Corps of Engineers annual budget warrants cautious optimism
The President’s 2017 budget request for the U.S. Army Corps of Engineers appears to bode well for the architecture, engineering and construction industry. My review of the situation is less solid than previous years’ due to this new and quite different administration. Solid information has been difficult to come by.
Here is what I know:
- In 2017, USACE total program is projected to be $27 billion. Broken down, this is $5.5 billion for civil works and $21.5 billion for military and work for others.
- The fiscal year 2017 President’s budget for USACE Civil Works released in February 2016 was $4.62 billion. This total is significantly less than is now projected to be executed.
- President Trump’s 2018 budget blueprint requested funding increases of 10 percent to the Department of Defense, 5.9 percent to the Department of Veteran’s Affairs, and 6.8 percent to the Department of Homeland Security. Since USACE provides military planning, design and construction for the Army and Air Force as well as support to the Veteran’s Affairs and the U.S. Customs and Border Patrol (part of DHS), we can expect that 2018 military and work for others execution will be similar to or larger than in 2017.
- The 2018 budget blueprint requests $5 billion for USACE. This is a reduction over the amount enacted in 2017 but actually more than the 2017 President’s budget request.
President Trump prides himself on being a “deal maker.” This budget blueprint is an opening request, not the final number. Remember the phrase “the President proposes, Congress disposes.” In all previous years, Congress added addition funding to the President’s budget in appropriations.
The actual President’s 2018 budget is scheduled to be released in mid-May. When it is released, we will have a clearer, although by no means complete, picture of next year’s USACE budget. Additionally, President Trump has proposed a $1 trillion infrastructure program. It is doubtful that program will be released before the 2018 budget is finalized. How all of this shakes out is to be determined.
An additional wrinkle is the 90-day federal hiring freeze “to reduce the size of the federal government’s workforce through attrition.” USACE has 33,000+ uniformed and civilian employees. This is an increase of about 3,000 employees in the past eight years. Any reduction in staffing will necessitate more outsourcing of services.
I am feeling optimistic about engineering and construction contracting opportunities in 2017 and 2018 because of the:
- Increase in military spending.
- Relatively moderate topline cut proposed to USACE civil works spending.
- Widespread support for additional infrastructure spending.
- Potential for increased outsourcing by the USACE.
I look forward to hearing more about all these programs upcoming spring conferences. Hope to see you at the ACEC Annual Convention in April and the SAME Joint Engineering and Training Conference in May.
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