It’s Business, And It’s Personal

VA ruled in breach of contract over new hospital construction

On Behalf of | Dec 11, 2014 | Business Contracts & Disputes |

How does a major government agency sign a contract for $600,000 with a private contractor for a medical center that it knows will probably cost $1 billion? When it’s the U.S. Department of Veterans Affairs that is involved, it may just be standard operating procedure. The Civilian Board of Contract Appeals just ruled that the VA is in material breach of contract to build a new VA hospital in one state, and it was learned that the VA has essentially created the same crisis in three other states. Contracts between private business entities and the government are a massive area of domestic economic activity, including in North Carolina.

The construction of the hospital is behind schedule and way over its budget. According to the private contractor, the VA does not have the money to continue the project and it does not plan to ask for funding. The Board of Contract Appeals issued a ruling placing fault on the VA and giving the contractor permission to stop work indefinitely.

The hospital is being built in Aurora, Colorado, where it has long been promised to veterans in the Rocky Mountain region and beyond. This stoppage puts about 1400 people out of work, including tens of dozens of subcontractors. The VA apparently failed to provide a viable design for the hospital that could be built within the contract price, leading to the major conflict by the two parties.

Reportedly every other project which involves the VA is having the same problem with over-budgeting and overspending. A U.S. Congressman from Colorado announced that he had initiated legislation to resolve the problem, including a provision which would take control away from the VA and put the Army Core of Engineers in charge of all VA construction projects. With government officials stepping in to take control of the collapsed contract, it may be that the hospital will eventually be built despite the breach of contract ruling. In North Carolina and nationwide, the smooth execution of private-public sector contracts is a major economic factor in bolstering employment and economic stability.  

Source:, “Work on VA hospital in Aurora comes to a halt“, Robert a’, Dec. 10, 2014