The politically-linked uncertainties of federal budgeting, the fast-changing military mission globally and strong construction market draws elsewhere are putting the squeeze on U.S. Defense Dept. building programs and contractors' ability and inclination to participate in billions of planned dollars worth of work, said speakers and 320 attendees at a DOD and federal programs' briefing March 30 in Arlington, Va. Speakers at the conference, sponsored by the Society of American Military Engineers and formerly known as the "engineering service chiefs briefing," came to talk about plans for fiscal 08 and beyond. Discussion Topic A: delays in Congressional approval of supplemental fiscal '07 funding for DOD construction programs and differences with the Bush administration over Iraq troop withdrawal schedules threaten to prompt a presidential veto of spending legislation. overhung the renamed and expanded conference, formerly known as the "engineering service chiefs briefing."
The House and Senate recessed for Easter break on March 30 without reconciling differences in their bills. Of particular interest is $3.1 billion still outstanding for 07 base realignment and closure (BRAC) activities. About $2.5 billion in 07 BRAC funds was committed last fall. Brig. Gen. Merdith "Bo" Temple, director of military programs for the Army Corps of Engineers , said the Corps is rushing to award $4.5 billion in existing 07 funds for BRAC work, and for military construction for Army, d Air Force and non-DOD customers. "DOD continues to burn though the 07 allocation waiting for the supplemental," he said. "By summer, if there is no bill, we will run out of funding. But I don't think that's likely."
Temple said the agency has "anticipated" program funding delay but conceded that the delay is placing strain on internal personnel and firms. The delay is hampering the services' ability to award contracts and alert prospective bidders of upcoming work plans, as DOD prepares for huge longer-term construction programs in support of troop redeployment and military "transformation." That in turn is making it tough for contractors already pressed with other work to include DOD construction programs in their proposal schedules and to guarantee bid prices, noted one conference questioner. He said that rushed procurements could leave the Corps with "single bidder jobs." The compressed schedule could also "leave less time for quality control," says Hans Van Winkle, a former top Corps official and now president of the project management group for Hill International, Marlton, N.J.
"For us and industry, it is easier to absorb this kind of workload over a longer time. We share in industry¹s frustration," said Temple. He noted the "daunting challenge" to award the work by this fall and told attendees the Corps would be "grateful if they could hold bid prices until the end of the fiscal year." Temple added that the Corps itself is facing fast-changing parameters of the military¹s own growth program that it must support. He noted plans for the Army to increase from 510,000 to 547,000 troops through 2012. "That's $10 billion of facilities I didn¹t know about six months ago," Temple said. He added that there are still decisions in play on final locations for units within the Army¹s new brigade-based structure, and noted challenges in unifying the service's different contracting and design standards, and in providing opportunities for small businesses.
Major Gen. Del Eulberg, Civil Engineer for the U.S. Air Force, noted time pressure to fully fund BRAC by fiscal 2011. "Timing is critical. There are a lot of movements as DOD consolidates," he said. Eulberg noted plans to better link design and construction management capability across service lines within DOD. He noted creation of a "joint" construction office in San Antonio that would serve the Corps, Air Force, Navy and Marine Corps. Service chiefs noted what could be an unprecedented amount of interdependence among military constructors across DOD and outsourcing to the private sector to fill growing gaps in government management ranks. "The challenge is to completely recapitalize the military forces, change how we're organized and build adaptable facilities," said Lt. Gen Carl A. Strock, outgoing Corps of Engineers commander. "After this, you won't see a time like this for years to come."
Eulberg said that prior BRAC rounds were "service specific," but that more military unit linkage "will take intense up front planning." Eulberg noted the change, despite continuing downsizing of Air Force constuction managers and craft personnel. He noted that "new ways of doing business" would help. Eulberg said that the Air Force Center for Environmental Excellence, which now manages much of its work, will add responsibility for military housing, now handled by individual commands. But Sal Nodjomian, chief of the Air Force's engineering division, said that the service's housing requirements have dropped as personnel find better availability off site. He said 95% of design for the Air Force's $1.3-billion 07 milcon program is complete, and that construction bidding is under way "on half the program." An expanded and more consistent approach to design-build among the services is another goal, Eulberg said. In fiscal 08, it will comprise 34% of Air Force procurement, said Nodjomian.
DOD held a pilot contractor-sponsored DB training workshop for about 40 service and private sector construction managers in Norfolk last month, and is set to launch the training program full blown by June. Joseph E. Gott, deputy chief engineer for the Naval Facilities Engineering Command, said that 75% of the Navy¹s work is being done design-build, and 95% of BRAC work. The service will obligate $470 million in fiscal 07. He noted new requirements to make projects comply with energy efficiency and LEED mandates, despite an expected 30% cost increase. By fiscal 09, projects must meet the LEED Silver standard, said Gott. He added that LEED, safety and quality issues will play a larger role in bidding decisions. Patrick Burns, vice president at M.A. Mortenson,Minneapolis, and a former top Air Force official, suggested a "clearinhouse" for contract solicitations to to expedite work.
DOD plans to spend billions to rebase troops in South Korea and to transfer U.S. Navy and Marine forces now in Japan to new and expanded facilities on the island of Guam. Work on Guam, including construction of housing, operations buildings, utilities and port deepening, is set to exceed $10 billion through 2014, participants said, Troop numbers could inicrease from about 6,420 now to 19,230, according to DOD data. Rear Adm, Richard Cellon, commander of the Naval Facilities Engineering Command's Atlantic division, also noted capacity challenges, adding further impacts from continuing Hurricane Katrina recovery at Gulf Coast facilities. "We have not unlocked the creativity of the private sector," he said. "We must change the way we approach executing our work." Gott said Guam work will involve use of a "foreign work force." Commanders of the U.S. Coast Guard and Public Health Service voiced similar facility challenges. Noting a $1.5-billion capital program for the Centers for Disease Control alone, and lots of work for related health and biodefense agencies, Rear Adm. Richard Barror, public health service chief engineer, told attendees to "learn the Corps and Navy projects and come over and help out."
Service chiefs claimed they were making more of a push to standardize military construction solicitation documents "as a founding tenant of transformation," said Strock. Added the Navy's Cellon, "if you don't see that soon, I need that feedback." But for now, industry firms, particularly smaller ones, push to keep up with the program and to position. "We're struggling with what to go after and who to partner with," said Joseph Angel, director of federal activities for KCI Associates of North Carolina, Raleigh. "The lack of money is constipating the system," said Neal T. Wright, Virginia Beach, Va.-based vice president and director of defense programs for Michael Baker Jr. Inc. "You can't keep investing if there's no money back."