This feature is part of “The Dotted Line” series, which takes an in-depth look at the complex legal landscape of the construction industry. To view the entire series, click here.
A federal push to build military facilities faster leaves contractors with more responsibility for projects already on tight schedules, attorneys told Construction Dive.
The U.S. Army announced a military construction reform initiative in October aimed at delivering infrastructure up to 50% faster and at 30% lower cost. The initiative emphasizes design-build delivery and industrialized construction methods, such as modular construction, as alternatives to traditional project delivery.
“The biggest change is a move toward faster, more flexible military construction procurement,” said Trent Cotney, Tampa, Florida-based partner at law firm Adams & Reese. “This represents a significant shift in how military construction projects may be awarded and completed.”
The 2026 National Defense Authorization Act expands the Department of Defense’s authority to use Other Transaction Agreements, or OTAs, for facility repairs or construction projects, said Stephen Tobin, a government contracts partner at Cohen Seglias, a Philadelphia-based law firm. Previously, OTA use in military construction only applied to a pilot program focused on new construction technologies, with restrictions on the number and total value of projects.
“This new authority is much broader, allowing MILCON OTAs for repair and construction projects for facilities, including the planning, design, engineering, prototyping, piloting and execution of such repair and construction projects,” Tobin told Construction Dive. “Additionally, [it] provides construction contractors the opportunity for a noncompetitive follow-on production contract or transaction.”
Opportunities in military awards
Contractors have taken notice of the military construction procurement changes.
Last month, Tutor Perini highlighted the use of the accelerated design-build to budget project delivery method for $315 million in work for the U.S. Coast Guard by its subsidiary Perini Management Services at Base Kodiak in Alaska. And on its most recent earnings call, Granite Construction spotlighted the opportunities it sees under the new procurement regime.
“With Granite's experience in collaborative contracting, we believe this change in federal procurement practice aligns with our capabilities and will create additional opportunities across much of our footprint,” said Kyle Larkin, Granite’s CEO and president, on a call with analysts Oct. 29.
Construction attorneys say expanded federal authority to use OTAs for military facility construction and repairs could give agencies greater flexibility in how they award projects and negotiate contracts. But faster procurement also could lead to design errors and cost overruns, said Cotney.
“Accelerated schedules and incomplete designs can expose contractors to increased costs, labor shortages, unforeseen conditions and scheduling disputes,” Cotney said. “Streamlining procurement does not eliminate construction risk.”
For these reasons, construction firms need to pay attention to how these contracts allocate those risks, especially when companies pursue work through OTAs. These agreements may not contain the same protections common in traditional federal construction contracts.
“Depending on the contractual language, it may shift more of that risk to contractors,” said Cotney. “Faster procurement should not come at the expense of reasonable risk allocation.”
An alternative delivery method
The Army’s announcement moves away from the traditional design-bid-build process, in which the government generally completes the design first, then awards a construction contract.
Under the design-build process, the contractor and designer collaborate on the project before construction, which can shorten delivery timelines and give builders more influence over project costs. The approach creates more opportunities for contractors to partner with architects and modular construction specialists, said Douglas Proxmire, a partner at Venable, a Washington, D.C.-based law firm.
The delivery method also gives contractors a greater role in value engineering, which helps identify ways to improve a project’s features or reduce costs before construction, added Proxmire.
“Yes, design-build shifts both the design and the construction risk onto the contractor,” Proxmire told Construction Dive. “That said, the Army would still set the basic elements required for the project, so the Army does keep some of the design risk, and still may hire a design consultant to ensure that the project meets the Army’s essential purpose.”
The changes make design capabilities and partnerships with modular construction firms increasingly important, said Proxmire. He recommended builders develop relationships with design partners and strengthen their modular capabilities.
Fewer standard protections
But the flexibility also changes legal protections available to contractors, said Cotney.
Unlike traditional federal construction contracts, OTAs generally operate outside the Federal Acquisition Regulation, or FAR. As a result, contractors cannot assume the familiar provisions will be included, said Cotney.
Tobin echoed the concern, particularly for contractors familiar with standard federal construction agreements. Under traditional procurement, FAR provisions establish procedures for addressing many common construction disputes. In an OTA, those provisions may need to be negotiated individually.
“Many of the FAR construction type clauses that contractors are accustomed to may not be included in the agreement absent the parties’ negotiation to include them,” Tobin told Construction Dive. “Contractors need to be aware of this and take steps to reduce risks and ensure protective clauses are included in their favor.”
Contractors also have fewer avenues to challenge an OTA award, said Tobin. The Government Accountability Office generally reviews whether an agency has properly used its OTA authority, rather than reconsidering the agency’s evaluation and selection of a contractor, added Tobin.
Faster procurement on construction
The government’s emphasis on speed also raises debate about whether accelerated procurement will lead to faster construction.
Government efforts to accelerate procurement have historically produced mixed results, said Tobin. Faster acquisition can lead to mistakes or poorly defined requirements, which may eventually surface as post-award claims.
“Contracting personnel may be more conscientious in evaluating acquisition cycle phase pairings such as planning and designing. This is not necessarily a bad thing, however, it potentially defeats the time savings the new approach is intended to facilitate,” Tobin told Construction Dive. “And so, it may be that a merger of planning and design simply creates more drag in the beginning of the project as opposed to deeper in the procurement cycle, where it might be typically felt.”
Preparing for changes
Attorneys recommend a more deliberate approach to contract negotiations and project planning for contractors considering federal construction work.
Companies should evaluate their ability to meet accelerated schedules before committing to a project, said Cotney. Firms should also become familiar with alternative delivery methods and participate in federal industry outreach opportunities, he said.
“Ultimately, these changes present significant opportunities, but contractors need to understand the risks,” Cotney told Construction Dive. “Faster procurement is only an improvement if it results in better project delivery without placing unreasonable burdens on contractors.”
