In addition to improving its responsiveness to veterans' medical problems, the U.S. Dept. of Veterans Affairs needs to revamp its construction strategies and practices on big hospital projects and possibly hand off construction to public-private partnership concessionaires. Two hospital projects, in Aurora, Colo., and Orlando, Fla., show how the VA comes up short on large, complex new hospitals.
The Orlando project, on which the prime contractor is Brasfield & Gorrie, is over two years behind schedule and the contractor says it is owed $48.7 million. Kiewit-Turner, the prime contractor in Aurora, has asked to be released from its contract, saying the price of the hospital that it agreed to build for $604 million will cost hundreds of millions more. The VA has said the contractors must stick to the promised construction prices and in both cases the contractors have submitted appeals over defective designs, change orders and VA-caused delays to the U.S. Civilian Board of Contract Appeals.
These two projects are not by any means representative of VA's construction record, which has been mixed. The VA has completed numerous projects, big and small, without such disastrous conflict, including many more small facilities and leased quarters. To be fair, the VA has labored under daunting circumstance, with expanding responsibility for millions of new Iraq and Afghanistan war veterans and serving older veterans who require more care.
The stresses on the agency, which struggles with its operations despite a budget that has tripled to $151 billion since 2000, suggest that complex construction and hospital ownership could be outsourced to the private sector. A VA hospital P3 has been discussed for Mission Bay, Calif. For the VA to get serious about P3s, however, will likely require a dedicated office and staff.
No one is suggesting that P3s are a panacea, even in Canada, where they are widely used for hospital construction. Any VA hospital P3 must be justified not only on the basis of budget savings but also on the basis of the best use of taxpayers' funds.
The Senate Appropriations Committee seems to recognize the need for construction changes at the VA. A military construction and VA appropriations bill, adopted May 22, says the VA should work collaboratively with other federal agencies, private contractors and non-government experts to explore new funding mechanisms, including private development.
This would be a good first step. We have no illusions about P3s as a cure-all, especially considering the risks that concessionaires shift to design-build contractors. But building new hospitals today is so complex that it is unfair to ask the VA to do it all while fulfilling its challenging operational mission.