[House Hearing, 112 Congress]
[From the U.S. Government Printing Office]





                   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               BOB FILNER, California, Ranking
DOUG LAMBORN, Colorado               CORRINE BROWN, Florida
GUS M. BILIRAKIS, Florida            SILVESTRE REYES, Texas
DAVID P. ROE, Tennessee              MICHAEL H. MICHAUD, Maine
MARLIN A. STUTZMAN, Indiana          LINDA T. SANCHEZ, California
BILL FLORES, Texas                   BRUCE L. BRALEY, Iowa
BILL JOHNSON, Ohio                   JERRY McNERNEY, California
JEFF DENHAM, California              JOE DONNELLY, Indiana
JON RUNYAN, New Jersey               TIMOTHY J. WALZ, Minnesota
DAN BENISHEK, Michigan               JOHN BARROW, Georgia
ANN MARIE BUERKLE, New York          RUSS CARNAHAN, Missouri
TIM HUELSKAMP, Kansas
MARK E. AMODEI, Nevada
ROBERT L. TURNER, New York

            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

                                                                   Page
The New Orlando VA Medical Center: Broken Ground, Broken Promises     1

                           OPENING STATEMENTS

Chairman Jeff Miller.............................................     1
    Prepared statement of Chairman Miller........................    54
Senator Bill Nelson..............................................     3
Hon. Corrine Brown, Democratic Member............................     4

                               WITNESSES

Mr. Glenn D. Haggstrom, Principal Executive Director, Office of 
  Acquisitions, Logistics, and Construction, U.S. Department of 
  Veterans Affairs...............................................     5
    Prepared statement of Mr. Haggstrom..........................    55

Accompanied By:

Mr. Robert L. Neary, Jr., Acting Executive Director, Office of 
  Construction & Facilities Management, U.S. Department of 
  Veterans Affairs...............................................     5
Mr. Chris Kyrgos, Supervisory Contracting Officer, Office of 
  Construction and Facilities Management, U.S. Department of 
  Veterans Affairs...............................................     5
Mr. Bart Bruchok, Senior Resident Engineer, Office of 
  Construction and Facilities Management, U.S. Department of 
  Veterans Affairs...............................................     5
Mr. Jim Gorrie, President and Chief Executive Officer, Brasfield 
  & Gorrie.......................................................    32
    Prepared statement of Mr. Gorrie.............................    57

Accompanied By:

Mr. George Paulson, Vice President/Division Manager, Brasfield & 
  Gorrie.........................................................    32

                   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...........................................    59
    Honorable Eric K. Shinseki, Secretary, U.S. Department 
      Veterans' Affairs to Honorable Jeff Miller, Chairman, 
      Committee on Veterans Affairs..............................    59

 
   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 2 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 timeline 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 prepared statement of Chairman Miller appears on p. 
54.]

              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 timeline 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 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 were 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 5-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 5 months ago, in March, we are having another 
hearing on the same facility.
    I hope this is not political, because the Veterans' Affairs 
Committee has 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 interfering--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 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 workforce on the project.
    On June 25th, 2012, in response to the cure notice 
Brasfield & Gorrie committed to increasing the workforce 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 prepared statement of Glenn Haggstrom appears on p. 
55.]
    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 [continuing]. 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 workforce.
    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 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. Mrs. 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 [continuing]. 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 2 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 7 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. Mrs. 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 2 
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 2-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 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 6-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 8- to 10-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 Mrs. 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 timeline?
    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 3 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 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 [continuing]. 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. Mrs. 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 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 [continuing]. 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 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 2 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 
1 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 2 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 2 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 prepared statement of Jim Gorrie appears on p. 57.]
    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 timeline 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 to deal with--you know, we 
have shared with you the $60 million of outstanding changes. 
They have 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. Mrs. 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 [continuing]. 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 [continuing]. 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 are 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 are 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 [continuing]. 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 1 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. 59.]
    The Chairman. And you are yielding back.
    Mr. Bilirakis. I will yield back.
    The Chairman. Mrs. 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 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.]



                            A P P E N D I X

                              ----------                              

                 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 through 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 8 
weeks to enable them to coordinate the changes with their 
subcontractors and to increase their workforce 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 1 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 health care 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 remainder of the facility by April 2014. We 
have not received any feedback on these schedules in the past 2 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 2 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 percent 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. Shinseki
Secretary
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