The Washington Business Journal says federal contracts for new construction will take a major hit with pending budget cuts, as agencies opt to instead spend money to maintain and rehabilitate existing buildings, according to a market snapshot report from Deltek Inc. The federal government spent $39.4 billion in construction and rehabilitation of physical assets in fiscal 2010, but will trim that amount by nearly $2 billion in fiscal 2012, according to the Obama administration’s proposed budget.
Specifically, funding for military construction and family housing in particular dropped from almost $15 billion to $12.5 billion, no doubt due in part to the temporary jump in construction that came with the defense base realignments that are supposed to be completed in September.
In contrast, the areas that saw a budget increase for construction and rehabilitation include veterans hospitals and other health facilities, from $1.81 billion to $3.06 billion, and projects that support energy initiatives, from $7.41 billion to $10.47 billion.
That said, federal spending on architecture and engineering services, in particular, will see modest growth to $9.5 billion in 2016 from $8.1 billion this year, as agencies try to extend the life of existing buildings and comply with various mandates for energy efficiency, data consolidation, physical security and teleworking, according to the report. Read More.