Hurricanes increase costs associated Corps year-end contract awards
It has been a strange Fall for those of us who focus on the federal engineering and construction market, especially work contracted by the U.S. Army Corps of Engineers. Anyone chasing federal contracts knows that September, the last month of the federal fiscal year, is the busiest. October may also very busy with just awarded contracts and task orders kicking off.
For a number of reasons, it didn’t quite work out that way this year. Hurricanes Harvey, Irma and Maria are driving up the costs of construction labor, materials and equipment. This means USACE contracting officers are scrambling to address both outstanding contracts and new emergency requirements.
The usual year-end contracting rush
For a variety of reasons, Congress routinely fails to pass a budget before the federal fiscal year ends on September 30. As a result, federal agencies spend several months not knowing exactly how much funding they will have. By the time this is sorted out, federal contracting officers award 50 to 75 percent of their contracts during the fourth quarter of the federal fiscal year – July 1 to September 30.
Contractors and consultants who execute federal work understand and are prepared for this challenge. A couple of months ago, I wrote “Win work by being ready” with some tips of how to be prepared.
Natural disasters throw a wrench into 2017 year-end rush
This year, three gigantic natural disasters threw a wrench into the year-end contracting rush with USACE: Hurricane Harvey in Texas (especially Houston), Hurricane Irma in the Caribbean and Florida, and Hurricane Maria in Puerto Rico. These three hurricanes devastated a large portion of the country and necessitated significant deployments of USACE employees – including key project managers and contracting officers – to support disaster response and recovery efforts.
Many of these folks are still deployed. The triple hurricanes are also significantly impacting the cost of construction labor, materials and equipment. This in turn is affecting USACE contracting officers’ ability to award contracts and task orders.
In a previous life, I commanded Tulsa District USACE and helped respond to Hurricane Rita in 2005-06 in southwestern Louisiana. Our District supported a Recovery Field Office for over 11 months. This effort put a drain on our human resources and affected our ability to execute other missions.
During this same timeframe, response to Hurricane Katrina in New Orleans necessitated a long-term effort by the entire USACE Mississippi Valley Division. It is likely, that the triple hurricanes of Harvey, Irma and Rita will have a similar effect on today’s Corps of Engineers.
An additional effect of the hurricanes on Corps of Engineers operations is an increased cost of construction labor, materials. and equipment resulting from the post-hurricane rebuilding demand. After Hurricanes Katrina and Rita in 2005, construction project bids on Tulsa District contracts rose 20 percent or more. The hurricanes aftermath complicated our efforts to execute the BRAC and “Grow the Army” construction programs. In talks with several USACE contracting representatives, I’ve heard that increased bid costs have already impacted the number of task orders awarded at year-end.
It’s possible that post-hurricane rebuilding effort may also provide opportunities. Rebuilding and upgrading the infrastructure in the hurricane affected areas – especially Houston and Puerto Rico – will require many years of effort and tens of billions of dollars.
I would love to hear and discuss your insights on this year’s fiscal year-end. I’ll be at the Society of American Military Engineers Federal Small Business Conference in Pittsburgh from November 15-17. Come visit me at Mead & Hunt booth #712.
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