Defense spending may be down somewhat, but there’s still plenty of project dollars out there if you know where to look.

May 31, 2012

1. STEPPED-UP DEMAND FOR ALTERNATIVE PROCUREMENT AND DELIVERY METHODS

A decade ago, the military used the traditional design-bid-build project delivery method pretty much exclusively. In the intervening years, the Defense Department has embraced design-build and other alternative strategies. In FY2013, the Air Force aims to use design-build on 75% of new construction, and the Navy is targeting 60% of new projects for design-build, according to Tom Kreher, senior vice president for federal programs with McCarthy Building Companies. About 43% of new military projects are expected to use design-build next year. “Early contractor involvement and CM at risk are also being fairly widely used,” says Kreher.

DoD has fully bought into getting contractors on board early. A recent example is a BRAC project for the National Geospatial-Intelligence Agency at Fort Belvoir, Va., an integrated design-bid-build project with early contractor involvement. The country’s eye in the sky, NGA monitors and analyzes data from military satellites and navigation buoys around the world. The $1.46 billion project, which included a 2.2-million-sf office building, was undertaken to consolidate the agency’s operations in the mid-Atlantic region in one location.

The proposals were judged on a best-value basis and included a bidding process. Clark won the contract in a joint venture with Balfour Beatty Construction. “We set our target price and ceiling price,” Colevas says. “Our fee would be reduced if we went over the target price. If our fee exceeded our ceiling price, it would have been reduced dollar for dollar.” The advantage for the client in this delivery method is evident in early constructability and cost reviews, says Colevas.

The military has also been exploring so-called “PPPs”––public-private partnerships––for offices, family housing, and barracks in recent years. “They’re trying a lot of things to offset costs,” says Cynthia Manning, PE, PMP, LEED AP BD+C, a vice president with STV, Douglassville, Pa. A retired Commander of the U.S. Navy’s Civil Engineer Corps, Manning notes that some military projects have even taken on design-build-maintain arrangements.

Many recently completed BRAC projects were performed on a design-build plus fast-track schedule, wherein the U.S. Army Corps of Engineers or other DoD client requires 35% completed designs to be submitted with proposals. “They were single-phase procurements, but DoD is now shifting to two-phase procurements,” says Manning.

Manning says the Society of American Military Engineers has been working with Defense agencies to streamline the process so that design firms don’t have to invest as much time and effort in the early proposal phase. The new model has a prequalification phase based on a firm’s experience and qualifications; only the short-listed firms would create a 35% design for the second phase.

While the military has become increasingly enamored with design-build, Atkins Global’s Fox, who once oversaw the Air Force’s civil engineering corps, believes its implementation has been somewhat flawed. “I don’t think it has been as successful as envisioned,” Fox says. “Design-build was envisioned as a teaming method to come to market quicker. But you’re not necessarily getting good partnerships.”

In recent years, he says, the process has emphasized lowest first cost over best value. “The builder is squeezed to come up with the lowest price. Some adversarial relationships develop when the designer is almost a commodity.” Consequently, Defense clients are engaging with less experienced firms, in some cases even looking at offshoring for design solutions, he says.

         
 

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