AEC: Designing with a Fundamental Focus

Published: September 19, 2019

Architecture Engineering and ConstructionCONGRESSSTATEVA

The House wants embassies constructed with security and standard design rather than modern architecture

State Department officials may have to consider security and standard designs as more fundamental than foreign embassies with modern architecture.

The overseas attacks in Benghazi, Beirut, Nairobia and Dar es Salaam, Tanzania, represent why security overrides modern architectural design, Rep. Michael McCaul said. He prefers building “safe and functional workplaces in a timely fashion so we can prevent attacks like these in the future,” he said in 2018. The General Services Administration’s Design Excellence program, which stresses creativity, has “shifted away from that core focus in favor of complex architectural design and costly building materials.” 

How the government designs and builds structures in the United States or overseas impacts one of the largest areas of spending in the Federal Government. The architecture, engineering, and construction (AEC) projects are a key component for nearly all government departments and agencies. The Federal Government spent nearly $40 billion on AEC-related contracts in FY 2018.

AEC Spending

In FY 2018, the State Department spent more than $2.2 billion through contracts with the primary requirement as AEC and approximately $3.9 billion in FY 2017. The Bureau of Overseas Building Operations alone spent $2 billion on AEC. More specifically, 82.22% of that spending was labeled under the NAICS code—236220, Commercial and Institutional Building Construction.

While the House did not take up McCaul’s bill on its own, its language was included in the Department of State Authorization Act of 2019 (H.R. 3352), and the House passed the bill on July 25, 2019. The Authorization Act requires the State Department to get Congressional approval for any non-standard design. More specifically, officials must justify their choice to use a customized design. They must provide full lifecycle costs and completion dates as compared to the project with a standard design.

The Bureau of Overseas Building Operations “should give appropriate consideration to standardization in construction, in which each new United States embassy and consulate starts with a standard design and keeps customization to a minimum,” according to the House Foreign Affairs Committee report accompanying the bill.

Across the Federal Government, AEC spending has increased from FY 2016 to FY 2018. The largest increase was $5.1 billion in FY 2018, despite a decrease in transactions. The Army is the top buyer in AEC contracts with more than $35.6 billion between FY 2016 and 2018. The departments of the Navy, Air Force, State and Energy round out the top five buyers.

The Government has a total of $12 billion in AEC projects awarded through Task Orders that have a start date between 2016 and 2018 and, to date, about $1 billion in FY 2019. Public Assistance and Technical Assistance Contract (PA TAC) III continues as the top contract vehicle.

Designing Continuity in the Design

Like building designs focused on security over style, the departments can face backlogs and skyrocketing costs if the continuity of designing and building fails. In 2016, the Department of Veterans Affairs had those problems at a replacement medical center outside of Denver in Aurora, Colorado. The project spending costs increased from $800 million to approximately $1.7 billion, according to a report from the VA Office of the Inspector General. 

A significant factor for mismanagement, delays and costs overruns was VA’s decision to change its acquisition strategy mid-stream from a Design Bid-Build (DBB) contract to an Integrated-Design and Construct (IDc) contract.

VA officials decided on a more complex building design after they considered more conventional and potentially simpler-to-construct options. It had implications for cost, constructability, and potential future expansion of the facility, according to the report.

“The lessons learned from the Denver replacement medical center can be applied to future construction projects to prevent similar problems,” Michael Missal, VA’s Inspector General, said in a 2016 statement.

In reaction, Reps. Jim Banks and Ed Perlmutter introduced the VA Design-Build Construction Enhancement Act of 2019 (H.R. 3996). The bill encourages department officials to use design-build construction to manage projects better.

“Design-build is a proven way to deliver construction projects more effectively and quickly. VA has a multibillion-dollar backlog of construction projects but has never made much use of design-build despite it being available to the federal government for over 20 years,” Banks said.

The House has yet to consider the bill.

Upcoming AEC Opportunities

Looking ahead, the Government has $102 billion in potential contracts with the projects averaging $46 million each. The U.S. Army Corps of Engineers has three of the top five upcoming opportunities. The USACE Galveston District is in the planning phase for a $4.5 billion horizontal construction contract to support Civil Works projects. As of late August, the Contracting Office did not have a specific timeframe for releasing a Solicitation.

The USACE Mobile District is in the planning stages of the $2.7 billion Hurricane Michael Rebuild Project. The Contracting Office released a Sources Sought notice in June, although the District has been quiet of late, as Deltek has reached out.

Finally, the USACE Omaha is considering a $2 billion airfield construction MATOC with an advertisement expected in FY 2021.

The State Department is another department with large AEC projects. The department’s Bureau of Overseas Buildings Operations has high-dollar opportunities. The Bureau may have follow-on requirements for designing and construction of containerized housing and office units and modular construction worldwide (CH/OU&MCS). The incumbent IDIQ contract for unclassified CH/OU&MCS expires in September 2021. A Solicitation is anticipated in Q3 FY 2021. The anticipated five-year project is estimated at $2.5 billion.

The State Department has several AEC and Design-Build projects related to embassies, including Hanoi, Vietnam, Bogota, Colombia, and Buenos Aires, Argentina. As the legislation moves forward, State officials may have to make new AEC considerations or start drafting lifecycle reports for Congress.