
as usual with the previously anticipated manning of the job.  There would have
to be, if not overall at least in certain trades, some weekend work, some shift
work.  There is some critical areas that the contractor has noted might take
extra effort, such as the operating rooms and the kitchen, server area. 

So
certainly to go from now to that date would require, I would think, an
increased effort in what they would have planned ordinarily. 

The CHAIRMAN.  My assumption would be that an increased effort would be at
increased cost as well.  So I am just trying to make sure that the committee
understands ‑‑ and I know Mr. Webster certainly
does ‑‑ that if you are bringing additional people
on board, it is going to cost additional dollars.  But we can wait for Brasfield & Gorrie to ask those questions. 

Thank
you, Mr. Bruchok. 

Miss Brown? 

Ms. BROWN.  Yes, sir.  Is it on? 

The
first question that I don't want to be charged to my time, because some of
the lay persons, like myself, can you explain the cure notice? 

Mr. HAGGSTROM.  Certainly.  The cure notice is a contractual vehicle available to
the contracting officer.  It is specified in the Federal Acquisition
Regulation.  And what this vehicle does, it allows the government to put the
contractor on notice that they are potentially in fault of defaulting on the
specifications and requirements of the contract. 

Ms. BROWN.  Okay.  So that I think is important for someone to understand.  And
this particular contractor has done lots of work with the VA and is still doing
a lot of additional work around the country is my understanding.  It has other
projects. 

Mr. HAGGSTROM.  They do have other projects as a commercial contracting firm.  I am
only familiar with the work that they have done on this particular site.  They
did have other contracts here at the medical center in which they completed.  I
believe it was the warehouse, department parking garage, and the structural components
of the hospital. 

Ms. BROWN.  Well, one other thing.  It has been very difficult to get VA in a
hundred percent support to want to partner, sometime it seems to me, with other
nonprofits, veterans‑owned businesses, minority‑owned businesses,
African‑American owned businesses.  The services that we are talking
about, even pharmacists, would love to work with VA to staff those facilities. 
It could be contracted out.

We
don't have to do all of the work ourself.  I know a lot of the people on the
committee want the VA to take over additional responsibilities.  But as far as
I am concerned, there are groups, colleges, ready to assist us.  We could put
people to work.  We don't have to wait until the facility is completed. 

And
so I am looking forward to you all, not just speaking about how VA can do it,
but how VA can partner to get what we need done.  And it could be a short‑term
contract.  But I am very interested in seeing what we could do together with
other community groups and organizations, veterans‑owned businesses. 

I
mean, it is no reason that we have a vet facility over there that we don't have
activity going on, phased‑in opening.  We don't have to wait for a
year to get the facilities up in operation.  And I am hoping that we can work
together to figure out how we can do it.  I would like to see an education facilities
pilot project.  This looks like a great pilot project to me. 

Any
additional comments about the time line? 

Mr. HAGGSTROM.  No, ma'am.  As I said, we are going to be meeting again later this
week to discuss the schedule, get a fuller understanding of it.  As the
chairman had talked about, cost implications as we get deeper into that
discussion on the schedule, I am sure costs will be a part of that. 

Ms. BROWN.  And you all didn't have to hire
additional consultants to get this going on.  I mean, at the last meeting there
was some discussion, that I am totally against, millions of dollars to
having some consultant to come in to put you with the contractors in the same
room.  I am very pleased to know that we are doing it on our own without any
additional cost. 

Mr. HAGGSTROM.  Yes, ma'am.

Ms. BROWN.  Well, I yield back the balance of my time.

The CHAIRMAN.  Really quickly, we talked about a cost savings of, I think you
had said, $20 million for what has already been completed.  What cost
savings have already been extracted out of this project? 

Because I think that there were ‑‑ if I am not mistaken, and I may be
wrong ‑‑  dollars allocated to a SIM
center.  There also was at one time some discussion of a substantial cost
savings that was going to be allocated to New Orleans.  If you could
briefly discuss the cost savings to date and where that money has been
allocated.  Is it normal to allocate cost savings before the project is
finished? 

Mr. HAGGSTROM.  We can answer that, Mr. Chairman, but I ask Mr. Neary to take
that question, please. 

Mr. NEARY.  Certainly.  Thank you, Mr. Chairman, for the question. 

In
total we have had approximately $100 million in bid savings on the
project.  And in the fiscal year 2012 budget the VA proposed transferring
$49 million of those bid savings as part of the Fiscal Year 2012 budget requests that
would support other projects. 

And
so that left approximately $51 million.  Twenty‑seven million
dollars has been set aside for the SimLEARN Center, and the balance remains
available in a reserve available as needed for the project. 

As to
your question about is it normal to move money off the job before it is
completed, typically we would want to wait until we are about 70 percent
completion before we think about that.  But given the economic situation around
the country, we have had significant bid savings.  And so in this case $100
million is a significant amount of money.  We made a decision to propose to
move some of that before we found ourselves in our current circumstances. 

The CHAIRMAN.  Does the 616 ‑‑ and I know that is not a noninclusive number ‑‑ include the start‑up
costs that would be necessary for the hospital, the clinic, the domiciliary? 

Mr. NEARY.  It does not.  The original
appropriation was $665, and then we transferred the money off to get down to
$616.  That is design fees and construction.  It does not include the activation
costs of furnishing the medical equipment, staffing, supplies, that sort of
thing. 

The CHAIRMAN.  Is there a number that you are dealing with now that would be
the activation costs? 

Mr. NEARY.  There is.  I am not familiar with that number here this morning.  The
medical center has an activation budget.  That has been evaluated by the
Veterans Health Administration in Washington, and there is a plan on that as
needed.

The CHAIRMAN.  Would it be appropriate to ask the chief of staff what that number
is, since he is here? 

Mr. NEARY.  If you would like to, sir. 

Voice. 
Sir, I am the chief of the medical staff at the Orlando VA, not chief of staff
for the entire VA.  So I can address medical issues concerning the Orlando VA, but not the larger ones. 

The CHAIRMAN.  I am talking about the activation costs for the hospital, the
domiciliary, the nursing facility, and the clinic.

Mr. BIRDSONG.  I am the activation executive.  I want to say our nonrecurring
health ‑‑

The CHAIRMAN.  And your name is? 

Mr. BIRDSONG.  My name is Jeff Birdsong.

The CHAIRMAN.  Okay.

Mr. BIRDSONG.  I have been in this role since January.  I want to say our
nonrecurring activation costs are in the neighborhood of 200 to $220 million
over a number of years.  So that would include things like the equipment, the
furnishings, telecommunications, a number of different items. 

The CHAIRMAN.  So we could be talking about a billion dollars when we are all
said and done to get this hospital up and running? 

Mr. BIRDSONG.  It will be under a billion dollars.  But ‑‑

The CHAIRMAN.  You hope it will be under a billion dollars.

Mr. BIRDSONG.  I would assume so.

The CHAIRMAN.  Okay.  Thank you very much.  Mr. Bilirakis.  Thank you. 

Mr. BILIRAKIS.  Thank you very much.  My concern again is that how ‑‑
elaborate on how you came up with this figure now of completion, or
substantially the hospital would be completed by the fourth quarter of next
year. 

I
don't want to give our veterans a false hope here.  How have you arrived at
that figure?  And have there been major discussions with the contractor with
regard to this cost?  Please elaborate on that. 

And I
hope that this wasn't ‑‑ you didn't come up with this
yesterday just to appease us here at the hearing today, and then we are going
to go back to, you know, possibly 2014 or 2015.  It really concerns me.  Our
veterans really need to know.  Can you elaborate on that? 

Mr. HAGGSTROM.  To a certain extent, Mr. Bilirakis.  First of all, VA did not
determine that.  That date was determined by the revised schedule that Brasfield & Gorrie proposed to us on August the 1st. 

For
the details, I would ask, when they are the panel, perhaps they could give
you a bit more elaboration on how they have arrived at that date.  But in
general, to my understanding is there is a significant difference in terms of
how the work was being approached. 

There
is now a concurrent effort to perform work in multiple areas of the hospital,
the clinic, the DNT, and the inpatient area.  Whereas on the prior schedule
these things were worked in a parallel, where they would move throughout
specific areas of the hospital with their crews. 

So
the main difference is there is additional staffing.  There are additional
crews, to my understanding.  And also there would be an additional crew to the
additional crew, if you will, to work in the operating rooms area and also the
kitchen area. 

So
there has been a completely different approach in how Brasfield & Gorrie
has taken to look at how they could move this schedule to an earlier completion
date.  But I think they could probably be the best people to answer that
question. 

Mr. BILIRAKIS.  Yield.

The CHAIRMAN.  Senator Nelson. 

Senator NELSON.  Mr. Chairman, Senator Murray, the chairman of the Veterans
Committee in the Senate, wanted me to convey a clear understanding of the cost
increases and all of these numbers having been thrown around here.  We started
out in 2009 GAO reported that the Orlando facility cost increased by
89 percent, from $347 million to $656 million.  And you all have testified
that we are talking about something just south of $1 billion now. 

Can
you give some clarity to that, please? 

Mr. HAGGSTROM.  If I could ask Mr. Neary to comment on that please, Senator. 

Mr. NEARY.  Thanks for the question, Senator.  It is my recollection that at the
time the hospital was originally proposed the economic assumptions that were
used in the marketplace, what the contractor would face when it went to the
marketplace, were considerably different. 

And
in addition, the requirements for the medical center grew from the original
proposal that was identified.  As you know, many, many more veterans are coming
to VA today than it did in the past and technologies have changed
significantly.  New technology brought on board.  So I think those two things
largely contributed to the growth in cost from the time of the original
proposal until it was ultimately fully funded. 

Senator NELSON.  I will have our Senate Veterans Committee collaborate with you, Mr. Chairman,
on understanding exactly those cost increases, because we are talking about
three years from GAO doing a report in 2009, and this seems exceptional. 

Thank
you. 

The CHAIRMAN.  Thank you.  Thank you very much.  Thank you, Senator.  We will move
to Mr. Mica next. 

Mr. MICA.  A couple of questions.  Again, I am pleased that the various adjunct
facilities, the chapel, the domiciliary care units, 60 bed, 120‑bed
nursing home, power plant, other parking that is in place, and the question of
getting, again, these up and running as soon as possible. 

I
have had some conversations with the medical director.  We don't have him here,
but we do have the chief of staff, Mr. Chairman.  Maybe we could direct
the question ‑‑ I don't know if you want to direct it to her
or from the committee to the medical director to respond to the committee.  But
I think that is important. 

We
could get those facilities up and running as soon as possible.  They have to be
safe and secure.  But since we are not sure about the delays, if we could get
that question answered, I think it would be helpful, if they think that is
possible. 

And
again, the whole project has still come in under budget.  According to the 616,
they took out money and transferred it to other projects.  Is that correct,
Mr. Haggstrom? 

Mr. NEARY.  Yes, sir, that is correct.

Mr. MICA.  Well, hopefully we can keep it in that direction.  The question of
workers, I don't know if that was answered.  We were down to about 400.  What
is the current level again? 

Mr. HAGGSTROM.  I believe we are in the vicinity of 500, 550. 

Mr. MICA.  Five hundred to 550.  All right.  And part of the ramp up would depend
on, again, the final resolution between you and the contractor; correct? 

Mr. HAGGSTROM.  It would.  The contractor, in their response to our cure notice,
had originally estimated that during the course of the cure notice there would
be approximately, at the highest time, 700 to 750 workers there. 

Mr. MICA.  And I did give you copies of the request to keep Lake Baldwin open.  You have all had that.  And we will make sure the medical director has that
too.  That is an important facility.  There is a lot of other veterans on the
north side are dependent.  And I think it can provide them ‑‑
the 60‑bed domiciliary care is great, because we have many homeless
veterans. 

We
have many returning veterans.  But they need some stability.  They can't just
come to a pharmacy or a clinic and then end up sleeping in the car or under a
viaduct or something.  So I think that that 120‑bed capacity, if we could
double that, using Lake Baldwin for that facility, and then a full service
clinic would be beneficial. 

The
last thing.  I am a transportation kind of guy.  Are you all coordinating ‑‑
veterans have to get here.  You have got a huge number of workers around here. 
Can anyone comment on the transportation connections here?  Are you working
with Lynx or someone ‑‑

Mr. HAGGSTROM.  I am sorry, Mr. Mica, I can't, unless the chairman would
direct the question to VHA, I cannot answer that question. 

Mr. MICA.  Well, maybe, Mr. Chairman ‑‑

Mr. HAGGSTROM.  We can take that for the record ‑‑

Mr. MICA.  ‑‑ I know we have been talking to Lynx.  We have several
systems coming into this location on both the commuter rail and now other
service that FEC is proposing. 

But I
think those links are very important.  And I will be glad to sit down with them
and try to make certain that the VA has the connections, so veterans, the staff
and then this greater community, which is ‑‑ I mean, when you
come in here, you just see the incredible facilities, but people need to get in
and out of here.  And who would the person be that would be ‑‑

Mr. HAGGSTROM.  It would be the acting supervisor, sir.  When we look at, no matter
what the facility is, whether it is a CBOC and HCC or a medical center,
transportation is always first and foremost. 

Mr. MICA.  If you could provide me and the committee with just a copy of where you
are with transportation connections, and I will be glad to work with you.

Mr. HAGGSTROM. 
We will be happy to do that. 

Mr. MICA.  Thank you, Mr. Chairman. 

The CHAIRMAN.  Miss Adams. 

Mrs. ADAMS.  Thank you, Mr. Chairman.  Along the same lines, as we go forward
and hopefully we get this hospital opened up in a timely manner, in a safe and
timely manner for our veterans, because of the length of time that it has
taken, the drawn‑out time frame, looking at how many of our wounded
warriors are returning home, I believe it would be in the best interest of our
veterans to keep the facility in Winter Park open. 

I
think ‑‑ and you can correct me if I am wrong ‑‑
but by the time you open you will have already probably reached capacity, quite
quickly.  Is that not true? 

Mr. HAGGSTROM.  I think that could be a reasonable assumption, yes. 

Mrs. ADAMS.  So you are going to be at capacity or overcapacity at the time of
opening.  So I would think that the VA would want to go ahead and keep that
facility open to maintain some assistance to this facility in taking care of
our veterans.  And I would strongly urge you to make sure that that happens and
that we don't have veterans not having the ability to get the services they
need. 

Looking
at where we are today ‑‑ and I keep going back to this, because I
think Mr. Webster asked it, the chairman asked it ‑‑ I heard a
number of $42 million plus and you are on schedule.  We are already past the
schedule.  We don't know for sure what the time frame is.  You are confident
that when you meet with the contractor this next go‑round you will have a
more solid date of completion? 

Mr. HAGGSTROM.  I think that will certainly be our goal, Ms. Adams, is to
arrive ‑‑

Mrs. ADAMS.  And in doing so, do you anticipate any more changes to this level? 

Mr. HAGGSTROM.  I can't comment as to the level.  But as Mr. Bruchok said, the
size of this project, we are constructing approximately 1.9 million square
feet of a very complex medical center, and there will be changes.  It is just
the nature of the beast, unfortunately.

Mrs. ADAMS.  How far along are you on the medical equipment? 

Mr. HAGGSTROM.  The medical equipment changes have been completed, so we have made
determination on the medical equipment. 

Mrs. ADAMS.  At the last hearing we were still waiting, the contractor was still
waiting for the equipment.  But it is completely completed.

Mr. HAGGSTROM.  It is completed in terms of initiating the buys and where we are
going to go with what we have.

Mrs. ADAMS.  And what equipment is going into the building.  And so we can
anticipate probably not having to see those drawings ‑‑

Mr. HAGGSTROM.  Not with regard to medical equipment. 

Mrs. ADAMS.  Thank you.  Well, again, I just want to thank the chairman for bringing
the committee over here, because it is so important.  And when you walk through
the hospital over there ‑‑ you know, we drive by it. 

I
have had veterans, every one of us were excited when we could see the shell
being completed.  And everybody was excited because we thought we were going to
see it actually opening.  And I have been here since the ground‑breaking,
and I know that our veterans deserve this facility.  They need this facility. 
So I would just encourage you, when you meet with the contractors ‑‑
I believe you said this week? 

Mr. HAGGSTROM.  Yeah.

Mrs. ADAMS.  That you finally solidify where you are and how you are going to
complete this in a timely manner for them. 

And I
yield back my time. 

The CHAIRMAN.  Mr. Webster. 

Mr. WEBSTER.  Thank you, Mr. Chairman.  I just have a follow‑up question
I thought of. 

Will
liquidated damages be charged against the contractor ‑‑
whoever that contractor is ‑‑ if they don't finish by July
2013? 

Mr. HAGGSTROM.  There is a potential for liquidated damages.  And not in all cases
are the liquidated damages ultimately assessed against a contractor. 

Mr. WEBSTER.  I had one other question about change orders.  Is the determined cost
or agreed to cost of that change order before, during, or after the actual
execution of that change order? 

Mr. HAGGSTROM.  I think it could be a combination of any one of those three, sir. 
If it is a relatively simple issue, we could probably come to that
determination relatively quickly. 

What
sometimes happens is some change orders are very complex.  And what we will do
is we will fund a portion of that change order, and at the same time we will
ask the contractor for additional information in terms of what the ultimate
cost of that change order is. 

What
we get into in these very large change orders is an issue of certified cost and
pricing.  So when we reach a certain threshold we have to have that certified
cost and pricing from the contractor in terms of those areas. 

And
so what we do is we work with the contractor collaboratively.  We have an
independent government cost estimate.  If those two areas don't come together,
then we ask the contractor, can you show us the documentation of how we can
close that gap relative to what the actual cost of that change was for you? 

Mr. WEBSTER.  Do you use standard industry costs to determine the government's
estimated value of the change order? 

Mr. HAGGSTROM.  We do.  I have to ask Mr. Bruchok to comment on that little
bit further on that, if you would like. 

Mr. BRUCHOK.  Yes, sir, absolutely we do.  We have professional estimators on our
staff that do nothing but.  They are here on the site.  They can actually see
the field conditions.  They use estimating guides and industry standards.  We
have market pricing for commodities. 

We
also have the benefit of having other contractors on the site with which we can
compare and get basically an idea of the change order pricing here on site in
this area.  Geographically market conditions are all identical.  So we have got
multiple metrics for determining a fair and reasonable price. 

We
prepare the estimate.  Issue the change order.  And as Mr. Haggstrom said,
the onus has been on the contractor to substantiate the proposal that they
provided us.  And in some cases we close the gap, because our estimates might
have left out scope or missed items.  And we certainly are not above raising
our estimate to make sure we are being fair and reasonable in compensating. 

But
then there are those cases where we simply cannot substantiate, or the
contractor can't to our satisfaction, that what they are asking for the change
is in fact fair and reasonable.  And we will issue a settlement determination,
as we said, that is as much as we can justify.  And the contractor is entitled
to dispute that bid via a dispute clause in the contract. 

Mr. WEBSTER.  Would there be currently change orders that are differences in
magnitude of difference ‑‑

Mr. BRUCHOK.  Absolutely.

Mr. WEBSTER.  It is multiples of differences between you and what the contractor
believes? 

Mr. BRUCHOK.  Yes, sir, absolutely there are.  It mainly pertains to the electrical
scope of work.  We have had tremendous challenge in trying to close that gap,
if you will.  A lot of people on our side with a lot of experience, and the
numbers we are seeing are those we are not accustomed to.  Simply cannot close
that gap.  And so that has been an ongoing problem. 

And
it is, a portion of that, that overage or that underfunding term that Brasfield
would use.  I would say it is not underfunding.  We just simply
can't justify it
in addition to being veterans, we are also taxpayers.  And we are trying to
make sure we are not providing the proverbial $1,200 toilet seat. 

Mr. WEBSTER.  Doesn't that though in some way affect the manning of the job?  If
there is a contractor that is stretched to the edge, let us say a sub ‑‑
I know a sub does not work for you, but works for the general ‑‑
but becomes so stretched that they can't go forward without getting some of
those resolved, do you think that affects the manning on the job? 

Mr. BRUCHOK.  Well, I think, again, all we can do is issue what we think is fair
and reasonable.  We go through tremendous effort to make sure that we get that
funding in place even before the work begins.  I don't think ‑‑

Mr. WEBSTER.  I am just saying from a time standpoint, even when you do come to an
agreement, when there is disagreements, that takes time.  Therefore the cash
flow of that subcontractor, whoever that may be ‑‑

Mr. BRUCHOK.  Sure.

Mr. WEBSTER.  ‑‑ has issues. 

Mr. BRUCHOK.  Absolutely.  And there are times where we will adjust the price
upward.  And this isn't a finger‑pointing thing.  But it takes the
contractor some amount of time to get us that proposal.  And that is where I
think sometimes we are hamstrung. 

All
we can rely is our estimate at the time.  I am not going to say that it is
always perfect.  But until we get that qualifying information, we can't even
have a negotiation to make that adjustment. 

Mr. WEBSTER.  But that could affect manning on the job. 

Mr. BRUCHOK.  Sure, it could.

Mr. WEBSTER.  Thank you.

The CHAIRMAN.  Mr. Nugent. 

Mr. NUGENT.  Thank you, Mr. Chairman.  And I apologize for having to step
out.  And this may have been covered in questions while I was out. 

But I
am curious to the fact that you have a $616 million number that we have
already shaved $100 million in savings off, and of that $100 million
of savings we siphoned off $49 million of that to another project. 

While
I can appreciate that, but then I look at we have $42.7 million overruns in
regards to change orders.  And I believe we still have ‑‑ and
I think maybe this was what Mr. Webster was talking about ‑‑
the fact that we have outstanding dollars to the tune of $30 plus million.

Mr. BRUCHOK.  I heard a $60 million number given by the contractor.  I
think that could be broken down almost into two pieces.  Roughly half of that
is a potential claim or a request for equitable adjustment for perceived
inefficiencies. 

We
are in receipt of the documentation that they provided for that.  We are not
convinced that they provided a what you would call a causal link between the
government causes and the value that they are asking for.  They used a total
cost approach and said we anticipated spending X.  We spent Y.  The VA owes us
the difference.  And so that is a big chunk of what is being worked about. 

However,
government contract regulations requires the contractor, even when there is a disputed
amount out there, to diligently pursue the work and not just sit there and wait
for these things to get resolved.  That is half of the overage, or the
$60 million of underfunding, as they termed it. 

The
other half is outstanding change orders.  And the government estimate for the
other $30 million is about $13.  So, we are still seeing almost a 300 percent
overage, if you will, of the proposed amount versus the estimated amount.  So,
yes, there are some numbers out there. 

Mr. NUGENT.  And I apologize for my simplicity, but I am a visual kind of guy.  And
I just hear all these numbers being thrown all over the place.  And I will be
honest with you.  I have a hard time reconciling how that all flushes out to
the 616 base number that you have appropriated. 

So,
you know, Mr. Chairman, I would like to indulge that ‑‑ I
would like to see those numbers on a graph, a piece of paper.  Show me how in
the heck we live within 616 and we already trim off $100 million and we
are ‑‑ you know, I don't get it when you have all the
overages.  It doesn't seem to add up in my simple ‑‑

Mr. BRUCHOK.  Yes, sir.  Our contingency accounts for the direct cost of the work
as we estimated.  It does not account for, again, the inefficiencies and things
that would be potentially claimed.

Mr. NUGENT.  The contingency, is that included within the 616 or is that above and
beyond the 616? 

Mr. BRUCHOK.  I believe Mr. Neary ‑‑

Mr. NEARY.  It is within the 616.

Mr. BRUCHOK.  It is within the $616.

Mr. HAGGSTROM.  Within the appropriation. 

Mr. NUGENT.  And what percentage do you have in regards to when you take that 616
number, obviously when you come up with that ‑‑ and I understand
it is a budget figure ‑‑ but what percentage of that is for
cost overruns or change orders? 

Mr. NEARY.  We budget a 5 percent construction contingency.  And that contingency
is for unforeseen conditions, changes, unanticipated things that come along. 
So on this job we would have budgeted 5 percent of our estimated construction.

Mr. NUGENT.  And what would that number be? 

Mr. NEARY.  In round numbers we initially received appropriation of $665
million.  I am anticipating about $550 million might have been our projection of
construction costs.  So 55 million would be the contingency that was
established as part of the budget. 

Mr. NUGENT.  You said, I am sorry, 5 percent. 

Mr. NEARY.  Five percent, right.  So it would be $24 million.

Mr. NUGENT.  So we have exceeded that budget amount already. 

Mr. NEARY.  We have.

Mr. NUGENT.  Far exceeded it.  Because we have outstanding claims that haven't been
paid, but we have paid at least $30 million ‑‑ I am
sorry ‑‑ $42 million today. 

Mr. NEARY.  Correct.  We had a ‑‑ as you say, in the weeds a bit. 
We, at the time of bidding, we included a bid item that the total changes we
made included a pre‑priced bid option that we exercised for $16 million. 
I don't think that was part of the contingency. 

Mr. NUGENT.  I yield back my balance of time. 

The CHAIRMAN.  Thank you.  I would also like to recognize Miss Brown.  And as
I do, if folks would either wrap up.  Hopefully you have asked your final
question.  If you have some other questions, be prepared.  We have got another
panel.  Miss Brown. 

Ms. BROWN.  Thank you.  Listen.  The building physically is a very attractive
building.  I have been over there several times.  And it is really a catalyst
for the development here, whether we talking about the universities or whether
we are talking about our stakeholders that are working together.  The VA is truly
the catalyst for the community. 

And
we have spent a lot of time talking about quantity.  But I want to know about
quality.  I was told that it was raining yesterday and it was raining in the
facility. 

So I
want to know what is the quality of the work.  Do we have mold or rust in this
new fabulous‑looking on the outside building?  What is the quality of the
work of the contractors? 

And I
am going to ask them that same question when they come up in a minute.  And I
hope they will be ready to answer it.  Is it raining in the facility?  Is there
rust in the facility?  Has there been damage to any of the equipment?  What is
the status? 

Mr. HAGGSTROM.  Miss Brown, there is water in the facility.  We were in there
yesterday.  The facility is not completely dried in yet.  Albeit that the roofs
are substantially complete, there are still open areas in the atrium and on the
exposures on some of the walls that have not been dried in.  So it does present
the opportunity for water to come into the facility as it currently stands. 

As we
have gone through the facility, there is rust in some of the duct work, in some
of the mechanical equipment.  So those conditions do exist.  They are being
identified as we go through and do our inspections.  And the contractor will be
expected to mitigate or repair those particular areas. 

Bart,
do you want to add anything? 

Mr. BRUCHOK.  Mr. Haggstrom summed it up pretty well.  There is some
installed work that subject to water are showing signs of corrosion.  We do
have a hygienist come in and test for all the mildew.  Make sure that we don't
have that situation.  But until we accept the work from the
contractor, they are responsible for protecting this work. 

Ms. BROWN.  Well, I have two minutes left.  Does anyone else want to respond to my
question?  Or any additional things?

Mr. NEARY.  I guess I would like to offer that at the end of the day this will be a
high, high quality facility.  The problems that the panel have mentioned are
ones that need to be corrected.  But at the end of day, our veterans will have
a very, very high quality facility here. 

Ms. BROWN.  The parking is something that I didn't know what a deal breaker it
could be. 

Mr. NEARY.  The what?  I am ‑‑

Ms. BROWN.  It is something I learned.  How parking, make sure you have adequate
parking spaces, it could break the deal.  I have learned that being on this
committee. 

Mr. NEARY.  For many of the facilities I am sure you visited that were originally
constructed when VA had a very small component of ambulatory care and now a
great component of ambulatory care.  You have far more people coming to the
site each day, and parking is a difficult thing in many locations. 

Ms. BROWN.  So we didn't have that problem here? 

Mr. NEARY.  We have attempted to size this.  We have two structured parking
facilities, and then approximately I believe it is 500 surface parking spaces. 

Ms. BROWN.  Are we going to have some kind of a way that we can take the veterans
maybe to and from in trolleys or something like that? 

Mr. NEARY.  I have to check.  I can't answer that.  I will be glad to provide that for the
record. 

Ms. BROWN.  Thank you.  I yield back. 

The CHAIRMAN.  Thank you, Miss Brown.  Any other questions?  Mr. Webster,
anything? 

Mr. WEBSTER.  No. 

The CHAIRMAN.  Thank you very much for being here with us today.  We are a little
bit behind schedule, so I would ask the next panel to come forward.  Why don't
we take just about a five‑minute recess.  We will start back at 11:00 AM.

[Recess.]

The CHAIRMAN.  Other members will be making their way back in.  But with us this
morning from Brasfield Gorrie general contractors is Jim Gorrie, the president
and chief executive officer. 

Mr. Gorrie
is accompanied by George Paulson, vice president and division manager, also at
Brasfield & Gorrie.  I want to thank you both for being here today. 

Mr. Gorrie,
you may proceed with your statement.

STATEMENT
OF JIM GORRIE, PRESIDENT AND CHIEF EXECUTIVE OFFICER, BRASFIELD & GORRIE;
ACCOMPANIED BY GEORGE PAULSON, VICE PRESIDENT/DIVISION MANAGER, BRASFIELD &
GORRIE.

OPENING STATEMENT OF MR. GORRIE

Mr. GORRIE.  Thank you very much, Mr. Chairman, and all of the representatives
from the great State of Florida.  We appreciate the opportunity to be here with
you today.  And if appropriate, I would like to also offer our written
testimony for the record and try to summarize it the best I can based on what
we have just heard. 

The CHAIRMAN.  Very well.  Without objection.

Mr. GORRIE.  I would also like to extend my thanks to the University of Central Florida and the veterans that are here present.  This is a wonderful facility and we
appreciate you hosting this today.  We appreciate the opportunity to meet.  And
my name is Jim Gorrie.  And I am the president and CEO for Brasfield &
Gorrie. 

And
as you will see today, the VA Medical Center is an incredible facility.  As
discussed in the March hearing, planning and design errors have plagued our
efforts to construct the medical center.  In March the VA not only acknowledged
the problems and confirmed they were acting to correct the problems, but we
went on and that also resulted in, between January and March of this year, the
VA agreed to furnish over 45 separate design corrections that were named by the
job as the blitz, which are represented in the yellow binders, with RFIs in the
yellow drawings as you see before you. 

The
blitz was a major commitment by the VA that required taking responsibility for
the design errors.  Unfortunately, the blitz has grown to include over 100
separate design corrections, which are reflected by all the questions
that ‑‑ which are the orange binders and the subsequent orange
drawings. 

Unfortunately,
these corrections have lasted longer than we anticipated too.  But we are
seeing the signs of these changes are slowing down.  However, we do know that
they are coming. 

Last
week we did receive another significant revision to the operating rooms, and we
have been notified that additional changes are coming for additional structure
to support the recently selected medical equipment.  Unfortunately for the
project, the operating rooms are on the critical path schedule. 

We
are starting to make positive progress with the new corrected design, and our
team is anxious to keep the momentum going.  Since the March hearing, we have
almost doubled the manpower working on this job, despite the continued
changes. 

The
project desperately needed the design blitz.  However, this effort was two years
too late.  For Brasfield & Gorrie and our subcontractors, this time is lost
forever. 

The
process requires us to submit a request for equitable adjustment, which you
heard about earlier, to recover the impact due us and our subcontractors.  It
was also mentioned at the March hearing our first REA was valued at
$33.6 million, and it is currently unresolved today.  And it is largely
represented by the blue drawings you see over here to the right. 

The
cost of our REA are being carried by us and our subcontractors.  I sincerely
hope the VA will review the entire REA process in the future, as the costs that
the contractor and subcontractors have incurred create real financial
challenges.  And given our subcontracting plan goals for this project,
including small and disadvantaged veteran‑owned businesses, this matter
is of real importance. 

After
the March hearing the VA committed to work with us to expedite the project, but
things have not gone as we had hoped.  Despite Tim Dwyer, who couldn't be with
us today, our south regional president, and my personal efforts, productive
meetings with the VA to develop a new game plan never happened. 

In
June, instead of discussing how we can accelerate the schedule, the VA issued
us a notice to cure, which we feel is totally baseless, and threatened to
terminate us for default.  We learned about this notice to cure via an email
approximately ten minutes before the VA held a press conference announcing its
actions.  One reason this was so strange is that it was just one week after the
VA met with us to discuss our approach towards partnering. 

A few
weeks ago the VA also withheld two million additional dollars from our monthly
pay request without any discussion.  This action creates an additional
financial hardship to us. 

The
VA has also contacted our bonding company for meetings on several occasions
without contacting me directly to discuss their concerns first.  Our bonding
company attended a meeting in Washington, DC at the request of the VA in July. 

This
is the first time in our 48‑year history our bonding company has attended
such a meeting.  Last month the VA gave us our first unsatisfactory rating we
have ever received on a government project in our 48‑year history of
doing business.  Again, with not so much as an advance warning. 

As
you know, these unsatisfactory ratings are shared throughout the government and
will have a major negative impact on our ability to get new work.  We take our
reputation and our finances very seriously. 

The
recent actions taken by the VA are extremely disturbing.  We have struggled to
understand how the VA could take these actions, take full responsibility of the
multi‑year design problem at the March hearing and just 11 weeks later
issue us a very public notice to cure and threaten termination.  It just
doesn't make sense. 

But
B&G has constructed many large health care facilities, many around here,
and we appreciate the positive comments by the VA at our first hearing
regarding our qualifications. 

This
particular hospital has been a job of firsts for us:  The first time we have
had to fund owner changes in the tens of millions of dollars; the first time
our bonding company has been called to get involved; the first time we have
testified at a congressional hearing; the first time we have ever received an
unsatisfactory rating.  And unfortunately for us our list is growing. 

Our
contract requires us to provide a revised schedule for completion with each
monthly pay request.  Our July pay request forecasted the completion for November
of 2014, which would also be no surprise to anybody within the VA, because we
have been forecasting that date, the 2014 date, for over a year.  I would also
like to mention that that date does not include any acceleration.  That is what
we have to do, just follow the contract as submitted accordingly. 

During
the VA's notice to cure 30‑day evaluation period we were instructed to
provide a new obtainable schedule, and so we updated our contract schedule for
completion for the entire building and presented it to the VA.  And we also
proposed as requested a detailed alternative accelerated contract schedule,
which shows us working in more areas.  And this schedule shows a completion of
the clinic in 2013 and the remainder of the facility by April of 2014. 

We
have not received any formal feedback on these schedules in the past two
weeks.  However, as you heard a little while ago, it was this past Friday we
reached an agreement at the job site on the effect of the current changes to us
on the job and a mutual commitment to work towards a completion date of 2013. 
That was important. 

We
know that for months the VA has mentioned this completion date in the summer of
2013.  But they have not been willing to discuss the detailed logic they are
using to reach those conclusions.  And based on what I think I just heard,
their analysis is based on our original logic that we presented to them before
you making any changes.  That is what I think I heard. 

But
from preliminary reports, we know their analysis is not apples to apples with
ours.  It does not include any of the most current information included in the
major changes issued during the blitz and post blitz. 

At
this time we are proceeding with the development of a plan to complete the
entire project in 2013, should the VA decide to adopt and support it.  Although
the contracting officer has not signed off on the new goal, she is fully
informed, and we hope she will act shortly. 

Our
team has been raising the red flag since the first month of the job.  We need
direction, and we need direction immediately if we are going to make this 2013
date.  The VA and the hospital and the design team must support it. 

The
changes we have faced over the last two years in just keeping everyone working
on the job has been a major effort.  I would like personally to thank everyone
on the job, especially our subcontractors, for hanging in there with us, even
though we do not have all of our schedule issues resolved, and that we are
still dealing with the nearly $30 million of unresolved change orders. 
And that does not include costs associated with the REAs and other changes. 

We
also think it is important that you understand that the VA keeps stating the
project is 60 to 70 percent complete in terms of dollars.  But these discussions
ignore all the pending changes, current changes, and REAs on the project, which
ultimately truly reflect the cost of the work. 

The
most important thing this job needs today is open and direct communication.  We
reiterate our eagerness to explore an expedited completion of the project.  The
threats of default should stop.  The only thing that could put this job over
the edge would be a termination. 

I
can't even imagine what such an action would cost the taxpayers, not to mention
the opening ‑‑ the delays for our veterans.  Such an action
would have a devastating effect on all the workers employed on the job.  At
this stage in the game no one can complete this project faster and more
economically than Brasfield & Gorrie. 

In
closing, we welcome face‑to‑face working sessions with the VA and
are available to answer any questions you may have about our current progress. 
We really do want to finish this project.  It is a wonderful facility.  And we
can't wait for you to see it. 

And
we thank you for your time.  And one of the things that we tried to do was to
share some really straightforward exhibits to help you maybe understand our
progress of where we are.  So, Mr. Chairman, I don't know if you would
like me to just ‑‑ to share with you quickly what is included
in with our statement. 

[The statement of
Jim Gorrie appears in the Appendix.]

The CHAIRMAN. 
Let us not do that now.  We are a little over time on your opening statement.

Mr. GORRIE.  Okay.

The CHAIRMAN.  Let us go ahead and move to questions, if we can.  We will do a
couple of rounds, if that is what it necessitates.  Thank you very much. 

You
pointed to a document on the table that has got some signatures on it.  Is that the agreement that was reached on Friday? 

Mr. GORRIE.  It is.

The CHAIRMAN.  Is that something you can make available to the committee?  Or is it
something the VA has asked you not to disclose? 

Mr. GORRIE.  I would just ask probably Mr. Haggstrom's concurrence.  But
if he concurs I could ‑‑

Mr. HAGGSTROM.  That is fine.

The CHAIRMAN.  Is that okay?  If you want to keep it just between
you all, that is okay with us too.  If we can have it, fine.

Mr. HAGGSTROM.  If I could ask that the chairman allow us to continue to work with Brasfield & Gorrie over the coming weeks to get a better understanding of
the schedule, that would be very beneficial. 

The CHAIRMAN.  Then I won't ask for that to be placed into the record at this
time. 

We have
heard discussions of varying degrees of project completeness.  Can you give me, from
the contractor's standpoint, where you think you are in completion?  The VA
says 60 to 70 percent.  Where do you think you are, based on the changes that you are
aware of so far? 

Mr. GORRIE.  Well, our estimated completion date was November 14 per the contract. 

The CHAIRMAN.  Percentagewise though can you ‑‑

Mr. GORRIE.  By dollars? 

The CHAIRMAN.  Well, no, no.  They say 60 percent complete.  Are they
50 percent?  Are they 65?  Are you 65?  Mr. Paulson? 

Mr. GORRIE.  Yeah.

Mr. PAULSON.  Yes.  I believe the percentage that the VA is using is based on our
current contract value, which would equate to about a 68 percent
completion of money paid to Brasfield & Gorrie. 

The CHAIRMAN.  But your ‑‑ but your ‑‑ estimate
of completion is what? 

Mr. PAULSON.  Through our time extension request number three, it would be about
55 percent.  Through our time extension request number four, it would be
about 45 percent. 

The CHAIRMAN.  So you are saying 45.  They are saying 60 plus. 

Mr. PAULSON.  Yes, sir.

The CHAIRMAN.  Based on your experience, testimony at other hearings, and
information that has been provided, you have significant experience in
constructing health care facilities.  Would you say that the number of
equipment revisions and accompanying drawings were normal, abnormal, or about
normal? 

Mr. GORRIE.  There is nothing normal about this project.  I would call this the
furthest thing from normal we have ever experienced.  I would suggest to you
All Children's Hospital, which is, you know, a similar size facility down the
street, we would have maybe had 6 or 8 RFI binders for that whole project.  And
the orange ones are just since the cleanup, to catch the cleanup. 

The CHAIRMAN.  Why do you think that is the case? 

Mr. GORRIE.  We don't ‑‑ we can't explain the evolution.

The CHAIRMAN.  There hasn't been a whole lot of discussion about the design team
that was put together, the architect and the engineers.  Is that where the issue
began, with an incomplete design?  And if so, obviously the project was bid
off that design.

Mr. GORRIE.  Well, in public projects we are ‑‑ there is a very
clear line that you have design and you have construction.  And so that is the
major difference.  And so we really aren't privy to what information is
involved with creating the design. 

In
fact, we have, you know, we really ‑‑ we have tried to get
involved with that in the past to try to help through that.  But we really have
not had much success with that effort.  And we have tried to explore that. 

The CHAIRMAN.  Knowing what you know now, and looking back to the
first time you ever saw the complete set of plans that were given to you to bid
off of, were the plans complete?  Were you aware they were incomplete when
you bid on them? 

Mr. GORRIE.  Clearly we thought they were.  And as you can see in the time line of
the design history, which is in here, there was a, right before the job issued,
there was a complete reissuance of the drawings. 

But I
guess there was no way for us to know that there was going to be a complete
fruit basket turnover of all the medical equipment.  But that, you know, that
is the result.

The CHAIRMAN.  Miss Brown. 

Ms. BROWN.  Thank you.  First of all, we are having communication problems, because
we are talking about how I wanted the project 2012.  October to be exact, or even
the summer.  So where VA and where the construction ‑‑ we are
just totally different. 

But
keep it in mind that the veterans here have waited 25 years to get this
hospital.  And so whatever we are talking about the details, we need to
expedite it.  You all are years apart from me.  And you all may think I am not
realistic. 

But I
feel ‑‑ and I am not in construction ‑‑ and
but I feel that when you put the money up front, you all are always talking
about private business, and the government, and this is a partnership, but when
you have ‑‑ if money is not an issue, I just think we all should
be able to work through whatever issues that we have. 

Now,
I am confused.  We are not talking about how much money that we owe you, or you
owe them, or we are negotiating.  The status of the project complete.  We are
not talking about money.  The VA say it is 60 percent complete.  What do
you say? 

Mr. GORRIE.  I would start by saying I think we probably wanted that November of
2012 date as much if not more than you did. 

Ms. BROWN.  November.  I was trying to get ahead of November. 

Mr. GORRIE.  Okay.  Well, I would like ‑‑

Ms. BROWN.  I wanted October. 

Mr. GORRIE.  I would just like you to know, when we bid this job, clearly our whole
approach was for that. 

So
clearly ‑‑

Ms. BROWN.  We all wanted the same thing. 

Mr. GORRIE.  We are all on the same page with you on that.  We have no ‑‑
there is no benefit for us to have ever asked for the first delay.  That was
certainly never our intention.  And it is really, quite frankly, it is really
impossible for us to ask that ‑‑ answer that question today
because of what is happening over here.  We just got the orange drawings, and
they are still coming. 

Ms. BROWN.  Well, the important thing for me is that you all are meeting.  You all
are talking.  And you are working through the issues.  And that is good.  I
mean, that is a good report.  You met August 1st.  You are meeting August the
15th. 

And I
don't want it to be we have another hearing on this same subject.  And,
you know, I want you all to continue to meet and work through the issues.  As the
person that watches the taxpayers' ‑‑ not just the money, but
we want the service provided.  The veterans in this area, Central Florida, have
waited 25 years.  Shouldn't take 25 years to do nothing.  Nothing. 

So,
what is the percentage that the project is completed?  Not how much money we
owe you.  But how much ‑‑ the VA says it is 60 percent. 
What do you say? 

Mr. GORRIE.  The critical path of the ‑‑ when we are going to
finish depends on ‑‑

Ms. BROWN.  Right. 

Mr. GORRIE.  ‑‑ when we get those. 

Ms. BROWN.  But if you looked at it today what would you say? 

Mr. GORRIE.  If I would have said today, November 14.  That is what our ‑‑
if you follow the contract, before you try to do something, like what we have
tried to do around the table the last few weeks, it is what we have been saying
for the year.

Ms. BROWN.  November the 14th what year? 

Mr. GORRIE.  November of 2014. 

Ms. BROWN.  Yeah, but see, I am at 2012. 

Mr. GORRIE.  No, I don't ‑‑

Ms. BROWN.  So what I am saying ‑‑

Mr. GORRIE.  You are just asking me a question.  But that is where we are before we
try to pull it back. 

Ms. BROWN.  But what is the percentage of completion?  That is what I am trying to
find. 

Mr. GORRIE.  Forty‑five percent, if you look at it just along the ‑‑

Ms. BROWN. 
So you are 45 and the VA say you are 60.  That is a big difference right
there. 

Mr. GORRIE.  Yeah.  Are you talking about dollars or are you talking about ‑‑

Ms. BROWN.  No.  I am talking about physical work.  Not money, work. 

Mr. GORRIE.  Well, there is 45 percent when you look at it time is what we are
saying here.  But the problem is, the schedule, the 24 months, or the
bigger schedule initially was never able to be built.  And so we were ‑‑
we are having to now create a new schedule, which we have all committed to do. 

Ms. BROWN.  Okay.  And you are capable of doing it. 

Mr. GORRIE.  We're committed.  Yes, we are more than capable.  

Ms. BROWN.  More capable. 

Mr. GORRIE.  We are committed to what our team discussed with their scheduling
professionals and our scheduling professionals, they have been meeting for
weeks and months trying to reconcile all these drawings and what we might can
do.  And this is the first time we have actually kind of seen the goal line at
the same place. 

Ms. BROWN. 
Well, let me just say in closing from this round, the military slogan for the
Army is one team, one fight.  And we all doing it to move forward, getting
veterans the facility that they deserve. 

Thank
you, Mr. Chairman. 

The CHAIRMAN.  Mr. Bilirakis. 

Mr. BILIRAKIS.  Thank you very much.  During the testimony you gave in Washington, DC you talked about a lack of cooperation with the VA. 

Mr. GORRIE.  That was my brother, the older Gorrie. 

Mr. BILIRAKIS.  Yes.  Go ahead and elaborate on that a little bit.  What is it
going to take to get it done?  What is it going to take, in your opinion?

Mr. GORRIE.  Open a direct communication.  We can't ignore the elephant in the
room.  We have got to deal with ‑‑ you know, we have shared
with you the $60 million of outstanding changes.  They have got to be
reconciled. 

And
we got to ‑‑ the schedule has to be based on logic.  It can't
be based on somebody that is not here or a schedule that doesn't exist any
more.  It has got to be based on fact.  And we are ready.  And that is all we
want to do. 

Mr. BILIRAKIS.  Okay.  In the construction process, are drawings simply ‑‑
when are they to be completed in the construction process?  What has been your
past experience? 

Mr. GORRIE.  In the private sector or the public sector? 

Mr. BILIRAKIS.  Yeah.  Well, both. 

Mr. GORRIE.  Well, the public sector, they are required by law to complete the
design.  I mean, it is a requirement.  So that is ‑‑ so they
are required by law to be completed before they are issued to us.  So that
is ‑‑ I don't know how else to answer it. 

Mr. BILIRAKIS.  Yeah, these drawings, the design drawings, the changes that have
been occurring, and I understand that about the equipment and the up‑to‑date
equipment, and that that attributed to a lot of these changes, design changes. 
Tell me how you feel about that. 

You
have already told me that there has been a lack of communication.  But is that
the case?  I mean, did you attribute these changes to updated equipment, design
equipment? 

Mr. GORRIE.  Yes.  I think the VA has shared in the March hearing where their
design was insufficient.  And, you know, the biggest one clearly is medical
equipment.  That one you just ‑‑ that one jumps off the page. 

Mr. BILIRAKIS.  Tell me what type of medical equipment. 

Mr. GORRIE.  There is 27 ‑‑ how many, 27,000? 

Mr. PAULSON.  Yes. 

Mr. GORRIE.  I mean, it is in every room. 

Mr. BILIRAKIS.  It is in every room. 

Mr. GORRIE.  It is in every room.  So when you start a job like this and you assume
you have the right drawings, you have flow, you go.  Now we have been directed
to a cure notice to just kind of go wherever we can go.  So we are hopscotching
all over the place, but we have to have flow. 

Mr. BILIRAKIS.  All right.  Following up on that.  In the alternative, so the
contract schedule, you propose working in more areas to expedite completion. 
If it is feasible to work in more areas, why wasn't that incorporated into the
current contract schedule?  You can probably answer the question.  But go ahead
and elaborate on that. 

Mr. GORRIE.  Well, there is a lot of ways you can answer it, but it doesn't make
sense to work inefficiently.  I guess that would be partly it.  And we are
willing to work wherever we can work.  And that is what we are doing now. 

But
first we are obligated by contract to follow ‑‑ they have a
very ‑‑ there is very rigid rules about how you do a schedule
for the VA, and you have to follow it.  So that is what we are trying to do. 

But
since June 15th we have been told you got to have more manpower.  At the
same time we are getting the orange stack. 

Mr. BILIRAKIS.  Okay.  Where are the additional costs associated with expediting
the project? 

Mr. GORRIE.  It is about everywhere.  But if you will look at the management, when
you see the job, there is a ‑‑ we have furnished two or
three times the amount of supervision that is needed, because we never have
flow.  We are just working wherever we can work.  I mean, that is the plan
right now is work wherever you can work. 

Mr. BILIRAKIS.  Okay.  Elaborate on the lack of the cooperation that you have been
receiving from the VA. 

Mr. GORRIE.  You have to have direction.  I mean, for us to get off of the plan, we
have to agree that we need to get off the plan and then be directed to get off
the plan.  And we haven't gotten that yet.  We think we may have Friday
actually made a break‑through on that.  I mean, the contracting officer
hasn't necessarily endorsed it yet.  But we think we are ‑‑

Mr. BILIRAKIS.  You think you can get it done by the fourth quarter '13?

Mr. GORRIE.  That is our plan, but it will take a ton of effort.  And if it
doesn't quite ‑‑ I mean, the changes are still coming, so I
can't commit to something that I don't have.  And the design isn't completely
finished. 

Mr. BILIRAKIS.  Okay.  Thank you very much. 

I
yield back, Mr. Chairman.

The CHAIRMAN.  Miss Adams. 

Mrs. ADAMS.  Thank you, Mr. Chairman.  A couple of things. 

Do
you have the final equipment list?

Mr. GORRIE.  No. 

Mrs. ADAMS.  No.  You were here when I asked that question earlier, were you not, of
the VA?  Your testimony is ‑‑

Mr. GORRIE.  They have one. 

Mrs. ADAMS.  But you do not.

Mr. GORRIE.  We do not. 

Mrs. ADAMS.  Okay.  The design, the VA designs, are they consistent with the
equipment vendors' designs when ‑‑ and is that why ‑‑

Mr. GORRIE.  We don't have the list to verify. 

Mrs. ADAMS.  So you have no idea.  Because that will create more delays; correct? 

Mr. GORRIE.  Hopefully not. 

Mrs. ADAMS.  Do you believe you have all the current changes? 

Mr. GORRIE.  No. 

Mrs. ADAMS.  No.  You said follow the rules by the VA.  You are required by your
contract to follow and proceed in precise areas throughout the contract. 
At any time did you ask the VA to be able to deviate in order to keep people
working and moving forward with this project? 

Mr. GORRIE.  Yes, ma'am. 

Mrs. ADAMS.  And what was the answer? 

Mr. GORRIE.  Well, when I went to Washington in the spring of whatever ‑‑
what is this year, '12? ‑‑ '11, we knew we had the problem with the
surfacing.  And we didn't ‑‑ we just didn't really get an
answer.  But we finally ‑‑ it finally dawned ‑‑
everybody realized that summer we had to do something. 

And
so they issued a change order, change order 05W, to resequence the job that would
enable us to make up for the lost time.  And the answer was we just got an
email that said, stop that.  We are no longer interested in that exercise. 

Mrs. ADAMS.  So they had the opportunity to resequence, is your word, to get
everybody moving again.  And then you got an order from them ‑‑

Mr. GORRIE.  To stop.

Mrs. ADAMS.  ‑‑ to stop the resequencing.  So is that the reason we
don't have a lot of workers on the job?

Mr. GORRIE.  That is a major part of it, yes, ma'am. 

Mrs. ADAMS.  I see.  So you got a contract and new rules by VA to follow.  You went
over to the VA back in '11, summer of '11.  You started resequencing.  Then you
are told to stop resequencing by the VA.  And we are here today because you
continued to get the change orders and revision drawings. 

You
still do not have all the equipment list, something that I asked during the
committee hearing in Washington.  And I am very concerned because the VA didn't
tell me that they had the list, but they hadn't provided it to you when I asked
them.  I guess I need to be more careful with my questioning.  I need to go
back to my law enforcement days. 

So I
have some concerns about this, Mr. Chairman.  We have, I believe, a little
bit of a difference of opinion on who has the equipment list now.  And I don't
know how we complete it if we don't have an equipment list.

Mr. GORRIE.  And we are not today ‑‑

Mrs. ADAMS.  Can you tell me how you complete it without equipment list? 

Mr. GORRIE.  We have to just assume what they issue us in the drawings have been
fully coordinated on their end. 

Mrs. ADAMS.  Have they in the past?

Mr. GORRIE.  No, ma'am. 

Mrs. ADAMS.  No.  So that is quite an assumption and risk you take in that
assumption I would believe. 

I
heard you say the REA is $33.6 million unresolved.  Can you elaborate on
how that affects your subcontractors and where we are with our subcontractors
on this job? 

Mr. GORRIE.  Well, the construction industry works off pretty thin margins.  And so
everybody is asking me ‑‑ I get calls daily wanting to know
the status.  So it is a cash flow business. 

Mrs. ADAMS.  When did you get notified that the VA was willing to start talking to
you again?  When you had that ‑‑ these meetings just
recently?  How long before the committee hearing was it released? 

Mr. GORRIE.  Well ‑‑

Mrs. ADAMS.  Or was it after? 

Mr. GORRIE.  It was right around the notice to cure. 

Mrs. ADAMS.  Well, I am happy to hear that they finally are speaking with you, and I
hope that open dialogue continues.  Because as you heard me say many times,
this is about our veterans and a facility they need and they deserve.  And I
hope the VA will continue that open dialogue. 

And I
yield back, Mr. Chairman. 

The CHAIRMAN.  Mr. Nugent. 

Mr. NUGENT.  Thank you, Mr. Chairman. 

Mr. Gorrie,
you had mentioned in your statement in regards to you have a mutual agreement
reference in the summer of 2013.  But you sort of caveated or put a caveat in
there, a reference, but you need direction to get there.  What did you mean by
you need direction to get to 2013 as the completion date? 

Mr. GORRIE.  The mutual agreeable date right now is, you know, the end of 2013.  We
have never had any kind of understanding of a summer date.  But the end of '13,
with the substantial completion at February '14, where they can start moving
in.  We are trying to work with them on how they can compress the activities to
complete. 

So
for us to pull back from November, which is what the current rules ‑‑
if you follow the rules, right now we are on November of '14.  And so we are
trying to and we have worked morning, noon and night and their scheduling teams
have worked to compress that time frame.  And that is what we are trying to
do.  And we can't do that without their help. 

So we
are, you know, we are having to create a new game plan.  And everybody ‑‑
that is what the team committed to do, is that we are basically ‑‑
since the cure notice, we have had to suspend the original logic.  And so we
are working off ‑‑ we are having to work on new logic now.

Mr. NUGENT.  I want to ask you a question.  How many hospitals has your corporation
built? 

Mr. GORRIE.  Well, we are the second largest, first or second every year.  You
know, we have done the All Childrens, you know, Florida Hospital, ORMC.  We are
the largest health care contractor, probably, health contractor in the
country. 

Mr. NUGENT.  Do you normally get them built on time? 

Mr. GORRIE.  Yes, sir.

Mr. NUGENT.  Have you exceeded the time limit on any of the projects in the last
few years? 

Mr. GORRIE.  No, sir.  I am not aware of any that we failed to meet a schedule that
we have given.  Commitment is everything in our business. 

Mr. NUGENT.  Is there a reason why you were able to meet that time period when you
respond to an RFP, to a request for proposal, and you can deliver?  Is there a
reason why that happens?  Or is that just by chance?

Mr. GORRIE.  Well, we are just familiar with that positive working relationship. 
Most of the work in health care facilities is done, you know, in partnerships,
so that the drawings can even evolve.  And we can sometimes, if you have a
plan, you know ‑‑ and the VA now is considering alternative
ways to contract for hospitals, because public bid, bidding of a hospital, is
very difficult because of this equipment. 

And
so in the other facilities and the other ways of contracting, you are able to
work with that medical equipment process.  So the processes we are normally
involved with is we are very much at the table in the medical selection
process. 

Mr. NUGENT.  Well, Florida Hospital, are you the contractor, the general, on that? 

Mr. GORRIE.  Yes.  Well, everybody knows, it is a big system. 

Mr. NUGENT.  Right.

Mr. GORRIE.  We started at Celebration.  We started working with Florida Hospital
15 years ago.  We have been there ever since.  And there has been a few
other people that have managed to get a job or two. 

Mr. NUGENT.  Well, there is a new hospital being built in Wesley Chapel.  In
watching ‑‑ I don't know if that is yours or not ‑‑
but in watching the construction, they actually left a large wall open so they
could move some of this larger medical equipment in. 

But
even though they were, I guess, at 50 percent complete, they had a roof
that kept the water out, because that is part of drying in.  I mean, when you
build a house or, you know, when I built a sheriff's office, there are certain
things you have to have done first, and one is you have to dry it in. 

Mr. GORRIE.  Yes. 

Mr. NUGENT.  Is there a reason why this building is not dried in? 

Mr. GORRIE.  Well, the roof design totally changed.  That was, you know, that was
discussed in March.  And you know, we have tried not to dwell on the past
problems.  But the current critical path is what it takes to get the medical
equipment and those operating rooms going.  So we have to focus on what is that
stream of work that gets you to the end. 

And
at this point ‑‑ and it hasn't been for a long time ‑‑
the dry‑in has not been where it is on most projects.  It is not
necessarily critical.  Right now it is critical to prevent quality issues, some
of which you heard.  I mean, obviously when we can finally get the new roof on,
it mitigates those kind of issues, but it doesn't help us get to the finish
line earlier. 

Mr. NUGENT.  I reserve the rest of my comments. 

The CHAIRMAN.  Mr. Webster. 

Mr. WEBSTER.  Thank you, Mr. Chairman. 

In
the testimony by the VA they mentioned also the movement of the date back from
the end of 2014 in several steps and eventually possibly in 2013.  And they
also said thought that there was no discussion on additional dollars at all. 

Did
that agreement that come out of that and the partially agreed to, did that
include any talk ‑‑ would you think there was any talk or any
agreement or any mention of the additional cost to move those dates up? 

Mr. GORRIE.  The only way we knew to get an agreement on the end date of this
project was to allow the best scheduling minds to get in the room and take
money out of it.  And that is what we did. 

I
continue to have some dialogue with Mr. Haggstrom about, you know, what
the next steps are, because he and I have been able to have conversations about
what can we do.  And so we have, you know, we have had very broad brushes on
this. 

But
the main thing we have to have is a mutually agreeable target.  And I think
anybody that takes what the VA requires us to do on the schedule, if you go
back to November '14, you can't do that, you know.  And you go to end of '13
for substantial completion. 

You
know, we never ‑‑ I don't have any experience with the
claims.  But, you know, they mentioned claims.  We don't have any experience
with that.  But if that is what we have to do, that is what we have to do.  We
want to finish.  We just want to finish. 

Mr. WEBSTER.  So is there a considered and possibly a logical step‑by‑step
partial completion date of certain areas ‑‑

Mr. GORRIE.  Sure. 

Mr. WEBSTER.  ‑‑ of the hospital? 

Mr. GORRIE.  Sure.  We can open the clinic early. 

Mr. WEBSTER.  Well, there was mentioned three items, the education, maybe the clinic
was, some other thing, in order to open two other facilities there.  Is there a
possibility to complete those and ‑‑

Mr. GORRIE.  There is all kind of possibilities. 

Mr. WEBSTER.  ‑‑ still continue construction.

Mr. GORRIE.  There is all kinds of possibilities with disconnecting the logic and
allowing us.  If we could really know what was important, instead of just
plopping the whole 2 million out there, square feet, we are ‑‑
that was part of the discussion a year ago, when we got in that change order of
5W that we mentioned that was stopped.  That was part of that exercise, was to
give them the menu, the road map. 

Mr. WEBSTER.  So you could, if there were a ‑‑ if the idea was to
open up the rest of the facility that is already available and there were some
requirements, that could be done in a logical, step‑by‑step basis
within the current time to finish and do it partially and that would fit in the
schedule that would possibly accelerate some movement and not others? 

Mr. GORRIE.  I think we are going to have ‑‑ I think the team is
going to have to do that.  I just don't think there is any question that there
is going to be additional changes. 

And I
think, quite frankly, I think we are going to have to isolate the operating
rooms.  We are getting daily changes on the operating rooms.  And I mean, what
is not even in the orange set were the changes we got last week.  But I
mentioned to the operating rooms, and George could tell you more with those, if
you would like. 

Mr. WEBSTER.  All right.  So now in order to accomplish that, it takes what you had
said, maybe VA had said, and that is open, direct communication.  So if you
were able to say, all right, after this meeting we are going to have some open
and direct communication, who would you want at that meeting?  Because I don't
think I know, and maybe none of the other members know.  Who would you want
there?  So if we publicly say that, maybe we could help that.  I don't know. 

Mr. GORRIE.  Well, we have to have ‑‑ we have been able to have
good discussions with Mr. Haggstrom.  And we would have to have ‑‑
we would certainly need to have the contracting officer present.  Because we
can't ‑‑ the scheduling people all agree now on what is
doable.  But the testimony just reflects they still think maybe the summer is
possible.  And the contracting officer hasn't necessarily agreed with our
logic.  So we can't ‑‑ we can't really do much without ‑‑
I can speak and any of our people can speak for us.  And we have done
whatever is asked.  But we do really to get the contracting officer ‑‑

Mr. WEBSTER.  Let me ask, if you set a meeting up, and you wanted the people there
that it would take to maybe resolve some of this ‑‑

Mr. GORRIE.  Well, it would have to be the contracting officer, you know.  I guess we ‑‑
you know, we have invited General Shinseki.  We would love to have somebody
say, make it happen. 

Mr. WEBSTER.  Well, maybe one just final quick answer you could give me.  Which of
these documents, green, blue, yellow, or orange, is 68 percent complete? 

Mr. GORRIE.  That would ‑‑

Mr. WEBSTER.  Any of them? 

Mr. GORRIE.  Well, by dollars or by time? 

Mr. WEBSTER.  Thank you very much. 

The CHAIRMAN.  For the record, we did ask for the contracting officer to be
present, but that request was declined by VA.  I understand VA's reason for declining
but I do hope that communication can be
opened between the contracting officer and B&G because I think that
appears to be one of the biggest issues here. 

Miss Brown. 

Ms. BROWN. 
Thank you. 

I
just returned a couple weeks ago from down in Miami to their VA facility. 
Their operating room is 95 percent complete.  All they need is a final
authorization from the committee and they will be ready to finish that facility
and operate it. 

I
understand that equipment is, you know, is I think changing.  I went to the
nice facility that we have down in Gainesville.  And the equipment is ‑‑
not just the operating ‑‑ even the kinds of equipment, because
of our veterans and their additional needs, not even for a person to touch
them, that they have to lease equipment.  So I understand that technology is
changing. 

And
so I guess we all need to think out of the box as to how we are going to do
it.  And I guess you need a different kind of people. 

You
know, I think sometimes it would be helpful to have the physicians and the
people that is going to actually use the equipment in the room as you work
through the additional what do we need to make sure that when we turn ‑‑
you all turn it over to the VA, it is the state of the art wherever we need
it. 

And I
have spent time with you all, the contractors and the VA and, you know, it is a
little frustrating, because, like I said, you all's dates, all of your dates is
different from, in my mind, what the dates are.  And I have been waiting with
the veterans for over 25 years. 

In
looking at this stack of blueprints, the change orders here, is this normal? 

Mr. GORRIE.  No, ma'am. 

Ms. BROWN.  It is not normal.  Well, I know that Florida is unique, and I know that
our VA hospital is going to be unique, and it is going to be the state of the
art.  And when you all finish it, it is going to be something that we know the
raining in the facilities, the leaking ‑‑ because I guess did
it have anything to do the with the roofing or just the way the building ‑‑

Mr. GORRIE.  It is the design of the roof.  We have to have ‑‑
they changed the design of the roof. 

Ms. BROWN.  Okay.  Is that why it is raining in the building? 

Mr. GORRIE.  Yes, ma'am.

Ms. BROWN.  Why can't we stop it? 

Mr. GORRIE.  We are close.

Ms. BROWN.  Close to stopping it.  It rained yesterday.  It rains every day here. 

Mr. GORRIE.  But I have been through the building a lot.  And we have made great
strides to, as you will see on the tour, you will see that those obstacles are
under ‑‑ are manageable at this point. 

Ms. BROWN.  And the mold and the mildew and all of that is ‑‑ and
the rust, all of that is going to be corrected. 

Mr. GORRIE.  Yes, ma'am. 

Ms. BROWN.  Okay.  You all do a lot of business.  I have had a lot of complaints
from veterans‑owned businesses and minority businesses, and female‑owned
businesses, that we have not been able to partner. 

What
kind of records do you all have working with small businesses and others? 
Because we have a lot of ‑‑ he wants to answer the question,
and that is fine.  We have a lot of veterans‑owned businesses in the
area, and they complain to me that they are not getting any work.  Can
you ‑‑

Mr. GORRIE.  He can speak specifically to this job.  I will give you the corporate
commitment if you need it. 

Ms. BROWN.  That is what I want to know, because you all do a lot of government
work, and perhaps we need to do something.  When I was listening to the VA
about this whole issue ‑‑ because I know a lot of people like
to talk about government, but government is a business and it is a big
business.  And it could help other small businesses do better.  Yes, sir. 

Mr. PAULSON.  Our commitment and/or requirement on this particular project was
11 percent of the total subcontracts be let to either a disabled veterans‑owned
business or veteran‑owned business, and we have exceeded those goals. 

Ms. BROWN.  You have done that? 

Mr. PAULSON.  Yes, ma'am.

Ms. BROWN.  Did you do ‑‑ get a lot of the local businesses? 
Because this is where I have gotten my complaints from. 

Mr. PAULSON.  Some of those businesses are local.  Some of them are not.  The
contractual requirements of the small business program, it is not a local
proem, per se, as a requirement. 

Mr. GORRIE.  We are mentoring.  And we have a lot of engagement and involvement. 
George has been helpful with other federal agencies.  You know, we are very
interested in helping and working with mentor programs. 

Ms. BROWN.  Well, this has been truly an area that I am interested in.  Because
when we look at the unemployment with veterans, it is much higher than other
groups.  It would be instrumental for us, as members of Congress, that as we
move forward with projects, to include a percentage.  Not just, you know,
saying after you get the contract, then we going to talk about what kind of
veteran businesses or businesses that we do business with.  It should be a part
of the contract when it goes out.  And then we would issue you some kind of
requirements that you employ veterans to do the work when they are able to do
the work. 

So,
you know, I am hoping that as we spend taxpayers' dollars for veterans, that we
include them as far as how they can participate with businesses and hire other
veterans.  That is one of my goals.  I yield back.

The CHAIRMAN.  Maybe some of the homeless veterans that are put in the
domiciliary can be put to work on the site. 

Ms. BROWN.  Yes, sir.  But in addition to that, if you put them in the sites, then
the people that is providing the food, the services, the clothing, the helping
with the keeping the facilities up, those could be veterans.  So, I mean, it is
a whole opportunity there if we could just think out of the box. 

The CHAIRMAN.  In your view, what effect did the notice of cure have on the job
site and the completion date?  I mean, has it affected it?  Or have things moved
along?  Did things slow down?  Did they stop?  Give us kind of a snapshot of
what the notice of cure did to the job site. 

Mr. GORRIE. 
Well, primarily, it destroyed moral.  As the drawings taper down the changes,
our manpower is picking up.  So it has basically directed us to now just start
working wherever we can work. 

So I
guess the ‑‑ it is just there is no way for us to answer that
question yet, until we know when they have told us to go run and jump.  But we
don't know where we are going yet.  So as soon as we can all agree on where we
are trying to run to, I will better be able and I can come back to you with an
answer. 

But,
you know, in essence, you wouldn't think that we would have needed ‑‑
we were ‑‑ we are not really doing anything different, other
than talking.  I mean, we are having to internally meet every day.  We talk to
subs every single day because they literally are scared for their jobs. 

The CHAIRMAN.  Have you done a cost estimate of bringing this thing to completion
by the fall of next year?  What would it cost, dollarwise? 

Mr. GORRIE.  Obviously that is of utmost importance.  And we have told you the 34
and the $30 million that we sure would like somebody to help us catch up
on.  And we testified in Congress in March.  It was asked of us then.  And
Mr. Dwyer said $120 million.  And we don't ‑‑ we are
just speculating.  But that is ‑‑ we don't have a better guess
today than we did in the March hearing.  But we do have an orange stack.  But
that is the only difference. 

The CHAIRMAN.  I would hope that you would have, with you and VA sitting down
together, they touted the fact that you had backed your dates from '15 to '14,
to substantial completion is what I heard.  I heard substantial completion.  I
didn't hear completion ‑‑

Mr. GORRIE.  That is correct.

The CHAIRMAN.  ‑‑ fall of 2013. 

Mr. GORRIE.  Yeah.

The CHAIRMAN.  If you had to bring double shifts on, what does
that do to the cost of the project?  The fixed costs are, I
assume, are there, I mean, your steel, your concrete, your drywall, all of
that.  But your labor costs would have to, I would assume ‑‑

Mr. GORRIE.  We will be glad to do that exercise.  I mean, obviously doing that
last year, when we thought we would a year ago, would have helped. 

And I
want to say for the record the '15 date that has been mentioned several times
was a one month blip when it was forecasted.  And that was before the
schedulers could reconcile the amount, you know. 

We
were able to mitigate that one time '15 date, and that seems like that
continues to be.  But we have been fairly consistent for a long period of time
when we would think this job would finish, and that is the end of '14.  That is
per the rules.  It has, you know, it has ebbed and flowed, as you can imagine. 
But we have been fairly consistent on that point. 

So
the exercise we are doing now is a ‑‑ it is not a all of a
sudden we got a new date.  It is going from what we ‑‑ the way
we interpret our contract to what can we do, which is we wish we could have
done this a year ago. 

The CHAIRMAN.  Mr. Bilirakis. 

Mr. BILIRAKIS.  Thank you.  Appreciate it.  Again, this is your first contract with
the VA? 

Mr. GORRIE.  No. 

Mr. BILIRAKIS.  What have been your past experiences? 

Mr. GORRIE.  We have not experienced anything like this. 

Mr. BILIRAKIS.  Nothing like this.

Mr. GORRIE.  No. 

Mr. BILIRAKIS.  Nothing.  Never seen anything like this in the history of the
firm. 

Mr. GORRIE.  That is correct. 

Mr. BILIRAKIS.  What ‑‑

Mr. GORRIE.  Yeah.  Excuse me.  I didn't ‑‑

Mr. BILIRAKIS.  In your estimation, what would this cost the taxpayers if there
were a termination of your contract? 

Mr. GORRIE.  I don't think it is calculable.  You heard ‑‑

Mr. BILIRAKIS.  You can't estimate here ‑‑

Mr. GORRIE.  ‑‑ for each 12 months ‑‑

Mr. BILIRAKIS.  ‑‑ the cost in delay. 

Mr. GORRIE.  The cost to the veterans I don't think is calculable.  Because, you
know, there is nobody that can pick up these drawings.  There is just nobody
else that can finish.  I mean, it is just ‑‑ it is not
fathomable how somebody could say, okay, here is your sets.  Here is your RFIs. 
You know?  Finish it in a year.  It is just not possible.  It is just ‑‑

The CHAIRMAN.  Are you done, Jim? 

Mr. BILIRAKIS.  Yes.

The CHAIRMAN.  For the record, we did write a letter to the Secretary on
the 22nd of June asking those questions.  The response from the
Secretary ‑‑ and I would like to ask that our letter be entered into the record, and also his
response. 

It was not a complete response.  There were no numbers.  There were
comments such as VA cannot predict the cost that might be associated with
possible legal actions that may result from Brasfield & Gorrie's
termination. 

So to
follow in behind your question, I would like to enter these two documents into
the hearing record. 

[The attachment
appears on p.    ]



The CHAIRMAN.  And
you are yielding back. 

Mr. BILIRAKIS.  I will yield back.

The CHAIRMAN.  Miss Adams. 

Mrs. ADAMS.  Thank you, Mr. Chairman. 

The
document that you guys are still working on, is it ‑‑ I want
to ask if it is ‑‑ there is anything other than what you discussed. 
Is there anything else outstanding that could shift the projection completion
date?  Is there anything else that you still have to work out with the VA that
could shift the projection completion date? 

Mr. GORRIE.  Yes.

Mrs. ADAMS.  Yes?

Mr. GORRIE. 
Yes.

Mrs. ADAMS.  And is it something that is large enough to shift it in a huge manner? 
Or is it something that is minor?  Is it ‑‑ I mean, and how
many are there? 

Mr. GORRIE.  Well, there is no normal on this job.  So I would have to say it would
have the potential to be a major. 

Mrs. ADAMS.  It has the potential to be a major.

Mr. GORRIE.  If we are not committed arm in arm to solve it.  Because what I
was ‑‑ what ‑‑

Mrs. ADAMS.  If you do get a commitment arm in arm to solve this potentially major
issue, would it add to, in addition to, the completion date of the end of next
year?  Is it possible?  Will it? 

Mr. GORRIE.  The change that we received in the ORs makes it extremely difficult
for us to answer that question.  And I would be glad to tell you what we
received last week in the ORs if you want a visual of that. 

Mrs. ADAMS.  Okay. 

Mr. GORRIE.  George. 

Mr. PAULSON.  The change that Mr. Gorrie is referring to is RFP 319, in which
in the third floor of the hospital where the ORs are located, we have added
smoke evacuation to those rooms.  We have added structural steel support for
the medical equipment in those areas.  We have added digital controls to
monitor all of the ORs.  We have added monitors and TV rough‑in.

Mr. GORRIE.  And the drawing equipment. 

Mr. PAULSON.  Of 76 ‑‑

Mr. GORRIE.  That is in the orange stack there. 

Mrs. ADAMS.  There is 76 more ‑‑

Mr. GORRIE.  They are not in the stack. 

Mrs. ADAMS.  So what I am hearing, Mr. Chairman, is it looks like they came to
agreement on possible completion date, substantial completion date, but there
is still ‑‑

Mr. GORRIE.  I would give you my commitment that we really are committed.  And part
of the agreement was that we would mitigate that. 

Mrs. ADAMS.  Or is there still a ‑‑

Mr. GORRIE.  Yes, there is no way it could be mitigated without the arm‑in‑arm
approach.  If it has to be, you know, just go to the contract, it would be
impossible to get there.  I mean, just you have to kind of agree we are doing
something unique to get there. 

Mrs. ADAMS.  So I would just ask that the VA make a commitment to work arm in arm
with you so that our veterans don't have to continue to wait any longer.  And I
heard you say that you think that if you could resequence, like we were trying
to do a year ago, that we would be able to get parts of it open to be available
to our current veterans today.  Is that correct? 

Mr. GORRIE.  We would love for you to start getting a return on your investment. 
And we are open to in any shape or form that comes.

Mrs. ADAMS.  Thank you.  I yield back. 

The CHAIRMAN.  Mr. Nugent. 

Mr. NUGENT.  Mr. Gorrie, I guess what you are looking for is some kind of
certainty, at least what I am hearing, and maybe not correctly. 

At
some point in time there has got to be an end to the change orders.  I mean, at
some point in time I would think the VA has got to say, this is what we want
this hospital to be, and we want to get it completed within a certain time
period. 

If
they continue to provide all these change orders as they have in the past, is
this going to push the extension of this, you know, this program, hospital,
further out? 

Mr. GORRIE.  Potentially. 

Mr. NUGENT.  Potentially.  Have you heard any commitment from the VA that, listen,
we think this is the hospital we want and we want it done now?  Now, there is
always going to be some, I guess, new innovation come out.  But is that how you
build a hospital is to keep stretching this out? 

Mr. GORRIE.  We don't see any need for it to be stretched out.  You can take cherry
and substitute it for vanilla on certain things.  Certain things you can't.

Mr. NUGENT.  Right.

Mr. GORRIE.  And we are not involved in that.  We just get the drawings.  We are
not involved with the selection of the equipment or the discussions of the
impacts that that decision might make. 

Mr. NUGENT.  While we want to have the most effective and state of the art facility
there is, if it never opens, then it doesn't matter what our great intentions
are.  Correct? 

Mr. GORRIE.  Correct. 

Mr. NUGENT.  So at some point in time the VA, and I guess sitting with you, saying
this is our baseline. 

Mr. GORRIE.  That is right. 

Mr. NUGENT.  And unless something comes up that it drastically changes that, we are
moving forward and we want you to get this done.  Is that the direction you are
looking for? 

Mr. GORRIE.  We have to have that.  The project has to have that.  I mean, they
either ‑‑ they either need to ‑‑ they either
are going to terminate us or they got to work with us.  You know, you just
can't let this thing continue down the path that it is on. 

Mr. NUGENT.  It almost sounds like it is time to fish or cut bait.  And the time
clock is ticking on our veterans that need it.  So we got this, when I drove up
here, it is amazing, the exterior of this facility.  I don't know if that helps
in regards to the quality of care.  I doubt it.  The quality of care is what
happens within the mortar. 

And
so what I want to know from you, is if you get a commitment from the VA to
substantially complete this project based upon what you have today, that you
can get this done in a timely manner.  And you are saying the end of 2013. 

Mr. GORRIE.  Yes.  That is what we are saying. 

Mr. NUGENT.  If they continue out, who knows ‑‑

Mr. GORRIE.  We can only control what we know.  But we are willing to do our part. 

Mr. NUGENT.  Well, having, you know, built ‑‑ having been on the
site where we built a facility, a public building, our biggest thing was to try
to ‑‑ was to stay away from change orders.  Because it was
always somebody coming up saying, hey, boss, you know, there is a new wood‑banger. 
There is something new that we can put in place.  And you always had to sit
down and say, can we retrofit later? 

But
we need to get into the facility.  And I guess that is what we need the VA to
commit to is that, while there may be something on the horizon every day, but
let us get this done today. 

So, I
know that representatives from the VA are sitting out there.  I would hope that
we can get all this, you know, in the past behind us and really consider, you
know, what this all ‑‑ what all this means is that it is care
for our veterans that need it the most at the end of the day. 

And
so I would ask again, Mr. Chairman, I appreciate you having this hearing here. 
Thanks very much.

The CHAIRMAN.  Mr. Webster. 

Mr. WEBSTER.  Thank you, Mr. Chairman. 

So
time and money, I guess, those are directly related.  Do you agree with that? 

Mr. GORRIE.  Yes. 

Mr. WEBSTER.  So we squeeze the time; we probably increase the cost.  But that is
just the way it is.  And it wouldn't be any different in any other situation in
any other day at any other project, probably the same thing; correct? 

Mr. GORRIE.  Yes.  There is a point where you cross the efficiency line.  There are
certain parts that we can accelerate that aren't, you know, that we may can
accelerate without costing you a lot of money.  But it depends on which effort
you want. 

So
time is money.  There is no question in that statement.  But as it relates to
this project, that could take a lot of different forms. 

Mr. WEBSTER.  Mr. Chairman, I have a letter from the Secretary that I got last
week I would like to insert into the record, because he does list some of the
dates and so forth.  But more importantly, he does say by October he will have
someone in place that would meet the statutory requirements to run this
construction job.  And I would like to have that for the record. 

I
also have two other letters for the record from UCF, the construction manager
there, and from Orlando Health, of what requirements they would have if they
were doing a project of this kind or projects around the country.  And these
would be for smaller.  And it does match what we have in our own statutes.  So
I would like to put these into the record.

The CHAIRMAN. 
Without objection.

Mr. WEBSTER. 
Yield back. 

The CHAIRMAN.  Miss Brown. 

Ms. BROWN.  Yeah, I am ready for the tour.  But I just have one
statement, and I would like for you all to respond to it.  I would hate to
leave this room, people thinking that change orders are just one‑sided.  And I am not in
construction.  But I do know the VA may have had changes.  But I am sure you
all have change orders also.  That is a part of what you all do.  Correct me if
I am wrong. 

Mr. GORRIE.  No, ma'am.  You are absolutely right.  There is two sides to it.  And
I would say that ‑‑ I would say this job has had, when we have
resolved our changes on the ones that we have resolved ‑‑
which is unfortunately the small things ‑‑ we did it about, I
don't know, 80 to 90 percent.  So, you know, if you could just give us
$0.50 on the dollar until we ‑‑ you know, we are just out a
lot of money.

Ms. BROWN.  Okay, okay.  And you said the small businesses, they are out of money
too? 

Mr. GORRIE.  Yeah.  We all are.

Ms. BROWN.  A lot of small businesses can't absorb as much as big
businesses.  But change orders are the part of when you build
buildings, that is part of everybody, they do that.  I do know that.  You said
that is correct. 

Mr. GORRIE.  Yes, ma'am.  That is correct.

Ms. BROWN.  So we don't want to think it is just the VA changing when you all run
into something or it is something different, then you all come to us and say VA
is the issue. 

But I guess what you have heard from this committee that we want the veterans
facility to be completed and in a time efficient, and that this project is
unique.  People sometimes people think unique is not a pretty thing.  But unique is
this project.  The fact is 25 years overdue is uniqueness. 

But
we have a growing Central Florida community that needs the services and, you
know, Florida is unique.  So all I want to be sure is that we are uniquely
working together to complete it. 

And I would love to see you all complete it.  But basically it is going
to be a team effort.  And we all have to work together, the VA, along with ‑‑
I mean, you all are basically in the driver's seat.  Because if you all do what
needs to happen, then I am sure that it could turn out positive quickly. 

Mr. GORRIE.  Can I comment on the change orders? 

Ms. BROWN.  Yes, sir. 

Mr. GORRIE.  We would love for these to be zero cost change orders.  Brasfield
& Gorrie is certainly not in the business of change orders.  I personally
have never testified.  I have never been in a claim.  I have never even given
my deposition. 

Our
company is founded on avoiding disputes, if at all possible.  If you look back
at our record, we don't have claims.  We just don't have them. 

So,
yes, there is two sides.  But it is almost like we don't want to go to claims. 
We want to resolve them as we go.  We want to ‑‑ we want to
clean up where we are.  And the claims process is a lose.  So we are
committed.  And to date we just don't know where we stand on these
$60 million of changes. 

Ms. BROWN.  But you all are working together.  And you had a meeting August the
1st.  And you have another one on August the 15th.  Is that right? 

Mr. GORRIE.  Yes, ma'am.  That is about the schedule. 

Ms. BROWN.  So then, and I am sure that we all hear you.

Mr. GORRIE.  Okay.

Ms. BROWN.  And that you all are going to work through these issues.  And I feel
very positive about it.  And I hope I feel this positive as when I go and tour
the facility.  It looks good from the outside. 

Mr. GORRIE.  It sure does. 

Ms. BROWN.  But outside is not what we look at.  We going to look
into the interior and see.  Because like I mentioned, I just visit the
facility down in Miami, where the operation room, I mean, is the state of the
art and they were
able to do it 95 percent complete.  Cost a little bit more, I guess, than
what was initially anticipated.  But they serve veterans, Orlando, all the way
down to Miami, state of the art operational room. 

And
so, basically, I know that the state of the art equipment is there and that
they can work together.  And they kept this facility operational while the
veterans was still being served.  So I am hoping we could expedite this
project. 

The CHAIRMAN.  Thank you, Miss Brown. 

Members, any other questions for the second panel of witnesses? 

If
not, thank you, gentlemen, for being here today.  Thank you, VA, for being here
today. 

We
are going to be taking a tour of the facility right after this.  We appreciate
everybody being here to listen to the testimony and this committee. 

I
would ask that all members would have five legislative days to revise and
extend their remarks, add any extraneous material they wish to do.

Without
objection, so ordered. 

The CHAIRMAN. 
And with that this hearing is adjourned.

[Whereupon, at
12:13 p.m., the committee was adjourned.]


APPENDIX


Prepared statement of Chairman Miller

Good morning, and welcome to today’s
House Committee on Veterans’ Affairs Full Committee field hearing, “The New
Orlando Department of Veterans Affairs (VA) Medical Center: Broken Ground,
Broken Promises.”

 I am grateful to my colleagues, our
witnesses, interested members of the community, and – most importantly – the
veterans in our audience today, for joining us this morning as we bring
Congress to Orlando.

 I also want to recognize and thank the
University of Central Florida (UCF) College of Medicine for their hard work and
cooperation in providing us with this space in the heart of the Medical City.

 When ground was broken in October 2008
on what will – eventually - become the new Orlando VA Medical Center, this area
was a mere shadow of what it is today.

 Since then, ideas and plans that existed
on drafting paper and in the minds of architects, designers, and engineers have
evolved into existing infrastructure and active medical and research
institutions.

 As you can tell from the crowds of
backpacks in the hallway, today is the first day of classes this year at the
UCF College of Medicine, which broke ground in 2007 and opened in 2010.

 Behind us is the Sanford-Burnham Medical
Research Institute, which broke ground in 2007 and opened its doors in 2009.

 Next to Sanford-Burnham is the
University of Florida’s Research and Academic Center, which broke ground in
2010 and will open to students and faculty later this year.

 And, across the way is the Nemour
[KNEE-MORE] Children’s Hospital, which broke ground in 2009 and will open to
patients just two short months from now.

 Yet, the new Orlando VA Medical Center
which was scheduled to be complete in October 2012 and an anchor in this
Medical City, is an empty shell.

 Four years and hundreds of millions of
taxpayer dollars later, VA has yet to yield anywhere close to the same results
as its neighbors.

 It was my intention to hold this hearing
at the new Orlando VA Medical Center site.

 However, a forum like this would be
impossible.

 Brand-new, state-of-the-art facilities
all around us are educating students and conducting research – and VA can’t
turn the lights on, much less accept visitors.

 During the Committee’s oversight hearing
in March, VA acknowledged that design errors and omissions, changes in medical
equipment and procurement delays, as well as VA oversight and management
failures led to serious construction delays. 

 In fact, Glenn Haggstrom, who is also
our VA witness today, in response to questioning, stated that “Brasfield and
Gorrie’s credentials in constructing health care facilities are second to none”
and “I am not placing the blame on Brasfield and Gorrie at all.  We fully recognize that we did have problems
…”   

 The end result was a commitment to work
diligently and collaboratively with the contractor to complete construction and
begin serving the veterans and families of Central Florida expeditiously. 

 Yet the intervening months have brought
more finger pointing and little progress. 

 It is perplexing that as recently as
June, the Department provided a Fact Sheet that began by stating that “VA is
working collaboratively with the prime contractor to get construction completed
as soon as practicable,”

Yet, concluded with the statement that
VA “… has issued a Cure Notice to B&G citing the contractors [sic]
inability to diligently pursue the work and to provide suitable manpower to
make satisfactory progress.”

 Today, VA will testify that the Medical
Center is sixty percent complete and on track to open in 2013.

 However, since January, VA has been
telling us that the Medical Center is sixty percent complete and on track to
open in 2013.

Even though the contractor has
repeatedly stated that construction is not sixty percent complete nor is VA’s
timeline realistic.   

 My single interest is the expeditious
completion of this facility for the veterans of Central Florida who have been
waiting almost a decade for the new medical center to open.  

 What this community is capable of is
clear - just look at our surroundings this morning. 

 It is time for VA to finish what it
started here so many years ago.

 Today I want answers as to how we are
going to accomplish this for our veterans. 

 Again, I thank you all for joining us
today.

PREPARED STATEMENT OF GLENN D. HAGGSTROM

Mr. Chairman, Congresswoman Brown and
Members of the Committee, I am pleased to appear here this morning to update
the Committee on the status of the construction of the new VA medical center in
Orlando.  Joining me this morning are Mr.
Robert Neary, Acting Executive Director; Mr. Chris Kyrgos, Supervisory
Contracting Officer; and Mr. Bart Bruchok, Senior Resident Engineer, all with
the VA’s Office of Construction and Facilities Management.

Across the street from where we are now
sitting, a 21st century medical center for Florida’s Veterans is
under construction.  For many years, a
debate took place concerning whether and where this facility should be
constructed.  While design began in 2004,
the decision to build the medical center at the Lake Nona location was made in
March of 2007, with Congress providing funding for the land acquisition in
fiscal year 2008.  Over the next two
fiscal years Congress continued to provide the Department with additional
funding to complete the medical center in a phased approach.  The project is currently funded at
$616,158,000 and VA believes this funding level is sufficient to finish the
project without any additional appropriation by Congress.

Once completed, this facility will contain
134 inpatient beds, a 120-bed community living center and a 60-bed
domiciliary.  In addition, the center
will provide a comprehensive range of outpatient services for Veterans within
the 1.2 million square feet facility.   Our
continuing goal is to complete and activate this facility as quickly as
possible to serve Florida’s Veterans who deserve nothing less.  Although the project has not progressed as
quickly as originally planned, at no time have Veterans been without the care
they require though the existing VA medical center, community based outpatient
clinics and non-VA care.

As VA has stated before, our mission is to
serve Veterans, which includes delivering first-rate facilities.  VA bears the responsibility to manage all
projects efficiently and to be good stewards of the resources entrusted to us
by Congress and the American people.  In
an effort to regain momentum on the project, VA has reallocated its staffing
resources to task more resident engineers, more architects, and more
construction management staff to oversee and support the project.  VA regrets that there are areas in this
project where we have not met our projected delivery schedule.

In the execution of this construction
project, six construction contracts have been awarded.  Work under the first five has been completed
and includes site utilities and grading, an energy plant, hospital foundations
and superstructure, the community living center, domiciliary and chapel, and
the warehouse and parking structures. 
Construction under the final contract for the main hospital and clinic
is underway and approximately 60 percent complete.

Regrettably, this final phase of
construction has experienced problems in two areas; VA’s revisions to the
facility design drawings, and, the slow progress of construction by Brasfield
and Gorrie, LLC, the prime contractor. 

There are three primary areas where we
experienced problems with the design. 
First  errors and omissions were
identified in the drawings related mostly to the electrical system.  These issues were addressed and corrected
drawings were provided to Brasfield and Gorrie in April 2011.  Second, there were design and performance
issues with the roofing systems.  These
issues have been resolved and the roofing systems for the facility are
essentially complete. 

Finally, because of a desire to have the
most up-to-date medical equipment in this new facility, some medical equipment
selections and the associated drawing updates to accommodate installation were
delayed.  In January of 2012, VA and
Brasfield and Gorrie met to discuss the issues surrounding the medical
equipment to be installed in the facility and the availability of the
construction drawings.  Recognizing these
deficiencies, VA issued a partial suspension in the construction of the diagnostic
and treatment area of the hospital.  In
mid-March of this year, the partial suspension was lifted and the last of the
drawing changes associated with the medical equipment changes were corrected
and provided to the Brasfield and Gorrie. 
Brasfield and Gorrie asked for a continuance of the suspension for an
additional eight weeks to enable them to coordinate the changes with their
subcontractors and to increase their work force to a level that would allow
them to fully resume work in accordance with the approved schedule   VA did not approve this request because
Brasfield and Gorrie could and would be expected to continue coordinating
throughout the suspension; thus, they were directed to resume work.  VA was encouraged when Brasfield and Gorrie advised
VA in mid-March that work would resume in the clinic areas by the end of
March.  Unfortunately the level of work
VA expected to take place never materialized and on April 16, 2012 the
contracting officer advised Brasfield and Gorrie of their deficiencies in
pursuing work in the hospital.

While VA continued to work with the
contractor there was increasing concern with the lack of manpower on the job
and progress made in constructing the main hospital and clinic.  As time progressed, the pace of activity at the
job site failed to increase as Brasfield and Gorrie indicated it would and as
required on a project of this magnitude.

On June 15, 2012, the contracting officer
issued a contract cure notice to Brasfield and Gorrie identifying two failures
of the contractor to comply with the VA contract.  The first relates to the contractor’s failure
and in some cases refusal to diligently pursue the work; and the second relates
to the lack of a sufficient workforce on the project. 

On June 25, 2012 in response to the cure
notice, Brasfield and Gorrie committed to increasing the workforce and pursuing
work more broadly within the building. 
In response to the Brasfield and Gorrie’s commitments, on July 10, 2012,
the contracting officer established an evaluation period running through August
9, 2012 and advised the Brasfield and Gorrie that their efforts would be
observed through this period to gauge implementation of its commitments.  VA provided the Brasfield and Gorrie with its
observations on a weekly basis during the evaluation period.  Now that the August 9 date has passed, the
contracting officer will make a determination in the near future as to whether
additional actions are required to ensure that the terms of the contract are
met and that the project moves to a timely completion.

VA remains concerned about the schedule to
complete the project.  Brasfield and
Gorrie has offered several conflicting indications that a more extended
duration is required, including at one point a schedule update stating that
completion would not take place until early 2015; most recently, Brasfield and
Gorrie has predicted that the project will be completed late in 2014 if VA will
fund work on an accelerated basis. 

 VA
continues to believe that the project can reasonably be completed in the summer
of 2013 without additional resources, based on an analysis of the remaining
work.  This completion date was
determined by utilizing the Brasfield and Gorrie approved baseline schedule and
the resources originally planned for by the Brasfield and Gorrie. 

Our ultimate objective is to have this
project completed to specifications as quickly as possible so that it can be
put into service to provide Veterans the high-quality health care they
deserve.  While the evaluation period has
ended, we continue to monitor the efforts of the Brasfield and Gorrie as they
work to complete the project.   

In closing, I would like to report to the
Committee that as a result of the challenges faced on the Orlando project, the
Department has undertaken a comprehensive review of its construction
program.  This review, which includes the
formation of a Construction Review Council chaired by the Secretary, VA has
examined the several programs within the Department related to VA’s physical
facilities including the major construction, minor construction, nonrecurring
maintenance and leasing programs as well as a focused review of the new
hospital projects currently underway. 
This review has identified action items to improve these programs.  One key reform decision already made by the
Secretary as an outcome of the Construction Review Council’s work, is that
prior to including a new major construction project in a budget request, the
project will have been developed to the level of 35 percent design.  This will ensure that the scope of the
requirement is more fully defined and the cost estimate used for budgeting is
more accurate.  It will also enable the
construction contracts for all projects to be awarded in the years in which the
funds are received. 

Other areas identified for review and
improvement include the design-review process and steps that can be taken to
streamline procedures while at the same time ensuring that decision-making is
taken at the appropriate levels within the Department.  We will keep the Committee informed of our
progress in these areas.  The Department
is committed to providing the Veterans of the Orlando area with a state-of-art
facility that the community deserves and that keeps in line with the
Department’s high standards of health care facilities.

Thank you for the opportunity to testify
before the committee today. We are prepared to answer questions that the
members of the Committee may have.

PREPARED STATEMENT OF JIM
GORRIE

Thank you, Mr.
Chairman and Committee Members.

Thank you for the opportunity to meet today in Orlando.  My name is
Jim Gorrie and I am President/CEO of Brasfield & Gorrie.  As you will see today, the VA Medical Center
is an incredible facility.

As discussed at the March hearing, poor
planning by the VA and design errors have plagued our efforts to construct the
VA Medical Center.  In March, the VA not
only acknowledged these problems and confirmed they were acting to correct them;
they also went on to say that Brasfield & Gorrie was not to blame.  Between January and March of this year, the
VA agreed to furnish over forty-five (45) separate design corrections (referred
to by the team as the “Design Blitz”) to get the job back on track. 

The
"Blitz" was a major commitment by the VA that required taking responsibility
for the design errors.  Unfortunately,
the Blitz has grown to include over one hundred (100) separate design corrections
and lasted significantly longer than the VA planned.  We are seeing signs that the changes are
slowing down but just last week we received another significant revision to the
operating rooms and we have been notified that additional changes are coming
for additional structure to support the new medical equipment.  Unfortunately for the project, these areas
are on our Critical Path schedule.  We
are starting to make positive progress with the new design and our team is
anxious to keep the momentum building.  Since the March hearing, we have
almost doubled the manpower working on the job despite the continued changes.

The project desperately needed the Design Blitz.  However, this effort was two (2) years too
late.  For B&G and its subcontractors, this time is lost forever.
 The process requires us to submit a Request for Equitable Adjustment (or
REA) to recover the impact to us and our subcontractors, which was mentioned in
the March hearing.  Our first REA was
valued at $33.6 million, and it is currently unresolved.  The costs of our REA are being carried by us and
our subcontractors.  I sincerely hope the VA will review the entire REA
process in the future as the costs that the general contractor and the
subcontractors have incurred create real financial challenges.  Given our subcontracting plan goals for this project,
including small and disadvantaged veteran owned businesses; this matter is of
real importance.

At the March hearing, the VA committed to
work with us to expedite the project - but things have not gone as we had
hoped.  Despite Tim Dwyer’s (our South
Regional President) and my personal efforts, productive meetings with the VA to
develop a new game plan never happened. 
In June, instead of discussing an accelerated schedule, the VA issued us
a Notice to Cure and threatened to terminate us for default.  We learned about the Notice to Cure via email
approximately ten (10) minutes before the VA held a press conference announcing
its actions.  One reason this was so
strange is that it was just one week after the VA met with us to discuss our
partnering approach. 

A few weeks ago - the VA also withheld $2
million from our monthly payment, without discussion.  This action creates an additional financial
hardship to us.  The VA has also contacted our bonding company for
meetings on several occasions without contacting me directly to discuss their
concerns first.  Our bonding company attended a meeting in Washington,
D.C. at the request of the VA in July. 
This is the first time in our 48 year history our bonding company has
attended such a meeting.  Last month, the
VA gave us the first “Unsatisfactory” rating we have ever received on a
Government project in our 48 year history of doing business - again with no
advanced warning.  As you know - these “Unsatisfactory” ratings are shared
throughout the Government and will have a major negative impact on our ability
to get new work.  We take our reputation and
finances very seriously.  The recent
actions taken by the VA are extremely disturbing.  We have struggled to understand how the VA
could take full responsibility for the multi-year design problem at the March
hearing and 11 weeks later, issue a very public Notice to Cure and Threat of
Termination.  It just doesn’t make sense.

B&G has constructed many large
healthcare facilities and we appreciated the positive comments by the VA at our
first hearing regarding our qualifications. 
This particular hospital has been a job of “firsts” for B&G:  the first time we have had to fund owner
changes into the tens of millions of dollars, the first time our bonding
company has been called to get involved, the first time we have testified at a
congressional hearing, the first time we have received an “Unsatisfactory”
rating and unfortunately the list is growing.

Our contract requires us to provide a
revised schedule for completion with each monthly pay request.  Our July
pay request forecasts a completion in November 2014 based on the approved
schedule which the contract requires us to follow.  During the VA’s Notice
to Cure 30-day evaluation period, we were instructed to provide a new
“obtainable” schedule.  We updated our
contract schedule for completion of the entire building and presented it to the
VA.  We also proposed a detailed
alternative, accelerated contract schedule which included us working in more
areas.  This schedule showed completion
of the clinic in 2013 and the reminder of the facility by April 2014.  We have not received any feedback on these
schedules in the past two weeks.

For months the VA has mentioned
completion dates in the summer of 2013; but to date they have not been willing
to disclose the detailed logic they are using to reach that conclusion.  From preliminary reports, we know their
analysis is not apples-to-apples with ours and does not include the most
current information, including major changes issued during the Blitz.  Last week, the VA asked if we could possibly
make a late 2013 construction completion date. 
We said we thought it was possible; however, it would come at a higher
premium than our suggested schedule. 
Nevertheless, we are proceeding with the development of a plan to
complete the entire project in 2013, should the VA decide to adopt and support
it.  It is our desire to complete the
project as soon as possible, and we hope that the VA will support and pay for
our efforts to do so. We look forward
to hearing back from the VA and hope that a new, obtainable completion date
will be established in the next few weeks.

Our team has been raising the red flag since the first month of the job.  We need direction immediately if we are to
complete in 2013, and the VA, the Hospital and the Design Team must support it.
  The challenges we have faced over the last two years in just keeping
everyone working on the job have been a major effort.   I would like
to personally thank everyone on the job - especially our subcontractors for
hanging in there with us even though we have not yet reconciled our schedule
issues and even though we are still dealing with nearly $30 million of unresolved
Change Order Requests (which does not even include costs associated with our
REA mentioned earlier and recent Change Order Requests).

We also think it is important that you
understand that the VA keeps stating the project is 60-70% complete in terms of
dollars - but these discussions ignore all the pending changes, current changes
and REA's on the project which ultimately represent the true cost of the work.    

The most important thing this job needs today is clear, open and direct communications.
 We reiterate our eagerness to explore an expedited completion of the
project.  The threats of default termination should stop. The only
thing that could push this job over the edge into the “Twilight Zone” would be
a termination.  I can’t even imagine what
such an action would cost the taxpayers, not to mention the delays in opening
the Hospital to our veterans.  Such an
action would also have a devastating effect on all the workers employed on the
jobsite.  At this stage in the game, no one can complete this project
faster or more economically than Brasfield & Gorrie.

In closing, we welcome face to face
working sessions with the VA and are available to answer any questions you may
have about our current progress.  We sincerely desire to finish this
project.  It is a wonderful facility and
we are excited for you to see it today.  Thank
you again for your time and we have enclosed a few very simple exhibits with
our written comments to hopefully help give you a better feel for the status of
the overall project.  

Thank you for your continued time and
interest.


MATERIAL SUBMITTED FOR THE RECORD

Honorable Jeff Miller, Chairman, Committee on Veterans' Affairs to
Honorable Eric K. Shinseki, Secretary, U.S. Department of Veterans Affairs

June
22, 2012

Honorable Eric K. ShinsekiSecretary

U.S. Department of Veterans
Affairs

810 Vermont Avenue, NW

Washington, DC  20420

Dear Mr. Secretary,

I am writing to express my deep
concern about the impact the Contract Cure Notice issued by the Department of
Veterans Affairs (VA) to Brasfield and Gorrie, LLC, (B&G) the prime
contractor for the hospital and clinic build out of the new Orlando VA Medical
Center, on Friday, June 15, 2012, will have on the completion of the project. 

My single interest is the
expeditious completion of this facility for the veterans of Central Florida who
have been waiting almost a decade for the new medical center to open.  

It is perplexing that in the Department’s
June 2012 Fact Sheet Update, the opening paragraph states that “VA is working
collaboratively with the prime contractor to get construction completed as soon
as practicable.”  Yet, the fact sheet concludes with the statement that VA “… has
issued a Cure Notice to B&G citing the contractors [sic] inability to
diligently pursue the work and to provide suitable manpower to make
satisfactory progress.”

This project from the start has
been compromised by the lack of oversight by VA leadership in addition to being
fraught with design deficiencies, medical equipment and procurement delays, a
bevy of change orders, and communication issues.

I respectfully request that you
respond in writing by June 30, 2012, with a report calculating the impact should
VA ultimately act to terminate B&G’s contract for default and providing an
integrated master schedule for moving forward. 

The report should include the
following:

a.      
A detailed list of any and all costs associated with a termination for
default to include legal actions, project transition logistics with regard to
project familiarity, management, mechanism, and repurchase of same or similar
services;

b.     
A complete and updated baseline and timeline for project completion and
an explanation as to how this will accelerate construction; and,

c.      
A detailed list of additional resources needed to complete the project. 

I appreciate your cooperation and
look forward to receiving this information.

Sincerely,

JEFF MILLER                  

Chairman

Honorable Eric K. Shinseki, Secretary, U.S.
Department Veterans' Affairs to
Honorable Jeff Miller, Chairman, Committee on Veterans Affairs

August 9, 2012

The Honorable Jeff Miller

Chairman

Committee on Veterans' Affairs

U.S. House of Representatives

Washington, DC 20515



Dear Mr. Chairman:

    Thank you for your letter regarding the contract cure
notice issued to the prime contractor, Brasfield and Gorrie (B&G), and issues
affecting construction of the new Department of Veterans Affairs (VA) Medical
Center in Orlando, Florida.  I share your interest in the expeditious
completion of this facility for the Veterans of Central Florida.  The delay
in responding was necessary to consider B&G's response to the cure notice.

    You specifically asked that I provide a report calculating
the impact to the project if VA ultimately terminated the subject contract. 
VA continues to work with B&G to complete the Orlando project.  The VA's
contracting officer clearly stated the government's expectations to B&G in a
July 10, 2012, letter:  VA will evaluate B&G's performance in resolving the
issues identified in the cure notice (specifically, B&G's not diligently
pursuing work and not providing a sufficient workforce on the project) at the
conclusion of the 30-day period referenced in the letter.

    A report detailing the costs, project baseline and
timeline, and additional resources needed should VA ultimately terminate B&G's
contract for default is premature.  While VA can generally provide
potential alternate scenarios for completing the project, the development of
true cost, scheduling, and resource information would depend on the specific
method of completing the project after termination.  In this regard, note
the following:

        Scenario 1:  If the surety
completes the project, minimal down time is expected during the transition. 
In this scenario, 4 to 6 months would be added to the projected completion of
summer 2013.  However, VA   does not anticipate the need to
request additional funds.  VA cannot predict the costs that might be
associated with possible legal actions that may result from B&G's termination.

        Scenario 2:  If the surety is
unable to complete the project, VA would reprocure.  This entails
approaching the original bidders and determining their ability to complete the
project.  If the prior bidders are unable to meet VA's requirements, VA
would be required to issue a new solicitation which would add 8 to 10 months to
the project completion date of summer 2013.  If VA must reprocure, this may
involve additional costs based on market conditions; however, at this time VA
believes there would be adequate funds to complete the project and we do not
anticipate a need to request additional funds.  VA cannot predict the costs
that might be associated with possible legal actions that may result from B&G's
termination.

    VA will continue to closely monitor this project. 
Should you have any further questions, please have your staff contact Mr. Robert
Madden, Congressional Relations Officer, at (202) 461-6470 or by e-mail at
robert.madden@va.gov.

    Thank you for your continued support of our mission.

Sincerely,

          Eric K.
Shinseki