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

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.