The Kiewit-Turner joint venture created to build the VA’s hospital near Denver stopped work on December 10 after the Civilian Board of Contract Appeals ruled that the VA breached the contract. Kiewit-Turner claims that the VA owes it over $100 million on the project. And, given the appeals board’s recent ruling entirely against the VA, the claim may get some traction.
This project has been plagued with problems from the beginning. One strange aspect of the project is the VA’s apparent unwillingness to incorporate value engineering or require the architects to redesign the project to fit within the budget. The latest budget was $582M, while the latest projections show that the project will cost more than $1 billion to complete.
In addition to serious budget overruns, the project is substantially delayed. The project was originally intended to open in May, 2015. That date has been pushed back to 2017, and given the recent shut-down, that date will likely be pushed back even later.
Kiewit-Turner must be applauded for the way it handled this situation. Instead of simply walking off the job, Kiewit-Turner continued to work, under protest, and asked the contracting officer to determine that the VA breached the contract by failing to provide a design that could be built within budget. The contracting officer ruled that the VA had not breached the contract and directed Kiewit-Turner to continue with the work.
While continuing the work, Kiewit-Turner appealed to Civilian Board of Contract Appeals. After an 8 day hearing, the appellate court ruled in Kiewit-Turner’s favor on all counts, finding that the VA had breached the contract and Kiewit-Turner was entitled to stop work on the project.
Of course, this is just the first step in what will likely be a very long process to figure out how the work will continue and how much Kiewit-Turner must be paid for the work it performed.
Authored by Craig Martin, Lamson, Dugan & Murray, LLP.
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