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Witness Testimony of John P. O’Keefe, President, National Group Clark Construction Group LL

Chairman Miller, Ranking Member Filner, Members of the Committee, My name is John O’Keefe and I am the President of the National Group for Clark Construction Group, LLC.  I would like to thank the committee for the opportunity to address two Veterans’ Administration (VA) hospital construction projects, the VA Hospital in Las Vegas, Nevada and the VA hospital in New Orleans, Louisiana.

Clark/Hunt Collaboration

In 2008, the Department of Veterans Affairs selected the joint venture of the Clark Construction Group and the Hunt Construction Group to construct the new Medical Center in Las Vegas, Nevada.  The Clark/Hunt team has over thirty years of experience working together to deliver a number of successful projects for our clients.

Clark Construction Group, LLC, founded in 1906, is today one of the nation's most experienced and respected providers of construction services, with  $4 billion in annual revenue and major projects throughout the United States.   In 2011, we ranked ninth in the United States on the Engineering News Record Top 400 list. 

Clark Construction performs a full range of construction services throughout the United States from small interior renovations to some of the most visible architectural landmarks in the country.  Some notable completed projects include Walter Reed Medical Center in Washington DC, and the San Antonio Military Medical Center in San Antonio, Texas.   The foundation of all of our construction work is a solid relationship with both public and private clients who have the confidence to rely, time and again, on our experience, and in-house expertise to make their vision a reality.

We approach each project with a cooperative mindset, working with clients, architects, subcontractors and the community toward the common goal - successful project delivery.  Our diverse construction portfolio and specialized divisions and subsidiaries ensure that each project is matched with appropriate resources and expertise.  Through technical skill, pre-construction know-how and self-performance capability, we anticipate project challenges, develop solutions that meet clients' objectives and ultimately deliver award-winning projects.  In this way, our work today continues to meet the stringent standards of safety, quality and integrity, which have been the Company’s core values since its founding.

Hunt Construction Group (“Hunt”), another of the country’s largest construction companies, has been in business for over sixty-six years and is headquartered in Scottsdale, Arizona.  Hunt was built on a simple, yet powerful philosophy, “do the job right”. This philosophy has proven to be Hunt’s lasting foundation.  With over $1.7 billion in revenues, in 2011 Hunt ranked twenty seventh in the United States on Engineering News Records Top 400 list.

Strong client relationships are as important to Hunt as Hunt’s construction expertise.  Both are needed to get the job done on time, in a cooperative manner, and in a way that meets the client’s needs. Hunt and their clients understand that at the end of the day they want the same thing, something both the client and Hunt are proud to put their names on.

Hunt’s portfolio encompasses nearly every type of project.  Significant projects include the San Antonio Military Medical Center hospital in San Antonio, Texas, and other healthcare facilities, as well as a variety of stadiums, government buildings, infrastructure and other significant projects throughout the United States.

VA Medical Center, Las Vegas Nevada

The Las Vegas VA Medical Center Project was awarded to Clark/Hunt, a Joint Venture in September 2008, and the notice to proceed was issued on October 22, 2008.  The original contract completion date was August 22, 2011, and due to time extensions granted for changes to the project, the contract completion date was extended to December 12, 2011.  The project was completed on time.  The VA has begun their activation of the project including installation of medical equipment, training and maintenance of facilities.  The VA has informed us that the Las Vegas VA Medical Center will begin treating patients by mid-summer of this year.

With the original contract work now complete, we are in the final stages of the punchlist and commissioning.  Clark/Hunt also received a change to modify the Mental Health Ward to accommodate revisions to the VA Design Guide issued after the September 2008 contract award.  This work is well underway and scheduled to be completed next month.  These revisions will not affect activation or occupancy.

The VA Medical Center in Las Vegas maintained the schedule throughout the project including adjustments for modifications requested by the Veterans Administration.  On this project, Clark/Hunt and the VA had an outstanding relationship.  Our relationship and the open communication between Clark/Hunt and the VA proved critical in making this Project a success.  Working through the VA Medical Center's liaison, we were able to actively coordinate the early stages of occupancy including services provided by their independent suppliers and the delivery of materials and equipment for activation.   We believe that this project was a great success for both Clark/Hunt and the VA.

Clark McCarthy Collaboration

In 2009, the Department of Veterans Affairs selected Clark McCarthy Healthcare Partners in association with Woodward Design+Build and Landis Construction, as the contractor for the New Orleans VA Replacement Hospital.  The team of Clark Construction Group, LLC, and McCarthy Building Companies, Inc. and New Orleans-based business partners, Woodward Design+Build and Landis Construction has a combined successful history of more than 400 years of continuous healthcare construction operations.

McCarthy Building Companies, Inc. (“McCarthy”), founded in 1864, and headquartered in St. Louis, Missouri, is the oldest privately held construction firm in the United States as well as one of the nation’s leading healthcare builders.  Current projects for the VA include the Southeast Louisiana Veterans Healthcare System Replacement Hospital, New Orleans, Louisiana, the 80 Bed Acute-Psychiatric Facility in Palo Alto, California and the Design Build Cogeneration Facility in Dallas, Texas. McCarthy is proud to be a 100% employee-owned firm, currently employing over 1,400 professionals and providing a wide range of construction related services under construction management, general contract and design/build contractual arrangements. McCarthy has successfully managed projects in 45 states and has annual revenues approaching $3 billion.

McCarthy has been building hospitals for over a century and is the largest American-owned Healthcare Builder in the United States. The company has been ranked among the top healthcare construction managers in the nation for the past 25 years, each and every year since they began keeping lists. McCarthy has provided construction services for over 650 major hospital projects. Over the last three years, McCarthy has delivered or is currently constructing over $2.4 billion in federal construction projects.  With each project, McCarthy focuses on serving our military and federal clients by bringing state-of-the-art construction innovation to each project.

The Clark McCarthy joint venture has successfully provided construction services since 2002.  In the past 10 years, the two firms have realized a total of nine projects completed or underway together, representing over $4.5 billion in construction value.  In addition to the New Orleans VA Replacement Hospital, Clark McCarthy is also building the Marine Corps, Camp Pendleton Replacement Hospital in Oceanside, California, the Stanford University Medical Center Adult Replacement Hospital in Palo Alto, California, and the California Department of Corrections and Rehabilitation/California Prison Health Care Services Health Care Facility in Stockton, California.

In short, the Clark/McCarthy joint venture is a proven, integrated team whose systems, protocols and most importantly – relationships and culture – have been successfully merged delivering outstanding results for clients and partners.

Southeast Louisiana Veterans Healthcare System Replacement Hospital, New Orleans, Louisiana

The Joint Venture of Clark McCarthy Healthcare Partners proposed on the Southeast Louisiana Veterans Healthcare System Replacement Hospital and received notice of award on October 1, 2009.  The contract utilizes an Incentive Price Revision Successive Targets Contract, using a Target Price and a Ceiling Price approach to manage costs.  Almost immediately upon award, but prior to a notice to proceed, the project was protested to the U.S. Government Accountability Office by one of the other proposers. While the protest was ultimately denied, it delayed the Notice To Proceed and the start of the preconstruction services until February 11, 2010. 

We mobilized in New Orleans and the preconstruction services began in February 2010 immediately upon receipt of the Notice to Proceed.    In addition to contractually required deliverables, Clark McCarthy worked closely with the design team, the VA Construction and Facilities Management Office and the VA Medical Center staff to manage and reduce overall project cost, expedite procurement activities, and mitigate the impact of the time lost during the protest.

Originally it was contemplated that the preconstruction services would run concurrently with the first phases of construction.  Because of the protest and further design development, preconstruction services were extended by approximately one year through mutual agreement between Clark McCarthy and the VA. The start of the first phase of construction was further delayed, as there were problems related to the land acquisition by the VA. The Pan American Life Building, originally slated to be turned over to the VA by the City of New Orleans in November of 2010, was not in the VA’s possession until August of 2011.  In an effort to reduce the impacts of the time lost, Clark McCarthy worked closely with the VA to develop an early demolition and abatement package for the Pan Am building. We received Notice to Proceed with this work on September 30, 2011. The early package was critical in ensuring that the Pan American Life insurance building could be renovated and turned over early for VA Medical Center administrative offices.  The remaining property was originally scheduled to be available for construction in April of 2010, but was delayed until July 2011. During that time period, Clark McCarthy worked with the team to obtain final designs for the first phases of the earthwork, allowing Clark McCarthy to procure the work prior to the state’s completion of the property turnover.  The delays caused by the property turnover, along with the continual refinement of the design necessitated that the preconstruction effort would continue through the end of 2011.  The VA was able to provide Clark McCarthy with a Notice to Proceed on the first phases of earthwork on May 12, 2011.

During the final phases of the property turnover, and after the original Notice to Proceed for the earthwork was issued, the Louisiana State Historical Preservation Office began to investigate the cleared site to determine if any items of historical significance were discovered on the property.  Work at the site was suspended after articles of historic significance were located.  The archeological investigation began in July 2011 and continued until December 2011.  During the investigation contaminated soils and underground storage tanks were also identified.  While largely concurrent, these discoveries, not unusual to large urban sites, were dealt with in cooperation between Clark McCarthy, the VA, their consultants and the Louisiana Department of Environmental Quality.  The property, once free of encumbrances, was fully released to Clark McCarthy for construction commencement on February 12, 2012, and work resumed on February 22, 2012. Our team was able to quickly mobilize and begin work on the site due to the preplanning and coordination between Clark McCarthy and the VA, which helped mitigate further delays.   As of this date work is underway and moving along in accordance with our plan and schedule.  Completion of the project is planned to occur in 2016. 

The Clark McCarthy team and the VA are determined to complete our work as quickly as possible while maintaining our stringent standards for safety, quality and integrity. To ensure a timely completion of this important project, cooperation, coordination, and effort will be required from all parties. 

I want to thank you for this opportunity to testify today and would welcome any questions you may have.

Thank you.