Kiewit-Turner stopping construction on the new Veterans Affairs Hospital in Aurora

Federal appeals court: VA breached contract

Construction of the new Veterans Affairs Hospital in Aurora is going to stop, according to the construction group that has been doing the work.

The spokesman for Kiewit-Turner joint venture said in a statement today that the group notified the VA that it will "immediately cease all work on the project and begin a safe and orderly process to secure the site."

The United States Civilian Board of Contract Appeals heard the case between Kiewit-Turner and the VA. It determined that the VA breached its contract by failing to provide a design that could be built for $582,840,000 and the court allowed Kiewit-Turner to stop work because of the breach. It's estimated that the project now costs more than $1 billion.

Document Links (courtesy Denver Post):

Tom Janssen, spokesperson for Kiewit-Turner, issued the following statement regarding Tuesday's decision by the Civilian Board of Contract Appeals:

"The CBCA agreed with Kiewit-Turner that the VA failed to fulfill its fundamental contractual obligation to manage this project and produce a design that could be built for $604 million, the VA's budget for the project authorized by Congress. As currently designed, the project will cost more than $1 billion. During the CBCA hearing VA documents and testimony by VA officials revealed that the VA intentionally forced Kiewit-Turner to finance the project by demanding that they continue construction even though third-party construction and design experts showed the project was going to be significantly over the VA's budget."

Key quotes from the CBCA decision:

"KT cannot be adequately compensated for the VA's failure to provide a design which could be constructed for the ECCA."

"… the agency does not have sufficient funds to pay for construction of the entire project as currently designed and has no plans to ask for money."

"As a matter of law, KT has the right to stop performance."

 "We find that beyond doubt, the VA's breach of its contract with KT was material."

 "… the behavior of the VA has not comported with standards of good faith and fair dealing required by law."

"Certainly it was a breach of contract, that part wasn't surprising," Rep. Mike Coffman, R-Colorado, told 7NEWS by phone from Washington, D.C.  "The general contractor to walk off the job or leave the site, I think is disturbing."

A construction worker told 7NEWS reporter Marshall Zelinger that an announcement was made after noon, letting crews know that everyone had to be off the job site by 5 p.m.

That worker provided 7NEWS a letter that alerted subcontractors to tell their personnel to not show up for work tomorrow.

"Immediately inform your craft and other personnel assigned to this project that the jobsite is closed and they should not report to the project jobsite tomorrow morning," the letter stated.

The worker also said he knows many construction workers who live paycheck-to-paycheck each Friday and now they will not be paid before the holidays.

"We've got a project that is in total chaos," said Coffman.

"What's appropriate for a delay in this project?" asked Zelinger.

"There's no appropriate time," said Coffman. "We've got to get this hospital built, but also have to do everything we can to bring down the cost."

"Could this become a blight in Aurora?" asked Zelinger.

"No, it's not going to become a blight in Aurora. Well, we've got to prevent that from happening," said Coffman.

Coffman has asked for the Army Corps of Engineers to take over management of the project to help lower the costs. He said they have built similar hospitals on military establishments and are able to do these types of projects on time and on budget.

"Right now, if I were to go before the Congress and say, 'Hey, we need $400 million more to build this hospital, that's way, way over budget and way behind schedule,' I don't know I'd get that kind of support," said Coffman. "The very people; they are so incompetent, it's just a culture of incompetence; the very people who drove this project into a ditch got bonuses, cash bonuses, for doing a good job. How did they do a good job when they were hundreds of millions of dollars over budget and years behind schedule?"

Kiewit-Turner said it had spent $100 million out of pocket to keep the project moving.

"I'll be calling a meeting for the Colorado delegation to come together and calling the Veterans Administration to be a part of that meeting," said Coffman. "As a veteran myself, I couldn't be more disappointed in the Department of Veterans Affairs for their total mismanagement of this."

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