Opportunities in federal construction despite cuts to building funds

Thursday - 1/5/2012, 10:47am EST

Marco Giamberardino, senior director of the Associated General Contractors of America's federal and heavy construction division

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By Jolie Lee
@jleewfed
Federal News Radio

Funding for federal building construction took a hit in the 2012 budget.

Agencies' construction funds decreased by $7.5 billion overall, or a 6 percent cut from fiscal 2011 levels, according data on federal construction accounts tracked by the Associated General Contractors of America.

"It's fairly bleak," said Marco Giamberardino, senior director of the AGCA's federal and heavy construction division, in an interview with The Federal Drive with Tom Temin.

For example, the General Services Administration's construction funds were cut 80 percent to $50 million. The reduction "really leaves us with one major project and a few smaller, new projects, and that's about it," he said.

Some projects have fallen victim to the budget axe midway through construction, most notably construction on the new Homeland Security Department at St. Elizabeths Hospital in Washington, D.C. In September, DHS Secretary Janet Napolitano announced the project would be put on hold in the short-term.

If the contractor is midway through a project, like at St. E's, and appropriations have run out, "they unfortunately have to shut down and demobilize, and the job will sit there quiet," Giamberardino said.

The good news, though, is Congress "did hold relatively firm" to cuts made to construction funds in fiscal 2011.

"The message we sent, frankly, to Capitol Hill was the FY11 deal cut the federal construction accounts pretty heavily," Giamberardino said. "We think we've taken our hit. There are plenty of needs out there for our nation, whether it's building construction or the traditional infrastructure program."

The 2012 budget did have some winners for federal construction. One was the National Oceanic and Atmospheric Administration, which saw a 36 percent increase for construction, and the State Department, which saw an 86 percent increase for embassy construction.

Federal building contractors are responding to these budget shifts, as well as to a demand for more green building. Giamberardino said contractors are "getting their teams trained up on LEED certification."

"That hasn't been a big deal breaker issue by any means," he said, referring to building to LEED standards.

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