Department of Defense Expenditure Plan Provides Tremendous Opportunities for Federal Construction Contractors
Although many aspects of our economy are suffering, the federal construction market will most certainly be booming. On Friday March 20, 2009, the Department of Defense issued a 191 page Report to Congress detailing how it plans to spend the money it has received as part of the American Recovery and Reinvestment Act of 2009, also known as the “Stimulus Package.” The DoD has “identified specific investments in construction, facility improvements, and energy efficiency projects that will help improve the quality of life for our troops and their families.” Included in the Report is a very detailed breakdown of how the money will be spent. For each project anticipated, the included spreadsheet provides cost, a brief description of the work, and the project location
The Recovery Act includes approximately $7.4 billion in Defense-related appropriations, which accounts for less than 1 percent of the total $787 billion stimulus package. The Department intends to spend this funding with “unprecedented full transparency and accountability.” A website, www.Recovery.gov, is the main vehicle to provide every citizen with the ability to monitor the progress of the recovery. The DoD also has a website which links to Recovery.gov. and it may be found at http://www.defenselink.mil/recovery.
The DoD plans to spend $2.3 billion of the Stimulus funds on military construction and family housing construction projects. The Department also indicates that it will be “pursuing architectural and engineering services greater than $1 million for 5 projects, conducting repair projects greater than $7.5 million for 56 projects, and carrying out 45 Energy Conservation Investment Program projects, respectively.” In addition, the DOD provided a list of 3,300 Facilities Sustainment, Restoration, and Modernization (“FSRM”) projects costing an estimated $3.4 billion, representing 80% of the total FSRM funds appropriated to the DOD. The FSRM projects account for over $3.83 billion of their entire Stimulus spending. The following are the areas where DoD plans to spend money as quickly as possible:
• $4.2 billion in Operation and Maintenance accounts to improve, repair, and modernize DOD facilities, including energy-related improvements
• $1.3 billion in military construction for hospitals
• $240 million in military construction for child development centers
• $100 million in military construction for warrior transition complexes
• $535 million for other military construction projects, such as housing for the troops and their families, energy conservation, and National Guard facilities
• $300 million to develop energy-efficient technologies
• $120 million for the Energy Conservation Investment Program (“ECIP”)
• $555 million for a temporary expansion of the Homeowner’s Assistance Program (“HAP”) benefits for private home sale losses of both DOD military and civilian personnel
• $15 million for DOD Inspector General oversight and audit of Recovery Act execution
The federal agency that is the most heavily involved in construction, the U.S. Army Corps of Engineers (“USACE”), has provided Congress with “informed estimates” of existing capability to perform additional work. The Corps has set forth project selection criteria as projects that will:
(1) Be obligated/executed quickly
(2) Result in high, immediate employment
(3) Have little schedule risk
(4) Be executed by contract or direct hire of temporary labor
(5) Complete either a project phase, a project, or will provide a useful service that does not require additional funding
For the USACE Civil Works Program, the Recovery Act includes $4.6 billion in funding. Of that, $2.1 billion is appropriated for construction and $2.3 billion for Operation and Maintenance (O&M). Appropriations are also included for the Mississippi River and Tributaries account. The Corps estimates that it will award contracts on approximately 400 maintenance projects with O&M funding by the end of April with contract values ranging from $250,000 to $10 million and construction durations of 6 months to 2 years. The Corps also estimates the award of approximately 300 construction contracts ranging in value from $1 million to $30 million by the end of April with construction durations ranging from 6 months to 3-1/2 years.
These projects will provide tremendous opportunities for federal construction contractors. It remains to be seen whether the government has enough procurement people to issue so many solicitations in such a short time and whether the specific agencies have the capability to properly administer all of this work. On the bright side, however, the surge of work created from all of these new projects should give our economy the boost that it needs.
