Contractor stops construction of Denver's new VA hospital amid dispute over project's cost

IndustriesAssociated Press

The company building Denver's new Veterans Administration hospital is stopping construction after a federal board of appeals ruled Tuesday that the VA breached its contract.

Kiewit-Turner is halting work after the U.S. Civilian Board of Contract Appeals determined that the VA did not produce a design that could be built for $604 million, but rather more than $1 billion. The board also found that the VA does not have sufficient funds to pay for construction of the entire project as currently designed and has no plans to ask for money.

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"Kiewit-Turner must cease all work on the project," Kiewit Corp. executive vice president Scott Cassels said in a letter to VA Secretary Robert McDonald and Deputy Secretary Sloan Gibson. "We will take all reasonable actions to preserve and protect work currently in place and materials on-site as we begin a safe and orderly demobilization from the project."

The board agreed with Kiewit-Turner that the VA failed to meet its contractual obligation to manage the Denver VA Medical Replacement Project, the Denver Post reported Wednesday (http://dpo.st/1scFAFs ). Kiewit-Turner said that throughout the design phase of the project, the VA's design documents were frequently issued late and were less complete than promised.

The Veterans Administration has argued the builder was involved in that design process and that it did not breach the contract.

Members of Colorado's congressional delegation said they hoped Kiewit-Turner's action was only the start of new negotiations in hopes the VA can get more money for the replacement hospital. VA officials released a statement saying the agency is committed to building it.

Cassels said in his letter that Kiewit-Turner must be paid all past costs, including $100 million of its own funds spent to keep the project moving forward.

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Information from: The Denver Post, http://www.denverpost.com