A Department of Veterans Affairs official found himself on the defensive Tuesday when a House lawmaker grilled him over bonuses he was awarded after various VA construction projects have experienced long delays and multi-million-dollar cost overruns.
Rep. Tim Huelskamp, R-Kan., pressed Glenn Haggstrom, principal executive director of the VA’s construction office, on whether Haggstrom deserved bonuses in light of critical reports on VA construction from the Government Accountability Office.
GAO officials released a report on VA contracting last week that found cost overruns of 58 to 144 percent at four ongoing projects with delays that will run from 14 to 74 months past the original completion date. The GAO found that while some cost overruns and schedule delays are out of the VA’s control, the department’s management processes contribute to the problems.
Huelskamp came prepared to hit Haggstrom on bonuses, which both House and Senate lawmakers have criticized over the past year. However, lawmakers typically target the VA’s backlog of claims among Iraq and Afghanistan war veterans.
“In 2009, you received a $20,470 bonus. In 2010, you received an $18,022 bonus. In 2011, you received a $16,300 bonus. All on top of your base pay,” Huelskamp said. “Given this GAO report and what we’ve heard here, do you really think you deserve those bonuses?”
“Congressman, those bonuses were not determined by myself. Those bonuses were determined by my supervisors and the senior leadership at VA, and with all due respect I think you should take it up with them,” Haggstrom replied.
As the verbal exchange continued, Haggstrom said he presumed the bonuses were based on performance during those years, but that no one specifically told him why he was getting them.
“These folks give you a very big bonus, multiple years in a row, in [spite] of these GAO reports and you claim not to know why you got a bonus,” Huelskamp said. “Bonuses are not given just because -- they’re given for performance. If I was giving bonuses here, we’d actually dock your pay.”
Haggstrom, though unflappable throughout Huelskamp’s questioning, did push back against Huelskamp’s repeated references to the overruns, even as he acknowledged problems with the system.
“I think you need to put those cost overruns in context,” he said.
“I’m putting it in a bonus context,” Huelskamp interjected, prompting a quick response from Haggstrom.
“No,” the VA official said. “I’m putting in the fact that when VA looked at these projects and costed them out, many of these projects started out as nothing more than large healthcare centers. Those matured sometimes into full-fledged inpatient medical facilities, based on patient needs. So you’ve got to look at ultimately what VA planned to build as opposed, in the end," what was contracted for, he said.
One example, according to the GAO report, is the Las Vegas facility, which the VA initially planned to construct as a clinic co-located with facilities at Nellis Air Force Base, Nev. The VA later determined the veteran community needed a larger medical facility. That change drove the price from $325 million to $585 million, according to GAO.
Increases in the Orlando, Fla., project were linked in large part to the VA changing the location three times between 2004 and 2010, the GAO said. The initial project called for renovating the existing Orlando VA center, only to find later that the facility was too small to include the needed services.
But before the VA was able to finalize the purchase of a new site, the owner sold it to someone else. When it found and acquired a new site, the architectural and engineering firm had to revise its design to accommodate it, according to the GAO.
The result was increasing costs and long delays owed to poor planning from the start.
Lorelei St. James, who conducted the GAO investigation, told the House panel that the total cost of overruns at four projects her agency reviewed amounts to $1.5 billion, for an average increase of $366 million.
The projects include medical facilities in Denver, Las Vegas, New Orleans and Orlando. She testified that several factors contributed to the increases, including changes to veterans’ healthcare needs in the region and problems with site acquisition.
St. James said the VA has taken steps to improve its system but has some ways to go. She said the department has not utilized medical equipment planners in designing medical centers and hospitals.
“Medical equipment planners have to be involved at the front end,” she said.
This is especially important in large, complex medical facilities, according to St. James. Their use prevents changes down the road, when officials determine the executed design will not accommodate the equipment.
The VA also has to improve the process whereby its changes orders, which currently can lead to conflicts between the department and the prime contractor, she said.
