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American Recovery and Reinvestment Act (ARRA)

To all the important day-to-day tasks regularly performed by the U.S. Army Corps of Engineers (USACE), Congress and the White House added a new responsibility for 2009 and 2010: helping to restore the nation’s economy.

The American Recovery and Reinvestment Act (ARRA), popularly known as the economic stimulus bill, authorized $2.2 billion for Corps-administered military projects. These will be contracted with industry to help create jobs and economic activity during the current recession. With construction projects ranging from hospitals to barracks, the projects add to an already hefty workload. Including the $2.2 billion in stimulus funding, the Corps’ military program will reach $28 billion this year as it fulfills its role to manage construction on Army posts and Air Force bases from initial proposals through project completion.

“We had our largest military construction program in history last year,” said J. Joseph Tyler, the Corps’ director of Military Programs. “But thanks in part to ARRA, fiscal 2009 is another record.”

While the Corps’ piece is a relatively small part of the ARRA – the stimulus bill totals $787 billion – the measure carries some significant requirements. First, work must be contracted by September 2010. In addition, the legislation carries significant rules and regulations. One is transparency, since it requires weekly reporting on expenditures on the Web site www.recovery.gov.

There also are Buy America rules so that government agencies and contractors purchase and utilize more U.S.-made goods. Both federal agencies and their contractors also must report how many people are getting new jobs as a result of these projects. “It’s a cultural change not just for the government but for private companies as well,” Tyler said.

The government stimulus projects come in two main categories. One is military construction, which includes barracks, family housing, child development centers, and warrior-in-transition facilities. Others include energy conservation and investment projects that will help the Department of Defense conserve energy.

The largest military construction (MILCON) project under ARRA is a new hospital complex at Fort Hood, Texas, that will cost upward of $700 million. Forty-seven other, smaller MILCON projects – available by contract to private industry – will cost more than $400 million.

The second project area under the law is Facilities Sustainment, Restoration and Maintenance (FSRM), which encompasses small projects that bring existing facilities up to current standards.

FSRM projects can range from roof repairs of $15,000 to a barracks building upgrade of $20 million, Tyler said. Overall, there are 701 stimulus-funded FSRM projects, totaling more than $1.2 billion.

Just as these improvement projects vary greatly in complexity, so too do the acquisition requirements. A $15,000 repair may be awarded quickly, while costly projects require detailed acquisition requirements.

“Almost every state is getting some piece of the Department of Defense ARRA allotment,” Tyler said. Projects serve not only active-duty personnel but also the National Guard and Reserve centers. For ARRA spending slated for fiscal 2009, the Corps was trying to award most funds by Labor Day. Throughout the process, USACE has an “aggressively realistic” schedule to implement ARRA. The new hospital at Fort Hood is by far the largest undertaking, with contracts likely to be awarded in late summer 2010.

Even before ARRA, however, the Corps had $25 billion for military construction programs in 2009, thanks to ongoing needs as well as the Base Realignment and Closure (BRAC) requirements. In addition to the stimulus funding, USACE received another $2 billion in construction-related business from the 2009 contingency operations bill that primarily funds overseas operations, Tyler said.

As a result, the total 2009 USACE military budget is nearly $30 billion. “That’s a huge challenge,” he said.

But in many ways, the Corps is poised to deliver more cost-effective construction. As a result of current recession, more companies are bidding for government work. Some are also bidding lower to try to win government business.

“A year ago, you might have only had one or two bidders for a project,” Tyler said. “Now, we’re getting 10, 12, 15 bidders on contracts. Bid prices are coming down. We’re getting project savings at the time of the award, since industry is looking for work.”

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