ARCHETECT EERS The VA Medics}. Center a identities Qctober1t.2011 Thaddeus T. Department of Veterans Affairs Contracting Officer idd?i?i East Coifax Aurora, CO 80045 Re: Repiacement iviedicai Center Project hie. 5546M, VAMC, ?enver, Coiorado Contract No. 1.1101090251 . the Process Bear i?vir. Thanir you for the emaii of September regarding our review of the assumptions identi?ed by Kiewit?Turner JV and inciuded in its Firm Target Price (FTP) proposai dated August 25, 2011. We are happy to know that you have found our comments heipfui. We have heard that the VA intends to award an FTP construction contract to KT on the basis of that proposai, and we wanted to rememphasiae and highiight the concerns that we have been expressing for many months regarding the status of the DVAMC project and any decision to move forward on the basis of KT's proposai without first proposai to the peervreviewed and approved construction cost estimate. The most obvious probiem is that the VA has not informed the JVT that the KT proposat has been reconciied to the construction estimate prepared by the per the contract with the VA. The JVT did successfuiiy reconciie the direct costportion of that estimate to the direct costs in proposai dated Aprii 11, Edi t, as agreed by the VA and peer reviewers. As the VA knows, however. KT has been unabie to reconciie its indirect costs to the construction estimate. KT inciuded in its Aprii 2011 proposai neariy d?iBG of indirect costs, based on the Design Deveiopment drawings. Since that time, the VA has apparentiy been negotiating to finaiize a construction contract on the basis of a radicaiiy different pricing proposai that is based on these now~outdated DD drawings, despite the of the recentiyndeiivered and soonwtowbe deiivered Construction Design drawings. new FTP pricing proposai has moved approximateiy $53 of that tide in indirect costs to ?above the tine? direct costs, and to date the government has not reconciied those figures against the estimate using the agreed-upon previousiy reconciied estimate and the set forth in the contract. We beiieve this impose high risk on the project. Since the Aprii of ?382 the VA has not required KT to reconciie the budgets as required per the RFP prior to moving forward into the CB design phase. Now it appears that the VA is proceeding with the award of the construction contract in spite of the budget requirements set forth in Section 2.6 of the RFP and in our contract. These actions by KT and the VA, inciuding the cost shitting that is apparent in the August 25 proposai. have been beyond the controi of the JVT and we expect resuit in a proposed contract that is unfavorabie to the VA, to say the Beast. if the VA proceeds with contract award in the absence of any agreed-upon budget tor the EVAMC project, then there be no agreed-upon iinanciai baseiine against which the parties be abie to measure and controi costs and identity possibie cost overruns. which we expect be substantiai. We aiso expect the administration of such a contract be extremeiy difficuit for parties and resuit in significant ciaims against the VA. Under these circumstances, it the VA signs a construction contract with KT without an agreed- upon as required. we reserve rights in connection with our contract. 1?55 Stake Street. Suite 4610. Denver CO 80262, areas?.1 II hunter Gsist, inc. AFO648.0001 1011 Mt Page 2 cf 2 forward is discussing these issues at our meeting schecuied for Thursday cf this week. AEA, ACHA Joint Venture Streetcr Ccpy: Steve Carr, tit-L Architecture Adam Breurtsteih, hier Architecture Bred Buhier, SA. Mire, inc. Richard Tcmiihsch. Micheei Liegertet, John Hughes, Cater, Ruins 8s Assccietes, Cc. Ari-7648.2 AF0648.0002