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- Addressed

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- Partially Addressed

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- Not Addressed

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- Consolidated or Other

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- Pending

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- Closed-Partially Addressed

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- Closed-Not Addressed

Year Identified: 2017

Area Number: 20

Area Type: Cost Savings & Revenue Enhancement

Action:

The Secretary of Veterans Affairs should establish a mechanism to monitor the extent that major medical facility construction projects are following guidelines on change order time frames and design changes.

Progress:

The Department of Veterans Affairs (VA) addressed GAO’s March 2017 recommendation by acquiring a new system to monitor change orders and design changes. According to information VA provided to GAO in July 2017, VA began collecting data on the time frames to approve change orders, as well as the length of time that pending change orders have been open. The new system also tracks milestones in the change order process and generates a report that assigns responsibility for ensuring that change orders are completed. VA also revised its Contract Modification Manual, which establishes processing time frames for change orders on construction contracts, to require that these data are to be used. Finally, in May 2018, VA confirmed that it had begun collecting data on the reasons why change orders arise (i.e., design changes). The system requires engineers to enter these data to create a change order in VA’s system. As a result of these actions, VA is in a better position to determine how processing time frames and design changes affect costs and schedule, and thus can better avoid cost increases and schedule delays on its medical facility construction projects.

Action:

The Secretary of Veterans Affairs should develop an activation cost estimate for the Denver project that is reliable and conforms with best practices as described in the GAO Cost Estimating and Assessment Guide.

Progress:

The Department of Veterans Affairs (VA) has not developed an activation cost estimate for the Denver project that is reliable and conforms with best practices, as GAO recommended in March 2017. While VA took steps to develop an activation cost estimate, GAO’s analysis of VA’s updated information indicated that the estimate did not meet best practices. Specifically, the VA Denver hospital activation cost estimate partially met three and minimally met one of the four characteristics of a reliable cost estimate as described in the GAO Cost Estimating and Assessment Guide. In October 2018, VA indicated it does not plan to develop another activation cost estimate because activation is expected to be complete in early 2019. Therefore, GAO is no longer assessing this action. GAO maintains that developing a reliable activation cost estimate would have helped VA better avoid cost increases for the Denver project and improve management of the project.

Action:

The Secretary of Veterans Affairs should clarify policies to require that (1) all projects have an integrated master schedule to ensure that the integrated master schedules include and link all construction and activation activities; and (2) the policies on integrated master schedules for projects managed by the Department of Veterans Affairs (VA) and the U.S. Army Corps of Engineers (the Corps) be consistent.

Progress:

VA has addressed GAO’s March 2017 recommendation by clarifying various policy documents to reinforce that all projects develop and maintain an integrated master schedule. Additionally, VA revised its policy to require that projects that the Corps manages also develop an integrated master schedule. Ensuring that all projects have an integrated master schedule that includes and links all construction and activation and clarifying VA’s policies to ensure that VA’s and the Corps’ projects are consistent will help VA avoid schedule delays and better manage its major construction projects. 

Action:

The Under Secretary of Health should work with the Department of Veterans Affairs’ (VA) Office of Construction and Facilities Management to ensure that the Veterans Health Administration (VHA) incorporates the 12 steps in the GAO Cost Estimating and Assessment Guide in VHA’s updated construction projects’ cost-estimating guidance.

Progress:

The Veterans Health Administration (VHA) concurred with GAO’s July 2018 recommendation to update its construction projects’ cost-estimating guidance, and has taken some steps to do so. In August 2019, GAO re-assessed VHA’s guidance and found that the guidance improved in two of the 12 cost estimating steps. However, in November 2019, officials in the Veterans Affairs Office of Construction and Facilities Management said they were reviewing GAO’s Cost Estimating and Assessment Guide, but do not have plans to do a further update. Until VHA takes further steps to incorporate GAO’s cost estimating steps into its projects’ cost estimation, VHA lacks reliable and valid cost estimates that management can use for making informed decisions.

Action:

The Under Secretary of Health should establish, at the central office level, a mechanism to monitor and review Minor Construction and Non-recurring Maintenance contract modifications that are taking longer than the established target time frame.

Progress:

The Veterans Health Administration (VHA) concurred in principle with GAO’s July 2018 recommendation, and has addressed it. In January 2019, GAO confirmed that VHA set up a mechanism at the central office level that reviews contract modifications on a biweekly basis by the Chief of Facilities Management or equivalent and a Supervisory Contracting Officer or Branch Chief. In May 2019, VHA provided documentation of a mechanism providing for a review between the Medical Center Director and the Director of Contracting for modifications not executed within 60 days. As a result, the Department of Veterans Affairs central office is better positioned to help ensure VHA addresses any potential problems with contract modifications.

Action:

The Under Secretary of Health should obtain information on cost increases, schedule decisions, and reasons for contract modifications in its updated Capital Asset Database through requiring medical center staff to provide the information or another appropriate method.

Progress:

The Veterans Health Administration (VHA) concurred with GAO’s July 2018 recommendation. As of October 2019, VHA reported making improvements to the Capital Asset Database, such as tracking the cost of contract modifications for active construction projects through both the Capital Asset Database and VHA’s Financial Management System. However, VHA needs to provide GAO documentation supporting these changes. Without accurate data and full information on cost increases, schedule decisions, and reasons for contract modifications, VHA’s ability to monitor over $1 billion of Minor Construction and NRM program funding is limited