The White House Office of Management and Budget on July 29 issued new guidelines that require all federal agencies to reduce contracts by 3.5% in 2010 and another 3.5% in fiscal 2011. Agencies must also reduce cost-reimbursement contracts by 10% in 2010 and for the first time track contractor performance. The guidance is part of an effort to streamline federal contract acquisition as outlined by President Barack Obama. OMB says it plans to release more detailed guidance in September.
The market is generally healthy and steadily growing, and margins are up for large specialty contractors. Further, advances in design tools and owner demand for collaboration are giving subcontractors a seat at the table early on in projects.