Firms Seek Silver Lining in Milcon Reductions
Even with military construction programs set for major cuts in fiscal 2013 and possibly in the current year, industry executives still were optimistic about the market's potential. An annual Defense Dept. construction chiefs' budget briefing drew record attendance on March 27 in suburban Washington, D.C.
The Obama administration proposes $10.7-billion milcon budget for the next fiscal year, down from $14.8 billion currently. Speakers told the nearly 650 attendees at the event, sponsored by the Society of American Military Engineers, that while new construction would face cuts, the services were focusing attention on energy efficiency, asset management, small businesses and alternative funding.
"We're being forced into a systems environment," said Robert Slockbower, director of military programs for the U.S. Army Corps of Engineers. "Asset management is at the core of what we'll do ahead. We will use milcon, but it will be used sparingly." Col. Stephen Shea, a U.S. Air Force division chief, added, "It's a pause, not a death, for milcon. It will come back in fiscal 2014."
Rear Adm. Christopher J. Mossey, head of the Naval Facilities Engineering Command, said the planned multibillion-dollar upgrade of facilities on the island of Guam to accommodate U.S. Marine Corps troop relocations "has not progressed as expected." Observers say many troops may stay on the Japanese island of Okinawa. Mossey did not elaborate but said Guam would remain "a strategic hub." He noted that the Navy's overall $1.75-billion milcon budget "has come down, but it's still significant."
Terry Edwards, director of the Air Force Center for Environmental Excellence, noted a push to reduce change orders both in the field and "customer-driven." He said the agency also is extending proposal due dates by 15 days to improve their quality.
Documents obtained by ENR also indicate that the process for proposing a future round of base realignments and closures (BRAC) could begin by September 2013, with a list of affected facilities ready two years later. They could include about five Army bases and a half-dozen each of Air Force and Navy facilities, with a new focus on reserve bases.
Attendees also noted the military presenters' strong emphasis on seeking out alternative financing, particularly for critical projects. One attendee said that Theodore A. Brown, a policy division chief for the Corps, pointed to civil-works facilities that were "experiencing fatigue without funds in place for replacement." But others said the military's focus on facility renovation over new construction would generate new risks for participants. One attendee commented that Congress may still block planned DOD cuts in fiscal 2013 and that the outlook for fiscal 2014 and beyond would remain "nebulous until the [November] elections decide which parties control what."
