As architecture, engineering, and environmental firms turn over rocks looking for work, it’s becoming painfully apparent that there simply are no sure-fire markets these days—just about every sector is slowing down or stalling out all together.

The one sector that appears to hold more opportunity above all others, at least for the time being, is the Federal Government. A number of speakers from various Federal Departments were featured at the recent ACEC Legislative Summit and Convention held in Washington, DC. The convention drew over 1,000 members and guests, many of whom attended breakout sessions that focused on A/E opportunities with the Federal Government. Some of the organizations within the Federal Government that were represented at the conference included:

Army Corps of Engineers
Lt. General Robert L. Van Antwerp stated that the Corps has, through the stimulus package, already authorized and funded 300 construction projects worth $2 billion and another 400 operations and management-related projects worth $2.6 billion. He also stated the Corps will hire 3,300 engineers to meet demand.

• $280M for Department of Navy Emissions Control
  
• $916M for O&M (Sustainment / Modernization)
  
• $9M for RDT&E (Energy)
  
• NAVFAC execution of the MILCON Program
  - $ 41M for Air Force Emissions Control
  - $590M for Defense TMA (hospital)
  - $ 68M for Energy Conservation Initiative Program

Gott added that projects are to be LEED Silver certified per USGBC and that NAVFAC budgets 3% of the ECC to meet EPA and LEED requirements.

And like Van Antwerp, Gott also mentioned that NAVFAC is on the lookout for A/E talent and is, in fact, gobbling up architects and engineers from the private sector at a healthy clip.

The Department of Overseas Buildings
Joseph Toussaint, Deputy Director for Program Development, Coordination, and Support for The Department of State Overseas Buildings Operations, gave an inside look at the Bureau’s $4 billion annual building program as well as the challenges he currently sees to getting all of the work done. He outlined the major portions of the building program as follows:

• Description: The construction of new overseas office buildings/complexes (NOBs/NECs)
  – 28 Active Projects
  – Workload of $3.2 Billion (10 years left on the program)
  
  

• Description: The Rehabilitation of existing overseas facilities
  – 12 Active Projects
  – Workload of $175M
  
  

• Description: Bringing overseas facilities to current security standards.
  – 17 Active Projects
  – Workload of $81M

Toussaint also alluded to challenges the Department is facing and how they are impacting their efforts to accomplish their own goals. In particular, the change in the economic climate has led to the building of fewer full-scope projects and a greater focus on life-cycle costs (hence the Department’s renewed commitment to LEED Silver Certification). He also mentioned that a shrinking contractor pool is leading to extended project durations and that programmatic changes are requiring greater and greater flexibility in terms of design and project delivery (e.g., expanded use of Design-Build).

• ERA Program $0.56B
  
• Environmental Compliance $0.49B
  
• MILCON Program Execution $0.35B
  
• MILCON Program Management $5.77B
  
• MILCON BRAC $1.91B
  
• Vertical SRM Program $0.10B
  
• Housing (Construction and Demo) $0.51B
  
• Housing Requirements $6.30B
  
• AOR $1.63B
  
• Other $0.75B

The Department of Veteran’s Affairs
According to Don Orndoff, Director of the VA’s Office of Construction and Facilities Management, his Department averages $724M in major construction and $463M minor construction per year. Recent and upcoming projects include the following:

NASA
Key players in NASA’s Construction Program include Frank Bellinger, Director of Facilities Engineering and the Real Property Division; and William McNally, Assistant Administrator, Office of Procurement.

According to Bellinger and McNally, 83% of NASA facilities are beyond their design life and annual maintenance appears to be under funded—currently, deferred maintenance on these facilities totals $2.5 billion.

• Institutional Construction
  
• Repair of existing roads, utility systems, airstrips, etc.
  
• Demolition – Demolition of un-needed facilities
  
• Recapitalization – Replacement of failing infrastructure
  
• Direct Program Support Construction
  – Construction that directly supports technical requirements for space operations or research programs

The sheer number and size of Federal Government projects equates to significant opportunity for the A/E and environmental consulting industry. The professional service firms that are already entrenched in the Federal market need to execute current contracts or risk losing their place at the table. The firms that have something to offer but have yet to crack the code need to immerse themselves in how the system works and start building relationships—either organically or through key hires or firm acquisitions. After all, the Federal sector is as close to a sure thing as you can get these days—why not capitalize on it?

2010 DoD Budget...What’s the Focus?

President Barack Obama’s proposed defense budget of $663.8 billion for fiscal 2010 includes $533.8 billion in discretionary budget authority to fund base defense programs and $130 billion to support overseas contingency operations, primarily in Iraq and Afghanistan.

The proposed budget represents a 4% ($20.5 billion) increase over the $513.3 billion enacted for fiscal 2009. An increase in the base budget is not unusual. In fact, DoD funding has increased substantially this decade. In 2008, the DoD base budget was $481.4 billion—and that was a 62% increase over 2001.

What will change more substantially, however, is how these funds will be allocated. Here are three areas that will get prime-time attention:

Quality of Life
The focus is moving rapidly to quality of life issues. The Obama Administration says it is committed to improving the quality of life for American Soldiers, Sailors, Airmen and Marines. According to Secretary of Defense, Robert Gates, the 2010 DoD budget increases funding by $200 million for improvements in child care, spousal support, lodging, and education. Many of these programs have been funded in the past by supplementals and the goal is to move away from ad hoc funding of long-term commitments. Therefore, money has been added to each of these areas and all will be permanently carried in the base defense budget. Together they represent an increase in base budget funding of $13 billion from 2009.

Energy Conservation
The Department of Defense (DOD) accounts for approximately 63% of the energy consumed by federal facilities and buildings. This makes DOD the single largest energy consumer in the United States. So even a small percentage reduction in energy equates to significant savings on an annual basis. But while the economic recovery bill allocates $3.6 billion for Department of Defense energy efficiency projects and modernization of facilities, the Defense Department’s energy spending has increased due to higher energy prices. Congress will continue to look at furthering energy efficiency improvements in aging Defense facilities and buildings as a means to rein in energy consumption and spending.

Weapons Systems
Weapons systems are going to get wire-brushed. The thought is that there is no need to fund the bomber that the other side doesn’t have. Defense Secretary Robert Gates recently stated that the Pentagon's weapons strategy will focus on equipment that can be used against the insurgencies and irregular threats faced in places like Afghanistan, rather than older programs designed for conventional wars. He also expressed skepticism over some programs with newer, yet unproven technology, like elements of the plan to build a shield from missile attacks.

While some companies could stand to lose sizable programs, like Lockheed Martin's contract to build a new helicopter for the president, which at $13 billion is significantly over budget and behind schedule, there will be opportunities as well. One example is Lockheed's F-35 Joint Strike Fighter program which would be accelerated as the F-22 phases out. Other potential opportunities include Boeing and Northrop possibly bidding on the Air Force refueling plane contract, which Gates wants to revive this summer. And the Army would still lean on General Dyamics for tanks and armored vehicles.

While law makers still have another four months to ponder the more than half a trillion budget proposed for the Department of Defense, it seems certain that in 2010, funds will flow in new directions—and A/E firms serious about winning in this market need to anticipate where it ends up.