The builder of Colorado’s troubled Veterans Affairs hospital says overruns bring the cost above $1 billion, far higher than the red ink already acknowledged, and has asked for the right to quit the project.

The dispute threatens further delays in a replacement project discussed since the late 1990s. Kiewit-Turner told a federal board it must stop working until the VA redesigns its hospital to fit the budget, or until it finds more money from Congress.

The builder’s complaint said bungled designs and mismanagement add up to twice the size of a $200 million overrun discussed in January.

The actual cost of finishing the replacement VA hospital in Aurora as currently designed would be more than $1 billion, Kiewit-Turner said, about $400 million more than the approved budget of $604 million.

“As a combat veteran and as a taxpayer, I couldn’t be more embarrassed over what is happening with the construction of our hospital,” said Rep. Mike Coffman, R-Aurora, who serves on the U.S. House Committee on Veterans’ Affairs and whose district includes the VA building site.

“Our veterans, who have made tremendous sacrifices on our behalf, deserve better than this, and the taxpayers, who are stuck with paying the bill, also deserve better than this. “

Coffman said his committee has been pressing the VA on its mismanagement of a national array of building projects, “and we will continue to push forward by looking into these new revelations.”

Kiewit-Turner has said it will continue building, but in the federal complaint said it is “contractually entitled to suspend performance immediately.”

VA’s construction managers have so far denied that right to quit.

The VA and Kiewit-Turner declined comment beyond the complaint.

The filing includes a decision letter from the VA’s construction manager saying the builder was involved in the design process, and the agency has not breached the contract.

The VA claimed in the June decision letter it had brainstormed up to $300 million in cost-saving ideas, including changing floor heights and eliminating whole buildings. Some of those trims have been carried out, the VA said.

The VA added that it’s not its fault that job bids from Kiewit-Turner’s subcontractors came in higher than the builder budgeted.

“I deny further that KT is relieved from its contractual obligations and its duty to continue performance and construct the project as the parties have agreed,” wrote VA senior contracting officer Thaddeus Willoughby.

Kiewit-Turner’s complaint is a brutal assessment of VA management, saying the hospital project was already over budget even before the building contract was signed.

“Throughout the design phase of the project, the VA’s design documents were frequently issued late and less complete than promised,” the complaint said. By this spring, Kiewit-Turner said, it had already obligated nearly the entire $604 million budget, with years of construction left to go.

The VA’s delays in agreeing to and paying change orders are not only hurting veteran patients waiting for a new hospital, they are damaging veterans who own and work for project subcontractors, the builder argued.

The filing includes a hastily drawn-up, handwritten agreement from November 2011, when the VA was under intense pressure from Congress to sign a long-promised contract to build the Aurora hospital. In that scrawled note, the VA agreed to provide a design that would meet the budget.

The complaint also makes clear Kiewit-Turner is worried about any profit it might have left in the project. The 2011 contract said the builder’s profit could be cut 20 percent if the final cost overran the budget, or increased 30 percent if it came in below budget.

The new hospital, going up near the corner of I-225 and Colfax Avenue east of the Anschutz Medical Campus, will replace an aging facility on Ninth Avenue in east Denver. It is meant to be a showcase health facility for tens of thousands of veteran patients in Rocky Mountain states, including a traumatic brain-injury center, nursing care and other clinics.

Kiewit-Turner’s complaint, to the Civilian Board of Contract Appeals, said that after the VA agreed in 2011 to cut the costs of the design, things got worse instead.

“The VA has never provided Kiewit-Turner with a complete design for the project that could be constructed anywhere close” to its budget from Congress, the complaint said.

In fact, the next sets of designs were “increasingly complex, included fewer cost reductions than expected, significantly increased the scope of the work, and made the budget problem worse rather than better,” Kiewit-Turner argued.

Late documentation also forced Kiewit-Turner to miss favorable pricing conditions for materials or subcontracts, the complaint said.

“Kiewit-Turner presently estimates that the current design of the project provided by the VA will exceed $1 billion in construction costs,” said the complaint, dated July 8.

As the disputes grew, the VA hired a designer independent of its contracted design-engineer team to review the project. That assessment found the existing design “contained a great many deficiencies and issues,” Kiewit-Turner claims. Its own review found “thousands of deficiencies,” the builder said.

The VA also hired an outside engineer to review costs. That engineer “provided the VA with an estimated construction cost of at least $782 million,” Kiewit-Turner’s complaint said.

Michael Booth: 303-954-1686, mbooth@denverpost.com or twitter.com/mboothdp