Army's Faster Build Push Shifts Design Risk to Contractors

Army's Faster Build Push Shifts Design Risk to Contractors

Faster military construction may come with fewer contract protections, and the risk could flow down to the builders and subs doing the work. Attorneys told Construction Dive that the Army’s push to deliver facilities up to 50% faster, combined with expanded use of Other Transaction Agreements (OTAs), leaves contractors carrying more design and schedule exposure. Contractors should settle their risk terms before they price the work.

One caveat up front: Construction Dive’s reporting does not discuss subcontractor terms directly. The subcontract-level points below are our inference from what the attorneys said about prime contracts.

Background

The Army announced a military construction reform initiative in October, aiming to deliver infrastructure up to 50% faster and at 30% lower cost, Construction Dive reported Nov. 4. The initiative favors design-build delivery and industrialized methods such as modular construction over traditional design-bid-build, where the government generally finishes design before awarding construction.

A second change sits underneath it. Stephen Tobin, a government contracts partner at Cohen Seglias, said the 2026 National Defense Authorization Act expands the Department of Defense’s authority to use OTAs for facility repair and construction. Before, OTA use in military construction was limited to a pilot program for new construction technologies, with caps on the number and total value of projects. The new authority covers planning, design, engineering, prototyping, piloting and execution, and it lets contractors get a noncompetitive follow-on production contract or transaction.

Contractors are already positioning. Tutor Perini’s subsidiary Perini Management Services is using accelerated design-build to budget delivery on $315 million of U.S. Coast Guard work at Base Kodiak, Alaska. On an Oct. 29 call with analysts, Granite Construction CEO Kyle Larkin said the procurement shift aligns with Granite’s collaborative contracting experience and should create opportunities across much of its footprint.

Analysis

The headline numbers, 50% faster and 30% cheaper, are targets, not guarantees. Tobin noted that past government efforts to speed procurement have produced mixed results. Faster acquisition can mean poorly defined requirements, which tend to surface later as post-award claims. He also suggested that merging planning and design could slow the front end of a project, which could eat into the intended time savings.

If the schedule compresses on paper but the problems still appear in the field, someone absorbs the gap. Trent Cotney, a partner at Adams & Reese, said accelerated schedules and incomplete designs can expose contractors to higher costs, labor shortages, unforeseen conditions and scheduling disputes. His point that “streamlining procurement does not eliminate construction risk” is the core of the story.

Two features of the new landscape raise the stakes:

Risk moves with the delivery method. Douglas Proxmire of Venable said design-build shifts both design and construction risk onto the contractor, though the Army still sets the basic project requirements and may keep some design risk. For a prime, that is manageable if the owner’s requirements are clear. For a sub on a fast-tracked package, the same ambiguity can arrive as a drawing that is not finished yet.

OTAs may not carry the usual protections. Cotney and Tobin both said OTAs generally operate outside the Federal Acquisition Regulation (FAR). Tobin said many FAR construction-type clauses may not appear unless the parties negotiate them in. Contractors also have fewer ways to challenge an award, because the Government Accountability Office generally reviews whether the agency properly used its OTA authority, not how it evaluated and selected a contractor.

Our read is that three clause categories matter most. The attorneys did not name specific clauses, but these follow from the risks they describe. First, differing-site-conditions language, because unforeseen conditions are one of Cotney’s named exposures and a missing clause leaves the sub holding that cost. Second, change-order notice windows, because compressed schedules shorten the time to document a change, and a short notice window can turn a legitimate claim into a waived one. Third, pay-when-paid terms, because if the prime’s recovery from the government is harder to pursue, a sub paid only after the prime is paid inherits that delay. Without a negotiated protection, the subcontract can absorb risk the prime contract no longer covers.

What It Means for Subcontractors

• Ask for the prime contract type before you price. If the prime is working under an OTA instead of a FAR-based contract, request the agreement’s relevant terms, or at least a clear statement of which clauses flow down. Do this at the bid or subcontract-package stage, before you sign.
• Negotiate differing-site-conditions language for civil, earthwork and utility trades. These trades hold the most exposure to unforeseen conditions, which Cotney flagged. If the prime’s agreement lacks a conditions clause, get one written into your subcontract or carry contingency.
• Check change-order notice windows against the accelerated schedule. A notice period written for a conventional schedule may be too slow on a compressed one. Set up daily logs and a same-week notice routine for any federal job in this program.
• Push back on pay-when-paid. Do not let your cash flow depend on a prime’s dispute with the Army. Ask for a firm outside payment date, and resist pay-if-paid language, which shifts the risk of nonpayment entirely onto you.
• Get into design-build teams early. Proxmire said design capability and modular partnerships are becoming more important. MEP, structural, steel and precast firms with prefabrication capacity should approach primes and architects now. Tutor Perini at Base Kodiak ($315 million, Coast Guard, accelerated design-build to budget) is a live example of the delivery method.
• Pre-qualify your schedule capacity this quarter. Cotney advised evaluating your ability to meet accelerated schedules before committing. Check crew availability, equipment and material lead times against a schedule cut by as much as half, and decline packages you cannot staff.
• Attend federal outreach sessions. Cotney recommended participating in federal industry outreach. Construction Dive’s reporting gives no dates, so ask the primes you work with, such as Tutor Perini and Granite, which sessions they are tracking and when the next one is.

This is a long-lead program story. Construction Dive’s reporting ties no bid dates to the reform initiative. The practical near-term step is updating your subcontract terms before the first compressed-schedule package reaches you.