Opportunity To Reduce the Cost of Building VA Medical Facilities

HRD-82-28: Published: Dec 30, 1981. Publicly Released: Dec 30, 1981.

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GAO was requested to review the Veterans Administration's (VA) medical facility construction program. GAO concentrated on: (1) the reasons for cost growth in the program; (2) the reasons for large numbers of changes to design and construction contracts; and (3) the costs that these changes added to projects.

The VA construction program has changed significantly since the projects GAO reviewed were being designed and constructed. Congressional concerns about cost growth in the major construction program prompted: (1) Congress to enact legislation to control the growth of VA projects beyond their original cost estimates; and (2) VA to create an Advanced Planning Fund to enable it to provide Congress with better cost estimates. Although it is too soon to fully evaluate the effectiveness of these actions, they should enable VA to submit better cost estimates to Congress and will provide an upper limit cost control on approved projects. The time it takes to complete medical facility construction projects could be reduced by extending the Advanced Planning Fund to allow VA to contract for final designs while Congress reviews the projects. This could reduce overall project costs by minimizing the effects of inflation. However, there would be the added risk that, if Congress did not approve or fund a project so designed, the final design costs would be wasted. Whether the change should be made rests largely on the confidence that the Subcommittee on Hospitals and Health Care has in the VA ability to identify and prioritize its construction requirements.

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