www.enr.com/articles/6670-omnibus-spending-bill-trims-many-construction-programs

Omnibus Spending Bill Trims Many Construction Programs

December 20, 2011
Omnibus Spending Bill Trims Many Construction Programs

Design and construction firms that focus on federal work now know how much funding many key government programs will receive through next fall, thanks to a massive, newly enacted fiscal 2012 omnibus spending package. 

But as industry officials examine the results for construction accounts scattered through the $915-billion omnibus, they mostly see bad news: Most programs were cut from 2011 levels, though a few line-items did score increases.

The new package includes funding for the Depts. of Defense, Energy and Veterans Affairs--among others--as well as such agencies as the General Services Administration and Environmental Protection Agency.

Sean O’Neill, Associated General Contractors of America congressional relations director for infrastructure advancement, says, “We are seeing some areas where the appropriators…are  recognizing the importance of investing in our federal construction accounts and other areas where they are not.”

President Obama signed the measure into law on Dec. 23. Final congressional approval of the package came on Dec. 17, when the Senate passed the bill on a 67-32 vote. The House cleared the measure one day earlier.

On Dec. 17 Obama had signed a short continuing resolution that kept the agencies in operation through Dec. 23. Previous extensions expired on Dec. 16 and on Dec. 17.

The Depts. of Transportation, Housing and Urban Development, Commerce, Justice and Agriculture aren't included in the omnibus. A separate bill funding their programs through the end of fiscal 2012 was enacted on Nov. 18.

Given the continued squeeze on overall federal discretionary spending, it’s no surprise that lawmakers sliced many construction accounts in the new omnibus bill.

Most of the reductions are relatively small, in percentage terms, but they amount to tens of millions of dollars worth of cuts and foregone work for construction firms still battling for new business wherever they can find it.

Among the programs hit with cuts is EPA water infrastructure, which appropriators pared 4%, to $3.6 billion.

Within that total, aid for Clean Water State Revolving Funds (SRFs), which help finance wastewater-treatment facilities, was sliced 4%. Drinking water SRFs were down 5%.



Adam Krantz, National Association of Clean Water Agencies managing director of government and public affairs, says,  “Obviously, we’re disappointed with the [EPA water] funding going down,” But he observes, “Clearly also it could have been worse.”

Krantz adds that many new or possible federal regulations affecting wastewater utilities make it increasingly hard for local agencies to meet their infrastructure needs. 

He says, “Either we need a smarter approach to clean water or ultimately we do need more federal funding of a significant nature…the numbers we’re dealing with now are simply not big enough to deal with the need.”

The General Services Administration’s account that funds new federal-buildings construction was slashed 39%, leaving the program with only $50 million in 2012. 

The GSA number is “another big disappointment for us,” says Marco Giamberardino, senior director of AGC’s federal and heavy construction division. “The needs are certainly out there,” he says, noting that the federal building inventory has more than 900 facilities that are nearly 50 years old.

Military construction funding also was cut back. The big drop in Base Realignment and Closure spending was no surprise,  because the program, which started in 2005, is in its final stage. But other DOD work was trimmed, too.

Giamberardino says, “This is going to be a big gap, in terms of work for contractors who …specialize in DOD work but also for private-building contractors who have moved over to this market as a result of the downturn in the economy.” The DOD construction funding “has been a real lifeblood for some of these firms,” he says.

Not all programs went under the knife, however. Perhaps the biggest construction winner in the omnibus is the Army Corps of Engineers civil works program. Appropriators hiked civil works’ 2012 regular appropriations 5%, to slightly more than $5 billion.



John Doyle, special counsel to the law and lobbying firm JonesWalker LLP, says, “The Corps did very well—much better than I think anyone had any right to expect.”

Doyle, a former senior Army civil works official, notes that the $5-billion Corps allotment is higher than the levels in earlier House and Senate versions of the energy and water programs spending bills. “Ten years ago, or even maybe five years ago,” he says, “one wouldn’t think that was so extraordinary or unusual, but in this budget climate I certainly didn’t expect to see that happen.”

Appropriators gave the Corps even more good news, providing an additional $1.7 billion to help rebuild and repair U.S. infrastructure damaged by storms, floods and other natural disasters.

The $1.7 billion is part of a separate $8.1-billion disaster-relief measure that Obama also signed on Dec. 23. The Federal Emergency Management Agency receives the other $6.4 billion in the bill.  The Senate had approved the disaster-relief measure on Dec. 17, one day after the House passed it.

The House also cleared a third measure, which aimed to offset the $8.1 billion in disaster-relief funds by cutting line-items in the omnibus by 1.83%, except for defense and veterans' programs. But the Senate rejected that offset bill, sinking the across-the-board cut.

Updated on Dec. 23 to take note of bill's enactment that day.